<PAGE> 1
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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 1-14380
CITGO PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 73-1173881
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE WARREN PLACE, 6100 SOUTH YALE AVENUE, TULSA, OKLAHOMA 74136
(Address of principal executive office) (Zip Code)
(918) 495-4000
(Registrant's telephone number, including area code)
N. A.
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
COMMON STOCK, $1.00 PAR VALUE 1,000
(Class) (outstanding at October 31, 2000)
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CITGO PETROLEUM CORPORATION
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
FACTORS AFFECTING FORWARD LOOKING STATEMENTS......................................................................1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - September 30, 2000 and December 31, 1999....................2
Condensed Consolidated Statements of Income - Three and Nine-Month Periods Ended
September 30, 2000 and 1999.........................................................................3
Condensed Consolidated Statement of Shareholder's Equity - Nine-Month Period
Ended September 30, 2000............................................................................4
Condensed Consolidated Statements of Cash Flows - Nine-Month Periods Ended
September 30, 2000 and 1999.........................................................................5
Notes to the Condensed Consolidated Financial Statements............................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................................................13
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................21
Item 6. Exhibits and Reports on Form 8-K...................................................................21
SIGNATURES.......................................................................................................22
</TABLE>
<PAGE> 3
FACTORS AFFECTING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Specifically, all statements under the caption "Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations" relating to
capital expenditures and investments related to environmental compliance and
strategic planning, purchasing patterns of refined products and capital
resources available to the Company (as defined herein) are forward looking
statements. In addition, when used in this document, the words "anticipate,"
"estimate," "prospect" and similar expressions are used to identify forward
looking statements. Such statements are subject to certain risks and
uncertainties, such as increased inflation, continued access to capital markets
and commercial bank financing on favorable terms, increases in regulatory
burdens, changes in prices or demand for the Company's products as a result of
competitive actions or economic factors and changes in the cost of crude oil,
feedstocks, blending components or refined products. Such statements are also
subject to the risks of increased costs in related technologies and such
technologies producing anticipated results. Should one or more of these risks or
uncertainties, among others, materialize, actual results may vary materially
from those estimated, anticipated or projected. Although CITGO believes that the
expectations reflected by such forward looking statements are reasonable based
on information currently available to the Company, no assurances can be given
that such expectations will prove to have been correct.
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
(UNAUDITED)
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 22,883 $ 95,780
Accounts receivable, net 1,114,941 1,004,268
Due from affiliates 36,107 37,860
Inventories 1,034,009 953,153
Deferred income taxes 6,440 --
Prepaid expenses and other 5,705 7,136
------------- ------------
Total current assets 2,220,085 2,098,197
PROPERTY, PLANT AND EQUIPMENT - Net 2,802,688 2,877,305
RESTRICTED CASH -- 3,015
INVESTMENTS IN AFFILIATES 721,217 734,822
OTHER ASSETS 209,123 193,946
------------- ------------
$ 5,953,113 $ 5,907,285
============= ============
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Short-term bank loans $ -- $ 16,000
Accounts payable 727,312 632,295
Payables to affiliates 461,869 381,404
Taxes other than income 192,903 218,503
Other 246,179 192,579
Current portion of long-term debt 47,078 47,078
Current portion of capital lease obligation 17,276 16,356
------------- ------------
Total current liabilities 1,692,617 1,504,215
LONG-TERM DEBT 1,041,888 1,392,222
CAPITAL LEASE OBLIGATION 76,695 85,570
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 209,506 212,871
OTHER NONCURRENT LIABILITIES 188,411 197,024
DEFERRED INCOME TAXES 577,434 521,751
MINORITY INTEREST 31,565 29,710
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDER'S EQUITY:
Common stock - $1.00 par value, 1,000 shares authorized, issued and outstanding 1 1
Additional capital 1,312,616 1,312,616
Retained earnings 825,594 654,519
Accumulated other comprehensive income (3,214) (3,214)
------------- ------------
Total shareholder's equity 2,134,997 1,963,922
------------- ------------
$ 5,953,113 $ 5,907,285
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
2
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CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)
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<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 5,826,293 $ 3,621,391 $ 16,232,533 $ 8,964,069
Sales to affiliates 51,198 50,156 167,458 117,182
------------ ------------ ------------ ------------
5,877,491 3,671,547 16,399,991 9,081,251
Equity in earnings (losses) of affiliates 27,957 12,150 30,984 8,931
Other income (expense) - net (1,603) (2,407) (1,522) (6,321)
------------ ------------ ------------ ------------
5,903,845 3,681,290 16,429,453 9,083,861
COST OF SALES AND EXPENSES:
Cost of sales and operating expenses (including
purchases of $2,858,919, $1,780,233,
$7,729,273 and $4,058,824 from affiliates) 5,675,036 3,554,336 15,945,481 8,640,531
Selling, general and administrative expenses 51,399 50,375 144,034 160,879
Interest expense, excluding capital lease 20,263 21,816 62,402 62,361
Capital lease interest charge 2,643 3,078 8,376 9,636
Minority interest 463 (42) 1,855 352
------------ ------------ ------------ ------------
5,749,804 3,629,563 16,162,148 8,873,759
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 154,041 51,727 267,305 210,102
INCOME TAXES 54,322 19,139 96,230 66,402
------------ ------------ ------------ ------------
NET INCOME $ 99,719 $ 32,588 $ 171,075 $ 143,700
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
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CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (UNAUDITED)
(DOLLARS IN THOUSANDS)
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<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON STOCK ADDITIONAL RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME TOTAL
---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 1 $ 1 $1,312,616 $ 654,519 $ (3,214) $1,963,922
Net Income -- -- -- 171,075 -- 171,075
---------- ---------- ---------- ---------- ------------- ----------
BALANCE, SEPTEMBER 30, 2000 1 $ 1 $1,312,616 $ 825,594 $ (3,214) $2,134,997
========== ========== ========== ========== ============= ==========
</TABLE>
See notes to condensed consolidated financial statements.
