EXHIBIT 99.1
TOTAL ACQUISITION AND PRO FORMA FINANCIAL DATA
On April 15, 1997, UDS (the "Company") entered into a
definitive Arrangement Agreement (the "Arrangement") to acquire
Total Petroleum (North America) Ltd. ("Total"), a Denver, Colorado
based petroleum refining and marketing company. The Agreement
provides for the issuance of 0.322 shares of UDS Common Stock for
each outstanding share of Total Common Stock. The Company expects
to issue approximately 13.0 million shares of UDS Common Stock and
will assume approximately $490.0 million of Total debt. The
transaction is subject to the approval of Total shareholders,
completion of due diligence and customary approvals, including
approval by the Federal Trade Commission (the "FTC") under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 (the "HSR
Act"). The Company has made the requisite initial filing with the
FTC under the HSR Act with respect to the proposed Total
transaction. The FTC had made a request for additional information
from the Company concerning such transaction, which the Company
intends to provide. The transaction is expected to be completed by
the end of the third quarter of 1997. Total has approximately
6,000 employees and operates refineries in Ardmore, Oklahoma, ▇▇▇▇,
Michigan, and Denver, Colorado. The three refineries have a
combined throughput capacity of approximately 150,000 barrels of
crude oil per day. Total distributes gasoline and merchandise
through approximately 2,100 branded outlets concentrated around its
refineries in the central United States, of which approximately 560
are company-operated.
Pro Forma Financial Data Reflecting Total Acquisition
The following pro forma consolidated financial data, which was
included in the May 26, 1997 Management Proxy Circular (the "Proxy
Circular") furnished by Total to its shareholders in connection
with the Special Meeting of Shareholders called for the purpose of
obtaining approval of the Arrangement, gives effect to the
Arrangement as if it occurred on March 31, 1997 or December 31,
1996, in the case of the pro forma balance sheet data, and on
January 1, 1996, in the case of the pro forma income statement
data.
The Arrangement will be accounted for by the Company using the
purchase method of accounting. In connection therewith, the
purchase price will be allocated to the assets and liabilities of
Total as of the effective date of the acquisition, and the results
of operations of Total will be included in the Company's results of
operations thereafter. The purchase price has been allocated in
the pro forma entries based on Total management's estimates of the
fair values of the assets and liabilities of Total available as of
the date of the Proxy Circular and, in some instances, the effects
of conforming Total accounting practices to those of the Company.
Following the consummation of the Arrangement, such allocation will
be reflected in the consolidated balance sheet of the Company in
accordance with information then available, which could be
materially different from the estimates reflected herein. Among
other things, based on information available to the Company as of
the date of the Proxy Circular, the Company anticipated that the
application of its accounting practices would require that it
establish certain additional reserves (estimated at approximately
$50 million on a pre-tax basis), principally relating to future
environmental costs for the acquired properties. As additional
information becomes available, adjustments to the Company's
consolidated financial statements may be necessary which could,
among other things, result in an increased allocation of costs to
assets acquired in the Arrangement, including goodwill.
The financial data should be read in conjunction with the
historical financial statements of Total including the notes
thereto included in Total's Report on Form 10-K for the year ended
December 31, 1996 and Total's Report on Form 10-Q for the Quarter
ended March 31, 1997, each of which is on file with the Securities
and Exchange Commission and the historical financial statements of
the Company including the notes thereto included in the Company's
10-K and 10-Q each of which is incorporated by reference herein.
The pro forma financial data is based on various assumptions and is
not necessarily indicative of the results that actually would have
occurred had the Arrangement been consummated on the dates
indicated or that may occur in the future.
