UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-11392
CLARK REFINING & MARKETING, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1491230
(State or other jurisdiction (I.R.S. Employer
of 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
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
(*) No ( )
Number of shares of registrant's common stock, $.01 par value,
outstanding as of November 12, 1996: 100, all of which are owned by
Clark USA, Inc.
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Clark Refining & Marketing, Inc.:
We have reviewed the accompanying consolidated balance sheet of Clark
Refining & Marketing, Inc. (a Delaware corporation) and subsidiary as of
September 30, 1996, and the related consolidated statements of earnings
for the three and nine month periods ended September 30, 1995 and 1996
and cash flows for the nine month periods ended September 30, 1995 and
1996. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
review procedures to the financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Clark Refining &
Marketing, Inc. and subsidiary as of December 31, 1995, and the related
consolidated statements of earnings, stockholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated
February 2, 1996, we expressed an unqualified opinion on those
statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 31, 1995 is fairly
stated, in all material respects, in relation to the financial statements
from which it has been derived.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri,
October 29, 1996
<PAGE> 3
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share data)
<TABLE>
Reference December 31, September 30,
ASSETS Note 1995 1996
------------- ------------- --------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 60,477 $ 52,639
Short-term investments 2 46,116 26,731
Accounts receivable 179,200 164,790
Inventories 3 290,444 285,109
Prepaid expenses and other 18,875 19,039
------------ -----------
Total current assets 595,112 548,308
PROPERTY, PLANT AND EQUIPMENT 7 549,292 543,430
OTHER ASSETS 4 43,930 38,133
------------ -----------
$ 1,188,334 $ 1,129,871
============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 315,236 $ 259,984
Accrued expenses and other 5 41,501 43,458
Accrued taxes other than income 45,240 47,716
------------ -----------
Total current liabilities 401,977 351,158
LONG-TERM DEBT 420,441 417,188
DEFERRED INCOME TAXES 22,861 7,782
OTHER LONG-TERM LIABILITIES 38,937 40,133
CONTINGENCIES 8 -- --
STOCKHOLDER'S EQUITY:
Common stock ($ 0.01 par value per share;
1,000 shares authorized and 100 shares
issued and outstanding) -- --
Paid-in capital 195,610 229,210
Retained earnings 2 108,508 84,400
------------ -----------
Total stockholder's equity 304,118 313,610
------------ -----------
$ 1,188,334 $ 1,129,871
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 4
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands)
<TABLE>
For the three months
ended September 30,
Reference ---------------------
Note 1995 1996
----------- ----------- ---------
<S> <C> <C> <C>
NET SALES AND OPERATING REVENUES $1,211,760 $1,249,468
EXPENSES:
Cost of sales (1,062,982) (1,121,246)
Operating expenses (100,685) (104,320)
General and administrative expenses (14,631) (15,823)
Depreciation (8,004) (9,870)
Amortization 4 (3,021) (2,509)
----------- ----------
(1,189,323) (1,253,768)
----------- ----------
OPERATING INCOME (LOSS) 22,437 (4,300)
Interest and financing costs, net 2, 4, 5 (9,915) (10,746)
----------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES 12,522 (15,046)
Income tax (provision) benefit (4,758) 5,718
----------- ----------
NET EARNINGS (LOSS) $ 7,764 $ (9,328)
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE> 5
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands)
<TABLE>
For the nine months
ended September 30,
Reference ---------------------
Note 1995 1996
----------- ----------- ---------
<S> <C> <C> <C>
NET SALES AND OPERATING REVENUES $ 3,376,857 $ 3,724,393
EXPENSES:
Cost of sales (3,027,788) (3,346,318)
Operating expenses (269,604) (303,200)
General and administrative expenses (42,338) (45,313)
Depreciation (22,613) (28,134)
Amortization 4 (8,848) (8,835)
----------- -----------
(3,371,191) (3,731,800)
----------- -----------
OPERATING INCOME (LOSS) 5,666 (7,407)
Interest and financing costs, net 2, 4, 5 (28,424) (31,177)
----------- -----------
LOSS BEFORE INCOME TAXES (22,758) (38,584)
Income tax benefit 8,648 14,662
----------- -----------
NET LOSS $ (14,110) $ (23,922)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE> 6
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
For the nine months
ended September 30,
---------------------
1995 1996
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (14,110) $(23,922)
Adjustments:
Depreciation 22,613 28,134
Amortization 12,623 13,898
Share of earnings of affiliates, net of dividends (741) (139)
Deferred income taxes (8,648) (14,965)
Other 1,008 (617)
Cash provided by (reinvested in) working capital -
Accounts receivable, prepaid expenses and other (80,899) 10,467
Inventories (149,884) 5,252
Accounts payable, accrued expenses, taxes other
than income, and other 132,290 (48,450)
----------- ---------
Net cash used in operating activities (85,748) (30,342)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (25,701) 85
Sales of short-term investments 25,942 19,000
Expenditures for property, plant and equipment (24,187) (23,327)
Expenditures for turnaround (2,764) (7,174)
Refinery acquisition expenditures (69,746) --
Proceeds from disposals of property, plant
and equipment 15,934 3,890
----------- ---------
Net cash used in investing activities (80,522) (7,526)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt payments (119) (3,253)
Capital contribution 150,000 33,600
Deferred financing costs (12,219) (317)
----------- ---------
Net cash provided by financing activities 137,662 30,030
----------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (28,608) (7,838)
CASH AND CASH EQUIVALENTS, beginning of period 105,450 60,477
----------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 76,842 $ 52,639
=========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
FORM 10-Q - PART I
ITEM 1 Financial Statements (continued)
Clark Refining & Marketing, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 30, 1996
(tabular dollar amounts in thousands of US dollars)
1. Basis of Preparation
The unaudited consolidated balance sheet of Clark Refining &
Marketing, Inc., a Delaware corporation, and Subsidiary (the "Company" or
"Clark"), as of September 30, 1996, and the related consolidated
statements of earnings for the three month and nine month periods ended
September 30, 1995 and 1996, and statements of cash flows for the nine
month periods ended September 30, 1995 and 1996, have been reviewed by
independent accountants as noted in their report included herein. Clark
Port Arthur Pipeline Company, a Delaware corporation, is included in the
consolidated results of the Company. In the opinion of the management of
the Company, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the financial statements
have been included therein. The results of this interim period are not
necessarily indicative of results for the entire year.
Certain reclassifications have been made to the operating and
general administrative expenses in the 1995 financial statements to
conform to current year presentation.
The financial statements have been prepared in accordance with the
instructions to Form 10-Q. Accordingly, certain information and
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. These unaudited financial statements should be read
in conjunction with the audited financial statements and notes thereto for
the year ended December 31, 1995.
The Company's earnings and cash flow from operations are primarily
dependent upon processing crude oil and selling quantities of refined
petroleum products at margins sufficient to cover operating expenses.
Crude oil and refined petroleum products are commodities, and factors
largely out of the Company's control can cause prices to vary, in a wide
range, over a short period of time. This potential margin volatility can
have a material effect on financial position, current period earnings and
cash flow.
2. Short-term Investments
The Company's short-term investments are all considered "Available-
for-Sale" and are carried at fair value with the resulting unrealized gain
or loss (net of applicable taxes) shown as a component of retained
earnings.
Short-term investments consisted of the following:
<TABLE>
December 31, 1995 September 30, 1996
------------------------------- --------------------------------
Major Amortized Unrealized Aggregate Amortized Unrealized Aggregate
Security Type Cost Gain/(Loss) Fair Value Cost Gain/(Loss) Fair Value
- - ------------- --------- ----------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Debt
Securities $ 46,116 $ -- $ 46,116 $ 27,031 $ (300) $ 26,731
</TABLE>
The net unrealized position at September 30, 1996 included gains of
$0.0 million and losses of $0.3 million (1995 -- gains of $0.1 million and
losses of $0.1 million).
<PAGE> 8
The contractual maturities of the short-term investments at
September 30, 1996 were:
<TABLE>
Amortized Aggregate
Cost Fair Value
---------- ----------
<S> <C> <C>
Due in one year or less $ 15,063 $ 14,966
Due after one year through five years 11,968 11,765
---------- ----------
$ 27,031 $ 26,731
========== ==========
</TABLE>
Although some of the contractual maturities of these short-term
investments are over one year, management's intent is to use the funds for
current operations and not hold the investments to maturity.
