<PAGE>
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO 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.
For the transition period _______ to _______.
For Quarter Ended September 30, 1995 Commission File Number:
1-10398
GIANT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0642718
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23733 North Scottsdale Road, Scottsdale, Arizona 85255
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(602) 585-8888
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 [ ]
Number of Common Shares outstanding at October 31, 1995:
11,316,229 shares.
<PAGE>
<PAGE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets
September 30, 1995 (Unaudited) and December 31, 1994
Condensed Consolidated Statements of Earnings (Loss)
(Unaudited) Three and Nine Months Ended
September 30, 1995 and 1994
Condensed Consolidated Statements of Cash Flows
(Unaudited) Nine Months Ended September 30,
1995 and 1994
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Item 6 - Exhibits and Reports on Form 8-K
SIGNATURE<PAGE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
(Unaudited)
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 34,520 $ 12,597
Marketable securities 35,631
Accounts receivable, net 17,217 20,368
Income tax refunds receivable 781 2,144
Inventories 33,627 32,270
Prepaid expenses and other 1,451 2,476
Deferred income taxes 2,323 2,490
--------- ---------
Total current assets 89,919 107,976
--------- ---------
Property, plant and equipment 325,520 306,717
Less accumulated depreciation,
depletion and amortization (153,656) (143,801)
--------- ---------
171,864 162,916
--------- ---------
Other assets 17,469 14,675
--------- ---------
$ 279,252 $ 285,567
========= =========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 4,043 $ 4,107
Accounts payable 21,474 20,707
Accrued expenses 17,196 17,591
--------- ---------
Total current liabilities 42,713 42,405
--------- ---------
Long-term debt, net of current portion 111,830 116,090
Deferred income taxes 13,990 13,752
Other liabilities 3,427 3,630
Common stockholders' equity 107,292 109,690
--------- ---------
$ 279,252 $ 285,567
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)
(In thousands except shares and per share data)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $ 79,184 $ 77,461 $ 230,742 $ 215,541
Cost of products sold 53,092 53,576 157,719 141,397
----------- ----------- ----------- -----------
Gross margin 26,092 23,885 73,023 74,144
Operating expenses 13,460 14,500 38,936 40,169
Depreciation, depletion and amortization 4,036 3,685 11,730 11,382
Reduction of carrying value of crude oil
and natural gas properties 3,395 3,395
Selling, general and administrative expenses 3,333 3,124 9,540 8,878
----------- ----------- ----------- -----------
Operating income (loss) 5,263 (819) 12,817 10,320
Interest expense, net 2,307 2,984 6,480 7,698
----------- ----------- ----------- -----------
Earnings (loss) before income taxes 2,956 (3,803) 6,337 2,622
Provision (benefit) for income taxes 978 (1,550) 2,060 506
----------- ----------- ----------- -----------
Net earnings (loss) $ 1,978 $ (2,253) $ 4,277 $ 2,116
=========== =========== =========== ===========
Earnings (loss) per common share $ 0.17 $ (0.19) $ 0.37 $ 0.17
=========== =========== =========== ===========
Weighted average number of shares outstanding 11,321,229 12,112,350 11,547,500 12,159,181
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Nine Months Ended
September 30,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,277 $ 2,116
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Reduction in carrying value of oil and gas properties 3,395
Depreciation, depletion and amortization 11,730 11,382
Deferred income taxes 405 (1,484)
Restricted stock award compensation 347 366
Changes in operating assets and liabilities:
Decrease in receivables 4,514 277
Increase in inventories (1,357) (7,943)
Decrease in prepaid expenses and other 1,025 2,075
Increase (decrease) in accounts payable 767 (555)
Decrease in accrued expenses (971) (5,266)
(Decrease) increase in other non-current liabilities (203) 1,035
Other 287 143
-------- --------
Net cash provided by operating activities 20,821 5,541
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment and other assets (25,009) (14,060)
Proceeds from sale of property, plant and equipment
and other assets 1,299 176
Payments received on ESOP loan 514
Purchases of marketable securities (88,124)
Proceeds from sales and maturities of marketable securities 35,981 89,027
-------- --------
Net cash provided by (used in) investing activities 12,785 (12,981)
-------- --------
Cash flows from financing activities:
Payments of long-term debt (4,325) (2,881)
Purchase of treasury stock (5,620) (935)
Payment of dividends (1,738)
Deferred financing costs (100)
Proceeds from exercise of stock options 3
-------- --------
Net cash used in financing activities (11,683) (3,913)
-------- --------
Net increase (decrease) in cash and cash equivalents 21,923 (11,353)
Cash and cash equivalents:
Beginning of period 12,597 19,807
-------- --------
End of period $ 34,520 $ 8,454
======== ========
</TABLE>
Noncash Investing and Financing Activities. In 1994, a portion of the
acquisition price of nine retail units was seller financed for $2,917,000.
In 1995, two retail units with a net book value of $1,613,000 were
exchanged for a finished product terminal.
See accompanying notes to condensed consolidated financial statements.<PAGE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments
and reclassifications considered necessary for a fair and comparable
presentation have been included and are of a normal recurring nature.
Operating results for the nine months ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1995. The enclosed financial statements should be
read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
NOTE 2 - MARKETABLE SECURITIES:
Marketable securities are comprised of taxable corporate bonds,
taxable and non-taxable municipal bonds and adjustable rate preferred
stock, are managed as part of the Company's short-term cash management
program and are classified as available-for-sale securities. Such
classification requires these securities to be reported at fair value,
with unrealized gains and losses excluded from earnings and reported in a
separate component of stockholders' equity. As of September 30, 1995 all
of the Company's marketable securities had matured or had been sold
resulting in a net realized loss of approximately $110,000. At
September 30, 1995 and December 31, 1994, there were valuation allowances
of $0 and $654,000, respectively, reducing the carrying value of the
portfolio to estimated fair value. The after-tax adjustments necessary
to mark the securities to market reduced stockholders' equity by $0
at September 30, 1995 and $398,000 at December 31, 1994.
