1
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): November 3, 1997
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Quaker State Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-2677 25-0742820
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(State of incorporation) (Commission File No.) (IRS Employer ID No,)
225 E. John Carpenter Freeway, Irving, Texas 75062
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(Address of principal executive offices) (Zip Code)
(972) 868-0400
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, If Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 29, 1997, Quaker State Corporation (the "Registrant" or
"Quaker State") and its wholly owned subsidiary Quaker State Investment
Corporation ("QSIC") entered into a Stock Purchase Agreement (the "Agreement")
to sell all of the shares of stock of QSIC's wholly owned subsidiary,
Truck-Lite Company, Inc. ("Truck-Lite"), to Truck-Lite Acquisition Corporation,
a subsidiary of Penske Capital Partners LLC (the "Purchaser"). Truck-Lite is
a manufacturer and marketer of vehicular lighting products. The sale was
concluded on November 3, 1997. The consideration for the transaction was
approximately $82 million in cash (subject to certain possible adjustments) and
was arrived at through arm's length negotiations.
No material relationship between the Purchaser and the Registrant, or any of its
affiliates, officers and directors existed prior to the transaction.
The description of the transaction contained herein is qualified in its
entirety by reference to the Agreement, which is attached hereto as Exhibit 2
and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial statements
are filed with this report:
Pro Forma Condensed Consolidated Statements of Operations of Quaker
State Corporation and Subsidiaries for the year ended December 31,
1996 and the nine months ended September 30, 1997.
Pro Forma Condensed Consolidated Balance Sheet of Quaker State
Corporation and Subsidiaries as of September 30, 1997.
Notes to Pro Forma Condensed Consolidated Balance Sheet and Statements
of Operations.
On June 28, 1996 and October 2, 1996, Quaker State acquired all the stock of
Blue Coral, Inc. ("Blue Coral") and Medo Industries, Inc. ("Medo"),
respectively. The acquisitions have been accounted for under the purchase
method and,
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accordingly, the operating results of Blue Coral and Medo have been included in
the consolidated financial statements of Quaker State from the date of
acquisition.
The adjustments presented in the Pro Forma statements are preliminary estimates
and subsequent revisions may be necessary. The Pro Forma financial statements
should be read in conjunction with the historical financial statements and
other financial information of Blue Coral and Medo appearing elsewhere in
Quaker State's Form 8-K/A-1, filed September 11, 1996, Form 8-K/A-1, filed
December 17, 1996, and the historical financial statements and other financial
information of Quaker State appearing in its 1996 Annual Report on Form 10-K
and its quarterly reports on Form 10-Q for the quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited Pro Forma Condensed Consolidated Statements of Operations of
Quaker State Corporation and Subsidiaries for the nine months ended September
30, 1997 and the year ended December 31, 1996 present the combined historical
results of Quaker State adjusted for the sale of Truck-Lite, purchase of Blue
Coral (prior to the acquisition date of June 28, 1996), purchase of Medo (prior
to the acquisition date of October 2, 1996) and pro forma results as though such
sale or purchases had occurred on January 1, 1996. The unaudited Pro Forma
Condensed Consolidated Statements of Operations do not purport to be indicative
of the results which actually would have occurred if the acquisitions and sale
had been consummated on January 1, 1996 or which may occur in the future.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The unaudited Pro Forma Condensed Consolidated Balance Sheet of Quaker State
Corporation and Subsidiaries as of September 30, 1997 presents the combined
financial position of Quaker State adjusted for the sale of Truck-Lite as of
September 30, 1997.
(c) Exhibits.
Item No. Description
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2 Stock Purchase Agreement dated October 29, 1997 among Quaker State Corporation, Quaker State
Investment Corporation and Truck-Lite Acquisition Corporation with list of omitted schedules, filed
herewith.
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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.
QUAKER STATE CORPORATION
(Registrant)
DATE: November 17, 1997
By: /s/ CONRAD A. CONRAD
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Conrad A. Conrad
Vice Chairman and
Chief Financial Officer
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QUAKER STATE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
Quaker Blue Less:
State(1) Coral(2) NicSand(3) Adjustments Pro Forma Medo(4) Adjustments Pro Forma
- -------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
REVENUES
Sales and operating revenues $ 1,200,229 $ 55,962 $ 2,282 $ 1,253,909 $ 54,293 $ 1,308,202
Other, net 7,470 -- -- 7,470 -- 7,470
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 1,207,699 55,962 2,282 1,261,379 54,293 1,315,672
COSTS AND EXPENSES
Cost of sales and operating costs 821,530 30,523 1,474 850,579 26,498 877,077
Selling, general and administrative 296,221 20,485 562 316,144 14,867 $ (2,498) (5) 328,513
Depreciation and amortization 38,578 696 21 $ 1,232 (6) 40,485 1,306 2,840 (6) 44,631
Interest 12,640 917 -- 704 (7) 14,261 674 6,609 (7) 21,544
Unusual items 14,507 14,507 14,507
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES 1,183,476 52,621 2,057 1,936 1,235,976 43,345 6,951 1,286,272
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Pretax income (loss) from
continuing operations 24,223 3,341 225 (1,936) 25,403 10,948 (6,951) 29,400
Provision for income taxes 10,500 264 109 298 (8) 10,953 312 1,287 (8) 12,552
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
CONTINUING OPERATIONS $ 13,723 $ 3,077 $ 116 $(2,234) $ 14,450 $ 10,636 $ (8,238) $ 16,848
===============================================================================================================================
Weighted average
shares outstanding 34,465 156 (9) 34,621
===============================================================================================================================
Per share:
Income from
continuing operations $ 0.40 $ 0.49
===============================================================================================================================
The accompanying notes are an integral part of these statements.
