SAN ANTONIO, Oct. 30, 2014 /PRNewswire/ --
- Net income of $396 million, or
$3.05 per diluted share
- Delivered $390 million towards
California synergies and business
improvements year to date
- Tesoro Logistics LP ("TLLP") to become full-service logistics
company with announced acquisition of QEP Field Services
- Closed the West Coast Logistics Assets acquisition with TLLP
for $270 million
- Repurchased $150 million of
shares during third quarter
- Declared a regular quarterly dividend of $0.30 per share
Tesoro Corporation (NYSE:TSO) today reported third quarter 2014
net income of $396 million, or
$3.05 per diluted share compared to
net income of $99 million, or
$0.72 per diluted share for the third
quarter of 2013. The third quarter of 2013 results included
discontinued operations of $0.26 per
diluted share related to the sale of the Hawaii business.
Results from continuing operations were $3.06 per diluted share compared to $0.44 per diluted share for the third quarter of
2013, excluding special items. The third quarter of 2013 results
included one-time special items of $0.02 per diluted share related to integration
costs, legal reserves, insurance proceeds and an inventory
adjustment.
"We continue to execute on our strategic priorities and business
improvement actions. In addition, our focus on operational
efficiency and effectiveness resulted in strong operating
performance across our integrated value chain. As a result of this
progress and strong commercial results in a favorable market, we
delivered the highest quarterly EBITDA in company history." said
Greg Goff, President and CEO. "With
the addition of our recently announced acquisition of QEP Field
Services, we plan to continue to significantly increase shareholder
value by building upon our logistics capabilities."
For the third quarter 2014, the Company recorded segment
operating income of $777 million
compared to segment operating income of $197
million in the third quarter of 2013. The refining segment's
operating income was $578 million for
the quarter, compared to $128 million
in the third quarter of 2013. The Tesoro Index was
$12.32 per barrel (/bbl) for the
quarter, up almost $4/bbl. The
California and Pacific Northwest
regions experienced an increase in the Tesoro Index compared to
last year, as a result of improved market fundamentals.
Overall gross margin for the quarter was $15.49/bbl or 126% of the Tesoro Index, compared
to $8.50/bbl or 101% of the Tesoro
Index last year. This improvement was driven by the continued
delivery of the California
synergies and our business improvement initiatives.
Total throughput for the quarter was 858 thousand barrels per
day, or 101% utilization. The strong margin environment, high
retail demand from our integrated network and our excellent
operating performance allowed us to run our refineries at slightly
higher utilization than we had originally forecast. Direct
manufacturing costs per barrel in the third quarter 2014 relative
to the second quarter 2014 were down $0.46/bbl to $5.42/bbl as a result of higher utilization.
During the quarter, Tesoro Corporation completed the sale of the
West Coast Logistics Assets to Tesoro Logistics LP for a total
consideration of $270 million.
The logistics segment's operating income was $61 million, up $48
million or 369% from the third quarter of 2013. The
substantial growth has been driven by increased throughput volume
from the High Plains System, Los Angeles Logistics Assets and
contributions from the West Coast Logistics Assets.
The retail segment's operating income was $138 million, an increase of 146% year-over-year
from $56 million in the third quarter
of last year. Strong sales from our ARCO network, our
expanding Exxon and Mobil retail branding program and favorable
market conditions resulting from strong demand and slowly
decreasing crude oil prices resulted in record level retail segment
performance. Same store fuel sales were higher during the
quarter by approximately 1% versus third quarter last year.
Corporate and unallocated costs were $75
million, including $4 million
of corporate depreciation. This is higher than our run rate
due to the timing impact of employee costs.
Capital Spending and Liquidity
Capital spending for the third quarter 2014 was $131 million for Tesoro Corporation and
$63 million for TLLP. The
Company now estimates full year 2014 capital spending, excluding
TLLP, of $550 million, a $75 million reduction from prior guidance. TLLP
capital spending is estimated to be approximately $200 million. Turnaround expenditures for
the third quarter were $19
million. The Company expects full year 2014 turnaround
spending of $195 million and deferred
retail branding costs of $20
million.
The Company ended the third quarter with $1.5 billion in cash and $2.2 billion of availability on the Tesoro
Corporation revolving credit facility. There are currently no
borrowings under the Company's revolving credit facility. Excluding
TLLP debt and equity, total debt was $1.7
billion or 27% of total capitalization at the end of the
third quarter 2014. On a consolidated basis total outstanding
debt was $2.9 billion.
TLLP ended the quarter with $243
million in borrowings under its separate revolving credit
facility.
Returning Cash to Shareholders
During the third quarter, Tesoro returned about $189 million to shareholders through the purchase
of nearly 2.5 million of the Company's shares for $150 million and its regular quarterly dividend
of $39 million.
Through the end of October, the Company has purchased an
additional $50 million of shares and
we expect to complete the remaining $100
million under the $1.0 billion
share repurchase program by the end of 2014. The Company
expects to continue repurchasing shares in 2015 under the new
$1.0 billion share repurchase program
authorized by the board of directors in July
2014.
Tesoro Corporation today also announced that the board of
directors has declared a regular quarterly cash dividend of
$0.30 per share payable on
December 15, 2014, to all holders of record as of
November 28, 2014.
Strategic Update
Through the end of September we estimate that we delivered
$390 million towards our ongoing
initiatives around synergy and business improvement
objectives. These initiatives, which focus on improving
capture rates and managing our costs to drive improvement in
operating income, are clearly reflected in our results this
quarter. We expect to exceed our full year estimate of
$370 to $430 million for 2014.
