<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-06903
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 17, 1996
$125,000,000
[FINA LOGO] FINA OIL AND CHEMICAL COMPANY
6 7/8% NOTES DUE 2001
------------------------
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED BY
FINA, INC.
------------------------
Interest on the 6 7/8% Notes due 2001 (the "Notes") is payable
semi-annually on January 15 and July 15 of each year, beginning January 15,
1997. The Notes will mature on July 15, 2001. The Notes will not be redeemable
prior to maturity. See "Description of Notes" in this Prospectus Supplement.
The Notes will be unsecured senior obligations of Fina Oil and Chemical
Company ("FOCC" or the "Company"), ranking pari passu with all other existing
and future unsecured and unsubordinated indebtedness of the Company and senior
in right of payment to all subordinated indebtedness of the Company. The Notes
will be unconditionally and irrevocably guaranteed on an unsecured basis by the
Company's parent, FINA, Inc. ("FINA"), which guarantee shall rank pari passu
with all future unsecured and unsubordinated indebtedness of FINA and senior in
right of payment to all subordinated indebtedness of FINA. FINA has no direct
debt outstanding to any third parties. All of the indebtedness reflected in
FINA's consolidated financial statements constitutes indebtedness of its
consolidated subsidiaries, including the Company. The Notes will be effectively
subordinated to any and all existing and certain future secured indebtedness of
the Company and any and all existing and future indebtedness (whether or not
secured) of any subsidiary of the Company.
The Notes will be issued in the form of one or more Global Securities (the
"Global Securities") registered in the name of The Depository Trust Company (the
"Depository") or its nominee. Interests in the Global Securities will be shown
on, and transfers will be effected only through, records maintained by the
Depository and its participants. Except as described herein, Notes in definitive
form will not be issued. See "Description of Notes" in this Prospectus
Supplement. The Notes will trade in the Depository's Same-Day Fund Settlement
System until their maturity, and secondary market trading activity in the Notes
will therefore settle in immediately available funds. All payments of principal
and interest will be made by the Company in immediately available funds.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
====================================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(3)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Per Note..................................... 99.44% 0.55% 98.89%
- ---------------------------------------------------------------------------------------------------
Total........................................ $124,300,000 $687,500 $123,612,500
====================================================================================================
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from July 22, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting" in this Prospectus Supplement.
(3) Before deducting estimated expenses of $317,000 payable by the Company.
------------------------
The Notes are being offered by Chase Securities Inc., Morgan Stanley & Co.
Incorporated and NationsBanc Capital Markets, Inc. (the "Underwriters") subject
to prior sale, when, as and if issued by the Company and delivered to and
accepted by the Underwriters, and subject to certain other conditions. It is
expected that delivery of the Notes will be made in book-entry form through the
facilities of the Depository on or about July 22, 1996.
------------------------
CHASE SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JULY 17, 1996.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
USE OF PROCEEDS
The net proceeds from the offering contemplated hereby will be used by the
Company to repay existing indebtedness that matures in 1997 and bore interest at
the per annum rate of 6.24% at December 31, 1995.
CAPITALIZATION
The following table sets forth the capitalization of FINA and its
consolidated subsidiaries (unaudited) as of March 31, 1996 and as adjusted to
give effect to the issuance of the Notes offered hereby and the application of
the net proceeds as indicated under "Use of Proceeds".
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
FINA, INC.
AND SUBSIDIARIES
-------------------------
AS
ACTUAL ADJUSTED
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt(1) (including current installments):
Notes, offered hereby.............................................. $ -- $ 125,000
Senior notes(2).................................................... 275,000 275,000
Other indebtedness................................................. 255,619 130,619
---------- ----------
Total long-term debt....................................... 530,619 530,619
---------- ----------
Stockholders' Equity:
Preferred stock of $1 par value; authorized 4,000,000 shares; none
issued.......................................................... -- --
Class A common stock of $.50 par value; authorized 38,000,000
shares; issued 29,212,472 shares................................ 14,606 14,606
Class B common stock of $.50 par value; authorized 2,000,000
shares; issued 2,000,000 shares................................. 1,000 1,000
Additional paid-in capital......................................... 450,770 450,770
Retained earnings.................................................. 731,147 731,147
---------- ----------
Total stockholders' equity......................................... 1,197,523 1,197,523
---------- ----------
Total long-term debt and stockholders' equity.............. $1,728,142 $1,728,142
========== ==========
</TABLE>
- ---------------
(1) FINA itself has no outstanding debt to third parties, i.e. subsidiaries of
FINA are the direct obligors on all of the debt reflected in the foregoing
table.
(2) In May 1993, the Company issued an aggregate of $275 million principal
amount of its senior notes in a private placement. See "Description of
Senior Debt Securities" in the accompanying Prospectus.
THE GUARANTOR
FINA was organized in 1956 as American Petrofina, Incorporated and is part
of an international group of companies affiliated with PetroFina S.A., a
publicly-held corporation organized under the laws of the Kingdom of Belgium. In
fiscal 1995, FINA represented approximately 22% and 34% of assets and net income
of PetroFina S.A., respectively.
Through its operating subsidiaries, FINA is engaged in three principal
lines of business: (1) crude oil and natural gas exploration and production; (2)
petroleum products refining, supply and transportation, and marketing; and (3)
chemicals manufacturing and marketing. The chemicals business consists primarily
of petrochemicals and plastics, including polypropylene, polystyrene, styrene
monomer and high density polyethylene. FINA also markets natural gas and
licenses certain chemical processes to others.
Crude oil and natural gas exploration and production, petroleum products
refining, supply and transportation, and marketing are conducted through FOCC.
Natural gas marketing is conducted through Fina Natural Gas Company, a
wholly-owned subsidiary of FINA; the licensing of proprietary processes to
others is conducted through Fina Technology, Inc.; and petrochemical and
plastics manufacturing and marketing are conducted through the Company and
through Cos-Mar Company, a 50% owned joint venture.
S-3
<PAGE> 4
THE COMPANY
FOCC is the primary operating subsidiary of FINA, and operates in three
major business segments: (1) petroleum products refining, supply and
transportation, and marketing; (2) chemical manufacturing and marketing; and (3)
crude oil and natural gas exploration and production.
The Company owns and operates two refineries in Texas. The total raw
materials processed at both refineries averaged 220,000 barrels per day for
1995. The Port Arthur, Texas refinery is located in Jefferson County, Texas and
the Big Spring, Texas refinery is located in Howard County, Texas. The Company
markets gasoline and other refined products under the FINA brand and also
markets some unbranded products. FINA transportation fuel products are primarily
sold through 240 independent businesses and 38 company-owned service stations
which consist of 2,702 branded retail outlets, located in 15 states in the
Southeastern and Southwestern United States. The Company also markets naphtha,
jet fuel, distillates, diesel fuel, heavy oils and asphalt.
The Company's chemicals segment is organized into three business units
along product lines: styrenics, polypropylene and polyethylene.
The Company's styrenics business unit includes a plant located at Carville,
Louisiana which is owned by a 50/50 joint venture with GE Plastics. This plant
is the largest single site styrene production facility in the world. In 1990,
the Company's polystyrene plant located in Carville, Louisiana became the
largest single site polystyrene manufacturing plant in the world.
The Company's polypropylene business unit includes the Company's
polypropylene plant located at La Porte, Texas. The La Porte, Texas plant is the
largest single site polypropylene manufacturing facility in the world. This
business unit also incorporates a propylene splitter at Mont Belvieu, Texas, in
which the Company has a one-third interest.
The Company's polyethylene business unit consists of the Company's high
density polyethylene plant located in Harris County, Texas.
All of the Company's proved oil and gas reserves are located in the United
States. Estimated proved net oil and gas reserves as of December 31, 1995 were
35 million barrels of crude oil and natural gas liquids and 314 billion cubic
feet of natural gas. The Company's major crude oil reserves are located in West
Texas in the Permian Basin and the major gas reserves are located offshore in
the Gulf of Mexico, at Mecom and LaTerre in Louisiana, and in the Texas Rio
Grande Valley.
In addition, the Company owns over 1,071 miles of crude oil gathering and
mainline pipeline and leases 372 miles of product pipeline. The Company also
owns storage terminals and owns and leases rail tank cars which are used in its
distribution systems.
S-4
<PAGE> 5
SUMMARY OF SELECTED FINANCIAL DATA
FINA
The following is a summary of certain selected financial data related to
FINA for the three months ended March 31, 1996 and 1995, and for each of the
years in the five-year period ended December 31, 1995. The data as of and for
each of the years in the five-year period ended December 31, 1995 are derived
from the consolidated financial statements of FINA audited by KPMG Peat Marwick
LLP, independent certified public accountants. The December 31, 1995 and 1994
consolidated balance sheets and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995, as supplemented to include certain
summary financial data concerning FOCC, are included in this Prospectus. See
"Index to Consolidated Financial Statements of FINA, Inc." herein. Such audited
financial statements differ from those incorporated by reference in FINA's
Annual Report on Form 10-K for the year ended December 31, 1995 only to the
extent that the audited financial statements included herein contain such
additional data concerning FOCC. The data as of and for the three months ended
March 31, 1996 and 1995 are derived from the unaudited consolidated financial
statements of FINA included in the Quarterly Report on Form 10-Q of FINA for the
quarter ended March 31, 1996. Such unaudited consolidated financial statements,
as supplemented to include certain summary financial data concerning FOCC, are
included in this Prospectus. See "Index to Consolidated Financial Statements of
FINA, Inc." herein. Such unaudited financial statements differ from those
included in such Quarterly Report on Form 10-Q in that the unaudited financial
statements included herein contain such additional data concerning FOCC. Such
unaudited financial statements reflect all adjustments which in the opinion of
management are necessary for a fair presentation of the results of such interim
periods. The interim results of operations for the three months ended March 31,
1996 are not necessarily indicative of results for the entire year. The
following summary is qualified in its entirety by the financial statements and
the notes thereto included in the Prospectus.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE FISCAL YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND %'S)
INCOME STATEMENT DATA:
Revenues:
Sales................................. $ 965,115 $ 863,188 $3,606,637 $3,421,112 $3,416,223 $3,397,523 $3,336,353
Interest and other income, net........ (2,715) (1,850) (11,111) 15,987 103,605 11,241 2,858
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues.................. 962,400 861,338 3,595,526 3,437,099 3,519,828 3,408,764 3,339,211
Cost of raw materials and products
purchased............................. 724,868 636,774 2,673,521 2,525,139 2,637,843 2,619,541 2,526,811
Operating profit(1)..................... 70,011 65,246 215,023 180,971 47,466 67,929 117,512
Depreciation, depletion, amortization
and lease impairment(2)............... 39,683 38,445 213,964 185,961 198,341 194,804 190,947
Interest expense........................ 9,738 11,958 42,834 44,601 54,956 59,060 66,807
Earnings before income taxes and
cumulative effect of accounting
change................................ 57,558 51,438 161,078 152,357 96,115 20,110 53,563
Income taxes............................ 19,536 17,948 56,653 50,316 25,762 (4,028) 11,555
Earnings before cumulative effect of
accounting change..................... 38,022 33,490 104,425 102,041 70,353 24,138 42,008
Cumulative effect of accounting
change(3)............................. -- -- -- -- -- (34,320) --
Net earnings (loss)..................... 38,022 33,490 104,425 102,041 70,353 (10,182) 42,008
Net earnings prior to the adoption of
SFAS 121.............................. -- -- 142,598 -- -- -- --
Earnings per common share(4):
Earnings before cumulative effect of
accounting change................... $ 1.22 $ 1.07 $ 3.35 $ 3.27 $ 2.26 $ 0.77 $ 1.35
Cumulative effect of accounting
change(3)........................... -- -- -- -- -- (1.10) --
Net earnings (loss)................... 1.22 1.07 3.35 3.27 2.26 (0.33) 1.35
Net earnings prior to the adoption of
SFAS 121............................ -- -- 4.57 -- -- -- --
Ratio of earnings to fixed charges(5)... 5.1 4.2 3.5 3.7 2.3 1.2 1.5
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................ $2,582,921 $2,518,488 $2,487,718 $2,493,862 $2,511,353 $2,924,475 $2,916,341
Long-term debt and lease obligations,
excluding current installments........ 494,899 528,035 498,446 532,148 766,476 950,960 911,521
Total debt obligations.................. 554,619 651,118 553,920 650,162 810,732 1,214,701 1,112,575
Stockholders' equity.................... 1,197,523 1,162,716 1,178,057 1,144,807 1,098,827 1,076,966 1,135,923
Total debt-to-total capitalization(6)... 31.7% 35.9% 32.0% 36.2% 42.5% 53.0% 49.5%
OTHER FINANCIAL DATA:
Average shares outstanding(4)........... 31,210 31,190 31,198 31,188 31,180 31,126 31,059
Cash dividends per share(4)............. $ 0.60 $ 0.50 $ 2.30 $ 1.80 $ 1.60 $ 1.60 $ 1.60
Capital expenditures.................... $ 38,991 $ 22,398 $ 218,436 $ 136,381 $ 125,472 $ 211,442 $ 296,590
</TABLE>
- ---------------
(1) Operating profit is defined as sales and other operating revenues less cost
of raw materials and products purchased; direct operating expenses, selling,
general and administrative expenses; taxes other than on income, dry holes
and abandonments; depreciation, depletion, amortization and lease
impairments.
(2) Fiscal year 1995 depreciation, depletion, amortization and lease impairment
includes $58,723,000 for adoption of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets to Be
Disposed Of" ("SFAS 121").
(3) Cumulative effect to January 1, 1992 of change in accounting for
postretirement benefits other than pensions.
(4) Adjusted for effects of May 1995 stock split.
(5) Earnings consist of consolidated income before income taxes and fixed
charges. Fixed charges consist of interest on outstanding debt and one-third
of net rentals (representing the portion of such rentals estimated to be
attributable to interest).
(6) Capitalization consists of total debt obligations and stockholders' equity.
