<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14D-1
(RULE 14D-100)
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
PETROFINA
(Name of Subject Company)
TOTAL
(Bidder)
SHARES NOMINAL WITH NO PAR VALUE
AMERICAN DEPOSITARY SHARES
WARRANTS
(Title of Class of Securities)
716485206
(CUSIP Number of Class of Securities)
ALAIN-MARC IRISSOU
GENERAL COUNSEL
TOTAL
24, COURS MICHELET
LA DEFENSE 10
92800 PUTEAUX, FRANCE
(011-33-1) 41-34-40-00
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee
- --------------------------------------------------------------------------
US$450,990,497 US$90,199.00
* Pursuant to Rule 457(f)(1), 457(c) and 457(i) under the Securities Act
and solely for the purpose of calculating the registration fee, the
transaction value was calculated on the basis of (x) in the case of the
Total shares, the average of the high and low sale price per American
depositary share of PetroFina on April 29, 1999 and (y) in the case of
the Total warrants, the average of the high and low sale price per
warrant of April 29, 1999, plus additional consideration of $46.94 per
American depositary share of Total payable in connection with the
exercise of the Total warrants registered in connection with the
exchange offer.
/[Check/ Check box if any part of the fee is offset as provided by Rule
Mark] 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: $125,376.00 Filing Party: Total
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Form of Registration No.: 333-10154 Date Filed: May 6, 1999
Note. The remainder of this cover page is only to be completed if this
Schedule 14D-1 (or amendment thereto) is being filed, inter alia, to satisfy the
reporting requirements of Section 13(d) of the Securities Act of 1934. See
General Instructions D, E, and F to Schedule 14D-1.
The Schedule 13D previously filed by Total with respect to PetroFina
is hereby amended to incorporate in Item 4 thereof the material appearing under
the captions "Total Fina Group Following the Exchange Offer" and "Terms and
Conditions of the Exchange Offer" in the Prospectus which is Exhibit (a)(1) to
this Schedule 14D-1.
Page 1 of 8
<PAGE> 2
CUSIP NO. 716485206 14D-1 PAGE 2 OF 8 PAGES
1 NAMES OF REPORTING PERSONS IRS IDENTIFICATION
NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Total
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
France
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON
9,614,190
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) / /
EXCLUDES CERTAIN SHARES*
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
41.0%
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10 TYPE OF REPORTING PERSON*
OO (societe anonyme)
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Page 2 of 8
<PAGE> 3
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is PetroFina, a Belgian societe
anonyme ("PetroFina"). PetroFina's principal offices are located at 52, rue de
l'Industrie, B-1040 Brussels, Belgium.
(b) This statement relates to the exchange offer by Total, a French
societe anonyme ("Total") to exchange (i) 9 shares of Total for each 2 properly
tendered shares of PetroFina held by a person in the United States; (ii) 9
American depositary shares of Total ("Total ADSs"), each representing one-half
of one share of Total, for each 10 properly tendered American depositary shares
of PetroFina ("PetroFina ADSs"), each representing one-tenth of one share of
PetroFina, held by a person in the United States; and (iii) 81 warrants of Total
each granting its holder the right to purchase one Total ADS at a price of
$46.94 (subject to adjustment) for each 100 properly tendered warrants of
PetroFina, held by a person in the United States, each granting its holder the
right to purchase nine-tenths of one petroFina ADS at a price of $42.25 (subject
to adjustment), upon the terms and subject to the conditions set forth in the
Prospectus / US Offer to Exchange dated May 6, 1999 (the "Prospectus") forming a
part of Amendment No. 1 to the Registration Statement on Form F-4 (No.
333-10154) filed by Total with the Securities and Exchange Commission on May 6,
1999, and the relevant Letter of Transmittal, Form of Acceptance, Certificated
Share Delivery Instruction Form and Notice of Guaranteed Delivery, copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (a)(3), (a)(4), and (a)(5)
(which are herein collectively referred to as the "US Offer"). The US Offer is
being made for 343,750 shares, including shares held directly or in the form of
American depositary shares, and 4,443,179 warrants.
(c) The information set forth under "Market Prices for Securities --
PetroFina Shares, PetroFina American depositary shares and PetroFina warrants"
in the Prospectus is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Statement is filed by Total, a societe anonyme organized
under the laws of the Republic of France, and its principal office is at Tour
Total, 24, cours Michelet, La Defense 10, 92800 Puteaux, France. The information
set forth under "Summary--The Companies--Total" in the Prospectus is herein
incorporated by reference.
(d) Indicated below are the material positions held during the past five
years for the Total directors.
<TABLE>
<CAPTION>
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
<S> <C>
DIRECTORS
Thierry Desmarest................... CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF TOTAL (1993
- PRESENT), CHIEF EXECUTIVE OFFICER OF TOTAL
EXPLORATION PRODUCTION (1989 - 1995)
FRANCOIS-XAVIER ORTOLI.............. HONORARY CHAIRMAN OF TOTAL (1990 - PRESENT)
JEROME MONOD........................ CHAIRMAN OF THE SUPERVISORY BOARD OF SUEZ LYONNAISE
DES EAUX (1997 - PRESENT), CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF LYONNAISE DES EAUX (1980 -
1997)
</TABLE>
Page 3 of 8
<PAGE> 4
<TABLE>
<S> <C>
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
Michel Francois-Poncet.............. Chairman of the Supervisory Board of Paribas (1990 -
Present)
Serge Tchuruk....................... Chairman and Chief Executive Officer of Alcatel
(1995 - Present), Chairman and Chief Executive
Officer of Total (1990 - 1995)
Jean Syrota......................... Chairman and Chief Executive Officer of Compagnie
Generale Des Matieres Nucleaires (Cogema) (1988 -
Present)
Antoine Jeancourt-Galignani......... Chairman of Assurances Generales De France (1994 -
Present)
Lord Alexander of Weedon, Q.C. Chairman and Chief Executive Officer of Natwest
Group (1989 - Present)
Professor Bertrand Jacquillat....... Co-founder and Chairman and Chief Executive
Officer of Associes En Finance (1991 - Present)
Daniel Bouton....................... Chairman and Chief Executive Officer of Societe
Generale (1997 - Present), Chief Executive Officer of
Societe Generale (1993 - 1997)
Bruno Ribeyron-Montmartin........... Secretary of Total Outre-mer (Before 1994 - Present)
Didier Houssin...................... Representing the French State (Before 1994 - Present)
Director of Hydrocarbon Department
Ministry of Economy, Finance and Industry
Junior Minister's Office of Industry
Baron Frere......................... Chairman and Managing Director of Bruxelles
Lambert S.a. (Before 1994 - Present)
Thierry De Rudder................... Managing Director of Groupe Bruxelles Lambert S.a.
(Before 1994 - Present)
Honorable Paul Desmarais............ Chief Executive Officer of Power Corporation of
Canada (Before 1994 - Present)
</TABLE>
(e)-(f) During the last five years, to the best knowledge of Total,
neither it nor any of the persons listed above has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgement, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
(g) Each individual noted above under item 2(d) is a citizen of France
except for Lord Alexander of Weedon, who is a citizen of the United Kingdom,
Baron Frere and Thierry De Rudder, who are citizens of Belgium and Honorable
Paul Desmarais, who is a citizen of Canada.
Page 4 of 8
<PAGE> 5
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
This information is set forth under "The Transaction -- The Background of
the Transaction", "-- The Belgian Exchange Offer", "Total Fina Group Following
the Exchange Offer -- PetroFina Corporate Structure and Management", "The
Contribution Transaction" and "Management -- Board of Directors of Total Fina
S.A." in the Prospectus, is herein incorporated by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) Total is offering to exchange a maximum of 1,546,875 shares of
Total which may be held either directly or in the form of American depositary
shares, and 3,598,975 warrants of Total, for, respectively, 343,750 shares of
PetroFina which are held either directly or in the form of PetroFina American
depositary shares, and 4,443,179 warrants of PetroFina, in the U.S. exchange
offer as described under "Terms and Conditions of the Exchange Offer -- Terms of
the Exchange Offer", "-- Fractional Shares, American depositary shares and
Warrants" and "-- VVPR-Strip" in the Prospectus which is incorporated herein by
reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) The information set forth under "The Transaction -- The Background of
the Transaction", "-- The Reasons for the Transaction", "The Contribution
Transaction", "Possible Future Results of Total Fina Group" in the Prospectus,
is herein incorporated by reference.
(b) The information set forth under "Total Fina Group following the
Exchange Offer -- Implementation of the Synergies", "-- Total Fina Group Asset
Disposals" in the Prospectus, is incorporated herein by reference.
(c) The information set forth under "Total Fina Group Following the
Exchange Offer -- PetroFina Corporate Structure and Management" in the
Prospectus, is herein incorporated by reference.
(d) The information is set forth under "Total Fina Group Following the
Exchange Offer -- Dividend Policy" in the Prospectus is herein incorporated by
reference.
(e) The information is set forth under "Total Fina Group Following the
Exchange Offer -- PetroFina Corporate Structure and Management in the Prospectus
is herein incorporated by reference.
(f)-(g) The information is set forth under "Total Fina Group Following the
Exchange Offer -- Delisting of PetroFina American Depositary Shares and
Warrants" and "Effect of Offer on Market for Shares" in the Prospectus is herein
incorporated by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Other than as described under "The Transaction -- Opinions on the
Exchange Offer -- Opinion of PetroFina Board of Directors", "The Contribution
Transaction -- The Contribution Agreement" in the Prospectus, which is
incorporated herein by reference, neither Total nor, to the best of Total's
knowledge, any of the persons named in Item 2 of this schedule and no associate
and majority-owned subsidiary of such persons own any securities of PetroFina.
Page 5 of 8
<PAGE> 6
(b) To Total's best knowledge, no transaction in securities of PetroFina
have been effected during the past 60 days by Total, and to Total's best
knowledge, by the persons named in Item 2 or by any executive officer, director
or subsidiary of such persons.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "The Contribution Transaction -- Resale of
Shares" and "-- Standstill Undertaking" in the Prospectus is herein incorporated
by reference. Except as disclosed above and under Item 3, there are no
contracts, arrangements, understandings, or relationships between Total or any
of the persons required to be named in Item 2 of this schedule and any person
with respect to any securities of PetroFina.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No person and class of persons have been employed, retained or are to be
compensated by Total or by any person on Total's behalf to make solicitations or
recommendation in connection with the exchange offer.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under Item 18 "Financial Statements" on page 56,
and Item 19 "Financial Statements and Exhibits -- Financial Statements" on page
56 of the Amendment No. 1 to Form 20-F filed with the Securities and Exchange
Commission under file number 1-10888 ("Form 20-F") is incorporated herein by
reference for the purpose of this Schedule 14D-1. Copies of the Total Form 20-F
may be obtained through the Securities and Exchange Commission or by requesting
them in writing or by telephone at the following address: MacKenzie Partners,
Inc., 156 Fifth Avenue, New York, New York 10010, telephone (212) 929-5500
(collect), or (1-800) 322-2885 (toll free).
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b)-(c) The information set forth under "Regulatory Matters -- United
States Antitrust", "-- European Union", and "-- Other Laws" in the Prospectus is
incorporated herein by reference.
(d) Not applicable.
(e) There are no pending legal proceedings relating to the U.S. offer.
(f) The information set forth in the Prospectus, the Letters of
Transmittal, the Form of Acceptance, the Certificated Share Delivery Instruction
Form, and the Notice of Guaranteed Delivery, copies of which are attached as
Exhibits (a)(1), (a)(2), (a)(3), (a)(4) and (a)(5), respectively is incorporated
herein by reference in its entirety.
Page 6 of 8
<PAGE> 7
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Prospectus, dated May 6, 1999.*
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.
(a)(3) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.
(a)(4) Certificated Share Delivery Instruction Form.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(7) Press Release dated May 5, 1999.
(b) None.
(c) None.
(d)(1) Legal opinion of Jones, Day, Reavis & Pogue relating to certain
U.S., Belgian and French tax matters.*
(e)(1) See Exhibit (a)(1) above.
(e)(2) Items 18 and 19 of the Total Form 20-F for 1998, found on page
57 of such document and pages F-1 to F-71 to S-2 referenced
herein.
(f) None.
- ---------------------------
* Filed as part of Amendment No. 1 to Total's Form F-4 Registration Statement
filed with the Commission on May 6, 1999 (Reg. No. 333-10154).
Page 7 of 8
<PAGE> 8
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete, and correct.
/s/ Charles de Bollardiere
---------------------------------------
(Signature)
Charles de Bollardiere
Treasurer
May 6, 1999
Page 8 of 8
<PAGE> 1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt about the exchange offer or about the action you should take,
you are recommended to seek your own personal financial advice immediately from
an appropriately authorized independent professional advisor.
If you have sold or otherwise transferred all your registered holdings of
PetroFina ADSs, please pass this document and the accompanying Prospectus dated
May 6, 1999 (the "Prospectus"), as soon as possible to the purchaser or
transferee, or to the stockbroker, bank or other agent through whom the sale or
transfer was effected, for delivery to the purchaser or transferee. However, the
exchange offer is not being made directly or indirectly in Canada, or any
jurisdiction where prohibited by applicable law and such documents should not be
distributed, forwarded or transmitted into or from Canada, or any jurisdiction
where prohibited by applicable law by any means whatsoever including without
limitation mail, facsimile, transmission, telex or telephone.
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LETTER OF TRANSMITTAL
TO ACCEPT THE OFFER TO EXCHANGE 10 AMERICAN DEPOSITARY SHARES OF PETROFINA
EACH REPRESENTING ONE TENTH OF ONE SHARE OF PETROFINA, WITHOUT NOMINAL VALUE,
FOR 9 AMERICAN DEPOSITARY SHARES OF TOTAL, EACH REPRESENTING
ONE HALF OF ONE SHARE OF TOTAL, NOMINAL VALUE FRF 50 EACH.
TOTAL
THERE WILL BE AN INITIAL OFFER PERIOD WHICH WILL EXPIRE AT 10:00 A.M. (NEW YORK
CITY TIME), ON FRIDAY, JUNE 4, 1999, UNLESS EXTENDED. AT THE CONCLUSION OF THE
INITIAL OFFER PERIOD, INCLUDING ANY EXTENSION THEREOF, ALL PETROFINA SECURITIES
VALIDLY TENDERED AND NOT WITHDRAWN WILL BE PURCHASED. HOLDERS OF PETROFINA ADSS
WILL HAVE WITHDRAWAL RIGHTS DURING THE EXCHANGE OFFER PERIOD TO WHICH THEY
TENDERED, BUT NOT DURING ANY OTHER EXCHANGE OFFER PERIOD.
The US Exchange Agent for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
(For Eligible Institutions
Tender & Exchange Department Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station For Confirmation Telephone: Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
<TABLE>
<C> <S> <C> <C>
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DESCRIPTION OF PETROFINA ADSs TENDERED
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NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) OF PETROFINA ADSs (PLEASE FILL
IN, IF BLANK, EXACTLY PETROFINA ADS CERTIFICATE(S) AND
AS NAME(S) APPEAR(S) ON ADS PETROFINA ADSs TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
PETROFINA PETROFINA ADSs NUMBER OF
ADS CERTIFICATE EVIDENCED BY SHARE PETROFINA ADSs
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total PetroFina ADSs.........................
- --------------------------------------------------------------------------------------------------------------
* Need not be completed by holders delivering PetroFina ADSs by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all PetroFina ADSs evidenced by each
ADS Certificate delivered to the US Exchange Agent are being tendered hereby. See Instruction 4.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE CHECKING ANY BOX
BELOW
ACCEPTANCE OF THE EXCHANGE OFFER IN RESPECT OF PETROFINA SHARES (EXCEPT INSOFAR
AS THEY ARE REPRESENTED BY PETROFINA ADSs EVIDENCED BY PETROFINA ADRs) CANNOT BE
MADE BY MEANS OF THIS LETTER OF TRANSMITTAL. If you hold PetroFina Shares that
are not represented by PetroFina ADSs, you may obtain a Certificated Share
Delivery Instructions Form (the "Instruction Form") from Mackenzie Partners Inc.
as the Information Agent. See Instruction 12 of this Letter of Transmittal.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the Prospectus
and this Letter of Transmittal may be directed to MacKenzie Partners, Inc. as
the Information Agent at its address and telephone number indicated below.
Delivery of a Letter of Transmittal, PetroFina ADRs evidencing PetroFina
ADSs (or book-entry transfer of such PetroFina ADSs evidenced by PetroFina ADRs)
and any other required documents to the US Depositary by PetroFina ADS holders
will be deemed an acceptance of the exchange offer by such holder with respect
to such PetroFina ADSs evidenced by PetroFina ADRs subject to the terms and
conditions set out in the Prospectus and this Letter of Transmittal.
If delivery of PetroFina ADSs is to be made by book-entry transfer to an
account maintained by the US Exchange Agent at The Depository Trust Company
pursuant to the procedures for book-entry transfer set forth in "Terms and
Conditions of the Exchange Offer -- Book-Entry Transfer" in the Prospectus, then
either this Letter of Transmittal or an Agent's Message (as defined below)
should be used.
The term "Agent's Message" means a message, transmitted by The Depository
Trust Company and received by the US Exchange Agent and forming a part of a
Book-Entry Confirmation, which states that The Depository Trust Company has
received an express acknowledgment from the participant in The Depository Trust
Company tendering the PetroFina ADSs which are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal.
[ ] CHECK HERE IF TENDERED PETROFINA ADSs ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE US EXCHANGE AGENT AT THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN
THE DEPOSITORY TRUST COMPANY MAY DELIVER PETROFINA ADSs EVIDENCED BY
PETROFINA ADRs BY BOOK-ENTRY TRANSFER):
2
<PAGE> 3
Name of Tendering Institution:
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DTC Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
Occupation:
----------------------------------------------------------------------------
If a holder of PetroFina ADSs wishes to accept the exchange offer and
PetroFina ADRs evidencing such PetroFina ADSs are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis, or
if time will not permit all required documents to reach the US Exchange Agent
prior to the expiration of the Initial Offer Period or any Subsequent Offer
Period, as the case may be, such holder's acceptance of the exchange offer may
nevertheless be effected using the guaranteed delivery procedure set out under
"Terms and Conditions of the Exchange Offer -- Guaranteed Delivery Procedures"
in the Prospectus. See Instruction 2 of this Letter of Transmittal. HOWEVER,
RECEIPT OF A NOTICE OF GUARANTEED DELIVERY WILL NOT BE TREATED AS A VALID
ACCEPTANCE FOR THE PURPOSE OF SATISFYING THE ACCEPTANCE CONDITION, UNLESS
PETROFINA ADRs EVIDENCING PETROFINA ADSs REFERRED TO IN THE NOTICE OF GUARANTEED
DELIVERY ARE RECEIVED BY THE US EXCHANGE AGENT PRIOR TO THE EXPIRATION OF THE
GUARANTEE PERIOD.
[ ] CHECK HERE IF THE ADRs REPRESENTING TENDERED PETROFINA ADSs ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO
THE US EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------
Window Ticket No. (if any):
----------------------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
---------------------------------------------------------------
For ADSs delivered by Book-Entry Transfer, complete the following:
DTC Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] I hereby waive the right to receive the cash net proceeds from the sale of
the VVPR-Strips.
3
<PAGE> 4
Ladies and Gentlemen:
The undersigned acknowledges that such person has received and reviewed the
Prospectus, dated May 6, 1999 (the "Prospectus"), of Total, a societe anonyme
organized under the laws of the Republic of France ("Total"), and this Letter of
Transmittal, which together with any amendments or supplements hereto or thereto
constitute the offer of Total (collectively, the "Exchange Offer") to exchange
PetroFina securities for Total securities. Unless otherwise defined in this
Letter of Transmittal, capitalized terms used herein have the meaning set forth
in the Prospectus.
The undersigned hereby instructs the US Exchange Agent to accept the
exchange offer on behalf of the undersigned with respect to the PetroFina ADSs
evidenced by PetroFina ADRs (which expression in this Letter of Transmittal
shall, except where the context otherwise requires, be deemed to include,
without limitation, the PetroFina shares represented thereby) specified in the
box entitled "Description of PetroFina ADSs Tendered," subject to the terms and
conditions of the exchange offer, by informing Total in writing that the
exchange offer has been so accepted. The undersigned hereby acknowledges that
delivery of this Letter of Transmittal, the PetroFina ADRs evidencing tendered
PetroFina ADSs (or book-entry transfer of such PetroFina ADSs evidenced by
PetroFina ADRs) and any other required documents to the US Exchange Agent by a
holder of PetroFina ADSs will be deemed (without any further action by the US
Exchange Agent) to constitute acceptance of the exchange offer by such holder in
respect of such holder's PetroFina ADSs, subject to the terms and conditions of
the exchange offer.
The undersigned understands that acceptance of the exchange offer by the
undersigned pursuant to the procedures described herein and in the instructions
hereto, subject to the withdrawal rights described in the Prospectus, will
constitute a binding agreement between the undersigned and Total upon the terms
and subject to the conditions of the exchange offer. IF ACCEPTANCE HAS BEEN MADE
IN RESPECT OF THE PETROFINA ADSs, THEN A SEPARATE ACCEPTANCE IN RESPECT OF THE
PETROFINA SHARES REPRESENTED BY SUCH PETROFINA ADSs MAY NOT BE MADE.
The undersigned hereby delivers to the US Exchange Agent the
above-described PetroFina ADSs evidenced by PetroFina ADRs for which the
exchange offer is being accepted, in accordance with the terms and conditions of
the exchange offer, receipt of which is hereby acknowledged.
Upon the terms of the exchange offer (including, if the exchange offer is
revised, varied, extended or renewed, the terms or conditions of any such
revision, variation, extension, or renewal), and effective at the time that the
condition to the exchange offer has been satisfied, fulfilled or, where
permitted, waived (at which time Total will give notice thereof to the US
Exchange Agent), and if he or she has not validly withdrawn his or her
acceptance, the undersigned hereby sells, assigns and transfers to, or upon the
order of, Total all right, title and interest in and to all PetroFina ADSs
evidenced by PetroFina ADRs with respect to which the exchange offer is being
accepted (and any and all PetroFina ADSs or other securities or rights issuable
in respect of such PetroFina ADSs) and irrevocably constitutes and appoints the
US Exchange Agent the true and lawful agent and attorney-in-fact of the
undersigned with respect to such PetroFina ADSs (and any such other PetroFina
ADSs, securities or rights), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver PetroFina ADSs for such PetroFina ADSs (and any such other PetroFina
ADSs, securities or rights), or accept transfer of ownership of such PetroFina
ADSs (and any such other PetroFina ADSs, securities or rights) on the account
books maintained by The Depository Trust Company together, in any such case,
with all accompanying evidences of transfer and authenticity, to, or upon the
order of, Total, and (b) receive all benefits and otherwise exercise all rights
of beneficial ownership of such PetroFina ADSs (and any such other PetroFina
ADSs, securities or rights), all in accordance with the terms of the exchange
offer.
The undersigned hereby represents and warrants that the undersigned has
full power of authority to accept the exchange offer and to tender, exchange,
sell, assign and transfer the PetroFina ADSs evidenced by PetroFina ADRs (and
the PetroFina shares represented by such PetroFina ADSs) in respect of which the
exchange offer is being accepted or deemed to be accepted (and any and all other
PetroFina ADSs, securities or rights issued or issuable in respect of such
PetroFina ADSs) and Total will acquire good title thereto, free from all liens,
equities, charges, encumbrances and other interests and together with all rights
now or hereafter
4
<PAGE> 5
attaching thereto, including, without limitation, the right to receive and
retain all dividends, interest and other distributions hereafter declared, with
respect to the PetroFina Shares represented by the PetroFina ADSs. The
undersigned will, upon request, execute any additional documents deemed by the
US Exchange Agent or Total to be necessary or desirable to complete the sale,
assignment and transfer of the PetroFina ADSs evidenced by PetroFina ADRs in
respect of which the exchange offer is being accepted (and any and all other
PetroFina ADSs, securities or rights).
The undersigned irrevocably undertakes, represents, and warrants to and
agrees with Total (so as to bind him or her, his or her personal
representatives, heirs, successors and assigns) to the effect that the
undersigned: (i) has not received or sent copies of the Prospectus or any
related documents in, into or from Canada, or any jurisdiction into which the
sending of such documents is prohibited by applicable law, and has not otherwise
utilized in connection with the exchange offer, directly or indirectly, the
Canadian, or the mails or any means or instrumentality (including, without
limitation, facsimile transmission, telex, and telephone) of interstate or
foreign commerce, or any facilities of a national securities exchange, of
Canada, or any jurisdiction into which the sending of such documents is
prohibited by applicable law, (ii) is accepting the exchange offer from outside
Canada, or any jurisdiction into which the sending of such documents is
prohibited by applicable law, and (iii) is not an agent or fiduciary acting on a
nondiscretionary basis for a principal, unless such agent or fiduciary is an
authorized employee of such principal or such principal has given any
instructions with respect to the exchange offer from outside Canada, or any
jurisdiction into which the sending of such documents is prohibited by
applicable law.
All authority herein conferred or agreed to be conferred pursuant to this
Letter of Transmittal shall be binding upon the successors, assigns, heirs,
executors, administrators and legal representatives of the undersigned and shall
not be affected by, and shall survive, the death or incapacity of the
undersigned. Except as stated in the Prospectus, this acceptance is irrevocable.
Unless otherwise instructed under "Special Issuance Instructions" below,
the undersigned hereby instructs the US Exchange Agent to register the Total
ADSs to which the undersigned is entitled in the name(s) of the holder(s) shown
above under "Description of PetroFina ADSs Tendered." Unless otherwise
instructed under "Special Delivery Instructions" below, the undersigned hereby
instructs the US Exchange Agent to return, or cause to be returned, any
PetroFina ADRs evidencing PetroFina ADSs in respect of which the exchange offer
is not being accepted or which are not exchanged (and accompanying documents, as
appropriate) and/or deliver the certificates representing the Total ADSs to be
delivered to the undersigned pursuant to the exchange offer to the address(es)
of the registered holder(s) appearing above under "Description of PetroFina ADSs
Tendered." In the case of a book-entry delivery of PetroFina ADSs evidenced by
PetroFina ADRs, the undersigned hereby instructs the US Exchange Agent to credit
the account maintained at The Depository Trust Company with any PetroFina ADSs
in respect of which the exchange offer is not being accepted or which are not
purchased. The undersigned recognizes that the US Exchange Agent will not
transfer any PetroFina ADSs which are not purchased pursuant to the exchange
offer from the name of the registered holder thereof to any other person.
SUBJECT TO THE TERMS OF THE PROSPECTUS, THIS LETTER OF TRANSMITTAL SHALL
NOT BE CONSIDERED COMPLETE AND VALID, AND DELIVERY OF TOTAL ADSs PURSUANT TO THE
EXCHANGE OFFER SHALL NOT BE MADE, UNTIL THE PETROFINA ADRs EVIDENCING THE
PETROFINA ADSs IN RESPECT OF WHICH THE EXCHANGE OFFER IS BEING ACCEPTED AND ALL
OTHER REQUIRED DOCUMENTATION HAVE BEEN RECEIVED BY THE US EXCHANGE AGENT AND THE
UNDERLYING SHARES HAVE BEEN RECEIVED BY THE CUSTODIAN AS PROVIDED IN THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL.
5
<PAGE> 6
SPECIAL ISSUANCE INSTRUCTIONS
REGARDING TOTAL ADSS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Total ADSs is to be registered in the name of
someone other than the undersigned.
Register Total ADS in the name of:
Name(s)
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(PLEASE PRINT)
Address
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(INCLUDE ZIP CODE)
Occupation
- ------------------------------------
- ------------------------------------------------
(Employer Identification or Social Security Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the certificates representing the Total ADSs or any
PetroFina ADSs not tendered or not accepted for exchange are to be sent to
someone other than the undersigned, or to the undersigned at an address other
than that shown in the box entitled "Description of PetroFina ADSs Tendered."
Mail:
[ ] Total ADS Certificate(s) to:
[ ] PetroFina ADS Certificate(s) to:
Name(s)
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(PLEASE PRINT)
Address
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------
(Employer Identification or Social Security Number)
[ ] CHECK HERE IF ANY OF THE PETROFINA ADRs REPRESENTING PETROFINA ADSs THAT
YOU OWN HAVE BEEN LOST, STOLEN OR DESTROYED AND SEE INSTRUCTION 11.
Number of PetroFina ADSs represented by the lost, stolen or destroyed PetroFina
ADSs:
- --------------------------------------------------------------------------------
6
<PAGE> 7
IMPORTANT
ALL TENDERING PETROFINA ADS HOLDERS PLEASE SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW OR,
IN THE CASE OF CERTAIN FOREIGN PERSONS, SUBSTITUTE FORM W-8 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- ------------------------------------ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
PetroFina ADRs evidencing PetroFina ADSs or on a security position listing or by
person(s) authorized to become registered holder(s) by endorsements, stock
powers and other documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- --------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY ELIGIBLE INSTITUTIONS ONLY,
PLACE MEDALLION GUARANTEE IN SPACE BELOW
Signature(s) Guaranteed by an Eligible Institution:
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Dated:
- ------------------------------------ , 1999
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on the
Letter of Transmittal if (a) the Letter of Transmittal is signed by the
registered holder(s) of the PetroFina ADSs evidenced by PetroFina ADRs in
respect of which the exchange offer is being accepted herewith and such
holder(s) have not completed the box entitled " Special Delivery Instructions"
or the box entitled "Special Issuance Instructions" on this Letter of
Transmittal or (b) the exchange offer is being accepted in respect of such
PetroFina ADSs for the account of an Eligible Institution. In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the Signature Guarantee Program, or the Stock Exchange
Medallion Program (an "Eligible Institution"). See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND ADSS. This Letter of Transmittal
is to be completed if PetroFina ADRs evidencing PetroFina ADSs are to be
forwarded herewith. PetroFina ADRs evidencing PetroFina ADSs or confirmation of
a book-entry transfer of such PetroFina ADSs into the US Exchange Agent's
account at The Depository Trust Company, as well as a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be delivered to the US Exchange Agent at one of its addresses
set forth herein.
