<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) -- September 1, 1994
MAPCO INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5254 73-0705739
- --------------- ------------ -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1800 South Baltimore Avenue
Tulsa, Oklahoma 74119
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 581-1800
--------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On September 1, 1994, MAPCO Inc. (the "Company" or the "Registrant")
through its wholly-owned subsidiaries, MAPCO Natural Gas Liquids Inc. and MAPCO
Petroleum Inc. (and its subsidiary, MAPCO Florida Inc.), completed the
acquisition of the assets of Emro Propane Company, a subsidiary of Emro
Marketing, which is a wholly-owned subsidiary of Marathon Oil (hereinafter
"Emro"). The Company signed a non-binding letter of intent for the purchase of
these assets on June 9, 1994, which was previously reported on Form 8-K filed
with the Securities and Exchange Commission on June 13, 1994.
The Registrant acquired the Emro assets by the payment of $178,046,000
and the transfer to Emro of MAPCO Florida Inc.'s retail marketing assets in
Florida. The cash payment was financed through the issuance by the Company of
commercial paper through Goldman Sachs Money Markets, L.P. and through
borrowings pursuant to uncommitted lines of credit with Bank of America
National Trust & Savings Association, Chemical Bank and J.P. Morgan Guaranty
Trust Company.
The assets acquired are retail propane plants in the States of
Illinois, Indiana, Michigan and Ohio. The assets which were transferred by the
Company to Emro are retail petroleum convenience stores located in the State of
Florida.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. The
following financial statements of Emro Propane Company are filed herewith:
Audited Annual Financial Statements:
Independent Auditors' Report
Balance Sheet as of December 31, 1993
Statement of Income and Retained Earnings for the Year
Ended December 31, 1993
Statement of Cash Flows for the Year Ended December 31,
1993
Notes to Financial Statements
Unaudited Interim Financial Statements:
Balance Sheets as of June 30, 1994 and December 31, 1993
Statements of Income and Retained Earnings for the Six
Months Ended June 30, 1994 and 1993
Statements of Cash Flows for the Six Months Ended June
30, 1994 and 1993
Notes to Financial Statements
<PAGE> 3
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Financial Statements:
Balance Sheet as of June 30, 1994
Statement of Income for the Six Months Ended June 30, 1994
Statement of Income for the Year Ended December 31, 1993
Notes to Pro Forma Financial Statements
(c) Exhibits.
*10 Purchase and Sale Agreement between Emro Propane
Company and Emro Marketing Company and MAPCO
Natural Gas Liquids Inc., MAPCO Petroleum Inc.
and MAPCO Florida Inc. dated August 3, 1994 and
executed on September 1, 1994.
23 Independent Auditors' Consent.
__________________________
*Previously Filed
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MAPCO INC.
By: /s/ James N. Cundiff
Name: James N. Cundiff
Title: Assistant General Counsel
and Assistant Secretary
Date: November 7, 1994
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
Emro Propane Company
We have audited the accompanying balance sheet of Emro Propane Company (an
indirect, wholly-owned subsidiary of Marathon Oil Company, a wholly-owned
subsidiary of USX Corporation) as of December 31, 1993, and the related
statements of income and retained earnings and of cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Emro Propane Company at December 31, 1993,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Tulsa, Oklahoma
September 1, 1994
<PAGE> 6
EMRO PROPANE COMPANY
BALANCE SHEET
DECEMBER 31, 1993
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,509,469
Accounts receivable, less allowance of $200,000 13,329,154
Inventories 7,816,350
Investment in USX Portfolio Delaware 23,230,015
Prepaid expenses 144,589
-----------
Total current assets 46,029,577
PROPERTY, PLANT AND EQUIPMENT, net 37,705,909
INTANGIBLE AND OTHER ASSETS, net 5,314,699
-----------
TOTAL $89,050,185
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,429,853
Accrued and other current liabilities 1,825,790
Income taxes payable 5,837,094
Current maturities of long-term debt
covenants payable 930,779
-----------
Total current liabilities 14,023,516
LONG-TERM DEBT 576,156
LONG-TERM COVENANTS PAYABLE 2,443,000
OTHER LONG-TERM LIABILITIES 1,006,296
DEFERRED INCOME TAXES 7,688,867
STOCKHOLDER'S EQUITY:
Capital stock, $1 par value: 1,500 shares
issued and outstanding 1,500
Paid-in surplus 9,614
Retained earnings 63,301,236
-----------
Total stockholder's equity 63,312,350
-----------
TOTAL $89,050,185
===========
</TABLE>
See notes to financial statements.
