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-29 through F-31 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
January 29, 1999, except as to the information in
Note 21, for which the date is March 2, 1999
TOSCO CORPORATION AND SUBSIDIARIES
EXHIBIT 99 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(Thousands of Dollars)
Tosco Bayway Nonguaranteeing
(Issuer) (Guarantor) (a) Subsidiaries Eliminations Consolidated
BALANCE SHEET - DECEMBER 31, 1998
Assets:
Cash and cash equivalents $ (25,608) $ 56,910 $- $ 31,302
Marketable securities and deposits 10,145 39,449 49,594
Other current assets (b) 993,711 444,379 1,438,090
------------- ----------- ------------ ------------ -----------
Total current assets 978,248 - 540,738 1,518,986
Other assets 2,567,193 261,483 1,499,520 (4,366) 4,323,830
Investment in Bayway and other subsidiaries 1,283,506 (1,283,506)
------------- ----------- ------------ -------------- ------------
$4,828,947 $261,483 $2,040,258 $(1,287,872) $5,842,816
============= =========== ============ ============== ============
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 $7,429,825 $1,161,275 $3,430,427 $- $12,021,527
Cost of sales 6,618,028 1,089,191 3,098,624 10,805,843
Depreciation and amortization 173,913 18,492 121,459 313,864
Inventory writedown 240,000 240,000
Restructuring charge 40,000 40,000
Selling, general, and administrative expenses (c) 174,402 7,872 118,037 300,311
Interest expense, net 115,770 7,667 (730) 122,707
------------- ----------- ------------ -------------- ------------
Income before income taxes and distributions
on Trust Preferred Securities 67,712 38,053 93,037 198,802
Income taxes 28,100 15,792 38,610 82,502
Distributions on Trust Preferred Securities, net
of income tax benefit 10,091 10,091
------------- ----------- ------------ -------------- ------------
Net income $39,612 $22,261 $44,336 $- $106,209
============= =========== ============ ============== ============
STATEMENT OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1998
Cash flows from operating activities:
Net income $39,612 $22,261 $44,336 $- $106,209
Depreciation and amortization,
provision for bad debts, and deferred
income taxes 309,728 18,492 121,459 449,679
Inventory writedown 240,000 240,000
Restructuring charge 40,000 40,000
Changes in operating assets and
liabilities, net (316,834) 104,549 61,313 (150,972)
Other, net (14,032) 1,330 (12,702)
------------- ----------- ------------ -------------- -----------
Net cash provided by (used in)
operating activities 298,474 145,302 228,438 672,214
------------- ----------- ------------ -------------- -----------
Cash flows from investing activities:
Purchase of property, plant, equipment,
net and increase in deferred
turnarounds, charges, and other assets, net (332,516) (44,307) (102,638) (479,461)
Intercompany transfers 109,968 (95,538) (14,430)
Intercompany dividend (309) (5,457) 5,766
Net change in marketable securities,
deposits, and other 1,194 (6,939) (5,745)
------------- ----------- ------------ -------------- -----------
Net cash provided by (used in)
investing activities (221,663) (145,302) (118,241) (485,206)
------------- ----------- ------------ -------------- -----------
Cash flows from financing activities:
Net borrowings under revolving
credit facilities 30,000 30,000
Payments under long-term debt agreements (500) (78,564) (79,064)
Payments under Circle K pre-acquisition debt (3,510) (3,510)
Repurchase of common stock (101,089) (101,089)
Dividends paid on common stock (37,084) (37,084)
Other, net 559 559
------------- ----------- ------------ -------------- -----------
Net cash provided by (used in)
financing activities (108,114) (82,074) (190,188)
------------- ----------- ------------ -------------- -----------
Net (decrease) increase in cash and
cash equivalents (31,303) 28,123 (3,180)
Cash and cash equivalents at beginning of year 5,695 28,787 34,482
------------- ----------- ------------ -------------- -----------
Cash and cash equivalents at end of year $(25,608) $- $56,910 $- $31,302
============= =========== ============ ============== ============
(a) Effective April 1, 1998, the working capital, certain long-term asses,
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
EXHIBIT 99 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(Thousands of Dollars)
Tosco Bayway Nonguaranteeing
(Issuer) (Guarantor) Subsidiaries Eliminations Consolidated
BALANCE SHEET - DECEMBER 31, 1997
Assets:
