Document wrMjRLVZ4v6Eo138vgbno3GqD

I CHAMPLIN PETROLEUM COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Celanese Corporation) Accountants' Report Consolidated Financial Statements - December 31, 1967 V PEAT. MARWICK. MITCHELL & CO. CERTIFIED PUBLIC ACCOUNTANTS Co.Peat, Marwick, Mitcheix & . CERTIFIED PUBLIC ACCOUNTANTS 1400 ONE MAIN PLACE DALLAS, TEXAS- T32SO The Board of Directors Champ 1 in Petroleum Company: We have examined the consolidated balance sheet of Champlin Petroleum Company and subsidiaries, a wholly-owned subsidiary of Celanese Corporation, as of December 31, 1967 and the related state ment 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 rec ords and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and statement of consolidated income and retained income present fairly the financial position of Champlin Petroleum Company and subsidiaries at December 31, 1967 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles appJLied on a basis consistent with that of the preceding year. Pc&t, January 30, 1968 CHAHPLIN PETROLEUM COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Celanese Corporation) Statement of Consolidated Income and Retained .Income Year ended December 31, 1967 with comparative figures for 1966 Sales Operating costs: Costs excluding items listed below Selling and administrative Depreciation, depletion and amortization (note 3) Dry holes and surrendered leases Total operating costs Operating income Interest and other income Operating and other income Provision for income taxes (note 4) Net income Retained income at beginning of year Cash dividend Retained income at end of year Net income per common share 1967 1966 (Thousands of dollars except per share amounts) $ 99,859 92,807 52,828 12,081 12,385 3,532 80,826 19,033 779 19,812 5,300 14,512 19,954 34,466 6,481 $ 27,985 $ 323.59 46,386 11,350 11,690 3,876 73,302 .19,505 556 20,061 5,600 14,461 11,466 25,927 5,973 19,954 322.45 See accompanying notes to consolidated financial statements. CHAMPLIN PETROLEUM COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Celanese Corporation) Notes to Consolidated Financial Statements December 31v 1967 .(I) Principles of consolidation The 1967 consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Harbor-Service Stations, Inc., Midland Gasoline Corporation, Star Oil Company and Cycler Oil Company. These insignificant subsidiaries were not consolidated prior to 1967. All material intercompany accounts and transactions have been eliminated. (2).Inventories Inventories of crude oil and refined products are stated at average cost, which is less than market and does not include depreciation, depletion and amortization of property, plant and equipment. As of December 31, 1967 and 1966, the inventories were classified as follows: Crude oil and refined products Materials and supplies, at average cost 1967 1966 (Thousands of dollars) $ 7,214 6,832 2,020 $ 9,234 2,002 8,834 (3) Property, plant and equipment Allowances for depreciation, depletion and amortization of producing oil properties and depreciation of producing gas properties are provided on a modified straight-line method over asset lives ranging from 1 to 15 years. Allowances for depletion and amortization of producing gas prop erties are provided on the unit-of-production method determined by reference to periodic estimates of the gas reserves of the respective properties. Producing oil and gas properties aggregated $150,512,000 in 1967 and $147,242,000 in 1966. The remaining major classes of property, plant and equipment are depreciated on a modified straight-line method as follows: 2 CHAMPLIN PETROLEUM COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Celanese Corporation) Notes to Consolidated Financial Statements, Continued (3) Property, plant and equipment, cont. Refinery Gas plants Marketing facilities Pipelines Assets, at cost 1967 1966 (Thousands of dollars) Years $ 23,783 32,416 41,345 15,311 23,374 31,247 36,187 14,791 10 15 5-20 10 Nonproducing leasehold and royalty costs aggregated $9,560,000 in 1967 and $8,209,000 in 1966. (4) Income taxes Significant variations in the relationship between the provision for Federal income taxes and income before taxes arise primarily because of the deduc tions for tax purposes of intangible development costs and the excess of allowable depletion over cost depletion. Tax allocation accounting has been applied to all other timing differences. 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. The Company will join with its parent in the filing of a consolidated Federal income tax return for. 1967. The policy of the Company is to accrue its share of the income taxes payable and to make periodic remittances to Celanese Corporation. The provision for income taxes is as follows : 1967 . 1966 (Thousands of dollars) Current Deferred $ 5,261 39 $5,300 5,506 94 5,600 3 CHAKPLIN PETROLEUM COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Celanese Corporation) Notes to Consolidated Financial Statements, Continued (5) Pension and retirement plans The Company has a pension plan and a retirement plan covering substantially all of its employees over 29-1/2 years of age. Charges to operations for both plans aggregated $1,150,000 in 1967 and $980,000 in 1966, 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.