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, 1997
_____________________
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
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:
We have audited the accompanying statements of net assets
available for benefits of the Pennzoil Company Savings and
Investment Plan (the Plan) as of December 31, 1997 and
1996, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1997.
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, 1997
and 1996, and the changes in its net assets available for
benefits for the year ended December 31, 1997, 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, 1997, included as Schedule I,
and reportable transactions (series of investment
transactions) for the year ended December 31, 1997, 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. The Fund Information in the statements of net
assets available for benefits and statement 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.
ARTHUR ANDERSEN LLP
Houston, Texas
June 25, 1998
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1997
Participant Directed Funds
------------------------------------------------------------------------------------
Merrill J. P. Fidelity Merrill Davis
Lynch Morgan Advisor Lynch New
Retirement Institutional Income & Equity York
Preservation Bond Growth Index Venture
Trust Fund Fund Trust Fund
------------ ------------ ------------ ------------ ------------
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $ - $ - $ - $ -
Battle Mountain Gold Company
common stock - - - - -
Merrill Lynch Retirement
Preservation Trust 24,482,865 - - - -
Mutual funds - 1,867,176 6,274,008 38,980,040 24,685,633
Participant loans - - - - -
Cash and temporary investments - - - - -
Receivables-
Employee contributions 195,651 24,383 85,124 258,516 267,615
Employer contributions - - - - -
Investment income - - - - -
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $24,678,516 $ 1,891,559 $ 6,359,132 $39,238,556 $24,953,248
============ ============ ============ ============ ============
Non-
Participant
Participant Directed Funds Directed
------------------------------ ------------
Company Company
Loan Stock Stock
Fund Fund Fund Total
------------ ------------ ------------ -------------
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $18,916,706 $74,694,182 $ 93,610,888
Battle Mountain Gold Company
common stock - 39,295 48,574 87,869
Merrill Lynch Retirement
Preservation Trust - - - 24,482,865
Mutual funds - - - 71,806,857
Participant loans 8,426,467 - - 8,426,467
Cash and temporary investments - - 4,017 4,017
Receivables-
Employee contributions - 156,529 - 987,818
Employer contributions - - 778,806 778,806
Investment income - - 34,566 34,566
------------ ------------ ------------ -------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 8,426,467 $19,112,530 $75,560,145 $200,220,153
============ ============ ============ =============
<FN>
See notes to financial statements.
</FN>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1996
Participant Directed Funds
------------------------------------------------------------------------------------
Merrill J. P. Fidelity Merrill Davis
Lynch Morgan Advisor Lynch New
Retirement Institutional Income & Equity York
Preservation Bond Growth Index Venture
Trust Fund Fund Trust Fund
------------ ------------ ------------ ------------ ------------
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $ - $ - $ - $ -
Battle Mountain Gold Company
common stock - - - - -
Merrill Lynch Retirement
Preservation Trust 22,453,443 - - - -
Mutual funds - 1,300,025 4,083,880 28,486,752 13,604,944
Participant loans - - - - -
Cash and temporary investments - - - - -
Receivables-
Employee contributions 65,791 7,486 26,028 70,664 62,563
Employer contributions - - - - -
Investment income - - - - -
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $22,519,234 $ 1,307,511 $ 4,109,908 $28,557,416 $13,667,507
============ ============ ============ ============ ============
Non-
Participant
Participant Directed Funds Directed
------------------------------ ------------
Company Company
Loan Stock Stock
Fund Fund Fund Total
------------ ------------ ------------ -------------
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $19,435,092 $60,860,439 $ 80,295,531
Battle Mountain Gold Company
common stock - 60,311 74,552 134,863
Merrill Lynch Retirement
Preservation Trust - - - 22,453,443
Mutual funds - - - 47,475,601
Participant loans 6,755,622 - - 6,755,622
Cash and temporary investments - - 76,731 76,731
Receivables-
Employee contributions - 63,718 - 296,250
Employer contributions - - 231,914 231,914
Investment income - - 25,810 25,810
------------ ------------ ------------ -------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 6,755,622 $19,559,121 $61,269,446 $157,745,765
============ ============ ============ =============
<FN>
See notes to financial statements.
