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<PAGE> 1
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, 1996.
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 1-2677 ---------------- ----------------
Full title of the Plan and the address of the Plan, if different from the
issuer named below:
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:
Quaker State Corporation
225 East John Carpenter Freeway
Irving, Texas 75062
<PAGE> 2
REQUIRED INFORMATION
The Quaker State Corporation 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 requirements of Items 1-3 of Form 11-K, the financial
statements and schedules of the Plan for the fiscal years ended December 31,
1996 and 1995, 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 Exhibit listed below is filed as a part of this Annual Report:
1. Consent of Coopers and Lybrand L.L.P.
<PAGE> 3
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the members of the Organization and Compensation Committee of the Board of
Directors of Quaker State Corporation have duly caused this annual report to be
signed on behalf of the Plan by the undersigned hereunto duly authorized.
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
Date June 20, 1997 By /s/ Thomas A. Gardner
--------------- -----------------------------
Thomas A. Gardner
Chairman, Organization
and Compensation Committee
<PAGE> 4
APPENDIX I
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
--------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
for the years ended December 31, 1996 and 1995
<PAGE> 5
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for
Benefits as of December 31, 1996 and 1995 3-4
Statements of Changes in Net Assets Available
for Benefits for the years ended
December 31, 1996 and 1995 5-6
Notes to Financial Statements 7-11
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1996 12
Item 27d - Schedule of Reportable Transactions
(Transactions in excess of 5% of Plan value)
for the year ended December 31, 1996 13
</TABLE>
<PAGE> 6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Organization and Compensation
Committee of the Board of Directors
Quaker State Corporation:
We have audited the statements of net assets available for benefits of the
Quaker State Corporation Thrift and Stock Purchase Plan (the Plan) as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits for the years then ended. 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 audits.
We conducted our audits 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 audits provide 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, 1996 and 1995, and the changes in net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed on
page 1 are presented for the purpose 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 statements of net assets available for
benefits and the statements 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 audits 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/ Coopers & Lybrand L.L.P.
Dallas, Texas
June 6, 1997
2
<PAGE> 7
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1996
<TABLE>
<CAPTION>
Participant
Directed and Non
Participant Participant Participant Participant
Directed Directed Directed Directed
Fund A Fund B Fund C Fund D
------ ------ ------ ------
Income Bond Quaker State Equity
ASSETS Fund Fund Stock Fund Fund
---- ---- ---------- ----
<S> <C> <C> <C> <C>
Investments, at fair value
Quaker State Corporation capital stock,
966,833 shares
(cost: $14,333,372) $13,535,662
U. S. government obligations
(cost: $2,384,982) $2,446,337 -
Registered Investment Companies - $2,300,053 - $5,711,006
Money market accounts 2,294,691 - 84,066 -
Employee loans - - - -
---------------------------------------------------------------------
Total investments 4,741,028 2,300,053 13,619,728 5,711,006
Receivables:
Employee contributions 62,643 51,743 106,872 124,788
Company contributions - - 107,226 -
Accrued interest receivable 54,914 71 394 98
---------------------------------------------------------------------
Net assets available for benefits $4,858,585 $2,351,867 $13,834,220 $5,835,892
=====================================================================
Participating units 684,362 1,961,166 375,243 3,376,904
=====================================================================
Unit value $7.10 $1.20 $36.87 $1.73
=====================================================================
<CAPTION>
Participant
Directed
Loan
Account
-------
Employee
ASSETS Loans Total
----- -----
<S> <C> <C>
Investments, at fair value
Quaker State Corporation capital stock,
966,833 shares
(cost: $14,333,372) $13,535,662
U. S. government obligations
(cost: $2,384,982) 2,446,337
Registered Investment Companies 8,011,059
Money market accounts 2,378,757
Employee loans $1,500,938 1,500,938
----------------------------
Total investments 1,500,938 27,872,753
Receivables:
Employee contributions - 346,046
Company contributions - 107,226
Accrued interest receivable - 55,477
----------------------------
Net assets available for benefits $1,500,938 $28,381,502
============================
Participating units
Unit value
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 8
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1995
<TABLE>
<CAPTION>
Participant
Directed and Non
Participant Participant Participant Participant
Directed Directed Directed Directed
Fund A Fund B Fund C Fund D
------ ------ ------ ------
Income Bond Quaker State Equity
ASSETS Fund Fund Stock Fund Fund
---- ---- ---------- ----
<S> <C> <C> <C> <C>
Investments, at fair value
Quaker State Corporation capital stock,
