HOUSTON, Feb. 5 /PRNewswire-FirstCall/ -- Pennzoil-Quaker State Company
(NYSE: PZL) today announced recurring fourth quarter 2001 income from
continuing operations of $15.1 million, or 19 cents per basic share, a
significant improvement compared to a recurring loss of four cents per basic
share in the fourth quarter of 2000. Due to the sale of non-strategic
businesses, total revenue during the fourth quarter 2001 was $545.9 million,
6.8 percent lower than the year earlier.
Including the previously announced non-recurring charges of $35.1 million
after-tax, the company reported a fourth-quarter 2001 net loss from continuing
operations of $20.0 million or 25 cents per share, versus a net loss of
26 cents per share in 2000. These non-recurring charges represent the final
amounts related to the restructuring program announced in June of 2001, and
the one-time charges announced in January of 2002.
For the full year 2001, recurring income from continuing operations was
$51.6 million, or 65 cents per basic share, compared to recurring income from
continuing operations of $48.9 million, or 62 cents per basic share in 2000.
Total revenue in 2001 was $2.3 billion, a 4.7 percent decrease compared to
2000, due to the sale of non-strategic businesses.
The full-year 2001 results include total non-recurring after-tax charges
of $62.1 million resulting from the aforementioned initiatives. Including
these charges, full year 2001 reported net loss from continuing operations was
$10.5 million or 13 cents per share, versus reported earnings per share of
five cents in 2000.
"The fourth quarter of 2001 was a major improvement compared to the
recurring loss in the fourth quarter a year earlier, and our second half
performance in 2001 of 39 cents per share was more than two and a half times
the 15 cents per share in the second half of 2000. While 2001 was a
challenging year overall, we took a number of aggressive actions to strengthen
our operations and I believe that our improved second half performance
indicates that we've left the valley and we're well on our way to a strong
2002," said James J. Postl, president and chief executive officer. "While
certain marketplace factors such as high gasoline prices resulted in generally
soft demand for automotive products in the last couple of years, many of these
market forces are trending back in our favor. We believe these positive
trends will accelerate during 2002, and anticipate double-digit year-over-year
earnings growth."
Lubricants: For the fourth quarter of 2001, lubricants reported recurring
operating income of $35.3 million, a 31.7 percent increase compared to
$26.9 million in 2000. Fourth quarter revenue was $290.9 million,
15.5 percent below 2000 due to the sale of non-strategic businesses.
Recurring operating income for the full year of 2001 was $137.3 million,
versus $156.2 million last year. Total revenue in 2001 decreased 11.5 percent
to $1.3 billion, due to the sale of non-strategic businesses.
Pennzoil(R) motor oil is entering its 16th consecutive year as America's
number one selling motor oil. With Quaker State(R), America's number two
selling motor oil, the company's combined November year-to-date market share
was 35.8 percent, which is down 0.4 share points versus prior year.
Consumer Products: Recurring operating income for the fourth quarter 2001
was $2.7 million, down from $6.6 million in the fourth quarter 2000, primarily
due to poor supply chain and customer execution. Revenues for the fourth
quarter totaled $79.1 million, a 0.3 percent increase from 2000.
Full year recurring operating income for this segment was $24.5 million
compared to $34.2 million in 2000. The year over year decline was the result
of the aforementioned issues. Total revenues were $351.4 million, a four
percent increase over 2000.
"This segment did not meet our objectives in 2001. Beginning in June, we
took aggressive actions that accelerated through the remainder of the year,"
said Postl. "We consolidated the four business units into Houston, and
combined those operations with Lubricants to create a single automotive
products sales force. This will produce better overall customer support and
set the stage for improved growth in the segment."
International: Recurring operating income for the fourth quarter
increased to $2.2 million, up $2.1 million from the fourth quarter 2000,
primarily due to significant cost reductions. Revenues for the fourth quarter
2001 totaled $49.4 million. Second half 2001 International operating income
was $7.3 million compared to $2.3 million in the second half of 2000.
For the full year 2001, recurring operating income for this segment was
$12.2 million compared to $11.2 million in 2000. The year over year increase
was the result of aggressive cost reductions partially offset by lower
margins. Total revenues were $242.2 million in 2001.
Jiffy Lube International: Recurring operating income for Jiffy Lube in
the fourth quarter was $8.5 million, a 10.5 percent increase from $7.7 million
in 2000. Comparable store sales were up 6.5 percent systemwide in the
quarter, continuing nine consecutive quarters of strong comparable store
growth. Revenues for the quarter were $88.8 million, a 6.4 percent increase
from the fourth quarter of 2000.