PetroFina ADS holders whose PetroFina ADRs are not immediately available or
who cannot deliver their PetroFina ADRs and all other required documents to the
US Exchange Agent or complete the procedures for book-entry transfer prior to
the expiration of the Initial Offer Period or any Subsequent Offer Period, as
the case may be, may accept the exchange offer with respect to their PetroFina
ADSs by properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedures set out in "Terms and Conditions
of the Exchange Offer -- Guaranteed Delivery Procedures" in the Prospectus,
Pursuant to the guaranteed delivery procedures: (a) acceptance must be made by
or through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery substantially in the form provided by Total must
be received by the US Exchange Agent prior to the expiration of the Initial
Offer Period or any Subsequent Offer Period, as the case may be; and (c) the
PetroFina ADRs evidencing the PetroFina ADSs in respect of which the exchange
offer is being accepted (or, in the case of PetroFina ADSs held in book-entry
form, timely confirmation of the book-entry transfer of such PetroFina ADSs into
the US Exchange Agent's account at The Depository Trust Company as described in
the Prospectus), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees (or in
the case of a book-entry transfer, an Agent's Message), and any other documents
required by this Letter of Transmittal, are received by the US Exchange Agent
within three NYSE trading days after the date of execution of such Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF PETROFINA ADSs EVIDENCED BY PETROFINA ADRs AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE HOLDERS OF
PETROFINA ADSs ACCEPTING THE EXCHANGE OFFER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent acceptance will be accepted and
no fractional PetroFina ADSs will be accepted. All accepting PetroFina ADS
holders, by execution of this Letter of Transmittal (or facsimile thereof),
waive any right to receive any notice of the acceptance of their PetroFina ADSs
for payment.
8
<PAGE> 9
3. INADEQUATE SPACE. If the space provided herein is inadequate, the series
numbers of the certificates and/or the number of PetroFina ADSs should be listed
on a separate schedule attached hereto.
4. PARTIAL ACCEPTANCES (NOT APPLICABLE TO BOOK-ENTRY TRANSFERS). If the
exchange offer is to be accepted in respect of less than all of the PetroFina
ADSs evidenced by any PetroFina ADRs delivered to the US Exchange Agent
herewith, fill in the number of PetroFina ADSs in respect of which the exchange
offer is being accepted in the box entitled "Number of PetroFina ADSs Tendered."
In such case, a new PetroFina ADR for the remainder of the PetroFina ADSs (in
respect of which the exchange offer is not being accepted) represented by the
old PetroFina ADR will be sent to the registered holders as promptly as
practicable following the date on which the PetroFina ADSs in respect of which
the exchange offer has been accepted are purchased.
The exchange offer will be deemed to have been accepted in respect of all
PetroFina ADSs evidenced by PetroFina ADRs delivered to the US Exchange Agent
unless otherwise indicated. In the case of partial acceptances, PetroFina ADSs
in respect of which the exchange offer was not accepted will not be reissued to
a person other than the registered holder.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the
PetroFina ADSs in respect of which the exchange offer is being accepted hereby,
the signature(s) must correspond with the name(s) as written on the face of the
certificates without any change whatsoever.
If any of the PetroFina ADSs evidenced by PetroFina ADRs in respect of
which the exchange offer is being accepted hereby are owned of record by two or
more owners, all such owners must sign this Letter of Transmittal.
If any of the PetroFina ADSs in respect of which the exchange offer is
being accepted are registered in different names on different PetroFina ADRs, it
will be necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of PetroFina ADRs.
If this Letter of Transmittal or any PetroFina ADRs or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to Total of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the PetroFina ADSs listed and transmitted hereby, no endorsements of
certificates or separate stock powers are required. Signatures on such PetroFina
ADRs or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the PetroFina ADSs listed, the PetroFina ADRs must be
endorsed or accompanied by appropriate stock powers signed exactly as the
name(s) of the registered holder(s) appear(s) on the PetroFina ADRs evidencing
such PetroFina ADSs. Signatures on such PetroFina ADRs or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Total will pay or cause to be paid any stock
transfer taxes with respect to the transfer and sale to it or its order of
PetroFina ADSs evidenced by PetroFina ADRs pursuant to the exchange offer. If,
however, delivery of any of the consideration payable pursuant to the exchange
offer is to be made to any persons other than the registered holder(s), or if
PetroFina ADSs in respect of which the exchange offer is being accepted are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holders(s) or such person(s)) payable on account of the
transfer to such person will be deducted from the purchase price (or new Total
Stock will be withheld) unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the PetroFina ADRs listed in this Letter of
Transmittal.
9
<PAGE> 10
7. SPECIAL DELIVERY INSTRUCTIONS. If any PetroFina ADRs evidencing
PetroFina ADSs in respect of which the exchange offer is not being accepted or
which are not purchased are to be returned to a person other than the signer of
this Letter of Transmittal or to an address other than that shown in the box
entitled "Description of PetroFina ADSs Tendered" on the first page of this
Letter of Transmittal, or the new Total Stock is to be registered in the name of
a person other than the signer of this Letter of Transmittal, the boxes labeled
"Special Delivery Instructions" and/or "Special Issuance Instructions" on this
Letter of Transmittal should be completed.
8. WAIVER OF CONDITIONS. Total reserves the absolute right in its sole
discretion to waive the condition of the exchange offer, in whole or in part, to
the extent permitted by applicable law.
9. IMPORTANT TAX INFORMATION; SUBSTITUTE FORM W-9 AND SUBSTITUTE FORM
W-8. Under United States federal income tax law, a holder whose tendered
PetroFina ADSs are accepted for exchange must provide the US Exchange Agent (as
payor) with (i) such holder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 below or (ii) in the case of certain exempt foreign persons,
the Substitute Form W-8 below. If the US Exchange Agent is not provided with the
correct TIN or an adequate basis for exemption, the holder may be subject to a
$50 penalty imposed by the Internal Revenue Service (the "IRS") in addition to
backup withholding in an amount equal to 31% of the gross proceeds resulting
from the exchange offer.
Certain holders (including, among others, all corporations and certain
foreign individuals) are exempt from these backup withholding requirements.
Certain foreign persons can qualify for this exemption by submitting a Form W-8
or Substitute Form W-8 below, signed under penalties of perjury and attesting to
such person's exempt status.
If backup withholding applies, the US Exchange Agent is required to
withhold 31% of the gross proceeds payable to a stockholder or other payee
pursuant to the exchange offer. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in overpayment of
taxes, a refund may be obtained from the IRS.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Box 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding. Even if the
box in Part 2 is checked and the Certificate of Awaiting Taxpayer Identification
Number is completed, the US Exchange Agent will withhold 31% of all reportable
payments made prior to the time a properly certified TIN is provided to the US
Exchange Agent. Such amounts will be refunded to such holder if a properly
certified TIN is provided to the US Exchange Agent within 60 days.
If the ADR(s) representing PetroFina ADSs are in more than one name or are
not in the name of the actual owner, consult the enclosed guidelines for
information on which TIN to report.
Holders of PetroFina ADSs who acquired shares at different times may have
different tax bases in their PetroFina ADSs and may wish to consult with their
own tax advisors as to the possibility of identifying the specific PetroFina
ADSs surrendered in the exchange offer in order to establish the basis of the
Total Shares received in exchange therefor.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
THEREOF) TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE US EXCHANGE AGENT, OR A
NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE US EXCHANGE AGENT, PRIOR
TO THE EXCHANGE OFFER EXPIRATION DATE. STOCKHOLDERS ARE ENCOURAGED TO RETURN A
COMPLETED SUBSTITUTE FORM W-9 OR SUBSTITUTE FORM W-8 WITH THEIR LETTER OF
TRANSMITTAL.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed
10
<PAGE> 11
Delivery and the Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 and Substitute Form W-8 may be directed to the
Information Agent at the address and telephone number set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any PetroFina ADR evidencing
PetroFina ADSs has been lost, destroyed or stolen, the holder thereof should
promptly notify the US Exchange Agent by checking the box immediately following
the Special Issuance Instructions -- Special Delivery Instructions boxes and
indicating the number of PetroFina ADSs evidenced by such lost, destroyed or
stolen PetroFina ADRs. The holder thereof will then be instructed as to the
steps that must be taken in order to replace such PetroFina ADRs. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen PetroFina ADRs have been followed.
12. HOLDERS OF PETROFINA SHARES NOT REPRESENTED BY PETROFINA ADSS. Holders
of PetroFina shares have been sent a Certificated Share Delivery Instruction
Form with the Prospectus and may not accept the exchange offer in respect of
PetroFina shares pursuant to this Letter of Transmittal, except insofar as those
shares are represented by PetroFina ADSs. If any holder of PetroFina shares
which are not represented by PetroFina ADSs needs to obtain a copy of a
Certificated Share Delivery Instruction Form, such holder should contact
Mackenzie Partners, Inc., at the appropriate address and telephone number set
forth in the Prospectus.
13. FRACTIONAL ENTITLEMENTS. Fractional shares of Total securities will not
be issued to holders of PetroFina ADSs, but will be aggregated and sold in the
market and the net proceeds of the sale will be paid to such holders entitled
thereto.
11
<PAGE> 12
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION B)
PAYOR'S NAME THE BANK OF NEW YORK
<TABLE>
<S> <C> <C> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX NAME:
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING ADDRESS:
BELOW
TIN:
Social Security Number or
Employer Identification Number
DEPARTMENT OF THE
TREASURY PART 2 -- TIN APPLIED FOR [ ]
INTERNAL REVENUE
SERVICE
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
PAYOR'S REQUEST FOR (1) the number shown on this form is my correct Taxpayer Identification
TAXPAYER Number (or I am waiting for a number to be issued to me).
IDENTIFICATION (2) I am not subject to backup withholding either because: (a) I am exempt
NUMBER ("TIN") from backup withholding, or (b) I have not been notified by the Internal
AND Revenue Service (the "IRS") that I am subject to backup withholding as a
CERTIFICATION result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE DATE _____________________
You must cross out item (2) of the above certification if you have been notified by the IRS that you
are subject to backup withholding because of underreporting of interest or dividends on your tax
refund and you have not been notified by the IRS that you are no longer subject to backup withholding.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
----------------------------------------- ------------------------------
Signature Date
- --------------------------------------------------------------------------------
FOR ASSISTANCE IN COMPLETING THE SUBSTITUTE FORM W-9 PLEASE REVIEW THE ENCLOSED
"GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9."
12
<PAGE> 13
CERTIFICATE OF FOREIGN STATUS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
------------------------------------------------------
SUBSTITUTE NAME OF OWNER
------------------------------------------------------
FORM W-8 U.S. TAXPAYER I.D. NUMBER (if any)
------------------------------------------------------
DEPARTMENT OF THE TREASURY, PERMANENT ADDRESS (See enclosed Guidelines)
INTERNAL REVENUE SERVICE ------------------------------------------------------
CURRENT MAILING ADDRESS (if different from Permanent
CERTIFICATE OF FOREIGN STATUS Address)
------------------------------------------------------------
CERTIFICATION:
UNDER PENALTIES OF PERJURY, I CERTIFY THAT I AM AN EXEMPT
FOREIGN PERSON BECAUSE:
(1) I am a nonresident alien individual or a foreign
corporation, partnership, estate or trust;
(2) I am an individual who has not been, and plans not to
be, present in the United States for a total of 183 days
or more during the calendar year; and
(3) I am neither engaged, nor plan to be engaged during
the year, in a United States trade or business that has
effectively connected gains from transactions with a
broker or barter exchange.
----------------------------------- ---------------
Signature Date
- --------------------------------------------------------------------------------------------------
</TABLE>
FOR ASSISTANCE IN COMPLETING THE SUBSTITUTE FORM W-8 PLEASE REVIEW THE
"GUIDELINES FOR CERTIFICATION OF FOREIGN STATUS ON SUBSTITUTE FORM W-8 BELOW."
GUIDELINES FOR CERTIFICATION OF FOREIGN STATUS
ON SUBSTITUTE FORM W-8
PERMANENT ADDRESS:
<TABLE>
<S> <C>
If you are: Show the address of:
An individual Your permanent residence
A partnership or corporation Principal office
An estate or trust Permanent residence or principal office of
any fiduciary
</TABLE>
NONRESIDENT ALIEN INDIVIDUAL: For United States federal income tax purposes,
"nonresident alien individual" means an individual who is neither a United
States citizen nor resident. Generally, an alien is considered to be a United
States resident if:
The individual was a lawful permanent resident of the United States at
any time during the calendar year, that is the alien held an immigrant visa
(a "green card"), or
The individual was physically present in the United States on:
(1) at least 31 days during the calendar year, and
(2) 183 days or more during the current year and the two preceding
calendar years (counting all the days of physical presence in the current
year, one-third the number of days of presence in the first preceding
year, and one-sixth of the number of days in the second preceding year).
EXEMPT FOREIGN PERSON: If you do not meet the requirements of certification
number two or three above, you may instead certify on Internal Revenue Service
Form 1001, Ownership, Exemption, or Reduced Rate Certificate, that your country
has a tax treaty with the United States that exempts your transactions from
United States tax.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
13
<PAGE> 14
The Information Agent for the Exchange Offer is:
[MACKENZIE PARTNERS LOGO]
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Phone: (1-212) 929-5500 (call collect)
or call toll free: (1-800) 322-2885
<PAGE> 1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt about the exchange offer or about the action you should take,
you are recommended to seek your own personal financial advice immediately from
an appropriately authorized independent professional advisor.
If you have sold or otherwise transferred all your registered holdings of
PetroFina warrants, please pass this document and the accompanying Prospectus
dated May 6, 1999 (the "Prospectus"), as soon as possible to the purchaser or
transferee, or to the stockbroker, bank or other agent through whom the sale or
transfer was effected, for delivery to the purchaser or transferee. However, the
exchange offer is not being made directly or indirectly in Canada, or any
jurisdiction where prohibited by applicable law and such documents should not be
distributed, forwarded or transmitted into or from Canada, or any jurisdiction
where prohibited by applicable law by any means whatsoever including without
limitation mail, facsimile, transmission, telex or telephone.
- --------------------------------------------------------------------------------
LETTER OF TRANSMITTAL
TO ACCEPT THE OFFER TO EXCHANGE 100 WARRANTS OF PETROFINA FOR 81 WARRANTS OF
TOTAL.
BY
TOTAL
THERE WILL BE AN INITIAL OFFER PERIOD WHICH WILL EXPIRE AT 10:00 A.M. (NEW YORK
CITY TIME), ON FRIDAY, JUNE 4, 1999, UNLESS EXTENDED. AT THE CONCLUSION OF THE
INITIAL OFFER PERIOD, INCLUDING ANY EXTENSION THEREOF, ALL PETROFINA SECURITIES
VALIDLY TENDERED AND NOT WITHDRAWN WILL BE PURCHASED. HOLDERS OF PETROFINA
WARRANTS WILL HAVE WITHDRAWAL RIGHTS DURING THE EXCHANGE OFFER PERIOD TO WHICH
THEY TENDERED, BUT NOT DURING ANY OTHER EXCHANGE OFFER PERIOD.
The US Exchange Agent for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
(For Eligible Institutions
Tender & Exchange Department Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station For Confirmation Telephone: Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<C> <S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
DESCRIPTION OF PETROFINA WARRANTS TENDERED
- --------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) OF PETROFINA WARRANTS (PLEASE
FILL IN, IF BLANK, EXACTLY PETROFINA WARRANT CERTIFICATE(S) AND
AS NAME(S) APPEAR(S) ON WARRANT PETROFINA WARRANTS TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
PETROFINA PETROFINA WARRANTS NUMBER OF
WARRANT CERTIFICATE EVIDENCED BY PETROFINA WARRANTS
NUMBER(S) CERTIFICATE(S) TENDERED*
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total PetroFina Warrants.....................
- --------------------------------------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all PetroFina Warrants evidenced by each
Warrant Certificate delivered to the US Exchange Agent are being tendered hereby. See Instruction 4.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE CHECKING ANY BOX
BELOW
ACCEPTANCE OF THE EXCHANGE OFFER IN RESPECT OF PETROFINA SHARES CANNOT BE MADE
BY MEANS OF THIS LETTER OF TRANSMITTAL. If you hold PetroFina Shares you may
obtain a Certificated Share Delivery Instructions Form (the "Instruction Form")
from Mackenzie Partners. Inc., as the Information Agent. See Instruction 12 of
this Letter of Transmittal.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the Prospectus
and this Letter of Transmittal may be directed to the Information Agent at its
address and telephone number indicated below.
Delivery of a Letter of Transmittal, PetroFina Warrant certificates (or a
book-entry transfer of such Warrants) and any other required documents to the US
Exchange Agent by PetroFina Warrant holders will be deemed an acceptance of the
exchange offer by such holder with respect to such PetroFina Warrants subject to
the terms and conditions set out in the Prospectus and this Letter of
Transmittal.
If delivery of PetroFina warrants is to be made by book-entry transfer to
an account maintained by the US Exchange Agent at The Depository Trust Company
pursuant to the procedures for book-entry transfer set forth in "Terms and
Conditions of the Exchange Offer -- Book-Entry Transfer" in the Prospectus, then
either this Letter of Transmittal or an Agent's Message (as defined below)
should be used.
The term "Agent's Message" means a message, transmitted by The Depository
Trust Company and received by the US Exchange Agent and forming a part of a
Book-Entry Confirmation, which states that The Depository Trust Company has
received an express acknowledgment from the participant in The Depository Trust
Company tendering the PetroFina Warrants which are the subject of such
Book-Entry Confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal.
[ ] CHECK HERE IF TENDERED PETROFINA WARRANTS ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE US EXCHANGE AGENT AT THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN
THE DEPOSITORY TRUST COMPANY MAY DELIVER PETROFINA WARRANTS BY BOOK-ENTRY
TRANSFER):
Name of Tendering Institution:
-------------------------------------------------------------------------------
DTC Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
Occupation:
----------------------------------------------------------------------------
If a holder of PetroFina Warrants wishes to accept the exchange offer and
PetroFina Warrants are not immediately available or the procedures for
book-entry cannot be completed on a timely basis or if time will not permit all
required documents to reach the US Exchange Agent prior to the expiration of the
Initial Offer Period or any Subsequent Offer Period, as the case may be, such
holder's acceptance of the exchange offer may nevertheless be effected using the
guaranteed delivery procedure set out under "Terms and Conditions of the
Exchange Offer -- Guaranteed Delivery Procedures" in the Prospectus. See
Instruction 2 of this Letter of Transmittal. HOWEVER, RECEIPT OF A NOTICE OF
GUARANTEED DELIVERY WILL NOT BE TREATED AS A VALID ACCEPTANCE FOR THE PURPOSE OF
SATISFYING THE ACCEPTANCE CONDITION, UNLESS PETROFINA WARRANTS REFERRED TO IN
THE NOTICE OF GUARANTEED DELIVERY ARE RECEIVED BY THE US EXCHANGE AGENT PRIOR TO
THE EXPIRATION OF THE GUARANTEE PERIOD.
2
<PAGE> 3
[ ] CHECK HERE IF THE REPRESENTING TENDERED PETROFINA WARRANTS ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO
THE US EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------
Window Ticket No. (if any):
----------------------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
---------------------------------------------------------------
For Warrants delivered by Book-Entry Transfer, complete the following:
DTC Account Number:
- --------------------------------------------------------------------------------
Transaction Code Number:
- -------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
3
<PAGE> 4
Ladies and Gentlemen:
The undersigned acknowledges that such person has received and reviewed the
Prospectus, dated May 6, 1999 (the "Prospectus"), of Total, a societe anonyme
organized under the laws of the Republic of France ("Total"), and this Letter of
Transmittal, which together with any amendments or supplements hereto or thereto
constitute the offer of Total (collectively, the "Exchange Offer") to exchange
PetroFina securities for Total securities. Unless otherwise defined in this
Letter of Transmittal, capitalized terms used herein have the meaning set forth
in the Prospectus.
The undersigned hereby instructs the US Exchange Agent to accept the
exchange offer on behalf of the undersigned with respect to the PetroFina
Warrants specified in the box entitled "Description of PetroFina Warrants
Tendered," subject to the terms and conditions of the exchange offer, by
informing Total in writing that the exchange offer has been so accepted. The
undersigned hereby acknowledges that delivery of this Letter of Transmittal, the
tendered PetroFina Warrants (or book-entry transfer of such PetroFina Warrants)
and any other required documents to the US Exchange Agent by a holder of
PetroFina Warrants will be deemed (without any further action by the US Exchange
Agent to constitute acceptance of the exchange offer by such holder in respect
of such holder's PetroFina Warrants, subject to the terms and conditions of the
exchange offer.
The undersigned understands that acceptance of the exchange offer by the
undersigned pursuant to the procedures described herein and in the instructions
hereto, subject to the withdrawal rights described in the Prospectus, will
constitute a binding agreement between the undersigned and Total upon the terms
and subject to the conditions of the offer.
The undersigned hereby delivers to the US Exchange Agent the
above-described PetroFina Warrants for which the exchange offer is being
accepted, in accordance with the terms and conditions of the exchange offer,
receipt of which is hereby acknowledged.
Upon the terms of the exchange offer (including, if the offer is revised,
varied, extended or renewed, the terms or conditions of any such revision,
variation, extension, or renewal), and effective at the time that the condition
to the exchange offer has been satisfied, fulfilled or, where permitted, waived
(at which time Total will give notice thereof to the US Exchange Agent), and if
he or she has not validly withdrawn his or her acceptance, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Total all right,
title and interest in and to all PetroFina Warrants with respect to which the
exchange offer is being accepted (and any and all PetroFina Warrants or other
securities or rights issuable in respect of such PetroFina Warrants) and
irrevocably constitutes and appoints the US Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned with respect to such PetroFina
Warrants (and any such other PetroFina Warrants, securities or rights), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver such PetroFina
Warrants (and any such other PetroFina Warrants, securities or rights), or
accept transfer of ownership of such PetroFina Warrants (and any such other
PetroFina Warrants, securities or rights) on the account books maintained by The
Depository Trust Company together, in any such case, with all accompanying
evidences of transfer and authenticity, to, or upon the order of Total, and (b)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such PetroFina Warrants (and any such other PetroFina Warrants, securities or
rights), all in accordance with the terms of the exchange offer.
The undersigned hereby represents and warrants that the undersigned has
full power of authority to accept the exchange offer and to tender, exchange,
sell, assign and transfer the PetroFina Warrants in respect of which the
exchange offer is being accepted or deemed to be accepted (and any and all other
PetroFina Warrants, securities or rights issued or issuable in respect of such
PetroFina Warrants) and Total will acquire good title thereto, free from all
liens, equities, charges, encumbrances and other interests and together with all
rights now or hereafter attaching thereto. The undersigned will, upon request,
execute any additional documents deemed by the US Exchange Agent or Total to be
necessary or desirable to complete the sale, assignment and transfer of the
PetroFina Warrants in respect of which the exchange offer is being accepted (and
any and all other PetroFina Warrants, securities or rights).
4
<PAGE> 5
The undersigned irrevocably undertakes, represents, and warrants to and
agrees with Total (so as to bind him or her, his or her personal
representatives, heirs, successors and assigns) to the effect that the
undersigned: (i) has not received or sent copies of the Prospectus or any
Acceptance Form or any related documents in, into or from Canada, or any
jurisdiction into which the sending of such documents is prohibited by
applicable law, and has not otherwise utilized in connection with the exchange
offer, directly or indirectly, the Canadian, or the mails or any means or
instrumentality (including, without limitation, facsimile transmission, telex,
and telephone) of interstate or foreign commerce, or any facilities of a
national securities exchange, of Canada, or any jurisdiction into which the
sending of such documents is prohibited by applicable law, (ii) is accepting the
exchange offer from outside Canada, or any jurisdiction into which the sending
of such documents is prohibited by applicable law, and (iii) is not an agent or
fiduciary acting on a nondiscretionary basis for a principal, unless such agent
or fiduciary is an authorized employee of such principal or such principal has
given any instructions with respect to the exchange offer from outside Canada,
or any jurisdiction into which the sending of such documents is prohibited by
applicable law.
All authority herein conferred or agreed to be conferred pursuant to this
Letter of Transmittal shall be binding upon the successors, assigns, heirs,
executors, administrators and legal representatives of the undersigned and shall
not be affected by, and shall survive, the death or incapacity of the
undersigned. Except as stated in the Prospectus, this acceptance is irrevocable.
Unless otherwise instructed under "Special Issuance Instructions" below,
the undersigned hereby instructs the US Exchange Agent to register the Total
Warrants to which the undersigned is entitled in the name(s) of the holder(s)
shown above under "Description of PetroFina Warrants Tendered." Unless otherwise
instructed under "Special Delivery Instructions" below, the undersigned hereby
instructs the US Exchange Agent to return, or cause to be returned, any
PetroFina Warrants in respect of which the exchange offer is not being accepted
or which are not exchanged (and accompanying documents, as appropriate) and/or
deliver the certificates representing the Total Warrants to be delivered to the
undersigned pursuant to the exchange offer to the address(es) of the registered
holder(s) appearing above under "Description of PetroFina Warrants Tendered." In
the case of a book-entry delivery of PetroFina Warrants, the undersigned hereby
instructs the US Exchange Agent to credit the account maintained at The
Depository Trust Company with any PetroFina Warrants in respect of which the
exchange offer is not being accepted or which are not purchased. The undersigned
recognizes that the US Exchange Agent will not transfer any PetroFina Warrants
which are not purchased pursuant to the exchange offer from the name of the
registered holder thereof to any other person.
SUBJECT TO THE TERMS OF THE PROSPECTUS, THIS LETTER OF TRANSMITTAL SHALL
NOT BE CONSIDERED COMPLETE AND VALID, AND DELIVERY OF TOTAL WARRANTS PURSUANT TO
THE EXCHANGE OFFER SHALL NOT BE MADE, UNTIL THE PETROFINA WARRANTS IN RESPECT OF
WHICH THE EXCHANGE OFFER IS BEING ACCEPTED AND ALL OTHER REQUIRED DOCUMENTATION
HAVE BEEN RECEIVED BY THE US EXCHANGE AGENT AS PROVIDED IN THE PROSPECTUS AND
THIS LETTER OF TRANSMITTAL.
5
<PAGE> 6
SPECIAL ISSUANCE INSTRUCTIONS
REGARDING TOTAL WARRANTS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Total Warrants are to be registered in the name of
someone other than the undersigned.
Register Total Warrants in the name of:
Name(s)
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(PLEASE PRINT)
Address
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(INCLUDE ZIP CODE)
Occupation
- ------------------------------------
- ------------------------------------------------
(Employer Identification or Social Security Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the certificates representing the Total Warrant or
any PetroFina Warrants not tendered or not accepted for exchange are to be sent
to someone other than the undersigned, or to the undersigned at an address other
than that shown in the box entitled "Description of PetroFina Warrants
Tendered."
Mail:
[ ] Total Warrant Certificate(s) to:
[ ] PetroFina Warrant Certificate(s) to:
Name(s)
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(PLEASE PRINT)
Address
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------
(Employer Identification or Social Security Number)
[ ] CHECK HERE IF ANY OF THE PETROFINA WARRANTS THAT YOU OWN HAVE BEEN LOST,
STOLEN OR DESTROYED AND SEE INSTRUCTION 11.
Number of PetroFina Warrants represented by the lost, stolen or destroyed
PetroFina
Warrants:
- --------------------------------------------------------------------------------
6
<PAGE> 7
IMPORTANT
ALL TENDERING PETROFINA WARRANT HOLDERS PLEASE SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW OR,
IN THE CASE OF CERTAIN FOREIGN PERSONS, SUBSTITUTE FORM W-8 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- ------------------------------------ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
PetroFina Warrants or on a security position listing or by person(s) authorized
to become registered holder(s) by endorsements, stock powers and other documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- --------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY ELIGIBLE INSTITUTIONS ONLY,
PLACE MEDALLION GUARANTEE IN SPACE BELOW
Signature(s) Guaranteed by an Eligible Institution:
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Dated:
- ------------------------------------ , 1999
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on the
Letter of Transmittal if (a) the Letter of Transmittal is signed by the
registered holder(s) of the PetroFina Warrants in respect of which the exchange
offer is being accepted herewith and such holder(s) have not completed the box
entitled "Special Delivery Instructions" or the box entitled "Special Issuance
Instructions" on this Letter of Transmittal or (b) the exchange offer is being
accepted in respect of such PetroFina Warrants for the account of an Eligible
Institution. In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) which is a participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program, or the Stock Exchange Medallion Program
(an "Eligible Institution"). See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND WARRANTS. This Letter of
Transmittal is to be completed and PetroFina Warrants are to be forwarded
herewith with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be delivered to the
US Exchange Agent at one of its addresses set forth herein. PetroFina Warrants
or confirmation of a book-entry transfer of such PetroFina Warrants into the US
Exchange Agent's account at The Depository Trust Company, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required by this Letter
of Transmittal, must be delivered to the US Exchange Agent at one of its
addresses set forth herein.