4
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CITGO PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 403,857 $ (21,720)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (76,386) (167,801)
Proceeds from sales of property, plant and equipment 4,129 7,514
Decrease in restricted cash 3,015 6,459
Loans to LYONDELL-CITGO Refining LP (7,024) (19,700)
Investment in LYONDELL-CITGO Refining LP (10,700) --
Proceeds from sale of investments -- 4,980
Investments in and advances to other affiliates (15,500) (4,212)
--------- ---------
Net cash used in investing activities (102,466) (172,760)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments of) proceeds from short-term bank loans (16,000) 55,000
Net (repayments of) proceeds from revolving bank loans (345,000) 164,000
Proceeds from issuance of tax-exempt bonds -- 25,000
Payments on taxable bonds -- (25,000)
Dividends paid -- (15,000)
Payments of capital lease obligations (7,954) (7,130)
Repayments of other debt (5,334) (5,334)
--------- ---------
Net cash (used in) provided by financing activities (374,288) 191,536
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (72,897) (2,944)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 95,780 30,338
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 22,883 $ 27,394
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of amounts capitalized $ 62,220 $ 60,946
========= =========
Income taxes, net of refunds of $15,008 and $30,052 $ 28,971 $ (27,672)
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 8
CITGO PETROLEUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
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1. BASIS OF PRESENTATION
The financial information for CITGO Petroleum Corporation ("CITGO" or "the
Company") subsequent to December 31, 1999 and with respect to the interim
three-month and nine-month periods ended September 30, 2000 and 1999 is
unaudited. In the opinion of management, such interim information contains
all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of such periods. The
results of operations for the three-month and nine-month periods ended
September 30, 2000 and 1999 are not necessarily indicative of the results
to be expected for the full year. Reference is made to CITGO's Annual
Report for the fiscal year ended December 31, 1999 on Form 10-K, dated
March 24, 2000, for additional information.
The condensed consolidated financial statements include the accounts of
CITGO, its wholly owned subsidiaries, and Cit-Con Oil Corporation, which
is 65 percent owned by CITGO (collectively, "the Company").
2. INVENTORIES
Inventories, primarily at LIFO, consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
(Unaudited)
------------- ------------
(000'S omitted)
<S> <C> <C>
Refined products $ 751,124 $ 747,620
Crude oil 222,238 150,092
Materials and supplies 60,647 55,441
------------- ------------
$ 1,034,009 $ 953,153
============= ============
</TABLE>
6
<PAGE> 9
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
(Unaudited)
------------- ------------
(000's omitted)
<S> <C> <C>
Revolving bank loans $ -- $ 345,000
Senior Notes $200 million face amount, due 2006 with
interest rate of 7.875% 199,829 199,806
Private Placement Senior Notes, due 2000 to 2006 with
interest rates from 9.03% to 9.30% 136,688 136,688
Master Shelf Agreement Senior Notes, due 2002 to
2009 with interest rates from 7.17% to 8.94% 260,000 260,000
Tax Exempt Bonds, due 2004 to 2029 with variable
and fixed interest rates 305,520 305,520
Taxable Bonds, due 2026 to 2028 with variable interest rates 178,000 178,000
Cit-Con bank credit agreement 8,929 14,286
------------- ------------
1,088,966 1,439,300
Current portion of long-term debt (47,078) (47,078)
------------- ------------
$ 1,041,888 $ 1,392,222
============= ============
</TABLE>
At September 30, 2000, the net year to date repayments on the revolving
bank loans were $345 million.
On May 10, 2000, CITGO renewed its $150 million 364-day revolving bank
loan facility for another term.
4. INVESTMENT IN LYONDELL-CITGO REFINING LP
LYONDELL-CITGO Refining LP ("LYONDELL-CITGO") owns and operates a 265 MBPD
refinery in Houston, Texas and is owned by subsidiaries of CITGO (41.25%)
and Lyondell Chemical Company (58.75%) ("the Owners"). This refinery
processes heavy crude oil supplied by Petroleos de Venezuela, S.A.
("PDVSA" which may also be used to refer to one or more of its
subsidiaries) under a long-term supply contract that expires in 2017.
CITGO purchases substantially all of the gasoline, diesel and jet fuel
produced at the refinery under a long-term contract.
In April 1998, PDVSA, pursuant to its contractual rights, declared force
majeure and reduced deliveries of crude oil to LYONDELL-CITGO; this
required LYONDELL-CITGO to obtain alternative sources of crude oil supply
in replacement, which resulted in lower operating margins. PDVSA informed
LYONDELL-CITGO that effective October 1, 2000, the force majeure condition
was terminated. PDVSA deliveries of crude oil have returned to contract
levels.
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<PAGE> 10
CITGO has notes receivable from LYONDELL-CITGO which total $35 million and
$28 million at September 30, 2000 and December 31, 1999, respectively. The
notes bear interest at market rates and are due July 1, 2003. These notes
are included in other assets in the accompanying consolidated balance
sheets.
