1
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, 1996
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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.
(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
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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
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.
29,216,172 Class A as of July 25, 1996
2,000,000 Class B as of July 25, 1996
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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,
1996 1995
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ASSETS
Current assets:
Cash and cash equivalents $ 2,587 $ 7,271
Accounts and notes receivable 421,943 336,246
Inventories 302,029 301,496
Prepaid expenses and other current assets 44,850 43,418
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Total current assets 771,409 688,431
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Property, plant, and equipment; net of $1,435,853 accumulated
depreciation at 6/30/96 and $1,388,645 at 12/31/95 1,667,130 1,662,887
Other assets 151,796 136,400
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$ 2,590,335 $ 2,487,718
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations $ 63,000 $ 20,000
Current installments of long term debt and lease obligations 36,078 35,474
Accounts payable and accrued liabilities 529,301 488,455
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Total current liabilities 628,379 543,929
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Long term debt, excluding current installments (note 7) 468,999 498,446
Other deferred credits and liabilities 279,075 267,286
Stockholders' equity: (note 2)
Preferred stock of $1 par value. Authorized 4,000,000 shares;
none issued - -
Class A common stock of $.50 par value. Authorized
38,000,000 shares; issued and outstanding 29,216,172 and
29,207,572 shares in 1996 and 1995 14,608 14,604
Class B common stock of $.50 par value. Authorized
and issued 2,000,000 shares 1,000 1,000
Additional paid-in capital 450,898 450,601
Retained earnings 747,376 711,852
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Total stockholders' equity 1,213,882 1,178,057
Commitments and contingencies (note 3) - -
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$ 2,590,335 $ 2,487,718
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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 SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
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1996 1995 1996 1995
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Revenues:
Sales and other operating revenues $ 1,047,290 $ 965,352 $ 2,012,405 $ 1,828,540
Interest and other, net (303) (8,889) (3,018) (10,739)
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1,046,987 956,463 2,009,387 1,817,801
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Costs and expenses:
Cost of raw materials and products purchased 802,716 715,437 1,527,584 1,352,211
Direct operating expenses 96,271 90,264 190,062 178,754
Selling, general, and administrative expenses 23,328 21,310 44,001 42,116
Taxes, other than on income 11,921 11,222 23,895 23,133
Dry holes and abandonments 3,40 4,707 7,520 6,223
Depreciation, depletion, amortization,
and lease impairment 41,220 36,300 80,903 74,745
Interest charges, net 9,757 11,532 19,495 23,490
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988,618 890,772 1,893,460 1,700,672
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Earnings before income taxes 58,369 65,691 115,927 117,129
Income taxes 20,290 23,905 39,826 41,853
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Net earnings $ 38,079 $ 41,786 $ 76,101 $ 75,276
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Earnings per common share (note 2) $ 1.22 $ 1.34 $ 2.44 $ 2.41
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See accompanying notes to consolidated financial statements.
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FINA, Inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
1996 1995
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Cash flows from operating activities:
Net earnings (loss) 76,101 75,276
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, depletion, amort., lease impairment 81,009 75,231
Net equity in losses of affiliates 2,562 4,591
Loss (gain) on sale of assets (2,995) 6,722
Changes in assets and liabilities:
Accounts and notes receivable (note 4) (85,697) 8,302
Inventories (533) (31,409)
Prepaid expenses and other current assets (1,432) (8,360)
Accounts payable and accrued liabilities 30,195 (31,362)
Current and deferred income taxes 26,807 15,079
Other (24,251) (6,253)
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Net cash provided by operating activities 101,766 107,817
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Cash flows from investing activities:
Additions to property, plant and equipment (91,678) (69,122)
Proceeds from sale of assets 11,561 12,456
Investments in and advances to affiliates (214) (2,119)
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Net cash used in investing activities (80,331) (58,785)
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Cash flows from financing activities:
Additions to long term debt and lease obligations 200,577 0
Payments of long term debt and lease obligations (229,420) (5,489)
Net change in short term obligations 43,000 (8,000)
Issuance of common stock 302 239
Dividends paid (40,578) (34,311)
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Net cash used in financing activities (26,119) (47,561)
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Net increase (decrease) in cash and cash equivalents (4,684) 1,471
Cash and cash equivalents at beginning of year 7,271 3,533
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Cash and cash equivalents at end of year $ 2,587 $ 5,004
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FINA, Inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(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. The results of operations for the three and six
months ended June 30, 1996 are not necessarily indicative of the operating
results for the full fiscal year.
(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
weighted average number of outstanding shares was 31,214,372 and 31,192,747
for the three months ended June 30, 1996 and 1995, respectively. The
weighted average number of outstanding shares was 31,212,143 and 31,191,371
for the six months ended June 30, 1996 and 1995, respectively.
(3) The Company is contingently liable under pending lawsuits and other claims,
some of which involve substantial 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) The Company sold certain accounts receivable with recourse, with balances
sold of $67,900,000 at June 30, 1996, and $80,000,000 at December 31, 1995.
The change in the balance of $12,100,000 results in a decrease in the 1996
cash flows provided by operating activities.
(5) The notes to the consolidated financial statements on pages 19 through 32 of
the Company's 1995 Form 10-K are an integral part of these consolidated
financial statements.
(6) Fina Oil and Chemical Company ("FOCC"), a wholly-owned subsidiary of FINA,
Inc., is the main operating subsidiary of the Company whose principle lines
of business include crude oil and natural gas exploration and production;
petroleum products refining, supply and transportation and marketing; and
chemicals manufacturing and marketing. Following is summary consolidated
financial data for FOCC (in thousands).
June 30, December 31,
1996 1995
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Current assets $ 725,751 $ 638,835
Noncurrent assets 1,784,146 1,762,093
Current liabilities (587,527) (493,078)
Noncurrent liabilities (1) (1,747,456) (1,794,887)
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Net Assets $ 174,914 $ 112,963
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Six Months Ended June 30, Three Months Ended June 30,
1996 1995 1996 1995
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Sales and other operating $ 1,818,617 $ 1,721,137 $ 960,809 $ 914,980
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Gross profit (2) $ 169,124 $ 195,972 $ 91,590 $ 101,833
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Net earnings $ 63,449 $ 74,522 $ 36,329 $ 41,573
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(1) Primarily consists of payables to related parties.
(2) 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.
(7) On July 18, 1996 FOCC issued $125,000,000 in debt securities which are
unconditionally guaranteed on an unsecured basis by FINA, Inc. All of the
proceeds were used to repay outstanding debt.
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PART I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Net earnings were $38,079,000 for the quarter ended June 30, 1996 compared
to $41,786,000 for the second quarter of 1995. The net earnings decrease in the
second quarter 1996 was largely attributable to lower chemicals and Gulf Coast
refining margins, only partially offset by increased natural gas prices and
higher chemicals sales volumes. Sales and other operating revenues were
$1,047,290,000 for second quarter 1996 compared to $965,352,000 for second
quarter of 1995. The 8% increase in sales and other operating revenues were
primarily due to higher prices in the Upstream and Downstream and higher
Chemicals volumes. Earnings per share were $1.22 compared to $1.34 per share
for the second quarter of last year.
For the first six months of 1996, net earnings were $76,101,000 compared
to $75,276,000 for the same period in 1995. Increased crude and natural gas
prices and higher chemicals sales volumes more than offset lower chemicals and
Gulf Coast refining margins. Sales and other operating revenues increased to
$2,012,405,000 during the first six months of 1996 from $1,828,540,000 in the
same period last year, reflecting higher prices in the Upstream and Downstream
and higher Chemicals volumes. Earnings per share were $2.44 for the first half
of 1996 compared to $2.41 for the first half of 1995.
The Board of Directors increased the quarterly cash dividend by 17%
beginning in June 1996; i.e. from 60 cents per share to 70 cents per share.
Cash dividends in the first half of 1996 increased to $40,578,000 compared to
$34,311,000 in the first half of 1995.
Total debt at the end of the first half of 1996 was $675,977,000,
essentially unchanged from year-end 1995, with a debt-to-capital ratio of
35.8%. On June 27, 1996 Fina Oil and Chemical Company, the Company's principal
operating subsidiary, filed on Form S-3 a $150 million debt shelf registration
which was declared effective by the Securities and Exchange Commission on July
8, 1996 and $125 million in debt was issued at a rate of 6 7/8% for a term of
five years due in 2001.
Upstream revenues improved to $128,567,000 for second quarter 1996 and to
$269,879,000 for the first six months of 1996 compared to $80,125,000 for
second quarter 1995 and $163,197,000 for the first six months of 1995.
Upstream net earnings before interest and income taxes were $14,595,000 in
second quarter 1996 compared to a loss of $7,729,000 in second quarter 1995,
and were $33,060,000 for the first half of 1996 compared to a loss of
$11,313,000 for the first half of 1995. Both the second quarter and first half
improvements were due to higher natural gas and crude oil prices, as well as
higher natural gas volumes from increased exploration and production
development drilling programs. In late June, the Pharr 26 well was completed,
a 100% owned property in Hidalgo County, Texas which is producing approximately
9 million cubic feet per day of gas and 85 barrels of oil per day. Lifting
costs per barrel of oil equivalent were reduced 8% compared to last year's
first half.
Downstream revenues improved to $651,598,000 for second quarter 1996 and
to $1,228,718,000 for the first six months of 1996 compared to $601,188,000 for
second quarter 1995 and $1,109,776,000 for the first six months of 1995.
Downstream net earnings before interest and income taxes were $4,503,000 in
second quarter 1996 compared to $10,417,000 in second quarter 1995, and were
$3,165,000 for the first half of 1996 compared to $14,407,000 for the first
half of 1995. Downstream reported decreased earnings in the quarter compared to
second quarter 1995 primarily due to lower industry fuels refining margins and
aromatics margins, which are especially important at the Port Arthur Refinery
where the Company is among industry leaders in aromatics production. First half
of 1996 included the impact of planned maintenance downtimes at the Big
Spring Refinery for a turnaround on the fluid catalytic cracking unit
("FCCU"), the crude unit and the reformer. Simultaneously, a FCCU enhancement
project was installed to improve yields.
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Chemicals revenues were $267,091,000 for second quarter 1996 and were
$513,741,000 for the first six months of 1996 compared to $284,008,000 for
second quarter 1995 and $555,504,000 for the first six months of 1995.
Chemicals net earnings before interest and income taxes were $53,501,000 in
second quarter 1996 compared to $77,934,000 in second quarter 1995, and were
$107,937,000 for the first half of 1996 compared to $145,248,000 for the first
half of 1995. The reductions reflect a 44% decline in average margins while
sales volumes increased 29% primarily due to expansions and debottleneck
projects in the polypropylene and styrenics businesses. Revenues were down due
to price decreases which were partially offset by increased sales volumes. In
mid-June, the Company completed, ahead of schedule and below budget, a 250
million pound crystal polystyrene production line, making the Carville
Polystyrene Plant the largest polystyrene plant in the world. At the LaPorte
polypropylene plant, an approximate 500 million pound expansion which
started-up at the end of 1995, made it the largest polypropylene plant in the
world.
The Company's annual meeting of shareholders was held April 17, 1996. All
members of the Board of Directors were reelected.
The declared dividend of $.70 per share was paid on June 17, 1996 to
shareholders of record on June 3, 1996.
The next regular dividend is expected to be paid in September 1996.
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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 Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
No Form 8-K's were filed during the period April 1, 1996 through, June 30,
1996. Form 8-K was filed completing underwriting and pricing agreements
relating to a public debt offering on August 2, 1996. The debt offering
filing was effective on July 8, 1996 and was filed on Form S-3.
Exhibits incorporated herein by reference:
(27) Financial Data Schedule
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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.
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(REGISTRANT)
Date: August 12, 1996
BY:
Yves Bercy
Vice President, Chief Financial
Officer and Treasurer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule