SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 11-K
ANNUAL REPORT
____________________
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
____________________
For the Fiscal Year Ended December 31, 1993
_____________________
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
Commission File No. 1-5591
______________________
PENNZOIL COMPANY
Pennzoil Place, P. O. Box 2967
Houston, Texas 77252-2967
(Name of issuer of securities held pursuant to the plan and address of its
principal executive office)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee,
Pennzoil Company Savings and
Investment Plan for Hourly Employees:
We have audited the accompanying statements of net assets available for benefits
of the Pennzoil Company Savings and Investment Plan for Hourly Employees (the
"Plan") as of December 31, 1993 and 1992, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1993.
These financial statements and the schedules referred to below are the
responsibility of the Plan's administrative committee. Our responsibility is to
express an opinion on these financial statements and schedules 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 the
Plan's administrative committee, 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, 1993 and 1992, and the changes in net assets available for benefits
for the year ended December 31, 1993, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes as of December 31, 1993, included as Schedule I,
and reportable transactions (series of investment transactions) for the year
ended December 31, 1993, included as Schedule II, 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. Such schedules 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.
ARTHUR ANDERSEN & CO.
Houston, Texas
June 10, 1994
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN FOR HOURLY EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1993
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Guaranteed Company
Income Equity Stock
Fund Fund Fund Total
------------ ------------ ------------ ------------
ASSETS:
Investments, at current value:
Pennzoil Company common stock, 68,056 shares,
cost of $4,193,900 $ - $ - $ 3,632,497 $ 3,632,497
Battle Mountain Gold Company common stock,
2,191 shares, cost of $10,105 - - 22,184 22,184
Guaranteed investment contract, cost of $2,583,087 2,583,087 - - 2,583,087
Common trust funds:
Stock fund, 13,144 units, cost of $978,142 - 1,341,170 - 1,341,170
Temporary investment fund,
85,965 units, cost of $85,965 - 64,248 21,717 85,965
Receivables:
Employee contributions 10,945 6,070 4,954 21,969
Employer contributions - - 15,244 15,244
Investment income - 2,401 5 2,406
------------ ------------ ------------ ------------
Total Assets 2,594,032 1,413,889 3,696,601 7,704,522
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,594,032 $ 1,413,889 $ 3,696,601 $ 7,704,522
============ ============ ============ ============
<FN>
See notes to financial statements
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN FOR HOURLY EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1992
------------------------------------------------------------------
Guaranteed Company
Income Equity Stock
Fund Fund Fund Total
------------ ------------ ------------ ------------
ASSETS:
Cash $ - $ 9,588 $ - $ 9,588
Investments, at current value:
Pennzoil Company common stock, 55,626 shares,
cost of $3,465,245 - - 2,781,308 2,781,308
Battle Mountain Gold Company common stock,
2,191 shares, cost of $10,105 - - 11,229 11,229
Guaranteed investment contract, cost of $2,079,511 2,079,511 - - 2,079,511
Common trust funds:
Stock fund, 11,288 units, cost of $798,563 - 1,054,726 - 1,054,726
Temporary investment fund,
29,461 units, cost of $29,461 413 20,765 8,283 29,461
Receivables:
Employee contributions 14,530 6,748 5,811 27,089
Employer contributions - - 15,026 15,026
Investment income - 2,504 - 2,504
------------ ------------ ------------ ------------
Total Assets 2,094,454 1,094,331 2,821,657 6,010,442
------------ ------------ ------------ ------------
LIABILITIES:
Payable to brokers - - 8,254 8,254
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,094,454 $ 1,094,331 $ 2,813,403 $ 6,002,188
============ ============ ============ ============
<FN>
See notes to financial statements
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1993
------------------------------------------------------------------
Guaranteed Company
Income Equity Stock
Fund Fund Fund Total
------------ ------------ ------------ ------------
Net assets available for benefits, beginning of year $ 2,094,454 $ 1,094,331 $ 2,813,403 $ 6,002,188
Contributions:
Employee 480,324 252,636 219,221 952,181
Employer - - 568,670 568,670
------------ ------------ ------------ ------------
