-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S62PTTys3PNIxsjqLyqxQQYGqbbloG8/XqbT+p4Q3oXoybo6lqYsapR7wTvDs8H/ MdWa+FQkZK3Ty6PTYnM7jQ== 0000920049-96-000039.txt : 19960816 0000920049-96-000039.hdr.sgml : 19960816 ACCESSION NUMBER: 0000920049-96-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUAKER CHEMICAL CORP CENTRAL INDEX KEY: 0000081362 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PRODUCTS OF PETROLEUM & COAL [2990] IRS NUMBER: 230993790 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12019 FILM NUMBER: 96614821 BUSINESS ADDRESS: STREET 1: ELM AND LEE STS CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 BUSINESS PHONE: 2158324011 MAIL ADDRESS: STREET 1: ELM & LEE STS CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _______________________ FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________to____________ Commission file number 0-7154 QUAKER CHEMICAL CORPORATION ------------------------------------------------------- (Exact name of Registrant as specified in its charter) Pennsylvania 23-0993790 - ----------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Elm and Lee Streets, Conshohocken, Pennsylvania 19428 - 0809 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 610-832-4000 ------------- Not Applicable ----------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of Shares of Common Stock Outstanding on August 12, 1996 8,558,242 --------- PART I. FINANCIAL INFORMATION QUAKER CHEMICAL CORPORATION AND CONSOLIDATED SUBSIDIARIES --------------------------------------------------------- CONDENSED FINANCIAL INFORMATION -------------------------------- The following condensed financial statements are filed as part of this quarterly report on Form 10-Q: Consolidated Balance Sheet at June 30, 1996 and December 31, 1995 Consolidated Statement of Income for the six months ended June 30, 1996 and 1995 Consolidated Statement of Income for the three months ended June 30, 1996 and 1995 Consolidated Statement of Cash Flows for the six months ended June 30, 1996 and 1995. * * * * * * * * * * NOTE TO CONDENSED FINANCIAL INFORMATION --------------------------------------- The attached condensed financial information has been prepared in accordance with instructions for Form 10-Q and, therefore, does not include all financial note information which might be necessary for a fair presentation in accordance with generally accepted accounting principles. Such condensed financial information is unaudited, but in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments and accruals, necessary for a fair presentation of results for the periods indicated. The net income reported for the periods should not necessarily be regarded as indicative of net income on an annualized basis (see accompanying Management's Discussion and Analysis-Other Significant Items); however, significant variations from the results for the same period of the previous year, if any, have been disclosed in the accompanying Management's Discussion and Analysis. Certain reclassifications of prior years' data have been made to improve comparability. - 2 - Quaker Chemical Corporation Consolidated Balance Sheet (dollars in thousands) ---------------------- June 30, December 31, 1996 1995 ---- ---- (Unaudited) * Assets - ------ Current assets Cash and cash equivalents $ 10,438 $ 7,230 Accounts receivable 50,202 46,965 Inventories Raw materials and supplies 7,581 10,964 Work in process and finished goods 11,573 10,669 Deferred income taxes 1,885 1,415 Prepaid expenses and other current assets 8,155 10,132 -------- -------- 89,834 87,375 -------- -------- Investments in and advances to associated companies 8,389 10,058 -------- -------- Property, plant and equipment, at cost Land 6,776 7,279 Buildings and improvements 38,331 40,232 Machinery and equipment 69,258 70,010 Construction in progress 1,867 1,068 -------- -------- 116,232 118,589 Less accumulated depreciation 61,472 62,280 -------- -------- 54,760 56,309 -------- -------- Excess of cost over net assets of acquired companies 18,092 18,973 Deferred income taxes 5,226 5,349 Other noncurrent assets 6,811 7,344 -------- -------- 30,129 31,666 -------- -------- $183,112 $185,408 ======== ======== * Condensed from audited financial statements. - 3 - Quaker Chemical Corporation Consolidated Balance Sheet (dollars in thousands) ---------------------- June 30 December 31, 1996 1995 ---- ---- (Unaudited) * Liabilities - ----------- Current liabilities Short-term borrowings, current portion of long-term debt, notes payable and capital leases $ 23,790 $ 25,548 Accounts payable 20,528 20,969 Dividends payable 1,473 Accrued liabilities 14,276 12,392 Estimated taxes on income 3,533 486 -------- -------- Total current liabilities 62,127 60,868 -------- -------- Long-term debt, notes payable and capital leases 7,592 9,300 Deferred income taxes 3,175 2,977 Accrued postretirement benefits 8,815 8,809 Other noncurrent liabilities 6,236 6,432 -------- -------- Total noncurrent liabilities 25,818 27,518 -------- -------- 87,945 88,386 -------- -------- Minority interest in equity of subsidiaries 3,992 3,030 -------- -------- Shareholders' equity - -------------------- 