UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[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 1-4718
VALERO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1244795
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
530 McCullough Avenue
San Antonio, Texas
(Address of principal executive offices)
78215
(Zip Code)
(210) 246-2000
(Registrant's telephone number, including area code)
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
Indicated below is the number of shares outstanding of the
registrant's only class of common stock, as of November 1, 1996.
Number of
Shares
Title of Class Outstanding
Common Stock, $1 Par Value 44,010,989
<PAGE>
VALERO ENERGY CORPORATION AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - September 30, 1996 and
December 31, 1995. . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income - For the Three
Months Ended and Nine Months Ended
September 30, 1996 and 1995. . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows - For the Nine
Months Ended September 30, 1996 and 1995 . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . .
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . .
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . .
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
VALERO ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
September 30,
1996 December 31,
(Unaudited) 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments. . . . . . . . . . . . . $ 14,055 $ 28,054
Cash held in debt service escrow . . . . . . . . . . . . . . 17,679 36,627
Receivables, less allowance for doubtful accounts of
$1,554 (1996) and $1,193 (1995). . . . . . . . . . . . . . 296,551 339,189
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 203,433 140,822
Current deferred income tax assets . . . . . . . . . . . . . 21,278 29,530
Prepaid expenses and other . . . . . . . . . . . . . . . . . 33,991 47,321
586,987 621,543
PROPERTY, PLANT AND EQUIPMENT - including
construction in progress of $52,839 (1996)
and $37,472 (1995), at cost. . . . . . . . . . . . . . . . . 2,769,325 2,697,494
Less: Accumulated depreciation. . . . . . . . . . . . . . 687,572 622,123
2,081,753 2,075,371
INVESTMENT IN AND ADVANCES TO JOINT VENTURES . . . . . . . . . 43,452 41,890
DEFERRED CHARGES AND OTHER ASSETS. . . . . . . . . . . . . . . 145,459 137,876
$2,857,651 $2,876,680
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
VALERO ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
September 30,
1996 December 31,
(Unaudited) 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,000 $ -
Current maturities of long-term debt . . . . . . . . . . . . . . . . . 72,341 81,964
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 378,238 312,672
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,213 31,104
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 40,204 42,542
564,996 468,282
LONG-TERM DEBT, less current maturities. . . . . . . . . . . . . . . . . 878,386 1,035,641
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . 282,937 276,013
DEFERRED CREDITS AND OTHER LIABILITIES . . . . . . . . . . . . . . . . . 52,510 56,031
REDEEMABLE PREFERRED STOCK, SERIES A, issued
1,150,000 shares, outstanding 69,000 (1996 and 1995) shares. . . . . . 6,900 6,900
COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value - 20,000,000 shares authorized
including redeemable preferred shares:
$3.125 Convertible Preferred Stock, issued and outstanding
3,450,000 (1996 and 1995) shares ($172,500 aggregate
involuntary liquidation value) . . . . . . . . . . . . . . . . . 3,450 3,450
Common stock, $1 par value - 75,000,000 shares authorized;
issued 44,024,260 (1996) and 43,739,380 (1995) shares. . . . . . . . 44,024 43,739
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . 537,806 530,177
Unearned Valero Employees' Stock Ownership Plan
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,982) (11,318)
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . 496,204 467,943
Treasury stock, 23,477 (1996) and 6,904 (1995) common shares,
at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (580) (178)
1,071,922 1,033,813
$2,857,651 $2,876,680
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
VALERO ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . $1,123,527 $803,670 $3,386,362 $2,270,027
COSTS AND EXPENSES:
Cost of sales and operating expenses . . . . . . . . 1,039,844 699,525 3,103,646 1,997,448
Selling and administrative expenses. . . . . . . . . 19,125 21,205 60,380 56,445
Depreciation expense . . . . . . . . . . . . . . . . 24,533 25,159 75,640 74,733
Total. . . . . . . . . . . . . . . . . . . . . . . 1,083,502 745,889 3,239,666 2,128,626
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 40,025 57,781 146,696 141,401
EQUITY IN EARNINGS OF JOINT VENTURES . . . . . . . . . 1,350 1,272 2,171 4,671
OTHER INCOME, NET. . . . . . . . . . . . . . . . . . . 2,030 550 5,322 2,160
INTEREST AND DEBT EXPENSE:
Incurred . . . . . . . . . . . . . . . . . . . . . . (24,084) (26,016) (74,550) (78,199)
Capitalized. . . . . . . . . . . . . . . . . . . . . 1,525 1,843 3,062 4,278
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . 20,846 35,430 82,701 74,311
INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . . 7,700 12,800 28,800 27,400
NET INCOME . . . . . . . . . . . . . . . . . . . . . . 13,146 22,630 53,901 46,911
Less: Preferred stock dividend requirements . . . . 2,844 2,967 8,526 8,895
NET INCOME APPLICABLE
TO COMMON STOCK. . . . . . . . . . . . . . . . . . . $ 10,302 $ 19,663 $ 45,375 $ 38,016
EARNINGS PER SHARE OF
COMMON STOCK . . . . . . . . . . . . . . . . . . . . $ .23 $ .45 $ 1.03 $ .87
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (in thousands) . . . . . . . . . . . . . 43,984 43,682 43,878 43,633
DIVIDENDS PER SHARE OF
COMMON STOCK . . . . . . . . . . . . . . . . . . . . $ .13 $ .13 $ .39 $ .39
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
VALERO ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 53,901 $ 46,911
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . 75,640 74,733
Amortization of deferred charges and other, net. . . . . . . . . . . . 24,242 23,742
Changes in current assets and current liabilities. . . . . . . . . . . 47,495 19,837
Deferred income tax expense. . . . . . . . . . . . . . . . . . . . . . 17,500 3,300
Equity in earnings in excess of distributions of joint ventures. . . . (2,171) (4,148)
Changes in deferred items and other, net . . . . . . . . . . . . . . . (10,130) (10,158)
Net cash provided by operating activities. . . . . . . . . . . . . . 206,477 154,217
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . (90,114) (99,828)
Deferred turnaround and catalyst costs . . . . . . . . . . . . . . . . . . (23,952) (35,228)
Investment in and advances to joint ventures, net. . . . . . . . . . . . . 1,792 (372)
Dispositions of property, plant and equipment. . . . . . . . . . . . . . . 6,728 13,840
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767 230
