CLARK REFINING & MARKETING INC, 10-K, 1994-03-30

CLARK REFINING & MARKETING INC
10-K, 1994-03-30
PETROLEUM REFINING

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM 10-K

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1993

[_]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: 1-11392

CLARK REFINING & MARKETING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 43-1491230
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

8182 MARYLAND AVENUE 63105-3721
ST. LOUIS, MISSOURI (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 854-9696

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

None

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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Number of shares of registrant's common stock, $.01 par value, outstanding as
of March 25, 1994: 100 all of which are indirectly owned by The Horsham
Corporation.
<PAGE>

CLARK REFINING & MARKETING, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
PART I
<C> <S> <C>
Items 1 and 2. Business; Properties..................................... 1
Item 3. Legal Proceedings........................................ 11
Item 4. Submission of Matters to a Vote of Security Holders...... 13

PART II
Item 5. Market for the Registrant's Common Stock and Related 14
Shareholder Matters.....................................
Item 6. Selected Financial Data.................................. 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 16
Item 8. Financial Statements and Supplementary Data.............. 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..................... 22

PART III
Item 10. Directors and Executive Officers of the Registrant....... 22
Item 11. Executive Compensation................................... 24
Item 12. Security Ownership of Certain Beneficial Owners and 26
Management..............................................
Item 13. Certain Relationships and Related Transactions........... 26

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports of 27
Form 8-K................................................
Signatures ......................................................... 48
</TABLE>
<PAGE>

PART I

ITEM 1 AND 2. BUSINESS; PROPERTIES

Clark Refining & Marketing, Inc. (formerly known as Clark Oil & Refining
Corporation), a Delaware Corporation (the "Company" or "Clark"), headquartered
in St. Louis, Missouri, is one of the leading independent refiners and
marketers of petroleum products in the Midwest. Its principal activities
consist of crude oil refining, wholesale marketing of refined petroleum
products and retail marketing of gasoline and convenience products. These
businesses have been operating under the Clark brand name for over 60 years.

The assets related to Clark's business were acquired on November 22, 1988
(the "Acquisition") out of bankruptcy proceedings. The assets acquired
consisted of (i) substantially all of the assets of Apex Oil Company, Inc., a
Wisconsin corporation (formerly known as OC Oil & Refining Corporation and
prior thereto known as Clark Oil & Refining Corporation, a Wisconsin
corporation ("Old Clark")) and its subsidiaries and (ii) certain other assets
and liabilities of the Novelly/Goldstein Partnership (formerly known as Apex
Oil Company), a Missouri general partnership ("Apex"), the indirect owner of
Old Clark.

All of the outstanding common stock of Clark is owned by Clark R & M
Holdings, Inc., a Delaware corporation ("R & M Holdings"), an indirect wholly-
owned subsidiary of The Horsham Corporation ("Horsham"), a Quebec corporation.
Horsham acquired an initial 60% ownership in R & M Holdings at the Acquisition
and 100% ownership in December 1992. Horsham is a Canadian management and
holding company which also owns a controlling 20% interest in American Barrick
Resources Corporation ("Barrick"), a major gold mining company and 100% of
Horsham Properties GmbH which is developing a 600-acre business park near
Berlin, Germany. Peter Munk, Horsham's Chairman and Chief Executive Officer and
controlling shareholder, is Chairman of the Board and a Director of Clark.

INDUSTRY ENVIRONMENT

During the period from 1982 to 1993, domestic refining capacity declined by
15.1% from 17.9 million bbls/day to 15.2 million bbls/day due primarily to a
significant reduction in the total number of domestic refineries. During the
same period, refinery throughput, or production, grew in response to market
demand, from 11.8 million bbls/day to 13.9 million bbls/day principally due to
increases in the number of operating vehicles and passenger miles driven.
Refining capacity utilization grew from 65.8% in 1982 to 91.4% in 1993. Clark
believes that the maximum achievable refining utilization for the industry is
approximately 93%, because of the requirements for scheduled and unscheduled
maintenance shutdowns. The following table sets forth selected US refinery
industry information published by the US Energy Information Administration:

SELECTED UNITED STATES REFINING INDUSTRY STATISTICS

<TABLE>
<CAPTION>
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993*
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capacity (mm bbls/day).. 17.9 16.9 16.1 15.7 15.5 15.6 15.9 15.6 15.6 15.7 15.6 15.2
Throughput (mm
bbls/day).............. 11.8 11.7 12.0 12.2 12.7 12.9 13.2 13.4 13.6 13.5 13.6 13.9
Utilization............. 65.8% 69.3% 74.6% 77.7% 82.3% 82.6% 83.2% 85.6% 87.1% 86.0% 87.2% 91.4%
</TABLE>
- --------
*1993 figures have been obtained from the American Petroleum Institute.

Clark believes that US refining capacity will continue to decline due to a
continuing escalation in the cost of new refinery construction combined with
the high cost of bringing many older refineries into compliance with current
and proposed environmental regulations, such as those mandated by the Clean Air
Act. The Clean Air Act Amendments of 1990 provide, among other things, that (i)
as of November 1992, the 39 cities which had failed to attain mandated carbon
monoxide air quality standards were required to use
<PAGE>

oxygenated gasoline for four to twelve months of each year depending upon each
area's historical noncompliance period and (ii) beginning in 1995, the nine
cities which have the worst ozone quality, including the Chicago and Milwaukee
metropolitan areas, will be required to use, and another 87 areas which have
failed to attain ozone air quality standards may elect to use, "reformulated"
gasoline throughout the year in order to decrease the emission of hydrocarbons
and toxic pollutants. Because of the expenditures associated with producing
reformulated gasoline and compliance with the Clean Air Act and other
environmental regulations, various US refiners have announced that they will
sell and or close those refineries where capital expenditures needed to ensure
compliance would not be economic. Over the near term, many refiners are
expected to utilize their capital expenditure budgets to bring their facilities
into compliance with environmental requirements, rather than to add to crude
oil throughput capacity. Refining and marketing is a cyclical commodity-based
business in which individual participants have virtually no control over
industry margin levels.

BUSINESS STRATEGY

Clark's strategic business plan is to position Clark as a low-cost, high-
quality refiner and marketer of refined petroleum products. Clark plans to
build on its strengths, which include flexibility in feedstock supply and
refined product output, a strong integrated wholesale distribution network, a
strong retail presence founded in Clark brand name recognition, comprehensive
planning and budgeting systems, strong entrepreneurial leadership and a high
level of employee participation. Clark is seeking to position itself so that
cash flow remains positive even in the worst possible industry margin
environment. The refining and marketing industry is mature, highly competitive
and extremely capital intensive. However, a highly productive company--in terms
of both operational excellence and capital utilization--can produce superior
results for its stakeholders. Management believes that there are four critical
strategies to achieve these goals:

. IMPROVE PRODUCTIVITY OF EXISTING OPERATIONS--Clark's refineries are in
the lower half of industry productivity benchmarks, providing much
opportunity for improvement. On the retail side, Clark's people and
assets have been neglected for many years while competitors have invested
heavily in upgrading and expanding their facilities. However, Clark's
investment and operating cost of a typical store are substantially lower
than most of its competitors--a significant competitive advantage. In
1993, Clark set a goal to achieve pre-tax productivity gains of $75
million. This goal assumes no improvement in industry margins and despite
deterioration in these margins in 1993, an estimated gain of $20 million
was realized in the last half of the year.

. MINIMIZE CAPITAL INVESTMENT--Clark plans to tie capital spending to cash
flow generated. Where alternative product markets exist under
environmental regulations, Clark intends to base capital investment
decisions on economic returns.

. CULTURE--Clark believes that it is people, not assets, that make the
difference in the success of the organization. The Company is striving to
achieve a highly motivated, entrepreneurial workforce where its people
understand the goals, objectives and targets of the Company, have the
freedom to contribute to the best of their abilities and participate in
the organization's success.

. GROWTH--Clark plans to grow its retail and refining business through
acquisition to benefit from the operating, capital and market synergies
associated with greater mass, particularly within current markets.

RETAIL DIVISION

The Clark retail system began operations during the 1930s with the opening of
Old Clark's first store in Milwaukee, Wisconsin and expanded thereafter to
Missouri and Illinois and then throughout the Midwest. At its peak in the early
1970s, Old Clark operated more than 1,800 retail stores and had established a
strong market presence for high octane gasoline at discount prices. In
subsequent years, Old Clark, in line with the general industry trend,
rationalized its operating stores, closing down marginal locations.

2
<PAGE>

During the 1970s, the majority of stores were dealer-operated. However, to
ensure more direct control of its marketing and distribution network, Old Clark
assumed management of most of its stores from 1973 through 1983. The high
proportion of company-operated stores enables Clark to respond more quickly and
uniformly to changing market conditions than major oil companies which
generally have most of their stores operated by independent dealers or jobbers.
This control over retail operations, combined with its over 60 year history and
brand strength throughout the Midwest, gives Clark a unique competitive
advantage. Clark has initiated an enhancement program aimed at increasing sales
volumes and profits while focusing on return on investment. The program is
designed to position Clark as the premier value-oriented gasoline marketer in
the Midwest.

Clark is reviewing its stores and markets and has developed a long-term
retail strategy to capitalize on its over 60 year old franchise, reputation for
quality products and efficient distribution network. Recognition of the Clark
name may be enhanced by improving the image of the entire network, through
superior customer service, graphic reimaging, building improvements and
strengthened advertising. Management has adopted "Market Business Planning"
principles that define preferred markets by developing a market ranking for
existing and potential investment opportunities. These techniques combine
economic, demographic and market data to arrive at market specific plans that
assist in both asset and operational strategies. The Company plans to focus on
those core markets where Clark has, or can develop, a competitive advantage.
Clark will consider expanding through development and acquisition of stores in
those markets where Clark already has a competitive strength on which to build
or where similar opportunities have been identified. In those market areas
where the Clark brand name is not strong and Clark has a low market ranking,
Clark will divest retail locations if favorable sale opportunities arise.

Clark classifies its stores into four categories: basic, upgraded, minimart
and "On The Go". A basic store is essentially a store as originally built in
the 1950s and 1960s and consists of a small kiosk-style building (generally
less than 400 total square feet and 200 square feet of selling area) with two
to four "islands" for pumps. Since 1988, Clark has invested in upgrading and
rebuilding selected sites. An upgraded store configuration generally consists
of the basic format with the addition of a canopy and other minor cosmetic
improvements. Most upgraded stores include the installation of new blending
pumps and at many locations existing storage tanks have been replaced. A
minimart is an upgraded location where the kiosk-style building has been
replaced with a convenience store of at least 900 square feet. In 1992, Clark
implemented a strategic enhancement program under which stores in preferred
market areas will undergo a sales optimization program to modestly increase the
sales area to 400 sq. ft. to emphasize quick and convenient purchasing of
gasoline and "On The Go" convenience items. This strategy attempts to
differentiate Clark stores from (i) major oil company outlets, which typically
price gasoline at a higher level, (ii) the convenience store industry, which
offers a full range of grocery items in addition to gasoline and (iii) low
price independents, whose gasoline quality may be perceived to be inferior.

Clark estimates that previously upgraded locations will require an additional
investment of approximately $70,000 per site to incorporate this "On The Go"
theme and that non-upgraded locations will require approximately $160,000 per
site. The Company believes that these investments are significantly less
expensive than investments made by competitors for similar upgrading. Emphasis
will be placed on the sale of select high volume convenience products without
competing directly with the larger convenience store ("C-Store") format of
major oil companies or other full scale C-Stores. Market research conducted in
the fourth quarter of 1992 indicated that gasoline customers are more likely to
shop at Clark if store sizes are increased. Furthermore, Clark believes its
existing customers are likely to shop more often and are more likely to
purchase additional convenience products from larger stores. Virtually all the
basic stores have the physical characteristics permitting them to be converted
to the "On The Go" format.

3
<PAGE>

The volume per store varies significantly, depending upon location,
competition, type and quality of the store improvements. The configuration of
the stores was as follows:

<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF AVERAGE MONTHLY CONVENIENCE PRODUCT
DESCRIPTION STORES GALLONAGE SALES
----------- -------------- ----------------------- -----------------------
AS OF AND FOR THE YEAR 1993 1992 1991 1993 1992 1991 1993 1992 1991
ENDED DECEMBER 31: ---- ---- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic................. 291 300 319 72,925 66,478 62,997 $18,030 $16,324 $14,132
Upgraded.............. 501 528 525 106,034 96,772 97,525 21,610 19,526 17,569
On The Go............. 9 -- -- 85,190 -- -- 23,140 -- --
Minimart.............. 45 45 45 184,298 173,233 177,162 38,520 34,195 31,759
--- --- --- ------- ------- ------- ------- ------- -------
Total/Average....... 846 873 889 98,615 90,083 86,853 $21,171 $19,154 $16,804
=== === === ======= ======= ======= ======= ======= =======
</TABLE>

As of December 31, 1993, Clark had 846 retail stores located in 12 midwestern
states, all of which operated under the Clark trade name. Of these 846 stores
(of which 763 are owned and 83 are leased), Clark directly operated 836 and the
reminder were dealer operated. Virtually all stores were self-service and all
sold convenience products.

Store locations are geographically diverse. More than half the stores are in
suburban areas, with the balance approximately equally divided between urban
and rural areas. The geographic distribution of retail stores by state as of
December 31, 1993, was as follows:

GEOGRAPHICAL DISTRIBUTION OF RETAIL STORES

<TABLE>
<CAPTION>
COMPANY DEALER TOTAL
OPERATED OPERATED STORES
-------- -------- ------
<S> <C> <C> <C>
Illinois......................................... 213 -- 213
Ohio............................................. 181 3 184
Michigan......................................... 168 2 170
Indiana.......................................... 105 -- 105
Wisconsin........................................ 77 4 81
Missouri......................................... 50 1 51
Other............................................ 42 -- 42
--- --- ---
Total........................................ 836 10 846
=== === ===
</TABLE>

Clark began marketing three grades of gasoline in 1989 with the introduction
of special blending dispenser pumps. These pumps enable Clark to improve
volumes and margins by marketing a more profitable mid-grade of gasoline
without installation of costly additional underground storage tanks.
Approximately one-half of Clark's stores now have blending pumps. Management
currently expects that by the end of 1995, canopies will have been installed
over the pump islands at all of Clark's stores. Management believes that the
installation of canopies will improve gasoline sales volume due to the shelter
provided from weather conditions.

Until early 1989, retail sales were primarily for cash as customers were
charged extra for credit card purchases. In 1989, Clark upgraded its credit
card processing system, enabling it to receive payments for credit card sales
within 48 hours. Simultaneously, to remain competitive, Clark revised its
pricing policy to charge the same price for cash and credit card purchases. In
late 1989, a business fleet card program was initiated to attract a new segment
of customers. Fleet customers are provided with a proprietary credit card and
detailed vehicle statistical information which is included on a convenient
monthly invoice.

Clark has implemented a number of environmental projects at its retail
stores. These projects include the ongoing Clark response to the September 1988
regulations concerning the design, construction, installation, repair and
testing of underground storage tanks and the requirement of the Clean Air Act
to install Stage II vapor recovery systems at certain retail stores.

4
<PAGE>

REFINING DIVISION

The refining division consists of two refineries in Illinois: Blue Island
near Chicago and Hartford near St. Louis, Missouri. The refining division also
includes Clark's supply and distribution and wholesale operations. Based upon
Clark's current cost structure and business plans, Clark anticipates that it
will continue to operate the Blue Island and Hartford refineries at or near
their respective full-rated capacities of approximately 70,000 and 60,000
barrels of crude oil per stream day.

Each refinery specializes in processing different types of crude oil
feedstocks, although both operations are sufficiently flexible to process a
variety of crude oils. Clark's refineries are capable of producing a
complementary product range, as well as shifting production quickly to take
advantage of market opportunities as they arise. Clark employs sophisticated
linear programming techniques to optimize the operations of both refineries.
These techniques enable Clark to predict feedstock performance, select optimal
feedstock combinations and produce the most advantageous refined product mix
for a given set of market conditions. Feedstock flexibility and linear programs
thus enable Clark to take advantage of lower cost crudes and to adjust the
output mix in response to changing market prices at any given time. These
refineries compare favorably in the amount of light oil products produced per
barrel of crude oil and therefore in competitiveness, with major oil company
refineries in their market areas.

In addition to gasoline, Clark's refineries produce other types of refined
products. Number 2 diesel fuel is used mainly as a fuel for diesel burning
engines. Number 2 diesel fuel production is moved via pipeline or barge to
Clark's 14 product terminals to be sold over Clark's terminal truck racks or
sold via refinery pipeline or barge movement. Other production includes
residual oils (slurry oil and vacuum tower bottoms) which are used mainly for
heavy industrial fuel (e.g., power generation) and in the manufacturing of
roofing shingles or for asphalt used in highway paving.

In the Clean Air Act Amendments of 1990, the US Environmental Protection
Agency ("EPA") promulgated regulations mandating maximum sulfur content for
diesel fuel offered for sale for on-road consumption beginning in October 1993.
Additional EPA regulations include guidelines for reformulated gasoline to be
effective by 1995 for nine regions in the US, including the Chicago and
Milwaukee metropolitan areas. These regulations are expected to be expanded to
most major urban centers by the year 2000. See "Regulatory Matters." Clark, and
virtually all other domestic refineries producing gasoline, will be required to
make significant capital expenditures to comply with these new requirements.

