UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended June 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
For the transition period from___________________to__________________
Commission file number: 1-9409
DIAMOND SHAMROCK, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2456753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9830 Colonnade Boulevard, San Antonio, Texas 78230
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code:(210) 641-6800)
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(X)YES ( )NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
( )YES ( )NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Shares of Common Stock outstanding at July 31, 1994: 29,006,733
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
DIAMOND SHAMROCK, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(dollars in millions, except per share data)
Three Months Six Months
Ended Ended
June 30, June 30,
1994 1993 1994 1993
REVENUES
Sales and operating revenues $ 646.5 $ 656.9 $ 1,230.3 $ 1,277.7
Other revenues, net 2.6 2.6 7.1 4.8
649.1 659.5 1,237.4 1,282.5
COSTS AND EXPENSES
Cost of products sold and
operating expenses 546.6 581.4 1,061.3 1,148.4
Depreciation 17.6 15.2 34.6 30.0
Selling and administrative 18.1 15.0 34.0 29.4
Taxes other than income taxes 10.4 10.5 19.9 20.3
Interest 10.8 9.9 21.3 18.6
603.5 632.0 1,171.1 1,246.7
Income Before
Tax Provision and
Cumulative Effect of
Accounting Changes 45.6 27.5 66.3 35.8
Provision for Income Taxes 18.1 11.0 26.6 14.3
Income Before
Cumulative Effect of
Accounting Changes 27.5 16.5 39.7 21.5
Cumulative Effect of
Accounting Changes - - - (14.2)
Net Income 27.5 16.5 39.7 7.3
Dividend Requirement
on Preferred Stock 1.1 0.3 2.2 0.3
Earnings Applicable to
Common Shares $ 26.4 $ 16.2 $ 37.5 $ 7.0
Primary Earnings (Loss)
Per Share
Before Accounting Changes $ 0.91 $ 0.56 $ 1.29 $ 0.73
Cumulative Effect
of Accounting Changes - - - (0.49)
Total $ 0.91 $ 0.56 $ 1.29 $ 0.24
Fully Diluted Earnings (Loss)
Per Share
Before Accounting Changes $ 0.85 $ 0.56 $ 1.23 $ 0.73
Cumulative Effect
of Accounting Changes - - - (0.49)
Total $ 0.85 $ 0.56 $ 1.23 $ 0.24
Cash Dividends Per Share
Common $ 0.13 $ 0.13 $ 0.26 $ 0.26
Preferred $ 0.625 $ - $ 1.25 $ -
Weighted Average Common Shares
Outstanding (thousands of shares)
Primary 29,122 28,837 29,132 28,820
Fully Diluted 32,376 29,591 32,389 29,213
See accompanying Notes to Consolidated Financial Statements.
DIAMOND SHAMROCK, INC.
CONSOLIDATED BALANCE SHEET
(dollars in millions, except per share data)
June 30, December 31,
1994 1993
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 18.3 $ 12.8
Receivables, less doubtful receivables
of $5.0; $5.5 in 1993 182.8 148.8
Inventories
Finished products 101.5 114.0
Raw materials 70.7 47.9
Supplies 31.3 24.1
203.5 186.0
Prepaid expenses 11.9 8.6
Total Current Assets 416.5 356.2
Properties and Equipment, less accumulated
depreciation of $582.2; $550.9 in 1993 964.7 941.1
Deferred Charges and Other Assets 52.4 51.9
$1,433.6 $1,349.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Long-term debt payable within one year $ 3.7 $ 3.5
Accounts payable 119.9 88.5
Accrued taxes 69.5 56.9
Accrued royalties 7.6 7.1
Current portion of Long-term Liability 8.0 8.0
Other accrued liabilities 73.7 56.4
Total Current Liabilities 282.4 220.4
Long-term Debt 463.8 486.2
Deferred Income Taxes 61.0 48.7
Other Liabilities and Deferred Credits 64.0 66.2
Stockholders' Equity
Preferred Stock, $.01 par value
Authorized shares - 25,000,000
Issued and Outstanding shares 1,725,000;
1,725,000 in 1993 0.0 0.0
Common Stock, $.01 par value
Authorized shares - 75,000,000
Issued shares - 29,014,667; 28,927,217
in 1993
Outstanding shares - 29,001,214; 28,903,468
in 1993 0.3 0.3
Paid-in Capital 447.1 444.8
ESOP Stock and Stock Held in Treasury (45.1) (47.9)
Retained Earnings 160.1 130.5
Total Stockholders' Equity 562.4 527.7
$1,433.6 $1,349.2
See accompanying Notes to Consolidated Financial Statements.
