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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 001-12138
PDV America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 51-0297556
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
750 Lexington Avenue, New York, New York 10022
(Address of principal executive office) (Zip Code)
(212) 753-5340
(Registrant's telephone number, including area code)
N.A.
-------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No ___
---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $1.00 par value 1,000
(Class) (outstanding at October 31, 2000)
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<PAGE>
PDV AMERICA, INC. AND SUBSIDIARIES
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2000
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TABLE OF CONTENTS
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Page
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FACTORS AFFECTING FORWARD LOOKING STATEMENTS......................................................................1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - September 30, 2000 and December 31, 1999....................2
Condensed Consolidated Statements of Income - Three and Nine-Month Periods Ended
September 30, 2000 and 1999.........................................................................3
Condensed Consolidated Statement of Shareholder's Equity - Nine-Month Period
Ended September 30, 2000............................................................................4
Condensed Consolidated Statements of Cash Flows - Nine-Month Periods Ended
September 30, 2000 and 1999.........................................................................5
Notes to the Condensed Consolidated Financial Statements............................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................................................13
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................21
Item 6. Exhibits and Reports on Form 8-K...................................................................21
SIGNATURES.......................................................................................................22
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FACTORS AFFECTING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Specifically, all statements under the caption "Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations" relating to
capital expenditures and investments related to environmental compliance and
strategic planning, purchasing patterns of refined products and capital
resources available to the Company (as defined herein) are forward looking
statements. In addition, when used in this document, the words "anticipate,"
"estimate," "prospect" and similar expressions are used to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, such as increased inflation, continued access to capital markets
and commercial bank financing on favorable terms, increases in regulatory
burdens, changes in prices or demand for the Company's products as a result of
competitive actions or economic factors and changes in the cost of crude oil,
feedstocks, blending components or refined products. Such statements are also
subject to the risks of increased costs in related technologies and such
technologies producing anticipated results. Should one or more of these risks or
uncertainties, among others, materialize, actual results may vary materially
from those estimated, anticipated or projected. Although the Company believes
that the expectations reflected by such forward looking statements are
reasonable based on information currently available to the Company, no
assurances can be given that such expectations will prove to have been correct.
1
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
PDV AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
--------------------------------------------------------------------------------------------------------------------
September 30, December 31,
2000 1999
(Unaudited)
------------------- --------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 95,516 $ 113,414
Accounts receivable, net 1,153,547 1,027,352
Due from affiliates 12,490 42,340
Inventories 1,184,874 1,097,923
Current portion of notes receivable from PDVSA - 250,000
Prepaid expenses and other 17,573 16,949
------------------- --------------------
Total current assets 2,464,000 2,547,978
NOTES RECEIVABLE FROM PDVSA AND AFFILIATE 798,000 798,000
PROPERTY, PLANT AND EQUIPMENT - Net 3,332,399 3,417,815
RESTRICTED CASH - 3,015
INVESTMENTS IN AFFILIATES 745,481 758,812
OTHER ASSETS 225,817 219,946
------------------- --------------------
TOTAL ASSETS $ 7,565,697 $ 7,745,566
=================== ====================
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Short-term bank loans $ - $ 16,000
Accounts payable 906,641 780,660
Payables to affiliates 398,425 281,428
Taxes other than income 192,903 218,503
Other current liabilities 222,681 208,394
Income taxes payable 44,550 6,367
Current portion of deferred income taxes 4,916 9,716
Current portion of long-term debt 47,078 314,078
Current portion of capital lease obligation 17,276 16,356
------------------- --------------------
Total current liabilities 1,834,470 1,851,502
LONG-TERM DEBT 1,560,234 2,010,223
CAPITAL LEASE OBLIGATION 76,695 85,570
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 209,506 212,871
OTHER NONCURRENT LIABILITIES 213,580 230,189
DEFERRED INCOME TAXES 677,726 607,213
MINORITY INTEREST 31,565 29,710
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDER'S EQUITY:
Common stock - $1.00 par value, 1,000 shares authorized,
issued and outstanding 1 1
Additional capital 1,532,435 1,532,435
Retained earnings 1,432,699 1,189,066
Accumulated other comprehensive income (3,214) (3,214)
------------------- --------------------
Total shareholder's equity 2,961,921 2,718,288
------------------- --------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 7,565,697 $ 7,745,566
=================== ====================
</TABLE>
See notes to condensed consolidated financial statements.
2
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PDV AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
----------------- ----------------- ---------------- -----------------
2000 1999 2000 1999
----------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 5,824,304 $ 3,623,953 $ 16,240,849 $ 8,970,409
Sales to affiliates 58,415 49,381 158,699 122,083
----------------- ----------------- ---------------- -----------------
5,882,719 3,673,334 16,399,548 9,092,492
Equity in earnings (losses) of affiliates 27,692 13,274 31,257 10,794
Interest income from affiliates 18,158 21,697 60,861 62,566
Other income (expense) - net (5,740) (4,853) (11,073) (17,999)
----------------- ----------------- ---------------- -----------------
5,922,829 3,703,452 16,480,593 9,147,853
----------------- ----------------- ---------------- -----------------
COST OF SALES AND EXPENSES:
Cost of sales and operating expenses 5,646,224 3,542,097 15,823,892 8,630,047
Selling, general and administrative 58,546 53,411 161,254 171,633
expenses
Interest expense:
Capital leases 2,643 3,078 8,376 9,636
Other 32,718 39,183 107,848 113,723
Minority interest 463 (42) 1,855 352
----------------- ----------------- ---------------- -----------------
5,740,594 3,637,727 16,103,225 8,925,391
----------------- ----------------- ---------------- -----------------
INCOME BEFORE INCOME TAXES 182,235 65,725 377,368 222,462
INCOME TAXES 60,991 25,274 132,735 73,747
----------------- ----------------- ---------------- -----------------
NET INCOME $ 121,244 $ 40,451 $ 244,633 $ 148,715
================= ================= ================ =================
</TABLE>
See notes to condensed consolidated financial statements.
