EXHIBIT 99
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Tosco Corporation
Our report on the consolidated financial statements of Tosco
Corporation and its subsidiaries is included on page F-2 of this Form 10-K. In
connection with our audits of such financial statements, we have also audited
Exhibit 99 presented on pages F-30 through F-32 of this Form 10-K.
In our opinion, the Exhibit 99 referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included herein.
PricewaterhouseCoopers LLP
Phoenix, Arizona
March 1, 2000
EXHIBIT 99
TOSCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(In Millions)
Tosco Bayway Nonguaranteeing
(Issuer) (Guarantor) Subsidiaries Eliminations Consolidated
-------- ----------- --------------- ------------ ------------
BALANCE SHEET - DECEMBER 31, 1999
Assets:
Cash and cash equivalents $(28.4) $56.7 $28.3
Marketable securities and deposits 7.5 46.3 53.8
Other current assets (a) 1,122.9 439.5 1,562.4
--------- ----------- -------- --------- ---------
Total current assets 1,102.0 542.5 1,644.5
Other assets 2,704.0 325.0 1,543.3 (4.4) 4,567.9
Investment in Bayway and other subsidiaries 1,336.4 (1,336.4)
--------- ----------- --------- ---------- ---------
$5,142.4 $325.0 $2,085.8 $(1,340.8) $6,212.4
========= =========== ========= ========== =========
Liabilities and Shareholders' Equity:
Current liabilities $1,405.4 $201.7 $1,607.1
Revolving credit facility and long-term debt 1,420.9 38.0 1,458.9
Other liabilities 585.0 157.5 (4.4) 738.1
Intercompany liabilities (assets) (377.2) (53.0) 430.2
Trust Preferred Securities 300.0 300.0
Total shareholders' equity 2,108.3 378.0 958.4 (1,336.4) 2,108.3
--------- ----------- --------- ---------- ---------
$5,142.4 $325.0 $2,085.8 $(1,340.8) $6,212.4
========= =========== ========= ========== =========
STATEMENT OF INCOME - YEAR ENDED DECEMBER 31, 1999
Sales $10,805.2 $3,556.9 $14,362.1
Cost of sales (9,873.6) 15.2 (3,244.9) (13,103.3)
Depreciation and amortization (196.0) (15.2) (97.2) (308.4)
Special items:
Inventory recovery 240.0 240.0
Restructuring recovery 2.1 2.1
Avon Refinery start-up costs (43.1) (43.1)
Gain on sale of retail assets in non-core
markets 40.5 40.5
Selling, general, and administrative expenses (b) (179.4) (125.8) (305.2)
Interest expense, net (123.0) 4.2 (118.8)
--------- ----------- --------- ---------- ---------
Income before income taxes and distributions on
Trust Preferred Securities 632.2 133.7 765.9
Income taxes (259.2) (54.8) (314.0)
Distributions on Trust Preferred Securities, net
of income tax benefit - (10.2) (10.2)
--------- ----------- --------- ---------- ---------
Net income $373.0 $- $68.7 $- $441.7
========= =========== ========= ========== =========
STATEMENT OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1999
Cash flows from operating activities:
Net income $373.0 $- $68.7 $- $441.7
Depreciation and amortization, provision
for bad debts, and deferred income taxes 360.6 15.2 97.2 473.0
Inventory recovery (240.0) (240.0)
Restructuring recovery (2.1) (2.1)
Gain on sale of retail assets in non-core markets (40.5) (40.5)
Changes in operating assets and liabilities, net 349.5 (174.0) 175.5
Other, net 8.1 8.1
Net cash provided by (used in) --------- ----------- --------- ---------- ---------
operating activities 849.1 15.2 (48.6) 815.7
--------- ----------- --------- ---------- ---------
Cash flows from investing activities:
Purchase of property, plant, equipment, net (211.3) (70.3) (13.2) (294.8)
Increase in deferred turnarounds, charges,
and other assets, net (65.5) 14.7 (50.8)
Acquisition of retail systems, net of cash acquired (22.8) (95.3) (118.1)
Intercompany transfers (225.8) 55.1 170.7
Intercompany dividend 15.7 (15.7)
Net change in marketable securities, deposits,
and other (2.1) (6.8) (8.9)
Net cash (used in) provided by --------- ----------- --------- ---------- ---------
investing activities (511.8) (15.2) 54.4 (472.6)
--------- ----------- --------- ---------- ---------
Cash flows from financing activities:
Net repayments under revolving credit facilities (90.0) (90.0)
Payments under long-term debt agreements (6.0) (6.0)
Repurchase of common stock (216.5) (216.5)
Dividends paid on common stock (40.0) (40.0)
Other, net 6.4 6.4
--------- ----------- --------- ---------- ---------
Net cash used in financing activities (340.1) (6.0) (346.1)
--------- ----------- --------- ---------- ---------
Net decrease in cash and cash equivalents (2.8) (0.2) (3.0)
Cash and cash equivalents at beginning of year (25.6) 56.9 31.3
--------- ----------- --------- ---------- ---------
Cash and cash equivalents at end of year $(28.4) $- $56.7 $- $28.3
========= =========== ========= ========== =========
(a) Inventories are valued at the lower of cost or market value, which is measured on a consolidated basis.
