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 SEPTEMBER 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 October 22, 1997:
27,656,309
WAINOCO OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 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$).
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share)
Nine Months Ended Three Months Ended
September 30 September 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
Revenues:
Refined products $ 292,354 $ 282,010 $ 107,684 $ 106,669
Other 1,654 915 424 370
---------- ---------- ---------- ----------
294,008 282,925 108,108 107,039
---------- ---------- ---------- ----------
Costs and Expenses:
Refining operating costs 262,950 265,231 88,567 100,149
Selling and general expenses 6,011 4,831 2,504 1,423
Depreciation 6,833 6,765 2,294 2,289
---------- ---------- ---------- ----------
275,794 276,827 93,365 103,861
---------- ---------- ---------- ----------
Operating Income 18,214 6,098 14,743 3,178
Interest Expense, Net 11,907 12,846 2,937 4,380
---------- ---------- ---------- ----------
Income (Loss) From Continuing
Operations Before Income Taxes 6,307 (6,748) 11,806 (1,202)
Provision for Income Taxes - 180 - 60
---------- ---------- ---------- ----------
Income (Loss) From Continuing Operations 6,307 (6,928) 11,806 (1,262)
Discontinued Operations:
Income from oil and gas operations,
net of taxes 1,721 2,255 - 294
Gain on disposal of Canadian oil and gas
properties, net of $800 of taxes 23,301 - - -
Recognition of cumulative
translation adjustment (9,862) - - -
---------- ---------- ---------- ----------
Income (Loss) Before Extraordinary Item 21,467 (4,673) 11,806 (968)
Extraordinary Loss on Retirement of Debt 2,622 - 2,622 -
---------- ---------- ---------- ----------
Net Income (Loss) $ 18,845 $ (4,673) $ 9,184 $ (968)
========== ========== ========== ==========
Income (Loss) Per Share
From Continuing Operations $ .23 $ (.25) $ .42 $ (.05)
========== ========== ========== ==========
Net Income (Loss) Per Share $ .68 $ (.17) $ .33 $ (.04)
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
- 1 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except shares)
September 30, 1997 and December 31, 1996 1997 1996
---------- ----------
ASSETS
Current Assets:
Cash, including cash equivalents of
$36,364 in 1997 and $609 in 1996 $ 49,530 $ 5,183
Trade receivables 24,064 19,422
Other receivables 1,172 1,357
Inventory of crude oil, products and other 25,116 29,617
Other current assets 500 730
---------- ----------
Total current assets 100,382 56,309
---------- ----------
Property and Equipment, at cost:
Refinery and pipeline 145,847 143,172
Furniture, fixtures and other equipment 2,857 3,646
Oil and gas properties, on a full-cost basis - 170,879
---------- ----------
148,704 317,697
Less - Accumulated depreciation, depletion
and amortization 43,298 139,091
---------- ----------
105,406 178,606
Other Assets 3,803 4,950
---------- ----------
$ 209,591 $ 239,865
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 32,362 $ 43,789
Accrued interest 2,581 5,249
Accrued turnaround cost 8,040 3,490
Accrued liabilities and other 5,547 5,033
Current maturities of long-term debt 7,500 2,500
---------- ----------
Total current liabilities 56,030 60,061
---------- ----------
Long-Term Debt, net of current maturities:
12% Senior Notes 49,318 95,000
7-3/4% Convertible Subordinated Debentures 46,000 46,000
10-3/4% Subordinated Debentures - 4,928
---------- ----------
95,318 145,928
---------- ----------
Deferred Credits and Other 2,828 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,
27,661,309 and 27,313,502 shares issued in 1997 and 1996 57,206 57,172
Paid-in capital 82,915 81,767
Retained earnings (deficit) (86,076) (104,921)
Cumulative translation adjustment - (8,501)
Treasury stock, 55,000 shares (248) (248)
---------- ----------
Total Shareholders' Equity 53,797 25,269
---------- ----------
$ 209,591 $ 239,865
========== ==========
The accompanying notes are an integral part of these financial statements.
- 2 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
For the nine months ended September 30, 1997 1996
---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ 18,845 $ (4,673)
Gain on disposal of Canadian oil and gas properties (23,301) -
Recognition of cumulative translation adjustment 9,862 -
Extraordinary loss on retirement of debt 2,622 -
Depreciation, depletion and amortization 10,681 12,991
Deferred credits and other 698 806
---------- ----------
19,407 9,124
Change in working capital from operations (12,607) (15,079)
---------- ----------
Net cash provided by (used in) operating activities 6,800 (5,955)
INVESTING ACTIVITIES
Additions to property and equipment (6,716) (10,602)
Sale of Canadian oil and gas properties, net of transaction costs 91,307 -
Other (590) 1,097
---------- ----------
Net cash provided by (used in) investing activities 84,001 (9,505)
FINANCING ACTIVITIES
Sale of 12% Senior Notes 2,000 2,000
Retirement of 12% Senior Notes, including redemption premium (49,329) -
Refining credit facility - 11,200
Issuance of common stock 1,182 -
Other (297) (329)
---------- ----------
Net cash provided by (used in) financing activities (46,444) 12,871
Effect of exchange rate changes on cash (10) 6
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents 44,347 (2,583)
Cash and Cash Equivalents, beginning of period 5,183 6,045
---------- ----------
Cash and Cash Equivalents, end of period $ 49,530 $ 3,462
========== ==========
The accompanying notes are an integral part of these financial statements.
- 3 -
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)
Shares issued under:
Stock option plans 347,807 34 1,148 - - -
Translation adjustment - - - - (1,361) -
Net income - - - 18,845 - -
Disposition of Canadian assets - - - - 9,862 -
---------- --------- ---------- ---------- ------------ ----------
September 30, 1997 27,661,309 $ 57,206 $ 82,915 $ (86,076) $ - $ (248)
========== ========= ========== ========== ============ ==========
The accompanying notes are an integral part of these financial statements.
- 4 -
WAINOCO OIL CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
September 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 nine months and three months ended September 30,
1997. The effect of dilution for the fully diluted computation was immaterial.
No effect was given for the addition of dilutive stock options for the nine
months and three months ended September 30, 1996 as losses were incurred. The
primary and fully diluted average shares outstanding for the nine months and
three months ended September 30, 1997 were 27,597,156 and 28,117,776, and in
1996 were 27,256,841 and 27,258,502, 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
15, 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
September 30, December 31,
1997 1996
------------- ------------
(in thousands)
Crude oil $ 5,125 $ 2,863
Unfinished products 4,726 7,024
Finished products 7,575 12,816
Chemicals 1,525 851
Repairs and maintenance supplies and other 6,165 6,063
------------- ------------
$ 25,116 $ 29,617
============= ============
- 5 -
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 September 30, 1997, $7.7
million of cash deposits are restricted until all Canadian tax reporting is
completed, which is expected to be within three 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 September 30, 1997, the assets and liabilities of the Canadian operations
retained by Wainoco consist of the following (in thousands):
Receivables $346
Other Assets 141
Payables 54
5. Extraordinary loss
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 expired on August 20,
1997 with $2.175 million being acquired by the Company. On August 21, 1997, the
Company called $48 million of its 12% Senior Notes (including $2.493 million
held by the Company) at a price of 103.43% and redeemed them on September 23,
1997. In addition, the Company called all $7.5 million of 10-3/4% Subordinated
Debentures and redeemed them on October 1, 1997. Based on the redemptions, the
Company has recognized a third quarter extraordinary loss of $2,622,000 ($.09
per share) due to the redemption premium of 103.43% on the 12% Senior Notes and
reduction in debt issuance costs. The redemptions and retirement of these debts
were funded with proceeds from the sale of the Canadian oil and gas operations
as disclosed in Note 4.
- 6 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Nine months ended September 30, 1997 compared with the same period in 1996
The Company had net income for the nine months ended September 30, 1997 of
$18,845,000, or $.68 per share, compared to a loss of $4,673,000 or $.17 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, the $9.9 million reduction to income in recognition of the cumulative
translation adjustment and a $2.6 million extraordinary loss on retirement of
debt. Refer to Notes 4 and 5 to the financial statements for further
information on the sale and extraordinary loss. 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 $12,116,000 in 1997 versus 1996 due to an increase
in the refined product spread, an increase in other income and a decrease in
refining operating costs. The refined product spread was $5.72 per bbl compared
to $4.65 per bbl in 1996. The 1997 refined product spread increased due to
better light product margins, primarily gasoline, and an improved light/heavy
crude 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 $10.3 million or 4%. The
increase in refined product revenues resulted from a $1.15 per bbl increase in
average gasoline sales prices offset by a $.66/bbl decrease in average
distillate sales prices. Refined product sales volumes also increased 4% in
1997 over 1996 levels. Yields of gasoline and distillate in 1997 were nearly the
same as for the same period in 1996.
