CROWN
(registered trademark)
Crown Central Petroleum Corporation
Refiners / marketers of petroleum products &
petrochemicals
One North Charles Street, P.O. Box 1168, Baltimore,
Maryland 21203, (410) 539-7400
RESULTS SECOND QUARTER 1996
July 25, 1996
Dear Shareholders:
Crown Central Petroleum Corporation announced today a
net profit of $3.0 million ($.31 per share) in the
second quarter of 1996, compared to a net profit of $7.0
million ($.72 per share) in the second quarter of 1995.
Sales and operating revenues for the second quarter were
$431 million compared to revenues of $380 million in the
second quarter of 1995.
For the first six months of 1996, the Company had a net
loss of $10.0 million ($1.03 per share) on revenues of
$802 million compared to a net loss of $3.1 million
($.32 per share) on revenues of $725 million in the
first half of 1995.
While the benchmark West Texas Intermediate crude oil
averaged 11% higher for the second quarter compared with
the same 1995 period, Gulf Coast refining margins did
not keep pace and declined $.80/BBL for the period,
directly impacting the company's refining margins.
During the quarter, Crown announced the Pasadena, Texas
refinery will process 20,000 barrels per day, for a 12
month period, of crude oil supplied by Statoil North
America Inc. In return, Crown will provide refined
products to Statoil on a formula basis. This mutually
beneficial agreement provides a predictable source of
crude and a fixed market for a portion of Crown's
refining output.
Retail marketing operations recovered significantly
during the quarter as the $.16/gallon gasoline margin
was double that of the first quarter. Net retail profit
before income tax totaled $10.5 million compared to $3.4
million for the same 1995 period and is up 18% for the
first six months from $6.2 million to $7.3 million.
Retail same store gasoline volumes increased 2% for the
quarter while overall gasoline volumes were up 6% with
the additional units. Merchandise gross margins
improved 14% compared to the same period last year on a
same store basis. Overall merchandise sales showed a 3%
gain.
As a result of the counter cyclical nature of refining
and marketing margins, one of Crown's strategic goals
has been to integrate these operations so as to reduce
overall margin exposure. I am very pleased with the
increase in our retail gasoline volumes which surpasses
industry growth for the first six months.
During the quarter, Crown's retail marketing division
was renamed CrownCen Marketing Co. This trade name
designation will provide the retail unit with a clear,
distinct identity within the marketing segment of the
industry.
Results for the quarter and first six months of 1996
reflect a net benefit before income taxes of
approximately $4.1 million and $2.5 million,
respectively, related to the adjustment of reserves
required principally for certain pending litigation and
employee benefit liabilities, which were partially
offset by $1.6 million of certain first quarter 1996
corporate restructuring and benefits charges.
The Pasadena refinery also announced a joint venture
with Shell Chemical Co. This project consists of
compression and pipeline facilities that transport
ethylene rich gas from Crown's (FCC) process unit to
Shell's olefins recovery process in Deer Park, Texas.
Crown thus receives a higher value for its FCC gas
because of the premium received for the ethylene portion
of this major process stream.
The lockout of the Oil, Chemical, and Atomic Workers
Union (OCAW) at Pasadena is into its sixth month. While
discussions continue and proposals are being presented
and some program has been made, regretably the parties
remain far apart on a number of significant issues. The
National Labor Relations Board (NLRB) regional decision
in favor of the company has been appealed by OCAW to the
NLRB general counsel in Washington and a final ruling is
expected shortly. Personnel operating the refinery
deserve great credit for their professionalism,
commitment and superior performance during this period.
On May 15, Crown and First Maryland Bancorp's credit
card subsidiary, First Omni Bank, announced release of
the new Crown MasterCard. This new card represents
additional value and convenience to Crown customers.
Charged purchases earn points towards premiums selected
from a unique gifts catalog.
Effective April 1, Crown announced a new senior
management structure from existing personnel designed to
implement the company's strategic plans and to ensure
the long term profitability of the company. Elected
were Randall M. Trembly (49) to Executive Vice President
and Philip W. Taff (54) as Executive Vice President and
Chief Financial Officer. Other Crown personnel elected
to Senior Vice President or Vice President with new
responsibilities and titles include: Edward L.
Rosenberg (40) Senior Vice President-Supply and
Transportation, Frank B. Rosenberg (37) Senior Vice
President-Marketing, John E. Wheeler, Jr. (43) Senior
Vice President-Finance, Paul J. Ebner (38) Vice
President-Shared Services,and Dolores B. Rawlings (58)
Vice President, Corporate Secretary and Executive
Assistant to the Chairman. Effective June 1, James
Robert (Rick) Evans (50) was elected Vice President-
Retail Marketing.
