<PAGE>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1995 Commission File No. 1-5591
PENNZOIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1597290
(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
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Number of shares outstanding of each class of common stock,
as of latest practicable date, July 31, 1995:
Common stock, par value $0.83-1/3 per share, 46,260,457
shares.
<PAGE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
----------------------------
<TABLE>
PENNZOIL COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(Expressed in thousands except per share amounts)
<S> <C> <C> <C> <C>
REVENUES $ 646,613 $ 651,809 $1,281,953 $1,273,885
COSTS AND EXPENSES
Cost of sales 386,604 378,001 755,436 749,640
Selling, general and administrative expenses 103,001 102,097 202,458 192,077
Depreciation, depletion and amortization 90,815 78,356 183,426 153,806
Exploration expenses 11,309 8,506 20,381 18,189
Taxes, other than income 13,851 15,305 28,582 32,374
Interest charges, net 47,767 43,581 96,246 85,170
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAX (6,734) 25,963 (4,576) 42,629
Income tax provision (benefit) (1,944) 9,153 (2,529) 15,081
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (4,790) 16,810 (2,047) 27,548
Cumulative effect of change in accounting
principle (See Note 2) - - - (4,948)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (4,790) $ 16,810 $ (2,047) $ 22,600
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE
Income (loss) before cumulative effect of
change in accounting principle $ (0.10) $ 0.37 $ (0.04) $ 0.60
Cumulative effect of change in accounting principle - - - (0.11)
----------- ----------- ----------- -----------
TOTAL $ (0.10) $ 0.37 $ (0.04) $ 0.49
=========== =========== =========== ===========
DIVIDENDS PER COMMON SHARE $ 0.75 $ 0.75 $ 1.50 $ 1.50
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING 46,218 45,989 46,188 45,961
=========== =========== =========== ===========
NUMBER OF SHARES OUTSTANDING 46,244 46,013 46,244 46,013
=========== =========== =========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION - continued
<TABLE>
PENNZOIL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
June 30, December 31,
1995 1994
------------- -------------
(Expressed in thousands)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 36,350 $ 24,884
Receivables 348,434 460,248
Inventories
Crude oil, natural gas and sulphur 26,210 38,239
Motor oil and refined products 127,402 126,019
Deferred income tax 18,009 19,735
Other current assets 52,685 59,127
------------- -------------
Total current assets 609,090 728,252
Property, plant and equipment, net 2,764,535 2,828,843
Marketable securities and other investments 851,620 833,400
Other assets 369,072 325,315
------------- -------------
TOTAL ASSETS $ 4,594,317 $ 4,715,810
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,800 $ 1,760
Notes payable 506,753 337,212
Accounts payable and accrued liabilities 227,809 252,575
Interest accrued 33,602 33,066
Other current liabilities 47,073 52,048
------------- -------------
Total current liabilities 817,037 676,661
Long-term debt 1,977,234 2,174,921
Deferred income tax 372,630 371,644
Other liabilities 280,156 288,320
------------- -------------
TOTAL LIABILITIES 3,447,057 3,511,546
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 1,147,260 1,204,264
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,594,317 $ 4,715,810
============= =============
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 4
PART I. FINANCIAL INFORMATION - continued
<TABLE>
PENNZOIL COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30
---------------------------------
1995 1994
----------- -----------
(Expressed in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2,047) $ 22,600
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation, depletion and amortization 183,426 153,806
Dry holes and impairments 7,846 8,276
Deferred income tax (3,296) (3,532)
Net gain on sales of assets (9,534) (2,809)
Non-cash and other nonoperating items 158 19,716
Cumulative effect of change in accounting principle - 4,948
Change in operating assets and liabilities 87,420 (100,744)
----------- -----------
Net cash provided by operating activities 263,973 102,261
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (191,540) (256,047)
Acquisition of Co-enerco Resources Ltd. - (230,924)
Purchases of marketable securities and other investments (309,486) (220,400)
Proceeds from sales of marketable securities and other
investments 306,144 857,044
Proceeds from sales of assets 56,557 28,201
Other investing activities (21,448) 2,456
----------- -----------
Net cash provided by (used in) investing activities (159,773) 180,330
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayment) of short-term debt, net 169,541 (19,951)
Debt and capital lease obligation repayments (207,980) (105,469)
Proceeds from issuance of debt 15,000 481,194
Dividends paid (69,295) (68,953)
Other financing activities - 256
----------- -----------
Net cash provided by (used in) financing activities (92,734) 287,077
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 11,466 569,668
CASH AND CASH EQUIVALENTS, beginning of period 24,884 262,275
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 36,350 $ 831,943
=========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 5
PART I. FINANCIAL INFORMATION - continued
PENNZOIL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) General -
The condensed consolidated financial statements included
herein have been prepared by Pennzoil Company ("Pennzoil") without
audit and should be read in conjunction with the financial
statements and the notes thereto included in Pennzoil's latest
annual report. The foregoing financial statements include only
normal recurring accruals and all adjustments which Pennzoil
considers necessary for a fair presentation.
