EX-99 2 exhibit99-1.txt GIANT INDUSTRIES, INC. EXHIBIT 99.1 EXHIBIT 99.1 GIANT INDUSTRIES, INC. NEWS RELEASE Contact: Mark B. Cox Executive Vice President, Treasurer, & Chief Financial Officer Giant Industries, Inc. (480) 585-8888 FOR IMMEDIATE RELEASE February 27, 2007 GIANT INDUSTRIES, INC. ANNOUNCES 2006 OPERATING RESULTS AND SHAREHOLDER APPROVAL OF MERGER Scottsdale, Arizona, February 27, 2007 - Giant Industries, Inc. [NYSE: GI] announced today full year 2006 net earnings of $82.8 million or $5.64 per diluted share versus net earnings of $103.9 million or $7.62 per diluted share in 2005. For the fourth quarter of 2006, net earnings were $1.8 million or $0.12 per diluted share compared to net earnings of $26.6 million or $1.82 per diluted share for the fourth quarter of 2005. Fred Holliger, Giant's Chief Executive Officer, commented, "While 2006 net earnings were by far the second best year in our Company's history, results were hampered by operating problems in our refining operations. Our fourth quarter 2006 earnings were negatively impacted by outages at our Ciniza refinery and our Yorktown refinery that significantly impacted our operating results. All units at our Ciniza refinery are now back operating with the exception of a portion of the diesel hydrotreater. We currently believe that the unit will resume full operations in early April. All units at our Yorktown refinery are now back in operation." "On a positive note, both our retail and wholesale business units continued good growth trends. Our retail operations achieved growth in excess of 4% in merchandise sales and fuel volumes on a comparable store basis in 2006 compared to the prior year. On top of this growth, merchandise sales increased by approximately 6% and fuel volumes increased in excess of 11% as a result of the two retail acquisitions that we completed in the last 18 months. This sales growth combined with stable fuel and merchandise margins resulted in an approximate $3.4 million improvement in operating income over the prior year level. Within our wholesale operations, we continued to experience growth in wholesale and cardlock fuel volumes, as well as lubricant sales. Our operating income was; however, lower by approximately $2.4 million compared to the prior year level as a result of lower fuel and lubricant margins. It is also worth noting, that we recently completed another acquisition of a privately-owned wholesale distribution company that should provide additional growth opportunities for our wholesale group in 2007." Commenting on first quarter operations, Holliger said, "Our current refining margins are stronger than the same time last year, as demand for gasoline and diesel has been strong at Yorktown and in our Four Corners' market. In our retail operations, we are continuing to achieve growth in both fuel volumes and merchandise sales on a comparable store basis. While fuel margins started the year stronger than typically seen in the winter months, recent increases in fuel costs have eroded fuel margins to lower levels than we realized at the same time last year. However, merchandise margins are comparable to the prior year level. In our wholesale operations, we are continuing to experience growth in fuel volumes in our historical business as well as from the recent acquisition. Margins, so far, are slightly lower compared to the same time last year." Holliger provided the following update on the Company's proposed merger with Western Refining Company, "We are pleased to announce that we have received the affirmative vote of more than a majority of our outstanding shares approving our merger with Western Refining Company. We believe the merger is an outstanding opportunity for our shareholders and are heartened by the overwhelming positive vote. In addition, we continue to believe that the merger will enhance opportunities for our employees as a result of being a part of a larger organization. We also believe that our customers and suppliers will be well served and benefit from the combined companies greater economies of scale and the resources needed for sustained success in our industry. Now that we received the approval of our shareholders, the only remaining hurdle to completing the merger is the Federal Trade Commission merger review process. On February 20, we and Western entered into an agreement with the FTC to provide them additional information that they have requested. We currently believe that these requests will be satisfied by the middle of March. We and Western also agreed with the FTC that we would not attempt to close the merger for thirty days following the providing of this information, which can be no earlier than April 13, 2007." Giant's senior management will hold a conference call at 8:00 a.m. EST (6:00 a.m. MST) on February 28, 2007 to discuss this earnings release and provide an update on Company operations. The conference call will be broadcast live on the Company's website at www.giant.com. Giant Industries, Inc., headquartered in Scottsdale, Arizona, is a refiner and marketer of petroleum products. Giant owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, New Mexico, which services the New Mexico refineries, finished products distribution terminals in Albuquerque, New Mexico and Flagstaff, Arizona, a fleet of crude oil and finished product truck transports, and a chain of retail service station/convenience stores in New Mexico, Colorado, and Arizona. Giant is also the parent Company of Phoenix Fuel Co., Inc., Dial Oil Co. and Empire Oil Co., all of which are wholesale petroleum products distributors. For more information, please visit Giant's website at www.giant.com. This press release contains forward-looking statements that involve known and unknown risks and uncertainties. Forward-looking statements are identified by words or phrases such as "believes," "expects," "anticipates," "estimates," "should," "could," "plans," "intends," "will," variations of such words and phrases, and other similar expressions. While these forward-looking statements are made in good faith, and reflect the Company's current judgment regarding such matters, actual results could vary materially from the forward-looking statements. Important factors that could cause actual results to differ from forward-looking statements include, but are not limited to: the risk that the Ciniza diesel hydrotreater will not return to full operation by early April, the risk that our refining margins will not remain stronger than last year, the risk that our retail operations will not continue to experience growth in both fuel and merchandise sales on a comparable store basis, the risk that retail merchandise margins will not remain comparable to last year, the risk that our wholesale operations will not continue to experience growth in fuel volumes, the risk that the Western transaction will not provide the anticipated benefits, the risk that we will not be able to respond to the Federal Trade Commission on schedule or at all, the risk that the Federal Trade Commission will oppose the transaction or that other conditions to the transaction will not be satisfied, the risk that the transaction will not close on schedule or at all, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on behalf of the Company, are expressly qualified in their entirety by the foregoing. Forward-looking statements made by the Company represent its judgment on the dates such statements are made. The Company assumes no obligation to update any forward-looking statements to reflect new or changed events or circumstance. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) ------------------------------------------------------------------------------------------------------------------- (In thousands except shares and per share data) ------------------------------------------------------------------------------------------------------------------- Three Months Ended December 31, Twelve Months Ended December 31, ------------------------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------------------------------------------------- Net revenues $ 999,312 $ 920,938 $ 4,173,564 $ 3,581,246 Cost of products sold (excluding depreciation and amortization) 897,534 798,110 3,776,923 3,093,191 ------------------------------------------------------------------------------------------------------------------- Operating expenses 64,229 56,750 232,848 205,639 Depreciation and amortization 12,685 9,845 45,193 40,280 Selling, general and administrative expenses 13,474 10,100 49,521 45,173 Net loss/(gain) on disposal/write-down of assets 1,764 174 723 1,009 Gain from insurance settlement due to fire incident - - (82,003) (3,688) ------------------------------------------------------------------------------------------------------------------- Operating income 9,626 45,959 150,359 199,642 Interest expense (5,158) (5,327) (19,172) (24,485) Costs associated with early debt extinguishment - - - (2,082) Amortization of financing costs (399) (399) (1,597) (2,797) Investment and other income 717 1,831 4,555 2,799 ------------------------------------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes 4,786 42,064 134,145 173,077 Provision for income taxes 2,966 15,369 51,394 69,146 ------------------------------------------------------------------------------------------------------------------- Earnings from continuing operations 1,820 26,695 82,751 103,931 Earnings from discontinued operations, net of income tax provision of $9 - - - 15 Cumulative effect of change in accounting principal, net of income tax benefit of $46 - (68) - (68) ------------------------------------------------------------------------------------------------------------------- Net Earnings $ 1,820 $ 26,627 $ 82,751 $ 103,878 =================================================================================================================== Net Earnings per common share: Basic Continuing operations $ 0.12 $ 1.84 $ 5.67 $ 7.71 Discontinued operations - - - - Cumulative effect of change in accounting principle - (0.01) - (0.01) ------------------------------------------------------------------------------------------------------------------- $ 0.12 $ 1.83 $ 5.67 $ 7.70 =================================================================================================================== Assuming dilution Continuing operations $ 0.12 $ 1.83 $ 5.64 $ 7.63 Discontinued operations - - - - Cumulative effect of change in accounting principle - (0.01) - (0.01) ------------------------------------------------------------------------------------------------------------------- $ 0.12 $ 1.82 $ 5.64 $ 7.62 =================================================================================================================== Weighted average number of shares outstanding: Basic 14,603,365 14,518,874 14,597,074 13,485,702 Assuming dilution 14,688,775 14,626,099 14,680,443 13,629,132 ===================================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) ------------------------------------------------------------------------------------------- December 31, 2006 December 31, 2005 ------------------------------------------------------------------------------------------- Assets Current assets $ 429,287 $ 442,355 ------------------------------------------------------------------------------------------- Property, plant and equipment 995,710 764,788 Less accumulated depreciation and amortization (327,460) (297,962) ------------------------------------------------------------------------------------------- 668,250 466,826 Other assets 78,640 75,291 ------------------------------------------------------------------------------------------- Total Assets $ 1,176,177 $ 984,472 =========================================================================================== Liabilities and Stockholders' Equity Current liabilities $ 222,135 $ 208,508 Long-term debt 325,387 274,864 Deferred income taxes 117,149 76,834 Other liabilities 27,138 24,430 Stockholders' equity 484,368 399,836 ------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 1,176,177 $ 984,472 ===========================================================================================
OPERATING STATISTICS 4 Qtr. 2006 3 Qtr. 2006 2 Qtr. 2006 1 Qtr. 2006 4 Qtr. 2005 ----------------------------------------------------------------------------------------------------------- Refining Group: -------------- Four Corners Operations: Crude Oil/NGL Throughput (BPD) 25,878 26,572 28,658 29,122 29,033 Refinery Sourced Sales Barrels (BPD) 25,157 27,102 27,084 28,471 27,075 Avg. Crude Oil Costs ($/Bbl) $ 60.18 $ 70.50 $ 67.86 $ 62.30 $ 60.21 Refining Margins ($/Bbl) $ 11.68 $ 18.31 $ 21.97 $ 10.84 $ 16.64 Retail Fuel Volumes Sold as a % of Four Corners Refineries' Sourced Sales Barrels 54% 50% 47% 38% 37% Yorktown Operations: Crude Oil/NGL Throughput (BPD) 68,818 70,751 60,396 37,589 41,685 Refinery Sourced Sales Barrels (BPD) 73,028 68,360 61,668 33,466 45,566 Avg. Crude Oil Costs ($/Bbl) $ 57.57 $ 68.92 $ 68.36 $ 59.02 $ 57.72 Refining Margins ($/Bbl) $ 5.19 $ 3.81 $ 6.65 $ (3.50) $ 9.61 Retail Group:(1)(2) ------------ Fuel Gallons Sold (000's) 52,881 52,426 49,021 46,261 45,421 Fuel Margins ($/gal) $ 0.17 $ 0.25 $ 0.17 $ 0.15 $ 0.29 Merchandise Sales ($ in 000's) $ 39,835 $ 43,175 $ 40,972 $ 35,531 $ 36,828 Merchandise Margins 28% 27% 27% 27% 28% Number of Operating Units at End of Period 155 153 134 134 135 Wholesale Group: (3) --------------- Fuel Gallons Sold (000's) 155,654 150,278 149,231 140,748 141,328 Fuel Margins ($/gal) $ 0.06 $ 0.07 $ 0.06 $ 0.07 $ 0.09 Lubricant Sales ($ in 000's) $ 19,833 $ 18,388 $ 15,770 $ 17,644 $ 14,789 Lubricant Margins 13% 14% 14% 13% 15% ----------------------------------------------------------------------------------------------------------- Operating Income/(loss)(before corporate allocations) (in 000's) ----------------------------------- Refining - Four Corners Operations $ 6,647 $ 24,572 $ 35,375 $ 11,233 $ 22,539 - Yorktown Operations 6,637 (802) 14,589 (30,805) 16,533 Retail(1)(2) 3,083 8,212 3,978 1,711 7,751 Wholesale(3) 3,901 5,202 3,527 4,175 5,109 Corporate (8,878) (8,784) (8,392) (6,102) (5,800) Net (loss)/gain on disposal/write-down of assets(4) (1,764) 46,500 33,051 3,493 (174) ----------------------------------------------------------------------------------------------------------- Total $ 9,626 $ 74,900 $ 82,128 $(16,295) $ 45,958 =========================================================================================================== Capital expenditures (in 000's) ------------------------------- Refining - Four Corners Operations(5) $ 27,589 $ 25,168 $ 26,263 $ 9,783 $ 5,687 - Yorktown Operations(6) 18,559 23,973 40,224 47,791 14,190 Retail 3,588 2,663 997 814 1,488 Wholesale 1,494 744 1,039 1,204 529 Corporate 172 395 398 105 375 ----------------------------------------------------------------------------------------------------------- Total $ 51,402 $ 52,943 $ 68,921 $ 59,697 $ 22,269 =========================================================================================================== (1) Includes 12 convenience stores from Dial Oil Co ("Dial"). (2) Includes 21 convenience stores purchased from Amigo Petroleum Company ("Amigo") in August 2006. (3) Includes Wholesale operations of Dial and Amigo. (4) Includes insurance proceeds related to the Yorktown fire incident that occurred in November 2005. (5) Includes disbursements related to the October 2006 Ciniza fire incident. (6) Includes disbursements related to the November 2005 and September 2006 Yorktown fire incidents.
Selected Financial Data December 31, 2006 December 31, 2005 ----------------------------------------------------------------------------------------- Working Capital (In Thousands) $ 207,152 $ 233,847 Current Ratio 1.93:1 2.12:1 Long-Term Debt As A Percent of Total Capital (8) 40.2% 40.7% Net Debt As A Percent of Total Net Capital (9) 38.8% 21.7% Book Value Per Share (10) $ 33.08 $ 27.36 Net cash provided by operating activities $ 27,830 $ 188,808 ----------------------------------------------------------------------------------------- (8) Total Capital represents Long-Term Debt plus Total Stockholders' Equity. (9) Net Debt represents Long-Term Debt less Cash and cash equivalents. Total Net Capital represents Long-Term Debt less Cash and cash equivalents plus Total Stockholders' Equity. (10) Book Value Per Share represents Total Stockholders' Equity divided by number of common shares outstanding.
Share Price Data (NYSE: GI) High Low Close ------------------------------------------- 2006 4th Quarter $81.45 $74.20 $74.95 2006 3rd Quarter $82.30 $64.49 $81.20 2006 2nd Quarter $76.97 $56.09 $66.55 2006 1st Quarter $71.00 $52.44 $69.54 2005 4th Quarter $60.50 $47.80 $51.96 RECONCILIATIONS TO AMOUNTS REPORTED UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REFINING GROUP Refining Margin Refining margin is the difference between average net sales prices and average cost of products produced per refinery sourced sales barrel of refined product. Refining margins for each of our refineries and all of our refineries on a consolidated basis are calculated as shown below. Three Months Twelve Months Ended December 31, Ended December 31, --------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 --------------------------------------------------------------------------------------------------- AVERAGE PER BARREL Four Corners Operations Net sales $ 72.18 $ 78.22 $ 84.19 $ 72.42 Less cost of products 60.50 61.58 68.47 58.39 --------------------------------------------------------------------------------------------------- Refining margin $ 11.68 $ 16.64 $ 15.72 $ 14.03 =================================================================================================== Yorktown Operations Net sales $ 62.80 $ 68.17 $ 70.43 $ 62.66 Less cost of products 57.61 58.56 66.48 53.94 --------------------------------------------------------------------------------------------------- Refining margin $ 5.19 $ 9.61 $ 3.95 $ 8.72 =================================================================================================== Consolidated Net sales $ 65.20 $ 71.92 $ 74.73 $ 65.71 Less cost of products 58.35 56.68 67.10 55.33 --------------------------------------------------------------------------------------------------- Refining margin $ 6.85 $ 15.24 $ 7.63 $ 10.38 =================================================================================================== Reconciliations of refined product sales from produced products sold per barrel to net revenues Four Corners Operations Average sales price per produced barrel sold $ 72.18 $ 78.22 $ 84.19 $ 72.42 Times refinery sourced sales barrels per day 25,157 27,075 26,945 28,516 Times number of days in period 92 92 365 365 --------------------------------------------------------------------------------------------------- Refined product sales from produced products sold* (000's) $ 167,057 $ 194,838 $ 828,002 $ 753,772 =================================================================================================== Yorktown Operations Average sales price per produced barrel sold $ 62.80 $ 68.17 $ 70.43 $ 62.66 Times refinery sourced sales barrels per day 73,028 45,566 59,264 62,667 Times number of days in period 92 92 365 365 --------------------------------------------------------------------------------------------------- Refined product sales from produced products sold* (000's) $ 421,927 $ 285,774 $1,523,497 $1,433,251 =================================================================================================== Consolidated (000's) Sum of refined product sales from produced products sold* $ 588,984 $ 480,612 $2,351,499 $2,187,023 Purchased product, transportation and other revenues 132,868 120,306 523,161 266,484 --------------------------------------------------------------------------------------------------- Net revenue $ 721,852 $ 600,918 $2,874,660 $2,453,507 =================================================================================================== *Includes inter-segment net revenues.
