10-K
1
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[*] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
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 1-7910
TOSCO CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 95-1865716
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
72 Cummings Point Road
Stamford, Connecticut 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
including area code (203) 977-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
Common Stock, $.75 par value New York Stock Exchange
Pacific Stock Exchange
9% Series A First
Mortgage Bonds due March 15, 1997 New York Stock Exchange
9 5/8% Series B First
Mortgage Bonds due March 15, 2002 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
* Yes No
The aggregate market value of the voting stock held by
non-affiliates of the registrant on February 28, 1995 based
on the closing price at which such stock was sold on the New
York Stock Exchange on such date was $1,609,814,679.
Registrant's Common Stock outstanding at
February 28, 1995 was 37,049,859 shares.
Portions of registrant's definitive Proxy Statement
relating to its 1995 Annual Meeting of Shareholders are
incorporated by reference into Part III, as set forth
herein.
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
TOSCO CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
Items 1 and 2. Business and Properties 1
Introduction 1
Petroleum Refining, Supply,
Distribution, and Marketing 1
Other Activities 7
Office Properties 7
Employees 6
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote
of Security Holders 9
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 12
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 13
Item 8. Financial Statements and Supplementary
Data 16
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 17
Item 10. Directors and Executive Officers of
the Registrant 17
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial
Owners and Management 17
Item 13. Certain Relationships and Related
Transactions 17
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 18
Index to Consolidated Financial Statements
and Financial Statement Schedules.. F-1
PART I
Items 1 and 2. Business and Properties
INTRODUCTION
Tosco Corporation ("Tosco"), through divisions and subsidiaries,
is a large independent refiner, wholesaler, and retail marketer
of petroleum products, principally on the East and West Coasts of
the United States.
Tosco has extensive distribution facilities and also engages in
related commercial activities throughout the United States and
internationally.
Following the December 28, 1993 acquisition of British
Petroleum's ("BP") petroleum refining and retail marketing system
in the Pacific
Northwest, Tosco increased its involvement in petroleum
marketing.
During 1994 Tosco added BP's retail marketing assets in
California and
Exxon Corporation's retail marketing assets in Arizona. Tosco
also acquired the exclusive right to market under the BP brand in
nine Western states.
Tosco also has interests in oil shale properties in Colorado and
Utah.
Tosco was incorporated under the laws of the State of Nevada in
1955. Its principal executive offices are located at 72 Cummings
Point Road, Stamford, Connecticut 06902 and its telephone number
is (203) 977-1000.
PETROLEUM REFINING, SUPPLY, DISTRIBUTION, AND MARKETING
Refining
Tosco, through three major facilities, currently processes
approximately 525,000 barrels per day of crude oil and other
feedstocks
into various petroleum products, consisting chiefly of light
transportation fuels (gasoline, diesel and jet fuel) and heating
oil.
Tosco Refining Company ("Tosco Refining"), a division of Tosco,
operates the Avon Refinery ("Avon"), located in the San Francisco
Bay Area. The Avon Refinery, the largest independently owned
refinery on the West Coast of the United States, with
approximately 160,000 barrels per day of crude oil distillation
capacity, is technologically complex,
with coking, catalytic cracking, hydrocracking and
hydrodesulfurizing units to accommodate comparatively lower
gravity crude oils. It is
capable of processing a broad range of crude oils and other
feedstocks into a high percentage of light refined petroleum
products, consisting chiefly of transportation fuels.
Bayway Refining Company ("BRC"), an indirect subsidiary of Tosco,
owens and operates the Bayway Refinery ("Bayway") located in
Linden, New
Jersey. Bayway is the largest refinery (as measured by
distillation capacity) on the U.S. East Coast and can process in
excess of 275,000 barrels per
day of crude oil and other feedstocks. Its facilities include
hydrodesulfurization units and the largest fluid catalytic
cracking unit in the world. In addition to producing
transportation fuels, Bayway is a principal supplier of heating
oil to the U. S. East Coast.
It is strategically located on the New York Harbor in a large
market area, with ready access to marine, rail, and truck
transportation and
product distribution pipelines, giving it considerable
flexibility to change its raw material input and product output
to respond to changing market conditions.
Tosco Northwest Company ("Tosco NW"), a division of Tosco,
operates the Ferndale Refinery ("Ferndale"), located on Puget
Sound, 100 miles north of Seattle. It is connected by the
Olympic pipeline to its major retail markets, has crude oil
distillation capacity of
approximately 90,000 barrels per day and is equipped with thermal
catalytic cracking and hydrodesulfurization units, as well as
modern marine facilities. The refinery, together with an
extensive retail gasoline marketing and distribution system (the
"Pacific Northwest Assets") was acquired from BP Exploration &
Oil Inc. on December 28, 1993.
The table on the following page sets forth quantities of crude
oil and feedstocks processed and refined products manufactured at
Avon during 1994, 1993 and 1992, at Bayway during 1994 and the
period April 8 to December 31, 1993 and at Ferndale during 1994.
A barrel is 42 gallons.
The Federal Clean Air Act Amendments of 1990 and the laws and
regulations of state and local agencies impose certain air
quality requirements that have a significant impact on Tosco.
These regulations require the sale of reformulated and oxygenated
gasoline in areas that do not meet certain air quality standards.
Effective January 1, 1995, federal regulations require the sale
of reformulated gasoline in the nine U.S. cities with the highest
levels of ozone in their air quality, including areas that Tosco
sells its gasoline. Tosco made the necessary modifications to
comply with this requirement. Effective March 1, 1996, the
California Air Resources Board requires the sale of reformulated
gasoline in California that meet specifications that are stricter
than the federal requirement ("CARB Phase II"). Tosco is making
modifications to Avon to comply with these requirements.
Raw Material Supply
During 1994, Tosco's crude oil and feedstock
requirement of approximately 503,000 barrels per day were
supplied by third parties. Avon's and Ferndale's requirements
were supplied from domestic sources, primartily Californnia and
Alaska, while Bayway's crude oil and feedstock requirements were
met from both foreign and deomestic sources. An average of
approximately 222,000 barrels per day was purchased under term
contracts from a variety of domestic sources including Atlantic
Richfield Co. ("ARCO"), BP, Texaco Trading and Transportation
Inc. ("Texaco Trading"), and Chevron U.S.A., a portion of which
was resold. Approximately 96,000 barrels per day of foreign,
waterborne crude and feedstock was obtained under contracts with
Statoil (Norway), an affiliate of Sinochem, and PetroEcuador.
The balance of
Tosco's crude oil and feedstock requirement during 1994
(approximately 185,000 barrels per day) was purchased on the spot
market, where Tosco purchased a total of approximately 295,000
barrels per day (including 225,000 barrels per day from foreign
sources). Tosco resold approximately 18% of its raw material
purchases.
In October 1986, Tosco entered into an agreement (the "ARCO
Exchange Agreement") with ARCO, under which ARCO delivers an
average of 50,000 barrels per day of crude oil to the Avon
Refinery in exchange for a variable quantity of gasoline based
upon the prices of certain crude oils. The ARCO Exchange
Agreement has a ten-year initial term, with
two five-year renewal options exercisable by ARCO. Under the
ARCO Exchange Agreement, Tosco has agreed that in the event it
desires to sell the Avon Refinery, Tosco will first offer it for
sale to ARCO. If ARCO declines, Tosco will be free for a
certain period of time to sell the Avon Refinery for
consideration no less favorable to Tosco than was initially
offered to ARCO, subject to the effect of possible
continuing Tosco obligations of exchange under the ARCO Exchange
Agreement. In addition, in any such subsequent sale ARCO has the
right to participate in the bidding and to acquire the Avon
Refinery if it is the high bidder. In the event conditions
change to the extent that one of the parties has sustained
significant losses for a substantial
period of time, or structural changes make substantial losses
likely, the ARCO Exchange Agreement is subject to renegotiation
and possible termination. Such possible termination could be
material to Tosco, depending on market conditions at the time.
In June 1986, Tosco and Texaco Refining & Marketing, Inc.
("Texaco") entered into a crude oil purchase, sale and exchange
agreement. This contract was extended in May 1988, in February
1990 and again in April 1992, with Texaco Trading on similar
terms. Pursuant to this agreement, Texaco Trading has agreed to
supply, and Tosco has agreed to purchase, an average of 35,000 to
40,000 barrels per day of San Joaquin Valley heavy crude oil
(subject to certain volume rate changes). Crude oil from the San
Joaquin Valley is principally moved to the Avon Refinery via
pipelines owned by Texaco. To the extent such
pipelines are not available, Tosco's operating results may be
materially adversely affected.
BRC has several term contracts with foreign suppliers of crude
oil and feedstocks and believes that in the event such contracts
are terminated, it would be able to replace them in the market
without material adverse effect. In connection with BRC's
reliance on European
sources as its primary suppliers of crude oil, Tosco established
a U.K. subsidiary during 1994 for the purpose of obtaining better
information and access to the European markets.
During 1994, BRC entered into a twelve-year tanker agreement with
Neptune Orient Lines, Ltd. of Singapore for the charter of four
100,000 dead weight tons (DWT) crude oil tankers. The tankers
will be built to
maximize the use of Bayway's dock receiving facilities as well as
to meet the requirements of the U.S. Oil Pollution Act of 1990.
The first tanker is expected to be delivered
in the second half of 1996.
BRC also entered into a long-term lease agreement with Statia
Terminals for 3,600,000 barrels of crude oil storage in Nova
Scotia, Canada. It is expected that the tankers will be utilized
to move
crude oil from the Nova Scotia storage location to Bayway or in
direct shipments to other locations.
In conjunction with the purchase of the Ferndale Refinery, Tosco
and BP Oil Supply Company entered into, effective as of December
28, 1993 for a term of five years, a crude oil supply agreement
under which Tosco has the right to purchase from BP, Alaska North
Slope ("ANS") crude oil delivered to the Ferndale Refinery in an
amount approximately equivalent to the requirements of that
refinery on terms Tosco considers to be favorable.
Tosco believes its average crude oil inventory is presently
sufficient for normal refinery operations at Avon, Bayway and
Ferndale. Tosco's crude oil inventory level is managed in light
of market risk, carrying costs, and delivery method.
The cost to Tosco of crude oil and other feedstocks depends on
many factors, including the terms of purchase, credit and
delivery. In general, heavy crude oils are less expensive than
lighter crude oils. Thus, if Avon's supply of San Joaquin Valley
heavy crude oil is reduced or curtailed, or if its price relative
to lighter crude oils increases, Tosco's operations could be
adversely affected. If Congress changes present law and allows
the export of Alaskan North Slope crude oil, which may affect its
price and availability, Tosco could be adversely
affected. If Bayway's foreign sources of crude oil or the marine
system for delivering crude oil, including required marine
insurance for possible marine environmental liabilities, were
curtailed, Tosco's operations could be adversely affected. In
addition, the loss, or an adverse change in the terms, of certain
of the crude oil supply contracts described above or the loss of
other sources or means of delivery of crude oil could have a
material adverse effect on Tosco's operating results. The
volatility of prices and quantities of crude oil that may be
purchased on the spot market or pursuant to long and
short-term contracts could materially adversely affect Tosco's
operating results.
Average Barrels Per Calendar Day
Avon Bayway Ferndale
Refinery Refinery Refinery Consolidated
1994 1993 1992 1994 1993(1) 1994 1994 1993
Crude oil refined 147,450 158,160 145,250 196,660 196,150 88,840 432,950 354,310
Additional
refinery feed and
blending stocks 13,140 8,150 7,260 55,560 63,100 1,800 70,500 71,250
Total Input 160,590 166,310 152,510 252,220 259,250 90,640 503,450 425,560
Petroleum products
produced:
Gasoline 86,020 98,640 92,230 120,580 130,140 39,860 246,460 228,780
Distillates 46,680 38,970 33,920 75,380 76,820 19,150 141,210 115,790
Jet fuel. 420 8,770 7,020 3,790 12,560 7,020
Residual 14,130 11,820 12,450 36,980 29,800 26,060 77,170 41,620
Petroleum coke
(fuel oil equiv.) 6,190 7,370 6,720 6,190 7,370
Propane 4,090 4,260 4,360 3,920 10,910 1,480 9,490 15,170
Other 2,240 3,050 1,030 10,600 9,800 (1,880) 10,960 12,850
Total petroleum
products produced 159,350 164,110 151,130 256,230 264,490 88,460 504,040 428,600
(1) Operations of the Bayway Refinery for the period April 8, 1993
(date acquired) to December 31, 1993.
Wholesale Marketing and Distribution
Tosco sells unbranded refined petroleum products to wholesale
purchasers. Tosco's wholesale sales of gasoline and distillates
were made to large end users, retailers, independent marketers
and jobbers who serve unbranded markets, including the retail,
industrial, commercial, agricultural and governmental classes of
trade. Sales are also made to other refiners and resellers, both
major and independent. Tosco generally sells other petroleum
products directly to the ultimate industrial users of such
products. Tosco's ability to sell its products
on economical terms is dependent in part on the competitive
position of its customers in changing and often turbulent
markets. During 1994, 1993 and 1992, wholesale gasoline products
accounted for approximately 44%, 57% and 68%, respectively, of
Tosco's revenues, while during the same periods distillates
accounted for approximately 29%, 31%, and 25%,
respectively, of Tosco's revenues. Tosco believes that its
average inventory of transportation fuels of 10 to 15 days sales
is slightly lower than average industry inventories.
There were no long-term sales contracts (i.e., in excess of one
year) which accounted for more than 10% of Tosco's consolidated
revenues.
During 1994, 1993 and 1992, Tosco purchased for resale an average
of approximately 320,769; 118,610; and 59,100 barrels per day,
respectively, of petroleum products from third parties.
In September 1994, Tosco entered into a long-term supply
agreement with Chevron USA Products Company that will provide
Tosco, commencing in 1996, with 30,000 barrels per day of CARB
Phase II gasoline in exchange for 30,000 barrels per day of
conventional grade gasoline. This agreement has a seven year
initial term and continues on an evergreen basis thereafter.
Tosco distributes refined petroleum products, principally in the
eastern and western United States through an extensive
distribution network comprised of 88 terminal locations in 20
states and by means of pipelines, rail tank cars, trucks,
ocean-going tankers and barges. A subsidiary of Tosco operates,
through a long-term lease, a petroleum products (primarily
heating oil) distribution system located on Long Island, New
York. In
addition, Tosco operates a petroleum storage facility (the
Riverhead Terminal) with deep water marine facilities in Eastern
Long Island. See Note 14
to the Consolidated Financial Statements.
Tosco also engages in commercial activities related to its
petroleum refining, distribution, and marketing businesses
throughout the United States and internationally.
Retail Marketing
In 1994, Tosco continued the expansion of its retail petroleum
fuel marketing business. Tosco's current sales volume through
its retail system is approximately 67,000 barrels per day.
On December 28, 1993, Tosco acquired from BP its retail gasoline
marketing system in Washington and Oregon. The Northwest system
includes approximately 500 retail locations, comprised of 129
company controlled stations, approximately 377 independently
owned and operated stations and two distribution terminals.
Tosco also acquired the exclusive right to use the BP brand in
Washington and Oregon for at least five years.
On August 1, 1994, Tosco acquired BP's California retail gasoline
marketing system. The California retail system includes
approximately 370 retail locations, 130 of which are company
controlled, a distribution terminal, and related assets.
Pursuant to the acquisition and related agreements, Tosco
purchased improvements at the retail service station locations
and received noncompetition and expanded trademark licensing
agreements. The balance of the California retail
assets, primarily land and equipment at retail service station
locations, were leased from a special purpose entity which
acquired the assets from BP. The trademark licensing agreement
extends Tosco's exclusive license to market under the BP brand to
seven western states for at least twelve years, adding to its
existing license in Washington and Oregon. The previous five
year trademark license agreement for Washington and Oregon was
also extended to a term of at least twelve years.
On December 16, 1994, Tosco completed the transaction for Exxon
Company USA's (Exxon) retail gasoline marketing assets in
Arizona, which includes 83 company controlled retail locations.
The Arizona retail marketing assets, which are operated under the
Exxon brand, are leased from a special
purpose entity that purchased the assets from Exxon. Tosco also
entered into an Exxon branded distributor agreement with a
minimum term of seven years.
Compliance With Environmental Requirements
Tosco is subject to extensive federal, state and local laws and
regulations governing releases into the environment and the
storage, transportation, disposal and clean-up of hazardous
materials, including, but not limited to, the Federal Clean Water
Act, the Clean Air Act, the Resource Conservation and Recovery
Act, and analogous state and local laws and regulations. See
"Legal Proceedings".
Environmental compliance has required, and will continue to
require, capital expenditures. Tosco spent approximately $17.2
million in 1994 and $13 million in 1993 for such capital
expenditures. Tosco currently estimates that capital
expenditures for environmental compliance may
approximate $16.5 million and $24.7 million for 1995 and 1996,
respectively. Such amounts do not include amounts that would be
necessary to produce gasoline to meet changing "clean fuels"
specifications.
During the fourth quarter of 1994, Tosco recorded a $6 million
accrual for environmental costs based upon a determination that
legal, investigative work and remedial actions, primarily related
to previously owned locations, will be required in the future.
In July 1993, outstanding litigation concerning environmental
issues with respect to the Avon Refinery was settled with certain
former owners of the Avon Refinery. Under the settlement, the
former owners agreed to pay up to $18 million for one-half of the
costs that may be incurred to comply with certain environmental
orders and to provide Tosco a $6 million credit for past
environmental expenses (which Tosco will use to reduce its
one-half share of future expenses). (See "Legal Proceedings".)
Because anticipated remedial actions are subject to negotiation
with governmental agencies the amount and timing of actual
cash expenditures is uncertain. In addition, further
investigative work and negotiations with governmental agencies
may result in different or additional remedial actions which
Tosco cannot presently predict.
Governmental regulations are complex and subject to different
interpretations. Therefore, future action and regulatory
initiatives could result in changes to expected operating
permits, additional remedial actions or increased capital
expenditures and operating costs that Tosco cannot presently
assess with certainty. See Note 15 to the Consolidated Financial
Statements.
Competition
Many of Tosco's competitors are fully integrated companies
engaged, on a national and/or international basis, in many
segments of the petroleum business, including exploration,
production, transportation, refining and marketing, on scales
much larger than Tosco. Such competitors may have greater
flexibility than Tosco in responding to or absorbing
market changes occurring in one or more of such segments.
Tosco's petroleum refining and marketing business is not
seasonal.
Tosco faces strong competition in its market for the sale of
refined petroleum products, including gasoline. Such
competitors, especially major integrated oil companies, have in
the past and may in the future engage in marketing practices that
result in profit margin deterioration for Tosco for periods of
time, causing an adverse impact on Tosco. The Company does not
believe that there is any one or a
small number of dominant competitors in the petroleum refining
business. The Company does not know its precise competitive
position therein. Principal methods of competition are price or
service.
Tosco believes it is able to compete with respect to these
methods because of its facilities and their locations.
Tosco must purchase substantially all of its crude oil and
feedstock supplies from others, while some of its competitors
have proprietary sources of crude oil available for their own
refineries. Tosco believes it has a crude oil cost disadvantage
to the extent major integrated oil companies have access to
proprietary sources of crude oil. However, Tosco has agreements
with ARCO, British Petroleum, PetroEcuador, Statoil, Texaco
Trading and others to provide Tosco certain amounts of crude oil.
Under present market conditions, Tosco does not anticipate
difficulty in obtaining necessary crude oil
supplies. See "Petroleum Refining, Supply, Distribution and
Marketing - Raw Material Supply".
Operating Properties
Tosco owns the 2,300 acre site on which the Avon Refinery is
located and the buildings, tanks, pipelines and related
facilities at that refinery. The Avon Refinery, including
certain leased facilities, occupies approximately l,400 acres of
the site. Of the approximately 900 remaining acres,
approximately 400 acres are not subject to encumbrances described
below. BRC owns the 1,300 acre site on which
the Bayway Refinery and its related facilities are located and
Tosco owns the 850 acre site on which the Ferndale Refinery is
located.
Tosco had available at December 31, 1994, through ownership,
lease agreement, exchange or other appropriate arrangement, the
use of storage tanks, loading racks, wharves, warehouses and
other related assets at approximately 88 terminal distribution
locations in 20 states. Tosco believes its refinery-related
properties are well-maintained and are suitable and adequate for
their purposes.
Tosco or its wholly owned subsidiaries own or control by
lease approximately 343 retail service stations located in the
states of Arizona, California, Oregon and Washington. In
addition to marketing transportation fuels (gasoline and diesel)
many of the stations have convenience store, car wash, and/or
automotive repair facilities.
Encumbrances
In March 1992, Tosco sold $300 million of First Mortgage Bonds
("Bonds"), comprised of $100 million of 9% Series A Bonds due
March 15, 1997 and $200 million of 9-5/8% Series B Bonds due
March 15, 2002. Interest on the Bonds is payable each March 15th
and September 15th.
Each of the issues is non-callable and is collateralized by
Tosco's Avon Refinery and certain related assets.
In April 1993, Tosco sold $150 million of 8-1/4% First Mortgage
Bonds due May 15, 2003 ("Bayway Bonds"). The issue is
non-callable, guaranteed by BRC and collateralized by the Bayway
Refinery and related assets and a guarantee of Tosco.
Interest on the Bonds is payable each May 15th and
November 15th. See Note 9 to the Consolidated Financial
Statements.
On August 1, 1994, Tosco provided Deeds of Trust on the
improvements at retail service station locations in California
that it acquired from BP to the special purpose entity from whom
Tosco leases the land and equipment at those locations.
Patents
Tosco's patents relating to petroleum operations are not
material.
OTHER ACTIVITIES
Oil Shale
Tosco and its wholly owned subsidiary, The Oil Shale Corporation
("Oil Shale"), have interests in oil shale properties aggregating
approximately 23,100 net mineral acres in Colorado and 20,525 net
mineral acres in Utah. Tracts vary in size from l60 to l7,570
mineral acres. Tosco is also the owner of water rights and
certain oil shale processes and technologies. In addition, Oil
Shale controls approximately l,900 acres of oil shale properties
through unpatented mining claims. (Unpatented properties are
those in which the United States Government has not conveyed to
others all of its right, title and interest.)
Other
During 1993, Seminole Fertilizer Corporation, a wholly owned
subsidiary of Tosco, sold its principal phosphate fertilizer
operating assets to Cargill Fertilizer Inc. ("Cargill").
Seminole's interest in Fort Meade Chemical Products partnership
("FMCP"), which was not included in the sale to Cargill, was sold
during the first quarter of 1994.
OFFICE PROPERTIES
At December 31, 1994 Tosco occupied a total of approximately
208,246 square feet of office space in Concord, California;
Linden, New Jersey; London, England; Rancho Cordova, California;
Singapore; San Ramon, California; Scottsdale, Arizona; Seattle,
Washington; and Stamford, Connecticut. The office space occupied
by Tosco is generally suitable and adequate for its purposes.
EMPLOYEES
At December 3l, 1994 Tosco (including its subsidiaries) had
approximately 3,613 employees at various locations, including
approximately 395 part-time employees. Approximately 35% of
Tosco's employees are represented by labor organizations. The
compensation paid to the Company's wholesale sales force is based
on the same general components as the Company's compensation to
certain other salaried employees, which is salary plus a bonus
under cash incentive plans based on results of operations. The
compensation paid to retail site managers is based, in part, on
commission on non-fuel sales and service station efficiency. The
Company does not maintain key person life insurance coverage on
its executive officers. Tosco believes that its labor relations
with its employees are good.
Item 3. Legal Proceedings
Tosco's Spokane, Washington terminal is located within a site
being investigated by the United States Environmental Protection
Agency (the "EPA") and the Washington Department of Ecology (the
"WDOE") for suspected hydrocarbon and lead contamination. Tosco
has been notified by the WDOE that it, and the major oil company
from which it purchased the facility, are included in the list of
six parties potentially liable for cleanup of the site under
state law. The area identified by the WDOE was included on the
Superfund National Priorities List (the "Superfund List"). The
source, extent and nature of the contamination
have not been determined but are the subject of investigations.
Tosco and other potentially liable parties are working with the
WDOE with regard to the investigation of the site. The extent of
Tosco's liability, if any, is unknown.
In 1990 the EPA and the California Regional Water Quality Control
Board ("RWQCB") issued Orders ("Orders") identifying suspected
releases of hazardous constituents at a number of hazardous waste
and solid waste management units on the Avon Refinery property,
including several older inactive units which were used by
Phillips Petroleum Company ("Phillips"), a former owner, but not
by Tosco, and directed Tosco to investigate the identified
releases and determine the need for corrective action. In July
1992, the RWQCB issued Waste Discharge Requirements which, among
other things, ordered Tosco to submit a plan of corrective action
"Corrective Action Plan" to deal with the suspected releases of
hazardous waste at the Avon Refinery. The Corrective Action Plan
was submitted on January 4, 1993. The RWQCB also issued an Order
in June 1990 which required Tosco to expand programs monitoring
groundwater quality throughout the Avon Refinery
and to investigate the presence of subsurface liquid
hydrocarbons. In the third quarter of 1992, Tosco received a
"Tentative Order" (later finalized) from the RWQCB that among
other things, set a date by which significant amounts of
subsurface liquid hydrocarbons were to be
removed. Pursuant to a lawsuit that was settled in July 1993,
Phillips and Texaco, the former owners of the refinery, for the
next four years or until the funds provided under the agreement
are expended (whichever is later), will pay up to an aggregate of
$18 million for one-half of the costs that may be incurred for
compliance with certain environmental orders, and in addition,
provide Tosco a $6 million credit for past expenses. After the
initial term of the agreement, the parties would be free to
reinstate the suit. Tosco has not relinquished any of its rights
to make claims for reimbursement for costs incurred after the
date of settlement and would not be required to reimburse amounts
received under the agreement.
On September 4, 1992, Tosco received a Report of Violation
("ROV") from the California Department of Toxic Substances
Control ("DTSC"), alleging violations of hazardous waste
regulations identified during an inspection of a parcel of land
owned by Tosco that was used for petroleum coke storage in
connection with operations of Tosco's former Bakersfield
Refinery, which was sold in 1986. The ROV, without
specifying dates, orders Tosco to comply with various hazardous
waste handling practices in connection with the site. Tosco has
entered into discussions with DTSC concerning required actions.
On July 26, 1994, the Washington Department of Ecology notified
Tosco that Tosco, along with approximately 150 other parties, may
be a potentially liable person under state law for the
environmental clean-up of a site known as Yakima Railroad Area.
The source, extent and nature of the contamination has not been
determined but is the subject of investigation. The extent of
Tosco's liability, if any, is unknown.
A refinery in Duncan, Oklahoma, formerly owned by Tosco, is
subject to investigation by the Oklahoma Department of
Environmental Quality ("ODEQ"). The ODEQ has requested that
Tosco participate with the former owner, Sun Company, Inc.
(R&M) ("Sun"), from whom Tosco purchased the
site, and the current owner, to whom Tosco sold the site, in the
investigation and potential remediation of alleged environmental
contamination. Tosco is discussing the investigation with the
ODEQ. The extent of Tosco's liability, if any, is unknown. On
December 6, 1994, Tosco filed a complaint for declaratory relief
against Sun (Tosco v. Sun Company, Inc.(R&M), United States
District Court, Northern District of California, Case No. 94 4190
FMS), as
amended on February 6, 1995, seeking an order determining
Tosco's and Sun's rights and legal relations under the Purchase
Agreement through which Tosco purchased the Duncan Refinery,
relating to the cost for environmental investigation
and potential remediation.
On November 18, 1992, the RWQCB issued an order against Tosco,
Phillips and Wickland Oil Company ("Wickland") as dischargers of
waste, including petroleum hydrocarbons, into the soil and
groundwater at an oil terminal owned by Wickland. The named
parties are required to investigate the site and submit reports
for the recovery of hydrocarbons and the remediation of
contaminated soil and groundwater.
On May 24, 1994, the United States Environmental Protection
Agency filed an Administrative Complaint and Opportunity to
Request a Hearing and Conference against Tosco alleging that
Tosco discharged oil into or upon the surface of the water
adjacent to Tosco's Avon refinery and
has failed to fully implement its Spill Prevention Control and
Counter Measures Plan. On September 27, 1994, the State of
California filed a complaint for violation of state law based on
the same incident (People of the State of California v. Tosco,
Superior Court, County of Contra Costa, California, Case No.
