FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________________to_____________
COMMISSION FILE NUMBER 1-7910
TOSCO CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 95-1865716
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
72 CUMMINGS POINT ROAD
STAMFORD, CONNECTICUT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 977-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[x] Yes ____No
Registrant's Common Stock outstanding at April 30, 1998 was 156,340,898 shares.
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL AND OTHER INFORMATION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
PAGE(S)
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1998 and
December 31, 1997 2
Consolidated Statements of Income for the three month
periods ended March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows for the three month
periods ended March 31, 1998 and 1997 4
Notes to Consolidated Financial Statements 5 - 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K: 12
Exhibit 11 - Computation of Earnings per Share for the
three month periods ended March 31, 1998 and 1997 13
Exhibit 12 - Ratio of Earnings to Fixed Charges for the
three month periods ended March 31, 1998 and 1997 14
Signatures 15
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars, Except Par Value)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $37,618 $34,482
Marketable securities and deposits 49,999 43,687
Trade accounts receivable, less allowance
for uncollectibles of $19,225 (1998) and
$19,018 (1997) 215,058 315,123
Inventories 1,323,651 1,253,692
Prepaid expenses and other current assets 100,694 107,632
Deferred income taxes 57,646 57,646
--------- ---------
Total current assets 1,784,666 1,812,262
Property, plant, and equipment, net 3,205,405 3,170,955
Deferred turnarounds, net 120,488 123,330
Intangible assets (primarily tradenames), less
accumulated amortization of $40,139 (1998)
and $34,546 (1997) 691,932 699,559
Other deferred charges and assets 156,183 168,746
---------- ----------
$5,958,674 $5,974,852
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses, and other
liabilities $1,348,033 $1,540,867
Current maturities of long-term debt 2,650 11,908
---------- -----------
Total current liabilities 1,350,683 1,552,775
Revolving credit facility 371,000 166,000
Long-term debt 1,360,297 1,415,257
Accrued environmental costs 261,204 252,964
Deferred income taxes 137,288 140,435
Other liabilities 201,498 203,366
---------- -----------
Total liabilities 3,681,970 3,730,797
---------- ---------
Company-obligated, mandatorily redeemable, convertible
preferred securities of Tosco Financing Trust, holding
solely 5.75% convertible junior subordinated debentures
of Tosco Corporation (Trust Preferred Securities) 300,000 300,000
---------- ---------
Shareholders' equity:
Common stock, $.75 par value, 250,000,000 shares
authorized, 177,781,330 (1998) and 177,706,038
(1997) shares issued 133,564 133,507
Additional paid-in capital 2,029,540 2,028,985
Retained earnings 286,512 254,351
Treasury stock, at cost (472,912) (472,788)
---------- ----------
Total shareholders' equity 1,976,704 1,944,055
---------- ----------
$5,958,674 $5,974,852
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Thousands of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
<S> <C> <C>
Sales $3,047,055 $2,410,273
Cost of sales 2,860,855 2,324,485
Selling, general, and administrative expenses 74,847 51,909
Interest expense 37,450 24,143
Interest income (1,420) (769)
----------- -----------
Income before income taxes and distributions on
Trust Preferred Securities 75,323 10,505
Income taxes 31,259 4,420
----------- ----------
Income before distributions on Trust Preferred Securities 44,064 6,085
Distributions on Trust Preferred Securities, net of
income tax benefit of $1,790 (1998 and 1997) 2,523 2,522
----------- ---------
Net income $ 41,541 $ 3,563
=========== ========
Basic earnings per share $ 0.27 $ 0.03
=========== ========
Diluted earnings per share $ 0.26 $ 0.03
=========== ========
Dividends per share $ 0.06 $ 0.06
=========== ========
Weighted average common and common equivalent shares
used for computation of basic earnings per share 156,325,535 131,175,830
Assumed conversion of dilutive stock options 4,601,636 4,514,952
Assumed conversion of Trust Preferred Securities (a) 9,113,940
----------- -----------
Weighted average common and common equivalent shares
used for computation of diluted earnings per share 170,041,111 135,690,782
=========== ===========
(a) Conversion of the Trust Preferred Securities is not assumed in 1997 due to
the anti-dilutive impact of the assumed conversion.
The accompanying notes are an integral part of these financial statements.