For the three month and nine month periods ended September 30, 1996,
proceeds from the sale of Available-for-Sale securities was $0.0 million
and $19.0 million, respectively, with no realized gains or losses recorded
for the period. For the same three and nine month periods in 1995,
proceeds from the sale of Available-for-Sale securities was $18.0 million
and $25.9 million, respectively, with no realized gains or losses recorded
for the periods. Realized gains and losses are presented in "Interest and
financing costs, net" and are computed using the specific identification
method.
The change in the net unrealized holding gains or losses on
Available-for-Sale securities for the three month and nine month periods
ended September 30, 1996, was $0.0 million and a loss of $0.3 million
($0.2 million after taxes), respectively. For the same three and nine
month periods in 1995, the change in the net unrealized holding gains or
losses was a gain of $0.1 million ($0.1 million after taxes) and a gain of
$1.5 million ($0.9 million after taxes), respectively.
3. Inventories
The carrying value of inventories consisted of the following:
<TABLE>
December 31, September 30,
1995 1996
----------- ------------
<S> <C> <C>
Crude oil $ 90,635 $ 80,618
Refined and blendstocks 163,915 170,803
Convenience products 20,532 19,698
Warehouse stock and other 15,362 13,990
----------- ------------
$290,444 $285,109
========== ============
</TABLE>
The market value of these inventories at September 30, 1996 was
approximately $69.3 million above the carrying value (December 31, 1995 -
$5.4 million).
4. Other Assets
Amortization of deferred financing costs for the three month and
nine month periods ended September 30, 1996, was $1.6 million (1995 - $1.5
million) and $4.9 million (1995 - $3.7 million), respectively, and is
included in "Interest and financing costs, net".
Amortization of turnaround costs for the three month and nine month
periods ended September 30, 1996, was $2.5 million (1995 - $3.0 million)
and $8.8 million (1995 - $8.8 million), respectively.
<PAGE> 9
5. Interest and Financing Costs, Net
Interest and financing costs, net, consisted of the following:
<TABLE>
For the three months For the nine months
ended September 30, ended September 30,
1995 1996 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest expense $ 10,155 $ 10,633 $ 30,730 $ 32,207
Financing costs 1,454 1,649 3,749 4,922
Interest income (1,570) (1,250) (4,780) (5,198)
--------- --------- --------- ---------
10,039 11,032 29,699 31,931
Capitalized interest (124) (286) (1,275) (754)
--------- --------- --------- ---------
$ 9,915 $ 10,746 $ 28,424 $ 31,177
========= ========= ========= =========
</TABLE>
Accrued interest payable at September 30, 1996, of $8.6 million
(December 31, 1995 - $6.8 million) is included in "Accrued Expenses and
Other".
6. Equity Contribution
On October 3, 1996, Clark USA, Inc. contributed to Clark an advance
crude oil purchase receivable together with certain associated hedge
contracts at fair market value. Clark recorded the transaction as an
equity contribution and sold the contributed asset for cash proceeds of
$235.4 million on October 4, 1996.
7. New Accounting Standard Adopted
On January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." The
standard requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable with future cash flows. Implementation of this SFAS did not
result in an impairment loss.
The Company has expended approximately $25 million on a project to
produce low sulfur diesel fuel at the Hartford refinery ("DHDS Project")
which was delayed in 1992. Should the Company determine in the future to
permanently discontinue this project, the carrying value of the DHDS
Project would likely not be fully recoverable.
8. Contingencies
The Company 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.
In early April, 1996, Clark learned that its Hartford, Illinois
refinery is the subject of a Clean Air Act enforcement referral by the
United States Environmental Protection Agency to the United States
Department of Justice. The referral pertains to alleged violations of the
Clean Air Act and regulations promulgated thereunder in the operation and
permitting of the Hartford refinery fluid catalytic cracking unit ("FCCU")
and alleged modification of the FCCU. Although a complaint has not yet
been filed, the government requested additional information from Clark
pursuant to Section 114 of the Clean Air Act for the stated purpose of
completing its pre-enforcement evaluation. Clark is gathering the
requested information and is otherwise cooperating with the
<PAGE 10>
government in its investigation. No estimate can be made at this time
of Clark's potential liability, if any, as a result of this enforcement
referral.
While it is not possible at this time to establish the ultimate
amount of liability with respect to such contingent liabilities, the
Company 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 their financial position, however, an adverse
outcome of any one or more of these matters could have a material effect
on quarterly or annual operating results or cash flows when resolved in a
future period.
<PAGE> 11
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Clark Refining & Marketing, Inc. (the "Company" or "Clark") is a
wholly-owned subsidiary of Clark USA, Inc. ("Clark USA"). The Company
also owns all of the outstanding capital stock of Clark Port Arthur
Pipeline Company which is reported as a component of the Company's
refining division.
Certain reclassifications were made to 1995 operating expenses and
general and administrative expenses to conform to current period
presentation. In addition, certain reclassifications were made to 1995
refining division results for the Port Arthur refinery and Blue Island,
Hartford and Other Refining to allocate certain crude oil acquisition
and inventory management results and conform to current period
presentation. Such reclassifications did not change the Company's total
results of operations.
Results of Operations
Financial Highlights
The following tables reflect the Company's financial and operating
highlights for the three and nine month periods ended September 30, 1995
and 1996. All dollars listed are in millions except per barrel, per
gallon and other statistical data.
<TABLE>
For the three months For the nine months
ended September 30, ended September 30,
Financial Results: 1995 1996 1995 1996
<S> <C> <C> <C> <C>
Net sales and operating revenues $1,211.8 $1,249.5 $3,376.8 $3,724.4
Cost of sales 1,063.0 1,121.2 3,027.8 3,346.3
Operating expenses 100.7 104.3 269.6 303.2
General and administrative expenses 14.7 15.9 42.3 45.3
Depreciation and amortization 11.0 12.4 31.5 37.0
Interest and financing costs 11.5 12.0 33.2 36.4
Interest and finance income 1.6 1.3 4.8 5.2
Earnings (loss) before income taxes 12.5 (15.0) (22.8) (38.6)
Income tax (provision) benefit (4.7) 5.7 8.7 14.7
Net earnings (loss) $ 7.8 $ (9.3) $(14.1) $ (23.9)
Operating Income:
Refining contribution to
operating income $ 21.0 $ 6.8 $ 13.1 $ 16.0
Retail contribution to
operating income 16.0 5.3 35.5 24.4
Corporate general and administrative 3.6 4.0 11.4 10.8
Depreciation and amortization 11.0 12.4 31.5 37.0
Operating income (loss) $ 22.4 $ (4.3) $ 5.7 $ (7.4)
</TABLE>
The Company reported a net loss of $9.3 million for the third quarter
of 1996 versus net earnings of $7.8 million in the third quarter of
1995. Refining and retail market conditions were weak in the quarter as
rising and volatile crude oil prices squeezed margins and more than
offset the positive impact of improved operations versus the prior year.
For the first nine months of 1996, Clark reported a net loss of $23.9
million as compared to a $14.1 million net loss in the same period of
1995. Despite a first quarter rebound in refining margins reflecting
more normal winter demand for distillates, nine month results were
reduced versus the prior year because of rising crude oil prices and
extreme crude oil market volatility. These factors effectively raised
the cost of the Company's feedstocks. The majority of the Company's
products are commodities that are subject to seasonal and market
volatility. Net sales and operating revenues increased approximately 3%
in the third quarter of 1996 as compared to the prior year because of
higher crude oil prices, and the first nine months of 1996 increased
approximately 10% over 1995 because of the higher crude oil prices and
the inclusion in 1996 of a full nine months of incremental sales from
production at the Port Arthur refinery, which was acquired on February
27, 1995.