CITGO accounts for its investment in LYONDELL-CITGO using the equity
method of accounting and records its share of the net earnings of
LYONDELL-CITGO based on allocations of income agreed to by the Owners.
Information on CITGO's investment in LYONDELL-CITGO follows:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
(000's omitted)
<S> <C> <C>
Carrying value of investment $ 549,536 $ 560,227
Notes receivable 35,278 28,255
Participation interest 41% 41%
Summary of financial position:
Current assets $ 358,560 $ 219,365
Non current assets 1,392,920 1,405,879
Current liabilities 911,238 696,661
Non current liabilities 321,573 316,492
Members' equity 518,669 612,091
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
----------- -----------
(Unaudited)
(000's omitted)
<S> <C> <C>
Equity in net income (loss) $ 18,483 $ (7,639)
Cash distribution received 39,874 52,823
Summary of operating results:
Revenue $ 2,936,815 $ 1,694,386
Gross profit 155,266 75,649
Net income (loss) 66,104 (2,445)
</TABLE>
LYONDELL-CITGO has arranged interim financing and repaid a $450 million
loan that matured on September 15, 2000. The interim financing agreement
expires in September 2001. The Owners are currently reviewing financing
alternatives to address this situation.
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5. COMMITMENTS AND CONTINGENCIES
LITIGATION AND INJURY CLAIMS - Various lawsuits and claims arising in the
ordinary course of business are pending against the Company. The Company
records accruals for potential losses when, in management's opinion, such
losses are probable and reasonably estimable. If known lawsuits and claims
were to be determined in a manner adverse to the Company, and in amounts
greater than the Company's accruals, then such determinations could have a
material adverse effect on the Company's results of operations in a given
reporting period. However, in management's opinion the ultimate resolution
of these lawsuits and claims will not exceed, by a material amount, the
amount of the accruals and the insurance coverage available to the
Company. This opinion is based upon management's and counsel's current
assessment of these lawsuits and claims. The most significant lawsuits and
claims are discussed below.
In May 1997, an explosion and fire occurred at CITGO's Corpus Christi
refinery. No serious personal injuries were reported. Approximately 1,300
claims have been resolved for amounts which individually and collectively
were not material. There are presently seventeen lawsuits filed on behalf
of approximately 9,000 individuals arising out of this incident in state
courts in Corpus Christi alleging property damages, personal injury and
punitive damages. There are no trials on these claims scheduled to take
place before mid-2001.
A class action lawsuit is pending in Corpus Christi, Texas state court
against CITGO which claims damages for reduced value of residential
properties located in the vicinity of the industrial facilities as a
result of air, soil and groundwater contamination. CITGO has contracted to
purchase all of the 275 properties included in the lawsuit which are in an
area adjacent to CITGO's Corpus Christi refinery and settle the property
damage claims relating to these properties. Related to this purchase,
$15.7 million was expensed in 1997. The trial judge ruled, over CITGO's
objections, that a settlement agreement CITGO entered into in September
1997 and subsequently withdrew from, that provided for settlement of the
remaining property damage claims for $5 million is enforceable. CITGO has
asked the court to reconsider its ruling. The trial against CITGO of these
remaining claims has been postponed indefinitely. Two related personal
injury and wrongful death lawsuits were filed against CITGO in 1996 and
are scheduled for trial in 2001.
Litigation is pending in federal court in Lake Charles, Louisiana against
CITGO by a number of current and former Lake Charles refinery employees
and applicants asserting claims of racial discrimination in connection
with CITGO's employment practices. The first trial in this case, which
involved two plaintiffs, began in October 1999 and resulted in verdicts
for the Company. The Court granted the Company's motion for summary
judgment with respect to another group of claims; this action has been
appealed to the Fifth Circuit Court of Appeals. Trials of all the
remaining cases have been taken off the trial court's docket pending this
appeal.
CITGO is among defendants to lawsuits in North Carolina, New York and
Illinois alleging contamination of water supplies by methyl tertiary butyl
ether ("MTBE"), a component of gasoline. The North Carolina case, filed in
January 1999, and the New York case, filed in January 2000 are putative
class actions on behalf of owners of water wells and other drinking water
supplies in such states. The Illinois class action, filed in April 2000,
purports to be on behalf of well owners in sixteen states. All of these
actions allege that MTBE poses public health risks. The suits seek damages
as well as remediation of the alleged contamination. These matters are in
early stages of discovery. A Federal Court and a Multi-District Litigation
Panel has ordered that the Illinois case be transferred to New York and
consolidated with the case pending in New York. CITGO has denied all of
the allegations and is pursuing its defenses.
9
<PAGE> 12
In June 1999, a group of U.S. independent oil producers filed petitions
under the U.S. antidumping and countervailing duty laws against imports of
crude oil from Venezuela, Iraq, Mexico and Saudi Arabia. These laws
provide for the imposition of additional duties on imports of merchandise
if (1) the U.S. Department of Commerce ("DOC") determines that the
merchandise has been sold to the United States at dumped prices or has
benefited from countervailable subsidies, and (2) the U.S. International
Trade Commission ("ITC") determines that the imported merchandise has
caused or threatened material injury to the U.S. industry producing like
product. The amount of the additional duties imposed is generally equal to
the amount of the dumping margin and subsidies found on the imports on
which the duties are assessed. In August 1999, the DOC dismissed the
petitions and terminated the antidumping and countervailing duty
investigations because the petitioners did not have the required industry
support. In September 2000, the U.S. Court of International Trade
overturned this decision and remanded the case to the DOC for
reconsideration; the DOC is to make a revised decision by November 18,
2000.