Over the period 1994 to 1998, Clark has preliminary plans to complete a
number of environmental and other regulatory capital expenditure programs.
These environmental expenditures comprise two major categories, those that are
mandatory in order to comply with regulations pertaining to ground, water and
air contamination and those that are primarily discretionary involving the
reformulation of refined fuel for sale into certain defined markets. The total
mandatory expenditures for regulatory compliance over the next five years are
estimated at approximately $100 million, split evenly between the retail and
refining businesses. Costs of potential future regulations cannot be forecast.

The expenditures required to comply with reformulated fuels regulations are
primarily discretionary, subject to market conditions and economic
justification. The reformulated fuels programs impose restrictions on
properties of fuels to be refined and marketed, including those pertaining to
gasoline volatility, oxygenated fuel, detergent addition and sulfur content.
The regulations regarding these fuel properties apply to different markets in
which Clark operates, in certain circumstances at different times of the year.

5
<PAGE>

products which have thus far borne out after the initial transition to the low
sulfur regulations. However, if price differentials widen sufficiently to
justify investment, Clark could install the necessary equipment over a 14 to 16
month period at an estimated additional cost of $40 million. Furthermore, if
Clark decided to install equipment necessary to produce reformulated gasoline
and control sulfur emissions at Hartford, the gasoil desulfurizer and related
equipment are estimated to cost an additional $90-130 million. These estimates
have declined from a year ago as Clark has found more cost-effective methods of
complying with the regulations.

Blue Island Refinery

The Blue Island refinery is located in Blue Island, Illinois, approximately
17 miles south of Chicago. The refinery is situated on a 170-acre site, bounded
by the town of Blue Island and the Calumet-Sag Canal. The facility was
initially constructed in 1945 and, through a series of improvements and
expansions, has reached a crude oil capacity of 70,000 barrels per stream day.
The Blue Island refinery has a Nelson Complexity Rating of 8.78 versus an
average rating of 8.61 for all Petroleum Administration for Defense District
("PADD") II refineries. The Nelson Complexity rating is an industry measure of
a refinery's ability to produce higher value-added products. Blue Island has
among the highest capabilities to produce gasoline relative to the other
refineries in its market area. During most of the year, gasoline is the most
profitable refinery product.

The production of the Blue Island refinery was as follows:

BLUE ISLAND REFINERY PRODUCTION YIELD
(BARRELS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1993 1992 1991
---------------- ------------- -------------
BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
GASOLINE
Unleaded...................... 9,701 38.3% 13,423 48.6% 14,270 52.8%
Premium Unleaded.............. 5,232 20.6 4,795 17.4 4,151 15.4
------ ----- ------ ----- ------ -----
14,933 58.9 18,218 66.0 18,421 68.2
------ ----- ------ ----- ------ -----
OTHER PRODUCTS
Number 2 Diesel Fuel.......... 5,329 21.0 3,863 14.0 4,042 15.0
Others........................ 5,091 20.1 5,522 20.0 4,540 16.8
------ ----- ------ ----- ------ -----
10,420 41.1 9,385 34.0 8,582 31.8
------ ----- ------ ----- ------ -----
Total........................... 25,353 100.0% 27,603 100.0% 27,003 100.0%
====== ===== ====== ===== ====== =====
Output/Day...................... 69.5(b) 75.4 74.0
Refinery Utilization (a)........ 99.3%(b) 107.7% 105.7%
</TABLE>
- --------
(a) Refinery utilization is production yield relative to the rated capacity of
the refinery to process crude oil. Production yield may be greater than the
rated capacity of the refinery because other feedstocks (including
partially refined products and liquefied petroleum gases) which add to the
refinery's output are utilized in the refining process.
(b) Refinery utilization reflects 1993 maintenance turnaround downtime of
approximately two months on selected units. A "maintenance turnaround" is a
periodically required standard procedure for refurbishing and maintenance
of a refinery that is scheduled approximately every three years. During a
turnaround, which usually lasts approximately four to six weeks, refinery
production is reduced significantly.

Hartford Refinery

The Hartford refinery is located in Hartford, Illinois, approximately 17
miles northeast of St. Louis, Missouri. The refinery is situated on a 400-acre
site. The facility was initially constructed in 1941 and, through

6
<PAGE>

a series of improvements and expansions, has reached a crude oil refining
capacity of approximately 60,000 barrels per stream day. The Hartford refinery
has a Nelson Complexity Rating of 9.83 versus an average of 8.61 for all PADD
II refineries. The Hartford facility has the ability to process lower cost,
heavy, high-sulfur crude oil into higher value products such as gasoline. This
upgrading capability allows the refinery to produce a high mix of premium
products and permits Clark to benefit from higher margins when high sulfur
crude oil, such as Maya crude oil, is available at a significant discount to
low sulfur crude oil.

The production of the Hartford refinery was as follows:

HARTFORD REFINERY PRODUCTION YIELD
(BARRELS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1993 1992 1991
------------- ------------- ----------------
BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
GASOLINE
Unleaded...................... 10,394 43.6% 11,487 46.9% 9,413 46.6%
Premium Unleaded.............. 1,892 8.0 1,855 7.6 891 4.4
------ ----- ------ ----- ------ -----
12,286 51.6 13,342 54.5 10,304 51.0
------ ----- ------ ----- ------ -----
OTHER PRODUCTS
Number 2 Diesel Fuel.......... 7,979 33.5 7,281 29.7 6,200 30.6
Others........................ 3,557 14.9 3,878 15.8 3,728 18.4
------ ----- ------ ----- ------ -----
11,536 48.4 11,159 45.5 9,928 49.0
------ ----- ------ ----- ------ -----
Total........................... 23,822 100.0% 24,501 100.0% 20,232 100.0%
====== ===== ====== ===== ====== =====
Output/Day...................... 65.3 66.9 55.4(b)
Refinery Utilization (a)........ 108.8% 111.6% 92.3%(b)
</TABLE>
- --------
(a) Refinery utilization is production yield relative to the rated capacity of
the refinery to process crude oil. Production yield may be greater than the
rated capacity of the refinery because other feedstocks (including
partially refined products and liquefied petroleum gases) which add to the
refinery's output are utilized in the refining process.
(b) Refinery utilization reflects 1991 maintenance turnaround downtime of
approximately two months on selected units.

Supply

Clark's integrated refining and marketing assets are strategically located in
the Midwest in close proximity to a variety of supply and distribution
channels. As a result, Clark has the flexibility to acquire crude oil from a
variety of sources around the world and the ability to distribute its products
to its own retail system and to most wholesale markets.

Clark's refineries are located on major inland water transportation routes
and are connected to various regional, national and Canadian common carrier
pipelines, in some of which Clark has a minority interest. The Blue Island
refinery can receive delivery of Canadian crude oil through the Lakehead
Pipeline from Canada and foreign and domestic crude oil through the Capline
Pipeline system originating in the Louisiana Gulf Coast and domestic crude oil
originating in West Texas, Oklahoma and the Rocky Mountains through the Arco
Pipeline system. The Hartford refinery has access to foreign and domestic crude
oil supplies through the Capline/Capwood Pipeline systems along with access to
West Texas, Oklahoma and Rocky Mountain crude oil from the Platte Pipeline
system. The fact that both refineries are situated on major water
transportation routes provides flexibility to receive crude oil or intermediate
feedstocks by barge when economically feasible.

7
<PAGE>

Clark has a sour crude oil supply contract with P.M.I. Comercio
Internacional, S.A. de C.V., an affiliate of Petroleos Mexicanos, S.A. de C.V.
("Pemex"). This contract is cancelable with three months' notice by either
party but it is intended to remain in place for the foreseeable future. The
volume is currently 35,000 barrels per day of Maya crude oil, with price
determination based on a market related formula applicable to all Pemex-US
customers. Other term crude oil supply agreements primarily consist of Canadian
crude oil delivered to Blue Island. Approximately 23,000 barrels per day are
currently under contract with three Canadian suppliers, cancelable with two
months' notice by either party with another 4,000 barrels per day under
contract through December 1994 without provision for cancellation. The above-
referenced contracts provide approximately 48% of Clark's crude oil
requirements which offer some security with respect to supply along with the
flexibility to take advantage of spot market opportunities.

Management has established product scheduling and supply priorities for
gasoline and diesel fuel. These ensure that Clark's retail network needs are
met first and then products are distributed to its wholesale operations based
on the highest average market returns before being sold into the spot market.

Clark employs several strategies to minimize the adverse impact on
profitability of the volatility in feedstock costs and refined product prices.
One strategy involves the purchase and sale of futures and options contracts on
the New York Mercantile Exchange to minimize, on a short-term basis, Clark's
exposure to the risk of fluctuations in crude oil prices and refined product
margins. The number of barrels of crude oil and refined products covered by
such contracts varies from time to time. Such purchases and sales are closely
managed, are balanced daily and are subject to internally established risk
standards. The results of these hedging activities affect refining costs of
sales or inventory costs.

Clark's dedicated retail network also reduces risk by providing market sales
representing approximately 60% of the refineries' gasoline production. In
addition, the retail network benefits from a reliable and cost effective source
of supply.

Wholesale Marketing and Distribution

Refined products are distributed primarily through Clark's terminals,
company-owned and common carrier product pipelines and by leased barges over
the Mississippi, Illinois and Ohio Rivers. Clark owns and operates 14 product
terminals which are strategically located throughout its market area, most of
which have product blending capabilities. Terminal blending involves the
blending of natural gasoline and other blendstocks with finished gasoline which
reduces product cost, lowers emission producing potential and improves product
quality. While other refiners engage in terminal blending, Clark believes that
its degree of blending and refinery/terminal integration provides Clark with a
competitive advantage over other refiners that do not have comparable blending
capabilities. In addition to cost efficiencies in supplying its retail network,
the terminals provide Clark with an additional source of revenues through sales
of gasoline, Number 2 diesel fuel and other refined products to wholesale
customers.

These terminals allow efficient distribution of refinery production through
readily accessible pipeline systems which connect the wholesale distribution
network. In addition, the terminals provide flexibility to direct wholesale
product sales to more profitable truck rack customers as an alternative to spot
market sales as market conditions dictate. Clark plans to broaden its wholesale
customer base which is expected to provide, on average, higher margins than
spot markets. In anticipation of the October 1993 deadline for low sulfur on-
road diesel fuel, Clark focused efforts on building market presence and
customer relationships with off-road diesel fuel users.

8
<PAGE>

Clark's terminals and respective capacities as of December 31, 1993, were as
follows:

<TABLE>
<CAPTION>
TERMINAL CAPACITY
-------- --------
(M BBLS)
<S> <C>
Blue Island, IL.................................................. 86.6
Brecksville, OH.................................................. 252.4
Clermont, IN..................................................... 272.0
Columbus, OH..................................................... 132.2
Dearborn, MI..................................................... 287.9
Granville, WI.................................................... 323.6
Green Bay, WI.................................................... 269.0
Hammond, IN...................................................... 816.9
Hartford, IL..................................................... 567.0
Marshall, MI..................................................... 248.3
Peoria, IL....................................................... 163.2
Rockford, IL..................................................... 143.2
St. Louis, MO.................................................... 471.3
Toledo, OH....................................................... 195.4
-------
Total capacity............................................... 4,229.0
=======
</TABLE>

Clark enters into refined product exchange agreements with unaffiliated
companies to broaden its geographical distribution capabilities. Products are
also received on exchange through 37 exchange terminals and distribution points
throughout the Midwest.

Clark's pipeline interests as of December 31, 1993, were as follows:

<TABLE>
<CAPTION>
PIPELINE TYPE INTEREST ROUTE
-------- ---- -------- -----
<S> <C> <C> <C>
Southcap Crude 36.0% St. James, LA to Patoka, IL
Chicap Crude 22.7 Patoka, IL to Mokena, IL
Wolverine Products 9.5 Chicago, IL to Toledo, OH
West Shore Products 11.1 Chicago, IL to Green Bay, WI
</TABLE>

These pipelines are operated as common carriers pursuant to published
pipeline tariffs, which also apply to use by Clark. Clark also owns a dedicated
pipeline from the Blue Island refinery to the company-owned terminal in
Hammond, Indiana. Clark Pipe Line Company, an affiliate of Clark, owns a 33.1%
interest in the Capwood Pipeline and leases space of approximately 15,000
barrels per day on the ARCO Pipeline. Each of these pipelines transports crude
oil to the Hartford refinery.

COMPETITIVE CONSIDERATIONS

The petroleum industry is highly competitive in all phases, from the
production and procurement of crude oil to the refining, distribution and
marketing of refined and intermediate products. Many of Clark's competitors are
large, integrated oil companies which, because of their diverse operations,
stronger capitalization and better brand name recognition, may be better able
than Clark to withstand volatile industry conditions, shortages of crude oil or
intense price competition.

The principal competitive factors affecting Clark's refining business are
crude oil and other feedstock costs, refinery efficiency, refinery product mix
and product distribution and marketing transportation costs. Certain of Clark's
larger competitors have refineries which are larger and more efficient and as a
result, have lower per barrel costs. Clark has no crude oil reserves and is not
engaged in exploration. Clark obtains all of its crude oil requirements from
unaffiliated sources. Clark believes that it will be able to obtain adequate
crude oil and other feedstocks at generally competitive prices for the
foreseeable future.

9
<PAGE>

The principal competitive factors affecting Clark's retail marketing business
are locations of stores, product price and quality, appearance and cleanliness
of stores and brand identification. Competition from large, integrated oil and
gas companies, as well as convenience stores which sell motor fuel, is expected
to continue. Clark believes it competes in the retail sale of gasoline
principally on the basis of price, location, store cleanliness and the Clark
brand name recognition in the Midwest.

REGULATORY MATTERS

The release or discharge of petroleum and hazardous materials is not an
uncommon occurrence at refineries, terminals and stores and may give rise to
liability under various federal, state and local regulations relating to soil
and ground water contamination. Clark has identified a variety of potential
environmental issues at its refineries, terminals and stores. In addition, each
refinery has areas on-site which may contain hazardous waste or hazardous
constituent contamination and which may have to be addressed in the future at
substantial cost. Many of the terminals may also require remediation due to the
age of the underground tanks and facilities and as a result of current or past
activities at the terminal properties including several significant spills and
past on-site waste disposal practices.

Federal, state and local laws and regulations establishing various health and
environmental quality standards and providing penalties for violations thereof
affect nearly all of the operations of the Company. Included among such
statutes are the Clean Air Act of 1955, as amended ("CAA"), the Resource
Conservation and Recovery Act of 1977, as amended ("RCRA") and the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"). Also significantly affecting the Company are the rules
and regulations of the Occupational Safety and Health Administration ("OSHA").

The CAA requires the Company to meet certain air emission standards and to
obtain and comply with the terms of discharge permits. The RCRA empowers the
EPA to regulate the treatment and disposal of industrial wastes and to regulate
the use and operation of underground storage tanks. CERCLA requires
notification to the National Response Center of releases of hazardous materials
and provides a program to remediate hazardous releases at uncontrolled or
abandoned hazardous waste sites. The Superfund Amendments and Reauthorization
Act of 1986 ("SARA") is a five year extension of the CERCLA cleanup program.
Title III of SARA, the Emergency Planning and Community Right to Know Act of
1986, relates to planning for hazardous material emergencies and provides for a
community's right to know about the hazards of chemicals used or manufactured
at industrial facilities. The OSHA rules and regulations call for the
protection of workers and provide for a worker's right to know about the
hazards of chemicals used or produced at the Company's facilities.

Regulations issued by the EPA in 1988 with respect to underground storage
tanks require the Company, over a period of up to ten years, to install, where
not already in place, detection devices and corrosion protection on all
underground tanks and piping at retail gasoline outlets. The regulations also
require periodic tightness testing of underground tanks and piping. Commencing
in 1998, operators will be required under these regulations to install
continuous monitoring systems for underground tanks.

In March 1989, the EPA issued Phase I of regulations under authority of the
CAA requiring a reduction for summer months in 1989 in the volatility of
gasoline ("RVP") (the measure of the amount of light hydrocarbons contained in
gasoline, such as normal butane, an octane booster). In June 1990, Phase II of
these regulations was issued by the EPA which would require further reduction
in RVP beginning in May 1992. The Clean Air Act Amendments also established
nationwide RVP standards which will apply as of May 1992, but do not exceed the
EPA's Phase II standards.

The Clean Air Act Amendments will impact the Company primarily in the
following areas: (i) starting in 1995 a "reformulated" gasoline (which would
include content standards for oxygen, benzenes and

10
<PAGE>

aromatics) is mandated in the nine worst ozone polluting cities, including
Chicago and Milwaukee in the Company's market area; (ii) Stage II hose and
nozzle controls on gas pumps to capture fuel vapors in nonattainment areas,
including 400 company stores; (iii) more stringent refinery permitting
requirements; and (iv) stricter refinery waste disposal requirements as a
broader group of wastes are classified as hazardous. In addition, EPA
regulations required that after October 1, 1993 the sulfur contained in on-road
diesel fuel produced in the US must be reduced.

