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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-4014
FINA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-1820692
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
FINA PLAZA, DALLAS, TEXAS 75206
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number Including Area Code: (214) 750-2400
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------------------------------- --------------------------------------------
Class A Common Stock $1 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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. YES X NO
--- ---
The aggregate market value of the Class A Common voting stock held by
non-affiliates of the Registrant as of January 27, 1995 was $163,650,127 based
on the closing price of $74.50 per share as recorded by the American Stock
Exchange.
The number of shares outstanding of each of the issuer's classes of common
stock, as of March 1, 1995:
CLASS A COMMON STOCK -- 14,594,902
CLASS B COMMON STOCK -- 1,000,000
Documents Incorporated by Reference: Part III: The Company's Proxy
Statement for Annual Meeting of Stockholders to be held April 12, 1995
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CROSS REFERENCE SHEET
FORM 10-K ITEM LOCATION IN
NUMBER AND CAPTION FORM 10-K
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PART I:
1. Business..................................................................... page 1
2. Properties................................................................... page 3
3. Legal Proceedings............................................................ page 5
4. Submission of Matters to a Vote of Security Holders.......................... page 6
PART II:
5. Market for the Registrants' Common Stock and Related Security Holder
Matters.................................................................... page 6
6. Selected Financial Data...................................................... page 7
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... page 7
8. Financial Statements and Supplementary Data.................................. page 14
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................................... page 37
PART III:
10. Directors and Executive Officers of the Registrant........................... page 37
11. Executive Compensation....................................................... page 37
12. Security Ownership of Certain Beneficial Owners and
Management................................................................. page 38
13. Certain Relationships and Related Transactions............................... page 38
PART IV:
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................................... page 38
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PART I
ITEM 1 BUSINESS
(a) FINA, Inc. (and subsidiaries, collectively the "Company" and "FINA")
was organized in 1956 as American Petrofina, Incorporated and is part of an
international group of about 166 companies in 34 countries which are affiliated
with Petrofina S.A., a publicly-held corporation organized under the laws of the
Kingdom of Belgium. Petrofina Delaware, Incorporated ("PDI") owns approximately
85% and 100% of the Class A and Class B common stock of the Company,
respectively. Petrofina S.A. owns 100% of American Petrofina Holding Company
which owns 75% of the stock of PDI. The remaining 25% of PDI's stock is owned by
Petrofina S.A.
FINA, Inc. is engaged, through its wholly-owned, main operating subsidiary,
Fina Oil and Chemical Company ("FOCC"), in crude oil and natural gas exploration
and production; petroleum products refining, supply and transportation and
marketing; and chemicals manufacturing and marketing. A wholly-owned subsidiary
of the Company, Fina Natural Gas Company, is engaged in natural gas marketing.
Fina Technology, Inc., a subsidiary of the Company, licenses certain proprietary
processes to others.
The Company entered the year with a strategic plan to strengthen its
balance sheet and better position itself for future profit growth by focusing on
items within management's control. Implementation of the plan, which included
further consolidation of the Upstream and Downstream businesses through sales of
non-strategic assets, constrained capital expenditures and productivity
improvements reduced debt by more than $160 million, or 20%, and reduced the
total debt to total capital ratio from 42% to 36%. Asset sales reflected the
Company's strategic objectives of geographic consolidation and organizational
streamlining. Capital expenditures were $136 million, or 9% above the prior
year's $125.4 million.
Capital expenditures by segments of the Company are shown in Note 12 to the
Consolidated Financial Statements on pages 30 and 31. Expenditures associated
with refining, supply and transportation and marketing were $48.8 million of the
total capital expenditures primarily due to safety and environmental projects at
both refineries. Expenditures of $49.3 million for exploration and production
were attributable primarily to development activity. Expenditures relating to
chemicals were $33.6 million. Capital expenditures are expected to increase to
$215 million in 1995.
No major individual assets or subsidiaries were acquired or disposed of
during the five years ending December 31, 1994.
(b) Segment data is shown in Note 12 "Segment Data" to consolidated
financial statements on pages 30 and 31 herein.
(c) The Company has grouped its businesses into (1) crude oil and natural
gas exploration and production, and natural gas marketing; (2) petroleum
products refining, supply and transportation and marketing; and (3) chemicals
manufacturing and marketing, primarily petrochemicals and plastics including
polypropylene, polystyrene, styrene monomer, high density polyethylene, and
aromatics, and the licensing of certain chemical processes. The energy products
are produced and refined by FOCC, a Delaware corporation. Petrochemicals and
plastics are manufactured by FOCC and by Cos-Mar Company, a 50% owned joint
venture.
The Company markets gasoline and other refined products under the FINA(R)
brand and also markets some unbranded products. FINA(R) fuel products are
primarily sold through 231 independent businesses which supply approximately
2,569 branded retail outlets, located in 11 states in the Southeastern and
Southwestern regions of the United States. The Company also markets
petrochemicals and plastics under the FINA(R) brand. Fina Natural Gas Company is
engaged in natural gas marketing.
FOCC also markets naphtha, jet fuel, distillates, diesel fuel, heavy oils,
and asphalt.
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Following are products which accounted for more than 10% of consolidated
revenues in 1994, 1993 and 1992, and their appropriate percentage of revenues
for the last three years:
PERCENTAGE OF REVENUES
----------------------
1994 1993 1992
---- ---- ----
Refined Products:
Gasoline...................................................... 29% 34% 37%
Distillates................................................... 20% 23% 22%
Petrochemicals and Plastics..................................... 28% 21% 21%
Natural Gas..................................................... 14% 13% 10%
Additional segment data is shown in Note 12 "Segment Data" to consolidated
financial statements on pages 30 and 31 herein.
Sufficient raw material is available in the foreseeable future for
supplying the needs of the various manufacturing units of the Company, although
political situations in the important oil producing nations can aggravate the
supply situation in the United States where imports of oil are necessary to meet
demand.
The Company licenses its patented chemical processes throughout the world,
but the net earnings derived from licensing were not material to the
consolidated results of operations in 1994, 1993 and 1992.
The business of the Company cannot be considered seasonal and is sensitive
to crude oil and natural gas pricing, margins between crude oil and refined
products and chemicals margins. There are, however, fluctuations, such as
increased demand for gasoline during summer months. Inflation increases the
costs of labor and supplies and increases costs of acquiring and replacing
property, plant and equipment.
Inventories of refined products fluctuate and crude oil inventories vary
according to the overall supply picture and in anticipation of price increases
or decreases. Payments for crude oil are generally expected by the 20th day of
the month following the month in which the crude oil was delivered. Payments for
refined products are generally expected within 10 days of billing. Payments for
chemicals are generally expected within 30 days of billing. Credit is sometimes
extended for a longer period on products when there is a surplus, and in some
cases, credit terms are influenced by credit history and financial stability.
No material part of the business is dependent on a single customer or a few
customers. Most of the Company's customers are located in the South and Midwest
regions of the United States, except with respect to chemicals where customers
are located throughout the United States. No single customer accounted for more
than 5% of the Company's sales in 1994, 1993 or 1992, and no account receivable
from any customer exceeded 5% of the Company's consolidated stockholders' equity
at December 31, 1994, 1993 or 1992.
No material portion of the business is subject to renegotiation of profits
or termination of contracts or subcontracts at the election of the government.
In both the crude oil and natural gas exploration and production and
natural gas marketing segment and the petroleum products refining, supply and
transportation and marketing segment, the principal methods of competition are
price and availability of product. In the petroleum products and chemicals
segments, quality of the product is also a competitive factor.
During 1994, $21.7 million was expended on pollution control and
environmental protection capital projects. It is estimated that environmental
protection facilities will require capital expenditures in 1995 of approximately
$19.3 million companywide. Additionally, during 1994, $51.6 million was charged
to expense relating to various environmental activities.
The number of persons employed on December 31, 1994 was 2,716 full time and
54 part time.
(d) Sales, operating profit (loss), and identifiable assets as of and for
the three years ended December 31, 1994 were substantially all attributable to
domestic operations.
(e) "Executive Officers of the Registrant" are described in Part III, Item
10.
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ITEM 2 PROPERTIES
(a) The Company owns and operates two refineries in Texas. The total raw
materials processed at both refineries averaged 215,000 barrels per day for the
year. The Port Arthur, Texas refinery is located on 1,231 acres in Jefferson
County, Texas and the Big Spring, Texas refinery is located on 1,259 acres in
Howard County, Texas.
In 1990, the plant located in Carville, Louisiana became the largest single
site polystyrene manufacturing plant in the United States and the second largest
in the world with total net capacity of approximately 700 million pounds per
year. The world's largest single production train is installed at the plant. The
Carville, Louisiana plant, and the adjacent styrene monomer plant discussed
below, are located on 358 acres in Iberville Parish, Louisiana.
The Company owns and operates a polypropylene plant at La Porte, Texas on
76.5 acres of land in Harris County, Texas. The throughput capacity is
approximately 960 million pounds per year. The La Porte, Texas, plant is the
third largest single site polypropylene manufacturing facility in the United
States.
Sigma Coatings, which conducted the Company's paint and industrial coatings
business, was sold in 1993 to an affiliate of Petrofina S.A. in an arm's length
transaction. The sales price was $7.8 million plus working capital. No gain or
loss was recorded.
The Company purchased a high density polyethylene plant in 1992. The plant
is located in Harris County, Texas, in the Bayport area. The plant has a
demonstrated capacity of 360 million pounds per year and is situated on 54.7
acres of land.
FOCC operates, for a 50% owned joint venture, a styrene monomer plant
located in Carville, Louisiana. Gross production capacity is 1.9 billion pounds
per year. This plant is the largest single site styrene production facility in
the world.
Through a 26% ownership interest in a joint venture with Hercules,
Incorporated, the Company owned an interest in a paraxylene facility rated at a
600 million pound capacity per year and located in St. Croix, V.I. The plant was
closed by the end of 1992.
A subsidiary of the Company owns a 33% interest in a propylene splitter at
Mont Belview, Texas with an approximate 650 million pounds per year capacity.
Approximately two-thirds of the output is currently supplied as raw material to
the Company's La Porte polypropylene plant.
Over 1,455 miles of crude oil gathering and mainline pipelines are owned
and operated by the Company, together with 372 miles of products pipelines which
are leased. The Company also owns storage terminals and owns and leases rail
tank cars which are used in its distribution systems.
Of the approximately 2,607 branded service stations in the Company's
marketing network, 85 are owned in fee, and 35 are leased.
At the end of 1993, the Company had one 225,000 DWT, 1.5 million barrel
capacity tanker, the T/T Brooklyn under time charter for a remaining period of 5
years. During 1994, the T/T Brooklyn had its long-term lease terminated and the
vessel was re-delivered to its owners. Another vessel, T/T Williamsburgh, had
its long-term lease terminated in 1993, and the vessel was re-delivered to its
owners.
(b) Reserve Quantity information is shown in "Supplemental Oil and Gas Data
(Unaudited)" to consolidated financial statements on pages 34 and 35 herein.
(c) 1. Location of Reserves. The Company's major crude oil reserves are
located in West Texas in the Permian Basin and the Company's major gas reserves
are located in High Island A571 offshore in the Gulf of Mexico, at Mecom and
LaTerre in Louisiana, and in the Texas Rio Grande Valley. All of the Company's
proved oil and gas reserves are located in the United States.
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2. Reserves Reported to Other Agencies
Total proved net oil and gas reserves as of December 31, 1993 were reported
to the Energy Information Agency of the U.S. Department of Energy in May 1994
(EIA-28) in the amounts of 36 million barrels of crude oil and natural gas
liquids and 439 BCF of natural gas.
The reserve estimates reported above do not vary by more than five percent
from the similar amounts reported to the SEC for the same date.
