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UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549





FORM 10-Q

Quarterly Report Pursuant to Section 13 or
15(d) of

the Securities Exchange Act of 1934



For the Quarter Ended March
31, 2001
                             Commission
File No. 1-14501

PENNZOIL-QUAKER STATE COMPANY

(Exact name of registrant as
specified in its charter)

Delaware        
                                          
                          76-0200625

(State or other jurisdiction
of incorporation or
organization)                (I.R.S.
Employer Identification No.)

Pennzoil Place, P.O. Box 2967

Houston, Texas 77252-2967

(Address of principal
executive offices)





Registrant's telephone number, including area
code: (713) 546-4000



Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X. No .

Number of shares of stock were outstanding, as
of latest practicable date, April 30, 2001:

Common Stock, par value $0.10 per share,
79,031,282 shares.



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|PART I. FINANCIAL INFORMATION                                    
|-----------------------------------------------------------------
|Item
        1. Financial Statements                             
|PENNZOIL-QUAKER STATE COMPANY                                    
|CONDENSED CONSOLIDATED STATEMENT OF
        OPERATIONS           
|AND COMPREHENSIVE INCOME                                         
|(UNAUDITED)                                                      
|                                                                 
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|                                                                 
|REVENUES                                                         
|COSTS AND EXPENSES                                               
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|INCOME (LOSS) FROM CONTINUING OPERATIONS                         
|                                                                 
|Income tax provision (benefit)                                   
|INCOME (LOSS) FROM CONTINUING OPERATIONS                         
|LOSS FROM DISCONTINUED OPERATIONS, net of tax                    
|NET INCOME (LOSS)                                                
|BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                      
|                                                                 
|                                                                 
|                                                                 
|DIVIDENDS PER COMMON SHARE                                       
|AVERAGE SHARES OUTSTANDING:                                      
|                                                                 
|                                                                 
|END OF PERIOD SHARES OUTSTANDING                                 
|NET INCOME (LOSS)                                                
|Other comprehensive income (loss) net of tax:                    
|                                                                 
|                                                                 
|                                                                 
|COMPREHENSIVE INCOME (LOSS)                                      
|See Notes to Condensed Consolidated Financial
        Statements.

|Page 2
        PART I. FINANCIAL INFORMATION -
        continued 
|-----------------------------------------------------------------
|                                                                 
|PENNZOIL-QUAKER STATE COMPANY                                    
|CONDENSED CONSOLIDATED
        BALANCE SHEET                     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|ASSETS                                                           
|Current assets                                                   
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Total current assets                                             
|Property, plant and equipment, net                               
|Deferred income taxes                                            
|Goodwill and other intangibles                                   
|Other assets                                                     
|Net assets of discontinued operations                            
|TOTAL ASSETS                                                     
|LIABILITIES AND SHAREHOLDERS' EQUITY                             
|Current liabilities                                              
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Total current liabilities                                        
|Total long-term debt, less current maturities                    
|Capital lease obligations, less current
        maturities       
|Other liabilities                                                
|TOTAL LIABILITIES                                                
|COMMITMENTS AND CONTINGENCIES                                    
|SHAREHOLDERS' EQUITY                                             
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       
|See Notes to Condensed Consolidated Financial
        Statements.

|Page 3
        PART I. FINANCIAL INFORMATION -
        continued 
|-----------------------------------------------------------------
|                                                                 
|PENNZOIL-QUAKER STATE COMPANY                                    
|CONDENSED CONSOLIDATED
        STATEMENT OF CASH FLOWS           
|(UNAUDITED)                                                      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|CASH FLOWS FROM OPERATING ACTIVITIES                             
|                                                                 
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|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
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|                                                                 
|                                                                 
|CASH FLOWS FROM INVESTING ACTIVITIES                             
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|CASH FLOWS FROM FINANCING ACTIVITIES                             
|                                                                 
|                                                                 
|                                                                 
|NET CASH PROVIDED BY (USED IN)                                   
|                                                                 
|                                                                 
|NET INCREASE (DECREASE) IN CASH                                  
|                                                                 
|                                                                 
|CASH AND CASH EQUIVALENTS, beginning of period                   
|CASH AND CASH EQUIVALENTS, end of period                         
|                                                                 
|See Notes to Condensed Consolidated Financial
        Statements.