3
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PDV AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (Unaudited)
(Dollars and Shares in Thousands)
-------------------------------------------------------------------------------------------------------------------------------
Accumulated
Common Stock Other
Additional Retained Comprehensive
Shares Amount Capital Earnings Income Total
--------- ---------- -------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C> <C> <C>
RETAINED EARNINGS,
DECEMBER 31, 1999 1 $ 1 $1,532,435 $1,189,066 $ (3,214) $2,718,288
Net income - - - 244,633 - 244,633
Dividend paid - - - (1,000) - (1,000)
--------- ---------- -------------- --------------- ----------------- --------------
RETAINED EARNINGS,
SEPTEMBER 30, 2000 1 $ 1 $1,532,435 $1,432,699 $ (3,214) $2,961,921
========= ========== ============== =============== ================= ==============
</TABLE>
See notes to condensed consolidated financial statements.
4
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PDV AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
-------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30,
----------------------------------------
2000 1999
------------------- --------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 588,340 $ 22,474
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (87,949) (181,191)
Proceeds from sale of property, plant and equipment 4,208 10,815
Proceeds from maturity of Mirror Notes 250,000 -
Note Receivable from affiliate - (38,000)
Decrease in restricted cash 3,015 6,459
Proceeds from sale of investment - 4,980
Loans to LYONDELL-CITGO Refining LP (7,024) (19,700)
Investment in LYONDELL-CITGO Refining LP (10,700) -
Investments in and advances to other affiliates (15,500) (4,212)
------------------- --------------------
Net cash provided by (used in) investing activities 136,050 (220,849)
------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments on) proceeds from revolving bank loans (462,000) 181,000
Net (repayments on) proceeds from short-term bank loans (16,000) 55,000
Proceeds from issuance of tax-exempt bonds - 25,000
Payments on taxable bonds - (25,000)
Payments on Senior Notes (250,000) -
Dividend paid (1,000) (22,015)
Repayments of other debt (5,334) (4,683)
Payments of capital lease obligations (7,954) (7,130)
------------------- --------------------
Net cash (used in) provided by financing activities (742,288) 202,172
------------------- --------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (17,898) 3,797
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 113,414 34,822
------------------- --------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 95,516 $ 38,619
=================== ====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of amounts capitalized $ 123,106 $ 116,552
=================== ====================
Income taxes, net of refunds of $15,008 and $30,052 $ 28,971 $ (27,672)
=================== ====================
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
PDV AMERICA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The financial information for PDV America, Inc. ("PDV America") subsequent
to December 31, 1999 and with respect to the interim three-month and
nine-month periods ended September 30, 2000 and 1999 is unaudited. In the
opinion of management, such interim information contains all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of such periods. The results of operations for
the three-month and nine-month periods ended September 30, 2000 and 1999
are not necessarily indicative of the results to be expected for the full
year. Reference is made to PDV America's Annual Report for the fiscal year
ended December 31, 1999 on Form 10-K, dated March 30, 2000, for additional
information.
The condensed consolidated financial statements include the accounts of
PDV America, its wholly owned subsidiaries, CITGO Petroleum Corporation
("CITGO") and its wholly owned subsidiaries Cit-Con Oil Corporation, which
is 65% owned by CITGO, VPHI Midwest, Inc. ("Midwest") and its wholly owned
subsidiary, PDV Midwest Refining, L.L.C. ("PDVMR") and PDV USA, Inc. ("PDV
USA") (collectively, "the Company").
2. INVENTORIES
Inventories, primarily at LIFO, consist of the following:
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September 30, December 31,
2000 1999
(Unaudited)
------------------ -------------------
(000's omitted)
<S> <C> <C>
Refined products $ 827,555 $ 814,785
Crude oil 283,548 215,248
Materials and supplies 73,771 67,890
------------ -----------
$ 1,184,874 $ 1,097,923
============ ===========
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6
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3. LONG-TERM DEBT
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<CAPTION>
September 30, December 31,
2000 1999
(Unaudited)
------------------------------------
(000's omitted)
<S> <C> <C>
Revolving bank loans - CITGO $ - $ 345,000
Revolving bank loan - PDVMR - 117,000
Senior Notes $200 million face amount, due 2006 with
interest rate of 7.875% 199,829 199,806
Senior Notes $500 million face amount, due 2003 with interest
rate of 7.875% 498,496 748,151
Private Placement Senior Notes, due 2000 to 2006 with interest rates from
9.03% to 9.30% 136,688 136,688
Master Shelf Agreement Senior Notes, due 2002 to 2009 with interest rates
from 7.17% to 8.94% 260,000 260,000
Tax Exempt Bonds, due 2004 to 2029 with variable
and fixed interest rates 325,370 325,370
Taxable Bonds, due 2026 to 2028 with variable interest rates 178,000 178,000
Cit-Con bank credit agreement
8,929 14,286
----------- ----------
1,607,312 2,324,301
Current portion of long-term debt (47,078) (314,078)
----------- ----------
$1,560,234 $2,010,223
=========== ==========
</TABLE>
At September 30, 2000, the net year to date repayments on the revolving
bank loans were $462 million.
On May 10, 2000, CITGO renewed its $150 million 364-day revolving bank
loan facility for another term.
4. INVESTMENT IN LYONDELL- CITGO REFINING LP
LYONDELL-CITGO Refining LP ("LYONDELL-CITGO") owns and operates a 265 MBPD
refinery in Houston, Texas and is owned by subsidiaries of CITGO (41.25%)
and Lyondell Chemical Company (58.75%) ("the Owners"). This refinery
processes heavy crude oil supplied by Petroleos de Venezuela, S.A.
("PDVSA" which may also be used to refer to one or more of its
subsidiaries) under a long-term supply contract that expires in 2017.
CITGO purchases substantially all of the gasoline, diesel and jet fuel
produced at the refinery under a long-term contract.
7
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In April 1998, PDVSA, pursuant to its contractual rights, declared force
majeure and reduced deliveries of crude oil to LYONDELL-CITGO; this
required LYONDELL-CITGO to obtain alternative sources of crude oil supply
in replacement, which resulted in lower operating margins. PDVSA informed
LYONDELL-CITGO that effective October 1, 2000, the force majeure condition
was terminated. PDVSA deliveries of crude oil have returned to contract
levels.
