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Delaware | 2911 | |||
(State or Other Jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
Incorporation or Organization) | Classification Code Number) | Identification Number) |
Proposed Maximum | ||||||
Title of Each Class of | Aggregate Offering | |||||
Securities to be Registered | Price (1)(2) | Amount of Registration Fee | ||||
Common Stock, $0.01 par value | $300,000,000 | $32,100 | ||||
(1) | Includes offering price of shares which the underwriters have the option to purchase. | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
Per Share | Total | |||||||
Initial public offering price | $ | $ | ||||||
Underwriting discount | $ | $ | ||||||
Proceeds, before expenses, to us | $ | $ |
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• | Construction of a new 23,000 bpd high pressure diesel hydrotreater and associated new sulfur recovery unit, which will allow the facility to meet the EPA Tier II Ultra Low Sulfur Diesel federal regulations; and | |
• | Expansion of one of the two gasification units within the fertilizer complex, which is expected to increase ammonia production by 5,500 tons per year. |
• | Refinery-wide capacity expansion by increasing throughput of the existing fluid catalytic cracking unit, delayed coker, and other major process units to be completed during a plant-wide turnaround scheduled to begin in the first quarter of 2007; and | |
• | Construction of a new grass roots 24,000 bpd continuous catalytic reformer to be completed in the third quarter of 2007. |
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• | High capital costs, historical excess capacity and environmental regulatory requirements have limited the construction of new refineries in the United States over the past 30 years. No new major refinery has been built in the United States since 1976. In addition, more than 175 refineries have been shut down since 1981. | |
• | Supply and demand fundamentals of the domestic refining industry have improved since the 1990’s and are expected by the Energy Information Administration of the U.S. Department of Energy, or the EIA, to remain favorable as the growth in demand for refined products continues to exceed increases in refining capacity, both in the United States and on a global basis. | |
• | Increasing demand for sweet crude oils and higher incremental production of lower cost sour crude are expected to provide a cost advantage to refiners with the ability to process sour crude oils. | |
• | New and evolving U.S. fuel specifications, including reduced sulfur content, reduced vapor pressure and the addition of oxygenates such as ethanol, should benefit refiners who are able to efficiently produce fuels that meet these specifications. | |
• | Based on the strong fundamentals for the global refining industry, capital investments for refinery expansions and new refineries in international markets, both in process and announced, have increased within the last year. However, the competitive threat from foreign refiners is limited by U.S. fuel specifications and increasing foreign demand for refined products, particularly for light transportation fuels. | |
• | Certain regional markets in the United States do not have a sufficient indigenous refining capacity to meet the demand for refined products and therefore rely on pipelines and other modes of transportation for supply. Shortage of refining capacity in the mid-continent region, including the Coffeyville supply area, is a factor that should result in local refiners earning higher margins on product sales. |
• | The combined impact of a growing world population, improving diets and expanded use of corn for the production of ethanol are expected to drive grain demand and farm production worldwide and consequently increase demand for nitrogen-based fertilizers. | |
• | High natural gas prices in North America contribute to higher production costs for natural gas-based U.S. ammonia producers, whose cost curves generally dictate the nitrogen fertilizer price trends. As a result, if natural gas prices remain high, fertilizer prices are likely to remain high. |
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• | Continue to take advantage of favorable supply and demand dynamics in the mid-continent region; | |
• | Selectively invest in significant projects that enhance our operating efficiency and expand our capacity while rigorously controlling costs; | |
• | Continue to evaluate attractive growth opportunities through acquisitionsand/or strategic alliances; | |
• | Increase our sales and supply capabilities of UAN, and other high value products, while finding lower cost sources of raw materials; | |
• | Continue to focus on being a reliable, low cost producer of petroleum and fertilizer products; and | |
• | Continue to focus on the reliability, safety and environmental performance of our operations. |
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• | Debt was used as part of the acquisition financing in June 2005 which required the introduction of a financial risk management tool that would mitigate a portion of inherent commodity price based volatility in our cash flow and preserve our ability to service debt; and | |
• | Given the size of the capital expenditure program contemplated by us at the time of the June 2005 acquisition, our new management team considered it necessary to enter into a derivative arrangement to reduce the volatility of our cash flow and to ensure an appropriate return on the incremental invested capital. |
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Issuer | CVR Energy, Inc. | |
Common stock offered by us | shares. | |
Common stock outstanding immediately after the offering | shares. | |
Use of proceeds | We estimate that the net proceeds to us in this offering, after deducting the underwriters’ discount of $ million, will be $ million. We intend to use the net proceeds from this offering for debt repayment and general corporate purposes. We will not receive any proceeds from the purchase by the underwriters of up to shares from the selling stockholder in connection with the exercise by the underwriters of their option. See “Use of Proceeds.” | |
Proposed symbol | “ .” | |
Risk Factors | See “Risk Factors” beginning on page 18 of this prospectus for a discussion of factors that you should carefully consider before deciding to invest in shares of our common stock. |
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Immediate | |||||||||||||||||||
Predecessor | Successor | Combined | Successor | ||||||||||||||||
174 Days Ended | 49 Days Ended | Six Months | Six Months | ||||||||||||||||
June 23, | June 30, | Ended June 30, | Ended June 30, | ||||||||||||||||
2005 | 2005 | 2005 | 2006 | ||||||||||||||||
(non-GAAP) | |||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||
(in millions, except as otherwise indicated) | |||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||
Net sales | $ | 980.7 | $ | 49.7 | $ | 1,030.4 | $ | 1,550.6 | |||||||||||
Gross profit (loss) | 130.7 | (12.8 | ) | 117.9 | 235.5 | ||||||||||||||
Selling, general and administrative expenses | 18.4 | 0.8 | 19.2 | 20.6 | |||||||||||||||
Operating income (loss) | $ | 112.3 | $ | (13.6 | ) | $ | 98.7 | $ | 214.9 | ||||||||||
Other income (expense)(1) | (8.4 | ) | 0.1 | (8.3 | ) | 1.4 | |||||||||||||
Interest (expense) | (7.8 | ) | (1.0 | ) | (8.8 | ) | (22.3 | ) | |||||||||||
Gain (loss) on derivatives | (7.6 | ) | (151.8 | ) | (159.4 | ) | (126.5 | ) | |||||||||||
Income (loss) before taxes | $ | 88.5 | $ | (166.3 | ) | $ | (77.8 | ) | $ | 67.5 | |||||||||
Income tax (expense) benefit | (36.1 | ) | 56.1 | 20.0 | (25.7 | ) | |||||||||||||
Net income (loss) | $ | 52.4 | $ | (110.2 | ) | $ | (57.8 | ) | $ | 41.8 | |||||||||
Pro forma earnings per share, basic and diluted | |||||||||||||||||||
Pro forma weighted average shares, basic and diluted | |||||||||||||||||||
Segment Financial Data: | |||||||||||||||||||
Operating income (loss) | |||||||||||||||||||
Petroleum | $ | 76.7 | $ | (13.3 | ) | $ | 63.4 | $ | 178.0 | ||||||||||
Nitrogen fertilizer | 35.3 | (0.3 | ) | 35.0 | 37.1 | ||||||||||||||
Other | 0.3 | — | 0.3 | (0.2 | ) | ||||||||||||||
Operating income (loss) | $ | 112.3 | $ | (13.6 | ) | $ | 98.7 | $ | 214.9 | ||||||||||
Depreciation and amortization | |||||||||||||||||||
Petroleum | $ | 0.8 | $ | 0.6 | $ | 1.4 | $ | 15.6 | |||||||||||
Nitrogen fertilizer | 0.3 | 0.3 | 0.6 | 8.4 | |||||||||||||||
Other | — | — | — | — | |||||||||||||||
Depreciation and amortization | $ | 1.1 | $ | 0.9 | $ | 2.0 | $ | 24.0 | |||||||||||
Other Financial Data: | |||||||||||||||||||
Depreciation and amortization | $ | 1.1 | $ | 0.9 | $ | 2.0 | $ | 24.0 | |||||||||||
Net income (loss) adjusted for unrealized gain or loss from Cash Flow Swap(2) | 52.4 | (33.5 | ) | 18.9 | 101.0 | ||||||||||||||
Adjusted EBITDA(3) | 105.5 | 2.1 | 107.6 | 212.9 | |||||||||||||||
Cash flows provided by (used in) operating activities(4) | 12.7 | (22.4 | ) | n/a | 120.3 | ||||||||||||||
Cash flows (used in) investing activities | (12.3 | ) | (685.5 | ) | (697.8 | ) | (86.2 | ) | |||||||||||
Cash flows provided by (used in) financing activities | (52.4 | ) | 717.7 | 665.3 | 29.0 | ||||||||||||||
Capital expenditures for property, plant and equipment | 12.3 | 0.4 | 12.7 | 86.2 | |||||||||||||||
Key Operating Statistics: | |||||||||||||||||||
Petroleum Business | |||||||||||||||||||
Production (barrels per day)(5)(6) | 99,171 | 103,750 | 99,348 | 106,915 | |||||||||||||||
Crude oil throughput (barrels per day)(5)(6) | 88,012 | 95,467 | 88,300 | 94,083 | |||||||||||||||
Gross profit per barrel | $ | 4.75 | $ | 11.31 | |||||||||||||||
Gross margin excluding manufacturing expenses per barrel(7) | $ | 8.15 | $ | 15.69 | |||||||||||||||
Manufacturing expenses excluding depreciation and amortization per barrel(7) | $ | 3.31 | $ | 3.48 | |||||||||||||||
Nitrogen Fertilizer Business | |||||||||||||||||||
Production Volume: | |||||||||||||||||||
Ammonia (tons in thousands)(5) | 193.2 | 8.4 | 201.6 | 205.6 | |||||||||||||||
UAN (tons in thousands)(5) | 309.9 | 12.3 | 322.2 | 328.3 | |||||||||||||||
On-stream factors(8): | |||||||||||||||||||
Gasification | 97.5 | % | 97.3 | % | |||||||||||||||
Ammonia | 95.2 | % | 94.7 | % | |||||||||||||||
UAN | 93.2 | % | 93.8 | % | |||||||||||||||
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Original | ||||||||||||||||||||||||||||||||||||
Predecessor | Immediate Predecessor | Successor | Combined | Pro Forma | ||||||||||||||||||||||||||||||||
Year | 62 Days | 304 Days | 174 Days | 233 Days | Year | Year | ||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | 2004 | 2005 | 2005 | |||||||||||||||||||||||||||||
(non-GAAP) | ||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||||||||||
Net sales | $ | 1,262.2 | $ | 261.1 | $ | 1,479.9 | $ | 980.7 | $ | 1,454.3 | $ | 1,741.0 | $ | 2,435.0 | $ | 2,435.0 | ||||||||||||||||||||
Gross profit (loss) | 63.9 | 15.9 | 116.5 | 130.7 | 177.0 | 132.4 | 307.7 | 285.3 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | 23.6 | 4.7 | 16.5 | 18.4 | 18.5 | 21.2 | 36.9 | 36.3 | ||||||||||||||||||||||||||||
Impairment, losses in joint ventures, and other charges(9) | 10.9 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Operating income (loss) | $ | 29.4 | $ | 11.2 | $ | 100.0 | $ | 112.3 | $ | 158.5 | $ | 111.2 | $ | 270.8 | $ | 249.0 | ||||||||||||||||||||
Other income (expense)(1) | (0.5 | ) | — | (6.9 | ) | (8.4 | ) | 0.4 | (6.9 | ) | (8.0 | ) | 0.1 | |||||||||||||||||||||||
Interest (expense) | (1.3 | ) | — | (10.1 | ) | (7.8 | ) | (25.0 | ) | (10.1 | ) | (32.8 | ) | (47.6 | ) | |||||||||||||||||||||
Gain (loss) on derivatives | 0.3 | — | 0.5 | (7.6 | ) | (316.1 | ) | 0.5 | (323.7 | ) | (323.7 | ) | ||||||||||||||||||||||||
Income (loss) before taxes | $ | 27.9 | $ | 11.2 | $ | 83.5 | $ | 88.5 | $ | (182.2 | ) | $ | 94.7 | $ | (93.7 | ) | $ | (122.2 | ) | |||||||||||||||||
Income tax (expense) benefit | — | — | (33.8 | ) | (36.1 | ) | 63.0 | (33.8 | ) | 26.9 | 39.3 | |||||||||||||||||||||||||
Net income (loss) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | (119.2 | ) | $ | 60.9 | $ | (66.8 | ) | $ | (82.9 | ) | |||||||||||||||||
Pro forma earnings per share, basic and diluted | ||||||||||||||||||||||||||||||||||||
Pro forma weighted average shares, basic and diluted | ||||||||||||||||||||||||||||||||||||
Segment Financial Data: | ||||||||||||||||||||||||||||||||||||
Operating income (loss) | ||||||||||||||||||||||||||||||||||||
Petroleum | $ | 21.5 | $ | 7.7 | $ | 77.1 | $ | 76.7 | $ | 123.0 | $ | 84.8 | $ | 199.7 | ||||||||||||||||||||||
Nitrogen fertilizer | 7.8 | 3.5 | 22.9 | 35.3 | 35.7 | 26.4 | 71.0 | |||||||||||||||||||||||||||||
Other | 0.1 | — | — | 0.3 | (0.2 | ) | — | 0.1 | ||||||||||||||||||||||||||||
Operating income (loss) | $ | 29.4 | $ | 11.2 | $ | 100.0 | $ | 112.3 | $ | 158.5 | $ | 111.2 | $ | 270.8 | ||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||||||||||||
Petroleum | $ | 2.1 | $ | 0.3 | $ | 1.5 | $ | 0.8 | $ | 15.6 | $ | 1.8 | $ | 16.4 | ||||||||||||||||||||||
Nitrogen fertilizer | 1.2 | 0.1 | 0.9 | 0.3 | 8.4 | 1.0 | 8.7 | |||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Depreciation and amortization | $ | 3.3 | $ | 0.4 | $ | 2.4 | $ | 1.1 | $ | 24.0 | $ | 2.8 | $ | 25.1 | ||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | $ | 3.3 | $ | 0.4 | $ | 2.4 | $ | 1.1 | $ | 24.0 | $ | 2.8 | $ | 25.1 | $ | 47.6 | ||||||||||||||||||||
Net income adjusted for unrealized gain or loss from Cash Flow Swap(2) | 27.9 | 11.2 | 49.7 | 52.4 | 23.6 | 60.9 | 76.0 | 59.9 | ||||||||||||||||||||||||||||
Adjusted EBITDA(3) | 42.1 | 11.6 | 108.0 | 105.5 | 146.6 | 119.6 | 252.1 | 254.8 | ||||||||||||||||||||||||||||
Cash flows provided by (used in) operating activities(4) | 20.3 | 53.2 | 89.8 | 12.7 | 82.5 | n/a | n/a | |||||||||||||||||||||||||||||
Cash flows (used in) investing activities | (0.8 | ) | — | (130.8 | ) | (12.3 | ) | (730.3 | ) | (130.8 | ) | (742.6 | ) | |||||||||||||||||||||||
Cash flows provided by (used in) financing activities | (19.5 | ) | (53.2 | ) | 93.6 | (52.4 | ) | 712.5 | 40.4 | 660.1 | ||||||||||||||||||||||||||
Capital expenditures for property, plant and equipment | 0.8 | — | 14.2 | 12.3 | 45.2 | 14.2 | 57.5 | |||||||||||||||||||||||||||||
Key Operating Statistics: | ||||||||||||||||||||||||||||||||||||
Petroleum Business | ||||||||||||||||||||||||||||||||||||
Production (barrels per day)(5)(6) | 95,701 | 106,645 | 102,046 | 99,171 | 107,177 | 102,825 | 103,362 | |||||||||||||||||||||||||||||
Crude oil throughput (barrels per day)(5)(6) | 85,501 | 92,596 | 90,418 | 88,012 | 93,908 | 90,787 | 91,097 | |||||||||||||||||||||||||||||
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Original | ||||||||||||||||||||||||||||||||||||
Predecessor | Immediate Predecessor | Successor | Combined | Pro Forma | ||||||||||||||||||||||||||||||||
Year | 62 Days | 304 Days | 174 Days | 233 Days | Year | Year | ||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | 2004 | 2005 | 2005 | |||||||||||||||||||||||||||||
(non-GAAP) | ||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||||||||||||||||||||||
Gross profit per barrel | $ | 1.25 | $ | 2.93 | $ | 6.75 | ||||||||||||||||||||||||||||||
Gross margin excluding manufacturing expenses per barrel(7) | $ | 3.89 | $ | 5.68 | $ | 10.59 | ||||||||||||||||||||||||||||||
Manufacturing expenses excluding depreciation and amortization per barrel(7) | $ | 2.57 | $ | 2.70 | $ | 3.35 | ||||||||||||||||||||||||||||||
Nitrogen Fertilizer Business Production Volume: | ||||||||||||||||||||||||||||||||||||
Ammonia (tons in thousands)(5) | 335.7 | 56.4 | 252.8 | 193.2 | 220.0 | 309.2 | 413.2 | |||||||||||||||||||||||||||||
UAN (tons in thousands)(5) | 510.6 | 93.4 | 439.2 | 309.9 | 353.4 | 532.6 | 663.3 | |||||||||||||||||||||||||||||
On-stream factors(8): | ||||||||||||||||||||||||||||||||||||
Gasification | 90.1 | % | 92.4 | % | 98.1 | % | ||||||||||||||||||||||||||||||
Ammonia | 89.6 | % | 79.9 | % | 96.7 | % | ||||||||||||||||||||||||||||||
UAN | 81.6 | % | 83.3 | % | 94.3 | % | ||||||||||||||||||||||||||||||
Original | Immediate | Successor | |||||||||||||||||||||
Predecessor | Predecessor | Successor | Actual | As Adjusted | |||||||||||||||||||
December 31, | December 31, | December 31, | June 30, | June 30, | |||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2006 | |||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 52.7 | $ | 64.7 | $ | 127.9 | |||||||||||||||
Working capital(10) | 150.5 | 106.6 | 108.0 | 139.7 | |||||||||||||||||||
Total assets | 199.0 | 229.2 | 1,221.5 | 1,406.1 | |||||||||||||||||||
Liabilities subject to compromise(11) | 105.2 | — | — | — | |||||||||||||||||||
Total debt, including current portion | — | 148.9 | 499.4 | 508.3 | |||||||||||||||||||
Management units subject to redemption | — | — | 3.7 | 12.2 | |||||||||||||||||||
Divisional/members equity | 58.2 | 14.1 | 115.8 | 170.1 |
(1) | During the 304 days ended December 31, 2004 and the 174 days ended June 23, 2005, we recognized a loss of $7.2 million and $8.1 million, respectively, on early extinguishment of debt. | |
(2) | Net income adjusted for unrealized gain or loss from Cash Flow Swap results from adjusting for the derivative transaction that was executed in conjunction with the Subsequent Acquisition. On June 16, 2005, Coffeyville Acquisition LLC entered into the Cash Flow Swap with J. Aron, a subsidiary of The Goldman Sachs Group, Inc., and a related party of ours. The Cash Flow Swap was subsequently assigned from Coffeyville Acquisition LLC to Coffeyville Resources, LLC on June 24, 2005. Under these agreements, sales representing approximately 70% and 17% of then forecasted refinery output for the periods from July 2005 through June 2009, and July 2009 through June 2010, respectively, have been economically hedged. The derivative took the form of three NYMEX swap agreements whereby if crack spreads fall below the fixed level, J. Aron agreed to pay the difference to us, and if crack spreads rise above the fixed level, we agreed to pay the difference to J. Aron. See “Description of Our Indebtedness and the Cash Flow Swap.” | |
We have determined that the Cash Flow Swap does not qualify as a hedge for hedge accounting purposes under current GAAP. As a result, our periodic statements of operations reflect in each period material amounts of unrealized gains and losses based on the increases or decreases in market value of the unsettled position under the swap agreements which is accounted for as a liability on our balance sheet. As the crack spreads increase we are required to record an increase in this liability account with a corresponding expense entry to be made to our statement of operations. Conversely, as crack spreads decline we are required to record a decrease in the swap related liability and post a corresponding income entry to our statement of operations. Because of this inverse relationship between the economic outlook for our underlying business (as represented by crack spread levels) and the income impact of the unrecognized gains and losses, and given the significant periodic fluctuations in the amounts of unrealized gains and losses, management utilizes Net income adjusted for unrealized gain or loss from Cash Flow Swap as a key indicator of our business performance and believes that this non-GAAP measure is a useful measure for investors in analyzing our business. The adjustment has been made for the unrealized loss from Cash Flow Swap net of its related tax benefit. | ||
Net income adjusted for unrealized gain or loss from Cash Flow Swap is not a recognized term under GAAP and should not be substituted for net income as a measure of our performance but instead should be utilized as a supplemental measure of performance in evaluating our business. Also, our presentation of this non-GAAP measure may not be comparable to similarly titled measures of other companies. |
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The following is a reconciliation of Net income adjusted for unrealized gain or loss from Cash Flow Swap to Net income: |
Immediate | |||||||||||||||||||
Predecessor | Successor | Combined | Successor | ||||||||||||||||
174 Days Ended | 49 Days Ended | Six Months | Six Months | ||||||||||||||||
June 23, | June 30, | Ended June 30, | Ended June 30, | ||||||||||||||||
2005 | 2005 | 2005 | 2006 | ||||||||||||||||
(non-GAAP) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||
(in millions) | |||||||||||||||||||
Net income (loss) adjusted for unrealized gain or loss from Cash Flow Swap | $ | 52.4 | $ | (33.5 | ) | $ | 18.9 | $ | 101.0 | ||||||||||
Less: | |||||||||||||||||||
Unrealized loss from Cash Flow Swap, net of tax benefit | — | 76.7 | 76.7 | 59.2 | |||||||||||||||
Net income (loss) | $ | 52.4 | $ | (110.2 | ) | $ | (57.8 | ) | $ | 41.8 | |||||||||
Pro Forma | ||||||||||||||||||||||||||||||||||||
Original Predecessor | Immediate Predecessor | Successor | Combined | Year | ||||||||||||||||||||||||||||||||
Year | 62 Days | 304 Days | 174 Days | 233 Days | Year | Ended | ||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | December | ||||||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | December 31, | 31, | ||||||||||||||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | 2004 | 2005 | 2005 | |||||||||||||||||||||||||||||
(non-GAAP) | ||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||
Net income adjusted for unrealized gain or loss from Cash Flow Swap | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | 23.6 | $ | 60.9 | $ | 76.0 | $ | 59.9 | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
Unrealized loss from Cash Flow Swap, net of tax benefit | — | — | — | — | 142.8 | — | 142.8 | 142.8 | ||||||||||||||||||||||||||||
Net income (loss) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | (119.2 | ) | $ | 60.9 | $ | (66.8 | ) | $ | (82.9 | ) | |||||||||||||||||
(3) | Adjusted EBITDA represents earnings before interest expense, taxes, depreciation and amortization, and the unrealized gain or loss on the Cash Flow Swap, as further adjusted for some other special charges (described below in footnotes (a) through (f) to the Adjusted EBITDA to net income reconciliation) that we believe aid in providing a meaningful comparison ofperiod-to-period results. Management believes that Adjusted EBITDA is a useful adjunct to net income and other measurements under GAAP because it is a meaningful measure for evaluating our performance in a given period compared to prior periods and compared to other companies in our industry, as interest expense, taxes, depreciation and amortization can vary significantly across periods and between companies due in part to differences in accounting policies, tax strategies, levels of indebtedness, capital purchasing practices and interest rates. Adjusted EBITDA also assists management in evaluating operating performance. EBITDA, with adjustments specified in our credit facilities, is also the basis for calculating our financial debt covenants under our existing credit facilities. | |
Adjusted EBITDA is net of the impact of the realized losses from Cash Flow Swap, which were $33.4 million for the six months ended June 30, 2006 and $59.3 million for the combined year ended December 31, 2005. | ||
Adjusted EBITDA has distinct limitations as compared to GAAP information, such as net income, income from continuing operations or operating income. By excluding interest expense and income tax expense, for example, it may not be apparent that both represent a reduction in cash available to us. Likewise, depreciation and amortization, while non-cash items, represent generally the decreases in value of assets that produce revenue for us. We present Adjusted EBITDA as a supplemental measure of our performance. We prepare Adjusted EBITDA by adjusting EBITDA to eliminate the impact of a number of items we do not consider indicative of our ongoing operating performance. We believe additional adjustments to EBITDA for these special charges provide a meaningful comparison ofperiod-to-period results. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these kinds of items or other items that are not indicative of our operating performance. Adjusted EBITDA should not be substituted as an alternative to net income or income from operations, which are measures of performance in accordance with GAAP. Our computation of Adjusted EBITDA for this purpose may not be comparable to other similarly titled measures computed for other purposes or by other companies because all companies do not calculate Adjusted EBITDA in the same fashion. |
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The following is a reconciliation of Adjusted EBITDA to net income: |
Immediate | |||||||||||||||||||
Predecessor | Successor | Combined | Successor | ||||||||||||||||
174 Days Ended | 49 Days Ended | Six Months | Six Months | ||||||||||||||||
June 23, | June 30, | Ended June 30, | Ended June 30, | ||||||||||||||||
2005 | 2005 | 2005 | 2006 | ||||||||||||||||
(unaudited) | (non-GAAP) | (unaudited) | |||||||||||||||||
(in millions) | |||||||||||||||||||
Adjusted EBITDA | $ | 105.5 | $ | 2.1 | $ | 107.6 | $ | 212.9 | |||||||||||
Less: | |||||||||||||||||||
Income tax expense | 36.1 | — | — | 25.7 | |||||||||||||||
Interest expense | 7.8 | 1.0 | 8.8 | 22.3 | |||||||||||||||
Depreciation and amortization | 1.1 | 0.9 | 2.0 | 24.0 | |||||||||||||||
Loss on extinguishment of debt(b) | 8.1 | — | 8.1 | — | |||||||||||||||
Inventory fair market value adjustment(c) | — | 14.3 | 14.3 | — | |||||||||||||||
Funded letter of credit expense and interest rate swap not included in interest expense(d) | — | — | — | 0.6 | |||||||||||||||
Major scheduled turnaround expense(e) | — | — | — | 0.3 | |||||||||||||||
Loss on termination of swap(f) | — | 25.0 | 25.0 | — | |||||||||||||||
Unrealized loss from Cash Flow Swap | — | 127.2 | 127.2 | 98.2 | |||||||||||||||
Plus: | |||||||||||||||||||
Income tax benefit | — | 56.1 | 20.0 | — | |||||||||||||||
Net income (loss) | $ | 52.4 | $ | (110.2 | ) | $ | (57.8 | ) | $ | 41.8 |
Original | Immediate | Combined | ||||||||||||||||||||||||||||||||||||||
Predecessor | Predecessor | Successor | Combined | Pro Forma | Twelve | |||||||||||||||||||||||||||||||||||
Year | 62 Days | 304 Days | 174 Days | 233 Days | Year | Year | Months | |||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | December 31, | December 31, | June 30, | |||||||||||||||||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||||||||||||||||||
(non-GAAP) | (non-GAAP) | |||||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 42.1 | $ | 11.6 | $ | 108.0 | $ | 105.5 | $ | 146.6 | $ | 119.6 | $ | 252.1 | $ | 254.8 | $ | 357.4 | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||
Income tax expense | — | — | 33.8 | 36.1 | — | 33.8 | — | — | 18.8 | |||||||||||||||||||||||||||||||
Interest expense | 1.3 | — | 10.1 | 7.8 | 25.0 | 10.1 | 32.8 | 47.6 | 46.3 | |||||||||||||||||||||||||||||||
Depreciation and amortization | 3.3 | 0.4 | 2.4 | 1.1 | 24.0 | 2.8 | 25.1 | 47.6 | 47.1 | |||||||||||||||||||||||||||||||
Impairment of property, plant and equipment(a) | 9.6 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt(b) | — | — | 7.2 | 8.1 | — | 7.2 | 8.1 | — | — | |||||||||||||||||||||||||||||||
Inventory fair market value adjustment(c) | — | — | 3.0 | — | 16.6 | 3.0 | 16.6 | 16.6 | 2.3 | |||||||||||||||||||||||||||||||
Funded letter of credit expense and interest rate swap not included in interest expense(d) | — | — | — | — | 2.3 | — | 2.3 | 4.3 | 2.9 | |||||||||||||||||||||||||||||||
Major scheduled turnaround expense(e) | — | — | 1.8 | — | — | 1.8 | — | — | 0.3 | |||||||||||||||||||||||||||||||
Loss on termination of swap(f) | — | — | — | — | 25.0 | — | 25.0 | 25.0 | — | |||||||||||||||||||||||||||||||
Unrealized loss from Cash Flow Swap | — | — | — | — | 235.9 | — | 235.9 | 235.9 | 206.9 | |||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||
Income tax benefit | — | — | — | — | 63.0 | — | 26.9 | 39.3 | — | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | (119.2 | ) | $ | 60.9 | $ | (66.8 | ) | $ | (82.9 | ) | $ | 32.8 |
(a) | During the year ended December 31, 2003, we recorded an additional charge of $9.6 million related to the asset impairment of our refinery and nitrogen fertilizer plant based on the expected sales price of the assets in the Initial Acquisition. | |
(b) | Represents the write-off of $7.2 million of deferred financing costs in connection with the refinancing of our senior secured credit facility on May 10, 2004 and the write-off of $8.1 million of deferred financing costs in connection with the refinancing of our senior secured credit facility on June 23, 2005. | |
(c) | Consists of the additional cost of goods sold expense due to the step up to estimated fair value of certain inventories on hand at March 3, 2004 and June 24, 2005, as a result of the allocation of the purchase price of the Initial Acquisition and the Subsequent Acquisition to inventory. |
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(d) | Consists of fees which are expensed to Selling, general and administrative expenses in connection with the funded letter of credit facility of $150.0 million issued in support of the Cash Flow Swap. We consider these fees to be equivalent to interest expense and the fees are treated as such in the calculation of EBITDA in the first lien credit facility and the second lien credit facility. | |
(e) | Represents expenses associated with a major scheduled turnaround at our nitrogen fertilizer plant. | |
(f) | Represents the expense associated with the expiration of the crude oil, heating oil and gasoline option agreements entered into by Coffeyville Acquisition LLC in May 2005. |
(4) | The reporting of cash flows from operating activities is impacted by the Initial Acquisition and the Subsequent Acquisition and the change in the basis of accounting that resulted from both of these transactions. Therefore, management believes it is not meaningful to combine cash flows from operating activities for the periods which include the date of the Initial Acquisition and the Subsequent Acquisition. | |
(5) | Operational information reflected for the 49 day Successor period ended June 30, 2005 includes only seven days of operational activity. Operational information reflected for the 233 day Successor period ended December 31, 2005 includes only 191 days of operational activity. Successor was formed on May 13, 2005 but had no financial statement activity during the 42-day period from May 13, 2005 to June 24, 2005, with the exception of certain crude oil, heating oil and gasoline option agreements entered into with J. Aron as of May 16, 2005 which expired unexercised on June 16, 2005. | |
(6) | Barrels per day is calculated by dividing the volume in the period by the number of calendar days in the period. Barrels per day as shown here is impacted by plant down-time and other plant disruptions and does not represent the capacity of the facility’s continuous operations. | |
(7) | For a discussion and presentation of “Gross margin excluding manufacturing expenses” and “Manufacturing expenses excluding depreciation and amortization” see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” commencing on page 61. | |
(8) | On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period. | |
(9) | During the year ended December 31, 2003, we recorded an additional charge of $9.6 million related to the asset impairment of the refinery and nitrogen fertilizer plant based on the expected sales price of the assets in the Initial Acquisition. In addition, we recorded a charge of $1.3 million for the rejection of existing contracts while operating under Chapter 11 of the U.S. Bankruptcy Code. | |
(10) | Excludes liabilities subject to compromise due to Original Predecessor’s bankruptcy of $105.2 million as of December 31, 2003 in calculating Original Predecessor’s working capital. | |
(11) | While operating under Chapter 11 of the U.S. Bankruptcy Code, Original Predecessor’s financial statements were prepared in accordance withSOP 90-7 “Financial Reporting by Entities in Reorganization under Bankruptcy Code.”SOP 90-7 requires that pre-petition liabilities be segregated in the Balance Sheet. |
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• | Original Predecessor refers to the former Petroleum Division and one facility within the eight-plant Nitrogen Fertilizer Manufacturing and Marketing Division of Farmland which Coffeyville Resources, LLC acquired on March 3, 2004 in a sales process under Chapter 11 of the U.S. Bankruptcy Code; | |
• | Initial Acquisition refers to the acquisition of Original Predecessor on March 3, 2004 by Coffeyville Resources, LLC; | |
• | Immediate Predecessor refers to Coffeyville Group Holdings, LLC and its subsidiaries, including Coffeyville Resources, LLC; | |
• | Subsequent Acquisition refers to the acquisition of Immediate Predecessor on June 24, 2005 by Coffeyville Acquisition LLC; and | |
• | Successor refers to Coffeyville Acquisition LLC and its consolidated subsidiaries. |
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• | limiting our ability to obtain additional financing to fund our working capital, acquisitions, expenditures, debt service requirements or for other purposes; | |
• | limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; | |
• | limiting our ability to compete with other companies who are not as highly leveraged; | |
• | placing restrictive financial and operating covenants in the agreements governing our and our subsidiaries’ long-term indebtedness and bank loans, including, in the case of certain indebtedness of subsidiaries, certain covenants that restrict the ability of subsidiaries to pay dividends or make other distributions to us; | |
• | exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries’ debt instruments that could have a material adverse effect on our business, financial condition and operating results; | |
• | increasing our vulnerability to a downturn in general economic conditions or in pricing of our products; and | |
• | limiting our ability to react to changing market conditions in our industry and in our customers’ industries. |
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• | the requirement that a majority of our board of directors consist of independent directors; | |
• | the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and | |
• | the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
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• | the failure of securities analysts to cover our common stock after this offering or changes in financial estimates by analysts; | |
• | announcements by us or our competitors of significant contracts or acquisitions; | |
• | variations in quarterly results of operations; | |
• | loss of a large customer or supplier; | |
• | general economic conditions; | |
• | terrorist acts; | |
• | future sales of our common stock; and | |
• | investor perceptions of us and the industries in which our products are used. |
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• | volatile margins in the refining industry; | |
• | exposure to the risks associated with volatile crude prices; | |
• | disruption of our ability to obtain an adequate supply of crude oil; | |
• | decreases in the light/heavy and/or the sweet/sour crude oil price spreads; | |
• | refinery operating hazards and interruptions, including unscheduled maintenance or downtime, and the availability of adequate insurance coverage; | |
• | interruption of the pipelines supplying feedstock and in the distribution of our products; | |
• | the seasonal nature of our petroleum business; | |
• | competition in the petroleum and nitrogen fertilizer businesses; | |
• | capital expenditures required by environmental laws and regulations; | |
• | changes in our credit profile; | |
• | the availability of adequate cash and other sources of liquidity for our capital needs; | |
• | fluctuations in the price of natural gas; | |
• | the cyclical nature of our nitrogen fertilizer business; | |
• | adverse weather conditions; | |
• | the supply and price levels of essential raw materials; | |
• | the volatile nature of ammonia, potential liability for accidents involving ammonia that cause severe damage to propertyand/or injury to the environment and human health and potential increased costs relating to transport of ammonia; | |
• | the dependence of our nitrogen fertilizer operations on a few third-party suppliers; | |
• | our limited operating history as a stand-alone company; | |
• | our commodity derivative activities; | |
• | our dependence on significant customers; | |
• | our potential inability to successfully implement our business strategies, including the completion of significant capital programs; | |
• | our significant indebtedness; | |
• | the dependence on our subsidiaries for cash to meet our debt obligations; | |
• | the potential loss of key personnel; |
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• | labor disputes and adverse employee relations; | |
• | potential increases in costs and distraction of management resulting from the requirements of being a public company; | |
• | risks relating to evaluations of internal controls required by Section 404 of the Sarbanes-Oxley Act; | |
• | the operation of our company as a “controlled company”; | |
• | new regulations concerning the transportation of hazardous chemicals, risks of terrorism and the security of chemical manufacturing facilities; | |
• | successfully defending against third-party claims of intellectual property infringement; and | |
• | our ability to continue to license the technology used in our operations. |
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• | on an actual basis for Coffeyville Acquisition LLC; and | |
• | as adjusted to give effect to the sale by us of shares in this offering at an assumed initial offering price of $ per share, the mid-point of the range set forth on the cover page of this prospectus, the use of proceeds from this offering and the Transactions. |
As of June 30, 2006 | ||||||||
Actual | As Adjusted | |||||||
(in millions) | ||||||||
Cash and cash equivalents | $ | 127.9 | $ | |||||
Term debt (including current portion) | ||||||||
First lien credit facility(1) | $ | 233.3 | $ | |||||
Second lien credit facility | 275.0 | |||||||
Total term debt | 508.3 | |||||||
Management voting common units subject to redemption, net of note receivable from management unitholder, 227,500 units | 12.2 | |||||||
Members’ equity(2): | ||||||||
Members’ voting common equity, 25,588,500 units | 168.2 | |||||||
Operating override units, 919,630 units | 1.2 | |||||||
Value override units, 1,839,265 units | 0.7 | |||||||
Total members’ equity | 170.1 | |||||||
Stockholders’ equity(2): | ||||||||
Common stock, $0.01 par value per share, shares authorized; shares issued and outstanding as adjusted | — | |||||||
Preferred stock, $0.01 par value; shares authorized; no shares issued and outstanding as adjusted | — | |||||||
Additional paid-in capital(2) | — | |||||||
Total stockholders’ equity | — | |||||||
Total capitalization | $ | 690.6 | $ | |||||
(1) | As of June 30, 2006, we had availability of $55.2 million under the revolving credit facility. | |
(2) | On an actual basis, the Members’ equity reflects the unit ownership at Coffeyville Acquisition LLC which is structured as a partnership for tax purposes. Upon completion of this offering, the reporting entity will be CVR Energy, Inc., a corporation. The ownership at Coffeyville Acquisition LLC will not be reported, and as such, the components of Members’ equity do not appear in the “As Adjusted” column. Upon completion of this offering, common stock in CVR Energy, Inc. will be issued and reflected in Common stock in the “As Adjusted” column. Members’ equity will be eliminated and replaced with Stockholders’ equity to reflect the new corporate structure. Any difference in the total value of equity upon completion of this offering and the par value of the common stock issued will be reflected in Additional paid-in capital. |
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Assumed initial public offering price per share | $ | |||||||
Pro forma net tangible book value per share as of June 30, 2006 | $ | |||||||
Pro forma increase per share attributable to new investors | $ | |||||||
Net tangible book value per share after the offering | $ | |||||||
Dilution per share to new investors | $ | |||||||
Shares Purchased | Total Consideration | Average Price | ||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | ||||||||||||||||
Existing stockholder | % | $ | % | |||||||||||||||||
New investors | ||||||||||||||||||||
Total | 100.0 | % | $ | 100.0 | % | |||||||||||||||
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Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2005
Historical | |||||||||||||||||||||||||
Immediate | Historical | Pro Forma | |||||||||||||||||||||||
Predecessor | Successor | Adjustments To | |||||||||||||||||||||||
174 Days | 233 Days | Combined | Give Effect | Pro Forma | |||||||||||||||||||||
Ended | Ended | Year Ended | to the | Year Ended | |||||||||||||||||||||
June 23, | December 31, | December 31, | Subsequent | December 31, | |||||||||||||||||||||
2005 | 2005 | 2005 | Acquisition | 2005 | |||||||||||||||||||||
(non-GAAP) | |||||||||||||||||||||||||
Net Sales | 980,706,261 | 1,454,259,542 | 2,434,965,803 | — | 2,434,965,803 | ||||||||||||||||||||
Cost of goods sold | 850,037,564 | 1,277,217,863 | 2,127,255,427 | 22,456,692 | (a)(b)(c) | 2,149,712,119 | |||||||||||||||||||
Gross profit (loss) | 130,668,697 | 177,041,679 | 307,710,376 | (22,456,692 | ) | 285,253,684 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Selling, general and administrative expenses | 18,413,003 | 18,506,617 | 36,919,620 | (602,559 | )(b)(c)(d) | 36,317,061 | |||||||||||||||||||
Total operating expenses | 18,413,003 | 18,506,617 | 36,919,620 | (602,559 | ) | 36,317,061 | |||||||||||||||||||
Operating income | 112,255,694 | 158,535,062 | 270,790,756 | (21,854,133 | ) | 248,936,623 | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||
Interest (expense) | (7,801,821 | ) | (25,007,159 | ) | (32,808,980 | ) | (14,779,995 | )(e) | (47,588,975 | ) | |||||||||||||||
Loss on derivatives | (7,664,725 | ) | (316,062,111 | ) | (323,726,836 | ) | — | (323,726,836 | ) | ||||||||||||||||
Loss on extinguishment of debt | (8,093,754 | ) | — | (8,093,754 | ) | 8,093,754 | (f) | — | |||||||||||||||||
Other income (expense) | (250,929 | ) | 409,074 | 158,145 | — | 158,145 | |||||||||||||||||||
Total other income (expense) | (23,811,229 | ) | (340,660,196 | ) | (364,471,425 | ) | (6,686,241 | ) | (371,157,666 | ) | |||||||||||||||
Income (loss) before income taxes | 88,444,465 | (182,125,134 | ) | (93,680,669 | ) | (28,540,374 | ) | (122,221,043 | ) | ||||||||||||||||
Income taxes expense (benefit) | 36,047,516 | (62,968,044 | ) | (26,920,528 | ) | (12,402,290 | )(g) | (39,322,818 | ) | ||||||||||||||||
Net income (loss) | 52,396,949 | (119,157,090 | ) | (66,760,141 | ) | (16,138,084 | ) | (82,898,225 | ) | ||||||||||||||||
Pro forma earnings per share, basic and diluted(h) | $ | — | $ | — | |||||||||||||||||||||
Pro forma weighted average earnings per share, basic and diluted(h) |
(a) | To reflect the increase in depreciation resulting from thestep-up of property, plant, and equipment, depreciated on a straight-line basis over 3 to 30 years. |
Assets acquired | ||||
Cash | $ | 666.5 | ||
Accounts receivable | 37,329.0 | |||
Inventories | 156,171.3 | |||
Prepaid expenses and other current assets | 4,865.2 | |||
Intangibles, contractual agreements | 1,322.0 | |||
Goodwill | 83,774.9 | |||
Other long-term assets | 3,837.6 | |||
Property, plant, and equipment | 750,910.2 | |||
Total assets acquired | $ | 1,038,876.7 | ||
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Liabilities assumed | ||||
Accounts payable | $ | 47,259.1 | ||
Other current liabilities | 16,017.2 | |||
Current income taxes | 5,076.0 | |||
Deferred income taxes | 276,888.8 | |||
Other long-term liabilities | 7,843.5 | |||
Total liabilities assumed | $ | 353,084.6 | ||
Cash paid for acquisition of Immediate Predecessor | $ | 685,792.1 | ||
(b) | To increase amortization expense due to the amortization of identifiable intangibles using a straight-line method over a weighted average life of eight years. | |
(c) | To reverse the share based compensation expense associated with senior management share based compensation plans of Immediate Predecessor and to recognize share based compensation expense as if the senior management share based compensation plans of Successor had gone into effect on January 1, 2005. | |
(d) | To reflect the increase in fees related to the funded letter of credit in support of the cash flow swaps, which are required under the terms of the senior secured credit facility refinanced on June 24, 2005. | |
(e) | To increase interest expense for (1) interest resulting from the issuance of debt to refinance our senior secured credit facility on June 24, 2005 to finance the cash portion of the purchase price giving pro forma effect to the refinancing of our debt as if it had occurred on January 1, 2005 and (2) the amortization of deferred financing cost resulting from $24.6 million of deferred financing charges related to the debt incurred on June 24, 2005 amortized using an effective interest amortization method over the term of the debt. An assumed average interest rate of 8.48% based on the interest rate in effect on the term loan as of June 24, 2005 was used to calculate interest expense on an average annual balance of $498.9 million of term debt as if the First Lien Credit Facility and the Second Lien Credit Facility were entered into on January 1, 2005. | |
(f) | To reverse the write-off of $8.1 million of deferred financing costs incurred in connection with the refinancing of our senior secured credit facility on June 24, 2005. | |
(g) | To reflect the income tax effect of the pro forma pre-tax loss adjustments of $28,540,374 for the year ended December 31, 2005, based on an effective tax rate of 43.5%. The effective tax rate was determined by applying a combined federal and state statutory income tax rate of approximately 39.7% to pro forma pre-tax loss adjustments of $31,240,024. There was no tax effect on pro forma adjustments of pre-tax income of $2,699,650 relating to non-deductible unearned compensation expense. | |
(h) | To calculate earnings per share on a pro forma basis, based on an assumed number of shares outstanding at the time of the initial public offering with respect to the existing shares. All information in this prospectus assumes that prior to the initial public offering, two newly formed direct wholly owned subsidiaries of CVR Energy, Inc. will merge with two wholly owned subsidiaries of Coffeyville Acquisition LLC, CVR Energy, Inc. will effect a for stock split prior to completion of this offering and CVR Energy, Inc. will issue shares of common stock in this offering. No effect has been given to any shares that might be issued in this offering pursuant to the exercise by the underwriters of their option. |
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Immediate | |||||||||||||
Predecessor | Successor | Successor | |||||||||||
174 Days | 49 Days | Six Months | |||||||||||
Ended | Ended | Ended | |||||||||||
June 23, | June 30, | June 30, | |||||||||||
2005 | 2005 | 2006 | |||||||||||
(unaudited) | (unaudited) | ||||||||||||
(in millions, except as otherwise indicated) | |||||||||||||
Statement of Operations Data: | |||||||||||||
Net sales | $ | 980.7 | $ | 49.7 | 1,550.6 | ||||||||
Gross profit (loss) | 130.7 | (12.8 | ) | 235.5 | |||||||||
Selling, general and administrative expense | 18.4 | 0.8 | 20.6 | ||||||||||
Operating income (loss) | $ | 112.3 | $ | (13.6 | ) | $ | 214.9 | ||||||
Other income (expense) and gain (loss) on sale in joint ventures(1) | (8.4 | ) | 0.1 | 1.4 | |||||||||
Interest (expense) | (7.8 | ) | (1.0 | ) | (22.3 | ) | |||||||
Gain (loss) on derivatives | (7.6 | ) | (151.8 | ) | (126.5 | ) | |||||||
Income (loss) before taxes | $ | 88.5 | $ | (166.3 | ) | $ | 67.5 | ||||||
Income tax (expense) benefit | (36.1 | ) | 56.1 | (25.7 | ) | ||||||||
Net income (loss) | $ | 52.4 | $ | (110.2 | ) | $ | 41.8 | ||||||
Pro forma earnings per share, basic and diluted | |||||||||||||
Pro forma weighted average shares, basic and diluted | |||||||||||||
Historical dividends per unit(2): | |||||||||||||
Preferred | $ | 0.70 | $ | — | $ | — | |||||||
Common | $ | 0.70 | $ | — | $ | — | |||||||
Balance Sheet Data: | |||||||||||||
Cash and cash equivalents | $ | 127.9 | |||||||||||
Working capital | 139.7 | ||||||||||||
Total assets | 1,406.1 | ||||||||||||
Total debt, including current portion | 508.3 | ||||||||||||
Management units subject to redemption | 12.2 | ||||||||||||
Divisional/members’ equity | 170.1 | ||||||||||||
Other Financial Data: | |||||||||||||
Depreciation and amortization | $ | 1.1 | $ | 0.9 | $ | 24.0 | |||||||
Net income (loss) adjusted for unrealized gain or loss from Cash Flow Swap(3) | 52.4 | (33.5 | ) | 101.0 | |||||||||
Adjusted EBITDA(4) | 105.5 | 2.1 | 212.9 | ||||||||||
Cash flows provided by (used in) operating activities | 12.7 | (22.4 | ) | 120.3 | |||||||||
Cash flows (used in) investing activities | (12.3 | ) | (685.5 | ) | (86.2 | ) | |||||||
Cash flows provided by (used in) financing activities | (52.4 | ) | 717.7 | 29.0 | |||||||||
Capital expenditures for property, plant and equipment | 12.3 | 0.4 | 86.2 | ||||||||||
Key Operating Statistics: | |||||||||||||
Petroleum Business | |||||||||||||
Production (barrels per day)(5)(6) | 99,171 | 103,750 | 106,915 | ||||||||||
Crude oil throughput (barrels per day)(5)(6) | 88,012 | 95,467 | 94,083 | ||||||||||
Nitrogen Fertilizer Business | |||||||||||||
Production Volume: | |||||||||||||
Ammonia (tons in thousands)(5) | 193.2 | 8.4 | 205.6 | ||||||||||
UAN (tons in thousands)(5) | 309.9 | 12.3 | 328.3 |
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Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||||||||||
62 Days | 304 Days | 174 Days | 233 Days | |||||||||||||||||||||||||||