(b) The condensed consolidating statement of income reflects a partial allocation of corporate selling,
general, and administrative expenses to Bayway and the
Nonguarranteeing Subsidiaries. Tosco may revise its allocation method in the future.
Tosco Bayway Nonguaranteeing
(Issuer) (Guarantor) Subsidiaries Eliminations Consolidated
---------- ----------- --------------- ------------ ------------
BALANCE SHEET - DECEMBER 31, 1998
Assets:
Cash and cash equivalents $ (25.7) $ $ 57.0 $ - $ 31.3
Marketable securities and deposits 10.2 39.4 49.6
Other current assets (b) 993.7 444.4 1,438.1
---------- ---------- ---------- ----------- ----------
Total current assets 978.2 - 540.8 1,519.0
Other assets 2,567.2 261.5 1,499.5 (4.4) 4,323.8
Investment in Bayway and other subsidiaries 1,283.5 (1,283.5)
---------- ---------- ---------- ----------- ----------
$4,828.9 $ 261.5 $ 2,040.3 $ (1,287.9) $ 5,842.8
========== ========== ========== =========== ==========
Liabilities and Shareholders Equity:
Current liabilities $1,041,705 $ 362,997 $1,404,702
Revolving credit facility and long-term debt 1,510,968 43,585 1,554,553
Other liabilities 515,443 159,494 (4,366) 670,571
Intercompany liabilities (assets) (152,159) (116,506) 268,665
Trust Preferred Securities 300,000 300,000
Total shareholders' equity 1,912,990 377,989 905,517 (1,283,506) 1,912,990
----------- --------- ----------- ------------ -----------
$4,828,947 $261,483 $2,040,258 $(1,287,872) $5,842,816
=========== ========= =========== ============ ===========
STATEMENT OF INCOME - YEAR ENDED DECEMBER 31, 1998
Sales $7,429.8 $ 1,161.3 $ 3,430.4 $ - $ 12,021.5
Cost of sales (6,618.0) (1,089.2) (3,098.6) (10,805.8)
Depreciation and amortization (173.9) (18.5) (121.5) (313.9)
Special items:
Inventory writedown (240.0) (240.0)
Restructuring charge (40.0) (40.0)
Selling, general, and administrative expenses (c) (174.4) (7.9) (118.0) (300.3)
Interest expense, net (115.8) (7.6) 0.7 (122.7)
---------- ---------- ---------- ----------- ----------
Income before income taxes and distributions on
Trust Preferred Securities 67.7 38.1 93.0 198.8
Income taxes (28.1) (15.8) (38.6) (82.5)
Distributions on Trust Preferred Securities, net
of income tax benefit (10.1) (10.1)
---------- ---------- ---------- ----------- ----------
Net income $39.6 $ 22.3 $ 44.3 $ - $ 106.2
========== ========== ========== =========== ==========
STATEMENT OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1998
Cash flows from operating activities:
Net income $39.6 $ 22.3 $ 44.3 $ - $ 106.2
Depreciation and amortization, provision
for bad debts, and deferred income taxes 309.7 18.5 121.5 449.7
Inventory writedown 240.0 240.0
Restructuring charge 40.0 40.0
Changes in operating assets and liabilities, net (316.8) 104.5 61.3 (151.0)
Other, net (14.0) 1.3 (12.7)
---------- ---------- ---------- ----------- ----------
Net cash provided by operating activities 298.5 145.3 228.4 672.2
---------- ---------- ---------- ----------- ----------
Cash flows from investing activities:
Purchase of property, plant, equipment, net and
increase in deferred turnarounds, charges, and
other assets, net (332.6) (44.3) (102.6) (479.5)
Intercompany transfers 109.9 (95.5) (14.4)
Intercompany dividend (0.3) (5.5) 5.8
Net change in marketable securities, deposits, and other 1.3 (7.0) (5.7)