Clark cannot predict what environmental legislation or regulations will be
enacted in the future or how existing or future laws or regulations will be
administered or interpreted with respect to products or activities to which
they have not previously been applied. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of the regulatory
agencies or stricter interpretation of existing laws which may develop in the
future, could have an adverse effect on the financial position or operations of
Clark and could require substantial additional expenditures by Clark for the
installation and operation of pollution control systems and equipment. See
"Item 3. Legal Proceedings."

EMPLOYEES

As of December 31, 1993, Clark employed approximately 5,500 people. Certain
employees at the Hartford and Blue Island refineries are covered by union
contracts. The Hartford refinery contract expires on February 28, 1996. The
Blue Island refinery contract expires August 31, 1996. In addition, Clark has a
union contract for certain employees at its Hammond, Indiana terminal which
expires March 31, 1995. Historically, relationships with the unions have been
good and neither Old Clark nor Clark has ever experienced a work stoppage as a
result of labor disagreements.

ITEM 3. LEGAL PROCEEDINGS

Generators of hazardous substances found in off-site disposal locations at
which environmental problems are alleged to exist, as well as the owners of
those sites and certain other classes of persons, are subject to claims brought
by state and federal agencies under CERCLA and analogous state laws, regardless
of fault or the legality of original disposal. Under CERCLA, a potentially
responsible party ("PRP") may be held jointly and severally liable for any such
claims.

On or about December 7, 1988, "Clark Oil" was named as PRP by the EPA with
respect to a solid waste disposal site in Gary, Indiana known as the 9th Avenue
Site and was ordered to participate with approximately 250 other PRPs in the
interim clean-up of that site. Information from the EPA and other parties
involved indicated that Old Clark may have transported waste oils and solvents
to the site during the mid 1970s. Pursuant to an Administrative Services
Agreement then in effect between Clark and Old Clark, Clark responded to
initial inquiries and advanced $160,000 for preliminary studies and clean-up of
that site. Upon the expiration of the Administrative Services Agreement on
November 30, 1990, Clark notified the EPA and other parties involved with
respect to the site that Clark's involvement on behalf of Old Clark was
terminated and advised that further contacts with respect to this site should
be directed to Old Clark. Clark has received no information concerning the site
since that notification. Clark believes it has no liability for this site
because of the terms of the Asset Purchase Agreement with Old Clark, as
approved by the Bankruptcy Court, which provided that Clark would not assume
environmental liabilities arising prior to the date of closing. Based on
information received by Clark during its involvement pursuant to the
Administrative Services Agreement, the estimated total clean-up of this site
ranged from $22 to $35 million. Clark has no information on the current amounts
estimated for clean-up or amounts actually spent for clean-up.

On or about March 17, 1989, "Clark Oil" was named as PRP by the EPA with
respect to a solid waste disposal site in Chicago, Illinois known as the U.S.
Scrap Site and along with approximately 250 other PRPs was ordered to reimburse
the EPA for $1.5 million in costs incurred in performing preliminary work on
that

11
<PAGE>

site. Information from the EPA and other parties indicated that Old Clark may
have sent waste oils to the site during the 1970s. No information has been
revealed which would indicate that Clark had any involvement with this site.
Pursuant to the Administrative Services Agreement with Old Clark then in
effect, Clark responded to initial inquiries about the site. However, Clark has
advanced no payments related to the EPA's claim for reimbursement. Upon the
expiration of the Administrative Services Agreement, on November 30, 1990,
Clark notified the EPA that its involvement on behalf of Old Clark was
terminated and advised that all future contacts with respect to the site should
be directed to Old Clark. Clark has received no other information concerning
the site since that notification. To the best of Clark's knowledge, the
estimated amount being sought by the EPA was $1.5 million. Clark believes it
has no liability for this site because of the terms of the Asset Purchase
Agreement with Old Clark.

On September 15, 1989, "Clark Oil & Refining Corp." received an inquiry from
the EPA concerning any involvement at a disposal site in Texas City, Texas
known as the Tex-Tin Site. On October 17, 1989, Clark responded that it had no
connection to the site. Upon the expiration of the Administrative Services
Agreement on November 30, 1990, Clark further notified the EPA that its
involvement on behalf of Old Clark was terminated and advised that all future
contacts with respect to the site should be directed to Old Clark. Clark has
never received any information concerning potential costs involved in
connection with this site, or any other parties which may be involved as
potential PRPs. Clark presumes that all contamination would have been the
result of activities of Old Clark and that Clark would have no liability
because of terms of the Asset Purchase Agreement.

As indicated, Clark does not believe that it is a proper party to any of the
above-described EPA claims. Clark cannot estimate costs for which it may
ultimately be liable with respect to these three sites, but in the opinion of
the management of Clark, these costs should not have a material adverse effect
on Clark's operations or financial condition. There can be no assurance that
Clark will not be named as a PRP at additional sites in the future or that the
costs associated with those sites would not be substantial.

In late 1990, Clark received a letter from the Illinois Attorney General
Environmental Control Division which included a report prepared by the Illinois
Environmental Protection Agency ("IEPA") on its investigation of the Village of
Hartford, Illinois ground water contamination. The report cited the history of
the ground water contamination in the area including the installation by Old
Clark in 1978 of recovery systems in Hartford for the removal of hydrocarbons
from the surface of the ground water. The report identified Clark or Old Clark
and two other oil companies as potential contributors to the contamination. In
particular, it contended that Clark or Old Clark is the party primarily
responsible for the hydrocarbon contamination and demanded that more aggressive
and encompassing efforts be immediately initiated by Clark. Clark submitted its
response to the letter and the report on January 15, 1991. In its response
Clark indicated that, without admission of legal liability, it would continue
to cooperate with the Illinois Attorney General and the IEPA by performing a
remediation program meeting the objectives defined by the IEPA in its report.
The response also contained data which disputed many of the contentions made by
the IEPA. Clark's remediation plan was approved by the IEPA and the IEPA has
issued all necessary permits to implement the remediation plan. The IEPA is
provided with monthly progress reports. Clark successfully completed a major
portion of the remediation work under an implementation plan that was submitted
to the IEPA in August 1991. The necessity of future remediation work is being
evaluated. Based upon the estimates of an independent environmental engineering
firm, Clark established a $10 million provision for the estimated costs of its
mitigation and recovery efforts of which $3.6 million has been spent to date.

12
<PAGE>

jurisdiction over Old Clark's bankruptcy proceedings issued its "free and
clear" order. In November 1992, the plaintiffs filed thirty-three amended
complaints. In addition, one new complaint involving nine plaintiffs was filed.
It is too early to predict whether any of these cases will go to trial on the
merits and if so, what the risk of exposure to Clark would be at trial. It is
also not possible to determine whether or to what extent Clark will have any
liability to other individuals arising from the ground water contamination.

In November 1991, Clark learned that the EPA, the IEPA and the Cook County
Department of Environmental Control were investigating the cause or causes of
certain apparent exceedences of ambient air quality standards for sulfur
dioxide in the vicinity of the Blue Island refinery. The EPA and the IEPA
requested certain specific information from Clark, which Clark supplied. Clark
has indicated that it will cooperate with the investigation of the apparent
sulfur dioxide exceedences and has undertaken the requested monitoring and
engineering procedures. Also in connection with the apparent exceedences, Clark
received a Notice of Violation from the EPA in February 1992 and an
Administrative Complaint and Notice of Proposed Order Assessing a Penalty of
$50,000 in October 1992. Clark paid a penalty of $45,000 to the EPA in March
1994.

Clark received an Administrative Complaint from the EPA on June 12, 1992
alleging record keeping violations of the RCRA concerning 22 stores in
Michigan, Indiana and Wisconsin and seeking civil penalties of $0.6 million. On
March 18, 1993, Clark received an Amended Complaint from the EPA involving
similar allegations but reducing the amount of civil penalties sought to $0.1
million. Clark received an Administrative Complaint from the EPA on January 5,
1993 alleging record keeping and related violations of the Clean Air Act
concerning the Hartford refinery and seeking civil penalties of $0.1 million.

On May 5, 1993, Clark received correspondence from the Michigan Department of
Natural Resources ("MDNR") indicating that the MDNR believes Clark may be a PRP
in connection with ground water contamination in the vicinity of one of its
retail stores in the Sashabaw Road area north of Woodhull Lake and Lake
Oakland, Oakland County Michigan. Clark has begun an initial investigation into
the matters raised by the MDNR. At the request of the MDNR, Clark has conducted
an investigation into the historical use of its site, potential contaminants
used at the site, third party sites which may be the source of contaminants and
is also conducting a subsurface investigation of its site and the surrounding
area. Clark has incurred approximately $25,000 in investigative activities to
date. Clark does not know whether MDNR has identified other PRPs in connection
with this matter, nor has it received any information from MDNR as to what it
believes may be the ultimate cost associated with this site. Clark will not be
able to prepare a corrective action plan and estimate potential clean-up costs
until its investigatory work is complete.

An impoundment at the Hartford refinery contains hazardous wastes that were
produced as the result of past operations. Clark has been evaluating remedial
options with respect to that waste since 1992 and has been in discussions with
the IEPA concerning those options. In April 1993 the IEPA told Clark that the
presence of those hazardous wastes may require a permit under the RCRA and that
in turn may require corrective action with respect to the entire refinery.
Clark has received no formal notice or complaint with respect to these issues
from the IEPA. Clark has begun an investigation with respect to the need for a
permit and consequent corrective action. Based upon the estimates of an
independent engineering firm, Clark established a $9.0 million provision for
the estimated costs of site clean-up of which $7.2 million has been spent to
date on remedial activities performed after notice to and comments from the
IEPA.

In addition to the proceedings described above, Clark has various suits and
claims against it. While it is impossible to estimate with certainty the
ultimate legal and financial liability in respect to these other suits and
claims, Clark believes the outcome of these other suits and claims will not be
material in relation to its financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Inapplicable.

13
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

Inapplicable.

ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

(IN THOUSANDS, EXCEPT RATIOS AND OPERATING DATA)

The following table sets forth, for the periods and dates indicated, selected
financial and other data derived from the financial statements and related
notes and the underlying books and records of Clark for the years ended
December 31, 1993, 1992, 1991, 1990 and 1989. These selected financial and
other data should be read in conjunction with the financial statements of Clark
and related notes appearing elsewhere in this document.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales and operating
revenues............... $ 2,263,410 $ 2,252,964 $ 2,426,059 $ 2,745,728 $ 2,023,234
Costs of sales.......... (1,936,563) (1,952,360) (2,092,738) (2,383,937) (1,678,011)
Operating expenses...... (218,087) (224,368) (199,686) (195,386) (181,704)
General and administra-
tive expenses.......... (27,533) (31,164) (20,758) (23,309) (21,326)
Depreciation............ (23,402) (21,122) (19,263) (17,128) (15,415)
Amortization (a)........ (11,907) (9,290) (7,131) (2,189) --
Inventory write down to
market................. (26,500) -- -- -- --
----------- ----------- ----------- ----------- -----------
Operating income........ 19,418 14,660 86,483 123,779 126,778
Interest and financing
costs, net (b)......... (29,933) (26,373) (27,196) (29,293) (45,775)
Other income (expense)
(c).................... 11,370 14,662 -- (22,253) --
----------- ----------- ----------- ----------- -----------
Earnings before taxes,
extraordinary item and
cumulative effect of
changes in accounting
principles............. 855 2,949 59,287 72,233 81,003
Income tax benefit (pro-
vision)................ 513 344 (21,972) (26,125) (26,639)
----------- ----------- ----------- ----------- -----------
Earnings before extraor-
dinary item and cumula-
tive effect of changes
in accounting princi-
ples................... 1,368 3,293 37,315 46,108 54,364
Extraordinary item (d).. -- (11,538) -- -- --
Cumulative effect of
changes in accounting
principles (e)......... (9,595) -- -- (4,204) --
----------- ----------- ----------- ----------- -----------
Net earnings (loss)..... $ (8,227) $ (8,245) $ 37,315 $ 41,904 $ 54,364
=========== =========== =========== =========== ===========
RATIO OF EARNINGS TO
FIXED CHARGES (F) (g) (g) 2.37x 2.54x 2.47x
BALANCE SHEET DATA (AT
PERIOD END):
Cash, cash equivalents
and short-term invest-
ments.................. $ 194,523 $ 206,130 $ 266,971 $ 174,060 $ 101,332
Property, plant and
equipment.............. 360,945 320,870 284,307 245,906 229,019
Total assets............ 811,454 787,795 809,468 638,753 540,757
Long-term debt.......... 401,038 401,514 426,619 301,907 302,168
Other noncurrent liabil-
ities.................. 52,106 44,593 42,975 21,905 12,375
Stockholder's equity.... 145,978 154,205 172,633 135,318 93,414
OPERATING INFORMATION:
Retail Division:
Number of stores (at
period end)........... 846 873 889 937 942
Gasoline volume (mm
gal).................. 1,014.8 956.7 966.2 978.2 970.5
Average stores volume
(m gal/month)......... 98.6 90.1 86.9 87.2 86.0
Gasoline gross margin
(cents/gal)........... 11.1c 10.0c 10.9c 11.7c 10.1c
Convenience products
sales (mm)............ $ 218.0 $ 203.4 $ 186.9 $ 187.0 $ 195.5
Convenience products
gross margin (mm)..... $ 54.8 $ 47.7 $ 45.1 $ 45.2 $ 41.4
Operating expenses (mm)
(h)................... $ 109.9 $ 100.5 $ 94.3 $ 94.0 $ 89.6
Refining Division:
Production (m
bbls/day)............. 134.7 142.4 129.4 131.7 135.4
Utilization (i)........ 103.6% 109.5% 99.5% 101.3% 104.2%
Gross margin (per bbl). $ 3.24 $ 3.03 $ 3.88 $ 4.20 $ 4.17
Operating expenses (per
bbl) (j).............. $ 2.20 $ 2.22 $ 2.38 $ 2.15 $ 1.86
</TABLE>

14
<PAGE>

- --------
(a) Amortization includes amortization of turnaround costs and organizational
costs.
(b) Interest and financing costs, net, includes amortization of debt issuance
costs of $1.2 million, $2.9 million, $6.0 million, $3.1 million and $9.1
million for the years ended December 31, 1993, 1992, 1991, 1990 and 1989
respectively. Interest and financing costs, net, also includes interest on
all indebtedness, net of capitalized interest and interest income.
(c) Other income in 1993 includes the final settlement of litigation with
Drexel of $8.5 million and a gain from the sale of "non-core" stores of
$2.9 million. Other income in 1992 includes the settlement of litigation
with Apex and Drexel of $9.2 million and $5.5 million, respectively. Other
expense in 1990 included a loss provision for $11.6 million representing
the full amount of an overnight deposit held by Drexel. An additional 1990
loss provision of $10.0 million represents estimated costs of mitigation
and recovery efforts resulting from alleged responsibility for ground water
contamination in the town of Hartford, Illinois, adjacent to the Hartford
refinery. A 1990 loss provision of $0.7 million reflected the inability of
a former affiliate to repay its note due Clark.
(d) Extraordinary item includes the recognition of deferred financing costs,
premium amount and interest expense from September 30, 1992 through the
redemption date of October 26, 1992, net of applicable income taxes on the
redemption of the 12 1/4% First Mortgage Fixed Rate Notes due 1996.
(e) On January 1, 1993, Clark adopted SFAS 106. This standard requires that
Clark accrue the actuarially determined costs of postretirement benefits
during the employees' active service periods. Previously, Clark had
accounted for these benefits on a "pay as you go" basis, recognizing an
expense when an obligation was paid. In accordance with SFAS 106, Clark
elected to recognize the cumulative liability, a non-cash "Transition
Obligation" of $9.6 million, net of the tax benefit of $6.0 million, as of
January 1, 1993.
On January 1, 1993, Clark adopted SFAS 109 and restated the years ended
December 31, 1992 and 1991. The cumulative effect through December 31, 1990
is reflected as an adjustment to income in 1990 in this table. The adoption
of this standard changes the method of accounting for income taxes from the
deferred method to an asset and liability approach. Previously, Clark
deferred the past tax effects of timing differences between financial
reporting and taxable income. The asset and liability approach requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and
the tax bases of assets and liabilities.
(f) The ratio of earnings to fixed charges is computed by dividing (i) earnings
before income taxes (adjusted to recognize only distributed earnings from
less than 50% owned persons accounted for under the equity method) plus
fixed charges by (ii) fixed charges. Fixed charges consist of interest on
indebtedness, including amortization of discount and debt issuance costs
and the estimated interest components (one-third) of rental and lease
expense.
(g) As a result of the losses for the years ended December 31, 1993 and 1992,
earnings were insufficient to cover fixed charges by $17.3 million and
$20.7 million respectively.
(h) Retail operating expenses for 1992 exclude $5.8 million of charges that
management considers to be unusual.
(i) Refinery utilization is the ratio of total production yield to the rated
capacity of the refinery to process crude oil. Production yield may be
greater than the rated capacity of the refinery because other feedstocks
(including partially refined products and liquefied petroleum gases), which
add to the refinery's output are utilized in the refining process.
(j) Refinery operating expenses for 1992 exclude $11.5 million ($0.22 per
barrel) of charges that management considers to be unusual.

