<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
----------------------------------------
Commission file number 1-5254
------------------
MAPCO INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 73-0705739
- -------------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 South Baltimore Avenue, Tulsa, Oklahoma 74119
- -------------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
(918) 581-1800
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Changes
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
On August 1, 1995, 29,821,724 shares of MAPCO Inc. Common Stock, $1 par value,
were outstanding.
<PAGE> 2
MAPCO Inc.
Index
PART I. Financial Information:
Condensed Consolidated Statements of Income
for the three and six months ended June 30,
1995 and 1994
Condensed Consolidated Balance Sheets,
June 30, 1995 and December 31, 1994
Condensed Consolidated Statements of Cash
Flows for the six months ended June 30,
1995 and 1994
Notes to Condensed Consolidated Financial
Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. Other Information:
Submission of Matters to a Vote of Security
Holders
Exhibits and Reports on Form 8-K
Signatures
<PAGE> 3
PART I
FINANCIAL INFORMATION
MAPCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Dollars and Shares in Millions
except per share amounts
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales and Operating Revenues (1) $ 927.6 $ 738.1 $1,704.8 $1,430.2
-------- -------- -------- --------
Expenses:
Outside purchases and operating
expenses (1) 834.2 719.5 1,506.5 1,295.1
Selling, general and administrative 18.0 16.5 36.5 33.4
Depreciation, depletion and amortization 27.5 24.8 54.7 49.2
Interest and debt expense 14.5 12.2 29.1 24.5
Other (income) expense - net 0.1 2.2 (0.4) 1.7
-------- -------- -------- --------
894.3 775.2 1,626.4 1,403.9
-------- -------- -------- --------
Income (Loss) before Provision (Benefit)
for Income Taxes 33.3 (37.1) 78.4 26.3
-------- -------- -------- --------
Provision (Benefit) for Income Taxes:
Current 7.2 (23.5) 15.9 (4.2)
Deferred 4.3 10.7 11.2 13.1
-------- -------- -------- --------
11.5 (12.8) 27.1 8.9
-------- -------- -------- --------
Income (Loss) before Minority Interest 21.8 (24.3) 51.3 17.4
Minority Interest in Earnings of Subsidiary (.6) (.3) (1.1) (.6)
-------- -------- -------- --------
Net Income (Loss) $ 21.2 $ (24.6) $ 50.2 $ 16.8
======== ======== ======== ========
Earnings (Loss) per Common Share $ .71 $ (.82) $ 1.68 $ .56
Average Common Shares Outstanding 29.9 30.0 29.9 30.0
Cash Dividends per Common Share $ .25 $ .25 $ .50 $ .50
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(1) Includes consumer excise taxes of $43.2 million and $42.7 million for the
three months ended June 30, 1995 and 1994, respectively, and $74.4 million
and $81.7 million for the six months ended June 30, 1995 and 1994,
respectively.
<PAGE> 4
MAPCO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in Millions
<TABLE>
<CAPTION>
June 30, 1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 37.6 $ 30.6
Receivables 261.7 263.3
Inventories (Note 3) 158.8 111.0
Prepaid expenses 40.5 44.1
Other current assets 29.6 29.9
------------- ------------
Total current assets 528.2 478.9
------------- ------------
Property, Plant and Equipment, at cost 2,577.4 2,501.5
Less - accumulated depreciation
and depletion (1,074.4) (1,027.3)
------------- ------------
1,503.0 1,474.2
------------- ------------
Other Assets 209.5 213.0
------------- ------------
$ 2,240.7 $ 2,166.1
============= ============
Current Liabilities:
Current maturities of long-term debt $ 29.3 $ 32.2
Accounts payable 274.7 270.0
Accrued taxes 45.7 37.8
Accrued payroll and related expenses 17.9 14.0
Other current liabilities 68.2 72.4
------------- ------------
Total current liabilities 435.8 426.4
------------- ------------
Long-Term Debt (Note 4) 742.1 720.9
------------- ------------
Other Liabilities 78.0 77.8
------------- ------------
Deferred Income Taxes 305.0 293.8
------------- ------------
Minority Interest 25.7 24.6
------------- ------------
Contingencies (Note 6)
------------- ------------
Stockholders' Equity (Note 5):
Common stock 62.8 62.8
Capital in excess of par value 203.0 202.6
Retained earnings 1,391.9 1,356.4
------------- ------------
1,657.7 1,621.8
Treasury stock, at cost (940.0) (935.6)
Loan to ESOP (63.6) (63.6)
------------- ------------
654.1 622.6
------------- ------------
$ 2,240.7 $ 2,166.1
============= ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
MAPCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 2)
Dollars in Millions
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 50.2 $ 16.8
Reconciliation of net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 54.7 49.2
Provision for deferred income taxes 11.2 13.1
Other items not requiring cash (Note 2) 5.9 9.0
-------- --------
Funds provided by operations 122.0 88.1
Changes in operating assets and
liabilities (Note 2) (33.2) 1.8
-------- --------
Net cash provided by operating activities 88.8 89.9
-------- --------
Cash Flows from Investing Activities:
Capital expenditures and acquisitions, net of
liabilities assumed (82.6) (51.1)
Proceeds from sales of property, plant and
equipment 1.7 4.8
-------- --------
Net cash used in investing activities (80.9) (46.3)
-------- --------
Cash Flows from Financing Activities:
Purchase of common stock (4.4) (6.2)
Increase (decrease) in borrowings 21.6 (20.0)
Dividends (14.9) (15.0)
Issuance of long-term debt - .1
Payments on long-term debt (3.5) (.1)
Other .3 (.3)
-------- --------
Net cash used in financing activities (.9) (41.5)
-------- --------
Increase in Cash and Cash Equivalents 7.0 2.1
Cash and Cash Equivalents, January 1 30.6 69.8
-------- --------
Cash and Cash Equivalents, June 30 $ 37.6 $ 71.9
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
MAPCO INC.
Notes to Condensed Consolidated Financial Statements
Note 1 - In the opinion of Management, the accompanying condensed consolidated
financial statements of MAPCO Inc. and its subsidiaries ("MAPCO" or the
"Company") contain all adjustments necessary to present fairly the financial
position as of June 30, 1995 (unaudited) and December 31, 1994, the results of
operations for the three and six months ended June 30, 1995 and 1994 (both
unaudited) and the cash flows for the six months ended June 30, 1995 and 1994
(both unaudited). Certain reclassifications have been made to prior year
amounts to conform to current year presentations. All significant intercompany
accounts and transactions have been eliminated.
