1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
Mark One
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
- --- OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
TRANSITION REPORT PURSUANT TO SECTION 13 OR
- --- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- --------------------
Commission File Number 1-2677
QUAKER STATE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 25-0742820
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
225 East John Carpenter Freeway
Irving, Texas 75062
(Address of Principal Executive Offices)
(Zip Code)
(214)868-0400
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of July 31, 1996, 35,845,885 shares of Capital Stock, par value $1.00
per share, of the registrant were outstanding.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quaker State Corporation and Subsidiaries
QUARTER ENDED SIX MONTHS ENDED
----------------------------------------------------------------------
6/30/96 6/30/95 6/30/96 6/30/95
- ------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA, UNAUDITED)
REVENUES
Sales and operating revenues $ 301,829 $ 257,698 $ 580,610 $ 497,231
Other, net 2,064 1,814 4,090 5,609
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 303,893 259,512 584,700 502,840
COSTS AND EXPENSES
Cost of sales and operating costs 214,266 182,888 401,378 354,136
Selling, general and administrative 67,544 59,696 141,216 115,711
Depreciation and amortization 8,437 7,692 16,836 14,570
Interest 1,773 1,582 3,941 3,118
Unusual item - 15,800 - 15,800
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES 292,020 267,658 563,371 503,335
- ------------------------------------------------------------------------------------------------------------------------------
Pretax income (loss) from continuing operations 11,873 (8,146) 21,329 (495)
Provision for (benefit from) income taxes 4,700 (3,618) 8,450 (188)
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 7,173 (4,528) 12,879 (307)
Income from discontinued operations - 1,303 - 2,678
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 7,173 $ (3,225) $ 12,879 $ 2,371
==============================================================================================================================
PER SHARE:
Income (loss) from continuing operations $ 0.22 $ (0.14) $ 0.39 $ (0.01)
Income from discontinued operations - 0.04 - 0.09
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE $ 0.22 $ (0.10) $ 0.39 $ 0.08
==============================================================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 33,012 31,596 32,973 31,591
==============================================================================================================================
DIVIDENDS PAID PER SHARE $ 0.10 $ 0.10 $ 0.20 $ 0.20
==============================================================================================================================
The accompanying notes are an integral part of the financial statements.
1
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Quaker State Corporation and Subsidiaries
For the six months ended June 30 1996 1995
- -----------------------------------------------------------------------------------------------------------
(IN THOUSANDS, UNAUDITED)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (676) $ 2,246
- -----------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposal of property and equipment 1,607 3,587
Capital expenditures (26,207) (16,189)
Acquisition of business, net of cash acquired (70,645) -
Other, net (7,103) -
- -----------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (102,348) (12,602)
- -----------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid (6,572) (6,303)
Proceeds from long-term debt 96,532
Payments on long-term debt (11,772) (1,498)
- -----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 78,188 (7,801)
- -----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (24,836) (18,157)
Cash and cash equivalents at beginning of period 30,659 29,805
- -----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,823 $ 11,648
===========================================================================================================
The accompanying notes are an integral part of the financial statements.
2
4
CONDENSED CONSOLIDATED BALANCE SHEETS
Quaker State Corporation and Subsidiaries
6/30/96 12/31/95
- -----------------------------------------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT SHARE DATA) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 5,823 $ 30,659
Accounts and notes receivable, net 176,820 129,267
Inventories 91,825 80,284
Other current assets 40,794 36,796
- -----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 315,262 277,006
- -----------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net of
accumulated depreciation 222,361 203,259
Other assets 323,756 236,758
- -----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 861,379 $ 717,023
=================================================================================================================
LIABILITIES
Current liabilities:
Accounts payable and long-term debt payable within one year $ 75,378 $ 60,708
Accrued liabilities 97,522 84,225
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 172,900 144,933
- -----------------------------------------------------------------------------------------------------------------
Long-term debt, less debt payable within one year 188,089 118,519
Other long-term liabilities 176,913 181,416
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 537,902 444,868
- -----------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock, $1.00 par value; authorized shares 95,000,000;
issued shares, 35,845,885 at 6/30/96 and
32,824,157 at 12/31/95 35,846 32,824
Additional capital 180,583 139,068
Retained earnings 109,814 103,519
Other, net (2,766) (3,256)
- -----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 323,477 272,155
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 861,379 $ 717,023
=================================================================================================================
The accompanying notes are an integral part of the financial statements.