For the full-year 2001, Jiffy Lube reported operating income of
$27.6 million excluding non-recurring charges, compared to $27.9 million in
2000. Total revenue for 2001 was $349.2 million, an increase of 2.5 percent
compared to $340.6 million in 2000.
Supply Chain Investments: Operating income for this segment was
$19.9 million in the fourth quarter compared to $0.1 million in 2000. In the
fourth quarter of 2000, Excel Paralubes carried out a planned turnaround that
resulted in breakeven performance. Total revenues before intersegment sales
eliminations were $93.6 million, a 70.9 percent increase from $54.8 million in
the fourth quarter of 2000.
For the full year, recurring operating income for this segment increased
to $53.1 million, up $24.2 million from the full year 2000, primarily due to
higher base oil margins and the fourth quarter 2000 turnaround. Revenues for
the full-year 2001 before intersegment sales totaled $337.0 million a
14.8 percent increase over 2000.
Supply Chain Investments includes the company's investment in Excel
Paralubes, a base oil manufacturing joint venture. The company accounts for
Excel using the equity method of accounting. Excel Paralubes has restated its
financial results for the year ended December 31, 2000 to correct errors in
the information previously provided by the company's equal partner in the
joint venture and audited by their independent accountants. Accordingly, the
company has restated its year ended December 31, 2000 results to reflect the
correction. As a result of the company's restatement, net income for the year
ended December 31, 2000 was reduced by $1.6 million, or $0.02 per share.
Included in the full year 2000 adjustment was a reduction in the fourth
quarter 2000 net income of $0.3 million, or $0.00 per share. There was no
impact on reported cash flow. For more information, see the company's current
report of Form 8-K dated February 4, 2002.
Balance Sheet/Other: During 2001, the company reduced the debt and CLOs
on its balance sheet by $78 million, increased its cash and cash equivalents
by $48 million and reduced its accounts receivable sales facility by
$39 million. Together, these changes represent an improved financial position
of $165 million.
"Debt reduction remains a key priority for the company in 2002," continued
Postl. "We are pleased with the improvement in our financial position in
2001, and we expect to enhance it further in 2002."
Pennzoil-Quaker State Company is a leading worldwide automotive consumer
products company, marketing over 1,300 products with 20 leading brands in more
than 90 countries. The company markets Pennzoil(R) and Quaker State(R) brand
motor oils, the number one and number two selling motor oils in the United
States. Jiffy Lube, a wholly owned subsidiary of Pennzoil-Quaker State
Company, is the world's largest fast lube operator and franchiser.
Note: The company's fourth quarter and full-year conference call with the
financial community will be broadcast live on the Internet beginning at
9:00 a.m. CST on February 5, 2002. The audio recording will be available for
one week following the live call. To listen to the call, please visit the
company's website at http://www.pennzoil-quakerstate.com/ .
The statements contained in this release and made on the conference call
that are not historical facts are forward-looking statements. Actual results
may differ materially from those projected in forward-looking statements.
Please see the company's Form 10-K for more information on the risks and
uncertainties related to forward-looking statements.
The following are the unaudited results of operations for the quarter and
twelve months ended December 31, 2001 compared with the same periods in 2000.
Three Months Ended Twelve Months Ended
December 31 December 31
2001 2000 2001 2000
(Expressed in thousands except per share amounts)
REVENUES
Lubricants $290,895 $344,072 $1,273,025 $1,438,410
Consumer Products 79,063 78,791 351,381 337,812
International 49,392 65,389 242,224 254,780
Jiffy Lube 88,772 83,440 349,204 340,567
Supply Chain Investments 93,615 54,773 337,032 293,697
Other (1,202) 111 (6,411) 5,303
Intersegment sales (54,661) (41,005) (233,225) (243,198)
Total revenues $545,874 $585,571 $2,313,230 $2,427,371
OPERATING INCOME (LOSS)
Lubricants $20,210 $15,315 $116,199 $139,985
Consumer Products (18,769) 5,118 (9,291) 29,875
International (21,108) 132 (27,775) 11,237
Jiffy Lube 8,260 4,794 24,180 23,591
Supply Chain
Investments [A] 19,872 120 53,080 28,888
Charges Related to
Asset Disposals and
Other (2,453) (8,556) (4,087) (9,472)
Total operating income 6,012 16,923 152,306 224,104
Corporate administrative
expenses 18,300 27,546 62,263 108,330
Interest charges, net 20,543 25,319 92,079 94,895
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAX (32,831) (35,942) (2,036) 20,879
Income tax provision
(benefit) (12,821) (15,688) 8,505 16,595
INCOME (LOSS) FROM
CONTINUING OPERATIONS (20,010) (20,254) (10,541) 4,284
Loss from Discontinued
Operations (16,220) (81,368) (22,467) (92,096)
LOSS BEFORE EXTRAORDINARY
ITEMS (36,230) (101,622) (33,008) (87,812)
Extraordinary Items (937) --- (937) ---
NET LOSS $(37,167) $(101,622) $(33,945) $(87,812)
BASIC AND DILUTED
EARNINGS (LOSS) PER
SHARE
Continuing Operations $(0.25) $(0.26) $(0.13) $0.05
Discontinued Operations (0.21) (1.03) (0.29) (1.17)
Extraordinary Items (0.01) --- (0.01) ---
TOTAL $(0.47) $(1.29) $(0.43) $(1.12)
AVERAGE SHARES OUTSTANDING
BASIC 79,541 78,698 79,209 78,468
DILUTED 79,541 78,698 79,209 79,112
END OF PERIOD SHARES
OUTSTANDING 79,630 78,744 79,630 78,744
[A] Operating income for Supply Chain Investments includes partnership
income accounted for using the equity method.
