QUAKER CHEMICAL CORP
10-K, 1998-03-30
MISCELLANEOUS PRODUCTS OF PETROLEUM & COAL
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                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549
                                  FORM 10-K

            [x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 1997

                                     or

          [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                     for transition period from       to

                       Commission file number 0-7154

                         QUAKER CHEMICAL CORPORATION
                         ---------------------------
           (Exact name of Registrant as specified in its charter)


  A Pennsylvania Corporation                   No. 23-0993790
- -------------------------------       ------------------------------------
(State or other jurisdiction of       (I.R.S. EMPLOYER IDENTIFICATION NO.)
incorporation or organization)

Elm and Lee Streets, Conshohocken, Pennsylvania         19428
- -----------------------------------------------         ------
   (Address of principal executive offices)           (Zip Code)

      Registrant's telephone number, including area code (610) 832-4000

         Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each Exchange on
        Title of each class                            which registered
        -------------------                       ------------------------
   Common Stock, $1.00 par value                    New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
                                    None

     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 and (2) has been subject to such filing
requirements for the past 90 days. Yes  X    No    .
                                      ----     ----

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.

     State the aggregate market value of the voting stock held by non-
affiliates of the Registrant.  (The aggregate market value is computed by
reference to the last reported sale on the New York Stock Exchange on March
13, 1998):  $152,969,813.

     Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date:  8,775,344 shares
of Common Stock, $1.00 Par Value, as of March 13, 1998.

                     DOCUMENTS INCORPORATED BY REFERENCE

(1) Portions of the Registrant's Annual Report to Shareholders for the year
    ended December 31, 1997 are incorporated into Parts I and II.

(2) Portions of the Registrant's definitive Proxy Statement dated March 30,
    1998 in connection with the Annual Meeting of Shareholders to be held on
    May 6, 1998 are incorporated into Part III.

The exhibit index is located on page 13.

=============================================================================
<PAGE>
                                    PART I

     As used in this Report, the term "Quaker," unless the context otherwise
requires, means Quaker Chemical Corporation, its subsidiaries, and associated
companies.

Item 1.   Business.

General Description

     Quaker develops, produces, and markets a broad range of formulated
chemical specialty products for various heavy industrial and manufacturing
applications and, in addition, offers and markets chemical management
services, including recycling services.  Quaker's principal products and
services include: (i) rolling lubricants (used by manufacturers of steel in
the hot and cold rolling of steel and by manufacturers of aluminum in the cold
rolling of aluminum); (ii) corrosion preventives (used by steel and
metalworking customers to protect metal during manufacture, storage, and
shipment); (iii) metal finishing compounds (used to prepare metal surfaces for
special treatments such as galvanizing and tin plating and to prepare metal
for further processing); (iv) machining and grinding compounds (used by
metalworking customers in cutting, shaping, and grinding metal parts which
require special treatment to enable them to tolerate the manufacturing
process); (v) forming compounds (used to facilitate the drawing and extrusion
of metal products); (vi) paper production products (used as defoamers, release
agents, softeners, debonders, and dispersants); (vii) hydraulic fluids (used
by steel, metalworking, and other customers to operate hydraulically activated
equipment); (viii) products for the removal of hydrogen sulfide in various
industrial applications; (ix) chemical milling maskants for the aerospace
industry; (x) construction products such as flexible sealants and protective
coatings for various applications; and (xi) programs to provide recycling and
chemical management services.

     Substantially all of Quaker's sales worldwide are made directly through
its own sales force.  Quaker sales persons visit the plants of customers
regularly, and through training and experience, identify production needs
which can be resolved or alleviated either by adapting Quaker's existing
products or by applying new formulations developed in Quaker's laboratories.
Sales personnel may call upon Quaker's regional managers, product managers,
and members of its laboratory staff for assistance in obtaining and setting up
product tests and evaluating the results of such tests.  In 1997, certain
products were also sold in Canada, Korea, and India by exclusive licensees
under long-term royalty agreements.  Generally, separate manufacturing
facilities of a single customer are served by different sales personnel.

     The business of the Company and its operating results are subject to
certain risks, of which the principal ones are referred to in the following
subsections.


                                      1
<PAGE>

     In 1997, the Company acquired a 55% interest in a joint venture with its
Indian licensee, Asianol Lubricants Ltd., to manufacture lubricants for the
cold rolling of steel and other products for the steel industry in India.  For
additional information regarding this transaction, see Note 11 of Notes to
Consolidated Financial Statements which appears on p. 30 of the Registrant's
1997 Annual Report to Shareholders, the incorporated portion of which is
included as Exhibit 13 to this Report.

Competition

     The chemical specialty industry is composed of a number of companies of
similar size as well as companies larger and smaller than Quaker. Quaker
cannot readily determine its precise position in every industry it serves.
Based on information available to Quaker, however, it is estimated that Quaker
holds a dominant position (among a group in excess of 25 other suppliers) in
the market for process fluids used in the production of hot and cold rolling
of steel.  Many competitors are in fewer and more specialized product
classifications or provide different levels of technical services in terms of
specific formulations for individual customers. Competition in the industry is
based primarily on the ability to provide products which meet the needs of the
customer and render technical services and laboratory assistance to customers
and, to a lesser extent, on price.

Major Customers and Markets

     During 1997, Quaker's five largest customers (each composed of multiple
subsidiaries or divisions with semi-autonomous purchasing authority) accounted
for approximately 16% of its consolidated net sales with the largest of these
customers accounting for approximately 4% of consolidated net sales.
Furthermore, a significant portion of Quaker's revenues are realized from the
sale of process fluids to manufacturers of hot and cold rolling steel, and,
therefore, Quaker is subject to the same business cycles as those experienced
by these manufacturers and their customers (the majority of which are
automobile, appliance, and durable good manufacturers or in the construction
industry).

Raw Materials

     Quaker uses over 500 raw materials, including mineral oils, fats and fat
derivatives, ethylene derivatives, solvents, surface active agents,
chlorinated paraffinic compounds, and a wide variety of organic and inorganic
compounds.  In 1997, only one raw material accounted for as much as 12% of the
total cost of Quaker's raw material purchases.  Many of the raw materials used
by Quaker are "commodity" chemicals, and, therefore, Quaker's earnings can be
affected by market changes in raw material prices caused by factors beyond
Quaker's control. Quaker has multiple sources of supply for most materials,
and management believes that the failure of any single supplier would not have
a material adverse effect upon its business.

                                      2
<PAGE>

Patents and Trademarks

     Quaker has a limited number of patents and patent applications, including
patents issued, applied for, or acquired in the United States and in various
foreign countries, some of which may prove to be material to its business.
Principal reliance is placed upon Quaker's proprietary formulae and the
application of its skills and experience to meet customer needs. Quaker's
products are identified by trademarks which are registered throughout its
marketing area. Quaker makes little use of advertising but relies heavily upon
its reputation in the markets which it serves.

Research and Development--Laboratories

     Quaker's research and development laboratories are directed primarily
toward applied research and development since the nature of Quaker's business
requires continuing modification and improvement of formulations to provide
chemical specialties to satisfy customer requirements.  Incorporated by
reference is the information contained under the caption "Research and
Development Costs" appearing in Note 1 of Notes to Consolidated Financial
Statements on page 23 of the Registrant's 1997 Annual Report to Shareholders,
the incorporated portions of which are included as Exhibit 13 to this Report.

     Quaker maintains quality control laboratory facilities in each of its
manufacturing locations.  In addition, Quaker maintains in Conshohocken,
Pennsylvania, and Uithoorn, The Netherlands, laboratory facilities which are
devoted primarily to applied research and development.

     Most of Quaker's subsidiaries and associates also have laboratory
facilities. Although not as complete as the Conshohocken laboratories, these
facilities are generally sufficient for the requirements of the customers
being served. If problems are encountered which cannot be resolved by local
laboratories, such problems may be referred to the corporate laboratory staff,
which also defines and supervises corporate research projects.

     Approximately 155 persons, of whom 72 have B. S. degrees and 41 have B.S.
and advanced degrees, are employed in Quaker's laboratories.

                                      3
<PAGE>

Number of Employees

     On December 31, 1997, Quaker's consolidated companies had 871 full-time
employees of whom 382 were employed by the parent company and its U.S.
subsidiaries and 489 were employed by its non-U.S. subsidiaries.  Associated
companies of Quaker (in which it owns 50% or less) employed 250 people on
December 31, 1997.

Product Classification

     Incorporated by reference is the information concerning product
classification by markets served appearing under the caption "Supplemental
Financial Information" on page 34 of the Registrant's 1997 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this Report.


Non-U.S. Activities

     Incorporated by reference is the information concerning non-U.S.
activities appearing in Note 10 of Notes to Consolidated Financial Statements
on page 30 of the Registrant's 1997 Annual Report to Shareholders and under
the caption "General" of the Operations section of Management's Discussion and
Analysis of Financial Condition and Results of Operations which appears on
page 18 of the aforementioned Annual Report, the incorporated portions of
which are included as Exhibit 13 to this Report.  Since significant revenues
and earnings are generated by its non-U.S. operations, Quaker's financial
results are affected by currency fluctuations, particularly between the U.S.
dollar and the Dutch guilder.

Item 2.   Properties.

     Quaker's principal facilities in the United States are located in
Conshohocken, Pennsylvania and Detroit, Michigan.  Quaker's non-U.S.
subsidiaries own facilities in Woodchester, England; Uithoorn, The
Netherlands; Villeneuve, France; and Santa Perpetua de Mogoda, Spain and lease
small sales facilities in other locations.  All of these facilities are owned
mortgage free.  Financing for the Technical Center in Conshohocken,
Pennsylvania was arranged through the use of industrial revenue and
development bonds with an outstanding balance at December 31, 1997 of
$5,000,000.

     Quaker's aforementioned facilities consist of various manufacturing,
administrative, warehouse, and laboratory buildings.  Substantially all of the
buildings are of fire-resistant construction and are equipped with sprinkler
systems. All facilities are primarily of masonry and/or steel construction and
are adequate and suitable for Quaker's present operations.  The Company has a
program to identify needed capital improvements which will be implemented as
management considers necessary or desirable.  Most locations have various
numbers of raw material storage tanks ranging from 6 to 63 having a capacity
from 500 to 80,000 gallons each and processing or

                                      4
<PAGE>

manufacturing vessels ranging in capacity from 50 to 12,000 gallons each.
Manufacturing and warehouse facilities located in Conshohocken, Pennsylvania,
were closed in 1996 but are being maintained in a state of readiness that will
permit resuming operations in all or some of such facilities if necessary or
desirable.

     In order to facilitate compliance with applicable federal, state, and
local statutes and regulations relating to occupational health and safety and
protection of the environment, the Company has an ongoing program of site
assessment, currently directed primarily to facilities in the United States
for the purpose of identifying capital expenditures or other actions that may
be necessary to comply with such requirements.  The program includes periodic
inspections of each facility in the United States by Quaker and/or independent
environmental experts, as well as ongoing inspections by on-site personnel.
Such inspections are addressed to operational matters, record keeping,
reporting requirements, and capital improvements.  In 1997, capital
expenditures directed solely or primarily to regulatory compliance amounted to
approximately $125,000.

     Quaker's executive offices are located in a four-story building
containing a total of approximately 47,000 square feet. A Technical Center
containing approximately 28,700 square feet houses the laboratory facility.
Both of these facilities are adjacent to Quaker's closed manufacturing
facility in Conshohocken.

     Quaker's 50% or less owned non-U.S. associates own or lease a plant
and/or sales facilities in various locations.

Item 3.   Legal Proceedings.

     On or about October 24, 1996, Petrolite Corporation and its subsidiary,
Petrolite Holdings, Inc. (collectively, "Petrolite"), filed a Demand for
Arbitration with the American Arbitration Association and a Petition with the
Circuit Court for the County of St. Louis, Missouri, against the Company and
certain of its subsidiaries.  Petrolite asserts claims for negligent
misrepresentation and breach of contract arising out of a Technology Purchase
Agreement (the "Agreement") between Petrolite and the Company (and certain of
its subsidiaries) dated April 13, 1993, as amended, pursuant to which the
Company sold various assets, including patent rights, to Petrolite for a
purchase price of approximately $8.5 million plus an obligation to pay
royalties.  In its actions against the Company, Petrolite seeks damages in an
unspecified amount, rescission of the Agreement, costs, and other relief.  The
Company believes that it has complete and meritorious defenses to the
Petrolite actions and intends to vigorously defend the actions and deny
liability and to pursue a claim against Petrolite for royalties.
Notwithstanding the foregoing, based upon the advice of counsel, on
information developed to date and settlement discussions which have been held,
the Company has established a reserve of $2,000,000 against its potential
liability in these actions which it believes to be adequate.  However, the
Company's potential liability could be in excess of the amount of the reserve.

                                      5
<PAGE>

     The Company is a party to other proceedings, cases, and requests for
information from, and negotiations with, various claimants and federal and
state agencies relating to various matters including environmental matters,
none of which is expected to result in monetary sanctions in an amount or in
an award that would have a material adverse effect on the Company's results of
operations or financial condition.  For information concerning pending
asbestos-related cases against a non-operating subsidiary and amounts accrued
associated with certain environmental investigatory and noncapital remediation
costs, refer to Note 12 of Notes to Consolidated Financial Statements which
appears on page 30 in the Registrant's 1997 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report.

Item 4.   Submission of Matters to a Vote of Security Holders.

     No matters were submitted to a vote of security holders during the last
quarter of the period covered by this Report.

Item 4(a).  Executive Officers of the Registrant.
<TABLE>
<CAPTION>
                                                                                   Year First
                                                                                   Elected as
                                                                                  an Executive
    Name              Office (since)                                      Age        Officer
- ------------------------------------------------------------------------------------------------
<S>                   <C>                                                 <C>         <C>
Ronald J. Naples      Chairman of the Board (1997),                       52          1995
                      President, and Chief Executive Officer (1995)

Joseph W. Bauer       President and Chief Operating Officer (1998)        55          1998

Jose Luiz Bregolato   Vice President-South America (1993)                 52          1993

James A. Geier        Vice President-Human Resources (1997)               42          1997

Daniel S. Ma          Vice President-Asia/Pacific (1995)                  57          1995

Marcus C. J. Meijer   Vice President-Europe (1990)                        50          1990

Joseph F. Virdone     Vice President-U.S. Commercial Operations  (1996)   53          1996
</TABLE>


                                      6
<PAGE>
     Mr. Meijer has served as an officer of the Registrant for more than the
past five years.  Prior to his election as an officer of the Registrant, Mr.
Bregolato served as Financial Consultant and Administrative Director of
Fabrica Carioca de Catalisadores, S.A. to which he was appointed in 1985.
Prior to his election as an officer of the Registrant,  Mr. Ma was Managing
Director, Asia/Pacific Region, to which he was appointed in 1993 and was
Business Manager, PPG Industries from 1991 to 1993.  Prior to his election as
President and Chief Executive Officer, effective October 2, 1995, Mr. Naples
served as Chairman of the Board and Chief Executive Officer of Hunt
Manufacturing Company until April 6, 1995, a position held for over five
years.  Mr. Naples was elected Chairman of the Board of the Registrant in
1997.  Mr. Naples has been a Director of the Registrant since 1988. Prior to
his election as an officer of the Registrant, Mr. Virdone served as Industry
Manager-Steel since August 15, 1994.  Prior to that date, Mr. Virdone was
employed by FMC Corporation as National Sales Director-Industrial Chemicals
and also served in various consulting capacities.  Prior to his election as an
officer of the Registrant in 1997, Mr. Geier was employed by Rhone-Poulenc
Rorer Pharmaceuticals, Inc., where he held a variety of human resource
positions.  Prior to his election as an officer of the Registrant effective
March 9, 1998, Mr Bauer was employed by M.A. Hanna since 1992 and served as
President of M.A. Hanna Color Divison from 1996 to 1998 and President of PMS
Consolidated form 1992 to 1995.

     There is no family relationship between the Registrant and any of the
Registrant's Executive Officers.  Each officer is elected for a term of
one year.

                                   PART II

Item 5.   Market for Registrant's Common Equity and
          Related Stockholder Matters.

     Incorporated by reference is the information appearing under the caption
"Stock Market and Related Security Holder Matters" on page 34 of the
Registrant's 1997 Annual Report to Shareholders, the incorporated portions of
which are included as Exhibit 13 to this Report.

Item 6.   Selected Financial Data.

     Incorporated by reference is the information appearing under the caption
"Eleven-Year Financial Information" on pages 32 and 33 of the Registrant's
1997 Annual Report to Shareholders, the incorporated portions of which are
included as Exhibit 13 to this Report.

Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.

     Incorporated by reference is the information appearing under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 16 through 18 of the Registrant's 1997 Annual Report to

                                      7
<PAGE>

Shareholders, the incorporated portions of which are included as Exhibit 13 to
this Report.


Item 8.   Financial Statements and Supplementary Data.

     Incorporated by reference is the information appearing on pages 19
through 34 of the Registrant's 1997 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report.

Item 9.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure.

     None.

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant.

     Incorporated by reference is the information beginning immediately
following the caption "Election of Directors" to, but not including, the
caption "Executive Compensation" contained in the Registrant's definitive
Proxy Statement to be filed no later than 120 days after the close of its
fiscal year ended December 31, 1997 (the "1998 Proxy Statement") and the
information appearing in Item 4(a) on pages 6 and 7 of this Report.

           Section 16(a) Beneficial Ownership Reporting Compliance.

     Based solely on the Company's review of certain reports filed with the
Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934 (the "1934 Act"), as amended, and written representations
of the Company's officers and directors, the Company believes that all reports
required to be filed pursuant to the 1934 Act with respect to transactions in
the Company's Common Stock through December 31, 1997 were filed on a timely
basis except for one filing on Form 4 covering one transaction for Patricia C.
Barron.

                                      8
<PAGE>

Item 11.  Executive Compensation.

     Incorporated by reference is the information beginning immediately
following the caption "Executive Compensation" to, but not including, the
caption "Compensation/Management Development Committee Report on Executive
Compensation" contained in the Registrant's 1998 Proxy Statement.


Item 12.  Security Ownership of Certain Beneficial Owners
          and Management.

     Incorporated by reference is the information  beginning immediately
following the caption "Security Ownership of Certain Beneficial Owners and
Management" to, but not including, the caption "Election of Directors"
contained in the Registrant's 1998 Proxy Statement.

Item 13.  Certain Relationships and Related Transactions.

     No information is required to be provided in response to this Item 13.

                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules,
          and Reports on Form 8-K.

     (a)  Exhibits and Financial Statement Schedules

               1.   Financial Statements

                    The following is a list of the Financial Statements and
                    related documents which have been incorporated by
                    reference from the Registrant's Annual Report to
                    Shareholders for the fiscal year ended December 31, 1997,
                    as set forth in Item 8:

                         Consolidated Statement of Operations

                         Consolidated Balance Sheet

                         Consolidated Statement of Cash Flows

                         Consolidated Statement of Shareholders' Equity

                         Notes to Consolidated Financial Statements

                         Report of Independent Accountants

                                      9
<PAGE>

               2.   Financial Statement Schedules

                         All schedules are omitted because they are not
                    applicable or the required information is shown in the
                    financial statements or notes thereto.

                         Financial statements of 50% or less owned companies
                    have been omitted because none of the companies meets the
                    criteria requiring inclusion of such statements.

