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Pennzoil-Quaker State Company Reports Smooth Merger Transition

7 May 1999

Pennzoil-Quaker State Company Reports Smooth Merger Transition and Synergy Progress at First Annual Meeting

    HOUSTON, May 6 -- Top executives of Pennzoil-Quaker State
Company told shareholders attending the company's Annual Meeting
today that the recently merged automotive consumer products giant was
progressing according to plan.
    "In 1998, Pennzoil Company embarked upon one of the most important
chapters in its 110-year history," said James L. Pate, chairman and chief
executive officer.  "Recognizing that the marketplace is evolving, we chose to
redefine ourselves in a dramatic fashion by spinning off the marketing, fast
lube and manufacturing operations of Pennzoil Company and merging with Quaker
State Corporation.  Our objectives were to bring greater focus to our diverse
operations, to promote growth through more efficient capital allocation and to
fully realize the power of our tremendously popular consumer brands.  Today
I'm happy to report that the integration of Pennzoil and Quaker State is
proceeding well and according to plan."
    James J. Postl, president and chief operating officer, said, "Our
objective is to be consumers' first choice for automotive products and
services that enhance the car and the driving experience.  We have every
reason to be encouraged by our progress these first few months."
    Postl outlined the company's growth strategy, which includes developing
new products, enhancing product category management, acquiring high-potential
brands, acquiring companies with high operating margins and growth potential,
and doubling international sales over the next five years.
    "The merger will generate substantial synergies and efficiencies," Postl
said.  "We've had some time now to evaluate opportunities in marketing,
administration, manufacturing, sales and distribution and are confident that
we can realize pretax savings of between $90 and $125 million annually.  First
quarter results indicate that we are on track to achieve those savings."
    On Monday, the company reported first quarter 1999 net income before
nonrecurring charges of $7.6 million, or 10 cents per basic share, compared to
recurring net income of $0.6 million, or 1 cent per basic share, for the same
period in 1998.  First quarter 1999 total revenues were $723.9 million, a
63 percent increase compared to last year's $443.4 million.  The increase in
revenues primarily resulted from the acquisition of Quaker State Corporation.
    Postl said, "Across the board, the first quarter was strong for lubricants
and consumer products.  Our market shares were up, sales were up in every
division, and operating income exceeded our expectations."
    Pennzoil(R) motor oil is now entering its 14th consecutive year as
America's number one selling motor oil with a trailing three month average
market share of 21.8 percent compared to 21.6 percent for the same period last
year.  Quaker State(R) motor oil is firmly established as the number two
selling motor oil in the United States with a trailing three month average
market share of 15.9 percent, 1.5 market share points ahead of last year and
2.6 market share points ahead of the number three brand.
    Branded motor oil sales increased significantly compared to last year,
with Pennzoil(R) motor oil sales increasing 4.6 percent, and Quaker State(R)
motor oil sales up 3.9 percent.  Other automotive consumer products divisions
also enjoyed strong sales increases.  During the first quarter of 1999, Axius
sales increased 21.3 percent, Medo sales increased 10.1 percent, Automotive
Chemicals sales increased 9.1 percent and Blue Coral/Slick 50/Rain-X sales
increased 5.6 percent.
    Pennzoil-Quaker State Company is a leading worldwide automotive consumer
products company that markets Pennzoil(R) and Quaker State(R) brand motor
oils, the number one and number two selling motor oils in the United States.
Jiffy Lube, a wholly owned subsidiary of Pennzoil-Quaker State Company, is the
world's largest fast lube operator and franchiser.  Pennzoil-Quaker State
Company also markets a complete line of automotive car care products including
Axius(TM) auto accessories, Blue Coral(R) and Classic(R) waxes and washes,
Black Magic(R) and Westley's(R) tire and wheel care products, Fix-A-Flat(R)
tire sealants, Medo(R) air fresheners, Rain-X(R) glass treatments, Gumout(R),
Snap(R) and The Outlaw(R) maintenance chemicals and Slick 50(R) engine
treatments.