HOUSTON, Oct. 30 /PRNewswire-FirstCall/ -- Frontier Oil Corporation
(NYSE: FTO) announced its strongest quarterly earnings since the third quarter
of 2001, even after recording $11.2 million ($0.42 per share) in after-tax
expenses relating to its terminated merger with Holly Corporation. Frontier
reported net income of $3.8 million, or $0.14 per share, for the third quarter
ended September 30, 2003, compared to net income of $809,000, or $0.03 per
share, for the same period of 2002. For the nine months ended September 30,
2003, Frontier recorded a net loss of ($870,000), or ($0.03) per share,
compared to a net loss of ($1.9 million), or ($0.08) per share, for the nine-
month period ended September 30, 2002.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010411/FTOLOGO )
During the third quarter, Frontier expensed $18.2 million pre-tax, $11.2
million after-tax, or $0.42 per share, in costs related to the terminated
Holly merger, the majority of which are one-time charges related to the
redeemed 8% Senior Notes. For the nine months ended September 30, 2003,
Frontier recorded expenses of $21.6 million pre-tax, $13.3 million after-tax,
or $0.51 per share, related to the terminated merger. Expenses included
financing costs, legal fees and other transaction related costs.
Third quarter 2003 results were positively impacted by higher product
margins due to increased product demand and improved crude oil differentials.
Frontier's refined products revenue less raw material, freight and other costs
was $5.62 per barrel for the third quarter 2003 compared to $4.19 per barrel
for the third quarter of 2002, $4.50 per barrel for the second quarter of 2003
and $4.63 per barrel for the first half of 2003. Crude oil spreads at both
refineries were well above the five-year averages. The light/heavy crude oil
spread was $6.00 per barrel in the third quarter of 2003 compared to $3.95 per
barrel for the third quarter 2002 and the WTI/WTS crude oil spread was
$2.44 per barrel for the third quarter 2003 compared to $0.97 per barrel for
the same period of 2002.
Both refineries operated well in the quarter, allowing for higher crude
charges and sales relative to 2002. For the three months ended September 30,
2003, crude charges averaged 158,884 barrels per day, up 5% from the 2002
crude charge rate of 151,055 barrels per day. Product sales were up 6% to
176,914 barrels per day in the third quarter 2003 compared to 166,750 barrels
per day for the same period of 2002.
Frontier's Chairman, President and CEO, James Gibbs, commented, "On an
operating basis, the third quarter was an outstanding quarter for Frontier.
Our plants ran extremely well and gasoline margins were significantly above
the five-year average. Unfortunately, we had to write off $18.2 million in
merger related expenses. We will attempt to recover these expenses as part of
damages claimed in the lawsuit filed against Holly in Delaware Chancery Court.
Looking forward, the fourth quarter is off to a strong start, due in part to
the industry's heavy turnaround schedule, particularly in the mid-continent,
the continued strength of crude oil differentials and diesel crack spreads
that are nearing highs for the year."
In connection with the termination of the Holly merger, on October 10,
2003 the Company redeemed $220 million of 8% Senior Notes sold in April to
help finance the merger. As a result of this redemption, Frontier's net debt
to capitalization ratio has improved. Post-redemption, the Company's long-
term debt consisted of $39.5 million of 9 1/8% Senior Notes due 2006 and
$170 million face amount of 11 3/4% Senior Notes due 2009. The Company's cash
balance at September 30, 2003 of $106.6 million was up $28.8 million from the
June 30, 2003 balance of $77.8 million.
The third quarter results included an after-tax inventory loss of
approximately ($3.9 million), or ($0.14) per share, compared to a gain of
$5.8 million, or $0.22 per share, for the same period of 2002. Year-to-date
2003 results include a FIFO inventory loss of ($2.3 million), or ($0.09) per
share, compared to a gain of $22.0 million, or $0.85 per share, for the nine
months ended September 30, 2002.
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.
Conference Call
A conference call is scheduled for tomorrow morning, October 31, 2003 at
10:30 a.m. EST, to discuss third quarter 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 November 13 by dialing (800) 428-6051 and
entering the passcode 309504. To access the call or the replay via the
Internet, go to http://www.frontieroil.com and register on the Investor Relations
page.
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
contemplated transaction and 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
Nine Months Ended Three Months Ended
September 30 September 30
2003 2002 2003 2002
INCOME STATEMENT DATA
($000's except per share)
Revenues $1,627,560 $1,282,192 $594,763 $486,680
Refining operating costs 1,550,460 1,232,229 551,218 466,397
Selling and general expenses 18,879 12,821 9,085 4,817
Operating income (loss) before
depreciation (EBITDA) (1) 58,221 37,142 34,460 15,466
Depreciation 21,187 20,353 7,156 6,979
Operating income (loss) 37,034 16,789 27,304 8,487
Interest expense, net
of interest income 37,474 19,352 20,542 6,538
Provision (Benefit) for
income taxes 430 (626) 2,940 1,140
Net income (loss) $(870) $(1,937) $3,822 $809
Net income per diluted, net
(loss) per basic share $(0.03) $(0.08) $0.14 $0.03
Average shares outstanding
(000's) 25,910 25,759 26,957 26,806
OTHER FINANCIAL DATA ($000's)
Cash flow before changes
in working capital $30,989 $20,059 $21,986 $10,119
Working capital changes (1,672) (12,986) 7,355 10,118
Net cash provided (used) by
operating activities 29,317 7,073 29,341 20,237
Net cash provided (used) by
investing activities (26,756) (30,388) (7,193) (4,193)
Net cash provided (used) by
financing activities (8,309) 26,003 6,646 (19,082)
BALANCE SHEET DATA ($000's)
Cash, including cash
equivalents (a) $106,616 $106,683
Restricted cash* 232,066 ---
Working capital 102,899 103,824
Short-term and current
debt (b)* 236,750 30,100
Total long-term debt (c) 208,112 207,921
Shareholders' equity (d) 164,731 166,748
Net debt to book capitalization
calculation
((b+c-a)/(b+c-a+d)) 67.2% 44.1%
OPERATIONS
Operations (bpd)
Total charges 165,385 164,306 177,364 170,391
Gasoline yields 81,936 81,303 86,014 79,779
Diesel yields 53,188 52,861 57,321 53,101
Total sales 164,468 163,379 176,914 166,750
Refinery operating margins
information ($ per bbl)
Refined products revenue $36.20 $28.76 $36.51 $31.84
Raw material, freight
and other costs 31.21 24.69 30.89 27.65
Operating expenses
excluding depreciation 3.32 2.94 2.98 2.75
Refinery depreciation 0.47 0.45 0.42 0.45
Light/Heavy crude spread
($ per bbl) $5.92 $3.74 $6.00 $3.95
WTI/WTS Differential
($ per bbl) 2.67 1.24 2.44 0.97
KEY TERMS: bpd = barrels per day; bbl = barrel
* Subsequent to quarter end, the Company redeemed $220 million 8% Senior
Notes using amounts classed as restricted cash.
(1) 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 nine months and three months ended
September 30, 2003 and 2002 is reconciled to net income as follows:
Nine Months Ended Three Months Ended
September 30 September 30
2003 2002 2003 2002
(in thousands)
Net income (loss) $(870) $(1,937) $3,822 $809
Add provision (benefit)
for income taxes 430 (626) 2,940 1,140
Add interest expense and
other financing costs 38,381 20,739 20,802 7,009
Subtract interest income (907) (1,387) (260) (471)
Add depreciation and
amortization 21,187 20,353 7,156 6,979
EBITDA $58,221 $37,142 $34,460 $15,466
SOURCE Frontier Oil Corporation
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