<PAGE> 7
EMRO PROPANE COMPANY
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1993
- -------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUES:
Propane sales $ 93,183,302
Appliances and other merchandise sales 13,835,596
------------
Total revenues 107,018,898
COSTS AND EXPENSES:
Cost of propane sold 44,800,308
Cost of appliances and other merchandise sold 8,205,952
Salaries and labor expense 16,869,071
Other operating costs 14,478,371
Depreciation and amortization 6,373,998
------------
Total costs and expenses 90,727,700
------------
OPERATING INCOME 16,291,198
OTHER INCOME 1,406,283
------------
INCOME BEFORE PROVISION FOR INCOME TAXES 17,697,481
PROVISION FOR INCOME TAXES 6,118,430
------------
NET INCOME 11,579,051
RETAINED EARNINGS, BEGINNING OF YEAR 51,722,185
------------
RETAINED EARNINGS, END OF YEAR $ 63,301,236
============
</TABLE>
See notes to financial statements.
<PAGE> 8
EMRO PROPANE COMPANY
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1993
- --------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: $ 11,579,051
Net income
Reconciliation of net income to net cash provided
by operating activities:
Depreciation and amortization 6,373,998
Provision for losses on accounts receivable 707,660
Gain on disposal of assets (1,510)
Provision for deferred income taxes 1,007,427
Changes in assets and liabilities:
Accounts receivable (765,467)
Inventories (385,533)
Prepaid expenses 1,193,394
Intangible and other assets (205,241)
Accounts payable 566,826
Accrued and other current liabilities 459,954
Income taxes payable 198,094
Other long-term liabilities (888,189)
------------
Net cash provided by operating activities 19,840,464
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,686,383)
Proceeds from sale of assets 117,533
Net investments in USX Portfolio Delaware (16,583,685)
------------
Net cash used in investing activities (19,152,535)
CASH FLOWS FROM FINANCING ACTIVITIES -
Principal payments on debt and covenants (927,423)
------------
Net cash used in financing activities (927,423)
------------
DECREASE IN CASH AND CASH EQUIVALENTS (239,494)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,748,963
------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,509,469
============
SUPPLEMENTAL DISCLOSURE:
Cash paid to Marathon during the year for income taxes $ 4,912,209
============
Cash paid during the year for interest $ 340,259
============
</TABLE>
See notes to financial statements.
<PAGE> 9
EMRO PROPANE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation - Emro Propane Company ("the Company") is a wholly-owned
subsidiary of Emro Marketing Company ("EMC"), which is a wholly-owned
subsidiary of Marathon Oil Company ("Marathon"), a wholly-owned
subsidiary of USX Corporation ("USX").
Accounts Receivable - The Company's receivables arise primarily from
credit granted to customers for the purchase of propane and related
appliances and other merchandise. Accounts receivable determined to be
uncollectible are written off using the direct write-off method.
Inventories - Inventories are valued at the lower of cost or market.
Propane and appliance inventories are determined by the last-in,
first-out method. Service parts are determined by the first-in,
first-out method.
Investment in USX Portfolio Delaware - The investment in USX Portfolio
Delaware represents shares of Class A, Series 1 Preferred Stock. These
shares are redeemable on a daily basis by either USX Portfolio Delaware
or the shareholder. Dividends are declared daily on the shares, and are
paid in fractional shares. The market value of these shares is $2,000
per share. These shares may be traded only between the shareholder and
USX Portfolio Delaware.
Property, Plant and Equipment - Property, plant and equipment is stated
at cost less accumulated depreciation. Depreciation is computed by
using the straight-line method over the estimated useful lives of the
asset ranging from four to 33 years. Expenditures for maintenance and
repairs are expensed as incurred.
Intangible and Other Assets - Intangible assets consist principally of
goodwill, being the excess of cost over the fair value of net assets
acquired in business combinations accounted for as purchases, and of
covenants not to compete. Goodwill and covenants not to compete are
stated at cost, net of amortization on the straight-line basis over
forty and ten years, respectively. Liabilities for covenants not to
compete are recorded as long-term covenants payable.