On October 20, 2014, we announced
that TLLP will become a full-service logistics company through
acquisition of QEP Field Services for $2.5
billion, including 58% ownership in QEP Midstream
Partners. After the announcement TLLP successfully completed
the $1.3 billion of equity and
$1.3 billion of debt offerings to
finance this acquisition. Tesoro participated in the equity
offering investing an additional $500
million to purchase 8.7 million TLLP common units. Prior to
the transaction Tesoro owned 19.5 million TLLP common units or 33%
and after the recent equity offering we now own 28.2 million TLLP
common units or 35% of the outstanding TLLP units. The
Company is excited about the opportunity as this acquisition
advances our distinctive strategy to build a customer-focused
full-service logistics business, broadening Tesoro's capabilities
across the value chain to deliver enhanced shareholder value.
With the growth in the base logistics business we expect 2015
EBITDA to grow $75 to $100 million
over 2014 and with the announced acquisition of QEP Field Services,
TLLP expects to generate an additional $250
to $275 million before integration expenses. Tesoro is
focused on driving further EBITDA growth and continuing to increase
distributions.
The permit process for the Vancouver Energy project, to
construct a 360 thousand barrel per day crude oil rail-to-marine
terminal, is continuing to progress with Washington State's Energy Facility Site
Evaluation Committee ("EFSEC"). We have fully submitted the
Preliminary Draft Environmental Impact Study to EFSEC. We
expect EFSEC to release the Draft Environmental Impact Study for
public comment and begin the adjudicative phase shortly, which is
the last stage prior to a recommendation being submitted to the
governor of Washington. The joint venture will begin
construction of the facilities upon governor approval of the
project and issuance of permits. Project construction is
estimated to take nine to twelve months, however initial operations
are expected to begin within six months of start of
construction.
The Los Angeles refinery
integration project, which is designed to improve the flexibility
of gasoline and diesel yields and reduce emissions, is moving
forward and the initial permits were submitted during the third
quarter. We expect the project, which is still subject to
final regulatory and board approval, to be completed in early
2017.
We are progressing forward with the review and commercialization
efforts around the West Coast Mixed Xylenes project we announced in
July. This $400 million project
to build a 15 thousand barrel per day mixed xylene extraction unit
in Anacortes, Washington will
supply the growing global xylene market from our West Coast
refining system. This is an attractive diversification of
Tesoro's product mix and supports our goals of enhancing our gross
margin and investing in high return capital projects.
Analyst and Investor Presentation
Tesoro Corporation and Tesoro Logistics LP will be hosting a
joint Analyst and Investor Presentation at Le Parker Meridian Hotel
in New York City on December 9, 2014 at 9:00
a.m. ET. Because space is limited, reservations will
be required to attend and accepted on a first-come, first-serve
basis. Interested parties should contact Tara Murr in the Investor Relations department
via email at tara.j.murr@tsocorp.com or phone at (210)
626-6603. Reservations will be accepted until close of
business on Monday, December 1,
2014. Interested parties may also access the presentation
over the Internet by logging on to http://www.tsocorp.com.
Public Invited to Listen to Analyst and Investor Conference
Call
At 7:30 a.m. CT tomorrow morning,
Tesoro will broadcast, live, its conference call with analysts
regarding third quarter 2014 results and other business
matters. Interested parties may listen to the live conference
call over the Internet by logging on to http://www.tsocorp.com.
Twitter Communication
Tesoro Corporation is utilizing Twitter, in conjunction with
other Regulation FD-compliant disclosure vehicles, such as press
releases, 8-Ks and its investor relations web site, as part of
broader investor and stakeholder communication strategy. The
Twitter page can be found at http://twitter.com/TesoroCorp.
Tesoro Corporation, a Fortune 100 company, is an independent
refiner and marketer of petroleum products. Tesoro, through
its subsidiaries, operates six refineries in the western
United States with a combined
capacity of over 850,000 barrels per day and ownership in a
logistics business which includes a 35% interest in Tesoro
Logistics LP (NYSE: TLLP) and ownership of its general
partner. Tesoro's retail-marketing system includes over 2,200
retail stations under the ARCO®, Shell®,
Exxon®, Mobil®, USA Gasoline™ and Tesoro®
brands.
This earnings release contains certain statements that are
"forward-looking" statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 concerning estimates and expectations of
exceeding our 2014 synergy and business improvement performance
objectives; increases in shareholder value as a result of the
pending acquisition of QEP Field Services; expectations about
capital spending, turnaround expenditures and deferred retail
branding costs; completion of the current share repurchase program
and continued share repurchases under the new program; TLLP's
anticipated 2015 year-end EBITDA run-rate; and timing and
benefits of various capital expansion projects, including the
Vancouver Energy project, Los
Angeles refinery integration project and West Coast Mixed
Xylenes project. For more information concerning factors that
could affect these statements see our annual report on Form 10-K
and quarterly reports on Form 10-Q, filed with the Securities and
Exchange Commission. We undertake no obligation to publicly
release the result of any revisions to any such forward-looking
statements that may be made to reflect events or circumstances that
occur, or which we become aware of, after the date hereof.
Contact:
Investors:
Brian Randecker, Senior Director,
Investor Relations, (210) 626-4757
Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702
Factors Affecting Comparability
As of December 31, 2013, we began
reporting the logistics assets and operations of our consolidated
variable interest entity, Tesoro Logistics LP ("TLLP"), as a
separate operating segment. In previous periods, when certain
quantitative thresholds had not been met, TLLP's assets and
operations were presented within our refining operating segment.
TLLP's assets and operations include certain crude oil gathering
assets and crude oil and refined products terminalling and
transportation assets acquired from Tesoro and third parties. The
TLLP financial and operational data presented include the
historical results of all assets acquired from Tesoro prior to the
acquisition dates. The historical results of operations of these
assets have been retrospectively adjusted to conform to current
presentation. These adjustments resulted in lower gross refining
margins. The refining segment now includes costs for transportation
and terminalling services provided by TLLP that were previously
eliminated with consolidated reporting of TLLP revenues within our
refining segment results.