Note 2 - Statements of Cash Flows
Other items not requiring (providing) cash reported in cash flows from
operating activities consist of (in millions):
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-------------------------
1995 1994
-------- --------
<S> <C> <C>
Net periodic pension (income) expense $ (.9) $ .1
Gain on sales of property, plant and equipment (.5) (.2)
Minority interest in earnings of subsidiary 1.1 .6
Refinery turnaround accrual 3.4 1.6
Recovery of advance royalties 1.7 1.9
Other non-cash income and expense items - net 1.1 5.0
-------- --------
$ 5.9 $ 9.0
======== ========
</TABLE>
Changes in operating assets and liabilities consist of (in millions):
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-------------------------
1995 1994
-------- --------
<S> <C> <C>
Decrease (increase) in:
Receivables $ 1.7 $ (30.3)
Inventories (46.6) 1.0
Prepaid expenses 3.6 (7.8)
Other current assets .3 (3.7)
Other assets (1.1) (6.1)
Increase (decrease) in:
Accounts payable 4.7 27.3
Accrued taxes 8.1 (38.4)
Accrued payroll and related expenses 4.0 (7.4)
Litigation and environmental (.2) 69.9
Other current liabilities (7.6) 1.2
Other liabilities (.1) (3.9)
-------- --------
$ (33.2) $ 1.8
======== ========
</TABLE>
Income taxes paid were $2.9 million and $36.2 million for the six months ended
June 30, 1995 and 1994, respectively.
<PAGE> 7
Note 2 - Statements of Cash Flows (continued)
Interest paid, net of amounts capitalized, was $29.9 million and $25.7 million
for the six months ended June 30, 1995 and 1994, respectively.
Note 3 - Inventories
<TABLE>
<CAPTION>
Inventories consist of (in millions): June 30, December 31,
1995 1994
-------- --------
<S> <C> <C>
Raw materials - crude oil $ 34.1 $ 21.8
-------- --------
Finished products:
Refined petroleum products 55.3 26.1
Fertilizer and natural gas liquids 28.9 31.5
Retail merchandise 25.0 23.7
Coal 15.5 7.9
-------- --------
124.7 89.2
-------- --------
Inventories $ 158.8 $ 111.0
======== ========
</TABLE>
The cost to replace the Petroleum segment's crude oil, refined petroleum
products and retail merchandise inventories in excess of their last-in,
first-out (LIFO) carrying values was approximately $17.1 million at June 30,
1995 and $11.6 million at December 31, 1994.
Note 4 - Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt consists of (in millions): June 30, December 31,
1995 1994
-------- --------
<S> <C> <C>
MAPCO Inc.
- ----------
Commercial paper and bank money market lines $ 206.7 $ 185.1
8.43% ESOP Notes, payable in mortgage type
principal reductions annually through 2003 63.6 63.6
Medium Term Notes, various maturities through 2022 331.8 334.8
-------- --------
602.1 583.5
-------- --------
Subsidiaries
- ------------
Senior Notes:
8.51% Notes, payable 2007 15.0 15.0
8.95% Notes, payable 2012 35.5 35.5
8.20% Notes, payable $2.5 annually 2007 through 2012 15.0 15.0
8.59% Notes, payable 2017 14.5 14.5
8.70% Notes, payable $2.0 annually 2018 through 2022 10.0 10.0
6.67% Notes, payable $15.0 annually 2001 through 2005 75.0 75.0
Other 4.3 4.6
-------- --------
169.3 169.6
-------- --------
771.4 753.1
Less - current maturities (29.3) (32.2)
-------- --------
Long-term debt $ 742.1 $ 720.9
======== ========
</TABLE>
<PAGE> 8
Note 4 - Long-Term Debt (continued)
Interest rates on commercial paper and bank money market lines ranged from
5.83% to 6.25% during the first half of 1995 and were 3.49% during the first
half of 1994. Commercial paper and bank money market lines outstanding at June
30, 1995 and December 31, 1994 were classified as long-term debt. MAPCO has
the ability and intent, if necessary, under a bank credit agreement to
refinance commercial paper and bank money market lines with long-term debt
having maturities in excess of one year.
MAPCO has a bank credit agreement for a line of credit of $300 million. The
bank credit agreement provides for reduction of the total commitment in
quarterly increments of $25 million commencing June 30, 1998. Interest on
borrowings under the bank credit agreement would be at rates generally less
than the prime interest rate. MAPCO must pay a commitment fee to maintain the
bank credit agreement. This agreement serves as a back-up for MAPCO's
outstanding commercial paper and bank money market lines. As of June 30, 1995,
no borrowings were outstanding under the bank credit agreement.
As of June 30, 1995, MAPCO had $331.8 million of Medium Term Notes outstanding.
These notes mature at various times through 2022 and bear interest at rates
ranging from 7.60% to 8.87%.
Various loan agreements contain restrictive covenants which, among other
things, limit the payment of advances or dividends by two of Natural Gas
Liquids' subsidiaries to MAPCO. At June 30, 1995, $173 million of net assets
were restricted by such provisions.
Note 5 - Employee Benefit Plans
With respect to its Employee Stock Ownership Plan ("ESOP"), MAPCO recognized
compensation expense of $.7 million and $1.4 million for the three and six
months ended June 30, 1995, respectively, and $.6 million and $1.2 million for
the three and six months ended June 30, 1994, respectively. Interest expense
on ESOP related debt was $1.3 million and $2.6 million for the three and six
months ended June 30, 1995, respectively, and $1.4 million and $2.8 million
for the three and six months ended June 30, 1994, respectively. Dividends on
the allocated and unallocated MAPCO common stock held by the ESOP were $.6
million and $1.2 million for the three and six months ended June 30, 1995 and
1994, respectively, and will be used for ESOP debt service.
Note 6 - Contingencies
Texas Explosion Litigation
On April 7, 1992, a liquefied petroleum gas explosion occurred near an
underground salt dome storage facility located near Brenham, Texas and owned by
an affiliate of the Company, Seminole Pipeline Company
<PAGE> 9
Note 6 - Contingencies (continued)
("Seminole"). The National Transportation Safety Board and the Texas Railroad
Commission essentially determined that the probable cause of the explosion was
the result of overfilling the storage facility.
The Company, as well as Seminole, Mid-America Pipeline Company and other
non-MAPCO entities have been named as defendants in civil actions filed in
state district courts in Texas. During 1993, Seminole received reimbursements
from its insurers for settlements which disposed of all the death claims and
substantially all of the serious injury claims resulting from the incident.
Generally, the types of remaining claims consist primarily of personal injury
and property damage claims, coupled with theories of nuisance and diminished
property value.