3. Production
FISCAL YEAR
ENDED DECEMBER 31,
------------------------
1994 1993 1992
------ ------ ------
Average Sales Price:
Crude Oil and Condensate ($/Bbl)........................... $14.27 $15.66 $17.67
Natural Gas ($/MCF)........................................ $ 1.85 $ 2.11 $ 1.77
Production (Lifting) Costs, including production severance
taxes ($BOE) (natural gas converted to barrels at 6 MCF to
1 Bbl)..................................................... $ 5.28 $ 5.09 $ 4.42
All of the Company's production is located in the United States. Any
volumes of natural gas liquids resulting from ownership of processing plant
facilities are not significant.
4. Productive Wells and Acreage
As of December 31, 1994:
PRODUCTIVE WELLS
- ------------------------------------------
GROSS NET DEVELOPED ACREAGE
- ---------------- ------------------ ----------------------
OIL GAS OIL GAS GROSS NET
- ------ ---- ------ ------ -------- --------
2,238 448 681.9 207.3 862,309 306,658
5. Undeveloped Lease Acreage
GROSS NET
-------------- --------------
As of December 31, 1994................................ 347,823 acres 189,723 acres
Fee, mineral and royalty acreage was 1,036,342 net acres as of December 31,
1994.
6. Drilling Activity
NET WELLS
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993 1992
----- ----- -----
Exploratory
Productive.............................................. 1.5 6.1 9.0
Dry..................................................... 1.2 5.1 9.4
Development
Productive.............................................. 30.1 18.0 37.3
Dry..................................................... 1.6 3.5 1.7
7. Present Activity as of December 31, 1994
DRILLING WELLS IN PROGRESS
Gross....................................................... 13
Net......................................................... 9.47
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8. At all times the Company has contractual obligations to deliver natural
gas, usually on an "as needed" basis. Therefore, contract quantities are not
fixed and determinable. In May of 1989, the Company began purchasing gas
produced by unaffiliated companies for resale to the Company's customers. During
1994, 247,916 MMCF of gas was purchased and resold from both affiliated and
unaffiliated companies. The Company's obligations to deliver natural gas have
been met.
On December 31, 1994, the Company was obligated to deliver 4,762,562
barrels of crude oil in January 1995, 4,283,372 barrels in February, 2,077,676
barrels in March and 1,014,059 barrels in April. The Company purchases crude oil
either at the lease, on the spot market or on the futures market to fulfill its
commitments. The Company met its contractual obligations to date.
ITEM 3 LEGAL PROCEEDINGS
As of December 31, 1994, neither FINA, Inc. nor any of its subsidiaries was
a party to, nor was any of their property subject to, any uninsured material
pending legal proceedings or claim which exceeds 10% of the current assets.
Management believes that there is no environmental liability pertaining to
proceedings involving a governmental authority in excess of $100,000 which is
reasonably foreseeable in relation to its business activities and operational
permits other than:
1. The United States Environmental Protection Agency ("EPA") is empowered
by the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") to investigate hazardous waste disposal sites and to
remove, or to cause responsible parties to remove, or treat hazardous
substances and to restore the sites to a safe condition. FOCC and
Cos-Mar, for which FOCC acts as operator, have been named as
potentially responsible parties with respect to the Brio site in Harris
County, Texas. FOCC and Cos-Mar, along with other potentially
responsible parties, have signed a consent decree with the EPA,
agreeing to treat or remove certain hazardous substances. FOCC's share
of the cleanup costs, both individually and as 50% owner of Cos-Mar, is
$395,000.
2. FOCC has also been named a potentially responsible party by the State
of New Jersey at the Duane Marine site in Perth Amboy, New Jersey. A
group of potentially responsible parties, including FOCC, have agreed
to conduct an investigation. It is not possible at this time to
estimate the amount of monies for which FOCC will be liable, if any.
3. The EPA has listed the hazardous waste disposal area of a refinery
located in El Dorado, Kansas, as a Superfund site pursuant to CERCLA.
As a former owner of the site, FOCC would be liable for 65% of the
clean-up cost which is currently estimated to be $4,170,000. FOCC
signed a consent order with the State of Kansas and the present owner
of the site. The State of Kansas and the EPA have approved a plan for
cleanup.
4. FOCC's Windsor, New Jersey, plant was closed in 1989. Under New
Jersey's closing law, surface cleanup of the site was conducted at a
cost of $1,000,000. The remaining groundwater cleanup was initiated in
1994 at an estimated total cost of $675,000 and will take a number of
years to complete.
5. FOCC and 8 other potentially responsible parties have been required by
the Texas Natural Resource Conservation Commission (TNRCC) to conduct
an investigation of the closed Col-Tex refinery located near Colorado
City, Texas. For a portion of the site, FOCC has covered pits which
could harm birds, provided fencing around the area, and installed a
hydrocarbon abatement system to stop oil from seeping into the Colorado
River. The other named potentially responsible parties have appealed
the TNRCC's Order regarding remediation to the state district court.
6. A hazardous waste operating permit has been issued to the Big Spring
Refinery. Pursuant to the permit, FOCC initiated interim corrective
action to recover free product from ground water. FOCC is also
obligated to submit a remediation plan.
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7. FOCC is engaged in several underground storage tank (UST) removal and
remediation activities in several states. These activities are conducted
pursuant to applicable state regulations, and a substantial portion of
costs are reimbursable from various state UST remediation funds.
Environmental contingencies and the Company's policy regarding
environmental costs are discussed in Note 11 to the consolidated financial
statements, on page 29. A reserve has been established in accordance with the
policy. Although the level of future expenditures for environmental matters,
including clean-up obligations, is impossible to determine with any degree of
certainty, it is management's opinion that the costs, although potentially
significant to any one accounting period, when finally determined will not have
a material adverse effect on the consolidated financial position or liquidity of
the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the Company's fiscal year ended December 31, 1994.
PART II
ITEM 5 MARKET FOR THE REGISTRANTS' COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Class A Common Stock of the Company is traded on the American Stock
Exchange under the symbol FI. On January 27, 1995, there were 14,594,902 Class A
Common Shares outstanding and 2,651 holders of the shares.
COMMON STOCK MARKET PRICES BY QUARTER AND DIVIDEND PAID PER QUARTER
1994 1993
---------------------------- ----------------------------------
DIVIDEND DIVIDEND
HIGH LOW PAID HIGH LOW PAID
----- ----- -------- -------- -------- --------
1st Quarter........................... $71 3/4 $67 1/2 $ .80 $67 3/4 60 1/2 $.80
2nd Quarter........................... 76 5/8 69 1/2 .80 67 1/4 60 1/4 .80
3rd Quarter........................... 79 3/4 75 1/4 1.00 69 3/4 60 1/2 .80
4th Quarter........................... 76 1/2 64 1.00 71 68 1/2 .80
The Stock Transfer Agent and Registrar of Stock is First Chicago Trust
Company of New York, P.O. Box 2500, Jersey City, New Jersey 07303-2500.
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ITEM 6 SELECTED FINANCIAL DATA
FINA, INC. AND SUBSIDIARIES
SUMMARY OF FINANCIAL AND OPERATING DATA
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FINANCIAL
Sales and other operating revenues..................... $3,421,112 $3,416,223 $3,397,523 $3,336,353 $3,978,202
Depreciation, depletion, amortization, and lease
impairment........................................... 185,961 198,341 194,804 190,947 176,097
Net earnings:
Earnings before cumulative effect of accounting
change............................................. 102,041 70,353 24,138 42,008 125,543
Cumulative effect of accounting change(1)............ -- -- (34,320) -- --
Net earnings (loss).................................. 102,041 70,353 (10,182) 42,008 125,543
Earnings per common share:
Earnings before cumulative effect of accounting
change............................................. 6.54 4.51 1.55 2.71 8.11
Cumulative effect of accounting change(1)............ -- -- (2.20) -- --
Net earnings (loss).................................. 6.54 4.51 (.65) 2.71 8.11
Capital expenditures................................... 136,381 125,472 211,442 296,590 333,861
Long-term debt......................................... 531,162 740,058 890,389 840,464 740,966
Total long-term obligations............................ 532,148 766,476 950,960 911,521 816,221
Total assets........................................... 2,493,862 2,511,353 2,924,475 2,916,341 2,879,380
Stockholders' equity................................... 1,144,807 1,098,827 1,076,966 1,135,923 1,140,529
Cash dividends per share............................... 3.60 3.20 3.20 3.20 3.20
Average shares outstanding............................. 15,595 15,590 15,563 15,530 15,480
OPERATIONS
Crude oil, condensate, and natural gas liquids produced
(in thousands of net barrels)........................ 4,556 5,905 7,164 7,681 8,211
Natural gas produced (in millions of cubic feet)....... 52,864 67,924 75,589 74,359 74,843
Natural gas sold (in millions of cubic feet)........... 259,515 204,449 178,712 131,978 106,721
Total refinery throughput (barrels per day)............ 215,000 198,000 187,000 175,000 175,000
Major petrochemicals and plastics sold (millions of
pounds).............................................. 3,200 3,000 2,700 2,500 2,300
Company-branded service stations....................... 2,607 2,675 2,644 2,919 3,136
Undeveloped leasehold acreage (net).................... 189,723 203,734 257,836 311,382 261,093
Fee, mineral, and royalty acreage (net)................ 1,036,342 1,045,108 1,056,963 1,052,984 1,044,322
Employees (year-end)................................... 2,770 3,224 3,369 3,665 3,997
- ---------------
(1) Cumulative effect to January 1, 1992 of change in accounting for
postretirement benefits other than pensions.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
DISCUSSION OF FINANCIAL INFORMATION
Fina's net income for 1994 was $102 million compared to $70 million in 1993
and $24 million in 1992 (before cumulative effect of accounting change). Net
income for 1994 includes $13 million of gain from sale of assets and $33 million
of inventory gains, after-tax, related to improved crude, product and chemical
prices since the beginning of the year. These gains were partially offset by a
$30 million after-tax charge for establishment of reserves for various
contingencies including $12.8 million after-tax for future environmental
remediation projects.
Net income for 1993 included a $75 million after-tax gain from sale of
assets and a $33 million after-tax charge to state inventories at the lower of
LIFO cost or market.
The net loss for 1992 includes an after-tax charge of $34.3 million from
adoption of Financial Accounting Standards Board Statement No. 106, which
relates to employee post-retirement benefits other than pensions.
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Earnings per common share in 1994 were $6.54 compared to $4.51 in 1993 and
a net loss in 1992 of $.65 per share ($1.55 per share net earnings before
cumulative effect of accounting change). The Company paid total dividends of
$3.60 per share in 1994 and $3.20 per share in 1993 and 1992.
Sales and other operating revenues for 1994 at $3.4 billion were
essentially unchanged from 1993 and 1992, with higher chemical prices and
volumes offsetting lower petroleum and natural gas prices and volumes. The
increase in 1992 over 1991 of $100 million was a result of higher volumes and
natural gas prices offsetting lower petroleum and chemical prices.
Total assets in 1994 and 1993 remained constant at $2.5 billion. Total
assets decreased by $413 million in 1993 from 1992. The decrease in 1993 was
principally due to price and volume related inventory declines, depreciation,
depletion and amortization in excess of capital expenditures and a decrease in
receivables. Book value of assets sold, excluding receivables, was $58.4 million
in 1993.
Cost of raw materials and products purchased and direct operating expenses
as a percent of sales and other operating revenues were relatively constant for
1994, 1993 and 1992.
Selling, general and administrative expenses have decreased over the three
year period because of a cost reduction program.
Interest expense decreased from 1992 to 1993 and again in 1994 primarily
because of decreased debt levels and lower interest rates on floating interest
rate debt in 1993 and 1994.
Interest and other income for 1993 includes $106.6 million from gain on
sale of assets, including $101.8 million from exploration and production related
properties.
