-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gHfTkBvCF5TDBicFfegjvxvKf9C31XW+ZpMZYzFbcHiJUsGVjYVJJuDSARvkzjsq 6BRHjDGmNESSWwSVLULn5g== 0000025885-95-000033.txt : 19950516 0000025885-95-000033.hdr.sgml : 19950516 ACCESSION NUMBER: 0000025885-95-000033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROWN CENTRAL PETROLEUM CORP /MD/ CENTRAL INDEX KEY: 0000025885 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 520550682 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01059 FILM NUMBER: 95538666 BUSINESS ADDRESS: STREET 1: ONE N CHARLES CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4015397400 FORMER COMPANY: FORMER CONFORMED NAME: UNITED CENTRAL OIL CORP DATE OF NAME CHANGE: 19680923 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 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 1-1059 CROWN CENTRAL PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) Maryland 52-0550682 (State or other jurisdiction of(I.R.S. Employer Identification Number) incorporation or organization) One North Charles Street, Baltimore, Maryland 21201 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 410-539- 7400 Not Applicable (Former name, former address and former fiscal year, if changed since last report) 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, and (2) has been subject to such filing requirements for the past 90 days. YES X NO The number of shares outstanding at April 30, 1995 of the Registrant's $5 par value Class A and Class B Common Stock was 4,817,392 shares and 5,135,506 shares, respectively. -1- CROWN CENTRAL PETROLEUM CORPORATION AND SUBSIDIARIES Table of Contents PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements (Unaudited) Consolidated Condensed Balance Sheets March 31, 1995 and December 31, 1994 3-4 Consolidated Condensed Statements of Operations Three months ended March 31, 1995 and 1994 5 Consolidated Condensed Statements of Cash Flows Three months ended March 31, 1995 and 1994 6 Notes to Unaudited Consolidated Condensed Financial Statements 7-11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 11-14 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 15 Item 6 - Exhibits and Reports on Form 8-K 15 Exhibit 10 - Material Contracts Exhibit 19 - Previously Unfiled Documents Exhibit 20 - Interim Report to Stockholders for the three months ended March 31, 1995 Exhibit 27 - Financial Data Schedule SIGNATURE 15 -2- PART I - FINANCIAL INFORMATION Item 1 - Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars) March 31 December 31 Assets 1995 1994 ------------------------------ (Unaudited) Current Assets Cash and cash equivalents $ 52,293 $ 54,868 AAccounts receivable - net 90,019 128,984 Recoverable and current deferred income taxes 19,303 16,075 Inventories 87,074 94,933 Other current assets 8,997 1,264 ---------------------- Total Current Assets 257,686 296,124 Investments and Deferred Charges 41,860 40,125 Property, Plant and Equipment 703,988 699,204 Less allowance for depreciation 337,479 331,377 ------------------------ Net Property, Plant and Equipment 366,509 367,827 ------------------------ $ 666,055 $ 704,076 ======= ======= See notes to unaudited consolidated condensed financial statements.
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CONSOLIDATED CONDENSED BALANCE SHEETS Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars) March 31 December 31 Liabilities and Stockholders' Equity 1995 1994 --------------------------------- (Unaudited) Current Liabilities Accounts payable: Crude oil and refined products $ 111,778 $ 150,877 Other 19,367 29,988 Accrued liabilities 50,142 51,500 Current portion of long-term debt 1,701 10,062 ------------------------ Total Current Liabilities 182,988 242,427 Long-Term Debt 129,570 96,632 Deferred Income Taxes 72,794 73,402 Other Deferred Liabilities 30,418 31,154 Common Stockholders' Equity Common stock, Class A - par value $5 per share: Authorized shares--7,500,000; issued and outstanding shares--4,817,392 in 1995 and 1994 24,087 24,087 Common stock, Class B - par value $5 per share: Authorized shares--7,500,000; issued and outstanding shares--5,135,506 in 1995 and 4,985,706 in 1994 25,678 24,929 Additional paid-in capital 91,979 90,549 Unearned restricted stock (3,446) (1,266) Retained earnings 111,987 122,162 ------------------------ Total Common Stockholders' Equity 250,285 260,461 ------------------------ $ 666,055 $ 704,076 ======= ======= See notes to unaudited consolidated condensed financial statements.
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars, except per share amounts) (Unaudited) Three Months Ended March 31 1995 1994 ---------------------------- Revenues Sales and operating revenues (including excise taxes of 1995--$100,591; 1994--$93,556) $ 445,424 $ 393,586 Operating Costs and Expenses Costs and operating expenses 422,164 343,415 Selling and administrative expenses 20,005 22,060 Depreciation and amortization 9,492 10,631 Sales of property, plant and equipment 243 (323) --------------------------- 451,904 375,783 --------------------------- Operating (Loss) Income (6,480) 17,803 Interest and other income 748 393 Interest expense (3,475) (1,911) --------------------------- (Loss) Income Before Income Taxes (9,207) 16,285 Income Tax (Benefit) Expense (2,289) 7,625 --------------------------- (Loss) Income Before Extraordinary Item (6,918) 8,660 Extraordinary (Loss) from Early Extingiushment of Debt (net of income tax benefit of $2,039) (3,257) --------------------------- Net (Loss) Income $ (10,175)$ 8,660 ======== ======== Net (Loss) Income Per Share: (Loss) Income Before Extraordinary Item $ (.71) $ .88 Extraordinary (Loss) from Early Extingiushment of Debt (.33 ) -------------- ---------- - --- Net (Loss) Income Per Share $ (1.04 )$ .88 ========= ======== See notes to unaudited consolidated condensed financial statements.
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars) (Unaudited) Three Months Ended March 31 1995 1994 ----------------------- Net Cash Flows From Operating Activities Net cash from operations before changes in working capital $ 1,636$ 19,454 Net changes in working capital items (15,215) (17,926) -------------------------- Net Cash (Used in) Provided by Operating Activities (13,579) 1,528 -------------------------- Cash Flows From Investment Activities Capital expenditures (6,602) (7,558) ) Proceeds from sales of property, plant and equipment 406 3,004 Deferred turnaround maintenance (1,750) (191) Other charges to deferred assets (2,442) (545) ------------------------- Net Cash (Used in) Investment Activities (10,388) (5,290) ------------------------- Cash Flows From Financing Activities Proceeds from debt and credit agreement borrowings 142,887 1,228 ) (Repayments) of debt and credit agreement borrowings (121,567) (207) Net cash flows from long-term notes receivable 72 (667) ------------------------ Net Cash Provided by Financing Activities 21,392 354 ------------------------ Net (Decrease) in Cash and Cash Equivalents $ (2,575) $ (3,408) ======== ======= See notes to unaudited consolidated condensed financial statements.