Net cash used in investing activities. . . . . . . . . . . . . . . . . . (104,779) (121,358)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term debt. . . . . . . . . . . . . . . . . . . . . . . . 63,000 25,000
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . - 96,500
Long-term debt reduction, net. . . . . . . . . . . . . . . . . . . . . . . (165,143) (138,857)
Decrease in cash held in debt service escrow for principal . . . . . . . . 6,964 6,340
Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . (17,114) (17,018)
Preferred stock dividends. . . . . . . . . . . . . . . . . . . . . . . . . (8,526) (8,892)
Issuance of common stock, net. . . . . . . . . . . . . . . . . . . . . . . 5,122 1,129
Net cash used in financing activities. . . . . . . . . . . . . . . . . . (115,697) (35,798)
NET DECREASE IN CASH AND TEMPORARY
CASH INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,999) (2,939)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,054 26,210
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,055 $ 23,271
<FN>
See Notes to Consolidated Financial Statements.
</FN>
<PAGE>
VALERO ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
Basis of Presentation
The consolidated financial statements included herein have
been prepared by Valero Energy Corporation ("Energy") and
subsidiaries (collectively referred to as the "Company"), without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. However, all adjustments have been made to
the accompanying financial statements which are, in the opinion of
the Company's management, necessary for a fair presentation of the
Company's results of operations for the periods covered. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented herein
not misleading. These consolidated financial statements should be
read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on
Form 10-K. Certain prior period amounts have been reclassified for
comparative purposes.
Note 2
Inventories
Refinery feedstocks and refined products and blendstocks are
carried at the lower of cost or market with cost determined
primarily under the last-in, first-out ("LIFO") method of inventory
pricing. The excess of the replacement cost of such inventories
over their LIFO values was approximately $34 million at
September 30, 1996. Natural gas in underground storage, natural
gas liquids ("NGLs") and materials and supplies are carried
principally at weighted average cost not in excess of market.
Inventories as of September 30, 1996 and December 31, 1995 were as
follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Refinery feedstocks . . . . . . . . . . . . $ 64,349 $ 48,295
Refined products and blendstocks. . . . . . 71,970 41,967
Natural gas in underground storage. . . . . 39,563 31,156
NGLs . . . . . . . . . . . . . . . . . . . 4,273 3,280
Materials and supplies. . . . . . . . . . . 23,278 16,124
$203,433 $140,822
</TABLE>
Note 3
Statements of Cash Flows
In order to determine net cash provided by operating
activities, net income has been adjusted by, among other things,
changes in current assets and current liabilities, excluding
changes in cash and temporary cash investments, cash held in debt
service escrow for principal, current deferred income tax assets,
short-term debt and current maturities of long-term debt. The
changes in the Company's current assets and current liabilities,
excluding the items noted above, are shown in the following table
as an (increase) decrease in current assets and an increase
(decrease) in current liabilities. The Company's temporary cash
investments are highly liquid, low-risk debt instruments which have
a maturity of three months or less when acquired. (Dollars in
thousands.)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash held in debt service escrow for interest . . . . $ 11,984 $ 12,673
Receivables, net. . . . . . . . . . . . . . . . . . . 42,638 5,171
Inventories . . . . . . . . . . . . . . . . . . . . . (62,611) 12,874
Prepaid expenses and other. . . . . . . . . . . . . . 13,330 6,467
Accounts payable. . . . . . . . . . . . . . . . . . . 64,383 (16,867)
Accrued interest. . . . . . . . . . . . . . . . . . . (19,891) (7,986)
Other accrued expenses. . . . . . . . . . . . . . . . (2,338) (5,878)
Income taxes payable. . . . . . . . . . . . . . . . . - 13,383
Total. . . . . . . . . . . . . . . . . . . . . . . $ 47,495 $ 19,837
</TABLE>
The following table provides information related to cash
interest and income taxes paid by the Company for the periods
indicated (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Interest (net of amount capitalized of $3,062 (1996)
and $4,278 (1995)) . . . . . . . . . . . . . . . . . . $90,898 $80,401
Income taxes. . . . . . . . . . . . . . . . . . . . . . . 10,746 9,813
</TABLE>
Note 4
Litigation and Contingencies
The Company and Southern Union Company ("Southern Union") are
defendants in a lawsuit brought by the City of Edinburg, Texas (the
"City") regarding certain ordinances of the City that granted
franchises to Rio Grande Valley Gas Company ("RGV") and its
predecessors allowing RGV to sell and distribute natural gas within
the City. RGV was formerly owned by Energy. On September 30,
1993, Energy sold the common stock of RGV to Southern Union. The
City alleges that the defendants have used RGV's facilities to sell
or transport natural gas in Edinburg in violation of the ordinances
and franchises granted by the City, and that RGV (now Southern
Union) has not fully paid all franchise fees due the City. The
City also alleges that the defendants have used the public property
of the City without compensating the City for such use, and alleges
conspiracy and alter ego claims involving all defendants. The City
seeks alleged actual damages of $50 million and unspecified
punitive damages related to amounts allegedly due under the RGV
franchise, City ordinances and state law. In addition, the City of
Pharr, Texas, filed an intervention seeking certification of a
class, with itself as class representative, consisting of all
cities served by franchise by Southern Union. On June 24, 1996,
the court certified the class, approved a class notice, and severed
the claims of the City of Pharr and the class from the original
City of Edinburg lawsuit. The defendants have appealed the class
certification ruling. The court of appeals granted the defendants'
request for disqualification of the trial judge, and a new trial
judge has been assigned to the case. On July 11, 1996, Southern
Union filed a cross-claim against Energy, alleging, among other
things, that Southern Union is entitled to indemnification under
provisions of the purchase agreement between Energy and Southern
Union. Southern Union also asserts claims related to a 1985
settlement among Energy, RGV and the Railroad Commission of Texas
regarding certain pricing terms. Southern Union's claims include,
among other things, damages for indemnification, breach of
contract, negligent misrepresentation and fraud.