(2) Employers' Accounting for Postemployment Benefits -
Effective January 1, 1994, Pennzoil changed its method of
accounting for postemployment benefit costs by adopting the
requirements of Statement of Financial Accounting Standards
("SFAS") No. 112, "Employers' Accounting for Postemployment
Benefits," and recorded a charge of $4.9 million ($7.6 million
before tax), or $.11 per share, as of that date to reflect the
cumulative effect of the change in accounting principle for periods
prior to 1994.
(3) Acquisition of Co-enerco Resources Ltd. -
In June 1994, Pennzoil Canada, Inc. ("Pennzoil Canada"), an
indirect wholly owned subsidiary of Pennzoil, acquired Co-enerco
Resources Ltd. ("Co-enerco"), a Canadian oil and gas exploration
and production company operating in Western Canada.
Pennzoil Canada paid $230.9 million in cash in connection with
the acquisition of Co-enerco and the repayment of Co-enerco's
outstanding bank debt. The acquisition was accounted for using the
purchase method of accounting, and the results of operations of Co-
enerco subsequent to June 1994 are included in Pennzoil's
consolidated statement of income.
(4) Accounting for the Impairment of Long-Lived Assets -
In March 1995 the Financial Accounting Standards Board issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of," which is intended to
establish more consistent accounting standards for measuring the
recoverability of long-lived assets. In certain instances, the
statement specifies that the carrying values of assets be written
down to fair values, which, for Pennzoil, could result in
write-downs that were previously not required under its existing
impairment policy. Such charges would result primarily from the
more detailed impairment review procedures that would be required
on Pennzoil's proved oil and gas properties. Under the new
standard, assets to be reviewed for impairment are required to be
grouped at the lowest level for which there are identifiable cash
flows that are largely independent of the cash flows of other
groups. Under current policy, oil and gas assets reviewed for
<PAGE>
<PAGE> 6
PART I. FINANCIAL INFORMATION - continued
impairment are grouped at a higher level. While the potential
impact of the new standard cannot be fully assessed at this time,
Pennzoil believes that the adoption of this statement could result
in a substantial charge to operating earnings and a corresponding
write-down of Pennzoil's fixed assets, primarily those related to
oil and gas producing activities. Pennzoil must adopt the new
standard no later than for its quarter ending March 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
A net loss was reported for the quarter and six months ended
June 30, 1995 of $4.8 million, or $.10 per share, and $2.0 million,
or $.04 per share, respectively. This compares with net income of
$16.8 million, or $.37 per share, for the second quarter of 1994
and $22.6 million, or $.49 per share, for the six months ended June
30, 1994. Effective January 1, 1994, Pennzoil changed its method
of accounting for postemployment benefit costs by adopting the
requirements of SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." As a result, Pennzoil recorded a charge
of $4.9 million, or $.11 per share, as of January 1, 1994, to
reflect the cumulative effect of change in accounting principle for
periods prior to 1994. Excluding this charge, income for the
quarter and six months ended June 30, 1995 decreased $21.6 million,
and $29.6 million, respectively, from the comparable periods in
1994. The decrease in earnings for both the quarter and six months
ended June 30, 1995, compared to the prior year, was primarily
attributable to lower results from the oil and gas and motor oil
and refined products segments. These decreases were partially
offset by higher results from the franchise operations segment.