</TABLE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
Cash flows from operating activities:
<S> <C> <C>
Net income $ 41,541 $ 3,563
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 75,970 55,928
Changes in operating assets and liabilities, net (152,565) (122,274)
Other, net 1,518 (1,147)
--------- ----------
Net cash used in operating activities (33,536) (63,930)
---------- ---------
Cash flows from investing activities:
Purchase of property, plant, and equipment, net (65,263) (72,174)
Net increase in deferred turnarounds, deferred charges, and other assets (13,356) (55,191)
Unocal escrow deposit (600,000)
Net change in marketable securities and deposits (6,312) (2,584)
Acquisition of 76 Products assets (4,382)
Other, net 1,857 (2,376)
--------- ----------
Net cash used in investing activities (83,074) (736,707)
--------- ----------
Cash flows from financing activities:
Proceeds from note and debenture offering 600,000
Net borrowings under revolving credit facility 205,000 276,000
Payments under long-term debt agreements (11,988) (102,939)
Early payoff of real estate installment purchase note (64,622)
Dividends paid on common stock (9,380) (7,842)
Other, net 736 (6,296)
-------- ---------
Net cash provided by financing activities 119,746 758,923
-------- ---------
Net increase (decrease) in cash and cash equivalents 3,136 (41,714)
Cash and cash equivalents at beginning of period 34,482 94,418
-------- ---------
Cash and cash equivalents at end of period $37,618 $52,704
======== =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
TOSCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
(ALL INFORMATION IS UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements of Tosco Corporation and subsidiaries
("Tosco" or the "Company") reflect all adjustments, consisting of normal
recurring accruals, which are, in the opinion of management, necessary for a
fair presentation of the Company's consolidated financial position, results of
operations, and cash flows. Such financial statements are presented in
accordance with disclosure requirements established by the Securities and
Exchange Commission for Form 10-Q. These unaudited, interim, consolidated
financial statements should be read in conjunction with the Company's audited
Consolidated Financial Statements and notes thereto included in the Company's
1997 Annual Report on Form 10-K.
2. ACCOUNTING CHANGES
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130 "Reporting Comprehensive Income" ("SFAS No. 130") and
Statement of Position No. 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP No. 98-1"). SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components (net income plus all other non-owner changes in equity). SOP No 98-1
provides guidance on accounting for the costs of computer software developed or
obtained for internal use. The adoption of these accounting pronouncements did
not have a material impact on the Company's financial statements for the three
month period ended March 31, 1998.
3. INVENTORIES
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(THOUSANDS OF DOLLARS) 1998 1997
------------- ---------
Refineries (LIFO):
<S> <C> <C>
Raw materials $ 575,192 $ 468,515
Intermediates 205,092 181,414
Finished products 392,085 440,525
Retail (FIFO):
Merchandise 117,201 121,082
Gasoline and diesel 32,543 39,901
Other 1,538 2,255
------------- --------------
$ 1,323,651 $ 1,253,692
============= ==============
</TABLE>
Inventories accounted for under the LIFO method at March 31, 1998 and December
31, 1997, are reduced by a $53,000,000 non-cash inventory valuation reserve
recorded in December 1997. At March 31, 1998, the adjusted carrying value of
LIFO inventories exceeded replacement cost. Management believes the decline in
replacement cost of inventories is temporary.
4. REVOLVING CREDIT FACILITY
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(THOUSANDS OF DOLLARS) 1998 1997
------------- ---------
<S> <C> <C>
Cash borrowings outstanding $ 371,000 $ 166,000
Letters of credit 36,271 57,241
------------- --------------
Total utilization 407,271 223,241
Availability 592,729 776,759
------------- --------------
$ 1,000,000 $ 1,000,000
============= ==============
</TABLE>
<PAGE>
5. LONG-TERM DEBT
During January 1998, Tosco completed the purchase of approximately 200
convenience stores by paying off the outstanding balance on a real estate
installment purchase note for $64,622,000, including the settlement of
contingent payments.
6. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
(THOUSANDS OF DOLLARS) 1998 1997
------------- ---------
Cash paid during the period for:
<S> <C> <C>
Interest, net of amounts capitalized $ 48,277 $ 23,862
Income taxes, net of refunds received 4,478 5,386
Detail of acquisitions:
Fair value of assets acquired $ 1,964,924
Liabilities assumed (265,693)
Common Stock issued (396,880)
--------------
Net cash paid for acquisitions 1,302,351
Cash acquired in acquisitions 711
--------------
Cash paid for acquisitions $ 1,303,062
==============
</TABLE>
7. NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued SFAS No. 131 "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131") during June
1997 and SFAS No. 132 "Employers' Disclosures about Pensions and Other
Postretirement Benefits" ("SFAS No. 132") during February 1998. SFAS No. 131
establishes disclosure standards regarding information about operating segments.