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SEGMENT INFORMATION
Quaker State Corporation and Subsidiaries
QUARTER ENDED SIX MONTHS ENDED
-----------------------------------------------------------
6/30/96 6/30/95 6/30/96 6/30/95
- ------------------------------------------------------------------------------------------------------------
(IN THOUSANDS, UNAUDITED)
OPERATING REVENUES
Lubricant and lubricant services $ 278,096 $ 232,875 $ 532,618 $ 445,952
Truck-Lite 22,737 23,934 46,267 49,617
Docks 996 889 1,725 1,662
- ------------------------------------------------------------------------------------------------------------
TOTAL OPERATING REVENUES $ 301,829 $ 257,698 $ 580,610 $ 497,231
============================================================================================================
OPERATING PROFITS
Lubricant and lubricant services $ 15,691 $ 9,181 $ 30,171 $ 17,014
Truck-Lite 2,011 3,581 4,021 7,343
Docks 437 276 618 481
- ------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROFITS 18,139 13,038 34,810 24,838
- ------------------------------------------------------------------------------------------------------------
Interest expense (1,773) (1,510) (3,941) (3,023)
Corporate other income 825 937 1,576 2,577
Unusual item * - (15,800) - (15,800)
General corporate expense (5,318) (4,811) (11,116) (9,087)
- ------------------------------------------------------------------------------------------------------------
PRETAX INCOME (LOSS) $ 11,873 $ (8,146) $ 21,329 $ (495)
============================================================================================================
The accompanying notes are an integral part of the financial statements.
* The restructuring charge of $15,800 includes $9,280 that relates to
lubricant and lubricant services.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quaker State Corporation and Subsidiaries (unaudited)
1. In the opinion of management of Quaker State Corporation (the company), the
accompanying financial statements include all adjustments which are
necessary for a fair statement of the results for such periods. All of
these adjustments are of a normal recurring nature. The December 31, 1995
condensed consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. These statements should be read
in conjunction with the financial statements included as part of the 1995
Annual Report on Form 10-K.
As of January 1, 1996, the company began reporting the results of its fast
lube subsidiary, Q Lube, as a component of its core lubricant and
lubricant services business. Prior to that, Q Lube had been reported as a
separate segment.
2. On June 28, 1996, the company acquired all of the stock of Blue Coral, Inc.
(Blue Coral) for $46.1 million in cash, 2,956,328 shares of capital stock
with a market value of $43.5 million and the payment of $25.2 million to
satisfy Blue Coral indebtedness outstanding prior to the closing. Blue
Coral is a leading manufacturer, marketer and distributor of high quality
automotive appearance products. The acquisition has been accounted for
under the purchase method. Accordingly, the operating results of Blue
Coral will be included in the accompanying condensed consolidated financial
statements from the date of acquisition. The purchase price allocation to
assets and liabilities is preliminary. The acquisition has resulted in a
preliminary excess of purchase price over fair market value of assets of
approximately $82.8 million recorded in the Condensed Consolidated Balance
Sheet at June 30, 1996. There are no revenues or expenses associated with
Blue Coral in the Condensed Consolidated Statement of Operations for the
quarter or six months ended June 30, 1996.
The following schedule is prepared on a pro forma basis as though Blue
Coral and Slick 50, Inc. had been acquired as of the beginning of 1995,
after including the impact of adjustments, such as amortization of
intangible assets, additional interest expense and related tax effects.