CERTAIN PROFORMA FINANCIAL STATEMENTS
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited, in millions
Company Total Pro Forma Company Pro
Historical Historical Adjustments Forma
ASSETS
Cash and cash
equivalents $ 99.4 $ 12.4 $ - $ 111.8
Accounts and notes
receivable 434.9 204.1 - 639.0
Inventories 543.4 178.3 17.0 738.7
Deferred income taxes 32.0 - 19.1 51.1
Prepaid expenses and
other current assets 39.3 39.8 (19.3) 59.8
Total current assets 1,149.0 434.6 16.8 1,600.4
Property, plant and
equipment, net 2,697.3 829.8 (11.7) 3,515.4
Other assets 282.0 32.3 69.9 384.2
$4,128.3 $1,296.7 $ 75.0 $5,500.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 397.2 $ 287.0 $ - $ 684.2
Accrued liabilities 287.7 28.1 47.0 362.8
Notes payable and
current portion of
long-term debt 9.9 - - 9.9
Taxes other than income
taxes 194.4 46.8 - 241.2
Income taxes 30.3 - - 30.3
Total current liabi-
lities 919.5 361.9 47.0 1,328.4
Long-term debt 1,579.8 486.1 - 2,065.9
Deferred income taxes 80.3 11.1 (17.3) 74.1
Other 304.7 68.4 18.5 391.6
Total liabilities 2,884.3 927.5 48.2 3,860.0
Stockholders' equity:
Common Stock 0.7 353.2 (353.1) 0.8
Additional paid-in
capital 1,138.1 79.7 316.2 1,534.0
ESOP, treasury stock
and other (32.2) - - (32.2)
Foreign currency
translation adjust-
ments (62.2) - - (62.2)
Retained earnings 199.6 (63.7) 63.7 199.6
Total stockholders'
equity 1,244.0 369.2 26.8 1,640.0
$4,128.3 $1,296.7 $75.0 $5,500.0
See accompanying Notes to Pro Forma Financial Data.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited, in millions)
Company Total Pro Forma Company
Historical Historical Adjustments Pro Forma
ASSETS
Cash and cash equiva-
▇▇▇▇▇ $ 197.9 $ 13.0 $ - $ 210.9
Accounts and notes
receivable 503.1 188.3 - 691.4
Inventories 633.3 161.7 47.0 842.0
Deferred income taxes 30.0 - 6.5 36.5
Prepaid expenses and
other current assets 35.0 38.4 (19.3) 54.1
Total current assets 1,399.3 401.4 34.2 1,834.9
Property, plant and
equipment, net 2,730.8 835.2 (11.7) 3,554.3
Other assets 289.9 31.7 37.8 359.4
$4,420.0 $1,268.3 $ 60.3 $5,748.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 540.7 $ 282.9 $ - $ 823.6
Accrued liabilities 328.9 38.2 43.9 411.0
Notes payable and current
portion of long-term
debt 3.2 - - 3.2
Taxes other than income
taxes 191.3 49.7 - 241.0
Income taxes 32.1 - - 32.1
Total current liabi-
lities 1,096.2 370.8 43.9 1,510.9
Long-term debt 1,646.3 428.0 - 2,074.3
Deferred income taxes 87.0 20.1 (15.9) 91.2
Other 349.6 67.2 18.5 435.3
Total liabilities 3,179.1 886.1 46.5 4,111.7
Stockholders' equity:
Common Stock 0.7 353.1 (353.0) 0.8
Additional paid-in
capital 1,137.0 79.7 316.2 1,532.9
ESOP, treasury stock
and other (32.2) - - (32.2)
Foreign currency trans-
lation adjustments (58.3) - - (58.3)
Retained earnings 193.7 (50.6) 50.6 193.7
Total stockholders'
equity 1,240.9 382.2 13.8 1,636.9
$4,420.0 $1,268.3 $60.3 $5,748.6
See accompanying Notes to Pro Forma Financial Data.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
March 31, 1997
(Unaudited, in millions except per share data)
Company Total Pro Forma Company
Historical Historical Adjustments Pro Forma
Sales and other revenues $ 2,550.2 $ 554.2 $ 165.1 $3,269.5
Operating costs and expenses:
Costs of products sold
and operating - 540.5 (540.5) -
Costs of products sold 1,649.7 - 458.8 2,108.5
Operating expenses 210.2 - 68.6 278.8
Selling, general and
administrative expenses 72.0 11.6 4.4 88.0
Taxes other than income
taxes 509.2 - 170.7 679.9
Depreciation and amorti-
zation 44.2 15.8 1.9 61.9
Total operating costs
and expenses 2,485.3 567.9 163.9 3,217.1
Operating income 64.9 (13.7) 1.2 52.4
Interest income 2.4 - - 2.4
Interest expense (32.5) (7.1) - (39.6)
Gain on sale of
assets 11.0 - - 11.0
Income (loss) before
income taxes 45.8 (20.8) 1.2 26.2
Income tax (benefit)
expense 18.2 (8.9) 0.5 9.8
Net (loss) income 27.6 (11.9) 0.7 16.4
Dividend requirement
on preferred stock 1.1 - - 1.1
Net income (loss)
applicable to common
shares $ 26.5 $ (11.9) $ 0.7 $ 15.3
Earnings (loss) per share
Income (loss) per common share:
Primary:
Net income (loss) $ 0.35 $ (0.30) $ 0.17
Fully diluted:
Net income (loss) $ 0.35 $ (0.30) $ 0.17
Weighted average number of shares used in computation
(in thousands)
Primary 75,561 39,114 88,156
Fully diluted 79,049 39,114 91,644
See accompanying Notes to Pro Forma Financial Data.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
December 31, 1996
(Unaudited, in millions except per share data)
Company Total Pro Forma Company
Historical Historical Adjustments Pro Forma
Sales and other revenues $ 10,208.4 $ 2,614.3 $ 719.1 $13,541.8
Operating costs and expenses:
Costs of products
sold and operating - 2,486.8 (2,486.8) -
Costs of products
sold 6,550.0 - 2,143.0 8,693.0
Operating expenses 928.1 - 290.8 1,218.9
Selling, general and
administrative ex-
penses 302.0 52.3 17.2 371.5
Taxes other than in-
come taxes 2,101.1 - 738.1 2,839.2
Depreciation and
amortization 179.9 60.8 6.2 246.9
Merger and integration
costs 77.4 - - 77.4
Total operating costs
and expenses 10,138.5 2,599.9 708.6 13,447.0
Operating income 69.9 14.4 10.5 94.8
Interest income 18.4 18.4
Interest expense (128.5) (26.6) - (155.1)
Income (loss) before
income taxes (40.2) (12.2) 10.5 (41.9)
Income tax (benefit)
expense (4.3) (6.8) 4.0 (7.1)
Net (loss) income (35.9) (5.4) 6.5 (34.8)
Dividend requirement
on preferred stock 4.3 - - 4.3
Net income (loss)
applicable to common
shares $ (40.2) $ (5.4) $ 6.5 $ (39.1)
Earnings (loss) per share
Income (loss) per common share:
Primary:
Net income (loss) $ (0.54) $ (0.14) $ (0.45)
Fully diluted:
Net income (loss) $ (0.54) $ (0.14) $ (0.45)
Weighted average number of shares used in computation
(in thousands)
Primary 74,427 38,913 86,957
Fully diluted 74,427 38,913 86,957
See accompanying Notes to Pro Forma Financial Data.
