Exhibit 99.1
Tesoro Corporation Announces Fourth Quarter and Year-End Results
SAN ANTONIO--(BUSINESS WIRE)--Tesoro Corporation (NYSE:TSO) today reported a net loss of $40 million, or $0.29 per share, for the fourth quarter of 2007 compared to net income of $158 million, or $1.14 per share, for the fourth quarter of 2006.
In comparison to last year, weak crack spreads, higher operating expenses and poor marketing margins negatively impacted earnings at the company’s West Coast refineries. The Hawaii refinery posted an $86 million pre-tax operating loss for the quarter compared to a $19 million pre-tax operating profit for the same period a year ago. In Hawaii, finished product prices did not reflect the rapidly rising cost and premiums paid for crude which accounted for most of the quarter to quarter difference. Additionally, an unplanned outage on the refinery’s reformer unit during the period negatively impacted results by an estimated $30 million, including $10 million of higher repairs and maintenance expenses.
In total, quarterly refining operating earnings were $9 million compared to fourth quarter earnings of $284 million a year ago. “The Company has made significant improvements in crude purchasing and product sales at all of our refineries with the exception of Hawaii but lower benchmark margins in the Western United States overwhelmed these improvements and account for most of the quarter to quarter change. In Hawaii, the disappointing financial results are due to a combination of factors and the company has developed an action plan to address the myriad issues there. Improved reliability, changes to our crude slate to reduce the amount of Asian light sweet crude oil used which has been selling at lofty premiums and a greater focus on achieving better value for commercial products marketed in Hawaii are among the key initiatives we have undertaken,” said Bruce Smith, Chairman, President and CEO of Tesoro.
Benchmark margins versus last year were lower by 23% on the West Coast, 36% in the Pacific Northwest, and 7% in the Group 3 (Midwest) region. “In the fourth quarter of 2006, we experienced record crack spreads on the West Coast. In contrast, during the 2007 fourth quarter, West Coast product inventories rose due to higher refinery utilization rates at a time of weakened demand in part due to both economic slowdown and inclement weather in California during the end of December. Three factors should have a positive impact on the outlook for spring margins – lower planned production runs combined with the impact of planned turnarounds, the seasonal reduction of gasoline inventories due to the transition into summer-grade gasoline and increased seasonal demand,” added Smith.
“Excluding Hawaii, for the fourth quarter, all regions achieved at or near record capture rates for the year due to our capital improvement and optimization efforts. The two sulfur handling projects at our Anacortes refinery, which were completed in the third quarter, give us the flexibility to increase the use of discounted Canadian sour crude. Optimization efforts throughout the system, especially in California, continue to add new crude flexibility and product upgrade opportunities. In the Mid-Continent region, we were able to shift our crude slate to take advantage of more deeply discounted local light sweet crudes. Our capital and optimization focus is on lowering our operating and raw material costs at all our refineries,” said Smith.
For the full year of 2007, the company reported net earnings of $566 million, or $4.06 per diluted share, versus earnings for the full year of 2006 of $801 million, or $5.73 per share.
“In 2007, Tesoro had many notable successes and fulfilled several goals. We acquired and fully integrated the Los Angeles refinery and California retail assets and subsequently reduced debt to achieve a year-end debt-to-capitalization ratio of 35%. The addition of these assets permitted us to achieve $45 million in synergies for the year, mainly through shared crude cargo benefits, and we are confident that we will meet our total goal of $100 million in the first twelve months of ownership. In May we doubled the dividend. The Shell and USA Gasoline acquisitions nearly doubled our retail network. Finally, we managed the largest capital program in Company history while achieving record safety performance.
“In 2008, we look forward to completing several income producing projects, realizing additional synergies associated with the addition of Los Angeles and improving profitability in Hawaii,” said Smith.
Board Declares Quarterly Dividend
Tesoro announced today that its Board of Directors has approved a regular quarterly cash dividend of $0.10 per share. The dividend is payable March 17th, 2008 to shareholders of record as of March 3rd, 2008.
