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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-4014
FINA, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 13-1820692
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Fina Plaza, Dallas, Texas 75206
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 750-2400
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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 over the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
29,202,372 Class A as of July 25, 1995
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2,000,000 Class B as of July 25, 1995
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FINA, Inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
1995 1994
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Assets
Current assets:
Cash and cash equivalents $5,004 $3,533
Accounts and notes receivable 357,312 365,614
Inventories 317,947 286,538
Prepaid expenses and other current assets 38,753 30,394
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Total current assets 719,016 686,079
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Property, plant, and equipment; net of $1,285,224 accumulated
depreciation at 6/30/95 1,666,152 1,691,062
Other assets 122,991 116,721
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$2,508,159 $2,493,862
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Liabilities and Stockholders' Equity
Current liabilities:
Short term obligations $49,000 $57,000
Current installments of long term debt and lease obligations 84,476 61,014
Accounts payable and accrued liabilities 422,246 452,387
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Total current liabilities 555,722 570,401
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Long term debt, excluding current installments 502,376 531,162
Other deferred credits and liabilities 264,049 247,492
Stockholders' equity: (note 2)
Preferred stock of $1 par value. Authorized 4,000,000 shares;
none issued - -
Class A common stock of 50 cents par value. Authorized
38,000,000 shares; issued and outstanding 29,197,772 and
29,189,404 shares in 1995 and 1994 14,599 14,595
Class B common stock of 50 cents par value. Authorized
and issued 2,000,000 shares 1,000 1,000
Additional paid-in capital 450,264 450,029
Retained earnings 720,149 679,183
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Total stockholders' equity 1,186,012 1,144,807
Commitments and contingencies (note 3) - -
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$2,508,159 $2,493,862
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See accompanying notes to consolidated financial statements.
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FINA, Inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
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1995 1994 1995 1994
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Revenues:
Sales and other operating revenues $965,352 $838,081 $1,828,540 $1,615,531
Interest and other, net (8,889) 6,388 (10,739) 6,423
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956,463 844,469 1,817,801 1,621,954
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Costs and expenses:
Cost of raw materials and products purchas $715,437 619,823 1,352,211 1,181,235
Direct operating expenses $90,264 109,175 178,754 201,956
Selling, general, and administrative expen $21,310 21,742 42,116 42,206
Taxes, other than on income $11,222 11,356 23,133 23,832
Dry holes and abandonments $4,707 1,743 6,223 2,389
Depreciation, depletion, amortization,
and lease impairment $36,300 47,819 74,745 90,235
Interest charges, net 11,532 11,548 23,490 22,054
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890,772 823,206 1,700,672 1,563,907
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Earnings before income taxes 65,691 21,263 117,129 58,047
Income taxes 23,905 7,906 41,853 19,673
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Net earnings (note 4) $41,786 $13,357 $75,276 $38,374
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Earnings per common share: (note 2) $1.34 $0.43 $2.41 $1.23
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See accompanying notes to consolidated financial statements.
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FINA, Inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(IN THOUSANDS)
(UNAUDITED)
1995 1994
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Cash flows provided by operating activities $107,817 $96,091
Cash flows from investing activities:
Capital Expenditures (69,122) (43,266)
Proceeds from disposal of assets 12,456 20,027
Investments in and advances to affiliates (2,119) (1,864)
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Net cash provided by (used in) investing activities (58,785) (25,103)
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Cash flows from financing activities:
Additions to long term debt and lease obligations 0 25,000
Payments of long term debt and lease obligations (5,489) (55,978)
Net change in short term obligations (8,000) (14,000)
Issuance of common stock 239 36
Dividends paid (34,311) (24,950)
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Net cash used in financing activities (47,561) (69,892)
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Net decrease in cash and cash equivalents 1,471 1,096
Cash and cash equivalents at beginning of period 3,533 3,276
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Cash and cash equivalents at end of period $5,004 $4,372
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See accompanying notes to consolidated financial statements.
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FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
(1) The information furnished reflects all adjustments which are, in the
opinion of management, necessary to a fair presentation of the results
of the interim periods presented.
(2) 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. The
Company declared a two-for-one stock split with record date of May 2,
1995, at close of business. The par value will be 50 cents per share of
both Class A and Class B stock. Share and per share amounts in the
accompanying financial statements have been adjusted retroactively to
reflect the stock split. The weighted average number of outstanding shares
was 31,192,747 and 31,187,304 for the three months ended June 30, 1995 and
1994, respectively. The weighted average number of outstanding shares was
31,191,371 and 31,187,178 for the six months ended June 30, 1995 and 1994,
respectively.
(3) The Company is contingently liable under pending lawsuits and other
claims, some of which involve sustantial sums. Considering certain
liabilities which 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, which
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.
(4) Earnings for the three-month period ended June 30, 1994 include $16
million after-tax of inventory gains related to crude and product price
improvement since the end of 1993. The earnings effect of the gain was
largely offset by accruals for various contingencies. Accruals include a
provision of $9.2 million for future environmental remediation projects.
