SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________________
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to____________
Commission file number 0-7154
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QUAKER CHEMICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-0993790
- ---------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Elm and Lee Streets, Conshohocken, Pennsylvania 19428-0809
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-832-4000
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Not Applicable
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Former name, former address and former fiscal year, if changed
since last report.
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the
latest practicable date.
Number of Shares of Common Stock
Outstanding on April 28, 1995 8,801,305
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<PAGE>
PART I. FINANCIAL INFORMATION
QUAKER CHEMICAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION
The following condensed financial statements are filed as part of this
quarterly report on Form 10-Q:
Consolidated Balance Sheet at March 31, 1995 and
December 31, 1994
Consolidated Statement of Income for the three months
ended March 31, 1995 and 1994
Consolidated Statement of Cash Flows for the three months
ended March 31, 1995 and 1994
* * * * * * * * * *
NOTE TO CONDENSED FINANCIAL INFORMATION
The attached condensed financial information has been prepared in
accordance with instructions for Form 10-Q and, therefore, does not include
all financial note information which might be necessary for a fair
presentation in accordance with generally accepted accounting principles.
Such condensed financial information is unaudited, but in the opinion of
management, includes all adjustments, consisting only of normal recurring
adjustments and accruals, necessary for a fair presentation of results for
the periods indicated. The net income reported for the periods should not
necessarily be regarded as indicative of net income on an annualized basis;
however, significant variations from the results for the same period of the
previous year, if any, have been disclosed in the accompanying management's
discussion and analysis.
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<PAGE>
Quaker Chemical Corporation
Consolidated Balance Sheet
(dollars in thousands)
March 31, December 31,
1995 1994
(Unaudited) *
- -------------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 5,633 $ 11,345
Accounts receivable 48,951 43,841
Inventories
Raw materials and supplies 8,794 8,795
Work in process and finished goods 10,791 9,042
Deferred income taxes 1,873 1,473
Prepaid expenses and other current assets 6,259 8,904
-------- --------
82,301 83,400
-------- --------
Investments in and advances to associated
companies 10,821 9,885
-------- --------
Property, plant and equipment, at cost
Land 7,002 6,702
Buildings and improvements 36,495 34,529
Machinery and equipment 65,373 63,403
Construction in progress 2,927 1,015
-------- --------
111,797 105,649
Less accumulated depreciation 57,555 53,955
-------- --------
54,242 51,694
-------- --------
Excess of cost over net assets
of acquired companies 12,825 12,262
Deferred income taxes 4,986 4,971
Other noncurrent assets 7,701 7,960
-------- --------
25,512 25,193
-------- --------
$172,876 $170,172
======== ========
* Condensed from audited financial statements.
- 3 -
<PAGE>
Quaker Chemical Corporation
Consolidated Balance Sheet
(dollars in thousands)
March 31, December 31,
1995 1994
(Unaudited) *
- -------------------------------------------------------------------------------
Liabilities
Current liabilities
Short-term borrowings and current
portions of long-term debt
and capital leases $ 9,831 $ 8,062
Accounts payable 22,000 20,575
Dividends payable 1,500
Accrued liabilities 9,700 12,850
Estimated taxes on income 103 440
-------- --------
Total current liabilities 41,634 43,427
-------- --------
Long-term debt and capital leases 10,571 12,207
Deferred income taxes 3,101 3,081
Accrued postretirement benefits 8,818 8,767
Other noncurrent liabilities 6,395 6,410
-------- --------
Total noncurrent liabilities 28,885 30,465
-------- --------
70,519 73,892
-------- --------
Minority interest in equity of subsidiary 2,548 2,603
-------- --------
Shareholders' equity
Common stock, $1 par value; authorized
30,000,000 shares; issued (including
treasury shares) 9,664,009 shares 9,664 9,664
Capital in excess of par value 759 649
Retained earnings 89,052 87,137
Foreign currency translation adjustments 14,347 9,856
-------- --------
113,822 107,306
Treasury stock, shares held at cost;
1995 - 860,291, 1994 - 844,691 (14,013) (13,629)
-------- --------
99,809 93,677
-------- --------
$172,876 $170,172
======== ========
* Condensed from audited financial statements
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<PAGE>
Quaker Chemical Corporation
Consolidated Statement of Income
Three Months Ended March 31,
Unaudited
(dollars in thousands
except per share data)
1995 1994
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Income
Net sales $ 54,527 $ 45,093
Other income, net 154 358
-------- --------
54,681 45,451
-------- --------
Costs and expenses
Cost of goods sold 32,724 25,383
Selling, administrative and
general expenses 18,521 16,354
-------- --------
51,245 41,737
-------- --------
Income from operations 3,436 3,714
Interest expense (332) (330)
Interest income 89 136
-------- --------
Income before taxes 3,193 3,520
-------- --------
Taxes on income 1,261 1,408
-------- --------
1,932 2,112
Equity in net income of associated
companies 90 237
Minority interest in net income of
subsidiary (107) (100)
-------- --------
Net income $ 1,915 $ 2,249
======== ========
Per share data:
Net income $0.22 $0.24
Dividends declared $0.17 $0.16
Based on weighted average number
of shares outstanding 8,823,989 9,252,727
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<PAGE>
Quaker Chemical Corporation
Consolidated Statement of Cash Flows
For the Three Months Ended March 31,
1995 1994
- -------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 1,915 $ 2,249
