Condensed Financial Information

9 Months Ended

Sep. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 – Condensed Financial Information

As used in these Notes to Condensed Consolidated Financial Statements, the terms “Quaker”, “Quaker Houghton”, the

“Company”, “we”, and “our” refer to Quaker Chemical Corporation (doing business as Quaker Houghton), its subsidiaries, and

associated companies, unless the context otherwise requires. As used in these Notes to Condensed Consolidated Financial Statements,

the term Legacy Quaker refers to the Company prior to the closing of its combination with Houghton International, Inc. (“Houghton”)

(herein referred to as the “Combination”). 

The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with

generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial reporting and the United States

Securities and Exchange Commission (“SEC”) regulations. Certain information and footnote disclosures normally included in

financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. 

In the opinion of management, the financial statements reflect all adjustments which are necessary for a fair statement of the financial

position, results of operations and cash flows for the interim periods. The results for the three and nine months ended September 30,

2020 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in

conjunction with the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”).

During the three months ended September 30, 2020, the Company identified and corrected certain immaterial adjustments relating

to the three months ended March 31, 2020 as well as the three and six months ended June 30, 2020. These adjustments related to the

Company’s over-recognition of cost of goods sold (“COGS”) and corresponding under -recognition of inventory, as well as the

associated tax impact of these adjustments, in the Company’s previously issued interim financial statements for the three months

ended March 31, 2020 and the three and six months ended June 30, 2020, respectively. These adjustments impact the Company’s

Americas reportable segment. The cumulative amount of reduction to COGS recorded in the three and nine months ended September

30, 2020 was approximately $

1.7

 million, with approximately $

0.7

 million related to the three months ended March 31, 2020 and

approximately $

1.0

 million related to the three months ended June 30, 2020.

Hyper-inflationary economies

Economies that have a cumulative three-year rate of inflation exceeding

100

% are considered hyper-inflationary in accordance

with U.S. GAAP. A legal entity that operates within an economy deemed to be hyper-inflationary is required to remeasure its

monetary assets and liabilities to the applicable published exchange rates and record the associated gains or losses resulting from the

remeasurement directly to the Condensed Consolidated Statements of Operations.

Based on various indices or index compilations currently being used to monitor inflation in Argentina as well as recent economic

instability, effective July 1, 2018, Argentina’s economy was considered hyper-inflationary under U.S. GAAP. As a result, the

Company began applying hyper-inflationary accounting with respect to the Company's wholly owned Argentine subsidiary beginning

July 1, 2018. In addition, Houghton has an Argentina subsidiary to which hyper-inflationary accounting also is applied. As of, and

for the three and nine months ended September 30, 2020 and 2019, the Company's Argentine subsidiaries represented less than

1

% of

the Company’s consolidated total assets and net sales, respectively. During the three and nine months ended September 30, 2020, the

Company recorded $

0.2

 million and $

0.3

 million, respectively, of remeasurement losses associated with the applicable currency

conversions related to Argentina. Comparatively, during the three and nine months ended September 30, 2019, the Company recorded

$

0.7

 million and $

0.9

 million of remeasurement losses associated with the applicable currency conversion related to Argentina. These

losses were recorded within foreign exchange (losses) gains, net, which is a component of other (expense) income, net, in the

Company’s Condensed Consolidated Statements of Operations.