ENVIRONMENTAL COMPLIANCE AND REMEDIATION - CITGO is subject to various
federal, state and local environmental laws and regulations which may
require CITGO to take action to correct or improve the effects on the
environment of prior disposal or release of petroleum substances by CITGO
or other parties. Management believes the Company is in compliance with
these laws and regulations in all material aspects. Maintaining compliance
with environmental laws and regulations in the future could require
significant capital expenditures and additional operating costs.
CITGO's accounting policy establishes environmental reserves as probable
site restoration and remediation obligations become reasonably capable of
estimation. Based on currently available information, including the
continuing participation of former owners in remediation actions and
indemnification agreements with third parties, CITGO believes that its
accruals are sufficient to address its environmental clean-up obligations.
The Texas Natural Resources Conservation Commission ("TNRCC") conducted
environmental compliance reviews at the Corpus Christi refinery in 1998
and 1999. TNRCC has issued Notices of Violation ("NOV") related to each of
the reviews and has proposed fines of approximately $970,000 based on the
1998 review and $700,000 based on the 1999 review. Most of the alleged
violations refer to recordkeeping and reporting issues, failure to meet
required emission levels, and failure to properly monitor emissions. The
Company is currently reviewing the alleged violations and intends to
vigorously protest the alleged violations and proposed fines.
In June 1999, CITGO and numerous other industrial companies received
notice from the U.S. Environmental Protection Agency ("EPA") that the EPA
believes these companies have contributed to contamination in the
Calcasieu Estuary, in the proximity of Lake Charles, Calcasieu Parish,
Louisiana and are Potentially Responsible Parties ("PRPs") under the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"). The EPA made a demand for payment of its past investigation
costs from CITGO and other PRPs and advised it is conducting a Remedial
Investigation/Feasibility Study ("RI/FS") under its CERCLA authority.
CITGO and other PRPs may be potentially responsible for the costs of the
RI/FS. CITGO disagrees with the EPA's allegations and intends to contest
this matter.
In October 1999, the EPA issued an NOV to CITGO for violations of federal
regulations regarding reformulated gasoline found during a May 1998
inspection at CITGO's Braintree, Massachusetts terminal and recommended a
penalty of $218,500. The Company settled this matter in September 2000
without a penalty.
10
<PAGE> 13
In March 2000, CITGO received an Information Request from the EPA under
Section 114 of the Federal Clean Air Act ("CAA"). This Information Request
seeks information regarding the Company's compliance with certain
provisions of the CAA addressing the installation and permitting of new
and modified air emission sources, commonly referred to as the "New Source
Review" ("NSR") provisions. The Information Request specifically seeks
information regarding CITGO's Lake Charles, LA; Corpus Christi, TX; and
Savannah, GA facilities and a Lemont, IL refinery operated by CITGO. In
addition to CITGO, several other petroleum refining companies received
similar requests. The Company substantially completed its response to this
request in August 2000. At this time, no enforcement or other legal action
arising out of this inquiry has been filed against the Company. If the
Company were to be found to have violated the NSR provisions of the CAA,
it could be subject to possible significant penalties and capital
expenditures for installation or upgrading of pollution control equipment
or technologies.
Conditions which require additional expenditures may exist with respect to
various Company sites including, but not limited to, CITGO's operating
refinery complexes, closed refineries, service stations and crude oil and
petroleum product storage terminals. The amount of such future
expenditures, if any, is indeterminable.
6. DERIVATIVE COMMODITY AND FINANCIAL INSTRUMENTS
CITGO enters into petroleum futures contracts, options and other
over-the-counter commodity derivatives, primarily to reduce its inventory
exposure to market risk. Such contracts are generally entered into through
major brokerage houses and traded on national exchanges and can be settled
in cash or through delivery of the commodity. Such contracts generally
qualify for hedge accounting and correlate to market price movements of
crude oil and refined products. Resulting gains and losses on such
contracts, therefore, will generally be offset by gains and losses on
CITGO's hedged inventory or future purchases and sales. In the nine-month
period ended September 30, 2000, there was no non-hedging activity.
CITGO has only limited involvement with other derivative financial
instruments and does not currently use them for trading purposes. CITGO
has entered into various interest rate swaps to manage its risk related to
interest rate changes on its debt. The fair value of the interest rate
swap agreements in place at September 30, 2000, based on the estimated
amount that CITGO would receive or pay to terminate the agreements as of
that date and taking into account current interest rates, was an
unrealized loss of $1 million. In connection with the determination of
fair market value, the Company considers the creditworthiness of the
counterparties, but no adjustment was determined to be necessary as a
result.
The commodity instruments increased cost of sales and operating expenses
and decreased pretax earnings by $3 million for the quarter and $9 million
for the nine months ended September 30, 2000. The commodity instruments
did not have a material impact on cost of sales and operating expenses or
pretax earnings in the quarter or the nine months ended September 30,
1999. The impact of the interest rate swaps on cost of sales and expenses
and pretax earnings was immaterial for all periods presented.