SFAS No. 132 changes the disclosure requirements for pension and other
postretirement benefits, but does not change any existing measurement or
recognition provisions. The Company will comply with the expanded disclosure
requirements of SFAS No. 131 and SFAS No. 132 with its 1998 annual financial
statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
INTRODUCTION
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three month period ended March 31, 1998 should be read in
conjunction with Management's Discussion and Analysis included in the Company's
1997 Annual Report on Form 10-K. The Annual Report sets forth Selected Financial
Data that, in summary form, reviewed Tosco's results of operations and
capitalization over the five year period 1993 through 1997. This Management's
Discussion and Analysis updates that data.
Tosco completed its acquisition of Union Oil Company of California's ("Unocal")
West Coast petroleum refining, marketing, and related supply and transportation
assets (the "76 Products Acquisition") on March 31, 1997. The assets acquired
are comprised of two petroleum refining systems, a retail gasoline system
consisting of 76-branded gasoline service stations, a distribution system
comprised of company-owned oil storage terminals, rights with respect to crude
oil and product pipelines, the world-wide rights to the "76" and "Union" brands,
and Unocal's lubricants manufacturing, distribution, and marketing business.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
(THOUSANDS OF DOLLARS) 1998 1997
------------- ---------
<S> <C> <C>
Sales $ 3,047,055 $ 2,410,273
Cost of sales 2,860,855 2,324,485
Selling, general, and administrative expenses 74,847 51,909
Interest expense, net 36,030 23,374
------------- --------------
Income before income taxes and distributions on Trust Preferred
Securities 75,323 10,505
Income taxes 31,259 4,420
------------- --------------
Income before distributions on Trust Preferred Securities 44,064 6,085
Distributions on Trust Preferred Securities, net of income tax benefit 2,523 2,522
------------- -------------
Net income $ 41,541 $ 3,563
============= ==============
Earnings per share (a) $ 0.26 $ 0.03
============= ==============
(a) Earnings per share in this document are expressed on a diluted basis.
REFINING DATA SUMMARY (A)
THREE MONTHS ENDED MARCH 31,
1998 1997
------------- ---------
Average charge barrels input per day (b):
Crude oil 857,800 383,200
Other feed and blending stocks 91,300 48,100
------------- --------------
949,100 431,300
============= ==============
Average barrels of petroleum products produced per day (b):
Clean products (c) 784,900 339,300
Other finished products 166,600 91,100
------------- --------------
951,500 430,400
============= ==============
Operating margin per charge barrel (d) $ 4.43 $ 5.03
============= ==============
(a) The Refining Data Summary presents the operating results of the following
refineries:
- Bayway Refinery, located on the New York Harbor
- Ferndale Refinery, located on Washington's Puget Sound
- Los Angeles Refinery System, comprised of two refineries in Los
Angeles (for the period beginning April 1, 1997)
- San Francisco Area Refinery System, comprised of the Rodeo-Santa
Maria complex (for the period beginning April 1, 1997) and the
Avon Refinery
- Trainer Refinery, located near Philadelphia (for the period beginning
May 8, 1997).
(b) A barrel is equal to 42 gallons.
(c) Clean products are defined as clean transportation fuels (gasoline, diesel,
distillates, and jet fuel) and heating oil.
(d) Operating margin per charge barrel is calculated as operating contribution,
excluding refinery operating costs, divided by total refinery charge
barrels. Operating contribution for 1997 includes insurance recoveries
related to the unscheduled shutdowns of the Bayway Refinery cat cracker and
the Avon Refinery hydrocracker.
</TABLE>
RETAIL DATA SUMMARY (A)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
------------- ---------
<S> <C> <C>
Volume of fuel sold (thousands of gallons) 1,068,638 625,945
Blended fuel margin (cents per gallon) (b) 11.1 8.3
Number of gasoline stations at period end 4,656 3,180
Merchandise sales (thousands of dollars) $ 475,857 $ 462,596
Merchandise margin (percentage of sales) 29.2% 29.7%
Number of merchandise stores at period end 2,291 2,390
Other retail gross profit (thousands of dollars) $ 29,407 $ 19,632
(a) The Retail Data Summary includes the operations of the 76 Products gasoline
service stations subsequent to March 31, 1997 (date acquired).
(b) Blended fuel margin is calculated as fuel sales minus fuel cost of sales
divided by fuel gallons sold.
