SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-7154
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Quaker Chemical Corporation
Elm and Lee Streets
Conshohocken, Pennsylvania 19428
Total Number of Pages: 13
1
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Index
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Page(s)
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Report of Independent Accountants 3
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 1999 and 1998 4
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1999 and 1998 5
Notes to Financial Statements 6-9
Additional Information:*
Schedule I - Schedule of Assets Held for Investment Purposes at December 31, 1999 10
Schedule II - Schedule of Reportable Transactions for the Year Ended
December 31, 1999 11
Signatures 12
Exhibit 23 - Consent of Independent Accountants
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are
not applicable.
2
Report of Independent Accountants
To the Participants and Administrator of the
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
(the "Plan") at December 31, 1999 and 1998, and the changes in net assets
available for benefits for the years then ended, in conformity with accounting
principles generally accepted in the United States. 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 of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were conducted 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 reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are 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. These supplemental
schedules are the responsibility of the Plan's management. 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.
/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
June 26, 2000
3
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
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1999 1998
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Investments $20,395,625 $20,426,690
Employer contributions receivable 1,299,715 356,203
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Net assets available for benefits $21,695,340 $20,782,893
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The accompanying notes are an integral part of these financial statements.
4
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
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1999 1998
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Investment income
Net appreciation in fair value of investments $ 100,339 $ 1,361,289
Interest and dividends 634,524 635,242
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734,863 1,996,531
Participant contributions 1,674,060 1,837,798
Employer contributions 1,399,769 473,307
Participant benefit payments (2,896,245) (1,016,060)
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Increase in net assets available for benefits 912,447 3,291,576
Net assets available for benefits:
Beginning of year 20,782,893 17,491,317
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End of year $ 21,695,340 $ 20,782,893
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The accompanying notes are an integral part of these financial statements.
5
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
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1. Description of Plan
The following description of the Profit Sharing and Retirement Savings Plan
of Quaker Chemical Corporation (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan for all employees of Quaker
Chemical Corporation (the "Company"), except for employees compensated in
whole or in part by commissions on sales. The Plan is administered by the
Profit Sharing and Retirement Savings Committee appointed by the Company's
Board of Directors, and is subject to the Employee Retirement Income
Security Act of 1974 ("ERISA").
Employees become eligible for participation in the Plan on the first day of
the month following employment commencement, unless the employee is hired
on the first day of the month in which case the employee is eligible
immediately. Plan participants are immediately vested in their account
balance. All Plan administrative expenses are paid by the Company.
Contributions
Participants may elect to contribute on a "before-tax" basis any whole
percentage of their compensation, up to 15%, during the year. Each year,
the Company makes a matching contribution of $150 for each whole percentage
of the participant's compensation contributed to the Plan during the Plan
year, with the Company's matching contribution for each individual
participant limited to $450 in any calendar year. The Company's 1999 and
1998 matching contributions were $100,054 and $117,104, respectively.
Additionally, the Company makes a contribution (the "profit sharing
contribution") based on the level of domestic company profit from
operations (as defined) versus the target profit (as defined). The target
profit is determined as the average of the prior three years' domestic
company profit from operations increased by 15%. The Company's Board of
Directors, at its discretion, may increase the amount of the contribution
to the Plan for each Plan year. The Company's 1999 and 1998 profit sharing
contributions were $1,299,715 and $356,203, respectively.
Participant accounts
Each participant's account is credited with the participant's contribution
and allocation of (a) the Company's contributions and (b) Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
Investment options
Participants may elect to invest their pro rata share of the Company's
contribution in any of the following pooled investment funds of Principal
Mutual Life Insurance Company ("PML"): Guaranteed Interest, U.S. Stock and
Bond and Mortgage. Participants may also elect to invest in Quaker Chemical
Corporation common stock.
6
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
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The Plan includes a provision whereby PML, if so instructed by the Plan
administrator, shall invest an amount less than 50% of the employer's
current contribution allocable to each participant for the year in whole
life insurance contracts. These contracts are owned by the Plan and
maintained by PML. The Plan is the sole beneficiary of the contracts.
Participant loans
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum of 50% of the participant's account balance. The loans are
secured by the balance in the participant's account, bear interest at the
prime rate in effect at loan inception, and have a term not to exceed three
years. At December 31, 1999 and 1998, outstanding loans were $131,585 and
$33,652, respectively, with original participant balances of $167,417 and
$49,563, respectively.
Benefit payments
Participants are entitled to receive their account balance upon retirement
or termination from the Company. In the event that a payment cannot be made
due to the inability to locate the participant or beneficiary, the
participant account balance will be forfeited and treated as an additional
employer profit sharing contribution for the related Plan year.
In the event of Plan termination, the Plan provides that the assets shall
continue to be held by the trustee and custodian (currently, First Union
Bank and PML, respectively) for normal distribution.
2. Significant Accounting Policies
Basis of accounting
The Plan's financial statements are prepared on the accrual basis of
accounting. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial statements and the
reported amounts of changes in net assets available for benefits. Actual
results could differ from those estimates.