PetroFina Warrant holders whose PetroFina Warrants are not immediately
available or who cannot deliver their PetroFina Warrants and all other required
documents to the US Exchange Agent or complete the procedures for book-entry
transfer prior to the expiration of the Initial Offer Period or any Subsequent
Offer Period, as the case may be, may accept the exchange offer with respect to
their PetroFina Warrants by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set out in
"Terms and Conditions of the Exchange Offer -- Guaranteed Delivery Procedures"
in the Prospectus. Pursuant to the guaranteed delivery procedures: (a)
acceptance must be made by or through an Eligible Institution; (b) a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by Total must be received by the US Exchange Agent prior to the
expiration of the Initial Offer Period or any Subsequent Offer Period, as the
case may be; and (c) the PetroFina Warrants in respect of which the exchange
offer is being accepted, (or, in the case of PetroFina Warrants held in
book-entry form, timely confirmation of the book-entry transfer of such
PetroFina Warrants into the US Exchange Agent's account at The Depository Trust
Company as described in the Prospectus), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or in the case of a book-entry transfer, an Agent's
Message), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees and
any other documents required by this Letter of Transmittal, are received by the
US Exchange Agent within three New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF PETROFINA WARRANTS AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE HOLDERS OF PETROFINA WARRANTS
ACCEPTING THE EXCHANGE OFFER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent acceptance will be accepted and
no fractional PetroFina Warrants will be accepted. All accepting PetroFina
Warrants holders, by execution of this Letter of
8
<PAGE> 9
Transmittal (or facsimile thereof), waive any right to receive any notice of the
acceptance of their PetroFina Warrants for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the series
numbers of the certificates and/or the number of PetroFina Warrants should be
listed on a separate schedule attached hereto.
4. PARTIAL ACCEPTANCES. If the exchange offer is to be accepted in respect
of less than all of the PetroFina Warrants delivered to the US Exchange Agent
herewith, fill in the number of PetroFina Warrants in respect of which the
exchange offer is being accepted in the box entitled "Number of PetroFina
Warrants Tendered." In such case, a new PetroFina Warrant for the remainder of
the PetroFina Warrants (in respect of which the exchange offer is not being
accepted) represented by the old PetroFina Warrant will be sent to the
registered holders as promptly as practicable following the date on which the
PetroFina Warrants in respect of which the exchange offer has been accepted are
purchased.
The exchange offer will be deemed to have been accepted in respect of all
PetroFina Warrants delivered to the US Exchange Agent unless otherwise
indicated. In the case of partial acceptances, PetroFina Warrants in respect of
which the exchange offer was not accepted will not be reissued to a person other
than the registered holder.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the
PetroFina Warrants in respect of which the exchange offer is being accepted
hereby, the signature(s) must correspond with the name(s) as written on the face
of the certificates without any change whatsoever.
If any of the PetroFina Warrants in respect of which the exchange offer is
being accepted hereby are owned of record by two or more owners, all such owners
must sign this Letter of Transmittal.
If any of the PetroFina Warrants in respect of which the exchange offer is
being accepted are registered in different names on different PetroFina
Warrants, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of PetroFina
Warrants.
If this Letter of Transmittal or any PetroFina Warrants or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to Total of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the PetroFina Warrants listed and transmitted hereby, no endorsements of
certificates are required. Signatures on such PetroFina Warrants or stock powers
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the PetroFina Warrants listed, the PetroFina Warrants
must be endorsed or accompanied by appropriate stock powers signed exactly as
the name(s) of the registered holder(s) appear(s) on the PetroFina Warrants.
Signatures on such PetroFina Warrant or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Total will pay or cause to be paid any stock
transfer taxes with respect to the transfer and sale to it or its order of
PetroFina Warrants pursuant to the exchange offer. If, however, delivery of any
of the consideration payable pursuant to the exchange offer is to be made to any
persons other than the registered holder(s), or if PetroFina Warrants in respect
of which the exchange offer is being accepted are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holders(s) or
such person(s)) payable on account of the transfer to such person will be
deducted from the purchase price (or new Total Warrants will be withheld) unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the PetroFina Warrants listed in this
Letter of Transmittal.
9
<PAGE> 10
7. SPECIAL DELIVERY INSTRUCTIONS. If any PetroFina Warrants in respect of
which the exchange offer is not being accepted or which are not purchased are to
be returned to a person other than the signer of this Letter of Transmittal or
to an address other than that shown in the box entitled "Description of
PetroFina Warrants Tendered" on the first page of this Letter of Transmittal,
should be completed.
8. WAIVER OF CONDITIONS. Total reserves the absolute right in its sole
discretion to waive any of the specified condition of the exchange offer, in
whole or in part, to the extent permitted by applicable law.
9. IMPORTANT TAX INFORMATION; SUBSTITUTE FORM W-9 AND SUBSTITUTE FORM
W-8. Under United States federal income tax law, a holder whose tendered
PetroFina Warrants are accepted for exchange must provide the US Exchange Agent
(as payor) with (i) such holder's correct Taxpayer Identification Number ("TIN")
on Substitute Form W-9 below or (ii) in the case of certain exempt foreign
persons, the Substitute Form W-8 below. If the US Exchange Agent is not provided
with the correct TIN or an adequate basis for exemption, the holder may be
subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS") in
addition to backup withholding in an amount equal to 31% of the gross proceeds
resulting from the exchange offer.
Certain holders (including, among others, all corporations and certain
foreign individuals) are exempt from these backup withholding requirements.
Certain foreign persons can qualify for this exemption by submitting a Form W-8
or Substitute Form W-8 below, signed under penalties of perjury and attesting to
such person's exempt status.
If backup withholding applies, the US Exchange Agent is required to
withhold 31% of the gross proceeds payable to a Warrant holder or other payee
pursuant to the exchange offer. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in overpayment of
taxes, a refund may be obtained from the IRS.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Box 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding. Even if the
box in Part 2 is checked and the Certificate of Awaiting Taxpayer Identification
Number is completed, the US Exchange Agent will withhold 31% of all reportable
payments made prior to the time a properly certified TIN is provided to the US
Exchange Agent. Such amounts will be refunded to such holder if a properly
certified TIN is provided to the US Exchange Agent within 60 days.
If the PetroFina Warrants are in more than one name or are not in the name
of the actual owner, consult the enclosed guidelines for information on which
TIN to report.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
THEREOF) TOGETHER WITH WARRANT CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE US EXCHANGE AGENT, OR A NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE US EXCHANGE AGENT, PRIOR TO THE OFFER EXPIRATION DATE.
WARRANT HOLDERS ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 OR
SUBSTITUTE FORM W-8 WITH THEIR LETTER OF TRANSMITTAL.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 and
Substitute Form W-8 may be directed to the Information Agent at the address and
telephone number set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any PetroFina Warrants have
been lost, destroyed or stolen, the holder thereof should promptly notify the US
Exchange Agent by checking the box immediately following the Special Issuance
Instructions -- Special Delivery Instructions boxes and indicating the number of
PetroFina Warrants lost, destroyed or stolen. The holder thereof will then be
instructed as to the steps that must be taken in order to replace such PetroFina
Warrants. This Letter of Transmittal and
10
<PAGE> 11
related documents cannot be processed until the procedures for replacing lost,
destroyed or stolen PetroFina Warrants have been followed.
12. HOLDERS OF PETROFINA SHARES. Holders of PetroFina shares [have been
sent a Certificated Share Delivery Instruction Form with the Prospectus] and may
not accept the exchange offer in respect of PetroFina shares pursuant to this
Letter of Transmittal. If any holder of PetroFina shares needs to obtain a copy
of a Certificated Share Delivery Instruction Form, such holder should contact
MacKenzie Partners, Inc., at the appropriate address and telephone number set
forth in the Prospectus.
13. FRACTIONAL ENTITLEMENTS. Fractional Total Warrants will not be issued
to holders of PetroFina Warrants, but will be aggregated and sold in the market
and the net proceeds of the sale will be paid to such holders entitled thereto.
11
<PAGE> 12
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION B)
PAYOR'S NAME THE BANK OF NEW YORK
<TABLE>
<S> <C> <C> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX NAME:
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING ADDRESS:
BELOW
TIN:
Social Security Number or
Employer Identification Number
DEPARTMENT OF THE
TREASURY PART 2 -- TIN APPLIED FOR [ ]
INTERNAL REVENUE
SERVICE
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
PAYOR'S REQUEST FOR (1) the number shown on this form is my correct Taxpayer Identification
TAXPAYER Number (or I am waiting for a number to be issued to me).
IDENTIFICATION (2) I am not subject to backup withholding either because: (a) I am exempt
NUMBER ("TIN") from backup withholding, or (b) I have not been notified by the Internal
AND Revenue Service (the "IRS") that I am subject to backup withholding as a
CERTIFICATION result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE _________________________________ DATE _____________________
You must cross out item (2) of the above certification if you have been notified by the IRS that you
are subject to backup withholding because of underreporting of interest or dividends on your tax
refund and you have not been notified by the IRS that you are no longer subject to backup withholding.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
----------------------------------------- ---------------------------
Signature Date
- --------------------------------------------------------------------------------
FOR ASSISTANCE IN COMPLETING THE SUBSTITUTE FORM W-9 PLEASE REVIEW THE ENCLOSED
"GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9."
12
<PAGE> 13
CERTIFICATE OF FOREIGN STATUS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
------------------------------------------------------
SUBSTITUTE NAME OF OWNER
------------------------------------------------------
FORM W-8 U.S. TAXPAYER I.D. NUMBER (if any)
------------------------------------------------------
DEPARTMENT OF THE TREASURY, PERMANENT ADDRESS (See enclosed Guidelines)
INTERNAL REVENUE SERVICE ------------------------------------------------------
CURRENT MAILING ADDRESS (if different from Permanent
CERTIFICATE OF FOREIGN STATUS Address)
------------------------------------------------------------
CERTIFICATION:
UNDER PENALTIES OF PERJURY, I CERTIFY THAT I AM AN EXEMPT
FOREIGN PERSON BECAUSE:
(1) I am a nonresident alien individual or a foreign
corporation, partnership, estate or trust;
(2) I am an individual who has not been, and plans not to
be, present in the United States for a total of 183 days
or more during the calendar year; and
(3) I am neither engaged, nor plan to be engaged during
the year, in a United States trade or business that has
effectively connected gains from transactions with a
broker or barter exchange.
------------------------------- ----------------
Signature Date
- --------------------------------------------------------------------------------------------------
</TABLE>
FOR ASSISTANCE IN COMPLETING THE SUBSTITUTE FORM W-8 PLEASE REVIEW THE
"GUIDELINES FOR CERTIFICATION OF FOREIGN STATUS ON SUBSTITUTE FORM W-8 BELOW."
GUIDELINES FOR CERTIFICATION OF FOREIGN STATUS
ON SUBSTITUTE FORM W-8
PERMANENT ADDRESS:
<TABLE>
<S> <C>
If you are: Show the address of:
An individual Your permanent residence
A partnership or corporation Principal office
An estate or trust Permanent residence or principal office of
any fiduciary
</TABLE>
NONRESIDENT ALIEN INDIVIDUAL: For United States federal income tax purposes,
"nonresident alien individual" means an individual who is neither a United
States citizen nor resident. Generally, an alien is considered to be a United
States resident if:
The individual was a lawful permanent resident of the United States at
any time during the calendar year, that is the alien held an immigrant visa
(a "green card"), or
The individual was physically present in the United States on:
(1) at least 31 days during the calendar year, and
(2) 183 days or more during the current year and the two preceding
calendar years (counting all the days of physical presence in the current
year, one-third the number of days of presence in the first preceding
year, and one-sixth of the number of days in the second preceding year).
EXEMPT FOREIGN PERSON: If you do not meet the requirements of certification
number two or three above, you may instead certify on Internal Revenue Service
Form 1001, Ownership, Exemption, or Reduced Rate Certificate, that your country
has a tax treaty with the United States that exempts your transactions from
United States tax.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
13
<PAGE> 14
The Information Agent for the Exchange Offer is:
[MACKENZIE PARTNERS LOGO]
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Phone: (1-212) 929-5500 (call collect)
or call toll free: (1-800) 322-2885
<PAGE> 1
BANQUE PARIBAS
Metier Titres France
Services aux Emetteurs
3 rue d'Antin
75078 PARIS CEDEX 02
FRANCE
Attention: 257 D Mr. Dominique SANCHEZ
CERTIFICATED SHARE
DELIVERY INSTRUCTION FORM
THE UNDERSIGNED ACKNOWLEDGES THAT SUCH PERSON HAS RECEIVED AND REVIEWED THE
PROSPECTUS, DATED MAY 6, 1999, OF TOTAL, A SOCIETE ANONYME ORGANIZED UNDER THE
LAWS OF THE REPUBLIC OF FRANCE, AND THIS CERTIFICATED SHARE DELIVERY INSTRUCTION
FORM, WHICH TOGETHER WITH ANY AMENDMENTS OR SUPPLEMENTS HERETO OR THERETO
CONSTITUTE THE OFFER OF TOTAL.
<TABLE>
<S> <C>
I the undersigned
Name (Please type or print in capital -----------------------------------------------------------
letters): (First Name) (Last Name)
Address (Please type or print in -----------------------------------------------------------
capital letters): (Street Address)
-----------------------------------------------------------
(City) (State) (Zip Code)
</TABLE>
hereby deliver to The Bank of New York ________ PETROFINA shares represented by
share certificates bearing numbers:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
for the purpose of tendering them into the exchange offer for TOTAL shares.
I request that my TOTAL shares:
[ ] be delivered in the form of share certificates and sent to the address
provided above.
[ ] be transferred to my account designated here:
<TABLE>
<S> <C>
Name of the Bank: -----------------------------------------------------------
Address of the Bank: -----------------------------------------------------------
Account No.: -----------------------------------------------------------
Date: Signature: Stamp of The Bank
of New York
</TABLE>
[ ] I hereby waive the right to receive VVPR-Strips.
[ ] I hereby elect to receive the VVPR-Strips and I request that they be
delivered to the address provided above.
<PAGE> 1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are
in any doubt about the exchange offer or the action you should take, you are
recommended to seek your own personal financial advice immediately from an
appropriately authorized independent financial advisor.
If you have sold or otherwise transferred all your registered holdings of
PetroFina ADSs and warrants, please pass this document and the accompanying
Prospectus dated May 6, 1999 (the Prospectus"), as soon as possible to the
purchaser or transferee, or to the stockbroker, bank or other agent through whom
the sale or transfer was effected, for delivery to the purchaser or transferee.
The exchange offer is not being made directly or indirectly in Canada, or any
jurisdiction where prohibited by applicable law and such documents should not be
distributed, forwarded or transmitted into or from Canada, or any jurisdiction
where prohibited by applicable law by any means whatsoever including without
limitation mail, facsimile, transmission, telex or telephone.
- --------------------------------------------------------------------------------
NOTICE OF GUARANTEED DELIVERY
TO ACCEPT THE OFFER TO EXCHANGE (I) 10 AMERICAN DEPOSITARY SHARES OF PETROFINA,
EACH REPRESENTING ONE TENTH OF ONE PETROFINA SHARE, WITHOUT NOMINAL VALUE FOR 9
AMERICAN DEPOSITARY SHARES OF TOTAL, EACH REPRESENTING ONE HALF OF ONE SHARE,
NOMINAL VALUE FRF 50 AND (II) 100 WARRANTS OF PETROFINA FOR EACH 81 WARRANTS OF
TOTAL
BY
TOTAL
As set forth under "Guaranteed Delivery Procedures" in the Prospectus, dated
May 6, 1999 (the "Prospectus"), this form or one substantially equivalent hereto
must be used for acceptance of the exchange offer (as defined in the Prospectus)
in respect of American Depositary Shares ("PetroFina ADSs") of PetroFina
("PetroFina") or warrants of PetroFina ("PetroFina Warrants"), if American
Depositary Receipts evidencing PetroFina ADSs ("PetroFina ADRs") or certificates
evidencing PetroFina Warrants are not immediately available or the procedures
for book-entry transfer cannot be completed on a timely basis or if time will
not permit all required documents to reach the US Exchange Agent) prior to the
expiration of the Initial Offer Period or any Subsequent Offer Period (each as
defined in the Prospectus), as the case may be. Such form may be delivered by
hand or mailed to the US Exchange Agent and must include a guarantee by an
Eligible Institution (as defined in the Prospectus) in the form set out herein.
See "Guaranteed Delivery Procedures" in the Prospectus.
The US Exchange Agent for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Facsimile Transmission:
(For Eligible Institutions
By Mail: Only) By Hand or Overnight Courier:
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station For Confirmation Telephone: Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Total, a societe anonyme organized under
the laws of the Republic of France, upon the terms and subject to the conditions
set forth in the Prospectus, and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Exchange Offer"), receipt of each of which is hereby acknowledged, the number
of PetroFina ADSs and/or PetroFina Warrants specified below pursuant to the
guaranteed delivery procedures described in "Guaranteed Delivery Procedures" in
the Prospectus.
Number of PetroFina ADSs:
Name(s) of Record Holders of PetroFina ADSs:
- --------------------------------------------------------------------------------
(Please Type or Print)
Address(es):
(Include Zip Code)
Area Code and Telephone Number:
Certificate Number(s) (if available):
- --------------------------------------------------------------------------------
[ ] Check here if PetroFina ADSs will be tendered by book-entry transfer
Account Number:
Name of Depositary Bank:
Account Number:
Signature(s):
- --------------------------------------------------------------------------------
Dated: ________________________ , 1999
Number of PetroFina Warrants:
Name(s) of Record Holders of PetroFina Warrants:
(Please Type or Print)
Address(es):
(Include Zip Code)
Certificate Number(s) if available:
[ ] Check here if PetroFina Warrants will be tendered by book-entry transfer
Account Number:
Name of Depositary Bank:
Account Number:
Signature(s):
Dated: _______________ , 1999
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a member of the Medallion Signature
Guarantee Program or is otherwise an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (each of the foregoing is referred to as an
"Eligible Institution"), hereby (a) represents that the above-named person(s)
"own(s)" the PetroFina ADSs and/or PetroFina Warrants tendered hereby within the
meaning of Rule 14e-4 under the Exchange Act ("Rule 14e-4"), (b) represents that
the tender of PetroFina ADSs and/or PetroFina Warrants effected hereby complies
with Rule 14e-4, and (c) guarantees delivery to the US Exchange Agent, at one of
its addresses set forth above, of ADRs evidencing the PetroFina ADSs or
certificates evidencing the PetroFina Warrants tendered hereby in proper form
for transfer, or in the case of a tender of PetroFina ADSs or PetroFina Warrants
through book-entry, confirmation of book-entry transfer of such PetroFina ADSs
or PetroFina Warrants into the Exchange Agent's account at The Depository Trust
Company, with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees in the
case of a tender of PetroFina ADSs and/or PetroFina Warrants (or an Agent's
Message (as defined in the section entitled "Procedures for Tendering Book-Entry
Transfer" in the Prospectus) in the case of book-entry transfer), and any other
documents required by the Letter of Transmittal, within three New York Stock
Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the US Exchange Agent and must comply with the delivery obligations
described above within the required time period. Failure to do so could result
in financial loss to such Eligible Institution.
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
- --------------------------------------------------------------------------
Authorized Signature:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(Please Type or Print)
Dated:
- ---------------------, 1999
NOTE: DO NOT SEND ADRS FOR PETROFINA ADSS OR WARRANTS CERTIFICATES WITH THIS
NOTICE, SUCH ADRS OR WARRANTS CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE> 1
THIS DOCUMENT SHOULD NOT BE FORWARDED OR TRANSMITTED IN OR INTO CANADA, OR
ANY OTHER JURISDICTION WHERE THE SENDING OF SUCH DOCUMENT IS PROHIBITED BY
APPLICABLE LAW.
- --------------------------------------------------------------------------------
OFFER TO EXCHANGE
ALL AMERICAN DEPOSITARY SHARES
EACH REPRESENTING ONE TENTH OF ONE SHARE WITHOUT NOMINAL VALUE
AND ALL WARRANTS OF
PETROFINA
BY
TOTAL
THERE WILL BE AN INITIAL OFFER PERIOD WHICH WILL EXPIRE AT 10:00 A.M. (NEW YORK
CITY TIME), ON FRIDAY, JUNE 4, 1999, UNLESS EXTENDED ("INITIAL OFFER PERIOD").
AT THE CONCLUSION OF THE INITIAL OFFER PERIOD, INCLUDING ANY EXTENSION THEREOF,
HOLDERS OF PETROFINA WARRANTS AND PETROFINA ADSS, AS THE CASE MAY BE, WILL HAVE
WITHDRAWAL RIGHTS DURING THE EXCHANGE OFFER PERIOD INTO WHICH THEY TENDER, BUT
NOT DURING ANY OTHER EXCHANGE OFFER PERIOD.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Total, a societe anonyme organized under the laws
of the Republic of France ("Total"), on behalf of PetroFina, a societe anonyme
organized under the laws of Belgium ("Petrofina") to act as exchange agent in
connection with Total's offer to exchange (i) 10 properly tendered American
depositary shares of PetroFina, each representing one-tenth of one share of
PetroFina for 9 American depositary shares, each representing one-half of one
share of Total, and (ii) 100 Warrants of PetroFina for 81 Warrants of Total,
upon the terms and subject to the conditions set forth in the Exchange Offer
Prospectus, dated May 6, 1999 (the "Prospectus"), and in the related
Certificated Share Delivery Instruction Form, the Letter of Transmittal and
Notice of Guaranteed Delivery enclosed herewith. Terms used in this document to
the extent not defined herein shall bear the same meaning as in the Prospectus.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold PetroFina securities registered in your name or in the
name of your nominee.
<PAGE> 2
Enclosed for your information and use are copies of the following
documents:
1. Prospectus, dated May 6, 1999;
2. Letter of Transmittal to be used by holders of PetroFina ADSs in
accepting the exchange offer and tendering ADSs;
3. Letter of Transmittal to be used by holders of PetroFina Warrants
in accepting the exchange offer and tendering Warrants;
4. Notice of Guaranteed Delivery to be used to accept the exchange
offer if the ADSs, the Warrants and all other required documents are not
immediately available or cannot be delivered to the US Exchange Agent by
the expiration of the Initial Offer Period or if the procedure for
book-entry transfer cannot be completed by the expiration of the Initial
Offer Period;
5. A letter which may be sent to your clients for whose accounts you
hold PetroFina Warrants and PetroFina ADSs registered in your name or in
the name of your nominee, with space provided for obtaining such clients'
instructions with regard to the exchange offer;
6. A Certificated Share Delivery Instructions Form;
7. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
8. Return envelope addressed to the US Exchange Agent.
THE EXCHANGE OFFER MAY NOT BE ACCEPTED IN RESPECT OF PETROFINA SHARES BY
MEANS OF A LETTER OF TRANSMITTAL AND NOTICE OF GUARANTEED DELIVERY. A
CERTIFICATED SHARE DELIVERY INSTRUCTION FORM FOR ACCEPTING THE EXCHANGE OFFER IN
RESPECT OF PETROFINA SHARES MAY BE OBTAINED FROM MACKENZIE PARTNERS, INC., AS
THE INFORMATION AGENT.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 10:00 A.M., NEW YORK
CITY TIME ON JUNE 4, 1999, EXCEPT WITH RESPECT TO PETROFINA SECURITIES TENDERED
IN ANY SUBSEQUENT OFFER PERIOD.
In all cases, exchange of PetroFina shares tendered and accepted pursuant
to the exchange offer will be made only after timely receipt by the (i) U.S.
Forwarding Agent of completed Certificated Share Delivery Instruction Form
together with certificates evidencing such PetroFina shares, (ii) US Exchange
Agent of a Letter of Transmittal or Notice of Guaranteed Delivery (or facsimile
thereof) properly completed and duly executed, with any required signature
guarantees (or in the case of a book-entry transfer, an Agent's Message)
together with ADRs evidencing such PetroFina ADSs or Warrant Certificates and
any other required documents.
A securityholder who desires to tender PetroFina ADSs and/or PetroFina
Warrants and whose American Depositary Receipts ("ADRs") evidencing such
PetroFina ADSs or Warrant Certificates are not immediately available, or who
cannot comply with the procedure for book-entry transfer on a timely basis, may
tender such PetroFina ADSs and/or PetroFina Warrants by following the procedure
for guaranteed delivery set forth in the Prospectus. See "Guaranteed Delivery
Procedures".
Total will not pay any fees or commissions to any broker, dealer or other
person (other than the U.S. Exchange Agent, the Forwarding Agent and the
Information Agent as described in the Prospectus) in connection with the
solicitation of tenders of PetroFina shares, PetroFina ADSs and PetroFina
Warrants pursuant to the exchange offer. However, Total will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Total will pay or cause to
2
<PAGE> 3
be paid any stock transfer taxes payable with respect to the transfer of
PetroFina shares, PetroFina ADSs and PetroFina Warrants to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the exchange offer should be
addressed to Mackenzie Partners, Inc. (the "Information Agent") at their address
and telephone numbers set forth on the back cover page of the Prospectus.
Additional copies of the enclosed material may be obtained from the
Information Agent, at the address and telephone number set forth on the back
cover page of the Offer to Exchange.
Very truly yours,
The Bank of New York
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF TOTAL, PETROFINA, THE U.S. EXCHANGE AGENT, THE
INFORMATION AGENT, OR THE FORWARDING AGENT, OR OF ANY AFFILIATE OF ANY OF THEM,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
Exhibit (a)(7)
TOTAL LAUNCHES PUBLIC EXCHANGE OFFER FOR PETROFINA SHARES
TOTAL has announced that it will launch a public exchange offer on May 6 to
acquire the 59% of outstanding PetroFina shares it does not already own.
The offer will enable PetroFina shareholders to exchange their shares for newly
issued TOTAL stock from May 6 through June 4, on the basis of nine TOTAL shares
for every two PetroFina shares. The TOTAL shares will carry dividend rights as
of January 1, 1998 and TOTAL VVPR strips, which entitle owners to a reduced
dividend withholding tax rate in Belgium.
The offer prospectus, including a description of the transaction and related
tender forms, has been approved by Belgium's Banking and Finance Commission. It
may be requested in Belgium from Banque Bruxelles Lambert, General de Banque
and KBC Bank, and from designated banks in other European countries.
The U.S. Prospectus, which is part of a registration statement, as declared
effective by the Securities and Exchange Commission will be mailed to the U.S.
security holders beginning on May 6, 1999. The U.S. exchange offer to U.S.
security holders will be made only by means of this prospectus.
The public exchange offer will be launched as initially scheduled. It
represents the last step in the creation of the new TOTAL FINA group, which
will rank among the European majors and will be the fifth-largest oil company
in the world.
<PAGE> 1
PART IV
ITEM 18. FINANCIAL STATEMENTS
See pages F-1 through F-71 and pages S-1 through S-2, incorporated herein
by reference.
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The following financial statements, together with the report of Arthur
Andersen thereon, are filed as part of this annual report.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-1
Consolidated Statements of Income for the Years Ended
December 31, 1998, 1997 and 1996............................ F-2
Consolidated Balance Sheets at December 31, 1998 and 1997... F-3
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1998, 1997 and 1996...................... F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 1998, 1997 and 1996........ F-5
Notes to Consolidated Financial Statements.................. F-6
Supplemental Oil and Gas Information (Unaudited)............ F-59
Schedules for the years ended December 31, 1998, 1997 and
1996
Report of Independent Auditors on Schedule.................. S-1
Schedule II -- Valuation and Qualifying Accounts............ S-2
</TABLE>
All other Schedules have been omitted since they are not required under the
applicable instructions or the substance of the required information is shown in
the financial statements.
B. EXHIBITS
The following documents are filed as part of this annual report:
1. Statutes of TOTAL (containing amendments through January 27, 1998).*
2. Contribution Agreement between TOTAL, Electrofina, Fibelpar, Tractebel,
Electrabel and AG 1824, dated December 1, 1998.*
3. Consent of Arthur Andersen LLP.
- ---------------
* Previously filed.
57
<PAGE> 2
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TOTAL
By: /s/ THIERRY DESMAREST
------------------------------------
Name: Thierry Desmarest
Title: Chairman and Chief Executive
Officer
Dated: April 30, 1999
58
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and the Board of Directors of TOTAL
We have audited the accompanying consolidated balance sheets of TOTAL and
its subsidiaries (together, the Company) as of December 31, 1998, and 1997, and
the related consolidated statements of income, cash flows and changes in
shareholders' equity for each of the three years in the period ended December
31, 1998, all expressed in French francs. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in France and in the United States of America. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles in France.
Accounting practices used by the Company in preparing the accompanying
consolidated financial statements conform with generally accepted accounting
principles in France, but do not conform in certain respects with accounting
principles generally accepted in the United States of America. A description of
the differences and a complete reconciliation of consolidated net income and
shareholders' equity to United States generally accepted accounting principles
are set forth in Note 3 of the notes to the consolidated financial statements.
ARTHUR ANDERSEN, LLP
Paris, France
March 17, 1999
F-1
<PAGE> 4
TOTAL
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
FRF FRF FRF
-------- -------- --------
1998 1997 1996
-------- -------- --------
(AMOUNTS IN MILLIONS,
EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C>
Sales (Notes 19 and 20).................................... 159,614 191,085 176,577
Operating expenses......................................... (141,968) (170,448) (159,893)
Depreciation, depletion and amortization................... (7,876) (7,565) (6,916)
Operating income: (Note 19)
Corporate................................................ (504) (551) (444)
Business Segments........................................ 10,274 13,623 10,212
-------- -------- --------
TOTAL OPERATING INCOME..................................... 9,770 13,072 9,768
Interest expense, net (Note 21)............................ (988) (738) (917)
Dividend income............................................ 326 597 339
Dividends on subsidiaries redeemable preferred shares
(Note 14)................................................ (61) (60) (52)
Other income (expense), net (Note 22)...................... (215) 71 (134)
Provision for income taxes (Note 23)....................... (2,402) (4,077) (2,622)
Equity in income (loss) of affiliates (Note 6)............. 372 (58) 66
-------- -------- --------
INCOME BEFORE AMORTIZATION OF ACQUISITION GOODWILL AND
MINORITY INTEREST........................................ 6,802 8,807 6,448
AMORTIZATION OF ACQUISITION GOODWILL....................... (686) (860) (663)
MINORITY INTEREST.......................................... (302) (336) (139)
-------- -------- --------
NET INCOME................................................. 5,814 7,611 5,646
======== ======== ========
EARNINGS PER SHARE (NOTE 1)................................ 23.7 31.0 23.5
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 5
TOTAL
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER, 31
---------------------
FRF FRF
------- -------
1998 1997
------- -------
(AMOUNTS IN MILLIONS,
EXCEPT FOR SHARE
AMOUNTS)
<S> <C> <C>
ASSETS
NONCURRENT ASSETS:
Intangible assets (Note 4)................................ 17,086 16,339
Accumulated amortization (Note 4)......................... (7,500) (6,965)
------- -------
Intangible assets, net (Note 4)......................... 9,586 9,374
Property, plant and equipment (Note 5).................... 132,163 127,525
Accumulated depreciation, depletion and amortization (Note
5)...................................................... (66,780) (66,125)
------- -------
Property, plant and equipment, net (Note 5)............. 65,383 61,400
Equity affiliates: Investments and loans (Note 6)......... 9,247 8,491
Other investments (Note 7)................................ 5,230 5,811
Other noncurrent assets (Note 8).......................... 4,692 5,489
------- -------
Total noncurrent assets................................. 94,138 90,565
CURRENT ASSETS:
Inventories (Note 9)...................................... 12,219 14,550
Accounts receivable (Note 10)............................. 20,485 23,371
Prepaid expenses and other current assets (Note 11)....... 11,032 8,800
Short-term investments (Note 12).......................... 4,097 1,773
Cash and cash equivalents................................. 9,982 12,652
------- -------
Total current assets.................................... 57,815 61,146
------- -------
Total Assets....................................... 151,953 151,711
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY (NOTE 13):
Common shares (FRF 50 par value; shares issued and
outstanding:
1998 -- 244,787,638, 1997 -- 244,333,176)................. 12,239 12,217
Paid-in surplus........................................... 13,007 12,918
Retained earnings......................................... 44,164 41,489
Revaluation reserve....................................... 465 458
Cumulative translation adjustments........................ (2,010) (450)
------- -------
Total shareholders' equity.............................. 67,865 66,632
SUBSIDIARIES REDEEMABLE PREFERRED SHARES (NOTE 14).......... 1,406 1,497
MINORITY INTEREST........................................... 1,577 1,605
COMMITMENTS AND CONTINGENCIES (NOTES 26 AND 28)
LONG-TERM LIABILITIES:
Reserve for crude oil price changes....................... -- 955
Deferred income taxes (Note 23)........................... 5,054 5,230
Employee benefits (Note 15)............................... 3,326 3,216
Other liabilities (Note 16)............................... 5,551 5,272
------- -------
Total long-term liabilities............................. 13,931 14,673
LONG-TERM DEBT:
Loans (Note 17)........................................... 23,919 21,742
Deposits.................................................. 985 939
------- -------
Total long-term debt.................................... 24,904 22,681
CURRENT LIABILITIES:
Accounts payable.......................................... 15,403 18,328
Other creditors and accrued liabilities (Note 18)......... 19,128 17,598
Current portion of long-term debt......................... 1,370 1,818
Short-term borrowings (Note 17)........................... 3,740 4,529
Bank overdrafts........................................... 2,629 2,350
------- -------
Total current liabilities............................... 42,270 44,623
------- -------
Total Liabilities and Shareholders' Equity......... 151,953 151,711
======= =======
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 6
TOTAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
FRF FRF FRF
------- ------- -------
1998 1997 1996
------- ------- -------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ 5,814 7,611 5,646
Adjustments to reconcile net income to net cash flows from
operating activities:
Minority interest......................................... 302 336 139
Depreciation, depletion and amortization.................. 9,112 9,073 7,965
Long-term liabilities, valuation allowances and deferred
income taxes............................................ 681 (1,697) 491
Unsuccessful exploration costs............................ 1,131 1,426 1,172
Reserve for crude oil price changes....................... (933) (1,012) 1,571
(Gains) Losses on sales of assets......................... (768) (813) (778)
Equity in income of affiliates (in excess of)/less than
dividends received...................................... (159) 110 (38)
Changes in operating assets and liabilities (Note 31)..... 1,502 837 (1,039)
Other changes, net........................................ (102) 19 320
------- ------- -------
Net Cash Flows From Operating Activities.................. 16,580 15,890 15,449
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITES
Intangible assets and property, plant and equipment
additions............................................... (16,950) (16,251) (11,721)
Exploration costs directly charged to expense............. (1,084) (1,181) (955)
Acquisitions of subsidiaries, net of cash acquired........ (713) (339) (1,636)
Investments in equity affiliates and equity securities.... (1,354) (2,840) (978)
Increase in long-term loans............................... (1,214) (2,048) (1,086)
Proceeds from sale of intangible assets and property,
plant and equipment..................................... 893 1,102 1,511
Proceeds from sale of subsidiaries, net of cash sold...... 923 1,326 31
Proceeds from sale of noncurrent investments.............. 1,678 442 1,278
Repayment of long-term loans.............................. 653 708 401
(Increase) decrease in short-term investments............. (2,336) (762) (292)
------- ------- -------
Net Cash Flows Provided by (Used in) Investing
Activities............................................ (19,504) (19,843) (13,447)
======= ======= =======
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares and repayment of TSDIRAs:
Parent company's shareholders (Note 31)................. 111 498 205
Minority shareholders................................... 2 17 6
Cash dividend paid:
Parent company's shareholders and holders of TSDIRAs.... (3,139) (2,554) (602)
Minority shareholders................................... (150) (189) (249)
Net issuance (repayment) of long-term debt (Note 31)...... 4,948 4,315 (1,695)
Increase (decrease) in short-term borrowings and bank
overdrafts.............................................. (2,014) (16,695) 3,749
Other changes, net........................................ (61) (60) (52)
------- ------- -------
Net Cash Flows Provided by (Used in) Financing
Activities............................................ (303) (14,668) 1,362
------- ------- -------
Net Increase (Decrease) in Cash and Cash Equivalents...... (3,227) (18,621) 3,364
Effect of exchange rates on cash and cash equivalents..... 557 (727) 73
Cash and cash equivalents at the beginning of the year.... 12,652 32,000 28,563
------- ------- -------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR............ 9,982 12,652 32,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for:
Interest (net of amount capitalized)...................... 3,059 6,117 2,691
Income taxes.............................................. 1,948 1,919 953
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 7
TOTAL
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON SHARES ISSUED CUMULATIVE
-------------------- PAID IN RETAINED REVALUATION TRANSLATION SHAREHOLDERS'
NUMBER AMOUNT SURPLUS EARNINGS RESERVE ADJUSTMENTS TSDIRAS EQUITY
----------- ------ ------- -------- ----------- ----------- ------- -------------
(AMOUNTS IN MILLIONS, EXCEPT FOR SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AS OF JANUARY 1, 1996.......... 235,049,629 11,753 10,672 32,850 477 (3,354) 190 52,588
Cash dividend(a)............. -- -- -- (602) -- -- -- (602)
Stock dividend(a)............ 4,446,738 221 1,241 (1,462) -- -- -- --
Net income................... -- -- -- 5,646 -- -- -- 5,646
Issuance of common shares.... 1,632,275 82 308 -- -- -- -- 390
Change in revaluation
reserve.................... -- -- -- -- (19) -- -- (19)
Translation adjustments...... -- -- -- -- -- 1,255 -- 1,255
Repayment of TSDIRAs into
common shares.............. 996,936 50 140 -- -- -- (190) --
----------- ------ ------ ------ ---- ------ ----- ------
AS OF DECEMBER 31, 1996........ 242,125,588 12,106 12,361 36,432 458 (2,099) -- 59,258
Cash dividend(b)............. -- -- -- (2,554) -- -- -- (2,554)
Net income................... -- -- -- 7,611 -- -- -- 7,611
Issuance of common shares.... 2,207,588 111 557 -- -- -- -- 668
Change in revaluation
reserve.................... -- -- -- -- -- -- -- --
Translation adjustments...... -- -- -- -- -- 1,649 -- 1,649
----------- ------ ------ ------ ---- ------ ----- ------
AS OF DECEMBER 31, 1997........ 244,333,176 12,217 12,918 41,489 458 (450) -- 66,632
Cash dividend(c)............. -- -- -- (3,139) -- -- -- (3,139)
Net income................... -- -- -- 5,814 -- -- -- 5,814
Issuance of common shares.... 454,462 22 89 -- -- -- -- 111
Change in revaluation
reserve.................... -- -- -- -- 7 -- -- 7
Translation adjustments...... -- -- -- -- -- (1,560) -- (1,560)
----------- ------ ------ ------ ---- ------ ----- ------
AS OF DECEMBER 31, 1998........ 244,787,638 12,239 13,007 44,164 465 (2,010) -- 67,865
----------- ------ ------ ------ ---- ------ ----- ------
</TABLE>
- ---------------
(a) Dividend paid in 1996: MFRF 2,064 (FRF 8.70 per share and FRF 34.80 per
TSDIRA).
(b) Dividend paid in 1997: MFRF 2,554 (FRF 10.50 per share)
(c) Dividend paid in 1998: MFRF 3,139 (FRF 13.00 per share)
The accompanying Notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 8
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFRF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED)
1. ACCOUNTING POLICIES
The consolidated financial statements of TOTAL and its subsidiaries
(together, the "Company") have been prepared in accordance with French generally
accepted accounting principles ("French GAAP"). They also include certain
additional information required by the Securities and Exchange Commission of the
United States.
The financial statements of the consolidated subsidiaries, when prepared in
accordance with different accounting principles generally accepted in their
country of origin, have been restated.
All material intercompany accounts, transactions and income have been
eliminated.
Certain previously reported amounts have been reclassified to conform with
the current year presentation.
A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all
significant subsidiaries.
The Company's interests in oil and gas joint ventures are proportionately
consolidated.
Investments in 20-50% owned significant companies are accounted for by the
equity method. Companies in which ownership interest is less than 20%, but over
which the Company has the ability to exercise significant influence are also
accounted for by the equity method. Under this method, the investment represents
the Company's share of the underlying equity of the investee (including income
or loss for the period) and is reflected in the consolidated balance sheets in
"Equity affiliates". The Company's share of the income or loss of its equity
investees is reflected in the consolidated statements of income as "Equity in
income (loss) of affiliates".
B) FOREIGN CURRENCY TRANSLATION
(i) MONETARY TRANSACTIONS
Transactions denominated in foreign currencies are translated at the
exchange rate prevailing when the transaction is realized.
Monetary assets and liabilities denominated in foreign currencies are
translated at the exchange rates prevailing at the end of the period. The
resulting gains or losses are recorded in "Other income (expense)" in the
consolidated statements of income. Translation differences arising on foreign
currency loans which are specifically contracted to hedge the value of a net
investment in a consolidated subsidiary or equity investee from the effect of
exchange rates fluctuations are reflected as a cumulative translation adjustment
to shareholders' equity.
(ii) TRANSLATION OF FINANCIAL STATEMENTS DENOMINATED IN FOREIGN CURRENCIES
All assets and liabilities of consolidated subsidiaries or of equity
affiliates are translated into French francs on the basis of exchange rates at
the end of the period. The consolidated statements of income and consolidated
statements of cash flows are translated using the average exchange rates during
the period. Foreign exchange differences resulting from such translation are
recorded either in "Cumulative translation adjustments" (for the Company's
share) or in "Minority interest, as appropriate."
F-6
<PAGE> 9
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
C) FINANCIAL INSTRUMENTS
(i) INTEREST RATE AND FOREIGN CURRENCY AGREEMENTS
The Company uses financial instruments for hedging purpose only, in order
to manage its exposure to movements in interest rates and foreign exchange
rates.
- The Company enters into interest rate and foreign currency swap
agreements to minimize its borrowing cost and reduce its exposure to
interest rate and foreign currency changes. The differential between
interest to be paid and interest to be received is recognized as interest
expense or interest income, over the life of the hedged item. The Company
can also use future rate agreements ("FRAs") and futures to adjust its
interest rate positions. Under hedge accounting, changes in the market
value of such contracts are recognized as interest expense or interest
income in the same period as the gains and losses on the item being
hedged are realized.
- To reduce the effects of adverse foreign exchange rate movements, the
Company can use forward exchange contracts and, in exceptional
circumstances, currency options. Under hedge accounting, changes in the
market value of these contracts are recognized in income in the same
period as the gains and losses on the item being hedged.
- Under hedge accounting, to the extent that a qualifying hedge is
terminated or ceases to be effective as a hedge, gains and losses on the
hedge are still amortized over the life of the underlying item and, to
the extent that the hedged item is sold or matures, the related hedge is
closed and gains or losses are included in earnings on a current basis.
(ii) COMMODITY TRANSACTIONS
- In connection with its trading activities, the Company uses hedging
strategies to help moderate its exposure to fluctuations in the prices of
crude oil, refined products and natural gas, using futures contracts,
forward contracts on Brent and Dubai, contracts for difference, refined
products swaps and natural gas swaps; options are rarely used. Gains and
losses on these contracts are recognized or accrued as a component of the
related transactions.
- Under hedge accounting, to the extent that a qualifying hedge is
terminated or ceases to be effective as a hedge, gains and losses on the
hedge are still amortized over the life of the underlying item and, to
the extent that the hedged item is sold or matures, the related hedge is
closed and gains or losses are included in earnings on a current basis.
- The Company also enters into contracts that are not specific hedges.
Gains and losses resulting from changes in the market value of these
types of contracts are recorded as follows:
- forward contracts: unrealized losses are recognized currently while
unrealized gains are deferred until the contract is closed out;
- futures contracts: unrealized gains and losses are recognized in
income or expensed currently.
- In connection with the Company's refining and marketing activities,
changes in the market value of commodity hedges of petroleum products
inventories are accounted for as additions to or reductions in inventory.
D) INTANGIBLE ASSETS
Acquisition goodwill is amortized using the straight-line basis over
periods not exceeding 30 years.
F-7
<PAGE> 10
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
E) PROPERTY, PLANT AND EQUIPMENT
(i) OIL AND GAS EXPLORATION AND PRODUCING PROPERTIES
The Company applies the successful efforts method of accounting for its oil
and gas exploration and producing properties as follows:
Concessions
- Costs of acquiring unproved properties are capitalized and impairment is
made in the absence of a commercial discovery. Geological and geophysical
costs are expensed as incurred. Drilling in progress and wells where
proved reserves have been discovered are capitalized. Costs of
exploratory wells are capitalized if oil and gas reserves are found and
either classified as proved within a year following completion of
drilling or if additional exploration work is underway or planned.
Otherwise, the costs of exploratory wells are charged to expense.
- The costs of productive leasehold and other capitalized costs related to
producing activities including tangible and intangible costs are
amortized on a unit-of-production basis using the estimated proved
reserves.
Production sharing contracts The Company conducts oil and gas exploration
and development with certain national oil companies under production sharing
contracts which entitle the Company to a contractual portion of the oil and gas
production to reimburse its operating, exploration and development costs (cost
oil). In addition, the Company is generally entitled to share a portion of the
net oil and gas revenues subject to the contract (profit oil).
Costs incurred under these agreements are accounted for under the
successful efforts method.
(i) OTHER PROPERTY, PLANT AND EQUIPMENT
Other property, plant and equipment are carried at cost with the exception
of assets that have been acquired before 1976 whose cost has been revalued under
French regulations by the French companies in their own financial statements and
for foreign companies, in addition to their own accounts. The revaluation
adjustment is included in shareholders' equity in "Revaluation reserve". This
surplus is credited to income over the useful life of the related depreciable
fixed assets using the corresponding rates of depreciation and depletion or upon
disposal of the revalued assets.
Fixed assets of significant value which are held under hire purchase and
similar agreements are capitalized and depreciated using the straight-line
method. The corresponding commitment is recorded as a liability.
Assets and capitalized leases are depreciated by the straight-line method
over their estimated useful life, as follows:
<TABLE>
<CAPTION>
YEARS OF ESTIMATED
USEFUL LIFE
------------------
<S> <C>
Transportation equipment.................................... 5-20
Machinery, plant and equipment:
Machinery, installations and tools........................ 5-10
Furniture and fixtures.................................... 5-10
</TABLE>
F-8
<PAGE> 11
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS OF ESTIMATED
USEFUL LIFE
------------------
<S> <C>
Refineries:
Specialized complex installations......................... 8-20
Storage tanks............................................. 10-15
Pipelines and related equipment............................. 10-15
Buildings................................................... 10-50
</TABLE>
Equipment subsidies are deducted from the cost of the related expenditures.
Routine maintenance and repairs are charged to income as incurred. However,
estimated costs of major refinery turnarounds are accrued over the period from
the prior turnaround to the next planned turnaround.
F) VALUATION OF LONG-LIVED ASSETS
The Company periodically evaluates the carrying value of oil and gas
properties by comparing net capitalized costs to undiscounted cash flows on a
field-by-field basis. For those oil and gas properties for which the carrying
amount exceeds the estimated future cash-flows, a loss is recognized based on
the amount by which the carrying value exceeds the anticipated cash flows
discounted at a rate commensurate with the risk involved.
Losses on other long-lived assets, to be held and used, including goodwill
and other intangibles assets, are determined in a similar manner.
The measurement of the impairment losses to be recognized for assets to be
disposed of is based on the difference between their fair market values and
their carrying amounts. Fair market value is assessed primarily using the
anticipated cash flows.
G) OTHER INVESTMENTS
Investees over which the Company does not have the ability to exercise
significant influence (generally less than 20% owned) or subsidiaries excluded
from consolidation after consideration of their materiality to the Company's
operations are valued at acquisition cost less allowance for impairment in
value.
Certain investments were revalued in accordance with French regulations as
described in paragraph E(ii).
H) INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is
determined on a first-in, first-out basis (FIFO) for crude oil and refined
product inventories. Other inventories are stated primarily on a weighted
average basis.
I) OPERATING EXPENSES -- RESERVE FOR CRUDE OIL PRICE CHANGES
Net income is presented according to the replacement cost method. Under
this method, monthly consumption of petroleum inventories (crude oil and refined
products) is valued at the replacement cost of crude oil and refined products
over the month instead of the historical cost value computed month-by-month
(FIFO or weighted production cost). When replacement cost exceeds historical
cost value (positive inventory effect), a reserve for crude oil price changes is
charged against operating income. This reserve is classified as a long-term
liability. When the inventory effect is negative, the reserve for crude oil
price changes is reversed up to the previously recorded amount.
F-9
<PAGE> 12
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
J) SHORT-TERM INVESTMENTS
Short-term investments are valued at the lower of cost or market value.
K) DISMANTLEMENT, REMOVAL AND ENVIRONMENTAL COSTS
UPSTREAM The Company accrues for estimated dismantlement and site
restoration costs of oil and gas exploration and producing properties on a
unit-of-production basis. Estimated costs are included in "Other liabilities".
OTHER SEGMENTS Remediation and other environmental costs are recorded when
expenses are probable and can be reasonably estimated. Accruals which are
included in "Other liabilities" are based on current legal requirements and
existing technology.
Estimated liabilities are not discounted to present value.
L) DEFERRED TAXES
The Company uses the liability method required by Statement of Financial
Accounting Standards ("SFAS") No 109, "Accounting for income taxes", whereby
deferred income taxes are recorded based upon differences between the financial
statement and tax bases of assets and liabilities. Deferred tax assets and
liabilities must be revalued to reflect new tax rates in the periods rate
changes are enacted.
M) SALES AND OPERATING EXPENSES
Sales are recorded as products are shipped and services are rendered. Sales
are presented net of excise taxes of MFRF 54,320 , MFRF 49,146 and MFRF 43,052,
for the years ended December 31, 1998, 1997 and 1996, respectively.
Taxes paid to Middle East producing countries are included in operating
expenses for the portion which the Company held historically as concessions (Abu
Dhabi-offshore, Abu Dhabi-onshore, Dubai-offshore, Oman and Abu Al Bu Khoosh).
The corresponding amounts were MFRF 3,586, MFRF 6,136 and MFF 6,069 for the
years ended December 31, 1998, 1997 and 1996, respectively.
Costs and expenses are charged to income in the period in which the related
sales are recognized.
N) RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses are charged to income as incurred.
The total of such costs expensed for the years ended December 31, 1998,
1997, and 1996 was MFRF 1,398, MFRF 1,289 and MFRF 1,157 respectively.
O) INTEREST EXPENSE
Interest charges relating to the financing of major projects under
construction, including development works on oil and gas properties, are
capitalized. All other interest is expensed currently.
P) EMPLOYEE BENEFITS
PENSION PLANS AND SPECIAL TERMINATION PLANS In accordance with the laws
and practices of each country, the Company participates in employee benefit
pension plans offering death and disability, retirement and
F-10
<PAGE> 13
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
special termination benefits. Those plans provide benefits of various types from
flat currency amounts per year of service up to systems integrated with social
security and multi-employer plans.
Most of pension plans are funded with investments made in various
instruments such as insurance contracts and securities. There is no significant
investment in the Company's shares.
For defined contribution plans and multi-employer plans, expenses
correspond to the contributions paid. For defined benefit pension plans,
accruals and prepaid expenses are determined using the projected unit credit
method. Accruals and prepaid expenses are recorded in accordance with the
prevailing accounting practice in each country. Adjustments to comply with the
Company's accounting policies have been made when necessary.
Special termination benefits are recorded on an accrual basis at the time
the offer is accepted by the employees or their representatives and can be
reasonably estimated.
FUTURE LIFE INSURANCE AND HEALTH-CARE COSTS The Company sponsors several
defined benefit postretirement plans providing health care and future life
insurance for eligible retirees.
The related cost is accrued for over the service life of the employees.
Q) EARNINGS PER SHARE
Earnings per common share are calculated by dividing net income by the
weighted average number of common shares and common share equivalents
outstanding during the period.
2. ACQUISITIONS AND DIVESTITURES
YEAR ENDED DECEMBER 31, 1998
TOTAL MINATOME In September 1998, the Company sold its US wholly owned
subsidiary, Total Minatome Corporation (TMC) to US based Energen Resources
Corporation in association with Wesport Oil and Gas Company, Inc. Consideration
received was MFRF 838 (US$142 million) and the Company posted a net gain of MFRF
21.
RESISA In July 1998, the Company acquired for cash, 100% of Resisa, the
Cepsa group's resins subsidiary in Spain. Total consideration was MFRF 328 (ESP
8,307 million).
YEAR ENDED DECEMBER 31, 1997
CESTARI In February 1997, the Company has acquired in cash 76.5% of
Cestari, a Brazilian manufacturer of components for the automotive industry, for
MFRF 188.
TOTAL PETROLEUM NORTH AMERICA In September 1997, the Company exchanged its
55.1% ownership interest in Total Petroleum North America ("TOPNA") for an 8%
stake in Ultramar Diamond Shamrock ("UDS"). The UDS shares were recorded for an
amount of MFRF 1,395 (US$231.2 million).
ARGON In December 1997, the Company acquired the Argon Group (later
renamed Totalgaz Argentina). Argon is the Argentine leader in liquefied
petroleum gas (LPG) marketing. The aggregate consideration was MFRF 73 (in
addition, loans were granted for MFRF 307).
COGEMA In December 1997, the Company acquired an additional 4.54%
ownership interest in Cogema for MFRF 876 in cash.
F-11
<PAGE> 14
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
YEAR ENDED DECEMBER 31, 1996
FAYETTE TUBULAR PRODUCTS In January 1996, the Company acquired all of the
issued and outstanding shares of Fayette Tubular Product, Inc. for MFRF 784 in
cash (US$153.6 million). Fayette designs, produces and sells automotive air
conditioning hoses and tubes.
KALON In September 1996, the Company acquired an additional 9.69%
ownership interest in Kalon for MFRF 465 (L 57.7 million) in cash.
All acquisitions have been accounted for under the purchase method. The
results of operations of the acquired businesses are included in the
consolidated financial statements from the dates of acquisition. The pro forma
effect on consolidated results of operations, as if the transactions had
occurred at the beginning of each respective year of acquisition has not been
presented herein since the aggregate effect in each of the three years in the
period ended December 31, 1998 is not material.
3. SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE COMPANY
AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The accompanying consolidated financial statements have been prepared in
accordance with French GAAP, which differ in certain significant respects from
those applicable in the United States ("US GAAP").
These differences have been reflected in the financial information given in
paragraph N below and mainly relate to the following items.
A) RESERVE FOR CRUDE OIL PRICE CHANGES
The replacement cost method adopted by the Company to reflect the impact of
price changes on crude oil and refined products sold and the related reserve for
crude oil price changes would not be acceptable under US GAAP.
B) INCOME TAXES
The Company reported the effect of applying SFAS No 109 on the difference
between the reported amount and the tax basis of oil and gas properties acquired
before January 1, 1993 as an adjustment to intangible assets.
Under US GAAP, the gross-up resulting from the deferred tax liability on
nondeductible fixed assets would have been recorded as an addition to the
corresponding oil and gas properties with the related depreciation expense
included in operating income.
C) RETIREE BENEFITS
The Company has applied the provisions of SFAS No 87, "Employers'
Accounting for Pensions", as follows:
- the transition obligation or fund excess has been determined as of
January 1, 1987 as being the difference between the liabilities accounted
for under prior years' accounting policies and the funded status of the
plans resulting from SFAS No 87 calculations.
- the net transition obligation has been charged against shareholders'
equity as of January 1, 1987.
F-12
<PAGE> 15
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
For US GAAP reporting purposes, the transition obligation or fund excess
have been amortized using the greater of 15 years and the average residual
active life of the employees covered by each plan. Also, SFAS No 87 requires the
Company to recognize a minimum pension liability equal to the amount by which
the actuarial present value of the accumulated benefit obligation exceeds the
fair value of plans' assets.
The Company adopted the provisions of SFAS No 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions", for plans in the United States
effective January 1, 1993 and for plans outside the United States effective
January 1, 1995. Prior to the implementation of SFAS No 106, postretirement
health care and life insurance benefits expense was not accrued and only
recognized when claims were paid. The transition obligation has been amortized
immediately.
D) REVALUATION
As described in Note 1, certain noncurrent assets have been revalued on the
basis of their appraised value. US GAAP does not permit such revaluation. This
US GAAP adjustment only affects shareholders' equity and this revaluation has no
impact on net income.
E) TREASURY SHARES
Subject to authorizations given by shareholders' meetings, the Company can
repurchase up to 10% of its common shares on the open market. The corresponding
cost of treasury shares is included in short-term investments.
Under US GAAP, such treasury shares should be reflected as a reduction of
shareholders' equity. In addition, under US GAAP, gains on sales of treasury
shares should be excluded from the determination of net income.
F) EQUITY SECURITIES
MARKETABLE EQUITY SECURITIES Under French GAAP, unrealized gains are not
recognized and valuation allowances of marketable equity securities are
generally determined based on year-end quotations.
Under US GAAP (SFAS No 115, "Accounting for Certain Investments in Debt and
Equity Securities") and except for securities classified as "held to maturity
securities", unrealized holding gains and losses for "trading" and "available
for sale" securities should be included in income or reported as an adjustment
to shareholders' equity until realized, respectively.
Gross realized gains and gross realized losses (determined on a FIFO basis)
on sales of available-for-sale and trading securities were:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1998 1997
---- ----
<S> <C> <C>
Gross realized gains
Available-for-sale.......................................... 465 29
Trading................................................... -- 5
Gross realized losses
Available-for-sale.......................................... -- --
Trading...................................................
</TABLE>
F-13
<PAGE> 16
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
The carrying amount of securities and their approximate fair value were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----- ---------- ---------- -----
<S> <C> <C> <C> <C>
Available-for-sale.................... 2,659 903 (360) 3,202
Trading............................... 14 -- -- 14
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----- ---------- ---------- -----
<S> <C> <C> <C> <C>
Available-for-sale.................... 3,282 1,348 (78) 4,552
Trading............................... 82 1 -- 83
</TABLE>
The Company does not hold debt securities that would be categorized as
held-to-maturity.
NON-PUBLICLY TRADED EQUITY SECURITIES Under US GAAP, previously recorded
impairments may not be reversed in subsequent periods.
G) INTANGIBLE ASSETS
DEPRECIATION AND AMORTIZATION The Company does not amortize all intangible
assets. Under US GAAP, all intangible assets should be amortized over the
future periods estimated to be benefited, up to a maximum of 40 years.
WRITE-DOWNS Under US GAAP, previously recorded write-downs for assets to
be held and used may not be reversed in subsequent periods.
