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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
[ ] Transition Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission file number 1-12
Full title of the Plan and the address of the Plan,
if different from that of the issuer named below:
The Quaker Investment Plan
Name of issuer of the securities held pursuant to the Plan and
the address of its principal executive office:
The Quaker Oats Company
P.O. Box 049001
Chicago, Illinois 60604-9001
<PAGE>
Item 1. See Item 4.
Item 2. See Item 4.
Item 3. See Item 4.
Item 4. Financial Statements and Exhibits
(a) Financial Statements
The Quaker Investment Plan is subject to the Employee
Retirement Income Security Act of 1974 (ERISA), and the
report of Washington, Pittman & McKeever LLC,
independent public accountants, as prepared in
accordance with the financial reporting requirements of
ERISA is attached hereto and incorporated into this
report.
(b) Exhibit
Consent of Independent Public Accountants - Washington,
Pittman & McKeever LLC.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the administrators of the Plan have duly
caused this annual report to be signed on their behalf by the
undersigned hereunto duly authorized.
The Quaker Investment Plan
(Name of Plan)
/s/ DENNIS CORRY
(Dennis Corry)
Director - Employee Benefits
/s/ KATHLEEN KEARNEY
(Kathleen Kearney)
Manager - Benefit Plans
/s/ ANNE TUMMINARO
(Anne Tumminaro)
Manager - Employee and Management Services
Date: June 25, 1998
<Page 2>
Exhibit Index
Exhibit Paper (P) or
Number Description Electronic(E)
(a) The Quaker Investment E
Plan Financial Statements
as of December 31, 1997
and 1996
(b) Consent of Independent E
Public Accountants
<Page 3>
Exhibit (a)
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
TOGETHER WITH INDEPENDENT AUDITOR'S REPORT
<Page 4>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
AS OF DECEMBER 31, 1997 AND 1996
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT 6
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS 7-8
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS 9-10
NOTES TO FINANCIAL STATEMENTS 11-17
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES 18-19
SCHEDULE OF REPORTABLE TRANSACTIONS 20
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 21
<Page 5>
INDEPENDENT AUDITOR'S REPORT
To the Plan Committee of
THE QUAKER INVESTMENT PLAN
of The Quaker Oats Company
We have audited the accompanying Statements of Net Assets
Available for Benefits of The Quaker Investment Plan (Plan) as of
December 31, 1997 and 1996, and the related Statements of Changes
in Net Assets Available for Benefits for the year ended December
31, 1997 and the six months ended December 31, 1996. These
financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 1997 and
1996, and the changes in net assets available for benefits for
the year ended December 31, 1997 and the six months ended
December 31, 1996 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
Schedules of Assets Held for Investment Purposes and of
Reportable Transactions are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements. These schedules contain supplementary
information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
WASHINGTON, PITTMAN & McKEEVER LLC
Chicago, Illinois
June 22, 1998
<Page 6>
<TABLE>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31,1997
(dollars in thousands)
<CAPTION>
Quaker Money
Stock Diversified Market Bond Loan
Total Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at market -
The Quaker Oats Company Common Stock
(1,896,494 shares, cost $47,579) $100,039 $100,039 $ -- $ -- $ -- $ --
Marketable Securities (cost $157,041) 182,149 -- 162,584 -- 19,565 --
Short-Term Investments (cost $16,586) 16,675 -- 16,675 -- -- --
Collective Short-Term Investment Fund 44,080 404 4,364 39,171 141 --
342,943 100,443 183,623 39,171 19,706 --
Participant loans 6,068 -- -- -- -- 6,068
Total investments 349,011 100,443 183,623 39,171 19,706 6,068
Employee contributions receivable 559 163 313 56 27 --
Accrued dividends and interest receivable 933 544 198 190 1 --
Receivable for investments sold 3,075 -- 3,075 -- -- --
Interfund transfers (payable) receivable -- (5,274) 1,905 801 2,568 --
Total assets 353,578 95,876 189,114 40,218 22,302 6,068
LIABILITY
Payable for investments purchased 2,113 -- 2,113 -- -- --
NET ASSETS AVAILABLE FOR BENEFITS $351,465 $ 95,876 $187,001 $ 40,218 $ 22,302 $ 6,068
See accompanying notes to financial statements.
