UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-8704
HOWELL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1223027
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1111 Fannin, Suite 1500, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 658-4000
(Registrant's telephone number, including area code)
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.
Yes X No
--- ---
Indicate the number of shares outstanding on each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1995
----------------------------- ----------------------------
Common Stock, $1.00 par value 4,846,894
This report contains 13 pages
<PAGE>
HOWELL CORPORATION AND SUBSIDIARIES
Form 10-Q
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Statements of Earnings --
Three and six months ended June 30, 1995 and 1994 3
Consolidated Balance Sheets --
June 30, 1995 and December 31, 1994 4
Consolidated Statements of Cash Flows --
Six months ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 4. Results of the Votes of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
PART I. FINANCIAL INFORMATION
(ITEM 1)
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Howell Corporation and Subsidiaries
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues $169,768 $109,013 $321,284 $196,687
-------- -------- -------- --------
Cost and expenses:
Products including operating expenses 161,744 104,385 308,567 188,364
Selling, general and administrative expenses 3,086 2,832 5,942 5,491
-------- -------- -------- --------
164,830 107,217 314,509 193,855
-------- -------- -------- --------
Other income (expense):
Interest expense (2,268) (535) (2,895) (1,044)
Interest income 69 25 112 31
Other-net 17 44 13 16
-------- -------- -------- --------
(2,182) (466) (2,770) (997)
-------- -------- -------- --------
Earnings before income taxes 2,756 1,330 4,005 1,835
Provision for income taxes 999 425 1,416 578
-------- -------- -------- --------
Net earnings $ 1,757 $ 905 $ 2,589 $ 1,257
======== ======== ======== ========
Net earnings per common share $ .24 $ .06 $ .29 $ .01
======== ======== ======== ========
Cash dividends per common share $ .04 $ .04 $ .08 $ .08
======== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Howell Corporation and Subsidiaries
June 30, December 31,
1995 1994
------- -----------
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 7,552 $ 3,340
Trade accounts receivable, less allowance for
doubtful accounts of $208,000 in 1995 and
$214,000 in 1994 60,744 48,432
Inventories 2,718 2,655
Other current assets 1,265 1,520
-------- --------
Total current assets 72,279 55,947
-------- --------
Property, plant and equipment:
Oil and gas properties, utilizing the full-cost
method of accounting 275,969 264,430
Fee mineral interests, unproven 18,188 18,200
Other 101,895 34,837
Less accumulated depreciation, depletion and
amortization (199,947) (192,694)
-------- --------
Net property and equipment 196,105 124,773
-------- --------
Other assets, net of accumulated amortization of
$132,000 in 1995 2,763 1,720
-------- --------
Total assets $271,147 $182,440
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $8,422 $2,670
Accounts payable 55,807 46,178
Accrued liabilities 9,523 5,152
-------- --------
Total current liabilities 73,752 54,000
-------- --------
Deferred income taxes 20,117 19,273
-------- --------
Other liabilities 150 150
-------- --------
Long-term debt 100,123 33,098
-------- --------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par value; 690,000 shares
issued and outstanding 690 690
Common stock, $1 par value; 4,845,544 shares
issued and outstanding in 1995; 4,836,876
shares issued and outstanding in 1994 4,846 4,837
Additional paid-in capital 33,601 33,518
Retained earnings 37,868 36,874
-------- --------
Total shareholders' equity 77,005 75,919
-------- --------
Total liabilities and shareholders' equity $271,147 $182,440
======== ========
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Howell Corporation and Subsidiaries
Six Months Ended June 30,
1995 1994
---- ----
(In thousands)
OPERATING ACTIVITIES:
Net earnings $ 2,589 $ 1,257
Adjustments for noncash items:
Depreciation, depletion and amortization 7,491 6,133
Deferred income taxes 844 363
Gain on sales of assets (9) (23)
Changes in components of working capital from
operations:
Increase in trade accounts receivable (12,312) (11,196)
Increase in inventories (63) (501)
Decrease in other current assets 255 729
Increase in accounts payable 9,629 11,572
Increase in accrued and other liabilities 4,371 777