For the six months ended June 30
(in thousands except per share data) 1996 1995
--------------------------------------------------------------------------------------------------
Revenues $ 646,417 $ 601,586
Income from continuing operations $ 15,610 $ (1,266)
Income per share from continuing operations $ .43 $ (.04)
--------------------------------------------------------------------------------------------------
3. The effective tax rate for the three and six months ended June 30, 1996 of
40% for continuing operations is higher than the 35% federal rate due to
the impact of state and foreign taxes and nondeductible intangible asset
amortization.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quaker State Corporation and Subsidiaries (unaudited)
4. Inventories are stated at the lower of cost or market. Cost is determined
on the last-in, first-out (LIFO) basis for all crude oil, the majority of
company refined petroleum and vehicular lighting products; and on the
first-in, first-out (FIFO) basis for consumer products and other
inventories. The reserve to reduce the carrying value of inventories from
FIFO basis to LIFO basis amounted to $19.6 million at June 30, 1996 and $
18.9 million at December 31, 1995. In the second quarter of 1995 certain
inventory quantities were reduced resulting in liquidations of LIFO
inventory. The effect of these liquidations was an increase in net income
of $900,000, or $.03 per share. Inventories consist of:
(in thousands) 6/30/96 12/31/95
--------------------------------------------------------------------------------------------------
Crude oil and petroleum products $ 55,203 $ 51,021
Vehicular lighting products 13,628 14,727
Automotive consumer products 13,340 5,355
Other 9,654 9,181
--------------------------------------------------------------------------------------------------
Total $ 91,825 $ 80,284
==================================================================================================
5. In December 1993, the United States commenced a lawsuit against the company
in the U.S. District Court for the Northern District of West Virginia. The
complaint alleged that the company violated the federal Resource
Conservation and Recovery Act and the federal Clean Air Act at the Congo
refinery on various dates starting in 1980 and seeks civil penalties not to
exceed $25,000 per day for each violation. A $2.9 million tentative
settlement has been reached regarding civil penalties, including
supplemental environmental projects. This settlement is provided for in
the company's current environmental reserves.
In addition, the company and certain of its subsidiaries have received
notices from the EPA and others that it is a "potentially responsible
party" relative to certain waste disposal sites identified by the EPA and
may be required to share in the cost of cleanup. The company has accrued
for all matters which are probable and can be reasonably estimated.
Quaker State-Slick 50, Inc. ("Slick 50"), a subsidiary of the company and
several Slick 50 subsidiaries have been named as defendants in four
separate proceedings alleging false, misleading, deceptive and/or
unsubstantiated advertising claims relating to Slick 50(R) engine
treatment. In July 1996, the Federal Trade Commission filed an
administrative proceeding seeking an order that the defendants cease and
desist from making certain product claims and refrain from making other
product claims without adequate substantiation. In addition, three
purported class action suits were filed in July 1996. These complaints seek
compensatory and punitive damages, recompense and injunctive relief,
attorney's fees, court costs and interest on behalf of the purported class.
The company intends to vigorously defend these lawsuits.
Contingent liabilities of an indeterminate amount exist in connection with
suits and claims arising in the ordinary course of business.
In the opinion of management, all matters discussed above are adequately
accrued for or covered by insurance, or, if not so provided for, are
without merit or the disposition is not anticipated to have a material
effect on the company's financial position; however, one or more of these
matters could have a material effect on future quarterly or annual results
of operations when resolved.
6. In April 1996, the company replaced its $45 million line of credit with a
$90 million Credit Agreement. The Credit Agreement provides for loans from
time to time not in excess of $90 million outstanding at any time, and
provides for various interest rate elections by the company. The Credit
Agreement expires April 2001.
6
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Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
The condensed consolidated financial statements, segment information and
related notes for Quaker State Corporation (the company) included in this Form
10-Q, should be read as an integral part of this analysis.
On June 28, 1996, the company acquired all of the stock of Blue Coral, Inc.
(Blue Coral) for $46.1 million in cash, 2,956,328 shares of capital stock with
a market value of $43.5 million and the payment of $25.2 million to satisfy
Blue Coral indebtedness outstanding prior to the closing. Blue Coral is a
leading manufacturer, marketer and distributor of high quality automotive
appearance products. The acquisition has been accounted for under the purchase
method. Accordingly, the operating results of Blue Coral will be included in
the accompanying consolidated financial statements from the date of
acquisition. The purchase price allocation to assets and liabilities is
preliminary. The acquisition has resulted in a preliminary excess of purchase
price over fair market value of assets of approximately $82.8 million recorded
in the Condensed Consolidated Balance Sheet at June 30, 1996. There are no
revenues or expenses associated with Blue Coral in the Condensed Consolidated
Statement of Operations for the quarter or six months ended June 30, 1996.
Effective July 1, 1996 the company will form a new consumer products segment, as
a result of combining the Blue Coral and Slick 50 operating results. Slick 50's
results are currently reported in the lubricant and lubricant services segment.
