FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
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 1-7910
TOSCO CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 95-1865716
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
72 CUMMINGS POINT ROAD
STAMFORD, CONNECTICUT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 977-1000
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. [X] Yes ___ No
Registrant's Common Stock outstanding at July 31, 1999 was 152,551,703
shares.
TOSCO CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL AND OTHER INFORMATION
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
PAGE(S)
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1999
and December 31, 1998 2
Consolidated Statements of Income for the three and
six month periods ended June 30, 1999 and 1998 3
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1999 and 1998 4
Notes to Consolidated Financial Statements 5 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the three
and six month periods ended June 30, 1999 10 - 16
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K: 17
Signature 18
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars, Except Par Value)
June 30, December 31,
1999 1998
----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $23,458 $31,302
Marketable securities and deposits 46,344 49,594
Trade accounts receivable, less allowance for uncollectibles
of $19,374 (1999) and $16,838 (1998) 429,566 265,439
Inventories, net 952,596 1,077,302
Prepaid expenses and other current assets 96,137 95,349
Deferred income taxes 30,704
----------- -----------
Total current assets 1,578,805 1,518,986
Property, plant, and equipment, net 3,419,361 3,379,404
Deferred turnarounds, net 190,047 156,310
Intangible assets (primarily tradenames), less accumulated amortization of
$60,156 (1999) and $51,907 (1998) 577,407 638,542
Other deferred charges and assets 139,948 149,574
----------- -----------
$5,905,568 $5,842,816
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses, and other current liabilities $1,476,278 $1,379,760
Current maturities of long-term debt 1,532 1,608
Deferred income taxes 23,334
----------- -----------
Total current liabilities 1,477,810 1,404,702
Revolving credit facility 80,000 196,000
Long-term debt 1,358,165 1,358,553
Accrued environmental costs 255,364 253,691
Deferred income taxes 191,941 179,453
Other liabilities 233,026 237,427
----------- -----------
Total liabilities 3,596,306 3,629,826
Company-obligated, mandatorily redeemable,
convertible preferred securities of
Tosco Financing Trust, holding solely 5.75%
convertible junior subordinated
debentures of Tosco Corporation
(Trust Preferred Securities) 300,000 300,000
----------- -----------
Shareholders' equity:
Common stock, $.75 par value, 250,000,000
shares authorized, 177,823,514
shares issued 133,596 133,596
Additional paid-in capital 2,029,968 2,029,969
Retained earnings 416,168 323,476
Treasury stock, at cost (570,470) (574,051)
----------- -----------
Total shareholders' equity 2,009,262 1,912,990
----------- -----------
$5,905,568 $5,842,816
=========== ===========
The accompanying notes are an integral part of these financial statements.
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Thousands of Dollars, Except Per Share Data)
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
----------- ----------- ---------- -----------
Sales $3,678,424 $3,168,389 $6,316,134 $6,215,444
Cost of sales 3,346,853 2,805,624 5,741,830 5,593,937
Avon Refinery start-up costs (Note 6) 39,291 39,291
Depreciation and amortization 75,011 81,719 157,615 157,689
Selling, general, and administrative expenses 80,512 73,983 158,012 146,714
Gain on sale of retail assets (Note 3) 40,500 40,500
Interest expense 30,692 32,293 62,983 68,431
Interest income 1,205 1,002 2,418 2,422
------------ ----------- ------------ -----------
Income before income taxes and distributions on Trust 147,770 175,772 199,321 251,095
Preferred Securities
Income taxes 60,586 72,945 81,722 104,204
------------ ----------- ------------ -----------
Income before distributions on Trust Preferred Securities 87,184 102,827 117,599 146,891
Distributions on Trust Preferred Securities, net of income tax
benefit of $1,768, $1,789, $3,536, and $3,579, respectively 2,544 2,523 5,089 5,046
------------ ----------- ------------ -----------
Net income $84,640 $100,304 $112,510 $141,845
============ =========== ============ ===========
BASIC EARNINGS PER SHARE
Earnings used for computation of basic earnings per share $84,640 $100,304 $112,510 $141,845
Weighted average common shares outstanding 152,470,117 156,348,509 152,399,359 156,337,022
Basic earnings per share $0.56 $0.64 $0.74 $0.91
============= ============ ============ ============
DILUTED EARNINGS PER SHARE
Net income $84,640 $100,304 $112,510 $141,845
Distributions on Trust Preferred Securities, net of
income tax benefit 2,544 2,523 5,089 5,046
------------- ------------ ------------ ------------
Earnings used for computation of diluted earnings per share $87,184 $102,827 $117,599 $146,891
============= ============ ============ ============
Weighted average common shares outstanding 152,470,117 156,348,509 152,399,359 156,337,022
Assumed conversion of dilutive stock options 3,511,436 4,402,193 3,357,813 4,482,601
Assumed conversion of Trust Preferred Securities 9,113,940 9,113,940 9,113,940 9,113,940
------------- ------------ ------------ ------------
Weighted average common and common equivalent shares
used for computation of diluted earnings per share 165,095,493 169,864,642 164,871,112 169,933,563
============= ============ ============ ============
Diluted earnings per share $0.53 $0.61 $0.71 $0.86
============= ============ ============ ============
DIVIDENDS PER SHARE
Dividends per share $0.07 $0.06 $0.13 $0.12
============= ============ ============ ============
The accompanying notes are an integral part of these financial statements.
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
Six Months Ended June 30,
1999 1998
------------- ------------
Cash flows from operating activities:
Net income $112,510 $141,845
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 157,615 157,689
Provision for bad debts 6,296 4,001
Gain on sale of retail assets (Note 3) (40,500)
Deferred income taxes (41,550)
Changes in operating assets and liabilities, net 27,870 (131,175)
Other, net 13,888 1,962
------------ -----------
Net cash provided by operating activities 236,129 174,322
Cash flows from investing activities:
Net change in marketable securities and deposits 3,250 (9,739)
Purchase of property, plant, and equipment (211,512) (205,604)
Proceeds on sale of property, plant, and equipment 140,301 20,885
Deferred turnaround spending (67,726) (26,236)
Decrease (increase) in deferred charges and other assets, net 32,134 (6,072)
Other, net (7,547) 9,262
------------ -----------
Net cash used in investing activities (111,100) (217,504)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit facilities (116,000) 143,000
Payments under long-term debt agreements (432) (12,724)
Retirement of real estate installment purchase note (64,622)
Dividends paid on common stock (19,819) (18,776)
Other, net 3,378 783
------------- -----------
Net cash (used in) provided by financing activities (132,873) 47,661
------------- -----------
Net (decrease) increase in cash and cash equivalents (7,844) 4,479
Cash and cash equivalents at beginning of period 31,302 34,482
Cash and cash equivalents at end of period $23,458 $38,961
============ ==========
The accompanying notes are an integral part of these financial statements.
TOSCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1999
(ALL INFORMATION IS UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated interim financial statements of Tosco Corporation and
subsidiaries ("Tosco" or the "Company") reflect all adjustments, consisting of
normal recurring accruals, which are, in the opinion of management, necessary
for a fair presentation of the Company's consolidated financial position,
results of operations, and cash flows. Such interim financial statements are
presented in accordance with the disclosure requirements for Form 10-Q. These
unaudited consolidated financial statements should be read in conjunction with
the Company's audited consolidated financial statements and notes thereto
included in the Company's 1998 Annual Report on Form 10-K.
Certain reclassifications, primarily the separate disclosure of depreciation and
amortization, have been made to the 1998 financial statements to conform to the
presentation in the 1999 financial statements.
2. INVENTORIES
JUNE 30, DECEMBER 31,
(THOUSANDS OF DOLLARS) 1999 1998
------------- -------------
Refineries (LIFO):
Raw materials $ 321,987 $ 418,768
Intermediates 184,539 191,575
Finished products 289,461 302,225
Retail (FIFO):
Merchandise 119,515 129,223
Gasoline and diesel 36,622 35,428
Other 472 83
------------- ------------
$ 952,596 $ 1,077,302
============= =============
Inventories accounted for under the LIFO method at June 30, 1999 and December
31, 1998, are reduced by a $293,000,000 inventory valuation reserve. At June 30,
1999, the net realizable value of such inventories exceeded carrying cost by
more than the $293,000,000 valuation reserve.
3. PROPERTY, PLANT, AND EQUIPMENT
During the first six months of 1999, the Company completed the sale of 326
convenience stores for $128,071,000, plus the value of inventories, at a gain of
$40,500,000 ($23,895,000 after tax and $0.14 per diluted share). All of the
convenience stores sold were in markets the Company is exiting. Operations from
these convenience stores did not significantly impact operating contribution
during the three and six month periods ended June 30, 1999.
Effective January 1, 1999, the Company prospectively extended the useful lives
of its refinery and distribution assets. This change was made to better
represent the remaining useful lives of the assets, as determined by a third
party appraisal. The impact of this change in accounting estimate, which was
partially offset by additional depreciation of assets placed in service in late
1998 and early 1999, was to increase net income during the three and six month
periods ended June 30, 1999 by $3,540,000 ($0.02 per diluted share) and
$7,080,000 ($0.04 per diluted share), respectively.
4. INTANGIBLE ASSETS
During April 1999, the Company reached an agreement with BP Amoco for the return
of the "BP" tradename over a two-year period.
In conjunction with the sale of convenience stores (Note 3), the Company
wrote-off the unamortized balance of its "Stax" tradename, which was used only
in markets in which the Company exited.
5. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER CURRENT LIABILITIES
During 1998, the Company recorded a $40,000,000 charge primarily related to the
restructuring of its San Francisco Area Refinery System. Activity for 1999 and
1998 is summarized below:
ORIGINAL 1999 ADJUSTED
(THOUSANDS OF DOLLARS) CHARGE ADJUSTMENT BALANCE
------------- ------------- ---------
Impairment of assets $ 15,153 $ $ 15,153
Exit costs 18,904 18,904
Employee termination costs (a) 5,943 (2,109) 3,834
--------- ----------- ----------
$ 40,000 $ (2,109) 37,891
========= ==========
Utilization through June 30,
1999, primarily the write-off
of impaired assets (19,206)
----------
Restructuring accrual balance at June 30, 1999 $ 18,685
==========
(a) During April 1999, management announced that layoffs and consolidation
of functions planned for 1999 would not occur as originally
contemplated. Accordingly, remaining employee termination cost
accruals totaling $2,109,000 were reversed in the 1999 second quarter.
Management continues to assess various strategies for the San
Francisco Area Refinery System. While such strategies do not
materially alter the restructuring accrual remaining at June 30, 1999,
depending on the strategies selected, the 1998 restructuring accrual
may be further modified during the remainder of 1999 (Note 7).
6. REVOLVING CREDIT FACILITY
JUNE 30, DECEMBER 31,
(THOUSANDS OF DOLLARS) 1999 1998
------------- -------------
Cash borrowings outstanding $ 80,000 $ 196,000
Letters of credit 20,346 30,160
------------- -------------
Total utilization 100,346 226,160
Availability 799,654 773,840
------------- -------------
$ 900,000 $1,000,000
============= =============
In order to reduce financing costs, the Company elected not to renew its $100
million Facility B under the Revolving Credit Facility when it expired on
January 12, 1999.
7. AVON REFINERY START-UP COSTS
On February 23, 1999, a fire occurred at a crude unit at the Avon Refinery. In
March 1999, the Avon Refinery was shutdown while a thorough safety review and
extensive employee safety training were conducted. In May 1999, the Company
began the process of restarting the refinery and all major processing units had
been restarted by the end of July 1999.