H) PRESENT VALUE OF LOANS AND ADVANCES
Non-interest or low-interest bearing loans and advances (for example
housing loans made to the Company's employees) are not discounted whereas under
US GAAP they should be recorded at their present value.
I) LIFO INVENTORY
TOPNA has followed the last-in, first-out method (LIFO) for financial
reporting purposes. The inventories have been adjusted to the first-in,
first-out method (FIFO) in the consolidated financial statements.
Under US GAAP, the inventories would not have been restated to FIFO.
As indicated in Note 2, the Company exchanged its stake in TOPNA for 8% in
UDS. Consequently, TOPNA was no longer consolidated as of December 31, 1997.
J) STOCK COMPENSATION
The Company generally grants to its employees a discount from the market
price for shares purchased pursuant to share subscription plans, share purchase
plans and reserved capital increases. Accounting for this discount is not
addressed by French GAAP and these transactions have no effect on net income.
F-14
<PAGE> 17
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
SFAS No 123, "Accounting for Stock-Based Compensation", established
accounting and disclosure requirements using a fair-value based method of
accounting for stock-based employee compensation plans.
Adoption in the financial statements of SFAS No 123 is optional.
The Company continues to apply Accounting Principles Board No 25,
"Accounting for Stock issued to Employees" for US GAAP purposes. Compensation
cost for share subscription plans, share purchase plans and capital increases
reserved to employees, if any, is measured as the excess of the quoted market
price of the Company's stock at the date of grant over the amount an employee
must pay to acquire the stock.
However, pro forma disclosures as if the Company adopted the cost
recognition requirements under SFAS No 123 are presented in paragraph 3-N(ii)
below.
K) ACCRUAL OF LOSS CONTINGENCIES
The Company has recorded loss contingencies in relation to future insurance
premium increases based on retrospective rating provisions in multiple-year
insurance contracts. Under US GAAP (SFAS No 5 and Emerging Issues Task Force
Issue No 93-6) such losses should only be accrued to the extent that they were
probable or known at year-end. Accordingly, the corresponding reserves
classified as "Long-term liabilities" in the accompanying balance sheets must be
reversed and retrospective premium payable must be recognized in the period in
which they are incurred.
L) CONSOLIDATED STATEMENTS OF INCOME PRESENTATION
OTHER INCOME (EXPENSE)/NON-RECURRING ITEMS Under US GAAP, depreciation and
amortization of intangible assets (including goodwill) would have been deducted
from operating income.
In addition, miscellaneous valuation allowances or reversals included in
"Other income (expense)" would have been deducted from or added to operating
income as follows:
<TABLE>
<CAPTION>
NET AMOUNT
----------
<S> <C>
Deduction from operating income
Year ended December 31, 1998.............................. (539)
Year ended December 31, 1997.............................. (23)
Year ended December 31, 1996.............................. (794)
</TABLE>
Consolidated statements of income presented under US format are included in
paragraph 3-N(ii) below.
M) EARNINGS PER SHARE
The Company reports earnings per share ("EPS") using the method described
in Note 1.
Under US GAAP (SFAS No 128, "Earnings per Share"), treasury shares would
not have been considered as outstanding. Also, the dilutive effect of
stock-based awards issued to employees would not be reflected in the basic EPS.
N) CONVERSION TO US GAAP
(i) NET INCOME AND SHAREHOLDERS' EQUITY
The following is a summary of the estimated adjustments to net income and
shareholders' equity for the years ended December 31, 1998, 1997 and 1996 which
would be required if US GAAP had been applied
F-15
<PAGE> 18
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
instead of French GAAP. These US GAAP adjustments are presented net of the
portion applicable to minority interest.
<TABLE>
<CAPTION>
NET INCOME
------------------------
YEAR ENDED DECEMBER 31,
------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Amounts per accompanying consolidated financial
statements................................................ 5,814 7,611 5,646
US GAAP ADJUSTMENTS
Increase (decrease) due to:
- Reserve for crude oil price changes..................... (871) (927) 1,431
- Pension plans........................................... 18 8 (58)
- Treasury shares......................................... (5) -- (76)
- Equity securities....................................... (112) (124) (43)
- Intangible assets....................................... (18) (40) (62)
- Present value of loans and advances..................... 102 (58) (6)
- LIFO inventory.......................................... -- 140 (132)
- Stock compensation...................................... (17) (142) (123)
- Accrual of loss contingencies........................... -- 32 28
- Tax effect of US GAAP adjustments....................... 24 54 (50)
----- ----- -----
Amounts under US GAAP....................................... 4,935 6,554 6,555
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
--------------------
YEAR ENDED
DECEMBER 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Amounts per accompanying consolidated financial
statements................................................ 67,865 66,632
US GAAP ADJUSTMENTS
Increase (decrease) due to:
- Reserve for crude oil price changes..................... 31 902
- Retiree benefits........................................ 218 554
- Revaluation............................................. (465) (458)
- Treasury shares......................................... (3,773) (1,521)
- Equity securities....................................... 322 806
- Intangible assets....................................... (483) (465)
- Present value of loans and advances..................... (100) (202)
- Accrual of loss contingencies........................... 126 126
- Tax effect of US GAAP adjustments....................... (245) (187)
- Cumulative translation adjustment of US GAAP
adjustments............................................ (55) (8)
------ ------
Amounts under US GAAP....................................... 63,441 66,179
====== ======
</TABLE>
(II) US GAAP CONSOLIDATED STATEMENTS OF INCOME
The consolidated statements of income for the years ended December 31,
1998, 1997 and 1996 presented below have been restated to reflect the principal
differences between US GAAP and French GAAP discussed above.
F-16
<PAGE> 19
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
NET INCOME
-----------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Sales....................................... 159,614 191,085 176,577
Cost of sales............................... (136,981) (169,010) (154,209)
Impairment of long-lived assets............. (584) (346) (477)
Other operating expenses.................... (14,926) (11,247) (12,822)
----------- ----------- -----------
OPERATING INCOME............................ 7,123 10,482 9,069
Interest expense, net....................... (988) (738) (917)
Dividend income............................. 326 597 339
Dividends on subsidiaries redeemable
preferred shares.......................... (61) (60) (52)
Other income (expense)...................... 789 719 895
Provision for income taxes.................. (2,358) (4,031) (2,691)
Equity in income (loss) of affiliates....... 372 (58) 66
Minority interest........................... (268) (357) (154)
----------- ----------- -----------
NET INCOME.................................. 4,935 6,554 6,555
=========== =========== ===========
BASIC EARNINGS PER SHARE.................... 20.5 27.1 27.4
=========== =========== ===========
DILUTED EARNINGS PER SHARE.................. 20.4 26.9 27.3
SHARES USED IN COMPUTING BASIC EARNINGS PER
SHARE
Shares outstanding, January 1............... 244,333,176 242,125,588 235,049,629
TSDIRAs shares equivalents, January 1....... -- -- 996,936
Issuance of common shares................... 227,231 1,190,031 881,799
Stock dividend.............................. -- -- 2,223,374
Treasury shares............................. (3,857,038) (1,108,302) (102,561)
----------- ----------- -----------
Weighted average number of shares --basic... 240,703,369 242,207,317 239,049,177
=========== =========== ===========
Dilutive effect of stocks plans............. 1,525,132 1,483,506 1,128,359
----------- ----------- -----------
Weighted average number of
shares -- diluted......................... 242,228,501 243,690,823 240,177,536
=========== =========== ===========
</TABLE>
Had compensation cost for the Company's grants for stock-based compensation
plans and transactions been determined consistent with SFAS No 123, the
Company's net income and net income per share would approximate the following
pro forma amounts:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996
--------------------- --------------------- ---------------------
AS AS AS
REPORTED PRO FORMA REPORTED PRO FORMA REPORTED PRO FORMA
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income...................... 4,935 4,886 6,554 6,524 6,555 6,541
Basic earnings per share........ 20.5 20.3 27.1 26.9 27.4 27.4
</TABLE>
F-17
<PAGE> 20
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions used
for those options granted in 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Risk-free interest rate(%).................................. 3.9 4.2 4.1
Dividend yield(%)........................................... 1.9 3.4 4.0
Expected volatility(%)...................................... 29 23 23
Expected life (years)....................................... 5 3 3
Weighted average fair value of options granted (FRF)........ 24.01 24.01 35.85
</TABLE>
SFAS No 123 does not apply to awards granted prior to 1995.
(i) US GAAP CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Comprehensive Income
In 1998, the Company adopted for US GAAP purposes SFAS No 130, "Reporting
Comprehensive Income", which requires companies to report all changes in equity
during a period, except those resulting from investment by owners and
distribution to owners, in a financial statement for the period in which they
are recognized. The Company has chosen to disclose comprehensive income, which
encompasses net income, foreign currency translation adjustments, unrealized
gains on losses on the Company's available for sale securities and the minimun
pension liability adjustment, in the Consolidated Statement of Shareholders'
Equity. Prior years have been restated to conform to the SFAS No 130
requirements.
F-18
<PAGE> 21
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE COMMON PAID IN RETAINED COMPREHENSIVE TREASURY SHAREHOLDERS'
INCOME SHARES SURPLUS EARNINGS INCOME TSDIRA'S SHARES EQUITY
------------- ------ ------- -------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AS OF JANUARY 1, 1996........ 11,753 10,672 32,774 (3,465) 190 -- 51,924
Net income 1996.............. 6,555 6,555 6,555
Other comprehensive income,
net of tax:
Unrealized foreign currency
translation
adjustments.............. 1,215
Realized foreign currency
translation
adjustments.............. 44
Unrealized gains on equity
securities............... 511
Gains on equity securities
included in net income... (143)
------
Other comprehensive income... 1,627 1,627 1,627
------
Comprehensive income....... 8,182
======
Cash dividend.............. (602) (602)
Stock dividend............. 221 1,241 (1,462) --
Issuance of common
shares................... 82 308 390
Stock compensation(a)...... 114 114
Treasury shares(a)......... 151 151
Repayment of TSDIRAs....... 50 140 (190) --
------ ------ ------ ------ ---- -- ------
AS OF DECEMBER 31, 1996...... 12,106 12,361 37,530 (1,838) -- -- 60,159
====== ====== ====== ====== ==== == ======
</TABLE>
- ---------------
(a) Stock compensation cost and elimination of gains on treasury shares are
reflected in net income above.
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE COMMON PAID IN RETAINED COMPREHENSIVE TREASURY SHAREHOLDERS'
INCOME SHARES SURPLUS EARNINGS INCOME SHARES EQUITY
------------- ------ ------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
AS OF JANUARY 1, 1997................. 12,106 12,361 37,530 (1,838) --
Net income 1997....................... 6,554 6,554 6,554
Other comprehensive income, net of
tax:
Unrealized foreign currency
translation adjustments........... 1,286
Realized foreign currency
translation adjustments........... 393
Unrealized gains on equity
securities........................ 980
Gains on equity securities included
in net income..................... (9)
------
Other comprehensive income.......... 2,650 2,650 2,650
------
Comprehensive income................ 9,204
======
Cash dividend....................... (2,554) (2,554)
Issuance of common share............ 111 557 668
Stock compensation(a)............... 223 223
Treasury shares(a).................. (1,521) (1,521)
------ ------ ------ ------ ------ ------
AS OF DECEMBER 31, 1997............... 12,217 12,918 41,753 812 (1,521) 66,179
====== ====== ====== ====== ====== ======
</TABLE>
F-19
<PAGE> 22
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE COMMON PAID IN RETAINED COMPREHENSIVE TREASURY SHAREHOLDERS'
INCOME SHARES SURPLUS EARNINGS INCOME SHARES EQUITY
------------- ------ ------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
AS OF JANUARY 1, 1998................. 12,217 12,918 41,753 812 (1,521) 66,179
Net income 1998....................... 4,935 4,935 4,935
Other comprehensive income, net of
tax:
Unrealized foreign currency
translation adjustments........... (1,626)
Realized foreign currency
translation adjustments........... 19
Unrealized gains on equity
securities........................ (80)
Gains on equity securities included
in net income..................... (384)
Minimum pension liability
adjustment........................ (344)
------
Other comprehensive losses.......... (2,415) (2,415) (2,415)
Comprehensive income................ 2,520
======
Cash dividend....................... (3,139) (3,139)
Issuance of common share............ 22 89 111
Stock compensation(a)............... 17 17
Treasury shares(a).................. 5 (2,252) (2,247)
------ ------ ------ ------ ------ ------
AS OF DECEMBER 31, 1998............... 12,239 13,007 43,571 (1,603) (3,773) 63,441
====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(a) Stock compensation cost and elimination of gains on treasury shares are
reflected in net income above.
DISCLOSURE OF ACCUMULATED OTHER COMPREHENSIVE INCOME BALANCES
The components of other comprehensive income (loss) balances are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1998 1997 1996
--------------------------- --------------------------- ---------------------------
TAX TAX TAX
PRE-TAX EXP. NET PRE-TAX EXP. NET PRE-TAX EXP. NET
AMOUNT (CREDIT) AMOUNT AMOUNT (CREDIT) AMOUNT AMOUNT (CREDIT) AMOUNT
------- -------- ------ ------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Foreign currency translation
Adjustments:
Unrealized foreign currency
translation adjustments....... (2,098) 14 (2,084) (848) (3) (851) (2,198) 17 (2,181)
Realized foreign currency
translation adjustments....... 19 -- 19 393 -- 393 44 -- 44
------ --- ------ ----- -- ----- ------ -- ------
Net foreign currency
translation adjustments..... (2,079) 14 (2,065) (455) (3) (458) (2,154) 17 (2,137)
Unrealized gain (loss) on equity
securities:
Unrealized holding gain
(loss)........................ 1,282 (92) 1,190 1,279 -- 1,279 442 -- 442
Reclassification adjustment..... (384) -- (384) (9) -- (9) (143) -- (143)
------ --- ------ ----- -- ----- ------ -- ------
Net unrealized gain (loss).... 898 (92) 806 1,270 -- 1,270 299 -- 299
Minimum pension liability
adjustment...................... (354) 10 (344) -- -- -- -- -- --
------ --- ------ ----- -- ----- ------ -- ------
Other comprehensive (loss)
income.......................... (1,535) (68) (1,603) 815 (3) 812 (1,855) 17 (1,838)
====== === ====== ===== == ===== ====== == ======
</TABLE>
F-20
<PAGE> 23
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
O) ADDITIONAL US GAAP INFORMATION
(i) INFORMATION ON EQUITY AFFILIATE
US GAAP summarized information for COGEMA was as follows (100% amounts):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
BALANCE SHEET DATA
Noncurrent assets........................................... 57,782 60,439
Current assets.............................................. 35,175 36,360
------ ------
Total assets................................................ 92,957 96,799
====== ======
Shareholders' equity and accumulated other comprehensive
income.................................................... 17,795 15,995
Minority interest........................................... 846 786
Noncurrent liabilities...................................... 55,824 61,112
Current liabilities......................................... 18,492 18,906
------ ------
Total liabilities and shareholders' equity.................. 92,957 96,799
====== ======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
STATEMENT OF INCOME DATA
Net sales................................................... 31,437
Operating income............................................ 686
Net income.................................................. 726
</TABLE>
COGEMA was accounted for under the equity method as effective December 31,
1997. Hence, statement of income data have been only presented for the year
ended December 31, 1998.
(ii) OTHER US GAAP REQUIREMENTS
RELATED PARTIES Under US GAAP, information provided in Note 25 would be
presented on the face of the consolidated balance sheets and consolidated
statements of income.
(iii) DISCLOSURE OF CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
NATURE OF OPERATIONS The Company is an integrated oil and gas group with
operations in more than 100 countries. The Company engages in all aspects of the
petroleum industry including upstream and downstream operations and the trading
of crude oil and petroleum products. The Company is also a significant producer
of chemicals products for industrial and consumer use (rubber-based products and
specialty chemicals: resins, inks, paints, adhesives).
ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-21
<PAGE> 24
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
(iv) RECENTLY ISSUED US ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded on the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999
and but cannot be applied retroactively. The Company has not yet determined the
timing of adoption of SFAS No. 133 and has not yet quantified the accounting
consequences on its hedging activities under this new standard.
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1998 1997
----------------------------- -----
ACCUMULATED
COST AMORTIZATION NET NET
------ ------------ ----- -----
<S> <C> <C> <C> <C>
ACQUISITION GOODWILL
Downstream...................................... 3,027 1,885 1,142 544
Chemicals....................................... 9,087 2,676 6,411 6,625
Other........................................... 114 114 -- 12
------ ----- ----- -----
Total Acquisition Goodwill................. 12,228 4,675 7,553 7,181
OTHER INTANGIBLES
Goodwill........................................ 1,499 530 969 813
Patents and trademarks.......................... 673 507 166 100
Entrance fee.................................... 163 103 60 55
Other(a)........................................ 2,523 1,685 838 1,225
------ ----- ----- -----
Total Other Intangibles.................... 4,858 2,825 2,033 2,193
------ ----- ----- -----
Total(b).............................. 17,086 7,500 9,586 9,374
====== ===== ===== =====
</TABLE>
- ---------------
(a) Further to the implementation of SFAS 109, certain assets of the upstream
segment acquired before January 1, 1993, whose depreciation was not tax
deductible were revaluated. Such revaluation (gross-up) is equal to the
value of the tax deduction attached to the assets should their depreciation
have been deductible. The opposite entry of the grossing-up of the assets,
which had no impact on the net income, has been recorded in deferred tax
liabilities.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1998 1997
---- -----
<S> <C> <C>
Cost................................................. 773 1,035
Accumulated amortization............................. (502) (415)
---- -----
Net........................................ 271 620
==== =====
</TABLE>
F-22
<PAGE> 25
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
(b) As of December 31, 1997, aggregate cost and accumulated amortization
amounted to MFRF 16,339 and MFRF 6,965 respectively.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment and the related accumulated depreciation,
depletion and amortization after effect of legal revaluation are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1998 1997
-------------------------------- ------
ACCUMULATED
DEPRECIATION,
DEPLETION AND
COST AMORTIZATION NET NET
------- ------------- ------ ------
<S> <C> <C> <C> <C>
OIL AND GAS EXPLORATION AND
PRODUCING PROPERTIES
Proved properties............................. 56,702 29,214 27,488 25,323
Unproved properties........................... 938 276 662 727
Work in progress.............................. 11,050 74 10,976 9,565
------- ------ ------ ------
Total Oil and Gas Exploration and Producing
Properties............................... 68,690 29,564 39,126 35,615
OTHER PROPERTY, PLANT AND EQUIPMENT
Transportation equipment...................... 1,409 390 1,019 1,023
Machinery, plant and equipment................ 22,868 16,672 6,196 6,258
Land.......................................... 3,499 168 3,331 3,302
Buildings..................................... 16,024 8,337 7,687 8,040
Construction in progress...................... 1,652 4 1,648 1,608
Other......................................... 18,021 11,645 6,376 5,554
------- ------ ------ ------
Total Other Property, Plant and
Equipment................................ 63,473 37,216 26,257 25,785
------- ------ ------ ------
Total(a).............................. 132,163 66,780 65,383 61,400
======= ====== ====== ======
</TABLE>
- ---------------
(a) As of December 31, 1997, aggregate cost and accumulated depreciation,
depletion and amortization amounted to MFRF 127,525 and MFRF 66,125,
respectively.
Property, plant and equipment presented above include the following amounts
for facilities and equipment leases that have been capitalized:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1998 1997
---------------------------- ----
ACCUMULATED
DEPRECIATION,
DEPLETION, AND
COST AMORTIZATION NET NET
----- -------------- --- ----
<S> <C> <C> <C> <C>
Machinery, plant and equipment...................... 4,312 4,273 39 94
Buildings........................................... 860 546 314 374
----- ----- --- ---
Total..................................... 5,172 4,819 353 468
===== ===== === ===
</TABLE>
Amortization expense of capital lease assets amounted to MFRF 74 in 1998,
MFRF 60 in 1997, MFRF 71 in 1996.
F-23
<PAGE> 26
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
6. EQUITY AFFILIATES: INVESTMENTS AND LOANS
The Company's share in the equity and income or loss of equity affiliates
is summarized below:
<TABLE>
<CAPTION>
DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- ---------------------------------
1998 1997 1998 1997 1998 1997 1996
----- ----- ------ ------ --------- --------- ---------
EQUITY EQUITY EQUITY
% % EQUITY EQUITY IN INCOME IN INCOME IN INCOME
OWNED OWNED VALUE VALUE (LOSS) (LOSS) (LOSS)
----- ----- ------ ------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
COGEMA.............................. 15.00 15.00 2,429 2,396 110 -- --
Ocensa.............................. 15.20 15.20 572 597 78 72 26
Gisco............................... 10.00 10.00 532 13 37 13 --
SARA................................ 25.00 25.00 401 373 49 12 33
Cie Francaise du Methane Holding.... 15.00 -- 399 -- 23 -- --
Qatargas LNG........................ 10.00 10.00 358 156 13 8 --
Abu Dhabi Gas Industries Ltd........ 15.00 15.00 356 379 -- -- --
Statoil Thailande Limited........... 33.33 -- 244 -- -- -- --
I.P.C............................... 23.75 23.75 153 164 -- -- --
Trapil.............................. 34.72 34.72 147 156 33 22 20
Ruwais Fertilizer Industries........ 33.33 33.33 141 150 -- -- --
Gaz de Strasbourg................... 24.98 49.88 93 189 5 11 --
Depots petroliers de Fos............ 25.69 25.69 117 131 (14) (14) (15)
Graficart........................... 47.98 -- 61 -- 5 -- --
POHOL............................... 10.00 10.00 38 40 -- -- --
A.D.P.C............................. 23.75 23.75 28 28 -- -- --
Other............................... (136) (152) 33 (182) 2
----- ----- --- ---- ---
5,933 4,620 372 (58) 66
----- ----- --- ---- ---
Loans..................... 3,314 3,871
----- -----
Total..................... 9,247 8,491
===== =====
</TABLE>
F-24
<PAGE> 27
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
7. OTHER INVESTMENTS
As of December 31, 1998 and 1997, other investments consisted of:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1998 1997
------------------------- -----
VALUATION
COST ALLOWANCE NET NET
----- --------- ----- -----
<S> <C> <C> <C> <C>
PUBLICLY TRADED EQUITY SECURITIES
Ultramar Diamond Shamrock......................... 1,310 -- 1,310 1,395
Societe Generale.................................. 499 -- 499 499
Eiffage........................................... 182 -- 182 83
Paribas........................................... 160 -- 160 410
Compagnie Generale de Geophysique................. 131 -- 131 147
Societe Centrale des AGF.......................... 128 -- 128 356
Technip........................................... 56 -- 56 56
Unibail........................................... -- -- -- 153
Other............................................. 52 4 48 108
----- --- ----- -----
Total publicly traded.......................... 2,518 4 2,514 3,207
----- --- ----- -----
Market value of publicly traded equity securities... -- -- 3,019 4,459
===== =====
OTHER EQUITY SECURITIES
Wepec............................................. 296 -- 296 296
Oman LNG LLC...................................... 163 -- 163 16
Bianco-Tramier-Tardy.............................. 97 75 22 22
Nogat............................................. 92 -- 92 98
Gasandes Argentina................................ 82 -- 82 --
Oleoducto de Colombia............................. 76 -- 76 89
Totalgaz Argentina(a)............................. -- -- -- 73
Graficart(b)...................................... -- -- -- 61
Other(c).......................................... 2,890 905 1,985 1,949
----- --- ----- -----
Total other equity securities.................. 3,696 980 2,716 2,604
----- --- ----- -----
Total(d)..................................... 6,214 984 5,230 5,811
===== === ===== =====
</TABLE>
- ---------------
(a) This subsidiary acquired in December 1997 was consolidated effective January
1, 1998.
(b) Investment reported as "Equity affiliates: investments and loans" (note 6)
as of December 31, 1998.
(c) Investments in subsidiaries excluded from consolidation after considering
their materiality to the Company's operations account for MFRF 1,213 and
MFRF 1,222 as of December 31, 1998 and 1997, respectively.
(d) As of December 31, 1997, the aggregate cost of other investments and
valuation allowances amounted to MFRF 6,847 and MFRF 1,036, respectively.
F-25
<PAGE> 28
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
8. OTHER NONCURRENT ASSETS
The table below sets forth the main items included under this caption in
the consolidated balance sheets as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1998 1997
------------------------- -----
VALUATION
COST ALLOWANCE NET NET
----- --------- ----- -----
<S> <C> <C> <C> <C>
Deferred income taxes(a)............................... 1,027 -- 1,027 1,008
Loans and advances(b).................................. 3,517 (820) 2,697 3,526
Other.................................................. 968 -- 968 955
----- ---- ----- -----
Total........................................ 5,512 (820) 4,692 5,489
===== ==== ===== =====
</TABLE>
- ---------------
(a) Note 23.
(b) Excluding loans to equity affiliates (Note 6).
9. INVENTORIES
As of December 31, 1998 and 1997, inventories consisted:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Crude oil and natural gas................................... 1,774 2,390
Refined petroleum products and products in process.......... 4,960 7,057
Chemical products........................................... 4,344 3,948
Supplies and other inventories.............................. 1,141 1,155
------ ------
Total............................................. 12,219 14,550
====== ======
</TABLE>
10. ACCOUNTS RECEIVABLE
The breakdown between accounts and notes receivable is the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1998 1997
----------------------------- ------
VALUATION
COST ALLOWANCE NET NET
------ --------- ------ ------
<S> <C> <C> <C> <C>
Receivables from customers.................... 21,053 (1,646) 19,407 21,835
Notes receivable.............................. 1,078 -- 1,078 1,536
------ ------ ------ ------
Total............................... 22,131 (1,646) 20,485 23,371
====== ====== ====== ======
</TABLE>
- ---------------
(a) As of December 31, 1997, aggregate cost and valuation allowance amounted to
MFRF 24,925 and MFRF 1,554, respectively.
F-26
<PAGE> 29
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
11. PREPAID EXPENSES AND OTHER CURRENT ASSETS
The detail of these captions as of December 31, 1998 and 1997 is shown
below:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1998 1997
----------------------------- -----
VALUATION
COST ALLOWANCE NET NET
------ --------- ------ -----
<S> <C> <C> <C> <C>
Advances to suppliers(a)....................... 830 -- 830 1,055
Current accounts(a)............................ 2,623 (2) 2,621 1,905
Receivables from States (including taxes and
duties)...................................... 3,481 -- 3,481 1,695
Prepayments and accrued income................. 1,041 -- 1,041 969
Deferred income taxes(b)....................... 333 -- 333 367
Other.......................................... 2,771 (45) 2,726 2,809
------ --- ------ -----
Total................................ 11,079 (47) 11,032 8,800
====== === ====== =====
</TABLE>
- ---------------
(a) Including advances to and current accounts with related parties (Note 25).
(b) Note 23.
12. SHORT-TERM INVESTMENTS
Short-term investments consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1997 1998
--------------- ---------------
MARKET MARKET
NET VALUE NET VALUE
----- ------ ----- ------
<S> <C> <C> <C> <C>
Marketable securities........................... 4,064 4,010 1,744 1,984
Other........................................... 33 -- 29 --
----- ----- ----- -----
Total................................. 4,097 4,010 1,773 1,984
===== ===== ===== =====
</TABLE>
13. SHAREHOLDERS' EQUITY
A) COMMON SHARES
DESCRIPTION The Company's common shares, par value of FRF 50, are the only
class of shares.
Shares may be held in either bearer or registered form. However, the shares
owned by the French State must be registered.
Holders of the Company's shares have a preemptive right to subscribe for
additional shares issued by the Company on a pro rata basis according to their
respective holding of shares.
Each share confers to its holder the right to one vote at the Shareholders'
Meeting. However, all fully paid-up shares registered in the name of the same
shareholder for at least two years, and any shares issued to such shareholders
without consideration in registered form in connection with any increase in the
registered capital of the Company by way of capitalization of reserves, of
profits or of premiums, carry double voting rights. The merger of the Company
has no impact on such double voting rights, which may be exercised at the
meeting of shareholders of the absorbing company if so provided for in the
bylaws of such company.
F-27
<PAGE> 30
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
At a Shareholders' Meeting, the number of single voting rights which may be
exercised by a shareholder acting on his own behalf or by proxy, with respect to
the shares held directly and indirectly and the proxies given to such
shareholder, may not exceed 10% of the total number of voting rights attached to
the Company's shares. However, should the shareholder possess and/or represent
double voting rights, the resulting additional voting rights, and only these,
may be exercised in excess of the limit so defined, provided that the total
voting rights exercised by such shareholder shall not exceed 20% of the total
voting rights attached to the Company's shares.
The above restrictions shall become null and void if any individual or
entity, acting alone or in cooperation with one or more individuals or entities,
holds at least two thirds of the total registered capital of the Company
following a public tender offer for all of the Company's shares.
PRINCIPAL SHAREHOLDERS Percentages have been determined in accordance with
shares issued and outstanding at year-end and existing voting rights,
respectively.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------
% OF STOCK % OF
OWNERSHIP VOTING
(B) RIGHTS
---------- ------
<S> <C> <C>
1. Principal shareholders represented within the Board of
Directors as of December 31, 1998
AGF................................................... 0.96 1.11
COGEMA................................................ 5.50 10.31
Societe Generale...................................... 1.84 2.53
Paribas............................................... 0.50 0.92
2. Company's Employees................................... 2.87 4.50
3. Other registered shareholders......................... 0.91 1.17
----- -----
Total.......................................... 12.58 20.54
Company's holdings
TOTAL............................................... 1.82 0.00
TOTAL Nucleaire..................................... 0.86 0.00
----- -----
Total.......................................... 2.68 0.00
Other shareholders....................................... 84.75 79.46
(among which ADR(a) holders)............................. 11.48 10.76
</TABLE>
- ---------------
(a) American depositary receipt
(b) As of December 31, 1998, the Company owned 6,548,894 of its own shares
(2.68%).