-6- NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Crown Central Petroleum Corporation and Subsidiaries March 31, 1995 Note A - Basis of Presentation The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments considered necessary for a fair and comparable presentation have been included. Operating results for the three months ended March 31, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. The enclosed financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1994. Cash and Cash Equivalents - Cash in excess of daily requirements is invested in marketable securities with maturities of three months or less. Such investments are deemed to be cash equivalents for purposes of the statements of cash flows. Inventories - The Company's crude oil, refined products, and convenience store merchandise and gasoline inventories are valued at the lower of cost (last-in, first-out) or market with the exception of crude oil inventory held for resale which is valued at the lower of cost (first-in, first-out) or market. Materials and supplies inventories are valued at cost. Incomplete exchanges of crude oil and refined products due the Company or owing to other companies are reflected in the inventory accounts. At March 31, 1995, approximately 170,000 barrels of crude oil and refined products, or approximately $3.4 million of inventory, were held in excess of anticipated year-end quantities, excluding crude oil held for resale, and were valued at the lower of cost (first-in, first-out) or market. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO projections must be based on Management's estimates of expected year-end inventory levels and values. Environmental Costs: The Company conducts environmental assessments and remediation efforts at multiple locations, including operating facilities, and previously owned or operated facilities. Estimated closure and post-closure costs for active, refinery and finished product terminal facilities are not recognized until a decision for closure is made. Estimated closure and post-closure costs for active and operated retail marketing facilities and costs of environmental matters related to ongoing refinery, terminal and retail marketing operations are recognized as described below. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized. The Company accrues environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and that the amount can be reasonably estimated. Accruals for losses from environmental remediation obligations generally are recognized no later than completion of the remediation feasibility study. Estimated costs, which are based upon experience and assessments, are recorded at undiscounted amounts without considering the impact of inflation, and are adjusted periodically as additional or new information is available. Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." The income tax provision for the three months ended March 31, 1995 has been computed based upon the Company's estimated effective tax rate for the year, after recognizing permanent tax differences. -7- Financial Instruments and Hedging Activities - The Company periodically enters into interest rate swap agreements to effectively manage the cost of borrowings. All interest rate swaps are subject to market risk as interest rates fluctuate. Interest rate swaps are designated to the Company's long-term debt and are accounted for as a hedge, the net amounts payable or receivable from periodic settlements under outstanding interest rate swaps are included in interest expense. Realized gains and losses from terminated interest rate swaps are deferred and amortized into interest expense over the shorter of the term of the underlying debt or the remaining term of the original swap agreement. Settlement of interest rate swaps involves the receipt or payment of cash on a periodic basis during the duration of the contract, or upon the Company's termination of the contract, for the differential of the interest rates swapped over the term of the contract. Other instruments are used to minimize the exposure of the Company's refining margins to crude oil and refined product price fluctuations. Hedging strategies used to minimize this exposure include fixing a future margin between crude oil and certain finished products and also hedging fixed price purchase and sales commitments of crude oil and refined products. Futures, forwards and exchange traded options entered into with commodities brokers and other integrated oil and gas companies are utilized to execute the Company's strategies. These instruments generally allow for settlement at the end of their term in either cash or product. Net realized gains and losses from these hedging strategies are recognized in costs and operating expenses when the associated refined products are sold. Unrealized gains and losses represent the difference between the market price of refined products and the price of the derivative financial instrument, inclusive of refining costs. Individual transaction unrealized gains and losses are deferred in inventory and other current assets and liabilities to the extent that the associated refined products have not been sold. A hedging strategy position generating an overall net unrealized loss is recognized in costs and operating expenses. While the Company's hedging activities are intended to reduce volatility while providing an acceptable profit margin on a portion of production, the use of such a program can limit the Company's ability to participate in an improvement in related refined product profit margins. The Company is exposed to credit risk in the event of non- performance by counterparties on interest rate swaps, and futures, forwards and exchange traded options for crude and finished products, but the Company does not anticipate non- performance by any of these counterparties. The amount of such exposure is generally the unrealized gains in such contracts. Statements of Cash Flows - Net changes in working capital items presented in the Unaudited Consolidated Condensed Statements of Cash Flows reflects changes in all current assets and current liabilities with the exception of cash and cash equivalents and the current portion of long-term debt. Note B - Inventories
Inventories consist of the following: March 31 December 31 1995 1994 ----------- ----------- (thousands of dollars) Crude oil $ 44,357 $ 53,359 Refined products 76,998 74,299 ----------- ----------- Total inventories at FIFO (approximates current cost) 121,355 127,658 LIFO allowance (46,458) (45,125) ---------------------- Total crude oil and refined products 74,897 82,533 ----------- ----------- Merchandise inventory at FIFO (approximates current cost) 6,650 7,150 LIFO allowance (2,110 ) (2,110 ) ----------- ----------- Total merchandise 4,540 5,040 ----------- ----------- Materials and supplies inventory at FIFO 7,637 7,360 ----------- ----------- Total Inventory $ 87,074 $ 94,933 ======= =======
-8- Note C - Long-term Debt and Credit Arrangements On January 24, 1995, the Company completed the sale of $125 million of Unsecured 10 7/8% Senior Notes due February 1, 2005 priced at 99.75% (Notes). Approximately $55 million of the net proceeds from the sale was used to retire the Company's outstanding 10.42% Senior Notes, including a prepayment premium of $3.4 million and $8 million was used to reduce amounts outstanding under the Company's unsecured bank lines. The remaining portion of the outstanding 10.42% Senior Notes had been paid on January 3, 1995 as part of the regularly scheduled debt service. The Notes were issued under an Indenture which includes certain restrictions and limitations customary with senior indebtedness of this type including, but not limited to, the payment of dividends and the repurchase of capital stock. The retirement of the Company's outstanding 10.42% Senior Notes resulted in a net extraordinary loss in the first quarter of 1995 of $3.3 million.
