Annual Report Project

1
Annual Report Project

• CITGO Petroleum Corp.
• ACG2021.080
• Jose A. Prieto

2
Executive Summary

• CITGO is owned by PDV America, Inc., an indirect,
  wholly owned subsidiary of Petróleos de
  Venezuela, S.A, the national oil company of the
  Bolivarian Republic of Venezuela. On its 40 years
  of providing energy and refining crude oil, it is
  one of the most important refining companies of
  crude oil, and one of the largest suppliers of
  petrochemicals in the U.S.A. In addition, the
  company is capable to refine more than 1 million
  of crude oil barrels per day.
• The Companys mission is to be the worlds
  Benchmark Energy Corporation. They are trying to
  achieve this goal by efficiently and reliably
  providing the energy that fuels the worlds
  economy.
• www.citgo.com/WebOther/InvestorRelations/10k2004Fi
  nal.pdf

3
Introduction

• Chairman and Chief Executive Officer Felix
  Rodriguez
• Location of Home Office Houston, TX
• Ending date of latest fiscal year December 31,
  2004
• Principal products and services CITGO provides a
  variety of refined crude oil products including
  gasoline and other fuels, lubricants and oils,
  asphalt, and more than 600 petrochemicals and
  industrial products.
• Main geographic area of activity The companys
  first place of market is in the U.S.A. But, they
  also supply countries in Latin America such as
  Brazil, Ecuador, and Mexico.

4
Audit Report

• Name of the company independent auditors KPMG
  LLP and DELOITTE TOUCHE LLP, Tulsa-Oklahoma.
• About report of independent auditors Auditors
  responsibility is to express their opinion about
  financial statements, and at the same time, to
  express their opinion about these statement
  schedules based on the company audits. Moreover,
  auditors were in agree with the financial
  statements presented at the end of the fiscal
  year 2004.

5
Stock Market Info.

• Price of Companys Stock The Companys common
  stock is not traded on any market. Its values is
  1.00 par value. All of the Companys common
  stock is held by PDV America.
• Dividends per Share/Value This info is not
  available in the Companys annual report. What it
  is stated in the report is that on December 10,
  2004, CITGO made 400 million dividend payment to
  PDV America.

6
Industry Situation and Company Plans

• To provide the energy needed to fuel our nations
  economy, CITGO owns or operates deep conversion
  refineries strategically located in Texas,
  Louisiana, and Illinois. CITGOs network of
  state-of-the-art refineries raw energy ( in the
  form of crude oil) into the energy products
  Americans need. CITGO is estimating to spend 1.1
  billion in capital between 2005 and 2009 to
  increase net income and productivity.
• CITGO plans are being applied efficiently by
  providing energy in an extendible nationwide
  range considering the terms of important values
  such as safety, health and environment,
  integrity, respect, fairness, social
  responsibility, and competitiveness.
• The Company provide what they pay for In a
• Gallon of Regular Gasoline on December, 2004
• in the following analyses

7
Net Income

• Income statement is more likely to be in single
  step format. It shows a quarterly format per
  year of the income statement including Sales,
  costs of sales and operating expenses, gross
  margin, and net income.
• This data reflects a increase in sales and net
  income of the Company. Also, a decrease in the
  costs of sales and operating expenses.

(in thousand US)
8
Balance Sheet

• In the Companys balance sheet of the year ending
  2003 and 2004 there is no such a remarkable
  difference between assets, liabilities, and
  shareholders equity. CITGOs main goal is to
  maintain over years a balance sheet in which
  productivity is increased by lowering liabilities
  costs.
• 
  STOCKHOLDERS
• YEAR ASSETS
  LIABILITIES EQUITY

9
Statement of Cash flows

• CITGO PETROLEUM CORPORATION
• CONSOLIDATED STATEMENTS OF CASH FLOWS
• EACH OF THE THREE YEARS IN THE PERIOD ENDED
  DECEMBER 31, 2004
• (Dollars in Thousands)
• 
  