DIAMOND SHAMROCK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(dollars in millions)
Six Months Ended
June 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 39.7 $ 7.3
Adjustments to arrive at net cash provided
by operating activities:
Depreciation 34.6 30.0
Deferred income taxes 12.4 (5.0)
Loss on sale of properties and equipment 1.8 0.9
Cumulative Effect of Accounting Changes - 23.6
Cash flow from futures activity (0.8) 2.4
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (34.0) (22.5)
Decrease (increase) in inventories (17.5) (59.0)
Decrease (increase) in prepaid expenses (3.3) (4.4)
Increase (decrease) in accounts payable 31.4 17.4
Increase (decrease) in taxes payable 12.6 4.2
Increase (decrease) in accrued liabilities 17.8 1.2
Other, net 3.4 8.8
NET CASH PROVIDED BY OPERATING ACTIVITIES 98.1 4.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of futures contracts (70.6) (76.4)
Settlement of futures contracts 71.4 74.0
Proceeds from sales of facilities 1.1 1.0
Purchase of properties and equipment (58.9) (72.1)
Expenditures for investments (2.6) (0.8)
NET CASH (USED IN) INVESTING ACTIVITIES (59.6) (74.3)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in commercial paper - (108.5)
Increases in long-term debt 92.5 316.8
Repayments of long-term debt (114.7) (216.7)
Payments of long-term liability (4.8) (6.4)
Funds received from ESOP 2.5 2.1
Issuance of Common Stock 0.9 -
Sale of Preferred Stock - 84.5
Sale of Common Stock held in treasury 0.3 0.1
Dividends paid (9.7) (7.5)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (33.0) 64.4
Net increase (decrease) in cash and cash equivalents 5.5 (5.0)
Cash and cash equivalents at beginning of period 12.8 17.5
Cash and cash equivalents at end of period $ 18.3 $ 12.5
See accompanying Notes to Consolidated Financial Statements.
DIAMOND SHAMROCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements
The consolidated financial statements as of June 30, 1994 and for the
three months and six months ended June 30, 1994 and 1993 are unaudited,
but in the opinion of Diamond Shamrock, Inc. (the "Company"), all
adjustments (consisting only of normal accruals) necessary for a fair
presentation of consolidated results of operations, consolidated
financial position, and consolidated cash flows at the date and for the
periods indicated have been included.
The consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. These unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the 1993 Annual Report to
Stockholders and incorporated by reference into the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 (the "1993 Form
10-K").
With respect to the unaudited consolidated financial information of the
Company as of June 30, 1994, and for the three months and six months
ended June 30, 1994 and 1993, Price Waterhouse LLP has made a review
(based on procedures adopted by the American Institute of Certified
Public Accountants) and not an audit, as set forth in their separate
report appearing herein. Such a report is not a "report" or "part of a
Registration Statement" within the meaning of Sections 7 and 11 of the
Securities Act of 1933 and the liability provisions of Section 11 of such
Act do not apply.
2. Inventories
Inventories are valued at the lower of cost or market with cost
determined primarily under the Last-in, First-out (LIFO) method. At June
30, 1994, inventories of crude oil and refined products of the Refining
and Wholesale segment and propylene products in the Allied Businesses
segment were valued at market values (lower than LIFO cost). Motor fuel
products of the Retail segment were recorded at their LIFO costs.
3. Long-term Debt
The Company currently has outstanding $150.0 million of debt which is
designated as the 10.75% Senior Notes. As of May 1, 1994, $30.0 million
of the Long-term debt became payable within one year. Since the Company
intends to refinance the $30.0 million repayment by the use of commercial
paper or other credit facilities which would be classified as long-term,
and the Company has the capacity to do so, the current portion of the
long-term debt payable on April 30, 1995 has been classified as long-term
debt.
4. Commitments and Contingencies
In connection with the 1987 Spin-off from Maxus Energy Corporation
("Maxus"), the Company agreed to assume a share of certain liabilities of
Maxus' businesses discontinued or disposed of prior to the Spin-off date
(see Note 16 of the 1993 Form 10-K). The Company's total liability for
such shared costs is limited to $85.0 million. The Company has
reimbursed Maxus for a total of $58.2 million as of June 30, 1994,
including $2.2 million and $4.8 million paid during the three months and
six months ended June 30, 1994, respectively (see Note 3 of the 1993 Form
10-K for a discussion of the change in the method of accounting for the
liability).
REVIEW BY INDEPENDENT ACCOUNTANTS
With respect to the unaudited consolidated financial information of the
Company as of June 30, 1994 and the three months and six months ended
June 30, 1994 and 1993, Price Waterhouse LLP reported that they have
applied limited procedures in accordance with professional standards for
a review of such information. However, their separate report dated
August 10, 1994 appearing below, states that they did not audit and they
do not express an opinion on that unaudited consolidated financial
information. Price Waterhouse LLP has not carried out any significant or
additional audit tests beyond those which would have been necessary if
their report had not been included. Accordingly, the degree of reliance
on their report on such information should be restricted in light of the
limited nature of the review procedures applied. Price Waterhouse LLP is
not subject to the liability provisions of Section 11 of the Securities
Act of 1933 for their report on the unaudited consolidated financial
information because that report is not a "report" or "part of a
Registration Statement" prepared or certified by Price Waterhouse LLP
within the meaning of Sections 7 and 11 of the Act.
REPORT ON REVIEW BY INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of Diamond Shamrock, Inc.
We have reviewed the consolidated interim financial information included
in the Report on Form 10-Q of Diamond Shamrock, Inc. and its subsidiaries
as of June 30, 1994 and for the quarters and six months ended June 30,
1994 and 1993. This financial information is the responsibility of the
management of Diamond Shamrock, Inc.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993, and
the related consolidated statements of operations and of cash flows for
the year then ended (not presented herein), and in our report dated
February 25, 1994, which included an explanatory paragraph regarding the
Company's changes in accounting for its long-term shared cost liability,
income taxes and post-retirement benefits other than pensions, we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of December 31,
1993, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
San Antonio, Texas
August 12, 1994
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
The following are the Company's sales and operating revenues and
operating profit for the three months and six months ended June 30, 1994
and 1993. Business segment operating profit is sales and operating
revenues less applicable segment operating expense. In determining the
operating profit of the three business segments, neither interest expense
nor administrative expenses are included.