</FN>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
FOR THE YEAR ENDED DECEMBER 31,1997
Participant Directed Funds
---------------------------------------------------------------------------------------
Merrill J.P. Fidelity Merrill Davis
Lynch Morgan Advisor Lynch New
Retirement Institutional Income & Equity York
Preservation Bond Growth Index Venture
Trust Fund Fund Trust Fund
-------------- ------------- ------------- ------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year $ 22,519,234 $ 1,307,511 $ 4,109,908 $ 28,557,416 $ 13,667,507
CONTRIBUTIONS:
Employee 2,418,980 302,180 1,055,042 3,212,481 3,336,138
Employer 25,915 2,050 6,796 28,265 22,725
Rollovers from qualified plans 55,376 41,440 29,728 88,914 236,925
(Note 1)
INVESTMENT INCOME:
Dividends - 103,947 554,210 - 1,110,154
Interest 1,438,539 - - - -
Loan Repayment Interest 151,334 10,679 33,109 181,051 119,205
NET APPRECIATION IN FAIR VALUE
OF INVESTMENTS - 25,473 444,345 9,535,499 4,141,863
NET TRANSFERS (Note 1)
Among Funds 1,516,620 202,684 565,287 644,471 3,991,224
From Hourly Plan 39,557 3,764 16,111 113,657 25,491
ADMINISTRATIVE EXPENSES (Note 1) (3,549) (182) (918) (4,344) (2,581)
DISTRIBUTIONS AND WITHDRAWALS (3,032,281) (105,208) (407,559) (2,346,951) (1,494,661)
(Note 1)
PARTICIPANT LOANS (Note 1)
New Loans Issued (1,279,625) (57,943) (234,367) (1,542,438) (885,634)
Principal Received 750,217 54,978 186,521 879,341 682,084
OTHER 78,199 186 919 (108,806) 2,808
-------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $ 24,678,516 $ 1,891,559 $ 6,359,132 $ 39,238,556 $ 24,953,248
============== ============= ============= ============= =============
Non-
Participant
Participant Directed Funds Directed
--------------------------------- --------------
Company Company
Loan Stock Stock
Fund Fund Fund Total
-------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year $ 6,755,622 $ 19,559,121 $ 61,269,446 $157,745,765
CONTRIBUTIONS:
Employee - 1,924,211 - 12,249,032
Employer - - 9,469,327 9,555,078
Rollovers from qualified plans - 112,370 - 564,753
(Note 1)
INVESTMENT INCOME:
Dividends - 306,574 1,102,671 3,177,556
Interest - - 8,756 1,447,295
Loan Repayment Interest - 140,395 - 635,773
NET APPRECIATION IN FAIR VALUE
OF INVESTMENTS - 3,508,516 11,956,241 29,611,937
NET TRANSFERS (Note 1)
Among Funds - (4,689,952) (2,230,334) -
From Hourly Plan 22,820 - 130,819 352,219
ADMINISTRATIVE EXPENSES (Note 1) - (2,489) (3,138) (17,201)
DISTRIBUTIONS AND WITHDRAWALS (337,548) (1,108,974) (6,223,270) (15,056,452)
(Note 1)
PARTICIPANT LOANS (Note 1)
New Loans Issued 5,264,568 (1,264,561) - -
Principal Received (3,275,764) 722,623 - -
OTHER (3,231) (95,304) 79,627 (45,602)
-------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $ 8,426,467 $ 19,112,530 $ 75,560,145 $200,220,153
============== ============= ============= =============
<FN>
See notes to financial statements
</FN>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN:
General
The Pennzoil Company Savings and Investment Plan (the Plan) was
established effective December 20, 1986 (effective date), by
Pennzoil Company. The purpose of the Plan is to encourage
employees of Pennzoil Company and participating subsidiaries and
affiliated companies (collectively referred to as 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 families
in the event of their death.
