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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 4, 2002
COMMISSION FILE NO. 1-14501
PENNZOIL-QUAKER STATE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0200625
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
PENNZOIL PLACE, P.O. BOX 2967
HOUSTON, TEXAS 77252-2967
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: (713) 546-4000
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Item 5. Other Events
Pennzoil-Quaker State Company ("PQS") is restating its financial results for the
quarters ended September 30, June 30 and March 31, 2001, for each quarter in the
year ended December 31, 2000, and for the years ended December 31, 2000 and
1999.
As a result of this restatement, net income of PQS for the years ended December
31, 2000 and 1999 was reduced by $1.6 million ($.02 per share) and $0.6 million
($0.0 per share), respectively, while net income for the quarters ended
September 30, June 30, and March 31, 2001 was reduced by $0.6 million ($.01 per
share), $0.1 million ($0.0 per share), and $ 0.4 million ($0.0 per share),
respectively. The restatement does not affect reported cash flow or cash flows
from operations.
The restatement results from an error in the consolidated financial statements
of Excel Paralubes ("Excel"), in which PQS and Conoco Inc. ("Conoco") are equal
partners. Excel operates a base oil processing facility located adjacent to
Conoco's refinery in Lake Charles, Louisiana. The facility is capable of
producing over 20,000 barrels per day of high-quality base oils, the base
ingredient in finished lubricants. Conoco operates the plant with support
positions staffed primarily by Conoco. PQS relies on Conoco for financial and
operating data relevant to Excel's operations. Under a co-products sale and
purchase agreement, certain co-products produced at an adjacent Conoco facility
are allocated between Excel Paralubes and Conoco based upon Excel's feed stream
flow rates and compositions. Excel recently determined that the measurements of
the allocation of co-products between Excel and Conoco had been in error since
the commencement of Excel's operations in 1997. The restatement is necessary as
a result of the error. Under the co-products agreement, no adjustment is
required for periods prior to 1999.
PQS accounts for its investment in Excel using the equity method. The
consolidated financial statements of Excel are audited by PriceWaterhouseCoopers
LLP and filed as part of PQS's Annual Report on Form 10-K. The reports of PQS's
auditors, Arthur Andersen LLP, relating to PQS's financial statements as of and
for the years ended December 31, 2000 and 1999 relied solely on the auditors'
reports of PriceWaterhouseCoopers LLP insofar as they related to the amounts and
disclosures included in the consolidated financial statements of Excel.
Item 7. Financial Statements
Restated financial information for the Company follows:
<Table>
<Caption>
For the quarter ended
March 31, 2001 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $273,781 $275,505
Other liabilities 388,445 392,796
Shareholders' equity 817,301 814,674
Statement of Operations
Other income, net 8,199 7,445
Income tax provision 7,095 6,756
Income from continuing operations 8,705 8,290
Income per share from
continuing operations $ 0.11 $ 0.11
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For the quarter ended
June 30, 2001 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $ 281,141 $ 283,476
Other liabilities 387,062 392,161
Shareholders' equity 798,665 795,901
Statement of Operations
Other income, net 7,389 6,641
Income tax provision (5,837) (6,448)
Income from continuing operations (2,746) (2,883)
Income per share from
continuing operations $ (0.04) $ (0.04)
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For the quarter ended
September 30, 2001 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $264,566 $266,574
Other liabilities 377,671 382,998
Shareholders' equity 802,585 799,266
Statement of Operations
Other income, net 12,640 12,412
Income tax provision 20,691 21,018
Income from continuing operations 4,618 4,063
Income per share from
Continuing operations $ 0.06 $ 0.05
</Table>
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<Table>
<Caption>
For the quarter ended
March 31, 2000 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $ 275,306 $ 275,868
Other liabilities 383,909 385,410
Shareholders' equity 944,236 943,297
Statement of Operations
Other income, net 9,275 8,670
Income tax provision (8,329) (8,569)
Income from continuing operations (1,166) (1,531)
Income per share from
Continuing operations $ (0.02) $ (0.02)
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For the quarter ended
June 30, 2000 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $258,325 $259,199
Other liabilities 373,108 375,401
Shareholders' equity 945,341 943,922
Statement of Operations
Other income, net 12,881 12,089
Income tax provision 19,968 19,656
Income from continuing operations 19,543 19,063
Income per share from
Continuing operations $ 0.25 $ 0.24
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For the quarter ended
September 30, 2000 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $239,909 $241,112
Other liabilities 372,609 375,734
Shareholders' equity 940,315 938,393
Statement of Operations
Other income, net 20,040 19,208
Income tax provision 21,525 21,196
Income from continuing operations 7,508 7,005
Income per share from
continuing operations $ 0.10 $ 0.09
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For the quarter ended
December 31, 2000 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $ 280,813 $ 282,198
Other liabilities 401,632 405,229
Shareholders' equity 823,191 820,979
Statement of Operations
Other income, net 6,656 6,184
Income tax provision (15,506) (15,688)
Income from continuing operations (19,963) (20,253)
Income per share from
continuing operations $ (0.26) $ (0.26)
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</Table>
<Table>
<Caption>
For the year ended
December 31, 2000 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $ 280,813 $ 282,198
Other liabilities 401,632 405,229
Accumulated deficit (692,372) (694,584)
Statement of Operations
Other income, net 48,852 46,151
Income tax provision 17,658 16,595
Income from continuing operations 5,922 4,284
Income per share from
continuing operations $ 0.07 0.05
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For the year ended
December 31, 1999 As previously reported As restated
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(Expressed in thousands, except per share amounts)
Balance Sheet:
Deferred income taxes $ 264,752 $ 265,074
Other liabilities 381,008 381,904
Accumulated deficit (547,385) (547,959)
Statement of Operations
Other income, net 18,125 17,229
Income tax provision 8,112 7,790
Loss from continuing operations (10,684) (11,258)
Loss per share from
continuing operations $ (0.14) $ (0.14)
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</Table>
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 thereunto duly authorized.
PENNZOIL-QUAKER STATE COMPANY
Registrant
/s/ MICHAEL J. MARATEA
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Michael J. Maratea
Vice President and Controller
February 4, 2002