1,159,139 shares
(cost: $17,055,646) $14,779,022
U. S. government obligations
(cost: $3,257,248) $3,399,924 -
Registered Investment Companies - $2,247,094 - $4,771,590
Money market accounts 2,167,403 - 138,231 -
Employee loans - - - -
-------------------------------------------------------------------
Total investments 5,567,327 2,247,094 14,917,253 4,771,590
Receivables:
Employee contributions 73,020 69,100 135,305 133,226
Company contributions - - 126,814 -
Accrued interest receivable 87,829 17 662 41
-------------------------------------------------------------------
Net assets available for benefits $5,728,176 $2,316,211 $15,180,034 $4,904,857
===================================================================
Participating units 855,337 1,998,033 459,498 3,322,152
===================================================================
Unit value $6.70 $1.16 $33.04 $1.48
===================================================================
<CAPTION>
Participant
Directed
Loan
Account
-------
Employee
ASSETS Loans Total
----- -----
<S> <C> <C>
Investments, at fair value
Quaker State Corporation capital stock,
1,159,139 shares
(cost: $17,055,646) $14,779,022
U. S. government obligations
(cost: $3,257,248) 3,399,924
Registered Investment Companies 7,018,684
Money market accounts 2,305,634
Employee loans $1,679,924 1,679,924
-----------------------------
Total investments 1,679,924 29,183,188
Receivables:
Employee contributions - 410,651
Company contributions - 126,814
Accrued interest receivable - 88,549
-----------------------------
Net assets available for benefits $1,679,924 $29,809,202
=============================
Participating units
Unit value
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 9
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the year ended December 31, 1996
<TABLE>
<CAPTION>
Participant
Directed and Non
Participant Participant Participant Participant
Directed Directed Directed Directed
Fund A Fund B Fund C Fund D
------ ------ ------ ------
Quaker State
Income Bond Stock Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Additions
Contributions:
Employee $775,395 $454,259 $972,764 $992,063
Company - - 1,277,279 -
---------------------------------------------------------------------
775,395 454,259 2,250,043 992,063
Income from:
Cash dividends - - 426,042 359,311
Interest 329,259 123,941 7,265 413
Transfers, net (166,147) 41,901 292,951 128,484
Net appreciation (depreciation) of investments (78,588) (29,465) 1,799,405 711,435
---------------------------------------------------------------------
Total Additions 859,919 590,636 4,775,706 2,191,706
Less distributions to withdrawing participants, 1,729,510 554,980 6,121,520 1,260,671
at unit value ---------------------------------------------------------------------
Net Change (869,591) 35,656 (1,345,814) 931,035
Net assets available for benefits, beginning of 5,728,176 2,316,211 15,180,034 4,904,857
year ---------------------------------------------------------------------
Net assets available for benefits, end of year $4,858,585 $2,351,867 $13,834,220 $5,835,892
=====================================================================
<CAPTION>
Participant
Directed
Loan
Account
-------
Employee
Loans Total
----- -----
<S> <C> <C>
Additions
Contributions:
Employee $3,194,481
Company 1,277,279
------------------------------
4,471,760
Income from:
Cash dividends 785,353
Interest $118,203 579,081
Transfers, net (297,189) -
Net appreciation (depreciation) of investments - 2,402,787
------------------------------
Total Additions (178,986) 8,238,981
Less distributions to withdrawing participants, - 9,666,681
at unit value ------------------------------
Net Change (178,986) (1,427,700)
Net assets available for benefits, beginning of year 1,679,924 29,809,202
------------------------------
Net assets available for benefits, end of year $1,500,938 $28,381,502
==============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 10
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the year ended December 31, 1995
<TABLE>
<CAPTION>
Participant
Directed and Non
Participant Participant Participant Participant
Directed Directed Directed Directed
Fund A Fund B Fund C Fund D
------ ------ ------ ------
Quaker State
Income Bond Stock Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Additions
Contributions:
Employee $631,521 $608,938 $1,168,306 $1,053,863
Company - - 1,371,756 -
Transfer from Subsidiary Plan 2,599,169 - - -
----------------------------------------------------------------------
3,230,690 608,938 2,540,062 1,053,863
Income from:
Cash dividends - - 472,153 719,162
Interest 399,417 117,798 11,406 621
Transfers, net (2,049,390) 364,516 731,313 895,333
Net appreciation (depreciation) of investments 179,055 124,956 (1,577,609) 472,483
----------------------------------------------------------------------
Total Additions 1,759,772 1,216,208 2,177,325 3,141,462
Less distributions to withdrawing participants, at 1,068,489 241,689 3,701,234 583,479
unit value ----------------------------------------------------------------------
Net Change 691,283 974,519 (1,523,909) 2,557,983
Net assets available for benefits, beginning of year 5,036,893 1,341,692 16,703,943 2,346,874
----------------------------------------------------------------------
Net assets available for benefits, end of year $5,728,176 $2,316,211 $15,180,034 $4,904,857
======================================================================
<CAPTION>
Participant
Directed
Loan
Account
-------
Employee
Loans Total
-------- -----
Additions
Contributions:
Employee $3,462,628