15
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

Overview

Clark's results are impacted significantly by a variety of factors beyond its
control, including movements in crude oil prices, demand for refined products,
general oil price levels and industry refinery capacity and utilization rates.
Clark's net sales and operating revenues fluctuate significantly with movements
in industry crude oil prices but they do not have a direct relationship to net
earnings. The effect of changes in crude oil prices on Clark's operating
results is determined more by the rate at which the prices of refined products
adjust to reflect such changes. Management believes that lower crude oil prices
benefit operating results over the longer term due to increased demand,
decreased working capital requirements and a greater sensitivity by the major
integrated oil companies to profitability in their refining and marketing
operations. Higher refinery production is typically associated with improved
results of operations. Conversely, lower production, which generally occurs
during scheduled refinery maintenance turnarounds, negatively impacts results
of operations.

The following table sets out the approximate pre-tax earnings impact on Clark
of changes in: 1) refining margins--the spread between wholesale and spot
market product prices and input (e.g. crude oil) costs and 2) retail margins--
the spread between product prices at the retail level and wholesale product
costs. While margins are impacted significantly by the industry factors
described above, individual companies can influence their own margins through
the efficiency of their operations.

<TABLE>
<CAPTION>
EARNINGS
SENSITIVITY CHANGE PRE-TAX EARNINGS IMPACT ON CLARK
----------- ------ --------------------------------
<S> <C> <C>
Clark refining
margin $1.00 per barrel $50 million
Clark retail mar-
gin $0.01 per gallon $10 million
Crude oil price Indeterminate since earnings depend on
margins--Clark does not produce crude oil*
</TABLE>
*Changes in crude oil prices may affect the carrying value of inventories.

Falling crude and product prices reduced 1993 and 1992 net sales and
operating revenues, while improved unit volumes partially offset the drop.
Crude and product prices have declined from the levels reached during the 1990
Iraqi invasion of Kuwait and the 1991 Soviet coup, which were viewed as
potential threats to supply. Net sales and operating revenues were also
affected by sales volumes; retail gasoline volumes were up 6% from 1992 and
down 1% in 1992 as compared to 1991, and wholesale sales volumes were up 21%
from 1992 and up 122% in 1992 as compared with 1991.

CLARK FINANCIAL HIGHLIGHTS:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
FINANCIAL RESULTS
Net sales and operating revenues.................. $2,263.4 $2,253.0 $2,426.1
Cost of sales..................................... 1,936.6 1,952.4 2,092.7
Operating expenses................................ 218.1 207.0 199.7
-------- -------- --------
108.7 93.6 133.7
General and administrative........................ 27.5 24.8 20.8
Depreciation and amortization..................... 35.3 30.5 26.4
Interest and financing costs, net................. 29.9 28.4 27.2
-------- -------- --------
Earnings before income taxes*..................... 16.0 9.9 59.3
Tax provision..................................... 5.4 4.7 22.0
-------- -------- --------
Earnings before unusual items*.................... 10.6 5.2 37.3
Unusual items, after taxes*....................... (18.8) (13.4) --
-------- -------- --------
Reported net earnings (loss)...................... $ (8.2) $ (8.2) $ 37.3
======== ======== ========
</TABLE>
*Management considers certain items in 1992 and 1993 at Clark to be "unusual".
In 1993, the unusual items netted to a $30.7 million charge before taxes,
$18.8 million net of taxes. In 1992, the unusual items netted to a $25.7
million charge before taxes, $13.4 million net of taxes. Detail on these
items is presented below.

16
<PAGE>

Net earnings excluding unusual items improved in 1993 despite a decline in
industry refining margins and reduced production associated with the scheduled
maintenance turnaround at Clark's Blue Island, Illinois refinery. The gain was
due to the combination of improved retail and refinery productivity and better
retail market conditions. These improvements became significant in the latter
part of 1993. Excluding unusual items, Clark's 1993 fourth quarter net earnings
rose to $7.3 million compared to $0.4 million in 1992 and a loss of $2.5
million in 1991.

UNUSUAL ITEMS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1993 1992
------ ------
(MILLIONS OF
DOLLARS)
<S> <C> <C>
Inventory write-down to market........................... $(26.5) $ --
Provision for environmental remediation cost............. -- (9.6)
Provision for store closures............................. -- (4.4)
Retirement and severance packages........................ -- (5.0)
Other.................................................... -- (4.7)
------ ------
Impact on Operating Income........................... (26.5) (23.7)
Change in accounting principle........................... (15.6) --
Early retirement of debt................................. -- (18.7)
Litigation settlements................................... 8.5 14.7
Sale of non-core stores.................................. 2.9 --
Other.................................................... -- 2.0
------ ------
Total................................................ $(30.7) $(25.7)
------ ------
Net of Taxes......................................... $(18.8) $(13.4)
====== ======
</TABLE>

Several items which are considered by management to be "unusual" are excluded
throughout this discussion of Clark's results of operations. A non-cash
accounting charge was taken in the fourth quarter of 1993 to reflect the
decline in the value of petroleum inventories below carrying value caused by a
substantial drop in prices. If petroleum prices were to recover, earnings would
benefit up to the extent of this charge. Further deterioration in prices could
result in further charges. Effective January 1, 1993, Clark adopted the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions" (see
Note 12 "Postretirement Benefits Other Than Pensions" to the financial
statements) and No. 109 "Accounting for Income Taxes", which was accounted for
by restating prior periods (see Note 13 "Income Taxes" to the financial
statements). Unusual credits included a 1993 gain related to the sale of 21
retail stores located in "non-core" markets and the favorable settlement of
litigation. See Note 11 "Other Income" to the financial statements. Unusual
charges in 1992 included the early retirement of Clark's 12 1/4% First Mortgage
Fixed Rate Notes due July 15, 1996, and provisions related to the environmental
clean-up of the storm water basin at the Hartford, Illinois refinery and
expected closures of under-performing retail stores. In addition, expenses
related to early retirements and a severance program along with a canceled
initial public offering were incurred in 1992.

17
<PAGE>

Retail

Retail Division Operating Statistics:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Gasoline volume (millions of gallons)............. 1,014.8 956.7 966.2
Gasoline volume (thousand gallons per month per
store)........................................... 98.6 90.1 86.9
Gasoline gross margin per gallon.................. 11.1c 10.0c 10.9c
Gasoline gross margin (millions).................. $ 112.7 $ 95.2 $ 105.1
Company-operated stores (end of year)............. 836 862 876
Dealer-operated stores (end of year).............. 10 11 13
Convenience product sales (millions).............. $ 218.0 $ 203.4 $ 186.9
Convenience product sales (per month per store)... $21,171 $19,154 $16,804
Convenience product gross margin.................. 25.2% 23.4% 24.1%
Convenience product gross margin (millions)....... $ 54.8 $ 47.7 $ 45.1
Convenience product gross margin (per month per
store)........................................... $ 5,320 $ 4,488 $ 4,004
Operating expenses (millions)..................... $ 109.9 $ 100.5(1) $ 94.3
Contribution to operating income (millions)....... $ 57.6 $ 42.4(1) $ 55.9
</TABLE>
- --------
(1) Excludes unusual charges totaling $5.8 million, primarily related to
restructuring and store closures.

Clark's retail division contributed $57.6 million in 1993 to operating
income, up from $42.4 million excluding unusual items in 1992 and $55.9 million
in 1991. The 1993 improvement is due to improved sales volumes and industry
margins, while the decline in 1992 as compared to 1991 was due to decreased
margins and the closure in late 1991 of stores representing approximately 2% of
1991 volume. Average monthly volumes per store in 1993 were up 9% over 1992 and
4% in 1992 over 1991 as a result of increased promotional activity, improved
productivity and the closure of under-performing units. During selected periods
of the year and in selected markets Clark ran promotions, including one that
offered premium gasoline at the same price as regular unleaded gasoline.
Margins per gallon improved in 1993 over the prior two years due to increased
sales of higher margin premium gasoline, stronger retail market conditions and
decreased competitive pricing pressures along with more responsive pricing
strategies. Excluding unusual items, the retail division contributed $16.0
million to 1993 fourth quarter operating income compared to $14.6 million in
the same periods of both 1992 and 1991.

The 1993 gross margin from convenience product sales rose 15% from 1992, with
1992 up 6% as compared to 1991. The average monthly contribution from
convenience product sales per store for the 1993 was up 19% as compared to 1992
and 1992 was up 12% as compared to 1991. These improvements were principally
due to improved vendor allowances, increased promotional activity, enhanced
store merchandising and manager training, and store incentive plans.

The increase in 1993 operating expenses over 1992 and 1991 is related to
costs incurred to implement a strategy to rework Clark's organizational
structure to more fully involve the general work force in the operation of the
business. These increased costs included higher labor, training, promotion and
systems-related expenses. The increased promotional activity related to
strengthening the Clark brand name, including purchasing of advertising and
point of sale materials. Adding to the increase from 1991 to 1992 were expenses
related to additional underground storage tank testing, a store associate bonus
program and increased participation in the store health insurance program.

18
<PAGE>

Refining

Refining Division Operating Statistics:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Crude oil throughput (thousand barrels per day)....... 123.8 126.8 119.3
Production (thousand barrels per day)................. 134.7 142.4 129.4
Utilization (production/rated capacity)............... 103.6% 109.5% 99.5%
Gross margin per barrel............................... $ 3.24 $ 3.03 $ 3.88
Gross margin (millions)............................... $159.3 $157.7 $183.2
Operating expenses (millions)......................... $108.2 $106.5(1) $105.4
Contribution to operating income (millions)........... $ 51.1 $ 51.2(1) $ 77.8
</TABLE>
- --------
(1) Excludes unusual charges totaling $11.5 million, primarily related to a
provision for environmental remediation and restructuring.

Clark's refining division contributed $51.1 million to operating income in
1993, flat with the $51.2 million excluding unusual items contributed in 1992
and compared to $77.8 million in 1991. Industry refining margins continued the
decline experienced in 1992, moving down further from the levels reached
following the 1990 Persian Gulf conflict and the 1991 Soviet coup. This
downward trend has occurred despite increasing demand for gasoline and
distillate products. As reported by the American Petroleum Institute, US
gasoline deliveries for 1993 rose by 1.5% versus a 1.1% increase in 1992, while
distillates showed an increase of 2.1%. However, demand has been more than
offset by high industry refinery runs, which have reached a crude oil
throughput utilization rate of 91.5%, the highest level in at least 20 years.
In addition, industry yield (as a percentage of crude oil runs) of light
products grew, with gasoline and distillate output rising 2.7% and 5.0%
respectively, further increasing the supply of these normally higher-margin
products. This changing industry yield pattern has resulted from upgraded
light-product processing, showing approximately a 10% increase in throughput
over the past five years.

Clark's refining margins improved in 1993, especially in the third and fourth
quarters and in relation to the decline in industry refining margin indicators.
Excluding unusual items, the refining division contributed $20.8 million to
1993 fourth quarter operating income compared to $11.0 million in 1992 and a
loss of $0.1 million in the same period of 1991. The third and fourth quarter
refining division results improved on the strength of recent productivity
initiatives, heavy oil and wholesale margins, and market profit opportunities
presented by the mandated transition to low sulfur #2 oil for on-road use. This
occurred despite third quarter losses related to a drop in crude and product
prices, flooding in the midwestern US, and the significant drop in Midwest #2
oil prices. Refinery production for 1993 was down from 1992 due to the
maintenance turnaround at the Blue Island refinery. Production during 1992
exceeded 1991 due to a turnaround at the Hartford refinery in 1991. Another
turnaround is scheduled for the Hartford refinery in 1994.

Refining operating expenses of $108.2 million in 1993 were just over 1992
operating expenses excluding unusual items of $106.5 million and 1991 expenses
of $105.4 million. The uninsured portion of the cost associated with a gasoline
spill from one of Clark's storage tanks in January 1994 is not expected to have
a material effect on earnings.

Outlook

Clark believes the demand for refined products will experience flat to only
slight growth over the next several years, but expects that regulatory
requirements and costs of entry will limit the industry's ability to meet
demand. High current industry refinery utilization and the expected closure of
marginal refineries due to increasing requirements for regulatory capital
investments may result in a more positive long-term outlook for the refining
and marketing industry.

19
<PAGE>

In the near-term, Clark is looking to achieve significant productivity gains
to secure its ongoing profitability. Clark has set a goal to achieve additional
pre-tax productivity gains of $55 million in 1994, having achieved estimated
gains of $20 million in 1993. These gains assume no improvement in industry
margins, and in fact, Clark's earnings before depreciation, interest and taxes
improved in the second half of 1993 despite deterioration in refining margins,
as a result of the productivity gains achieved to date. In addition to this
internal earnings growth, Clark is also pursuing growth in its retail and
refining businesses through acquisitions.

General and Administrative Expense

Clark's general and administrative expenses were $27.5 million, higher than
1992 expenses of $24.8 million excluding unusual items and expenses of $20.8
million in 1991. Expenses in 1993 and 1992 were up principally due to higher
labor and related costs, as Clark is making significant changes in its
management, systems and procedures to benefit productivity in the longer term.

Depreciation and Amortization

Depreciation and amortization expenses have increased in the past three years
due to the completion of higher cost refinery turnarounds in 1991 and 1993 and
the recent higher levels of capital expenditures.

Net Interest and Financing Costs

Clark's capital structure has changed significantly over the past three
years, although the resulting effect on 1993 and 1992 net interest and
financing costs has not been substantial. Clark's 1993 net interest and
financing cost increase was principally due to lower interest income on less
average funds invested and lower rates. See Note 8 "Long-Term Debt" to the
financial statements.

Other Income (Expenses)

See Note 11 "Other Income" to the financial statements for the items that
comprise other income.

LIQUIDITY AND CAPITAL RESOURCES

Financial Position

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1993 1992 1991
------ ------ ------
(MILLIONS OF
DOLLARS)
<S> <C> <C> <C>
Cash and short-term investments........................... $194.5 $206.1 $267.0
Working capital........................................... 203.8 245.1 304.1
Property, plant and equipment............................. 360.9 320.9 284.3
Long-term debt............................................ 401.0 401.5 426.6
Shareholder's equity...................................... 146.0 154.2 172.6
Operating cash flow....................................... 62.2 36.9 89.9
</TABLE>

Cash generated by operating activities before working capital changes for the
year ended December 31, 1993, was $62.2 million, $25.3 million greater than
1992 but $27.7 million under 1991. Cash flow has been impacted by the
fluctuation in Clark's net earnings the past three years. Working capital at
December 31, 1993, was $203.8 million, a 1.96 to 1 current ratio, versus
working capital of $245.1 million, a 2.31 to 1 current ratio at December 31,
1992, and working capital of $304.1 million, a 2.82 to 1 current ratio, at
December 31, 1991. The 1992 decline was principally a result of capital
expenditures and the retirement of debt. See Note 8 "Long-Term Debt" to the
financial statements.

In general, Clark's short-term working capital requirements fluctuate with
the price of crude oil. Clark expects internally generated cash flows will be
sufficient to meet its needs. Clark has in place a $100 million

20
<PAGE>

committed revolving line of credit expiring December 31, 1994, for cash
borrowings and for the issuance of letters of credit primarily for purchases of
crude oil, other feedstocks and refined products. At December 31, 1993, $51.5
million of the line of credit was utilized for letters of credit. There were no
direct borrowings under Clark's line of credit at December 31, 1993 or 1992.

Cash flows from investing activities are primarily impacted by capital
expenditures including maintenance turnarounds. During 1993, capital
expenditures were $67.9 million compared with $59.5 million in 1992 and $58.0
million in 1991. Refinery division capital expenditures were $39.2 million in
1993 compared with $49.2 million in 1992 and $33.4 million in 1991. In
addition, $20.6 million, $2.7 million and $17.2 million was spent for
maintenance turnaround expenditures in 1993, 1992 and 1991 respectively. The
increased spending in the refining division over the past three years has been
primarily related to environmental projects. In 1993, projects included
Stretford, crude and FCC unit upgrades at the Blue Island refinery while in
1992 projects included the distillate desulfurization project (subsequently
delayed), vapor reduction and a new flare at the Hartford refinery. Retail
expenditures were $26.5 million, $8.8 million and $23.6 million in 1993, 1992
and 1991 respectively. In 1993 nearly half of retail expenditures were
environmental projects related to tanks, lines, vapor recovery and soil
remediation. The balance of 1993 retail expenditures included discretionary
projects such as store interior remodeling, systems automation and "On The Go"
store concept development. Spending declined in 1992 and was limited primarily
to environmental projects while a new long-term strategic plan was developed.