Long-term obligations less current installments were $532 million at the
end of 1994, compared to $766 million in 1993 and $951 million in 1992. Total
debt was $650 million at year-end 1994, compared to $811 million at year-end
1993 and $1.215 billion at year-end 1992. The principal paydown was primarily
from operating income, working capital reductions, and the proceeds from asset
sales, as part of the plan to reduce debt. The increase in total debt in 1992
was due primarily to the large capital expenditure associated with the
acquisition of the HDPE plant described herein under the subheading "Chemicals"
and to expenditures to upgrade the Port Arthur, Texas Refinery.
Stockholders' equity was $1.145 billion, or $73.41 per common share, in
1994 compared to $1.099 billion, or $70.47 per common share, in 1993 and $1.077
billion, or $69.16 per common share, in 1992. The increase in stockholders'
equity in 1994 and 1993 was attributable to net income after annual dividends of
$3.60 per share in 1994 and $3.20 per share in 1993.
Crude oil and refined products and chemicals are priced at the lower of
cost (last-in, first-out, "LIFO") or market on an aggregate basis. Materials and
supplies are priced at average cost, not in excess of market; in the case of
material salvaged, an allowance is made for obsolescence and depreciation.
Because of a significant decline in the price of crude oil and refined products,
the Company recorded a valuation reserve in 1993 of $47,048,000 pre-tax to
reduce the LIFO cost of inventory to net realizable value. The price of crude
oil, petroleum products and chemicals increased in 1994 allowing restoration
through income of the full amount of the reserve established in 1993. The excess
of replacement cost of crude oil and refined products and chemicals over LIFO
cost at December 31, 1994 was approximately $8.4 million.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other than Pensions" (Statement 106), which establishes a new accounting
principle for the cost of retiree health care and other postretirement benefits.
Prior to 1992, the Company recognized these benefits on the pay-as-you-go basis.
The effect of adopting Statement 106 for the year ended December 31, 1992 was to
increase net periodic postretirement benefits costs by $1,500,000 ($.10 per
share), decrease earnings before cumulative effect of accounting change by
$990,000 ($.06 per share) and increase net loss by $35,310,000 ($2.26 per
share).
The impact of the various lines of business on the financial position and
results of operations is discussed in the following text under appropriate
operating unit subheadings.
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Exploration and Production and Natural Gas Marketing
Revenues and earnings (loss) before interest and income tax were $549.2
million and ($3.4 million), $519.8 million and $121.1 million and $456.9 million
and $51.1 million for 1994, 1993 and 1992, respectively.
Exploration and production earnings before interest and taxes decreased
$124.5 million from 1993 including an $89 million decrease in gain from asset
sales. Asset sales gains were $12.7 million in 1994 and $101.8 million in 1993.
The remainder of the decrease was because of lower oil and gas prices and
volumes partially offset by lower operating costs.
Average crude oil, condensate and natural gas liquids production was 12,500
barrels per day, a decline from 16,200 barrels in 1993 because of natural
declines, divestitures and limited drilling. Natural gas production in 1994 was
145 MMCF per day and 186 MMCF per day in 1993. Natural gas wellhead sales
volumes declined due to asset sales and mild winter weather.
Average wellhead prices for crude fell $1.39 per barrel to $14.27 in 1994.
Average wellhead prices for natural gas were $1.85 per MCF in 1994 down from
$2.11 per MCF in 1993.
The drilling program for 1994 got off to a slow start with significant
resources devoted to the sale of lower value properties and geographic
consolidation, a strategy initiated in 1993. Reserve additions were 7.5 million
barrels oil equivalent. Total reserves fell 18% after production of 13.4 million
barrels oil equivalent. Divestitures accounted for 49% of the decline. Finding
and development costs in 1994 were $5.71 per barrel oil equivalent compared to
$5.74 in 1993 and $3.90 in 1992. Lifting costs, at $5.28 per barrel oil
equivalent was up from $5.09 in 1993.
The Company participated in 3 net exploratory wells, compared to 11 in 1993
and 18 in 1992. The success rate was 56% compared to 54% in 1993 and 50% in
1992.
Natural Gas Marketing in 1994 increased sales 27% compared to 1993. Sales
volume was 711 million cubic feet per day. Income from gas trading increased
11%. This was accomplished with no increase in per-unit marketing costs.
Overall, gas marketing activities added 17 cents per thousand cubic feet to the
value of the Company's natural gas production.
Refining, Marketing, Supply & Transportation
Revenues and earnings (loss) before interest and income tax were $2.0
billion and $47.2 million, $2.1 billion and ($8.3 million), and $2.2 billion and
($61.4 million) for 1994, 1993 and 1992, respectively.
The earnings for 1994 include $25.4 million of inventory gains from the
reversal of a 1993 valuation reserve due to price increases of crude oil and
petroleum products since the beginning of the year and a $6.2 million gain from
the sale of the Company's retail operations in the Minneapolis/St. Paul area.
Offsetting these gains were $29.4 million of established reserves including
$18.7 for future environmental remediation. Sale of the Minneapolis/St. Paul
area retail operation will allow increased focus on a single Dallas/Fort Worth
area retail operations.
During 1994, the Downstream was reorganized into two geographic Business
Units which contributed to improved results. The business unit structure
improved communications and teamwork across business lines and increased focus
on key elements of the business, while facilitating better productivity and
lower cost of operations. This reorganization is expected to provide further
benefits in 1995. Record-setting refinery operations and greater productivity
contributed to the improved earnings, even in a persistently difficult industry
business environment characterized by low refining margins.
Refining margins were disappointing, specifically the fuels margin.
Industry fuels margins were only 7 cents per barrel better than 1993, which was
a very low year, and were 50 cents per barrel below the historical five-year
average. Aromatics margins were strong, about 65 cents per barrel above 1993.
This was especially helpful at the Port Arthur refinery where the Company is
among the industry leaders in aromatics production compared to crude throughput.
Margins at the Big Spring refinery were improved from 1993 primarily because
9
12
of improved yields. Overall, poor industry margins continued to negatively
affect earnings and mask significant improvements in refining operations.
Refinery operations were excellent in 1994 with a new record throughput of
215,000 barrels per day. Yields were substantially improved over 1993 with
throughput records set in numerous units, including the catalytic cracking
units, reformers and hydrotreaters. Both refineries have turnaround activity
scheduled for 1995 in the reforming areas.
Chemicals
Revenues and earnings before interest and income taxes were $890.3 million
and $164.4 million, $794.8 million and $53.7 million, and $729.7 million and
$102.8 million for 1994, 1993 and 1992, respectively. Earnings for 1994 include
an inventory gain from the reversal of a 1993 valuation reserve of $16 million
from price recovery since the first of the year.
Chemicals was the largest contributor to earnings, as demands and margins
for the Company's products continued to increase. With all plants operating at
maximum capacity, total demand for some products could not be met.
As with the Downstream, the Chemicals segment was reorganized into business
units of Styrenics, Polypropylene and Polyethylene. The business units, which
facilitated enhanced teamwork and focus, were particularly important at a time
when demands grew rapidly, resulting in critically low inventories and the need
for close and effective coordination between plant and sales personnel. The
benefits were apparent in more optimized plant scheduling and in helping manage
customer relations as on-time deliveries became more difficult.
Industry margins growth exceeded expectations reflecting strong product
demand growth and increased capacity utilization. Industry demands for
polypropylene, polystyrene, and HDPE resulted in industry capacity utilization
levels in the 90-95% range. Margins for all products improved as the year
progressed in spite of rapidly increasing raw material costs. Petrochemical
demand and prices are expected to remain strong through 1995.
Total chemicals sales growth continued in 1994 with volumes up 7 percent
compared to 1993. Total production and sales volumes were 3.1 billion pounds in
1994 compared to 3.0 billion pounds in 1993 and 2.7 billion pounds in 1992.
Early in 1995, plans were announced for debottlenecking the polystyrene
plant in Carville, Louisiana. The first quarter 1995 project will increase
capacity on all production lines, and will increase annual polystyrene capacity
by 45 million pounds, to 775 million pounds. FINA also will build a new 250
million pound crystal polystyrene production line utilizing proprietary
technology at the Carville site. It will commence operations in the third
quarter of 1996 and will increase total polystyrene capacity to 1.025 billion
pounds per year, making the Carville plant the largest single site polystyrene
facility in the world.
An expansion at the LaPorte polypropylene plant to increase capacity by 400
million pounds per year is scheduled for completion in the fourth quarter of
1995. After completion, at a capacity of 1.4 billion pounds per year, it will be
the largest polypropylene plant in the world.
Sigma Coatings, a manufacturer of paint and industrial coatings was sold in
1993 to an affiliate of Petrofina S.A. for $7.8 million plus working capital. No
gain or loss was recorded.
ENVIRONMENTAL MATTERS
The Company is subject to extensive federal, state and local environmental
laws and regulations, including the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund), the Resource Conservation
and Recovery Act (RCRA), the Clean Water Act and the Clean Air Act. These
regulations, which are constantly changing, regulate the discharge of materials
into the environment and may require the Company to remove or mitigate the
environmental effects of the disposal or
10
13
release of petroleum or chemical substances at various sites, including
Superfund sites, service stations, terminals and other operating or inactive
facilities.
Environmental expenditures are expensed or capitalized depending on their
future economic benefit. Expenditures that relate to an existing condition
caused by past operations and that have no future economic benefits are
expensed. Liabilities for expenditures of a non-capital nature are recorded when
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated.
In 1994, the Company spent approximately $21.7 million in capital
expenditures for environmental protection and for compliance with federal, state
and local environmental laws and regulations. Environmental costs charged to
expense in 1994 were $51.6 million. Costs charged to operating expense include
ongoing administration and maintenance activities at operating facilities, and
reserves associated with site remediation at current operating facilities,
former operating facilities, and off-premises waste disposal sites.
Total environmental cash expenditures at the Company's operating locations
are expected to increase over the next several years as the Company complies
with present and future regulatory requirements. These costs are likely to be
substantial, and will be incurred over an extended period of time. Estimated
capital expenditures for 1995 related to environmental matters are $19.3
million.
The Company has been advised it may be a Potentially Responsible Party
(PRP) at 19 Federal Superfund sites and one state Superfund site. Due to the
number of PRPs involved at most sites, the number of possible remedial
solutions, the number of years of remedial activity required, and the
evolutionary nature of the technology involved, the Company is unable to assess
and quantify the extent of its responsibilities at the majority of the sites.
The Company and Cos-Mar, a joint venture for which the Company acts as
operator, have been named as potentially responsible parties for a Superfund
site, the Brio site, in Harris County, Texas. The Company and Cos-Mar, along
with other potentially responsible parties, have signed a consent decree with
the EPA, agreeing to treat or remove certain hazardous substances. FOCC's share
of the cleanup costs, both individually and as 50% owner of Cos-Mar, is
$395,000.
The EPA has listed the hazardous waste disposal area of a refinery located
in El Dorado, Kansas, as a Superfund site. As a former owner of the site, the
Company would be liable for 65% of the clean-up cost which is currently
estimated to be $4,170,000. The Company signed a consent order with the State of
Kansas and the present owner of the site which recommends cleanup alternatives.
The State of Kansas and the EPA have approved a clean-up plan for surface
impoundments at the site and remediation began in late 1994.
In response to an Administrative Order from the Texas Natural Resources
Conservation Commission to 9 PRPs, the Company agreed to conduct an
investigation of a closed refinery located near Colorado City, Texas. The other
named PRP's have appealed the order. A comprehensive investigation of the site
is now underway. The Company also operates a hydrocarbon abatement system, which
captures contaminated groundwater before it reaches the Colorado River.
A hazardous waste operating permit issued to the Big Spring refinery
requires an investigation of the sources of soil and groundwater contamination
at the site. An environmental assessment of inactive waste management units is
ongoing, and widespread on site and off site groundwater contamination has been
confirmed. The Company has taken action to define the extent of contamination
and has initiated interim groundwater recovery. The design of a full-scale
groundwater collection and treatment system is nearing completion.
