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 fiscal year ended DECEMBER 31, 2004
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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 001-32395
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CONOCOPHILLIPS 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 Savings Plan, filed as 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
ConocoPhillips Savings Plan Committee has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
CONOCOPHILLIPS
SAVINGS PLAN
/s/ J. W. Sheets
-------------------------------
J. W. Sheets
Plan Financial Administrator
June 21, 2005
1
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INDEX TO FINANCIAL STATEMENTS CONOCOPHILLIPS SAVINGS PLAN
AND SCHEDULE
Page
Report of Independent Registered Public Accounting Firm ................. 3
Financial Statements
Statements of Net Assets Available for Benefits
at December 31, 2004 and 2003 ....................................... 4
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2004 ....................... 5
Notes to Financial Statements ......................................... 6
Supplemental Schedule *
Schedule of Assets (Held at End of Year) as of
December 31, 2004, Schedule H, Line 4i .............................. 19
Exhibit Index ........................................................... 22
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* 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
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The ConocoPhillips Savings Plan Committee
ConocoPhillips Savings Plan
We have audited the accompanying statements of net assets available for benefits
of ConocoPhillips Savings Plan as of December 31, 2004 and 2003, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 2004. These financial statements are the responsibility of the
Plan's management. 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. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
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, 2004 and 2003, and the changes in its net assets available for
benefits for the year ended December 31, 2004, 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 schedule of assets
(held at end of year) as of December 31, 2004, 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
Plan's management. 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 21, 2005
3
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STATEMENTS OF NET ASSETS CONOCOPHILLIPS SAVINGS PLAN
AVAILABLE FOR BENEFITS
Thousands of Dollars
-------------------------
At December 31 2004 2003
-------------------------
ASSETS
Investments
Plan interest in Master Trusts
ConocoPhillips Stock Fund $1,660,153 1,356,479
DuPont Stock Fund 217,803 259,323
Stable Value Fund 1,998,674 1,947,229
Leveraged Stock 721,791 640,260
Loan 2 Suspense, unallocated 566,101 464,097
Insurance contract 10 13
Loans to Plan participants 72,466 70,976
Fidelity Low-Priced Stock Fund 146,214 111,173
Fidelity Magellan Fund 139,941 162,755
PIMCO Total Return Fund - Administrative Class 22,435 22,159
Vanguard Funds:
500 Index Fund 350,151 324,560
Asset Allocation Fund 10,406 5,957
Balanced Index Fund 25,298 18,252
Explorer Fund 90,776 86,800
Extended Market Index Fund 38,559 29,310
Growth Index Fund 14,354 7,986
Inflation-Protected Securities Fund 33,741 21,961
International Growth Fund 37,425 25,274
International Value Fund 51,758 36,375
LifeStrategy Conservative Growth Fund 14,066 9,303
LifeStrategy Growth Fund 26,241 15,443
LifeStrategy Income Fund 10,895 5,334
LifeStrategy Moderate Growth Fund 90,611 83,018
Long-Term Treasury Fund 19,086 16,905
Mid-Cap Index Fund 43,617 19,548
Morgan Growth Fund 20,938 17,307
Prime Money Market Fund 150,720 161,676
PRIMECAP Fund 240,918 194,619
Small-Cap Growth Index Fund 32,854 20,081
Small-Cap Value Index Fund 49,876 15,468
Total Bond Market Index Fund 77,159 75,334
Total International Stock Index Fund 25,688 13,048
Total Stock Market Index Fund 25,986 17,753
Value Index Fund 16,974 5,378
Wellington Fund 84,233 62,276
Windsor II Fund 106,804 70,253
Vanguard Retirement Savings Trust -- 1
Vanguard Prime Money Market - Loan 2 unallocated 73 65
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Total Investments 7,234,795 6,393,749
Participant Contributions Receivable 860 --
Company Contributions Receivable 89 --
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Total Assets 7,235,744 6,393,749
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LIABILITIES
Securities Acquisition Loans, unallocated 252,600 275,150
Interest Payable, unallocated 498 300
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Total Liabilities 253,098 275,450
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NET ASSETS AVAILABLE FOR BENEFITS $6,982,646 6,118,299
================================================================================
See Notes to Financial Statements.