Although plaintiffs seek actual and punitive damages, the Company believes that
complete resolution of the remaining Texas explosion actions by litigation or
settlement, after reimbursement of insurance coverage, will not have a material
adverse effect on the Company's business, results of operations or financial
position.
Seminole Loop/Aquila-LaGrange Line Litigation
In May 1993, Seminole completed its Seminole loop project and in January 1994,
Seminole completed its Aquila-LaGrange line project. Seminole is the defendant
in over 70 lawsuits claiming additional compensation for and/or damages to
tracts of land traversed by these projects in 15 counties in the state of
Texas. Many of the lawsuits claim punitive damages for alleged fraud, illegal
entry and other wrongful conduct. Claims in this litigation are not covered by
the Company's insurance.
The Company believes that complete resolution of the Seminole
loop/Aquila-LaGrange line litigation will not have a material adverse effect on
the Company's business, results of operations or financial position.
General Litigation
The Company and its subsidiaries are involved in various other lawsuits, claims
and regulatory proceedings incidental to their businesses. In the opinion of
management, the outcome of such matters will not have a material adverse effect
on the Company's business, results of operations or financial position.
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SECOND QUARTER 1995 VS. SECOND QUARTER 1994
RESULTS OF OPERATIONS
Sales and operating revenues were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------
1995 1994 Variance
------ ------ --------
<S> <C> <C> <C>
Natural Gas Liquids $131.1 $114.9 $ 16.2
Petroleum 698.6 535.9 162.7
Coal 112.8 104.7 8.1
Eliminations (14.9) (17.4) 2.5
------ ------ ------
$927.6 $738.1 $189.5
====== ====== ======
</TABLE>
Sales and operating revenues increased $189.5 million over the 1994 second
quarter.
The $16.2 million increase in Natural Gas Liquids' sales and operating revenues
was principally due to higher retail propane sales as a result of the Emro
Propane Company ("Emro") acquisition in September 1994.
Petroleum's sales and operating revenues increased $162.7 million primarily due
to a change in trading strategies implemented in the second and third quarters
of 1994 and increased sales at the Memphis Refinery. Higher product prices and
increased volumes were the principal reasons for the improvement in sales at
the Memphis Refinery.
The Coal segment's sales and operating revenues increased $8.1 million over the
same period last year. Higher brokerage volumes and increased sales by the
Mettiki, Pontiki and Martiki mines were partially offset by lower sales at the
Dotiki, Pattiki and Retiki mines. Mettiki's production increased over 1994
because of the impact on production of a longwall move during May 1994. The
resolution of labor issues at Pontiki and the installation of new equipment at
Pontiki and Martiki contributed to the increased production at those mines.
Lower sales at the Dotiki and Pattiki mines primarily resulted from timing
differences on the shipment of contract tons. Sales were lower at the Retiki
mine because that facility was closed in January 1995. The increased brokerage
sales were primarily attributable to supplying a customer's contract tons from
brokerage sources rather than from the Retiki mine.
<PAGE> 11
Outside purchases and operating expenses increased $114.7 million in the second
quarter of 1995 as compared to the second quarter of 1994. Details by segment
are as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------------------------------------------
1995 1994 Variance
-------------------- -------------------- --------------------
Outside Operating Outside Operating Outside Operating
Purchases Expenses Purchases Expenses Purchases Expenses
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Natural Gas Liquids $ 39.5 $ 45.8 $ 27.4 $ 43.9 $ (12.1) $ (1.9)
Petroleum 616.0 42.2 449.8 112.1 (166.2) 69.9
Coal 22.0 68.7 11.2 75.1 (10.8) 6.4
------- ------- ------- ------- ------- -------
$ 677.5 $ 156.7 $ 488.4 $ 231.1 $(189.1) $ 74.4
======= ======= ======= ======= ======= =======
</TABLE>
Natural Gas Liquids' outside purchases increased $12.1 million primarily as a
result of additional propane and appliance purchases to supply the Emro plants
acquired in September 1994. Operating expenses in the Natural Gas Liquids'
segment increased $1.9 million because of higher retail propane plant expenses
due to the acquired Emro retail propane plants, partially offset by lower
transportation and gas plant expenses. Transportation costs were lower
primarily due to a charge in the second quarter of 1994 associated with the
buy-out of a gas supply contract and lower power costs in 1995. Gas plant
expenses were lower because of the shutdown of a plant in the West Panhandle
field in December 1994.
Petroleum's outside purchases increased $166.2 million reflecting higher crude
costs and new trading strategies. Operating expenses decreased $69.9 million
principally because of the $68.7 million charge in 1994 relative to the State
Royalty Oil settlement.
Coal's outside purchases increased $10.8 million primarily due to more coal
brokerage activities. Most of the increased activity was due to brokerage tons
supplied to a customer that were previously shipped from the Retiki mine, which
was closed in January 1995. Operating expenses decreased $6.4 million
principally due to the closing of the Retiki mine.
The $2.7 million increase in depreciation, depletion and amortization expense
was primarily due to the Emro acquisition.
Interest expense increased $2.3 million because of increased debt, partially
offset by lower average interest rates. The increase in MAPCO's debt since
last year was in commercial paper and bank money market lines. Although
interest rates were higher in 1995 compared to 1994, MAPCO's average interest
rate decreased due to the increase in short-term debt which carried a lower
interest rate than MAPCO's fixed-rate long-term debt.
The effective income tax rate for the second quarter of 1995 and 1994 was
34.5%. The difference between the statutory Federal income tax rate of 35% and
the effective income tax rate is primarily due to statutory depletion,
partially offset by state taxes.
<PAGE> 12
Operating profit (loss) for the three months ended June 30, 1995 and 1994 is
detailed below (in millions):
<TABLE>
<CAPTION>
1995 1994 Variance
------ ------ --------
<S> <C> <C> <C>
Natural Gas Liquids $ 24.8 $ 25.8 $ (1.0)
Petroleum 18.4 (49.6) 68.0
Coal 10.5 7.5 3.0
------ ------ ------
$ 53.7 $(16.3) $ 70.0
====== ====== ======
</TABLE>
Operating profit increased $70.0 million over the 1994 quarter primarily due to
the $68.7 million charge against last year's earnings relative to the State
Royalty Oil settlement. Excluding the State Royalty Oil settlement, earnings
in both the Natural Gas Liquids and Petroleum segments were consistent with
1994.
Coal's operating profit increased $3.0 million principally because of improved
production tons and lower per ton production costs at the Pontiki, Martiki and
Mettiki coal mines. The resolution of labor issues at Pontiki and the
installation of new equipment at Pontiki and Martiki contributed to the
productivity improvements at those mines. Mettiki's second quarter production
increased over 1994 because last year's production was impacted by a longwall
move during May 1994.
MAPCO's consolidated second quarter 1995 net income was $21.2 million or $0.71
per share compared to a net loss of $24.6 million or $0.82 per share in 1994.
Excluding the impact of the State Royalty Oil settlement, 1994 second quarter
net income was $20.9 million or $0.70 per share. Average common shares
outstanding were 29.9 million in 1995 and 30.0 million in 1994.
YEAR-TO-DATE 1995 VS. YEAR-TO-DATE 1994
RESULTS OF OPERATIONS
Sales and operating revenues were as follows (in millions):
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1995 1994 Variance
-------- -------- --------
<S> <C> <C> <C>
Natural Gas Liquids $ 302.0 $ 245.3 $ 56.7
Petroleum 1,221.6 1,012.5 209.1
Coal 215.1 207.0 8.1
Eliminations (33.9) (34.6) 0.7
-------- -------- ------
$1,704.8 $1,430.2 $274.6
======== ======== ======
</TABLE>
Sales and operating revenues increased $274.6 million over 1994.
The $56.7 million increase in Natural Gas Liquids' sales and operating revenues
was due to higher transportation revenues and retail propane sales.
Transportation revenues increased principally because of additional volumes
from new plant connections, plant expansions, a new
<PAGE> 13
contract with a major customer and higher tariffs. Retail propane sales
improved over last year primarily because of the Emro acquisition in September
1994.
Petroleum's sales and operating revenues increased $209.1 million primarily due
to a change in trading strategies implemented in the second and third quarters
of 1994.
The Coal segment's sales and operating revenues increased $8.1 million over
last year. Higher brokerage volumes and increased sales by the Mettiki,
Pontiki and Martiki mines were partially offset by lower sales at the Dotiki,
Pattiki and Retiki mines. Mettiki's production increased over 1994 because of
the impact on production of a longwall move during May 1994. The resolution of
labor issues at Pontiki and the installation of new equipment at Pontiki and
Martiki contributed to the increased production at those mines. Lower sales
at the Dotiki and Pattiki mines primarily resulted from timing differences on
the shipment of contract tons. Sales were lower at the Retiki mine because that
facility was closed in January 1995. The increased brokerage sales were
primarily attributable to additional third party sales volumes and supplying a
customer's contract tons from brokerage sources rather than from the Retiki
mine.
Outside purchases and operating expenses increased $211.4 million in the first
six months of 1995 as compared to 1994. Details by segment are as follows (in
millions):
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------------------------------------------
1995 1994 Variance
-------------------- -------------------- --------------------
Outside Operating Outside Operating Outside Operating
Purchases Expenses Purchases Expenses Purchases Expenses
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Natural Gas Liquids $ 85.8 $ 92.7 $ 60.4 $ 91.2 $ (25.4) $ (1.5)
Petroleum 1,071.8 84.1 824.2 152.6 (247.6) 68.5
Coal 38.6 133.5 20.1 146.6 (18.5) 13.1
-------- ------- ------- ------- ------- -------
$1,196.2 $ 310.3 $ 904.7 $ 390.4 $(291.5) $ 80.1
======== ======= ======= ======= ======= =======
</TABLE>
Natural Gas Liquids' outside purchases increased $25.4 million primarily as a
result of additional propane and appliance purchases to supply the plants
acquired from Emro in September 1994. Operating expenses in the Natural Gas
Liquids' segment increased only $1.5 million as higher retail propane plant
expenses due to the Emro acquisition were substantially offset by lower
transportation and gas plant operating costs. Lower pipeline maintenance costs
and prior year charges associated with the buy-out of a gas supply contract
were the principal reasons that transportation expenses declined in 1995. The
shut-down of a gas plant in the West Panhandle field at the end of 1994 is the
reason that gas plant expenses were lower in the current year.
Petroleum's outside purchases increased $247.6 million over the same
<PAGE> 14
period in 1994 reflecting higher crude costs and the new trading strategies
previously mentioned. Operating expenses decreased $68.5 million because last
year's costs included a $68.7 million charge relative to the State Royalty Oil
settlement.
Coal's outside purchases exceeded last year's purchases by $18.5 million
primarily due to increased coal brokerage activities. Most of the increased
brokerage activity was due to tons supplied to a customer that were previously
shipped from the Retiki mine, which was closed in January 1995. Operating
expenses decreased $13.1 million principally due to the closing of the Retiki
mine.
The $5.5 million increase in depreciation, depletion and amortization expense
was primarily due to the Emro acquisition.
Interest expense increased $4.6 million because of increased debt, partially
offset by lower average interest rates. The increase in MAPCO's debt since
last year was in commercial paper and bank money market lines. Although
interest rates were higher in 1995 compared to 1994, MAPCO's average interest
rate decreased due to the increase in short-term debt which carried a lower
interest rate than MAPCO's fixed-rate long-term debt.
The effective income tax rate for the first six months of 1995 was 34.6%
compared to 33.8% in 1994. The difference between the statutory Federal income
tax rate of 35% and the effective income tax rate is primarily due to statutory
depletion, partially offset by state taxes.
Operating profit (loss) for the six months ended June 30, 1995 and 1994 is
detailed below (in millions):
<TABLE>
<CAPTION>
1995 1994 Variance
------ ------ --------
<S> <C> <C> <C>
Natural Gas Liquids $ 79.8 $ 59.0 $ 20.8
Petroleum 19.4 (13.2) 32.6
Coal 19.7 18.9 0.8
------ ------ ------
$118.9 $ 64.7 $ 54.2
====== ====== ======
</TABLE>
Natural Gas Liquids' operating profit increased $20.8 million because of higher
transportation revenues and higher retail propane plant and gas plant profits.
Strong revenues in the first quarter of 1995 and lower pipeline maintenance
expense resulted in a $10.7 million (28%) increase in transportation operating
profit. Retail propane operating profit increased $7.4 million (46%) as a
result of the Emro acquisition. Gas plant operating profits increased $2.8
million (59%) as a result of higher NGL prices, increased condensate production
and lower plant operating expenses.
Petroleum's operating profit increased $32.6 million over the first six months
of 1994. Excluding the $68.7 million impact of the State Royalty Oil
settlement, Petroleum's operating profit was $36.1 million lower principally
because of reduced margins at both the Memphis and North Pole
<PAGE> 15
Refineries. Significantly higher crude costs, particularly in the first
quarter of 1995, negatively impacted margins and operating profit at both
refineries.