On September 25, 2013, we
completed the sale of all of our interest in Tesoro Hawaii, LLC,
which operated a 94 thousand barrels per day ("Mbpd") Hawaii refinery, retail stations and
associated logistics assets (the "Hawaii Business"). As a
result, we have reflected its results as discontinued operations in
the results of operations for all periods presented and have
excluded the Hawaii Business from the financial and operational
data presented in the tables that follow.
TESORO
CORPORATION
RESULTS OF
CONSOLIDATED OPERATIONS
(Unaudited)
(In millions,
except per share amounts)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Revenues
|
$
|
11,151
|
|
|
$
|
11,241
|
|
|
$
|
32,188
|
|
|
$
|
27,485
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
9,594
|
|
|
10,355
|
|
|
28,409
|
|
|
24,827
|
|
Operating
expenses
|
624
|
|
|
542
|
|
|
1,813
|
|
|
1,351
|
|
Selling, general and
administrative expenses (a)
|
86
|
|
|
54
|
|
|
209
|
|
|
229
|
|
Depreciation and
amortization expense
|
144
|
|
|
140
|
|
|
409
|
|
|
356
|
|
(Gain) loss on asset
disposals and impairments (b)
|
1
|
|
|
4
|
|
|
(2)
|
|
|
19
|
|
Operating
Income
|
702
|
|
|
146
|
|
|
1,350
|
|
|
703
|
|
Interest and
financing costs, net (c)
|
(51)
|
|
|
(47)
|
|
|
(169)
|
|
|
(110)
|
|
Other income, net
(d)
|
12
|
|
|
22
|
|
|
14
|
|
|
78
|
|
Earnings Before
Income Taxes
|
663
|
|
|
121
|
|
|
1,195
|
|
|
671
|
|
Income tax
expense
|
249
|
|
|
47
|
|
|
437
|
|
|
243
|
|
Net Earnings From
Continuing Operations
|
414
|
|
|
74
|
|
|
758
|
|
|
428
|
|
Earnings (loss) from
discontinued operations, net of tax (e)
|
(1)
|
|
|
35
|
|
|
(2)
|
|
|
23
|
|
Net
Earnings
|
413
|
|
|
109
|
|
|
756
|
|
|
451
|
|
Less: Net earnings
from continuing operations attributable to noncontrolling
interest
|
17
|
|
|
10
|
|
|
58
|
|
|
32
|
|
NET EARNINGS
ATTRIBUTABLE TO TESORO CORPORATION
|
$
|
396
|
|
|
$
|
99
|
|
|
$
|
698
|
|
|
$
|
419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
(LOSS) ATTRIBUTABLE TO TESORO CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
397
|
|
|
$
|
64
|
|
|
$
|
700
|
|
|
$
|
396
|
|
Discontinued
operations
|
(1)
|
|
|
35
|
|
|
(2)
|
|
|
23
|
|
Total
|
$
|
396
|
|
|
$
|
99
|
|
|
$
|
698
|
|
|
$
|
419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
(LOSS) PER SHARE - BASIC:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
3.11
|
|
|
$
|
0.48
|
|
|
$
|
5.41
|
|
|
$
|
2.92
|
|
Discontinued
operations
|
(0.01)
|
|
|
0.26
|
|
|
(0.02)
|
|
|
0.17
|
|
Total
|
$
|
3.10
|
|
|
$
|
0.74
|
|
|
$
|
5.39
|
|
|
$
|
3.09
|
|
Weighted average
common shares outstanding - Basic
|
127.9
|
|
|
134.6
|
|
|
129.5
|
|
|
135.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
(LOSS) PER SHARE - DILUTED:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
3.06
|
|
|
$
|
0.46
|
|
|
$
|
5.32
|
|
|
$
|
2.86
|
|
Discontinued
operations
|
(0.01)
|
|
|
0.26
|
|
|
(0.02)
|
|
|
0.17
|
|
Total
|
$
|
3.05
|
|
|
$
|
0.72
|
|
|
$
|
5.30
|
|
|
$
|
3.03
|
|
Weighted average
common shares outstanding - Diluted
|
129.7
|
|
|
136.8
|
|
|
131.7
|
|
|
138.1
|
|
________________________
(a) Includes stock-based compensation expense
of $12 million and benefit of
$12 million for the three months
ended September 30, 2014 and 2013, respectively, and expense
of $20 million and $33 million for the nine months ended
September 30, 2014 and 2013, respectively. The
significant impact to stock-based compensation expense is primarily
a result of changes in Tesoro's stock price during the three and
nine months ended September 30, 2014 as compared to the three
and nine months ended September 30, 2013. Also includes
transaction and integration costs related to our acquisition of
BP's integrated Southern
California refining, marketing and logistics business on
June 1, 2013 from BP West Coast
Products, LLC and other affiliated sellers (the "Los Angeles
Acquisition") and TLLP's acquisition of Chevron's northwest
products system of $14 million
($9 million after-tax) and
$47 million ($30 million after-tax) for the three and nine
months ended September 30, 2013, respectively.
(b) Includes a gain of $5
million for the nine months ended September 30, 2014
resulting from TLLP's sale of its Boise terminal.
(c) Includes charges totaling $10 million and
$41 million for premiums and unamortized debt issuance costs
associated with the redemption of the 2019 Notes and 2020 Notes
during the three and nine months ended September 30, 2014.
(d) Includes a $16
million ($10 million
after-tax) benefit related to the release of a legal reserve as a
result of a favorable litigation settlement for the three and nine
months ended September 30, 2013. Also includes
$54 million in refunds from a
settlement of a rate proceeding from the California Public
Utilities Commission for the nine months ended September 30,
2013.
