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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 2
to Current Report on
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): AUGUST 27, 2001
TESORO PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-3473 95-0862768
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
300 CONCORD PLAZA DRIVE 78216-6999
SAN ANTONIO, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (210) 828-8484
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The undersigned hereby amends and restates Appendix B contained in
Item 7 of its Current Report on Form 8-K, as amended by Amendment No. 1 thereto,
in its entirety to read as set forth in Appendix B attached hereto. In addition,
the undersigned reports certain related events in Item 5 hereof and files
certain additional exhibits in Item 7(c) hereof.
ITEM 5. OTHER EVENTS
On November 1, 2001, the Company closed on the purchase from BP p.l.c.
of the North Dakota-based, common-carrier crude oil pipeline and gathering
system that is the primary crude supply source for the Company's Mandan, North
Dakota refinery, which the Company acquired from BP on September 6, 2001.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro forma financial information.
The pro forma financial information is amended as included in
Appendix B hereto and incorporated herein by reference:
<Table>
PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro Forma Combined Condensed
Balance Sheet as of June 30, 2001 ........................... B-2
Unaudited Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 2000 ............. B-4
Unaudited Pro Forma Combined Condensed Statement of
Operations for the Six Months Ended June 30, 2001 ........... B-5
</Table>
(c) Exhibits.
10.1 $1,000,000,000 Credit Agreement (the "Credit
Agreement"), dated as of September 6, 2001, among the
Company and Lehman Brothers Inc. (arranger), Lehman
Commercial Paper Inc. (the syndication agent), Bank
One, NA (the administrative agent) and a syndicate of
banks, financial institutions and other entities.
10.2 Guarantee and Collateral Agreement, dated as of
September 6, 2001, made by Tesoro Petroleum
Corporation in favor of Bank One, NA, as
Administrative Agent.
10.3 First Amendment, dated as of October 16, 2001, to the
Credit Agreement.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: November 5, 2001
TESORO PETROLEUM CORPORATION
By: /s/ JAMES C. REED, JR.
--------------------------------
James C. Reed, Jr.
Executive Vice President,
General Counsel and Secretary
3
APPENDIX B
<Table>
PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro Forma Combined Condensed
Balance Sheet as of June 30, 2001 ........................... B-2
Unaudited Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 2000 ............. B-4
Unaudited Pro Forma Combined Condensed Statement of
Operations for the Six Months Ended June 30, 2001 ........... B-5
</Table>
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the acquisition of two refineries in North Dakota and Utah and
related storage, distribution and retail assets from certain affiliates of
BP p.l.c. and the acquisition of the North Dakota crude oil pipeline system
(together "the Acquisitions") and the recent financing of the Company's new
senior secured credit facility, as amended, to fund the Acquisitions
(together "the Transactions").
These unaudited pro forma combined condensed statements have been prepared
from, and should be read in conjunction with, the historical Consolidated
Financial Statements of Tesoro Petroleum Corporation filed on the Company's Form
10-K for the year December 31, 2000 and Form 10-Q for June 30, 2001 and the
Financial Statements of The North Dakota and Utah Refining and Marketing
Business of BP Corporation North America Inc. included in Appendix A to
Amendment No. 1 to this Current Report on Form 8-K/A.
The Unaudited Pro Forma Combined Condensed Balance Sheet gives effect to
the Transactions, and the conversion of our Premium Income Equity Securities
("PIES(SM)") into shares of our common stock on July 1, 2001 as if each had
occurred on June 30, 2001. The Unaudited Pro Forma Combined Condensed Statements
of Operations for the year ended December 31, 2000, and the six months ended
June 30, 2001, give effect to the Transactions and the conversion of our
PIES(SM) into shares of our common stock on July 1, 2001 as if each had occurred
on January 1, 2000. The Acquisitions are being accounted for using the purchase
method of accounting. The estimates of the fair value of the acquired assets and
liabilities, and related estimated useful lives of various intangible assets are
based on valuations that are preliminary. These valuations will likely be
updated with respect to property, plant and equipment, intangible assets and
certain assumed liabilities, and will likely change from the amounts shown. The
unaudited pro forma combined condensed financial statements are based on
assumptions that we believe are reasonable under the circumstances and are
intended for informational purposes only. They are not necessarily indicative of
the future financial position or future results of the combined companies or of
the financial position or the results of operations that would have actually
occurred had the Acquisitions taken place as of the date or for the periods
presented. The Unaudited Pro Forma Combined Condensed Statements of Operations
do not reflect any benefits from potential cost savings or revenue enhancements
resulting from the integration of the operations of Tesoro and the Acquisitions.
