Exhibit 99.1
Tesoro Reports First Quarter Earnings
SAN ANTONIO--(BUSINESS WIRE)--April 30, 2003--Tesoro Petroleum
Corporation (NYSE:TSO) today reported net income of $20.4 million or
$0.32 per share for the first quarter of 2003 compared to a net loss
of $55.6 million or $1.15 per share for the first quarter of 2002. The
first quarter of 2003 results include $8.8 million in pre-tax charges,
or $0.08 per share, which are primarily related to the company's early
retirement program and severance costs.
"Our first quarter operating income of $79.5 million demonstrates
the earnings potential of our assets, which last year did not include
our California refinery," said Bruce A. Smith, Chairman, President and
CEO of Tesoro. "In addition to the benefit of that refinery, the
results were better due to stronger industry margins and the continued
progress of our operating income initiatives," Smith said.
"Compared to the average of the third and fourth quarters of last
year, which is our baseline period for measuring improvements, we made
good progress toward our $65 million goal. First quarter operating
income improved by $15 million, as we reduced costs by $10 million and
captured non-capital refining improvements totaling $5 million. A
component of these initiatives was a company-wide workforce reduction
that included a voluntary early retirement program. Overall, we
estimate that our workforce reduction program will realize annual
savings of nearly $20 million from the elimination of 214 full-time
and contract positions. We also believe that costs in the second
quarter will continue to decline and that we will achieve our goal by
the end of 2003," added Smith.
On April 17 Tesoro completed its previously announced refinancing
of its senior secured credit facility. "With this refinancing, we
reduced our annual cash interest expense, improved our overall
financial flexibility and positioned ourselves to expedite our debt
reduction program. It is our belief that these changes will permit us
to withstand lower industry margins," said Smith.
The company also repaid $76 million in term debt during the
quarter. "Our plan has targeted $500 million in debt reduction by the
end of 2003. As of March 31 we had $300 million remaining on our goal.
With the benefit of the new credit facility and with reasonable
margins, we expect to continue to generate strong cash flow. Debt
reduction is our top financial priority and I am committed to
achieving the targeted debt reduction I set last June," added Smith.
Public Invited to Listen to Analyst Conference Call via Internet
At 2 p.m., CDT, today Tesoro will broadcast, live, its conference
call with analysts regarding first quarter 2003 results. Interested
parties may listen to the live conference call over the Internet by
logging on to Tesoro's Internet site at http://www.tesoropetroleum.com
and clicking on the "What's New" section.
Tesoro Petroleum Corporation, a Fortune 500 Company, is an
independent refiner and marketer of petroleum products and provider of
marine logistics services. Tesoro operates six refineries in the
western United States with a combined capacity of nearly 560,000
barrels per day. Tesoro's retail-marketing system includes
approximately 600 branded retail stations, of which over 200 are
company operated under the Tesoro(R) and Mirastar(R) brands.
This news release contains certain statements that are
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These forward-looking statements contain expectations with
respect to the company's future cash interest expense, working capital
requirements and debt and cost reduction initiatives. Factors which
may cause actual results to differ from those forward-looking
statements include: changes in general economic conditions, the timing
and extent of changes in demand for refined products, availability and
cost of crude oil, other feedstock's, or of refined products, the
price differentials between light and heavy crude oils and light and
heavy refined products, throughput and yield levels, disruptions due
to equipment interruptions or failure at Company or third-party
facilities, and other factors beyond the Company's control. For more
information concerning factors that could cause such a difference, see
the company's annual report on Form 10-K and quarterly reports on Form
10-Q filed with the Securities and Exchange Commission. The company
undertakes no obligation to publicly release the result of any
revisions to any such forward-looking statements that may be made to
reflect events or circumstances that occur, or which the Company
becomes aware of, after the date hereof.
TESORO PETROLEUM CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions except per share amounts)
Three Months Ended
March 31,
------------------
2003(a) 2002(b)
-------- --------
Revenues $2,286.1 $1,232.6
Costs and Expenses
Costs of sales and operating expenses 2,131.1 1,231.9
Selling, general and administrative expenses 38.3 38.5
Depreciation and amortization 37.0 25.2
Loss on asset sales 0.2 0.2
-------- --------
Operating Income (Loss) 79.5 (63.2)
Interest and Financing Costs, Net
of Capitalized Interest (47.2) (30.3)
Interest Income 0.2 0.7
-------- --------
Earnings (Loss) Before Income Taxes 32.5 (92.8)
Income Tax Provision (Benefit) 12.1 (37.2)
-------- --------
Net Earnings (Loss) $ 20.4 $ (55.6)
======== ========
Net Earnings (Loss) Per Share
Basic $ 0.32 $ (1.15)
======== ========
Diluted $ 0.32 $ (1.15)
======== ========
Weighted Average Common Shares
Basic 64.6 48.2
======== ========
Diluted 64.7 48.2
======== ========
------------------------------
(a) Results for 2003 include the California refinery operations
acquired in May 2002 and interest expense for the related
financing.