Total contributions 480,324 252,636 787,891 1,520,851
Investment income:
Dividends - 32,244 184,777 217,021
Interest 162,974 975 680 164,629
------------ ------------ ------------ ------------
Total investment income 162,974 33,219 185,457 381,650
Realized gains on sale of investments - - 6,020 6,020
Unrealized appreciation of investments - 106,864 99,053 205,917
Net transfer among funds and Prior Plan (Note 1) (20,870) 6,359 (29,449) (43,960)
Distributions and withdrawals (Note 1) (122,850) (79,520) (165,774) (368,144)
------------ ------------ ------------ ------------
Net assets available for benefits, end of year $ 2,594,032 $ 1,413,889 $ 3,696,601 $ 7,704,522
============ ============ ============ ============
<FN>
See notes to financial statements
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(1) Description of the Plan -
General -
The Pennzoil Company Savings and Investment Plan for Hourly Employees (the
"Plan") was established effective January 1, 1989, by Pennzoil Company. The
purpose of the Plan is to encourage hourly employees of Pennzoil Company and
participating subsidiaries and affiliated companies ("Pennzoil") to save, and
invest systematically, a portion of their current compensation in order that
they may have an additional source of income upon their retirement or
disability, or for their family in the event of their death. Prior to January
1, 1989, some hourly and salaried employees participated in the Pennzoil Company
Savings and Investment Plan (the "Prior Plan"). Effective January 1, 1989, the
account balances of all hourly employees in the Prior Plan at December 31, 1988,
along with assets from the Roosevelt Refinery Hourly Employees Retirement
Savings Plan, were transferred to the Plan. Upon changing wage status, a
participant's account balance is transferred between the Plan and the Prior
Plan.
Each person employed by Pennzoil who is a member of a collective bargaining
unit which has agreed to participate in the Plan and who is receiving
remuneration on an hourly basis on or after January 1, 1989 (the "effective
date"), is eligible to participate in the Plan on the later of the effective
date or the entry date coinciding with or next following their completion of one
year of service.
In order to participate in the Plan, an eligible employee may authorize, by
pretax payroll deduction, a contribution in whole percentages of not less than
1% and not more than 6% of annual compensation. In addition, an eligible
employee may, independently of his pretax contribution, elect to make after-tax
contributions to the Plan in whole percentages of not less than 1% and not more
than 6% of annual compensation. The sum of the rates of pretax and after-tax
contributions are subject to the following limitations:
Maximum
Years of Combined
Participation (a) Contribution Rate
- - ------------------- -----------------------
Less than 5 years 3%
5 - 10 years 4%
More than 10 years 6%
For each Plan year, Pennzoil contributes an amount on behalf of participating
employees equal to the following percentages of the aggregate pretax and
after-tax contribution rates shown above:
Applicable Percentage -
Years of Employer Matching
Participation (a) Contribution
- - ------------------- -----------------------
Less than 5 years 50%
5 - 10 years 75%
More than 10 years 100%
(a) Includes years of participation in the Plan, the Prior Plan or the
Pennzoil Company and Participating Companies Employees Stock Purchase Plan.
Effective April 1, 1994, the Plan was amended to increase the maximum pretax
and after-tax contributions for certain eligible employees from 6% of annual
compensation to 12% of annual compensation. In addition, the maximum combined
contribution rates of pretax and after-tax contributions based on years
of participation in the Plan were increased from 3%, 4%, and 6%, to 9%, 10%, and
12%, respectively, for those employees. Pennzoil's contributions on behalf of
participating employees will continue to equal the percentages shown in the
preceeding tables.
Investment choices -
Employer contributions are invested solely in Pennzoil Company common stock.
At Pennzoil's discretion, employer contributions may be made either in cash or
in Pennzoil Company common stock. During 1993 and 1992, Pennzoil Company
contributed 9,546 shares and 11,712 shares, respectively, of its common stock
valued at the average of the high and low market prices on the date of the
contribution. All employee and employer contributions (other than stock) are
initially invested in interest-bearing short-term, highly liquid investments and
are classified in the accompanying statement of net assets available for
benefits under the caption "Common trust funds - temporary investment fund."