Three Months Six Months
Ended Ended
June 30, June 30,
1994 1993 1994 1993
Sales and Operating Revenues:
Refining and Wholesale $ 335.2 $ 328.2 $ 639.2 $ 639.1
Retail 242.1 255.1 454.5 479.4
Allied Businesses 69.2 73.6 136.6 159.2
Total Sales and
Operating Revenues $ 646.5 $ 656.9 $1,230.3 $1,277.7
Operating Profit:
Refining and Wholesale $ 60.2 $ 32.1 $ 92.4 $ 45.5
Retail 9.9 13.7 18.2 24.9
Allied Businesses 2.6 5.1 7.1 10.3
Total Operating Profit $ 72.7 $ 50.9 $ 117.7 $ 80.7
Consolidated Results Second Quarter 1994 vs Second Quarter 1993
Sales and operating revenues of $646.5 million for the second quarter of
1994 were 1.6% lower than in the same period of 1993, primarily due to a
10.9% decrease in retail gasoline prices and a 10.9% decrease in refined
product sales prices. Also contributing to the decrease was a 16.1%
decrease in natural gas liquids sales prices, partially offset by a 15.5%
increase in refined product sales volumes and a 4.6% increase in retail
merchandise sales.
During the second quarter of 1994, the Company had net income of $27.5
million compared to net income of $16.5 million in the 1993 second
quarter. The Company's second quarter 1994 results were positively
impacted by higher refinery margins, particularly at the beginning of the
quarter, and reflected the full benefit of the Three Rivers refinery
expansion project.
Inventories are valued at the lower of cost or market with cost
determined primarily under the Last-in, First-out (LIFO) method. At June
30, 1994, inventories of crude oil and refined products of the Refining
and Wholesale segment and propylene products in the Allied Businesses
segment were valued at market values (lower than LIFO cost). Motor fuel
product inventories of the Retail segment were recorded at their LIFO
costs.
Estimating the financial impact of changes in the valuation of refinery
inventories due to such inventories being valued at market is difficult
because of the number of variables that must be considered. For
operating purposes, management attempts to estimate the impact of changes
in valuation of refinery inventories on net income. The estimated after-
tax effect on net income from changes in inventory values was a positive
$10.9 million and a negative $1.1 million in the second quarters of 1994
and 1993, respectively.
Consolidated Results First Six Months 1994 vs First Six Months 1993
Sales and operating revenues of $1.2 billion for the first six months of
1994 were $47.4 million lower than the same period of 1993. This
decrease was primarily due to an 11.9% decrease in retail gasoline prices
and a 17.6% and a 13.3% decrease in natural gas liquids sales prices and
volumes, respectively, reflecting the cancellation of a contract during
the second quarter of 1993 to process natural gas.
During the first six months of 1994, the Company had net income of $39.7
million compared to net income of $21.5 million in the first six months
of 1993 (before cumulative effect of accounting changes) reflecting
higher refinery margins and an increase in the value of refinery
inventories due primarily to crude oil price increases during the first
six months of 1994. The estimated after-tax effect on net income from
changes in inventory values was a positive $5.7 million and a negative
$2.2 million in the first six months of 1994 and 1993, respectively.
Segment Results Second Quarter 1994 vs Second Quarter 1993
During the second quarter of 1994, the Refining and Wholesale segment had
sales and operating revenues of $335.2 million compared to $328.2 million
during the second quarter of 1993. The increase in sales and operating
revenues was primarily due to a 15.5% increase in refined product sales
volumes, reflecting the completion of the expansion of the Three Rivers
refinery, partially offset by a 10.9% decrease in refined product sales
prices. Operating profit in the second quarter of 1994 increased $28.1
million over the second quarter of 1993, primarily due to a 10.5%
increase in refinery margins and a 15.5% increase in refined product
sales volumes over the same period a year ago.
The Retail segment in the second quarter of 1994 experienced a 5.1%
decrease in sales and operating revenues compared to the second quarter
of 1993. Such decrease was primarily due to a 10.9% decrease in retail
gasoline prices, partially offset by a 4.6% increase in retail
merchandise sales. Operating profit in the second quarter of 1994 was
$9.9 million compared to $13.7 million in the second quarter of 1993.
The decrease was primarily due to a 4.2% decrease in retail gasoline
margins, partially offset by a 5.7% increase in gross merchandise margins
and a $0.2 million increase in gross profit from lottery sales.
During the second quarter of 1994, the Allied Businesses segment results
reflected a decrease in sales and operating revenues of 6.0%, primarily
due to a 16.1% decrease in natural gas liquids sales prices and a 33.7%
decrease in propane/propylene revenues. Improvements in the Nitromite
anhydrous ammonia fertilizer and telephone services businesses partially
offset these decreases. Operating profits were $2.6 million for the
second quarter of 1994 compared to $5.1 million in the second quarter of
1993. Operating profits for this segment decreased primarily due to a
decrease of $1.9 million and $1.8 million in propane/propylene splitter
operating profit and international operations operating profit,
respectively. These decreases were partially offset by a $2.2 million
increase in Nitromite anhydrous ammonia fertilizer operating profit.
