UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 1-7627
WAINOCO OIL CORPORATION
(Exact name of registrant as specified in its charter)
Wyoming 74-1895085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10000 Memorial Drive, Suite 600 77024-3411
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 688-9600
Not Applicable
------------------------------------------------------
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 . . .
Registrant's number of common shares outstanding as of July 29, 1997:
27,343,499
WAINOCO OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II - Other Information 11
Definitions of Terms
bbl(s) = barrel(s)
bpd = barrel per day
mbbls = thousand barrels
All dollar amounts are expressed in United States dollars unless otherwise
indicated as Canadian dollars (C$).
- 1 -
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share)
Six Months Ended Three Months Ended
June 30 June 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
Revenues:
Refined products $ 184,670 $ 175,341 $ 95,458 $ 100,037
Other 1,230 545 872 283
---------- ---------- ---------- ----------
185,900 175,886 96,330 100,320
---------- ---------- ---------- ----------
Costs and Expenses:
Refining operating costs 174,383 165,082 83,234 90,701
Selling and general expenses 3,507 3,408 1,785 1,433
Depreciation 4,539 4,476 2,266 2,265
---------- ---------- ---------- ----------
182,429 172,966 87,285 94,399
---------- ---------- ---------- ----------
Operating Income 3,471 2,920 9,045 5,921
Interest Expense, Net 8,970 8,466 4,511 4,316
---------- ---------- ---------- ----------
Income (Loss) From Continuing
Operations Before Income Taxes (5,499) (5,546) 4,534 1,605
Provision for Income Taxes - 120 - 60
---------- ---------- ---------- ----------
Income (Loss) From Continuing Operations (5,499) (5,666) 4,534 1,545
Discontinued Operations:
Income from oil and gas operations,
net of taxes 1,721 1,961 167 192
Gain on disposal of Canadian oil and gas
properties, net of $800 of taxes 23,301 - 23,301 -
Recognition of cumulative
translation adjustment (9,862) - (9,862) -
---------- ---------- ---------- ----------
Net Income (Loss) $ 9,661 $ (3,705) $ 18,140 $ 1,737
========== ========== ========== ==========
Income (Loss) Per Share
From Continuing Operations $ (.20) $ (.21) $ .17 $ .06
========== ========== ========== ==========
Net Income (Loss) Per Share $ .35 $ (.14) $ .66 $ .06
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
- 2 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except shares)
June 30, 1997 and December 31, 1996 1997 1996
---------- -----------
ASSETS
Current Assets:
Cash, including cash equivalents of
$92,238 in 1997 and $609 in 1996 $ 93,833 $ 5,183
Trade receivables 22,347 19,422
Other receivables 1,010 1,357
Inventory of crude oil, products and other 25,155 29,617
Other current assets 430 730
---------- ----------
Total current assets 142,775 56,309
---------- ----------
Property and Equipment, at cost:
Refinery and pipeline 144,730 143,172
Furniture, fixtures and other equipment 2,764 3,646
Oil and gas properties, on a full-cost basis - 170,879
---------- ----------
147,494 317,697
Less - Accumulated depreciation, depletion
and amortization 41,004 139,091
---------- ----------
106,490 178,606
Other Assets 4,669 4,950
---------- ----------
$ 253,934 $ 239,865
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 31,844 $ 43,789
Revolving credit facility 6,400
Accrued interest 5,363 5,249
Accrued turnaround cost 8,028 3,490
Accrued liabilities and other 4,909 5,033
Current maturities of long-term debt 2,500 2,500
---------- ----------
Total current liabilities 59,044 60,061
---------- ----------
Long-Term Debt, net of current maturities:
12% Senior Notes 97,000 95,000
7 3/4% Convertible Subordinated Debentures 46,000 46,000
10 3/4% Subordinated Debentures 4,954 4,928
---------- ----------
147,954 145,928
---------- ----------
Deferred Credits and Other 1,887 6,189
Deferred Income Taxes 1,618 2,418
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $100 par value, 500,000 shares
authorized, no shares issued - -
Common stock, no par, 50,000,000 shares authorized,
27,313,502 shares issued in 1997 and 1996 57,172 57,172
Paid-in capital 81,767 81,767
Retained earnings (deficit) (95,260) (104,921)
Cumulative translation adjustment - (8,501)
Treasury stock, 55,000 shares (248) (248)
---------- ----------
Total Shareholders' Equity 43,431 25,269
---------- ----------
$ 253,934 $ 239,865
========== ==========
The accompanying notes are an integral part of these financial statements.
- 3 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
For the six months ended June 30, 1997 1996
---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ 9,661 $ (3,705)
Gain on disposal of Canadian oil and gas properties (23,301) -
Recognition of cumulative translation adjustment 9,862 -
Depreciation, depletion and amortization 8,387 8,666
Deferred credits and other (205) 445
---------- ----------
4,404 5,406
Change in working capital from operations (9,224) (12,719)
---------- ----------
Net cash used in operating activities (4,820) (7,313)
INVESTING ACTIVITIES
Additions to property and equipment (5,524) (7,632)
Sale of Canadian oil and gas properties,
net of transaction costs 91,307 -
Other (590) 1,022
---------- ----------
Net cash provided by (used in) investing activities 85,193 (6,610)
FINANCING ACTIVITIES
Long-term borrowing-
Bank debt 1,371 5,143
12% Senior Notes 2,000 2,000
Repayments of long-term bank debt (1,371) (5,143)
Refining credit facility 6,400 7,600
Other (113) (170)
Net cash provided by financing activities 8,287 9,430
Effect of exchange rate changes on cash (10) 4
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents 88,650 (4,489)
Cash and Cash Equivalents, beginning of period 5,183 6,045
---------- ----------
Cash and Cash Equivalents, end of period $ 93,833 $ 1,556
========== ==========
The accompanying notes are an integral part of these financial statements.
- 4 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited, in thousands except shares)
Common Stock
-----------------------
Number of Retained Cumulative
Shares Paid-In Earnings Translation Treasury
Issued Amount Capital (Deficit) Adjustment Stock
---------- ---------- ---------- ---------- ----------- ----------
December 31, 1996 27,313,502 $ 57,172 $ 81,767 $(104,921) $ (8,501) $ (248)
Translation adjustment - - - - (1,361) -
Net income - - - 9,661 - -
Disposition of Canadian assets - - - - 9,862 -
---------- ---------- ---------- ---------- ----------- ----------
June 30, 1997 27,313,502 $ 57,172 $ 81,767 $ (95,260) $ - $ (248)
========== ========== ========== ========== =========== ==========
The accompanying notes are an integral part of these financial statements.
- 5 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. Financial statement presentation and earnings per share
Financial statement presentation
The condensed consolidated financial statements include the accounts of
Wainoco Oil Corporation, a Wyoming Corporation, and its wholly owned
subsidiaries, including Frontier Holdings Inc. ("Frontier" or the "Refinery"),
collectively referred to as Wainoco or the Company. These financial statements
have been prepared by the registrant without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) and include all
adjustments (comprised of only normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although Wainoco believes that
the disclosures are adequate to make the information presented not misleading.
It is suggested that the financial statements included herein be read in
conjunction with the financial statements and the notes thereto included in
Wainoco's annual report on Form 10-K for the year ended December 31, 1996.
Wainoco conducts its refining operations in the Rocky Mountain region of the
United States. The Company's Cheyenne, Wyoming Refinery purchases the crude oil
to be refined and markets the refined petroleum products produced, including
various grades of gasoline, diesel fuel, asphalt and petroleum coke. As
discussed in Note 4, on June 16, 1997, Wainoco completed the sale of all its
Canadian oil and gas properties. Operating results for Wainoco's oil and gas
exploration and production segment have been presented as discontinued
operations in the accompanying statements of operations and all previously
reported results have been restated to this presentation.
Earnings per share
Primary and fully diluted earnings per share have been computed on the
weighted average number of common shares outstanding and assume the exercise of
stock option shares for the six months ended June 30, 1997 and the three months
ended June 30, 1997 and 1996. The effect of dilution for the fully diluted
computation was immaterial. No effect was given for the addition of dilutive
stock options for the six months ended June 30, 1996 as a loss was incurred.