Company 1,371,756
Transfer from Subsidiary Plan 2,599,169
------------------------------
7,433,553
Income from:
Cash dividends 1,191,315
Interest $130,656 659,898
Transfers, net 58,228 -
Net appreciation (depreciation) of investments - (801,115)
------------------------------
Total Additions 188,884 8,483,651
Less distributions to withdrawing participants, at - 5,594,891
unit value ------------------------------
Net Change 188,884 2,888,760
Net assets available for benefits, beginning of 1,491,040 26,920,442
year ------------------------------
Net assets available for benefits, end of year $1,679,924 $29,809,202
==============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 11
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
----------
1. MAJOR FEATURES OF THE PLAN:
General
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 and certain of its subsidiaries
(Quaker State or the Company) who have completed one year of service and
have reached age 21. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). The Organization
and Compensation Committee (Committee) of the Quaker State Board of
Directors administers the Plan. Reference should be made to the Quaker
State Corporation Thrift and Stock Purchase Plan Summary Plan Description
and Prospectus 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.
Contributions
Under the Plan, 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 12% of their compensation or $9,500 (as
adjusted annually by the Internal Revenue Service). 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 12% of the participant's
compensation. For contribution purposes, not more than $150,000 of a
participant's compensation (as adjusted annually by the Internal Revenue
Service) can be taken into account for any one calendar year. Subject to
limitations, the Company will make contributions (Regular Company
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 Company will make a
profit-sharing contribution (Company Profit-Sharing Contribution) to the
Plan provided certain predetermined profit levels are attained. In
addition, the Plan accepts rollover contributions from employees' former
employer qualified plans and conduit IRAs.
Investment Options
Four funds are available for investment of contributions to the Plan.
Fund A, the Income Fund, is composed of Compass Capital Money Market funds
and bonds or other obligations issued by the U.S. Government. At December
31, 1996, stated interest rates on investments in Fund A ranged from 5.3%
to 8.625%. Fund B is the Compass Capital Intermediate Government
Portfolio, a registered investment company, and is comprised of a
portfolio of fixed income securities. Fund C, the Quaker State Stock
Fund, is composed of Quaker State capital stock. Fund D is the Compass
Capital Index Equity Portfolio, a registered investment company, comprised
of a diversified portfolio of corporate stocks. All Company contributions
are invested in Fund C; however, participants may select any one or more
of the four funds for their contributions. Allocations of employee
contributions must be in even multiples of 10%, and no less than 10% of
their total contributions can be invested in any one fund. Participant
directed and nonparticipant directed funds included in Fund C at December
31, 1996 were as follows:
<TABLE>
<CAPTION>
Units Dollars
-------- -------------
<S> <C> <C>
Participant directed 171,903 6,337,600
Nonparticipant directed 203,340 7,496,620
</TABLE>
7
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. MAJOR FEATURES OF THE PLAN, continued:
Investments in Fund C represent shares of Quaker State capital stock,
and, therefore, transactions within Fund C also qualify as exempt
party-in-interest transactions. In 1996, the recordkeeper for the
Plan was William M. Mercer Company, Inc and the Trustee was PNC Bank,
N.A.
On February 1, 1997, the Plan changed recordkeeper to Fidelity
Institutional Retirement Services Company and the trustee to Fidelity
Management Trust Company.
Vesting
Participants are fully vested in their contributions plus actual
earnings thereon. Participants are also fully vested in Regular
Company Contributions and Company Profit Sharing Contributions.
Participant Accounts and Benefit Payments
An account is maintained for each participant, which is credited with
the participant's contributions and allocation of (a) the Company's
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, 1996 and 1995, there were
1,966 and 1,738 participants in the Plan, respectively.
Amendments
In January 1997, the Plan was amended to merge the Blue Coral, Slick 50
and Tye Distributing 401(K) plans into the Plan and to add Blue Coral,
Inc. as a participating Company, and to make amendments required by the
Small Business Job Protection Act of 1996. In February 1997, the Plan
was amended to: (1) change the minimum contribution percentage from
10% to 1% increments; (2) make immediate participation available to new
employees over 21 years of age, excluding the Regular Company
Contributions which still require one year of employment; (3) make
Plan accounting daily so daily transactions can be processed; (4)
increase the number of investment options available under the Plan to a
maximum of ten (10) investments, one of which would be Quaker State
capital stock; (5) change the method of calculating the interest rate
on loans; and (6) make other changes necessary to comply with the new
recordkeeper and trustee systems.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The financial statements of the Plan are prepared under the accrual
method of accounting.