The following reconciles unaudited results of operations to recurring
results for the three months ended December 31, 2001.
Three Months Ended
December 31, 2001
Nonrecurring
Reported Items Recurring
(Expressed in millions except
per share amounts)
OPERATING INCOME (LOSS)
Lubricants $20.2 $15.1 [A] $35.3
Consumer Products (18.8) 21.5 [B] 2.7
International (21.1) 23.3 [C] 2.2
Jiffy Lube 8.3 0.2 [D] 8.5
Supply Chain Investments 19.9 --- 19.9
Other (2.4) --- (2.4)
Total operating income 6.1 60.1 66.2
Corporate administrative expenses 18.3 (4.1)[E] 14.2
Interest charges, net 20.6 --- 20.6
Income (loss) from continuing
operations before income tax (32.8) 64.2 31.4
Income tax provision (benefit) (12.8) 29.1 16.3
INCOME (LOSS) FROM CONTINUING
OPERATIONS (20.0) 35.1 15.1
Loss from Discontinued Operations (16.2) --- (16.2)
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS (36.2) 35.1 (1.1)
Extraordinary Items (0.9) --- (0.9)
NET INCOME (LOSS) $(37.1) $35.1 $(2.0)
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE
Continuing Operations $(0.25) $0.44 $0.19
Discontinued Operations (0.21) --- (0.21)
Extraordinary Items (0.01) --- (0.01)
$(0.47) $0.44 $(0.03)
Explanation of Nonrecurring Items
[A] Lubricants
Restructuring Charges 10.7
Write-off of K-mart
receivables 4.4
15.1
[B] Consumer Products
Restructuring Charges 9.9
Write-off of K-mart
receivables 11.6
21.5
[C] International
Restructuring Charges and
Impairments 23.3
[D] Jiffy Lube
Impairment 0.2
[E] Corporate
Restructuring Charges 4.1
The following reconciles unaudited results of operations to recurring
results for the twelve months ended December 31, 2001.
Twelve Months Ended
December 31, 2001
Nonrecurring
Reported Items Recurring
(Expressed in millions except
per share amounts)
OPERATING INCOME (LOSS)
Lubricants $116.2 $21.1 [A] $137.3
Consumer Products (9.3) 33.8 [B] 24.5
International (27.8) 40.0 [C] 12.2
Jiffy Lube 24.2 3.4 [D] 27.6
Supply Chain Investments 53.1 --- 53.1
Other (4.0) --- (4.0)
Total operating income 152.4 98.3 250.7
Corporate administrative expenses 62.3 (4.4)[E] 57.9
Interest charges, net 92.1 --- 92.1
Income (loss) from continuing
operations before income tax (2.0) 102.7 100.7
Income tax provision 8.5 40.6 49.1
INCOME (LOSS) FROM CONTINUING
OPERATIONS (10.5) 62.1 51.6
Loss from Discontinued
Operations (22.5) --- (22.5)
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS (33.0) 62.1 29.1
Extraordinary Items (0.9) --- (0.9)
NET INCOME (LOSS) $(33.9) $62.1 $28.2
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE
Continuing Operations $(0.13) $0.78 $0.65
Discontinued Operations (0.29) --- (0.29)
Extraordinary Items (0.01) --- (0.01)
$(0.43) $0.78 $0.35
Explanation of Nonrecurring Items
[A] Lubricants
Restructuring Charges 16.7
Write-off of K-mart
receivables 4.4
21.1
[B] Consumer Products
Restructuring Charges 22.2
Write-off of K-mart
receivables 11.6
33.8
[C] International
Restructuring Charges and
Impairments 40.0
[D] Jiffy Lube
Impairments 3.4
[E] Corporate
Restructuring Charges and
Other 4.4
PENNZOIL - QUAKER STATE COMPANY
OPERATING HIGHLIGHTS
(UNAUDITED)
Three Months Ended % Twelve Months Ended %
December 31 Change December 31 Change
2001 2000 2001 2000
LUBRICANTS
Recurring
revenues (in
millions) $290.9 $344.1 -15.5% $1,273.0 $1,438.4 -11.5%
Recurring
operating
income (in
millions) $35.3 $26.9 31.7% $137.3 $156.2 -12.0%