Oil and Gas
Operating income from this segment for the quarter and six
months ended June 30, 1995 was $32.5 million and $45.4 million,
respectively. This compares with operating income of $54.1 million
and $91.7 million, respectively, for the same periods in 1994. The
decrease in operating income for both the quarter and six months
ended June 30, 1995 was primarily due to lower natural gas prices
and higher depreciation, depletion and amortization ("DD&A")
expense. The higher DD&A expense was attributable to an increase
in barrels of oil equivalent sold and higher DD&A rates. The
higher DD&A rates resulted, in part, from a settlement with the
Internal Revenue Service in October 1994, which increased the
carrying value of certain oil and gas properties. Reference is
made to Note 8 of Notes to Consolidated Financial Statements in
Pennzoil's Annual Report on Form 10-K for the year ended December
31, 1994. Partially offsetting these decreases for the quarter
ended June 30, 1995 were higher liquids volumes and prices and
higher other income, primarily due to $6.6 million in gains on
sales of assets. The decreases in operating income for the six
months ended June 30, 1995 were partially offset by higher liquids
and natural gas volumes, higher liquids prices, lower operating
expenses and higher other income, primarily due to $9.6 million in
gains on sales of assets. Operating costs per barrel of oil
equivalent produced for the quarter and six months ended June 30,
1995, excluding DD&A and exploration expense, decreased $.13 and
$.47, respectively, compared to the same periods in 1994.
<PAGE>
<PAGE> 7
PART I. FINANCIAL INFORMATION - continued
Natural gas volumes produced for sale during the quarter and
six months ended June 30, 1995 were 718.6 MMcf per day and 700.5
MMcf per day, respectively. This compares to 720.5 MMcf per day
and 690.2 MMcf per day, respectively, for the same periods in 1994.
Liquids production volumes were 69.6 Mbbls per day and 71.4 Mbbls
per day, respectively, for the quarter and six months ended June
30, 1995 compared to 66.2 Mbbls per day and 64.8 Mbbls per day,
respectively, for the quarter and six months ended June 30, 1994.
In March 1995, Pennzoil and Brooklyn Union Gas Co. formed a
new gas marketing venture through their subsidiaries, Pennzoil Gas
Marketing Company and BRING Gas Services Corp. The 50-50 gas
marketing venture is known as PennUnion Energy Services, L.L.C.
("PennUnion"). Pennzoil contributed $3.7 million to the venture in
March 1995 and has committed a substantial majority of its natural
gas production from the continental U.S. to be marketed by
PennUnion.
In March 1995 the Financial Accounting Standards Board issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of," which is intended to
establish more consistent accounting standards for measuring the
recoverability of long-lived assets. In certain instances, the
statement specifies that the carrying values of assets be written
down to fair values, which, for Pennzoil, could result in
write-downs that were previously not required under its existing
impairment policy. Such charges would result primarily from the
more detailed impairment review procedures that would be required
on Pennzoil's proved oil and gas properties. Under the new
standard, assets to be reviewed for impairment are required to be
grouped at the lowest level for which there are identifiable cash
flows that are largely independent of the cash flows of other
groups. Under current policy, oil and gas assets reviewed for
impairment are grouped at a higher level. While the potential
impact of the new standard cannot be fully assessed at this time,
Pennzoil believes that the adoption of this statement could result
in a substantial charge to operating earnings and a corresponding
write-down of Pennzoil's fixed assets, primarily those related to
oil and gas producing activities. Pennzoil must adopt the new
standard no later than for its quarter ending March 31, 1996.
Motor Oil & Refined Products
Operating income from this segment for the quarter and six
months ended June 30, 1995 was $13.4 million and $27.7 million,
respectively. This compares to operating income of $16.6 million
and $42.4 million, respectively, for the same periods in 1994.
In July 1995, Pennzoil Products Company ("PPC") announced
plans to close The Eureka Pipe Line Company ("Eureka") in
approximately six months. Eureka, a wholly owned subsidiary,
operates a crude oil gathering system in West Virginia. In
connection with the decision to close the facility, PPC recorded a
charge of $5.7 million in June 1995 for estimated costs associated
with the closing. Excluding the closing costs accrued for Eureka,
operating income for the quarter ended June 30, 1995 increased $2.5
million from the same period in 1994. The increase was due in part
to higher domestic and international motor oil margins and higher
refinery margins. Partially offsetting these were lower specialty
product and other product margins and lower domestic motor oil
volumes.
Operating income for the six months ended June 30, 1995,
excluding the closing costs accrued for Eureka, was down $9.0
million from the same period in 1994. The decrease in operating
income was primarily due to lower specialty and other product
margins, and a $4.0 million litigation settlement charge.