Employee contributions are invested as designated by each participating
employee in one or more of the following investment funds:
Fund Name Type of Investment(s)
- - --------------------------- -----------------------------------------------
I. Guaranteed Income Fund Investments in insurance or group annuity
contracts with a guaranteed rate of return
II. Equity Fund Investments in common trust funds with various
holdings including (but not limited to) common
stocks, corporate debt securities, interests
in oil, gas or mineral properties and others
III. Company Stock Fund Common stock of Pennzoil Company
Under the terms of the Plan, assets transferred from the Prior Plan (which
included shares of Battle Mountain Gold Company common stock) are at all times
fully vested and nonforfeitable.
Vesting and disposition of forfeitures -
Participants are always fully vested in employee contributions. Participants
vest in employer contributions at a rate of 25% per year beginning at the end of
two years of service, becoming fully vested after five years of service. Any
non-vested portion of employer contributions is forfeited upon termination.
Forfeitures are allocated as follows: first, to reinstate any employer
contribution amounts of participants who return to service and second, to
restore any amounts previously forfeited as unclaimed benefits. Any remaining
amounts are applied to reduce succeeding employer contributions.
Withdrawals -
Withdrawals may be made from either an employee's previous pretax or
after-tax contributions, net of previous withdrawals, upon written notice to the
administrative committee of the Plan. After-tax withdrawals result in the
participant's forfeiture of the right to participate in the Plan for the
following two Plan quarters. Pretax withdrawals are allowed only when the
participant's age is 59-1/2 or older, unless a financial hardship exists.
Hardship withdrawals will cause the participant to be suspended from making
further contributions for four Plan quarters. Withdrawals may be made from
employer contributions only if the participant has been a member of the Plan for
five full Plan years and will cause an employee to be suspended from
participation in the Plan for two Plan quarters.
Distribution of benefits -
Benefits that are vested are payable to participants or their beneficiaries
at retirement, permanent disability, death or termination of service.
Plan administration -
The Plan is administered by an administrative committee consisting of at
least three members appointed by the board of directors of Pennzoil Company.
The sole trustee of the Plan is Mellon Bank, N. A. ("Trustee"). All
administrative expenses, including the Trustee's fees, are borne by Pennzoil.
The Plan is subject to reporting and regulations pursuant to the Employee
Retirement Income Security Act of 1974.
Termination or amendment of the Plan -
The Plan may be terminated, amended or modified by Pennzoil Company at any
time. Upon complete or partial termination of the Plan, all amounts credited to
the accounts with respect to which the Plan has been terminated shall become
fully vested and nonforfeitable.
(2) Summary of accounting policies -
Basis of accounting -
The financial statements of the Plan are presented on the accrual basis of
accounting, except that amounts allocated to accounts of persons who have
withdrawn from participation in the earnings and operations of the Plan are not
recorded as a liability of the Plan, but are classified as a component of net
assets available for benefits. Such amounts were $23,081, $12,425 and $24,370
for the Guaranteed Income, Equity and Company Stock Funds, respectively, at
December 31, 1993, and $5,633, $4,166 and $45,431 for the Guaranteed Income,
Equity and Company Stock Funds, respectively, at December 31, 1992. A separate
account is maintained for each participant which reflects the participant's
contributions, net of withdrawals, and the participant's allocable share of
Pennzoil's contributions and the Plan's investment earnings.
Asset valuation -
The Plan's investments are reflected in the accompanying financial statements
at year-end current values, which represent fair values, except for the
Guaranteed Income Fund which represents contract value. For the Company
Stock Fund, fair value was determined by using the closing price of the
securities held as listed on the New York Stock Exchange ("NYSE") on the last
trading day of the Plan year. For the Equity Fund, fair value was
determined based on the closing price of the securities held by the collective
fund as listed on the NYSE on the last trading day of the Plan year and the
number of participating units held by the Plan. Contract value for the
Guaranteed Income Fund was determined based on contributions made under the
investment contract plus interest earned at the contract's rate less funds used
to pay investment fees charged by the insurance company.
