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
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from ________ to ________
Commission file number 0-7154
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
QUAKER CHEMICAL CORPORATION PROFIT SHARING
AND RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
QUAKER CHEMICAL CORPORATION
Elm and Lee Streets
Conshohocken, Pennsylvania 19428
<PAGE>
Profit Sharing and Retirement Savings Plan of Quaker
Chemical Corporation
Financial Statements and
Additional Information
December 31, 1997
<PAGE>
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Index to the Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
Page(s)
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits, with Fund
Information at December 31, 1997 and 1996 2 - 3
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the Years Ended
December 31, 1997 and 1996 4 - 5
Notes to Financial Statements 6 - 8
Additional Information:*
Schedule I - Schedule of Assets Held for Investment at
December 31, 1997 9
Schedule II - Schedule of Reportable Transactions for the
Year Ended December 31, 1997 10
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 ("ERISA") have been omitted because
they are not applicable.
<PAGE>
Report of Independent Accountants
May 15, 1998
To the Participants and Administrator;
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
at December 31, 1997 and 1996 and the changes in net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is additional information
required by ERISA. The Fund Information in the statement of net assets available
for benefits and the 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 plan benefits and changes in net assets available for
benefits of each fund. Schedules I and II and the 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.
- 1 -
<PAGE>
<TABLE>
<CAPTION>
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Fund Information
-------------------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Notes Other Total
---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
U.S. Stock Fund $11,357,394* $11,357,394
Common Stock $895,767* 895,767
Bond and Mortgage Fund $2,758,687* 2,758,687
Guaranteed Interest Fund $2,058,665* 2,058,665
Participant notes receivable $ 7,628 7,628
Cash surrender value of life
insurance contracts $75,203 75,203
Cash equivalents 1,603 1,603
---------- ----------- ---------- -------- -------- ------- -----------
Total investments 2,058,665 11,357,394 2,758,687 895,767 7,628 76,806 17,154,947
Employee contributions receivable 47,394 215,941 50,972 22,063 336,370
---------- ----------- ---------- -------- -------- ------- -----------
Net assets available for benefits $2,106,059 $11,573,335 $2,809,659 $917,830 $ 7,628 $76,806 $17,491,317
========== =========== ========== ======== ======== ======= ===========
<FN>
* Represents greater than 5% of net assets available for benefits.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
Fund Information
-------------------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Notes Other Total
---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
U.S. Stock Fund $9,986,849* $9,986,849
Common Stock $715,932 715,932
Bond and Mortgage Fund $2,759,029* 2,759,029
Guaranteed Interest Fund $2,022,914* 2,022,914
Participant notes receivable $8,056 8,056
Cash surrender value of life
insurance contracts $91,443 91,443
Cash equivalents 1,524 1,524
---------- ----------- ---------- -------- ------ ------- -----------
Total investments 2,022,914 9,986,849 2,759,029 715,932 8,056 92,967 15,585,747
Employee contributions receivable 50,407 244,284 72,966 38,052 405,709
---------- ----------- ---------- -------- ------ ------- -----------
Net assets available for benefits $2,073,321 $10,231,133 $2,831,995 $753,984 $8,056 $92,967 $15,991,456
========== =========== ========== ======== ====== ======= ===========
<FN>
The accompanying notes are an integral part of these financial statements.
* Represents greater than 5% of net assets available for benefits.
</FN>
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statements of Changes in Net Assets Available for Benefits, with Fund Information
December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Information
-----------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Notes Other Total
---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income $ 109,781 $2,561,919 $ 261,862 $ 31,837 $ 535 $ 79 $2,966,013
Participant contributions 88,211 846,230 219,747 103,617 1,257,805
Employer contribution 65,671 298,628 73,238 29,829 467,366
Rollovers 3,102 15,298 3,189 302 21,891
Unrealized appreciation of investments 118,947 118,947
Other 795 7,463 7,225 907 2 16,392
---------- ----------- ---------- -------- ------ ------- -----------
267,560 3,729,538 565,261 285,439 535 81 4,848,414
---------- ----------- ---------- -------- ------ ------- -----------
Deductions from net assets attributed to:
Participant benefits 216,936 2,460,544 599,430 48,950 2,270 3,328,130
Life insurance premiums 945 2,486 750 2 4,183
Net participant loan activity (3,122) 6,074 (1,624) (21) (1,307) -
Decrease in cash surrender value of
insurance contracts 16,240 16,240
Interfund transfers 20,063 (81,768) (10,959) 72,664 -
---------- ----------- ---------- -------- ------ ------- -----------
234,822 2,387,336 587,597 121,593 963 16,242 3,348,553
---------- ----------- ---------- -------- ------ ------- -----------
Net increase (decrease) 32,738 1,342,202 (22,336) 163,846 (428) (16,161) 1,499,861
Net assets at beginning of year 2,073,321 10,231,133 2,831,995 753,984 8,056 92,967 15,991,456
---------- ----------- ---------- -------- ------ ------- -----------
Net assets available for benefits $2,106,059 $11,573,335 $2,809,659 $917,830 $7,628 $76,806 $17,491,317
========== =========== ========== ======== ====== ======= ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statements of Changes in Net Assets Available for Benefits, with Fund Information
December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Information
