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Quaker State CEO..."Why"

18 May 1998

CEO Says Quaker State Is Now a Total Car Care Company -- and Cites Benefits of Pennzoil Merger

    IRVING, Texas, May 15 -- At the annual meeting today, Quaker
State Corporation Chairman and CEO Herbert M. Baum said the pending merger
with Pennzoil Company's downstream operations will create the "Procter &
Gamble of the automotive aftermarket industry" -- an "industry powerhouse"
addressing car-protection needs "from bumper to bumper, inside and out."
    Baum said the merger will cap a five-year rebuilding and restructuring
process at Quaker State that has transformed the company from a loose string
of unrelated entities into a total car care company that is well-positioned
for growth, even in the unlikely event that the consolidation with Pennzoil is
not approved.
    Baum, who was not free to discuss details of the proposed merger due to a
SEC-imposed "quiet period," nevertheless said the company is "proceeding
assuredly" on the assumption that the merger will receive regulatory and
shareholder approvals.
    Noting that the consolidation follows a pattern that is already well
accepted in banking, pharmaceuticals and other industries, he said, "the
merger will combine the best of both businesses, complement our mix of brands
and services and generate major synergies and significant cost savings that we
expect will have a positive impact on shareholder value."
    Regulatory approvals needed include clearance by the Federal Trade
Commission and receipt of a ruling from the Internal Revenue Service to the
effect that the spin-off of Pennzoil's downstream operations will be tax free.
Baum said that, in the meantime, the company expects to hold a special
stockholders meeting later this summer to vote on the merger.
    Regarding Quaker State's current enterprise, Baum reported that the
company is positioned -- with a sharpened focus and a clear sense of mission
-- for continued growth.
    In its motor oil business, he expressed confidence that the company had
"turned the corner.  Despite the softness of the overall (motor oil) market,
Quaker State's branded motor oil sales increased 10 percent during the first
quarter of this year and I'm happy to report that we continued to see growth
through the month of April."
    Quaker State's consumer products group continued to show strength as
revenues increased nearly 22 percent.  Although branded motor oil volume
increased, revenues for the company's lubricants and lubricant services group
declined due to lost refinery and base oil sales from the recently divested
West Virginia refinery. Operating profit for the group was up 13 percent in
the first quarter of this year.
    The company's continued growth has emerged through a restructuring program
launched at the end of 1997.  The three goals of the program are to 1) fully
leverage the synergies from recent acquisitions; 2) significantly reduce costs
at every level, and; 3) employ new information systems technology to maximize
efficiency and ensure unparalleled customer service.
    While Baum said that Quaker State will continue to further improve
operations, enhance services, cut costs and increase efficiency,  the company
already has been transformed into a focused, top-notch innovator and marketer.
    All items of business proposed by the Board of Directors as described in
the Proxy Statement for the meeting were voted on and approved.  The four
proposals were the election of 13 directors to serve until next year's Annual
Meeting, an award of restricted shares of the Company's capital stock to
certain non-employee directors in lieu of retirement benefits, an amendment to
the company's 1994 Stock Incentive Plan to increase by 2.5 million the number
of shares available for issuance, and the appointment of Coopers & Lybrand to
serve as independent auditors.  Baum also lauded Dr. Thomas Gardner for his
19 years of service as a Board member.  His retirement reduced the number of
Directors to 13.
    Quaker State Corporation is principally a manufacturer and marketer of
leading consumer automotive aftermarket products and services, including motor
oil and a full range of high-quality automotive treatment, appearance,
accessory and air freshener products.