B-1
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 2001
<Table>
<Caption>
HISTORICAL PRO FORMA
----------------------- ------------------------
TESORO ACQUISITIONS ADJUSTMENTS COMBINED
-------- ------------ ----------- --------
(DOLLARS IN MILLIONS)
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 1.9 $ -- $ -- $ 1.9
Receivables................................... 340.5 56.5 (56.5)(a) 340.5
Inventories................................... 307.8 39.8 85.5 (b) 433.1
Prepayments and other......................... 8.2 2.5 (2.5)(a) 8.2
-------- ------ ------- --------
Total Current Assets.................. 658.4 98.8 26.5 783.7
-------- ------ ------- --------
Property, Plant and Equipment:
Refining and Marketing........................ 1,065.8 571.5 (7.2)(c) 1,630.1
Marine Services............................... 51.2 -- -- 51.2
Corporate..................................... 29.3 -- -- 29.3
-------- ------ ------- --------
1,146.3 571.5 (7.2) 1,710.6
Less accumulated depreciation and
amortization............................... 305.6 311.6 (311.6)(c) 305.6
-------- ------ ------- --------
Net Property, Plant and Equipment............. 840.7 259.9 304.4 1,405.0
Goodwill........................................ 61.9 -- 53.3 (d) 115.2
Other Assets.................................... 67.9 6.5 (6.5)(a) 177.4
20.6 (e)
77.6 (f)
11.3 (g)
-------- ------ ------- --------
Total Assets.......................... $1,628.9 $365.2 $ 487.2 $2,481.3
======== ====== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................. $ 265.2 $111.4 $(111.4)(a) $ 265.2
Accrued liabilities........................... 86.1 17.8 (15.3)(h) 88.6
Current maturities of debt and other
obligations................................ 3.7 -- 15.4 (i) 19.1
-------- ------ ------- --------
Total Current Liabilities............. 355.0 129.2 (111.3) 372.9
-------- ------ ------- --------
Deferred Income Taxes........................... 120.7 42.0 (42.0)(a) 120.7
Other Liabilities............................... 78.5 10.5 20.4 (h) 109.4
Debt and Other Obligations...................... 352.6 -- 804.1 (i) 1,156.7
Parent Company Investment....................... -- 183.5 (183.5)(j) --
Stockholders' Equity:
Preferred stock............................... 165.0 -- (165.0)(k) --
Common stock.................................. 5.4 -- 1.7 (k) 7.1
Additional paid-in capital.................... 285.2 -- 163.3 (k) 448.5
Retained earnings............................. 285.1 -- (0.5)(e) 284.6
Treasury stock................................ (18.6) -- -- (18.6)
-------- ------ ------- --------
Total Stockholders' Equity............ 722.1 -- (0.5) 721.6
-------- ------ ------- --------
Total Liabilities and Stockholders'
Equity.............................. $1,628.9 $365.2 $ 487.2 $2,481.3
======== ====== ======= ========
</Table>
B-2
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 2001
(a) Represents an adjustment to exclude certain assets and liabilities of BP
that we did not acquire in connection with the Acquisitions, including
cash, receivables, prepayments and other assets, accounts payable and
deferred income taxes.
(b) Represents an adjustment of refined products inventories to net realizable
value, less an allowance for a normal selling margin, and of raw materials
inventories to replacement cost. The inventory acquired included $119.2
million of crude oil, other feedstocks and refined products (including
$34.0 million for inventories acquired subject to the agreement referenced
in footnote (i) below) and $6.1 million of materials and supplies.
(c) Represents an adjustment of acquired property, plant and equipment from
book value to fair market value.
(d) Represents goodwill, which is the excess purchase price over the fair
market value of net assets acquired.
(e) Represents an adjustment to record debt issuance costs associated with the
new senior secured credit facility totaling $21.4 million net of the
writeoff of debt issuance costs of $0.8 million ($0.5 million net of tax)
related to our prior credit facility.
(f) Represents an adjustment to record intangible assets recorded in connection
with the Acquisitions including jobber agreements, permits and plans,
refinery technology, customer contracts and non-contractual customer
arrangements.
