FORM 10-K/A
Amendment No. 1
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, 1996
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission file number 1-720
-------------------------------------------
Phillips Petroleum Company
(Exact name of registrant as specified in its charter)
Delaware 73-0400345
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Phillips Building, Bartlesville, Oklahoma 74004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 918-661-6600
- -----------------------------------------------------------------
Filing Additional Exhibits
<PAGE>
Item 14 - Exhibits
- ------------------
The registrant is filing with this Amendment No. 1 Annual Reports
on Form 11-K for the Thrift Plan of Phillips Petroleum Company,
the Long-Term Stock Savings Plan of Phillips Petroleum Company
and the Retirement Savings Plan of Phillips Petroleum Company.
1
<PAGE>
PHILLIPS PETROLEUM COMPANY
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
3(i) Restated Certificate of Incorporation, as filed with
the State of Delaware July 17, 1989 (incorporated by
reference to Exhibit 3(i) to Annual Report on
Form 10-K for the year ended December 31, 1995).
(ii) Bylaws of Phillips Petroleum Company, as amended
effective December 9, 1996.*
4(a) Indenture dated as of September 15, 1990, between
Phillips Petroleum Company and First Trust National
Association (formerly Continental Bank, National
Association), relating to the 9 1/2% Notes due 1997
and the 9 3/8% Notes due 2011.*
(b) Indenture dated as of September 15, 1990, as
supplemented by Supplemental Indenture No. 1 dated
May 23, 1991, between Phillips Petroleum Company and
First Trust National Association (formerly
Continental Bank, National Association), relating to
the 9.18% Notes due September 15, 2021; the 9% Notes
due 2001; the 8.86% Notes due May 15, 2022; the 8.49%
Notes due January 1, 2023; the 7.92% Notes due
April 15, 2023; the 7.20% Notes due November 1, 2023;
and the 6.65% Notes due March 1, 2003 (incorporated
by reference to Exhibit 4(d) to Annual Report on
Form 10-K for the year ended December 31, 1991).
(c) Preferred Share Purchase Rights as described in the
Rights Agreement dated as of July 10, 1989, between
Phillips Petroleum Company and Chemical Bank
(formerly Manufacturers Hanover Trust Company)
(incorporated by reference to Exhibit 4(c) to Annual
Report on Form 10-K for the year ended December 31,
1995).
(d) Amendment dated May 16, 1990, to the Rights Agreement
dated July 10, 1989, between Phillips Petroleum
Company and Chemical Bank (formerly Manufacturers
Hanover Trust Company).*
2
<PAGE>
PHILLIPS PETROLEUM COMPANY
INDEX TO EXHIBITS
(Continued)
Exhibit
Number Description
- ------- -----------
The company incurred during 1996 certain long-term
debt not registered pursuant to the Securities
Exchange Act of 1934. No instrument with respect to
such debt is being filed since the total amount of
the securities authorized under any such instrument
did not exceed 10 percent of the total assets of the
company on a consolidated basis. The company hereby
agrees to furnish to the Securities and Exchange
Commission upon its request a copy of such instrument
defining the rights of the holders of such debt.
Material Contracts
10(a) Agreement dated December 23, 1984, among Mesa Partners
and related entities and Phillips Petroleum Company
and the schedules, annexes and exhibit thereto
(incorporated by reference to Exhibit 10(a) to Annual
Report on Form 10-K for the year ended December 31,
1995).
(b) Letter Agreement dated December 23, 1984, among Mesa
Partners and related entities and Phillips Petroleum
Company (incorporated by reference to Exhibit 10(b)
to Annual Report on Form 10-K for the year ended
December 31, 1995).
(c) Trust Agreement dated December 12, 1995, between
Phillips Petroleum Company and Vanguard Fiduciary
Trust Company, as Trustee of the Phillips Petroleum
Company Compensation and Benefits Arrangements Stock
Trust (incorporated by reference to Exhibit 10(c) to
Annual Report on Form 10-K for the year ended
December 31, 1995).
Management Contracts and Compensatory Plans or Arrangements
(d) 1986 Stock Plan of Phillips Petroleum Company
(Incorporated by reference to Exhibit 10(d) to Annual
Report on Form 10-K for the year ended December 31,
1992).
3
<PAGE>
PHILLIPS PETROLEUM COMPANY
INDEX TO EXHIBITS
(Continued)
Exhibit
Number Description
- ------- -----------
10(e) 1990 Stock Plan of Phillips Petroleum Company
(incorporated by reference to Exhibit 10(e) to Annual
Report on Form 10-K for the year ended December 31,
1995).
(f) Annual Incentive Compensation Plan of Phillips
Petroleum Company (incorporated by reference to
Exhibit 10(f) to Annual Report on Form 10-K for the
year ended December 31, 1992).
(g) Incentive Compensation Plan of Phillips Petroleum
Company (incorporated by reference to Exhibit 10(g)
to Annual Report on Form 10-K for the year ended
December 31, 1994).
(h) Principal Corporate Officers Supplemental Retirement
Plan of Phillips Petroleum Company (incorporated by
reference to Exhibit 10(h) to Annual Report on
Form 10-K for the year ended December 31, 1995).
(i) Phillips Petroleum Company Supplemental Executive
Retirement Plan.*
(j) Key Employee Deferred Compensation Plan of Phillips
Petroleum Company.*
(k) Non-Employee Director Retirement Plan of Phillips
Petroleum Company (incorporated by reference to
Exhibit 10(k) to Annual Report on Form 10-K for the
year ended December 31, 1995).
(l) Omnibus Securities Plan of Phillips Petroleum Company.*
(m) Deferred Compensation Plan for Non-Employee Directors
of Phillips Petroleum Company (incorporated by
reference to Exhibit 10(m) to Annual Report on
Form 10-K for the year ended December 31, 1995).
(n) Key Employee Missed Credited Service Retirement Plan of
Phillips Petroleum Company.*
4
<PAGE>
PHILLIPS PETROLEUM COMPANY
INDEX TO EXHIBITS
(Continued)
Exhibit
Number Description
- ------- -----------
12 Computation of Ratio of Earnings to Fixed Charges.*
21 List of Subsidiaries of Phillips Petroleum Company.*
23 Consent of Independent Auditors.*
27 Financial Data Schedule.*
99(a) Form 11-K, Annual Report, of the Thrift Plan of
Phillips Petroleum Company for the fiscal year ended
December 31, 1996.
(b) Form 11-K, Annual Report, of the Long-Term Stock
Savings Plan of Phillips Petroleum Company for the
fiscal year ended December 31, 1996.
(c) Form 11-K, Annual Report, of the Retirement Savings
Plan of Phillips Petroleum Company for the fiscal
year ended December 31, 1996.
*Filed with the original Annual Report on Form 10-K for the year
ended December 31, 1996.
Copies of the exhibits listed in this Index to Exhibits are
available upon request for a fee of $3.00 per document. Such
request should be addressed to:
Secretary
Phillips Petroleum Company
1234 Adams Building
Bartlesville, OK 74004
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
PHILLIPS PETROLEUM COMPANY
/s/ Jacqueline K. Wagner
-----------------------------
Jacqueline K. Wagner
Vice President and Controller
(Chief Accounting and
Duly Authorized Officer)
June 25, 1997
6
<PAGE>
Exhibit 99(a)
FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- ---------
Commission file number 33-50134
--------------------------------
THRIFT PLAN OF PHILLIPS PETROLEUM COMPANY
(Full title of the Plan)
PHILLIPS PETROLEUM COMPANY
(Name of issuer of securities)
Bartlesville, Oklahoma 74004
(Address of principal executive office) (Zip code)
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
--------------------
Financial statements of the Thrift Plan of Phillips Petroleum
Company, filed as a part of this annual report, are listed in the
accompanying index.
(b) Exhibits
--------
Exhibit 1 Consent of Ernst & Young LLP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Thrift Plan Committee has duly caused this annual
report to be signed on its behalf by the undersigned hereunto
duly authorized.
THRIFT PLAN OF
PHILLIPS PETROLEUM COMPANY
/s/ Jacqueline K. Wagner
---------------------------------
Jacqueline K. Wagner
Member
Thrift Plan Committee
June 25, 1997
1
<PAGE>
- -----------------------------------------------------------------
Index To Financial Statements Thrift Plan Of Phillips
And Schedules Petroleum Company
Page
Report of Independent Auditors .............................. 3
Financial Statements
Statements of Net Assets Available for Benefits
at December 31, 1996 and 1995
Total Plan ............................................ 4
Fund A (Bond Index Fund) .............................. 6
Funds B and C (Phillips Stock Fund) ................... 8
Fund D (Investment Contracts Fund)--Deposit
Administration Account .............................. 10
Fund D (Investment Contracts Fund)--Deferred
Settlement Account .................................. 12
Fund E (S&P 500 Fund) ................................. 14
Fund F (Money Market Fund) ............................ 16
Loan Fund ............................................. 18
Temporary Investment Fund ............................. 20
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1996, 1995 and 1994
Total Plan ............................................ 5
Fund A (Bond Index Fund) .............................. 7
Funds B and C (Phillips Stock Fund) ................... 9
Fund D (Investment Contracts Fund)--Deposit
Administration Account .............................. 11
Fund D (Investment Contracts Fund)--Deferred
Settlement Account .................................. 13
Fund E (S&P 500 Fund) ................................. 15
Fund F (Money Market Fund) ............................ 17
Loan Fund ............................................. 19
Temporary Investment Fund.............................. 21
Notes to Financial Statements ............................. 22
Supplemental Schedules
Schedule of Assets Held for Investment Purposes
at December 31, 1996, Line 27(a) ........................ 32
Schedule of Reportable Transactions for the Year
Ended December 31, 1996, Line 27(d)--Series
of Transactions ......................................... 33
Schedule of Reportable Transactions for the Year
Ended December 31, 1996, Line 27(d)--Individual
Transactions ............................................ 34
2
<PAGE>
- -----------------------------------------------------------------
Report Of Independent Auditors
The Thrift Plan Committee
Thrift Plan of Phillips Petroleum Company
We have audited the accompanying statement of net assets available
for benefits of the Thrift Plan of Phillips Petroleum Company
(Plan) as of December 31, 1996 and 1995, and the related statement
of changes in net assets available for benefits for each of the
three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Thrift Plan
Committee (Committee). Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by the Committee, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for
benefits of the Plan at December 31, 1996 and 1995, and the
changes in its net assets available for benefits for each of the
three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment purposes as
of December 31, 1996, and reportable transactions for the year
ended December 31, 1996, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974, and are not a required part of the basic financial
statements. The fund information presented on pages 6 through 21
listed in the accompanying index to financial statements and
schedules is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes
in net assets available for benefits of each fund. The
supplemental schedules and fund information have been subjected to
the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements
taken as a whole.
/s/ Ernst & Young LLP
Tulsa, Oklahoma ERNST & YOUNG LLP
June 25, 1997
3
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Phillips Petroleum Company
common stock $ 797,584 704,705
Insurance contracts 155,955 285,462
Vanguard Money Market Reserves-
Prime Portfolio 158,914 -
Vanguard Index Trust 500 Portfolio 114,578 -
Vanguard Bond Index-Total Bond
Market Portfolio 74,837 -
BT Pyramid Government Securities
Cash Fund - 9,356
BT Pyramid Large Capitalization
Equity Index Fund - 71,911
Barclays Global Investors
Government/Corporate
Bond Index Fund E - 74,816
BT Pyramid Discretionary Cash Fund - 66,264
Loans to Plan participants 21,024 18,868
- -----------------------------------------------------------------
1,322,892 1,231,382
Cash - 1
Contributions Receivable 694 568
Employee Deposits Receivable 104 204
Loan Repayments Receivable 106 73
Dividends Receivable 55 -
Interest Receivable - 1,446
Securities Sold - 1,241
- -----------------------------------------------------------------
Total Assets 1,323,851 1,234,915
- -----------------------------------------------------------------
Net Assets Available for Benefits $1,323,851 1,234,915
=================================================================
See Notes to Financial Statements.