-------- --------
Cash provided by operating activities 12,795 9,111
-------- --------
INVESTING ACTIVITIES:
Proceeds from the disposition of property 155 1,444
Additions to property, plant and equipment (78,837) (7,297)
Other, net (1,175) (208)
-------- --------
Cash utilized in investing activities (79,857) (6,061)
-------- --------
FINANCING ACTIVITIES:
Long-term debt:
Borrowings (repayments) under revolving credit
agreement 15,300 (2,500)
Borrowings under term loan agreement 57,500 -
Other repayments (23) (796)
Cash dividends:
Common shareholders (387) (385)
Preferred shareholders (1,208) (1,208)
Issuance of common stock due to stock option
exercise 92 -
-------- --------
Cash provided by (utilized in) financing
activities 71,274 (4,889)
-------- --------
NET INCREASE (DECREASE) IN CASH BALANCE $ 4,212 $ (1,839)
======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Net cash paid for:
Interest $ 1,336 $ 659
======== =========
Income taxes $ 469 $ 76
======== =========
See accompanying Notes to Consolidated Financial Statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Howell Corporation and Subsidiaries
June 30, 1995 and 1994
Note 1 - Basis of Financial Statement Preparation
The consolidated financial statements included herein have been prepared by
Howell Corporation (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and in accordance with
generally accepted accounting principles. In the opinion of management, all
adjustments (all of which are normal and recurring) have been made which are
necessary for a fair statement of the results of operations for the three and
six months ended June 30, 1995 and June 30, 1994. These consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's latest Form 10-K.
Note 2 - Inventories
The components of inventories at the balance sheet dates are as follows:
June 30, December 31,
1995 1994
------- ------
(In thousands)
Refined products $1,607 $1,333
Crude oil 759 578
Other materials and supplies 352 744
------ ------
$2,718 $2,655
====== ======
Note 3 - Acquisition of Oil and Gas Properties
In March 1995, the Company acquired all of the Mississippi operated properties
and certain other assets of Norcen Explorer, Inc., for $5.8 million. The
properties include working interests in six fields with 21 producing wells. The
estimated proved reserves acquired were 961,029 barrels of oil and 1.0 Bcf of
natural gas.
Note 4 - Acquisition of Pipeline Assets
On March 31, 1995, the Company's crude oil marketing segment acquired from Exxon
Pipeline Company ("Exxon") two interstate crude oil pipeline systems and one
intrastate crude oil pipeline system. The interstate pipeline systems are
located in Florida/Alabama ("Jay System") and Mississippi/Louisiana ("MS
System"). The intrastate system is located in Texas ("Texas System").
Collectively, the purchase of these pipelines and related assets comprise the
"Exxon Transaction".
The Texas System consists of a 555-mile pipeline system extending from
Groesbeck, Texas, south to Texas City, Texas, and tanks for crude oil storage
with a total capacity of approximately 1.9 million barrels. The Jay System
consists of a 90-mile pipeline system that extends west from Santa Rosa County,
Florida, to Mobile County, Alabama, and includes tanks with approximately 0.2
million barrels of storage capacity. The MS System consists of a 230-mile
pipeline system extending from Jones County, Mississippi, to Baton Rouge,
Louisiana, and includes storage capacity of approximately 0.2 million barrels.
The total negotiated purchase price paid to Exxon for the Exxon Transaction was
$63.5 million. Of this amount, $6.3 million of the purchase price was paid as a
deposit in February 1995 and the remainder at closing of the Exxon Transaction.
The Exxon Transaction was financed through borrowings from banks. See Note 7
below.
<PAGE>
The following unaudited pro forma information represents the consolidated
statements of earnings, assuming the Exxon Transaction had occurred at the
beginning of each period presented (in thousands).
Six Months Ended June 30
1995 1994
---- ----
(In thousands)
Revenues $326,452 $206,164
Net Earnings 3,436 2,367
Net earnings per common share 0.59 0.24
The above amounts are based upon certain assumptions and estimates which the
Company believes are reasonable. The pro forma results do not necessarily
represent results which would have occurred if the acquisition had taken place
on the basis assumed above, nor are they indicative of the results of future
combined operations.
