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 September 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 November 1, 1995
----------------------------- -------------------------------
Common Stock, $1.00 par value 4,932,046
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 nine months ended September 30, 1995 and 1994 3
Consolidated Balance Sheets --
September 30, 1995 and December 31, 1994 4
Consolidated Statements of Cash Flows --
Nine months ended September 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 1. Legal Proceedings 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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(In thousands, except
per share amounts)
<S> <C> <C> <C> <C>
Revenues $172,972 $120,530 $494,256 $317,217
Cost and expenses:
Products including operating expenses 165,955 115,951 474,522 304,315
Selling, general and administrative expenses 3,077 2,729 9,019 8,220
-------- -------- -------- --------
169,032 118,680 483,541 312,535
-------- -------- -------- --------
Other income (expense):
Interest expense (2,134) (578) (5,029) (1,622)
Interest income 40 11 152 42
Other-net (134) 26 (121) 42
-------- -------- -------- --------
2,228 (541) 4,998 (1,538)
-------- -------- -------- --------
Earnings before income taxes 1,712 1,309 5,717 3,144
Provision for income taxes 627 433 2,043 1,011
-------- -------- -------- --------
Net earnings $ 1,085 $ 876 $ 3,674 $ 2,133
======== ======== ======== ========
Net earnings per common share $ .10 $ .06 $ .38 $ .07
======== ======== ======== ========
Cash dividends per common share $ .04 $ .04 $ .12 $ .12
======== ======== ======== ========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Howell Corporation and Subsidiaries
September 30, December 31,
1995 1994
---- ----
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 6,194 $ 3,340
Trade accounts receivable, less allowance for
doubtful accounts of $217,000 in 1995 and
$214,000 in 1994 60,353 48,432
Inventories 3,304 2,655
Other current assets 2,390 1,520
---------- ----------
Total current assets 72,241 55,947
---------- ----------
Property, plant and equipment:
Oil and gas properties, utilizing the full-cost
method of accounting 278,737 264,430
Mineral fee interests 18,188 18,200
Other 104,614 34,837
Less accumulated depreciation, depletion
and amortization (205,083) (192,694)
---------- ----------
Net property and equipment 196,456 124,773
---------- ----------
Other assets 784 1,720
---------- ----------
Total assets $ 269,481 $ 182,440
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 8,423 $ 2,670
Accounts payable 54,070 46,178
Accrued liabilities 10,268 5,152
---------- ----------
Total current liabilities 72,761 54,000
---------- ----------
Deferred income taxes 20,327 19,273
---------- ----------
Other liabilities 150 150
---------- ----------
Long-term debt 98,173 33,098
---------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par; 690,000 shares issued
and outstanding 690 690
Common stock, $1 par; 4,922,046 shares and
4,836,876 shares issued and outstanding,
respectively 4,922 4,837
Additional paid-in capital 34,302 33,518
Retained earnings 38,156 36,874
---------- ----------
Total shareholders' equity 78,070 75,919
---------- ----------
Total liabilities and shareholders' equity $ 269,481 $ 182,440
========== ==========
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Howell Corporation and Subsidiaries
Nine Months Ended September 30,
1995 1994
---- ----
(In thousands)
OPERATING ACTIVITIES:
Net earnings $ 3,674 $ 2,133
Adjustments for noncash items:
Depreciation, depletion and amortization 11,992 9,181
Deferred income taxes 1,054 742
Gain on sales of assets (22) (23)
Changes in components of working capital
from operations:
Increase in trade accounts receivable (11,921) (13,146)
Increase in inventories (649) (637)
Increase in other current assets (870) (3)
Increase in accounts payable 7,892 13,459
Increase in accrued and other liabilities 5,116 1,852
--------- --------
Cash provided by operating activities 16,266 13,558
--------- --------
INVESTING ACTIVITIES:
Proceeds from the disposition of property 1,166 1,444
Additions to property, plant and equipment (84,611) (10,723)
Other, net 728 (317)
--------- --------
Cash utilized in investing activities (82,717) (9,596)
--------- --------
FINANCING ACTIVITIES:
Long-term debt:
Borrowings (repayments) under revolving
credit agreement 14,800 (1,700)
Borrowings under term loan agreement, net 56,063 -
Other repayments, net (35) (808)
Cash dividends:
Common stock (581) (581)
Preferred stock (1,811) (1,811)
Issuance of common stock 869 -
--------- --------
Cash provided by (utilized in)
financing activities 69,305 (4,900)
--------- --------
NET INCREASE (DECREASE) IN CASH BALANCE $ 2,854 $ (938)
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Net cash paid for:
Interest $ 3,830 $ 1,014
========= ========
Income taxes $ 843 $ 84
========= ========
See accompanying Notes to Consolidated Financial Statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Howell Corporation and Subsidiaries
September 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 to a fair statement of the results of operations for the three and
nine months ended September 30, 1995 and September 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:
September 30, December 31,
1995 1994
---------- --------
(In thousands)
Refined products $1,614 $1,333
Crude oil 774 578
Other materials and supplies 352 744
------ ------
$3,304 $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. The Exxon Transaction was financed through borrowings from
banks. See Note 7 below.
