-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L8ucIaJzBIidpQ5Foc8WNqham+V04fJReTlgLseJmzAl8Pf1OEUXK/CXQVKPB4QN BRHmkJ1ON4vOStnc9V2SCA== 0001157523-04-010358.txt : 20041104 0001157523-04-010358.hdr.sgml : 20041104 20041104124427 ACCESSION NUMBER: 0001157523-04-010358 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041104 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041104 DATE AS OF CHANGE: 20041104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TESORO PETROLEUM CORP /NEW/ CENTRAL INDEX KEY: 0000050104 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 950862768 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03473 FILM NUMBER: 041118759 BUSINESS ADDRESS: STREET 1: 300 CONCORD PLAZA DRIVE CITY: SAN ANTONIO STATE: TX ZIP: 78216-6999 BUSINESS PHONE: 2108288484 MAIL ADDRESS: STREET 1: 300 CONCORD PLAZA DRIVE CITY: SAN ANTONIO STATE: TX ZIP: 78216-6999 8-K 1 a4757502.txt TESORO PETROLEUM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 4, 2004 Tesoro Petroleum Corporation (Exact name of registrant as specified in its charter) Delaware 1-3473 95-0862768 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 300 Concord Plaza Drive 78216-6999 San Antonio, Texas (Zip Code) (Address of principal executive offices) (210) 828-8484 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On November 4, 2004 Tesoro issued a press release (the "Press Release") announcing financial results for its third quarter ended September 30, 2004. The Press Release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information in this report is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in Item 2.02 of this report, including the press release, will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. 99.1 Press Release issued on November 4, 2004 by Tesoro Petroleum Corporation. 2 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 hereunto duly authorized. Date: November 4, 2004 TESORO PETROLEUM CORPORATION By: /s/ GREGORY A. WRIGHT ------------------------------------ Gregory A. Wright Executive Vice President and Chief Financial Officer 3 Index to Exhibits Exhibit Number Description 99.1 Press Release issued on November 4, 2004 by Tesoro Petroleum Corporation 4 EX-99.1 2 a4757502ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Tesoro Reports Third Quarter Earnings SAN ANTONIO--(BUSINESS WIRE)--Nov. 4, 2004--Tesoro Petroleum Corporation (NYSE:TSO) today reported net earnings of $64.6 million, or $0.93 per share, for the third quarter of 2004 compared to net earnings of $70.6 million, or $1.09 per share, for the third quarter of 2003. As reported in the attached financial information, results for the third quarter include after-tax charges of $12.7 million, or $0.18 per share, to write-off premiums and unamortized debt issuance costs in connection with the Company's prepayment of almost $400 million of debt during the quarter. Excluding these special items, net earnings for the quarter were $77.3 million, or $1.11 per share, compared to net earnings excluding special items for the third quarter of 2003 of $77.1 million, or $1.19 per share. For the first nine months of 2004, the company reported net earnings of $328.1 million, or $4.79 per share, compared to net earnings of $84 million, or $1.30 per share, for the first nine months of 2003. Excluding special items, net earnings for the nine months of 2004 were $342 million, or $4.99 per share, compared to net earnings excluding special items of $117.2 million, or $1.81 per share, for the first nine months of 2003. "This was another very successful quarter for our company. Industry margins continued to be better than historical averages and exceeded margins in the third quarter of 2003, operational reliability was excellent and our total throughput was our second best ever," said Bruce A. Smith, Chairman, President and CEO of Tesoro. "Throughput and the quarter's financial results could have meaningfully been better without the planned coker turnaround at Golden Eagle. Tesoro began the coker turnaround on September 6th which limited our total throughput at that facility and also reduced the amount of lower cost heavy crude that we could process. In addition, to sustain gasoline production, we purchased higher-cost, lighter crudes and processed more intermediate feedstocks. Using our actual margins, we estimate that we lost the opportunity to generate another $34 million of operating income due to this turnaround." Tesoro stated that the Golden Eagle coker turnaround was completed October 31st and the facility is currently operating at its planned throughput rate of approximately 160,000 barrels per day. "Our third quarter financial results were also impacted by the decision to prepay debt," Smith continued. "In June of 2002, we announced a plan to reduce our debt by $500 million. Including the $400 million of debt we repaid in the third quarter, debt is down nearly $900 million, debt to total capitalization has decreased to 48% and cash at September 30th was over $200 million." "Our commitment to shareholders to grow the value of Tesoro is being recognized by investors and I believe our track record over the past two and a half years confirms our ability to improve future shareholder value," added Smith. Public Invited to Listen to Analyst Conference Call via Internet At 2 p.m., CT, Thursday, November 4, 2004, Tesoro will broadcast, live, its conference call with analysts regarding third quarter 2004 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. 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 over 500 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 concern the company's expectation of improved shareholder value. Factors which can cause actual results to differ from these 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 feedstocks or refined products, throughput and yield levels, disruptions due to equipment interruptions or failure at our or third-party facilities, political developments and other factors beyond our control. For more information concerning these factors and other factors that could cause such a difference, see our annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. We undertake 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 we become aware of, after the date hereof. TESORO PETROLEUM CORPORATION STATEMENTS OF CONSOLIDATED OPERATIONS (Unaudited) (In millions except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2004 2003 (a) 2004 2003 (a) -------- --------- --------- -------- Revenues $3,288.5 $ 2,330.0 $ 8,873.4 $6,732.5 Costs and Expenses: Costs of sales and operating expenses 3,053.2 2,096.2 7,967.2 6,206.9 Selling, general and administrative expenses (b) 37.8 28.3 107.5 98.7 Depreciation and amortization 36.3 36.7 111.1 110.4 Loss on asset sales and impairments (a) 0.6 9.2 4.7 10.3 -------- --------- --------- -------- Operating Income 160.6 159.6 682.9 306.2 Interest and Financing Costs, Net (c) (52.9) (45.9) (136.0) (171.1) -------- --------- --------- -------- Earnings Before Income Taxes 107.7 113.7 546.9 135.1 Income Tax Provision 43.1 43.1 218.8 51.1 -------- --------- --------- -------- Net Earnings $ 64.6 $ 70.6 $ 328.1 $ 84.0 ======== ========= ========= ======== Net Earnings Per Share: Basic $ 0.98 $ 1.09 $ 5.02 $ 1.30 Diluted $ 0.93 $ 1.09 $ 4.79 $ 1.30 Weighted Average Common Shares: Basic 65.6 64.6 65.3 64.6 Diluted 69.5 64.9 68.5 64.8 - ----------------------------- (a) The 2003 results include the marine services operations, which were sold in December 2003. In September 2003, the Company recorded a pretax loss of $7.6 million, or $0.07 per share, reflecting the sales value of the assets and estimated selling costs. (b) Includes stock-based compensation for stock options and other stock-based awards totaling $3.3 million and $9.0 million during the three months and nine months ended September 30, 2004, respectively. The fair value method of accounting for stock options was adopted on January 1, 2004 and, therefore, compensation expense associated with stock options was not recorded during 2003. (c) During the three months ended September 30, 2004, the Company wrote off unamortized debt issuance and discount costs of $9.3 million and incurred redemption premiums of $11.9 million associated with the voluntary prepayments of the 9% senior subordinated notes and senior secured term loans. In addition, the Company recorded charges of $2.0 million during the nine months ended September 30, 2004 for financing costs related to amending both the 8% senior secured notes and the senior secured term loans. During the three months and nine months ended September 30, 2003, the Company wrote-off $2.9 million and $36.2 million, respectively, of unamortized debt issuance costs related to voluntary prepayments of debt and the replacement of the Company's previous credit facility with a new credit agreement