Page 4



PENNZOIL-QUAKER STATE COMPANY

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

(UNAUDITED)

(1)       General -

The
condensed consolidated financial statements included herein have
been prepared by Pennzoil-Quaker State Company
("Pennzoil-Quaker State" or the "Company")
without audit and should be read in conjunction with the
financial statements and the notes thereto included in
Pennzoil-Quaker State's latest annual report. The foregoing
financial statements include only normal recurring accruals and
all adjustments which Pennzoil-Quaker State considers necessary
for a fair presentation. Certain prior period items have been
reclassified in the condensed consolidated financial statements
in order to conform with the current year presentation.

During
the first quarter of 2001, the Company determined that certain
continuing operations had been included as part of the
discontinued operations presentation that was initially presented
in the Company's December 31, 2000 financial statements.
Previously issued financial results have been adjusted herein to
appropriately reflect these operations as part of continuing
operations. This adjustment had no effect on previously reported
income from continuing operations or net income and an
insignificant effect on previously reported revenues, cost of
sales and certain assets and liability accounts.

(2)       Derivative
Instruments -

At
times, the Companyhas utilized swaps and
forward contracts to manage certain risks resulting from
fluctuations in interest rates and foreign currency exchange
rates. On January 1, 2001, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging
Activities" as amended which established accounting and
reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes
in the derivative instrument's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met.
The adoption of this standard did not impact the Company's
results of operations or financial position.

In
connection with the issuance of $150.0 million of two-year fixed
rate notes in December 2000, Pennzoil-Quaker State entered into a
fixed to floating interest rate swap to maintain its mix of
variable rate versus fixed rate debt. The Company designated the
swap as a fair value hedge. Under SFAS No. 133, changes in the
fair value of the swap are recognized currently in earnings along
with the offsetting changes in the fair value of the associated
debt. At March 31, 2001, the fair market value of the swap of
$6.6 million was recorded in other current assets. In March 2001,
the Company purchased $6.8 million of the notes and unwound the
corresponding swaps. No material gain or loss was recognized on
this transaction.

(3)       Summarized
Financial Data of Excel Paralubes -

Pennzoil-Quaker
State's net investment in Excel Paralubes, accounted for using
the equity method and carried as a credit balance of $64.6
million and $71.6 million at March 31, 2001 and December 31,
2000, respectively, is included in other liabilities on the
condensed consolidated balance sheet. Pennzoil-Quaker State's
equity in Excel Paralubes' pretax income for the three months
ended March 31, 2001 and 2000 of $6.9 million and $2.2 million,
respectively, is included in revenues in the condensed
consolidated statement of operations and comprehensive income.

Page 5

Summarized
financial information for Excel Paralubes for the three months
ended March 31, 2001 and 2000 on a 100% basis follows:

Three months ended March 312001
        
        2000(Expressed in thousands)(Unaudited)Revenues
        $ 123,696
        
        $ 114,864Operating
        earnings
        24,193
        
        14,470Net
        income
        13,890
        
        4,373


(4)       Segment
Reporting -

During
the first quarter of 2001, the Company realigned its business
segments to report five separate operating segments. Results for
the first three months of 2000 have been restated to conform with
the new presentation. Information with respect to revenues,
operating income and other data is presented in the following
tables.