Partially offsetting these were higher volumes for motor oil,
specialty and other products.
<PAGE>
<PAGE> 8
PART I. FINANCIAL INFORMATION - continued
In July 1995, PPC agreed to purchase a one-third ownership in
a manufacturing and marketing company located in Caracas,
Venezuela. The company, Aceites y Solventes Venezolanos VASSA
S.A., is constructing a facility in Cardon, Venezuela to
manufacture white oils, solvents, and transformer oils for sale
primarily in South America, Central America, and the Caribbean.
Pennzoil's capital investment will be approximately $14.5 million,
a portion of which will be financed through non-recourse project
financing.
Franchise Operations
The franchise operations segment, operating through Pennzoil's
wholly owned subsidiary Jiffy Lube International, Inc. ("Jiffy
Lube"), recorded operating income of $5.0 million and $4.9 million,
respectively, for the quarter and six months ended June 30, 1995.
This compares with operating income of $2.3 million and $1.6
million, respectively, for the same periods in 1994. The increase
in operating income for 1995 is primarily due to higher company
store results and lower operating expenses. Results for the six
months ended June 30, 1995 include a $6.0 million litigation
settlement charge.
Domestic systemwide sales reported on a comparable store
basis for the quarter and six months ended June 30, 1995
increased $7.4 million, or 4.9%, and $15.9 million, or 5.5%,
respectively, from comparable periods in 1994. Comparable stores
in the Jiffy Lube system reported a 3.8% increase in the total
number of vehicles serviced. There were 1,142 domestic lube
centers (including 462 Jiffy Lube company-operated centers) open
as of June 30, 1995.
Jiffy Lube currently operates six fast-oil change operations
in Sears Auto Centers in Kentucky and New Jersey as part of a test
which began in mid-1994. In March 1995, Jiffy Lube and the Sears
Merchandise Group ("Sears") agreed to open as many as 456 fast-oil
change units in Sears Auto Centers over the next three years. The
agreement calls for Jiffy Lube to open as many as 234 company-owned
units and 222 franchise units. Under the agreement, Jiffy Lube
remodels, equips and operates service areas within the Sears
Auto Centers, while Sears continues to utilize the remaining bays
for its operations. As a first step, Sears and Jiffy Lube have
agreed to set up 145 company-owned units and anticipates having
approximately 50 to 60 of these centers open by year end.
Sears and Jiffy Lube will continue to review the market and work
toward agreement on the final plans for the remaining 311 units
by later this year.
Sulphur
In October 1994, Pennzoil entered into an agreement with
Freeport-McMoRan Resource Partners, Limited Partnership ("Freeport-
McMoRan") providing for the sale of substantially all the domestic
assets of Pennzoil's sulphur segment to Freeport-McMoRan. The
transaction was completed in January 1995. Pennzoil continues to
operate its related international sulphur business. Beginning in
January 1995, the results of such operations are included in other
segment operating income.
<PAGE>
<PAGE> 9
PART I. FINANCIAL INFORMATION - continued
Other
Other operating income for the quarter and six months ended
June 30, 1995 was $6.9 million and $47.9 million, respectively,
compared with $17.8 million and $34.7 million, respectively, for
the same periods in 1994. The decrease in other operating income
for the quarter ended June 30, 1995, compared to the same period in
1994, was due to lower investment income as the result of having
lower investable funds. The increase in other operating income for
the six months ended June 30, 1995, compared to the same period in
1994, was primarily due to a favorable resolution of a Texas
franchise tax issue, which resulted in Pennzoil's receiving a $23.2
million refund. In addition, Pennzoil received approximately $1.5
million in interest associated with the franchise tax refund. This
increase was partially offset by lower investment income as the
result of having lower investable funds.
Net interest expense for the quarter and six months ended June
30, 1995 increased $4.2 million and $11.1 million, respectively,
from the same periods in 1994 primarily due to increased average
borrowings at higher rates.
Capital Resources and Liquidity
As of June 30, 1995, Pennzoil had cash and cash equivalents of
$36.4 million, an increase of $11.5 million over December 31, 1994.
Cash flows from operating activities totaled $264.0 million during
the six months ended 1995.
Pennzoil's other income includes dividend income from its
investment in common stock of Chevron Corporation ("Chevron") of
$8.4 million and $16.7 million for the quarter and six months
ended June 30, 1995, respectively compared to $8.4 million and
$16.7 million, respectively, for the same periods in 1994.