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 768 780 Retained earnings 90,702 87,852 Unearned compensation (591) (722) Foreign currency translation adjustments 7,913 12,333 -------- -------- 108,456 109,907 Treasury stock, shares held at cost; 1996 - 1,109,123, 1995 - 853,809 (17,281) (15,915) -------- -------- 91,175 93,992 -------- -------- $183,112 $185,408 ======== ======== * Condensed from audited financial statements - 4 - Quaker Chemical Corporation Consolidated Statement of Income Six Months Ended June 30, Unaudited (dollars in thousands except per share data) ------------------------- 1996 1995 ---- ---- Income Net sales $117,989 $113,562 Other income, net 820 900 -------- -------- 118,809 114,462 -------- -------- Costs and expenses Cost of goods sold 68,190 67,835 Selling, administrative and general expenses 42,504 38,675 -------- -------- 110,694 106,510 -------- -------- Income from operations 8,115 7,952 Interest expense (1,008) (735) Interest income 196 150 -------- -------- Income before taxes 7,303 7,367 Taxes on income 2,921 2,925 -------- -------- 4,382 4,442 Equity in net income of associated companies 102 197 Minority interest in net income of subsidiaries (160) (253) -------- -------- Net income $ 4,324 $ 4,386 ======== ======== Per share data: Net income $0.50 $0.50 Dividends declared $0.17 $0.31 Based on weighted average number of shares outstanding 8,666,161 8,812,602 - 5 - Quaker Chemical Corporation Consolidated Statement of Income Three Months Ended June 30, Unaudited (dollars in thousands except per share data) ---------------------- 1996 1995 ---- ---- Income Net sales $ 59,786 $ 59,035 Other income, net 536 746 -------- -------- 60,322 59,781 -------- -------- Costs and expenses Cost of goods sold 34,235 35,111 Selling, administrative and general expenses 21,419 20,154 -------- -------- 55,654 55,265 -------- -------- Income from operations 4,668 4,516 Interest expense (508) (403) Interest income 104 61 -------- -------- Income before taxes 4,264 4,174 Taxes on income 1,705 1,664 -------- -------- 2,559 2,510 Equity in net income of associated companies 145 107 Minority interest in net income of subsidiaries (56) (146) -------- -------- Net income $ 2,648 $ 2,471 ======== ======== Per share data: Net income $0.31 $0.28 Dividends declared * $0.17 Based on weighted average number of shares outstanding 8,665,575 8,804,016 * Dividends for the second quarter of 1996 were declared and paid in July 1996 at a rate of $0.17 per share. - 6 - Quaker Chemical Corporation Consolidated Statement of Cash Flows For the Six Months Ended June 30, Unaudited (dollars in thousands) 1996 1995 ---- ---- Cash flows from operating activities Net income $ 4,324 $ 4,386 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 3,151 3,346 Amortization 1,080 1,094 Equity in net income of associated companies (102) (197) Minority interest in earnings of subsidiaries 160 253 Deferred income taxes 103 31 Deferred compensation and other postretirement benefits 668 455 Net change in repositioning liability (618) (564) Other, net 393 (28) Increase (decrease) in cash from changes in current assets and liabilities net of acquisitions and divestitures: Accounts receivable (4,170) (5,622) Inventories 2,060 (1,573) Prepaid expenses and other current assets 1,317 (3,174) Accounts payable and accrued liabilities 725 (92) Estimated taxes on income 3,065 90 ------- ------- Net cash provided by (used in) operating activities 12,156 (1,595) ------- ------- Cash flows from investing activities Dividends from associated companies 1,078 50 Investments in property, plant, equipment and other assets (2,937) (4,942) Companies acquired excluding cash (6,404) Investments in and advances to associated companies (720) (623) Proceeds from the sale of patent, production technology and other assets 683 2,000 Other, net (75) ------- ------- Net cash used in investing activities (1,896) (9,994) ------- ------- Cash flows from financing activities Net (decrease) increase in short-term borrowings (1,034) 13,545 Repayment of long-term debt, notes payable and capital leases (2,408) (1,692) Dividends paid (1,474) (3,003) Treasury stock issued 209 340 Treasury stock acquired (1,587) (516) Other, net (141) ------- ------- Net cash (used in) provided by financing activities (6,294) 8,533 ------- ------- Effect of exchange rate changes on cash (758) (174) ------- ------- Net increase (decrease) in cash and cash equivalents 3,208 (3,230) Cash and cash equivalents at beginning of period 7,230 11,345 ------- ------- Cash and cash equivalents at end of period $10,438 $ 8,115 ======= ======= Supplemental cash flow information Cash paid during the year for: Income taxes $ 2,050 $ 2,285 Interest 1,087 751 - 7 - Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- Net cash flow provided by (used in) operating activities amounted to $12.2 million in the first half of 1996 compared to ($1.6) million in the same period of 1995. The improvement was principally due to better management of operating working capital and the timing of a tax refund in Europe. The Company's net cash position (cash and cash equivalents plus short-term investments less short-term borrowings and current