Investments
Investments are carried at fair value in the accompanying financial
statements. Investments in Quaker State capital stock are valued at
the closing price on the last business day of the period. U.S.
government obligations are valued at the mean of the bid and asked
prices on the last business day of the period. 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 loans receivable are valued at cost
which approximates market.
Purchases and sales of Quaker State capital stock and U.S. government
obligations are reflected on a trade-date basis. Gains and losses are
based on average cost for Quaker State capital stock and specific
identification for U.S. government obligations.
Dividend income is recorded on the ex-dividend date. Interest income
is recorded as earned.
8
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS, Continued
----------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:
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) on U.S. government obligations
and Quaker State capital stock and net increase (decrease) in the
value of the Plan's interest in the bond and equity funds.
Other
Administrative expenses, including trustee, legal, auditing and other
fees, are paid by Quaker State 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 Plan benefits.
3. INVESTMENTS:
The Plan's investments are held in a bank-administered trust fund.
Investments that represent five (5%) or more of the Plan's net assets
are:
<TABLE>
<CAPTION>
FUNDS 1996 1995
----- ---- ----
<S> <C> <C>
Compass Capital Money Market $2,378,757 $2,305,634
Compass Capital Intermediate Government Portfolio 2,300,053 2,247,094
Quaker State Corporation Stock 13,535,662 14,779,022
Compass Capital Index Equity Portfolio 5,711,006 4,771,590
Participant Loans 1,500,938 1,679,924
</TABLE>
4. UNITS AND UNIT VALUES:
The total number of units and net asset value per unit during the
year were as follows:
<TABLE>
<CAPTION>
Fund A Fund B Fund C Fund D
-------------------- ------------------- -------------------- --------------------
Unit Unit Unit Unit
Units Value Units Value Units Value Units Value
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1996 798,961 $ 6.74 1,987,456 $ 1.15 426,734 $36.26 3,337,197 $ 1.55
June 30, 1996 789,821 6.82 2,095,810 1.16 427,708 38.98 3,505,471 1.62
September 30, 1996 735,596 6.93 2,043,844 1.18 397,662 45.22 3,473,921 1.67
December 31, 1996 684,362 7.10 1,961,166 1.20 375,243 36.87 3,376,904 1.73
</TABLE>
9
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS, Continued
----------
5. EMPLOYEE LOANS:
Participants are permitted to borrow against all or a portion of their
Tax-Deferred Contribution and Company Profit-Sharing Contribution 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 current loan is the rate set by the
Compensation Committee from time to time determined by periodically
comparing rates at various banks. Principal and interest payments are
generally made through monthly payroll deductions and are credited to the
participant's individual Plan account(s). Loans totaling $756,703 and
$1,177,835 were made from the Plan, and repayments, including interest of
$118,203 and $130,656, totaling $1,053,892 and $1,119,607 were received by
the Plan during the years ended December 31, 1996 and 1995, respectively.
As of December 31, 1996 there were 666 loans to participants, maturing
from 1997 to 2006, with interest rates ranging between 8% and 9.5%.
6. FEDERAL INCOME TAXES:
The Internal Revenue Service has determined and most recently informed the
Plan by letter dated March 22, 1996, as amended in April 1996, 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 Internal Revenue
Service review and approval. The Plan administrator and its legal counsel
do 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 contributions and earnings reinvested into the various funds are
not taxable to the participant until distribution.
7. PLAN TERMINATION:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
10
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, Continued
----------
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The Form 5500 has not yet been filed; however, the treatment of
distributions due to participants is the only anticipated difference
between the Statements of Net Assets and Changes in Net Assets and the
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>
1996 1995
---- ----
<S> <C> <C>
Net assets available for benefits per the financial statements
$ 28,381,502 $29,809,202
Amounts allocated to withdrawing participants (1,285,486) (927,788)
------------- -----------
Net assets available for benefits per the Form 5500 $ 27,096,016 $28,881,414
============= ===========
</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
DECEMBER 31, 1996
-----------------
<S> <C>
Distributions to withdrawing participants per the financial statements $ 9,666,681
Add: Amounts allocated to withdrawing participants at December 31, 1996 1,285,486
Less: Amounts allocated to withdrawing participants at December 31, 1995 (927,788)
------------
Distributions to withdrawing participants per the Form 5500 $ 10,024,379
============
</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.