NOTES TO PRO FORMA FINANCIAL DATA
Note 1-Basis of Presentation
The unaudited income statement data were prepared using the Company's
and Total's audited income statements for the year ended December 31, 1996 and
unaudited income statements for the three month period ended March 31, 1997
and the reclassifications and adjustments described below. The unaudited
pro forma balance sheet data were prepared using the Company's and Total's
audited balance sheets dated December 31, 1996 and unaudited balance sheets
dated March 31, 1997 and the adjustments and assumptions described below.
Note 2-Reclassifications
Certain pro forma reclassifications have been made to the audited
consolidated financial statements of Total to conform with the financial
presentation of the Company.
For the unaudited pro forma income statement data, federal excise and state
motor fuel taxes of Total have been included in sales and other revenues and
taxes other than income taxes. Additionally, cost of products sold
and operating expenses of Total have been reclassified to appropriate
categories used by the Company.
Note 3-Pro Forma Adjustments
Inventories-Total's inventories of crude oil and products have been
adjusted from the lower of cost or net realizable value as determined by
the last-in, first-out method of accounting to fair market value.
Property, Plant and Equipment-Pro forma adjustments have been
made for Total to account for refinery maintenance turnaround costs under
the deferral and amortization method versus the accrual method, to conform to
the financial presentation of the Company.
Retiree Health Care Benefits-Total adopted Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employer's Accounting for
Postretirement Benefits other than Pensions," by recognizing an unfunded
obligation and a corresponding asset for the actuarial present value of
estimated benefits attributed to participant service rendered through
January 1, 1993. Total was amortizing this transition asset over 20 years.
For the unaudited pro forma financial data, this transition asset has been
eliminated and the corresponding expense has been appropriately adjusted.
Other Balance Sheet Adjustments-Pro forma adjustments to various assets
and liabilities have been made for the effect of the Company's intentions of
merging the operations of Total into the Company. Valuation adjustments have
been provided for anticipated changes in operations and brands, as well as
duplicate information technology and facilities.
Expenses of the Merger-Expenses incurred in connection with the
Arrangement are considered part of the cost of Total being purchased and
will be capitalized. These expenses primarily consist of financial
advisory fees, outside legal, accounting and professional fees, and
one-time costs of severance and other benefit payments to employees of
Total that will result from the elimination of certain operational and
administrative functions. These expenses are estimated to be approximately
$30.0 million and have been reflected in the pro forma financial data. The
pro forma financial data do not include any cost savings expected to occur
as a result of the Arrangement.
Income Taxes-A deferred income tax benefit has been provided
in the unaudited pro forma financial data, representing the income tax
effect on the pro forma financial data adjustments, calculated at a combined
federal and state rate of 38%.
Goodwill-The aggregate effect of the pro forma balance sheet
adjustments resulted in pro forma increases of $44.9 million and $80.6 million
in goodwill at December 31, 1996 and March 31, 1997, respectively, which is
included in other assets. Goodwill will be amortized over 20 years and the pro
forma income statement data include an adjustment to reflect such amortization.
Stockholders' Equity-Pro forma adjustments to stockholders' equity
provide for the acquisition of each issued and outstanding Total Common
Share by a Canadian subsidiary of the Company in exchange for 0.322 of a
share of the Company's common stock under the Arrangement.
Earnings per Share-Pro forma earnings per share for the Company are
based on the historical weighted average number of common and common
equivalent shares outstanding for each company during the respective period
adjusted to reflect the changes in shares due to the Arrangement.
