EXHIBIT 12
PENNZOIL COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS--PRO FORMA
FOR THE THREE FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
MARCH 31, DECEMBER 31,
1998 1997
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(DOLLAR AMOUNT EXPRESSED IN
THOUSANDS)
Income from continuing operations................ $ 9,658 $180,255
Income tax provision............................. 2,300 124,140
Interest charges................................. 48,346 187,271
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Income before income tax provision and interest
charges......................................... $60,304 $491,666
======= ========
Fixed charges.................................... $50,377 $200,356
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DETAIL OF INTEREST AND FIXED CHARGES:
Interest charges per Consolidated Statement of
Income which includes amortization of debt
discount, expense and premium................... $43,911 $176,891
Add: portion of rental expense representative of
interest factor (1)............................. 6,466 23,465
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Total fixed charges............................ $50,377 $200,356
Less interest capitalized per Consolidated
Statement of Income............................. 2,031 13,085
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Total interest charges......................... $48,346 $187,271
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PRO FORMA ADJUSTMENTS--
PREFERRED STOCK--
Preferred dividends............................ $ 3,931 $ 15,726
Decrease in interest charges................... 2,205 8,820
REFINANCING OF EXCHANGEABLE DEBENTURES--
Decrease in interest charges................... 3,341 13,145
DISCONTINUED OPERATIONS--
Decrease in income from continuing operations.. 5,848 22,756
Decrease in income tax......................... 5,149 20,536
Decrease in portion of rental expense represen-
tative of interest factor (1)................. 4,929 18,387
Decrease in net interest charges per
Consolidated Statement of Income which
includes amortization of debt discount,
expense and premium........................... 8,538 31,584
Decrease in capitalized interest............... 255 7,441
RATIO OF EARNINGS TO FIXED CHARGES:
HISTORICAL--
Ratio of earnings to fixed charges............. 1.20 2.45
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PRO FORMA PREFERRED STOCK AND REFINANCING OF
EXCHANGEABLE DEBENTURES--
Ratio of earnings to fixed charges............. 1.24 2.53
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PRO FORMA DISCONTINUED OPERATIONS--
Ratio of earnings to fixed charges............. -- 2.70
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Amount by which fixed charges exceed earnings.. $ 815 --
======= ========
PRO FORMA PREFERRED STOCK, REFINANCING OF
EXCHANGEABLE DEBENTURES AND DISCONTINUED
OPERATIONS--
Ratio of earnings to fixed charges............. 1.02 2.82
======= ========
(1) Interest factor based on management's estimates and approximates one-third
of rental expense.
PENNZOIL COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
HISTORICAL
FOR THE TWELVE MONTHS ENDED DECEMBER
31,
---------------------------------------
1996 1995 1994 1993
-------- --------- --------- --------
Income (loss) from continuing
operations............................ $133,898 $(305,142) $(283,739) $160,236
Income tax provision (benefit)......... 35,228 (172,533) (221,355) 59,205
Interest charges....................... 200,086 217,689 497,799 199,410
-------- --------- --------- --------
Income (loss) before income tax
provision (benefit) and interest
charges............................... $369,212 $(259,986) $ (7,295) $418,851
======== ========= ========= ========
Fixed charges.......................... $210,821 $ 221,920 $ 506,826 $210,830
======== ========= ========= ========
DETAIL OF INTEREST AND FIXED CHARGES:
Interest charges per Consolidated
Statement of Income which includes
amortization of debt discount, expense
and premium........................... $188,155 $ 198,579 $ 485,668 $190,968
Add: portion of rental expense
representative of interest factor(1).. 22,666 23,341 21,158 19,862
-------- --------- --------- --------
Total fixed charges................ $210,821 $ 221,920 $ 506,826 $210,830
Less interest capitalized per
Consolidated Statement of Income...... 10,735 4,231 9,027 11,420
-------- --------- --------- --------
Total interest charges............. $200,086 $ 217,689 $ 497,799 $199,410
======== ========= ========= ========
RATIO OF EARNINGS TO FIXED CHARGES:
Ratio of earnings to fixed charges..... 1.75 -- -- 1.99
======== ========= ========= ========
Amount by which fixed charges exceed
earnings.............................. -- $ 481,906 $ 514,121 --
======== ========= ========= ========
(1) Interest factor based on management's estimates and approximates one-third
of rental expense.