Long-term debt consists of the following: March 31 December 31 1995 1994 ---------- --------------- (thousands of dollars) Unsecured 10 7/8% Senior Notes $124,687 Unsecured 10.42% Senior Notes $ 60,000 Unsecured Credit Agreement 35,000 Purchase Money Lien 5,314 5,579 Other obligations 1,270 6,115 ----------------------- 131,271 103,694 Less current portion 1,701 10,062 ----------------------- Long-Term Debt $129,570 $ 96,632 ======= =======
Note D--Crude Oil and Refined Product Hedging Activities and Other Derivative Financial Instruments The net deferred gain from crude oil and refined product hedging strategies at March 31, 1995 was $3.5 million. Included in these hedging strategies are contracts maturing from May 1995 to January 1996. The Company is using these contracts to fix the purchase price of approximately 15% of its crude requirements, and the selling price of approximately 4% of its refined products, for the aforementioned period, at current related market prices. The Company is exposed to credit risk to the extent of counterparty non-performance on forward contracts. Management monitors this credit risk by evaluating counterparties prior to and during their contractual obligation. Management considers non-performance credit risk to be remote. As of March 31, 1995, the Company has entered into interest rate swap agreements to effectively convert $47.5 million of its fixed rate debt to variable interest rate debt with maturities ranging from 1996 to 1998.
The following is a summary, by year of maturity, of the Company's outstanding interest rate swap agreements: Instruments Expected to Mature in --------------------------------------------------- 1996 1997 1998 -------------- -------------------- - ----- (thousands of dollars) Interest rate swaps $17,500 $15,000 $ 15,000 Average variable pay rates assuming current market conditions 6.50 %6.45 % 6.46 % Average fixed rate 7.00% 6.81 % 6.81%
The variable interest rates to be paid by the Company are reset on various predetermined dates which range from May 1995 to March 1998 and are based on the London Interbank Offered Rate (LIBOR). -9- The termination of existing interest rate swap agreements as of March 31, 1995 would result in a gain of approximately $1 million. The Company is exposed to credit risk to the extent of nonperformance by the counterparties to the interest rate swap agreements; however, management considers the risk of default to be remote. Note E - Calculation of Net (Loss) Income Per Common Share Net (loss) income per common share for the three months ended March 31, 1995 and 1994 is based upon the 9,803,098 and the 9,832,598 common shares outstanding, respectively. Note F--Long-Term Incentive Plan and Stock Option Plan Under the terms of the 1994 Long-term Incentive Plan (Plan), the Company may distribute to selected employees restricted shares of the Company's Class B Common Stock and options to purchase Class B Common Stock. Up to 1.1 million shares of Class B Common Stock may be distributed under the Plan over a five year period. The balance sheet caption "Unearned restricted stock" is charged for the market value of restricted shares at their grant date and changes in the market value of shares outstanding until the vesting date, and is shown as a reduction of stockholders' equity. The impact is further reflected within Class B Common Stock and Additional paid-in-capital. Performance Vested Restricted Stock (PVRS) awards are subject to the attainment of performance goals and certain restrictions including the receipt of dividends and transfers of ownership. As of April 30, 1995, 255,300 shares of PVRS have been registered in participants names and are being held by the Company subject to the attainment of the related performance goals. Under the 1994 Long-term Incentive Plan, non-qualified stock options are granted to participants at a price not less than 100% of the fair market value of the stock on the date of grant. The exercise period is ten years with the options vesting one-third per year over three years after a one-year waiting period. As of April 30, 1995, grants of non-qualified stock options have been awarded to participants to purchase 505,000 shares of the Company's Class B Common Stock. Under the terms of the 1995 Management Stock Option Plan, the Company may award to participants non-qualified stock options to purchase shares of the Company's Class B Common Stock at a price equal to 100% of the fair market value of the stock at the date of grant. Up to 500,000 shares of Class B Common Stock may be distributed under the Plan. The exercise period is ten years with the options vesting one-third per year over three years after a one-year waiting period. As of April 30, 1995, grants of non-qualified stock options have been awarded to participants to purchase 456,470 shares of the Company's Class B Common Stock. Note G - Litigation and Contingencies There have no material changes in the status of litigation and contingencies as discussed in Note I of Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 1994. Like other petroleum refiners and marketers, the Company's operations are subject to extensive and rapidly changing federal and state environmental regulations governing air emissions, waste water discharges, and solid and hazardous waste management activities. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and the amount can be reasonably estimated. While it is often extremely difficult to reasonably quantify future environmental related expenditures, the Company anticipates that a substantial capital investment will be required over the next several years to comply with existing regulations. The Company had recorded a liability of approximately $16 million as of March 31, 1995 relative to the estimated costs of a non-capital nature related to compliance with environmental regulations. This liability is anticipated to be expended over the next five years and is included in the balance sheet as a noncurrent liability. No amounts have been accrued as receivables for potential reimbursement or recoveries to offset this liability. Included in costs and operating expenses in the statements of operations for the three months ended March 31, 1995 and 1994 were costs related to environmental remediation in the amount of $.7 million and $.6 million, respectively. -10- Environmental liabilities are subject to considerable uncertainties which affect the Company's ability to estimate its ultimate cost of remediation efforts. These uncertainties include the exact nature and extent of the contamination at each site, the extent of required cleanup efforts, varying costs of alternative remediation strategies, changes in environmental remediation requirements, the number and strength of other potentially responsible parties at multi-party sites, and the identification of new environmental sites. It is possible that the ultimate cost, which cannot be determined at this time, could exceed the Company's recorded liability. As a result, charges to income for environmental liabilities could have a material effect on the results of operations in a particular quarter or year as assessments and remediation efforts proceed or as new claims arise. However, management is not aware of any matters which would be expected to have a material adverse effect on the Company. Item 2 -Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The Company's Sales and operating revenues increased $51.8 million or 13.2% in the first quarter of 1995 from the comparable period in 1994. The Company's Sales and operating revenues and Costs and operating expenses include all Federal and State excise and other similar taxes which totalled $100.6 million and $93.6 million for the three months ended March 31, 1995 and 1994, respectively. The increase in Sales and operating revenues was primarily attributable to a 10.1% increase