The company reported net income of $7.2 million or $.22 per share for the
quarter ended June 30, 1996, compared to a net loss of $3.2 million or $.10 per
share for the quarter ended June 30, 1995. The quarter ended June 30, 1995
included $1.3 million, or $.04 per share, of income from discontinued
operations. In addition, the quarter ended June 30, 1995 included a
restructuring charge of $15.8 million, $9.5 million after-tax. The weighted
average shares of capital stock outstanding for the quarter ended June 30, 1996
increased over 1.4 million shares compared to the same period in 1995,
primarily as a result of issuing shares in connection with the acquisitions of
Blue Coral in June 1996 and Slick 50, Inc. (Slick 50) in July 1995. Sales and
operating revenues from continuing operations were $301.8 million for the
quarter ended June 30, 1996, up $44.1 million from $257.7 million for the
quarter ended June 30, 1995. Sales and operating revenues include $23.9
million from Slick 50 for the quarter ended June 30, 1996. Operating profit
from continuing operations for the quarter ended June 30, 1996, increased 39%
to $18.1 million from $13 million for the quarter ended June 30, 1995.
Lubricant and lubricant services operating profit before the restructuring
charge was $15.7 million for the quarter ended June 30, 1996, up 71% compared
to $9.2 million for the quarter ended June 30, 1995. Revenues for the quarter
ended June 30, 1996 were $278.1 million, up $45.2 million from $232.9 million
for the quarter ended June 30, 1995. Branded and private label motor oil sales
volumes for the quarter ended June 30, 1996 increased 7% and 14%, respectively,
compared to the same quarter in 1995. Refinery product margins improved as a
result of higher sales prices for base stocks, gasoline and fuel oil. In
addition, 1995 operating results included $1.5 million of LIFO inventory profit
as a result of liquidating certain inventory quantities. Car counts for the
quarter ended June 30, 1996 were up 3% and the average ticket price was up 2%
at the company's Q Lube operations, compared to the same quarter in 1995. As
of January 1, 1996, the company began reporting the results of its fast lube
subsidiary, Q Lube, as a component of its core lubricant and lubricant
services business. Prior to that, Q Lube had been reported as a separate
segment.
Truck-Lite operating profit for the quarter ended June 30, 1996 was $2 million,
down 44% compared to $3.6 million for the quarter ended June 30, 1995.
Revenues were down $1.2 million to $22.7 million from $23.9 million for the
quarter ended June 30, 1995. These declines are attributable to Truck-Lite
changing its product mix coupled with overall industry declines in truck and
trailer builds.
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9
Management's Discussion and Analysis of Results of Operations and Financial
Condition, continued
For the quarter ended June 30, 1996, corporate income was $825,000 compared to
$937,000 for the quarter ended June 30, 1995. The decrease is primarily due to
additional interest income received in 1995. Interest expense increased for
the quarter ended June 30, 1996 as a result of the issuance of $100 million of
Notes in October 1995. Corporate expenses for the quarter ended June 30, 1996
increased to $5.3 million from $4.8 million for the same period in 1995, due to
the increased benefit and lease costs.
Net income for the six months ended June 30, 1996 was $12.9 million or $.39 per
share, compared to net income of $2.4 million or $.08 per share for the six
months ended June 30, 1995. The six months ended June 30, 1995 included $2.7
million, or $.09 per share, of income from discontinued operations. In
addition, the six months ended June 30, 1995 included a restructuring charge of
$15.8 million, $9.5 million after-tax. The weighted average shares of capital
stock outstanding for the six months ended June 30, 1996 increased over 1.3
million shares compared to the same period in 1995, primarily as a result of
issuing shares in connection with the acquisitions of Blue Coral and Slick 50.
Sales and operating revenues from continuing operations were $580.6 million for
the six months ended June 30, 1996, up $83.4 million from $497.2 million for
the six months ended June 30, 1995. Sales and operating revenues include $48.2
million from Slick 50 for the six months ended June 30, 1996. Operating profit
from continuing operations for the six months ended June 30, 1996, increased
40% to $34.8 million from $24.8 million for the six months ended June 30, 1995.
Lubricant and lubricant services operating profit before the restructuring
charge was $30.2 million for the six months ended June 30, 1996, up 77%
compared to $17 million for the six months ended June 30, 1995. Revenues for
the six months ended June 30, 1996 were $532.6 million, up $86.6 million from
$446 million for the six months ended June 30, 1995. Branded and private label
motor oil sales volumes for the six months ended June 30, 1995 increased 5% and
16%, respectively, compared to the same six month period in 1995. Refinery
product margins improved as a result of higher sales prices for base stocks,
gasoline and fuel oil. In addition, 1995 operating results included $1.5
million of LIFO inventory profits. Car counts for 1996 were up 5% and the
average ticket price was up 4% at the company's Q Lube operations as compared
to the same six month period in 1995.