<PAGE> 12
Refining
<TABLE>
Refining Division Operating Statistics:
For the three months For the nine months
ended September 30, ended September 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Port Arthur Refinery (acquired February 27, 1995)
Crude oil throughput (m bbls/day) 210.2 196.4 203.8 201.7
Production (m bbls/day) 222.5 210.7 210.6 212.0
Gross margin ($/barrel of production) $ 2.37 $ 2.72 $ 2.41 $ 2.49
Operating expenses($/barrel of production) 1.81 2.19 1.90 2.06
Net margin (millions) $ 11.6 $ 10.4 $ 23.2 $ 25.0
Blue Island, Hartford and other refining
Crude oil throughput (m bbls/day) 141.1 140.1 133.3 135.1
Production (m bbls/day) 139.1 144.3 133.1 136.2
Gross margin ($/barrel of production) $ 3.72 $ 2.43 $ 2.80 $ 2.66
Operating expenses ($/barrel of production) 2.52 2.24 2.62 2.44
Net margin (millions) $ 15.3 $ 2.5 $ 6.5 $ 8.2
Divisional G & A expenses (millions) 5.9 6.1 16.6 17.2
Contribution to earnings (millions) $ 21.0 $ 6.8 $ 13.1 $ 16.0
</TABLE>
The refining division contribution to operating income in the third
quarter of 1996 was $6.8 million (1995 - $21.0 million). Refining
results in the third quarter continued to be hampered by weak market
conditions. Rising crude oil prices combined with weaker than expected
summer gasoline demand squeezed margins. Clark's Midwest and Gulf Coast
markets were both negatively impacted, as reflected by $1.80 and $0.80
per barrel respective declines in industry refining margin indicators
from the second quarter. In addition, high absolute crude oil prices
weakened margins on by-products that do not immediately track crude oil
price changes, and higher refinery fuel gas prices increased operating
expenses at the Port Arthur refinery by approximately 30 cents per
barrel. For the first nine months of 1996, the refining division
improved its contribution to $16.0 million (1995 - $13.1 million). Nine
month refining division results reflected year over year operational
improvements, including improved yields, but these improvements were
tempered by the volatile crude oil markets, increased refinery fuel gas
costs and lower chemical and by-product margins. Industry margins in
early 1995 were particularly weak due to the transition to reformulated
gasoline in certain markets and an unseasonably warm winter, which
reduced demand for heating oil.
Port Arthur crude oil throughput and production in the third quarter
was below 1995 levels due to maintenance on the FCC unit. Midwest
refining production during the first nine months was below capacity as
routine maintenance was successfully completed on several units.
Refinery production was reduced by an average of approximately 9,000
barrels per day in the first nine months of 1995 due to the poor
industry refining margins and a fire in an operating unit at the Blue
Island refinery. Production in the fourth quarter of 1996 is expected
to be five to ten percent less than capacity at Clark's Blue Island
refinery due to two units being out of service for approximately three
weeks.
In 1996, the commodity markets for crude oil and refined products
have been characterized by rising crude oil prices, daily price
volatility and steep premiums for prompt crude oil and product
deliveries. These type of commodity market conditions disrupt many
normal options and futures relationships making it difficult for the
Company to effectively hedge short-term price risk.
<PAGE> 13
Retail
Retail Division Operating Statistics:
<TABLE>
For the three months For the nine months
ended September 30, ended September 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Gasoline volume (mm gals.) 278.4 270.1 807.2 777.7
Gasoline gross margin (cents/gal) 12.9 9.4 11.1 10.6
Gasoline gross margin (millions) $ 35.8 $ 25.4 $ 89.9 $ 82.3
Convenience product sales (millions) $ 72.5 $ 68.3 $ 190.0 $193.7
Convenience product and
other income (millions) 16.8 17.9 47.7 52.1
Operating expenses (millions) $ 31.4 $ 32.2 $ 87.8 $ 92.7
Divisional G & A expenses (millions) 5.2 5.8 14.3 17.3
Contribution to operating
income (millions) $ 16.0 $ 5.3 $ 35.5 $ 24.4
Per Month Per Store
Company operated stores (average) 863 827 852 828
Gasoline volume (m gals.) 107.5 108.9 105.3 104.4
Convenience product sales (m) $ 28.0 $ 27.5 $ 24.7 $ 26.0
Convenience product gross margin (m) $ 6.5 $ 7.2 $ 6.2 $ 6.7
</TABLE>
The retail division contributed $5.3 million to operating income in
the third quarter of 1996 (1995 - $16.0 million). The third quarter
retail division contribution was below 1995 levels due almost entirely
to a sharp drop in retail gasoline margins. This resulted from an
increase in wholesale gasoline costs associated with higher crude oil
prices that was not fully captured in retail selling prices due to an
extremely competitive Midwest retail market environment. This was
particularly the case in the last half of the third quarter.
Convenience product sales were below year ago levels, but overall
margin contribution was higher due to improved pricing and product mix.
Nine month results were also below year ago levels because of the
squeeze in overall fuel margin contribution. Retail margins generally
are compressed in periods of rapid oil price increases and widen as
prices stabilize or fall. Operating and general and administrative
expenses increased over the prior year principally due to operating
leases and other costs related to new store properties and increased
costs related to the expansion of Clark's credit card programs.
The Company continued to implement its targeted retail growth
strategy in 1996 by adding 10 high volume stores in its core Chicago
market which raised its Chicago market share to approximately 10%.
Early in 1996, the Company completed its withdrawal from the Minnesota
market, recognizing a modest gain. As part of its overall growth
strategy, the Company expects to continue to consider retail store
growth in both existing and new markets while also evaluating current
markets for possible divestiture.
Other Financial Highlights
Depreciation and amortization expenses for the third quarter and
first nine months of 1996 exceeded the comparable periods of 1995
principally because of the acquisition of Port Arthur refinery in early
1995.
For the third quarter and first nine months of 1996, interest
expense increased over 1995 due to costs related to an expanded working
capital facility and amortization of bondholder consent fees, both
incurred during 1995.
<PAGE> 14
Liquidity and Capital Resources
Net cash generated from operating activities, excluding working
capital changes, for the first nine months of 1996 was $2.4 million
compared to $12.7 million in the year-earlier period as a result of
weaker market conditions. Working capital at September 30, 1996 was
$197.2 million, a 1.56 to 1 current ratio, and was comparable to $193.1
million at December 31, 1995, a 1.48 to 1 current ratio.
In general, the Company's short-term working capital requirements
fluctuate with the price and payment terms of crude oil. Clark has in
place a $400 million committed revolving line of credit expiring
December 31, 1997 for the issuance of letters of credit primarily to
support purchases of crude oil, other feedstocks and refined products.
The amount available under the borrowing base associated with such
facility at September 30, 1996 was $393 million and approximately $286
million of the facility was utilized for letters of credit. There were
no direct borrowings under the Company's line of credit at September 30,
1996.
Cash flows used in investing activities in the first nine months of
1996, excluding short-term investment activities which management treats
similar to cash and cash equivalents, decreased to $26.6
million from $80.8 million in the year-earlier period. The higher
investing activities in 1995 resulted principally from the Port Arthur
refinery acquisition which closed on February 27, 1995. Capital
expenditures for property, plant and equipment during the first nine
months of 1996 totaled $23.3 million (1995 - $24.2 million) with an
additional $7.2 million (1995 - $2.8 million) for refinery maintenance
turnaround expenditures. Refinery capital expenditures totaled $12.5
million in the first nine months of 1996 (1995 - $4.8 million), most of
which was for discretionary projects at the Port Arthur and Hartford
refineries. Retail capital expenditures for the first nine months of
1996 totaled $10.5 million (1995 - $18.5 million) principally for the
purchase of equipment related to new stores and underground storage
tank-related work.
In early October, the Company sold for net cash proceeds of $235.4
million one of the advance crude oil purchase receivables Clark USA
acquired in December, 1995 and certain associated hedge contracts. The
receivable together with the associated hedge contracts was assigned to
the Company by Clark USA in early October at fair market value and
recorded as an equity contribution. The Company has historically
maintained substantial cash reserves to mitigate the cyclical nature of
its business. Such cash reserves may also be used to enhance existing
assets, for acquisitions, to reduce debt or may be distributed to Clark
USA.
Cash flows from financing activities declined in the first nine
months of 1996 as compared to the prior year. Financing activities in
1995 related to the financing of the Port Arthur refinery acquisition.
Funds generated from operating activities together with the Company's
existing cash, cash equivalents and short-term investments are expected
to be adequate to fund requirements for working capital and capital
expenditure programs for the next year. Future working capital,
discretionary or non-discretionary capital expenditures, or acquisitions
may require additional debt or equity financing.