Energy and certain of its subsidiaries have been sued by Teco
Pipeline Company ("Teco") regarding the operation of the Company's
340-mile West Texas pipeline. In 1985, a subsidiary of Energy sold
a 50% undivided interest in the pipeline and entered into a joint
venture through an ownership agreement and an operating agreement,
each dated February 28, 1985, with the purchaser of the interest.
In 1988, Teco succeeded to that purchaser's 50% interest. A
subsidiary of Energy has at all times been the operator of the
pipeline. Notwithstanding the written ownership and operating
agreements, the plaintiff alleges that a separate, unwritten
partnership agreement exists, and that the defendants have
exercised improper dominion over such alleged partnership's
affairs. The plaintiff also alleges that the defendants acted in
bad faith by negatively affecting the economics of the joint
venture in order to provide financial advantages to facilities or
entities owned by the defendants and by allegedly usurping for the
defendants' own benefit certain opportunities available to the
joint venture. The plaintiff asserts causes of action for breach
of fiduciary duty, fraud, tortious interference with business
relationships, and other claims, and seeks unquantified actual and
punitive damages. The Company's motion to compel arbitration was
denied. The Company has also filed a counterclaim alleging that
the plaintiff breached its own obligations to the joint venture and
jeopardized the economic and operational viability of the pipeline
by its actions. The Company is seeking unquantified actual and
punitive damages.
Approximately 15 lawsuits have been filed against various
pipeline owners and other parties, including the Company, arising
from the rupture of several pipelines and fire as a result of
severe flooding of the San Jacinto River in Harris County, Texas on
October 20, 1994. The Company is a defendant in 10 of these
lawsuits. The plaintiffs are property owners in surrounding areas
who allege that the defendant pipeline owners were negligent and
grossly negligent in failing to bury the pipelines at a proper
depth to avoid rupture or explosion and in allowing the pipelines
to leak chemicals and hydrocarbons into the flooded area. The
plaintiffs assert claims for property damage, costs for medical
monitoring, personal injury and nuisance, and seek an unspecified
amount of actual and punitive damages.
Energy and certain of its subsidiaries are defendants in a
lawsuit originally filed in January 1993. The lawsuit is based
upon construction work performed by the plaintiff at a gas
processing plant in 1991 and 1992. The plaintiff alleges that it
performed work for the defendants for which it was not compensated.
The plaintiff asserts claims for fraud, quantum meruit, and
numerous other tort claims. The plaintiff alleges actual damages
of approximately $1.5 million, plus retainage, interest and
attorneys fees, and punitive damages of at least four times the
amount of actual damages. In July 1996, the court granted the
defendants' motion to transfer the case from Duval County to Webb
County. A new trial date has not been set.
On April 15, 1994, certain trusts named certain subsidiaries
of the Company as additional defendants (the "Valero Defendants")
to a lawsuit filed in 1989 against a supplier with whom the Valero
Defendants have contractual relationships under gas purchase
contracts. In order to resolve certain potential disputes with
respect to the gas purchase contracts, the Valero Defendants agreed
to bear a substantial portion of any settlement or any
nonappealable final judgment rendered against the supplier. In
January 1993, the District Court ruled in favor of the trusts'
motion for summary judgment against the supplier. Damages, if any,
were not determined. The trusts seek $50 million in damages from
the Valero Defendants as a result of the Valero Defendants' alleged
interference between the trusts and the supplier, plus punitive
damages in an amount in excess of treble the amount of actual
damages proven at trial. The trusts also seek approximately $56
million in take-or-pay damages from the supplier and $70 million as
damages for the supplier's failure to take the trusts' gas ratably.
The Company believes that the claims brought by the trusts have
been significantly overstated, and that the supplier and the Valero
Defendants have a number of meritorious defenses to the claims.
A federal securities fraud lawsuit was filed against Energy
and certain of its subsidiaries by a former owner of approximately
19,500 units of limited partnership interests of Valero Natural Gas
Partners, L.P. ("VNGP, L.P."). The plaintiff alleges that the
proxy statement used in connection with the solicitation of votes
for approval of a merger (the "Merger") of the Company and VNGP,
L.P. contained fraudulent misrepresentations. The plaintiff also
alleges breach of fiduciary duty in connection with the merger
transaction. The subject matter of this lawsuit was the subject
matter of a prior Delaware class action lawsuit which was settled
prior to consummation of the Merger. The Company believes that the
plaintiff's claims have been settled and released by the prior
class action settlement. On July 26, 1996, the magistrate assigned
to the case issued a memorandum to the district court recommending
approval of the Company's motion for summary judgment. If adopted
by the district court, the plaintiff's claims against the Company
will be dismissed. The lawsuit is scheduled for trial on
December 2, 1996.