Truck-Lite operating profit for the six months ended June 30, 1996 was $4
million, down 45% compared to $7.3 million for the six months ended June 30,
1995. Revenues were down $3.3 million to $46.3 million from $49.6 million for
the six months ended June 30, 1995. Truck-Lite continues to suffer from
softening of the overall automotive and truck markets. These declines are
attributable to Truck-Lite changing its product mix coupled with overall
industry declines in truck and trailer builds.
For the six months ended June 30, 1996, corporate income was $1.6 million
compared to $2.6 million for the six months ended June 30, 1995. The decrease
is primarily due to additional royalty and interest income received in 1995.
Interest expense increased for the six months ended June 30, 1996 as a result
of the issuance of $100 million of Notes in October 1995. Corporate expenses
for the six months ended June 30, 1996 increased to $11.1 million from $9.1
million for the same period in 1995, due to the increased benefit and lease
costs and higher than expected transition costs.
The effective tax rate for the quarter and six months ended June 30, 1996 of
40% for continuing operations is higher than the 35% federal rate due to the
impact of state and foreign income taxes and nondeductible intangible asset
amortization.
8
10
Management's Discussion and Analysis of Results of Operations and Financial
Condition, continued
In April 1996, the company replaced its $45 million line of credit with a $90
million Credit Agreement. The Credit Agreement provides for loans from time to
time not in excess of $90 million outstanding at any time, and provides for
various interest rate elections by the company. The Credit Agreement expires
April 2001.
Cash and cash equivalents decreased by $24.8 million over the six months ended
June 30, 1996. The decrease was comprised of $676,000 net cash used in
operations, $102.3 million net cash used in investing activities and $78.2
million net cash provided by financing activities. Cash used in operations was
impacted by additional working capital requirements and cash paid in connection
with the 1995 restructuring program.
Cash used in investing activities of $102.3 million was primarily due to the
$70.6 million cash investment in Blue Coral and $26.2 million of capital
expenditures. Cash provided by financing activities of $78.2 million was
primarily due to a cash use of $6.6 million for payment of dividends, and net
borrowings of $84.8 million, of which a substantial portion was used to
acquire Blue Coral.
On July 25, 1996 the Board of Directors of the company authorized a quarterly
dividend of $.10 per share, payable to shareholders of record as of August 15,
1996.
9
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In December 1993, the United States commenced a lawsuit against the company in
the U.S. District Court for the Northern District of West Virginia. The
complaint alleges the company violated the federal Resource Conservation and
Recovery Act and the federal Clean Air Act at the Congo refinery in Newell,
West Virginia (Congo refinery) on various dates starting in 1980 and seeks
civil penalties not to exceed $25,000 per day for each violation. A tentative
settlement has been reached setting the civil penalty amount, including
supplemental environmental projects, at $2.9 million, and the other terms and
conditions of a potential consent decree are under negotiation.
In 1994, the State of West Virginia required the company's Congo refinery to
enter into a Consent Order to control the SO2 emissions by the Congo refinery
into the New Manchester Grant Magisterial District of Hancock County (NMG),
West Virginia. This Order became effective on January 9, 1995. An inspection
was conducted on January 30, 1996 by the West Virginia Department of
Environmental Protection (WVDEP). During the inspection, alleged violations of
the January 9, 1995 Order were noted and a Notice of Violation (NOV) and Cease
and Desist Order was issued by the WVDEP on April 4, 1996. The NOV alleges
that the company failed to comply with the January 9, 1995 Order. WVDEP has
granted a stay pending settlement negotiations with the company. The company
has been told that the WVDEP may seek penalties in excess of $100,000.
Settlement discussions with the WVDEP are continuing.
Quaker State-Slick 50, Inc. ("Slick 50"), a subsidiary of the company, and
several Slick 50 subsidiaries have been named as defendants in four separate
proceedings alleging that false, misleading, deceptive and/or unsubstantiated
advertising claims were made for Slick 50(R) engine treatment. The Federal
Trade Commission filed an administrative proceeding on July 16, 1996 seeking an
order that the defendants cease and desist from making certain product claims
and refrain from making other product claims without adequate substantiation.
