-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYYu0jKeKW9/6wl75UdhHf7mC7+4p4pxYaWTgBSCr95S918Fe4SgXurexK5eYzRu IsDJMPQvCzkgKgOdN3sUjg== 0000810316-96-000023.txt : 19960515 0000810316-96-000023.hdr.sgml : 19960515 ACCESSION NUMBER: 0000810316-96-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAMOND SHAMROCK INC CENTRAL INDEX KEY: 0000810316 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 742456753 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09409 FILM NUMBER: 96562879 BUSINESS ADDRESS: STREET 1: P O BOX 696000 CITY: SAN ANTONIO STATE: TX ZIP: 78230 BUSINESS PHONE: 2106416800 MAIL ADDRESS: STREET 1: P O BOX 696000 CITY: SAN ANTONIO STATE: TX ZIP: 78230 FORMER COMPANY: FORMER CONFORMED NAME: DIAMOND SHAMROCK R&M INC DATE OF NAME CHANGE: 19900207 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the quarterly period ended March 31, 1996 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: 1-9409 DIAMOND SHAMROCK, INC. (Exact name of registrant as specified in its charter) DELAWARE 74-2456753 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9830 Colonnade Boulevard, San Antonio, Texas 78230 (Address of principal executive offices) (Zip Code) 210-641-6800 (Registrant's telephone number, including area code) ________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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. (X)YES ( )NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ( )YES ( )NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares of Common Stock outstanding at April 30, 1996: 29,258,874 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements DIAMOND SHAMROCK, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (dollars in millions, except per share data) Three Months Ended March 31, 1996 1995 (a) REVENUES Sales and operating revenues $1,171.2 $ 845.6 Other revenues, net 7.1 4.2 1,178.3 849.8 COSTS AND EXPENSES Cost of products sold 739.1 517.1 Operating expenses 151.4 95.9 Depreciation and amortization 25.9 18.7 Selling and administrative 24.8 18.3 Taxes other than income taxes 206.2 179.3 Interest 18.5 11.4 1,165.9 840.7 Income Before Tax Provision 12.4 9.1 Provision for Income Taxes 5.2 3.7 Net Income 7.2 5.4 Dividend Requirement on Preferred Stock 1.1 1.1 Earnings Applicable to Common Shares $ 6.1 $ 4.3 Primary Earnings Per Share $ 0.21 $ 0.15 Fully Diluted Earnings Per Share $ 0.21 $ 0.15 Cash Dividends Per Share Common $ 0.14 $ 0.14 Preferred $ 0.625 $ 0.625 Weighted Average Common Shares Outstanding (thousands of shares) Primary 29,104 29,024 Fully Diluted 32,359 32,332 (a) Reclassified to conform to 1996 presentation, to include excise taxes as a component of sales: 1996-$196.6 million; 1995-$168.0 million. (See Note 2) See accompanying Notes to Consolidated Financial Statements. DIAMOND SHAMROCK, INC. CONSOLIDATED BALANCE SHEET (dollars in millions, except per share data) March 31, December 31, 1996 1995 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 47.3 $ 48.6 Receivables, less doubtful receivables of $5.9; $7.1 in 1995 247.1 213.0 Inventories Finished products 171.9 204.1 Raw materials 71.0 137.4 Supplies 34.8 34.5 277.7 376.0 Prepaid expenses and other current assets 11.5 17.3 Total Current Assets 583.6 654.9 Properties and Equipment, less accumulated depreciation of $704.3; $684.2 in 1995 1,377.3 1,357.1 Excess of Cost over Acquired Net Assets, less accumulated amortization of $1.9; $0.3 in 1995 158.2 160.1 Deferred Charges and Other Assets 70.6 73.3 $2,189.7 $2,245.4 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Long-term debt payable within one year $ 7.5 $ 7.2 Accounts payable 207.8 274.3 Accrued taxes 71.1 71.0 Accrued royalties 10.3 6.6 Current portion of Long-term Liability 7.2 8.0 Other accrued liabilities 90.7 122.4 Total Current Liabilities 394.6 489.5 Long-term Debt 993.7 957.5 Deferred Income Taxes 57.7 58.6 Other Liabilities and Deferred Credits 112.2 115.1 Stockholders' Equity Preferred Stock, $.01 par value Authorized shares - 25,000,000 Issued and Outstanding shares - 1,725,000; 1,725,000 in 1995 0.0 0.0 Common Stock, $.01 par value Authorized shares - 75,000,000 Issued shares - 29,190,373; 29,035,853 in 1995 Outstanding shares - 29,190,373; 28,994,715 in 1995 0.3 0.3 Paid-in Capital 453.2 447.8 ESOP Stock and Stock Held in Treasury (36.4) (37.4) Retained Earnings 214.4 214.0 Total Stockholders' Equity 631.5 624.7 $2,189.7 $2,245.4 See accompanying Notes to Consolidated Financial Statements. DIAMOND SHAMROCK, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (dollars in millions) Three Months Ended March 31, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7.2 $ 5.4 Adjustments to arrive at net cash provided by operating activities: Depreciation and amortization 25.9 18.7 Deferred income taxes (0.9) 3.2 Loss on sale of properties and equipment 0.3 0.0 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable (34.1) 6.5 Decrease (increase) in inventories 98.3 87.5 Decrease (increase) in prepaid expenses 5.8 3.4 Increase (decrease) in accounts payable (66.2) (82.1) Increase (decrease) in taxes payable 0.1 (3.4) Increase (decrease) in accrued liabilities (28.8) (14.7) Other, net 3.2 1.5 NET CASH PROVIDED BY OPERATING ACTIVITIES 10.8 26.0 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of properties and equipment 0.1 0.0 Purchase of properties and equipment (40.9) (51.5) Expenditures for investments (2.1) (0.2) NET CASH (USED IN) INVESTING ACTIVITIES (42.9) (51.7) CASH FLOWS FROM FINANCING ACTIVITIES: Increases in long-term debt 78.3 138.9 Repayments of long-term debt (42.1) (116.0) Payments of long-term liability (2.2) (3.0) Issuance of Common Stock 2.1 - Sale of Common Stock held in treasury 0.7 - Dividends paid (5.1) (5.1) Other, net (0.9) - NET CASH PROVIDED BY FINANCING ACTIVITIES 30.8 14.8 Net (decrease) in cash and cash equivalents (1.3) (10.9) Cash and cash equivalents at beginning of period 48.6 27.4 Cash and cash equivalents at end of period $ 47.3 $ 16.5 In January 1995, the Company acquired a portion of a crude oil import and storage terminal in a non-cash transaction under an installment purchase arrangement. The purchase price was $12.0 million. See accompanying Notes to Consolidated Financial Statements. DIAMOND SHAMROCK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Financial Statements The consolidated financial statements as of March 31, 1996 and for the three months ended March 31, 1996 and 1995 are unaudited, but in the opinion of Diamond Shamrock, Inc. (the "Company"), all adjustments (consisting only of normal accruals) necessary for a fair presentation of consolidated results of operations, consolidated financial position, and consolidated cash flows at the date and for the periods indicated have been included. The consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 1995 Annual Report to Stockholders and incorporated by reference into the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K"). With respect to the unaudited consolidated financial information of the Company as of March 31, 1996, and for the three months ended March 31, 1996 and 1995, Price Waterhouse LLP has made a review (based on procedures adopted by the American Institute of Certified Public Accountants) and not an audit, as set forth in their separate report appearing herein. Such a report is not a "report" or "part of a Registration Statement" within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11 of such Act do not apply. 2. Classification of Excise Taxes Beginning in 1996, the Company includes federal excise taxes and state motor fuel taxes in Sales and operating revenues and in Costs and expenses for financial reporting purposes. The results of operations for the three months ended March 31, 1995 have been reclassified to conform to the 1996 presentation. The amount of such taxes is $196.6 million and $168.0 in 1996 and 1995, respectively. Neither operating profits nor net income are affected by including such taxes in both sales and expenses. 3. Acquisition On December 14, 1995, the Company completed the acquisition of National Convenience Stores Incorporated ("NCS") (See footnote 4 of the 1995 Form 10K). The acquisition was accounted for under the purchase method. Consequently, the operating results of NCS are included in the first quarter Consolidated Statement of Income and the Consolidated Statement of Cash Flows for 1996, but not for 1995. The amount of NCS sales included in the 1996 first quarter Consolidated Statement of Operations is $200.9 million. 4. Inventories Inventories are valued at the lower of cost or market with cost determined primarily under the Last-in, First-out (LIFO) method. At March 31, 1996, inventories of crude oil and refined products of the Refining and Wholesale segment were valued at market values (lower than LIFO cost). Motor fuel products of the Retail segment, and propylene products in the Allied Businesses segment were recorded at their LIFO costs. Costs of all other inventories are determined on an average cost method. 5. Long-term Debt As of March 31, 1996, the Company had $120.0 million of debt designated as the 10.75% Senior Notes outstanding, $30.0 million of which was payable within one year. On April 30, 1996, the Company refinanced the $30.0 million repayment using credit facilities which are classified as long-term debt. Therefore, the current portion of the 10.75% Senior Notes outstanding as of March 31, 1996 was classified as long-term debt. 6. Commitments and Contingencies In connection with the 1987 Spin-off from Maxus Energy Corporation ("Maxus"), the Company agreed to assume a share of certain liabilities of Maxus' businesses discontinued or disposed of prior to the Spin-off date (see Note 17 of the 1995 Form 10-K). The Company's total liability for such shared costs is limited to $85.0 million. The Company has reimbursed Maxus for a total of $77.8 million as of March 31, 1996, including $2.8 million paid during the three months ended March 31, 1996. See Note 3 of the 1995 Form 10-K for a discussion of the change in the method of accounting for the liability. REVIEW BY INDEPENDENT ACCOUNTANTS With respect to the unaudited consolidated financial information of the Company as of March 31, 1996 and the three months ended March 31, 1996 and 1995, Price Waterhouse LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated May 10, 1996, appearing below, states that they did not audit and they do not express an opinion on that unaudited consolidated financial information. Price Waterhouse LLP has not carried out any significant or additional audit tests beyond those which would have been necessary if their report had not been included. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Price Waterhouse LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited consolidated financial information because that report is not a "report" or "part of a Registration Statement" prepared or certified by Price Waterhouse LLP within the meaning of Sections 7 and 11 of the Act. REPORT ON REVIEW BY INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Diamond Shamrock, Inc. We have reviewed the consolidated interim financial information included in the Report on Form 10-Q of Diamond Shamrock, Inc. (the "Company") and its subsidiaries as of March 31, 1996 and for the quarter then ended. This financial information is the responsibility of the management of Diamond Shamrock, Inc. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial information for it to be in conformity with generally accepted accounting principles. We previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of the Company as of December 31, 1995, and the related consolidated statements of operations and of cash flows for the year then ended (not presented herein), and in our report dated February 23, 1996 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 1995, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP San Antonio, Texas May 10, 1996 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following are the Company's sales and operating revenues and operating profit for the three months ended March 31, 1996 and 1995. Business segment operating profit is sales and operating revenues less applicable segment operating expense. In determining the operating profit of the three business segments, neither interest expense nor administrative expenses are included. Three Months Ended March 31, 1996 1995 Sales and Operating Revenues: Refining and Wholesale $ 519.3 $ 403.8(1) Retail 562.2 337.31 Allied Businesses 89.7 104.5 Total Sales and Operating Revenues $ 1,171.2 $ 845.6 Operating Profit: Refining and Wholesale $ 34.0 $ 8.4 Retail 7.5 15.1 Allied Businesses 10.3 13.1 Total Operating Profit $ 51.8 $ 36.6 (1) Reclassified to conform to 1996 presentation, including excise taxes as a component of sales. Consolidated Results First Quarter 1996 vs 1995 Sales and operating revenues of $1,171.2 million for the first quarter of 1996 were 38.5% higher than in the same period of 1995, primarily due to the acquisition of National Convenience Stores Incorporated ("NCS") in mid-December 1995 which contributed $200.9 million in sales and operating revenues. Excluding the impact of the NCS acquisition, sales and operating revenues increased 14.7%, primarily due to a 15.7% and an 11.5% increase in refined product sales volumes and prices, respectively, compared to the same period a year ago. During the first quarter of 1996, the Company had net income of $7.2 million compared to net income of $5.4 million in the 1995 first quarter. The Company's first quarter results were positively impacted by higher refinery margins . Partially offsetting the increase in refining margins during the first quarter of 1996 was a 23.0% decrease in retail fuel margins compared to the first quarter of 1995, as the retail segment was unable to recoup the rising cost of wholesale gasoline and diesel fuel resulting from higher crude prices in the first quarter of 1996. Inventories are valued at the lower of cost or market with cost determined primarily under the Last-in, First-out (LIFO) method. At March 31, 1996, inventories of crude oil and refined products of the Refining and Wholesale segment were valued at market values (lower than LIFO cost). Motor fuel products of the Retail segment, and propylene products in the Allied Businesses segment were recorded at their LIFO costs. All other inventories are determined on an average cost method. Estimating the financial impact of changes in the valuation of refinery inventories due to such inventories being valued at market is difficult because of the number of variables that must be considered. For operating purposes, management attempts to estimate the impact of changes in valuation of refinery inventories on net income. The estimated after tax change in inventory values was a positive $1.2 million and $1.8 million in the first quarters of 1996 and 1995, respectively. Segment Results First Quarter 1996 vs First Quarter 1995 During the first quarter of 1996 the Refining and Wholesale segment had sales and operating revenues of $519.3 million compared to $403.8 million during