Thank you for your continuing support during these
challenging times.
Sincerely,
HENRY A. ROSENBERG, JR.
Chairman of the Board, Chief Executive Officer, and
President
Crown Central Petroleum Corporation ans Subsidiaries
Dollars in thousands, except per share data
Six Months Ended Three Months Ended
June 30 June 30
1996 1995 1996 1995
--------- -------- --------- --------
Sales and operating
revenues 802,299
$ $ 724,958 431,208
$ 380,125
$
(Loss) income before
income taxes (16,626) 2,219 1,384 11,426
(Loss) income before
extraordinary item (9,998) 112 3,012 7,030
(Loss) from extraordinary
item __
1/
---- )
(3,257 ---- ----
Net (loss) income )
(9,998 )
(3,145 3,012 7,030
(Loss) income per share
before extraordinary item (1.03) .01 .31 .72
(Loss) per share from
extraordinary item ---- )
(.33 ---- ----
Net (loss) income per
share )
(1.03 )
(.32 .31 .72
Weighted average shares
used in the computation of
(loss) income oer share 9,711,419 9,697,598 9,711,419 9,697,598
<FN>
During the first quarter of 1995, the Company incurred an
__
1/
extraordinary loss as a result of the early retirement of its
outstanding 10.42% Senior Notes (Notes). The outstanding
Notes were retired on January 24, 1995 from the proceeds
received from the sale of $125 million of unsecured 10 7/8%
Senior Notes due February 1, 2005.
CROWN CENTRAL PETROLEUM CORPORATION
OPERATING STATISTICS
Six Months Ended Three Months Ended
June 30 June 30
1996 1995 1996 1995
--------- ---------- --------- ---------
COMBINED REFINERY
OPERATIONS
-----------------------
Production (BPD - M) 150 154 149 155
Production (MMbbl) 27.4 27.9 13.8 14.1
Sales (MMMbbl) 30.1 25.2 15.6 13.6
Gross Margin ($/bbl) 2.08 3.16 1.89 3.66
Gross Profit ($MM) 62.6 79.6 29.6 49.6
Operating Cost ($/bbl) 2.13 2.66 1.91 2.46
Operating Cost ($MM) 64.2 66.9 29.8 33.4
Net Refining Profit
($MM) (1.6) 12.7 )
(0.2 16.2
RETAIL
-----------------------
Number Stores 350 332 350 332
Volume (pmps - Mgal) 124 124 127 126
Volume (MMgal) 260 248 133 126
Gas Gross Margin
($/gal) 0.12 0.12 0.16 0.11
Gas Gross Profit ($MM) 32.0 28.7 21.6 13.3
Merchandise Sales (pmps
- $M) 24.0 24.7 25.5 25.8
Merchandise Sales ($MM) 50.3 49.1 26.8 25.7
Merchandise Gross
Margin (%) 28.7 25.8 30.1 26.4
Merchandise Gross
Profit ($MM) 14.4 12.7 8.1 6.8
Retail Gross Profit
($MM) 46.4 41.4 29.7 20.1
Retail Operating Costs
(pmps - $M) (19.0) (17.0) (19.1) (16.3)
Retail Operating Costs
($MM) (39.9) (33.8) (20.1) (16.2)
Retail Non-Operating
Income (Expense) ($MM) 0.8 (1.4) 0.5 (0.5)
Retail Net Profit ($MM) 7.3 6.2 10.1 3.4
Wholesale / Terminal
($MM) 0.0 (0.7) (1.5) (0.6)
LIFO (Provision) ($MM) (8.9) (2.4) (1.2) (1.1)
Corporate Overhead /
Other ($MM) (13.4) (13.5) (5.8) (6.5)
Income Tax Benefit
(Expense) ($MM) 6.6 (2.1) 1.6 (4.4)
(Loss) from
Extraordinary Item
($MM) (3.3)
Total Net (Loss) Income
($MM) (10.0) (3.1) 3.0 7.0
Depreciation &
Amortization ($MM) 16.0 18.9 8.0 9.5
Net Interest Expense
($MM) 6.2 5.5 3.2 3.0
LIFO Provision ($MM) 8.9 2.4 1.2 1.1
(Gain) from Asset
Disposals ($MM) 0.0 (0.2) 0.0 (0.4)
Loss from Extraordinary
Item ($MM) 3.3
EBITDAAL ($MM) 14.5 28.9 13.8 24.6
Capital Expenditures
($MM) 14.7 14.8 7.3 8.2
<FN>
BPD = Barrels Per Day
bbl = barrel or barrels as applicable
gal = gallon or gallons as applicable
pmps = per month per store
M = in thousands
MM = in millions