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 March 31, 1997
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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 _____________
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.
29,217,172 Class A as of April 28, 1997
2,000,000 Class B as of April 28, 1997
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FINA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
1997 1996
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ASSETS
Current assets:
Cash and cash equivalents $ 8,156 $ 1,585
Accounts and notes receivable 557,591 552,553
Inventories 309,135 318,565
Prepaid expenses and other current assets 32,999 31,995
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Total current assets 907,881 904,698
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Property, plant, and equipment; net of $1,546,981 accumulated
depreciation at 3/31/97 and $1,504,018 at 12/31/96 1,697,369 1,720,965
Other assets 230,804 230,159
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$2,836,054 $2,855,822
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations $ 74,858 $ 71,735
Current installments of long term debt and lease obligations 37,456 37,188
Accounts payable and accrued liabilities 590,168 633,034
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Total current liabilities 702,482 741,957
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Long term debt, excluding current installments 583,200 587,290
Other deferred credits and liabilities 285,754 279,290
Stockholders' equity:
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 29,217,172 and
29,216,172 shares in 1997 and 1996 14,609 14,608
Class B common stock of $.50 par value. Authorized
and issued 2,000,000 shares 1,000 1,000
Additional paid-in capital 450,933 450,899
Retained earnings 798,076 780,778
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Total stockholders' equity 1,264,618 1,247,285
Commitments and contingencies -- --
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$2,836,054 $2,855,822
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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 MARCH 31,
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1997 1996
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Revenues:
Sales and other operating revenues $1,114,068 $ 965,115
Interest and other, net 5,375 (2,715)
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1,119,443 962,400
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Costs and expenses:
Cost of raw materials and products purchased 878,116 724,868
Direct operating expenses 87,927 93,791
Selling, general, and administrative expenses 21,427 20,673
Taxes, other than on income 14,351 11,974
Dry holes and abandonments 2,055 4,115
Depreciation, depletion, amortization,
and lease impairment 47,478 39,683
Interest charges, net 9,605 9,738
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1,060,959 904,842
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Earnings before income taxes 58,484 57,558
Income taxes 19,334 19,536
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Net earnings $ 39,150 $ 38,022
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Earnings per common share - (note 2) $ 1.25 $ 1.22
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See accompanying notes to consolidated financial statements.
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FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
1997 1996
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Cash flows from operating activities:
Net earnings 39,150 38,022
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, depletion, amort., lease impairment & aband 47,584 39,735
Net equity in losses of affiliates 1,605 1,274
Loss (gain) on sale of assets (6,176) (352)
Changes in assets and liabilities:
Accounts and notes receivable (5,038) (82,672)
Inventories 9,430 (3,862)
Prepaid expenses and other current assets (1,004) (4,724)
Accounts payable and accrued liabilities (45,959) 67,948
Current and deferred income taxes 9,967 11,752
Other (2,143) (20,114)
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Net cash provided by operating activities 47,416 47,007
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Cash flows from investing activities:
Additions to property, plant and equipment (24,744) (38,588)
Proceeds from sale of assets 8,424 7,207
Investments in and advances to affiliates (2,009) (570)
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Net cash used in investing activities (18,329) (31,951)
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Cash flows from financing activities:
Additions to long term debt and lease obligations 18 0
Payments of long term debt and lease obligations (3,840) (3,301)
Net change in short term obligations 3,123 4,000
Issuance of common stock 35 171
Dividends paid (21,852) (18,727)
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Net cash used in financing activities (22,516) (17,857)
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Net increase (decrease) in cash and cash equivalents 6,571 (2,801)
Cash and cash equivalents at beginning of year 1,585 7,271
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Cash and cash equivalents at end of year $ 8,156 $ 4,470
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FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(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 months ended March 31, 1997 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 31,216,722 and
31,209,997 for the three months ended March 31, 1997 and 1996,
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 notes to the consolidated financial statements on pages 19 through
34 of the Company's 1996 Form 10-K are an integral part of these
consolidated financial statements.
(5) 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).
March 31, December 31,
1997 1996
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Current assets $ 846,188 $ 818,116
Noncurrent assets 1,892,508 1,914,715
Current liabilities (642,390) (659,894)
Noncurrent liabilities (1) (1,943,649) (1,956,490)
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Net Assets $ 152,657 $ 116,447
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Three Months Ended March 31,
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1997 1996
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Sales and other operating revenues $ 960,099 $ 857,808
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Gross profit (2) $ 82,608 $ 77,534
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Net earnings $ 37,184 $ 21,597
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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.
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PART I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Net earnings were $39,150,000 for the quarter ended March 31, 1997
compared to $38,022,000 for the first quarter of 1996. Sales and other
operating revenues were $1,114,068,000 compared to $965,115,000 for first
quarter 1996. Earnings per share were $1.25 compared to $1.22 per share for the
first quarter of last year.
The net earnings increase in the first quarter 1997 was largely
attributable to higher Upstream volumes and prices, partially offset by lower
industry chemicals margins. Downstream increased only slightly as higher
refining margins were mostly offset by inventory value effects of the large
drop in crude prices during the first quarter 1997. Sales and other operating
revenues increased primarily due to higher prices in the Upstream and
Downstream and higher Chemicals volumes, partially offset by lower Chemicals
prices.
