Printer Friendly

QUAKER STATE ANNOUNCES STRUCTURAL AND ACCOUNTING CHANGES WITH ITS 1992 RESULTS

 OIL CITY, Pa., Jan. 28 /PRNewswire/ -- The board of directors of Quaker State Corporation (NYSE: KSF) has approved a series of changes recommended by management to eliminate continuing losses in its coal operations and to restructure the company as a better focused organization that will concentrate on its core business units.
 As part of the restructuring of Quaker State, the company announced that it is planning to sell its vehicular lighting operation, Truck-Lite Company, Inc. and has retained J.P. Morgan Securities, Inc. to assist in this effort.
 Specific changes and their financial impact are:
 -- Quaker State has elected to adopt Financial Accounting Standard No. 106 and take a one-time aftertax charge of $62.6 million for the cumulative effect through Jan. 1, 1992, of future retiree health benefits.
 -- As a result of a decision to exit the coal business, The Valley Camp Coal Company subsidiary has been classified as a discontinued operation, and the 1992 loss includes a $37.7 million aftertax charge for its disposition.
 -- A one-time aftertax charge of $2 million has also been recorded for Quaker State Minit-Lube, Inc., the company's fast lube subsidiary, to reserve for future replacement of signage and other assets impaired by the conversion of existing Minit-Lube stores to Quaker State Q Lube facilities.
 As a direct result of these changes, Quaker State Corporation reported a net loss for 1992 of $93,848,000 ($3.45 loss per share). This includes several accounting adjustments totalling $102.3 million discussed below and compares to net income in 1991 of $22,709,000 ($.84 per share) which included $7,170,000 ($.26 per share), resulting from implementation of FASB Accounting Standard No. 96.
 Reflecting the discontinuance of coal operations, sales and operating revenues from continuing operations for the year were $724,392,000, compared to $700,080,000 as restated for 1991. Operating profits in 1992 totalled $29,808,000, versus $42,350,000 in 1991. (All 1991 amounts have been restated to exclude the discontinued coal operations.)
 For the fourth quarter, Quaker State reported sales and operating revenues of $173,996,000, compared to $171,600,000 in the fourth quarter of 1991. For the same period, it reported an operating profit in 1992 of $5,666,000, compared to $9,474,000 in 1991. The net loss for the quarter, which includes the cost of divesting coal, was $35,761,000 ($1.32 loss per share), compared to a net profit in the fourth quarter of 1991 of $3,567,000 ($.14 per share).
 BUSINESS SEGMENTS
 In 1992, Quaker State Oil Refining Corporation, the company's core petroleum refining and marketing operation, reported operating profits of $23,336,000, compared to $36,785,000 in 1991. The decline from 1991 reflects lower operating margins at the refinery, increased advertising expenses, and the cost in 1992 of implementing Financial Accounting Standard No. 106 and occurred despite an increase in motor oil sales volume.
 The company's fast lube units reported operating profits of $2 million prior to the one-time charge. This compares to an operating loss of $1.1 million in 1991. The improved results reflect stronger pricing and a modest increase in car counts in many markets, both of which contributed to a six percent sales gain to $104.4 million in 1992.
 Operating profits of the company's oil and gas production unit increased from $2.8 million in 1991 to $3.8 million in 1992. This occurred despite lower crude oil and natural gas prices in 1992 and reflects increases in natural gas sales and gas transportation revenues.
 At Heritage Insurance Group, operating profits more than doubled, amounting to $6.1 million in 1992 compared to $3 million in 1991. Strong sales of extended service contracts and improved loss experience in the two key categories of credit life insurance and extended warranty policies contributed to the profit gain. Overall, sales increased seven percent to $115 million.
 The Truck-Lite subsidiary reported an operating loss of $3.7 million, compared to a loss of $323,000 in 1991. The operating loss occurred entirely in the automotive division and is attributable to low production levels. It also includes a write-off of $1.6 million taken in the third quarter for unrecoverable development costs on a project to build large rear light assemblies for the Ford Escort line. Truck-Lite's heavy duty division, which manufactures lighting for trucks and truck trailers, continued to report strong operating profits.
 During the year, Quaker State made clear its intent to exit the coal business. On Dec. 30, it announced the first step, which involved sale of certain assets in West Virginia and Minnesota and compensation for termination of a coal supply contract. The J.P. Morgan organization is currently negotiating the sale of Valley Camp of Utah with prospective purchasers. Negotiations involving the future of Helen Mining company are continuing.
 Because of its status as a discontinued operation, Valley Camp's operating figures are not included in this year's results for continuing operations. However, that unit has been separately reported and had an aftertax loss for 1992 of $2.9 million on sales of $94.4 million. This compares to an aftertax gain of $409,000 in 1991 and sales of $113.5 million.
 Chairman and Chief Executive Officer Jack W. Corn said, "We are confident the sale of our coal and lighting operations and the resulting accounting charges will make it possible to create a better focused and more profitable Quaker State. There were signs of improvement on our core business in 1992, including an upturn in motor oil sales volume and an increase in the number of cars services at the fast lube centers we have converted to Q Lubes. Assuming the economy continues to show improvement, 1993 should be a significantly improved year for Quaker State."
 QUAKER STATE CORPORATION AND SUBSIDIARIES
 (in thousands except per share data)
 QUARTER ENDED YEAR ENDED
 12/31/92 12/31/91 12/31/92 12/31/91
 (unaudited)
 Net Income (Loss)
 Per Share $ (1.32) $ .14 $ (3.45)(A)$ .84(A)
 Sales and Operating
 Revenues $ 173,996 $ 171,600(B)$ 724,392 $ 700,080(B)
 Operating Profit $ 5,666 $ 9,474 $ 29,808 $ 42,350
 Income (Loss)
 From Continuing
 Operations Before
 Income Taxes and
 Cumulative Effect
 of Accounting
 Change $ (182) $ 4,012 $ 10,143 $ 22,930
 Net Income (Loss) $ (35,761) $ 3,567 $ (93,848)(A)$ 22,709(A)
 Weighted Average
 Capital Shares
 Outstanding 27,166 27,171 27,184 27,167
 (A) Includes the cumulative effect of an accounting change for FASB No. 106 of $62,600,000 ($2.30 loss per share) in 1992 and for FASB No. 96 of $7,170,000 ($.26 per share) in 1991.
 (B) Restated to exclude the discontinued coal operations.
 -0- 1/28/93
 /CONTACT: Benton H. Faulkner of Quaker State 814-676-7877/
 (KSF)


