-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G+QDnTOv6VJwMURGA30h5pW1JMD+dHp1roObDWcRgUfLhIqSWKnWL0HgpnCJpJcM F3aYpqBYJnVYEZZ2jcAgCw== 0000950129-97-004396.txt : 19971028 0000950129-97-004396.hdr.sgml : 19971028 ACCESSION NUMBER: 0000950129-97-004396 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19971027 SROS: NYSE SROS: PSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PENNZOIL CO /DE/ CENTRAL INDEX KEY: 0000077320 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 741597290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: SEC FILE NUMBER: 005-06319 FILM NUMBER: 97701483 BUSINESS ADDRESS: STREET 1: PENNZOIL PL STREET 2: P O BOX 2967 CITY: HOUSTON STATE: TX ZIP: 77252-2967 BUSINESS PHONE: 7135464000 MAIL ADDRESS: STREET 1: PENNZOIL PLACE STREET 2: P O BOX 2967 CITY: HOUSTON STATE: TX ZIP: 77252-2967 FORMER COMPANY: FORMER CONFORMED NAME: PENNZOIL UNITED INC DATE OF NAME CHANGE: 19680429 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PENNZOIL CO /DE/ CENTRAL INDEX KEY: 0000077320 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 741597290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: PENNZOIL PL STREET 2: P O BOX 2967 CITY: HOUSTON STATE: TX ZIP: 77252-2967 BUSINESS PHONE: 7135464000 MAIL ADDRESS: STREET 1: PENNZOIL PLACE STREET 2: P O BOX 2967 CITY: HOUSTON STATE: TX ZIP: 77252-2967 FORMER COMPANY: FORMER CONFORMED NAME: PENNZOIL UNITED INC DATE OF NAME CHANGE: 19680429 SC 14D9/A 1 PENNZOIL COMPANY (AMENDMENT #37) 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT (AMENDMENT NO. 37) PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 PENNZOIL COMPANY (Name of Subject Company) PENNZOIL COMPANY (Name of Person(s) Filing Statement) COMMON STOCK, PAR VALUE $0.83 1/3 PER SHARE (including the associated Preferred Stock Purchase Rights) (Title of Class of Securities) 709903 10 8 (CUSIP Number of Class of Securities) LINDA F. CONDIT CORPORATE SECRETARY PENNZOIL COMPANY PENNZOIL PLACE, P.O. BOX 2967 HOUSTON, TEXAS 77252-2967 (713) 546-8910 (Name, address and telephone number of person authorized to receive notice and communications on behalf of the person(s) filing statement) Copies to: MOULTON GOODRUM, JR. CHARLES F. RICHARDS, JR. BAKER & BOTTS, L.L.P. RICHARDS, LAYTON & FINGER ONE SHELL PLAZA ONE RODNEY SQUARE HOUSTON, TEXAS 77002-4995 P.O. BOX 551 (713) 229-1234 WILMINGTON, DELAWARE 19899-0551 (302) 658-6541
================================================================================ 2 This Amendment No. 37 (this "Amendment") amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9, as amended, originally filed on July 1, 1997 by Pennzoil Company, a Delaware corporation ("Pennzoil" or the "Company"), relating to a tender offer commenced by Resources Newco, Inc., a wholly owned subsidiary of Union Pacific Resources Group Inc. ("UPR"), on June 23, 1997. All capitalized terms used in this Amendment without definition have the meanings attributed to them in the Schedule 14D-9. The items of the Schedule 14D-9 set forth below are hereby amended by adding the following: ITEM 9. MATERIAL TO BE FILED AS EXHIBITS EXHIBIT NO. DESCRIPTION ------- ----------- 104 Text of press release of the Company dated October 27, 1997.
3 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. PENNZOIL COMPANY Dated: October 27, 1997 By: /s/ James L. Pate James L. Pate Chairman of the Board, President and Chief Executive Officer 3 4 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ------- ----------- 104 Text of press release of the Company dated October 27, 1997.
