1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 9, 1995
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
2
QUAKER STATE CORPORATION AND SUBSIDIARIES
Item 2. Acquisition or Disposition of Assets.
On July 26, 1995, Quaker State signed a Definitive Agreement to sell
most of the assets of its Natural Gas Exploration and Production Division to
Belden & Blake Corporation of Canton, Ohio for a purchase price of
approximately $56,000,000, subject to certain adjustments. The purchase price
was determined in arm's length negotiations. This transaction was completed on
August 9, 1995, with net proceeds of $49,500,000 paid in cash at the time of
closing after estimation of certain adjustments. The sale included interests in
approximately 1,460 producing oil and gas wells, approximately 250,000 acres of
leasehold interests, approximately 250 miles of gas gathering lines, royalty
interests and gas storage rights and various inventories, equipment and rolling
stock used in oil and gas production activities. The assets sold are located in
the states of New York, Ohio, Pennsylvania and West Virginia. Final
adjustments to the purchase price are to be determined within six months of
the closing date. There is no material relationship between Quaker State and
Belden & Blake Corporation, other than purchases by Quaker State of crude oil
in the ordinary course of business.
Quaker State has either sold or is negotiating the sale, in several
transactions, of the remaining assets of the Natural Gas Exploration and
Production Division, consisting of a pipeline and timber rights. The estimated
net selling price is $19,400,000.
Item 7.
Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements - not applicable
(b) Pro Forma Financial Information
(1) Pro Forma Consolidated Statement of Operations of Quaker
State Corporation and Subsidiaries for the fiscal year ending December
31, 1994.
No Pro Forma Consolidated Statement of Operations of Quaker
State Corporation and Subsidiaries for the six-month period ending
June 30, 1995 is included in this current report on Form 8-K because
the operations of the Natural Gas Exploration and Production Division
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, 1995.
Pro Forma Consolidated Balance Sheet for Quaker State
Corporation and Subsidiaries as of June 30, 1995.
The pro forma financial statements provided do not include Quaker
State's acquisition of Slick 50, Inc. on July 11, 1995. Pro Forma
financial statements including this acquisition will be provided no
later than September 25, 1995 in a subsequent filing.
3
(c) Exhibits:
2(a) Asset Purchase Agreement dated July 26, 1995 among
Quaker State Corporation, QSE&P, Inc. and Belden & Blake
Corporation, filed as Exhibit 2 to Form 10-Q for the
quarter ending June 30, 1995 and incorporated herein by reference.
2(b) List of Omitted Exhibits and Schedules to Asset Purchase Agreement
dated July 26, 1995 among Quaker State Corporation, QSE&P, Inc. and
Belden & Blake Corporation, filed herewith.
4
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: August 21, 1995 QUAKER STATE CORPORATION
--------------- (Registrant)
BY: /s/ HERBERT M. BAUM
----------------------------
Herbert M. Baum
Chairman and
Chief Executive Officer
5
PRO FORMA FINANCIAL INFORMATION
On August 9, 1995 Quaker State Corporation sold certain
Natural Gas Exploration and Production Division assets to Belden & Blake
Corporation. Additionally, Quaker State Corporation has either sold or is
currently negotiating the sale of the remaining assets of the Natural Gas
Exploration & Production Division. 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 1994 Annual Report on Form 10-K and its Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995.
PRO FORMA CONSOLIDATED BALANCE SHEET
The following unaudited Pro Forma Consolidated Balance Sheet of Quaker
State Corporation and Subsidiaries at June 30, 1995 has been adjusted to give
effect to the sales of Natural Gas Exploration & Production Division assets as
though such sales had occurred on June 30, 1995.