In July 1995, Chevron announced an increase in the amount of
quarterly dividends paid to holders of its common stock from
$.4625 per share to $.50 per share.
In February 1995, Pennzoil's Board of Directors increased the
limit on the aggregate amount of commercial paper that Pennzoil may
issue under its domestic commercial paper program and/or its Euro-
commercial paper program from $250.0 million to $500.0 million.
Borrowings under Pennzoil's commercial paper facilities totaled
$415.0 million and $243.9 million at June 30, 1995 and December 31,
1994, respectively. The cash provided by the increase in
borrowings under Pennzoil's commercial paper facilities was used
primarily to repay $205.0 million in borrowings under an unsecured
revolving credit facility with a group of banks.
In April 1995, Pennzoil received a cash tax refund of $116.9
million from the Internal Revenue Service, which was used to reduce
borrowings under its commercial paper facilities.
<PAGE>
<PAGE> 10
PART I. FINANCIAL INFORMATION - continued
<TABLE>
(UNAUDITED)
The following tables show revenues and operating income by segment,
other components of income and operating data.
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(Dollar amounts expressed in thousands)
<S> <C> <C> <C> <C>
REVENUES
Oil and Gas $ 201,843 $ 210,353 $ 391,019 $ 414,317
Motor Oil & Refined Products 400,718 387,574 779,001 744,979
Franchise Operations 72,879 65,136 139,999 127,354
Sulphur - 14,896 - 30,827
Other 13,424 16,721 55,456 38,256
Intersegment sales (42,251) (42,871) (83,522) (81,848)
----------- ----------- ----------- -----------
Total revenues $ 646,613 $ 651,809 $1,281,953 $1,273,885
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Oil and Gas $ 32,475 $ 54,121 $ 45,383 $ 91,707
Motor Oil & Refined Products 13,394 16,600 27,659 42,358
Franchise Operations 5,046 2,335 4,898 1,598
Sulphur - (3,406) - (7,136)
Other 6,856 17,760 47,914 34,702
----------- ----------- ----------- -----------
Total operating income 57,771 87,410 125,854 163,229
Corporate administrative expenses 16,738 17,866 34,184 35,430
Interest charges, net 47,767 43,581 96,246 85,170
----------- ----------- ----------- -----------
Income (loss) before income tax (6,734) 25,963 (4,576) 42,629
Income tax provision (benefit) (1,944) 9,153 (2,529) 15,081
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (4,790) 16,810 (2,047) 27,548
Cumulative effect of change in accounting principle - - - (4,948)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (4,790) $ 16,810 $ (2,047) $ 22,600
=========== =========== =========== ===========
RATIO OF EARNINGS TO FIXED CHARGES - 1.38
=========== ===========
AMOUNT BY WHICH FIXED CHARGES EXCEED EARNINGS $ 7,351 $ -
=========== ===========
</TABLE>
<PAGE>
<PAGE> 11
PART I. FINANCIAL INFORMATION - continued
<TABLE>
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------ ------------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING DATA
--------------
OIL AND GAS
Net production
Crude oil, condensate and natural
gas liquids (barrels per day) 69,584 66,203 71,445 64,811
Natural gas produced for sale (Mcf per day) 718,606 720,463 700,540 690,161
Weighted average prices
Crude oil, condensate and natural
gas liquids (per barrel) $ 15.01 $ 14.11 $ 14.66 $ 13.05
Natural gas (per Mcf) $ 1.45 $ 1.88 $ 1.43 $ 2.05
MOTOR OIL & REFINED PRODUCTS
Sales (barrels per day)
Gasoline and naphtha 19,211 25,695 20,464 25,268
Distillates and gas oils 28,319 31,118 28,403 30,212
Lubricating oil and other specialty products 24,037 22,662 24,039 22,765
Residual fuel oils 3,737 3,931 3,916 3,582
----------- ----------- ----------- -----------
Total sales (barrels per day) 75,304 83,406 76,822 81,827
=========== =========== =========== ===========
Raw materials processed (barrels per day) 54,328 58,621 54,936 57,647
Refining capacity (barrels per day) <F1> 62,700 70,700 62,700 70,700
FRANCHISE OPERATIONS
Domestic systemwide sales (in thousands) $ 167,679 $ 154,096 $ 320,213 $ 291,588
Same center sales (in thousands) $ 159,011 $ 151,625 $ 303,041 $ 287,136
Centers open (U.S.) 1,142 1,086 1,142 1,086
<FN>
<F1>
As of September 1994, Pennzoil stopped processing
crude oil at its refinery in Roosevelt, Utah. The
Roosevelt Refinery had a refining capacity of 8,000
barrels per day.