During the 1999 second quarter, the Company incurred non-recurring expenses of
$39,291,000 ($23,182,000 after tax and $0.14 per diluted share) primarily
related to the restart of the Avon Refinery. The start-up and related expenses
consist primarily of safety and maintenance projects, implementation of
regulatory and independent safety consultant recommendations, and the early
write-off of existing turnaround costs. These start-up costs do not include any
normal recurring expenses for maintaining the refinery or training employees
during the stand-down period.
8. OPERATING LEASES
In late June 1999, the Company purchased 110 retail gasoline and convenience
store sites located principally in seven major Southeastern urban areas from BP
Amoco (Note 11). These sites will be operated under the Company's "76" gasoline
and "Circle K" convenience store brands. The majority of the sites were acquired
by a special purpose entity that leased the sites to the Company under an
operating lease that runs through June 2004. The Company has the option to renew
the lease for a series of five year renewal terms. Minimum monthly rental
payments vary based on a commercial paper rate.
9. COMMITMENTS AND CONTINGENCIES
There are various legal proceedings and claims pending against the Company that
are common to its operations. While it is not feasible to predict or determine
the ultimate outcome of these matters, it is the opinion of management that
these suits will not result in monetary damages not covered by insurance that in
the aggregate would be material to the Company's business or operating results.
As a condition of the Company's March 31, 1997 acquisition of Union Oil Company
of California's ("Unocal") West Coast petroleum assets (the "76 Products
Acquisition"), Unocal is entitled to receive contingent participation payments
through March 31, 2004, up to a maximum of $250,000,000, if retail market
conditions and/or California Air Resources Board ("CARB") gasoline margins
increase above specified levels. The contingent participation payments will be
capitalized, when incurred, as an additional cost of the 76 Products
Acquisition. For completed participation periods, the Company's contingent
participation payments are not material to its consolidated financial position.
Litigation between Unocal and certain petroleum refiners has contested the
validity of patents held by Unocal covering certain formulations for clean
burning fuels meeting California fuel specifications and, in turn, alleged
infringement of those patents by certain refiners. The Company is not a party to
the patent litigation. Under the terms of the 76 Products Acquisition, the
Company has no liability to Unocal for any possible past infringement of the
patents, including to the date of final resolution of the matter, which,
considering appeals, could take several years.
The Company has employment agreements with certain of its executive officers
that provide for lump sum severance payments and accelerated vesting of options
upon termination of employment under certain circumstances or a change of
control, as defined.
The Company, in keeping with industry practice, schedules periodic maintenance
of major processing units for significant non-routine repairs and replacements
(turnarounds) as the units reach the end of their normal operating cycles.
Unscheduled turnarounds also occur because of operating difficulties or external
factors. Throughput and earnings are lowered, and deferred turnaround
expenditures increased, during such periods.
The Company carries insurance policies on insurable risks, which it believes to
be appropriate at commercially reasonable rates. While management believes the
Company is adequately insured, future losses could exceed insurance policy
limits or, under adverse interpretations, be excluded from coverage. Future
liability or costs, if any, incurred under such circumstances would have to be
paid out of general corporate funds.
In the normal course of business, the Company has entered into numerous crude
oil and feedstock supply contracts, finished product sale and exchange
agreements, and transportation contracts.
10. BUSINESS SEGMENTS
The Company has two operating business segments: refining and marketing. The
refining segment includes the acquisition of crude oil and other feedstocks, the
production of petroleum products, and the distribution and sale of petroleum
products to wholesale customers. The marketing segment includes the sale of
petroleum products and merchandise through company owned gasoline stations and
convenience stores, and branded dealers and jobbers. The nonoperating segment
consists of corporate activities and certain nonoperating subsidiaries.
Summarized financial information by segment for the three and six month periods
ended June 30, 1999 and 1998 is as follows:
THREE MONTHS ENDED OPERATING SEGMENTS NONOPERATING CONSOLIDATED
JUNE 30, 1999 (THOUSANDS OF DOLLARS) REFINING MARKETING SEGMENT TOTAL
----------- ----------- ----------- ---------------
Total sales $ 2,746,382 $ 1,503,021 $ - $ 4,249,403
Intersegment sales (568,080) (2,899) (570,979)
------------- ------------- ------------ -------------
Third party sales $ 2,178,302 $ 1,500,122 $ - $ 3,678,424
============= ============= ============== ==============
Operating contribution (a) $ 142,257 $ 189,314 $ - $ 331,571
Depreciation and amortization 42,058 32,620 333 75,011
Net interest expense (income) 17,884 11,864 (261) 29,487
Income (loss) before income taxes and
distributions on Trust Preferred Securities 24,704 127,719 (4,653) 147,770
Capital expenditures (b) 106,302 72,991 179,293
THREE MONTHS ENDED OPERATING SEGMENTS NONOPERATING CONSOLIDATED
JUNE 30, 1998 (THOUSANDS OF DOLLARS) REFINING MARKETING SEGMENT TOTAL
-------------- -------------- -------------- --------------
Total sales $ 2,316,376 $ 1,356,712 $ - $ 3,673,088
Intersegment sales (503,383) (1,316) (504,699)
------------- ------------- ------------- --------------
Third party sales $ 1,812,993 $ 1,355,396 $ - $ 3,168,389
============= ============= ============== ==============
Operating contribution (a) $ 251,966 $ 110,799 $ - $ 362,765
Depreciation and amortization 48,720 32,747 252 81,719
Net interest expense 20,063 11,108 120 31,291
Income (loss) before income taxes and