in the average sales price per gallon of petroleum products and a 3.4% increase in petroleum product sales volumes. Additionally, there was a 27.1% or $4.6 million increase in merchandise sales. As previously mentioned, merchandise sales increased 27.1% or $4.6 million and merchandise gross profit increased $.6 million or 13.2% for the three months ended March 31, 1995 compared to the same period in 1994. The increase in merchandise gross profit occurred despite a reduction in the number of operating units during the period. Merchandise gross margin (merchandise gross profit as a percent of merchandise sales) decreased from 25.4% to 22.6% for the three months ended March 31, 1995 and 1994, respectively. The decrease in gross margin was due to the introduction late in the first quarter of 1994 of a new merchandise pricing program designed to increase per unit customer traffic and overall merchandise sales and gasoline volumes. A key element of the program includes the reduction of prices on certain items such as tobacco products and beverages. This marketing strategy has resulted in average monthly gasoline sales volume and merchandise sales increases on a same store basis of approximately 6.5% and 33.3%, respectively, and has contributed to the overall $.6 million increase in merchandise gross profit mentioned above by increasing aggregate merchandise gross profit on a same store basis by 17.5% in 1995 as compared to 1994. Costs and operating expenses increased $78.7 million or 22.9% in the first quarter of 1995 compared to the same period in 1994. The increase was due to a 25.4% increase in the average cost per barrel consumed of crude oil and feedstocks and to increases in excise taxes and volumes sold as previously mentioned. The results of operations were affected by the Company's use of the LIFO method to value inventory which decreased the Company's gross margin $.10 per barrel ($1.3 million) in 1995, and $.28 per barrel ($4 million) in 1994. Due to better gasoline margins compared to distillate margins, yields of gasoline improved to 97,000 bpd (63.6%) compared to 88,400 bpd (56.0%) in 1994. Correspondingly, distillate production decreased from 53,900 bpd (34.2%) in 1994 to 42,700 bpd (28.0%) this year. A majority of the Company's total crude oil and related raw material purchases are transacted on the spot market. The Company continues to selectively enter into forward hedging contracts to minimize price fluctuations for a portion of its crude oil and refined products. Selling and administrative expenses decreased $2.1 million or 9.3% for the three months ended March 31, 1995 as compared to the same period in 1994. The decrease is principally due to decreased accruals associated with the Company's incentive plans. -11- Operating costs and expenses in the first quarter of 1995 and 1994 included $.7 million and $.6 million, respectively, related to environmental matters and $.6 million and $.3 million, respectively related to retail units that have been closed. Depreciation and amortization decreased $1.1 million or 10.7% in the first quarter of 1995 compared to the same 1994 period. The 1995 decrease was primarily the result of a $10.4 million decrease in the underlying value of the Pasadena Refinery Fluid Catalytic Cracking Unit (FCC) turnaround being amortized in first quarter of 1995 compared to the underlying value of the FCC turnaround that was amortized in the same 1994 period. Interest and other income increased $.4 million or 90.3% for the three months ended March 31, 1995 as compared to the same 1994 period. The 1995 increase is primarily due to an increase in the average daily rate on cash invested of 265 basis points. Interest expense increased $1.6 million or 81.8% in the first quarter of 1995 compared to the same 1994 period. The increase was due to a $46.3 million increase in the average daily cash borrowed as a result of additional outstanding borrowings of $63 million at March 31, 1995 as compared to March 31, 1994. The additional outstanding borrowings are due to the sale of $125 million of Unsecured 10 7/8% Senior Notes in January 1995 net of the repayment of the outstanding balance of the 10.42% Senior Notes as previously discussed. On January 24, 1995, the Company completed the sale of $125 million of Unsecured 10 7/8% Senior Notes due February 1, 2005 priced at 99.75% (Notes). Approximately $55 million of the net proceeds from the sale was used to retire the Company's outstanding 10.42% Senior Notes, including a prepayment premium of $3.4 million. The remaining portion of the outstanding 10.42% Senior Notes had been paid on January 3, 1995 as part of the regularly scheduled debt service. In the first quarter of 1995, the Company has recorded an extraordinary loss of $3.3 million (net of income tax benefits of $2 million) consisting of redemption related premiums and the write-off of deferred financing costs associated with the 10.42% Senior Notes. Liquidity and Capital Resources Net cash used in operating activities (including changes in working capital) totalled $13.6 million for the three months ended March 31, 1995 compared to cash provided by operating activities of $1.5 million for the three months ended March 31, 1994. The 1995 outflows consist of $15.2 million in cash outflows related to working capital requirements resulting from decreases in crude oil, refined products and other payables. Additionally, there were increases in prepaid operating expenses and in the current income tax asset. These working capital outflows were partially offset by decreases in accounts receivable and in the value of crude oil and finished product inventories. Partially offsetting these cash outflows was cash provided by operations of $1.6 million. The 1994 inflows consist of $19.4 million in cash provided by operations which were partially offset by cash outflows of $17.9 million related to working capital requirements resulting from increases in accounts receivable and increases in the value of crude oil and finished product inventories and prepaid operating expenses. The 1994 working capital outflows were partially offset by increases in crude oil and refined products payables and in accrued income and excise tax liabilities. Net cash outflows from investment activities were $10.4 million for the first quarter of 1995 compared to a net outflow of $5.3 million for the same 1994 period. The 1995 amount consists principally of capital expenditures of $6.6 million (which includes $3.4 million from refinery operations and $3.2 million relating to the marketing area). Additionally, there were increases in other deferred assets of $2.4 million, which consists primarily of $2.9 million in loan placement fees related to the sale of $125 million of Unsecured 10 7/8% Senior Notes in January 1995, and refinery turnaround expenditures of $1.8 million. These cash outflows were partially offset by proceeds from the sale of property, plant and equipment of $.4 million. The 1994 activity relates primarily to $7.6 million of capital expenditures ($4.4 million relating to refinery operations and $2.2 relating to the marketing area). The 1994 cash outflows were partially offset by proceeds from the sale of property, plant and equipment of $3 million. -12- Net cash provided by financing activities was $21.4 million for the three months ended March 31, 1995 compared to $.4 million for the three months ended March 31, 1994. The 1995 cash inflows relate to $24.6 million in net proceeds received from debt and credit agreement borrowings due primarily to the sale in January 1995 of $125 million of Unsecured 10 7/8% Senior Notes net of amounts used to repay outstanding balances relating to the 10.42% Senior Notes (including a prepayment premium) and credit agreement borrowings. The 1994 cash inflows relate primarily to $.9 million in net proceeds received from the purchase money lien