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QUAKER STATE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996, CONTINUED
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
Less:
Pro Forma Truck-Lite(10) Adjustments Pro Forma
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(IN THOUSANDS EXCEPT PER SHARE DATA)
REVENUES
Sales and operating revenues $ 1,308,202 $ 86,725 $ 1,221,477
Other, net 7,470 (204) 7,674
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TOTAL REVENUES 1,315,672 86,521 1,229,151
COSTS AND EXPENSES
Cost of sales and operating costs 877,077 61,618 815,459
Selling, general and administrative 328,513 15,403 313,110
Depreciation and amortization 44,631 2,797 41,834
Interest 21,544 31 (4,826)(11) 16,687
Unusual items 14,507 14,507
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TOTAL COSTS AND EXPENSES 1,286,272 79,849 (4,826) 1,201,597
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Pretax income (loss) from
continuing operations 29,400 6,672 4,826 27,554
Provision for income taxes 12,552 2,600 1,930 (12) 11,882
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INCOME (LOSS) FROM
CONTINUING OPERATIONS 16,848 $ 4,072 $ 2,896 $ 15,672
=====================================================================================================
Weighted average
shares outstanding 34,621 34,621
=====================================================================================================
Per share:
Income from
continuing operations $ 0.49 $ 0.45
=====================================================================================================
The accompanying notes are an integral part of these statements.
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QUAKER STATE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
Quaker
State(1) Adjustments Pro Forma
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(IN THOUSANDS EXCEPT PER SHARE DATA)
REVENUES
Sales and operating revenues $ 916,983 $ 916,983
Other, net 4,551 4,551
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TOTAL REVENUES 921,534 921,534
COSTS AND EXPENSES
Cost of sales and operating costs 590,311 590,311
Selling, general and administrative 247,032 247,032
Depreciation and amortization 30,303 30,303
Interest 20,251 $ (3,619) (11) 16,632
Unusual item 4,667 4,667
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TOTAL COSTS AND EXPENSES 892,564 (3,619) 888,945
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Pretax income from continuing operations 28,970 3,619 32,589
Provision for income taxes 11,800 1,448 (12) 13,248
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INCOME FROM CONTINUING OPERATIONS $ 17,170 $ 2,171 $ 19,341
=========================================================================================================
Weighted average shares outstanding 35,256 35,256
=========================================================================================================
Per share:
Income from continuing operations $ 0.49 $ 0.55
=========================================================================================================
The accompanying notes are an integral part of these statements.
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QUAKER STATE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(IN THOUSANDS)
Quaker Less:
State(1) Truck-Lite(10) Adjustments Pro Forma
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(IN THOUSANDS EXCEPT SHARE DATA)
ASSETS
Current assets:
Cash and cash equivalents $ 16,706 $ 16,706
Accounts and notes receivable, net of allowance 190,206 190,206
Inventories 92,507 92,507
Other current assets 22,233 22,233
Net assets of discontinued operations 34,428 $ 34,428 --
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Total current assets 356,080 34,428 321,652
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Property, plant and equipment, net of
accumulated depreciation 234,251 234,251
Other assets 531,372 531,372
=============================================================================================================
TOTAL ASSETS $ 1,121,703 $ 34,428 $ 1,087,275
=============================================================================================================
LIABILITIES
Current liabilities:
Accounts payable $ 75,624 $ 75,624
Accrued liabilities 80,700 $ 19,972 (13) 100,672
Installments on long-term debt, payable within one year 1,198 1,198
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Total current liabilities 157,522 19,972 177,494
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Long-term debt, less current installments 458,717 (82,000)(11) 376,717
Other long-term liabilities 188,711 188,711
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Total liabilities 804,950 (62,028) 742,922
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STOCKHOLDERS' EQUITY
Capital stock 36,852 36,852
Additional capital 194,653 194,653
Retained earnings 114,012 27,600 (14) 141,612
Treasury Stock, at cost (26,924) (26,924)
Other, net (1,840) (1,840)
- -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 316,753 27,600 344,353
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,121,703 $ (34,428) $ 1,087,275
=============================================================================================================
The accompanying notes are an integral part of these statements.