distributions on Trust Preferred Securities 160,020 19,426 (3,674) 175,772
Capital expenditures (b) 88,683 60,118 148,801
SIX MONTHS ENDED OPERATING SEGMENTS NONOPERATING CONSOLIDATED
JUNE 30, 1999 (THOUSANDS OF DOLLARS) REFINING MARKETING SEGMENT TOTAL
--------------- ------------ --------------- --------------
Total sales $ 4,576,078 $ 2,733,056 $ - $ 7,309,134
Intersegment sales (986,424) (6,576) (993,000)
--------------- ------------- --------------- --------------
Third party sales $ 3,589,654 $ 2,726,480 $ - $ 6,316,134
=============== ============= =============== ===============
Operating contribution (a) $ 258,220 $ 316,084 $ - $ 574,304
Depreciation and amortization 90,613 66,316 686 157,615
Net interest expense (income) 37,171 24,292 (898) 60,565
Income (loss) before income taxes and
distributions on Trust Preferred Securities 52,739 154,601 (8,019) 199,321
Capital expenditures (b) 154,998 124,230 10 279,238
SIX MONTHS ENDED OPERATING SEGMENTS NONOPERATING CONSOLIDATED
JUNE 30, 1998 (THOUSANDS OF DOLLARS) REFINING MARKETING SEGMENT TOTAL
---------------- ----------- --------------- --------------
Total sales $ 4,565,468 $ 2,599,537 $ - $ 7,165,005
Intersegment sales (946,925) (2,636) (949,561)
---------------- ------------ -------------- --------------
Third party sales $ 3,618,543 $ 2,596,901 $ - $ 6,215,444
================ ============= ============== ==============
Operating contribution (a) $ 406,247 $ 215,260 $ - $ 621,507
Depreciation and amortization 92,300 64,883 506 157,689
Net interest expense (income) 44,079 22,635 (705) 66,009
Income (loss) before income taxes and
distributions on Trust Preferred Securities 225,966 32,061 (6,932) 251,095
Capital expenditures (b) 119,191 112,629 20 231,840
(a) Operating contribution is calculated as sales minus cost of sales.
(b) Capital expenditures include the purchase of property, plant, and equipment and deferred turnaround spending.
Summarized total assets by segment as of June 30, 1999 and December 31, 1998 is
as follows:
OPERATING SEGMENTS NONOPERATING CONSOLIDATED
(THOUSANDS OF DOLLARS) REFINING MARKETING SEGMENT TOTAL
------------- ------------- ------------- -------------
June 30, 1999 $ 3,511,022 $ 2,275,122 $119,424 $ 5,905,568
December 31, 1998 3,436,007 2,319,272 87,537 5,842,816
11. SUBSEQUENT EVENTS
On July 1, 1999, the Company entered into an agreement with Boardman Petroleum,
Inc. for the purchase of 67 "Smile" retail gasoline service stations and
convenience stores plus 20 vacant lots. These sites are located principally in
five Southeastern states and will be operated under the Company's "76" gasoline
and "Circle K" convenience store brands.
On July 28, 1999, the Company completed the sale of 46 convenience stores in
Idaho.
On July 29, 1999, the Company completed the purchase of 27 retail gasoline and
convenience stores in Pittsburgh, Pennsylvania from BP Amoco. These sites will
be rebranded to the Company's "76" gasoline and "Circle K" convenience store
brands.
On August 5, 1999, the Company announced the completion of its Board of
Directors approved Common Stock repurchase program. Pursuant to this program,
the Company repurchased 13,157,862 shares of Common Stock for $317,614,000, of
which 8,899,862 shares were repurchased in July and August 1999 for
$216,525,000.
12. NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. The
Company plans to adopt SFAS No. 133 on January 1, 2001. The Company is currently
evaluating the effect SFAS No. 133 will have on its financial position and
results of operations.
TOSCO CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1999
INTRODUCTION
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") for the three and six month periods ended June 30, 1999
should be read in conjunction with MD&A included in the Tosco Corporation
("Tosco") 1998 Annual Report on Form 10-K. The Annual Report sets forth Selected
Financial Data that, in summary form, reviewed Tosco's results of operations and
capitalization over the five year period 1994 through 1998. This MD&A updates
that data.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(THOUSANDS OF DOLLARS) 1999 1998 1999 1998
------------- ------------- ------------- -------------
Sales $ 3,678,424 $ 3,168,389 $ 6,316,134 $ 6,215,444
Cost of sales 3,346,853 2,805,624 5,741,830 5,593,937
Avon Refinery start-up costs 39,291 39,291
Depreciation and amortization 75,011 81,719 157,615 157,689
Selling, general, and administrative expenses 80,512 73,983 158,012 146,714
Gain on sale of retail assets 40,500 40,500
Interest expense, net 29,487 31,291 60,565 66,009
------------- ------------- --------------- -------------
Income before income taxes and distributions on
Trust Preferred Securities 147,770 175,772 199,321 251,095
Income taxes 60,586 72,945 81,722 104,204
-------------- ------------- -------------- -------------
Income before distributions on Trust Preferred Securities 87,184 102,827 117,599 146,891
Distributions on Trust Preferred Securities, net of
income tax benefit 2,544 2,523 5,089 5,046
------------- ------------- ------------- -------------
Net income $ 84,640 $ 100,304 $ 112,510 $ 141,845
============= ============= ============= =============
Diluted earnings per share (a) $ 0.53 $ 0.61 $ 0.71 $ 0.86
============= ============= ============= =============
(a)Earnings per share throughout MD&A are expressed on a diluted basis.
REFINING DATA SUMMARY (a)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
Average charge barrels input per day (b):
Crude oil 684,300 879,900 711,800 868,900
Other feed and blending stocks 77,200 109,800 79,500 100,500
---------- ------------ ---------- ---------
761,500 989,700 791,300 969,400
========== ============= ========== ==========
Average production barrels produced per day (b):
Clean products (c) 633,700 822,000 667,500 803,600
Other finished products 125,600 159,000 120,600 162,800
------------- ------------- ------------- -----------
759,300 981,000 788,100 966,400
============= ============= ============= ===========
Operating margin per charge barrel (d) $ 4.93 $ 5.30 $ 4.60 $ 4.86
============= ============= ============= ===========
(a) The Refining Data Summary presents the operating results of the following refineries:
- Bayway Refinery, located on the New York Harbor.