---------- ---------- ---------- ----------- ----------
Net cash used in investing activities (221.7) (145.3) (118.2) (485.2)
---------- ---------- ---------- ----------- ----------
Cash flows from financing activities:
Net borrowings under revolving credit facilities 30.0 30.0
Payments under long-term debt agreements (0.5) (78.6) (79.1)
Payments under Circle K pre-acquisition debt (3.5) (3.5)
Repurchase of common stock (101.1) (101.1)
Dividends paid on common stock (37.1) (37.1)
Other, net 0.6 0.6
---------- ---------- ---------- ----------- ----------
Net cash used in financing activities (108.1) (82.1) (190.2)
---------- ---------- ---------- ----------- ----------
Net (decrease) increase in cash and cash equivalents (31.3) 28.1 (3.2)
Cash and cash equivalents at beginning of year 5.7 28.8 34.5
---------- ---------- ---------- ----------- ----------
Cash and cash equivalents at end of year $ (25.6) $ - $ 56.9 $ - $ 31.3
========== ========== ========== =========== ==========
(a) Effective April 1, 1998, the working capital, certain long-term assets, and
operating results of Bayway were consolidated into Tosco.
(b) Inventories are valued at the lower of cost or market value, which is
measured on a consolidated basis.
(c) The condensed consolidating statement of income reflects a partial
allocation of corporate selling, general, and administrative expenses to
Bayway and the Nonguarranteeing Subsidiaries. Tosco may revise its
allocation method in the future.
TOSCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(Millions of Dollars)
Tosco Bayway Nonguaranteeing
(Issuer) (Guarantor) Subsidiaries Eliminations Consolidated
STATEMENT OF INCOME - YEAR ENDED DECEMBER 31, 1997 --------- ---------- --------------- ------------ ------------
Sales $4,856.7 $4,748.3 $3,676.6 $ - $13,281.6
Cost of sales (4,246.3) (4,512.1) (3,356.4) 1.3 (12,113.5)
Depreciation and amortization (163.3) (32.2) (108.0) (303.5)
Special item:
Inventory writedown (17.0) (36.0) (53.0)
Selling, general, and administrative expenses (b) (138.4) (33.6) (123.0) (1.3) (296.3)
Interest expense, net (93.9) (29.2) (11.4) (134.5)
----------- ----------- ------------ ----------- -----------
Income before income taxes and distributions on
Trust Preferred Securities 197.8 105.2 77.8 - 380.8
Income taxes (82.0) (43.7) (32.3) (158.0)
Distributions on Trust Preferred Securities, net of
income tax benefit (10.1) (10.1)
----------- ----------- ------------ ----------- -----------
Net income $115.8 $61.5 $35.4 $ - $212.7
=========== =========== ============ =========== ===========
STATEMENT OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1997
Cash flows from operating activities:
Net income $115.8 $61.5 $35.4 $ - $212.7
Depreciation and amortization, provision for
bad debts, and deferred income taxes 213.5 32.2 105.5 351.2
Inventory writedown 17.0 36.0 53.0
Changes in operating assets and liabilities, net 394.1 (176.0) (146.0) 72.1
Other, net 0.9 (3.9) (3.0)
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in)
operating activities 741.3 (46.3) (9.0) 686.0
----------- ----------- ------------ ----------- -----------
Cash flows from investing activities:
Purchase of property, plant, equipment, net (177.7) (28.5) (197.8) (404.0)
Increase in deferred turnarounds, charges,
and other assets, net (64.0) (42.5) (2.8) (109.3)