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.
Nine Months Ended September 30
1995 1994
------- -------
(In thousands, except per share)
Revenues $499,424 $331,981
Net earnings 4,521 3,720
Net earnings per common share 0.56 0.39
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 nine months of 1995 and 1994 was 36% and
32%, 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 $41.5 million
at October 1, 1995. 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 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.
In July 1995, the Company began making 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 three 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 approximately $3.8 million and are based on numerous damage
theories including, but not limited to, allegations of breach of contract and
fraud. The complaint also seeks punitive damages. 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 defendants in
this action have counterclaimed against the Company. These claims are similar
in nature to the Alabama litigation. One of the defendants, John Faulkinberry,
has filed a counterclaim against the Company seeking actual damages of $70,000
and punitive damages of $100,000,000. 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 nine months
ended September 30, 1995 and September 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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(In thousands)
Revenues
<S> <C> <C> <C> <C>
Oil and gas exploration and production $ 7,907 $ 7,442 $ 23,642 $ 21,855
Crude oil marketing 161,497 109,282 457,949 283,066
Technical fuels and chemical processing 6,729 7,021 21,470 22,098
Transportation 4,133 3,244 11,982 8,627
Other - - - 16
Intersegment sales (7,294) (6,459) (20,787) (18,445)
-------- -------- -------- --------
$172,972 $120,530 $494,256 $317,217
======== ======== ======== ========
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(In thousands)
Earnings
Oil and gas exploration and production $ 1,494 $ 1,826 $ 5,471 $ 4,793
Crude oil marketing 2,830 540 6,477 1,458
Technical fuels and chemical processing 226 132 851 556
Transportation 289 309 802 881
Other (17) (77) (140) (257)
-------- -------- -------- --------
Operating profit 4,822 2,730 13,461 7,431
General corporate expenses (882) (880) (2,746) (2,749)
Other income (expense) (2,228) (541) (4,998) (1,538)
-------- -------- -------- --------
Earnings before taxes 1,712 1,309 5,717 3,144
Provision for income taxes 627 433 2,043 1,011
-------- -------- -------- --------
Net earnings $ 1,085 $ 876 $ 3,674 $ 2,133
======== ======== ======== ========
</TABLE>
Oil & Gas Exploration and Production
Revenues of the oil and gas exploration and production segment for the three
months ended September 30, 1995 and 1994 were as follows:
Three Months Ended September 30,
1995 1994
---- ----
(In thousands)
Revenues
Sales of oil and natural gas $6,728 $6,374
Sales of LaBarge other products 477 526
Gas marketing 606 357
Minerals leasing and other 96 185
------ ------
Total revenues $7,907 $7,442
====== ======
Production and sales data for the three months ended September 30, 1995 and 1994
were as follows:
Three Months Ended September 30,
1995 1994
---- ----
Production:
Crude oil (bbls per day) 3,723 3,359
Natural gas (Mcf per day) 9,514 8,642
Natural gas liquids (bbls per day) 213 223
Sales prices:
Crude oil (per bbl) $15.42 $15.82
Natural gas (per Mcf) 1.38 1.72
Natural gas liquids (per bbl) 9.81 8.90
Despite a $0.5 million increase in revenues of the oil and gas exploration and
production segment in the third quarter of 1995 when compared to the same
quarter in 1994, operating profit declined $0.3 million, primarily due to higher
depreciation, depletion and amortization (DD&A) expense. The increase in
revenue is attributable to higher daily oil and gas production. This production
rise is due to the acquisition, in March 1995, of certain properties of Norcen
Explorer, Inc. (Norcen) that added 430 barrels of oil per day and 269 Mcf per
day of natural gas to the 1995 third quarter levels. Additionally, a 1995
discovery, the Cauthen 6-15 #1 well in Mississippi, added 401 Mcf to daily
natural gas production for the 1995 period.
DD&A for the 1995 quarter was $5.35 per equivalent barrel of production,
compared to $4.90 in the 1994 period. Downward revisions to reserve estimates
and costs incurred during the 1995 period were the two factors contributing to
the increased DD&A.
The Company's revenues and costs were impacted slightly in the 1995 third
quarter by Hurricane Erin which caused a shut-in of the Company's Main Pass
Block 64 Field and North Frisco City Field for less than two days. In the
fourth quarter of 1995, operating results for the oil and gas exploration and
production segment are expected to be significantly impacted by the shut-in of
Main Pass Block 64 for nineteen days due to Hurricane Opal.
Crude Oil Marketing
Operating profit of the crude oil marketing segment was $2.8 million in the 1995
third quarter, an increase of $2.3 million over the prior year period. The
operating profits generated from the crude oil pipeline assets acquired on March
31, 1995 from Exxon Pipeline Company (EPC) produced the increase. See Note 4 of
Notes to Consolidated Financial Statements.
Pipeline transmission volumes for the third quarter of 1995 were 87,317 barrels
per day down from 96,401 barrels per day in the second quarter of 1995.