Investments and investment income
Investments in the pooled Guaranteed Interest fund are valued at contract
value, representing contributions made plus interest at the contract rate
less funds withdrawn. Investments in the pooled U.S. Stock and Bond and
Mortgage investment funds are valued at market value, determined using the
daily net asset value quoted by the trustee based on the published market
prices of the underlying securities in the funds. The market value of the
Company's common stock is based on the closing price as listed on the New
York Stock Exchange. Life insurance contracts are valued at cash surrender
value, which approximates fair value. Participant loans receivable are
valued at cost, which approximates fair value. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is recorded
on the accrual basis. Dividends are recorded on the ex-dividend date.
Benefit payments
Benefits are recorded when paid.
7
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
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Financial statement presentation
The Plan adopted Statement of Position ("SOP") 99-3, Accounting for and
Reporting of Certain Defined Contribution Benefit Plan Investments and
Other Disclosure Matters. Certain reclassifications of 1998 amounts have
been made to conform to the 1999 presentation in accordance with SOP 99-3.
This SOP eliminated the previously required reporting of changes in net
assets by investment option for participant directed investments.
3. Investments
The following presents the Plan's investments at December 31:
1999 1998
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Principal Mutual Life
Pooled Investment Funds:
Guaranteed Interest $ 2,228,804* $ 2,137,010*
U.S. Stock 14,189,764* 13,716,684*
Bond and Mortgage 2,801,278* 3,440,567*
Quaker Chemical Corporation
Common Stock 973,965 1,044,719*
Loans to participants 131,585 33,652
Other 70,229 54,058
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$20,395,625 $20,426,690
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* Represents 5 percent or more of the Plan's assets.
The Plan's investments (including gains and losses on investments bought
and sold, as well as held during the year) appreciated in value as follows:
1999 1998
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Principal Mutual Life Pooled Investment Funds:
U.S. Stock $ 571,303 $1,358,303
Bond and Mortgage (218,904) 18,364
Quaker Chemical Corporation Common Stock (252,060) (15,378)
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$ 100,339 $1,361,289
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4. Related Party Transactions
Certain Plan assets are invested in shares of separate accounts managed by
PML. PML is a custodian and recordkeeper as defined by the Plan and,
therefore, these investments qualify as party-in-interest which are exempt
from the prohibited transactions rules.
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Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
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5. Tax Status of the Plan
The Plan has received a tax determination letter from the Internal Revenue
Service dated August 18, 1995 indicating that the Plan is a qualified plan
under Section 401 of the Internal Revenue Code ("IRC"). The Plan has been
amended since receiving the determination letter. However, the Plan
administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
Accordingly, no provision for income taxes has been recorded in the
financial statements.
6. Termination of the Plan
Although it has not expressed any intent to do so, the Company has the
right to terminate the Plan subject to the provisions of ERISA.
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Schedule I
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Item 27a Form 5500 - Schedule of Asets Held for Investment Purposes
December 31, 1999
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Current
Description of Asset Cost Value
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* Principal Mutual Life Pooled Investment Funds:
Guaranteed Interest Fund $ 2,145,383 $ 2,228,804
U.S. Stock Fund 7,657,721 14,189,764
Bond and Mortgage Fund 2,212,360 2,801,278
* Quaker Chemical Corporation
Common Stock 971,355 973,965
Sun Life of Canada Insurance Contracts 70,229 70,229
Loans to Participants, 8.75% - 9.50% 131,585 131,585
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$13,188,633 $20,395,625
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* Party-in-interest
10
Schedule II
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Item 27d Form 5500 - Schedule of Reportable (5%) Transactions*
For the Year Ended December 31, 1999
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Current
Value of Asset
Identity of Number of Purchase Selling Cost of on Transaction
Party involved Description of Asset Transactions Price Price Asset Date Net Gain
-------------- -------------------- ------------ -------- ------- ------- -------------- --------
Principal Mutual Life
Insurance Co. U.S. Stock Fund 64 $1,973,717 - $1,973,717 $ 1,973,717 -
U.S. Stock Fund 59 - $2,274,576 1,142,618 2,274,576 $ 1,131,958
Principal Mutual Life
Insurance Co. Guaranteed Interest Fund 41 1,300,172 - 1,300,172 1,300,172 -
Guaranteed Interest Fund 46 - 1,290,092 1,290,092 1,290,092 -
Principal Mutual Life
Insurance Co. Bond and Mortgage Fund 37 641,212 - 641,212 641,212 -
Bond and Mortgage Fund 47 - 1,266,063 987,338 1,266,063 278,725
*Transactions or series of transactions in excess of 5 percent of the current
value of the Plan's assets as of December 31, 1999 as defined in Section
2520.103-6 of the Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA.
11
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
trustees have duly caused this annual report to be signed by the undersigned
hereunto duly authorized.
Profit Sharing and Retirement Savings
Plan of Quaker Chemical Corporation
Date: June 28, 2000
By: /s/ James A. Geier
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Vice President - Human Resources
12
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-54158) of Quaker Chemical Corporation of our
report dated June 26, 2000 relating to the financial statements of the Profit
Sharing and Retirement Savings Plan of Quaker Chemical Corporation, which
appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
June 28, 2000
13