Segment Results First Six Months 1994 vs First Six Months 1993
Sales and operating revenues from the Refining and Wholesale segment were
$639.2 million in the first six months of 1994 compared to $639.1 million
during the first six months of 1993. A 15.7% increase in refined product
sales volumes was partially offset by a 13.1% decrease in refined product
sales prices. Operating profit in this segment for the period more than
doubled that for the first six months of 1993, primarily due to a 27.1%
increase in refinery margins and a 12.0% increase in refined product
sales volumes over the first six months of 1993.
The Retail segment results in the first six months of 1994 experienced a
5.2% decrease in sales and operating revenues, primarily due to a 11.9%
decrease in retail gasoline prices. Operating profit in the first six
months of 1994 was $18.2 million compared to $24.9 million in the first
six months of 1993. The decrease was primarily due to a 4.7% decrease in
retail gasoline margins, partially offset by a 2.7% increase in gross
merchandise margins and a $0.9 million increase in gross profit from
lottery sales.
The Allied Businesses segment reflected a decrease in sales and operating
revenues of 14.2% to $136.6 in the first six months of 1994. This
decrease was primarily due to a 17.6% and a 13.3% decrease in natural gas
liquids sales prices and volumes, respectively, reflecting the
cancellation during the second quarter of 1993 of a contract to process
natural gas. Operating profits decreased by $3.2 million in the first
six months of 1994 from the first six months of 1993, primarily due to a
$2.9 million reduction in propane/propylene splitter operating profit and
a decrease of $2.5 million in natural gas processing operating profit,
reflecting the shut down of the Company's natural gas processing facility
in the second quarter of 1993.
Outlook
During the second quarter, refinery margins narrowed as world crude
prices advanced sharply and refined product prices did not keep pace. To
some extent during the period, the Company has been able to lower its
crude oil acquisition costs, due in part to the supply flexibility which
our crude oil pipeline system provides. In addition gasoline demand in
the U.S. continues to exceed last years, due mainly to the strength of
the economy, with the result that U.S. gasoline inventories are
relatively low for this time of year. To the extent that crude oil
prices stabilize, strong demand and lower than normal inventories should
lead to reasonably good refining margins in the third quarter.
Longer term, although demand for gasoline is expected to grow only
modestly as fuel efficiency improves and alternative fuels are
introduced, industry refining capacity is expected to remain constrained
due to the impact of regulatory restrictions. The current regulatory
restrictions ultimately are expected to contribute to the shut down of
smaller, less efficient refineries and to discourage the construction of
any new refineries in the United States. Management continues to believe
that the Company is well-positioned to benefit from these conditions due
to its efficient and strategically located refining, distribution, and
marketing system.
Liquidity and Capital Resources
Cash Flow and Working Capital
For the six months ended June 30, 1994, cash provided by operations was
$98.1 million, compared with $4.9 million in the same period of 1993.
The increase in cash provided by operations was primarily attributable to
higher product sales volumes and improved refinery margins in the
refining and wholesale segment, along with lower inventories.
Working capital at June 30, 1994 was down $1.7 million from December 31,
1993, and consisted of current assets of $416.5 million and current
liabilities of $282.4 million, or a current ratio of 1.5. At December
31, 1993, current assets were $356.2 million and current liabilities were
$220.4 million, or a current ratio of 1.6. The increase in current
assets and current liabilities in the first six months of 1994 was
primarily due to a 18.6% increase in crude oil purchase prices during the
period.
Capital Expenditures
The Company's capital and investment expenditures estimate for 1994 is
approximately $165.0 million. The 1994 capital expenditures include
approximately $88.0 million for the recently completed refined products
pipeline from the McKee refinery to Colorado Springs, and for projects
currently underway, namely the Colorado Springs to Denver products
pipeline, a 400-mile pipeline to El Paso from McKee, and a crude oil
storage terminal at Corpus Christi and pipeline to Three Rivers. The
Company's capital and investment expenditures during 1993 were $131.8
million. The Company's 1994 capital expenditures were $58.9 million
during the first six months of the year, compared with $72.1 million for
the same period of 1993. Included in the first six months of 1993
capital expenditures was the major expansion of the Three Rivers
refinery, completed in June 1993.
The Company anticipates that its capital expenditures, as well as
expenditures for debt service, lease obligations, working capital, and
dividend requirements might at times exceed cash generated by operations.
To the extent that the Company's requirements exceed cash generated by
operations, the Company anticipates that it may access its commercial
paper and bank money market facilities or issue medium- to long-term
notes. The Company may also consider other alternatives depending upon
various factors, including changes in its capital requirements, results
of operations, and developments in the capital markets.
The Company continued to enhance its retail marketing business in the
first six months of 1994 with the announcement in June that the Company
had signed an agreement with PDQ Food Stores of Colorado to acquire 18
outlets and the purchase of 8 outlets from TM&S Oil Company in El Paso,
Texas. In addition, the Company opened 7 new outlets and closed 4
marginal units through June 30, 1994. The newly opened outlets and some
of the newly acquired outlets are or will be leased by the Company under
a pre-existing long-term lease arrangement. The Company has leased
approximately $148.8 million in retail outlets and related equipment
under these arrangements. During March, 1994 the Company arranged to
expand the capacity of the lease by $25.0 million and extend the primary
term applicable to a portion of the properties under the lease by two
years. This expansion and extension became effective on April 23, 1994.
