-----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, I7D0uDz7Ru1TEl/4/YJpQFk+odCC9Z2XrfZUal1jAa2A4ef1pbAfZVXH9OD89enV Q0SX2wZrsz8flz7KXEVH2w== 0000081371-97-000007.txt : 19970627 0000081371-97-000007.hdr.sgml : 19970627 ACCESSION NUMBER: 0000081371-97-000007 CONFORMED SUBMISSION TYPE: 11-KT PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUAKER OATS CO CENTRAL INDEX KEY: 0000081371 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 361655315 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 11-KT SEC ACT: 1934 Act SEC FILE NUMBER: 033-02709 FILM NUMBER: 97629784 BUSINESS ADDRESS: STREET 1: QUAKER TOWER STREET 2: PO BOX 049001 CITY: CHICAGO STATE: IL ZIP: 60604-9001 BUSINESS PHONE: 3122228503 11-KT 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K [ ] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 [X] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the transition period from July 1, 1996 to December 31, 1996 Commission file number 1-12 Full title of the Plan and the address of the Plan, if different from that of the issuer named below: The Quaker Investment Plan Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: The Quaker Oats Company P.O. Box 049001 Chicago, Illinois 60604-9001 Item 1. See Item 4. Item 2. See Item 4. Item 3. See Item 4. Item 4. Financial Statements and Exhibits (a) Financial Statements The Quaker Investment Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA), and the report of Washington, Pittman & McKeever, independent public accountants, as prepared in accordance with the financial reporting requirements of ERISA is attached hereto and incorporated into this report. (b) Exhibit Consent of Independent Public Accountants - Washington, Pittman & McKeever. SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the administrators of the Plan have duly caused this annual report to be signed on their behalf by the undersigned hereunto duly authorized. The Quaker Investment Plan (Name of Plan) DENNIS M. CORRY (Dennis M. Corry) Senior Manager - Benefit Plans KATHLEEN KEARNEY (Kathleen Kearney) Manager - Benefit Plans ANNE TUMMINARO (Anne Tumminaro) Manager - Employee and Management Services Date: June 25, 1997 2 Exhibit Index Exhibit Paper (P) or Number Description Electronic (E) (a) The Quaker Investment E Plan Financial Statements as of December 31, 1996 and June 30, 1996 (b) Consent of Independent E Public Accountants 3 Exhibit (a) THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 TOGETHER WITH INDEPENDENT AUDITOR'S REPORT 4 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 6 STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS 7-8 STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS 9-10 NOTES TO FINANCIAL STATEMENTS 11-16 SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES 17-18 SCHEDULE OF REPORTABLE TRANSACTIONS 19 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 20 5 INDEPENDENT AUDITOR'S REPORT To the Plan Committee of THE QUAKER INVESTMENT PLAN of The Quaker Oats Company We have audited the accompanying Statements of Net Assets Available for Benefits of The Quaker Investment Plan (Plan) as of December 31, 1996 and June 30, 1996, and the related Statements of Changes in Net Assets Available for Benefits for the six months ended December 31, 1996 and the year ended June 30, 1996. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1996 and June 30, 1996, and the changes in net assets available for benefits for the six months ended December 31, 1996 and the year ended June 30, 1996 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedules of Assets Held for Investment Purposes and of Reportable Transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements. These schedules contain supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. WASHINGTON, PITTMAN & McKEEVER Chicago, Illinois June 12, 1997 6 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1996 (dollars in thousands)
Quaker Money Stock Diversified Market Bond Loan Total Fund Fund Fund Fund Fund ASSETS Investments, at market - The Quaker Oats Company common stock (2,293,417 shares, cost $53,221) $ 87,433 $87,433 $ -- $ -- $ -- $ -- Marketable Securities (cost $122,190) 148,254 -- 131,124 -- 17,130 -- Short-Term Investments (cost $5,567) 5,589 -- 5,589 -- -- -- Collective Short-Term Investment Fund 44,803 514 3,369 40,672 248 -- 286,079 87,947 140,082 40,672 17,378 -- Participant loans 5,886 -- -- -- -- 5,886 Total investments 291,965 87,947 140,082 40,672 17,378 5,886 Employee contributions receivable 230 42 154 27 7 -- Accrued dividends and interest receivable 1,056 655 215 185 1 -- Interfund transfers receivable (payable) -- 1,013 (1,236) 322 (99) -- Total assets 293,251 89,657 139,215 41,206 17,287 5,886 LIABILITY Payable for investments purchased 114 114 -- -- -- -- NET ASSETS AVAILABLE FOR BENEFITS $293,137 $89,543 $139,215 $41,206 $17,287 $5,886 See accompanying notes to financial statements. 7 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS OF JUNE 30, 1996 (dollars in thousands) Quaker Money Stock Diversified Market Bond Loan Total Fund Fund Fund Fund Fund ASSETS Investments, at market - The Quaker Oats Company common stock (2,302,937 shares, cost $50,800) $ 78,008 $78,008 $ -- $ -- $ -- $ -- Marketable Securities (cost $116,087) 133,856 -- 116,061 -- 17,795 -- Short-Term Investments (cost $8,251) 8,275 -- 8,275 -- -- -- Collective Short-Term Investment Fund 48,443 301 7,554 40,498 90 -- 268,582 78,309 131,890 40,498 17,885 -- Participant loans 6,242 -- -- -- -- 6,242 Total investments 274,824 78,309 131,890 40,498 17,885 6,242 Employee contributions receivable 540 143 305 60 32 -- Accrued dividends and interest receivable 1,015 662 174 178 1 -- Receivable for investments sold 639 -- 639 -- -- -- Interfund transfers receivable (payable) -- 552 (748) 283 (87) -- Total assets 277,018 79,666 132,260 41,019 17,831 6,242 LIABILITY Payable for investments purchased 299 -- 299 -- -- -- NET ASSETS AVAILABLE FOR BENEFITS $276,719 $79,666 $131,961 $41,019 $17,831 $6,242 See accompanying notes to financial statements. 8 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (dollars in thousands) Quaker Money Stock Diversified Market Bond Loan ADDITIONS Total Fund Fund Fund Fund Fund Investment income: Dividends $ 2,468 $ 1,337 $ 1,131 $ -- $ -- $ -- Interest 1,641 119 397 1,106 19 -- Total investment income 4,109 1,456 1,528 1,106 19 -- Realized gain on investments - (Note 5) 12,006 3,023 8,360 -- 623 -- Unrealized gain on investments - (Note 6) 15,297 7,004 7,813 -- 480 -- Employee contributions 5,009 1,606 2,540 531 332 -- Contributions from other plans 1,914 391 1,159 304 60 -- Total additions 38,335 13,480 21,400 1,941 1,514 -- DEDUCTIONS Distributions to participants 21,917 4,705 9,968 5,808 1,436 -- Increase (decrease) in net assets 16,418 8,775 11,432 (3,867) 78 -- Net assets available for benefits, beginning of period 276,719 79,666 131,961 41,019 17,831 6,242 Interfund transfers, net -- 1,102 (4,178) 4,054 (622) (356) NET ASSETS AVAILABLE FOR BENEFITS, END OF PERIOD $293,137 $89,543 $139,215 $41,206 $17,287 $5,886 See accompanying notes to financial statements. 9 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED JUNE 30, 1996 (dollars in thousands) Quaker Money Stock Diversified Market Bond Loan ADDITIONS Total Fund Fund Fund Fund Fund Investment income: Dividends $ 5,001 $ 2,795 $ 2,206 $ -- $ -- $ -- Interest 3,811 256 811 2,693 51 -- Total investment income 8,812 3,051 3,017 2,693 51 -- Realized gain on investments - (Note 5) 31,414 8,832 21,880 -- 702 -- Unrealized (loss) gain on investments - (Note 6) (6,010) (4,973) (1,153) -- 116 -- Employee contributions 10,469 3,831 4,659 1,253 726 -- Contributions from other plans 2,835 681 1,607 438 109 -- Total additions 47,520 11,422 30,010 4,384 1,704 -- DEDUCTIONS Distributions to participants 41,865 13,091 13,107 13,903 1,764 -- Increase (decrease) in net assets 5,655 (1,669) 16,903 (9,519) (60) -- Net assets available for benefits, beginning of period 271,064 90,852 102,101 55,223 14,996 7,892 Interfund transfers, net -- (9,517) 12,957 (4,685) 2,895 (1,650) NET ASSETS AVAILABLE FOR BENEFITS, END OF PERIOD $276,719 $79,666 $131,961 $41,019 $17,831 $6,242 See accompanying notes to financial statements.
10 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 NOTE 1 - THE QUAKER INVESTMENT PLAN The following brief description of The Quaker Investment Plan (Plan) provides only general information. The Plan document should be referred to for the complete Plan provisions. General The Plan covers salaried domestic employees of The Quaker Oats Company (Company) and certain domestic subsidiaries. The Plan is solely funded by employee contributions. Under the Plan, eligible salaried employees may accumulate funds on a pretax basis for long-term retirement savings. The Plan is intended to qualify as a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code and is subject to the provisions of the Employee Retirement Income Security Act of 1974. This report discusses the six-month transition period ended December 31, 1996. The Plan year end changed from a June 30 fiscal-year end to a fiscal year aligned with the calendar year beginning January 1, 1997. Overall responsibility for administering the Plan rests with the Plan's administrative committee which is appointed by the Board of Directors of the Company. The Plan's administrative committee has appointed Hewitt Associates as the Plan's record keeper. The Plan's trustee, The Northern Trust Company, is responsible for the management and control of the Plan's assets and has certain discretionary authority and control over such assets. The Company pays all expenses incurred by the Plan. Eligibility Effective July 1, 1994, the Plan was amended to allow salaried employees participation in the Plan on the date of employment or, if employed less than six months, effective July 1, 1994. Prior to this Plan amendment, salaried employees were eligible to participate in the Plan after six months of employment and acceptance as an approved employee, or after a twelve-month period during which the employee had at least 998 hours of employment and was still employed by the Company. 11 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 NOTE 1 - THE QUAKER INVESTMENT PLAN (CONTINUED) Contributions Participants in the Plan are allowed to defer receipt of, and have placed in the Plan, up to 7 percent of their earnings. Contributions are not subject to Federal income tax until distributed to the participants or their beneficiaries. Plan participants may invest in one or more of the Plan's four funds: the Quaker Stock Fund, the Diversified Fund, the Bond Fund, or the Money Market Fund. The Plan allows participants to transfer their accounts, in multiples of 25 percent, among funds once a month. Participants may also change the percent of their earnings contributed to the Plan once a month. The Plan allows employees the option to deposit excess funds from The Quaker Flex Plan to the Plan. The Plan also allows a participant to contribute to the Plan a lump-sum distribution received from other qualified plans when the contribution qualifies as a tax-free roll-over. Distributions Participants may elect in writing to receive all or a portion of their accounts if they are at least age 59 1/2 years or if they are totally and permanently disabled as determined by the Company with the advice of a medical doctor. The participant's account will then be valued as of the latest available valuation date before distribution. If only a portion of the account is distributed, the remaining balance will continue to be adjusted for contributions, net earnings, gains and losses as of each valuation date. Participants may receive a distribution of a portion of their accounts in the event of a hardship. Hardship means when funds are required for purchasing or making capital expenditures for a primary residence, financing the post- secondary education of the participant or the participant's family or alleviating existing financial hardship. If a participant's employment with the Company is terminated, the Plan will distribute the participant's account balance to the participant or the participant's beneficiary. A participant may elect to defer the lump-sum distribution or the start of installment payments until age 70 1/2. If a participant terminates employment, attains age 65 in a Plan year, and no distribution or deferral election is received by the 15th day after the end of the Plan year, an automatic lump-sum distribution will be made. A participant may elect in writing to receive the distribution in one of the following ways: (a) in a lump sum; (b) in a partial distribution; or (c) in approximately equal annual installments over a chosen period. The period chosen, however, must be no longer than the participant's life expectancy when distributions begin as determined by the Internal Revenue Service regulations. If the distribution is made through installment payments, the participant's remaining account balance will continue to be adjusted for net earnings and gains and losses as of each valuation date. If a participant's account value is $3,500 or less, an automatic lump-sum distribution will be made as soon as practicable after the end of the Plan year in which termination occurs. This provision does not apply to accounts under $3,500 at the end of the transition period ending December 31, 1996. 12 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 NOTE 1 - THE QUAKER INVESTMENT PLAN (CONTINUED) Loans Plan participants may obtain loans from their account balances subject to the following terms and restrictions which are effective for loan applications received after September 15, 1989: (a) Participants may borrow up to 50 percent of their account balance including the highest loan balance in the previous one-year period, but not more than $50,000 or less than $1,000. (b) The terms of such loans shall not exceed five years and the rate of interest to be applied will be the Northern Trust prime rate plus 1 percent. (c) Repayments on the loan are to be made directly through payroll deductions for active employees. (d) Loans made to a participant shall be secured by the participant's non- forfeitable interest from one or more of the funds in which a participant's account is invested prior to the making of such loans. Participants with an outstanding loan (for at least a year) may request an additional loan. The additional loan will have a separate payment schedule from the existing loan. Participants cannot exceed two outstanding loans. Plan Termination The Plan may be terminated at any time by the action of the Board of Directors or Executive Committee of the Board. In the event of termination of the Plan, the accounts shall be held for the benefit of the participants, former participants or their beneficiaries. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements are prepared on the accrual basis of accounting. Interest income is recorded as earned and dividend income is recorded as of the record date. The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires the Plan's management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates and assumptions. 13 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investment Valuation Investments are included in the accompanying Statements of Net Assets Available for Benefits at fair market value. Fair market value is based on published market prices. Net realized and unrealized gains and losses for the period are reflected in the accompanying Statement of Changes in Net Assets Available for Benefits. The net realized gain or loss on the investments sold is calculated as the difference between the proceeds received and the average cost of the investments. The net realized gain or loss on the distribution of investments is calculated as the difference between the fair market value on the date of distribution and the average cost of the investments. The net unrealized gain or loss is calculated as the difference between the fair market value of the investments less the cost of the investments at the end of the Plan year and the fair market value of the investments less the cost of the investment at the beginning of the Plan year. Purchases and