CONSUMER PRODUCTS
Recurring
revenues (in
millions) $79.1 $78.8 0.3% $351.4 $337.8 4.0%
Recurring
operating income
(in millions) $2.7 $6.6 -59.8% $24.5 $34.2 -28.5%
INTERNATIONAL
Recurring
revenues (in
millions) $58.4 $65.4 -10.6% $251.3 $254.8 -1.4%
Recurring
operating
income (in
millions) $2.2 $0.1 1537.1% $12.2 $11.2 8.5%
JIFFY LUBE
Domestic
systemwide
sales (in
thousands) $320,127 $297,085 7.8% $1,267,127 $1,185,690 6.9%
Same center
sales Jiffy
Lube (in
thousands) $312,437 $293,488 6.5% $1,236,688 $1,167,367 5.9%
Systemwide
centers open 2,157 2,143 0.7% 2,157 2,143 0.7%
SUPPLY CHAIN
INVESTMENTS
Base oil
production
(bbls per
day) 10,263 4,553 125.4% 9,229 8,652 6.7%
Average base
oil margin
($ per bbl) $29.07 $22.24 30.7% $26.30 $19.88 32.3%
PENNZOIL - QUAKER STATE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, December 31,
2001 2000
(Unaudited)
(Expressed in Thousands)
ASSETS
Current assets
Cash and cash equivalents $86,412 $38,263
Receivables 268,209 315,710
Inventories 199,641 186,999
Other current assets 78,212 52,775
Total current assets 632,474 593,747
Net, property, plant and equipment 438,981 476,134
Deferred income taxes 266,805 282,198
Goodwill and other intangibles 1,118,039 1,139,413
Other assets 240,018 212,316
Net assets of discontinued operations --- 97,259
TOTAL ASSETS $2,696,317 $2,801,067
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $133,733 $13,786
Accounts payable 163,537 166,056
Payroll accrued 14,058 17,215
Other current liabilities 144,709 121,515
Total current liabilities 456,037 318,572
Long-term debt less current maturities 1,002,554 1,194,426
Capital lease obligations 55,329 61,861
Other liabilities 417,846 405,229
TOTAL LIABILITIES 1,931,766 1,980,088
SHAREHOLDERS' EQUITY 764,551 820,979
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,696,317 $2,801,067
PENNZOIL - QUAKER STATE COMPANY
CONDENSED CONSOLIDATED CASH FLOW FROM OPERATIONS
(UNAUDITED)
Twelve Months Ended
December 31
2001 2000
Description
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(33,945) $(87,812)
Adjustments to net loss
Depreciation and amortization 110,047 96,070
Charges related to asset disposal --- 9,952
Deferred income tax (benefit) (8,721) (46,123)
Partnership distributions in excess
of earnings 7,628 12,745
Loss on discontinued operations 37,136 152,224
Changes in assets and liabilities
and noncash items, net (22,822) (28,728)
NET CASH PROVIDED BY OPERATING ACTIVITIES 89,323 108,328
CASH FLOW FROM INVESTING AND FINANCING
ACTIVITIES:
Capital expenditures (51,866) (78,491)
Acquisitions (800) (76,901)
Net debt increase (decrease) (78,763) 160,252
Proceeds from the sales of assets 17,370 49,424
Dividends paid (33,602) (58,813)
Other 10,253 10,168
NET CASH PROVIDED BY (USED IN)
INVESTING AND FINANCING ACTIVITIES (137,408) 5,639
NET CASH PROVIDED BY (USED IN)
DISCONTINUED OPERATIONS 96,234 (95,859)
Total Cash Flow 48,149 18,108
Beginning Balance 38,263 20,155
Ending Balance $86,412 $38,263
SOURCE Pennzoil-Quaker State Company
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Related links:
http://www.pennzoil-quakerstate.com
Company News On-Call:
http://www.prnewswire.com/comp/684550.html
CONTACT:
media, Ray Scippa, +1-713-546-8942, or
investors, Jay Roueche, +1-713-546-4961, both of Pennzoil-Quaker
State Company
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