<Page 7>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
(dollars in thousands)
<CAPTION>
Quaker Money
Stock Diversified Market Bond Loan
Total Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at market -
The Quaker Oats Company Common Stock
(2,293,417 shares, cost $53,221) $ 87,433 $ 87,433 $ -- $ -- $ -- $ --
Marketable Securities (cost $122,190) 148,254 -- 131,124 -- 17,130 --
Short-Term Investments (cost $5,567) 5,589 -- 5,589 -- -- --
Collective Short-Term Investment Fund 44,803 514 3,369 40,672 248 --
286,079 87,947 140,082 40,672 17,378 --
Participant loans 5,886 -- -- -- -- 5,886
Total investments 291,965 87,947 140,082 40,672 17,378 5,886
Employee contributions receivable 230 42 154 27 7 --
Accrued dividends and interest receivable 1,056 655 215 185 1 --
Interfund transfers receivable (payable) -- 1,013 (1,236) 322 (99) --
Total assets 293,251 89,657 139,215 41,206 17,287 5,886
LIABILITY
Payable for investments purchased 114 114 -- -- -- --
NET ASSETS AVAILABLE FOR BENEFITS $293,137 $ 89,543 $139,215 $ 41,206 $ 17,287 $ 5,886
See accompanying notes to financial statements.
<Page 8>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
(dollars in thousands)
<CAPTION>
Quaker Money
Stock Diversified Market Bond Loan
ADDITIONS Total Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 4,672 $ 2,381 $ 2,291 $ -- $ -- $ --
Interest 3,794 217 1,216 2,322 39 --
Total investment income 8,466 2,598 3,507 2,322 39 --
Realized gain on investments - (Note 6) 53,077 12,719 39,697 -- 661 --
Unrealized gain (loss) on investments -
(Note 7) 17,359 18,248 (2,516) -- 1,627 --
Employee contributions 10,813 3,042 5,927 1,150 694 --
Contributions from other plans 3,898 926 2,193 566 213 --
Total additions 93,613 37,533 48,808 4,038 3,234 --
DEDUCTIONS
Distributions to participants 35,285 9,019 13,766 10,068 2,432 --
Increase (decrease) in net assets 58,328 28,514 35,042 (6,030) 802 --
Net assets available for benefits,
beginning of period 293,137 89,543 139,215 41,206 17,287 5,886
Interfund transfers, net -- (22,181) 12,744 5,042 4,213 182
NET ASSETS AVAILABLE FOR BENEFITS,
END OF PERIOD $351,465 $ 95,876 $187,001 $ 40,218 $ 22,302 $ 6,068
See accompanying notes to financial statements.
<Page 9>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(dollars in thousands)
<CAPTION>
Quaker Money
Stock Diversified Market Bond Loan
ADDITIONS Total Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 2,468 $ 1,337 $ 1,131 $ -- $ -- $ --
Interest 1,641 119 397 1,106 19 --
Total investment income 4,109 1,456 1,528 1,106 19 --
Realized gain on investments - (Note 6) 12,006 3,023 8,360 -- 623 --
Unrealized gain on investments -
(Note 7) 15,297 7,004 7,813 -- 480 --
Employee contributions 5,009 1,606 2,540 531 332 --
Contributions from other plans 1,914 391 1,159 304 60 --
Total additions 38,335 13,480 21,400 1,941 1,514 --
DEDUCTIONS
Distributions to participants 21,917 4,705 9,968 5,808 1,436 --
Increase (decrease) in net assets 16,418 8,775 11,432 (3,867) 78 --
Net assets available for benefits,
beginning of period 276,719 79,666 131,961 41,019 17,831 6,242
Interfund transfers, net -- 1,102 (4,178) 4,054 (622) (356)
NET ASSETS AVAILABLE FOR BENEFITS,
END OF PERIOD $293,137 $ 89,543 $139,215 $ 41,206 $ 17,287 $ 5,886
See accompanying notes to financial statements.
</TABLE>
<Page 10>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
NOTE 1 - THE QUAKER INVESTMENT PLAN
The following brief description of The Quaker Investment Plan
(Plan) provides only general information. The Plan document
should be referred to for the complete Plan provisions.
General
The Plan covers salaried domestic employees of The Quaker Oats
Company (Company) and certain domestic subsidiaries. The Plan is
solely funded by employee contributions. Under the Plan, eligible
salaried employees may accumulate funds on a pretax basis for
long-term retirement savings. The Plan is intended to qualify as
a cash or deferred arrangement under Section 401(k) of the
Internal Revenue Code and is subject to the provisions of the
Employee Retirement Income Security Act of 1974.
