Exhibit 99.1
The Premcor Refining Group Inc.
Unaudited Pro Forma Combined Condensed Financial Statements
The following unaudited pro forma combined condensed financial statements
give effect to the restructuring described in Item 2 to this Current Report on
Form 8-K. Certain of these pro forma statements, as described below, also give
effect to a contribution to PRG from the proceeds of the Premcor Inc. initial
public offering and application of those proceeds to redeem PRG's 9 1/2% senior
notes due 2004, on June 3, 2002 (the "IPO related transactions"). The effects of
the IPO related transactions were not part of the restructuring. However, the
effects of the IPO related transactions have been included in certain of the
unaudited pro forma combined condensed financial statements because they are not
reflected in the historical financial statements and are considered material.
The unaudited pro forma combined condensed balance sheet as of March 31,
2002 gives effect to the restructuring and IPO related transactions as if each
had occurred on March 31, 2002. The unaudited pro forma combined condensed
statements of operations for the quarter ended March 31, 2002 and the year ended
December 31, 2001 give effect to the restructuring and IPO related transactions
as if each had occurred on January 1, 2002 and January 1, 2001, respectively.
The unaudited pro forma combined condensed statements of operations for the
years ended December 31, 2000 and 1999 give effect to the combination of PRG and
Sabine as if the combination had occurred on January 1st of the applicable year,
but do not reflect transactions related to the restructuring or the IPO related
transactions. The unaudited pro forma combined condensed financial statements
are based on assumptions that PRG believes are reasonable under the
circumstances and are intended for informational purposes only. These statements
are not necessarily indicative of the financial position or future financial
results of the combined companies or of the financial position or the results of
operations that would have actually occurred had the restructuring and IPO
related transactions taken place as of the date or for the periods presented.
These unaudited pro forma combined condensed statements should be read in
conjunction with Sabine's and PRG's Annual Reports on Form 10-K for the year
ended December 31, 2001 and Quarterly Reports on Form 10-Q for the quarter ended
March 31, 2002. The pro forma adjustments use estimates and assumptions based on
currently available information. Management believes that the estimates and
assumptions are reasonable, and that the significant effects of the transactions
are properly reflected. However, actual results may differ from this pro forma
information.
The unaudited pro forma combined condensed statements of operations do not
include the effects of nonrecurring charges related to the restructuring and IPO
related transactions, which include the write-off of deferred charges and
payments of premiums related to the early redemption of debt at both PRG and
Sabine. These nonrecurring charges in the aggregate were $13.7 million ($8.8
million net of income taxes) as of March 31, 2002.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
As of March 31, 2002
Historical Adjustments
------------------ ----------------------------
Contribution
from
Intercompany Premcor Pro
PRG Sabine Eliminations Combined Inc. IPO Restructuring Forma
--------- -------- ------------- ---------- ------------- ------------- --------
Assets (in millions)
Current Assets:
Cash and cash equivalents ............ $ 207.5 $ 152.5 $ 360.0 $ (0.6)(d) $ (97.3)(e) $ 200.2
(61.9)(i)
Cash restricted for debt
service .............................. -- 53.4 53.4 (53.4)(e) 61.9
61.9 (i)
Short-term investments ............... 1.7 -- 1.7 1.7
Accounts receivable .................. 214.6 -- 214.6 214.6
Receivable from affiliates ........... 65.2 74.1 (96.1)(a) 43.2 43.2
Inventories .......................... 316.3 15.8 332.1 332.1