Other income increased $739,000 to $1,654,000 in 1997 versus 1996 due to
foreign currency transaction gains of $522,000 related to the Canadian sales
proceeds and higher processing fees.
Refining operating costs decreased $2.3 million or less than 1% from 1996
levels due to a decrease in material costs partially offset by a slight increase
in operating costs. Material costs per bbl decreased 5% or $.98 per bbl in 1997
due to lower oil prices in 1997. The light/heavy spread increased 36% to
average $3.45 per bbl in the nine months of 1997 as Frontier contracted
approximately 30,000 bpd of Wyoming and Canadian sour crude oil for much of 1997
at a light/heavy crude spread substantially better than in 1996. Refining
operating expense per bbl increased $.03 per bbl to $3.16 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 $1,180,000 million or 24% for the nine
months ended September 30, 1997 reflecting increases in salaries and benefits.
The nine months ended September 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 $68,000 or 1% in the 1997 nine-month period as compared
to the same period in 1996, attributable to increases in capital investment.
The interest expense decrease of $939,000 or 7% in 1997 was attributable to
interest income earned on the Canadian sale proceeds. Average debt for the nine
months decreased from $154 million in 1996 to $153 million in 1997. As
described in Note 5, the Company retired $50.175 million of its 12% Senior Notes
near the end of the third quarter of 1997 and $7.5 million of its 10-3/4%
Subordinated Debentures on October 1, 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 $534,000 to
$1,721,000 for the nine months ended September 30, 1997 as compared to 1996,
consisting of a $453,000 increase in Canadian oil and gas income and a $987,000
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
despite the nearly five months in 1997 without income recognition. The 1996
discontinued earnings included $987,000 associated with the 1995 disposition of
United States oil and gas operations, due to a reduction of certain accruals.
- 7 -
Three months ended September 30, 1997 compared with the same period in 1996
The Company had net income for the three months ended September 30, 1997 of
$9,184,000, or $.33 per share, compared to loss of $968,000, or $.04 per share,
for the same period in 1996. The 1997 results include a $2.6 million
extraordinary loss on retirement of debt. Refer to Note 5 to the financial
statements for further information on the extraordinary loss. 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 $11,565,000 to $14,743,000 in 1997 versus 1996 due
to a combination of very good market conditions, lower operating costs and good
refinery operations. The refined product spread increased to $7.36 per bbl in
1997 from $4.60 per bbl in 1996. The improved refined product spread was due to
better gasoline margins caused by strong demand growth and lower gasoline
inventory levels in Frontier's marketing area, the increased light/heavy spread
for crude oil and better asphalt and other by-product margins resulting from
lower stable crude oil prices. Refined product revenues increased $1 million or
about 1% due to a 4% increase in refined product sales volumes in 1997 partially
offset by the average refined product sales prices decrease of $.87 per bbl.
Yields of gasoline and asphalt and other by-products each increased 4% and 5%,
respectively, from 1996 levels while distillate yields decreased 2%. The crude
charge rate increased 1%, while the percentage of heavy crude usage increased to
91% of total crude oil charge in 1997 versus 87% in 1996.
Other income increased $54,000 to $424,000 in 1997 versus 1996 due to higher
processing fees and the recognition of redemption premium on the 12% Senior
Notes held by Wainoco.
Refining operating costs decreased $11,582,000 or 12% over 1996 levels
primarily as a result of a decrease in material costs. Material costs per bbl
decreased 17% or $3.63 per bbl in 1997 due to lower oil prices. The light/heavy
spread increased 41% to average $3.54 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 light/heavy spread substantially better than in 1996.
Refining operating expense decreased $.15 per bbl to $2.86 per bbl in 1997 due
to reduced energy costs and higher sales volumes. 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 $1,081,000 to $2,504,000 for the three
months ended September 30, 1997, reflecting increases in salary and benefits and
other general expenses.