In addition to the legal obligation to notify the Company of the
acquisition of shares in excess of certain percentages of its stock, any
individual or legal entity who becomes the owner, directly or indirectly, of
shares, voting rights or any securities convertible or otherwise exchangeable
for shares representing 1% of the Company's stock or any multiple thereof must
notify the Company thereof within fifteen days of exceeding each of these
levels, by registered mail, stating the number of securities held and requesting
acknowledgement of receipt (Article 12 of the Statuts).
Failure to make this disclosure as explained in the foregoing paragraph
results in the withholding of voting rights at Shareholders' Meetings, in the
manner prescribed by law, in respect of shares exceeding the fraction which
should have been disclosed, if at any such Meeting the failure to disclose has
been noted and if one or more shareholders holding in the aggregate not less
than 3% of the equity or voting rights so request.
F-28
<PAGE> 31
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Any individual or legal entity must also notify the Company in the manner
and within the time limits set forth above when the direct or indirect holding
thereof falls below each of the levels mentioned.
AUTHORIZED CAPITAL
<TABLE>
<CAPTION>
COMMON SHARES
-------------
<S> <C>
As of January 1, 1996....................................... 649,459,740
Increase (Decrease) in authorized shares.................... 6,540,076
-----------
As of December 31, 1996..................................... 655,999,816
Increase (Decrease) in authorized shares.................... (217,598)
-----------
As of December 31, 1997..................................... 655,782,218
Increase (Decrease) in authorized shares.................... 4,091,809
-----------
As of December 31, 1998..................................... 659,874,027
===========
</TABLE>
SHARES ISSUED AND OUTSTANDING
<TABLE>
<CAPTION>
COMMON SHARES
-------------
<S> <C>
As of January 1, 1996....................................... 235,049,629
Issued in connection with:
Capital increase reserved to employees.................... 1,244,892
Stock dividend............................................ 4,446,748
Exercise of employees share subscription options.......... 387,383
Repayment of TSDIRAs...................................... 996,936
-----------
As of December 31, 1996..................................... 242,125,588
Issued in connection with:
Capital increase reserved to employees.................... 1,630,756
Exercise of employees share subscription options.......... 576,832
-----------
As of December 31, 1997................................... 244,333,176
Issued in connection with:
Exercise of employees share subscription options.......... 454,462
-----------
As of December 31, 1998..................................... 244,787,638
===========
</TABLE>
B) PAID-IN SURPLUS
In accordance with French law, the paid-in surplus corresponds to share
premiums of the parent company which can be capitalized or used to offset losses
if the legal reserve has reached its minimum required level (see C) below). The
amount of the paid-in surplus may also be distributed subject to taxation unless
the unrestricted reserves of the parent company are distributed prior to or
simultaneously with this item.
F-29
<PAGE> 32
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
C) RETAINED EARNINGS
As of December 31, 1998, consolidated retained earnings consist of:
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Parent company:
Legal reserve............................................. 1,222
Unrestricted reserves..................................... 23,340
------
Total parent company...................................... 24,562
Consolidated subsidiaries................................... 19,329
Equity affiliates........................................... 273
------
Total retained earnings..................................... 44,164
======
</TABLE>
Under French law, 5% of net income must be transferred to the legal reserve
until the legal reserve reaches 10% of the capital par value. This reserve
cannot be distributed to the shareholders other than in liquidation but can be
used to offset losses.
If wholly distributed, the unrestricted reserves of the parent company
would be taxed for an approximate amount of MFRF 753 as of December 31,1998.
The individual financial statements of consolidated subsidiaries and equity
affiliates include reserves which are legally restricted as to disposal. Based
upon the Company's ownership percentages, these amounted to MFRF 5,714 as of
December 31, 1998.
A)PERPETUAL SUBORDINATED SECURITIES REPAYABLE IN SHARES ("TSDIRAS")
On June 28, 1990, the Company issued 8,804,204 TSDIRAs with a par value of
FRF 761 each for an aggregate par value of FRF 6,699,999,244. These securities
were subscribed for by the French State in connection with the Company's
acquisition of assets from the Orkem Group. In the second half of 1990, the
French State transferred 854,240 TSDIRAs to Groupe des Assurances Nationales
(GAN) and 1,971,000 TSDIRAs to Assurances Generales de France (AGF). In May
1994, the French State transferred an additional 467,290 TSDIRAs to AGF and, in
December 1994, AGF transferred 362,950 TSDIRAs to COGEMA.
On December 28, 1994, the Company repurchased all of the 1,106,225
remaining TSDIRAs held by the French State at a price of FRF 1,142.96 per
TSDIRA, that is FRF 285.74 per equivalent share. Such TSDIRAs have been
cancelled as provided in the issue agreement.
All TSDIRAS outstanding as of December 31, 1995 were repaid in shares in
1996 through various capital increases.
B) REPAYMENT
The duration of TSDIRAs was equal to that of the Company. Each TSDIRA was
repayable at the holders' discretion on the basis of four shares of the Company
for one TSDIRA on the following terms:
- upon each new issuance of shares of the Company for cash, the maximum
number of shares of the Company that could be obtained in repayment of
TSDIRAs was limited to 35/65ths of the number of new shares subscribed by
persons other than the French State, after deduction of new shares of the
Company effectively subscribed for by the French State;
F-30
<PAGE> 33
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
- upon each new issuance of shares of the Company reserved for investors
other than the French State, subscribed in cash or in kind, and upon each
new issuance of shares of the Company resulting from conversion,
exchange, repayment, exercise of a warrant or stock option or otherwise
subscribed by investors other than the French State, the maximum number
of shares of the Company that could be obtained in repayment of the
perpetual subordinated securities repayable in shares was limited to
35/65ths of the number of new shares issued;
- in case of liquidation of the Company, the perpetual subordinated
securities repayable in shares were repaid in shares.
14. SUBSIDIARIES REDEEMABLE PREFERRED SHARES
These non-voting shares were issued by two North American subsidiaries:
- TOTAL Energy Resources Finance, Inc. (TERFIN), (USA)
- TOTAL Energy Capital, Inc. (TECI), (USA).
TOTAL Energy Resources Finance, Inc. (TERFIN) and Total Energy Capital,
Inc. (TECI), wholly-owned subsidiaries of the Company, have been established for
the purpose of issuing Auction Preferred Stock (APS). In 1987, TERFIN issued
$100 million of APS and in 1988 TECI issued $150 million of APS.
The shares of APS are adjustable rate securities with dividend rates set at
auction every 49 days. Dividends are cumulative from date of issue and are
payable every 49 days in arrears. The effective dividend rates of the APS were
4% and 4% in 1998 and 1997, respectively.
The shares may be redeemed at the option of TERFIN and TECI at their
liquidation preference ($100 million for the TERFIN APS and $150 million for the
TECI APS) plus accumulated and unpaid dividends. The shares become mandatorily
redeemable if certain required coverages are not met, if dividends paid are not
eligible for the dividend-exclusion deduction under United States tax law or if
TECI must register as an investment company under the Investment Company Act of
1940, as amended.
During any period that accumulated dividends payable are unpaid or that
TERFIN and TECI have not redeemed shares when required, holders of a majority of
the APS, voting as a single class, can elect a majority of the board of
directors of the respective companies.
The assets of TERFIN and TECI are not available to satisfy claims of the
creditors of the Company and its affiliates while shares of APS are outstanding.
Balances at the end of periods were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1998 1997
--------------------- --------------------
IN MILLIONS IN MILLIONS
OF LOCAL OF LOCAL
CURRENCY MFF CURRENCY MFF
------------ ----- ----------- -----
<S> <C> <C> <C> <C>
TERFIN....................................... US$100 562 US$100 599
TECI......................................... US$150 844 US$150 898
----- -----
Total.............................. 1,406 1,497
===== =====
</TABLE>
F-31
<PAGE> 34
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
A) CHANGES IN SUBSIDIARIES REDEEMABLE PREFERRED SHARES
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
December 31, 1997........................................... 1,497
Foreign currency translation effect......................... (91)
-----
December 31, 1998........................................... 1,406
=====
</TABLE>
B) DIVIDENDS ON SUBSIDIARIES REDEEMABLE PREFERRED SHARES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Redeemable preferred shares issued by:
TERFIN.................................................... 24 24 21
TECI...................................................... 37 36 31
-- -- --
Total............................................. 61 60 52
== == ==
</TABLE>
F-32
<PAGE> 35
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
15. EMPLOYEE BENEFITS
The funded status of defined benefits pension plans and other than pension
benefits plans presented and determined under US GAAP was as follows (prior
years data have been restated in accordance with SFAS No 132 "Employers'
Disclosures about Pensions and other Postretirements Benefits"):
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------- --------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------- --------------
1998 1997 1998 1997
------ ------ ----- -----
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit Obligation at beginning of year............ 9,409 8,362 360 390
Service Cost....................................... 233 252 7 7
Interest cost...................................... 622 596 22 22
Plan participants contributions.................... 54 49 -- --
Business combinations.............................. -- 343 -- --
Disposal........................................... -- -- (4) (83)
Curtailment........................................ 90 (111) -- --
Actuarial loss (gain).............................. 240 348 (21) 34
Benefits paid...................................... (525) (559) (15) (15)
Others (foreign currency translation).............. (276) 129 (9) 5
------ ------ ---- ----
Benefit Obligation at end of year.................. 9,847 9,409 340 360
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year..... (8,042) (4,055) -- --
Actuarial return on plan assets.................... (836) (975) -- --
Company contributions(a)........................... (110) (2,532) -- --
Plan participants contributions.................... (55) (49) -- --
Business combinations.............................. -- (473) -- --
Benefits paid...................................... 349 158 -- --
Others (foreign currency translation).............. 35 (116) -- --
------ ------ ---- ----
Fair value of plan assets at end of year........... (8,659) (8,042) -- --
Funded status of the plan.......................... 1,188 1,367 340 360
Unrecognized actuarial loss........................ 756 467 6 (13)
Unrecognized actuarial prior service cost.......... 59 73 17 19
Unrecognized actuarial transition obligation....... (17) (35) -- --
------ ------ ---- ----
Accrued benefit cost............................... 1,986 1,872 363 366
</TABLE>
- ---------------
(a) In 1997, the Company covered certain French employee pension benefit plans
through insurance companies for an amount of MFRF 2,441. Further to this
externalization, employee benefits provision was reduced by an amount of
MFRF 2,441 and the funding of insurance premium was charged to expenses. As
a consequence, the externalization had no impact on net income.
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligation
in excess of plan assets were MFRF 3,389, MFRF 3,209, and MFRF 487,
respectively, as of December 31, 1998 and MFRF 3,271, MFRF 3,113, and MFRF 512,
respectively, as of December 31, 1997.
F-33
<PAGE> 36
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Amounts recognized in the balance sheets consist of:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------- --------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------- --------------
1998 1997 1998 1997
------ ------ ----- -----
<S> <C> <C> <C> <C>
Accrued benefit liability (including Minimum
Liability Adjustments -- MLA)...................... 3,127 2,712 363 366
Prepaid benefit cost................................. (784) (840) -- --
----- ----- ---- ----
Net amount accrued for under US GAAP................. 2,343 1,872 363 366
----- ----- ---- ----
Accumulated other comprehensive income (MLA)......... (357) -- -- --
----- ----- ---- ----
Net amount recognized under US GAAP.................. 1,986 1,872 363 366
===== ===== ==== ====
</TABLE>
Net accruals as of December 31, 1998 and 1997 in the accompanying
consolidated balance sheets can be compared with balances determined under US
GAAP as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------- --------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------- --------------
1998 1997 1998 1997
------ ------ ----- -----
<S> <C> <C> <C> <C>
Net amount accrued for under US GAAP................. 2,343 1,872 363 366
- Excess funding of plans recognized in income
only when paid back to the Company............ 451 497 -- --
- Impacts of transition obligation, of prior
service cost and of actuarial gains recognized
with a different timing under local
regulations................................... 90 58 (1) --
- Minimum liability adjustment (MLA)............ (357) -- -- --
----- ----- ---- ----
Net amount accrued for under French GAAP in the
accompanying consolidated balance sheet............ 2,527 2,427 362 366
===== ===== ==== ====
- Accrued....................................... 2,964 2,850 362 366
- Prepaid....................................... (437) (423) -- --
</TABLE>
COMPONENTS OF NET PERIODIC BENEFIT COST
Net periodic cost under US GAAP (after minority interests) was as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------
1998 1997 1996 1998 1997 1996
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Service Cost(a)............................... 233 252 259 7 7 13
Expected interest cost........................ 622 596 546 22 22 25
Expected return on plan assets................ (663) (403) (278) -- -- --
Amortization of unrecognized prior service
cost........................................ (6) (7) 3 (2) (1) (1)
</TABLE>
F-34
<PAGE> 37
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------
1998 1997 1996 1998 1997 1996
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Amortization of actuarial net loss (gain)..... 64 37 (89) -- -- --
Amortization of net transition obligation..... 23 24 26 -- -- --
Curtailments/Settlements...................... 91 (91) 219 1 (3)
---- ---- ---- ---- ---- ----
Net periodic benefit cost..................... 364 408 686 28 25 37
==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(a) In 1998, service cost is presented free from plan participants
contributions. 1997 and 1996 data have been restated for comparison
purposes.
Annual cost under French GAAP was MFRF 390, MFRF 422 and MFRF 614 for the
years ended December 31, 1998, 1997 and 1996, respectively. The difference
between these amounts and the annual cost under US GAAP primarily results from
the difference in timing of amortization of the initial transition liability and
of actuarial gains and losses. In addition, certain companies do not recognize
the excess funding.
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31,
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------------- -------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- -------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Discount rates................... 7.1% 7.4% 6.6% 6.6%
Future salary increases.......... 4.0% 4.0% 4.0% 4.0%
Expected long-term return on
assets......................... 8.1% 8.0% -- --
Residual active life............. 10-25 years 10-25 years 10-25 years 10-25 years
</TABLE>
Regarding the other benefits plans, the assumed increase of health care
costs is a fixed amount per person agreed upon between the employer and the
trade unions under the existing cost sharing agreements which represent 2.5% for
1999. This percentage will decrease in the future as these increases are fixed
in French Francs.
For other benefits plans, a one-percentage-point change in assumed health
care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1-PERCENTAGE- 1-PERCENTAGE-
POINT POINT
INCREASE DECREASE
------------- -------------
<S> <C> <C>
Effect on total of service and interest cost components.... 4 (4)
Effect on the postretirement benefit obligation............ 46 (42)
</TABLE>
F-35
<PAGE> 38
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
16. OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1998 1997
----- -----
<S> <C> <C>
Litigation and accrued penalty claims....................... 595 388
Major refinery turnarounds.................................. 613 572
Site restoration and environmental contingencies............ 1,627 1,516
Other....................................................... 2,716 2,796
----- -----
Total....................................................... 5,551 5,272
===== =====
</TABLE>
17. DEBT
A) LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------
1998 1997
---------------------------- ----------------------------
SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL
------- --------- ------ ------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Debenture loans(a)............. 5 16,052 16,057 7 13,874 13,881
Capital lease obligations...... 418 -- 418 567 -- 567
Banks and other:
Fixed rate................... 25 444 469 52 414 466
Floating rate................ 9 6,966 6,975 22 6,806 6,828
--- ------ ------ --- ------ ------
34 7,410 7,444 74 7,220 7,294
--- ------ ------ --- ------ ------
Total................ 457 23,462 23,919 648 21,094 21,742
=== ====== ====== === ====== ======
</TABLE>
- ---------------
(a) Including two loans issued by the parent company which are presented as
debenture loans.
F-36
<PAGE> 39
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Debenture loans can be analyzed as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
PARENT COMPANY
6% Notes 1993-2000 (Swiss francs 150 million)(a)............ 553 589
9 1/2% Bonds 1991-1998 (French francs 750 million)(a)....... -- 789
8 1/2% Bonds 1991-2001 (German marks 200 million)(a)........ 711 758
7 1/8% Bonds 1991-2001 (Swiss francs 100 million)(a)........ 405 432
8 1/4% Bonds 1992-2002 (German marks 300 million)(a)........ 1,015 1,081
8 1/5% Bonds 1995-2005 (French francs 500 million) (a)...... 547 582
7.62% Single Coupon Bonds 1995-2005 (French francs 950
million)(a)............................................... 1,040 1,108
7 1/2% Bonds 1995-2005 (French francs 400 million)(a)....... 438 467
6.90% Bonds 1996-2006 (French francs 990 million)(a)........ 1,103 1,175
6 3/4% Bonds 1996-2008 (French francs 950 million)(a)....... 1,029 1,096
6 3/4% Bonds 1996-2008 (French francs 800 million)(a)....... 887 945
6 3/4% Bonds 1996-2008 (French francs 700 million)(a)....... 758 807
6.20% Bonds 1997-2009 (French francs 900 million)(a)........ 971 1,034
6 7/8% Bonds 1997-2004 (US Dollars 300 million)............. 1,687 1,796
5 1/4% Bonds 1997-2003 (German marks 250 million)(a)........ 817 870
5.03% Bonds 1997-2007 (French francs 620 million)(a)........ 555 591
6 4/5% Bonds 1997-2007 (Spanish Pesetas 12 billion)(a)...... 463 493
3 months Pibor + 0.38% Bonds 1998-2008 (French francs 230
million)(a)............................................... 215 --
2 1/4% Bonds 1998-2003 (Swiss francs 200 million)(a)........ 754 --
5% Bonds 1998-2013 (French francs 1 billion)(a)............. 939 --
3 months ATHIMID 0.9% Bonds 1998-2003 (Greek drachmas 10
billion)(a)............................................... 184 --
5 1/8% Bonds 1998-2009 (French francs 1 billion)(a)......... 932 --
Short-term portion(b)....................................... -- (789)
------ ------
Total Parent company................................... 16,003 13,824
------ ------
Consolidated subsidiaries................................... 54 57
------ ------
Total............................................. 16,057 13,881
====== ======
</TABLE>
- ---------------
(a) Through the use of issue swaps, each debenture loan becomes equivalent to a
US dollar floating rate debt.
(b) Amounts:
-- as of December 31, 1998:
nil
-- as of December 31, 1997:
9 1/2% Bonds 1991-1998 parent company MFRF 789
F-37
<PAGE> 40
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Loan repayment schedule (excluding short-term portion):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
YEAR 1998 % 1997 %
---- ------ --- ------ ---
<S> <C> <C> <C> <C>
1999................................................. -- -- 803 4
2000................................................. 1,671 7 1,448 7
2001................................................. 1,672 7 1,872 8
2002................................................. 2,458 10 3,877 18
2003................................................. 2,752 12 13,742 63
2004 and after....................................... 15,366 64 -- --
------ --- ------ ---
Total...................................... 23,919 100 21,742 100
====== === ====== ===
</TABLE>
Analysis by currency and interest rate:
These analyses take into account interest rate and foreign currency swap
operations which hedge long-term debt.
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 % 1997 %
------ --- ------ ---
<S> <C> <C> <C> <C>
US dollar............................................ 15,006 63 13,067 60
Pound sterling....................................... 5,311 22 5,699 26
Norwegian krone...................................... 2,400 10 1,582 7
French franc......................................... 711 3 931 5
Italian lira......................................... 193 1 75 --
Australian dollar.................................... 169 1 209 1
Spanish peseta....................................... 15 -- 37 --
Other currencies..................................... 114 -- 142 1
------ --- ------ ---
Total...................................... 23,919 100 21,742 100
====== === ====== ===
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Fixed rates:
Below 7%.................................................. 198 137
7% to 11%................................................. 356 394
11% and over.............................................. 26 38
Floating rates(a)........................................... 23,339 21,173
------ ------
Total....................................................... 23,919 21,742
====== ======
</TABLE>
- ---------------
(a) Mainly composed of:
<TABLE>
<CAPTION>
CURRENCY MAIN REFERENCE AVERAGE SPREAD EFFECTIVE RATE
- -------- -------------- -------------- --------------
<S> <C> <C> <C>
US dollar.................. Libor USD 6 months 0.04% 5.35%
Pound sterling............. Libor GBP 3 months 0.19% 6.62%
</TABLE>
As of December 31, 1998, the parent company had an amount of US$ 3,327
million of long-term lines of credit, of which US$ 3,292 million were not used
(US$ 2,981 million and US$ 2,933 million, respectively, as of December 31,
1997).
F-38
<PAGE> 41
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
These facilities are primarily contracted with international banks for
periods initially extending up to 5 years (with an average maturity of
approximately 3.2 years). Interests on borrowings under these agreements are
based on prevailing money market rates. Besides, the credit lines are subject to
various commitment fees on the unused portions.
(b) Short-Term Borrowings
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1998 1997
------------------------------ ------------------------------
WEIGHTED WEIGHTED
BALANCE AT AVERAGE BALANCE AT AVERAGE
END OF PERIOD INTEREST RATE END OF PERIOD INTEREST RATE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
French commercial paper.............. 1,120 3.50% 2,000 3.49%
Short-term loans..................... 2,620 6.46% 2,529
----- -----
Total........................... 3,740 4,529
===== =====
</TABLE>
18. OTHER CREDITORS AND ACCRUED LIABILITIES
The main items included under this caption in the consolidated balance
sheets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Advances from customers(a).................................. 3,095 3,258
Accruals and deferred income................................ 766 897
Payables to States (including taxes and duties)............. 9,535 8,422
Payroll..................................................... 1,717 1,636
Other....................................................... 4,015 3,385
------ ------
Total............................................. 19,128 17,598
====== ======
</TABLE>
- ---------------
(a) Including advances from related parties (Note 25).
19. BUSINESS SEGMENT INFORMATION
Business segments are defined in accordance with the structure of the
internal reporting which is designed for evaluating segments performance by
management. Each segment is managed as a separate profit center responsible for
its worldwide results.
Since 1995, the Company's activities are conducted through three segments:
- The Upstream segment is responsible for the oil and gas exploration and
production activities (including Middle East). Residual mining activities
and the investment in Cogema are also integrated in this segment.
- The Downstream segment includes Refining and Marketing, Trading and
Shipping operations.
- Chemicals are organized into five divisions (rubber processing, resins,
inks, paints and adhesives).
The Company's other activities, not falling within these segments, are
grouped under the classification "Corporate" which also includes the residual
corporate administration costs.
F-39
<PAGE> 42
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
The accounting policies of the business segments are the same as those
described in Note 1 (Accounting Policies).
Operating profit and assets for each segment have been determined after
making consolidation and intersegment adjustments as appropriate. Sales prices
between business segments approximate market prices.
A summary of the Company's operations by business segment is presented
below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-----------------------------------------------------------------------
CONSOLIDATION
UPSTREAM DOWNSTREAM CHEMICALS CORPORATE ADJUSTMENTS TOTAL
-------- ---------- --------- --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Statement of income:
Non-Group sales....................... 15,496 112,742 31,131 245 -- 159,614
Intersegment sales.................... 15,420 274 39 1,902 (17,635) --
------ ------- ------ ------ ------- -------
Total sales.................... 30,916 113,016 31,170 2,147 (17,635) 159,614
====== ======= ====== ====== ======= =======
Operating income........................ 4,813 2,993 2,468 (504) -- 9,770
Depreciation, depletion and amortization
per accompanying consolidated
statements of income.................. 4,196 2,439 1,110 131 -- 7,876
Additional depreciation (write-backs) on
tangible assets (included in operating
expenses)............................. 86 -- (3) -- -- 83
Amortization of intangible assets (Note
22)................................... 144 147 47 129 -- 467
Amortization of acquisition goodwill.... -- 207 457 22 -- 686
------ ------- ------ ------ ------- -------
Depreciation, depletion and amortization
charged to income..................... 4,426 2,793 1,611 282 -- 9,112
====== ======= ====== ====== ======= =======
Interest income......................... 190 432 64 889 -- 1,575
Interest expense........................ (475) (517) (280) (1,847) -- (3,119)
Equity in net income (loss) of
affiliates............................ 295 72 5 -- -- 372
Income tax expense (credit)............. 1,570 450 270 112 -- 2,402
Segment assets(a)....................... 39,831 18,855 15,344 939 -- 74,969
Intangible assets and property, plant
and equipment additions............... 11,849 2,954 1,964 183 -- 16,950
Equity affiliates: investments.......... 2,742 672 68 2,451 -- 5,933
</TABLE>
- ---------------
(a) Intangible assets and property, plant and equipment
F-40
<PAGE> 43
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------------------------------------
CONSOLIDATION
UPSTREAM DOWNSTREAM CHEMICALS CORPORATE ADJUSTMENTS TOTAL
-------- ---------- --------- --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Statement of income:
Non-Group sales....................... 16,539 145,613 28,537 396 -- 191,085
Intersegment sales.................... 20,299 334 39 1,631 (22,303) 0
------ ------- ------ ------ ------- -------
Total sales.................... 36,838 145,947 28,576 2,027 (22,303) 191,085
====== ======= ====== ====== ======= =======
Operating income........................ 8,217 3,082 2,324 (551) -- 13,072
Depreciation, depletion and amortization
per accompanying consolidated
statements of income.................. 3,542 2,785 1,019 219 -- 7,565
Additional depreciation (write-backs) on
tangible assets (included in operating
expenses)............................. 114 1 -- -- -- 115
Amortization of intangible assets (Note
22)................................... 60 148 48 277 -- 533
Amortization of acquisition goodwill.... -- 252 590 18 -- 860
------ ------- ------ ------ ------- -------
Depreciation, depletion and amortization
charged to income..................... 3,716 3,186 1,657 514 -- 9,073
====== ======= ====== ====== ======= =======
Interest income......................... 171 307 65 1,953 -- 2,496
Interest expense........................ (403) (635) (271) (2,287) -- (3,596)
Equity in net income (loss) of
affiliates............................ (92) 30 4 -- -- (58)
Income tax expense (credit)
Segment assets(a)..................... 36,682 18,199 14,888 1,005 -- 70,774
Intangible assets and property, plant
and equipment additions............... 9,995 4,084 1,862 310 -- 16,251
Equity affiliates: investments.......... 1,529 687 8 2,396 -- 4,620
</TABLE>
- ---------------
(a) Intangible assets and property, plant and equipment
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------------
CONSOLIDATION
UPSTREAM DOWNSTREAM CHEMICALS CORPORATE ADJUSTMENTS TOTAL
-------- ---------- --------- --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Statement of income:
Non-Group sales....................... 12,160 139,441 24,568 408 -- 176,577
Intersegment sales.................... 16,235 234 45 1,451 (17,965) --
------ ------- ------ ------ ------- -------
Total sales.................... 28,395 139,675 24,613 1,859 (17,965) 176,577
====== ======= ====== ====== ======= =======
Operating income........................ 6,767 1,529 1,916 (444) -- 9,768
Depreciation, depletion and amortization
per accompanying consolidated
statements of income.................. 3,391 2,525 901 99 -- 6,916
Additional depreciation (write-backs) on
tangible assets (included in operating
expenses)............................. 39 1 -- -- -- 40
Amortization of intangible assets (Note
22)................................... 69 141 72 64 -- 346
Amortization of acquisition goodwill.... -- 253 389 21 -- 663
------ ------- ------ ------ ------- -------
Depreciation, depletion and amortization
charged to income..................... 3,499 2,920 1,362 184 -- 7,965
====== ======= ====== ====== ======= =======
Interest income......................... 82 251 53 1,787 -- 2,173
Interest expense........................ (550) (623) (271) (1,830) -- (3,274)
Equity in net income (loss) of
affiliates............................ 22 41 3 -- -- 66
Income tax expense (credit)
</TABLE>
F-41
<PAGE> 44
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------------
CONSOLIDATION
UPSTREAM DOWNSTREAM CHEMICALS CORPORATE ADJUSTMENTS TOTAL
-------- ---------- --------- --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Segment assets(a)..................... 27,908 21,362 13,252 1,161 -- 63,683
Intangible assets and property, plant
and equipment additions............... 6,655 3,231 1,604 231 -- 11,721
Equity affiliates: investments.......... 1,316 704 19 -- -- 2,039
</TABLE>
- ---------------
(a) Intangible assets and property, plant and equipment
20. GEOGRAPHICAL AREAS
Information concerning principal geographic areas was as follows:
<TABLE>
<CAPTION>
FAR EAST
REST OF NORTH AND REST OF
FRANCE EUROPE AMERICA AFRICA THE WORLD TOTAL
------ ------- ------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Non-Group sales................ 42,663 43,673 8,290 12,193 52,795 159,614
Intangible assets and property,
plant and equipment......... 13,279 26,598 4,035 8,899 22,158 74,969
</TABLE>
<TABLE>
<CAPTION>
FAR EAST
REST OF NORTH AND REST OF
FRANCE EUROPE AMERICA AFRICA THE WORLD TOTAL
------ ------- ------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Non-Group sales................ 49,223 44,792 18,098 12,879 66,093 191,085
Intangible assets and property,
plant and equipment......... 13,783 26,314 4,732 8,282 17,663 70,744
</TABLE>
<TABLE>
<CAPTION>
FAR EAST
REST OF NORTH AND REST OF
FRANCE EUROPE AMERICA AFRICA THE WORLD TOTAL
------ ------- ------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Non-Group sales................ 44,592 39,163 20,331 11,772 60,719 176,577
Intangible assets and property,
plant and equipment......... 14,378 24,310 8,132 6,201 10,662 63,683
</TABLE>
Sales are attributed to geographic areas based on the location of the
assets producing revenues.