S-5
<PAGE> 6
SUMMARY OF FINA OPERATING DATA
The following is a summary of certain operating data related to FINA for
each of the years in the five-year period ended December 31, 1995.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Crude oil, condensate, and natural gas liquids produced (in
thousands of net barrels)...................................... 3,749 4,556 5,905 7,164 7,681
Natural gas produced (in millions of cubic feet)................. 52,119 52,864 67,924 75,589 74,359
Natural gas sold (in millions of cubic feet)..................... 190,926 259,515 204,449 178,712 131,978
Total refining throughput (barrels per day)...................... 220,000 215,000 198,000 187,000 175,000
Major petrochemicals and plastics sold (millions of pounds)...... 3,000 3,200 3,000 2,700 2,500
Company-branded service stations................................. 2,702 2,607 2,675 2,644 2,919
Undeveloped leasehold acreage (net).............................. 209,167 189,723 203,734 257,836 311,382
Fee, mineral, and royalty acreage (net).......................... 1,035,922 1,036,342 1,045,108 1,056,963 1,052,984
Employees (period end)........................................... 2,693 2,770 3,224 3,369 3,665
</TABLE>
THE COMPANY
The following is a summary of certain selected financial data related to
the Company for the three months ended March 31, 1996 and 1995 and for each of
the years in the five-year period ended December 31, 1995.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE FISCAL YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND %'S)
INCOME STATEMENT DATA:
Revenues:
Sales................................. $ 857,808 $ 806,157 $3,363,505 $3,013,957 $3,099,097 $3,176,250 $3,219,002
Interest and other income, net........ (2,681) (1,848) (11,616) 13,930 99,787 864 1,609
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues.................. 855,127 804,309 3,351,889 3,027,887 3,198,884 3,177,114 3,220,611
Cost of raw materials and products
purchased............................. 633,791 582,761 2,441,862 2,134,075 2,329,228 2,405,303 2,425,363
Operating profit(1)..................... 53,480 64,204 207,358 176,539 55,344 76,008 119,028
Depreciation, depletion, amortization
and lease impairment(2)............... 39,044 37,689 210,927 182,952 190,985 184,017 181,754
Interest expense........................ 9,744 11,972 42,918 44,650 54,984 59,054 66,736
Earnings before income taxes and
cumulative effect of accounting
change................................ 41,055 50,384 152,824 145,819 100,147 17,818 53,901
Income taxes............................ 13,935 17,580 53,750 48,157 26,843 (3,569) 11,628
Earnings before cumulative effect of
accounting change..................... 27,120 32,804 99,074 97,662 73,304 21,387 42,273
Cumulative effect of accounting
change(3)............................. -- -- -- -- -- (34,320) --
Net earnings (loss)..................... 27,120 32,804 99,074 97,662 73,304 (12,933) 42,273
Net earnings prior to the adoption of
SFAS 121.............................. -- -- 137,247 -- -- -- --
Ratio of earnings to fixed charges(4)... 3.9 4.1 3.4 3.6 2.4 1.2 1.5
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................ $2,500,150 $2,450,977 $2,400,928 $2,408,424 $2,408,484 $2,804,674 $2,746,386
Long-term debt and lease obligations,
excluding current installments........ 494,899 528,035 498,446 532,148 766,476 950,960 911,521
Total debt obligations.................. 554,619 651,118 553,920 650,162 810,732 1,214,701 1,112,575
OTHER FINANCIAL DATA:
Capital expenditures.................... $ 38,509 $ 22,101 $ 216,240 $ 132,924 $ 122,011 $ 208,964 $ 292,811
</TABLE>
- ---------------
(1) Operating profit is defined as sales and other operating revenues less cost
of raw materials and products purchased; direct operating expenses, selling,
general and administrative expenses; taxes other than on income, dry holes
and abandonments; depreciation, depletion, amortization and lease
impairments.
(2) Fiscal year 1995 depreciation, depletion, amortization and lease impairment
includes $58,723,000 for adoption of SFAS 121.
(3) Cumulative effect to January 1, 1992 of change in accounting for
postretirement benefits other than pensions.
(4) Earnings consist of consolidated income before income taxes and fixed
charges. Fixed charges consist of interest on outstanding debt and one-third
of net rentals (representing the portion of such rentals estimated to be
attributable to interest).
S-6
<PAGE> 7
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Notes set forth in the
accompanying Prospectus.
GENERAL
The Notes will be issued under an Indenture to be dated as of July 22, 1996
(the "Indenture"), as supplemented by an Indenture Supplement with respect
thereto to be dated as of July 22, 1996 (the "Indenture Supplement"), between
the Company, FINA and Texas Commerce Bank National Association, as trustee (the
"Trustee").
The Notes will be general unsecured obligations of the Company, will mature
on July 15, 2001, and will be limited to an aggregate principal amount of
$125,000,000, although the Indenture provides that additional Senior Debt
Securities may be issued thereunder up to the aggregate principal amount, which
is not limited by the Indenture, authorized from time to time by the Company's
Board of Directors.
The Notes will be unconditionally and irrevocably guaranteed on an
unsecured basis by FINA, which guarantee shall rank pari passu with all future
unsecured and unsubordinated indebtedness of FINA and senior in right of payment
to all subordinated indebtedness of FINA.
Interest on the Notes will be payable semi-annually on January 15 and July
15, commencing January 15, 1997, to holders of record on the preceding January 1
and July 1, respectively, at the per annum rate set forth on the cover page of
this Prospectus Supplement, with respect to interest accrued (based on a 360-day
year of twelve 30-day months) from the preceding interest payment date (or from
July 22, 1996 in the case of the first interest payment) to the current interest
payment date.
The Notes are not redeemable prior to maturity and no sinking fund will be
established with respect to the Notes.
Beneficial interests in the Notes will be reflected in denominations of
$1,000 or any integral multiple thereof. The Notes will be represented by one or
more permanent global Notes registered in the name of the Depository or its
nominee, as described below.
The Notes are senior in right of payment to certain other indebtedness of
the Company. See "Description of Senior Debt Securities -- Priority" in the
accompanying Prospectus.
The Notes are not subject to any so-called "event risk" covenants or other
Indenture provisions affording holders of the Notes specific protection in the
event of a highly leveraged transaction involving the Company. See "Description
of Senior Debt Securities -- Events of Default and Notice Thereof" in the
accompanying Prospectus for a description of those events that will constitute
an event of default with respect to the Notes.
As discussed below, payment of principal of, and interest on, Notes
represented by one or more permanent global Notes registered in the name of or
held by the Depository or its nominee will be made in immediately available
funds to the Depository or its nominee, as the case may be, as the registered
owner and holder of such permanent global Note or Notes.
GLOBAL SECURITIES
The Notes will be issued in whole or in part in the form of one or more
Global Securities deposited with, or on behalf of, the Depository and registered
in the name of a nominee of the Depository. Except under the limited
circumstances described in the Prospectus under "Description of Senior Debt
Securities -- Global Securities," owners of beneficial interests in Global
Securities will not be entitled to physical delivery of Notes in certificated
form. Global Securities may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
nominee to a successor of the Depository or a nominee of such successor. A
further description of the Depository's procedures with respect to Global
Securities representing
S-7
<PAGE> 8
the Notes is set forth in the Prospectus under "Description of Senior Debt
Securities -- Global Securities". The Depository has confirmed to the Company,
the Underwriters and the Trustee that it intends to follow such procedures.
The Depository has advised the Company and the Underwriters as follows: The
Depository is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository was created to hold
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of which (and/or their representatives) own the Depository.
Access to the Depository's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may own beneficial interests in Global
Securities held by the Depository only through participants.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") dated July 17, 1996 among the Company, FINA and
the several Underwriters, the Company has agreed to sell to the Underwriters,
and the Underwriters have severally agreed to purchase from the Company, the
following respective principal amounts of the Notes:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
<S> <C>
Chase Securities Inc. ................................................. $ 41,700,000
Morgan Stanley & Co. Incorporated...................................... 41,650,000
NationsBanc Capital Markets, Inc. ..................................... 41,650,000
------------
Total........................................................ $125,000,000
============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any of the Notes are purchased. The Company and FINA have been advised
by the Underwriters that the Underwriters propose to offer the Notes to the
public initially at the respective public offering prices set forth on the cover
page of this Prospectus Supplement, and to certain dealers initially at such
price less a discount not in excess of 0.35% of the principal amount of the
Notes. The Underwriters may allow, and such dealers may reallow, a concession to
certain other dealers not in excess of 0.25% of the principal amount of the
Notes. After the initial offering of the Notes to the public, the Underwriters
may change the public offering price, the discount and the concession.
The Notes comprise new issues of securities with no established trading
market. The Company and FINA have been advised by the Underwriters that the
Underwriters intend to make a market in the Notes, as permitted by applicable
laws and regulations. No assurance can be given, however, that the Underwriters
will make a market in the Notes, or as to the liquidity of, or the trading
market for the Notes.
The Company and FINA have agreed to indemnify the Underwriters against
certain civil liabilities, including liabilities under the Securities Act, and
to contribute to payments which the Underwriters might be required to make in
respect thereof.
Certain of the Underwriters and their respective affiliates engage in
transactions and perform services for the Company and its affiliates in the
ordinary course of business. Texas Commerce Bank National Association, an
affiliate of Chase Securities Inc., is the Trustee under the Indenture and a
lender to FINA and
S-8
<PAGE> 9
the Company. NationsBank of Texas, N.A., an affiliate of NationsBanc Capital
Markets, Inc., is a lender to FINA and the Company.
LEGAL OPINIONS
The validity of the Notes offered hereby and the guarantee by FINA and
certain other legal matters will be passed upon for the Company and FINA by
Cullen M. Godfrey, Senior Vice President, Secretary and General Counsel of FINA.
Certain legal matters in connection with the Notes offered hereby and the
guarantee by FINA will be passed upon for the Company and FINA by Thompson &
Knight, A Professional Corporation, Dallas, Texas, special counsel for the
Company and FINA. Certain legal matters will be passed upon for the Underwriters
by Simpson Thacher & Bartlett (a partnership which includes professional
corporations).
S-9
<PAGE> 10
PROSPECTUS
FINA OIL AND CHEMICAL COMPANY
SENIOR DEBT SECURITIES
---------------------
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED BY
FINA, INC.
---------------------
Fina Oil and Chemical Company (the "Company" or "FOCC") may from time to
time issue and offer up to $150,000,000 (or its equivalent in other currencies)
aggregate principal amount of unsecured senior debt securities (the "Senior Debt
Securities") consisting of bonds, debentures, notes and/or other unsecured
evidences of indebtedness in one or more series. The Senior Debt Securities may
be offered as separate series in amounts, at prices and on terms to be
determined at the time of sale. The Senior Debt Securities will be
unconditionally guaranteed on an unsecured basis by the Company's parent, FINA,
Inc. ("FINA" or the "Guarantor"). The Company is a wholly-owned subsidiary of
FINA. An accompanying Prospectus Supplement will set forth, with regard to the
Senior Debt Securities in respect of which this Prospectus is being delivered,
the terms of the Senior Debt Securities, including, where applicable, the
specific designation, priority, aggregate principal amount, denominations,
currency of issue and payment, maturity, rate (which may be fixed or variable)
and time of payment of any interest, any terms for redemption at the option of
the Company or the holder, any terms for sinking fund payments, any listing on a
securities exchange and the initial public offering price and any other terms in
connection with the offering and sale of such Senior Debt Securities. The Senior
Debt Securities, when issued, will, except under certain circumstances, rank on
a parity with all other unsecured and unsubordinated indebtedness of the
Company.
The Company may sell Senior Debt Securities to or through underwriters, and
also may sell Senior Debt Securities directly to other purchasers or through
agents. An accompanying Prospectus Supplement will set forth the names of any
underwriters or agents involved in the sale of the Senior Debt Securities in
respect of which this Prospectus is being delivered, the principal amounts, if
any, to be purchased by underwriters and the compensation, if any, of such
underwriters or agents.
The Senior Debt Securities will be unsecured obligations of the Company,
ranking pari passu with all other existing and future unsecured and
unsubordinated indebtedness of the Company and senior in right of payment to all
subordinated indebtedness of the Company. The Senior Debt Securities will be
unconditionally and irrevocably guaranteed on an unsecured basis by the
Company's parent, FINA, which guarantee shall rank pari passu with all other
existing and future unsecured and unsubordinated indebtedness of FINA and senior
in right of payment to all subordinated indebtedness of FINA. FINA has no direct
debt outstanding to any third parties. All of the indebtedness reflected in
FINA's consolidated financial statements constitutes indebtedness of its
consolidated subsidiaries, including the Company. As of May 31, 1996, after
giving pro forma effect to the sale of the Senior Debt Securities offered hereby
and the use of proceeds described in the Prospectus Supplement accompanying this
Prospectus, the Company would have had approximately $549 million of total
unsubordinated indebtedness, approximately $17.9 million of which was secured
indebtedness. The Senior Debt Securities will be effectively subordinated to any
and all existing and future secured indebtedness of the Company and any and all
existing and certain future indebtedness (whether or not secured) of any
subsidiary of the Company.
The indenture under which the Senior Debt Securities will be issued does
not contain any limitation on the ability of the Company or FINA to incur
additional debt or on the ability of the Company's or FINA's subsidiaries to
incur additional debt to the Company or FINA or to unaffiliated third parties.
See "Description of Senior Debt Securities" in this Prospectus.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Senior Debt
Securities unless accompanied by a Prospectus Supplement.
---------------------
The date of this Prospectus is July 17, 1996.
<PAGE> 11
AVAILABLE INFORMATION
Fina Oil and Chemical Company, a Delaware corporation (herein and in the
Prospectus Supplement referred to as the "Company" or "FOCC"), and FINA, Inc., a
Delaware corporation (which, together with its subsidiaries consolidated for
financial reporting purposes, is herein and in the Prospectus Supplement
referred to as "FINA" or the "Parent," unless otherwise specified herein or the
context requires otherwise), have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), with
respect to the Senior Debt Securities offered hereby and FINA's guarantee
applicable thereto. This Prospectus and the Prospectus Supplement, which form a
part of the Registration Statement, do not contain all the information set forth
in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
FINA is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Certain current
information concerning such corporation's directors and officers and their
remuneration, options granted to them, the principal holders of securities and
any material interest of such persons in transactions with FINA is disclosed in
a proxy statement distributed to shareholders of FINA and in certain of FINA's
reports filed with the Commission. As long as FINA is subject to such periodic
and information reporting requirements, it will file all reports, proxy
statements and other information with the Commission required thereby. Such
reports, proxy statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and at 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such materials can be obtained by mail at
prescribed rates from the Public Reference Branch of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, such material may also be
inspected and copied at the offices of the American Stock Exchange, Information
Center, 86 Trinity Place, New York, New York 10006.
FOCC is not subject to the informational requirements of the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by FINA with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
1. The Annual Report on Form 10-K of FINA for the fiscal year ended
December 31, 1995, as amended;
2. The Quarterly Report on Form 10-Q of FINA for the quarter ended
March 31, 1996, as amended; and
3. All other documents filed by FINA pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Senior Debt
Securities offered hereby.
FINA's Annual Reports on Form 10-K (subsequent to the Annual Report on Form
10-K for the fiscal year ended December 31, 1995, as amended) will include
summary information concerning FOCC, and FINA's Quarterly Reports on Form 10-Q
(subsequent to the Quarterly Report on Form 10-Q for the quarter ended March 31,
1996, as amended) will also include FOCC summary financial information.
Any statement or other information contained herein or in a document or
information incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus and the
Prospectus Supplement to the extent that a statement or other information
contained herein or in any subsequently filed document which also is, or is
deemed to be, incorporated by reference herein modifies or supersedes such
statement or other information. Any such statement or other information so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or the Prospectus Supplement.