6
QUAKER STATE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1995
PRO FORMA
QUAKER STATE LESS: NATURAL GAS
CORPORATION NATURAL GAS E&P PRO FORMA
AS REPORTED E&P ADJUSTMENTS CONSOLIDATED
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents $ 11,648 $ - $46,835 (a) $ 58,483
Accounts and notes receivable, less allowance of
$3,049 at 6/30/95 and $2,185 at 12/31/94. 104,920 104,920
--------------------------------------------------------------------------------------------------------------------------
Inventories
Crude oil 1,816 1,816
Finished and in-process petroleum products 45,533 45,533
Other 27,797 27,797
--------------------------------------------------------------------------------------------------------------------------
Total inventories 75,146 - - 75,146
--------------------------------------------------------------------------------------------------------------------------
Deferred income taxes 9,929 9,929
Other current assets 11,637 11,637
Discontinued operation assets 48,052 44,346 3,706
--------------------------------------------------------------------------------------------------------------------------
Total current assets 261,332 44,346 46,835 263,821
--------------------------------------------------------------------------------------------------------------------------
Property, plant, and equipment, net of accumulated
depreciation and depletion of $202,126 at 6/30/95
and $190,986 at 12/31/94. 199,962 199,962
Discontinued operation assets - -
Other assets 170,401 (11,366) 181,767
--------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $631,695 $32,980 $46,835 $645,550
==========================================================================================================================
LIABILITIES
Current liabilities:
Accounts payable $ 61,711 $ - $ - $ 61,711
Accrued liabilities 66,363 66,363
Installments on long term debt 3,314 3,314
--------------------------------------------------------------------------------------------------------------------------
Total current liabilities 131,388 - - 131,388
--------------------------------------------------------------------------------------------------------------------------
Long term debt, less payable in one year 68,471 68,471
Other long term liabilities 183,456 183,456
--------------------------------------------------------------------------------------------------------------------------
Total liabilities 383,315 - - 383,315
--------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock, $1.00 par value; authorized shares
95,000,000; issued shares, 31,513,968 at 6/30/95
and 31,517,305 shares at 12/31/94 31,514 31,514
Treasury stock, at cost 49,786 shares at 6/30/95 and
33,498 shares at 12/31/94 (690) (690)
Additional capital 120,757 120,757
Retained earnings 100,354 13,855 (a) 114,209
Cumulative foreign currency translation adjustment (488) (488)
Unearned compensation (3,067) (3,067)
--------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 248,380 - 13,855 262,235
--------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $631,695 $ - $13,855 $645,550
==========================================================================================================================
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
7
QUAKER STATE CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(Dollars in thousands)
Adjustments to the Pro Forma Consolidated Balance Sheet as of June 30, 1995 in
connection with the sale of the Quaker State Natural Gas Exploration &
Production Division are presented below:
(a) Information with regard to the sale of the assets is as follows:
Estimated sales price $ 69,251
Estimated closing costs ( 2,000)
Net book value of assets sold (44,346)
--------
Estimated book gain on the sale 22,905
Income tax provision (9,050)
--------
Net gain from sale of assets $ 13,855
========
The pro forma adjustment to cash consists of the following:
Estimated sales price $ 69,251
Estimated closing costs (2,000)
Taxes paid on gain (20,416)
--------
$ 46,835
========
8
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,
1994 presents the pro forma results of Quaker State Corporation as though such
sales had occurred on January 1, 1994. The pro forma Quaker State Corporation
column for the year ended December 31, 1994 represents pro forma information
disclosed in Note 2 of the 1994 Quaker State Corporation Annual Report.
Quaker State Exploration and Production Division was classified as a
discontinued operation at June 30, 1995 and as a result, the Consolidated
Statement of Operations filed in Quaker State's second quarter 1995 10-Q
presents the Natural Gas E&P segment as a discontinued operation.
9
QUAKER STATE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In Thousands, Except Per Share Data)
PRO FORMA
PRO FORMA LESS: NATURAL GAS
QUAKER STATE NATURAL GAS E&P PRO FORMA
CORPORATION E&P ADJUSTMENTS CONSOLIDATED
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------------------------------------------------------
REVENUES
Sales and operating revenues $ 996,393 $27,284 $4,625 (a) $973,734
Other, net 10,678 2,467 - 8,211
-------------------------------------------------------------
Total $1,007,071 $29,751 $4,625 $981,945
-------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales and operating costs 701,684 10,144 4,625 (a) $696,165
Selling, general and administrative 233,491 3,806 312 (b) 229,997
Depreciation, depletion and amortization 38,254 10,414 - 27,840
Interest 6,708 - - 6,708
-------------------------------------------------------------
Total 980,137 24,364 4,937 960,710
-------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 26,934 5,387 (312) 21,235
PROVISION FOR INCOME TAXES 9,902 883 - 9,019
------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 17,032 4,504 (312) 12,216
============================================================
PER SHARE:
Income from continuing operations $ 0.54 $ 0.39
============================================================
Weighted average shares outstanding 31,475 31,475
============================================================
10
QUAKER STATE CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(Dollars in thousands)
The adjustments to the Pro Forma Consolidated Statement of Operations
for the twelve month period ended December 31, 1994 in connection with the
sales of the Quaker State Natural Gas Exploration & Production Division assets
is presented below. The Pro Forma Quaker State Corporation column for the year
ended December 31, 1994 represents pro forma information disclosed in Note 2 of
the 1994 Quaker State Corporation Annual Report.
(a) Represents the elimination of interdivisional sales from the
Natural Gas E&P Division to Quaker State.
(b) Represents the elimination of interdivisional management fee
charged to the Natural Gas E&P Division.
11
QUAKER STATE CORPORATION
EXHIBIT LIST
The following Exhibits are required to be filed with this current report
on Form 8-K.
EXHIBIT NO. AND DOCUMENT
2(a) Asset Purchase Agreement dated July 26, 1995 among Quaker
State Corporation, QSE&P, Inc., and Belden & Blake Corporation, filed
as Exhibit 2 to Form 10-Q for the quarter ending June 30, 1995 and
incorporated herein by reference.
2(b) List of Omitted Exhibits and Schedules to Asset Purchase Agreement
dated July 26, 1995 among Quaker State Corporation, QSE&P, Inc. and
Belden & Blake Corporation, filed herewith.