EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1

 
NEWS
RELEASE

2005-02

FOR IMMEDIATE RELEASE
Contact: Doug Aron
(713) 688-9600 x145

FRONTIER OIL REPORTS 2004 FOURTH QUARTER AND YEAR END RESULTS

HOUSTON, TEXAS, February 23, 2005 - Frontier Oil Corporation (NYSE: FTO) today announced results for the quarter ended December 31, 2004. Fourth quarter earnings, excluding the impact of a $9.2 million (1) (after-tax) charge related to the Company’s early debt retirement, would have been approximately $9.5 million, or $0.34 per diluted share. Including this charge, Frontier reported net income of $239,000, or $0.01 per diluted share. Net income for the fourth quarter of 2003 was $4.1 million, or $0.15 per diluted share.

For the twelve months ended December 31, 2004, Frontier’s net income excluding the early debt retirement charge totaled $79.0 million, or $2.88 per diluted share, compared to net income of $3.2 million, or $0.12 per diluted share, for the twelve-month period in 2003. Including the early debt retirement charge, net income for the twelve-month period ended 2004 totaled $69.8 million, or $2.55 per diluted share.

The fourth quarter 2004 results benefited primarily from wide crude oil differentials and strong diesel crack spreads. Frontier’s light/heavy crude oil differential averaged $13.34 per barrel for the fourth quarter 2004, significantly higher than the average $7.66 per barrel in the same period of 2003. The WTI/WTS (sweet/sour) crude oil differential averaged $5.82 per barrel for the fourth quarter 2004, more than double the $2.71 per barrel average in the fourth quarter of 2003. The diesel crack spread improved to an average of $9.84 per barrel in the fourth quarter of 2004 compared to an average of $5.57 per barrel for the fourth quarter of 2003. The fourth quarter 2004 was negatively impacted by the gasoline crack spread averaging $3.71 per barrel in the fourth quarter 2004, compared to the $5.22 per barrel average earned in the same period of 2003.

Frontier’s Chairman, President and CEO, James Gibbs, commented, “We are delighted with the fourth quarter and year-end 2004 results. Crude oil differentials continue to be a significant competitive advantage for Frontier and with the continued worldwide increase of heavy and sour crude oil production, we expect wide crude oil differentials for several years to come. The future bodes well for refiners like Frontier with complex plants that can process these lower cost feedstocks. Our outstanding 2004 results allowed us to accomplish two of our previously stated strategic goals, increasing our quarterly dividend as well as refinancing our long-term debt. In September of 2004 our Board of Directors increased our dividend from $0.20 to $0.24 annually and we hope to announce another increase in 2005. Also in the fourth quarter, we not only reduced our debt outstanding by more than $50 million, we also decreased our long-term interest rate to 6 ⅝%, which should lead to an approximate $10 million annual reduction in interest expense going forward.”

Frontier’s year-end cash balance was $124.4 million and the Company had no borrowings under its revolving credit facility. As of December 31, 2004, Frontier’s debt to total capitalization was 38.5% and net debt (debt minus cash) to total capitalization was 9.6%.
 
The fourth quarter 2004 results include an after-tax inventory loss of approximately $8.1 million, or $0.29 per diluted share, compared to a gain of $6.7 million, or $0.25 per diluted share, for the same period of 2003. The twelve months ended December 31, 2004 include an after-tax inventory gain of $19.8 million, or $0.72 per share, compared to a gain of $4.4 million, or $0.16 per share, for the twelve-month period ended December 31, 2003.

Conference Call

A conference call is scheduled for today, February 23, 2005, at 11:00 a.m. eastern time, to discuss the financial results. To access the call, please dial (800) 289-0746. For those individuals outside the United States, please call (913) 981-5573. A recorded replay of the call may be heard through March 9, 2005 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 7142683. In addition, the real-time conference call and a recorded replay will be webcast by PR Newswire. To access the call or the replay via the Internet, go to www.frontieroil.com and register from the Investor Relations page of the site.

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 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
 
Three Months
 
   
December 31
  
December 31
  
   
2004
 
2003
 
2004
  
2003
  
INCOME STATEMENT DATA ($000's except per share)
                  
Revenues
  
$
2,861,716
  
$
2,170,503
  
$
803,404
  
$
542,943
  
Raw material, freight and other costs
    
2,432,461
    
1,860,795
    
712,610
    
459,394
  
Refining operating expenses, excluding depreciation
    
219,781
    
200,383
   
57,657
   
51,324
  
Selling and general expenses, excluding depreciation
    
29,893
   
19,890
   
8,972
   
4,964
 
Merger termination and legal costs
    
3,824
   
8,739
   
4
   
4,786
 
Operating income before depreciation
    
175,757
   
80,696
   
24,161
   
22,475
 
Depreciation and amortization
    
32,208
   
28,832
   
8,280
   
7,645
 
Operating income
   
143,549
   
51,864
   
15,881
   
14,830
 
Interest expense and other financing costs (1)
    