4
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STATEMENT OF CHANGES IN NET CONOCOPHILLIPS SAVINGS PLAN
ASSETS AVAILABLE FOR BENEFITS
Thousands
Year Ended December 31, 2004 of Dollars
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ADDITIONS
Company Contributions
Company matching contributions $ 111,101
Funds for debt service, unallocated 525
Basic allocation requirements 98,732
Participant Contributions 247,536
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457,894
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Investment Income
Dividends and interest, allocated 55,771
Dividends and interest, unallocated 12,356
Interest, participant loans 3,381
Plan interest in Master Trusts
Stable Value Fund 89,168
DuPont Stock Fund 18,643
ConocoPhillips Stock Fund 458,537
Net appreciation in fair value
of investments, allocated 247,287
Net appreciation in fair value
of investments, unallocated 146,639
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1,031,782
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Other Additions
Asset transfers in 5,688
Other additions 193
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5,881
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Total 1,495,557
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DEDUCTIONS
Distributions to participants
or their beneficiaries 625,324
Interest expense, unallocated 4,821
Administrative expense 995
Other deductions 70
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Total 631,210
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NET INCREASE 864,347
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of Year 6,118,299
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End of Year $6,982,646
================================================================================
See Notes to Financial Statements.
5
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NOTES TO FINANCIAL STATEMENTS CONOCOPHILLIPS SAVINGS PLAN
NOTE 1--PLAN DESCRIPTION
The following describes the ConocoPhillips Savings Plan (Plan), subject to and
qualified by the more complete information appearing in the Plan document.
General: The Plan is a defined contribution, 401(k) profit sharing plan which
includes a Stock Savings Feature and a Thrift Feature. This Plan was formerly
known as the Long-Term Stock Savings Plan of Phillips Petroleum Company (LTSSP);
the name was changed at the close of business on December 31, 2002, along with
the formal merger of the Thrift Plan of Phillips Petroleum Company (Thrift Plan)
into the Plan. The Thrift Plan became the Thrift Feature of the Plan, the LTSSP
became the Stock Savings Feature, and ConocoPhillips Company (Company) became
the Plan sponsor. On October 3, 2003 assets of the Thrift Plan for employees of
Conoco, Inc. (Conoco Thrift Plan) were merged into the Plan. On February 18,
2004, assets of the River Gas 401(k) Plan were merged into the Plan. On
September 24, 2004 assets of the Retirement Savings Plan of ConocoPhillips
Company (RSP) were merged into the Plan.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended (ERISA) and the Internal Revenue Code, as amended by the
Tax Reform Act of 1986 and subsequent legislation.
Eligibility: Generally, employees of ConocoPhillips Company (Company) and its
subsidiaries on the U.S. direct dollar payroll are eligible to participate in
the Plan, except retail marketing outlet employees and certain other employee
classifications.
A summary of the key provisions of the Plan are as follows:
Thrift Feature: Participants may contribute from 1 to 30 percent of pay on a
before-tax basis, an after-tax basis, or a combination of both. The Company
contributes $1 for each $1 deposited by the participant up to 1.25 percent of
pay. Thrift assets are invested in 32 investment funds; however, the DuPont
Stock Fund and the Fidelity Low-Priced Stock Fund are closed to new investment
elections. Investments in the Thrift Feature are participant-directed.
Stock Savings Feature: The Stock Savings Feature is a stock bonus plan that
contains an Employee Stock Ownership Plan (ESOP). Participants may contribute 1
percent of pay on a before-tax basis. Participants' Stock Savings Feature
contributions are invested in the ConocoPhillips Stock Fund. Participants in the
Stock Savings
6
Feature receive semiannual allocations of ConocoPhillips common stock (Company
Stock) as of June 30 and December 31 of each year. The semiannual allocation to
participants is based on the ratio of the participant's Stock Savings Feature
(SSF) contributions to all participants' SSF contributions for the allocation
period. A supplemental allocation shall be made each year-end if all shares
released for allocation, based on loan payment provisions, have not been
allocated. Semiannual allocations and supplemental allocations are invested in
the ConocoPhillips Stock Fund and the Leveraged Stock Fund.
The number of shares allocated semiannually on each allocation date in 2004 was
4,349 shares for each 100 employees eligible to make deposits. The number of
shares allocated on each allocation date in 2005 will be 8,698 shares for each
100 eligible employees as a result of a two-for-one stock split declared on
April 7, 2005. 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 7,924 shares for each 100 eligible employees. In
late 1995, the Company extended the terms of the second loan to the year 2015.
