HOUSTON, May 1 /PRNewswire-FirstCall/ -- Pennzoil-Quaker State Company
(NYSE: PZL) today announced first quarter 2002 net income of $21.0 million, or
26 cents per share, versus net income of $8.3 million or 11 cents per share a
year ago. First quarter 2002 net income reflects a combination of improved
marketplace factors, normalized motor oil margins and strong supply chain
performance combined with lower amortization expense across most segments.
Revenue in the quarter was $564 million, down modestly compared to revenue in
last year's first quarter.
Lubricants: Operating income for the Lubricant's segment was
$43.8 million in the first quarter, an increase of 39.9 percent compared to
last year, reflecting improved motor oil margins, strong cost performance and
excellent premium oil sales. Year-over-year, branded motor oil revenue
increased 2.6 percent, although total revenue for Lubricants decreased
3.6 percent to $307.5 million primarily due to lower sales of non-branded, low
margin products.
Pennzoil(R) motor oil is in 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 market share for the three months ending
March 31 was 36.1 percent.
Consumer Products: Operating income for the company's Consumer Products
segment was $6.0 million in the first quarter 2002 versus $4.9 million in the
first quarter last year, reflecting lower amortization expense. Revenue in
the quarter increased 4.6 percent year-over-year to $88.8 million.
During 2001, Pennzoil-Quaker State Company's former consumer products
divisions -- Axius, Blue Coral/Slick50, Medo and Automotive Chemicals -- were
consolidated into the company's Houston headquarters. The sales forces from
consumer products and lubricants were integrated in late-2001, allowing the
company to provide improved service and focus to its retail customers.
International: Operating income for the International segment was
$3.5 million compared to $1.2 million in the first quarter 2001. First
quarter revenue decreased 11.3 percent year-over-year to $56.1 million, driven
primarily by restructuring actions to scale back low margin operations,
facilities and distribution channels.
Jiffy Lube International: Operating income for Jiffy Lube in the first
quarter was $8.2 million, a 64.6 percent increase from $5.0 million last year.
The increase in first quarter 2002 operating income is due in part to higher
comparable store sales and strong cost performance. Comparable store sales
were up 6.4 percent system wide in the quarter. First quarter revenue
increased 8.0 percent from a year ago to $90.5 million.
Supply Chain Investments: Operating income for the Supply Chain
Investment segment, which includes Pennzoil-Quaker State Company's equity
investment in the Excel Paralubes base oil processing facility, was
$16.5 million in the first quarter compared to $9.7 million in 2001. The
year-over-year improvement reflects increased base oil production and a change
in turnaround expense accruals, partially offset by lower base oil margins.
Total revenue was $78.6 million, a 4.1 percent decrease from $82.0 million for
the first quarter of 2001, due primarily to lower base oil prices.
Balance Sheet & Cash Flow
Pennzoil-Quaker State reduced total debt and CLOs during the first quarter
by $38.1 million, continuing the significant progress in balance sheet
improvement achieved in 2001.
Cash flow provided from operations in the first quarter of 2002 increased
by $78.3 million versus last year's first quarter. As of March 31, 2002 cash
and cash equivalents were $80.2 million.
Pending Acquisition by Shell Oil Products U.S.
Pennzoil-Quaker State Company and Shell Oil Products U.S., a wholly-owned
member of the Royal Dutch/Shell Group, announced on March 25, 2002 that they
have entered into a definitive agreement under which Shell Oil Company will
acquire Pennzoil-Quaker State Company at a price of $22.00 per share in cash.
The proposed transaction, which was approved by the board of directors of
Pennzoil-Quaker State Company, represents a premium of approximately
42 percent over Pennzoil-Quaker State Company's closing market price of
$15.49 per share on the New York Stock Exchange on March 22, 2002. The
transaction is subject to Pennzoil-Quaker State Company shareholder and
regulatory approval.
"The merger with Shell is progressing smoothly, and we are actively
working together on the integration plans to the extent permitted by
regulatory agencies," said Jim Postl, president and chief executive officer.
"The merger will enable our business to benefit from a lower cost of capital,
leverage the best practices from each organization and better serve our
customers and consumers. Clearly, we are excited about this transaction and
are hoping to complete it as soon as possible."
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. For more
information about Pennzoil-Quaker State Company, visit its web site at
http://www.pennzoil-quakerstate.com/ .
Note: Certain statements contained in this release 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.
With the pending transaction with Shell Oil Company, Pennzoil-Quaker State
Company will not host a conference call this quarter. If you have any
investor relations questions, call Jay Roueche at 713/546-4961. If you have
any media relations questions, call Ray Scippa at 713/546-8942.
The following are the unaudited results of operations for the quarter
ended March 31, 2002 compared with the same period in 2001.