(b) Certain reclassifications were made to prior period amounts to
conform to current presentation, principally to reclassify
amortization of major maintenance turnaround costs from operating
expenses to depreciation and amortization and to net purchases and
sales considered to be energy trading contracts.
TESORO PETROLEUM CORPORATION
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In millions)
Three Months Ended
March 31,
------------------
2003(a) 2002(b)
-------- --------
Operating Income (Loss)
Refining $ 109.2 $ (35.8)
Retail (8.1) (9.6)
Other 1.1 0.5
-------- --------
Total Segment Operating Income 102.2 (44.9)
Corporate and Unallocated Costs(c) (22.5) (18.1)
Loss on asset sales (0.2) (0.2)
-------- --------
Operating Income (Loss) 79.5 (63.2)
Interest and Financing Costs, Net
of Capitalized Interest (47.2) (30.3)
Interest Income 0.2 0.7
-------- --------
Earnings (Loss) Before Income Taxes $ 32.5 $ (92.8)
======== ========
Depreciation and Amortization
Refining 29.8 $ 20.4
Retail 5.0 3.4
Other 0.7 0.7
Corporate 1.5 0.7
-------- --------
Depreciation and Amortization $ 37.0 $ 25.2
======== ========
Capital Expenditures
Refining $ 27.0 $ 36.3
Retail 0.2 10.1
Other 0.3 1.2
Corporate 0.2 5.0
-------- --------
Capital Expenditures $ 27.7 $ 52.6
======== ========
------------------------------
(c) Corporate and unallocated costs in 2003 include $4.6 million in
reorganization costs, primarily a non-cash charge for voluntary
early retirement benefits and severance payments. An additional
$4.2 million of reorganization costs were charged to the operating
segments, including $2.6 million in Refining, $1.2 million in
Retail and $0.4 million in Other. Unallocated costs also include
a $1.1 million non-cash charge for the cumulative effect of a
required accounting change for asset retirement obligations.
BALANCE SHEET DATA
(Unaudited)
(Dollars in millions)
March 31, Dec. 31,
2003 2002
--------- ---------
Total Assets $ 3,664.0 $ 3,758.8
Total Debt $ 1,906.0 $ 1,976.7
Total Stockholders' Equity $ 908.0 $ 887.6
Total Debt to Capitalization Ratio 68% 69%
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
------------------
2003(a) 2002(b)
-------- --------
REFINING SEGMENT
Total Refining Segment
Throughput (thousand barrels per day)
Heavy crude 282.9 113.3
Light crude 167.5 195.1
Other feedstocks 14.1 5.3
-------- --------
Total Throughput 464.5 313.7
======== ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 229.8 118.1
Jet fuel 56.5 62.0
Diesel fuel 97.7 52.9
Heavy oils, residual products, internally
produced fuel and other 100.0 85.7
-------- --------
Total Yield 484.0 318.7
======== ========
Refining Margin ($/throughput bbl)(d)
Gross $ 6.92 $ 2.52
Manufacturing cost before depreciation
and amortization(e) $ 2.90 $ 2.21
Segment Operating Income ($ millions)
Gross refining margin
(after inventory changes)(f) $ 294.8 $ 80.1
Expenses(g)
Manufacturing costs 121.3 62.3
Other operating expenses 26.4 23.8
Selling, general and administrative 8.1 9.4
Depreciation and amortization(h) 29.8 20.4
-------- --------
Segment Operating Income (Loss) $ 109.2 $ (35.8)
======== ========
Product Sales (thousand barrels per day)(i)
Gasoline and gasoline blendstocks 270.0 208.0
Jet fuel 87.3 88.0
Diesel fuel 123.5 95.5
Heavy oils, residual products and other 62.7 59.4
-------- --------
Total Product Sales 543.5 450.9
======== ========
Product Sales Margin ($/barrel)
Average sales price $ 42.59 $ 26.15
Average costs of sales 36.60 24.18
-------- --------
Product Sales Margin $ 5.99 $ 1.97
======== ========
------------------------------
(d) Management uses gross refining margin per barrel to compare
profitability to other companies in the industry. Gross refining
margin per barrel is calculated by dividing gross refining margin
by total refining throughput. Gross refining margin per barrel
may not be comparable to similarly titled measures used by other
entities.
(e) Management uses manufacturing costs per barrel to evaluate the
efficiency of refinery operations. Manufacturing costs per barrel
may not be comparable to similarly titled measures used by other
entities.
(f) Gross refining margin is revenues less cost of refining feedstock
and purchased products. Approximates total Refining segment
throughput times gross refining margin per barrel, adjusted for
changes in refined product inventory due to selling a volume and
mix of product that is different than actual volumes manufactured.
Also includes the effect of intersegment sales to the Retail
segment at prices which approximate market.