4
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Contributions and Deposits
Company contributions
Matching $ 5,604 5,742 5,854
Before-tax deposits 18,840 17,601 17,313
Employee deposits 15,697 15,865 16,429
- -----------------------------------------------------------------
40,141 39,208 39,596
- -----------------------------------------------------------------
Investment Income
Dividends 33,925 24,471 24,213
Interest
Participant loans 1,355 1,179 919
Other 18,911 30,530 33,492
Net appreciation 209,634 60,994 82,085
- -----------------------------------------------------------------
263,825 117,174 140,709
- -----------------------------------------------------------------
Total Additions 303,966 156,382 180,305
- -----------------------------------------------------------------
Deductions
Distributions to
Participants or Their
Beneficiaries
Cash 167,282 109,754 123,967
Phillips Petroleum Company
common stock 47,426 39,221 45,868
Forfeitures - 12 2
Administrative Expense 316 404 452
Interest Expense 6 19 43
- -----------------------------------------------------------------
Total Deductions 215,030 149,410 170,332
- -----------------------------------------------------------------
Net Increase 88,936 6,972 9,973
Net Assets Available for
Benefits
Beginning of Year 1,234,915 1,227,943 1,217,970
- -----------------------------------------------------------------
End of Year $1,323,851 1,234,915 1,227,943
=================================================================
See Notes to Financial Statements.
5
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
FUND A
(Bond Index Fund)
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Vanguard Bond Index-Total Bond
Market Portfolio $74,837 -
Barclays Global Investors
Government/Corporate
Bond Index Fund E - 74,816
Due from Temporary Investment Fund 116 107
Cash - 1
- -----------------------------------------------------------------
Total Assets 74,953 74,924
- -----------------------------------------------------------------
Net Assets Available for Benefits $74,953 74,924
=================================================================
Number of Units 7,617,326 6,156,676
Unit Value $9.8398 12.1696
- -----------------------------------------------------------------
See Notes to Financial Statements.
6
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
FUND A
(Bond Index Fund)
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Interest $ 1 2 2
Dividends 3,191 - -
Net appreciation
(depreciation) (1,157) 12,772 (3,127)
- -----------------------------------------------------------------
2,035 12,774 (3,125)
Allocation of Deposits and
Earnings from Temporary
Investment Fund 1,132 1,117 1,333
- -----------------------------------------------------------------
Total Additions 3,167 13,891 (1,792)
- -----------------------------------------------------------------
Deductions
Cash Distributions to
Participants or Their
Beneficiaries 9,268 7,591 9,561
Administrative Expense 73 68 124
- -----------------------------------------------------------------
Total Deductions 9,341 7,659 9,685
- -----------------------------------------------------------------
Interfund Transfers 6,203 (2,142) (8,410)
- -----------------------------------------------------------------
Net Increase (Decrease) 29 4,090 (19,887)
Net Assets Available for
Benefits
Beginning of Year 74,924 70,834 90,721
- -----------------------------------------------------------------
End of Year $74,953 74,924 70,834
=================================================================
See Notes to Financial Statements.
7
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
FUNDS B and C
(Phillips Stock Fund)
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Phillips Petroleum Company
common stock $797,584 704,705
Vanguard Money Market Reserves-
Prime Portfolio 993 -
BT Pyramid Government Securities
Cash Fund - 6,020
- -----------------------------------------------------------------
798,577 710,725
Due from Temporary Investment Fund 2,826 2,523
Contributions Receivable 487 452
Interest Receivable - 54
Securities Sold - 1,241
- -----------------------------------------------------------------
Total Assets 801,890 714,995
- -----------------------------------------------------------------
Net Assets Available for Benefits $801,890 714,995
=================================================================
Number of Units 8,246,509 9,510,541
Unit Value $97.2399 75.1792
- -----------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
FUNDS B and C
(Phillips Stock Fund)
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Dividends $ 23,461 24,471 24,213
Interest 324 702 434
Net appreciation 193,528 29,404 84,226
- -----------------------------------------------------------------
217,313 54,577 108,873
Matching Company
Contributions 5,604 5,742 5,854
Allocation of Deposits and
Earnings from Temporary
Investment Fund 26,976 26,050 25,932
- -----------------------------------------------------------------
Total Additions 249,893 86,369 140,659
- -----------------------------------------------------------------
Deductions
Distributions to Participants
or Their Beneficiaries
Cash 42,452 30,076 42,687
Phillips Petroleum Company
common stock 47,426 39,221 45,868
Forfeitures - 12 2
Administrative Expense 109 122 119
Interest Expense 6 19 43
- -----------------------------------------------------------------
Total Deductions 89,993 69,450 88,719
- -----------------------------------------------------------------
Interfund Transfers (73,005) 5,337 (11,161)
- -----------------------------------------------------------------
Net Increase 86,895 22,256 40,779
Net Assets Available for
Benefits
Beginning of Year 714,995 692,739 651,960
- -----------------------------------------------------------------
End of Year $801,890 714,995 692,739
=================================================================
See Notes to Financial Statements.
9
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
FUND D (Investment Contracts Fund)
DEPOSIT ADMINISTRATION ACCOUNT
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Insurance contracts
Travelers Insurance Company,
Group Annuity Contract GR-15505 $ - 127,316
Continental Assurance Company,
Group Annuity, Contract GP-12692 67,098 67,946
Group Annuity, Contract GP-12787 23,656 23,537
Provident National Assurance,
Group Annuity, Contract GC-05048 64,731 66,060
- -----------------------------------------------------------------
155,485 284,859
Interest Receivable - 1,041
- -----------------------------------------------------------------
Total Assets 155,485 285,900
- -----------------------------------------------------------------
Net Assets Available for Benefits $155,485 285,900
=================================================================
Number of Units (A) (A)
Unit Values (A) (A)
- -----------------------------------------------------------------
(A) See Note 6.
See Notes to Financial Statements.
10
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
FUND D (Investment Contracts Fund)
DEPOSIT ADMINISTRATION ACCOUNT
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Interest $ 17,140 25,576 30,956
- -----------------------------------------------------------------
Total Additions 17,140 25,576 30,956
- -----------------------------------------------------------------
Deductions
Cash Distributions to
Participants or Their
Beneficiaries 60,681 52,263 51,376
Administrative Expense 28 75 97
- -----------------------------------------------------------------
Total Deductions 60,709 52,338 51,473
- -----------------------------------------------------------------
Interfund Transfers (86,846) (20,541) (48,168)
- -----------------------------------------------------------------
Net Decrease (130,415) (47,303) (68,685)
Net Assets Available for
Benefits
Beginning of Year 285,900 333,203 401,888
- -----------------------------------------------------------------
End of Year $ 155,485 285,900 333,203
=================================================================
See Notes to Financial Statements.
11
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
FUND D (Investment Contracts Fund)
DEFERRED SETTLEMENT ACCOUNT
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Insurance contract $470 603
- -----------------------------------------------------------------
Total Assets 470 603
- -----------------------------------------------------------------
Net Assets Available for Benefits $470 603
=================================================================
See Notes to Financial Statements.
12
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
FUND D (Investment Contracts Fund)
DEFERRED SETTLEMENT ACCOUNT
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Interest $ 44 66 118
- -----------------------------------------------------------------
Total Additions 44 66 118
- -----------------------------------------------------------------
Deductions
Cash Distributions to
Participants or Their
Beneficiaries 177 307 507
- -----------------------------------------------------------------
Total Deductions 177 307 507
- -----------------------------------------------------------------
Net Decrease (133) (241) (389)
Net Assets Available for
Benefits
Beginning of Year 603 844 1,233
- -----------------------------------------------------------------
End of Year $ 470 603 844
=================================================================
See Notes to Financial Statements.
13
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
FUND E
(S&P 500 Fund)
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Vanguard Index Trust 500 Portfolio $114,578 -
BT Pyramid Large Capitalization
Equity Index Fund - 71,911
Due From Temporary Investment Fund 457 358
- -----------------------------------------------------------------
Total Assets 115,035 72,269
- -----------------------------------------------------------------
Net Assets Available for Benefits $115,035 72,269
=================================================================
Number of Units 1,663,309 46,684,257
Unit Value $69.1603 1.5480
- -----------------------------------------------------------------
See Notes to Financial Statements.
14
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
FUND E
(S&P 500 Fund)
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Dividends $ 2,035 - -
Net appreciation 17,263 18,818 986
- -----------------------------------------------------------------
19,298 18,818 986
Allocation of Deposits and
Earnings from Temporary
Investment Fund 4,185 3,698 3,818
- -----------------------------------------------------------------
Total Additions 23,483 22,516 4,804
- -----------------------------------------------------------------
Deductions
Cash Distributions to
Participants or Their
Beneficiaries 10,320 5,377 3,928
Administrative Expense 39 23 73
- -----------------------------------------------------------------
Total Deductions 10,359 5,400 4,001
- -----------------------------------------------------------------
Interfund Transfers 29,642 3,292 13,118
- -----------------------------------------------------------------
Net Increase 42,766 20,408 13,921
Net Assets Available for
Benefits
Beginning of Year 72,269 51,861 37,940
- -----------------------------------------------------------------
End of Year $115,035 72,269 51,861
=================================================================
See Notes to Financial Statements.
15
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
FUND F
(Money Market Fund)
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Vanguard Money Market Reserves-
Prime Portfolio $154,203 -
BT Pyramid Discretionary Cash Fund - 66,264
Due from Temporary Investment Fund 238 259
Interest Receivable - 337
- -----------------------------------------------------------------
Total Assets 154,441 66,860
- -----------------------------------------------------------------
Net Assets Available for Benefits $154,441 66,860
=================================================================
Number of Units 154,440,044 59,671,680
Unit Value $1.000 1.1205
- -----------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
FUND F
(Money Market Fund)
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Dividends $ 5,094 - -
Interest 1,336 4,015 1,867
Allocation of Deposits and
Earnings from Temporary
Investment Fund 2,454 2,770 2,773
- -----------------------------------------------------------------
Total Additions 8,884 6,785 4,640
- -----------------------------------------------------------------
Deductions
Cash Distributions to
Participants or Their
Beneficiaries 43,654 13,420 15,426
Administrative Expense 67 116 39
- -----------------------------------------------------------------
Total Deductions 43,721 13,536 15,465
- -----------------------------------------------------------------
Interfund Transfers 122,418 13,290 51,075
- -----------------------------------------------------------------
Net Increase 87,581 6,539 40,250
Net Assets Available for
Benefits
Beginning of Year 66,860 60,321 20,071
- -----------------------------------------------------------------
End of Year $154,441 66,860 60,321
=================================================================
See Notes to Financial Statements.
17
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
LOAN FUND
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Loans to participants $21,024 18,868
Due from Temporary Investment Fund 553 496
- -----------------------------------------------------------------
Total Assets 21,577 19,364
- -----------------------------------------------------------------
Net Assets Available for Benefits $21,577 19,364
=================================================================
See Notes to Financial Statements.
18
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
LOAN FUND
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Interest--Participant Loans $ 1,355 1,179 919
- -----------------------------------------------------------------
Deductions
Cash Distributions to
Participants or Their
Beneficiaries 730 720 482
Loan Repayments from Plan
Participants 9,368 7,867 5,934
- -----------------------------------------------------------------
Total Deductions 10,098 8,587 6,416
- -----------------------------------------------------------------
Interfund Transfers 10,956 8,631 9,481
- -----------------------------------------------------------------
Net Increase 2,213 1,223 3,984
Net Assets Available for
Benefits
Beginning of Year 19,364 18,141 14,157
- -----------------------------------------------------------------
End of Year $21,577 19,364 18,141
=================================================================
See Notes to Financial Statements.
19
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Thrift Plan Of Phillips
Available For Benefits Petroleum Company
TEMPORARY INVESTMENT FUND
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Vanguard Money Market Reserves-
Prime Portfolio $3,718 -
BT Pyramid Government Securities
Cash Fund - 3,336
Contributions Receivable 207 116
Employee Deposits Receivable 104 204
Loan Repayments Receivable 106 73
Dividends Receivable 55 -
Interest Receivable - 14
- -----------------------------------------------------------------
Total Assets 4,190 3,743
- -----------------------------------------------------------------
Liabilities
Due to Fund A 116 107
Due to Fund B 2,826 2,523
Due to Fund E 457 358
Due to Fund F 238 259
Due to Loan Fund 553 496
- -----------------------------------------------------------------
Total Liabilities 4,190 3,743
- -----------------------------------------------------------------
Net Assets Available for Benefits $ - -
=================================================================
See Notes to Financial Statements.
20
<PAGE>
- -----------------------------------------------------------------
Statement Of Changes In Net Thrift Plan Of Phillips
Assets Available For Benefits Petroleum Company
TEMPORARY INVESTMENT FUND
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Contributions and Deposits
Company contributions--
before-tax deposits $18,840 17,601 17,313
Employee deposits 15,697 15,865 16,429
Loan repayments from
Plan participants 9,368 7,867 5,934
- -----------------------------------------------------------------
43,905 41,333 39,676
Investment Income
Dividends 147 - -
Interest 63 169 115
- -----------------------------------------------------------------
Total Additions 44,115 41,502 39,791
- -----------------------------------------------------------------
Deductions
Allocation of Deposits and
Earnings 34,747 33,635 33,856
- -----------------------------------------------------------------
Interfund Transfers (9,368) (7,867) (5,935)
Net Increase - - -
Net Assets Available for
Benefits
Beginning of Year - - -
- -----------------------------------------------------------------
End of Year $ - - -
=================================================================
See Notes to Financial Statements.
21
<PAGE>
- -----------------------------------------------------------------
Notes To Financial Statements Thrift Plan Of Phillips
Petroleum Company
Note 1--Plan Description
The following description of the Thrift Plan of Phillips
Petroleum Company (Plan) is subject to and qualified by the more
complete information appearing in the Plan document.
The Plan is a defined contribution plan available to certain
employees of Phillips Petroleum Company and participating
subsidiaries (Company). Generally, any person on the direct U.S.
dollar payroll of the Company is eligible to participate.
Non-managerial retail outlet marketing employees and certain
other employee classifications are not eligible.
Effective at the close of business on December 31, 1995, the
Trustee for Funds B and C, which were invested primarily in
common stock of the Company, was changed from Bankers Trust
Company (Bankers) to Vanguard Fiduciary Trust Company (Vanguard).
Bankers continued to serve as custodian for those funds until
June 28, 1996, when Vanguard became custodian. Effective July 1,
1996, Vanguard began providing recordkeeping, participant
accounting, and tax reporting services for the Plan, and became
Trustee for all funds except Fund D. Effective June 1, 1996,
Phillips Petroleum Company became contractholder for all Fund D
insurance contracts. This change in contractholder did not
affect participant benefits. Vanguard does provide recordkeeping
services for Fund D as part of the recordkeeping services
provided to the Plan. Funds A, E, F and the Temporary Investment
Fund were transferred to Vanguard for investment management
effective May 1, 1996. With Vanguard as Trustee, participants
are permitted to make transfers between investment funds on any
valuation date (each day the New York Stock Exchange is open for
business). Before the change of Trustee, transfers between
investment funds were permitted only on a monthly basis.
Under the new trust agreement with Vanguard, assets of Fund A,
also known as the Vanguard Bond Index - Total Bond Market
Portfolio Fund (Bond Index Fund), formerly invested in the Wells
Fargo Government/Corporate Bond Index Fund E, managed by Barclays
Global Investors (BGI), are now invested in the Vanguard Bond
Index - Total Bond Market Portfolio. Assets of Funds B and C are
now invested in the Phillips Stock Fund which is a single
investment fund consisting of two separate accounts. The
Phillips Stock Fund is invested only in the common stock of the
Company and holds cash reserves as determined by the Trustee.
Assets of Fund D, also known as the Investment Contracts Fund,
are invested in contracts guaranteed by insurance companies as to
both principal and interest. Fund D consists of the Deposit
Administration Account and the Deferred Settlement Account.
22
<PAGE>
Assets of Fund E, also known as the Vanguard Index Trust 500
Portfolio Fund (S&P 500 Fund), formerly invested in the Bankers
Trust Pyramid Large Capitalization Equity Index Fund, are now
invested in the Vanguard Index Trust 500 Portfolio. Assets of
Fund F, also known as the Vanguard Money Market Reserves - Prime
Portfolio Fund (Money Market Fund), formerly invested in the
Bankers Trust Discretionary Cash Fund, are now invested in the
Vanguard Money Market Reserves - Prime Portfolio. Assets of the
Temporary Investment Fund, formerly invested in the Bankers Trust
Pyramid Government Securities Cash Fund, are now invested in the
Vanguard Money Market Reserves - Prime Portfolio.
Vanguard reports all mutual fund investment income as dividends.
These dividends may be any type of income, including interest.
The income is divided by the total number of units held in each
mutual fund. Then the additional units are credited by Vanguard
to the investment funds of the Plan. This differs from Bankers
and BGI where interest was earned on cash accounts and share
values of the commingled funds would increase as a result of
income earned, increasing Plan per-unit amounts, not the number
of units in the investment funds. Hence, unit values in 1996 did
not fluctuate as much as they did in earlier years. Because of
this change in method and the fact that the funds were invested
in new investment vehicles at Vanguard, the number of units and
the unit values in the statements for Funds A, E, and F are not
comparable for 1996 and 1995.
The dividends reported for the Phillips Stock Fund are the
dividends on Company stock, as they have been reported
historically.
Participants may have up to 15 percent of their pay deposited in
the Plan each month. The first 5 percent is designated as
regular deposits with any excess being designated as supplemental
deposits. Deposits may be further designated by a participant as
before-tax or after-tax deposits. Before-tax deposits are made
by the Company on behalf of a participant who has elected the
before-tax feature of the Plan, voluntarily reducing his salary
by a corresponding amount. Total deposit amounts and allocation
of deposits between after-tax and before-tax accounts are subject
to limitations imposed by the Internal Revenue Code. Participants
may change their investment direction and deposit rate
semiannually during designated enrollment periods. Employee
deposits may be suspended in certain circumstances.
The Company contributes an amount equal to 25 percent of an
employee's regular deposits made to the Phillips Stock Fund--
Fund B account and 15 percent of regular deposits made to any
other investment fund.
23
<PAGE>
Employee and before-tax deposits and loan repayments are first
placed into the Temporary Investment Fund and remain there until
the valuation date on or about the 20th day of the following
month. Employee and before-tax deposits are paid into the
respective investment funds in accordance with the allocation
directions of participants. Loan repayments are transferred to
the Loan Fund and then are generally allocated to Funds A, B, E
or F based on a participant's regular deposits investment
allocation, except that funds borrowed from Fund C are repaid only
to Fund C. Interest earned on deposits and loan repayments while in
the Temporary Investment Fund are credited quarterly in the same
manner to each participant who still maintains an account in the
Plan and who made deposits or loan repayments during the quarter.
The allocation of earnings shall be made to each Participant in
the proportion to which his deposits or loan repayments bears to
all deposits or loan repayments during the period for which such
interest was earned. Employee deposits and earnings are paid
into Funds A, B, E or F as directed by the participant. After
June 30, 1993, Fund D (investment contracts which guarantee
repayment of principal invested and a fixed rate of interest) no
longer accepted deposits. Company matching contributions are
invested in the Phillips Stock Fund--Fund C account. The Loan
Fund is used to record transactions resulting from loans made to
active employees against their accounts. Except for the
Temporary Investment Fund and the Loan Fund, the interests of
participants in each fund are represented by units allocated to
them.
Effective July 1, 1996 (when Vanguard became Trustee), the Plan
provides for daily transfers among funds; however, plan
participants may not direct transfers to Fund C, the Loan Fund,
or the Temporary Investment Fund. A participant may make
unlimited transfers of any dollar amount, whole percentages or
mutual fund shares to or from Investment Funds A, E or F on any
valuation date. A participant may direct the transfer of any
dollar amount, whole percentages or units of the Phillips Stock
Fund to or from his Fund B account to or from Funds A, E, or F on
any valuation date. The participant must wait 10 calendar days to
make another transfer involving Fund B. Transfers to Fund D were
permitted only in certain circumstances until June 15, 1993, but
transfers were not allowed out of Fund D after January 15, 1993.
Effective July 1, 1995, a participant is vested at all times with
respect to his deposits and his interest in Company
contributions. Upon a Participant's termination of employment,
prior to July 1, 1995, that portion of his interest in the Plan
resulting from contributions that were not vested at termination
were forfeited. Forfeitures arising from non-vested withdrawals
were used to reduce future Company contributions.
24
<PAGE>
Prior to January 1, 1996, generally a participant could, as of
any valuation date, withdraw any portion of his vested interest
in his after-tax account. Effective January 1, 1996, Company
contributions made after December 31, 1995, may not be withdrawn
until 24 months after they are contributed unless the participant
has been in the Plan for at least five years or becomes eligible
to withdraw, for reasons other than a specified financial
hardship, his interest in the before-tax account. A participant
may not withdraw his interest in his before-tax account unless he
is at least age 59 1/2, experiences a specified financial
hardship, becomes totally and permanently disabled, or separates
from service. Upon death of a participant, the beneficiary may
withdraw the participant's before-tax account balance.
Distributions occur upon separation from service, but may be
deferred. For a participant who retires or becomes totally
disabled, distribution will be deferred to a date not later than
the first valuation date of February of the year after the year
age 70 1/2 is attained. If the participant dies, distribution to
a surviving spouse beneficiary will be deferred to the first
valuation date of the second month preceding the month in which
the participant would have attained age 70 1/2. This deferral is
revocable by the participant or the surviving spouse.
Distributions to non-spouse beneficiaries may be deferred
approximately five years. Distributions are based on the
valuation of the participant's interest in the trust fund.
Available forms of distribution are:
(a) from Funds A, D, E or F in cash;
(b) from Funds B and C in whole shares of common stock
and/or cash;
(c) with respect to a participant who retires under a
Company retirement plan or a beneficiary spouse of a
participant in the event of an active employee
participant's death, in the form of an irrevocable
non-transferable monthly annuity purchased with a
specified dollar amount of the participant's interest in
the Plan; and
(d) with respect to a participant who retired under a Company
retirement plan before July 1, 1992, and who timely
elected a deferred settlement option--monthly, quarterly
or annual payments irrevocably elected from his interest
in Fund D--commencing at retirement with, at the
participant's direction, a designated life-interest
beneficiary to receive any unpaid scheduled payments
following the participant's death.
25
<PAGE>
A participant may elect a direct rollover of the taxable portion
of most distributions to an Individual Retirement Account or
another tax-qualified plan. The taxable portion of any such
distribution that is not rolled over directly will be subject to
20 percent federal withholding.
The Plan is administered by a Thrift Plan Committee, the members
of which are appointed by the Board of Directors of Phillips
Petroleum Company. The Plan Financial Administrator and Plan
Benefits Administrator are the persons who occupy, respectively,
the Phillips Petroleum Company positions of Treasurer and
Compensation and Benefits Manager. Members of the Committee and
the Plan Administrators serve without compensation, but are
reimbursed by the Company for necessary expenditures incurred in
the discharge of their duties.
The Plan pays all reasonable expenses necessary for the operation
of the Plan, unless such expenses are paid by the Company. The
Company pays only the Trustee's recordkeeping and accounting fees
and the class year contract administration fees of .15 percent of
the funds invested in the insured contracts in Fund D.
The Company intends to continue the Plan indefinitely, but
reserves the right to amend or terminate it at any time. In the
event of termination of the Plan, participants and beneficiaries
of deceased participants will receive, within a reasonable time,
any funds in their accounts as of the date of the termination.
Note 2--Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates and assumptions.
Note 3--Investments
All securities are valued at their quoted market price or, with
respect to units of participation in commingled funds, redemption
value. Insurance contracts are valued pursuant to their terms; the
value, which approximates fair value, represents fund deposits
plus interest credited, less distributions. Participant loans
are valued at cost, which approximates fair value.
26
<PAGE>
Note 4--Contributions Receivable
Contributions receivable at December 31 included the following:
Thousands of Dollars
--------------------
1996 1995
--------------------
Receivable from the Company for
Matching contributions $487 452
Before-tax deposits 207 116
- -----------------------------------------------------------------
$694 568
=================================================================
Note 5--Insurance Contracts
A breakdown of the average yields and crediting interest rates
for the insurance contracts by Class Year included in Fund D
follows:
Crediting
Average Interest
Yield Rate
Class ----------- -----------
Year Identity of Issue Contract Description 1996 1995 1996 1995
- ----- --------------------- ---------------------- -------------------------
1992 Continental Assurance Group Annuity Contract
Company (CNA) GP-12787, deposit
administration
account 7.33% 7.38 7.35 7.35
1991 Continental Assurance Group Annuity Contract
Company GP-12692, deposit
administration
account 8.33* 8.26* 8.30* 8.30*
Provident National Group Annuity Contract
Assurance (PNA) GC-027-05048,
deposit
administration
account 8.33* 8.26* 8.30* 8.30*
1990 Travelers Insurance Group Annuity Contract
Company GR-15505, deposit
administration
account - 9.11 - 9.10
- -----------------------------------------------------------------------------
*The average yields and crediting interest rates for the 1991 Class Year are
the combined yields for Group Annuity Contracts GP-12692 and GC-027-05048.
The crediting interest rates, determined by each insurance
company, are guaranteed over their respective six-year contract
terms. However, the effective rates of interest for each
contract year may be different. The contracts may be
discontinued as of any date the Plan has failed to qualify, or
continue to qualify, under Section 401(a) of the Internal Revenue
Code of 1986 as amended, or if the Plan is terminated. Also, the
Company may discontinue the contracts by giving written notice.
27
<PAGE>
The final year of the Travelers Insurance Company Group Annuity
Contract GR-15505 terminated July 1, 1996, and the balance,
approximately $86.5 million, was transferred from Fund D to
Fund F, causing the net assets available for benefits in Fund F
to more than double between year-ends 1995 and 1996.
Note 6--Class Year Accounts
A breakdown of Fund D (Investment Contracts Fund)--Deposit
Administration Account by Class Year at December 31 follows:
Thousands
of Dollars
------------
Net Assets
Available Number Unit
for Benefits of Units Values
--------------------------------------
1996
- ----
1992 $ 23,656 10,259,372 2.3058
1991 131,829 44,731,562 2.9471
1990 - - -
- -----------------------------------------------------------------
$155,485
=================================================================
1995
- ----
1992 $ 23,622 10,995,307 2.1484
1991 134,496 49,438,453 2.7205
1990 127,782 36,686,402 3.4831
- -----------------------------------------------------------------
$285,900
=================================================================
Note 7--Loan Fund
Since July 1, 1993, the Plan has allowed loans to active
employees or parties-in-interest from their accounts. The
minimum loan is $1,000, and generally the maximum is the lesser
of $50,000 or half a participant's vested account. The loans may
extend for up to 60 months (180 months for a home loan) with a
rate of interest equal to the national prime lending rate, as
determined on the last valuation date of the previous month.
No more than one home loan and two regular loans may be
outstanding at any given time.
Loan payments and interest are repaid to the borrowing
participant's accounts through the Loan Fund, which records the
outstanding loans and related transactions. Generally,
repayments are allocated to Funds A, B, E or F based on a
participant's regular deposits investment direction, except that
funds borrowed from Fund C are repaid only to Fund C. For the
periods ended December 31, the total of loans made by fund of
origin, principal repaid, and aggregate outstanding loan balances
were:
28
<PAGE>
Thousands of Dollars
---------------------------------------------
Fund A B C D E F Total
---------------------------------------------
Period ended
December 31, 1996
- -----------------
Loans Outstanding
at December 31,
1995 $18,868
Participant Loans $396 8,137 179 311 841 1,035 10,899
Principal Repaid 108 6,560 173 - 244 928 8,013
Distributions to
Participants 730
- -----------------------------------------------------------------
Loans Outstanding
at December 31,
1996 $21,024
=================================================================
Period ended
December 31, 1995
- -----------------
Loans Outstanding
at December 31,
1994 $17,837
Participant Loans $549 5,588 963 513 350 480 8,443
Principal Repaid 95 5,917 231 - 181 268 6,692
Distributions to
Participants 720
- -----------------------------------------------------------------
Loans Outstanding
at December 31,
1995 $18,868
=================================================================
29
<PAGE>
Note 8--Allocation of Deposits and Earnings from Temporary
Investment Fund
Allocation of deposits and earnings from the Temporary Investment
Fund to other investment funds represents the allocation of
employee deposits and before-tax contributions made first to the
Temporary Investment Fund, with related earnings thereon. A
breakdown of the allocation for each of the periods follows:
Thousands of Dollars
------------------------------------
Fund A Fund B Fund E Fund F
------------------------------------
December 31, 1996
- -----------------
Employee deposits $ 602 11,721 1,848 1,526
Before-tax contributions 525 15,146 2,293 876
Interest and dividends 5 109 44 52
- -----------------------------------------------------------------
$1,132 26,976 4,185 2,454
=================================================================
December 31, 1995
- -----------------
Employee deposits $ 610 11,770 1,755 1,730
Before-tax contributions 504 14,268 1,864 965
Interest 3 12 79 75
- -----------------------------------------------------------------
$1,117 26,050 3,698 2,770
=================================================================
December 31, 1994
- -----------------
Employee deposits $ 746 11,983 1,926 1,774
Before-tax contributions 584 13,932 1,841 956
Interest 3 17 51 43
- -----------------------------------------------------------------
$1,333 25,932 3,818 2,773
=================================================================
Note 9--Credit Facility
Effective July 14, 1993, the Plan established a 364-day
$50 million revolving credit facility with NationsBank of Texas,
N.A., for the purpose of financing net Funds B and C
distributions, participant loans from the Plan, or transfers of
participants' interests to other funds of the Plan. The interest
rate may not exceed the Eurodollar interbank offered rate plus
.25 percent. Effective June 17, 1994, this credit facility was
reduced to $25 million. The Plan Trustee requested that the
credit facility be renewed for this reduced amount for an
additional year. On July 12, 1995, the credit facility was
renewed for another year, but at December 31, 1995, no portion of
this credit facility was outstanding.
In 1995, the Department of Labor issued the Company a Prohibited
Transaction Exemption allowing the Plan to replace its existing
bank credit facility with a new $25 million credit agreement
between Phillips Petroleum Company and the Thrift Plan of
Phillips Petroleum Company and Trust, effective March 15, 1996.
30
<PAGE>
The agreement is used for the same purposes as the bank credit
facility, which was canceled. The agreement requires no
commitment fee. Borrowings are non-interest bearing, without
recourse, and must be repaid within 31 days. There was no
balance outstanding under this agreement at December 31, 1996.
Note 10--Transactions with Parties-in-Interest
During 1996, 1995 and 1994, the Plan received $23,461,000,
$24,471,000 and $24,213,000, respectively, in common stock
dividends from the Company. Fees paid for legal, accounting, and
other services rendered by parties-in-interest were based on
customary and reasonable rates for such services.
Note 11--Tax Status
The Internal Revenue Service (IRS) determined on November 30,
1995, that the Plan, as amended through June 23, 1994, is
qualified under Section 401(a) of the Internal Revenue Code of
1986 and the Trust is exempt from federal income tax under
Section 501(a). Subsequent amendments have been adopted, but are
not expected to affect the qualified status of the Plan. The
Committee is not aware of any activity that would affect the
qualified status of the Plan.
31
<PAGE>
- -----------------------------------------------------------------------------
Schedule of Assets Held Thrift Plan Of Phillips
for Investment Purposes Petroleum Company
Line 27a EIN 73-0400345, Plan No. 002
At December 31, 1996
Description of investment
Identity of issue, including maturity date,
borrower, lessor, rate of interest, collateral, Historical Current
or similar party par or maturity value Cost Value
- --------------------- -------------------------------- ---------- --------
Phillips Petroleum Common stock, $1.25 par value,
Company* 18,024,498 shares $309,627 797,584
- -----------------------------------------------------------------------------
The Vanguard Group* 1,656,699.834 units, Vanguard
Index Trust 500 Portfolio 103,118 114,578
7,605,516.349 units, Vanguard
Bond Index-Total Bond Market
Portfolio 73,758 74,837
158,913,872.72 units, Vanguard
Money Market Reserves-Prime
Portfolio 158,914 158,914
- -----------------------------------------------------------------------------
335,790 348,329
- -----------------------------------------------------------------------------
Thrift Plan of Loans to Plan participants at
Phillips Petroleum 6% - 9%
Company - 21,024
- -----------------------------------------------------------------------------
Travelers Insurance Group Annuity Contract GR-1966A,
Company* deferred settlement account 470 470
Continental Assurance Group Annuity Contract GP-12692,
Company* deposit administration account 67,098 67,098
Group Annuity Contract GP-12787,
deposit administration account 23,656 23,656
Provident National Group Annuity Contract
Assurance Company* GC-027-05048, deposit
administration account 64,731 64,731
- -----------------------------------------------------------------------------
155,955 155,955
- -----------------------------------------------------------------------------
$801,372 1,322,892
=============================================================================
*Party-in-interest
32
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Reportable Transactions Thrift Plan of Phillips
Line 27d Petroleum Company
Series of Transactions EIN 73-0400345, Plan 022
Year Ended December 31, 1996
Total Total
number of number Gain or
purchases of sales (loss) as a
Identity of party during during result of
involved and the plan the plan Value of Value trans-
description of asset year year purchases* of Sales* actions
- ---------------------- --------- -------- ----------- ----------- -----------
Bankers Trust Company,
BT Pyramid
Government
Securities Cash
Fund 113 95 $98,655,366 108,012,028 -
Phillips Petroleum
Company, Common
Stock 22 39 19,761,791 72,605,820 43,333,166
Bankers Trust Company,
BT Pyramid
Discretionary Cash
Fund 23 20 29,095,652 95,359,823 -
Bankers Trust Company,
BT Pyramid Large
Capitalization
Equity Index Fund 8 5 14,760,597 91,757,478 24,003,456
BZW Barclays Global
Investors,
Government/Corporate
Bond Index Fund E 5 8 4,075,754 76,630,698 11,527,496
The Vanguard Group,
Vanguard Money Market
Reserves-Prime
Portfolio 266 212 274,844,939 114,387,265 -
The Vanguard Group,
Vanguard Bond Index-
Total Bond Market
Portfolio 98 94 82,807,478 9,073,129 23,194
The Vanguard Group,
Vanguard Index Trust
500 Portfolio 99 91 113,581,032 11,196,834 733,363
- --------------------------------------------------------------------------------
*This is also the current value at time of transaction.