- Ferndale Refinery, located on Washington's Puget Sound.
- Los Angeles Refinery System, comprised of two refineries in Los Angeles.
- San Francisco Area Refinery System, comprised of the Rodeo-Santa Maria complex and the
Avon Refinery, which was shutdown throughout the 1999 second quarter.
See Note 7 to the Consolidated Financial Statements.
- Trainer Refinery, located near Philadelphia.
(b) A barrel is equal to 42 gallons.
(c) Clean products are defined as clean transportation fuels (gasoline, diesel,
distillates, and jet fuel) and heating oil.
(d) Operating margin per charge barrel is calculated as operating contribution,
excluding refinery operating costs, divided by total refinery charge barrels.
RETAIL DATA SUMMARY
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(THOUSANDS OF DOLLARS) 1999 1998 1999 1998
------------- ------------- ------------- -------------
Volume of fuel sold (thousands of gallons) 1,099,255 1,136,128 2,184,469 2,204,766
Blended fuel margin (cents per gallon) (a) 16.7 9.9 14.0 10.5
Number of gasoline stations at period end (b) (c) 4,064 4,529 4,064 4,529
Merchandise sales (thousands of dollars) $ 514,956 $ 541,391 $ 1,015,319 $ 1,017,248
Merchandise margin (percentage of sales) 28.5% 29.3% 29.4% 29.2%
Number of merchandise stores at period end (b) (c) 2,040 2,337 2,040 2,337
Other retail gross profit (thousands of dollars) $ 28,359 $ 28,303 $ 56,511 $ 57,710
(a) Blended fuel margin is calculated as fuel sales minus fuel cost of sales
divided by fuel gallons sold.
(b) During the first six months of 1999, Tosco completed the sale of 326
convenience stores.
(c) The number of gasoline stations and convenience stores at June 30, 1999
exclude the 110 sites acquired from BP Amoco in late June 1999.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Tosco earned net income of $84.6 million ($0.53 per share) on sales of $3.7
billion during the second quarter of 1999, compared to earnings of $100.3
million ($0.61 per share) on sales of $3.2 billion in the corresponding period
of 1998. The increase in sales of $510.0 million was primarily due to higher
product prices and the resale of crude purchases intended for the Avon Refinery,
partially offset by lower refinery production. Production declines were
primarily due to the stand-down of the Avon Refinery following the fire that
occurred on February 23, 1999.
Tosco generated an operating contribution (sales less cost of sales) of $331.6
million for the second quarter of 1999, compared to $362.8 million in the
corresponding period in 1998. The decline of $31.2 million was attributable to
refining (reduction of $109.7 million) and retail (improvement of $78.5 million)
operations.
Refining operating contribution was $142.3 million for the 1999 second quarter,
compared to $252.0 million in the 1998 second quarter. This decrease of $109.7
million was primarily attributable to lower refinery production and operating
margin per charge barrel. Production rates on the East Coast were reduced and
the scheduled turnaround of the Bayway refinery cat cracker was moved forward in
response to the poor margins. Production rates on the West Coast were lower due
to the stand-down of the Avon Refinery throughout the 1999 second quarter.
Although operating margins were higher on the West Coast, margins per charge
barrel were lower on a consolidated basis because of lower East Coast margins.
Retail operating contribution was $189.3 million for the quarter ended June 30,
1999, compared to $110.8 million in the comparable period in 1998. The 1999
improvement of $78.5 million was attributable to increased fuel margins
partially offset by lower fuel volumes, merchandise sales, and merchandise
margins. The decline in fuel volumes and merchandise sales was a result of
reduced store counts. See Note 3 to the Consolidated Financial Statements.
During the 1999 second quarter, the Company incurred non-recurring expenses of
$39.3 million ($23.2 million after tax and $0.14 per share) primarily related to
the restart of the Avon Refinery following its stand-down for a safety review.
The start-up and related expenses consist primarily of safety and maintenance
projects, implementation of regulatory and independent safety consultant
recommendations, and the early write-off of existing turnaround costs. These
start-up costs do not include any normal recurring expenses for maintaining the
refinery or training employees during the stand-down period. There were no
insurance recoveries in 1999 earnings relative to the Avon Refinery accident and
stand-down.
Depreciation and amortization for the quarter ended June 30, 1999 was $75.0
million, compared to $81.7 million in the comparable 1998 period. The decrease
of $6.7 million was primarily due to a reduction in depreciation associated with
Tosco's January 1, 1999 extension of its refinery and distribution assets'
useful lives. See Note 3 to the Consolidated Financial Statements.
Selling, general, and administrative expenses for the second quarter of 1999
increased by $6.5 million compared to the corresponding period in 1998,
principally due to higher incentive compensation accruals, primarily for Tosco's
retail division.
Tosco realized a gain of $40.5 million ($23.9 million after tax and $0.14 per
share) from the sale of 326 convenience stores in 1999. Operations from these
convenience stores did not significantly impact operating contribution during
the three and six month periods ended June 30, 1999.
Net interest expense for the quarter ended June 30, 1999 decreased by $1.8
million compared to the 1998 period. This decrease was primarily due to lower
borrowings under Tosco's revolving credit facility.