NOTE 3 - INVENTORIES:
<TABLE>
<CAPTION>
(In thousands)
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Inventories consist of the following:
First-in, first-out ("FIFO") method:
Crude oil $ 12,075 $ 13,611
Refined products 13,268 11,054
Refinery and shop supplies 5,719 5,705
Retail method:
Merchandise 2,709 2,428
-------- --------
33,771 32,798
Allowance for last-in, first-out
("LIFO") method (144) (528)
-------- --------
$ 33,627 $ 32,270
======== ========
/TABLE
<PAGE>
<PAGE>
NOTE 4 - LONG-TERM DEBT:
In November 1993, the Company issued $100,000,000 of 9 3/4% senior
subordinated notes ("Notes"). Repayment of the Notes is jointly and
severally guaranteed on an unconditional basis by the Company's direct
and indirect wholly-owned subsidiaries, subject to a limitation
designed to ensure that such guarantees do not constitute a fraudulent
conveyance. Except as otherwise allowed in the Indenture pursuant to
which the Notes were issued, there are no restrictions on the ability
of such subsidiaries to transfer funds to the Company in the form of
cash dividends, loans or advances. General provisions of applicable
state law, however, may limit the ability of any subsidiary to pay
dividends or make distributions to the Company in certain
circumstances.
Separate financial statements of the subsidiaries are not included
herein because the subsidiaries are jointly and severally liable; the
aggregate assets, liabilities, earnings, and equity of the subsidiaries
are substantially equivalent to the assets, liabilities, earnings and
equity of the Company on a consolidated basis; and the separate
financial statements and other disclosures concerning the subsidiaries
are not deemed material to investors.
On October 4, 1995, the Company entered into a Credit
Agreement with a money center bank under which $30,000,000 was
borrowed pursuant to a three-year unsecured revolving term
facility to provide financing for the purchase of the Bloomfield
Refinery. The principal balance is due in October 1998 and has a
floating interest rate that is tied to various short-term indices.
Currently this rate is approximately 7%. On November 6, 1995,
$10,000,000 of this revolving term facility was prepaid from cash
on hand.
In addition, the Credit Agreement contains a three-year
unsecured working capital facility to provide working capital and
letters of credit in the ordinary course of business. The
availability under this working capital facility is the lesser of
(i) $40,000,000, or (ii) the amount determined under a borrowing
base calculation tied to eligible accounts receivable and
inventories as defined in the Credit Agreement. This facility has
a floating interest rate that is tied to various short-term
indices. As of October 31, 1995, no amounts had been borrowed
under this arrangement and there were $16,300,000 of irrevocable
letters of credit outstanding. The Company has terminated its
previous $20,000,000 uncommitted line of credit that supported the
issuance of letters of credit.
The Credit Agreement contains certain covenants and restrictions
which require the Company to, among other things, maintain a minimum
consolidated net worth; minimum fixed charge coverage ratio; minimum
funded debt to total capitalization percentage; and places limits on
investments, prepayment of senior subordinated debt, guarantees,
liens and restricted payments. The Credit Agreement is guaranteed
by substantially all of the Company's wholly-owned subsidiaries.
NOTE 5 - COMMON STOCK:
On September 21, 1995, the Company's Board of Directors declared
a common stock dividend of $0.05 per share payable to stockholders of
record on October 24, 1995. This dividend was paid on November 6,
1995. In 1995, the Company has paid dividends of $0.20 per share.
In the first nine months of 1995, the Company repurchased 664,100
shares of its common stock for approximately $5,600,000. From the
inception of the Company's common stock repurchase program in 1994
through September 30, 1995, the Company repurchased 866,400 shares at
a weighted average cost of approximately $8.39 per share, including
commissions, or approximately $7,300,000. These shares are treated
as treasury shares. Any repurchased shares are available for a
variety of corporate purposes.
In 1995, the Company's Board of Directors authorized an increase
in the existing stock repurchase program from 1,000,000 shares to
1,500,000 shares.
NOTE 6 - CONTINGENCIES:
The Company and certain subsidiaries are defendants in various
legal actions. Certain of these pending legal actions involve or may
involve compensatory, punitive or other damages. Litigation is subject
to many uncertainties and it is possible that some of the legal
actions, proceedings or claims referred to above could be decided
adversely. Although the amount of liability at September 30, 1995 with
respect to these matters is not ascertainable, the Company believes
that any resulting liability should not materially affect the Company's
financial condition or results of operations.
Federal, state and local laws and regulations relating to health
and the environment affect nearly all of the operations of the Company.
As is the case with all companies engaged in similar industries, the
Company faces significant exposure from actual or potential claims and
lawsuits involving environmental matters. These matters involve
alleged soil and water contamination, air pollution and personal
injuries or property damage allegedly caused by exposure to hazardous
materials manufactured, handled or used by the Company. Future
expenditures related to health and environmental matters cannot be
reasonably quantified in many circumstances due to the speculative
nature of remediation and cleanup cost estimates and methods,
imprecise and conflicting data regarding the hazardous nature of
various types of waste, the number of other potentially responsible
parties involved, various defenses which may be available to the
Company and changing environmental laws and interpretations of
environmental laws.
The United States Environmental Protection Agency notified the
Company in May 1991 that it may be a potentially responsible party for
the release or threatened release of hazardous substances, pollutants,
or contaminants at the Lee Acres Landfill, which is owned by the United
States Bureau of Land Management and which is adjacent to the Company's
Farmington refinery which was operated until 1982. Potentially
responsible party liability is joint and several, such that a
responsible party may be liable for all of the cleanup costs at a site
even though the party was responsible for only a small part of such
costs. At the present time, the Company is unable to determine the
extent of potential liability, if any, in this matter and has made no
provision therefore in its financial statements.
The Company has an environmental liability accrual of approximately
$1,500,000 relating to ongoing environmental projects, including the
remediation of a free-phase hydrocarbon plume at the Company's inactive
Farmington refinery and hydrocarbon contamination on and adjacent to 5.5
acres the Company owns in Bloomfield, New Mexico. The accrual is
recorded in the current and long-term sections of the Company's
consolidated balance sheet. An environmental reserve to be established
in connection with the Bloomfield Refinery acquisition will be recorded as
an adjustment to the purchase price.