11
<PAGE> 14
7. RELATED PARTY TRANSACTIONS
CITGO's largest supplier of crude oil is PDVSA. CITGO has entered into
long-term crude oil supply agreements with PDVSA with respect to the crude
oil requirements for each of CITGO's refineries. These crude oil supply
agreements contain force majeure provisions that entitle the supplier to
reduce the quantity of crude oil and feedstock delivered under the crude
supply agreements under specified circumstances. PDVSA declared force
majeure in April 1998. Through the nine-month period ended September 30,
2000, PDVSA deliveries of crude oil to CITGO were less than contractual
base volumes due to PDVSA's declaration of force majeure. Therefore, the
Company has been required to use alternative sources of crude oil. As a
result, CITGO estimates that crude oil costs in the nine months ended
September 30, 2000 were increased by $5 million. However, in the three
months ended September 30, 2000, CITGO estimates that the declaration of
force majeure did not result in increased crude costs. PDVSA informed CITGO
that effective October 1, 2000, the force majeure condition was terminated
and delivery of full contract volumes of crude oil would be restored.
These contracts also contain provisions which entitle the supplier to
reduce the quantity of crude oil and feedstock delivered under the crude
supply agreements and oblige the supplier to pay CITGO a deemed margin
under that contract for each barrel of reduced crude oil and feedstock.
During the nine months ended September 30, 2000, PDVSA did not deliver
naphtha pursuant to two of these contracts. As a result, naphtha costs, net
of deemed margin were increased by $3 million and $6 million for the three
months and nine months ended September 30, 2000. During the three months
ended September 30, 1999, PDVSA did not deliver naphtha pursuant to one of
these contracts and made contractually specified payments in lieu thereof.
The financial impact to the three-month and nine-month periods ended
September 30, 1999 was immaterial.
12
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion of the financial condition and results of
operations of CITGO should be read in conjunction with the unaudited condensed
consolidated financial statements of CITGO included elsewhere herein. Reference
is made to CITGO's Annual Report for the fiscal year ended December 31, 1999 on
Form 10-K, dated March 24, 2000, for additional information and a description of
factors which may cause substantial fluctuations in the earnings and cash flows
of CITGO.
In the quarter ended September 30, 2000, CITGO generated net income of
$99.7 million on revenue of $5.9 billion compared to net income of $32.6 million
on revenues of $3.7 billion for the same period last year. In the nine months
ended September 30, 2000, CITGO generated net income of $171.1 million on
revenue of $16.4 billion compared to net income of $143.7 million on revenues of
$9.1 billion for the same period last year. Gross margin for the first nine
months of 1999 benefited from the sale of inventories that were written down by
$159 million at December 31, 1998, to reflect market prices at that time. (See
"Gross margin").
RESULTS OF OPERATIONS
The following table summarizes the sources of CITGO's sales revenues
and sales volumes for the three-month and nine-month periods ended September 30,
2000 and 1999:
CITGO SALES REVENUES AND VOLUMES
<TABLE>
<CAPTION>
THREE NINE THREE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- -------- -------- -------- --------
($ in millions) ($ in millions) (MM gallons) (MM gallons)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gasoline $ 3,364 $ 2,172 $ 9,460 $ 5,306 3,559 3,231 10,350 9,718
Jet fuel 523 297 1,457 726 576 520 1,758 1,591
Diesel/#2 fuel 1,168 637 3,292 1,649 1,310 1,136 4,028 3,738
Asphalt 201 124 414 243 293 271 614 568
Petrochemicals and industrial products 472 217 1,324 649 547 448 1,654 1,494
Lubricants and waxes 139 129 411 370 66 77 208 220
-------- -------- -------- -------- -------- -------- -------- --------
Total refined product sales 5,867 3,576 16,358 8,943 6,351 5,683 18,612 17,329
Other sales 10 96 42 138
-------- -------- -------- -------- -------- -------- -------- --------
Total sales $ 5,877 $ 3,672 $ 16,400 $ 9,081 6,351 5,683 18,612 17,329
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
13
<PAGE> 16
The following table summarizes CITGO's cost of sales and operating
expenses for the three-month and nine-month periods ended September 30, 2000 and
1999:
CITGO COST OF SALES AND OPERATING EXPENSES
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
Crude oil $ 1,437 $ 796 $ 3,895 $ 1,919
Refined products purchases 3,471 2,208 9,913 5,356
Intermediate feedstocks purchases 365 311 1,015 616
Refining and manufacturing costs 217 204 648 600
Inventory changes (1) 20 (117) (7) (338)
Other operating costs and expenses 165 152 481 488
-------- -------- -------- --------
Total cost of sales and operating expenses $ 5,675 $ 3,554 $ 15,945 $ 8,641
======== ======== ======== ========
</TABLE>
(1) The nine months ended September 30, 1999, includes the impact of the
inventory valuation reserve of $159 million recorded at December 31, 1998.
See "Gross Margin".
Sales revenues and volumes. Sales increased $2.2 billion, or
approximately 60%, in the three-month period ended September 30, 2000 as
compared to the same period in 1999. This was due to an increase in average
sales price of 43% and an increase in sales volume of 12%. Sales increased $7.3
billion, or approximately 81%, in the nine-month period ended September 30, 2000
as compared to the same period in 1999. This was due to an increase in average
sales price of 68% and an increase in sales volume of 7%. (See CITGO Sales
Revenues and Volumes table above.)
