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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 29, 1998
FINA, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-4014 13-1820692
(State or other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification
Incorporation) Number)
P. O. Box 2159
Dallas, Texas 75221
(Address of principal executive offices, Zip Code)
Registrant's telephone number, including area code:
(214) 750-2400
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Item 5. OTHER EVENTS
The Company announced its second quarter and first half 1998 earnings of $33.1
million and $43.1 million, respectively. The attached News Release describing
earnings is filed as an exhibit.
Item 7. Financial Statements and Exhibits
(c) Exhibit 99(A)
News Release dated July 28, 1998.
(Released by the Company)
FINA, Inc.
(Registrant)
/s/ CULLEN M. GODFREY
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Cullen M. Godfrey, Senior Vice President,
Secretary and General Counsel
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
99(A) Press Release
</TABLE>
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[FINA LOGO]
FINA ANNOUNCES SECOND QUARTER, FIRST HALF 1998 EARNINGS
DALLAS (July 28, 1998) FINA, Inc. today reported second quarter net
earnings of $33.1 million, or $1.06 per share, after a non-cash LIFO inventory
write-down of $12.1 million after tax, due to the drop in crude oil and
refined and chemical product prices, and asset sales gains of $6.7 million after
tax. 1997 second quarter earnings were $40.0 million. Excluding one-time
unusual items, second quarter earnings were essentially unchanged from the
prior year. Sales and other operating revenues of $1.0 billion were also
essentially unchanged from the same period last year, with lower prices
generally offset by higher volumes.
Net earnings for the first half of 1998 were $43.1 million, or $1.38
per share, after a non-cash LIFO inventory write-down of $38.8 million and
asset sales gains of $20.7 million, both after tax, compared to 1997 first half
earnings of $79.2 million. Excluding one-time unusual items, first half
earnings were down 16% from the prior year with reduced Upstream profits
reflecting lower crude and natural gas prices. Sales and other operating
revenues decreased slightly to $2.0 billion with lower prices in all lines of
business partially offset by higher volumes.
Commenting on the results, FINA President and Chief Executive Officer,
Ron W. Haddock, said, "Second quarter and first half results included
significant non-cash LIFO
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inventory write-downs which detracted from strong operations and the successful
sale of selected non-strategic assets."
Operating cash flow, excluding changes in working capital, LIFO
inventory effects, and proceeds from asset sales and environmental insurance
recovery, totaled $117.5 million in the second quarter and $211.4 million for
the first half of 1998, down 2% and 7%, respectively, from the same periods
last year.
Capital expenditures for the first half increased to $157.2 million,
compared to $100.4 million in the same period last year, due largely to the
two Chemicals expansion projects at the La Porte, Texas Polypropylene Plant and
the Bayport, Texas Polyethylene Plant, and to the FINA Holly Pipeline project.
Cash dividends in the first half of 1998 increased to $50.0 million,
compared to $46.8 million in the first half of 1997, reflecting quarterly
dividends of $0.80 per share.
Total debt at the end of the first half was $789.1 million, with a
total debt to total capital ratio of 38% compared to 37% at the same time last
year, reflecting the larger capital expansion program mostly offset by the
on-going debt management program.
On August 5, 1998, FINA, Inc. will hold a special meeting of
shareholders to vote on the proposed merger with PetroFina S.A. PetroFina
S.A., located in Brussels, Belgium, owns 100% of Petrofina Delaware,
Incorporated, which owns approximately 85% of FINA, Inc. common stock. When
the merger is approved by FINA, Inc. shareholders, FINA will become an
indirect, wholly-owned subsidiary of PetroFina S.A.
UPSTREAM
Earnings before interest and income taxes (EBIT) were $19.3 million in
the second quarter of 1998 including asset sales gains of $9.2 million before
tax, an increase of $15.2
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million from second quarter 1997. Excluding one-time unusual items, earnings
were up over 300% from the prior year.
For the first half of 1998, Upstream EBIT was $47.3 million including
asset sales gains of $28.9 million before tax, up $7.7 million from the same
period last year. Excluding one-time unusual items, earnings were down 43% from
the prior year due to lower crude oil and natural gas prices and lower natural
gas production.
The sale of non-strategic onshore properties and 50% of our interest in
undeveloped Gulf of Mexico properties, in addition to increasing earnings and
cash flow will also significantly reduce administrative overhead costs as the
program continues during the second half of the year. Successful drilling
activity, including a significant natural gas discovery in South Texas, and
lower Exploration expenses also contributed to earnings in the first half of
1998. These factors were partially offset by a 35% decrease in crude oil
wellhead prices and a 7% decrease in natural gas wellhead prices, compared to
the first half of 1997.
DOWNSTREAM
Downstream EBIT was $20.2 million in the second quarter, after a non-cash
LIFO inventory write-down of $9.3 million and an asset sales gain of $1.7
million, both before tax. Excluding one-time unusual items, earnings were 9%
below the same period last year, reflecting lower industry refining margins and
lower wholesale marketing margins.
For the first half of 1998, Downstream EBIT was $21.3 million, after a
$15.1 million LIFO inventory write-down and an asset sales gain of $1.7 million,
both before tax. Excluding one-time unusual items, earnings were up 17% from
the same period last year, reflecting higher industry refining margins and good
operations.
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The Big Spring Refinery throughput increased significantly in the second
quarter following successful Crude Unit upgrades. In addition, the FINA-Holly
Pipeline project, which will increase product outlets for the Refinery in West
Texas, New Mexico and Arizona, is progressing well and is scheduled for start up
in August.
FINA is finalizing its partnership with BASF to build the world's largest
stream cracker at the Port Arthur Refinery following approval of the project by
the Boards of Directors of both PetroFina and BASF in May. Construction is
expected to begin in the fourth quarter.
CHEMICALS
Chemicals EBIT for the second quarter was $29.3 million, after a non-cash
LIFO inventory write-down of $9.3 million before tax. Excluding one-time
unusual items, earnings were down 2% from the same period last year.
For the first half of the year,EBIT was $27.6 million, after a non-cash
LIFO inventory write-down of $44.6 million before tax. Excluding one-time
unusual items, earnings were down 4% from the same period last year with an 8%
decline in average margins only partially offset by a 3% increase in sales
volumes.
The two major Chemicals expansion projects are progressing well. Capacity
at the La Porte, Texas, Polypropylene Plant, already the world's largest, will
be increased to 2.15 billion pounds per year, while the Bayport, Texas,
Polyethylene Plant will double in size to 850 million pounds per year. Start-up
of these expansions is anticipated in the fourth quarter. A third expansion
project at the Propylene Splitter at Mont Belvieu, Texas, of which FINA owns a
33% interest, is also progressing well and is scheduled to start up in
mid-August.
An unaudited summary of the Company's financial results by business
segment, and a comparison to last year, follows:
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FINA, INC.
COMPANY'S UNAUDITED RESULTS
(THOUSANDS, EXCEPT SHARE AND PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
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1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET REVENUE
Upstream $ 281,414 $ 153,272 $ 618,198 $ 370,334
Downstream 510,581 611,307 958,914 1,222,157
Chemicals 227,175 269,933 460,174 556,047
Other 28 46 71 88
------------ ------------ ------------ ------------
Total Net Revenue $ 1,019,198 $ 1,034,558 $ 2,037,357 $ 2,148,626
============ ============ ============ ============
EARNINGS
Upstream $ 19,276 $ 4,091 $ 47,313 $ 39,578
Downstream 20,191 29,820 21,318 31,827
Chemicals 29,288 40,575 27,607 75,649
Corporate/Financing (17,679) (14,383) (29,777) (28,467)
Income Tax (17,961) (20,080) (23,324) (39,414)
------------ ------------ ------------ ------------
Total Net Earnings* $ 33,115 $ 40,023 $ 43,137 $ 79,173
============ ============ ============ ============
Net Earnings Per Share $ 1.06 $ 1.28 $ 1.38 $ 2.54
Average Shares Outstanding 31,245,022 31,217,372 31,236,715 31,217,029
CAPITAL EXPENDITURES
Upstream $ 21,764 $ 28,465 $ 35,666 $ 45,266
Downstream 17,706 14,838 24,794 16,733
Chemicals 70,232 12,671 90,301 20,525
Other 1,398 2,144 2,671 3,095
------------ ------------ ------------ ------------
Total Capital Expenditures $ 111,100 $ 58,118 $ 153,432 $ 85,619
============ ============ ============ ============
Exploratory Expenditures 1,940 10,484 3,811 14,780
Total $ 113,040 $ 68,602 $ 157,243 $ 100,399
OPERATING STATISTICS
Upstream
Crude Oil Production - Mb/d 9.9 10.3 10.1 10.3
Natural Gas Production - MMcf/d 184 183 182 186
Natural Gas Sales - MMcf/d 1,237 673 1,329 700
Average Wellhead Oil Price/bbl $ 11.24 $ 17.07 $ 12.12 $ 18.71
Average Natural Gas Sales Price/Mcf $ 2.43 $ 2.29 $ 2.51 $ 2.71
Downstream
Refinery Throughput - Mb/d 235.4 229.0 228.8 230.6
Chemicals
Total Chemical Sales Volumes - MMlb 1,059.9 1,009.2 2,073.4 2,009.6
* BREAKDOWN OF TOTAL NET EARNINGS EXCLUDING UNUSUAL ITEMS:
Total Net Earnings $ 33,115 $ 40,023 $ 43,137 $ 79,173
Add Back LIFO Inventory Write-Down 12,143 (157) 38,820 (1,557)
Less Asset Sales Gains (6,700) (1,284) (20,709) (4,843)
------------ ------------ ------------ ------------
Total Net Earnings Excl. Un. Items $ 38,558 $ 38,582 $ 61,248 $ 72,773
============ ============ ============ ============
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