2
<PAGE> 12
The Company will provide without charge to each person to whom this
Prospectus and the Prospectus Supplement have been delivered, upon the request
of any such person, a copy of any and all of the documents which have been or
may be incorporated by reference in this Prospectus and the Prospectus
Supplement, other than exhibits to such information (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Cullen M. Godfrey, Senior Vice President, Secretary and General
Counsel, FINA, Inc., Fina Plaza, Dallas, Texas 75206, telephone (214) 750-2400.
THE COMPANY AND THE GUARANTOR
For a description of the Company and the Guarantor, see "The Company" and
"The Guarantor" in the Prospectus Supplement. The Company was incorporated in
Delaware in 1958 as American Petrofina Company of Texas, and the address of its
principal executive office is Fina Plaza, Dallas, Texas 75206, and its telephone
number is (214) 750-2400.
LEGAL PROCEEDINGS
As of December 31, 1995, neither FINA nor any of its subsidiaries was a
party to, nor was any of their property subject to, any uninsured material
pending legal proceedings or claim which exceeds 10% of FINA's current assets.
For a description of certain proceedings involving environmental claims in
excess of $100,000, please see Item 3, "Legal Proceedings," in FINA's Annual
Report on Form 10-K for the year ended December 31, 1995, as amended. A reserve
has been established for environmental contingencies in accordance with FINA's
practice regarding environmental costs. The level of future expenditures for
environmental matters, including clean-up obligations, is impossible to
determine with any degree of accuracy.
USE OF PROCEEDS
Except as otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Senior Debt Securities will be used for general
corporate purposes, including acquisitions and the reduction of short-term and
long-term borrowings. Any specific allocation of the net proceeds of an offering
of the Senior Debt Securities will be described in the related Prospectus
Supplement. The precise amount and timing of sales of the Senior Debt Securities
will be dependent on the Company's capital requirements, market conditions and
the availability and cost of other funds to the Company.
RATIO OF EARNINGS TO FIXED CHARGES(1)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS
ENDED MARCH
31, FOR THE FISCAL YEARS ENDED DECEMBER 31,
------------- ----------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
FOCC................................... 3.9x 4.1x 3.4x 3.6x 2.4x 1.2x 1.5x
FINA................................... 5.1x 4.2x 3.5x 3.7x 2.3x 1.2x 1.5x
</TABLE>
- ---------------
(1) The ratio of earnings to fixed charges is computed for each of FOCC and FINA
as a whole, including each such entity's consolidated subsidiaries. For
purposes of calculating this ratio, earnings consist of consolidated income
before income taxes and fixed charges. Fixed charges consist of interest on
outstanding debt and one-third of net rentals (representing the portion of
such rentals estimated to be attributable to interest).
3
<PAGE> 13
DESCRIPTION OF SENIOR DEBT SECURITIES
GENERAL
The Senior Debt Securities are to be issued from time to time in one or
more series under an indenture (the "Indenture"), as supplemented from time to
time by an indenture supplement with respect to each series (each, an "Indenture
Supplement"), to be entered into between the Company, as issuer, FINA, as
guarantor, and Texas Commerce Bank National Association, as Trustee.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, all provisions of the Indenture and the related Indenture
Supplement, including the definitions of certain terms contained in the
Indenture. In particular, the term "Company" as used in the Indenture and the
related Indenture Supplement and in this section of the Prospectus means Fina
Oil and Chemical Company without its subsidiaries. Copies of the Indenture and
Indenture Supplement have been or will be filed as exhibits with the Commission.
Wherever particular sections or defined terms of the Indenture are referred to,
such sections or defined terms are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the respective meanings given to
them in the Indenture. Article and section numbers set forth below refer to
provisions of the Indenture unless otherwise noted.
The Senior Debt Securities will be unsecured obligations of the Company.
The Senior Debt Securities offered hereby will be limited to Senior Debt
Securities having an aggregate principal amount not to exceed $150,000,000 or
the equivalent thereof in any currency, although the Indenture provides that
additional senior debt securities may be issued thereunder up to the aggregate
principal amount, which is not limited by the Indenture, authorized from time to
time by the Company's Board of Directors. The Company may from time to time,
without the consent of the holders of any of the Senior Debt Securities offered
hereby, authorize the issuance of future series of Senior Debt Securities in
addition to those authorized as of the date of this Prospectus or any related
Prospectus Supplement. See "Capitalization" in the accompanying Prospectus
Supplement and "-- Priority" herein.
The Indenture under which the Senior Debt Securities are to be issued does
not contain any limitation on the ability of the Company or FINA to incur
additional debt or on the ability of FINA's subsidiaries to incur additional
debt to the Company or FINA or to unaffiliated third parties. See
"Capitalization" in the accompanying Prospectus Supplement and "-- Priority" and
"-- Certain Covenants" herein.
The particular terms of each series of Senior Debt Securities, as well as
any modification or addition to the general terms of the Senior Debt Securities
as herein described which may be applicable to a particular series of Senior
Debt Securities, are described in the Prospectus Supplement relating to such
series of Senior Debt Securities and will be set forth in a filing with the
Commission. Accordingly, for a description of the terms of a particular series
of Senior Debt Securities, reference must be made to both the Prospectus
Supplement relating to such series and the description of Senior Debt Securities
set forth in this Prospectus. In addition to the provisions of the Senior Debt
Securities hereinafter described, the Prospectus Supplement relating to each
particular series of Senior Debt Securities will set forth or describe: (1) the
title of such Senior Debt Securities; (2) any limit on the aggregate principal
amount of such Senior Debt Securities; (3) the percentage of their principal
amount at which such Senior Debt Securities will be issued; (4) the date or
dates on which such Senior Debt Securities will mature; (5) the rate or rates
per annum (which may be fixed or variable), or the method by which such rate or
rates shall be determined, at which such Senior Debt Securities will bear
interest, if any; (6) the date or dates from which any such interest shall
accrue, or the method by which such date or dates shall be determined, and the
times at which any such interest will be payable; (7) the period or periods
within which, the price or prices at which and the terms and conditions upon
which such Senior Debt Securities may be redeemed, in whole or in part, at the
option of the Company or the holder, if the Company or the holder is to have
such an option; (8) the obligation, if any, of the Company to redeem, repay or
purchase such Senior Debt Securities pursuant to any sinking fund or analogous
provision and the period or periods within which, the price or prices at which
and the terms and conditions upon which such Senior Debt Securities shall be
redeemed, repaid or purchased, in whole or part, pursuant to
4
<PAGE> 14
such obligation; (9) the denominations in which such Senior Debt Securities are
authorized to be issued and the currencies in which such Senior Debt Securities
are issued or payable; (10) any additional Event of Default with respect to such
Senior Debt Securities; (11) whether such Senior Debt Securities are to be
issued in whole or in part in the form of one or more global securities ("Global
Securities") and, if so, the identity of a depository for such Global Security
or Securities; and (12) any other terms of such Senior Debt Securities not
inconsistent with the provisions of the Indenture, or any provisions expressly
amending the Indenture with respect to the series of Senior Debt Securities to
which such Prospectus Supplement relates.
If the principal of (and premium, if any) or interest, if any, on any
Senior Debt Securities are to be payable in any currency other than U.S. dollars
or, at the election of the Company or a holder thereof, in one or more
currencies or composite currencies, or if any index is used to determine the
amount of payments of principal of (and premium, if any) or interest, if any, on
any series of Senior Debt Securities, any special Federal income tax, accounting
and other considerations applicable thereto will be described in the Prospectus
Supplement relating thereto.
Some of the Senior Debt Securities may be issued as original issue discount
Senior Debt Securities (bearing no interest or interest at a rate which at the
time of issuance is below market rates), to be sold at a discount below their
stated principal amount. Federal income tax, accounting and other special
considerations applicable to any such original issue discount Senior Debt
Securities will be described in the Prospectus Supplement relating thereto.
The Indenture does not contain any restriction on the Company's ability to
enter into a highly leveraged transaction or any provision affording special
protection to holders of Senior Debt Securities in the event the Company engages
in a highly leveraged transaction. Further, the Indenture does not contain any
provisions that would provide protection to holders of Senior Debt Securities
upon a sudden and dramatic decline in the credit quality of the Company
resulting from a takeover, recapitalization or similar restructuring of the
Company.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
principal of and premium, if any, and interest on the Senior Debt Securities
will be payable, and the Senior Debt Securities will be exchangeable and
transfers thereof will be registrable, at the office or agency of the Company
designated for that purpose in New York, New York, and any other office or
agency of the Company designated for that purpose, provided that, at the option
of the Company, payment of any interest may be made by check mailed to the
address of the person entitled thereto as it appears in the Senior Debt Security
Register. (Sections 2.04, 2.06 and 5.02.)
The Company will from time to time execute and deliver Senior Debt
Securities to the Trustee for authentication and delivery, and the Trustee will
authenticate and deliver such Senior Debt Securities upon written order of the
Company. No service charge will be made for any transfer or exchange of the
Senior Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
(Section 2.06.)
GUARANTEE BY FINA
FINA will unconditionally guarantee the due and punctual payment of the
principal of (and premium, if any) and interest, if any, on the Senior Debt
Securities, and the due and punctual payment of any sinking fund or analogous
payments (including all additional amounts), when and as the same shall become
due and payable, whether at maturity, upon redemption, by declaration of
acceleration or otherwise. Holders of Senior Debt Securities need not exhaust
their recourse against the Company prior to proceeding against FINA under the
Guarantee. (Article Three).
The Guarantee will be a direct, unsecured and unsubordinated obligation of
FINA and will rank equally and ratably with other unsecured and unsubordinated
indebtedness of FINA. FINA has no direct debt outstanding to any third parties.
All of the indebtedness reflected in FINA's consolidated financial statements
constitutes indebtedness of its consolidated subsidiaries, including the
Company.
5
<PAGE> 15
PRIORITY
The Senior Debt Securities offered hereby will rank equally with the
Company's other general unsecured and unsubordinated indebtedness, including
indebtedness from time to time outstanding to banks and other unaffiliated
lenders. The Senior Debt Securities will be effectively subordinated to any and
all existing and certain future secured indebtedness of the Company and any and
all existing and future indebtedness (whether or not secured) of any subsidiary
of the Company. As of May 31, 1996, after giving pro forma effect to the sale of
the Senior Debt Securities offered hereby and the use of proceeds described in
the Prospectus Supplement accompanying this Prospectus, the Company would have
had approximately $549 million of total unsubordinated indebtedness,
approximately $17.9 million of which was secured indebtedness. As of May 31,
1996, none of the Company's subsidiaries had any outstanding indebtedness and
the Company had no outstanding indebtedness that would have been subordinated in
right of payment to the Senior Debt Securities. All series of Senior Debt
Securities of the Company issued under the Indenture will rank pari passu in
right of payment with each other. See "Capitalization" in the accompanying
Prospectus Supplement.
The Indenture provides that additional senior debt securities may be issued
thereunder up to the aggregate principal amount, which is not limited by the
Indenture, authorized from time to time by the Company's Board of Directors. Any
such additional senior debt securities would rank pari passu in right of payment
with the Senior Debt Securities offered hereby. Further, the Indenture does not
prohibit the Company from entering into additional indentures and issuing
thereunder additional debt securities that may rank pari passu in right of
payment to the Senior Debt Securities offered hereby.
CERTAIN COVENANTS
Liens. The Indenture provides that so long as any Senior Debt Securities
are outstanding, FINA will not, and will not permit any Restricted Subsidiary,
including the Company, to, pledge, mortgage, hypothecate or grant a security
interest in, or permit any mortgage, pledge, security interest or other lien
upon, any property or assets owned by FINA or any Restricted Subsidiary to
secure any Indebtedness, without making effective provision whereby outstanding
Senior Debt Securities shall (so long as such other indebtedness shall be so
secured) be equally and ratably secured. (Section 5.07.)
Under the terms of the Indenture, the foregoing limitation does not apply
to (a) any mortgage, pledge, security interest, lien or encumbrance upon any
property or assets created at the time of the acquisition of such property or
assets by FINA or any Restricted Subsidiary or within one year after such time
to secure all or a portion of the purchase price for such property or assets;
(b) any mortgage, pledge, security interest, lien or encumbrance upon any
property or assets existing thereon at the time of the acquisition thereof by
FINA or any Restricted Subsidiary (whether or not the obligations secured
thereby are assumed by FINA or any Restricted Subsidiary); (c) any mortgage,
pledge, security interest, lien or encumbrance upon any property or assets,
whenever acquired, of any corporation or other entity that becomes a Restricted
Subsidiary after the date of the Indenture, provided that (i) the instrument
creating such mortgage, pledge, security interest, lien or encumbrance shall be
in effect prior to the time such corporation or other entity becomes a
Restricted Subsidiary and (ii) such mortgage, pledge, security interest, lien or
encumbrance shall only apply to properties or assets owned by such corporation
or other entity at the time it becomes a Restricted Subsidiary or thereafter
acquired by it from sources other than FINA or another Restricted Subsidiary;
(d) any mortgage, pledge, security interest, lien or encumbrance arising from or
in connection with a conveyance by FINA or a Restricted Subsidiary of any
production payment with respect to oil, gas, natural gas, carbon dioxide,
sulphur, helium, coal, metals, minerals, steam, timber or other natural
resources; (e) any mortgage, pledge, security interest, lien or encumbrance in
favor of FINA or any wholly-owned subsidiary; (f) any mortgage, pledge, security
interest, lien or encumbrance created or assumed by FINA or a Restricted
Subsidiary in connection with the issuance of debt securities the interest on
which is excludable from gross income of the holder of such security pursuant to
the Internal Revenue Code of 1986, as amended, for the purpose of financing, in
whole or in part, the acquisition or construction of property or assets to be
used by FINA or a Subsidiary; (g) any extension, renewal or refunding of any
mortgage, pledge, security interest, lien or encumbrance permitted by the
foregoing clauses (a) through (f) above on substantially the same property or
assets theretofore subject thereto; and (h) any mortgage, pledge, security
interest, lien or encumbrance securing any Indebtedness in an
6
<PAGE> 16
amount which, together with all other Indebtedness secured by a mortgage,
pledge, security interest, lien or encumbrance that is not otherwise permitted
by the foregoing provisions, does not at the time of the incurrence of the
Indebtedness so secured exceed 15% of FINA's Consolidated Net Tangible Assets.
