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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K-405/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1996
Commission file number 0-685
PETROLITE CORPORATION
Incorporated in the State of Delaware
Employer Identification No. 43-0617572
369 Marshall Avenue, St. Louis, MO 63119
Telephone 314/961-3500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act:
Title of Class:
Capital Stock without par value
Exhibits Index is on page 39 through 41
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The Registrant hereby amends its Form 10-K405 dated January 29, 1997 by
inserting into Items 8 and 14 thereof the following:
(a) List of financial statements filed as part of this report:
Petrolite Corporation [filed with original filing on Form 10-K]
---------------------
Bareco Products (page numbers correspond to the original filing
---------------
on Form 10-K)
Statement of operations for the years ended October 31, 1996 and
1995
Balance sheet as of October 31, 1996 and 1995
Statement of cash flows for the years ended October 31, 1996 and
1995
Statement of changes in partners' equity for the years ended
October 31, 1996 and 1995
Notes to financial statements
Report of independent accountants
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PETROLITE CORPORATION
By /s/ John M. Casper
-------------------------------
Vice President
and Chief Financial Officer
Date: February 11, 1997
2
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<TABLE>
BARECO PRODUCTS
STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
April 15,
Year Ended 1995 to
October 31, October 31,
1996 1995
(unaudited)
<S> <C> <C>
Net revenues $ 67,248 $ 33,002
Cost of sales 53,410 26,786
----------- -----------
Gross profit 13,838 6,216
Selling, general and administrative expenses 2,984 1,638
Research and development expenses 400 187
----------- -----------
Income before income taxes 10,454 4,391
Provision for income taxes 48 19
----------- -----------
Net income $ 10,406 $ 4,372
=========== ===========
See accompanying Notes to Financial Statements.
</TABLE>
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<TABLE>
BARECO PRODUCTS
BALANCE SHEET
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
October 31,
1996 1995
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 148 $ 659
Accounts receivable, net of allowance for
doubtful accounts of $175 and $74 (unaudited) 11,893 9,531
Inventories 4,177 3,298
Prepaid expenses 47 36
---------- ----------
Total current assets 16,265 13,524
Property, plant and equipment, net of
accumulated depreciation of $244 and $88 (unaudited) 336 432
Other noncurrent assets 289 2
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Total assets $ 16,890 $ 13,958
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to Petrolite Wax Partner Company $ 2,276 $ 1,760
Due to Pennzoil Wax Partner Company 788 2,624
Accrued commissions 355 70
Other accounts payable and accrued expenses 651 922
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Total current liabilities 4,070 5,376
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Partners' equity:
Petrolite Wax Partner Company 6,410 4,291
Pennzoil Wax Partner Company 6,410 4,291
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Total partners' equity 12,820 8,582
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Total liabilities and partners' equity $ 16,890 $ 13,958
========== ==========
See accompanying Notes to Financial Statements.
</TABLE>
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<TABLE>
BARECO PRODUCTS
STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
April 15,
Year Ended 1995 to
October 31, October 31,
1996 1995
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,406 $ 4,372
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 155 88
Increase (decrease) in cash due to changes
in assets and liabilities:
Accounts receivable (2,362) (9,531)
Inventories (879) (3,298)
Prepaid expenses (11) (36)
Other noncurrent assets (287) (2)
Current liabilities (1,306) 5,376
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Net cash provided by (used in)
operating activities 5,716 (3,031)
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Cash flows from investing activities:
Capital expenditures, net (59) (520)
----------- ----------
Net cash used in investing activities (59) (520)
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Cash flows from financing activities:
Capital contributions, net - 4,210
Capital distributions (6,168) -
----------- ----------
Net cash (used in) provided by
financing activities (6,168) 4,210
----------- ----------
Net change in cash and cash equivalents (511) 659
Cash and cash equivalents at beginning of period 659 -
----------- ----------
Cash and cash equivalents at end of period $ 148 $ 659
=========== ==========
See accompanying Notes to Financial Statements.
