Pennzoil-Quaker State Reports Q2 2002 Results

HOUSTON, July 25 Pennzoil-Quaker State Company today reported second 
quarter 2002 net income of $28.6 million, or36 cents per share.  The second 
quarter 2002 results compare to a reportedsecond quarter 2001 net loss of 
$5.3 million, or 7 cents per share.  Excluding the $14.9 million of 
nonrecurring after-tax charges (detailed in last year's earnings release) 
and a $2.5 million loss from discontinued operations, second quarter 2001 
recurring net income from continuing operations was $12.1 million, or 15 
cents per share.  There have been no nonrecurring charges in 2002.  Second 
quarter 2002 revenue of $590.4 million was down 1.8 percent versus a year 
ago, due primarily to reduced sales of low margin and unbranded products.

For the first six months of 2002, net income was $49.6 million, or 62 cents 
per share versus reported net income of $2.9 million, or 4 cents per share 
for the first half of 2001.  Excluding nonrecurring charges and 
discontinued operations from the mid-year 2001 results, recurring net 
income from continuing operations was $20.3 million or 26 cents per 
share.  Second quarter and first half 2001 earnings reflect goodwill and 
other amortization expense of 9 cents and 18 cents per share, 
respectively.  Year-to-date,
revenue decreased 1.1 percent to $1.2 billion, reflecting lower revenues in 
the lubricants and international segments from reduced sales of low margin 
and unbranded products in those segments.

"We are pleased with the continued improvement and strong operating results 
across all of our business units," said Jim Postl, president and chief 
executive officer.  "These results reflect the dramatic transformation that 
we have undertaken over the last three and a half years to focus on our 
core businesses, lower costs and enhance service to our customers."

Lubricants: Operating income for the Lubricant's segment was $52.1 million 
in the second quarter versus recurring operating income of $32.7 million 
last year.  The year-over-year gain reflects an improvement in motor oil 
margins versus low levels experienced a year ago, as well as a 64 percent 
increase in premium motor oil volumes, combined with lower selling, general 
& administrative (S,G & A) and amortization expenses.  Branded motor oil 
sales were up 3.3 percent during the quarter although dramatically reduced 
sales of
unbranded and low margin products resulted in total lubricants revenue 
declining 2.5 percent to $323.0 million.

For the first six months of 2002, operating income increased 49.8 percent 
from last year's operating income excluding nonrecurring 
items.  Year-to-date branded motor oil sales increased 3.0 percent, 
although total lubricants revenue was down 3.1 percent from a year ago, to 
$630.5 million, reflecting the factors identified above.

Pennzoil(R) and Quaker State(R) premium motor oils are leading brands in 
the U.S. passenger car motor oil market, holding a combined 35.6 percent 
market share over the last twelve months.

Consumer Products: The Company's Consumer Products segment improved its 
operating income 23.6 percent to $12.7 million versus recurring operating 
income of $10.3 million in the second quarter last year.  The improvement 
reflects lower amortization expense in 2002.  Revenues in the second 
quarter increased modestly year-over-year.

Year-to-date revenues increased 2.3 percent and recurring operating income 
increased 23.2 percent, respectively, from the same period results a year ago.

International: Pennzoil-Quaker State Company's International segment had 
operating income of $4.5 million in the second quarter 2002 compared to 
recurring operating income of $3.7 million in the second quarter of 2001. 
Second quarter revenue decreased 11.2 percent year-over-year to $58.7 
million, primarily due to the scale back of low margin operations, 
facilities and distribution channels.

For the first six months of 2002, revenue decreased 11.3 percent and 
recurring operating income increased 62.2 percent, respectively, from a 
year ago.

Jiffy Lube International: Operating income for Jiffy Lube in the second 
quarter 2002 was $9.1 million, a 17.4 percent increase from recurring 
operating income last year.  Comparable store sales were up 6.9 percent 
system wide in the quarter, with total system sales up 7.5 percent.

For the first six months of 2002, comparable store sales were up 6.6 
percent, with total system sales up 7.9 percent and recurring operating 
income up 35.9 percent from a year ago.  Year-to-date revenues increased 
6.8 percent to $184 million.

Supply Chain Investments: Operating income for the Supply Chain Investment 
segment, which includes Pennzoil-Quaker State Company's partnership 
interest in the Excel Paralubes base oil processing facility, was $11.3 
million in the second quarter compared to $8.2 million in 2001.  The 
increase in operating income is due primarily to increased base oil production.

For the first six months of 2002, operating income increased 56.0 percent 
from a year ago.  The year-over-year improvement in operating income 
reflects an 18.0 percent increase in base oil production and a $4.4 million 
after-tax change in turnaround expense accruals, partially offset by a 22.0 
percent decline in base oil margins.