|(Expressed in Thousands)                                                              | Three months ended March
        31, 2001
|------------------------------------------------------------------------------------- | -----------------------------------------
|                                                                                      |                                          
|                                                                                      |                                          
|Unaffiliated revenues (a)                                                             | $ 305,148                                
|Intersegment revenues                                                                 | 15,983                                   
|                                                                                      | Total
        revenues                   
|Income before interest                                                                |                                          
|                                                                                      | and
        income taxes                 
|                                                                                      |                                          
|(Expressed in Thousands)                                                              | Three months ended March
        31, 2000
|                                                                                      |                                          
|                                                                                      |                                          
|Unaffiliated revenes (a)                                                              | $ 335,517                                
|Intersegment revenues                                                                 | 14,685                                   
|                                                                                      | Total
        revenues                   
|Income before interest                                                                |                                          
|                                                                                      | and
        income taxes                 
|                                                                                      |                                          
|(a)
        Unaffiliated revenues include sales to unconsolidated
        affiliates.
|(b)
        Includes consolidating eliminations.                                     

(5)       Debt -

Pennzoil-Quaker
State has a revolving credit facility with a group of banks that
provides for up to $450.0 million of committed unsecured
revolving credit borrowings through December 13, 2001, with any
outstanding borrowings on such date being converted into a term
credit facility due on December 13, 2002. Outstanding borrowings
were $265.0 million under the revolving credit facility at March
31, 2001 and were classified as long-term debt. The average
interest rate applicable to borrowings under the revolving credit
facility was 6.78% during the first three months of 2001.

Page 6

Pennzoil-Quaker
State's Canadian subsidiary also maintains a revolving credit
facility with Canadian banks, which provides for up to $17.1
million of committed borrowings through October 28, 2001, with
any outstanding borrowings on such date being converted into a
term credit facility due on October 28, 2002. As of March 31,
2001 borrowings under the Company's Canadian facility totaled
$8.9 million and were classified as long-term debt.

A
U.K. subsidiary of the Company maintains a revolving credit
facility that provides for borrowings up to $20.1 million through
July 26, 2002. Outstanding borrowings under the facility totaled
$17.4 million at March 31, 2001 and were classified as long-term
debt.

In
December 2000, Pennzoil-Quaker State issued $150.0 million of
8.65% Notes due 2002. Net proceeds of $149.1 million were used to
reduce the Company's commercial paper borrowings. The terms of
the notes provide that, in the event a rating on Pennzoil-Quaker
State's senior unsecured debt falls and remains below investment
grade, the coupon on the notes increases 0.75% to 9.4% and each
noteholder has the option, at any time on or after June 1, 2001,
to require the Company to purchase its note at 100% of the
principal amount thereof plus accrued and unpaid interest on or
after June 1, 2001. On March 2, 2001 Standard and Poor's lowered
the senior unsecured debt rating for the Company's debt below
investment grade. The notes are currently trading above 100% face
value plus accrued interest. During March 2001, the Company
purchased and retired $6.8 million face amount of these notes and
no material gain or loss was recognized. In April, the Company
purchased and retired $5.0 million face amount of these notes.

As
of March 31, 2001, $138.2 million of indebtedness under
Pennzoil-Quaker State's 8.65% Notes due in 2002 has been
classified as long-term debt. Such debt classification is based
upon the availability of committed long-term credit facilities to
refinance such short - term obligations and the Company's intent
to maintain such commitments in excess of one year.

Debt
outstanding was as follows:

March 31,
        
        December 31,2001
        
        2000(Expressed in thousands)7.375% Debentures due 2029, net of discount
        $ 398,122
        
        $ 398,1056.750% Notes due 2009, net of discount
        199,184
        
        199,1598.65% Notes due 2002, net of discount
        143,039
        
        149,7466.625 % Notes due 2005, net of discount
        99,724
        
        99,708Commercial paper
        -
        
        57,709Revolving credit facility
        265,000
        
        195,000Pollution control bonds, net of discount
        50,556
        
        50,522International debt facilities
        43,768
        
        51,808Fair Value of Interest Rate Swap
        6,644
        
        1,271Other debt
        7,707
        
        5,184Total
        debt
        1,213,744
        
        1,208,212Less amounts classified as current maturities
        (18,195)
        