Public Invited to Listen to Analyst Conference Call via Internet
At 10:30 a.m., CST, Thursday, January 31st, 2008 Tesoro will broadcast, live, its conference call with analysts regarding fourth quarter 2007 results and other business matters. Interested parties may listen to the live conference call over the Internet by logging on to Tesoro’s Internet site at http://www.tsocorp.com.
Tesoro Corporation, a Fortune 150 Company, is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates seven refineries in the western United States with a combined capacity of approximately 660,000 barrels per day. Tesoro's retail-marketing system includes over 900 branded retail stations, of which over 445 are company operated under the Tesoro®, Shell®, Mirastar® and USA GasolineTM brands.
This earnings release contains certain statements that are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 concerning the market environment, and our expectations about operating enhancements. For more information concerning factors that could affect these statements see our annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. We undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date hereof."
TESORO CORPORATION | |||||||||||||||||||
STATEMENTS OF CONSOLIDATED OPERATIONS | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(In millions except per share amounts) | |||||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||||
Revenues | $ | 6,533 | $ | 4,020 | $ | 21,915 | $ | 18,104 | |||||||||||
Costs and Expenses: | |||||||||||||||||||
Costs of sales and operating expenses | 6,399 | 3,652 | 20,308 | 16,314 | |||||||||||||||
Selling, general and administrative expenses | 74 | 50 | 263 | 176 | |||||||||||||||
Depreciation and amortization | 102 | 64 | 357 | 247 | |||||||||||||||
Loss on asset disposals and impairments | 7 | 7 | 20 | 50 | |||||||||||||||
Operating Income (Loss) | (49) | 247 | 967 | 1,317 | |||||||||||||||
Interest and Financing Costs | (20) | (17) | (95) | (77) | |||||||||||||||
Interest Income and Other | 4 | 14 | 33 | 46 | |||||||||||||||
Earnings (Loss) Before Income Taxes | (65) | 244 | 905 | 1,286 | |||||||||||||||
Income Tax Provision (Benefit) | (25) | 86 | 339 | 485 | |||||||||||||||
Net Earnings (Loss) | $ | (40) | $ | 158 | $ | 566 | $ | 801 | |||||||||||
Net Earnings (Loss) Per Share: | |||||||||||||||||||
Basic | $ | (0.29) | $ | 1.17 | $ | 4.17 | $ | 5.89 | |||||||||||
Diluted | $ | (0.29) | $ | 1.14 | $ | 4.06 | $ | 5.73 | |||||||||||
Weighted Average Common Shares: | |||||||||||||||||||
Basic | 136.0 | 134.6 | 135.7 | 136.0 | |||||||||||||||
Diluted | 136.0 | 138.4 | 139.5 | 139.8 | |||||||||||||||
Note: Amounts include the results of operations of our Shell and USA Petroleum acquisitions since their acquisition dates in May 2007. Share and per share data for the periods presented reflect the effect of a two-for-one stock split effected in the form of a stock dividend which was distributed on May 29, 2007. |
TESORO CORPORATION | |||||||||||||||||||||
SELECTED OPERATING SEGMENT DATA | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
Operating Income (Loss) | |||||||||||||||||||||
Refining | $ | 9 | $ | 284 | $ | 1,188 | $ | 1,476 | |||||||||||||
Retail | (1) | - | (8) | (21) | |||||||||||||||||
Total Segment Operating Income | 8 | 284 | 1,180 | 1,455 | |||||||||||||||||
Corporate and Unallocated Costs | (57) |
| (37) | (213) | (138) | ||||||||||||||||
Operating Income (Loss) | (49) | 247 | 967 | 1,317 | |||||||||||||||||
Interest and Financing Costs | (20) | (17) | (95) | (77) | |||||||||||||||||
Interest Income and Other | 4 | 14 | 33 | 46 | |||||||||||||||||