(5) The notes to the consolidated financial statements on pages 20 through 32
of the Company's 1994 Form 10-K are an integral part of these consolidated
financial statements.
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PART I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Net earnings were $41.8 million for the quarter ended June 30, 1995
compared to $13.4 million during the same period last year. Second quarter
1995 earnings reflect higher chemicals margins and the lowest industry fuels
refining margins in several years. They also reflect lower chemicals volumes
and lower natural gas prices than in the same period of 1994. Sales and other
operating revenues for second quarter 1995 were $965.3 million compared to
$838.1 million for second quarter 1994. The increased revenues were primarily
attributable to (a) increased prices in the Downstream and Chemicals segments
and (b) higher Downstream volumes, partially offset by (c) natural gas volume
and price decreases and (d) lower chemicals volumes. Earnings per share for
second quarter 1995 were $1.34 per share compared to $0.43 for second quarter
1994.
For the first six months of 1995, net earnings were $75.3 million,
compared to $38.4 million for the same period in 1994. The increase in net
earnings was generally due to higher chemical margins. Sales and other
operating revenues for the first six months of 1995 were $1.8 billion compared
to $1.6 billion for the first half of 1994. Earnings per share for the six
months ended June 30, 1995 were $2.41 compared to $1.23 at June 30, 1994.
Per share earnings reflect a 2-for-1 stock split which occurred of record
at close of business on May 2, 1995. Outstanding Class A Common Stock
increased from 14,595,269 to 29,190,538 shares, and outstanding Class B Common
Stock increased from 1 million to 2 million shares. Prior year's per share
earnings have been adjusted consistent with the stock split.
In July 1995 the Company committed to maintain its subsidiary's one-third
ownership interest in a propylene splitter facility at Mont Belvieu, Texas by
participating in an expansion project that would double the facility's
capacity. The facility is expected to increase its total capacity to
1,440,000,000 lbs/yr. The Board of Directors approved increasing the 1995
capital expenditures from the previously disclosed estimate of $215 million to
a revised 1995 projected capital expenditure amount of $217 million. The
expansion of the propylene splitter facility will help ensure adequate supplies
of propylene feedstock to the polypropylene plant when its expansion becomes
operational later this year.
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Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long- Lived Assets to Be Disposed Of", was
issued by the Financial Accounting Standards Board in March 1995. The
Company expects to adopt the provisions of Statement No. 121 in accordance
with the standard and not later than 1996. The Company is currently assessing
the effects of the provisions of Statement No. 121.
Upstream - Earnings and revenues in the second quarter of 1995 were lower
than second quarter 1994 reflecting lower natural gas prices and lower crude
volumes. The Company is focusing on developing its exploration prospects and
has increased drilling activity on promising prospects. First half 1995
operating expenses were reduced 18% from 1994. Natural gas sales prices
dropped 26% in the first six months of 1995 while crude prices increased 19%
compared to the same period last year. Natural gas marketing achieved higher
net income on lower volumes while sales volume decreased 36% from the same
period in 1994 due primarily to reduced spot trading.
Downstream - Total average daily refining throughput was 210,500 barrels
per day in second quarter 1995 compared to 208,400 barrels per day in the same
period of 1994. The Port Arthur, Texas Refinery set several throughput records
during second quarter 1995. Earnings declined as industry fuels refining
margins fell to the lowest levels in several years. In Marketing, progress
was made toward adding high quality distributors in key markets.
Chemicals - Sales volumes in the second quarter decreased primarily due
to lower polypropylene, polystyrene and polyethylene sales. With margin
increases in all product lines, chemicals earnings improved over last year's
first half, even with lower production due to operating interruptions at some
plants. The previously announced polypropylene expansion project is ahead of
schedule and will be complete fourth quarter 1995. In polystyrene, an expansion
project at the Carville plant was begun in the first half with completion
scheduled by mid 1996.
The Company's Annual Meeting of the Shareholders was held April 12, 1995.
All members of the Board of Directors were reelected. Since that time,
however, the Company has received a resignation letter from Henrique Bandiera
Vieira, to be effective on August 16, 1995.
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The Board of Directors elected three new Vice Presidents to newly created
positions at its April meeting. Also elected was a new Controller filling an
opening vacated by a retirement. Four Vice Presidents were promoted to Senior
Vice President.
The Company's regular quarterly dividend of $.60 per share was paid on
June 15, 1995 to shareholders of record on June 2, 1995.
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Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
Item 2. Changes in Securities.
(a) Not Applicable
(b) Not Applicable
Item 3. Defaults upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Required
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
Exhibit 27 Financial Data Schedule
No Form 8-K's were filed during the period April 1,
through June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FINA, Inc.
(REGISTRANT)
Date: August 11, 1995
BY: ___________________
Yves Bercy
Vice President, Chief
Financial Officer and
Treasurer
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EXHIBIT INDEX
EXHIBIT
Number Description
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27 Financial Data Schedule