Irene Torres, on behalf of herself and other purchasers of Slick 50 engine
treatment between January 1, 1993 and July 16, 1996 filed a purported class
action in the 190th Judicial District Court for Harris County, Texas on July 18,
1996 alleging fraud, negligent misrepresentation and breach of warranty. Donna
Lombardi filed a purported class action on behalf of all purchasers of Slick 50
engine treatment since 1993 in the Supreme Court for Nassau County, New York on
July 19, 1996 alleging fraud under the New York General Business Laws and common
laws, and economic loss and damage as a result of misleading marketing and
advertising activities. Jorden M. Weiss filed a purported class action, on
behalf of himself and all others similarly situated, in the Supreme Court for
New York County, New York, on July 23, 1996 alleging breach of warranty and
violation of the New York General Business Law in the marketing of Slick 50
engine treatment. These complaints seek compensatory and punitive damages,
imposition of a constructive trust, recompense and injunctive relief, attorney's
fees, court costs and interest on behalf of the purported class. The company
intends to vigorously defend these lawsuits.
10
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Item 4. Submission of Matters to a Vote of Security Holders.
On May 16, 1996, Quaker State held its Annual Meeting of Stockholders, at
which four items were submitted to a vote of security holders. The first item
voted upon was the election of directors, and the following individuals were
elected as directors, with the following votes for or withheld as to each:
Name Votes For Votes Withheld
---- ---------- --------------
John D. Barr 28,598,981 599,758
Herbert M. Baum 28,570,342 628,397
Leonard M. Carroll 28,594,732 604,007
Conrad A Conrad 28,599,957 598,782
Laurel Cutler 28,585,259 613,480
C. Frederick Fetterolf 27,794,933 1,403,806
Thomas A. Gardner 28,594,128 604,611
F. William Grube 28,603,235 595,504
Forrest R. Haselton 28,595,495 603,244
Delbert J. McQuaide 28,602,134 596,605
L. David Myatt 28,600,739 598,000
Raymond A. Ross, Jr. 28,603,096 595,643
Lorne R. Waxlax 28,605,221 593,518
The second matter submitted to a vote of security holders was approval of
the 1996 Directors' Fee Plan. On this second matter, 27,367,762 shares were
voted for the proposition, 1,450,621 shares were voted against and 380,356
shares abstained.
The third matter submitted to a vote of security holders was the adoption
of an amendment to the 1994 Stock Incentive Plan to authorize the issuance
under the Plan of shares previously authorized for issuance, but not issued,
under the 1986 Stock Option Plan. On this third matter, 22,651,833 shares were
voted for the proposition, 6,178,181 shares were voted against, and 368,725
shares abstained.
The fourth matter submitted to a vote of security holders was the
ratification of the appointment of Coopers & Lybrand L.L.P. as independent
auditors for 1996. On this fourth matter, 28,777,532 shares were voted for the
proposition, 171,942 were voted against, and 134,240 shares abstained.
13
Item 6. Exhibits and Reports on Form 8-K
(a) 10. Employment contract dated June 28, 1996 between Sheldon D.
Adelman and Quaker State Corporation.
11. Computation of net income per share for the quarters and six
month periods ending June 30, 1996 and 1995, filed herewith.
27. Financial data schedule, filed herewith.
(b) A current report on Form 8-K was filed by Quaker State on June 27,
1996. Quaker State reported under item 5. the settlement of a class
action brought by Lazy Oil, Inc. in the federal district court for the
western district of Pennsylvania alleging violation of the Sherman Act
was approved by the court on June 13, 1996 and the action was
dismissed as to Quaker State. No financial statements were filed with
this report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.
QUAKER STATE CORPORATION
(Registrant)
Date October 9, 1996 By /s/ HERBERT M. BAUM
--------------- -----------------------------------
Herbert M. Baum
Chairman of the Board and
Chief Executive Officer
Date October 9, 1996 By /s/ CONRAD A. CONRAD
--------------- -----------------------------------
Conrad A. Conrad
Vice Chairman and
Chief Financial Officer
11
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QUAKER STATE CORPORATION
EXHIBIT LIST
The following Exhibits are required to be filed with this quarterly report on
Form 10-Q.
Exhibit No. and Document
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10. Employment contract dated June 28, 1996 between Sheldon D.
Adelman and Quaker State Corporation.
11. Computation of net income per share for the quarters and six
month periods ended June 30, 1996 and 1995, filed herewith.
27. Financial data schedule, filed herewith.
12