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
In early April, 1996, Clark learned that its Hartford, Illinois
refinery is the subject of a Clean Air Act enforcement referral by the
United States Environmental Protection Agency ("USEPA") to the United
States Department of Justice. The referral pertains to alleged
violations of the Clean Air Act and regulations promulgated thereunder in
the operation and permitting of the Hartford refinery fluid catalytic
cracking unit ("FCCU") and alleged modification of the FCCU. Although a
complaint has not yet been filed, the government requested additional
information from Clark pursuant to Section 114 of the Clean Air Act for
the stated purpose of completing its pre-enforcement evaluation. Clark
is gathering the requested information and is otherwise cooperating with
the government in its investigation. No estimate can be made at this
time of Clark's potential liability, if any, as a result of this
enforcement referral.
On January 5, 1995, Clark received a Unilateral Administrative Order
from the USEPA pursuant to CERCLA alleging that "Clark Oil & Refining
Corp." is a potential responsible party ("PRP") with respect to
shipments of hazardous substances to a solid waste disposal site known
as the Ninth Avenue Site, Gary, Indiana. The alleged shipments all
occurred prior to 1987. The Order instructs Clark and the other
approximately ninety PRPs to design and implement certain remedial work
at the site. Clark has informed the USEPA that it is not a proper party
to this matter, because its purchase of certain assets of a company
previously operating under the "Clark" name ("Old Clark") was "free and
clear" of all Old Clark liabilities. Information provided with the
Order estimates that the remedial work may cost approximately $25
million. No estimate of liability can be made with respect to this
proceeding at this time. In addition, on December 28, 1994, Clark was
served with a summons and complaint brought by certain private parties
seeking to recover all past and future response costs with respect to
that site on the basis of shipments of hazardous substances allegedly
made prior to 1987. Clark moved to dismiss this action on the basis
that the action is barred by the "free and clear" Order pursuant to
which Clark purchased certain assets of Old Clark. The plaintiffs and
one co-defendant opposed Clark's motion to dismiss. On April 19, 1996,
the District Court denied Clark's Motion to Dismiss holding that at this
early procedural stage of the case and prior to gathering facts
regarding the plaintiffs opportunity to participate in the bankruptcy
case which issued the "free and clear" order, the Court would not
dismiss the case. No estimate of any liability with respect to this
case can be made at this time.
On September 30, 1996, the USEPA sent a combined Finding of Violation
alleging that fugitive emissions had been released from Clark's Blue
Island refinery and a Notice of Violation alleging that the total annual
benzene calculation pursuant to the National Emissions Standards for
Hazardous Air Pollutants was incorrectly determined. Clark has
scheduled an administrative conference to discuss this matter with the
USEPA. No estimate of liability, if any, with respect to any of these
matters can be made at this time.
Following an explosion on October 19, 1996 in a propane gas line at
the Blue Island refinery, the State of Illinois brought an action seeking a
temporary restraining order requiring the refinery to cease operations,
temporarily, pending a safety review. On November 8, 1996, the court
denied the requested order. The State's time for appeal has not yet run
out.
<PAGE> 16
ITEM 5 - Other Information
Clark signed a new three year collective bargaining agreement,
expiring August 31, 1999, for certain Blue Island refinery employees.
The previous agreement would have expired August 31, 1996.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - Fifth Amendment to Amended and Restated Credit
Agreement, dated as of October 4, 1996
Exhibit 27.0 - Financial Data Schedule
(b) Reports on Form 8-K
October 4, 1996 - Announcement of the sale of an advance
crude oil purchase receivable
<PAGE> 17
SIGNATURE
Pursuant to the requirements 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.
(Registrant)
/s/ Dennis R. Eichholz
Dennis R. Eichholz
Controller and Treasurer (Authorized
Officer and Chief Accounting Officer)
November 12, 1996
<PAGE> 1
CLARK REFINING & MARKETING, INC.
FIFTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
This FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is dated as of October 4, 1996 and entered into by and among
Clark Refining & Marketing, Inc., a Delaware corporation, Bank of America
National Trust and Savings Association, a national banking association, as
Administrative Agent, Bankers Trust Company, a New York banking
corporation, as Documentation Agent, The Toronto-Dominion Bank, a Canadian
chartered bank, as Syndications Agent, BA Securities, Inc., a Delaware
corporation, as Technical Agent, and the other financial institutions
party hereto. This Amendment amends the Amended and Restated Credit
Agreement dated as of April 19, 1995, as amended by (i) the First
Amendment to Amended and Restated Credit Agreement dated as of June 14,
1995, (ii) the Second Amendment to Amended and Restated Credit Agreement
dated as of November 27, 1995, (iii) the Third Amendment to Amended and
Restated Credit Agreement dated as of January 31, 1996, and (iv) the
Fourth Amendment to Amended and Restated Credit Agreement dated as of July
12, 1996 (as amended, the "Credit Agreement"), by and among the parties
hereto. Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the parties hereto entered into the Credit Agreement, which
provides for aggregate Commitments of $400,000,000;
WHEREAS, the parties hereto desire to make certain amendments as set
forth below.
NOW,, THEREFORE in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as
follows:
Article I
AMENDMENTS TO THE CREDIT AGREEMENT
1.01 Amendments to Section 1.01: Certain Defined
Terms.
(a) The definition of "Change of Control" set forth in Section
1.01 of the Credit Agreement is hereby amended
<PAGE> 2
by deleting it in its entirety and substituting the following
therefor:
"'Change of Control' means any of (a) the failure of Holdings to own
at all times l00% of the outstanding Capital Stock of the Company, or (b)
the failure of Horsham to maintain, at all times, beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of (i) more than
40% of the Voting Shares of Holdings and (ii) more than 40% of all other
Capital Stock of Holdings; provided, that during any period in which the
common stock of Holdings is listed on a nationally recognized exchange or
traded on NASDAQ, the percentages set forth in clauses (c) (i) and (ii)
above shall be reduced to 25%."
(b) The definition of "Consent and Waiver" is hereby added to
Section 1.01 of the Credit Agreement as follows:
"'Consent and Waiver' means the Agreement Regarding Limited Consent
and Waiver dated as of September 30, 1996 by and among the Company and the
financial institutions party thereto."
(c) The definition of "Cumulative Adjusted Free Cash Flow" set
forth in Section 1.01 of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"'Cumulative Adjusted Free Cash Flow' means, for the period
beginning on October 1, 1995 and ending on the last day of the relevant
period, (a) EBITDA minus (b) Cash Outlays for such period."
(d) The definition of "EBITDA" set forth in Section 1.01 of the
Credit Agreement is hereby amended by adding the following proviso to the
end thereof:
";provided, that for the purposes of the definition of 'Adjusted
Cash Flow', EBITDA shall, as of any date of determination, include an
additional amount (without duplication) equal to the amount of any cash
equity capital contributions made or deemed made by Holdings to the
Company (i) during the consecutive 12 month period ending on such date of
determination and (ii) within 30 days after such date of determination;
provided that any such cash equity capital contributions shall be
described in an officer's certificate delivered to the Administrative
Agent and signed by a Responsible Officer certifying that Holdings has
made such cash equity capital contributions to the Company and setting
forth the date such contributions were made or deemed made."
(e) The definition of "Fifth Amendment" is hereby added to Section
1.01 or the Credit Agreement as follows:
<PAGE> 3
"'Fifth Amendment' means the Fifth Amendment to Amended and Restated
Credit Agreement dated as of October 4, 1996."
(f) The definition of "Horsham" set forth in Section 1.01 of the
Credit Agreement is hereby amended by deleting it in its entirety and
substituting the following therefor:
"'Horsham' means Horsham Corporation, an Ontario corporation, any
successor corporation by merger or amalgamation, and any other corporation
controlled by Peter Munk."
(g) The definition of "Initial Cash Reserves" set forth in Section
1.01 of the Credit Agreement is hereby amended by deleting it in its
entirety and substituting the following therefor:
"'Initial Cash Reserves' means (a) Cash, Cash Equivalents and
Qualifying Investments of the Company as of the close of business on
September 30, 1995 minus (b) $50,000,000."
1.02 Amendments to Section 8.11: Restricted Payments. Subsection
8.11(b) is hereby amended by deleting it in its entirety and substituting
the following therefor:
"(b) (i) make payments to Holdings in accordance with the terms of,
and to the extent required by, the Tax Sharing Agreement but only to the
extent Holdings actually pays such amounts in taxes, and (ii)
notwithstanding clause (a) of this Section 8.11, make and declare one or
more cash dividends to Holdings in an aggregate amount not exceeding the
amount of the Net Cash Proceeds (as defined in the Consent and Waiver)
minus $40,000,000."