Note 5 - Earnings Per Share
Earnings per common share has been computed by dividing net earnings, after
reduction for preferred stock dividends, by the weighted average number of
common shares outstanding. Shares issuable in connection with stock options are
not included in the per share computations since their dilutive effect is less
than 3%. Earnings per share assuming full dilution does not result in a
difference from earnings per share assuming no dilution. The common shares
issuable upon conversion of the convertible preferred stock are anti-dilutive,
and the common shares issuable in connection with stock options result in a
dilutive effect of less than 3%.
Note 6 - Income Taxes
The effective tax rate for the first six months of 1995 and 1994 was 35% and
31%, respectively.
Note 7 - Debt and Available Credit Facilities
On March 31, 1995, the Company replaced the Credit Facility and the LC Facility,
as described in Note 5 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, with
two new credit facilities. The Credit Facility was replaced with a new credit
facility among Howell Petroleum Corporation and Bank One, Texas, N.A., Bank of
Montreal, Compass Bank - Houston and Den norske Bank AS (the "HPC Credit
Facility"). The borrowing base under the HPC Credit Facility was $43.3 million
at March 31, 1995, and will decline by $0.8 million monthly beginning May 1,
1995, until such time as it is redetermined. The borrowing base is reviewed
semi-annually by the banks with mandatory payments if the borrowing base, as
determined solely by the banks based on the Company's interest in proved oil and
gas reserves, is less than the outstanding balance on the loan. The HPC Credit
Facility provides for a revolving period until June 1, 1997, with interest to be
paid monthly at the rate selected by the Company of either (1) a Floating Base
Rate (as defined in the HPC Credit Facility) that is generally the prevailing
prime rate or (2) a rate based on LIBOR. At the end of the revolving period,
the revolving loan converts automatically to a four-year term loan, with
principal payments to be made in sixteen quarterly installments along with
accrued interest on the unpaid principal balance at a rate equal to the prime
rate. The HPC Credit Facility also provides for the issuance of letters of
credit in an amount up to $5.0 million. The amount of letters of credit
outstanding reduces the amount of the available commitment.
The HPC Credit Facility is collateralized by mortgages on substantially all of
the Company's producing oil and gas properties, the common stock of Howell
Petroleum Corporation (HPC), the common stock of Howell Crude Oil Company (HCO)
and the guarantee of the Company. There is no compensating balance requirement,
and the HPC Credit Facility carries a commitment fee of 3/8% on the available
portion of the commitment. Material covenants and restrictions include a
current ratio requirement, a tangible net worth requirement, a prohibition of
certain defined types of additional indebtedness and a prohibition from the
granting of certain liens on the Company's assets without the banks' approval.
<PAGE>
The LC Facility was replaced with a new credit facility among Howell Crude Oil
Company, Bank One, Texas, N.A., Bank of Montreal, Compass Bank - Houston and Den
norske Bank AS (the "HCO Credit Facility"). The HCO Credit Facility provides
for a term loan in an amount of $57.5 million and for the issuance of letters of
credit in the aggregate not to exceed the lesser of the commitment of $15
million or the Borrowing Base, as defined in the HCO Credit Facility.
Repayment of the term loan will occur over a period not to exceed seven years.
Beginning in July 1995, the Company will make principal payments in quarterly
installments of $1.4 million. In addition, the Company is required to make
additional repayments of the term loan, beginning in the second quarter of 1996,
equal to 60% of Excess Cash Flow, as defined in the HCO Credit Facility.
Interest will be paid monthly at the rate selected by the Company of either (1)
a Floating Base Rate (as defined in the HCO Credit Facility) that is generally
the prevailing prime rate or (2) a rate based on LIBOR.
The HCO Credit Facility carries a commitment fee of 1/4% on the available
portion of the commitment for letters of credit. There is no compensating
balance requirement. The HCO Credit Facility is collateralized by the inventory
and accounts receivable of HCO, the pipeline properties acquired in the Exxon
Transaction, the common stock of HCO and its subsidiaries, the common stock of
HPC, and the guarantee of the Company.
Note 8 - Commitments and Contingencies
Information about the Company's commitments and contingent liabilities is
included in Notes 8 and 9 to the consolidated financial statements contained in
the Company's 1994 Annual Report on Form 10-K. There were no significant
changes to such information during the first and second quarters of 1995 except
as follows:
Mobile Mineral Corporation, et al, v. Howell Crude Oil Company, et al; Circuit
Court of Mobile County, Alabama; CV-95-1564. This lawsuit was filed as a class
action in May 1995 by one working interest owner and two royalty owners in the
North Frisco City Field alleging breach of contracts by not paying the
plaintiffs " . . . the highest available price for oil". Damages claimed by the
plaintiffs are unspecified, but are based on allegations of breach of contract
and fraud. The Company has filed an answer denying all charges.