Coal's operating profit increased $0.8 million over 1994. The principal
reasons for this favorable variance were higher profits at the Pontiki, Martiki
and Mettiki mines, partially offset by lower profits at the Dotiki and Pattiki
mines. The resolution of labor issues at Pontiki and the installation of new
equipment at Pontiki and Martiki were the reasons for the operating profit
increase at those mines. The increase in Mettiki's operating profit was
attributable to the impact on last year's costs as a result of a longwall move
in the second quarter of 1994. Dotiki and Pattiki's operating profit was
unfavorable to 1994 principally due to reduced shipments of contract tons.
MAPCO's consolidated net income for the first six months of 1995 was $50.2
million or $1.68 per share compared to $16.8 million or $0.56 per share in
1994. Excluding the impact of the State Royalty Oil settlement, net income
for the first six months of 1994 was $62.3 million or $2.08 per share. Average
common shares outstanding were 29.9 million in 1995 and 30.0 million in 1994.
FINANCIAL CONDITION
Cash Generation
Cash generation was as follows (in millions):
<TABLE>
<CAPTION>
Six Months Ended, June 30, 1995 1994
- -------------------------- -------- --------
<S> <C> <C>
Funds provided by operations $ 122.0 $ 88.1
Changes in operating assets and liabilities (33.2) 1.8
-------- --------
Net cash provided by operating activities 88.8 89.9
Net cash used in investing activities (80.9) (46.3)
Net cash used in financing activities (.9) (41.5)
-------- --------
Cash generation $ 7.0 $ 2.1
======== ========
</TABLE>
Funds provided by operations through the first six months of 1995 as compared
to 1994 increased primarily due to the negative impact of the State Royalty Oil
settlement on 1994 operating profit. The 1995 change in operating assets and
liabilities was primarily attributable to the build-up of inventory at the
Memphis Refinery in anticipation of the July 1995 turnaround.
Capital expenditures through June of 1995 were $82.6 million, of which $33.8
million was for capital items necessary to maintain existing operations,
compared to capital expenditures of $51.1 million for the same period of 1994,
of which $28.0 million was for capital items necessary to maintain existing
operations. Capital expenditures in 1995 included $11.2 million for the
expansion of the Rocky Mountain Pipeline
<PAGE> 16
System, $11.0 million for the acquisition of 27 retail gasoline/convenience
stores in the Nashville, Tennessee market area and $8.5 million related to the
expansion of the Martiki mine.
Financing activities for the first six months of 1995 included short-term
borrowings of $21.6 million which were offset by the payment of $14.9 million
of dividends, the repurchase of 78,700 shares of MAPCO common stock for $4.4
million and the repayment of $3.5 million of fixed-rate debt. Financing
activities for the first six months of 1994 included the reduction of
short-term borrowings by $20.0 million, the payment of $15.0 million of
dividends and the repurchase of 101,966 shares of MAPCO common stock for $6.2
million.
Capitalization
Capitalization, which includes long-term debt (excluding current maturities)
and stockholders' equity, increased from $1,344 million at December 31, 1994 to
$1,396 million at June 30, 1995. The increase in 1995 represents the favorable
impact of 1995 operating results on stockholders' equity and the increase in
commercial paper, partially offset by the payment of dividends. MAPCO's
long-term debt as a percentage of capitalization was 53% at June 30, 1995
compared to 54% at December 31, 1994.
Various loan agreements contain restrictive covenants which, among other
things, limit the payment of advances or dividends by two of Natural Gas
Liquids' subsidiaries to MAPCO. At June 30, 1995, $173 million of net assets
were restricted by such provisions.
Liquidity and Capital Resources
MAPCO's primary sources of liquidity are its cash and cash equivalents,
internal cash generation, and external financing. At June 30, 1995, MAPCO had
$37.6 million of cash and cash equivalents.
MAPCO's external financing sources include its bank credit agreement, its
uncommitted bank credit lines and its ability to issue public or private debt,
including commercial paper. MAPCO's bank credit agreement is for a committed
line of credit of $300 million. The total commitment under the bank credit
agreement reduces in quarterly amounts of $25 million beginning June 30, 1998.
This agreement serves as a back-up for commercial paper and for borrowings
against bank money market lines. As of June 30, 1995, no borrowings were
outstanding under the bank credit agreement.
In 1990, MAPCO filed a shelf registration statement with the Securities and
Exchange Commission providing for the issuance of up to $400 million of debt
securities. As of June 30, 1995, MAPCO had outstanding $332 million of Medium
Term Notes under this registration. MAPCO has the
<PAGE> 17
authorization to issue up to an additional $47 million of Medium Term Notes.
The proceeds from any debt issued under the shelf registration statement have
been and will continue to be used for general corporate purposes, including
working capital, capital expenditures, reduction of other debt and
acquisitions.
MAPCO's existing debt and credit agreements contain covenants which limit the
amount of additional indebtedness the Company can incur. Management believes;
however, that MAPCO has sufficient capacity to fund its anticipated needs.
Capital expenditures in 1995 are expected to be approximately $300 million, of
which $199 million will be for acquisitions and expansion projects. MAPCO
expects to utilize cash from operations and short-term funding sources as
needed to meet anticipated 1995 capital expenditures; however, MAPCO's
long-term liquidity is expected to increase since cash from operations is
anticipated to exceed currently projected capital expenditures, environmental
projects, debt service and dividends. MAPCO anticipates that future excess
internal cash generation will be used primarily for debt reduction and capital
expenditures.
<PAGE> 18
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on Friday,
May 26, 1995, at the Four Seasons Resort and Club in Irving, Texas. In
connection with the election of four nominees for Directors to Class I
Directorships, 26,906,920 votes were cast as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------------------
NAME FOR WITHHOLD AUTHORITY
---- --- ------------------
<S> <C> <C>
Wayne K. Goettsche 26,319,443 587,477
---------- -------
Donald L. Mellish 26,708,693 198,227
---------- -------
Robert M. Howe 26,682,611 224,309
---------- -------
Robert L. Parker 26,702,760 204,160
---------- -------
</TABLE>
Stockholders were also requested to consider and act upon a proposal to
approve the selection of Deloitte & Touche LLP as independent auditors for the
year ended December 31, 1995. Of the 26,794,165 votes cast, the number of
shares voting FOR this proposal was 26,705,696, 88,469 votes were cast AGAINST
the proposal and 112,755 abstentions were tabulated.
In addition to the above proposals, the Company's stockholders were also
asked to consider and act upon a proposal to approve the MAPCO Inc. Incentive
Compensation Plan. Of the 26,381,138 votes cast, the number of shares voting
FOR this proposal was 23,900,231 with 2,480,907 votes AGAINST the proposal,
230,305 abstentions and 295,477 broker non-votes.