(e) On September 25,
2013, we completed the sale of all of our interest in the
Hawaii Business to a subsidiary of Par Petroleum. As a
result, we have reflected its results as discontinued operations in
our consolidated statements of operations for all periods presented
and have excluded the Hawaii Business from the financial and
operational data presented in the tables and discussion that
follow. Net earnings from discontinued operations include an
$80 million ($49 million after-tax) gain related to the sale
of the Hawaii Business, which includes a $17
million curtailment gain related to the remeasurement of our
pension and other postretirement benefit obligations during the
three and nine months ended September 30, 2013.
TESORO
CORPORATION
SELECTED SEGMENT
OPERATING DATA
(Unaudited) (In
millions)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Segment Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
Refining
|
$
|
578
|
|
|
$
|
128
|
|
|
$
|
1,137
|
|
|
$
|
766
|
|
TLLP (b)
|
61
|
|
|
13
|
|
|
169
|
|
|
53
|
|
Retail
|
138
|
|
|
56
|
|
|
229
|
|
|
96
|
|
Total Segment
Operating Income
|
777
|
|
|
197
|
|
|
1,535
|
|
|
915
|
|
Corporate and
unallocated costs (a)
|
(75)
|
|
|
(51)
|
|
|
(185)
|
|
|
(212)
|
|
Operating
Income
|
702
|
|
|
146
|
|
|
1,350
|
|
|
703
|
|
Interest and
financing costs, net (c)
|
(51)
|
|
|
(47)
|
|
|
(169)
|
|
|
(110)
|
|
Other income, net
(d)
|
12
|
|
|
22
|
|
|
14
|
|
|
78
|
|
Earnings Before
Income Taxes
|
$
|
663
|
|
|
$
|
121
|
|
|
$
|
1,195
|
|
|
$
|
671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization Expense
|
|
|
|
|
|
|
|
|
|
|
|
Refining
|
$
|
112
|
|
|
$
|
109
|
|
|
$
|
317
|
|
|
$
|
286
|
|
TLLP
|
18
|
|
|
16
|
|
|
51
|
|
|
28
|
|
Retail
|
10
|
|
|
9
|
|
|
30
|
|
|
26
|
|
Corporate
|
4
|
|
|
6
|
|
|
11
|
|
|
16
|
|
Total Depreciation
and Amortization Expense
|
$
|
144
|
|
|
$
|
140
|
|
|
$
|
409
|
|
|
$
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
Refining
|
$
|
118
|
|
|
$
|
88
|
|
|
$
|
280
|
|
|
$
|
317
|
|
TLLP
|
63
|
|
|
23
|
|
|
137
|
|
|
59
|
|
Retail
|
9
|
|
|
10
|
|
|
27
|
|
|
26
|
|
Corporate
|
4
|
|
|
2
|
|
|
20
|
|
|
10
|
|
Total Capital
Expenditures
|
$
|
194
|
|
|
$
|
123
|
|
|
$
|
464
|
|
|
$
|
412
|
|
TESORO
CORPORATION
OTHER SUMMARY
FINANCIAL INFORMATION
(Unaudited)
(Dollars in millions)
|
|
September 30,
2014
|
|
December 31,
2013
|
Cash and cash
equivalents (TLLP: $3 and $23, respectively)
|
$
|
1,530
|
|
|
$
|
1,238
|
|
Inventories
(f)
|
2,674
|
|
|
2,565
|
|
Current maturities
of debt
|
6
|
|
|
6
|
|
Long-term debt
(TLLP: $1,276 and $1,164, respectively)
|
2,938
|
|
|
2,823
|
|
Total
equity
|
5,892
|
|
|
5,485
|
|
Total debt to
capitalization ratio
|
33
|
%
|
|
34
|
%
|
Total debt to
capitalization ratio excluding TLLP debt (g)
|
27
|
%
|
|
28
|
%
|
Working
capital
|
2,296
|
|
|
1,918
|
|
Total market value
of TLLP units held by Tesoro (i)
|
1,379
|
|
|
1,000
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
Cash distributions
received from TLLP (h):
|
|
|
|
|
|
For common units
held
|
$
|
12
|
|
|
$
|
9
|
|
For general partner
units held
|
8
|
|
|
2
|
|
_______________________
(f) The total carrying value of our crude oil
and refined product inventories was less than replacement cost by
approximately $1.6 billion and
$1.7 billion at September 30,
2014 and December 31, 2013, respectively.
(g) Excludes TLLP's total debt, including
capital leases, of $1.3 billion and
$1.2 billion and noncontrolling
interest of $1.3 billion and
$1.2 billion at September 30,
2014 and December 31, 2013, respectively, which are
non-recourse to Tesoro, except for Tesoro Logistics GP, LLC.
(h) Represents distributions received from TLLP
during the three months ended September 30, 2014 and 2013 on
units held by Tesoro.
(i) Represents market value of units held at
September 30, 2014 and December 31, 2013. Tesoro
held 19,481,557 common units at a market value of $70.77 per unit based on the closing unit price
at September 30, 2014. Tesoro held 3,855,824 common
units and 15,254,890 subordinated units at a market value of
$52.34 per unit based on the closing
unit price at December 31, 2013.
TESORO
CORPORATION
SEGMENT OPERATING
DATA AND RESULTS
(Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
REFINING
SEGMENT
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Total Refining
Segment
|
|
|
|
|
|
|
|
|
|
|
|
Throughput
(Mbpd)
|
|
|
|
|
|
|
|
|
|
|
|
Heavy crude
(j)
|
157
|
|
|
208
|
|
|
163
|
|
|
195
|
|
Light
crude
|
641
|
|
|
591
|
|
|
614
|
|
|
425
|
|
Other
feedstocks
|
60
|
|
|
64
|
|
|
54
|
|
|
48
|
|
Total
Throughput
|
858
|
|
|
863
|
|
|
831
|
|
|
668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield
(Mbpd)
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline and gasoline
blendstocks
|
445
|
|
|
418
|
|
|
430
|
|
|
331
|
|
Jet fuel
|
130
|
|
|
126
|
|
|
126
|
|
|
93
|
|
Diesel
fuel
|
199
|
|
|
198
|
|
|
196
|
|
|
152
|
|
Heavy fuel oils,
residual products, internally produced fuel
and other
|
141
|
|
|
173
|
|
|
135
|
|
|
132
|
|
Total
Yield
|
915
|
|
|
915
|
|
|
887
|
|
|
708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refined Product Sales
(Mbpd) (k)
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline and gasoline
blendstocks
|
516
|
|
|
499
|
|
|
511
|
|
|
407
|
|
Jet fuel
|
146
|
|
|
144
|
|
|
146
|
|
|
108
|
|
Diesel
fuel
|
223
|
|
|
223
|
|
|
208
|
|
|
175
|
|
Heavy fuel oils,
residual products and other
|
87
|
|
|
98
|
|
|
85
|
|
|
85
|
|
Total Refined Product
Sales
|
972
|
|
|
964
|
|
|
950
|
|
|
775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
Gross refining margin
(l)
|
$
|
1,222
|
|
|
$
|
675
|
|
|
$
|
3,008
|
|
|
$
|
2,165
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
costs
|
428
|
|
|
378
|
|
|
1,280
|
|
|
919
|
|
Other operating
expenses
|
95
|
|
|
57
|
|
|
259
|
|
|
174
|
|
Selling, general and
administrative expenses
|
7
|
|
|
2
|
|
|
14
|
|
|
9
|
|
Depreciation and
amortization expense
|
112
|
|
|
109
|
|
|
317
|
|
|
286
|
|
Loss on asset
disposal and impairments
|
2
|
|
|
1
|
|
|
1
|
|
|
11
|
|
Segment Operating
Income
|
$
|
578
|
|
|
$
|
128
|
|
|
$
|
1,137
|
|
|
$
|
766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross refining margin
($/throughput bbl) (m)
|
$
|
15.49
|
|
|
$
|
8.50
|
|
|
13.27
|
|
|
$
|
11.88
|
|
Manufacturing cost
before depreciation and amortization
expense ($/throughput bbl) (m)
|
$
|
5.42
|
|
|
$
|
4.76
|
|
|
5.65
|
|
|
$
|
5.04
|
|
Refined Product Sales
Margin ($/bbl) (m)
|
|
|
|
|
|
|
|
|
|
|
|
Average sales
price
|
$
|
118.75
|
|
|
$
|
120.39
|
|
|
$
|
119.04
|
|
|
$
|
120.54
|
|
Average costs of
sales
|
106.93
|
|
|
113.47
|
|
|
107.77
|
|
|
111.38
|
|
Refined Product Sales
Margin
|
$
|
11.82
|
|
|
$
|
6.92
|
|
|
$
|
11.27
|
|
|
$
|
9.16
|
|
___________________________
(j) We define heavy crude oil as crude oil
with an American Petroleum Institute gravity of 24 degrees or
less.
(k) Sources of total refined product sales include
refined products manufactured at our refineries and refined
products purchased from third parties. Total refined product
sales margins include margins on sales of manufactured and
purchased refined products.
(l) Gross refining margin includes the effect
of intersegment sales to the retail segment at prices which
approximate market and fees charged by TLLP for the transportation
and terminalling of crude oil and refined products at prices which
we believe are no less favorable to either party than those that
could have been negotiated with unaffiliated parties with respect
to similar services. Gross refining margin approximates total
refining throughput multiplied by the gross refining margin per
barrel.
(m) Management uses various measures to evaluate
performance and efficiency and to compare profitability to other
companies in the industry, including gross refining margin per
barrel, manufacturing costs before depreciation and amortization
expense ("Manufacturing Costs") per barrel and refined product
sales margin per barrel. We calculate gross refining margin
per barrel by dividing gross refining margin (revenues less costs
of feedstocks, purchased refined products, transportation and
distribution) by total refining throughput. We calculate
Manufacturing Costs per barrel by dividing Manufacturing Costs by
total refining throughput. We calculate refined product sales
margin per barrel by dividing refined product sales and refined
product cost of sales by total refining throughput, and subtracting
refined product cost of sales per barrel from refined product sales
per barrel. Investors and analysts use these financial
measures to help analyze and compare companies in the industry on
the basis of operating performance. These financial measures
should not be considered alternatives to segment operating income,
revenues, costs of sales and operating expenses or any other
measure of financial performance presented in accordance with U.S.
GAAP.