33
<PAGE>
- ------------------------------------------------------------------------------
Schedule of Reportable Transactions Thrift Plan of Phillips
Line 27d Petroleum Company
Individual Transactions EIN 73-0400345, Plan 022
Year Ended December 31, 1996
Identity of
party
involved and Current
description Selling Purchase Cost of value Net gain/
of asset price price Expenses asset of asset (loss)
- ------------- ---------- -------- -------- ----------- ---------- ----------
Bankers Trust
Company, BT
Pyramid
Large
Capital-
ization
Equity
Index
Fund $1,478.495 Net $67,280,791 91,111,338 23,830,547
Bankers Trust
Company, BT
Pyramid
Discret-
ionary
Cash Fund 1.00 Net 91,059,544 91,059,544 -
BZW Barclays
Global
Investors,
Government/
Corporate
Bond Index
Fund E 12.060 Net 62,600,288 73,605,416 11,005,128
The Vanguard
Group, Van-
guard Bond
Index-Total
Bond Market
Portfolio 9.69 Net 73,605,416 73,605,416 -
The Vanguard
Group, Van-
guard Money
Market
Reserves-
Prime
Portfolio* 1.00 Net 91,432,292 91,432,292 -
The Vanguard
Group, Van-
guard Money
Market
Reserves-
Prime
Portfolio** 1.00 Net 86,547,675 86,547,675 -
The Vanguard
Group, Van-
guard Index
Trust 500
Portfolio 61.31 Net 91,095,800 91,095,800 -
- ------------------------------------------------------------------------------
*Initial purchase May 1, 1996, resulting from transfer of the assets of
Fund F from Bankers Trust to Vanguard.
**The Travelers Company Group Annuity Contract GR-15505 terminated July 1,
1996, and the balance was transferred to Fund F.
34
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8, File No. 33-50134) pertaining to the Thrift Plan of
Phillips Petroleum Company and in the related Prospectus of our report
dated June 25, 1997, with respect to the financial statements and
schedules of the Thrift Plan of Phillips Petroleum Company included in
this Annual Report (Form 11-K) for the year ended December 31, 1996.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 25, 1997
<PAGE>
Exhibit 99(b)
FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- ---------
Commission file number 33-50283
--------------------------------
LONG-TERM STOCK SAVINGS PLAN OF
PHILLIPS PETROLEUM COMPANY
(Full title of the Plan)
PHILLIPS PETROLEUM COMPANY
(Name of issuer of securities)
Bartlesville, Oklahoma 74004
(Address of principal executive office) (Zip code)
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
--------------------
Financial statements of the Long-Term Stock Savings Plan of
Phillips Petroleum Company, filed as part of this annual report,
are listed in the accompanying index.
(b) Exhibits
--------
Exhibit 1 Consent of Ernst & Young LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Long-Term Stock Savings Plan Committee has duly caused
this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
LONG-TERM STOCK SAVINGS PLAN
OF PHILLIPS PETROLEUM COMPANY
/s/ Jacqueline K. Wagner
-----------------------------
Jacqueline K. Wagner
Member
Long-Term Stock Savings
Plan Committee
June 25, 1997
1
<PAGE>
- -----------------------------------------------------------------
Index To Financial Statements Long-Term Stock Savings Plan
And Schedules Of Phillips Petroleum Company
Page
Report of Independent Auditors ............................. 3
Financial Statements
Statements of Net Assets Available for Benefits
at December 31, 1996 and 1995
Total Plan ........................................... 4
Fund EP .............................................. 6
Fund K ............................................... 8
Fund L ............................................... 10
Temporary Fund ....................................... 12
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1996,
1995 and 1994
Total Plan ........................................... 5
Fund EP .............................................. 7
Fund K ............................................... 9
Fund L ............................................... 11
Temporary Fund ....................................... 13
Notes to Financial Statements ............................ 14
Supplemental Schedules
Schedule of Assets Held for Investment Purposes at
December 31, 1996, Line 27a ............................ 19
Schedule of Reportable Transactions for the Year Ended
December 31, 1996, Line 27d ............................ 20
2
<PAGE>
- ------------------------------------------------------------------
Report Of Independent Auditors
The Long-Term Stock Savings Plan Committee
Long-Term Stock Savings Plan of Phillips Petroleum Company
We have audited the accompanying statement of net assets available
for benefits of the Long-Term Stock Savings Plan of Phillips
Petroleum Company (Plan) as of December 31, 1996 and 1995, and the
related statement of changes in net assets available for benefits
for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Long-Term
Stock Savings Plan Committee (Committee). Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by the Committee, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for
benefits of the Plan at December 31, 1996 and 1995, and the
changes in its net assets available for benefits for each of the
three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment purposes as
of December 31, 1996, and reportable transactions for the year
ended December 31, 1996, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974, and are not a required part of the basic financial
statements. The fund information presented on pages 6 through 13
listed in the accompanying index to financial statements and
schedules is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes
in net assets available for benefits of each fund. The
supplemental schedules and fund information have been subjected to
the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements
taken as a whole.
/s/ Ernst & Young LLP
Tulsa, Oklahoma ERNST & YOUNG LLP
June 25, 1997
3
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Long-Term Stock Savings Plan
Available For Benefits Of Phillips Petroleum Company
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Common stock $1,371,686 1,095,085
Money market fund 1,682 5,139
- -----------------------------------------------------------------
1,373,368 1,100,224
Cash 1,082 -
Company Contributions Receivable
Funds for debt service 2,037 172
Before-tax deposits 33 34
Interest Receivable 24 43
- -----------------------------------------------------------------
Total Assets 1,376,544 1,100,473
- -----------------------------------------------------------------
Liabilities
Securities Acquisition Loans 450,850 476,450
Interest Payable 2,165 2,371
Securities Purchased - 245
Administrative Expenses Payable 155 97
- -----------------------------------------------------------------
Total Liabilities 453,170 479,163
- -----------------------------------------------------------------
Net Assets Available for Benefits $ 923,374 621,310
=================================================================
See Notes to Financial Statements.
4
<PAGE>
- -------------------------------------------------------------------
Statement Of Changes In Net Long-Term Stock Savings Plan
Assets Available For Benefits Of Phillips Petroleum Company
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Company Contributions
Funds for debt service $ 15,578 20,828 11,797
Basic allocation requirements 58 - 56
Before-tax deposits 5,773 5,832 5,988
- -------------------------------------------------------------------
21,409 26,660 17,841
- -------------------------------------------------------------------
Investment Income
Dividends 39,237 38,854 37,527
Interest 358 437 337
Net appreciation 318,207 44,821 126,928
- -------------------------------------------------------------------
357,802 84,112 164,792
- -------------------------------------------------------------------
Total Additions 379,211 110,772 182,633
- -------------------------------------------------------------------
Deductions
Distributions to Participants
or Their Beneficiaries 50,310 37,845 41,725
Interest Expense 26,779 30,754 23,965
Administrative Expense 58 93 100
- -------------------------------------------------------------------
Total Deductions 77,147 68,692 65,790
- -------------------------------------------------------------------
Net Increase 302,064 42,080 116,843
Net Assets Available for
Benefits
Beginning of Year 621,310 579,230 462,387
- -------------------------------------------------------------------
End of Year $923,374 621,310 579,230
===================================================================
See Notes to Financial Statements.
5
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Long-Term Stock Savings Plan
Available For Benefits Of Phillips Petroleum Company
FUND EP
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Common stock $217,193 180,975
Money market fund 351 9
- -----------------------------------------------------------------
217,544 180,984
Interest Receivable 2 3
- -----------------------------------------------------------------
Total Assets 217,546 180,987
- -----------------------------------------------------------------
Liabilities
Administrative Expenses Payable 155 97
- -----------------------------------------------------------------
Total Liabilities 155 97
- -----------------------------------------------------------------
Net Assets Available for Benefits $217,391 180,890
=================================================================
Number of Units 27,811,188 30,014,306
Unit Value $7.8167 6.0268
- -----------------------------------------------------------------
See Notes to Financial Statements.
6
<PAGE>
- -------------------------------------------------------------------
Statement Of Changes In Net Long-Term Stock Savings Plan
Assets Available For Benefits Of Phillips Petroleum Company
FUND EP
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Investment Income
Dividends $ 6,280 6,480 6,465
Interest 15 7 3
Net appreciation 51,183 7,528 22,230
- -------------------------------------------------------------------
Total Additions 57,478 14,015 28,698
- -------------------------------------------------------------------
Deductions
Distributions to Participants
or Their Beneficiaries 20,919 16,051 16,244
Administrative Expense 58 93 100
- -------------------------------------------------------------------
Total Deductions 20,977 16,144 16,344
- -------------------------------------------------------------------
Net Increase (Decrease) 36,501 (2,129) 12,354
Net Assets Available for
Benefits
Beginning of Year 180,890 183,019 170,665
- -------------------------------------------------------------------
End of Year $217,391 180,890 183,019
===================================================================
See Notes to Financial Statements.
7
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Long-Term Stock Savings Plan
Available For Benefits Of Phillips Petroleum Company
FUND K
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Common stock $64,354 46,526
Money market fund 167 430
- -----------------------------------------------------------------
64,521 46,956
Due from Temporary Fund 635 493
Interest Receivable 1 3
- -----------------------------------------------------------------
Total Assets 65,157 47,452
- -----------------------------------------------------------------
Liabilities
Securities Purchased - 245
- -----------------------------------------------------------------
Total Liabilities - 245
- -----------------------------------------------------------------
Net Assets Available for Benefits $65,157 47,207
=================================================================
Number of Units 34,574,082 32,392,783
Unit Value $1.8846 1.4573
- -----------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE>
- -------------------------------------------------------------------
Statement Of Changes In Net Long-Term Stock Savings Plan
Assets Available For Benefits Of Phillips Petroleum Company
FUND K
Thousands of Dollars
---------------------------------
Years Ended December 31 1996 1995 1994
---------------------------------
Additions
Allocation of Deposits and
Earnings from Temporary Fund $ 5,804 5,856 6,005
- -------------------------------------------------------------------
Investment Income
Dividends 1,741 1,534 1,295
Interest 20 22 16
Net appreciation 13,924 1,703 4,280
- -------------------------------------------------------------------
15,685 3,259 5,591
- -------------------------------------------------------------------
Total Additions 21,489 9,115 11,596
- -------------------------------------------------------------------
Deductions
Distributions to Participants
or Their Beneficiaries 3,539 2,767 3,452
- -------------------------------------------------------------------
Net Increase 17,950 6,348 8,144
Net Assets Available for
Benefits
Beginning of Year 47,207 40,859 32,715
- -------------------------------------------------------------------
End of Year $65,157 47,207 40,859
===================================================================
See Notes to Financial Statements.