Income Taxes - The Company is included in the consolidated federal
income tax return filed by USX. The Company's provision for income
taxes is based on statutory income tax rates applied to pre-tax income
adjusted for certain permanent differences. USX requires its
subsidiaries, for financial statement purposes, to record income tax
expense or benefits in the current period in accordance with the tax
allocation rules under the Internal Revenue Code's consolidated return
regulations.
<PAGE> 10
2. INVENTORIES
Inventories at December 31, 1993 consist of:
<TABLE>
<S> <C>
Propane $ 1,076,655
Appliances 4,195,044
Other merchandise 2,544,651
-----------
$ 7,816,350
===========
</TABLE>
The cost to replace propane and appliances in excess of last-in,
first-out (LIFO) carrying values was approximately $471,000 at December
31, 1993.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1993 consist of:
<TABLE>
<S> <C>
Land and improvements $ 3,134,376
Buildings 8,710,582
Equipment 69,104,893
Highway equipment 5,573,343
Furniture and fixtures 2,491,832
------------
89,015,026
Less accumulated depreciation (51,833,736)
------------
37,181,290
Construction in progress 524,619
------------
$ 37,705,909
============
</TABLE>
4. INTANGIBLE AND OTHER ASSETS
Intangibles and other assets at December 31, 1993 consist of:
<TABLE>
<S> <C>
Noncompete agreements $ 7,275,000
Goodwill 1,289,978
Other 16,437
-----------
8,581,415
Less accumulated amortization (3,266,716)
-----------
$ 5,314,699
===========
</TABLE>
<PAGE> 11
5. LONG-TERM DEBT
Long-term debt at December 31, 1993 consists of:
<TABLE>
<S> <C>
8.75% unsecured notes payable, principal due
annually from January 1994 through 1998 $ 692,435
Less current portion (116,279)
---------
$ 576,156
=========
</TABLE>
Aggregate maturities of long-term debt are:
<TABLE>
<S> <C>
1994 $ 116,279
1995 126,453
1996 137,517
1997 149,550
1998 162,636
---------
$ 692,435
=========
</TABLE>
6. LONG-TERM COVENANTS PAYABLE
Long-term covenants payable at December 31, 1993 consist of:
<TABLE>
<S> <C>
Covenants not to compete at interest rates
of 6% to 10% payments due annually $ 3,257,500
Less current portion (814,500)
-----------
$ 2,443,000
===========
</TABLE>
Aggregate covenants payable are due as follows: 1994 - $814,500; 1995 -
$814,500; 1996 - $814,500; 1997 - $814,000.
7. COMMITMENTS AND CONTINGENCIES
Certain property and equipment is leased under noncancelable operating
leases which require fixed monthly rental payments and which expire at
various dates through 2009. Future minimum lease commitments for such
leases are $47,712 in 1994; $23,783 in 1995; $8,958 in 1996; $5,985 in
1997; $1,081 in 1998 and $1,100 thereafter. Rental expense under all
operating leases totaled approximately $1,119,046 for the year ended
December 31, 1993.
The Company is a party to various legal proceedings incidental to its
business. Certain claims, suits and complaints arising in the ordinary
course of business have been filed or are pending against the Company.
In the opinion of management, all such matters are covered by insurance,
are without merit, or involve amounts which, if resolved unfavorably,
would not have a significant effect on the financial position or results
of operations of the Company.
<PAGE> 12
8. EMPLOYEE BENEFIT PLAN
The Company participates in Marathon's noncontributory defined benefit
plan covering substantially all employees. The funding policy for the
plan is to make the minimum annual contributions required by the
Employee Retirement Income Security Act.