TESORO
CORPORATION
SEGMENT OPERATING
DATA AND RESULTS
(Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
Refining By
Region
|
2014
|
|
2013
|
|
2014
|
|
2013
|
California
(Martinez and Los Angeles)
|
|
|
|
|
|
|
|
|
|
|
|
Throughput (Mbpd)
(j)
|
|
|
|
|
|
|
|
|
|
|
|
Heavy crude
(j)
|
153
|
|
|
193
|
|
|
158
|
|
|
187
|
|
Light
crude
|
342
|
|
|
319
|
|
|
334
|
|
|
175
|
|
Other
feedstocks
|
43
|
|
|
45
|
|
|
36
|
|
|
35
|
|
Total
Throughput
|
538
|
|
|
557
|
|
|
528
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield
(Mbpd)
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline and gasoline
blendstocks
|
292
|
|
|
275
|
|
|
284
|
|
|
203
|
|
Jet fuel
|
84
|
|
|
84
|
|
|
81
|
|
|
52
|
|
Diesel
fuel
|
119
|
|
|
123
|
|
|
123
|
|
|
92
|
|
Heavy fuel oils,
residual products, internally produced fuel
and other
|
90
|
|
|
117
|
|
|
86
|
|
|
82
|
|
Total
Yield
|
585
|
|
|
599
|
|
|
574
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross refining margin
($ millions)
|
$
|
644
|
|
|
$
|
342
|
|
|
$
|
1,620
|
|
|
$
|
1,028
|
|
Gross refining margin
($/throughput bbl) (m)
|
$
|
13.01
|
|
|
$
|
6.67
|
|
|
$
|
11.24
|
|
|
$
|
9.47
|
|
Manufacturing cost
before depreciation and amortization
expense ($/throughput bbl) (m)
|
$
|
6.26
|
|
|
$
|
5.39
|
|
|
$
|
6.46
|
|
|
$
|
5.75
|
|
Capital expenditures
($ millions)
|
$
|
36
|
|
|
$
|
38
|
|
|
$
|
101
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Northwest
(Alaska & Washington)
|
|
|
|
|
|
|
|
|
|
|
|
Throughput (Mbpd)
(j)
|
|
|
|
|
|
|
|
|
|
|
|
Heavy crude
(j)
|
4
|
|
|
15
|
|
|
5
|
|
|
8
|
|
Light
crude
|
171
|
|
|
153
|
|
|
154
|
|
|
136
|
|
Other
feedstocks
|
12
|
|
|
14
|
|
|
13
|
|
|
9
|
|
Total
Throughput
|
187
|
|
|
182
|
|
|
172
|
|
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield
(Mbpd)
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline and gasoline
blendstocks
|
80
|
|
|
75
|
|
|
74
|
|
|
62
|
|
Jet fuel
|
36
|
|
|
32
|
|
|
32
|
|
|
29
|
|
Diesel
fuel
|
38
|
|
|
36
|
|
|
33
|
|
|
28
|
|
Heavy fuel oils,
residual products, internally produced fuel
and other
|
39
|
|
|
45
|
|
|
38
|
|
|
38
|
|
Total
Yield
|
193
|
|
|
188
|
|
|
177
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross refining margin
($ millions)
|
$
|
269
|
|
|
$
|
109
|
|
|
$
|
538
|
|
|
$
|
421
|
|
Gross refining margin
($/throughput bbl) (m)
|
$
|
15.64
|
|
|
$
|
6.48
|
|
|
$
|
11.49
|
|
|
$
|
10.11
|
|
Manufacturing cost
before depreciation and amortization
expense ($/throughput bbl) (m)
|
$
|
4.00
|
|
|
$
|
3.57
|
|
|
$
|
4.33
|
|
|
$
|
4.13
|
|
Capital expenditures
($ millions)
|
$
|
18
|
|
|
$
|
9
|
|
|
$
|
30
|
|
|
$
|
43
|
|
TESORO
CORPORATION
SEGMENT OPERATING
DATA AND RESULTS
(Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Mid-Continent
(North Dakota and Utah)
|
|
|
|
|
|
|
|
|
|
|
|
Throughput
(Mbpd)
|
|
|
|
|
|
|
|
|
|
|
|
Light
crude
|
128
|
|
|
119
|
|
|
126
|
|
|
114
|
|
Other
feedstocks
|
5
|
|
|
5
|
|
|
5
|
|
|
4
|
|
Total
Throughput
|
133
|
|
|
124
|
|
|
131
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield
(Mbpd)
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline and gasoline
blendstocks
|
73
|
|
|
68
|
|
|
72
|
|
|
66
|
|
Jet fuel
|
10
|
|
|
10
|
|
|
13
|
|
|
12
|
|
Diesel
fuel
|
42
|
|
|
39
|
|
|
40
|
|
|
32
|
|
Heavy fuel oils,
residual products, internally produced fuel
and other
|
12
|
|
|
11
|
|
|
11
|
|
|
12
|
|
Total
Yield
|
137
|
|
|
128
|
|
|
136
|
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross refining margin
($ millions)
|
$
|
308
|
|
|
$
|
224
|
|
|
$
|
846
|
|
|
$
|
711
|
|
Gross refining margin
($/throughput bbl) (m)
|
$
|
25.23
|
|
|
$
|
19.66
|
|
|
$
|
23.62
|
|
|
$
|
22.12
|
|
Manufacturing cost
before depreciation and amortization
expense ($/throughput bbl) (m)
|
$
|
4.02
|
|
|
$
|
3.68
|
|
|
$
|
4.08
|
|
|
$
|
3.82
|
|
Capital expenditures
($ millions)
|
$
|
64
|
|
|
$
|
42
|
|
|
$
|
149
|
|
|
$
|
175
|
|
TESORO
CORPORATION
SEGMENT OPERATING
DATA AND RESULTS
(Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
TLLP
SEGMENT
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Crude Oil
Gathering
|
|
|
|
|
|
|
|
|
|
|
|
Pipeline gathering
throughput (Mbpd)
|
136
|
|
|
91
|
|
|
114
|
|
|
85
|
|
Average pipeline
gathering revenue per barrel
|
$
|
1.38
|
|
|
$
|
1.28
|
|
|
$
|
1.35
|
|
|
$
|
1.26
|
|
Trucking volume
(Mbpd)
|
51
|
|
|
47
|
|
|
47
|
|
|
45
|
|
Average trucking
revenue per barrel
|
$
|
3.30
|
|
|
$
|
3.02
|
|
|
$
|
3.24
|
|
|
$
|
3.04
|
|
Terminalling and
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
Terminalling
throughput (Mbpd)
|
943
|
|
|
1,020
|
|
|
919
|
|
|
675
|
|
Average terminalling
revenue per barrel
|
$
|
1.03
|
|
|
$
|
0.63
|
|
|
$
|
0.97
|
|
|
$
|
0.67
|
|
Pipeline
transportation throughput (Mbpd)
|
843
|
|
|
213
|
|
|
824
|
|
|
153
|
|
Average pipeline
transportation revenue per barrel
|
$
|
0.36
|
|
|
$
|
0.71
|
|
|
$
|
0.36
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
Gathering
|
$
|
32
|
|
|
$
|
24
|
|
|
$
|
84
|
|
|
$
|
66
|
|
Terminalling and
Transportation
|
118
|
|
|
73
|
|
|
326
|
|
|
146
|
|
Total Revenues
(n)
|
150
|
|
|
97
|
|
|
410
|
|
|
212
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(o)
|
55
|
|
|
59
|
|
|
155
|
|
|
109
|
|
General and
administrative expenses (p)
|
16
|
|
|
9
|
|
|
39
|
|
|
22
|
|
Depreciation and
amortization expense
|
18
|
|
|
16
|
|
|
51
|
|
|
28
|
|
Gain on asset
disposals and impairments
|
—
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
Segment Operating
Income
|
$
|
61
|
|
|
$
|
13
|
|
|
$
|
169
|
|
|
$
|
53
|
|
___________________________
(n) TLLP segment revenues from services provided to
our refining segment were $130
million and $81 million for
the three months ended September 30, 2014 and 2013,
respectively, and $358 million and
$187 million for the nine months
ended September 30, 2014 and 2013, respectively. These
amounts are eliminated upon consolidation.
