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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 31, 1994
QUAKER STATE CORPORATION
(exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-2677 25-0742820
- - ------------------------ ------------------------------------
(Commission File Number) (IRS Employer Identification Number)
255 Elm Street, Oil City, PA 16301
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: 814/676-7676
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Item 2. Acquisition or Disposition of Assets.
On August 31, 1994, Quaker State completed the sale of all of the stock of
its wholly owned subsidiary Heritage Insurance Group, Inc. to General Electric
Capital Corporation for approximately $85 million, with net proceeds of $82
million paid in cash at the time of closing after satisfaction of certain
intercompany obligations. The transaction included the sale of all of the
subsidiaries of Heritage Insurance Group, Inc. The consideration paid in the
transaction was determined in accordance with a negotiated Stock Purchase
Agreement related to the transaction. The Stock Purchase Agreement also
includes indemnification of the buyer by Quaker State with respect to certain
preclosing liabilities of Heritage Insurance Group, Inc. including, among other
things, matters which constitute breaches of warranties made in the Stock
Purchase Agreement, certain employment and employee benefit plan matters, and
certain tax matters.
There is no material relationship between General Electric Capital
Corporation and Quaker State or any of Quaker State's affiliates, directors, or
officers.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b)(1) Pro Forma Consolidated Statement of Operations of Quaker State
Corporation and Subsidiaries for the fiscal year ending December 31, 1993
No Pro Forma Consolidated Statement of Operations of Quaker State
Corporation and Subsidiaries for the six month period ending June 30,
1994 is included in this current report on Form 8-K because the
operations of Heritage Insurance Group, Inc. were accounted for as
discontinued operations in the financial statements included in Quaker
State's quarterly report on Form 10-Q for the quarter ended June 30, 1994.
Pro Forma Consolidated Balance Sheet for Quaker State Corporation and
Subsidiaries as of June 30, 1994.
(c) Exhibits:
2. Stock Purchase Agreement dated as of May 12, 1994 Among Quaker
State Corporation, QS Holding Company, and General Electric Capital
Corporation With Respect to all of the Outstanding Capital Stock of
Heritage Insurance Group, Inc., filed as Exhibit 2 to Form 10-Q for
the period ending June 30, 1994 and incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 15, 1994 QUAKER STATE CORPORATION
----------------------- (Registrant)
By: /s/ Herbert M. Baum
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Herbert M. Baum, Chairman and
Chief Executive Officer
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PRO FORMA FINANCIAL INFORMATION
On August 31, 1994 Quaker State Corporation sold 100% of the stock in its
wholly owned Heritage Insurance Group subsidiary to GE Capital Corporation for
$85,000,000. The following pro forma financial statements should be read in
conjunction with the historical financial statements and other financial
information of Quaker State Corporation appearing in its 1993 Annual Report on
Form 10-K and its Quarterly Report on Form 10-Q for the quarter ended June 30,
1994.
PRO FORMA CONSOLIDATED BALANCE SHEET
The following unaudited Pro Forma Consolidated Balance Sheet of Quaker State
Corporation and Subsidiaries at June 30, 1994 has been adjusted to give effect
to the sale of Heritage as though such sale had occurred on June 30, 1994.
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Quaker State Corporation and Subsidiaries
Pro Forma Consolidated Balance Sheet
June 30, 1994
(Unaudited)
(Dollars in Thousands, Except Share Data)
Quaker State Heritage
Corporation Ins. Group Adjustments Pro Forma
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ASSETS
Current assets:
Cash and cash equivalents $ 3,063 $ $82,000 (1) $ 89,437
4,184 (2)
190 (3)
Accounts and notes receivable, less allowance of
$2,430 at 6/30/94 63,154 (17)(3) 63,137
Inventories 45,285 45,285
Deferred income taxes 18,496 18,496
Other current assets 16,811 2,570 (4) 19,008
(365)(6)
(8)(3)
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Total current assets 146,809 88,554 235,363
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Property, plant and equipment, net of accumulated
depreciation and depletion of $351,403 at 6/30/94 221,355 221,355
Other assets 80,026 80,026
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Total assets other than insurance 448,190 88,554 536,744
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Insurance assets
Investments 194,688 (194,688)
Cash 5,704 (5,704)
Premiums and other receivables 59,662 (59,662)
Deferred insurance acquisition costs 60,521 (60,521)
Other assets 19,344 (19,344)
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Total insurance assets 339,919 (339,919) -- --
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TOTAL ASSETS $788,109 $(339,919) $88,554 $536,744
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LIABILITIES
Current liabilities:
Accounts payable $ 36,825 $ $ $ 36,825
Accrued liabilities 73,148 4,184 (2) 84,082
2,570 (4)
2,695 (5)
1,320 (7)
165 (3)