Year Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||||
Net sales | $ | 1,630.2 | $ | 887.5 | $ | 1,262.2 | $ | 261.1 | $ | 1,479.9 | $ | 980.7 | $ | 1,454.3 | ||||||||||||||||
Gross profit (loss) | 6.8 | (58.5 | ) | 63.9 | 15.9 | 116.5 | 130.7 | 177.0 | ||||||||||||||||||||||
Selling, general and administrative expenses | 24.8 | 16.3 | 23.6 | 4.7 | 16.5 | 18.4 | 18.5 | |||||||||||||||||||||||
Impairment, earnings (losses) in joint ventures, and other charges(7) | (2.8 | ) | (375.1 | ) | (10.9 | ) | — | — | — | — | ||||||||||||||||||||
Operating income (loss) | $ | (20.8 | ) | $ | (449.9 | ) | $ | 29.4 | $ | 11.2 | $ | 100.0 | $ | 112.3 | $ | 158.5 | ||||||||||||||
Other income (expense) and gain (loss) on sale in joint ventures(1) | 19.2 | 0.1 | (0.5 | ) | — | (6.9 | ) | (8.4 | ) | 0.4 | ||||||||||||||||||||
Interest (expense) | (18.3 | ) | (11.7 | ) | (1.3 | ) | — | (10.1 | ) | (7.8 | ) | (25.0 | ) | |||||||||||||||||
Gain (loss) on derivatives | 0.5 | (4.2 | ) | 0.3 | — | 0.5 | (7.6 | ) | (316.1 | ) | ||||||||||||||||||||
Income (loss) before taxes | $ | (19.4 | ) | $ | (465.7 | ) | $ | 27.9 | $ | 11.2 | $ | 83.5 | $ | 88.5 | $ | (182.2 | ) | |||||||||||||
Income tax (expense) benefit | — | — | — | — | (33.8 | ) | (36.1 | ) | 63.0 | |||||||||||||||||||||
Net income (loss) | $ | (19.4 | ) | $ | (465.7 | ) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | (119.2 | ) | |||||||||||||
Pro forma earnings per share, basic and diluted | ||||||||||||||||||||||||||||||
Pro forma weighted average shares, basic and diluted | ||||||||||||||||||||||||||||||
Historical dividends per unit(2): | ||||||||||||||||||||||||||||||
Preferred | $ | 1.50 | $ | 0.70 | ||||||||||||||||||||||||||
Common | $ | 0.48 | $ | 0.70 | ||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 52.7 | $ | 64.7 | ||||||||||||||||||||
Working capital(8) | 71.2 | 122.2 | 150.5 | 106.6 | 108.0 | |||||||||||||||||||||||||
Total assets | 300.3 | 172.3 | 199.0 | 229.2 | 1,221.5 | |||||||||||||||||||||||||
Liabilities subject to compromise(9) | — | 105.2 | 105.2 | — | — | |||||||||||||||||||||||||
Total debt, including current portion | — | — | — | 148.9 | 499.4 | |||||||||||||||||||||||||
Management units subject to redemption | — | — | — | — | 3.7 | |||||||||||||||||||||||||
Divisional/members’ equity | 241.4 | 49.8 | 58.2 | 14.1 | 115.8 | |||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||||
Depreciation and amortization | $ | 19.1 | $ | 30.8 | $ | 3.3 | $ | 0.4 | $ | 2.4 | $ | 1.1 | $ | 24.0 | ||||||||||||||||
Net income (loss) adjusted for unrealized gain or loss from Cash Flow Swap(3) | (19.4 | ) | (465.7 | ) | 27.9 | 11.2 | 49.7 | 52.4 | 23.6 | |||||||||||||||||||||
Adjusted EBITDA(4) | 18.7 | (30.8 | ) | 42.1 | 11.6 | 108.0 | $ | 105.5 | $ | 146.6 | ||||||||||||||||||||
Cash flows provided by (used in) operating activities | 65.4 | (1.7 | ) | 20.3 | 53.2 | 89.8 | 12.7 | 82.5 | ||||||||||||||||||||||
Cash flows (used in) investing activities | 17.9 | (272.4 | ) | (0.8 | ) | — | (130.8 | ) | (12.3 | ) | (730.3 | ) | ||||||||||||||||||
Cash flows provided by (used in) financing activities | (83.3 | ) | 274.1 | (19.5 | ) | (53.2 | ) | 93.6 | (52.4 | ) | 712.5 | |||||||||||||||||||
Capital expenditures for property, plant and equipment | 8.2 | 272.4 | 0.8 | — | 14.2 | 12.3 | 45.2 | |||||||||||||||||||||||
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Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||||||||||
62 Days | 304 Days | 174 Days | 233 Days | |||||||||||||||||||||||||||
Year Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||||||||||||||||
Key Operating Statistics: | ||||||||||||||||||||||||||||||
Petroleum Business | ||||||||||||||||||||||||||||||
Production (barrels per day)(5)(6) | 94,758 | 84,343 | 95,701 | 106,645 | 102,046 | 99,171 | 107,177 | |||||||||||||||||||||||
Crude oil throughput (barrels per day)(5)(6) | 84,605 | 74,446 | 85,501 | 92,596 | 90,418 | 88,012 | 93,908 | |||||||||||||||||||||||
Nitrogen Fertilizer Business | ||||||||||||||||||||||||||||||
Production Volume: | ||||||||||||||||||||||||||||||
Ammonia (tons in thousands)(5) | 198.5 | 265.1 | 335.7 | 56.4 | 252.8 | 193.2 | 220.0 | |||||||||||||||||||||||
UAN (tons in thousands)(5) | 286.2 | 434.6 | 510.6 | 93.4 | 439.2 | 309.9 | 353.4 |
(1) | Includes a gain on sale of joint venture interest of $18.0 million that was recorded in 2001 for the disposition of our share in Country Energy, LLC. During the 304 days ended December 31, 2004 and the 174 days ended June 23, 2005, we recognized a loss of $7.2 million and $8.1 million, respectively, on early extinguishment of debt, respectively. | |
(2) | Historical dividends per unit for the304-day period ended December 31, 2004 and the174-day period ended June 23, 2005 are calculated based on the ownership structure of Immediate Predecessor. | |
(3) | Net income adjusted for unrealized gain or loss from Cash Flow Swap results from adjusting for the derivative transaction that was executed in conjunction with the Subsequent Acquisition. On June 16, 2005, Coffeyville Acquisition LLC entered into the Cash Flow Swap with J. Aron, a subsidiary of The Goldman Sachs Group, Inc., and a related party of ours. The Cash Flow Swap was subsequently assigned from Coffeyville Acquisition LLC to Coffeyville Resources, LLC on June 24, 2005. Under these agreements, sales representing approximately 70% and 17% of then forecasted refinery output for the periods from July 2005 through June 2009, and July 2009 through June 2010, respectively, have been economically hedged. The derivative took the form of three NYMEX swap agreements whereby if crack spreads fall below the fixed level, J. Aron agreed to pay the difference to us, and if crack spreads rise above the fixed level, we agreed to pay the difference to J. Aron. See “Description of Our Indebtedness and the Cash Flow Swap.” | |
We have determined that the Cash Flow Swap does not qualify as a hedge for hedge accounting purposes under current GAAP. As a result, our periodic statements of operations reflect material amounts of unrealized gains and losses based on the increases or decreases in market value of the unsettled position under the swap agreements which is accounted for as a liability on our balance sheet. As the crack spreads increase we are required to record an increase in this liability account with a corresponding expense entry to be made to our statement of operations. Conversely, as crack spreads decline we are required to record a decrease in the swap related liability and post a corresponding income entry to our statement of operations. Because of this inverse relationship between the economic outlook for our underlying business (as represented by crack spread levels) and the income impact of the unrecognized gains and losses, and given the significant periodic fluctuations in the amounts of unrealized gains and losses, management utilizes Net income adjusted for gain or loss from Cash Flow Swap as a key indicator of our business performance and believes that this non-GAAP measure is a useful measure for investors in analyzing our business. The adjustment has been made for the unrealized loss from Cash Flow Swap net of its related tax benefit. | ||
Net income adjusted for gain or loss from Cash Flow Swap is not a recognized term under GAAP and should not be substituted for net income as a measure of our performance but instead should be utilized as a supplemental measure of performance in evaluating our business. Also, our presentation of this non-GAAP measure may not be comparable to similarly titled measures of other companies. |
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The following is a reconciliation of Net income adjusted for unrealized gain or loss from Cash Flow Swap to Net income: |
Immediate | ||||||||||||||
Predecessor | Successor | Successor | ||||||||||||
174 Days | 49 Days | Six Months | ||||||||||||
Ended | Ended | Ended | ||||||||||||
June 23, | June 30, | June 30, | ||||||||||||
2005 | 2005 | 2006 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||
(in millions) | ||||||||||||||
Net income (loss) adjusted for unrealized gain or loss from Cash Flow Swap | $ | 52.4 | $ | (33.5 | ) | $ | 101.0 | |||||||
Less: | ||||||||||||||
Unrealized loss from Cash Flow Swap, net of tax benefit | — | 76.7 | 59.2 | |||||||||||
Net income (loss) | $ | 52.4 | $ | (110.2 | ) | $ | 41.8 | |||||||
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||||||||||
62 Days | 304 Days | 174 Days | 233 Days | |||||||||||||||||||||||||||
Year Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Net income (loss) adjusted for unrealized gain or loss from Cash Flow Swap | $ | (19.4 | ) | $ | (465.7 | ) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | 23.6 | ||||||||||||||
Less: | ||||||||||||||||||||||||||||||
Unrealized loss from Cash Flow Swap, net of tax benefit | — | — | — | — | — | — | 142.8 | |||||||||||||||||||||||
Net income (loss) | $ | (19.4 | ) | $ | (465.7 | ) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | (119.2 | ) | |||||||||||||
(4) | Adjusted EBITDA represents earnings before interest expense, taxes, depreciation and amortization, and the unrealized gain or loss on the Cash Flow Swap, as further adjusted for some other special charges (described below in footnotes (a) through (h) to the Adjusted EBITDA to net income reconciliation) that we believe aid in providing a meaningful comparison ofperiod-to-period results. Management believes that Adjusted EBITDA is a useful adjunct to net income and other measurements under GAAP because it is a meaningful measure for evaluating our performance in a given period compared to prior periods and compared to other companies in our industry, as interest expense, taxes, depreciation and amortization can vary significantly across periods and between companies due in part to differences in accounting policies, tax strategies, levels of indebtedness, capital purchasing practices and interest rates. Adjusted EBITDA also assists management in evaluating operating performance. EBITDA, with adjustments specified in our credit facilities, is also the basis for calculating our financial debt covenants under our existing credit facilities. | |
Adjusted EBITDA is net of the impact of the realized losses from Cash Flow Swap, which were $33.4 million for the six months ended June 30, 2006 and $59.3 million for the combined year ended December 31, 2005. | ||
Adjusted EBITDA has distinct limitations as compared to GAAP information, such as net income, income from continuing operations or operating income. By excluding interest expense and income tax expense, for example, it may not be apparent that both represent a reduction in cash available to us. Likewise, depreciation and amortization, while non-cash items, represent generally the decreases in value of assets that produce revenue for us. We present Adjusted EBITDA as a supplemental measure of our performance. We prepare Adjusted EBITDA by adjusting EBITDA to eliminate the impact of a number of items we do not consider indicative of our ongoing operating performance. We believe additional adjustments to EBITDA for these special charges provide a meaningful comparison ofperiod-to-period results. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these kinds of items or other items that are not indicative of our operating performance. Adjusted EBITDA should not be substituted as an alternative to net income or income from operations, which are measures of performance in accordance with GAAP. Our computation of Adjusted EBITDA for this purpose may not be comparable to other similarly titled measures computed for other purposes or by other companies because all companies do not calculate Adjusted EBITDA in the same fashion. |
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The following is a reconciliation of Adjusted EBITDA to net income: |
Immediate Predecessor | Successor | Successor | ||||||||||||
174 Days Ended June 23, | 49 Days Ended June 30, | Six Months Ended June 30, | ||||||||||||
2005 | 2005 | 2006 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||
(in millions) | ||||||||||||||
Adjusted EBITDA | $ | 105.5 | $ | 2.1 | $ | 212.9 | ||||||||
Less: | ||||||||||||||
Income tax expense | 36.1 | — | 25.7 | |||||||||||
Interest expense | 7.8 | 1.0 | 22.3 | |||||||||||
Depreciation and amortization | 1.1 | 0.9 | 24.0 | |||||||||||
Loss on extinguishment of debt(d) | 8.1 | — | — | |||||||||||
Inventory fair market value adjustment(e) | — | 14.3 | — | |||||||||||
Funded letter of credit and interest rate swap not included in interest expense(f) | — | — | 0.6 | |||||||||||
Major scheduled turnaround expense | — | — | 0.3 | |||||||||||
Loss on termination of swap | — | 25.0 | — | |||||||||||
Unrealized loss from Cash Flow Swap | — | 127.2 | 98.2 | |||||||||||
Plus: | ||||||||||||||
Income tax benefit | — | 56.1 | — | |||||||||||
Net income (loss) | $ | 52.4 | $ | (110.2 | ) | $ | 41.8 |
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Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||||||||||
Year | 62 Days | 304 Days | 174 Days | 233 Days | ||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 18.7 | $ | (30.8 | ) | $ | 42.1 | $ | 11.6 | $ | 108.0 | $ | 105.5 | $ | 146.6 | |||||||||||||||
Less: | ||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | 33.8 | 36.1 | — | |||||||||||||||||||||||
Interest expense | 18.3 | 11.7 | 1.3 | — | 10.1 | 7.8 | 25.0 | |||||||||||||||||||||||
Depreciation and amortization | 19.1 | 30.8 | 3.3 | 0.4 | 2.4 | 1.1 | 24.0 | |||||||||||||||||||||||
Impairment of property, plant and equipment(a) | — | 375.1 | 9.6 | — | — | — | — | |||||||||||||||||||||||
Fertilizer lease payments(b) | 18.7 | 0.3 | — | — | — | — | — | |||||||||||||||||||||||
Loss on extinguishment of debt(d) | — | — | — | — | 7.2 | 8.1 | — | |||||||||||||||||||||||
Inventory fair market value adjustment(e) | — | — | — | — | 3.0 | — | 16.6 | |||||||||||||||||||||||
Funded letter of credit expense and interest rate swap not included in interest expense(f) | — | — | — | — | — | — | 2.3 | |||||||||||||||||||||||
Major scheduled turnaround expense(g) | — | 17.0 | — | — | 1.8 | — | — | |||||||||||||||||||||||
Loss on termination of swap(h) | — | — | — | — | — | — | 25.0 | |||||||||||||||||||||||
Unrealized loss from Cash Flow Swap | — | — | — | — | — | — | 235.9 | |||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||
Interest tax benefit | — | — | — | — | — | — | 63.0 | |||||||||||||||||||||||
Gain on sale of joint venture(c) | 18.0 | — | — | — | — | — | — | |||||||||||||||||||||||
Net income (loss) | $ | (19.4 | ) | $ | (465.7 | ) | $ | 27.9 | $ | 11.2 | $ | 49.7 | $ | 52.4 | $ | (119.2 | ) | |||||||||||||
(a) | During the year ended December 31, 2002, we recorded a $375.1 million asset impairment related to the write-down of our refinery and nitrogen fertilizer plant to estimated fair value. During the year ended December 31, 2003, we recorded an additional charge of $9.6 million related to the asset impairment of our refinery and nitrogen fertilizer plant based on the expected sales price of the assets in the Initial Acquisition. | |
(b) | Reflects the impact of an operating lease structure utilized by Farmland to finance the nitrogen fertilizer plant which operating lease structure is not currently in use. The cost of this plant under the operating lease was $263.0 million and the rental payments were $18.7 million and $0.3 million for the periods ended December 31, 2001 and 2002, respectively. In February 2002, Farmland refinanced the operating lease into a secured loan structure, which effectively terminated the lease and all of Farmland’s obligations under the lease. | |
(c) | Reflects the gain on sale of $18.0 million, which was recorded for the disposition of Original Predecessor’s share in Country Energy, LLC. | |
(d) | Represents the write-off of $7.2 million of deferred financing costs in connection with the refinancing of our senior secured credit facility on May 10, 2004 and the write-off of $8.1 million of deferred financing costs in connection with the refinancing of our senior secured credit facility on June 23, 2005. | |
(e) | Consists of the additional cost of goods sold expense due to the step up to estimated fair value of certain inventories on hand at March 3, 2004 and June 24, 2005, as a result of the allocation of the purchase price of the Initial Acquisition and the Subsequent Acquisition to inventory. | |
(f) | Consists of fees which are expensed to Selling, general and administrative expenses in connection with the funded letter of credit facility of $150.0 million issued in support of the Cash Flow Swap. We consider these fees to be equivalent to interest expense and the fees are treated as such in the calculation of EBITDA in the First Lien Credit Facility and the Second Lien Credit Facility. | |
(g) | Represents expense associated with a major scheduled turnaround at our nitrogen fertilizer plant. |
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(h) | Represents the expense associated with the expiration of the crude oil, heating oil and gasoline option agreements entered into by Coffeyville Acquisition LLC in May 2005. |
(5) | Operational information reflected for the 49 day Successor period ended June 30, 2005 includes only seven days of operational activity. Operational information reflected for the 233 day Successor period ended December 31, 2005 includes only 191 days of operational activity. Successor was formed on May 13, 2005 but had no financial statement activity during the42-day period from May 13, 2005 to June 24, 2005, with the exception of certain crude oil, heating oil and gasoline option agreements entered into with J. Aron as of May 16, 2005 which expired unexercised on June 16, 2005. | |
(6) | Barrels per day is calculated by dividing the volume in the period by the number of calendar days in the period. Barrels per day as shown here is impacted by plant down-time and other plant disruptions and does not represent the capacity of the facility’s continuous operations. | |
(7) | Includes the following: |
• | During the year ended December 31, 2001, we recognized expenses of $2.8 million for our share of losses of Country Energy, LLC. | |
• | During the year ended December 31, 2002, we recorded a $375.1 million asset impairment related to the write-down of the refinery and nitrogen fertilizer plant to estimated fair value. | |
• | During the year ended December 31, 2003, we recorded an additional charge of $9.6 million related to the asset impairment of the refinery and nitrogen plant based on the expected sales price of the assets in the Initial Acquisition. In addition, we recorded a charge of $1.3 million for the rejection of existing contracts while operating under Chapter 11 of the U.S. Bankruptcy Code. |
(8) | Excludes liabilities subject to compromise due to Original Predecessor’s bankruptcy of $105.2 million as of December 31, 2002 and 2003 in calculating Original Predecessor’s working capital. | |
(9) | While operating under Chapter 11 of the U.S. Bankruptcy Code, Original Predecessor’s financial statements were prepared in accordance withSOP 90-7 “Financial Reporting by Entities in Reorganization under Bankruptcy Code.”SOP 90-7 requires that pre-petition liabilities be segregated in the Balance Sheet. |
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Predecessor | and Successor | and Successor | ||||||||||||||||||
Original | Combined | Combined | Combined | |||||||||||||||||
Predecessor | (non-GAAP) | (non-GAAP) | (non-GAAP) | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
Consolidated Financial Results | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales | $ | 1,262.2 | $ | 1,741.0 | $ | 2,435.0 | $ | 1,030.4 | $ | 1,550.6 | ||||||||||
Cost of goods sold | 1,198.3 | 1,608.6 | 2,127.3 | 912.5 | 1,315.1 | |||||||||||||||
Gross profit | 63.9 | 132.4 | 307.7 | 117.9 | 235.5 | |||||||||||||||
Operating income | 29.4 | 111.2 | 270.8 | 98.7 | 214.9 | |||||||||||||||
Net income (loss) | 27.9 | 60.9 | (66.8 | ) | (57.8 | ) | 41.8 | |||||||||||||
Net income adjusted for unrealized gain or loss from Cash Flow Swap(1) | 27.9 | 60.9 | 76.0 | 18.9 | 101.0 | |||||||||||||||
Adjusted EBITDA(2) | 42.1 | 119.6 | 252.1 | 107.6 | 212.9 | |||||||||||||||
Reconciliation of Gross margin excluding manufacturing expenses to Gross profit: | ||||||||||||||||||||
Gross margin excluding manufacturing expenses | 205.7 | 283.3 | 507.7 | 204.5 | 351.5 | |||||||||||||||
Less: | ||||||||||||||||||||
Manufacturing expenses excluding depreciation and amortization | 138.5 | 148.1 | 175.2 | 84.7 | 92.1 | |||||||||||||||
Depreciation and amortization included in gross profit | 3.3 | 2.8 | 24.8 | 1.9 | 23.9 | |||||||||||||||
Gross profit | $ | 63.9 | $ | 132.4 | $ | 307.7 | $ | 117.9 | $ | 235.5 |
(1) | Net income adjusted for unrealized gain or loss from Cash Flow Swap results from adjusting for the derivative transaction that was executed in conjunction with the Subsequent Acquisition. On June 16, 2005, Coffeyville Acquisition LLC entered into the Cash Flow Swap with J. Aron, a subsidiary of The Goldman Sachs Group, Inc., and a related party of ours. The Cash Flow Swap was subsequently assigned from Coffeyville Acquisition LLC to Coffeyville Resources, LLC on June 24, 2005. Under these agreements, sales representing approximately 70% and 17% of then forecasted refinery output for the periods from July 2005 through June 2009, and July 2009 through June 2010, respectively, have been economically hedged. The derivative took the form of three NYMEX swap agreements whereby if crack spreads fall below the fixed level, J. Aron agreed to pay the difference to us, and if crack spreads rise above the fixed level, we agreed to pay the difference to J. Aron. See “Description of Our Indebtedness and the Cash Flow Swap.” | |
We have determined that the Cash Flow Swap does not qualify as a hedge for hedge accounting purposes under current GAAP. As a result, our periodic statements of operations reflect material amounts of unrealized gains and losses based on the increases or decreases in market value of the unsettled position under the swap agreements which is accounted for as a liability on our balance sheet. As the crack spreads increase we are required to record an increase in this liability account with a corresponding expense entry to be made to our statement of operations. Conversely, as crack spreads decline we are required to record a decrease in the swap related liability and post a corresponding income entry to our statement of operations. Because of this inverse relationship between the economic outlook for our underlying business (as represented by crack spread levels) and the income impact of the unrecognized gains and losses, and given the significant periodic fluctuations in the amounts of unrealized gains and losses, management utilizes Net income adjusted for gain or loss from Cash Flow Swap as a key indicator of our business performance and believes that this non-GAAP measure is a useful measure for investors in analyzing our business. The adjustment has been made for the unrealized loss from Cash Flow Swap net of its related tax benefit. | ||
Net income adjusted for unrealized gain or loss from Cash Flow Swap is not a recognized term under GAAP and should not be substituted for net income as a measure of our performance but instead should be utilized as a supplemental measure of performance in evaluating our business. Also, our presentation of this non-GAAP measure may not be comparable to similarly titled measures of other companies. |
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The following is a reconciliation of Net income adjusted for unrealized gain or loss from Cash Flow Swap to Net income: |
Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Predecessor | and Successor | and Successor | ||||||||||||||||||
Original | Combined | Combined | Combined | |||||||||||||||||
Predecessor | (non-GAAP) | (non-GAAP) | (non-GAAP) | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Net Income adjusted for unrealized gain or loss from Cash Flow Swap | $ | 27.9 | $ | 60.9 | $ | 76.0 | $ | 18.9 | $ | 101.0 | ||||||||||
Less: | ||||||||||||||||||||
Unrealized loss from Cash Flow Swap, net of tax benefit | — | — | 142.8 | 76.7 | 59.2 | |||||||||||||||
Net income (loss) | $ | 27.9 | $ | 60.9 | $ | (66.8 | ) | $ | (57.8 | ) | $ | 41.8 |
(2) | Adjusted EBITDA represents earnings before interest expense, taxes, depreciation and amortization, and the unrealized gain or loss on the Cash Flow Swap, as further adjusted for some other special charges (described below in footnotes (a) through (f) to the Adjusted EBITDA to net income reconciliation) that we believe aid in providing a meaningful comparison ofperiod-to-period results. Management believes that Adjusted EBITDA is a useful adjunct to net income and other measurements under GAAP because it is a meaningful measure for evaluating our performance in a given period compared to prior periods and compared to other companies in our industry, as interest expense, taxes, depreciation and amortization can vary significantly across periods and between companies due in part to differences in accounting policies, tax strategies, levels of indebtedness, capital purchasing practices and interest rates. Adjusted EBITDA also assists management in evaluating operating performance. EBITDA, with adjustments specified in our credit facilities, is also the basis for calculating our financial debt covenants under our existing credit facilities. | |