Three Months Ended
March 31
2002 2001
(expressed in thousands
except per share amounts)
REVENUES
Lubricants $307,503 $319,004
Consumer Products 88,823 84,939
International 56,091 63,272
Jiffy Lube 90,506 83,764
Supply Chain Investments 78,608 81,954
Other (2,635) (1,595)
Intersegment sales (55,322) (65,275)
Total revenues $563,574 $566,063
OPERATING INCOME
Lubricants $43,752 $31,268
Consumer Products 5,976 4,889
International 3,456 1,158
Jiffy Lube 8,184 4,973
Supply Chain Investments [A] 16,524 9,660
Other (1,696) 2,265
Total operating income [B] 76,196 54,213
Corporate administrative expenses 18,058 14,455
Interest charges, net 22,832 24,712
INCOME BEFORE INCOME TAX 35,306 15,046
Income tax provision 14,332 6,756
NET INCOME $20,974 $8,290
BASIC EARNINGS PER SHARE $0.26 $0.11
DILUTED EARNINGS PER SHARE $0.26 $0.10
AVERAGE SHARES OUTSTANDING
BASIC 79,787 78,836
DILUTED 81,461 80,279
END OF PERIOD SHARES OUTSTANDING 80,001 78,970
[A] Operating income for Supply Chain Investments includes partnership
income accounted for using the equity method.
[B] Total operating income for the quarter ended March 31, 2001 included
$8.9 million of goodwill amortization. Effective January 1, 2002,
Pennzoil-Quaker State adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets."
In accordance with this standard, the Company discontinued the
amortization of goodwill and identifiable intangible assets that
have indefinite useful lives.
PENNZOIL - QUAKER STATE COMPANY
OPERATING HIGHLIGHTS
(UNAUDITED)
Three Months Ended %
March 31 Change
2002 2001
LUBRICANTS
Revenues (in thousands): $307,503 $319,004 -3.6%
Operating income (in thousands): $43,752 $31,268 39.9%
CONSUMER PRODUCTS
Revenues (in thousands): $88,823 $84,939 4.6%
Operating income (in thousands): $5,976 $4,889 22.2%
INTERNATIONAL
Revenues (in thousands): $56,091 $63,272 -11.3%
Operating income (in thousands): $3,456 $1,158 198.4%
JIFFY LUBE
Domestic systemwide sales
(in thousands) $327,564 $302,603 8.2%
Same center sales (in thousands) $319,734 $300,601 6.4%
Systemwide centers open 2,167 2,138 1.4%
SUPPLY CHAIN INVESTMENTS
Base oil production (bbls per day) 9,552 8,818 8.3%
Average base oil margin ($ per bbl) $21.58 $24.99 -13.6%
PENNZOIL - QUAKER STATE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, December 31,
2002 2001
(unaudited)
(expressed in thousands)
ASSETS
Current assets
Cash and cash equivalents $80,200 $86,412
Receivables 294,492 269,515
Inventories 209,625 199,641
Other current assets 58,841 66,778
Total current assets 643,158 622,346
Net, property, plant and equipment 429,538 438,981
Deferred income taxes 253,129 266,805
Goodwill 714,069 719,280
Other intangibles 469,466 462,433
Other assets 180,857 186,472
TOTAL ASSETS $2,690,217 $2,696,317
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $98,102 $133,733
Accounts payable 172,076 163,537
Payroll accrued 15,151 14,058
Other current liabilities 170,029 141,936
Total current liabilities 455,358 453,264
Long-term debt less current maturities 1,001,058 1,002,554
Capital lease obligations 54,164 55,329
Other liabilities 394,015 420,619
TOTAL LIABILITIES 1,904,595 1,931,766
SHAREHOLDERS' EQUITY 785,622 764,551
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,690,217 $2,696,317
PENNZOIL - QUAKER STATE COMPANY
CONDENSED CONSOLIDATED CASH FLOW FROM OPERATIONS
(UNAUDITED)
Three Months Ended
March 31
2002 2001
(expressed in thousands)
Description
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $20,974 $8,290
Adjustments to net income
Depreciation and amortization 15,601 24,696
Deferred income tax 13,836 6,534
Partnership distributions less
than earnings (13,406) (6,190)
Changes in assets and liabilities and
noncash items, net (2,517) (77,142)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 34,488 (43,812)
CASH FLOWS FROM INVESTING AND
FINANCING ACTIVITIES:
Capital expenditures (9,647) (13,689)
Acquisitions --- (600)
Net debt decrease (35,167) (2,648)
Proceeds from the sales of assets 6,746 6,622
Dividends paid (1,995) (14,784)
Other (637) 1,285
NET CASH USED IN INVESTING AND
FINANCING ACTIVITIES (40,700) (23,814)
NET CASH PROVIDED BY DISCONTINUED
OPERATIONS --- 65,624
Total Cash Flow (6,212) (2,002)
Beginning Balance 86,412 38,263
Ending Balance $80,200 $36,261
SOURCE Pennzoil-Quaker State Company
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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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