               3.   Exhibits (numbered in accordance with Item 601 of
                    Regulation S-K)

                     3(a)--Amended and Restated Articles of Incorporation.
                           Incorporated by reference to Exhibit 3(a) as filed
                           by Registrant with Form 10-K for the year 1996.
                     3(b)--By-Laws.  Incorporated by reference to Exhibit 3(b)
                           to Form 10-Q as filed by the Registrant for the
                           quarter ended June 30, 1993.
                        4--Shareholder Rights Plan.  Incorporated by reference
                           to  Form 8-K as filed by the Registrant on February
                           20,  1990.
                    10(a)--Long-Term Performance Incentive Plan as approved
                           May 5, 1993.  Incorporated by reference to Exhibit
                           10(a) as filed by the Registrant with Form 10-K for
                           the year 1993.
                    10(h)--Documents constituting employment contract by and
                           between Quaker Chemical Europe B.V. and M. C. J.
                           Meijer.  Incorporated by reference to Exhibit 10(h)
                           as filed by Registrant with Form 10-K for the year
                           1993.
                    10(i)--Employment Agreement by and between the Registrant
                           and Ronald J. Naples.  Incorporated by reference to
                           Exhibit 10(i) as filed by Registrant with Form 10-Q
                           for  the quarter ended September 30, 1995.
                    10(j)--Amendment to the Stock Option Agreement by and
                           between the Registrant and Ronald J. Naples.
                           Incorporated by reference to Exhibit 10(i) as filed
                           by Registrant with Form 10-Q for the quarter ended
                           September 30, 1995.
                    10(k)--Employment Agreement by and between Registrant and
                           Jose Luiz Bregolato.  Incorporated by reference to
                           Exhibit 10(k) as filed by Registrant with Form 10-K
                           for the year 1995.
                    10(l)--Employment Agreement by and between Registrant and
                           Daniel S. Ma.  Incorporated by reference to Exhibit
                           10(l) as filed by Registrant with Form 10-K for the
                           year 1995.
                    10(n)--Deferred Compensation Plan as adopted by the
                           Registrant on July 10, 1996.  Incorporated by
                           reference to Exhibit 10(n) as filed by Registrant
                           with Form 10-K for the year 1996.

                                      10

                    10(o)--Amendment No. 1 to Employment Agreement by and
                           between Registrant and Ronald J. Naples.
                    10(p)--Amendment No. 1 to 1995 Naples Restricted Stock
                           Plan and Agreement by and between Registrant and
                           Ronald J. Naples.
                    10(q)--Employment Agreement by and between Registrant and
                           Joseph F. Virdone.
                    10(r)--Employment Agreement by and between Registrant and
                           James A. Geier.
                    10(s)--Employment Agreement by and between Registrant and
                           Joseph W. Bauer.
                    13 --  Portions of the 1997 Annual Report to Shareholders
                           incorporated by reference.
                    21 --  Subsidiaries and Affiliates of the Registrant.
                    23 --  Consent of Independent Accountants.
                    27 --  Financial Data Schedule.

     (b)  Reports on Form 8-K.

          No reports on Form 8-K were filed by the Registrant during the last
          quarter of the period covered by this Report.

     (c)  The exhibits required by Item 601 of Regulation S-K filed  as part
          of this Report or incorporated herein by reference are listed in
          subparagraph (a)(3) of this Item 14.

     (d)  The financial statement schedules are omitted because they are not
          applicable or the required information is shown in the financial
          statements or notes thereto.


                                      11
<PAGE>


                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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

Date:  March 18, 1998                  By: /s/ Ronald J. Naples
                                           --------------------------------
                                           Ronald J. Naples
                                           Chairman of the Board and Chief
                                           Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

   Signatures                        Capacity                       Date
   ----------                        --------                       ----

/s/ Ronald J. Naples
- ---------------------------   Principal Executive Officer      March 18, 1998
Ronald J. Naples              and Director
Chairman of the Board and
Chief Executive Officer

/s/ Richard J. Fagan
- ---------------------------   Principal Financial Officer      March 18, 1998
Richard J. Fagan
Controller and Treasurer

/s/ Joseph B. Anderson, Jr.
- ---------------------------   Director                         March 18, 1998
Joseph B. Anderson, Jr.


- ---------------------------   Director                         March   , 1998
Patricia C. Barron

/s/ William L. Batchelor
- ---------------------------   Director                         March 18, 1998
William L. Batchelor

/s/ Peter A. Benoliel
- ---------------------------   Director                         March 18, 1998
Peter A. Benoliel

/s/ Lennox K. Black
- ---------------------------   Director                         March 18, 1998
Lennox K. Black

/s/ Donald R. Caldwell
- ---------------------------   Director                         March 18, 1998
Donald R. Caldwell

/s/ Robert E. Chappell
- ---------------------------   Director                         March 18, 1998
Robert E. Chappell

/s/ Edwin J. Delattre
- ---------------------------   Director                         March 18, 1998
Edwin J. Delattre

/s/ Robert P. Hauptfuhrer
- ---------------------------   Director                         March 18, 1998
Robert P. Hauptfuhrer

/s/ Robert H. Rock
- ---------------------------   Director                         March 18, 1998
Robert H. Rock

                                      12
<PAGE>

                                EXHIBIT INDEX

 Exhibit No.                     Description
 -----------                     -----------

    10(o)      Amendment No. 1 to Employment Agreement by and between
               Registrant and Ronald J. Naples

    10(p)      Amendment No. 1 to 1995 Naples Restricted Stock Plan and
               Agreement by and between Registrant and Ronald J. Naples

    10(q)      Employment Agreement by and between Registrant and
               Joseph F. Virdone

    10(r)      Employment Agreement by and between Registrant and
               James A. Geier

    10(s)      Employment Agreement by and between Registrant and
               Joseph W. Bauer

     13        Portions of the 1997 Annual Report to Shareholders
               Incorporated by Reference

     21        Subsidiaries and Affiliates of the Registrant

     23        Consent of Independent Accountants

     27        Financial Data Schedule



                                      13
<PAGE>

                                                                 Exhibit 10(o)

                          AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
                            DATED AUGUST 14, 1995 BETWEEN
                        QUAKER CHEMICAL CORPORATION AND RONALD J. NAPLES



     AMENDMENT NO. 1 ("Amendment"), dated and effective as of January 1, 1997,
between QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation (the
"Company"), and RONALD J. NAPLES ("Executive").


                                 BACKGROUND:

     The Company and Executive entered into an Employment Agreement dated
August 14, 1995 (the "Employment Agreement"). The Company and Executive
desire, by this Amendment No. 1, to amend the Employment Agreement in certain
respects.

     NOW, THEREFORE, intending to be legally bound hereby, the Company and
Executive agree as follows:


     1.   Paragraph 4(b) of the Employment Agreement is hereby amended by
adding thereto the following sentence:

          "Notwithstanding anything contained in this Paragraph 4(b) to the
          contrary, this Paragraph 4(b) shall not apply to and Executive shall
          not participate in the Quaker Annual Incentive Compensation Plan for
          the years 1997 and 1998."

     2.   The Employment Agreement is hereby amended by adding thereto a new
Paragraph 4.1 which reads as follows:

          "4.1  1997 and 1998 Restricted Stock Awards.

          (a)  On or before June 30, 1997, the Company shall cause to be
          issued in Executive's name 35,000 shares of the Company's Common
          Stock as a restricted stock award for the years 1997 and 1998 (the
          "Award Shares").  Certificates representing the Award Shares shall

                                Exhibit 10(o)
                                    Page 1
<PAGE>

          be deposited with the Company together with stock powers endorsed by
          Executive in blank to be held in custody by the Company for the
          Executive's account.  The certificates representing the Award Shares
          shall bear the following legend:

               "The transferability of this certificate and the shares of
               stock represented hereby are subject to the terms and
               conditions of Paragraph 4.1 of an Employment Agreement between
               Quaker Chemical Corporation and Ronald J. Naples dated August
               14, 1995, as amended.  A copy of such Employment Agreement is
               on file in the offices of Quaker Chemical Corporation."

          (b)  On or before May 1 of each of the years 1997 and 1998, the
          Compensation Committee shall establish "Operating Income Financial
          Performance Criteria" for the Company for each of those years, and
          shall set levels thereof to be achieved so as to permit the delivery
          of 30%, 40% or 50% of the Award Shares to Executive for each such
          year.

          (c)  The Company shall deliver Award Shares to Executive free of the
          aforesaid legend and of all restrictions (except as otherwise
          provided in this Paragraph 4.1) in two installments of up to 17,500
          Award Shares each on March 31, 1998 and 1999, provided that
          Executive is employed by the Company on the immediately preceding
          December 31.  The number, if any, of Award Shares to be delivered to
          Executive in each such installment shall be determined by comparing
          the Company's actual results for the years 1997 and 1998, as the
          case may be, with the Operating Income Financial Performance
          Criteria established and levels set for such year pursuant to
          Paragraph 4.1(b).  Interpolation shall be applied to determine the
          exact number of Award Shares to be delivered if the Company's
          results fall between the levels for a 30%, 40% or 50% delivery.

          If by March 31, 1998, less than 17,500 Award Shares have been
          delivered or are deliverable to Executive, the difference between
          the number of Award Shares so delivered or deliverable and 17,500
          shall be forfeited and transferred to the Company without further
          action by Executive or the Company.


                                Exhibit 10(o)
                                    Page 2
<PAGE>

          If by March 31, 1999, less than 35,000 Award Shares have been
          delivered or are deliverable to Executive, the difference between
          the number of Award Shares so delivered or deliverable and 35,000
          shall be forfeited and transferred to the Company without further
          action by Executive or the Company.

          (d)  During the period Award Shares are held in custody by the
          Company, Executive shall generally have the rights and privileges of
          a shareholder as to the Award Shares including the right to all cash
          or stock dividends paid with respect to the Award Shares and the
          right to vote the Award Shares, except that none of the Award Shares
          may be sold, transferred, assigned, pledged, or otherwise encumbered
          or disposed of by Executive except by will or the laws of dissent
          and distribution.  Subject to Paragraph 4.1(e), all of the Award
          Shares remaining in the custody of the Company shall be forfeited to
          the Company and all rights of Executive to the Award Shares shall
          terminate without further obligation on the part of the Company upon
          the termination of Executive's employment with the Company.  Upon
          such forfeiture of any Award Shares, the forfeited shares shall be
          transferred to the Company without further action by Executive or
          the Company.

          (e)  Notwithstanding anything contained in this Paragraph 4.1 to the
          contrary, if prior to December 31, 1998 Executive's employment with
          the Company shall terminate by reason of his death or by reason of
          his disability or if the Company shall terminate Executive's
          employment with the Company without "Cause", or Executive shall
          terminate his employment with the Company for "Good Reason", or
          there shall occur a "First Event" or a "Significant Transaction" (as
          each of said terms are defined in this Agreement), then, and in any
          such event, the Company shall, within thirty days after the
          occurrence of such event, pay and deliver to Executive or his
          personal representative, as the case may be, free of all
          restrictions (except as otherwise provided in this Paragraph 4.1),
          the remaining Award Shares in the custody of the Company which have
          not been delivered to Executive.  The termination of Executive's


                                Exhibit 10(o)
                                    Page 3
<PAGE>

          employment on or after December 31, 1998 shall not affect his right,
          if any, to receive the delivery of Award Shares pursuant to
          Paragraph 4.1(c).

          (f)  In the event of a change in the outstanding shares of the
          Company's Common Stock through reorganization, merger,
          consolidation, recapitalization, reclassification, stock split-up,
          stock dividend, stock consolidation or otherwise, or in the event of
          a sale of all or substantially all of the assets of the Company,
          appropriate and proportionate adjustments shall be made by the
          Compensation Committee in the number and kind of shares of capital
          stock to be paid by the Company.

          (g)  The Company shall determine the appropriate amount of Federal,
          state and local withholding taxes or charges due as a result of the
          payment of the Award Shares, which amount the Company shall transmit
          to the appropriate taxing authority (the "Withholding Amount").
          Executive may satisfy any such withholding tax obligation by any of
          the following means or by a combination of such means:  (a)
          authorizing the Company to deduct from the number of Award Shares
          otherwise deliverable hereunder, such number of Award Shares as
          shall have a fair market value equal to the Withholding Amount; (b)
          delivering to the Company such number of unencumbered shares of the
          Company's Common Stock as shall have an aggregate fair market value
          equal to the Withholding Amount; or (c) tendering a cash payment.

          (h)  Award Shares will not be paid and delivered to Executive
          hereunder except in compliance with all applicable Federal and state
          laws and regulations including, without limitation, compliance with
          all Federal and state securities laws, withholding tax requirements
          and the rules of all stock exchanges, if any, on which the Company's
          Common Stock may be listed.

          (i)  Executive represents and warrants to the Company that he is and
          will be acquiring the Award Shares to be paid and delivered to him
          hereunder for investment for his own account and not with a view to
          the resale, distribution or public offering thereof.  Executive


                                Exhibit 10(o)
                                    Page 4
<PAGE>

          acknowledges that he has been informed and is aware that the Award
          Shares are not and may not be registered under the Securities Act of
          1933 and applicable state securities laws (and that the Company has
          no obligation to effect such registration) and must be held
          indefinitely until they are subsequently registered under said Act
          or an exemption from such registration is available; and that
          routine sales of securities made in reliance upon SEC Rule 144 can
          be made only in limited amounts in accordance with the terms and
          conditions of that Rule and subject to compliance with Section 16 of
          the Securities Exchange Act of 1934.

          (j)  Any share certificate delivered to Executive hereunder may bear
          such legends and statements as the Company shall deem advisable to
          assure compliance with Federal and state laws and regulations.  The
          Company may require Executive to execute and deliver to the Company
          an agreement or other instrument evidencing Executive's acceptance
          of the terms and conditions hereof or as may be deemed necessary to
          effectuate the provisions of this Agreement."

     3.   Except as specifically provided herein, the Employment Agreement
remains in full force and effect without further modification or amendment.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 1 as of the day and year first above written.


                                   QUAKER CHEMICAL CORPORATION


                                   By:___________________________________


                                    -------------------------------------
                                    RONALD J. NAPLES


                                Exhibit 10(o)
                                    Page 5
<PAGE>



                                                                 Exhibit 10(p)
                              AMENDMENT NO. 1 TO
               1995 NAPLES RESTRICTED STOCK PLAN AND AGREEMENT
                            DATED AUGUST 14, 1995


     AMENDMENT NO. 1 ("Amendment"), dated and effective as of January 21,
1998, by and between QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation
(the "Company") and RONALD J. NAPLES ("Executive").

                                  BACKGROUND

     The Company and Executive entered into the 1995 Naples Restricted Stock
Plan and Agreement on August 14, 1995 (the "Stock Plan Agreement").  The
Company and Executive desire by this Amendment No. 1 to amend the Stock Plan
Agreement in certain respects.

     NOW, THEREFORE, intending to be legally bound hereby, the Company and
Executive agree as follows:

     1.   Paragraph 4(a) of the Stock Plan Agreement ("Additional Stock
Bonus") shall be amended in its entirety as follows:

     4.   Additional Stock Bonus

          (a)  The Company shall issue and pay to Naples as an additional
     stock bonus (the "Additional Stock Bonus") up to an aggregate of 50,000
     additional shares of Common Stock on the following terms:  Commencing for
     the year 1996, and for each year thereafter during the term of Naples'
     employment with the Company, the Company will pay and deliver to Naples,
     free of all restrictions (except as otherwise provided in Paragraph 9 of
     this Plan and Agreement), 1,000 shares of Common Stock for each $.01 per
     share increase, on a cumulative basis, in net income per share ("EPS"),
     starting from a base equal to the greater of 1995 EPS or $1.10 per share.
     Notwithstanding anything contained herein to the contrary, for the
     purposes of calculating the Additional Stock Bonus, foreign currency
     translation fluctuations, and extraordinary and non-recurring gains and
     losses will be excluded from the determination of EPS.  Shares of the
     Additional Stock Bonus will be deemed to have been earned by Naples as of
     the last day of the year in question (provided Naples is employed by the
     Company on the last day of the year), shall be issued not later than
     April 15 of the following year and shall be issued even if Naples is not
     employed by the Company on the date of payment and delivery of such
     shares.


                                Exhibit 10(p)
                                    Page 1
<PAGE>
               The application of the preceding paragraph may be illustrated
     as follows:  If for 1995, EPS is $1.15 and for 1996 EPS is $1.35 per
     share, an Additional Stock Bonus of 20,000 shares will be paid; if for
     1997 EPS is $1.33, no shares will be paid; and if for 1998 EPS is $1.45,
     an Additional Stock Bonus of 10,000 shares will be paid.

     2.   Except as specifically provided herein, the Stock Plan Agreement
remains in full force and effect without further modification or amendment.

     IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment No. 1 as of the day and year first above written.


QUAKER CHEMICAL CORPORATION



By:____________________________     ___________________________________
                                    Ronald J. Naples


                                Exhibit 10(p)
                                    Page 2



                                                                 Exhibit 10(q)
                             EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT, made and entered into as of the 17th day of
July 1996, by and between QUAKER CHEMICAL CORPORATION, a Pennsylvania
corporation (hereinafter referred to as "QUAKER"), and JOSEPH F. VIRDONE
(hereinafter referred to as "VIRDONE").

                             W I T N E S S E T H:

     WHEREAS, QUAKER wishes to employ VIRDONE, and VIRDONE wishes to be
employed by QUAKER.
     NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
     1.   QUAKER agrees to employ VIRDONE, and VIRDONE agrees to serve as Vice
President, U.S. Commercial Operations of QUAKER.  He shall perform all duties
consistent with such position as well as any other duties which are assigned
to him from time to time by the Board of Directors or President of QUAKER.
VIRDONE covenants and agrees that he will, during the term of this Employment
Agreement or any extension or renewal thereof, devote his knowledge, skill,
and working time solely and exclusively to the business and interests of
QUAKER.


                                Exhibit 10(q)
                                    Page 1
<PAGE>
     2.   The term of VIRDONE's employment shall continue until December 31,
1996 and continuing thereafter until either party hereto shall have given the
other at least ninety (90) days' written notice of a desire to terminate.

     3.   QUAKER shall pay to VIRDONE and VIRDONE shall accept an annual rate
of salary as set forth in Exhibit A attached hereto, payable semi-monthly,
during the term of this Employment Agreement or any extension or renewal
thereof.
     4.   VIRDONE shall participate in such QUAKER Incentive Programs as
described and set forth in Exhibit A.  As an Officer of QUAKER, the
particulars of Exhibit A may be amended by the Board of Directors at any time
as to any matter set forth therein including rate of annual salary,
eligibility to participate in any given QUAKER incentive plan, the level of
participation in any QUAKER incentive plan, and the terms and conditions of
any QUAKER incentive plan.  Any changes to Exhibit A shall not affect any of
the other terms and conditions hereof including, without limitation, the
provisions of Paragraphs 7 through 9.  For the purposes of this Agreement, the
term "QUAKER Incentive Program" shall refer to each individual as well as the
combined incentive programs approved by the Board of Directors.  Revisions to
Exhibit A shall become effective upon notification in writing by QUAKER and
VIRDONE's acceptance by his signature on the notification.
     5.   (a)  With respect to Quaker's Long-Term Performance Incentive Plan
(the "Incentive Plan"), VIRDONE shall be eligible to participate in the 1995-
1998 performance award period under the terms and conditions of the Incentive
Plan.  In connection therewith, he has been  granted Stock Options to purchase


                                Exhibit 10(q)
                                    Page 2
<PAGE>
5,000 shares (to be priced as of the close of business July 17, 1996).  He is
also eligible for an award of 7,000 performance units.

          (b)  VIRDONE shall be entitled to his current vacation eligibility,
paid holidays, and such other employee benefits, including insurance, medical
benefits, profit sharing, and retirement benefits as are made generally
available to all QUAKER employees.  In addition, VIRDONE shall be eligible to
participate in Quaker's Supplemental Retirement Income Program.
          (c)  QUAKER shall reimburse VIRDONE for all reasonable expenses
incurred by VIRDONE on behalf of QUAKER in the course of VIRDONE's employment
under this Employment Agreement, provided that such expenses shall have been
approved by QUAKER in accordance with such expense reimbursement procedures as
shall be adopted by QUAKER.
     6.   In the event of the death of VIRDONE while this Employment Agreement
is in effect and as to which no notice of termination has been given by either
party, QUAKER shall (i) continue to pay a sum of money equal to the salary
that would have been paid to him for four months following his death just as
if he were living, and (ii) QUAKER shall pay a death benefit equal to his then
current annual salary plus $30,000 to be paid in three equal payments, without
interest, on the 16, 28, and 40 month anniversary of the date of his death.
Payments made pursuant to this Paragraph 6 shall be made to the person or
persons who may be designated by VIRDONE, in writing, and, in the event he
fails to so designate to whom payments shall be made, payments shall be made
to VIRDONE's personal representatives.


