FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-7154
------
QUAKER CHEMICAL CORPORATION
----------------------------------------------------------
(Exact name of Registrant as specified in its charter)
A Pennsylvania Corporation No. 23-0993790
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Elm and Lee Streets, Conshohocken, Pennsylvania 19428
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-832-4000
------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
-----------------------------
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes / X / No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant. (The aggregate market value is computed by
reference to the last reported sale price on the Nasdaq National Market on
March 18, 1994): $166,425,298.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 9,255,506 shares
of Common Stock, $1.00 Par Value, as of March 18, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1993 are incorporated into Parts I and II.
(2) Portions of the Registrant's definitive Proxy Statement dated March 31,
1994, in connection with the Annual Meeting of Shareholders to be held on
May 4, 1994, are incorporated into Part III.
The exhibit index is located on page 18.
PART I
As used in this Report, the term "Quaker," unless the context otherwise
requires, means Quaker Chemical Corporation, its subsidiaries, and associated
companies.
ITEM 1. BUSINESS.
--------
General Description
- -------------------
Quaker develops, produces, and markets a broad range of formulated
chemical specialty products for various heavy industrial, institutional, and
manufacturing applications. Quaker's principal products include: (i) rolling
lubricants (used by manufacturers of steel in the hot and cold rolling of
steel); (ii) corrosion preventives (used by steel and metalworking customers
to protect metal during manufacture, storage, and shipment); (iii) metal
finishing compounds (used to prepare metal surfaces for special treatments
such as galvanizing and tin plating and to prepare metal for further
processing); (iv) machining and grinding compounds (used by metalworking
customers in cutting, shaping, and grinding metal parts which require special
treatment to enable them to tolerate the manufacturing process); (v) forming
compounds (used to facilitate the drawing and extrusion of metal products);
(vi) paper production products (used as defoamers, release agents, softeners,
debonders, and dispersants); (vii) hydraulic fluids (used by steel,
metalworking, and other customers to operate hydraulically activated
equipment); (viii) products for the removal of hydrogen sulfide in various
industrial applications. During 1993, Quaker developed programs to provide
recycling and chemical management services.
In 1994, Quaker entered into an agreement for the creation of a
joint venture which is expected to enhance the Total Fluid Management (TFM)
service capabilities of Quaker. An initial cash investment of
approximately $3,000,000 has been made with additional investments expected
based on the growth of the venture.
Other specialty products and services are produced and marketed by
Quaker's domestic subsidiaries. AC Products, Inc., Quaker Construction
Products, Inc., QSC Products, Ltd., and Multi-Chemical Products, Inc.
manufacture and/or sell sealants and coatings for aerospace, construction, and
industrial use. Selby, Battersby & Co. manufactures and sells trowel-applied
flooring systems which derive their specialty characteristics from the
different resins used and the methods of their application.
During the third quarter 1992, as part of a plan to exit from the
petroleum production chemicals market, Quaker entered into an agreement to
sell certain of its petroleum production chemical operations assets, the
principal component of which is technology used in the removal of hydrogen
sulfide and organic sulfides from liquid and gaseous streams, embodied in the
SULFA-SCRUB(R) product series. This transaction was consummated in 1993.
Quaker acquired in May 1993 a French producer of metalworking fluids at a
price of approximately French Francs 53,000,000 (approximately US
$10,700,000), to reinforce Quaker's existing metalworking operations in
Europe.
2
Substantially all of Quaker's sales worldwide are made directly through
its own sales forces. Quaker salesmen visit the plants of customers regularly
and through training and experience identify production needs which can be
resolved or alleviated either by adapting Quaker's existing products or by new
formulations developed in Quaker's laboratories. Salesmen may call upon
Quaker's regional managers, product managers, and members of its laboratory
staff for assistance in obtaining and setting up product tests and evaluating
the results of such tests. In 1993, certain products were also sold in
Canada, Korea, India, and Argentina by exclusive licensees under long-term
royalty agreements.
Generally, separate manufacturing facilities of a single customer are
served by different salesmen.
Competition
- -----------
The chemical specialty industry is composed of a number of companies of
similar size as well as companies larger and smaller than Quaker. Quaker
cannot readily determine its precise position in the industry. Many
competitors are in fewer and more specialized product classifications or
provide different levels of technical services in terms of specific
formulations for individual customers. Competition in the industry is based
primarily on the ability to provide products which meet the needs of the
customer and render technical services and laboratory assistance to customers
and, to a lesser extent, on price.
Major Customers
- ---------------
During 1993, Quaker's five largest customers (each composed of multiple
subsidiaries or divisions with semi-autonomous purchasing authority) accounted
for approximately 16% of its consolidated net sales with the largest of these
customers accounting for approximately 4% of consolidated net sales. No one
subsidiary or division of these five customers accounted for more than 3% of
consolidated net sales. During the same period, approximately 46% of
consolidated net sales were made to customers engaged in the manufacture of
cold-rolled steel.
Raw Materials
- -------------
Quaker uses over 500 raw materials, including mineral oils, fats and fat
derivatives, ethylene derivatives, solvents, surface active agents,
chlorinated paraffinic compounds, and a wide variety of organic and inorganic
compounds. In 1993, only one raw material accounted for as much as 11% of the
total cost of Quaker's raw material purchases. Quaker has multiple sources of
supply for most materials, and Management believes that the failure of any
single supplier would not have a material adverse effect upon its business.
3
Patents and Trademarks
- ----------------------
Quaker has a limited number of patents and patent applications,
including patents issued, applied for, or acquired in the United States and in
various foreign countries, some of which may prove to be material to its
business. Principal reliance is placed upon Quaker's proprietary formulae and
the application of its skills and experience to meet customer needs. Quaker's
products are identified by trademarks which are registered throughout its
marketing area. Quaker makes little use of advertising but relies heavily
upon its reputation in the markets which it serves.