Effective January 1, 1999, Tosco reduced its effective income tax rate to 41.0%,
from 41.5% in 1998. This reduction was attributable to decreased state income
taxes based upon revised state apportionment factors.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
Tosco earned net income of $112.5 million ($0.71 per share) on sales of $6.3
billion during the six month period ended June 30, 1999 compared to earnings of
$141.8 million ($0.86 per share) on sales of $6.2 billion in the corresponding
period of 1998. The increase in sales of $100.7 million was primarily due to
higher product prices and the resale of crude purchases intended for the Avon
Refinery, partially offset by lower refinery production. Production declines
were primarily due to the stand-down of the Avon Refinery following the fire
that occurred on February 23, 1999 and the accelerated turnaround of the Bayway
Refinery cat cracker in March and April 1999.
Tosco generated an operating contribution (sales less cost of sales) of $574.3
million for the first six months of 1999, compared to $621.5 million in the
corresponding period in 1998. The decline of $47.2 million was attributable to
refining (reduction of $148.0 million) and retail (improvement of $100.8
million) operations.
Refining operating contribution was $258.2 million for the first six months of
1999, compared to $406.2 million in the 1998 comparable period. This decrease of
$148.0 million was primarily attributable to lower refinery production and
operating margin per charge barrel. Production rates on the East Coast were
reduced and the scheduled turnaround of the Bayway refinery cat cracker was
moved forward in response to the poor margins. Production rates on the West
Coast were lower due to the stand-down of the Avon Refinery throughout the 1999
second quarter. Although operating margins were higher on the West Coast,
margins per charge barrel were lower on a consolidated basis because of lower
East Coast margins.
Retail operating contribution was $316.1 million for the six month period ended
June 30, 1999, compared to $215.3 million in the comparable 1998 period. The
1999 improvement of $100.8 million was attributable to increased fuel margins.
Fuel volumes, merchandise sales, and merchandise margins were consistent in the
1999 and 1998 year to date periods.
Depreciation and amortization for the six month period ended June 30, 1999 was
$157.6 million, compared to $157.7 million in the comparable 1998 period. The
decrease of $0.1 million was due to a reduction in depreciation associated with
Tosco's January 1, 1999 extension of its refinery and distribution assets'
useful lives. This was almost completely offset by depreciation on assets placed
in service in late 1998 and early 1999 and the acceleration of the Bayway
Refinery cat cracker turnaround. See Note 3 to the Consolidated Financial
Statements.
Selling, general, and administrative expenses for the first six months of 1999
increased by $11.3 million compared to the corresponding period in 1998,
principally due to higher incentive compensation accruals, primarily for Tosco's
retail division.
Net interest expense for the six month period ended June 30, 1999 decreased by
$5.4 million compared to the 1998 period. This decrease was primarily due to
lower borrowings and interest rates under Tosco's revolving credit facility.
Effective January 1, 1999, Tosco reduced its effective income tax rate to 41.0%,
from 41.5% in 1998. This reduction was attributable to decreased state income
taxes based upon revised state apportionment factors.
OUTLOOK
Results of operations are primarily determined by the operating efficiency of
the refineries, and by refining and retail fuel margins. With the restart of the
Avon Refinery in late July 1999, all of Tosco's refineries are currently
operating at or near capacity. Tosco is not able to predict the level of
refinery and retail fuel operating margins for the balance of 1999 because of
the uncertainties associated with oil markets. In view of uncertain operating
margins and highly competitive markets, Tosco is committed to improving its
results by lowering costs without compromising safety, reliability, or
environmental compliance.
Tosco continued its program of upgrading its retail system by selling
under-performing assets and acquiring high-quality outlets in core areas. In
late June 1999, Tosco purchased 110 retail gasoline and service station sites
located principally in seven major southeastern urban areas. In July 1999, Tosco
completed the purchase of 27 retail gasoline and service station sites located
in Pittsburgh, Pennsylvania and announced the acquisition of 67 high-quality
gasoline stations and convenience stores in the Southeast.
Tosco's policy is to recognize non-cash writedowns and recoveries of inventories
due to price changes only at year-end, unless the change is not expected to be
temporary. At June 30, 1999, the fair value of Tosco's LIFO inventories exceeded
carrying value by more than the $293.0 million net realizable value reserve
existing at June 30, 1999. This recovery was not recorded because there is no
assurance that the higher level of prices will continue through December 31,
1999 due to market volatility.
CASH FLOWS
As summarized in the Consolidated Statement of Cash Flows, cash and cash
equivalents decreased by $7.8 million during the six-month period ended June 30,
1999. Cash used in investing activities of $111.1 million and financing
activities of $132.8 million exceeded cash provided by operating activities of
$236.1 million.
Net cash provided by operating activities of $236.1 million was from cash
earnings (net income plus depreciation and amortization, provision for bad
debts, gain on sale of retail assets, and deferred income taxes) of $194.3
million, a decrease in net operating assets and liabilities of $27.9 million,
and other sources of $13.9 million. The change in net operating assets and
liabilities reflect the increase in product prices that occurred in 1999.
Net cash used in investing activities totaled $111.1 million due to capital
additions of $211.5 million, spending for turnarounds of $67.7 million, and
other items totaling $7.5 million, partially offset by the net change in
marketable securities and deposits of $3.2 million, proceeds on sales of
property, plant, and equipment of $140.3 million, and a net decrease in deferred
charges and other assets of $32.1 million.
Net cash used in financing activities totaled $132.9 million, due to net
repayments under the revolving credit facility of $116.0 million and Common
Stock dividend payments of $19.8 million, partially offset by other items of
$2.9 million.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, liquidity (cash and cash equivalents, marketable securities
and deposits, and availability under the Revolving Credit Facility) totaled
$869.5 million, a $14.7 million increase compared to the December 31, 1998
balance of $854.8 million. Cash and cash equivalents decreased by $7.8 million,
marketable securities and deposits decreased by $3.3 million, and availability
under the Revolving Credit Facility increased by $25.8 million. The increase in
availability under the Revolving Credit Facility has been reduced by Tosco's
election not to renew its $100 million Facility B under the Revolving Credit
Facility when it expired on January 12, 1999.
