<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
Mark One
X ANNUAL REPORT PURSUANT TO SECTION 15(d)
- ------------------- OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998.
TRANSITION REPORT PURSUANT TO SECTION 13 OR
- ------------------- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from to
-------------------- --------------------
Commission File Number 1-14501
Full title of the Plan and the address of the Plan, if different from the issuer
named below:
Pennzoil-Quaker State Company
Thrift and Stock Purchase Plan
(formerly Quaker State Corporation
Thrift and Stock Purchase Plan)
Name of issuer of the securities held pursuant to the Plan and the address of
its principal executive office:
Pennzoil-Quaker State Company
Pennzoil Place, 700 Milam Street
Houston, TX 77252-2967
<PAGE> 2
REQUIRED INFORMATION
The Pennzoil-Quaker State Company Thrift and Stock Purchase Plan (Plan), is
subject to the Employee Retirement Income Security Act of 1974, as amended
(ERISA). Therefore, in lieu of the information required by Items 1-3 of Form
11-K, the financial statements and schedules of the Plan for the fiscal years
ended December 31, 1998 and 1997, which have been prepared in accordance with
the financial reporting requirements of ERISA, except for the "limited scope
exemption" contained in ERISA Section 103 (a)(3)(c) which does not apply, are
attached hereto as Appendix I and are incorporated herein by reference.
EXHIBITS
The Exhibits listed below are filed as a part of this Annual Report:
23.1 Consent of Arthur Andersen LLP
23.2 Consent of PricewaterhouseCoopers LLP
<PAGE> 3
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee has duly caused this annual report to be signed on
behalf of the Plan by the undersigned hereunto duly authorized.
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
Date July 14, 1999 By /s/ JAMES W. SHADDIX
---------------------- -------------------------------
James W. Shaddix
Chairman of the Administrative
Committee
<PAGE> 4
APPENDIX I
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
--------
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
as of December 31, 1998 and 1997
TOGETHER WITH REPORTS OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 5
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
---------
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Reports of Independent Public Accountants 2-3
Financial Statements:
Statements of Net Assets Available for
Benefits as of December 31, 1998 and 1997 4-7
Statements of Changes in Net Assets Available
for Benefits for the years ended
December 31, 1998 and 1997 8-11
Notes to Financial Statements 12-16
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1998 17
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1998 18
Item 27e - Schedule of Nonexempt Transactions
for the year ended December 31, 1998 19-20
</TABLE>
1
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee for the
Pennzoil-Quaker State Company Thrift and Stock Purchase Plan:
We have audited the accompanying statement of net assets available for benefits
of Pennzoil-Quaker State Company Thrift and Stock Purchase Plan (the Plan) as of
December 31, 1998 and the related statement of changes in net assets available
for benefits for the year ended December 31, 1998. These financial statements
and the supplemental schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and supplemental schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and the changes in net assets available for benefits for the
year ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as whole. The supplemental schedules listed on page 1
are presented for purposes of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statement of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
July 6, 1999
2
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
To the Administrative Committee:
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Pennzoil-Quaker State Company Thrift and Stock Purchase Plan (formerly
Quaker State Corporation Thrift and Stock Purchase Plan and referred to herein
as the Plan) at December 31, 1997, and the changes in net assets available for
benefits for the year ended December 31, 1997 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
in accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above. We have not audited the financial statements of
the Pennzoil-Quaker State Company Thrift and Stock Purchase Plan for any period
subsequent to December 31, 1997.
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
June 19, 1998
3
<PAGE> 8
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1998
<TABLE>
<CAPTION>
Participant Directed Funds
---------------------------------------------------------------------------------
Spartan Fidelity
Pennzoil- Fidelity Fidelity U.S. Investment
Quaker State Puritan Magellan Fidelity Equity Grade Bond
Stock Fund Fund Fund Contrafund Fund Fund
----------- ----------- ----------- ----------- ----------- -----------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE
Pennzoil-Quaker State Company capital stock $ 4,380,144 $ -- $ -- $ -- $ -- $ --
Registered Investment Companies -- 1,588,497 3,010,939 2,992,961 227,833 1,555,275
Money market accounts 71,557 -- -- -- -- --
Participant loans -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENTS 4,451,701 1,588,497 3,010,939 2,992,961 227,833 1,555,275
RECEIVABLES
Employee contributions 8,525 7,079 10,149 8,177 7,480 3,370
Company contributions -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 4,460,226 $ 1,595,576 $ 3,021,088 $ 3,001,138 $ 235,313 $ 1,558,645
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
4
<PAGE> 9
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Participant Directed Funds
------------------------------------------------
Fidelity Fidelity Fidelity
Growth & Low-Priced Diversified
Income Stock International
Fund Fund Fund
-------------- -------------- --------------
ASSETS
<S> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE
Pennzoil-Quaker State Company capital stock $ -- $ -- $ --
Registered Investment Companies 8,889,954 1,697,412 853,170
Money market accounts -- -- --
Participant loans -- -- --
-------------- -------------- --------------
TOTAL INVESTMENTS 8,889,954 1,697,412 853,170
RECEIVABLES
Employee contributions 20,563 6,150 3,345
Company contributions -- -- --
-------------- -------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 8,910,517 $ 1,703,562 $ 856,515
============== ============== ==============
<CAPTION>
Non-Participant
Participant Directed Funds Directed
------------------------------- ----------------
Fidelity
Retirement Pennzoil-
Money Market Quaker State
Fund Loans Stock Fund Total
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE
Pennzoil-Quaker State Company capital stock $ -- $ -- $ 6,070,830 $ 10,450,974
Registered Investment Companies -- -- -- 20,816,041
Money market accounts 2,269,150 -- 99,183 2,439,890
Participant loans -- 1,530,863 -- 1,530,863
-------------- -------------- -------------- --------------
TOTAL INVESTMENTS 2,269,150 1,530,863 6,170,013 35,237,768
RECEIVABLES
Employee contributions 4,004 -- -- 78,842
Company contributions -- -- 27,442 27,442
-------------- -------------- -------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,273,154 $ 1,530,863 $ 6,197,455 $ 35,344,052
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 10
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1997
<TABLE>
<CAPTION>
Participant Directed Funds
------------------------------------------
Fidelity Fidelity
Quaker State Puritan Magellan
Stock Fund Fund Fund
------------ ------------ ------------
ASSETS
<S> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE
Quaker State Corporation capital stock $ 5,435,506 $ -- $ --
Registered Investment Companies -- 1,621,407 2,237,095
Money market accounts 127,941 -- --
Participant loans -- -- --
------------ ------------ ------------
TOTAL INVESTMENTS 5,563,447 1,621,407 2,237,095
RECEIVABLES
Employee contributions 66,634 19,854 34,081
Company contributions -- -- --
ACCRUED INTEREST RECEIVABLE -- -- --
------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,630,081 $ 1,641,261 $ 2,271,176
============ ============ ============
<CAPTION>
Participant Directed Funds
---------------------------------------------------------
Fidelity Fidelity Fidelity
Investment Growth & Low-Priced
Fidelity Grade Bond Income Stock
Contrafund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE
Quaker State Corporation capital stock $ -- $ -- $ -- $ --
Registered Investment Companies 2,699,960 1,723,415 8,536,472 2,171,905
Money market accounts -- -- -- --
Participant loans -- -- -- --
------------ ------------ ------------ ------------
TOTAL INVESTMENTS 2,699,960 1,723,415 8,536,472 2,171,905
RECEIVABLES
Employee contributions 32,503 14,717 79,241 26,076
Company contributions -- -- -- --
ACCRUED INTEREST RECEIVABLE -- -- -- --
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,732,463 $ 1,738,132 $ 8,615,713 $ 2,197,981
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
6
<PAGE> 11
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Non-Participant
Participant Directed Funds Directed
------------------------------------------------ ---------------
Fidelity Fidelity
Diversified Retirement
International Money Market Quaker State
Fund Fund Loans Stock Fund Total
-------------- -------------- -------------- -------------- --------------
ASSETS
<S> <C> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE
Quaker State Corporation capital stock $ -- $ -- $ -- $ 8,366,562 $ 13,802,068
Registered Investment Companies 847,759 -- -- -- 19,838,013
Money market accounts -- 2,573,912 -- 197,428 2,899,281
Participant loans -- -- 1,953,633 -- 1,953,633
-------------- -------------- -------------- -------------- --------------
TOTAL INVESTMENTS 847,759 2,573,912 1,953,633 8,563,990 38,492,995
RECEIVABLES