Of the 26,765,589 votes cast on proposal #4: to transact any other
business which may properly come before the meeting or any adjournment thereof,
26,765,589 voted in favor of the proposal and the remaining 141,331 were
abstentions.
<PAGE> 19
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
Exhibit 10 - MAPCO Inc. Incentive Compensation Plan effective as
of January 1, 1995 and approved by the Company's shareholders on
May 26, 1995.
Exhibit 11 - Statement Regarding Computation of per Share
Earnings.
Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges.
Exhibit 27 - Financial Data Schedule.
(b). Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended June 30, 1995.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAPCO Inc.
Date: August 4, 1995 /s/ FRANK S. DICKERSON, III
----------------- ------------------------------
Frank S. Dickerson, III
Senior Vice President,
Chief Financial Officer,
and Treasurer
Date: August 4, 1995 /s/ DONALD R. WELLENDORF
----------------- -----------------------------
Donald R. Wellendorf
Vice President and Controller
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Exhibit 10 MAPCO Inc. Incentive Compensation Plan
effective as of January 1, 1995 and approved
by the Company's shareholders on
May 26, 1995.
Exhibit 11 Statement Regarding Computation of per
Share Earnings.
Exhibit 12 Computation of Ratio of Earnings to Fixed
Charges.
Exhibit 27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10
MAPCO INC.
INCENTIVE COMPENSATION PLAN
(EFFECTIVE AS OF JANUARY 1, 1995)
1. Purpose. The purpose of the MAPCO Inc. Incentive Compensation Plan (the
"Plan") is to provide certain designated persons in key management positions
within MAPCO Inc. (the "Company") and its subsidiaries with incentive
compensation to encourage outstanding performance and to aid in attracting and
retaining highly-qualified employees.
2. Plan Administration.
(a) The Compensation Committee of the Board of Directors of the
Company ("Committee") shall have full power to administer and interpret the
Plan and to establish rules for its administration. The Committee, by
majority action thereof, is authorized to prescribe, amend, and rescind
rules and regulations relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for
the administration and interpretation of the Plan in order to carry out its
provisions and purposes. Determinations, interpretations, or other actions
made or taken by the Committee pursuant to the provisions of the Plan shall
be final, binding, and conclusive for all purposes and upon all persons.
Awards under the Plan shall be based on one or more calendar years, as
determined by the Committee (hereinafter, an "Award Period").
(b) The Plan shall be governed by the laws of the State of Delaware
and applicable federal law.
3. Eligibility and Participation.
(a) Eligibility. Eligibility to participate in the Plan shall be
restricted to those executives and other key employees who, through their
position and performance, contribute substantially to the success of the
Company and its subsidiaries.
(b) Participation. On or before April 1 of the applicable Award Period
(or such other date as may be required or permitted under Internal Revenue
Code ("Code") Section 162(m)), the Committee shall, in its discretion,
determine the eligible employees who shall participate in the Plan
(collectively, the "Participants") during such Award Period. Except as
provided in Section 7 herein, the Committee may add additional Participants
to the Plan at any time during the Award Period, specifying the effective
date of such action. Participation in any given Award Period shall not
connote participation in any other Award Period. The Committee in its sole
discretion may remove any Participant from the Plan at any time, specifying
the effective date of such action for the purpose of prorating his eventual
award of incentive compensation, if any.
4. Awards.
(a) General. Beginning with 1995, the Committee may make awards with
respect to each calendar year. The Committee may also make additional
awards with respect to any Award Period based on the achievement of certain
long-term goals as discussed hereafter in Subsection (f). With respect to
each Award Period, the Committee shall (1) establish which Participants are
eligible for awards, (2) select one or more of the performance measures
listed in Section 4(c), (3) establish targets for such performance
measures, and (4) establish Award Levels (as defined in Section 4(b)) for
each Participant. Awards shall be determined by the Committee based on the
achievement during an Award Period of the target(s) established by the
Committee with respect to one or more of the performance measures selected
by the Committee. The Committee shall certify that the performance measure
targets have been satisfied before payment of any award.
<PAGE> 2
(b) Award Levels. An "Award Level" shall mean a percentage, determined
pursuant to this Subsection, of a Participant's annual base salary as of
January 1 of the applicable Award Period. With respect to a Participant who
is added to the Plan after such date, "Award Level" shall mean a percentage
of the Participant's base salary on the effective date of his
participation. The Committee shall establish an Award Level for each
Participant which shall represent the percentage of base salary to be paid
to the Participant if actual performance meets or exceeds predetermined
performance measure targets.
(c) Performance Measures and Targets. The Committee, as it deems
appropriate, shall select one or more of the following performance measures
and establish targets for each Award Period: Funds Provided by Operations,
Net Cash from Operations, PreTax Investment Yield, Value Added, EBITD
Margin (Earnings Before Interest, Taxes and Depreciation/Total Revenue),
Operating Profit, Earnings Per Share, Total Shareholder Return (assuming
the reinvestment of dividends), or Net Income.
(d) Revised Award Levels, Performance Measures or Targets. Subject to
Section 7 herein, the Committee may, at any time, establish revised Award
Levels, performance measures or targets for any Participant.
(e) Award Determinations. As soon as practicable after the financial
results of the Company's operations for an Award Period are known, the
Committee, after receiving the recommendation of the CEO (except in the
case of his own award), shall determine and certify the amount of each
Participant's award. The performance of the Company shall also be reviewed
to determine the extent, if any, that unforeseen circumstances may have
influenced results. Although adjustments shall be kept to a minimum, the
Committee, except as provided in Section 7 herein, may approve retroactive
adjustments to performance measures in order to avoid unwarranted penalties
or unearned windfalls. For a Participant added to the Plan during the Award
Period, the award shall be determined as though he had been a Participant
for the entire Award Period and then multiplied by a percentage which is
equal to the percentage of the Award Period during which he was a
Participant.
(f) Long-term Award. In addition to any other award payable under this
Plan, a long-term award may be made to Participants with respect to any
Award Period which is longer than one calendar year based upon the
attainment of one or more predetermined performance measure targets,
established by the Committee from the performance measures listed in
Section 4(c). With respect to each Award Period, the Committee shall (1)
establish which Participants are eligible for awards, (2) select one or
more of the performance measures listed in Section 4(c), (3) establish
targets for such performance measures, and (4) establish Award Levels (as
defined in Section 4(b)) for each Participant. No award shall be made if
there is a failure to meet or exceed the applicable performance measure
target(s).