Clark projects 1994 capital expenditures to be approximately $80 million.
Another $15 million is expected to be spent on a maintenance turnaround at the
Hartford refinery. Estimated refining division capital expenditures of $40
million include $10 million for various environmental projects and $30 million
of discretionary spending such as improvements to Hartford's crude and FCC
units. Retail division capital expenditures are estimated to be $40 million
including $20 million for environmental projects and $20 million for
discretionary projects such as the addition of canopies and new dispensers to
existing sites, the expansion of store interior selling space and "reimaging"
locations under Clark's new logo and updated color scheme. Discretionary
spending in each division will be linked to its operating cash flow.

Over the period 1994 to 1998, Clark has preliminary plans to complete a
number of environmental and other regulatory capital expenditure programs.
These environmental expenditures comprise two major categories, those that are
mandatory in order to comply with regulations pertaining to ground, water and
air contamination, and those that are primarily discretionary involving the
reformulation of refined fuel for sale into certain defined markets. The total
mandatory expenditures for regulatory compliance over the next five years are
estimated at approximately $100 million, split evenly between the retail and
refining businesses. Costs of potential future regulations cannot be forecast.

Modifications estimated at $10-15 million to produce reformulated gasoline
are being considered for the Blue Island refinery. The decision to proceed with
such a project will depend on economic justification. A project initiated to
produce low sulfur diesel fuel at the Hartford refinery was delayed in 1992
based on internal and third party analyses that indicated an oversupply of low
sulfur diesel fuel capacity in Clark's marketplace. These analyses projected
relatively narrow price differentials between low and high sulfur diesel
products which have thus far been borne out after the initial transition to the
low sulfur regulations. However, if price differentials widen sufficiently to
justify investment, Clark could install the necessary equipment over a 14 to 16
month period at an estimated additional cost of $40 million. Furthermore, if
Clark decided to install equipment necessary to produce reformulated gasoline
and control sulfur emissions at Hartford, the gasoil desulfurizer and related
equipment are estimated to cost an additional $90-130 million. These estimates
have declined from a year ago as Clark has found more cost-effective methods of
complying with regulations.

21
<PAGE>

Clark's net cash flow used in financing activities was $1.1 million in 1993
and $38.7 million in 1992, while $119.1 million was provided in 1991. In 1991
and 1992, long-term debt was retired early and new debt was issued, principally
to increase available cash and extend maturities of debt past the period when
Clark expected to incur its largest capital expenditure requirements. See Note
8 "Long-Term Debt" to the financial statements. In 1993, Clark entered into
several operating leases related to retail store automation equipment, coolers
and beverage dispensers, office equipment, refinery lab equipment and a filter
press.

Funds generated from operating activities, together with Clark's existing
cash, cash equivalents and marketable investments, are expected to be adequate
to fund requirements for working capital and capital expenditure programs for
the next year. Clark's future discretionary or environmentally-mandated
spending, or acquisitions may require additional debt or equity capital.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated herein by reference to
Part IV Item 14 (a) 1 and 2. Financial Statements and Financial Statement
Schedules.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of Clark and their respective ages and
positions are set forth in the table below.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Peter Munk 66 Chairman of the Board and Director
Paul D. Melnuk 39 President and Chief Executive Officer;
Chief Operating Officer; Director
C. William D. Birchall 51 Director
Brandon K. Barnholt 35 Executive Vice President-Retail Marketing
Kevin P. Pennington 37 Executive Vice President-Corporate Services
Eric D. Sigurdson 41 Executive Vice President-Refining
Patrick F. Heider 33 Secretary
</TABLE>

The Board of Directors of Clark consists of three directors who serve until
the next annual meeting of stockholders or until a successor is duly elected.
Directors do not receive any compensation for their services as such. Officers
of Clark serve at the discretion of the Board of Directors (and in the case of
Messrs. Barnholt and Sigurdson, pursuant to employment agreements).

Peter Munk has served as Chairman of the Board since July 1992, as Chairman
of the Board and Chief Executive Officer from August 1990 through July 1992 and
as Vice Chairman from November 1988 through August 1990. Mr. Munk has served as
a director of the Company since November 1988. Mr. Munk has served as Chairman
of the Board of Directors of Horsham since its formation in June 1987 and as
Chairman and Chief Executive Officer and a director of Barrick since July 1984.

22
<PAGE>

Paul D. Melnuk has served as a director since October 1992, as President and
Chief Executive Officer since July 1992, as President and Chief Operating
Officer from February 1992 through July 1992, as Executive Vice President and
Chief Operating Officer from December 1991 through February 1992, as Executive
Vice President and Chief Financial Officer from November 1991 through December
1991, as Vice President and Chief Financial Officer from August 1990 through
November 1991 and as Vice President from November 1988 through August 1990. Mr.
Melnuk has served as President and Chief Operating Officer and as a director of
Horsham since March 1992, as Executive Vice President and Chief Financial
Officer of Horsham from May 1990 through February 1992 and as Vice President of
Horsham from April 1988 through May 1990.

C. William D. Birchall has been a director of Clark since November 1988. Mr.
Birchall has been Chief Financial Officer of Arlington Investments Limited, a
private investment holding company located in Nassau, Bahamas, for the last
five years. Mr. Birchall has been a director of Barrick since July 1984 and a
director of Horsham since 1987.

Brandon K. Barnholt has served as Executive Vice President-Retail Marketing
since December 1993 and Vice President-Retail Marketing from July 1992 through
December 1993 and as Managing Director-Retail Marketing from May 1992 through
July 1992. Mr. Barnholt previously served as Retail Marketing Manager of
Conoco, Inc. from March 1991 through March 1992 and Lubricants Sales Manager
from April 1988 through March 1991. During 1990 and 1989, Mr. Barnholt served
as President of the Denver Conoco Credit Union.

Kevin P. Pennington has served as Executive Vice President-Corporate Services
since December 1993 and as Vice President-Human Resources from July 1993
through December 1993. Previously Mr. Pennington served as Vice President-Human
Resources for the Mercy Health System from April 1991 through July 1993 and as
Assistant Vice President-Human Resources at GTE from June 1985 through April
1991.

Eric D. Sigurdson has served as Executive Vice President-Refining since
December 1993, Vice President-Finance and Administration and Chief Financial
Officer from October 1992 through December 1993 and as Vice President-Corporate
Development from May 1992 to October 1992. Mr. Sigurdson has served as Vice
President and Chief Financial Officer since November 1992 and as Vice President
of Horsham since January 1992. From September 1989 through January 1992, Mr.
Sigurdson served as President of Toronto Dominion Real Estate Inc. and as
Director of Mergers & Acquisitions, Toronto Dominion Securities Inc. From April
1988 through September 1989, he served as corporate finance and real estate
consultant at Cormax Capital Ltd.

Patrick F. Heider has served as Secretary since October 1992. Mr. Heider has
served as in-house counsel since April 1990. Mr. Heider previously was employed
as an associate with the St. Louis law firm of Shepard, Sandberg & Phoenix from
April 1988 through April 1990.

There are no arrangements or understandings between any director or executive
officer and any other person pursuant to which such person was elected or
appointed as a director or executive officer of Clark. There are no family
relationships between any director or executive officer and any other director
or executive officer.

23
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid to the most highly
compensated executive officers of Clark earning in excess of $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ------------
NAME AND PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(D) COMPENSATION(B)
- ------------------ ---- -------- ------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul D. Melnuk(a) 1993 $325,578 $ -- $ -- -- $8,994
President and Chief 1992 311,731 -- -- -- 8,728
Executive Officer 1991 200,000 -- -- -- --
Brandon K. Barnholt 1993 143,722 100,000 -- -- 4,500
Executive Vice President- 1992 87,781 53,300 -- 30,000 --
Retail Marketing 1991 -- -- -- -- --
Kevin P. Pennington 1993 74,038 56,900 -- -- --
Executive Vice President- 1992 -- -- -- -- --
Corporate Services 1991 -- -- -- -- --
Eric D. Sigurdson(a) 1993 199,601 130,000 -- -- 6,000
Executive Vice President- 1992 148,077 50,000 90,000(c) -- --
Refining 1991 -- -- -- -- --
</TABLE>
- --------
(a) Mr. Melnuk and Mr. Sigurdson receive compensation from Horsham for their
services as President and Chief Operating Officer and Vice President and
Chief Financial Officer, respectively, of Horsham.
(b) Represents amounts accrued for the accounts of such individuals under the
Clark Refining & Marketing, Inc. Savings Plan.
(c) Payment of equity protection in sale of personal residence.
(d) Number of shares covered by grants which may be exercised as stock options.
These shares were granted under the Clark Refining & Marketing Stock Option
Plan (the "Option Plan") and are exercisable for Subordinate Voting Shares
of Horsham. Mr. Melnuk, Mr. Barnholt, Mr. Pennington and Mr. Sigurdson hold
options to acquire Subordinate Voting Shares of Horsham received as
compensation from Horsham.

Compensation of Clark's executive officers is determined by Clark's Board of
Directors. Mr. Melnuk, Clark's President and Chief Executive Officer, is a
member of Clark's Board of Directors.

OPTION GRANTS IN 1993

There were no grants of stock options pursuant to Clark's Option Plan during
the year ended December 31, 1993, to the executive officers named above. In
1993, Mr. Barnholt, Mr. Pennington and Mr. Sigurdson received options to
acquire Subordinate Voting Shares of Horsham from Horsham.

YEAR-END OPTION VALUES

The following table sets forth information with respect to the number and
value of unexercised options to purchase Subordinate Voting Shares of Horsham
held by the executive officers named in the Summary Compensation Table at
December 31, 1993. None of the named executive officers exercised any stock
options during 1993.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS HELD AT THE-MONEY OPTIONS HELD AT
DECEMBER 31, 1993 DECEMBER 31, 1993(A)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul D. Melnuk.............. -- -- -- --
Brandon K. Barnholt......... 10,000 20,000 $74,350 $148,700
Kevin P. Pennington......... -- -- -- --
Eric D. Sigurdson........... -- -- -- --
</TABLE>
- --------
(a) Based upon the closing price on the New York Stock Exchange--Composite
Transactions on December 31, 1993.
(b) Mr. Melnuk, Mr. Barnholt, Mr. Pennington and Mr. Sigurdson hold options to
acquire Subordinate Voting Shares of Horsham received as compensation from
Horsham.

24
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Compensation of Clark's executive officers is determined by the Board of
Directors. Mr. Melnuk, Clark's President and Chief Executive Officer, is a
member of the Board of Directors. Other than reimbursement of their expenses,
Clark's directors do not receive any compensation for their service as
directors.

EMPLOYMENT AGREEMENTS

Clark has an employment agreement with Mr. Sigurdson which provides for a
term of three years commencing January 14, 1992 at a minimum annual salary of
$150,000. In addition, Mr. Sigurdson was granted an option to purchase 100,000
shares of Subordinate Voting Shares of Horsham by Horsham which option shall
become exercisable as to one-third of the shares on each of the first three
anniversary dates of the granting of the option.

Clark has an employment agreement with Mr. Barnholt which provides for a term
of three years commencing May 11, 1992 at a base annual salary of $112,500. In
addition, Mr. Barnholt was granted an option to purchase 30,000 shares of
Subordinate Voting Shares of Horsham, which option shall become exercisable as
to one-third of the shares on each of the first three anniversary dates of the
granting of the option.

CLARK REFINING & MARKETING, INC. SAVINGS PLAN

Clark maintains the Clark Refining & Marketing, Inc. Savings Plan (the
"Plan"), a profit sharing plan which permits employee before-tax contributions
and provides for employer incentive matching contributions. The Plan was
adopted effective January 1, 1989 and as of January 1, 1994 the assets under
the related trust that implements and forms a part of the Plan are held in
trust by Boatmen's Trust Company. Under the Plan, each employee of Clark and
such other related companies as may adopt the Plan, who has attained age 21 (no
age requirement effective April 1, 1994) and completed one year of service (six
months of service effective April 1, 1994) may become a participant.
Participants are permitted to make elective before-tax contributions to the
Plan, effected through payroll reduction, from 2% to 12% (15% effective January
1, 1994) of their compensation. Clark makes matching contributions equal to
100% of a participant's elective before-tax contributions up to 6% of
compensation (effective April 1, 1994 a 200% match of up to 3% of
compensation). Participants are also permitted to make after-tax voluntary
contributions through payroll deduction, from 2% to 5% of compensation, which
are not matched by employer contributions. All employer contributions are
vested at a rate of 20% per year of service, becoming fully vested after five
years of service. Participants' vested accounts are distributable upon a
participant's disability, death, retirement or separation from service. Subject
to certain restrictions, employees may make loans or withdrawals of employee
contributions during the term of their employment.

CLARK REFINING & MARKETING, INC. STOCK OPTION PLAN

In 1991, Clark established a Stock Option Plan (the "Option Plan") under
which options to purchase Subordinate Voting Shares of Horsham ("Horsham
Shares") could be granted to certain of its non-employee directors and key
employees. Under the Option Plan, options were granted for the purpose of
attracting and motivating directors, officers and key employees. The Option
Plan is administered by a committee of the Board of Directors consisting of two
or more directors. Under the terms of the Option Plan, options granted to
purchase Horsham Shares were at the market price of the Horsham Shares at the
time of grant. In the event that an option holder ceases to be an employee, the
holder (or the holder's estate) has three months to exercise the vested
options. The maximum number of Horsham Shares authorized for issuance under the
Option Plan, as amended, is 600,000.

As of December 31, 1993, there were 363,737 options outstanding to purchase
shares of Horsham at prices ranging from $7.19 to $11.88 per share. The
Company, under a trust agreement, held 253,738 Horsham shares at December 31,
1993 to meet obligations under the Option Plan.

25
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of Clark's common stock is owned by R & M Holdings, which is indirectly
wholly owned by Horsham. R & M Holdings was formed by Horsham and AOC L.P. to
acquire all of the capital stock of Clark and certain other assets. In
connection with the Acquisition, AOC L.P., Horsham, R & M Holdings and Clark
entered into a shareholder agreement, pursuant to which Horsham purchased 60%
of the equity capital of R & M Holdings for $18 million and AOC L.P. purchased
the remaining 40% of the equity capital of R & M Holdings for $12 million. AOC
L.P. is a Missouri limited partnership, the sole general partner of which is G
& N Investments, Inc.

REPURCHASE OF STOCK

On December 30, 1992, R & M Holdings repurchased from AOC L.P. 34.67 shares
of its common stock (approximately 87% of the shares of R & M Holdings common
stock owned by AOC L.P.) and the option held by AOC L.P. to acquire common
stock described above, for a purchase price of $90 million in cash and the
transfer of all of the shares of CMAT, Inc. ("CMAT"), the principal asset of
which is a Colorado ski resort. Horsham purchased the remaining 5.33 shares of
common stock (approximately 13% of the shares of R & M Holdings common stock
owned by AOC L.P.) for a purchase price of $10 million in cash and a warrant to
purchase up to 3,000,000 subordinate voting shares of Horsham at an exercise
price of $7.625 per share. In addition, a shareholder agreement was terminated.
As of December 31, 1993, Peter Munk held approximately 80.9% voting control of
Horsham.

In addition, R & M Holdings and Horsham have agreed to pay to AOC L.P.
approximately 89% and 11%, respectively, of the Contingent Payment described
below. The Contingent Payment is an amount, which shall not exceed in the
aggregate $24 million plus interest at 9% per annum, compounded annually,
calculated as a percentage of (i) the net cash flow of Clark for the years
1993, 1994, 1995 and 1996, in excess of specified levels and (ii) the net
proceeds from sales, prior to January 1, 1997, of any equity security of R & M
Holdings or Clark, or of certain assets of Clark or Clark Pipe Line Company or
of certain mergers involving R & M Holdings or Clark, at prices in excess of
specified levels. Any Contingent Payments due for 1993 were immaterial.

The shares of CMAT transferred to AOC L.P. were valued at approximately $9.9
million, following capitalization of certain intercompany debt held by Clark.

In connection with the foregoing transaction, AOC L.P., its principals and
their affiliates, on the one hand and Horsham, R & M Holdings and Clark, on the
other hand, delivered a Mutual Release of all claims, known or unknown, of
either party against the other. In consideration of such release, Clark paid to
AOC L.P. $2.5 million in cash.

To fund the repurchase of shares of its common stock, R & M Holdings borrowed
$90 million pursuant to the Horsham Notes. The Horsham Notes consist of (i) a
zero coupon note payable to Horsham issued on December 30, 1992 for a price of
$75.0 million and maturing on June 28, 1993 in the face amount of approximately
$79.6 million and (ii) a zero coupon note payable to a wholly owned subsidiary
of Horsham issued on December 21, 1992 for a price of $15.0 million and
maturing on June 19, 1993 in the face amount of approximately $15.9 million.
The issue price of each of the Horsham Notes represented a yield to maturity of
approximately 11.8%. The Horsham Notes were repaid on February 18, 1993 from
the proceeds of a private debt placement by R & M Holdings.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Horsham and Clark have agreements to provide certain management services to
each other from time to time. During 1990, Clark arranged interim letter of
credit facilities with two banks totaling $125.0 million requiring the
guarantee of Horsham. Fees related to this interim financing arrangement and
associated

26
<PAGE>

guarantee paid to Horsham in 1991 totaled $7.0 million. Clark has established
trade credit with various suppliers of its petroleum requirements, occasionally
requiring the guarantee of Horsham. Fees related to trade credit guarantees
totaled $0.4 million during 1991 and $0.1 million in 1992.