-------------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Notes Other Total
---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income $ 121,627 $ 1,929,896 $ 108,072 $ 29,928 $1,759 $ 73 $2,191,355
Participant contributions 81,658 630,825 208,175 93,220 1,013,878
Employer contribution 73,862 317,961 98,534 48,906 539,263
Rollovers 1,409 6,495 4,381 704 12,989
Unrealized appreciation of investments 130,144 130,144
Other 6,032 6,032
---------- ----------- ---------- -------- ------- ------- -----------
284,588 2,885,177 419,162 302,902 1,759 73 3,893,661
---------- ----------- ---------- -------- ------- ------- -----------
Deductions from net assets attributed to:
Participant benefits 517,007 385,209 626,560 47,511 15,867 1,592,154
Life insurance premiums 1,889 3,663 1,302 30 6,884
Net participant loan activity 5,542 9,938 1,724 (17,204) -
Decrease in cash surrender value of
insurance contracts 20,144 20,144
Interfund transfers 231,225 (1,119) (283,754) 53,648 -
---------- ----------- ---------- -------- ------- ------- -----------
755,663 397,691 345,832 101,159 (1,337) 20,174 1,619,182
---------- ----------- ---------- -------- ------- ------- -----------
Net increase (decrease) (471,075) 2,487,486 73,330 201,743 3,096 (20,101) 2,274,479
Net assets at beginning of year 2,544,396 7,743,647 2,758,665 552,241 4,960 113,068 13,716,977
---------- ----------- ---------- -------- ------- ------- -----------
Net assets available for benefits $2,073,321 $10,231,133 $2,831,995 $753,984 $8,056 $92,967 $15,991,456
========== =========== ========== ======== ====== ======= ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
- 5 -
<PAGE>
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
1. Description of Plan
The following description of the Quaker Chemical Corporation Profit Sharing
and Retirement Savings Plan (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution plan for all employees of the Quaker
Chemical Corporation (the "Company") except for employees compensated in
whole or in part by commissions on sales. Eligible employees, including
employees compensated in whole or in part by commissions on sales, may
choose to make elective contributions to the Plan on a "before tax" basis.
The Plan is administered by a six member committee appointed by the
Company's Board of Directors.
Effective March 1, 1996, employees become eligible for participation in the
Plan on the first day of the month following employment commencement,
unless the employee is hired on the first day of the month in which case
the employee is eligible immediately. Prior to March 1, 1996, employees
were eligible to participate in the plan after one year of service. Plan
participants are immediately vested in their account balance. All
administrative expenses of the Plan are paid by the Company.
Contributions
The contribution is calculated by the Company based on the level of
domestic company profit from operations (as defined) versus the target
profit (as defined). The target profit is determined as the average of the
prior three years' domestic company profit from operations increased by
15%. The Company's Board of Directors, at its discretion, may increase the
amount of the contribution to the Plan for each Plan year. The Company's
1997 and 1996 profit sharing contributions were $336,370 and $404,709,
respectively.
Effective September 1, 1997, participants of the Plan may elect to
contribute any whole percentage of their compensation, up to 15%, during
the year. Prior to September 1, 1997, participants could elect to
contribute any whole percentage of their compensation, up to 8%, during the
year. Each year, the Company makes a matching contribution of $150 for each
whole percentage of the participant's compensation contributed to the Plan
during the Plan year, with the Company's matching contribution for each
individual participant limited to $450 in any calendar year.
Payment of Benefits
Participants are entitled to receive their account balance upon retirement
or termination from the Company. In the event that a payment cannot be made
due to the inability to locate the participant or beneficiary, the
participant account balance will be forfeited and treated as an additional
employer profit sharing contribution for the related Plan year.
- 6 -
<PAGE>
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
In the event of Plan termination, the Plan provides that the assets shall
continue to be held by the trustee and custodian (currently, CoreStates
Bank, N.A. and Principal Mutual Life Insurance Company, "PML") for normal
distribution.
Investment Options
Participants in the Plan may elect to invest their pro-rata share of the
Company's contribution in any of the following pooled investment funds of
PML: Guaranteed Interest, U.S. Stock and/or Bond and Mortgage. Participants
may also elect to invest in Quaker Chemical Corporation common stock.
The Plan includes a provision whereby PML, if so instructed by the Plan
administrator, shall invest an amount less than 50% of the employer's
current contribution allocable to each participant for the year in whole
life insurance contracts. These contracts are owned by the Plan and
maintained by PML.
The Plan is the sole beneficiary of the contracts.
Investment income
PML, the Plan custodian and recordkeeper, is unable to separately report
interest and dividends and net appreciation (depreciation) in the market
value of investments. Therefore, all such amounts are included in net
investment income.
2. Summary of Accounting Policies
Method of accounting
The Plan's financial statements are prepared on the accrual basis of
accounting.
Income recognition
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
Participant notes receivable
Participant notes receivable are valued at cost, which approximates fair
value.
Payment of benefits Benefits are recorded when payable.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets at the date of the
financial statements and the reported amounts of additions and deductions
during the reporting period. Actual results could differ from those
estimates.