which was offset by net issuances of long-term notes receivable of $.7 million. Cash and cash equivalents at March 31, 1995 were $3.7 million higher than at March 31, 1994. This increase resulted primarily from cash provided by financing activities of $58.3 million for the period April 1, 1994 to March 31, 1995 relating primarily to the sale in January 1995 of $125 million of Unsecured 10 7/8% Senior Notes as previously discussed. These cash inflows were partially offset by cash used in investment activities of $48.1 million, which includes capital expenditures of $33.4 million, deferred turnaround costs of $13.9 million and increases in deferred loan costs of $2.9 million., net of $2.3 million of proceeds received from the sale of property plant and equipment. Cash outflows also include $6.5 million of cash used in operations for the twelve month period ended March 31, 1995. The ratio of current assets to current liabilities at March 31, 1995 was 1.41:1 compared to 1.26:1 at March 31, 1994 and 1.22:1 at December 31, 1994. If FIFO values had been used for all inventories, assuming an incremental effective income tax rate of 38.5%, the ratio of current assets to current liabilities would have been 1.52:1 at March 31, 1995, 1.34:1 at March 31, 1994 and 1.32:1 at December 31, 1994. Like other petroleum refiners and marketers, the Company's operations are subject to extensive and rapidly changing federal and state environmental regulations governing air emissions, waste water discharges, and solid and hazardous waste management activities. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and that the amount can be reasonably estimated. While it is often extremely difficult to reasonably quantify future environmental related expenditures, the Company anticipates that a substantial capital investment will be required over the next several years to comply with existing regulations. The Company believes that cash provided from its operating activities, together with other available sources of liquidity, including the remaining proceeds of the $125 million of Unsecured 10 7/8% Senior Notes and borrowings under the Credit Facility, will be sufficient to fund these costs. The Company had recorded a liability of approximately $16 million as of March 31, 1995 to cover the estimated costs of compliance with environmental regulations which are not anticipated to be of a capital nature. The liability of $16 million includes accruals for issues extending past 1996. Environmental liabilities are subject to considerable uncertainties which affect the Company's ability to estimate its ultimate cost of remediation efforts. These uncertainties include the exact nature and extent of the contamination at each site, the extent of required cleanup efforts, varying costs of alternative remediation strategies, changes in environmental remediation requirements, the number and financial strength of other potentially responsible parties at multi-party sites, and the identification of new environmental sites. As a result, charges to income for environmental liabilities could have a material effect on results of operations in a particular quarter or year as assessments and remediation efforts proceed or as new claims arise. However, management is not aware of any matters which would be expected to have a material adverse effect on the Company. During the years 1995-1997, the Company estimates environmental expenditures at the Pasadena and Tyler refineries, of at least $4.3 million and $18.2 million, respectively. Of these expenditures, it is anticipated that $3.2 million for Pasadena and $16.7 million for Tyler will be of a capital nature, while $1.1 million and $1.5 million, respectively, will be related to previously accrued non-capital remediation efforts. At the Company's marketing facilities, capital expenditures relating to environmental improvements are planned totaling approximately $23 million through 1998. As a result of a strong balance sheet and overall favorable credit relationships, the Company has been able to maintain open lines of credit with its major suppliers. Under the Revolving Credit Agreement (Credit Agreement), effective as of May 10, 1993, the Company had outstanding as of April 30, 1995, irrevocable standby letters of credit in the principal amount of $19.5 million for purposes in the ordinary course of business. -13- At the Company's option, up to $37.5 million of the Unsecured 10 7/8% Senior Notes (Notes) may be redeemed at 110.875% of the principal amount at any time prior to February 1, 1998. After such date, they may not be redeemed until February 1, 2000 when they are redeemable at 105.438% of the principal amount, and thereafter at an annually declining premium over par until February 1, 2003 when they are redeemable at par. The Notes were issued under an Indenture which includes certain restrictions and limitations customary with senior indebtedness of this type including, but not limited to, the payment of dividends and the repurchase of capital stock. There are no sinking fund requirements on the Notes. As discussed in Note C of Notes to Unaudited Consolidated Condensed Financial Statements, the Company has entered into interest rate swap agreements to effectively convert $47.5 million of its fixed rate debt to variable interest rate debt with maturities ranging from 1996 to 1998. According to the terms of these swap agreements, the variable interest rates to be paid by the Company are reset on various predetermined dates which range from May 1995 to March 1998. The Company may utilize interest rate swaps in the future to manage the cost of funds. At March 31, 1995, the Company was in compliance with all covenants and provisions of the Credit Agreement. Meeting the covenants imposed by the Credit Agreement is dependent, among other things, upon the level of future earnings and the rate of capital spending. The Company reasonably expects to continue to be in compliance with the covenants imposed by the Credit agreement, or a successor agreement, over the next twelve months. The existing credit facility expires on May 10, 1996. The Company is currently evaluating various options which include renegotiating the existing credit facility or entering into alternative financing facilities to meet its letter of credit and working capital requirements. The Company's management is involved in a continual process of evaluating growth opportunities in its core business as well as its capital resource alternatives. Non-discretionary capital expenditures related primarily to company wide environmental requirements and deferred turnaround costs in 1995 are projected to approximate $31.4 million. In addition, the Company has identified projects at its refineries and retail unit improvements which are projected to provide attractive returns. The Company is prudently proceeding with the most attractive projects but is likely to have total capital expenditures slightly less than the $56.6 million originally forecasted and included in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for 1994. The Company believes that cash provided from its operating activities, together with other available sources of liquidity, including the remaining proceeds of the $125 million of Unsecured 10 7/8% Senior Notes (Notes) and borrowings under the existing Credit Facility or a successor agreement, will be sufficient over the next several years to make required payments of principal and interest on its debt, including interest payments due on the Notes, permit anticipated capital expenditures and fund the Company's working capital requirements. The Company places its temporary cash investments in high credit quality financial instruments which are in accordance with the covenants of the Company's financing agreements. These securities mature within ninety days, and, therefore, bear minimal risk. The