9. MERGER OF SUBSIDIARY PLANS:
Effective January 1, 1995, the Plan was amended to merge the SOC/West
Profit Sharing Plan ("Specialty Plan") into the Quaker State
Corporation Thrift and Stock Purchase Plan. Assets in the amount of
$2,599,169 were transferred on January 3, 1995 to the Quaker State
Corporation Thrift and Stock Purchase Plan and are reflected as a
transfer from subsidiary plan in the statement of changes in net
assets available.
Effective January 1, 1997, several subsidiary plans were merged into
the Plan, with assets to transfer later in the year. 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.
11
<PAGE> 16
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
<TABLE>
<CAPTION>
Cost Value
---- -----
<S> <C> <C>
Investments:
* Quaker State Corporation capital stock $ 14,333,372 $ 13,535,662
U. S. Treasury notes, par value; $ 350,000, 6.875%, due 3/31/97 349,052 351,257
U. S. Treasury notes, par value; $ 125,000, 6.75%, due 5/31/97 125,000 125,645
U. S. Treasury notes, par value; $ 165,000, 6.375%, due 6/30/97 164,617 165,851
U. S. Treasury notes, par value; $ 435,000, 6.375%, due 8/15/02 431,055 437,854
U. S. Treasury notes, par value; $ 75,000, 5.50%, due 9/30/97 74,870 74,988
U. S. Treasury notes, par value; $ 90,000, 5.75%, due 10/31/97 89,654 90,127
U. S. Treasury notes, par value; $ 110,000, 6.0%, due 12/31/97 110,000 110,394
U. S. Treasury notes, par value; $ 150,000, 5.625%, due 1/31/98 149,774 149,930
U. S. Treasury notes, par value; $ 500,000, 8.625%, due 8/15/97 492,656 509,455
U. S. Treasury notes, par value; $ 350,000, 8.5%, due 11/15/00 349,945 378,000
U. S. Treasury notes, par value; $ 50,000, 7.75%, due 2/15/01 48,359 52,836
* Compass Capital Money Market Account, 5.3% 2,378,757 2,378,757
* Registered Investment Companies-Compass Capital Funds, Index Equity Portfolio 4,850,844 5,711,006
* Registered Investment Companies-Compass Capital Funds, Intermediate
Government Portfolio 2,287,293 2,300,053
* Participant loans, 8% - 9.5%, due at various dates - 1,500,938
------------------------------
$ 26,235,248 $ 27,872,753
==============================
</TABLE>
* Denotes exempt party-in-interest
12
<PAGE> 17
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
ITEM 27-d - SCHEDULE OF REPORTABLE TRANSACTIONS
(Transactions in excess of 5% of plan value)
for the year ended December 31, 1996
<TABLE>
<CAPTION>
Number of Purchase Selling
Identity of Party Description of Asset Transactions Price Price
- ----------------- -------------------- ------------ ----- -----
<S> <C> <C> <C> <C>
Quaker State Corporation Capital Stock 25 $2,533,691
Quaker State Corporation Capital Stock 494 - $5,397,377
Compass Capital Money Market Account 173 8,812,641 -
Compass Capital Money Market Account 147 - 8,739,519
Compass Capital Registered Investment Companies 120 2,462,123 -
Compass Capital Registered Investment Companies 45 - 2,151,778
<CAPTION>
Current Value
of Asset on
Cost of Transaction Net Gain
Identity of Party Asset Date (Loss)
- ----------------- ----- ---- ------
<S> <C> <C> <C>
Quaker State Corporation $2,533,691 $2,533,691
Quaker State Corporation 5,304,450 5,397,377 $ 92,927
Compass Capital 8,812,641 8,812,641 -
Compass Capital 8,739,519 8,739,519 -
Compass Capital 2,462,123 2,462,123 -
Compass Capital 1,972,772 2,151,778 179,006
</TABLE>
13
<PAGE> 18
QUAKER STATE CORPORATION
THRIFT AND STOCK PURCHASE PLAN
----------
Annual Report on Form 11-K
for the fiscal year ended December 31, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
1 Consent of Independent Accountants,
filed herewith.
</TABLE>
<PAGE> 1
Exhibit No. 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Registration Statements No.
333-06291 and 333-20416 on Form S-8 for the 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 6, 1997, on our audits of the financial statements of the
Quaker State Corporation Thrift and Stock Purchase Plan as of December 31, 1996
and 1995 and for the years 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" in the
above-mentioned Prospectus.
/s/ Coopers & Lybrand L.L.P.
Dallas, Texas
June 17, 1997
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