</FN>
</TABLE>
<PAGE>
<PAGE> 12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting of Shareholders
April 27, 1995
<TABLE>
<CAPTION>
Broker
(c) Proposals For Against Withheld Abstain Non-Votes
----------- ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Election of Directors
W. J. Bovaird 39,298,903 - 930,687 - -
W. L. Lyons Brown, Jr. 39,325,434 - 904,156 - -
Ernest H. Cockrell 39,282,490 - 947,100 - -
Approval of Appointment of
Arthur Andersen LLP
as Independent Public
Accountants 39,946,198 170,513 - 112,879 -
Amendment and Restatement of
the Restated Certificate
of Incorporation 31,159,726 8,646,026 - 423,838 -
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
12 Computation of Ratio of Earnings to Fixed Charges
for the six months ended June 30, 1995 and 1994.
27 Financial Data Schedule
(b) Reports -
No reports on Form 8-K were filed during the quarter
for which this report was filed.
<PAGE>
<PAGE> 13
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 COMPANY
Registrant
S/N Michael J. Maratea
Michael J. Maratea
Controller
August 9, 1995
<TABLE>
EXHIBIT 12
PENNZOIL COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
For the six months ended
June 30,
----------------------------------
1995 1994
------------- -------------
(Dollar amounts expressed in thousands)
<S> <C> <C>
Income (loss) before cumulative effect of change
in accounting principle $ (2,047) $ 27,548
Income tax provision (benefit)
Federal and foreign (3,588) 11,819
State 1,059 3,262
------------- -------------
Total income tax provision (benefit) (2,529) 15,081
Interest charges 108,929 96,720
------------- -------------
Income before income tax provision (benefit) and interest charges $ 104,353 $ 139,349
============= =============
Fixed charges $ 111,704 $ 101,214
============= =============
Ratio of earnings to fixed charges 0.93 1.38
============= =============
Amount by which fixed charges exceed earnings $ 7,351 $ -
============= =============
<CAPTION>
DETAIL OF INTEREST AND FIXED CHARGES
For the six months ended
June 30,
----------------------------------
1995 1994
------------- -------------
(Expressed in thousands)
<S> <C> <C>
Interest charges per Consolidated Statement of Income
which includes amortization of debt discount, expense and premium $ 99,021 $ 89,664
Add: portion of rental expense representative of interest factor <F1> 12,683 11,550
------------- -------------
Total fixed charges $ 111,704 $ 101,214
Less: interest capitalized per Consolidated Statement of Income 2,775 4,494
------------- -------------
Total interest charges $ 108,929 $ 96,720
============= =============
<FN>
<F1> Interest factor based on management's estimates and approximates one-third of rental expense.
</FN>
</TABLE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1995 Commission File No. 1-5591
PENNZOIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1597290
(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)
EXHIBIT
<PAGE>
PENNZOIL COMPANY AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No.
-----------
12 Computation of Ratio of Earnings to Fixed Charges for the six
months ended June 30, 1995 and 1994.
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 36,350
<SECURITIES> 0
<RECEIVABLES> 358,300
<ALLOWANCES> 9,866
<INVENTORY> 153,612
<CURRENT-ASSETS> 609,090
<PP&E> 6,049,558
<DEPRECIATION> 3,285,023
<TOTAL-ASSETS> 4,594,317
<CURRENT-LIABILITIES> 817,037
<BONDS> 1,977,234
<COMMON> 43,507
0
0
<OTHER-SE> 1,103,753
<TOTAL-LIABILITY-AND-EQUITY> 4,594,317
<SALES> 1,212,503
<TOTAL-REVENUES> 1,281,953
<CGS> 755,436
<TOTAL-COSTS> 775,817
<OTHER-EXPENSES> 212,008
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96,246
<INCOME-PRETAX> (4,576)
<INCOME-TAX> (2,529)
<INCOME-CONTINUING> (2,047)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,047)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