</TABLE>
1998 FIRST QUARTER COMPARED TO 1997 FIRST QUARTER
Tosco earned net income of $41.5 million ($0.26 per share) on sales of $3.0
billion during the first quarter of 1998, compared to earnings of $3.6 million
($0.03 per share) on sales of $2.4 billion in the corresponding period of 1997.
The increase in sales is attributable to higher refinery production and retail
fuel volumes resulting from the 76 Products Acquisition (on March 31, 1997) and
the reopening of the Trainer Refinery (on May 8, 1997), which more than offset a
reduction in refinery product and retail fuel prices.
Tosco generated an operating contribution (sales less cost of sales) of $186.2
million for the first quarter of 1998 compared to $85.8 million in the
corresponding period in 1997. The improvement was attributable to refining
($63.5 million) and retail ($36.9 million) operations.
Refining operating contribution was $112.8 million for the 1998 first quarter
compared to $49.3 million in the 1997 first quarter. This increase was due to
higher production volumes resulting from the 76 Products Acquisition and the
reopening of the Trainer Refinery. Production volumes for the first quarter of
1997 were reduced by scheduled and unscheduled shutdowns at certain refinery
units. The favorable production results were reduced by lower operating margins
due to weak product demand for East Coast heating oil and West Coast gasoline.
Refining operating contribution for the 1997 first quarter includes insurance
recovery accruals related to the unscheduled shutdowns of the Bayway Refinery
cat cracker and the Avon Refinery hydrocracker.
<PAGE>
Retail operating contribution was $73.4 million for the quarter ended March 31,
1998 compared to $36.5 million in the comparable period in 1997. The 1998
increase was due to increased fuel volumes from the 76 Products assets and
higher blended fuel margins for the company.
Selling, general, and administrative expenses for the quarter ended March 31,
1998 increased by $22.9 million compared to the corresponding period in 1997
primarily due to the 76 Products Acquisition and higher incentive
compensation costs.
Net interest expense for the quarter ended March 31, 1998 increased by $12.7
million compared to the 1997 period. This increase is primarily due to higher
debt levels incurred to finance Tosco's expanded operations.
OUTLOOK
Results of operations are primarily determined by the operating efficiency of
the refineries, and refining and retail fuel margins. Normal levels of
maintenance are scheduled for the remainder of 1998 and Tosco expects, given
reasonable margins, to operate its refineries at high levels during 1998.
Refining margins at the beginning of the 1998 second quarter have improved over
the weak first quarter due to stronger demand for gasoline. However, retail
margins continue to be poor. Tosco is not able to predict the level of refinery
and retail fuel operating margins for the balance of 1998 because of the
uncertainties associated with oil markets. In view of uncertain operating
margins and highly competitive markets, Tosco is committed to improving its
results by lowering costs without compromising safety, reliability, or
environmental compliance.
In February 1998, Tosco entered into a long-term contract with Occidental
Petroleum Company ("Occidental") to buy a substantial portion of Occidental's
crude oil production from the Elk Hills oil and gas field in California at
market-related pricing. Tosco plans to build a 14 mile pipeline from the Elk
Hills field to existing lines that serve the San Francisco Area Refinery System.
This domestic supply of light crude oil should reduce the need for Tosco to
purchase waterborne crude oil.
CASH FLOWS
As summarized in the Consolidated Statement of Cash Flows, cash and cash
equivalents increased by $3.1 million during the first quarter of 1998 as cash
provided by financing activities of $119.7 million exceeded cash used in
operating and investing activities of $33.5 million and $83.1 million,
respectively.
Net cash used in operating activities of $33.5 million was from cash earnings
(net income plus depreciation and amortization) of $117.5 million and $1.5
million from other uses, net of an increase in net operating assets and
liabilities of $152.5 million.
Net cash used in investing activities totaled $83.1 million due to capital
additions ($65.3 million), spending for turnarounds, deferred charges, and other
assets ($13.4 million), and other items ($4.4 million).
Net cash provided by financing activities totaled $119.7 million as net
borrowings under the Revolving Credit Facility of $205.0 million and other
items of $0.7 million exceeded scheduled and early principal payments on
long-term debt of $76.6 million and dividend payments of $9.4 million.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, liquidity (cash and cash equivalents, marketable securities
and deposits, and unused credit facilities) totaled $680.3 million, a $174.6
million decrease from the December 31, 1997 balance of $854.9 million. Cash and
cash equivalents increased by $3.1 million, marketable securities and deposits
increased by $6.3 million, and unused credit facilities decreased by $184.0
million.