Hurricane Erin affected the Company's crude oil pipeline transmission activities
as the Jay System had to be shut down for almost two days for the hurricane. In
addition, due to the impact of Hurricane Erin, shippers diverted some crude they
would normally have shipped on the Texas System to other destinations. This
also negatively impacted third quarter pipeline transmission volumes.
Technical Fuels and Chemical Processing
In the third quarter of 1995, the technical fuels and chemical processing
segment experienced an increase in operating profit of $0.1 million, despite a
$0.3 million decline in revenues. Revenues from chemical toll processing and
terminalling activities rose 59% while volumes of reference fuels sold declined
10%. The costs associated with these activities declined slightly resulting in
the operating profit improvement.
Transportation
The results of the transportation segment for the quarter ended September 30,
1995 were flat when compared to the 1994 period. Revenues increased between the
periods as the Company has been able to grow its level of business with third
parties. These revenues have, however, had higher associated costs per revenue
dollar.
Other Income (Expense)
Interest expense for the three months ended September 30, 1995 increased $1.6
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 nine months of 1995 and 1994 the provision for income taxes was
calculated at rates of 36% and 32%, respectively. The variance from the
statutory rate of 34% was due to the effect of the percentage depletion
deduction, offset in 1995 by higher state income tax expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operating activities in the first nine months of
1995 of $16.3 million. During this period, the Company utilized the cash flow
generated from operations and $70.8 million of borrowings under its revolving
credit agreement and term loan agreement to invest $84.6 million in additions to
property, plant and equipment, to pay a total of $2.4 million of cash dividends
to its common and preferred shareholders and to increase its cash balances by
$2.9 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.
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 $41.5 million at October 1, 1995. 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.
In July 1995, the Company began making 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 1. Legal Proceedings
The Company, through its subsidiaries, is involved from time to time in various
claims, lawsuits and administrative proceedings incidental to its business. In
the opinion of management, the ultimate liability thereunder, if any, will not
have a material adverse effect on the financial condition or results of
operations of the Company. See Note 8 of Notes to Consolidated Financial
Statements.
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 September 11, 1995, announcing a
change in the directors and officers of the Registrant.
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: November 13, 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 Nine Months Ended
September 30, September 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 $1,085 $ 876 $3,674 $2,133
Subtract - Dividend to preferred shareholders 603 603 1,811 1,811
------ ------ ------ ------
Net earnings, as adjusted $ 482 $ 273 $1,863 $ 322
====== ====== ====== ======
Weighted average number of common shares
outstanding 4,867 4,837 4,849 4,837
====== ====== ====== ======
Earnings per share - assuming no dilution <F1> $ .10 $ .06 $ .38 $ .07
====== ====== ====== ======
Additional Primary Computation
- ------------------------------
Net earnings, as adjusted per primary
computation above $ 482 $ 273 $1,863 $ 322
====== ====== ====== ======
Adjustment to weighted average number of
shares outstanding:
Weighted average number of shares outstanding
per primary computation above 4,867 4,837 4,849 4,837
Add - Dilutive effect of outstanding options
(as determined by application of the treasury
stock method) 150 49 117 52
------ ------ ------ ------
Weighted average number of shares outstanding,
as adjusted 5,017 4,886 4,966 4,889
====== ====== ====== ======
Primary earnings per share, as adjusted <F2> $ .10 $ .06 $ .38 $ .07
====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE
Computation for Statement of Earnings
- -------------------------------------
Net earnings, as adjusted per
primary computation above $ 482 $ 273 $1,863 $ 322
====== ====== ====== ======
Weighted average number of common shares
outstanding, per primary computation above 4,867 4,837 4,849 4,837
====== ====== ====== ======
Earnings per share - assuming full
dilution <F1> $ .10 $ .06 $ .38 $ .07
====== ====== ====== ======
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 $ 482 $ 273 $1,863 $ 322
Add - Dividend to preferred shareholders 603 603 1,811 1,811
------ ------ ------ ------
Net earnings, as adjusted $1,085 $ 876 $3,674 $2,133
====== ====== ====== ======
Additional adjustment to weighted average number
of shares outstanding:
Weighted average number of shares outstanding,
per fully diluted computation above 4,867 4,837 4,849 4,837
Add - Dilutive effect of outstanding options
(as determined by the application of the treasury
stock method) 152 42 131 40
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 7,110 6,970 7,071 6,968
====== ====== ====== ======
Fully diluted earnings per share <F3> $ .15 $ .13 $ .52 $ .31
====== ====== ====== ======
<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 SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6194
<SECURITIES> 0
<RECEIVABLES> 60353
<ALLOWANCES> 217
<INVENTORY> 3304
<CURRENT-ASSETS> 72241
<PP&E> 401539
<DEPRECIATION> 205083
<TOTAL-ASSETS> 269481
<CURRENT-LIABILITIES> 72761
<BONDS> 98173
<COMMON> 4922
0
690
<OTHER-SE> 72458
<TOTAL-LIABILITY-AND-EQUITY> 269481
<SALES> 494256
<TOTAL-REVENUES> 494256
<CGS> 474522
<TOTAL-COSTS> 474522
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5029
<INCOME-PRETAX> 5717
<INCOME-TAX> 2043
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3674
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
