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): April 19, 2000
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
incorporation or organization) Identification No.)
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
1
Item 2. Acquisition or Disposition of Assets
Introduction
On April 7, 2000, Pennzoil-Quaker State Company (the "Company"
or "Pennzoil-Quaker State") completed the sale of its Rouseville,
Pennsylvania wax processing facilities and the related assets at the
Rouseville facility to Calumet Lubricants Company, LP ("Calumet").
Also included in the sale was Pennzoil-Quaker State's share of its
Bareco Products partnership with Baker Petrolite Corporation, a
division of Baker Hughes Incorporated. The facilities sold to
Calumet are herein referred to as the "Rouseville Facilities." The
Company received gross proceeds of $27.7 million from the sale of
the Rouseville Facilities.
SEC Requirements
Included on pages F-1 through F-3 hereof are the unaudited Pro
Forma Condensed Consolidated Financial Statements of Pennzoil-Quaker
State and subsidiaries, which include certain adjustments to the
historical consolidated financial statements of the Company and
subsidiaries to reflect the disposition of its Rouseville
Facilities.
Effects of the Disposition
Results of operations from the Rouseville Facilities are being
removed from Pennzoil-Quaker State's consolidated financial
statements beginning April 7, 2000.
Item 7. Financial Statements and Exhibits
(a) Pro Forma Financial Information
Pennzoil-Quaker State Company and Subsidiaries Pro Forma
Condensed Consolidated Statements (Unaudited) F-1
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1999 F-2
Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1999 F-3
Notes to Pro Forma Condensed Consolidated Financial
Statements F-4
(b) Exhibits-
Press Release of Pennzoil-Quaker State dated February 7, 2000
F-1
PENNZOIL-QUAKER STATE COMPANY AND SUBDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
SEC Requirements
The Pro Forma Condensed Consolidated Financial Statements have been
prepared in accordance with the requirements of Item 11 of Regulation
S-X promulgated by the Securities and Exchange Commission ("SEC").
These required statements are presented for informational purposes only
and are not indicative of the results of future operations or financial
position, nor the results of historical operations and financial
position had the disposition occurred as of the assumed dates.
Explanatory Notes
The Pro Forma Condensed Consolidated Balance Sheet as of December
31, 1999 has been prepared assuming that the disposition of the
Rouseville Facilities occurred on that date. The Pro Forma Condensed
Consolidated Statement of Operations for the twelve months ended
December 31, 1999 has been prepared assuming that the disposition had
occurred at the beginning of the period. Pursuant to SEC regulations,
pro forma adjustments include only the effects of events directly
attributable to a transaction that are factually supportable and, for
income accounts, are expected to have a continuing impact.
The Pro Forma Condensed Consolidated Financial Statements should be
read in conjunction with the Company's historical consolidated
financial statements included in Pennzoil-Quaker State's Annual Report
on Form 10-K for the year ended December 31, 1999.
F-2
PENNZOIL-QUAKER STATE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1999
(UNAUDITED)
Historical
Pennzoil- Pro Forma
Quaker State Adjustments As Adjusted
------------- ------------- -------------
(Expressed in thousands)
ASSETS
Current assets
Cash and cash equivalents $ 20,155 $ - $ 20,155
Receivables 312,320 (7,634) (a) 304,686
Inventories 298,202 (16,522) (a) 281,680
Other current assets 55,361 (873) (a) 54,488
------------- ------------- -------------
Total current assets 686,038 (25,029) 661,009
Property, plant and equipment, net 502,101 (798) (a) 501,303
Deferred income taxes 272,677 - 272,677
Goodwill and other intangibles 1,065,143 - 1,065,143
Other 207,262 (5,878) (b) 201,384
------------- ------------- -------------
2,047,183 (6,676) 2,040,507
------------- ------------- -------------
TOTAL ASSETS $ 2,733,221 $ (31,705) $ 2,701,516
============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,080 $ - $ 1,080
Accounts payable 210,700 - 210,700
Payroll accrued 28,328 - 28,328
Other current liabilities 129,295 - 129,295
------------- ------------- ------------
Total current liabilities 369,403 - 369,403
Long-term debt, less current maturities 1,026,153 - 1,026,153
Capital lease obligations 68,786 - 68,786
Other liabilities 319,011 - 319,011
------------- ------------- ------------
TOTAL LIABILITIES 1,783,353 - 1,783,353
------------- ------------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 949,868 (31,705) 918,163
------------- ------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,733,221 $ (31,705) $ 2,701,516
============= ============= ============
<F1>
The accompanying notes are an integral part of these pro
forma condensed consolidated financial statements.
