Pennzoil-Quaker State To Undergo Major Restructuring.(Brief Article)

Pennzoil-Quaker State Co. said it will undertake a comprehensive corporate restructuring program designed to enhance growth potential, strengthen its balance sheet, accelerate debt reduction and improve long-term shareholder value. The company said it will implement an accelerated organizational restructuring in the lubricants, consumer products and international segments, generating improvements of $40 million over the next two years.

The company said it is taking the restructuring actions in response to continued weak demand for automotive consumer products, resulting from high gasoline prices, fewer miles being driven by motorists and the lingering effects from increased retail prices for motor oil.

"These measures are the right actions to be taking now," said James J. Postl, president and chief executive officer of Pennzoil-Quaker State Co. "While the company has been executing well on its strategy to create one of the leading automotive consumer products powerhouses, we have been fighting an uphill battle against a very difficult macro environment. I feel confident the industry will recover as it has in the past, but we have not yet seen evidence that the recovery has begun. Therefore, we must plan prudently to ensure that we achieve our objectives in spite of the current soft market."

"We reduced costs by much more than originally expected, generated new products and acquisitions, dramatically streamlined our portfolio and built a senior management team. The deteriorating market environment, however, offset much of this success."

In lubricants, the restructuring is primarily intended to reduce manufacturing and selling expense. Consumer products will consolidate its four business units into one organization in Houston. The international segment will be scaling back low margin operations, facilities and distribution channels, the company said.

"When completed, we anticipate that we will have created a better organization for our customers and more profitable business segments for our shareholders," Postl said. These initiatives will require an after-tax charge to earnings of approximately $50 million, he added.

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