EXHIBIT 12.1
TESORO PETROLEUM CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS
(DOLLARS IN THOUSANDS)
Pro Forma
for the
Tesoro Historical Transactions
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Years Ended December 31,
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1997 1998 1999 2000 2001 2001
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EARNINGS:
Earnings (Loss) from continuing operations
before income taxes and extraordinary loss ........ $ 3,400 $ 12,100 $ 51,200 $ 123,500 $ 146,900 $ 273,700
Interest expense, net of capitalized interest (a) ... 8,100 24,790 36,710 31,720 51,630 185,245
Amortization of debt discount ....................... -- 100 215 235 260 260
Amortization of debt issuance costs ................. -- 310 675 745 910 2,595
Estimated interest portion of rents (b) ............. 12,400 17,400 22,400 19,800 17,010 17,010
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Total Earnings ................................ $ 23,900 $ 54,700 $ 111,200 $ 176,000 $ 216,710 $ 478,810
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FIXED CHARGES:
Interest expense whether expensed or capitalized (a).. $ 8,500 $ 24,890 $ 37,310 $ 32,420 $ 56,730 $ 190,345
Amortization of debt discount ........................ -- 100 215 235 260 260
Amortization of debt issuance costs .................. -- 310 675 745 910 2,595
Estimated interest portion of rents (b) .............. 12,400 17,400 22,400 19,800 17,010 17,010
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Total Fixed Charges ............................ $ 20,900 $ 42,700 $ 60,600 $ 53,200 $ 74,910 $ 210,210
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RATIO OF EARNINGS TO FIXED CHARGES ..................... 1.14 1.28 1.83 3.31 2.89 2.28
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Pro Forma
as Adjusted
Tesoro for the
Historical Transactions
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Three Months Ended
March 31, 2002
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EARNINGS:
Earnings (Loss) from continuing operations
before income taxes and extraordinary loss ........ $ (92,800) $(133,200)
Interest expense, net of capitalized interest (a) ... 29,865 42,115
Amortization of debt discount ....................... 70 70
Amortization of debt issuance costs ................. 365 615
Estimated interest portion of rents (b) ............. 4,840 4,840
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Total Earnings ................................ $ (57,660) $ (85,560)
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FIXED CHARGES:
Interest expense whether expensed or capitalized (a).. $ 30,840 $ 43,090
Amortization of debt discount ........................ 70 70
Amortization of debt issuance costs .................. 365 615
Estimated interest portion of rents (b) .............. 4,840 4,840
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Total Fixed Charges ............................ $ 36,115 $ 48,615
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RATIO OF EARNINGS TO FIXED CHARGES ..................... * *
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* For the three months ended March 31, 2002 fixed charges exceeded earnings by
$93.8 million and $134.2 million on a historical basis and on a pro forma basis,
respectively.
(a) Includes interest expense and financing costs.
(b) For a majority of the marine charter leases the interest portion of rents
was estimated by using the Company's incremental borrowing rate in effect at the
inception of the leases. For the remaining leases, interest expense was
estimated by using one third of the rental payments. Total rental expense
including marine charters was approximately $45 million, $54 million, $64
million, $60 million and $66 million for the years ended 1997, 1998, 1999, 2000
and 2001, respectively, and $20 million for the three months ended March 31,
2002.