At March 31, 1998, total shareholders' equity was $2.0 billion, a $32.6 million
increase from the December 31, 1997 balance. This increase was due to net income
of $41.5 million and other items of $0.5 million less Common Stock dividends of
$9.4 million. Debt (short-term bank borrowings, current and non-current
maturities of long-term debt, and revolving credit facilities) increased by
$140.8 million during the three month period ended March 31, 1998 to $1.7
billion due to Tosco's borrowings under the Revolving Credit Facility, net of
early and scheduled principal payments under long-term debt agreements.
<PAGE>
The ratio of long-term debt (revolving credit facilities and non-current portion
of long-term debt) to total capitalization (revolving credit facilities,
non-current portion of long-term debt, Trust Preferred Securities, and total
shareholders' equity) increased from 41% at December 31, 1997 to 43% at March
31, 1998.
In January 1997, Tosco filed a shelf registration statement providing for the
issuance of up to $1.5 billion aggregate principal amount of debt and equity
securities. Such securities may be offered, separately or together, in amounts
and at prices and terms to be set forth in one or more supplements to the shelf
registration statement. On May 30, 1997, Tosco issued 25.3 million shares of
Common Stock pursuant to this shelf registration statement for gross proceeds of
$721.1 million. At March 31, 1998, Tosco had available for issue $778.9 million
of securities pursuant to this shelf registration statement.
The Revolving Credit Facilities, as well as funds potentially available from the
issuance of securities, provide Tosco with adequate resources to meet its
expected liquidity demands for at least the next twelve months.
CAPITAL EXPENDITURES
Tosco spent $65.2 million on budgeted capital projects during the first quarter
of 1998, primarily at its retail sites (enhancing existing sites and upgrading
underground storage tanks) and at the San Francisco Area Refinery System.
Refinery capital spending programs were primarily for the completion of projects
related to compliance with environmental regulations and permits,
personnel/process safety programs, and operating flexibility and reliability
projects.
IMPACT OF THE YEAR 2000 ISSUE
Tosco recognizes the need to ensure that its computer operations and operating
systems will not be adversely affected by the Year 2000 Issue and is cognizant
of the time-sensitive nature of the problem. Since 1996, Tosco has been
proactively upgrading and replacing its business systems while integrating the
Circle K and 76 Products acquisitions. Tosco has assessed how its critical
business systems may be affected by the Year 2000 Issue and has formulated and
is implementing plans to address the known Year 2000 Issues. These plans, as
they relate to business systems, involve a combination of additional software
upgrades, replacements, and modifications. Tosco believes the cost of Year 2000
compliance for its business systems will not have a material adverse effect on
Tosco's future operating results or financial position. Tosco is currently
assessing the impact of the Year 2000 Issue on its field systems and software
suppliers. Accordingly, Tosco is unable to estimate the costs related to these
Year 2000 Issues. However, Tosco does not believe its Year 2000 costs related to
its field systems and software suppliers will have a material adverse effect on
Tosco's future operating results or financial position.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued SFAS No. 131 "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131") during June
1997 and SFAS No. 132 "Employers' Disclosures about Pensions and Other
Postretirement Benefits" ("SFAS No. 132") during February 1998. SFAS No. 131
establishes disclosure standards regarding information about operating segments.
SFAS No. 132 changes the disclosure requirements for pension and other
postretirement benefits but does not change any existing measurement or
recognition provisions. The Company will comply with the expanded disclosure
requirements of SFAS No. 131 and SFAS No. 132 with its 1998 annual financial
statements.
FORWARD LOOKING STATEMENTS
TOSCO HAS MADE, AND MAY CONTINUE TO MAKE, VARIOUS FORWARD-LOOKING STATEMENTS
WITH RESPECT TO ITS FINANCIAL POSITION, BUSINESS STRATEGY, PROJECTED COSTS,
PROJECTED SAVINGS, AND PLANS AND OBJECTIVES OF MANAGEMENT. SUCH FORWARD-LOOKING
STATEMENTS ARE IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS OR PHRASES SUCH AS
"ANTICIPATES," "INTENDS," "EXPECTS," "PLANS," "BELIEVES," "ESTIMATES," OR WORDS
OR PHRASES OF SIMILAR IMPORT. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
NUMEROUS ASSUMPTIONS, RISKS, AND UNCERTAINTIES, AND THE STATEMENTS LOOKING
FORWARD BEYOND 1998 ARE SUBJECT TO GREATER UNCERTAINTY BECAUSE OF THE INCREASED
LIKELIHOOD OF CHANGES IN UNDERLYING FACTORS AND ASSUMPTIONS. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED BY THE FORWARD-LOOKING
STATEMENTS.
