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 ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED].
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
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:
QUAKER CHEMICAL CORPORATION PROFIT SHARING
AND RETIREMENT SAVINGS PLAN
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
Profit Sharing and
Retirement Savings Plan of Quaker Chemical Corporation
Financial Statements and Additional Information
December 31, 1998 and 1997
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Index to the Financial Statements and Additional Information
December 31, 1998 and 1997
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Page(s)
Financial Statements:
Report of Independent Accountants 1
Statements of Net Assets Available for Benefits
at December 31, 1998 and 1997 2 - 3
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1998 and 1997 4 - 5
Notes to Financial Statements 6 - 8
Additional Information:*
Schedule I - Schedule of Assets Held for Investment at
December 31, 1998 9
Schedule II - Schedule of Reportable Transactions for the
Year Ended December 31, 1998 10
* 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.
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, 1998 and 1997 and the changes in net assets
available for benefits for the years then ended, in conformity with generally
accepted accounting principles. 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 generally accepted auditing
standards 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. The fund information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for benefits of each fund. These supplemental
schedules and fund information are the responsibility of the Plan's management.
The supplemental schedules and fund information 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.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
June 11, 1999
- 1 -
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statement of Net Assets Available for Benefits
December 31, 1998
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Fund Information
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Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Loan Fund Other Total
Investments, at fair value $2,137,010* $13,716,684* $3,440,567* $1,044,719* $20,338,980
Loans to participants $33,652 33,652
Cash surrender value of life
insurance contracts $54,058 54,058
---------- ----------- ---------- ---------- ------- ------- -----------
Total investments 2,137,010 13,716,684 3,440,567 1,044,719 33,652 54,058 20,426,690
Employer contributions receivable 56,535 224,198 51,442 24,028 - - 356,203
---------- ----------- ---------- ---------- ------- ------- -----------
Net assets available for benefits $2,193,545 $13,940,882 $3,492,009 $1,068,747 $33,652 $54,058 $20.782.893
---------- ----------- ---------- ---------- ------- ------- -----------
* Represents greater than 5% of net assets available for benefits.
The accompanying notes are an integral part of these financial statements.
- 2 -
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statement of Net Assets Available for Benefits
December 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
Fund Information
-----------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Loan Fund Other Total
Investments, at fair value $2,058,665* $11,357,394* $2,758,687* $897,370* $17,072,116
Loans to participants $7,628 7,628
Cash surrender value of life
insurance contracts $75,203 75,203
---------- ----------- ---------- ---------- ------- ------- -----------
Total investments 2,058,665 11,357,394 2,758,687 897,370 7,628 75,203 17,154,947
Employer contributions receivable 47,394 215,941 50,972 22,063 336,370
---------- ----------- ---------- ---------- ------- ------- -----------
Net assets available for benefits $2,106,059 $11,573,335 $2,809,659 $919,433 $7,628 $75,203 $17,491,317
---------- ----------- ---------- ---------- ------- ------- -----------
* Represents greater than 5% of net assets available for benefits.
The accompanying notes are an integral part of these financial statements.
- 3 -
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
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Fund Information
-------------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Loan Fund Other Total
Additions to net assets attributed to:
Net investment income (loss) $ 110,715 $ 1,687,284 $ 233,567 $ (15,295) $ 1,405 $ 2,017,676
Participant contributions 103,976 1,125,647 237,001 152,978 1,619,602
Employer contributions 76,971 296,565 66,295 33,476 473,307
Rollovers 29,651 138,171 41,136 9,238 218,196
---------- ----------- ---------- ---------- ------- -----------
321,313 3,247,667 577,999 180,397 1,405 4,328,781
---------- ----------- ---------- ---------- ------- -----------
Deductions from net assets attributed to:
Participant benefit payments 164,702 755,584 77,654 13,396 2,238 1,013,574
Life insurance premiums 203 1,713 570 2,486
Net participant loan activity 4,825 21,326 734 (28) (26,857) -
Decrease in cash surrender value of
insurance contracts 21,145 21,145
Interfund transfers 64,097 101,497 (183,309) 17,715 -
---------- ----------- ---------- ---------- ------- ------- -----------
233,827 880,120 (104,351) 31,083 (24,619) 21,145 1,037,205
---------- ----------- ---------- ---------- ------- ------- -----------
Net increase (decrease) 87,486 2,367,547 682,350 149,314 26,024 (21,145) 3,291,576
Net assets available for benefits:
Beginning of year 2,106,059 11,573,335 2,809,659 919,433 7,628 75,203 17,491,317
---------- ----------- ---------- ---------- ------- ------- -----------
End of year $2,193,545 $13,940,882 $3,492,009 $1,068,747 $33,652 $54,058 $20,782,893
---------- ----------- ---------- ---------- ------- ------- -----------
The accompanying notes are an integral part of these financial statements.