and term debt. NET EARNINGS ADJUSTED FOR SPECIAL ITEMS (Unaudited) (In millions except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2004 2003 (a) 2004 2003 (a) -------- --------- --------- -------- Net Earnings - U.S. GAAP $ 64.6 $ 70.6 $ 328.1 $ 84.0 Special Items, Aftertax: Financing costs related to debt prepayments and refinancing (c) 12.7 1.8 13.9 22.8 Loss on sale of Marine Services (a) -- 4.7 -- 4.7 Early retirement and severance costs -- -- -- 5.7 -------- --------- --------- -------- Net Earnings Adjusted for Special Items $ 77.3 $ 77.1 $ 342.0 $ 117.2 ======== ========= ========= ======== Net Earnings Per Share - U.S. GAAP $ 0.93 $ 1.09 $ 4.79 $ 1.30 Special Items Per Share, Aftertax: Financing costs related to debt prepayments and refinancing (c) 0.18 0.03 0.20 0.35 Loss on sale of Marine Services (a) -- 0.07 -- 0.07 Early retirement and severance costs -- -- -- 0.09 -------- --------- --------- -------- Net Earnings Per Share Adjusted for Special Items $ 1.11 $ 1.19 $ 4.99 $ 1.81 ======== ========= ========= ======== - ----------------------------- Note: The special items present information that the Company believes is useful to investors, relating to prepayments and refinancing of debt, the sale of Marine Services assets in 2003, and severance and other reorganization costs. The Company believes that the special items described above are not indicative of its core operations. TESORO PETROLEUM CORPORATION SELECTED OPERATING SEGMENT DATA (Unaudited) (In millions) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 2004 2003 2004 2003 --------- -------- --------- ------- Operating Income (Loss) Refining $ 187.1 $ 175.4 $ 766.2 $ 356.9 Retail 1.1 6.6 (4.6) 8.8 Marine Services (a) -- 2.1 -- 4.9 -------- -------- ------- ------- Total Segment Operating Income 188.2 184.1 761.6 370.6 Corporate and Unallocated Costs (d) (27.0) (15.3) (74.0) (54.1) Loss on Asset Sales and Impairments (a) (0.6) (9.2) (4.7) (10.3) -------- -------- ------- ------- Operating Income 160.6 159.6 682.9 306.2 Interest and Financing Costs, Net (c) (52.9) (45.9) (136.0) (171.1) -------- -------- ------- ------- Earnings Before Income Taxes $ 107.7 $ 113.7 $ 546.9 $ 135.1 ======== ======== ======= ======= Depreciation and Amortization Refining $ 30.1 $ 29.5 $ 92.9 $ 88.9 Retail 4.5 4.7 13.3 14.7 Marine Services (a) -- 0.6 -- 2.0 Corporate 1.7 1.9 4.9 4.8 -------- -------- ------- ------- Depreciation and Amortization $ 36.3 $ 36.7 $ 111.1 $ 110.4 ======== ======== ======= ======= Capital Expenditures Refining $ 37.4 $ 22.4 $ 80.7 $ 64.8 Retail 0.4 0.3 1.4 0.6 Marine Services (a) -- 0.2 -- 0.6 Corporate 1.4 0.4 3.4 0.9 -------- -------- ------- ------- Capital Expenditures $ 39.2 $ 23.3 $ 85.5 $ 66.9 ======== ======== ======= ======= - ----------------------- (d) Corporate and unallocated costs for the nine months ended September 30, 2003 include charges of $4.7 million in reorganization costs, primarily a non-cash charge for voluntary early retirement benefits and severance payments. An additional $4.3 million of reorganization costs were charged to the operating segments during 2003, including $2.6 million in refining, $1.3 million in retail and $0.4 million in marine services. BALANCE SHEET DATA (Unaudited) (Dollars in millions) September 30, December 31, 2004 2003 ------------- ------------- Total Assets $ 4,131.3 $ 3,661.3 Total Debt $ 1,217.1 $ 1,608.8 Total Stockholders' Equity $ 1,314.6 $ 965.4 Total Debt to Capitalization Ratio 48% 62% TESORO PETROLEUM CORPORATION OPERATING DATA (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2004 2003 2004 2003 -------- -------- --------- --------- REFINING SEGMENT Total Refining Segment Throughput (thousand barrels per day) Heavy crude 242.4 278.9 268.2 284.2 Light crude 264.8 209.0 234.1 188.7 Other feedstocks 27.4 17.5 21.1 16.2 -------- -------- --------- --------- Total Throughput 534.6 505.4 523.4 489.1 ======== ======== ========= ========= Yield (thousand barrels per day) Gasoline and gasoline blendstocks 257.1 246.6 254.9 241.4 Jet fuel 71.2 58.5 66.5 56.8 Diesel fuel 110.7 111.0 110.0 105.4 Heavy oils, residual products, internally produced fuel and other 114.2 107.8 111.1 104.1 -------- -------- --------- --------- Total Yield 553.2 523.9 542.5 507.7 ======== ======== ========= ========= Refining Margin ($/throughput bbl) (e) Gross $ 8.27 $ 8.24 $ 9.73 $ 7.04 Manufacturing cost before depreciation and amortization (e) $ 