Without the extension, allocations of stock to employees would have been
completed in 2005 or before. The extension required additional shares of Company
Stock to be delivered to the Plan. The Plan is eligible to receive shares from
the Company's Compensation and Benefits Trust (CBT). In 2004, the Company used
the CBT to contribute 1,209,904 shares of stock to the Plan. The fair value of
the shares was approximately $99 million.
The Plan is required to retain and use eligible dividends on Company Stock to
make payments on the loans it used to acquire Company Stock for the Stock
Savings Feature. If the Company does not elect to make a special contribution
and if eligible dividends from participants' accounts are used to make loan
payments, participants receive a dividend replacement allocation. The Plan used
$14.3 million in dividends on allocated shares to make loan payments and
allocated 185,114 shares in dividend replacement allocations to participants'
accounts in 2004.
The Company made contributions to the Plan which, when aggregated with certain
Plan dividends and certain interest earnings, equaled the amount necessary to
enable the Plan to make its regularly scheduled payments of principal and
interest due on its loan. The Company can also elect to make contributions to
the Plan, as an alternative to using the dividends. Finally, the Company can
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
semiannual allocation by contributing cash or by contributing Company Stock.
7
Catch-up Deposits: Participants are eligible to make catch-up deposits to the
Thrift Feature beginning in the year they attain age 50. The participant is
allowed to elect catch-up deposits to be deducted as a dollar amount from each
paycheck up to the applicable dollar limit, as defined by the Plan, for such
Plan year. Effective January 1, 2004, elections to make catch-up contributions
remain in effect until changed or revoked by a participant.
Participant Accounts: Participants' contributions and company contributions are
credited directly to employees' accounts as soon as administratively
practicable. The interest of participants in each fund is represented by shares
or units attributable to them.
Vesting: Participants are always vested in their contributions and amounts
credited to their accounts.
Share Accounting Method for Company Stock: Any shares purchased or sold on any
business day for the Plan are valued at the Participant Transaction Price, which
is calculated using a weighted-average price of the Company Stock traded on that
business day and any carryover impact from the previous trading day.
Distributions: Total distributions from participant accounts can be made upon
the occurrence of specified events, including the attainment of age 59 1/2,
disability, or termination of employment. Partial distributions are permitted in
cases of specified financial hardship. Unless a request for withdrawal is made
as of any earlier date, distribution to a former employee participant is
deferred to February 1 of the year following the year the employee reaches age
70 1/2. If the participant dies, distribution to a surviving spouse beneficiary
can be deferred to the later of December 31st of the year the participant would
have reached age 70 1/2 or December 31st of the year following the year the
participant died. These deferrals are revocable by the participant or the
surviving spouse. Distributions to non-spouse beneficiaries can be deferred
approximately five years. A participant can elect a direct rollover of the
taxable and/or non-taxable portion of most distributions to an Individual
Retirement Account or another tax-qualified plan.
Installment Payments: A terminated employee or a beneficiary who is the
surviving spouse of a participant is eligible to elect a distribution based on a
fixed-dollar amount or life-expectancy installment payments.
Installment distribution options offered under the Conoco Thrift Plan and
exercised by a participant were grandfathered into the Plan.
Dividend Pass Through: A participant can make an election to receive cash
dividends from the ConocoPhillips Stock Fund on a portion of his account
invested in Company Stock. The distribution of these
8
dividends is made on each dividend payment date.
Forms of Payment: Generally, distributions from participant accounts invested in
Company Stock and DuPont stock can be made in cash, stock, or a combination of
both. Distributions from all other funds in the Thrift Feature are made in cash.
An election to make an eligible rollover distribution is also available.
Loans: Active employee participants can request a loan from their account in the
Plan. The minimum loan is $1,000. Generally, the maximum loan is the lesser of
$50,000 or one-half of the value of the account. For those eligible for loans,
three outstanding loans are available at any one time, one of which can be a
home loan for a term of up to 238 months.
Trust Agreements: On January 1, 2003, ConocoPhillips entered into both a trust
agreement and a master trust agreement with Vanguard Fiduciary Trust Company
(Vanguard), as Trustee, and subsequently both were superceded by a trust
agreement and a master trust agreement dated October 3, 2003. The master trust
agreement provides for the administration by the Trustee of each Investment Fund
in the Trust Fund that consists primarily of Company Stock in both the Stock
Savings Feature and the Thrift Feature. Effective July 2, 2004, the master trust
agreement was renamed as the ConocoPhillips Stock Fund Master Trust Agreement.