Equity in earnings (losses) of affiliates. Equity in earnings (losses)
of affiliates increased by $16 million for the three-month period and increased
$22 million for the nine-month period ended September 30, 2000 as compared to
the same periods in 1999. The increase was primarily due to the change in the
earnings of LYONDELL-CITGO. CITGO's share of these earnings increased $26
million, from $(8) million in the first nine months of 1999 to $18 million in
the first nine months of 2000. The improved gasoline market in 2000 compared to
1999 continued into the quarter ended September 30, 2000. This was supplemented
by the completion of processing unit turnarounds in the second quarter 2000 and
the ability to run crude oil in the third quarter 2000 which had been stored
during the second quarter 2000 due to the turnarounds.
Cost of sales and operating expenses. Cost of sales and operating
expenses increased by $2.1 billion or 60%, in the quarter ended September 30,
2000 as compared to the same period in 1999. Cost of sales and operating
expenses increased by $7.3 billion or 85%, in the nine months ended September
30, 2000 as compared to the same period in 1999. (See CITGO Cost of Sales and
Operating Expenses table above.)
As a result of the invocation of the force majeure clause in its crude
supply contracts, CITGO estimates that crude oil costs in the nine months ended
September 30, 2000 were increased by $5 million. However, in the three months
ended September 30, 2000, CITGO estimates that the declaration of force majeure
did not result in increased crude costs. PDVSA informed CITGO that effective
October 1, 2000, the force majeure condition was terminated and delivery of full
contract volumes of crude oil would be restored. These contracts also contain
provisions which entitle the supplier to reduce the quantity of crude
14
<PAGE> 17
oil and feedstock delivered under the crude supply agreements and oblige the
supplier to pay CITGO a deemed margin under that contract for each barrel of
reduced crude oil and feedstock. During the nine months ended September 30,
2000, PDVSA did not deliver naphtha pursuant to two of these contracts. As a
result, naphtha costs, net of deemed margin were increased by $3 million and $6
million for the three months and nine months ended September 30, 2000.
CITGO purchases refined products to supplement the production from its
refineries to meet marketing demands and resolve logistical issues. Refined
product purchases represented 61% and 62% of total cost of sales and operating
expenses for the third quarters of 2000 and 1999, respectively, and 62% for the
first nine months of 2000 and 1999. CITGO estimates that margins on purchased
products, on average, are lower than margins on produced products due to the
fact that CITGO can only receive the marketing portion of the total margin
received on the produced refined products. However, purchased products are not
segregated from CITGO produced products and margins may vary due to market
conditions and other factors beyond the Company's control. As such, it is
difficult to measure the effects on profitability of changes in volumes of
purchased products. In the near term, other than normal refinery turnaround
maintenance, CITGO does not anticipate operational actions or market conditions
which might cause a material change in anticipated purchased product
requirements; however, there could be events beyond the control of CITGO which
impact the volume of refined products purchased. See also "Factors Affecting
Forward Looking Statements".
Gross margin. The gross margin for the three-month period ended
September 30, 2000 was approximately 3.2 cents per gallon, compared to
approximately 2.1 cents per gallon for the same period in 1999. The gross margin
for the nine-month period ended September 30, 2000 was approximately 2.4 cents
per gallon, compared to approximately 2.5 cents per gallon for the same period
in 1999. In the three-month period ended September 30, 2000, the revenue per
gallon component and the cost per gallon component both increased approximately
43%. As a result, the gross margin increased approximately 1.1 cents on a per
gallon basis in the quarter ended September 30, 2000 compared to the same period
in 1999. In the nine-month period ended September 30, 2000, the revenue per
gallon component increased approximately 68% while the cost per gallon component
increased approximately 72%. As a result, the gross margin decreased
approximately one-tenth of one cent on a per gallon basis in the nine-months
ended September 30, 2000 compared to the same period in 1999. Inventories at
December 31, 1998 had been revalued resulting in a charge of $159 million to the
results of operations for the year 1998. The sale of these revalued inventories
during the first quarter of 1999 is the principal factor in the higher gross
margins realized during the first quarter of 1999. The gross margin for the
nine-month period ended September 30, 1999 would have been 1.6 cents per gallon
if these inventories had not been revalued. At September 30, 2000 and 1999
estimated net market values of inventories exceeded historical cost, and
accordingly, no valuation reserve was necessary.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased in the third quarter of 2000 by 2%, from $50
million in the third quarter of 1999 to $51 million in the third quarter of
2000. Selling, general and administrative expenses decreased in the first nine
months of 2000 by 10%, from $161 million in the first nine months of 1999 to
$144 million in the first nine months of 2000. The decrease is principally due
to a decrease in professional and consulting fees and the recovery of the bad
debt reserve related to credit card receivables. The recovery was in connection
with the sale of CITGO's proprietary consumer credit card receivables and
related credit card program on March 1, 2000 as described below.
15
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
For the nine-month period ended September 30, 2000, the Company's
consolidated net cash provided by operating activities totaled approximately
$404 million. Operating cash flows were derived from net income of $171 million,
depreciation and amortization of $182 million, and changes in other assets and
liabilities of $51 million.
Net cash used in investing activities totaled $102 million for the
nine-month period ended September 30, 2000 consisting primarily of capital
expenditures of $76 million (compared to $168 million for the same period in
1999). The decline in capital expenditures in the first nine months of 2000
compared to the first nine months of 1999 is due primarily to projects which
have continued to progress more slowly than anticipated. Total capital
expenditures for the year are currently estimated to be approximately $130
million. This is approximately 57 percent of 1999 capital expenditures. In
addition, CITGO has loaned $7 million to LYONDELL-CITGO in the nine-month period
ended September 30, 2000.