        (13,786)Total
        long-term debt
        $ 1,195,549
        
        $ 1,194,426


Page 7

(6)       Earnings Per
Share -

Computations
for basic and diluted earnings (loss) per share for the three
months ended March 31, 2001 and 2000 consist of the following:

Three months ended March 312001
        
        2000(Expressed in thousandsexcept per share amounts)Income (loss) from continuing operations
        $ 8,705
        
        $ (1,166)Basic weighted average shares
        78,836
        
        78,216Effect of dilutive securities (a)Options
        935
        
        -Awards
        508
        
        -Diluted weighted average shares
        80,279
        
        78,216Basic and diluted earnings (loss) per share
        $ 0.11
        
        $ (0.02)


1. A weighted average number of options to
        purchase 4.7 million shares of common stock were
        outstanding for the three months ended March 31, 2001
        that were not included in the computation of diluted
        earnings per share because the options' prices were
        greater than the average market price of the common
        shares. A weighted average number of options to purchase
        9.8 million shares of common stock were outstanding for
        the three months ended March 31, 2000 and awards of 583.7
        thousand shares of common stock were outstanding for the
        three months ended March 31, 2000, but were not included
        in the computation of diluted earnings per share because
        these options and awards would have resulted in an
        antidilutive per share amount.

(7)        Cash
Flow Information -

Cash
paid for interest during the three months ended March 31, 2001
and 2000 was $11.1 million and $13.7 million, respectively.
Income tax payments (refunds) of $0.1 million and $(0.7) million
were paid (received) during the three months ended March 31, 2001
and 2000, respectively.

(8)     Discontinued Operations -

Based
on the results of a strategic review completed in 2000, the
Company began to withdraw from the refining business and to
dispose of its refineries and related assets. In February 2000,
the Company ceased processing crude oil at its Rouseville,
Pennsylvania refinery. In April 2000, the Company sold the wax
processing facilities and related assets at the Rouseville
refinery and its interest in the Bareco wax marketing
partnership. In January 2001, the Company sold its share of
Penreco, a specialty industrial products partnership with Conoco.
In April 2001, the Company completed its exit from the refining
business with the sale of the Company's Shreveport, Louisiana
refinery to Calumet Lubricants Company, LP. Accordingly, the net
assets and results of operations of the Company's refining assets
and specialty industrial products businesses, including the
Shreveport and Rouseville refineries and the Penreco partnership,
have been combined and reported as discontinued operations in the
accompanying financial statements.

No
earnings or loss from discontinued operations was reported for
the quarter ended March 31, 2001. After-tax losses from
discontinued operations for the quarter ended March 31, 2000
totaled $6.6 million ($10.9 million pretax). Operating revenues
for discontinued operations for the quarter ended March 31, 2001
was $155.2 million compared to $198.3 million for the same period
last year. Included in net cash provided by discontinued
operations for the 2001 period are proceeds of $70.0 million from
the sale of Penreco.

Page 8

In
April 2001, Pennzoil-Quaker State completed the sale of its
Shreveport, Louisiana, refinery to Calumet Lubricants Company,
LP. The Company received $25.2 million from the sale, which
consisted of $14.2 million in cash proceeds and a note for $11.0
million. Results of the Shreveport refinery's operations,
including the expected loss on its sale of $40.4 million
after-tax that was accrued as of December 31, 2000, are included
in Pennzoil-Quaker State's discontinued operations.

Item 2. Management's Discussion and Analysis of Financial
Condition

and
Results of Operations

Pennzoil-Quaker
State's operations are conducted primarily through the following
five segments: (1) Lubricants, (2) Consumer Products, (3)
International, (4) Jiffy Lube and (5) Supply Chain Investments.

Results of Operations

Net
sales for Pennzoil-Quaker State decreased by $15.6 million from
the year earlier period, or approximately 2.7% for the quarter
ended March 31, 2001, to $560.7 million. The decrease in net
sales was primarily a result of the disposition of non-strategic
operating assets associated with the Viscosity Oil Division
during 2000.

Income
from continuing operations for the quarter ended March 31, 2001
was $8.7 million, or 11 cents per basic share. This compares with
a loss from continuing operations of $1.2 million, or 2 cents per
basic share for the quarter ended March 31, 2000. The increase in
income for the quarter ended March 31, 2001, compared to the same
period in 2000, is primarily due to charges associated with the
Company's general and administrative cost reduction project
recorded in the first quarter of 2000, improved operating results
for the Supply Chain Investments segment due to higher base oil
margins, and higher results in Jiffy Lube primarily due to higher
comparable store sales. These improvements were partially offset
by lower results from consumer products, lubricants and
international and higher interest expense.

Lubricants

Net
sales for the Lubricants segment were $319.5 million for the
quarter ended March 31, 2001, compared to $347.9 million for the
same period last year. The decrease in net sales is primarily a
result of the disposition of non-strategic operating assets
associated with the Viscosity Oil Division during the fourth
quarter of 2000. Operating income for this segment was $31.3
million for the quarter ended March 31, 2001, compared to $34.6
million for the same period last year. The decrease in operating
income for the quarter ended March 31, 2001 is primarily due to
lower volumes partially offset by lower selling, general and
administrative expenses.

Consumer Products

Net
sales for the Consumer Products segment were $84.9 million for
the quarter ended March 31, 2001, compared to $84.0 million for
the same period last year. The increase in net sales is primarily
due to increased automotive seat cover and floor mat revenues as
a result of the acquisition of Sagaz Industries in early March
2000, partially offset by lower revenues from car washes and
cleaners. Operating income for this segment was $4.9 million for
the quarter ended March 31, 2001, compared to $12.0 million for
the same period last year. The decrease in operating income is
primarily due to increased cost of sales.

Page 9

International

Net
sales for the International segment were $63.1 million for the
quarter ended March 31, 2001, compared to $58.5 million for the
same period last year. The increase in net sales for the first
quarter of 2001 compared to the same period last year is
primarily due to acquisitions completed toward the end of the
first quarter of 2000 and higher lubricating product prices.
These increases were partially offset by lower volumes. Operating
income for this segment was $1.2 million for the quarter ended
March 31, 2001, compared to $5.0 million for the same period last
year. The decrease in operating income is primarily due to lower
lubricating product margins resulting from higher base oil costs.

Jiffy Lube

Net
sales for this segment were $82.7 million for the quarter ended
March 31, 2001. This compares to net sales of $82.1 million for
the same period in 2000. Other income for this segment for the
quarter ended March 31, 2000, was $1.1 million compared to $1.7
million for the same period in 2000. Operating income from this
segment for the quarter ended March 31, 2001 was $5.0 million
compared to $3.2 million for the same period in 2000. The
improvement in operating income was primarily due to higher
comparable store sales and lower costs.

Supply Chain Investments

Net
sales for this segment, primarily intercompany sales to
Lubricants, were $75.8 million for the quarter ended March 31,
2001. This compares to net sales of $65.7 million for the same
period in 2000. Other income for this segment for the quarter
ended March 31, 2001, was $6.9 million compared to $2.2 million
for the same period in 2000. Other income represents the equity
income from the 50/50 Excel Paralubes partnership with Conoco
Inc., which is recorded using the equity method of accounting.
The increase in equity income reflects higher base oil margins.
Operating income from this segment for the quarter ended March
31, 2001 was $10.4 million compared to operating income of $5.5
million for the same period in 2000. The increase in operating
income for the quarter ended March 31, 2001 was primarily due to
higher base oil margins.