</TABLE>
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<TABLE>
BARECO PRODUCTS
STATEMENT OF CHANGES IN PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Petrolite Pennzoil Total
Wax Partner Wax Partner Partners'
Company Company Equity
<S> <C> <C> <C>
Partners' initial and subsequent capital
contributions in fiscal 1995, net (unaudited) $ 2,105 $ 2,105 $ 4,210
Net income (unaudited) 2,186 2,186 4,372
---------- ---------- ----------
Balance at October 31, 1995 (unaudited) 4,291 4,291 8,582
Partners' capital distributions, net (3,084) (3,084) (6,168)
Net income 5,203 5,203 10,406
---------- ---------- ----------
Balance at October 31, 1996 $ 6,410 $ 6,410 $ 12,820
========== ========== ==========
See accompanying Notes to Financial Statements.
</TABLE>
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BARECO PRODUCTS
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
1. ORGANIZATION
Effective April 15, 1995, Bareco Products ("Bareco" or the "Company"),
a 50-50 partnership between Petrolite Wax Partner Company
("Petrolite") and Pennzoil Wax Partner Company ("Pennzoil"),
began operations to purchase, market and sell a broad line of wax
products to purchasers of paraffin, microcrystalline and related
synthetic waxes worldwide. Such wax products are primarily
utilized in the manufacturing of adhesives, chewing gum,
packaging, inks, plastics and candles. Previously, Petrolite and
Pennzoil manufactured and sold non-competing wax products. Under
the partnership agreement, Petrolite has discontinued
manufacturing microcrystalline waxes. The partnership agreement
was entered into on November 18, 1994 and extends fifteen years
with two additional five year periods at the option of the
partners.
The partnership arrangement allows for the transfer of Petrolite's
partnership interest to Pennzoil under certain defined
circumstances. As a result, at any time after September 1, 1997,
and before August 31, 1998, either Petrolite may require Pennzoil
to purchase Petrolite's partnership interest, or Pennzoil may
require Petrolite to sell its partnership interest to Pennzoil.
The purchase price of Petrolite's partnership interest will be
determined by using an agreed-upon formula.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by Bareco require management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those
estimates. The significant accounting policies followed by
Bareco are described below and are in conformity with generally
accepted accounting principles.
UNAUDITED INFORMATION
The accompanying balance sheet and the related statements of
operations, changes in partners' equity and of cash flows at
October 31, 1995 and for the period from April 15, 1995 to
October 31, 1995, as well as the related disclosures herein at
October 31, 1995 and for the period from April 15, 1995 to
October 31, 1995 are unaudited. However, in the opinion of
management, such information has been prepared on the same basis
as the audited financial statements and includes all adjustments,
consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the period presented.
BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual basis
of accounting in conformity with generally accepted accounting principles.
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BARECO PRODUCTS
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
REVENUE RECOGNITION
Revenue from the sale of the Company's products is recognized upon
shipment to the customer. Costs and related expenses to purchase
and warehouse the products are recorded as costs of sales when
the related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers
demand deposits with financial institutions to be cash.
INVENTORIES
Inventories are stated at the lower of cost, determined using the FIFO
method, or market. Obsolete or unsalable inventories are
reflected at their estimated realizable values.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and is depreciated
using the double-declining balance or straight-line method over
the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Laboratory equipment 5 years
Computer equipment 5 years
Furniture and fixtures 7 years
Automobiles 5 years
Leasehold improvements 39 years
</TABLE>
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred.
INCOME TAXES
The Company is treated as a partnership under the Internal Revenue
Code. This results in the partners, rather than the Company,
being taxed for federal and state purposes on the results of the
Company's domestic operations. However, the Company has
established a foreign sales corporation under which federal taxes
are payable by Bareco.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and other
accruals, at cost which approximates fair value.
CONCENTRATIONS OF CREDIT RISK
The Company sells its goods to a wide range of customers. The Company
performs ongoing credit evaluations of its customers and
generally does not require collateral. Reserves are maintained
for potential credit losses which historically have been within
management's expectations.