CITGO has notes receivable from LYONDELL-CITGO which total $35 million and
$28 million at September 30, 2000 and December 31, 1999, respectively. The
notes bear interest at market rates and are due July 1, 2003. These notes
are included in other assets in the accompanying consolidated balance
sheets.
CITGO accounts for its investment in LYONDELL-CITGO using the equity
method of accounting and records its share of the net earnings of
LYONDELL-CITGO based on allocations of income agreed to by the Owners.
Information on CITGO's investment in LYONDELL-CITGO follows:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---------------- ----------------
(Unaudited)
(000s omitted)
<S> <C> <C>
Carrying value of investment $ 549,536 $ 560,227
Notes receivable 35,278 28,255
Participation interest 41% 41%
Summary of financial position:
Current assets $ 358,560 $ 219,365
Non current assets 1,392,920 1,405,879
Current liabilities 911,238 696,661
Non current liabilities 321,573 316,492
Members' equity 518,669 612,091
Nine Months Ended September 30,
2000 1999
---------------- ----------------
(Unaudited)
(000's omitted)
Equity in net income (loss) $ 18,483 $ (7,639)
Cash distribution received 39,874 52,823
Summary of operating results:
Revenue $2,936,815 $ 1,694,386
Gross profit 155,266 75,649
Net income (loss) 66,104 (2,445)
</TABLE>
8
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LYONDELL-CITGO has arranged interim financing and repaid a $450 million
loan that matured on September 15, 2000. The interim financing agreement
expires in September 2001. The Owners are currently reviewing financing
alternatives to address this situation.
5. COMMITMENTS AND CONTINGENCIES
Litigation and Injury Claims - Various lawsuits and claims arising in the
ordinary course of business are pending against the Company. The Company
records accruals for potential losses when, in management's opinion, such
losses are probable and reasonably estimable. If known lawsuits and claims
were to be determined in a manner adverse to the Company, and in amounts
greater than the Company's accruals, then such determinations could have a
material adverse effect on the Company's results of operations in a given
reporting period. However, in management's opinion the ultimate resolution
of these lawsuits and claims will not exceed, by a material amount, the
amount of the accruals and the insurance coverage available to the
Company. This opinion is based upon management's and counsel's current
assessment of these lawsuits and claims. The most significant lawsuits and
claims are discussed below.
In May 1997, an explosion and fire occurred at CITGO's Corpus Christi
refinery. No serious personal injuries were reported. Approximately 1,300
claims have been resolved for amounts which individually and collectively
were not material. There are presently seventeen lawsuits filed on behalf
of approximately 9,000 individuals arising out of this incident in state
courts in Corpus Christi alleging property damages, personal injury and
punitive damages. There are no trials on these claims scheduled to take
place before mid-2001.
A class action lawsuit is pending in Corpus Christi, Texas state court
against CITGO which claims damages for reduced value of residential
properties located in the vicinity of the industrial facilities as a
result of air, soil and groundwater contamination. CITGO has contracted to
purchase all of the 275 properties included in the lawsuit which are in an
area adjacent to CITGO's Corpus Christi refinery and settle the property
damage claims relating to these properties. Related to this purchase,
$15.7 million was expensed in 1997. The trial judge ruled, over CITGO's
objections, that a settlement agreement CITGO entered into in September
1997 and subsequently withdrew from, that provided for settlement of the
remaining property damage claims for $5 million is enforceable. CITGO has
asked the court to reconsider its ruling. The trial against CITGO of these
remaining claims has been postponed indefinitely. Two related personal
injury and wrongful death lawsuits were filed against CITGO in 1996 and
are scheduled for trial in 2001.
Litigation is pending in federal court in Lake Charles, Louisiana against
CITGO by a number of current and former Lake Charles refinery employees
and applicants asserting claims of racial discrimination in connection
with CITGO's employment practices. The first trial in this case, which
involved two plaintiffs, began in October 1999 and resulted in verdicts
for the Company. The Court granted the Company's motion for summary
judgment with respect to another group of claims; this action has been
appealed to the Fifth Circuit Court of Appeals. Trials of all the
remaining cases have been taken off the trial court's docket pending this
appeal.
Four former UNO-VEN Company ("UNO-VEN") marketers have filed a class
action complaint against UNO-VEN alleging improper termination of the
UNO-VEN Marketer Sales Agreement
9
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under the Petroleum Marketing Practices Act in connection with PDVMR's
1997 acquisition of Union Oil Company of California's interest in UNO-VEN.
This class action has been certified for liability purposes. The lawsuit
is pending in U.S. District Court in Wisconsin. PDVMR has filed a Motion
for Summary Judgment.
PDVMR and PDV America, jointly and severally, have agreed to indemnity
UNO-VEN and certain other related entities against certain liabilities and
claims, including this matter.
CITGO is among defendants to lawsuits in North Carolina, New York and
Illinois alleging contamination of water supplies by methyl tertiary butyl
ether ("MTBE"), a component of gasoline. The North Carolina case, filed in
January 1999, and the New York case, filed in January 2000 are putative
class actions on behalf of owners of water wells and other drinking water
supplies in such states. The Illinois class action, filed in April 2000,
purports to be on behalf of well owners in sixteen states. All of these
actions allege that MTBE poses public health risks. The suits seek damages
as well as remediation of the alleged contamination. These matters are in
early stages of discovery. A Federal Court and a Multi-District Litigation
Panel has ordered that the Illinois case be transferred to New York and
consolidated with the case pending in New York. CITGO has denied all of
the allegations and is pursuing its defenses.
In June 1999, a group of U.S. independent oil producers filed petitions
under the U.S. antidumping and countervailing duty laws against imports of
crude oil from Venezuela, Iraq, Mexico and Saudi Arabia. These laws
provide for the imposition of additional duties on imports of merchandise
if (1) the U.S. Department of Commerce ("DOC") determines that the
merchandise has been sold to the United States at dumped prices or has
benefited from countervailable subsidies, and (2) the U.S. International
Trade Commission ("ITC") determines that the imported merchandise has
caused or threatened material injury to the U.S. industry producing like
product. The amount of the additional duties imposed is generally equal to
the amount of the dumping margin and subsidies found on the imports on
which the duties are assessed. In August 1999, the DOC dismissed the
petitions and terminated the antidumping and countervailing duty
investigations because the petitioners did not have the required industry
support. In September 2000, the U.S. Court of International Trade
overturned this decision and remanded the case to the DOC for
reconsideration; the DOC is to make a revised decision by November 18,
2000.
