SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
Form 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 31, 1995
___________________
HOWELL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
1-8704 74-1223027
(Commission File Number) (I.R.S. Employer Identification No.)
1111 Fannin, Suite 1500, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 658-4000
<PAGE>
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
March 31, 1995, and filed on April 17, 1995, as set forth in the pages attached
hereto.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
An index of historical financial statements of businesses acquired included in
this current report is presented on page 3.
(b) Pro forma financial information
An index of pro forma financial information included in this current report is
presented on page 3.
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 hereunto duly authorized.
HOWELL CORPORATION
(Registrant)
Date: May 25, 1995 By /s/ Paul W. Funkhouser
Paul W. Funkhouser
President and Chief Operating Officer
<PAGE>
Howell Corporation
Current Report on Form 8-K/A
Index to Financial Information
Page
I. Predecessor Operations of Certain Crude Oil Pipeline
Businesses of Exxon Pipeline Company
Report of Independent Accountants 4
Statement of Revenues and Direct Operating Expenses 5
Notes to the Statement of Revenues and Direct Operating Expenses 6
II. Unaudited Pro Forma Consolidated Statements of Earnings
Introduction 7
Unaudited Pro Forma Consolidated Statement of Earnings
for the Year Ended December 31, 1994 8
Unaudited Pro Forma Consolidated Statement of Earnings
for the Three Months Ended March 31, 1995 9
Notes to Unaudited Pro Forma Consolidated Statements of Earnings 10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Exxon Pipeline Company and Howell
Crude Oil Company
We have audited the accompanying statement of revenues and direct operating
expenses of the Pipeline Systems (as described in Note 1 of this statement) for
each year in the three-year period ended December 31, 1994. This statement is
the responsibility of management. Our responsibility is to express an opinion
on this statement based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the statement. We believe that
our audits provide a reasonable basis for our opinion.
The accompanying statement reflects the revenues and direct operating expenses
of the Pipeline Systems and was prepared as described in Note 2 and is not
intended to be a complete presentation of the revenues and expenses of the
Pipeline Systems.
In our opinion, the statement audited by us presents fairly, in all material
respects, the revenues and direct operating expenses of the Pipeline Systems
(and was prepared as described in Note 2 to the statement) for each year in the
three-year period ended December 31, 1994 in conformity with generally accepted
accounting principles.
PRICE WATERHOUSE LLP
Houston, Texas
May 25, 1995
<PAGE>
<TABLE>
THE PIPELINE SYSTEMS
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
(in thousands of dollars)
<CAPTION>
Three months ended
Year ended December 31, March 31,
---------------------------- ------------------
1994 1993 1992 1995 1994
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Trunk $15,889 $13,103 $16,350 $4,195 $3,248
Gathering 2,775 2,338 2,630 626 597
------- ------- ------- ------ ------
Total 18,664 15,441 18,980 4,821 3,845
Direct operating expenses:
Pipeline salaries and wages 1,391 1,511 1,508 336 339
Other pipeline expenses 3,202 3,062 3,091 525 517
Major maintenance projects 1,911 897 883 17 78
------- ------- ------- ------ ------
Total 6,504 5,470 5,482 878 934
------- ------- ------- ------ ------
Excess of revenues over
direct operating expenses $12,160 $9,971 $13,498 $3,943 $2,911
======= ======= ======= ====== ======
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
THE PIPELINE SYSTEMS
NOTES TO THE STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
NOTE 1 - THE PIPELINE SYSTEMS
Effective March 31, 1995, Howell Crude Oil Company purchased certain domestic
oil pipeline systems from Exxon Pipeline Company (EPC) which are commonly
referred to as the Texas System, the Mississippi System and the Jay System
(collectively, the Pipeline Systems) for approximately $64 million. The
Pipeline Systems cover territory in Central Texas and the Texas Gulf Coast,
Mississippi, Louisiana, Alabama and Florida. EPC is subject to regulation by
the Federal Energy Regulatory Commission (FERC) and conducts its business in
accordance with the relevant FERC requirements.