  2004
  2003 2002
• CASH FLOWS FROM OPERATING ACTIVITIES
• Net income
  
  625,003 438,774
  180,012
• Adjustments to reconcile net income to net cash
  provided by
• operating activities
• Depreciation and amortization
  
  375,213 333,626 298,686
• Provision for losses on accounts
  receivable
  12,415 15,066
  17,458
• Deferred income taxes
  
  (10,519) 159,791
  37,642
• Distributions in excess of equity in
  earnings of affiliates
  67,146 100,071 22,313
• Other adjustments
  
  9,142 18,329
  3,992
• Changes in operating assets and
  liabilities
• Accounts receivable and
  due from affiliates
  (291,141) (155,126) (40,009)
• Inventories
  
  (148,047) 73,302
  18,431
• Prepaid expenses and other
  current assets
  (49,248) 6,478 62,465
• Accounts payable and other
  current liabilities
  394,102 (68,508) 315,266

10
Statements of Cash Flow (Cont.)

• CITGO PETROLEUM CORPORATION
• CONSOLIDATED STATEMENTS OF CASH FLOWS
• EACH OF THE THREE YEARS IN THE PERIOD ENDED
  DECEMBER 31, 2004
• (Dollars in Thousands)
• 
  
  
  2004
  2003 2002
• CASH FLOWS FROM FINANCING ACTIVITIES
• Net (repayments of) proceeds from
  revolving bank loans
  
  - (279,300)
  (112,200)
• Proceeds from 6 senior notes due 2011
  
  
  248,250 -
  -
• (Payments on) proceeds from 11-3/8
  senior notes due 2011
  
  (543,355) 546,590 -
• (Payments on) proceeds from senior
  secured term loan
  
  (200,000) 200,000 -
• Repurchase of senior notes due 2006
  
  
  - (47,500)
  -
• Proceeds from (payments on) loans from
  affiliates
  
  26,100 (39,000) 39,000
• Payments on private placement senior
  notes
  
  (11,364) (11,364)
  (11,364)
• Payments of master shelf agreement notes
  
  
  (20,000) (50,000) (25,000)
• Proceeds from (payments on) taxable
  bonds
  
  55,000 (90,000)
  (31,000)
• Proceeds from (payments on) tax-exempt
  bonds
  
  126,805 (93,400) 68,502
• Payments of capital lease obligations
  
  
  (4,131) (23,601)
  (20,358)
• Repayments of other debt
  
  
  - -
  (8,305)
• Dividends paid to parent, PDV America
  
  
  (400,000) (500,795) -

11
Accounting principles

• Revenue Recognition is generated from the sale of
  refined petroleum products to bulk purchasers,
  wholesale purchasers and final consumers.
• Cash and cash equivalents consist of highly
  liquid short-term investments and bank deposits
  with initial maturities of three months or less.
• Property plant and equipment is resorted at cost,
  less accumulated depreciation. Depreciation is
  estimated useful lives of the related assets
  using the straight line method. Depreciable lives
  are generally as follows building and leaseholds
  10 to 24 years, machinery and equipment 5 to
  25 years and vehicles 3 to 10 years.
• Other principles also listed are description of
  business, principles of consideration, estimates
  and risks and uncertainties, impairment of long
  lived assets, supply and market activities,
  exercise taxes, inventories, restricted cash,
  refinery maintenance, environmental expenditures,
  income taxes, and new accounting standards.
• 
  
  (Continued)
• 
  

12
Accounting Principles

• Topics of the Notes to the Financial Statements
• Significant Account policies
• Refinery Agreements
• Investment in LYONDELL-CITGO LP
• Related Party Transactions
• Accounts Receivable
• Inventories
• Property plant and equipment
• Investments in affiliate
• Long term debt and financing arrangements
• Employee benefits plans
• Commitments and contingencies
• Leases
• Fair value information
• Insurance recoveries
• Corporate Headquarters Relocation
• Subsequent events

13
Financial AnalysisProfitability Ratios
14
Financial Analysis Liquidity Ratios
15
Financial AnalysisSolvency Ratio
16
CITGO Petroleum Corp.Presented byJose A.
Prieto