Net periodic pension cost for the defined benefit pension plan during
1993 includes the following components:
<TABLE>
<S> <C>
Service Cost $ 403,759
Interest cost on projected benefit obligations 244,135
Actual return on plan assets (229,891)
Net amortization (10,049)
---------
Net periodic pension cost $ 407,954
=========
</TABLE>
The funded status of the defined benefit pension plan and the amounts
recognized in the balance sheet at December 31, 1993 are as follows:
<TABLE>
<S> <C>
Vested benefit obligation $(2,183,718)
===========
Accrued benefit obligation $(2,390,170)
===========
Projected benefit obligation $(3,692,608)
Plan assets at fair value 2,433,435
-----------
Plan assets less than projected benefit obligation (1,259,173)
Remaining unrecognized net asset existing at date
of initial application (315,570)
Unrecognized prior service cost 204,729
Unrecognized net loss 498,175
-----------
Accrued pension cost $ (871,839)
===========
</TABLE>
The assumed discount rate used to measure the benefit obligation was
7.00% at December 31, 1993. The assumed rate of future increases in
compensation levels was 5.00% at December 31, 1993.
9. TRANSACTIONS WITH RELATED PARTIES
At December 31, 1993, the Company had an invested cash balance of
$23,230,015 on deposit with USX Portfolio Delaware ("PFD"), a subsidiary
of USX, representing approximately 11,615 shares of USX Portfolio
Delaware Class A, Series 1 Preferred Stock, valued at $2,000 per share.
These shares are redeemable on a daily basis by either PFD or the
Company. These shares may be traded only between the Company and PFD.
They may not be traded between USX and any of its other subsidiaries.
During 1993 the Company earned $654,194 in dividends from PFD.
<PAGE> 13
The Company has the facility under a promissory note to borrow up to $30
million from PFD. In the event of a change in ownership of the Company,
PFD may demand repayment of any loan amount outstanding. If the loan in
whole is not so demanded before then, any final repayment is due on
November 30, 1998. The loan bears interest at the one-month LIBOR rate
on the last Euro-banking day of the previous month plus 100 basis
points. There were no borrowings under this unsecured note at December
31, 1993.
At December 31, 1993, the Company was owed $2,675,756 by EMC. This
balance was unsecured and interest free, and was settled in full in
January 1994.
During 1993, the Company purchased $44,000,000 of propane from EMC. All
transactions between the Company and EMC were consummated on terms
substantially equivalent of those that prevail in arm's-length
transactions.
10. INCOME TAXES
In 1992, USX and its subsidiaries, including the Company, adopted
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which requires an asset and liability approach in
accounting for income taxes. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used
for income tax purposes. The temporary differences that give rise to
significant portions of the deferred tax liabilities at December 31,
1993 relate primarily to tax bases of property, plant and equipment in
excess of financial bases due to accelerated depreciation deducted for
income tax purposes.
The provision for 1993 income taxes consists of the following:
<TABLE>
<S> <C>
Current:
Federal $ 5,515,751
State 279,094
Deferred 323,585
-----------
Provision for income taxes $ 6,118,430
===========
</TABLE>
The provision for income taxes varies from the Federal statutory rate on
income before income taxes primarily due to the dividends received
deduction, state income taxes, and the effect of the tax rate change in
the current year.
The consolidated tax returns of USX for the years 1988 through 1991 are
under various stages of audit and administrative review by the IRS. USX
believes it has made adequate provision for income taxes and interest
which may become payable for years not yet settled; however, none of the
provision is attributable to the Company.
At December 31, 1993, there were no operating loss and tax credit
carryforwards attributable to the Company's operations.
Other state taxes of approximately $460,000, including franchise taxes
and single business tax, are reflected in other operating costs.
<PAGE> 14
11. SUBSEQUENT EVENTS
On September 1, 1994, Marathon sold the Company's assets to MAPCO Inc.
for approximately $178,046,000 and the transfer of MAPCO Florida Inc.'s
retail marketing assets in Florida.