Prepaid expenses and other ........... 37.9 8.8 46.7 (4.5)(f) 42.2
Net assets held for sale ............. 61.0 -- 61.0 61.0
-------- -------- ------- --------- -------- -------- --------
Total current assets .............. 904.2 304.6 (96.1) 1,112.7 (0.6)(d) (155.2) 956.9
Property, plant and equipment,
net .................................... 550.5 627.6 1,178.1 1,178.1
Deferred income taxes .................. 50.3 -- (36.0)(j) 14.3 0.5 (c) 4.4 (g) 19.2
Other assets ........................... 133.3 16.6 149.9 (1.2)(c) 9.4 (e) 151.0
(7.1)(f)
Note receivable from affiliate ......... 2.4 -- (2.4)(a) -- --
-------- -------- -------- --------- -------- --------- --------
$1,640.7 $ 948.8 $ (134.5) $ 2,455.0 $ (1.3) $ (148.5) $2,305.2
======== ======== ======== ========= ======== ========= ========
Liabilities And Stockholder's
Equity
Current Liabilities:
Accounts payable ..................... $ 334.6 $ 129.6 $ 464.2 $ 464.2
Payable to affiliates ................ 114.4 54.1 (93.5)(a) 75.0 75.0
Accrued expenses and other ........... 93.9 11.1 105.0 (0.6)(d) (3.2)(e) 101.2
Accrued taxes other than
income ............................ 23.4 2.3 25.7 25.7
Current portion of long-term
debt .............................. 1.4 26.9 28.3 (22.6)(e) 5.7
Current portion of notes
payable to affiliate .............. -- 2.6 (2.6)(a) -- --
------- -------- -------- --------- -------- -------- --------
Total current liabilities ......... 567.7 226.6 (96.1) 698.2 (0.6) (25.8) 671.8
Long-term debt ......................... 784.0 449.5 1,233.5 (150.4)(b) (198.8)(e) 884.3
Deferred income taxes .................. -- 36.0 (36.0)(j) -- --
Other long-term liabilities ............ 143.9 0.1 144.0 144.0
Note payable to affiliate .............. -- 2.4 (2.4)(a) -- --
Commitments and contingencies .......... -- -- -- --
Common Stockholder's Equity:
Common stock ......................... -- 0.1 0.1 (0.1)(h) --
Paid-in capital ...................... 140.8 121.7 262.5 150.4 (b) 225.6 (e) 601.5
(37.1)(e)
0.1 (h)
Retained earnings .................... 4.3 112.4 116.7 (0.7)(c) (104.3)(e) 3.6
(11.6)(f)
(0.9)(e)
4.4 (g)
-------- -------- -------- --------- ------- --------- --------
Total common stockholder's
equity ............................... 145.1 234.2 -- 379.3 149.7 76.1 605.1
-------- -------- -------- --------- -------- --------- --------
$1,640.7 $ 948.8 $ (134.5) $ 2,455.0 $ (1.3) $ (148.5) $2,305.2
======== ======== ======== ========= ======== ========= ========
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
As of March 31, 2002
(a) Represents the elimination of intercompany receivable and payable
balances.
(b) Represents a contribution of $150.4 million in proceeds to PRG from the
Premcor Inc. initial public offering, which PRG used to redeem its 9 1/2%
senior notes due 2004 on June 3, 2002.
(c) Represents the write-off of unamortized debt costs associated with the
repayment of PRG's 9 1/2% senior notes due 2004 and the income tax effect
of the write-off at PRG's effective income tax rate of 39%.
(d) Represents the payment of accrued interest on PRG's 9 1/2% senior notes
due 2004.
(e) Represents adjustments to reflect the sources and uses of cash to effect
the restructuring (in millions):
Capital contribution from Premcor Inc. ......... $ 225.6
Cash restricted for debt service as
of March 31, 2002 .............................. 53.4
Repay senior secured bank loan:
Current portion ............................. (22.6)
Long-term portion ........................... (198.8)
Interest .................................... (3.2)
Premium for early payment ................... (0.9)
Dividend paid to Premcor Inc. .................. (141.4)
Transaction fees and expenses .................. (9.4)
---------
Net use of cash ....................... $ (97.3)
=========
(f) Represents adjustments to write-off $7.1 million in debt issuance costs
associated with Sabine's senior secured bank loan and $4.5 million
related to terminated insurance policies.