The Company owns a 20% general partner interest in Javelina
Company ("Javelina"), a general partnership that owns a refinery
off-gas processing plant in Corpus Christi. Javelina has been
named as a defendant in ten lawsuits filed since 1992 in state
district courts in Nueces County and Duval County, Texas. Six of
the suits include as defendants other companies that own refineries
or other industrial facilities in Nueces County. These suits were
brought by a number of plaintiffs who reside in neighborhoods near
the facilities. The plaintiffs claim injuries relating to an
alleged exposure to toxic chemicals, and generally claim that the
defendants were negligent, grossly negligent and committed
trespass. The plaintiffs claim personal injury and property
damages resulting from soil and ground water contamination and air
pollution allegedly caused by the operations of the defendants.
The plaintiffs seek an unspecified amount of actual and punitive
damages. The remaining four suits were brought by plaintiffs who
either live or have businesses near the Javelina plant. The
plaintiffs in these suits allege claims similar to those described
above and seek unspecified actual and punitive damages.
The Company is also a party to additional claims and legal
proceedings arising in the ordinary course of business. The
Company believes it is unlikely that the final outcome of any of
the claims or proceedings to which the Company is a party,
including those described above, would have a material adverse
effect on the Company's financial statements; however, due to the
inherent uncertainty of litigation, the range of possible loss, if
any, cannot be estimated with a reasonable degree of precision and
there can be no assurance that the resolution of any particular
claim or proceeding would not have an adverse effect on the
Company's results of operations for the interim period in which
such resolution occurred.
<PAGE>
VALERO ENERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following are the Company's financial and operating
highlights for the three months ended and nine months ended
September 30, 1996 and 1995. The 1995 amounts of operating
revenues and operating income (loss) by segment and certain natural
gas/natural gas liquids operating statistics have been restated to
conform to the 1996 presentation. The amounts in the following
table are in thousands of dollars, unless otherwise noted:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Refining and marketing . . . . . . . . . . . . . . . . . $ 678,045 $498,492 $1,927,546 $1,386,102
Natural gas/natural gas liquids. . . . . . . . . . . . . 504,359 338,021 1,605,342 995,386
Intersegment eliminations. . . . . . . . . . . . . . . . (58,877) (32,843) (146,526) (111,461)
Total. . . . . . . . . . . . . . . . . . . . . . . . . $1,123,527 $803,670 $3,386,362 $2,270,027
OPERATING INCOME (LOSS):
Refining and marketing . . . . . . . . . . . . . . . . . $ 27,336 $ 47,688 $ 83,925 $ 108,591
Natural gas/natural gas liquids. . . . . . . . . . . . . 21,811 19,956 91,989 59,886
Corporate general and administrative expenses. . . . . . (9,122) (9,863) (29,218) (27,076)
Total. . . . . . . . . . . . . . . . . . . . . . . . $ 40,025 $ 57,781 $ 146,696 $ 141,401
Equity in earnings of joint ventures . . . . . . . . . . . $ 1,350 $ 1,272 $ 2,171 $ 4,671
Other income, net. . . . . . . . . . . . . . . . . . . . . $ 2,030 $ 550 $ 5,322 $ 2,160
Interest and debt expense, net . . . . . . . . . . . . . . $ 22,559 $ 24,173 $ 71,488 $ 73,921
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 13,146 $ 22,630 $ 53,901 $ 46,911
Net income applicable to common stock. . . . . . . . . . . $ 10,302 $ 19,663 $ 45,375 $ 38,016
Earnings per share of common stock . . . . . . . . . . . . $ .23 $ .45 $ 1.03 $ .87
OPERATING STATISTICS:
Refining and marketing:
Throughput volumes (Mbbls per day) . . . . . . . . . . 169 168 169 157
Average throughput margin per barrel . . . . . . . . . $ 5.10 $ 6.64 $ 5.36 $ 6.28
Natural gas/natural gas liquids:
Gas volumes (MMcf per day):
Sales. . . . . . . . . . . . . . . . . . . . . . . . 1,521 1,405 1,630 1,400
Transportation . . . . . . . . . . . . . . . . . . . 1,894 1,521 1,745 1,430
Total gas volumes. . . . . . . . . . . . . . . . . 3,415 2,926 3,375 2,830
Average gas sales margin per Mcf . . . . . . . . . . . $ .053 $ .158 $ .141 $ .156
Average gas transportation fee per Mcf . . . . . . . . $ .090 $ .089 $ .090 $ .094
NGL plant production:
Production volumes (Mbbls per day) . . . . . . . . . 81.0 76.7 79.8 81.6
Average NGL market price per gallon. . . . . . . . . $ .349 $ .244 $ .320 $ .258
Average gas cost per Mcf . . . . . . . . . . . . . . $ 1.92 $ 1.28 $ 1.73 $ 1.35
Average NGL margin per gallon. . . . . . . . . . . . $ .113 $ .077 $ .104 $ .081
</TABLE>
<PAGE>
Consolidated Results
The Company reported net income of $13.1 million, or $.23 per
share, for the third quarter of 1996 compared to $22.6 million, or
$.45 per share, for the same period in 1995. For the first nine
months of 1996, net income was $53.9 million, or $1.03 per share,
compared to $46.9 million, or $.87 per share, for the first nine
months of 1995. Net income and earnings per share decreased for
the quarter due primarily to a substantial decrease in operating
income from the Company's refining and marketing operations.