C94-04239). These matters have been settled.
On June 14, 1994, Lion Oil Company ("Lion") filed a Complaint
against Tosco (Lion Oil Company v. Tosco Corporation, United
States District Court, Western District of Arkansas, Case No.
94-1072) as amended on August 22, 1994 seeking an order for
reimbursement under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), contribution and
declaratory relief in connection with the investigation and
remediation of alleged environmental contamination of a refinery
formerly owned by Tosco located in El Dorado, Arkansas. Tosco
sold the property to Lion pursuant to an Asset Purchase & Sale
Agreement of March 22, 1985 which included specific provisions
limiting Tosco's liability with respect to environmental matters.
Tosco filed Answers to the Complaint and Amended Complaint
denying generally the allegations made and denying specifically
any liability to Lion. Tosco also filed a counter-claim
asserting that Lion's suit is a breach of the Asset Purchase and
Sale Agreement and if Tosco is liable to Lion in this case, then
Lion is liable to Tosco for contribution under federal and state
law.
The operator of a landfill to which it is alleged Tosco sent
hazardous waste has sued numerous alleged waste generators,
including Tosco, and municipalities under CERCLA (ACME Landfill
Corporation v. Althin CD Medical, Inc. et al., United States
District Court, Northern District of California, Case No.
C91444268 SBA) to recover the costs for
closure/post closure of the site. The source, extent and nature
of any contamination is the subject of ongoing discovery. Tosco
has sought indemnification from Phillips.
The costs of remedial actions are highly uncertain due to,
among other items, the complexity and evolving nature of
governmental laws and regulations and their interpretations as
well as the varying costs and effectiveness of alternative
cleanup technologies. However, Tosco
presently believes that any cost in excess of the amounts already
provided for in the financial statements should not have a
materially adverse effect upon Tosco's operations or financial
condition. Tosco further believes, as discussed with respect to
the Phillips case above, that a portion of future
environmental costs, as well as environmental expenditures
previously made, will be recovered from other responsible parties
under contractual agreements and existing
laws and regulations. See Note 15 to the Consolidated Financial
Statements.
There are various other suits and claims pending against Tosco
and its
subsidiaries, which in the opinion of Tosco are not material or
meritorious or are substantially covered by insurance. While it
is impossible to estimate with certainty the ultimate legal and
financial liability with respect to these suits and claims, Tosco
believes the aggregate amount of such liabilities will not result
in monetary damages which in the aggregate would be material to
the business or operations of Tosco.
Item 4. Submission of Matters to a Vote of Security Holders
None
Executive Officers of the Registrant
Served as an
Name Age Officer Since Principal Occupation and Positions Held
Thomas D. O'Malley 53 1989 Chairman of the Board and Chief
Executive Officer of Tosco since
January 1990; President of Tosco
since May 1993 and from October
1989 to May 1, 1990; Chairman and
Chief Executive Officer of Argus
Investments, Inc. since July 1988
and Argus Energy Corporation since
December 1987; Vice Chairman of
Salomon Inc. from 1983 to December
1986.
Jefferson F. Allen 49 1990 Executive Vice President, Chief
Financial Officer and Treasurer of
Tosco Corporation since June 1990;
various positions including
Chairman and CEO, with Comfed
Bancorp, Inc. and related entities
from November 1988 to June 1990;
Executive Vice President, Argus
Investments during 1988; Senior
Vice President, Exploration
Management Corporation from 1985 to
April 1988.
James M. Cleary 49 1987 Senior Vice President, Tosco
Corporation since July 1990;
President of Tosco Refining Company
(a division of Tosco) since May
1990; Senior Vice President of
Tosco Refining Company from June
1989 to May 1990; Vice
President-Refining of Tosco from
January 1987 to June 1989. Various
other positions with Tosco since
1980.
Robert J. Lavinia 48 1993 Senior Vice President of Tosco
Corporation since May 1994;
President of Tosco Northwest
Company (a division of Tosco) since
October 1993; Vice President of
Tosco Corporation since 1993 and
Executive Vice President of Bayway
Refining Company during 1993;
President, Tosco Energy Corporation
during 1992; prior to 1992, various
positions with Phibro Energy for a
period in excess of five years;
most recently as a Senior Vice
President.
Dwight L. Wiggins 54 1993 Senior Vice President of Tosco
Corporation since May 1994 and
Vice President of Tosco
Corporation; President of Bayway
Refining Company since January
1993; New Jersey Area Manager for
Exxon Company U.S.A. 1990 to 1993;
Benicia Refinery Manager for Exxon
Company 1983 to 1990.
Wilkes McClave III 47 1989 Vice President and General Counsel of
Tosco and Senior Vice President
of Tosco Refining Company (a
division of Tosco) since May
1990; Secretary of Tosco since
August 1989; Vice President and
Secretary of Bayway Refining
Company since January 1993 and
Tosco Northwest since October
1993; Assistant General Counsel
of Tosco from January 1986 to May
1990.
George E. Ogden 52 1994 Vice President of Tosco Corporation
since May 1994; Vice President of
Tosco Refining Company from
March 1992 to March 1994.
Independent Petroleum
Consultant from 1984 to 1992.
Peter A. Sutton 49 1992 Vice President of Tosco Corporation
since January 1992; Senior Vice
President of Tosco Refining
Company since May 1990, various
other positions with Tosco for a
period in excess of five years.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Tosco's Common Stock is traded on the New York Stock Exchange
("NYSE") and the Pacific Stock Exchange. Set forth below are the
high and low sales prices as reported on the NYSE Composite Tape.
Price Range of Common Stock
1994 High Low 1993 High Low
1st Quarter $35 $29 1st Quarter $24 5/8 $18 7/8
2nd Quarter 32 3/8 27 3/8 2nd Quarter 26 22 3/8
3rd Quarter 32 7/8 27 3/8 3rd Quarter 26 5/8 21 3/8
4th Quarter 32 26 3/4 4th Quarter 32 3/4 26 3/8
The number of Tosco shareholders of record on February 28,
1995 was 11,280.
Dividend Policy
Tosco has paid a regular quarterly cash dividend on its Common
Stock since the third quarter of 1989. In the third quarter of
1994 the cash dividend was raised from $.15 to $.16 per share.
Pursuant to the terms of Tosco's working capital facility and its
bond indentures, dividends on Tosco's Common Stock are permitted
to the extent Tosco satisfies certain defined criteria.
Continued payment of such quarterly dividend
is also subject to profitable results of operations, which are
primarily dependent on the continued favorable performance of
Tosco's operating facilities and favorable operating margins.
There can be no assurance that Tosco will be able to continue
payment of such quarterly dividend. Through August 15, 1994,
Tosco paid all scheduled dividends on its outstanding preferred
stock. In September 1994, substantially all the preferred stock
was converted to common stock pursuant to a redemption call by
Tosco. For the shares that were redeemed, Tosco paid the
accumulated and unpaid dividend from August 16, 1994 to the
Redemption Date of September 26, 1994.
Item 6. Selected Financial Data
The following Selected Financial Data are qualified in their
entirety by the more detailed Consolidated Financial Statements
and related Notes at the end of this report. The Selected
Financial Data for each of the five years ended December 31, 1994
are derived from the Consolidated Financial Statements of Tosco
audited by Coopers & Lybrand L.L.P., independent accountants.
TOSCO CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (a)
(Millions of dollars except per share and ratio data)
Year Ended December 31,
1994 1993 1992 1991 1990
Results of Operations
Sales $6,365.8 $3,559.2 $1,861.0 $1,608.7 $1,854.6
Gross profit on sales 260.4 251.8 132.7 121.2 248.3
Inventory valuation
(recovery) writedown (17.7) 17.7
Environmental cost accrual 6.0 25.0 4.0 2.0
Operating contribution 272.1 234.1 107.7 117.2 246.3
Selling, general and
administrative expense 84.1 58.2 38.7 30.2 48.1
Interest expense, net 54.2 44.1 18.0 16.5 24.3
Pre-tax income 133.8 131.8 51.0 70.5 173.9
Provision for income taxes (b) 50.0 51.2 20.8 2.4 19.6
Income from continuing
operations
before other items 83.8 80.6 30.2 68.1 154.3
Discontinued operations,
net of income taxes
Income (loss) from operations (15.9) 7.3 (31.1)
Estimated loss on disposal (105.0)
Cumulative effect of accounting changes 16.2
Net income (loss) $ 83.8 $80.6 ($ 74.5) $ 75.4 $123.2
Income (loss) per common and
common equivalent share
Primary:
From continuing operations $ 2.27 $ 2.38 $ .68 $ 2.15 $ 6.81
From discontinued operations (4.08) .24 (1.44)
From cumulative effect of accounting
changes ___ ___ .55 _____ _____
Net income (loss) $ 2.27 $ 2.38 ($ 2.85) $ 2.39 $ 5.37
Fully Diluted:
From continuing operations $ 2.24 $ 2.33 $ .68 $ 2.12 $ 4.94
From discontinued operations (4.08) 23 (1.00)
From cumulative effect of accounting
changes .55
Net income (loss) $ 2.24 $ 2.33 ($ 2.85) $ 2.35 $ 3.94
Capitalization (at end of period)
Total assets $1,797.2 $1,492.9 $ 952.9 $871.0 $ 678.9
Long-term and revolver debt $ 687.4 $ 603.3 $ 356.8 $211.9 $ 202.7
Preferred stock 111.2 111.2 111.2
Common shareholders' equity 575.5 410.4 270.2 385.6 333.3
Total capitalization $1,262.9 $1,124.9 $ 738.2 $ 708.7 $ 536.0
Other Information
Ratio of long-term and
revolver debt to
total capitalization .54 .54 .48 .30 .38
Current ratio 1.8 2.2 2.6 1.6 1.6
Book value per share $ 15.53 $ 12.60 $ 9.10 $ 12.78 $ 11.15
Cash dividends per share $ .62 $ .60 $ .60 $ .60 $ .60
___________________________________
(a) Reflects Seminole Fertilizer Corporation, acquired on July 1, 1989,
as a discontinued operation for all
applicable periods.
(b) Reflects the provision for income taxes for 1992 - 1994 at regular
tax rates pursuant to the provisions of SFAS No. 109 adopted January 1, 1992.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Introduction
1994 was an acceptable year for Tosco. Net income was $83.8
million including a $17.7 million inventory valuation
recovery and a $6 million environmental cost accrual.
Excluding these non-cash items, Tosco's results for 1994
declined from 1993 due to weak refining margins, reduced
production levels, and higher costs. These negative factors
overshadowed strong operating results from Tosco's entry
into retail marketing and the achievement of investment
grade credit ratings on its senior debt.
Results of operations - 1994
For the Year Ended December 31,
1994 1993
(Thousands of Dollars)
Sales $ 6,365,757 $3,559,217
Cost of sales 6,105,293 3,307,492
Inventory valuation
(recovery) writedown (17,651) 17,651
Environmental cost accrual 6,000
Operating contribution 272,115 234,074
Selling, general, and
administrative expense 84,123 58,174
Net interest expense 54,143 44,146
Pre-tax income 133,849 131,754
Provision for income taxes 50,006 51,175
Net income $ 83,843 $ 80,579
Refining Data Summary
Year ended December 31, 1994 and 1993
(In thousands of B/D except for refining margins)
Avon Bayway(a)(b) Ferndale Consolidated(b)
1994 1993 1994 1993 1994 1994 1993
Crude and other
raw materials 160.6 166.3 252.2 259.2 90.6 503.4 425.5
Petroleum products
produced:
Clean products 132.7 137.6 204.8 213.9 62.8 400.3 351.5
Other finished
products 26.7 26.5 51.5 50.5 25.7 103.9 77.0
Total finished
products produced 159.4 164.1 256.3 264.4 88.5 504.2 428.5
Refining margin
per charge barrel (c) $ 6.79 $8.03 $3.02 $3.47 $4.54 $4.50 $5.60
(a) Bayway's refining margins include the results of hedges on a
varying percentage of Bayway's production.
(b) Refining margins for the Bayway Refinery for 1994 were adversely
impacted because of the scheduled shutdown of the fluid cat
cracker during which the volume and mix of finished products
produced is not representative of normal operations.
(c) As illustrated by the table, refining margins vary significantly
by refinery. This variance is due to a number of reasons
including marketing conditions in the principal areas served by
the refineries, their configuration and complexity (ability to
convert raw materials into clean products), and maintenance
schedules.
Tosco earned $83.8 million, or $2.24 per fully diluted
share,
on sales of $6.4 billion for 1994 compared to $80.6 million
or $2.33 per fully diluted share, on sales of $3.6 billion
for 1993. Earnings per fully diluted share for 1994 fell by
$.09 per share while income rose by $3.3 million because of
the issuance of 2,990,000 shares of Common Stock in December
1993. Tosco's acquisitions and expanded wholesale
operations were the principal reasons for the increase in
sales and cost of sales for 1994 compared to 1993. In April
1993, Tosco purchased the Bayway Refinery and related assets
from Exxon Corporation. In December 1993, Tosco acquired,
through long-term lease, Northville Industries' Long Island,
New York oil distribution system and purchased the Ferndale
Refinery and retail marketing operations in the Pacific
Northwest from BP Exploration & Oil Inc. (BP). In August
1994 and mid-December 1994, Tosco expanded its retail system
through the acquisition, under long-term lease arrangements,
of the retail marketing operations of BP in Northern
California and Exxon in Arizona, respectively.
Results of operations for 1994 include the reversal of the
$17.7 million ($10.7 million after tax, $.29 per share)
writedown of LIFO inventories incurred in 1993 due to the
recovery of prices during 1994. Tosco also recorded a $6
million ($3.6 million after tax, $.10 per share)
environmental cost accrual for probable investigative and
remedial liabilities at former operating locations. See
Note 15 to the Consolidated Financial Statements.
Tosco generated an operating contribution (income before
selling, general and administrative expense, net interest
expense and income taxes) for 1994 of $272.1 million from
its three refineries and retail marketing operations, an
increase of $38.0 million over 1993.
Tosco Northwest, whose operations encompass retail marketing
operations, the Ferndale Refinery and related commercial
activities, produced an operating contribution of $118.6
million in its initial year of operations due to strong
retail margins, good production results from the Ferndale
Refinery, and good refining margins in the Pacific
Northwest. The Ferndale Refinery processed 90,600 barrels
per day (B/D) of raw materials for 1994, a 17,100 B/D
improvement over 1993 production results under previous
management. Refining margins (the difference between the
price of refined products produced for sale and raw material
costs) were $4.54 for 1994 due to better than anticipated
prices, especially for residual fuels, while retail margins
averaged $.10 per gallon on sales volumes of 2.1 million
gallons per day. Following the completion of the Northern
California and Arizona transactions in August and December
1994, respectively, retail margins increased to $.12 per
gallon on sales volumes of 2.7 million gallons per day.
The Avon Refinery and its related commercial operations
experienced a decline in operating contribution from 1993
due to reduced production levels and poor refining margins.
Raw material throughput rates for 1994 fell by 5,700 to
160,600 B/D while production of clean transportation fuels
(gasoline, diesel, and jet fuel) fell by 4,900 B/D to
132,700 B/D. Scheduled turnaround maintenance on the fluid
coker, which was completed during the second quarter of
1994, was the primary reason for the fall in production.
Tosco also reduced production levels in early December 1994
in response to poor refining margins and to prepare for an
early start of the major upgrade and turnaround of the fluid
catalytic cracking unit (cat cracker) which occurred in
January 1995.
Avon's refining margins for 1994 declined by $1.24 to $6.79,
the lowest since 1987. Increases in raw material costs were
not matched by increases in product prices because of excess
supply, highly competitive markets and the lingering effects
of the recession in California, Avon's principal market,
which lagged the improvement in the national economy.
Bayway's operating contribution for 1994 includes the
reversal of the $17.7 million writedown of LIFO inventories
recorded in 1993. Excluding the inventory valuation,
Bayway's operating contribution for 1994 declined from the
approximate nine month operating period of 1993. The
decline in operating contribution was primarily due to
reduced production, weak refining margins and higher
distribution costs. Raw materials processed declined by
7,000 B/D to 252,200 B/D while production of clean products
declined by 9,100 B/D to 204,800 B/D due to scheduled
turnaround maintenance of the fluid cat cracker, the world's
largest and Bayway's principal gasoline production unit,
during the third quarter of 1994. Bayway also reduced
production runs in early December in response to weak
refining margins in the Northeast and to perform some minor
but necessary maintenance of production units.
Refining margins, including results of hedges designed to
lock in a predetermined level of refining margins on a
percentage of Bayway's production, averaged $3.02 for the
year, a decline of $.45 from 1993. Bayway, like Avon, was
not able to match increases in raw material costs with
comparable increases in product prices, due to excess supply
in highly competitive markets. In addition, fourth quarter
margins were negatively impacted by mild winter weather and
market uncertainty over the introduction of cleaner burning
but higher cost reformulated gasoline (RFG). Certain areas
in the Northeast elected to opt out, and were permitted to
do so by the federal government, of their voluntary
participation in the RFG program (mandated by federal
regulations for the largest metropolitan areas of the United
States). Operating costs were also impacted by higher
distribution costs as Bayway expanded its terminal
distribution network and commercial operations.
Selling, general and administrative (SG&A) expense for 1994
increased by $25.9 million to $84.1 million due to Tosco's
expanded operations. SG&A expense for 1994 was reduced by
insurance recoveries of $3.5 million (related to now-settled
litigation with the predecessor owners of the Avon Refinery
over environmental matters) and $1.0 million (related to a
retroactive adjustment of prior year medical costs based on
favorable claim experience). See Note 15 to the
Consolidated Financial Statements.
The increase in net interest expense for 1994 is primarily
due to higher levels of debt related to Tosco's acquisitions
and their associated working capital requirements and higher
short-term interest rates.
The provision for income taxes for 1994 reflects a 1.5%
reduction in the annual effective income tax rate and
recognition of $2.9 million of revised income tax benefits
related to Tosco's former activities. The effective rate
reduction is attributable to revised state income tax
allocation factors and estimated California investment tax
credits. The provision for income taxes for 1993 included
prior year tax credits of approximately $2.5 million which
were finalized in tax returns filed in October 1993.
Results of operations - 1993
Tosco's continuing operations earned $80.6 million, or $2.33
per fully diluted share, on sales of $3.56 billion for 1993
as compared to income from continuing operations of $30.2
million, or $.68 per fully diluted share, on sales of $1.86
billion for 1992. Continuing operations exclude the results
of Tosco's former phosphate fertilizer operations.
Tosco's operating contribution of $234.1 million for 1993
increased by $126.4 million over 1992 due to a $74.8 million
increase in operating contribution from Avon and its related
commercial activities and an operating contribution of $51.6
million from Bayway and its related commercial activities.
Avon's improvement in operating contribution was primarily
attributable to record production rates, improved refining
margins and lower environmental cost accruals, partially
offset by the increased refinery and product distribution
costs associated with higher levels of production. Raw
material throughput rates averaged a record 166,310 B/D for
1993 (versus 152,510 B/D for 1992) and production of clean
transportation fuels also averaged a record 137,610 B/D
(versus 126,570 B/D for 1992). Refining margins improved by
$.70 to $8.03 per barrel as per barrel costs of raw
materials fell by more than the sales value of refined
products produced. The improved margins (achieved despite
the sluggish economy, especially in California) were
assisted by the completion and start up of facilities for
the production of low-sulfur, low-aromatic diesel fuel
meeting the California Air Resources Board's (CARB) cleaner
burning fuel standards effective October 1, 1993.
Bayway achieved an operating contribution of $51.6 million,
after an inventory writedown of $17.7 million, for the
period April 8, 1993 to December 31, 1993 due to strong
refinery performance in a period of lackluster margins. Raw
material throughput averaged 259,250 B/D while production of
clean transportation fuels and total production averaged
213,980 and 264,490 B/D, respectively. Refining margins,
including net realized results of hedges, averaged $3.47 per
barrel while refinery and distribution expenses together
averaged approximately $2.55 per barrel.
Consolidated selling, general and administrative expense of
$58.2 million for 1993 increased by $19.4 million over 1992
primarily due to the acquisition of Bayway (including
approximately $7.5 million of non-recurring costs incurred
in establishing commercial, accounting and general and
administrative functions at Bayway).
Consolidated net interest expense for 1993 of $44.1 million
increased by $26.2 million over 1992. Net interest expense
for 1992 includes $12.8 million of intercompany interest
income from discontinued operations and the writeoff of
approximately $3.6 million of deferred financing costs
related to previously outstanding indebtedness. Without the
effect of these two items, consolidated net interest expense
for 1993 increased by $17 million as the costs of higher
levels of debt (resulting from the purchase of Bayway and
its associated working capital requirements) more than
offset the benefits of lower interest rates.
The provision for income taxes for 1993 includes the 1%
increase in federal income tax rates effective January 1,
1993 as well as tax credits of approximately $2.5 million
which were finalized in tax returns filed in October 1993.
Results of operations - 1992
Tosco's continuing operations earned $30.2 million, or $.68
per fully diluted share, on sales of $1.86 billion for 1992
as compared to income from continuing operations of $68.1
million, or $2.12 per fully diluted share, on sales of $1.61
billion for 1991. After discontinued operations and the
cumulative effect of accounting changes, a net loss of $74.5
million, or $2.85 per fully diluted share, was incurred for
1992. Continuing operations generated an operating
contribution of $107.7 million for 1992, a decrease of $9.5
million from 1991. The decrease was attributable to the $25
million environmental cost accrual (an increase of $21
million over the $4 million accrual of 1991) which more than
offset the $11.5 million improvement in operating margins.
The improvement in operating margins was achieved through
the then-record production rates at the Avon Refinery. Raw
material throughput rates averaged 152,510 B/D in 1992
(versus 139,980 B/D in 1991), while production of petroleum
products increased to 151,130 B/D (versus 137,150 B/D in
1991). Production of clean transportation fuels also
achieved then-record levels, increasing from 110,550 B/D to
126,570 B/D for 1992. Despite these record production
rates, refining margins declined by $.33 per barrel to $7.33
for 1992. In view of the poor margins, which averaged $6.23
for the fourth quarter, scheduled 1993 maintenance of
refinery processing units was accelerated into 1992.
Operating results for 1992 were also negatively impacted by
higher distribution costs associated with expanded
commercial activities and the use of additives and
oxygenates in gasoline.
Selling, general, and administrative expense for 1992
increased by $8.5 million over 1991 primarily because of
higher costs of professional services ($3.6 million,
primarily legal costs related to litigation against the
predecessor owners of the Avon Refinery concerning
environmental issues), workers compensation and general
liability insurance ($1.0 million), as well as the full year
costs of expanded commercial activities.
Net interest expense for 1992 includes the writeoff of
approximately $3.6 million of deferred financing costs
related to the refinancing of previously outstanding Bank
indebtedness. Without the writeoff, net interest expense
for 1992 would have been approximately $2.1 million lower
than 1991, as the benefits of lower interest rates and
higher levels of invested cash more than offset the costs of
higher levels of outstanding debt.
Tosco recorded a loss of $105 million for the estimated loss
on disposition of Seminole Fertilizer Corporation (Seminole)
including a provision for estimated future costs and
operating results until expected disposition dates.
Seminole sold its principal operating assets in April 1993
and entered into an agreement to sell the remainder in the
first quarter of 1994. See Note 4 to the Consolidated
Financial Statements.
Effective January 1, 1992, Tosco adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions"
(electing to prospectively amortize its postretirement
benefits obligation) and SFAS No. 109, "Accounting for
Income Taxes," and changed its accounting policy for
turnaround costs. The cumulative effect of the changes in
accounting for income taxes and turnaround costs was $13
million or $.44 per share, and $3.2 million or $.11 per
share, respectively.
Outlook
Results of operations continue to be determined principally
by two factors: the operating efficiency of the refineries,
and refining and retail marketing margins.
Tosco's processing units are periodically shut down for
turnaround maintenance as the units reach the end of their
normal operating cycle. The scheduled turnarounds of the
Avon fluid coker and the Bayway cat cracker, the refineries'
principal conversion and gasoline production units, were
completed in 1994 and are not expected to undergo turnaround
maintenance for three to four years. Avon's cat cracker and
the processing units at the Ferndale Refinery were shutdown
for turnaround maintenance beginning in January and February
1995, respectively. The Avon cat cracker returned to
service in early March and the Ferndale Refinery is
scheduled to be back in full operation by April 1995.
Significant turnaround activity is not scheduled for the
balance of 1995 at the three refineries and, assuming
reasonable margins, Tosco expects to operate the refineries
at high production levels for the balance of 1995.
Tosco is not able to predict the level or trend of refining
and retail margins because of uncertainties with oil
markets. However, Tosco is not optimistic about the level
of refining margins for 1995 despite the strengthened
national economy, in light of the present highly competitive
market and the increasing costs of complying with
government-mandated clean fuel standards. In addition,
Congress is expected to reconsider the current ban on
exports of crude oil from the Alaska North Slope (ANS) this
year. If passed, the legislation would likely lead to
higher crude oil costs for Tosco and other domestic
refiners. Tosco may not be able to recover these higher
crude costs in the market. Given this serious outlook,
Tosco has implemented programs to lower operating and SG&A
costs and enhance the productivity and reliability of its
operations.
Tosco's expansion into retail marketing has been successful
in providing earnings stability in a period of poor refining
margins. Tosco expects to enhance its existing retail
assets and continue to pursue acquisitions that allow an
attractive rate of return and complement its existing
refining and retail systems.
Cash flows and liquidity - 1994
As summarized in the Statement of Cash Flows, cash decreased
by $31 million during 1994 as cash used in investing
activities of $252 million exceeded cash provided by
operating and financing activities of $126 million and $95
million, respectively.
Cash provided by operating activities of $126 million was
from cash earnings of $192 million (net income plus
depreciation, amortization, the environmental cost accrual
and deferred income taxes minus the inventory valuation
recovery), and from other sources of $6 million, partially
reduced by an increase in working capital of $72 million.
Net cash used in investing activities totaled $252 million,
primarily for capital additions and deferred turnaround
expenditures of $160 million and $76 million, respectively,
increases in other assets of $15 million and a net transfer
to Tosco's former fertilizer operations for payment of
liabilities of $9 million, partially offset by a $10 million
return of Tosco's investment in Continental-Tosco Limited
Partnership.
Cash generated from financing activities totaled $95 million
as net borrowings under the revolving credit facility of $86
million and short-term bank borrowings of $42 million
exceeded dividend payments of $28 million and debt and other
payments totaling $5 million.
Liquidity (as measured by cash, short-term investments and
deposits and unused credit facilities) increased by $67
million during 1994 due to an increase of $98 million in
unused credit facilities partially offset by a decrease in
cash and equivalents of $31 million. Tosco amended its
revolving credit facility to support its expanded working
capital requirements due to its acquisitions. At December
31, 1994, liquidity totaled $213 million (an amount which
Tosco believes is adequate to meet its expected liquidity
demands for at least the next twelve months).
Capital Expenditures and Capitalization
Capital spending programs continue to address compliance
with environmental regulations and permits, operating
flexibility and reliability, personnel/process safety,
reformulated fuel specifications, and most recently, retail
expansion and modernization. Tosco spent $160 million on
budgeted capital projects in 1994 and accrued approximately
$11 million of participation payments based on Tosco's
interpretation of its agreement with BP. See Note 2 to the
Consolidated Financial Statements. The Avon Refinery
underwent several significant upgrades during 1994,
including improvements and expansion of its cat feed
hydrotreater and alkylation unit, and the Bayway Refinery
increased its storage capacity with the construction of two
250,000-barrel crude tanks. Pump credit card readers and
convenience store upgrades were implemented to enhance the
efficiency and attractiveness of the retail stations.
During the second quarter of 1994, Tosco's Board of
Directors approved a $25 million project for the
refurbishment and improvement of the Avon Refinery's 65,000
B/D cat cracker. This expansion project, which is expected
to produce a five percent volume increase in clean
transportation fuels, was completed during the scheduled
turnaround of the unit in the first quarter of 1995.