11
14
Discussions are also ongoing with governmental agencies regarding the scope
of investigation and remediation activities at operating and inactive locations.
Although the level of future expenditures for environmental matters, including
cleanup obligations, is impossible to determine with any degree of certainty, it
is management's opinion that the costs, although potentially significant to any
one accounting period, when finally determined will not have a materially
adverse effect on the financial position or liquidity of the Company.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash liquidity requirements for working capital, capital
expenditures, acquisitions and debt reductions over the past three years were
financed primarily by a combination of funds generated from operations,
borrowings and dispositions of assets.
The Company had working capital of $115.7 million at December 31, 1994 and
$164.9 million at December 31, 1993. Excluding short term obligations and the
current portion of total debt, working capital increased from 1993 by $24.5
million.
Cash flow from operations was $275.4 million in 1994, $378.3 million in
1993 and $119.3 million in 1992. The 1994 cash flow from operations decreased
primarily because of an increase in inventories and accounts receivable. The
1993 cash flow from operations increased primarily because of substantial
decreases in inventories, and accounts receivable, including an $80 million sale
of accounts receivable during 1993. Cash flow in 1992 decreased because of lower
earnings and changes in various working capital components.
During 1994, the Company furthered its debt reduction plan and, as a
result, total debt at year-end 1994 was reduced to $650 million from a level of
$1.24 billion during the first quarter of 1993. Debt was reduced primarily with
proceeds from the sale of assets and funds from operations. The majority
stockholder of the Company has not been the principal lender in the past two
fiscal years.
In 1993, the Company entered into long-term note agreements with certain
insurance companies that provided for unsecured borrowings aggregating $275
million under Series A, Series B, and Series C Senior Notes. Proceeds from these
notes were used to repay other debt.
The Company had an unsecured revolving credit facility with a group of
banks in the amount of $450 million at December 31, 1993. Under the facility,
the Company has available credit in an amended amount of $400 million through
May 2000. No borrowings were outstanding under this facility at December 31,
1994.
The Company paid dividends of $3.60 per share in 1994 and $3.20 per share
in 1993 and 1992.
The Company believes that cash provided by operations, together with
borrowings available under the revolving credit facility with banks, will be
sufficient to fund the Company's working capital requirements, capital
expenditures, principal, interest and dividends.
Capital Expenditures
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
Exploration, Production and Natural Gas............ $ 49,299 $ 30,665 $ 61,885
Refining, Marketing, and Supply and
Transportation................................... 48,817 86,233 77,711
Chemicals.......................................... 33,579 7,226 69,183(1)
Corporate and Other................................ 4,686 1,348 2,663
-------- -------- --------
Total.................................... $136,381 $125,472 $211,442
- ---------------
(1) Includes a $32 million non-cash item.
1994 capital expenditures were 9% above 1993. Projected capital
expenditures in 1995 are $215 million.
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IMPACT OF INFLATION AND CHANGING PRICES
The business of the Company is not seasonal but is sensitive to crude oil
and natural gas pricing, margins between crude oil and refined products, and
chemical margins. Inflation impacts the Company by increasing costs of labor and
supplies, and increasing costs of acquiring and replacing property, plant and
equipment. The replacement cost of property, plant and equipment is generally
greater than the historical cost as a result of inflation.
Market conditions continue to be the primary factor in determining the
prices and costs of Company products.
MANAGEMENT RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS
The management of FINA, Inc. is responsible for the financial information
and representations contained in the Consolidated Financial Statements and other
sections of this Annual Report on Form 10-K. The Company believes that the
financial statements fairly reflect the substance of its transactions and
present its consolidated financial position and results of operations in
conformity with generally accepted accounting principles. In preparing the
Consolidated Financial Statements, the Company is required to include amounts
that are based on estimates and judgments which the Company believes are
reasonable under the circumstances.
The Company has developed and maintains a system of internal accounting
controls designed to provide reasonable assurance that assets are safeguarded
from loss or unauthorized use and that transactions are properly recorded. In
establishing and maintaining internal controls, management must exercise
judgment in determining that the cost of such controls does not exceed the
benefits to be derived.
The Board of Directors exercises its oversight role for the Consolidated
Financial Statements through its Audit Committee, which is composed solely of
directors who are not officers or employees of the Company. The Audit Committee
meets with Company management, internal auditors, and the independent auditors
to review the audit scope and any recommendations for improvements in the
Company's internal accounting controls. The independent auditors are engaged to
provide an objective, independent view of the fairness of reported operating
results and financial condition.
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ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINA, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
PAGE
----
Independent Auditors' Report.......................................................... 15
Consolidated Balance Sheets -- December 31, 1994 and 1993............................. 16
Consolidated Statements of Operations -- Three years ended December 31, 1994.......... 17
Consolidated Statements of Stockholders' Equity -- Three years ended December 31,
1994................................................................................ 18
Consolidated Statements of Cash Flows -- Three years ended December 31, 1994.......... 19
Notes to Consolidated Financial Statements............................................ 20
Schedule VIII -- Consolidated Valuation and Qualifying Accounts -- Three years ended
December 31, 1994................................................................... 36
All other schedules are omitted as the required information is inapplicable
or presented in the consolidated financial statements or related notes.
14
17
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
FINA, Inc.:
We have audited the consolidated financial statements of FINA, Inc. and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the consolidated
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FINA, Inc.
and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles. Also, in our opinion, the related consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in note 7 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" in 1992.
KPMG Peat Marwick LLP
Dallas, Texas
January 27, 1995
15
18
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
1994 1993
---------- ----------
Current assets:
Cash and cash equivalents......................................... $ 3,533 $ 3,276
Accounts and notes receivable, less allowance for doubtful
receivables of $7,201 in 1994 and $6,685 in 1993............... 365,614 293,269
Inventories....................................................... 286,538 264,536
Deferred Federal income taxes..................................... 21,381 34,272
Prepaid expenses and other current assets......................... 9,013 10,960
---------- ----------
Total current assets...................................... 686,079 606,313
---------- ----------
Investments in and advances to affiliates........................... 16,754 30,292
Net property, plant and equipment, at cost (successful efforts
method for oil and gas properties)................................ 1,691,062 1,792,718
Deferred charges and other assets, at cost less applicable
amortization...................................................... 99,967 82,030
---------- ----------
$2,493,862 $2,511,353
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations............................................ $ 57,000 $ 33,000
Current installments of long term debt and lease obligations...... 61,014 11,256
Accounts payable.................................................. 352,123 303,186
Accrued liabilities............................................... 100,264 93,966
---------- ----------
Total current liabilities................................. 570,401 441,408
---------- ----------
Long term debt, excluding current installments...................... 531,162 740,058
Lease obligations, excluding current installments................... 986 26,418
Deferred Federal income taxes....................................... 159,704 148,380
Other deferred credits and liabilities.............................. 86,802 56,262
Stockholders' equity:
Preferred stock of $1 par value. Authorized 4,000,000 shares; none
issued......................................................... -- --
Class A common stock of $1 par value. Authorized 19,000,000
shares; issued 14,594,702 shares in 1994 and 14,593,502 shares
in 1993........................................................ 14,595 14,594
Class B common stock of $1 par value. Authorized and issued
1,000,000 shares............................................... 1,000 1,000
Additional paid-in capital.......................................... 450,029 449,952
Retained earnings................................................... 679,183 633,281
---------- ----------
Total stockholders' equity................................ 1,144,807 1,098,827
---------- ----------
Commitments and contingencies
$2,493,862 $2,511,353
========= =========
See accompanying notes to consolidated financial statements.
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FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1994 1993 1992
---------- ---------- ----------
Revenues:
Sales and other operating revenues...................... $3,421,112 $3,416,223 $3,397,523
Interest and other income, net.......................... 15,987 103,605 18,790
---------- ---------- ----------
3,437,099 3,519,828 3,416,313
---------- ---------- ----------
Costs and expenses:
Cost of raw materials and products purchased............ 2,525,139 2,637,843 2,619,541
Direct operating expenses............................... 398,269 375,879 370,011
Selling, general and administrative expenses............ 78,054 88,749 90,721
Taxes, other than on income............................. 44,562 52,101 53,818
Dry holes and abandonments.............................. 8,156 15,844 8,248
Depreciation, depletion, amortization and lease
impairment........................................... 185,961 198,341 194,804
Interest................................................ 47,023 58,190 61,762
Less interest capitalized............................... (2,422) (3,234) (2,702)
---------- ---------- ----------
3,284,742 3,423,713 3,396,203
---------- ---------- ----------
Earnings before income taxes and cumulative
effect of accounting change................... 152,357 96,115 20,110
---------- ---------- ----------
Income taxes:
Current:
Federal.............................................. 23,351 28,807 (1,926)
State................................................ 2,750 1,600 453
Deferred -- Federal..................................... 24,215 (4,645) (2,555)
---------- ---------- ----------
50,316 25,762 (4,028)
---------- ---------- ----------
Earnings before cumulative effect of accounting
change........................................ 102,041 70,353 24,138
Cumulative effect to January 1, 1992 of change in
accounting for postretirement benefits other than
pensions, net of income tax benefit of $17,680.......... -- -- (34,320)
---------- ---------- ----------
Net earnings (loss)............................. $ 102,041 $ 70,353 $ (10,182)
========= ========= =========
Earnings (loss) per common share:
Earnings before cumulative effect of accounting
change............................................... $ 6.54 $ 4.51 $ 1.55
Cumulative effect of accounting change.................. -- -- (2.20)
---------- ---------- ----------
Net earnings (loss)............................. $ 6.54 $ 4.51 $ (.65)
========= ========= =========
See accompanying notes to consolidated financial statements.
17
20
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
COMMON STOCK
----------------- ADDITIONAL TOTAL
PREFERRED CLASS PAID-IN RETAINED STOCKHOLDERS'
STOCK CLASS A B CAPITAL EARNINGS EQUITY
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1991.... $ -- $14,555 $1,000 $ 447,566 $672,802 $1,135,923
Shares issued in connection with
employee benefit plans, 16,199
shares........................ -- 17 -- 1,010 -- 1,027
Net loss........................ -- -- -- -- (10,182) (10,182)
Dividends paid, $3.20 per
share......................... -- -- -- -- (49,802) (49,802)
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1992.... -- 14,572 1,000 448,576 612,818 1,076,966
Shares issued in connection with
employee benefit plans, 21,705
shares........................ -- 22 -- 1,376 -- 1,398
Net earnings.................... -- -- -- -- 70,353 70,353
Dividends paid, $3.20 per
share......................... -- -- -- -- (49,890) (49,890)
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1993.... -- 14,594 1,000 449,952 633,281 1,098,827
Shares issued in connection with
employee benefit plans, 1,200
shares........................ -- 1 -- 77 -- 78
Net earnings.................... -- -- -- -- 102,041 102,041
Dividends paid $3.60 per
share......................... -- -- -- -- (56,139) (56,139)
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1994.... $ -- $14,595 $1,000 $ 450,029 $679,183 $1,144,807
======= ======= ====== ======== ======== ============
See accompanying notes to consolidated financial statements.
