UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[ ] Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
[X] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from January 1, 1998 to May 31, 1998
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
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/PAMELA S. HEWITT
(Pamela S. Hewitt)
Senior Vice President - Human Resources
/s/DENNIS CORRY
(Dennis Corry)
Director - Employee Benefits
/s/JAMES BROWN
(James Brown)
Manager - Benefit Plans
Date: November 20, 1998
<2>
Exhibit Index
Exhibit Paper (P) or
Number Description Electronic (E)
(a) The Quaker Investment E
Plan Financial Statements
as of May 31, 1998 and
December 31, 1997
(b) Consent of Independent E
Public Accountants
<3>
Exhibit (a)
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
TOGETHER WITH INDEPENDENT AUDITOR'S REPORT
<4>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
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 11-18
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES 19
SCHEDULE OF REPORTABLE TRANSACTIONS 20
<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 May 31, 1998 and December
31, 1997, and the related Statements of Changes in Net Assets Available for
Benefits for the five months ended May 31, 1998 and the year ended December 31,
1997. 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
May 31, 1998 and December 31, 1997, and the changes in net assets available for
benefits for the five months ended May 31, 1998 and the year ended December 31,
1997 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.
/s/WASHINGTON, PITTMAN & McKEEVER, LLC
WASHINGTON, PITTMAN & McKEEVER, LLC
Chicago, Illinois
October 30, 1998
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<TABLE>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF MAY 31, 1998
(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 $ -- $ -- $ -- $ -- $ -- $ --
LIABILITY -- -- -- -- -- --
NET ASSETS AVAILABLE FOR BENEFITS $ -- $ -- $ -- $ -- $ -- $ --
See the Statement of Changes in Net Assets Available for Benefits for the five months
ended May 31, 1998 and the accompanying notes to financial statements.
</TABLE>
<7>
<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 Diversfied 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.
</TABLE>
<8>
<TABLE>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE FIVE MONTHS ENDED MAY 31, 1998
(dollars in thousands)
<CAPTION>
Quaker Money
Stock Diversfied Market Bond Loan
ADDITIONS Total Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 1,784 $ 494 $ 1,290 $ -- $ -- $ --
Interest 1,736 92 606 970 68 --
Total investment income 3,520 586 1,896 970 68 --
Realized gain on investments - (Note 6) 33,165 9,222 15,706 -- 8,237 --
Unrealized gain (loss) on investments - (Note 7) 2,411 (331) 10,516 -- (7,774) --
Employee contributions 6,541 1,502 4,004 608 427 --
Contributions from other plans 1,063 184 742 69 68 --
Total additions 46,700 11,163 32,864 1,647 1,026 --
DEDUCTIONS
Distributions to participants 21,876 4,494 10,966 5,277 1,139 --
Dividends distributions to participants 1,550 1,550 -- -- -- --
Total deductions 23,426 6,044 10,966 5,277 1,139 --
Interfund transfers, net -- (4,709) (2,693) 4,149 2,820 433
Net transfers to the Salaried 401(k) Plan - (Note 2) (374,739) (96,286) (206,206) (40,737) (25,009) (6,501)
Decrease in net assets (351,465) (95,876) (187,001) (40,218) (22,302) (6,068)
Net assets available for benefits,
Beginning of period 351,465 95,876 187,001 40,218 22,302 6,068
NET ASSETS AVAILABLE FOR
BENEFITS, END OF PERIOD $ -- $ -- $ -- $ -- $ -- $ --
See accompanying notes to financial statements.
</TABLE>
<9>
<TABLE>
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 --
Interfund transfers, net -- (22,181) 12,744 5,042 4,213 182
Increase (decrease) in net assets 58,328 6,333 47,786 (988) 5,015 182
Net assets available for benefits,
Beginning of period 293,137 89,543 139,215 41,206 17,287 5,886
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.
</TABLE>
<10>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
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 five-month transition period ended May 31, 1998 and
the year ended December 31, 1997. The Board of Directors of the Company
approved the merger of the Plan with The Quaker Employee Stock Ownership Plan
to form The Quaker 401(k) Plan for Salaried Employees (Salaried 401(k)). See
Note 2 for further discussion of the merger.
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, which was The Northern Trust Company (Northern
Trust) through May 31, 1998, and then was The Fidelity Management Trust Company
(FMTC), is responsible for the management and control of the Plan's assets and
has certain discretionary authority and control over such assets. Hewitt
Associates was the Plan's record-keeper through May 31, 1998. The Fidelity
Institutional Retirement Services Company is the new record-keeper for the
Plan, effective June 1, 1998. The Company paid all expenses incurred by the
Plan through May 31, 1998.
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 were paid quarterly cash dividends
from the Plan and, when paid, the Company was eligible for a corresponding
tax deduction.
<11>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
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 15 percent of their base salary, subject to the Internal
Revenue Service (IRS) dollar amounts allowed. 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 limited to 7 percent.
Contributions are not subject to federal income tax until distributed to the
participants or their beneficiaries. Through May 31, 1998, Plan participants
could 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.
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 IRS regulations.
<12>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
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 $5,000 ($3,500 through May 31, 1998) 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.
