-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, PfsWs+MibncRPtpyZO+7hmAh8aKBGVHAV9p1uuaumrXeuoffuqFYecR5aGiC7Gtt z5xIZz4iFRx55Vhhsn/aGA== 0000950154-94-000074.txt : 19940815 0000950154-94-000074.hdr.sgml : 19940815 ACCESSION NUMBER: 0000950154-94-000074 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUAKER CHEMICAL CORP CENTRAL INDEX KEY: 0000081362 STANDARD INDUSTRIAL CLASSIFICATION: 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: 000-07154 FILM NUMBER: 94543629 BUSINESS ADDRESS: STREET 1: ELM AND LEE STS CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 BUSINESS PHONE: 2158324000 MAIL ADDRESS: STREET 2: ELM & LEE STS CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 10-Q 1 QUAKER CHEMICAL -- 2ND QUARTER 10Q 1994 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, 1994 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 July 29, 1994 9,238,987 ----------------- This report contains a total of 10 pages. 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, 1994 and December 31, 1993 Consolidated statement of income for the six months ended June 30, 1994 and 1993 Consolidated statement of income for the three months ended June 30, 1994 and 1993 Consolidated statement of cash flows for the six months ended June 30, 1994 and 1993 * * * * * * * * * * 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 adjust- ments, 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; 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. - 2 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED BALANCE SHEET -------------------------- (DOLLARS IN THOUSANDS) ---------------------- JUNE 30, DEC 31, 1994 1993 ---- ---- (UNAUDITED) * ASSETS - ------ CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 10,664 $ 19,293 SHORT-TERM INVESTMENTS 1,000 ACCOUNTS RECEIVABLE 43,460 37,108 INVENTORIES WORK IN PROCESS AND FINISHED GOODS 9,626 9,278 RAW MATERIALS AND SUPPLIES 9,642 8,269 DEFERRED TAXES 2,648 2,857 OTHER CURRENT ASSETS 6,716 6,582 -------- -------- TOTAL CURRENT ASSETS 82,756 84,387 -------- -------- INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY 9,677 6,224 -------- -------- PROPERTY, PLANT AND EQUIPMENT LAND 6,705 6,440 BUILDINGS AND IMPROVEMENTS 37,103 35,590 MACHINERY AND EQUIPMENT 66,180 63,066 CONSTRUCTION IN PROGRESS 4,059 1,980 -------- -------- 114,047 107,076 LESS ACCUMULATED DEPRECIATION 55,805 50,525 -------- -------- 58,242 56,551 -------- -------- EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES, NET 14,755 14,472 DEFERRED TAXES 4,636 4,788 OTHER NONCURRENT ASSETS 3,831 4,563 -------- -------- 23,222 23,823 -------- -------- $173,897 $170,985 ======== ======== * CONDENSED FROM AUDITED FINANCIAL STATEMENTS. - 3 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED BALANCE SHEET -------------------------- (DOLLARS IN THOUSANDS) ---------------------- JUNE 30, DEC 31, 1994 1993 ---- ---- (UNAUDITED) * LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES SHORT-TERM BORROWINGS AND CURRENT PORTION OF LONG-TERM DEBT AND CAPITAL LEASE $ 7,192 $ 4,953 ACCOUNTS PAYABLE 16,217 18,117 DIVIDENDS PAYABLE 1,432 ACCRUED LIABILITIES 16,236 17,727 ESTIMATED TAXES ON INCOME 211 413 -------- -------- TOTAL CURRENT LIABILITIES 39,856 42,642 -------- -------- LONG-TERM DEBT AND CAPITAL LEASE 14,205 16,095 DEFERRED TAXES ON INCOME 3,073 3,043 ACCRUED POSTRETIREMENT BENEFITS 9,118 8,968 OTHER NONCURRENT LIABILITIES 6,695 6,840 -------- -------- TOTAL NONCURRENT LIABILITIES 33,091 34,946 -------- -------- 72,947 77,588 -------- -------- MINORITY INTEREST IN EQUITY OF SUBSIDIARIES 2,318 2,014 - ------------------------------------------- -------- -------- 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 594 529 RETAINED EARNINGS 86,502 83,498 EQUITY ADJUSTMENT FROM FOREIGN CURRENCY TRANSLATION 7,801 3,577 -------- -------- 104,561 97,268 TREASURY STOCK, SHARES HELD AT COST; 1994 - 398,587, 1993 - 446,160 (5,929) (5,885) -------- -------- 98,632 91,383 -------- -------- $173,897 $170,985 ======== ======== * CONDENSED FROM AUDITED FINANCIAL STATEMENTS. - 4 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF INCOME -------------------------------- FOR SIX MONTHS ENDED JUNE 30, ----------------------------- UNAUDITED (DOLLARS IN THOUSANDS EXCEPT PER SHARE FIGURES) ------------------------- 1994 1993 ---- ---- INCOME NET SALES $ 92,440 $ 99,704 OTHER INCOME, NET 939 551 ---------- ---------- 93,379 100,255 ---------- ---------- COSTS AND EXPENSES COST OF GOODS SOLD 52,132 57,707 SELLING, ADMINISTRATIVE AND GENERAL EXPENSES 33,739 35,822 REPOSITIONING CHARGES 3,500 ---------- ---------- 85,871 97,029 ---------- ---------- INCOME FROM