In 1996, gasoline sold in California must meet new
specifications enacted by the California Air Resources Board
(CARB) (CARB Phase II gasoline). The Avon Refinery's
reformulated gasoline project, budgeted at $100 million,
will convert a significant portion of its current production
to CARB Phase II gasoline. Tosco entered into a long-term
exchange agreement with Chevron USA Products Company which
will provide Tosco, commencing in 1996, with 30,000 B/D of
CARB Phase II gasoline in exchange for 30,000 B/D of
conventional grade gasoline. The product exchange agreement
extends to 2003. Tosco expects that the supply of CARB
Phase II gasoline from this exchange, and from Tosco's own
planned production, will equal approximately 80% of the Avon
Refinery's current gasoline production.
Tosco's retail capital spending program will focus on
building new stations, remodeling existing facilities, and
acquiring new locations.
Tosco expects to fund its 1995 capital expenditures from
cash provided by operations. Tosco may, depending upon
market conditions, offer debt securities (to exchange
existing debt and/or to pay down cash borrowings under its
revolving credit agreement) or expand its revolving credit
availability.
In 1994, Bayway entered into a twelve-year tanker agreement
with Neptune Orient Lines, Ltd. for the charter of four
100,000 DWT crude oil tankers. The tankers will be built to
maximize the use of the Bayway Refinery's dock receiving
facilities as well as to meet the requirements of the U.S.
Oil Pollution Act of 1990. The first tanker is expected to
be delivered in the second half of 1996. Bayway also
entered into a long-term lease agreement with Statia
Terminals for 3,600,000 barrels of crude oil storage in Nova
Scotia, Canada. The four tankers will be used to move crude
oil from the Nova Scotia storage location to the Bayway
Refinery or in direct shipments to other locations. In
September 1994, Bayway announced that it had entered into a
letter of intent pursuant to which the Huntsman Chemical
Corporation (Huntsman) would build an ethylbenzene plant at
the Bayway Refinery and purchase feedstocks produced by the
Bayway Refinery. In January 1995, Huntsman delayed the
proposed construction project. Bayway does not anticipate
any significant impact on its results due to this delay.
At December 31, 1994, total shareholders' equity was $576
million, an increase from December 31, 1993 of $54 million
due to net income ($84 million) less dividend and other
payments ($30 million). In September 1994, Tosco increased
its quarterly dividend by $.01 per share to $.16 per share.
Debt, including current maturities and short-term bank
borrowings, increased by $126 million to $730 million at the
end of 1994, primarily due to the expansion of Tosco's
operations.
Impact of Inflation
The impact of inflation has been less significant during
recent years because of the relatively low rates of
inflation experienced in the United States. Raw material
costs, energy costs, and labor costs are important
components of Tosco's costs. Any or all of these components
could be increased by inflation, with a possible adverse
effect on profitability, especially in high inflation
periods when raw material and energy cost increases
generally lead finished product prices. In addition, a
rapid escalation of raw material and finished products
prices could result in credit restrictions if working
capital requirements exceed the maximum availability under
Tosco's working capital facilities.
Risk Management
Tosco uses a variety of strategies to reduce commodity
price, interest and operational risks.
As discussed in Note 3 to the Consolidated Financial
Statements, Tosco, at times and when able, uses futures
contracts to lock in what it believes to be favorable
margins on a portion of Bayway's production by taking
offsetting long (obligation to buy at a fixed price)
positions in crude oil and short (obligation to deliver at a
fixed price) positions in gasoline and heating oil futures
and forward contracts. This strategy hedges Bayway's
exposure to fluctuations in refining margins and therefore
reduces the volatility of operating results. In addition,
Tosco enters into swap contracts with counterparties
(typically agreeing to sell at fixed forward prices, and to
buy at future variable market prices, stated volumes of
residual fuels) to hedge sales prices of the Bayway
Refinery's residual fuels production. At December 31, 1994,
Bayway had hedged approximately 12% and 6% of its expected
first quarter and annual 1995 production, respectively, at
acceptable historical margins. Tosco utilizes futures and
forward contracts to a lesser extent to hedge inventories
stored for future sale and to hedge against adverse price
movements between the cost of foreign crude oil that Bayway
refines and the cost of domestic crude oil.
Tosco manages its interest rate risk by maintaining an
appropriate mix of fixed rate and floating rate debt.
Currently, floating rate debt, primarily borrowings under
the Revolving Credit Facilities which provide up to $450
million of revolving credit availability, is used to finance
Tosco's working capital requirements. Existing fixed rate
debt consists primarily of $450 million of mortgage bonds
issued in 1992 and 1993 to refinance previously outstanding
floating rate bank debt and to finance the acquisition of
capital assets including the acquisition of the Bayway
Refinery. As required by the previously outstanding bank
debt agreement, Tosco entered into an interest rate swap
agreement which converted a predetermined percentage of
floating rate bank term debt ($49.5 million at December 31,
1994) to fixed rate term debt. The interest rate swap
expires in the second quarter of 1996.
Tosco carries insurance policies on insurable risks, which
it believes to be appropriate at commercially reasonable
rates. While Tosco believes that it is adequately insured,
future losses could exceed insurance policy limits or, under
adverse interpretations, be excluded from coverage. Future
liability or costs, if any, incurred under such
circumstances would have to be paid out of general corporate
funds, if available. See Note 3 to the Consolidated
Financial Statements for a discussion of Tosco's strategy to
reduce credit risk.
Item 8.Financial Statements and Supplementary Data
The financial statements and supplementary data required by
Part II, Item 8, are included in Part IV, as indexed at Item
14(a)(1) and (a)(2).
Item 9.Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There is hereby incorporated by reference the information
appearing under the caption "Nominees for Election" in the
registrant's definitive Proxy Statement relating to its 1995
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission. See also the information appearing
under the caption "Executive Officers of the Registrant"
appearing in Part I.
Tosco is not aware of any family relationship between any
Director or executive officer. Each officer is generally elected
to hold office until the next Annual Meeting of the Board of
Directors.
Item 11. Executive Compensation
There is hereby incorporated by reference the information
appearing under the caption "Executive Compensation" in the
registrant's definitive Proxy Statement relating to its 1995
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
There is hereby incorporated by reference the information
appearing under the caption "Stock Ownership of Officers and
Directors" and "Other Matters - Certain Security Holdings" in the
registrant's definitive Proxy Statement relating to its 1995
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.
Item 13. Certain Relationships and Related Transactions
There is hereby incorporated by reference the information
appearing under the caption "Executive Compensation" in the
registrant's definitive Proxy Statement relating to its 1995
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.
PART IV
Item 14. Exhibits, Financial Statement Schedules
(a)(1) and (a)(2). Financial Statements and Financial
Statement Schedules. The consolidated financial statements and
financial statement schedules of Tosco Corporation and
subsidiaries, required by Part II, Item 8, are included in Part
IV of this report. See Index to Consolidated Financial
Statements and Financial Statement Schedules on page F-1.
(a)(3). Exhibits.
3(a). Restated Articles of Incorporation of Registrant as
currently in effect, including Certificates of Voting Powers,
Designations, Preferences and Relative, Participating, Optional
or Other Special Rights of Preferred Stock. Incorporated by
reference to Exhibit 28.2 to Registrant's Current Report on
Form 8-K dated July 29, 1991.
3(b). By-laws of Registrant as currently in effect.
Incorporated by reference to Exhibit 3(b) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1992.
4(a). Form of Indenture between Registrant and IBJ Schroder
Bank and Trust Company, as Trustee, relating to 9% Series A First
Mortgage Bonds due March 15, 1997 and 9 5/8% Series B First
Mortgage Bonds due March 15, 2002. Incorporated by reference
to Exhibit 4.1 to Registration Statement filed by Registrant on
Form S-3 dated March 4, 1992.
4(b). Form of Indenture among Registrant, Bayway Refining
Company and the First National Bank of Boston, as Trustee,
relating to 8 1/4% First Mortgage Bonds due 2003. Incorporated
by reference to Exhibit 4.1 to Registration Statement filed by
Registrant on Form S-4 dated April 29, 1993.
10(a). Amended and Restated Credit Agreement dated as of
April 8, 1993 among Tosco Corporation, Seminole Fertilizer
Corporation and Bayway Refining Company, as Borrowers, and the
Banks named therein, as Banks, and The Chase Manhattan Bank
(National Association) as Co-Agent, Bank of America National
Trust and Savings Association, as Co-Agent and Co-Arranger, and
the First National Bank of Boston, as Agent and Arranger.
Incorporated by reference to Exhibit 28 to Registrant's Current
Report on Form 8-K dated April 8, 1993.
10(b). Amendatory Agreement No. 1 dated as of June 7, 1993
to Credit Agreement among Tosco Corporation, Seminole
Fertilizer Corporation and Bayway Refining Company, as
Borrowers, and the Banks named therein, as Banks, and The Chase
Manhattan Bank (National Association) as Co-Agent, Bank of
America National Trust and Savings Association, as Co-Agent and
Co-Arranger, and the First National Bank of Boston, as Agent
and Arranger. Incorporated by reference to Exhibit 10(b) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
10(c). Amendatory Agreement No. 2 dated as of December 10,
1993 to Credit Agreement among Tosco Corporation, Seminole
Fertilizer Corporation and Bayway Refining Company, as
Borrowers, and the Banks named therein, as Banks, and The Chase
Manhattan Bank (National Association) as Co-Agent, Bank of
America National Trust and Savings Association, as Co-Agent and
Co-Arranger, and the First National Bank of Boston, as Agent
and Arranger. Incorporated by reference to Exhibit 10(c) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
10(d). Amendatory Agreement No. 3 dated as of March 31, 1994
to Credit Agreement among Tosco Corporation, Seminole
Fertilizer Corporation and Bayway Refining company, as
Borrowers, and the Banks named therein , as Banks, and The
Chase Manhattan Bank (National Association) as Co-Agent, Bank
of America National Trust and Savings Association, as Co-Agent
and Co-Arranger, and the First National Bank of Boston, as
Agent and Arranger.
10(e). Amendatory Agreement No. 4 dated as of May 9, 1994 to
Credit Agreement among Tosco Corporation, Seminole Fertilizer
Corporation and Bayway Refining Company, as Borrowers, and the
Banks named therein , as Banks, and The Chase Manhattan Bank
(National Association) as Co-Agent, Bank of America National
Trust and Savings Association, as Co-Agent and Co-Arranger, and
the First National Bank of Boston, as Agent and Arranger.
10(f). Amendatory Agreement No. 5 dated as of August 16,
1994 to Credit Agreement among Tosco Corporation, Bayway
Refining Company and Tosco Europe Limited, as Borrowers, and
the Banks named therein , as Banks, and The Chase Manhattan
Bank (National Association) as Co-Agent, Bank of America
National Trust and Savings Association, as Co-Agent and
Co-Arranger, and the First National Bank of Boston, as Agent
and Arranger.
10(g). Amendatory Agreement No. 6 dated as of December 28
1994 to Credit Agreement among Tosco Corporation, Bayway
Refining Company and Tosco Europe Limited, as Borrowers, and
the Banks named therein , as Banks, and The Chase Manhattan
Bank (National Association) as Co-Agent, Bank of America
National Trust and Savings Association, as Co-Agent and
Co-Arranger, and the First National Bank of Boston, as Agent
and Arranger.
10(h). Exchange Agreement dated October 2, 1986, between
Registrant and Atlantic Richfield Company. Incorporated by
reference to Exhibit 10(aa) to Registration Statement filed by
Registrant on Form S-1 under the Securities Act of 1933 (No.
33-9578).
10(i) Severance Agreement dated November 15, 1989, between
Registrant and James M. Cleary. Incorporated by reference to
Exhibit l0(i) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990. Schedule identifying
similar agreement between Registrant, or its subsidiaries, and
another employee. Amendments, effective as of January 1 and
February 1, 1993, to said Agreements. Incorporated by
reference to Exhibit 10(e) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
10(j). Severance Agreement dated January 1, 1993 between
Registrant and Thomas D. O'Malley including schedule
identifying similar agreements between Registrant, or its
subsidiaries, and four of its employees. Incorporated by
reference to Exhibit 10(g) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
10(k). Indemnification Agreement dated September 30, 1987,
between Registrant and James M. Cleary, including schedule
identifying similar agreements between Registrant and its
Directors and/or officers, together with related Trust
Agreement. Incorporated by reference to Exhibit 10(aa) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987.
10(l) Consulting Agreement dated January 1, 1990 between the
Registrant and Clarence G. Frame. Incorporated by reference to
Exhibit 10(p) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989.
10(m). Sale and Purchase Agreement for Bayway Refinery and
Related Facilities dated December 10, 1992 between Exxon
Corporation and Bayway Refining Company. Incorporated by
reference to Exhibit 10(l) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.
10(n) Amendment, dated April 30, 1992, to TTTI Buy/Sell
Contract No. 35P73, dated February 22, 1990 between Texaco
Trading and Transportation Inc. and Tosco Refining Company.
Incorporated by reference to Exhibit 10(q) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1992.
10(o) Amendment, dated April 30, 1992, to TTTI Buy/Sell
Contract No. 17P77, dated April 13, 1988 between Texaco Trading
and Transportation Inc. and Tosco Refining Company.
Incorporated by reference to Exhibit 10(r) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1992.
10(p). Crude Oil Supply Agreement dated December 28, 1993
between BP Oil Supply Company and Tosco Corporation.
Incorporated by reference to Exhibit 10(r) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993.
10(q). Trademark License Agreement dated December 28, 1993
between British Petroleum Company p.l.c. and Tosco Corporation.
Incorporated by reference to Exhibit 10(s) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993. Schedule Identifying (i) Amended and Restated
Trademark License Agreement
between British Petroleum Company p.l.c. and Tosco Corporation
dated as of August 1, 1994 and (ii) Trademark License Agreement
(California) between BP
Oil Marketing Inc. and Tosco Corporation dated as of August 1,
1994. These agreements extended the term of the original
agreement and expanded the territory of the original agreement.
11. Statement regarding computation of per share earnings.
See Exhibit 11 to Financial Statements (page F-28), as required
by Item 8 and appearing in Item 14 hereof.
21. A list of all subsidiaries of the Registrant.
23. Consent of Coopers & Lybrand.
27. Financial Data Schedule
99. Condensed Consolidating Financial Information
and Report of Independent Accountants.
(b). Reports on Form 8-K
None
(c). Financial Statement schedules required by Regulation
S-X are excluded from the Annual Report to Shareholders by
Rule 14a-3(b)(1). See Schedule VIII to the Financial
Statements, as required by Item 8, and appearing under Item 14
hereof.
TOSCO CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Financial
Statement Schedules Filed with the Annual Report of the Company
on Form 10-K
Year Ended December 31, 1994
Page
Report of Independent Accountants F-2
Consolidated Balance Sheets as of
December 31, 1994 and 1993 F-3
Consolidated Statements of
Operations for the Years Ended
December 31, 1994, 1993 and 1992 F-4
Consolidated Statements of
Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 F-5
Consolidated Statement of Common
Shareholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992 F-7
Notes to Consolidated Financial Statements F-8 to F-26
Financial Statement Schedules:
VIII - Valuation and Qualifying Accounts F-27
Financial Exhibits F-28-F-33
Financial statement schedules other than those listed above
have been omitted since they are either not required, are not
applicable, or the required information is shown in the
financial statements and related notes.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Tosco Corporation
We have audited the consolidated financial statements and the
financial statement schedule of Tosco Corporation and
subsidiaries listed in the index on page F-1 of this Form
10-K. These financial statements and the financial statement
schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Tosco Corporation and subsidiaries as
of December 31, 1994 and 1993, and the consolidated results
of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included
therein.
As discussed in Note 1 to the consolidated financial
statements, in 1992 the Company changed its method of
accounting for turnarounds, income taxes and postretirement
benefits other than pensions.
COOPERS & LYBRAND L.L.P.
Oakland, California
March 3, 1995
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
December 31,
1994 1993
ASSETS
Current assets
Cash and cash equivalents $ 23,793 $ 55,091
Short-term investments
and deposits 30,829 30,035
Trade accounts receivable,
less allowance for uncollectibles
of $8,392,000 (1994) and
$5,091,000 (1993) 291,772 174,285
Inventories 463,637 362,284
Prepaid expenses and
other current
assets 43,258 44,863
Deferred income taxes 6,160 12,123
Total current assets 859,449 678,681
Property, plant and
equipment, net 822,057 715,788
Deferred turnarounds 74,849 24,807
Deferred income taxes 6,998 37,108
Other deferred charges
and assets 33,853 36,475
Total assets $ 1,797,206 $1,492,859
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 328,572 $ 223,407
Accrued expenses
and other liabilities 151,561 87,623
Total current liabilities 480,133 311,030
Revolver debt 233,000 147,000
Long-term debt 454,429 456,306
Other liabilities 14,338 12,433
Environmental cost liability 35,382 29,440
Net liabilities of
discontinued operations 2,526 11,733
Deferred income taxes 1,934 3,273
Shareholders' equity
$4.375 Series F Cumulative Convertible
Preferred Stock -$1.00 par value -
Authorized 2,500,000 shares; issued
and outstanding 2,300,000 shares (1993)
(liquidation preference of $115,000,000) 111,197
Common shareholders' equity:
Common Stock $.75 par value, 50,000,000
shares authorized, 39,598,900 (1994)
and 34,811,158 (1993) shares issued 29,702 26,112
Capital in excess of par value 640,078 534,727
Retained earnings (deficit) ( 25,436) ( 81,512)
Reductions from capital ( 68,880) ( 68,880)
Total common shareholders' equity 575,464 410,447
Total shareholders' equity 575,464 521,644
Total liabilities and
shareholders' equity $1,797,206 $1,492,859
The accompanying notes are an integral part of these financial
statements.
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars Except Per Share Data)
Year Ended December 31,
1994 1993 1992
Sales $6,365,757 $ 3,559,217 $ 1,860,969
Cost of sales 6,105,293 3,307,492 1,728,305
Inventory valuation
(recovery) writedown ( 17,651) 17,651
Environmental cost accrual 6,000 25,000
Selling, general and administrative
expense 84,123 58,174 38,728
Interest expense 58,315 48,868 23,941
Interest income ( 4,172) ( 4,722) ( 6,018)
6,231,908 3,427,463 1,809,956
Income from continuing
operations before provision for
income taxes and
cumulative effect of accounting
changes 133,849 131,754 51,013
Provision for income taxes 50,006 51,175 20,766
Income from continuing
operations before cumulative effect
of accounting changes 83,843 80,579 30,247
Discontinued
operations, net of income taxes:
Loss from operations,
net of income taxes of $10,625,000 ( 15,905)
Estimated loss on disposal, net of income taxes
of $79,531,000 ( 105,000)
Loss from discontinued operations ( 120,905)
Income (loss) before
cumulative effect of accounting
changes 83,843 80,579 ( 90,658)
Cumulative effect of changes in accounting for:
Income taxes
Continuing operations 56,000
Discontinued operations ( 43,000)
Turnarounds, net of taxes 3,203
Net income (loss) 83,843 80,579 ( 74,455)
Preferred stock
dividend requirements ( 6,293) ( 10,063) ( 10,063)
Income (loss)
attributable to common shareholders $ 77,550 $ 70,516 ($ 84,518)
Income (loss) per common and common
equivalent share:
Primary:
From continuing operations $ 2.27 $ 2.38 $ .68
From discontinued operations ( 4.08)
From cumulative effect
of accounting changes .55
Income (loss) per share $ 2.27 $ 2.38 ($ 2.85)
Fully diluted:
From continuing operations $ 2.24 $ 2.33 $ .68
From discontinued operations ( 4.08)
From cumulative effect of accounting
changes .55
Income (loss) per share $ 2.24 $ 2.33 ($ 2.85)
The accompanying notes are an integral part of these financial
statements.
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Year Ended December 31,
1994 1993 1992
Cash flows from operating activities:
Net income (loss) $ 83,843 $ 80,579 ($ 74,455)
Adjustments to arrive at net cash
provided by operating activities:
Depreciation and depletion 51,905 35,618 25,740
Write-off of deferred loan costs 3,645
Amortization of deferred items 32,956 29,473 29,323
Inventory valuation (recovery) writedown ( 17,651) 17,651
Environmental cost accrual 6,000 25,000
(Income) loss from discontinued operations 120,905
Cumulative effect of accounting changes ( 16,203)
Deferred income taxes 34,734 ( 10,189) 9,044
(Increase) decrease:
Trade accounts receivable (117,487) ( 83,431) ( 26,438)
Inventories ( 83,702) ( 95,389) ( 7,123)
Prepaid expenses and
other current assets 1,605 ( 16,020) ( 1,677)
Increase (decrease):
Accounts payable and accrued liabilities 127,607 151,236 61,578
Other liabilities and deferred gains 3,320 3,676 3,128
Other, net 2,390 ( 532) 2,795
Net cash provided
by operating activities 125,520 112,672 155,262
Cash flows from investing activities:
Purchase of property, plant and equipment ( 160,119) ( 73,897) ( 69,133)
Purchase of Bayway assets,
including acquired inventories ( 317,630) ( 17,500)
Purchase of Tosco
Northwest, including acquired inventories ( 159,981)
Increase in deferred turnarounds ( 76,045) ( 5,568) ( 13,928)
Increase in deferred charges and other
assets ( 15,374) ( 18,087) ( 21,396)
Net proceeds from sale of
discontinued operations 91,217
Transfers (to) from discontinued
operations ( 9,207) 41,791 ( 33,306)
Net change in short-term investments
and deposits ( 794) 2,181 ( 20,174)
Proceeds from (investment in)
Continental-Tosco
Limited Partnership 9,519 4,880 ( 16,194)
Net cash used in investing activities ( 252,020) ( 435,094) ( 191,631)
Cash flows from financing activities:
Proceeds from Bayway Mortgage Bonds 150,000
First Mortgage Bond Offering
Proceeds 300,000
Debt principal payments (186,608)
Borrowings under revolver, net 86,000 147,000
Short-term borrowings 41,500
Early retirement of debt ( 50,000)
Principal payments under debt agreements ( 2,275) ( 795) ( 5,261)
Issuance of long-term debt 1,500
Issuance of Common Stock, net of expenses 88,418
Dividends paid on Preferred and
Common Stock ( 27,767) ( 28,056) ( 27,825)
Purchase of equity securities ( 14) ( 13,875)
Other, net ( 2,256) ( 713) 742
Net cash provided by financing activities 95,202 305,840 68,673
Net increase (decrease) in cash
and cash equivalents ( 31,298) ( 16,582) 32,304
Cash and cash equivalents at beginning
of year 55,091 71,673 39,369
Cash and cash equivalents at
end of year $ 23,793 $ 55,091 $ 71,673
The accompanying notes are an integral part of these financial
statements.
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Supplemental Disclosures of Cash Flow Information
(Thousands of Dollars)
Year Ended December 31,
1994 1993 1992
Cash paid during the year:
Interest $ 54,059 $ 44,923 $ 24,878
Income taxes $ 9,891 $ 2,576 $ 6,612
The accompanying notes are an integral part of these
financial statements.
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY
(Dollar Amounts in Thousands)
Reductions from Capital
Common Stock Capital in Retained Treasury Stock, Total Common
Issued Excess of Earnings at Cost Shareholders'
Shares Amount Par Value (Deficit) Shares Amount Other Equity
Balance January 1, 1992 31,819,518 $23,865 $449,327 ($ 31,755) 1,930,711 ($ 54,991) ($ 800) $385,646
Net loss (74,455) (74,455)
Dividends - Preferred stock ( 10,063) (10,063)
Dividends - Common stock ( 17,762) (17,762)
Purchase of Common Stock 617,733 (13,875) (13,875)
Payment of fractional
shares in cash (4,231) (87) ( 87)
ESOP note payment 800 800
Exercise of stock options 5,933 4 86 90
Other (62) (61) ( 61)
Balance, December 31, 1992 31,821,158 23,869 449,265 (134,035) 2,548,444 ( 68,866) 270,233
Net income 80,579 80,579
Dividends - Preferred stock ( 10,063) ( 10,063)
Dividends - Common stock ( 17,993) ( 17,993)
Issuance of Common Stock 2,990,000 2,243 86,175 88,418
Purchase of Common Stock 597 ( 14) ( 14)
Other ( 713) (713)
Balance, December 31,1993 34,811,158 26,112 534,727 ( 81,512) 2,549,041 ( 68,880) 410,447
Net income 83,843 83,843
Dividends - Preferred stock ( 6,293) ( 6,293)
Dividends - Common stock ( 21,474) ( 21,474)
Exercise of stock options 3,333 2 46 48
Conversion of Series F
Preferred Stock 4,784,409 3,588 106,503 110,091
Other (1,198) ( 1,198)
Balance, December 31,1994 39,598,900 $29,702 $640,078 ($ 25,436) 2,549,041 ($ 68,880) $ - $575,464
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Tosco Corporation and its wholly owned
subsidiaries (Tosco), including Seminole Fertilizer
Corporation (Seminole), a discontinued operation whose
principal operating assets were sold in 1993.
All significant intercompany accounts and transactions have
been eliminated.
Nature of Business
Tosco is an independent oil refiner and marketer of
petroleum products with related distribution facilities and
domestic and international commercial activities.
Reclassifications
Certain previously reported amounts have been reclassified
to conform to classifications adopted in 1994.
Cash, Cash Equivalents, Short-term Investments and Deposits
Cash in excess of operating requirements is invested in
certificates of deposit, government securities, commercial
paper and other highly liquid investments. Investments with
original maturities of more than three months and less than
12 months are classified as short-term investments and
carried at cost which approximates market.
Tosco purchased director and officer liability insurance
coverage from its wholly owned subsidiary Loil Group Ltd.
(Loil), with limits of liability coverage of $14,000,000 and
$13,200,000 at December 31, 1994 and 1993, respectively (an
amount approximately equal to the amount of cash and
investments of Loil). The assets of Loil are restricted to
payment of defense costs and claims made against the
directors and officers of Tosco. At December 31, 1994 the
portfolio's carrying value of marketable investments which
is considered "available for sale" in accordance with SFAS
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" approximated fair value.
Inventories
Inventories of raw materials and products are valued at the
lower of cost, determined on the last-in, first-out (LIFO)
basis, or market. The market value of LIFO inventories is
measured on a consolidated basis.
Deferred Charges and Turnarounds
Financing charges related to the acquisition or refinancing
of debt are deferred and amortized over the term of the
related debt using the effective interest method.
Refinery processing units are periodically shut down for
major maintenance (turnarounds). To provide for a better
matching of costs with revenues, Tosco changed its
accounting for turnaround costs, effective January 1, 1992,
to one that results in the deferral and subsequent
amortization of turnaround costs incurred on all significant
processing units. The cumulative effect of this accounting
change was a benefit of $3,203,000 (net of income taxes of
$2,138,000) or $.11 per share for 1992. The cost of
turnarounds is deferred and amortized on a straight-line
basis over the expected period of benefit (the period to the
next scheduled shutdown of the unit, which generally ranges
from 24 to 48 months).
Property, Plant and Equipment
Property, plant and equipment, including capitalized
interest, are carried at cost less accumulated depreciation.
Depreciation and amortization are provided over the
estimated useful lives of the respective classes of assets
utilizing the straight-line method. Expenditures which
materially increase values, change capacities or extend
useful lives are capitalized. Routine maintenance, repairs,
and replacement costs are expensed. Cost of assets disposed
of, less sales proceeds, is charged against accumulated
depreciation unless extraordinary in nature or amount.
Excise Taxes
Excise taxes collected on the sale of products are remitted
to governmental agencies and are not included in sales, cost
of sales or other expenses.
Environmental Costs
Environmental expenditures that relate to current operations
are expensed or capitalized as appropriate. Expenditures
that relate to an existing condition caused by past
operations, which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded
when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated.
Generally, the timing of these accruals coincides with
completion of investigations and other studies or Tosco's
commitment to a formal plan of action.
Postretirement Benefits
Effective January 1, 1992 Tosco adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions,"
and elected to prospectively amortize its accumulated
postretirement benefits liability.
Income Taxes
Effective January 1, 1992, Tosco adopted SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, deferred
income tax liabilities and assets are adjusted for the
estimated future tax effects attributable to "temporary
differences" (differences between book and tax bases of
assets and liabilities) at enacted tax rates. The
cumulative effect of this accounting change was a benefit of
$13,000,000 or $.44 per share for 1992.