Discontinued Operations

No
earnings or loss from discontinued operations was reported for
the quarter ended March 31, 2001. After-tax loss from
discontinued operations for the quarter ended March 31, 2000 was
$6.6 million ($10.9 million pretax). Operating revenues for
discontinued operations for the quarter ended March 31, 2001 was
$155.2 million compared to $198.3 million for the same period
last year.

Corporate Administrative Expense

Corporate
administrative expense decreased $32.4 million to $14.5 million
for the quarter ended March 31, 2001, compared to the same period
in 2000. The decrease for the quarter ended March 31, 2001 is
primarily due to charges in 2000 related to a general and
administrative cost reduction project.

Page 10

Capital Resources and Liquidity

Cash
Flow.As of March 31, 2001,
Pennzoil-Quaker State had cash and cash equivalents of $36.3
million. During the quarter ended March 31, 2001, cash and cash
equivalents decreased $2.0 million.

Cash
flow used in operating activities for the first three months
ended March 31, 2001 decreased due to improved operating results.

Debt
Instruments and Repayments.   Pennzoil-Quaker
State has a revolving credit facility with a group of banks that
provides for up to $450.0 million of committed unsecured
revolving credit borrowings through December 13, 2001, with any
outstanding borrowings on such date being converted into a term
credit facility due on December 13, 2002. Outstanding borrowings
were $265.0 million under the revolving credit facility at March
31, 2001 and were classified as long-term debt. The average
interest rate applicable to borrowings under the revolving credit
facility was 6.78% during the first three months of 2001.

Pennzoil-Quaker
State's Canadian subsidiary also maintains a revolving credit
facility with Canadian banks, which provides for up to $17.1
million of committed borrowings through October 28, 2001, with
any outstanding borrowings on such date being converted into a
term credit facility due on October 28, 2002. As of March 31,
2001 borrowings under the Company's Canadian facility totaled
$8.9 million and were classified as long-term debt.

A
U.K. subsidiary of the Company maintains a revolving credit
facility that provides for borrowings up to $20.1 million through
July 26, 2002. Outstanding borrowings under the facility totaled
$17.4 million at March 31, 2001 and were classified as long-term
debt.

In
December 2000, Pennzoil-Quaker State issued $150.0 million of
8.65% Notes due 2002. Net proceeds of $149.1 million were used to
reduce the Company's commercial paper borrowings. The terms of
the notes provide that, in the event a rating on Pennzoil-Quaker
State's senior unsecured debt falls and remains below investment
grade, the coupon on the notes increases 0.75% to 9.4% and each
noteholder has the option, at any time on or after June 1, 2001,
to require the Company to purchase its note at 100% of the
principal amount thereof plus accrued and unpaid interest on or
after June 1, 2001. On March 2, 2001 Standard and Poor's lowered
the senior unsecured debt rating for the Company's debt below
investment grade. The notes are currently trading above 100% face
value plus accrued interest. In March 2001, the Company purchased
and retired $6.8 million face amount of these notes.

As
of March 31, 2001, $138.2 million of indebtedness under
Pennzoil-Quaker State's 8.65% Notes due in 2002 has been
classified as long-term debt. Such debt classification is based
upon the availability of committed long-term credit facilities to
refinance such short - term obligations and the Company's intent
to maintain such commitments in excess of one year.

Accounts
Receivable. Pennzoil-Quaker State, through its wholly
owned subsidiary Pennzoil Receivables Company ("PRC"),
sells certain of its accounts receivable to a third party
purchaser. PRC is a special limited purpose corporation and the
assets of PRC are available solely to satisfy the claims of its
own creditors and not those of Pennzoil-Quaker State or its
affiliates. The Company renewed and increased the receivable
sales facility during August 2000. The renewed facility provides
for ongoing sales of up to $170.0 million through August 2001, at
which time the Company intends to renew the facility. The
Company's net accounts receivable sold under its receivable sales
facility totaled $139.5 million and $149.1 million at March 31,
2001 and December 31, 2000, respectively.

