Exhibit 99.1
Tesoro Corporation Reports Fourth Quarter $0.99 per Share Loss, Excluding Goodwill Impairment
SAN ANTONIO--(BUSINESS WIRE)--February 2, 2010--Tesoro Corporation (NYSE:TSO) today reported a fourth quarter 2009 net loss of $179 million, or $1.30 per diluted share compared to net earnings of $97 million, or $0.70 per diluted share for the fourth quarter of 2008. The company’s fourth quarter results include a non-cash charge of $43 million for a goodwill impairment related to the Anacortes refinery.
For the full year 2009, the company reported a net loss of $140 million, or $1.01 per diluted share, versus net earnings of $278 million, or $2.00 per diluted share for the full year 2008. Full year 2009 segment operating income was $138 million, compared to $673 million for the full year 2008. The negative variance is a result of lower gross margins, partially offset by lower operating expenses.
For the fourth quarter, the company recorded a segment operating loss of $172 million, compared to segment operating income of $204 million in the fourth quarter a year ago. The decrease in operating income is primarily due to lower distillate margins and compressed discounts for heavy crudes, partially offset by improved margins for gasoline.
The Company’s fourth quarter gross refining margin fell to $5.37 per barrel (/bbl) from $12.47/bbl in the 2008 fourth quarter, as clean product inventories on the West Coast built during a time of weak seasonal product demand. West Coast benchmark diesel margins fell by approximately $11.50/bbl, down 60% from the fourth quarter a year ago, while benchmark gasoline margins increased more than $1/bbl to average $8/bbl during the fourth quarter. Accordingly, the company shifted 4% of its production out of the distillate pool relative to the 2008 fourth quarter. Additionally, discounts for foreign heavy crudes narrowed, as Oriente traded $6.50/bbl below Alaska North Slope crude, a 47% decrease from the 2008 fourth quarter. As a result of deteriorating benchmark margins, throughput decreased by approximately 25 thousand barrels per day (mbpd) versus the fourth quarter a year ago, primarily in the California region.
Direct manufacturing costs in the fourth quarter were $261 million, an increase of $13 million from the third quarter of 2009, primarily as a result of increased prices for purchased energy. While higher than the previous quarter, direct manufacturing costs for the system came in below the company’s initial guidance as a result of lower repair and maintenance costs associated with the Los Angeles coker repair work, and lower than expected prices for purchased energy. Direct manufacturing costs at Hawaii exceeded guidance as a result of one-time repair and maintenance costs during the quarter.
“Depressed consumer demand for transportation fuels significantly impacted the company’s gross margins,” said Bruce Smith, Chairman, President and CEO of Tesoro. “While we are disappointed with the loss, we are pleased that we were able to maintain the strength of our balance sheet by making operational adjustments that minimized these difficult market conditions. The supply and optimization team continually adjusted crude supply, throughput and inventory as they attempted to match wildly fluctuating supply prices and product margins to highly uncertain demand. As a result, the team managed to reduce inventories by 3.7 million barrels during the year. The refining team focused on reducing costs and ensuring that our capital program was effective as they reduced our $600 million capital budget to $542 million. We also exceeded our non-capital and capital improvement initiative target of approximately $370 million by $55 million. The result of these combined efforts was a build in cash for the year, given an $8.00/bbl Tesoro Index average for 2009.
“In January, we have seen seasonally high West Coast product inventories. We believe this is partially attributable to builds in anticipation of turnarounds, low demand for winter grade gasoline and the required switch to summer grade gasoline, all of which have kept margins depressed to start 2010. However, January margins are historically the lowest of the year, and on average for the last twenty years, West Coast gasoline demand has increased by more than 75 thousand barrels per day from January to March. 2009 was no exception, as demand increased 125 thousand barrels per day during the January to March time frame,” said Smith.
Capital Spending and Liquidity
Capital spending for the full year 2009 was $542 million and in-line with company guidance. For the first quarter of 2010, the company estimates capital spending to be less than $150 million, down from the original estimate of $250 million. For the full year, the company anticipates a capital program of $600 million.
The company ended the year with $413 million in cash and approximately $1 billion of availability on the revolving credit facility. Before the debt offering, our cash position for the year improved by over $175 million dollars from the end of 2008, which includes $66 million for revolver repayments.