During the year-to-date period, net income and earnings per share
increased due primarily to a significant increase in natural
gas/natural gas liquids operating income, the majority of which
occurred in the 1996 first quarter, partially offset by a decrease
in refining and marketing operating income in the 1996 second and
third quarters.
Operating revenues increased $319.8 million, or 40%, to
$1.1 billion, and $1.1 billion, or 49%, to $3.4 billion, during the
third quarter and first nine months of 1996, respectively, compared
to the same periods in 1995 due to increases in operating revenues
from both the Company's refining and marketing operations and
natural gas/natural gas liquids operations. Operating income
decreased $17.8 million, or 31%, to $40 million during the third
quarter of 1996 compared to the same period in 1995 due to the
substantial decrease in operating income from refining and
marketing operations noted above, partially offset by an increase
in operating income from natural gas/natural gas liquids operations
and a slight decrease in corporate expenses. Operating income
increased $5.3 million, however, during the first nine months of
1996 compared to the same period in 1995, from $141.4 million to
$146.7 million, as an increase in natural gas/natural gas liquids
operating income more than offset a decrease in refining and
marketing operating income and an increase in corporate expenses
resulting primarily from higher employee-related costs. Changes in
operating revenues and operating income by business segment are
explained below under "Segment Results."
Equity in earnings of joint ventures decreased $2.5 million
during the first nine months of 1996 compared to the same period in
1995 due to a decrease in the Company's equity in earnings of
Javelina resulting primarily from lower petrochemical product
prices and higher feedstock costs. Other income, net, increased
$3.1 million in the year-to-date period resulting primarily from
income recognized in 1996 on a one-time basis in connection with a
minor investment in a natural gas development project. Net
interest and debt expense decreased $2.4 million to $71.5 million
during the first nine months of 1996 compared to the same period in
1995 due primarily to a decrease in bank borrowings and paydowns of
certain outstanding nonbank debt, partially offset by the issuance
of medium-term notes in the first half of 1995. Income tax expense
increased $1.4 million in the first nine months of 1996 compared to
the same period in 1995 due primarily to higher pre-tax income
partially offset by the recognition in the 1996 period of certain
income tax credits related to the natural gas development project
noted above.
Segment Results
Refining and Marketing
Operating revenues from the Company's refining and marketing
operations increased $179.5 million, or 36%, to $678 million during
the third quarter of 1996 compared to the same period in 1995 due
primarily to a 22% increase in the average sales price per barrel,
and to an increase in sales volumes resulting from increased
trading and rack marketing activities. The average sales price per
barrel increased due primarily to higher gasoline prices which
followed increasing crude oil prices. Average daily throughput
volumes were flat during the third quarter of 1996 compared to the
same period in 1995 as increases resulting from various unit
improvements and enhancements made during 1995 were offset
primarily by the effects of scheduled maintenance turnarounds on
the hydrodesulfurization ("HDS") and MTBE units completed during
the third quarter of 1996. During the MTBE turnaround, the
capacity of the MTBE plant was increased by 1,500 barrels per day
("BPD") to a total of 17,000 BPD.
Operating income from the Company's refining and marketing
operations decreased $20.4 million, or 43%, to $27.3 million during
the third quarter of 1996 compared to the same period in 1995 due
primarily to a 23% decrease in total throughput margins. Total
throughput margins were lower due to a decrease in margins between
conventional gasoline and crude oil, the effect of the two third
quarter 1996 maintenance turnarounds noted above, and lower
oxygenate margins resulting from higher feedstock costs. These
decreases in throughput margins were partially offset by an
improvement in residual oil ("resid") discounts resulting from the
above noted increase in crude oil prices.
Operating revenues from the Company's refining and marketing
operations increased $541.4 million, or 39%, to $1.9 billion during
the first nine months of 1996 compared to the same period in 1995
due primarily to an increase in trading and rack marketing sales
volumes, an 8% increase in throughput volumes, and a 9% increase in
the average sales price per barrel. Operating income decreased
$24.7 million, or 23%, to $83.9 million during the first nine
months of 1996 compared to the first nine months of 1995 due
primarily to a decrease in total throughput margins (including the
adverse effect of two second quarter 1996 power outages at the
Refinery), and an increase in operating expenses resulting from
costs associated with the methanol plant which was placed in
service in late August 1995.
Natural Gas/Natural Gas Liquids
Operating revenues from the Company's natural gas/natural gas
liquids operations increased $166.4 million, or 49%, to
$504.4 million during the third quarter of 1996 compared to the
same period in 1995. This was due primarily to a 34% increase in
average natural gas sales prices, a 43% increase in average NGL
market prices, and increases in daily natural gas sales volumes,
primarily off-system sales, and NGL sales volumes. Natural gas
sales prices and volumes were higher due to increased demand for
natural gas during the 1996 period to replenish low industry-wide
natural gas storage inventories. NGL market prices increased as a
result of continued firm petrochemical and refining demand,
historically low NGL inventory levels and strong crude oil and
refined product prices. NGL sales volumes were higher due to
increased NGL marketing activities and a 6% increase in NGL
production volumes.