                                Exhibit 10(q)
                                    Page 3
<PAGE>
     7.    VIRDONE acknowledges that information concerning the method and
conduct of QUAKER's (and any affiliates') business, including, without
limitation, strategic and marketing plans, budgets, corporate practices and
procedures, financial statements, customer and supplier information, formulae,
formulation information, application technology, manufacturing information,
and laboratory test methods and all of QUAKER's (and any affiliates') manuals,
documents, notes, letters, records, and computer programs are QUAKER's (and/or
QUAKER's affiliates', as the case may be) trade secrets ("Trade Secrets") and
are the sole and exclusive property of QUAKER (and/or QUAKER's affiliates, as
the case may be).  VIRDONE agrees that at no time during or following his
employment with QUAKER will he use, divulge, or pass on, directly or through
any other individual or entity, any Trade Secrets.  Upon termination of
VIRDONE'S employment with QUAKER, or at any other time upon QUAKER's request,
VIRDONE agrees to forthwith surrender to QUAKER any and all materials in his
possession or control which include or contain any such Trade Secrets.  The
words "Trade Secrets" do not include information already known to the public
through no act or failure to act on the part of VIRDONE, required by law to be
disclosed, or which can be clearly shown to have been known by VIRDONE prior
to the commencement of his employment with QUAKER.
     8.   VIRDONE agrees that during his employment and for a period of one
(1) year thereafter, regardless of the reason for the termination of VIRDONE's
employment hereunder, he will not:


                                Exhibit 10(q)
                                    Page 4
<PAGE>
          (a)  directly or indirectly, together or separately or with any
third party, whether as an individual proprietor, partner, stockholder,
officer, director, joint venturer, investor, or in any other capacity
whatsoever engage in business or assist anyone or any firm in business as a
manufacturer, seller, or distributor of specialty chemical products or
chemical management services which are the same, like, similar to, or which
compete with the products and services offered by QUAKER (or any of its
affiliates);
          (b)  recruit or solicit any employee of QUAKER or otherwise induce
such employee to leave the employ of QUAKER or to become an employee or
otherwise be associated with his or any firm, corporation, business or other
entity with which he is or may become associated; and
          (c)  solicit, directly or indirectly, for himself or as agent or
employee of any person, partnership, corporation, or other entity (other than
for QUAKER) any then or former customer, supplier, or client of QUAKER.

                                Exhibit 10(q)
                                    Page 5
<PAGE>

     VIRDONE acknowledges and agrees that all of the foregoing restrictions
are reasonable as to the period of time and scope.  However, if any paragraph,
sentence, clause, or other provision is held invalid or unenforceable by a
court of competent and relevant jurisdiction, such provision shall be deemed
to be modified in a manner consistent with the intent of such original
provision so as to make it valid and enforceable, and this Agreement and the
application of such provision to persons and circumstances other than those
with respect to which it would be invalid or unenforceable shall not be
affected thereby.  VIRDONE agrees and recognizes that in the event of a breach
or threatened breach of the provisions of the restrictive covenants contained
in Paragraph 7 or in this Paragraph 8, QUAKER may suffer irreparable harm, and
monetary damages may not be an adequate remedy.  Therefore, if any breach
occurs or is threatened, in addition to all other remedies available to QUAKER
at law or in equity, Quaker shall be entitled as a matter of right to specific
performance of the covenants of Quaker contained herein by way of temporary or
permanent injunctive relief.  In the event of any breach of the restrictive
covenant contained in this Paragraph 8, the term of the restrictive covenant
specified herein shall be extended by a period of time equal to that period
beginning on the date such violation commenced and ending when the activities
constituting such violation cease.
     9.   (a)  Definitions.  For the purposes of this agreement, the following
definitions shall apply and will be used:
               (i)  "Act" means the Securities Exchange Act of 1934, as
amended;
               (ii) "QUAKER's Common Stock" means shares of Common Stock,
$1.00 par value, of QUAKER;


                                Exhibit 10(q)
                                    Page 6
<PAGE>
               (iii) "Termination for Cause" means VIRDONE's employment
with QUAKER shall have been terminated by QUAKER by reason of either:
                     (1)  The willful and continued failure by VIRDONE to
execute his duties under this Employment Agreement; or
                     (2)  The willful engaging by VIRDONE in a continued
course of misconduct which is materially injurious to QUAKER, monetarily or
otherwise.
                         VIRDONE shall have been given notice thereof from
QUAKER's Board of Directors and an opportunity (with counsel) to be heard by
said Board of Directors, and the Board of Directors shall have made a
reasonable and good faith finding that VIRDONE was guilty of the conduct set
forth in clause (1) or (2) hereof.
               (iv) "Termination for Good Reason" means VIRDONE's
employment with QUAKER shall have been terminated by VIRDONE by reason of a
material change announced or promulgated by QUAKER in the terms, conditions,
duties, compensation, or benefits of VIRDONE's employment with QUAKER and not
agreed to by VIRDONE.
     (b)  The purpose of this Paragraph 9 is to reinforce and encourage the
continued dedication and attention of VIRDONE to VIRDONE's assigned duties
under this Employment Agreement without distraction as a result of
circumstances which may arise from the possibility of a change of control or
an attempt to change the control of QUAKER.
          (i)  Upon the occurrence of a "First Event," QUAKER will deposit in
an escrow account at CoreStates Bank, N.A. (or such other bank as QUAKER may
hereafter designate) (the "Bank") an amount equal to VIRDONE's then current


                                Exhibit 10(q)
                                    Page 7
<PAGE>
annual salary for an eighteen (18) month period ("Termination Pay").  A First
Event for the purposes of this Agreement shall mean any one of the following
events.

               (1)  Shares of QUAKER's Common Stock are acquired (other than
directly from QUAKER in exchange for cash or property) by any person (as used
in Sections 13 and 14 of the Act) other than a person who is a present Officer
or Director of QUAKER, who thereby becomes the beneficial owner (as defined in
Rule 13d-3 under the Act) of more than 10% of the issued and outstanding shares
of QUAKER's Common Stock.
               (2)  Any person, firm, or corporation (including a shareholder
of QUAKER) makes a tender offer or exchange offer for, or a request or
invitation for tenders or exchanges of, shares of QUAKER's Common Stock.
          (ii) If a "Second Event" shall occur and thereafter (but within
three (3) years after date of the occurrence of the First Event) VIRDONE's
employment with QUAKER shall terminate for a reason other than (1) VIRDONE's
death, (2) VIRDONE's normal retirement for age, (3) VIRDONE's physical or
mental disability in accordance with prevailing QUAKER policy, (4) by QUAKER
as a Termination for Cause, or (5) by VIRDONE other than as a Termination for
Good Reason, VIRDONE may demand that the Bank pay VIRDONE the Termination Pay
(the "Demand").
               A "Second Event" for the purposes of this Agreement shall mean
 any of the following events occurring after a First Event:
               (1)  A new Director of QUAKER is elected in an election in which
the acquirer of the shares or the offeror or the requester voted, in person or
by proxy, and such new Director was not nominated as a candidate in a proxy
management prior to the occurrence of the First Event.

                                Exhibit 10(q)
                                    Page 8
<PAGE>
               (2)  More than 20% of the issued and outstanding shares of
QUAKER's Common Stock are owned by one person (as used in Sections 13 and 14
of the Act) other than a person who is a present Officer or Director of QUAKER.
               (3)  During any period of two (2) consecutive calendar years,
individuals who at the beginning of such period constitute QUAKER's Board of
Directors cease for any reason to constitute at least a majority thereof,
unless the election or the nomination for election by QUAKER's shareholders of
each new Director was approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who were Directors at the beginning of the
two (2) year period.
          (iii) After the receipt of the Demand, the Bank will pay
VIRDONE the Termination Pay in eighteen (18) equal consecutive monthly
installments, the first such installment to be paid within thirty (30) days
from the date of the demand.  VIRDONE shall not be required to diminish the
amount of any payment to which he is entitled under this subparagraph (c) by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this subparagraph (c) be reduced by any compensation earned by
VIRDONE as the result of employment by another employer after the date of
termination.
          (iv) QUAKER may withdraw the deposited Termination Pay if three
(3) years elapse from the date of deposit thereof and if no demand has been
made.  If, prior to the expiration of said three (3) year period, there shall
occur another First Event, QUAKER will not be required to make an additional
deposit of Termination Pay, but the three (3) year period described herein
shall be deemed to commence on the date of the occurrence of the last such
First Event.


                                Exhibit 10(q)
                                    Page 9
<PAGE>

          (v)  QUAKER shall pay the usual and customary charges of the
Bank for acting as escrow agent.  QUAKER will be entitled to the payment of
any and all interest and other income earned by the Bank through the
investment of the deposited Termination Pay.  Said interest shall be paid to
QUAKER as earned.  The escrow arrangement may be subject to the Bank's usual
rules and procedures, and QUAKER will indemnify the Bank against any loss or
liability for any action taken by it in good faith as escrow agent.
     10.  In the event that QUAKER, in its sole discretion and at any time
terminates this Agreement with VIRDONE (other than for Termination for Cause),
QUAKER agrees to provide VIRDONE with reasonable out-placement assistance and
a severance payment (contingent upon VIRDONE executing a form of release
satisfactory to Quaker) in an amount equal to three (3) months' salary
calculated at VIRDONE'S then current rate plus an additional one (1) month for
each additional year of employment up to a maximum of twelve (12) months'
compensation
     11.  Termination.  This Employment Agreement also can be terminated at
any time by "Termination for Cause" or "Termination for Good Reason" as
defined in Paragraph 9.
     12.  VIRDONE represents and warrants to QUAKER that:
          (a)  there are no restrictions, agreements, or understandings
whatsoever to which VIRDONE is a party which would prevent or make unlawful
his execution of this Employment Agreement or his employment hereunder; and


                                Exhibit 10(q)
                                   Page 10
<PAGE>
          (b)  his execution of this Employment Agreement and his employment
hereunder shall not constitute a breach of any contract, agreement, or
understanding, oral or written, to which he is a party or by which he is
bound.
     13.  This Employment Agreement contains all the agreements and
understandings between the parties hereto with respect to VIRDONE's employment
by QUAKER and supersedes all prior or contemporaneous agreements with respect
thereto and shall be binding upon and for the benefit of the parties hereto
and their respective personal representatives, successors, and assigns.  This
Employment Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania without regard to any conflict of
laws.
     IN WITNESS WHEREOF, QUAKER has caused this Employment Agreement to be
signed by its President, thereunto duly authorized, and its corporate seal to
be hereunto affixed and attested by its Corporate Secretary, and VIRDONE has
hereunto set his hand and seal all as of the day and year first above written.


ATTEST:                            QUAKER CHEMICAL CORPORATION
[SEAL]


_________________________________       By:________________________________
Karl H. Spaeth                          Ronald J. Naples
Corporate Secretary                     President and Chief Executive Officer


WITNESS:


_________________________________       ____________________________________
                                        Joseph F. Virdone


                                Exhibit 10(q)
                                   Page 11
<PAGE>
                             EMPLOYMENT AGREEMENT




                                  EXHIBIT A

                                               Effective:   July 17, 1996

Name of Employee:   Joseph  F. Virdone

Address:            654 Creighton Road
                    Villanova, Pennsylvania 19085

Title:              Vice President, U.S. Commercial Operations

Term of Employment: To December 31, 1996 and continuing thereafter until
                    either party gives ninety (90) days' written notice of
                    termination

Annual Rate of
Salary at
Starting Date:      $140,000


Participation in Quaker Incentive Programs for 1996 Only:

     Incentive Bonus Plan

          Bonus will be based on the newly-adopted Incentive Bonus Plan
          Business Unit - Corporation -- 41% of mid-point
          Discretionary - 9% of mid-point
          Incentive Award Amount - 50% of mid-point - $136,980

     Long-Term Performance Incentive Plan 1995-1998

          Type of stock options offered - Qualified and Non-Qualified
            Stock Options
          Number of shares subject to option - 5,000
          Performance Units - 7,000
          Option price per share - Closing price on July 17, 1996
          Participation under and subject to the terms of a
            Stock Option Agreement




                                Exhibit 10(q)
                                   Page 12
<PAGE>

                                                                 Exhibit 10(r)

                             EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT, made and entered into as of the 5th day of
November 1997, by and between QUAKER CHEMICAL CORPORATION, a Pennsylvania
corporation (hereinafter referred to as "QUAKER"), and JAMES A. GEIER
(hereinafter referred to as "GEIER").

                             W I T N E S S E T H:

     WHEREAS, QUAKER wishes to employ GEIER, and GEIER wishes to be employed
by QUAKER.

     NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:

     1.   QUAKER agrees to employ GEIER, and GEIER agrees to serve as Vice
President-Human Resources of QUAKER.  He shall perform all duties consistent
with such position as well as any other duties which are assigned to him from
time to time by the Board of Directors or Chief Executive Officer of QUAKER.
GEIER covenants and agrees that he will, during the term of this Employment
Agreement or any extension or renewal thereof, devote his knowledge, skill,
and working time solely and exclusively to the business and interests of
QUAKER.

     2.   The term of GEIER's employment shall continue until December 31,
1997 and shall continue for annual calendar year terms thereafter until either
party hereto shall have given the other at least ninety (90) days' prior
written notice of a desire to terminate this Agreement (and thereby terminate
GEIER's employment with QUAKER) except as otherwise provided under Paragraph
11 below.


                                Exhibit 10(r)
                                    Page 1

<PAGE>

     3.   QUAKER shall pay to GEIER and GEIER shall accept an annual rate of
salary as set forth in Exhibit A attached hereto, payable semi-monthly, during
the term of this Employment Agreement or any extension or renewal thereof.
The rate of salary will be reviewed on an annual basis consistent with
Quaker's then current practice for reviewing officers' salaries and
performance.

     4.   GEIER shall participate in such QUAKER Incentive Programs as
described and set forth in Exhibit A.  As an Officer of QUAKER, the
particulars of Exhibit A may be amended by the Board of Directors at any time
as to any matter set forth therein including rate of annual salary,
eligibility to participate in any given QUAKER incentive plan, the level of
participation in any QUAKER incentive plan, and the terms and conditions of
any QUAKER incentive plan.  Any changes to Exhibit A shall not affect any of
the other terms and conditions hereof including, without limitation, the
provisions of Paragraphs 7 through 9.  For the purposes of this Agreement, the
term "QUAKER Incentive Program" shall refer to each individual as well as the
combined incentive programs approved by the Board of Directors.  Revisions to
Exhibit A shall become effective upon notification in writing by QUAKER and
GEIER's acceptance by his signature on the notification.

     5.   (a)  With respect to Quaker's Long-Term Performance Incentive Plan
(the "Incentive Plan"), GEIER shall be eligible to participate in the 1995-
1998 performance award period under the terms and conditions of the Incentive
Plan.  In connection therewith, GEIER will be granted:
          * Stock options - 9,000 to be issued to GEIER on the first day of
            employment  - 4,000 of which shall first become exercisable on the
            second anniversary of the first day of employment and the
            remaining 5,000 to first become exercisable on the third
            anniversary of the first day of employment.
          * Type of stock option offered - non-qualified stock options.
          * Option price per share - closing price on first day of employment.


                                Exhibit 10(r)
                                    Page 2
<PAGE>

          * Performance incentive units - 3,500 @ $18.625 (equal to 100% of
            target value).

          (b)  GEIER shall be entitled to four (4) weeks vacation per year,
beginning the calendar year 1998, paid holidays, and such other employee
benefits, including, without limitation, life insurance, medical benefits,
disability, profit sharing, and retirement benefits as are made generally
available to all senior QUAKER salaried officers as a group.  In addition,
GEIER shall be eligible to participate in Quaker's Supplemental Retirement
Income Program.
          (c)  QUAKER shall reimburse GEIER for all reasonable expenses
incurred by GEIER on behalf of QUAKER in the course of GEIER's employment
under this Employment Agreement, provided that such expenses shall have been
approved by QUAKER in accordance with such expense reimbursement procedures as
shall be adopted by QUAKER.  In addition, QUAKER shall provide for GEIER's use
a cellular phone, and QUAKER will reimburse GEIER for all business-related
calls.

     6.   In the event of the death of GEIER while this Employment Agreement
is in effect and as to which no notice of termination has been given by GEIER
or, in the case of a Termination for Cause, by QUAKER, QUAKER shall (i)
continue to pay a sum of money equal to the salary that would have been paid
to him for four months following his death just as if he were living, and (ii)
QUAKER shall pay a death benefit equal to his then current annual salary plus
$30,000 to be paid in three equal payments, without interest, on the 16-, 28-,
and 40-month anniversary of the date of his death.  Payments made pursuant to
this Paragraph 6 shall be made to the person or persons who may be designated
by GEIER in writing, and, in the event he fails to so designate to whom
payments shall be made, payments shall be made to GEIER's personal
representatives.

     7.   GEIER acknowledges that information concerning the method and
conduct of QUAKER's (and any affiliates') business, including, without
limitation, strategic and marketing plans, budgets, corporate practices and
procedures, financial statements, customer and supplier information, formulae,


                                Exhibit 10(r)
                                    Page 3
<PAGE>

formulation information, application technology, manufacturing information,
and laboratory test methods and all of QUAKER's (and any affiliates') manuals,
documents, notes, letters, records, and computer programs are QUAKER's (and/or
QUAKER's affiliates', as the case may be) trade secrets ("Trade Secrets") and
are the sole and exclusive property of QUAKER (and/or QUAKER's affiliates, as
the case may be).  GEIER agrees that at no time during or following his
employment with QUAKER will he use, divulge, or pass on, directly or through
any other individual or entity, any Trade Secrets.  Upon termination of
GEIER's employment with QUAKER, or at any other time upon QUAKER's request,
GEIER agrees to forthwith surrender to QUAKER any and all materials in his
possession or control which include or contain any such Trade Secrets. The
words "Trade Secrets" do not include information already known to the public
through no act or failure to act on the part of GEIER, required by law to be
disclosed, or which can be clearly shown to have been known by GEIER prior to
the commencement of his employment with QUAKER.

     8.   GEIER agrees that during his employment and for a period of one (1)
year thereafter, regardless of the reason for the termination of GEIER'S
employment hereunder, he will not:
          (a)  directly or indirectly, together or separately or with any
third party, whether as an individual proprietor, partner, stockholder,
officer, director, joint venturer, investor, or in any other capacity
whatsoever actively engage in business or assist anyone or any firm in
business as a manufacturer, seller, or distributor of specialty chemical
products or chemical management services which are the same, like, similar to,
or which compete with the products and services offered by QUAKER (or any of
its affiliates);
          (b)  recruit or solicit any employee of QUAKER or otherwise induce
such employee to leave the employ of QUAKER or to become an employee or
otherwise be associated with his or any firm, corporation, business or other
entity with which he is or may become associated; and


                                Exhibit 10(r)
                                    Page 4
<PAGE>

          (c)  solicit, directly or indirectly, for himself or as agent or
employee of any person, partnership, corporation, or other entity (other than
for QUAKER) any then or former customer, supplier, or client of QUAKER with
the intent of actively engaging in business which would cause competitive harm
to QUAKER.
          GEIER acknowledges and agrees that all of the foregoing restrictions
are reasonable as to the period of time and scope. However, if any paragraph,
sentence, clause, or other provision is held invalid or unenforceable by a
court of competent and relevant jurisdiction, such provision shall be deemed
to be modified in a manner consistent with the intent of such original
provision so as to make it valid and enforceable, and this Agreement and the
application of such provision to persons and circumstances other than those
with respect to which it would be invalid or unenforceable shall not be
affected thereby.  GEIER agrees and recognizes that in the event of a breach
or threatened breach of the provisions of the restrictive covenants contained
in Paragraph 7 or in this Paragraph 8, QUAKER may suffer irreparable harm, and
monetary damages may not be an adequate remedy.  Therefore, if any breach
occurs or is threatened, in addition to all other remedies available to QUAKER
at law or in equity, QUAKER shall be entitled as a matter of right to specific
performance of the covenants of QUAKER contained herein by way of temporary or
permanent injunctive relief.  In the event of any breach of the restrictive
covenant contained in this Paragraph 8, the term of the restrictive covenant
specified herein shall be extended by a period of time equal to that period
beginning on the date such violation commenced and ending when the activities
constituting such violation cease.