Company has not experienced any losses on its investments. The Company faces intense competition in all of the business areas in which it operates. Many of the Company's competitors are substantially larger and therefore, the Company's earnings can be affected by the marketing and pricing policies of its competitors, as well as changes in raw material costs. Merchandise sales and operating revenues from the Company's convenience stores are seasonal in nature, generally producing higher sales and net income in the summer months than at other times of the year. Gasoline sales, both at the Crown multi-pumps and convenience stores, are also somewhat seasonal in nature and, therefore, related revenues may vary during the year. The seasonality does not, however, negatively impact the Company's overall ability to sell its refined products. The Company maintains business interruption insurance to protect itself against losses resulting from shutdowns to refinery operations from fire, explosions and certain other insured casualties. Business interruption coverage begins for such losses at the greater of $5 million or shutdowns for periods in excess of 25 days. -14- PART II - OTHER INFORMATION Item 1 - Legal Proceedings There have been no material changes in the status of legal proceedings as reported in Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. The Company is involved in various matters of litigation, the ultimate determination of which, in the opinion of management, is not expected to have a material adverse effect on the Company. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit: 10 - Material Contracts (a) Crown Central Petroleum Corporation 1995 Management Stock Option Plan filed on April 28, 1995 as Exhibit 4 of Registration Statement on Form S-8, Registration No. 33-58927, herein incorporated by reference. 19 - Previously Unfiled Documents (a) Crown Central Petroleum Corporation 1995 Annual Incentive Plan. 20 - Interim Report to Stockholders for the three months ended March 31, 1995 27 - Financial Data Schedule (b) Reports on Form 8-K: There were no reports on Form 8-K filed with the Securities and Exchange Commission during the three months ended March 31, 1995. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q for the quarter ended March 31, 1995 to be signed on its behalf by the undersigned thereunto duly authorized. CROWN CENTRAL PETROLEUM CORPORATION John E. Wheeler, Jr. John E. Wheeler, Jr., Senior Vice President - Treasurer and Controller, Chief Accounting Officer and Duly Authorized Officer Date: May 12, 1995 -15- EX-19 2 CROWN CENTRAL PETROLEUM CORPORATION 1995 ANNUAL INCENTIVE PLAN Section 1: Purpose The purpose of the Crown Central Petroleum Corporation 1995 Annual Incentive Plan (the "Plan") is to provide an annual performance-based incentive for executives and other key employees who are in a position to contribute materially to the success of the Corporation and its Subsidiaries. Section 2: Definitions The following terms, as used herein, will have the meaning specified: a. "Award" means an award made pursuant to the Plan. b. "Award Schedule" means the Award Schedule established pursuant to Section 3(d)(i). c. "Board of Directors" means the Board of Directors of the Corporation as it may be comprised from time to time. d. "Code" means the Internal Revenue Code of 1986, and any successor statute, and the regulations promulgated thereunder, as it or they may be amended from time to time. e. "Committee" means the Committee as defined in Section 4. f. "Corporation" means Crown Central Petroleum Corporation and any successor corporation. g. "Employee" means executive officers and other key employees of the Corporation or a Subsidiary, but excludes directors who are not also officers or employees of the Corporation. h. "Exchange Act" means the Securities Exchange Act of 1934, and any successor statute, as it may be amended from time to time. i. "Participant" means an Employee selected from time to time by the Committee to participate in the Plan. j. "Performance Adjustment" means the percentage(s), as set forth in the Award Schedule, that will, when multiplied by a Participant's Target Award, determine the amount of a Participant's Award. k. "Performance Criteria" means the criteria selected by the Committee to measure performance for a Plan Year from among one or more of the following: i. Income before income taxes, as shown in the Corporation's annual report to shareholders, but excluding extraordinary items, discontinued operations, and the cumulative effect of accounting changes, in accordance with generally accepted accounting principles consistently applied by the Corporation; ii. Any other criteria related to Corporate performance, Subsidiary, division or unit performance, individual performance or any other category of performance selected by the Committee. l. "Performance Goal" means the level of performance as to each Performance Criteria, as established by the Committee, that will result in a 100 percent Performance Adjustment. m. "Plan Year" means the calendar year. n. "Retirement" means retirement at or after age 65 or, with the advance consent of the Committee, at or after age 55. o. "Subsidiary" means any corporation in which the Corporation, directly or indirectly, controls 50% or more of the total combined voting power of all classes of such corporation's stock. p. "Target Award" means the Target Award established pursuant to Section 4(a). Section 3: Eligibility The Committee shall from time to time determine those Employees eligible for Awards. Section 4: Awards a. Awards. Target Awards will be established by the Committee for each Award made to each Participant. b. Performance Criteria and Performance Goals. Performance Criteria and Performance Goals will be established by the Committee for the Corporation and/or its Subsidiaries each Plan Year. The Committee shall also determine the extent to which each Performance Criteria shall be weighted in determining Awards. The Committee may vary the Performance Criteria, Performance Goals and weightings from Participant to Participant, Award to Award and Plan Year to Plan Year. c. Performance Adjustment. The Award payable to any Participant may range from zero (0) to 150 percent of the Participant's Target Award, depending upon whether, or the extent to which, the Performance Goals have been achieved. All such determinations regarding the achievement of any Performance Goals will be made by the Committee; provided, however, that the Committee may not increase the amount of the Award that would otherwise be payable upon achievement of the Performance Goal or Goals. i. Award Schedules. The Committee will establish an Award Schedule for each Award to each Participant setting forth the percentage of the Target Award for such Participant payable at specified levels of performance, based on the Performance Goal for each Performance Criteria and the weighting established for such criteria. ii. Award Determination. Actual Awards will be derived from the Award Schedule based on the level of performance. The actual Award for a Participant will be calculated by multiplying the Participant's Target Award by the Performance Adjustments in accordance with the Award Schedule. d. Payment of Awards. Awards will be paid, in a lump sum cash payment, as soon as practicable after the close of the Plan Year for which they are made; provided, however, that no Awards shall be paid except to the extent that the Committee has certified in writing that the Performance Goals have been met. No Award will be payable to any Participant who is not an Employee on the last day of the year, except that if, during the last six months of the Plan Year, the Participant dies, or becomes disabled, the Participant may be entitled to a prorated Award as and to the extent determined by the Committee. If a Participant terminates employment due to Retirement, the Participant shall be entitled to a prorated Award but only as and to the extent that the Performance Goals have been met. Notwithstanding the foregoing provisions of this Section 4(d), the Committee shall have the right to defer, or to allow Participants to elect to defer, the payment of Awards subject to such terms and conditions as it may determine. Section 5: Administration a. Committee. The Plan and all Awards will be administered by a Committee of the Board of Directors, which Committee shall consist of not less than three members of such Board of Directors. The members of the Committee shall be designated by the Board and, unless the Board provides otherwise, the Committee shall be the Executive Compensation and Bonus Committee of the Board of Directors. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of a quorum shall constitute action by the Committee. b. Authority. The Committee will have full and complete authority, in its sole absolute discretion, (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any related document, (iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to make all determinations necessary or advisable in administering the Plan, and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan. c. Determinations. The actions and determinations of the Committee on all matters relating to the Plan and any Awards will be final and conclusive. d. Liability. No member of the Committee or the Board will be liable for any action taken or determination made in good faith with respect to the Plan or any Award thereunder, and the Corporation will defend Committee and Board members for any actions taken or decisions made in good faith under the Plan. e. Awards. Subject to the terms of the Plan, the Committee will have full and complete authority, to determine, among other things, the Employees to whom, and the time or times at which, Awards will be made and the requisite conditions thereof. f. Delegation. The Committee may delegate to the officers or employees of the Corporation and/or a Subsidiary the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take all such other steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms and purpose. Section 6: Change of Control a. Effect of Change of Control. In the event of a change in control of the Corporation, the Committee may, in its sole discretion, take any of the following actions as a result, or in anticipation, of any such event to assure fair and equitable treatment of Participants: i. accelerate time periods for purposes of vesting in, or receiving any payment with regard to, any outstanding Award, or ii. make adjustments or modifications to outstanding Awards as the Committee deems appropriate to maintain and protect the rights and interests of Participants following such change of control. Any such action approved by the Committee shall be conclusive and binding on the Corporation and all Participants. b. Change of Control Defined. For purposes of this Section, a change of control shall means the following: i. A tender offer or exchange offer is made whereby the effect of such offer is to take over and control the affairs of the Corporation, and such offer is consummated for the ownership of securities of the Corporation representing twenty percent (20%) or more of the combined voting power of the Corporation's then outstanding voting securities. ii. The Corporation is merged or consolidated with another corporation and, as a result of such merger or consolidation, less than seventy-five percent (75%) of the outstanding voting securities of the surviving or resulting corporation shall then be owned in the aggregate by the former stockholders of the Corporation, other than affiliates within the meaning of the Exchange Act or any party to such merger or consolidation. iii. The Corporation transfers substantially all of its assets to another corporation or entity that is not a wholly owned subsidiary of the Corporation. iv. Any person (as such term is used in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing twenty percent (20%) or more of the combined voting power of the Corporation's then outstanding securities, and the effect of such ownership is to take over and control the affairs of the Corporation. v. As the result of a tender offer, merger, consolidation, sale of assets, or contested election, or any combination of such transactions, the persons who were members of the Board of Directors immediately before the transaction, cease to constitute at least a majority thereof. Section 7: Miscellaneous a. Nonassignability. No Award will be assignable or transferable except by will or by the laws of descent and distribution. b. Withholding Taxes. Whenever payments under the Plan are to be made, the Corporation and/or the Subsidiary will withhold therefrom an amount sufficient to satisfy any applicable governmental withholding tax requirements related thereto. c. Amendment or Termination of the Plan. The Board of Directors may at any time amend, suspend or discontinue the Plan, in whole or in part. d. Non-Uniform Determinations. The Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations and to establish non-uniform and selective Performance Criteria, Performance Goals, the weightings thereof, and Target Awards. e. Other Payments or Awards. Nothing contained in the Plan will be deemed in any way to limit or restrict the Corporation, its Subsidiaries, or the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. f. Payments to Other Persons. If payments are legally required to be made to any person other than the person to whom any amount is available under the Plan, payments will be made accordingly. Any such payment will be a complete discharge of the liability of the Committee. g. Unfunded Plan. The Plan shall be unfunded. No provision of the Plan will require the Corporation or its Subsidiaries, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor will the Corporation or its Subsidiaries maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants will have no rights under the Plan other than as unsecured general creditors of the Corporation and its Subsidiaries, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they will have the same rights as other employees under generally applicable law. h. Limits of Liability. i. Any liability of the Corporation or a Subsidiary to any Participant with respect to an Award shall be based solely upon contractual obligations created by the Plan. ii. Neither the Corporation nor a Subsidiary, nor any member of the Board of Directors or of the Committee, nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, shall have any liability to any party for any action taken or not taken in good faith under the Plan. i. Rights of Employees. i. Status as an eligible Employee shall not be construed as a commitment that any Award will be made under this Plan to such eligible Employee or to eligible Employees generally. ii. Nothing contained in this Plan (or in any other documents related to this Plan) shall confer upon any Employee or Participant any right to continue in the employ or other service of the Corporation or a Subsidiary or constitute any contract or limit in any way the right of the Corporation or a Subsidiary to change such person's compensation or other benefits or to terminate the employment or other service of such person with or without cause. j. Section Headings. The section headings contained herein are for the purposes of convenience only, and in the event of any conflict, the text of the Plan, rather than the section headings, will control. k. Invalidity. If any term or provision contained herein will to any extent be invalid or unenforceable, such term or provision will be reformed so that it is valid, and such invalidity or unenforceability will not affect any other provision or part hereof. l. Applicable Law. The