Each person employed by Pennzoil as of December 20, 1986, who was a
member of the Pennzoil Company and Participating Companies
Employees Stock Purchase Plan (Pennzoil Stock Purchase Plan) or the
Employee Stock Ownership Plan of Pennzoil Company (Pennzoil Stock
Ownership Plan), became eligible to participate in the Plan on that
date. All other salaried employees become eligible to participate
in the Plan on the effective date or entry date coinciding with or
immediately following their completion of one year of service.
Effective January 1, 1989, the account balances of all hourly
employees (if such hourly employee was a member of a collective
bargaining unit to which the Plan had been made available) were
transferred to the Pennzoil Company Savings and Investment Plan for
Hourly Employees (Hourly Plan). Upon changing wage status, a
participant's account balance is transferred between the Plan and
the Hourly Plan. Such transfers are reflected at current value as
of the date of transfer in the accompanying financial statements.
Effective October 24, 1986, the Pennzoil Stock Purchase Plan and
Pennzoil Stock Ownership Plan were terminated. As a result of
these terminations, participants were able to elect to receive all
Pennzoil Company common stock (Common Stock) and Battle Mountain
Gold Company common stock (Battle Mountain Stock), as well as the
cash value of any related fractional shares, or to transfer such
vested amounts to the Plan.
In January 1990, Pennzoil acquired 80 percent (on a fully diluted
basis) of the common stock of Jiffy Lube International, Inc.
Effective October 1, 1990, the Board of Directors of Pennzoil
approved the merger of the assets of the Jiffy Lube International,
Inc. 401(k) Plan and Trust Agreement (Jiffy Lube Plan) into the
Plan. Accordingly, the account balances of participants in the
Jiffy Lube Plan were transferred to the Plan. The Pennzoil Stock
Purchase Plan, the Pennzoil Stock Ownership Plan and the Jiffy Lube
Plan are collectively referred to as the Prior Plans.
The transferred amounts applicable to the Prior Plans are
maintained in separate accounts for each participant (Prior Plan
Accounts) segregated into amounts representing each participant's
employee and employer accounts under the Prior Plans (see
"Investment Choices" below).
Contributions
In order to participate in the Plan, an eligible employee may
authorize, by payroll deduction, a contribution of not less than
1 percent and not more than 12 percent of annual compensation.
Employee contributions may be made "after-tax" or, under a
Section 401(k) option, on a "before-tax" basis. Pennzoil will
match an employee's contribution dollar- for- dollar up to 6
percent of their base pay.
Upon written request filed with the administrative committee, a
participant in the Plan or an employee of Pennzoil who is otherwise
eligible to participate in the Plan but who has not yet completed
the participation requirements may transfer an amount from another
qualified investment plan (Rollover Amount) into the Plan, provided
that such Rollover Amount is transferred in the form of cash. The
Rollover Amount will be deposited in an investment fund and shall
at all times be fully vested and nonforfeitable and share in the
income of the investment fund. However, such Rollover Amount will
not share in employer matching contributions.
Investment Choices
Employer contributions are invested primarily in Common Stock. At
Pennzoil's option, employer contributions may be made either in
cash or in Common Stock. Employer contributions are invested in
either Common Stock or in the other investment funds as designated
by the participant. The statements of net assets available for
benefits and statement of changes in net assets available for
benefits present participant directed and non-participant directed
activity separately. During 1997, Pennzoil contributed 141,515
shares 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 statements of net assets
available for benefits under the caption "Cash and temporary
investments."
Participants who have attained age 55 have the option to transfer
all or a part of their existing employer contributions to be
invested among the various investment options. Employee
contributions are invested, as designated by participating
employees, in the following investment funds:
Fund Name Type of
Investment(s)
I. Merrill Lynch Invests primarily in
Retirement guaranteed investment
Preservation Trust contracts (generally with
insurance companies or
banks which agree to return
principal and a stated rate
of return over a specified
period of time) and U.S.