* * * * * *
<PAGE> 15
EMRO PROPANE COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1994 December 31,
(Unaudited) 1993
------------ -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $1,361,099 $1,509,469
Accounts receivable 11,085,912 13,329,154
Inventories 8,814,585 7,816,350
Investment in USX Portfolio Delaware 39,417,145 23,230,015
Prepaid expenses 268,228 144,589
------------ -----------
Total current assets 60,946,969 46,029,577
Property, Plant and Equipment, net 35,788,652 37,705,909
Intangible and Other Assets, net 4,951,479 5,314,699
------------ -----------
Total $101,687,100 $89,050,185
============ ===========
Current Liabilities:
Accounts payable $1,980,541 $5,429,853
Accrued and other current liabilities 2,421,692 1,825,790
Income taxes payable 11,499,004 5,837,094
Current maturities of long-term debt and
covenants payable 940,953 930,779
------------ -----------
Total current liabilities 16,842,190 14,023,516
Long-Term Debt 449,704 576,156
Long-Term Covenants Payable 2,005,000 2,443,000
Other Long-Term Liabilities 811,429 1,006,296
Deferred Income Taxes 7,358,867 7,688,867
Stockholder's Equity:
Capital stock 1,500 1,500
Paid-in surplus 9,614 9,614
Retained earnings 74,208,796 63,301,236
------------ -----------
Total stockholder's equity 74,219,910 63,312,350
------------ -----------
Total $101,687,100 $89,050,185
============ ===========
</TABLE>
See notes to financial statements.
<PAGE> 16
EMRO PROPANE COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30,
--------------------------
1994 1993
----------- -----------
<S> <C> <C>
Revenues:
Propane sales $52,095,824 $51,455,084
Appliance and other merchandise sales 6,854,899 5,452,434
----------- -----------
Total revenues 58,950,723 56,907,518
Costs and Expenses:
Cost of propane sold 21,124,875 25,031,023
Cost of appliances and other merchandise sold 4,043,999 3,188,798
Salaries and labor expense 9,113,764 8,480,555
Other operating costs 6,634,792 6,977,461
Depreciation and amortization expense 3,131,850 3,253,323
----------- -----------
Total costs and expenses 44,049,280 46,931,160
----------- -----------
Operating Income 14,901,443 9,976,358
Other Income 1,259,027 642,123
----------- -----------
Income Before Provision for Income Taxes 16,160,470 10,618,481
Provision for Income Taxes 5,252,910 3,600,000
----------- -----------
Net Income 10,907,560 7,018,481
Retained Earnings, Beginning of Year 63,301,236 51,722,185
----------- -----------
Retained Earnings, June 30 $74,208,796 $58,740,666
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 17
EMRO PROPANE COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30,
--------------------------
1994 1993
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $10,907,560 $ 7,018,481
Reconciliation of net income to net cash provided
by operating activities:
Depreciation and amortization 3,131,850 3,253,323
Provision for losses on accounts receivable 87,283 347,206
Loss on disposition of assets 3,813 11,538
Provision for deferred income taxes (330,000) (7,000)
Changes in assets and liabilities:
Accounts receivable 2,155,959 593,002
Inventories (998,235) (316,191)
Prepaid expenses (123,639) 976,614
Intangible and other assets (111,147) (220,024)
Accounts payable (3,449,312) (3,388,820)
Accrued and other current liabilities 595,902 (138,524)
Income taxes payable 5,661,910 3,665,200
Other long-term liabilities (194,867) (1,044,849)
----------- -----------
Net cash provided by operating activities 17,337,077 10,749,956
Cash Flows from Investing Activities:
Capital expenditures (820,726) (362,825)
Proceeds from sale of assets 76,687 34,655
Net investments in USX Portfolio Delaware (16,187,130) (10,377,421)
----------- -----------
Net cash used in investing activities (16,931,169) (10,705,591)
Cash Flows from Financing Activities -
Principal payments on debt and covenants (554,278) (542,422)
----------- -----------
Net cash used in financing activities (554,278) (542,422)
----------- -----------
Decrease In Cash and Cash Equivalents (148,370) (498,057)
Cash and Cash Equivalents, January 1 1,509,469 1,748,963
----------- -----------
Cash and Cash Equivalents, June 30 $ 1,361,099 $ 1,250,906
=========== ===========
Supplemental Disclosure:
Cash paid to Marathon for income taxes - $ 650,800
=========== ===========
Cash paid for interest $ 246,782 $ 279,944
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 18
EMRO PROPANE COMPANY
Notes to Financial Statements
Note 1 - In the opinion of management, the accompanying financial statements of
Emro Propane Company ("Emro") contain all adjustments necessary to present
fairly the financial position as of June 30, 1994 (unaudited) and December 31,
1993, the results of operations for the six months ended June 30, 1994 and 1993
(both unaudited) and and the cash flows for the six months ended June 30, 1994
and 1993 (both unaudited). The financial statements and notes should be read
in conjunction with the financial statements and notes for the year ended
December 31, 1993.
Note 2 - Inventories
Inventories consist of:
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---------- ------------
<S> <C> <C>
Propane $1,291,636 $1,076,655
Appliances 4,591,868 4,195,044
Other merchandise 2,931,081 2,544,651
---------- ----------
Total inventories $8,814,585 $7,816,350
========== ==========
</TABLE>
Note 3 - Contingencies
Emro is a party to various legal proceedings incidental to its business.
Certain claims, suits and complaints arising in the ordinary course of business
have been filed or are pending against Emro. In the opinion of management, all
such matters are covered by insurance, are without merit, or involve amounts,
which if resolved unfavorably, would not have a significant effect on the
financial position or results of operations of Emro.
Note 4 - Subsequent Event
On September 1, 1994, Marathon Oil Company completed the sale of Emro's assets
to MAPCO Inc. for $178,046,000 and the retail marketing assets of MAPCO Florida
Inc.
<PAGE> 19
MAPCO Inc.
Unaudited Pro Forma Combined Financial Statements
The following unaudited pro forma combined financial statements set forth
certain pro forma financial information with respect to the acquisition by
MAPCO Inc. through its wholly-owned subsidiaries, MAPCO Natural Gas Liquids
Inc. and MAPCO Petroleum Inc. (and its subsidiary, MAPCO Florida Inc.), of the
assets of Emro Propane Company ("Emro"), a wholly-owned subsidiary of Emro
Marketing Company, which is a wholly-owned subsidiary of Marathon Oil Company,
a wholly-owned subsidiary of USX Corporation. MAPCO Inc. acquired the Emro
assets by the payment of $178,046,000, the transfer to Emro Marketing Company
of MAPCO Florida Inc.'s retail marketing assets in Florida and the purchase of
certain Emro working capital.
The unaudited pro forma combined balance sheet as of June 30, 1994, has been
prepared as if the acquisition of Emro had occurred on that date, and the
unaudited pro forma combined statements of income for the six months ended June
30, 1994 and the year ended December 31, 1993, have been prepared as if the
acquisition of Emro had occurred on January 1, 1993. The acquisition of Emro
has been accounted for using the purchase method of accounting. The unaudited
pro forma combined financial statements have been prepared based on estimates
and assumptions deemed by MAPCO Inc. to be appropriate and do not proport to be
indicative of the financial position or results of operations which would
actually have been obtained had the acquisition occurred as presented in such
statements or which may be obtained in the future. Future results may vary
significantly from the amounts reflected in the following information due to
economic factors, future activities of MAPCO Inc., or other matters.
The unaudited pro forma combined financial statements should be read in
conjunction with the financial statements of Emro included elsewhere herein,
the consolidated financial statements and related notes of MAPCO Inc. included
in its Annual Report on Form 10-K for the year ended December 31, 1993 and
MAPCO Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1994.
<PAGE> 20
MAPCO Inc.
PRO FORMA COMBINED BALANCE SHEET
June 30, 1994
Dollars in Millions
(Unaudited)
<TABLE>
<CAPTION>
Emro
MAPCO Propane Pro Forma Pro Forma
Inc. Company Adjustments Combined
-------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 71.9 $ 1.4 $(1.4) (1) $ 71.9
Receivables 262.6 11.1 (2.2) (1) 271.5
Inventories 112.4 8.8 (2.7) (2) 118.5
Investment in USX Portfolio Delaware 39.4 (39.4) (1) 0.0
Prepaid expenses 37.9 0.3 38.2
Other current assets 26.6 (0.5) (2) 26.1
-------- ------- ----- --------
Total current assets 511.4 61.0 (46.2) 526.2
Property, Plant and Equipment, net 1,362.8 35.8 76.1 (3) 1,461.8
(12.9) (2)
Other Assets 133.6 4.9 74.2 (4) 212.7
-------- ------- ----- --------
$2,007.8 $ 101.7 $91.2 $2,200.7
======== ======= ===== ========
Current Liabilities:
Current maturities of long-term debt $ 15.8 $ 0.1 $(0.1) (1) $ 15.8
Accounts payable 279.0 2.0 (0.7) (1) 280.3
Accrued taxes 6.8 11.5 (11.5) (1) 6.8
Accrued payroll and related expenses 16.4 1.8 (1.8) (1) 16.4
Litigation and envionmental 116.7 116.7
Other current liabilities 41.9 1.5 (0.7) (1) 42.7
-------- ------- ----- --------
Total current liabilities 476.6 16.9 (14.8) 478.7
Long-Term Debt 562.5 0.4 187.4 (5) 749.9
(0.4) (1)
Other Liabilities 85.5 2.8 (1.1) (1) 87.2
Deferred Income Taxes 286.7 7.4 (7.4) (1) 286.7
Minority Interest 23.6 23.6
Stockholders' Equity:
Common stock 62.8 62.8
Capital in excess of par value 202.6 202.6
Retained earnings 1,308.8 74.2 (74.2) (1) 1,310.5
1.7 (2)
-------- ------- ----- --------
1,574.2 74.2 (72.5) 1,575.9
Less:
-Treasury stock, at cost (933.1) (933.1)
-Loan to ESOP (68.2) (68.2)
-------- ------- ----- --------
572.9 74.2 (72.5) 574.6
-------- ------- ----- --------
$2,007.8 $ 101.7 $91.2 $2,200.7
======== ======= ===== ========
</TABLE>
See notes to pro forma financial statements.