Three Months Twelve Months Ended December 31, Ended December 31, --------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 --------------------------------------------------------------------------------------------------- Reconciliation of average cost of products per produced per barrel sold to total cost of products sold (excluding depreciation and amortization) Four Corners Operations Average cost of products per produced barrel sold $ 60.50 $ 61.58 $ 68.47 $ 58.39 Times refinery sourced sales barrels per day 25,157 27,075 26,945 28,516 Times number of days in period 92 92 365 365 --------------------------------------------------------------------------------------------------- Cost of products for produced products sold (000's) $ 140,024 $ 153,389 $ 673,397 $ 607,743 =================================================================================================== Yorktown Operations Average cost of products per produced barrel sold $ 57.61 $ 58.56 $ 66.48 $ 53.94 Times refinery sourced sales barrels per day 73,028 45,566 59,264 62,667 Times number of days in period 92 92 365 365 --------------------------------------------------------------------------------------------------- Cost of products for produced products sold (000's) $ 387,057 $ 245,488 $1,438,053 $1,233,794 =================================================================================================== Consolidated Sum of refined cost of produced products sold $ 527,081 $ 398,877 $2,111,450 $1,841,537 Purchased product, transportation and other cost of products sold 125,138 114,554 491,733 236,363 --------------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) $ 652,219 $ 513,431 $2,603,183 $2,077,900 ===================================================================================================
RETAIL GROUP(1)(2) Fuel Margin Fuel margin is the difference between fuel sales less cost of fuel sales divided by number of gallons sold. Three Months Twelve Months Ended December 31, Ended December 31, ----------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 ----------------------------------------------------------------------------------------------------- (in 000's except fuel margin per gallon) Fuel sales $ 123,578 $ 114,277 $ 526,623 $ 408,687 Less cost of fuel sold 114,385 100,937 489,345 374,071 ----------------------------------------------------------------------------------------------------- Fuel margin $ 9,193 $ 13,340 $ 37,278 $ 34,616 Number of gallons sold 52,881 45,421 200,590 174,510 Fuel margin per gallon $ 0.17 $ 0.29 $ 0.19 $ 0.20 Reconciliation of fuel sales to net revenues (000's) Fuel sales $ 123,578 $ 114,277 $ 526,623 $ 408,687 Excise taxes included in sales (21,153) (16,665) (74,178) (62,671) ----------------------------------------------------------------------------------------------------- Fuel sales, net of excise taxes 102,425 97,612 452,445 346,016 Merchandise sales 39,835 36,828 159,513 144,968 Other sales 5,737 5,024 20,809 17,133 ----------------------------------------------------------------------------------------------------- Net revenues $ 147,997 $ 139,464 $ 632,767 $ 508,117 ===================================================================================================== Reconciliation of fuel cost of products sold to total cost of products sold (excluding depreciation and amortization) (000's) Fuel cost of products sold $ 114,385 $ 100,937 $ 489,345 $ 374,071 Excise taxes included in cost of products sold (21,153) (16,665) (74,178) (62,671) ----------------------------------------------------------------------------------------------------- Fuel cost of products sold, net of excise taxes 93,232 84,272 415,167 311,400 Merchandise cost of products sold 28,874 26,574 115,723 105,391 Other cost of products sold 4,459 3,971 16,046 13,466 ----------------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) $ 126,565 $ 114,817 $ 546,936 $ 430,257 ===================================================================================================== (1) Includes 12 retail stores acquired in the Dial transaction on July 12, 2005. (2) Includes 21 operating stores acquired from Amigo in August 2006.