The primary and fully diluted average shares outstanding for the six months and
three months ended June 30, 1997 were 27,336,847 and 27,415,191, and in 1996
were 27,256,002 and 27,330,233, respectively.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("FAS") No. 128, Earnings Per Share, which
establishes new standards for computing and presenting earnings per share. The
provisions of the statement are effective for fiscal years ending after December
31, 1997. If the provisions of FAS No. 128 had been adopted in 1997 and 1996,
basic and diluted earnings per share would not have been materially different
from primary and fully diluted earnings per share, respectively, as calculated
in accordance with Accounting Principles Board Opinion No. 15.
2. Schedule of major components of inventory
June 30, December 31,
1997 1996
---------- ----------
(in thousands)
Crude oil $ 2,927 $ 2,863
Unfinished products 5,060 7,024
Finished products 10,129 12,816
Chemicals 910 851
Repairs and maintenance supplies and other 6,129 6,063
---------- ----------
$ 25,155 $ 29,617
========== ==========
- 6 -
3. Refining credit facility
The Frontier revolving credit facility was amended in 1997 to extend the
maturity from April 2, 1998 to April 2, 1999. No changes to the financial terms
of the credit facility were made.
4. Sale of Canadian oil and gas operations
On June 16, 1997, Wainoco completed the sale of all its Canadian oil and gas
properties to Numac Energy Inc. The transaction was initiated by the Company
through a negotiated bid process in order to maximize shareholder value. The
oil and gas assets were located in British Columbia and Alberta and included
approximately 94 billion cubic feet of natural gas, 1.7 million barrels of oil,
condensate and natural gas liquids, 121,500 net undeveloped leasehold acres and
a significant amount of seismic data. Additionally, value was received for
certain Canadian income tax pools of the Company.
The contract purchase price of C$133.6 million was adjusted from the January
1, 1997 effective date of the sale to June 16, 1997. Net proceeds after these
adjustments, transaction expenses and severance costs were approximately C$126.7
million (US$91.3 million) as of June 16, 1997. As of June 30, 1997, $7.7
million of cash deposits are restricted until all Canadian tax reporting is
completed, which is expected to be within six months.
A net gain of $23.3 million was realized on the transaction. No Canadian
taxes are estimated to be payable due to available oil and gas deductions and
net operating loss carryforwards. For U.S. federal income taxes, available net
operating loss carryforwards will be utilized to offset the gain; however,
alternative minimum taxes of approximately $800,000 are estimated to be payable.
The cumulative translation adjustment as of May 5, 1997 (the measurement
date of the sale) of $9.9 million was realized against income as a result of the
sale. In prior periods, Wainoco had recognized the currency translation impact
of its Canadian operations as a direct reduction to shareholders' equity.
Consequently, the recognition of the cumulative translation adjustment in the
accompanying statements of operations has no affect on shareholders' equity.
A net operating loss of $54,000 from Canadian operations from the
measurement date until June 16, 1997 was included in the gain calculation. As
of June 30, 1997, the assets and liabilities of the Canadian operations retained
by Wainoco consist of the following (in thousands):
Receivables $323
Other Assets 141
Payables 130
- 7 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Six months ended June 30, 1997 compared with the same period in 1996
The Company had net income for the six months ended June 30, 1997 of
$9,661,000, or $.35 per share, compared to a loss of $3,705,000 or $.14 per
share for the same period in 1996. The 1997 results include a $23.3 million
gain on the sale of the Canadian oil and gas operations which closed on June 16,
1997 and the $9.9 million reduction to income in recognition of the cumulative
translation adjustment. Refer to Note 4 to the financial statements for further
information on the sale. Operating results for Wainoco's oil and gas
exploration and production segment have been presented as discontinued
operations in the accompanying statements of operations and all previously
reported results have been restated to this presentation. Wainoco's primary
continuing operation is its Frontier refining operation in the Rocky Mountain
region of the United States.
Operating income increased $551,000 in 1997 versus 1996 due to an increase in
the refined product spread and an increase in other income offset by higher
refining operating costs. The refined product spread was $4.75 per bbl compared
to $4.66 per bbl in 1996. The 1997 refined product spread benefited from better
light product margins and improved sweet/sour spread despite the first quarter
1997 inventory losses of approximately $4.0 million from a decline in crude
prices of more than $6 per bbl. Inventories are recorded at the lower of cost
on a first in, first out (FIFO) basis or market. Refined product revenues
increased $9.3 million or 5.3%. The increase in refined product revenues
resulted from a $.65 per bbl increase in average product sales prices. Refined
product sales volumes also increased 3% in 1997 over 1996 levels. Yields of
gasoline decreased 3%, while yields of distillate increased by 1% from the same
period in 1996.