EX-99.104 2 PRESS RELEASE OF COMPANY DATED 10/27/97 1 [PENNZOIL LOGO] Public Relations Department PENNZOIL COMPANY P.O. Box 2967 NEWS Houston, Texas 77252-8200 FOR IMMEDIATE RELEASE Contact: Bob Harper 713/546-8536 PENNZOIL'S THIRD QUARTER RECURRING INCOME UP 56 PERCENT, YEAR-TO-DATE RECURRING INCOME UP 94 PERCENT HOUSTON (Oct. 27, 1997) -- Pennzoil Company (NYSE:PZL) today reported third quarter and year-to-date 1997 results, emphasizing the following highlights: o year-to-date recurring income was up 94 percent to $2.85 per share; o year-to-date operating cash flow was up 26 percent to $8.79 per share; o third quarter recurring income was up 56 percent to 81 cents per share; and o third quarter operating cash flow was up 29 percent to $2.84 per share. Third Quarter Recurring third quarter net income increased 56 percent to $38.2 million, or 81 cents per share, compared to last year's $24.2 million, or 52 cents per share. Third quarter after-tax nonrecurring items totaled $2.9 million, including $2.6 million of after-tax charges associated with the early retirement of debt. Net income for the third quarter totaled $35.2 million, or 75 cents per share, including nonrecurring charges, compared to net income of $65.1 million, or $1.40 per share, for the same period in 1996. Third quarter 1996 net income included 88 cents per share of nonrecurring gains, primarily resulting from the sale of noncore real estate holdings. Cash flow from operations, before changes in operating assets and liabilities, during the third quarter increased 29 percent to $134.3 million, or $2.84 per share, compared to $102.3 million, or $2.20 per share, for the same period in 1996. 2 Year-to-Date On a recurring basis, year-to-date earnings nearly doubled, increasing 94 percent to $134.0 million, or $2.85 per share, versus $68.1 million, or $1.47 per share, in 1996. Net income, including nonrecurring charges, increased 9 percent to $116.7 million, or $2.48 per share, compared to $105.4 million, or $2.27 per share, last year. Year-to-date cash flow from operations, before changes in operating assets and liabilities, increased 26 percent to $413.3 million, or $8.79 per share, compared to $323.7 million, or $6.97 per share, for the same period in 1996. For the full year 1997, cash flow from operations, before changes in operating assets and liabilities, is expected to exceed $12.00 per share. James L. Pate, chairman and chief executive officer, said, "Pennzoil has now had eight consecutive quarters of year-over-year increases in recurring earnings. This demonstrates that Pennzoil's turnaround is well underway. The improvement at Pennzoil Company has been solid, consistent and across the board. We are committed to creating value for all Pennzoil shareholders." Pate added, "Each of our core business segments showed strong third quarter results and year-over-year operating income improvements." Oil and gas reported an 11 percent increase, motor oil and refined products reported a 240 percent increase, and franchise operations reported a 28 percent increase. Oil and Gas The oil and gas segment reported third quarter operating income of $67.7 million, an 11 percent increase over last year's $60.7 million. The increase in operating income was primarily due to increased liquids and natural gas production and higher realized prices. Production volumes increased approximately 3 percent, while natural gas prices increased 29 cents per thousand cubic feet and liquids prices increased 70 cents per barrel. These improvements were partially offset by higher exploration expense which resulted from increased drilling activity in the Gulf of Mexico. 2 3 Pennzoil was the high bidder on 9 out of 17 blocks in the August 1997 western Gulf of Mexico federal offshore oil and gas sale. The blocks are located in water depths ranging from 50 to 3,000 feet. Pennzoil will have a 100 percent working interest in eight of the blocks and 50 percent in one block bid jointly with Enterprise Oil Gulf of Mexico, Inc., subject to approval by the Minerals Management Service. Pennzoil's share of the high bids was $4 million. Internationally, Pennzoil is currently drilling several wells in the Caspian Sea, Australia and Qatar. In the Caspian Sea, the KPS-1 well on the Karabakh block continues drilling at 3,691 meters. Pennzoil has a 30 percent working interest in Karabakh. On October 10, Pennzoil confirmed that natural gas had been encountered after drilling had reached 3,470 meters. Additional natural gas shows have been encountered after drilling deeper, and drilling continues toward additional prospective horizons. KPS-1 is expected to reach target depth of approximately 3,850 meters in early November. At the nearby Azeri-Chirag-Gunashli (ACG) joint development area, where Pennzoil has a 4.8 percent carried interest, the first development well to be drilled off of the