Related to this matter, the Company, on July 11, 1995, received a demand letter
from the working interest owners in the North Frisco City Field and in the North
Rome Field indicating the Company has not paid according to the terms of a "call
on production".
The Company was granted a call on a portion of this production but has never
exercised the call. Accordingly, the Company has filed a petition for a
declaratory judgment to that effect in Texas District Court. The Company does
not believe that the ultimate resolution of these matters will have a material
adverse effect on the financial condition or results of operations of the
Company.
<PAGE>
PART I. FINANCIAL INFORMATION
(ITEM 2)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's principal business segments are oil and gas exploration and
production, crude oil marketing, technical fuels and chemical processing, and
transportation. Results of operations by segment for the three and six months
ended June 30, 1995 and June 30, 1994 are presented below and discussed in the
following sections. The "Other" segment includes primarily depreciation and
amortization of certain assets not directly related to those segments identified
above. Selling, general and administrative expenses incurred by each business
segment are included in the determination of the operating profit (loss) for
that business segment. General corporate expenses comprise the balance of
selling, general and administrative expenses.
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(In thousands)
Revenues
<S> <C> <C> <C> <C>
Oil and gas exploration and production $ 8,189 $ 7,453 $ 15,735 $ 14,413
Crude oil marketing 157,572 97,263 296,452 173,784
Technical fuels and chemical processing 7,044 7,877 14,741 15,077
Transportation 3,887 2,866 7,849 5,383
Other - 16 - 16
Intersegment sales (6,924) (6,462) (13,493) (11,986)
-------- -------- -------- --------
$169,768 $109,013 $321,284 $196,687
======== ======== ======== ========
Earnings
Oil and gas exploration and production $ 2,265 $ 1,892 $ 3,977 $ 2,967
Crude oil marketing 3,134 545 3,647 918
Technical fuels and chemical processing 363 129 625 424
Transportation 177 301 513 572
Other (58) (75) (123) (180)
-------- -------- -------- --------
Operating profit 5,881 2,792 8,639 4,701
General corporate expenses (943) (996) (1,864) (1,869)
Other income (expense) (2,182) (466) (2,770) (997)
-------- -------- -------- --------
Earnings before taxes 2,756 1,330 4,005 1,835
Provision for income taxes 999 425 1,416 578
-------- -------- -------- --------
Net earnings $ 1,757 $ 905 $ 2,589 $ 1,257
======== ======== ======== ========
</TABLE>
<PAGE>
Oil & Gas Exploration and Production
Revenues of the oil and gas exploration and production segment for the three
months ended June 30, 1995 and 1994 were as follows:
Three Months Ended June 30,
1995 1994
(In thousands)
Sales of oil and natural gas $7,151 $6,484
Sales of LaBarge other products 419 455
Gas marketing 526 409
Minerals leasing and other 93 105
------ ------
Total revenues $8,189 $7,453
====== ======
Production and sales data for the three months ended June 30, 1995 and 1994 were
as follows:
Three Months Ended June 30,
1995 1994
Production:
Crude oil (bbls per day) 3,706 3,428
Natural gas (Mcf per day) 9,683 8,459
Natural gas liquids (bbls per day) 206 225
Sales prices:
Crude oil (per bbl) $16.69 $15.58
Natural gas (per Mcf) 1.46 1.80
Natural gas liquids (per bbl) 10.04 8.00
Revenues from sales of crude oil and natural gas increased $0.7 million or 10%
in the 1995 second quarter when compared to the same quarter in 1994. An
increase of 8% in the Company's daily oil production over the 1994 quarter
combined with a $1.11 higher oil sales price accounted for most of the increase.