     9.   (a)  Definitions.  For the purposes of this agreement, the following
definitions shall apply and will be used.
               (i)  "Act" means the Securities Exchange Act of 1934, as
amended:
               (ii) "QUAKER's Common Stock" means shares of Common Stock,
$1.00 par value, of QUAKER;


                                Exhibit 10(r)
                                    Page 5
<PAGE>

               (iii) "Termination for Cause" means GEIER's employment with
QUAKER shall have been terminated by QUAKER by reason of either:
                     (1)  The willful and continued failure (following
written notice) by GEIER to execute his duties under this Employment
Agreement; or
                     (2)  The willful engaging by GEIER in a continued
course of misconduct which is materially injurious to QUAKER, monetarily or
otherwise.
                     GEIER shall have been given notice thereof from
QUAKER's Board of Directors and an opportunity (with counsel) to be heard by
said Board of Directors, and the Board of Directors shall have made a
reasonable and good faith finding that GEIER was guilty of the conduct set
forth in clause (1) or (2) hereof.
               (iv)  "Termination for Good Reason" means GEIER's
employment with QUAKER shall have been terminated by GEIER by reason of a
material change announced or promulgated by QUAKER in the terms, conditions,
duties, compensation, or benefits of GEIER's employment with QUAKER and not
agreed to by GEIER.
          (b)  The primary purpose of this Paragraph 9 is to reinforce and
encourage the continued dedication and attention of GEIER to GEIER's assigned
duties under this Employment Agreement without distraction as a result of
circumstances which may arise from the possibility of a change of control or
an attempt to change the control of QUAKER.
               (i) Upon the occurrence of a "First Event," QUAKER will
deposit in an escrow account at CoreStates Bank, N.A. (or such other bank as
QUAKER may hereafter designate) (the "Bank") an amount equal to GEIER's then
current annual salary for an eighteen (18) month period ("Termination Pay").
A First Event for the purposes of this Agreement shall mean any one of the
following events.
                    (1)  Shares of QUAKER's Common Stock are acquired
(other than directly from QUAKER in exchange for cash or property) by any
person (as used in Sections 13 and 14 of the Act) other than a person who is a
present Officer or Director of QUAKER, who thereby becomes the beneficial


                                Exhibit 10(r)
                                    Page 6

<PAGE>

owner (as defined in Rule 13d-3 under the Act) of more than 10% of the issued
and outstanding shares of QUAKER's Common Stock.
                    (2)  Any person, firm, or corporation (including a
shareholder of QUAKER) makes a tender offer or exchange offer for, or a
request or invitation for tenders or exchanges of shares of QUAKER's Common
Stock.
               (ii) If a "Second Event" shall occur and thereafter (but
within three (3) years after date of the occurrence of the First Event)
GEIER's employment with QUAKER shall terminate for a reason other than (1)
GEIER's death, (2) GEIER's normal retirement for age, (3) GEIER's physical or
mental disability in accordance with prevailing QUAKER policy, (4) by QUAKER
as a Termination for Cause, or (5) by GEIER other than as a Termination for
Good Reason, GEIER may demand that the Bank pay GEIER the Termination Pay (the
"Demand").
                    A "Second Event" for the purposes of this Agreement
shall mean any of the following events occurring after a First Event:
                    (1)  A new Director of QUAKER is elected in an
election in which the acquirer of the shares or the offeror or the requester
voted, in person or by proxy, and such new Director was not nominated as a
candidate in a proxy statement forwarded to shareholders by QUAKER's
management prior to the occurrence of the First Event.
                    (2)  More than 20% of the issued and outstanding
shares of QUAKER's Common Stock are owned by one person (as used in Sections
13 and 14 of the Act) other than a person who is a present Officer or Director
of QUAKER.
                    (3)  During any period of two (2) consecutive
calendar years, individuals who at the beginning of such period constitute
QUAKER's Board of Directors cease for any reason to constitute at least a
majority thereafter, unless the election or the nomination for election by
QUAKER's shareholders of each new Director was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who were Directors at
the beginning of the two (2) year period.


                                Exhibit 10(r)
                                    Page 7

<PAGE>

               (iii) After the receipt of the Demand, the Bank will pay
GEIER the Termination Pay in eighteen (18) equal consecutive monthly
installments, the first such installment to be paid within thirty (30) days
from the date of the demand.  GEIER shall not be required to diminish the
amount of any payment to which he is entitled under this subparagraph (b) by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this subparagraph (b) be reduced by any compensation earned by
GEIER as the result of employment by another employer after the date of
termination.
               (iv) QUAKER may withdraw the deposited Termination Pay if
three (3) years elapse from the date of deposit thereof and if no demand has
been made.  If, prior to the expiration of said three (3) year period, there
shall occur another First Event, QUAKER will not be required to make an
additional deposit of Termination Pay, but the three (3) year period described
herein shall be deemed to commence on the date of the occurrence of the last
such First Event.
               (v) QUAKER shall pay the usual and customary charges of
the Bank for acting as escrow agent.  QUAKER will be entitled to the payment
of any and all interest and other income earned by the Bank through the
investment of the deposited Termination Pay.  Said interest shall be paid to
QUAKER as earned.  The escrow arrangement may be subject to the Bank's usual
rules and procedures, and QUAKER will indemnify the Bank against any loss or
liability for any action taken by it in good faith as escrow agent.

     10.  In the event that QUAKER in its sole discretion and at any time
terminates this Agreement with GEIER (other than for Termination for Cause),
QUAKER agrees to provide GEIER with reasonable out-placement assistance and a
severance payment (contingent upon GEIER executing a form of release
satisfactory to QUAKER) that shall be equal to but not less than twelve (12)
months' salary calculated at GEIER's then current rate.


                                Exhibit 10(r)
                                    Page 8
<PAGE>

     11.  Termination.  This Employment Agreement also can be terminated (and
thereby terminate GEIER's employment with QUAKER) at any time and without
notice by "Termination for Cause" or "Termination for Good Reason" as defined
in and pursuant to Paragraph 9.

     12.  GEIER represents and warrants to QUAKER that:
          (a)  there are no restrictions, agreements, or understandings
whatsoever to which GEIER is a party which would prevent or make unlawful his
execution of this Employment Agreement or his employment hereunder; and
          (b)  his execution of this Employment Agreement and his employment
hereunder shall not constitute a breach of any contract agreement, or
understanding, oral or written, to which he is a party or by which he is
bound.

     13.  This Employment Agreement contains all the agreements and
understandings between the parties hereto with respect to GEIER's employment
by QUAKER and supersedes all prior or contemporaneous agreements with respect
thereto and shall be binding upon and for the benefit of the parties hereto
and their respective personal representatives, successors, and assigns.  This
Employment Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania without regard to any conflict of
laws.

     IN WITNESS WHEREOF, QUAKER has caused this Employment Agreement to be
signed by its President, thereunto duly authorized, and its corporate seal to
be hereunto affixed and attested by its Corporate Secretary, and GEIER has
hereunto set his hand and seal all as of the day and year first above written.

ATTEST:                       QUAKER CHEMICAL CORPORATION
(SEAL)


____________________________       By:________________________________
Karl H. Spaeth                     Ronald J. Naples
Corporate Secretary                Chairman, President and Chief
                                   Executive Officer


WITNESS:


_____________________________         ____________________________________
                                      James A. Geier



                                Exhibit 10(r)
                                    Page 9

<PAGE>
                             EMPLOYMENT AGREEMENT

                                  EXHIBIT A

                                                  Effective: November 17, 1997


Name of Employee:   James A. Geier

Address:            8016 Narvon Street
                    Philadelphia, PA  19136

Title:              Vice President-Human Resources


Annual Rate of
Salary at
Starting Date:      $152,000



Participation in Quaker Incentive Programs

     Annual Bonus Plan (1997)

          Bonus will be based on achieving certain benchmarks and/or a
          discretionary award, as follows:

          Threshold level          -  10% of midpoint
          Target level             -  19% of midpoint
          Maximum level            -  37% of midpoint
          Discretionary            -  8%  of midpoint
          Total Bonus Opportunity  -  45% of midpoint

          For the year 1997 only, the Annual Bonus (payable in early 1998)
          will not be less than $30,000.

Long-Term Performance Incentive Plan 1997-2000

Will be full participant in Plan, even though entering one (1) year after the
start, at an appropriate level in relation to other officers.  (Awards not yet
designated by Compensation/Management Development Committee of the Board.)



                                Exhibit 10(r)
                                   Page 10



                                                                 Exhibit 10(s)
                             EMPLOYMENT AGREEMENT



     THIS EMPLOYMENT AGREEMENT, made and entered into as of the 9th day of
March 1998, by and between QUAKER CHEMICAL CORPORATION, a Pennsylvania
corporation (hereinafter referred to as "QUAKER"), and JOSEPH W. BAUER
(hereinafter referred to as "EXECUTIVE").

                             W I T N E S S E T H:

     WHEREAS, QUAKER wishes to employ EXECUTIVE, and EXECUTIVE wishes to be
employed by QUAKER.

     NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:

     1.   QUAKER agrees to employ EXECUTIVE, and EXECUTIVE agrees to serve as
President and Chief Operating Officer of QUAKER.  He shall perform all duties
consistent with such position as well as any other duties which are assigned
to him from time to time by the Board of Directors or Chief Executive Officer
of QUAKER.  EXECUTIVE covenants and agrees that he will, during the term of
this Employment Agreement or any extension or renewal thereof, devote his
knowledge, skill, and working time solely and exclusively to the business and
interests of QUAKER.

                                Exhibit 10(s)
                                    Page 1
<PAGE>

     2.   Except as otherwise provided for in Paragraph 11, the term of
EXECUTIVE's employment shall continue until December 31, 1998 and shall
continue for annual calendar year terms thereafter until either party hereto
shall have given the other at least ninety (90) days' prior written notice of
a desire to terminate this Agreement (and thereby terminate EXECUTIVE's
employment with QUAKER) except as otherwise provided under Paragraph 11 below.

     3.   QUAKER shall pay to EXECUTIVE and EXECUTIVE shall accept an annual
rate of salary as set forth in Exhibit A attached hereto, payable semi-
monthly, during the term of this Employment Agreement or any extension or
renewal thereof.  The rate of salary will be reviewed on an annual basis
consistent with QUAKER's then current practice for reviewing officers'
salaries and performance.

     4.   EXECUTIVE shall participate in such QUAKER Incentive Programs as
described and set forth in Exhibit A.  The particulars of the Incentive
Programs described in Exhibit A may be amended by the Board of Directors at
any time as to any matter set forth therein (with the exception of the items
covered in Paragraph 5 below) including eligibility to participate in any
given QUAKER incentive plan, the level of participation in any QUAKER
incentive plan, and the terms and conditions of any QUAKER incentive plan.
Any changes to Exhibit A shall not affect any of the other terms and
conditions hereof including, without limitation, the provisions of Paragraphs
7 through 9.  For the purposes of this Agreement, the term "QUAKER Incentive
Program" shall refer to each individual as well as the combined incentive


                                Exhibit 10(s)
                                    Page 2
<PAGE>
programs approved by the Board of Directors.  Revisions to Exhibit A shall
become effective upon notification in writing by QUAKER.

     5.   (a)  With respect to QUAKER's Annual Bonus Plan for the 1998 year
only, EXECUTIVE's annual bonus (payable in early 1999) will not be less than
$100,000.

          (b)  With respect to QUAKER's Long Term Bonus Payment, FY95-FY98,
EXECUTIVE will be paid $75,000 in March, 1999, as long as regular participants
in the plan qualify for at least a 100% award level.

          (c)  With respect to QUAKER's Long-Term Performance Incentive Plan
(the "Incentive Plan"), for the 1997-2000 performance award period under the
terms and conditions of the Incentive Plan, EXECUTIVE will be granted:

          * Stock options - 30,000 to be issued to EXECUTIVE on the first day
            of employment --  14,000 of which shall first become exercisable
            on the second anniversary of the first day of employment and the
            remaining 16,000 to first become exercisable on the third
            anniversary of the first day of employment; in addition, if
            EXECUTIVE makes a demand for his Termination Pay (as defined
            hereinafter) pursuant to Paragraph 9(b)(ii), any of the
            aforementioned 30,000 options not then exercisable shall become
            immediately exercisable in accordance with the terms of the
            Incentive Plan.
          * Type of stock option offered - non-qualified stock options.

          * Option price per share - closing price on first day of employment.


                                Exhibit 10(s)
                                    Page 3
<PAGE>

          * Performance incentive units - 11,000 @ $16.9375 (equal to 100% of
            target value).

For the 1999-2002 performance award period, level of EXECUTIVE's participation
will be consistent with his position and the then current program, except that
the amount of options granted shall be reduced by 8,000.

          (d)  EXECUTIVE shall be entitled to four (4) weeks vacation per
year, beginning the calendar year 1998, paid holidays, and such other employee
benefits, including, without limitation, life insurance, medical benefits,
disability, profit sharing, and retirement benefits as are made generally
available to all senior QUAKER salaried officers as a group.  In addition,
EXECUTIVE will participate in Quaker's Supplemental Retirement Income Program
(SERP) under the plan's standard provisions, except as follows.  If EXECUTIVE
leaves Quaker prior to age 60 for any reason, other than for termination of
employment due to performance (as determined in good faith) during the first
two years of employment as specified below, EXECUTIVE's SERP benefit will be
payable at age 65.  If EXECUTIVE leaves for any reason after age 60, the SERP
benefit will be payable the first of the month following EXECUTIVE's last day
of active full time employment.  If EXECUTIVE leaves during the first two
years of employment due to performance (as determined in good faith),
EXECUTIVE will not be eligible for benefits under the SERP.

          (e)  QUAKER shall reimburse EXECUTIVE for all reasonable expenses
incurred by EXECUTIVE on behalf of QUAKER in the course of EXECUTIVE's
employment under this Employment Agreement, provided that such expenses shall
have been approved by QUAKER in accordance with such expense reimbursement


                                Exhibit 10(s)
                                    Page 4
<PAGE>
procedures as shall be adopted by QUAKER.  In addition, QUAKER shall pay for
EXECUTIVE's country club membership, specifically, initiation fees, regular
dues and business related entertainment expenses.

               (f)  In addition to the benefits provided under QUAKER's
policy, EXECUTIVE will seek to sell his house at his own expense  for 120 days
from the effective date of this Agreement.  If EXECUTIVE has not signed an
agreement of sale for his house at the end of such period, QUAKER will buy
EXECUTIVE's  house, probably through a third party, at its then appraised
value.   EXECUTIVE can either accept the price, as determined by the appraisal
or continue to sell the house himself at his own expense.  If QUAKER sells the
house, EXECUTIVE will receive any profit realized in excess of QUAKER's costs.
Further, EXECUTIVE will be eligible for temporary living expenses for 90 days,
as discussed.

     6.   In the event of the death of EXECUTIVE while this Employment
Agreement is in effect and as to which no notice of termination has been given
by EXECUTIVE or, in the case of a Termination for Cause, by QUAKER, QUAKER
shall (i) continue to pay a sum of money equal to the salary that would have
been paid to him for four months following his death just as if he were
living, and (ii) QUAKER shall pay a death benefit equal to his then current
annual salary plus $30,000 to be paid in three equal payments, without
interest, on the 16-, 28-, and 40-month anniversary of the date of his death.
Payments made pursuant to this Paragraph 6 shall be made to the person or
persons who may be designated by EXECUTIVE in writing, and, in the event he



                                Exhibit 10(s)
                                    Page 5
<PAGE>
fails to so designate to whom payments shall be made, payments shall be made
to EXECUTIVE's personal representatives.

     7.   EXECUTIVE acknowledges that information concerning the method and
conduct of QUAKER's (and any affiliates') business, including, without
limitation, strategic and marketing plans, budgets, corporate practices and
procedures, financial statements, customer and supplier information, formulae,
formulation information, application technology, manufacturing information,
and laboratory test methods and all of QUAKER's (and any affiliates') manuals,
documents, notes, letters, records, and computer programs are QUAKER's (and/or
QUAKER's affiliates', as the case may be) trade secrets ("Trade Secrets") and
are the sole and exclusive property of QUAKER (and/or QUAKER's affiliates, as
the case may be).  EXECUTIVE agrees that at no time during or following his
employment with QUAKER will he use, divulge, or pass on, directly or through
any other individual or entity, any Trade Secrets.  Upon termination of
EXECUTIVE's employment with QUAKER, or at any other time upon QUAKER's
request, EXECUTIVE agrees to forthwith surrender to QUAKER any and all
materials in his possession or control which include or contain any such Trade
Secrets. The words "Trade Secrets" do not include information already known to
the public through no act or failure to act on the part of EXECUTIVE, required
by law to be disclosed, or which can be clearly shown to have been known by
EXECUTIVE prior to the commencement of his employment with QUAKER.


                                Exhibit 10(s)
                                    Page 6
<PAGE>
     8.   EXECUTIVE agrees that during his employment and for a period of one
(1) year thereafter, regardless of the reason for the termination of
EXECUTIVE'S employment hereunder, he will not:

          (a)  directly or indirectly, together or separately or with any
third party, whether as an individual proprietor, partner, stockholder (unless
such holdings are less than 5% of the outstanding equity securities of a
publicly traded company), officer, director, joint venturer, investor, or in
any other capacity whatsoever actively engage in business or assist anyone or
any firm in business as a manufacturer, seller, or distributor of specialty
chemical products or chemical management services which are the same, like,
similar to, or which compete with the products and services offered by QUAKER
(or any of its affiliates);

          (b)  recruit or solicit any employee of QUAKER or otherwise induce
such employee to leave the employ of QUAKER or to become an employee or
otherwise be associated with his or any firm, corporation, business or other
entity with which he is or may become associated; and

          (c)  solicit, directly or indirectly, for himself or as agent or
employee of any person, partnership, corporation, or other entity (other than
for QUAKER) any then or former customer, supplier, or client of QUAKER with
the intent of actively engaging in business which would cause competitive harm
to QUAKER.

          EXECUTIVE acknowledges and agrees that all of the foregoing
restrictions are reasonable as to the period of time and scope. However, if
any paragraph, sentence, clause, or other provision is held invalid or
unenforceable by a court of competent and relevant jurisdiction, such
provision shall be deemed to be modified in a manner consistent with the


                                Exhibit 10(s)
                                    Page 7
<PAGE>

intent of such original provision so as to make it valid and enforceable, and
this Agreement and the application of such provision to persons and
circumstances other than those with respect to which it would be invalid or
unenforceable shall not be affected thereby.  EXECUTIVE agrees and recognizes
that in the event of a breach or threatened breach of the provisions of the
restrictive covenants contained in Paragraph 7 or in this Paragraph 8, QUAKER
may suffer irreparable harm, and monetary damages may not be an adequate
remedy.  Therefore, if any breach occurs or is threatened, in addition to all
other remedies available to QUAKER at law or in equity, QUAKER shall be
entitled as a matter of right to specific performance of the covenants of
QUAKER contained herein by way of temporary or permanent injunctive relief.
In the event of any breach of the restrictive covenant contained in this
Paragraph 8, the term of the restrictive covenant specified herein shall be
extended by a period of time equal to that period beginning on the date such
violation commenced and ending when the activities constituting such violation
cease.