Chirag-1 platform is currently being completed after reaching total depth of 2,938 meters. The ACG joint development area is estimated to contain over 4.7 billion barrels of crude oil. First crude oil production will begin in early November, with sales of crude expected to begin in the first quarter of 1998. The international consortium developing this area, known as AIOC, plans to drill one more development well in 1997 and six wells in 1998. In Australia, the WR-4 exploration well on Whicher Range (44 percent Pennzoil) is currently drilling at 4,400 meters toward target depth of 4,600 meters. In Qatar, the PQ-3 exploration well on Block 8 (75 percent Pennzoil) spudded October 17 with a target depth of 2,800 meters. Motor Oil and Refined Products The motor oil and refined products segment reported third quarter operating income of $32.3 million, a 240 percent increase over last year's $9.5 million. The increase in operating income was due to a number of factors, including higher fuels 3 4 volumes resulting from the upgrade of Pennzoil's Shreveport refinery, higher income from the Excel Paralubes lube base oil plant joint venture, increased industrial specialities margins and volumes and improved international marketing results. Third quarter operating income also included a one-time insurance settlement. Pennzoil continues as the leading marketer of motor oil in the U.S., with a market share of over 21 percent. In July, Pennzoil Products Company and Conoco Inc. signed a joint venture agreement combining portions of the two companies' speciality petroleum products businesses. The 50/50 joint venture, called Penreco, will have estimated sales of $200 million worldwide. On October 17, Pennzoil Products Company announced that it has agreed to acquire the assets of two automobile aftermarket chemical companies. Pennzoil is purchasing the marketing assets of Snap Automotive Products, Inc. Snap products include Fix-a-Flat, the number one selling tire inflator in the U.S., fuel additives and other automotive chemicals. Pennzoil will also acquire the assets of Total Action Automotive products (TAAP). TAAP manufactures and markets premium automotive appearance products, including Classic car waxes and washes. Franchise Operations The franchise operations segment, Jiffy Lube International, Inc., reported third quarter operating income of $7.6 million, a 23 percent increase over last year's $6.2 million. The year-on-year improvement was primarily due to improved results in company-operated stores. Jiffy Lube has added 144 new fast oil change centers in the U.S. since the third quarter last year, an increase of 11 percent. Most of the new stores are part of the company's alliance with Sears. Jiffy Lube now has a total of 1,476 stores. Jiffy Lube is the largest fast oil change provider in the U.S. with over 25 percent of the market. 4 5 Pennzoil Company explores for and produces crude oil and natural gas, manufactures and markets premium quality lubricants, including America's top selling motor oil for the past 11 years, and is the parent company of Jiffy Lube International, the world's largest franchiser of fast oil change centers. - ----------------------- This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Factors that could cause actual results or events to differ materially from those anticipated are discussed in detail in Pennzoil's Annual Report on Form 10-K for the year ended December 31, 1996. ### 5 6 The following are the unaudited results of operations for the quarter and six months ended September 30,1997 compared with the same periods in 1996.
Three Months Ended Nine Months Ended September 30 September 30 ----------------------- ---------------------------- 1997 1996 1997 1996 --------- --------- ----------- ------------ (Expressed in thousands except per share amounts) REVENUES Oil and Gas $ 210,703 $ 186,797 $ 641,718 $ 566,097 Motor Oil & Refined Products 441,493 426,475 1,327,541 1,258,141 Franchise Operations 84,459 78,626 243,256 226,617 Other 14,543 55,352 23,551 90,640 Intersegment sales (92,259) (93,562) (279,771) (263,886) --------- --------- ----------- ----------- Total revenues $ 658,939 $ 653,688 $ 1,956,295 $ 1,877,609 ========= ========= =========== =========== OPERATING INCOME Oil and Gas $ 67,689 $ 60,715 $ 243,975 $ 175,522 Motor Oil & Refined Products 32,302 9,459 71,153 39,667 Franchise Operations 7,554 6,152 18,966 15,988 Other 14,420 51,609 26,903 77,411 --------- --------- ----------- ----------- Total operating income 121,965 127,935 960,397 308,588 Corporate administrative expenses 20,245 13,413 53,232 39,495 Interest charges, net 42,708 43,585 120,988 137,952 --------- --------- ----------- ----------- Income before income tax 59,012 70,937 186,177 131,141 Income tax provision 21,188 5,812 66,926 25,704 --------- --------- ----------- ----------- INCOME BEFORE EXTRAORDINARY ITEM 37,824 65,125 119,251 105,437 Extraordinary Item (2,575) - (2,575) - NET INCOME $ 35,249 $ 65,125 $ 116,676 $ 105,437 ========= ========= =========== =========== EARNINGS PER SHARE Before Extraordinary Item $ 0.80 $ 1.40 $ 2.53 2.27 Extraordinary Item (0.05) - (0.05) - --------- --------- ------------ ----------- EARNINGS PER SHARE $ 0.75 $ 1.40 $ 2.48 $ 2.27 ========= ========= =========== =========== AVERAGE SHARES OUTSTANDING 47,208 46,494 47,002 46,445 END OF PERIOD SHARES OUTSTANDING 47,382 46,518 47,382 46,518
7 PENNZOIL COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, December 31, 1997 1996 ----------- ----------- (Expressed in Thousands) ASSETS Current assets Cash and cash equivalents $ 29,724 $ 34,383 Receivables 215,500 250,328 Inventories Crude oil, natural gas and sulphur 25,989 24,365 Motor oil and refined products 181,963 147,554 Deferred income taxes 14,309 20,834 Other current assets 60,123 60,128 ----------- ----------- Total current assets 527,608 537,592 Net property, plant, and equipment 2,501,354 2,318,084 Marketable securities and other investments 953,489 955,182 Other assets 317,652 313,396 ----------- ----------- TOTAL ASSETS $ 4,300,103 $ 4,124,254 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 2,433 $ 1,181 Accounts payable and accrued liabilities 235,443 274,618 Interest accrued 47,596 30,827 Other current liabilities 90,053 86,321 ----------- ----------- Total current liabilities 375,525 392,947 Long-term debt 2,271,809 2,217,806 Deferred income taxes 273,801 241,791 Other liabilities 290,269 302,635 ----------- ----------- TOTAL LIABILITIES 3,211,404 3,155,179 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY 1,088,699 969,075 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,300,103 $ 4,124,254 =========== ===========
8 PENNZOIL COMPANY CASH FLOW FROM OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 ---------------------- ----------------------- 1997 1996 1997 1996 -------- --------- --------- --------- (Expressed in thousands except per share amounts) Description - --------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 35,249 $ 65,125 $116,676 $105,437 Adjustments to net income Depreciation, depletion and amortization 77,406 68,728 214,757 207,726 Dry holes and impairments 10,210 67 19,441 5,240 Deferred income tax 11,408 (4,597) 40,089 14,805 Non-cash items and other non-operating items 32 (27,064) 22,303 (9,474) -------- --------- -------- -------- NET CASH FROM OPERATING ACTIVITIES BEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES $134,305 $ 102,258 $413,266 $323,734 CASH FLOW FROM OPERATIONS PER SHARE $ 2.84 $ 2.20 $ 8.79 $ 6.97 ======== ========= ======== ======== Other exploration expense 8,581 8,239 21,669 24,774 -------- --------- -------- -------- CASH FLOW FROM OPERATIONS ADJUSTED FOR TOTAL EXPLORATION EXPENSE $142,886 $ 110,497 $434,935 $348,508 ======== ========= ======== ======== CASH FLOW FROM OPERATIONS PER SHARE ADJUSTED FOR TOTAL EXPLORATION EXPENSE $ 3.03 $ 2.38 $ 9.25 $ 7.50 ======== ========= ======== ======== AVERAGE SHARES OUTSTANDING 47,208 46,494 47,002 46,445
9 PENNZOIL COMPANY OPERATING HIGHLIGHTS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 --------- -------- -------- --------- 1997 1996 1997 1996 --------- -------- -------- --------- OPERATING DATA - ------------------------------------------------ OIL AND GAS Net production Crude oil, condensate and natural gas liquids (barrels per day) 59,938 58,442 58,807 61,274 Natural gas produced for sale (Mcf per day) 619,364 599,615 586,709 595,967 Weighted average prices Crude oil, condensate and natural gas liquids (per barrel) $ 15.55 $ 14.85 $ 16.77 $ 14.85 Natural gas (per Mcf) $ 2.09 $ 1.80 $ 2.25 $ 1.81 Costs and expenses ($/BOE) Operating expense excl. COS $ 2.83 $ 2.75 $ 2.93 $ 2.77 Cost of sales 0.06 0.08 0.08 0.08 General and administrative expense 0.87 0.84 0.87 0.91 Other taxes 0.57 0.67 0.61 0.67 -------- -------- -------- -------- Total ($/BOE) $ 4.33 $ 4.34 $ 4.49 $ 4.43 DD&A expense ($/BOE) $ 3.95 $ 3.74 $ 3.85 $ 3.76 MOTOR OIL & REFINED PRODUCTS Sales (barrels per day) Gasoline and naphtha 18,807 21,332 19,015 21,043 Distillates and gas oils 24,073 25,984 26,479 26,711 Lubricating oil and other specialty products 30,257 24,638 29,200 23,768 Residual fuel oils 1,284 4,221 1,962 4,120 -------- -------- -------- -------- Total sales (barrels per day) 74,421 76,175 76,656 75,642 ======== ======== ======== ======== Raw materials processed (barrels per day)(1) 54,320 54,330 54,540 53,302 Refining capacity (barrels per day)(1) 62,700 62,700 62,700 62,700 FRANCHISE OPERATIONS Domestic systemwide sales (in thousands) $199,002 $179,980 $572,566 $523,394 Same center sales (in thousands) $185,205 $179,554 $542,418 $522,183 Centers open (U.S.) 1,476 1,332 1,476 1,332
(1) Excludes Excel Paralubes -----END PRIVACY-ENHANCED MESSAGE-----