37,573
   
28,746
   
19,955
   
7,997
 
Interest income
    
(1,716
)
  
(1,109
)
  
(826
)
  
(202
)
Gain on involuntary conversion of assets
    
(4,411
)
  
-
   
(3,817
)
  
-
 
Merger financing termination costs, net
    
-
    
18,039
    
-
    
407
  
Provision for income taxes
    
42,339
   
2,956
   
330
   
2,526
 
Net income
 
$
69,764
  
$
3,232
  
$
239
  
$
4,102
  
Net income per diluted share
  
$
2.55
  
$
0.12
  
$
0.01
  
$
0.15
  
Average shares outstanding (000's)
    
27,401
   
26,991
   
27,707
   
27,068
 
                           
OTHER FINANCIAL DATA ($000's)
                          
Adjusted EBITDA (2)
  
$
180,168
  
$
80,696
  
$
27,978
  
$
22,475
  
Cash flow before changes in working capital
    
139,280
   
19,917
   
15,058
    
(11,072
)
Working capital changes
    
38,619
   
(25,922
)
  
57,385
   
(24,250
)
Net cash provided by (used in) operating activities
    
177,899
   
(6,005
)
  
72,443
   
(35,322
)
Net cash used in investing activities
    
(43,107
)
  
(34,300
)
  
(10,057
)
  
(7,544
)
                           
OPERATIONS
                          
Consolidated
                          
Operations (bpd)
                          
Total charges
    
164,757
   
165,628
   
164,581
   
166,347
 
Gasoline yields
    
82,944
   
83,449
   
85,997
   
87,937
 
Diesel and jet fuel yields
    
53,093
   
53,156
   
54,898
   
53,059
 
Total sales
    
165,989
   
165,667
   
169,518
   
169,233
 
                           
Refinery operating margins information ($ per bbl)
                          
Refined products revenue
  
$
47.27
  
$
35.88
  
$
51.41
  
$
34.95
  
Raw material, freight and other costs
    
40.04
   
30.77
   
45.69
   
29.51
 
Refinery operating expenses, excluding depreciation
    
3.62
   
3.31
   
3.70
   
3.30
 
Refinery depreciation and amortization
    
0.53
   
0.47
   
0.58
   
0.49
 
                           
Light/Heavy crude oil differential ($ per bbl)
  
$
9.90
  
$
7.10
  
$
13.34
  
$
7.66
  
WTI/WTS crude oil differential ($ per bbl)
    
3.74
   
2.68
   
5.82
   
2.71
 
                           
BALANCE SHEET DATA ($000's)
        
Cash, including cash equivalents (a)
  
$
124,389
  
$
64,520
              
Working capital
    
97,261
   
38,621
              
Short-term and current debt (b)
    
-
   
45,750
              
Total long-term debt (c)
    
150,000
   
168,689
              
Shareholders’ equity (d)
    
240,113
   
169,277
              
Net debt to book capitalization (b+c-a)/(b+c-a+d)
    
9.6
%
  
47.0
%
            

(1) Interest expense and other financing costs for twelve months and three months ended December 31, 2004 includes $14.9 million ($9.2 million after-tax) in costs related to the redemption of 11 ¾% senior notes.

(2) Adjusted EBITDA represents income before interest expense, interest income, merger financing termination costs (includes both interest expense and income), income tax, and depreciation and amortization. Adjusted EBITDA is not a calculation based upon generally accepted accounting principles; however, the amounts included in the adjusted EBITDA calculation are derived from amounts included in the consolidated financial statements of the Company. Adjusted 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. Adjusted EBITDA is not necessarily comparable to similarly titled measures of other companies. Adjusted 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. Adjusted EBITDA is also used for internal analysis and as a basis for financial covenants. Frontier’s adjusted EBITDA for the twelve and three months ended December 31, 2004 and 2003 is reconciled to net income as follows:

   
Twelve Months
 
Three Months
 
   
December 31
  
December 31
  
   
2004
 
2003
 
2004
  
2003
  
   
 (In thousands)
  
Net income
 
$
69,764
  
$
3,232
  
$
239
  
$
4,102
  
Add provision benefit for income taxes
    
42,339
   
2,956
   
330
   
2,526
 
Add interest expense and other financing costs
    
37,573
   
28,746
   
19,955
   
7,997
 
Subtract interest income
    
(1,716
)
  
(1,109
)
  
(826
)
  
(202
)
Add merger financing termination costs, net
    
-
   
18,039
   
-
   
407
 
Add depreciation and amortization
    
32,208
   
28,832
   
8,280
   
7,645
 
Adjusted EBITDA
  
$
180,168
  
$
80,696
  
$
27,978
  
$
22,475
  



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