- 4 -
Profit Sharing and Retirement Savings Plan of Quaker Chemical Corporation
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
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Fund Information
--------------------------------------------------------------------------
Quaker
Chemical
Guaranteed Bond and Corporation
Interest U.S. Stock Mortgage Common Participant
Fund Fund Fund Stock Loan Fund Other Total
Additions to net assets attributed to:
Net investment income $ 109,860 $ 2,561,919 $ 261,862 $150,784 $ 535 $ 3,084,960
Participant contributions 89,006 853,695 226,972 104,524 1,274,197
Employer contributions 65,671 298,628 73,238 29,829 467,366
Rollovers 3,102 15,298 3,189 302 21,891
---------- ------------ ---------- -------- ------ -----------
267,639 3,729,540 565,261 285,439 535 4,848,414
---------- ------------ ---------- -------- ------ -----------
Deductions from net assets attributed to:
Participant benefit payments 216,936 2,460,544 599,430 48,950 2,270 3,328,130
Life insurance premiums 945 2,488 750 4,183
Net participant loan activity (3,122) 6,074 (1,624) (21) (1,307) -
Decrease in cash surrender value of
insurance contracts $16,240 16,240
Interfund transfers 20,063 (81,768) (10,959) 72,664 -
---------- ------------ ---------- -------- ------ ------- -----------
234,822 2,387,338 587,597 121,593 963 16,240 3,348,553
---------- ------------ ---------- -------- ------ ------- -----------
Net increase (decrease) 32,817 1,342,202 (22,336) 163,846 (428) (16,240) 1,499,861
Net assets available for benefits:
Beginning of year 2,073,242 10,231,133 2,831,995 755,587 8,056 91,443 15,991,456
---------- ------------ ---------- -------- ------ ------- -----------
End of year $2,106.059 $ 11,573,335 $2,809,659 $919,433 $7,628 $75,203 $17,491,317
---------- ------------ ---------- -------- ------ ------- -----------
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
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
1. Description of Plan
The following description of the Quaker Chemical Corporation Profit Sharing
and Retirement Savings Plan (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 the 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.
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 1998 and 1997 matching
contributions were $117,104 and $130,996, respectively.
Additionally, the Company makes a 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 1998 and
1997 profit sharing contributions were $356,203 and $336,370, 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 Principal Mutual Life Insurance Company ("PML"), respectively,) for
normal distribution.
- 6 -
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
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 PML:
Guaranteed Interest, U.S. Stock, and Bond and Mortgage. Participants may
also elect to invest in Quaker Chemical Corporation Common Stock.
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.
2. Significant Accounting Policies
Basis of accounting
The Plan's financial statements are prepared on the accrual basis of
accounting.
Reclassifications
Certain prior year amounts have been reclassified in order to conform to
current year presentation.
Benefit payments
Benefits are recorded when paid.
Use of estimates
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.
Investment valuation and income recognition
Investments in pooled investment funds are valued at the Plan's pro rata
share of the market value of the funds. Market value is 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 notes 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.
- 7 -
Profit Sharing and Retirement Savings Plan of
Quaker Chemical Corporation
Notes to Financial Statements
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
3. Loans to Participants
At December 31, 1998 and 1997, outstanding loans were $33,652 and $7,628
with original principal of $49,563 and $19,960, respectively. Interest rates
on loans approximate the prime rate in effect at loan inception. The Plan
has certain limitations on loans that can be made to Plan participants.
These limitations include, but are not limited to, a minimum on loans of
$1,000 not to exceed one-half of the participant's vested interest in the
Plan and with a term of not more than three years. Participants should refer
to the Plan document for a complete description of these limitations.
4. 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.
5. 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.
- 8 -
Profit Sharing and Retirement Savings Plan of Schedule I
Quaker Chemical Corporation
Item 27a Form 5500 - Schedule of Assets Held for Investment Purposes
December 31, 1998
- --------------------------------------------------------------------------------
Current
Description of Asset Cost value
*Principal Mutual Life Pooled Investment Funds:
Guaranteed Interest Fund $ 2,024,588 $ 2,137,010
U.S. Stock Fund 6,826.623 13,716,684
Bond and Mortgage Fund 2,558,486 3,440,567
*Quaker Chemical Corporation
Common Stock 897,923 1,044,719
Sun Life of Canada Insurance Contracts 54,058 54,058
Loans to Participants, 9.00% - 9.50% 33,652 33,652
------------ -----------
$12,395,330 $20,426,690
------------ -----------
* Party-in-interest
- 9 -
Profit Sharing and Retirement Savings Plan of Schedule II
Quaker Chemical Corporation
Item 27d Form 5500 - Schedule of Reportable (5%) Transactions*
December 31, 1998
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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 73 $1,906,502 $ - $1,906,502 $1,906,502 $ -
U.S. Stock Fund 54 - 1,234,496 624,084 1,234,496 610,412
Principal Mutual Life
Insurance Co. Guaranteed Interest Fund 34 545,704 - 545,704 545,705 -
Guaranteed Interest Fund 24 - 578,072 578,072 578,072 -
Principal Mutual Life
Insurance Co. Bond and Mortgage Fund 38 695,414 - 695,414 695,414 -
Bond and Mortgage Fund 31 - 247,102 183,393 247,102 63,709
* Transactions or series of transactions in excess of 5 percent of the current
value of the Plan's assets as of January 1, 1998 as defined in Section
2520.103-6 of the Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA.
- 10 -
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 11, 1999, appearing on page 1 on this Form 11-K.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
June 30, 1999