Earnings Per Share
Primary earnings per share are computed by dividing net
income (loss) less preferred stock dividend requirements by
the weighted average number of common and common equivalent
shares outstanding during the year. Fully diluted earnings
per share computations assume, unless the effect is to
increase earnings per share or reduce loss per share, that
all shares of previously outstanding convertible preferred
stock were converted to common stock of Tosco (Common Stock)
at the beginning of each period and that no preferred
dividends were paid.
The weighted average number of shares used in computing
earnings per share are as follows:
Year Ended December 31
1994 1993 1992
(In Thousands)
Primary 34,214 29,679 29,618
Fully Diluted 37,408 34,641 29,618
2. Acquisitions
In April 1993, Bayway Refining Company (Bayway), a wholly
owned subsidiary of Tosco, acquired the Bayway Refinery and
related facilities (Bayway Refinery) from Exxon Corporation.
The purchase price of approximately $175,000,000 (excluding
acquired inventories of $164,630,000) plus related
acquisition costs of $4,056,000 was fully allocated to the
acquired assets based upon their fair values.
In December 1993, Tosco acquired the Ferndale Refinery,
retail marketing assets in the Pacific Northwest, and the
right to market under the BP brand for five years (Tosco
Northwest) from BP Exploration & Oil Inc. (BP). The
purchase price of Tosco Northwest was $125,230,000
(excluding acquired inventories of $39,615,000) plus annual
contingent participation payments over the five years
following the acquisition of up to $50,000,000 and
$100,000,000 based on the performance of the refining and
retail marketing segments, respectively. Participation
payments of approximately $11,000,000, based upon Tosco's
interpretation of the agreement, were accrued for 1994 and
recorded as additional fixed asset value.
In August 1994, Tosco acquired additional retail marketing
assets (primarily a 370 station system with approximately
130 company-controlled stations and a distribution terminal)
in Northern California (BP California retail system) in
purchase and long-term lease transactions. Tosco purchased
improvements at the retail service station locations and
entered into long-term operating leases for the balance of
the assets, primarily land and equipment, with a special
purpose entity which acquired such assets from BP (Note 14).
In addition, Tosco entered into a trademark licensing
agreement with British Petroleum which expanded Tosco's
license to market under the BP brand to seven additional
western states for at least twelve years. The previous five
year trademark license agreement for Washington and Oregon
was also extended to a term of at least twelve years.
In December 1994, Tosco acquired Exxon U.S.A.'s retail
gasoline marketing assets (83 service station properties) in
Arizona in purchase and long-term operating lease
transactions similar to those used for the acquisition of
the BP California retail system (Note 14). Tosco also
entered into an Exxon branded distribution agreement with a
minimum term of seven years.
3. Financial Instruments
Tosco, at times and when able, uses commodity futures
contracts primarily to lock in what it believes to be
favorable margins between the sales value of refined
products produced and the cost of raw materials purchased,
on a varying percentage of Bayway's production, generally
for periods not exceeding one year. In addition, Tosco
enters into swap and forward contracts with counterparties
(typically agreeing to sell at fixed prices and to buy at
variable market prices, stated volumes of residual fuels in
future periods) to hedge sales prices of Bayway's residual
fuels production. Realized gains and losses on liquidated
raw material futures contracts are deferred in inventory
until the related refined products are sold. Tosco also
uses commodity futures contracts to a lesser extent to hedge
inventories stored for future sale and to hedge against
adverse price movements between the cost of foreign crude
oil that Bayway refines and the cost of domestic crude oil.
At December 31, 1994, Tosco had, as part of its hedging
program, open long (obligation to purchase) and short
(obligation to deliver) futures, swap and forward contracts
for crude oil and products with a notional value (number of
barrels under contract multiplied by the per barrel contract
value) of approximately $200,000,000 and $311,000,000,
respectively. The unrecognized net loss on open and closed
futures and swap contracts of approximately $7,800,000 will
be recognized or reversed in 1995 as an offset to realized
margins on refined products sold.
Pursuant to the requirements of the commodity exchanges,
margin deposits for a percentage of the value of the futures
contracts have been placed with commodity brokers. The
margin deposits are classified as short-term deposits on the
balance sheet.
Fair Values
The carrying value of cash and cash equivalents, short-term
investments and deposits, trade accounts receivable, and
accounts payable and other current liabilities approximates
fair value. Estimated fair values of other financial
instruments and their method of determination, are as
follows:
December 31,
1994 1993
Carrying Fair Carrying Fair
Value Value Value Value
(Thousands of Dollars)
Mortgage and Exchange Bonds (a) $450,000 $448,578 $450,000 $490,170
Revolving Credit Facilities (b) 233,000 233,000 147,000 147,000
Note collateralized by oil shale properties (c) 5,200 6,306
Interest rate swaps,net asset (liability) (d) 608 (2,690)
(a) The fair value of these instruments reflects quoted market
prices at the end of each year.
(b) Borrowings under the floating rate revolving credit
facilities approximate fair value.
(c) These instruments are not publicly traded; therefore the
fair value is not practicable to estimate.
(d) As required by a former loan agreement, Tosco entered into
a five year interest rate swap agreement in 1991 which was
intended to convert a predetermined percentage of floating
rate bank term debt to fixed rate term debt. The notional
amount (the amount upon which interest to be paid or received
is calculated) of the interest rate swap was $49,500,000 and
$63,500,000, at December 31, 1994 and 1993, respectively.
Concurrent with the retirement of the floating rate bank term
debt, Tosco entered into a second interest rate swap agreement
in 1992 pursuant to which Tosco received fixed rate interest
and paid floating rate interest. In March 1993, Tosco
terminated the second interest rate swap and received
$3,200,000 which is being amortized over the term of the
agreement. The fair values indicated in the table represent
the cost of terminating the first swap, net of the unamortized
gain on the second swap.
Credit Risk
Financial instruments which potentially subject Tosco to
concentrations of credit risk consist principally of temporary
cash investments, trade receivables and commodity futures,
swap and forward contracts. Tosco does not believe that it
has a significant credit risk on its futures, swap and forward
contracts. Futures contracts are transacted through the New
York Mercantile Exchange (NYMEX) and other large commodity
exchanges with established collateral and credit criteria for
participants. To reduce credit risk, temporary cash
investments are spread among several high quality financial
institutions, and Tosco conducts ongoing evaluations of its
broad base of customers and counter parties and requires
letters of credit or other collateral arrangements as
appropriate.
4. Discontinued Operations
On May 4, 1993, Seminole completed the sale of its principal
operating assets to Cargill Fertilizer Inc. for approximately
$127,000,000. The cash proceeds, net of amounts used to
extinguish outstanding revolving credit borrowings, of
$91,217,000 were paid to Tosco to reduce intercompany debt.
A 1992 loss of $105,000,000 was recorded for the estimated
loss on sale of Seminole's principal operating assets
including its 50% interest in the Fort Meade Chemical Products
partnership (FMCP), and a provision for estimated operating
losses during the phase-out period.
Net liabilities of the discontinued segment are as follows:
December 31,
1994 1993
(Thousands of Dollars)
Assets (a) $ 25,015 $ 46,059
Long-term debt (b) ( 15,200) ( 32,982)
Other liabilities (c) ( 12,341) ( 24,810)
Net liabilities
of discontinued
operations ($ 2,526) ($ 11,733)
(a) Assets include a receivable for income taxes of
$12,936,000 and $37,740,000 at December 31, 1994 and 1993,
respectively, which will be utilized to reduce Tosco's
consolidated tax liability.
(b) A subsidiary of Seminole sold its partnership interest in
FMCP effective January 1, 1994. Pursuant to the sale
agreement, the subsidiary remains obligated for its 50%
share of the debt of FMCP.
(c) Under the terms of the 1993 sale agreement, Seminole
executed promissory notes to Cargill totaling $14,500,000,
payable in two equal installments on January 1, 1994 and
1995.
5. Inventories
December 31,
1994 1993
(Thousands of Dollars)
Raw materials $ 163,866 $ 131,780
Intermediates 24,603 26,723
Finished products 272,462 202,670
Retail 2,706 1,111
$ 463,637 $362,284
Results of operations for 1994 include the reversal (based on
price levels at the end of 1994) of the $17,651,000 market
valuation reserve recorded at December 31, 1993. The excess
of replacement cost over the value of inventories based upon
the LIFO method was $5,821,000 at December 31, 1994.
6. Deferred Charges and Other Assets
December 31,
1994 1993
(Thousands of Dollars)
Deferred financing costs $ 15,332 $ 15,223
Service station dealer advances 3,390
Deposits 5,500
Investment in Continental-Tosco
Limited Partnership (CT-LP) 216 10,180
Other assets 9,415 11,072
$ 33,853 $ 36,475
7. Property, Plant and Equipment
December 31, Straight-Line
1994 1993 Annual Rate
(Thousands of Dollars)
Land $ 94,511 $ 90,381
Refineries and related assets 821,517 768,708 4% to 15%
Retail marketing and
related assets 50,866 30,550 5% to 20%
Furniture, fixtures
and improvements 31,012 16,815 3% to 33%
Transportation equipment 10,120 23,391 4% to 33%
Mineral properties,
principally oil shale
interests (a) 21,815 21,815
Natural gas properties 4,104 4,104
Construction in progress 109,264 45,769
1,143,209 1,001,533
Less accumulated
depreciation and
amortization 321,152 285,745
$ 822,057 $ 715,788
(a) At cost, net of impairments.
Expenditures for maintenance and repairs (excluding the
amortization of turnaround costs) were $89,513,000,
$74,596,000, and $53,480,000 for 1994, 1993 and 1992,
respectively.
8. Accrued Expenses and Other Liabilities
December 31,
1994 1993
(Thousands of Dollars)
Accrued taxes other
than taxes on income $ 71,964 $ 36,783
Accrued compensation
and related benefits 11,570 7,812
Accrued interest 11,958 10,791
Income taxes
payable (receivable) ( 9,546) 13,766
Acquisition related
liabilities 15,856 10,938
Other accrued costs 7,476 6,746
Short term borrowings (a) 41,500
Current installments
of long-term debt 783 787
$ 151,561 $ 87,623
(a) At December 31, 1994 Tosco had short-term lines of
credit which provide for cash borrowings for working capital
purposes of up to $45,000,000, $41,500,000 of which was
outstanding. Of this amount, $22,000,000 was collateralized
by certain inventory. Cash borrowings are payable within 90
days and bear interest at alternative rates at Tosco's
option. At December 31, 1994 the weighted average interest
rate for these credit lines was 6.9%.
9. Long-term Debt
December 31,
1994 1993
(Thousands of Dollars)
Collateralized
First Mortgage Bonds (a) (c) $ 300,000 $ 300,000
Exchange Bonds (b) (c) 150,000 150,000
Revolving Credit Facilities (c) 233,000 147,000
Note collateralized
by oil shale mining
properties (d) 5,200 5,647
Uncollateralized 12 1,446
688,212 604,093
Less: Current installments. 783 787
$ 687,429 $ 603,306
(a) In March 1992, Tosco issued $300,000,000 of First
Mortgage Bonds (Bonds), comprised of $100,000,000 of 9%
Series A Bonds due March 15, 1997 and $200,000,000 of 9-5/8%
Series B Bonds due March 15, 2002. Interest on the Bonds is
payable each March 15th and September 15th. The Bonds are
non-callable and are collateralized by the Avon Refinery and
certain related assets.
(b) In connection with the acquisition of the Bayway
Refinery, Tosco issued in a private placement $150,000,000
of 8-1/4% First Mortgage Bonds due May 15, 2003, guaranteed
by Bayway, with interest payable semi-annually on May 15th
and November 15th (Bayway Bonds). Proceeds for the sale of
the Bayway Bonds, net of $2,325,000 of costs, were
contributed as an equity investment to Bayway. The Bayway
guarantee is collateralized by the Bayway Refinery and
related assets and a guarantee of Tosco. Effective July 7,
1993, the Bayway Bonds were exchanged, pursuant to a
registration statement, for a new series of publicly traded
8-1/4% First Mortgage Bonds (Exchange Bonds), the terms of
which are substantially identical to the Bayway Bonds.
(c) In connection with the acquisition of Tosco Northwest,
Tosco amended its revolving credit facility to increase
credit availability from $350,000,000 to $450,000,000 (New
Revolving Credit Agreement). Cash borrowings under the New
Revolving Credit Agreement bear interest, at the option of
Tosco, at either the prime rate plus a margin ranging from
zero to 1/4%, or at the Eurodollar rate plus a margin
ranging from 1% to 1-1/2%. The incremental margin is
dependent on the credit rating of the First Mortgage Bonds.
A commitment fee of 3/8% per annum on the unused portion
of the commitment is also due. The New Revolving Credit
Agreement, which expires in April 1997, is collateralized
by investments, accounts receivable and inventory.
The loan agreements for the Bonds, the Exchange Bonds, and
the New Revolving Credit Agreement contain covenants which
limit Tosco's ability to incur additional indebtedness, pay
dividends, acquire equity securities of Tosco, and make
investments in certain subsidiaries and discretionary
capital expenditures. In addition, the New Revolving
Credit Agreement requires the maintenance of specified
ratios and net worth. At December 31, 1994, Tosco was in
compliance with all debt covenants.
(d) On December 17, 1987, The Oil Shale Corporation, a
subsidiary of Tosco, exercised options to acquire certain
oil shale mining claims (Ertl and Paraho oil shale
properties in Rio Blanco County, Colorado) for a cash
payment of $1,150,000 and execution of a promissory note
of $11,562,000, payable in fifteen equal annual principal
installments beginning on December 17, 1990. The
promissory note, with a stated interest rate of 5%, was
discounted, based upon long-term market rates, to a value
of $6,356,000 at the date of issue.
Future Installments of Long-Term Debt
Maturities relating to long-term debt during the next five
years are as follows:
Years Ending Thousands
December 31, of Dollars
1995 $ 783
1996 771
1997 333,771 (a)
1998 771
1999 771
(a) Includes cash borrowings of $233,000,000 at December 31,
1994 under the revolving credit facility and
$100,000,000 First Mortgage Bonds.
Utilization of Revolving Credit Facility
December 31,
1994 1993
(Thousands of Dollars)
Revolving Credit Facility
Cash borrowings $233,000 $ 147,000
Letters of credit 58,517 142,177
Total utilization 291,517 289,177
Availability 158,483 60,823
Total credit line $450,000 $ 350,000
10. Capital Stock
Series F Preferred Stock
In August 1994, Tosco called for the redemption on
September 26, 1994 (the Redemption Date) of its shares of
$4.375 Series F Cumulative Convertible Preferred Stock (Series
F Stock). The redemption price was $53.0625 per share, plus
$.486 per share in accumulated and unpaid dividends from
August 16, 1994 to the Redemption Date. Of the 2,300,000
shares of Series F Stock outstanding, 2,296,644 shares were
converted to shares of Common Stock and 3,356 were redeemed.
Common Stock
In December 1993, Tosco received net proceeds of
$88,418,000 from a public offering of 2,990,000 shares of
Common Stock. Dividends paid on Common Stock of $.16 per
share for the third and fourth quarters of 1994 reflected an
increase of $.01 per share over prior quarterly dividend
payments.
11.Stock Options and Shares Reserved For Issuance
Tosco had three stock option plans in effect at December
31, 1994: the 1992 Stock Incentive Plan (1992 Plan), the 1989
Stock Incentive Plan (1989 Plan), and the Long Term Incentive
Plan of 1979 (as amended) (LTIP). Grants may no longer be
made under the LTIP; however, grants previously made may be
exercised until they expire or terminate.
The 1989 and 1992 Stock Incentive Plans
The 1989 and 1992 Stock Incentive Plans provide for the
issuance to key employees, consultants, and non-employee
directors of a maximum of 1,280,000 and 1,200,000 shares of
Common Stock, respectively, in the form of stock options,
restricted stock awards and/or stock appreciation rights.
Stock options may be granted as "Incentive Stock Options" (as
defined by the Internal Revenue Code of 1986), or as
nonqualified options, including nonqualified stock options
whose purchase price or vesting requirements are based on the
employee's achievement of established performance objectives.
Options may be exercised only within ten years from the date
of grant. The exercise price of nonqualified stock options is
determined by the Compensation Committee of the Board of
Directors and may be less than the fair value of Common Stock
on the date of grant. Awards under the 1989 and 1992 Plan
may be granted until March 7, 1999 and March 13, 2002,
respectively.
Options to acquire an aggregate of 452,000 shares of Common
Stock at prices ranging from $29.25 to $31.81 per share (the
fair value of Common Stock on the respective dates of grant)
were granted during 1994. Subject to the severance agreements
with certain employees (Note 15), one-third of the options may
be exercised at any time following the first anniversary of
the date of grant and an additional one-third after each of
the second and third anniversaries.
Year Ended December 31,
1994 1993 1992
Option Price Option Price Option Price
Shares Per Share Shares Per Share Shares Per Share
Outstanding, beginning of year 1,619,299 $14.38 to $31.37 1,468,099 $11.90 to $28.56 1,003,032 $11.90 to $24.63
Grants - 1992 Plan 287,000 $30.31 to $31.81 542,500 $21.69 to $25.94 193,500 $28.56
Grants - 1989 Plan 165,000 $29.25 24,000 $31.37 324,000 $27.75 to $28.56
Exercised ( 89,533)$14.38 to $28.56 ( 221,633) $18.86 to $23.56 ( 21,933) $11.90 to $28.56
Expired or canceled ( 6,500)$24.25 to $25.94 ( 193,667) $28.44 to $28.56 ( 30,500) $18.75 to $23.56
Outstanding end of year (a) 1,975,266 $14.81 to $31.81 1,619,299 $14.38 to $31.37 1,468,099 $11.90 to $28.56
Exercisable 1,069,600 722,799 550,766
Available for future grant 251,667 697,167 1,009,000
Shares reserved for:
Exercise of stock options 2,226,933 2,316,466 2,477,099
Conversion of Convertible
Subordinated 8% Debentures 267,558
ConversBion of Series F Stock 4,791,590 4,791,590
Total shares reserved 2,226,933 7,108,056 7,536,247
(a) As of December 31, 1994, the expiration dates of options
outstanding range from December 5, 1995 to November 1, 2004.
Options to purchase 168,333 shares of Common Stock were granted
under the 1992 Plan at $29.19 per share in January 1995.
12. Income Taxes
The provision for income taxes is summarized below:
Year Ended December 31,
1994 1993 1992
(Thousands of Dollars)
Current:
Federal $ 10,774 $ 51,915 $ 9,293
State 7,362 12,096 3,225
Foreign 218 336
Total current 18,136 64,229 12,854
Deferred:
Federal 36,073 ( 6,366) 6,546
State ( 1,339) ( 3,823) 1,366
Total deferred 34,734 ( 10,189) 7,912
Adjustments (a) ( 2,864) ( 2,865)
Provision for income taxes $ 50,006 $ 51,175 $ 20,766 *
* Excluding effect of accounting changes.
A reconciliation of the provision for income taxes to income
taxes computed by applying the statutory federal income tax
rate to earnings before income taxes is as follows:
Year Ended December 31,
1994 1993 1992
(Thousands of Dollars)
Computed income taxes
at 35% for 1994 and
1993 and 34% for 1992 $ 46,847 $ 46,114 $ 17,344
State income taxes 9,302 11,858 4,591
Federal tax benefit of
state income taxes ( 3,279) ( 4,150) (1,560)
Foreign and other taxes 218 391
Adjustments (a) ( 2,864) ( 2,865)
$50,006 $51,175 $ 20,766*
* Excluding effect of accounting changes.
(a) The provision for income taxes for 1994 reflects a 1.5%
reduction in the effective state income tax rate and
recognition of $2,900,000 of revised income tax benefits
related to Tosco's former activities. The provision for
income taxes for 1993 includes prior year tax credits of
approximately $2,500,000 which were finalized in tax
returns filed in October 1993.
Temporary differences and carryforwards which give rise to
deferred tax assets and liabilities are as follows:
Year Ended December 31,
1994 1993
(Thousands of Dollars)
Deductible temporary differences:
Environmental cost liability ($ 35,382) ($29,440)
Inventories ( 22,318)
Postretirement benefit obligations other than
pensions ( 4,530) ( 3,439)
Accrued liabilities deductible for tax when paid ( 29,466) ( 12,200)
Deferred state income taxes (a) ( 1,934) ( 3,273)
Allowance for bad debts ( 8,392) ( 5,091)
Other ( 12,516) ( 9,089)
( 92,220) ( 84,850)
Tax carryforwards:
Net operating losses (b) (106,834) ( 176,718)
Taxable temporary differences:
Inventories 20,258
Property, plant and equipment 156,747 156,793
Deferred turnarounds expensed for tax 41,239 7,251
Capital leases for tax 18,206 21,527
Other 4,753 3,872
241,203 189,443
Total temporary differences and carryforwards $ 42,149 ($ 72,125)
Federal income taxes at 35% $ 14,752 ($ 25,330)
Tax credit carryforwards (b) ( 17,197) ( 14,659)
Alternative minimum tax
credit carryforwards (c) ( 10,713) ( 9,242)
Deferred federal
income tax asset ($ 13,158) ($ 49,231)
Current deferred ($ 6,160) ($ 12,123)
Long-term deferred ( 6,998) ( 37,108)
($ 13,158) ($ 49,231)
(a)Deferred state income tax liabilities of $1,934,000 and
$3,273,000 in 1994 and 1993, respectively, were provided
for temporary differences primarily related to the excess
of state tax over book depreciation.
(b)The NOLs which expire by 2001 were generated during the
four-year period 1983 through 1986 during which Tosco
disposed of three refineries and its investments in oil
and gas ventures and restructured its operations around
the Avon Refinery. Investment tax credit carryforwards
expire as follows: $4,334,000 (1997), $8,330,000 (1998),
$464,000 (1999), $732,000 (2000), $337,000 (2001),
$462,000 (2002) and $2,537,000 (2008).
(c)Alternative minimum tax credit (AMT) carryforwards may be
carried forward indefinitely.
Tosco believes that it is more likely than not that the
federal deferred tax asset will be realized prior to the
expiration of the carryforward period based upon the expected
continuation of Tosco's profitable results of continuing
operations since 1986 and resultant taxable income.
13.Employee Benefit and Incentive Compensation Plans
Pension Plans
Tosco has non-contributory, defined benefit pension plans
covering substantially all of its employees located at
the Avon and Bayway Refineries and its union employees at
the Ferndale Refinery (collectively, the Plans). The
benefits under the Plans generally are based on the
employee's years of service and average earnings for the
three highest consecutive calendar years of compensation
during the ten years immediately preceding retirement.
Contributions to the Plans are at least sufficient to
meet the minimum funding requirements of applicable laws
and regulations but no more than the amount deductible
for federal income tax purposes. The assets of the Plans
are managed by major financial institutions and invested
in high quality equity securities, guaranteed investment
contracts, corporate and government debt securities and
real estate equity funds. The funded status of the Plans
and amounts recognized in Tosco's balance sheet are as
follows:
December 31,
1994 1993
(Thousands of Dollars)
Actuarial present
value of benefit obligations:
Vested benefits ($ 36,132) ($35,109)
Nonvested benefits ( 1,762) ( 1,056)
Accumulated benefit
obligations (ABO) ( 37,894) ( 36,165)
Plan assets at fair value 47,371 41,920
Plan assets in excess of ABO $ 9,477 $ 5,755
Projected benefit obligations (PBO) for services
rendered to date ($60,016) ($65,036)
Plan assets at fair value 47,371 41,920
PBO in excess of plan assets ( 12,645) ( 23,116)
Prior service cost not yet recognized
in net periodic pension cost 10,528 15,240
Unrecognized net loss 781 7,054
Unrecognized net obligation
at January 1, 1987
being amortized over 15 years 2,014 2,302
Prepaid pension cost $ 678 $ 1,480
Net pension cost included the following components:
Service cost $ 5,284 $ 3,668
Interest 4,283 3,581
Actual return on plan assets ( 450) ( 3,521)
Net amortization and deferral ( 1,715) 1,843
Net pension cost $ 7,402 $ 5,571
Major assumptions at year end (a)
Assumed discount rate (b) 8-1/4% 7%
Assumed rate of
future compensation increase 5% 5%
Expected rate of return
on plan assets 7-1/2% 7-1/2%
____________________
(a) Net pension cost is determined using the assumptions as
of the beginning of each respective year. The funded
status of the Plans is determined using the assumptions
as of the end of each respective year. Net pension cost
for 1992 was $2,448,000.
(b) The discount rate represents the expected yield on a
diversified portfolio of high-grade (AA rated or
equivalent) fixed income investments with cash flow
streams approximating payments under the Plans. The
higher 1994 discount rate is reflective of the rise in
interest rates that occurred in 1994.
In connection with Tosco's acquisition of the Bayway and
Ferndale refineries, pension coverage was extended to
certain acquired employees. Pension benefits granted
provide for recognition of past employees' service but
benefits accrued through the respective acquisition dates
will be paid by their former employers. Benefits are
payable at the normal retirement age of 65 with reduced
benefits for early retirement (as defined).
In 1990, Tosco adopted a Senior Executive Retirement Plan to
provide retirement benefits to selected senior executives
of Tosco and their beneficiaries. A provision of
$1,855,000, $1,267,000 and $1,237,000 was recorded in
1994, 1993 and 1992, respectively.
Employee and Retiree Benefit Plans
Tosco provides health care and life insurance benefits for
all of its employees and postretirement health care and life
insurance benefits for certain employees (primarily
employees at the Avon Refinery). Beginning January 1,
1988, new employees not employed at the Avon Refinery,
including employees acquired in the Bayway and Tosco
Northwest acquisition, are not eligible for
postretirement benefits. Health care benefits for
eligible employees and retirees are provided through
insurance companies whose premiums are based on the
benefits paid during the year. The health care plans are
contributory, with employee/retiree contributions
adjusted periodically, and contain other cost-sharing
features such as deductibles and coinsurance. The life
insurance plans are noncontributory.
Tosco elected to prospectively recognize its accumulated
postretirement benefits obligation (APBO) other than
pensions of $32,661,000 as of January 1, 1992, the
effective date of Tosco's adoption of SFAS No. 106. In
view of the escalating costs of medical care, Tosco
revised its retiree benefit plans in 1993 and 1994 to,
among other things, limit its future obligation to absorb
health care increases. These revisions as well as
favorable changes in experience and cost trends reduced
Tosco's APBO to $25,797,000 and $14,209,000 as of
December 31, 1993 and 1994, respectively. The total cost
of postretirement benefits, including the amortization of
the transition obligation, was $2,630,000 for 1994, an
increase of $433,000 over the amount which would have
been expensed under the pay as you go approach.
The funded status of the postretirement plans and the amounts recognized in Tosco's balance sheet are as follows:
December 31,
1994 1993
(Thousands of Dollars)
Accumulated postretirement
benefit obligation (APBO):
Retirees $10,788 $ 18,787
Fully eligible active
plan participants 1,418 3,241
Other active plan participants 2,003 3,769
14,209 25,797
Plan assets at
fair value (Insurance assets) 5,265 5,580
APBO in excess of plan assets 8,944 20,217
Unrecognized net gain
from past experience different
from that assumed and from other changes 11,461 31
Unrecognized transition obligation ( 15,875) ( 16,809)
Accrued postretirement benefit liability $ 4,530 $ 3,439
Net periodic postretirement benefit cost for 1994 and 1993
includes the following components:
Amortization of transition
obligation over 20 years $ 934 $ 934
Interest cost on APBO 1,702 1,813
Service cost 330 189
Actual return on life insurance assets 41 ( 411)
Net amortization and deferral ( 377) 16
Net postretirement benefit cost 2,630 2,541
Liability at beginning of year 3,439 3,111
Employer payments,
net of employee contributions ( 2,197) ( 2,213)
Favorable claim expense dividend 658
Accrued postretirement benefit liability $ 4,530 $ 3,439
The following assumptions were used to develop the net
postretirement benefit:
Discount rate 8-1/4% 7%
Current year health care
cost trend rate (a) (2.6%) 11%
Ultimate health care cost trend rate 5-1/2% 6%
Year ultimate trend rate is achieved 2002 2002
Effect of a 1% point increase in
the health care cost trend rate
APBO $ 881 $ 1,977
Aggregate of service and interest cost $ 136 $ 137
(a) The negative trend rate for 1994 is a result of premium
rate reductions. In 1995, the composite rate of increase
is assumed to be 7.8%.
The changes in assumptions as well as changes in
circumstances and experience resulted in a net gain of
$11,461,000 which will be recognized as a reduction in
postretirement benefit expense on a straight line basis over the
average remaining employee service period of 6 years.
Postretirement benefit expense for 1992 was $4,919,000.
Savings Plan
A savings plan has been established for all eligible
employees (Tosco Corporation Capital Accumulation Plan (CAP)) to
encourage long-term savings and to provide additional
funds for retirement. Participants may make, within
certain limitations, voluntary contributions under
Section 401(k) of the Internal Revenue Code based upon a
percentage of their compensation. Tosco makes matching
contributions based upon years of contributory
participation (as defined under the CAP) for employees
who elect to make certain specified and minimum
contributions. In addition, eligible employees receive
an additional contribution equal to 5% of their
compensation (up to $150,000 in 1994 and 1995) which is
intended to replace Tosco's contribution under a
terminated pension plan. Participants are immediately
vested in both their voluntary and Tosco contributions.
Contributions by Tosco to the savings plan for the years
ended December 31 were $7,146,000 (1994), $5,524,000 (1993),
and $2,379,000 (1992).
Management Incentive Plans
A Cash Incentive Plan (CIP) was established for members of
middle and senior management in 1987. The CIP sets forth
awards which are computed as a variable percentage of a
participant's base salary, which percentage is dependent
upon the pretax income (as defined) of the business unit.
Tosco also adopted a bonus plan in 1990 for senior
executives who are not participants in the CIP based on
Tosco's per share pretax income (as defined).
Results of operations for the years ended December 31, 1994,
1993 and 1992 include incentive compensation of
$6,800,000, $9,531,000, and $5,616,000 respectively, of
which $5,350,000, $7,458,000 and $4,393,000,
respectively, were included in selling, general and
administrative expense.
Employee Stock Ownership Plan (ESOP)
In 1992, Tosco's Board of Directors authorized the merger of
the ESOP into the CAP. Effective January 1, 1993,
contributions of 2% of eligible pay previously made to
the ESOP were paid to the CAP for all eligible
participants. ESOP expense for 1992 was $516,000.
14. Lease Commitments
Tosco distributes petroleum products throughout its
marketing areas through a combination of owned and leased
terminals. Ten year lease arrangements for two major
West Coast product distribution terminals were renewed in
1991 and additional leases for the Riverhead product
distribution terminal and Northville Industries oil
distribution system, both in Long Island, New York, were
added in 1992 and 1993 (for terms of 5-1/2 and 9 years,
respectively). Tosco has options to purchase the
Riverhead Terminal and the Northville distribution system
at their fair market values at the end of their
respective leases. Other product distribution terminal
leases are generally for short periods of time and
continue in effect until canceled by either party with
contracted days of notice. The product distribution
terminal leases, other than the Long Island leases, are
subject to escalation either based on increases in annual
average wage rates or as allowed by the Public Utilities
Commission (PUC). A portion of the product distribution
terminals' storage and handling facilities is subleased
to others. In July of 1994, Tosco entered into a five
year lease, with options to renew for two additional five
year periods, with Statia Terminals for approximately
3,600,000 barrels of storage capacity at Point Tupper,
Nova Scotia. The facility will be used primarily to
store crude oil destined for the Bayway Refinery.
Minimum annual rentals for distribution terminals
currently under long-term lease total $23,700,000 for
1995, including approximately $4,400,000 for the Point
Tupper facility. Thereafter, annual rentals total
$18,900,000, $30,000,000 (including an $11,500,000
payment due at the end of the Riverhead terminal lease),
$14,600,000 and $11,300,000 for the years 1996 to 1999,
respectively.
In conjunction with the acquisition of the BP California
retail system in August 1994, Tosco entered into
long-term leases with a special purpose entity
established to purchase land and equipment in the BP
California retail system. The leases provide Tosco with
options to purchase at agreed upon contracted values (a)
not less than all of the leased assets at annual
anniversary dates and (b) a portion of the leased assets
for resale to unaffiliated parties at quarterly lease
payment dates. Tosco may also cancel the leases at the
second through sixth anniversary dates provided that the
lessor receives minimum sales values for the leased
assets. The purchase option price and guaranteed sales
values decline over the applicable periods of the leases.
Minimum annual rentals, which vary with a reference
interest rate (LIBOR) and assume that Tosco exercises its
lease renewal options, approximate $5,300,000 for the
first four years, $4,700,000 for the fifth and sixth
years, and $3,100,000 for the seventh year. Final
payments totaling $55,000,000 are due at the end of the
leases. Tosco entered into similar leases in conjunction
with the acquisition of Exxon's retail marketing assets
in Arizona in December 1994. Minimum annual rentals
currently approximate $6,000,000 over the term of the
lease with a final payment of $44,000,000 due at the end
of the seventh year. In addition, Tosco also assumed
existing leases of property, with expiration dates
through 2011, and subleases of retail properties, with
expiration dates through 1998, in connection with the
acquisitions of retail assets in Northern California and
Arizona.
Tosco leases sulfuric acid and MTBE manufacturing
facilities, both located at the Avon Refinery. The leases of the
sulfuric acid and MTBE facilities expire in 1998 and
2007, respectively, and the leases may be extended or the
facilities purchased at their estimated fair market
values at the end of the lease terms. Tosco also leases
transportation equipment, including railcars and trucks,
as well as computer and office equipment primarily at
leased office space at various locations in the United
States.
Future minimum obligations under non-cancelable operating
leases and warehousing agreements at December 31, 1994
were as follows:
Years Ending Thousands
December 31, of Dollars
1995 $ 57,890
1996 49,432
1997 57,599
1998 35,747
1999 33,033
2000 and subsequent 196,201
429,902
Less future minimum sublease income ( 49,282)
Total minimum lease payments $ 380,620
Rental expense, including amounts under non-cancelable
operating leases, was as follows:
Year Ended December 31,
1994 1993 1992
(Thousands of Dollars)
Minimum rental and
warehousing charges $54,986 $25,428 $15,644
Contingent rental and
warehousing charges
(based primarily on throughput) 6,952 4,203 3,494
61,938 29,631 19,138
Rental income on
properties subleased
to others (21,214)( 3,025) ( 1,493)
Net rental expense $ 40,724 $26,606 $17,645
15.Commitments and Contingencies
Tosco is subject to extensive federal, state and local
regulation of environmental and permitting matters
relating to its petroleum refining and marketing
operations. These regulations are complex and subject to
differing interpretations, and Tosco is currently
involved in a number of proceedings and discussions
regarding the removal and mitigation of the environmental
effects of subsurface liquid hydrocarbons and alleged
levels of hazardous waste at the Avon Refinery and other
locations, including Tosco's Spokane, Washington terminal
which is located in a site on the Superfund National
Priorities List. Tosco recorded environmental cost
accruals of $6,000,000 and $25,000,000 for 1994 and 1992,
respectively, based upon a determination that
investigative work and remedial actions would be
required.
In July 1993, outstanding litigation concerning
environmental issues was settled with the predecessor owners of
the Avon Refinery (Settlement Agreement). Under the
Settlement Agreement, the former owners agreed to pay up
to $18,000,000 for one-half of the costs that may be
incurred for compliance with certain environmental orders
and to provide Tosco with a $6,000,000 credit for past
expenses (which Tosco will use to reduce its one-half
share of future costs). After the initial term of the
Settlement Agreement (the later of four years or until
the $36,000,000 shared cost maximum is expended), the
parties may elect to continue the Settlement Agreement or
to reinstate litigation. Tosco and the former owners
have established a committee to review and approve
expenditures for environmental investigative and remedial
actions at the Avon Refinery. Through December 31, 1994,
the committee has spent approximately $1,200,000 on such
matters. Remedial actions are subject to negotiation
with governmental agencies and therefore the timing and
amount of future cash expenditures is uncertain. In
addition, further investigative work and negotiations
with the governmental agencies may result in additional
remedial actions which Tosco cannot presently predict.
Tosco has not relinquished its right to make claims for
reimbursement of future costs and is not required to
reimburse amounts received under the Settlement
Agreement. Tosco received $3,474,000 in 1994 in partial
settlement of litigation cost reimbursement claims from
its insurance carriers and is pursuing additional
recoveries and reimbursement under insurance policies in
effect during the applicable periods of coverage.
By agreement, Exxon is responsible for environmental
obligations related to or arising out of its ownership
and operation of the Bayway Refinery, as will be set
forth in a list to be prepared under administrative
consent orders between Exxon and the State of New Jersey.
Bayway has the right, for a period of one year following
the expected 1997 completion date of such list, to add
additional items to the list. Responsibility for clean-up
projects thereafter identified will be shared by Exxon
and Tosco based on their respective length of ownership.
Tosco has also received indemnifications with respect to
environmental obligations arising out of or relating to
the period prior to the respective acquisition dates of
the Ferndale Refinery and retail assets in the Pacific
Northwest and Northern California from BP, and the
Arizona retail properties from Exxon (Note 2).
Environmental exposures are difficult to assess and estimate
for numerous reasons including the complexity and
differing interpretations of governmental regulations,
the lack of reliable data, the number of potentially
responsible parties and their financial capabilities, the
multiplicity of possible solutions, the years of remedial
and monitoring activity required, and the identification
of new sites. While Tosco believes that it has
adequately provided for environmental exposures, should
these matters be resolved unfavorably to Tosco, they
could have a material adverse effect on its long-term
consolidated financial position and results of
operations.
There are various other legal proceedings and claims pending
against Tosco which are common to its operations. While
it is not feasible to predict or determine the ultimate
outcome of these matters, it is the opinion of management
that these suits will not result in monetary damages
which in the aggregate would be material to the business
or operations of Tosco.
In October 1986, Tosco and Atlantic Richfield Co. (ARCO)
entered into an agreement pursuant to which ARCO has
agreed for ten years (with two five-year renewal options
exercisable by ARCO) to deliver to Tosco an average of
50,000 barrels per day of Alaskan North Slope crude oil
in exchange for a quantity of gasoline that is a variable
percentage of the amount of crude oil delivered, based
upon the prices of certain crude oils (ARCO Exchange
Agreement). Under the ARCO Exchange Agreement, Tosco has
agreed that in the event it desires to sell the Avon Refinery,
Tosco will first offer the Avon Refinery for sale to ARCO. If
ARCO declines, Tosco will be free for a certain period of time to
sell the Avon Refinery for consideration no less favorable to
Tosco than was initially offered to ARCO, subject to the
effect of possible continuing Tosco obligations of exchange
under the ARCO Exchange Agreement. In addition, in any such
subsequent sale ARCO has the right to participate in the
bidding and to acquire the Avon Refinery as long as it agrees
to pay a specified sum more than any other bidder. The ARCO
Exchange Agreement is subject to renegotiation in the event
conditions change to the extent that one of the parties has
sustained significant losses for a substantial period of time,
or structural changes make substantial losses likely. In the
event such renegotiation is unsuccessful, the ARCO Exchange
Agreement is subject to arbitration and possible termination.
Tosco has employment agreements with certain of its
executive officers which provide for lump sum severance payments
and accelerated vesting of options upon termination of
employment under certain circumstances or a change of
control, as defined. Tosco's potential obligation to its
nine executive officers was $5,486,000 at December 31, 1994.
Tosco, in keeping with industry practice, schedules periodic
maintenance of major processing units for significant
non-routine repairs and replacements as the units reach
the end of their normal operating cycles (turnarounds).
Unscheduled turnarounds also occur because of operating
difficulties or external factors. Throughput and
earnings are lowered, and deferred turnaround
expenditures increased, during such periods.
Tosco's NOL, investment tax and AMT credit carryforwards
(Note 12) are subject to various complex tax rules and
regulations which may be subject to varying
interpretations. These carryforwards may be adversely
affected by changes in the rules and regulations or
significant changes in the ownership of Tosco or its
trade or business. Therefore, the future benefit of
these carryforwards, although more likely than not
realizable under current rules and regulations, is not
assured.
Effective December 1993, the date commercial operation of a
hydrogen production facility (Hydrogen Plant) commenced,
Tosco entered into 15 year agreements to purchase up to
25 million cubic feet per day of hydrogen and steam
(Hydrogen Supply Agreement) and to provide utilities,
wastewater disposal and other services to the Hydrogen
Plant. The Hydrogen Plant, located at the Avon Refinery
on property leased from Tosco, is owned and operated by
a third party. The Hydrogen Supply Agreement may be
modified to provide for higher levels of hydrogen at
prices to be negotiated and can be terminated under
certain circumstances upon payment of a stipulated fee
(which decreases over the term of the agreement).
To control costs and improve delivery reliability, Tosco
entered into a twelve year time charter agreement with
Neptune Orient Lines commencing after completion of
construction of four 100,000 DWT crude oil tankers. The
first tanker is scheduled to be delivered in June 1996
with the last tanker scheduled for delivery in the first
quarter of 1997. The tankers will be used to move crude
oil from the Nova Scotia storage location to the Bayway
Refinery or in direct shipments to other locations.
16. Quarterly Financial Data (Unaudited)
Thousands of Dollars Except Per Share Data
First Second Third Fourth
Quarter Quarter Quarter Quarter
1994
Sales $1,495,688 $1,399,761 $1,671,557 $1,798,751
Gross profit on sales 105,497 45,049 48,175 61,743
Inventory valuation recovery 17,651
Environmental cost accrual (6,000)
Operating contribution $ 105,497 $ 45,049 $ 48,175 $ 73,394
Income from continuing operations
before income taxes $ 65,893 $ 17,534 $ 16,099 $ 34,323
Provision for income taxes 27,026 3,082 6,423 13,475
Net income $ 38,867 $ 14,452 $ 9,676 $ 20,848
Earnings per share:
Primary $ 1.11 $ .37 $ .25 $ .56
Fully diluted $ 1.04 $ .37 $ .25 $ .56
Thousands of Dollars Except Per Share Data
First Second Third Fourth
Quarter Quarter Quarter Quarter
1993
Sales $ 416,136 $956,254 $1,043,673 $1,143,154
Gross profit on sales 41,588 64,321 75,502 70,314
Inventory valuation writedown ( 17,651)
Operating contribution $ 41,588 $ 64,321 $ 75,502 $ 52,663
Income from continuing operations
before income taxes $ 24,789 $ 37,220 $ 47,348 $ 22,397
Provision for income taxes 9,987 15,079 19,423 6,686
Net income $ 14,802 $ 22,141 $ 27,925 $ 15,711
Earnings per share:
Primary $ .42 $ .67 $ .86 $ .43
Fully diluted $ .42 $ .65 $ .81 $ .43
SCHEDULE VIII
TOSCO CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1994, 1993 and 1992
(Thousands of Dollars)
Column A Column B Column C Column D Column E
Charged
Balance at (Credited) to Charged Balance
Beginning Costs and to Other at End of
Description of Period Expenses Accounts Deductions Period
1994
Allowance
for Uncollectible
Trade Accounts
Receivable $5,091 $3,301 $ - $8,392
1993
Allowance
for Uncollectible
Trade Accounts
Receivable $5,164 $ - $ 73 $5,091
1992
Allowance
for Uncollectible
Trade Accounts
Receivable $5,148 $ 26 $ 10 $ 5,164
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized,
in the City of San Francisco, and the State of California, on
March 16, 1995.
TOSCO CORPORATION
(Registrant)
By /s/ THOMAS D. O'MALLEY
(Thomas D. O'Malley)
Chairman of the Board of Directors,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Signature Title
/s/ THOMAS D. O'MALLEY Chairman of the Board of March16, 1995
(Thomas D. O'Malley) Directors, President and
Chief Executive Officer
/s/ JEFFERSON F. ALLEN Principal Financial Officer, March 16,1995
(Jefferson F. Allen) Executive Vice President
and Director
/s/ ROBERT I. SANTO Principal Accounting Officer March 16, 1995
(Robert I. Santo)
Director March 1995
(Joseph B. Carr)
/s/ HOUSTON I. FLOURNOY Director March 16, 1995
(Houston I. Flournoy)
/s/ CLARENCE G. FRAME Director March 16, 1995
(Clarence G. Frame)
/s/ EDMUND A. HAJIM Director March 16, 1995
(Edmund A. Hajim)
/s/ JOSEPH P. INGRASSIA Director March 16, 1995
(Joseph P. Ingrassia)
/s/ CHARLES J. LUELLEN Director March 16, 1995
(Charles J. Luellen)
EX-99
2
Exhibit 10(d)
AMENDMENT NO. 3
DATED AS OF MARCH 31, 1994 TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 8, 1993
AMENDMENT No. 3 (the "Amendment") dated as of March 31,
1994 by and among TOSCO CORPORATION, a Nevada corporation
("Tosco") and BAYWAY REFINING COMPANY, a Delaware corporation
("Bayway") as co-borrowers (collectively, the "Borrowers"),
Seminole Fertilizer Corporation, a Delaware corporation,
("Seminole"), the financial institutions listed on Schedule
1.01(a) to the Credit Agreement referred to below, as in effect
immediately prior to the date hereof (the "Existing Banks"), THE
SUMITOMO BANK, LIMITED ("Sumitomo" and together with the
Existing Banks, the "Banks"), THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION) ("Chase"), as co-agent, BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION ("BofA"), as co-agent and
co-arranger, and THE FIRST NATIONAL BANK OF BOSTON ("FNBB"), as
agent (in that capacity, the "Agent") and as arranger for the
Banks.
Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement referred to below
shall have the same meaning herein as in the Credit Agreement,
as amended hereby.
WHEREAS, the Borrowers, the Existing Banks, the Co-Agents,
the Agent and the FMCP L/C Bank are parties to that certain
Credit Agreement dated as of April 8, 1993 (as amended,
restated, modified or supplemented and in effect from time to
time, the "Credit Agreement"); and
WHEREAS, Sumitomo wishes to become a party to the Credit
Agreement and the Borrowers, Seminole and the Existing Banks
have consented thereto; and
WHEREAS, the Borrowers have requested, and the Banks have
agreed, that the aggregate commitment of the Banks to extend
credit under the Credit Agreement be increased to $400,000,000;
NOW, THEREFORE, in consideration of the foregoing premises
the parties hereto hereby agree as follows:
Section 1. Amendment to Credit Agreement. The Credit
Agreement is hereby amended by deleting Schedules 1.01(a) and
(b) thereto and replacing it with Schedules 1.01(a) and (b)
hereto.
Section 2. Assignment and Acceptance.
Section 2.1. Assignments. Each of FNBB, BofA and Chase
(collectively, the "Assignor Banks" and individually, an
"Assignor Bank") hereby sells and assigns to The Sumitomo Bank,
Limited ("Assignee Bank") a certain percentage interest in and
to all of such Assignor Bank's rights and obligations under the
Credit Agreement as of the effective date hereof, including,
without limitation, such percentage interest in the Assignor
Bank's Commitment as in effect on the effective date hereof, and
the outstanding Loans, Letter of Credit Reimbursement
Obligations and Acceptance Obligations owing to the Assignor
Bank on the effective date hereof, and such percentage interest
in the Revolving Credit Note held by the Assignor Bank (such
interest being hereinafter referred to as the "Assigned
Portion") such that, after giving effect to the assignments
contemplated hereby and the increase in the aggregate
Commitments of all of the Banks contemplated hereby and as of
the effective date hereof, the respective Commitments and
Commitment Percentages of the Assignor Banks and the Assignee
Bank shall be as set forth on Schedule 1.01(b) to the Credit
Agreement, as amended hereby and each Bank shall have that
percentage interest in all outstanding Loans, Letter of Credit
Reimbursement Obligations and Acceptance Obligations.
Notwithstanding any term or provision of Section 10.03 of the
Credit Agreement to the contrary, the execution and delivery
hereof by the Assignor Banks, the Assignee Bank, the Agent, the
FMCP L/C Bank and the Borrowers shall constitute an Assignment
and Acceptance delivered in accordance with the Credit Agreement
and shall be effective in respect of the assignments
contemplated hereby.
Section 2.2. Representations and Warranties of Assignor
Banks. Each Assignor Bank (i) represents and warrants that as
of the date hereof, its Commitment and Commitment Percentage
(without giving effect to assignments thereof which have not yet
become effective, including, but not limited to, the assignment
contemplated hereby) is the amount set forth opposite such
Assignor Bank's name under the respective captions "Commitment"
and "Commitment Percentage" on Schedule 1.01(b) to the Credit
Agreement as in effect prior to the effective date hereof; (ii)
represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (iii)
makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit
Agreement or any Ancillary Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
the Credit Agreement or any Ancillary Agreement or any other
instrument or document furnished pursuant thereto; (iv) makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any of its
Subsidiaries or the performance or observance by any Borrower or
any of its Subsidiaries of any of its or their obligations under
the Credit Agreement or any Ancillary Agreement or any other
instrument or document furnished pursuant thereto; and (v)
requests that in connection with such assignment and the
increase in the aggregate total Commitments of all of the Banks
as set forth herein the Agent and the Borrowers exchange the
Revolving Credit Notes referred to in Section 2.1 above for new
Revolving Credit Notes, each dated the Closing Date, payable to
the order of each Assignor Bank and the Assignee Bank in the
principal amount of the Commitment set forth opposite such
Assignor Bank's name and the Assignee Bank's name on Schedule
1.01(b) to the Credit Agreement as amended hereby.
Section 2.3. Representations and Warranties of Assignee
Bank. The Assignee Bank represents and warrants (i) that it has
received a copy of the Credit Agreement and each Ancillary
Agreement, together with copies of the financial statements
referred to in Section 4.11 of the Credit Agreement and the most
recent financial statements delivered to the Banks pursuant to
Sections 5.04(d)(i) and 5.04(e) of the Credit Agreement and such
other documents and information as it deems appropriate to make
its own credit analysis and decision to enter into this
Amendment and Assignment, (ii) that it will, independently and
without reliance upon any Assignor Bank or any other Bank or the
Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Agreement or any Ancillary Agreement, (iii) that it is an
Eligible Assignee and (iv) that the making of Loans by the
Assignee Bank will not be unlawful as set forth in Section 2.16
of the Credit Agreement.
Section 2.4. Appointment of Agent. The Assignee Bank (i)
appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Credit
Agreement and the Ancillary Agreements as are delegated to the
Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, and (ii) agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the Ancillary
Agreements are required to be performed by it as a Bank.
Section 2.5. Respective Rights and Obligations of
Assignor Banks and Assignee Bank. As of the Amendment and
Assignment Effective Date, (i) each Assignee Bank shall, in
addition to any rights and obligations under the Credit
Agreement held by it immediately prior to the effective date
hereof, have the respective rights and obligations of a Bank
under the Credit Agreement and the Ancillary Agreements that
have been assigned to it pursuant to this Section 2 and under
Sections 2.15 and 2.20 of the Credit Agreement with respect to
the applicable Assigned Portion and (ii) each Assignor Bank
shall, to the extent provided in this Section 2, relinquish its
rights and be released from its obligations under the Credit
Agreement and the Ancillary Agreements with respect to the
Assigned Portion.
Section 2.6. Agent's Duties in Respect of Assignment and
Acceptance. From and after the effective date hereof, the Agent
shall record the information contained in this Section 2 in the
Register and shall make all payments under the Credit Agreement
and the Revolving Credit Notes in respect of the interests
assigned hereby (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the
Assignee Bank. The Assignor Banks and Assignee Bank shall make
all appropriate adjustments under the Credit Agreement and the
Revolving Credit Notes for periods prior to the effective date
hereof directly between themselves as directed by the Agent.
Section 3. Scope of Amendment. Except as specifically
amended by this Amendment, the Credit Agreement shall remain in
full force and effect.
Section 4. Representations and Warranties. The
Borrowers hereby jointly and severally represent and warrant to
the Banks, the Agent and the FMCP L/C Bank as follows:
(a) Representations and Warranties in Credit Agreement.
The representations and warranties of the Borrowers and Seminole
contained in the Credit Agreement (i) were true and correct in
all material respects when made, and (ii) except to the extent
such representations and warranties by their terms are made
solely as of a prior date, continue to be true and correct in
all material respects on the date hereof.
(b) Authority, etc. The execution and delivery by the
Borrowers and Seminole of this Amendment and the Revolving
Credit Notes and the performance by the Borrowers and Seminole
of all of their agreements and obligations under this Amendment
and the Revolving Credit Notes are within the corporate
authority of each of the Borrowers and Seminole, have been duly
authorized by all necessary corporate action on the part of each
of the Borrowers and Seminole, and do not and will not (i)
contravene any provision of any Borrower's or Seminole's
charter, other incorporation papers, by-laws or any stock
provision, or any amendment thereof, (ii) conflict with, or
result in a breach of any material term, condition or provision
of, or constitute a default under or result in the creation of
any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property of any Borrower or Seminole
under any agreement, deed of trust, indenture, mortgage or other
instrument to which such Borrower or Seminole is a party or by
which any of such Borrower's or Seminole's properties are bound,
(iii) violate or contravene any provision of any law,
regulation, order, ruling or interpretation thereunder or any
decree, order or judgment of any court or governmental or
regulatory authority, bureau, agency or official, (iv) require
any waiver, consent or approval by any creditor of any Borrower
or Seminole which has not been obtained or (v) require any
approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to, any
governmental or regulatory authority or agency under any
provision of any law, except those actions which have been taken
or will be taken prior to the date of execution of this
Amendment.
(c) Enforceability of Obligations. This Amendment, the
Credit Agreement as amended hereby, the Revolving Credit Notes
delivered in connection herewith and the Loan Documents
constitute the legal, valid and binding obligations of the
Borrowers and Seminole enforceable against the Borrowers and
Seminole in accordance with their respective terms, provided
that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applications affecting the rights and remedies of
creditors, and (ii) the availability of the remedies of specific
performance and injunctive relief may be subject to the
discretion of the court before which any proceedings for such
remedies may be brought.
Section 5. Confirmation of Collateral Documents. Each
of the Borrowers and Seminole hereby ratify and confirm each of
the Collateral Documents and the pledges and security interests
created thereby. Each of the Borrower and Seminole hereby
further ratify and confirm that the Collateral Documents and the
pledges and security interest created thereby secure the
Obligations of the Borrowers and Seminole under the Credit
Agreement, as amended hereby, and the Revolving Credit Notes.
Section 6. Conditions to Effectiveness. The
effectiveness of this Amendment No. 3 shall be conditioned upon
receipt by the Agent of the following, in form and substance
satisfactory to the Banks:
(a) this Amendment No. 3, executed by the Borrowers,
Seminole, the Banks, the Agent, the Co-Agents and the FMCP L/C
Bank;
(b) Revolving Credit Notes, substantially in the form of
Exhibit D-1 hereto, executed and delivered by the Borrowers and
Seminole and payable to the order of each of the Banks in the
respective aggregate principal amounts set forth under the
caption "Commitment" opposite each such Bank's name on Schedule
1.01(b) hereto;
(c) copies, certified by the Secretary of each of the
Borrowers and Seminole to be true and complete on the date of
execution of this Amendment, of the records of all actions taken
by each such Borrower and Seminole as may be required according
to the terms of each such Borrower's or Seminole's charter,
other incorporation documents and by-laws to authorize (i) the
execution and delivery of this Amendment and each of the
Revolving Credit Notes by each such Borrower and Seminole and
(ii) the performance by each such Borrower and Seminole of all
of its agreements and obligations under this Amendment and the
Credit Agreement as amended hereby;
(d) a certificate of the Secretary of each of the
Borrowers and Seminole (i) setting forth the names, incumbency
and specimen signatures of those officers of each of the
Borrowers and Seminole authorized to execute and deliver this
Amendment and the Revolving Credit Notes and (ii) with respect
to the Borrowers, stating that there have been no amendments to
the charter documents and by-laws of the Borrowers delivered to
the Agent and the Banks on April*8, 1993;
(e) an opinion of counsel to the Borrowers and Seminole in
form and substance satisfactory to the Agent; and
(f) fees, payable to the Agent for the account of each
Bank, in the amounts separately agreed to by the Borrowers as
set forth in certain letters dated March 4, 1994.
Section 7. Certain Transitional Arrangements.
Section 7.1. Revolving Credit Loans. Effective as of the
date hereof, each Bank shall make such dispositions and
arrangements with each other Bank with respect to the then
outstanding Revolving Credit Loans (the "Loan Adjustment") as
shall result in the amount of Revolving Credit Loans owed to
each Bank being equal to the product of such Bank's Ratable
Portion multiplied by the aggregate Revolving Credit Loans
outstanding on the effective date hereof (the "Loan Adjusted
Amount"). Upon the occurrence of the Loan Adjustment, the Agent
shall amend each Loan Account to reflect such Bank's Loan
Adjusted Amount. The Ratable Portion of each Bank shall be
adjusted as at the effective date hereof and the Commitment Fee
payable for the period during which the Ratable Portion of each
Bank was adjusted pursuant hereto shall be allocated among the
Banks according to the daily Ratable Portion for each Bank for
each day during such period. In the event any of the Revolving
Credit Loans are Eurodollar Rate Loans, the Borrowers shall
reimburse the Banks for any and all fees, taxes, penalties or
other breakage costs incurred in connection with the Loan
Adjustment.
Section 7.2. Existing Credit Instruments. Effective as
of the date hereof, each Bank shall make such dispositions and
arrangements with each other Bank with respect to the
participations of the Banks in each Credit Instrument then
outstanding (the "Credit Instrument Adjustment") as shall result
in the participations held by each Bank in each such Credit
Instrument being equal to the product of such Bank's Ratable
Portion multiplied by the aggregate participations in such
Credit Instrument on the date hereof (the "Credit Instrument
Adjusted Amount"). All commissions and fees payable to the
Banks in connection with such Credit Instruments for the period
during which the Ratable Portion of each Bank was adjusted
pursuant hereto shall be allocated among the Banks according to
the daily Ratable Portion for each Bank for each day during such
period.
Section 7.3. Return of Old Notes. Promptly after the
effective date of this Amendment*No. 3, the Banks will return to
the Agent the Revolving Credit Notes previously delivered by the
Borrowers and Seminole to the Banks under the Credit Agreement
which are superseded by the Revolving Credit Notes delivered to
the Banks pursuant to this Amendment. Upon receipt of such
superseded Revolving Credit Notes from the Banks, the Agent
shall return such Revolving Credit Notes to the Borrowers and
Seminole.
Section 8. Execution in Counterparts. This Amendment
may be executed in any number of counterparts, but all such
counterparts shall together constitute but one instrument. In
making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart signed by each
party hereto by and against which enforcement hereof is sought.
Section 9. Governing Law. This Amendment shall be
construed according to and governed by the laws of The
Commonwealth of Massachusetts.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as an agreement under seal as of
the date set forth at the beginning of this Amendment.
TOSCO CORPORATION
By:
__________________________________
Title:
SEMINOLE FERTILIZER CORPORATION
By:___________________________________
Title:
BAYWAY REFINING COMPANY
By:____________________________________
Title:
THE FIRST NATIONAL BANK OF
BOSTON, individually and
as Agent
By:____________________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Co-Agent
By:____________________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually
By:____________________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Co-Agent
By:____________________________________
Title:
ARAB BANKING CORPORATION
By:____________________________________
Title:
NATIONAL CITY BANK
By:____________________________________
Title:
THE FUJI BANK, LIMITED
By:____________________________________
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:____________________________________
Title:
BANK HAPOALIM B.M.
By:____________________________________
Title:
By:____________________________________
Title:
UNITED JERSEY BANK
By:____________________________________
Title:
THE YASUDA TRUST AND BANKING
CO., LTD.
By:____________________________________
Title:
THE SUMITOMO BANK, LIMITED
By:____________________________________
Title:
INTERNATIONALE NEDERLANDEN
BANK, N.V., as FMCP L/C Bank
By:____________________________________
Title:
Exhibit 10(e)
AMENDMENT NO. 4
DATED AS OF MAY 9, 1994 TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 8, 1993
AMENDMENT No. 4 (the "Amendment") dated as of May 9, 1994
by and among TOSCO CORPORATION, a Nevada corporation ("Tosco")
and BAYWAY REFINING COMPANY, a Delaware corporation ("Bayway")
as co-borrowers (collectively, the "Borrowers"), Seminole
Fertilizer Corporation, a Delaware corporation, ("Seminole"),
the financial institutions listed on Schedule 1.01(a) to the
Credit Agreement referred to below, as in effect immediately
prior to the date hereof (the "Existing Banks"), THE Dai-Ichi
Kangyo Bank, LTD. ("Dai-Ichi"), The Sanwa Bank Limited
("Sanwa"), SeaTTLE-first NATIONAL Bank ("Seafirst"), Union Bank
("Union"), Midlantic National Bank ("Midlantic"), National
Westminster Bank Plc ("NatWest"), Credit Lyonnais NEW YORK
BRANCH ("Lyonnais"), The Sakura Bank, Ltd. ("Sakura"), PNC Bank,
NATIONAL ASSOCIATION ("PNC"), Banca di Roma ("di Roma", and
together with Dai-Ichi, Sanwa, Seafirst, Union, Midlantic,
NatWest, Lyonnais, Sakura and PNC, the "New Banks"), THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION) ("Chase"), as co-agent,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"),
as co-agent and co-arranger, and THE FIRST NATIONAL BANK OF
BOSTON ("FNBB"), as agent (in that capacity, the "Agent") and as
arranger for the Existing Banks and the New Banks.
Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement referred to below
shall have the same meaning herein as in the Credit Agreement,
as amended hereby. The Existing Banks and the New Banks are
hereinafter referred to collectively as the "Banks".
WHEREAS, the Borrowers, the Existing Banks, the Co-Agents,
the Agent and the FMCP L/C Bank are parties to that certain
Credit Agreement dated as of April 8, 1993 (as amended,
restated, modified or supplemented and in effect from time to
time, the "Credit Agreement"); and
WHEREAS, the New Banks wish to become parties to the Credit
Agreement and the Borrowers, Seminole and the Existing Banks
have consented thereto; and
WHEREAS, the Borrowers have requested, and the Banks have
agreed, that the aggregate commitment of the Banks to extend
credit under the Credit Agreement be increased to $450,000,000;
NOW, THEREFORE, in consideration of the foregoing premises
the parties hereto hereby agree as follows:
Section 1. Amendment to Credit Agreement.
(a) The Credit Agreement is hereby amended by deleting
Schedules 1.01(a) and (b) thereto and replacing it with
Schedules 1.01(a) and (b) hereto.
(b) Section 2.09(a) of the Credit Agreement is hereby
amended by deleting the words "or the amount by which the
aggregate Revolving Credit Debt outstanding exceeds the
Commitments" found in the ninth, tenth and eleventh lines
thereof and replacing them with the words "of the amount by
which the Commitments exceed the aggregate Revolving Credit Debt
outstanding".
(c) For the purposes of the assignments contemplated by
this Amendment No. 4, the provisions of Section 10.03(a)(ii)(A)
of the Credit Agreement are hereby waived and the parties hereto
hereby consent and agree to such assignments.
Section 2. Assignment and Acceptance.
Section 2.1. Assignments. Each of FNBB, BofA and Chase
(collectively, the "Assignor Banks" and individually, an
"Assignor Bank") hereby sells and assigns to the New Banks (each
an "Assignee Bank" and collectively the "Assignee Banks") a
certain percentage interest in and to all of such Assignor
Bank's rights and obligations under the Credit Agreement and the
Ancillary Agreements as of the effective date hereof, including,
without limitation, such percentage interest in the Assignor
Bank's Commitment as in effect on the effective date hereof, and
the outstanding Loans, Letter of Credit Reimbursement
Obligations and Acceptance Obligations owing to the Assignor
Bank on the effective date hereof, and such percentage interest
in the Revolving Credit Note held by the Assignor Bank (such
interest being hereinafter referred to as the "Assigned
Portion") such that, after giving effect to the assignments
contemplated hereby and the increase in the aggregate
Commitments of all of the Banks contemplated hereby and as of
the effective date hereof, the respective Commitments and
Ratable Portions of the Assignor Banks and the Assignee Banks
shall be as set forth on Schedule 1.01(b) to the Credit
Agreement, as amended hereby, and each Bank shall have that
percentage interest in all outstanding Loans, Letter of Credit
Reimbursement Obligations and Acceptance Obligations.
Notwithstanding any term or provision of Section 10.03 of the
Credit Agreement to the contrary, the execution and delivery
hereof by the Assignor Banks, the Assignee Bank, the Agent, the
FMCP L/C Bank and the Borrowers shall constitute an Assignment
and Acceptance delivered in accordance with the Credit Agreement
and shall be effective in respect of the assignments
contemplated hereby.
Section 2.2. Representations and Warranties of Assignor
Banks. Each Assignor Bank (i) represents and warrants that as
of the date hereof, its Commitment and Ratable Portion (without
giving effect to assignments thereof which have not yet become
effective, including, but not limited to, the assignment
contemplated hereby) is the amount set forth opposite such
Assignor Bank's name under the respective captions "Commitment"
and "Ratable Portion" on Schedule 1.01(b) to the Credit
Agreement as in effect prior to the effective date hereof; (ii)
represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (iii)
makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit
Agreement or any Ancillary Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
the Credit Agreement or any Ancillary Agreement or any other
instrument or document furnished pursuant thereto; (iv) makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any of its
Subsidiaries or the performance or observance by any Borrower or
any of its Subsidiaries of any of its or their obligations under
the Credit Agreement or any Ancillary Agreement or any other
instrument or document furnished pursuant thereto; and (v)
requests that in connection with such assignment and the
increase in the aggregate total Commitments of all of the Banks
as set forth herein the Agent and the Borrowers exchange the
Revolving Credit Notes referred to in Section 2.1 above for new
Revolving Credit Notes, each dated as of the effective date
hereof, payable to the order of each Assignor Bank and each
Assignee Bank in the principal amount of the Commitment set
forth opposite such Assignor Bank's name and such Assignee
Bank's name on Schedule 1.01(b) to the Credit Agreement as
amended hereby and each such new note shall be deemed to be a
"Revolving Credit Note" under the Credit Agreement.
Section 2.3. Representations and Warranties of Assignee
Banks. Each Assignee Bank represents and warrants (i) that it
has received a copy of the Credit Agreement and each Ancillary
Agreement, together with copies of the financial statements
referred to in Section 4.11 of the Credit Agreement and the most
recent financial statements delivered to the Banks pursuant to
Sections 5.04(d)(i) and 5.04(e) of the Credit Agreement and such
other documents and information as it deems appropriate to make
its own credit analysis and decision to enter into this
Amendment and Assignment, (ii) that it will, independently and
without reliance upon any Assignor Bank or any other Bank or the
Agent or any Co-Agent and based on such documents and
information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action
under the Credit Agreement or any Ancillary Agreement, (iii)
that it is an Eligible Assignee and (iv) that the making of
Loans by the Assignee Bank will not be unlawful as set forth in
Section 2.16 of the Credit Agreement.
Section 2.4. Appointment of Agent. Each Assignee Bank
(i) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Credit
Agreement and the Ancillary Agreements as are delegated to the
Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, and (ii) agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the Ancillary
Agreements are required to be performed by it as a Bank.
Section 2.5. Respective Rights and Obligations of
Assignor Banks and Assignee Banks. As of the effective date
hereof, (i) each Assignee Bank shall, in addition to any rights
and obligations under the Credit Agreement held by it
immediately prior to the effective date hereof, have the
respective rights and obligations of a Bank under the Credit
Agreement and the Ancillary Agreements that have been assigned
to it pursuant to this Section 2 and under Sections 2.15 and
2.20 of the Credit Agreement with respect to the applicable
Assigned Portion and (ii) each Assignor Bank shall, to the
extent provided in this Section 2, relinquish its rights and be
released from its obligations under the Credit Agreement and the
Ancillary Agreements with respect to the Assigned Portion.
Section 2.6. Agent's Duties in Respect of Assignment and
Acceptance. From and after the effective date hereof, the Agent
shall record the information contained in this Section 2 in the
Register and shall make all payments under the Credit Agreement
and the Revolving Credit Notes in respect of the interests
assigned hereby (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the
Assignee Banks. The Assignor Banks and the Assignee Banks shall
make all appropriate adjustments under the Credit Agreement and
the Revolving Credit Notes for periods prior to the effective
date hereof directly between themselves as directed by the
Agent.
Section 3. Scope of Amendment. Except as specifically
amended by this Amendment, the Credit Agreement shall remain in
full force and effect.
Section 4. Representations and Warranties. The
Borrowers hereby jointly and severally represent and warrant to
the Banks, the Agent and the FMCP L/C Bank as follows:
(a) Representations and Warranties in Credit Agreement.
The representations and warranties of the Borrowers and Seminole
contained in the Credit Agreement (i) were true and correct in
all material respects when made, and (ii) except to the extent
such representations and warranties by their terms are made
solely as of a prior date, continue to be true and correct in
all material respects on the date hereof.
(b) Authority, etc. The execution and delivery by the
Borrowers and Seminole of this Amendment and the Revolving
Credit Notes and the performance by the Borrowers and Seminole
of all of their agreements and obligations under this Amendment
and the Revolving Credit Notes are within the corporate
authority of each of the Borrowers and Seminole, have been duly
authorized by all necessary corporate action on the part of each
of the Borrowers and Seminole, and do not and will not (i)
contravene any provision of any Borrower's or Seminole's
charter, other incorporation papers, by-laws or any stock
provision, or any amendment thereof, (ii) conflict with, or
result in a breach of any material term, condition or provision
of, or constitute a default under or result in the creation of
any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property of any Borrower or Seminole
under any agreement, deed of trust, indenture, mortgage or other
instrument to which such Borrower or Seminole is a party or by
which any of such Borrower's or Seminole's properties are bound,
(iii) violate or contravene any provision of any law,
regulation, order, ruling or interpretation thereunder or any
decree, order or judgment of any court or governmental or
regulatory authority, bureau, agency or official, (iv) require
any waiver, consent or approval by any creditor of any Borrower
or Seminole which has not been obtained or (v) require any
approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to, any
governmental or regulatory authority or agency under any
provision of any law, except those actions which have been taken
or will be taken prior to the date of execution of this
Amendment.
(c) Enforceability of Obligations. This Amendment, the
Credit Agreement as amended hereby, the Revolving Credit Notes
delivered in connection herewith and the Loan Documents
constitute the legal, valid and binding obligations of the
Borrowers and Seminole enforceable against the Borrowers and
Seminole in accordance with their respective terms, provided
that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applications affecting the rights and remedies of
creditors, and (ii) the availability of the remedies of specific
performance and injunctive relief may be subject to the
discretion of the court before which any proceedings for such
remedies may be brought.
Section 5. Confirmation of Collateral Documents. Each
of the Borrowers and Seminole hereby ratify and confirm each of
the Collateral Documents and the pledges and security interests
created thereby. Each of the Borrower and Seminole hereby
further ratify and confirm that the Collateral Documents and the
pledges and security interest created thereby secure the
Obligations of the Borrowers and Seminole under the Credit
Agreement, as amended hereby, and the Revolving Credit Notes.
Section 6. Conditions to Effectiveness. The
effectiveness of this Amendment No. 4 shall be conditioned upon
receipt by the Agent of the following, in form and substance
satisfactory to the Banks:
(a) this Amendment No. 4, executed by the Borrowers,
Seminole, the Banks, the Agent, the Co-Agents and the FMCP L/C
Bank;
(b) Revolving Credit Notes, substantially in the form of
Exhibit A hereto, executed and delivered by the Borrowers and
Seminole and payable to the order of each of the Assignor Banks
and each of the Assignee Banks in the respective aggregate
principal amounts set forth under the caption "Commitment"
opposite each such Bank's name on Schedule 1.01(b) hereto;
(c) copies, certified by the Secretary of each of the
Borrowers and Seminole to be true and complete on the date of
execution of this Amendment, of the records of all actions taken
by each such Borrower and Seminole as may be required according
to the terms of each such Borrower's or Seminole's charter,
other incorporation documents and by-laws to authorize (i) the
execution and delivery of this Amendment and each of the
Revolving Credit Notes by each such Borrower and Seminole and
(ii) the performance by each such Borrower and Seminole of all
of its agreements and obligations under this Amendment and the
Credit Agreement as amended hereby;
(d) a certificate of the Secretary of each of the
Borrowers and Seminole (i) setting forth the names, incumbency
and specimen signatures of those officers of each of the
Borrowers and Seminole authorized to execute and deliver this
Amendment and the Revolving Credit Notes and (ii) with respect
to the Borrowers, stating that there have been no amendments to
the charter documents and by-laws of the Borrowers delivered to
the Agent and the Banks on April*8, 1993;
(e) an opinion of counsel to the Borrowers and Seminole in
form and substance satisfactory to the Agent; and
(f) fees, payable to the Agent for the account of each
Bank, in the amounts separately agreed to by the Borrowers as
set forth in a certain letter dated March*4, 1994.
Section 7. Certain Transitional Arrangements.
Section 7.1. Revolving Credit Loans. Effective as of the
date hereof, each Bank shall make such dispositions and
arrangements with each other Bank with respect to the then
outstanding Revolving Credit Loans (the "Loan Adjustment") as
shall result in the amount of Revolving Credit Loans owed to
each Bank being equal to the product of such Bank's Ratable
Portion multiplied by the aggregate Revolving Credit Loans
outstanding on the effective date hereof (the "Loan Adjusted
Amount"). Upon the occurrence of the Loan Adjustment, the Agent
shall amend each Loan Account to reflect such Bank's Loan
Adjusted Amount. The Ratable Portion of each Bank shall be
adjusted as at the effective date hereof and the Commitment Fee
payable for the period during which the Ratable Portion of each
Bank was adjusted pursuant hereto shall be allocated among the
Banks according to the daily Ratable Portion for each Bank for
each day during such period. In the event any of the Revolving
Credit Loans are Eurodollar Rate Loans, the Borrowers shall
reimburse the Banks for any and all fees, taxes, penalties or
other breakage costs incurred in connection with the Loan
Adjustment.
Section 7.2. Existing Credit Instruments. Effective as
of the date hereof, each Bank shall make such dispositions and
arrangements with each other Bank with respect to the
participations of the Banks in each Credit Instrument then
outstanding (the "Credit Instrument Adjustment") as shall result
in the participations held by each Bank in each such Credit
Instrument being equal to the product of such Bank's Ratable
Portion multiplied by the aggregate amount available for drawing
under such Credit Instrument on the date hereof (the "Credit
Instrument Adjusted Amount"). All commissions and fees payable
to the Banks in connection with such Credit Instruments for the
period during which the Ratable Portion of each Bank was
adjusted pursuant hereto shall be allocated among the Banks
according to the daily Ratable Portion for each Bank for each
day during such period.
Section 7.3. Return of Old Notes. Promptly after the
effective date of this Amendment*No. 4, the Assignor Banks will
return to the Agent the Revolving Credit Notes previously
delivered by the Borrowers and Seminole to the Assignor Banks
under the Credit Agreement which are superseded by the Revolving
Credit Notes delivered to the Assignor Banks pursuant to this
Amendment. Upon receipt of such superseded Revolving Credit
Notes from the Assignor Banks, the Agent shall return such
Revolving Credit Notes to the Borrowers and Seminole.
Section 8. Execution in Counterparts. This Amendment
may be executed in any number of counterparts, but all such
counterparts shall together constitute but one instrument. In
making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart signed by each
party hereto by and against which enforcement hereof is sought.
Section 9. Governing Law. This Amendment shall be
construed according to and governed by the laws of the
Commonwealth of Massachusetts.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as an agreement under seal as of
the date set forth at the beginning of this Amendment.
TOSCO CORPORATION
By:_________________________________
Title:
SEMINOLE FERTILIZER CORPORATION
By:___________________________________
Title:
BAYWAY REFINING COMPANY
By:____________________________________
Title:
THE FIRST NATIONAL BANK OF
BOSTON, individually and
as Agent
By:____________________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually and as Co-Agent
By:____________________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Co-Agent
By:____________________________________
Title:
ARAB BANKING CORPORATION
By:____________________________________
Title:
NATIONAL CITY BANK
By:____________________________________
Title:
THE FUJI BANK, LIMITED
By:____________________________________
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:____________________________________
Title:
BANK HAPOALIM B.M.
By:____________________________________
Title:
By:____________________________________
Title:
UNITED JERSEY BANK
By:____________________________________
Title:
THE YASUDA TRUST AND BANKING
CO., LTD.
By:____________________________________
Title:
THE SUMITOMO BANK, LIMITED
By:____________________________________
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By:____________________________________
Title:
THE SANWA BANK LIMITED
By:____________________________________
Title:
SEATTLE-FIRST NATIONAL BANK
By:____________________________________
Title:
UNION BANK
By:____________________________________
Title:
MIDLANTIC NATIONAL BANK
By:____________________________________
Title:
NATIONAL WESTMINSTER BANK PLC
By:____________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Title:
THE SAKURA BANK, LTD.
By:____________________________________
Title:
PNC BANK, NATIONAL ASSOCIATION
By:____________________________________
Title:
BANCA DI ROMA
By:____________________________________
Title:
INTERNATIONALE NEDERLANDEN
BANK, N.V., as FMCP L/C Bank
By:____________________________________
Title:
Exhibit 10(f)
AMENDMENT NO. 5
DATED AS OF AUGUST 16, 1994 TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 8, 1993
AMENDMENT No. 5 (the "Amendment") dated as of August ___,
1994 by and among TOSCO CORPORATION, a Nevada corporation
("Tosco"), BAYWAY REFINING COMPANY, a Delaware corporation
("Bayway"), and TOSCO EUROPE LIMITED, a limited liability
company organized under the laws of England and Wales ("TEL"),
as co-borrowers (collectively, the "Borrowers"), Seminole
Fertilizer Corporation, a Delaware corporation, ("Seminole"),
the financial institutions listed on Schedule 1.01(a) to the
Credit Agreement referred to below (the "Banks"), THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION) ("Chase"), as co-agent,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"),
as co-agent and co-arranger, and THE FIRST NATIONAL BANK OF
BOSTON ("FNBB"), as the FMCP L/C Bank, as agent (in that
capacity, the "Agent") for the Banks and as arranger.
Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement referred to below
shall have the same meaning herein as in the Credit Agreement,
as amended hereby.
W I T N E S S E T H:
WHEREAS, Tosco, Bayway, Seminole, the Banks, the Co-Agents,
the Agent and the FMCP L/C Bank are parties to that certain
Amended and Restated Credit Agreement dated as of April 8, 1993
(as amended, restated, modified or supplemented and in effect
from time to time, the "Credit Agreement");
WHEREAS, Tosco and Bayway have informed the Banks and the
Agent that Tosco has formed TEL as a wholly-owned subsidiary and
that Tosco and Bayway desire to add TEL as a Borrower under the
Credit Agreement and the Loan Documents; and
WHEREAS, the Borrowers and Seminole have requested that the
Agent and the Banks agree to amend the Credit Agreement (i) to
allow the Borrowers to enter into certain transactional lines of
credit with various banks and financial institutions and (ii) to
make certain other changes thereto;
NOW, THEREFORE, in consideration of the foregoing premises
the parties hereto hereby agree as follows:
Section 1. Amendment to Credit Agreement.
Section 1.1. TEL as a Borrower. The Credit Agreement is
hereby amended to provide that TEL is a "Borrower" thereunder
with all of the rights and obligations appurtenant thereto,
including, without limitation, joint and several liability for
the Obligations. The Credit Agreement is hereby amended mutatis
mutandis as appropriate to reflect the fact that TEL is a
"Borrower" thereunder. TEL hereby acknowledges and agrees that
upon the effectiveness of this Amendment it shall be jointly and
severally liable with Tosco, Bayway and Seminole for the payment
and performance of the Obligations upon the terms set forth in
the Credit Agreement, including, without limitation, the
provisions of Section 2.23 thereof.
Section 1.2. Certain Definitions. Section 1.01 of the
Credit Agreement is hereby amended by adding the following new
definitions in the appropriate place in the alphabetical
sequence:
"Canadian Security Documents" means (i) the General
Assignment of Book Debts, the Pledge Agreement and the Demand
Fixed and Floating Debenture, dated as of August 16, 1994,
between TEL and the Agent, (ii) the General Assignment of Book
Debts, the Pledge Agreement and the Demand Fixed and Floating
Debenture, dated as of August 16, 1994, between Bayway and the
Agent, and (iii) any other mortgage, pledge, charge or security
agreement executed and delivered, or filing made, in connection
with the granting, attachment and perfection of security
interests by either TEL or Bayway to the Agent, on behalf of the
Banks, on such Borrower's assets in Canada.
"TEL" means Tosco Europe Limited, a limited liability
company organized under the laws of the United Kingdom.
"TEL Advance" means any Borrowing that is supported by the
TEL Borrowing Base and is requested by Tosco for the purpose of
making intercompany loans to TEL.
"TEL Borrowing Base" means, at the relevant time of
determination, a Borrowing Base calculated as provided in the
definition thereof by reference to the assets and obligations of
TEL and the Paid but Unexpired Standby Letters of Credit issued
for the account of TEL, plus the Available Tosco Excess Amount
allocated thereto.
"TEL Overadvance Amount" means, at the relevant time of
determination, the amount by which (a) the aggregate amount of
TEL Revolving Credit Debt, exceeds (b) the TEL Borrowing Base.
"TEL Revolving Credit Debt" means at any time, (a) the
aggregate principal amount of all TEL Advances outstanding at
such time, plus (b) the aggregate principal amount of all
Borrowings at such time made pursuant to Article II and issued
for the account of or requested by TEL, including, without
limitation, (i) all such Borrowings in cash thereunder, (ii) the
aggregate principal amount of all such Letter of Credit
Reimbursement Obligations outstanding thereunder and (iii) the
aggregate principal amount of all such Acceptance Obligations
outstanding thereunder.
"U.K. Security Documents" means the Debenture, dated as of
August*16, 1994, between TEL and the Agent and any other
mortgage, pledge, charge or security agreement executed and
delivered, or filing made, in connection with the granting,
attachment and perfection of security interests by TEL to the
Agent, on behalf of the Banks, on its assets in the United
Kingdom.
Section 1.3. Agency Agreement. Section 1.01 of the
Credit Agreement is hereby further amended by deleting the
definition of "Agency Agreement" in its entirety and replacing
it with the following:
"Agency Agreement" means an agency agreement made in favor
of the Agent, as agent for the Banks, (a) substantially in the
form of Exhibit N-1 or Exhibit N-3 attached hereto, by any
financial institution in which any Borrower has deposited cash
or (b) substantially in the form of Exhibit N-2 attached hereto,
by each financial institution in which any Borrower has
deposited cash which, upon such deposit, shall become Eligible
Margin Deposits.
Section 1.4. Available Tosco Excess Amount. Section 1.01
of the Credit Agreement is hereby further amended by deleting
the definition of "Available Tosco Excess Amount" in its
entirety and replacing it with the following:
"Available Tosco Excess Amount" means that portion of the
Tosco Excess Amount allocated by the Borrowers to the Bayway
Borrowing Base or TEL Borrowing Base, as the case may be;
provided, that the sum of the Available Tosco Excess Amount
allocated to the Bayway Borrowing Base and the TEL Borrowing
Base, respectively, will not exceed the Tosco Excess Amount.
Section 1.5. Borrowing Base. Section 1.01 of the Credit
Agreement is hereby further amended by deleting the definition
of "Borrowing Base" in its entirety and replacing it with the
following:
"Borrowing Base" means, as to the Borrowers, at any given
time, the sum of the following amounts owned by or reflected on
the books of such Borrower at such time:
(a) 100% of its Eligible Cash and Eligible Cash Equivalents,
(b) 95% of its Eligible Investments,
(c) 90% of its Major Oil Company Receivables,
(d) 85% of the excess, if any, of its Eligible Receivables over
its Major Oil Company Receivables,
(e) the lesser of (i) 85% of its Eligible Margin Deposits, or
(ii) $50,000,000,
(f) 80% of its Eligible Petroleum Inventory,
(g) 80% of its Eligible Petroleum Inventory Under Contract, and
(h) 100% of its Paid but Unexpired Standby Letters of Credit.
Section 1.6. Collateral Documents. Section 1.01 of the
Credit Agreement is hereby further amended by deleting the
definition of "Collateral Documents" in its entirety and
replacing it with the following:
"Collateral Documents" means, collectively, the Pledge
Agreement, the Custody Agreement, the Security Agreement, the
Seminole/Ridgewood Pledge Agreement, the Agency Agreements, the
Canadian Security Documents, and the U.K. Security Documents.
Section 1.7. Eligible Exchange Balances. Section 1.01 of
the Credit Agreement is hereby further amended by deleting the
definition of "Eligible Exchange Balances" in its entirety and
replacing it with the following:
"Eligible Exchange Balances" means, to the extent not
otherwise included in the definition of Eligible Inventory or
Eligible Receivables, as to any Borrower and in respect of any
Class of Inventory, an amount equal to the difference between
(a) the value of any and all products within any Class of
Inventory which such Borrower is entitled to receive in
connection with Eligible Exchange Transactions, minus (b) the
value of any and all products within such Class of Inventory
which such Borrower is obligated to deliver in connection with
Eligible Exchange Transactions. If the amount set forth in
clause (b) above exceeds the amount set forth in clause (a)
above, Eligible Exchange Balances shall be expressed as a
negative number and if the amount set forth in clause (a) above
exceeds the amount set forth in clause (b) above, Eligible
Exchange Balances shall be expressed as a positive number. With
respect to each Eligible Exchange Transaction included in the
calculation of Eligible Exchange Balances, the value of the
product subject to such Eligible Exchange Transactions shall be
determined on a FIFO basis; after deducting therefrom (x) the
value of any product subject to any Eligible Exchange
Transaction for which performance has not been made on the date
that such performance is due, (y) the amount of all discounts,
allowances, rebates, credits and adjustments to such Eligible
Exchange Transaction and (z) the amount billed for or
representing retainage, if any, with respect to such Eligible
Exchange Transaction until all prerequisites to the immediate
payment of retainage have been satisfied.
Section 1.8. Restricted Investment. Section 1.01 of the
Credit Agreement is hereby further amended by amending the
definition of "Restricted Investment" by deleting clause (ix)
thereof and inserting the following:
(ix) investments in respect of intercompany loans made by
Tosco to Bayway or TEL in connection with Bayway Advances or TEL
Advances, respectively, hereunder.
Section 1.9. Restricted Payment. Section 1.01 of the
Credit Agreement is hereby further amended by deleting the
definition of "Restricted Payment" in its entirety and replacing
it with the following:
"Restricted Payment" means (a) the declaration of any
dividend on, or the making of or the incurrence of any liability
to make any other payment or distribution in cash or other
property or assets in respect of, any Stock of any Borrower
other than (i) one payable or paid solely in Stock of such
Borrower, and (ii) the payment of any dividends from Seminole,
Bayway or TEL to Tosco, or (b) any payment on account of the
purchase, redemption, retirement or other acquisition of any of
the Stock of any Borrower or any other payment or distribution
made in respect thereof, either directly or indirectly, except
solely in exchange for Stock of such Borrower.
Section 1.10. Revolving Credit Debt. Section 1.01 of the
Credit Agreement is hereby further amended by deleting the
definition of "Revolving Credit Debt" and replacing it with the
following:
"Revolving Credit Debt" means, at any time, the sum of the
Tosco Revolving Credit Debt, plus the TEL Revolving Credit Debt,
plus the Bayway Revolving Credit Debt outstanding at such time.
Section 1.11. Tosco Revolving Credit Debt. Section 1.01
of the Credit Agreement is hereby further amended by deleting
the definition of "Tosco Revolving Credit Debt" and replacing it
with the following:
"Tosco Revolving Credit Debt means at any time, (a) the
aggregate principal amount of all Borrowings at such time made
pursuant to Article II and issued for the account of or
requested by Tosco, including, without limitation, (i)*all such
Borrowings in cash thereunder, (ii) the aggregate principal
amount of all such Letter of Credit Reimbursement Obligations
outstanding thereunder and (iii)*the aggregate principal amount
of all such Acceptance Obligations outstanding thereunder, but
not including (b)*the aggregate principal amount of Bayway
Advances and TEL Advances outstanding at such time."
Section 1.12. Loans. Section 2.01(b) of the Credit
Agreement is hereby deleted in its entirety and replaced with
the following:
(b) Commencing on the Closing Date through and including
the Maturity Date, the Borrowers may use the Commitments by (i)
borrowing and prepaying Loans, in whole or in part, and
reborrowing, (ii) causing Letters of Credit to be issued, and
(iii) causing Acceptances to be created, all in accordance with
the provisions of this Agreement. In no event shall the
Revolving Credit Debt at any time exceed the Credit Limit,
determined as of such time, nor shall any Tosco Overadvance
Amount, Bayway Overadvance Amount or TEL Overadvance Amount
result as a consequence of any Borrowing hereunder. If on any
date (x) the Revolving Credit Debt exceeds the Credit Limit, for
whatever reason, or (y) a Tosco Overadvance Amount, Bayway
Overadvance Amount or TEL Overadvance Amount exists, the
Borrowers shall (i) reduce the Revolving Credit Debt to an
amount less than or equal to the Credit Limit, (ii) in the case
of any Tosco Overadvance Amount, reduce the aggregate Tosco
Revolving Credit Debt to an amount less than or equal to the
Tosco Borrowing Base, (iii) in the case of any Bayway
Overadvance Amount, reduce the aggregate Bayway Revolving Credit
Debt to an amount less than or equal to the Bayway Borrowing
Base, and (iv) in the case of any TEL Overadvance Amount, reduce
the aggregate TEL Revolving Credit Debt to an amount less than
or equal to the TEL Borrowing Base, by: (A) depositing
Qualifying Investments and/or Cash Equivalents into the Custody
Account; and/or (B) repaying amounts outstanding under the
Notes, together with all accrued and unpaid interest,
commissions and fees with respect thereto to such date; and/or
(C) causing Letters of Credit and/or Acceptances to be cancelled
and delivering to the Agent the originals of all such Letters of
Credit and/or Acceptances marked "cancelled" by the respective
beneficiaries thereof, or depositing with the Agent for the
benefit of the Banks and the Agent or in the case of FMCP L/C's,
the FMCP L/C Bank, as applicable, at once and in full, all sums
sufficient to reimburse the Agent or the FMCP L/C Bank for all
payments, present or future, contingent or otherwise, that may
be required to be made by the Agent or the FMCP L/C Bank or the
Banks on account of any Letter of Credit or Acceptance, and such
sums shall be deposited (I) in an interest-bearing cash
collateral account maintained by the Agent, to be held by the
Agent and applied thereby in reduction of any Obligations
arising out of any Application, Letter of Credit (other than any
FMCP L/C) and/or Acceptance and (II) in a separate
interest-bearing cash collateral account maintained by the
Agent, to be held by the Agent and applied thereby in reduction
of Obligations arising out of any FMCP L/C; provided, however,
that, in the case of any Tosco Overadvance Amount, Bayway
Overadvance Amount or TEL Overadvance Amount, all such amounts
deposited or repaid shall be applied only to the extent
necessary to reduce such Tosco Overadvance Amount, Bayway
Overadvance Amount or TEL Overadvance Amount, as applicable.
Section 1.13. Notice and Method of Borrowing. Section
2.02(a)(v) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(v) if such proposed Borrowing is requested by Tosco,
whether such Borrowing (A) shall be supported by the Tosco
Borrowing Base and issued for Tosco's own account, or (B) shall
be a Bayway Advance or (C) shall be a TEL Advance.
Section 1.14. Use of Proceeds. Section 2.03(a) of the
Credit Agreement is hereby deleted in its entirety and replaced
with the following:
(a) Loans, Letters of Credit and Acceptances. Except as
provided in Section 2.03(b) hereof, (i) Tosco shall use the
proceeds of (A) all TEL Advances solely to provide intercompany
loans to TEL, (B) all Bayway Advances solely to provide
intercompany loans to Bayway, and (C) all Tosco Revolving Credit
Debt solely (I) to repay in full amounts owing to the
Withdrawing Banks and to ING Bank as co-agent under the Existing
Tosco Credit Agreement in accordance with Sections 3.01 and
11.01 hereof, (II) to provide working capital in the ordinary
course of its business, including, without limitation, to fund
receivables and the purchases of Inventory, (III) to provide
security in connection with its performance and bonding
requirements, in the case of each of clauses (i)(C)(I) and (II)
hereof, in replacement of and in order to refinance the
outstanding Indebtedness under the Existing Tosco Credit
Agreement, or (IV) to fund investments in or capital
contributions to Bayway in order to finance the acquisition of
the Bayway Refinery to the extent permitted by this Agreement,
(ii) Bayway shall use the proceeds of all Bayway Revolving
Credit Debt solely (A) to provide working capital in the
ordinary course of its business, including, without limitation,
to fund receivables and the purchases of Inventory, or (B) to
provide security in connection with its performance and bonding
requirements, and (iii) TEL shall use the proceeds of all TEL
Revolving Credit Debt solely (A) to provide working capital in
the ordinary course of its business, including, without
limitation, to fund receivables and the purchases of Inventory,
or (B) to provide security in connection with its performance
and bonding requirements.
Section 1.15. Letters of Credit. Section 2.04(a)(ii) of
the Credit Agreement is hereby amended by deleting from the
ninth and tenth line thereof the words "if such Borrower is
Tosco or Bayway".
Section 1.16. Letter of Credit and FMCP L/C Commissions
and Fees. Section 2.07(b) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
(b) All such fees specified in Section 2.07(a)(i) through
(iii) inclusive hereof shall be calculated as follows: (i) with
respect to Standby Letters of Credit, including, without
limitation, FMCP L/C's, such fees shall be calculated based on
the maximum drawing amount thereunder during the period
commencing on the date of issuance through the expiry date
thereof (calculated on the basis of a 360-day year for the
actual number of days elapsed) and shall be payable in arrears
within seven (7) Business Days after the end of each month
during which or any part of which such Standby Letter of Credit
or FMCP L/C, as the case may be, is outstanding and (ii) with
respect to any Documentary Letter of Credit, such fees shall be
calculated based on the maximum drawing amount thereunder during
the period commencing on the date of issuance through the date
of negotiation or cancellation thereof (calculated on the basis
of a 360-day year for the actual number of days elapsed) and
shall be payable in arrears within seven (7) Business Days after
the end of each month during which or any part of which such
Documentary Letter of Credit is outstanding. No later than one
(1) Business Day after receipt of such monthly payment, the
Agent shall pay to each Bank such Bank's Ratable Portion of all
Letter of Credit fees referred to in Section 2.07(a)(i) through
(iii) which are received. Notwithstanding any provision
contained herein to the contrary, no fees, commissions or other
amounts paid as of or prior to the Closing Date in respect of
the FMCP L/C existing as of the Closing Date shall be repaid or
credited against any amounts otherwise payable pursuant to this
Section 2.07.
Section 1.17. Commitment Fee. Section 2.09(a) of the
Credit Agreement is hereby deleted in its entirety and replaced
with the following:
(a) Commitment Fee. The Borrowers jointly and severally
agree to pay to the Agent, on behalf of each Bank, a commitment
fee (the "Commitment Fee") for the period commencing on the date
of the Borrowers' acceptance of such Bank's Commitment, as such
date is set forth on Schedule 1.01(b) hereto, through and
including the Maturity Date, or such earlier date upon which the
Borrowers shall terminate the Commitments, in an amount equal to
such Bank's Ratable Portion of 3/8 of 1% per annum of the amount
by which the Commitments exceed the aggregate Revolving Credit
Debt outstanding. The Commitment Fees shall be payable in
arrears to the Agent, on behalf of each Bank, in cash on the
Closing Date and, thereafter, monthly in arrears within seven
(7) Business Days after the end of each month, commencing on the
first of such days to occur after the Closing Date, and on the
date upon which the Commitments shall terminate. No later than
one (1) Business Day after receipt of such monthly payment, the
Agent shall pay to each Bank such Bank's Ratable Portion of all
Commitment Fees referred to in this Section 2.09(a) which are
received.
Section 1.18. Optional Prepayments of Loans. Section 2.11
of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
2.11.**Optional Prepayments of Loans. The Borrowers may
prepay the Notes, in whole or in part, without premium or
penalty, upon prior written, telex or telegraphic notice
(effective upon receipt) to the Agent, to be received by the
Agent not later than 4:00*p.m. Boston, Massachusetts time at
least (i) two Business Days', with respect to Base Rate Loans,
and (ii) three Business Days', with respect to Eurodollar Rate
Loans, preceding the date of the prepayment (whereupon the Agent
shall promptly notify the Banks) specifying the date and the
amount of such prepayment; provided, however, that any
prepayment of the Loans while such Loans bear interest at a rate
determined with respect to the Eurodollar Rate shall be made on,
and only on, the last day of the relevant Interest Period
applicable thereto. On the date of any such prepayment of
Eurodollar Loans, the Borrowers shall pay accrued interest to
the date of such prepayment on the principal amount so prepaid.
On the date of any such prepayment of Base Rate Loans, the
Borrowers shall pay accrued interest on the principal amount of
any Base Rate Loan so prepaid as provided in Section 2.13(a)
hereof, unless such prepayment is a prepayment in full of all
Loans outstanding, in which case the Borrowers shall pay, on the
date of such prepayment, accrued interest to the date of such
prepayment on the principal amount of all Loans, including,
without limitation, Base Rate Loans, so prepaid. Partial
prepayments hereunder shall be in the principal amount of
$1,000,000 or any integral multiple in excess thereof (unless
the outstanding principal amount of such Loans is less than
$1,000,000, in which case the prepayment shall be in the full
amount of such outstanding amount). The Borrowers shall have no
right to prepay the principal amount of the Loans other than as
provided in this Section 2.11.
Section 1.19. Interest. Section 2.13(a) of the Credit
Agreement is hereby deleted in its entirety and replaced with
the following:
(a) Base Rate Election. Unless the Borrowers shall have
validly and effectively elected to have Loans made or continued
as Eurodollar Rate Loans pursuant to the provisions of this
Agreement, at a rate per annum at all times equal to the Base
Rate plus the Applicable Margin in effect from time to time,
payable monthly in arrears on the first day of each month, and
on the Maturity Date.
Section 1.20. Interest. Section 2.18(a) of the Credit
Agreement is hereby amended by adding the following sentence to
the end thereof:
Notwithstanding any term or provision of this Agreement to the
contrary, the Agent shall have no obligation under any
circumstances to pay any Bank such Bank's Ratable Portions of
any amounts due and payable under this Agreement, including,
without limitation, principal, interest, fees, commissions and
any other amounts (collectively, "Payments"), unless and until
such time as the Agent shall have received immediately available
funds from the Borrowers in an amount equal to such Payments.
Section 1.21. Taxes. Section 2.20(a) of the Credit
Agreement is hereby deleted in its entirety and replaced with
the following:
(a) Any and all payments by the Borrowers hereunder or
under the Notes or in respect of Letters of Credit including,
without limitation, FMCP L/C's shall be made, in accordance with
Sections 2.09, 2.10, 2.11, 2.13 and 2.17, free and clear of and
without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto imposed on it by any
jurisdiction, including, without limitation, the United States
of America, Canada and the United Kingdom of Great Britain and
Northern Ireland (excluding, in the case of each Bank, the FMCP
L/C Bank and the Agent, (x) taxes imposed on its income by the
jurisdiction under the laws of which such Bank, the FMCP L/C
Bank or the Agent (as the case may be) is organized or any
political subdivision thereof, (y) franchise taxes measured by
income imposed on it by the jurisdiction under the laws of which
such Bank, the FMCP L/C Bank or the Agent (as the case may be)
is organized or any political subdivision thereof and, (z) if
such Bank, the FMCP L/C Bank or the Agent is entitled at such
time to a total or partial exemption from withholding that is
required to be evidenced by a United States Internal Revenue
Service Form 1001 or 4224 or any successor or additional form,
taxes imposed on it by reason of any failure of such Bank, the
FMCP L/C Bank or the Agent to deliver to the Agent or the
Borrowers, from time to time as required by the Agent or the
Borrowers, such Form 1001 or 4224 (as applicable) or any
successor or additional form, completed in a manner reasonably
satisfactory to the Agent or the Borrowers; all such
non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrowers shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or
under any Note to any Bank, the FMCP L/C Bank or the Agent, (i)
the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.20)
such Bank, the FMCP L/C Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrowers shall make such
deductions, and (iii) the Borrowers shall pay the full amount
deducted to the relevant taxing authority or other authority in
accordance with applicable law.
Section 1.22. Capitalization. Section 4.05 of the Credit
Agreement is hereby amended by adding the following new
subsection (f) after existing subsection (e):
(f) The authorized capitalization of TEL, as of the date
hereof, consists of 100 shares of common stock, of which 2
shares of common stock are issued and outstanding. All of such
issued and outstanding shares are owned beneficially and of
record by Tosco, free and clear of all Liens and encumbrances.
Section 1.23. Financial Matters. Section 4.11(b) of the
Credit Agreement is hereby deleted in its entirety and replaced
with the following:
(b) (i) The Company is Solvent and shall remain Solvent
immediately following the Borrowings to be made by the Borrowers
and the application by the Borrowers of the proceeds of such
Borrowings in accordance with Section 2.03 of this Agreement,
and (ii) immediately following the Borrowings of such Borrower's
Revolving Credit Debt and the application by such Borrower of
the proceeds thereof in accordance with Section 2.03 hereof, (A)
Bayway is Solvent and shall remain Solvent as determined after
excluding from Bayway's liabilities that portion of the
Obligations in excess of the Bayway Revolving Credit Debt, and
(B) TEL is Solvent and shall remain Solvent as determined after
excluding from TEL's liabilities that portion of the Obligations
in excess of the of TEL Revolving Credit Debt.
Section 1.24. Reports. Section 5.04(b) of the Credit
Agreement is hereby deleted in its entirety and replaced with
the following:
(b) (i) On the Closing Date and, subject to Section
5.04(b)(ii) below, prior to the close of business on the
fifteenth day (or, if the fifteenth day is not a Business Day,
the first Business Day thereafter) and on the last Business Day
of each month thereafter, including the month in which the
Closing Date occurs, a report (the "Borrowing Base Report")
substantially in the form of Exhibit*L hereto, signed by the
Chief Financial Officers of each of the Borrowers, setting
forth, on an itemized basis, the Tosco Borrowing Base, the
Bayway Borrowing Base and the TEL Borrowing Base as of the close
of business on the fifth preceding Business Day and the
Borrowing Base computations based thereon, as well as
certifications by the Chief Financial Officers of each of the
Borrowers that from the date of the most recent Borrowing Base
Report previously delivered to the date of the new Borrowing
Base Report being delivered with such certification, no Default
or Event of Default has occurred. Each Borrowing Base Report
shall become effective upon the Agent's receipt thereof and
shall remain in effect until the earlier of (A) the receipt by
the Agent of the next Borrowing Base Report to be delivered
hereunder, and (B) the close of business on the date on which
the next Borrowing Base Report is required to be delivered
hereunder.
(ii) Notwithstanding any provision of Section 5.04(b)(i) to
the contrary, if (A) the Tosco Borrowing Base, as set forth in
any Borrowing Base Report, is equal to or greater than 125% of
the Tosco Revolving Credit Debt outstanding on such date, (B)
the TEL Borrowing Base, as set forth in such Borrowing Base
Report, is equal to or greater than 125% of the TEL Revolving
Credit Debt outstanding on such date, and (C) the Bayway
Borrowing Base, as set forth in such Borrowing Base Report, is
equal to or greater than 125% of the Bayway Revolving Credit
Debt outstanding on such date, then, unless any Borrower has
reason to believe that the subsequent Borrowing Base Report
otherwise required to be delivered pursuant to this Section
5.04(b) would show that (I) the Tosco Borrowing Base would be
less than 125% of the Tosco Revolving Credit Debt outstanding on
such date, or (II) the TEL Borrowing Base would be less than
125% of the TEL Revolving Credit Debt outstanding on such date,
or (III) the Bayway Borrowing Base would be less than 125% of
the Bayway Revolving Credit Debt outstanding on such date, the
Borrowers shall be required to deliver a Borrowing Base Report
to the Agent only once per month, on the last Business Day of
such month.
Section 1.25. Material Change in Business. Section 5.11
of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
5.11.**Material Change in Business. Tosco's primary
business shall continue to be petroleum refining, distribution,
wholesale and retail marketing and related businesses (other
than oil and gas exploration, natural gas marketing and
petroleum trading which does not support the primary refining ,
distribution and marketing business). Tosco shall notify the
Agent promptly (and in any event by no later than the next
Business Day) upon (i) any termination of the ARCO Exchange
Agreement or any failure of the ARCO Exchange Agreement to be in
full force and effect and (ii) any termination of the Exxon
Supply Agreement or any failure of the Exxon Supply Agreement to
be in full force and effect. Bayway's primary business shall be
petroleum refining, distribution, wholesale and retail marketing
and related businesses (other than oil and gas exploration,
natural gas marketing and petroleum trading which does not
support the primary refining, distribution and marketing
business). TEL's primary business shall be the purchase and
sale of petroleum products as required to support the primary
businesses of Tosco and Bayway described in this Section 5.11;
provided, however, that in no event shall TEL engage in (i)
petroleum trading which does not support the primary refining,
distribution and marketing businesses of Tosco and Bayway, (ii)
oil and gas exploration or (iii) natural gas marketing.
Section 1.26. Application of Proceeds. Section 5.13 of
the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
5.13.**Application of Proceeds. Bayway shall apply the
proceeds of all Bayway Advances, TEL shall apply the proceeds of
all TEL Advances and each Borrower shall apply the proceeds of
all Borrowings made by it in accordance with Section 2.03.
Section 1.27. Limitations on Indebtedness. Section
7.01(a) of the Credit Agreement is hereby amended as follows:
(a) by deleting subparagraph (iv) thereof in its entirety
and replacing it with the following:
(iv) intercompany loans by Tosco to Bayway in respect of
Bayway Advances or by Tosco to TEL in respect of TEL Advances in
accordance with Section 2.03 hereof;
(b) by deleting the word "and" from the end of subsection
(viii) thereof; (c) by deleting the period at the end of
subsection (ix) thereof and inserting the words "; and"; and (d)
by inserting after existing subsection (ix) the following new
subsection (x):
(x) Indebtedness of the Borrowers, in an aggregate amount
not to exceed $50,000,000 outstanding at any one time, in
respect of transactional lines of credit created for the purpose
of financing specific cargoes of Petroleum Inventory or
receivables related to specific cargoes of Petroleum Inventory;
provided that (i) any such Indebtedness is secured only by the
cargo of Petroleum Inventory financed thereby or the receivable
relating thereto, (ii) such Petroleum Inventory or receivable is
not included in any Borrowing Base, and (iii) the Borrowers
shall have provided, prior to or simultaneously with the
incurrence of any such Indebtedness, written notice to the Agent
and the Banks describing such Indebtedness in sufficient detail
to accurately and completely identify such Indebtedness and the
cargo of Petroleum Inventory or receivable relating thereto.
Section 1.28. Limitations on Liens. Section 7.02 of the
Credit Agreement is hereby amended (a) by deleting the word "or"
from the end of subsection (m) thereof, (b) by deleting the
period at the end of subsection (n) thereof and inserting a
semi-colon, and (c) by inserting after existing subsection (n)
the following new subsections (o) and (p):
(o) on tangible fixed assets (as defined by GAAP) of the
Company to secure the obligations of any Borrower owed to a Bank
and arising in connection with interest rate protection
arrangements entered into by such Borrower with such Bank,
including, without limitation, interest rate swaps, caps,
collars and floors; provided, however, that (i) the aggregate
book value of such tangible fixed assets shall not exceed
$50,000,000 and (ii) such tangible fixed assets shall not be
Collateral; or
(p) created to secure Indebtedness permitted by Section
7.01(a)(x) on those specific cargoes of Petroleum Inventory
financed with such Indebtedness and on accounts receivable
arising in connection therewith.
Section 1.29. Limitations on Restricted Payments, Etc.
Section 7.03 of the Credit Agreement is hereby amended by
inserting in the twelfth line thereof, after the words "Cargill
Fertilizer, Inc.", the words "(or any assignee of Cargill
Fertilizer, Inc.)".
Section 1.30. Transactions with Affiliates. Section 7.12
of the Credit Agreement is hereby amended by deleting the last
three words thereof and replacing them with the words "Tosco,
Bayway and TEL".
Section 1.31. Events of Default. Section 8.01(a) of the
Credit Agreement is hereby amended by (a) deleting the word "or"
from the end of subsection (x) thereof, (b) by deleting the
semi-colon from the end of subsection (xi) thereof and replacing
it with the words "; or" and (c) by inserting the following new
subsection (xii) after existing subsection (xi):
(xii) Tosco shall cease to own beneficially and of
record 100% of the issued and outstanding Stock of TEL;
Section 1.32. Amendments and Waivers. Section 10.01(b) of
the Credit Agreement is hereby amended by deleting clause (v)
thereof in its entirety and replacing it with the following:
(v) amend or modify the definition of "Borrowing Base", "Tosco
Borrowing Base", "Bayway Borrowing Base" or "TEL Borrowing
Base", in each case without the written consent of all the
Banks,
Section 1.33. Schedules and Exhibits.
(a) Schedule 4.01(b) of the Credit Agreement is hereby
deleted in its entirety and replaced with Schedule 4.01(b)
hereto.
(b) Exhibit D-1 to the Credit Agreement is hereby deleted
in its entirety and replaced with Exhibit D-1 hereto.
(c) Exhibit L to the Credit Agreement is hereby deleted in
its entirety and replaced with Exhibit L hereto.
(d) Exhibit N-3 hereto is hereby added to the Credit
Agreement and made a part thereof.
Section 2. Scope of Amendment. Except as specifically
amended by this Amendment, the Credit Agreement shall remain in
full force and effect.
Section 3. Representations and Warranties. The
Borrowers and Seminole hereby jointly and severally represent
and warrant to the Banks, the Agent and the FMCP L/C Bank as
follows:
(a) Representations and Warranties in Credit Agreement.
The representations and warranties of the Borrowers and Seminole
contained in the Credit Agreement (i) were true and correct in
all material respects when made, and (ii) except to the extent
such representations and warranties by their terms are made
solely as of a prior date, continue to be true and correct in
all material respects on the date hereof.
(b) Authority, etc. The execution and delivery by the
Borrowers and Seminole of this Amendment and the performance by
the Borrowers and Seminole of all of their agreements and
obligations under this Amendment are within the corporate
authority of each of the Borrowers and Seminole, have been duly
authorized by all necessary corporate action on the part of each
of the Borrowers and Seminole, and do not and will not (i)
contravene any provision of any Borrower's or Seminole's
charter, other incorporation papers, by-laws or any stock
provision, or any amendment thereof, (ii) conflict with, or
result in a breach of any material term, condition or provision
of, or constitute a default under or result in the creation of
any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property of any Borrower or Seminole
under any agreement, deed of trust, indenture, mortgage or other
instrument to which such Borrower or Seminole is a party or by
which any of such Borrower's or Seminole's properties are bound,
(iii) violate or contravene any provision of any law,
regulation, order, ruling or interpretation thereunder or any
decree, order or judgment of any court or governmental or
regulatory authority, bureau, agency or official, (iv) require
any waiver, consent or approval by any creditor of any Borrower
or Seminole which has not been obtained or (v) require any
approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to, any
governmental or regulatory authority or agency under any
provision of any law, except those actions which have been taken
or will be taken prior to the date of execution of this
Amendment.
(c) Enforceability of Obligations. This Amendment, the
Credit Agreement as amended hereby, and the Loan Documents
constitute the legal, valid and binding obligations of the
Borrowers and Seminole enforceable against the Borrowers and
Seminole in accordance with their respective terms, provided
that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applications affecting the rights and remedies of
creditors, and (ii) the availability of the remedies of specific
performance and injunctive relief may be subject to the
discretion of the court before which any proceedings for such
remedies may be brought.
(d) No Default or Event of Default. No Default or Event
of Default has occurred or is continuing and the effectiveness
of this Amendment will not cause any such Default or Event of
Default to occur.
(e) Address of TEL. The chief executive office of TEL,
its principal place of business and the address to which notices
to TEL under the Credit Agreement should be sent is as follows:
Tosco Europe Limited
Sceptre Court, Number 40
Tower Hill
London EC3 N4BB England
with a copy to
Tosco Europe Limited
c/o Bayway Refining Company
1400 Park Avenue
Linden, NJ 07036 U.S.A.