</FN>
F-3
PENNZOIL-QUAKER STATE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1999
(UNAUDITED)
Historical
Pennzoil- Pro Forma
Quaker State Adjustments As Adjusted
------------- ------------ -------------
(Expressed in thousands except per share amounts)
REVENUES $ 2,988,932 $ (128,383) (a) $ 2,860,549
COSTS AND EXPENSES
Cost of sales 2,182,632 (111,157) (a) 2,071,475
Selling, general and administrative expenses 520,660 (430) (a) 520,230
Depreciation and amortization 123,363 (7,308) (a) 116,055
Acquisition related expenses 86,173 - 86,173
Impairment of long-lived assets 493,910 (133,831) (b) 360,079
Taxes, other than income 16,984 (189) (a) 16,795
Interest charges, net 80,588 - 80,588
------------- ------------ -------------
(515,378) 124,532 (390,846)
Income tax provision (benefit) (194,447) 49,249 (c) (145,198)
------------- ------------ -------------
NET INCOME (LOSS) $ (320,931) $ 75,283 $ (245,648)
============= ============ =============
LOSS PER SHARE $ (4.12) $ (3.16)
============= =============
DIVIDENDS PER COMMON SHARE $ 0.75 $ 0.75
============= =============
AVERAGE SHARES OUTSTANDING 77,850 77,850
============= =============
<F1>
The accompanying notes are an integral part of these pro
forma condensed consolidated financial statements.
</FN>
F-4
PENNZOIL-QUAKER STATE COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On April 7, 2000, Pennzoil-Quaker State Company ("the Company"
or "Pennzoil-Quaker State"), completed the sale of its Rouseville,
Pennsylvania wax processing facilities and related assets at the
Rouseville facility to Calumet Lubricants Company, LP ("Calumet").
Also included in the sale was Pennzoil-Quaker State's share of its
Bareco Products partnership with Baker Petrolite Corporation, a
division of Baker Hughes Incorporated. The facilities sold to
Calumet are herein referred to as the "Rouseville Facilities." The
Company received gross proceeds of $27.7 million from the sale of
the Rouseville Facilities.
The Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1999 has been prepared assuming that the disposition
of the Rouseville Facilities occurred on that date. The Pro Forma
Condensed Consolidated Statement of Operations for the twelve
months ended December 31, 1999 has been prepared assuming that the
disposition occurred at the beginning of the period.
The adjustments to the Pro Forma Condensed Consolidated
Balance Sheet as of December 31, 1999 are as follows:
(a) Reflects the removal of the historical net book value of
the Rouseville Facilities, including inventory, accounts
receivable, prepaids and property, plant and equipment.
No liabilities were assumed by Calumet.
(b) Reflects the removal of the net investment associated
with the Bareco partnership.
The adjustments to the Pro Forma Condensed Consolidated
Statement of Operations for the twelve months ended December 31,
1999 are as follows:
(a) Reflects the removal of revenues and certain costs and
expenses associated with the assets sold by the Company.
(b) Reflects the elimination of the charge for the impairment
of long-lived assets related to the assets sold by the
Company. Such impairment is related to the application
of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," and would not
be required once the aforementioned assets are removed.
(c) Reflects the pro forma effect of the adjustments to income
using the historical effective tax rate.
F-5
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/N Michael J. Maratea
Michael J. Maratea
Vice President and Controller
April 19, 2000