Sale and Leaseback Transactions. The Indenture provides that so long as any
Senior Debt Securities are outstanding, FINA will not enter into and will not
permit a Restricted Subsidiary, including the Company, to enter into any Sale
and Leaseback Transaction with respect to any Principal Property owned by FINA
or such Restricted Subsidiary, unless (a) such Sale and Leaseback Transaction
involves a lease for a term of not more than three years; (b) such Sale and
Leaseback Transaction is between FINA or such Restricted Subsidiary and a
Subsidiary; (c) FINA or such Restricted Subsidiary would be entitled to incur
indebtedness secured by a mortgage, pledge or other lien or encumbrance on such
Principal Property involved in such Sale and Leaseback Transaction at least
equal in amount to the Attributable Debt with respect to such Sale and Leaseback
Transaction without equally and ratably securing the Senior Debt Securities of
any applicable Series pursuant to the covenant concerning future liens described
above; or (d) the proceeds of such Sale and Leaseback Transaction are at least
equal to the fair market value thereof and FINA applies an amount equal to the
greater of the net proceeds of such sale or the Attributable Debt with respect
to such Sale and Leaseback Transaction within 180 days of such sale to either
(or a combination) of (i) the retirement (other than the mandatory retirement,
mandatory prepayment or sinking fund payment or by payment at maturity) of
long-term debt of FINA or a Restricted Subsidiary (other than long-term debt
that is subordinated to the Senior Debt Securities) or (ii) the purchase,
construction or development of other comparable property. (Section 5.08.)
EVENTS OF DEFAULT AND NOTICE THEREOF
The Indenture defines an Event of Default with respect to any series of
Senior Debt Securities as being any one of the following events and such other
events as may be established for the Senior Debt Securities of a particular
series (as set forth in the related Prospectus Supplement): (a) failure to pay
interest on the Senior Debt Securities when due, continued for 30 days; (b)
failure to pay principal (including any sinking fund installment) of or premium,
if any, on the Senior Debt Securities when due; (c) failure to observe or
perform any other covenant of the Company set forth in the Indenture or the
Senior Debt Securities of such series, continued for 60 days after notice as
provided in the Indenture; (d) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or FINA; and (e) any default or event
of default under any of the Company's $275 million principal amount of senior
notes issued in a 1993 private placement (collectively, the "Private Placement
Notes"), which default or event of default results in the Private Placement
Notes being declared due and payable prior to maturity, without such
acceleration having been rescinded or annulled, within 15 days of notice from
the Trustee or the holders of 25% of the Senior Debt Securities. (Section 7.01.)
Within 90 days after the occurrence of a Default known to the Trustee, the
Trustee is required to transmit notice thereof to the holders of the Senior Debt
Securities. Except in the case of a default in the payment of the principal of
(or premium, if any) or interest on any Senior Debt Security, or in the payment
of any sinking fund installment, the Trustee may withhold such notice if and so
long as it in good faith determines that the withholding of such notice is in
the interests of holders of the Senior Debt Securities. (Section 7.07.) If an
Event of Default in respect of a particular series of Senior Debt Securities
shall occur and be continuing, the Trustee or the holders of not less than 25%
in aggregate principal amount of the Senior Debt Securities of such series
outstanding may declare the principal of such series due and payable
immediately. (Section 7.01.) However, if prior to the entry of any judgment or
decree for the accelerated amount, the Company shall pay or deposit with the
Trustee all principal, premium, if any, and interest arrearage, then the holders
of not less than a majority in aggregate principal amount of the Senior Debt
Securities of the affected series shall have the right to waive all defaults and
the consequences of having declared all principal payments due. Such waiver will
not, however, be operative as against nor impair any rights arising as a result
of any subsequent Event of Default with respect to such series. (Section 7.01.)
The Trustee will not be charged with knowledge of any Event of Default other
than the Company's failure to make principal and interest payments unless actual
written notice thereof is received by the Trustee. (Section 7.01.) No Event of
Default with respect to a particular series of Senior Debt Securities
necessarily constitutes an Event of Default with respect to any other series of
Senior Debt Securities.
7
<PAGE> 17
The Indenture contains provisions regarding limitations on the right to
institute legal proceedings. No holder of any Senior Debt Securities of a
particular series shall have the right to institute an action or proceeding for
rights arising under the Indenture unless (i) such holder has given written
notice of default to the Trustee; (ii) the holders of not less than 25% of the
aggregate principal amount of Senior Debt Securities of such series shall have
made a written request to the Trustee to institute an action and offered the
Trustee such indemnification satisfactory to it; (iii) the Trustee shall not
have commenced such action within 60 days of receipt of such notice and
indemnification offer; and (iv) no direction inconsistent with such request has
been given to the Trustee by the holders of not less than a majority of the
aggregate principal amount of the Senior Debt Securities of such series then
outstanding. Notwithstanding the foregoing, subject to applicable law and any
applicable subordination provisions, nothing shall prevent the holders of Senior
Debt Securities from enforcing payment of the principal of or premium, if any,
or interest on their Senior Debt Securities. No holder of Senior Debt Securities
of a particular series may have the right to prejudice the rights or obtain
priority or preference over the rights of any other holder of Senior Debt
Securities of such series. (Section 7.04.)
The holders of a majority in aggregate principal amount of the Senior Debt
Securities of such series outstanding at the time may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, provided, however,
that the Trustee shall have the right to decline to follow such direction if,
being advised by counsel, the Trustee determines that the action so directed may
not lawfully be taken, or if the Trustee in good faith determines that the
action so directed would be unduly prejudicial to the holders of the Senior Debt
Securities not taking part in such action or would involve the Trustee in
personal liability. (Section 7.06.)
The Indenture provides that, in case an Event of Default in respect of a
particular series of Senior Debt Securities shall occur (which shall not have
been cured or waived), the Trustee will be required to use the degree of care of
a prudent man in the conduct of his own affairs. (Section 8.01.) Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or power under the applicable Indenture at the request of any of the
holders of the Senior Debt Securities of such series unless they shall have
offered to the Trustee security or indemnity satisfactory to it. (Section 8.02.)
The Company will be required to furnish to the Trustee annually a statement
as to the fulfillment by the Company of all of its obligations under the
Indenture. (Section 5.06.)
GLOBAL SECURITIES
The Senior Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with or on
behalf of a depository located in the United States (a "Depository") identified
in the Prospectus Supplement relating to such series.
The specific terms of the depository arrangements with respect to any
Senior Debt Securities of a series will be described in the Prospectus
Supplement relating to such series. The Company anticipates that the following
provisions will apply to all depository arrangements.
Unless otherwise specified in an applicable Prospectus Supplement, Senior
Debt Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depository will be represented by a Global Security
registered in the name of such depository or its nominee. Upon the issuance of a
Global Security in registered form, the Depository for such Global Security will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Senior Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such Depository
or its nominee ("participants"). The accounts to be credited shall be designated
by the underwriters or agents of such Senior Debt Securities or by the Company,
if such Debt Securities are offered and sold directly by the Company. Ownership
of beneficial interests in such Global Securities will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Global Securities will be shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the Depository or its nominee for such Global Securities.
Ownership of beneficial interests in Global Securities by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws
8
<PAGE> 18
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depository for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities of the series represented by such Global Security for all
purposes under the Indenture governing the Senior Debt Securities. Except as set
forth below, owners of beneficial interests in such Global Security will not be
entitled to have Senior Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Senior Debt Securities of such series in definitive form,
and will not be considered the owners or holders thereof under the applicable
Indenture.
Payment of principal of, premium, if any, and any interest on Senior Debt
Securities of a series registered in the name of or held by a Depository or its
nominee will be made to the Depository or its nominee, as the case may be, as
the registered owner or the holder of the Global Security representing such
Senior Debt Securities. None of the Company, the Trustee, any Paying Agent, or
the Senior Debt Security Registrar for such Senior Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Senior Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depository for Senior Debt Securities of a
series, upon receipt of any payment of principal, premium or interest in respect
of a permanent Global Security, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Global Security as shown on the records of the
Depository. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and such payments will be the responsibility of such
participants. However, the Company has no control over the practices of the
Depository and/or the participants and there can be no assurance that these
practices will not be changed.
A Global Security may not be transferred except as a whole by the
Depository for such Global Security to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any such nominee to a successor of such
Depository or a nominee of such successor. If a Depository for Senior Debt
Securities of a series is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Senior Debt Securities of such series in definitive
registered form in exchange for the Global Security or Securities representing
such Senior Debt Securities. In addition, the Company may at any time and in its
sole discretion determine not to have any Senior Debt Securities of a series in
registered form represented by one or more Global Securities and, in such event,
will issue Senior Debt Securities in definitive form in exchange for the Global
Security or Securities representing such Senior Debt Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of Senior Debt Securities of
the series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Senior Debt Securities registered in its
name.
DEFEASANCE
The Company may terminate its obligations under the Indenture with respect
to the Senior Debt Securities of a series at any time by acquiring and
delivering all outstanding Senior Debt Securities of such series to the Trustee
for cancellation. The Company may also terminate all of its obligations under
the Indenture with respect to the Senior Debt Securities of a series, other than
its obligations in respect of payment of principal of and interest on the Senior
Debt Securities of such series, at any time by depositing in trust with the
Trustee money or non-callable U.S. Government Obligations sufficient to pay all
remaining indebtedness on the Senior Debt Securities of such series. Money or
securities so deposited in trust with the
9
<PAGE> 19
Trustee is for the sole benefit of the holders of the Senior Debt Securities of
such series. As a condition to defeasance, the Company must deliver to the
Trustee an Opinion of Counsel (as specified in the Indenture) to the effect that
holders of such Senior Debt Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance. Purchasers of
such Senior Debt Securities should consult their own advisors with respect to
the tax consequences to them of defeasance, including the applicability and
effect of tax laws other than the Federal income tax law. (Section 13.01.)
MERGER AND CONSOLIDATION
The Company may merge with another corporation if the Company is the
surviving corporation, or may consolidate with or merge into another corporation
or transfer all or substantially all of its assets to another corporation if the
resulting, surviving or transferee corporation assumes all obligations of the
Company under the Senior Debt Securities of each series and the Indenture, and
is not immediately thereafter in default under any covenant in the Indenture.
FINA may merge with another corporation if FINA is the surviving corporation, or
may consolidate with or merge into another corporation or transfer all or
substantially all of its assets to another corporation if the resulting,
surviving or transferee corporation assumes all obligations of FINA in respect
of the Guarantee and the Indenture, and is not immediately thereafter in default
under any covenant of the Indenture. (Article Twelve.)
MODIFICATION OF THE INDENTURE
With the consent of the holders of not less than a majority in aggregate
principal amount of the outstanding Senior Debt Securities of a particular
series, the Indenture, the rights and obligations of the Company and the rights
of the holders of such series of Senior Debt Securities may be modified by the
Company and the Trustee. However, no modification of the terms of payment of
principal of or premium, if any, or interest on Senior Debt Securities of any
series, and no modification reducing the percentage of outstanding Senior Debt
Securities of a series required for modification, will be effective against any
holder of a Senior Debt Security of such series affected thereby without the
holder's consent. The Company, the Guarantor and the Trustee may also enter into
supplemental indentures, without obtaining the consent of the holders of any
series of Senior Debt Securities, to cure any ambiguity or to correct or
supplement any provision of the Indenture or any supplemental indenture which
may be defective or inconsistent with any other provision, to pledge any
property to or with the Trustee or to make any other provisions with respect to
matters or questions arising under the Indenture, provided that such action
shall not adversely affect the interests of the holders of the Senior Debt
Securities. Such supplemental indentures may also be entered into without the
consent of holders of any series of Senior Debt Securities to set forth the
terms of additional series of Senior Debt Securities, to evidence the succession
of another person to the Company or the Guarantor or to add to the covenants of
the Company or the Guarantor. (Article Eleven.)
CERTIFICATES AND OPINIONS TO BE FURNISHED TO TRUSTEE
The Indenture provides that, in addition to such other certificates or
opinions as may be specifically required by other provisions of the Indenture,
every application by the Company or the Guarantor for action by the Trustee
thereunder shall be accompanied by a certificate of certain officers of the
Company or the Guarantor, as the case may be, and an opinion of counsel (who may
be counsel for the Company) stating that, in the opinion of the signers, all
conditions precedent to such action have been complied with. (Section 15.07.)
REPORT TO HOLDERS OF SENIOR DEBT SECURITIES
Audited financial statements of the Company will be provided annually to
holders of Senior Debt Securities. (Section 6.03.) The Trustee is required to
submit an annual report to the holders of the Senior Debt Securities regarding,
among other things, the Trustee's eligibility to serve as such, the priority of
the Trustee's claims regarding certain advances made by it, and any action taken
by the Trustee materially affecting the Senior Debt Securities.
10
<PAGE> 20
THE TRUSTEE
Texas Commerce Bank National Association, whose Corporate Trust Office is
located at 2200 Ross Avenue, Dallas, Texas 75201, will be the Trustee under the
Indenture with respect to each series of Senior Debt Securities issued
thereunder.
The Company and its affiliates maintain other banking relationships in the
ordinary course of business with the Trustee and its affiliates.
The Trustee may resign or be removed by the Company with respect to one or
more series of Senior Debt Securities and a successor trustee may be appointed
to act with respect to any such series. The holders of a majority in aggregate
principal amount of the Senior Debt Securities of any series may remove the
Trustee with respect to the Senior Debt Securities of such series. (Section
8.10.)
The Indenture contains certain limitations on the right of the Trustee
thereunder, in the event that it becomes a creditor of the Company, to obtain
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim as security or otherwise. (Section 8.13.)
PLAN OF DISTRIBUTION
The Company may sell Senior Debt Securities to or through underwriters, and
also may sell Senior Debt Securities directly to other purchasers or through
agents.
The distribution of the Senior Debt Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
In connection with the sale of Senior Debt Securities, underwriters may
receive compensation from the Company, or from purchasers of Senior Debt
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. Underwriters may sell Senior Debt Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Underwriters, dealers and
agents that participate in the distribution of Senior Debt Securities may be
deemed to be underwriters, and any discounts or commissions received by them
from the Company and any profit on the resale of Senior Debt Securities by them
may be deemed to be underwriting discounts and commissions, under the Act. Any
such underwriter or agent will be identified, and any such compensation received
from the Company will be described, in the Prospectus Supplement.
The Senior Debt Securities, when first issued, will have no established
trading market. Any underwriters or agents to or through whom Senior Debt
Securities are sold by the Company for public offering and sale may make a
market in such Senior Debt Securities, but such underwriters or agents will not
be obligated to do so and may discontinue any market making activities at any
time without notice. No assurance can be given as to the existence or the
liquidity of any trading market for any Senior Debt Securities.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Senior Debt Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Senior Debt Securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject. The
underwriters and such other agents will not have any responsibility in respect
of the validity or performance of such contracts.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Senior Debt Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act.
11
<PAGE> 21
The specific terms and manner of sale of specific series of Senior Debt
Securities offered hereby are set forth or summarized in an accompanying
Prospectus Supplement.
EXPERTS
The financial statements and schedule of FINA, Inc. and its subsidiaries as
of December 31, 1995 and 1994, and for each of the years in the three-year
period ended December 31, 1995, have been included and incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein and incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
refers to a change in 1995 in the method of accounting for long-lived assets to
adopt the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 121.
12
<PAGE> 22
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF FINA, INC.