CO: Quaker State Corporation ST: Pennsylvania IN: OIL SU: ERN

CD -- PG015 -- 0504 01/28/93 17:30 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 28, 1993
Words:1157
Previous Article:WEIRTON STEEL ISSUES RESULTS
Next Article:QUAKER STATE CORPORATION DECLARES DIVIDEND
Topics:


Related Articles
QUAKER STATE ANNOUNCES 1991 EARNINGS
COURT ORDERS QUAKER STATE TO PULL AD IN WAKE OF CASTROL INC. SUIT
QUAKER STATE REPORTS EARNINGS, DECLARES DIVIDEND
QUAKER STATE REPORTS THIRD QUARTER EARNINGS
QUAKER STATE SELLS CERTAIN COAL ASSETS, PLANS TO TAKE FASB 106 WRITE-OFF IN 1992
QUAKER STATE REPORTS IMPROVED FIRST QUARTER SALES AND NET INCOME
QUAKER STATE NAMES NEW CHIEF EXECUTIVE
THE NEW QUAKER STATE CEO SETS GOALS FOR STRONGER EARNINGS AND INCREASED MARKET SHARE
QUAKER STATE LAUNCHES AGGRESSIVE PROGRAMS FOCUSING ON ENVIRONMENTAL RESPONSIBILITY
Quaker State Earnings Meet Market Expectations as Sales and Operating Profits Rise in First Quarter

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters