SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 11-K

 

 

 

[   X   ]

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES

 

EXCHANGE ACT OF OF 1934

 

 

 

For fiscal year ended December 31, 2005

 

OR

 

[

]

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES

 

EXCHANGE ACT OF 1934

 

 

 

For the transition period from ________to ________

 

Commission file number 1-6262

 

A.

Full title of the plan and the address of the plan, if different from that of the

 

issuer named below:

 

 

BP EMPLOYEE SAVINGS PLAN

 

4101 Winfield Road

Warrenville, IL 60555

 

B.

Name of issuer of the securities held pursuant to the plan and the address of its

 

principal executive office:

 

 

 

BP p.l.c.

1 St. James’s Square

London SW1Y 4PD England

 


 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Savings Plan Investment Oversight Committee of BP Corporation

North America Inc.

 

We have audited the accompanying statements of assets available for benefits of the BP Employee Savings Plan as of December 31, 2005 and 2004, and the related statement of changes in assets available for benefits for the year ended December 31, 2005. 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 audits 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 assets available for benefits of the Plan at December 31, 2005 and 2004, and the changes in its assets available for benefits for the year ended December 31, 2005, 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, 2005 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.

 

 

 

 

Ernst & Young LLP

 

 

Chicago, Illinois

June 12, 2006

 

1

 

 

 


 

 

EIN 36-1812780

Plan No. 001

 

BP EMPLOYEE SAVINGS PLAN

__________________________

 

STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS

thousands of dollars

 

 

December 31,  
 
 
2005   2004  
 
 
Investment in the BP Master Trust
   for Employee Savings Plans 		    $ 8,938,245   $ 8,491,309  
                 
Participant loans       99,372     101,604  
 
 
                 
Assets available for benefits     $ 9,037,617   $ 8,592,913  
     
 

 

 

The accompanying notes are an integral part of these statements.

 

 

 

 

 

 

 

2

 

 

 

 



EIN 36-1812780
Plan No. 001

 

BP EMPLOYEE SAVINGS PLAN

 

__________________________

 

STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2005

thousands of dollars

 

 

Additions of assets attributed to:          
     Participant contributions     $ 230,667  
     Company contributions       143,403  
     Rollover contributions       33,775  
     Net investment gain - BP Master Trust
         for Employee Savings Plans 		      786,489  
     Transfer of assets from other BP
         sponsored savings plans 		      198  
     Transfer of assets from BP Solvay
         401(k) plan 		      71,277  
     Loan interest       5,720  
           
         Total additions       1,271,529  
Deductions of assets attributed to:          
     Distributions to participants       818,928  
     Transfer of assets to other BP
         sponsored savings plans 		      5,598  
     Transfer of assets to plans sponsored by
         other entities: 		         
            Propex Salaried 401(k) plan       711  
            Propex Hourly 401(k) plan       1,588  
           
         Total deductions       826,825  
           
Net increase in assets during the year       444,704  
           
Assets available for benefits:          
           
     Beginning of year       8,592,913  
           
     End of year     $ 9,037,617  

 

 

The accompanying notes are an integral part of this statement.

 

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BP EMPLOYEE SAVINGS PLAN

__________________________

 

NOTES TO FINANCIAL STATEMENTS

 

1.

DESCRIPTION OF THE PLAN

 

The following description of the BP Employee Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for more complete information.

 

The Plan, established July 1, 1955, is a defined contribution plan which is subject to and complies with the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Generally, an employee of BP Corporation North America Inc. (the “Company”) or a participating affiliate is eligible to participate in the Plan as long as that employee is not eligible to participate in a separate Company-sponsored defined contribution plan, or the employee is represented by a labor organization that has bargained for and agreed to the provisions of the Plan. The Company is an indirect wholly owned subsidiary of BP p.l.c. (“BP”). The Company reserves the right to amend or terminate the Plan at any time.

 

The purpose of the Plan is to encourage eligible employees to regularly save part of their earnings and to assist them in accumulating additional financial security for their retirement. The Plan provides that both participant contributions and Company matching contributions be held in a trust by an independent trustee for the benefit of participating employees. Plan assets are held in the BP Master Trust for Employee Savings Plans (the “Master Trust”). The trustee of the Master Trust is State Street Bank and Trust Company.

 

Fidelity Investments Institutional Services Company, Inc. is the Plan’s recordkeeper. The Company is the Plan sponsor and the Company’s Vice President, Human Resources is the Plan administrator.

 

Under the Plan, participating employees may contribute up to 100% of their qualified pay on a pre-tax and/or after tax basis, subject to Internal Revenue Service (“IRS”) limits. Participants who attain age 50 before the end of the applicable plan year are eligible to make additional elective deferrals (catch-up contributions), subject to IRS limits. Participants may elect to invest in numerous investment fund options offered under the Plan. Participants may change the percentage they contribute and the investment direction of their contributions at any time throughout the year. A specified portion of the employee contribution, up to a maximum of 7 percent of compensation, as defined, is matched by the Company in the form of cash contributions, which were initially invested in the BP Stock Fund during 2004. Effective January 1, 2005, Company contributions are invested in funds selected by participants. Participants are permitted to rollover amounts into the Plan representing distributions from other qualified plans. Participants may elect to sell any portion of their investment fund(s) and reinvest the proceeds in one or more of the other available investment alternatives. Except where the fund provider, the recordkeeper, or the Plan have restrictions or take discretionary action responsive to frequent trading or market timing concerns, there are no restrictions on the number of transactions a participant may authorize during the year.

 

The benefit to which a participant is entitled is the benefit which can be provided by the participant’s vested account balance. Participants are immediately and fully vested in their participant contribution accounts. Vesting in Company matching contribution accounts is

 

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BP EMPLOYEE SAVINGS PLAN

__________________________

 

NOTES TO FINANCIAL STATEMENTS (continued)

 

1.

DESCRIPTION OF THE PLAN (continued)

 

dependent upon specific criteria as described in the Plan document. Forfeitures of Company contributions by participants who withdrew from the Plan before vesting amounted to (in thousands of dollars) $437 and $450 during the years ended December 31, 2005 and 2004, respectively. The Plan uses forfeitures to pay certain administrative expenses and to reduce future Company matching contributions.

 

All reasonable and necessary Plan administrative expenses are paid out of the Master Trust or paid by the Company. Generally, fees and expenses related to investment management of each investment option are paid out of the respective funds. As a result, the returns on those investments are net of the fees and expenses of the managers of those investment options and certain other brokerage commissions, fees and expenses incurred in connection with those investment options.

 

Effective December 31, 2004, the Amoco Fabrics and Fibers Company Salaried 401(k) Savings Plan and the Amoco Fabrics and Fibers Company Hourly 401(k) Savings Plan were merged into the Plan. Assets totaling $47 million were transferred to the Plan on December 31, 2004. On March 4, 2005, assets totaling $2.3 million were transferred to the Propex Salaried 401(k) Savings Plan and the Propex Hourly 401(k) Savings Plan in response to participants’ direction.

 

Effective April 1, 2005, the BP Solvay Polyethylene North America Savings Plan was merged into the Plan. On April 1, 2005, assets totaling $71.3 million were transferred to the Plan.

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Method of Accounting. The financial statements of the Plan are prepared under the accrual method of accounting in accordance with U.S. generally accepted accounting principles.

 

Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires estimates and assumptions that affect certain reported amounts. Actual results may differ in some cases from the estimates.

 

Investment Valuation. All investments of the Master Trust, except as noted below, are stated at fair value generally as determined by quoted closing market prices, if available. Investments in guaranteed investment contracts and synthetic guaranteed investment contracts, which are fully benefit responsive, are valued at contract value which approximates fair value. Money market investments are valued at cost which approximates fair value. Other investments for which no quoted market prices are available are valued at fair value as determined by the trustee based on the advice of its investment consultants. Participant loans are valued at cost which approximates fair value.