OPERATIONS 7,508 3,226 INTEREST EXPENSE (734) (729) INTEREST INCOME 296 816 ---------- ---------- INCOME BEFORE TAXES 7,070 3,313 TAXES ON INCOME 2,793 1,531 ---------- ---------- 4,277 1,782 EQUITY IN NET INCOME OF ASSOCIATED COMPANIES 324 704 MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES (161) (211) ---------- ---------- NET INCOME $ 4,440 $ 2,275 ========== ========== PER SHARE: NET INCOME $0.48 $0.25 DIVIDENDS $0.16 $0.15 BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,256,400 9,204,037 - 5 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF INCOME -------------------------------- THREE MONTHS ENDED JUNE 30, --------------------------- UNAUDITED (DOLLARS IN THOUSANDS EXCEPT PER SHARE FIGURES) ------------------------- 1993 1992 ---- ---- INCOME NET SALES $ 47,347 $ 51,343 OTHER INCOME, NET 581 348 ---------- ---------- 47,928 51,691 ---------- ---------- COSTS AND EXPENSES COST OF GOODS SOLD 26,749 29,885 SELLING, ADMINISTRATIVE AND GENERAL EXPENSES 17,385 18,877 REPOSITIONING CHARGES 3,500 ---------- ---------- 44,134 52,262 ---------- ---------- INCOME FROM OPERATIONS 3,794 (571) INTEREST EXPENSE (404) (349) INTEREST INCOME 160 347 ---------- ---------- INCOME BEFORE TAXES 3,550 (573) TAXES ON INCOME 1,385 54 ---------- ---------- 2,165 (627) EQUITY IN NET INCOME OF ASSOCIATED COMPANIES 87 289 MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES (61) (111) ---------- ---------- NET INCOME $ 2,191 $ (449) ========== ========== PER SHARE: NET INCOME $0.24 ($0.05) DIVIDENDS * * BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,260,808 9,209,478 * DIVIDENDS APPLICABLE TO THE SECOND QUARTER ARE NORMALLY DECLARED AND PAID IN JULY. - 6 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ FOR SIX MONTHS ENDED JUNE 30, ----------------------------- UNAUDITED (DOLLARS IN THOUSANDS) ---------------------- 1994 1993 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES $ (341) $ 7,255 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES SHORT-TERM INVESTMENTS 1,000 152 DIVIDENDS FROM ASSOCIATED COMPANIES 864 277 INVESTMENT IN ASSOCIATED COMPANY (3,464) PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (3,832) (3,563) COMPANIES ACQUIRED EXCLUDING CASH (11,099) OTHER 266 (308) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (5,166) (14,541) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES SHORT-TERM DEBT INCURRED 5,565 1,752 CAPITAL LEASE INCURRED 879 REPAYMENT OF SHORT-TERM DEBT (3,500) (2,434) REPAYMENT OF LONG-TERM DEBT (1,761) REPAYMENT OF CAPITAL LEASE (182) (697) DIVIDENDS PAID (2,868) (2,760) TREASURY STOCK ISSUED 21 401 OTHER (3) 145 -------- -------- NET CASH PROVIDED FROM FINANCING ACTIVITIES (2,728) (2,714) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (394) (34) -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (8,629) (10,034) CASH AND CASH EQUIVALENTS AT: BEGINNING OF PERIOD 19,293 24,373 -------- -------- END OF PERIOD $ 10,664 $ 14,339 ======== ======== CASH PAID FOR: INCOME TAXES $ 2,385 $ 2,763 INTEREST 700 1,016 * * * * * * * * * * - 7 - Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- The working capital ratio at June 30, 1994 was 2.1 to 1 as compared to 2.0 to 1 at December 31, 1993, reflecting the continuation of an adequate level of liquidity necessary to support operations. 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 lease) declined $11.9 million during the first six months of 1994. This was due primarily to a cash investment of approximately $3.5 million in a joint venture, cash outlays of about $1.5 million related to the company's 1993 repositioning program and increased short-term borrowings in the U.S. associated with (i) seasonal cash needs, (ii) the replacement of maturing long-term obligations with short-term debt, (iii) increases in non-cash (primarily accounts receivable) working capital. Working capital increased $1.2 million in the first half of 1994 mainly as a result of the aforementioned increases in non-cash working capital. On March 24, 1994, the formation of the above-noted joint venture with Fluid Recycling Services was completed. In addition to the initial contribution, additional investments are expected over the next few years based on the growth of the venture. Comparison of Six Months 1994 with Six Months 1993 - -------------------------------------------------- Consolidated net sales for the first half of 1994 decreased $7.3 million (7%) while comparative income from operations improved $.8 million (12%) versus the first half of 1993. The decrease in sales was due to a 2% reduction associated with currency translation; a decline of 1% from price and product