Adjusted EBITDA is net of the impact of the realized losses from Cash Flow Swap, which were $33.4 million for the six months ended June 30, 2006 and $59.3 million for the combined year ended December 31, 2005. | ||
Adjusted EBITDA has distinct limitations as compared to GAAP information, such as net income, income from continuing operations or operating income. By excluding interest expense and income tax expense, for example, it may not be apparent that both represent a reduction in cash available to us. Likewise, depreciation and amortization, while non-cash items, represent generally the decreases in value of assets that produce revenue for us. We present Adjusted EBITDA as a supplemental measure of our performance. We prepare Adjusted EBITDA by adjusting EBITDA to eliminate the impact of a number of items we do not consider indicative of our ongoing operating performance. We believe additional adjustments to EBITDA for these special charges provide a meaningful comparison of period-to-period results. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these kinds of items or other items that are not indicative of our operating performance. Adjusted EBITDA should not be substituted as an alternative to net income or income from operations, which are measures of performance in accordance with GAAP. Our computation of Adjusted EBITDA for this purpose may not be comparable to other similarly titled measures computed for other purposes or by other companies because all companies do not calculate Adjusted EBITDA in the same fashion. |
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Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Predecessor | and Successor | and Successor | ||||||||||||||||||
Original | Combined | Combined | Combined | |||||||||||||||||
Predecessor | (non-GAAP) | (non-GAAP) | (non-GAAP) | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Adjusted EBITDA | $ | 42.1 | $ | 119.6 | $ | 252.1 | $ | 107.6 | $ | 212.9 | ||||||||||
Less: | ||||||||||||||||||||
Income tax expense | — | 33.8 | — | — | 25.7 | |||||||||||||||
Interest expense | 1.3 | 10.1 | 32.8 | 8.8 | 22.3 | |||||||||||||||
Depreciation and amortization | 3.3 | 2.8 | 25.1 | 2.0 | 24.0 | |||||||||||||||
Impairment of property, plant and equipment(a) | 9.6 | — | — | — | — | |||||||||||||||
Loss of extinguishment of debt(b) | — | 7.2 | 8.1 | 8.1 | — | |||||||||||||||
Inventory fair market value adjustment(c) | — | 3.0 | 16.6 | 14.3 | — | |||||||||||||||
Funded letter of credit expense & interest rate swap not included in interest expense(d) | — | — | 2.3 | — | 0.6 | |||||||||||||||
Major scheduled turnaround expense(e) | — | 1.8 | — | — | 0.3 | |||||||||||||||
Loss on termination of swap(f) | — | — | 25.0 | 25.0 | — | |||||||||||||||
Unrealized loss from Cash Flow Swap | — | — | 235.9 | 127.2 | 98.2 | |||||||||||||||
Plus: | ||||||||||||||||||||
Income tax benefit | — | — | 26.9 | 20.0 | — | |||||||||||||||
Net income (loss) | $ | 27.9 | $ | 60.9 | $ | (66.8 | ) | $ | (57.8 | ) | $ | 41.8 |
(a) | During the year ended December 31, 2003, we recorded an additional charge of $9.6 million related to the asset impairment of our refinery and nitrogen fertilizer plant based on the expected sales price of the assets in the Initial Acquisition. | |
(b) | Represents the write-off of $7.2 million of deferred financing costs in connection with the refinancing of our senior secured credit facility on May 10, 2004 and the write-off of $8.1 million of deferred financing costs in connection with the refinancing of our senior secured credit facility on June 23, 2005. | |
(c) | Consists of the additional cost of goods sold expense due to the step up to estimated fair value of certain inventories on hand at March 3, 2004 and June 24, 2005, as a result of the allocation of the purchase price of the Initial Acquisition and the Subsequent Acquisition to inventory. | |
(d) | Consists of fees which are expensed to selling, general and administrative expense in connection with the funded letter of credit facility of $150.0 million issued in support of the Cash Flow Swap. We consider these fees to be equivalent to interest expense and the fees are treated as such in the calculation of EBITDA in the First Lien Credit Facility and the Second Lien Credit Facility. | |
(e) | Represents expenses associated with a major scheduled turnaround at our nitrogen fertilizer plant. | |
(f) | Represents the expense associated with the expiration of the crude oil, heating oil and gasoline option agreements entered into by Coffeyville Acquisition LLC in May 2005. |
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Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Predecessor | and Successor | and Successor | ||||||||||||||||||
Original | Combined | Combined | Combined | |||||||||||||||||
Predecessor | (non-GAAP) | (non-GAAP) | (non-GAAP) | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
Petroleum Business Financial Results | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales | $ | 1,161.3 | $ | 1,632.4 | $ | 2,267.2 | $ | 950.4 | $ | 1,457.7 | ||||||||||
Cost of goods sold | 1,122.2 | 1,535.2 | 2,043.0 | 874.5 | 1,265.3 | |||||||||||||||
Gross profit | 39.1 | 97.2 | 224.2 | 75.9 | 192.4 | |||||||||||||||
Operating income (loss) | 21.5 | 84.8 | 199.7 | 63.4 | 178.0 | |||||||||||||||
Reconciliation of Gross margin excluding manufacturing expenses to Gross profit: | ||||||||||||||||||||
Gross margin excluding manufacturing expenses | 121.3 | 188.7 | 352.0 | 130.2 | 267.2 | |||||||||||||||
Less: | ||||||||||||||||||||
Manufacturing expenses excluding depreciation and amortization | 80.1 | 89.7 | 111.5 | 52.9 | 59.2 | |||||||||||||||
Depreciation and amortization included in gross profit | 2.1 | 1.8 | 16.3 | 1.4 | 15.6 | |||||||||||||||
Gross profit | $ | 39.1 | $ | 97.2 | $ | 224.2 | $ | 75.9 | $ | 192.4 |
Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Original | Predecessor | and Successor | and Successor | |||||||||||||||||
Predecessor | Combined | Combined | Combined | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
Market Indicators | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
(dollars per barrel) | ||||||||||||||||||||
West Texas Intermediate (WTI) crude oil | $ | 30.99 | $ | 41.47 | $ | 56.70 | $ | 51.66 | $ | 67.10 | ||||||||||
NYMEX 2-1-1 Crack Spread | 5.53 | 7.43 | 11.62 | 9.61 | 11.88 | |||||||||||||||
Crude Oil Differentials: | ||||||||||||||||||||
WTI less WTS (sour) | 2.67 | 3.96 | 4.61 | 4.53 | 5.84 | |||||||||||||||
WTI less Maya (heavy sour) | 6.78 | 11.40 | 15.67 | 15.17 | 15.85 | |||||||||||||||
WTI less Dated Brent (foreign) | 2.16 | 3.20 | 2.18 | 2.02 | 1.44 | |||||||||||||||
PADD II Group 3 versus NYMEX Basis: | ||||||||||||||||||||
Gasoline | 0.62 | (0.52 | ) | (0.53 | ) | (0.63 | ) | 0.82 | ||||||||||||
Heating Oil | 1.11 | 1.24 | 3.20 | 1.59 | 5.61 |
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Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Original | Predecessor | and Successor | and Successor | |||||||||||||||||
Predecessor | Combined | Combined | Combined | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
Company Operating Statistics | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
(in millions) | ||||||||||||||||||||
Per barrel profit, margin and expense of crude oil throughput: | ||||||||||||||||||||
Gross profit | $ | 1.25 | $ | 2.93 | $ | 6.75 | $ | 4.75 | $ | 11.31 | ||||||||||
Gross margin excluding manufacturing expenses | 3.89 | 5.68 | 10.59 | 8.15 | 15.69 | |||||||||||||||
Manufacturing expenses excluding depreciation and amortization | 2.57 | 2.70 | 3.35 | 3.31 | 3.48 | |||||||||||||||
Per gallon sales price: | ||||||||||||||||||||
Gasoline | 0.91 | 1.19 | 1.61 | 1.45 | 1.94 | |||||||||||||||
Distillate | 0.84 | 1.15 | 1.71 | 1.49 | 1.97 |
Original | ||||||||||||||||||||||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||||||||||||||||||||||
and Immediate | Predecessor and | Predecessor and | ||||||||||||||||||||||||||||||||||||||
Original | Predecessor | Successor | Successor | |||||||||||||||||||||||||||||||||||||
Predecessor | Combined | Combined | Combined | Successor | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||
Barrels | Barrels | Barrels | Barrels | Barrels | ||||||||||||||||||||||||||||||||||||
Selected Company Volumetric Data | Per Day | % | Per Day | % | Per Day | % | Per Day | % | Per Day | % | ||||||||||||||||||||||||||||||
Production: | ||||||||||||||||||||||||||||||||||||||||
Total gasoline | 48,230 | 50.4 | 48,420 | 47.1 | 45,275 | 43.8 | 42,590 | 42.9 | 48,250 | 45.1 | ||||||||||||||||||||||||||||||
Total distillate | 34,363 | 35.9 | 38,104 | 37.1 | 39,997 | 38.7 | 38,725 | 39.0 | 42,275 | 39.5 | ||||||||||||||||||||||||||||||
Total other | 13,108 | 13.7 | 16,301 | 15.9 | 18,090 | 17.5 | 18,033 | 18.2 | 16,390 | 15.3 | ||||||||||||||||||||||||||||||
Total all production | 95,701 | 100.0 | 102,825 | 100.0 | 103,362 | 100.0 | 99,348 | 100.0 | 106,915 | 100.0 | ||||||||||||||||||||||||||||||
Crude oil throughput | 85,501 | 93.4 | 90,787 | 92.8 | 91,097 | 92.6 | 88,300 | 93.6 | 94,083 | 92.8 | ||||||||||||||||||||||||||||||
All other inputs | 6,085 | 6.6 | 7,023 | 7.2 | 7,246 | 7.4 | 6,084 | 6.4 | 7,276 | 7.2 | ||||||||||||||||||||||||||||||
Total feedstocks | 91,586 | 100.0 | 97,810 | 100.0 | 98,343 | 100.0 | 94,384 | 100.0 | 101,359 | 100.0 |
Original | ||||||||||||||||||||||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||||||||||||||||||||||
and Immediate | Predecessor and | Predecessor and | ||||||||||||||||||||||||||||||||||||||
Original | Predecessor | Successor | Successor | |||||||||||||||||||||||||||||||||||||
Predecessor | Combined | Combined | Combined | Successor | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||
Total | Total | Total | Total | Total | ||||||||||||||||||||||||||||||||||||
Barrels | % | Barrels | % | Barrels | % | Barrels | % | Barrels | % | |||||||||||||||||||||||||||||||
Crude oil throughput by crude type: | ||||||||||||||||||||||||||||||||||||||||
Sweet | 18,187,215 | 58.3 | 15,232,022 | 45.8 | 13,958,567 | 42.0 | 6,944,320 | 43.5 | 7,497,863 | 44.0 | ||||||||||||||||||||||||||||||
Light/medium sour | 12,311,203 | 39.4 | 17,995,949 | 54.2 | 19,291,951 | 58.0 | 9,038,005 | 56.5 | 9,531,125 | 56.0 | ||||||||||||||||||||||||||||||
Heavy sour | 709,300 | 2.3 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total crude oil throughput | 31,207,718 | 100.0 | 33,227,971 | 100.0 | 33,250,518 | 100.0 | 15,982,325 | 100.0 | 17,028,988 | 100.0 |
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Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Predecessor | and Successor | and Successor | ||||||||||||||||||
Original | Combined | Combined | Combined | |||||||||||||||||
Predecessor | (non-GAAP) | (non-GAAP) | (non-GAAP) | Successor | ||||||||||||||||
Nitrogen Fertilizer | Year Ended December 31, | Six Months Ended June 30, | ||||||||||||||||||
Business Financial Results | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales | $ | 100.9 | $ | 112.9 | $ | 173.0 | $ | 82.5 | $ | 95.6 | ||||||||||
Cost of goods sold | 76.1 | 77.7 | 89.7 | 41.0 | 52.7 | |||||||||||||||
Gross profit | 24.8 | 35.2 | 83.3 | 41.5 | 42.9 | |||||||||||||||
Operating income (loss) | 7.8 | 26.4 | 71.0 | 35.0 | 37.1 | |||||||||||||||
Reconciliation of Gross margin excluding manufacturing expenses to Gross profit: | ||||||||||||||||||||
Gross margin excluding manufacturing expenses | 84.4 | 94.6 | 146.6 | 70.0 | 79.6 | |||||||||||||||
Less: | ||||||||||||||||||||
Manufacturing expenses excluding depreciation and amortization | 58.4 | 58.4 | 54.6 | 27.9 | 28.3 | |||||||||||||||
Depreciation and amortization included in gross profit | 1.2 | 1.0 | 8.7 | 0.6 | 8.4 | |||||||||||||||
Gross profit | $ | 24.8 | $ | 35.2 | $ | 83.3 | $ | 41.5 | $ | 42.9 |
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Year Ended | Six Months | |||||||||||||||||||
December 31, | Ended June 30, | |||||||||||||||||||
Market Indicators | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
Natural gas (dollars per million Btu) | $ | 5.49 | $ | 6.18 | $ | 9.01 | $ | 6.73 | $ | 7.24 | ||||||||||
Ammonia — southern plains (dollars per ton) | 274 | 297 | 355 | 318 | 386 | |||||||||||||||
UAN — corn belt (dollars per ton) | 143 | 171 | 211 | 205 | 207 |
Original | ||||||||||||||||||||
Predecessor | Immediate | Immediate | ||||||||||||||||||
and Immediate | Predecessor | Predecessor | ||||||||||||||||||
Original | Predecessor | and Successor | and Successor | |||||||||||||||||
Predecessor | Combined | Combined | Combined | Successor | ||||||||||||||||
Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
Company Operating Statistics | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||
Production (thousand tons): | ||||||||||||||||||||
Ammonia | 335.7 | 309.2 | 413.2 | 201.6 | 205.6 | |||||||||||||||
UAN | 510.6 | 532.6 | 663.3 | 322.2 | 328.3 | |||||||||||||||
Total | 846.3 | 841.8 | 1,076.5 | 523.8 | 533.9 | |||||||||||||||
Sales (thousand tons)(1): | ||||||||||||||||||||
Ammonia | 134.8 | 103.9 | 141.8 | 71.0 | 66.3 | |||||||||||||||
UAN | 528.9 | 541.6 | 646.5 | 317.6 | 339.3 | |||||||||||||||
Total | 663.7 | 645.5 | 788.3 | 388.6 | 405.6 | |||||||||||||||
Product pricing (plant gate) (dollars per ton)(1): | ||||||||||||||||||||
Ammonia | $ | 235 | $ | 266 | $ | 324 | $ | 296 | 376 | |||||||||||
UAN | 107 | 136 | 173 | 170 | 181 | |||||||||||||||
On-stream factor(2): | ||||||||||||||||||||
Gasification | 90.1 | % | 92.4 | % | 98.1 | % | 97.5 | % | 97.3 | % | ||||||||||
Ammonia | 89.6 | % | 79.9 | % | 96.7 | % | 95.2 | % | 94.7 | % | ||||||||||
UAN | 81.6 | % | 83.3 | % | 94.3 | % | 93.2 | % | 93.8 | % | ||||||||||
Capacity utilization: | ||||||||||||||||||||
Ammonia(3) | 83.6 | % | 76.8 | % | 102.9 | % | 101.3 | % | 103.2 | % | ||||||||||
UAN(4) | 93.3 | % | 97.0 | % | 121.2 | % | 118.7 | % | 120.9 | % | ||||||||||
Reconciliation to net sales (dollars in thousands): | ||||||||||||||||||||
Freight in revenue | $ | 12,535 | $ | 11,429 | $ | 15,010 | $ | 7,396 | $ | 9,441 | ||||||||||
Sales net plant gate | 88,373 | 101,439 | 157,989 | 75,110 | 86,191 | |||||||||||||||
Total net sales | 100,908 | 112,868 | 172,999 | 82,506 | 95,632 |
(1) | Plant gate sales per ton represents net sales less freight revenue divided by sales tons. Plant gate pricing per ton is shown in order to provide industry comparability. | |
(2) | On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period. | |
(3) | Based on nameplate capacity of 1,100 tons per day. | |
(4) | Based on nameplate capacity of 1,500 tons per day. |
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• | $685.8 million for cash proceeds to Immediate Predecessor ($1,038.9 million of assets acquired less $353.1 million of liabilities assumed), including $12.6 million of legal, accounting, advisory, transaction and other expenses associated with the Subsequent Acquisition; | |
• | $49.6 million of other fees and expenses related to the Subsequent Acquisition; and | |
• | $4.9 million of cash to fund our operating accounts. |
• | Tranche C term loans and delayed draw term loans bear interest at either LIBOR plus 2.25%, or at the borrower’s election, the prime rate plus 1.25% (with step-downs to LIBOR plus 2.00% or the prime rate plus 1%, respectively, upon achievement of certain rating conditions). | |
• | Revolving loan facility borrowings bear interest at either LIBOR plus 2.50% or, at the borrower’s election, the prime rate plus 1.50% (with step-downs to LIBOR plus 2.25% or the prime rate plus 1.25%, respectively, and then to LIBOR plus 2.00% or the prime rate plus 1%, respectively, upon certain prepayments of the term loans and substantial completion of certain capital expenditure projects). |
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• | Letters of credit issued under the $50.0 million sub-limit available under the revolving loan facility are subject to a fee equal to the applicable margin on revolving LIBOR loans owing to all revolving lenders and a fronting fee of 0.25% owing to the issuing lender. | |
• | Funded letters of credit are subject to a fee equal to the applicable margin on term LIBOR loans owed to all funded letter of credit lenders and a fronting fee of 0.125% owing to the issuing lender. The borrower is also obligated to pay a fee of 0.10% to the administrative agent on a quarterly basis based on the average balance of funded letters of credit outstanding during the calculation period, for the maintenance of a credit-linked deposit account backstopping funded letters of credit. |
Second Lien | ||||||||||||
First Lien Credit Facility | Credit Facility | |||||||||||
Minimum | Maximum | Maximum | ||||||||||
interest | leverage | leverage | ||||||||||
Fiscal quarter ending | coverage ratio | ratio | ratio | |||||||||
June 30, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
September 30, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
December 31, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
March 31, 2007 | 2.25:1.00 | 4.75:1.00 | 5.00:1.00 | |||||||||
June 30, 2007 | 2.50:1.00 | 4.50:1.00 | 4.75:1.00 | |||||||||
September 30, 2007 | 2.75:1.00 | 4.25:1.00 | 4.75:1.00 | |||||||||
December 31, 2007 | 3.00:1.00 | 3.50:1.00 | 4.00:1.00 | |||||||||
March 31, 2008 | 3.25:1.00 | 3.50:1.00 | 4.00:1.00 | |||||||||
June 30, 2008 | 3.25:1.00 | 3.25:1.00 | 3.75:1.00 | |||||||||
September 30, 2008 | 3.25:1.00 | 3.00:1.00 | 3.50:1.00 | |||||||||
December 31, 2008 | 3.25:1.00 | 2.75:1.00 | 3.25:1.00 | |||||||||
March 31, 2009 and thereafter | 3.50:1.00 | 2.50:1.00 | 3.00:1.00 |
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Cumulative | ||||||||||||||||||||||||
Through | ||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Environmental capital needs | $ | 115.5 | $ | 27.8 | $ | 18.5 | $ | 15.4 | $ | 8.5 | $ | 185.7 | ||||||||||||
Sustaining capital needs | 32.0 | 26.5 | 21.9 | 21.4 | 17.6 | 119.4 | ||||||||||||||||||
Subtotal | $ | 147.5 | $ | 54.3 | $ | 40.4 | $ | 36.8 | $ | 26.1 | $ | 305.1 | ||||||||||||
Turnaround expenses | 5.6 | 30.8 | 3.0 | 3.0 | 33.0 | 75.4 | ||||||||||||||||||
Total estimated non-discretionary spending | $ | 153.1 | $ | 85.1 | $ | 43.4 | $ | 39.8 | $ | 59.1 | $ | 380.5 | ||||||||||||
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Payments Due by Period | ||||||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||||||
Ending | ||||||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
Total | 2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
Contractual Obligations | ||||||||||||||||||||||||||||
Long-term debt(1) | $ | 508.3 | $ | 1.1 | $ | 2.3 | $ | 2.3 | $ | 2.3 | $ | 2.2 | $ | 498.1 | ||||||||||||||
Operating leases(2) | 14.6 | 1.7 | 3.8 | 3.7 | 2.9 | 1.6 | 0.9 | |||||||||||||||||||||
Unconditional purchase obligations(3) | 247.1 | 12.5 | 24.0 | 19.7 | 19.6 | 17.3 | 154.0 | |||||||||||||||||||||
Other long-term liabilities included in the balance sheet(4) | 0.3 | 0.3 | — | — | — | — | — | |||||||||||||||||||||
Environmental liabilities(5) | 10.3 | 0.6 | 1.7 | 0.9 | 0.5 | 0.3 | 6.3 | |||||||||||||||||||||
Funded letter of credit fees(6) | 16.6 | 2.1 | 4.1 | 4.2 | 4.1 | 2.1 | — | |||||||||||||||||||||
Interest payments(7) | 338.1 | 26.3 | 52.0 | 51.9 | 51.6 | 51.4 | 104.9 | |||||||||||||||||||||
Total | $ | 1,135.3 | $ | 44.6 | $ | 87.9 | $ | 82.7 | $ | 81.0 | $ | 74.9 | $ | 764.2 | ||||||||||||||
Other Commercial Commitments | ||||||||||||||||||||||||||||
Standby letters of credit(8) | $ | 44.8 | $ | 41.6 | $ | 3.2 | $ | — | $ | — | $ | — | $ | — |
(1) | Long-term debt amortization is based on the contractual terms of our existing credit facilities. See “Description of Our Indebtedness and the Cash Flow Swap.” | |
(2) | We lease various facilities and equipment, primarily railcars for our nitrogen fertilizer business under non-cancelable operating leases for various periods. | |
(3) | The amount includes (1) commitments under several agreements in our petroleum operations related to pipeline usage, petroleum products storage and petroleum transportation and (2) commitments under an electric supply agreement with the City of Coffeyville. | |
(4) | The amount includes contractual payments due to Farmland related to rejection damages for the electricity contract with the City of Coffeyville. |
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(5) | Environmental liabilities represents our estimated payments required by federaland/or state environmental agencies related to closure of hazardous waste management units at our sites in Coffeyville and Phillipsburg, Kansas. We also have other environmental liabilities which are not contractual obligations but which would be necessary for our continued operations. See “Business — Environmental Matters.” | |
(6) | This amount represents the total of all fees related to the funded letter of credit issued under our First Lien Credit Facility. The funded letter of credit is utilized as credit support for the Cash Flow Swap. See “— Quantitative and Qualitative Disclosures About Market Risk — Commodity Price Risk.” | |
(7) | Interest payments are based on interest rates in effect at June 30, 2006 and assume contractual amortization payments. | |
(8) | Standby letters of credit include our obligations under $3.2 million of letters of credit issued in connection with environmental liabilities, $3.2 million to secure transportation expenses related to the Transportation Services Agreement with CCPS Transportation, LLC and a $38.5 million letter of credit issued to support certain crude oil purchases. This letter of credit was subsequently cancelled on July 5, 2006. |
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• | lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity spreads that generate positive cash flows; and | |
• | hedge the value of inventories in excess of minimum required inventories. |
• | Time Basis — In enteringover-the-counter swap agreements, the settlement price of the swap is typically the average price of the underlying commodity for a designated calendar period. This settlement price is based on the assumption the underling physical commodity will price ratably over the swap period. If the commodity does not move ratably over the period then weighted average physical prices will be weighted differently than the swap price as the result of timing. | |
• | Location Basis — In hedging NYMEX crack spreads, we experience location basis as the settlement of NYMEX refined products (related more to New York Harbor cash markets) which may be different than the prices of refined products in our Group 3 pricing area. |
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• | Successor’s Petroleum Segment holds commodity derivative contracts in the form of three swap agreements for the period from July 1, 2005 to June 30, 2010 with J. Aron, a subsidiary of The Goldman Sachs Group, Inc. and a related party of ours. The swap agreements were originally executed on June 16, 2005 in conjunction with the Subsequent Acquisition of Immediate Predecessor and required under the terms of our long-term debt agreements. These agreements were subsequently assigned from Coffeyville Acquisition LLC to Coffeyville Resources, LLC on June 24, 2005. The notional quantities on the date of execution were 100,911,000 barrels of crude oil; 2,348,802,750 gallons of unleaded gasoline and 1,889,459,250 gallons of heating oil. In June 2006, a subsequent swap was entered into with J. Aron to effectively reduce our unleaded notional quantity and increase our heating oil notional quantity by 229,671,750 over the period July 1, 2007 to June 30, 2010. The swap agreements were executed at the prevailing market rate at the time of execution and management believed the swap agreements would provide an economic hedge on future transactions. At June 30, 2006 the net notional open amounts under these swap agreements were 77,186,000 barrels of crude oil, 1,620,906 gallons of heating oil and 1,620,906 gallons of unleaded gasoline. The purpose of these contracts is to economically hedge 38,593,000 barrels of heating oil crack spreads, the price spread between crude oil and heating oil and 38,593,000 barrels of unleaded gas crack spreads, the price spread between crude oil and unleaded gasoline. These open contracts had total unrealized net loss at June 30, 2006 of approximately $334.3 million. | |
• | Successor’s Petroleum Segment holds another commodity derivative contract for the period from July 1, 2006 to September 30, 2006 with J. Aron. The notional quantity was 230,000 barrels of unleaded gasoline. The swap agreement was executed to economically hedge location basis between the NYMEX Unleaded price and the Platts U.S. Gulf Coast Unleaded price. This open contract had an unrealized gain of $0.2 million at June 30, 2006. | |
