1. CITGO Petroleum Corporation Sheryll Dean ACG2021 Section 0H1 & 008
Annual Report
CITGO Petroleum Corporation
Sheryll Dean
ACG2021 Section 0H1 & 008

2. Executive Summary
Citgo is a refining company. They refine crude oil and transformed this in a variety of products which includes gasoline, diesel, fuel oil, asphalt, etc. They evaluate the price of the crude oil and then the cost of the refining to get the final price of their products. The problem with this kind of company is that they faced some problems because the volatile market price, this is caused by the change in the price crude, weather problems, or government regulations which can increase or decrease Citgo’s company. The last 2 years were excellent for Citgo as a result of a high utilization rate of refining capacity excellent safety performance and favorable market conditions.

3. Part A. Introduction Name of chief executive: Felix Rodriguez.
Location of Home office: 1293 Eldridge Pkwy Houston, TX
Ending date of latest fiscal year: 31 December 2004
Principal products and services: Citgo provides petroleum products as jet fuel, diesel fuel, heating oils, lubricants and waxes, asphalts, petrochemicals and Industrial products.
Main geographic area of activity: Throughout the US and in some Latin American markets including Brazil, Ecuador and Mexico.

4. Part A Audit Report
The Auditors are: KPMG LLP and DELOITTE & TOUCHE LLP, Tulsa-Oklahoma
The auditors said that all of the information in the financial statements is present correctly

5. Stock Market Information
Company’s Stock: it is $1.00 par value but the company’s common stock is not traded on any market. All of the Citgo’ s stock is held by PDV America.
Dividend per Share: Data do not available. On 2004 Citgo paid $400 million dividend to PDV America

6. Part B. Industry Situation and Company Plans
Citgo petroleum Corporation is doing well the past two years have been increasing their income. The last year they paid $400 million in dividends. Also The change in technology help Citgo to increase their profits. They estimate to spend $1.1 billion in capital between 2005 and 2009 to increase the quality of their products.

7. Part C. Income Statement
The format is more like a single step where all revenues and incomes are listed first.
As we see in the following data Citgo had an increase in their revenues in The company was not affected for the hurricanes and also the increase in the fuel prices help the company to increase their profits.
*Data in US millions
Year
Gross profit
Income from operations
Net income
2003
825.4
529.8
438.8
2004
1260.3
932.4
625.0

8. Part C. Balance Sheet
The accounts in the balance sheet maintain stable over the two years, The account that most changed was the asset.
Year Assets= Liabilities Stockholders equity
2003 7,273,493 4,772,009 2,501,484
2004 7,643,672 4,921,240 2,722,432

9. Statement of Cash Flows
For 2003 the cash flows from operation were more than the net income , but in 2004 the cash flows were less than net income .
The company is growing through investing the last year the company increase their investing activities. One of the principles investing for the company was LYONDELL-CITGO Refining.
Citgo’s primary source of financing is the pay of long terms loans which is due 2001 in a term 11-3/8% and pay in dividends to PDV America.
Over the two years the cash used has been increasing for financing activities. For operating and investing activities the cash maintain the same. Also Citgo has sufficient cash, available borrowing capacity and access to accounts receivable sales facility.

10. Part D. Accounting Policies
Revenue Recognition: Revenue 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

11. Part D. Accounting Policies
They Also talk about:
Description of business
Principles of consolidation
Estimates, Risks and Uncertainties
Impairment of long lived asset
Supply and market activities
Excise taxes
Inventories
Restricted cash
Refinery Maintenance
Environmental Expenditures
Income Taxes
New accounting standards

12. Part D. Accounting Policies
Topics of the notes to the financial statements:
1- Significant Account policies
2- Refinery Agreements
3- Investment in LYONDELL-CITGO LP
4-Related Party Transactions
5-Accounts Receivable
6-Inventories
7- Property plant and equipment
8- Investments in affiliate
9- Long term debt and financing arrangements
10- Employee benefits plans
11- Commitments and contingencies
12- Leases
13- Fair value information
14- Insurance recoveries
15 – Corporate Headquarters Relocation
16- Subsequent events

13. Part E Financial Analysis Profitability Ratios
Ratios for the past two years:
Profit Margin: % %
Asset Turnover: % %
Return On Assets: % %
Return on Equity: % %

14. Financial Analysis Liquidity Ratios
Working capital: , ,319
Current Ratios: times times
Inventory Turnover: times times
Average days’ inventory on hand: 13 days both years
* For the others ratios Citgo do not have the data