(g) Represents the income tax effect of the write-offs of debt issuance costs
and prepaid insurance premiums and the payment of the premium for the
early repayment of the senior secured bank loan, all based on Sabine's
effective income tax rate of 35%.
(h) Represents adjustments necessary to reflect Sabine as a consolidated
subsidiary.
(i) Represents adjustments necessary to reflect cash restricted for debt
service.
(j) Represents adjustments to reclassify deferred income tax assets and
liabilities.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the quarter ended March 31, 2002
Historical Adjustments
----------------------- ---------------------------
Contribution
from
Intercompany Premcor Inc. Pro
PRG Sabine Eliminations Combined IPO Restructuring Forma
---------- ------- ------------ ---------- ----------- ------------- -------
(in millions)
Net sales and operating
revenues ..................... $ 1,255.9 $ 420.7 $ (27.6)(b) $ 1,228.3 $1,228.3
(420.7)(c)
Expenses:
Cost of sales ................ 1,123.1 379.6 (418.6)(b) 1,062.0 $ (0.5)(f) 1,061.5
(22.1)(c)
Operating expenses ........... 88.3 33.7 (7.6)(c) 114.4 114.4
General and administrative
expenses .................. 14.9 1.1 16.0 (0.2)(g) 15.8
Depreciation and
amortization ............... 17.0 5.2 22.2 22.2
Refinery restructuring
and other charges ......... 142.0 -- 142.0 142.0
--------- -------- -------- --------- -------- -------- --------
1,385.3 419.6 (448.3) 1,356.6 -- (0.7) 1,355.9
Operating income (loss) ........ (129.4) 1.1 -- (128.3) -- 0.7 (127.6)
Interest expense and
finance income, net .......... (14.6) (13.7) (28.3) 3.7(d) 4.0 (h) (20.6)
--------- -------- -------- --------- -------- -------- --------
Loss before income taxes ....... (144.0) (12.6) -- (156.6) 3.7 4.7 (148.2)
Income tax benefit ............. 56.0 4.5 60.5 (1.4)(e) (1.6)(i) 57.5
--------- -------- -------- --------- -------- -------- --------
Net loss ....................... $ (88.0) $ (8.1) $ -- $ (96.1) $ 2.3 $ 3.1 $ (90.7)
========= ======== ======== ========= ======== ======== ========
EBITDA ......................... $ (112.4) $ 6.3 $ -- $ (106.1) $ -- $ 0.7 $ (105.4)
========= ======== ======== ========= ======== ======== ========
Adjusted EBITDA (a) ............ $ 29.6 $ 6.3 $ -- $ 35.9 $ -- $ 0.7 $ 36.6
========= ======== ======== ========= ======== ======== ========
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 2001
Historical Adjustments
---------------------- ----------------------------
Contribution
from
Intercompany Premcor Inc. Pro
PRG Sabine Eliminations Combined IPO Restructuring Forma
--------- --------- ------------ ------------- ------------ ------------- --------
(in millions)
Net sales and operating revenues ... $6,532.8 $1,882.4 $ (122.2)(b) $ 6,417.4 $6,417.4
(1,877.2)(c)
1.6 (j)
Expenses:
Cost of sales .................... 5,759.9 1,460.2 (1,871.3)(b) 5,253.1 $ (2.2)(f) 5,250.9
(95.7)(c)
Operating expenses ............... 358.9 140.4 20.0 (b) 466.9 466.9
(52.4)(c)
General and administrative
expenses ...................... 59.0 4.1 63.1 (0.6)(g) 62.5
Depreciation and amortization .... 71.4 20.5 91.9 91.9
Refinery restructuring
and other charges ............. 176.2 -- 176.2 176.2
-------- -------- --------- --------- -------- -------- --------
6,425.4 1,625.2 (1,999.4) 6,051.2 (2.8) 6,048.4
Operating income ................... 107.4 257.2 1.6 366.2 2.8 369.0
Interest expense and finance
income, net ...................... (62.2) (60.1) (122.3) 16.3(d) 29.2 (h) (76.8)
-------- -------- --------- --------- -------- -------- --------
Income from continuing operations
before income taxes and
extraordinary item ............... 45.2 197.1 1.6 243.9 16.3 32.0 292.2
Income tax provision ............... (3.7) (69.0) -- (72.7) (6.4)(e) (11.2)(i) (90.3)
-------- -------- --------- --------- -------- -------- --------
Income from continuing operations