the first quarter of 1995. The increase in sales and operating revenues was primarily due to a 15.7% and an 11.5% increase in refined product sales volumes and prices, respectively. Operating profit in the first quarter of 1996 increased $25.6 million from the first quarter of 1995, primarily due to a 52.0% increase in refinery margins from the same period a year ago. Refining margins were weak early in the quarter but improved significantly in March. Volatile and rising crude oil prices, low industry-wide inventory levels, primarily as a consequence of an unusually harsh winter, and strong product demand, have had a significant impact on refining margins during the first quarter of 1996. The Retail segment in the first quarter of 1996 reflected a 66.6% increase in sales and operating revenues, primarily due to the acquisition of NCS and its 661 retail outlets in mid-December 1995. Operating profit in the first quarter of 1996 was $7.5 million compared to $15.1 million in the first quarter of 1995. The decrease in operating profit was primarily due to a 23.0% and a 1.4% decrease in retail fuel and merchandise margins, respectively, reflecting pricing competition. Retail was unable to recoup the rising cost of wholesale gasoline and diesel fuel resulting from higher crude prices during the first quarter of 1996. During the first quarter of 1996, the Allied Businesses segment reflected a decrease in sales and operating revenues of 14.2%, primarily due to a decrease in prices in the Company's propylene business. Operating profits were $10.3 million for the first quarter of 1996 compared to $13.1 million in the first quarter of 1995. Operating profits decreased primarily due to a $1.5 million and a $1.4 million decrease in operating profit from the Company's propane/propylene and Nitromite fertilizer businesses, respectively. Outlook The outlook for the refining and marketing industry for the rest of 1996 is positive. Most analysts agree that in 1995, refining industry profitability hit the bottom of a cycle that is expected to swing upward this year. Underlying these expectations is the assumed continued growth in gasoline demand and higher prices for heating oil driven by the recent harshwinter weather. Gasoline margins, which until recently were depressed, are beginning to recover as we approach the driving season. Liquidity and Capital Resources Cash Flow and Working Capital For the three months ended March 31, 1996, cash provided by operations was $10.8 million, compared with $26.0 million in the same period of 1995. Working capital at March 31, 1996 was up $23.6 million from December 31, 1995, and consisted of current assets of $583.6 million and current liabilities of $394.6 million, or a current ratio of 1.5. At December 31, 1995, current assets were $654.9 million and current liabilities were $489.5 million, or a current ratio of 1.3. The increase in working capital was primarily due to a 24.2% and a 21.5% decrease in accounts payable and accrued liabilities, respectively. The decrease in current liabilities was partially offset by a 26.1% decrease in inventories. The decrease in accounts payable reflected the payment in the first quarter of 1996 for the additional crude oil purchased in December 1995 and the return to lower inventory levels. In addition, receivables increased primarily due to increased refined product sales prices and an increase in the receivables associated with the open positions of the Company's futures contracts at March 31, 1996. Capital Expenditures In recent years, capital expenditures have represented a variety of projects designed to expand and maintain up-to-date refinery facilities, improve terminal and distribution systems, modernize and expand retail outlets, comply with environmental regulatory requirements, and pursue new ventures in related businesses. In January 1996, the Company announced the goal of strengthening the Company's balance sheet and, within two years, bringing its debt to total capital and interest coverage ratios back to the levels experienced prior to the acquisition of NCS. The Company's capital expenditure budgets for the next two years have been reduced so that revised capital spending plans are approximately $160.0 million in 1996 and $140.0 million in 1997. In addition to capital spending cuts the Company's goal is to pay down over $200.0 million of debt in the next two years through cash flow generated from operations, and the pruning of assets. The capital spending cuts include eliminating retail store construction in most of Texas but allow for the integration of the NCS stores into the Company's system. Thus far the gasoline facilities at nearly 100 former NCS retail outlets have been branded Diamond Shamrock. This conversion includes signage on the street and at the pump, and upgraded security, computerization, and store interiors. The Company expects to complete branding the NCS gasoline retail outlets at a rate of about 100 outlets per month. The Company also intends to continue to construct additional