The trust agreement provides for the administration of all the other assets in
the Plan by the Trustee or any Successor Trustee.
An additional master trust agreement with the Trustee, effective October 3,
2003, provides for the administration by the Trustee of the DuPont Stock Fund in
the Thrift Feature. Effective September 24, 2004, the name of the master trust
agreement was renamed as the DuPont Stock Fund Master Trust Agreement.
Effective October 3, 2003, pursuant to a master trust agreement, the trustee for
the Stable Value Fund in the Thrift Feature is State Street Bank and Trust
Company. Effective September 24, 2004, the name of the master trust agreement
was renamed as the Stable Value Fund Master Trust Agreement.
Administration: The Plan is administered by the ConocoPhillips Savings Plan
Committee (Committee), a Plan Financial Administrator, a Plan Benefits
Administrator, and the Chief Financial Officer of the Company. Members of the
Committee are appointed by the Board of Directors of ConocoPhillips Company. The
Plan Financial Administrator and the Plan Benefits Administrator are the persons
who occupy, respectively, the ConocoPhillips positions of Vice President and
Treasurer, and Manager Global Compensation and Benefits COE (Center of
Excellence). Members of the Committee and the Plan Administrators serve without
compensation, but are reimbursed by the Company for necessary expenditures
incurred in the
9
discharge of their duties. Administrative expenses of the Plan are paid by the
Trustee from assets of the Plan to the extent allowable by law, unless paid by
the Company. In 2004, reimbursement of administrative expenses paid to
ConocoPhillips totaled $994,954.
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 U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
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 Company
Stock, respectively. The shares are held in a Loan 2 suspense account until
allocated to eligible participants based on the provisions of the Plan. Upon
allocation to participants' accounts, the Loan 2 shares are transferred to the
Leveraged Stock Fund. The Plan released 373,132 Loan 2 suspense shares in 2004
for semiannual allocations to participants' accounts. The fair value of the Loan
2 shares used in the semiannual allocations was approximately $30 million. At
December 31, 2004 and 2003, the market value of unallocated shares was $566
million and $464 million, respectively. There were no other unallocated assets
at December 31, 2004 and December 31, 2003.
Loan 1 was fully repaid in June 1998 and all leveraged shares associated with
Loan 1 have been allocated to participant accounts.
Loan 2 was amended in 1995 to extend its term from 15 to 25 years, requiring
repayment in annual installments beginning in 2005, through the year 2015. Due
to loan prepayments, the first required payment is currently scheduled to be in
2010.
Loan 2 was refinanced on October 12, 2004. The loan balance, maturity, and
number of shares were not changed as a result of the refinancing. Additionally,
there was no change to the current allocation schedule of stock to Plan
participants as a result of this refinancing.
10
Each bank participating in the loan also has the optional right, if the current
Directors of ConocoPhillips 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 ConocoPhillips if not
transferred to another bank of ConocoPhillips' choice.
The outstanding balance of Loan 2 at December 31, 2004, was $253 million and at
December 31, 2003 was $275 million. Loan 2 prepayments totaled $23 million in
2004. Loan 2 provides for variable interest rates. The rates were 2.84 percent
and 1.44 percent at December 31, 2004 and 2003, respectively.
Loan 2 is guaranteed by ConocoPhillips and is being repaid through contributions
made by the Company; dividends on certain allocated and unallocated shares, and
earnings on the short-term investment of dividends. The Loan 2 carrying amount
approximates fair value.
NOTE 4--INVESTMENTS
VALUATION
Common stock and mutual fund securities are valued at fair value. Common stock
values are based on their quoted market prices. Mutual funds are valued using
quoted market prices which represent the net asset values of shares held by the
Plan at year-end. The Stable Value Fund is managed under the Stable Value Fund
Master Trust Agreement. The assets in this fund include investment contracts,
money market instruments, and units of a common collective trust. The investment
contracts are valued at contract value and represents contributions, plus
interest credited, less distributions, which approximate fair value. The money
market instruments are valued at amortized cost, which approximates fair value.
The common collective trust is valued at fair value as determined by the issuer
based on the current values of the underlying assets of such trust. Participant
loans are valued at carrying value, which approximates fair value. Purchases and
sales of investments are recorded on a trade date basis. Dividends are recorded
on the ex-divided date.