NOTE 2 - BASIS OF PRESENTATION
During the periods presented, the Pipeline Systems were not accounted for as a
separate entity. Certain costs, such as depreciation and amortization, general
and administrative expenses, interest expense and corporate taxes, were not
allocated to the Pipeline Systems. Accordingly, full separate financial
statements prepared in accordance with generally accepted accounting principles
do not exist and are not practicable to obtain in these circumstances.
The statement of revenues and direct operating expenses (the Statement) was
derived from the historical accounting records of the seller. Such information
is presented on the accrual basis of accounting. Revenue is recognized upon
delivery. Trunk revenues include net inventory gains and losses. Depreciation
and amortization, allocated general and administrative expenses, interest
expense and corporate income taxes are not components of direct operating
expenses and are therefore not included in the Statement. Accordingly, the
Statement is not intended to present financial position and results of
operations in accordance with generally accepted accounting principles.
The revenues and direct operating expenses for the periods ended March 31, 1995
and 1994 presented in the Statement have not been audited by independent
accountants; however, in the opinion of management, the amounts present fairly
EPC's revenues and direct operating expenses for the three-month periods ended
March 31, 1995 and 1994.
NOTE 3 - RELATED PARTY
EPC is a wholly-owned subsidiary of Exxon Corporation (Exxon). As a result,
numerous transactions routinely occur in the normal course of business between
EPC and its parent. Salaries and wages in the Statement include certain
retirement, health and welfare, life and other such benefits. EPC participates
in Exxon benefit plans and pays the costs associated with benefits provided to
EPC employees and annuitants. Exxon is also a major customer of the Pipeline
Systems. See Note 4.
NOTE 4 - MAJOR CUSTOMERS
During 1994, revenue from Exxon accounted for 38% of total revenue while two
other individual customers accounted for 37% and 18% of total revenue. During
1993, revenue from Exxon accounted for 28% of total revenue while two other
individual customers accounted for 39% and 20% of total revenue. During 1992,
revenue from Exxon accounted for 31% of total revenue while two other individual
customers accounted for 32% and 14% of the revenue.
<PAGE>
HOWELL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
INTRODUCTION
The following Unaudited Pro Forma Consolidated Statements of Earnings for the
year ended December 31, 1994, and the three-month period ended March 31, 1995
(the "Pro Forma Consolidated Statements of Earnings") give effect to the
acquisition of the Pipeline Systems and the related assumptions and adjustments
described in the notes to the Pro Forma Consolidated Statements of Earnings.
The Pro Forma Consolidated Statements of Earnings are based upon the historical
audited and unaudited consolidated statements of earnings of Howell Corporation
and the operations historically included in the Pipeline Systems and should be
read in conjunction with the audited consolidated financial statements and notes
thereto included in Howell's Annual Report on Form 10-K for the year ended
December 31, 1994, the unaudited consolidated financial statements and notes
thereto included in Howell's Quarterly Report on Form 10-Q for the three months
ended March 31, 1995, and the audited and unaudited financial statements and
notes thereto of the Pipeline Systems included in this current report.
The Pro Forma Consolidated Statements of Earnings for the year ended December
31, 1994, and the three-month period ended March 31, 1995, were prepared
assuming that the acquisition of the Pipeline Systems was consummated as of the
beginning of each period presented. The Pro Forma Consolidated Statements of
Earnings have been prepared based upon assumptions deemed appropriate by Howell
and may not be indicative of actual results.