Plan and all actions taken hereunder or thereunder shall be governed by, and construed in accordance with, the laws of the state of Maryland without regard to the conflict of law principles thereof. m. Effective Date. The Plan shall be effective as of January 1, 1995. IN WITNESS WHEREOF, Crown Central Petroleum Corporation has caused this Plan to be executed. CROWN CENTRAL PETROLEUM CORPORATION By: J. Michael Mims J. Michael Mims EX-20 3 EXHIBIT 20 CROWN (registered trademark) Crown Central Petroleum Corporation Refiners / marketers of petroleum products & petrochemicals One North Charles Street, P.O. Box 1168, Baltimore, Maryland 21203, (410) 539-7400 April 27, 1995 Results First Quarter 1995 -------------------- - ----------------- Dear Shareholders: Crown Central Petroleum Corporation announced today a net loss before extraordinary charges of $6.9 million ($.71 per share) in the first quarter of 1995 on revenues of $445.5 million. This compares to a net profit from operations of $8.7 million ($.88 per share) in the first quarter of 1994 on revenues of $393.6 million. Including the extraordinary charge of $3.3 million ($.33 per share) due to the early extinguishment of debt, the total net loss for the first quarter amounted to $10.2 million ($1.04 per share). Due to the warmest weather conditions in the Eastern United States in 30 years, which resulted in depressed distillate prices, the refining industry experienced its worst margins since 1987. While the Company's gross refining margins of $1.79 per barrel in the first quarter were well below the $3.63 per barrel experienced last year, the margins realized were actually better than those achieved by similarly configured refiners located on the Gulf Coast. Factors contributing to this result include the disciplined pursuit of the Company's margin management strategies coupled with ratably purchasing crude below the average daily price. Important, also, was the improved yield performance at both refineries which allowed the Company to produce a higher mix of gasoline and reduce the over-all production of less profitable distillates. This was particularly gratifying at the Houston refinery, where, after having completed a major turnaround in December 1994, gasoline production was up 14% over last year. Additionally, total refining operating expenses were down 6% from last year. Crown retail marketing produced very positive results for the quarter. Retail gasoline volumes increased 6% for the quarter to over 32,000 barrels per day, while merchandise sales increased 27% to $21.4 million. The strong retail gasoline and merchandise net margin improvement somewhat offset the depressed refining gross margins. Selling and administrative expenses were also down 9% for the quarter versus the same period last year. These savings, combined with the refining operating expense reductions, reflect the Company's on-going programs to improve productivity. During 1995, Crown will continue to seek opportunities to improve the balance between gasoline production and retail marketing. This action is expected to reduce the Company's earnings volatility. The sale of $125 million of unsecured notes due in 2005 was concluded during the first quarter. The offering brought an increased focus to the financial stability of the Company by the investment banking community. We are proud of the Crown teamwork and personal commitment from those involved. The oversubscribed debentures reflect well on the Company, provide us with permanent non-amortizing debt, and position the Company to more effectively access the public capital markets in the future. While gasoline stocks are relatively low for this time of year, which is reason for at least short-term optimism, the past several years have been challenging to many of us in the refining industry. As we celebrate over 75 years of Crown refining and marketing excellence, we have every confidence in the strategies Crown has adopted to lead our Company to an even more successful and profitable future. Sincerely, HENRY A. ROSENBERG, JR. CHARLES L. DUNLAP HENRY A. ROSENBERG, JR. CHARLES L. DUNLAP Chairman and Chief Executive Officer President and Chief Operating Officer
Crown Central Petroleum Corporation and Subsidiaries Dollars in thousands, except per share data Three Months Ended March 31 1995 1994 ------------ ------------- Sales and operating revenues $445,424 $ 393,586 (Loss) income before income taxes (9,207) 16,285 (Loss) income before extraordinary item (6,918) 8,660 (Loss) from extraordinary item 1/ (3,257) - ---- Net (loss) income (10,175) 8,660 (Loss) income per share before extraordinary item(.71 ) .88 (Loss) per share from extraordinary item (.33) - ---- Net (loss) income per share (1.04) . 88 Share used in the computation of (loss) income per share9,80 3,098 9,832,598 1/ During the first quarter of 1995, the Company incurred an extraordinary loss as a result of the early retirement of its outstanding 10.42% Senior Notes (Notes). The outstanding Notes were retired on January 24, 1995 from the proceeds received from the sale of $125 million of Unsecured 10 7/8% Senior Notes due February 1, 2005. 2/ Certain corrections have been made to specific lines of data contained in this table from the original table presented in the press release and the quarterly letter to shareholders. The corrections to these items decreased Retail Gasoline Gross Profit by $3.9 million, increased Merchandise Gross Margin by $1.5 million, inrcreased monthly Retail Operating Costs per store by $2.1 thousand, decreased Retail Net Profit by $4.6 million and increased Wholesale / Other by $4.3 million. The corrections had no impact on Sales and operating revenues, (Loss) income before income taxes or Net (loss) income. This altered format of the quarterly statement represents a substantial savings in report costs and delivery time. Should you wish further information on the quarterly results, please call 1-800-610-1415 or refer to the operating statistics sheet.
Crown Central Petroleum Corporation and Subsidiaries Operating Statistics Three Months Ended March 31 1995 1994 ------------ ------------- REFINING Production (BPD - M) 154 1 61 Production (MMbbl) 13.9 1 4.5 Gross Margin ($/bbl) 1.79 3 .63 Gross Profit ($MM) 24.8 5 2.6 Operating Cost ($/bbl) 2.30 2 .37 Operating Cost ($MM) 31.9 3 4.4 Net Refining Profit ($MM) (7.1) 1 8.2 RETAIL Number Stores 345 3 62 Volume (pmps - Mgal) 115 1 03 Volume (MMgal) 119 1 12 Gasoline Gross Margin ($/gal) 0.13 0 .12 Gasoline Gross Profit ($MM) 15.4 1 3.9 Merchandise Sales (pmps - $M) 20.7 1 5.5 Merchandise Sales ($MM) 21.4 1 6.8 Merchandise Gross Margin (%) 29.4 3 2.7 Merchandise Gross Margin ($MM) 6.3 5 .5 Retail Gross Profit ($MM) 21.7 1 9.8 Retail Operating Costs (pmps - $M) 17.2 16.8 Retail Net Profit ($MM) 3.9 1 .6 Wholesale / Other (($MM) 0.7 6 .2 Total Net Profit ($MM) (2.5) 2 6.0 Corporate Overhead ($MM) 4.0 8 .2 Depreciation and Amortization ($MM) 9.5 10.6 EBITDA ($MM) 3.0 2 8.4 LIFO Provision (Recovery) ($MM) (1.2) 4.0 (Gain) Loss on Sales and Abandonments of P, P & E ($MM) 0.2 (0.3 ) EBITDAAL ($MM) 2.0 32.1 Net Interest Expense ($MM) 2.7 1.5 Capital Expenditures ($MM) 6.6 7.6 - ------------------------------------------------------------- - ------------------------------------------------------------- - ------ BPD = Barrels per day bbl = barrel or barrels as applicable gal = gallon or gallons as applicable pmps = per month per store M = in thousands MM = in millions EBITDAAL = EBITDA on a FIFO basis plus net sales and abandonments of property, plant and equipment
EX-27 4
5 1000 DEC-31-1995 MAR-31-1995 3-MOS 5,608 46,685 92,003 1,984 87,074 257,686 703,988 337,479 666,055 182,988 129,570 0 0 49,765 200,520 666,055 445,424 445,424 422,164 422,164 29,614 126 3,475 (9,207 ) (2,289 ) (6,918 ) 0 (3,257 ) 0 (10,175 ) (1.04 ) (1.04 )
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