Environmental Compliance and Remediation - The Company is subject to
various federal, state and local environmental laws and regulations which
may require the Company to take action to correct or improve the effects
on the environment of prior disposal or release of petroleum substances by
the Company or other parties. Management believes the Company is in
compliance with these laws and regulations in all material aspects.
Maintaining compliance with environmental laws and regulations in the
future could require significant capital expenditures and additional
operating costs.
The Company's accounting policy establishes environmental reserves as
probable site restoration and remediation obligations become reasonably
capable of estimation. Based on currently available information, including
the continuing participation of former owners in remediation actions and
indemnification agreements with third parties, the Company believes that
its accruals are sufficient to address its environmental clean-up
obligations.
The Texas Natural Resources Conservation Commission ("TNRCC") conducted
environmental compliance reviews at the Corpus Christi refinery in 1998
and 1999. TNRCC has issued Notices of
10
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Violation ("NOV") related to each of the reviews and has proposed fines of
approximately $970,000 based on the 1998 review and $700,000 based on the
1999 review. Most of the alleged violations refer to recordkeeping and
reporting issues, failure to meet required emission levels, and failure to
properly monitor emissions. The Company is currently reviewing the alleged
violations and intends to vigorously protest the alleged violations and
proposed fines.
In June 1999, CITGO and numerous other industrial companies received
notice from the U.S. Environmental Protection Agency ("EPA") that the EPA
believes these companies have contributed to contamination in the
Calcasieu Estuary, in the proximity of Lake Charles, Calcasieu Parish,
Louisiana and are Potentially Responsible Parties ("PRPs") under the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"). The EPA made a demand for payment of its past investigation
costs from CITGO and other PRPs and advised it is conducting a Remedial
Investigation/Feasibility Study ("RI/FS") under its CERCLA authority.
CITGO and other PRPs may be potentially responsible for the costs of the
RI/FS. CITGO disagrees with the EPA's allegations and intends to contest
this matter.
In October 1999, the EPA issued an NOV to CITGO for violations of federal
regulations regarding reformulated gasoline found during a May 1998
inspection at CITGO's Braintree, Massachusetts terminal and recommended a
penalty of $218,500. The Company settled this matter in September 2000
without a penalty.
In November 1999, the Attorney General's Office of Illinois filed a
complaint in the 12th Judicial Circuit Court, Will County, Illinois,
against PDV Midwest Refining and CITGO Petroleum Corporation alleging
damages from several releases to the air of contaminants from the Lemont,
Illinois refinery. The initial complaint addressed alleged violations and
potential compliance action. The Attorney General's office later made a
demand for penalties of approximately $150,000. While CITGO and PDVMR
disagree with the Attorney General's alleged violations and proposed
penalty demand, they are cooperating with the agency and anticipate
reaching an agreement with the agency to resolve this lawsuit by the end
of the year 2000.
In March 2000, CITGO received an Information Request from the EPA under
Section 114 of the Federal Clean Air Act ("CAA"). This Information Request
seeks information regarding the Company's compliance with certain
provisions of the CAA addressing the installation and permitting of new
and modified air emission sources, commonly referred to as the "New Source
Review" ("NSR") provisions. The Information Request specifically seeks
information regarding CITGO's Lake Charles, LA; Corpus Christi, TX; and
Savannah, GA facilities and PDVMR's Lemont, IL refinery operated by CITGO.
In addition to CITGO, several other petroleum refining companies received
similar requests. The Company substantially completed its response to this
request in August 2000. At this time, no enforcement or other legal action
arising out of this inquiry has been filed against the Company. If the
Company were to be found to have violated the NSR provisions of the CAA,
it could be subject to possible significant penalties and capital
expenditures for installation or upgrading of pollution control equipment
or technologies.
Conditions which require additional expenditures may exist with respect to
various Company sites including, but not limited to, CITGO's operating
refinery complexes, closed refineries, service stations and crude oil and
petroleum product storage terminals. The amount of such future
expenditures, if any, is indeterminable.
11
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6. DERIVATIVE COMMODITY AND FINANCIAL INSTRUMENTS
The Company enters into petroleum futures contracts, options and other
over-the-counter commodity derivatives, primarily to reduce its inventory
exposure to market risk. Such contracts are generally entered into through
major brokerage houses and traded on national exchanges and can be settled
in cash or through delivery of the commodity. Such contracts generally
qualify for hedge accounting and correlate to market price movements of
crude oil and refined products. Resulting gains and losses on such
contracts, therefore, will generally be offset by gains and losses on the
Company's hedged inventory or future purchases and sales. In the
nine-month period ended September 30, 2000, there was no non-hedging
activity.
The Company has only limited involvement with other derivative financial
instruments and does not currently use them for trading purposes. The
Company has entered into various interest rate swaps to manage its risk
related to interest rate changes on its debt. The fair value of the
interest rate swap agreements in place at September 30, 2000, based on the
estimated amount that the Company would receive or pay to terminate the
agreements as of that date and taking into account current interest rates,
was an unrealized loss of $1 million. In connection with the determination
of fair market value, the Company considers the creditworthiness of the
counterparties, but no adjustment was determined to be necessary as a
result.
The commodity instruments increased cost of sales and operating expenses
and decreased pretax earnings by $3 million for the quarter and $9 million
for the nine months ended September 30, 2000. The commodity instruments
did not have a material impact on cost of sales and operating expenses or
pretax earnings in the quarter or the nine months ended September 30,
1999. The impact of the interest rate swaps on cost of sales and expenses
and pretax earnings was immaterial for all periods presented.
7. RELATED PARTY TRANSACTIONS
CITGO's largest supplier of crude oil is PDVSA. CITGO has entered into
long-term crude oil supply agreements with PDVSA with respect to the crude
oil requirements for each of CITGO's refineries. These crude oil supply
agreements contain force majeure provisions that entitle the supplier to
reduce the quantity of crude oil and feedstock delivered under the crude
supply agreements under specified circumstances. PDVSA declared force
majeure in April 1998. Through the nine-month period ended September 30,
2000, PDVSA deliveries of crude oil to CITGO were less than contractual
base volumes due to PDVSA's declaration of force majeure. Therefore, the
Company has been required to use alternative sources of crude oil. As a
result, CITGO estimates that crude oil costs in the nine months ended
September 30, 2000 were increased by $5 million. However, in the three
months ended September 30, 2000, CITGO estimates that the declaration of
force majeure did not result in increased crude costs. PDVSA informed
CITGO that effective October 1, 2000, the force majeure condition was
terminated and delivery of full contract volumes of crude oil would be
restored.
These contracts also contain provisions which entitle the supplier to
reduce the quantity of crude oil and feedstock delivered under the crude
supply agreements and oblige the supplier to pay CITGO a deemed margin
under that contract for each barrel of reduced crude oil and feedstock.
During the nine months ended September 30, 2000, PDVSA did not deliver
naphtha pursuant to two of these contracts. As a result, naphtha costs,
net of deemed margin were increased by $3 million and $6 million for the
three months and nine months ended September 30, 2000. During the three
months
12
<PAGE>
ended September 30, 1999, PDVSA did not deliver naphtha pursuant to one of
these contracts and made contractually specified payments in lieu thereof.
The financial impact to the three-month and nine-month periods ended
September 30, 1999 was immaterial.
PDV America paid a dividend of $1 million in August 2000.
13
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The following discussion of the financial condition and results of
operations of PDV America should be read in conjunction with the unaudited
condensed consolidated financial statements of PDV America included elsewhere
herein. Reference is made to PDV America's Annual Report for the fiscal year
ended December 31, 1999 on Form 10-K, dated March 30, 2000, for additional
information and a description of factors which may cause substantial
fluctuations in the earnings and cash flows of PDV America.
In the quarter ended September 30, 2000, PDV America generated net
income of $121.2 million on revenue of $5.9 billion compared to net income of
$40.4 million on revenues of $3.7 billion for the same period last year. In the
nine months ended September 30, 2000, PDV America generated net income of $244.6
million on revenue of $16.5 billion compared to net income of $148.7 million on
revenues of $9.1 billion for the same period last year. Gross margin for the
first nine months of 1999 benefited from the sale of inventories that were
written down by $172 million at December 31, 1998, to reflect market prices at
that time. (See "Gross margin").
CITGO's revenue accounted for over 99% of PDV America's consolidated
revenues for all periods presented. PDVMR's sales in all periods presented were
primarily to CITGO and, accordingly, have been eliminated in consolidation.
Results of Operations
The following table summarizes the sources of PDV America's sales
revenues and sales volumes for the three-month and nine-month periods ended
September 30, 2000 and 1999:
<TABLE>
<CAPTION>
PDV America Sales Revenues and Volumes
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
---------------- --------------- ------------------ ----------------
2000 1999 2000 1999 2000 1999 2000 1999
------- ------- ------- ------ ------- ------- ------- -------
($ in millions) ($ in millions) (MM gallons) (MM gallons)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gasoline $3,364 $2,172 $ 9,460 $5,306 3,559 3,231 10,350 9,718
Jet Fuel 523 297 1,457 726 576 520 1,758 1,591
Diesel/#2 fuel 1,168 637 3,292 1,649 1,310 1,136 4,028 3,738
Asphalt 201 124 414 243 293 271 614 568
Petrochemicals and industrial products 472 217 1,324 649 547 448 1,654 1,494
Lubricants and waxes 139 129 411 370 66 77 208 220
------ ------ ------- ------ ----- ----- ------ ------
Total refined product sales 5,867 3,576 16,358 8,943 6,351 5,683 18,612 17,329
Other sales 16 97 42 149
------ ------ ------- ------ ----- ----- ------ ------
Total Sales $5,883 $3,673 $16,400 $9,092 6,351 5,683 18,612 17,329
====== ====== ======= ====== ===== ===== ====== ======
</TABLE>
14
<PAGE>
The following table summarizes PDV America's cost of sales and
operating expenses for the three-month and nine-month periods ended September
30, 2000 and 1999:
<TABLE>
<CAPTION>
PDV America's Cost of Sales and Operating Expenses
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
Crude oil $ 1,857 $ 1,077 $ 5,024 $ 2,556
Refined product purchases 2,991 1,833 8,431 4,542
Intermediate feedstocks purchases 391 340 1,140 682
Refining and manufacturing costs 263 242 781 735
Inventory changes(1) 10 (101) (12) (350)
Other operating costs and expense 134 151 460 465
--------- --------- --------- ---------
Total cost of sales and operating expenses $ 5,646 $ 3,542 $ 15,824 $ 8,630
========= ========= ========= =========
(1) The nine months ended September 30, 1999, includes the impact of the inventory valuation reserve of $172 million
recorded at December 31, 1998. See "Gross Margin."
</TABLE>
Sales revenues and volumes. Sales increased $2.2 billion, or
approximately 60%, in the three-month period ended September 30, 2000 as
compared to the same period in 1999. This was due to an increase in average
sales price of 43% and an increase in sales volume of 12%. Sales increased $7.3
billion, or approximately 80%, in the nine-month period ended September 30, 2000
as compared to the same period in 1999. This was due to an increase in average
sales price of 68% and an increase in sales volume of 7%. (See PDV America Sales
Revenues and Volumes table above.)
Equity in earnings (losses) of affiliates. Equity in earnings (losses)
of affiliates increased by $14.4 million for the three-month period and
increased $20.5 million for the nine-month period ended September 30, 2000 as
compared to the same periods in 1999. The increase was primarily due to the
change in the earnings of LYONDELL-CITGO. CITGO's share of these earnings
increased $26 million, from $(8) million in the first nine months of 1999 to $18
million in the first nine months of 2000. The improved gasoline market in 2000
compared to 1999 continued into the quarter ended September 30, 2000. This was
supplemented by the completion of processing unit turnarounds in the second
quarter 2000 and the ability to run crude oil in the third quarter 2000 which
had been stored during the second quarter 2000 due to the turnarounds.