Operating income from the Company's natural gas/natural gas
liquids operations increased $1.8 million, or 9%, to $21.8 million
during the third quarter of 1996 compared to the same period in
1995 as an increase in margins on NGL production and higher natural
gas transportation revenues more than offset significantly lower
natural gas sales margins. Total margins on NGL production were
higher due to the substantial increase in average NGL market prices
and increase in NGL production volumes noted above, partially
offset by an increase in natural gas fuel and shrinkage costs net
of benefits from price risk management activities which reduced
such costs to below-market levels. NGL production volumes were
higher due to production increases at various plants resulting from
the completion in 1995 of certain operational improvements and
production enhancements which more than offset the sale of the
Company's two West Texas processing plants in August 1995. Natural
gas transportation revenues were higher due primarily to a 25%
increase in transportation volumes resulting from increased
marketing activities. Total natural gas sales margins were lower
due primarily to price volatility resulting from unusually soft
weather-related demand in the Company's core markets during the
latter half of the current quarter, and to decreased results from
price risk management activities.
Operating revenues from the Company's natural gas/natural gas
liquids operations increased $609.9 million, or 61%, to
$1.6 billion during the first nine months of 1996 compared to the
same period in 1995 due primarily to a 43% increase in average
natural gas sales prices and a 16% increase in daily natural gas
sales volumes resulting from the factors noted above and the
extreme cold winter weather during the 1996 first quarter.
Operating revenues also increased due to a 24% increase in average
NGL market prices and increased NGL sales volumes from marketing
activities. Operating income from the Company's natural
gas/natural gas liquids operations increased $32.1 million, or 54%,
to $92 million during the first nine months of 1996 compared to the
same period in 1995 due primarily to higher margins on NGL
production and to a lesser extent to increases in natural gas
transportation revenues and total gas sales margins. Total margins
on NGL production were higher due to a 24% increase in the average
NGL market price for the reasons described above and to an
approximate $15 million increase in benefits from price risk
management activities which limited the increase in natural gas
fuel and shrinkage costs. Natural gas transportation revenues
increased due primarily to a 22% increase in transportation volumes
as explained above. Total gas sales margins increased slightly as
the significant margin increase during the first quarter resulting
from the extreme cold winter weather during the 1996 period and
increased benefits from price risk management activities was offset
to a large extent by the third quarter decrease in margins
described above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by the Company's operating activities
increased $52.3 million during the first nine months of 1996
compared to the same period in 1995 due primarily to the increase
in income described above under "Results of Operations" and to the
changes in current assets and current liabilities detailed in Note
3 of Notes to Consolidated Financial Statements. During the 1996
period, the Company utilized the cash provided by its operating
activities, a portion of its existing cash balances, proceeds from
dispositions of various nonessential properties, and proceeds from
issuances of common stock related to the Company's employee benefit
plans to fund capital expenditures and deferred turnaround and
catalyst costs, reduce bank debt, repay principal on certain
outstanding nonbank debt, and pay common and preferred stock
dividends.
Energy currently maintains an unsecured $300 million
revolving bank credit and letter of credit facility. As of
September 30, 1996, Energy had approximately $270 million available
under this committed bank credit facility for additional borrowings
and letters of credit. Energy also has $130 million of uncommitted
short-term bank credit lines and $170 million of uncommitted bank
letter of credit facilities, of which $67 million and $130 million,
respectively, were available as of September 30, 1996 for
additional borrowings and letters of credit. The Company was in
compliance with all covenants contained in its various debt
facilities as of September 30, 1996.
During the first nine months of 1996, the Company expended
approximately $114 million for capital investments, including
capital expenditures and deferred turnaround and catalyst costs,
$65 million of which related to refining and marketing operations
while $45 million related to natural gas/natural gas liquids
operations. For total year 1996, the Company currently expects to
incur approximately $180 million for capital expenditures and
deferred turnaround and catalyst costs. Such amount includes
approximately $10 million for a fourth quarter 1996 turnaround and
catalyst change on the Company's hydrocracker and reformer units
previously scheduled for the first quarter of 1997. The Company
has also entered into an operating lease commitment in connection
with a xylene fractionation facility being constructed at the
Refinery. The lease term is for a period of 33 months beginning
from the date the facility is completed, currently estimated to be
late 1996.
The Company currently owns a 35% interest in Productos
Ecologicos, S.A. de C.V. ("Proesa"), a Mexican corporation which is
involved in a project (the "Project") to design, construct and
operate a plant in Mexico to produce MTBE. In January 1995, the
Company suspended further investment in the Project pending the
resolution of certain key issues. Since that time, the Project
participants have engaged in negotiations among themselves and with
potential additional participants to restructure the participants'
ownership interests in Proesa and arrange funding for the Project.
Proesa and the Project participants have also engaged in
discussions with Petroleos Mexicanos, S.A. ("Pemex"), the Mexican
state-owned oil company, to renegotiate the purchase and sales
agreements between Proesa and Pemex. To date, little progress has
been made in resolving financial and ownership structure issues, or
in acquiring commitments from potential Project participants, and
there can be no assurance that the Project will continue. At
September 30, 1996, the Company had a total investment in the
Project of approximately $16.5 million. If the Project is
terminated, there can be no assurance that the Company's investment
in the Project could be recovered. Proesa also has incurred
additional obligations totaling approximately $11 million which
have not been funded and has furnished a surety bond in connection
with the plant's first year of operations under the existing MTBE
sales agreement between Proesa and Pemex. Such bond is subject to
being called upon by Pemex under certain conditions and, based on
the exchange rate at October 31, 1996, has an insurable value of
approximately $5.2 million. Proesa has no independent source of
funding. Therefore, in the event of any cash requirements
resulting from the above, Proesa would necessarily request
additional funding from its owners.