Debt payable within one year 152 152
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Total current liabilities 110,125 10,934 121,059
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Long-term debt, less debt payable within one year 51,161 51,161
Other long-term liabilities 171,550 171,550
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Total liabilities other than insurance 332,836 10,934 343,770
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Insurance liabilities
Unearned premiums 219,032 (219,032)
Policy claims 30,133 (30,133)
Due to reinsurance companies 4,550 (4,550)
Other liabilities 10,057 (10,057)
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Total insurance liabilities 263,772 (263,772) -- --
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STOCKHOLDERS' EQUITY
Capital stock $1.00 par value; authorized shares,
37,500,000, issued shares, 27,332,050 at 6/30/94 27,332 27,332
Treasury stock, 6,696 shares, at cost (92) (92)
Additional capital 64,146 64,146
Retained earnings 102,076 377 (9) 103,549
1,096 (8)
Cumulative foreign currency translation adjustment (661) (661)
Unearned compensation (1,300) (1,300)
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Total stockholders' equity 191,501 -- 1,473 192,974
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $788,109 $(263,772) $12,407 $536,744
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See accompanying Notes to Pro Forma Consolidated Balance Sheet
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NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
The Pro Forma Balance Sheet as of June 30, 1994 gives effect to the following
pro forma adjustments:
To reflect the sale of stock of Heritage Insurance Group (HIG) and
resulting gain:
(1) Proceeds of sale in cash $82,000
(2) Payment for HIG portion of 1993 federal taxes 4,184
(3) Payment for intercompany transactions 190
(4) To record receivable for HIG portion for 1994 federal taxes 2,570
(5) To record Quaker State Corporation tax liability associated
with sale 2,695
(6) To expense prepaid costs associated with sale 365
(7) To record closing costs associated with sale 1,320
(8) Income recorded by Quaker State for the months of July
and August 1,096
(9) Net gain from sale 377
The $85,000,000 sale price was settled by $82,000,000 in cash paid by GE
Capital to Quaker State and $3,000,000 paid to Heritage which represented
the amount of intercompany indebtedness from Quaker State to HIG.
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PRO FORMA FINANCIAL INFORMATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
The following unaudited Pro Forma Consolidated Statement of Operations of
Quaker State Corporation and Subsidiaries for the year ended December 31, 1993
presents the historical results of Quaker State Corporation as though such
sale had occurred on January 1, 1993.
Heritage was classified as a discontinued operation at June 30, 1994 and as a
result, the Consolidated Statement of Operations filed in Quaker State's second
quarter 1994 10-Q presents the Insurance Segment as a discontinued operation.
The unaudited Pro Forma Consolidated Statement of Operations does not purport
to be indicative of the results which actually would have occurred if the
acquisition had been consummated on January 1, 1993 or which may occur in the
future.
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Quaker State Corporation and Subsidiaries
Pro Forma Statement of Operations
December 31, 1993
(Unaudited)
(Dollars in Thousands, Except Share Data)
Quaker State Heritage
Corporation Ins. Group Adjustments Pro Forma
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REVENUES
Sales and operating revenues $628,336 $ $ $628,336
Insurance revenues 130,830 (130,830) 0
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759,166 (130,830) 628,336
Other, net 8,292 8,292
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767,458 (130,830) 636,628
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COSTS AND EXPENSES
Cost of sales and operating costs 429,453 429,453
Insurance contract and benefit costs 103,693 (103,693) 0
Selling, general and administrative 184,115 (24,048) 160,067
Depreciation, depletion and amortization 28,758 28,758
Interest 5,287 5,287
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751,306 (127,741) 623,565
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INCOME FROM CONTINUING OPERATIOS BEFORE INCOME TAX 16,152 (3,089) 13,063
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Provision for income taxes 2,450 (286) 2,736
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INCOME FROM CONTINUING OPERATIONS $ 13,702 $ (3,375) $ $ 10,327
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PER SHARE:
INCOME FROM CONTINUING OPERATIONS PER SHARE $.50 $.38
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Weighted average capital and equivalent
shares outstanding 27,234 27,234
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QUAKER STATE CORPORATION
EXHIBIT LIST
The following Exhibit is required to be filed with this current report on
Form 8-K.
EXHIBIT NO. AND DOCUMENT
2. Stock Purchase Agreement dated as of May 12, 1994 among Quaker State
Corporation, QS Holding Company and General Electric Capital Corporation
with respect to all of the Outstanding Capital Stock of Heritage Insurance
Group, Inc., filed as Exhibit 2 to Form 10-Q for the period ending
June 30, 1994 and incorporated herein by reference.