mix; and a 4% decrease associated with the net result of acquisitions and divestitures. The company's major markets continue to be characterized by customers focused on increasing efficiencies in the usage of chemical products and lowering their costs by demanding more value-added services and exerting price pressures on suppliers. In addition, there are signs that raw material prices for many commodity chemicals are starting to rise. Operating conditions in the United States appear to be sustainable at the present pace at least into early 1995. In Europe, some positive trends have been apparent, but the timing of an overall recovery is difficult to predict. Continued improvement in operating results during 1994 is largely dependent on both the timing of the European economic recovery and the acceleration of the effectiveness of the company's service activities in the United States. - 8 - Operating margins as a percentage of sales improved in the first half of 1994 when compared to the corresponding period in 1993 as improved sales mix, lower raw material costs, and cost savings associated with the company's 1993 repositioning program offset the negative leverage effect of fixed costs on reduced sales volume. The after-tax financial benefit generated in the first half of 1994 due to the 1993 repositioning program was approximately $.05 per share in each quarter. Other income rose primarily as a result of increased royalty income. Interest income declined due to lower cash holdings by the company. The effective tax rate in the first half of 1994 decreased 6% when compared to the first half of 1993 due in large part to the negative influence on the prior year rate of non-deductible expenses related to both goodwill and a second quarter repositioning charge. The decrease in equity in net income from associated companies was primarily due to lower earnings from the company's Japanese affiliate which is being hampered by sluggish demand in the Japanese steel industry and business development investments in the joint venture mentioned above. The negative influence of currency translation on first half 1994 net income was $.02 per share. Comparison of Second Quarter 1994 with Second Quarter 1993 - ---------------------------------------------------------- Consolidated net sales for the second quarter of 1994 decreased $4.0 million (8%) while comparative income from operations improved $.9 million (30%) versus the second quarter of 1993. The decrease in sales was primarily due to an 8% decrease associated with the net result of acquisitions and divestitures as volume improvements of 2% were offset by a decline of 1% each from price and product mix, and currency translation. The operating margin improvement in the second quarter of 1994 over 1993 resulted from more favorable sales mix and cost savings associated with the company's 1993 repositioning program. The reasons for the change in Other Income, Interest Income and the effective tax rate in the second quarter 1994 versus 1993 are basically the same as the six-month period. - 9 - PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The 1994 Annual Meeting of the Company's shareholders was held on May 4, 1994. At the Meeting, management's nominees, Lennox K. Black, Robert P. Hauptfuhrer, Frederick Heldring, Ronald J. Naples and Alex Satinsky were elected to fill the five available positions as Class II directors. Voting (expressed in numbers of votes) was as follows: Mr. Black -- 35,877,982 for, 47,605 against or withheld and no abstentions or broker non-votes; Mr. Hauptfuhrer -- 35,887,982 for, 37,605 against or withheld and no abstentions or broker non-votes; Mr. Heldring -- 35,886,882 for, 38,705 against or withheld and no abstentions or broker non-votes; Mr. Naples -- 35,870,232 for, 55,355 against or withheld and no abstentions or broker non-votes; and Mr. Satinsky -- 35,861,382 for, 64,205 against or withheld and no abstentions or broker non-votes. At the Meeting, shareholders ratified the appointment of Price Waterhouse as the Company's independent auditors to examine and report on its financial statements for the year ending December 31, 1994 by a vote of 35,252,668 votes for, 662,614 votes against and 10,305 abstentions or broker non-votes. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None. (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) JOSEPH F. SPANIER ----------------------------------------------- Joseph F. Spanier, officer duly authorized to sign this report, Corporate Controller and Principal Financial Officer Date: August 12, 1994 --------------- - 10 - -----END PRIVACY-ENHANCED MESSAGE-----