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21
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS)
1994 1993 1992
--------- ----------- ---------
Cash flows from operating activities:
Net earnings (loss)................................... $ 102,041 $ 70,353 $ (10,182)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Cumulative effect of accounting change, before
tax.............................................. -- -- 52,000
Depreciation, depletion, amortization, lease
impairment and abandonments...................... 190,044 210,055 197,299
Net equity in losses of affiliates................. 6,269 5,504 6,079
Gain on sale of assets............................. (18,768) (106,603) (18,814)
Changes in assets and liabilities:
Accounts and notes receivable.................... (72,345) 148,241 18,670
Inventories...................................... (22,002) 102,982 (41,309)
Prepaid expenses and other current assets........ 1,947 4,539 (384)
Accounts payable and accrued liabilities......... 55,235 (43,408) (48,337)
Current and deferred income taxes................ 24,215 (4,645) (20,235)
Other............................................ 8,741 (8,728) (15,522)
--------- ----------- ---------
Net cash provided by operating activities..... 275,377 378,290 119,265
--------- ----------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment............ (133,928) (121,899) (179,442)
Proceeds from sales of assets......................... 68,170 165,288 6,586
Proceeds from sale of notes receivable................ -- 34,337 --
Investments in and advances to affiliates............. (3,430) (6,369) (3,253)
Dividends received in excess of equity in earnings
of affiliates...................................... 10,699 1,261 5,520
--------- ----------- ---------
Net cash provided by (used in) investing
activities.................................. (58,489) 72,618 (170,589)
--------- ----------- ---------
Cash flows from financing activities:
Additions to long term debt and lease obligations..... 52,040 1,018,781 400,177
Payments of long term debt and lease obligations...... (236,610) (1,352,750) (210,051)
Net change in short term obligations.................. 24,000 (70,000) (88,000)
Issuance of common stock.............................. 78 1,398 1,027
Dividends paid........................................ (56,139) (49,890) (49,802)
--------- ----------- ---------
Net cash provided by (used in) financing
activities.................................. (216,631) (452,461) 53,351
--------- ----------- ---------
Net increase (decrease) in cash and cash equivalents.... 257 (1,553) 2,027
Cash and cash equivalents at beginning of year.......... 3,276 4,829 2,802
--------- ----------- ---------
Cash and cash equivalents at end of year................ $ 3,533 $ 3,276 $ 4,829
========= =========== =========
See accompanying notes to consolidated financial statements.
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FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) GENERAL
FINA, Inc. and subsidiaries (the Company) is engaged in crude oil and
natural gas exploration and production and natural gas marketing; petroleum
products refining, supply and transportation and marketing; and chemicals
manufacturing and marketing. Most of the Company's customers are located in the
United States. Raw materials are readily available and the Company is not
dependent upon a single supplier or a few suppliers.
Class A and Class B common stock are identical in all respects except Class
B stockholders elect one more than a majority of the members of the Board of
Directors of the Company. Class A stockholders are entitled to elect the
remaining members of the Board of Directors. Petrofina Delaware, Incorporated
(PDI) owns 100% of the Class B common stock and approximately 85% of the Class A
common stock. Petrofina S.A. (Petrofina), a Belgian publicly-held corporation,
owns 100% of American Petrofina Holding Company which owns 75% of the stock of
PDI. The remaining 25% of PDI's stock is owned by Petrofina.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its significant subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
(C) STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, all certificates of deposit and short
term highly liquid debt instruments, such as U.S. Treasury bills and notes, with
original maturities of three months or less are considered cash equivalents.
The indirect method is used to present cash flows from operating
activities. Additional cash flow information follows:
1994 1993 1992
-------- -------- -------
(IN THOUSANDS)
Interest paid, net of amounts capitalized............... $ 44,807 $ 52,101 $66,730
======= ======= =======
Income taxes paid, net of refunds received.............. $ 33,001 $ 14,344 $(8,124)
======= ======= =======
Capital lease obligations of $27,548,000 in 1994 and $26,501,000 in 1993
were converted into debt as a result of termination of time charters relating to
tankers.
In connection with the exchange discussed in note 6, the Company
transferred nonmonetary assets with an estimated fair value of $32,000,000 in
1992.
(D) INVESTMENTS IN AFFILIATES
Investments in affiliates in which the Company owns between 20% and 50% of
the voting stock are carried at amortized cost adjusted for changes in equity
since acquisition.
(E) INVENTORIES
Crude oil and refined products and chemicals are priced at the lower of
cost (last-in, first-out) (LIFO) or market on an aggregate basis. Materials and
supplies are priced at average cost, not in excess of market; in the case of
material salvaged, an allowance is made for obsolescence and depreciation.
Because of price declines in crude oil and refined products in 1993, a valuation
reserve of $47,048,000 was established to reduce the LIFO cost of inventory to
net realizable value. As prices increased in 1994 the valuation reserve was
eliminated. The
20
23
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
excess of replacement cost of crude oil and refined products and chemicals over
LIFO cost was $8,262,000 at December 31, 1994.
During 1994, certain inventory quantities were reduced, resulting in
liquidations of LIFO inventory which decreased pretax earnings by approximately
$5,600,000.
A summary of inventories follows:
DECEMBER 31
---------------------------------
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS)
Crude oil and refined products and chemicals......... $ 250,808 $ 225,286 $ 326,225
Materials and supplies............................... 35,730 39,250 41,293
--------- --------- ---------
$ 286,538 $ 264,536 $ 367,518
========= ========= =========
(F) PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties are accounted for in accordance with Statement of
Financial Accounting Standards No. 19. Costs to acquire mineral interests in oil
and gas properties, to drill exploratory wells that find proved reserves and to
drill and equip development wells are capitalized. Geological and geophysical
costs and costs to drill exploratory wells that do not find proved reserves are
expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value and, if necessary, a loss is
recognized by providing an impairment allowance. The remaining unproved oil and
gas properties are aggregated and an overall impairment allowance is provided
based on prior experience. Capitalized costs of proved oil and gas properties
are depreciated and depleted by the unit-of-production method based on proved
oil and gas reserves estimated by Company engineers.
Substantially all other property, plant and equipment is depreciated by the
straight-line method at rates based on the estimated useful lives of the classes
of property.
Interest is capitalized as a component of the cost of construction and
development projects in progress.
Repairs and maintenance are charged to earnings as incurred. Renewals and
betterments are capitalized. When assets are sold, retired or otherwise disposed
of, the applicable costs and reserves are removed from the accounts and the
resulting gain or loss is recognized.
(G) RESEARCH AND DEVELOPMENT
Research and development costs, which are expensed as incurred, amounted to
$12,932,000 in 1994, $12,233,000 in 1993 and $11,298,000 in 1992.
(H) INCOME TAXES
The Company files a consolidated Federal income tax return with PDI and its
affiliates. Under the terms of the tax sharing agreement with PDI, the Company
is allocated Federal income taxes on a separate return basis.
Effective January 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109 (Statement 109), "Accounting for
Income Taxes." The effect of adopting Statement 109 was not material.
21
24
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(I) EARNINGS PER COMMON SHARE
Earnings per common share is based on the weighted average number of
outstanding shares. Shares issuable upon the exercise of stock options are
excluded from the computation since their effect is insignificant.
(J) FINANCIAL INSTRUMENTS
Interest rate swap agreements are used to help manage interest rate
exposure. The differential to be paid or received under these agreements is
accrued as interest rates change and is recognized over the life of the
agreements.
The Company uses futures contracts and forward purchase commitments to
reduce its exposure to fluctuations in the prices of crude oil and natural gas.
The Company hedges crude oil purchase and sales commitments, firm natural gas
purchase and sales commitments and anticipated crude oil purchases. Gains and
losses related to qualifying hedges of firm commitments or anticipated
transactions are deferred and recognized in income when the hedged transaction
occurs.
The Company enters into agreements with institutions of high credit
quality; therefore the risk of nonperformance by counterparties is considered to
be negligible.
(K) RECLASSIFICATIONS
Certain previously reported financial information has been reclassified to
conform to the 1994 presentation.
(2) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
DECEMBER 31
-------------------------
1994 1993
---------- ----------
(IN THOUSANDS)
Proved oil and gas properties............................... $ 906,738 $1,012,024
Unproved oil and gas properties............................. 254,998 246,607
Refining and marketing facilities........................... 1,332,412 1,343,241
Chemical facilities......................................... 314,960 292,170
Marine transportation....................................... -- 58,830
Pipelines................................................... 82,976 79,971
Other....................................................... 69,241 67,648
---------- ----------
2,961,325 3,100,491
Less accumulated depreciation, depletion, amortization and
lease impairment.......................................... 1,270,263 1,307,773
---------- ----------
$1,691,062 $1,792,718
========= =========
Property, plant and equipment includes capitalized lease obligations of
$4,653,000 and $69,364,000 and related accumulated depreciation of $3,866,000
and $67,943,000 at December 31, 1994 and 1993.
22
25
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) CURRENT AND LONG TERM DEBT
Short term obligations due to various banks were $27,000,000 and
$33,000,000, at December 31, 1994 and 1993 and bear interest at weighted average
rates of 6.15% and 3.4%, respectively. Short term obligations due to PDI were
$55,000,000 at December 31, 1994, and bear interest at 6.18% as to $5 million,
6.20% as to $25 million and 6.30% as to $25 million.
A summary of long term debt follows:
DECEMBER 31
---------------------
1994 1993
-------- --------
(IN THOUSANDS)
6.64% Series A Senior Notes, due May 1, 2000................... $117,000 $117,000
7.13% Series B Senior Notes, due May 1, 2002................... 125,000 125,000
7.57% Series C Senior Notes, due May 1, 2003................... 33,000 33,000
Notes under revolving credit agreements with PDI, due in 1997
(6.35% at December 31, 1994)................................. 100,000 200,000
Note to PDI, due in 1995 (6.01% at December 31, 1994).......... 75,000 150,000
Other.......................................................... 141,359 119,371
-------- --------
Total long term debt................................. 591,359 744,371
Less current installments of long term debt.................... 60,197 4,313
-------- --------
Long term debt, excluding current installments....... $531,162 $740,058
======== ========
The Company has a $400,000,000 revolving bank credit facility through May
2000 (no borrowings were outstanding under the facility at December 31, 1994 or
1993) and a $150,000,000 credit facility with PDI through 1997. The Company
intends to use borrowings under these facilities to finance the repayment of
$25,000,000 of short term obligations due to various banks and the $75,000,000
note bearing interest at 6.01% to PDI, and has classified these borrowings as
long term debt at December 31, 1994. Borrowings under the credit facilities bear
interest at various market rate options.
The Senior Notes, a note payable to a bank, the bank revolving credit
facility and the PDI loan agreements contain provisions that limit sales of
assets and mergers, limit the incurrence of indebtedness and restrict payments
to stockholders. No material amounts of long term debt are collateralized by
Company assets.
Letters of credit are maintained with various banks, aggregating
$28,956,000 at December 31, 1994; principally for pollution control and worker's
compensation obligations.
Interest rate swap agreements, which expire at various dates through 2003,
effectively convert an aggregate principal amount of $155,000,000 of fixed rate
long term debt into variable rate borrowings. Under these agreements, interest
is paid at variable market rates, and interest is received at fixed rates. At
December 31, 1994 and 1993, the weighted average variable interest rate under
these agreements was 6.19% and 3.41%. The estimated fair value of these
agreements (based on current market rates) approximated a net payable of
$9,898,000 at December 31, 1994 and a net receivable of $4,032,000 at December
31, 1993. Exposure to credit loss is only when the fair value of the agreement
is a net receivable.
The outstanding borrowings due to PDI and various banks bear interest at
current market rates and thus, the carrying amount of debt approximates
estimated fair value. The estimated fair value of the debt instruments that bear
interest at fixed rates was $348,000,000 ($379,000,000 carrying value) at
December 31, 1994, and approximated the carrying amount of these instruments at
December 31, 1993.
The aggregate maturities of long term debt and capitalized lease
obligations for the five years ending December 31, 1999 are as follows:
1995 -- $61,014,000; 1996 -- $109,825,000; 1997 -- $135,710,000; 1998 --
$62,008,000; and 1999 -- $53,705,000.