Net cash used in financing activities totaled $374 million for the
nine-month period ended September 30, 2000 consisting primarily of $345 million
net repayment on revolving bank loans and $16 million net repayment on short
term loans.
As of September 30, 2000, capital resources available to the Company
include cash generated by operations, available borrowing capacity under CITGO's
committed bank facilities of $550 million and $220 million of uncommitted
short-term borrowing facilities with various banks. Additionally, the remaining
$400 million from CITGO's shelf registration with the Securities and Exchange
Commission for $600 million of debt securities may be offered and sold from time
to time. CITGO management believes that the Company has sufficient capital
resources to carry out planned capital spending programs, including regulatory
and environmental projects in the near term, and to meet currently anticipated
future obligations as they arise. CITGO periodically evaluates other sources of
capital in the marketplace and anticipates that long-term capital requirements
will be satisfied with current capital resources and future financing
arrangements, including the issuance of debt securities. The Company's ability
to obtain such financing will depend on numerous factors, including market
conditions and the perceived creditworthiness of the Company at that time.
On March 1, 2000, CITGO sold its proprietary consumer credit card
receivables and related credit card program to Associates First Capital
Corporation ("Associates"). In this transaction, Associates acquired
approximately $19 million in receivables from CITGO and $113 million from Royal
Bank of Canada which had previously been purchased from CITGO under a revolving
sale facility. In addition, Associates acquired 1.2 million active consumer
accounts. The sale did not affect CITGO's commercial or fleet credit card
programs.
In April 2000, CITGO amended an agreement to sell trade accounts
receivable on an ongoing basis and without recourse. The amendment increased the
amount of such receivables that can be sold to $225 million. The amended
agreement has a minimum term of one year and is renewable for successive annual
terms by mutual agreement. $181 million has been sold under this amended
agreement as of September 30, 2000. Proceeds from the sale were used for general
corporate purposes.
The Company is in compliance with its obligations under its debt
financing arrangements at September 30, 2000.
16
<PAGE> 19
NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). In June 2000, Statement of
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities" ("SFAS No. 138"), an amendment of
SFAS No. 133, was issued. The statement, as amended, establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives, at fair value, as either
assets or liabilities in the statement of financial position with an offset
either to shareholder's equity and comprehensive income or income depending upon
the classification of the derivative. CITGO is in the process of reviewing its
contracts to determine the appropriate accounting treatment required by SFAS No.
133. Due to uncertainty about market conditions related to both crude oil and
refined products and the CITGO risk management response to those market
conditions at year end, CITGO can not determine the impact on its financial
statements that will result from adoption of SFAS No. 133, as amended, which is
required no later than January 1, 2001.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction. CITGO has exposure to price fluctuations of crude oil and
refined products as well as fluctuations in interest rates. To manage these
exposures, management has defined certain benchmarks consistent with its
preferred risk profile for the environment in which the Company operates and
finances its assets. CITGO does not attempt to manage the price risk related to
all of its inventories of crude oil and refined products. As a result, at
September 30, 2000, CITGO was exposed to the risk of broad market price declines
with respect to a substantial portion of its crude oil and refined product
inventories. The following disclosures do not attempt to quantify the price risk
associated with such commodity inventories.
Commodity Instruments. CITGO balances its crude oil and petroleum
product supply/demand and manages a portion of its price risk by entering into
petroleum commodity derivatives. Generally, CITGO's risk management strategies
qualify as hedges, however, certain strategies that CITGO may use on commodity
positions do not qualify as hedges.
17
<PAGE> 20
NON TRADING COMMODITY DERIVATIVES
OPEN POSITIONS AT SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
MATURITY NUMBER OF CONTRACT MARKET
COMMODITY DERIVATIVE DATE CONTRACTS VALUE (2) VALUE
--------- ---------- -------- --------- --------- ------
($ in millions)
-------------------
<S> <C> <C> <C> <C> <C>
No Lead Gasoline (1) OTC Crack Swaps (Pay Floating/
Receive Fixed)(4) 2000 1200 $ 3.7 $ 2.5
OTC Crack Swaps (Pay Fixed/
Receive Floating)(4) 2000 1200 $ 2.7 $ 2.5
Heating Oil (1) Futures Purchased 2000 299 $ 10.6 $ 11.6
Futures Purchased 2001 702 $ 23.8 $ 25.8
Futures Purchased 2002 8 $ 0.3 $ 0.3
OTC Crack Swap Options Purchased 2000 100 $ -- $ --
OTC Crack Swap Options Sold 2000 100 $ -- $ (0.2)
OTC Swaps (Pay Floating/Receive Fixed)(4) 2000 100 $ 4.3 $ 3.9
OTC Swaps (Pay Fixed/Receive Floating)(4) 2000 9 $ 0.2 $ 0.3
OTC Swaps (Pay Fixed/Receive Floating)(4) 2001 9 $ 0.2 $ 0.3
OTC Crack Swaps (Pay Floating/
Receive Fixed)(4) 2000 3000 $ 21.6 $ 19.6
Natural Gas (3) Futures Purchased 2000 10 $ 0.5 $ 0.5
</TABLE>
----------
(1) 1000 barrels per contract
(2) Weighted average price
(3) 10,000 mmbtu per contract
(4) Floating price based on market index designated in contract; fixed price
agreed upon at date of contract.