(g) Negative Discretion. Notwithstanding anything else contained in
this Section 4 to the contrary, the Committee shall have the right, in its
absolute discretion, (1) to reduce or eliminate the amount otherwise
payable to any Participant under this Section 4 based on individual
performance or any other factors that the Committee, in its discretion,
shall deem appropriate and (2) to establish rules or procedures that have
the effect of limiting the amount payable to each Participant to an amount
that is less than the maximum amount otherwise authorized under the Plan.
5. Payment of Awards. Any award to be paid to a Participant for an Award
Period shall be paid as soon as practicable after the Award Period, but in no
event later than six months after the Award Period ("Payment Date"), provided,
however, the Committee in its sole discretion may accelerate or defer payment of
all or a portion of an award if such acceleration or deferral does not result in
loss of deductibility pursuant to Code Section 162(m). Awards shall be paid in
cash, unless otherwise elected by a Participant or the Company. Any Participant,
by written notice given to the Company prior to payment of an award, may elect
to take all or any part of his award in common stock of the Company, priced at
the closing sale price on the New York Stock Exchange on the last business day
preceding the day on which the Committee approves the awards. In addition, the
Committee may, in its sole discretion, with respect to any Award Period, cause
payment of all or any part of a Participant's award to be made in common stock
of the Company, priced at the closing sale price on the New York Stock Exchange
on the last business day preceding the day on which the Committee approves the
awards. No fractional shares shall be issued in payment of any award, but the
market value of
<PAGE> 3
such fractional shares, priced as provided above, shall be paid in cash. The
maximum number of shares that may be issued under the Plan in any one calendar
year shall not exceed one percent of the Company's total outstanding shares.
6. Termination of Employment. If a Participant's employment with the
Company (and any of its subsidiaries) is terminated prior to the end of an Award
Period by reason of retirement (in accordance with the retirement provisions of
any qualified retirement plan maintained by the Company or any of its
subsidiaries), total and permanent disability or death and if an award would
have been payable to, or in respect of, the Participant with respect to the
Award Period had he remained in employment throughout the Award Period, the
Participant shall be entitled to an award for the portion of the Award Period
that he was employed by the Company. His award shall be equal to the award he
would have received had he remained in employment through the end of the Award
Period multiplied by a percentage which is equal to the percentage of the Award
Period during which he was a Participant. His award shall be paid at the time it
would have been paid had he remained in employment through the Payment Date of
any award. In the case of the death of a Participant, his award shall be paid to
his estate unless by written notice to the Company he shall have named a
beneficiary or beneficiaries under the Plan, in which case the award shall be
paid to the beneficiary(ies). A Participant who otherwise is separated from the
Company and any of its subsidiaries prior to the Payment Date of any award shall
cease to be a Participant and shall forfeit any right to receive any award
pursuant to the Plan unless the Committee shall rule otherwise. Whether a
Participant is disabled or has retired, for purposes of this Plan, shall be
determined by the Committee, whose determination shall be conclusive and binding
on the Participant.
7. Key Executives.
(a) Applicability. The provisions of this Article 7 shall apply only
to those Participants who are "covered employees" within the meaning of
Code Section 162(m) with respect to the applicable year and whose
compensation for such year, taking into account the amounts to be paid
hereunder, but excluding any amounts otherwise excluded from consideration
under Code Section 162(m), would exceed Code Section 162(m) limitations
(hereinafter, "Key Executives"). In the event of any inconsistencies
between this Article 7 and any other Plan provision as it pertains to Key
Executives, the provisions of this Article 7 shall control.
(b) Award Levels. Except as provided in Subsection (e) herein, Award
Levels for Key Executives shall be established on or before April 1 of the
applicable Award Period (or such other date as may be required or permitted
under Code Section 162(m)) and shall be a function of each Key Executive's
annual base salary as of January 1 of the applicable Award Period. A Key
Executive who becomes a Participant after Award Levels have been
established shall not be eligible for an award with respect to such Award
Period. Except as provided in Subsection (e) herein, a Key Executive's
Award Levels may not be revised after April 1 of the applicable Award
Period (or such other date as may be required or permitted under Code
Section 162(m)).
(c) Performance Measures and Targets. Except as provided in Subsection
(e) herein, performance measures and targets relating to Key Executives
shall be established on or before April 1 of the applicable Award Period
(or such other date as may be required or permitted under Code Section
162(m)) and shall not be subject to revision after such date.
(d) Maximum Award. The maximum amount that may be paid under this Plan
(including amounts payable pursuant to the provisions of Section 4(f)) to
any Key Executive with respect to any one calendar year shall be four
million dollars.
(e) Possible Modifications. If, on the advice of the Company's legal
counsel, the Committee determines that Code Section 162(m) and the
regulations thereunder will not adversely affect the deductibility for
federal income tax purposes of any amount paid under the Plan by permitting
greater discretion and/or flexibility with respect to determining awards
made to Key Executives pursuant to this Section 7, then the Committee may,
in its sole discretion, apply such greater discretion and/or flexibility as
is consistent with the terms of the Plan, and without regard to the
restrictive provisions of this
<PAGE> 4
Section 7. In the event that any requirements relating to Code Section
162(m) or the regulations thereunder are modified to permit greater
flexibility under the Plan, the Committee may make such adjustments as it
deems appropriate.
8. Designation of Beneficiaries. A Participant may designate a beneficiary
or beneficiaries and may change such designation from time to time by filing a
written designation of beneficiaries with the Company on a form prescribed by
it, provided that no such designation shall be effective unless prior to the
date of the death of the Participant such designation is either received by the
Company or postmarked with sufficient postage affixed.
9. Modification or Termination of Plan. The Board may terminate the Plan at
any time to be effective at such date as the Board shall determine. The
Committee may amend the Plan from time to time as it deems appropriate; provided
however that no amendment shall result in an increase in any award to a Key
Executive with respect to an Award Period after the commencement of such Award
Period.
10. Shareholder Approval. The adoption and operation of the Plan is subject
to approval by the Company's shareholders in accordance with Code Section
162(m). Plan amendments are subject to shareholder approval only to the extent
required by Code Section 162(m).
11. Miscellaneous.
(a) Inalienability. No Participant shall have the right to anticipate,
alienate, sell, transfer, assign, pledge or encumber his right to receive
any award to be made under the Plan.
(b) Liens. No Participant shall have any lien on any of the assets of
the Company or any subsidiary thereof by reason of any award made under the
Plan.