- 7 -
<PAGE>
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
Investments
Investments in pooled investment funds are valued at the Plan's pro-rata
share of the market value of the funds. Market value is determined using
the daily net asset value quoted by the trustee based on the published
market prices of the underlying securities in the funds. The market value
of Quaker Chemical common stock is based on the closing price as listed on
the New York Stock Exchange. Life insurance contracts are valued at cash
surrender value, which approximates fair value.
3. Participant Notes Receivable
At December 31, 1997 and 1996, outstanding loans were $7,628 and $8,056
with original principal of $19,960 and $29,177, respectively. Interest
rates on loans approximate the prime rate in effect at loan inception. The
Plan has certain limitations on loans that can be made to Plan
participants. These limitations include, but are not limited to, a minimum
on loans of $1,000 not to exceed one-half of the participant's vested
interest in the Plan and with a term of not more than three years.
Participants should refer to the Plan document for a complete description
of these limitations.
4. Tax Status of the Plan
The Plan has received a tax determination letter from the Internal Revenue
Service dated August 18, 1995 indicating that the Plan is a qualified plan
under Section 401 of the Internal Revenue Code ("IRC"). The Plan has been
amended since receiving the determination letter. However, the Plan
administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
Accordingly, no provision for income taxes has been recorded in the
financial statements.
5. Related Party Transactions
Certain Plan assets are invested in shares of separate accounts managed by
PML. PML is a custodian and recordkeeper as defined by the Plan and,
therefore, these investments qualify as party-in-interest.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
Profit Sharing and Retirement Savings Plan Schedule I
of Quaker Chemical Corporation
Item 27a Form 5500 - Schedule of Assets Held for Investment Purposes
December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Units of Interest Market
participation/shares Description rate Maturity value Cost
-------------------- ----------- ---- -------- ----- ----
<S> <C> <C> <C> <C> <C>
* Principal Mutual Life Pooled Investment Funds:
2,058,665 Guaranteed Interest Fund various various $ 2,058,665 **
29,702 U.S. Stock Fund n/a n/a 11,357,394 **
6,028 Bond and Mortgage Fund n/a n/a 2,758,687 **
* Quaker Chemical Corporation
46,558 Common Stock n/a n/a 895,767 $707,606
- Sun Life of Canada Insurance Contracts n/a n/a 75,203 75,203
- Participant Notes 9.25% - 9.75% 7/31/98 - 9/30/00 7,628 7,628
----------- --------
$17,153,344 $790,437
=========== ========
<FN>
* Party-in-interest
**Results are maintained on a contract and fair market value basis, therefore,
cost basis information is not available.
</FN>
</TABLE>
- 9 -
<PAGE>
<TABLE>
<CAPTION>
Profit Sharing and Retirement Savings Plan of Schedule II
Quaker Chemical Corporation
Item 27d Form 5500 - Schedule of Reportable (5%) Transactions*
Year ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Current
value of asset
Number of Purchase Selling Cost of on transaction
Party involved Description Transactions price price asset date Net gain
-------------- ----------- ------------ ----- ----- ----- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Series of transactions:
Principal Mutual Life
Insurance Co. U.S. Stock Fund 58 $1,586,371 $ - $1,586,371 $1,586,371 $ -
U.S. Stock Fund 62 - 2,777,746 1,396,445 2,777,746 1,381,301
Principal Mutual Life
Insurance Co. Guaranteed Interest Fund 35 986,837 - 986,837 986,837 -
Guaranteed Interest Fund 50 - 1,060,836 1,060,836 1,060,836 -
Principal Mutual Life
Insurance Co. Bond and Mortgage Fund 48 618,851 - 618,851 618,851 -
Bond and Mortgage Fund 57 - 881,055 655,498 881,055 225,557
<FN>
*Transactionsor series of transactions in excess of 5 percent of the
current value of the Plan's assets as of December 31, 1996 as defined in Section
2520.103-6 of the Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA.
This schedule was prepared from data certified by Principal Mutual Life
Insurance Company.
</FN>
</TABLE>
- 10 -
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Committee which acts as Plan Administrator has duly caused this
Annual Report to be signed on its behalf by the undersigned hereunto duly
authorized.
QUAKER CHEMICAL CORPORATION PROFIT
SHARING AND RETIREMENT SAVINGS PLAN
June 30, 1998 /s/ James A. Geier
--------------------------
James A. Geier,
Chairman of the Committee
June 30, 1998 /s/ Richard J. Fagan
--------------------------
Richard J. Fagan,
Member of the Committee
June 30, 1998 /s/ Joseph C. Hudson
--------------------------
Joseph C. Hudson,
Member of the Committee
- 11 -
<PAGE>
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-54158) of the Quaker Chemical Corporation Profit
Sharing and Retirement Savings Plan of our report dated May 15, 1998, appearing
on page 1 of the Annual Report of the Quaker Chemical Corporation Profit Sharing
and Retirement Savings Plan on Form 11-K for the year ended December 31, 1997.
Price Waterhouse LLP
Philadelphia, Pennsylvania
June 26, 1998