The business relationships described above and any future business
relationships with Horsham will be on terms no less favorable in any respect
than those which could be obtained through dealings with third parties.

RELATIONSHIP WITH R & M HOLDINGS

For Federal income tax purposes, Clark has been a member of the consolidated
group of which R & M Holdings is the parent corporation (the "R & M Holdings
Group").

Pursuant to a Tax Sharing Agreement in effect among R & M Holdings and each
of its direct and indirect subsidiaries, for any year in which Clark is
entitled to file a consolidated Federal income tax return with R & M Holdings,
Clark generally is required to pay to R & M Holdings an amount equal to the
amount of Federal income tax Clark would have paid had it computed its Federal
income tax liability as a separate company in such year and any prior year. If
Clark has or would have had an unused tax credit or loss which it could have
carried back had it filed separate tax returns for all prior years, R & M
Holdings must pay Clark an amount equal to the refund to which Clark would have
been entitled. However, if Clark leaves the R & M Holdings Group, the Tax
Sharing Agreement will cease to apply to it and it will no longer be entitled
to reimbursement for the use of any of its losses, even if those losses result
in refunds to the R & M Holdings Group or otherwise reduce the Federal income
liability of the R & M Holdings Group, unless R & M Holdings otherwise agrees.
Clark also may have to pay an additional amount to R & M Holdings or may be
entitled to a payment from R & M Holdings if Clark's separately computed
income, losses or credits are adjusted as a result of an audit by the Internal
Revenue Service. The principles set forth above with respect to the Federal
income taxes also apply to state taxes in those states where a combined income
tax return can be filed.

Holding's address is 8000 South Beech Daly Road, Taylor, Michigan 48180.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) 1. AND 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The financial statements and schedules filed as a part of this Report on Form
10-K are listed in the accompanying index to financial statements and
schedules.

3. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of Clark (Exhibit 3.1
filed with Clark Registration Statement on Form S-1
(Registration No. 33-28146))
3.2 Certificate of Amendment to the Certificate of Incorporation of
Clark dated September 28, 1990 (Exhibit 3.2 filed with Clark
Annual Report on Form 10-K for the year ended December 31, 1991
(Commission File No. 1-11392))
3.3 By-laws of the Company (Exhibit 3.2 filed with Clark
Registration Statement on Form S-1 (Registration No. 33-28146))
4.1 Indenture between Clark and NationsBank of Virginia, N.A.
(formerly Sovran Bank), N.A. including the form of 10 1/2%
Senior Notes due 2001 (Exhibit 4.1 filed with Clark Registration
Statement on Form S-1 (Registration No. 33- 43358))
</TABLE>

27
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<C> <S>
4.2 Indenture between Clark and NationsBank of Virginia, N.A.,
including the form of 9 1/2% Senior Notes due 2004 (Exhibit 4.1
filed with Clark Registration Statement on Form S-1
(Registration No. 33-50748))
10.1 Clark Refining & Marketing, Inc. Stock Option Plan (Exhibit 10.5
filed with Clark Registration Statement on Form S-1
(Registration No. 33-43358))
10.2 Clark Refining & Marketing, Inc. Savings Plan, as amended and
restated effective as of October 1, 1989 (Exhibit 10.6 filed
with Clark Annual Report on Form 10-K for the year ended
December 31, 1989 (Commission File No. 1-11392))
10.3 Employment Agreement of Brandon K. Barnholt (Exhibit 10.13 filed
with Clark Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992 (Commission File No. 1-11392))
10.4 Employment Agreement of Eric D. Sigurdson (Exhibit 10.12 filed
with Clark Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992 (Commission File No.
1-11392))
10.5 Amended and Restated Credit Agreement, dated as of February 10,
1993, between Clark, the Banks listed therein, Bankers Trust
Company, as Issuing Bank, The Toronto-Dominion Bank, as Co-Agent
and BT Commercial Corporation, as Agent (Exhibit 10.9 filed with
Clark Annual Report on Form 10-K for the year ended December 31,
1992 (Commission File No. 1-11392))
10.6 First Amendment, dated as of January 26, 1994, to Credit
Agreement between the Company, the Banks listed therein,
Banker's Trust Company as Issuing Bank, the Toronto-Dominion
Bank, as Co-Agent and BT Commercial Corporation, as Agent.
12.1 Computation of Ratio of Earnings to Fixed Charges
</TABLE>

(B) REPORTS ON FORM 8-K

Registrant filed a Form 8-K dated October 1, 1993 disclosing change of
corporate name and trademark.

28
<PAGE>

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Clark Refining & Marketing, Inc.:
Annual Financial Statements
Report of Independent Accountants..................................... 30
Balance Sheets as of December 31, 1993 and 1992....................... 31
Statements of Earnings for the years ended December 31, 1993, 1992 and
1991................................................................. 32
Statements of Cash Flows for the years ended December 31, 1993, 1992
and 1991............................................................. 33
Statement of Stockholder's Equity for the years ended December 31,
1993, 1992 and 1991.................................................. 34
Notes to Financial Statements......................................... 35
Clark Refining & Marketing, Inc.:
Schedules
Report of Independent Accountants..................................... 43
I--Marketable Securities--Other Investments........................... 44
V--Property, Plant, & Equipment....................................... 45
VI--Accumulated Depreciation of Property, Plant & Equipment........... 46
X--Supplementary Earnings Statement Information....................... 47
</TABLE>

29
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Clark Refining & Marketing, Inc.:

We have audited the accompanying balance sheets of Clark Refining &
Marketing, Inc. (formerly Clark Oil & Refining Corporation) (a Delaware
corporation and wholly owned subsidiary of Clark R & M Holdings, Inc.) as of
December 31, 1993 and 1992 and the related statements of earnings,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clark Refining & Marketing,
Inc. as of December 31, 1993 and 1992 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.

As discussed in notes 12 and 13 to the financial statements, in 1993 the
Company changed its method of accounting for postretirement benefits other than
pensions and its method of accounting for income taxes.

Coopers & Lybrand

St. Louis, Missouri,
January 28, 1994

30
<PAGE>

CLARK REFINING & MARKETING, INC.

BALANCE SHEETS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
REFERENCE DECEMBER 31, DECEMBER 31,
ASSETS NOTE 1993 1992
------ --------- ------------ ------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents................ $ 60,771 $ 18,643
Short-term investments................... 3 133,752 187,487
Accounts receivable...................... 58,103 52,150
Inventories.............................. 2, 4 147,961 151,083
Prepaid expenses and other............... 15,573 23,178
-------- --------
Total current assets................... 416,160 432,541
Property, Plant and Equipment.............. 2, 5 360,945 320,870
Other Assets............................... 2, 6 34,349 34,384
-------- --------
$811,454 $787,795
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable......................... 7 $138,321 $107,211
Accrued expenses and other............... 8 43,151 45,902
Accrued taxes other than income.......... 30,860 34,370
-------- --------
Total current liabilities.............. 212,332 187,483
Long-Term Debt............................. 3, 8, 9 401,038 401,514
Deferred Taxes............................. 2, 13 35,248 44,593
Liability for Postretirement Benefits...... 12 16,858 --
Contingencies.............................. 14 -- --
Stockholder's Equity:
Common stock ($.01 par value per share;
1,000 shares authorized and 100 shares
issued and outstanding)
Paid-in capital.......................... 30,000 30,000
Retained earnings........................ 7 115,978 124,205
-------- --------
Total stockholder's equity............. 145,978 154,205
-------- --------
$811,454 $787,795
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

31
<PAGE>

CLARK REFINING & MARKETING, INC.

STATEMENTS OF EARNINGS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
REFERENCE ----------------------------------
NOTE 1993 1992 1991
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales and Operating Revenues. $2,263,410 $2,252,964 $2,426,059
Expenses:
Cost of sales.................. (1,936,563) (1,952,360) (2,092,738)
Operating expenses............. (218,087) (224,368) (199,686)
General and administrative ex-
penses........................ (27,533) (31,164) (20,758)
Depreciation................... 2 (23,402) (21,122) (19,263)
Amortization................... 2, 6 (11,907) (9,290) (7,131)
Inventory write-down to market. 4 (26,500) -- --
---------- ---------- ----------
(2,243,992) (2,238,304) (2,339,576)
---------- ---------- ----------
Operating Income................. 19,418 14,660 86,483
Interest and financing costs,
net........................... 8 (29,933) (26,373) (27,196)
Other income................... 11 11,370 14,662 --
---------- ---------- ----------
Earnings Before Income Taxes, Ex-
traordinary Item and Cumulative
Effect of Change in Accounting
Principle....................... 855 2,949 59,287
Income tax (provision) benefit. 2, 13 513 344 (21,972)
---------- ---------- ----------
Earnings Before Extraordinary
Item and Change in Accounting
Principle....................... 1,368 3,293 37,315
Extinguishment of debt (net of
taxes of $7,192).............. 8 -- (11,538) --
Cumulative effect of change in
accounting principle (net of
taxes of $5,992).............. 12 (9,595) -- --
---------- ---------- ----------
Net Earnings (Loss).............. $ (8,227) $ (8,245) $ 37,315
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

32
<PAGE>

CLARK REFINING & MARKETING, INC.
STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER
31,
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss)......................... $ (8,227) $ (8,245) $ 37,315
Extraordinary item.......................... -- 11,538 --
Cumulative effect of change in accounting
principle.................................. 9,595 -- --
Adjustments:
Depreciation.............................. 23,402 21,122 19,263
Amortization.............................. 13,025 12,217 13,126
Share of earnings of affiliates, net of
dividends................................ 197 182 1,254
Deferred taxes............................ (3,536) 267 19,124
Inventory write-down to market............ 26,500 -- --
Other..................................... 1,271 (206) (156)
Cash provided by (reinvested in) working
capital--
Accounts receivable, prepaid expenses and
other.................................... 2,328 13,171 (32,692)
Inventories............................... (23,378) (31,334) (9,094)
Accounts payable, accrued expenses, taxes
other than income, and other............. 22,288 20,418 (4,200)
--------- --------- ---------
Net cash provided by operating activi-
ties................................... 63,465 39,130 43,940
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of short-term investments......... (114,534) (987,883) (202,306)
Sales of short-term investments............. 168,470 1,027,053 --
Expenditures for property, plant and equip-
ment....................................... (67,938) (59,518) (58,042)
Expenditures for turnaround................. (20,577) (2,729) (17,237)
Payment received on CMAT, Inc. note......... 10,000 -- --
Proceeds from disposals of property, plant
and equipment.............................. 4,582 995 5,129
Other investing activity.................... (201) (5,006) --
--------- --------- ---------
Net cash used in investing activities... (20,198) (27,088) (272,456)
--------- --------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt.... -- 175,000 225,000
Long-term debt payments..................... (775) (207,396) (100,288)
Deferred financing costs.................... (663) (6,458) (5,591)
Other....................................... 299 135 --
--------- --------- ---------
Net cash provided by (used in) financing
activities............................. (1,139) (38,719) 119,121
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents.................................. 42,128 (26,677) (109,395)
Cash and Cash Equivalents, beginning of peri-
od........................................... 18,643 45,320 154,715
--------- --------- ---------
Cash and Cash Equivalents, end of period...... $ 60,771 $ 18,643 $ 45,320
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

33
<PAGE>

CLARK REFINING & MARKETING, INC.

STATEMENT OF STOCKHOLDER'S EQUITY

DECEMBER 31, 1993

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ------- -------- --------
<S> <C> <C> <C> <C>
Balance--December 31, 1990
As previously reported.................... $ -- $30,000 $109,522 $139,522
Cumulative effect of change in accounting
principle................................. -- -- (4,204) (4,204)
---- ------- -------- --------
Balance--December 31, 1990 as restated...... -- 30,000 105,318 135,318
Net Earnings.............................. -- -- 37,315 37,315
---- ------- -------- --------
Balance--December 31, 1991.................. -- 30,000 142,633 172,633
Net Loss.................................. -- -- (8,245) (8,245)
Dividend Paid ............................ -- -- (10,183) (10,183)
---- ------- -------- --------
Balance--December 31, 1992.................. -- 30,000 124,205 154,205
Net Loss.................................. -- -- (8,227) (8,227)
---- ------- -------- --------
Balance--December 31, 1993.................. $ -- $30,000 $115,978 $145,978
==== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

34
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991

(TABULAR DOLLAR AMOUNTS IN THOUSANDS OF US DOLLARS)

1. GENERAL

Clark Refining & Marketing, Inc., formerly Clark Oil & Refining Corporation,
a Delaware corporation ("Clark") was organized in 1988 for the purpose of
acquiring the principal assets of OC Oil & Refining Corporation (formerly Clark
Oil & Refining Corporation, a Wisconsin Corporation) ("Old Clark"), a wholly-
owned subsidiary of Apex Oil Company, Inc. (formerly Apex Oil Company) ("Apex")
and certain other assets of Apex. Clark is wholly-owned by Clark R & M
Holdings, Inc., a Delaware corporation ("R & M Holdings"), and R & M Holdings
is indirectly, wholly-owned by The Horsham Corporation, a Quebec corporation
("Horsham"). During December 1992, the 40% ownership interest of R & M Holdings
that was held by AOC Limited Partnership, a Missouri limited partnership and
affiliate of Apex ("AOC, LP"), was acquired by R & M Holdings and Horsham.

Clark's principal operations include crude oil refining, wholesale and retail
marketing of refined petroleum products and the retail marketing of convenience
store items in the Central United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents; Short-term Investments

Clark considers all highly liquid investments, such as time deposits, money
market instruments, commercial paper and United States and foreign government
securities, purchased within three months of maturity, to be cash equivalents.
Short-term investments consist of similar investments, as well as United States
government security funds, maturing more than three months from date of
purchase and are carried at the lower of cost or market. Clark invests only in
AA rated or better fixed income marketable securities or the short-term rated
equivalent.

Inventories

Inventories are stated at the lower of cost, predominantly using the last-in,
first-out "LIFO" method, adjusted for realized hedging gains or losses on
petroleum products, or market on an aggregate basis. To limit risk related to
price fluctuations, Clark purchases and sells crude oil and refined products
futures contracts as hedges of its production requirements and physical
inventories. Gains and losses on futures contracts are recognized in earnings
as a product cost component and as an adjustment to the carrying amount of
petroleum inventories and are reflected when such inventories are consumed or
sold.

Property, Plant and Equipment

Depreciation of property, plant and equipment is computed using the straight-
line method over the estimated useful lives of the assets or group of assets.
The cost of buildings and marketing facilities on leased land and leasehold
improvements are amortized on a straight-line basis over the shorter of the
estimated useful life or the lease term. Clark capitalizes the interest cost
associated with major construction projects based on the effective interest
rate on aggregate borrowings.

Expenditures for maintenance and repairs are expensed. Major replacements and
additions are capitalized. Gains and losses on assets depreciated on an
individual basis are included in current income. Upon disposal of assets
depreciated on a group basis, unless unusual in nature or amount, residual cost
less salvage is charged against accumulated depreciation.

35
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Environmental Costs

Environmental expenditures are expensed or capitalized depending upon their
future economic benefit. Costs which improve a property as compared with the
condition of the property when originally constructed or acquired and costs
which prevent future environmental contamination are capitalized. Costs which
return a property to its condition at the time of acquisition are expensed.

Deferred Turnaround and Financing Costs

A turnaround is a periodically required standard procedure for maintenance of
a refinery that involves the shutdown and inspection of major processing units
and occurs approximately every three years. Turnaround costs, which are
included in "Other assets", are amortized over three years beginning the month
following completion.

Financing costs related to obtaining or refinancing of debt are deferred and
amortized over the expected life of the debt.

Income Taxes

Clark files a consolidated US federal income tax return with R & M Holdings
but computes its provision on a separate company basis. On January 1, 1993,
Clark adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109") (see Note 13, "Income Taxes").

Deferred taxes are classified as current and included in prepaid or accrued
expenses or noncurrent depending on the classification of the assets and
liabilities to which the temporary differences relate. Deferred taxes arising
from temporary differences that are not related to a specific asset or
liability are classified as current or noncurrent depending on the periods in
which the temporary differences are expected to reverse.

Employee Benefit Plans

The Clark Refining & Marketing, Inc. Savings Plan and separate Trust (the
"Plan"), a defined contribution plan covers substantially all employees of
Clark. Under terms of the Plan, Clark matches the amount of employee
contributions, subject to specified limits. Contributions to the Plan during
1993 were $2.7 million (1992--$2.7 million; 1991--$2.7 million).

Clark provides certain benefits for retirees once they have reached specified
years of service. These benefits include health insurance in excess of social
security and an employee paid deductible amount, and life insurance equal to
one and one-half times the employee's annual salary. On January 1, 1993, Clark
adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106") which
changed the method of accounting for such benefits from a cash to an accrual
basis (see Note 12, "Postretirement Benefits Other Than Pensions").

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of Clark's financial instruments as of December 31,
1993 was as follows:

<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- --------
<S> <C> <C>
Short-term investments................................. $133,752 $134,000
Long-term debt......................................... 401,038 423,000
</TABLE>

The estimated fair value amounts were determined using quoted market prices
for the same or similar issues.