21. INTEREST EXPENSE, NET
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Interest income.......................................... 1,575 2,496 2,173
Interest expense......................................... (3,119) (3,596) (3,274)
------ ------ ------
(1,544) (1,100) (1,101)
------ ------ ------
Amounts capitalized...................................... 556 362 184
------ ------ ------
Total.......................................... (988) (738) (917)
====== ====== ======
</TABLE>
F-42
<PAGE> 45
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
22. OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Foreign exchange gains (losses)............................. (139) (180) 78
Gains (losses) on sales of assets........................... 845 974 851
Amortization of intangible assets........................... (467) (533) (346)
Other....................................................... (454) (190) (717)
---- ---- ----
Total............................................. (215) 71 (134)
==== ==== ====
</TABLE>
23. INCOME TAXES
Pursuant to the provisions of the French Tax Code (Article 209 quinquies)
and in accordance with a tax agreement from the French Tax Authorities, the
parent company files a worldwide consolidated tax return. This regime provides
that the basis for income tax computation of the parent company is not limited
to French or foreign consolidated subsidiaries or equity investees, but also
applies to direct or indirect shareholdings over 10% in the energy segment and
over 50% for other activities. It allows the parent company to offset, within
certain limits, the taxable income of profitable companies against the losses of
other entities. The previous agreement ended on December 31, 1998 and the
Company expects that it will be renewed by the French Tax Authorities for a
further three-year period which will end on December 31, 2001.
A valuation allowance is recorded to reduce deferred tax assets to the net
amount which is more likely than not to be realized, based on all available
evidence. French income and foreign withholding taxes are not provided for the
temporary differences related to the financial statement carrying amount and tax
bases of investments in foreign subsidiaries which are considered to be
permanent investments. Undistributed earnings of foreign subsidiaries considered
to be reinvested indefinitely amounted to MFRF 9,000 as of December 31, 1998.
The determination of the tax effect relating to such reinvested income is not
practicable.
In addition, no provision for income taxes has been made for approximately
MFRF 12,208 of unremitted earnings of the Company's French subsidiaries in that:
- the remittance of such earnings would be tax exempt for 95% or more owned
subsidiaries,
- the income tax which would be paid upon distribution of the undistributed
earnings of 95% or less owned subsidiaries and equity investees could be
offset by foreign tax credits in the consolidated tax agreement and
reimbursed to the Company.
Income tax expense:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Current income taxes........................................ 2,189 3,311 2,869
Deferred income taxes....................................... 213 766 (247)
----- ----- -----
Provision for income taxes.................................. 2,402 4,077 2,622
===== ===== =====
</TABLE>
F-43
<PAGE> 46
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Reconciliation between provision for income taxes and pre-tax income:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1998 1997 1996
----- ------ ------
<S> <C> <C> <C>
Net income................................................ 5,814 7,611 5,646
Minority interest......................................... 302 336 139
Provision for income taxes................................ 2,401 4,077 2,622
Equity in (income) loss of affiliates..................... (372) 58 (66)
----- ------ ------
Pre-tax income before non-recurring items................. 8,145 12,082 8,341
French statutory tax rate................................. 41 2/3% 41 2/3% 36 2/3%
French statutory rate applied to pre-tax income before
non-recurring items..................................... 3,394 5,034 3,058
Differences between French and foreign income tax rates... (145) 108 223
Permanent differences..................................... 153 363 809
Effects of consolidated tax agreement, net................ (712) (1,100) (1,177)
Change in valuation allowance............................. (317) (339) (236)
Other, net................................................ 29 11 (55)
----- ------ ------
Provision for income taxes................................ 2,402 4,077 2,622
===== ====== ======
</TABLE>
The components of deferred tax balances were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Deferred tax assets:
Net operating losses (NOLs) and tax credit
carryforwards.......................................... 2,334 2,453
Employee benefits......................................... 492 458
Accrued liabilities....................................... 811 753
Exploration costs......................................... 368 542
Miscellaneous............................................. 2,285 1,839
------ ------
Gross deferred tax asset.................................. 6,290 6,045
Valuation allowance....................................... (1,509) (1,636)
------ ------
Net deferred tax asset.................................... 4,781 4,409
Deferred tax liabilities:
Excess tax over book depreciation......................... (4,383) (5,370)
Temporary tax deductions.................................. (1,253) (1,537)
Miscellaneous............................................. (2,839) (1,357)
------ ------
Total deferred tax liabilities............................ (8,475) (8,264)
------ ------
Net deferred tax liabilities................................ (3,694) (3,855)
</TABLE>
F-44
<PAGE> 47
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Deferred taxes are presented as follows in the balance sheet:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Noncurrent deferred tax assets.............................. 1,027 1,008
Current deferred tax assets................................. 333 367
Deferred tax liability...................................... (5,054) (5,230)
------ ------
Net......................................................... (3,694) (3,855)
====== ======
</TABLE>
Deferred tax assets relating to NOLs and tax credit carryforwards were
available in various tax jurisdictions as of December 31, 1998 expiring in the
following years:
<TABLE>
<CAPTION>
NOLS AND
TAX CREDIT
CARRYFORWARDS
-------------
<S> <C>
1999........................................................ 102
2000........................................................ 32
2001........................................................ 120
2002........................................................ 139
2003........................................................ 237
2004 and after.............................................. 613
Unlimited................................................... 1,091
-----
Total carryforwards............................... 2,334
=====
</TABLE>
24. LEASES
The Company leases real estate, service stations and other equipment
through noncancelable capital and operating leases.
The future minimum lease payments on noncancelable leases to which the
Company is committed as of December 31, 1998 is set forth below:
<TABLE>
<CAPTION>
CAPITAL
OPERATING LEASE
LEASES OBLIGATION
--------- -----------
<S> <C> <C>
1999........................................................ 246 207
2000........................................................ 210 217
2001........................................................ 189 72
2002........................................................ 148 69
2003........................................................ 81 26
2004 and after.............................................. 84 122
--- ----
Future lease payments....................................... 958 713
Less amount representing interest........................... (128)
----
Present value of net minimum lease payments................. 585
Less current portion of capital leases...................... (167)
----
Long Term Obligation........................................ 418
====
</TABLE>
F-45
<PAGE> 48
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Net rental expense incurred under operating leases for the years ended
December 31, 1998, 1997 and 1996 was MFRF 248, MFRF 364 and MFRF 396,
respectively.
Operating leases also include long-term charters of several tankers.
25. RELATED PARTIES
The main transactions with related parties (principally all the investments
carried under the equity method and subsidiaries excluded from consolidation)
and balances receivable from and payable to them were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1998 1997
------ -----
<S> <C> <C>
Receivables
Trade accounts............................................ 468 453
Loans (excluding loans to equity affiliates).............. 573 1,708
Payables
Trade accounts............................................ 973 1,204
Loans..................................................... 116 101
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1998 1997 1996
----- ------ -----
<S> <C> <C> <C>
Sales.............................................. 2,790 3,220 3,113
Purchases.......................................... 6,945 10,530 9,723
Interest expense................................... 3 2 141
Interest income.................................... 56 42 68
</TABLE>
26. COMMITMENTS AND CONTINGENCIES
A summary of commitments given and received is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
COMMITMENTS GIVEN
Discounted notes not yet matured.......................... 30 16
Guarantees given on customs duties........................ 9,329 9,106
Bank guarantees........................................... 1,464 1,759
Pledged assets............................................ 26 64
Other commitments given................................... 1,201 1,323
------ ------
Total Commitments Given........................... 12,050 12,268
====== ======
COMMITMENTS RECEIVED
Commitments received on receivables....................... 819 810
Other commitments received................................ 1,098 930
------ ------
Total Commitments Received........................ 1,917 1,740
====== ======
</TABLE>
Commitments relating to leases are mentioned in Note 24.
F-46
<PAGE> 49
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
FINANCIAL INSTRUMENTS AND COUNTERPARTY RISKS The Company uses basic
financial derivative instruments to manage its exposure to fluctuations in
interest rates, foreign currency rates and prices of crude oil and natural gas.
During fiscal year 1998, the Company has continued its policy of favoring
the daily interest rate as a benchmark for its cash investments. This justifies
the use of short-term interest rate swaps which reduce to a daily reference
liquidities invested for a few weeks or months.
The cash investment operations explain part of the high outstanding amount
of the short term currency swaps. Currency swaps are also used when the parent
company finances subsidiaries in order to ensure a balance between their demands
and the refinancing of the parent company.
In order to minimize the cost of its long-term debt, the Company has
borrowed at a fixed rate on international markets and uses issue swaps
(long-term interest rate and foreign currency swaps) in order to convert this
debt into US dollars at a variable rate. Long-term interest rate swaps can also
hedge certain long-term debts in order to modify the indebtedness structure of
the Company.
Currency exposures are hedged by purchases/sales of currencies primarily on
the spot market, which explains the relatively low level of use of foreign
currency instruments. Forward currency purchases/sales have, for the most part,
a very short maturity (several days to a few months).
The Company does not anticipate any third-party default which could have a
significant impact on its financial position and the results of its
transactions.
INTEREST RATE AND FOREIGN CURRENCY AGREEMENTS The contractual amounts
stated below are outstanding as of December 31, 1998 and 1997. These amounts
represent the levels of involvement by the Company and are not indicative of
gains or losses. The amounts are in million FRF.
F-47
<PAGE> 50
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
2004 AND
AS OF DECEMBER 31, 1998 TOTAL 1999 2000 2001 2002 2003 AFTER
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE HEDGING ACTIVITY
ISSUE SWAP
Receive-fixed swap Notional amount 16,003 -- 553 1,116 1,015 1,755 11,564
Received rate 6.43%
Paid rate (as of 12.31.98) 5.30%
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM CURRENCY SWAP
Notional amount 388 -- -- 388 -- -- --
Received rate (as of 12.31.98) 4.08%
Paid rate (as of 12.31.98) 7.85%
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM INTEREST RATE SWAP
Receive-fixed swap Notional amount 795 122 122 122 308 113 8
Received rate 8.00%
Paid rate (as of 12.31.98) 7.10%
Pay-fixed swap Notional amount 190 190 -- -- -- -- --
Paid rate 4.89%
Received rate (as of 12.31.98) 3.44%
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM CURRENCY SWAP Notional amount 14,661 2 days
to 6 months
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM INTEREST RATE SWAP
Receive-fixed swap Notional amount 793 1 month
Received rate 3.44% to 4 months
Paid rate (as of 12.31.98) 3.24%
Pay-fixed swap Notional amount 12,344 7 days
Paid rate 3.17% to 6 months
Received rate (as of 12.31.98) 3.06%
- ---------------------------------------------------------------------------------------------------------------
CAP/FLOOR* Notional amount 144 9 months
Guaranteed rate 22.00%
- ---------------------------------------------------------------------------------------------------------------
FUTURE RATE AGREEMENT* Notional amount 144 9 months
Guaranteed rate 19.86%
- ---------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY HEDGING ACTIVITY
CURRENCY OPTION Option bought-notional -- -- -- -- -- -- --
Option sold-notional -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
FORWARD EXCHANGE CONTRACT Notional amount 488 475 9 4 -- -- --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* These contracts were negotiated in South African rands (ZAR), which explains
the high level of the guaranteed rates.
F-48
<PAGE> 51
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
2003 AND
AS OF DECEMBER 31, 1997 TOTAL 1998 1999 2000 2001 2002 AFTER
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE HEDGING ACTIVITY
ISSUE SWAP
Receive-fixed swap Notional amount 14,613 789 -- 589 1,189 1,081 10,965
Received rate 7.06%
Paid rate (as of 12.31.97) 5.91%
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM CURRENCY SWAP
Notional amount 414 -- -- -- 414 -- --
Received rate (as of 12.31.97) 3.45%
Paid rate (as of 12.31.97) 7.11%
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM INTEREST RATE SWAP
Receive-fixed swap Notional amount 981 130 130 130 130 329 132
Received rate 7.99%
Paid rate (as of 12.31.97) 8.24%
Pay-fixed swap Notional amount 190 -- 190 -- -- -- --
Paid rate 4.89%
Received rate (as of 12.31.97) 3.61%
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM CURRENCY SWAP Notional amount 16,476 2 days
to 6 months
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM INTEREST RATE SWAP
Receive-fixed swap Notional amount 50 1 month
Received rate 3.48%
Paid rate (as of 12.31.97) 3.38%
Pay-fixed swap Notional amount 19,067 2 days
Paid rate 3.52% to 6 months
Received rate (as of 12.31.97) 3.48%
- ---------------------------------------------------------------------------------------------------------------
FUTURE RATE AGREEMENT Notional amount 0 -- -- -- -- -- --
Guaranteed rate
- ---------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY HEDGING ACTIVITY
CURRENCY OPTION Option bought notional -- -- -- -- -- -- --
Option sold-notional -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
FORWARD EXCHANGE CONTRACT Notional amount 1,159 1,134 13 12 -- -- --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
F-49
<PAGE> 52
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1998 1997
---- ----
<S> <C> <C>
Impact on the reported interest expenses(a)
Long-term interest rate swaps............................. (20) (19)
Short-term interest rate swaps............................ (10) (12)
Caps/Floors............................................... (1) --
Short-term foreign currency swaps......................... (258) (461)(b)
Currency options.......................................... -- 73
</TABLE>
- ---------------
(a) The Company does not consider as meaningful to measure this impact for the
issue swaps. These swaps are contracted as part of the issuance of most of
the debenture loans, the fixed rate of which is in this way converted into a
US dollar floating rate. The absolute level of this fixed rate, hence the
amount of interest paid on the debenture loans (at fixed rate) and received
on the swap (at the same fixed rate) are therefore not meaningful. It is
worth noting that these flows of fixed rate interest are netted by the banks
which manage these swaps.
(b) A large part of these currency swaps are used by the Parent Company to place
French francs deposits on foreign money markets, especially US dollar. This
policy results, in the course of 1998, in a higher financial result, which
was compensated by a significant amount of exchange premium.
COMMODITY CONTRACTS The commitments related to the Company's operations on
crude oil, petroleum products and natural gas futures markets are stated below.
These amounts represent the levels of involvement by the Company and are not
indicative of gains or losses.
The commitments relating to financial instruments represent the purchase
involvement of the swaps.
The commitments relating to non financial instruments are valued based on
quoted market prices at year end.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1998 1997
----- -----
<S> <C> <C>
FINANCIAL INSTRUMENTS
Refined products swaps.................................... 384 879
Crude oil swaps (contracts for difference)................ 1,342 1,170
Natural gas swaps (contracts for difference).............. -- 341
NON FINANCIAL INSTRUMENTS
Futures contracts (exchanges):
Purchase............................................... 751 76
Sale................................................... 821 333
OTC contracts (Brent, Dubai and natural gas):
Purchase............................................... 3,060 1,280
Sale................................................... 3,946 1,992
</TABLE>
27. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No 107 and No 119, issued by the FASB, require the disclosure of the
estimated fair value of all financial instruments other than specified items
such as lease contracts, subsidiary and affiliate investments and employers'
pension and benefit obligations. Except for publicly traded equity and
marketable securities for which market prices were used, these values have been
estimated for the majority of the Company's financial instruments. Accordingly,
fair values are based on estimates using various valuation techniques, such as
present value of future cash-flows. However, methods and assumptions followed to
disclose data presented herein are inherently judgmental and involve various
limitations including the following:
- fair values presented do not take into consideration the effects of
future interest rate and currency fluctuations,
F-50
<PAGE> 53
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
- estimates as of December 31,1998 and 1997 are not necessarily indicative
of the amounts that the Company would record upon further
dispositions/terminations of the financial instruments.
As a consequence, the use of different estimations, methodologies and
assumptions may have a material effect on the estimated fair value amounts.
The methodologies used are as follows:
CASH AND CASH EQUIVALENTS, ACCOUNTS AND NOTES RECEIVABLE, BANK OVERDRAFTS,
SHORT-TERM BORROWINGS, ACCOUNTS AND NOTES PAYABLE
The carrying amounts reflected in the consolidated statements are
reasonable estimates of the fair value because of the relatively short period of
time between the origination of the instruments and their expected realization.
INVESTMENTS Estimated fair values for publicly traded equity securities
are based on quoted market prices as of December 31, 1998 and 1997. For other
investments for which there is no quoted price, a reasonable estimate of fair
value could not be made without incurring excessive costs.
LOANS AND ADVANCES The fair values for loans have been determined by
discounting the estimated future cash flows, using the zero coupon interest rate
curves at year end taking into account a spread that corresponds to the average
risk classification of the Company. Loans to subsidiaries excluded from
consolidation are not fair valued.
LONG-TERM DEBT, CURRENT PORTION OF LONG-TERM DEBT, LONG-TERM INTEREST RATE
AND FOREIGN CURRENCY SWAPS The fair values of these financial instruments were
determined by estimating future cash flows on a borrowing-by-borrowing basis and
discounting these future cash flows using the zero coupon interest rate curves
at year end and taking into account a spread that corresponds to the average
risk classification of the Company.
All issue swaps (long-term interest rate and foreign currency swaps)
specifically hedge debenture loans. They were concluded under ISDA agreements,
in order to create long-term debt in US dollars on a Libor basis. Fair values of
these swaps have to be considered together with the fair values of hedged
debenture loans, as set forth below. Also, some long-term interest rate swaps
were concluded to modify partially the interest rate exposure. The corresponding
fair value is set forth below and should be considered together with the fair
value of the long-term debt.
BANK GUARANTEES These instruments were fair valued based on average fees
currently charged for similar agreements, taking into account the average risk
classification of the Company.
OTHER OFF-BALANCE SHEET FINANCIAL INSTRUMENTS The fair value of the
interest rate swaps is calculated by discounting future cash flows on the basis
of the zero coupon interest rate curves existing at year end.
The FRAs are valued based on the forward rates deduced from the curve of
the interest rates observed at year end.
As to the single Cap existing as of December 31, 1998, it was estimated,
given its approaching maturity and its low liquidity, that the premium paid was
a good indicator of its fair value.
Forward exchange transactions (forward exchange rates and currency swaps)
are valued on the basis of a comparison of the forward rates negotiated with the
rates in effect on the financial markets at year end for similar maturities.
Nota.: Short-term currency swaps are used in the context of managing the
current position of the Company, in order to be able to borrow or invest cash in
markets other than the French franc market. Thus, their fair value, if it is
significant, is compensated by the value of the short-term loans and borrowings
which they hedge. Likewise, the fair value of the short-term interest rate swaps
correlates with the value of the short-term loans and borrowings; these swaps
are used in order to reduce the negotiated rates to the daily rate which is the
benchmark.
F-51
<PAGE> 54
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
The carrying values and the fair values determined are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1998 1997
--------------------- ---------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
BALANCE SHEET
Other investments:
Publicly traded............................. 2,514 3,019 3,207 4,459
Non publicly traded
Subsidiaries excluded from
consolidation.......................... 1,213 -- 1,222 --
Others................................... 1,503 -- 1,382 --
Short-term investments:
Publicly traded............................. 4,064 4,010 1,744 1,984
Non publicly traded......................... 33 -- 29 --
Loans and advances
Loans to subsidiaries excluded from
consolidation............................ 1,443 -- 1,798 --
Other loans................................. 1,254 1,155 1,728 1,354
Debenture loans (before swaps and excluding
current portion)............................ 16,057 18,215 13,881 14,147
Issue swaps................................... -- (2,226) -- (235)
Bank loans(a):
Fixed rates................................. 1,109 1,217 466 536
Floating rates.............................. 6,335 6,335 6,828 6,828
Current portion of long-term debt (excluding
current portion of capital lease
obligation)................................. 1,204 1,278 1,658 1,757
OFF-BALANCE SHEET
TREASURY MANAGEMENT
Bank guarantees............................. -- (82) -- (22)
Long-term interest rate swaps............... -- 34 -- 30
Short-term interest rate swaps.............. -- (b) -- (b)
Long-term interest rate and currency
swaps(c)................................. -- (b) -- --
Forward exchange contracts.................. -- 39 -- (b)
Forward rate agreements..................... -- (b) -- --
Caps/Floors................................. -- (b) -- (b)
COMMODITIES TRADING MANAGEMENT
Refined products swaps and contracts for
difference............................... -- (b) -- (b)
Natural gas swaps........................... -- -- -- 13
</TABLE>
- ---------------
(a) The market value does not take into account the interest rate swaps, since
they are presented separately.
(b) Estimated fair value is immaterial (below FRF 10M).
(c) These swaps do not specifically hedge debenture loans.
F-52
<PAGE> 55
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
Estimated fair values for the other off-balance-sheet instruments held as
at December 31, 1998 and 1997 are not material (below FRF 10M).
28. ENVIRONMENTAL CONTINGENCIES
The Company operates in an industry and in countries where regulations and
laws concerning environmental protection are increasing. The reasonably
estimable future costs of probable environmental obligations have been provided
for in the Company's consolidated statements of income. As the scope of
environmental obligations becomes better defined, there may be changes in the
estimated future costs. The ultimate amount of such future costs cannot be
determined due to such factors as the unknown magnitude of possible
contamination, the unknown timing and extent of the corrective actions that may
be required and the determination of the Company's liability in proportion to
other responsible parties. While it is not possible at this time to establish
the ultimate amount of liability with respect to future environmental costs, the
Company does not expect that these contingencies will materially affect its
consolidated financial statements.
29. EMPLOYEES SHARE SUBSCRIPTION PLANS
SHARE SUBSCRIPTION PLANS
<TABLE>
<CAPTION>
1992 PLAN 1993 PLAN 1994 PLAN 1995 PLAN 1996 PLAN
(A) (A) (A) (A) (B) TOTAL
---------- ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Price per share (FRF).......... 225 210 286 291 392
Options exercisable and granted
prior to January 1, 1996..... 657,497 686,300 795,000 946,500 -- 3,085,297
Granted...................... -- -- -- -- 960,000 960,000
Cancelled or expired......... 600 (17,100) (3,500) (4,900) -- (24,900)
Exercised.................... (272,143) (100,740) (10,500) (4,000) -- (387,383)
- -------------------------------------------------------------------------------------------------------------
Exercisable as of January 1,
1997....................... 385,954 568,460 781,000 937,600 960,000 3,633,014
Granted...................... -- -- -- -- -- --
Cancelled or expired......... -- -- (1,150) (500) (2,200) (3,850)
Exercised.................... (277,117) (222,947) (70,968) (3,300) (2,500) (576,832)
- -------------------------------------------------------------------------------------------------------------
Exercisable as of January 1,
1998....................... 108,837 345,513 708,882 933,800 955,300 3,052,332
Granted......................
Cancelled or expired......... (15,300) (200) (500) (1,000) (2,100) (19,100)
Exercised.................... (93,537) (168,483) (102,302) (85,240) (4,900) (454,462)
- -------------------------------------------------------------------------------------------------------------
Exercisable as of December
31, 1998................... -- 176,830 606,080 847,560 948,300 2,578,770
---------- ------------ ------------ --------- -------- ---------
Expiration date................ March 1998 June 1999 November September December
June 1998 October 1999 2000 2001 2002
</TABLE>
- ---------------
(a) Grants decided by the Board of Directors and authorized by the Extraordinary
Shareholders' Meeting held June 17, 1991. The options are exercisable only
after a 3-year period from the date the option is granted to the individual
employee and must be exercised within 6 years from the date of grant.
(b) Grants decided by the Board of Directors and authorized by the Extraordinary
Shareholders' Meeting held June 4, 1996. The options are exercisable only
after a 3-year period from the date the option is granted to the individual
employee and must be exercised within 6 years from the date of grant.
F-53
<PAGE> 56
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
SHARE PURCHASE PLANS As approved by the Extraordinary General
Shareholders' Meeting held June 12, 1989, the Board of Directors was authorized
to make available to eligible employees options to purchase shares of the
Company. This program, limited to 1,200,000 shares, has been implemented as
follows:
Board of Directors held January 24, 1990: 240,000 options granted at an
exercise price of FRF 112.5 per share.
Board of Directors held December 12,1990: 960,000 options granted at an
exercise price of FRF 148.5 per share: 904,800 options were individually granted
and 24,800 options were cancelled after they had been granted
The exercise period of those share purchase options was 5 years from the
date of grant.
As of December 31, 1996, all the options granted had been either exercised
(1,111,200) cancelled (24,800) or expired (8,800).
As approved by the Extraordinary General Shareholders' meeting held May 21,
1997 the Board of Directors was authorized to make available to eligible
employees options to purchase shares of the Company. The Board of Directors held
on March 17, 1998 decided to grant 955,000 options on an individual basis at an
exercise price of FRF 615. These options are exercisable after a 5-year period
from the date of grant and must be exercised within 8 years from the date of
grant.
30. PAYROLL AND STAFF
The main data relating to this caption consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
PERSONNEL EXPENSE
Wages and salaries (including social charges) (MFRF)..... 14,206 13,906 13,052
------ ------ ------
AVERAGE NUMBER OF EMPLOYEES
France
Management.......................................... 5,164 4,942 4,829
Other............................................... 16,904 16,586 16,815
International
Management.......................................... 4,391 4,337 3,924
Other............................................... 30,707 28,526 31,987
------ ------ ------
Total.................................................... 57,166 54,391 57,555
====== ====== ======
</TABLE>
Average number of employees includes employees of consolidated
subsidiaries.
31. CONSOLIDATED STATEMENTS OF CASH FLOWS
(i) SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
ISSUANCE OF SHARES
No significant non-cash investing and financing activities were undertaken
in 1998.
1997: Proceeds exclude subscriptions made by employees through the
conversion of loans for FRF 170M.
F-54
<PAGE> 57
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
1996: Proceeds exclude subscriptions made by employees through the
conversion of loans for FRF 185M.
(ii) DISCLOSURE OF ACCOUNTING POLICY
The consolidated statements of cash flows have been translated into French
francs at the average exchange rates. They exclude the currency translation
differences arising from translation of assets and liabilities denominated in
foreign currency into French francs using exchange rates prevailing at the end
of periods (except for cash and cash equivalents). Therefore, the consolidated
statements of cash flows will not agree with the differences derived from the
consolidated balance sheet amounts.
CASH AND CASH EQUIVALENTS Cash equivalents are highly liquid investments
that are readily convertible to cash and have original maturities of three
months or less. Changes in bank overdrafts are included in cash provided by
financing activities.
LONG-TERM DEBT Changes in long-term debt have been presented net to
reflect that significant changes mainly related to revolving credit agreements.
The detailed analysis is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Increase in long-term debt............................... 6,009 7,638 4,282
Repayment of long-term debt.............................. (1,061) (3,323) (5,977)
------ ------ ------
Net increase (decrease) in long-term debt................ 4,948 4,315 (1,695)
====== ====== ======
</TABLE>
Changes in operating assets and liabilities
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1998 1997 1996
------ ----- ------
<S> <C> <C> <C>
Inventories............................................... 2,149 348 (2,680)
Accounts receivable....................................... 2,664 (255) (1,338)
Prepaid expenses and other current assets................. (2,734) (881) (507)
Accounts payable.......................................... (2,422) 531 1,277
Other creditors and accrued liabilities................... 1,845 1,094 2,209
------ ----- ------
1,502 837 (1,039)
====== ===== ======
</TABLE>
32. LIST OF THE PRINCIPAL CONSOLIDATED SUBSIDIARIES AS OF DECEMBER 31, 1998
As of December 31, 1998, 489 subsidiaries were consolidated of which 453
were fully consolidated, 4 were proportionately consolidated and 32 were
accounted for under the equity method.