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) Through May 31, 1998, 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
(through May 31, 1998).
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.
<13>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
NOTE 2 - PLAN CHANGES
Plan Merger
Effective May 31, 1998, at close of business, the Plan merged with The Quaker
Employee Stock Ownership Plan to form the Salaried 401(k). As a result of this
merger, the assets of the Plan were transferred to the Salaried 401(k).
The Salaried 401(k) has not yet received a determination letter from the IRS;
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 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 previously 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.
Management of the Diversified Fund remains the same.
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.
<14>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
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 final value before transfer of each unit in a participant's account as of
May 31, 1998 and December 31, 1997 for each of the four funds was as follows:
Unit Value
1998 1997
Quaker Stock Fund $ 43.41 $ 39.61
Diversified Fund $ 35.35 $ 30.68
Money Market Fund $ 7.83 $ 7.65
Bond Fund $ 2.90 $ 2.84
<15>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
(dollars in thousands)
NOTE 5 - FEDERAL INCOME TAXES
The Plan obtained its latest determination letter on October 9, 1997, in which
the IRS 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 May 31, 1998 and December 31, 1997.
NOTE 6 - REALIZED GAIN ON INVESTMENTS IN SECURITIES
The realized gain on investments in securities was as follows:
Five Months Ended Year Ended
May 31, 1998 December 31, 1997
Aggregate Aggregate
Cost of Cost of
Securities Realized Securities Realized
Sold/Distributed Gain Sold/Distributed Gain
Quaker Stock Fund $ 8,056 $ 9,222 $ 14,099 $ 12,719
Diversified Fund 141,658 15,706 271,701 39,697
Bond Fund 15,196 8,237 1,161 661
$ 164,910 $ 33,165 $ 286,961 $ 53,077
NOTE 7 - UNREALIZED GAIN ON INVESTMENTS IN SECURITIES
The unrealized gain on investments in securities was as follows:
Five Months Ended Year Ended
May 31, 1998 December 31, 1997
Unrealized gain, beginning of year $ 77,657 $ 60,298
Unrealized gain during the year 2,411 17,359
UNREALIZED GAIN, END OF YEAR $ 80,068 $ 77,657
<16>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
(dollars in thousands)
NOTE 8 - CURRENT VALUE GAIN
Based on the Current Value reporting requirements of the Department of Labor
and the IRS 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 for Form 5500 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:
Five Months Ended Year Ended
May 31, 1998 December 31, 1997
Net realized gain on investments $ 8,187 $ 29,253
Net unrealized gain on investments 27,389 41,183
NET GAIN ON INVESTMENTS $ 35,576 $ 70,436
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:
As of As of
May 31, 1998 December 31,1997
Net assets available for benefits
per the Form 5500 $ -- $ 348,531
Add: Distributions payable to participants -- 2,934
NET ASSETS AVAILABLE FOR BENEFITS PER
THE FINANCIAL STATEMENTS $ -- $ 351,465
<17>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF MAY 31, 1998 AND DECEMBER 31, 1997
(dollars in thousands)
NOTE 9 - RECONCILIATION OF THE FORM 5500 TO THE FINANCIAL STATEMENTS (CONTINUED)
The following is a reconciliation of benefits paid to participants per the Form
5500 to the financial statements:
Five Months Ended Year Ended
May 31, 1998 December 31,1997
Distributions to participants per
the Form 5500 $ 24,521 $ 36,475
Add: Distributions payable,
beginning of year 2,934 1,744
Less: Distributions payable,
transferred to Salaried 401(k)
on May 31, 1998 4,029 --
Distributions payable, end of year -- 2,934
DISTRIBUTIONS AND DIVIDENDS TO
PARTICIPANTS PER THE FINANCIAL
STATEMENTS $ 23,426 $ 35,285
<18>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FORM 5500 ITEM 27A - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
AS OF MAY 31, 1998
Investments were transferred to the Salaried 401(k) as of May 31, 1998.
Number of Market
Description Shares Cost Value
TOTAL INVESTMENTS -- $ -- $ --
<19>
<TABLE>
THE QUAKER OATS COMPANY
THE QUAKER INVESTMENT PLAN
FORM 5500 ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE FIVE MONTHS ENDED MAY 31, 1998
(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
<S> <C> <C> <C> <C> <C>
Description
Quaker Stock Fund -
The Quaker Oats Company Common Stock
81,590 shares purchased in 8 transactions $ 52.41 $ 4 $ 4,280 $ 4,280 $ --
298,216 shares sold in 13 transactions $ 54.81 $ 15 $ 7,621 $ 16,360 $ 8,739
Bond Fund -
Quaker Master Trust - Wells Fargo Bond
807,546 units sold in 1 transaction $ 28.88 $ -- $ 15,129 $ 23,324 $ 8,196
</TABLE>
<20>
Exhibit (b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated October 30, 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 May 31, 1998 or
performed any audit procedures subsequent to the date of our report.
/s/WASHINGTON, PITTMAN & McKEEVER, LLC
WASHINGTON, PITTMAN & McKEEVER, LLC
Chicago, Illinois
November 17, 1998
<21>