<TABLE>
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheet -- December 31, 1995 and 1994.............................. F-3
Consolidated Statement of Operations -- Three years ended December 31, 1995........... F-4
Consolidated Statement of Stockholders' Equity -- Three years ended December 31,
1995................................................................................ F-5
Consolidated Statement of Cash Flows -- Three years ended December 31, 1995........... F-6
Notes to Consolidated Financial Statements............................................ F-7
Condensed Consolidated Balance Sheet as of March 31, 1996 (unaudited)................. F-25
Condensed Consolidated Statement of Operations for the three months ended March 31,
1996 and 1995 (unaudited)........................................................... F-26
Condensed Consolidated Statement of Cash Flows for the three months ended March 31,
1996 and 1995 (unaudited)........................................................... F-27
Notes to Condensed Consolidated Financial Statements.................................. F-28
</TABLE>
The separate financial statements of Fina Oil and Chemical Company ("FOCC")
are not presented as FOCC is a wholly-owned subsidiary of FINA, Inc. and FINA,
Inc. will fully and unconditionally and irrevocably guarantee the Senior Debt
Securities offered hereby.
F-1
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
FINA, Inc.:
We have audited the accompanying consolidated balance sheet of FINA, Inc.
and subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1995. These consolidated
financial statements are the responsibility of FINA, Inc.'s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FINA, Inc.
and subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in note 6 to the consolidated financial statements, FINA, Inc.
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in 1995.
KPMG Peat Marwick LLP
Dallas, Texas
January 26, 1996
F-2
<PAGE> 24
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS
1995 1994
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 7,271 $ 3,533
Accounts and notes receivable, less allowance for doubtful
receivables of $6,711 in 1995 and $7,201 in 1994............... 336,246 365,614
Inventories....................................................... 301,496 286,538
Deferred Federal income taxes..................................... 30,455 21,381
Prepaid expenses and other current assets......................... 12,963 9,013
---------- ----------
Total current assets...................................... 688,431 686,079
---------- ----------
Investments in and advances to affiliates........................... 17,669 16,754
Net property, plant, and equipment, at cost, (successful efforts
method for oil and gas properties)................................ 1,662,887 1,691,062
Deferred charges and other assets, at cost less applicable
amortization...................................................... 118,731 99,967
---------- ----------
$2,487,718 $2,493,862
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations............................................ $ 20,000 $ 57,000
Current installments of long term debt and lease obligations...... 35,474 61,014
Accounts payable.................................................. 368,008 352,123
Accrued liabilities............................................... 120,447 100,264
---------- ----------
Total current liabilities................................. 543,929 570,401
---------- ----------
Long term debt and lease obligations, excluding current
installments...................................................... 498,446 532,148
Deferred Federal income taxes....................................... 177,229 159,704
Other deferred credits and liabilities.............................. 90,057 86,802
Stockholders' equity:
Preferred stock of $1 par value. Authorized 4,000,000 shares; none
issued......................................................... -- --
Class A common stock of $.50 par value. Authorized 38,000,000
shares; issued 29,207,572 shares in 1995 and 29,189,404 shares
in 1994........................................................ 14,604 14,595
Class B common stock of $.50 par value. Authorized and issued
2,000,000 shares............................................... 1,000 1,000
Additional paid-in capital.......................................... 450,601 450,029
Retained earnings................................................... 711,852 679,183
---------- ----------
Total stockholders' equity................................ 1,178,057 1,144,807
---------- ----------
Commitments and contingencies
$2,487,718 $2,493,862
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 25
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE YEARS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Sales and other operating revenues................... $3,606,637 $3,421,112 $3,416,223
Interest and other income, net....................... (11,111) 15,987 103,605
---------- ---------- ----------
3,595,526 3,437,099 3,519,828
---------- ---------- ----------
Costs and expenses:
Cost of raw materials and products purchased......... 2,673,521 2,525,139 2,637,843
Direct operating expenses............................ 361,711 398,269 375,879
Selling, general and administrative expenses......... 86,247 78,054 88,749
Taxes, other than on income.......................... 43,533 44,562 52,101
Dry holes and abandonments........................... 12,638 8,156 15,844
Depreciation, depletion, amortization and lease
impairment (1995 includes $58,723 for adoption of
SFAS 121)......................................... 213,964 185,961 198,341
Interest............................................. 50,707 47,023 58,190
Less interest capitalized............................ (7,873) (2,422) (3,234)
---------- ---------- ----------
3,434,448 3,284,742 3,423,713
---------- ---------- ----------
Earnings before income taxes................. 161,078 152,357 96,115
---------- ---------- ----------
Income taxes:
Current:
Federal........................................... 39,401 23,351 28,807
State............................................. 8,801 2,750 1,600
Deferred -- Federal.................................. 8,451 24,215 (4,645)
---------- ---------- ----------
56,653 50,316 25,762
---------- ---------- ----------
Net earnings................................. $ 104,425 $ 102,041 $ 70,353
========== ========== ==========
Earnings per common share:............................. $ 3.35 $ 3.27 $ 2.26
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 26
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
PREFERRED -------------------- PAID-IN RETAINED STOCKHOLDERS'
STOCK CLASS A CLASS B CAPITAL EARNINGS EQUITY
--------- ------- ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992......... $ -- $14,572 $1,000 $ 448,576 $612,818 $1,076,966
Shares issued in connection with
employee benefit plans, 43,410 -- 22 -- 1,376 -- 1,398
shares............................. -- -- -- -- 70,353 70,353
Net earnings......................... -- -- -- -- (49,890) (49,890)
Dividends paid, $1.60 per share......
-------- ------- ------ --------- -------- ----------
-- 14,594 1,000 449,952 633,281 1,098,827
Balance at December 31, 1993.........
Shares issued in connection with
employee benefit plans, 2,400 -- 1 -- 77 -- 78
shares............................. -- -- -- -- 102,041 102,041
Net earnings......................... -- -- -- -- (56,139) (56,139)
Dividends paid, $1.80 per share......
-------- ------- ------ --------- -------- ----------
-- 14,595 1,000 450,029 679,183 1,144,807
Balance at December 31, 1994.........
Shares issued in connection with
employee benefit plans, 18,168 -- 9 -- 632 -- 641
shares............................. -- -- -- (60) -- (60)
Expenses from stock split............ -- -- -- -- 104,425 104,425
Net earnings......................... -- -- -- -- (71,756) (71,756)
Dividends paid, $2.30 per share......
-------- ------- ------ --------- -------- ----------
$ -- $14,604 $1,000 $ 450,601 $711,852 $1,178,057
Balance at December 31, 1995......... ======== ======= ====== ========= ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 27
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings........................................... $ 104,425 $ 102,041 $ 70,353
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, depletion, amortization, lease
impairment and abandonments....................... 214,952 190,044 210,055
Net equity in losses of affiliates.................. 4,713 6,269 5,504
Loss (gain) on sale of assets....................... 6,245 (18,768) (106,603)
Deferred income taxes............................... 8,451 24,215 (4,645)
Changes in assets and liabilities:
Accounts and notes receivable..................... 29,368 (72,345) 148,241
Inventories....................................... (14,958) (22,002) 102,982
Prepaid expenses and other current assets......... (3,950) 1,947 4,539
Accounts payable and accrued liabilities.......... 36,068 55,235 (43,408)
Other............................................. (19,140) 8,741 (8,728)
--------- --------- -----------
Net cash provided by operating activities...... 366,174 275,377 378,290
--------- --------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment............. (213,142) (133,928) (121,899)
Proceeds from sales of assets.......................... 23,751 68,170 165,288
Proceeds from sale of notes receivable................. -- -- 34,337
Investments in and advances to affiliates.............. (7,582) (3,430) (6,369)
Dividends received in excess of equity in earnings of
affiliates.......................................... 1,954 10,699 1,261
--------- --------- -----------
Net cash provided by (used in) investing
activities................................... (195,019) (58,489) 72,618
--------- --------- -----------
Cash flows from financing activities:
Additions to long term debt and lease obligations...... 127,451 52,040 1,018,781
Payments of long term debt and lease obligations....... (186,693) (236,610) (1,352,750)
Net change in short term obligations................... (37,000) 24,000 (70,000)
Issuance of common stock............................... 581 78 1,398
Dividends paid......................................... (71,756) (56,139) (49,890)
--------- --------- -----------
Net cash used in financing activities.......... (167,417) (216,631) (452,461)
--------- --------- -----------
Net increase (decrease) in cash and cash equivalents..... 3,738 257 (1,553)
Cash and cash equivalents at beginning of year........... 3,533 3,276 4,829
--------- --------- -----------
Cash and cash equivalents at end of year................. $ 7,271 $ 3,533 $ 3,276
========= ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 28
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) GENERAL
FINA, Inc. and subsidiaries (the "Company") is a fully integrated energy
company. The Company's principal lines of business are crude oil and natural gas
exploration and production and natural gas marketing ("Upstream"); petroleum
products refining, supply and transportation and marketing ("Downstream"); and
chemicals manufacturing and marketing ("Chemicals"). The principal markets for
refined products are domestic wholesale and retail markets while natural gas is
sold primarily to domestic marketers and local distribution companies.
Petrochemical and plastic products are primarily sold to domestic manufacturers
of fiber, film, packaging and consumable products. Raw materials are readily
available and the Company is not dependant upon a single supplier or a few
suppliers.
Class A and Class B common stock are identical in all respects except on
any vote for the election of directors. The holders of record of the Class B
Common Stock are entitled to elect the smallest number comprising more than half
of the directors to be elected and the remaining directors are elected by the
holders of record of the Class A Common Stock voting separately as a class.
Petrofina Delaware, Incorporated (PDI) owns 100% of the Class B common stock and
approximately 85% of the Class A common stock. PetroFina S.A. (Petrofina), a
Belgian publicly-held corporation, owns 100% of American Petrofina Holding
Company which owns 75% of the stock of PDI. The remaining 25% of PDI's stock is
owned by Petrofina.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its significant subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
(C) STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, all certificates of deposit and short
term highly liquid debt instruments, such as U.S. Treasury bills and notes, with
original maturities of three months or less are considered cash equivalents.
The indirect method is used to present cash flows from operating
activities. Additional cash flow information follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest paid, net of amounts capitalized............... $45,249 $44,807 $52,101
======= ======= =======
Income taxes paid, net of refunds received.............. $38,132 $33,001 $14,344
======= ======= =======
</TABLE>
Capital lease obligations of $27,548,000 in 1994 and $26,501,000 in 1993
were converted into debt as a result of termination of time charters relating to
tankers.
(D) INVESTMENTS IN AFFILIATES
Investments in affiliates in which the Company owns between 20% and 50% of
the voting stock are carried at amortized cost adjusted for changes in equity
since acquisition.
(E) INVENTORIES
Crude oil and refined products and chemicals are priced at the lower of
cost (last-in, first-out) (LIFO) or market on an aggregate basis. Materials and
supplies are priced at average cost, not in excess of market; in the
F-7
<PAGE> 29
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
case of material salvaged, an allowance is made for obsolescence and
depreciation. Because of price declines in crude oil and refined products in
1993, a valuation reserve of $47,048,000 was established to reduce the LIFO cost
of inventory to net realizable value. As prices increased in 1994 the valuation
reserve was eliminated. The excess of replacement cost of crude oil and refined
products and chemicals over LIFO cost was $7,356,000 at December 31, 1995 and
$8,262,000 at December 31, 1994.
Certain inventory quantities were reduced, resulting in liquidations of
LIFO inventory which decreased pretax earnings by approximately $4,400,000 in
1995 and $5,600,000 in 1994.
A summary of inventories follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Crude oil and refined products and chemicals......... $267,907 $250,808 $225,286
Materials and supplies............................... 33,589 35,730 39,250
-------- -------- --------
$301,496 $286,538 $264,536
======== ======== ========
</TABLE>
(F) PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 19. Costs to acquire mineral
interests in oil and gas properties, to drill exploratory wells that find proved
reserves and to drill and equip development wells are capitalized. Geological
and geophysical costs and costs to drill exploratory wells that do not find
proved reserves are expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value and, if necessary, a loss is
recognized by providing an impairment allowance. The remaining unproved oil and
gas properties are aggregated and an overall impairment allowance is provided
based on prior experience. Capitalized costs of proved oil and gas properties
are depreciated and depleted by the unit-of-production method based on proved
oil and gas reserves estimated by Company engineers.
Substantially all other property, plant and equipment is depreciated by the
straight-line method at rates based on the estimated useful lives of the classes
of property.
Interest is capitalized as a component of the cost of construction and
development projects in progress.
Repairs and maintenance are charged to earnings as incurred. Renewals and
betterments are capitalized. When assets are sold, retired or otherwise disposed
of, the applicable costs and reserves are removed from the accounts and the
resulting gain or loss is recognized.
(G) RESEARCH AND DEVELOPMENT
Research and development costs, which are expensed as incurred, amounted to
$13,208,000 in 1995, $12,932,000 in 1994 and $12,233,000 in 1993.
(H) INCOME TAXES
Income taxes are accounted for pursuant to SFAS 109 "Accounting for Income
Taxes." The Company files a consolidated Federal income tax return with PDI and
its affiliates. Under the terms of the tax sharing agreement with PDI, the
Company is allocated Federal income taxes on a separate return basis.
F-8
<PAGE> 30
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(I) EARNINGS PER COMMON SHARE
Earnings per common share is based on the weighted average number of
outstanding shares. Shares issuable upon the exercise of stock options are
excluded from the computation since their effect is insignificant. The Company
declared a two-for-one stock split with a May 2, 1995 record date and reduced
the par value of both Class A and Class B stock from $1 to 50 cents per share.
Share and per share amounts in the accompanying financial statements and notes
thereto have been adjusted retroactively to reflect the stock split.
(J) FINANCIAL INSTRUMENTS
The Company utilizes derivative financial instruments to manage market
risks and reduce its exposure resulting from fluctuations in interest rates and
the prices of crude oil, refined products and natural gas. Derivative
instruments used include swap agreements, futures and options contracts and
forward purchase commitments. Gains and losses related to qualifying hedges are
deferred and included in the measurement of the related transaction, when the
hedged transaction occurs. Realized and unrealized changes in the fair value of
the remaining derivative financial instruments and forward commitments are
recognized in income in the period in which the change occurs. The Company's
practice is to not hold or issue financial instruments for trading purposes.
Instruments are either exchange-traded or with counterparties of high
credit quality; therefore, the risk of nonperformance by the counterparties is
considered to be negligible. Additional information regarding financial
instruments is shown in Note 4.