F-55
<PAGE> 58
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
A list of the principal consolidated subsidiaries is as follows:
<TABLE>
<CAPTION>
COMPANY'S
SHARE %
---------
<S> <C>
UPSTREAM
EUROPE:
Total Oil Marine 100.0
Total Norge 100.0
Total Oil & Gas Nederland BV 100.0
Total Exploration Production
Russie 99.7
Total Exploration Production
Kazakhstan 99.7
AFRICA:
Total Upstream Nigeria 100.0
Total Exploration Production
Algerie 100.0
T.L.O.G. (Libye) 99.8
Total Angola 100.0
Total Exploration South Africa 85.1
Total Marine Gabon 100.0
MIDDLE EAST/ASIA:
Total Yemen 100.0
Total Abu Al Bu Khoosh 99.7
Total Qatar Oil & Gas 99.7
Total Thailande 100.0
Total Indonesie 100.0
Total Myanmar Exploration
Production 99.7
Total Oman 99.8
Total Sirri 99.8
Total South Pars 99.8
NORTH AND SOUTH AMERICA:
Tepma Colombie 100.0
Total Austral 99.7
Total Exploration Production
Venezuela 99.6
Total Exploration Production USA 100.0
DOWNSTREAM
FRANCE:
Total Raffinage Distribution 100.0
Totalgaz 100.0
Compagnie Petroliere de l'Est 100.0
Distributeurs de Combustibles
Associes 100.0
Charvet 100.0
Sud Ouest Fioul Total 100.0
Stela 100.0
Petroliers Reunis de l'Ouest 100.0
Total Solvants 100.0
Francilienne de Confort 100.0
Yacco 100.0
EUROPE:
Total Oil Great Britain 100.0
Total Nederland 100.0
Total Belgique Luxembourg 100.0
Total Deutschland 100.0
Total Espana 100.0
Total Hungaria 100.0
P Lindsey Oil Refinery 50.0
P Total Raffinaderij Nederland 55.0
- ---------------
P = Proportionately consolidated
</TABLE>
<TABLE>
<CAPTION>
COMPANY'S
SHARE %
---------
<S> <C>
DOWNSTREAM
MEDITERRANEAN/AFRICA:
Total Turkiye 51.0
Total Maroc 100.0
Total Nigeria 60.0
Total Kenya 78.6
Total Tunisie 90.0
Total Outre-Mer 100.0
Total Cote d'Ivoire 77.3
Total Liban 99.8
Total Senegal 91.0
Total South Africa (Pty) Ltd 57.6
SOUTH AMERICA:
Totalgaz Argentina 100.0
Total Gasandes SA 100.0
INTERNATIONAL:
Total Transport Maritime 100.0
Total Transport Corporation 100.0
Total International 100.0
Air Total International 99.0
New Wisdom Operating Cy 100.0
New Vision Operating Cy 100.0
CHEMICALS
FRANCE:
Hutchinson 100.0
Euridep 65.9
Cray Valley SA 100.0
Coates Lorilleux SA 100.0
Bostik SA 100.0
EUROPE:
Resinas Sinteticas SA 100.0
Total Inchiostri 100.0
Kalon 65.9
Coates Brothers PLC 100.0
NORTH AND SOUTH AMERICAS:
Bostik Inc. 100.0
Cook Composites & Polymers Co 70.0
Hutchinson FTS, Inc. 100.0
Sinclair 100.0
CORPORATE AND OTHER ACTIVITIES
Total (Parent company) 100.0
Societe Financiere d'Auteuil 100.0
Total Nucleaire 100.0
Omnium de Participations SA 99.9
Omnium Insurance and
Reinsurance Cy 100.0
Total Oil Holdings Ltd 100.0
Total Finance Nederland 100.0
Total America, Inc. 100.0
Total Chimie 100.0
</TABLE>
F-56
<PAGE> 59
TOTAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS OF FRENCH FRANCS ("MFF"),
EXCEPT FOR PER SHARE AMOUNTS OR WHERE OTHERWISE INDICATED) -- (CONTINUED)
33. SUBSEQUENT EVENT
On January 14, 1999, shareholders at the Combined General Meeting approved
the proposed combination of TOTAL and PETROFINA announced on December 1, 1998.
This involves as a first step the acquisition of PETROFINA shares held by
ELECTROFINA, FIBELPAR, TRACTEBEL, ELECTRABEL and AG 1824, representing 41% of
PETROFINA's issued capital. This acquisition takes the form of an exchange for
new shares of TOTAL. The exchange parity is on the basis of 9 TOTAL shares for 2
PETROFINA shares.
The above-mentioned companies will therefore contribute 9,614,190 fully
paid-in shares of PETROFINA common stock and will receive in exchange 43,263,855
shares of TOTAL. TOTAL will increase its capital by issuing new ordinary shares
with an effective date of January 1, 1998.
The share contribution and the capital increase will be finalized only
after approval from the European and US antitrust authorities.
As soon as the approved share issue is carried out, TOTAL will file notice
with the Belgian banking and finance Committee of its intention to make a public
offer to acquire all the remaining outstanding share of PETROFINA in exchange
for TOTAL shares, based on the same exchange ratio.
F-57
<PAGE> 60
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
Information shown in the following tables is presented in accordance with
Statement of Financial Accounting Standards No 69 ("SFAS 69"), "Disclosures
About Oil and Gas Producing Activities."
The amounts shown under the caption "Company's share of equity affiliates"
relate to certain Middle East affiliates.
CAPITALIZED COSTS
Capitalized costs represent the amounts of capitalized proved and unproved
property costs, including support equipment and facilities, along with the
related accumulated depreciation, depletion and amortization. The amount of
proved and unproved properties relating to production sharing contracts is
reflected in capitalized costs net of amounts recovered. The following presents
a detail of the capitalized costs as of December 31, 1998, 1997, and 1996,
relating to the Company's oil and gas exploration and production activities:
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS OF FRENCH FRANCS
----------------------------------------------
CONSOLIDATED SUBSIDIARIES
----------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
------ ------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1998
Proved properties............................... 35,791 -- 8,093 22,841 66,725
Unproved properties............................. 156 273 147 2,175 2,751
------ ----- ----- ------ ------
Total capitalized costs......................... 35,947 273 8,240 25,016 69,476
Accumulated depreciation, depletion and
amortization.................................... 21,920 2 1,102 7,054 30,078
------ ----- ----- ------ ------
Net capitalized costs........................... 14,027 271 7,138 17,962 39,398
Including capitalized general and administrative
expenses..................................... 50 -- 17 72 139
Company's share of equity affiliates'
net capitalized costs........................... 3,591
AS OF DECEMBER 31, 1997
Proved properties............................... 35,475 3,637 6,466 19,955 65,533
Unproved properties............................. 534 254 205 915 1,908
------ ----- ----- ------ ------
Total capitalized costs......................... 36,009 3,891 6,671 20,870 67,441
Accumulated depreciation, depletion and
amortization.................................... 21,821 2,891 816 5,648 31,176
------ ----- ----- ------ ------
Net capitalized costs........................... 14,188 1,000 5,855 15,222 36,265
Including capitalized general and administrative
expenses..................................... 48 2 -- 70 120
Company's share of equity affiliates'
net capitalized costs........................... 2,173
AS OF DECEMBER 31, 1996
Proved properties............................... 31,279 3,208 4,194 13,712 52,393
Unproved properties............................. 615 149 209 278 1,251
------ ----- ----- ------ ------
Total capitalized costs......................... 31,894 3,357 4,403 13,990 53,644
Accumulated depreciation, depletion and
amortization.................................... 19,075 2,648 716 3,657 26,096
------ ----- ----- ------ ------
Net capitalized costs........................... 12,819 709 3,687 10,333 27,548
Including capitalized general and administrative
expenses..................................... 27 3 191 175 396
Company's share of equity affiliates'
net capitalized costs........................... 2,468
</TABLE>
F-58
<PAGE> 61
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
COSTS INCURRED
Costs incurred represent amounts capitalized or expensed during the year in
the Company's oil and gas property acquisition, exploration and development
activities:
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS OF FRENCH FRANCS
--------------------------------------------------
CONSOLIDATED SUBSIDIARIES
--------------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
------ ------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1998
Proved property acquisition.......... 69 -- -- 58 127
Unproved property acquisition........ 5 109 4 180 298
Exploration costs.................... 261 192 298 1,854 2,605
Development costs.................... 2,974 246 2,091 4,389 9,700
----- --- ----- ----- ------
Total costs incurred.............. 3,309 547 2,393 6,481 12,730
===== === ===== ===== ======
AS OF DECEMBER 31, 1997
Proved property acquisition.......... -- 24 -- -- 24
Unproved property acquisition........ -- 98 36 232 366
Exploration costs.................... 361 56 285 1,035 1,737
Development costs.................... 2,348 333 1,844 4,404 8,929
----- --- ----- ----- ------
Total costs incurred.............. 2,709 511 2,165 5,671 11,056
===== === ===== ===== ======
AS OF DECEMBER 31, 1996
Proved property acquisition.......... 3 -- 48 76 127
Unproved property acquisition........ -- 6 4 3 13
Exploration costs.................... 319 42 314 596 1,271
Development costs.................... 1,652 197 1,120 3,129 6,098
----- --- ----- ----- ------
Total costs incurred.............. 1,974 245 1,486 3,804 7,509
===== === ===== ===== ======
</TABLE>
Company's share of equity affiliates' costs of property acquisition,
exploration and development:
<TABLE>
<S> <C>
Year ended December 31, 1998................................ 686
Year ended December 31, 1997................................ 651
Year ended December 31, 1996................................ 650
</TABLE>
RESULTS OF OPERATIONS OF OIL AND GAS PRODUCING ACTIVITIES
The following table includes revenues and expenses associated directly with
the Company's oil and gas producing activities. It does not include any
allocation of the Company's interest costs or corporate overhead and, therefore,
is not necessarily indicative of the contribution to consolidated net earnings
of the Company's oil and gas operations.
Operations pursuant to Production Sharing Contracts (Far East and Rest of
World) are reflected as follows:
- operating costs are reported as "Production costs" or "Exploration
expenses";
- capital costs incurred are classified as "Depreciation, depletion and
amortization and valuation allowances".
F-59
<PAGE> 62
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
In the Consolidated Financial Statements, the Company's share of results of
oil and gas producing activities for equity affiliates is reflected through
internal billing in the Upstream operating income.
Production taxes paid by two consolidated subsidiaries operating in the
Middle East have been included in production costs. The corresponding amounts
were FRF 217M, FRF 299M and FRF 236M for the years ended December 31, 1998, 1997
and 1996, respectively.
Transportation tariffs paid in the North Sea, Columbia and Africa are
included in production costs. The corresponding amounts were FRF 1,175M, FRF
1,043M and FRF 730M for the years ended December 31, 1998, 1997 and 1996,
respectively.
The liquefaction costs of the Bontang LNG facility in East Kalimantan
(Indonesia) and related transportation costs, are included both in revenues and
in production costs. The corresponding amounts were FRF 488M, FRF 489M and FRF
434M for the years ended December 31, 1998, 1997 and 1996, respectively.
Transportation revenues from pipelines where the Company has an interest
were FRF 582M, FRF 605M and FRF 549M for the years ended December 31, 1998, 1997
and 1996, respectively. The corresponding production costs were FRF 125M, FRF
104M and FRF 44M for 1998, 1997 and 1996, respectively. Depreciation costs for
the same period were FRF 208M, FRF 211M and FRF 148M respectively.
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS OF FRENCH FRANCS
--------------------------------------------------
CONSOLIDATED SUBSIDIARIES
--------------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
------ ------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Revenues
Sales to unaffiliated parties............... 3,860 392 3,366 1,380 8,998
Transfers to affiliated parties............. 2,155 -- 480 4,551 7,186
------ ---- ------ ------ ------
Total Revenues................................ 6,015 392 3,846 5,931 16,184
Production costs.............................. (2,053) (178) (1,052) (2,886) (6,169)
Exploration expenses.......................... (173) (85) (232) (636) (1,126)
Depreciation, depletion and amortization and
valuation allowances........................ (2,100) (163) (503) (2,112) (4,878)
------ ---- ------ ------ ------
Pretax income from producing activities....... 1,689 (34) 2,059 297 4,011
Income tax.................................... (255) 14 (1,041) (78) (1,360)
------ ---- ------ ------ ------
Results of oil and gas producing activities... 1,434 (20) 1,018 219 2,651
====== ==== ====== ====== ======
YEAR ENDED DECEMBER 31, 1997
Revenues
Sales to unaffiliated parties............... 4,211 680 3,722 1,612 10,225
Transfers to affiliated parties............. 3,102 -- 732 5,544 9,378
------ ---- ------ ------ ------
Total Revenues................................ 7,313 680 4,454 7,156 19,603
Production costs.............................. (1,999) (231) (1,259) (3,205) (6,694)
Exploration expenses.......................... (355) (67) (235) (824) (1,481)
Depreciation, depletion and amortization and
valuation allowances........................ (1,850) (234) (166) (1,731) (3,981)
------ ---- ------ ------ ------
Pretax income from producing activities....... 3,109 148 2,794 1,396 7,447
Income tax.................................... (1,295) (50) (1,239) (372) (2,956)
------ ---- ------ ------ ------
Results of oil and gas producing activities... 1,814 98 1,555 1,024 4,491
====== ==== ====== ====== ======
</TABLE>
F-60
<PAGE> 63
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS OF FRENCH FRANCS
--------------------------------------------------
CONSOLIDATED SUBSIDIARIES
--------------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
------ ------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
====== ==== ====== ====== ======
YEAR ENDED DECEMBER 31, 1996
Revenues
Sales to unaffiliated parties............... 3,663 698 3,157 1,223 8,741
Transfers to affiliated parties............. 2,915 -- 701 4,450 8,066
------ ---- ------ ------ ------
Total Revenues................................ 6,578 698 3,858 5,673 16,807
Production costs.............................. (1,709) (245) (975) (2,496) (5,425)
Exploration expenses.......................... (321) (29) (307) (565) (1,222)
Depreciation, depletion and amortization and
valuation allowances........................ (2,274) (222) (170) (1,232) (3,898)
------ ---- ------ ------ ------
Pretax income from producing activities....... 2,274 202 2,406 1,380 6,262
Income tax.................................... (1,041) (71) (1,332) (585) (3,029)
------ ---- ------ ------ ------
Results of oil and gas producing activities... 1,233 131 1,074 795 3,233
====== ==== ====== ====== ======
</TABLE>
Company's share of equity affiliates' results of oil and gas producing
activities:
<TABLE>
<S> <C>
Year ended December 31, 1998................................ 684
Year ended December 31, 1997................................ 633
Year ended December 31, 1996................................ 639
</TABLE>
OIL AND GAS RESERVE INFORMATION
The following summarizes the policies used by the Company in preparing the
accompanying oil and gas reserve disclosures, Standardized Measure of Discounted
Future Net Cash Flows Relating to Proved Oil and Gas Reserves and the
reconciliation of such standardized measure from year to year.
Proved reserves are estimated quantities of crude oil and natural gas which
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions. Proved developed reserves are proved reserves that can
reasonably be expected to be recovered through existing wells with existing
equipment and operating methods. Reserve quantities exclude royalties and
interests owned by others. Proved reserves do not include additional quantities
recoverable beyond the term of lease or concession.
Production quantities shown for crude oil (which include condensate and
natural gas liquids) and natural gas are the Company's net share of volumes
withdrawn from the oil and gas reserves. The natural gas quantities produced
differ from the quantities of gas delivered for sale due to volumes flared or
consumed in the production, liquefaction and transport process. Such quantities
amounted to approximately 43.4 billion cubic feet in 1998, 32.2 billion cubic
feet in 1997 and 42.6 billion cubic feet in 1996.
The amounts shown for the caption "Company's net share of equity
affiliates" relate to certain Middle East affiliates. In addition, the Company
has Middle East oil reserves in consolidated subsidiaries included in the "Rest
of world" column. The Company's share of oil reserves included in all Middle
East affiliates aggregated 2,106, 2,014 and 2,061 million barrels as of December
31, 1998, 1997 and 1996, respectively.
Under production sharing contracts, the Company has the right to share in
revenues through production of oil and gas reserves. Proved reserves include
estimated quantities allocable to the Company for recovery of costs as well as
the Company's net share after recovery of costs. The reserve estimates are
subject to revision as prices fluctuate due to the cost recovery feature under
the production sharing contract.
F-61
<PAGE> 64
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
The following reserve quantities as of December 31, 1998 include:
- extension and discoveries made in South Pars (Iran) and Vuite (Angola)
- additions in Hamra (Algeria), Tin Fouye Tabankort (Algeria) and Asgard
(Norway)
The standardized measure of discounted future net cash flows from
production of proved reserves was developed as follows:
1. Estimates are made of quantities of proved reserves and the future
periods during which they are expected to be produced based on year-end
economic conditions.
2. The estimated future cash flows from proved reserves are determined
based on year-end prices, except in those instances where fixed and
determinable price escalations are included in existing contracts.
3. The future cash flows are reduced by estimated production costs
(including production taxes), future development costs and abandonment
costs. All estimates are based on year-end economic conditions.
4. Future income taxes are computed by applying the year-end statutory tax
rate to future net cash flows after consideration of permanent
differences and future income tax credits.
5. Future net cash flows have been discounted at 10 percent in accordance
with SFAS 69.
The standardized measure of discounted future net cash flows does not
purport nor should it be interpreted to present the fair value of the Company's
oil and gas reserves. An estimate of fair value would also take into account,
among other things, the recovery of reserves not presently classified as proved,
anticipated future changes in prices and costs and a discount factor more
representative of the time value of money and the risks inherent in reserve
estimates.
F-62
<PAGE> 65
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
ESTIMATED NET PROVED RESERVES OF CRUDE OIL AND NATURAL GAS
The following tables reflect the estimated proved reserves of crude oil and
natural gas as of December 31, 1996, 1997 and 1998, and the changes therein.
<TABLE>
<CAPTION>
CRUDE OIL, CONDENSATE AND NATURAL GAS LIQUIDS
(MILLIONS OF BARRELS)
---------------------------------------------------
CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
------ ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE AS OF JANUARY 1, 1996................. 191.1 11.8 124.6 546.6 874.1
Revisions of previous estimates............... 5.2 3.1 (14.3) 9.8 3.8
Extensions, discoveries and other............. 45.4 0.4 -- 117.5 163.3
Acquisitions of reserves in place............. 15.3 -- -- -- 15.3
Sales of reserves in place.................... -- (0.1) -- (0.4) (0.5)
Production for the year....................... (30.6) (2.2) (8.8) (49.4) (91.0)
===== ===== ===== ===== =======
BALANCE AS OF DECEMBER 31, 1996............... 226.4 13.0 101.5 624.1 965.0
Revisions of previous estimates............... 30.8 1.9 19.1 145.3 197.1
Extensions, discoveries and other............. 11.4 0.6 1.2 4.9 18.1
Acquisitions of reserves in place............. -- 0.1 -- -- 0.1
Sales of reserves in place.................... (5.5) (0.6) -- -- (6.1)
Production for the year....................... (29.5) (1.7) (8.6) (60.4) (100.2)
===== ===== ===== ===== =======
BALANCE AS OF DECEMBER 31, 1997............... 233.6 13.3 113.2 713.9 1,074.0
Revisions of previous estimates............... 40.0 3.2 21.8 131.0 196.0
Extensions, discoveries and other............. 2.8 -- -- 227.2 230.0
Acquisitions of reserves in place............. -- -- -- 0.2 0.2
Sales of reserves in place.................... (0.6) (15.5) -- -- (16.1)
Production for the year....................... (26.8) (1.0) (10.2) (72.8) (110.8)
===== ===== ===== ===== =======
BALANCE AS OF DECEMBER 31, 1998............... 249.0 -- 124.8 999.5 1,373.3
Proved developed reserves as of:
December 31, 1996........................... 129.3 13.0 71.6 529.9 743.8
December 31, 1997........................... 144.6 13.3 84.6 564.2 806.7
December 31, 1998........................... 175.8 -- 92.5 706.5 974.8
Company's net share in proved reserves of
equity affiliates as of:
December 31, 1996..................................................................... 1,853.3
December 31, 1997..................................................................... 1,765.5
December 31, 1998..................................................................... 1,647.5
</TABLE>
F-63
<PAGE> 66
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
NATURAL GAS
(BILLIONS OF CUBIC FEET)
----------------------------------------------------
CONSOLIDATED SUBSIDIARIES
----------------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE AS OF JANUARY 1, 1996............... 1,575.0 132.2 5,955.8 853.5 8,516.5
Revisions of previous estimates............. 109.6 7.2 108.2 143.9 368.9
Extensions, discoveries and other........... 295.8 35.0 -- 261.1 591.9
Acquisitions of reserves in place........... 18.0 -- -- -- 18.0
Sales of reserves in place.................. (1.4) (2.6) -- -- (4.0)
Production for the year..................... (191.1) (34.0) (208.7) (73.7) (507.5)
======= ====== ======= ======= =======
BALANCE AS OF DECEMBER 31, 1996............. 1,805.9 137.8 5,855.3 1,184.8 8,983.8
Revisions of previous estimates............. 180.6 2.0 312.4 411.8 906.8
Extensions, discoveries and other........... 143.7 49.9 86.7 15.5 295.8
Acquisitions of reserves in place........... -- 0.4 -- -- 0.4
Sales of reserves in place.................. (88.1) (3.7) -- -- (91.8)
Production for the year..................... (185.1) (34.9) (217.0) (71.1) (508.1)
======= ====== ======= ======= =======
BALANCE AS OF DECEMBER 31, 1997............. 1,857.0 151.5 6,037.4 1,541.0 9,586.9
Revisions of previous estimates............. 210.5 51.7 329.2 231.1 822.5
Extensions, discoveries and other........... 128.1 -- 93.3 12.5 233.9
Acquisitions of reserves in place........... 0.4 -- -- 24.4 24.8
Sales of reserves in place.................. (9.8) (179.6) -- -- (189.4)
Production for the year..................... (158.9) (23.6) (252.6) (71.0) (506.1)
======= ====== ======= ======= =======
BALANCE AS OF DECEMBER 31, 1998............. 2,027.3 -- 6,207.3 1,738.0 9,972.6
======= ====== ======= ======= =======
Proved developed reserves as of:
December 31, 1996......................... 1,322.2 137.8 3,568.0 497.9 5,525.9
December 31, 1997......................... 1,358.3 151.5 3,519.0 457.3 5,486.1
December 31, 1998......................... 1,367.8 -- 4,457.3 670.9 6,496.0
Company's net share in proved reserves
of equity affiliates as of:
December 31, 1996.................................................................... 921.8
December 31, 1997.................................................................... 876.0
December 31, 1998.................................................................... 857.2
Nota: the Company's share in the proved
reserves accounted for by the cost method
is as follows:
December 31, 1996.................................................................... 286.7
December 31, 1997.................................................................... 714.0
December 31, 1998.................................................................... 745.4
</TABLE>
F-64
<PAGE> 67
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
The following is the projected standardized measure of discounted future
net cash flows relating to proved oil and gas reserves:
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS OF FRENCH FRANCS
--------------------------------------------------------
CONSOLIDATED SUBSIDIARIES
--------------------------------------------------------
NORTH REST OF
EUROPE AMERICA FAR EAST WORLD TOTAL
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996
Future cash inflows...................... 64,029.9 4,201.9 89,082.1 86,743.9 244,057.8
Future production costs.................. (19,656.1) (1,176.2) (15,518.9) (32,227.6) (68,578.8)
Future development costs................. (7,026.3) (245.7) (10,736.2) (8,200.8) (26,209.0)
--------- -------- --------- --------- ---------
Future net cash flows, before income
taxes................................. 37,347.5 2,780.0 62,827.0 46,315.5 149,270.0
Future income taxes...................... (19,704.2) -- (28,741.2) (12,809.8) (61,255.2)
--------- -------- --------- --------- ---------
Future net cash flows, after income
taxes................................. 17,643.3 2,780.0 34,085.8 33,505.7 88,014.8
Discount at 10%.......................... (6,511.5) (874.7) (18,622.0) (14,845.0) (40,853.2)
--------- -------- --------- --------- ---------
Standardized measure of discounted future
net cash flows........................ 11,131.8 1,905.3 15,463.8 18,660.7 47,161.6
========= ======== ========= ========= =========
AS OF DECEMBER 31, 1997
Future cash inflows...................... 63,125.5 3,572.6 76,955.5 78,777.7 222,431.3
Future production costs.................. (21,443.2) (1,418.6) (14,587.0) (30,299.0) (67,747.8)
Future development costs................. (6,518.4) (255.7) (11,341.5) (7,231.8) (25,347.4)
--------- -------- --------- --------- ---------
Future net cash flows, before income
taxes................................. 35,163.9 1,898,3 51,027.0 41,246.9 129,336.1
Future income taxes...................... (18,421.2) -- (22,773.9) (10,899.2) (52,094.3)
--------- -------- --------- --------- ---------
Future net cash flows, after income
taxes................................. 16,742.7 1,898.3 28,253.1 30,347.7 77,241.8
Discount at 10%.......................... (6,315.0) (547.8) (15,228.9) (11,929.5) (34,021.2)
--------- -------- --------- --------- ---------
Standardized measure of discounted future
net cash flows........................ 10,427.7 1,350.5 13,024.2 18,418.2 43,220.6
========= ======== ========= ========= =========
AS OF DECEMBER 31, 1998
Future cash inflows...................... 50,766.3 -- 54,755.7 67,554.8 173,076.8
Future production costs.................. (20,414.8) -- (13,959.1) (27,382.3) (61,756.2)
Future development costs................. (5,435.6) -- (8,932.0) (10,066.8) (24,434.4)
--------- -------- --------- --------- ---------
Future net cash flows, before income
taxes................................. 24,915.9 -- 31,864.6 30,105.7 86,886.2
Future income taxes...................... (11,332.6) -- (13,031.2) (5,756.7) (30,120.5)
--------- -------- --------- --------- ---------
Future net cash flows, after income
taxes................................. 13,583.3 -- 18,833.4 24,349.0 56,765.7
Discount at 10%.......................... (5,059.6) -- (9,761.3) (10,444.9) (25,265.8)
--------- -------- --------- --------- ---------
Standardized measure of discounted future
net cash flows........................ 8,523.7 -- 9,072.1 13,904.1 31,499.9
========= ======== ========= ========= =========
</TABLE>
Company's net share of equity investees' standardized measure of discounted
future net cash flows as of:
<TABLE>
<S> <C>
December 31, 1996........................................... 9,065.8
December 31, 1997........................................... 8,331.8
December 31, 1998........................................... 5,904.3
</TABLE>
F-65
<PAGE> 68
TOTAL
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) -- (CONTINUED)
CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
The following table reflects the changes in standardized measure of
discounted future net cash flows for each of the years 1998, 1997, and 1996:
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS OF FRENCH FRANCS
--------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Consolidated:
Beginning of year....................................... 43,220.6 47,161.6 29,159.9
Sales and transfers, net of production costs............ (10,242.0) (13,202.0) (11,619.1)
Net change in sales and transfer prices, net of
production
costs................................................ (24,645.9) (25,731.1) 19,086.4
Extensions, discoveries and improved recovery, net of
future production and development costs.............. 6,220.2 7,794.9 11,093.5
Changes in estimated future development costs........... (2,134.9) (2,087.0) (2,115.2)
Previously estimated development costs incurred during
the year............................................. 7,871.8 7,750.8 5,141.9
Revisions of previous quantity estimates................ 427.2 3,700.5 84.7
Accretion of discount................................... 6,608.8 8,626.5 4,991.7
Net change in income taxes.............................. 11,699.7 9,369.8 (10,896.3)
Purchases of reserves in place.......................... 64.3 6.2 769.6
Sales of reserves in place.............................. (1,168.7) (527.8) (60.4)
Changes in production rates (timing) and other.......... (6,421.2) 358.2 1,524.9
--------- --------- ---------
End of year............................................. 31,499.9 43,220.6 47,161.6
========= ========= =========
</TABLE>
F-66
<PAGE> 69
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF TOTAL,
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. This Valuation and Qualifying Account
schedule listed in the index above is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ARTHUR ANDERSEN, LLP
Arthur Andersen, LLP
Paris, France
March 17, 1999
S-1
<PAGE> 70
SCHEDULE II
TOTAL
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHANGES IN CHARGED TO BALANCE AT
BEGINNING REPORTING COSTS AND END
OF PERIOD ENTITY EXPENSES DEDUCTIONS OF PERIOD
---------- ---------- ---------- ---------- ----------
(AMOUNTS IN MILLIONS OF FRENCH FRANCS)
<S> <C> <C> <C> <C> <C>
VALUATION AND QUALIFYING ACCOUNTS DEDUCTED
FROM THE RELATED ASSETS ACCOUNTS
1998
Investments and other noncurrent assets... 1,359 473 244 272 1,804(a)
Inventories............................... 298 46 169 119 394
Accounts receivable....................... 1,554 (73) 359 194 1,646
Marketable securities..................... 6 -- 2 5 3
Other current assets...................... 38 4 7 2 47
------ ----- ----- ----- ------
Total............................. 3,255 450 781 592 3,894
1997
Investments and other noncurrent assets... 1,419 2 257 349 1,359(a)
Inventories............................... 270 19 152 143 298
Accounts receivable....................... 887 734 261 328 1,554
Marketable securities..................... 11 -- -- 5 6
Other current assets...................... 44 (12) 28 22 38
------ ----- ----- ----- ------
Total............................. 2,631 773 698 847 3,255
1996
Investments and other noncurrent assets... 1,389 (31) 196 135 1,419(a)
Inventories............................... 229 19 143 121 270
Accounts receivable....................... 790 50 249 202 887
Marketable securities..................... 8 -- 4 1 11
Other current assets...................... 48 (7) 7 4 44
------ ----- ----- ----- ------
Total............................. 2,464 31 599 463 2,631
LONG-TERM LIABILITIES
1998
Reserve for crude oil price changes....... 955 (22) -- 933 --
Employee benefits......................... 3,216 (40) 513 363 3,326
Other liabilities and deferred income
taxes.................................. 10,502 (491) 2,260 1,666 10,605
------ ----- ----- ----- ------
Total............................. 14,673 (553) 2,773 2,962 13,931
1997
Reserve for crude oil price changes....... 1,977 (10) -- 1,012 955
Employee benefits......................... 5,623 286 511 3,204 3,216
Other liabilities and deferred income
taxes.................................. 9,866 (97) 2,525 1,792 10,502
------ ----- ----- ----- ------
Total............................. 17,466 179 3,036 6,008 14,673
1996
Reserve for crude oil price changes....... 393 13 1,571 -- 1,977
Employee benefits......................... 5,545 312 473 707 5,623
Other liabilities and deferred income
taxes.................................. 8,494 681 2,056 1,365 9,866
------ ----- ----- ----- ------
Total............................. 14,432 1,006 4,100 2,072 17,466
</TABLE>
- ---------------
(a) The breakdown between investments and other noncurrent assets is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Investments........................................... 984 1,036 1,045
Other noncurrent assets............................... 820 323 374
----- ----- -----
1,804 1,359 1,419
===== ===== =====
</TABLE>
S-2