At June 30, 1999, total shareholders' equity was $2.0 billion, a $96.3 million
increase compared to the December 31, 1998 balance of $1.9 billion. This
increase was due to net income of $112.5 million and other items of $3.6
million, less Common Stock dividends of $19.8 million. Debt (current and
long-term debt and the Revolving Credit Facility) decreased by $116.4 million to
$1.4 billion at June 30, 1999 due primarily to net repayments under the
Revolving Credit Facility.
The ratio of long-term debt (Revolving Credit Facility and non-current portion
of long-term debt) to total capitalization (Revolving Credit Facility,
non-current portion of long-term debt, Trust Preferred Securities, and total
shareholders' equity) was 38.4% at June 30, 1999 compared to the December 31,
1998 ratio of 41.3%.
In January 1997, Tosco filed a shelf registration statement providing for the
issuance of up to $1.5 billion aggregate principal amount of debt and equity
securities. Such securities may be offered, separately or together, in amounts
and at prices and terms to be set forth in one or more supplements to the shelf
registration statement. At June 30, 1999, Tosco had available for issue $779
million of securities pursuant to this shelf registration statement.
Tosco's Board of Directors previously approved the repurchase of $300 million of
Tosco Common Stock. Approximately $100 million of this program was completed in
1998, while the remainder of the program was completed in July and August 1999.
The Revolving Credit Facility, as well as funds potentially available from the
issuance of securities, provide Tosco with adequate resources to meet its
expected liquidity demands for at least the next twelve months.
CAPITAL EXPENDITURES
During the first six months of 1999, Tosco spent $279.2 million for capital
additions: $211.5 million on property, plant, and equipment additions and $67.7
million for turnarounds. With the exception of certain turnarounds at the Avon
Refinery during the stand-down period, these capital additions were budgeted for
1999. Refining capital additions of $155.0 million were primarily for turnaround
projects at the Avon and Bayway Refineries and the completion of projects
related to compliance with environmental regulations and permits,
personnel/process safety programs, and operating flexibility and reliability
projects. Tosco intends to finance its 1999 capital additions, including
construction of a polypropylene plant at the Bayway Refinery, through cash flows
from operations and, if needed, by borrowings under the Revolving Credit
Facility.
Marketing capital additions of $124.2 million were primarily for improvements at
existing sites. In late June 1999, the Company purchased 110 retail gasoline and
convenience store sites. The majority of the sites were acquired by a special
purpose entity that leased the sites to Tosco under an operating lease. Tosco
divested 326 non-core properties during the first six months of 1999 and 46
non-core sites during July 1999.
IMPACT OF THE YEAR 2000 ISSUE
Historically, certain computer programs have used two rather than four digits to
define a given calendar year. Computer programs that use two digits to define
the year may recognize a date using "00" as the year 1900 rather than 2000. This
could result in business and field system failures or miscalculations that could
cause serious disruption of operations. This is generally referred to as the
"Year 2000 Issue."
For several years, Tosco has been proactively upgrading and replacing its
information systems. During early 1998, Tosco formed a Year 2000 Program Office
to coordinate the efforts of Tosco's operating units and administrative
departments. Three primary areas related to the Year 2000 Issue are being
addressed: business systems, field systems, and third parties. Each of these
areas has five overlapping phases: (i) identifying and assessing critical
systems, equipment, and business relationships requiring modification or
replacement prior to 2000; (ii) formulating compliance action plans; (iii)
upgrading, replacing, and/or remediating noncompliant systems and equipment;
(iv) testing; and (v) contingency and business continuation planning.
BUSINESS SYSTEMS: These include computer systems and applications relating to
financial reporting, human resources, purchasing, commercial, supply, pricing,
and marketing activities. Tosco is addressing its Year 2000 issues, primarily
through software upgrades and replacements, and remediation of existing business
systems. The assessment, planning, development, and testing phases for critical
business systems were completed as scheduled by June 30, 1999. Tosco is
substantially complete with the above phases for all other business systems.
Tosco believes its business systems are currently substantially Year 2000 ready.
FIELD SYSTEMS: These include embedded computer chips and computer systems
relating to Tosco's refining, distribution, and marketing operating assets.
Tosco has assessed the Year 2000 compliance status of substantially all of its
field systems and is currently implementing plans related to the replacement and
remediation of noncompliant systems. Tosco expects these plans to be
substantially completed by September 30, 1999. The balance of field system
replacements and remediation are expected to be performed in the fourth quarter,
primarily during scheduled turnarounds of refinery processing units. Field
system remediation progress is dependent upon the timely delivery of Year 2000
compliant, third party software and devices. Internal and vendor-assisted
testing is being done on an ongoing basis as the field systems are replaced or
remediated.
THIRD PARTY RELATIONSHIPS: These are Tosco's critical suppliers, vendors,
customers, financial institutions, utilities, telecommunication providers,
governmental entities, and others with whom Tosco does significant business
(collectively "third parties"). Tosco has initiated two-way communications with
third parties about their plans and progress in addressing the Year 2000 Issue.
Tosco will continue to communicate with and monitor the progress its third
parties are making in addressing their Year 2000 Issues. Tosco's ability to
accurately assess its third parties' Year 2000 readiness is dependent in large
part upon the completeness and reliability of the third parties'
representations.
CONTINGENCY PLANS: Tosco has formed a Year 2000 Contingency Task Force (the
"Task Force") which includes representatives from all business segments and
other functional responsibilities. The Task Force is currently evaluating
various business disruption scenarios, evaluating existing contingency plans,
and formulating new contingency plans, and preemptive strategies, as
appropriate. The Task Force is also formulating contingency plans based on the
progress its third parties are making in addressing their Year 2000 Issues. The
Task Force has organized management response teams and is formalizing Year 2000
plans and strategies in conjunction with Tosco's existing contingency plans for
equipment failures, emergencies, and other business disruptions. Additionally,
the Task Force will coordinate a test on Tosco's communication systems and
strategies in September 1999. Throughout the balance of 1999, the Year 2000
contingency plans and strategies will be modified as facts and circumstances
change.