     9.   (a)  Definitions.  For the purposes of this Paragraph 9, the
following definitions shall apply and will be used.
               (i)  "Act" means the Securities Exchange Act of 1934, as
amended:
               (ii) "QUAKER's Common Stock" means shares of Common Stock,
$1.00 par value, of QUAKER;
               (iii) "Termination for Cause" means EXECUTIVE's employment
with QUAKER shall have been terminated by QUAKER by reason of either:



                                Exhibit 10(s)
                                    Page 8
<PAGE>

                    (1)  The willful and continued failure (following written
notice) by EXECUTIVE to execute his duties under this Employment Agreement; or
                    (2)  The willful engaging by EXECUTIVE in a continued
course of misconduct which is materially injurious to QUAKER, monetarily or
otherwise.
                    EXECUTIVE shall have been given notice thereof from
QUAKER's Board of Directors and an opportunity (with counsel) to be heard by
said Board of Directors, and the Board of Directors shall have made a
reasonable and good faith finding that EXECUTIVE was guilty of the conduct set
forth in clause (1) or (2) hereof.
               (iv) "Termination for Good Reason" means EXECUTIVE's employment
with QUAKER shall have been terminated by EXECUTIVE by reason of a material
change announced or promulgated by QUAKER in the terms, conditions, duties,
compensation, or benefits of EXECUTIVE's employment with QUAKER and not agreed
to by EXECUTIVE.
          (b)  The primary purpose of this Paragraph 9 is to reinforce and
encourage the continued dedication and attention of EXECUTIVE to EXECUTIVE's
assigned duties under this Employment Agreement without distraction as a
result of circumstances which may arise from the possibility of a change of
control or an attempt to change the control of QUAKER.
               (i)  Upon the occurrence of a "First Event," QUAKER will
deposit in an escrow account at CoreStates Bank, N.A. (or such other bank as
QUAKER may hereafter designate) (the "Bank") an amount equal to EXECUTIVE's
then current annual salary for a twenty four (24) month period ("Termination



                                Exhibit 10(s)
                                    Page 9
<PAGE>
Pay").  A First Event for the purposes of this Agreement shall mean any one of
the following events.
                    (1)  Shares of QUAKER's Common Stock are acquired (other
than directly from QUAKER in exchange for cash or property) by any person (as
used in Sections 13 and 14 of the Act) other than a person who is a present
Officer or Director of QUAKER, who thereby becomes the beneficial owner (as
defined in Rule 13d-3 under the Act) of more than 10% of the issued and
outstanding shares of QUAKER's Common Stock.
                    (2)  Any person, firm, or corporation (including a
shareholder of QUAKER) makes a tender offer or exchange offer for, or a
request or invitation for tenders or exchanges of shares of QUAKER's Common
Stock.
               (ii) If a "Second Event" shall occur and thereafter (but within
three (3) years after date of the occurrence of the First Event) EXECUTIVE's
employment with QUAKER shall terminate for a reason other than (1) EXECUTIVE's
death, (2) EXECUTIVE's normal retirement for age, (3) EXECUTIVE's physical or
mental disability in accordance with prevailing QUAKER policy, (4) by QUAKER
as a Termination for Cause, or (5) by EXECUTIVE other than as a Termination
for Good Reason, EXECUTIVE may demand that the Bank pay EXECUTIVE the
Termination Pay (the "Demand").
                    A "Second Event" for the purposes of this Agreement shall
mean any of the following events occurring after a First Event:
                    (1)  A new Director of QUAKER is elected in an election in
which the acquirer of the shares or the offeror or the requester voted, in


                                Exhibit 10(s)
                                   Page 10
<PAGE>
person or by proxy, and such new Director was not nominated as a candidate in
a proxy statement forwarded to shareholders by QUAKER's management prior to
the occurrence of the First Event.
                    (2)  More than 20% of the issued and outstanding shares of
QUAKER's Common Stock are owned by one person (as used in Sections 13 and 14
of the Act) other than a person who is a present Officer or Director of
QUAKER.
                    (3)  During any period of two (2) consecutive calendar
years, individuals who at the beginning of such period constitute QUAKER's
Board of Directors cease for any reason to constitute at least a majority
thereafter, unless the election or the nomination for election by QUAKER's
shareholders of each new Director was approved by a vote of at least two-
thirds (2/3) of the Directors then still in office who were Directors at the
beginning of the two (2) year period.
               (iii) After the receipt of the Demand, the Bank will pay
EXECUTIVE the Termination Pay in twenty four (24) equal consecutive monthly
installments, the first such installment to be paid within thirty (30) days
from the date of the demand.  EXECUTIVE shall not be required to diminish the
amount of any payment to which he is entitled under this subparagraph (b) by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this subparagraph (b) be reduced by any compensation earned by
EXECUTIVE as the result of employment by another employer after the date of
termination.
               (iv) QUAKER may withdraw the deposited Termination Pay if three
(3) years elapse from the date of deposit thereof and if no demand has been
made.  If, prior to the expiration of said three (3) year period, there shall


                                Exhibit 10(s)
                                   Page 11
<PAGE>
occur another First Event, QUAKER will not be required to make an additional
deposit of Termination Pay, but the three (3) year period described herein
shall be deemed to commence on the date of the occurrence of the last such
First Event.
               (v)  QUAKER shall pay the usual and customary charges of the
Bank for acting as escrow agent.  QUAKER will be entitled to the payment of
any and all interest and other income earned by the Bank through the
investment of the deposited Termination Pay.  Said interest shall be paid to
QUAKER as earned.  The escrow arrangement may be subject to the Bank's usual
rules and procedures, and QUAKER will indemnify the Bank against any loss or
liability for any action taken by it in good faith as escrow agent.

     10.  In the event that QUAKER in its sole discretion and at any time
terminates this Agreement with EXECUTIVE (other than for Termination for
Cause, death, disability, or normal retirement age), QUAKER agrees to provide
EXECUTIVE with reasonable out-placement assistance and a severance payment
(contingent upon EXECUTIVE executing a form of release satisfactory to QUAKER)
that shall be equal to but not less than twelve (12) months' salary calculated
at EXECUTIVE's then current rate.

     11.  Termination.  This Employment Agreement also can be terminated (and
thereby terminate EXECUTIVE's employment with QUAKER) at any time and without
notice by "Termination for Cause" as defined in Paragraph 9 (a) (iii).

     12.  EXECUTIVE represents and warrants to QUAKER that:


                                Exhibit 10(s)
                                   Page 12
<PAGE>

          (a)  there are no restrictions, agreements, or understandings
whatsoever to which EXECUTIVE is a party which would prevent or make unlawful
his execution of this Employment Agreement or his employment hereunder; and
          (b)  his execution of this Employment Agreement and his employment
hereunder shall not constitute a breach of any contract agreement, or
understanding, oral or written, to which he is a party or by which he is
bound.

     13.  This Employment Agreement contains all the agreements and
understandings between the parties hereto with respect to EXECUTIVE's
employment by QUAKER and supersedes all prior or contemporaneous agreements
with respect thereto and shall be binding upon and for the benefit of the
parties hereto and their respective personal representatives, successors, and
assigns.  This Employment Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
any conflict of laws.


     IN WITNESS WHEREOF, QUAKER has caused this Employment Agreement to be
signed by its Chairman of the Board, thereunto duly authorized, and its
corporate seal to be hereunto affixed and attested by its Corporate Secretary,
and EXECUTIVE has hereunto set his hand and seal all as of the day and year
first above written.

ATTEST:                       QUAKER CHEMICAL CORPORATION
(SEAL)


____________________________       By:________________________________
Karl H. Spaeth                     Ronald J. Naples
Corporate Secretary                Chairman, President, and Chief
                                   Executive Officer


WITNESS:


_____________________________      ____________________________________
                                    Joseph W. Bauer



                                Exhibit 10(s)
                                   Page 13
<PAGE>


                             EMPLOYMENT AGREEMENT

                                  EXHIBIT A

                                           Effective: March 9, 1998

Name of Employee:   Joseph W. Bauer

Address:            4035 Old Southwick
                    Alpharetta, GA 30202

Title:              President and Chief Operating Officer


Annual Rate of
Salary at
Starting Date:      $250,000


Participation in Quaker Incentive Programs

     Annual Bonus Plan (1998)

          Bonus will be based on achieving certain benchmarks, as follows:

          Threshold level     -15% of midpoint
          Target level        -30% of midpoint
          Maximum level       -60% of midpoint

          For the year 1998 only, the Annual Bonus (payable in early 1999)
          will not be less than $100,000.

     Long-Term Bonus Payment, FY95-FY98

     You will be paid $75,000 in March, 1999, as long as regular participants
     in the plan qualify for at least a 100% award level.

     Long-Term Performance Incentive Plan, 1997-2000

          * Stock options - 30,000 to be issued to EXECUTIVE on the first day
            of employment --  14,000 of which shall first become exercisable
            on the second anniversary of the first day of employment and the
            remaining 16,000 to first become exercisable on the third
            anniversary of the first day of employment; in addition, if
            EXECUTIVE makes a demand for his Termination Pay (as defined


                                Exhibit 10(s)
                                   Page 14
<PAGE>

            hereinafter) pursuant to Paragraph 9(b)(ii), any of the
            aforementioned 30,000 options not then exercisable shall become
            immediately exercisable in accordance with the terms of the
            Incentive Plan.


          * Type of stock option offered - non-qualified stock options.

          * Option price per share - closing price on first day of employment.

          * Performance incentive units - 11,000 @ $16.9375 (equal to 100% of
            target value).

     For the 1999-2002 performance award period, will participate at an
     appropriate level in relation to other officers, except that the
     amount of options granted shall be reduced by 8,000.

                                Exhibit 10(s)
                                   Page 15
<PAGE>

                                                                    EXHIBIT 13

                         QUAKER CHEMICAL CORPORATION

                               Financial Review

                              1997 Annual Report


Management's Discussion and Analysis of
Financial Condition and Results of Operations ........................ 16
Consolidated Statement of Operations ................................. 19
Consolidated Balance Sheet ........................................... 20
Consolidated Statement of Cash Flows ................................. 21
Consolidated Statement of Shareholders' Equity ....................... 22
Notes to Consolidated Financial Statements............................ 23
Report of Independent Accountants .................................... 31
Eleven-Year Financial Summary ........................................ 32
Supplemental Financial Information ................................... 34


                                  Exhibit 13
                                   Page 15
<PAGE>

                    Management's Discussion and Analysis
               of Financial Condition and Results of Operations

Liquidity and Capital Resources

     Management continues to believe that the Company is capable of generating
adequate cash to meet the needs of current operations and to fund strategic
initiatives.

     Net cash flow provided by operating activities amounted to $15.2 million
in 1997 compared to $28 million in 1996. The decrease principally resulted
from changes in working capital.

     Net cash used in investing activities decreased to $1.4 million in 1997
from $6.3 million in 1996. The decrease was due mainly to a decline in
expenditures for property, plant, and equipment ($5.6 million in 1997 versus
$6.9 million in 1996); $3.5 million in proceeds from the sale of the European
pulp and paper business; and reduced investments and advances in the Company's
Fluid Recycling Services Company, LLC ("FRS") joint venture ($.8 million in
1997 versus $2 million in 1996).

     In addition to the items noted above, the Company issued $20 million of
long-term debt and made payments of $17.4 million to reduce outstanding short-
term debt. As a result of the reduction of short-term debt, the Company's net
cash position (cash and cash equivalents less short-term borrowings and
current portion of long-term debt) increased $27.3 million in 1997 compared to
a $9.4 million increase in 1996. The current ratio was 2.1 to 1 in 1997 as
compared to 1.4 to 1 in 1996 reflecting the impact of the aforementioned
changes in net cash.

     The majority of expenditures for property, plant, and equipment in 1997
included upgrades of manufacturing capabilities at various locations. Capital
expenditures for 1998 are expected to be in the range of $7-9 million and
include various upgrades of manufacturing capabilities in the U.S.  and
Europe, and an estimated $1.0 million for environmental and regulatory
compliance. The Company believes that funds generated internally should be
sufficient to finance payments for capital expenditures.

     The Company has $10 million in a line of credit and believes that
additional bank borrowings could be negotiated at competitive rates, based on
its debt-equity ratio and current levels of operating performance. The Company
is capable of supporting its operating requirements during 1998, payment of
dividends to shareholders, possible acquisition opportunities and possible
resolution of contingencies (see Note 12 to the consolidated financial
statements) through internally generated funds supplemented with debt as
needed.

Operations

Comparison of 1997 with 1996

     Consolidated net sales for 1997 increased $1.3 million (.5%) over 1996.
The sales growth was the net result of (i) a 6% increase in volume, and (ii) a
1.5% improvement in price/mix resulting primarily from better pricing, mainly
in Europe, and an overall positive shift in sales mix, offset by (iii) a 1%
decrease associated with the 1997 divestiture of the European pulp and paper
business, and (iv) a 6% negative impact from currency translation
(fluctuations in foreign currency exchange rates used to translate local
currency statements to U.S. dollars). The volume improvement for the year was
attributable to sales growth in Europe, mainly attributable to the strong
demand from the European steel industry, increased sales to aircraft
producers, and increased demand from the South American steel and metalworking
markets. Sales in the major U.S. markets were steady throughout most of the
year. In Asia/Pacific, sales were hurt in the first half of 1997 due to a
decrease in customer production levels in order to work down earlier buildups
of inventories but increased in the second half of the year.

     Operating income (excluding the gain on the sale of the European pulp and
paper business in 1997) increased to $18.5 million from $15.2 million
(excluding the repositioning charge in 1996). The improvement was due in large
part to the higher level of sales combined with an increased gross margin
percentage. The Company's gross margin as a percentage of sales improved 1.6%
points, when compared to 1996 mainly as a result of the benefits associated
with the consolidation of manufacturing operations in the U.S., pricing
initiatives implemented over the past year, and a more favorable sales mix.
Selling, administrative, and general expenses as a percent of sales were near
last year's level.

     The $2,000 litigation charge relates to a reserve established in
the fourth quarter of 1997 for the Company's potential liability in
a legal proceeding (see Note 12 to the consolidated financial
statements). Net interest costs decreased as a result of the
increase in the Company's net cash position.


                                  Exhibit 13
                                   Page 16
<PAGE>


The increase in equity in net income from associated companies was due
primarily to improved profitability in the Company's FRS joint venture. The
negative influence of currency translation on net income in 1997 was
approximately $.21 per share compared to $.08 per share in 1996.

1996 Repositioning

     In 1996, the Company announced and implemented a series of measures
designed to improve manufacturing capacity utilization, responsiveness to
customers, operating efficiencies, and return on assets. The consolidated
statement of operations for 1996 included total pre-tax charges of $24,455
($16,912 after tax, or $1.96 per share) related to these initiatives. Of the
total charges, $19,230 was shown as "Repositioning charges" in income before
tax and the remaining $5,225, was shown net of tax ($3,445) under the caption
"Asset impairment charge on equity investment."

     The plan of action related to the repositioning charges included (i) the
closure of one of two manufacturing plants in the U.S., (ii) the closure of a
sales and distribution office and streamlining of research and other
functional activities in Europe, and (iii) other workforce reductions. The
closure of a manufacturing facility in the U.S. and a sales and distribution
office in Europe were substantially completed in 1996. The completion of the
plan resulted in workforce reductions of approximately 90 employees.

     In addition, the charges also include an asset impairment on goodwill
related to a Spanish subsidiary. The asset impairment charge against the
equity investment represents the write-down of the Company's investment in its
FRS joint venture.

     Asset impairments represent charges arising from the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." The charge related to a Spanish subsidiary resulted from the evaluation
of the Company's ability to recover asset costs given changes in local market
conditions, current and projected capacity utilization, and other strategic
factors. The determination to write down the Company's investment in FRS was
made after extensive analysis of FRS's past performance and future prospects
compared to the Company's level of investment. In evaluating both of these
operations, management did not believe that future cash flows would
be adequate to recover the carrying value of these assets. The components of
the pre-tax charges incurred in 1996 as well as balances remaining at December
31, 1997 were as follows:

                                                     Amounts charged
                                            ---------------------------------
                                              Cash      Non-cash        Total
- ------------------------------------------------------------------------------
Severance, other employee benefits,
  and facility closure costs ...........    $ 7,705                   $ 7,705
Asset write-offs .......................                 $10,332       10,332
Goodwill impairment ....................                   1,193        1,193
                                            -------      -------      -------
Subtotal  ..............................      7,705       11,525       19,230
FRS investment impairment ..............                   5,225        5,225
                                            -------      -------      -------
Total repositioning charges ............     $7,705      $16,750      $24,455
Amount utilized in 1996 ................     (2,355)     (16,750)     (19,105)
Amount utilized in 1997 ................     (4,105)                   (4,105)
                                            -------      -------      -------
Remaining liability ....................    $ 1,245      $    --      $ 1,245
                                            =======      =======      =======

     At December 31, 1997 and 1996, approximately $945 and $5,000 remained in
accrued liabilities and approximately $300 and $350 remained in other
noncurrent liabilities, respectively. The future cash outlays primarily
represent termination benefits related to workforce reductions.

Comparison of 1996 with 1995

     Consolidated net sales for 1996 increased $13.2 million (6%) over 1995.
The sales growth was a result of (i) a 3% increase in volume, (ii) a 4%
improvement in price/mix resulting primarily from better pricing, mainly in
Europe, and an overall positive shift in sales mix, (iii) a 1% increase
associated with a 1995 acquisition in Brazil, offset by (iv) a 2% negative
impact from currency translation (fluctuations in foreign currency exchange
rates used to translate local currency statements to U.S. dollars). The volume
improvement for the year was attributable primarily to continued sales growth
in the Asia/Pacific markets and increased sales in certain U.S. markets. Sales
in the major U.S. markets were steady throughout most of the year, but slowed
somewhat in the fourth quarter. In Europe, sales were steady during the first
three quarters and then picked up in the fourth quarter primarily as a result
of strong demand from the European steel industry.


                                  Exhibit 13
                                   Page 17
<PAGE>

Operating income increased to $15.2 million (excluding the repositioning
charge in 1996) from $11.4 million in 1995. The improvement was due in large
part to the higher level of sales combined with an increased gross margin
percentage. The Company's gross margin as a percentage of sales improved 2.2%
points, when compared to 1995 mainly as a result of the benefits of pricing
initiatives, particularly in Europe, a more favorable sales mix, and stable
raw material costs. Selling, administrative, and general expenses as a percent
of sales increased .8% points primarily as a result of increased spending on
geographic and product growth areas, other strategic initiatives, and an
additional provision of $1.3 million in the fourth quarter of 1996 for
estimated future remediation costs related to certain soil and groundwater
contamination at a subsidiary's facility in California.

     The increase in equity in net income from associated companies for both
the fourth quarter and full year was due primarily to higher earnings from the
Company's Mexican and Venezuelan affiliates and reduced business development
costs in the Company's FRS joint venture. The negative influence of currency
translation on net income in 1996 was approximately $.08 per share compared to
a positive impact of $.07 per share in 1995.

General

     The Company is involved in environmental clean-up activities and
litigation in connection with existing plant locations and former waste
disposal sites (see Note 12 to the consolidated financial statements). This
involvement has not historically had, nor is it expected to have, a material
effect on the Company's results of operations or financial condition.

     The Company does not use financial instruments which expose it to
significant risk involving foreign currency transactions; however, the size of
non-U.S. activities has a significant impact on reported operating results and
the attendant net assets. During the past three years, sales by non-U.S.
subsidiaries accounted for approximately 54-57% of the consolidated sales. In
the same period, these subsidiaries accounted for approximately 74-81% of
consolidated operating profit (see Note 10 to the consolidated financial
statements). The greater profitability of non-U.S. sales during this period is
attributable to higher unit selling prices and lower fixed overhead and
selling costs.

     The Company is currently working to resolve the potential impact of the
year 2000 on the processing of date sensitive information by the Company's
computerized information systems. Historically, certain computer programs have
been written using two digits rather than four digits to define the applicable
year. Any of the Company's programs that have time sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000, which
could result in miscalculations or system failures. The costs of addressing
potential problems are not currently expected to have a material adverse
impact on the Company's financial position, results of operations, or cash
flows in future periods. The Company expects that all necessary modifications
or replacements to key systems will occur on a timely basis.

     During 1997, the Financial Accounting Standards Board issued SFAS No. 130
- -- "Reporting Comprehensive Income" and SFAS No. 131 -- "Disclosures about
Segments of an Enterprise and Related Information." These standards are
effective in 1998. SFAS No. 130 requires that the components of comprehensive
income be reported in the financial statements. SFAS No. 131 requires the
disclosure of segment information utilizing the approach that the Company uses
to manage its internal organization. Also, SFAS No. 131 requires the reporting
of segment information on a condensed basis for interim periods beginning in
1999. The Company is currently assessing the impact these new standards will
have on its financial statements.