<PAGE> 21
MAPCO Inc.
PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1994
Dollars and Shares in Millions
except per share amounts
(Unaudited)
<TABLE>
<CAPTION>
Emro
MAPCO Propane Pro Forma Pro Forma
Inc. Company Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Sales and Operating Revenues $1,430.2 $58.9 $(41.5)(11) $1,447.6
-------- ----- ------ --------
Expenses:
Outside purchases and operating expenses 1,295.1 37.8 (39.9)(11) 1,292.3
(0.5) (6)
(0.2) (7)
Selling, general and administrative 33.4 2.4 (1.8) (6) 33.5
(0.5)(11)
Depreciation, depletion and amortization 49.2 3.1 0.9 (8) 52.8
(0.4)(11)
Interest and debt expense 24.5 3.7 (9) 28.2
Other (income) expense - net 1.7 (0.6) 0.6 (10) 1.7
-------- ----- ------ --------
1,403.9 42.7 (38.1) 1,408.5
-------- ----- ------ --------
Income Before Provision for Income Taxes 26.3 16.2 (3.4) 39.1
Provision for Income Taxes 8.9 5.3 (1.0)(12) 13.2
-------- ----- ------ --------
Income Before Minority Interest 17.4 10.9 (2.4) 25.9
Minority Interest in Earnings of Subsidiary (0.6) (0.6)
-------- ----- ------ --------
Net Income $ 16.8 $10.9 $ (2.4) $ 25.3
======== ===== ====== ========
Earnings per Common Share $ 0.56 $ 0.84
======== ========
Average Common Shares Outstanding 30.0 30.0
======== ========
</TABLE>
See notes to pro forma financial statements.
<PAGE> 22
MAPCO Inc.
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993
Dollars and Shares in Millions
except per share amounts
(Unaudited)
<TABLE>
<CAPTION>
Emro
MAPCO Propane Pro Forma Pro Forma
Inc. Company Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Sales and Operating Revenues $2,715.3 $107.0 $(84.8) (11) $2,737.5
-------- ------ ------ --------
Expenses:
Outside purchases and operating expenses 2,307.4 76.6 (80.4) (11) 2,302.2
(1.0) (6)
(0.4) (7)
Selling, general and administrative 72.8 6.9 (3.6) (6) 75.3
(0.8) (11)
Depreciation, depletion and amortization 97.3 6.4 1.6 (8) 104.5
(0.8) (11)
Interest and debt expense 46.5 6.2 (9) 52.7
Other (income) expense - net (11.6) (0.6) 0.6 (10) (11.6)
-------- ------ ------ --------
2,512.4 89.3 (78.6) 2,523.1
-------- ------ ------ --------
Income Before Provision for Income Taxes 202.9 17.7 (6.2) 214.4
Provision for Income Taxes 74.5 6.1 (1.9) (12) 78.7
-------- ------ ------ --------
Income Before Minority Interest 128.4 11.6 (4.3) 135.7
Minority Interest in Earnings of Subsidiary (1.4) (1.4)
-------- ------ ------ --------
Net Income $ 127.0 $ 11.6 $ (4.3) $ 134.3
======== ====== ====== ========
Earnings per Common Share $ 4.24 $ 4.48
======== ========
Average Common Shares Outstanding 30.0 30.0
======== ========
</TABLE>
See notes to pro forma financial statements.