36
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Financial Accounting Standards Board has issued SFAS No. 115 "Accounting
for Certain Investments in Debt and Equity Securities". The standard generally
replaces the historical cost accounting approach to debt securities with one
based on fair value. All affected debt and equity securities must be classified
as held-to-maturity, trading, or available-for-sale. Classification is critical
as it effects the carrying amount of the security, as well as the timing of
gain or loss recognition. Clark will adopt this standard beginning January 1,
1994 and expects most securities to be classified as available-for-sale with no
material impact on the carrying values of the securities or earnings.

4. INVENTORIES

The carrying value of inventories consisted of the following:

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Crude oil............................................. $ 53,860 $ 46,120
Refined and blendstocks............................... 102,604 89,064
Convenience products.................................. 12,044 10,480
Warehouse stock and other............................. 5,953 5,419
Inventory write-down to market........................ (26,500) --
-------- --------
$147,961 $151,083
======== ========
</TABLE>

Inventories at December 31, 1993 were written down to market value which was
$26.5 million lower than LIFO cost. The market value of inventories at December
31, 1992, was approximately $13.2 million higher than the carrying value.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Land.................................................. $ 17,206 $ 17,916
Refineries............................................ 255,218 217,829
Retail stores......................................... 132,542 111,044
Product terminals and pipelines....................... 40,731 38,780
Other................................................. 9,677 8,004
-------- --------
455,374 393,573
Accumulated depreciation and amortization............. (94,429) (72,703)
-------- --------
$360,945 $320,870
======== ========
</TABLE>

At December 31, 1993, property, plant & equipment included $48.2 million
(1992--$57.1 million) of construction in progress.

6. OTHER ASSETS

Other assets consisted of the following:

<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Deferred financing costs................................. $ 8,287 $ 8,799
Deferred turnaround costs................................ 19,324 10,591
Notes receivable......................................... 2,161 9,897
Investment in non-consolidated affiliates................ 4,410 4,607
Other.................................................... 167 490
------- -------
$34,349 $34,384
======= =======
</TABLE>

37
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Amortization of deferred financing costs for the year ended December 31,
1993, was $1.2 million (1992--$2.9 million; 1991--$6.0 million). Amortization
of turnaround costs during 1993 totaled $11.8 million (1992--$9.2 million;
1991--$7.0 million).

7. WORKING CAPITAL FACILITY

Clark has in place a working capital facility which provides a revolving line
of credit for cash borrowings and for the issuance of letters of credit
primarily for securing purchases of crude oil, other feedstocks and refined
products. The facility is for $100 million and expires December 31, 1994. There
are restrictive limitations on inventory positions, and certain financial
ratios are required to be maintained, including a net worth requirement of at
least $130.0 million in 1993 and $140.0 million effective January 1, 1994. At
December 31, 1993, $51.5 million (1992--$57.4 million) of the line of credit
was utilized for letters of credit, of which $8.7 million (1992--$31.8 million)
supports commitments for future deliveries of petroleum products. There were no
direct borrowings outstanding under the facility at December 31, 1993 or 1992.

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
10 1/2% Senior Notes due December 1, 2001
("10 1/2% Senior Notes").............................. $225,000 $225,000
9 1/2% Senior Notes due September 15, 2004
("9 1/2% Senior Notes")............................... 175,000 175,000
Obligations under capital leases and other notes....... 1,355 1,753
-------- --------
401,355 401,753
Less current portion............................... 317 239
-------- --------
$401,038 $401,514
======== ========
</TABLE>

The 9 1/2% and 10 1/2% Senior Notes were issued in September 1992 and
December 1991, respectively and are both unsecured. The 9 1/2% Senior Notes and
10 1/2% Senior Notes are redeemable by Clark beginning September 1997 and
December 1996, respectively at a redemption price which starts at 105% and
decreases to 100% of principal two years later. The indentures for the Notes
contain certain restrictive covenants including limitations on the payment of
dividends, the payment of amounts to related parties, the level of debt, change
in control and incurrence of liens. In addition, Clark must maintain a minimum
net worth of $100 million.

The scheduled maturities of long-term debt during the next five years are (in
thousands): 1994--$317 (included in "Accrued expenses and other"); 1995--$106;
1996--$99; 1997--$82; 1998--$121; 1999 and thereafter $400,630.

Interest and financing costs

Interest and financing costs, net consisted of the following:

<TABLE>
<CAPTION>
1993 1992 1991
------- -------- --------
<S> <C> <C> <C>
Interest expense............................. $40,479 $ 45,736 $ 34,509
Financing costs.............................. 1,593 3,541 7,072
Interest income.............................. (9,363) (17,796) (12,264)
------- -------- --------
32,709 31,481 29,317
Capitalized interest......................... (2,776) (5,108) (2,121)
------- -------- --------
Interest and financing costs, net........ $29,933 $ 26,373 $ 27,196
======= ======== ========
</TABLE>

38
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash paid for interest in 1993 was $40.1 million (1992--$52.1 million; 1991--
$35.1 million).

Interest income in 1993 includes $0.2 million (1992--$2.0 million; 1991--
$(0.2) million) from CMAT (see Note 10 "Related Party Transactions").

Accrued interest payable at December 31, 1993, of $6.9 million (1992--$6.7
million) is included in "Accrued expenses and other".

Early Extinguishment of Debt

In 1992 Clark repurchased $95.9 million of its First Mortgage Notes on the
open market for $103.0 million and redeemed the remaining $104.1 million at
106% of principal amount, or $110.4 million. Available cash was used to
extinguish the debt. The costs of the early extinguishment of debt of $11.5
million (net of taxes of $7.2 million) included the premium amount, deferred
financing costs, and defeasance-related interest expense.

9. LEASE COMMITMENTS

Clark leases premises and equipment under lease arrangements, many of which
are non-cancelable. Clark leases store property and equipment with lease terms
extending to 2013, some of which have escalation clauses based on a set amount
or increases in the Consumer Price Index. Clark also has operating lease
agreements for certain pieces of equipment at the refineries, retail stores,
and the general office. These lease terms range from 3 to 9 years with the
option to purchase the equipment at the end of the lease term at fair market
value. The leases generally provide that Clark pay taxes, insurance, and
maintenance expenses related to the leased assets. At December 31, 1993, future
minimum lease payments under capital leases and non-cancelable operating leases
were as follows (in millions): 1994--$4.9; 1995--$4.2; 1996--$4.0; 1997--$1.6;
1998--$1.6 and $4.6 thereafter. Rental expense during 1993 was $3.4 million
(1992--$3.7 million; 1991--$3.4 million).

10. RELATED PARTY TRANSACTIONS

Transactions of significance with related parties not disclosed elsewhere in
the footnotes are detailed below:

Apex Oil Company, Inc. and Subsidiaries

Clark had various agreements with Apex related to the sale of products
(slurry oil, vacuum tower bottoms, asphalt) produced by the refineries. These
agreements were terminated or expired in 1992 or 1991. The purchase and sale of
products and services between the parties were made at market terms and prices.
During 1992, Clark purchased $1.6 million (1991--$51.0 million) of its crude
oil and other petroleum requirements from Apex and sold $0.7 million (1991--
$119.6 million) of refined product to Apex. There were no purchases from or
sales to Apex in 1993.

Clark Executive Trust

Clark established a deferred compensation plan called the Clark Refining &
Marketing, Inc. Corporation Stock Option Plan (the "Stock Option Plan") which
became effective May 1, 1991. Under the Stock Option Plan, as amended, options
to purchase up to 600,000 subordinate voting shares of Horsham could be granted
to certain employees and non-employee directors. Exercise prices reflect the
market value of Horsham stock on the date of issuance. As of December 31, 1993,
there were 363,737 options outstanding to purchase shares of Horsham at prices
ranging from $7.19 to $11.88 per share. The trust held 253,738 Horsham shares
at December 31, 1993.

39
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

CMAT, Inc.

On December 30, 1992 the stock of CMAT Inc. ("CMAT") was transferred to an
affiliate of Apex as part of the consideration for the acquisition by R & M
Holdings for most of R & M Holdings' shares held by AOC, LP, an affiliate of
Apex. As part of this transaction, Clark held a $10.0 million note due from
CMAT December 31, 1997. This note was paid in full in early 1993.

11. OTHER INCOME

Other income consisted of the following:

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- ----
<S> <C> <C> <C>
Drexel litigation.................................... $ 8,468 $ 5,530 $--
Apex litigation...................................... -- 9,132 --
Sale of "non-core" retail stores..................... 2,902 -- --
------- ------- ---
$11,370 $14,662 $--
======= ======= ===
</TABLE>

Litigation Settlements

In 1993 and 1992, Clark settled litigation and recovered all previous losses
incurred relating to a line of credit with a lending syndicate (led by Drexel
Trade Finance) that had filed bankruptcy in 1990. Also in 1992, Clark settled
litigation against Apex related to a dispute arising out of the November 1988
acquisition of Clark's assets from Apex.

Retail Stores

In June 1993, Clark sold 21 "non-core" retail stores in Kentucky and
Minnesota, which resulted in the recognition of other income of $2.9 million.

12. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

On January 1, 1993, Clark adopted SFAS 106. This standard requires that Clark
accrue the actuarially determined costs of postretirement benefits during the
employees' active service periods. Previously, Clark had accounted for these
benefits on a "pay as you go" basis, recognizing an expense when an obligation
was paid. The cost of such benefits in 1992 and 1991 was not significant and
these years have not been restated. In accordance with SFAS 106, Clark elected
to recognize the cumulative liability, a non-cash "Transition Obligation" of
$9.6 million, net of the tax benefit of $6.0 million, as of January 1, 1993.
The current year effect of adopting SFAS 106 was $1.9 million ($1.2 million,
net of taxes).

The following table sets forth the unfunded status for the post retirement
health and life insurance plans as of December 31, 1993:

<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees..................................................... $10,536
Fully eligible plan participants............................. 1,189
Other plan participants...................................... 6,465
-------
Total...................................................... 18,190
Accrued postretirement benefit cost............................ --
Less: Plan assets at fair value................................ --
Less: Unrecognized net loss.................................... (1,332)
-------
Accrued postretirement benefit liability..................... $16,858
=======
The components of net periodic postretirement benefit costs
were as follows:
Service Costs................................................ $ 620
Interest Costs............................................... 1,270
-------
Net periodic postretirement benefit cost................... $ 1,890
=======
</TABLE>

40
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
A discount rate of 7.25% was assumed as well as a 4.5% rate of increase in
the compensation level. For measuring the expected postretirement benefit
obligation, the health care cost trend rate ranged from 9.8% to 14.0% in 1993,
grading down to an ultimate rate in 2001 of 5.25%. The effect of increasing the
average health care cost trend rates by one percentage point would increase the
accumulated postretirement benefit obligation, as of December 31, 1993, by $2.2
million and increase the annual aggregate service and interest costs by $0.3
million.

13. INCOME TAXES

On January 1, 1993, Clark adopted SFAS 109 retroactive to January 1, 1991.
The adoption of this standard changes the method of accounting for income taxes
from the deferred method to an asset and liability approach. Previously, Clark
deferred the past tax effects of timing differences between financial reporting
and taxable income. The asset and liability approach requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts and the tax bases of
assets and liabilities.

The 1992 and 1991 financial statements have been restated to give retroactive
effect to the adoption of SFAS 109. As a result of the restatement, deferred
income tax liabilities have increased and retained earnings has decreased at
December 31, 1992 and 1991 by $8.4 million and $5.2 million, respectively.
Before retroactive application of SFAS 109, the 1992 net loss was $5.1 million
and the 1991 net income was $38.3 million. The respective effect of the
retroactive application of SFAS 109 on these years' earnings was a $3.1 million
and $1.0 million increase in the tax provision, resulting in a net loss for
1992 of $8.2 million and net earnings for 1993 of $37.3 million.

The income tax provision (benefit) including the impact of the accounting
change in 1993 and the extraordinary item in 1992 is summarized as follows:

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
Earnings (loss) before provision for income
taxes...................................... $(14,732) $(15,781) $59,287
======== ======== =======
Current provision (benefit)--Federal........ $ 1,204 $ (5,796) $ 1,360
--State..................................... 1,819 (2,007) 1,488
-------- -------- -------
3,023 (7,803) 2,848
-------- -------- -------
Deferred provision (benefit)--Federal....... (6,866) (697) 16,740
--State..................................... (2,662) 964 2,384
-------- -------- -------
(9,528) 267 19,124
-------- -------- -------
$ (6,505) $ (7,536) $21,972
======== ======== =======
</TABLE>

A reconciliation between the income tax provision computed on pretax income
at the statutory federal rate and the actual provision for income taxes is as
follows:

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Federal taxes computed at 34%.................. $(5,009) $(5,366) $20,158
State income taxes, net of federal benefits.... (556) (689) 2,556
Nontaxable dividend income..................... (1,276) (1,208) (1,322)
Other items, net............................... 336 (273) 580
------- ------- -------
Income tax provision (benefit)............. $(6,505) $(7,536) $21,972
======= ======= =======
</TABLE>

41
<PAGE>

CLARK REFINING & MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following represents the approximate tax effect of each significant
temporary difference giving rise to deferred tax liabilities and assets.

<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment.......................... $52,590 $42,183
Other.................................................. 11,667 23,978
------- -------
64,257 66,161
------- -------
Deferred tax assets:
Alternative minimum tax credit......................... 14,286 9,458
Other.................................................. 21,186 18,391
------- -------
35,472 27,849
------- -------
Net deferred tax liability............................... 28,785 38,312
Current portion--included in "Prepaid expenses and oth-
er"..................................................... 6,463 6,281
------- -------
Deferred taxes......................................... $35,248 $44,593
======= =======
</TABLE>

As of December 31, 1993, Clark has made payments of $14.3 million under the
Federal alternative minimum tax system which are available to reduce future
regular income tax payments. Net cash tax refunds of $6.6 million were received
during 1993. Net cash paid for income taxes in 1992 was $2.2 million and $3.2
million in 1991.

Federal income taxes payable at December 31, 1993, of $2.7 million (1992--
$5.9 million receivable) are due to R & M Holdings, an affiliate, in accordance
with a tax-sharing agreement between Clark and R & M Holdings and are included
in "Accounts payable".

14. CONTINGENCIES

Forty-one civil suits by residents of Hartford, Illinois have been filed
against Clark in Madison County Illinois, alleging damage from ground water
contamination. The relief sought in each of these cases is an unspecified
dollar amount. The litigation proceedings are in the initial stages. Discovery,
which could be lengthy and complex, is only just beginning. Clark moved to
dismiss thirty-four cases filed in December 1991 on the ground that Clark is
not liable for alleged activity of Old Clark. On September 4, 1992, the trial
court granted Clark's motions to dismiss. The plaintiffs were given leave to
re-file their complaints but based only on alleged activity of Clark occurring
since November 8, 1988, the date on which the bankruptcy court with
jurisdiction over Old Clark's bankruptcy proceedings issued its "free and
clear" order. In November 1992, the plaintiffs filed thirty-three amended
complaints. In addition, one new complaint involving nine plaintiffs was filed.
It is too early to predict whether any of these cases will go to trial on the
merits and if so, what the risk of exposure to Clark would be at trial. It is
also not possible to determine whether or to what extent Clark will have any
liability to other individuals arising from the ground water contamination.

Clark is subject to various legal proceedings related to governmental
regulations and other actions arising out of the normal course of business,
including legal proceedings related to environmental matters. While it is not
possible at this time to establish the ultimate amount of liability with
respect to such contingent liabilities, Clark is of the opinion that the
aggregate amount of any such liabilities, for which provision has not been
made, will not have a material adverse effect on its financial position.

42
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of
Clark Refining & Marketing, Inc.:

Our report on the financial statements of Clark Refining & Marketing, Inc.
(formerly Clark Oil & Refining Corporation) is included on page 30 of this Form
10-K. In connection with our audits of such financial statements, we have also
audited the financial statement schedules as of and for the years ended
December 31, 1993, 1992 and 1991 listed in Part IV, Item 14(a)(2) of this Form
10-K.

In our opinion, these financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.

Coopers & Lybrand

St. Louis, Missouri,
January 28, 1994

43
<PAGE>

CLARK REFINING & MARKETING, INC.