WHOLESALE GROUP(1)(2) Fuel Margin Fuel margin is the difference between fuel sales less cost of fuel sales divided by number of gallons sold. Three Months Twelve Months Ended December 31, Ended December 31, ----------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 ----------------------------------------------------------------------------------------------------- (in 000's except fuel margin per gallon) Fuel sales $ 334,849 $ 319,217 $1,410,604 $1,118,796 Less cost of fuel sold 324,914 307,046 1,372,318 1,080,618 ----------------------------------------------------------------------------------------------------- Fuel margin $ 9,935 $ 12,171 $ 38,286 $ 38,178 Number of gallons sold 155,654 141,328 595,910 520,664 Fuel margin per gallon $ 0.06 $ 0.09 $ 0.06 $ 0.07 Reconciliation of fuel sales to net revenues (000's) Fuel sales $ 334,849 $ 319,217 $1,410,604 $1,118,796 Excise taxes included in sales (49,135) (43,277) (192,798) (162,780) ----------------------------------------------------------------------------------------------------- Fuel sales, net of excise taxes 285,714 275,940 1,217,806 956,016 Lubricant sales 19,833 14,789 71,635 46,309 Other sales 4,117 583 14,199 5,087 ----------------------------------------------------------------------------------------------------- Net revenues $ 309,664 $ 291,312 $1,303,640 $1,007,412 ===================================================================================================== Reconciliation of fuel cost of products sold to total cost of products sold (excluding depreciation and amortization) (000's) Fuel cost of products sold $ 324,914 $ 307,046 $1,372,318 $1,080,618 Excise taxes included in cost of products sold (49,135) (43,277) (192,798) (162,780) ----------------------------------------------------------------------------------------------------- Fuel cost of products sold, net of excise taxes 275,779 263,769 1,179,520 917,838 Lubricant cost of products sold 17,165 12,635 61,912 38,962 Other cost of products sold 1,613 125 5,247 1,308 ----------------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) $ 294,557 $ 276,529 $1,246,679 $ 958,108 ===================================================================================================== (1) Includes Phoenix Fuel and Wholesale operations of Dial and Amigo that were acquired in July 2005 and August 2006, respectively. (2) Dial presents sales and cost of sales, net of excise taxes.
CONSOLIDATED Three Months Twelve Months Ended December 31, Ended December 31, ----------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 ----------------------------------------------------------------------------------------------------- Reconciliation to net revenues reported in Condensed Consolidated Statement of Operations (000's) Net revenues - Refinery Group $ 721,852 $ 600,918 $2,874,660 $2,453,507 Net revenues - Retail Group 147,997 139,464 632,767 508,117 Net revenues - Wholesale Group 309,664 291,312 1,303,640 1,007,412 Net revenues - Other 72 77 296 455 Eliminations (180,273) (110,833) (637,799) (388,245) ----------------------------------------------------------------------------------------------------- Total net revenues reported in Condensed Consolidated Statement of Earnings $ 999,312 $ 920,938 $4,173,564 $3,581,246 ===================================================================================================== Reconciliation to cost of products sold (excluding depreciation and amortization) in Condensed Consolidated Statement of Operations (000's) Cost of products sold - Refinery Group (excluding depreciation and amortization) $ 652,219 $ 513,431 $2,603,183 $2,077,900 Cost of products sold - Retail Group (excluding depreciation and amortization) 126,565 114,817 546,936 430,257 Cost of products sold - Wholesale Group (excluding depreciation and amortization) 294,557 276,529 1,246,679 958,108 Eliminations (180,273) (110,833) (637,799) (388,245) Other 4,466 4,166 17,924 15,171 ----------------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) reported in Condensed Consolidated Statement of Operations $ 897,534 $ 798,110 $3,776,923 $3,093,191 =====================================================================================================
Our refining margin per barrel is calculated by subtracting cost of products from net sales and dividing the result by the number of barrels sold for the period. Our fuel margin per gallon is calculated by subtracting cost of fuel sold from fuel sales and dividing the result by the number of gallons sold for the period. We use refining margin per barrel and fuel margin per gallon to evaluate performance, and allocate resources. These measures may not be comparable to similarly titled measures used by other companies. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered as alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America.