HOUSTON, Feb. 11 /PRNewswire-FirstCall/ -- Frontier Oil Corporation
(NYSE: FTO) announced net income of $4.1 million, or $0.15 per diluted share,
for the fourth quarter ended December 31, 2003, compared to net income of
$3.0 million, or $0.11 per diluted share, for the same period of 2002. For
the year ended December 31, 2003, Frontier recorded net income of
$3.2 million, or $0.12 per diluted share, compared to net income of
$1.0 million, or $0.04 per diluted share, for the year ended
December 31, 2002.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010411/FTOLOGO )
Included in the fourth quarter are pre-tax expenses of $5.2 million,
after-tax expenses of $3.2 million, or $0.12 per share, related to the
terminated Holly Corp. merger and the associated pending lawsuit. The trial
is scheduled to begin in late February 2004 in Delaware Chancery Court.
Included in the results for the year ended December 31, 2003 are pre-tax
expenses of $26.8 million, after-tax expenses of $16.5 million, or $0.61 per
share, related to the terminated merger. Expenses related to the termination
of the Holly merger include $8.7 million of merger termination and legal fees
and $18.8 million in interest expense and financing costs offset by $752,000
in interest income.
EBITDA(A) for the fourth quarter of 2003 was $22.5 million compared to
$18.1 million for the same period of 2002. For the year ended 2003, EBITDA
totaled $80.7 million compared to $55.2 million for the twelve months ended
2002.
During the fourth quarter, Frontier benefited from excellent crude oil
spreads. The light/heavy crude oil spread was $7.66 per barrel in the fourth
quarter of 2003 compared to $6.31 per barrel for the fourth quarter of 2002,
and the WTI/WTS crude oil spread was $2.71 per barrel for the fourth quarter
of 2003 compared to $1.73 per barrel for the same period of 2002. For the
twelve months ended December 31, 2003, the light/heavy spread averaged $7.10
per barrel compared to $4.77 per barrel for the same period of 2002. The
WTI/WTS differential was $2.68 per barrel for the twelve-month period of 2003
compared to $1.36 per barrel for the year ended December 31, 2002.
Frontier's Chairman, President and CEO, James Gibbs, commented, "From an
operating standpoint, 2003 was an excellent year in which income before taxes,
excluding merger costs(B) was approximately $33.0 million, or $1.22 per share.
Furthermore, despite an 18-day crude unit turnaround at El Dorado in March
during a high margin period, we set a total charge record of 165,628 barrels
per day for the year. Unfortunately, due to the terminated merger with Holly
and the related merger costs(B), our income before taxes was offset by
$26.8 million, or $0.99 per share. We are eagerly awaiting a conclusion to
this matter. Looking forward, we are encouraged by the strength of crude oil
differentials and are exploring several opportunities to leverage this ongoing
trend."
On January 19, 2004, the Company reported a fire in the furnaces of the
coking unit at its Cheyenne Refinery and expected the coker to be out of
service for approximately 30 days. Fortunately, no serious injuries occurred
as a result of the fire. Frontier replaced one of the furnaces and is
completing repairs on the other and expects the coking unit to return to
service in mid-February 2004. The Company had previously scheduled a
distillate hydrotreater and naphtha hydrotreater turnaround in Cheyenne for
late March 2004, but has accelerated the start of the turnaround to begin in
mid-February in order to minimize lost production. This turnaround is
expected to last 16 days. As a result of the fire and the turnaround,
Frontier expects total crude charge for the first quarter at the Cheyenne
Refinery to average 35,000 barrels per day, of which approximately 81% will be
heavy crude. However, for the year, the Company expects to recover almost all
of the production lost in the first quarter.
The fourth quarter results include an after-tax inventory gain of
approximately $6.7 million, or $0.25 per share, compared to a loss of
($3.0) million, or ($0.11) per share, for the same period of 2002. Year-end
2003 results include a first in first out (FIFO) inventory gain of
$4.4 million, or $0.16 per share, compared to a gain of $19.0 million, or
$0.71 per share, for the year ended December 31, 2002.
Conference Call
A conference call is scheduled for today, February 11, 2004, at
11:00 a.m. EST, to discuss the financial results. To access the call, please
dial (800) 838-4403. For those outside the U.S., please call (973) 317-5319.
A replay may be heard through February 25, 2004 by dialing (800) 428-6051 and
entering the passcode 333626. To access the call or the replay via the
Internet, go to http://www.frontieroil.com and register on the Investor Relations
page.
Frontier operates a 110,000 barrel-per-day refinery located in El Dorado,
Kansas, and a 46,000 barrel-per-day refinery located in Cheyenne, Wyoming, and
markets its refined products principally along the eastern slope of the Rocky
Mountains and in other neighboring plains states. Information about the
Company may be found on its web site http://www.frontieroil.com .
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning
strategic plans, expectations and objectives for future operations. All
statements, other than statements of historical facts, included in this press
release that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future are forward-
looking statements. These statements are based on certain assumptions made by
the Company based on its experience and perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate in the circumstances. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the control
of the Company. Investors are cautioned that any such statements are not
guarantees of future performance and that actual results or developments may
differ materially from those projected in the forward-looking statements.