Earnings (Loss) Before Income Taxes | $ | (65) | $ | 244 | $ | 905 | $ | 1,286 | |||||||||||||
Depreciation and Amortization | |||||||||||||||||||||
Refining | $ | 87 | $ | 57 | $ | 314 | $ | 221 | |||||||||||||
Retail | 9 | 4 | 28 | 16 | |||||||||||||||||
Corporate | 6 | 3 | 15 | 10 | |||||||||||||||||
Depreciation and Amortization | $ | 102 | $ | 64 | $ | 357 | $ | 247 | |||||||||||||
- | |||||||||||||||||||||
Capital Expenditures | |||||||||||||||||||||
Refining | $ | 231 | $ | 159 | $ | 720 | $ | 401 | |||||||||||||
Retail | 7 | 1 | 10 | 5 | |||||||||||||||||
Corporate | 27 | 7 | 59 | 47 | |||||||||||||||||
Capital Expenditures | $ | 265 | $ | 167 | $ | 789 | $ | 453 | |||||||||||||
BALANCE SHEET DATA | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2007 (a) | 2006 | ||||||||||||||||||||
Cash and Cash Equivalents | $ | 23 | $ | 986 | |||||||||||||||||
Total Assets | $ | 8,128 | $ | 5,904 | |||||||||||||||||
Total Debt | $ | 1,659 | $ | 1,046 | |||||||||||||||||
Total Stockholders' Equity | $ | 3,052 | $ | 2,502 | |||||||||||||||||
Total Debt to Capitalization Ratio | 35% | 29% | |||||||||||||||||||
(a) | The purchase price of the Shell and USA assets, both acquired in May 2007, have been preliminarily allocated to the assets and liabilities acquired based upon their fair market values at the date of acquisition. The allocations remain subject to change. |
TESORO CORPORATION | ||||||||||||||||||||
OPERATING DATA | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||||||
REFINING SEGMENT | ||||||||||||||||||||
Total Refining Segment | ||||||||||||||||||||
Throughput (thousand barrels per day) (b) | ||||||||||||||||||||
Heavy crude | 175 | 97 | 137 | 96 | ||||||||||||||||
Light crude | 436 | 391 | 429 | 415 | ||||||||||||||||
Other feedstocks | 28 | 13 | 29 | 18 | ||||||||||||||||
Total Throughput | 639 | 501 | 595 | 529 | ||||||||||||||||
Yield (thousand barrels per day) | ||||||||||||||||||||
Gasoline and gasoline blendstocks | 313 | 225 | 280 | 245 | ||||||||||||||||
Jet fuel | 82 | 61 | 77 | 68 | ||||||||||||||||
Diesel fuel | 137 | 118 | 129 | 121 | ||||||||||||||||
Heavy oils, residual products, internally produced fuel and other | ||||||||||||||||||||
135 | 115 | 133 | 115 | |||||||||||||||||
Total Yield | 667 | 519 | 619 | 549 | ||||||||||||||||
Gross refining margin ($/throughput bbl) (c) | $ | 8.28 | $ | 12.83 | $ | 12.73 | $ | 13.62 | ||||||||||||
Manufacturing cost before depreciation and amortization ($/throughput bbl) (c) | ||||||||||||||||||||
$ | 5.22 | $ | 3.88 | $ | 4.47 | $ | 3.57 | |||||||||||||
Segment Operating Income ($ millions) | ||||||||||||||||||||
Gross refining margin (d) | $ | 486 | $ | 592 | $ | 2,762 | $ | 2,631 | ||||||||||||
Expenses | ||||||||||||||||||||
Manufacturing costs | 307 | 179 | 971 | 689 | ||||||||||||||||
Other operating expenses | 61 | 56 | 236 | 178 | ||||||||||||||||
Selling, general and administrative | 18 | 10 | 43 | 26 | ||||||||||||||||
Depreciation and amortization (e) | 87 | 57 | 314 | 221 | ||||||||||||||||
Loss on asset disposals and impairments | 4 | 6 | 10 | 41 | ||||||||||||||||
Segment Operating Income | $ | 9 | $ | 284 | $ | 1,188 | $ | 1,476 | ||||||||||||
Refined Product Sales (thousand barrels per day) (f) | ||||||||||||||||||||
Gasoline and gasoline blendstocks | 349 | 268 | 319 | 280 | ||||||||||||||||
Jet fuel | 102 | 88 | 96 | 91 | ||||||||||||||||
Diesel fuel | 127 | 120 | 131 | 128 | ||||||||||||||||
Heavy oils, residual products and other | 106 | 88 | 97 | 87 | ||||||||||||||||
Total Refined Product Sales | 684 | 564 | 643 | 586 | ||||||||||||||||
Refined Product Sales Margin ($/barrel) (f) | ||||||||||||||||||||