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 values
of investments will occur in the near term and that such changes could
materially affect participants' account balances and the amounts reported in the
Statements of Net Assets Available for Benefits.
NET APPRECIATION
During 2004, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year)
11
appreciated in value as follows:
Thousands
of Dollars
----------
ConocoPhillips Common Stock $222,762
Mutual Funds 171,164
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$393,926
================================================================================
NOTE 5--NON-PARTICIPANT-DIRECTED INVESTMENTS
The Company Stock in the Loan 2 Suspense Account of the Stock Savings Feature is
the only non-participant-directed investment in the Plan. Information about the
net assets and the significant components of the changes in net assets relating
to this non-participant-directed investment is as follows:
Thousands of Dollars
-----------------------------
At December 31 2004 2003
--------- ---------
Loan 2 Suspense, unallocated $ 566,101 464,097
Vanguard Prime Money Market
Fund - Loan 2 unallocated 73 65
Securities Acquisition
Loans, unallocated (252,600) (275,150)
Interest Payable, unallocated (498) (300)
-------------------------------------------------------------------------------
Net Assets Available for Benefits $ 313,076 188,712
===============================================================================
Changes in Net Assets during Year Ended December 31, 2004:
Company contributions, funds
for debt service, unallocated $ 525
Dividends and interest, unallocated 12,356
Net appreciation in fair value
of investments, unallocated 146,639
Interfund transfers, allocation
of Loan 2 shares (30,335)
Interest expense, unallocated (4,821)
-------------------------------------------------------------------------------
Net increase 124,364
Beginning of year 188,712
-------------------------------------------------------------------------------
End of year $313,076
===============================================================================
NOTE 6--ASSET TRANSFERS IN
At the close of business on February 18, 2004, $14,686 of assets form the River
Gas 401(k) Plan, and at the close of business on September 24, 2004, $5,673,491
of assets from the Retirement Savings Plan of ConocoPhillips Company were
transferred into the Plan. These transfers were a result of the mergers
discussed in Note 1.
12
NOTE 7--TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated March 23, 2004, stating that the Plan, as amended and restated as of
October 3, 2003, is qualified under Section 401(a) of the Internal Revenue Code
(the Code) and, therefore, the related trust is exempt from taxation. Subsequent
to this determination by the Internal Revenue Service, the Plan was amended.
Once qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Committee believes the Plan is being operated in
compliance with the applicable requirements of the Code and, therefore, believes
the Plan, as amended, is qualified and the related trust is tax exempt.
NOTE 8--PARTY-IN-INTEREST TRANSACTIONS
A large portion of the Plan's assets are invested in Company Stock. Because
ConocoPhillips is the parent of the Company, transactions involving Company
Stock qualify as party-in-interest transactions. In addition, certain
investments of the Plan are in shares of mutual funds managed by Vanguard.
Because Vanguard is the Plan's trustee, these transactions also qualify as
party-in-interest transactions. All of these types of transactions were exempt
from the prohibited transaction rules.
NOTE 9--PLAN TERMINATION
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. Unallocated assets leveraged to Loan 2 would be allocated pursuant
to applicable legal and contractual requirements.
NOTE 10--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits as of
December 31, 2004 and 2003, as reflected in these financial statements, to the
amounts reflected in the Plan's Form 5500:
13
Thousands of Dollars
------------------------------
2004 2003
---------- ----------
Net assets available for benefits as
reported in the financial statements $6,982,646 6,118,299
Less: Defaulted loans identified
as deemed distributions for tax reporting (150) (22)
Less: Defaulted loan amounts identified
as actual distributions at
December 31, 2003 -- (30)
--------------------------------------------------------------------------------
Net assets available for benefits
as reported in the Form 5500 $6,982,496 6,118,247
================================================================================
The following is a reconciliation of distributions to participants or their
beneficiaries for the year ended December 31, 2004, as reflected in these
financial statements, to the amounts reflected in the Plan's Form 5500:
Thousands
of Dollars
----------
Year Ended December 31, 2004
Distributions to participants or their
beneficiaries reported in the
financial statements $625,324
Add: Current year deemed distributions
of participant loans 131
Less: Current year distributions
previously recognized as deemed (3)
Less: Defaulted loan amounts identified
as actual distributions at December 31, 2003 (30)
--------------------------------------------------------------------------------
Total distributions as reported
in the Form 5500 $625,422
================================================================================
NOTE 11--MASTER TRUSTS
Three investment options of the Plan are held in master trusts and administered
under master trust agreements. These investment options include the Stable Value
Fund, ConocoPhillips Stock Fund, and DuPont Stock Fund.