The interest expense decrease of $1,443,000 or 33% was attributable to
interest income earned on the Canadian sale proceeds. Average debt for the
three months ended September 30, 1997 decreased from $158 million in 1996 to
$141 million in 1997. As described in Note 5, the Company retired $50.175
million of its 12% Senior Notes near the end of the third quarter of 1997 and
$7.5 million of its 10-3/4% Subordinated Debentures on October 1, 1997.
Income from discontinued oil and gas operations of $294,000 for the third
quarter 1996 includes both Canadian and United States. The 1996 discontinued
earnings included $146,000 associated with the 1995 disposition of United States
oil and gas operations due to a reduction of certain accruals.
- 8 -
REFINING OPERATING STATISTICAL INFORMATION
Nine Months Ended Three Months Ended
September 30, September 30,
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Raw material input (bpd)
Light crude 3,340 5,371 3,643 4,840
Heavy crude 32,800 30,983 35,301 33,596
Other feed and blend stocks 5,839 5,016 5,963 5,282
---------- ---------- ---------- ----------
Total 41,979 41,370 44,907 43,718
Manufactured product yields (bpd)
Gasoline 17,473 17,514 18,679 17,900
Distillates 13,349 13,289 12,936 13,129
Asphalt and other 10,021 8,986 11,774 11,243
---------- ---------- ---------- ----------
Total 40,843 39,789 43,389 42,272
Total product sales (bpd)
Gasoline 20,861 20,627 21,919 21,613
Distillates 12,751 12,659 13,214 13,091
Asphalt and other 8,470 7,305 11,072 9,544
---------- ---------- ---------- ----------
Total 42,082 40,591 46,205 44,248
Operating margin information (per sales bbl)
Average sales price $ 25.45 $ 25.36 $ 25.34 $ 26.21
Material costs (under FIFO inventory accounting) 19.73 20.71 17.98 21.61
---------- ---------- ---------- ----------
Product spread 5.72 4.65 7.36 4.60
Operating expenses excluding depreciation 3.16 3.13 2.86 3.01
Depreciation .58 .59 .53 .54
---------- ---------- ---------- ----------
Operating margin $ 1.98 $ .93 $ 3.97 $ 1.05
Manufactured product margin
before depreciation (per bbl) $ 2.56 $ 1.50 $ 4.50 $ 1.59
Purchase product margin (per purchased product bbl) $ 3.36 $ 2.03 $ 4.20 $ 2.03
Light/heavy crude spread (per bbl) $ 3.45 $ 2.54 $ 3.54 $ 2.51
Average sales price (per sales bbl)
Gasoline $ 29.29 $ 28.14 $ 30.12 $ 29.37
Distillates 27.17 27.83 25.06 28.53
Asphalts and other 13.39 13.20 16.19 15.86
- 9 -
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). With
proceeds from the sale, the Company spent $49.3 million on the redemption of 12%
Senior Notes, including redemption premium, during the third quarter of 1997,
and on October 1, 1997, redeemed all $7.5 million of 10-3/4% Subordinated
Debentures at par. Further debt repayments in 1997 will depend upon the
Company's market outlook and investment opportunities available to Wainoco.
During the first nine months of 1997, $6,800,000 of cash flows were generated
by operating activities. In 1996, $5,955,000 of cash flows were used in
operating activities primarily for a Refinery inventory increase of $8,998,000.
The primary source of cash in 1996 was net borrowings of $11,200,000 under the
Frontier line of credit.
At September 30, 1997, the Company had $20,000,000 available under the
Frontier line of credit. The Company had working capital of $44,352,000 at
September 30, 1997, including the portion of the Canadian sales proceeds still
remaining after debt retirement, compared with $8,211,000 at September 30, 1996.
Additions to property and equipment in the first nine months decreased
$3,886,000 from the first nine months in 1996 attributable to a decrease in
capital expenditures in Canada. Investing activities include proceeds from the
sale of the Canadian oil and gas properties of $91.3 million for the nine months
ended September 30, 1997. Capital expenditures of approximately $9 million are
currently planned for 1997, of which $5.6 million had been incurred as of
September 30, 1997. Capital expenditures of approximately $6.2 million are
planned for the Refinery in 1997.
- 10 -
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 -
None.
ITEM 5. Other Information -
None.
ITEM 6. Exhibits and Reports on Form 8-K -
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
- 11 -
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/Jon D. Galvin
---------------------------
Jon D. Galvin
Vice President - Controller
Date: October 22, 1997