Average sales price | $ | 99.47 | $ | 72.93 | $ | 89.47 | $ | 81.26 | ||||||||||||
Average costs of sales | 92.20 | 61.95 | 78.14 | 69.42 | ||||||||||||||||
Refined Product Sales Margin | $ | 7.27 | $ | 10.98 | $ | 11.33 | $ | 11.84 | ||||||||||||
(b) | In 2007, we redefined heavy crude oil as crude oil with an American Petroleum Institute gravity of 24 degrees or less. Previously, heavy crude oils were defined as crude oils with a gravity of 32 degrees or less. Heavy and light throughput volumes for the three months and year ended December 31, 2006 have been adjusted to conform to the 2007 presentation. | |||||||||||||||||||
(c) | In 2007, we revised the calculation of gross refining margin per throughput barrel to include the effect of inventory changes. Inventory changes are the result of selling a volume and mix of product that is different than actual volumes manufactured. The amounts for the three months and year ended December 31, 2006 have been recalculated to conform to the 2007 calculation. Previously, gross refining margin per barrel was calculated based upon manufactured product volumes. Management uses gross refining margin per barrel to evaluate performance and compare profitability to other companies in the industry. Gross refining margin per barrel is calculated by dividing gross refining margin by total refining throughput and may not be calculated similarly by other companies. Gross refining margin is calculated as revenues less costs of feedstocks, purchased refined products, transportation and distribution. Management uses manufacturing costs per barrel to evaluate the efficiency of refinery operations. Manufacturing costs per barrel is calculated by dividing manufacturing costs by total refining throughput and may not be comparable to similarly titled measures used by other companies. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered as alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America. | |||||||||||||||||||
(d) | Gross refining margin totals gross refining margin for each of our regions adjusted for other costs not directly attributable to a specific region. Other costs resulted in a decrease of $2 million and $21 million for the three months and year ended December 31, 2007, respectively, and an increase of $5 million and $1 million for the three months and year ended December 31, 2006, respectively. Gross refining margin includes the effect of intersegment sales to the retail segment at prices which approximate market. Gross refining margin approximates total refining throughput times gross refining margin per barrel. | |||||||||||||||||||
(e) | Includes manufacturing depreciation and amortization per throughput barrel of approximately $1.41 and $1.17 for the three months ended December 31, 2007 and 2006, respectively, and $1.37 and $1.06 for the years ended December 31, 2007 and 2006, respectively. | |||||||||||||||||||
(f) | Sources of total refined product sales include products manufactured at the refineries and products purchased from third parties. Total refined product sales margin includes margins on sales of manufactured and purchased refined products. |
TESORO CORPORATION | ||||||||||||||||||
OPERATING DATA | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||||
Refining By Region | ||||||||||||||||||
California (Golden Eagle and Los Angeles) (g)(h) | ||||||||||||||||||
Throughput (thousand barrels per day) (b) | ||||||||||||||||||
Heavy crude | 148 | 76 | 115 | 75 | ||||||||||||||
Light crude | 108 | 82 | 90 | 81 | ||||||||||||||
Other feedstocks | 18 | 8 | 17 | 9 | ||||||||||||||