Employee contributions 13,900 13,754 -- 480 301,240
Company contributions -- -- -- 80,067 80,067
ACCRUED INTEREST RECEIVABLE -- -- -- 1,259 1,259
-------------- -------------- -------------- -------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 861,659 $ 2,587,666 $ 1,953,633 $ 8,645,796 $ 38,875,561
============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 12
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Participant Directed Funds
---------------------------------------------------------------------------------------------
Fidelity
Pennzoil- Fidelity Fidelity Fidelity Spartan U.S. Investment
Quaker State Puritan Magellan Contrafund Equity Grade Bond
Stock Fund Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS
Employee $ 944,964 $ 265,569 $ 490,445 $ 444,862 $ 63,368 $ 177,699
Company -- -- -- -- -- --
Rollovers from qualified plans 26,267 16,374 140,131 23,578 29,611 12,413
------------ ------------ ------------ ------------ ------------ ------------
971,231 281,943 630,576 468,440 92,979 190,112
INVESTMENT INCOME
Dividends and interest -- 156,293 131,642 220,844 2,683 91,710
Loan repayment interest 31,921 6,758 16,885 10,541 885 10,636
NET APPRECIATION (DEPRECIATION) (470,908) 83,794 609,665 497,250 26,835 23,260
OF INVESTMENTS
DISTRIBUTIONS AND WITHDRAWALS (667,657) (234,690) (395,796) (303,748) (28,123) (258,196)
NET TRANSFERS
Among funds (562,371) (92,460) 241,538 (24,529) 146,343 83,882
To other plans (408,787) (232,945) (428,383) (576,954) (2,584) (319,501)
PARTICIPANT LOANS
New loans issued (241,435) (56,669) (141,332) (70,802) (7,309) (59,229)
Principal received 178,151 42,291 85,117 47,633 3,604 57,839
------------ ------------ ------------ ------------ ------------ ------------
NET CHANGE (1,169,855) (45,685) 749,912 268,675 235,313 (179,487)
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 5,630,081 1,641,261 2,271,176 2,732,463 -- 1,738,132
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ 4,460,226 $ 1,595,576 $ 3,021,088 $ 3,001,138 $ 235,313 $ 1,558,645
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
8
<PAGE> 13
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (Continued)
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Participant Directed Funds
------------------------------------------------
Fidelity Fidelity Fidelity
Growth & Low-Priced Diversified
Income Stock International
Fund Fund Fund
------------- ------------- -------------
CONTRIBUTIONS
Employee $ 1,053,597 $ 338,316 $ 177,445
Company -- -- --
Rollovers from qualified plans 63,061 30,418 30,118
------------- ------------- -------------
1,116,658 368,734 207,563
INVESTMENT INCOME
Dividends and interest 467,211 148,917 33,615
Loan repayment interest 30,455 9,125 4,311
NET APPRECIATION (DEPRECIATION)
OF INVESTMENTS 1,543,190 (121,977) 85,928
DISTRIBUTIONS AND WITHDRAWALS (1,029,889) (217,014) (82,562)
NET TRANSFERS
Among funds (200,309) (184,613) (110,092)
To other plans (1,579,906) (469,775) (130,691)
PARTICIPANT LOANS
New loans issued (225,934) (70,543) (32,837)
Principal received 173,328 42,727 19,621
------------- ------------- -------------
NET CHANGE 294,804 (494,419) (5,144)
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 8,615,713 2,197,981 861,659
------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ 8,910,517 $ 1,703,562 $ 856,515
============= ============= =============
<CAPTION>
Non-Participant
Participant Directed Funds Directed
------------------------------ -----------------
Fidelity
Retirement Pennzoil-
Money Market Quaker State
Fund Loans Stock Fund Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CONTRIBUTIONS
Employee $ 196,212 $ -- $ -- $ 4,152,477
Company -- -- 1,462,558 1,462,558
Rollovers from qualified plans 60,510 -- -- 432,481
------------- ------------- ------------- -------------
256,722 -- 1,462,558 6,047,516
INVESTMENT INCOME
Dividends and interest 120,745 -- -- 1,373,660
Loan repayment interest 9,831 -- 5,177 136,525
NET APPRECIATION (DEPRECIATION)
OF INVESTMENTS -- -- (779,659) 1,497,378
DISTRIBUTIONS AND WITHDRAWALS (752,705) (227,497) (1,344,720) (5,542,597)
NET TRANSFERS
Among funds 658,084 44,879 (352) --
To other plans (570,001) (526,526) (1,797,938) (7,043,991)
PARTICIPANT LOANS
New loans issued (87,030) 1,025,179 (32,059) --
Principal received 49,842 (738,805) 38,652 --
------------- ------------- ------------- -------------
NET CHANGE (314,512) (422,770) (2,448,341) (3,531,509)
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 2,587,666 1,953,633 8,645,796 38,875,561
------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ 2,273,154 $ 1,530,863 $ 6,197,455 $ 35,344,052
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 14
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Participant Directed Funds
--------------------------------------------------------
Fund A Fund B Quaker State Fund D
Income Fund Bond Fund Stock Fund Equity Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CONTRIBUTIONS
Employee $ 99,960 $ 35,637 $ 1,193,869 $ 59,079
Company -- -- -- --
Rollovers from qualified plans -- -- 47,572 --
----------- ----------- ----------- -----------
99,960 35,637 1,241,441 59,079
INVESTMENT INCOME
Dividends and interest 27,683 23,313 47,956 2,196
Loan Repayment interest 1,313 1,746 29,468 3,374
NET APPRECIATION (DEPRECIATION)
OF INVESTMENTS (6,574) (6,880) 224,025 342,840
DISTRIBUTIONS AND WITHDRAWALS (370,550) (72,326) (1,515,281) (257,170)
NET TRANSFERS
Among funds (4,602,685) (2,330,181) (648,503) (5,978,821)
From other plans -- -- 35,670 --
PARTICIPANT LOANS
New loans issued (16,997) (11,634) (272,072) (23,789)
Principal received 9,265 8,458 149,777 16,399
----------- ----------- ----------- -----------
NET CHANGE (4,858,585) (2,351,867) (707,519) (5,835,892)
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 4,858,585 2,351,867 6,337,600 5,835,892
----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ -- $ -- $ 5,630,081 $ --
=========== =========== =========== ===========
<CAPTION>
Participant Directed Funds
--------------------------------------------------------
Fidelity
Fidelity Fidelity Fidelity Investment
Puritan Magellan Contrafund Grade Bond
Fund Fund Fund Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CONTRIBUTIONS
Employee $ 302,838 $ 470,821 $ 492,993 $ 230,654
Company -- -- -- --
Rollovers from qualified plans 11,255 51,011 40,087 2,207
----------- ----------- ----------- -----------
314,093 521,832 533,080 232,861
INVESTMENT INCOME
Dividends and interest 113,892 124,498 221,069 119,761
Loan Repayment interest 5,401 12,928 11,351 10,037
NET APPRECIATION (DEPRECIATION)
OF INVESTMENTS 108,984 193,588 258,553 22,458
DISTRIBUTIONS AND WITHDRAWALS (109,400) (87,232) (100,596) (150,663)
NET TRANSFERS
Among funds 926,514 1,369,292 877,318 1,320,923
From other plans 318,091 210,385 977,481 239,010
PARTICIPANT LOANS
New loans issued (67,971) (129,418) (110,409) (108,637)
Principal received 31,657 55,303 64,616 52,382
----------- ----------- ----------- -----------
NET CHANGE 1,641,261 2,271,176 2,732,463 1,738,132
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year -- -- -- --
----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ 1,641,261 $ 2,271,176 $ 2,732,463 $ 1,738,132
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
10
<PAGE> 15
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (Continued)
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Participant Directed Funds
---------------------------------------------
Fidelity Fidelity Fidelity
Growth & Low-Priced Diversified
Income Stock International
Fund Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
CONTRIBUTIONS
Employee $ 1,211,438 $ 402,019 $ 192,233
Company -- -- --
Rollovers from qualified plans 211,949 55,060 6,304
------------ ------------ ------------
1,423,387 457,079 198,537
INVESTMENT INCOME
Dividends 381,184 133,976 30,723
Interest 31,731 9,522 3,657
NET APPRECIATION (DEPRECIATION)
OF INVESTMENTS 1,154,719 215,327 20,787
DISTRIBUTIONS AND WITHDRAWALS (408,303) (45,885) (41,143)
NET TRANSFERS
Among funds 5,738,755 1,442,946 527,383
From other plans 449,171 -- 127,264
PARTICIPANT LOANS
New loans issued (333,140) (62,976) (28,212)
Principal received 178,209 47,992 22,663
------------ ------------ ------------
NET CHANGE 8,615,713 2,197,981 861,659
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year -- -- --
------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ 8,615,713 $ 2,197,981 $ 861,659
============ ============ ============
<CAPTION>
Non-Participant
Participant Directed Funds Directed
---------------------------- --------------------
Fidelity
Retirement
Money Market Quaker State
Fund Loans Stock Fund Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CONTRIBUTIONS
Employee $ 250,592 $ -- $ -- $ 4,942,133
Company -- -- 1,574,142 1,574,142
Rollovers from qualified plans 42,927 -- -- 468,372
------------ ------------ ------------ ------------
293,519 -- 1,574,142 6,984,647
INVESTMENT INCOME
Dividends 153,054 -- 49,121 1,428,426
Interest 8,362 -- 5,264 134,154
NET APPRECIATION (DEPRECIATION)
OF INVESTMENTS -- -- 324,967 2,852,794
DISTRIBUTIONS AND WITHDRAWALS (399,933) (106,386) (675,229) (4,340,097)
NET TRANSFERS
Among funds 2,012,537 -- (655,478) --
From other plans 560,222 -- 516,841 3,434,135
PARTICIPANT LOANS
New loans issued (87,094) 1,275,409 (23,060) --
Principal received 46,999 (716,328) 32,608 --
------------ ------------ ------------ ------------
NET CHANGE 2,587,666 452,695 1,149,176 10,494,059
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year -- 1,500,938 7,496,620 28,381,502
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $ 2,587,666 $ 1,953,633 $ 8,645,796 $ 38,875,561
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 16
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
-----------
1. MAJOR FEATURES OF THE PLAN:
General
The Pennzoil-Quaker State Company Thrift and Stock Purchase Plan
(formerly the Quaker State Corporation Thrift and Stock Purchase Plan)
(the Plan) is a defined contribution and profit sharing plan available
to eligible employees of Quaker State Corporation (a wholly owned
subsidiary of Pennzoil-Quaker State Company at December 30, 1998) and
certain employees of subsidiaries of Quaker State Corporation (the
Company) who have reached age 21 and are not participating in the
Pennzoil-Quaker State Savings and Investment Plan. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of
1974, as amended (ERISA). The Administrative Committee appointed by the
Board of Directors of Pennzoil-Quaker State Company administers the
Plan. Reference should be made to the Summary Plan Description and
Prospectus and the related Summary of Material Modifications for a
detailed description of the Plan including eligibility, vesting,
employee and Company contributions, investment options, withdrawals,
borrowings by participants and termination of the Plan.
Investment Options
All Company contributions and former Company Profit Sharing
contributions are invested in the Pennzoil-Quaker State Stock Fund
(formerly the Quaker State Stock Fund); however, participants may
select any one or more of the funds for their contributions in 1%
increments. The investment options are as follows:
o Pennzoil-Quaker State Stock Fund - A fund invested primarily
in Pennzoil-Quaker State Company common stock with a small
amount invested in short-term instruments. On December 30,
1998, each share of Quaker State Capital Stock held by the
Plan in the Quaker State Stock Fund converted to .8204 of a
share of Pennzoil-Quaker State Company common stock.
o Fidelity Puritan Fund - A balanced fund primarily invested in
a combination of equity and fixed income securities.
o Fidelity Magellan Fund - A growth fund primarily invested in
securities of companies with above-average growth potential.
o Fidelity Contrafund - A growth fund that seeks long-term
capital appreciation by investing mainly in the securities of
companies believed to be undervalued.
o Spartan U.S. Equity Index Fund - An index fund that seeks a
total return corresponding to that of the Standard & Poor's
500 Index. This fund was added January 1, 1998.
o Fidelity Investment Grade Bond Fund - A fund that invests at
least 65% of its portfolio in investment-grade fixed-income
securities including a broad range of corporate debt
securities that are investment grade.
o Fidelity Growth & Income Portfolio - A growth and income fund
invested primarily in domestic securities focusing on those
that pay current dividends and offer potential growth of
earnings.
o Fidelity Low-Priced Stock Fund - A growth fund primarily
invested in domestic and foreign low-priced stocks that may be
undervalued.
o Fidelity Diversified International Fund - An international
fund invested primarily in equity securities of companies
outside the United States.
o Fidelity Retirement Money Market Portfolio - A fund primarily
invested in short-term money market securities of U.S. and
foreign issuers.
Prior to February 1, 1997, only four funds were available for
investment. Fund A, the Income Fund, was composed of Compass Capital
Money Market funds and bonds or other obligations issued by the U.S.
Government. Fund B was the Compass Capital Intermediate Government
Portfolio, a registered investment company, comprised of a portfolio of
fixed income securities. Fund C, the Quaker State Stock Fund, was
composed of Quaker State capital stock. Fund D was the Compass Capital
Index Equity Portfolio, a registered investment company, comprised of a
diversified portfolio of corporate stocks.
12
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS, Continued
-----------
1. MAJOR FEATURES OF THE PLAN, continued
On February 1, 1997, the Plan changed its recordkeeper to Fidelity
Institutional Retirement Services Company and its trustee to Fidelity
Management Trust Company.
Contributions
Under the Plan, certain participants may elect to make contributions on
a tax-deferred basis in the form of a salary reduction (Tax-Deferred
Contributions) up to the lesser of 15% of their compensation or $10,000
(as adjusted annually by the Internal Revenue Service (IRS)). Some
highly compensated employees are limited to lower contributions to
satisfy IRS discrimination testing limits. In addition, employees may
elect to make contributions on an after-tax basis in the form of a
payroll deduction (Thrift Contributions) of up to 6% of their
compensation; however, the sum of the Thrift Contributions and the
Tax-Deferred Contributions cannot exceed 15% of the participant's
compensation. For contribution purposes, not more than $160,000 of a
participant's compensation (as adjusted annually by the IRS) can be
taken into account for any one calendar year. Subject to limitations,
the Company will make contributions (Company Matching Contributions) in
an amount equal to 50% of a participant's total contributions paid each
pay date up to a maximum of 3% of that participant's compensation. In
addition, the Plan accepts rollover contributions from employees'
former employer qualified plans and conduit IRAs.
Vesting
Effective December 30, 1998, participants are fully vested in all
contributions made to the Plan plus actual earnings thereon.
Participant Accounts and Benefit Payments
An account is maintained for each participant, which is credited daily
with the participant's contributions and allocation of (a) the
Company's Matching Contributions, and (b) Plan earnings. Allocations
are based on participant contributions, other than rollover
contributions, or account balances, as defined by the Plan. The benefit
to which a participant is entitled is the benefit that can be provided
from that participant's account. As of December 31, 1998 and 1997,
there were 2,948 and 2,833 participants in the Plan, respectively.