Natural gas production volumes improved from 8,459 Mcf per day to 9,683 Mcf per
day but a decline in the related sales prices produced an overall decrease in
revenues from natural gas production. The improved daily production volumes are
attributable to the production from the properties acquired from Norcen
Explorer, Inc., (Norcen) in the first quarter of 1995, and greater natural gas
production from the Company's LaBarge property. In the second quarter of 1994,
the plant that processes the Company's LaBarge production was shut down for a
plant turnaround. A turnaround has not occurred in 1995, nor is one scheduled
to occur. Additionally, the Company's recent discovery, the Cauthen 6-15 #1
well in Mississippi, added 301 Mcf per day to 1995 natural gas production
volumes. See Note 3 of Notes to Consolidated Financial Statements.
Revenues from sales of other products at LaBarge decreased in the second quarter
of 1995 when compared to the second quarter of 1994 primarily due to lower
carbon dioxide sales. A contract expired in April 1995 and sales volumes in May
and June fell as a result. A new contract for carbon dioxide sales begins in
July 1995.
Operating profit of the oil and gas exploration and production segment in the
second quarter of 1995 was $2.3 million, an increase of $0.4 million over the
second quarter of 1994. Higher revenues, as discussed above, contributed to the
operating profit improvement. Additionally, DD&A per barrel declined slightly
in the 1995 period to $4.88 per barrel. These positive impacts on operating
profit were partially offset by a $0.13 per barrel increase in operating costs
in the 1995 quarter to $4.28 per barrel.
<PAGE>
Crude Oil Marketing
Operating profit of the crude oil marketing segment for the three months ended
June 30, 1995 increased $2.6 million when compared to the three months ended
June 30, 1994. The increase in operating profit is attributable primarily to
the operating profits generated from the crude oil pipeline assets acquired on
March 31, 1995 from Exxon Pipeline Company (Exxon). See Note 4 of Notes to
Consolidated Financial Statements.
Technical Fuels and Chemical Processing
The technical fuels and chemical processing segment generated operating profit
of $0.4 million in the second quarter of 1995, an improvement of $0.2 million
over the same period in 1994. Although revenues declined when compared to the
prior year quarter, the mix of products sold resulted in better margins on those
sales in the 1995 period. In addition a slight decline in operating costs in
the 1995 quarter contributed to the improved operating profit.
Transportation
The transportation segment reported an operating profit of $0.2 million for the
three months ended June 30, 1995. The decrease in operating profit from the
1994 quarter, despite a $1.0 million increase in revenues, resulted from
additional maintenance and supply expenditures to bring equipment acquired over
the last nine months up to the Company's standards. Costs associated with the
commencement of crude oil transportation operations in Mississippi also reduced
operating profit.
Other Income (Expense)
Interest expense for the three months ended June 30, 1995 increased $1.7 million
when compared to the same period in 1994. As discussed in Notes 3, 4 and 7 of
Notes to Consolidated Financial Statements, the Company acquired certain oil and
gas properties from Norcen and certain crude oil pipeline assets from Exxon for
$5.8 million and $63.5 million, respectively. The increase in debt for these
acquisitions combined with higher market interest rates in the 1995 period
resulted in the increase in interest expense.
Provision for Income Taxes
For the first six months of 1995 and 1994 the provision for income taxes was
calculated at rates of 35% and 31%, respectively. The variance from the federal
statutory rate of 34% was due to the effects of the percentage depletion
deduction offset by the provision for state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operating activities in the first six months of
1995 of $12.8 million. During the period, the Company utilized the cash flow
generated from operations and $72.8 million in borrowings under its revolving
credit agreement and term loan agreement to invest $78.8 million in additions to
property, plant and equipment, to pay a total of $1.6 million of cash dividends
to its common and preferred shareholders and to increase its cash balances by
$4.2 million.
The additions to property, plant and equipment consisted primarily of the
acquisition of all of the Mississippi operated oil and gas properties and
certain other assets of Norcen for $5.8 million, the acquisition of three crude
oil pipeline systems from Exxon for $63.5 million and additional costs of $1.7
million related to the pipelines acquisition.