At June 30, 1994, approximately $41.2 million remained available under
the lease. This arrangement permits the Company to continue to expand
its development and acquisition of retail outlets on a competitive basis.
The Company presently anticipates constructing or acquiring approximately
45 to 50 additional outlets during 1994.
Regulatory Matters
It is expected that rules and regulations implementing the federal,
state, and local laws relating to health and environmental quality will
continue to affect the operations of the Company. The Company cannot
predict what health or environmental legislation, rules or regulations
will be enacted in the future or how existing or future laws, rules or
regulations will be administered or enforced with respect to products or
activities of the Company. However, compliance with more stringent laws
or regulations, as well as more expansive interpretation of existing laws
and their more vigorous enforcement by the regulatory agencies could have
an adverse effect on the operations of the Company and could require
substantial additional expenditures by the Company, such as for the
installation and operation of pollution control systems and equipment.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On April 15, 1994, a subsidiary of the Company entered into a Consent
Agreement in a pending administrative proceeding which had been
instituted by the United States Environmental Protection Agency on April
8, 1992. The action concerned alleged regulatory violations in
connection with waste water treatment facilities at the Company's Three
Rivers Refinery. In compliance with the Final Order which was entered
based upon the Consent Agreement, the Company's subsidiary tendered
$170,000.00 to the Environmental Protection Agency in full and final
settlement of all penalties assessed in connection with the alleged
violations and completed all corrective actions required by the Consent
Agreement.
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company's 1994 Annual Meeting of Stockholders was held on May 3, 1994
in San Antonio, Texas. At that meeting, the Company's stockholders
elected three directors to serve for a three-year term expiring in 1997
and they ratified appointment of Price Waterhouse LLP to serve as
independent accountants for the Company and its subsidiaries for 1994.
The number of votes cast for, against, or withheld, as well as the number
of abstentions as to each matter, is set forth below:
Election of Directors
Name Total Votes For Total Votes Withheld
W.H. Clark 25,282,019 109,855
William L. Fisher, Ph.D. 25,306,540 85,334
Katherine D. Ortega 25,286,205 105,669
Ratification of Appointment of Independent Accountants
For Against Abstain
25,113,284 106,208 172,382
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Second Amendment to Agreement for Ground Lease between Brazos River
Leasing L.P. and Diamond Shamrock Refining and Marketing Company,
dated as of April 23, 1994.
10.2 Second Amendment to Ground Lease Agreement between Brazos River
Leasing L.P. and Diamond Shamrock Refining and Marketing Company,
dated as of April 23, 1994.
10.3 Second Amendment to Agreement for Facilities Lease between Brazos
River Leasing L.P. and Diamond Shamrock Refining and Marketing
Company, dated as of April 23, 1994.
10.4 Second Amendment to Facilities Lease Agreement between Brazos River
Leasing L.P. and Diamond Shamrock Refining and Marketing Company,
dated as of April 23, 1994.
15.1 Independent Accountants' Awareness Letter
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company in the second quarter of
1994.
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.
DIAMOND SHAMROCK, INC.
By /S/GARY E. JOHNSON
Gary E. Johnson
Vice President and Controller
(Principal Accounting Officer)
August 15, 1994
<PAGE>
EXHIBIT 10.1
SECOND AMENDMENT
TO
AGREEMENT FOR GROUND LEASE
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Agreement for Ground Lease has been manually
executed in 8 counterparts, numbered consecutively from 1 through 8, of
which this is No. _____. To the extent, if any, that this Second Amendment
to Agreement for Ground Lease constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any jurisdiction),
no security interest in this Second Amendment to Agreement for Ground Lease
may be created or perfected through the transfer or possession of any
counterpart other than the original counterpart which shall be the
counterpart identified as counterpart No. 1.
<PAGE>
SECOND AMENDMENT TO AGREEMENT FOR GROUND LEASE
This Second Amendment to Agreement for Ground Lease is made and
entered into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered
into an agreement for Ground Lease, dated as of April 23, 1992 (as amended
by the First Amendment to Agreement for Ground Lease dated as of August 1,
1992, referred to herein together as the "Agreement for Ground Lease"); and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the Agreement
for Ground Lease to extend the acquisition period and to otherwise set forth
their mutual agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Property
hereafter acquired by Brazos under the Agreement for Ground Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Agreement for Ground Lease is hereby amended as follows:
1. Section 3.06 of the Agreement for Ground Lease is hereby amended
by deleting in subsection (i) in Section 3.06, the reference to "two years"
and inserting in lieu thereof "four years".
2. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Agreement for Ground Lease shall not be effective until the approvals
required by Section 9.01 of the Credit Agreement have been obtained as
evidenced by the execution of Amendment No. 2 by the necessary parties under
the Credit Agreement.