before extraordinary item ........ 41.5 128.1 1.6 171.2 9.9 20.8 201.9
Loss from discontinued operations,
net of income tax benefit of
$11.5 million .................... (18.0) -- (18.0) -- (18.0)
-------- -------- --------- --------- -------- -------- --------
Income before extraordinary item ... 23.5 128.1 1.6 153.2 9.9 20.8 183.9
Gain on repurchase of long-term
debt, net of income taxes
of $0.3 million .................. 0.5 -- -- 0.5 -- -- 0.5
-------- -------- --------- --------- -------- -------- --------
Net income ......................... $ 24.0 $ 128.1 $ 1.6 $ 153.7 $ 9.9 $ 20.8 $ 184.4
======== ======== ========= ========= ======== ======== ========
EBITDA ............................. $ 178.8 $ 277.7 $ 1.6 $ 458.1 $ -- $ 2.8 $ 460.9
======== ======== ========= ========= ======== ======== ========
Adjusted EBITDA (a) ................ $ 355.0 $ 277.7 $ 1.6 $ 634.3 $ -- $ 2.8 $ 637.1
======== ======== ========= ========= ======== ======== ========
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 2000
Historical
---------------------------------
Intercompany Pro Forma
PRG Sabine Eliminations Combined
---------------- --------------- --------------- --------------
(in millions)
Net sales and operating revenues ....................... $ 7,311.8 $ 100.3 $ (8.5)(b) $ 7,301.7
(100.3)(c)
(1.6)(j)
Expenses:
Cost of sales ........................................ 6,586.5 83.6 (99.8)(b) 6,564.1
(6.2)(c)
Operating expenses ................................... 459.3 10.2 5.2 (b) 466.7
(8.0)(c)
General and administrative expenses .................. 51.6 1.1 -- 52.7
Depreciation and amortization ........................ 71.7 -- -- 71.7
---------- --------- --------- ---------
7,169.1 94.9 (108.8) 7,155.2
Operating income ....................................... 142.7 5.4 (1.6) 146.5
Interest expense and finance income, net ............... (61.1) (3.2) -- (64.3)
---------- --------- --------- ---------
Income before income taxes ............................. 81.6 2.2 (1.6) 82.2
Income tax (provision) benefit ......................... (1.9) 4.1 -- 2.2
---------- --------- --------- ---------
Net income ............................................. $ 79.7 $ 6.3 $ (1.6) $ 84.4
========== ========= ========= =========
EBITDA ................................................. $ 214.4 $ 5.4 $ (1.6) $ 218.2
========== ========= ========= =========
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 1999
Historical
---------------------------------
Intercompany Pro Forma
PRG Sabine Eliminations Combined
-------------- --------------- ----------------- -------------
(in millions)
Net sales and operating revenues ....................... $ 4,520.3 $ -- $ -- $ 4,520.3
Expenses:
Cost of sales ........................................ 4,102.0 -- -- 4,102.0
Operating expenses ................................... 402.0 -- -- 402.0
General and administrative expenses .................. 48.3 3.1 -- 51.4
Depreciation and amortization ........................ 63.0 -- -- 63.0
Inventory recovery from market write-down ............ (105.8) -- -- (105.8)
----------- ---------- ------------ ------------
4,509.5 3.1 -- 4,512.6
Operating income (loss) ................................ 10.8 (3.1) -- 7.7
Interest expense and finance income, net ............... (61.5) (10.8) -- (72.3)
----------- ---------- ------------ ------------
Loss from continuing operations before
income taxes ......................................... (50.7) (13.9) -- (64.6)
Income tax benefit ..................................... 16.2 -- -- 16.2
----------- ---------- ------------ ------------
Loss from continuing operations ........................ (34.5) (13.9) -- (48.4)
Discontinued operations:
Loss from operations, net of tax benefit of
$2.7 .............................................. (4.3) -- -- (4.3)
Gain on disposal of discontinued operations,