This report discusses the year ended December 31, 1997, and the
six-month transition period ended December 31, 1996. The Plan
year end changed from a June 30 fiscal year end to a fiscal year
aligned with the calendar year beginning January 1, 1997.
Overall responsibility for administering the Plan rests with the
Plan's administrative committee which is appointed by the Board
of Directors of the Company. The Plan's trustee, The Northern
Trust Company (Northern Trust), is responsible for the management
and control of the Plan's assets and has certain discretionary
authority and control over such assets. Hewitt Associates is the
Plan's record keeper during the years reported herein. The
Company pays all expenses incurred by the Plan.
Eligibility
Under the current terms of the Plan, salaried employees of the
Company are eligible to participate in the Plan on the date of
employment.
Changes to the Quaker Stock Fund
Effective September 1, 1997, the Quaker Stock Fund was converted
to an Employee Stock Ownership Plan within the meaning of Section
4975(e)(7) of the Internal Revenue Code. The Quaker Stock Fund
will continue to be a part of the Plan; however, Quaker Stock
Fund participants may be paid quarterly cash dividends from the
Plan and, if paid, the Company would be eligible for a
corresponding tax deduction. As of December 31, 1997, no cash
dividends had been paid.
<Page 11>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
NOTE 1 - THE QUAKER INVESTMENT PLAN (CONTINUED)
Contributions
Participants in the Plan are allowed to defer receipt of, and
have placed in the Plan, up to 7 percent of their base salary,
subject to the Internal Revenue Service (I.R.S.) dollar amounts
allowed. Contributions are not subject to federal income tax
until distributed to the participants or their beneficiaries.
Plan participants may invest in one or more of the Plan's four
funds: the Quaker Stock Fund, the Diversified Fund, the Bond
Fund, and the Money Market Fund. The Plan allows participants to
transfer their accounts, in multiples of 25 percent, among funds
once a month. Participants may also change the percentage of
their earnings contributed to the Plan once a month. The Plan
allows employees the option to deposit excess funds from The
Quaker Flex Plan to the Plan. The Plan also allows a participant
to contribute to the Plan a lump-sum distribution received from
other qualified plans when the contribution qualifies as a tax-
free rollover.
The Plan was amended September 1, 1997, to allow participants to
contribute up to 15 percent of their base salary, subject to the
I.R.S. dollar amounts allowed. Beginning January 1, 1998,
participants with a base salary of less than $70,000 are able to
contribute up to 15 percent. Those participants with a base
salary of $70,000 or more are still limited to 7 percent.
Distributions
Participants may elect in writing to receive all or a portion
of their accounts if they are at least age 59 1/2 years or if
they are totally and permanently disabled as determined by the
Company with the advice of a medical doctor. The participant's
account will then be valued as of the latest available valuation
date before distribution. If only a portion of the account is
distributed, the remaining balance will continue to be adjusted
for contributions, net earnings, gains and losses as of each
valuation date.
Participants may receive a distribution of a portion of their
accounts in the event of a hardship. Hardship withdrawals occur
when funds are required for purchasing or making capital
expenditures for a primary residence, financing the post-
secondary education of the participant or the participant's
family or alleviating existing financial hardship.
If a participant's employment with the Company is terminated, the
Plan will distribute the participant's account balance to the
participant or the participant's beneficiary. A participant may
elect to defer the lump-sum distribution or the start of
installment payments until age 70 1/2. If a participant
terminates employment, attains age 65 in a Plan year, and no
distribution or deferral election is received by the 15th day
after the end of the Plan year, an automatic lump-sum
distribution will be made. A participant may elect in writing to
receive the distribution in one of the following ways: (a) in a
lump sum; (b) in a partial distribution; or (c) in approximately
equal annual installments over a chosen period. The period
chosen, however, must be no longer than the participant's life
expectancy when distributions begin as determined by the I.R.S.
regulations.
<Page 12>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
NOTE 1 - THE QUAKER INVESTMENT PLAN (CONTINUED)
If the distribution is made through installment payments, the
participant's remaining account balance will continue to be
adjusted for net earnings and gains and losses as of each
valuation date. If a participant's account value is $3,500 or
less, an automatic lump-sum distribution will be made as soon as
practicable after the end of the Plan year in which termination
occurs. This provision did not apply to accounts under $3,500 at
the end of the transition period ending December 31, 1996.
Loans
Plan participants may obtain loans from their account balances
subject to the following terms and restrictions which are
effective for loan applications received after September 15, 1989:
(a) Participants may borrow up to 50 percent of their account
balance including the highest loan balance in the previous
one-year period, but not more than $50,000 or less than $1,000.
(b) The terms of such loans shall not exceed five years
and the rate of interest to be applied will be the
Northern Trust prime rate plus 1 percent.
(c) Repayments on the loan are to be made directly through
payroll deductions for active employees.
(d) Loans made to a participant shall be secured by the
participant's non-forfeitable interest from one or more of the
funds in which a participant's account is invested prior to the
making of such loans.
Participants with an outstanding loan (for at least a year) may
request an additional loan. The additional loan will have a
separate payment schedule from the existing loan. Participants
cannot exceed two outstanding loans.
Plan Termination
The Plan may be terminated at any time by the action of the Board
of Directors or Executive Committee of the Board. In the event
of termination of the Plan, the accounts shall be held for the
benefit of the participants, former participants or their
beneficiaries.
<Page 13>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
NOTE 2 - PLAN CHANGES SUBSEQUENT TO FISCAL YEAR END
Plan Merger
Effective June 1, 1998, the Plan was merged with The Quaker
Employee Stock Ownership Plan to form The Quaker 401(k) Plan for
Salaried Employees (Salaried 401(k)). The Salaried 401(k) has not
yet received a determination letter from the I.R.S.; however, the
Salaried 401(k) administrator believes that the merged plan is
currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code, and
therefore, qualifies as tax exempt.
Management Change
The Plan's administrative committee appointed The Fidelity
Management Trust Company (FMTC) as the new trustee and The
Fidelity Institutional Retirement Services Company as the new
record keeper for the Plan, effective June 1, 1998. The Salaried
401(k) offers four funds similar to those available in the Plan,
along with several new investment options. Participant accounts
were transferred into the corresponding investment funds. The
Bond Fund, previously managed by Barclays Global Investors, is
managed by The Pacific Investment Management Company. The Money
Market Fund and the Quaker Stock Fund, previously managed by
Northern Trust, are managed by FMTC. The Diversified Fund
remains the same. On June 1, 1998, the assets of the Plan were
transferred from Northern Trust to FMTC.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements are prepared on the accrual
basis of accounting. Interest income is recorded as earned and
dividend income is recorded as of the record date.
The preparation of the financial statements in conformity with
generally accepted accounting principles (GAAP) requires the
Plan's management to use estimates and assumptions that affect
the accompanying financial statements and disclosures. Actual
results could differ from these estimates and assumptions.
<Page 14>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment Valuation
Investments are included in the accompanying Statements of Net
Assets Available for Benefits at fair market value. Fair market
value is based on published market prices.
Net realized and unrealized gains and losses for the period are
reflected in the accompanying Statement of Changes in Net Assets
Available for Benefits. The net realized gain or loss on the
investments sold is calculated as the difference between the
proceeds received and the average cost of the investments. The
net realized gain or loss on the distribution of investments is
calculated as the difference between the fair market value on the
date of distribution and the average cost of the investments.
The net unrealized gain or loss is calculated as the difference
between the fair market value of the investments less the cost of
the investments at the end of the Plan year and the fair market
value of the investments less the cost of the investment at the
beginning of the Plan year.
Purchases and sales of securities, including related gains and
losses, are recognized on the transaction trade date. Brokerage
commissions increase the cost or decrease the sale proceeds on
the security transactions.
NOTE 4 - TRUST INVESTMENTS
Participants in the Plan may invest in the Quaker Stock Fund
(common stock of the Company), the Diversified Fund (primarily
common and preferred stock of corporations other than the Company
and/or interest-bearing securities), the Bond Fund (primarily
corporate bonds with an average credit rating of "A" and with
maturities of up to 30 years), or the Money Market Fund
(primarily short-term fixed-income securities). The Trustee is
authorized to keep such portion of any of the investment funds as
may seem advisable, from time to time, in cash or cash
equivalents and/or in short-term fixed-income investments.
The value of each unit in a participant's account as of December
31, 1997 and 1996, for each of the four funds was as follows:
Unit Value
1997 1996
Quaker Stock Fund $ 39.61 $ 28.26
Diversified Fund $ 30.68 $ 23.72
Money Market Fund $ 7.65 $ 7.24
Bond Fund $ 2.84 $ 2.50
<Page 15>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
(dollars in thousands)
NOTE 5 - FEDERAL INCOME TAXES
The Plan obtained its latest determination letter on October 9, 1997, in which
the I.R.S. stated that the Plan, as then designed, was in compliance with the
applicable requirements of the Internal Revenue Code. The Plan has been
amended since receiving the determination letter; however, the Plan
administrator believes the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code.
The Plan administrator believes that the Plan was qualified and that the
related trust was tax exempt as of December 31, 1997 and 1996.
NOTE 6 - REALIZED GAIN ON INVESTMENTS IN SECURITIES
The realized gain on investments in securities was as follows:
Year Ended Six Months Ended
December 31, 1997 December 31, 1996
Aggregate Aggregate
Cost of Cost of
Securities Realized Securities Realized
Sold/Distributed Gain Sold/Distributed Gain
Quaker Stock Fund $ 14,099 $ 12,719 $ 5,577 $ 3,023
Diversified Fund 271,701 39,697 111,775 8,360
Bond Fund 1,161 661 1,241 623
$ 286,961 $ 53,077 $ 118,593 $ 12,006
NOTE 7 - UNREALIZED GAIN ON INVESTMENTS IN SECURITIES
The unrealized gain on investments in securities was as follows:
Year Ended Six Months Ended
December 31, 1997 December 31, 1996
Unrealized gain, beginning of year $ 60,298 $ 45,001
Unrealized gain during the year 17,359 15,297
UNREALIZED GAIN, END OF YEAR $ 77,657 $ 60,298
<Page 16>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
(dollars in thousands)
NOTE 8 - CURRENT VALUE GAIN
Based on the Current Value reporting requirements of the Department of
Labor and the I.R.S. instructions for Form 5500, the net realized gain on
the investments sold is calculated as the difference between the proceeds
received and the fair market value of investments on the first day of the
Plan year or the acquisition date if purchased during the Plan year. The net
realized gain on the distribution of investments is calculated as the
difference between the fair market value of investments on the date of
distribution and the fair market value of investments on the first day of the
Plan year. The net unrealized gain is calculated as the difference between
the fair market value of investments at the end of the Plan year and the fair
market value at the beginning of the Plan year. The net realized gain and
net unrealized gain were as follows:
Year Ended Six Months Ended
December 31, 1997 December 31, 1996
Net realized gain on investments $ 29,253 $ 3,893
Net unrealized gain on investments 41,183 23,410
NET GAIN ON INVESTMENTS $ 70,436 $ 27,303
NOTE 9 - RECONCILIATION OF THE FORM 5500 TO THE FINANCIAL STATEMENTS
The following is a reconciliation of net assets available for benefits per the
Form 5500 to the financial statements:
<TABLE>
<CAPTION>
As of As of
December 31, 1997 December 31, 1996
<S> <C> <C>
Net assets available for benefits per the Form 5500 $348,531 $291,393
Add: Distributions payable to participants 2,934 1,744
NET ASSETS AVAILABLE FOR BENEFITS PER
THE FINANCIAL STATEMENTS $351,465 $293,137
The following is a reconciliation of benefits paid to participants per the
Form 5500 to the financial statements:
<CAPTION>
Year Ended Six Months Ended
December 31, 1997 December 31, 1996
<S> <C> <C>
Distributions to participants per the Form 5500 $ 36,475 $ 15,859
Add: Distributions payable, beginning of year 1,744 7,802
Less: Distributions payable, end of year 2,934 1,744
DISTRIBUTIONS TO PARTICIPANTS PER THE
FINANCIAL STATEMENTS $ 35,285 $ 21,917
</TABLE>
<Page 17>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FORM 5500 ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