Cash and cash equivalents $5,695 $- $28,787 $- $34,482
Marketable securities and deposits 2,498 8,679 32,510 43,687
Other current assets (a) 677,554 505,137 551,402 1,734,093
---------- ---------- ---------- ----------- -------------
Total current assets 685,747 513,816 612,699 1,812,262
Other assets 2,363,955 296,213 1,506,788 (4,366) 4,162,590
Investment in Bayway and other
subsidiaries 1,216,601 (1,216,601)
----------- ----------- ----------- ------------ -------------
$4,266,303 $810,029 $2,119,487 $(1,220,967) $5,974,852
=========== =========== =========== ============ =============
Liabilities and Shareholders' Equity:
Current liabilities $685,039 $469,812 $397,924 $- $1,552,775
Revolving credit facility and
long-term debt 1,480,961 100,296 1,581,257
Other liabilities 418,375 182,756 (4,366) 596,765
Intercompany liabilities (assets) (262,127) (20,968) 283,095
Trust Preferred Securities 300,000 300,000
Total shareholders' equity 1,944,055 361,185 855,416 (1,216,601) 1,944,055
---------- ---------- ---------- ----------- -------------
$4,266,303 $810,029 $2,119,487 $(1,220,967) $5,974,852
=========== =========== =========== ============ =============
STATEMENT OF INCOME -
YEAR ENDED DECEMBER 31, 1997
Sales $4,856,693 $4,748,344 $3,676,583 $- $13,281,620
Cost of sales 4,246,209 4,512,139 3,356,444 (1,300) 12,113,492
Depreciation and amortization 163,327 32,231 107,981 303,539
Inventory writedown 17,000 36,000 53,000
Selling, general, and
administrative expenses (b) 138,469 33,585 122,984 1,300 296,338
Interest expense, net 93,832 29,209 11,414 134,455
---------- ---------- ---------- ----------- -------------
Income before income taxes and
distributions on Trust Preferred Securities 197,856 105,180 77,760 - 380,796
Income taxes 82,110 43,650 32,270 158,030
---------- ---------- ---------- ----------- -------------
Distributions on Trust Preferred
Securities, net of income tax benefit 10,091 10,091
Net income $115,746 $61,530 $35,399 $- $212,675
=========== =========== =========== ============ =============
STATEMENT OF CASH FLOWS -
YEAR ENDED DECEMBER 31, 1997
Cash flows from operating activities:
Net income $115,746 $61,530 $35,399 $- $212,675
Depreciation and amortization,
provision for bad debts, and deferred
income taxes 213,456 32,231 105,476 351,163
Inventory writedown 17,000 36,000 53,000
Changes in operating assets
and liabilities, net 394,183 (176,095) (145,950) 72,138
Other, net 920 (3,898) (2,978)
---------- ---------- ---------- ----------- -------------
Net cash provided by (used in)
operating activities 741,305 (46,334) (8,973) 685,998
Cash flows from investing activities:
Purchase of property, plant,
equipment, net (177,765) (28,489) (197,752) (404,006)
Increase in deferred turnarounds,
charges, and other assets, net (64,003) (42,491) (2,823) (109,317)
Acquisition of 76 Products, net of
cash acquired and assets sold (1,116,460) (1,116,460)
Intercompany transfers (30,504) 105,054 (74,550)
Intercompany dividend (309,765) (3,819) 313,584
Net change in marketable securities,
deposits, and other 7,722 (331) (9,818) (2,427)
---------- ---------- ---------- ----------- -------------
Net cash provided by (used in)
investing activities (1,690,775) 29,924 28,641 (1,632,210)
---------- ---------- ---------- ----------- -------------
Cash flows from financing activities:
Proceeds from note, bond, and
debenture offerings 600,000 600,000
Proceeds from common stock offering, net 697,396 697,396
Net borrowings under revolving
credit facilities 166,000 166,000
Payments under long-term debt agreements (100,000) (13,699) (113,699)
Payments under Circle K
pre-acquisition debt (23,807) (23,807)
Repurchase of Unocal shares (393,708) (393,708)
Dividends paid on common stock (35,918) (35,918)
Other, net (9,988) (9,988)
---------- ---------- ---------- ----------- -------------
Net cash provided by (used in)
financing activities 923,782 (37,506) 886,276
---------- ---------- ---------- ----------- -------------
Net (decrease) increase in cash and
cash equivalents (25,688) (16,410) (17,838) (59,936)
Cash and cash equivalents at beginning of year 31,383 16,410 46,625 94,418
---------- ---------- ---------- ----------- -------------
Cash and cash equivalents at end of year $5,695 $- $28,787 $- $34,482
=========== =========== =========== ============ =============
(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 CORPORATION AND SUBSIDIARIES
EXHIBIT 99 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(Thousands of Dollars)
