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, 1997
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
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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.
29,217,572 Class A as of July 31, 1997
2,000,000 Class B as of July 31, 1997
2
FINA, Inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
1997 1996
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ASSETS
Current assets:
Cash and cash equivalents $ 6,083 $ 1,585
Accounts and notes receivable 539,783 552,553
Inventories 370,181 318,565
Prepaid expenses and other current assets 34,193 31,995
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Total current assets 950,240 904,698
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Property, plant, and equipment; net of $1,575,474 accumulated
depreciation at 6/30/97 and $1,504,018 at 12/31/96 1,699,000 1,720,965
Other assets 236,534 230,159
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$2,885,774 $2,855,822
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations $ 159,076 $ 71,735
Current installments of long term debt and lease obligations 62,965 37,188
Accounts payable and accrued liabilities 556,927 633,034
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Total current liabilities 778,968 741,957
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Long term debt, excluding current installments 532,364 587,290
Other deferred credits and liabilities 294,761 279,290
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 29,217,572 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 450,947 450,899
Retained earnings 813,125 780,778
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Total stockholders' equity 1,279,681 1,247,285
Commitments and contingencies -- --
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$2,885,774 $2,855,822
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See accompanying notes to consolidated financial statements.
3
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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1997 1996 1997 1996
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Revenues:
Sales and other operating revenues $1,034,558 $ 1,047,290 $2,148,626 $ 2,012,405
Interest and other, net 1,712 (303) 7,087 (3,018)
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1,036,270 1,046,987 2,155,713 2,009,387
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Costs and expenses:
Cost of raw materials and products purchased 775,710 802,716 1,653,826 1,527,584
Direct operating expenses 92,138 96,271 180,065 190,062
Selling, general, and administrative expenses 24,833 23,328 46,260 44,001
Taxes, other than on income 13,811 11,921 28,162 23,895
Dry holes and abandonments 9,363 3,405 11,418 7,520
Depreciation, depletion, amortization,
and lease impairment 50,613 41,220 98,091 80,903
Interest charges, net 9,699 9,757 19,304 19,495
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976,167 988,618 2,037,126 1,893,460
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Earnings before income taxes 60,103 58,369 118,587 115,927
Income taxes 20,080 20,290 39,414 39,826
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Net earnings $ 40,023 $ 38,079 $ 79,173 $ 76,101
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Earnings per common share (note 2) $ 1.28 $ 1.22 $ 2.54 $ 2.44
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See accompanying notes to consolidated financial statements.
4
FINA, Inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
1997 1996
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Cash flows from operating activities:
Net earnings 79,173 76,101
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, depletion, amort., lease impairment & aband. 98,499 81,009
Net equity in losses of affiliates 2,894 2,562
Loss (gain) on sale of assets (8,313) (2,995)
Changes in assets and liabilities:
Accounts and notes receivable 12,770 (85,697)
Inventories (51,616) (533)
Prepaid expenses and other current assets (2,198) (1,432)
Accounts payable and accrued liabilities (84,206) 30,195
Current and deferred income taxes 28,925 26,807
Other (9,619) (24,251)
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Net cash provided by operating activities 66,309 101,766
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Cash flows from investing activities:
Additions to property, plant and equipment (78,982) (91,678)
Proceeds from sale of assets 13,673 11,561
Investments in and advances to affiliates (7,917) (214)
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Net cash used in investing activities (73,226) (80,331)
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Cash flows from financing activities:
Additions to long term debt and lease obligations 906 200,577
Payments of long term debt and lease obligations (30,055) (229,420)
Net change in short term obligations 87,341 43,000
Issuance of common stock 49 302
Dividends paid (46,826) (40,578)
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Net cash provided (used) in financing activities 11,415 (26,119)
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Net increase (decrease) in cash and cash equivalents 4,498 (4,684)
Cash and cash equivalents at beginning of year 1,585 7,271
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Cash and cash equivalents at end of period $ 6,083 $ 2,587
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FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 and six months ended June 30, 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 31,217,372 and
31,214,372 for the three months ended June 30, 1997 and 1996,
respectively. The weighted average number of outstanding shares was
31,217,029 and 31,212,143 for the six months ended June 30, 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).
June 30, December 31,
1997 1996
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Current assets $ 894,715 $ 818,116
Noncurrent assets 1,899,726 1,914,715
Current liabilities (725,315) (659,894)
Noncurrent liabilities (1) (1,877,511) (1,956,490)
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Net Assets $ 191,615 $ 116,447
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Six Months Ended June 30, Three Months Ended June 30,
1997 1996 1997 1996
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Sales and other operating revenues $ 1,889,773 $1,818,617 $929,674 $960,809
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Gross profit (2) $ 182,807 $ 169,124 $100,199 $ 91,590
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Net earnings $ 76,478 $ 63,449 $ 39,294 $ 36,329
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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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FINA, INC.