(dollars in thousands)
Page 1 of 2
Market
Description Number of Shares Cost Value
Company Stock
The Quaker Oats Company Common Stock * 1,896,494 $ 47,579 $ 100,039
Marketable Securities
Common Stocks -
ADR Akzo Nobel NV Sponsored 36,600 2,607 3,180
ADR Diageo Plc Sponsored ADR 98,050 3,413 3,714
ADR Elf Aquitaine Sponsored 46,240 2,601 2,711
ADR Hoechst A.G. Isin 121,900 4,979 4,274
ADR Peninsular & Oriental Steam
Nav Co. Sponsored 172,114 3,404 3,934
ADR Phillips Electronics N.V. 104,800 4,859 6,340
ADR Rhone Poulenc S.A. Sponsored 98,832 3,037 4,367
American Home Products Corp. 83,800 5,059 6,411
AMR Corp. 10,850 967 1,394
Archer-Daniels Midland Co. 142,000 3,273 3,080
Ashland Inc. 31,700 1,462 1,702
Banc One Corp. 26,750 1,061 1,453
Baxter Intl. Inc. 13,100 646 661
Boeing Co. 82,550 3,788 4,040
Boise Cascade Corp. 37,100 1,304 1,122
Burlington Northern Santa Fe Corp. 46,150 3,522 4,289
Canadian Pac Ltd. New 188,500 5,096 5,137
Case Corp. 65,800 3,621 3,977
Citicorp 39,600 5,260 5,007
Dun & Bradstreet Corp. 139,650 3,498 4,320
DuPont, E.I. DeNemours & Co. 107,050 5,465 6,430
Federated Department Stores Inc. 77,900 2,547 3,355
First Data Corp. 60,800 1,641 1,778
General Motors Corp. 98,850 5,060 6,005
Goodrich B.F. Co. 37,100 1,642 1,537
Hasbro Inc. 105,250 2,669 3,315
Host Marriot Corp. 161,800 2,824 3,175
IMC Global Inc. 55,600 1,946 1,821
International Business Machines Corp. 43,050 2,787 4,504
Loews Corp. 40,250 4,316 4,272
LSI Logic Corp. 42,950 1,314 843
* Identifies a party-in-interest to the Plan.
<Page 18>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FORM 5500 ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
(dollars in thousands)
Page 2 of 2
Market
Description Number of Shares Cost Value
Common Stocks (continued)
Motorola Inc. 70,200 4,379 4,015
Nationsbank Corp. 94,150 5,944 5,725
Northrop Gruman Corp. 46,800 3,921 5,382
Philip Morris Companies Inc. 146,100 6,303 6,611
Raytheon Co. CL A 6,304 285 311
Raytheon Co. CL B 84,400 4,077 4,262
Reynolds Metals Co. 60,600 3,835 3,636
Tenet Healthcare Corp. 88,000 2,001 2,915
U.S.W. Inc. 168,700 3,414 4,871
Union Pacific Res Group Inc. 112,800 2,911 2,735
Unocal Corp. 126,750 4,931 4,919
Wells Fargo & Co. 9,750 2,440 3,310
Preferred Stocks -
ADR News Corp. Ltd. 289,000 5,201 5,744
Corporate Bonds -
Quaker Master Trust - Wells Fargo Bonds 691,602 11,731 19,565
Total Marketable Securities 157,041 182,149
Short-Term Investments
Dow Chemical Co.
Commercial Paper Note, $1,500 due 1/6/98 1,499 1,499
Lucent Technologies, Inc.
Commercial Paper Note, $7,600 due 1/16/98 7,537 7,582
Procter & Gamble Co.
Commercial Paper Note, $7,600 due 1/6/98 7,550 7,594
Total Short-Term Investments 16,586 16,675
Collective Short-Term Investment Fund 44,080 44,080
Participant Loans (9.5%) 6,068 6,068
TOTAL INVESTMENTS $ 271,354 $ 349,011
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<TABLE>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FORM 5500 ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(dollars in thousands, except average price data)
<CAPTION>
Average Purchase Transaction Cost of Current Value on Net
and Sale Price Fees Asset Transaction Date Gain
Description
Quaker Stock Fund -
The Quaker Oats Company Common Stock
<S> <C> <C> <C> <C> <C>
191,781 shares purchased in 26 transactions $ 44.04 $ 7 $ 8,454 $ 8,454 --
532,805 shares sold in 28 transactions $ 45.73 $ 25 $ 12,757 $ 24,340 $ 11,558
</TABLE>
<Page 20>
Exhibit (b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use
of our report dated June 22, 1998 (and references to our Firm)
included in or made a part of this Form 11-K. It should be noted
that we have not audited any financial statements of The Quaker
Investment Plan subsequent to December 31, 1997 or performed any
audit procedures subsequent to the date of our report.
WASHINGTON, PITTMAN & McKEEVER LLC
Chicago, Illinois
June 22, 1998
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