The Company has received several tax notifications and assessments
from the Navajo Nation relating to crude oil and natural gas removed
from properties located outside the boundaries of the Navajo Indian
Reservation in an area of disputed jurisdiction, including a $1,800,000
severance tax assessment issued to Giant Industries Arizona, Inc., a
wholly-owned subsidiary of the Company, in November 1991. The Company
has invoked its appeal rights with the Navajo Nation's Tax Commission in
connection with this assessment and intends to vigorously oppose the
assessment. It is the Company's understanding that these appeals will
be held in abeyance pending further judicial clarification of the
Navajo Nation's taxing authority by means of litigation involving other
companies. It is possible, however, that the Company's assessments
will have to be litigated by the Company before final resolution. The
Company may receive further tax assessments before judicial resolution
of the Navajo Nation's taxing authority.
NOTE 7 - PRO FORMA FINANCIAL INFORMATION:
On October 4, 1995, the Company, through its wholly-owned subsidiary,
completed the purchase of the Bloomfield Refinery along with related
pipeline and transportation assets from Gary-Williams Energy Co. and its
wholly-owned subsidiary Bloomfield Refining Company ("BRC").
The following unaudited pro forma combined condensed financial
information for the nine months ended September 30, 1995 and 1994 include
the results of operations of the Company and BRC, along with adjustments
which give effect to events that are directly attributable to the
transaction and which are expected to have a continuing impact. The
information assumes the transaction was consummated as of the beginning
of each period presented.
The unaudited pro forma combined condensed financial
information does not purport to represent the results of operations
that actually would have resulted had the purchase occurred on the
dates specified, nor should it be taken as indicative of the
future results of operations.
<TABLE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In thousands except shares and per share data)
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net revenues $ 337,573 $ 322,348
Cost of products sold 236,801 215,689
---------- ----------
Gross margin 100,772 106,659
---------- ----------
Operating expenses 48,584 49,735
Depreciation, depletion and amortization 13,793 13,445
Reduction of carrying value of crude oil
and natural gas properties 3,395
Selling, general and administrative expenses 11,101 10,694
---------- ----------
Operating income 27,294 29,390
Interest expense, net and other 9,442 10,660
---------- ----------
Earnings before income taxes 17,852 18,730
Provision for income taxes 6,540 6,810
---------- ----------
Net earnings $ 11,312 $ 11,920
========== ==========
Earnings per common share $ 0.98 $ 0.98
========== ==========
Weighted average number of shares outstanding 11,547,500 12,159,181
========== ==========
/TABLE
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Earnings (Loss) Before Income Taxes
- -----------------------------------
Earnings before income taxes were $3.0 million for
the three months ended September 30, 1995, an increase of
approximately $6.8 million from a loss of $3.8 million for the
three months ended September 30, 1994. The increase is
primarily the result of a $3.4 million writedown in the
carrying value of crude oil and natural gas properties due to a
"ceiling test " calculation in the 1994 third quarter; and in
the 1995 third quarter, a decrease in ethanol plant grain
costs, a decline in operating expenses, an 8% increase in
refinery sourced finished product sales volumes, lower net
interest costs, a 5% increase in average refinery margins and a
13% increase in service station merchandise sales. The increase
was partially offset by a decrease in third party ethanol sales
volumes in the 1995 third quarter, and in the 1994 third quarter,
the recording of a $1.0 million accrual for estimated
reimbursement under the Company's business interruption
insurance policies relating to an accident at the refinery,
which reduced 1994 cost of products sold.
Earnings before income taxes were $6.3 million for the
nine months ended September 30, 1995, an increase of
approximately $3.7 million from $2.6 million for the nine
months ended September 30, 1994. The increase is primarily the
result of the writedown in the carrying value of crude oil and
natural gas properties in 1994; and in 1995, a 6% increase
in refinery sourced finished product sales volumes, a decrease
in ethanol plant grain costs, a 16% increase in service station
merchandise sales, a decline in operating expenses, lower net
interest costs and the addition of third party crude oil sales. The
increase was partially offset by a 17% decrease in average refinery
margins and a decrease in third party ethanol sales volumes in
1995 and, in 1994, the recording of the accrual for estimated
reimbursement under the Company's business interruption
insurance policies.
For the three and nine month periods ended September 30,
1995 and 1994, the Company's exploration and production
operations ("Giant E&P") recorded pretax earnings of $21,000
and $217,000 and pretax losses of $3.7 million and $4.3
million, respectively. The improvement in each period is due
primarily to the writedown in the carrying value of crude oil
and natural gas properties in the third quarter of 1994, and in
the 1995 periods, increases in crude oil and natural gas
production, offset in part by a decline in natural gas selling
prices. Crude oil prices were up slightly in the comparative
year to date periods and down slightly in the comparative
quarterly periods.
Revenues
- --------
Revenues for the three months ended September 30, 1995
increased $1.7 million or 2% to $79.2 million from $77.5
million in the comparable 1994 period. The increase is
primarily due to an 8% increase in refinery sourced finished
product sales volumes and a 13% increase in service station
merchandise sales. Offsetting these increases was a decline in
third party ethanol sales volumes, an overall decline in other
revenues from retail operations and a 1% decrease in refinery
weighted average selling prices.
Revenues for the nine months ended September 30, 1995,
increased $15.2 million or 7% to $230.7 million from $215.5
million in the comparable 1994 period. The increase is
primarily due to a 6% increase in refinery sourced finished
product sales volumes, a 5% increase in refinery weighted
average selling prices, a 16% increase in service station
merchandise sales and the addition of third party crude oil sales.
Offsetting these increases was an overall decline in other revenues
from the retail operations and a decline in third party ethanol
sales volumes.
The increase in refinery sourced finished product sales
volumes in each period was partially the result of an accident
at the refinery in July 1994 which reduced production for a
period of approximately sixty days. The 1994 year to date
volumes were also affected by a scheduled major maintenance
turnaround started in March and completed in April of that
year. The increase in service station merchandise sales is the
result of increased same store volumes and the net addition of
three units. The overall decline in other revenues from retail
operations is primarily related to the sale of the Giant Express
travel center in November 1994.
In each period, volumes of refined products sold through
retail outlets decreased approximately 8% from 1994 levels due
to a 31% decrease in volumes sold from the travel centers,
primarily related to the sale of the Giant Express, and a
slight decrease in service station volumes.