 

 

 

 

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BP EMPLOYEE SAVINGS PLAN

_______________________

 

NOTES TO FINANCIAL STATEMENTS (continued)

 

3.

PARTICIPANT LOANS

 

Participants are eligible to borrow from their account balances in the Plan. Loans are made in the form of cash and the amount may not exceed the lesser of 50 percent of the market value of the total vested participant’s account or $50,000 less the participant’s highest loan balance outstanding during the preceding twelve months. Interest rates charged on unpaid balances are fixed for the duration of the loan. The interest rate charged is one percent plus the prime rate as reported by The Wall Street Journal on the last business day of the calendar quarter immediately preceding the calendar quarter in which the participant applies for the loan. A processing fee of $35 is charged for each new loan. Repayment of loan principal and interest is generally made by payroll deductions and credited to the participant’s accounts.

 

4.

INCOME TAX STATUS  

 

The Plan has received a determination letter from the IRS dated November 5, 2003, with respect to its qualified status under Section 401(a) of the Internal Revenue Code (“IRC”) and, therefore, the related trust is exempt from taxation. The Plan is required to operate in conformity with the IRC in order to maintain its qualification. Although the Plan has been amended since receiving the determination letter, the Plan administrator and the Company’s tax counsel believe the Plan continues to meet the applicable tax qualification requirements of the IRC. The Plan sponsor reserves the right to make any amendments necessary to maintain the qualification of the Plan and trust.

 

5.

RISKS AND UNCERTAINTIES

 

Investment securities held in the Master Trust are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities could occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of assets available for benefits.

 

6.

MASTER TRUST

 

All investment assets of the Plan except participant loans are held in the Master Trust with the assets of other BP sponsored savings plans.

 

The beneficial interest of the plans in the Master Trust is adjusted daily to reflect the effect of income collected and accrued, realized and unrealized gains and losses, contributions and withdrawals, and all other transactions. The Master Trust constitutes a single investment account as defined in the master trust reporting and disclosure rules and regulations of the Department of Labor.

 

 

 

 

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BP EMPLOYEE SAVINGS PLAN

__________________________

 

NOTES TO FINANCIAL STATEMENTS (continued)

 

6.

MASTER TRUST (continued)

 

The Master Trust holds guaranteed investment contracts and synthetic guaranteed investment contracts in order to achieve certain fixed income objectives and to manage interest rate risk. The crediting interest rates on the contracts ranged from 4.3% to 5.8% at December 31, 2005 (3.9% to 7.6% at December 31, 2004). The average yield earned on the contracts during the years ended December 31, 2005 and 2004 was 4.4% and 4.2%, respectively. The crediting interest rates on synthetic guaranteed investment contracts are generally reset quarterly by the issuer, but can not be less than 0%. There were no guaranteed investment contracts held by the Master Trust at December 31, 2005. The contract values of synthetic guaranteed investment contracts are net of $7 million at December 31, 2005 and ($6 million) at December 31, 2004 representing the fair value of the related wrapper contracts. The Master Trust’s interest in the contracts represents the maximum potential credit loss from concentrations of credit risk associated with its investment.

 

Certain Master Trust investments include American Depositary Shares of BP p.l.c. (“BP ADSs”). Transactions in BP ADSs qualify as party-in-interest transactions under the provisions of ERISA. Purchases and sales of BP ADSs during 2005 amounted to $825 million and $1,041 million, respectively.

 

In order to provide the BP Stock Fund liquidity, the Company has agreed to advance the Master Trust up to $200 million. Amounts borrowed by the Master Trust under the revolving loan facility do not bear interest and are repayable within three days. There were no amounts borrowed during 2005 or 2004 under the agreement.