9
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Long-Term Stock Savings Plan
Available For Benefits Of Phillips Petroleum Company
FUND L
Thousands of Dollars
------------------------
At December 31 1996 1995
------------------------
Assets
Investments
Common stock $1,090,139 867,584
Money market fund 562 4,243
- -----------------------------------------------------------------
1,090,701 871,827
Cash 1,082 -
Company Contributions Receivable
Funds for debt service 2,037 172
Interest Receivable 21 35
- -----------------------------------------------------------------
Total Assets* 1,093,841 872,034
- -----------------------------------------------------------------
Liabilities
Securities Acquisition Loans 450,850 476,450
Interest Payable 2,165 2,371
- -----------------------------------------------------------------
Total Liabilities 453,015 478,821
- -----------------------------------------------------------------
Net Assets Available for Benefits $ 640,826 393,213
=================================================================
Number of Units 175,944,066 157,715,845
Unit Value** $2.5317 1.9514
- -----------------------------------------------------------------
See Notes to Financial Statements.
*The amount of total assets that was not allocated to
participants at December 31, 1996 and 1995, was
$648,408 thousand and $564,275 thousand, respectively.
**Unit value calculated on assets allocated to participants only.
10
<PAGE>
- -------------------------------------------------------------------
Statement Of Changes In Net Long-Term Stock Savings Plan
Assets Available For Benefits Of Phillips Petroleum Company
FUND L
Thousands of Dollars
----------------------------------
Years Ended December 31 1996 1995 1994
----------------------------------
Additions
Company Contributions
Funds for debt service $ 15,578 20,828 11,797
Basic allocation requirements 58 - 56
- -------------------------------------------------------------------
15,636 20,828 11,853
- -------------------------------------------------------------------
Investment Income
Dividends 31,216 30,840 29,767
Interest 292 384 301
Net appreciation 253,100 35,590 100,418
- -------------------------------------------------------------------
284,608 66,814 130,486
- -------------------------------------------------------------------
Total Additions 300,244 87,642 142,339
- -------------------------------------------------------------------
Deductions
Distributions to Participants
or Their Beneficiaries 25,852 19,027 22,029
Interest Expense 26,779 30,754 23,965
- -------------------------------------------------------------------
Total Deductions 52,631 49,781 45,994
- -------------------------------------------------------------------
Net Increase 247,613 37,861 96,345
Net Assets Available for
Benefits
Beginning of Year 393,213 355,352 259,007
- -------------------------------------------------------------------
End of Year $640,826 393,213 355,352
===================================================================
See Notes to Financial Statements.
11
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Long-Term Stock Savings Plan
Available For Benefits Of Phillips Petroleum Company
TEMPORARY FUND
Thousands of Dollars
--------------------
At December 31 1996 1995
--------------------
Assets
Investments
Money market fund $602 457
Company Contributions Receivable
Before-tax deposits 33 34
Interest Receivable - 2
- -----------------------------------------------------------------
Total Assets 635 493
- -----------------------------------------------------------------
Liabilities
Due to Fund K 635 493
- -----------------------------------------------------------------
Total Liabilities 635 493
- -----------------------------------------------------------------
Net Assets Available for Benefits $ - -
=================================================================
See Notes to Financial Statements.
12
<PAGE>
- -------------------------------------------------------------------
Statement Of Changes In Net Long-Term Stock Savings Plan
Assets Available For Benefits Of Phillips Petroleum Company
TEMPORARY FUND
Thousands of Dollars
--------------------------------
Years Ended December 31 1996 1995 1994
--------------------------------
Additions
Company Contributions
Before-tax deposits $5,773 5,832 5,988
Investment Income
Interest 31 24 17
- -------------------------------------------------------------------
Total Additions 5,804 5,856 6,005
- -------------------------------------------------------------------
Deductions
Allocation of Deposits and
Earnings to Fund K 5,804 5,856 6,005
- -------------------------------------------------------------------
Net Increase - - -
Net Assets Available for
Benefits
Beginning of Year - - -
- -------------------------------------------------------------------
End of Year $ - - -
===================================================================
See Notes to Financial Statements.
13
<PAGE>
- ----------------------------------------------------------------
Notes To Financial Statements Long-Term Stock Savings Plan
Of Phillips Petroleum Company
Note 1--Plan Description
The following description of the Long-Term Stock Savings Plan of
Phillips Petroleum Company (Plan) is subject to and qualified by
the more complete information appearing in the Plan document.
The Plan became effective July 1, 1988, and is a defined
contribution stock bonus plan available to certain employees of
Phillips Petroleum Company and participating subsidiaries
(Company). Generally, any person on the U.S. direct dollar
payroll of the Company is eligible to participate, except
non-managerial retail marketing outlet employees and certain
other employee classifications.
Prior to December 31, 1995, the Company had a trust agreement
with Bankers Trust Company, 280 Park Avenue, New York,
New York 10017 (Trustee). Effective at the close of business on
December 31, 1995, the Trustee was changed to Vanguard Fiduciary
Trust Company. Plan investments are held by the Trustee in the
Temporary Fund, Fund K (also known as the Employee Stock Fund),
Fund L (also known as the Employer Stock Fund) and Fund EP (also
known as the EP Stock Fund). Temporary Fund investments consist
of specified short-term securities. Funds K, L and EP are
invested primarily in common stock of Phillips Petroleum Company
(Phillips Stock).
Fund L consists of Phillips Stock purchased with the proceeds of
the loans described in Note 3 or with certain Company
contributions. The Phillips Stock will be allocated to Fund L
accounts of eligible participants. The Plan provides for three
types of stock allocations: semiannual basic allocations,
dividend replacement allocations and supplemental allocations. A
basic allocation is made as of June 30 and December 31 of each
year. Prior to 1999, 716,846 shares of stock will be divided
among or "allocated to" the Fund L accounts of eligible
participants as of each June 30 and December 31. After 1998 and
through 2005, the number of shares to be allocated semiannually
will be 477,876. In December 1995, the Company extended the
LTSSP to the year 2015. Without the extension, allocations of
stock to employees would have been completed in 2005 or before.
The new extension will require additional shares to be delivered
to the LTSSP. After 2005 and through the allocation date
following the date the second loan is repaid, the number of
shares to be allocated semiannually on each basic allocation date
will be 3,877 shares for each 100 employees eligible to make
14
<PAGE>
deposits as of the preceding allocation date. The LTSSP is
eligible to receive shares from the Company's Compensation and
Benefits Trust, also established in December 1995.
A participant's semiannual basic allocation is based on the ratio
of the participant's Fund K before-tax deposits to all eligible
participants' before-tax deposits for the allocation period. If
the Company does not elect to make a special contribution and if
eligible dividends from participants' Fund L or Fund EP accounts
are used to make loan payments, participants will receive a
dividend replacement allocation. The Plan used $16.1 million,
$14.5 million and $12.7 million in dividends on allocated shares
to make loan payments and allocated 402,774 shares,
431,613 shares and 399,586 shares in dividend replacement
allocations to participants' Fund L and Fund EP accounts in 1996,
1995 and 1994, respectively. A supplemental allocation is made
each year-end if all shares released for allocation, based on
loan payment provisions, have not been allocated.
The Company makes contributions to the Plan which, when
aggregated with the Plan's dividends from Fund L, certain
dividends from Fund EP and certain interest earnings from Fund L,
equal the amount necessary to enable the Plan to make its
regularly scheduled payments of principal and interest due on its
loans. The Company may also elect to make contributions to the
Plan, as an alternative to utilizing the dividends from shares in
Fund EP or allocated shares in Fund L. Finally, the Company may
make contributions to the Plan in the amount necessary to bring
the number of shares of stock released for allocation up to the
level required to complete the basic allocation by contributing
cash or by contributing Phillips Stock from the Compensation and
Benefits Trust.
Eligible employees may elect to have their salaries reduced and
before-tax deposits made by the Company on their behalf equal to
one percent of pay. These deposits are first placed into the
Temporary Fund and remain there until the valuation date on or
about the 20th day of the following month, and then are
transferred into the employee's Fund K account. Interest earned
on deposits while in the Temporary Fund are credited quarterly in
the same manner to each participant who still maintains an
account in the Plan and who made deposits during the quarter.
The interest of participants in each fund is represented by units
allocated to them.
Assets of the Employee Stock Ownership Plan of Phillips Petroleum
Company (ESOP) and the Payroll Stock Ownership Plan of Phillips
Petroleum Company (PAYSOP), which were merged into the Plan on
July 1, 1988, are held in Fund EP.
15
<PAGE>
Participants are always vested in their deposits and amounts
credited to their accounts. Total withdrawals from Funds K, L
and EP may be made upon the occurrence of specified events,
including attainment of age 59 1/2 (after December 31, 1998, for
Funds EP and L) or separation from service. Partial withdrawals
are permitted in cases of specified financial hardship and
certain other cases. For a participant who retires or becomes
totally disabled, unless a request for withdrawal is made as of
any earlier date, distribution will be deferred to a date not
later than the first valuation date of February of the year after
the year age 70 1/2 is attained. If the participant dies,
distribution to a surviving spouse beneficiary will be deferred
to the first valuation date of the second month preceding the
month in which the participant would have attained age 70 1/2.
This deferral is revocable by the participant or the surviving
spouse. Distributions to non-spouse beneficiaries may be
deferred approximately five years.
A participant may elect a direct rollover of the taxable portion
of most distributions to an Individual Retirement Account or
another tax-qualified plan. The taxable portion of any such
distribution that is not rolled over directly will be subject to
20 percent federal withholding.
The Plan is administered by the Long-Term Stock Savings Plan
Committee, the members of which are appointed by the Board of
Directors of Phillips Petroleum Company. Members of the
Committee serve without compensation, but are reimbursed by the
Company for necessary expenditures incurred in the discharge of
their duties. Administrative expenses of the Plan will be paid
by the Trustee from assets of the Plan to the extent allowable by
law, unless paid by the Company. In 1996, 1995 and 1994, the
Trustee made cash payments of $0, $95,844 and $100,000,
respectively, for reimbursement of administrative expenses to
Phillips from Fund EP. Plan administrative expenses of
approximately $200,000, $400,000 and $402,000 were paid by
Phillips to the Trustee in 1996, 1995 and 1994, respectively.
Note 2--Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates.
16
<PAGE>
Note 3--Securities Acquisition Loans
The Plan borrowed $250 million (Loan 1) and $400 million (Loan 2)
in 1988 and 1990, respectively, and purchased 14,336,918 and
14,159,292 shares of common stock from Phillips Petroleum Company
(Phillips), respectively. The shares are held in a Fund L
suspense account until allocated to eligible participants based
on the provisions of the Plan. At December 31, 1996 and 1995,
the market value of unallocated shares was $645 million and
$560 million, respectively.