These acquisitions were financed by two new credit facilities that replaced the
existing Credit Facility and LC Facility described in Note 5 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
<PAGE>
The Credit Facility was replaced with a new credit facility among Howell
Petroleum Corporation and Bank One, Texas, N.A., Bank of Montreal, Compass Bank
- Houston and Den norske Bank AS (the "HPC Credit Facility"). The borrowing
base under the HPC Credit Facility was $43.3 million at March 31, 1995, and will
decline by $0.8 million monthly beginning May 1, 1995, until such time as it is
redetermined. The borrowing base is reviewed semi-annually by the banks with
mandatory payments if the borrowing base, as determined solely by the banks
based on the Company's interest in proved oil and gas reserves, is less than the
outstanding balance on the loan. The HPC Credit Facility provides for a
revolving period until June 1, 1997, with interest to be paid monthly at the
rate selected by the Company of either (1) a Floating Base Rate (as defined in
the HPC Credit Facility) that is generally the prevailing prime rate or (2) a
rate based on LIBOR. At the end of the revolving period, the revolving loan
converts automatically to a four-year term loan, with principal payments to be
made in sixteen quarterly installments along with accrued interest on the unpaid
principal balance at a rate equal to the prime rate. The HPC Credit Facility
also provides for the issuance of letters of credit in an amount up to $5.0
million. The amount of letters of credit outstanding reduces the amount of the
available commitment.
The HPC Credit Facility is collateralized by mortgages on substantially all of
the Company's producing oil and gas properties, the common stock of Howell
Petroleum Corporation (HPC), the common stock of Howell Crude Oil Company (HCO)
and the guarantee of the Company. There is no compensating balance requirement,
and the HPC Credit Facility carries a commitment fee of 3/8% on the available
portion of the commitment. Material covenants and restrictions include a
current ratio requirement, a tangible net worth requirement, a prohibition of
certain defined types of additional indebtedness and a prohibition from the
granting of certain liens on the Company's assets without the banks' approval.
The LC Facility was replaced with a new credit facility among HCO, Bank One,
Texas, N.A., Bank of Montreal, Compass Bank - Houston and Den norske Bank AS
(the "HCO Credit Facility"). The HCO Credit Facility provides for a term loan
in an amount of $57.5 million and for the issuance of letters of credit in the
aggregate not to exceed the lesser of the commitment of $15 million or the
Borrowing Base, as defined in the HCO Credit Facility.
Repayment of the term loan will occur over a period not to exceed seven years.
Beginning in July 1995, the Company will make principal payments in quarterly
installments of $1.4 million. In addition, the Company is required to make
additional repayments of the term loan, beginning in the second quarter of 1996,
equal to 60% of Excess Cash Flow, as defined in the HCO Credit Facility.
Interest will be paid monthly at the rate selected by the Company of either (1)
a Floating Base Rate (as defined in the HCO Credit Facility) that is generally
the prevailing prime rate or (2) a rate based on LIBOR.
The HCO Credit Facility carries a commitment fee of 1/4% on the available
portion of the commitment for letters of credit. There is no compensating
balance requirement. The HCO Credit Facility is collateralized by the inventory
and accounts receivable of HCO, the pipeline properties acquired in the Exxon
Transaction, the common stock of HCO and its subsidiaries, the common stock of
HPC and the guarantee of the Company.
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders
The Annual Meeting of the Shareholders of the Company was held on April 24,
1995, for the following purposes.
(1) To elect two members to the Board of Directors to serve a three-year term
as Class I Directors.
<PAGE>
The results of the voting for each of the nominees for director were as
follows:
Shares Shares Broker
For Withheld Non-Votes
------ -------- ---------
Paul N. Howell 4,262,020 156,757 -
John F. Schwarz 4,267,620 151,157 -
A simple majority of the shares of common stock represented at the meeting
was required for each nominee to be elected. Therefore both nominees for
director were elected.
(2) To ratify the appointment of Deloitte & Touche LLP as independent auditors
for the Company for the fiscal year ending December 31, 1995.
The results of the voting on this matter were as follows:
Shares For 4,410,567
Shares Against 2,550
Shares Abstaining 5,660
Broker Non-Votes -
A simple majority of the common shares represented was required for
ratification; therefore, the appointment was ratified.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
11 Computation of Earnings per Share
(b) Reports on Form 8-K
A report on Form 8-K was filed on April 17, 1995 announcing that the
Registrant had acquired three crude oil pipelines from Exxon Pipeline
Company. An amendment to this Form 8-K was filed on May 25, 1995
providing historical financial data and pro forma data for the assets
acquired.