(c) Absence of Liability. Neither the Company, nor any member of the
Board of the Company, nor any member of the Committee, nor any officer,
agent or employee of the Company shall have any liability to any
Participant by reason of any act or omission on his part in connection with
the administration of the Plan, except only for his or its willful and
intentional misconduct. All administrative decisions made hereunder shall
be binding and not subject to challenge in any form by a Participant, his
heirs or assigns.
(d) Right to Withhold Taxes. The Company and its subsidiaries shall
have the right to deduct from all amounts paid in cash any taxes required
by law to be withheld with respect to such cash payments.
(e) Expenses of Plan. All expenses incurred in connection with the
administration and operation of the Plan shall be paid by the Company, and
none shall be charged against the amount of an award which may be payable
under the Plan.
(f) No Employment Rights Conferred. The adoption of this Plan, or any
modification hereof, does not imply any commitment to continue or adopt the
same plan, or any modification thereof, or any other plan of incentive
compensation for any succeeding year. Neither the Plan nor any award made
hereunder shall create any employment contract or continuing relationship
between any Participant and the Company (or any of its subsidiaries).
(g) Other Compensation. Nothing in this Plan shall preclude the
Committee, as it shall deem necessary or appropriate, from authorizing the
payment to any Participant of compensation outside the parameters of the
Plan, including, without limitation, base salary, awards under any other
plan of the Company or any of its subsidiaries (whether or not approved by
shareholders), any other bonuses (whether or not based on the attainment of
performance measures) and retention or other special payments, provided
that, if the shareholders of the Company do not approve the Plan at the
first annual meeting of shareholders following the adoption of the Plan,
the Plan set forth herein shall not be implemented.
<PAGE> 1
EXHIBIT 11
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Dollars and Shares in Millions
except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
Computation for Consolidated Statements of Income
- -------------------------------------------------
Net income (loss) (a) $ 21.2 $(24.6) $ 50.2 $ 16.8
====== ====== ====== ======
Weighted average common shares outstanding 29.9 30.0 29.9 30.0
Common stock equivalents (stock options) - - - -
------ ------ ------ ------
Weighted average common shares outstanding (a) 29.9 30.0 29.9 30.0
====== ====== ====== ======
Primary earnings (loss) per common share (a) (c) $ .71 $ (.82) $ 1.68 $ .56
====== ====== ====== ======
Additional Primary Computation
- ------------------------------
Net income (loss) (a) $ 21.2 $(24.6) $ 50.2 $ 16.8
====== ====== ====== ======
Weighted average common shares outstanding (a) 29.9 30.0 29.9 30.0
Dilutive effect of outstanding options (d) .1 - .1 .2
------ ------ ------ ------
Weighted average common shares outstanding,
as adjusted 30.0 30.0 30.0 30.2
====== ====== ====== ======
Primary earnings (loss) per common share,
as adjusted (b) $ .71 $ (.82) $ 1.67 $ .56
====== ====== ====== ======
FULLY DILUTED EARNINGS PER COMMON SHARE
Additional Fully Diluted Computation
- ------------------------------------
Net income (loss) (a) $ 21.2 $(24.6) $ 50.2 $ 16.8
====== ====== ====== ======
Weighted average common shares outstanding (a) 29.9 30.0 29.9 30.0
Dilutive effect of outstanding options (d) .1 - .1 .2
------ ------ ------ ------
Weighted average common shares outstanding,
as adjusted 30.0 30.0 30.0 30.2
====== ====== ====== ======
Fully diluted earnings (loss) per common share,
as adjusted (b) $ .71 $ (.82) $ 1.67 $ .56
====== ====== ====== ======
</TABLE>
<PAGE> 2
EXHIBIT 11
(a) These figures agree with the related amounts in the Condensed
Consolidated Statements of Income.
(b) This calculation is submitted in accordance with Securities Exchange Act
of 1934 Release No. 9083, although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because it results in dilution of
less than 3%.
(c) In 1995 and 1994, stock options are not included in the earnings per
share computation included in MAPCO's Condensed Consolidated Statements
of Income because the dilutive effect is less than 3%.
(d) The impact of outstanding options is not shown for the three months
ended June 30, 1994 because the effect of these options on the
additional primary earnings per share and additional fully diluted
earnings per share calculations would be anti-dilutive.
<PAGE> 1
EXHIBIT 12
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 1994 1993 1992 1991 1990
------------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Earnings as defined:
Income before provision for income taxes ........ $ 78.4 $116.6 $202.9 $144.6 $182.6 $185.7
Fixed charges.................................... 32.3 60.1 55.3 60.1 63.9 67.3
Capitalized interest included in fixed charges... (.1) (2.8) (2.0) (1.2) (1.1)
Amortization of capitalized interest............. 1.7 3.4 3.5 3.5 3.3 3.6
Distributed income of affiliate accounted for by
the equity method.............................. 4.5
------- ------ ------ ------ ------ ------
Total................................. $ 112.3 $180.1 $258.9 $206.2 $248.6 $260.0
======= ====== ====== ====== ====== ======
Fixed charges as defined:
Interest and debt expense (includes amortization
of debt expense and discount).................. $ 29.4 $ 53.7 $ 46.9 $ 51.7 $ 55.5 $ 59.3
Capitalized interest............................. .1 2.8 2.0 1.2 1.1
Interest expense on guaranteed debt of affiliate
accounted for by the equity method............. .6
Portion of rentals representative of the interest
factor......................................... 2.8 6.4 5.6 6.4 7.2 6.3
------- ------ ------ ------ ------ ------
Total................................. $ 32.3 $ 60.1 $ 55.3 $ 60.1 $ 63.9 $ 67.3
======= ====== ====== ====== ====== ======
Ratio of earnings to fixed charges................. 3.5 3.0 4.7 3.4 3.9 3.9
======= ====== ====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MAPCO
INC.'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995, AND MAPCO
INC.'S CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE
30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 37,600
<SECURITIES> 0
<RECEIVABLES> 261,700
<ALLOWANCES> 0
<INVENTORY> 158,800
<CURRENT-ASSETS> 528,200
<PP&E> 2,577,400
<DEPRECIATION> 1,074,400
<TOTAL-ASSETS> 2,240,700
<CURRENT-LIABILITIES> 435,800
<BONDS> 742,100
<COMMON> 62,800
0
0
<OTHER-SE> 591,300
<TOTAL-LIABILITY-AND-EQUITY> 2,240,700
<SALES> 1,704,800
<TOTAL-REVENUES> 1,704,800
<CGS> 0
<TOTAL-COSTS> 1,506,500
<OTHER-EXPENSES> 90,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,100
<INCOME-PRETAX> 78,400
<INCOME-TAX> 27,100
<INCOME-CONTINUING> 51,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,200
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.67
</TABLE>