<PAGE> 23
MAPCO INC.
Notes to Unaudited Pro Forma Combined Fianancial Statements
Note 1 - On September 1, 1994, MAPCO Inc. ("MAPCO") through its wholly-owned
subsidiaries, MAPCO Natural Gas Liquids Inc. and MAPCO Petroleum Inc. (and its
subsidiary, MAPCO Florida Inc.), completed the acquisition of the assets of
Emro Propane Company ("Emro"), a wholly-owned subsidiary of Emro Marketing
Company, which is a wholly-owned subsidiary of Marathon Oil Company, a
wholly-owned subsidiary of USX Corporation. The purchase price consisted of
the payment of $178,046,000, the transfer to Emro Marketing Company of MAPCO
Florida Inc.'s retail marketing assets in Florida and the purchase of certain
Emro working capital. The cash paid was financed through the issuance of
commercial paper and through the use of lines of credit. The acquisition of
Emro has been accounted for using the purchase method of accounting.
The unaudited pro forma combined balance sheet has been prepared as if the
acquisition of Emro had occurred as of June 30, 1994, and the unaudited pro
forma combined statements of income for the six month period ended June 30,
1994 and the year ended December 31, 1993, have been prepared as if the
acquisition of Emro had occurred on January 1, 1993.
Note 2 - Pro Forma Adjustments
The accompanying unaudited pro forma combined balance sheet reflects the
following adjustments:
(1) To adjust for Emro assets and liabilities excluded from the transaction.
(2) To record the transfer of MAPCO Florida Inc.'s retail assets to Emro
Marketing Company.
(3) To record the Emro assets acquired at fair value.
(4) To record the excess purchase price over the amounts assignable to
identifiable assets less liabilities assumed.
(5) To record borrowings used to finance the acquisition of Emro's assets and
working capital.
The accompanying unaudited pro forma combined statements of income reflect the
following adjustments:
(6) To adjust for plant consolidation and general and administrative synergies.
(7) To adjust the single business unit tax for the impact of the capital
acquisition deduction.
(8) To adjust depreciation and amortization to reflect the acquisition of Emro.
(9) To adjust interest expense for the incremental commercial paper and line of
credit borrowings.
(10) To adjust for interest income associated with Emro assets excluded from the
transaction.
(11) To adjust for the transfer of MAPCO Florida Inc.'s retail operations to
Emro Marketing Company.
(12) To adjust the provision for income taxes for the change in pre-tax income
resulting from the inclusion of the historical results of Emro and
adjustments 6 through 11.
Note 3 - Reorganization Costs
MAPCO estimates that within the first 12 months subsequent to the acquisition
date, nonrecurring reorgainzation costs of approximately $1.2 million, net of
$.8 million of tax benefit, or $.04 per share, will be incurred. The
reorganization costs are not reflected in the unaudited pro forma combined
financial statements herein.
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
Exhibit 23 Independent Auditors' Consent
</TABLE>
<PAGE> 1
November 7, 1994
VIA EDGAR
Securities and Exchange Commission
Operations Center
Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Attn: Filer Support
Re: MAPCO Inc. - Current Report on Form 8-K/A
Gentlemen:
Pursuant to the Securities and Exchange Act of 1934, as amended, and
the rules and regulations of the Securities and Exchange Commission and on
behalf of MAPCO Inc., a Delaware corporation, enclosed for filing please find
one copy of a Current Report on Form 8-K/A. The Amendment is being filed to
provide supplemental financial schedules to the Company's previous Current
Report on Form 8-K which was filed on September 12, 1994, in connection with
the acquisition of assets of Emro Propane Company.
If you have any questions regarding the enclosed documents, please
telephone the undersigned at the (918) 599-3707.
Very truly yours,
James N. Cundiff
JNC/cl
Enclosure(s)
c: New York Stock Exchange, Inc. - Barbara Healy (2 copies)
Pacific Stock Exchange (1 copy)
Chicago Stock Exchange (1 copy)