• | Successor’s Petroleum Segment also holds various NYMEX positions through ABN Amro. At June 30, 2006, we were short 300 crude contract, 45 heating oil contracts and 135 unleaded contracts reflecting an unrealized loss of $1.3 million on that date. |
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Effective | Maturity | Fixed | ||||||||||
Notional Amount | Date | Date | Rate | |||||||||
$375.0 million | 6/30/06 | 3/30/07 | 4.038% | |||||||||
$325.0 million | 3/30/07 | 6/29/07 | 4.038% | |||||||||
$325.0 million | 6/29/07 | 3/31/08 | 4.195% | |||||||||
$250.0 million | 3/31/08 | 3/31/09 | 4.195% | |||||||||
$180.0 million | 3/31/09 | 3/31/10 | 4.195% | |||||||||
$110.0 million | 3/31/10 | 6/30/10 | 4.195% |
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Ammonia | UAN | |||||||
State | Quantity | Quantity | ||||||
(thousand tons per year) | ||||||||
Texas | 2,285 | 840 | ||||||
Oklahoma | 95 | 240 | ||||||
Kansas | 370 | 635 | ||||||
Missouri | 315 | 235 | ||||||
Iowa | 625 | 840 | ||||||
Nebraska | 450 | 1100 | ||||||
Minnesota | 360 | 210 |
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Natural Gas | WTI | Ammonia | ||||||||||
Year | ($/million btu) | ($/bbl) | ($/ton) | |||||||||
1990 | 1.78 | 24.53 | 125 | |||||||||
1991 | 1.53 | 21.55 | 130 | |||||||||
1992 | 1.73 | 20.57 | 134 | |||||||||
1993 | 2.11 | 18.43 | 139 | |||||||||
1994 | 1.94 | 17.16 | 197 | |||||||||
1995 | 1.69 | 18.38 | 238 | |||||||||
1996 | 2.50 | 22.01 | 217 | |||||||||
1997 | 2.48 | 20.59 | 220 | |||||||||
1998 | 2.16 | 14.43 | 162 | |||||||||
1999 | 2.32 | 19.26 | 145 | |||||||||
2000 | 4.32 | 30.28 | 208 | |||||||||
2001 | 4.06 | 25.92 | 262 | |||||||||
2002 | 3.39 | 26.19 | 191 | |||||||||
2003 | 5.49 | 31.03 | 292 | |||||||||
2004 | 5.90 | 41.47 | 326 | |||||||||
2005 | 8.92 | 56.58 | 394 | |||||||||
2006 (through June 30) | 7.09 | 66.92 | 400 |
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• | Construction of a new 23,000 bpd high pressure diesel hydrotreater and associated new sulfur recovery unit, which will allow the facility to meet the EPA Tier II Ultra Low Sulfur Diesel federal regulations; and | |
• | Expansion of one of the two gasification units within the fertilizer complex, which is expected to increase ammonia production by 5,500 tons per year. |
• | Refinery-wide capacity expansion by increasing throughput of the existing fluid catalytic cracking unit, delayed coker, and other major process units to be completed during a plant-wide turnaround scheduled to begin in the first quarter of 2007; and | |
• | Construction of a new grass roots 24,000 bpd continuous catalytic reformer to be completed in the third quarter of 2007. |
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• | Continue to take advantage of favorable supply and demand dynamics in the mid-continent region; | |
• | Selectively invest in significant projects that enhance our operating efficiency and expand our capacity while rigorously controlling costs; | |
• | Continue to evaluate attractive growth opportunities through acquisitionsand/or strategic alliances; | |
• | Increase our sales and supply capabilities of UAN, and other high value products, while finding lower cost sources of raw materials; | |
• | Continue to focus on being a reliable, low cost producer of petroleum and fertilizer products; and | |
• | Continue to focus on the reliability, safety and environmental performance of our operations. |
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• | Crude Oil Gathering System. We own and operate a 25,000 bpd crude oil gathering system comprised of over 300 miles of feeder and trunk pipelines, 40 trucks and associated storage facilities for gathering light, sweet Kansas and Oklahoma crude oils purchased from independent crude producers. We have also leased a section of a third-party pipeline that will allow us to gather additional volumes of attractively priced quality crudes. | |
• | Phillipsburg Terminal. We own storage and terminalling facilities for asphalt and refined fuels at Phillipsburg, Kansas. The asphalt facilities are leased to third parties on a throughput basis. |
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Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||||||||||||
(in barrels) | ||||||||||||||||||||||||||||||||
Crude oil | 31,286,728 | 30,880,860 | 27,172,830 | 31,207,718 | 33,227,971 | 33,250,518 | 15,982,325 | 17,028,988 | ||||||||||||||||||||||||
Natural gasoline | 766,228 | 694,552 | 1,093,629 | 483,362 | 317,874 | 455,587 | 111,620 | 163,371 | ||||||||||||||||||||||||
Normal butane | — | — | — | — | 530,575 | 467,176 | 158,116 | 163,116 | ||||||||||||||||||||||||
Isobutane | 924,875 | 1,142,098 | 1,037,855 | 1,627,989 | 1,615,898 | 1,398,694 | 645,660 | 745,698 | ||||||||||||||||||||||||
Alky feed | — | — | — | — | — | 68,636 | 51,961 | 24,796 | ||||||||||||||||||||||||
Gas oil | — | — | — | — | — | 155,344 | 34,574 | 189,744 | ||||||||||||||||||||||||
Vacuum tower bottom | 53,453 | 32,951 | 98,371 | 109,974 | 105,981 | 99,362 | 99,234 | 30,208 | ||||||||||||||||||||||||
Total Inputs | 33,031,284 | 32,750,461 | 29,402,685 | 33,429,043 | 35,798,299 | 35,895,317 | 17,083,490 | 18,345,921 | ||||||||||||||||||||||||
Nominal | ||||
Pipeline | Capacity (bpd) | |||
Seaway Pipeline (TEPPCO) from U.S. Gulf Coast to Cushing, Oklahoma | 350,000 | |||
Spearhead (CCPS/Enbridge) from Griffith (Chicago) to Cushing, Oklahoma | 125,000 | |||
Coffeyville Crude Oil Pipeline System from Caney, Kansas to Oil Refinery | 145,000 | |||
Coffeyville Crude Oil Gathering and Trucking System | 25,000 | |||
Natural Gas Liquid (NGL) Connection from/to Conway, Kansas through MAPCO and ONEOK | 15,000 | |||
Plains-Cushing to Caney, Kansas | 97,000 | |||
Sun Logistics Pipeline from U.S.G.C. to Cushing, Oklahoma | 120,000 |
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• | Gasoline. Gasoline typically accounts for approximately 47% of our refinery’s production. Our oil refinery produces various grades of gasoline, ranging from 84 sub-octane regular unleaded to 91 octane premium unleaded and uses a computerized component blending system to optimize gasoline blending. | |
• | Distillates. Kerosene, diesel and off-road diesel typically account for approximately 41% of the refinery’s production. The majority of the diesel fuel we produce is low-sulfur. |
Year Ended | Six Months Ended | |||||||||||||||||||||||||||
December 31, | June 30, | |||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||||||||
(in barrels) | ||||||||||||||||||||||||||||
Gasoline: | ||||||||||||||||||||||||||||
Regular unleaded | 15,118,607 | 14,071,304 | 16,531,362 | 16,703,566 | 16,154,172 | 7,512,804 | 8,382,403 | |||||||||||||||||||||
Premium unleaded | 423,898 | 306,334 | 298,789 | 220,908 | 261,467 | 136,075 | 270,207 | |||||||||||||||||||||
Sub-octane unleaded | 803,590 | 754,264 | 773,831 | 797,416 | 109,774 | 59,986 | 80,599 | |||||||||||||||||||||
Total gasoline | 16,346,095 | 15,131,902 | 17,603,982 | 17,721,890 | 16,525,413 | 7,708,865 | 8,733,209 | |||||||||||||||||||||
Distillate: | ||||||||||||||||||||||||||||
Kerosene | 25,675 | 26,085 | 25,149 | 23,256 | 32,302 | 8,091 | (5,542 | ) | ||||||||||||||||||||
Jet fuel | 97,354 | — | — | — | — | |||||||||||||||||||||||
No. 1 distillate | 278,325 | 124,741 | 342,363 | 99,832 | 261,048 | 28,857 | 3,272 | |||||||||||||||||||||
No. 2 low sulfur distillate | 6,708,536 | 6,526,883 | 7,899,132 | 8,896,701 | 9,129,518 | 4,062,492 | 5,599,539 | |||||||||||||||||||||
No. 2 high sulfur distillate | 3,138,236 | 2,268,116 | 3,017,785 | 3,500,351 | 3,916,658 | 2,160,909 | 2,031,624 | |||||||||||||||||||||
Diesel | 2,105,709 | 1,923,370 | 1,258,279 | 1,425,897 | 1,259,308 | 748,896 | 22,869 | |||||||||||||||||||||
Total distillate | 12,353,835 | 10,869,195 | 12,542,708 | 13,946,037 | 14,598,834 | 7,009,245 | 7,651,762 | |||||||||||||||||||||
Liquid by-products: | ||||||||||||||||||||||||||||
NGL (propane, butane) | 676,753 | 583,095 | 734,737 | 1,137,645 | 696,637 | 337,088 | 342,989 | |||||||||||||||||||||
Slurry | 507,407 | 445,784 | 532,236 | 500,692 | 562,657 | 229,339 | 375,492 | |||||||||||||||||||||
Light cycle oil sales | 214,504 | 84,146 | 42,571 | — | — | — | ||||||||||||||||||||||
VTB sales | 188,684 | 8,212 | 26,438 | 150,700 | 134,899 | 25,949 | ||||||||||||||||||||||
Reformer feed sales | 207,154 | — | — | 79,906 | 230,785 | 147,178 | 180,360 | |||||||||||||||||||||
Gas oil sales | — | 84,673 | — | — | 66,274 | 66,274 | — | |||||||||||||||||||||
Total liquid by-products | 1,794,502 | 1,205,910 | 1,335,982 | 1,868,943 | 1,691,252 | 779,879 | 924,790 | |||||||||||||||||||||
Solid by-products: | ||||||||||||||||||||||||||||
Coke | 2,751,298 | 2,068,031 | 1,956,619 | 2,384,414 | 2,439,297 | 1,193,304 | 1,273,412 | |||||||||||||||||||||
Sulfur | 92,918 | 74,226 | 131,137 | 88,744 | 100,035 | 36,434 | 44,755 | |||||||||||||||||||||
Total solid by-products | 2,844,216 | 2,142,257 | 2,087,756 | 2,473,158 | 2,539,332 | 1,229,738 | 1,318,167 | |||||||||||||||||||||
NGL production | 226,159 | 52,682 | (8,539 | ) | — | 548,883 | 291,635 | 218,419 | ||||||||||||||||||||
In process change | (347,599 | ) | 114,945 | (120,122 | ) | (12,369 | ) | 265,280 | 200,697 | (307,639 | ) | |||||||||||||||||
Produced fuel | 1,369,413 | 1,268,388 | 1,489,030 | 1,636,665 | 1,557,689 | 762,026 | 812,823 | |||||||||||||||||||||
Processing loss (gain) | (1,836,160 | ) | (1,382,594 | ) | (1,501,754 | ) | (1,836,025 | ) | (1,831,366 | ) | (898,595 | ) | (1,005,610 | ) | ||||||||||||||
Total yields | 32,750,461 | 29,402,685 | 33,429,043 | 35,798,299 | 35,895,317 | 17,083,490 | 18,345,921 |
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Product | Capacity (barrels) | |||
Gasoline | 767,000 | |||
Distillates | 1,068,000 | |||
Intermediates | 1,004,000 | |||
Crude oil(1) | 1,194,000 |
(1) | Crude oil storage consists of 674,000 barrels of refinery storage capacity and 520,000 barrels of field storage capacity. |
Pipeline | Capacity (bpd) | |||
Magellan Pipeline #3-8” Line (from Coffeyville to northern cities via Caney, Kansas) | 32,000 | |||
Magellan Pipeline #2-10” Line (from Coffeyville to northern cities via Barnsdall, Oklahoma) | 81,000 | |||
Enterprise Pipeline (provides accessibility to Magellan (Mountain) and Valero systems at El Dorado, Kansas) | 12,000 | |||
Truck Loading Rack Delivery System | 40,000 |
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Year Ended | ||||||||||||||||||||||||
December 31, | Six Months Ended June 30, | |||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||||||
Gasifier on-stream(1) | 78.6% | 90.1% | 92.4% | 98.1% | 97.5% | 97.4% | ||||||||||||||||||
Ammonia capacity utilization(2) | 66.0% | 83.6% | 76.8% | 102.9% | 101.3% | 103.2% | ||||||||||||||||||
UAN capacity utilization(3) | 79.4% | 93.3% | 97.0% | 121.2% | 118.7% | 121.0% |
(1) | On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period. | |
(2) | Based on nameplate capacity of 1,100 tons per day. | |
(3) | Based on nameplate capacity of 1,500 tons per day. |
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Crude Capacity | Solomon | |||||||||||
(barrels per | Complexity | |||||||||||
Company | Location | calendar day) | Index | |||||||||
ConocoPhillips | Ponca City, OK | 187,000 | 12.5 | |||||||||
Frontier Oil | El Dorado, KS | 110,000 | 13.3 | |||||||||
CVR Energy | Coffeyville, KS | 108,000 | 10.0 | |||||||||
Valero | Ardmore, OK | 88,000 | 11.3 | |||||||||
NCRA | McPherson, KS | 82,200 | 14.1 | |||||||||
Gary Williams Energy | Wynnewood, OK | 52,500 | 8.0 | |||||||||
Sinclair | Tulsa, OK | 50,000 | 8.3 | |||||||||
Mid-continent Total: | 677,700 | |||||||||||
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• | restrictions on operationsand/or the need to install enhanced or additional controls; | |
• | the need to obtain and comply with permits and authorizations; | |
• | liability for the investigation and remediation of contaminated soil and groundwater at current and former facilities and off-site waste disposal locations; and | |
• | specifications for the products we market, primarily gasoline, diesel fuel, UAN and ammonia. |
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Total | ||||||||||||||||
Site | Total O&M | Estimated | ||||||||||||||
Investigation | Capital | Costs | Costs | |||||||||||||
Facility | Costs | Costs | Through 2010 | Through 2010 | ||||||||||||
Coffeyville Oil Refinery | $ | 0.5 | $ | — | $ | 1.0 | $ | 1.5 | ||||||||
Phillipsburg Terminal | 0.3 | — | 1.9 | 2.2 | ||||||||||||
Total Estimated Costs | $ | 0.8 | $ | — | $ | 2.9 | $ | 3.7 | ||||||||
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Location | Acres | Own/Lease | Use | |||
Coffeyville, KS | 440 | Own | Oil refinery, nitrogen plant and office buildings | |||
Phillipsburg, KS | 200 | Own | Terminal facility | |||
Montgomery County, KS (Coffeyville Station) | 20 | Own | Crude oil storage | |||
Montgomery County, KS (Broome Station) | 20 | Own | Crude oil storage | |||
Bartlesville, OK | 25 | Own | Truck storage and office buildings | |||
Winfield, KS | 5 | Own | Truck storage | |||
Cushing, OK (pending) | 300 | Own | Crude oil storage | |||
Cowley County, Kansas (Hooser Station) | 80 | Own | Crude oil storage | |||
Holdrege, NE | 7 | Own | Crude oil storage | |||
Stockton, KS | 6 | Own | Crude oil storage | |||
Kansas City, KS | 19,000 (square feet) | Lease | Office space |
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Executive Officers and Directors
Name | Age | Position | ||||
John J. Lipinski | 55 | Chief Executive Officer, President and Director | ||||
Stanley A. Riemann | 55 | Chief Operating Officer | ||||
James T. Rens | 40 | Chief Financial Officer | ||||
Edmund S. Gross | 55 | Vice President, General Counsel and Secretary | ||||
Robert W. Haugen | 48 | Executive Vice President Refining Operations | ||||
Wyatt E. Jernigan | 54 | Executive Vice President Crude Oil Acquisition and Petroleum Marketing | ||||
Kevan A. Vick | 52 | Executive Vice President, General Manager Nitrogen Fertilizer | ||||
Christopher G. Swanberg | 48 | Vice President, Environmental, Health and Safety | ||||
Wesley Clark | 60 | Director | ||||
Scott Lebovitz | 31 | Director | ||||
George E. Matelich | 50 | Director | ||||
Stanley de J. Osborne | 35 | Director | ||||
Kenneth A. Pontarelli | 36 | Director |
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Annual Compensation | All Other | |||||||||||||||
Name and Principal Position | Year | Salary | Bonus(1) | Compensation | ||||||||||||
John J. Lipinski | 2005 | 315,000 | 1,336,301 | 2,633,925 | (2) | |||||||||||
Chief Executive Officer | ||||||||||||||||
Philip L. Rinaldi | 2005 | 180,385 | — | 382,599 | (3) | |||||||||||
Former Chief Executive Officer(4) | ||||||||||||||||
Stanley A. Riemann | 2005 | 329,410 | 896,012 | 1,178,595 | (5) | |||||||||||
Chief Operating Officer | ||||||||||||||||
Kevan A. Vick | 2005 | 183,061 | 307,931 | 609,641 | (6) | |||||||||||
Executive Vice President General Manager Nitrogen Fertilizer | ||||||||||||||||
James T. Rens | 2005 | 211,346 | 269,971 | 609,641 | (7) | |||||||||||
Chief Financial Officer | ||||||||||||||||
Wyatt E. Jernigan | 2005 | 116,376 | 340,515 | 609,641 | (8) | |||||||||||
Executive Vice President Crude Oil Acquisition and Petroleum Marketing |
(1) | Bonuses are reported for the year in which they were earned, though they may have been paid the following year. | |
(2) | Includes the value of profit interests in Coffeyville Acquisition LLC that were granted on July 25, 2005. The value of the profit interests was determined by a third-party valuation using binomial modeling based on company projections of undiscounted future cash flows. The profit interests are more fully described below under “— Executives’ Interests in Coffeyville Acquisition LLC.” | |
(3) | Includes (1) a lump sum severance payment of $173,999.72 (which represents six months of base salary equal to $175,000 less the aggregate of Mr. Rinaldi’s share of premium payments for continuing health care coverage), (2) $3,470.40, which represents the dollar value of the company’s cost of continued health care coverage for six months, (3) $91,000, which represents a pro rata portion of Mr. Rinaldi’s 2005 bonus paid as a component of severance (4) $36,346, which represents 5.4 weeks of earned but unused vacation and paid time off, (5) $15,000 in lieu of outplacement services, (6) $23,332.99, which represents two months’ salary in lieu of receiving two months’ written notice from us less an amount paid by us to Mr. Rinaldi subsequent to his termination date of $35,000.01, (7) $30,000, which amount represents payment for consulting services provided by Mr. Rinaldi following his termination of employment and (8) $9,450, which represents a pre-separation company contribution under the company’s 401(k) plan in 2005. | |
(4) | Mr. Rinaldi served as Chief Executive officer from March 3, 2004 to June 24, 2005. | |
(5) | Includes (1) a company contribution of $9,450 under the company’s 401(k) plan in 2005 and (2) $1,169,145, which represents the value of profit interests in Coffeyville Acquisition LLC that were granted on July 25, 2005. The value of the profit interests was determined by a third-party valuation using binomial modeling based on company projections of undiscounted future cash |
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flows. The profit interests are more fully described below under “Executives’ Interests in Coffeyville Acquisition LLC.” | ||
(6) | Includes (1) a company contribution of $9,450 under the company’s 401(k) plan in 2005 and (2) $600,191, which represents the value of profit interests in Coffeyville Acquisition LLC that were granted on July 25, 2005. The value of the profit interests was determined by a third-party valuation using binomial modeling based on company projections of undiscounted future cash flows. The profit interests are more fully described below under “— Executives’ Interests in Coffeyville Acquisition LLC.” | |
(7) | Includes (1) a company contribution of $9,450 under the company’s 401(k) plan in 2005 and (2) $600,191, which represents the value of profit interests in Coffeyville Acquisition LLC that were granted on July 25, 2005. The value of the profit interests was determined by a third-party valuation using binomial modeling based on company projections of undiscounted future cash flows. The profit interests are more fully described below under “— Executives’ Interests in Coffeyville Acquisition LLC.” | |
(8) | Includes (1) a company contribution of $9,450 under the company’s 401(k) plan in 2005 and (2) $600,191, which represents the value of profit interests in Coffeyville Acquisition LLC that were granted on July 25, 2005. The value of the profit interests was determined by a third-party valuation using binomial modeling based on company projections of undiscounted future cash flows. The profit interests are more fully described below under “— Executives’ Interests in Coffeyville Acquisition LLC.” |
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• | each of our directors; | |
• | each of our named executive officers; | |
• | each stockholder known by us to beneficially hold five percent or more of our common stock; | |
• | each selling stockholder who beneficially owns less than five percent of our common stock; and | |
• | all of our executive officers and directors as a group. |
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Shares Beneficially | ||||||||||||||||||||||||
Shares Beneficially | Owned After this Offering | |||||||||||||||||||||||
Owned Prior | Assuming the | Assuming the | ||||||||||||||||||||||
to this | Underwriters’ Option Is | Underwriters’ Option Is | ||||||||||||||||||||||
Offering | Not Exercised(1) | Exercised(1) | ||||||||||||||||||||||
Name and Address | Number | Percent | Number | Percent | Number | Percent | ||||||||||||||||||
Coffeyville Acquisition LLC(2)(3) | ||||||||||||||||||||||||
The Goldman Sachs Group, Inc.(2) | ||||||||||||||||||||||||
85 Broad Street | ||||||||||||||||||||||||
New York, New York 10004 | ||||||||||||||||||||||||
Kelso Investment Associates VII, L.P. | ||||||||||||||||||||||||
KEP VI, LLC(3) | ||||||||||||||||||||||||
320 Park Avenue, 24th Floor | ||||||||||||||||||||||||
New York, New York 10022 | ||||||||||||||||||||||||
John J. Lipinski | ||||||||||||||||||||||||
Stanley A. Riemann | ||||||||||||||||||||||||
James T. Rens | ||||||||||||||||||||||||
Edmund S. Gross | ||||||||||||||||||||||||
Robert W. Haugan | ||||||||||||||||||||||||
Wyatt E. Jernigan | ||||||||||||||||||||||||
Kevan A. Vick | ||||||||||||||||||||||||
Christopher G. Swanberg | ||||||||||||||||||||||||
Wesley Clark | ||||||||||||||||||||||||
Scott Lebovitz | ||||||||||||||||||||||||
George E. Matelich(3) | ||||||||||||||||||||||||
Stanley de J. Osborne | ||||||||||||||||||||||||
Kenneth A. Pontarelli | ||||||||||||||||||||||||
All directors and executive officers, as a group (13 persons) |
(1) | The underwriters have an option to purchase up to an additional shares from the selling stockholder in this offering. If the underwriters exercise this option, shares would be sold to the underwriters by Coffeyville Acquisition LLC and Coffeyville Acquisition LLC would distribute the proceeds to its members. | |
(2) | The Goldman Sachs Group, Inc., and certain affiliates, including Goldman, Sachs & Co., may be deemed to directly or indirectly own in the aggregate shares of common stock which are owned directly or indirectly by investment partnerships, which we refer to as the Goldman Sachs Funds, of which affiliates of The Goldman Sachs Group, Inc. and Goldman, Sachs & Co. are the general partner, managing limited partner or the managing partner. Goldman, Sachs & Co. is the investment manager for certain of the Goldman Sachs Funds. Goldman, Sachs & Co. is a direct and indirect, wholly owned subsidiary of The Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc., Goldman, Sachs & Co. and the Goldman Sachs Funds share voting power and investment power with certain of their respective affiliates. Shares beneficially owned by the Goldman Sachs Funds consist of: (1) shares of common stock owned by GS Capital Partners V Fund, L.P., (2) shares of common stock owned by GS Capital Partners V |
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Offshore Fund, L.P., (3) shares of common stock owned by GS Capital Partners V Institutional, L.P., and (4) shares of common stock owned by GS Capital Partners V GmbH & Co. KG. Ken Pontarelli is a managing director of Goldman, Sachs & Co. Mr. Pontarelli, The Goldman Sachs Group, Inc. and Goldman, Sachs & Co. each disclaims beneficial ownership of the shares of common stock owned directly or indirectly by the Goldman Sachs Funds, except to the extent of their pecuniary interest therein, if any. If the underwriters exercise their option to purchase additional shares in full, (1) shares of common stock will be sold in respect of member units owned by GS Capital Partners V Fund, L.P., (2) shares of common stock will be sold in respect of member units owned by GS Capital Partners V Offshore Fund, L.P., (3) shares of common stock will be sold in respect of member units owned by GS Capital Partners V Institutional, L.P. and (4) shares of common stock will be sold in respect of member units owned by GS Capital Partners V GmbH & Co. KG. | ||
(3) | With respect to the total number of shares of common stock beneficially owned prior to this offering, the share amount includes (1) shares of common stock owned by Kelso Investment Associates VII, L.P., a Delaware limited partnership, or KIA VII, and (2) shares of common stock owned by KEP VI, LLC, a Delaware limited liability company, or KEP VI. KIA VII and KEP VI, due to their common control, could be deemed to beneficially own each of the other’s shares but each disclaims such beneficial ownership. Messrs. Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum, Berney, Loverro and Connors may be deemed to share beneficial ownership of shares of common stock owned of record, by virtue of their status as managing members of KEP VI and of Kelso GP VII, LLC, a Delaware limited liability company, the principal business of which is serving as the general partner of Kelso GP VII, L.P., a Delaware limited partnership, the principal business of which is serving as the general partner of KIA VII. Each of Messrs. Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum, Berney, Loverro and Connors share investment and voting power with respect to the ownership interests owned by KIA VII and KEP VI but disclaim beneficial ownership of such interests. If the underwriters exercise their option to purchase additional shares in full, (i) shares of common stock will be sold in respect of member units owned by KIA VII and (ii) shares of common stock will be sold in respect of member units owned by KEP VI. |
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Number of | Amount of | |||||||
Common | Promissory | |||||||
Executive Officer | Units | Note | ||||||
Philip L. Rinaldi | 3,717,647 | $ | 21,000 | |||||
Abraham H. Kaplan | 2,230,589 | $ | 12,600 | |||||
George W. Dorsey | 2,230,589 | $ | 12,600 | |||||
Stanley A. Riemann | 1,301,176 | $ | 7,350 | |||||
James T. Rens | 371,764 | $ | 2,100 | |||||
Keith D. Osborn | 650,588 | $ | 3,675 | |||||
Kevan A. Vick | 650,588 | $ | 3,675 |
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Executive Officer | Bonus Amount | |||
Philip L. Rinaldi | $ | 1,000,000 | ||
Abraham H. Kaplan | $ | 600,000 | ||
George W. Dorsey | $ | 300,000 | ||
Stanley A. Riemann | $ | 700,000 | ||
James T. Rens | $ | 150,000 | ||
Keith D. Osborn | $ | 150,000 | ||
Kevan A. Vick | $ | 150,000 | ||
Edmund S. Gross | $ | 200,000 |
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• | 100% of the net asset sale proceeds received by Holdings or any of its subsidiaries from specified asset sales and net insurance/condemnation proceeds, if the borrower does not reinvest those proceeds in assets to be used in its business or to make other certain permitted investments within 12 months or if, within 12 months of receipt, the borrower does not contract to reinvest those proceeds in assets to be used in its business or to make other certain permitted investments within 18 months of receipt, each subject to certain limitations; | |
• | 100% of the cash proceeds from the incurrence of specified debt obligations by Holdings or any of its subsidiaries; and | |
• | 75% of “consolidated excess cash flow” less 100% of voluntary prepayments made during the fiscal year; provided that this percentage will be reduced to 50% when the term loan repayment amount is at least $150.0 million. |
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Second Lien | ||||||||||||
First Lien Credit Facility | Credit Facility | |||||||||||
Minimum | Maximum | Maximum | ||||||||||
interest | leverage | leverage | ||||||||||
Fiscal quarter ending | coverage ratio | ratio | ratio | |||||||||
June 30, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
September 30, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
December 31, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
March 31, 2007 | 2.25:1.00 | 4.75:1.00 | 5.00:1.00 | |||||||||
June 30, 2007 | 2.50:1.00 | 4.50:1.00 | 4.75:1.00 | |||||||||
September 30, 2007 | 2.75:1.00 | 4.25:1.00 | 4.75:1.00 | |||||||||
December 31, 2007 | 3.00:1.00 | 3.50:1.00 | 4.00:1.00 | |||||||||
March 31, 2008 | 3.25:1.00 | 3.50:1.00 | 4.00:1.00 | |||||||||
June 30, 2008 | 3.25:1.00 | 3.25:1.00 | 3.75:1.00 | |||||||||
September 30, 2008 | 3.25:1.00 | 3.00:1.00 | 3.50:1.00 | |||||||||
December 31, 2008 | 3.25:1.00 | 2.75:1.00 | 3.25:1.00 | |||||||||
March 31, 2009 and thereafter | 3.50:1.00 | 2.50:1.00 | 3.00:1.00 |
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• | crude oil for each quarter equals the average of the closing settlement price(s) on NYMEX for the Nearby Light Crude Futures Contract that is “first nearby” as of any determination date during that calendar quarter; | |
• | unleaded gasoline for each quarter equals the average of the closing settlement prices on NYMEX for the Unleaded Gasoline contract that is “first nearby” for any determination period to and including the determination period ending December 31, 2006 and the average of the closing settlement prices on NYMEX for Reformulated Gasoline Blendstock for Oxygen Blending futures contract that is “first nearby” for each determination period thereafter quoted in U.S. dollars per gallon; and | |
• | heating oil for each quarter equals to the average of the closing settlement prices on NYMEX for the Heating Oil Futures Contract that is “first nearby” as of any determination date during such calendar quarter quoted in U.S. dollars per gallon. |
• | guaranteed by Coffeyville Refining & Marketing, Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc. Coffeyville Terminal, Inc., CL JV Holdings, LLC and their domestic subsidiaries; | |
• | secured by a $150 million funded letter of credit issued under the First Lien Credit Facility in favor of J. Aron; and | |
• | to the extent J. Aron’s exposure under the derivative transaction exceeds $150 million, secured by the same collateral that secures our First Lien Credit Facility. |
• | Coffeyville Resources, LLC’s obligations under the derivative transaction cease to be secured as described above equally and ratably with the security interest granted under the First Lien Credit Facility; |
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• | Coffeyville Resources, LLC’s obligations under the derivative transaction cease to be guaranteed by Coffeyville Refining & Marketing, Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc. Coffeyville Terminal, Inc., CL JV Holdings, LLC and their domestic subsidiaries; or | |
• | Coffeyville Resources, LLC fails to maintain a $150 million funded letter of credit in favor of J. Aron. |
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• | restricting dividends on the common stock; | |
• | diluting the voting power of the common stock; | |
• | impairing the liquidation rights of the common stock; or | |
• | delaying or preventing a change in control without further action by the stockholders. |
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• | one percent of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or | |
• | the average weekly trading volume of the common stock during the four calendar weeks preceding the sale. |
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• | an individual who is a citizen or resident of the United States or a former citizen or resident of the United States subject to taxation as an expatriate; | |
• | a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
• | a partnership; | |
• | an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or | |
• | a trust, if (1) a United States court is able to exercise primary supervision over the trust’s administration and one or more “United States persons” (within the meaning of the U.S. Internal Revenue Code of 1986, as amended, or the Code) has the authority to control all of the trust’s substantial decisions, or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a “United States person.” |
• | special U.S. federal income tax rules that may apply to particularnon-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, and dealers and traders in securities or currencies; | |
• | non-U.S. holders holding our common stock as part of a conversion, constructive sale, wash sale or other integrated transaction or a hedge, straddle or synthetic security; | |
• | any U.S. state and local ornon-U.S. or other tax consequences; and | |
• | the U.S. federal income or estate tax consequences for the beneficial owners of anon-U.S. holder. |
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• | the gain is effectively connected with thenon-U.S. holder’s conduct of a trade or business in the United States and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by thenon-U.S. holder in the United States; in these cases, the gain will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons (unless an applicable income tax treaty provides otherwise) and, if thenon-U.S. holder is a foreign corporation, the “branch profits tax” described above may also apply; |
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• | thenon-U.S. holder is an individual who holds our common stock as a capital asset, is present in the United States for more than 182 days in the taxable year of the disposition and meets other requirements (in which case, except as otherwise provided by an applicable income tax treaty, the gain, which may be offset by U.S. source capital losses, generally will be subject to a flat 30% U.S. federal income tax, even though thenon-U.S. holder is not considered a resident alien under the Code); or | |
• | we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that thenon-U.S. holder held our common stock. |
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• | is a United States person; | |
• | derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States; | |
• | is a “controlled foreign corporation” for U.S. federal income tax purposes; or | |
• | is a foreign partnership, if at any time during its tax year: |
• | one or more of its partners are United States persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or | |
• | the foreign partnership is engaged in a U.S. trade or business, |
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Underwriters | Number of Shares | |||
Total |
No Exercise | Full Exercise | |||||||
Per Share | ||||||||
Total |
No Exercise | Full Exercise | |||||||
Per Share | ||||||||
Total |
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Alkylation | A process uniting olefins and isoparaffins forming a longer chain, isoparaffin; particularly the reacting of butylene and isobutane, with sulfuric acid or hydrofluoric acid as a catalyst, to produce a high-octane, low-sensitivity blending agent for gasoline. | |
Barrel | Common unit of measure in the oil industry which equates to 42 gallons. | |
Blendstocks | Various compounds that are combined with gasoline or diesel from the crude oil refining process to make finished gasoline and diesel fuel; these may include natural gasoline, FCC unit gasoline, ethanol, reformate or butane, among others. | |
bpd | Abbreviation for barrels per day. | |
Btu | British thermal units: a measure of energy. One Btu of heat is required to raise the temperature of one pound of water one degree Fahrenheit. | |
By-products | Products that result from extracting high value products such as gasoline and diesel fuel from crude oil; these include black oil, sulfur, propane, pet coke and other products. | |
Capacity | Capacity is defined as the throughput a process unit is capable of sustaining, either on a calendar or stream day basis. The throughput may be expressed in terms of maximum sustainable, nameplate or economic capacity. The maximum sustainable or nameplate capacities may not be the most economical. The economic capacity is the throughput that generally provides the greatest economic benefit based on considerations such as feedstock costs, product values and downstream unit constraints. | |
Catalyst | A substance that alters, accelerates, or instigates chemical changes, but is neither produced, consumed nor altered in the process. | |
Coffeyville supply area | Refers to the states of Kansas, Oklahoma, Missouri, Nebraska and Iowa. | |
Coker unit | A refinery unit that utilizes the lowest value component of crude oil remaining after all higher value products are removed, further breaks down the component into more valuable products and converts the rest into pet coke. | |
Corn belt | The primary corn producing region of the United States, which includes Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska, Ohio and Wisconsin. | |
Crack spread | A simplified model that measures the difference between the price for light products and crude oil. For example, 2-1-1 crack spread is often referenced and represents the approximate gross margin resulting from processing two barrels of crude |
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oil to produce one barrel of gasoline and one barrel of diesel fuel. | ||
Crude unit | The initial refinery unit to process crude oil by separating the crude oil according to boiling point under high heat to recover various hydrocarbon fractions. | |
Distillates | Primarily diesel fuel, kerosene and jet fuel. | |
Ethanol | A clear, colorless, flammable oxygenated hydrocarbon. Ethanol is typically produced chemically from ethylene, or biologically from fermentation of various sugars from carbohydrates found in agricultural crops and cellulosic residues from crops or wood. It is used in the United States as a gasoline octane enhancer and oxygenate. | |
Farm belt | Refers to the states of Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Texas and Wisconsin. | |
Feedstocks | Hydrocarbon compounds, such as crude oil and natural gas liquids, that are processed and blended into refined products. | |
Fluid catalytic cracking unit | Converts gas oil from the crude unit or coker unit into liquefied petroleum gas, distillates and gasoline blendstocks by applying heat in the presence of a catalyst. | |
Heavy crude oil | A relatively inexpensive crude oil characterized by high relative density and viscosity. Heavy crude oils require greater levels of processing to produce high value products such as gasoline and diesel fuel. | |
Independent refiner | A refiner that does not have crude oil exploration or production operations. An independent refiner purchases the crude oil used as feedstock in its refinery operations from third parties. | |
Light crude oil | A relatively expensive crude oil characterized by low relative density and viscosity. Light crude oils require lower levels of processing to produce high value products such as gasoline and diesel fuel. | |
Liquefied petroleum gas | Light hydrocarbon material gaseous at atmospheric temperature and pressure, held in the liquid state by pressure to facilitate storage, transport and handling. | |
Maya | A heavy, sour crude oil from Mexico characterized by an API gravity of approximately 22.0 and a sulfur content of approximately 3.3 weight percent. | |
MTBE | Methyl Tertiary Butyl Ether, an ether produced from the reaction of isobutylene and methanol specifically for use as a gasoline blendstock. The EPA required MTBE or other oxygenates to be blended into reformulated gasoline. | |
Naphtha | The major constituent of gasoline fractionated from crude oil during the refining process, which is later processed in the reformer unit to increase octane. |
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Netbacks | Refers to the unit price of fertilizer, in dollars per ton, offered on a delivered basis and excludes shipment costs. Also referred to as plant gate price. | |
PADD I | East Coast Petroleum Area for Defense District which includes Connecticut, Delaware, District of Columbia, Florida, Georgia, Maine, Massachusetts, Maryland, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia and West Virginia. | |
PADD II | Midwest Petroleum Area for Defense District which includes Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, and Wisconsin. | |
PADD III | Gulf Coast Petroleum Area for Defense District which includes Alabama, Arkansas, Louisiana, Mississippi, New Mexico, and Texas. | |
PADD IV | Rocky Mountains Petroleum Area for Defense District which includes Colorado, Idaho, Montana, Utah, and Wyoming. | |
PADD V | West Coast Petroleum Area for Defense District which includes Alaska, Arizona, California, Hawaii, Nevada, Oregon, and Washington. | |
Pet coke | A coal-like substance that can be burned to generate electricity or used as a hardener in concrete. | |
Rack sales | Sales which are made into tanker truck (versus bulk pipeline batcher) via either a proprietary or third terminal facility designed for truck loading. | |
Recordable incident | An injury, as defined by OSHA. All work-related deaths and illnesses, and those work-related injuries which result in loss of consciousness, restriction of work or motion, transfer to another job, or require medical treatment beyond first aid. | |
Recordable injury rate | The number of recordable injuries per 200,000 hours rate worked. | |
Refined products | Hydrocarbon compounds, such as gasoline, diesel fuel and jet fuel, that are produced by a refinery. | |
Reformer unit | A refinery unit that processes naphtha and converts it to high-octane gasoline by using a platinum/rhenium catalyst. Also known as a platformer. | |
Reformulated gasoline | The composition and properties of which meet the requirements of the reformulated gasoline regulations. | |
Sour crude oil | A crude oil that is relatively high in sulfur content, requiring additional processing to remove the sulfur. Sour crude oil is typically less expensive than sweet crude oil. | |
Spot market | A market in which commodities are bought and sold for cash and delivered immediately. |
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Sweet crude oil | A crude oil that is relatively low in sulfur content, requiring less processing to remove the sulfur. Sweet crude oil is typically more expensive than sour crude oil. | |
Syngas | A mixture of gases (largely carbon monoxide and hydrogen) that results from heating coal in the presence of steam. | |
Throughput | The volume per day processed through a unit or a refinery. | |
Ton | One ton is equal to 2,000 pounds. | |
Turnaround | A periodically required standard procedure to refurbish and maintain a refinery that involves the shutdown and inspection of major processing units and occurs every three to four years. | |
UAN | UAN is a solution of urea and ammonium nitrate in water used as a fertilizer. | |
Utilization | Ratio of total refinery throughput to the rated capacity of the refinery. | |
Vacuum unit | Secondary refinery unit to process crude oil by separating product from the crude unit according to boiling point under high heat and low pressure to recover various hydrocarbons. | |
Wheat belt | The primary wheat producing region of the United States, which includes Oklahoma, Kansas, Texas, North Dakota and South Dakota. | |
WTI | West Texas Intermediate crude oil, a light, sweet crude oil, characterized by an API gravity between 38 and 40 and a sulfur content of approximately 0.3 weight percent that is used as a benchmark for other crude oils. | |
WTS | West Texas Sour crude oil, a relatively light, sour crude oil characterized by an API gravity of 32-33 degrees and a sulfur content of approximately 2 weight percent. | |
Yield | The percentage of refined products that is produced from crude and other feedstocks. |
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Audited Financial Statements: | ||||||||
F-2 | ||||||||
F-3 | ||||||||
F-4 | ||||||||
F-5 | ||||||||
F-7 | ||||||||
F-8 | ||||||||
Unaudited Condensed Consolidated Financial Statements: | ||||||||
F-38 | ||||||||
F-39 | ||||||||
F-40 | ||||||||
F-41 | ||||||||
F-42 | ||||||||
EX-23.1: CONSENT OF KPMG LLP |
F-1
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Coffeyville Group | |||||||||
Holdings, LLC | Coffeyville | ||||||||
Immediate | Acquisition LLC | ||||||||
Predecessor | Successor | ||||||||
December 31, | December 31, | ||||||||
2004 | 2005 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 52,651,952 | $ | 64,703,524 | |||||
Accounts receivable, net of allowance for doubtful accounts of $190,468 and $275,188, respectively | 23,383,818 | 71,560,052 | |||||||
Inventories | 80,422,506 | 154,275,818 | |||||||
Prepaid expenses and other current assets | 7,844,264 | 14,709,309 | |||||||
Deferred income taxes | 264,246 | 31,059,748 | |||||||
Total current assets | 164,566,786 | 336,308,451 | |||||||
Property, plant, and equipment, net of accumulated depreciation | 50,005,847 | 772,512,884 | |||||||
Intangible assets | 79,824 | 1,008,547 | |||||||
Goodwill | — | 83,774,885 | |||||||
Deferred financing costs | 7,206,653 | 19,524,839 | |||||||
Other long-term assets | 6,946,793 | 8,418,297 | |||||||
Deferred income taxes | 351,434 | — | |||||||
Total assets | $ | 229,157,337 | $ | 1,221,547,903 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt | $ | 1,500,000 | $ | 2,235,973 | |||||
Revolving debt | 56,510 | — | |||||||
Accounts payable | 31,059,282 | 87,914,833 | |||||||
Personnel accruals | 6,591,495 | 10,796,896 | |||||||
Accrued taxes other than income taxes | 2,652,948 | 4,841,234 | |||||||
Accrued income taxes | 1,301,160 | 4,939,614 | |||||||
Payable to swap counterparty | — | 96,688,956 | |||||||
Deferred revenue | 11,119,905 | 12,029,987 | |||||||
Other current liabilities | 3,723,057 | 8,831,937 | |||||||
Total current liabilities | 58,004,357 | 228,279,430 | |||||||
Long-term liabilities: | |||||||||
Long-term debt, less current portion | 147,375,000 | 497,201,527 | |||||||
Accrued environmental liabilities | 9,100,937 | 7,009,388 | |||||||
Deferred income taxes | — | 209,523,747 | |||||||
Payable to swap counterparty | — | 160,033,333 | |||||||
Other long-term liabilities | 592,881 | — | |||||||
Total long-term liabilities | 157,068,818 | 873,767,995 | |||||||
Management voting common units subject to redemption | — | 4,172,350 | |||||||
Less: note receivable from management unitholder | — | (500,000 | ) | ||||||
Total management voting common units subject to redemption, net | — | 3,672,350 | |||||||
Members’ equity: | |||||||||
Voting preferred units | 10,485,160 | — | |||||||
Non-voting common units | 7,584,993 | — | |||||||
Unearned compensation | (3,985,991 | ) | — | ||||||
Voting common units | — | 114,830,560 | |||||||
Management nonvoting override units | — | 997,568 | |||||||
Total members’ equity | 14,084,162 | 115,828,128 | |||||||
Commitments and contingencies | |||||||||
Total liabilities and equity | $ | 229,157,337 | $ | 1,221,547,903 | |||||
F-3
Table of Contents
Coffeyville | ||||||||||||||||||||||
Farmland Industries, Inc. | Coffeyville Group Holdings, LLC | Acquisition LLC | ||||||||||||||||||||
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year Ended | 62 Days Ended | 304 Days Ended | 174 Days Ended | 233 Days Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Net sales | $ | 1,262,196,894 | $ | 261,086,529 | $ | 1,479,893,189 | $ | 980,706,261 | $ | 1,454,259,542 | ||||||||||||
Cost of goods sold | 1,198,332,922 | 245,234,642 | 1,363,369,459 | 850,037,564 | 1,277,217,863 | |||||||||||||||||
Gross profit | 63,863,972 | 15,851,887 | 116,523,730 | 130,668,697 | 177,041,679 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling, general and administrative expenses | 23,617,264 | 4,649,145 | 16,552,393 | 18,413,003 | 18,506,617 | |||||||||||||||||
Reorganization expenses: | ||||||||||||||||||||||
Impairment of property, plant and equipment | 9,638,626 | — | — | — | — | |||||||||||||||||
Rejection of executory contracts | 1,250,000 | — | — | — | — | |||||||||||||||||
Total operating expenses | 34,505,890 | 4,649,145 | 16,552,393 | 18,413,003 | 18,506,617 | |||||||||||||||||
Operating income | 29,358,082 | 11,202,742 | 99,971,337 | 112,255,694 | 158,535,062 | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||
Interest expense | (1,281,513 | ) | — | (10,058,450 | ) | (7,801,821 | ) | (25,007,159 | ) | |||||||||||||
Interest income | — | — | 169,652 | 511,687 | 972,264 | |||||||||||||||||
Gain (loss) on derivatives | 303,742 | — | 546,604 | (7,664,725 | ) | (316,062,111 | ) | |||||||||||||||
Loss on extinguishment of debt | — | — | (7,166,110 | ) | (8,093,754 | ) | — | |||||||||||||||
Other income (expense) | (458,514 | ) | 9,345 | 52,659 | (762,616 | ) | (563,190 | ) | ||||||||||||||
Total other income (expense) | (1,436,285 | ) | 9,345 | (16,455,645 | ) | (23,811,229 | ) | (340,660,196 | ) | |||||||||||||
Income (loss) before provision for income taxes | 27,921,797 | 11,212,087 | 83,515,692 | 88,444,465 | (182,125,134 | ) | ||||||||||||||||
Income tax expense (benefit) | — | — | 33,805,480 | 36,047,516 | (62,968,044 | ) | ||||||||||||||||
Net income (loss) | $ | 27,921,797 | $ | 11,212,087 | $ | 49,710,212 | $ | 52,396,949 | $ | (119,157,090 | ) | |||||||||||
Unaudited Pro Forma Information (Note 1) | ||||||||||||||||||||||
Basic and diluted earnings per common share | $ | — | ||||||||||||||||||||
Basic and diluted weighted average common shares outstanding | — |
F-4
Table of Contents
Divisional | Voting | Nonvoting | Unearned | |||||||||||||||||
Equity | Preferred | Common | Compensation | Total | ||||||||||||||||
Original Predecessor | ||||||||||||||||||||
For the year ended December 31, 2003 and the 62 days ended March 2, 2004 | ||||||||||||||||||||
Balance, January 1, 2003 | $ | 49,773,605 | $ | — | $ | — | $ | — | $ | 49,773,605 | ||||||||||
Net income | 27,921,797 | — | — | — | 27,921,797 | |||||||||||||||
Net distribution to Farmland Industries, Inc. | (19,503,913 | ) | — | — | — | (19,503,913 | ) | |||||||||||||
Balance, December 31, 2003 | 58,191,489 | — | — | — | 58,191,489 | |||||||||||||||
Net income | 11,212,087 | — | — | — | 11,212,087 | |||||||||||||||
Net distribution to Farmland Industries, Inc. | (53,216,357 | ) | — | — | — | (53,216,357 | ) | |||||||||||||
Balance, March 2, 2004 | $ | 16,187,219 | $ | — | $ | — | $ | — | $ | 16,187,219 | ||||||||||
Immediate Predecessor | ||||||||||||||||||||
For the 304 days ended December 31, 2004 and the 174 days ended June 23, 2005 | ||||||||||||||||||||
Members’ Equity, March 3, 2004 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Issuance of 63,200,000 preferred units for cash | — | 63,200,000 | — | — | 63,200,000 | |||||||||||||||
Issuance of 11,152,941 common units to management for recourse promissory notes and unearned compensation | — | — | 3,100,000 | (3,037,000 | ) | 63,000 | ||||||||||||||
Issuance of 500,000 common units to management for recourse promissory notes and unearned compensation | — | — | 2,047,450 | (2,044,600 | ) | 2,850 | ||||||||||||||
Recognition of earned compensation expense related to common units | — | — | — | 1,095,609 | 1,095,609 | |||||||||||||||