Revenues, including intercompany revenues of $1.4 million
in 1995 and $1.1 million in 1994, from Giant E & P totaled $2.1
million for the three months ended September 30, 1995, an
increase of $338,000 or 18% from the $1.8 million reported for
the comparable 1994 period. This increase is due to a 62%
increase in crude oil production and a 20% increase in natural
gas production. These increases are offset in part by a 3%
decline in average crude oil selling prices and a 29% decline
in average natural gas selling prices.
Revenues, including intercompany revenues of $3.9 million
in 1995 and $3.1 million in 1994, from Giant E & P totaled $6.1
million for the nine months ended September 30, 1995, an
increase of $1.3 million or 27% from the $4.8 million reported
for the comparable 1994 period. This increase is due to a 47%
increase in crude oil production, a 9% increase in average
crude oil selling prices and a 16% increase in natural gas
production. These increases are offset in part by a 28% decline
in average natural gas selling prices.
In each period, the increase in crude oil production is
primarily the result of the acquisition of various crude oil
producing reserves during 1995. The increase in natural gas
production is due to a 1994 year end downward adjustment of
coal seam gas reserves sold in 1992, determined pursuant to an
annual redetermination clause contained in the 1992 purchase
and sale agreement, which resulted in the addition of
approximately 1,018 million cubic feet of natural gas reserves.
Cost of Products Sold
- ---------------------
For the three months ended September 30, 1995, cost of
products sold decreased $484,000 or 1% to $53.1 million from
$53.6 million for the corresponding 1994 period. A decrease in
1995 average grain costs resulting from an improved grain harvest
in the fall of 1994 and higher grain costs in 1994 due to forward
purchase contracts and a poor grain harvest in the fall of 1993,
along with a 2% decline in average crude oil costs and a decrease
in travel center merchandise sales due to the sale of the Giant
Express accounts for most of the decrease. The decrease is
partially offset by an 8% increase in the volume of finished
products sold from the refinery, a 13% increase in merchandise
sales from the service stations and a $1.0 million accrual for
estimated reimbursement under the Company's business
interruption insurance policies relating to an accident at the
refinery in the 1994 third quarter, which reduced 1994 cost of
products sold.
For the nine months ended September 30, 1995, cost of
products sold increased $16.3 million or 12% to $157.7 million
from $141.4 million for the corresponding 1994 period. An 11%
increase in average crude oil costs, a 6% increase in the
volume of finished products sold from the refinery and a 16%
increase in merchandise sales from the service stations
accounts for most of the increase. The increase is partially
offset by a decrease in average grain costs and a decrease in
merchandise sales from the travel centers related to the sale of
the Giant Express.
Cost of products sold by Giant E & P increased
approximately 21% and 20% for the three and nine month periods
ended September 30, 1995, respectively, compared to the same
1994 periods. The increases are primarily related to an
increase in production.
Operating Expenses
- ------------------
For the three months ended September 30, 1995, operating
expenses decreased $1.0 million or 7%, to $13.5 million from
$14.5 million in the corresponding 1994 period.
For the nine months ended September 30, 1995, operating
expenses decreased $1.2 million or 3%, to $38.9 million from
$40.1 million in the corresponding 1994 period.
The decreases in each period are primarily related to the
sale of the Giant Express and a decline in utility and
purchased fuel costs for the refinery. Partially offsetting
these decreases are increases in payroll and related costs and
outside services for other operations. Third quarter 1995 costs
also reflect a reduction in contract labor and material expense
at the refinery.
Selling, General and Administrative Expenses
- --------------------------------------------
For the three months ended September 30, 1995, selling,
general and administrative expenses increased $209,000 or 7% to
$3.3 million from $3.1 million in the corresponding 1994
period. The increase is primarily the result of higher payroll
and related costs in the 1995 period.
For the nine months ended September 30, 1995, selling,
general and administrative expenses increased $662,000 or 7% to
$9.5 million from $8.9 million in the corresponding 1994
period. The increase is primarily the result of a reduction in
1994 first quarter expenses from the recording of a $1.0
million insurance settlement relating to environmental costs
incurred in prior years and higher payroll costs in the 1995
period. Offsetting these items are a reduction in expenses from
not recording a management incentive bonus accrual in the 1995
period and reductions in 1995 first quarter expenses for a
decrease in the estimated liability for self insured workmen's
compensation claims and a reduction in the estimated allowance
for doubtful accounts.
Interest Expense, Net
- ---------------------
For the three months ended September 30, 1995, interest
expense, net (interest expense less interest income) decreased
$677,000 or 23% to $2.3 million from $3.0 million and for the
nine months ended September 30, 1995, decreased $1.2 million
or 16% to $6.5 million from $7.7 million compared to the same
1994 periods.
The decrease in the comparative three month periods is
primarily due to an interest income adjustment in the 1994 third
quarter, a decrease in interest expense related to a reduction in
long-term debt and an increase in interest income related to
higher interest rates.
The decrease in the comparative nine month periods is
primarily due to the interest income adjustment in the 1994 third
quarter, an increase in interest income primarily due to interest
received on the refund of income taxes paid in prior periods and
higher interest rates on invested funds, along with a decrease in
interest expense related to a reduction in long-term debt.
Income Taxes
- ------------
Income taxes for the three and nine months ended
September 30, 1995 and 1994 were computed in accordance with
Statement of Financial Accounting Standards No. 109 ("SFAS No.
109"), resulting in effective tax (benefit) rates ranging from
approximately 19% to 40%. The difference in rates is primarily
due to the relationship of relatively consistent amounts of
estimated alcohol fuel and coal seam gas credits to varying
amounts of estimated annual income.
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow From Operations
- -------------------------
Net cash provided by operating activities totaled $20.8
million for the nine months ended September 30, 1995, compared
to $5.5 million for the comparable 1994 period. Operating cash
flows increased primarily as the result of the differences in
the net changes in working capital items and an increase in net
earnings.
Working Capital
- ---------------
Working capital at September 30, 1995 consisted of current
assets of $89.9 million and current liabilities of $42.7
million, or a current ratio of 2.11:1. At December 31, 1994,
the current ratio was 2.55:1 with current assets of $108.0
million and current liabilities of $42.4 million.