retail stores in Arizona. Several refinery projects have been deferred from 1996; however, expansion and upgrading projects begun in 1995 at the Company's Three Rivers refinery will be completed in 1996. These projects will increase the capacity of the refinery from 75,000 barrels per day to 85,000 barrels per day and will allow heavy oils to be upgraded to higher value refined products. The projects are scheduled for completion in the third quarter of 1996. In addition, expenditures continue at Three Rivers on the previously announced benzene, toluene, and xylene ("BTX") extraction unit, which will produce high value petrochemical feedstocks. Once completed in 1997, the BTX project gives the Company the flexibility to shift certain components out of the gasoline pool into more attractive petrochemical markets. Finally, the 1996 capital budget also includes construction of a second 730 million pound per year propylene splitter at Mont Belvieu with completion scheduled for the third quarter of 1996. The Company's capital and investment expenditures during the first three months of 1996 were $44.7 million. The Company's capital expenditures were $63.5 million during the first three months of 1995, including a non-cash investment of $12.0 million for the Corpus Christi crude oil terminal acquired under an installment purchase arrangement. Although it is presently the Company's goal to reduce debt in 1996, if its assumptions regarding operating results or capital requirements change, the Company can access its bank credit, bank money market, and commercial paper facilities. In addition, depending upon developments in the capital markets, the Company can access such markets to refinance existing debt or to meet its capital and operating requirements. The Company opened 4 retail outlets and closed 4 marginal retail outlets during the quarter ended March 31, 1996. One of the newly opened outlets was leased by the Company under a pre-existing long-term lease arrangement (the "Brazos Lease"). The Brazos Lease has an initial lease term that will expire in April 1999. Rent payable under the Brazos Lease is based upon the amounts spent to acquire or construct the outlets and the lessor's cost of funds from time to time. At March 31, 1996, approximately $10.2 million of the $190.0 million commitment remained available under the Brazos Lease to construct retail outlets. After the non-cancelable lease term, the Brazos Lease may be extended by agreement of the parties, or the Company may purchase or arrange for the sale of the retail outlets. If the Company were unable to extend the lease or arrange for the sale of the properties to a third party in 1999, the amount necessary to purchase properties under the lease as of March 31, 1996 would be approximately $179.8 million. Regulatory Matters It is expected that rules and regulations implementing the federal, state, and local laws relating to health and environmental quality will continue to affect the operations of the Company. The Company cannot predict what health or environmental legislation, rules or regulations will be enacted in the future or how existing or future laws, rules or regulations will be administered or enforced with respect to products or activities of the Company. However, compliance with more stringent laws or regulations, as well as more expansive interpretation of existing laws and their more vigorous enforcement by the regulatory agencies could have an adverse effect on the operations of the Company and could require substantial additional expenditures by the Company, such as for the installation and operation of pollution control systems and equipment. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 15.1 Independent Accountants' Awareness Letter 27.1 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company in the first quarter of 1996. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIAMOND SHAMROCK, INC. By: /s/ GARY E. JOHNSON Gary E. Johnson Vice President and Controller Principal Accounting Officer May 10, 1996 EX-15.1 2 EXHIBIT 15.1 INDEPENDENT ACCOUNTANTS' AWARENESS LETTER Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that Diamond Shamrock, Inc. has included our report dated May 10, 1996 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) in the Prospectuses constituting part of its Registration Statements on Form S-3 (Nos. 33-67166 and 33-59451) filed on August 9, 1993, and May 19, 1995, respectively, and on Form S-8 (Nos. 33-15268, 33-34306, 33-47761, 33-50573, 33-59025 and 33-64645) filed on June 22, 1987, April 13, 1990, May 6, 1992, October 6, 1993, May 2, 1995 and November 30, 1995, respectively. We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP San Antonio, Texas May 10, 1996 w3922.TW EX-27.1 3
5 3-MOS DEC-31-1995 MAR-31-1996 47,300 0 253,000 5,900 277,700 583,600 2,081,600 704,300 2,189,700 489,500 0 0 0 300 631,200 2,189,700 1,178,300 1,178,300 739,100 739,100 408,300 0 18,500 12,400 5,200 7,200 0 0 0 7,200 0.21 0.21
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