                                  Exhibit 13
                                   Page 18
<PAGE>
                    CONSOLIDATED STATEMENT OF OPERATIONS

                                                    Year Ended December 31,
                                               --------------------------------
(Dollars in thousands except per share amounts)  1997        1996        1995
- --------------------------------------------------------------------------------
Net sales ..................................   $241,534    $240,251    $227,038
                                               --------    --------    --------
Costs and expenses:
  Cost of goods sold .......................    134,943     138,199     135,490
  Selling, administrative, and
    general expenses .......................     88,064      86,853      80,115
  Repositioning charges ....................                 19,230
Gain on sale of European pulp and
  paper business ...........................     (2,621)
                                               --------    --------    --------
                                                220,386     244,282     215,605
                                               --------    --------    --------
Operating income (loss) ....................     21,148      (4,031)     11,433
Other income, net (Note 1) .................      1,805       1,508       2,090
Litigation charge ..........................     (2,000)
Interest expense ...........................     (1,547)     (1,906)     (1,712)
Interest income ............................        329         432         286
                                               --------    --------    --------
Income (loss) before taxes .................     19,735      (3,997)     12,097
Taxes on income ............................      7,893         466       4,887
                                               --------    --------    --------
                                                 11,842      (4,463)      7,210
Equity in net income (loss) of
  associated companies .....................      1,161         480         (78)
Asset impairment charge on equity investment                 (3,445)
Minority interest in net income
  of subsidiaries ..........................       (392)       (171)       (444)
                                               --------    --------    --------
Net income (loss) ..........................   $ 12,611    $ (7,599)   $  6,688
                                               ========    ========    ========
Per share data:
  Net income (loss) basic and diluted ......      $1.45       $(.88)       $.76
  Dividends ................................        .71         .69         .68

The accompanying notes are an integral part of these financial statements.


                                   Exhibit 13
                                    Page 19
<PAGE>
<TABLE>
<CAPTION>
                                   CONSOLIDATED BALANCE SHEET
                                                                                December 31,
                                                                        -------------------------
(Dollars in thousands except per share amounts)                             1997           1996
- -------------------------------------------------------------------------------------------------
<S>                                                                      <C>           <C>
Assets
Current assets
  Cash and cash equivalents (Note 1) .................................   $ 18,416       $  8,525
  Accounts receivable, less allowances for doubtful accounts
    of $1,085 in 1997 and $1,005 in 1996 .............................     48,625         45,564
  Inventories (Notes 1 and 4) ........................................     21,681         21,041
  Deferred income taxes (Note 6) .....................................      5,729          4,840
  Prepaid expenses and other current assets ..........................      3,675          6,582
                                                                         --------       --------
     Total current assets ............................................     98,126         86,552
                                                                         --------       --------
Investments in and advances to associated companies (Notes 1 and 3) ..      4,925          3,941
                                                                         --------       --------
Property, plant, and equipment, net (Notes 1 and 5) ..................     40,654         43,960
                                                                         --------       --------
Goodwill (Note 1) ....................................................     14,500         16,222
Deferred income taxes (Note 6) .......................................      9,090          9,278
Other noncurrent assets (Note 1) .....................................      3,345          5,655
                                                                         --------       --------
     Total noncurrent assets .........................................     26,935         31,155
                                                                         --------       --------
         Total assets ................................................   $170,640       $165,608
                                                                         ========       ========

Liabilities and Shareholders' Equity
Current liabilities
  Short-term borrowings and current portion of long-term debt (Note 8)   $     --       $ 17,404
  Accounts payable ...................................................     22,871         23,386
  Dividends payable ..................................................      1,570          1,508
  Accrued liabilities
    Compensation .....................................................      9,723          7,097
    Other (Note 2) ...................................................     11,101         12,746
  Accrued taxes on income (Note 6) ...................................      2,494          1,893
                                                                         --------       --------
     Total current liabilities .......................................     47,759         64,034
                                                                         --------       --------
Long-term debt (Note 8) ..............................................     25,203          5,182
Deferred income taxes (Note 6) .......................................      3,752          3,222
Accrued postretirement benefits (Note 7) .............................      8,934          8,898
Other noncurrent liabilities (Note 2) ................................      5,825          6,255
                                                                         --------       --------
     Total noncurrent liabilities ....................................     43,714         23,557
                                                                         --------       --------
         Total liabilities ...........................................     91,473         87,591
                                                                         --------       --------
Minority interest in equity of subsidiaries (Note 1) .................      3,525          3,763
                                                                         --------       --------
Commitments and contingencies (Notes 1 and 12)
Shareholders' equity (Note 9)
  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 .....................................        928            634
  Retained earnings ..................................................     80,749         74,317
  Unearned compensation ..............................................       (528)          (459)
  Foreign currency translation adjustments ...........................       (208)         6,475
                                                                         --------       --------
                                                                           90,605         90,631
  Treasury stock, shares held at cost; 1997--943,552, 1996--1,044,452      14,963         16,377
                                                                         --------       --------
         Total shareholders' equity ..................................     75,642         74,254
                                                                         --------       --------
           Total liabilities and shareholders' equity ................   $170,640       $165,608
                                                                         ========       ========


The accompanying notes are an integral part of these financial statements.

</TABLE>


                                           Exhibit 13
                                             Page 20
<PAGE>
<TABLE>
<CAPTION>

                                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                 Year Ended December 31,
                                                                         ---------------------------------------
(Dollars in thousands)                                                      1997           1996           1995
- ----------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>            <C>           <C>
Cash flows from operating activities
  Net income (loss) .................................................    $ 12,611       $ (7,599)      $  6,688
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation ..................................................       5,154          6,347          6,764
      Amortization ..................................................       2,110          2,361          1,883
      Equity in net (income) loss of associated companies ...........      (1,161)          (480)            78
      Minority interest in earnings of subsidiaries .................         392            171            444
      Gain on sale of European pulp and paper business ..............      (2,621)
      Litigation charge .............................................       2,000
      Proceeds from insurance settlement ............................                                     2,500
      Deferred income taxes .........................................         661         (3,658)          (499)
      Deferred compensation and other postretirement benefits .......       1,649            952           (585)
      Repositioning and asset impairment charges ....................                     24,455
      Change in repositioning liabilities ...........................      (4,426)        (2,921)        (1,546)
      Other, net ....................................................          36            541           (464)
  Increase (decrease) in cash from changes in current assets and
    current liabilities, net of acquisitions and divestitures:
      Accounts receivable ...........................................      (6,379)           305         (1,513)
      Inventories ...................................................      (1,868)           132         (2,771)
      Prepaid expenses and other current assets .....................       1,744           (148)        (2,389)
      Accounts payable and accrued liabilities ......................       4,199          6,017         (1,357)
 
      Estimated taxes on income .....................................       1,109          1,475             58
                                                                         --------       --------       --------
        Net cash provided by operating activities ...................      15,210         27,950          7,291
                                                                         --------       --------       --------

Cash flows from investing activities
  Dividends from associated companies ...............................         654          1,406            565
  Investments in property, plant, equipment, and other assets .......      (5,580)        (6,923)        (9,833)
  Companies/businesses acquired excluding cash ......................                                    (7,728)
  Investments in and advances to associated companies ...............        (779)        (2,039)        (1,970)
  Proceeds from sale of European pulp and paper business ............       3,548
  Proceeds from sale of patent, production technology,
    and other assets ................................................       1,005            830          2,000
  Other, net ........................................................        (280)           428           (576)
                                                                         --------       --------       --------
       Net cash used in investing activities ........................      (1,432)        (6,298)       (17,542)
                                                                         --------       --------       --------

Cash flows from financing activities
  Net (decrease) increase in short-term borrowings ..................     (13,090)        (7,438)        15,923
  Long-term debt incurred ...........................................      20,000                         2,155
  Repayment of long-term debt .......................................      (4,289)        (4,796)        (3,857)
  Dividends paid ....................................................      (6,179)        (5,936)        (5,973)
  Treasury stock issued .............................................         937            979          1,439
  Treasury stock acquired ...........................................                     (1,587)        (3,594)
                                                                         --------       --------       --------
      Net cash (used in) provided by financing activities ...........      (2,621)       (18,778)         6,093
                                                                         --------       --------       --------
  Effect of exchange rate changes on cash ...........................      (1,266)        (1,579)            43
                                                                         --------       --------       --------
    Net increase (decrease) in cash and cash equivalents ............       9,891          1,295         (4,115)
    Cash and cash equivalents at beginning of year ..................       8,525          7,230         11,345
                                                                         --------       --------       --------
    Cash and cash equivalents at end of year ........................    $ 18,416       $  8,525       $  7,230
                                                                         --------       --------       --------

Supplemental cash flow disclosures
  Cash paid during the year for:
    Income taxes ....................................................    $  5,920       $  5,497       $  5,048
    Interest ........................................................       1,568          2,040          1,776


The accompanying notes are an integral part of these financial statements.
</TABLE>


                                                   Exhibit 13
                                                    Page 21
<PAGE>
<TABLE>
<CAPTION>

                                          CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY


                                                                                                     Foreign
                                                                                                    currency
                                                                                                     trans-
                                                              Capital in                Unearned    lation
                                                    Common     excess of    Retained     compen-    adjust-     Treasury
(Dollars in thousands except per share amounts)      stock     par value    earnings     sation      ments       stock      Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>         <C>         <C>         <C>       <C>
Balance at December 31, 1994 ...................     $9,664       $ 649     $87,137                 $ 9,856    $(13,629)   $93,677
  Net income ...................................                              6,688                                          6,688
  Dividends ($.68 per share) ...................                             (5,973)                                        (5,973)
  Shares acquired under repurchase program .....                                                                 (3,594)    (3,594)
  Shares issued upon exercise of options .......                   (141)                                            141
  Shares issued for employee stock purchase plan                     68                                             370        438
  Restricted stock bonus .......................                    175                   $(722)                    700        153
  Translation adjustment .......................                                                      2,477                  2,477
  Other ........................................                     29                                              97        126
                                                    -------     -------     -------     -------     -------     -------    -------
Balance at December 31, 1995 ...................      9,664         780      87,852        (722)     12,333     (15,915)    93,992
  Net loss .....................................                             (7,599)                                        (7,599)
  Dividends ($.69 per share) ...................                             (5,936)                                        (5,936)
  Shares acquired under repurchase program .....                                                                 (1,587)    (1,587)
  Shares issued upon exercise of options........                   (146)                                            681        535
  Shares issued for employee stock purchase plan                                                                    444        444
  Amortization of restricted stock bonus .......                                            263                                263
  Translation adjustment .......................                                                     (5,858)                (5,858)
                                                    -------     -------     -------     -------     -------     -------    -------
Balance at December 31, 1996                          9,664         634      74,317        (459)      6,475     (16,377)    74,254
  Net income ...................................                             12,611                                         12,611
  Dividends ($.71 per share) ...................                             (6,179)                                        (6,179)
  Shares issued upon exercise of options .......                     23                                             459        482
  Shares issued for employee stock purchase plan                     85                                             371        456
  Shares issued for director stock ownership plan                    12                                              73         85
  Other, primarily employee stock awards........                      1                                              21         22
  Restricted stock bonus .......................                    173                    (332)                    490        331
  Amortization of restricted stock bonus .......                                            263                                263
  Translation adjustment .......................                                                     (6,683)                (6,683)
                                                    -------     -------     -------     -------     -------     -------    -------
Balance at December 31, 1997 ...................     $9,664       $ 928     $80,749       $(528)    $  (208)   $(14,963)   $75,642
                                                    =======     =======     =======     =======     =======     =======    =======

The accompanying notes are an integral part of these financial statements.
</TABLE>

                                                            Exhibit 13
                                                              Page 22
<PAGE>

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (Dollars in thousands except share and per share amounts)

Note 1 -- Significant Accounting Policies

     Principles of consolidation: All majority-owned subsidiaries are included
in the Company's consolidated financial statements, with appropriate
elimination of intercompany balances and transactions. The consolidated
balance sheet includes total assets of $96,034 and $102,665 and total
liabilities of $29,553 and $31,801 in 1997 and 1996, respectively, of non-U.S.
subsidiaries. The consolidated statement of operations includes net income of
non-U.S. subsidiaries of $13,286, $4,415, and $7,290 in 1997, 1996, and 1995,
respectively. Investments in associated (less than majority owned) companies
are stated at the Company's equity in the underlying net assets.

     Translation of foreign currency: Assets and liabilities of non-U.S.
subsidiaries and associated companies are translated into U.S. dollars at the
respective rates of exchange prevailing at the end of the year. Income and
expense accounts are translated at average exchange rates prevailing during
the year. Translation adjustments resulting from this process are recorded
directly in shareholders' equity and will be included in income only upon sale
or liquidation of the underlying investment.

     Derivative financial instruments: The Company's utilization of derivative
financial instruments is substantially limited to the use of forward exchange
contracts to hedge foreign currency transactions and foreign exchange options
to reduce its exposure to changes in foreign exchange rates. The amount of any
gain or loss on derivative financial instruments was immaterial in 1997 and no
contracts or options were entered into in 1996 or 1995. There are no contracts
or options outstanding at December 31, 1997.

     Cash and cash equivalents: The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

     Inventories: Inventories of the parent Company are valued at the lower of
cost or market value, with cost determined using the last-in, first-out
("LIFO") cost method. Inventories of subsidiaries are valued primarily using
the first-in, first-out ("FIFO") cost method, but not in excess of market
value.

     Property, plant, and equipment: Property, plant, and equipment are
recorded at cost, and capital leases are recorded at the present value of
future minimum lease payments. Depreciation is computed using the straight-
line method on an individual asset basis over the following estimated useful
lives: buildings and improvements, 10 to 45 years; machinery and equipment, 3
to 15 years; and capital leases are depreciated over the remaining life of the
lease. At December 31, 1997 and 1996, $1,214 of leased equipment and
accumulated depreciation thereon in the amount $1,214 and $1,156 in 1997 and
1996, respectively, are included in property, plant, and equipment.

     Expenditures for renewals and betterments which increase the estimated
useful life or capacity of the assets are capitalized; expenditures for
repairs and maintenance are charged to income.

     Goodwill: Goodwill consists primarily of intangible assets arising from
acquisitions which are being amortized on a straight-line basis over periods
of 5 to 40 years (5 to 20 years on acquisitions subsequent to 1991). Goodwill
is reviewed by the Company whenever events or circumstances indicate that the
carrying amount may not be recoverable. At December 31, 1997 and 1996,
accumulated goodwill amortization amounted to $4,398 and $3,574, respectively.

     Capitalization of software: The Company capitalizes certain computer
software costs which are amortized utilizing the straight-line method over
their estimated economic lives, not to exceed three years. At December 31,
1997 and 1996, the net amount capitalized was $776 and $1,670, respectively.

     Pension and postretirement benefit plans: The Company's policy is to fund
pension costs allowable for income tax purposes. See Note 7 for the accounting
policies for pension and other postretirement benefits.

     Revenue recognition: Sales are recorded primarily when products are
shipped to customers. Other income, principally license fees and royalties
offset by miscellaneous expenses, is recorded when earned. License fees from
nonconsolidated non-U.S. associates and royalties from third parties amounted
to $1,656, $1,505, and $2,293 in 1997, 1996, and 1995, respectively.

     Research and development costs: Research and development costs are
expensed as incurred. Company sponsored research and development expenses
during 1997, 1996, and 1995 were $9,508, $11,181, and $11,307, respectively.

     Earnings per share: Effective December 31, 1997, the Company adopted SFAS
No. 128, "Earnings Per Share." This standard establishes new accounting and
disclosure requirements for earnings per share ("EPS"). The EPS amounts for
1997, 1996, and 1995 have been restated to conform to SFAS No. 128
requirements. The following


                                  Exhibit 13
                                   Page 23
<PAGE>

table summarizes the restatement for the years ended December 31, 1997, 1996,
and 1995:

                                                    December 31,
                                     -----------------------------------------
                                        1997           1996           1995
- ------------------------------------------------------------------------------
Numerator for basic EPS
  and diluted EPS --
  net income (loss) ..............    $12,611       $(7,599)         $6,688
Denominator for basic EPS --
  weighted average shares ........      8,673         8,587           8,811
Effect of dilutive securities:
  Employee stock options .........         34            52              48
Denominator for diluted EPS --
  weighted average shares and
  assumed conversions ............      8,707         8,639           8,859
Basic EPS ........................      $1.45         $(.88)           $.76
Diluted EPS ......................       1.45          (.88)            .76

     The following number of stock options are not included in dilutive
earnings per share since in each case the exercise price is greater than the
market price: 225,882, 587,036, 715,153 in 1997, 1996, and 1995, respectively.

     Concentration of credit risk: Financial instruments, which potentially
subject the Company to a concentration of credit risk, principally consist of
cash equivalents, short-term investments, and trade receivables. The Company
invests temporary and excess cash in money market securities and financial
instruments having maturities typically within 90 days. The Company has not
experienced losses from the aforementioned investments.

     The Company sells its principal products to the major steel, automotive,
and related companies around the world. The Company maintains allowances for
potential credit losses. Historically, the Company has experienced some losses
related to bankruptcy proceedings of major steel companies in the U.S.;
however, such losses have not been material.

     Environmental liabilities and expenditures: Accruals for environmental
matters are recorded when it is probable that a liability has been incurred
and the amount of the liability can be reasonably estimated. Accrued
liabilities are exclusive of claims against third parties and are not
discounted. Environmental costs and remediation costs are capitalized if the
costs increase the value of the property from the date acquired or constructed
and/or mitigate or prevent contamination in the future.

     Reclassifications:  Certain reclassifications of prior years' data have
been made to improve comparability.

     Accounting 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,
liabilities, and disclosure of contingencies at the date of the financial
statements and the reported amounts of net sales and expenses during the
reporting period.

     Income taxes: Income taxes are provided in accordance with SFAS No. 109,
"Accounting for Income Taxes."

Note 2 -- Repositioning of Operations

     In 1996, the Company announced and implemented a series of measures
designed to improve manufacturing capacity utilization, responsiveness to
customers, operating efficiencies, and return on assets. The consolidated
statement of operations for 1996 included total pre-tax charges of $24,455
($16,912 after tax, or $1.96 per share) related to these initiatives. Of the
total charges, $19,230 was shown as "Repositioning charges" in income before
tax and the remaining $5,225, was shown net of tax ($3,445) under the caption
"Asset impairment charge on equity investment."

     The plan of action related to the repositioning charges included (i) the
closure of one of two manufacturing plants in the U.S., (ii) the closure of a
sales and distribution office and streamlining of research and other
functional activities in Europe, and (iii) other workforce reductions. The
closure of a manufacturing facility in the U.S. and a sales and distribution
office in Europe were substantially completed in 1996. The completion of the
plan resulted in workforce reductions of approximately 90 employees.

     In addition, the charges also include an asset impairment on goodwill
related to a Spanish subsidiary. The asset impairment charge against the
equity investment represents the write-down of the Company's investment in its
FRS joint venture.

     Asset impairments represent charges arising from the adoption of SFAS No.
121. The charge related to a Spanish subsidiary resulted from the evaluation
of the Company's ability to recover asset costs given changes in local market
conditions, current and projected capacity utilization, and other strategic
factors. The determination to write down the Company's investment in FRS was
made after extensive analysis of FRS's past performance and future prospects
compared to the Company's level of investment. In evaluating both of these


                                  Exhibit 13
                                   Page 24
<PAGE>
operations, management did not believe that future cash flows would be
adequate to recover the carrying value of these assets.

The components of the pre-tax charges incurred in 1996
as well as balances remaining at December 31, 1997 were
as follows:

                                                 Amounts charged
                                     -----------------------------------------
                                       Cash         Non-cash         Total
- ------------------------------------------------------------------------------
Severance, other employee
  benefits, and facility
  closure costs ..................   $ 7,705                       $ 7,705
Asset write-offs .................                  $10,332         10,332
Goodwill impairment ..............                    1,193          1,193
                                     -------        -------        -------
Subtotal .........................     7,705         11,525         19,230
FRS investment impairment                             5,225          5,225
                                     -------        -------        -------
Total repositioning charges ......    $7,705        $16,750        $24,455
Amount utilized in 1996 ..........    (2,355)       (16,750)       (19,105)
Amount utilized in 1997 ..........    (4,105)                      ( 4,105)
                                     -------        -------        -------
Remaining liability ..............   $ 1,245        $    --        $ 1,245
                                     =======        =======        =======

     At December 31, 1997 and 1996, approximately $945 and $5,000 remained in
accrued liabilities and approximately $300 and $350 remained in other
noncurrent liabilities, respectively. The future cash outlays primarily
represent termination benefits related to workforce reductions.