1.03 Amendments to Subsection 8.16(c): Tangible Net Worth.
Subsection 8.l6(c) of the Credit Agreement is hereby amended by deleting
it in its entirety and substituting the following therefor:
"(c) The Company shall not permit the Tangible Net Worth of the
Company plus the amount of any after tax writedown of book value with
respect to the DHDS Unit minus any after tax gain from the sale of the
DHDS Unit, at any time, to be less than $254,209,812.78 plus a cumulative
amount determined by adding (i) 50% of Net Income for all fiscal quarters
ending after September 30, 1995 and on or before such date of
determination plus (ii) 50% of the aggregate amount of equity capital
contributions made by Holdings to the Company after the later of (x) the
Second Amendment Effective Date and (y) the issuing date of the Additional
Holdings Indebtedness; provided, that the following equity capital
contributions shall be excluded for all purposes from this clause (ii)
(but shall be included for the purpose of calculating Net Worth) : (A)
the equity capital contribution made
<PAGE> 4
by Holdings to the Company on December 29, 1995 in the amount of
$6,400,000; (B) any equity capital contributions made by Holdings to the
Company during the period after December 29, 1995 and before the Third
Amendment Effective Date in an amount of not less than $13,600,000 and not
more than $33,600,000; and (C) any equity capital contributions made or
deemed made by Holdings to the Company in excess of $40,000,000 in
connection with the contribution by Holdings to the Company of all of
Holdings' interests in the Crude Oil Purchase Agreements (as defined in
the Consent and Waiver) and the Forward Contracts (as defined in the
Consent and Waiver)."
1.04 Amendments to Subsection 8.16(e): Adjusted Cash Flow.
Subsection 8.16(e) of the Credit Agreement is hereby amended by deleting
it in its entirety and substituting the following therefor:
"(e) The Company shall not permit the Adjusted Cash Flow of the
Company, determined as of the last day of each calendar month for the 12
consecutive calendar months ending September 30, 1996 and for the 12
consecutive calendar months ending any time thereafter to be less than
1.50 times Debt Service for such period."
1.05 Amendments to Section 8.17: Capital Expenditures. The
proviso to Section 8.17 is hereby amended by deleting it in its entirety
and substituting the following therefor:
";provided, that notwithstanding any of the foregoing, none of the
Company or any of its Subsidiaries shall make any Permitted Capital
Expenditure during any calendar month (whether prior to or after the
Acquisition Date) unless (i) the sum of Cumulative Adjusted Free Cash Flow
and Adjusted Cash Reserves, of the end of the calendar month immediately
preceding such calendar month, is greater than zero ($0) and (ii) after
giving effect to such Permitted Capital Expenditure the Company reasonably
expects the sum of Cumulative Adjusted Free Cash Flow and Adjusted Cash
Reserves to continue to be greater than zero ($0) as of the end of such
calendar month (and a Responsible Officer delivers a certificate to the
Administrative Agent certifying to the satisfaction of such conditions)."
1.06 Amendments to Compliance Certificate. The form of Compliance
Certificate set forth in Exhibit C to the Credit Agreement is hereby
amended by deleting it in its entirety and substituting therefor Exhibit C
attached to this Amendment.
1.07 Certain Capital Contributions It is agreed that for all
purposes of the Credit Agreement, the contribution to the Company by
Holdings of the rights of Holdings under the Crude Oil Purchase Agreements
(as defined in the Agreement Regarding Limited Consent and Waiver dated as
of September 30, 1996 by and
<PAGE> 5
among the Company and the financial institutions party thereto (the
"Consent and Waiver")) and the Forward Contracts (as defined in the
Consent and Waiver) shall be deemed to be a cash equity capital
contribution by Holdings to the Company.
Article II
EFFECTIVENESS OF AMENDMENT
This Amendment shall become effective as of September 30, 1996 (the
"Fifth Amendment Effective Date") upon the satisfaction in full of the
conditions precedent set forth in subsections 2.01 through 2.04 below.
2.01 Receipt of Signatures. The Administrative Agent shall have
(i) executed a counterpart signature page of this Amendment and (ii)
received executed counterpart signature pages of this Amendment from the
Company and the Majority Banks.
2.02 Equity Contribution. The Administrative Agent shall have
received a letter from the Company addressed to the Administrative Agent
and the Banks, signed by a Responsible Officer of the Company and stating
that the maximum amount of Dividends (as defined in the Consent and
Waiver) will not exceed an amount equal to (i) the Net Cash Proceeds (as
defined in the Consent and Waiver) minus (ii) $40,000,000, notwithstanding
anything to the contrary contained in the Consent and Waiver.
2.03 Occidental Petroleum Matters. The Company shall have provided
evidence satisfactory to the Administrative Agent that the Company has
sold or assigned all of its interests in the Crude Oil Purchase Agreements
(as defined in the Consent and Waiver) and the Forward Contracts (as
defined in the Consent and Waiver) to a third party.
2.04 Amendment Fee. The Company shall have paid to each of the
Banks signatory to this Amendment an amount equal to 0.05% of such Bank's
Pro Rata Share of the aggregate Commitments in effect under the Credit
Agreement as of the date hereof.
Article III
MISCELLANEOUS
3.01 Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(a) On and after the Fifth Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean
<PAGE> 6
and be a reference to the Credit Agreement as amended by this
Amendment.
(b) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed; provided, that (except as
set forth in Section 2.02 of this Amendment) nothing contained in this
Amendment shall derogate from the effect of the Consent and Waiver, which
(except as set forth in Section 2.02 of this Amendment) shall remain in
full force and effect.
(c) The execution, delivery and performance of this Amendment
shall not except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent, any Bank or any Issuing Bank under, the Credit
Agreement or any of the other Loan Documents.
3.02 Headings. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
3.03 Applicable Law THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
3.04 Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original,
but all such counterparts together shall constitute but one and the same
instrument.
[remainder of page intentionally left blank]
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CLARK REFINING & MARKETING, INC.
By: /s/ Dennis R. Eichholz
Name: Dennis R. Eichholz
Title: Controller and Treasuer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
an Administrative Agent
By: /s/ Judith L. Kramer
Name: Judith L. Kramer
Title: Vice President
BA SECURITIES, INC.
as Technical Agent
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION as an
Issuing Bank and as a Bank
By: /s/ David E. Sisler
Name: David E. Sisler
Title: Vice President
<PAGE> 8
THE TORONTO-DOMINION BANK, as
Syndications Agent, as a
Co-Arranger, as an Issuing Bank
and as a Bank
By: /s/ L. Allison
Name: Lisa Allison
Title: Manager, Credit
Administration
BANKERS TRUST COMPANY, as an
Issuing Bank, as the Documentation
Agent, as a Co-
Arranger and as a Bank
By: /s/ Basil Palmeri
Name: Basil Palmeri
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON, as an Issuing Bank and
as a Bank
By:
Name:
Title:
BANK OF AMERICA ILLINOIS, N.A.,
as an Issuing Bank
By:
Name:
Title:
<PAGE> 9
UNION BANK OF CALIFORNIA, N.A.
as a Bank
By: /s/ Walter Roth
Name: Walter M. Roth
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
as a Bank
By: /s/ Pascal Poupelie
Name: Pascal Poupelie
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, as a Bank
By: /s/ Pascal Poupelie
Name: Pascal Poupelie
Title: Authorized Signature
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH, as
a Bank
By: /s/ Armund J. Schoen, Jr.
Name: Armund J. Schoen, Jr.