(g) Includes $2.6 million for voluntary early retirement benefits and
severance payments in 2003.
(h) Includes manufacturing depreciation and amortization per
throughput barrel of approximately $0.62 and $0.55 for the three
months ended March 31, 2003 and 2002, respectively.
(i) Sources of total product sales include products manufactured at
the refineries, products drawn from inventory balances and
products purchased from third parties.
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
-------------------
2003 2002
-------- --------
Refining By Region
Pacific Northwest (Alaska & Washington)
Throughput (thousand barrels per day)
Heavy crude 79.6 53.6
Light crude 62.9 79.8
Other feedstocks 7.4 1.7
-------- --------
Total Throughput 149.9 135.1
======== ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 66.3 46.2
Jet fuel 25.0 26.9
Diesel fuel 23.0 16.6
Heavy oils, residual products, internally
produced fuel and other 40.9 47.0
-------- --------
Total Yield 155.2 136.7
======== ========
Refining Margin ($/throughput bbl)
Gross $ 6.19 $ 2.48
Manufacturing cost before depreciation and
amortization $ 2.45 $ 2.59
Mid-Pacific (Hawaii)
Throughput (thousand barrels per day)
Heavy crude 53.5 59.7
Light crude 21.9 22.3
-------- --------
Total Throughput 75.4 82.0
======== ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 17.7 20.3
Jet fuel 23.4 25.2
Diesel fuel 12.7 11.2
Heavy oils, residual products, internally
produced fuel and other 22.8 26.5
-------- --------
Total Yield 76.6 83.2
======== ========
Refining Margin ($/throughput bbl)
Gross $ 3.15 $ 2.93
Manufacturing cost before depreciation and
amortization $ 1.40 $ 1.43
Mid-Continent (North Dakota & Utah)
Throughput (thousand barrels per day)
Light crude 78.9 93.0
Other feedstocks 2.5 3.6
-------- --------
Total Throughput 81.4 96.6
======== ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 44.9 51.6
Jet fuel 8.1 9.9
Diesel fuel 22.4 25.1
Heavy oils, residual products, internally
produced fuel and other 8.9 12.2
-------- --------
Total Yield 84.3 98.8
======== ========
Refining Margin ($/throughput bbl)
Gross $ 4.71 $ 2.27
Manufacturing cost before depreciation and
amortization $ 2.47 $ 2.34
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
-------------------
2003 2002
-------- --------
California
Throughput (thousand barrels per day)
Heavy crude 149.8 --
Light crude 3.8 --
Other feedstocks 4.2 --
-------- --------
Total Throughput 157.8 --
======== ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 100.9 --
Diesel fuel 39.6 --
Heavy oils, residual products, internally
produced fuel and other 27.4 --
-------- --------
Total Yield 167.9 --
======== ========
Refining Margin ($/throughput bbl)
Gross $ 10.56 $ --
Manufacturing cost before depreciation and
amortization $ 4.27 $ --
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
------------------
2003 2002
-------- --------
RETAIL SEGMENT
Number of Stations (end of period)
Company-operated 230 218
Branded jobber/dealer 354 461
-------- --------
Total Stations 584 679
======== ========
Average Stations (during period)
Company-operated 231 215
Branded jobber/dealer 360 464
-------- --------
Total Average Retail Stations 591 679
======== ========
Fuel Sales (millions of gallons)
Company-operated 77.1 78.3
Branded jobber/dealer 66.6 94.2
-------- --------
Total Fuel Sales 143.7 172.5
======== ========
Fuel Margin ($/gallon)(j) $ 0.11 $ 0.09
Merchandise Sales ($ millions) $ 24.9 $ 22.2
Merchandise Margin ($ millions) $ 6.2 $ 5.7
Merchandise Margin % 25% 26%
Segment Operating Income (Loss) ($ millions)
Gross Margins
Fuel(k) $ 16.4 $ 16.3
Merchandise and other non-fuel margin 7.3 7.0
-------- --------
Total gross margins 23.7 23.3
Expenses(l)
Operating expenses 18.4 18.4
Selling, general and administrative 8.4 11.1
Depreciation and amortization 5.0 3.4
-------- --------
Segment Operating Income (Loss) $ (8.1) $ (9.6)
======== ========
------------------------------
(j) Fuel margin per gallon is calculated by dividing fuel gross margin
by fuel sales volumes. Fuel margin per gallon may not be
comparable to similarly titled measures used by other entities.
Management uses fuel margin per gallon calculations to compare
profitability to other companies in the industry.
(k) Includes the effect of intersegment purchases from the Refining
segment at prices which approximate market.
(l) Includes $1.2 million for voluntary early retirement benefits and
severance payments in 2003.
CONTACT: Tesoro Petroleum Corp., San Antonio
Investors: Susan Lerette, 210/283-2631
or
Media: Tara Ford, 210/283-2676