UNAUDITED SEGMENT INFORMATION
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SIX MONTHS SECOND QUARTER
1997 1996 1997 1996
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EARNINGS (Thousands, except share and per-share amounts)
Upstream $39,578 $33,060 $4,091 $14,595
Downstream $31,827 $3,165 $29,820 $4,503
Chemicals $75,649 $107,937 $40,575 $53,501
Corporate / Financing ($28,467) ($28,234) ($14,383) ($14,228)
Income Tax ($39,414) ($39,827) ($20,080) ($20,292)
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Total Net Earnings $79,173 $76,101 $40,023 $38,079
========== ========== ========== ==========
Net Earnings Per Share $2.54 $2.44 $1.28 $1.22
Average Shares Outstanding 31,217,029 31,212,143 31,217,372 31,214,372
OPERATING STATISTICS
Upstream
Crude Oil Production - MBD 10.3 9.7 10.3 9.9
Natural Gas Production - MMCFD 186 139 183 145
Natural Gas Sales - MMCFD 700 521 673 525
Average Oil Price/BBL $18.71 $17.92 $17.07 $18.93
Average Natural Gas Sales Price/MCF $ 2.71 $ 2.65 $ 2.29 $ 2.49
Downstream
Refinery Throughput - MBD 230.6 220.6 229.0 226.3
Chemicals
Styrene Sales Volume - MMLB 660.3 583.0 334.3 308.8
Polystyrene Sales Volume - MMLB 499.7 407.0 263.6 212.3
Polypropylene Sales Volume - MMLB 663.2 680.2 325.7 329.0
Polyethylene Sales Volume - MMLB 186.4 204.1 85.6 98.6
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Total Chemicals Sales Volume - MMLB 2,009.6 1,874.3 1,009.2 948.7
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PART I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Net earnings were $40,023,000 for the quarter ended June 30, 1997
compared to $38,079,000 for the second quarter of 1996. Sales and other
operating revenues were $1,034,558,000 compared to $1,047,290,000 for second
quarter 1996. Earnings per share were $1.28 compared to $1.22 per share for the
second quarter of last year.
The net earnings increase in second quarter 1997 was largely
attributable to stronger refining and marketing margins, partially offset by
lower crude oil and natural gas prices, increased exploration costs, and weaker
chemicals margins. Sales and other operating revenues were essentially
unchanged from the same period last year as higher volumes offset price
declines in all business segments.
For the six months of 1997, net earnings were $79,173,000 compared to
$76,101,000 for the same period in 1996 as higher Upstream and Downstream
earnings more than offset lower Chemicals profits. Earnings per share for the
first six months of 1997 were $2.54 per share compared to $2.44 per share for
the same period in 1996. Sales and other operating revenues increased to
$2,148,626,000 during the six-month period compared to $2,012,405,000 for the
same period in 1996, reflecting increased volumes in all business segments and
slightly higher Upstream and Downstream prices.
Capital expenditures for the six months were $100,399,000 compared to
$104,021,000 for the same period in 1996. Chemicals expansion projects
continued at both the La Porte Polypropylene Plant and the Bayport Polyethylene
Plant; capital expenditures are expected to increase during the second half of
the year as construction accelerates. An increase to the capital budget of
$4,000,000 was approved by the Board of Directors for the current portion of an
expansion of the polymer grade propylene splitter at Mont Belvieu, Texas. The
total capital budget for 1997 is now $326,400,000.
The total debt to total capital ratio increased slightly to 37%,
largely due to higher working capital requirements for the various business
expansions.
In the Upstream, earnings before interest and income taxes (EBIT)
were $4,091,000 in the second quarter of 1997 compared to $14,595,000 for the
same period in 1996. For the first half of 1997, Upstream EBIT was $39,578,000
compared to $33,060,000 in the first six months of 1996. An aggressive
exploration program was reflected in lower second quarter earnings, while
improved volumes and higher crude oil and natural gas prices contributed to
increased first half results. Crude oil and natural gas volumes increased
compared to last year's first half, the result of successful step-out and
development drilling activities, while lifting costs per barrel of oil
equivalent were reduced 18% compared to the same period last year.
In the Downstream, earnings before interest and income taxes (EBIT)
were $29,820,000 in the second quarter of 1997 compared to $4,503,000 for the
same period in 1996. For the six-month period of 1997, Downstream EBIT was
$31,827,000 compared to $3,165,000 for the same period in 1996. Industry
refining margins rose significantly during first half 1997, while total
throughput increased, reflecting good overall refinery operations with new
throughput records on numerous units, lower costs, and the absence of last
year's first half turnaround activities at the Big Spring, Texas Refinery.
Chemicals EBIT for the second quarter was $40,575,000 which was a
decrease from second quarter 1996's EBIT of $ 53,501,000. For the six-month
period of 1997, EBIT of $75,649,000 was down from the corresponding period in
1996 of $ 107,937,000 reflecting a 36% decline in average margins due to
increased industry capacity. This was only partially offset by a 7% sales
volume increase, largely the result of the mid-1996 expansion of the
Polystyrene Plant in Carville, Louisiana.
8
The Company's regular quarterly dividend of $.80 per share was paid
on June 17, 1997 to shareholders of record on June 3, 1997. On July 23, 1997,
the Board of Directors voted a regular quarterly dividend of $.80 per share to
be paid on September 18, 1997 to shareholders of record on September 5, 1997.
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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, 1997 through June
30, 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: August 13, 1997
BY: /s/ Yves Bercy
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Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule