-----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, JVeanoHzUbdTU9BOI4OBl4ZZIi5iMfTg2v1DnHjNmEe18czPB6n5KCyg/psFrNGB TViwggBIlWglot+0j6qp0A== 0000950154-94-000041.txt : 19940516 0000950154-94-000041.hdr.sgml : 19940516 ACCESSION NUMBER: 0000950154-94-000041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 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: 94528211 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 -- 1ST QUARTER 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 March 31, 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 April 30, 1994 9,260,785 ----------------- This report contains a total of 9 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 March 31, 1994 and December 31, 1993 Consolidated statement of income for the three months ended March 31, 1994 and 1993 Consolidated statement of cash flows for the three months ended March 31, 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) ---------------------- MARCH 31, DEC 31, 1994 1993 ---- ---- (UNAUDITED) * ASSETS - ------ CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 15,354 $ 19,293 SHORT-TERM INVESTMENTS 1,000 ACCOUNTS RECEIVABLE 40,568 37,108 INVENTORIES WORK IN PROCESS AND FINISHED GOODS 9,902 9,278 RAW MATERIALS AND SUPPLIES 7,631 8,269 DEFERRED TAXES 2,414 2,857 OTHER CURRENT ASSETS 6,407 6,582 -------- -------- TOTAL CURRENT ASSETS 82,276 84,387 -------- -------- INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY 9,992 6,224 -------- -------- PROPERTY, PLANT AND EQUIPMENT LAND 6,559 6,440 BUILDINGS AND IMPROVEMENTS 36,247 35,590 MACHINERY AND EQUIPMENT 64,115 63,066 CONSTRUCTION IN PROGRESS 3,581 1,980 -------- -------- 110,502 107,076 LESS ACCUMULATED DEPRECIATION 52,961 50,525 -------- -------- 57,541 56,551 -------- -------- EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES, NET 14,373 14,472 DEFERRED TAXES 4,792 4,788 OTHER NONCURRENT ASSETS 4,019 4,563 -------- -------- 23,184 23,823 -------- -------- $172,993 $170,985 ======== ======== * CONDENSED FROM AUDITED FINANCIAL STATEMENTS. - 3 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED BALANCE SHEET -------------------------- (DOLLARS IN THOUSANDS) ---------------------- MARCH 31, DEC 31, 1994 1993 ---- ---- (UNAUDITED) * LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES SHORT-TERM BORROWINGS AND CURRENT PORTION OF LONG-TERM DEBT AND CAPITAL LEASE $ 8,969 $ 4,953 ACCOUNTS PAYABLE 16,474 18,117 DIVIDENDS PAYABLE 1,435 1,432 ACCRUED LIABILITIES 16,225 17,727 ESTIMATED TAXES ON INCOME 149 413 -------- -------- TOTAL CURRENT LIABILITIES 43,252 42,642 -------- -------- LONG-TERM DEBT AND CAPITAL LEASE 14,338 16,095 DEFERRED TAXES ON INCOME 3,004 3,043 ACCRUED POSTRETIREMENT BENEFITS 9,043 8,968 OTHER NONCURRENT LIABILITIES 6,947 6,840 -------- -------- TOTAL NONCURRENT LIABILITIES 33,332 34,946 -------- -------- 76,584 77,588 -------- -------- MINORITY INTEREST IN EQUITY OF SUBSIDIARIES 2,225 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 568 529 RETAINED EARNINGS 84,301 83,498 EQUITY ADJUSTMENT FROM FOREIGN CURRENCY TRANSLATION 5,318 3,577 -------- -------- 99,852 97,268 TREASURY STOCK, SHARES HELD AT COST; 1994 - 405,611, 1993 - 458,375 (5,668) (5,885) -------- -------- 94,184 91,383 -------- -------- $172,993 $170,985 ======== ======== * CONDENSED FROM AUDITED FINANCIAL STATEMENTS. - 4 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF INCOME -------------------------------- FOR THE PERIOD ENDED MARCH 31, ------------------------------ UNAUDITED (DOLLARS IN THOUSANDS EXCEPT PER SHARE FIGURES) ------------------------- 1994 1993 ---- ---- INCOME NET SALES $ 45,093 $ 48,361 OTHER INCOME, NET 358 203 ---------- ---------- 45,451 48,564 ---------- ---------- COSTS AND EXPENSES COST OF GOODS SOLD 25,383 27,822 SELLING, ADMINISTRATIVE AND GENERAL EXPENSES 16,354 16,945 ---------- ---------- 41,737 44,767 ---------- ---------- INCOME FROM OPERATIONS 3,714 3,797 INTEREST EXPENSE (330) (380) INTEREST INCOME 136 469 ---------- ---------- INCOME BEFORE TAXES 3,520 3,886 TAXES ON INCOME 1,408 1,477 ---------- ---------- 2,112 2,409 EQUITY IN NET INCOME OF ASSOCIATED COMPANIES 237 415 MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES (100) (100) ---------- ---------- NET INCOME $ 2,249 $ 2,724 ========== ========== PER SHARE: NET INCOME $0.24 $0.30 DIVIDENDS $0.16 $0.15 BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,252,727 9,198,536 - 5 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ FOR THE PERIOD ENDED MARCH 31, ------------------------------ UNAUDITED (DOLLARS IN THOUSANDS) ---------------------- 1994 1993 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES $ (1,105) $ 2,681 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES SHORT-TERM INVESTMENTS 1,000 (471) DIVIDENDS FROM ASSOCIATED COMPANIES 551 277 INVESTMENT IN ASSOCIATED COMPANY (3,319) PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (2,147) (1,373) OTHER 47 72 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (3,868) (1,495) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES SHORT-TERM DEBT INCURRED 4,000 1,500 CAPITAL LEASE INCURRED 879 REPAYMENT OF SHORT-TERM DEBT (49) (434) REPAYMENT OF LONG-TERM DEBT (1,667) REPAYMENT OF CAPITAL LEASE (101) (610) DIVIDENDS PAID (1,433) (1,379) TREASURY STOCK ISSUED 256 233 OTHER (3) 93 -------- -------- NET CASH PROVIDED FROM FINANCING ACTIVITIES 1,003 282 -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 31 (178) -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,939) 1,290 CASH AND CASH EQUIVALENTS AT: BEGINNING OF PERIOD 19,293 24,373 -------- -------- END OF PERIOD $ 15,354 $ 25,663 ======== ======== CASH PAID FOR: INCOME TAXES $ 1,264 $ 1,237 INTEREST 556 650 * * * * * * * * * * - 6 - Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- The working capital ratio at March 31, 1994 was 1.9 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 $9.0 million during the quarter. This was due primarily to a cash investment of approximately $3.3 million in a joint venture 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, and (iii) increases in non-cash (primarily accounts receivable) working capital. Working capital decreased $2.7 million during the quarter mainly as a result of the aforementioned reduction in net cash. During March, 1994, the company entered into an agreement for the creation of the above-noted joint venture with Fluid Recycling Services Company which is expected to enhance the Total Fluid Management (TFM) capabilities of the company. In addition to the initial contribution, additional investments are expected over the next few years based on the growth of the venture. Comparison of First Quarter 1994 with First Quarter 1993 - -------------------------------------------------------- Consolidated net sales for the first quarter of 1994 decreased $3.3 million (7%) while income from operations decreased $.1 million (2%) when compared to the first quarter of 1993. The decrease in sales was due to a 3% decline in volume; a 2% reduction associated with currency translation; and declines of 1% each from price and product mix, and the net result of acquisitions and divestitures. The decrease in the volume for the quarter was mainly a result of a reduction in orders shipped to the People's Republic of China (PRC) as that country worked down an earlier inventory buildup; the European recession's impact on customer production levels, particularly in the steel and automotive markets of Southern Europe; and the adverse effect of the continued slump in the aircraft and aerospace industry. Shipments to the PRC are expected to resume in the second quarter, hopefully, under a more consistent order pattern. The company continues to be challenged with pricing pressures in key markets and increased customer efficiencies in the usage of chemical products. While operating conditions in the United States appear healthy, uncertainty exists as to whether or not the current pace of industrial activity can continue given the Federal Reserve Board's recent actions to restrain inflation. In Europe, though there have been modest signs of improvement in some of our markets, it is difficult to predict the timing of an overall recovery. - 7 - Operating margins as a percentage of sales were comparable to first quarter 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 quarter 1994 from the 1993 repositioning program was approximately $.05 per share. Interest income declined mainly as a result of lower cash holdings by the company. The effective tax rate in the first quarter of 1994 increased slightly versus first quarter 1993 primarily as a result of foreign taxes on earnings at rates different than the U.S. federal tax rates. 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. The negative influence of currency translation on first quarter 1994 net income was $.01 per share. - 8 - PART II. OTHER INFORMATION Items 1-5 are inapplicable and have been omitted. 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: May 13, 1994 ------------ - 9 - -----END PRIVACY-ENHANCED MESSAGE-----