Page 11

The
Company maintains a lube center receivable purchase and sale
agreement, which provides for the sale of certain notes
receivable up to $275.0 million, through a wholly owned
subsidiary, Pennzoil Lube Center Acceptance Corporation
("PLCAC"). The assets of PLCAC are available solely to
satisfy the claims of its own creditors and not those of
Pennzoil-Quaker State or its affiliates.  Through March
31, 2001, the Company sold a total of $223.9 million of notes
receivable under this agreement, of which $152.6 million were
outstanding to the third party purchaser at March 31, 2001.
Through December 31, 2000, the Company sold a total of $220.8
million of notes receivable under this agreement, of which $159.0
million were outstanding to the third party purchaser at December
31, 2000.

Disclosures about Market Risk

The
Company's primary exposure to market risk includes changes in
interest rates, commodity prices and foreign currency exchange
rates.

In
connection with the issuance of $150.0 million of two-year fixed
rate notes in December 2000, Pennzoil-Quaker State entered into a
fixed to floating interest rate swap to maintain its mix of
variable rate versus fixed rate debt. The Company designated the
swap as a fair value hedge. Under SFAS No. 133, changes in the
fair value of the swap are recognized currently in earnings along
with the offsetting changes in the fair value of the associated
debt. At March 31, 2001, the fair market value of the swap was
$6.6 million. In March 2001, the Company purchased $6.8 million
of the notes and unwound the corresponding swaps. No material
gain or loss was recognized on this transaction.

Pennzoil-Quaker
State enters into forward exchange contracts and options to hedge
the impact of foreign currency fluctuations on certain monetary
liabilities and commitments denominated in foreign currencies.
The purpose of entering into these hedges is to minimize the
impact of foreign currency fluctuations on the results of
operations. The unrealized gains and losses on these contracts
are deferred and recognized in the results of operations in the
period in which the hedged transaction is consummated. During
April 2001, the Company's Canadian subsidiary entered into
several foreign currency forward contracts to reduce the impact
of fluctuating foreign exchange rates for a total amount of $6.0
million. The contracts will settle over the next four months. The
forward contracts are designated as cash flow hedges of
forecasted transactions. The forward contracts will be recorded
at fair value as an asset or liability on the Company's balance
sheet with the effective portion of the gain or loss reported as
a component of other comprehensive income and will be
reclassified into earnings in the same period during which the
transactions are settled.

Forward-Looking Statements - Safe Harbor Provisions

This
quarterly report on Form 10-Q of Pennzoil-Quaker State for the
quarter ended March 31, 2001 contains certain forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. To the extent that
such statements are not recitations of historical fact, such
statements constitute forward-looking statements, which, by
definition, involve risks and uncertainties. Where, in any
forward-looking statements, Pennzoil-Quaker State expresses an
expectation or belief as to future results or events, such
expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or
accomplished.

The
following are factors that could cause actual results or events
to differ materially from those anticipated, and include but are
not limited to: general economic, financial and business
conditions; competition in the motor oil and marketing business;
base oil margins and supply and demand in the base oil business;
the success and cost of advertising and promotional efforts;
mechanical failure in refining operations; unanticipated
environmental liabilities; changes in and compliance with
governmental regulations; changes in tax laws; and the cost and
effects of legal proceedings.

Page 12

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)     Exhibits -

12    Computation
of Ratio of Earnings to Fixed Charges for the three months ended

March
31, 2001 and 2000.

(b)    Reports -

No reports on
Form 8-K were filed during the quarter for which this report was
filed.

Page 13



SIGNATURE





Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.







PENNZOIL-QUAKER
STATE COMPANY

Registrant



S/N
Michael J. Maratea

Michael
J. Maratea

VicePresident and Controller



May 14, 2001