The Company has entered into a sublease agreement for unused
space in its corporate headquarters office complex. The sublease
has a primary term of 20 years, with the sublessee having an option
to terminate the lease after 10 years. The sublessee is scheduled
to occupy the premises in phases, with full occupancy currently
expected in 1997.
The Company believes it has sufficient funds from operations,
and to the extent necessary, from the public and private capital
markets and bank markets, to fund its ongoing operating
requirements. The Company expects that it will raise additional
funds from time to time through equity or debt financings; however,
except for borrowings under bank credit agreements or debt
securities that may be issued from time to time under the Company's
$250 million shelf registration statement, the Company has no
specific financing plans as of the date hereof.
The foregoing discussion contains certain estimates,
predictions, projections and other "forward- looking statements"
(within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934) that
involve various risks and uncertainties. While these forward-looking
statements, and any assumptions upon which they are based,
are made in good faith and reflect the Company's current judgment
regarding the direction of its business, actual results will almost
always vary, sometimes materially, from any estimates, predictions,
projections, assumptions, or other future performance suggested
herein. Some important factors (but not necessarily all factors)
that could affect the Company's sales volumes, growth strategies,
future profitability and operating results, or that otherwise could
cause actual results to differ materially from those expressed in
any forward-looking statement include the following: renewal or
satisfactory replacement of the Company's resid feedstock
arrangements described in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 ("1995 Form 10-K") as well as
market, political or other forces generally affecting the pricing
and availability of resid and other refinery feedstocks, refined
products, natural gas supplies or natural gas liquids; accidents or
other unscheduled shutdowns affecting the Company's, its suppliers'
or its customers' pipelines, plants, machinery or equipment; excess
industry capacity, particularly in the natural gas pipeline
industry; competition from products and services offered by other
energy enterprises; changes in the cost or availability of third-party
vessels, pipelines and other means of transporting feedstocks
and products; state and federal environmental, economic, safety and
other policies and regulations, any changes therein, and any legal
or regulatory delays or other factors beyond the Company's control;
execution of planned capital projects; weather conditions affecting
the Company's operations or the areas in which the Company's
products are marketed; adverse rulings, judgments, or settlements
in litigation or other legal matters, including unexpected
environmental remediation costs in excess of any reserves; and
adverse changes in the credit ratings assigned to the Company's
debt securities and trade credit. Certain of these risk factors
are more fully discussed in the 1995 Form 10-K. The Company
undertakes no obligation to publicly release the result of any
revisions to any such forward-looking statements that may be made
to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
11.1 Computation of Earnings Per Share.
12.1 Computation of Ratio of Earnings to Fixed Charges.
27.1* Financial Data Schedule (reporting financial
information as of and for the nine months ended
September 30, 1996).
27.2* Restated Financial Data Schedule (reporting
financial information as of and for the nine months
ended September 30, 1995).
__________
* The Financial Data Schedule and Restated Financial Data
Schedule shall not be deemed "filed" for purposes of
Section 11 of the Securities Act of 1933 or Section 18 of
the Securities Exchange Act of 1934, and are included as
exhibits only to the electronic filing of this Form 10-Q
in accordance with Item 601(c) of Regulation S-K and
Section 401 of Regulation S-T.
(b) Reports on Form 8-K.
(i) The Company did not file a Current Report on Form 8-K
during the quarter ended September 30, 1996.
Pursuant to subparagraph 601(b)(4)(iii)(A) of Regulation S-K,
the registrant has omitted from the foregoing list of exhibits, and
hereby agrees to furnish to the Commission upon its request, copies
of certain instruments, each relating to long-term debt not
exceeding 10 percent of the total assets of the registrant and its
subsidiaries on a consolidated basis.
<PAGE>
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.
VALERO ENERGY CORPORATION
(Registrant)
By: /s/ Edward C. Benninger
Edward C. Benninger
Executive Vice President and Chief
Financial Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
Date: November 5, 1996
<TABLE>
EXHIBIT 11.1
VALERO ENERGY CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Thousands of Dollars, Except Per Share Amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
COMPUTATION OF EARNINGS PER
SHARE ASSUMING NO DILUTION:
Net income. . . . . . . . . . . . . . . . . . . $ 13,146 $ 22,630 $ 53,901 $ 46,911
Less: Preferred stock dividend requirements. . (2,844) (2,967) (8,526) (8,895)
Net income applicable to common stock . . . . . $ 10,302 $ 19,663 $ 45,375 $ 38,016
Weighted average number of shares of
common stock outstanding. . . . . . . . . . . 43,983,599 43,681,606 43,877,733 43,632,905
Earnings per share assuming no dilution . . . . $ .23 $ .45 $ 1.03 $ .87
COMPUTATION OF EARNINGS PER
SHARE ASSUMING FULL DILUTION:
Net income. . . . . . . . . . . . . . . . . . . $ 13,146 $ 22,630 $ 53,901 $ 46,911
Less: Preferred stock dividend requirements. . (2,844) (2,967) (8,526) (8,895)
Add: Reduction of preferred stock
dividends applicable to the assumed
conversion of Convertible Preferred Stock . . 2,695 2,695 8,086 8,086
Net income applicable to common stock
assuming full dilution . . . . . . . . . . . $ 12,997 $ 22,358 $ 53,461 $ 46,102
Weighted average number of shares of
common stock outstanding. . . . . . . . . . . 43,983,599 43,681,606 43,877,733 43,632,905
Weighted average common stock
equivalents applicable to stock options . . . 229,801 401,255 407,319 371,228
Weighted average shares issuable upon
conversion of Convertible Preferred Stock . . 6,381,798 6,381,798 6,381,798 6,381,798
Weighted average shares used for computation. . 50,595,198 50,464,659 50,666,850 50,385,931
Earnings per share assuming full dilution . . . $ .26<F1> $ .44<F2> $ 1.06<F1> $ .91<F1>
<FN>
<F1>
This calculation is submitted in accordance with paragraph 601(b)(11) of Regulation S-K although it is
contrary to APB Opinion No. 15 because it produces an antidilutive result.