Dividends on preferred units ($1.50 per unit) | — | (94,686,276 | ) | — | — | (94,686,276 | ) | |||||||||||||
Dividends to management on common units ($0.48 per unit) | — | — | (5,301,233 | ) | — | (5,301,233 | ) | |||||||||||||
Net income | — | 41,971,436 | 7,738,776 | — | 49,710,212 | |||||||||||||||
Members’ Equity, December 31, 2004 | — | 10,485,160 | 7,584,993 | (3,985,991 | ) | 14,084,162 | ||||||||||||||
Recognition of earned compensation expense related to common units | — | — | — | 3,985,991 | 3,985,991 | |||||||||||||||
Contributed capital | — | 728,724 | — | — | 728,724 | |||||||||||||||
Dividends on preferred units ($0.70 per unit) | — | (44,083,323 | ) | — | — | (44,083,323 | ) | |||||||||||||
Dividends to management on common units ($0.70 per unit) | — | — | (8,128,170 | ) | — | (8,128,170 | ) | |||||||||||||
Net income | — | 44,239,908 | 8,157,041 | — | 52,396,949 | |||||||||||||||
Members’ Equity, June 23, 2005 | $ | — | $ | 11,370,469 | $ | 7,613,864 | $ | — | $ | 18,984,333 | ||||||||||
F-5
Table of Contents
Management Voting Common | Note Receivable from | |||||||||||
Units Subject to Redemption | Management Unit Holder | Total | ||||||||||
Successor | ||||||||||||
For the 233 days ended December 31, 2005 | ||||||||||||
Balance at May 13, 2005 | $ | — | $ | — | $ | — | ||||||
Issuance of 177,500 common units for cash | 1,775,000 | — | 1,775,000 | |||||||||
Issuance of 50,000 common units for note receivable | 500,000 | (500,000 | ) | — | ||||||||
Adjustment to fair value for management common units | 3,035,586 | — | 3,035,586 | |||||||||
Net loss allocated to management common units | (1,138,236 | ) | — | (1,138,236 | ) | |||||||
Balance at December 31, 2005 | $ | 4,172,350 | $ | (500,000 | ) | $ | 3,672,350 | |||||
Management | ||||||||||||||||
Voting | Management | Nonvoting | ||||||||||||||
Common | Nonvoting Override | Override | ||||||||||||||
Units | Operating Units | Value Units | Total | |||||||||||||
For the 233 days ended December 31, 2005 | ||||||||||||||||
Balance at May 13, 2005 | $ | — | $ | — | $ | — | $ | — | ||||||||
Issuance of 23,588,500 common units for cash | 235,885,000 | — | — | 235,885,000 | ||||||||||||
Issuance of 919,630 nonvested operating override units | — | — | — | — | ||||||||||||
Issuance of 1,839,265 nonvested value override units | — | — | — | — | ||||||||||||
Recognition of share-based compensation expense related to override units | — | 602,381 | 395,187 | 997,568 | ||||||||||||
Adjustment to fair value for management common units | (3,035,586 | ) | — | — | (3,035,586 | ) | ||||||||||
Net loss allocated to management common units | (118,018,854 | ) | — | — | (118,018,854 | ) | ||||||||||
Balance at December 31, 2005 | $ | 114,830,560 | $ | 602,381 | $ | 395,187 | $ | 115,828,128 | ||||||||
F-6
Table of Contents
Coffeyville Group | Coffeyville | |||||||||||||||||||||
Farmland Industries, Inc. | Holdings, LLC | Acquisition LLC | ||||||||||||||||||||
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year Ended | 62 Days Ended | 304 Days Ended | 174 Days Ended | 233 Days Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||
Net income (loss) | $ | 27,921,797 | $ | 11,212,087 | $ | 49,710,212 | $ | 52,396,949 | $ | (119,157,090 | ) | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||||
Depreciation and amortization | 3,313,526 | 432,003 | 2,445,961 | 1,128,005 | 23,954,031 | |||||||||||||||||
Provision for doubtful accounts | — | — | 190,468 | (190,468 | ) | 275,189 | ||||||||||||||||
Amortization of deferred financing costs | — | — | 1,332,890 | 812,166 | 1,751,041 | |||||||||||||||||
Loss on extinguishment of debt | — | — | 7,166,110 | 8,093,754 | — | |||||||||||||||||
Reorganization expenses — impairment of property, plant, and equipment | 9,638,626 | — | — | — | — | |||||||||||||||||
Share-based compensation | — | — | 1,095,609 | 3,985,991 | 997,568 | |||||||||||||||||
Changes in assets and liabilities, net of effect of acquisition: | ||||||||||||||||||||||
Accounts receivable | (25,301,358 | ) | 19,635,303 | (23,571,436 | ) | (11,334,177 | ) | (34,506,244 | ) | |||||||||||||
Inventories | 10,371,108 | (6,399,677 | ) | 20,068,625 | (59,045,550 | ) | 1,895,473 | |||||||||||||||
Prepaid expenses and other current assets | (23,806,340 | ) | 25,716,107 | (6,758,666 | ) | (937,543 | ) | (6,491,633 | ) | |||||||||||||
Other long-term assets | (90,733 | ) | 715,132 | (5,379,727 | ) | 3,036,659 | (4,651,733 | ) | ||||||||||||||
Accounts payable | 8,347,575 | (6,759,702 | ) | 31,059,282 | 16,124,794 | 40,655,763 | ||||||||||||||||
Accrued income taxes | — | — | 1,301,160 | 4,503,574 | (136,398 | ) | ||||||||||||||||
Deferred revenue | 1,545,894 | 8,319,913 | 1,209,008 | (9,073,050 | ) | 9,983,132 | ||||||||||||||||
Other current liabilities | 419,415 | 364,555 | 12,967,500 | 1,254,196 | 10,499,712 | |||||||||||||||||
Payable to swap counterparty | — | — | — | — | 256,722,289 | |||||||||||||||||
Accrued environmental liabilities | 7,958,165 | (20,057 | ) | (1,746,043 | ) | (1,553,184 | ) | (538,365 | ) | |||||||||||||
Other long-term liabilities | — | — | (689,372 | ) | (297,105 | ) | (295,776 | ) | ||||||||||||||
Deferred income taxes | — | — | (615,680 | ) | 3,803,937 | (98,424,817 | ) | |||||||||||||||
Net cash provided by operating activities | 20,317,675 | 53,215,664 | 89,785,901 | 12,708,948 | 82,532,142 | |||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||
Cash paid for acquisition of Original Predecessor | — | — | (116,599,329 | ) | — | — | ||||||||||||||||
Cash paid for acquisition of Immediate Predecessor, net of cash acquired | — | — | — | — | (685,125,669 | ) | ||||||||||||||||
Capital expenditures | (813,762 | ) | — | (14,160,280 | ) | (12,256,793 | ) | (45,172,134 | ) | |||||||||||||
Net cash used in investing activities | (813,762 | ) | — | (130,759,609 | ) | (12,256,793 | ) | (730,297,803 | ) | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Revolving debt payments | — | — | (57,686,789 | ) | (343,449 | ) | (69,286,016 | ) | ||||||||||||||
Revolving debt borrowings | — | — | 57,743,299 | 492,308 | 69,286,016 | |||||||||||||||||
Proceeds from issuance of long-term debt | — | — | 171,900,000 | — | 500,000,000 | |||||||||||||||||
Principal payments on long-term debt | — | — | (23,025,000 | ) | (375,000 | ) | (562,500 | ) | ||||||||||||||
Repayment of capital lease obligation | — | — | (1,176,424 | ) | — | — | ||||||||||||||||
Net divisional equity distribution | (19,503,913 | ) | (53,216,357 | ) | — | — | — | |||||||||||||||
Payment of deferred financing costs | — | — | (16,309,917 | ) | — | (24,628,315 | ) | |||||||||||||||
Prepayment penalty on extinguishment of debt | — | — | (1,095,000 | ) | — | — | ||||||||||||||||
Issuance of members’ equity | — | — | 63,263,000 | — | 237,660,000 | |||||||||||||||||
Distribution of members’ equity | — | — | (99,987,509 | ) | (52,211,493 | ) | — | |||||||||||||||
Net cash provided by (used in) financing activities | (19,503,913 | ) | (53,216,357 | ) | 93,625,660 | (52,437,634 | ) | 712,469,185 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | (693 | ) | 52,651,952 | (51,985,479 | ) | 64,703,524 | |||||||||||||||
Cash and cash equivalents, beginning of period | 2,250 | 2,250 | — | 52,651,952 | — | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 2,250 | $ | 1,557 | $ | 52,651,952 | $ | 666,473 | $ | 64,703,524 | ||||||||||||
Supplemental disclosures | ||||||||||||||||||||||
Cash paid for income taxes | $ | — | $ | — | $ | 33,820,000 | $ | 27,040,000 | $ | 35,593,172 | ||||||||||||
Cash paid for interest | $ | — | $ | — | $ | 8,570,069 | $ | 7,287,351 | $ | 23,578,178 | ||||||||||||
Non-cash financing activities: | ||||||||||||||||||||||
Contributed capital through Leiber tax savings | $ | — | $ | — | $ | — | $ | 728,724 | $ | — | ||||||||||||
F-7
Table of Contents
F-8
Table of Contents
F-9
Table of Contents
Assets acquired | ||||
Inventories | $ | 100,491,131 | ||
Prepaid expenses and other current assets | 1,085,598 | |||
Property, plant, and equipment | 38,239,154 | |||
Total assets acquired | $ | 139,815,883 | ||
Liabilities assumed | ||||
Deferred revenue | $ | 9,910,897 | ||
Capital lease obligations | 1,176,424 | |||
Accrued environmental liabilities | 10,846,980 | |||
Other long-term liabilities | 1,282,253 | |||
Total liabilities assumed | $ | 23,216,554 | ||
Cash paid for acquisition of Original Predecessor | $ | 116,599,329 | ||
F-10
Table of Contents
Assets acquired | ||||
Cash | $ | 666,473 | ||
Accounts receivable | 37,328,997 | |||
Inventories | 156,171,291 | |||
Prepaid expenses and other current assets | 4,865,241 | |||
Intangibles, contractual agreements | 1,322,000 | |||
Goodwill | 83,774,885 | |||
Other long-term assets | 3,837,647 | |||
Property, plant, and equipment | 750,910,245 | |||
Total assets acquired | $ | 1,038,876,779 | ||
Liabilities assumed | ||||
Accounts payable | $ | 47,259,070 | ||
Other current liabilities | 16,017,210 | |||
Current income taxes | 5,076,012 | |||
Deferred income taxes | 276,888,816 | |||
Other long-term liabilities | 7,843,529 | |||
Total liabilities assumed | $ | 353,084,637 | ||
Cash paid for acquisition of Immediate Predecessor | $ | 685,792,142 | ||
Historical | Pro Forma | |||||||
(non-GAAP) | ||||||||
Year ended December 31, 2005 | $ | (66,760 | )(1) | $ | (82,898 | ) | ||
Year ended December 31, 2004 | $ | 60,922 | (2) | $ | 20,730 |
(1) | Reflects the sum of the results of operations for the periods ended June 23, 2005 and December 31, 2005. | |
(2) | Reflects the sum of the results of operations for the periods ended March 2, 2004 and December 31, 2004. |
(2) | Basis of Presentation |
F-11
Table of Contents
(3) | Summary of Significant Accounting Policies |
F-12
Table of Contents
Asset | Range of useful lives, in years | |||
Improvements to land | 15 to 20 | |||
Buildings | 20 to 30 | |||
Machinery and equipment | 5 to 30 | |||
Automotive equipment | 5 | |||
Furniture and fixtures | 3 to 5 |
F-13
Table of Contents
F-14
Table of Contents
F-15
Table of Contents
F-16
Table of Contents
(4) | Members’ Equity |
F-17
Table of Contents
• | Estimated forfeiture rate | None | ||||
• | Explicit service period | Based on forfeiture schedule below | ||||
• | Grant-date fair value — controlling basis | $5.16 per share | ||||
• | Marketability and minority interest discounts | $1.24 per share (24% discount) | ||||
• | Volatility | 37% |
Forfeiture | ||||
Minimum Period Held | Percentage | |||
2 years | 75 | % | ||
3 years | 50 | % | ||
4 years | 25 | % | ||
5 years | 0 | % |
F-18
Table of Contents
• | Estimated forfeiture rate | None | ||||
• | Derived service period | 6 years | ||||
• | Grant-date fair value — controlling basis | $2.91 per share | ||||
• | Marketability and minority interest discounts | $0.70 per share (24% discount) | ||||
• | Volatility | 37% |
Subject to | ||||
Forfeiture | ||||
Minimum Period Held | Percentage | |||
2 years | 75 | % | ||
3 years | 50 | % | ||
4 years | 25 | % | ||
5 years | 0 | % |
F-19
Table of Contents
(5) | Inventories |
Immediate | |||||||||
Predecessor | Successor | ||||||||
December 31, | December 31, | ||||||||
2004 | 2005 | ||||||||
Finished goods | $ | 24,704 | $ | 58,513 | |||||
Raw materials and catalysts | 26,136 | 47,437 | |||||||
In-process inventories | 14,059 | 33,397 | |||||||
Parts and supplies | 15,524 | 14,929 | |||||||
$ | 80,423 | $ | 154,276 | ||||||
(6) | Property, Plant, and Equipment |
Immediate | |||||||||
Predecessor | Successor | ||||||||
December 31, | December 31, | ||||||||
2004 | 2005 | ||||||||
Land and improvements | $ | 1,061 | $ | 9,346 | |||||
Buildings | 768 | 10,306 | |||||||
Machinery and equipment | 39,617 | 715,381 | |||||||
Automotive equipment | 660 | 3,396 | |||||||
Furniture and fixtures | 1,372 | 271 | |||||||
Construction in progress | 8,738 | 57,382 | |||||||
52,216 | 796,082 | ||||||||
Accumulated depreciation | 2,210 | 23,569 | |||||||
$ | 50,006 | $ | 772,513 | ||||||
F-20
Table of Contents
(7) | Goodwill and Intangible Assets |
Contractual | ||||
Year Ending December 31, | Agreements | |||
2006 | $ | 370 | ||
2007 | 165 | |||
2008 | 64 | |||
2009 | 33 | |||
2010 | 33 | |||
Thereafter | 344 | |||
1,009 | ||||
(8) | Deferred Financing Costs |
F-21
Table of Contents
Immediate | |||||||||
Predecessor | Successor | ||||||||
December 31, | December 31, | ||||||||
2004 | 2005 | ||||||||
Deferred financing costs | $ | 10,009 | $ | 24,628 | |||||
Less accumulated amortization | 1,103 | 1,751 | |||||||
Unamortized deferred financing costs | 8,906 | 22,877 | |||||||
Less current portion | 1,699 | 3,352 | |||||||
$ | 7,207 | $ | 19,525 | ||||||
Deferred | ||||
Year Ending December 31, | Financing | |||
2006 | $ | 3,352 | ||
2007 | 3,337 | |||
2008 | 3,332 | |||
2009 | 3,308 | |||
2010 | 3,293 | |||
Thereafter | 6,255 | |||
$ | 22,877 | |||
(9) | Other Long-Term Assets |
Immediate | |||||||||
Predecessor | Successor | ||||||||
December 31, | December 31, | ||||||||
2004 | 2005 | ||||||||
Restricted cash held for debt repayment | $ | 3,500 | $ | — | |||||
Prepaid insurance charges | 3,047 | 2,447 | |||||||
Non-current receivables | — | 4,889 | |||||||
Other assets | 400 | 1,082 | |||||||
$ | 6,947 | $ | 8,418 | ||||||
F-22
Table of Contents
Prepaid | ||||
Year Ending December 31, | Insurance | |||
2006 | $ | 1,062 | ||
2007 | 394 | |||
2008 | 333 | |||
2009 | 333 | |||
2010 | 333 | |||
Thereafter | 1,054 | |||
3,509 | ||||
Less current portion | (1,062 | ) | ||
Total long-term | $ | 2,447 | ||
(10) | Long-Term Debt |
F-23
Table of Contents
Second Lien Credit | ||||||||||||
First Lien Credit Facility | Facility | |||||||||||
Maximum | Maximum | |||||||||||
Minimum Interest | Leverage | Leverage | ||||||||||
Fiscal Quarter Ending | Coverage Ratio | Ratio | Ratio | |||||||||
March 31, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
June 30, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
September 30, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
December 31, 2006 | 2.25:1.00 | 5.00:1.00 | 5.25:1.00 | |||||||||
March 31, 2007 | 2.25:1.00 | 4.75:1.00 | 5.00:1.00 | |||||||||
June 30, 2007 | 2.50:1.00 | 4.50:1.00 | 4.75:1.00 | |||||||||
September 30, 2007 | 2.75:1.00 | 4.25:1.00 | 4.75:1.00 | |||||||||
December 31, 2007 | 3.00:1.00 | 3.50:1.00 | 4.00:1.00 | |||||||||
March 31, 2008 | 3.25:1.00 | 3.50:1.00 | 4.00:1.00 | |||||||||
June 30, 2008 | 3.25:1.00 | 3.25:1.00 | 3.75:1.00 | |||||||||
September 30, 2008 | 3.25:1.00 | 3.00:1.00 | 3.50:1.00 | |||||||||
December 31, 2008 | 3.25:1.00 | 2.75:1.00 | 3.25:1.00 | |||||||||
March 31, 2009 and thereafter | 3.50:1.00 | 2.50:1.00 | 3.00:1.00 |
F-24
Table of Contents
First lien Tranche B term loans; principal payments of .25% of the principal balance due quarterly commencing October 2005, increasing to 23.5% of the principal balance due quarterly commencing October 2011, with a final payment of the aggregate remaining unpaid principal balance due July 2012 | $ | 224,437,500 | ||
Second lien term loan, due in full June 2013 | 275,000,000 | |||
499,437,500 | ||||
Less current portion | 2,235,973 | |||
$ | 497,201,527 | |||
Year Ending December 31, | Amount | |||
2006 | $ | 2,235,973 | ||
2007 | 2,213,697 | |||
2008 | 2,191,642 | |||
2009 | 2,169,808 | |||
2010 | 2,148,191 | |||
Thereafter | 488,478,189 | |||
$ | 499,437,500 | |||
(11) | Benefit Plans |
F-25
Table of Contents
(12) | Income Taxes |
Immediate Predecessor | Successor | ||||||||||||
304 Days | 174 Days | 229 Days | |||||||||||
Ended | Ended | Ended | |||||||||||
December 31, | June 23, | December 31, | |||||||||||
2004 | 2005 | 2005 | |||||||||||
Current — Federal | $ | 27,902 | $ | 26,145 | $ | 29,000 | |||||||
State | 6,519 | 6,099 | 6,457 | ||||||||||
34,421 | 32,244 | 35,457 | |||||||||||
Deferred — Federal | (499 | ) | 3,083 | (80,500 | ) | ||||||||
State | (117 | ) | 721 | (17,925 | ) | ||||||||
(616 | ) | 3,804 | (98,425 | ) | |||||||||
Total income taxes | $ | 33,805 | $ | 36,048 | $ | (62,968 | ) | ||||||
Immediate Predecessor | Successor | ||||||||||||
304 Days | 174 Days | 229 Days | |||||||||||
Ended | Ended | Ended | |||||||||||
December 31, | June 23, | December 31, | |||||||||||
2004 | 2005 | 2005 | |||||||||||
Computed expected taxes | $ | 29,230 | $ | 30,956 | $ | (63,744 | ) | ||||||
Loss on unexercised option agreements with no tax benefit to Successor | — | — | 8,750 | ||||||||||
State taxes, net of federal benefit | 4,162 | 4,433 | (7,454 | ) | |||||||||
Manufacturing deduction | — | (825 | ) | (897 | ) | ||||||||
Other, net | 413 | 1,484 | 377 | ||||||||||
Total income tax expense | $ | 33,805 | $ | 36,048 | $ | (62,968 | ) | ||||||
F-26
Table of Contents
Immediate | |||||||||
Predecessor | Successor | ||||||||
December 31, | December 31, | ||||||||
2004 | 2005 | ||||||||
Deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 74 | $ | 109 | |||||
Personnel accruals | 342 | 483 | |||||||
Inventories | 215 | 560 | |||||||
Environmental obligations | 166 | — | |||||||
Electricity contract | 229 | — | |||||||
Unrealized derivative losses | — | 91,226 | |||||||
Deferred tax assets | 1,026 | 92,378 | |||||||
Deferred tax liabilities: | |||||||||
Unrealized derivative gains | 326 | — | |||||||
Property, plant, and equipment | 84 | 269,462 | |||||||
Environmental obligations | — | 1,238 | |||||||
Other | — | 142 | |||||||
Deferred tax liabilities | 410 | 270,842 | |||||||
Net deferred tax assets (liabilities) | $ | 616 | $ | (178,464 | ) | ||||
F-27
Table of Contents
(13) | Commitments and Contingent Liabilities |
Year Ending | Operating | Unconditional | ||||||
December 31, | Leases | Purchase Obligations | ||||||
2006 | $ | 3,654,956 | $ | 22,462,157 | ||||
2007 | 3,445,287 | 22,840,325 | ||||||
2008 | 3,354,004 | 18,716,401 | ||||||
2009 | 2,595,539 | 18,685,325 | ||||||
2010 | 1,259,805 | 16,293,845 | ||||||
Thereafter | 644,669 | 153,877,335 | ||||||
$ | 14,954,260 | $ | 252,875,388 | |||||
F-28
Table of Contents
F-29
Table of Contents
F-30
Table of Contents
Year Ending December 31, | Amount | |||
2006 | $ | 1,211 | ||
2007 | 1,712 | |||
2008 | 616 | |||
2009 | 508 | |||
2010 | 473 | |||
Thereafter | 6,798 | |||
Undiscounted total | 11,318 | |||
Less amounts representing interest at 4.51% | 3,098 | |||
Accrued environmental liabilities at December 31, 2005 | $ | 8,220 | ||
(14) | Derivative Financial Instruments |
F-31
Table of Contents
F-32
Table of Contents
Notional | Fixed | |||||||
Period Covered | Amount | Interest Rate | ||||||
June 30, 2005 to June 30, 2006 | $ | 375 million | 3.835 | % | ||||
June 30, 2006 to June 30, 2007 | 325 million | 4.038 | % | |||||
June 30, 2007 to March 31, 2008 | 325 million | 4.195 | % | |||||
March 31, 2008 to March 31, 2009 | 250 million | 4.195 | % | |||||
March 31, 2009 to March 31, 2010 | 180 million | 4.195 | % | |||||
March 31, 2010 to June 30, 2010 | 110 million | 4.195 | % |
(15) | Related Party Transactions |
F-33
Table of Contents
(16) | Business Segments |
F-34
Table of Contents
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year | 62-Day Period | 304-Day Period | 174-Day Period | 233-Day Period | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Net sales | ||||||||||||||||||||||
Petroleum | $ | 1,161,287,249 | $ | 241,640,365 | $ | 1,390,768,126 | $ | 903,802,983 | $ | 1,363,390,142 | ||||||||||||
Nitrogen Fertilizer | 100,909,645 | 19,446,164 | 93,422,503 | 79,347,843 | 93,651,855 | |||||||||||||||||
Other | — | — | (4,297,440 | ) | (2,444,565 | ) | (2,782,455 | ) | ||||||||||||||
Total | $ | 1,262,196,894 | $ | 261,086,529 | $ | 1,479,893,189 | $ | 980,706,261 | $ | 1,454,259,542 | ||||||||||||
Depreciation and amortization | ||||||||||||||||||||||
Petroleum | $ | 2,094,627 | $ | 271,284 | $ | 1,522,464 | $ | 770,728 | $ | 15,566,987 | ||||||||||||
Nitrogen Fertilizer | 1,218,899 | 160,719 | 855,289 | 316,446 | 8,360,911 | |||||||||||||||||
Other | — | — | 68,208 | 40,831 | 26,133 | |||||||||||||||||
Total | $ | 3,313,526 | $ | 432,003 | $ | 2,445,961 | $ | 1,128,005 | $ | 23,954,031 | ||||||||||||
Operating income (loss) | ||||||||||||||||||||||
Petroleum | $ | 21,544,374 | $ | 7,687,745 | $ | 77,094,034 | $ | 76,654,428 | $ | 123,044,854 | ||||||||||||
Nitrogen Fertilizer | 7,813,708 | 3,514,997 | 22,874,227 | 35,267,752 | 35,731,056 | |||||||||||||||||
Other | — | — | 3,076 | 333,514 | (240,848 | ) | ||||||||||||||||
Total | $ | 29,358,082 | $ | 11,202,742 | $ | 99,971,337 | $ | 112,255,694 | $ | 158,535,062 | ||||||||||||
F-35
Table of Contents
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year | 62-Day Period | 304-Day Period | 174-Day Period | 233-Day Period | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Capital expenditures | ||||||||||||||||||||||
Petroleum | $ | 489,083 | $ | — | $ | 11,267,244 | $ | 10,790,042 | $ | 42,107,751 | ||||||||||||
Nitrogen fertilizer | 324,679 | — | 2,697,852 | 1,434,921 | 2,017,385 | |||||||||||||||||
Other | — | — | 195,184 | 31,830 | 1,046,998 | |||||||||||||||||
Total | $ | 813,762 | $ | — | $ | 14,160,280 | $ | 12,256,793 | $ | 45,172,134 | ||||||||||||
Reorganization expenses — | ||||||||||||||||||||||
Impairment of property, plant, and equipment | ||||||||||||||||||||||
Petroleum | $ | 3,950,519 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Nitrogen fertilizer | 5,688,107 | — | — | — | — | |||||||||||||||||
Other | — | — | — | — | — | |||||||||||||||||
Total | $ | 9,638,626 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Total assets | ||||||||||||||||||||||
Petroleum | $ | 145,861,715 | $ | 664,870,240 | ||||||||||||||||||
Nitrogen Fertilizer | 83,561,149 | 425,333,621 | ||||||||||||||||||||
Other | (265,527 | ) | 131,344,042 | |||||||||||||||||||
Total | $ | 229,157,337 | $ | 1,221,547,903 | ||||||||||||||||||
Goodwill | ||||||||||||||||||||||
Petroleum | $ | — | $ | 42,806,422 | ||||||||||||||||||
Nitrogen Fertilizer | — | 40,968,463 | ||||||||||||||||||||
Other | — | — | ||||||||||||||||||||
Total | $ | — | $ | 83,774,885 | ||||||||||||||||||
F-36
Table of Contents
(17) | Major Customers and Suppliers |
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year | 62-Day Period | 304-Day Period | 174-Day Period | 233-Day Period | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Petroleum | ||||||||||||||||||||||
Customer A | 89 | % | 10 | % | 18 | % | 17 | % | 16 | % | ||||||||||||
Customer B | 3 | % | 25 | % | 10 | % | 5 | % | 6 | % | ||||||||||||
Customer C | 1 | % | 18 | % | 17 | % | 17 | % | 15 | % | ||||||||||||
Customer D | — | — | 8 | % | 14 | % | 17 | % | ||||||||||||||
Customer E | 1 | % | 9 | % | 15 | % | 11 | % | 11 | % | ||||||||||||
94 | % | 62 | % | 68 | % | 64 | % | 65 | % | |||||||||||||
Nitrogen Fertilizer | ||||||||||||||||||||||
Customer F | 66 | % | 48 | % | 24 | % | 16 | % | 10 | % | ||||||||||||
Customer G | 0 | % | 0 | % | 5 | % | 9 | % | 10 | % | ||||||||||||
66 | % | 48 | % | 29 | % | 25 | % | 20 | % | |||||||||||||
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year | 62-Day Period | 304-Day Period | 174-Day Period | 233-Day Period | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Supplier A | 28 | % | 32 | % | 68 | % | 77 | % | 69 | % | ||||||||||||
Original Predecessor | Immediate Predecessor | Successor | ||||||||||||||||||||
Year | 62-Day Period | 304-Day Period | 174-Day Period | 233-Day Period | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
December 31, | March 2, | December 31, | June 23, | December 31, | ||||||||||||||||||
2003 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||
Supplier | 1 | % | 2 | % | 3 | % | 3 | % | 3 | % | ||||||||||||
F-37
Table of Contents
Pro Forma | ||||||||||||
Successor | Successor | Successor | ||||||||||
December 31, | June 30, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(unaudited) | (unaudited) | |||||||||||
(note 3) | ||||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 64,703,524 | $ | 127,867,055 | $ | — | ||||||
Accounts receivable, net of allowance for doubtful accounts of $275,188 and $354,904, respectively | 71,560,052 | 63,504,465 | ||||||||||
Inventories | 154,275,818 | 179,658,465 | ||||||||||
Prepaid expenses and other current assets | 14,709,309 | 15,208,697 | ||||||||||
Deferred income taxes | 31,059,748 | 46,419,549 | ||||||||||
Total current assets | 336,308,451 | 432,658,231 | — | |||||||||
Property, plant, and equipment, net of accumulated depreciation | 772,512,884 | 859,664,720 | ||||||||||
Intangible assets | 1,008,547 | 823,502 | ||||||||||
Goodwill | 83,774,885 | 83,774,885 | ||||||||||
Deferred financing costs | 19,524,839 | 17,867,958 | ||||||||||
Other long-term assets | 8,418,297 | 11,353,121 | ||||||||||
Total assets | $ | 1,221,547,903 | $ | 1,406,142,417 | $ | — | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of long-term debt | $ | 2,235,973 | $ | 2,224,807 | $ | — | ||||||
Revolving debt | — | — | ||||||||||
Accounts payable | 87,914,833 | 109,844,255 | ||||||||||
Personnel accruals | 10,796,896 | 7,428,667 | ||||||||||
Accrued taxes other than income taxes | 4,841,234 | 5,186,288 | ||||||||||
Accrued income taxes | 4,939,614 | 11,294,389 | ||||||||||
Payable to swap counterparty | 96,688,956 | 150,506,479 | ||||||||||
Deferred revenue | 12,029,987 | 1,554,313 | ||||||||||
Other current liabilities | 8,831,937 | 4,915,415 | ||||||||||