(o) TLLP segment operating expenses include amounts
billed by Tesoro for services provided to TLLP under various
operational contracts. These amounts totaled $1 million and $28
million for the three months ended September 30, 2014
and 2013, respectively, and $24
million and $48 million for
the nine months ended September 30, 2014 and 2013. These
amounts are eliminated upon consolidation. TLLP segment third-party
operating expenses related to the transportation of crude oil and
refined products are reclassified to cost of sales upon
consolidation.
(p) TLLP segment general and administrative expenses
include amounts charged by Tesoro for general and administrative
services provided to TLLP under various operational and
administrative contracts. These amounts totaled $10 million and $6
million for the three months ended September 30, 2014
and 2013, respectively, and $28
million and $13 million for
the nine months ended September 30, 2014 and 2013,
respectively. These amounts are eliminated upon consolidation.
TESORO
CORPORATION
SEGMENT OPERATING
DATA AND RESULTS
(Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
RETAIL
SEGMENT
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Average Stations
(during period)
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated
|
586
|
|
|
572
|
|
|
580
|
|
|
570
|
|
Branded jobber/dealer
(q)
|
1,693
|
|
|
1,640
|
|
|
1,694
|
|
|
1,154
|
|
Total Average Retail
Stations
|
2,279
|
|
|
2,212
|
|
|
2,274
|
|
|
1,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel Sales (millions
of gallons)
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated
|
287
|
|
|
278
|
|
|
826
|
|
|
806
|
|
Branded jobber/dealer
(q)
|
788
|
|
|
768
|
|
|
2,295
|
|
|
1,333
|
|
Total Fuel
Sales
|
1,075
|
|
|
1,046
|
|
|
3,121
|
|
|
2,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel margin
($/gallon) (r)
|
$
|
0.20
|
|
|
$
|
0.12
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margins
|
|
|
|
|
|
|
|
|
|
|
|
Fuel (r)
|
$
|
214
|
|
|
$
|
123
|
|
|
$
|
445
|
|
|
$
|
294
|
|
Merchandise and other
non-fuel margin
|
33
|
|
|
31
|
|
|
92
|
|
|
71
|
|
Total Gross
Margins
|
247
|
|
|
154
|
|
|
537
|
|
|
365
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
97
|
|
|
86
|
|
|
271
|
|
|
231
|
|
Selling, general and
administrative expenses
|
2
|
|
|
1
|
|
|
5
|
|
|
8
|
|
Depreciation and
amortization expense
|
10
|
|
|
9
|
|
|
30
|
|
|
26
|
|
Loss on asset
disposals and impairments
|
—
|
|
|
2
|
|
|
2
|
|
|
4
|
|
Segment Operating
Income
|
$
|
138
|
|
|
$
|
56
|
|
|
$
|
229
|
|
|
$
|
96
|
|
___________________________
(q) Reflects the acquisition of supply rights for
approximately 835 dealer-operated and branded wholesale retail
stations with the Los Angeles Acquisition on June 1, 2013.
(r) Management uses fuel margin per gallon to
compare fuel results to other companies in the industry. There are
a variety of ways to calculate fuel margin per gallon; different
companies may calculate it in different ways. We calculate
fuel margin per gallon by dividing fuel gross margin by fuel sales
volumes. Investors and analysts may use fuel margin per
gallon to help analyze and compare companies in the industry on the
basis of operating performance. This financial measure should
not be considered an alternative to revenues, segment operating
income or any other measure of financial performance presented in
accordance with U.S. GAAP. Fuel margin and fuel margin per
gallon include the effect of intersegment purchases from the
refining segment at prices which approximate market.