The Board of Directors increased the cash dividend beginning in June
1997 ; i.e., from 70 cents per share to 80 cents per share.
Upstream results in the first quarter were improved compared with the
corresponding period last year primarily due to higher volumes and increases in
natural gas and crude oil prices. Earnings before interest and income taxes
("EBIT") were $35,487,000 in first quarter 1997 compared to $18,465,000 in
first quarter 1996. The improvement was due to increased production volumes
reflecting improved results from 1996 and early 1997 drilling activity, as well
as higher natural gas and crude oil prices. Natural gas production increased
43% to 189 million cubic feet per day. Also, lifting costs per barrel of oil
equivalent were reduced 23% compared to last year's first quarter. In
addition, total natural gas sales increased 40% to 727 million cubic feet per
day. During first quarter 1997, interests were acquired with other partners in
20 offshore blocks in the Central Gulf of Mexico lease sale, increasing
offshore exploration inventory.
Downstream reported increased earnings in first quarter 1997 compared to
first quarter 1996. Downstream EBIT were $2,007,000 in first quarter of 1997
compared to a loss of $1,338,000 in first quarter 1996, as improved industry
refining margins, and the absence of a 1996 refinery maintenance downtime were
only partially offset by the large drop in crude oil prices which decreased
inventory values. Total refining throughput increased to 232,000 barrels per
day in first quarter 1997 compared to 215,000 barrels per day for the same
period last year. During the quarter, a product supply alliance was made with
Holly Corporation to create a network to provide sufficient gasoline and diesel
supplies to satisfy total demand growth in the West Texas, New Mexico and
Arizona markets for at least the next five years. The project is expected to
use existing assets and provide the lowest capital cost alternative for
product supply from the Gulf Coast to the Southwest markets.
Chemicals results were down 35% due to a 40% drop in industry refining
margins partially offset by higher sales volumes. Chemicals EBIT for first
quarter 1997 were $35,074,000 compared to $54,436,000 for first quarter 1996.
The reduction reflects a 40% decline in overall average margins, partially
offset by an 8% increase in total sales volumes. The Carville Polystyrene
Plant's fourth production line, which was completed in June 1996 making the
plant the largest polystyrene plant in the world, increased production and sales
of polystyrene by 22% in first quarter 1997 compared to the same period in 1996.
The capital budget was amended in second quarter 1997 to include an increase of
$60,000,000, the majority of which to include an additional polypropylene
production line (Train 9) at the La Porte, Texas Plant.
The Company's annual meeting of shareholders was held April 16, 1997.
All members of the Board of Directors as proposed in the Company's Proxy
Statement were elected other than Mr. Robert L. Mitchell who withdrew his name
from nomination. In his stead, the shareholders elected Mr. Albert V. Casey.
The Company's regular quarterly dividend of $.70 per share was paid
March 18, 1997 to shareholders of record on March 6, 1997. Due to a dividend
increase, the next declared dividend of $.80 per share will be paid on June 17,
1997 to shareholders of record on June 3, 1997.
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FINA, INC.
UNAUDITED SEGMENT INFORMATION
FIRST QUARTER
1997 1996
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EARNINGS (Thousands, except share and per-share amounts)
Upstream $ 35,487 $ 18,465
Downstream $ 2,007 $ (1,338)
Chemicals $ 35,074 $ 54,436
Corporate / Financing $ (14,084) $ (14,006)
Income Tax $ (19,334) $ (19,535)
Total Net Earnings $ 39,150 $ 38,022
Net Earnings Per Share $ 1.25 $ 1.22
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Average Shares Outstanding 31,216,722 31,209,997
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OPERATING STATISTICS
Upstream
Crude Oil Production - MBD 10.3 9.5
Natural Gas Production - MMCFD 189 132
Natural Gas Sales - MMCFD 727 518
Average Oil Price/BBL $ 20.34 $ 16.87
Average Natural Gas Sales Price/MCF $ 2.91 $ 2.20
Downstream
Refinery Throughput - MBD 232.2 215.0
Chemicals
Styrene Sales Volume - MMLB 326.0 274.2
Polystyrene Sales Volume - MMLB 236.1 194.7
Polypropylene Sales Volume - MMLB 337.5 351.2
Polyethylene Sales Volume - MMLB 100.8 105.5
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Total Chemicals Sales Volume - MMLB 1,000.4 925.6
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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.
At the annual meeting of shareholders, held April 16, 1997 nine
directors were elected.
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
One Form 8-K was filed on March 6, 1997 reporting a news release by
PetroFina S.A. offering to negotiate a merger whereby the Company would
become a wholly-owned affiliate. Form 10-K/A numbers 1 and 2, as cover
for the Forms 11-K pertaining to the FINA Capital Accumulation Plan (a
401(k) plan) and the Amdel Savings Plan, were filed April 25, 1997.
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: May 13, 1997
BY:
Yves Bercy
Vice President and Chief
Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule