-----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, qzGUmfYLzyR7a8qJGeqomeKEeu/EdrMWF283bIRrPCROYsUwogW6nLtZApYd+W9U 7ms0tX2aRS5Zl4HtcL5rPQ== 0000950154-94-000086.txt : 19941116 0000950154-94-000086.hdr.sgml : 19941116 ACCESSION NUMBER: 0000950154-94-000086 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NONE 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: 94559071 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 10Q -- 3RD 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 September 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 October 31, 1994 8,932,375 --------------- This report contains a total of 12 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 September 30, 1994 and December 31, 1993 Consolidated statement of income for the nine months ended September 30, 1994 and 1993 Consolidated statement of income for the three months ended September 30, 1994 and 1993 Consolidated statement of cash flows for the nine months ended September 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) ---------------------- SEPT 30, DEC 31, 1994 1993 ---- ---- (UNAUDITED) * ASSETS - ------ CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 12,356 $ 19,293 SHORT-TERM INVESTMENTS 1,000 ACCOUNTS RECEIVABLE 41,586 37,108 INVENTORIES WORK IN PROCESS AND FINISHED GOODS 9,962 9,278 RAW MATERIALS AND SUPPLIES 9,063 8,269 DEFERRED TAXES 3,713 2,857 OTHER CURRENT ASSETS 8,082 6,582 --------- --------- TOTAL CURRENT ASSETS 84,762 84,387 --------- --------- INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY 10,332 6,224 --------- --------- PROPERTY, PLANT AND EQUIPMENT LAND 6,709 6,440 BUILDINGS AND IMPROVEMENTS 36,059 35,590 MACHINERY AND EQUIPMENT 64,996 63,066 CONSTRUCTION IN PROGRESS 4,407 1,980 --------- --------- 112,171 107,076 LESS ACCUMULATED DEPRECIATION 56,187 50,525 --------- --------- 55,984 56,551 --------- --------- EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES, NET 12,120 14,472 DEFERRED TAXES 4,818 4,788 OTHER NONCURRENT ASSETS 3,765 4,563 --------- --------- 20,703 23,823 --------- --------- $ 171,781 $ 170,985 ========= ========= *CONDENSED FROM AUDITED FINANCIAL STATEMENTS. - 3 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED BALANCE SHEET -------------------------- (DOLLARS IN THOUSANDS) ---------------------- SEPT 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 $ 7,200 $ 4,953 ACCOUNTS PAYABLE 18,392 18,117 DIVIDENDS PAYABLE 1,390 1,432 ACCRUED LIABILITIES 15,378 17,727 ESTIMATED TAXES ON INCOME 581 413 --------- --------- TOTAL CURRENT LIABILITIES 42,941 42,642 --------- --------- LONG-TERM DEBT AND CAPITAL LEASE 12,304 16,095 DEFERRED TAXES ON INCOME 3,185 3,043 ACCRUED POSTRETIREMENT BENEFITS 9,193 8,968 OTHER NONCURRENT LIABILITIES 6,736 6,840 --------- --------- TOTAL NONCURRENT LIABILITIES 31,418 34,946 --------- --------- 74,359 77,588 --------- --------- MINORITY INTEREST IN EQUITY OF SUBSIDIARIES 2,509 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 620 529 RETAINED EARNINGS 86,028 83,498 EQUITY ADJUSTMENT FROM FOREIGN CURRENCY TRANSLATION 9,503 3,577 --------- --------- 105,815 97,268 TREASURY STOCK, SHARES HELD AT COST; 1994 - 695,795, 1993 - 446,160 (10,902) (5,885) --------- --------- 94,913 91,383 --------- --------- $ 171,781 $ 170,985 ========= ========= *CONDENSED FROM AUDITED FINANCIAL STATEMENTS. - 4 - CONSOLIDATED STATEMENT OF INCOME -------------------------------- FOR NINE MONTHS ENDED SEPTEMBER 30, ----------------------------------- UNAUDITED (DOLLARS IN THOUSANDS EXCEPT PER SHARE FIGURES) ------------------------- 1994 1993 ---- ---- INCOME NET SALES $ 142,557 $ 148,145 OTHER INCOME, NET 1,294 752 --------- --------- 143,851 148,897 --------- --------- COSTS AND EXPENSES COST OF GOODS SOLD 80,352 85,693 SELLING, ADMINISTRATIVE AND GENERAL EXPENSES 51,882 55,185 REPOSITIONING CHARGES 3,500 --------- --------- 132,234 144,378 --------- --------- INCOME FROM OPERATIONS 11,617 4,519 INTEREST EXPENSE (1,107) (1,082) INTEREST INCOME 346 1,008 --------- --------- INCOME BEFORE TAXES 10,856 4,445 TAXES ON INCOME 4,332 2,088 --------- --------- 6,524 2,357 EQUITY IN NET INCOME OF ASSOCIATED COMPANIES 555 952 MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES (286) (304) --------- --------- NET INCOME $ 6,793 $ 3,005 ========= ========= PER SHARE: NET INCOME $0.74 $0.33 DIVIDENDS $0.46 $0.45 BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,229,236 9,209,929 - 5 