2.96 $ 2.80 $ 2.89 $ 2.83 Segment Operating Income ($ millions) Gross refining margin (after inventory changes) (f) $ 402.8 $ 376.3 $ 1,389.8 $ 938.8 Expenses (g) Manufacturing costs 145.4 130.0 414.2 377.8 Other operating expenses 34.4 34.9 98.9 93.8 Selling, general and administrative 5.8 6.5 17.6 21.4 Depreciation and amortization (h) 30.1 29.5 92.9 88.9 -------- -------- --------- --------- Segment Operating Income $ 187.1 $ 175.4 $ 766.2 $ 356.9 ======== ======== ========= ========= Product Sales (thousand barrels per day) (i) Gasoline and gasoline blendstocks 302.6 289.4 299.9 283.8 Jet fuel 99.0 86.2 88.3 84.2 Diesel fuel 140.1 122.5 133.1 124.8 Heavy oils, residual products and other 72.2 70.7 74.8 70.2 -------- -------- --------- --------- Total Product Sales 613.9 568.8 596.1 563.0 ======== ======== ========= ========= Product Sales Margin ($/barrel) (i) Average sales price $ 55.11 $ 41.06 $ 51.68 $ 40.23 Average costs of sales 47.41 33.98 42.85 34.20 -------- -------- --------- --------- Product Sales Margin $ 7.70 $ 7.08 $ 8.83 $ 6.03 ======== ======== ========= ========= - ----------------- (e) Management uses gross refining margin per barrel to evaluate performance, allocate resources and compare profitability to other companies in the industry. Gross refining margin per barrel is calculated by dividing gross refining margin by total refining throughput and may not be calculated similarly by other companies. Management uses manufacturing costs per barrel to evaluate the efficiency of refinery operations and allocate resources. Manufacturing costs per barrel may not be comparable to similarly titled measures used by other companies. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered as alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America. (f) Gross refining margin is revenues less costs of feedstocks, purchased products, transportation, and distribution. Gross refining margin approximates total refining segment throughout 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 during the nine months ended September 30, 2003. (h) Includes manufacturing depreciation and amortization per throughput barrel of approximately $0.61 and $0.55 for the three months ended September 30, 2004 and 2003, respectively, and $0.65 and $0.58 for the nine months ended September 30, 2004 and 2003, respectively. (i) Sources of total product sales include products manufactured at the refineries, products drawn from inventory balances and products purchased from third parties. Total product sales margin includes margins on sales of manufactured and purchased products and the effects of inventory changes. TESORO PETROLEUM CORPORATION OPERATING DATA (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2004 2003 2004 2003 -------- -------- -------- -------- Refining By Region California (j) Throughput (thousand barrels per day) Heavy crude 116.4 147.4 135.8 149.3 Light crude 19.9 4.2 8.3 2.7 Other feedstocks 17.2 6.3 12.1 6.2 -------- -------- -------- -------- Total Throughput 153.5 157.9 156.2 158.2 ======== ======== ======== ======== Yield (thousand barrels per day) Gasoline and gasoline blendstocks 96.6 97.2 99.0 99.6 Diesel fuel 37.8 40.5 38.7 39.8 Heavy oils, residual products, internally produced fuel and other 27.2 29.5 27.4 28.2 -------- -------- -------- -------- Total Yield 161.6 167.2 165.1 167.6 ======== ======== ======== ======== Refining Margin ($/throughput bbl) Gross $ 11.61 $ 11.19 $ 14.16 $ 10.28 Manufacturing cost before depreciation and amortization $ 5.06 $ 4.39 $ 4.77 $ 4.42 Pacific Northwest (Alaska & Washington) (k) Throughput (thousand barrels per day) Heavy crude 82.2 85.6 86.4 84.3 Light crude 94.1 84.2 82.5 72.9 Other feedstocks 5.4 6.6 4.4 6.3 -------- -------- -------- -------- Total Throughput 181.7 176.4 173.3 163.5 ======== ======== ======== ======== Yield (thousand barrels per day) Gasoline and gasoline blendstocks 77.0 80.3 73.5 74.0 Jet fuel 34.8 26.8 31.2 25.4 Diesel fuel 26.9 32.0 27.3 27.2 Heavy oils, residual products, internally produced fuel and other 48.1 42.5 46.1 42.1 -------- -------- -------- -------- Total Yield 186.8 181.6 178.1 168.7 ======== ======== ======== ======== Refining Margin ($/throughput bbl) Gross $ 7.95 $ 8.04 $ 8.83 $ 6.44 Manufacturing cost before depreciation and amortization $ 2.29 $ 2.11 $ 2.33 $ 2.17 Mid-Pacific (Hawaii) Throughput (thousand barrels per day) Heavy crude 43.8 45.9 46.0 50.6 Light crude 41.1 34.5 38.8 26.6 -------- -------- -------- -------- Total Throughput 84.9 80.4 84.8 77.2 ======== ======== ======== ======== Yield (thousand barrels per day) Gasoline and gasoline blendstocks 20.7 20.2 21.8 18.5 Jet fuel 24.6 23.0 24.5 22.9 Diesel fuel 15.2 13.5 14.5 13.5 Heavy oils, residual products, internally produced fuel and other 25.9 25.0 25.4 23.4 -------- -------- -------- -------- Total Yield 86.4 81.7 86.2 78.3 ======== ======== ======== ======== Refining Margin ($/throughput bbl) Gross $ 5.07 $ 4.07 $ 5.75 $ 3.16 Manufacturing cost before depreciation and amortization $ 1.55 $ 1.40 $ 1.44 $ 1.40 - ---------------- (j) The California refinery's scheduled maintenance turnaround, which began during the 2004 third quarter, resulted in reduced throughput and yield levels. (k) Throughput and yield levels were reduced in the 2003 second quarter during a scheduled maintenance turnaround at the Alaska refinery. TESORO PETROLEUM CORPORATION OPERATING DATA (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ----------------- ---------------- 2004 2003 2004 2003 ------- ------- ------- ------- Mid-Continent (North Dakota & Utah) (l) Throughput (thousand barrels per day) Light crude 109.7 86.1 104.5 86.5 Other feedstocks 4.8 4.6 4.6 3.7 ------- ------- ------- ------- Total Throughput 114.5 90.7 109.1 90.2 ======= ======= ======= ======= Yield (thousand barrels per day) Gasoline and gasoline blendstocks 62.8 48.9 60.6 49.3 Jet fuel 11.8 8.7 10.8 8.5 Diesel fuel 30.8 25.0 29.5 24.9 Heavy oils, residual products, internally produced fuel and other 13.0 10.8 12.2 10.4 ------- ------- ------- ------- Total Yield 118.4 93.4 113.1 93.1 ======= ======= ======= ======= Refining Margin ($/throughput bbl) Gross $ 6.68 $ 7.16 $ 7.90 $ 5.75 Manufacturing cost before depreciation and amortization $ 2.23 $ 2.59 $ 2.22 $ 2.45 - ------------ (l) Throughput and yield levels were reduced during scheduled maintenance turnarounds at the North Dakota refinery in the 2003 third quarter and at the Utah refinery in the 2003 first quarter. TESORO PETROLEUM CORPORATION OPERATING DATA (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ---------------- ---------------- 2004 2003 2004 2003 ------- ------- ------- ------- RETAIL SEGMENT Number of Stations (end of period) Company-operated 221 228 221 228 Branded jobber/dealer 313 336 313 336 ------- ------- ------- ------- Total Stations 534 564 534 564 ======= ======= ======= ======= Average Stations (during period) Company-operated 222 228 223 229 Branded jobber/dealer 315 342 320 350 ------- ------- ------- ------- Total Average Retail Stations 537 570 543 579 ======= ======= ======= ======= Fuel Sales (millions of gallons) Company-operated 76.6 79.1 219.1 235.8 Branded jobber/dealer 59.7 65.8 168.9 203.0 ------- ------- ------- ------- Total Fuel Sales 136.3 144.9 388.0 438.8 ======= ======= ======= ======= Fuel Margin ($/gallon) (m) $ 0.15 $ 0.18 $ 0.15 $ 0.17 Merchandise Sales ($ millions) $ 35.5 $ 32.8 $ 96.2 $ 87.3 Merchandise Margin ($ millions) $ 10.0 $ 9.4 $ 26.4 $ 23.6 Merchandise Margin % 28% 29% 27% 27% Segment Operating Income (Loss) ($ millions) Gross Margins Fuel (n) $ 20.4 $ 26.7 $ 56.3 $ 74.9 Merchandise and other non- fuel margin 11.1 10.3 29.3 26.7 ------- ------- ------- ------- Total Gross Margins 31.5 37.0 85.6 101.6 Expenses (o) Operating expenses 19.4 18.3 56.2 53.7 Selling, general and administrative 6.5 7.4 20.7 24.4 Depreciation and amortization 4.5 4.7 13.3 14.7 ------- ------- ------- ------- Segment Operating Income (Loss) $ 1.1 $ 6.6 $ (4.6) $ 8.8 ======= ======= ======= ======= - --------------- (m) Fuel margin per gallon is calculated by dividing fuel gross margin by fuel sales volumes. Fuel margin per gallon may not be calculated similarly by other companies. Investors and analysts use fuel margin per gallon to help analyze and compare companies in the industry on the basis of operating performance. Management uses fuel margin per gallon to compare profitability to other companies in the industry. (n) Includes the effect of intersegment purchases from the refining segment at prices which approximate market. (o) Includes $1.3 million for voluntary early retirement benefits and severance payments during the nine months ended September 30, 2003. CONTACT: Tesoro Petroleum Corporation, San Antonio Investors: John Robertson, 210-283-2687 or Media: Tara Payne, 210-283-2676 -----END PRIVACY-ENHANCED MESSAGE-----