Amendments
In February 1997, the Plan was amended to: (1) change the minimum
contribution percentage to each fund from 10% to 1% increments; (2)
make immediate participation available to new employees over 21 years
of age; (3) make Plan accounting and transaction processing daily; (4)
increase the number of investment options available under the Plan to a
maximum of ten investments, one of which would be Quaker State capital
stock; (5) change the method of calculating the interest rate on loans;
(6) make other changes necessary to comply with the new recordkeeper
and trustee systems; and (7) make amendments required by the Small
Business Job Protection Act of 1996. In December 1997, the Plan was
amended to terminate all future Profit sharing contributions into the
Plan and to merge the terminated Quaker State Corporation Employee
Stock Ownership Plan accounts (ESOP) into the Plan.
On December 30, 1998, in connection with the merger of Quaker State
Corporation into Pennzoil-Quaker State Company, the Plan was amended to
(1) change the name of the Plan; (2) change the name of the stock fund
and stock held by the Plan; (3) vest all Slick 50 accounts currently
held in the Plan and (4) exclude from participation employees already
participating in the Pennzoil-Quaker State Savings and Investment Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The financial statements of the Plan are prepared under the accrual
method of accounting. Certain 1997 items have been reclassified in
order to conform to 1998 presentation.
13
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS, Continued
-----------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:
Investments
Investments are carried at fair value in the accompanying financial
statements. Investments in money market accounts are carried at cost
which approximates market. Registered investment companies are valued
at market determined by quoted market prices. Participant loan
receivables are valued at cost which approximates market.
Purchases and sales of Pennzoil-Quaker State Company capital stock are
reflected on a trade-date basis. Gains and losses are based on average
cost for Pennzoil-Quaker State Company capital stock.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded as earned.
The Plan presents in the statement of changes in net assets available
for benefits the net appreciation (depreciation) in the fair value of
its investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) of Pennzoil-Quaker State Company
capital stock and net increase (decrease) in the value of the Plan's
interest in mutual funds.
Investments in the Pennzoil-Quaker State Company Stock Fund are
assigned units of participation. The unit value is determined daily
based upon the fair market value of the underlying net assets. At
December 31, 1998, the total units assigned to participants were
1,127,570 and the unit value assigned was $9.42.
Other
Administrative expenses, including trustee, legal, auditing and other
fees, are paid by Pennzoil-Quaker State Company and, therefore, are not
expenses of the Plan.
The preparation of financial statements requires the plan administrator
to make estimates and assumptions that affect the reported amounts of
net assets available for benefits at the date of the financial
statements and amounts included as changes in net assets available for
benefits during the reporting period. Actual results could differ from
those estimates.
The Plan provides for various investment options including investment
securities. Investment securities are exposed to various risks, such as
interest rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at least
reasonably possible that changes in the values of the investment
securities will occur in the near term and that such changes could
materially affect the amounts reported in the statement of net assets
available for benefits and participant accounts.
3. PARTICIPANT LOANS:
Participants are permitted to borrow against all or a portion of all
units held with the Plan except ESOP units within prescribed
limitations and pursuant to nondiscriminatory rules established by the
Committee. Loan transactions are treated as a transfer to (from) the
applicable investment fund from (to) the Employee Loan Account. Each
loan is to be repaid over a period not to exceed five years or ten
years for certain loans related to a participant's primary residence.
The interest rate applied to a new loan is the current prime rate as
reported in the Wall Street Journal plus one percent. Principal and
interest payments are generally made through payroll deductions and are
credited to the participant's individual employee loan account(s).
As of December 31, 1998, there were 743 loans to participants, maturing
from 1999 to 2008, with interest rates ranging between 7.9% and 10.5%.
As of December 31, 1997, there were 852 loans to participants, maturing
from 1999 to 2007, with interest rates ranging between 7% and 10.5%.
14
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS, Continued
-----------
4. FEDERAL INCOME TAXES:
The IRS has determined and most recently informed the Plan by letter
dated January 27, 1998, that the Plan is qualified and the Trust
established under the Plan is tax-exempt, under the appropriate
sections of the Internal Revenue Code. Accordingly, no provision has
been made for federal income taxes. Certain prior and any subsequent
amendments to the Plan are subject to IRS review and approval. The Plan
administrator does not anticipate that such changes will affect the
qualified and tax-exempt status of the Plan and Trust, respectively.
Thrift Contributions are included in the participant's income in the
year the payroll deductions are made and are not deductible by the
participant for federal income tax purposes. Tax-Deferred Contributions
are not included in the participant's income for federal income tax
purposes and, therefore, are not subject to federal income tax or
withholding at the time of contribution.
Company Matching Contributions and earnings reinvested into the various
funds are not taxable to the participant until distributed or a deemed
distribution of a loan has occurred.
5. PLAN TERMINATION:
Although it has not expressed any intent to do so, Pennzoil-Quaker
State Company has the right under the Plan to discontinue its Company
Matching Contributions at any time and to terminate the Plan subject to
the provisions of the Plan and ERISA.
6. TRANSFERS TO AND FROM OTHER PLANS:
Effective December 31, 1997, the Quaker State Corporation Employee
Stock Ownership Plan (ESOP) was merged into the Plan. In January 1997,
the Plan was amended to merge the former Blue Coral, Slick 50 and Tye
Distributing 401(K) plans into the Plan and to add Blue Coral-Slick 50
Ltd. as a participating company. To the extent not otherwise provided
in the Plan, the benefits, rights, and features of the subsidiary plans
shall be protected and provided to the extent required by applicable
law. Effective with the sale of Truck-Lite Co, Inc, ("Truck-Lite") a
wholly owned subsidiary of the Company, in November 1997, the Company
agreed to spin-off the assets of the Plan related to Truck-Lite
employees to a qualified plan set up by Truck-Lite or its new owner.
During 1998, approximately $7,000,000 was transferred out of the plan
for the benefit of Truck-Lite employees.
7. NONEXEMPT TRANSACTIONS:
As reported on Item 27e, schedule of nonexempt transactions, certain
Plan contributions were not remitted to the trust within the time frame
specified by the Department of Labor's Regulation 29 CFR 2510.3-102,
thus constituting nonexempt transactions between the Plan and the
Company. The Company will pay the higher of interest incurred on the
loan or investment fund earnings for each participant's late
contribution.
15
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS, Continued
-------------
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for benefits
per the financial statements to amounts anticipated to be reported in
the Form 5500:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Net assets available for benefits per the financial statements $ 35,344,052 $ 38,875,561
Amounts allocated to withdrawing participants -- (20,960)
------------ ------------
Net assets available for benefits per the Form 5500 $ 35,344,052 $ 38,854,601
============ ============
</TABLE>
The following is a reconciliation of distributions to withdrawing
participants per the financial statements to amounts anticipated to be
reported in the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/98 12/31/97
------------ ------------
<S> <C> <C>
Distributions to withdrawing participants per the financial statements $ 5,542,597 $ 4,340,097
Add: Amounts allocated to withdrawing participants at the end of the
year -- 20,960
Less: Amounts allocated to withdrawing participants at the beginning of
the year (20,960) (1,285,486)
------------ ------------
Distributions to withdrawing participants per the Form 5500 $ 5,521,637 $ 3,075,571
============ ============
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for
payment prior to December 31 but not yet paid as of that date.
16
<PAGE> 21
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
<TABLE>
<CAPTION>
Current
Cost Value
--------------- ---------------
Identity of Issue/Description:
<S> <C> <C>
*Pennzoil-Quaker State Company Stock Fund $ 12,501,859 $ 10,450,974
*Fidelity Institutional Cash Portfolio 170,740 170,740
*Fidelity Puritan Fund 1,482,617 1,588,497
*Fidelity Magellan Fund 2,371,166 3,010,939
*Fidelity Contrafund 2,455,017 2,992,961
*Spartan U.S. Equity Fund 204,565 227,833
*Fidelity Investment Grade Bond Fund 1,508,343 1,555,275
*Fidelity Growth & Income Fund 6,859,860 8,889,954
*Fidelity Low-Priced Stock Fund 1,710,833 1,697,412
*Fidelity Diversified International Fund 786,259 853,170
*Fidelity Retirement Money Market Fund 2,269,150 2,269,150
*Participant loans, 7.9% - 10.5%, due at various dates 1,530,863 1,530,863
--------------- ---------------
$ 33,851,272 $ 35,237,768
=============== ===============
</TABLE>
* Denotes exempt party-in-interest
17
<PAGE> 22
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Purchase Selling Cost of
Identity of Party Involved Description of Asset Price(b) Price(b) Asset
-------------------------- -------------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Pennzoil-Quaker State Stock Fund (a) Stock Fund $ 3,886,979 $ -- $ 3,886,979
Pennzoil-Quaker State Stock Fund (a) Stock Fund -- 6,143,394 5,789,755
Fidelity Magellan Fund Mutual Fund 1,420,699 -- 1,420,699
Fidelity Magellan Fund Mutual Fund -- 1,256,520 1,119,229
Fidelity Contrafund Mutual Fund 1,088,174 -- 1,088,174
Fidelity Contrafund Mutual Fund -- 1,292,423 1,150,419
Fidelity Growth & Income Fund Mutual Fund 2,459,812 -- 2,459,812
Fidelity Growth & Income Fund Mutual Fund -- 3,649,520 3,071,441
Fidelity Retirement Money Market Mutual Fund 1,736,979 -- 1,736,979
Fidelity Retirement Money Market Mutual Fund -- 2,041,741 2,041,741
<CAPTION>
Current Value
of Asset on
Transaction Net Gain
Identity of Party Involved Description of Asset Date (Loss)
-------------------------- -------------------- --------------- ----------------
Pennzoil-Quaker State Stock Fund (a) Stock Fund $ 3,886,979 $ --
Pennzoil-Quaker State Stock Fund (a) Stock Fund 6,143,394 353,639
Fidelity Magellan Fund Mutual Fund 1,420,699 --
Fidelity Magellan Fund Mutual Fund 1,256,520 137,291
Fidelity Contrafund Mutual Fund 1,088,174 --
Fidelity Contrafund Mutual Fund 1,292,423 142,004
Fidelity Growth & Income Fund Mutual Fund 2,459,812 --
Fidelity Growth & Income Fund Mutual Fund 3,649,520 578,079
Fidelity Retirement Money Market Mutual Fund 1,736,979 --
Fidelity Retirement Money Market Mutual Fund 2,041,741 --
</TABLE>
(a) The Pennzoil-Quaker State Stock Fund is reported on a unitized basis.
(b) Prices are shown net of related expenses.
Note: This schedule includes each series of transactions involving the same
asset which, in aggregate, amounts to more than five percent of Plan assets
as of January 1, 1998.
18
<PAGE> 23
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Relationship to Plan Interest
Identity of Employer or Other Amount Incurred
Party Involved Party in Interest Description of Transaction Loaned on Loan
-------------- ------------------- --------------------------- ------ --------
<S> <C> <C> <C> <C>
Quaker State Corporation Employers Lending of monies from the Plan to
the Employers -, employee contributions of
one division were due on January 22, 1998 and
not remitted until February 5, 1998. Interest
at 9% per annum. $ 361 $ 1
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of three
divisions were due on February 20, 1998 and
not remitted until March 3, 1998. Interest
at 8% per annum. 37,247 101
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on February 20, 1998 and
not remitted until March 19, 1998. Interest
at 8% per annum. 375 3
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on March 20, 1998 and not
remitted until April 8, 1998. Interest at 8%
per annum. 22 --
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on April 21, 1998 and not
remitted until April 29, 1998. Interest at
8% per annum. 92 --
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on April 22, 1998 and not
remitted until April 29, 1998. Interest at
8% per annum. 1,787 3
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on April 22, 1998 and not
remitted until May 6, 1998. Interest at 8%
per annum. 375 1
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of two
divisions were due on May 21, 1998 and not
remitted until June 1, 1998. Interest at 8%
per annum. 184 -
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on May 21, 1998 and not
remitted until June 2, 1998. Interest at 8%
per annum. 3,736 10
</TABLE>
19
<PAGE> 24
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS
for the year ended December 31, 1998 (continued)
<TABLE>
<CAPTION>
Relationship to Plan Interest
Identity of Employer or Other Amount Incurred
Party Involved Party in Interest Description of Transaction Loaned on Loan
-------------- ------------------- --------------------------- ------ --------
<S> <C> <C> <C> <C>
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on May 21, 1998 and not
remitted until June 17, 1998. Interest at 8%
per annum. $ 138 $ 1
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on June 19, 1998 and not
remitted until August 14, 1998. Interest at
8% per annum. 2,371 29
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on August 21, 1998 and not
remitted until September 15, 1998. Interest
at 8% per annum. 2,256 12
Quaker State Corporation Employers Lending of monies from the Plan to the
Employers -, employee contributions of one
division were due on August 21, 1998 and not
remitted until September 19, 1998. Interest
at 8% per annum. 8,865 57
</TABLE>
20
<PAGE> 25
PENNZOIL-QUAKER STATE COMPANY
THRIFT AND STOCK PURCHASE PLAN
---------
Annual Report on Form 11-K
for the fiscal year ended December 31, 1998
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
23.1 Consent of Arthur Andersen LLP, filed herewith.
23.2 Consent of PricewaterhouseCoopers LLP, filed herewith.
</TABLE>
21
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated July 6, 1999, included herein, into Pennzoil-Quaker State Company's
previously filed Registration Statement on Form S-8 No. 333-72835.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
July 12, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Registration Statement No.
333-72835 on Form S-8 for the Pennzoil-Quaker State Company Thrift and Stock
Purchase Plan (formerly Quaker State Corporation Thrift and Stock Purchase
Plan), filed under the Securities Act of 1933, as amended, and in the Prospectus
used in connection with such Registration Statement, of our report dated June
19, 1998, on our audit of the financial statements of the Quaker State
Corporation Thrift and Stock Purchase Plan as of December 31, 1997 and for the
year then ended, which report is included in this Annual Report on Form 11-K.
We also consent to the reference to our Firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
July 13, 1999