FRONTIER OIL CORPORATION
Twelve Months Ended Three Months Ended
December 31 December 31
2003 2002 2003 2002
INCOME STATEMENT DATA
($000's except per
share)
Revenues $2,170,503 $1,813,750 $542,943 $531,558
Refining operating
costs 2,061,178 1,740,908 510,718 508,679
Selling and general
expenses 19,890 17,611 4,964 4,790
Merger termination and
legal costs 8,739 0 4,786 0
Operating income
before depreciation
(EBITDA)(A) 80,696 55,231 22,475 18,089
Depreciation 28,832 27,332 7,645 6,979
Operating income 51,864 27,899 14,830 11,110
Interest expense and
other financing costs 28,746 27,613 7,997 6,874
Merger financing
termination costs, net 18,039 0 407 0
Interest income (1,109) (1,802) (202) (415)
Income before income
taxes 6,188 2,088 6,628 4,651
Provision for income
taxes 2,956 1,060 2,526 1,686
Net income $3,232 $1,028 $4,102 $2,965
Net income per diluted
share $0.12 $0.04 $0.15 $0.11
Diluted average shares
outstanding (000's) 26,991 26,934 27,068 26,813
OTHER FINANCIAL
DATA ($000's)
Cash flow before changes
in working capital $19,917 $33,050 $(11,072) $12,991
Working capital changes (25,922) 17,772 (24,250) 30,758
Net cash provided (used)
by operating activities (6,005) 50,822 (35,322) 43,749
Net cash provided (used)
by investing activities (34,300) (37,117) (7,544) (6,729)
Net cash provided (used)
by financing activities (7,539) (5,336) 770 (31,339)
BALANCE SHEET
DATA ($000's)
Cash, including cash
equivalents $64,520 $112,364
Working capital 38,621 108,253
Short-term and current
debt 45,750 0
Total long-term debt 168,689 207,966
Shareholders' equity 169,277 168,258
OPERATIONS
Operations (bpd)
Total charges 165,628 163,816 166,347 162,361
Gasoline yields 83,449 84,645 87,937 94,564
Diesel yields 53,156 53,436 53,059 55,140
Total sales 165,667 166,532 169,233 175,888
Refinery operating
margins information
($ per sales bbl)
Refined products
revenue $35.88 $29.82 $34.95 $32.74
Raw material, freight
and other costs 30.77 25.71 29.51 28.51
Operating expenses
excluding
depreciation 3.31 2.93 3.30 2.93
Refinery depreciation 0.47 0.44 0.49 0.43
Light/heavy crude oil
spread ($ per bbl) (C) $7.10 $4.77 $7.66 $6.31
WTI/WTS Differential
($ per bbl) 2.68 1.36 2.71 1.73
KEY TERMS: bpd = barrels per day; bbl = barrel
(A) EBITDA represents income before interest expense, interest income,
income tax, and depreciation and amortization. EBITDA is not a calculation
based upon generally accepted accounting principles; however, the amounts
included in the EBITDA calculation are derived from amounts included in the
consolidated financial statements of the Company. EBITDA should not be
considered as an alternative to net income or operating income, as an
indication of operating performance of the Company or as an alternative to
operating cash flow as a measure of liquidity. EBITDA is not necessarily
comparable to similarly titled measures of other companies. EBITDA is
presented here because it enhances an investor's understanding of Frontier's
ability to satisfy principal and interest obligations with respect to
Frontier's indebtedness and to use cash for other purposes, including capital
expenditures. EBITDA is also used for internal analysis and as a basis for
financial covenants. Frontier's EBITDA for each of the twelve months and
three months ended December 31, 2003 and 2002 is reconciled to net income as
follows:
Twelve Months Ended Three Months Ended
December 31 December 31
2003 2002 2003 2002
(In thousands)
Net income $3,232 $1,028 $4,102 $2,965
Add provision for
income taxes 2,956 1,060 2,526 1,686
Add interest expense
and other financing
costs 28,746 27,613 7,997 6,874
Add merger financing
termination costs,
net 18,039 0 407 0
Subtract interest
income (1,109) (1,802) (202) (415)
Add depreciation and
amortization 28,832 27,332 7,645 6,979
EBITDA $80,696 $55,231 $22,475 $18,089
(B) Merger costs consist of merger termination and legal costs, and merger
financing termination costs, net of merger escrow account interest income.
Income before taxes, excluding merger costs is income before taxes adding back
merger costs. Income before taxes, excluding merger costs is not a
calculation based upon generally accepted accounting principles; however the
amounts included in the calculation are derived from amounts included in the
consolidated financial statements of the Company. Income before taxes,
excluding merger costs should not be considered as an alternative to net
income or operating income, as an indication of operating performance of the
Company or as an alternative to operating cash flow as a measure of liquidity.
Income before taxes, excluding merger costs is presented here because it
enhances an investor's and management's understanding of Frontier's
operational results and provides a better comparison to prior year operations.
Income before taxes, excluding merger cost is reconciled below to income
before taxes for December 31, 2003:
Twelve Months Ended
December 31,
2003
(In thousands)
Income before taxes $6,188
Add merger financing termination
costs, net 18,039
Add merger termination and legal
costs 8,739
Subtotal Merger Costs 26,778
Income before taxes, excluding merger costs $32,966
Diluted shares 26,991
Merger costs per share $0.99
Income before taxes, excluding merger costs
per share $1.22
(C) Average light/heavy crude oil spread is the differential between the
benchmark average West Texas Intermediate (WTI) crude priced at Cushing,
Oklahoma and the heavy crude oil priced delivered to the Cheyenne refinery.
The light heavy spread has been restated in prior periods using WTI as the
light crude oil in order to be comparable with the WTI/WTS spread reported for
the El Dorado Refinery.
SOURCE Frontier Oil Corporation
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