EX-99.2 5 d90037a2ex99-2.txt PRO FORMA FINANCIAL INFORMATION 1 EXHIBIT 99.2 PRO FORMA FINANCIAL INFORMATION UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS Unaudited Pro Forma Combined Balance Sheet as of March 31, 2000 Unaudited Pro Forma Combined Statement of Income for the Three Months Ended March 31, 2000 Unaudited Pro Forma Combined Statement of Income for the Year Ended December 31, 1999 Notes to Unaudited Pro Forma Combined Financial Statements 2 EXHIBITS 99.2 VALERO ENERGY CORPORATION UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following unaudited pro forma combined financial statements give effect to the Benicia acquisition and related interim financings as described in Valero's Form 8-K dated May 15, 2000. The unaudited pro forma combined balance sheet as of March 31, 2000 is presented as if the Benicia acquisition and related interim financings had occurred on that date. The unaudited pro forma combined statements of income for the three months ended March 31, 2000 and the year ended December 31, 1999 assume that the Benicia acquisition and related interim financings occurred on January 1, 1999. The Benicia acquisition is being accounted for using the purchase method of accounting, with the purchase price allocated to the assets acquired and liabilities assumed based on estimated fair values, pending the completion of an independent appraisal. The unaudited pro forma combined financial statements should be read in conjunction with (i) the historical consolidated financial statements of Valero included in its quarterly report on Form 10-Q for the three months ended March 31, 2000 and its annual report on Form 10-K for the year ended December 31, 1999, and (ii) the historical consolidated financial statements of the Benicia refinery and related branded supplier relationships and service station facilities included in this Form 8-K/A. The unaudited pro forma combined financial statements are not necessarily indicative of the financial position that would have been obtained or the financial results that would have occurred if the Benicia acquisition and related interim financings had been consummated on the dates indicated, nor are they necessarily indicative of the financial position or financial results which may be attained in the future. The pro forma adjustments, as described in the Notes to Pro Forma Combined Financial Statements, are based upon available information and upon certain assumptions that Valero's management believes are reasonable. 3 VALERO ENERGY CORPORATION PRO FORMA COMBINED BALANCE SHEET March 31, 2000 (in thousands) (unaudited)
Valero Benicia Pro Forma Pro Forma Historical Historical Adjustments Combined ----------- ----------- ------------- ----------- ASSETS CURRENT ASSETS: Cash and temporary cash investments .................... $ 8,509 $ 99 $ (99)(a) $ 8,509 Receivables, net ................... 403,557 44,998 (44,998)(a) 403,557 Inventories ........................ 436,197 30,345 (30,345)(a) 591,083 154,886 (b) Current deferred income tax assets ..................... 89,477 -- -- 89,477 Prepaid expenses and other .......................... 22,591 3,224 (3,224)(a) 22,591 ----------- ----------- ------------- ----------- 960,331 78,666 76,220 1,115,217 ----------- ----------- ------------- ----------- PROPERTY, PLANT AND EQUIPMENT .......................... 2,711,907 901,641 (901,641)(a) 3,427,527 715,620 (b) Less: Accumulated depreciation ................... 726,723 426,191 (426,191)(a) 726,723 ----------- ----------- ------------- ----------- 1,985,184 475,450 240,170 2,700,804 ----------- ----------- ------------- ----------- DEFERRED CHARGES AND OTHER ASSETS ....................... 175,659 18,109 (18,109)(a) 218,467 42,808 (b) ----------- ----------- ------------- ----------- $ 3,121,174 $ 572,225 $ 341,089 $ 4,034,488 =========== =========== ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt .................... $ 126,500 $ -- $ -- $ 126,500 Accounts payable ................... 732,561 37,768 (37,768)(a) 732,561 Accrued expenses ................... 96,213 24,512 (24,512)(a) 97,213 1,000 (b) ----------- ----------- ------------- ----------- 955,274 62,280 (61,280) 956,274 ----------- ----------- ------------- ----------- LONG-TERM DEBT ......................... 645,155 -- 907,014 (b) 1,552,169 ----------- ----------- ------------- ----------- DEFERRED INCOME TAXES .............................. 296,628 88,560 (88,560)(a) 296,628 ----------- ----------- ------------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES .................. 115,413 11,503 (11,503)(a) 120,713 5,300 (b) ----------- ----------- ------------- ----------- COMMON STOCKHOLDERS' EQUITY: Common stock ................... 563 -- -- 563 Additional paid-in capital .................... 1,088,829 -- -- 1,088,829 Retained earnings .............. 27,408 -- -- 27,408 Treasury stock ................. (8,096) -- -- (8,096) ExxonMobil net investment ...... -- 409,882 (409,882)(a) -- ----------- ----------- ------------- ----------- 1,108,704 409,882 (409,882) 1,108,704 ----------- ----------- ------------- ----------- $ 3,121,174 $ 572,225 $ 341,089 $ 4,034,488 =========== =========== ============= ===========
See Notes to Pro Forma Combined Financial Statements. 4 VALERO ENERGY CORPORATION PRO FORMA COMBINED STATEMENT OF INCOME For the Three Months Ended March 31, 2000 (dollars in thousands, except per share amounts) (unaudited)
Valero Benicia Pro Forma Pro Forma Historical Historical Adjustments Combined ---------- ---------- ----------- ----------- OPERATING REVENUES............... $2,928,617 $ 623,337 $ (128,538)(c) $ 3,423,416 ---------- ---------- ----------- ----------- COSTS AND EXPENSES: Cost of sales and operating expenses................. 2,827,341 567,535 (128,538)(c) 3,268,376 612 (d) (670)(g) 2,096 (g) Selling and administrative expenses................. 19,669 7,501 2,020 (d) 30,065 875 (e) Depreciation expense......... 24,555 6,723 (6,723)(f) 31,023 6,468 (f) ---------- ---------- ----------- ----------- Total.................... 2,871,565 581,759 (123,860) 3,329,464 ---------- ---------- ----------- ----------- OPERATING INCOME (LOSS).......... 57,052 41,578 (4,678) 93,952 OTHER INCOME (EXPENSE), NET.......................... 2,647 (45) -- 2,602 INTEREST AND DEBT EXPENSE: Incurred................. (14,147) -- (18,775)(h) (32,922) Capitalized.............. 1,387 -- -- 1,387 ---------- ---------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES................. 46,939 41,533 (23,453) 65,019 INCOME TAX EXPENSE (BENEFIT).................... 16,200 16,923 (9,923)(i) 23,200 ---------- ---------- ----------- ----------- NET INCOME (LOSS)................ $ 30,739 $ 24,610 $ (13,530) $ 41,819 ========== ========== =========== =========== EARNINGS PER SHARE OF COMMON STOCK.............. $ .55 $ .75 Weighted average common shares outstanding (in thousands) 55,874 55,874 EARNINGS PER SHARE OF COMMON STOCK - ASSUMING DILUTION............. $ .54 $ .73 Weighted average common shares outstanding (in thousands) 57,234 57,234
See Notes to Pro Forma Combined Financial Statements. 5 VALERO ENERGY CORPORATION PRO FORMA COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Valero Benicia Pro Forma Pro Forma Historical Historical Adjustments Combined ---------- ---------- ----------- ----------- OPERATING REVENUES............... $7,961,168 $1,826,081 $ (474,506)(c) $ 9,312,743 ---------- ---------- ----------- ----------- COSTS AND EXPENSES: Cost of sales and operating expenses....................... 7,731,151 1,661,750 (474,506)(c) 8,882,224 2,448 (d) (45,100)(g) 6,481 (g) Selling and administrative expenses................. 68,463 25,478 8,080 (d) 105,521 3,500 (e) Depreciation expense......... 92,413 26,474 (26,474)(f) 118,283 25,870 (f) ---------- ---------- ----------- ----------- Total.................... 7,892,027 1,713,702 (499,701) 9,106,028 ---------- ---------- ----------- ----------- OPERATING INCOME................. 69,141 112,379 25,195 206,715 OTHER INCOME (EXPENSE), NET.......................... 6,475 (825) -- 5,650 INTEREST AND DEBT EXPENSE: Incurred................. (61,182) -- (75,098)(h) (136,280) Capitalized.............. 