Government and U.S.
Government Agency
securities.
II. J. P. Morgan Normally, at least 65% of
Institutional Bond the fund's assets will be
Fund represented by investment
in securities rated "A" or
better by a major ratings
agency. The fund's
duration (a measure of
average maturity) ranges
between 3-1/2 and 5-1/2
years.
III. Fidelity Advisor Invests in a diversified
Income & Growth Fund portfolio of equity and
fixed-income securities
with income, growth of
income and capital
appreciation potential.
IV. Merrill Lynch Consists of common stocks
Equity Index Trust that, to the extent
possible, duplicate the
composition of Standard &
Poor's Index of 500 stocks.
V. Davis New York Invests primarily in common
Venture Fund stock and securities
(formerly New York convertible into common
Venture Fund) stock. The fund ordinarily
invests in securities which
the Fund management
believes have above-average
appreciation potential.
VI. Company Stock Fund Common Stock of Pennzoil.
Under the terms of the Plan, Prior Plan Accounts are not commingled
with other Plan assets for investment purposes, are not allocated
investment income from other Plan assets and are not allocated
employer contributions. In addition, amounts transferred to the
Plan from the Pennzoil Stock Purchase Plan and Pennzoil Stock
Ownership Plan must remain invested in Common Stock and Battle
Mountain Stock. Amounts transferred from the employer account of
the Jiffy Lube Plan must remain invested in Common Stock while
amounts transferred from the employee account may be invested in
any one of the six options described above. Dividends or other
income earned on shares of Common Stock and Battle Mountain Stock
in the Prior Plan Accounts are required to be reinvested in Common
Stock. Participants are fully vested in such Prior Plan Accounts
and will receive distributions upon giving written notice to the
administrative committee for withdrawals or upon termination of
employment. Included in Prior Plan Accounts at December 31, 1997
and 1996, respectively, are 52,148 and 68,105 shares of Common
Stock and 15,219 and 19,547 shares of Battle Mountain Stock which
have been reflected in the Non-Participant Directed Company Stock
Fund in the accompanying financial statements. The fair value of
the Common Stock was $3,484,135 at December 31, 1997, and
$3,847,932 at December 31, 1996. The fair value of the Battle
Mountain Stock was $87,876 at December 31, 1997, and $134,863 at
December 31, 1996.
Loans
A participant may apply to the administrative committee of the Plan
to borrow from his accounts, subject to certain limitations. Such
loans will be for a term from six months to five years (up to
20 years in the case of loans to purchase a primary residence).
The minimum loan amount is $1,000 and the maximum loan amount is
the lesser of $50,000 or 50 percent of the participant's vested
account balances. Interest rates on loans are fixed at the Prime
Rate plus one percent.
Repayment of loans will be made each pay period by payroll
deductions, or a loan may be prepaid in full by a lump sum payment.
Upon retirement, death or termination of employment, participants
have 60 days after the next-payment due date to pay the loan in
full.
Participant loans are reported as an asset of the Loan Fund and
principal and interest payments received are transferred to the
investment funds based on the participant's current contribution
elections.
Vesting and Disposition of Forfeitures
Participants are always fully vested in employee contributions.
Participants vest in employer contributions at a rate of 25 percent
per year beginning at the end of two years of service, becoming
fully vested after five years of service or attainment of age 55.
Any nonvested portion of employer contributions shall be forfeited
upon termination. Forfeitures shall be 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.
Forfeitures available for utilization as of December 31, 1997 and
1996 were $164,207 and $153,540, respectively. The amount of
forfeitures utilized during 1997 was $140,035.