2010 Strategy Update
“Effective cash management includes constant review of each capital projects’ scope and timing. Since November of last year, we were able to reduce our 2010 capital budget by $75 million, while retaining our 3-year, $300 million quick hit income program. We continue to believe that cost cuts and non-capital improvements are essential to our success; however, they alone are not enough to grow value if margins remain range bound. The quick hit opportunities that exist especially in the California region are low cost, high return projects that are more resilient to margin movement and the program is intended to become self funding after the first year. These projects are intended to improve our plants’ competitive position and create incremental shareholder value in this low margin environment,” said Smith.
Full details of the plan can be viewed in the November analyst day presentation posted on the Investor Relations section of the www.tsocorp.com website.
Dividend Update
Tesoro Corporation today announced it will suspend its quarterly dividend for the foreseeable future in order to preserve cash and keep a healthy balance sheet. “While we ended the fourth quarter with over a billion dollars of cash and availability under our revolver, we expect further margin volatility as supply adjustments are continuing in the market place. There is still no transparency into the future of global demand for petroleum products, and therefore we must act prudently. We believe that capturing the superior returns of our quick hit investment program will deliver the highest shareholder return, and this action helps to ensure its completion,” said Smith.
Public Invited to Listen to Analyst Conference Call
At 7:30 a.m. CST tomorrow morning, Tesoro will broadcast, live, its conference call with analysts regarding fourth quarter and full year 2009 results and other business matters. Interested parties may listen to the live conference call over the Internet by logging on to http://www.tsocorp.com, or via phone by dialing (877) 485-3104 (international dial-in: (201) 689-8579), event ID 341836. A telephone replay of the call will be available for one week, and may be accessed via phone by dialing (877) 660-6853 (international replay: (201) 612-7415 and entering passcode 341836.
Tesoro to Present Tomorrow at Credit Suisse Energy Summit
Bruce Smith, the Chairman, President and CEO of Tesoro, is scheduled to make a presentation tomorrow afternoon at 2:30 p.m. CST at the 2010 Credit Suisse Energy Summit. The webcast will be broadcast live and can be accessed through the Investors section of www.tsocorp.com. A replay of the presentation will be available for one month.
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 665,000 barrels per day. Tesoro's retail-marketing system includes over 880 branded retail stations, of which over 380 are company operated under the Tesoro®, Shell®, Mirastar® and USA Gasoline™ 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 our capital spending and our expectations about forward refining margins. 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, | ||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||
Revenues (a) | $ | 4,669 | $ | 4,241 | $ | 16,872 | $ | 28,416 | |||||||
Costs and Expenses: | |||||||||||||||
Costs of sales and operating expenses (a) (b) | 4,672 | 3,826 | 16,208 | 27,177 | |||||||||||
Selling, general and administrative expenses | 59 | 147 | 221 | 325 | |||||||||||
Depreciation and amortization | 111 | 113 | 426 | 401 | |||||||||||
Loss on asset disposals and impairments (c) | 49 | 5 | 74 | 42 | |||||||||||
Operating Income (Loss) | (222 | ) | 150 | (57 | ) | 471 | |||||||||
Interest and Financing Costs | (36 | ) | (28 | ) | (130 | ) | (111 | ) | |||||||
Interest Income | 1 | 2 | 4 | 7 | |||||||||||
Foreign Currency Exchange Gain (Loss) | 8 | 20 | (5 | ) | 12 | ||||||||||
Other Income (d) | - | - | - | 50 | |||||||||||
Earnings (Loss) Before Income Taxes | (249 | ) | 144 | (188 | ) | 429 | |||||||||
Income Tax Provision (Benefit) | (70 | ) | 47 | (48 | ) | 151 | |||||||||
Net Earnings (Loss) | $ | (179 | ) | $ | 97 | $ | (140 | ) | $ | 278 | |||||
Net Earnings (Loss) Per Share: | |||||||||||||||
Basic | $ | (1.30 | ) | $ | 0.71 | $ | (1.01 | ) | $ | 2.03 | |||||
Diluted | $ | (1.30 | ) | $ | 0.70 | $ | (1.01 | ) | $ | 2.00 | |||||
Weighted Average Common Shares: | |||||||||||||||
Basic | 138.2 | 137.3 | 138.2 | 136.8 | |||||||||||
Diluted | 138.2 | 138.7 | 138.2 | 139.2 | |||||||||||
(a) We have reclassified our gains and losses associated with our derivative instruments for the 2008 periods from “Revenues” to “Costs of sales and operating expenses” to conform to the 2009 presentation. The reclassifications totaled a $7 million loss and an $85 million gain during the three months ended December 31, 2009 and 2008, respectively, and losses of $68 million and $107 million during the years ended December 31, 2009 and 2008, respectively.