Current assets have decreased since December 31, 1994,
primarily due to a decrease in cash and cash equivalents,
marketable securities , accounts receivable and income tax
refunds receivable. Marketable securities have declined due to
sales and maturities. Accounts receivable have decreased as a
result of insurance reimbursements received and the receipt of
excise tax refunds. Inventories have increased due to an
increase of ethanol volumes on hand at the ethanol plant and
terminal operations. Current liabilities have increased due to an
increase in accounts payable offset in part by a decrease in
accrued liabilities. Accounts payable have increased primarily
due to an increase in raw material purchases at slightly higher
prices, offset in part by the timing of certain payments which
would have normally occurred at year end but were not due and
payable until 1995. Accrued liabilities have declined as the
result of the payment of certain year-end accruals, offset in
part by an increase in accrued interest payable.
Capital Expenditures and Resources
- ----------------------------------
Net cash used in investing activities for the purchase of
property, plant and equipment and other assets totaled
approximately $25.0 million for the first nine months of 1995.
These expenditures were primarily for the acquisition of proved
reserves, oil and gas well drilling and leasehold costs; the
acquisition, construction, rebuilding and remodeling of various
retail units; the acquisition of a crude oil gathering operation,
including long-term crude oil supply contracts, and information
system enhancements.
The Company, through its subsidiary Giant E & P, has added
approximately 2.4 million barrels of oil equivalent, primarily
crude oil, to its net proved reserves in 1995 through various
acquisitions.
The Company acquired two service station/convenience
stores in 1995. One unit was purchased on January 10, 1995 and
the other unit, which is located on the Navajo Indian Reservation,
is being operated by the Company under a management agreement
effective January 11, 1995, with closing of the purchase pending
approval by the Navajo Nation. In addition, three new retail units
constructed by the Company are in operation, one in the Albuquerque
market, which opened in the first quarter, and two in the Phoenix
area, which opened in the third quarter.
On July 25, 1995, the Company completed the exchange of
two of its retail service stations located in Tucson, Arizona
for a finished products terminal in Albuquerque, New Mexico
previously owned by a major oil company. The effect of the
exchange is to replace two service stations not considered to
be strategic to the Company's overall marketing strategies with
a finished products terminal which is a part of the Company's
strategy to maximize both product volumes and netbacks to the
Ciniza Refinery.
The Company has received proceeds of approximately $1.3
million from the sale of certain non-strategic real estate and
other assets. A gain of approximately $150,000 resulted from
these sales.
In the third quarter, the Company, through a wholly-owned
subsidiary, completed the acquisition of a crude oil gathering
operation. The assets acquired include land, buildings,
equipment and long-term crude oil supply contracts. The amounts
allocated to the long-term supply contracts will be amortized to
cost of products sold over the life of the contracts which have
a duration of three to twelve years. The acquisition should
lower raw material and transportation costs by providing new
long-term crude oil purchase agreements and through consolidation
of crude oil trucking operations.
On October 4, 1995, the Company through its wholly-owned
subsidiary, completed the purchase of the 18,000 barrel per
day ("bpd") Bloomfield Refinery ("Bloomfield") located in
Bloomfield, New Mexico, along with related pipeline and
transportation assets. Bloomfield and the related assets were
purchased for a price of $55 million, plus approximately $7.5
million for crude oil and refined product inventories
associated with the refinery operations. The purchase was
funded with $32.5 million of cash on hand and $30.0 million
provided under a Credit Agreement. The purchase agreement
also provides for potential contingent payments to be made to
the seller over approximately the next six years should
certain criteria be met.
Included in the purchase is approximately 25 miles of
pipeline connecting Bloomfield to the Texas-New Mexico and
Four Corners common carrier pipeline systems and various
automobiles and small trucks.
Bloomfield has been and will continue to be used to
process primarily locally acquired crude oil into refined
products which are distributed principally in Southern Utah,
Southern Colorado, Northwestern New Mexico and Northeastern
Arizona.
On a pro forma basis, assuming the purchase took place on
January 1, 1994, the Company's net revenues would have been $337.6
million and $433.9 million, net earnings would have been $11.3
million and $16.0 million and earnings per common share would
have been $0.98 and $1.32 for the nine months ended September
30, 1995 and the year ended December 31, 1994, respectively.
On October 2, 1995, the Company announced the temporary
suspension of operations at its ethanol processing plant due to
high grain costs. The plant is expected to be closed until
grain prices return to more favorable levels. Included in the
Company's financial results are ethanol plant third party revenues
of $1.4 million and operating losses of $74,000 for the three
months ended September 30, 1995, and third party revenues of $6.7
million and operating earnings of $372,000 for the nine months ended
September 30, 1995.
The Company continues to investigate other strategic
acquisitions as well as capital improvements to its existing
facilities, and is actively pursuing the possible sale or exchange
of certain other non-strategic assets.
Working capital, including that necessary for capital
expenditures and debt service, will be funded through cash
generated from operating activities, existing cash balances and,
if necessary, future borrowings. Future liquidity, both short and
long-term, will continue to be primarily dependent on producing and
selling sufficient quantities of refined products at margins
sufficient to cover fixed and variable expenses.
Capital Structure
- -----------------
At September 30, 1995, and December 31, 1994, the
Company's long-term debt was 51.0% and 51.4% of total capital,
respectively. The slight decrease is due to a decrease in long-
term debt offset in part by a decrease in shareholders' equity
due to the purchase of treasury stock and the declaration and
payment of common stock dividends.
The Company's capital structure includes $100 million of
10 year 9 3/4% senior subordinated notes ("Notes"). Repayment
of the Notes is jointly and severally guaranteed on an
unconditional basis by the Company's direct and indirect
wholly-owned subsidiaries, subject to a limitation designed to
ensure that such guarantees do not constitute a fraudulent
conveyance. Except as otherwise allowed in the Indenture
pursuant to which the Notes were issued, there are no
restrictions on the ability of such subsidiaries to transfer
funds to the Company in the form of cash dividends, loans or
advances. General provisions of applicable state law, however,
may limit the ability of any subsidiary to pay dividends or
make distributions to the Company in certain circumstances.