(K) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Proved oil and gas properties............................... $ 905,554 $ 906,738
Unproved oil and gas properties............................. 232,085 254,998
Refining and marketing facilities........................... 1,342,609 1,332,412
Chemical facilities......................................... 449,034 343,577
Pipelines................................................... 75,126 82,976
Other....................................................... 47,124 40,624
---------- ----------
3,051,532 2,961,325
Less accumulated depreciation, depletion, amortization and
lease impairment.......................................... 1,388,645 1,270,263
---------- ----------
$1,662,887 $1,691,062
========== ==========
</TABLE>
F-9
<PAGE> 31
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property, plant and equipment includes capitalized lease obligations and
related accumulated depreciation of $8,102,000 and $4,823,000 at December 31,
1995 and $4,653,000 and $3,866,000 at December 31, 1994.
(3) CURRENT AND LONG TERM DEBT
Short term obligations include $20,000,000 and $2,000,000 to various banks,
at December 31, 1995 and 1994, respectively, and bear interest at weighted
average rates of 5.85% and 6.15%, respectively. Short term obligations include
$55,000,000 due to PDI at December 31, 1994.
A summary of long term debt follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
6.64% Series A Senior Notes, due May 1, 2000................... $117,000 $117,000
7.13% Series B Senior Notes, due May 1, 2002................... 125,000 125,000
7.57% Series C Senior Notes, due May 1, 2003................... 33,000 33,000
Notes under revolving credit agreement with PDI, due in 1997
(6.24% at December 31, 1995)................................. 150,000 100,000
Note to PDI.................................................... -- 75,000
Other.......................................................... 105,579 141,359
-------- --------
Total long term debt................................. 530,579 591,359
Less current installments of long term debt.................... 34,248 60,197
-------- --------
Long term debt, excluding current installments....... $496,331 $531,162
======== ========
</TABLE>
The Company has a $400,000,000 revolving bank credit facility through May
2000 of which $50,000,000 was outstanding under the facility at December 31,
1995. The Company intends to use borrowings under this facility and a credit
facility with PDI to finance the repayment of $50,000,000 of short term
obligations due to various banks and has classified these borrowings as long
term debt at December 31, 1995. Borrowings under the credit facilities bear
interest at various market rate options.
The Senior Notes, a note payable to a bank, the bank revolving credit
facility and the PDI loan agreements contain provisions that limit mergers and
sales of assets, limit the incurrence of indebtedness and restrict payments to
stockholders. No material amounts of current and long term debt are
collateralized by Company assets.
Letters of credit are maintained with various banks, aggregating
$34,777,000 at December 31, 1995; principally for pollution control and worker's
compensation obligations.
The aggregate maturities of long term debt and capitalized lease
obligations for the five years ending December 31, 2000 are as follows:
1996 -- $35,474,000; 1997 -- $186,398,000; 1998 -- $62,529,000; 1999 --
$53,619,000; and 2000 -- $98,400,000.
(4) FINANCIAL INSTRUMENTS AND FAIR VALUES
The Company uses swap agreements, futures and options contracts and forward
purchase commitments to reduce its exposure to fluctuations in interest rates
and in the prices of crude oil, refined products and natural gas.
Interest rate swap agreements are used to help manage interest rate
exposure. Amounts to be paid or received under interest rate swap agreements are
accrued as interest rates change and are recognized over the
F-10
<PAGE> 32
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
life of the swap agreements as an adjustment to interest expense. The related
amounts payable to, or receivable from, the counterparties are included in other
accrued liabilities. The fair value of the swap agreements was not recognized in
the consolidated financial statements since they are accounted for as hedges.
These swap agreements expire at various dates through 2003 and effectively
convert an aggregate principal amount of $105,000,000 of fixed rate, long term
debt into variable rate borrowings and $100,000,000 of variable rate borrowings
to fixed. The variable interest rates are based on 3 month and 6 month LIBOR
rates. At December 31, 1995 and 1994, the weighted average variable interest
rates under these agreements were 5.9% and 6.19%, respectively, and fixed rates
were 6.5% and 6.3%, respectively.
The estimated fair value of the swap agreements, based on current market
rates, approximated a net payable of $815,000 and $9,898,000 at December 31,
1995 and 1994, respectively. Exposure to credit loss could occur when the fair
value of the agreements is a net receivable. The outstanding borrowings due to
PDI and various banks bear interest at current market rates and thus, the
carrying amount of debt approximates estimated fair value. The estimated fair
value of the debt instruments that bear interest at fixed rates was $331,000,000
($320,000,000 carrying value) at December 31, 1995, and $348,000,000
($379,000,000 carrying value) at December 31, 1994.
The Company hedges crude oil, refined products and natural gas future
purchases and sales commitments. The Company also uses derivative financial
instruments to reduce financial exposure from price changes related to
anticipated crude oil purchases and refined product and natural gas sales. At
December 31, 1995 and 1994, the Company had futures contracts to sell crude oil
and refined products in the amount of $13,661,000 and $26,930,000, respectively,
and forward contracts to purchase crude oil and refined products of $46,323,000
and $60,536,000, respectively. The estimated fair value and carrying value of
these outstanding contracts were a net receivable of $62,000 and $683,000 at
December 31, 1995 and 1994, respectively. The estimated fair values of the
futures and forward contracts are based on quoted market prices. The Company
recognizes realized and unrealized gains and losses on these contracts in income
in the period in which the change occurs. These contracts generally have
maturities of one year or less. Crude and refined product forward and purchase
contracts are used to facilitate the supply of crude to the Company's refineries
and sales of refined products while attempting to minimize price risk.
Derivative financial instruments related to natural gas activities were not
significant at December 31, 1995 and 1994. Market value is not readily
determinable for certain investments in equity securities and long term
receivables with a carrying value of $36,572,000 and $32,131,000 at December 31,
1995 and 1994, respectively. The reported amounts of cash equivalents, short
term receivables and payables and short term debt approximate fair value due to
their short maturities.
(5) INCOME TAXES
Actual income tax expense differs from the "normal" income tax expense at
U.S. statutory rates as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed income tax expense (at U.S. statutory rates)... $56,377 $53,325 $33,641
State income taxes, net of Federal benefit.............. 5,721 1,788 1,040
Tax-free benefits and dividends on Company owned life
insurance............................................. (2,358) (3,141) (3,352)
Section 29 credit....................................... (2,280) (2,088) (7,393)
Change in temporary differences due to 1994 tax rate
change................................................ -- -- 4,565
Miscellaneous items..................................... (807) 432 (2,739)
------- ------- -------
$56,653 $50,316 $25,762
======= ======= =======
</TABLE>
F-11
<PAGE> 33
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of the primary temporary differences giving rise to the
deferred Federal income tax assets and liabilities as determined under SFAS 109
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Employee benefits............................................ $ 2,955 $ 5,875
Basis in inventories......................................... 5,845 7,519
Provision for losses......................................... 4,910 9,783
Alternative minimum tax credit carryforwards................. 43,816 59,943
Miscellaneous items.......................................... 9,993 6,771
-------- --------
Total deferred income tax assets..................... 67,519 89,891
-------- --------
Deferred income tax liabilities:
Property, plant and equipment, principally due to differences
in depreciation, depletion, amortization, lease impairment
and abandonments.......................................... 179,663 200,698
Investments in affiliates, principally due to differences in
joint venture depreciation................................ 34,372 26,401
Miscellaneous items.......................................... 258 1,115
-------- --------
Total deferred income tax liabilities................ 214,293 228,214
-------- --------
Net deferred Federal income tax liability............ $146,774 $138,323
======== ========
</TABLE>
At December 31, 1995, alternative minimum tax credit carryforwards of
approximately $43,816,000 are available to reduce future Federal regular income
taxes payable over an indefinite period.
(6) IMPAIRMENT OF LONG-LIVED ASSETS
During the fourth quarter of 1995, the Company adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" which resulted in a before-tax addition of $58,723,000 to
depreciation, depletion and amortization expense. After tax, the additional
charge was $38,173,000 or $1.22 per share.
Under SFAS 121, the Company now evaluates impairment of exploration and
production assets on a field-by-field basis rather than using a one country cost
center for its proved properties. On this basis, certain fields are impaired
because they are not expected to recover their entire carrying value from future
cash flows. In addition to the change in grouping of proved properties, the
value of certain marketing assets in the Company's Downstream business were also
determined to be impaired under SFAS 121. As a result, the Company recognized a
non-cash pre-tax charge of $52,523,000 related to its Upstream exploration and
production assets and $6,200,000 related to its Downstream marketing assets. The
fair values of the impaired assets were determined by using the present value of
expected future cash flows for the oil and gas properties and sales prices for
similar assets for certain marketing assets. If estimated future cash flows are
not achieved with respect to certain fields, further writedowns may be required.
F-12
<PAGE> 34
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) EMPLOYEE STOCK OPTIONS
Options to purchase shares of Class A common stock have been granted to
officers and employees under a stock option plan adopted in 1979. The stock
option plan expired in 1989, and no further grants will be made under that plan.
A summary of transactions follows:
<TABLE>
<CAPTION>
OPTION PRICE
NUMBER OF ----------------------
SHARES PER SHARE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Outstanding and exercisable at December 31, 1994.... 60,968 $ 35.25 $2,149,122
=======
Terminated and reverted to plan..................... (1,800) $ 35.25 (63,450)
=======
Exercised........................................... (18,168) $ 35.25 (640,422)
=======
-------- ----------
Outstanding and exercisable at December 31, 1995.... 41,000 $ 35.25 $1,445,250
======== ======= ==========
</TABLE>
The option price for options granted is the market value at date of grant.
Each option granted expires ten years from date of grant. No amounts are
recorded until options are exercised, at which time proceeds in excess of the
par value of the shares are credited to additional paid-in capital.
(8) INVESTMENTS IN JOINT VENTURE
The Company and GE Plastics, a wholly-owned subsidiary of General Electric
Company (GE), are joint venturers in Cos-Mar Company, a chemical operation. The
Company's interest is 50% and is accounted for by the equity method. The
venturers reimburse the joint venture for the costs of operating the facility
and raw material and finished product inventories are the property of the
venturers. Direct operating expenses include charges from the joint venture of
$19,346,000 in 1995, $16,011,000 in 1994 and $15,990,000 in 1993. Investments in
and advances to the joint venture were $11,229,000 and $8,829,000 at December
31, 1995 and 1994. The Company has guaranteed the joint venture's borrowings
from a bank, which aggregated $40,000,000 at December 31, 1995. GE has
guaranteed the joint venture's borrowings from a bank, which aggregated
$74,200,000 at December 31, 1995.
(9) EMPLOYEE AND POST RETIREMENT BENEFITS
The Company and its subsidiaries have two defined benefit pension plans
covering substantially all employees. The benefits are based on years of service
and the employee's final average monthly compensation. The Company's funding
policy is to contribute annually not less than the minimum required nor more
than the maximum amount that can be deducted for Federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
A restoration benefit plan provides supplemental pension benefits to
certain participants whose benefits are limited by the defined benefit pension
plans. The funding policy is to contribute annually amounts equal to benefit
payments made.
F-13
<PAGE> 35
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the plans' funded status and the amounts recognized in the
consolidated balance sheet follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------------------
1995 1994
----------------------- -----------------------
DEFINED DEFINED
BENEFITS RESTORATION BENEFITS RESTORATION
PLANS PLAN PLANS PLAN
--------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation................ $(118,639) $(3,726) $ (94,196) $(3,785)
========= ======= ========= =======
Accumulated benefit obligation, including
vested benefits....................... $(131,956) $(3,726) $(104,895) $(3,796)
========= ======= ========= =======
Projected benefit obligation............... $(156,909) $(4,692) $(127,077) $(4,615)
Plan assets at fair value, primarily listed
stocks and U.S. Government securities.... 217,961 -- 180,705 --
--------- ------- --------- -------
Plan assets in excess of (less than)
projected benefit obligation............. 61,052 (4,692) 53,628 (4,615)
Unrecognized net (gain) loss from past
experience different from that assumed
and effect of changes in assumptions..... (614) 528 1,982 426
Unrecognized prior service cost being
recognized over 15 years................. 1,918 620 2,114 657
Unrecognized net (asset) liability at date
of adoption being recognized over 15.3
years.................................... (5,737) 728 (7,075) 850
Adjustment required to recognize minimum
liability................................ -- (910) -- (1,114)
--------- ------- --------- -------
Prepaid (accrued) pension cost included in
the balance sheet........................ $ 56,619 $(3,726) $ 50,649 $(3,796)
========= ======= ========= =======
</TABLE>
A summary of the components of pension expense (income) follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year....... $ 4,920 $ 5,848 $ 5,620
Interest cost on projected benefit obligation...... 11,218 10,495 10,509
Actual return on plan assets....................... (43,665) (2,063) (22,914)
Net asset gain (loss) deferred for later
recognition...................................... 23,167 (17,128) 5,235
Amortization of unrecognized prior service cost.... 234 234 188
Amortization of unrecognized actuarial losses...... -- 33 18
Amortization of unrecognized net asset............. (1,217) (1,217) (1,217)
Cost of termination benefits....................... -- 710 --
-------- -------- --------
Total pension expense (income)........... $ (5,343) $ (3,088) $ (2,561)
======== ======== ========
</TABLE>
A summary of the actuarial assumptions used in calculating the plans'
present value of projected benefit obligation follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Weighted average discount rate.......................... 7.50% 8.75% 7.50%
Rate of increase in future compensation levels.......... 4.00% 4.50% 4.50%
Expected long term rate of return on assets............. 11.00% 11.00% 11.00%
</TABLE>
The effect on the projected benefit obligation of these changes was an
increase of approximately $19,871,000 in 1995 and a decrease of approximately
$24,100,000 in 1994.
F-14
<PAGE> 36
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In addition to providing pension benefits, certain health care and life
insurance benefits are provided to active and certain retired employees who meet
eligibility requirements defined in plan documents. During 1995, substantially
all covered employees were eligible for those benefits after they reach normal
retirement age. The health care benefits in excess of certain limits and the
life insurance benefits are insured. The costs of providing these benefits for
active employees are expensed when the insurance premiums and claims are paid.
The cost of providing these benefits for active employees was $8,594,000 in
1995, $10,092,000 in 1994 and $11,219,000 in 1993.
A summary of the postretirement plan's funded status and the amounts
recognized in the consolidated balance sheet follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees....................................................... $42,018 $43,118
Fully eligible active plan participants........................ 2,981 3,443
Other active plan participants................................. 19,140 14,120
------- -------
64,139 60,681
Unrecognized net loss............................................ (4,999) (3,789)
Unrecognized prior service cost.................................. 219 241
------- -------
Accrued postretirement benefit cost.............................. $59,359 $57,133
======= =======
</TABLE>
A summary of the components of net periodic postretirement benefit cost
follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................................... $1,024 $1,226 $1,043
Interest cost.............................................. 5,111 4,878 4,653
Amortization of unrecognized prior service cost............ (22) (22) (22)
Amortization of net loss from earlier periods.............. -- 504 --
------ ------ ------
Net periodic postretirement benefit cost................... $6,113 $6,586 $5,674
====== ====== ======
</TABLE>
For measurement purposes, a 7.68% and 7.14% weighted average annual rate of
increase in the per capita cost of covered benefits (i.e., health care cost
trend rate) for pre-65 and post-65 years of age, respectively, was assumed for
1996; the rate was assumed to decrease gradually to 6% for pre-65 and 5% for
post-65 years of age by the year 2002 and remain at that level thereafter. An
8.67% and 7.50% annual rate for pre-65 and post-65 years of age, respectively,
was assumed for 1995. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the assumed
health care cost trend rates by one percentage point in each year would increase
the accumulated postretirement benefit obligation as of December 31, 1995 by
$2,835,000 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year ended December 31, 1995 by
$297,000.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5%, 8.75% and 7.5% at December 31, 1995,
1994 and 1993, respectively. The effect on the accumulated benefit obligation of
these changes was an increase of $7,766,000 in 1995 and a decrease of
$11,665,000 in 1994.