Cost of sales and operating expenses. Cost of sales and operating
expenses increased by $2.1 billion or 59%, in the quarter ended September 30,
2000 as compared to the same period in 1999. Cost of sales and operating
expenses increased by $7.2 billion or 83%, in the nine months ended September
30, 2000 as compared to the same period in 1999. (See PDV America Cost of Sales
and Operating Expenses table above.)
15
<PAGE>
The invocation of the force majeure clause in the Company's crude oil
supply contracts resulted in an increase of an estimated $5 million in crude oil
costs for the nine months ended September 30, 2000. However, in the three months
ended September 30, 2000, the Company estimates that the declaration of force
majeure did not result in increased crude costs. PDVSA informed the Company that
effective October 1, 2000, the force majeure condition was terminated and
delivery of full contract volumes of crude oil would be restored. During the
nine months ended September 30, 2000, PDVSA did not deliver naphtha pursuant to
two of the contracts. As a result, naphtha costs, net of deemed margin were
increased by $3 million and $6 million for the three months and nine months
ended September 30, 2000.
The Company purchases refined products to supplement the production
from its refineries to meet marketing demands and resolve logistical issues.
Refined product purchases represented 53% and 52% of total cost of sales and
operating expenses for the third quarters of 2000 and 1999, respectively, and
53% for the first nine months of 2000 and 1999. The Company estimates that
margins on purchased products, on average, are lower than margins on produced
products due to the fact that the Company can only receive the marketing portion
of the total margin received on the produced refined products. However,
purchased products are not segregated from the Company produced products and
margins may vary due to market conditions and other factors beyond the Company's
control. As such, it is difficult to measure the effects on profitability of
changes in volumes of purchased products. In the near term, other than normal
refinery turnaround maintenance, the Company does not anticipate operational
actions or market conditions which might cause a material change in anticipated
purchased product requirements; however, there could be events beyond the
control of the Company which impact the volume of refined products purchased.
See also "Factors Affecting Forward Looking Statements".
Gross margin. The gross margin for the three-month period ended
September 30, 2000 was approximately 3.7 cents per gallon, compared to
approximately 2.3 cents per gallon for the same period in 1999. The gross margin
for the nine-month period ended September 30, 2000 was approximately 3.1 cents
per gallon, compared to approximately 2.7 cents per gallon for the same period
in 1999. In the three-month period ended September 30, 2000, the revenue per
gallon component and the cost per gallon component both increased approximately
43%. As a result, the gross margin increased approximately 1.4 cents on a per
gallon basis in the quarter ended September 30, 2000 compared to the same period
in 1999. In the nine-month period ended September 30, 2000, the revenue per
gallon component increased approximately 68% while the cost per gallon component
increased approximately 71%. As a result, the gross margin increased by
approximately 0.4 cents per gallon in the nine-months ended September 30, 2000
compared to the same period in 1999. Inventories at December 31, 1998 had been
revalued resulting in a charge of $172 million to the results of operations for
the year 1998. The sale of these revalued inventories during the first quarter
of 1999 is the principal factor in the higher gross margins realized during the
first quarter of 1999. The gross margin for the nine-month period ended
September 30, 1999 would have been 1.6 cents per gallon if these inventories had
not been revalued. At September 30, 2000 and 1999 estimated net market values of
inventories exceeded historical cost, and accordingly, no valuation reserve was
necessary.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased in the third quarter of 2000 by 10%, from
$53.4 million in the third quarter of 1999 to $58.5 million in the third quarter
of 2000. Selling, general and administrative expenses decreased in the first
nine months of 2000 by 6%, from $171.6 million in the first nine months of 1999
to $161.2 million in the first nine months of 2000. The decrease is principally
due to the decrease in professional and consulting fees and the recovery of the
bad debt reserve related to credit card receivables. The recovery was in
connection
16
<PAGE>
with the sale of CITGO's proprietary consumer credit card receivables and
related credit card program on March 1, 2000 as described below.
Liquidity and Capital Resources
For the nine-month period ended September 30, 2000, the Company's
consolidated net cash provided by operating activities totaled approximately
$588.3 million. Operating cash flows were derived from net income of $244.6
million, depreciation and amortization of $214.0 million, and changes in other
assets and liabilities of $129.7 million.
Net cash provided by investing activities totaled $136.1 million for
the nine-month period ended September 30, 2000 consisting primarily of proceeds
from the maturity of the Mirror Notes ($250.0 million), offset by capital
expenditures of $87.9 million (compared to $181.2 million for the same period in
1999). The decline in capital expenditures in the first nine months of 2000
compared to the first nine months of 1999 is due primarily to projects which
have continued to progress more slowly than anticipated. Total capital
expenditures for the year are currently estimated to be approximately $160
million. This is approximately 65% of 1999 capital expenditures. In addition,
CITGO has loaned $7 million to LYONDELL-CITGO in the nine-month period ended
September 30, 2000.
Net cash used in financing activities totaled $742.3 million for the
nine-month period ended September 30, 2000 consisting primarily of $462.0
million net repayment on revolving bank loans, $16.0 million net repayment on
short-term loans and $250.0 million payment on Senior Notes.
As of September 30, 2000, capital resources available to the Company
include cash generated by operations, available borrowing capacity under CITGO's
committed bank facilities of $550 million, $220 million of uncommitted
short-term borrowing facilities with various banks and available borrowing
capacity under PDVMR's revolving credit facility of $100 million. Additionally,
the remaining $400 million from CITGO's shelf registration with the Securities
and Exchange Commission for $600 million of debt securities may be offered and
sold from time to time. PDV America management believes that the Company has
sufficient capital resources to carry out planned capital spending programs,
including regulatory and environmental projects in the near term, and to meet
currently anticipated future obligations as they arise. The Company periodically
evaluates other sources of capital in the marketplace and anticipates that
long-term capital requirements will be satisfied with current capital resources
and future financing arrangements, including the issuance of debt securities.