(b) Reductions in petroleum inventories resulted in decreases of last-in-first-out ("LIFO") layers acquired at lower per-barrel costs. These inventory reductions resulted in decreases to costs of sales of $69 million and $138 million during the years ended December 31, 2009 and 2008, respectively and $57 million during the three months ended December 31, 2009.
(c) The three months and year ended December 31, 2009 include a $43 million impairment charge to write-off goodwill in our refining segment.
(d) Other income for the year ended December 31, 2008 represents refunds received from the Trans Alaska Pipeline System in connection with rulings by the Regulatory Commission of Alaska concerning our protest of intrastate pipeline tariffs set between 1997 and 2003.
TESORO CORPORATION | ||||||||||||
SELECTED OPERATING SEGMENT DATA | ||||||||||||
(Unaudited) | ||||||||||||
(In millions) | ||||||||||||
Three Months Ended | Years Ended | |||||||||||
December 31, | December 31, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
Operating Income (Loss) | ||||||||||||
Refining | $ | (213 | ) | $ | 153 | $ | 55 | $ | 627 | |||
Retail | 41 | 51 | 83 | 46 | ||||||||
Total Segment Operating Income (Loss) | (172 | ) | 204 | 138 | 673 | |||||||
Corporate and Unallocated Costs | (50 | ) | (54 | ) | (195 | ) | (202 | ) | ||||
Operating Income (Loss) | (222 | ) | 150 | (57 | ) | 471 | ||||||
Interest and Financing Costs | (36 | ) | (28 | ) | (130 | ) | (111 | ) | ||||
Interest Income | 1 | 2 | 4 | 7 | ||||||||
Foreign Currency Exchange Gain (Loss) | 8 | 20 | (5 | ) | 12 | |||||||
Other Income (d) | - | - | - | 50 | ||||||||
Earnings (Loss) Before Income Taxes | $ | (249 | ) | $ | 144 | $ | (188 | ) | $ | 429 | ||
Depreciation and Amortization | ||||||||||||
Refining | $ | 96 | $ | 87 | $ | 359 | $ | 326 | ||||
Retail | 10 | 17 | 39 | 49 | ||||||||
Corporate | 5 | 9 | 28 | 26 | ||||||||
Depreciation and Amortization | $ | 111 | $ | 113 | $ | 426 | $ | 401 | ||||
Capital Expenditures | ||||||||||||
Refining | $ | 106 | $ | 154 | $ | 356 | $ | 561 | ||||
Retail | 4 | 10 | 14 | 20 | ||||||||
Corporate | - | 14 | 31 | 38 | ||||||||
Capital Expenditures | $ | 110 | $ | 178 | $ | 401 | $ | 619 |
BALANCE SHEET DATA | |||||||
(Unaudited) | |||||||
(Dollars in millions) | |||||||
December 31, | December 31, | ||||||
2009 | 2008 | ||||||
Cash and Cash Equivalents | $ | 413 | $ | 20 | |||
Total Assets | $ | 8,070 | $ | 7,433 | |||
Total Debt | $ | 1,841 | $ | 1,611 | |||
Total Stockholders' Equity | $ | 3,087 | $ | 3,218 | |||
Total Debt to Capitalization Ratio | 37 | % | 33 | % |
TESORO CORPORATION | ||||||||||||||
OPERATING DATA | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | Years Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
REFINING SEGMENT | ||||||||||||||
Total Refining Segment | ||||||||||||||
Throughput (thousand barrels per day) | ||||||||||||||
Heavy crude (e) | 180 | 186 | 177 | 192 | ||||||||||
Light crude | 313 | 332 | 335 | 369 | ||||||||||
Other feedstocks | 37 | 37 | 37 | 34 | ||||||||||
Total Throughput | 530 | 555 | 549 | 595 | ||||||||||
Yield (thousand barrels per day) | ||||||||||||||
Gasoline and gasoline blendstocks | 238 | 256 | 268 | 275 | ||||||||||
Jet fuel | 71 | 72 | 70 | 78 | ||||||||||
Diesel fuel | 111 | 141 | 114 | 143 | ||||||||||
Heavy oils, residual products, internally produced fuel | 138 | 116 | 127 | 129 | ||||||||||
Total Yield | 558 | 585 | 579 | 625 | ||||||||||
Gross refining margin ($/throughput bbl) (f) | $ | 5.37 | $ | 12.47 | $ | 8.90 | $ | 11.50 | ||||||
Manufacturing cost before depreciation and | $ | 5.35 | $ | 4.86 | $ | 5.01 | $ | 5.19 | ||||||
Segment Operating Income ($ millions) | ||||||||||||||