Note 3 -- Associated Companies

     Summarized financial information of the associated companies (less than
majority owned), in the aggregate, for 1997, 1996, and 1995 is as follows:


                                        1997           1996           1995
- ------------------------------------------------------------------------------
Current assets ...................    $21,922        $20,848        $22,319
Noncurrent assets ................      4,484          5,263          8,273
Current liabilities ..............     11,994         12,647         14,136
Noncurrent liabilities ...........      3,395          2,763          1,806

Net sales ........................    $54,262        $53,481        $54,710
Operating income .................      6,089          3,412          2,689
Income before taxes ..............      4,537          2,289            929
Net income .......................      2,662          1,252              9


Note 4 -- Inventories

     Total inventories are comprised of:

                                                       1997           1996
- ------------------------------------------------------------------------------
Raw materials and supplies .......................   $10,316        $ 9,094
Work in process and finished goods ...............    11,365         11,947
                                                     -------        -------
                                                     $21,681        $21,041
                                                     =======        =======

     Inventories valued under the LIFO method amounted to $6,988 and $6,792 at
December 31, 1997 and 1996, respectively. The estimated replacement costs for
these inventories using the FIFO method were approximately $7,148 and $7,268,
respectively.

Note 5 -- Property, Plant, and Equipment

     At December 31, 1997 and 1996, property, plant, and equipment at cost is
comprised of:


                                                        1997           1996
- ------------------------------------------------------------------------------
Land .............................................   $ 5,751        $ 6,586
Building and improvements ........................    31,523         32,680
Machinery and equipment ..........................    58,532         58,220
Construction in progress .........................     1,213          1,476
                                                     -------        -------
                                                      97,019         98,962
Less accumulated depreciation ....................    56,365         55,002
                                                     -------        -------
                                                     $40,654        $43,960
                                                     =======        =======

Note 6 -- Taxes on Income

     Taxes on income included in the consolidated statement of operations
consist of the following for the year ended December 31:


                                       1997           1996           1995
- ------------------------------------------------------------------------------
Current
  Federal .........................   $  557        $(3,838)        $  872
  State ...........................      155            193             53
  Foreign .........................    6,640          4,359          4,399
                                      ------        -------         ------
                                       7,352            714          5,324
Deferred
  Federal .........................   (1,294)          (488)           103
  Foreign .........................    1,835            240           (540)
                                      ------        -------         ------
Total .............................   $7,893        $   466         $4,887
                                      ======        =======         ======


                                  Exhibit 13
                                   Page 25
<PAGE>


     Total deferred tax assets and liabilities are comprised of the following
at December 31:

                                          1997                    1996
                                  --------------------    -------------------
                                                Non-                    Non-
                                  Current     current     Current     current
- ------------------------------------------------------------------------------
Retirement benefits ...........    $  251                  $  311
Allowance for doubtful
  accounts ....................       369                     342
FRS impairment ................     1,780                   1,780
Insurance and litigation
  reserves ....................     1,479                   1,192
Postretirement benefits .......                $3,038                  $3,025
Supplemental retirement
  benefits ....................                   682                     677
Performance incentives ........       797         663                     204
Alternative minimum
  tax carryforward ............                   968                     683
Amortization ..................                   222                     343
Repositioning charges .........       868       3,498         849       3,988
R&D expenses
  capitalized for tax .........                                           245
Other .........................       185          19         366         113
                                   ------      ------      ------      ------
Total deferred tax assets .....    $5,729      $9,090      $4,840      $9,278
                                   ======      ======      ======      ======
Depreciation ..................                $2,732                  $2,698
Sale of European pulp
  and paper business ..........                   916
Other .........................                   104                     524
                                               ------                  ------
Total deferred tax liabilities                 $3,752                  $3,222
                                               ======                  ======

     The following is a reconciliation of income taxes at the Federal
statutory rate with income taxes recorded by the Company for the year ended
December 31:

                                        1997           1996           1995
- ------------------------------------------------------------------------------
Income tax (benefit)
  provision at the Federal
  statutory tax rate ..............    $6,710       $(1,359)         $4,113
State income tax
  provisions, net .................       102            54              35
Non-deductible
  entertainment and business
  meal expense ....................       214           200             177
Non-deductible divestiture
  charges .........................                                     503
Foreign taxes on earnings
  at rates different than the
  Federal statutory rate ..........       833         1,280              30
Miscellaneous items, net ..........        34           291              29
                                       ------       -------          ------
Taxes on income ...................    $7,893       $   466          $4,887
                                       ======       =======          ======

     U.S. income taxes have not been provided on the undistributed earnings of
non-U.S. subsidiaries since it is the Company's intention to continue to
reinvest these earnings in those subsidiaries for working capital and
expansion needs. The amount of such undistributed earnings at December 31,
1997 was approximately $80,000. Any income tax liability which might result
from ultimate remittance of these earnings is expected to be substantially
offset by foreign tax credits.

     The benefits of net operating loss carryforwards approximating $600
expiring from 1998 to 2001 have been recorded.

Note 7 -- Employee Benefits

     Pension plans: The Company maintains various noncontributory retirement
plans covering substantially all of its employees in the U.S. and certain
other countries. The benefits for the plans are based on a number of factors,
the most significant of which are years of service and levels of compensation
either during employment or near retirement. The plans of the Company's
subsidiaries in the Netherlands  and in the United Kingdom are subject to the
provision of SFAS No. 87, "Employers' Accounting for Pensions" ("SFAS No.
87"). The plans of the remaining non-U.S. subsidiaries are, for the most part,
either fully insured or integrated with the local governments' plans and are
not subject to the provisions of SFAS No. 87.

     The pension costs for all plans include the following
components:


                                       1997           1996           1995
- ------------------------------------------------------------------------------
Service cost--benefits earned
  during the period ...............   $1,425         $1,305         $1,149
Interest cost on projected
benefit obligation  ...............    3,376          3,347          3,314
Net investment (income)
  loss on plan assets:
    Actual ........................   (5,148)        (5,755)        (7,837)
    Deferral of difference
      between actual and
      expected income .............    1,024          1,897          4,373
Other amortization, net ...........     (454)          (373)          (320)
                                      ------         ------         ------
Net pension costs of plans
  subject to SFAS No. 87 ..........      223            421            679
Pension costs of plans not
  subject to SFAS No. 87 ..........      179            274             98
                                      ------         ------         ------
Total pension costs ...............   $  402         $  695         $  777
                                      ======         ======         ======

     The following table summarizes the funded status of the Company's defined
benefit pension plans, the largest of which



                                  Exhibit 13
                                   Page 26
<PAGE>
is in the U.S., and the related amounts recognized in the Company's
consolidated balance sheets as of December 31:

                                    1997                         1996
                          -------------------------   -------------------------
                             Assets     Accumulated       Assets     Accumulated
                             exceed       benefits        exceed       benefits
                          accumulated      exceed      accumulated      exceed
                            benefits     assets(a)       benefits      assets(a)
- --------------------------------------------------------------------------------
Actuarial present value of:
  Vested benefit
    obligation ............  $41,831       $ 2,485        $40,720       $ 2,583
                             -------       -------        -------       -------
  Accumulated benefit
    obligation ............   41,998         2,637         40,895         2,630
                             -------       -------        -------       -------
Projected benefit
  obligation (PBO) ........   46,418         2,763         45,772         2,693
Plan assets at
  market value ............   53,041                       51,336
                             -------       -------        -------       -------
Plan assets greater
  (less) than PBO .........    6,623        (2,763)         5,564        (2,693)
                             -------       -------        -------       -------
Unrecognized
  cumulative net
  (gain) loss .............   (4,298)          791         (3,699)          756
                             -------       -------        -------       -------
Unrecognized prior
  service costs ...........    1,274                        1,318
                             -------       -------        -------       -------
Unrecognized transition
  obligation ..............   (2,621)           (5)        (3,275)           (6)
                             -------       -------        -------       -------
Prepaid (accrued)
  pension costs ...........  $   978       $(1,977)       $   (92)      $(1,943)
                             =======       =======        =======       =======

(a) Substantially all of this relates to nonqualified, unfunded supplemental
    pension plans.

     The U.S. funded plan is the largest plan. The significant assumptions for
the U.S. plan were as follows:

                                        1997           1996           1995
- ------------------------------------------------------------------------------
Discount rate for projected
  benefit obligation ...............    7.25%         7.375%         7.375%
Assumed long-term rates of
  compensation increases ...........     5.5%           5.5%           5.5%
Long-term rate of return
  on plan assets ...................    9.25%          9.25%          9.25%

     All other pension plans used assumptions in determining the actuarial
present value of the projected benefit obligations that are consistent with
(but not identical to) those of the U.S. plan.

     Profit sharing plan:  The parent Company also maintains a qualified
profit sharing plan covering all employees other than those who are
compensated on a commission basis. Contributions were $295 and $405 for 1997
and 1996, respectively. No contributions were made in 1995.

     Other postretirement and postemployment benefits: The Company has
postretirement benefit plans that provide medical and life insurance benefits
for certain retired employees of the parent Company. These benefits vary based
on age, years of service, and retirement date. Coverage of health benefits
under the plan may require the retiree to make payments where the insured
equivalent costs exceed the Company's fixed contribution. The cost of the life
insurance benefit plan, which provides a flat $2,000 per retiree, is
noncontributory. Both the medical and life insurance plans are currently
unfunded.

     The components of periodic postretirement benefit costs are as follows:

                                         1997           1996           1995
- ------------------------------------------------------------------------------
Service cost--benefits
  attributed to service
  during the period .................    $ 72           $ 77           $ 65
Interest cost on accumulated
  benefit obligation
  and amortization ..................     576            571            594
                                         ----           ----           ----
Postretirement benefit costs ........    $648           $648           $659
                                         ====           ====           ====

     The status of the plan at December 31, 1997 and 1996 is as follows:


                                                        1997           1996
- ------------------------------------------------------------------------------
Retirees ........................................     $6,903         $6,672
Fully eligible active participants ..............         44             45
Other participants ..............................      1,266          1,379
                                                      ------         ------
Total accumulated postretirement
  benefit obligation ............................      8,213          8,096
Unrecognized actuarial gain .....................        721            802
                                                      ------         ------
Net unfunded postretirement
  benefit liability .............................     $8,934         $8,898
                                                      ======         ======

     The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25% and 7.375% in 1997 and 1996, respectively.

     In valuing costs and liabilities, different health care cost trend rates
were used for retirees under and over age 65. The average assumed rate for
medical benefits for all retirees was 8.0% in 1997, gradually decreasing to
5.5% over 10 years. A 1% increase in the health care cost trend rate would
increase aggregate service cost for 1997 by $38 and the accumulated
postretirement benefit obligation as of December 31, 1997 by $557.

     The parent Company maintains a plan under which the Company will provide,
in certain cases, supplemental retirement benefits to officers of the parent
Company. Benefits payable under the plan are based on a combination of years
of service and existing postretirement benefits. Included in total pension
costs are charges of $291, $262, and $276 in 1997, 1996, and 1995,
respectively, representing the annual accrued benefits under this plan.


                                  Exhibit 13
                                   Page 27
<PAGE>

Note 8 -- Long-term Debt
     Long-term debt consisted of the following at December 31:


                                                      1997           1996
- ------------------------------------------------------------------------------
6.98% Senior unsecured notes due 2007 ...........    $20,000
Industrial development authority
  monthly floating rate (4.0% at
  December 31, 1997) demand
  bonds maturing 2014  ..........................      5,000         $5,000
6.64% Notes payable due July 8, 1997 ............                     3,333
Notes payable due 1997 ..........................                       728
Capital leases ..................................                        54
Other debt obligations ..........................        203            356
                                                     -------         ------
                                                      25,203          9,471
Less current portion ............................                     4,289
                                                     -------         ------
                                                     $25,203         $5,182
                                                     =======         ======

     The long-term financing agreements require the maintenance of certain
financial covenants with which the Company is in compliance.

     During the next five years, payments on long-term debt are due as
follows: $0 in 1998, 1999, and 2000; $2,857 in 2001 and 2002.

     At December 31, 1996, the Company had outstanding short-term borrowings
with banks under non-confirmed lines of credit in the aggregate of $13,115.
The weighted average interest rate on such borrowings was 5.7% during 1996.
There were no outstanding short-term borrowings at December 31, 1997.

     The parent Company has available a $10,000 unsecured line of credit that
is renewed annually. Any borrowings under this line of credit will be at the
bank's most competitive rate of interest in effect at the time. There were no
outstanding borrowings under this line of credit at December 31, 1997 or 1996.

     At December 31, 1997 and 1996, the values at which the financial
instruments are recorded are not materially different from their fair market
value.

Note 9 -- Shareholders' Equity

     Treasury stock is held for use by the various Company plans which require
the issuance of the Company's common stock.

     The Company is authorized to issue 10,000,000 shares of preferred stock,
$1.00 par value, subject to approval by the Board of Directors. The Board of
Directors may designate one or more series of preferred stock and the number
of shares, rights, preferences, and limitations of each series. No preferred
stock has been issued.

     Under provisions of a stock purchase plan which permits employees to
purchase shares of stock at 85% of the market value, 26,490 shares, 31,193
shares, and 26,933 shares were issued from treasury in 1997, 1996, and 1995,
respectively. The number of shares that may be purchased by an employee in any
year is limited by factors dependent upon the market value of the stock and
the employee's base salary. At December 31, 1997, 132,564 shares are available
for purchase.

     The Company has a long-term incentive plan for key employees which
provides for the granting of options to purchase stock at prices not less than
market value on the date of the grant. Most options are exercisable one year
after the date of the grant for a period of time determined by the Company not
to exceed ten years from the date of grant. The Company has adopted the
disclosure-only provisions of SFAS No. 123, "Accounting for Stock-based
Compensation." Accordingly, no compensation expense has been recognized for
the stock option plans. Had compensation cost been determined based on the
fair value at grant date for awards in 1997, 1996, and 1995 consistent with
the provisions of SFAS No. 123, the Company's net earnings and earnings per
share would have been reduced to the pro forma amounts indicated below:


                                         1997           1996           1995
- ------------------------------------------------------------------------------
Net income (loss)--
  as reported .....................   $12,611       $(7,599)         $6,688
Net income (loss)--
  pro forma .......................    12,567        (8,139)          6,058
Net income (loss) per share--
  as reported .....................      1.45          (.88)            .76
Net income (loss) per share--
  pro forma .......................      1.45          (.95)            .69

     The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions:

                                         1997           1996           1995
- ------------------------------------------------------------------------------
Dividend yield ....................      3.9%           3.9%           3.6%
Expected volatility ...............     24.5%          22.5%          22.5%
Risk-free interest rate ...........     5.65%          6.35%          5.53%
Expected life (years) .............        8              8              8

     The table below summarizes transactions in the plan during 1997, 1996,
and 1995.


                                      1997                  1996         1995
                            ------------------------     -----------------------
                                           Weighted
                                            Average
                              Number       Exercise        Number        Number
                            of Shares        Price       of Shares     of Shares
- --------------------------------------------------------------------------------
Options outstanding at
  January 1, ............  1,008,129         $16.83       894,854       633,087
Options granted .........     62,530         $18.24       290,070       459,056
Options exercised .......    (32,768)        $14.71       (48,678)      (44,842)
Options expired .........   (115,892)        $15.82      (128,117)     (152,447)
Options outstanding at
  December 31, ..........    921,999         $17.03     1,008,129       894,854
                            ========         ======     =========       =======
Options exercisable at
  December 31, ..........    712,154         $17.30       689,934       486,548
                            ========         ======     =========       =======


                                  Exhibit 13
                                   Page 28
<PAGE>

     The following table summarizes information about stock options
outstanding at December 31, 1997:

             Options Outstanding                       Options Exercisable
- --------------------------------------------------   -------------------------
                               Weighted
                                Average   Weighted                  Weighted
                   Number        Con-      Average     Number        Average
Range of         Outstanding   tractual   Exercise   Exercisable    Exercise
Exercise Prices  at 12/31/97     Life       Price    at 12/31/97     Prices
- --------------------------------------------------   -------------------------
$12.10--$14.52     215,380         5       $13.18      182,505       $13.13
 14.53-- 16.94     157,083         9        15.04       32,178        15.15
 16.95-- 19.36     373,654         6        18.20      345,875        18.19
 19.37-- 21.78      75,882         4        20.79       75,882        20.79
 21.79-- 24.20     100,000         5        22.69       75,714        22.75
                   -------        --       ------      -------       ------
                   921,999         6       $17.03      712,154       $17.30
                   =======        ==       ======      =======       ======

     Options were exercised for cash, resulting in the issuance of 32,768
shares in 1997 and 48,678 shares in 1996. Options to purchase 155,847 shares
were available at December 31, 1997 for future grants.

     The plan also provides for the issuance of performance incentive units,
the value of which is determined based on operating results over a four-year
period. The effect on operations of the change in the estimated value of
incentive units during the year was $1,350, $600, and $0 in 1997, 1996, and
1995, respectively.

     On February 7, 1990, the Company declared a dividend distribution to
shareholders of record on February 20, 1990 which, after giving effect for the
three-for-two stock split effective July 30, 1990, was in the form of two
stock purchase rights (the "Rights") for each three shares of common stock
outstanding. The Rights become exercisable if a person or group acquires or
announces a tender offer which would result in such person's acquisition of
20% or more of the Company's common stock. The Rights also become exercisable
if the Board of Directors declares a person to be an "adverse person" and that
person has obtained not less than 10% of the outstanding shares of the
Company's common stock.

     Each Right, when exercisable, entitles the registered holder to purchase
one one-hundredth of a share of a newly authorized Series A preferred stock at
an exercise price of seventy-two dollars per share subject to certain anti-
dilution adjustments. In addition, if a person or group acquires 20% or more
of the outstanding shares of the Company's common stock, without first
obtaining Board of Directors' approval, as required by the terms of the Rights
Agreement, or a person is declared an adverse person, each Right will then
entitle its holder (other than such person or members of any such group) to
purchase, at the Right's then current exercise price, a number of shares of
the Company's common stock having a total market value of twice the Right's
exercise price.

     In the event that the Company merges with or transfers 50% or more of its
assets or earnings to any entity after the Rights become exercisable, holders
of Rights may purchase, at the Right's then current exercise price, common
stock of the acquiring entity having a value equal to twice the Right's
exercise price.

     In addition, at any time after a person acquires 20% of the outstanding
shares of common stock and prior to the acquisition by such person of 50% or
more of the outstanding shares of common stock, the Company may exchange the
Rights (other than the Rights which have become null and void), in whole or in
part, at an exchange ratio of one share of common stock or equivalent share of
preferred stock, per Right.

     The Board of Directors can redeem the Rights for $.01 per Right at any
time prior to the acquisition by a person or group of beneficial ownership of
20% or more of the Company's common stock or a person being declared an
adverse person. Until a Right is exercised, the holder thereof will have no
rights as a shareholder of the Company, including without limitation, the
right to vote or to receive dividends. Unless earlier redeemed or exchanged,
the Rights will expire on February 20, 2000.

     Restricted stock bonus: In 1995, the Company granted an initial stock
bonus of 50,000 shares of the Company's common stock to its chief executive
officer ("CEO") of which 5,000 shares were paid to him immediately, and the
balance of the shares were registered in his name, 15,000 of which were
delivered to him on both October 2, 1996 and October 2, 1997. The balance is
being held by the Company for delivery to him on October 2, 1998, if he is
employed by the Company on that date.

     The remaining shares are subject to forfeiture provisions, have been
recorded as unearned compensation, and are presented as a separate component
of shareholders' equity. The unearned compensation is being charged to
selling, administrative, and general expenses ("SG&A") over the three-year
vesting period and was $263 in 1997 and 1996 and $153 in 1995.

     In 1997, the Company granted an additional stock bonus of 35,000 shares
of the Company's common stock to its CEO. The shares were registered in his
name and will be delivered over a two-year period based on the attainment of
certain profit before tax financial performance criteria. In 1997, 17,500
shares were earned and $331 was charged to SG&A. The remaining shares have
been recorded as unearned compensation and will be charged to SG&A when
earned.

     Additionally, the CEO earned an additional bonus of 50,000 shares of the
Company's common stock during 1997 based on the increase in the Company's EPS.
Approximately $900 was charged to SG&A during 1997 and the shares will be
delivered to the CEO in early 1998.