(g) Represents an adjustment to conform the accounting policy for refinery
maintenance turnaround costs to Tesoro's policy. BP expensed refinery
maintenance turnaround costs as incurred while Tesoro's policy is to defer
the costs and amortize them on a straight line basis over the expected
periods of benefit.
(h) Represents an adjustment for certain employee benefit and environmental
liabilities we assumed in connection with the Acquisitions.
(i) Represents an adjustment of $819.5 million to aggregate borrowings to
finance the Acquisitions, to finance our existing indebtedness and to pay
related fees, expenses and debt issuance costs as follows:
<Table>
<Caption>
Cash purchase price (including direct costs of
acquisition).............................................. $764.1
Inventories acquired subject to an agreement*............... 34.0
Debt issuance costs......................................... 21.4
------
$819.5
======
</Table>
---------------
* In connection with the Acquisitions, we acquired certain refined
product inventories at the North Dakota refinery subject to an
agreement. Under this agreement, instead of paying cash for these
inventories, we agreed to deliver an equal amount of refined
products to BP.
(j) Represents the elimination of historical equity related to the BP assets.
(k) Represents an adjustment for the conversion of our Premium Income Equity
Securities ("PIES(SM)") into shares of our common stock on July 1, 2001.
B-3
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
<Table>
<Caption>
HISTORICAL PRO FORMA
-------------------------- -----------------------
TESORO ACQUISITIONS ADJUSTMENTS COMBINED
-------- --------------- ----------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Refining and Marketing...................... $4,917.6 $1,483.8(a) $ -- $6,401.4
Marine Services............................. 186.8 -- -- 186.8
-------- -------- ------ --------
Total Revenues...................... 5,104.4 1,483.8 -- 6,588.2
-------- -------- ------ --------
Cost of Sales and Operating Expenses:
Refining and Marketing...................... 4,688.1 1,368.2 (0.9)(b) 6,055.4
Marine Services............................. 173.7 -- -- 173.7
Depreciation and amortization............... 43.1 23.2 (3.0)(c) 68.1
4.8 (d)
-------- -------- ------ --------
Total Costs of Sales and Operating
Expenses.......................... 4,904.9 1,391.4 0.9 6,297.2
-------- -------- ------ --------
Segment Operating Profit...................... 199.5 92.4 (0.9) 291.0
General and Administrative.................... (40.3) -- -- (40.3)
Interest and Financing Costs, Net of
Capitalized Interest........................ (32.7) -- (54.7)(e) (90.7)
(3.3)(f)
Interest Income............................... 2.8 -- -- 2.8
Other Expenses................................ (5.8) -- -- (5.8)
-------- -------- ------ --------
Earnings Before Income Taxes.................. 123.5 92.4 (58.9) 157.0
Income Tax Provision.......................... 50.2 35.9 (22.4)(g) 63.7
-------- -------- ------ --------
Net Earnings.................................. 73.3 56.5 (36.5) 93.3
Preferred Dividend Requirements............... (12.0) -- 12.0 (h) --
-------- -------- ------ --------
Net Earnings Applicable to Common Stock....... $ 61.3 $ 56.5 $(24.5) $ 93.3
======== ======== ====== ========
Earnings Per Share
Basic ...................................... $ 1.96 $ 2.24
======== ========
Diluted .................................... $ 1.75 $ 2.23
======== ========
Weighted Average Common Shares - Basic(h) .... 31.2 41.6
======== ========
Weighted Average Common Shares and
Potentially Dilutive Common
Shares - Diluted ............................ 41.8 41.8
======== ========
</Table>
B-4
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
<Table>
<Caption>
HISTORICAL PRO FORMA
----------------------- -----------------------
TESORO ACQUISITIONS ADJUSTMENTS COMBINED
-------- ------------ ----------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Refining and Marketing......................... $2,433.1 $725.7(a) $ -- $3,158.8
Marine Services................................ 93.8 -- -- 93.8
-------- ------ ------ --------
Total Revenues......................... 2,526.9 725.7 -- 3,252.6
-------- ------ ------ --------
Costs of Sales and Operating Expenses:
Refining and Marketing......................... 2,295.4 636.8 (6.1)(b) 2,926.1
Marine Services................................ 86.4 -- -- 86.4
Depreciation and amortization.................. 21.6 11.2 (1.1)(c) 34.1
2.4 (d)
-------- ------ ------ --------
Total Costs of Sales and Operating