The Company's ability to obtain such financing will depend on numerous factors,
including market conditions and the perceived creditworthiness of the Company at
that time.
On March 1, 2000, CITGO sold its proprietary consumer credit card
receivables and related credit card program to Associates First Capital
Corporation ("Associates"). In this transaction, Associates acquired
approximately $19 million in receivables from CITGO and $113 million from Royal
Bank of Canada which had previously been purchased from CITGO under a revolving
sale facility. In addition, Associates acquired 1.2 million active consumer
accounts. The sale did not affect CITGO's commercial or fleet credit card
programs.
In April 2000, CITGO amended an agreement to sell trade accounts
receivable on an ongoing basis and without recourse. The amendment increased the
amount of such receivables that can be sold to $225 million. The amended
agreement has a minimum term of one year and is renewable for successive annual
17
<PAGE>
terms by mutual agreement. $181 million has been sold under this amended
agreement as of September 30, 2000. Proceeds from the sale were used for general
corporate purposes.
The Company is in compliance with its obligations under its debt
financing arrangements at September 30, 2000.
New Accounting Standard
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). In June 2000, Statement of
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", an amendment of SFAS No. 133, was
issued. The statement, as amended, establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that an entity recognize all derivatives, at fair value, as either assets or
liabilities in the statement of financial position with an offset either to
shareholder's equity and comprehensive income or income depending upon the
classification of the derivative. PDV America is in the process of reviewing its
contracts to determine the appropriate accounting treatment required by SFAS No.
133. Due to uncertainty about market conditions related to both crude oil and
refined products and the PDV America risk management response to those market
conditions at year end, PDV America can not determine the impact on its
financial statements that will result from adoption of SFAS No. 133, as amended,
which is required no later than January 1, 2001.
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements." This SAB provides guidance on the recognition,
presentation, and disclosure of revenue, and will be implemented by the Company
in the quarter ending December 31, 2000. The Company continues to study the SAB,
however, it is anticipated that its adoption will not materially affect the
Company's consolidated financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Introduction. PDV America has exposure to price fluctuations of crude
oil and refined products as well as fluctuations in interest rates. To manage
these exposures, management has defined certain benchmarks consistent with its
preferred risk profile for the environment in which the Company operates and
finances its assets. PDV America does not attempt to manage the price risk
related to all of its inventories of crude oil and refined products. As a
result, at September 30, 2000, PDV America was exposed to the risk of broad
market price declines with respect to a substantial portion of its crude oil and
refined product inventories. The following disclosures do not attempt to
quantify the price risk associated with such commodity inventories.
Commodity Instruments. PDV America balances its crude oil and petroleum
product supply/demand and manages a portion of its price risk by entering into
petroleum commodity derivatives. Generally, PDV America's risk management
strategies qualify as hedges, however, certain strategies that PDV America may
use on commodity positions do not qualify as hedges.
18
<PAGE>
<TABLE>
<CAPTION>
Non Trading Commodity Derivatives
Open Positions at September 30, 2000
Maturity Number of Contract Market
Commodity Derivative Date Contracts Value (2) Value
--------- ---------- ---- --------- --------- ------
($ in millions)
--------- ------
<S> <C> <C> <C> <C> <C>
No Lead Gasoline(1) OTC Crack Swaps (Pay Floating/
Receive Fixed)(4) 2000 1200 $ 3.7 $ 2.5
OTC Crack Swaps (Pay Fixed/
Receive Floating)(4) 2000 1200 $ 2.7 $ 2.5
Heating Oil(1) Futures Purchased 2000 299 $ 10.6 $ 11.6
Futures Purchased 2001 702 $ 23.8 $ 25.8
Futures Purchased 2002 8 $ 0.3 $ 0.3
OTC Crack Swap Options Purchased 2000 100 $ - $ -
OTC Crack Swap Options Sold 2000 100 $ - $ (0.2)
OTC Swaps (Pay Floating/Receive Fixed)(4) 2000 100 $ 4.3 $ 3.9
OTC Swaps (Pay Fixed/Receive Fixed)(4) 2000 9 $ 0.2 $ 0.3
OTC Swaps (Pay Fixed/Receive Floating)(4) 2001 9 $ 0.2 $ 0.3
OTC Crack Swaps (Pay Floating/
Receive Fixed)(4) 2000 3000 $ 21.6 $ 19.6
Natural Gas(3) Futures Purchased 2000 10 $ 0.5 $ 0.5
----------
(1) 1000 barrels per contract
(2) Weighted average price
(3) 10,000 mmbtu per contract
(4) Floating price based on market index designated in contract; fixed price agreed upon at date of contract.
</TABLE>
<TABLE>
<CAPTION>
Non Trading Commodity Derivatives
Open Positions at September 30, 1999
Maturity Number of Contract Market
Commodity Derivative Date Contracts Value (2) Value
--------- ---------- ---- --------- --------- ------
($ in millions)
--------- ------
<S> <C> <C> <C> <C> <C>
No Lead Gasoline(1) Futures Purchased 1999 225 $ 6.6 $6.5
Futures Sold 1999 75 $ 2.2 $2.2
Heating Oil(1) Futures Purchased 1999 192 $ 4.9 $5.0
Futures Purchased 2000 51 $ 1.2 $1.3
Futures Purchased 2001 6 $ 0.1 $0.1
Futures Sold 2000 325 $ 9.0 $8.6
OTC Swaps 1999 20 $ 0.4 $0.5
OTC Swaps 2000 34 $ 0.7 $0.8
Natural Gas(3) Futures Purchased 1999 33 $ 0.8 $0.9
----------
(1) 1000 barrels per contract
(2) Weighted average price
(3) 10,000 mmbtu per contract
</TABLE>
19
<PAGE>
Debt Related Instruments. PDV America has fixed and floating U.S.
currency denominated debt. PDV AMERICA uses interest rate swaps to manage its
debt portfolio toward a benchmark of 40 to 60 percent ratio of fixed rate debt
to total debt. These instruments have the effect of changing the interest rate
with the objective of minimizing PDV America's long-term costs. At September 30,
2000, PDV America's primary exposures were to U.S. dollar, LIBOR and U.S.