net of income tax provision of $23.3 .............. 36.6 -- -- 36.6
----------- ---------- ------------ ------------
Net loss ............................................... $ (2.2) $ (13.9) $ -- $ (16.1)
=========== ========== ============ ============
EBITDA ................................................. $ 73.8 $ (3.1) $ -- $ 70.7
=========== ========== ============ ============
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
For the quarter ended March 31, 2002 and years ended
December 31, 2001, 2000, and 1999
(a) Adjusted EBITDA represents EBITDA excluding refinery restructuring and
other charges of $142.0 million in the quarter ended March 31, 2002 and
$176.2 million in 2001. The $142.0 million in charges for the quarter
ended March 31, 2002 included $131.2 million related to the announced
discontinuation of refining operations at our Hartford refinery and $10.8
million primarily due to severance and other charges related to corporate
restructuring. The $176.2 million in charges in 2001 included $167.2
million related to the closure of our Blue Island refinery and $9.0
million related to a write-off of idled coker units at the Port Arthur
refinery. Adjusted EBITDA is presented because PRG believes it is a
useful indicator to its investors of its ability to incur and service
debt based on its ongoing operations. Adjusted EBITDA should not be
considered by investors as an alternative to operating income or net
income as an indicator of performance, nor as an alternative to cash
flows from operating activities, investing activities or financing
activities as a measure of liquidity. Because all companies do not
calculate EBITDA identically, this presentation of adjusted EBITDA may
not be comparable to EBITDA, adjusted EBITDA or other similarly-titled
measures of other companies.
(b) Represents the elimination of PRG's revenue and expense from intercompany
transactions with PACC.
(c) Represents the elimination of PACC's revenue and expense from
intercompany transactions with PRG.
(d) Represents interest expense and debt amortization costs of the 9 1/2%
senior notes for the year ended December 31, 2001 and for the quarter
ended March 31, 2002.
(e) Represents the income tax effect of the adjustments relating to the
redemption of our 9 1/2% senior notes at PRG's effective income tax rate
of 39%.
(f) Represents annual cost savings from cancellation of insurance policies
and Sabine's working capital facility based on 2001 actual cost, offset
by an estimated annual increase in letter of credit usage under PRG's
amended working capital facility at 2.9% per annum. Amounts have been
pro-rated for the quarter ended March 31, 2002.
(g) Represents cost savings related to the elimination of independent
director fees, two full-time equivalent employees and redundant trustee
and rating agency fees.
(h) Represents $29.5 million in annual interest expense savings, a $1.5
million reduction in annual debt amortization costs relating to the
repayment of $287.6 million in senior secured bank loans based on the
actual 2001 interest cost, and a net $0.4 million in annual cost savings
representing the difference in the cost of Sabine's insurance policies
and working capital facility versus an estimated increase in the amended
working capital facility usage at 2.9% per annum. These savings are
partially offset by a $2.2 million increase in amortization of the
consent fees and other costs of the restructuring. Adjustments for the
quarter ended March 31, 2002 are based on actual first quarter 2002
amounts.
(i) Represents the income tax effect of the adjustments relating to the
restructuring at Sabine's effective income tax rate of 35%.
(j) Represents the elimination of intercompany profit between PRG and Sabine
as of the year ended December 31, 2000 and the reversal of this
elimination in the year ended December 31, 2001.