Gross refining margin (g) | $ | 262 | $ | 637 | $ | 1,783 | $ | 2,506 | ||||||
Expenses | ||||||||||||||
Manufacturing costs | 261 | 248 | 1,004 | 1,131 | ||||||||||
Other operating expenses | 57 | 50 | 262 | 284 | ||||||||||
Selling, general and administrative | 13 | 98 | 32 | 127 | ||||||||||
Depreciation and amortization (h) | 96 | 87 | 359 | 326 | ||||||||||
Loss on asset disposals and impairments (c) (i) | 48 | 1 | 71 | 11 | ||||||||||
Segment Operating Income (Loss) | $ | (213 | ) | $ | 153 | $ | 55 | $ | 627 | |||||
Refined Product Sales (thousand barrels per day) (j) | ||||||||||||||
Gasoline and gasoline blendstocks | 291 | 313 | 306 | 326 | ||||||||||
Jet fuel | 88 | 86 | 84 | 92 | ||||||||||
Diesel fuel | 112 | 136 | 121 | 144 | ||||||||||
Heavy oils, residual products and other | 87 | 81 | 85 | 94 | ||||||||||
Total Refined Product Sales | 578 | 616 | 596 | 656 | ||||||||||
Refined Product Sales Margin ($/barrel) (j) | ||||||||||||||
Average sales price | $ | 82.26 | $ | 71.24 | $ | 72.17 | $ | 112.06 | ||||||
Average costs of sales | 78.76 | 63.36 | 64.93 | 102.37 | ||||||||||
Refined Product Sales Margin | $ | 3.50 | $ | 7.88 | $ | 7.24 | $ | 9.69 | ||||||
(e) We define heavy crude oil as crude oil with an American Petroleum Institute gravity of 24 degrees or less.
(f) 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 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.
(g) Consolidated gross refining margin totals gross refining margin for each of our regions adjusted for other costs not directly attributable to a specific region. 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.
(h) Includes manufacturing depreciation and amortization per throughput barrel of approximately $1.87 and $1.57 for the three months ended December 31, 2009 and 2008, respectively, and $1.69 and $1.40 for the years ended December 31, 2009 and 2008, respectively.
(i) Includes a termination charge of $12 million during the year ended December 31, 2009, related to cancelling the purchase of equipment associated with a capital project at our Los Angeles refinery.
(j) Sources of total refined product sales included refined products manufactured at the refineries and refined 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, | |||||||||
2009 | 2008 | 2009 | 2008 | |||||||
Refining By Region | ||||||||||
California (Golden Eagle and Los Angeles) | ||||||||||
Throughput (thousand barrels per day) (k) | ||||||||||
Heavy crude (e) | 159 | 166 | 160 | 164 | ||||||
Light crude | 46 | 61 | 57 | 73 | ||||||
Other feedstocks | 27 | 24 | 24 | 21 | ||||||
Total Throughput | 232 | 251 | 241 | 258 | ||||||
Yield (thousand barrels per day) | ||||||||||
Gasoline and gasoline blendstocks | 109 | 127 | 130 | 133 | ||||||
Jet fuel | 17 | 15 | 18 | 18 | ||||||
Diesel fuel | 49 | 76 | 52 | 72 | ||||||
Heavy oils, residual products, internally produced fuel | 75 | 52 | 63 | 54 | ||||||
Total Yield | 250 | 270 | 263 | 277 | ||||||
Gross refining margin | $ | 126 | $ | 316 | $ | 897 | $ | 1,332 | ||
Gross refining margin ($/throughput bbl) (f) | $ | 5.92 | $ | 13.66 | $ | 10.18 | $ | 14.08 | ||
Manufacturing cost before depreciation and | $ | 7.29 | $ | 6.13 | $ | 6.86 | $ | 7.18 | ||
Pacific Northwest (Alaska & Washington) | ||||||||||
Throughput (thousand barrels per day) (k) | ||||||||||
Heavy crude (e) | - | - | - | 7 | ||||||
Light crude | 125 | 128 | 126 | 143 | ||||||
Other feedstocks | 6 | 10 | 9 | 9 | ||||||
Total Throughput | 131 | 138 | 135 | 159 | ||||||
Yield (thousand barrels per day) | ||||||||||
Gasoline and gasoline blendstocks | 55 | 56 | 60 | 63 | ||||||
Jet fuel | 28 | 30 | 26 | 32 | ||||||