Title: Vice President and
Deputy General Manager
NBD BANK, as a Bank
By: /s/ Steven P. Capouch
Name: Steven P. Capouch
Title: First Vice President
<PAGE> 10
ABN AMRO BANK N.V., CHICAGO
BRANCH, as a BANK
By: /s/ Scott J. Albert
Name: Scott J. Albert
Title: Vice President
By: /s/ Mary L. Honda
Name: Mary L. Honda
Title: Vice President
BANK OF SCOTLAND, NEW YORK
BRANCH, as a Bank
By: /s/ Elizabeth Wilson
Name: Elizabeth Wilson
Title: Vice President and Branch
Manager
THE FUJI BANK, LIMITED, CHICAGO
BRANCH, as a Bank
By: /s/ Peter L. Chinnici
Name: Peter L. Chinnici
Title: Joint General Manager
COMERICA BANK, as a Bank
By:
Name:
Title:
<PAGE> 11
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, as a Bank
By: /s/ Hiroaki Nakamura
Name: Hiroaki Nakamura
Title: Joint General Manager
NATIONAL CITY BANK, as a Bank
By:
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION, CHICAGO BRANCH, as
a Bank
By: /s/ Masaaki Yamagishi
Name: Masaaki Yamagishi
Title: Chief Manager
THE YASUDA TRUST AND BANKING
CO., LTD., CHICAGO BRANCH, as a
Bank
By: /s/ Joseph C. Meek
Name: Joseph C. Meek
Title: Deputy General Manager
WELLS FARGO BANK, N.A., as a
Bank
By: /s/ Charles D. Kirkham
Name: Charles D. Kirkham
Title: Vice President
<PAGE> 12
EXHIBIT C
[FORM OF COMPLIANCE CERTIFICATE]
CLARK REFINING & MARKETING INC.
COMPLIANCE CERTIFICATE
Financial
Statement Date: ____________, 199___
Reference is made to that certain Amended and Restated Credit Agreement
dated as of April 19, 1995 (amending and restating the Credit Agreement
dated as of November 30, 1994) (as it may hereafter be amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Clark Refining and Marketing, Inc., a Delaware
corporation (the "Company"), the financial institution from time to time
party thereto, BA Securities, Inc., as the Technical Agent and as a
Co-Arranger, Bankers Trust Company, as an Issuing Bank, as the
Documentation Agent and as a Co-Arranger, the First National Bank of Boston,
as an Issuing Bank, The Toronto-Dominion Bank, as the Syndications Agent,
as a Co-Arranger and as an Issuing Bank, and Bank of America National Trust
and Savings Association, as the Administrative Agent and as an Issuing Bank.
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Company hereby certifies as of
the date hereof that he/she is the ___________________ of the Company, and
that, as such, he/she is authorized to execute and deliver this
Certificate to the Banks and the Administrative Agent on the behalf of the
Company and its Subsidiaries, and that:
(Use the following paragraph if this Certificate is delivered in
connection with the financial statements required by subsection 7.O1(a) of
the Credit Agreement.)
1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
audited consolidated balance sheet of the Company and its Subsidiaries as
at the end of the fiscal year ended ______________, 199____ and (b) the
related consolidated statements of income or operations, shareholders' equity
and cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, and accompanied by the
opinion of [Coopers & Lybrand], which report states that such consolidated
financial statements present fairly the financial position of the Company
and its Subsidiaries for the periods indicated in conformity with GAAP applied
on a basis consistent with prior periods.
or
<PAGE> 13
(Use the following paragraph is this Certificate is delivered in
connection with the financial statements required by subsection 7.01(b)
off the Credit Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries
as of the end of the fiscal quarter ended _________, 199__ , and (b) the
related consolidated statements of income, shareholders' equity, and cash
flows for the period commencing on the first day and ending on the last day of
such quarter [and for the period commencing on the first day of the fiscal
year ended [________] and ending on the last day of such fiscal quarter]
and such financial statements fairly present, in accordance with GAAP
(subject only to ordinary, good faith year-end audit adjustments), the
financial position and the results of operations of the Company and its
Subsidiaries.
or
[Use the following paragraph if this Certificate is delivered in
connection with the financial statements required by subsection 7.01(c) of
the Credit Agreement.]
1. Attached as Schedule l hereto are (a) a true and correct copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries
as of the end of the month ended [Insert applicable month and year] and
(b) the related consolidated statements of income, shareholders' equity
and cash flows for the period commencing on the first day and ending on
the last day of such month [and for the period commencing on the first day
of the fiscal year ended [_________I and ending on the last day of such
month], and such financial statements fairly present, in accordance with
GAAP (subject only to ordinary, good-faith year-end audit adjustments),
the financial position and the results of operations of the Company and its
Subsidiaries.
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the
attached financial statements.
3. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and
other agreements, and satisfied every condition in the Credit Agreement to
be observed, performed or satisfied by the Company, and the undersigned
has no knowledge of any Default or Event of Default.
4. The following financial covenant analyses and information set forth on
Schedule 2 attached hereto are true and accurate on and as of the date of
this Certificate.
<PAGE> 14
IN WITNESS WHEREOF, the undersigned has executed this certificate
as of _____________________, 199___.
CLARK REFINING & MARKETING, INC.
By:
Name:
Title:
<PAGE> 15
Date: _______________ 199 ___
For the fiscal
month/quarter/year
ended _______________, 199 ___
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
Actual Required/Permitted
1. Working capital (Section 8.l6(a)).
Applicable period: all periods.
The difference (determined on a
consolidated basis) of:
A. Current Assets (determined on
an approximate FIFO basis)
less
B. Current Liabilities
= A - B = Not less than $150,000,000
2. Cash, Cash Equivalents and
Qualifying Investments (Section
8.16(b)
Applicable period: all periods.
The sum (determined on a
consolidated basis) of:
A. Cash
plus
B. Cash Equivalents
plus
C. Qualifying Investments
(i) readily marketable
certificates of deposit
meeting the requirements
of clause (i) of the
definition of the term
"Qualifying Investments"
plus
(ii) commercial paper or
finance company paper
meeting the requirements
of clause (ii) of the
definition of the term
"Qualifying Investments"
plus
<PAGE> 16
Actual Required/Permitted
(iii) direct obligations of
the U.S. meeting the
requirements of clause
(iii) of the definition
of the term "Qualifying
Investments"
plus
(iv) repurchase agreements
and reverse repurchase
agreements with
durations of less than
31 days that are fully
secured by direct
obligations of the U.S.
= (i) + (ii) + (iii)
+ (iv) =
minus
D. The sum of:
(i) outstanding Loans
(ii) on and after September
30, l995, the Aggregate
Linefill Exposure
= (i) + (ii) =
= A + B + C - D = Not less than $50,000,000
3. Tangible Net Worth (Section
8. 16(c)).
Applicable period: all periods.
The difference (determined on a
consolidated basis) of:
A. Total Assets
less
B. Total Liabilities
less
C. goodwill, organizational
expenses, research and
development expenses,
trademarks, trade names,
copyrights, patents, patent
applications, licenses and
rights in any of the above,
and other similar intangibles.
less
<PAGE> 17
Actual Required/Permitted
D. reserves carried and not
deducted from assets
less
E. securities not readily
marketable
F. any items not included in C, D
or E which are treated as
intangibles in conformity with
GAAP
plus
G. the amount of any after tax
writedown of book value with
respect to the DHDS Unit
minus
H. any after tax gain from the
sale of the DHDS Unit
= A - B - C - D - E - F + G - H = Not less than the Sum of:
A. $254,209,812.78
plus
B. 50% of Net Income for all
fiscal quarters ending
after September 30, 1995
and on or before the date
of determination
plus
C. 50% of the aggregate
amount of equity capital
contributions made by
Holdings to the company
after the later of (x)
the Second Amendment
Effective Date and (y)
the issuing date of the
Additional Holdings
Indebtedness; provided,
that the following equity
capital contributions
shall be excluded for all
purposes from this item
C: (A) the equity
capital contribution made
by Holdings to the
Company on December 29,
1995 in the amount of
$6,400,000; (B) any
equity capital
contributions made by
<PAGE> 18
Actual Required/Permitted
Holdings to the Company
during the period after
December 29, 1995 and
before the Third
Amendment Effective Date
in an amount of not less
than $13,600,000 and not
more than $33,600,000;
and (C) any equity
capital contributions
made or deemed made by
Holdings to the Company
in excess of $40,000,000
in connection with the
contribution by Holdings
to the Company of all of
Holdings' interests in
the Crude Oil Purchase
Agreements (as defined
in the Consent and
Waiver) and the Forward
Contracts (as defined
in the Consent and
Waiver).
= A + B + C =
4. Ratio of Indebtedness to Tangible
Net Worth (Section 8.l6(d)).
Applicable period: any period as
indicated in table at right.