Total current liabilities | 228,279,430 | 292,954,613 | — | |||||||||
Long-term liabilities: | ||||||||||||
Long-term debt, less current portion | 497,201,527 | 506,091,909 | ||||||||||
Accrued environmental liabilities | 7,009,388 | 6,083,488 | ||||||||||
Deferred income taxes | 209,523,747 | 198,758,629 | ||||||||||
Payable to swap counterparty | 160,033,333 | 218,462,243 | ||||||||||
Other long-term liabilities | — | 1,471,269 | ||||||||||
Total long-term liabilities | 873,767,995 | 930,867,538 | — | |||||||||
Management voting common units subject to redemption | 4,172,350 | 12,553,450 | ||||||||||
Less: note receivable from management unitholder | (500,000 | ) | (350,000 | ) | ||||||||
Total management voting common units subject to redemption, net | 3,672,350 | 12,203,450 | — | |||||||||
Members’ equity: | ||||||||||||
Voting common units | 114,830,560 | 168,206,669 | ||||||||||
Management nonvoting override units | 997,568 | 1,910,147 | ||||||||||
Total members’ equity | 115,828,128 | 170,116,816 | — | |||||||||
PRO FORMA STOCKHOLDERS’ EQUITY | ||||||||||||
Stockholders’ equity: | ||||||||||||
Common stock, $0.01 par value, shares authorized; shares issued and outstanding | ||||||||||||
Additional paid-in capital | ||||||||||||
Retained earnings | ||||||||||||
Total pro forma stockholders’ equity | ||||||||||||
Commitments and contingencies | ||||||||||||
Total liabilities and equity | $ | 1,221,547,903 | $ | 1,406,142,417 | $ | — | ||||||
F-38
Table of Contents
Immediate | |||||||||||||||||
Predecessor | Successor | ||||||||||||||||
174 Days Ended | 49 Days Ended | Six Months Ended | |||||||||||||||
June 23, | June 30, | June 30, | |||||||||||||||
2005 | 2005 | 2006 | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Net sales | $ | 980,706,261 | $ | 49,692,475 | $ | 1,550,566,629 | |||||||||||
Cost of goods sold | 850,037,564 | 62,526,529 | 1,315,084,162 | ||||||||||||||
Gross profit (loss) | 130,668,697 | (12,834,054 | ) | 235,482,467 | |||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative expenses | 18,413,003 | 757,946 | 20,622,332 | ||||||||||||||
Total operating expenses | 18,413,003 | 757,946 | 20,622,332 | ||||||||||||||
Operating income (loss) | 112,255,694 | (13,592,000 | ) | 214,860,135 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense | (7,801,821 | ) | (955,583 | ) | (22,335,620 | ) | |||||||||||
Interest income | 511,687 | 2,150 | 1,683,157 | ||||||||||||||
Loss on derivatives | (7,664,725 | ) | (151,780,732 | ) | (126,462,043 | ) | |||||||||||
Loss on extinguishment of debt | (8,093,754 | ) | — | — | |||||||||||||
Other income (expense) | (762,616 | ) | 1,304 | (262,864 | ) | ||||||||||||
Total other income (expense) | (23,811,229 | ) | (152,732,861 | ) | (147,377,370 | ) | |||||||||||
Income (loss) before provision for income taxes | 88,444,465 | (166,324,861 | ) | 67,482,765 | |||||||||||||
Income tax expense (benefit) | 36,047,516 | (56,076,520 | ) | 25,725,556 | |||||||||||||
Net income (loss) | $ | 52,396,949 | $ | (110,248,341 | ) | $ | 41,757,209 | ||||||||||
Unaudited Pro Forma Information (Note 3) | |||||||||||||||||
Basic and diluted earnings per common share | $ | — | |||||||||||||||
Basic and diluted weighted average common shares outstanding | — |
F-39
Table of Contents
Management Voting Common | Note Receivable | |||||||||||||||||||
Units Subject to Redemption | from Management | Total | ||||||||||||||||||
Units | Dollars | Unit Holder | Dollars | |||||||||||||||||
For the six months ended June 30, 2006 | ||||||||||||||||||||
Balance at December 31, 2005 | 227,500 | $ | 4,172,350 | $ | (500,000 | ) | $ | 3,672,350 | ||||||||||||
Payment of note receivable | — | 150,000 | 150,000 | |||||||||||||||||
Adjustment to fair value for management common units | 8,013,120 | — | 8,013,120 | |||||||||||||||||
Net income allocated to management common units | 367,980 | — | 367,980 | |||||||||||||||||
Balance at June 30, 2006 | 227,500 | $ | 12,553,450 | $ | (350,000 | ) | $ | 12,203,450 | ||||||||||||
Management | Management | |||||||||||||||||||||||||||
Nonvoting Override | Nonvoting Override | |||||||||||||||||||||||||||
Voting Common Units | Operating Units | Value Units | Total | |||||||||||||||||||||||||
Units | Dollars | Units | Dollars | Units | Dollars | Dollars | ||||||||||||||||||||||
For the six months ended June 30, 2006 | ||||||||||||||||||||||||||||
Balance at December 31, 2005 | 23,588,500 | $ | 114,830,560 | 919,630 | $ | 602,381 | 1,839,265 | $ | 395,187 | $ | 115,828,128 | |||||||||||||||||
Issuance of 2,000,000 common units for cash | 2,000,000 | 20,000,000 | — | — | 20,000,000 | |||||||||||||||||||||||
Recognition of share-based compensation expense related to override units | — | 573,848 | 338,731 | 912,579 | ||||||||||||||||||||||||
Adjustment to fair value for management common units | (8,013,120 | ) | — | — | (8,013,120 | ) | ||||||||||||||||||||||
Net income allocated to management common units | 41,389,229 | — | — | — | 41,389,229 | |||||||||||||||||||||||
Balance at June 30, 2006 | 25,588,500 | $ | 168,206,669 | 919,630 | $ | 1,176,229 | 1,839,265 | $ | 733,918 | $ | 170,116,816 | |||||||||||||||||
F-40
Table of Contents
Immediate | |||||||||||||
Predecessor | Successor | ||||||||||||
174 Days Ended | 49 Days Ended | Six Months Ended | |||||||||||
June 23, | June 30, | June 30, | |||||||||||
2005 | 2005 | 2006 | |||||||||||
(unaudited) | (unaudited) | ||||||||||||
Cash flows from operating activities: | |||||||||||||
Net income (loss) | $ | 52,396,949 | $ | (110,248,341 | ) | $ | 41,757,209 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||
Depreciation and amortization | 1,128,005 | 914,595 | 24,022,108 | ||||||||||
Provision for doubtful accounts | (190,468 | ) | 285,514 | 79,716 | |||||||||
Amortization of deferred financing costs | 812,166 | 53,119 | 1,664,316 | ||||||||||
Loss on extinguishment of debt | 8,093,754 | — | — | ||||||||||
Loss on disposition of fixed assets | — | — | 437,952 | ||||||||||
Share-based compensation | 3,985,991 | 75,478 | 912,579 | ||||||||||
Changes in assets and liabilities, net of effect of acquisition: | |||||||||||||
Accounts receivable | (11,334,177 | ) | (2,399,054 | ) | 7,975,871 | ||||||||
Inventories | (59,045,550 | ) | 15,442,988 | (25,382,647 | ) | ||||||||
Prepaid expenses and other current assets | (937,543 | ) | (3,450,145 | ) | (594,392 | ) | |||||||
Other long-term assets | 3,036,659 | 12,561 | (2,990,407 | ) | |||||||||
Accounts payable | 16,124,794 | 2,911,211 | (3,179,621 | ) | |||||||||
Accrued income taxes | 4,503,574 | 371,747 | 6,354,775 | ||||||||||
Deferred revenue | (9,073,050 | ) | (22,651 | ) | (10,475,674 | ) | |||||||
Other current liabilities | 1,254,196 | 2,915,659 | (6,939,698 | ) | |||||||||
Payable to swap counterparty | — | 127,220,262 | 112,246,434 | ||||||||||
Accrued environmental liabilities | (1,553,184 | ) | — | (925,900 | ) | ||||||||
Other long-term liabilities | (297,105 | ) | — | 1,471,269 | |||||||||
Deferred income taxes | 3,803,937 | (56,448,266 | ) | (26,124,919 | ) | ||||||||
Net cash provided by (used in) operating activities | 12,708,948 | (22,365,323 | ) | 120,308,971 | |||||||||
Cash flows from investing activities: | |||||||||||||
Cash paid for acquisition of Immediate Predecessor, net of cash acquired | — | (685,125,669 | ) | — | |||||||||
Capital expenditures | (12,256,793 | ) | (352,385 | ) | (86,174,655 | ) | |||||||
Net cash used in investing activities | (12,256,793 | ) | (685,478,054 | ) | (86,174,655 | ) | |||||||
Cash flows from financing activities: | |||||||||||||
Revolving debt payments | (343,449 | ) | (10,000,000 | ) | — | ||||||||
Revolving debt borrowings | 492,308 | 25,686,016 | — | ||||||||||
Proceeds from issuance of long-term debt | — | 500,000,000 | 10,000,000 | ||||||||||
Principal payments on long-term debt | (375,000 | ) | — | (1,120,785 | ) | ||||||||
Payment of deferred financing costs | — | (23,645,890 | ) | — | |||||||||
Issuance of members’ equity | — | 225,635,000 | 20,000,000 | ||||||||||
Payment of note receivable | — | — | 150,000 | ||||||||||
Distribution of members’ equity | (52,211,493 | ) | — | — | |||||||||
Net cash provided by (used in) financing activities | (52,437,634 | ) | 717,675,126 | 29,029,215 | |||||||||
Net increase (decrease) in cash and cash equivalents | (51,985,479 | ) | 9,831,749 | 63,163,531 | |||||||||
Cash and cash equivalents, beginning of period | 52,651,952 | — | 64,703,524 | ||||||||||
Cash and cash equivalents, end of period | $ | 666,473 | $ | 9,831,749 | $ | 127,867,055 | |||||||
Supplemental disclosures | |||||||||||||
Cash paid for income taxes | $ | 27,040,000 | $ | — | $ | 45,495,700 | |||||||
Cash paid for interest | $ | 7,287,351 | $ | — | $ | 24,712,898 | |||||||
Non-cash investing and financing activities: | |||||||||||||
Accrual of construction in progress additions | $ | 25,109,043 | |||||||||||
Contributed capital through Leiber tax savings | $ | 728,724 | $ | — | $ | — |
F-41
Table of Contents
(1) | Basis of Presentation |
(2) | Organization and Nature of Business and the Acquisitions |
F-42
Table of Contents
Assets acquired | ||||
Cash | $ | 666,473 | ||
Accounts receivable | 37,328,997 | |||
Inventories | 156,171,291 | |||
Prepaid expenses and other current assets | 4,865,241 | |||
Intangibles, contractual agreements | 1,322,000 | |||
Goodwill | 83,774,885 | |||
Other long-term assets | 3,837,647 | |||
Property, plant, and equipment | 750,910,245 | |||
Total assets acquired | $ | 1,038,876,779 | ||
Liabilities assumed | ||||
Accounts payable | $ | 47,259,070 | ||
Other current liabilities | 16,017,210 | |||
Current income taxes | 5,076,012 | |||
Deferred income taxes | 276,888,816 | |||
Other long-term liabilities | 7,843,529 | |||
Total liabilities assumed | $ | 353,084,637 | ||
Cash paid for acquisition of Immediate Predecessor | $ | 685,792,142 | ||
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Historical | Pro Forma | |||||||
(non-GAAP) | ||||||||
six months ended June 30, 2005 | $ | (57,851 | )(1) | $ | (73,290 | ) |
(1) | Reflects the sum of the results of operations for the periods ended June 23, 2005 and June 30, 2005. |
(3) | Unaudited Pro Forma Information |
(4) | Members’ Equity |
F-44
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(5) | Inventories |
Successor | ||||||||
December 31, | June 30, | |||||||
2005 | 2006 | |||||||
(unaudited) | ||||||||
Finished goods | $ | 58,513 | $ | 55,078 | ||||
Raw materials and catalysts | 47,437 | 85,436 | ||||||
In-process inventories | 33,397 | 16,588 | ||||||
Parts and supplies | 14,929 | 22,556 | ||||||
$ | 154,276 | $ | 179,658 | |||||
(6) | Commitments and Contingent Liabilities |
Operating | Unconditional | |||||||
Leases | Purchase Obligations | |||||||
Six months ending December 31, 2006 | $ | 1,734,379 | $ | 12,479,277 | ||||
Year ending December 31, 2007 | 3,771,560 | 23,982,825 | ||||||
Year ending December 31, 2008 | 3,665,278 | 19,676,401 | ||||||
Year ending December 31, 2009 | 2,906,968 | 19,645,325 | ||||||
Year ending December 31, 2010 | 1,596,818 | 17,253,845 | ||||||
Year ending December 31, 2011 | 857,494 | 15,683,927 | ||||||
Thereafter | 108,063 | 138,353,408 | ||||||
$ | 14,640,560 | $ | 247,075,008 | |||||
F-45
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F-46
Table of Contents
Amount | ||||
Six months ending December 31, 2006 | $ | 608 | ||
Year ending December 31, 2007 | 1,737 | |||
Year ending December 31, 2008 | 904 | |||
Year ending December 31, 2009 | 493 | |||
Year ending December 31, 2010 | 341 | |||
Year ending December 31, 2011 | 341 | |||
Thereafter | 6,001 | |||
Undiscounted total | 10,425 | |||
Less amounts representing interest at 5.22% | 3,017 | |||
Accrued environmental liabilities at June 30, 2006 | $ | 7,408 | ||
F-47
Table of Contents
(7) | Derivative Financial Instruments |
F-48
Table of Contents
Period Covered | Amount | Interest Rate | ||||||
June 30, 2006 to March 31, 2007 | 375 million | 4.038 | % | |||||
March 31, 2007 to June 30, 2007 | 325 million | 4.038 | % | |||||
June 30, 2007 to March 31, 2008 | 325 million | 4.195 | % | |||||
March 31, 2008 to March 31, 2009 | 250 million | 4.195 | % | |||||
March 31, 2009 to March 31, 2010 | 180 million | 4.195 | % | |||||
March 31, 2010 to June 30, 2010 | 110 million | 4.195 | % |
(8) | Related Party Transactions |
F-49
Table of Contents
(9) | Business Segments |
F-50
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Immediate Predecessor | Successor | ||||||||||||
174-Day Period | 49-Day Period | Six Months | |||||||||||
Ended | Ended | Ended | |||||||||||
June 23, | June 30, | June 30, | |||||||||||
2005 | 2005 | 2006 | |||||||||||
(unaudited) | (unaudited) | ||||||||||||
Net sales | |||||||||||||
Petroleum | $ | 903,802,983 | $ | 46,646,714 | $ | 1,457,663,348 | |||||||
Nitrogen Fertilizer | 79,347,843 | 3,158,276 | 95,632,021 | ||||||||||
Other | (2,444,565 | ) | (112,515 | ) | (2,728,740 | ) | |||||||
Total | $ | 980,706,261 | $ | 49,692,475 | $ | 1,550,566,629 | |||||||
Depreciation and amortization | |||||||||||||
Petroleum | $ | 770,728 | $ | 590,036 | $ | 15,612,029 | |||||||
Nitrogen Fertilizer | 316,446 | 323,815 | 8,384,377 | ||||||||||
Other | 40,831 | 744 | 25,702 | ||||||||||
Total | $ | 1,128,005 | $ | 914,595 | $ | 24,022,108 | |||||||
Operating income (loss) | |||||||||||||
Petroleum | $ | 76,654,428 | $ | (13,298,086 | ) | $ | 178,023,767 | ||||||
Nitrogen Fertilizer | 35,267,752 | (270,113 | ) | 37,065,026 | |||||||||
Other | 333,514 | (23,801 | ) | (228,658 | ) | ||||||||
Total | $ | 112,255,694 | $ | (13,592,000 | ) | $ | 214,860,135 | ||||||
Capital expenditures | |||||||||||||
Petroleum | $ | 10,790,042 | $ | 339,821 | $ | 76,791,026 | |||||||
Nitrogen fertilizer | 1,434,921 | 8,661 | 7,605,735 | ||||||||||
Other | 31,830 | 3,903 | 1,777,894 | ||||||||||
Total | $ | 12,256,793 | $ | 352,385 | $ | 86,174,655 | |||||||
Total assets | |||||||||||||
Petroleum | $ | 741,525,912 | |||||||||||
Nitrogen Fertilizer | 424,625,981 | ||||||||||||
Other | 214,881,481 | ||||||||||||
Total | $ | 1,381,033,374 | |||||||||||
Goodwill | |||||||||||||
Petroleum | $ | 42,806,422 | |||||||||||
Nitrogen Fertilizer | 40,968,463 | ||||||||||||
Other | — | ||||||||||||
Total | $ | 83,774,885 | |||||||||||
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Table of Contents
(10) | Major Customers and Suppliers |
Immediate | |||||||||||||
Predecessor | Successor | ||||||||||||
174-Day Period | 49-Day Period | Six Months | |||||||||||
Ended | Ended | Ended | |||||||||||
June 23, | June 30, | June 30, | |||||||||||
2005 | 2005 | 2006 | |||||||||||
Petroleum | |||||||||||||
Customer A | 17 | % | 16 | % | 2 | % | |||||||
Customer B | 5 | % | 4 | % | 6 | % | |||||||
Customer C | 17 | % | 25 | % | 17 | % | |||||||
Customer D | 14 | % | 18 | % | 14 | % | |||||||
Customer E | 11 | % | 11 | % | 10 | % | |||||||
64 | % | 74 | % | 49 | % | ||||||||
Nitrogen Fertilizer | |||||||||||||
Customer F | 16 | % | 25 | % | 5 | % | |||||||
Customer G | 9 | % | 0 | % | 4 | % | |||||||
Customer H | 8 | % | 14 | % | 6 | % | |||||||
33 | % | 39 | % | 15 | % | ||||||||
Immediate | |||||||||||||
Predecessor | Successor | ||||||||||||
174-Day Period | 49-Day Period | Six Months | |||||||||||
Ended | Ended | Ended | |||||||||||
June 23, | June 30, | June 30, | |||||||||||
2005 | 2005 | 2006 | |||||||||||
Supplier A | 77 | % | 37 | % | 1 | % | |||||||
Supplier B | — | — | 66 | % | |||||||||
77 | % | 37 | % | 67 | % | ||||||||
F-52
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F-1 |
Table of Contents
Item 13. | Other Expenses of Issuance and Distribution. |
SEC registration fee | $ | 32,100.00 | ||
NASD filing fee | 30,500.00 | |||
listing fee | ||||
Accounting fees and expenses | ||||
Legal fees and expenses | ||||
Printing and engraving expenses | ||||
Blue Sky qualification fees and expenses | ||||
Transfer agent and registrar fees and expenses | ||||
Miscellaneous expenses | ||||
Total | $ | |||
Item 14. | Indemnification of Directors and Officers. |
• | for any breach of the director’s duty of loyalty to the Registrant or its stockholders; | |
• | for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; | |
• | under section 174 of the Delaware General Corporation law regarding unlawful dividends and stock purchases; or | |
• | for any transaction for which the director derived an improper personal benefit. |
• | the Registrant is required to indemnify its directors and officers to the fullest extend permitted by the Delaware General Corporation Law, subject to very limited exceptions; | |
• | the Registrant may indemnify its other employees and agents to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions; | |
• | the Registrant is required to advance expenses, as incurred, to its directors and officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions; |
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• | the Registrant may advance expenses, as incurred, to its employees and agents in connection with a legal proceeding; and | |
• | the rights conferred in the Bylaws are not exclusive. |
Item 15. | Recent Sales of Unregistered Securities. |
Item 16. | Exhibits and Financial Statement Schedules. |
Number | Exhibit Title | |||
1 | .1* | Form of Underwriting Agreement. | ||
3 | .1* | Certificate of Incorporation of CVR Energy, Inc. | ||
3 | .2* | Bylaws of CVR Energy, Inc. | ||
4 | .1* | Specimen Common Stock Certificate. | ||
5 | .1* | Form of opinion of Fried, Frank, Harris, Shriver & Jacobson, LLP. | ||
10 | .1* | Amended and Restated First Lien Credit and Guaranty Agreement, dated as of June 29, 2006, among Coffeyville Resources, LLC and the other parties thereto. | ||
10 | .2* | Second Lien Credit and Guaranty Agreement, dated as of June 24, 2005, as amended. | ||
10 | .3* | First Lien Pledge and Security Agreement, dated as of June 24, 2005 and amended as of July 8, 2005, among Coffeyville Resources, LLC, CL JV Holdings, LLC, Coffeyville Pipeline, Inc., Coffeyville Refining and Marketing, Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc., Coffeyville Terminal, Inc., Coffeyville Resources Pipeline, LLC, Coffeyville Resources Refining & Marketing, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, Coffeyville Resources Crude Transportation, LLC and Coffeyville Resources Terminal, LLC, as grantors, and Credit Suisse, Cayman Islands Branch, as collateral agent. |
II-2
Table of Contents
Number | Exhibit Title | |||
10 | .4* | Second Lien Pledge and Security Agreement, dated as of June 24, 2005 and amended as of July 8, 2005, among Coffeyville Resources, LLC, CL JV Holdings, LLC, Coffeyville Pipeline, Inc., Coffeyville Refining and Marketing, Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc., Coffeyville Terminal, Inc., Coffeyville Resources Pipeline, LLC, Coffeyville Resources Refining & Marketing, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, Coffeyville Resources Crude Transportation, LLC and Coffeyville Resources Terminal, LLC, as grantors, and Wachovia Bank, National Association, as collateral agent. | ||
10 | .5* | Swap agreements with J. Aron & Company, dated June 16, 2005. | ||
10 | .6* | Amended and RestatedOn-Site Product Supply Agreement dated as of June 1, 2005, between The BOC Group, Inc. and Coffeyville Resources Nitrogen Fertilizers, LLC. | ||
10 | .7* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and John J. Lipinski. | ||
10 | .8* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and Stanley A. Riemann. | ||
10 | .9* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and Kevan A. Vick. | ||
10 | .10* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and Wyatt E. Jernigan. | ||
10 | .11* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and James T. Rens. | ||
10 | .12* | Separation and Consulting Agreement dated as of November 21, 2005, by and between Coffeyville Resources, LLC and Philip L. Rinaldi. | ||
10 | .13* | Crude Oil Supply Agreement, dated as of December 23, 2005, between J. Aron & Company and Coffeyville Resources Refining and Marketing, LLC. | ||
10 | .14* | Pipeline Construction, Operation and Transportation Commitment Agreement, dated February 11, 2004, as amended, between Plains Pipeline, L.P. and Coffeyville Resources Refining & Marketing, LLC. | ||
10 | .15* | Electric Services Agreement dated January 13, 2004, between Coffeyville Resources Nitrogen Fertilizers, LLC and the City of Coffeyville, Kansas. | ||
21 | .1* | List of Subsidiaries of CVR Energy, Inc. | ||
23 | .1 | Consent of KPMG LLP. | ||
23 | .2* | Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included in Exhibit 5.1). | ||
24 | .1 | Power of Attorney (included on the signature page to the Registration Statement). |
* | To be filed by amendment. |
Item 17. | Undertakings. |
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II-4
Table of Contents
By: | /s/ John J. Lipinski |
Signature | Title | Date | ||||
/s/ John J. Lipinski John J. Lipinski | Chief Executive Officer, President and Director (principal executive officer) | September 26, 2006 | ||||
/s/ James T. Rens James T. Rens | Chief Financial Officer (Principal Financial and Accounting Officer) | September 26, 2006 | ||||
/s/ Wesley Clark Wesley Clark | Director | September 26, 2006 | ||||
/s/ Scott Lebovitz Scott Lebovitz | Director | September 26, 2006 | ||||
/s/ George E. Matelich George E. Matelich | Director | September 26, 2006 | ||||
/s/ Stanley de J. Osborne Stanley de J. Osborne | Director | September 26, 2006 | ||||
/s/ Kenneth A. Pontarelli Kenneth A. Pontarelli | Director | September 26, 2006 |
II-5
Table of Contents
Number | Exhibit Title | |||
1 | .1* | Form of Underwriting Agreement. | ||
3 | .1* | Certificate of Incorporation of CVR Energy, Inc. | ||
3 | .2* | Bylaws of CVR Energy, Inc. | ||
4 | .1* | Specimen Common Stock Certificate. | ||
5 | .1* | Form of opinion of Fried, Frank, Harris, Shriver & Jacobson, LLP. | ||
10 | .1* | Amended and Restated First Lien Credit and Guaranty Agreement, dated as of June 29, 2006, among Coffeyville Resources, LLC and the other parties thereto. | ||
10 | .2* | Second Lien Credit and Guaranty Agreement, dated as of June 24, 2005, as amended. | ||
10 | .3* | First Lien Pledge and Security Agreement, dated as of June 24, 2005 and amended as of July 8, 2005, among Coffeyville Resources, LLC, CL JV Holdings, LLC, Coffeyville Pipeline, Inc., Coffeyville Refining and Marketing, Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc., Coffeyville Terminal, Inc., Coffeyville Resources Pipeline, LLC, Coffeyville Resources Refining & Marketing, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, Coffeyville Resources Crude Transportation, LLC and Coffeyville Resources Terminal, LLC, as grantors, and Credit Suisse, Cayman Islands Branch, as collateral agent. | ||
10 | .4* | Second Lien Pledge and Security Agreement, dated as of June 24, 2005 and amended as of July 8, 2005, among Coffeyville Resources, LLC, CL JV Holdings, LLC, Coffeyville Pipeline, Inc., Coffeyville Refining and Marketing, Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc., Coffeyville Terminal, Inc., Coffeyville Resources Pipeline, LLC, Coffeyville Resources Refining & Marketing, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, Coffeyville Resources Crude Transportation, LLC and Coffeyville Resources Terminal, LLC, as grantors, and Wachovia Bank, National Association, as collateral agent. | ||
10 | .5* | Swap agreements with J. Aron & Company, dated June 16, 2005. | ||
10 | .6* | Amended and RestatedOn-Site Product Supply Agreement dated as of June 1, 2005, between The BOC Group, Inc. and Coffeyville Resources Nitrogen Fertilizers, LLC. | ||
10 | .7* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and John J. Lipinski. | ||
10 | .8* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and Stanley A. Riemann. | ||
10 | .9* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and Kevan A. Vick. | ||
10 | .10* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and Wyatt E. Jernigan. | ||
10 | .11* | Employment Agreement dated as of July 12, 2005, by and between Coffeyville Resources, LLC and James T. Rens. | ||
10 | .12* | Separation and Consulting Agreement dated as of November 21, 2005, by and between Coffeyville Resources, LLC and Philip L. Rinaldi. | ||
10 | .13* | Crude Oil Supply Agreement, dated as of December 23, 2005, between J. Aron & Company and Coffeyville Resources Refining and Marketing, LLC. | ||
10 | .14* | Pipeline Construction, Operation and Transportation Commitment Agreement, dated February 11, 2004, as amended, between Plains Pipeline, L.P. and Coffeyville Resources Refining & Marketing, LLC. |
Table of Contents
Number | Exhibit Title | |||
10 | .15* | Electric Services Agreement dated January 13, 2004, between Coffeyville Resources Nitrogen Fertilizers, LLC and the City of Coffeyville, Kansas. | ||
21 | .1* | List of Subsidiaries of CVR Energy, Inc. | ||
23 | .1 | Consent of KPMG LLP. | ||
23 | .2* | Consent of Fried, Frank, Harris, Shriver & Jacobson, LLP (included in Exhibit 5.1). | ||
24 | .1 | Power of Attorney (included on the signature page to the Registration Statement). |
* | To be filed by amendment |