3. Defined terms used in this second Amendment to Agreement for Ground
Lease and not otherwise defined herein have the meanings ascribed to those
terms in the Agreement for Ground Lease.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Agreement for Ground Lease to be executed and delivered
by their duly authorized officers as of the day and year first above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By: /s/ Gregory C. Greene
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /S/ R.C. Becker
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 10.2
SECOND AMENDMENT
TO
GROUND LEASE AGREEMENT
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Ground Lease Agreement has been manually
executed in 8 counterparts, numbered consecutively from 1 through 8, of which
this is No. ____. To the extent, if any, that this Second Amendment to
Ground Lease Agreement constitutes chattel paper (as such term is defined in
the Uniform Commercial code as in effect in any jurisdiction), no security
interest in this Second Amendment to Ground Lease Agreement may be created or
perfected through the transfer or possession of any counterpart other than
the original counterpart which shall be the counterpart identified
as counterpart No. 1.
SECOND AMENDMENT TO GROUND LEASE AGREEMENT
This Second Amendment to Ground Lease Agreement is made and entered
into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered into
a Ground Lease Agreement, dated as of April 23, 1992 (as amended by the First
Amendment to Ground Lease Agreement dated as of August 1, 1992, referred to
herein together as the "Ground Lease Agreement"); and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the Ground
Lease Agreement to extend the lease term and to otherwise set forth their
mutual agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Property
hereafter leased by Brazos under the Ground Lease Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Ground Lease Agreement is hereby amended as follows:
1. Section 5.01 of the Ground Lease Agreement is hereby amended by
deleting the reference to "five years" and inserting in lieu thereof "seven
years".
2. Section 5.02 of the Ground Lease Agreement is hereby amended by
deleting the reference to "2007" and inserting in lieu thereof "2009".
3. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Ground Lease Agreement shall not be effective until the approvals required
by Section 9.01 of the Credit Agreement have been obtained as evidenced by
the execution of Amendment No. 2 by the necessary parties under the Credit
Agreement.
4. Defined terms used in this Second Amendment to Ground Lease
Agreement and not otherwise defined herein have the meanings ascribed to
those terms in the Ground Lease Agreement.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Ground Lease Agreement to be executed and delivered by
their duly authorized officers as of the day and year first above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By: /s/ Gregory C. Greene
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /S/ R.C. Becker
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 10.3
SECOND AMENDMENT
TO
AGREEMENT FOR FACILITIES LEASE
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Agreement for Facilities Lease has been
manually executed in 8 counterparts, numbered consecutively from 1 through 8,
of which this is No. ______. To the extent, if any, that this Second
Amendment to Agreement for Facilities Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Second Amendment to Agreement for
Facilities Lease may be created or perfected through the transfer
or possession of any counterpart other than the original counterpart which
shall be the counterpart identified as counterpart No. 1.
SECOND AMENDMENT TO AGREEMENT FOR FACILITIES LEASE
This Second Amendment to Agreement for Facilities Lease is made and
entered into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered into
an Agreement for Facilities Lease, dated as of April 23, 1992 (as amended by
the First Amendment to Agreement for Facilities Lease dated as of August 1,
1992, referred to herein together as the "Agreement for Facilities Lease");
and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the Agreement
for Facilities Lease to extend the acquisition period, to add additional
equipment to the FF&E Specifications and to otherwise set forth their mutual
agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Facility
hereafter acquired by Brazos under the Agreement for Facilities Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Agreement for Facilities Lease is hereby amended as follows:
1. Section 2.02 of the Agreement for Facilities Lease is hereby
amended by deleting "900,000" from the first and second sentences of such
Section and inserting in lieu thereof, "1,000,000".
2. Section 3.06 of the Agreement for Facilities Lease is hereby
amended by deleting in subsection (i) in Section 3.06, the reference to "two
years" and inserting in lieu thereof "four years".
3. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Agreement for Facilities Lease shall not be effective until the approvals
required by Section 9.01 of the Credit Agreement have been obtained as
evidenced by the execution of Amendment No. 2 by the necessary parties under
the Credit Agreement.
4. Defined terms used in this Second Amendment to Agreement for
Facilities Lease and not otherwise defined herein have the meanings ascribed
to those terms in the Agreement for Facilities Lease.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Agreement for Facilities Lease to be executed and
delivered by their duly authorized officers as of the day and year first
above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By: /s/ Gregory C. Greene
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /S/ R.C. Becker
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 10.4
SECOND AMENDMENT
TO
FACILITIES LEASE AGREEMENT
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Facilities Lease Agreement has been manually
executed in 8 counterparts, numbered consecutively from 1 through 8, of which
this is No. ______. To the extent, if any, that this Second Amendment to
Facilities Lease Agreement constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any jurisdiction), no
security interest in this Second Amendment to Facilities Lease Agreement may
be created or perfected through the transfer or possession of any counterpart
other than the original counterpart which shall be the counterpart identified
as counterpart No. 1.
SECOND AMENDMENT TO FACILITIES LEASE AGREEMENT
This Second Amendment to Facilities Lease Agreement is made and entered
into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered into
a Facilities Lease Agreement, dated as of April 23, 1992 (as amended by the
First Amendment to Facilities Lease Agreement dated as of August 1, 1992,
referred to herein together as the "Facilities Lease Agreement"); and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the
Facilities Lease Agreement to extend the lease term and to otherwise set
forth their mutual agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Facility
hereafter leased by Brazos under the Facilities Lease Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Facilities Lease Agreement is hereby amended as follows:
1. Section 5.01 of the Facilities Lease Agreement is hereby amended
by deleting the reference to "five years" and inserting in lieu thereof
"seven years".