23
26
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) INCOME TAXES
Actual income tax expense (benefit) differs from the "normal" income tax
expense at U.S. statutory rates as follows:
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
Computed income tax expense (at U.S. statutory rates)... $53,325 $33,641 $ 6,837
Excess Federal over foreign income taxes................ (859) (120) (587)
Tax-free benefits and dividends on Company owned
life insurance........................................ (3,141) (3,352) (3,929)
Acquired subsidiary tax loss carryforward............... -- -- (5,522)
Section 29 credit....................................... (2,088) (7,393) --
Change in temporary differences due to 1993 tax rate
change................................................ -- 4,565 --
Miscellaneous items..................................... 3,079 (1,579) (827)
------- ------- -------
$50,316 $25,762 $(4,028)
======= ======= =======
The tax effects of the primary temporary differences giving rise to the
deferred Federal income tax assets and liabilities as determined under Statement
109 are as follows:
DECEMBER 31
-------------------
1994 1993
-------- --------
(IN THOUSANDS)
Deferred income tax assets:
Employee benefits.............................................. $ 5,875 $ 7,045
Basis in inventories........................................... 7,519 23,202
Provision for losses........................................... 9,783 5,806
Alternative minimum tax credit carryforwards................... 59,943 58,197
Miscellaneous items............................................ 6,771 7,108
-------- --------
Total deferred income tax assets....................... 89,891 101,358
-------- --------
Deferred income tax liabilities:
Property, plant and equipment, principally due to differences
in depreciation, depletion, amortization, lease impairment
and abandonments............................................ 200,698 188,409
Investments in affiliates, principally due to differences in
joint venture depreciation.................................. 26,401 26,289
Miscellaneous items............................................ 1,115 768
-------- --------
Total deferred income tax liabilities.................. 228,214 215,466
-------- --------
Net deferred Federal income tax liability.............. $138,323 $114,108
======== ========
At December 31, 1994, alternative minimum tax credit carryforwards of
approximately $59,943,000 are available to reduce future Federal regular income
taxes payable over an indefinite period.
24
27
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) EMPLOYEE STOCK OPTIONS
Options to purchase shares of Class A common stock have been granted to
officers and employees under a stock option plan adopted in 1979. The stock
option plan expired in 1989, and no further grants will be made under that plan.
A summary of transactions follows:
OPTION PRICE
NUMBER ----------------------------
OF SHARES PER SHARE TOTAL
--------- ------------- ----------
Outstanding and exercisable at December 31,
1993......................................... 33,284 $60.125-70.50 $2,338,000
============
Terminated and reverted to plan................ (1,600) $60.125-70.50 (111,000)
============
Exercised...................................... (1,200) $60.125-70.50 (78,000)
============
------ ----------
Outstanding and exercisable at December 31,
1994......................................... 30,484 $ 70.50 $2,149,000
====== ============ =========
The option price for options granted is the market value at date of grant.
Each option granted may be exercised in cumulative annual installments of
one-third of grant upon completion of two years of continued employment and
expires ten years from date of grant. No amounts are recorded until options are
exercised, at which time proceeds in excess of the par value of the shares are
credited to additional paid-in capital.
(6) INVESTMENTS IN JOINT VENTURES
The Company had 25.85% ownership interest in two joint ventures engaged
primarily in the production and worldwide marketing of terephthalates, the basic
raw materials for polyesters, which were accounted for by the equity method. In
August 1992, the Company exchanged its 25.85% interest in one of the joint
ventures and $53,983,000 in cash for a high density polyethylene plant and
related working capital of $24,820,000. A gain of $6,373,000 was recognized
based on the fair value of the assets exchanged. Investments in and advances to
the joint venture were $2,105,000 and $2,804,000 at December 31, 1994 and 1993
and equity in earnings of the joint ventures was $76,000 in 1994, $33,000 in
1993 and $3,271,000 in 1992. The Company sold chemicals aggregating $16,444,000
in 1992 to an affiliate of one of the joint ventures.
The Company and GE Plastics, a wholly owned subsidiary of General Electric
Company (GE), are joint venturers in Cos-Mar Company, a chemical operation. The
Company's interest is 50% and is accounted for by the equity method. The
venturers reimburse the joint venture for the costs of operating the facility
and raw material and finished product inventories are the property of the
venturers. Direct operating expenses include charges from the joint venture of
$16,011,000 in 1994, $15,990,000 in 1993 and $16,411,000 in 1992. Investments in
and advances to the joint venture were $8,829,000 and $21,379,000 at December
31, 1994 and 1993. The Company has guaranteed the joint venture's borrowings
from a bank, which aggregated $40,000,000 at December 31, 1994. GE has
guaranteed the joint venture's borrowings from a bank, which aggregated
$74,200,000 at December 31, 1994.
(7) EMPLOYEE AND POST RETIREMENT BENEFITS
The Company and its subsidiaries have two defined benefit pension plans
covering substantially all employees. The benefits are based on years of service
and the employee's final average monthly compensation. The Company's funding
policy is to contribute annually not less than the minimum required nor more
than the maximum amount that can be deducted for Federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
A restoration benefit plan provides supplemental pension benefits to
certain participants whose benefits are limited by the defined benefit pension
plans. The funding policy is to contribute annually amounts equal to benefit
payments made.
25
28
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the plans' funded status and the amounts recognized in the
consolidated balance sheets follows:
DECEMBER 31
----------------------------------------------------
1994 1993
------------------------ ------------------------
DEFINED DEFINED
BENEFITS RESTORATION BENEFITS RESTORATION
PLANS PLAN PLAN PLAN
--------- ----------- --------- -----------
(IN THOUSANDS)
Actuarial present value of benefit
obligations:
Vested benefit obligation............. $ (94,196) $(3,785) $(100,722) $(2,903)
========= ======== ========= ========
Accumulated benefit obligation,
including vested benefits.......... $(104,895) $(3,796) $(112,842) $(2,976)
========= ======== ========= ========
Projected benefit obligation............ $(127,077) $(4,615) $(140,482) $(4,056)
Plan assets at fair value, primarily
listed and stocks U.S. Government
securities............................ 180,705 -- 185,240 --
--------- ----------- --------- -----------
Plan assets in excess of (less than)
projected benefit obligation.......... 53,628 (4,615) 44,758 (4,056)
Unrecognized net loss from past
experience different from that assumed
and effect of changes in
assumptions........................... 1,982 426 7,572 737
Unrecognized prior service cost being
recognized over 15 years.............. 2,114 657 2,311 694
Unrecognized net (asset) liability at
date of adoption being recognized over
15.3 years............................ (7,075) 850 (8,413) 971
Adjustment required to recognize minimum
liability............................. -- (1,114) -- (1,322)
--------- ----------- --------- -----------
Prepaid (accrued) pension cost included
in the consolidated balance sheets.... $ 50,649 $(3,796) $ 46,228 $(2,976)
========= ======== ========= ========
A summary of the components of pension expense (income) follows:
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
Service cost -- benefits earned during the year.... $ 5,848 $ 5,620 $ 5,228
Interest cost on projected benefit obligation...... 10,495 10,509 9,404
Actual return on plan assets....................... (2,063) (22,914) (13,218)
Net asset gain (loss) deferred for later
recognition...................................... (17,128) 5,235 (2,750)
Amortization of unrecognized prior service cost.... 234 188 205
Amortization of unrecognized actuarial losses...... 33 18 20
Amortization of unrecognized net asset............. (1,217) (1,217) (1,217)
Cost of termination benefits....................... 710 -- 671
-------- -------- --------
Total pension expense (income)........... $ (3,088) $ (2,561) $ (1,657)
======== ======== ========
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.75% and 4.5%, respectively, as of December
31, 1994, and 7.5% and 4.5%, respectively, as of December 31, 1993 and 9% and
6%, respectively, as of December 31, 1992. The expected long term rate of return
on assets was 11% for 1994, 1993
26
29
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and 1992. The effect on the projected benefit obligation of these changes was a
decrease of approximately $24,100,000 in 1994 and an increase of approximately
$14,800,000 in 1993.
In addition to providing pension benefits, certain health care and life
insurance benefits are provided to active and retired employees. During 1994,
substantially all covered employees were eligible for those benefits after they
reach normal retirement age. The health care benefits in excess of certain
limits and the life insurance benefits are insured. The cost of providing these
benefits for active employees are expensed when the insurance premiums and
claims as paid. The cost of providing these benefits for active employees was
$10,092,000 in 1994, $11,219,000 in 1993 and $12,055,000 in 1992.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other than Pensions" (Statement 106). The effect of adopting Statement 106 for
the year ended December 31, 1992 was to increase net periodic postretirement
benefit cost by $1,500,000, decrease earnings before cumulative effect of
accounting change by $990,000 ($.06 per share) and increase net loss by
$35,310,000 ($2.26 per share).
A summary of the postretirement plan's funded status and the amounts
recognized in the consolidated balance sheets follows:
DECEMBER 31
-------------------
1994 1993
------- --------
(IN THOUSANDS)
Accumulated postretirement benefit obligation:
Retirees....................................................... $43,118 $ 48,072
Fully eligible active plan participants........................ 3,443 6,936
Other active plan participants................................. 14,120 14,775
------- --------
60,681 69,783
Unrecognized net loss............................................ (3,789) (15,951)
Unrecognized prior service cost.................................. 241 263
------- --------
Accrued postretirement benefit cost.............................. $57,133 $ 54,095
======= ========
A summary of the components of net periodic postretirement benefit cost
follows:
1994 1993 1992
------ ------ ------
(IN THOUSANDS)
Service cost............................................... $1,226 $1,043 $1,100
Interest cost.............................................. 4,878 4,653 4,600
Amortization of unrecognized prior service cost............ (22) (22) --
Amortization of net loss from earlier periods.............. 504 -- --
------ ------ ------
Net periodic postretirement benefit cost................... $6,586 $5,674 $5,700
====== ====== ======
For measurement purposes, an 8.67% and 7.50% weighted average annual rate
of increase in the per capita cost of covered benefits (i.e., health care cost
trend rate) for pre-65 and post-65 years of age, respectively, was assumed for
1995; the rate was assumed to decrease gradually to 5% by the year 2002 and
remain at that level thereafter. A 10.13% and 9.23% annual rate for pre-65 and
post-65 years of age, respectively, was assumed for 1994. The health care cost
trend rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1994 by $3,653,000 and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
for the year ended December 31, 1994 by $439,000.
27
30
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.75%, 7.5% and 9% at December 31, 1994,
1993 and 1992. The effect on the accumulated benefit obligation of these changes
was a decrease of $11,665,000 in 1994 and an increase of $10,600,000 in 1993.
Defined contribution retirement savings plans (Thrift Plans) are available
to substantially all employees. The Thrift Plans permit employees to elect
salary deferral contributions of up to 10% of their compensation on a
tax-deferred basis and requires the Company to match up to the first 6% of the
participants' compensation. The expense for the Company's contribution was
$5,963,000 in 1994, $6,007,000 in 1993 and $5,883,000 in 1992.
(8) SALE OF ACCOUNTS AND NOTES RECEIVABLE
Certain accounts and notes receivable were sold with recourse. At December
31, 1994, and 1993, $80,000,000 of accounts receivable and $32,100,000 and
$34,300,000, respectively, of notes receivable sold were outstanding under these
agreements. The Company remains obligated to reimburse the purchasers for or
repurchase any uncollectible amounts pursuant to the recourse provisions of the
agreements.
(9) LEASES
The Company occupies certain marketing and manufacturing facilities and
uses certain equipment under leases expiring at various dates over the next 20
years. Under terms of certain lease agreements, the Company has agreed not to
mortgage certain of its interests in oil and gas properties.
At December 31, 1994, minimum lease payments on capital and operating
leases were as follows:
CAPITAL OPERATING
LEASES (I) LEASES (II)
---------- -----------
(IN THOUSANDS)
1995............................................................ $ 903 $22,172
1996............................................................ 484 21,434
1997............................................................ 483 18,378
1998............................................................ 95 13,763
1999............................................................ -- 9,876
Later years to 2014............................................. -- 14,447
----------
Total minimum lease payments.......................... 1,965
Imputed interest (6.5%)......................................... 161
----------
Present value of minimum lease payments (iii)................... $1,804
==========
- ---------------
(i) Substantially all leases provide that the Company shall pay taxes,
maintenance, insurance and certain other operating expenses applicable to
the leased properties. The Company terminated tanker leases in 1993 and
1994.
(ii) Minimum payments have not been reduced by minimum sublease rentals of
approximately $3,164,000 which are due in the future under noncancellable
subleases.
(iii) Presented in the consolidated balance sheets as current installments and
noncurrent lease obligations of $818,000 and $986,000 and $6,493,000 and
$26,418,000 at December 31, 1994 and 1993.
Total rental expense was $26,962,000 (net of $1,191,000 subleases) in 1994,
$32,749,000 (net of $1,345,000 subleases) in 1993 and $29,944,000 (net of
$1,372,000 subleases) in 1992. Contingent rentals were not significant.
28
31
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) RELATED PARTY TRANSACTIONS
Sales and other operating revenues for 1993 and 1992 include $37,300,000
and $4,000,000, respectively, of reimbursements from business interruption and
property damage insurance resulting from operating problems in 1992 at the Port
Arthur refinery and a fire at the Big Spring refinery in 1993. The Company's
insurance provider on these claims is a wholly-owned subsidiary of Petrofina.
The Company has a 50% interest in joint ventures with PDI in Texas and with
Petrofina in Hong Kong which market chemicals in international trade. The
Company sold chemicals aggregating $1,401,000 in 1994, $985,000 in 1993 and
$6,447,000 in 1992 to the joint ventures.
Accounts receivable include $10,719,000 and $3,996,000 at December 31, 1994
and 1993, respectively, from affiliates.
Accounts payable include $6,539,000 and $8,817,000 at December 31, 1994 and
1993, respectively, to affiliates.
During 1994 the Company assumed a $50,000,000 note from PDI payable to a
bank in 1995. Interest expense relating to borrowings from PDI (see note 3) was
$13,916,000 in 1994, $28,565,000 in 1993 and $48,127,000 in 1992. Accrued
liabilities include accrued interest of $791,000 and $3,580,000 at December 31,
1994 and 1993, respectively, which is payable to PDI for such borrowings.
Crude oil and natural gas aggregating $16,626,000 in 1994, $21,145,000 in
1993 and $8,879,000 in 1992 were purchased from PDI in the ordinary course of
business.
Refined products and chemicals aggregating $34,963,000 in 1994, $50,992,000
in 1993 and $56,997,000 in 1992 were purchased from Petrofina and its affiliates
other than PDI in the ordinary course of business.
(11) CONTINGENCIES
The Company was contingently liable at December 31, 1994, under pending
lawsuits and other claims, some of which involved substantial sums. Considering
certain liabilities that have been set up for the lawsuits and claims, and the
difficulty in determining the ultimate liability in some of these matters,
internal counsel is of the opinion that the amounts, if any, that ultimately
might be due in connection with such lawsuits and claims would not have a
material adverse effect upon the Company's consolidated financial condition.
The Company is subject to extensive Federal, state and local environmental
laws and regulations. These regulations, which are constantly changing, regulate
the discharge of materials into the environment and may require the Company to
remove or mitigate the environmental effects of the disposal or release of
petroleum or chemical substances at various sites. Such contingencies may exist
for various sites including, but not limited to: Superfund Sites for which the
Company has been named as a potentially responsible party, operating and closed
refineries, chemical facilities, oil fields, service stations, terminals and
land development areas. Environmental expenditures are expensed or capitalized
depending on their future economic benefit. Expenditures that relate to an
existing condition caused by past operations and that have no future economic
benefit are expensed. Liabilities for expenditures of a noncapital nature are
recorded when environmental assessment and/or remediation is probable, and the
costs can be reasonably estimated. The level of future expenditures for
environmental matters, including cleanup obligations, is impossible to determine
with any degree of probability. Although potentially significant with respect to
results of operations for any one accounting period, management believes that
such costs will not have a material adverse effect on liquidity or financial
position.
29
32
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(12) SEGMENT DATA
The Company is engaged in crude oil and natural gas exploration and
production and natural gas marketing; petroleum products refining, supply and
transportation and marketing; and chemicals manufacturing and marketing. Segment
data as of and for the three years ended December 31, 1994 follows (in
thousands):
EXPLORATION, REFINING,
PRODUCTION SUPPLY AND
AND NATURAL TRANSPORTATION CORPORATE
GAS MARKETING AND MARKETING CHEMICALS AND OTHER CONSOLIDATED
------------- ------------- --------- ---------- ------------
1994:
Sales:
Unaffiliated customers....... $ 549,160 $1,981,444 $ 888,728 $ 178 $ 3,419,510
========== ========== ======== ========
Affiliates................... $ -- $ -- $ 1,602 $ -- 1,602
========== ========== ======== ========
Inter-segment................ $ 42,358 $ 154,965 $ 14,425 $ -- --
========== ========== ======== ========
------------
$ 3,421,112
=========
Operating profit (loss)......... $ (15,713) $ 42,473 $ 171,164 $ (16,953) $ 180,971
Interest and other income....... $ 12,307 $ 4,771 $ (6,765) $ 5,674 15,987
Interest expense, net........... (44,601) (44,601)
---------- ------------
Earnings before income
taxes................. $ (3,406) $ 47,244 $ 164,399 $ (55,880) $ 152,357
========== ========== ======== ======== =========
Accounts and notes receivable,
net.......................... $ 68,198 $ 208,055 $ 73,058 $ 16,303 $ 365,614
========== ========== ======== ======== =========
Identifiable assets............. $ 656,977 $1,307,181 $ 420,901 $ 108,803 $ 2,493,862
========== ========== ======== ======== =========
Depreciation, depletion,
amortization and lease
impairment................... $ 82,425 $ 80,471 $ 18,872 $ 4,193 $ 185,961
========== ========== ======== ======== =========
Capital expenditures............ $ 49,299 $ 48,817 $ 33,579 $ 4,686 $ 136,381
========== ========== ======== ======== =========
30
33
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EXPLORATION, REFINING,
PRODUCTION SUPPLY AND
AND NATURAL TRANSPORTATION CORPORATE
GAS MARKETING AND MARKETING CHEMICALS AND OTHER CONSOLIDATED
------------- ------------- --------- ---------- ------------
1993:
Sales:
Unaffiliated customers....... $ 519,810 $2,101,448 $ 793,372 $ 156 $ 3,414,786
========== ========== ======== ========
Affiliates................... $ -- $ -- $ 1,437 $ -- 1,437
========== ========== ======== ========
Inter-segment................ $ 45,570 $ 167,160 $ 5,491 $ -- --
========== ========== ======== ========
------------
$ 3,416,223
=========
Operating profit (loss)......... $ 13,277 $ (8,329) $ 60,437 $ (17,919) $ 47,466
Interest and other income....... $ 107,872 $ (12) $ (6,713) $ 2,458 103,605
Interest expense, net........... (54,956) (54,956)
---------- ------------
Earnings before income
taxes................. $ 121,149 $ (8,341) $ 53,724 $ (70,417) $ 96,115
========== ========== ======== ======== =========
Accounts and notes receivable,
net.......................... $ 88,038 $ 155,054 $ 49,398 $ 779 $ 293,269
========== ========== ======== ======== =========
Identifiable assets............. $ 745,473 $1,260,463 $ 402,270 $ 103,147 $ 2,511,353
========== ========== ======== ======== =========
Depreciation, depletion,
amortization and lease
impairment................... $ 94,704 $ 79,347 $ 19,562 $ 4,728 $ 198,341
========== ========== ======== ======== =========
Capital expenditures............ $ 30,665 $ 86,233 $ 7,226 $ 1,348 $ 125,472
========== ========== ======== ======== =========
1992:
Sales:
Unaffiliated customers....... $ 456,856 $2,210,867 $ 706,348 $ 97 $ 3,374,168
========== ========== ======== ========
Affiliates................... $ -- $ -- $ 23,355 $ -- 23,355
========== ========== ======== ========
Inter-segment................ $ 45,303 $ 156,859 $ 6,431 $ -- --
========== ========== ======== ========
------------
$ 3,397,523
=========
Operating profit (loss)......... $ 43,568 $ (64,691) $ 99,714 $ (18,211) $ 60,380
Interest and other income....... $ 7,538 $ 3,277 $ 3,096 $ 4,879 18,790
Interest expense, net........... (59,060) (59,060)
---------- ------------
Earnings before income taxes
and cumulative effect of
accounting change.......... $ 51,106 $ (61,414) $ 102,810 $ (72,392) $ 20,110
========== ========== ======== ======== =========
Accounts and notes receivable,
net.......................... $ 112,617 $ 198,034 $ 115,321 $ 15,538 $ 441,510
========== ========== ======== ======== =========
Identifiable assets............. $ 897,119 $1,398,368 $ 524,868 $ 104,120 $ 2,924,475
========== ========== ======== ======== =========
Depreciation, depletion,
amortization and lease
impairment................... $ 94,613 $ 77,223 $ 17,833 $ 5,135 $ 194,804
========== ========== ======== ======== =========
Capital expenditures............ $ 61,885 $ 77,711 $ 69,183 $ 2,663 $ 211,442
========== ========== ======== ======== =========
31
34
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidated totals are after elimination of inter-segment amounts.
Operating profit (loss) is sales less operating expenses and is substantially
all derived from domestic operations. Identifiable assets are those assets that
are used in the operations in each business segment.
Most customers are located in the South and Midwest regions of the United
States. No single customer accounted for more than 5% of sales in 1994, 1993 or
1992, and no account receivable from any customer exceeded 5% of consolidated
stockholders' equity at December 31, 1994, 1993 or 1992.
(13) QUARTERLY FINANCIAL DATA (UNAUDITED)
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1994:
Sales and other operating revenues.... $777,450 $838,081 $918,237 $ 887,344
======== ======== ========== =========
Gross profit.......................... $ 68,365 $ 49,908 $ 69,126 $ 79,782
======== ======== ========== =========
Net earnings.......................... $ 25,017 $ 13,357 $ 27,973 $ 35,694
======== ======== ========== =========
Earnings per common share............. $ 1.60 $ 0.86 $ 1.79 $ 2.29
======== ======== ========== =========
1993:
Sales and other operating revenues.... $853,606 $931,598 $846,240 $ 784,779
======== ======== ========== =========
Gross profit.......................... $ 36,127 $ 62,837 $ 42,769 $ 10,326
======== ======== ========== =========
Net earnings (loss)................... $ 83 $ 61,960 $ 21,729 $ (13,419)
======== ======== ========== =========
Earnings (loss) per common share...... $ -- $ 3.97 $ 1.39 $ (0.85)
======== ======== ========== =========
Gross profit is defined as sales and other operating revenues less cost of
raw materials and products purchased; direct operating expenses; taxes, other
than on income; and depreciation, depletion, amortization and lease impairment.
32
35
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA
SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED)
The following tables set forth supplementary disclosures for oil and gas
producing activities in accordance with Statement of Financial Accounting
Standards No. 69.
(A) CAPITALIZED COSTS
Capitalized costs relating to oil and gas producing activities and the
related amounts of accumulated depreciation, depletion, amortization and lease
impairment follow:
DECEMBER 31
----------------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS)
Proved oil and gas properties.................. $ 906,738 $1,012,024 $1,148,016
Unproved oil and gas properties................ 254,998 246,607 262,920
---------- ---------- ----------
1,161,736 1,258,631 1,410,936
Less accumulated depreciation, depletion,
amortization and lease impairment............ 585,138 613,120 644,303
---------- ---------- ----------
Net capitalized costs.......................... $ 576,598 $ 645,511 $ 766,633
========= ========= =========
(B) COSTS INCURRED
A summary of costs incurred in oil and gas property acquisition,
exploration and development activities (both capitalized and charged to expense)
for the three years ended December 31, 1994 follows:
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
Acquisition of unproved properties..................... $ 2,784 $ 1,181 $ 3,477
======= ======= =======
Acquisition of proved properties....................... $ 237 $ 482 $ 581
======= ======= =======
Exploration costs...................................... $32,674 $21,476 $34,525
======= ======= =======
Development costs...................................... $28,314 $23,869 $44,121
======= ======= =======
The above costs were incurred in the United States.