The ratio (determined on a
consolidated basis) of:
A. The sum (without duplication)
of:
(i) Indebtedness
(a) indebtedness for
borrowed money
plus
(b) obligations issued,
undertaken or assumed as
the deferred purchase
price of property or
services (other than
trade payables entered
into in the ordinary
course)
plus
<PAGE> 19
Actual Required/Permitted
(c) non-contingent
reimbursement or payment
obligations for Surety
Instruments
plus
(d) obligations evidenced by
notes, bonds, debentures
or similar instruments
including for the
acquisition of property,
assets or businesses
plus
(e) indebtedness arising
under any conditional
sale or other title
retention agreement, or
incurred as financing,
with respect to property
acquired and all
obligations not
capitalized under the
Linefill Agreements and
similar linefill
agreements
plus
(f) Capitalized Lease
obligations
plus
(g) net obligations with
respect to Swap
Contracts
plus
(h) all indebtedness
referred to in (a)
through (g) above
secured by any lien upon
or in property owned
plus
(i) all Guaranty obligations
in respect of
indebtedness or
obligations of others of
the kinds referred to in
(a) through (g) above
= (a) + (b) + (c) + (d) +
(e) + (f) + (g) + (h) +
(i)
=
<PAGE> 20
Actual Required/Permitted
plus
(ii) all contingent reimbursement
or payment obligations of the
Company with respect to
letters of credit
= (i) + (ii) =
B. Tangible Net Worth (from item
3 above)
A
___
= B = Not greater than:
Acquisition Date
through 12/30/95 3.00:1.00
12/31/95 through 9/29/96 2.75:1.00
9/30/96 and thereafter 2.50:1.00
5. Adjusted Cash Flow (Section
8.16(e)).
Applicable Period. Determined as of
the last day of each calendar month
(commencing with the calendar month
ending September 30, 1996) for the
12 consecutive calendar months then
ended.
The sum (determined on a
consolidated basis) of:
A. EBITDA
(i) Net Income (determined
on a LIFO basis)
plus
(ii) gross accrued interest
expense (other than
capitalized interest)
plus
(iii) income tax expense as
reflected on the books
of account
plus
(iv) charges for depreciation
and amortization
plus
(v) the amount of expense,
if any, from inventory
write-down to market
less
<PAGE> 21
Actual Required/Permitted
(vi) the amount of income, if
any, from inventory
write-up to market
plus
(vii) extraordinary loss items
(as defined by GAAP),
together (without
duplication) with the
amount of any writedown
of book value with
respect to the DHDS Unit
less
(viii) extraordinary gain items
(as defined by GAAP),
together (without
duplication) with the
amount of any gain from
the sale of the DHDS
Unit
plus
(ix) for the fiscal quarter
ended December 31, 1995,
an amount equal to the
amount of equity capital
contributions made by
Holdings to the Company
during the period
beginning on December
29, 1995 and ending on
the Third Amendment
Effective Date, which
amount shall not be less
than $20,000,000 nor
more than $40,000,000;
provided, that the full
amount of such equity
capital contributions
shall be deemed made in
the fiscal quarter ended
December 31, 1995, but
with respect to the four
fiscal quarters ended
December 31, 1996, the
full amount of such
equity capital
contributions shall be
deemed made in the
fiscal quarter ended
March 31, 1996
= (i) + (ii) + (iii) + (iv) +
(v) - (vi) + (vii) - (viii) +
(ix) =
<PAGE> 22
Actual Required/Permitted
plus
(x) (only for the purposes
of the definition of
Adjusted Cash Flow) the
amount of any cash
equity capital
contributions made or
deemed made by Holdings
to the company (i)
during the consecutive
12 month period ending
on such date of
determination or (ii)
within 30 days after
such date of
determination
= (i) + (ii) + (iii) + (iv) +
(v) - (vi) + (vii) - (viii)
+ (ix) + (x) =
less
B. cash income taxes paid
less
C. Non-Discretionary Capital
Expenditures paid
plus
D. Excluded Portion of Major
Turnaround Expenditures to be
excluded from the calculation
of Adjusted Cash Flow
less
<PAGE> 23
Actual Required/Permitted
E. The portion of any Excluded
Portion previously excluded
from the calculation of
Adjusted Cash Flow and to be
added back into such
calculation one year or two
years, as the case may be,
after being excluded.
= A - B - C + D - E =
Not less than 1.50 times Debt
Service for the 12 consecutive
calendar months ending 9/30/96
or the 12 consecutive calendar
months ending any time
thereafter. Such Debt Service
is calculated as the sum
(without duplication) of:
A. All interest (other than
capitalized interest)
accrued on Indebtedness
and, to the extent not
included as an expense in
determining EBITDA, all
fees and commissions
payable in respect of
letters of credit
plus
B. All scheduled maturities
or installments of
Indebtedness due and
payable
plus
C. All fees (excluding
amortization of up-front
fees described in the Fee
Letters and certain
issuance and consent fees
as described in the
definition of the term
"Debt Service") payable
under the Loan Documents
= (A+B+C) x 1.50 =
<PAGE> 24
Actual Required/Permitted
6. Disposition of Assets (Section 8.02(f)).
Applicable period: all periods.
Aggregate fair market value of all
assets sold pursuant to
Section 8.02(f) since the Closing
Date. Not greater than $15,000,000
7. Capital Expenditures After
Acquisition Date (Section 8.l7).
Applicable period: any period as
indicated in table at right.
A. Discretionary Capital Fiscal Year
Expenditures to date for the Ended
applicable fiscal year December 31 Not greater than
1995 125,000,000
1996 90,000,000
1997 75,000,000
1998 and thereafter 75,O00,000
B. Permitted Capital Expenditures
to date for the applicable
fiscal year
The sum of:
(i) Discretionary Capital
Expenditures (from A
above)
plus
(ii} Non-Discretionary Fiscal Year
Capital Expenditures Ended
December 31 Not greater than:
= (i) + (ii)
1995 225,000,000
1996 215,000,000
1997 200,000,000
1998 and thereafter 200,000,000
PROVIDED, THAT NO PERMITTED
CAPITAL EXPENDITURE SHALL BE
MADE DURING ANY CALENDAR MONTH
(WHETHER PRIOR TO OR AFTER THE
ACQUISITION DATE) UNLESS;
I. As of the end of the
calendar month immediately
proceeding such calendar
month, the sum of the
following must be greater
than zero ($0):
A. Cumulative Adjusted Free
Cash Flow
<PAGE> 25
Actual Required/Permitted
(i) EBITDA for the period
beginning on October 1,
1995 and ending on the
last day of such period
less
(ii) Cash Outlays for such
period. The sum
(determined on a
consolidated basis and
without duplication) of:
(a) gross accrued
interest expense
as defined in
clause (a) of the
definition of
"Cash Outlays"
plus
(b) Parent
Distributions
plus
(c) cash income
taxes paid
plus
(d) scheduled
principal
repayments of
Indebtedness
plus
(e) Permitted
Capital
Expenditures
= (a)+(b)+(c)+
(d)+(e) =
=(i) - (ii)
plus
B. Adjusted Cash Reserve
(i) Initial Cash
Reserves
(a) Cash, Cash
Equivalents
and
Qualifying
Investments
as of
the close
of business
on 9/30/95
less
(b) $5O,000,000
<PAGE> 26
Actual Required/Permitted
= (a) - (b) =
plus
(ii) the aggregate amount of
capital contributions
made by Holdings in cash
after the Acquisition
Date and prior to the
date of determination
plus
(iii) the aggregate amount of
net proceeds received
after the Acquisition
Date from the issuance
of Indebtedness with
respect to tax-exempt
industrial development
bonds
plus
(iv) the aggregate amount of
Capitalized Lease
Obligations incurred
after the Acquisition
Date minus transaction
costs in connection
therewith
= (i)+(ii)+(iii)+(iv)
= A + B = _____ >0
AND
II. After giving effect
to such Permitted Capital
Expenditure, the Company
reasonably expects the sum
of Cumulative Adjusted
Free Cash Flow and
Adjusted Cash Reserves
to continue to be greater
than zero ($0) as of the
end of such fiscal quarter
(and a Responsible Officer
delivers a certificate to
the Administrative Agent
certifying to the
Satisfaction of such
conditions).
8. Judgment or Judicial Attachment
Liens (Section 8.01(q))
Applicable period: all periods.
<PAGE> 27
Actual Required/Permitted
Aggregate amount of judgment or Not greater than $5,000,000
judicial attachment liens for the
Company and Subsidiaries
9. Purchase Money Security Interests
(Section 8.01(j)).