Acquisition of 76 Products, net of cash acquired
and assets sold (1,116.5) (1,116.5)
Intercompany transfers (30.4) 105.0 (74.6)
Intercompany dividend (309.8) (3.8) 313.6
Net change in marketable securities, deposits,
and other 7.7 (0.3) (9.8) (2.4)
----------- ----------- ------------ ----------- -----------
Net cash (used in) provided by
investing activities (1,690.7) 29.9 28.6 (1,632.2)
----------- ----------- ------------ ----------- -----------
Cash flows from financing activities:
Proceeds from note, bond, and debenture offerings 600.0 600.0
Proceeds from common stock offering, net 697.4 697.4
Net borrowings under revolving credit facilities 166.0 166.0
Payments under long-term debt agreements (100.0) (13.7) (113.7)
Payments under Circle K pre-acquisition debt (23.8) (23.8)
Repurchase of Unocal shares (393.7) (393.7)
Dividends paid on common stock (35.9) (35.9)
Other, net (10.0) (10.0)
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in)
financing activities 923.8 (37.5) 886.3
----------- ----------- ------------ ----------- -----------
Net decrease in cash and cash equivalents (25.6) (16.4) (17.9) (59.9)
Cash and cash equivalents at beginning of year 31.4 16.4 46.6 94.4
----------- ----------- ------------ ----------- -----------
Cash and cash equivalents at end of year $ 5.8 $ - $28.7 $ - $34.5
=========== =========== ============ =========== ===========
(a) Inventories are valued at the lower of cost or market value, which is measured on a consolidated basis.
(b) The condensed consolidating statement of income reflects a partial allocation of corporate selling, general,
and administrative expenses to Bayway and the Nonguarranteeing Subsidiaries. Tosco may revise its
allocation method in the future.
(This Page Intentionally Left Blank)
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, in the City of
Stamford, and the State of Connecticut, on March 16, 2000.
TOSCO CORPORATION
(Registrant)
BY /S/ THOMAS D. O'MALLEY
--------------------------------------
(Thomas D. O'Malley)
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE
/s/ THOMAS D. O'MALLEY Chairman of the Board of Directors March 16, 2000
- ------------------------- and Chief Executive Officer
(Thomas D. O'Malley)
/s/ JEFFERSON F. ALLEN President, Principal Financial March 16, 2000
- ------------------------- Officer, and Director
(Jefferson F. Allen)
/s/ ROBERT I. SANTO Vice President and Principal March 17, 2000
- ------------------------- Accounting Officer
(Robert I. Santo)
/s/ PATRICK M. de BARROS Director March 16, 2000
- -------------------------
(Patrick M. de Barros)
/s/ WAYNE A. BUDD Director March 16, 2000
- --------------------------
(Wayne A. Budd)
/s/ HOUSTON I. FLOURNOY Director March 16, 2000
- ---------------------------
(Houston I. Flournoy)
/s/ EDMUND A. HAJIM Director March 16, 2000
- --------------------------
(Edmund A. Hajim)
/s/ JOSEPH P. INGRASSIA Director March 16, 2000
- --------------------------
(Joseph P. Ingrassia)
/s/ CHARLES J. LUELLEN Director March 16, 2000
- --------------------------
(Charles J. Luellen)
/s/ EIJA MALMIVIRTA Director March 16, 2000
- --------------------------
(Eija Malmivirta)
/s/ MARK R. MULVOY Director March 16, 2000
- --------------------------
(Mark R. Mulvoy)
/s/ KATHRYN L. MUNRO Director March 16, 2000
- --------------------------
(Kathryn L. Munro)