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,708 1,820
Amortization 408 208
Equity in net income of associated companies (90) (237)
Minority interest in earnings of subsidiary 107 100
Deferred income taxes (20) 400
Deferred compensation and other
postretirement benefits 92 152
Net change in repositioning liability (367) (848)
Other (243) 158
Increase (decrease) in cash from changes in current
assets and liabilities net of acquisitions
and divestitures:
Accounts receivable (3,492) (2,575)
Inventories (1,012) 347
Prepaid expenses (including taxes) and
other current assets 567 693
Accounts payable and accrued liabilities (2,960) (3,286)
Estimated taxes on income (323) (286)
-------- --------
Net cash used in operating activities (3,710) (1,105)
-------- --------
Cash flows from investing activities:
Short-term investments 1,000
Dividends from associated companies 551
Investments in property, plant, equipment
and other assets (2,033) (3,319)
Companies/businesses acquired excluding cash (2,147)
Investments in and advances to associated companies (323)
Proceeds from the sale of patent, production
technology and other related assets 2,000
Other 47
-------- --------
Net cash used in investing activities (356) (3,868)
-------- --------
Cash flows from financing activities:
Net increase in short-term borrowings 1,827 3,951
Repayment of long-term debt and capital leases (1,679) (1,768)
Dividends paid (1,500) (1,433)
Treasury stock (acquired) issued (274) 256
Other (3)
-------- --------
Net cash (used in) provided by financing activities (1,626) 1,003
-------- --------
Effect of exchange rate changes on cash (20) 31
-------- --------
Net decrease in cash and cash equivalents (5,712) (3,939)
Cash and cash equivalents at beginning of period 11,345 19,293
-------- --------
Cash and cash equivalents at end of period $ 5,633 $ 15,354
======== ========
Supplemental cash flow information
Cash paid for income taxes and interest was as follows:
Income taxes $ 1,958 $ 1,264
Interest 560 556
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<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The working capital ratio at March 31, 1995 was 2.0 to 1 as compared
to 1.9 to 1 at December 31, 1994, reflecting the continuation of an
adequate level of liquidity necessary to support operations. The company's
net cash position (cash and cash equivalents plus short-term investments
less short-term borrowings and current portion of long-term debt and
capital lease) declined $7.5 million during the quarter. This was due
primarily to increased short-term borrowings associated with (i) seasonal
cash needs, (ii) the replacement of maturing long-term obligations with
short-term debt and (iii) increases in non-cash working capital (primarily
increases in accounts receivable generated from higher sales). Working
capital increased $.7 million during the quarter mainly as a result of the
aforementioned increases in non-cash working capital.
Other major sources and uses of cash in the quarter were a receipt of
$2.0 million related to the 1993 sale of the SULFA-SCRUB (registered trademark)
patents and technology, and dividend payments of $1.5 million.
Comparison of First Quarter 1995 with First Quarter 1994
Consolidated net sales for the first quarter of 1995 increased $9.4
million (21%) due mainly to increased sales volume, particularly in Europe,
and the appreciation of European currencies versus the U.S. dollar.
However, income from operations and net income were each $.3 million lower
than the same quarter in 1994 largely as a result of the short-term dampening
effect of raw material cost inflation on margins. The increase in sales
was due to a 12% increase in volume; a 7% improvement associated with
currency translation; and an increase of 2% from an acquisition of a
European metalworking business.
Operating margins as a percentage of sales declined due to the
aforementioned negative effect of rising raw material costs. Other income
decreased mainly as a result of foreign exchange transaction losses on
dollar denominated sales from the company's European operations.
These losses offset in large part the first quarter positive impact of
currency translation which approximated $.03 per share. The decrease in
equity in net income from associated companies was primarily due to business
development investment costs in the company's Fluid Recycling Services
joint venture.
The company continues to be encouraged by sales growth trends,
especially in Europe. In addition, programs have been and are
still being implemented to increase prices (the effect of which
should be more evident toward the end of the second quarter) in order to
recover margin losses associated with raw material cost inflation.
- 7 -
<PAGE>
PART II. OTHER INFORMATION
Items 1-5 are inapplicable and have been omitted.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 27-Financial Data Schedule
(b) Reports on Form 8-K.
No report on Form 8-K was filed during the quarter for
which this report is filed.
* * * * * * * * *
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.
QUAKER CHEMICAL CORPORATION
------------------------------
(Registrant)
RICHARD J. FAGAN
-----------------------------
Richard J. Fagan, officer duly
authorized to sign this report,
Corporate Controller, Acting
Corporate Treasurer and Principal
Financial and Chief Accounting
Officer
Date: May 15, 1995
- 9 -
<PAGE>
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<ARTICLE> 5
<LEGEND> UNAUDITED
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-END> MAR-31-1995
<CASH> 5,633
<SECURITIES> 0
<RECEIVABLES> 49,509
<ALLOWANCES> 558
<INVENTORY> 19,585
<CURRENT-ASSETS> 82,301
<PP&E> 111,797
<DEPRECIATION> 57,555
<TOTAL-ASSETS> 172,876
<CURRENT-LIABILITIES> 41,634
<BONDS> 5,000
<COMMON> 9,664
0
0
<OTHER-SE> 90,145
<TOTAL-LIABILITY-AND-EQUITY> 172,876
<SALES> 54,527
<TOTAL-REVENUES> 54,681
<CGS> 32,724
<TOTAL-COSTS> 51,245
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 332
<INCOME-PRETAX> 3,193
<INCOME-TAX> 1,261
<INCOME-CONTINUING> 1,915
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,915
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
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