Withdrawals
Withdrawals may be made from either of an employee's previous
pretax or after-tax contributions, net of previous withdrawals,
upon written notice to the administrative committee. After-tax
withdrawals cause the participants to forfeit the right to
participate in the Plan for 180 days, while pre-tax withdrawals are
allowed only when the participant is age 59-1/2 or older, unless a
financial hardship exists. Hardship withdrawals will cause the
participants to be suspended from making further contributions for
365 days. Withdrawals may be made from employer contributions only
if the participant is fully vested and only after withdrawing all
amounts from any Prior Plan Accounts and any Rollover Amounts, and
not being in a suspended status.
Distribution of Benefits
Benefits are payable to participants or their beneficiaries at
retirement, permanent disability, death or termination of service.
Pending Distributions at Year-End
Benefits pending payment to participants that have provided notice
of withdrawal totaled $86,255 as of December 31, 1997. The
following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
December 31
1997
-------------
Net assets available for benefits per
the financial statements $ 200,220,153
Less- Amounts allocated to
withdrawing participants (86,255)
-------------
Net assets available for benefits per
the Form 5500 at December 31, 1997 $ 200,133,898
=============
The following is a reconciliation of
benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31
1997
-------------
Benefits paid to participants per the
financial statements $ 15,056,452
Add- Amounts allocated to
withdrawing participants at December 31, 1997 86,255
-------------
Benefits paid to participants per the
Form 5500 $ 15,142,707
=============
Amounts allocated to withdrawing participants are recorded on the
Form 5500 for benefit claims that have been processed and approved
for participants prior to December 31, 1997, but have not yet been
paid as of that date.
Plan Administration
The Plan is administered by an administrative committee consisting
of at least three members appointed by the Board of Directors of
Pennzoil. Merrill Lynch Trust Company (Trustee) is sole trustee of
the Plan. All administrative expenses are borne by Pennzoil with
the exception of fees for investment management and loan processing
fees for participant loans.
The Plan is subject to reporting and regulations pursuant to the
Employee Retirement Income Security Act of 1974 (ERISA).
Termination or Amendment of the Plan
The Plan may be terminated, amended or modified by the Board of
Directors of Pennzoil 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. 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. 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.
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan's
management to use estimates and assumptions that affect the
accompanying financial statements and disclosures. Actual results
could differ from those estimates.
Asset Valuation
The Plan's investments are reflected in the accompanying financial
statements at year-end current values, which represent fair values.
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 on the last trading day of the Plan year. Fair
value of the mutual funds was determined based on the closing price
of the securities held by the collective fund as listed on the
applicable stock exchange on the last trading day of the Plan year
and the number of participating units held by the Plan. The
Merrill Lynch Retirement Preservation Trust Fund is a
common/collective trust fund investing primarily in guaranteed
investment contracts and U.S. Government securities. The
guaranteed investment contracts are fully benefit responsive and
are recorded at contract value, which approximates fair value.
Effective yields approximated 6.6% and 6.4% and crediting interest
rates approximated 6.1% and 5.9% for the years ended December 31,
1997 and 1996, respectively. Contract value for the Merrill Lynch
Retirement Preservation Trust 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 companies.
Net appreciation in fair value of investments consists of realized
gains on sale of investments and unrealized appreciation of
investments. Realized gains are calculated based on proceeds from
the sale of assets and the current 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 of
investments is calculated based on the current value of the assets
at the end of the Plan year and the current 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 received its latest determination letter on October 26,
1994, in which the Internal Revenue Service stated that the Plan,
as then designed, was in compliance with the applicable
requirements of the Internal Revenue Code. The Plan has since been
amended; however, the Plan administrator believes that the Plan is
currently designed and being operated in compliance with applicable
requirements of the Internal Revenue Code. Therefore, the Plan
administrator believes that the Plan was qualified and the related
trust was tax-exempt as of December 31, 1997 and 1996.