Defined contribution retirement savings plans (Thrift Plans) are available
to substantially all employees. The Thrift Plans permit employees to elect
salary deferral contributions of up to 10% of their compensation on
F-15
<PAGE> 37
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
a tax-deferred basis and requires the Company to match up to the first 6% of the
participants' compensation in the highest matched plan subject to salary caps.
The expense for the Company's contribution was $5,911,000 in 1995, $5,963,000 in
1994 and $6,007,000 in 1993.
(10) SALE OF ACCOUNTS AND NOTES RECEIVABLE
The Company sold certain accounts and notes receivable with recourse. At
both December 31, 1995 and 1994, $80,000,000 of accounts receivable were sold
and $27,742,000 and $32,100,000, respectively, of notes receivable were sold
under these agreements. The Company remains obligated to reimburse the
purchasers for any uncollectible amounts pursuant to the recourse provisions of
the agreements.
(11) LEASES
The Company occupies certain marketing and manufacturing facilities and
uses certain equipment under leases expiring at various dates over the next 20
years. Under terms of certain lease agreements, the Company has agreed not to
mortgage certain of its interests in oil and gas properties.
At December 31, 1995, minimum lease payments on capital and operating
leases were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES (I) LEASES (II)
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
1996............................................................ $1,420 $24,785
1997............................................................ 1,419 21,827
1998............................................................ 824 17,260
1999............................................................ -- 13,147
2000............................................................ -- 7,042
Later years to 2015............................................. -- 7,527
------
Total minimum lease payments.......................... 3,663
Imputed interest (6.92%)........................................ 322
------
Present value of minimum lease payments (iii)................... $3,341
======
</TABLE>
- ---------------
(i) Substantially all leases provide that the Company shall pay taxes,
maintenance, insurance and certain other operating expenses applicable to
the leased properties.
(ii) Minimum payments have not been reduced by minimum sublease rentals of
approximately $2,426,000 which are due in the future under noncancellable
subleases.
(iii) Presented in the consolidated balance sheet as current installments and
noncurrent lease obligations of $1,226,000 and $2,115,000 at December 31,
1995 and $818,000 and $986,000 at December 31, 1994.
Total rental expense was $32,562,000 (net of $676,000 subleases) in 1995,
$26,962,000 (net of $1,191,000 subleases) in 1994 and $32,749,000 (net of
$1,345,000 subleases) in 1993. Contingent rentals were not significant.
(12) RELATED PARTY TRANSACTIONS
Sales and other operating revenues for 1993 include $37,300,000 of
reimbursements from business interruption and property damage insurance
resulting from a fire at the Big Spring refinery. The Company's insurance
provider on this claim is a wholly-owned subsidiary of Petrofina.
The Company has a 50% interest in joint ventures with PDI in Texas and with
Petrofina in Hong Kong which market chemicals in international trade. The
Company sold chemicals aggregating $3,652,000 in 1995, $1,401,000 in 1994 and
$985,000 in 1993 to the joint ventures.
F-16
<PAGE> 38
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Accounts receivable include $3,485,000 and $10,719,000 at December 31, 1995
and 1994, respectively, from affiliates.
Accounts payable include $13,410,000 and $6,539,000 at December 31, 1995
and 1994, respectively, to affiliates.
During 1994 the Company assumed a $50,000,000 note from PDI that was paid
in 1995. Interest expense relating to borrowings from PDI (see note 3) was
$12,938,000 in 1995, $13,916,000 in 1994 and $28,565,000 in 1993. Accrued
liabilities include accrued interest of $607,000 and $791,000 at December 31,
1995 and 1994, respectively, which is payable to PDI for such borrowings.
Crude oil and natural gas aggregating $8,953,000 in 1995, $16,626,000 in
1994 and $21,145,000 in 1993 were purchased from PDI in the ordinary course of
business.
Refined products and chemicals aggregating $53,542,000 in 1995, $34,963,000
in 1994 and $50,992,000 in 1993 were purchased from Petrofina and its affiliates
other than PDI in the ordinary course of business.
(13) CONTINGENCIES
The Company was contingently liable at December 31, 1995, under pending
lawsuits and other claims, some of which involved substantial sums. Considering
certain liabilities that have been set up for the lawsuits and claims, and the
difficulty in determining the ultimate liability in some of these matters,
internal counsel is of the opinion that the amounts, if any, that ultimately
might be due in connection with such lawsuits and claims would not have a
material adverse effect upon the Company's consolidated financial condition.
The Company is subject to loss contingencies pursuant to federal, state and
local environmental laws and regulations. These regulations, which are currently
changing, regulate the discharge of materials into the environment and may
require the Company to include existing and possible future obligations to
investigate the effects of the release or disposal of certain petroleum,
chemical and mineral substances at various sites; to remediate or restore these
sites; to compensate others for damage to property and natural resources and for
remediation and restoration costs. These possible obligations relate to sites
owned by the Company or others and associated with past or present operations,
including sites at which the Company has been identified as a potentially
responsible party ("PRP") under the federal Superfund laws and comparable state
laws. The Company is currently participating in environmental investigations,
assessments and cleanups under these regulations at federal Superfund and
state-managed sites, as well as other cleanup sites, including operating and
closed refineries, chemical facilities, service stations and terminals. The
Company may in the future be involved in additional environmental
investigations, assessments and cleanups. The amount of such future costs will
depend on such factors as the unknown nature and contamination at many sites,
the unknown timing, extent and method of the remedial actions which may be
required and the determination of the Company's liability in proportion to other
responsible parties.
Environmental expenditures are expensed or capitalized depending on their
future economic benefit. Expenditures that relate to an existing condition
caused by past operations and that have no future economic benefit are expensed.
Liabilities for expenditures of a noncapital nature are recorded when
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated. The Company has accrued for environmental remediation
obligations of $20,856,000 at December 31, 1995. These liabilities have not been
reduced for probable recoveries from third parties. Substantially all amounts
accrued are expected to be paid out over the next five to six years. The level
of future expenditures for environmental remediation obligations is impossible
to determine with any degree of probability. In 1995, the Company spent
approximately $14,782,000 in capital expenditures for environmental protection
and for compliance with federal, state and local environmental laws and
regulations. In addition, the Company expensed $43,135,000 in 1995 for ongoing
environmental administration and maintenance activities at operating facilities.
The Company also paid $10,165,000 for superfund taxes in 1995. Total
environmental cash expenditures at the
F-17
<PAGE> 39
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's operating locations are expected to increase over the next several
years as the Company complies with present and future regulatory requirements.
These costs will be incurred over an extended period of time. Estimated capital
expenditures for 1996 related to environmental matters are $18,351,000.
(14) SEGMENT DATA
The Company is engaged in crude oil and natural gas exploration and
production and natural gas marketing ("Upstream"); petroleum products refining,
supply and transportation and marketing ("Downstream"); and chemicals
manufacturing and marketing ("Chemicals"). Segment data as of and for the three
years ended December 31, 1995 follows (in thousands):
<TABLE>
<CAPTION>
CORPORATE
UPSTREAM DOWNSTREAM CHEMICALS AND OTHER CONSOLIDATED
-------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
1995:
Sales:
Unaffiliated customers............. $352,932 $2,189,860 $1,059,731 $ 130 $3,602,653
======== ========== ========== ========
Affiliates......................... $ -- $ -- $ 3,984 $ -- 3,984
======== ========== ========== ========
Inter-segment...................... $ 44,095 $ 129,780 $ 7,423 $ -- --
======== ========== ========== ======== ----------
$3,606,637
==========
Operating profit (loss)(1)............ $(60,653) $ (2,777) $ 295,905 $(17,452) $ 215,023
Interest and other income............. (6,258) (1,940) (5,292) 2,379 (11,111)
Interest expense, net................. -- -- -- (42,834) (42,834)
-------- ---------- ---------- -------- ----------
Earnings (loss) before income
taxes....................... $(66,911) $ (4,717) $ 290,613 $(57,907) $ 161,078
======== ========== ========== ======== ==========
Accounts and notes receivable, net.... $ 70,282 $ 194,051 $ 70,427 $ 1,486 $ 336,246
======== ========== ========== ======== ==========
Identifiable assets................... $576,966 $1,263,618 $ 531,737 $115,397 $2,487,718
======== ========== ========== ======== ==========
Depreciation, depletion, amortization
and lease impairment(1)............ $115,890 $ 75,554 $ 18,975 $ 3,545 $ 213,964
======== ========== ========== ======== ==========
Capital expenditures.................. $ 55,606 $ 42,234 $ 113,911 $ 6,685 $ 218,436
======== ========== ========== ======== ==========
1994:
Sales:
Unaffiliated customers............. $549,160 $1,981,444 $ 888,728 $ 178 $3,419,510
======== ========== ========== ========
Affiliates......................... $ -- $ -- $ 1,602 $ -- 1,602
======== ========== ========== ========
Inter-segment...................... $ 42,358 $ 154,965 $ 14,425 $ -- --
======== ========== ========== ======== ----------
$3,421,112
==========
Operating profit (loss)............... $(15,713) $ 42,473 $ 171,164 $(16,953) $ 180,971
Interest and other income............. 12,307 4,771 (6,765) 5,674 15,987
Interest expense, net................. -- -- -- (44,601) (44,601)
-------- ---------- ---------- -------- ----------
Earnings (loss) before income
taxes....................... $ (3,406) $ 47,244 $ 164,399 $(55,880) $ 152,357
======== ========== ========== ======== ==========
Accounts and notes receivable, net.... $ 68,198 $ 208,055 $ 73,058 $ 16,303 $ 365,614
======== ========== ========== ======== ==========
Identifiable assets................... $656,977 $1,307,181 $ 420,901 $108,803 $2,493,862
======== ========== ========== ======== ==========
Depreciation, depletion, amortization
and lease impairment............... $ 82,425 $ 80,471 $ 18,872 $ 4,193 $ 185,961
======== ========== ========== ======== ==========
Capital expenditures.................. $ 49,299 $ 48,817 $ 33,579 $ 4,686 $ 136,381
======== ========== ========== ======== ==========
</TABLE>
F-18
<PAGE> 40
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CORPORATE
UPSTREAM DOWNSTREAM CHEMICALS AND OTHER CONSOLIDATED
-------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
1993:
Sales:
Unaffiliated customers............. $519,810 $2,101,448 $ 793,372 $ 156 $ 3,414,786
======== ========== ========= =========
Affiliates......................... $ -- $ -- $ 1,437 $ -- 1,437
======== ========== ========= =========
Inter-segment...................... $ 45,570 $ 167,160 $ 5,491 $ -- --
======== ========== ========= ========= -----------
$ 3,416,223
===========
Operating profit (loss)............... $ 13,277 $ (8,329) $ 60,437 $ (17,919) $ 47,466
Interest and other income............. 107,872 (12) (6,713) 2,458 103,605
Interest expense, net................. -- -- -- (54,956) (54,956)
-------- ---------- --------- --------- -----------
Earnings (loss) before income
taxes....................... $121,149 $ (8,341) $ 53,724 $ (70,417) $ 96,115
======== ========== ========= ========= ===========
Accounts and notes receivable, net.... $ 88,038 $ 155,054 $ 49,398 $ 779 $ 293,269
======== ========== ========= ========= ===========
Identifiable assets................... $745,473 $1,260,463 $ 402,270 $ 103,147 $ 2,511,353
======== ========== ========= ========= ===========
Depreciation, depletion, amortization
and lease impairment............... $ 94,704 $ 79,347 $ 19,562 $ 4,728 $ 198,341
======== ========== ========= ========= ===========
Capital expenditures.................. $ 30,665 $ 86,233 $ 7,226 $ 1,348 $ 125,472
======== ========== ========= ========= ===========
</TABLE>
- ---------------
(1) During the fourth quarter of 1995, the Company adopted SFAS 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." As a result, the Company recognized a before-tax addition of
$58,723,000 to depreciation, depletion and amortization expense, of which
$52,723,000 was related to its Upstream business and $6,200,000 was related
to its Downstream business. After tax, the additional charge was
$38,173,000 or $1.22 per share.
Consolidated totals are after elimination of inter-segment amounts.
Operating profit (loss) is sales less operating expenses and is substantially
all derived from domestic operations. Identifiable assets are those assets that
are used in the operations in each business segment.
Most customers are located in the South and Midwest regions of the United
States. No single customer accounted for more than 5% of sales in 1995, 1994 or
1993, and no account receivable from any customer exceeded 5% of consolidated
stockholders' equity at December 31, 1995, 1994 or 1993.
F-19
<PAGE> 41
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(15) FINA OIL AND CHEMICAL COMPANY AND CONSOLIDATED SUBSIDIARIES SUMMARY
FINANCIAL DATA
Fina Oil and Chemical Company ("FOCC"), a wholly-owned subsidiary of the
Company, is the main operating subsidiary of the Company whose principle lines
of business include crude oil and natural gas exploration and production;
petroleum products refining, supply and transportation and marketing; and
chemicals manufacturing and marketing. FOCC is proposing to issue senior debt
securities, which will be unconditionally guaranteed on an unsecured basis by
the Company. Following is summary consolidated financial data for FOCC (in
thousands).
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
At December 31:
Current assets............................. $ 638,835 $ 645,045
Noncurrent assets.......................... 1,762,093 1,763,379
Current liabilities........................ (493,078) (538,004)
Noncurrent liabilities(1).................. (1,794,887) (1,651,716)
----------- -----------
Net Assets......................... $ 112,963 $ 218,704
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
Year ended December 31:
Sales and other operating revenues......... $ 3,363,505 $ 3,013,957 $3,099,097
=========== =========== ==========
Gross profit(2)............................ $ 303,166 $ 259,411 $ 156,528
=========== =========== ==========
Net earnings(3)............................ $ 99,074 $ 97,662 $ 73,304
=========== =========== ==========
</TABLE>
- ---------------
(1) Includes intercompany accounts receivable and payable.
(2) Gross profit is defined as sales and other operating revenues less cost of
raw materials and products purchased; direct operating expenses; taxes,
other than on income; and depreciation, depletion, amortization and lease
impairment.