portion of long-term debt and capital leases) increased $5.0 million primarily as a result of decreases in short-term borrowings and operating working capital. The current ratio was 1.4 to 1 at June 30, 1996, unchanged from December 31, 1995. Operations - ---------- Comparison of Six Months 1996 with Six Months 1995 - -------------------------------------------------- Consolidated net sales for the first half of 1996 increased approximately 4% over the first half of 1995, mainly due to the effects of improved pricing and product sales mix. The increase in sales was the net result of a 5% increase in pricing and product sales mix; a 3% increase due to business acquisitions; a 3% decrease in volume; and a 1% decrease due to translation rates. Income from operations was 2% higher than the first half of 1995. The Company's gross profit margin as a percentage of sales increased 2% mainly as a result of the aforementioned benefits of improved pricing, particularly in Europe, a more profitable sales mix and stable raw material costs. Selling, administrative and general expenses as a percent of sales were 1.7% higher than 1995 primarily as a result of planned increases in operating expenses related to geographic and product growth areas and strategic initiatives. Net interest costs rose due to increased financing costs associated with higher debt levels carried into 1996 related to the financing of a 1995 acquisition and other operating needs. Other income decreased primarily because of decreased license fee income. The decrease in equity in net income from associated companies was due to losses incurred by the Company's FRS joint venture related to increased costs of new business development and staff reorganization along with delays in new business startups. Earnings per share of $.50 were even with those of the prior year despite a negative currency translation impact of approximately $.03 per share due to the strengthening of the dollar against the major European currencies. - 8 - Comparison of Second Quarter 1996 with Second Quarter 1995 - ---------------------------------------------------------- Consolidated net sales for the second quarter of 1996 increased 1% while comparative income from operations improved 3% versus the second quarter of 1995. The increase in sales was the net result of a 4% increase in price and sales mix; a 2% increase due to acquisitions offset by a 2% decrease in volume; and a 3% decrease due to currency translation. The reasons for changes in operating margin percentages and net interest costs in the second quarter 1996 versus the second quarter 1995 are basically the same as those previously mentioned for the comparative six-month periods. Other income decreased in the quarter mainly as a result of the absence of positive exchange impacts recorded in 1995. The increase in equity in net income from associated companies was primarily due to solid performances from joint ventures in Mexico and Venezuela offset in part by losses incurred by the Company's FRS joint venture. Other Significant Items - ----------------------- The Company remains cautiously optimistic about customer production levels and raw material inflation over the balance of the year. However, the principal challenges still facing the Company are the highly competitive nature of the pricing environment in the Company's major markets and the effective management of the Company's FRS joint venture. Given these factors, the Company announced its intention to implement a series of measures that should improve manufacturing capacity utilization, customer responsiveness, operating efficiencies, and financial results. These measures include the consolidation of manufacturing operations in the United States into one facility, and the consolidation of certain manufacturing, research and other functional activities in Europe. These actions should result in a pretax charge in the second half of 1996 in the range of $23 million (approximately $15 million after tax or $1.75 per share), about two-thirds of which will consist of non-cash items. If these measures are completed as planned, the Company expects annualized pretax cost savings of approximately $4 million, a substantial portion of which the Company now believes it will be able to realize in 1997. - 9 - PART II. OTHER INFORMATION Items 1, 2, 3, 4 and 5 are inapplicable and have been omitted. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit 27-Financial Data Schedule (b) Reports on Form 8-K. No report on Form 8-K was filed during the quarter for which this report is filed. * * * * * * * * * Pursuant to the requirements 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) /s/ THOMAS F. KIRK -------------------------------- Thomas F. Kirk, officer duly authorized to sign this report, Vice President and Chief Financial Officer Date: August 14, 1996 - ---------------------- - 10 - EX-27 2 ART.5 FDS FOR SECOND QUARTER 10-Q
5 1,000 6-MOS DEC-31-1996 JUN-30-1996 10,438 0 50,966 764 19,154 89,834 116,232 61,472 183,112 62,127 5,000 9,664 0 0 81,511 183,112 117,989 118,809 68,190 110,694 0 0 1,008 7,303 2,921 4,324 0 0 0 4,324 0.50 0.50
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