Diesel fuel | 24 | 25 | 23 | 30 | ||||||
Heavy oils, residual products, internally produced fuel | 29 | 31 | 30 | 39 | ||||||
Total Yield | 136 | 142 | 139 | 164 | ||||||
Gross refining margin | $ | 41 | $ | 24 | $ | 376 | $ | 396 | ||
Gross refining margin ($/throughput bbl) (f) | $ | 3.39 | $ | 1.83 | $ | 7.65 | $ | 6.82 | ||
Manufacturing cost before depreciation and | $ | 4.02 | $ | 4.19 | $ | 3.81 | $ | 3.99 | ||
Mid-Pacific (Hawaii) | ||||||||||
Throughput (thousand barrels per day) | ||||||||||
Heavy crude (e) | 21 | 20 | 17 | 21 | ||||||
Light crude | 46 | 46 | 51 | 48 | ||||||
Total Throughput | 67 | 66 | 68 | 69 | ||||||
Yield (thousand barrels per day) | ||||||||||
Gasoline and gasoline blendstocks | 15 | 15 | 16 | 16 | ||||||
Jet fuel | 16 | 18 | 17 | 18 | ||||||
Diesel fuel | 13 | 11 | 12 | 11 | ||||||
Heavy oils, residual products, internally produced fuel | 24 | 24 | 24 | 26 | ||||||
Total Yield | 68 | 68 | 69 | 71 | ||||||
Gross refining margin | $ | 12 | $ | 140 | $ | 90 | $ | 170 | ||
Gross refining margin ($/throughput bbl) (f) | $ | 1.99 | $ | 23.14 | $ | 3.62 | $ | 6.72 | ||
Manufacturing cost before depreciation and | $ | 3.51 | $ | 3.52 | $ | 3.18 | $ | 3.30 | ||
|
(k) We experienced reduced throughput due to scheduled turnarounds at the Alaska and Golden Eagle refineries during the 2009 second quarter, scheduled maintenance at the Washington refinery during the 2009 first quarter, and scheduled turnarounds at the Golden Eagle refinery during the 2008 first and second quarters and at the Washington refinery during the 2008 first quarter.
TESORO CORPORATION | ||||||||||
OPERATING DATA | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Years Ended | |||||||||
December 31, | December 31, | |||||||||
2009 | 2008 | 2009 | 2008 | |||||||
Mid-Continent (North Dakota & Utah) | ||||||||||
Throughput (thousand barrels per day) | ||||||||||
Light crude | 96 | 97 | 101 | 105 | ||||||
Other feedstocks | 4 | 3 | 4 | 4 | ||||||
Total Throughput | 100 | 100 | 105 | 109 | ||||||
Yield (thousand barrels per day) | ||||||||||
Gasoline and gasoline blendstocks | 59 | 58 | 62 | 63 | ||||||
Jet fuel | 10 | 9 | 9 | 10 | ||||||
Diesel fuel | 25 | 29 | 27 | 30 | ||||||
Heavy oils, residual products, internally produced fuel | 10 | 9 | 10 | 10 | ||||||
Total Yield | 104 | 105 | 108 | 113 | ||||||
Gross refining margin | $ | 81 | $ | 155 | $ | 418 | $ | 603 | ||
Gross refining margin ($/throughput bbl) (f) | $ | 8.78 | $ | 16.82 | $ | 10.95 | $ | 15.12 | ||
Manufacturing cost before depreciation | $ | 3.82 | $ | 3.50 | $ | 3.49 | $ | 3.44 |
TESORO CORPORATION | ||||||||||||||
OPERATING DATA | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | Years Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
RETAIL SEGMENT | ||||||||||||||
Number of Stations (end of period) | ||||||||||||||
Company-operated | 387 | 389 | 387 | 389 | ||||||||||
Branded jobber/dealer | 499 | 490 | 499 | 490 | ||||||||||
Total Stations | 886 | 879 | 886 | 879 | ||||||||||
Average Stations (during period) | ||||||||||||||
Company-operated | 387 | 390 | 388 | 422 | ||||||||||
Branded jobber/dealer | 484 | 491 | 487 | 489 | ||||||||||
Total Average Retail Stations | 871 | 881 | 875 | 911 | ||||||||||
Fuel Sales (millions of gallons) | ||||||||||||||
Company-operated | 252 | 257 | 1,027 | 1,072 | ||||||||||
Branded jobber/dealer | 73 | 71 | 302 | 282 | ||||||||||
Total Fuel Sales | 325 | 328 | 1,329 | 1,354 | ||||||||||
Fuel Margin ($/gallon) (l) (m) | $ | 0.26 | $ | 0.32 | $ | 0.21 | $ | 0.21 | ||||||
Merchandise Sales ($ millions) | $ | 51 | $ | 52 | $ | 210 | $ | 223 | ||||||
Merchandise Margin ($ millions) | $ | 14 | $ | 13 | $ | 53 | $ | 57 | ||||||