(3) In 1995, the Company adopted SFAS 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
resulted in a before tax charge of $58,723,000 to gross profit. After tax,
the additional charge was $38,173,000.
F-20
<PAGE> 42
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(16) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1995:
Sales and other operating revenues... $863,188 $965,352 $916,287 $ 861,810
======== ======== ======== =========
Gross profit(1)...................... $ 87,568 $112,129 $105,012 $ 9,199
======== ======== ======== =========
Net earnings (loss)(2)............... $ 33,490 $ 41,786 $ 44,973 $ (15,824)
======== ======== ======== =========
Earnings (loss) per common share..... $ 1.07 $ 1.34 $ 1.44 $ (.50)
======== ======== ======== =========
1994:
Sales and other operating revenues... $777,450 $838,081 $918,237 $ 887,344
======== ======== ======== =========
Gross profit(1)...................... $ 68,365 $ 49,908 $ 69,126 $ 79,782
======== ======== ======== =========
Net earnings......................... $ 25,017 $ 13,357 $ 27,973 $ 35,694
======== ======== ======== =========
Earnings per common share............ $ 1.60 $ 0.86 $ 1.79 $ 2.29
======== ======== ======== =========
</TABLE>
- ---------------
(1) Gross profit is defined as sales and other operating revenues less cost of
raw materials and products purchased; direct operating expenses; taxes,
other than on income; and depreciation, depletion, amortization and lease
impairment.
(2) During the quarter ended December 31, 1995, the Company adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" which resulted in a before-tax addition of
$58,723,000 to depreciation, depletion and amortization expense. After tax,
the additional charge was $38,173,000 or $1.22 per share.
F-21
<PAGE> 43
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (UNAUDITED)
The following tables set forth supplementary disclosures for oil and gas
producing activities in accordance with SFAS 69.
(A) CAPITALIZED COSTS
Capitalized costs relating to oil and gas producing activities and the
related amounts of accumulated depreciation, depletion, amortization and lease
impairment follow:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Proved oil and gas properties................ $ 905,554 $ 906,738 $1,012,024
Unproved oil and gas properties.............. 232,085 254,998 246,607
---------- ---------- ----------
1,137,639 1,161,736 1,258,631
Less accumulated depreciation, depletion,
amortization and lease impairment.......... 640,223 585,138 613,120
---------- ---------- ----------
Net capitalized costs........................ $ 497,416 $ 576,598 $ 645,511
========== ========== ==========
</TABLE>
(B) COSTS INCURRED
A summary of costs incurred in oil and gas property acquisition,
exploration and development activities (both capitalized and charged to expense)
for the three years ended December 31, 1995 follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition of unproved properties...................... $ 5,304 $ 2,784 $ 1,181
======= ======= =======
Acquisition of proved properties........................ $ 1,091 $ 237 $ 482
======= ======= =======
Exploration costs....................................... $46,463 $32,674 $21,476
======= ======= =======
Development costs....................................... $29,992 $28,314 $23,869
======= ======= =======
</TABLE>
The above costs were incurred in the United States.
F-22
<PAGE> 44
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (UNAUDITED) -- (CONTINUED)
(C) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following table presents the results of operations for oil and gas
producing activities for the three years ended December 31, 1995.
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Sales............................................ $ 119,772 $139,532 $ 209,753
Transfers........................................ 17,710 17,205 17,751
--------- -------- ---------
Total.................................... 137,482 156,737 227,504
Production costs................................... (51,922) (66,374) (83,237)
Exploration costs.................................. (26,662) (14,173) (15,632)
Depreciation, depletion, amortization, lease
impairment and abandonments...................... (116,592) (86,236) (106,140)
--------- -------- ---------
(57,694) (10,046) 22,495
Income tax benefit (expense)....................... 22,473 5,604 (480)
--------- -------- ---------
Results of operations from producing activities,
excluding interest costs......................... $ (35,221) $ (4,442) $ 22,015
========= ======== =========
</TABLE>
(D) RESERVE QUANTITY INFORMATION
The following table presents the Company's estimate of its proved oil and
gas reserves, all of which are located in the United States. The Company
emphasizes that reserve estimates are inherently imprecise and that estimates of
new discoveries are more imprecise than those of producing oil and gas
properties. Accordingly, the estimates are expected to change as future
information becomes available. The estimates have been prepared by the Company's
internal petroleum reservoir engineers.
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- ------------------
OIL GAS OIL GAS OIL GAS
------ ------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Proved developed and undeveloped
reserves:
Beginning of year................... 31,699 348,204 36,090 439,066 42,479 655,649
Revisions of previous estimates..... 1,236 283 2,571 (40,376) (6,405) (23,294)
Purchases of minerals in place...... 48 55 57 6 419 1,705
Sales of minerals in place.......... (2,052) (11,729) (4,756) (28,780) (2,803) (156,418)
Extensions and discoveries.......... 7,390 29,528 2,293 31,152 8,305 29,348
Production.......................... (3,749) (52,119) (4,556) (52,864) (5,905) (67,924)
------ ------- ------ ------- ------ -------
End of year......................... 34,572 314,222 31,699 348,204 36,090 439,066
====== ======= ====== ======= ====== =======
Proved developed reserves:
Beginning of year................... 19,986 237,270 23,644 306,991 34,892 468,310
====== ======= ====== ======= ====== =======
End of year......................... 18,814 228,548 19,986 237,270 23,644 306,991
====== ======= ====== ======= ====== =======
</TABLE>
Oil reserves, which include condensate and natural gas liquids, are stated
in thousands of barrels and gas reserves are stated in millions of cubic feet.
F-23
<PAGE> 45
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (UNAUDITED) -- (CONTINUED)
(E) STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN
RELATING TO PROVED OIL AND GAS RESERVES
The following table, which presents a standardized measure of discounted
future net cash flows and changes therein relating to proved oil and gas
reserves, is presented pursuant to Statement of Financial Accounting Standards
No. 69. In computing this data, assumptions other than those required by the
Financial Accounting Standards Board could produce different results.
Accordingly, the data should not be construed as representative of the fair
market value of the Company's proved oil and gas reserves.
Future cash inflows were computed by applying year end prices of oil and
gas relating to proved reserves to the estimated year end quantities of those
reserves. Future price changes were considered only to the extent provided by
contractual arrangements in existence at year end. Future development and
production costs were computed by estimating the expenditures to be incurred in
developing and producing the proved oil and gas reserves at the end of the year,
based on year end costs. Future income tax expenses were computed by applying
the year end statutory tax rate adjusted for tax credits, with consideration of
future tax rates already legislated, to the future pretax net cash flows
relating to proved oil and gas reserves, less the tax basis of the properties
involved. The standardized measure of discounted future cash flows represents
the present value of estimated future net cash flows using a discount rate of
10% a year.
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------
1995 1994 1993
---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Future cash inflows.............................. $1,202,555 $ 977,811 $1,330,387
Future production and development costs.......... (476,786) (422,277) (484,783)
Future income tax expenses....................... (117,188) (45,859) (121,028)
---------- --------- ----------
Future net cash flows............................ 608,581 509,675 724,576
10% annual discount for estimated timing of
cash flows..................................... (244,862) (191,981) (277,041)
---------- --------- ----------
Standardized measure of discounted future net
cash flows..................................... $ 363,719 $ 317,694 $ 447,535
========== ========= ==========
Beginning of year................................ $ 317,694 $ 447,535 $ 668,331
Changes resulting from:
Sales and transfers of oil and gas produced,
net of production costs..................... (85,560) (90,363) (144,267)
Extensions and discoveries..................... 56,806 26,246 51,053
Purchases of minerals in place................. 353 350 3,555
Sales of minerals in place..................... (22,829) (48,157) (154,814)
Previously estimated development costs incurred
during the year............................. 43,600 25,625 26,337
Revisions of previous quantities............... 17,186 (4,880) (49,494)
Accretion of discount.......................... 34,626 52,227 82,980
Net change in income taxes..................... (41,459) 46,163 86,754
Net changes in prices and costs................ 43,302 (137,052) (122,900)
---------- --------- ----------
End of year...................................... $ 363,719 $ 317,694 $ 447,535
========== ========= ==========
</TABLE>
F-24
<PAGE> 46
FINA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents.................................................... $ 4,470
Accounts and notes receivable................................................ 418,918
Inventories.................................................................. 305,358
Prepaid expenses and other current assets.................................... 48,142
----------
Total current assets................................................. 776,888
----------
Net property, plant, and equipment, at cost.................................... 1,655,961
Other noncurrent assets........................................................ 150,072
----------
$2,582,921
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations....................................................... $ 24,000
Current installments of long term debt and lease obligations................. 35,720
Accounts payable and accrued liabilities..................................... 560,740
----------
Total current liabilities............................................ 620,460
----------
Long term debt, excluding current installments................................. 494,899
Other deferred credits and liabilities......................................... 270,039
Stockholders' equity:
Preferred stock of $1 par value. Authorized 4,000,000 shares; none issued.... --
Class A common stock of $.50 par value. Authorized 38,000,000 shares; issued
and outstanding 29,212,472 shares......................................... 14,606
Class B common stock of $.50 par value. Authorized and issued 2,000,000
shares.................................................................... 1,000
Additional paid-in capital................................................... 450,770
Retained earnings............................................................ 731,147
----------
Total stockholders' equity........................................... 1,197,523
Commitments and contingencies
----------
$2,582,921
==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-25
<PAGE> 47
FINA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Sales and other operating revenues................................... $965,115 $863,188
Interest and other, net.............................................. (2,715) (1,850)
-------- --------
962,400 861,338
-------- --------
Costs and expenses:
Cost of raw materials and products purchased......................... 724,868 636,774
Direct operating expenses............................................ 93,791 88,490
Selling, general, and administrative expenses........................ 20,673 20,806
Taxes, other than on income.......................................... 11,974 11,911
Dry holes and abandonments........................................... 4,115 1,516
Depreciation, depletion, amortization, and lease impairment.......... 39,683 38,445
Interest charges, net................................................ 9,738 11,958
-------- --------
904,842 809,900
-------- --------
Earnings before income taxes................................. 57,558 51,438
Income taxes........................................................... 19,536 17,948
-------- --------
Net earnings................................................. $ 38,022 $ 33,490
======== ========
Earnings per common share.............................................. $ 1.22 $ 1.07
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-26
<PAGE> 48
FINA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows provided by operating activities............................ $ 47,007 $ 31,032
Cash flows from investing activities:
Additions to property, plant and equipment........................... (38,588) (22,398)
Proceeds from sales of assets........................................ 7,207 5,609
Investments in and advances to affiliates............................ (570) (1,406)
-------- --------
Net cash used in investing activities........................ (31,951) (18,195)
-------- --------
Cash flows from financing activities:
Payments of long term debt and lease obligations..................... (3,301) (3,107)
Net change in short term obligations................................. 4,000 5,000
Issuance of common stock............................................. 171 14
Dividends paid....................................................... (18,727) (15,595)
-------- --------
Net cash used in financing activities........................ (17,857) (13,688)
-------- --------
Net decrease in cash and cash equivalents.............................. (2,801) (851)
Cash and cash equivalents at beginning of period....................... 7,271 3,533
-------- --------
Cash and cash equivalents at end of period............................. $ 4,470 $ 2,682
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 49
FINA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
(1) The information furnished reflects all adjustments which are, in the opinion
of management, necessary to a fair presentation of the results of the
interim periods presented. The results of operations for the three months
ended March 31, 1996 are not necessarily indicative of the operating results
for the full fiscal year.
(2) Earnings per common share is based on the weighted average number of
outstanding shares. Shares issuable upon the exercise of stock options are
excluded from the computation since their effect is insignificant. The
weighted average number of outstanding shares was 31,209,997 and 31,189,604
for the three months ended March 31, 1996 and 1995, respectively.
(3) FINA, Inc. is contingently liable under pending lawsuits and other claims,
some of which involve substantial sums. Considering certain liabilities
which have been set up for the lawsuits and claims, and the difficulty in
determining the ultimate liability in some of these matters, internal
counsel is of the opinion that the amounts, if any, which ultimately might
be due in connection with such lawsuits and claims would not have a material
adverse effect upon the Company's consolidated financial condition.
(4) These financial statements are for interim periods and do not include all
detail normally provided in annual financial statements and should be read
in conjunction with the consolidated financial statements of FINA, Inc. and
subsidiaries as of December 31, 1995 and 1994 and for each of the years in
the three-year period ended December 31, 1995 included elsewhere herein.
(5) Fina Oil and Chemical Company ("FOCC"), a wholly-owned subsidiary of FINA,
Inc., is the main operating subsidiary of the Company whose principle lines
of business include crude oil and natural gas exploration and production;
petroleum products refining, supply and transportation and marketing; and
chemicals manufacturing and marketing. FOCC is proposing to issue senior
debt securities which will be unconditionally guaranteed on an unsecured
basis by the Company. Following is summary consolidated financial data for
FOCC (in thousands).
<TABLE>
1996
-----------
<S> <C>
At March 31:
Current assets............................................ $ 730,682
Noncurrent assets......................................... 1,769,468
Current liabilities....................................... (577,088)
Noncurrent liabilities(1)................................. (1,788,772)
-----------
Net Assets........................................ $ 134,290
===========
</TABLE>
<TABLE>
1996 1995
----------- --------
<S> <C> <C>
Three months ended March 31:
Sales and other operating revenues........................ $ 857,808 $806,157
=========== ========
Gross profit(2)........................................... $ 77,534 $ 85,139
=========== ========
Net earnings.............................................. $ 27,120 $ 32,804
=========== ========
</TABLE>
- ---------------
(1) Includes intercompany accounts receivable and payable.
(2) Gross profit is defined as sales and other operating revenues less cost of
raw materials and products purchased, direct operating expenses; taxes,
other than on income; and depreciation, depletion, amortization and lease
impairment.
F-28
<PAGE> 50
================================================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, FINA OR ANY UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR FINA SINCE SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds....................... S-3
Capitalization........................ S-3
The Guarantor......................... S-3
The Company........................... S-4
Summary of Selected Financial Data.... S-5
Description of Notes.................. S-7
Underwriting.......................... S-8
Legal Opinions........................ S-9
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company and The Guarantor......... 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 3
Description of Senior Debt
Securities.......................... 4
Plan of Distribution.................. 11
Experts............................... 12
Index to Consolidated Financial
Statements of FINA, Inc............. F-1
</TABLE>
================================================================================
================================================================================
$125,000,000
[FINA LOGO]
FINA OIL AND CHEMICAL
COMPANY
6 7/8% NOTES DUE 2001
UNCONDITIONALLY AND IRREVOCABLY
GUARANTEED BY
FINA, INC.
---------------------
PROSPECTUS SUPPLEMENT
---------------------
CHASE SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
JULY 17, 1996
================================================================================