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF INCOME -------------------------------- THREE MONTHS ENDED SEPTEMBER 30, -------------------------------- UNAUDITED (DOLLARS IN THOUSANDS EXCEPT PER SHARE FIGURES) ------------------------- 1994 1993 ---- ---- INCOME NET SALES $ 50,117 $ 48,441 OTHER INCOME, NET 355 201 --------- --------- 50,472 48,642 --------- --------- COSTS AND EXPENSES COST OF GOODS SOLD 28,220 27,986 SELLING, ADMINISTRATIVE AND GENERAL EXPENSES 18,143 19,363 REPOSITIONING CHARGES -- -- --------- --------- 46,363 47,349 --------- --------- INCOME FROM OPERATIONS 4,109 1,293 INTEREST EXPENSE (373) (353) INTEREST INCOME 50 192 --------- --------- INCOME BEFORE TAXES 3,786 1,132 TAXES ON INCOME 1,539 557 --------- --------- 2,247 575 EQUITY IN NET INCOME OF ASSOCIATED COMPANIES 231 248 MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES (125) (93) --------- --------- NET INCOME $ 2,353 $ 730 ========= ========= PER SHARE: NET INCOME $0.26 $0.08 DIVIDENDS $0.31 $0.30 BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,182,098 9,221,520 - 6 - QUAKER CHEMICAL CORPORATION --------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ FOR NINE MONTHS ENDED SEPTEMBER 30, ----------------------------------- UNAUDITED (DOLLARS IN THOUSANDS) ------------------------- 1994 1993 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES $ 3,783 $ 8,368 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES SHORT-TERM INVESTMENTS 1,000 (365) DIVIDENDS FROM ASSOCIATED COMPANIES 927 457 INVESTMENTS IN AND ADVANCES TO ASSOCIATED COMPANIES (4,325) PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (5,134) (6,374) PROCEEDS FROM SALE OF SUBSIDIARY 7,045 PROCEEDS FROM THE SALE OF PATENT, PRODUCTION TECHNOLOGY AND OTHER RELATED NONCURRENT ASSETS 6,500 COMPANIES ACQUIRED EXCLUDING CASH (11,099) OTHER 776 (1,301) --------- --------- NET CASH USED IN INVESTING ACTIVITIES 289 (12,182) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES SHORT-TERM DEBT INCURRED 6,995 2,059 CAPITAL LEASE INCURRED 878 REPAYMENT OF SHORT-TERM DEBT (4,872) (2,637) REPAYMENT OF LONG-TERM DEBT (3,582) (1,667) REPAYMENT OF CAPITAL LEASE (264) (764) DIVIDENDS PAID (4,305) (4,142) TREASURY STOCK ISSUED (ACQUIRED) (4,926) 743 OTHER (17) --------- --------- NET CASH PROVIDED FROM FINANCING ACTIVITIES (10,954) (5,547) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (55) 1,095 --------- --------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,937) (8,266) CASH AND CASH EQUIVALENTS AT: BEGINNING OF PERIOD 19,293 24,373 --------- --------- END OF PERIOD $ 12,356 $ 16,107 ========= ========= CASH PAID FOR: INCOME TAXES $ 4,937 $ 4,289 INTEREST 1,350 1,279 * * * * * * * * * * - 7 - Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations ---------------------------------------------- Liquidity and Capital Resources - ------------------------------- The working capital ratio at September 30, 1994 was 2.0 to 1, the same as 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 $10.2 million during the first nine months of 1994. This decline was due primarily to a cash investment and advances of approximately $4.3 million in a joint venture, cash outlays of about $2.1 million related to the company's 1993 repositioning program, increased short-term borrowings to finance the replacement of maturing long-term obligations with short-term debt, and increases in non-cash (primarily accounts receivable) working capital. Working capital remained virtually unchanged from year-end 1993 due to the offsetting impacts of the aforementioned changes in net cash and non-cash working capital. Pursuant to the plans identified in the company's 1993 repositioning program, the sale of certain of the company's businesses and assets were recently completed. On September 30, 1994, and November 7, 1994, respectively, the company consummated the sales of the businesses which comprised its wholly-owned subsidiary, Quaker Construction Products, Incorporated (QCP). On September 30, 1994, the coatings and waterproofing business of QCP was sold to Carlisle Coatings & Waterproofing, Incorporated, a subsidiary of Carlisle Corporation for approximately $8.2 million, $7.0 million of which was received at settlement. On November 7, 1994, the flooring business of QCP was sold to Thoro System Products, Incorporated, a subsidiary of Harris Chemical Group, Incorporated for approximately $2.8 million. In addition, the company sold its Pomona, California manufacturing facility, which had ceased production in 1993, for approximately $1.0 million on October 1, 1994. The transactions are not expected to have a material impact on the company's operating results. During the second and third quarters of 1994, the company repurchased a total of 304,000 outstanding shares of common stock for approximately $5.4 million as part of the previously announced share repurchase program. The share repurchases were funded primarily with the above noted business and asset sale proceeds. - 8 - Comparison of Nine Months 1994 with Nine Months 1993 - ---------------------------------------------------- Net sales for the first nine months of 1994 decreased $5.6 million (4%) while income from operations, before repositioning charges, improved $3.6 million (45%) versus the first nine months of 1993. The decrease in sales was the net result of a 3% increase in volume offset by a decline of 2% from price and sales mix and a 5% decrease associated with the net result of acquisitions and divestitures. Operating margins as a percentage of sales improved in the first nine months of 1994 when compared to the corresponding period in 1993 as increased core market volume, improved sales mix, 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 nine months 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 nine months of 1994 decreased 7% when compared to the first nine months 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 business development investments in a joint venture and 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 nine months 1994 net income was $.01 per share. Operating conditions in the United States appear to be sustainable at the present pace into 1995. In Europe, there are encouraging signals as the region's automotive production rates show signs of sustained improvement, and steel production increases primarily to meet both local demand and export demand from the United States and Asia Pacific regions. However, raw material price increases have become evident in both the U.S. and Europe mainly on the larger commodities. Programs have been initiated to offset these increases in the fourth quarter and early next year. However, there may be some lag in the short-term in passing on the increases due to the longer term nature of some existing contracts and ongoing pricing pressures exerted by some major customer groups. Further improvement in operating results during 1994 is dependent on the sustainability of the positive economic trends in Europe, on minimizing the impact of recent raw material price increases, and on accelerating the effectiveness of the company's service activities in the United States. - 9 - Comparison of Third Quarter 1994 with Third Quarter 1993 - -------------------------------------------------------- Consolidated net sales for the third quarter of 1994 increased $1.7 million (3%) while comparative income from operations improved $2.8 million (218%) versus the third quarter of 1993. The increase in sales was primarily due to positive improvements related to volume and currency translation of 11% and 3%, respectively, partially offset by an 8% decrease associated with the net result of acquisitions and divestitures and a decline of 3% from price and product mix. The operating margin improvement in the third quarter of 1994 over 1993 resulted from increased volume (particularly in Europe), more favorable sales mix, and cost savings associated with the company's 1993 repositioning program. The reasons for the changes in Other Income and Interest Income are basically the same as the nine-month period. The change in effective tax rate in the third quarter 1994 versus 1993 is mainly a result of the combination of non-deductible expenses and low level of sales in 1993. - 10 - PART II. OTHER INFORMATION Items 1-5 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) RICHARD J. FAGAN --------------------------------------- Richard J. Fagan, officer duly authorized to sign this report, Acting Corporate Controller, Corporate Treasurer and Principal Financial and Chief Accounting Officer Date: November 11, 1994 ----------------- - 11 - EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 9-MOS DEC-31-1994 SEP-30-1994 12,356 0 42,413 827 19,025 84,762 112,171 56,187 171,781 42,941 5,000 9,664 0 0 85,249 171,781 142,557 143,851 80,352 132,234 0 0 1,107 10,856 4,332 6,793 0 0 0 6,793 0.74 0.74 - 12 -
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