Treasury rates.
For interest rate swaps, the table below presents notional amounts
and interest rates by expected (contractual) maturity dates. Notional amounts
are used to calculate the contractual payments to be exchanged under the
contracts.
Non Trading Interest Rate Derivatives
Open Positions at September 30, 2000
<TABLE>
<CAPTION>
Notional
Expiration Fixed Rate Principal
Variable Rate Index Date Paid Amount
------------------- ---- ---- ------
($ in millions)
<S> <C> <C> <C>
J.J. Kenny February 2005 5.30% 12
J.J. Kenny February 2005 5.27% 15
J.J. Kenny February 2005 5.49% 15
---
$42
===
</TABLE>
Non Trading Interest Rate Derivatives
Open Positions at September 30, 1999
<TABLE>
<CAPTION>
Notional
Expiration Fixed Rate Principal
Variable Rate Index Date Paid Amount
------------------- ---- ---- ------
($ in millions)
<S> <C> <C> <C>
One-month LIBOR May 2000 6.28% $25
J.J. Kenny May 2000 4.72% 25
J.J. Kenny February 2005 5.30% 12
J.J. Kenny February 2005 5.27% 15
J.J. Kenny February 2005 5.49% 15
---
$92
===
</TABLE>
The fair value of the interest rate swap agreements in place at
September 30, 2000, based on the estimated amount that PDV America would receive
or pay to terminate the agreements as of that date and taking into account
current interest rates, was an unrealized loss of $1 million.
20
<PAGE>
For debt obligations, the table below presents principal cash flows and
related weighted average interest rates by expected maturity dates. Weighted
average variable rates are based on implied forward rates in the yield curve at
the reporting date.
At September 30, 2000
<TABLE>
<CAPTION>
Expected Average
Fixed Average Fixed Variable Variable
Expected Maturities Rate Debt Interest Rate Rate Debt Interest Rate
------------------- --------- ------------- --------- ----------------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
2000 $ 40 9.11% $ 2 7.60%
2001 40 9.11% 7 7.49%
2002 36 8.78% - 7.64%
2003 560 7.98% - 7.95%
2004 31 8.02% 16 8.26%
Thereafter 391 8.02% 484 9.47%
------- ----- ----- -----
Total $1,098 8.10% $ 509 9.40%
======= ===== ===== =====
Fair Value $1,073 $ 509
======= =====
</TABLE>
Debt Obligations
At September 30, 1999
<TABLE>
<CAPTION>
Expected
Fixed Average Fixed Variable Average Variable
Expected Maturities Rate Debt Interest Rate Rate Debt Interest Rate
------------------- --------- ------------- --------- ----------------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
1999 $ 40 9.11% $ 94 6.32%
2000 290 7.94% 7 6.84%
2001 40 9.11% 7 7.24%
2002 36 8.78% 62 7.56%
2003 559 7.98% 329 7.88%
Thereafter 422 8.02% 500 9.31%
------- ----- ----- -----
Total $1,387 8.07% $ 999 8.42%
======= ===== ===== =====
Fair Value $1,374 $ 999
======= =====
</TABLE>
21
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The required information is incorporated by reference into Part II of
this Report from Note 5 of the Notes to the Condensed Consolidated Financial
Statements included in Part I of this Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
Exhibit No. Description
----------- -----------
27 Financial Data Schedule (filed electronically only)
(b) Reports on Form 8-K:
--------------------
None.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PDV AMERICA, INC.
Date: November 13, 2000 /s/ Carlos Jorda
-----------------------------------------
Carlos Jorda
Chairman, President, Chief Executive
Officer and Chief Financial Officer
Date: November 13, 2000 /s/ Jose I. Moreno
-----------------------------------------
Jose I. Moreno
Secretary
23
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
-----------------------
30-Sept-00
----------
COMMERCIAL AND INDUSTRIAL COMPANIES
ARTICLE 5 OF REGULATION S-X
This schedule contains summary financial information extracted from PDV America,
Inc.'s financial statements for the period ending September 30, 2000:
<TABLE>
<CAPTION>
-------------- ---------------------------------------------------------- --------------
(Dollars in
Item Number Item Description Thousands)
-------------- ---------------------------------------------------------- --------------
<S> <C> <C>
5-02(1) Cash and cash items $ 95,516
5-02(2) Marketable Securities -
5-02(3)(a)(1) Notes and accounts receivable-trade 1,179,246
5-02(4) Allowances for doubtful accounts (13,209)
5-02(6) Inventory 1,184,874
5-02(9) Total current assets 2,464,000
5-02(13) Property, plant and equipment 4,577,564
5-02(14) Accumulated depreciation (1,245,165)
5-02(18) Total assets 7,565,697
5-02(21) Total current liabilities 1,834,470
5-02(22) Bonds, mortgages and similar debt 1,560,234
5-02(28) Preferred stock-mandatory redemption -
5-02(29) Preferred stock-no mandatory redemption -
5-02(30) Common stock 1
5-02(31) Other shareholder's equity 2,961,920
5-02(32) Total liabilities and shareholder's equity 7,565,697
5-03(b)1(a) Net sales of tangible products 16,399,548
5-03(b)1 Total revenues 16,480,593
5-03(b)2(a) Cost of tangible goods sold 15,823,892
5-03(b)2 Total costs and expenses applicable to sales and revenues 15,983,341
5-03(b)3 Other costs and expenses -
5-03(b)5 Provision for doubtful accounts and notes 1,805
5-03(b)(8) Interest and amortization of debt discount 116,224
5-03(b)(10) Income before taxes and other items 377,368
5-03(b)(11) Income tax expense 132,735
5-03(b)(14) Income/loss continuing operations 244,633
5-03(b)(15) Discontinued operations -
5-03(b)(17) Extraordinary items -
5-03(b)(18) Cumulative effect-Changes in accounting principles -
5-03(b)(19) Net income or loss 244,633
5-03(b)(20) Earnings per share-primary -
5-03(b)(20) Earnings per share-diluted -
</TABLE>
