UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended DECEMBER 31, 2003
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 333-98681
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RETIREMENT SAVINGS PLAN OF CONOCOPHILLIPS COMPANY
(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 Retirement Savings Plan of ConocoPhillips Company,
filed as a part of this annual report, are listed in the accompanying index.
(b) Exhibits
Exhibit 23 Consent of Independent Registered Public Accounting Firm.
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
CONOCOPHILLIPS COMPANY
/s/ J. W. Sheets
-------------------------------
J. W. Sheets
Plan Financial Administrator
June 28, 2004
1
INDEX TO FINANCIAL STATEMENTS RETIREMENT SAVINGS PLAN OF
AND SCHEDULES CONOCOPHILLIPS COMPANY
Page
Report of Independent Registered Public Accounting Firm .................. 3
Financial Statements
Statement of Net Assets Available for Benefits
at December 31, 2003 and 2002........................................ 4
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2003 ................................. 5
Notes to Financial Statements ......................................... 6
Supplemental Schedules*
Schedule of Assets (Held at End of Year) as of
December 31, 2003, Schedule H, Line 4i ............................. 11
Schedule of Reportable Transactions for the Year Ended
December 31, 2003, Schedule H, Line 4j ............................. 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 the Employee
Retirement Income Security Act of 1974 (ERISA) have been omitted because they
are not applicable.
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Retirement Savings Plan Committee
Retirement Savings Plan of ConocoPhillips Company
We have audited the accompanying statements of net assets available for benefits
of the Retirement Savings Plan of ConocoPhillips Company (Plan) as of December
31, 2003 and 2002, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2003. 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 the standards of the Public Company
Accounting Oversight Board (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, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
(held at end of year) as of December 31, 2003, and reportable transactions for
the year then ended, are presented for purposes of additional analysis and are
not a required part of the financial statements but are 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. These supplemental schedules are the responsibility of the Committee. The
supplemental schedules have been subjected to the auditing procedures applied in
our audits of the financial statements and, in our opinion, are fairly stated in
all material respects in relation to the financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Houston, Texas ERNST & YOUNG LLP
June 28, 2004
3
STATEMENT OF NET ASSETS RETIREMENT SAVINGS PLAN OF
AVAILABLE FOR BENEFITS CONOCOPHILLIPS COMPANY
Thousands of Dollars
--------------------
At December 31 2003 2002
--------------------
ASSETS
Investments
Insurance contract, Fixed Investment Fund $6,294 6,864
Plan interest in Master Trust 101 --
ConocoPhillips Common Stock -- 546
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Total Assets 6,395 7,410
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NET ASSETS AVAILABLE FOR BENEFITS $6,395 7,410
=============================================================================
See Notes to Financial Statements.
4
STATEMENT OF CHANGES IN NET RETIREMENT SAVINGS PLAN OF
ASSETS AVAILABLE FOR BENEFITS CONOCOPHILLIPS COMPANY
Thousands
Year Ended December 31, 2003 of Dollars
----------
ADDITIONS
Investment Income
Interest and dividends $ 343
Plan interest in Master Trust,
ConocoPhillips Stock Fund 79
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422
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Total 422
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DEDUCTIONS
Distributions to
participants or their
beneficiaries 1,437
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Total 1,437
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NET CHANGE (1,015)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of Year 7,410
-------------------------------------------------------------------------------
End of Year $6,395
===============================================================================
See Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS RETIREMENT SAVINGS PLAN OF
CONOCOPHILLIPS COMPANY
NOTE 1--PLAN DESCRIPTION
The following description of the Retirement Savings Plan of ConocoPhillips
Company is subject to and qualified by the more complete information appearing
in the Plan document.
GENERAL
This Plan was formerly known as the Retirement Savings Plan of Phillips
Petroleum Company. The name was changed on June 1, 2003 to the Retirement
Savings Plan of ConocoPhillips Company.
The Plan is a defined contribution plan sponsored by ConocoPhillips Company
(Sponsor) for any domestic subsidiary or division that the Sponsor 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). The Plan had no Participating Employers in 2003 and 2002, and is
currently considered to be inactive.
Generally, employees of a Participating Employer become 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.
CONTRIBUTIONS
There are currently no contributions into the Plan.
Plan assets consist of the Stock Fund, the Fixed Investment Fund and the
Temporary Investment Fund. Investments for each fund are: Stock Fund (common
stock of ConocoPhillips, the parent of the Sponsor), Fixed Investment Fund (an
insurance contract with Travelers Insurance Company (Travelers) under which
Travelers guarantees repayment of the principal paid to it and a minimum
effective rate of interest thereon as determined by Travelers annually), and
Temporary Investment Fund (specified short-term securities--currently, this Fund
is inactive). The Trustee for all Plan assets is Vanguard Fiduciary Trust
Company (Vanguard). The interests of participants in each fund are represented
by units allocated to them.
Earnings are paid into the Stock Fund or the Fixed Investment Fund as directed
by the participant. The Plan allows limited transfers between the Stock Fund and
the Fixed Investment Fund.
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VESTING
Participant contributions are vested at all times, and Participating Employer
contributions become 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 and
permanently 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 made deposits can withdraw any amount attributable to those
deposits. Withdrawals of deposits can be made only once each six months.
Suspensions of employee deposits for three and six months apply for partial and
complete withdrawals, respectively.
DISTRIBUTIONS
A participant's interest in the contributions of a Participating Employer
becomes available for distribution upon specified events, including termination
of employment or retirement. Termination of employment results 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 can generally
postpone distribution until no later than the first valuation date in October of
the year age 69 was attained. Effective January 1, 2003, the distribution
postponement age was changed to 70 1/2.
Distributions from the Fixed Investment Fund are made in cash while those from
the Stock Fund are in whole shares of ConocoPhillips 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 would be vested with respect to, and would receive, within
a reasonable time, any funds in their accounts as of the date of the
termination.
ADMINISTRATION FEES
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 Sponsor. The Plan
Financial Administrator and Plan Benefits Administrator are the persons who
occupy, respectively, the ConocoPhillips positions of Treasurer
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and Compensation and Benefits Manager. 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. The Plan pays all reasonable expenses necessary for the
operation of the Plan, unless such expenses are paid by the Sponsor. Fees paid
by the Sponsor are not reflected in the Plan's financial statements.
TRUST AGREEMENTS
On January 1, 2003, ConocoPhillips entered into a Master Trust Agreement which
was superceded by a Master Trust Agreement dated October 3, 2003, both with
Vanguard Fiduciary Trust Company, as Trustee. These trust agreements provide for
the administration by the Trustee of the ConocoPhillips Stock Fund.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Plan's financial statements are presented on the accrual basis of
accounting. Withdrawals and distributions are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles require estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes and
schedules. Actual results could differ from the estimates and assumptions used.
NOTE 3--INVESTMENTS
Common stock of ConocoPhillips is valued at the closing quoted market price on
the valuation date. The value of the insurance contract is recorded at contract
value, which approximates fair value, and represents contributions, plus
interest credited, less distributions. The money market fund is valued at the
current redemption price determined by the Trustee.
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 participant account balances and the
amounts reported in the Statement of Net Assets Available for Benefits.
NOTE 4--NON-PARTICIPANT-DIRECTED INVESTMENTS
The only non-participant-directed investments in the Plan are held in the Fixed
Investment Fund, which also holds participant-
8
directed investments. The investment activity cannot be segregated between
participant and non-participant directed transactions.
Information about the net assets and the significant components of the changes
in net assets relating to the Fixed Investment Fund is as follows:
Thousands of Dollars
--------------------
At December 31 2003 2002
--------------------
Net Assets:
Fixed Investment Fund $6,294 6,864
===============================================================================
Changes in Net Assets during Year Ended
December 31, 2003:
Interest and dividends $ 343
Distributions to participants
or their beneficiaries (913)
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Net decrease (570)
Beginning of year 6,864
-------------------------------------------------------------------------------
End of year $6,294
===============================================================================
NOTE 5--TAX STATUS
The Internal Revenue Service (IRS) determined on July 3, 2002, that the Plan 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.
NOTE 6--INSURANCE CONTRACT
The average yield and crediting interest rate of the Fixed Investment Fund
insurance contract was 5.25 percent in 2003 and 5.60 percent in 2002. The
crediting interest rate, which is 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. The
crediting interest rate for 2004 will be 4.55 percent.
NOTE 7--PARTY-IN-INTEREST TRANSACTIONS
The majority of the Plan's assets are invested in an insurance contract with
Travelers, qualifying transactions between the Plan and Travelers as
party-in-interest transactions. Certain Plan assets are invested in
ConocoPhillips stock. Because
9
ConocoPhillips is the parent of the Sponsor, transactions involving
ConocoPhillips stock qualify as party-in-interest transactions. In addition, any
investments in the Temporary Investment Fund would be managed by Vanguard.
Because Vanguard is the Plan's trustee, these transactions would also qualify as
party-in-interest transactions. All of these types of transactions are exempt
from the prohibited transaction rules.
NOTE 8--MASTER TRUST (CONOCOPHILLIPS STOCK FUND)
The ConocoPhillips Stock Fund is comprised of ConocoPhillips stock held in a
Master Trust. This investment option provided by the Plan is also available to
participants in the ConocoPhillips Savings Plan and the ConocoPhillips Store
Savings Plan. Each plan's beneficial interest in the commingled Master Trust
funds is based on that plan's proportionate share of the value of the total net
assets in the Master Trust. Investment income for each plan is calculated using
this same basis. The Plan's proportionate share of Master Trust net assets and
investment income was approximately 00.01% as of December 31, 2003.
Master Trust net assets were $1.4 billion and $0.0 as of December 31, 2003 and
December 31, 2002, respectively. Investment income for the Master Trust was
$335.2 million and $0.0 for years ending December 31, 2003 and December 31,
2002, respectively, and included interest and dividend income, and appreciation.
NOTE 9 -- SUBSEQUENT EVENTS
On June 18, 2004, Travelers Insurance Company was notified that the Sponsor
intends to terminate the contract with Travelers on July 9, 2004. The Sponsor
intends to replace the Travelers Fixed Investment Fund with the Stable Value
Fund, which is part of a Master Trust, on July 9, 2004.
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SCHEDULE OF ASSETS (HELD AT END OF YEAR) RETIREMENT SAVINGS PLAN OF
SCHEDULE H, LINE 4I CONOCOPHILLIPS COMPANY
EIN 73-0400345, PLAN 010
At December 31, 2003
(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
------------------ ----------------------------- -------------- ----------
The Travelers Group Annuity Contract
Insurance Company* GR-10462, Fixed
Investment Fund $6,295 $6,294
--------------------------------------------------------------------------------
$6,295 $6,294
================================================================================
*Party-in-interest
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SCHEDULE OF REPORTABLE TRANSACTIONS RETIREMENT SAVINGS PLAN OF
SCHEDULE H, LINE 4J CONOCOPHILLIPS COMPANY
SERIES OF TRANSACTIONS IN EIN 73-0400345, PLAN 010
EXCESS OF 5 PERCENT OF
NET ASSETS
(CATEGORY III)
Year Ended December 31, 2003
Thousands of Dollars
---------------------------------------
(a, b) Identity of
party involved and (c) Value of (d) Value (i) Net gain
description of asset purchases* of sales* or (loss)
----------------------- ------------ --------- ------------
The Travelers Insurance
Company $343 $913 $-
-------------------------------------------------------------------------------
* This was also the cost of purchases and current value of sales at time of
transaction.
Columns (e), (f), (g) and (h) are not applicable.
There were no category (i), (ii) or (iv) reportable transactions during 2003.
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EXHIBIT INDEX RETIREMENT SAVINGS PLAN OF
CONOCOPHILLIPS COMPANY
EXHIBIT
NUMBER DESCRIPTION
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23 Consent of Independent Registered Public Accounting Firm.
13