sales of securities, including related gains and losses, are recognized on the transaction trade date. Brokerage commissions increase the cost or decrease the sale proceeds on the security transactions. NOTE 3 - TRUST INVESTMENTS Participants in the Plan may invest in the Quaker Stock Fund (common stock of the Company), the Diversified Fund (primarily common and preferred stock of corporations other than the Company and/or interest-bearing securities), the Bond Fund (primarily corporate bonds with an average credit rating of "A" and with maturities of up to 30 years), or the Money Market Fund (primarily short- term fixed-income securities). The Trustee is authorized to keep such portion of any of the Investment Funds as may seem advisable, from time to time, in cash or cash equivalents and/or in short-term fixed-income investments. The value of each unit in a participant's account as of December 31, 1996 and June 30, 1996 for each of the four funds was as follows: Unit Value December 31 June 30 Quaker Stock Fund $ 28.26 $ 24.78 Diversified Fund $ 23.72 $ 20.73 Money Market Fund $ 7.24 $ 7.04 Bond Fund $ 2.50 $ 2.35 14 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 (dollars in thousands) NOTE 4 - FEDERAL INCOME TAXES The Plan obtained its latest determination letter on May 22, 1996, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, the Plan administrator believes that the Plan was qualified and the related trust was tax-exempt as of December 31, 1996 and June 30, 1996. NOTE 5 - REALIZED GAIN ON INVESTMENTS IN SECURITIES The realized gain on investments in securities was as follows: Six Months Ended Year Ended December 31, 1996 June 30, 1996 Aggregate Aggregate Cost of Cost of Securities Realized Securities Realized Sold/Distributed Gain Sold/Distributed Gain Quaker Stock Fund $ 5,577 $ 3,023 $ 15,135 $ 8,832 Diversified Fund 111,775 8,360 163,233 21,880 Bond Fund 1,241 623 1,410 702 $118,593 $12,006 $179,778 $31,414 NOTE 6 - UNREALIZED GAIN (LOSS) ON INVESTMENTS IN SECURITIES The unrealized gain (loss) on investments in securities was as follows: Six Months Ended Year Ended December 31, 1996 June 30, 1996 Unrealized gain, beginning of year $45,001 $ 51,011 Unrealized gain (loss) during the year 15,297 (6,010) UNREALIZED GAIN, END OF YEAR $60,298 $ 45,001 15 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND JUNE 30, 1996 (dollars in thousands) NOTE 7 - CURRENT VALUE GAIN Based on the Current Value reporting requirements of the Department of Labor and the Internal Revenue Service instructions for Form 5500, the net realized gain on the investments sold is calculated as the difference between proceeds received and the fair market value of investments on the first day of the Plan year or the acquisition date if purchased during the Plan year. The net realized gain on the distribution of investments is calculated as the difference between fair market value of investments on the date of distribution and the fair market value of investments on the first day of the Plan year. The net unrealized gain is calculated as the difference between the fair market value of investments at the end of the Plan year and the fair market value at the beginning of the Plan year. The net realized gain and net unrealized gain were as follows: Six Months Ended Year Ended December 31, 1996 June 30, 1996 Net realized gain on investments $ 3,893 $13,535 Net unrealized gain on investments 23,410 11,869 NET GAIN ON INVESTMENTS $27,303 $25,404 NOTE 8 - RECONCILIATION OF THE FORM 5500 TO THE FINANCIAL STATEMENTS The following is a reconciliation of net assets available for benefits per the Form 5500 to the financial statements: As of As of December 31, 1996 June 30, 1996 Net assets available for benefits per the Form 5500 $291,393 $268,917 Add: Distributions payable to participants 1,744 7,802 NET ASSETS AVAILABLE FOR BENEFITS PER THE FINANCIAL STATEMENTS $293,137 $276,719 The following is a reconciliation of benefits paid to participants per the Form 5500 to the financial statements: Six Months Ended Year Ended December 31, 