Tosco Bayway Nonguaranteeing
(Issuer) (Guarantor) Subsidiaries Eliminations Consolidated
STATEMENT OF INCOME -
YEAR ENDED DECEMBER 31, 1996
Sales $3,689,395 $4,185,271 $2,047,945 $- $9,922,611
Cost of sales 3,329,042 3,984,045 1,882,047 1,864 9,196,998
Depreciation and amortization 101,776 25,954 56,775 184,505
Consolidation accrual 13,500 13,500
Selling, general, and administrative expenses (a) 98,382 39,857 59,960 (1,864) 196,335
Interest expense, net 33,453 18,176 31,795 83,424
------------- ------------- ----------- ---------- ----------
Income before income taxes and distributions
on Trust Preferred Securities 113,242 117,239 17,368 - 247,849
Income taxes 44,814 46,309 9,976 101,099
Distributions on Trust Preferred Securities,
net of income tax benefit 464 464
------------- ------------- ----------- ---------- ----------
Net income $67,964 $70,930 $7,392 $- $146,286
============= ============= =========== ========== ==========
STATEMENT OF CASH FLOWS -
YEAR ENDED DECEMBER 31, 1996
Cash flows from operating activities:
Net income $67,964 $70,930 $7,392 $- $146,286
Depreciation and amortization, provision
for bad debts, and deferred
income taxes 121,944 25,954 69,213 217,111
Restructuring charge 13,500 13,500
Changes in operating assets and
liabilities, net (63,121) 255,334 (102,028) 90,185
Other, net 410 3,207 3,617
------------- ------------- ----------- ---------- ----------
Net cash provided by (used in)
operating activities 140,697 352,218 (22,216) 470,699
------------- ------------- ----------- ---------- ----------
Cash flows from investing activities:
Purchase of property, plant, equipment, net (95,213) (28,329) (70,149) (193,691)
Increase in deferred turnarounds, charges,
and other assets, net (33,776) (9,633) 11,000 (32,409)
Acquisition of Circle K and BP, net of
cash acquired (431,096) (45,428) (476,524)
Intercompany transfers (5,537) (255,613) 261,150
Intercompany dividend 2,915 (2,915)
Net change in marketable securities,
deposits, and other (10,802) (8,348) 4,452 (14,698)
------------- ------------- ----------- ---------- ----------
Net cash provided by (used in)
investing activities (576,424) (299,008) 158,110 (717,322)
------------- ------------- ----------- ---------- ----------
Cash flows from financing activities:
Proceeds from bond offering 240,000 240,000
Proceeds from Trust Preferred
Securities offering 300,000 300,000
Net borrowings (repayments) under
short-term bank borrowings
and revolving credit facilities (20,000) (45,000) (65,000)
Payments under long-term debt agreements (8,157) (8,157)
Payment of preacquisition Circle K debt (102,504) (102,504)
Dividends paid on common stock (27,356) (27,356)
Other, net (3,256) (11,834) (15,090)
------------- ------------- ----------- ---------- ----------
Net cash provided by (used in)
financing activities 489,388 (45,000) (122,495) 321,893
------------- ------------- ----------- ---------- ----------
Net increase in cash and cash equivalents 53,661 8,210 13,399 75,270
Cash and cash equivalents at beginning of year 10,188 8,200 760 19,148
Circle K acquired cash (32,466) 32,466 -
------------- ------------- ----------- ---------- ----------
Cash and cash equivalents at end of year $31,383 $16,410 $46,625 $- $94,418
============= ============= =========== ========== ==========
(a) 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.
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 18, 1999.
TOSCO CORPORATION
(Registrant)
BY /S/
(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/ Chairman of the Board of Directors March 18, 1999
- ------------------------- and Chief Executive Officer
(Thomas D. O'Malley)
/s/ President, Principal Financial March 18, 1999
- ------------------------- Officer, and Director
(Jefferson F. Allen)
/s/ Vice President and March 18, 1999
- ------------------------- Principal Accounting Officer
(Robert I. Santo)
/s/ Director March 18, 1999
- -------------------------
(Patrick M. de Barros)
/s/ Director March 18, 1999
- -------------------------
(Wayne A. Budd)
/s/ Director March 18, 1999
- -------------------------
(Houston I. Flournoy)
/s/ Director March 18, 1999
- -------------------------
(Edmund A. Hajim)
/s/ Director March 18, 1999
- -------------------------
(Joseph P. Ingrassia)
/s/ Director March 18, 1999
- -------------------------
(Charles J. Luellen)
/s/ Director March 18, 1999
- -------------------------
(Eija Malmivirta)
/s/ Director March 18, 1999
- -------------------------
(Mark R. Mulvoy)