On October 4, 1995, the Company entered into a Credit
Agreement with a money center bank under which $30.0 million was
borrowed pursuant to a three-year unsecured revolving term
facility to provide financing for the purchase of the Bloomfield
Refinery. The principal balance is due in October 1998 and has a
floating interest rate that is tied to various short-term indices.
Currently this rate is approximately 7%. On November 6, 1995,
$10.0 million of this revolving term facility was prepaid from
cash on hand.
In addition, the Credit Agreement contains a three-year
unsecured working capital facility to provide working capital
and letters of credit in the ordinary course of business. The
availability under this working capital facility is the lesser
of (i) $40.0 million, or (ii) the amount determined under a
borrowing base calculation tied to eligible accounts receivable
and inventories as defined in the Credit Agreement. This
facility has a floating interest rate that is tied to various
short-term indices. As of October 31, 1995, no amounts had been
borrowed under this arrangement and there were $16.3 million
of irrevocable letters of credit outstanding. The Company has
terminated its previous $20.0 million uncommitted line of credit
that supported the issuance of letters of credit.
The Credit Agreement contains certain covenants and
restrictions which require the Company to, among other things,
maintain a minimum consolidated net worth; minimum fixed charge
coverage ratio; minimum funded debt to total capitalization
percentage; and places limits on investments, prepayment of senior
subordinated debt, guarantees, liens and restricted payments. The
Credit Agreement is guaranteed by substantially all of the Company's
wholly-owned subsidiaries.
The Company's Board of Directors has authorized the
repurchase of a total of 1,500,000 shares of the Company's
common stock, or approximately 13% of all outstanding shares.
This is an increase of 500,000 shares over the previous
authorizations. These purchases may be made from time to time
as conditions permit. Shares may be repurchased through
privately-negotiated transactions, block share purchases and
open market transactions. In the first nine months of 1995, the
Company repurchased 664,100 shares of its common stock for
approximately $5.6 million. From the inception of the repurchase
program through September 30, 1995, the Company repurchased
866,400 shares at a weighted average cost of approximately $8.39
per share, including commissions, or approximately $7.3 million.
These shares are treated as treasury shares.
Any repurchased shares are available for a variety of
corporate purposes. The number of shares actually repurchased
will be dependent upon market conditions and there is no
guarantee as to the exact number of shares to be repurchased by
the Company. The Company may suspend or discontinue the
program at any time without notice.
On September 21,1995, the Company's Board of Directors
declared a common stock dividend of $0.05 per share payable to
stockholders of record on October 24,1995. This dividend was
paid on November 6, 1995. Future dividends, if any, are subject
to the results of the Company's operations, existing debt
covenants and declaration by the Company's Board of Directors.
Other
- -----
Federal, state and local laws and regulations relating to
health and the environment affect nearly all of the operations
of the Company. As is the case with all companies engaged in
similar industries, the Company faces significant exposure from
actual or potential claims and lawsuits involving environmental
matters. These matters involve alleged soil and water
contamination, air pollution and personal injuries or property
damage allegedly caused by exposure to hazardous materials
manufactured, handled or used by the Company. Future
expenditures related to health and environmental matters cannot
be reasonably quantified in many circumstances due to the
speculative nature of remediation and cleanup cost estimates
and methods, imprecise and conflicting data regarding the
hazardous nature of various types of waste, the number of other
potentially responsible parties involved, various defenses
which may be available to the Company and changing
environmental laws and interpretations of environmental laws.
It is expected that rules and regulations implementing
federal, state and local laws relating to health and the
environment will continue to affect the operations of the
Company. The Company cannot predict what additional health or
environmental legislation or regulations will be enacted or
become effective in the future or how existing or future laws
or regulations will be administered or enforced with respect to
products or activities of the Company. Compliance with more
stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies, could have an
adverse effect on the financial position and the results of
operations of the Company and could require substantial
expenditures by the Company for the installation and operation
of pollution control systems and equipment not currently
possessed by the Company.
In May 1991, the EPA notified the Company that it may be a
potentially responsible party for the release, or threatened
release, of hazardous substances, pollutants or contaminants at
the Lee Acres Landfill, which is adjacent to the Company's
Farmington refinery which was operated until 1982. At the
present time, the Company is unable to determine the extent of
its potential liability, if any, in the matter. In 1989, a
consultant to the Company estimated, based on various
assumptions, that the Company's share of potential liability
could be approximately $1.2 million. This figure was based
upon the consultant's evaluation of such factors as available
clean-up technology, BLM's involvement at the site and the
number of other entities that may have had involvement at the
site. The consultant, however, did not conduct an analysis of
the Company's potential legal defenses and arguments including
possible setoff rights. Potentially responsible party liability
is joint and several, such that a responsible party may be
liable for all of the clean-up costs at a site even though the
party was responsible for only a small part of such costs.
Actual liability, if any, may differ significantly from the
consultant's estimate. In addition, the Company is remediating
a free-phase hydrocarbon plume that extends approximately 1,000
feet south of its inactive Farmington refinery.
The Company has an environmental liability accrual of
approximately $1.5 million relating to on going environmental
projects, including the remediation of the free-phase
hydrocarbon plume described above and hydrocarbon contamination
on and adjacent to 5.5 acres the Company owns in Bloomfield,
New Mexico. The accrual is recorded in the current and long-
term sections of the Company's consolidated balance sheet. An
environmental reserve to be established in connection with the
Bloomfield Refinery acquisition will be recorded as an adjustment to
the purchase price.
The Company is subject to audit on an ongoing basis of the
various taxes that it pays to federal, state, local and Tribal
agencies. These audits may result in additional assessments or
refunds along with interest and penalties. In some cases the
jurisdictional basis of the taxing authority is in dispute and
is the subject of litigation or administrative appeals. In one
such case, the Company has received several tax assessments
from the Navajo Nation, including a $1.8 million severance tax
assessment issued to Giant Industries Arizona, Inc., a
wholly-owned subsidiary of the Company, in November 1991
relating to crude oil removed from properties located outside
the boundaries of the Navajo Indian Reservation in an area of
disputed jurisdiction. It is the Company's position that it is
in substantial compliance with laws applicable to the disputed
area, and such assessments are or will be the subject of
litigation or administrative appeals.