SCHEDULE I--MARKETABLE SECURITIES--OTHER INVESTMENTS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
MARKET AMOUNT AT
VALUE OF WHICH EACH
NO. OF EACH PORTFOLIO OF EQUITY
SHARES OR ISSUE AT SECURITY ISSUES AND
UNITS/PRINCIPAL COST OF BALANCE EACH OTHER SECURITY
NAME OF ISSUER/ AMOUNT OF BONDS EACH SHEET ISSUE IS CARRIED IN
TITLE OF EACH ISSUE TERM RATE (%) AND NOTES ISSUE DATE THE BALANCE SHEET
------------------- ----- ------------ --------------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31,
1993
United States Govern-
ment and its agen-
cies:
Treasury Notes...... 11/98 4.625-11.125% $ 50,215 $ 53,038 $ 52,689 $ 52,646
Mortgage Backed..... 11/07 5.500-7.500% 17,472 17,838 13,415 12,949
-------- -------- -------- --------
$ 67,687 $ 70,876 $ 66,104 $ 65,595
-------- -------- -------- --------
Corporate issues:
Overland Express
Funds, Inc.--
Variable Rate Gov-
ernment Fund...... $ 52,964 $ 52,964 $ 52,561 $ 52,964
Paine Webber--
Short term Gov-
ernment Fund...... 2,542 2,542 2,522 2,542
Barclay's Bank
Corp............... 12/97 9.125% 3,000 3,466 3,428 3,446
Chevron Canada...... 04/98 5.600% 1,000 1,013 1,013 1,013
Mobil Corp.......... 10/95 6.750% 1,000 1,051 1,038 1,030
Exxon Capital Corp.. 08/97 7.875% 1,000 1,068 1,090 1,052
Upjohn.............. 12/97 6.430% 1,000 997 1,041 998
New England
Telephone.......... 12/97 6.250% 1,000 989 1,034 991
IBM................. 11/97 6.375% 1,000 998 1,032 999
Procter & Gamble
Co................. 03/95 6.250% 2,000 2,061 2,049 2,040
Duke Power Co....... 04/99 7.500% 1,000 1,083 1,072 1,082
-------- -------- -------- --------
$ 67,506 $ 68,232 $ 67,880 $ 68,157
-------- -------- -------- --------
-------- -------- -------- --------
$135,193 $139,108 $133,984 $133,752
======== ======== ======== ========
</TABLE>

44
<PAGE>

CLARK REFINING & MARKETING, INC.

SCHEDULE V--PROPERTY, PLANT & EQUIPMENT (A)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE BALANCE
AT AT END
BEGINNING ADDITION OF
CLASSIFICATION OF PERIOD AT COST DEDUCTIONS (B) PERIOD
- -------------- --------- -------- -------------- --------
<S> <C> <C> <C> <C>
Year ended December 31, 1991:
Land............................... $ 17,869 $ 81 $ (76) $ 17,874
Refineries......................... 144,371 26,505 (23) 170,853
Retail stores...................... 80,351 23,505 (693) 103,163
Pipelines and storage terminals.... 29,744 6,898 (14) 36,628
Other.............................. 7,536 1,053 (69) 8,520
-------- ------- ------- --------
Total............................ $279,871 $58,042 $ (875) $337,038
======== ======= ======= ========
Year ended December 31, 1992:
Land............................... $ 17,874 $ 124 $ (82) $ 17,916
Refineries......................... 170,853 46,991 (15) 217,829
Retail stores...................... 103,163 8,770 (889) 111,044
Pipelines and storage terminals.... 36,628 2,164 (12) 38,780
Other.............................. 8,520 1,469 (1,985) 8,004
-------- ------- ------- --------
Total............................ $337,038 $59,518 $(2,983) $393,573
======== ======= ======= ========
Year ended December 31, 1993:
Land............................... $ 17,916 $ 9 $ (719) $ 17,206
Refineries......................... 217,829 37,317 72 255,218
Retail stores...................... 111,044 26,494 (4,996) 132,542
Pipelines and storage terminals.... 38,780 1,858 93 40,731
Other.............................. 8,004 2,260 (587) 9,677
-------- ------- ------- --------
Total............................ $393,573 $67,938 $(6,137) $455,374
======== ======= ======= ========
</TABLE>
- --------
(a) Depreciation of property, plant and equipment is computed using the
straight-line method based upon the following estimated useful lives:

<TABLE>
<CAPTION>
ASSET USEFUL LIFE
----- -----------
<S> <C>
Refinery processing units............. 15-30
Retail facilities..................... 15-25
Storage facilities.................... 30-40
Equipment............................. 10-15
Other................................. 3-10
</TABLE>
(b) 1993 deductions include assets which transferred among divisions within the
Company.

45
<PAGE>

CLARK REFINING & MARKETING, INC.

SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY, PLANT & EQUIPMENT

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONS BALANCE
BALANCE AT CHARGED TO AT END
BEGINNING COSTS & OF
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS PERIOD
- -------------- ---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Year ended December 31, 1991:
Refineries.......................... $18,225 $ 8,836 $ (20) $27,041
Retail stores....................... 10,545 7,434 (448) 17,531
Pipelines and storage terminals..... 4,613 2,216 (9) 6,820
Other............................... 582 777 (20) 1,339
------- ------- ------- -------
Total............................. $33,965 $19,263 $ (497) $52,731
======= ======= ======= =======
Year ended December 31, 1992:
Refineries.......................... $27,041 $ 9,002 $ (15) $36,028
Retail stores....................... 17,531 8,977 (571) 25,937
Pipelines and storage terminals..... 6,820 2,108 0 8,928
Other............................... 1,339 1,035 (564) 1,810
------- ------- ------- -------
Total............................. $52,731 $21,122 $(1,150) $72,703
======= ======= ======= =======
Year ended December 31, 1993:
Refineries.......................... $36,028 $11,021 $ (74) $46,973
Retail stores....................... 25,937 8,989 (1,553) 33,373
Pipelines and storage terminals..... 8,928 2,298 (29) 11,197
Other............................... 1,810 1,094 (20) 2,886
------- ------- ------- -------
Total............................. $72,703 $23,402 $(1,676) $94,429
======= ======= ======= =======
</TABLE>

46
<PAGE>

CLARK REFINING & MARKETING, INC.

SCHEDULE X--SUPPLEMENTARY EARNINGS STATEMENT INFORMATION

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
CHARGED TO
COSTS AND
EXPENSES
----------
<S> <C>
Year ended December 31, 1991:
Maintenance and repairs............................................ $33,508
Year ended December 31, 1992:
Maintenance and repairs............................................ $47,488
Year ended December 31, 1993:
Maintenance and repairs............................................ $32,959
</TABLE>

Other items were not in excess of one percent of total sales and revenues.

47
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

Clark Refining & Marketing, Inc.

/s/ Paul D. Melnuk
By: _________________________________
Paul D. Melnuk
President and Chief Executive
Officer

March 25, 1994

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS REPORT HAS
BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT IN THE
CAPACITIES AND ON THE DATE INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Peter Munk
- -------------------------------------------
Peter Munk Director and Chairman of the Board
/s/ Paul D. Melnuk
- -------------------------------------------
Paul D. Melnuk Director, Principal Executive Officer, and
Principal Financial Officer
/s/ C. William D. Birchall
- -------------------------------------------
C. William D. Birchall Director
/s/ James A. Zweifel
- -------------------------------------------
James A. Zweifel Controller (Principal Accounting Officer)
</TABLE>

March 25, 1994

<PAGE>

EXHIBIT 10.6

AMENDMENT NUMBER ONE, dated as of January 26, 1994 (this "Amendment"), to
CREDIT AGREEMENT, dated as of November 30, 1990, and Amended and Restated as of
February 10, 1993, as thereafter amended (the "Credit Agreement"), among CLARK
REFINING & MARKETING, INC. (formerly CLARK OIL & REFINING CORPORATION), a
Delaware corporation (the "Company"), the banks signatory thereto (each a "Bank"
and, collectively, the "Banks"), BANKERS TRUST COMPANY, a New York banking
corporation, as an Issuing Bank, THE TORONTO-DOMINION BANK, a Canadian chartered
bank, as Co-Agent, and BT COMMERCIAL CORPORATION, a Delaware corporation, as a
Bank and as agent for the Banks (in such capacity, including its successors and
permitted assigns, the "Agent"). Terms which are capitalized herein and not
otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement.

WHEREAS, the Company has requested that the Agent and the Banks agree to (i)
amend certain provisions of the Credit Agreement and (ii) consent to the
purchase of insurance from HSM Insurance Ltd., a company organized under the
laws of Barbados and a wholly owned subsidiary of Horsham (the "Insurer"); and

WHEREAS, the Agent and the Banks have considered and agreed to the Company's
requests, upon the terms and subject to the conditions set forth in
this Amendment;

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

SECTION ONE - AMENDMENTS
----------- ----------

Upon the fulfillment of the conditions set forth in Section Three hereof,
the Credit Agreement is hereby amended as follows:

(1) Section 1.1 of the Credit Agreement is amended by deleting the
definition of the term "Company" contained in such Section and replacing it
with the following:

"Company" means Clark Refining & Marketing, Inc., a Delaware corporation."
<PAGE>

-2-

(2) Section 6.13C of the Credit Agreement is amended by deleting such
Section in its entirety and replacing it with the following:

"C. Minimum Net Worth. The Company shall not permit or suffer
its Net Worth at any time during any period listed below to be less
than the amount set forth opposite such period:

Period Amount
------ ------

January 1, 1994 to December 31, 1994 "$140,000,000
January 1, 1995 to December 31, 1995 175,000,000"

(3) References in the Loan Documents to "Clark Oil & Refining
Corporation" or the "Company" shall be deemed to be references to "Clark
Refining & Marketing, Inc."

SECTION TWO - CONSENTS
----------- --------

(1) Effective upon the fulfillment of the conditions set forth in
Section Three hereof, each Bank hereby consents to the purchase by the Company
of insurance in respect of environmental liabilities of the Company, on the
terms and conditions set forth in the Insurance Policy attached hereto as Annex
1, from the Insurer at an aggregate cost not to exceed $2,000,000 in any Fiscal
Year if, and for so long as:

(a) The Insurer is a Wholly Owned Subsidiary of Horsham;

(b) The Insurer provides to the Agent, on behalf of the Banks, within
30 days following the end of each Fiscal Quarter, the consolidated balance
sheet of the Insurer as at the end of such Fiscal Quarter and the related
consolidated statements of income and shareholder's equity and cash flows
of the Insurer, in each case certified by the chief financial officer of
the Insurer to the effect that they fairly present the consolidated
financial condition of the Insurer as at the dates indicated and the
results of its operations and changes in its financial position, based on
GAAP applied on a consistent basis;
<PAGE>

-3-

(c) On the date hereof and within 10 days following the end of each
Fiscal Year beginning with the Fiscal Year ended December 31, 1994, the
Company delivers to the Agent, on behalf of the Banks, the written opinion
of Marsh & McLennan Limited to the effect that the insurance arrangement
between the Company and the Insurer is fair to the Company; and

(d) The Insurer delivers to the Company the consolidated balance
sheet of the Insurer as of a recent date certified by its chief financial
officer to the effect that such balance sheet fairly presents the financial
condition of the Insurer as of its date in accordance with GAAP.

(2) Effective upon the fulfillment of the conditions set forth in
Section Three hereof, each Bank hereby consents to (x) the deletion of
"PaineWebber Inc." from Schedule 1-D to the Credit Agreement and to the addition
of "Dean Witter Inc." to such Schedule 1-D and (y) the execution and delivery of
a Commodities Account Agreement by the Company, the Collateral Agent and Dean
Witter Inc., as Broker (the "Dean Witter Agreement").

SECTION THREE - CONDITIONS PRECEDENT
- ------------- --------------------

Upon the fulfillment of the following conditions the amendments and
consents contemplated by this Amendment shall become effective:

(1) All representations and warranties of the Company set forth in
Section 4 of the Credit Agreement and Section Four of this Amendment shall
be true and correct in all material respects on and as of the date hereof,
and, immediately before and immediately after giving effect to the
effectiveness of this Amendment, no Unmatured Event of Default and no Event
of Default shall have occurred and be continuing at such time;

(2) Since December 31, 1991, nothing shall have occurred or become
known that the Agent shall have determined has a Materially Adverse Effect;

(3) The Agent shall have received a certificate from the Company,
executed by the Company's
<PAGE>

-4-

Treasurer or Chief Financial Officer, as to the effect of paragraphs (a) and
(b); and

(4) The Collateral Agent, the Company and Dean Witter Inc., as Broker, shall
have entered into a Commodities Account Agreement and such Agreement shall be
in full force and effect and the Secured Parties shall have obtained, to each
Secured Party's satisfaction, a valid and enforceable perfected security
interest in the Collateral thereunder on the terrms contemplated by the Loan
Documents and such Collateral shall be subject to no Liens other than the
Liens permitted thereunder.

SECTION FOUR - REPRESENTATIONS AND WARRANTIES
------------ ------------------------------

The Company hereby confirms, reaffirms and restates the representations and
warranties made by it in Section 4 of the Credit Agreement, as amended hereby,
and all such representations and warranties are true and correct in all material
respects as of the date hereof. The Company further represents and warrants
(which representations and warranties shall survive the execution and delivery
hereof) to the Agent, for the benefit of the Banks and to any Issuing Bank that:

(1) The Company has the corporate power, authority and legal right to
execute, deliver and perform this Amendment, and the transactions contemplated
hereby, and has taken all actions necessary to authorize the execution,
delivery and performance of this Amendment and the transactions contemplated
hereby;

(2) No consent of any person (including, without limitation, shareholders or
creditors of the Company, as the case may be) other than the Required Banks,
and no consent, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment and the transactions contemplated
hereby;

(3) Each of this Amendment and the Dean Witter Agreement has been duly
executed and
<PAGE>

-5-

delivered on behalf of the Company by its duly authorized officer, and
constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally;
and

(4) The execution, delivery and performance of this Amendment and the
Dean Witter Agreement will not violate any requirement of law or
contractual obligation of the Company.

SECTION FIVE - MISCELLANEOUS
------------ -------------

(1) Except as herein expressly amended, the Credit Agreement and all
other agreements, documents, instruments and certificates executed in connection
therewith, except as otherwise provided herein, are ratified and confirmed in
all respects and shall remain in full force and effect in accordance with their
respective terms.

(2) All references to the Credit Agreement or any of the other Loan
Documents shall mean the Credit Agreement or such other Loan Documents, as the
case may be, as amended as of the effective date hereof, and as amended hereby
and as hereafter amended, supplemented and modified from time to time. All
references in the Loan Documents to Schedule 1-D to the Credit Agreement shall
mean Schedule 1-D as amended as of the effective date hereof, and as amended
hereby and as hereafter amended, supplemented and modified from time to time.

(3) This Amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement.

(4) This Amendment shall be governed by, construed and interpreted in
accordance with, the internal laws of the State of New York.

<PAGE>

-6-

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.

CLARK REFINING & MARKETING, INC.
(formerly CLARK OIL & REFINING
CORPORATION)

By: /s/ Dennis R. Eichholz
---------------------------------
Title: Treasurer

BT COMMERCIAL CORPORATION, as
Agent and as a Bank

By: /s/ Christopher Kinslow
---------------------------------
Title: Vice-President

BANKERS TRUST COMPANY, as an
Issuing Bank

By: /s/ Christopher Kinslow
---------------------------------
Title: Vice-President

THE TORONTO-DOMINION BANK, as a
Bank and as Co-Agent

By: /s/ Martin T. Snyder
---------------------------------
Title: Director Corporate Finance

SWISS BANK CORPORATION, New York
Branch, as a Bank

By: /s/ William N. Schwarze
---------------------------------
Title: Director-Commodity Trade
Finance

By: /s/ David S. Dickenson
---------------------------------
Title: Director-Commodity Trade
Finance

<PAGE>

-7-

NATIONAL CITY BANK, as a Bank

By: /s/ Brian J. Karrip
---------------------------------
Title: Vice President

DRESDNER BANK AG, Chicago Branch,
as a Bank

By: /s/ John H. Schaus
---------------------------------
Title: First Vice-President

By: /s/ Brian J. Brodeur
---------------------------------
Title: Vice-President

LASALLE NATIONAL BANK, as a Bank

By: /s/ Christopher G. Clifford
---------------------------------
Title: First Vice-President
Acknowledged by:

BANKERS TRUST COMPANY,
as Collateral Agent

By: /s/ Christopher Kinslow
---------------------------------
Title: Vice-President

<PAGE>

Exhibit 12.1

CLARK REFINING & MARKETING, INC.

CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in thousands)

<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
Pretax earnings (a) $(14,732) $(15,781) $ 59,287 $ 72,233 $ 81,003
Fixed charges (b) 40,429 45,403 40,584 44,591 55,115
Other (c) 197 182 1,254 (489) (227)
-------- -------- -------- -------- --------
$25,894 $29,804 $101,125 $116,335 $135,891
======== ======== ======== ======== ========

FIXED CHARGES
Gross interest expense (d) $42,072 $49,277 $ 41,581 $ 44,672 $ 54,045
Interest factor attributable
to real expense 1,133 1,234 1,124 1,077 1,070
-------- -------- -------- -------- --------
$43,205 $50,511 $ 42,705 $ 45,749 $ 55,115
======== ======== ======== ======== ========

RATIO OF EARNINGS TO FIXED CHARGES 0.60 0.59 2.37 2.54 2.47
======== ======== ======== ======== ========
</TABLE>
(a) 1993 pretax earnings includes a pretax charge of $15,587 for the cumulative
effect of change in accounting principle and 1992 pretax earnings include a
pretax charge of $18,730 for the early extinguishment of debt
(b) As adjusted for capitalized interest
(c) Represents the total of adjustments to recognize only distributed earnings
for less than 50% owned companies accounted for under the equity method
(d) Represents interest expense on long-term and short-term debt and
amortization of debt discount and debt issue costs