Document p7N5pEd44JGXVJp63RXZ2LOd

s, ll Jf ie .ts .ot .on ing ,ces by rty, uces able olic* tion. rears olicy lefits. arket policy ration, on for it by itract year ng in ..inal PONTIAC REFINING CORP. (a wholly-owned subsidiary of Celanese Corporation) Accountants' Report Financial Statements - December 31, 1968 PEAT, MARWICK, MITCHELL & CO. CERTIFIED PUBLIC ACCOUNTAN-'; Peat, Marwick. Mitchell & Co. - CERTIFIED PUBLIC ACCOUNTANTS MOO ONE MAIN PLACE DA LIAS, TEXAS 15250 t The Board of Directors Pontiac Refining Corp.: We have examined the balance sheet of Pontiac Refining Corp., a wholly-owned subsidiary of Celanese Corporation, as of December 31, 1968 and the related statement of income and retained income for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and statement of income and retained income present fairly the financial position of Pontiac Refining Corp. at December 31, 1968 and the results of its opera tions for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding period. January 24, 1969 PONTIAC REFINING CORP. (a wholly-owned subsidiary o Celanese Corporation) Statement of Income and Retained Income Year ended December 31, 1968 with figures for seven months ended December 31, 1967 Sales Operating costs: Costs excluding items listed below Selling and administrative Depreciation Total operating costs Operating income Other income Operating and other income Provision for income taxes (note 3) Net income Retained income at beginning of year Cash dividend Retained income at end of year Net income per common share 1968 Seven months ended December 31, 1967 (Thousands of dollars except per share amounts) $ 88,644 47,936 81,473 451 455 82,379 6,265 106 6,371 3,268 3,103 11,817 14,920 2,679 $ 12,241 $ 15,515 44,275 227 295 44,797 3,139 11 3,150 1,581 1,569 11.248 12,817 1,000 11,817 7,845 i ll ( See accompanying notes to financial statements. PONTIAC REFINING CORP. (a wholly-owned subsidiary of Celanese Corporation) Notes to Financial Statements December 31, 1968 (1) Inventories Inventories of refined products ($2,242,000) and supplies ($1,240,000) at December 31, 1968 are stated at the lower of cost (average) or market. Inventories of crude oil ($1,268,000) at December 31, 1968 are stated at the lower of cost (first-in, first-out) or market. (2) Property, plant and equipment Allowances for depreciation of property, plant and equipment are provided on-the straight-line method over an estimated useful life of 10 years, except for transportation equipment which has an estimated useful, life of 4 years. The major classes of property, plant and equipment are as follows: Assets, at cost 1968 1967 (Thousands of dollars) Plant, lines and dock facilities Land and rights-of-way Transportation equipment Other $ 26,198 716 124 ' 396 $ 27,434 25,762 716 120 311 26,909 (3) Income taxes The Company will join with its parent in the filing of a consolidated Federal income tax return for 1968. The policy of the Company is to accrue its share of the income taxes payable and to make periodic remit tances to Celanese Corporation. The policy of the Company is to take the investment tax credit into income as a reduction in the provision for income taxes over the estimated useful lives of the related assets. Deferred Federal income taxes arise from accelerated depreciation used for tax purposes, partially offset by provision for refinery turnarounds taken for financial purposes. The provision for income taxes is as follows: 2 PONTIAC REPINING CORP. (a wholly-owned subsidiary of Celanese Corporation) Notes to Financial Statements, Continued (3) Income taxes, cont. Current Deferred 1968 Seven months ended December 31, 1967 (Thousands of dollars) $ 3,360 (92) $ 3,268 1,446 135 1,581 (4) Sales and crude supply contracts Substantially all the Company's production of refined products is sold to one customer under the terms of a contract expiring in 1972. Quantities of refined products to be delivered to that customer reduce substantially in the last year of the contract. The Company purchases its supply of crude products under the terms of various contracts expiring in 1972 and 1977. (5) Retirement plans The Company has retirement plans covering substantially all employees. Charges to operations under the plans amounted to $243,000 for 1968 and $99,000 for the seven-month period ended December 31, 1967, including amortization of prior service costs over periods ranging from 10 to 15 years. The Company's policy is to fund costs accrued. Based on actuarial determinations, the plans are fully funded with respect to all vested benefits.