The Loans are guaranteed by Phillips. They are being repaid
through contributions made by the Company, dividends on
unallocated and allocated shares, and earnings on the short-term
investment of dividends.
Loan 1
During 1994, the Plan signed a $131 million term loan agreement
that was used to refinance the outstanding notes payable issued
in 1988. The notes were redeemed on May 16, 1994. The new term
loan requires repayment in annual installments through the year
1998, matching the maturities of the refinanced notes, but at a
reduced cost. Principal payments totaling $26 million were made
on Loan 1 in both 1996 and 1995. The outstanding balance of
Loan 1 at December 31, 1996, was $54 million. Loan 1 provides
for variable interest rates. The rates were 4.98 percent and
4.88 percent at December 31, 1996 and 1995, respectively.
Loan 2
Loan 2 was amended late in 1995 to extend its term from 15 to
25 years. Loan 2 is a bank loan, requiring repayment in annual
installments beginning in 2005, through the year 2015.
Any participating bank in the syndicate of lenders may cease to
participate on November 30, 2001, by giving not less than
180 days prior notice to the Plan and Phillips. Also, each bank
participating in the loan has the optional right, if the current
directors of Phillips or their approved successors cease to be a
majority of the Board of Directors, and upon not less than 90
days' notice, to cease to participate in the loan. Under the
above conditions, such banks' rights and obligations under the
loan agreement must be purchased by Phillips if not transferred
to another bank of Phillips' choice. The Company amended Loan 2,
effective May 30, 1997, to extend the date that any participating
bank in the syndicate of lenders may cease to participate from
November 30, 2001, to December 5, 2004.
The outstanding balance of Loan 2 at December 31, 1996, was
$397 million. Loan 2 provides for variable interest rates. The
rates were 5.775 percent and 6.20 percent at December 31, 1996
and 1995, respectively.
17
<PAGE>
Note 4--Investments
Phillips Stock is valued at fair value, using the New York Stock
Exchange closing quoted market price. For money market funds,
cost and market value are the same.
Note 5--Tax Status
The Internal Revenue Service (IRS) determined on January 16,
1996, that the Plan is qualified under Section 401(a) of the
Internal Revenue Code of 1986 and the Trust is exempt from
federal income tax under Section 501(a). Subsequent amendments
have been adopted, but are not expected to affect the qualified
status of the Plan. The Committee is not aware of any activity
that would affect the qualified status of the Plan.
18
<PAGE>
- ------------------------------------------------------------------------------
Schedule of Assets Held for Long-Term Stock Savings Plan Of
Investment Purposes Phillips Petroleum Company
Line 27a EIN 73-0400345, Plan 022
At December 31, 1996
Description of investment Thousands of Dollars
Identity of issue, including maturity date, ----------------------
borrower, lessor, rate of interest, collateral, Historical Current
or similar party par or maturity value Cost Value
- ------------------ -------------------------------- ---------- ---------
Phillips Petroleum 30,998,548 shares of common
Company* stock, $1.25 par value $677,867 1,371,686
Vanguard Fiduciary 1,682,186 units of participation
Trust Company* in the Vanguard Money Market
Reserves-Prime Portfolio,
$1.00 par value 1,682 1,682
- ------------------------------------------------------------------------------
$679,549 1,373,368
==============================================================================
*Party-in-interest
19
<PAGE>
- ------------------------------------------------------------------------------
Schedule of Reportable Transactions Long-Term Stock Savings Plan of
Line 27d Phillips Petroleum Company
EIN 73-0400345, Plan 022
Year Ended December 31, 1996
Thousands of Dollars
Total Total --------------------------------
number of number of Gain or
Identity of party purchases sales Value (loss) as a
involved and during the during the Value of of result of
description of asset plan year plan year purchases* Sales* transactions
- -------------------- ---------- ---------- ---------- ------ ------------
Bankers Trust
Company General
Employee Benefit
Trust, BT Pyramid
Government
Securities Cash
Fund 94 93 $27,489 32,627 -
Vanguard Fiduciary
Trust Company,
Vanguard Money
Market Reserves-
Prime Portfolio 138 126 31,972 30,290 -
- ------------------------------------------------------------------------------
*This is also the current value at time of transaction.
20
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8, File No. 33-50283) pertaining to the Long-
Term Stock Savings Plan of Phillips Petroleum Company and in the
related Prospectus of our report dated June 25, 1997, with
respect to the financial statements and schedules of the
Long-Term Stock Savings Plan of Phillips Petroleum Company
included in this Annual Report (Form 11-K) for the year ended
December 31, 1996.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 25, 1997
<PAGE>
Exhibit 99(c)
FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- ---------
Commission file number 33-28669
--------------------------------
RETIREMENT SAVINGS PLAN OF
PHILLIPS PETROLEUM COMPANY
(Full title of the Plan)
PHILLIPS PETROLEUM COMPANY
(Name of issuer of securities)
Bartlesville, Oklahoma 74004
(Address of principal executive office) (Zip code)
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
--------------------
Financial statements of the Retirement Savings Plan of Phillips
Petroleum Company, filed as a part of this annual report, are
listed in the accompanying index.
(b) Exhibits
--------
Exhibit 1 Consent of Ernst & Young LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Retirement Savings Plan Committee has duly caused this
annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
RETIREMENT SAVINGS PLAN OF
PHILLIPS PETROLEUM COMPANY
/s/ Jacqueline K. Wagner
---------------------------------
Jacqueline K. Wagner
Member
Retirement Savings Plan Committee
June 25, 1997
1
<PAGE>
- -----------------------------------------------------------------
Index To Financial Statements Retirement Savings Plan Of
And Schedules Phillips Petroleum Company
Page
Report of Independent Auditors ............................. 3
Financial Statements
Statement of Net Assets Available for Benefits
at December 31, 1996 ................................... 4
Statement of Net Assets Available for Benefits
at December 31, 1995 ................................... 5
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1996 ................... 6
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1995 ................... 7
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1994 ................... 8
Notes to Financial Statements ............................ 9
Supplemental Schedules
Schedule of Assets Held for Investment Purposes at
December 31, 1996, Line 27a ............................ 13
Schedule of Reportable Transactions for the Year Ended
December 31, 1996, Line 27d ............................ 14
2
<PAGE>
- -----------------------------------------------------------------
Report Of Independent Auditors
The Retirement Savings Plan Committee
Retirement Savings Plan of Phillips
Petroleum Company
We have audited the accompanying statements of net assets
available for benefits of the Retirement Savings Plan of Phillips
Petroleum Company (Plan) as of December 31, 1996 and 1995, and
the related statements of changes in net assets available for
benefits for each of the three years in the period ended
December 31, 1996. These financial statements are the
responsibility of the Retirement Savings Plan Committee
(Committee). Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by the Committee, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan at December 31, 1996 and 1995,
and the changes in its net assets available for benefits for each
of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
accompanying supplemental schedules of assets held for investment
purposes as of December 31, 1996, and reportable transactions for
the year ended December 31, 1996, are presented for purposes of
complying with the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic
financial statements. The fund information in the statement of
net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets
available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in
our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 25, 1997
3
<PAGE>
- -----------------------------------------------------------------
Statement Of Net Assets Retirement Savings Plan Of
Available For Benefits Phillips Petroleum Company
At December 31, 1996
Fixed
Investment Stock
Total Fund Fund
-----------------------------------
Assets
Investments
Insurance contract $ 9,801,586 9,801,586 -
Common stock 791,898 - 791,898
Money market fund 12,499 - 12,499
- -----------------------------------------------------------------
10,605,983 9,801,586 804,397
Interest Receivable 80 - 80
Employer Contributions
Receivable 75,880 75,880 -
- -----------------------------------------------------------------
Total Assets 10,681,943 9,877,466 804,477
- -----------------------------------------------------------------
Net Assets Available
for Benefits $10,681,943 9,877,466 804,477
=================================================================
Number of Units 2,332,746 129,469
Unit Values $4.2343 6.2137
- -----------------------------------------------------------------
See Notes to Financial Statements.
4
<PAGE>
- --------------------------------------------------------------------
Statement Of Net Assets Retirement Savings Plan Of
Available For Benefits Phillips Petroleum Company
At December 31, 1995
Fixed Temporary
Investment Stock Investment
Total Fund Fund Fund
--------------------------------------------
Assets
Investments
Insurance contract $ 9,850,414 9,850,414 - -
Common stock 624,146 - 624,146 -
Money market fund 19,619 - 8,615 11,004
- --------------------------------------------------------------------
10,494,179 9,850,414 632,761 11,004
Interest Receivable 86 - 38 48
Employee Deposits
Receivable 10,290 - - 10,290
Employer Contributions
Receivable 28,011 28,011 - -
Interfund Receivable
(Payable) - 20,168 1,174 (21,342)
- --------------------------------------------------------------------
Total Assets 10,532,566 9,898,593 633,973 -
- --------------------------------------------------------------------
Liabilities
Other Payables 36,470 36,470 - -
- --------------------------------------------------------------------
Total Liabilities 36,470 36,470 - -
- --------------------------------------------------------------------
Net Assets Available
for Benefits $10,496,096 9,862,123 633,973 -
====================================================================
Number of Units 2,479,731 135,882
Unit Values $3.9771 4.6656
- --------------------------------------------------------------------
See Notes to Financial Statements.
5
<PAGE>
- ---------------------------------------------------------------------
Statement Of Changes In Net Retirement Savings Plan Of
Assets Available For Benefits Phillips Petroleum Company
Year Ended December 31, 1996
Fixed Temporary
Investment Stock Investment
Total Fund Fund Fund
---------------------------------------------
Additions
Participating Employer
Contributions $ 418,159 418,159 - -
- ---------------------------------------------------------------------
Investment Income
Interest 628,693 628,198 459 36
Dividends 22,751 - 22,751 -
Net appreciation of
common stock 182,474 - 182,474 -
- ---------------------------------------------------------------------
833,918 628,198 205,684 36
- ---------------------------------------------------------------------
Total Additions 1,252,077 1,046,357 205,684 36
- ---------------------------------------------------------------------
Deductions
Withdrawals and
Distributions 1,059,430 1,032,212 27,218 -
Forfeitures 6,800 6,800 - -
- ---------------------------------------------------------------------
Total Deductions 1,066,230 1,039,012 27,218 -
- ---------------------------------------------------------------------
Allocation of Deposits
and Earnings - 30 6 (36)
- ---------------------------------------------------------------------
Interfund Transfers - 7,968 (7,968) -
- ---------------------------------------------------------------------
Net Increase 185,847 15,343 170,504 -
Net Assets Available
for Benefits
Beginning of Year 10,496,096 9,862,123 633,973 -
- ---------------------------------------------------------------------
End of Year $10,681,943 9,877,466 804,477 -
=====================================================================
See Notes to Financial Statements.
6
<PAGE>
- ----------------------------------------------------------------------
Statement Of Changes In Net Retirement Savings Plan Of
Assets Available For Benefits Phillips Petroleum Company
Year Ended December 31, 1995
Fixed Temporary
Investment Stock Investment
Total Fund Fund Fund
--------------------------------------------
Additions
Contributions and Deposits
Participating Employer
contributions $ 316,258 316,258 - -
Employee deposits 128,135 - - 128,135
- ----------------------------------------------------------------------
444,393 316,258 - 128,135
- ----------------------------------------------------------------------
Investment Income
Interest 639,370 638,561 379 430
Dividends 21,759 - 21,759 -
Net appreciation of
common stock 28,022 - 28,022 -
- ----------------------------------------------------------------------
689,151 638,561 50,160 430
- ----------------------------------------------------------------------
Total Additions 1,133,544 954,819 50,160 128,565
- ----------------------------------------------------------------------
Deductions
Withdrawals and
Distributions 1,309,461 1,309,461 - -
Forfeitures 6,820 6,820 - -
- ----------------------------------------------------------------------
Total Deductions 1,316,281 1,316,281 - -
- ----------------------------------------------------------------------
Allocation of Deposits
and Earnings - 122,754 5,811 (128,565)
- ----------------------------------------------------------------------
Interfund Transfers - 23,633 (23,633) -
- ----------------------------------------------------------------------
Net Increase (Decrease) (182,737) (215,075) 32,338 -
Net Assets Available
for Benefits
Beginning of Year 10,678,833 10,077,198 601,635 -
- ----------------------------------------------------------------------
End of Year $10,496,096 9,862,123 633,973 -
======================================================================
See Notes to Financial Statements.
7
<PAGE>
- ----------------------------------------------------------------------
Statement Of Changes In Net Retirement Savings Plan Of
Assets Available For Benefits Phillips Petroleum Company
Year Ended December 31, 1994
Fixed Temporary
Investment Stock Investment
Total Fund Fund Fund
--------------------------------------------
Additions
Contributions and Deposits
Participating Employer
contributions $ 283,224 283,224 - -
Employee deposits 118,472 - - 118,472
- ----------------------------------------------------------------------
401,696 283,224 - 118,472
- ----------------------------------------------------------------------
Investment Income
Interest 683,550 683,081 186 283
Dividends 20,727 - 20,727 -
Net appreciation of
common stock 70,999 - 70,999 -
- ----------------------------------------------------------------------
775,276 683,081 91,912 283
- ----------------------------------------------------------------------
Total Additions 1,176,972 966,305 91,912 118,755
- ----------------------------------------------------------------------
Deductions
Withdrawals and
Distributions 2,380,787 2,380,787 - -
Forfeitures 3,125 3,125 - -
- ----------------------------------------------------------------------
Total Deductions 2,383,912 2,383,912 - -
- ----------------------------------------------------------------------
Allocation of Deposits
and Earnings - 113,788 4,967 (118,755)
- ----------------------------------------------------------------------
Interfund Transfers - 41,419 (41,419) -
- ----------------------------------------------------------------------
Net Increase (Decrease) (1,206,940) (1,262,400) 55,460 -
Net Assets Available
for Benefits
Beginning of Year 11,885,773 11,339,598 546,175 -
- ----------------------------------------------------------------------
End of Year $10,678,833 10,077,198 601,635 -
======================================================================
See Notes to Financial Statements.
8
<PAGE>
- -----------------------------------------------------------------
Notes To Financial Statements Retirement Savings Plan Of
Phillips Petroleum Company
Note 1--Plan Description
The following description of the Retirement Savings Plan of
Phillips Petroleum Company (Plan) is subject to and qualified by
the more complete information appearing in the Plan document.
The Plan was known as the Retirement Savings Plan of Phillips
Petroleum Company Subsidiaries until December 7, 1994.
The Plan is a defined contribution plan sponsored by Phillips
Petroleum Company (Company) for any domestic subsidiary or
division that the Company approves for participation in the Plan
and that has adopted and become a party to the Plan for the
current participation of their active employees (Participating
Employer). For the three-year period ending December 31, 1996,
Phillips Driscopipe (with respect to hourly employees only), a
division of the Company, was the only Participating Employer.
Other subsidiaries or divisions having present or former
employees holding interests in the Plan are Catalyst Resources,
Inc. (sold March 30, 1994), Drilling Specialties Company,
Phillips Coal Company, and Phillips Uranium Corporation (now
liquidated).
Generally, an employee of a Participating Employer becomes a
participant after completing a six-month period of service of 500
or more hours. Participation in the Plan by each eligible
employee is mandatory. Each month the Participating Employer or
the Company contributes an amount equal to 5 percent of each
participant's regular monthly earnings. Prior to January 1,
1996, a participant could make after-tax deposits, in whole
percentages, ranging from 1 to 10 percent of his regular monthly
earnings. A participant could elect to change his deposit rate
once each six months. Effective January 1, 1996, employees were
no longer permitted to make deposits into the Plan. Instead, on
that same date the currently participating employees became
eligible to participate in the Thrift Plan of Phillips Petroleum
Company. The Participating Employer or Company continues to make
contributions to this Plan.
Contributions were placed in a Trust fund administered by
WestStar Bank, Bartlesville, Oklahoma (Trustee) prior to the
close of business on February 28, 1996, when the Trustee was
changed to Vanguard Fiduciary Trust Company. Prior to the
Trustee change, the Trust fund consisted of the Stock Fund, the
Fixed Investment Fund and the Temporary Investment Fund.
9
<PAGE>
Investments for each fund are as follows: Stock Fund (common
stock of the Company); Fixed Investment Fund (an insurance
contract with The Travelers Insurance Company (Travelers) under
which Travelers guarantees repayment of the principal paid to it
and a minimum effective rate of interest thereon) and Temporary
Investment Fund (specified short-term securities). Effective
with the change in Trustee, the Company became contractholder of
the insurance contract with Travelers for the Fixed Fund, thus
excluding the Fixed Fund from the Trust. This change in
contractholder does not affect participant benefits. The
interests of participants in each fund are represented by units
allocated to them. Unit values reflected in the accompanying
statements are based on aggregate fund values and aggregate
units.
Prior to January 1, 1996, participant deposits were placed first
in the Temporary Investment Fund for about 30 days. Deposits and
earnings thereon were then paid into the Stock Fund or the Fixed
Investment Fund as directed by the participant. Participants
could direct that their deposits be invested entirely in either
the Stock Fund or Fixed Investment Fund or allocated between the
two funds in multiples of 10 percent. No investment directions
may be made with respect to Participating Employer contributions,
all of which are invested only in the Fixed Investment Fund.
Investment directions could be changed once each year.
The Plan allows limited transfers between the Stock Fund and the
Fixed Investment Fund.
A participant's interest in his own deposits is vested at all
times. His interest in Participating Employer contributions
becomes fully vested on the earliest of the following dates:
(a) upon attainment of age 65 or upon normal retirement; (b) upon
completing five years of vesting service; (c) upon death;
(d) upon becoming totally disabled; (e) upon being laid off for
lack of work; (f) upon termination or partial termination of the
Plan or discontinuance of Participating Employer contributions;
or (g) upon certain other events.
Partial vesting in Participating Employer contributions takes
place in one year increments, with complete vesting after five
years of vesting service. A participant who has made deposits
may withdraw any amount attributable to those deposits.
Withdrawals of deposits may be made only once each six months.
Suspensions of deposits for three and six months apply for
partial and complete withdrawals, respectively.
A participant's interest in the contributions of a Participating
Employer becomes available for distribution upon specified
events, including separation from service or retirement.
10
<PAGE>
Termination of employment will result in forfeiture of
Participating Employer contributions if a participant's interest
attributable to those Participating Employer contributions is not
vested. Forfeitures are used to reduce employer contributions.
A participant who retires may postpone distribution until no
later than the February valuation date following the year of
attainment of age 70 1/2.
Distributions from the Fixed Investment Fund are made in cash
while those from the Stock Fund are in whole shares of the
Company's common stock, plus cash for fractional shares, unless
the participant directs that the distribution be wholly or
partially in cash. Distribution in the form of an annuity is
also available, as set forth in the Plan.
In the event of termination of the Plan, participants and
beneficiaries of deceased participants will be vested with
respect to, and will receive, within a reasonable time, any funds
in their accounts as of the date of the termination.
The Plan is administered by the Retirement Savings Plan
Committee, a Plan Financial Administrator and a Plan Benefits
Administrator. The members of the Committee are appointed by the
Board of Directors of the Company. The Committee has power to
interpret the Plan and the Plan Benefits Administrator has the
authority to determine eligibility for benefits. The Plan
Financial Administrator has the responsibility to manage and
control the assets of the Plan in accordance with the terms of
the Plan. Brokerage fees, commissions, stock transfer taxes and
other charges and expenses incurred in connection with the
purchase or sale of securities are paid by the Plan. The cost of
administering the Plan is paid by the Company.
Note 2--Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates and assumptions.
Note 3--Investments
Common stock of the Company is valued at the closing quoted
market price on the valuation date. The value of the insurance
contract, which approximates fair value, represents contributions,
plus interest credited, less distributions. The money market
fund is valued at the current redemption price determined by the
Trustee.
11
<PAGE>
Note 4--Tax Status
The Internal Revenue Service (IRS) determined on December 26,
1995, that the Plan is qualified under Section 401(a) of the
Internal Revenue Code of 1986 and the Trust is exempt from
federal income tax under Section 501(a). Subsequent amendments
have been adopted, but are not expected to affect the qualified
status of the Plan. The Committee is not aware of any activity
that would affect the qualified status of the Plan.
Note 5--Insurance Contract
The average yield of the Fixed Fund insurance contract was
6.66 percent and 6.60 percent in 1996 and 1995, respectively.
The crediting interest rate of the insurance contract was
6.60 percent for 1996 and 6.55 percent for 1995. The crediting
interest rate, determined by Travelers, is reset annually, with
the new rate going into effect on January 1 of each year. There
is no contractually guaranteed minimum interest rate and the
contract with Travelers does not provide a basis for determining
the crediting interest rate.
12
<PAGE>
- ------------------------------------------------------------------------------
Schedule of Assets Held Retirement Savings Plan of
For Investment Purposes Phillips Petroleum Company
Line 27a EIN 73-0400345, Plan 010
At December 31, 1996
Description of investment
Identity of issue, including maturity date,
borrower, lessor, rate of interest, collateral, Historical Current
or similar party par or maturity value Cost Value
- -------------------- ------------------------------ ----------- ----------
The Travelers Group Annuity Contract
Insurance Company* GR-10462, deposit
administration fund $ 9,801,586 9,801,586
Phillips Petroleum 17,896 shares of common stock,
Company* $1.25 par value 311,282 791,898
Vanguard Fiduciary 12,499 units of participation
Trust Company* in the Vanguard Money Market
Reserves-Prime Portfolio,
$1.00 par value 12,499 12,499
- ------------------------------------------------------------------------------
$10,125,367 10,605,983
==============================================================================
*Party-in-interest
13
<PAGE>
- ------------------------------------------------------------------------------
Schedule of Reportable Transactions Retirement Savings Plan of
Line 27d Phillips Petroleum Company
EIN 73-0400345, Plan 010
Year Ended December 31, 1996
Total Total
number of number of
Identify of party purchases sales Gain or
involved and during during (loss) as a
description of the plan the plan Value of Value result of
asset year year purchases* of sales* transactions
- ------------------- --------- --------- ---------- --------- ------------
The Travelers
Insurance Company 178 59 $1,019,853 1,068,681 -
- ------------------------------------------------------------------------------
*This is also the current value at time of transaction.
14
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8, File No. 33-28669) pertaining to the
Retirement Savings Plan of Phillips Petroleum Company and in the
related Prospectus of our report dated June 25, 1997, with respect
to the financial statements and schedules of the Retirement Savings
Plan of Phillips Petroleum Company included in this Annual Report
(Form 11-K) for the year ended December 31, 1996.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 25, 1997
<PAGE>