TESORO
CORPORATION
RECONCILIATION OF
AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (In
millions)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Reconciliation of
Net Earnings to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to Tesoro Corporation
|
$
|
396
|
|
|
$
|
99
|
|
|
$
|
698
|
|
|
$
|
419
|
|
(Earnings) loss from
discontinued operations, net of tax
|
1
|
|
|
(35)
|
|
|
2
|
|
|
(23)
|
|
Depreciation and
amortization expense
|
144
|
|
|
140
|
|
|
409
|
|
|
356
|
|
Income tax
expense
|
249
|
|
|
47
|
|
|
437
|
|
|
243
|
|
Interest and
financing costs, net
|
51
|
|
|
47
|
|
|
169
|
|
|
110
|
|
Interest
income
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
(1)
|
|
EBITDA
(s)
|
$
|
840
|
|
|
$
|
298
|
|
|
$
|
1,714
|
|
|
$
|
1,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Cash Flows from (used in) Operating Activities to
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from
(used in) operating activities
|
$
|
671
|
|
|
$
|
831
|
|
|
$
|
1,047
|
|
|
$
|
670
|
|
Net earnings
attributable to noncontrolling interest
|
(17)
|
|
|
(10)
|
|
|
(58)
|
|
|
(32)
|
|
Net cash used in
(from) discontinued operations
|
1
|
|
|
118
|
|
|
2
|
|
|
(74)
|
|
Debt redemption
charges
|
(10)
|
|
|
—
|
|
|
(41)
|
|
|
—
|
|
Deferred
charges
|
40
|
|
|
56
|
|
|
119
|
|
|
333
|
|
Changes in current
assets and liabilities
|
25
|
|
|
(615)
|
|
|
228
|
|
|
129
|
|
Income tax
expense
|
249
|
|
|
47
|
|
|
437
|
|
|
243
|
|
Stock-based
compensation benefit (expense)
|
(12)
|
|
|
12
|
|
|
(20)
|
|
|
(33)
|
|
Interest and
financing costs, net
|
51
|
|
|
47
|
|
|
169
|
|
|
110
|
|
Deferred income
taxes
|
(203)
|
|
|
(180)
|
|
|
(227)
|
|
|
(222)
|
|
Other
|
45
|
|
|
(8)
|
|
|
58
|
|
|
(20)
|
|
EBITDA
(s)
|
$
|
840
|
|
|
$
|
298
|
|
|
$
|
1,714
|
|
|
$
|
1,104
|
|
___________________________
(s) EBITDA represents consolidated earnings,
excluding net earnings (loss) from discontinued operations, before
depreciation and amortization expense, net interest and financing
costs, income taxes and interest income. We present EBITDA because
we believe some investors and analysts use EBITDA to help analyze
our cash flows including our ability to satisfy principal and
interest obligations with respect to our indebtedness and use cash
for other purposes, including capital expenditures. EBITDA is also
used by some investors and analysts to analyze and compare
companies on the basis of operating performance and by management
for internal analysis. EBITDA should not be considered as an
alternative to U.S. GAAP net earnings or net cash from operating
activities. EBITDA has important limitations as an analytical tool,
because it excludes some items that affect net earnings and net
cash from operating activities.
TESORO
CORPORATION
RECONCILIATION OF
TLLP FORECASTED EBITDA TO AMOUNTS UNDER U.S. GAAP
(Unaudited) (In
millions)
|
|
QEPFS
Assets
|
Reconciliation of
TLLP Forecasted 2015 EBITDA to Forecasted Net
Earnings:
|
|
|
|
Forecasted net
earnings
|
$
|
32 -
57
|
Add depreciation and
amortization expense
|
|
132
|
|
Add interest and
financing costs, net
|
|
86
|
|
Forecasted
EBITDA
|
$
|
250 -
275
|
|
2014 TLLP
Forecasted Current Business
|
|
2015 TLLP
Forecasted Current Business
|
Reconciliation of
TLLP Forecasted EBITDA to Forecasted Net Earnings:
|
|
|
|
|
|
|
|
Forecasted net
earnings
|
$
|
150 -
165
|
|
$
|
225 -
265
|
Add depreciation and
amortization expense
|
|
70
|
|
|
|
70
|
|
Add interest and
financing costs, net
|
|
80
|
|
|
|
80
|
|
Forecasted
EBITDA
|
$
|
300 -
315
|
|
$
|
375 -
415
|
TESORO
CORPORATION
NET EARNINGS
ADJUSTED FOR SPECIAL ITEMS
(Unaudited) (In
millions)
|
|
Three Months
Ended
September 30,
|
|
2014
|
|
2013
|
Net Earnings
Attributable to Tesoro Corporation from
Continuing
Operations - U.S. GAAP
|
$
|
397
|
|
|
$
|
64
|
|
Special Items,
After-tax:
|
|
|
|
|
|
Transaction and
integration costs (a)
|
—
|
|
|
9
|
|
Business interruption
insurance recoveries (t)
|
—
|
|
|
(10)
|
|
Release of legal
reserve (d)
|
—
|
|
|
(10)
|
|
Non-cash inventory
valuation adjustment (u)
|
—
|
|
|
7
|
|
Net Earnings
Adjusted for Special Items (v)
|
$
|
397
|
|
|
$
|
60
|
|
|
|
|
|
|
|
Diluted Net
Earnings per Share from Continuing Operations
Attributable to
Tesoro Corporation - U.S. GAAP
|
$
|
3.06
|
|
|
$
|
0.46
|
|
Special Items Per
Share, After-tax:
|
|
|
|
|
|
Transaction and
integration costs (a)
|
—
|
|
|
0.07
|
|
Business interruption
insurance recoveries (t)
|
—
|
|
|
(0.07)
|
|
Release of legal
reserve (d)
|
—
|
|
|
(0.07)
|
|
Non-cash inventory
valuation adjustment (u)
|
—
|
|
|
0.05
|
|
Net Earnings per
Diluted Share Adjusted for Special Items (v)
|
$
|
3.06
|
|
|
$
|
0.44
|
|
________________________
(t) Represents a benefit of $16 million ($10
million after-tax) from business interruption recoveries
related to the April 2, 2010 incident
at the Washington refinery for the
three months ended September 30, 2013.
(u) Represents an increase to cost of sales of
$11 million ($7 million after-tax) related to a non-cash
inventory valuation adjustment recorded for the Los Angeles
Acquisition during the three months ended September 30,
2013.
(v) We present net earnings adjusted for special
items ("Adjusted Earnings") and net earnings per diluted share
adjusted for special items ("Adjusted Diluted EPS") as management
believes that the impact of these items on net earnings and diluted
earnings per share is important information for an investor's
understanding of the operations of our business and the financial
information presented. Adjusted Earnings and Adjusted Diluted EPS
should not be considered as an alternative to net earnings,
earnings per diluted share or any other measure of financial
performance presented in accordance with U.S. GAAP. Adjusted
Earnings and Adjusted Diluted EPS may not be comparable to
similarly titled measures used by other entities.
SOURCE Tesoro Corporation