1996 June 30,1996 Distributions to participants per the Form 5500 $15,859 $41,958 Add: Distributions payable, beginning of year 7,802 7,709 Less: Distributions payable, end of year 1,744 7,802 DISTRIBUTIONS TO PARTICIPANTS PER THE FINANCIAL STATEMENTS $21,917 $41,865 16 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN FORM 5500 ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1996 (dollars in thousands) Schedule I Page 1 of 2 Market Description Number of Shares Cost Value Company Stock The Quaker Oats Company Common Stock * 2,293,417 $53,221 $87,433 Marketable Securities Common Stocks - ADR C.S. Hldg. Sponsored ADR 98,700 2,499 2,527 ADR Elf Aquitaine Sponsored 93,000 3,673 4,208 ADR Nokia Corp. Sponsored 38,800 1,491 2,236 ADR Novartis A.G. Sponsored 85,385 3,772 4,874 ADR Peninsular & Oriental Steam Nav Co. Sponsored 97,600 1,949 1,971 ADR Phillips Electronics N.V. 106,600 3,367 4,264 ADR Rhone Poulenc S.A. Sponsored 95,500 2,552 3,235 Aetna Inc. 20,950 1,366 1,676 Allegheny Teledyne Inc. 50,600 1,041 1,164 Allstate Corp. 66,218 2,056 3,832 American Home Products Corp. 60,400 3,106 3,541 Amoco Corp. 47,950 3,148 3,866 AMR Corp. 30,200 2,552 2,661 Banc One Corp. 71,500 2,712 3,075 Boeing Co. 38,850 3,334 4,138 Bristol Myers Squibb Co. 33,900 2,924 3,695 Burlington Northern Santa Fe Corp. 38,850 2,555 3,356 Citicorp 32,100 1,457 3,306 Dow Chemical Co. 47,650 3,722 3,734 Dun & Bradstreet Corp. 83,050 1,940 1,972 DuPont, E.I. DeNemours & Company 36,050 2,631 3,393 Federated Department Stores Inc. 87,500 2,363 2,986 General Instr. Corp. 41,000 949 892 General Motors Corp. 77,050 3,971 4,295 Grace, W.R. & Co. 41,500 2,020 2,148 Hasbro Inc. 42,200 1,498 1,640 Host Marriot Corp. 87,600 1,378 1,402 International Business Machines Corp. 24,350 2,522 3,689 ITT Inds. Inc. 60,800 3,419 2,637 Loews Corp. 30,950 2,425 2,917 Mattel Inc. 29,321 547 814 MCI Communications Corp. 103,000 3,266 3,367 * Identifies a party-in-interest to the Plan. 17 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN FORM 5500 ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1996 (dollars in thousands) Schedule I Page 2 of 2 Market Description Number of Shares Cost Value Common Stocks (continued) Motorola Inc. 42,350 2,136 2,594 Northrop Gruman Corp. 34,900 2,380 2,888 Nynex Corp. 81,300 3,639 3,913 Pacific Telesis Group 125,500 4,238 4,612 Raytheon Co. 59,450 2,855 2,861 Scripps Howard Inc. 55,200 1,780 1,932 Tenet Healthcare Corp. 89,100 1,712 1,949 Travelers Group Inc. 66,966 1,486 3,039 Union Pacific Corp. 70,750 3,181 4,254 Wal-Mart Stores, Inc. 144,500 3,623 3,287 Wells Fargo & Co. 13,900 3,410 3,750 WMX Technology Inc. 78,000 2,622 2,534 Corporate Bonds - Quaker Master Trust - Wells Fargo Bonds 687,725 10,923 17,130 Total Marketable Securities 122,190 148,254 Short-Term Investments Coca Cola Co. Coupon, $700 due 1/10/97 700 698 699 Ford Motor Car Co. Coupon, $2,800 due 1/07/97 2,800 2,782 2,798 Lucent Technologies, Inc. Coupon, $2,100 due 1/29/97 2,100 2,087 2,092 Total Short-Term Investments 5,567 5,589 Collective Short-Term Investment Fund 44,803 44,803 Participant Loans (9.25%) 5,886 5,886 TOTAL INVESTMENTS $231,667 $291,965 18 THE QUAKER OATS COMPANY THE QUAKER INVESTMENT PLAN FORM 5500 ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (dollars in thousands) Schedule II Purchase and Transaction Cost of Current Net Sale Price Fees Asset Value Gain Description Quaker Stock Fund - The Quaker Oats Company common stock 234,899 shares purchased in 16 transactions $34.006 $10 $7,998 $7,998 -- 194,720 shares sold in 12 transactions $35.717 $10 $4,464 $6,965 $2,491 19 Exhibit (b) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated June 12, 1997 (and references to our Firm) included in or made a part of this Form 11-K. It should be noted that we have not audited any financial statements of The Quaker Investment Plan subsequent to December 31, 1996 or performed any audit procedures subsequent to the date of our report. WASHINGTON, PITTMAN & McKEEVER Chicago, Illinois June 20, 1997 20 -----END PRIVACY-ENHANCED MESSAGE-----