COSTS: Tosco's Year 2000 compliance costs include external consultants and
contractors, compensation costs of internal employees working directly on Year
2000 Issues, purchases of software and hardware, system upgrades and
modifications which were accelerated to address the Year 2000 Issue, and
contingency planning measures. Year 2000 compliance costs did not have a
material effect on Tosco's 1998 operating results or financial position. Year
2000 compliance costs are not expected to have a material effect on Tosco's 1999
operating results or financial position.
RISKS: Tosco believes its business systems are currently substantially Year 2000
ready and its field systems will be substantially Year 2000 ready by September
30, 1999. Tosco further believes that its critical third party vendors and
suppliers are making good progress on their own Year 2000 remediation efforts.
In the event that Tosco is unable to make the necessary system changes on a
timely basis, fails to identify all critical Year 2000 Issues, or is unable to
implement appropriate contingency plans, such inability could cause significant
business disruptions. Additionally, Tosco could incur significant business
disruptions if one or more of its critical third parties (over whom Tosco does
not have control) are not Year 2000 compliant by December 31, 1999. Business
disruptions such as production and/or distribution shutdowns, out-of-stock
conditions, communication and/or energy outages, or billing and/or collecting
problems could negatively affect Tosco's results of operations.
The foregoing Year 2000 readiness disclosure is based on Tosco's current
expectations, estimates, and projections, which could ultimately prove to be
inaccurate. Because of uncertainties, the actual effect of the Year 2000 Issue
on Tosco may be different from our current assessment.
NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. Tosco
plans to adopt SFAS No. 133 on January 1, 2001. Tosco is currently evaluating
the effect SFAS No. 133 will have on its financial position and results of
operations.
FORWARD LOOKING STATEMENTS
TOSCO HAS MADE, AND MAY CONTINUE TO MAKE, VARIOUS FORWARD-LOOKING STATEMENTS
WITH RESPECT TO ITS FINANCIAL POSITION, BUSINESS STRATEGY, PROJECTED COSTS,
PROJECTED SAVINGS, AND PLANS AND OBJECTIVES OF MANAGEMENT. SUCH FORWARD-LOOKING
STATEMENTS ARE IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS OR PHRASES SUCH AS
"ANTICIPATES," "INTENDS," "EXPECTS," "PLANS," "BELIEVES," "ESTIMATES," OR WORDS
OR PHRASES OF SIMILAR IMPORT. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
NUMEROUS ASSUMPTIONS, RISKS, AND UNCERTAINTIES, AND THE STATEMENTS LOOKING
FORWARD BEYOND 1999 ARE SUBJECT TO GREATER UNCERTAINTY BECAUSE OF THE INCREASED
LIKELIHOOD OF CHANGES IN UNDERLYING FACTORS AND ASSUMPTIONS. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED BY THE FORWARD-LOOKING
STATEMENTS.
IN ADDITION TO FACTORS PREVIOUSLY DISCLOSED BY TOSCO AND FACTORS IDENTIFIED
ELSEWHERE HEREIN, CERTAIN OTHER FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM SUCH FORWARD-LOOKING STATEMENTS. ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO TOSCO, OR PERSONS ACTING ON BEHALF OF
TOSCO, ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH FACTORS.
TOSCO'S FORWARD-LOOKING STATEMENTS REPRESENT ITS JUDGMENT ONLY ON THE DATES SUCH
STATEMENTS ARE MADE. BY MAKING ANY FORWARD-LOOKING STATEMENTS, TOSCO ASSUMES NO
DUTY TO UPDATE THEM TO REFLECT NEW, CHANGED, OR UNANTICIPATED EVENTS OR
CIRCUMSTANCES.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Tosco has reached a settlement with the California Air Resource Board (CARB) on
a Report of Violation (ROV F99-4-2), which alleged that Tosco made certain
shipments of motor fuel which did not meet California specifications and did
not provide proper notification to CARB when Tosco changed diesel blends.
(1998 Form 10-K).
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
On May 20, 1999, the Annual Meeting of Tosco Corporation Stockholders was held.
The table below briefly describes the proposals and the results of the
shareholder vote:
I. Election of Directors
WITHHOLD
VOTES FOR AUTHORITY
Jefferson F. Allen 133,895,444 284,154
Patrick M. de Barros 133,905,089 274,509
Wayne A. Budd 133,889,542 290,056
Houston I. Flournoy 133,841,699 337,899
Edmund A. Hajim 133,880,753 298,845
Joseph P. Ingrassia 133,841,310 338,288
Charles J. Luellen 133,857,773 321,825
Eija Malmivirta 133,879,907 299,691
Mark R. Mulvoy 133,882,800 296,798
Thomas D. O'Malley 133,891,333 288,265
II. Ratification of Independent Accountants
VOTES
VOTES FOR AGAINST ABSTAIN
Ratification and approval of appointment
of PricewaterhouseCoopers LLP as
independent accountants 134,004,549 87,583 87,466
III. Stockholder Proposal - Pollution Policy
VOTES VOTES BROKER
FOR AGAINST ABSTAIN NON-VOTE
Adoption of policy requiring
each of Tosco's major
facilities to conduct an
annual review of
available pollution
prevention options and
provide a summary
report to shareholders 4,181,151 101,794,267 2,363,519 25,840,661
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
27 - Financial Data Schedule (filed electronically only)
b. Reports on Form 8-K:
None.
SIGNATURE
Pursuant to the requirements 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.
TOSCO CORPORATION
(Registrant)
Date: August 16, 1999 By: /S/ ROBERT I. SANTO
-------------------------
(Robert I. Santo)
Vice President and
Chief Accounting Officer