5,753 -- -- 5,753 ---------- ---------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES................. 20,187 111,554 (49,903) 81,838 INCOME TAX EXPENSE (BENEFIT).................... 5,900 46,023 (23,723)(i) 28,200 ---------- ---------- ----------- ----------- NET INCOME (LOSS)................ $ 14,287 $ 65,531 $ (26,180) $ 53,638 ========== ========== =========== =========== EARNINGS PER SHARE OF COMMON STOCK................. $ .25 $ .96 Weighted average common shares outstanding (in thousands).... 56,086 56,086 EARNINGS PER SHARE OF COMMON STOCK - ASSUMING DILUTION.............. $ .25 $ .95 Weighted average common shares outstanding (in thousands)... 56,758 56,758
See Notes to Pro Forma Combined Financial Statements. 6 VALERO ENERGY CORPORATION NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED) (a) To reverse the historical cost of the assets acquired and liabilities assumed. (b) To reflect the allocation of the purchase price, including transaction costs incurred in the acquisition, to the assets acquired and liabilities assumed based on their estimated fair values as follows (in thousands): Inventories......................................................... $ 154,886 Property, plant and equipment....................................... 715,620 Deferred charges and other assets................................... 42,808 Accrued expenses.................................................... (1,000) Deferred credits and other liabilities.............................. (5,300) --------- $ 907,014 =========
The above also reflects borrowings of $600 million under the Bridge Facility and $307 million under the Credit Facility, including related debt issuance costs of $7.8 million, required to fund the Benicia acquisition. (c) To exclude excise taxes collected on behalf of governmental agencies associated with the operations acquired in the Benicia acquisition from Operating Revenues and Cost of Sales to conform to Valero's accounting policies. (d) To reflect rent expense related to a structured lease financing arrangement used to finance the acquisition of the Benicia refinery's dock facility, which is included in Operating Expenses, and the Service Station Assets, which is included in Selling and Administrative Expenses. (e) To reflect amortization expense on $35 million of value assigned to Valero's receipt of the exclusive right to offer the Exxon brand throughout California (except for the San Francisco Bay area) for a ten-year period in connection with Valero's acquisition of the Distribution Assets. (f) To reverse historical depreciation expense and record depreciation expense over an estimated life of 25 years based on the portion of the acquisition cost allocated to property, plant and equipment. (g) To conform the accounting for turnaround costs at the Benicia refinery from the "expense as incurred" method followed by ExxonMobil to the "defer and amortize" method followed by Valero. (h) To reflect interest expense on borrowings under the Bridge Facility of $12.2 million and $48.6 million for the three months ended March 31, 2000 and the year ended December 31, 1999, respectively, and interest expense on borrowings under the Credit Facility of $5.9 million and $23.7 million for the three months ended March 31, 2000 and the year ended December 31, 1999, respectively, required to fund the Benicia acquisition, as well as the amortization of deferred debt issuance costs. (i) To reflect the tax effect, based on statutory rates, of the pro forma pre-tax income adjustments related to the Benicia acquisition and to adjust taxes on Benicia's earnings to reflect state income taxes based on Valero's consolidated operations rather than the operations of Benicia on a stand-alone basis. The statutory rate utilized, including federal taxes at 35% and state taxes based on an applicable apportionment factor applied to the statutory California tax rate of 8.84%, totaled 36.3% and 36.5% for the three months ended March 31, 2000 and the year ended December 31, 1999, respectively.