NON TRADING COMMODITY DERIVATIVES
OPEN POSITIONS AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
MATURITY NUMBER OF CONTRACT MARKET
COMMODITY DERIVATIVE DATE CONTRACTS VALUE (2) VALUE
--------- ---------- -------- --------- --------- ------
($ in millions)
-------------------
<S> <C> <C> <C> <C> <C>
No Lead Gasoline (1) Futures Purchased 1999 225 $ 6.6 $ 6.5
Futures Sold 1999 75 $ 2.2 $ 2.2
Heating Oil (1) Futures Purchased 1999 192 $ 4.9 $ 5.0
Futures Purchased 2000 51 $ 1.2 $ 1.3
Futures Purchased 2001 6 $ 0.1 $ 0.1
Futures Sold 2000 325 $ 9.0 $ 8.6
OTC Swaps 1999 20 $ 0.4 $ 0.5
OTC Swaps 2000 34 $ 0.7 $ 0.8
Natural Gas (3) Futures Purchased 1999 33 $ 0.8 $ 0.9
</TABLE>
----------
(1) 1000 barrels per contract
(2) Weighted average price
(3) 10,000 mmbtu per contract
18
<PAGE> 21
Debt Related Instruments. CITGO has fixed and floating U.S. currency
denominated debt. CITGO uses interest rate swaps to manage its debt portfolio
toward a benchmark of 40 to 60 percent ratio of fixed rate debt to total debt.
These instruments have the effect of changing the interest rate with the
objective of minimizing CITGO's long-term costs. At September 30, 2000, CITGO's
primary exposures were to U.S. dollar, LIBOR and U.S. Treasury rates.
For interest rate swaps, the table below presents notional amounts
and interest rates by expected (contractual) maturity dates. Notional amounts
are used to calculate the contractual payments to be exchanged under the
contracts.
NON TRADING INTEREST RATE DERIVATIVES
OPEN POSITIONS AT SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
NOTIONAL
EXPIRATION FIXED RATE PRINCIPAL
VARIABLE RATE INDEX DATE PAID AMOUNT
------------------- ------------- ---------- ---------
($ in millions)
<S> <C> <C> <C>
J.J. Kenny February 2005 5.30% 12
J.J. Kenny February 2005 5.27% 15
J.J. Kenny February 2005 5.49% 15
-----
$ 42
=====
</TABLE>
NON TRADING INTEREST RATE DERIVATIVES
OPEN POSITIONS AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
NOTIONAL
EXPIRATION FIXED RATE PRINCIPAL
VARIABLE RATE INDEX DATE PAID AMOUNT
------------------- ------------- ---------- ---------
($ in millions)
<S> <C> <C> <C>
One-month LIBOR May 2000 6.28% $ 25
J.J. Kenny May 2000 4.72% 25
J.J. Kenny February 2005 5.30% 12
J.J. Kenny February 2005 5.27% 15
J.J. Kenny February 2005 5.49% 15
-----
$ 92
=====
</TABLE>
The fair value of the interest rate swap agreements in place at
September 30, 2000, based on the estimated amount that CITGO would receive or
pay to terminate the agreements as of that date and taking into account current
interest rates, was an unrealized loss of $1 million.
19
<PAGE> 22
For debt obligations, the table below presents principal cash flows and
related weighted average interest rates by expected maturity dates. Weighted
average variable rates are based on implied forward rates in the yield curve at
the reporting date.
DEBT OBLIGATIONS
AT SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
EXPECTED
FIXED AVERAGE FIXED VARIABLE AVERAGE VARIABLE
EXPECTED MATURITIES RATE DEBT INTEREST RATE RATE DEBT INTEREST RATE
------------------- --------- ------------- --------- ----------------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
2000 $ 40 9.11% $ 2 7.60%
2001 40 9.11% 7 7.49%
2002 36 8.78% -- 7.64%
2003 61 8.79% -- 7.95%
2004 31 8.02% 16 8.26%
Thereafter 391 8.02% 465 9.47%
----- ----- ----- -----
Total $ 599 8.29% $ 490 9.40%
===== ===== ===== =====
Fair Value $ 589 $ 490
===== =====
</TABLE>
DEBT OBLIGATIONS
AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
EXPECTED
FIXED AVERAGE FIXED VARIABLE AVERAGE VARIABLE
EXPECTED MATURITIES RATE DEBT INTEREST RATE RATE DEBT INTEREST RATE
------------------- --------- ------------- --------- ----------------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
1999 $ 40 9.11% $ 94 6.32%
2000 40 9.11% 7 6.84%
2001 40 9.11% 7 7.24%
2002 36 8.78% -- 7.56%
2003 61 8.79% 329 7.88%
Thereafter 422 8.02% 481 9.31%
----- ----- ----- -----
Total $ 639 8.34% $ 918 8.46%
===== ===== ===== =====
Fair Value $ 655 $ 918
===== =====
</TABLE>
20
<PAGE> 23
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The required information is incorporated by reference into Part II of this
Report from Note 5 of the Notes to the Condensed Consolidated Financial
Statements included in Part I of this Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule (filed electronically only)
</TABLE>
(b) Reports on Form 8-K:
None.
21
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITGO PETROLEUM CORPORATION
Date: November 8, 2000 /s/ R. M. Bright
-------------------------------------
R. M. Bright
Controller (Chief Accounting Officer)
22
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule (filed electronically only)
</TABLE>