Other income increased $685,000 to $1,230,000 in 1997 versus 1996 due to
foreign currency transaction gains of $496,000 related to the Canadian sales
proceeds and higher processing fees.
Refining operating costs increased $9.3 million or 6% over 1996 levels due to
an increase in material costs and refining operating expense. Material costs
per bbl increased 3% or $.56 per bbl in 1997 due to higher oil prices and
inventory losses caused by the rapid decline in crude prices since year-end
1996. The sweet/sour spread increased 33% to average $3.40 per bbl in the six
months of 1997 as Frontier contracted approximately 30,000 bpd of Wyoming and
Canadian sour crude oil for much of 1997 at a sweet/sour spread substantially
better than in 1996. Refining operating expense per bbl increased $.12 per bbl
to $3.33 per bbl in 1997 due to higher maintenance costs compared to 1996
operating expenses which were reduced by a $1.3 million settlement of repair
costs related to a 1995 pipeline gas explosion.
Selling and general expenses increased $99,000 or 3% for the six months ended
June 30, 1997 reflecting increases in salaries and benefits. The six months
ended June 30, 1996 included $240,000 of salary and salary-related expenses of
certain employees who were not retained subsequent to March 31, 1996 in
connection with the disposition of United States oil and gas operations in late
1995 and corporate reorganization in early 1996.
Depreciation increased $63,000 or 1% in the 1997 six-month period as compared
to the same period in 1996, attributable to increases in capital investment.
The interest expense increase of $504,000 or 6% in 1997 was attributable to
interest on higher borrowings during 1997 under the Frontier revolving credit
facility and more 12% senior notes outstanding during 1997 than 1996. Average
debt for the six months increased from $152 million in 1996 to $161 million in
1997.
Income from discontinued oil and gas operations includes Canadian oil and gas
operations through May 5, 1997 and both Canadian and United States oil and gas
operations for 1996. Income from discontinued operations declined $240,000 to
$1,721,000 for the six months ended June 30, 1997 as compared to 1996,
consisting of a $601,000 increase in Canadian oil and gas income and a $841,000
decrease in United States oil and gas income. The increase in Canadian oil and
gas income is due to higher oil and gas prices offset by declining volumes. The
1996 discontinued earnings included $841,000 associated with the 1995
disposition of United States oil and gas operations, due to a reduction of
certain accruals.
- 8 -
Three months ended June 30, 1997 compared with the same period in 1996
The Company had net income for the three months ended June 30, 1997 of
$18,140,000, or $.66 per share, compared to net income of $1,737,000, or $.06
per share, for the same period in 1996. The 1997 results include a $23.3
million gain on the sale of the Canadian oil and gas operations which closed on
June 16, 1997 and the $9.9 million reduction to income in recognition of the
cumulative translation adjustment. Refer to Note 4 to the financial statements
for further information on the sale. Operating results for Wainoco's oil and
gas exploration and production segment have been presented as discontinued
operations in the accompanying statements of operations and all previous
reported results have been restated to this presentation. Wainoco's primary
continuing operation is its Frontier refining operation in the Rocky Mountain
region of the United States.
Operating income increased $3,124,000 to $9,045,000 in 1997 versus 1996 due to
an increase in the refined product spread to $6.18 per bbl from $5.77 per bbl,
an increase in other income and reduced refining operating expense. The
improvement in the refined product spread was due to better gasoline margins,
the increase sweet/sour spread for crude oil and better by-product margins due
to lower crude oil prices. Despite the improved refined product spread and
increased sales volumes, refined product revenues decreased as product and crude
price levels were lower. Refined product sales prices declined $1.81 per bbl in
1997 to an average $25.06 per bbl. Refined product sales volumes increased
approximately 2% in 1997 from 1996 levels, primarily asphalt and other
by-product sales. Yields of gasoline and diesel each declined 3% from 1996
levels while asphalt and other by-product yields increased. The crude charge
rate was unchanged, yet the percentage of sour crude usage increased to 92% of
total crude oil charge in 1997 versus 84% in 1996. The increased sour crude
usage, while more profitable, resulted in lesser gasoline and diesel yields and
increased by-product yields.
Other income increased $589,000 to $872,000 in 1997 versus 1996 due to foreign
currency transaction gains of $496,000 related to the Canadian sales proceeds
and higher processing fees.
Refining operating costs decreased $7,467,000 or 8% over 1996 levels primarily
as a result of a decrease in material costs and a decrease in refining operating
expense. Material costs per bbl decreased approximately 11% or $2.22 per bbl
in 1997 due to lower oil prices. The sweet/sour spread increased 29% to average
$3.32 per bbl in 1997, as Frontier has contracted approximately 30,000 bpd of
Wyoming and Canadian sour crude oil for much of 1997 at a sweet/sour spread
substantially better than in 1996. Refining operating expense decreased $.28
per bbl to $2.98 per bbl in 1997 due to reduced energy and turnaround costs
partially offset by higher maintenance costs. The strike by approximately 150
union employees which commenced May 8, 1996 and settled July 29, 1996 did not
adversely impact 1996 operating costs.
Selling and general expenses increased $352,000 to $1,785,000 for the three
months ended June 30, 1997, reflecting increases in salary and benefits and
other general expenses.
The interest expense increase of $195,000 or 5% was attributable to higher
borrowings during 1997 under the refining revolving credit facility and more 12%
senior notes outstanding during 1997 than 1996. Average debt for the three
months ended June 30, 1997 increased from $154 million in 1996 to $161 million
in 1997.
Income from discontinued oil and gas operations includes Canadian oil and gas
operations from April 1, 1997 through May 5, 1997 and both Canadian and United
States oil and gas operations for the 1996 period. Income from discontinued
operations declined $25,000 to $167,000 for the three months ended June 30, 1997
as compared to 1996, consisting of a $57,000 decrease in Canadian oil and gas
income and a $110,000 decrease in United States oil and gas income. The
decrease in Canadian oil and gas income is due to only one month of income being
reported for 1997. The 1996 discontinued earnings included $110,000 associated
with the 1995 disposition of United States oil and gas operations due to a
reduction of certain accruals.
- 9 -
REFINING OPERATING STATISTICAL INFORMATION
Six Months Ended Three Months Ended
June 30, June 30,
--------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
Raw material input (bpd)
Sweet crude 3,187 5,640 3,064 6,177
Sour crude 31,529 29,662 34,421 31,768
Other feed and blend stocks 5,777 4,882 4,856 4,351
-------- -------- -------- --------
Total 40,493 40,184 42,341 42,296
Manufactured product yields (bpd)
Gasoline 16,860 17,318 16,456 16,969
Distillates 13,559 13,369 13,676 14,169
Asphalt and other 9,129 7,844 11,062 9,501
-------- -------- -------- --------
Total 39,548 38,531 41,194 40,639
Total product sales (bpd)
Gasoline 20,324 20,129 20,359 20,317
Distillates 12,516 12,441 12,343 12,756
Asphalt and other 7,147 6,174 9,146 7,837
-------- -------- -------- --------
Total 39,987 38,744 41,848 40,910
Operating margin information (per sales bbl)
Average sales price $ 25.51 $ 24.86 $ 25.06 $ 26.87
Material costs (under FIFO inventory accounting) 20.76 20.20 18.88 21.10
-------- -------- -------- --------
Product spread 4.75 4.66 6.18 5.77
Operating expenses excluding depreciation 3.33 3.21 2.98 3.26
Depreciation .62 .61 .59 .59
-------- -------- -------- --------
Operating margin $ .80 $ .84 $ 2.61 $ 1.92
Manufactured product margin
before depreciation (per bbl) $ 1.42 $ 1.45 $ 3.22 $ 2.51
Purchase product margin (per purchased product bbl) $ 1.74 $ - $ 1.74 $ -
Sweet/sour spread (per bbl) $ 3.40 $ 2.56 $ 3.32 $ 2.58
Average sales price (per sales bbl)
Gasoline $ 28.84 $ 27.47 $ 28.54 $ 29.89
Distillates 28.30 27.47 28.16 30.19
Asphalts and other 11.19 11.13 13.15 13.66
- 10 -
LIQUIDITY AND CAPITAL RESOURCES
On June 16, 1997, Wainoco completed the sale of its Canadian oil and gas
properties. Net proceeds after purchase price adjustments, transaction expenses
and severance costs were approximately C$126.7 million (US$91.3 million). The