Total Throughput | 274 | 166 | 222 | 165 | ||||||||||||||
Yield (thousand barrels per day) | ||||||||||||||||||
Gasoline and gasoline blendstocks | 157 | 95 | 121 | 96 | ||||||||||||||
Jet fuel | 17 | - | 11 | - | ||||||||||||||
Diesel fuel | 65 | 55 | 53 | 49 | ||||||||||||||
Heavy oils, residual products, internally produced fuel and other | ||||||||||||||||||
51 | 26 | 49 | 30 | |||||||||||||||
Total Yield | 290 | 176 | 234 | 175 | ||||||||||||||
Gross refining margin | $ | 317 | $ | 258 | $ | 1,317 | $ | 1,148 | ||||||||||
Gross refining margin ($/throughput bbl) | $ | 12.60 | $ | 16.86 | $ | 16.33 | $ | 19.08 | ||||||||||
Manufacturing cost before depreciation and amortization ($/throughput bbl) | $ | 7.72 | $ | 5.50 | $ | 7.22 | $ | 5.57 | ||||||||||
Pacific Northwest (Alaska & Washington) (g) | ||||||||||||||||||
Throughput (thousand barrels per day) (b) | ||||||||||||||||||
Heavy crude | 14 | 10 | 11 | 8 | ||||||||||||||
Light crude | 160 | 132 | 163 | 154 | ||||||||||||||
Other feedstocks | 6 | 2 | 8 | 5 | ||||||||||||||
Total Throughput | 180 | 144 | 182 | 167 | ||||||||||||||
Yield (thousand barrels per day) | ||||||||||||||||||
Gasoline and gasoline blendstocks | 74 | 49 | 77 | 67 | ||||||||||||||
Jet fuel | 33 | 31 | 33 | 31 | ||||||||||||||
Diesel fuel | 35 | 19 | 33 | 27 | ||||||||||||||
Heavy oils, residual products, internally produced fuel and other | ||||||||||||||||||
45 | 48 | 46 | 47 | |||||||||||||||
Total Yield | 187 | 147 | 189 | 172 | ||||||||||||||
Gross refining margin | $ | 107 | $ | 150 | $ | 730 | $ | 706 | ||||||||||
Gross refining margin ($/throughput bbl) | $ | 6.42 | $ | 11.27 | $ | 10.94 | $ | 11.57 | ||||||||||
Manufacturing cost before depreciation and amortization ($/throughput bbl) | $ | 3.55 | $ | 3.57 | $ | 3.00 | $ | 2.88 | ||||||||||
Mid-Pacific (Hawaii) | ||||||||||||||||||
Throughput (thousand barrels per day) (b) | ||||||||||||||||||
Heavy crude | 13 | 11 | 11 | 13 | ||||||||||||||
Light crude | 61 | 66 | 70 | 72 | ||||||||||||||
Total Throughput | 74 | 77 | 81 | 85 | ||||||||||||||
Yield (thousand barrels per day) | ||||||||||||||||||
Gasoline and gasoline blendstocks | 16 | 17 | 19 | 20 | ||||||||||||||
Jet fuel | 20 | 19 | 23 | 26 | ||||||||||||||
Diesel fuel | 11 | 12 | 14 | 13 | ||||||||||||||
Heavy oils, residual products, internally produced fuel and other | ||||||||||||||||||
28 | 30 | 27 | 27 | |||||||||||||||
Total Yield | 75 | 78 | 83 | 86 | ||||||||||||||
Gross refining margin | $ | (51) | $ | 50 | $ | 35 | $ | 199 | ||||||||||
Gross refining margin ($/throughput bbl) | $ | (7.42) | $ | 7.01 | $ | 1.18 | $ | 6.44 | ||||||||||
Manufacturing cost before depreciation and amortization ($/throughput bbl) | $ | 2.91 | $ | 2.23 | $ | 2.22 | $ | 1.84 | ||||||||||
| ||||||||||||||||||
(g) | The Company experienced reduced throughput and yield levels during scheduled maintenance turnarounds for the Los Angeles refinery during the 2007 second quarter, the Golden Eagle refinery during the 2007 and 2006 first quarters, the Utah refinery during the 2007 first quarter, and the Alaska refinery during the 2006 second quarter. | |||||||||||||||||
(h) | Volumes and margins for 2007 include amounts for the Los Angeles refinery since acquisition on May 10, 2007, averaged over the periods presented. Throughput and yield averaged over the 235 days of operation were 106,000 bpd and 114,000 bpd, respectively. |
TESORO CORPORATION | |||||||||||||||||||
OPERATING DATA | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||||
Mid-Continent (North Dakota & Utah) (g) | |||||||||||||||||||
Throughput (thousand barrels per day) (b) | |||||||||||||||||||