IN ADDITION TO FACTORS PREVIOUSLY DISCLOSED BY TOSCO AND FACTORS IDENTIFIED
ELSEWHERE HEREIN, CERTAIN OTHER FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM SUCH FORWARD-LOOKING STATEMENTS. ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO TOSCO, OR PERSONS ACTING ON BEHALF OF
TOSCO, ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH FACTORS.
TOSCO'S FORWARD-LOOKING STATEMENTS REPRESENT ITS JUDGMENT ONLY ON THE DATES SUCH
STATEMENTS ARE MADE. BY MAKING ANY FORWARD-LOOKING STATEMENTS, TOSCO ASSUMES NO
DUTY TO UPDATE THEM TO REFLECT NEW, CHANGED, OR UNANTICIPATED EVENTS OR
CIRCUMSTANCES.
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
11 - Computation of Earnings Per Share (see page 13)
12 - Ratio of Earnings to Fixed Charges (see page 14)
27 - Financial Data Schedule
EXHIBIT 11
TOSCO CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
(Thousands of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
Income before distributions on Trust Preferred Securities $44,064 $6,085
Distributions on Trust Preferred Securities, net of income tax benefit 2,523 2,522
---------- ----------
Net income $ 41,541 $ 3,563
BASIC EARNINGS PER SHARE
Earnings used for computation of basic earnings per share $ 41,541 $ 3,563
-------------- --------------
Weighted average shares outstanding during the period 156,325,535 131,175,830
-------------- ---------------
Basic earnings per share $0.27 $0.03
============== ================
DILUTED EARNINGS PER SHARE
Earnings used for computation of diluted earnings per share (a) $ 44,064 $3,563
------------ -----------
Weighted average shares outstanding during the period 156,325,535 131,175,830
Assumed conversion of dilutive stock options 4,601,636 4,514,952
Assumed conversion of Trust Preferred Securities (a) 9,113,940
-------------- ----------------
Weighted average shares outstanding used for computation
of diluted earnings per share 170,041,111 135,690,782
-------------- ----------------
Diluted earnings per share $0.26 $0.03
================ =================
(a) Conversion of the Trust Preferred Securities is not assumed in 1997 due
to the anti-dilutive impact of the assumed conversion.
</TABLE>
EXHIBIT 12
TOSCO CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars, Except Ratio Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
------------ -------------
<S> <C> <C>
Income before income taxes $71,010 $6,193
Fixed charges to be added to income before income taxes:
Interest expense, including amortization of financing costs 37,450 24,143
Distributions on Trust Preferred Securities 4,313 4,312
Interest factor of rental expense 12,843 7,175
------------ -----------
Earnings $125,616 $41,823
------------ -----------
Fixed charges:
Interest expense, including amortization of financing costs $ 37,450 $24,143
Interest capitalized 149 249
Distributions on Trust Preferred Securities 4,313 4,312
Interest factor of rental expense 12,843 7,175
------------- -----------
Total fixed charges $54,755 $35,879
------------- -----------
Ratio of earnings to fixed charges 2.29 1.17
============== ============
</TABLE>
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.
TOSCO CORPORATION
(Registrant)
Date: May 14, 1998 By: /S/ JEFFERSON F. ALLEN
-----------------------
(Jefferson F. Allen)
President and Chief Financial Officer
By: /S/ ROBERT I. SANTO
-----------------------
(Robert I. Santo)
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 37,618
<SECURITIES> 49,999
<RECEIVABLES> 234,283
<ALLOWANCES> 19,225
<INVENTORY> 1,323,651
<CURRENT-ASSETS> 1,784,666
<PP&E> 3,946,293
<DEPRECIATION> 740,888
<TOTAL-ASSETS> 5,958,674
<CURRENT-LIABILITIES> 1,350,683
<BONDS> 350,000
300,000
0
<COMMON> 133,564
<OTHER-SE> 1,843,140
<TOTAL-LIABILITY-AND-EQUITY> 5,958,674
<SALES> 3,047,055
<TOTAL-REVENUES> 3,047,055
<CGS> 2,860,855
<TOTAL-COSTS> 2,860,855
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,460
<INCOME-PRETAX> 75,323
<INCOME-TAX> 31,259
<INCOME-CONTINUING> 44,064
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,541
<EPS-PRIMARY> .27
<EPS-DILUTED> .26
</TABLE>