33
36
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (CONTINUED)
(C) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following table presents the results of operations for oil and gas
producing activities for the three years ended December 31, 1994.
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
Revenues:
Sales.............................................. $139,532 $209,753 $241,449
Transfers.......................................... 17,205 17,751 16,956
-------- -------- --------
Total...................................... 156,737 227,504 258,405
Production costs..................................... (66,374) (83,237) (84,530)
Exploration costs.................................... (14,173) (15,632) (20,974)
Depreciation, depletion, amortization, lease
impairment and abandonments........................ (86,236) (106,140) (96,886)
-------- -------- --------
(10,046) 22,495 56,015
Income tax benefit (expense)......................... 5,604 (480) (19,045)
-------- -------- --------
Results of operations from producing activities,
excluding interest costs........................... $ (4,442) $ 22,015 $ 36,970
======== ======== ========
(D) RESERVE QUANTITY INFORMATION
The following table presents the Company's estimate of its proved oil and
gas reserves, all of which are located in the United States. The Company
emphasizes that reserve estimates are inherently imprecise and that estimates of
new discoveries are more imprecise than those of producing oil and gas
properties. Accordingly, the estimates are expected to change as future
information becomes available. The estimates have been prepared by the Company's
internal petroleum reservoir engineers.
1994 1993 1992
----------------- ------------------ -----------------
OIL GAS OIL GAS OIL GAS
------ ------- ------ -------- ------ -------
Proved developed and undeveloped
reserves:
Beginning of year................... 36,090 439,066 42,479 655,649 47,772 724,561
Revisions of previous estimates..... 2,571 (40,376) (6,405) (23,294) 750 (7,191)
Purchases of minerals in place...... 57 6 419 1,705 3,080 9,796
Sales of minerals in place.......... (4,756) (28,780) (2,803) (156,418) (3,664) (18,598)
Extensions and discoveries.......... 2,293 31,152 8,305 29,348 1,705 22,670
Production.......................... (4,556) (52,864) (5,905) (67,924) (7,164) (75,589)
------ ------- ------ -------- ------ -------
End of year......................... 31,699 348,204 36,090 439,066 42,479 655,649
====== ======= ====== ======== ====== =======
Proved developed reserves:
Beginning of year................... 23,644 306,991 34,892 468,310 37,538 501,042
====== ======= ====== ======== ====== =======
End of year......................... 19,986 237,270 23,644 306,991 34,892 468,310
====== ======= ====== ======== ====== =======
Oil reserves, which include condensate and natural gas liquids, are stated
in thousands of barrels and gas reserves are stated in millions of cubic feet.
34
37
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (CONTINUED)
(E) STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN
RELATING TO PROVED OIL AND GAS RESERVES
The following table, which presents a standardized measure of discounted
future net cash flows and changes therein relating to proved oil and gas
reserves, is presented pursuant to Statement of Financial Accounting Standards
No. 69. In computing this data, assumptions other than those required by the
Financial Accounting Standards Board could produce different results.
Accordingly, the data should not be construed as representative of the fair
market value of the Company's proved oil and gas reserves.
Future cash inflows were computed by applying year end prices of oil and
gas relating to proved reserves to the estimated year end quantities of those
reserves. Future price changes were considered only to the extent provided by
contractual arrangements in existence at year end. Future development and
production costs were computed by estimating the expenditures to be incurred in
developing and producing the proved oil and gas reserves at the end of the year,
based on year end costs. Future income tax expenses were computed by applying
the year end statutory tax rate adjusted for tax credits, with consideration of
future tax rates already legislated, to the future pretax net cash flows
relating to proved oil and gas reserves, less the tax basis of the properties
involved. The standardized measure of discounted future cash flows represents
the present value of estimated future net cash flows using a discount rate of
10% a year.
DECEMBER 31
-------------------------------------
1994 1993 1992
--------- ---------- ----------
(IN THOUSANDS)
Future cash inflows.............................. $ 977,811 $1,330,387 $2,057,618
Future production and development costs.......... (422,277) (484,783) (662,757)
Future income tax expenses....................... (45,859) (121,028) (272,716)
--------- ---------- ----------
Future net cash flows............................ 509,675 724,576 1,122,145
10% annual discount for estimated timing of cash
flows.......................................... (191,981) (277,041) (453,814)
--------- ---------- ----------
Standardized measure of discounted future net
cash flows..................................... $ 317,694 $ 447,535 $ 668,331
========= ========= =========
Beginning of year................................ $ 447,535 $ 668,331 $ 622,366
Changes resulting from:
Sales and transfers of oil and gas produced,
net of production costs..................... (90,363) (144,267) (173,875)
Extensions and discoveries..................... 26,246 51,053 32,912
Purchases of minerals in place................. 350 3,555 30,101
Sales of minerals in place..................... (48,157) (154,814) (43,306)
Previously estimated development costs incurred
during the year............................. 25,625 26,337 42,258
Revisions of previous quantities............... (4,880) (49,494) 2,341
Accretion of discount.......................... 52,227 82,980 74,846
Net change in income taxes..................... 46,163 86,754 (37,529)
Net changes in prices and costs................ (137,052) (122,900) 118,217
--------- ---------- ----------
End of year...................................... $ 317,694 $ 447,535 $ 668,331
========= ========= =========
35
38
SCHEDULE VIII
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
---------- ---------- ---------- ----------
Year ended December 31, 1992 --
Allowance for doubtful receivables............ $ 5,279 $ 6,603 $ 6,443(1) $ 5,439
======== ======== ======== ========
Year ended December 31, 1993 --
Allowance for doubtful receivables............ $ 5,439 $ 5,549 $ 4,303(1) $ 6,685
======== ======== ======== ========
Inventory valuation reserve................... $ -- $ 47,048 $ -- $ 47,048
======== ======== ======== ========
Year ended December 31, 1994 --
Allowance for doubtful receivables............ $ 6,685 $ 3,652 $ 3,136(1) $ 7,201
======== ======== ======== ========
Inventory valuation reserve................... $ 47,048 $ -- $ 47,048 $ --
======== ======== ======== ========
- ---------------
(1) Bad debts written off, less recoveries.
36
39
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements by the
Registrant with its accountants on accounting or financial disclosures.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS OF REGISTRANT AND SERVED AS AN
CAPACITIES SERVED IN 1994 AGE OFFICER SINCE
- --------------------------------------------- --- -------------
Paul D. Meek, 64 6-06-68
Chairman of the Board
Ron W. Haddock, 54 6-19-86
President and Chief Executive Officer
Yves Bercy 49 7-01-93
Vice President, Chief Financial Officer
and Treasurer
Cullen M. Godfrey, 49 4-15-87
Vice President, Secretary and General
Counsel
Michael J. Couch, 43 4-30-84
Vice President
H. Patrick Jack, 43 8-23-89
Vice President
Henry J. Lartigue, Jr., 61 1-01-89
Vice President (Retired 7/1/94)
Neil A. Smoak, 49 4-24-86
Vice President
Glenn E. Selvidge, 58 2-15-78
Vice President (Retired 7/1/94)
S. R. West, 55 5-02-83
Vice President
James D. Grier, 53 1-01-92
Controller
Brendan M. O'Connor, 49 10-18-84
Treasurer (Resigned 4/13/94)
Linda Middleton, Assistant Secretary 44 8-20-84
There is incorporated by reference pages 3 through 6 of the Company's Proxy
Statement for the Annual Meeting of Security Holders to be held April 12, 1995.
ITEM 11 EXECUTIVE COMPENSATION
There is incorporated by reference pages 2 through 3 and 8 through 13 of
the Company's Proxy Statement for the Annual Meeting of Security Holders to be
held April 12, 1995.
37
40
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated by reference the first page and pages 2 through 5 of
the Proxy Statement for the Annual Meeting of Security Holders to be held April
12, 1995.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference pages 4 through 5, 12 and 18 of the
Company's Proxy Statement for the Annual Meeting of Security Holders to be held
April 12, 1995.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following are incorporated by reference or filed as part of this
Annual Report:
1. and 2. Consolidated Financial Statements and Schedules:
Reference is made to page 14 of this Form 10-K for a list of all
consolidated financial statements and schedules filed as part of this
Form 10-K.
3. Exhibits:
(3a) -- The Articles of Incorporation of FINA, Inc.
(3b) -- The Bylaws of FINA, Inc.
(10a) -- Thrift and Employee Stock Ownership Plan for Employees of American
Petrofina, Incorporated
(10b) -- Credit Agreement of March 7, 1995 with NationsBank of Texas, N.A. as
Agent
(10c) -- American Petrofina, Incorporated Employee Non-Qualified Stock Option
Plan (1979)
(10d) -- Form 11-K Amdel Inc. Employee Investment Plan
(10e) -- Agreement between FINA, Inc. and Glenn E. Selvidge
(10h) -- Agreements between FINA, Inc. (formerly American Petrofina,
Incorporated) and Ron W. Haddock
(10i) -- Agreement between FINA, Inc. and Henry J. Lartigue
(10j) -- Employee Stock Ownership Plan of American Petrofina, Incorporated
(10k) -- FINA Capital Accumulation Plan
(10l) -- Fina Restoration Plan
(19) -- FINA, Inc.'s Proxy Statement for Annual Meeting of Security Holders
to be held April 12, 1995
(21) -- Subsidiaries of the Registrant
(23) -- Independent Auditors' Consent
38
41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FINA, Inc.
(Registrant)
By: /s/ CULLEN M. GODFREY
Cullen M. Godfrey, Vice President,
Secretary and General Counsel
Date: March 7, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURES AND TITLES DATE
- --------------------------------------------- ---------------------------
By: /s/ PAUL D. MEEK March 7, 1995
Paul D. Meek
Chairman of the Board
By: /s/ RON W. HADDOCK March 7, 1995
Ron W. Haddock
President and CEO, Director
By: /s/ FRANCOIS CORNELIS March 7, 1995
Francois Cornelis
Director
By: March , 1995
Axel de Broqueville
Director
By: March , 1995
Pierre Jungels
Director
By: /s/ ROBERT L. MITCHELL March 7, 1995
Robert L. Mitchell
Director
By: /s/ DAVID C. TREEN March 7, 1995
David C. Treen
Director
By: March , 1995
Henrique Bandeira Vieira
Director
By: /s/ YVES BERCY March 7, 1995
Yves Bercy
Vice President, Chief Financial Officer and
Treasurer
By: /s/ JAMES D. GRIER March 7, 1995
James D. Grier
Controller and Principal Accounting Officer
39
42
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- -----------------------------------------------------------------------------------
(3a) -- The Articles of Incorporation of FINA, Inc.
(3b) -- The Bylaws of FINA, Inc.
(10a) -- Thrift and Employee Stock Ownership Plan for Employees of American
Petrofina, Incorporated
(10b) -- Credit Agreement of March 7, 1995 with NationsBank of Texas, N.A. as
Agent
(10c) -- American Petrofina, Incorporated Employee Non-Qualified Stock Option
Plan (1979)
(10d) -- Form 11-K Amdel Inc. Employee Investment Plan
(10e) -- Agreement between FINA, Inc. and Glenn E. Selvidge
(10h) -- Agreements between FINA, Inc. (formerly American Petrofina,
Incorporated) and Ron W. Haddock
(10i) -- Agreement between FINA, Inc. and Henry J. Lartigue
(10j) -- Employee Stock Ownership Plan of American Petrofina, Incorporated
(10k) -- FINA Capital Accumulation Plan
(10l) -- Fina Restoration Plan
(19) -- FINA, Inc.'s Proxy Statement for Annual Meeting of Security Holders
to be held April 12, 1995
(21) -- Subsidiaries of the Registrant
(23) -- Independent Auditors' Consent