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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________________to__________________
Commission file number 333-98681
CONOCOPHILLIPS STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION STORE SAVINGS PLAN)
(Full title of the Plan)
CONOCOPHILLIPS
(Name of issuer of securities)
600 NORTH DAIRY ASHFORD
HOUSTON, TEXAS 77079
(Address of principal executive office) (Zip code)
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Financial statements of the ConocoPhillips Store Savings Plan (formerly known as
the Tosco Corporation Store Savings Plan), filed as a part of this annual
report, are listed in the accompanying index.
(b) Exhibits
Exhibit 23 Consent of Independent Auditors.
Exhibit 99 Certifications Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
ConocoPhillips Store Savings Plan Committee has duly caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized.
CONOCOPHILLIPS
STORE SAVINGS PLAN
/s/ J. W. Sheets
----------------------------
J. W. Sheets
Plan Financial Administrator
June 25, 2003
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INDEX TO FINANCIAL STATEMENTS CONOCOPHILLIPS
AND SCHEDULE STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION
STORE SAVINGS PLAN)
Page
Report of Independent Auditors ....................................... 3
Financial Statements
Statement of Net Assets Available for Benefits
at December 31, 2002 and 2001 .................................... 4
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2002 ............................. 5
Notes to Financial Statements ...................................... 6
Supplemental Schedule*
Schedule of Assets (Held at End of Year)
as of December 31, 2002, Schedule H, Line 4i ..................... 12
Exhibit Index ........................................................ 13
-------------------------------
* Other supplemental schedules required by Section 2520.103-10 of the Department
of Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable.
2
REPORT OF INDEPENDENT AUDITORS
The Store Savings Plan Committee
ConocoPhillips Store Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the ConocoPhillips Store Savings Plan (formerly the Tosco Corporation Store
Savings Plan) (Plan) as of December 31, 2002 and 2001, and the related statement
of changes in net assets available for benefits for the year ended December 31,
2002. These financial statements are the responsibility of the Store Savings
Plan Committee (Committee). Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Committee, as well as evaluating the overall financial statement
presentation. We believe that our 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, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2002 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Committee. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Houston, Texas
June 25, 2003
3
STATEMENT OF NET ASSETS CONOCOPHILLIPS
AVAILABLE FOR BENEFITS STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION
STORE SAVINGS PLAN)
Thousands of Dollars
--------------------
At December 31 2002 2001
--------------------
ASSETS
Investments
Merrill Lynch Retirement
Preservation Trust $ - 15,656
Income Fund of America - 5,130
Davis New York Venture Fund - 6,217
American New Perspective Fund - 3,157
ConocoPhillips common stock 1,344 1,457
Loans to Plan participants 2,087 2,141
--------------------------------------------------------------------------------
3,431 33,758
Cash 27,245 38
Contributions Receivable - -
Interest and Dividends Receivable 31 31
--------------------------------------------------------------------------------
Total Assets 30,707 33,827
NET ASSETS AVAILABLE FOR BENEFITS $ 30,707 33,827
================================================================================
See Notes to Financial Statements.
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STATEMENT OF CHANGES IN NET TOSCO CORPORATION
ASSETS AVAILABLE FOR BENEFITS STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION
STORE SAVINGS PLAN)
Thousands
Year Ended December 31, 2002 of Dollars
----------
ADDITIONS
Contributions
Participants $ 2,215
Rollovers 8
-------------------------------------------------------------------------------
2,223
-------------------------------------------------------------------------------
Investment Income
Interest and dividend income 1,204
Interest on participant loans 135
-------------------------------------------------------------------------------
1,339
-------------------------------------------------------------------------------
Total 3,562
-------------------------------------------------------------------------------
DEDUCTIONS
Distributions to
participants or their
beneficiaries 4,227
Net depreciation in fair value
of investments 2,286
Other, net 149
Administrative expense 20
-------------------------------------------------------------------------------
Total 6,682
-------------------------------------------------------------------------------
NET CHANGE (3,120)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of Year 33,827
-------------------------------------------------------------------------------
End of Year $ 30,707
===============================================================================
See Notes to Financial Statements.
5
NOTES TO FINANCIAL STATEMENTS CONOCOPHILLIPS
STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION
STORE SAVINGS PLAN)
NOTE 1--PLAN DESCRIPTION
The following description of the ConocoPhillips Store Savings Plan (formerly the
Tosco Corporation Store Savings Plan) (the Plan) provides only general
information. Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
GENERAL
The Plan was established in 1985 as the Circle K Kash Plus Plan and has been
amended and restated at various times since its formation. Effective January 1,
1998, the Plan was amended to change its name to the Tosco Corporation Store
Savings Plan. Effective January 1, 2003, the Plan sponsor, Tosco Corporation,
was merged into the ConocoPhillips Company (formerly Phillips Petroleum
Company), and the Plan was amended to change its name to the ConocoPhillips
Store Savings Plan and ConocoPhillips Company became the Plan sponsor (Sponsor).
The Plan is a defined contribution, 401(k) profit sharing plan, covering
substantially all of the full-time retail store and marketing job outlet
employees on the payroll of Circle K Stores Inc., who have reached the age of 18
and completed one continuous year of employment. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and
the Internal Revenue Code, as amended by the Tax Reform Act of 1986 and
subsequent legislation.
On March 12, 2002, stockholders of Phillips Petroleum Company and Conoco Inc.
approved a merger of the two companies to form ConocoPhillips (Company). The
merger was finalized on August 30, 2002. Under the terms of the merger
agreement, each outstanding share of Phillips Petroleum Company common stock,
including all those held by the Plan, was automatically converted into one share
of the new ConocoPhillips common stock (Company Stock).
In 2002, Tosco Corporation had a trust agreement with the Merrill Lynch Trust
Company (Merrill Lynch). Merrill Lynch also maintained the individual
participant account records and served as custodian for the Plan's investments.
In December 2002, effective as of January 1, 2003, Tosco Corporation entered
into a Trust Agreement with Vanguard Fiduciary Trust Company (the Tosco
Corporation Trust) and ConocoPhillips Company entered into a Master Trust
Agreement with Vanguard Fiduciary Trust Company
6
which provides that some or all of the assets held in the Tosco Corporation
Trust with respect to the Plan would be delivered to be held, administered and
invested pursuant to the Master Trust Agreement. On December 31, 2002, Merrill
Lynch converted Plan investments, with the exception of Company Stock, to cash
to expedite the transfer of custody to Vanguard. Vanguard subsequently
re-invested those funds in other investments, as directed by the participants.
Company Stock was transferred "in-kind."
The Plan is administered by the Store 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 ConocoPhillips Company. The Plan
Financial Administrator and Plan Benefits Administrator are the persons who
occupy, respectively, the ConocoPhillips positions of Treasurer and Compensation
and Benefits Manager. Members of the Committee and the Plan Administrators serve
without compensation, but are reimbursed by the Sponsor for necessary
expenditures incurred in the discharge of their duties.
CONTRIBUTIONS
In 2002, participants could contribute between 1 and 20 percent of their
eligible compensation (up to $200,000) to the Plan. Earnings on investments held
by the Plan in the name of a participant are automatically invested in the
respective fund from which the earnings were derived.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
Plan earnings, and charged with an allocation of investment expenses.
Allocations are based on participant earnings or account balances, as defined.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
VESTING
Participants are fully vested in their account balances.
LOANS TO PARTICIPANTS
The Plan, with certain limitations, may make loans to participants with an
interest rate approximately equal to the prime interest rate on the origination
date. A loan from the Plan will be made for up to 50 percent of the
participant's account balance and all interest payments made under the terms of
the loan will be credited to the participant's account and not considered
general earnings of the Plan. Participants' loans are repaid through payroll
deductions. Participant loans are collateralized by the participants' vested
account balances. The maturity on these loans cannot exceed five years. However,
a loan made to acquire the Participant's primary residence may be repaid over a
commercially reasonable period.
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DISTRIBUTIONS
Benefits under the Plan are payable upon reaching normal retirement, early
retirement, termination, or in the event of death or disability. Distributions
from the Plan are made in lump sums. Any whole shares of stock in a
participant's stock fund account may be distributed in the form of shares of
stock at the participant's discretion. All other amounts, including fractional
shares of stock, will be distributed to the participant in cash.
ADMINISTRATION FEES
All Plan investment management fees are paid from the investment earnings of the
individual investment funds. All other administration fees are paid by the Plan
or the Sponsor. Fees paid by the Sponsor are not reflected in the Plan's
financial statements.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Plan's financial statements are presented on the accrual basis of
accounting. Distributions to participants or their beneficiaries are recorded
when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes
and schedules. Actual results could differ from those estimates and assumptions.
NOTE 3--INVESTMENTS
Participants may designate, in 5 percent increments, the portion of their
contributions to be placed in various funds. Loan repayments are allocated to
these funds based on the participant's current contribution designation.
Interest income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
VALUATION
Common stock and mutual fund securities are valued at fair value, based on their
quoted market prices. The Merrill Lynch Retirement Preservation Trust is a
collective investment of
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assets. The assets in this fund include stable value investment contracts and
money market instruments. The stable value investments contracts are valued at
contract value and the money market instruments are valued at amortized cost,
both of which approximate fair value. Participant loans are valued at cost,
which approximates fair value. Purchases and sales of investments are recorded
on a trade date basis. Investment securities are exposed to various risks, such
as interest rate, market, and credit risk. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in risks in the near term could materially affect the amounts reported
in the Statement of Net Assets Available for Benefits.
APPRECIATION (DEPRECIATION)
During 2002, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value as
follows:
Thousands
of Dollars
----------
Income Fund of America $ (474)
Davis New York Venture Fund (1,018)
American New Perspective Fund (489)
ConocoPhillips common stock (305)
------------------------------------------------------------------------------
$(2,286)
==============================================================================
NOTE 4--TAX STATUS
The Internal Revenue Service (IRS) determined on April 15, 1996, that the Plan,
as amended through December 28, 1994, was qualified under Section 401(a) of the
Internal Revenue Code of 1986 and the Trust was 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. A request
for a Letter of Determination was submitted to the IRS on February 28, 2002.
NOTE 5--PLAN TERMINATION
Although it has not expressed any intent to do so, the Sponsor has the right
under the Plan to terminate the Plan subject to the provisions of ERISA. Upon
termination, the Plan's assets would be distributed to the participants, as soon
as possible and legally permitted, on the basis of their account balances
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existing on the date of termination as adjusted for investment gains and losses.
NOTE 6--PARTY-IN-INTEREST TRANSACTIONS
In 2002, certain investments of the Plan were in shares of mutual funds managed
by Merrill Lynch. Because Merrill Lynch was the Plan's trustee, these
transactions qualify as party-in-interest transactions. In addition, certain
Plan investments were in ConocoPhillips common stock or in Phillips Petroleum
Company common stock prior to August 30, 2002. These transactions also qualify
as party-in-interest transactions.
NOTE 7--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits as of
December 31, 2002 and 2001, as reflected in these financial statements to the
amounts reflected in the Plan's Form 5500:
Thousands of Dollars
--------------------
2002 2001
--------------------
Net assets available for benefits as
reported in the financial statements $ 30,707 33,827
Amounts allocated to withdrawing
participants - (13)
-------------------------------------------------------------------------------
Net assets available for benefits
as reported in the Form 5500 $ 30,707 33,814
===============================================================================
The following is a reconciliation of distributions to participants for the year
ended December 31, 2002, as reflected in these financial statements to the
amount reflected in the Plan's Form 5500:
Thousands of
Dollars
------------
Distributions to participants as reported
in the financial statements $ 4,227
Amount allocated to withdrawing
participants at December 31, 2001 (13)
-------------------------------------------------------------------------------
Distributions to participants as reported
in the Form 5500 $ 4,214
===============================================================================
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NOTE 8--SUBSEQUENT EVENTS
As previously mentioned in Note 1, effective January 1, 2003, Vanguard replaced
Merrill Lynch as the Plan's trustee and recordkeeper.
Effective January 1, 2003, the Plan was amended to increase the maximum
participant contribution percentage from 20 percent to 30 percent, and
participants in the Thrift Plan for Retail Employees of Conoco Inc. became
eligible to participate in the Plan.
A new Plan provision for 2003 allows participants who reach age 50 or over in
2003 to make catch-up contributions of up to $2,000 to the Plan. This additional
amount will increase by $1,000 per year through 2006.
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SCHEDULE OF ASSETS (HELD AT END OF YEAR) CONOCOPHILLIPS
SCHEDULE H, LINE 4i STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION
STORE SAVINGS PLAN)
At December 31, 2002
(a)(b) Identity of (c) Description of investment Thousands of Dollars
issue, borrower, including maturity date, ---------------------------
lessor, or similar rate of interest, collateral, (d) Historical (e) Current
party par or maturity value Cost Value
-------------------- ----------------------------- -------------- -----------
ConocoPhillips* Common Stock, $ 0.01 par
Value, 27,777 shares ** $ 1,344
Participants* Loans to Plan participants ** 2,087
----------------------------------------------------------------------------------
$ 3,431
==================================================================================
*Party-in-interest
**Historical cost information is not required for participant-directed
investments.
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EXHIBIT INDEX CONOCOPHILLIPS
STORE SAVINGS PLAN
(FORMERLY THE TOSCO CORPORATION
STORE SAVINGS PLAN)
EXHIBIT
NUMBER DESCRIPTION
------- -----------
23 Consent of Independent Auditors.
99 Certifications Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
13