<PAGE>
<TABLE>
HOWELL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
For the Year Ended December 31, 1994
(in thousands, except per share data)
<CAPTION>
Historical
---------------------
Acquired Pro
Howell Pipeline Forma Pro
Corporation Systems Adjustments Forma
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
Revenues $448,952 $18,664 $1,386 (a) $469,002
-------- ------- ------ --------
Costs and expenses:
Products including operating expenses 431,783 6,504 4,076 (b) 442,363
Selling, general and administrative expenses 10,992 - 1,982 (c) 12,974
-------- ------- ------ --------
442,775 6,504 6,058 455,337
-------- ------- ------ --------
Other income (expense):
Interest expense (2,237) - (4,345)(d) (6,582)
Interest income 131 - - 131
Other, net 180 - - 180
-------- ------- ------ --------
(1,926) - (4,345) (6,271)
-------- ------- ------ --------
Earnings from operations before income taxes 4,251 12,160 (9,017) 7,394
Provision for income taxes 1,368 - 1,172 (e) 2,540
-------- ------- ------ --------
Net earnings $2,883 $12,160 $(10,189) $4,854
======== ======= ====== ========
Weighted average shares outstanding 4,837 4,837
======== ========
Net earnings per common share $0.10 $0.50
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Earnings.
<PAGE>
<TABLE>
HOWELL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
For the Three Months Ended March 31, 1995
(in thousands, except per share data)
<CAPTION>
Historical
---------------------
Acquired Pro
Howell Pipeline Forma Pro
Corporation Systems Adjustments Forma
---------- -------- ----------- --------
<S> <C> <C> <C> <C>
Revenues $151,516 $ 4,821 $ 347 (a) $156,684
-------- ------- ------- --------
Costs and expenses:
Products including operating expenses 146,823 878 1,019 (b) 148,720
Selling, general and administrative expenses 2,856 - 496 (c) 3,352
-------- ------- ------- --------
149,679 878 1,515 152,072
-------- ------- ------- --------
Other income (expense):
Interest expense (627) - (1,424)(d) (2,051)
Interest income 43 - - 43
Other, net (4) - - (4)
-------- ------- ------- --------
(588) - (1,424) (2,012)
-------- ------- ------- --------
Earnings from operations before income taxes 1,249 3,943 (2,592) 2,600
Provision for income taxes 417 - 504 (e) 921
-------- ------- ------- --------
Net earnings $ 832 $ 3,943 $(3,096) $ 1,679
======== ======= ======= ========
Weighted average shares outstanding 4,837 4,837
======== ========
Net earnings per common share $ 0.05 $ 0.22
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Earnings.
<PAGE>
HOWELL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
For the Year Ended December 31, 1994 and
the Three-Month Period Ended March 31, 1995
1. BASIS OF PRESENTATION
The Unaudited Pro Forma Consolidated Statements of Earnings for the year ended
December 31, 1994, and the three-month period ended March 31, 1995, are
presented as if the combination occurred at the beginning of each period
presented. The Unaudited Pro Forma Consolidated Statements of Earnings may not
necessarily be indicative of the results which would have resulted if the
combination had been in effect on the date or for the periods indicated or which
may result in the future.
2. PRO FORMA ADJUSTMENTS - STATEMENTS OF EARNINGS
The pro forma adjustments to the unaudited statements of earnings reflect the
following:
(a) Revenues - The Company has entered into a lease with Exxon Pipeline Company
(EPC) under which EPC will rent tankage for a minimum of one year.
(b) Operating Expenses.
1. Depreciation and amortization - The adjustment reflects the pro forma
depreciation and amortization expense based upon the allocation of the purchase
price.
2. Rent expense - The Company has entered into an agreement to rent
certain tankage from EPC.
(c) General and administrative expenses - The adjustment reflects the
incremental costs the Company expects to incur for general and administrative
functions, including administrative personnel costs, additional property and
casualty insurance costs, state franchise taxes and consulting services.
(d) Interest expense - The adjustment for interest expense reflects (i)
interest computed on pro forma average debt balances using the average London
Interbank Offered Rate ("LIBOR") in effect during the respective time periods,
as adjusted for the margin over LIBOR applicable to the credit agreements, and
(ii) the amortization of financing costs. The effective LIBOR used was 6.4% and
8.5% for the 1994 annual period and 1995 three-month period, respectively.
(e) Income taxes - The adjustment for income taxes represents the tax effect
applicable to the Pipeline Systems and the foregoing pro forma adjustments
computed at the 34% federal income tax rate in effect during the time periods
presented. An adjustment for estimated applicable state income taxes is also
included.