<F2>
This calculation is submitted in accordance with paragraph 601(b)(11) of Regulation S-K although it is
not required by APB Opinion No. 15 because it results in dilution of less than 3%.
</FN>
</TABLE>
<TABLE>
EXHIBIT 12.1
VALERO ENERGY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
<CAPTION>
Nine
Months
Ended Year Ended Year Ended Year Ended Year Ended
September 30, December 31, December 31, 1994 December 31, 1993 December 31,
1996 1995 Pro Forma<F1> Historical Pro Forma<F1> Historical 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pretax income
from continuing
operations. . . . . $ 82,701 $ 95,138 $ 31,289 $ 42,782 $ 76,698 $ 68,224 $131,419 $146,367
Add (Deduct):
Net interest
expense <F4> . . . 71,488 101,222 98,695 76,921 89,413 37,182 30,423 12,540
Amortization of
previously
capitalized
interest . . . . . 4,539 6,820 6,847 6,282 6,300 4,998 4,544 3,457
Interest portion
of rental
expense <F2> . . . 11,135 13,251 8,259 6,695 8,003 4,316 4,214 3,913
Distributions
(less than)/in
excess of equity
in earnings of
VNGP, L.P. <F3>. . - - - 18,968 - (4,970) (1,067) 1,030
Distributions
(less than)
equity in
earnings of
joint
ventures <F4>. . . (2,171) (4,304) (2,437) (2,437) - - - -
Earnings as
defined. . . . . $167,692 $212,127 $142,653 $149,211 $180,414 $109,750 $169,533 $167,307
Net interest
expense <F4>. . . . $ 71,488 $101,222 $ 98,695 $ 76,921 $ 89,413 $ 37,182 $ 30,423 $ 12,540
Capitalized
interest. . . . . . 3,062 4,699 2,558 2,365 14,048 12,335 15,853 25,408
Interest portion
of rental
expense <F2>. . . . 11,135 13,251 8,259 6,695 8,003 4,316 4,214 3,913
Fixed charges
as defined. . . . $ 85,685 $119,172 $109,512 $ 85,981 $111,464 $ 53,833 $ 50,490 $ 41,861
Ratio of earnings
to fixed
charges . . . . . . 1.96x 1.78x 1.30x 1.74x 1.62x 2.04x 3.36x 4.00x
<FN>
<F1>
The pro forma computations reflect the consolidation of VNGP, L.P. and its consolidated subsidiaries ("the
Partnership") with the Company for all of 1994 and 1993.
<F2>
The interest portion of rental expense represents one-third of rents, which is deemed representative of the
interest portion of rental expense.
<F3>
Represents the Company's undistributed equity in earnings or distributions in excess of equity in earnings
of the Partnership for the periods prior to and including May 31, 1994. On May 31, 1994, the Merger of the
Partnership with the Company was consummated and the Partnership became a wholly owned subsidiary of the
Company.
<F4>
The Company has guaranteed its pro rata share of the debt of Javelina Company, an equity method investee in
which the Company holds a 20% interest. The interest expense related to the guaranteed debt is not included
in the computation of the ratio as the Company has not been required to satisfy the guarantee nor does the
Company believe that it is probable that it would be required to do so.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 31,734
<SECURITIES> 0
<RECEIVABLES> 298,105
<ALLOWANCES> 1,554
<INVENTORY> 203,433
<CURRENT-ASSETS> 586,987
<PP&E> 2,769,325
<DEPRECIATION> 687,572
<TOTAL-ASSETS> 2,857,651
<CURRENT-LIABILITIES> 564,996
<BONDS> 878,386
6,900
3,450
<COMMON> 44,024
<OTHER-SE> 1,024,448
<TOTAL-LIABILITY-AND-EQUITY> 2,857,651
<SALES> 3,386,362
<TOTAL-REVENUES> 3,386,362
<CGS> 3,239,666
<TOTAL-COSTS> 3,239,666
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,488
<INCOME-PRETAX> 82,701
<INCOME-TAX> 28,800
<INCOME-CONTINUING> 53,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,901
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 39,699
<SECURITIES> 0
<RECEIVABLES> 228,178
<ALLOWANCES> 1,076
<INVENTORY> 169,215
<CURRENT-ASSETS> 486,479
<PP&E> 2,695,327
<DEPRECIATION> 600,577
<TOTAL-ASSETS> 2,760,758
<CURRENT-LIABILITIES> 393,769
<BONDS> 993,227
<COMMON> 43,717
12,650
3,450
<OTHER-SE> 990,880
<TOTAL-LIABILITY-AND-EQUITY> 2,760,758
<SALES> 2,270,027
<TOTAL-REVENUES> 2,270,027
<CGS> 2,128,626
<TOTAL-COSTS> 2,128,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,921
<INCOME-PRETAX> 74,311
<INCOME-TAX> 27,400
<INCOME-CONTINUING> 46,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,911
<EPS-PRIMARY> .87
<EPS-DILUTED> 0
</TABLE>