                                  Exhibit 13
                                   Page 29
<PAGE>

Note 10 -- Business Segments

     The Company operates primarily in one business segment -- the manufacture
and sale of industrial chemical specialty products. The Company has both U.S.
and non-U.S. operations which are summarized for 1997, 1996, and 1995 as
follows:

                                          1997           1996           1995
- ------------------------------------------------------------------------------
Net sales
  United States ....................   $110,942       $104,135       $102,651
  Europe ...........................     94,898        101,676         99,222
  Asia/Pacific .....................     22,416         24,188         18,715
  South America ....................     13,278         10,252          6,450
                                       --------       --------       --------
  Consolidated .....................   $241,534       $240,251       $227,038
                                       ========       ========       ========
Income (loss) before taxes
  United States ....................   $  7,667       $  5,558       $  3,357
  Europe ...........................     18,534         17,336         13,344
  Asia/Pacific .....................      2,919          2,575          2,214
  South America ....................         35         (1,113)        (1,188)
                                       --------       --------       --------
  Operating profit .................     29,155         24,356         17,727
  Repositioning charges ............                   (19,230)
  Nonoperating expenses ............    (10,041)        (9,123)        (5,630)
  Asset impairment charge
    on equity investment ...........                    (3,445)
  Gain on sale of
    European pulp and
    paper business .................      2,621
  Litigation charge ................     (2,000)
  Equity in net income
    (loss) of associated
    companies ......................       1,161           480            (78)
  Minority interest in net
    income of subsidiaries .........       (392)          (171)          (444)
                                       --------       --------       --------
  Consolidated .....................   $ 20,504      $  (7,133)      $ 11,575
                                       ========       ========       ========
Identifiable assets
  United States ....................   $ 42,845       $ 39,697       $ 51,420
  Europe ...........................     52,607         57,836         63,073
  Asia/Pacific .....................     11,572         10,783          8,578
  South America ....................      4,509          4,116          3,694
  Investments in associated
    companies ......................      4,924          3,941         10,058
  Nonoperating assets ..............     54,183         49,235         48,585
                                       --------       --------       --------
  Consolidated .....................   $170,640       $165,608       $185,408
                                       ========       ========       ========

     Transfers between geographic areas are not material. Operating profit
comprises revenue less related costs and expenses. Nonoperating expenses
primarily consist of general corporate expenses identified as not being a cost
of operations, interest expense, interest income, and license fees from
nonconsolidated associates. Nonoperating assets, consisting primarily of cash
equivalents and short-term investments, have not been included with
identifiable assets. No single customer accounted for 10% of net sales in
1997, 1996, or 1995. A substantial portion of consolidated sales on a global
basis are made to the steel industry (see Classification of Products by
Markets Served), and as a result, accounts receivable generally reflect a
similar distribution of receivables from customers in this market.

Note 11 -- Business Acquisitions and Divestitures

     In 1997 and 1995, the Company completed the acquisitions or divestitures
set forth below. Each acquisition was accounted for as a purchase, and,
accordingly, the purchase price has been allocated where appropriate between
the fair value of identifiable net assets acquired and the excess of cost over
net assets of acquired companies. The consolidated financial statements
include the operating results of each business acquired from the date of
acquisition. Pro forma results of operations have not been presented for any
of the acquisitions or divestitures because the effects of these transactions
were not material.

     On August 7, 1997, the Company entered into an agreement with Asianol
Lubricants Ltd. for the creation of a joint venture in India. The Company owns
55% of the joint venture and made a cash investment of $153 during 1997.

     On July 1, 1997, the Company completed the sale of its European pulp and
paper business for approximately $3,500 in cash.

     Effective May 31, 1995, the Company acquired 90% of the common stock of
Celumi S.A., a metalworking chemical specialty business in Brazil, for
approximately $7,700 in cash and notes. The excess of cost over the estimated
fair value of net assets acquired amounted to approximately $6,500 which has
been accounted for as goodwill and is being amortized over 20 years.

     On March 29, 1995, the Company entered into an agreement with Wuxi Oil
Refinery for the creation of a joint venture in the People's Republic of
China. The Company made cash contributions to the venture of approximately
$600 and $500 in 1996 and 1995, respectively.

Note 12 -- Commitments and Contingencies

     In the fourth quarter of 1996, Petrolite Corporation ("Petrolite"), filed
a demand of arbitration and a statement in support thereof with the American
Arbitration Association in St. Louis, Missouri. Petrolite asserts claims for
negligent misrepresentation and breach of contract arising out of a Technology
Purchase Agreement (the "Agreement") between Petrolite and the Company pursuant
to which the Company sold various assets, including certain patent rights, to
Petrolite for a purchase price of approximately $8,500 plus an obligation to
pay royalties. In its actions against the Company, Petrolite seeks damages in
an unspecified amount, rescission of the Agreement, costs and other relief.
The Company believes that it has complete and meritorious defenses to the
Petrolite actions and intends to vigorously defend the actions and deny
liability and to pursue a claim against Petrolite for royalties.
Notwithstanding the foregoing, upon the advice of counsel and on information
developed to date and settlement discussions which have been held,
the Company has established a reserve of $2,000 against its


                                  Exhibit 13
                                   Page 30
<PAGE>
potential liability in these actions which it believes to be adequate.
However, the Company's potential liability could be in excess of the amount of
the reserve.

     A wholly owned non-operating subsidiary of the Company is a co-defendant
in claims filed by multiple claimants alleging injury due to exposure to
asbestos. Although there can be no assurance regarding the outcome of existing
claims proceedings, the subsidiary believes that it has made adequate accruals
for all potential uninsured liabilities related to claims of which it is
aware. Effective October 31, 1997, the subsidiary's insurance carriers have
agreed to be responsible for all damages and costs (including attorneys' fees)
arising out of all existing and future asbestos claims. At December 31, 1997,
the subsidiary has accrued approximately $50 to provide for anticipated
damages and costs incurred prior to October 31, 1997. In addition, in 1995 the
subsidiary received a cash payment of $2,500 from one of its insurance
carriers in settlement over certain disputed coverage.

     The Company has accrued for certain environmental investigatory and
noncapital remediation costs consistent with the policy set forth in Note 1.
In 1994, the Company identified certain soil and groundwater contamination at
AC Products, Inc. ("ACP"), a wholly owned subsidiary. In coordination with the
Santa Ana California Regional Water Quality Board, ACP is remediating the
contamination. The Company believes that the potential uninsured liability
associated with the completion of the remediation effort ranges from $1,100 to
$3,200, for which the Company has accrued approximately $1,800.

     Additionally, although there can be no assurance regarding the outcome of
other environmental matters, the Company believes that it has made adequate
accruals for costs associated with other environmental problems of which it is
aware. Approximately $475 and $400 was accrued at December 31, 1997 and 1996,
respectively, to provide for such anticipated future environmental assessments
and remediation costs.

     The Company is party to other litigation which management currently
believes will not have a material adverse effect on the Company's results of
operations or financial condition.


                      REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
of Quaker Chemical Corporation

     In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, cash flows and shareholders'
equity present fairly, in all material respects, the financial position of
Quaker Chemical Corporation and its subsidiaries at December 31, 1997 and
1996, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company'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.


PRICE WATERHOUSE LLP

Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 10, 1998


                                  Exhibit 13
                                   Page 31
<PAGE>

<TABLE>
<CAPTION>
                                                   ELEVEN-YEAR FINANCIAL SUMMARY
                              (Dollars in thousands except per share data and number of employees)

                        1997(1)   1996(2)     1995    1994(3)   1993(4)     1992      1991      1990      1989      1988      1987
- ------------------------------------------------------------------------------------------------------------------------------------
                       <S>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>      <C>
Summary of Operations
Net sales              $241,534  $240,251  $227,038  $194,676  $195,004  $212,491  $191,051  $201,474  $181,660  $166,662  $147,455
Income (loss) before
  taxes and cumulative
  effect of change in
  accounting principle   20,504    (7,133)   11,575    15,318    (1,524)   19,045    16,888    22,580    19,647    18,939    17,511
Cumulative effect of
  change in accounting
  for postretirement
  benefits                                                                           (5,675)
Net income (loss)        12,611    (7,599)    6,688     9,402    (1,758)   12,098     5,115    14,106    12,840    11,731    10,423
Per share(5)
 Income (loss) before
   cumulative effect
   of change in
   accounting principle    1.45      (.88)      .76      1.03      (.19)     1.33      1.20      1.51      1.35      1.21      1.05
 Cumulative effect of
   change in accounting
   for postretirement
   benefits                                                                            (.63)
 Net income (loss)         1.45      (.88)      .76      1.03      (.19)     1.33       .57      1.51      1.35      1.21      1.05
 Dividends                  .71       .69       .68   .63 1/2   .60 1/2       .57       .53       .47       .41       .37       .34

Financial Position
Current assets           98,126    86,552    87,375    83,400    84,387    85,567    82,725    84,833    75,427    69,326    66,633
Current liabilities      47,759    64,034    60,868    42,754    42,642    28,126    36,592    40,342    27,848    26,924    29,447
Working capital          50,367    22,518    26,507    40,646    41,745    57,441    46,133    44,491    47,579    42,402    37,186
Property, plant, and
  equipment, net         40,654    43,960    56,309    51,694    55,541    52,179    48,661    46,315    36,539    32,821    32,622
Total assets            170,640   165,608   185,408   170,172   170,985   166,613   159,121   152,408   131,430   121,125   118,367
Long-term debt           25,203     5,182     9,300    12,207    16,095    18,604     5,219     5,453     5,665     5,000     5,000
Shareholders' equity     75,642    74,254    93,992    93,677    91,383   101,642    98,898    99,113    90,440    82,884    78,079

Other Data
Current ratio             2.1/1     1.4/1     1.4/1     2.0/1     2.0/1     3.0/1     2.3/1     2.1/1     2.7/1     2.6/1     2.3/1
Capital expenditures      5,580     6,923     9,833     9,255     8,960     7,226     8,420    12,663     7,553     5,295     3,705
Net income (loss) as
  a percentage of
  net sales(6)              5.2%    (3.2)%      2.9%      4.8%    (0.9)%      5.7%      5.6%      7.0%      7.1%      7.0%      7.1%
Return on average
  shareholders' equity(6)  16.8%    (9.0)%      7.1%     10.2%    (1.8)%     12.1%     10.9%     14.9%     14.8%     14.6%     14.4%
Shareholders' equity
  per share at end
  of year(5)               8.67      8.61     10.85     10.62      9.89     11.06     10.95     11.11      9.55      8.57      8.08
Common stock per share
  price range(5):
    High                 19 5/8    17 1/4        19    19 1/2    24 5/8    26        22 1/4    19 1/4    15 5/8    16 1/8        18
    Low                  15 1/8    11 3/4        11    14 3/4    14 1/4    18 3/4    15        12        12 1/2    11 3/8         9
Number of shares
  outstanding at end
  of year(5)              8,720     8,620     8,664     8,819     9,242     9,188     9,028     8,921     9,473     9,669     9,644
Number of employees at
  end of year:
   Consolidated
     subsidiaries           871       835       870       743       865       842       840       819       829       832       824
   Associated companies     250       232       235       212       141       130       187       261       154       150       140

<FN>
(1) The results of operations for 1997 include a gain on the sale of the
    European pulp and paper business -- $1,703 after tax, or $.20 per share
    and a litigation charge of $2,000 -- $1,320 after tax or $.16 per share.
    Excluding these items, net income was $12,228, or $1.41 per share.
(2) The results of operations for 1996 include special charges -- $16,912
    after tax, or $1.96 per share. Excluding these charges, net income for
    1996 was $9,313, or $1.08 per share.
(3) The results of operations for 1994 include net repositioning credits of
    $347, or $0.04 per share. Excluding these credits, net income for 1994 was
    $9,055, or $0.99 per share.
(4) The results of operations for 1993 include net repositioning charges of
    $7,854, or $0.85 per share. Excluding these charges, net income for 1993
    was $6,096, or $0.66 per share.
(5) Restated to give retroactive effect to a three-for-two split in 1990.
(6) Calculated for 1991 using $10,790, which is the net income before the
    cumulative effect of change in accounting principle.
</TABLE>


                                  Exhibit 13
                                  Page 32-33
<PAGE>

                      SUPPLEMENTAL FINANCIAL INFORMATION

Classification of Products by Markets Served (unaudited)

     Consolidated net sales comprise chemical specialty and other products
classified by markets served as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)      1997                1996                 1995                1994              1993
- ---------------------------------------------------------------------------------------------------------------------
<S>                  <C>        <C>      <C>        <C>       <C>        <C>      <C>        <C>      <C>       <C>
Steel ............   $116,091    48%     $118,988    50%      $103,765    46%     $ 90,549    47%    $ 89,255     46%
Metalworking .....     82,578     34       84,657    35         85,949    38        68,576    35       57,826     30
Other ............     42,865     18       36,606    15         37,324    16        35,551    18       47,923     24
                     --------   ----     --------   ----      --------   ----     --------   ----    --------    ----
                     $241,534   100%     $240,251   100%      $227,038   100%     $194,676   100%    $195,004    100%
                     ========   ====     ========   ====      ========   ====     ========   ====    ========    ====
</TABLE>

     Information on the Company's markets appears on page 5 of this report.
Quarterly Results (unaudited)

(Dollars in thousands, except per share amounts)

                                    First      Second      Third        Fourth
- ------------------------------------------------------------------------------
1997
  Net sales ...................    $58,543     $60,312    $58,687     $63,992
  Operating income(1) .........      3,872       6,799      5,065       5,412
  Net income(2) ...............      2,567       4,657      3,319       2,068
  Net income per share
    (basic and diluted) .......       $.30        $.54       $.38        $.23

1996
  Net sales ...................    $58,203     $59,786    $61,813     $60,449
  Operating income (loss)(3) ..      3,163       4,132     (8,719)     (2,607)
  Net income (loss)(4) ........      1,676       2,648     (5,881)     (6,042)
  Net income (loss) per share
    (basic and diluted) .......       $.19        $.31      $(.68)      $(.70)

1995
  Net sales ...................    $54,527     $59,035    $57,872     $55,604
  Operating income ............      3,282       3,770      3,408         973
  Net income ..................      1,915       2,471      2,099         203
  Net income per share
    (basic and diluted) .......       $.22        $.28       $.24        $.02

(1) The second quarter includes a gain of $2,621 related to the sale of the
    European pulp and paper business.
(2) The fourth quarter includes a $2,000 litigation charge.
(3) The third and fourth quarters include repositioning charges of $13,100
    and $6,130, respectively.
(4) The fourth quarter includes an asset impairment charge on equity
    investment of $3,445.

Stock Market and Related Security Holder Matters

     The Company's common stock is listed on the New York Stock Exchange
("NYSE"). Prior to August 23, 1996, the common stock was traded on the NASDAQ
National Market. The following table sets forth, for the calendar quarters
during the past two years, the range of high and low sales prices for the
common stock as quoted on the NASDAQ National Market or as reported by the
NYSE, and the quarterly dividends declared as indicated.

                             Range of Quotations           Dividends Declared
                  -------------------------------------    -------------------
                           1997               1996           1997      1996
                  -------------------------------------    -------------------
                    High        Low      High       Low
- ------------------------------------------------------------------------------
First quarter    $17 1/8  $15  1/8    $15       $12 3/4    $.17 1/2   $.17
Second quarter    17 3/8   15  5/8     14 1/2    11 3/4     .17 1/2
Third quarter     18 3/4   15 15/16    15 1/4    11 3/4     .18        .34 1/2
Fourth quarter    19 5/8   17  5/8     17 1/4    14 5/8     .18        .17 1/2


     As of January 15, 1998 there were 1,007 shareholders of record of the
Company's common stock, $1.00 par value, its only outstanding class of equity
securities.

                    -------------------------------------

Copies of the Company's Form 10-K for the year ended December 31, 1997 as
filed with the Securities and Exchange Commission will be provided without
charge on request to Quaker Chemical Corporation, Attention:
Irene M. Kisleiko, Assistant Corporate Secretary, Conshohocken, PA 19428.


                                  Exhibit 13
                                   Page 34
<PAGE>



                                                                    EXHIBIT 21

                   SUBSIDIARIES AND AFFILIATES OF THE REGISTRANT

                                                             Percentage of
                                                           voting securities
                                      Jurisdiction of      owned directly or
     Name                             Incorporation      indirectly by Quaker
     ----                             ---------------    --------------------
  *  Quaker Chemical Europe B.V.      Holland                    100%
  *  Quaker Chemical B.V.             Holland                    100%
  +* Quaker Chemical Holdings UK      United Kingdom             100%
       Limited
  *  Quaker Chemical Limited          United Kingdom             100%
  *  Quaker Chemical S.A.             France                     100%
  ** Quaker Chemical South            Republic of                 50%
       Africa (Pty.) Limited          South Africa
  *  Quaker Chemical, S.A.            Spain                      100%
  *  Quaker Chemical S.A.             Argentina                  100%
  +  Quaker Chemical Participacoes,   Brazil                     100%
       Ltda.
  *  Quaker Chemical Industria e      Brazil                      90%
     Comercio Ltda.
  *  Quaker Chemical India Limited    India                       55%
  ** Kelko Quaker Chemical, S.A.      Venezuela                   50%
  *  Quaker Chemical Limited          Hong Kong                  100%
  *  Wuxi Quaker Chemical Co.,        China                       60%
       Ltd.
  +* Quaker Chemical South East       Singapore                  100%
       Asia Pte. Ltd.
  ** Nippon Quaker Chemical, Ltd.     Japan                       50%
  *  Quaker Chemical (Australasia)    State of New South          51%
       Pty. Limited                   Wales, Australia
  ** TecniQuimia Mexicana             Mexico                      40%
       S.A. de C.V.
  +* SB Decking, Inc. (formerly       Delaware, U.S.A.           100%
       Selby, Battersby & Co.)
  *  Quaker Chemical Corporation      Delaware, U.S.A.           100%
  +  Quaker Chemical Management,      Delaware, U.S.A.           100%
       Inc.
  *  AC Products, Inc.                California, U.S.A.         100%
  ** Fluid Recycling Services         Michigan, U.S.A.            50%
       Company, LLC
__________________
 + A non-operating company.
 * Included in the consolidated financial statements.
** Accounted for in the consolidated financial statements under the
   equity method.


                                                                    EXHIBIT 23

                      Consent of Independent Accountants

     We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 2-57924, No. 33-54158, and No. 33-51655) of Quaker
Chemical Corporation of our report dated February 10, 1998 appearing on page
31 of the 1997 Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K.


PRICE WATERHOUSE LLP

Philadelphia, PA
March 27, 1998

<TABLE> <S> <C>

       
<S>                               <C>
<ARTICLE>                         5
<MULTIPLIER>                      1,000
<PERIOD-TYPE>                     12-MOS
<FISCAL-YEAR-END>                 DEC-31-1997
<PERIOD-END>                      DEC-31-1997
<CASH>                                 18,416
<SECURITIES>                                0
<RECEIVABLES>                          49,710
<ALLOWANCES>                            1,085
<INVENTORY>                            21,681
<CURRENT-ASSETS>                       98,126
<PP&E>                                 97,019
<DEPRECIATION>                         56,365
<TOTAL-ASSETS>                        170,640
<CURRENT-LIABILITIES>                  47,759
<BONDS>                                 5,000
<COMMON>                                9,664
                       0
                                 0
<OTHER-SE>                             65,978
<TOTAL-LIABILITY-AND-EQUITY>          170,640
<SALES>                               241,534
<TOTAL-REVENUES>                      241,534
<CGS>                                 134,943
<TOTAL-COSTS>                         220,386
<OTHER-EXPENSES>                            0
<LOSS-PROVISION>                            0
<INTEREST-EXPENSE>                      1,547
<INCOME-PRETAX>                        19,735
<INCOME-TAX>                            7,893
<INCOME-CONTINUING>                    11,842
<DISCONTINUED>                              0
<EXTRAORDINARY>                             0
<CHANGES>                                   0
<NET-INCOME>                           12,611
<EPS-PRIMARY>                            1.45
<EPS-DILUTED>                            1.45
        

</TABLE>


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