STABLE VALUE FUND
The Stable Value Fund option provided by the Plan is also available to
participants in the ConocoPhillips Store Savings Plan, and was available to
participants in the Retirement Savings Plan of ConocoPhillips Company from July
2, 2004 through September 24, 2004. Each plan's beneficial interest in the
commingled master trust funds is based on that plan's proportionate share,
determined by participant-directed balances, 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
14
trust net assets was approximately 99.9% as of December 31, 2004
and December 31, 2003.
The Stable Value Fund consisted of guaranteed investment contracts (GICs),
separate account guaranteed investment contracts (SAGICs), synthetic contracts
(SYNs), a common collective trust (CCT), and short-term investments and cash.
The crediting interest rates for the Stable Value Fund's investment contracts
ranged from 3.39% to 7.68% as of December 31, 2004. The fund's blended rate of
return for 2004 was 4.60%.
The crediting rates for most SAGIC and SYN contracts were reset quarterly and
were based on the market value of the underlying portfolio of assets backing
these contracts. Inputs used to determine the crediting rate included each
contract's portfolio market value, current yield-to-maturity, duration (i.e.,
the present value of the weighted average life), and market value relative to
contract value. All contracts had a guaranteed rate of 0.0% or higher.
The master trust (Stable Value Fund) values as of December 31, 2004 and December
31, 2003 were as follows:
Thousands of Dollars
-----------------------------
2004 2003
---------- ----------
Stable Value Fund
At December 31
GICs $ 129,095 181,510
SAGICs 175,350 183,861
SYNs 1,604,147 1,502,584
-----------------------------------------------------------------------------------------
Assets at Contract Value,
which approximates fair value 1,908,592 1,867,955
-----------------------------------------------------------------------------------------
CCT 67,612 65,056
Short-term investments and cash 24,349 15,951
-----------------------------------------------------------------------------------------
Assets at Fair Value 91,961 81,007
-----------------------------------------------------------------------------------------
End of Year $2,000,553 1,948,962
=========================================================================================
The estimated fair value of the underlying assets of the synthetic guaranteed
investment contracts at December 31, 2004 and 2003, was $1,627,937,906 and
$1,548,759,889, respectively. The contract values of synthetic guaranteed
investment contracts were net of ($23,790,533) at December 31, 2004 and
($46,175,584) at December 31, 2003 related to wrapper contracts, which guarantee
the contract value of the synthetic guaranteed investment contracts for
participant initiated withdrawal events.
The significant components of the changes in net assets relating to the master
trust (Stable Value Fund) are as follows:
15
Thousands
of Dollars
------------
Stable Value Fund
Year Ended December 31, 2004
Contributions $ 85,091
Interest and Dividend Income (net) 89,309
Asset Transfers In 367,341
Distributions (220,433)
Participant Loans (3,820)
Other Deductions (70)
Asset Transfers Out (265,827)
--------------------------------------------------------------------------------------
Net Increase 51,591
Beginning of Year 1,948,962
--------------------------------------------------------------------------------------
End of Year $ 2,000,553
======================================================================================
CONOCOPHILLIPS STOCK FUND
The ConocoPhillips Stock Fund is comprised of Company Stock held in a master
trust. This investment option provided by the Plan is also available to
participants in the ConocoPhillips Store Savings Plan, and was available to
participants in the Retirement Savings Plan of ConocoPhillips Company until
September 24, 2004. Each plan's beneficial interest in the commingled master
trust funds is based on that plan's proportionate share, determined by
participant-directed balances, 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 was
approximately 99.9% as of December 31, 2004 and December 31, 2003.