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Explanation of adjustments to the Pro Forma Consolidated Statements of
Operations for the year ended December 31, 1996 and the nine months ended
September 30, 1997 and the Balance Sheet as of September 30, 1997 in connection
with the sale of Truck-Lite and the acquisitions of Blue Coral and Medo are
presented below:
(1) Quaker State's historical data represents reported results of operations
for the year ended December 31, 1996 and the nine months ended September
30, 1997 and the balance sheet as of September 30, 1997. Truck-Lite's
results of operations for the nine months ended September 30, 1997 were
presented as discontinued operations in Quaker State's September 30, 1997
Condensed Consolidated Statement of Operations.
(2) Blue Coral's historical data represents activity for the six months ended
June 28, 1996 adjusted for the sale of its interest in NicSand, Inc., on
October 31, 1996. Blue Coral's activity for the six months ended December
31, 1996 is included in Quaker State's historical data for the year ended
December 31, 1996 as this activity was subsequent to the acquisition date.
(3) To record the sale of Blue Coral's interest in NicSand, Inc. effective
October 31, 1996. Amounts represents activity from June 28, 1996 (the date
of acquisition) through September 30, 1996, which are reflected in Quaker
State's historical data for the year ended December 31, 1996.
(4) Medo's historical data represents activity for the nine months ended
September 30, 1996.
(5) To record a reduction in Medo's salaries as a result of the acquisition for
the year ended December 31, 1996 and to reverse bonuses paid by Medo in
September 1996, in connection with the acquisition.
(6) To record amortization of excess of purchase price over fair market value
of assets acquired by Quaker State ($82.2 million for Blue Coral and $145.9
million for Medo), for the year ended December 31, 1996. Amortization is
calculated on a straight-line basis over periods not exceeding 40 years.
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
(7) To record the net effect on interest expense of the payment of Blue Coral
and Medo indebtedness and the increase in debt due to Quaker State's
borrowings in connection with the acquisitions for the year ended December
31, 1996. Calculation of adjustment is as follows (in thousands):
Initial Blue Coral borrowing $ 71,000
Less: Cash received from sale of NicSand 9,471
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Net Blue Coral borrowings $ 61,529
Effective annual interest rate 5.710%
Number of months pro forma interest expense calculated 6
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Gross increase in interest expense $ 1,757
Less:
Blue Coral interest expense on books 917
Interest expense related to NicSand 136
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Net pro forma adjustment for Blue Coral $ 704
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Initial Medo borrowing $165,000
Effective annual interest rate 5.885%
Number of months pro forma interest expense calculated 9
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Gross increase in interest expense $ 7,283
Less: Medo interest expense on books 674
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Net pro forma adjustment for Medo $ 6,609
========
(8) To record an income tax provision (benefit) for the results of operations
of Blue Coral and Medo and the tax effect of pro forma adjustments for the
year ended December 31, 1996.
(9) To increase the number of weighted average shares outstanding due to the
acquisition of Blue Coral. Calculation is as if shares were issued January
1, 1996 and shares repurchased from former Blue Coral stockholder were
repurchased January 1, 1996.
(10) Truck-Lite's historical data represents results of operations for the year
ended December 31, 1996 and balance sheet data as of September 30, 1997.
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
(11) To record the reduction of indebtedness and related effect on interest
expense due to Quaker State's sale of Truck-Lite as of September 30, 1997,
for the year ended December 31, 1996 and the nine months ended September
30, 1997 . Calculation of adjustment is as follows (in thousands):
Proceeds from sale $82,000
Effective annual interest rate 5.885%
Number of months pro forma interest expense calculated 9
-------
Gross decrease in interest expense in 1997 $ 3,619
=======
Proceeds from sale $82,000
Effective annual interest rate 5.885%
Number of months pro forma interest expense calculated 12
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Gross decrease in interest expense in 1996 $ 4,826
=======
(12) To record the tax effect of pro forma adjustments for the year ended
December 31, 1996 and the nine months ended September 30, 1997.
(13) To accrue the estimated tax liability and other closing costs in
connection with the sale of Truck-Lite as of September 30, 1997.
(14) To adjust Retained Earnings in connection with the sale of Truck-Lite.
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EXHIBIT INDEX
Exhibit No. Description
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2 Stock Purchase Agreement dated October 29, 1997 among Quaker State Corporation, Quaker State
Investment Corporation and Truck-Lite Acquisition Corporation with list of omitted schedules,
filed herewith.