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BARECO PRODUCTS
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS
The Company maintains supply agreements with both partners which allows
it to purchase microcrystalline and related synthetic waxes
manufactured by Petrolite, allows it to purchase microcrystalline
waxes from Pennzoil and requires it to purchase all paraffin
waxes manufactured by Pennzoil. The partners sell such products
to the Company at agreed-upon prices which may be at or below
market. During fiscal years 1996 and 1995 (unaudited),
approximately 80% of the Company's inventory purchases were from
Petrolite and Pennzoil.
The Company sells microcrystalline and related synthetic waxes to
Luzzatto & Figlio, a wholly-owned subsidiary of Petrolite, and
Toyo-Petrolite, a 50%-owned joint venture between Petrolite and
Toyo Ink. During fiscal years 1996 and 1995 (unaudited) the
Company recorded net sales to these two related parties of $6,154
and $4,264, respectively.
All of the Company's employees are employed by Petrolite or Pennzoil.
The Company reimburses both partners for salaries, benefits and
incentive compensation expenses. Such expenses for fiscal years
1996 and 1995 (unaudited) were $1,439 and $790, respectively.
At October 31, 1996 and 1995 (unaudited), the Company had obligations
to reimburse Petrolite for $2,276 and $1,760, respectively. At
October 31, 1996 and 1995 (unaudited), the Company had
obligations to reimburse Pennzoil for $788 and $2,624,
respectively. Such obligations primarily relate to the
aforementioned inventory purchases and reimbursement for
salaries, benefits and incentive compensation expenses.
4. SHELL MALAYSIA DISTRIBUTORSHIP AGREEMENT
During calendar year 1996, Petrolite had a distributorship agreement
with Shell Malaysia which is assigned to the Company whereby the
Company maintained the exclusive right to purchase and sell
certain synthetic waxes manufactured by Shell Malaysia throughout
all countries of the world except Australia, Japan, Korea,
Malaysia and New Zealand. Under this agreement, the Company was
required to purchase from Shell Malaysia during calendar year
1996 a minimum of 8,700 metric tons of product at an average
purchase price of $.43 per pound. During calendar year 1996, the
Company purchased approximately 8,700 metric tons of product
manufactured by Shell Malaysia. The Company's failure to
purchase the minimum amount in calendar year 1996 would have
required the Company to pay Shell Malaysia for such shortfall at
approximately 50% of the aforementioned average purchase price.
During 1997, all European countries and Turkey will be eliminated
from this exclusive distributorship agreement; the take or pay
clause was terminated effective January 1, 1997.
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BARECO PRODUCTS
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
5. SUPPLEMENTAL STATEMENT OF OPERATIONS
During fiscal years 1996 and 1995 (unaudited), the Company recorded net
sales to one customer that represented approximately 11.3% and
6.2%, respectively, of consolidated net sales. In addition,
during fiscal years 1996 and 1995 (unaudited), the Company
recorded export sales of approximately $18,237 and $8,099,
respectively.
The composition of selling, general and administrative for the years
ending October 31, 1996 and 1995 (unaudited) is as follows:
<TABLE>
<CAPTION>
1996 1995
(unaudited)
<S> <C> <C>
Salaries and benefits $ 1,248 $ 739
Commissions 595 71
Travel and entertainment 325 262
Depreciation 108 60
Other 708 506
---------- --------
$ 2,984 $ 1,638
========== ========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
Future minimum rental commitments under noncancellable operating leases
in effect as of October 31, 1996 were: 1997 - $130, 1998 - $130,
1999 - $130, 2000 - $130, 2001 - $130, thereafter - $0.
Total rental expense for all operating leases was $114 in 1996 and $65
in 1995 (unaudited).
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Management Committee
of Bareco Products (a partnership)
In our opinion, the accompanying balance sheet and the related statements of
operations, changes in partners' equity and of cash flows present fairly, in
all material respects, the financial position of Bareco Products at October
31, 1996, and the results of its operations and its cash flows for the year
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
St. Louis, Missouri
January 30, 1997
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