Applicable period: all periods.
Principal amount of Indebtedness
secured by all purchase money
security interests as set forth on
Section 8.0l(j) Not greater than $15,000,000
10. Pledges of Cash, Cash Equivalents
Qualifying Investments, or Long Term
Treasury Obligations under Swap
Contracts (Section 8.0l(m)).
Applicable period: all periods.
Aggregate value of Cash, Cash
Equivalents, Qualifying Investments
and Long Term Treasury Securities
pledged by the Company and
Subsidiaries as set forth in Section
8.01(m) to secure obligations under
Swap Contracts Not greater than $50,000,000
11. Liens on Cash or Qualifying
Investments in lieu of L/Cs for
Bonding and Performance
Requirements, etc. (Section
8.0l(o)).
Applicable period: all periods.
Aggregate amount of cash or
Qualifying Investments pledged in
lieu of L/Cs for bonding and
performance requirements, insurance
requirements and workers'
compensation requirements as
provided in Section 8.0l(o). Not greater than $5,000,000
12. Investments in Publicly Traded
Stocks (Section 8.04(e)).
Applicable period: all periods.
Aggregate amount of investments in
publicly traded stocks Not greater than $10,000
<PAGE> 28
Actual Required/Permitted
13. Limitation on Indebtedness
(Section 8.05 (f)).
Applicable period: all periods.
Aggregate amount of Indebtedness of
the Company with respect to tax
exempt industrial development bonds Not greater than $75,000,000
14. Limitation on Indebtedness (Section
8.05 (h)).
Applicable period: all periods.
Additional unsecured Indebtedness of
the Company Not greater than $25,000,000
15. Swap Contracts (Section 8.08(c)).
Applicable period: all periods.
Aggregate notional amount of all
Swap contracts of the Company
relating to interest rates entered
into in the ordinary course of
business as bona fide hedging
transactions with Interest Rate
Exchangers Not greater than $100,000,000
16. Outstanding Eligibles LOIs
(Section 8.08(f)).
Applicable period; all periods.
Effective Amount of all Outstanding
Eligible LOIs Not greater than $40,000,000
17. Joint Ventures (Section 8.09).
Applicable period: all periods.
A. The sum of:
(i) All investments made by the
Company and its Subsidiaries
in any Joint venture on a
cumulative basis (other than
the PAPS Joint Venture)
plus
(ii) All loans and advances made by
the Company and Subsidiaries
to any Joint Venture
plus
<PAGE> 29
Actual Required/Permitted
(iii) All Contingent Obligations
incurred by the Company and
Subsidiaries with respect to
any Indebtedness of any Joint
Venture
= (i) + (ii) + (iii) = Not greater than $5,000,000
B. Aggregate amount of all loans,
advances and investments made
by the Company and
Subsidiaries in the PAPS Joint
Venture. Not greater than the
required investment
pursuant to the Port
Arthur Purchase Agreement
or otherwise required as
set forth in Section 8.09.
18. Lease Obligations (Section 8.10(b)).
Applicable period: all periods.
Aggregate annual rental payments for
the four fiscal quarters following
any date of determination (not
including the fiscal quarter in
which such date of determination
occurs) for all Capital Leases and
operating leases entered into by the
company after the Closing Date or in
existence on the Closing Date and
thereafter renewed, extended or
refinanced Not greater than the
greater of (i) $35,000,000
and (ii) $15% of EBITDA for
the four fiscal quarters
immediately preceding
(or ending on, if such date
of determination is the end
of a fiscal quarter) the
date of determination
subject to the last two
provisos set forth in
Section 8.10(b).
19. Inventory Net Open Position ("NOP")
Section 8.20).
Applicable period: all periods.
A. The sum of the number of
barrels of Petroleum inventory
which
(i) the Company has in
inventory
plus
(ii) are owed to the Company
from exchange parties
plus
<PAGE> 30
Actual Required/Permitted
(iii) the company has
contracted to purchase
and with respect to
which the Company and
the Seller have agreed
to a fixed sales price
less
(iv) the Company owes to
exchange parties
less
(v) the Company has
contracted to sell and
with respect to which
the company and the
Seller have agreed to a
fixed sales price
= (i) + (ii) + (iii) -
(iv) - (v) =
B. Adjustment giving effect to
Swap Contracts entered into by
the Company relating to
Petroleum Inventory [+] [-]
C. The company's average forecast
throughput per day during the
current and next two calendar
months from its refineries
= A [+1 [-] B
_____________ =
C
Not less than 30 day's nor
greater than 60 day's
throughput, except for the
period
(i) from the Acquisition
Date through
3/29/95, the NOP
shall not be less
than 15 days'
throughput,
(ii) from 3/30/95 through
4/29/95, the NOP
shall not be less
than 20 days'
throughput,
(iii) from 4/30/95 through
5/29/95, the NOP
shall not be less
than 25 days'
throughput.
20. Restricted Payments
(Section 8.ll(b)).
Applicable period: after the
Acquisition Date.
A. Aggregate amount of Parent
Distributions for the
<PAGE> 31
Actual Required/Permitted
immediately preceding two
fiscal quarters
Not greater than (i)
$10,000,000 or (ii) the
amount of any payment during
such period required to be
made and made under the AOC
Stock Purchase and
Redemption Agreement.
B. Aggregate amount of Parent
Distributions for the
immediately preceding four
fiscal quarters.
Not greater than (i)
$20,000,000 or (ii) the
amount of any payment during
such period required to be
made and made under the AOC
Stock Purchase and
Redemption Agreement.
C. Aggregate amount of Parent
Distributions made since the
Acquisition Date together with
the amount of Parent
Distributions proposed to be
made.
Not greater than the
Permitted Parent
Distribution Amount plus
Cumulative Adjusted Free
Cash Flow as of the end of
the immediately preceding
fiscal quarter
AND
The Company reasonably
expects Cumulative Adjusted
Free Cash Flow to continue
to be greater than zero ($0)
as of the end of the fiscal
quarter in which such Parent
Distribution is made (and a
Responsible Officer delivers
a certificate to the
Administrative Agent
certifying
to the satisfaction of such
conditions).
<PAGE> 32
Actual Required/Permitted
21. Cash Flow Leverage
A. Applicable Period:
_____ to _____
B. Indebtedness described in
clauses (a), (b), (d), (e) and
(f) of the definition thereof
as of the last day of the
Applicable Period:
C. EBITDA (without giving effect
to the adjustments referred to
in items (e) and (f) of the
definition of EBITDA) for the
Applicable Period:
D. Cash Flow Leverage
= B
___
C
22. Rating of Company's Senior Unsecured
Debt.
A. Rating by Moody's
B. Rating by S&P
23. Aggregate Linefill Exposure.
Applicable Period: all periods.
For each type of crude oil covered
by Linefill Agreements, the aggre-
gate of the following [specify
separately for each type of crude
oil and each of the Linefill
Agreements];
A. Average market price of crude
oil subject to the applicable
Linefill Agreement for prior
30 calendar days
times
B. Average number of barrels of
crude oil covered by the
applicable Linefill Agreement
during such 30 calendar day
period
= A X B
Aggregate for all types of crude
oil covered by Linefill Agreements Not greater than $25,000,000
<PAGE> 33
Actual Required/Permitted
24. Major Turnaround Expenditures.
For any fiscal quarter or two
consecutive fiscal quarters in which
cash payments in respect of non-
discretionary turnaround project
expenditures exceed $10,000,000, the
following:
A. $10,000,000
plus
the amount of cash payments in
respect of non-discretionary
turnaround project expenditures in excess of
$10,000,000
= A + B
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 52,639
<SECURITIES> 26,731
<RECEIVABLES> 166,365
<ALLOWANCES> 1,575
<INVENTORY> 285,109
<CURRENT-ASSETS> 548,308
<PP&E> 717,658
<DEPRECIATION> 174,228
<TOTAL-ASSETS> 1,129,871
<CURRENT-LIABILITIES> 351,158
<BONDS> 417,188
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,129,871
<SALES> 3,716,875
<TOTAL-REVENUES> 3,729,591
<CGS> 3,346,318
<TOTAL-COSTS> 3,694,831
<OTHER-EXPENSES> 41,137
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,207
<INCOME-PRETAX> (38,584)
<INCOME-TAX> 14,662
<INCOME-CONTINUING> (23,922)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,922)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
