As of December 31, 2012, the Company held a 50% investment in and had significant influence over Kelko Quaker Chemical, S.A. (Venezuela), Nippon Quaker Chemical, Ltd. (Japan) and Kelko Quaker Chemical S.A. (Panama) and held a 32% investment in and had significant influence over Primex, Ltd. (Barbados).

In 1986, the market for general liability insurance became highly volatile and there was limited product liability insurance for chemical companies to purchase. In response, the Company joined together with fifteen other chemical companies, each putting forward $0.5 million as capital, to form a captive insurance company, Primex, Ltd. (“Primex”). Primex was incorporated in Barbados and operates under the provisions of the Exempt Insurance Act of 1983, and provides excess liability insurance coverage only to its shareholders who are in chemical and chemical related manufacturing industries. Primex utilizes leading service providers for insurance, actuarial, accounting and legal services.

Since 1986, many of the original investors have exited Primex, either through acquisitions or divestitures. To date, companies that have ceased to purchase insurance from Primex have sold their share shares back to Primex. Each current shareholder has one representative on Primex's board of directors, each having an equal vote on operational and financial matters. As a result of one of those shareholders exiting Primex in 2012, the Company reassessed its ability to significantly influence the operating and financial policies of Primex. Based on its ownership percentage and other factors, the Company determined that during 2012 the Company obtained the ability to significantly influence Primex and, as a result, needed to change its method of accounting for Primex from the cost method to the equity method. In accordance with the guidance of the FASB, the equity method of accounting must be applied on a retrospective basis, and all periods presented must be recast to reflect the change in the method of accounting.

Consequently, the Company has recast its Consolidated Balance Sheet as of December 31, 2011, the Consolidated Statements of Income, Other Comprehensive Income and Cash Flows for the years ending December 31, 2010 and December 31, 2011 and the Consolidated Statement of Changes in Equity for the years ending December 31, 2009, December 31, 2010 and December 31, 2011 and the Notes to Consolidated Financial Statements.

The change in the method of accounting results in an increase of previously reported net income and earnings per share for the years ending December 31, 2011 and December 31, 2010 of $2,323, or $0.19 per diluted share ,and $313, or $0.03 per diluted share, respectively.

The following table sets forth the impact, by line item of the retrospective application of the change in method of accounting (amounts in thousands, except per share data):

Income Statement:		2011		2010
Equity in net income of associated companies	$	2,323	$	313
Net income attributable to Quaker Chemical Corporation	$	2,323	$	313
Net income attributable to Quaker Chemical Corporation Common Shareholders - Diluted	$	0.19	$	0.03

Balance Sheet:
Investments in associated companies	$	6,131	$	3,938
Other assets		(500)		(500)
Total assets	$	5,631	$	3,438

Retained earnings	$	4,778	$	2,455
Accumulated other comprehensive loss		853		983
Total equity	$	5,631	$	3,438

For further information, see Note 21 of the Notes to Consolidated Financial Statements.

In 2011, the Company purchased the remaining 60% ownership interest in Tecniquimia Mexicana, S.A. de C.V., the Company's Mexican equity affiliate. As a result of the purchase, the Company only included six months of the affiliate's 2011 results in its investments in associated companies, with the remaining six months after acquisition being reflected as a wholly owned subsidiary in the Company's Consolidated Financial Statements.

Effective January 1, 2010, Venezuela's economy was considered to be highly inflationary under U.S. generally accepted accounting principles, as it had experienced a rate of general inflation in excess of 100% over the latest three-year period, based upon the blended Consumer Price Index and National Consumer Price Index. Accordingly, all gains and losses resulting from the remeasurement of the Company's Venezuelan 50% owned equity affiliate (Kelko Quaker Chemical, S.A.) were required to be recorded directly to the Consolidated Statement of Income. On January 8, 2010, the Venezuelan government announced the devaluation of the Bolivar Fuerte and the establishment of a two-tier exchange structure. The Company recorded a charge in the first quarter of 2010 of approximately $0.03 per diluted share to reflect the devaluation. On February 9, 2013, the Venezuelan Government announced a further devaluation of the Bolivar Fuerte. Accordingly, the Company currently estimates that it will record a charge of approximately $0.03 per diluted share during the first quarter of 2013.

During the fourth quarter of 2010, the Company identified errors in reserves for pension and certain other items at its Tecniquimia Mexicana, S.A. de C.V. affiliate. The affiliate adjusted for these items in the fourth quarter of 2010, which had the effect of reducing equity in net income of associated companies and net income by $564 in the fourth quarter and year-to-date periods of 2010. The Company believes this adjustment was not material to its Consolidated Financial Statements for the years ended December 31, 2007, December 31, 2008, December 31, 2009 or December 31, 2010 and, therefore, did not restate any prior period amounts.

Summarized financial information of Kelko Quaker Chemical, S.A. (Venezuela), Nippon Quaker Chemical, Ltd. (Japan) and Kelko Quaker Chemical S.A. (Panama), in the aggregate, is as follows:

		December 31,
		2012		2011
Current Assets	$	28,602	$	32,998
Noncurrent Assets		2,402		845
Current Liabilities		15,158		17,793
Noncurrent Liabilities		248		359

		Year Ended December 31,
		2012		2011		2010
Net Sales	$	55,963	$	66,925	$	65,592
Gross Margin		18,480		22,092		24,810
Operating Income		4,224		4,769		5,211
Net Income		2,118		1,696		1,071

		Year Ended December 31,
		2012		2011		2010
Revenue	$	8,473	$	11,523	$	3,317
Income Before Income Taxes		8,901		14,837		2,178
Net Income		6,031		9,941		1,596

Subsequent to December 31, 2012, the company received its first dividend distribution from Primex, Ltd. of approximately $2,000, which will be accounted for as a reduction of the Company's investment balance in this associated company.