Light crude | 107 | 111 | 106 | 108 | |||||||||||||||
Other feedstocks | 4 | 3 | 4 | 4 | |||||||||||||||
Total Throughput | 111 | 114 | 110 | 112 | |||||||||||||||
Yield (thousand barrels per day) | |||||||||||||||||||
Gasoline and gasoline blendstocks | 66 | 64 | 63 | 62 | |||||||||||||||
Jet fuel | 12 | 11 | 10 | 11 | |||||||||||||||
Diesel fuel | 26 | 32 | 29 | 32 | |||||||||||||||
Heavy oils, residual products, internally produced fuel and other | |||||||||||||||||||
11 | 11 | 11 | 11 | ||||||||||||||||
Total Yield | 115 | 118 | 113 | 116 | |||||||||||||||
Gross refining margin | $ | 115 | $ | 129 | $ | 701 | $ | 577 | |||||||||||
Gross refining margin ($/throughput bbl) | $ | 11.27 | $ | 12.36 | $ | 17.51 | $ | 14.06 | |||||||||||
Manufacturing cost before depreciation and amortization ($/throughput bbl) | $ | 3.33 | $ | 3.02 | $ | 3.07 | $ | 2.96 |
TESORO CORPORATION | |||||||||||||||||||
OPERATING DATA | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||||
RETAIL SEGMENT | |||||||||||||||||||
Number of Stations (end of period) | |||||||||||||||||||
Company-operated | 449 | 194 | 449 | 194 | |||||||||||||||
Branded jobber/dealer | 462 | 266 | 462 | 266 | |||||||||||||||
Total Stations | 911 | 460 | 911 | 460 | |||||||||||||||
Average Stations (during period) | |||||||||||||||||||
Company-operated | 449 | 194 | 362 | 204 | |||||||||||||||
Branded jobber/dealer | 457 | 264 | 384 | 261 | |||||||||||||||
Total Average Retail Stations | 906 | 458 | 746 | 465 | |||||||||||||||
Fuel Sales (millions of gallons) | |||||||||||||||||||
Company-operated | 301 | 59 | 856 | 248 | |||||||||||||||
Branded jobber/dealer | 67 | 48 | 242 | 186 | |||||||||||||||
Total Fuel Sales | 368 | 107 | 1,098 | 434 | |||||||||||||||
- | |||||||||||||||||||
Fuel Margin ($/gallon) (i) | $ | 0.15 | $ | 0.19 | $ | 0.15 | $ | 0.17 | |||||||||||
Merchandise Sales ($ millions) | $ | 56 | $ | 33 | $ | 202 | $ | 141 | |||||||||||
Merchandise Margin ($ millions) | $ | 14 | $ | 9 | $ | 52 | $ | 38 | |||||||||||
Merchandise Margin % | 25% | 27% | 26% | 27% | |||||||||||||||
Segment Operating Income (Loss) ($ millions) | |||||||||||||||||||
Gross Margins | |||||||||||||||||||
Fuel (j) | $ | 54 | $ | 20 | $ | 164 | $ | 72 | |||||||||||
Merchandise and other non-fuel margin | 21 | 10 | 69 | 41 | |||||||||||||||
Total Gross Margins | 75 | 30 | 233 | 113 | |||||||||||||||
Expenses | |||||||||||||||||||
Operating expenses | 60 | 20 | 182 | 87 | |||||||||||||||
Selling, general and administrative | 7 | 6 | 24 | 25 | |||||||||||||||
Depreciation and amortization | 9 | 4 | 28 | 16 | |||||||||||||||
Loss on asset disposals and impairments | - | - | 7 | 6 | |||||||||||||||
Segment Operating Income (Loss) | $ | (1) | $ | - | $ | (8) | $ | (21) | |||||||||||
(i) | Management uses fuel margin per gallon to compare profitability to other companies in the industry. Fuel margin per gallon is calculated by dividing fuel gross margin by fuel sales volume and may not be calculated similarly by other companies. Investors and analysts use fuel margin per gallon to help analyze and compare companies in the industry on the basis of operating performance. This financial measure should not be considered as an alternative to segment operating income and revenues or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America. | ||||||||||||||||||
(j) | Includes the effect of intersegment purchases from the refining segment at prices which approximate market. |
CONTACT:
Tesoro Corporation, San Antonio
Investors:
Scott Phipps, Director, Investor Relations, 210-283-2882
or
Media:
Natalie Silva, Director, Media Relations, 210-283-2729