Company intends to use the net proceeds from the disposition to repay $57.5
million principal amount of debt obligations of the Company. The Company
expects to retire $7.5 million of 10 3/4% Subordinated Debentures in October
1997 and repay $50 million of 12% Senior Notes in the third quarter of 1997 at a
redemption price of 103.43%. Based on the anticipated repayments, the Company
will recognize an extraordinary loss on debt extinguishment during the second
half of 1997 totaling approximately $2.7 million due to the redemption premium
of 103.43% on the 12% Senior Notes and reduction in debt issuance costs. On
July 21, 1997, the Company initiated a tender offer for $91.4 million of its 12%
Senior Notes at a price of par as required by the Senior Note Indenture after a
material sale of assets. The par tender offer will expire on August 20, 1997.
The ultimate amount of debt repayment in 1997 will depend upon the response to
the tender offer, the Company's market outlook and investment opportunities
available to Wainoco and could vary significantly.
Commencing June 30, 1997, borrowings under the Frontier revolving credit
facility are reflected as current liabilities. Prior to this, borrowings were
reflected as long-term debt because of available credit under the Canadian oil
and gas line of credit which was terminated upon the sale of the Canadian oil
and gas properties.
During the first six months of 1997, $4,820,000 of cash flows were used in
operating activities. In 1996, $7,313,000 of cash flows were used in operating
activities primarily for a Refinery inventory increase of $9,028,000. The
primary source of cash was net borrowings of $6,400,000 in 1997 and $7,600,000
in 1996 under the Frontier line of credit. Proceeds on the resale of $2,000,000
of 12% Senior Notes in each of the years were used to finance operating and
investing activities.
At June 30, 1997, the Company had $18,600,000 available under the Frontier
line of credit. The Company had working capital of $83,731,000 at June 30,
1997, including sales proceeds, compared with $4,404,000 at June 30, 1996.
Additions to property and equipment in the first six months decreased
$2,108,000 from the first six months in 1996. In the first six months of 1997,
capital expenditures in Canada decreased approximately $1.9 million to $3.3
million, while expenditures at the Refinery decreased approximately $.2 million
to $2.3 million. Investing activities include proceeds from the sale of the
Canadian oil and gas properties of $91.3 million for the six months ended June
30, 1997. Capital expenditures of approximately $9.0 million are currently
planned for 1997, of which $4.4 million had been incurred as of June 30, 1997.
Capital expenditures of approximately $6.2 million are planned for the Refinery
in 1997.
- 11 -
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings -
None, which in the opinion of management would have a material impact
on the registrant.
ITEM 2. Changes in Securities -
There have been no changes in the constituent instruments defining the
rights of the holders of any class of registered securities during the
current quarter.
ITEM 3. Defaults Upon Senior Securities -
None.
ITEM 4. Submission of Matters to a Vote of Security Holders -
The annual meeting of the registrant was held April 24, 1997 with no
significant proposals brought to a vote of the shareholders.
ITEM 5. Other Information -
None.
ITEM 6. Exhibits and Reports on Form 8-K -
(a) Exhibits
10.1 - Amended and Restated Revolving Credit and Letter of Credit
Agreement dated June 30, 1997 among Frontier Oil and Refining
Company, certain banks and Union Bank of California.
27 - Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K was filed on June 30, 1997. This report included
Item 2 for the Disposition of Assets and Items 7(a) Pro Forma Financial
Statements, 7(b) Pro Forma Financial Information and 7(c) Exhibit of a
Purchase and Sale Agreement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WAINOCO OIL CORPORATION
By: /s/ Julie H. Edwards
-------------------------------
Julie H. Edwards
Senior Vice President - Finance
and Chief Financial Officer
Date: July 29, 1997