2. Section 5.03 of the Facilities Lease Agreement is hereby amended
by deleting the reference to "2007" and inserting in lieu thereof "2009".
3. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Facilities Lease Agreement shall not be effective until the approvals
required by Section 9.01 of the Credit Agreement have been obtained as
evidenced by the execution of Amendment No. 2 by the necessary parties under
the Credit Agreement.
4. Defined terms used in this Second Amendment to Facilities Lease
Agreement and not otherwise defined herein have the meanings ascribed to
those terms in the Facilities Lease Agreement.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Facilities Lease Agreement to be executed and delivered
by their duly authorized officers as of the day and year first above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By: /s/ Gregory C. Greene
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /s/ R.C. Becker
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 15.1
INDEPENDENT ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Diamond Shamrock, Inc. has included our report dated
August 12, 1994 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the Prospectuses constituting part of its
Registration Statements on Form S-3 (Nos. 33-58744, 33-67166, and 33-
67556) filed on February 24, 1993, August 9, 1993, and August 18, 1993,
respectively, and on Form S-8 (Nos. 33-15268, 33-34306, and 33-50573)
filed on June 22, 1987, April 13, 1990 and October 6, 1993, respectively.
We are also aware of our responsibilities under the Securities Act of
1933.
Yours very truly,
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Antonio, Texas
August 12, 1994
EXHIBIT 10.1
SECOND AMENDMENT
TO
AGREEMENT FOR GROUND LEASE
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Agreement for Ground Lease has been manually
executed in 8 counterparts, numbered consecutively from 1 through 8, of
which this is No. _____. To the extent, if any, that this Second Amendment
to Agreement for Ground Lease constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any jurisdiction),
no security interest in this Second Amendment to Agreement for Ground Lease
may be created or perfected through the transfer or possession of any
counterpart other than the original counterpart which shall be the
counterpart identified as counterpart No. 1.
<PAGE>
SECOND AMENDMENT TO AGREEMENT FOR GROUND LEASE
This Second Amendment to Agreement for Ground Lease is made and
entered into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered
into an agreement for Ground Lease, dated as of April 23, 1992 (as amended
by the First Amendment to Agreement for Ground Lease dated as of August 1,
1992, referred to herein together as the "Agreement for Ground Lease"); and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the Agreement
for Ground Lease to extend the acquisition period and to otherwise set forth
their mutual agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Property
hereafter acquired by Brazos under the Agreement for Ground Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Agreement for Ground Lease is hereby amended as follows:
1. Section 3.06 of the Agreement for Ground Lease is hereby amended
by deleting in subsection (i) in Section 3.06, the reference to "two years"
and inserting in lieu thereof "four years".
2. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Agreement for Ground Lease shall not be effective until the approvals
required by Section 9.01 of the Credit Agreement have been obtained as
evidenced by the execution of Amendment No. 2 by the necessary parties under
the Credit Agreement.
3. Defined terms used in this second Amendment to Agreement for Ground
Lease and not otherwise defined herein have the meanings ascribed to those
terms in the Agreement for Ground Lease.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Agreement for Ground Lease to be executed and delivered
by their duly authorized officers as of the day and year first above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By:___________________________
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /S/ R.C. BECKER
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 10.2
SECOND AMENDMENT
TO
GROUND LEASE AGREEMENT
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Ground Lease Agreement has been manually
executed in 8 counterparts, numbered consecutively from 1 through 8, of which
this is No. ____. To the extent, if any, that this Second Amendment to
Ground Lease Agreement constitutes chattel paper (as such term is defined in
the Uniform Commercial code as in effect in any jurisdiction), no security
interest in this Second Amendment to Ground Lease Agreement may be created or
perfected through the transfer or possession of any counterpart other than
the original counterpart which shall be the counterpart identified
as counterpart No. 1.
SECOND AMENDMENT TO GROUND LEASE AGREEMENT
This Second Amendment to Ground Lease Agreement is made and entered
into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered into
a Ground Lease Agreement, dated as of April 23, 1992 (as amended by the First
Amendment to Ground Lease Agreement dated as of August 1, 1992, referred to
herein together as the "Ground Lease Agreement"); and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the Ground
Lease Agreement to extend the lease term and to otherwise set forth their
mutual agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Property
hereafter leased by Brazos under the Ground Lease Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Ground Lease Agreement is hereby amended as follows:
1. Section 5.01 of the Ground Lease Agreement is hereby amended by
deleting the reference to "five years" and inserting in lieu thereof "seven
years".
2. Section 5.02 of the Ground Lease Agreement is hereby amended by
deleting the reference to "2007" and inserting in lieu thereof "2009".
3. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Ground Lease Agreement shall not be effective until the approvals required
by Section 9.01 of the Credit Agreement have been obtained as evidenced by
the execution of Amendment No. 2 by the necessary parties under the Credit
Agreement.