Merchandise Margin % | 27 | % | 25 | % | 25 | % | 26 | % | ||||||
Segment Operating Income ($ millions) | ||||||||||||||
Gross Margins | ||||||||||||||
Fuel (m) | $ | 84 | $ | 105 | $ | 273 | $ | 286 | ||||||
Merchandise and other non-fuel margin | 19 | 18 | 77 | 78 | ||||||||||
Total Gross Margins | 103 | 123 | 350 | 364 | ||||||||||
Expenses | ||||||||||||||
Operating expenses | 49 | 46 | 202 | 216 | ||||||||||
Selling, general and administrative | 2 | 5 | 23 | 24 | ||||||||||
Depreciation and amortization | 10 | 17 | 39 | 49 | ||||||||||
Loss on asset disposals and impairments (n) | 1 | 4 | 3 | 29 | ||||||||||
Segment Operating Income | $ | 41 | $ | 51 | $ | 83 | $ | 46 | ||||||
(l) 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 volumes 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.
(m) Includes the effect of intersegment purchases from the refining segment at prices which approximate market.
(n) Impairment charges for the year 2008 are related to a potential sale of 20 retail stations and the closure of 42 Mirastar stations.
TESORO CORPORATION | ||||||||||||||||
RECONCILIATION TO AMOUNTS REPORTED UNDER US GAAP | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In millions) | ||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net Earnings (Loss) | $ | (179 | ) | $ | 97 | $ | (140 | ) | $ | 278 | ||||||
Add Income Tax Provision (Benefit) | (70 | ) | 47 | (48 | ) | 151 | ||||||||||
Add Interest and Financing Costs | 36 | 28 | 130 | 111 | ||||||||||||
Less Interest Income | (1 | ) | (2 | ) | (4 | ) | (7 | ) | ||||||||
Add Depreciation and Amortization | 111 |
| 113 | 426 |
| 401 | ||||||||||
Earnings (Loss) before Income Taxes, | $ | (103 | ) | $ | 283 | $ | 364 | $ | 934 |
(o) EBITDA represents earnings before interest and financing costs, interest income, income taxes, and depreciation and amortization. We present EBITDA because we believe some investors and analysts use EBITDA to help analyze our cash flows including our ability to satisfy principal and interest obligations with respect to our indebtedness and to use cash for other purposes, including capital expenditures. EBITDA is also used by some investors and analysts to analyze and compare companies on the basis of operating performance and by management for internal analysis and as a component of the fixed charge coverage financial covenant in our credit agreement. EBITDA should not be considered as an alternative to net earnings, earnings before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America. EBITDA may not be comparable to similarly titled measures used by other entities.
NET EARNINGS ADJUSTED FOR SPECIAL ITEMS | |||||||
(Unaudited) | |||||||
(In millions except per share amounts) | |||||||
Three Months | Year | ||||||
Ended | Ended | ||||||
December 31, | December 31, | ||||||
2009 | 2009 | ||||||
Net Earnings (Loss) - U.S. GAAP | $ | (179 | ) | $ | (140 | ) | |
Special Items: | |||||||
Goodwill Impairment (c) | 43 | 43 | |||||
Net Earnings (Loss) Adjusted for Special Items | $ | (136 | ) | $ | (97 | ) | |
Net Earnings (Loss) Per Share - U.S. GAAP | $ | (1.30 | ) | $ | (1.01 | ) | |
Special Items Per Share: | |||||||
Goodwill Impairment (c) | 0.31 | 0.31 | |||||
Net Earnings (Loss) Per Share Adjusted for Special Items | $ | (0.99 | ) | $ | (0.70 | ) |
Note: The special items present information that the Company believes is useful to investors. The Company believes that special items are not indicative of its core operations.
CONTACT:
Tesoro Corporation
Investors:
Scott Phipps, Managing Director, Finance & Investor Relations, 210-626-4882
or
Media:
Lynn Westfall, SVP of External Affairs and Chief Economist, 210-626-4697