(f) Canadian Taxes of the Borrowers. The Borrowers have
no employees within Canada and have no obligation to pay any
taxes, imposts or fees, or file returns, to or in connection
with (i) the Provincial Tax Commission for the Health Services
Tax for Nova Scotia, (ii) the Workers' Compensation Board of
Nova Scotia for premiums for workers' compensation, (iii) the
Department of Labour (Province of Nova Scotia) for unpaid
vacation pay, or (iv) Revenue Canada for withholdings pursuant
to the Income Tax Act of Canada, the Unemployment Insurance Act
of Canada and the Canada Pension Plan Act.
Section 4. Confirmation of Collateral Documents. Each
of the Borrowers and Seminole hereby ratify and confirm each of
the Collateral Documents and the pledges and security interests
created thereby. Each of the Borrowers and Seminole hereby
further ratify and confirm that the Collateral Documents and the
pledges and security interest created thereby secure the
Obligations of the Borrowers and Seminole under the Credit
Agreement, as amended hereby.
Section 5. Conditions to Effectiveness. The
effectiveness of this Amendment No. 5 shall be conditioned upon
receipt by the Agent of the following, in form and substance
satisfactory to the Banks:
(a) this Amendment No. 5, executed by the Borrowers,
Seminole, the Banks, the Agent, the Co-Agents and the FMCP L/C
Bank;
(b) Revolving Credit Notes, substantially in the form of
Exhibit D-1 hereto, executed and delivered by the Borrowers and
Seminole and payable to the order of each of the Banks in the
respective aggregate principal amounts set forth under the
caption "Commitment" opposite each such Bank's name on Schedule
1.01(b) to the Credit Agreement;
(c) an amendment to the Security Agreement executed by the
Borrowers, Seminole and the Agent in form and substance
satisfactory to the Agent;
(d) an amendment to the Custody Agreement executed by the
Borrowers, Seminole and the Agent in form and substance
satisfactory to the Agent;
(e) an Agency Agreement substantially in the form of
Exhibit N-3 hereto executed by TEL and the other parties
thereto;
(f) each of the U.K. Security Documents executed by the
TEL and the Agent;
(g) each of the Canadian Security Documents executed by
TEL, Bayway and the Agent;
(h) a perfection certificate executed by TEL and Bayway in
form and substance satisfactory to the Agent;
(i) all financing statements, registrations, instruments
or other documents necessary to perfect the security interests
of the Banks created by the Collateral Documents executed by the
Borrowers and duly recorded with the proper authorities;
(j) copies, certified by the Secretary (or comparable
officer) of each of the Borrowers and Seminole to be true and
complete on the date of execution of this Amendment, of the
records of all actions taken by each such Borrower and Seminole
as may be required according to the terms of each such
Borrower's or Seminole's charter, other incorporation documents
and by-laws to authorize (i) the execution and delivery of this
Amendment, each of the Revolving Credit Notes, and each other
document and instrument to be executed and delivered in
connection herewith and (ii) the performance by each such
Borrower and Seminole of all of its agreements and obligations
under this Amendment and the Credit Agreement, as amended
hereby;
(k) a certificate of the Secretary (or comparable officer)
of each of the Borrowers and Seminole (i) setting forth the
names, incumbency and specimen signatures of those officers of
each of the Borrowers and Seminole authorized to execute and
deliver this Amendment, each of the Revolving Credit Notes, and
each other document and instrument to be executed and delivered
in connection herewith and (ii) setting forth the charter
documents and bylaws of each of the Borrowers and Seminole, or,
with respect to the Tosco, Bayway and Seminole, stating that
there have been no amendments to the charter documents and
by-laws of each such Person delivered to the Agent and the Banks
on April*8, 1993;
(l) a certificate of the Secretary of State (or comparable
officer) of the jurisdiction of organization of each of the
Borrowers and Seminole as to each such Person's legal existence
and corporate good standing;
(m) an opinion of United States counsel to the Borrowers
and Seminole in form and substance satisfactory to the Agent;
(n) an opinion of TEL's counsel in the United Kingdom in
form and substance satisfactory to the Agent;
(o) an opinion of the Borrowers' counsel in Canada in form
and substance satisfactory to the Agent; and
(p) any other agreement, document, instrument or financing
statement the Agent may, in its sole discretion, reasonably
require.
Section 6. Execution in Counterparts. This Amendment
may be executed in any number of counterparts, but all such
counterparts shall together constitute but one instrument. In
making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart signed by each
party hereto by and against which enforcement hereof is sought.
Section 7. Governing Law. This Amendment shall be
construed according to and governed by the laws of the
Commonwealth of Massachusetts.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as an agreement under seal as of
the date set forth at the beginning of this Amendment.
TOSCO CORPORATION
By:__________________________________
Title:
BAYWAY REFINING COMPANY
By:___________________________________
Title:
TOSCO EUROPE LIMITED
By:____________________________________
Title:
SEMINOLE FERTILIZER CORPORATION
By:___________________________________
Title:
THE FIRST NATIONAL BANK OF
BOSTON, individually, as FMCP L/C Bank
and as Agent
By:____________________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually and as Co-Agent
By:____________________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Co-Agent
By:____________________________________
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:____________________________________
Title:
THE FUJI BANK, LIMITED
By:____________________________________
Title:
ARAB BANKING CORPORATION
By:____________________________________
Title:
NATIONAL CITY BANK
By:____________________________________
Title:
BANK HAPOALIM B.M.
By:____________________________________
Title:
By:____________________________________
Title:
UNITED JERSEY BANK
By:____________________________________
Title:
THE YASUDA TRUST AND BANKING
CO., LTD.
By:____________________________________
Title:
THE SUMITOMO BANK, LIMITED
By:____________________________________
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By:____________________________________
Title:
THE SANWA BANK LIMITED
By:____________________________________
Title:
SEATTLE-FIRST NATIONAL BANK
By:____________________________________
Title:
UNION BANK
By:____________________________________
Title:
MIDLANTIC NATIONAL BANK
By:____________________________________
Title:
NATIONAL WESTMINSTER BANK PLC
By:____________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Title:
THE SAKURA BANK, LTD.
By:____________________________________
Title:
PNC BANK, NATIONAL ASSOCIATION
By:____________________________________
Title:
BANCA DI ROMA
By:____________________________________
Title:
By:____________________________________
Title:
Exhibit 10(g)
AMENDMENT NO. 6
DATED AS OF DECEMBER 28, 1994 TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 8, 1993
AMENDMENT No. 6 (the "Amendment") dated as of December 28,
1994 by and among TOSCO CORPORATION, a Nevada corporation
("Tosco"), BAYWAY REFINING COMPANY, a Delaware corporation
("Bayway"), and TOSCO EUROPE LIMITED, a limited liability
company organized under the laws of England and Wales ("TEL"),
as co-borrowers (collectively, the "Borrowers"), the financial
institutions listed on Schedule 1.01(a) to the Credit Agreement
referred to below (the "Banks"), THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION) ("Chase"), as co-agent, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as co-agent and
co-arranger, and THE FIRST NATIONAL BANK OF BOSTON ("FNBB"), as
the FMCP L/C Bank, as agent (in that capacity, the "Agent") for
the Banks and as arranger.
Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement referred to below
shall have the same meaning herein as in the Credit Agreement,
as amended hereby.
W I T N E S S E T H:
WHEREAS, Tosco, Bayway, Seminole Fertilizer Corporation,
the Banks, the Co-Agents, the Agent and the FMCP L/C Bank are
parties to that certain Amended and Restated Credit Agreement
dated as of April 8, 1993 (as amended, restated, modified or
supplemented and in effect from time to time, the "Credit
Agreement");
WHEREAS, Tosco and Bayway have informed the Banks and the
Agent that Tosco has formed Tosco Processing & Marketing, Inc.
("TPMI") as a wholly-owned subsidiary of Tosco and that Tosco
desires to transfer to TPMI all of the stock that Tosco owns of
record in Bayway which constitutes all of the issued and
outstanding capital stock of Bayway; and
WHEREAS, the Borrowers have requested that the Agent and
the Banks agree to amend the Credit Agreement to permit Tosco to
transfer to TPMI the stock of Bayway and to make certain other
changes;
NOW, THEREFORE, in consideration of the foregoing premises
the parties hereto hereby agree as follows:
Section 1. Amendment to Credit Agreement.
Section 1.1. Restricted Subsidiary. Section 1.01 of the
Credit Agreement is hereby amended by deleting the definition of
"Restricted Subsidiary" in its entirety and replacing it with
the following:
"Restricted Subsidiary" means, (i) Diablo Service
Corporation, a California corporation (ii) Western Hemisphere
Corporation, a Delaware corporation, (iii) Tosco International
Finance N.V., a Netherlands Antilles corporation and (iv) Tosco
Processing & Marketing, Inc., a Delaware corporation.
Section 1.2. Limitations on Liens. Section 7.02 of the
Credit Agreement is hereby amended by deleting subsection (k)
thereof in its entirety and replacing it with the following:
(k) on the Stock of Bayway; provided that Tosco shall be the
record and beneficial owner of not less than 100% of the issued
and outstanding voting Stock of TPMI, free and clear of all
Liens, at all times while TPMI owns any Stock of Bayway and
further provided that Tosco and TPMI, in aggregate, shall be the
record and beneficial owner of not less than 51% of the issued
and outstanding voting Stock of Bayway, free and clear of all
Liens;
Section 1.3. Events of Default. Section 8.01(a) of the
Credit Agreement is hereby amended as follows:
(a) by deleting subsection (xi) thereof in its entirety and
replacing it with the following:
(xi) (A) Tosco shall cease to own beneficially and of
record 100% of the issued and outstanding Stock of TPMI at any
time while TPMI holds any Stock of Bayway or (B) TPMI and Tosco,
in aggregate, shall cease to own beneficially and of record at
least 51% (or such greater amount as is required to elect a
majority of the members of the Board of Directors of Bayway) of
the issued and outstanding voting Stock of Bayway.
(b) by inserting the following subsection (xiii):
(xiii) TPMI shall conduct any business other than
holding Stock of Bayway and matters incidental thereto.
Section 2. Scope of Amendment. Except as specifically
amended by this Amendment, the Credit Agreement shall remain in
full force and effect.
Section 3. Representations and Warranties. The
Borrowers hereby jointly and severally represent and warrant to
the Banks, the Agent and the FMCP L/C Bank that (a) no Default
or Event of Default has occurred or is continuing and the
effectiveness of this Amendment will not cause any such Default
or Event of Default to occur; (b) the representations and
warranties of the Borrowers and Seminole contained in the Credit
Agreement (i) were true and correct in all material respects
when made, and (ii) except to the extent such representations
and warranties by their terms are made solely as of a prior
date, continue to be true and correct in all material respects
on the date hereof; (c) the execution and delivery by the
Borrowers of this Amendment and the performance by the Borrowers
of all of their agreements and obligations under this Amendment
are within the corporate authority of each of the Borrowers and
have been duly authorized by all necessary corporate actions on
the part of the Borrowers; and (d) this Amendment, the Credit
Agreement as amended hereby, and the Loan Documents constitute
the legal, valid and binding obligations of the Borrowers
enforceable against the Borrowers in accordance with their
respective terms, provided that (i) enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws of general applications affecting the rights and
remedies of creditors, and (ii) the availability of the remedies
of specific performance and injunctive relief may be subject to
the discretion of the court before which any proceedings for
such remedies may be brought.
Section 4. Confirmation of Collateral Documents. Each
of the Borrowers hereby ratify and confirm each of the
Collateral Documents and the pledges and security interests
created thereby. Each of the Borrowers hereby further ratify
and confirm that the Collateral Documents and the pledges and
security interest created thereby secure the Obligations of the
Borrowers under the Credit Agreement, as amended hereby.
Section 5. Conditions to Effectiveness. The
effectiveness of this Amendment No. 6 shall be conditioned upon
receipt by the Agent of the following, in form and substance
satisfactory to the Banks:
(a) this Amendment No. 6 executed by the Borrowers, TPMI,
the Required Banks and the Agent; and
(b) a fee, payable to the Agent for the account of each
Bank that executes this Amendment No. 6 by December 28, 1994, in
an amount equal to $1,000 per each such Bank.
Section 6. Execution in Counterparts. This Amendment
may be executed in any number of counterparts, but all such
counterparts shall together constitute but one instrument. In
making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart signed by each
party hereto by and against which enforcement hereof is sought.
Section 7. Governing Law. This Amendment shall be
construed according to and governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as an agreement under seal as of
the date set forth at the beginning of this Amendment.
TOSCO CORPORATION
By:__________________________________
Title:
BAYWAY REFINING COMPANY
By:___________________________________
Title:
TOSCO EUROPE LIMITED
By:____________________________________
Title:
THE FIRST NATIONAL BANK OF
BOSTON, individually, as FMCP L/C Bank
and as Agent
By:____________________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually and as Co-Agent
By:____________________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Co-Agent
By:____________________________________
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:____________________________________
Title:
THE FUJI BANK, LIMITED
By:____________________________________
Title:
ARAB BANKING CORPORATION
By:____________________________________
Title:
NATIONAL CITY BANK
By:____________________________________
Title:
BANK HAPOALIM B.M.
By:____________________________________
Title:
By:____________________________________
Title:
UNITED JERSEY BANK
By:____________________________________
Title:
THE YASUDA TRUST AND BANKING
CO., LTD.
By:____________________________________
Title:
THE SUMITOMO BANK, LIMITED
By:____________________________________
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By:____________________________________
Title:
THE SANWA BANK LIMITED
By:____________________________________
Title:
SEATTLE-FIRST NATIONAL BANK
By:____________________________________
Title:
UNION BANK
By:____________________________________
Title:
MIDLANTIC NATIONAL BANK
By:____________________________________
Title:
NATIONAL WESTMINSTER BANK PLC
By:____________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Title:
THE SAKURA BANK, LTD.
By:____________________________________
Title:
PNC BANK, NATIONAL ASSOCIATION
By:____________________________________
Title:
BANCA DI ROMA
By:____________________________________
Title:
By:____________________________________
Title:
ACKNOWLEDGED AND
ACCEPTED BY:
TOSCO PROCESSING & MARKETING, INC.
By:__________________________________
Title:
Exhibit 10(q)
Schedule
1.Amended and Restated Trademark License Agreement between
British Petroleum Company p.l.c. and Tosco Corporation dated as
of August 1, 1994. This Agreement extends the term of the
pervious Trademark Agreement for Washington and Oregon from five
to twelve years and also extends the trademark license to six
additional states: Arizona, Idaho, Montana, New Mexico, Nevada
and Utah.
2. Trademark License Agreement (California) between BP Oil
Marketing Inc. and Tosco Corporation dated as of August 1, 1994.
This Agreement granted Tosco's license to use the BP trademark in
the state of California under the same terms and conditions in
the Amended and Restated Trademark Agreement.
Exhibit 11
TOSCO CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE DATA
Thousands of Dollars Except Per Share Data
Year Ended December 31,
1994 1993 1992
Net income (loss) $ 83,843 $ 80,579 ($ 74,455)
Preferred stock dividends ( 6,293) ( 10,063) (10,063)
Net income (loss) attributable
to common shareholders for
primary earnings per share
computations 77,550 70,516 ( 84,518)
Addback of dividends
on preferred stock
for assumed conversion 6,293 10,063 10,063
Net income (loss) attributable to common
shareholders for fully diluted
earnings per share computations $ 83,843 $ 80,579 ($74,455)
Weighted average number of shares
outstanding during the period 33,859 29,522 29,618
Stock option equivalents 355 157
Shares and equivalents used for
computation of primary earnings
per share 34,214 29,679 29,618
Additional stock option equivalents 170
Weighted average potentially dilutive
securities for the assumed conversion of
preferred stock 3,194 4,792
Shares and equivalents
used for computation of fully diluted
earnings per share 37,408 34,641 29,618
Earnings (loss) per share:
Primary $ 2.27 $ 2.38 ($ 2.85)
Fully diluted $ 2.24 $ 2.33 ($ 2.85) (a)
(a)Fully diluted earnings per share computations for 1992 did
not assume the conversion of stock options or Series F
Stock because the effect would have resulted in a lower
loss per share.
Exhibit 21
SUBSIDIARIES OF TOSCO CORPORATION
AZL Resources, Inc.
Arizona-Florida Land & Cattle Company
AZCO Capital Corp. N.V.
AZCO Properties, Inc.
AZL Engineering, Inc.
Breckenridge Nordic Village Corporation
Tosco Processing & Marketing, Inc.
Bayway Refining Company
Tosco Pipeline Company
Diablo Service Corporation
Seminole Fertilizer Corporation
Ridgewood Chemical Corporation
International Energy Insurance Limited
T Northwest Properties I, Inc.
T. Northwest Properties II, Inc.
The Loil Group Limited
The Oil Shale Corporation
Tosco (C-TI), Inc.
Tosco (C-TLP), Inc.
Tosco Corporation (A Delaware Corporation)
Tosco Europe Limited
Tosco International Finance N.V.
Tosco Marketing, Inc.
Tosco Northwest, Inc.
Avon Marine Corp.
Riverhead Marine Corp.
Tosco Refining Company, Inc.
Tosco Trading, Transportation and Supply, Inc.
Tosco (U.K.) Ltd.
Toscopetro Corporation
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration
statements of Tosco Corporation on Form S-8 (File No. 33-39303,
File No. 33-51243, and File No. 33-54153) of our report dated
March 3, 1995, on our audits of the consolidated financial
statements and the financial statement schedule of Tosco
Corporation and subsidiaries as of December 31, 1994 and 1993,
and for the years
ended December 31, 1994, 1993, and 1992, which report is included
in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Oakland, California
March 28, 1995
[TYPE] EX-27
[DESCRIPTION] ART. 5 FDS FOR FORM 10-K
[ARTICLE] 5
[MULTIPLIER] 1,000
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-END] DEC-31-1994
[CASH] 23,793
[SECURITIES] 0
[RECEIVABLES] 291,772
[ALLOWANCES] 8,392
[INVENTORY] 463,637
[CURRENT-ASSETS] 859,449
[PP&E] 822,057
[DEPRECIATION] 51,905
[TOTAL-ASSETS] 1,797,206
[CURRENT-LIABILITIES] 480,133
[BONDS] 0
[COMMON] 29,702
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 545,762
[TOTAL-LIABILITY-AND-EQUITY] 1,797,206
[SALES] 6,365,757
[TOTAL-REVENUES] 6,365,757
[CGS] 6,105,293
[TOTAL-COSTS] 6,105,293
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 58,315
[INCOME-PRETAX] 133,849
[INCOME-TAX] 50,006
[INCOME-CONTINUING] 83,843
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 83,843
[EPS-PRIMARY] 2.27
[EPS-DILUTED] 2.24
EXHIBIT 99
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
AND REPORT OF INDEPENDENT ACCOUNTANTS
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the consolidated financial statements of Tosco
Corporation and subsidiaries is included on page F-2 of this Form
10-K. In connection with our audits of such financial
statements, we have also audited Exhibit 99 presented on page F-
30 of this Form 10-K.
In our opinion, Exhibit 99 referred to above, when
considered in relation to the basic financial statements taken as
a whole, present fairly, in all material respects, the
information required to be included herein.
Coopers and Lybrand L.L.P.
Oakland, California
March 3, 1995
Condensed Consolidating Financial Information
The following tables set forth the condensed consolidating
financial statements as of December 31, 1994 and 1993 and for the
years then ended of Tosco, Bayway and Tosco's other subsidiaries.
They are provided to meet the reporting and informational
requirements of Bayway as a guarantor of the 8 1/4% First
Mortgage Bonds (Bayway Exchange Bonds).
Condensed Consolidating Balance Sheet
(Thousands of Dollars)
December 31, 1994
Tosco Bayway Minor Subs
(Issuer) (Guarantor) (Non-guarantors) Eliminations Consolidated
Assets
Cash and cash equivalents $ 1,524 $ 19,541 $ 2,728 $ 23,793
Short-term investments and deposits 1,470 8,167 21,192 30,829
Other current assets(a) 353,794 413,536 37,497 804,827
Total current assets 356,788 441,244 61,417 859,449
Other assets 655,421 246,158 40,544 ($ 4,366) 937,757
Investment in Bayway and other subsidiaries 218,722 ( 218,722)
Intercompany receivables 158,108 ( 158,108)
Total assets $1,389,039 $ 687,402 $ 101,961 ($ 381,196) $ 1,797,206
Liabilities and shareholders' equity
Current liabilities $ 277,917 $ 142,610 $ 59,606 $ 480,133
Revolver and long-term debt 477,938 205,000 4,491 687,429
Other liabilities 57,720 826 ($ 4,366) 54,180
Intercompany liabilities 149,007 9,101 ( 158,108)
Shareholders' equity 575,464 190,785 27,937 ( 218,722) 575,464
Total liabilities and shareholders' equity $1,389,039 $ 687,402 $ 101,961 ($ 381,196) $ 1,797,206
Condensed Consolidating Statement of Income
(Thousands of Dollars)
For the Year Ended December 31, 1994
Sales $ 2,770,402 $ 3,412,498 $353,783 ($ 170,926) $6,365,757
Cost of sales 2,581,262 3,331,638 351,668 ( 170,926) 6,093,642
Operating contributon 189,140 80,860 2,115 272,115
Selling, general, and administrative
expense (b) 56,737 28,453 ( 1,067) 84,123
Interest expense, net 33,736 20,493 ( 86) 54,143
Income before provision for income taxes 98,667 31,914 3,268 133,849
Provision for income taxes 36,109 12,606 1,291 50,006
Net income $ 62,558 $ 19,308 $ 1,977 $ - $ 83,843
(a) The lower of LIFO cost or market value of inventories is measured on a consolidated basis.
(b) The condensed consolidating statement of income does not reflect an allocation of a portion of aggregate corporate
selling, general and administrative expense of $18,602,000 to Bayway and the Minor Subsidiaries. Tosco may
allocate such costs in the future.
Condensed Consolidating Financial Information (continued)
Condensed Consolidating Statement of Cash Flows
(Thousands of Dollars)
For the Year Ended December 31, 1994
Tosco Bayway Minor Subs
(Issuer) (Guarantor) (Non-guarantors) Consolidated
Cash flows from operating activities:
Net income $ 62,558 $ 19,308 $ 1,977 $ 83,843
Depreciation and amortization 68,203 15,585 1,073 84,861
Deferred income taxes 34,734 34,734
Inventory valuation recovery ( 17,651) ( 17,651)
Environmental cost accrual 6,000 6,000
Changes in working capital (27,119) ( 65,857) 20,999 ( 71,977)
Other 4,439 1,271 5,710
Net cash provided by (used in)
operating activities 148,815 ( 48,615) 25,320 125,520
Cash flows from investing activities:
Purchase of property, plant and equipment ( 95,347) ( 44,218) ( 20,554) ( 160,119)
Increase in deferred turnarounds, charges
and other assets ( 46,411) ( 45,008) ( 91,419)
Transfers to discontinued operations ( 9,207) ( 9,207)
Intercompany transfers ( 999) 90 909
Proceeds from termination of Continental
Tosco Limited Partnership 9,519 9,519
Inter-company dividend 7,167 ( 7,167)
Net change in short-term investments and deposits 3,967 ( 1,553) ( 3,208) ( 794)
Net cash used in investing activities ( 140,830) ( 90,689) ( 20,501) ( 252,020)
Cash flows from financing activities:
Short-term borrowings and borrowings (repayments)
under revolver, net ( 5,500) 133,000 127,500
Principal payments under debt agreements ( 4) ( 2,271) ( 2,275)
Dividends on Preferred and Common Stock ( 27,767) ( 27,767)
Other ( 2,256) ( 2,256)
Net cash provided by (used in) financing activities( 35,527) 133,000 ( 2,271) 95,202
Net increase (decrease) in cash and cash
equivalents ( 27,542) ( 6,304) 2,548 ( 31,298)
Cash and cash equivalents at beginning of period 29,066 25,845 180 55,091
Cash and cash equivalents
at end of period $ 1,524 $ 19,541 $ 2,728 $ 23,793
Condensed Consolidating Financial Information (continued)
Condensed Consolidating Balance Sheet
(Thousands of Dollars)
December 31, 1993
Tosco Bayway Minor Subs
(Issuer) (Guarantor) (Non-guarantors) Eliminations Consolidated
Assets
Cash and cash equivalents $ 29,066 $ 25,845 $ 180 $ 55,091
Short-term investments and deposits 5,437 6,614 17,984 30,035
Other current assets 258,121 335,316 118 593,555
Total current assets 292,624 367,775 18,282 678,681
Other assets 615,387 172,517 30,640 ($ 4,366) 814,178
Investment in Bayway and other
subsidiaries 204,604 (204,604)
Intercompany receivables 162,865 1,083 4,67 3 ( 168,621)
Total assets $1,275,480 $ 541,375 $ 53,595 ($377,591) $1,492,859
Liabilities and shareholders' equity
Current liabilities $ 161,904 $ 147,898 $ 1,228 $ 311,030
Revolver and long-term debt 524,931 72,000 6,375 603,306
Other liabilities 61,245 ($ 4,366) 56,879
Intercompany liabilities 5,756 150,000 12,865 ( 168,621)
Shareholders' equity 521,644 171,477 33,127 ( 204,604) 521,644
Total liabilities and
shareholders' equity $1,275,480 $ 541,375 $ 53,595 ($ 377,591) $1,492,859
Condensed Consolidating Statement of Income
(Thousands of Dollars)
For the Year Ended December 31, 1993
Sales $ 1,783,387 $ 1,775,830 $ $ $ 3,559,217
Cost of sales 1,600,937 1,724,206 3,325,143
Operating contribution 182,450 51,624 234,074
Selling, general, and
administrative expenses 43,015 15,226 ( 67) 58,174
Interest expense, net 32,612 12,011 ( 477) 44,146
Income before provision
for income taxes 106,823 24,387 544 131,754
Provision for income taxes 40,950 10,007 218 51,175
Net income $ 65,873 $ 14,380 $ 326 $ $ 80,579
The condensed consolidating statement of income which
includes the operations of Bayway since April 8, 1993, does not reflect
an allocation of a portion of
aggregate corporate selling, general and administrative expenses
of $25,557,000 to Bayway and the Minor Subsidiaries.
Tosco may allocate such costs in the future.
Condensed Consolidating Financial Information (continued)
Condensed Consolidating Statement of Cash Flows
Thousands of Dollars)
For the Year Ended December 31, 1993
Tosco Bayway Minor Subs
(Issuer) (Guarantor) (Non-guarantors) Eliminations Consolidated
Cash flows from operating activities:
Net income $ 65,873 $14,380 $ 326 $ 80,579
Depreciation and amortization 57,023 7,668 400 65,091
Deferred income taxes (10,189) (10,189)
Inventory valuation writedown 17,651 17,651
Changes in working capital ( 11,376) (31,935) ( 293) ( 43,604)
Other 20,644 (17,500) 3,144
Net cash provided by (used in)
operating activities 121,975 (9,736) 433 112,672
Cash flows from investing activities:
Purchase of property, plant and equipment, net,
and acquired inventories (225,361) (326,147) ( 551,508)
Increase in deferred turnarounds, charges
and other assets ( 22,748) ( 907) ( 23,655)
Investment in Bayway Refinery (147,675) 147,675
Intercompany transfers (199,068) 149,574 49,494
Net proceeds from sale of
discontinued operations 91,217 91,217
Proceeds from termination of Continental
Tosco Limited Partnership 4,880 4,880
Transfers from discontinued operations 41,791 41,791
Net change in short-term investments
and deposits 12,927 ( 6,614) ( 4,132) 2,181
Net cash provided by (used in)
investing activities ( 448,917) ( 36,419) 50,242 (435,094)
Cash flows from financing activities:
Proceeds from Bayway Exchange Bonds 150,000 150,000
Borrowings under revolver, net 75,000 72,000 147,000
Early retirement of debt (50,000) ( 50,000)
Principal payments under debt agreements ( 24) 771) ( 795)
Issuance of Common Stock, net of expenses 88,418 88,418
Dividends on Preferred and Common Stock ( 28,056) ( 28,056)
Other ( 727) ( 727)
Net cash provided by (used in)
financing activities 284,611 72,000 ( 50,771) 305,840
Net increase (decrease) in cash and cash
equivalents ( 42,331) 25,845 (96) ( 16,582)
Cash and cash equivalents at
beginning of period 71,397 276 71,673
Cash and cash equivalents at end of period $29,066 $25,845 $ 180 $ $ 55,091