4. Defined terms used in this Second Amendment to Ground Lease
Agreement and not otherwise defined herein have the meanings ascribed to
those terms in the Ground Lease Agreement.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Ground Lease Agreement to be executed and delivered by
their duly authorized officers as of the day and year first above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By:____________________________
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /S/ R.C. BECKER
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 10.3
SECOND AMENDMENT
TO
AGREEMENT FOR FACILITIES LEASE
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Agreement for Facilities Lease has been
manually executed in 8 counterparts, numbered consecutively from 1 through 8,
of which this is No. ______. To the extent, if any, that this Second
Amendment to Agreement for Facilities Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Second Amendment to Agreement for
Facilities Lease may be created or perfected through the transfer
or possession of any counterpart other than the original counterpart which
shall be the counterpart identified as counterpart No. 1.
SECOND AMENDMENT TO AGREEMENT FOR FACILITIES LEASE
This Second Amendment to Agreement for Facilities Lease is made and
entered into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered into
an Agreement for Facilities Lease, dated as of April 23, 1992 (as amended by
the First Amendment to Agreement for Facilities Lease dated as of August 1,
1992, referred to herein together as the "Agreement for Facilities Lease");
and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the Agreement
for Facilities Lease to extend the acquisition period, to add additional
equipment to the FF&E Specifications and to otherwise set forth their mutual
agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Facility
hereafter acquired by Brazos under the Agreement for Facilities Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Agreement for Facilities Lease is hereby amended as follows:
1. Section 2.02 of the Agreement for Facilities Lease is hereby
amended by deleting "900,000" from the first and second sentences of such
Section and inserting in lieu thereof, "1,000,000".
2. Section 3.06 of the Agreement for Facilities Lease is hereby
amended by deleting in subsection (i) in Section 3.06, the reference to "two
years" and inserting in lieu thereof "four years".
3. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Agreement for Facilities Lease shall not be effective until the approvals
required by Section 9.01 of the Credit Agreement have been obtained as
evidenced by the execution of Amendment No. 2 by the necessary parties under
the Credit Agreement.
4. Defined terms used in this Second Amendment to Agreement for
Facilities Lease and not otherwise defined herein have the meanings ascribed
to those terms in the Agreement for Facilities Lease.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Agreement for Facilities Lease to be executed and
delivered by their duly authorized officers as of the day and year first
above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By:___________________________
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /S/ R.C. BECKER
Name: R.C. Becker
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 10.4
SECOND AMENDMENT
TO
FACILITIES LEASE AGREEMENT
between
BRAZOS RIVER LEASING L.P.
and
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Dated as of April 23, 1994
This Second Amendment to Facilities Lease Agreement has been manually
executed in 8 counterparts, numbered consecutively from 1 through 8, of which
this is No. ______. To the extent, if any, that this Second Amendment to
Facilities Lease Agreement constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any jurisdiction), no
security interest in this Second Amendment to Facilities Lease Agreement may
be created or perfected through the transfer or possession of any counterpart
other than the original counterpart which shall be the counterpart identified
as counterpart No. 1.
SECOND AMENDMENT TO FACILITIES LEASE AGREEMENT
This Second Amendment to Facilities Lease Agreement is made and entered
into as of April 23, 1994, by and between BRAZOS RIVER LEASING L.P.
("Brazos") and DIAMOND SHAMROCK REFINING AND MARKETING COMPANY ("Diamond
Shamrock R & M").
W I T N E S S E T H:
WHEREAS, Brazos and Diamond Shamrock R & M have heretofore entered into
a Facilities Lease Agreement, dated as of April 23, 1992 (as amended by the
First Amendment to Facilities Lease Agreement dated as of August 1, 1992,
referred to herein together as the "Facilities Lease Agreement"); and
WHEREAS, Brazos and Diamond Shamrock R & M desire to amend the
Facilities Lease Agreement to extend the lease term and to otherwise set
forth their mutual agreement; and
WHEREAS, Brazos and Diamond Shamrock R & M agree that the provisions of
this amendment shall apply, to the extent provided by law, to each Facility
hereafter leased by Brazos under the Facilities Lease Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Diamond Shamrock R & M agree that
the Facilities Lease Agreement is hereby amended as follows:
1. Section 5.01 of the Facilities Lease Agreement is hereby amended
by deleting the reference to "five years" and inserting in lieu thereof
"seven years".
2. Section 5.03 of the Facilities Lease Agreement is hereby amended
by deleting the reference to "2007" and inserting in lieu thereof "2009".
3. Brazos and Diamond Shamrock R & M agree that this Second Amendment
to Facilities Lease Agreement shall not be effective until the approvals
required by Section 9.01 of the Credit Agreement have been obtained as
evidenced by the execution of Amendment No. 2 by the necessary parties under
the Credit Agreement.
4. Defined terms used in this Second Amendment to Facilities Lease
Agreement and not otherwise defined herein have the meanings ascribed to
those terms in the Facilities Lease Agreement.
IN WITNESS WHEREOF, Brazos and Diamond Shamrock R & M have caused this
Second Amendment to Facilities Lease Agreement to be executed and delivered
by their duly authorized officers as of the day and year first above written.
BRAZOS RIVER LEASING L.P.
By: Headwater Investments L.P.,
its General Partner
By: Headwater Holdings, Inc.,
its General Partner
By:___________________________
Gregory C. Greene,
President
DIAMOND SHAMROCK REFINING AND
MARKETING COMPANY
By: /s/ R.C. BECKER
Name: R.C. Becker
Title: Vice President and
Treasurer