The master trust (ConocoPhillips Stock Fund) values as of December 31, 2004 and
December 31, 2003 were as follows:
Thousands of Dollars
-----------------------------
2004 2003
--------- ---------
At December 31
ConocoPhillips Stock Fund $1,662,488 1,358,719
--------------------------------------------------------------------------------------
End of Year $1,662,488 1,358,719
======================================================================================
The significant components of the changes in net assets relating to the master
trust (ConocoPhillips Stock Fund) are as follows:
16
Thousands
of Dollars
------------
ConocoPhillips Stock Fund
Year Ended December 31, 2004
Contributions $ 174,711
Dividend Income 35,385
Net Appreciation in Fair Value of Investments 423,819
Asset Transfers In 238,946
Other Additions 38
Distributions (127,625)
Participant Loans (17,825)
Other Deductions (626)
Asset Transfers Out (423,054)
--------------------------------------------------------------------------------------
Net Increase 303,769
Beginning of Year 1,358,719
--------------------------------------------------------------------------------------
End of Year $ 1,662,488
======================================================================================
DUPONT STOCK FUND
The DuPont Stock Fund is comprised of DuPont stock held in a master trust. This
investment option provided by the Plan is also available to participants in the
ConocoPhillips Store Savings Plan. Each plan's beneficial interest in the
commingled master trust funds is based on that plan's proportionate share,
determined by participant-directed balances, 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 was
approximately 99.9% as of December 31, 2004 and December 31, 2003.
The master trust (DuPont Stock Fund) values as of December 31, 2004 and December
31, 2003 were as follows:
Thousands of Dollars
------------------------------
2004 2003
---------- ----------
At December 31
DuPont Stock Fund $ 217,907 259,443
--------------------------------------------------------------------------------------
End of Year $ 217,907 259,443
======================================================================================
The significant components of the changes in net assets relating to the master
trust (DuPont Stock Fund) are as follows:
17
Thousands
of Dollars
-------------
DuPont Stock Fund
Year Ended December 31, 2004
Dividend Income $ 7,024
Net Appreciation in Fair Value of Investments 11,628
Distributions (16,219)
Participant Loans (428)
Other Deductions (91)
Asset Transfers Out (43,450)
----------------------------------------------------------------------------------------
Net Decrease (41,536)
Beginning of Year 259,443
----------------------------------------------------------------------------------------
End of Year $ 217,907
========================================================================================
NOTE 12 -- SUBSEQUENT EVENTS
On April 7, 2005, the Board of Directors of ConocoPhillips declared a
two-for-one split in the form of a 100% stock dividend, payable June 1, 2005
(Payment Date), to stockholders of record as of May 16, 2005 (Record Date). As a
result, ConocoPhillips stockholders, including participants in the Plan,
received one additional share of Company Stock for each share owned as of the
Record Date. Since there were twice as many shares after the split, each share
was worth half of what it was worth immediately before the split, while the
value of each participant's total investment in Company Stock remained unchanged
until the stock price moved up or down. For participants in the Stock Savings
Feature, the formula used to determine the shares allocated for the semiannual
allocations has been adjusted to reflect the two-for-one split.
Also, as a result of Department of Labor regulations regarding cash-out
distributions, the Plan was amended to eliminate involuntary cash-out
distributions of accounts valued at more than $1,000. Effective March 28, 2005,
if a participant terminates from employment, a cash out distribution is only
required for each account valued at $1,000 or less on the valuation dates of
March 1st or September 1st, unless the participant has an outstanding loan.