 

As of December 31, 2005 and December 31, 2004, the Plan’s percentage interest in the Master Trust was 98.55% and 98.71%, respectively. The net assets of the Master Trust as of December 31, 2005 and December 31, 2004, and changes in net assets of the Master Trust for the year ended December 31, 2005 are as follows:

 

 

 

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BP EMPLOYEE SAVINGS PLAN

__________________________

 

NOTES TO FINANCIAL STATEMENTS (continued)

 

6.

MASTER TRUST (continued)

 

 

NET ASSETS

thousands of dollars

 

December 31,  
2005   2004  
Investments:                
   BP ADSs     $ 3,287,442   $ 3,185,260  
   Registered investment companies       3,089,405     2,657,274  
   Common collective trust funds       1,223,963     1,203,099  
   Money market and short-term
       investment funds 		      805,012     860,118  
   Synthetic guaranteed investment
       contracts 		      661,292     675,461  
   Guaranteed investment contracts       —     28,207  
         Total investments       9,067,114     8,609,419  
     
Receivables:                
   Dividends and interest       809     418  
   Securities sold       2,373     1,355  
         Total assets       9,070,296     8,611,192  
     
Accrued liabilities:                
   Securities purchased       —     8,859  
   Fees and expenses       362     481  
         Total liabilities       362     9,340  
      Net assets     $ 9,069,934   $ 8,601,852  

 

 

8

 

 

 

BP EMPLOYEE SAVINGS PLAN

__________________________

 

NOTES TO FINANCIAL STATEMENTS (continued)

 

6.

MASTER TRUST (continued)

 

CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2005

thousands of dollars

 

Additions of assets attributed to:          
     Transfer of assets from participating plans:          
        Participant contributions     $ 237,546  
        Rollover contributions       34,323  
        Company contributions       147,001  
        Loan repayments       54,422  
     Interest and dividends       302,769  
     Transfer of assets from BP Solvay 401(k) Plan       69,415  
     Net realized and unrealized appreciation
         in fair value of investments: 		         
           BP ADSs       319,499  
           Registered investment companies       70,211  
           Common collective trust funds       108,122  
           
                Total additions       1,343,308  
           
Deductions of assets attributed to:          
     Transfer of assets to participating plans:          
        Distributions to participants       821,063  
        Loans to participants       50,401  
     Transfer of assets to plans sponsored by other
         entities: 		         
              Propex Salaried 401(k) Plan       643  
              Propex Hourly 401(k) Plan       1,359  
     Administrative expenses       1,760  
           
                Total deductions       875,226  
           
Net increase in assets during the year       468,082  
           
Net assets:          
           
     Beginning of year       8,601,852  
           
     End of year     $ 9,069,934  

 

 

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EIN: 36-1812780
Plan No. 001

 

BP EMPLOYEE SAVINGS PLAN

__________________________

 

Schedule H, Line 4i – Schedule Of Assets (Held At End Of Year)

 

December 31, 2005

 

 

 

Description of

 

 

 

Investment Including

 

 

Identity of Issue,

Maturity Date, Rate

 

 

Borrower, Lessor,

of Interest, Collateral,

 

Current

Similar Party

Par, Maturity Value

Cost

Value

 

 

 

 

* Participant loans

4.00% - 11.25%

N/A

$ 99,372,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Indicates party-in-interest

 

 

 

 

10

 

 

 


 

 

SIGNATURE  

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

BP EMPLOYEE SAVINGS PLAN

 

 

By Plan Administrator

 

 

Date: June 21, 2006 /s/ Patricia H. Miller
————————————————

 

Patricia H. Miller

 

 

Vice-President, Human Resources

 

 

BP Corporation North America Inc.

 

 

 

 

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BP EMPLOYEE SAVINGS PLAN

_______________________

 

EXHIBITS

 

 

 

 

Exhibit No.

Description

 

 

23

Consent of Independent Registered

Public Accounting Firm

 

 

 

 

 

 

 

12