Realized gains (losses) are calculated based on proceeds from the sale of
assets and the value of the assets at the beginning of the Plan year or at time
of purchase if acquired during the current Plan year. Unrealized appreciation
(depreciation) of investments is calculated based on the market value of the
assets at the end of the Plan year and the market value of the assets at the
beginning of the Plan year or at time of purchase if acquired during the current
Plan year.
(3) Federal income taxes -
The Plan has not received a determination letter that the Plan, as currently
designed, is in compliance with the applicable requirements of the Internal
Revenue Code of 1986, as amended, (the "Code"). The intention of the
administrative committee and the Plan's tax counsel is to submit the Plan for a
determination by the end of the upcoming Plan year. However, the administrative
committee believes that the Plan is designed and operated in compliance with the
applicable requirements of the Code. Therefore, it believes that the Plan was
qualified and the related trust was tax-exempt as of December 31, 1993 and 1992.
Schedule I
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN FOR HOURLY EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1993
Current
Identity of Issue Description of Investment Cost Value<F1>
- - ----------------- ------------------------- ------------ ------------
EQUITY SECURITIES:
Common stock -
Pennzoil Company <F2> 68,056 shares -- $.83-1/3 par value $ 4,193,900 $ 3,632,497 <F3>
Battle Mountain Gold Company 2,191 shares -- $.10 par value 10,105 22,184
------------ ------------
Total equity securities 4,204,005 3,654,681
------------ ------------
GUARANTEED INVESTMENT CONTRACT:
Connecticut General Life Insurance Co. 2,583,087 units of group
investment contract 2,583,087 2,583,087 <F3>
------------ ------------
COMMON TRUST FUNDS:
Mellon Bank - EB Stock Fund <F2> 13,144 units of Stock Fund 978,142 1,341,170 <F3>
Mellon Bank - EB Temporary 85,965 units of Temporary
Investment Fund <F2> Investment Fund 85,965 85,965
------------ ------------
Total common trust funds 1,064,107 1,427,135
------------ ------------
Total assets held for investment purposes $ 7,851,199 $ 7,664,903
============ ============
<FN>
<F1> Represents fair value, except for the guaranteed investment contract which represents contract value.
<F2> Represents party-in-interest.
<F3> Represents an asset whose current value exceeds 5% of net assets available for benefits.
Schedule II
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN FOR HOURLY EMPLOYEES
SCHEDULE OF REPORTABLE TRANSACTIONS
(SERIES OF INVESTMENT TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1993
Number of
Units or
Face Value Purchase Selling Cost of
Amount Description of Assets Price Price<F1> Asset Net Gain
- - ----------- ------------------------------------------------- ---------- ---------- ---------- ----------
Pennzoil Company common stock,
$.83-1/3 par value-
5,566 Purchases (17 transactions) $ 330,994 $ - $ 330,994 $ -
430 Sales (3 transactions) - 27,869 26,582 1,287
Mellon Bank - EB Temporary Investment Fund-
1,015,721 Purchases (281 transactions) 1,015,721 - 1,015,721 -
959,216 Sales (97 transactions) - 959,216 959,216 -
Connecticut General Life Insurance Company,
Group Investment Contract-
445,756 Purchases (25 transactions) 445,756 - 445,756 -
101,766 Sales (11 transactions) - 101,766 101,766 -
Mellon Bank - Money Market-
260,000 Purchases (21 transactions) 260,000 - 260,000 -
260,000 Sales (21 transactions) - 260,000 260,000 -
<FN>
<F1> Current value of asset on transaction date is equal to the selling price.
NOTE: This Schedule is a listing of a series of investment transactions in the same security which exceed 5% of the
market value of the Plan's assets as of the beginning of the Plan year.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this report to be signed by the
undersigned thereunto duly authorized.
PENNZOIL COMPANY SAVINGS AND
INVESTMENT PLAN FOR HOURLY EMPLOYEES
By S/N TERRY HEMEYER
Terry Hemeyer
Chairman of the Administrative Committee
June 29, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated June 10, 1994, included herein, into Pennzoil Company's
previously filed Registration Statements on Form S-8 Nos. 33-24261 and 33-53783.
ARTHUR ANDERSEN & CO.
Houston, Texas
June 29, 1994