4. SUBSEQUENT EVENTS:
On April 15, 1998, Pennzoil announced a comprehensive restructuring
that will result in the separation of Pennzoil's motor oil, refined
products and franchise operations (which generally include Pennzoil
Products Company ("PPC"), Jiffy Lube International, Inc. ("Jiffy
Lube") and their respective subsidiaries (collectively, "Pennzoil
Products Group")) from Pennzoil's exploration and production
operations. The restructuring includes the pro rata distribution
of Pennzoil Products Group (i.e., the common stock of PPC (which
will at such time hold the motor oil and refined products operations
of PPC and the common stock of Jiffy Lube)) to holders of Pennzoil
common stock. As a result of the restructuring, the Plan will be
split between the Pennzoil Products Group and Pennzoil. Each plan
after the split will have similar provisions as the existing Plan.
At this time, Pennzoil is unable to determine the amounts to be
transferred to the new plans.
SCHEDULE I
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Current
Identity of Issue Description of Investment Cost Value
- --------------------- ------------------------- ----------- -----------
EQUITY SECURITIES:
Common stock-
Pennzoil Company <F1> 1,401,109 shares--$.83-1/3 par value $ 78,143,486 $ 93,610,888
Battle Mountain Gold Company 15,218 shares--$.10 par value 72,680 87,869
------------ ------------
Total equity securities 78,216,166 93,698,757
------------ ------------
INVESTMENT CONTRACTS:
Merrill Lynch Retirement
Preservation Trust <F1> 24,482,865 units 24,482,865 24,482,865
------------ ------------
MUTUAL FUNDS:
Merrill Lynch Equity Index Trust <F1> 596,253 units 21,799,888 38,980,040
Fidelity Advisor Income & Growth Fund 344,726 units 5,694,532 6,274,008
Davis New York Venture Fund 1,105,492 units 18,922,443 24,685,633
J.P. Morgan Institutional Bond Fund 187,279 units 1,837,380 1,867,176
------------ ------------
Total mutual funds 48,254,243 71,806,857
------------ ------------
OTHER ASSETS:
Cash and Temporary investments 4,017 4,017
Participant loans, at interest
rates ranging from 7.0% to 10.0% <F1> 8,426,467 8,426,467
------------ ------------
Total other assets 8,430,484 8,430,484
------------ ------------
Total assets held for $159,383,758 $198,418,963
investment purposes ============ ============
<FN>
<F1> Represents party in interest.
</FN>
SCHEDULE II
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
(SERIES OF INVESTMENT TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1997
Number of
Units or
Face Value Identity of Party Involved Purchase Selling Cost of Net
Amount and Description of Assets Price <F1> Price <F1> Asset Gain
---------- --------------------------- ---------- ---------- -------- ---------
Pennzoil Company common stock,
$.83-1/3 par value-
244,231 Purchases (589 transactions) $15,397,778 $ - $15,397,778 $ -
264,281 Sales (781 transactions) - 17,547,178 14,229,652 3,317,526
Merrill Lynch Equity Index Trust-
121,394 Purchases (518 transactions) 7,082,395 - 7,082,395 -
104,599 Sales (574 transactions) - 6,124,606 4,081,560 2,043,046
Merrill Lynch Retirement
Preservation Trust-
11,083,949 Purchases (770 transactions) 11,083,949 - 11,083,949 -
9,054,527 Sales (568 transactions) - 9,054,527 9,054,527 -
Davis New York Venture Fund
536,969 Purchases (500 transactions) 11,273,519 - 11,273,519 -
208,902 Sales (470 transactions) - 4,334,693 3,494,454 840,239
<FN>
<F1> Current value of asset on transaction date is equal to the purchase or selling
price. Prices are shown net of related expenses.
NOTE: This schedule is a listing of series of investment transactions in
the same security which exceed 5% of the current value of the Plan's
assets as of the beginning of the Plan year.
</FN>
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
By S/N JAMES W. SHADDIX
James W. Shaddix
Chairman of the Administrative Committee
June 29, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated June 25, 1998, included herein, into
Pennzoil Company's previously filed Registration Statement on Form S-8
No. 33-51473.
ARTHUR ANDERSEN LLP
Houston, Texas
June 29, 1998