18
SCHEDULE OF ASSETS (HELD AT END OF YEAR) CONOCOPHILLIPS SAVINGS PLAN
SCHEDULE H, LINE 4i EIN 73-0400345, PLAN 022
At December 31, 2004
(c) Thousands of Dollars
(a)(b) Description of investment ------------------------
Identity of issue, including maturity date, (d) (e)
borrower, lessor rate of interest, collateral, Historical Current
or similar party par or maturity value Cost Value
------------------ ------------------------------ ----------- -----------
CONOCOPHILLIPS* 8,312,694 SHARES,
LEVERAGED STOCK FUND $ 159,480 $ 721,791
CONOCOPHILLIPS* 6,519,634 SHARES,
LOAN 2 SUSPENSE, UNALLOCATED 184,180 566,101
FIDELITY 3,632,643 UNITS, FIDELITY
INVESTMENTS LOW PRICE STOCK ** 146,214
FIDELITY 1,348,305 UNITS, MAGELLAN
INVESTMENTS FUND ** 139,941
PIMCO FUNDS 2,102,596 UNITS, PIMCO
TOTAL RETURN ** 22,435
-------------------------------------------------------------------------------
THE VANGUARD 3,136,425 UNITS, VANGUARD
GROUP* 500 INDEX INV ** 350,151
423,712 UNITS, VANGUARD
ASSET ALLOCATION FUND ** 10,406
1,300,677 UNITS, VANGUARD
BALANCED IX INV ** 25,298
1,217,326 UNITS, VANGUARD
EXPLORER FUND ** 90,776
1,229,569 UNITS, VANGUARD
EXTEND MKT INDEX INV ** 38,559
543,504 UNITS, VANGUARD
GROWTH INDEX INV ** 14,354
2,684,218 UNITS, VANGUARD
INFLA-PRO SECUR ** 33,741
1,984,370 UNITS, VANGUARD
INTL GROWTH FUND ** 37,425
19
SCHEDULE OF ASSETS (HELD AT END OF YEAR) CONOCOPHILLIPS SAVINGS PLAN
SCHEDULE H, LINE 4i EIN 73-0400345, PLAN 022
At December 31, 2004
(c) Thousands of Dollars
(a)(b) Description of investment ------------------------
Identity of issue, including maturity date, (d) (e)
borrower, lessor rate of interest, collateral, Historical Current
or similar party par or maturity value Cost Value
------------------ ------------------------------ ----------- -----------
THE VANGUARD 1,673,396 UNITS, VANGUARD
GROUP* INTL VALUE FUND ** 51,758
921,782 UNITS, VANGUARD
LIFEST CONSERV GROWTH ** 14,066
1,309,445 UNITS, VANGUARD
LIFEST GROWTH FUND ** 26,241
805,278 UNITS, VANGUARD
LIFEST INCOME FUND ** 10,895
5,059,226 UNITS, VANGUARD
LIFEST MODERATE GROWTH ** 90,611
1,658,236 UNITS, VANGUARD
LT TREASURY INV ** 19,086
2,788,808 UNITS, VANGUARD
MD-CAP INDEX FUND ** 43,617
1,282,975 UNITS, VANGUARD
MORGAN GROWTH INV ** 20,938
150,719,988 UNITS, VANGUARD
PRIME MONEY MKT ** 150,720
3,867,066 UNITS, VANGUARD
PRIMECAP FUND ** 240,918
2,167,148 UNITS, VANGUARD
SM-CAP GROWTH INDEX ** 32,854
3,570,188 UNITS, VANGUARD
SM-CAP VALUE INDEX ** 49,876
7,513,088 UNITS, VANGUARD
TOTAL BOND MKT INDEX ** 77,159
2,038,712 UNITS, VANGUARD
TOTAL INTL STOCK IDX ** 25,688
20
SCHEDULE OF ASSETS (HELD AT END OF YEAR) CONOCOPHILLIPS SAVINGS PLAN
SCHEDULE H, LINE 4i EIN 73-0400345, PLAN 022
At December 31, 2003
(c) Thousands of Dollars
(a)(b) Description of investment ------------------------
Identity of issue, including maturity date, (d) (e)
borrower, lessor rate of interest, collateral, Historical Current
or similar party par or maturity value Cost Value
------------------ ------------------------------ ----------- -----------
THE VANGUARD 903,221 UNITS, VANGUARD
GROUP* TOTAL STOCK MKT INV ** 25,986
795,021 UNITS, VANGUARD
VALUE INDEX INV ** 16,974
2,790,093 UNITS, VANGUARD
WELLINGTON INV ** 84,233
3,475,571 UNITS, VANGUARD
WINDSOR II FUND INV ** 106,804
-----------------------------------------------------------------------------
PARTICIPANTS* LOANS TO PLAN PARTICIPANTS,
INTEREST RATES RANGING
FROM 4% TO 5% - 72,466
-----------------------------------------------------------------------------
THE VANGUARD PRIME MONEY MARKET FUND
GROUP* - LOAN 2 UNALLOCATED 73 73
-----------------------------------------------------------------------------
TRAVELERS INSURANCE GROUP ANNUITY CONTRACT GR-1966A,
DEFERRED SETTLEMENT ACCOUNT ** 10
-----------------------------------------------------------------------------
$ 3,358,165
=============================================================================
* Party-in-interest
** Historical cost information is not required for participant-directed
investments.
21
EXHIBIT INDEX CONOCOPHILLIPS SAVINGS PLAN
EIN 73-0400345, PLAN 022
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
23 Consent of Independent Registered Public Accounting Firm
22