The Company uses the full cost method of accounting for
oil and gas activities. Under this method, the Company is
required to write down capitalized costs, adjusted for
accumulated amortization and related deferred income taxes, if
those costs exceed a "cost ceiling." This "cost ceiling" is
determined by calculating the value of the Company's estimated
reserves utilizing, among other things, the price of crude oil
and natural gas at the end of each quarter. During periods of
declining prices and reserves, the Company may be required to
write down these capitalized costs due to impairment in value.
At September 30, 1995, the Company's adjusted capitalized costs
were approximately equal to the "cost ceiling". Whether or not
a writedown will be necessary in the future depends upon future
prices and reserve volumes.
In the first quarter of 1995, the Company reached final
settlement with its insurance companies under its business
interruption insurance policies as they relate to the accident
that occurred at the refinery in July 1994 for approximately $1.5
million. Approximately $1.4 million of this amount had been accrued
in 1994.
With the acquisition of the Bloomfield Refinery and based
on projections of local crude oil availability from the field,
current levels of usage of Alaska North Slope crude oil ("ANS"),
and the Company's inventory levels, the Company believes an
adequate crude oil supply will be available, without the use of
additional supplemental supply alternatives, to sustain both
refineries' operations at planned levels, at least through mid-1996.
The Company believes that local crude oil production currently
approximates 95% of aggregate local crude oil demand. The Company
is currently able to supplement local crude oil supplies with ANS
and other alternate grades of crude oil through its gathering
systems' interconnection with the Four Corners and Texas-New Mexico
common carrier pipeline systems and by truck or rail. Generally,
such crude oil is of lesser quality than locally available crude
oils, and, with the exception of ANS, the Company believes such
crude oil generally has a delivered cost greater than that of
locally available crude oil.
In response to the decline in local crude oil production,
along with the acquisition of the Bloomfield Refinery, the Company
is evaluating supplemental crude oil supply alternatives for both
of its refineries on both a short-term and long-term basis. Among
other alternatives, the Company has considered making equipment
modifications to increase its ability to use ANS crude oil and is
considering the installation of additional rail facilities to
enable the Company to provide incremental crude oil to supplement
local supply sources when required in the most cost effective manner.
As additional supplemental crude oil becomes necessary,
the Company intends to implement one or more of these available
alternatives as necessary and as is most advantageous under the
then prevailing conditions. The Company currently believes that
the most desirable strategy to supplement local crude oil
supplies, on a long-term basis, is the delivery of supplemental
crude oil from outside of the Four Corners area by pipeline.
Implementation of supplemental supply alternatives will
result in additional raw material costs, operating costs, capital
costs, or a combination thereof in amounts which are not
presently ascertainable by the Company but which will vary
depending on factors such as the specific alternative
implemented, the quantity of supplemental crude oil required,
and the date of implementation. Implementation of some supply
alternatives requires the consent or cooperation of third
parties and other considerations beyond the control of the
Company.
<PAGE>
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings required to be
reported pursuant to Item 103 of Regulation S-K. The Company is a
party to ordinary routine litigation incidental to its business. In
addition, there is hereby incorporated by reference the information
regarding contingencies in Note 6 to the Unaudited Condensed
Consolidated Financial Statements set forth in Item 1, Part I hereof
and the discussion of certain contingencies contained herein under the
heading "Liquidity and Capital Resources - Other."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
4 - Letter Amendment No. 2, dated May 9, 1995, to Amended and
Restated Note Agreement, dated September 30, 1993, among
The Prudential Insurance Company of America, Pruco Life
Insurance Company, Giant Industries, Inc. and Giant
Industries Arizona, Inc., relating to $20,000,000 of
10.91% Senior Notes due March 31, 1999.
11 - Computation of Per Share Data.
27 - Financial Data Schedule.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the three months ended September 30, 1995.<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report on Form 10-Q for the
quarter ended September 30, 1995 to be signed on its behalf by the
undersigned thereunto duly authorized.
GIANT INDUSTRIES, INC.
/s/ A. WAYNE DAVENPORT
------------------------------------------
A. Wayne Davenport
Vice President and Chief Financial Officer
(Principal Accounting Officer)
Date: November 13, 1995
LETTER AMENDMENT NO. 2
May 9, 1995
The Prudential Insurance Company
of America
Pruco Life Insurance Company
100 Mulberry Street
Newark, NJ 07102
Ladies and Gentlemen:
We refer to the Amended and Restated Note Agreement between
Giant Industries Arizona, Inc., an Arizona corporation (the
"Company"), Giant Industries, Inc., a Delaware corporation (the
"Guarantor"), The Prudential Insurance Company of America
("Prudential") and Pruco Life Insurance Company ("Pruco"), dated as
of September 30, 1993, as amended (the "Agreement"), pursuant to
which the Company issued and sold, and Prudential and Pruco
purchased, the Company's 10.91% Notes due March 31, 1999. Unless
otherwise defined herein, the terms defined in the Agreement shall
be used herein as therein defined.
The Company desires the ability to invest in money market
mutual funds that invest in government obligations. The Company
has requested that you amend paragraph 5C(3) of the Agreement to
permit the Company to invest in such funds.
Pursuant to the request of the Company, and to amend the terms
of the Agreement, the undersigned hereby agrees with you as
follows:
Paragraph 5C(3). Loans, Advances and Investments. Paragraph
5C(3) of the Agreement is amended by amending clause (vi) in its
entirety to read as follows:
"(vi) the Guarantor or any Subsidiary of the Guarantor
may own, purchase or acquire investments in (a) direct
obligations of the United States of America, or of any
agency thereof, or obligations guaranteed as to principal
and interest by the United States of America, or of any
agency thereof, in either case maturing not more than one
year from the date of acquisition thereof; (b) direct
obligations of any state in the Untied States of America or
any municipality thereof, in each case maturing not more
than one year from the date of acquisition or which the
holder thereof may require the issuer thereof to repurchase
within one year and being rated AA- or better by Standard
and Poor's Corporation ("S&P") or Aa3 or better by Moody's
Investors Service, Inc. ("Moody's"); (c) certificates of
deposit issued by any bank or trust company organized under
the laws of the United States of America or any state
thereof and having capital surplus and undivided profits of
at least $300,000,000 and having a senior unsecured debt
rating of AA- or better from S&P or Aa3 or better from
Moody's, maturing not more than one year from the date of
acquisition thereof; (d) commercial paper rated A-1 or
better or P-1 or better by S&P or Moody's, respectively,
maturing not more than 270 days from the date of acquisition
thereof; (e) repurchase agreements with a term not in excess
of 7 days with any Person relating to any obligations of the
type described in the foregoing clauses; (f) adjustable rate
preferred stock issued by a corporation organized under the
laws of a state of the United States of America which is
rated AA- or better by S&P and Aa3 or better by Moody's; and
(g) money market mutual funds that invest only in
obligations described in clause (a) or (b) of this clause
(vi),"
On and after the effective date of this letter amendment, each
reference in the Agreement to "this Agreement", "hereunder",
"hereof", or words of like import referring to the Agreement, and
each reference in the Notes to "the Agreement", "thereunder",
"thereof", or words of like import referring to the Agreement,
shall mean the Agreement as amended by this letter amendment. The
Agreement, as amended by this letter amendment, are and shall
continue to be in full force and effect and are hereby in all
respects ratified and confirmed.
The execution, delivery and effectiveness of this letter
amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy under the Agreement nor
constitute a waiver of any provision of the Agreement. The
effectiveness of this letter amendment is conditioned upon the
accuracy of the factual matters described above and the delivery of
a Guaranty of Giant Mid-Continent, Inc., an Arizona corporation.
This letter amendment may be executed in any number of
counterparts and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an
original and all of which taken together shall constitute one and
the same letter amendment.
If you agree to the terms and provisions hereof, please
evidence your agreement by executing and returning at least one
counterpart of this letter amendment to Giant Industries, Inc.,
23733 North Scottsdale Road, Scottsdale, AZ 85255, Attention: Gary
L. Nielsen, Vice President & Treasurer. This letter amendment
shall become effective as of the date first above written when and
if counterparts of this letter amendment shall have been executed
by us and you.
Very truly yours,
GIANT INDUSTRIES ARIZONA, INC.
By: /s/ GARY L. NIELSEN
--------------------------------
Title: Vice President
--------------------------------
GIANT INDUSTRIES, INC., as Guarantor
By: /s/ GARY L. NIELSEN
--------------------------------
Title: Vice President
--------------------------------
Agreed and accepted as of
the date first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ TOM DONAHUE
___________________________________
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ TOM DONAHUE
___________________________________
Vice President
<PAGE>
<PAGE>
CONSENT
Each of the undersigned is a Guarantor under a Guaranty dated
as of November 11, 1993 (each being a "Guaranty") in favor of The
Prudential Insurance Company of America and Pruco Life Insurance
Company who are parties to the Agreement referred to in the
foregoing letter amendment. Each of the undersigned hereby
consents to said letter amendment and hereby confirms and agrees
that its Guaranty is and shall continue to be in full force and
effect and is hereby confirmed and ratified in all respects except
that, upon the effectiveness of, and on and after the date of, said
letter amendment, all references in the Guaranty to the Agreement,
"thereunder", "thereof", or words of like import referring to the
Agreement shall mean the Agreement as amended by said letter
amendment.
GIANT FOUR CORNERS, INC.
CINIZA PRODUCTION COMPANY
GIANT EXPLORATION & PRODUCTION
COMPANY
GIANT STOP-N-GO OF NEW MEXICO, INC.
By: /s/ GARY L. NIELSEN
--------------------------------
Vice President
<TABLE>
EXHIBIT 11
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE DATA
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ----------------------
1995 1994 1995 1994
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings (loss) $1,978,000 $(2,253,000) $4,277,000 $2,116,000
========== =========== ========== ==========
Weighted average number of shares outstanding during the period 11,321,229 12,112,350 11,547,500 12,159,181
========== =========== ========== ==========
Earnings (loss) per common share $ 0.17 $ (0.19) $ 0.37 $ 0.17
========== =========== ========== ==========
Additional Primary Computation:
- -------------------------------
Net earnings (loss) $1,978,000 $(2,253,000) $4,277,000 $2,116,000
========== =========== ========== ==========
Additional adjustment to weighted average number of shares outstanding:
Weighted average number of shares outstanding above 11,321,229 12,112,350 11,547,500 12,159,181
Add - dilutive effect of outstanding options (a) 45,252 30,067 34,902
---------- ----------- ---------- ----------
Weighted average number of shares outstanding as adjusted 11,366,481 12,112,350 11,577,567 12,194,083
========== =========== ========== ==========
Earnings (loss) per common share (b) $ 0.17 $ (0.19) $ 0.37 $ 0.17
========== =========== ========== ==========
Fully Diluted Computation:
- --------------------------
Net earnings (loss) $1,978,000 $(2,253,000) $4,277,000 $2,116,000
========== =========== ========== ==========
Additional adjustment to weighted average number of shares outstanding:
Weighted average number of shares outstanding above 11,321,229 12,112,350 11,547,500 12,159,181
Add - dilutive effect of outstanding options (a) 77,427 77,427 37,082
---------- ----------- ---------- ----------
Weighted average number of shares outstanding as adjusted 11,398,656 12,112,350 11,624,927 12,196,263
========== =========== ========== ==========
Earnings (loss) per common share (b) $ 0.17 $ (0.19) $ 0.37 $ 0.17
========== =========== ========== ==========
</TABLE>
(a) As determined by the application of the treasury stock method.
(b) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required per note 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 34,520
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 33,627
<CURRENT-ASSETS> 89,919
<PP&E> 325,520
<DEPRECIATION> 153,656
<TOTAL-ASSETS> 279,252
<CURRENT-LIABILITIES> 42,713
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 279,252
<SALES> 230,742
<TOTAL-REVENUES> 230,742
<CGS> 157,719
<TOTAL-COSTS> 208,385
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,337
<INCOME-TAX> 2,060
<INCOME-CONTINUING> 4,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,277
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0
</TABLE>