Expenses............................. 2,403.4 648.0 (4.8) 3,046.6
-------- ------ ------ --------
Segment Operating Profit......................... 123.5 77.7 4.8 206.0
General and Administrative....................... (21.3) -- -- (21.3)
Interest and Financing Costs, Net of Capitalized
Interest....................................... (14.1) -- (28.1)(e) (43.4)
(1.2)(f)
Interest Income.................................. 0.5 -- -- 0.5
Other Expenses................................... (3.1) -- -- (3.1)
-------- ------ ------ --------
Earnings Before Income Taxes..................... 85.5 77.7 (24.5) 138.7
Income Tax Provision............................. 34.3 30.5 (9.3)(g) 55.5
-------- ------ ------ --------
Net Earnings..................................... 51.2 47.2 (15.2) 83.2
Preferred Dividend Requirements.................. (6.0) -- 6.0 (h) --
-------- ------ ------ --------
Net Earnings Available to Common Stock........... $ 45.2 $ 47.2 $ (9.2) $ 83.2
======== ====== ====== ========
Earnings Per Share
Basic.......................................... $ 1.46 $ 2.01
======== ========
Diluted........................................ $ 1.22 $ 1.98
======== ========
Weighted Average Common Shares -- Basic(h)....... 31.0 41.4
======== ========
Weighted Average Common Shares and Potentially
Dilutive Common Shares -- Diluted.............. 42.0 42.0
======== ========
</Table>
B-5
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE SIX MONTHS ENDED JUNE 30, 2001
(a) In connection with the Acquisitions, we entered into certain offtake
agreements with BP to provide us with a distribution channel for a portion
of our refined products we produce at these refineries. The offtake
agreements commit approximately 37,220 bpd of refined products for a period
ranging from three to five years. Historically, BP has sold these volumes
through its distribution network, which included retail stations and
jobbers. The product sales prices that we will receive under the offtake
agreements may be less than BP historically had realized. A change in
product sales price of 1 cent per gallon would have resulted in a decrease
in revenues of $5.7 million for the year ended December 31, 2000 and $2.8
million for the six months ended June 30, 2001, and a decrease in net
earnings of $3.4 million for the year ended December 31, 2000 and $1.7
million for the six months ended June 30, 2001.
(b) Represents an adjustment to conform the accounting policy for refinery
maintenance turnaround costs to that of Tesoro's policy.
(c) Represents an adjustment in depreciation expense due to the change in
property, plant and equipment from book value to fair value related to the
Acquisitions. Pro forma depreciation is calculated on the straight-line
method over estimated useful lives of 28 years for refinery assets, 22
years for pipeline assets and 16 years for terminals and retail assets.
(d) Represents the amortization of various intangible assets related to the
Acquisitions over their estimated useful lives. The lives are 20 years for
jobber networks, 15 to 28 years for permits and plans, 28 years for
refinery technology, 5 years for refinery software and 10 years for
customer contracts and non-contractual customer arrangements.
(e) Represents additional interest under our new senior secured credit
facility, offset by a decrease in interest related to our prior credit
facility.
(f) Represents the amortization of debt issuance costs related to our new
senior secured credit facility less the amortization of debt issuance costs
related to our prior credit facility.
(g) Represents the tax effect of the adjustments above at a combined statutory
tax rate of 38%.
(h) Represents the elimination of the preferred dividend requirements upon
conversion of our PIES(SM) into shares of our common stock on July 1, 2001.
The increased number of shares of common stock is reflected in the pro
forma weighted average common shares used in the computation of Earnings
Per Share -- Basic.
B-6
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
10.1 $1,000,000,000 Credit Agreement (the "Credit
Agreement"), dated as of September 6, 2001, among the
Company and Lehman Brothers Inc. (arranger), Lehman
Commercial Paper Inc. (the syndication agent), Bank
One, NA (the administrative agent) and a syndicate of
banks, financial institutions and other entities.
10.2 Guarantee and Collateral Agreement, dated as of
September 6, 2001, made by Tesoro Petroleum
Corporation in favor of Bank One, NA, as
Administrative Agent.
10.3 First Amendment, dated as of October 16, 2001, to the
Credit Agreement.
</Table>