SIGNATURE
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.
Howell Corporation
(Registrant)
Date: August 9, 1995 /s/ Allyn R. Skelton, II
------------------------
Allyn R. Skelton, II
Senior Vice President & Chief
Financial Officer
(Principal Financial and Accounting
Officer)
<TABLE>
EXHIBIT 11
HOWELL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Computation for Statement of Earnings
-------------------------------------
Reconciliation of net income per statement of
earnings to amount used in calculation of earnings
per share - assuming no dilution:
Net earnings $1,757 $ 905 $2,589 $1,257
Subtract - Dividend to preferred shareholders 604 604 1,208 1,208
------ ------ ------ ------
Net earnings, as adjusted $1,153 $ 301 $1,381 $ 49
====== ====== ====== ======
Weighted average number of common shares
outstanding 4,842 4,837 4,839 4,837
====== ====== ====== ======
Earnings per share - assuming no dilution <F1> $ .24 $ .06 $ .29 $ .01
====== ====== ====== ======
Additional Primary Computation
------------------------------
Net earnings, as adjusted per primary
computation above $1,153 $ 301 $1,381 $ 49
====== ====== ====== ======
Adjustment to weighted average number of
shares outstanding:
Weighted average number of shares outstanding
per primary computation above 4,842 4,837 4,839 4,837
Add - Dilutive effect of outstanding options
(as determined by application of the treasury
stock method) 130 39 100 53
------ ------ ------ ------
Weighted average number of shares outstanding,
as adjusted 4,972 4,876 4,939 4,890
====== ====== ====== ======
Primary earnings per share, as adjusted <F2> $ .23 $ .06 $ .28 $ .01
====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE
Computation for Statement of Earnings
-------------------------------------
Net earnings, as adjusted per
primary computation above $1,153 $ 301 $1,381 $ 49
====== ====== ====== ======
Weighted average number of common shares
outstanding, per primary computation above 4,842 4,837 4,839 4,837
====== ====== ====== ======
Earnings per share - assuming full
dilution <F1> $ .24 $ .06 $ .29 $ .01
====== ====== ====== ======
Additional Fully Diluted Computation
------------------------------------
Additional adjustment to net earnings,
as adjusted per fully diluted computation above:
Net earnings, as adjusted per fully
diluted computation above $1,153 $ 301 $1,381 $4 9
Add - Dividend to preferred shareholders 604 604 1,208 1,208
------ ------ ------ ------
Net earnings, as adjusted $1,757 $ 905 $2,589 $1,257
====== ====== ====== ======
Additional adjustment to weighted average number
of shares outstanding:
Weighted average number of shares outstanding,
per fully diluted computation above 4,842 4,837 4,839 4,837
Add - Dilutive effect of outstanding options
(as determined by the application of the treasury
stock method) 130 42 121 54
Shares issuable from assumed exercise of
convertible preferred stock 2,091 2,091 2,091 2,091
------ ------ ------ ------
Weighted average number of common shares,
as adjusted 7,063 6,970 7,051 6,982
====== ====== ====== ======
Fully diluted earnings per share <F3> $ .25 $ .13 $ .37 $ .18
====== ====== ====== ======
<FN>
<F1>
These amounts agree with the reported amounts on the statements of
earnings.
<F2>
This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion
No. 15 because it results in dilution of less than 3%.
<F3>
This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because
it produces an anti-dilutive result.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL STATEMENT INFORMATION FROM THE FORM 10-Q OF
HOWELL CORPORATION FOR THE QUARTER ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 7552
<SECURITIES> 0
<RECEIVABLES> 60744
<ALLOWANCES> 208
<INVENTORY> 2718
<CURRENT-ASSETS> 72279
<PP&E> 396052
<DEPRECIATION> 196105
<TOTAL-ASSETS> 271147
<CURRENT-LIABILITIES> 73752
<BONDS> 100123
<COMMON> 4846
0
690
<OTHER-SE> 71479
<TOTAL-LIABILITY-AND-EQUITY> 271147
<SALES> 321284
<TOTAL-REVENUES> 321284
<CGS> 308567
<TOTAL-COSTS> 308567
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2895
<INCOME-PRETAX> 4005
<INCOME-TAX> 1416
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2589
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