Research and Development -- Laboratories
- ----------------------------------------
Quaker's research and development laboratories support its sales
organization. Accordingly, the activities of Quaker's laboratory staff are
directed primarily toward applied research and development since the nature of
Quaker's business requires continuing modification and improvement of
formulations to provide chemical specialties to satisfy customer requirements.
Quaker maintains quality control laboratory facilities in each of its
manufacturing locations. In addition, Quaker maintains in Conshohocken,
Pennsylvania, laboratory facilities which are devoted primarily to applied
research and development.
Most of Quaker's affiliates also have research and development facilities.
Although not as complete as the Conshohocken laboratories, these facilities
are generally sufficient for the requirements of the customers being served.
If problems are encountered which cannot be resolved by local research and
development facilities, such problems are referred to the Conshohocken
laboratory staff.
Approximately 195 persons, of whom 98 have B.S. degrees and 44 have B.S.
and advanced degrees, are employed in Quaker's laboratories.
Number of Employees
- -------------------
On December 31, 1993, Quaker had 1,006 full-time employees, of whom 369
were employed by the parent company, 548 were employed by its international
subsidiaries and associates, and 89 were employed by all domestic
subsidiaries.
Product Classification
- ----------------------
Incorporated by reference is the information concerning product
classification by markets served appearing under the caption "Supplemental
Financial Information" on page 27 of the Registrant's
4
1993 Annual Report to Shareholders, the incorporated portions of which are
included as Exhibit 13 to this Report.
International Activities
- ------------------------
Incorporated by reference is the information concerning international
activities appearing in Note 9 to Notes to Consolidated Financial Statements
and under the caption "General" of the Operations section of Management's
Discussion and Analysis of Financial Condition and Results of Operations which
appear on pages 30 and 31, respectively, of the Registrant's 1993 Annual
Report to Shareholders, the incorporated portions of which are included as
Exhibit 13 to this Report.
ITEM 2. PROPERTIES.
----------
Quaker's principal facilities in the United States are located in
Conshohocken, Pennsylvania and Detroit, Michigan. Quaker also owns a
non-operating facility in Pomona, California. Quaker's international
subsidiaries own facilities in Woodchester, England; Uithoorn, The
Netherlands; Verona, Italy; Villeneuve, France; Santa Perpetua de Mogoda,
Spain; and Seven Hills, N.S.W., Australia. Quaker Construction Products, Inc.
has a manufacturing facility in Sapulpa, Oklahoma that also serves QSC
Products, Ltd. and Selby, Battersby & Co. All of these facilities are owned
mortgage free. Financing for the Corporate Technical Center in Conshohocken,
Pennsylvania was arranged through the use of industrial revenue and
development bonds with an outstanding balance at December 31, 1993 of
$5,000,000.
Quaker's aforementioned facilities consist of various manufacturing,
administrative, warehouse, and laboratory buildings. Substantially all of the
buildings are of fire-resistant construction and are equipped with sprinkler
systems. All facilities are primarily of masonry and/or steel construction
and are adequate and suitable for Quaker's present operations. The Company
has a program to identify needed capital improvements which will be
implemented as Management considers necessary or desirable. Most locations
have various numbers of raw material storage tanks ranging from six to 63
having a capacity from 500 to 80,000 gallons each and processing or
manufacturing vessels ranging in capacity from 50 to 12,000 gallons each.
In order to facilitate compliance with applicable federal, state, and
local statutes and regulations relating to occupational health and safety and
protection of the environment, the Company has implemented a program of site
assessment, currently directed primarily to facilities in the United States
for the purpose of identifying capital expenditures or other actions that may
be necessary to comply with such requirements. The program includes periodic
inspections of each facility in the United States by Quaker and/or independent
environmental experts, as well as ongoing inspections by on-site personnel.
Such inspections are addressed
5
to operational matters, record keeping, reporting requirements, and
capital improvements. In 1993, capital expenditures directed solely or
primarily to regulatory compliance amounted to approximately
$1,000,000.
Quaker's executive offices are located in a four-story building containing
a total of approximately 47,000 square feet. A corporate technical center
containing approximately 28,700 square feet houses the laboratory facility.
Both of these facilities are adjacent to Quaker's manufacturing facility in
Conshohocken.
Multi-Chemical Products, Inc. has a ten-year lease on its facility in
Fontana, California which expires in 2001. AC Products, Inc. has a ten-year
lease on its facility in Placentia, California that expires in 1997.
Quaker's Mexican associate (40% owned) owns a plant in Monterrey, Mexico.
ITEM 3. LEGAL PROCEEDINGS.
-----------------
The Company is a party to proceedings, cases, and requests for information
from, and negotiations with, various claimants and federal and state agencies
relating to various matters including environmental matters, none of which are
expected to result in monetary sanctions in any amount or in awards that would
have a material adverse effect on the Company's financial condition.
Reference is made to Note 11 to Notes to Consolidated Financial Statements
which appears on page 26 in the Registrant's 1993 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this report, for information concerning pending asbestos-related cases against
a subsidiary.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
No matters were submitted to a vote of security holders during the last
quarter of the period covered by this Report.
6
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT.
------------------------------------
YEAR FIRST
ELECTED AS
AN EXECUTIVE
NAME OFFICE (SINCE) AGE OFFICER
---- -------------- --- ------------
Peter A. Benoliel Chairman of the Board (1980) 62 1963
S. W. W. Lubsen President (1988) and Chief 50 1988
Executive Officer (1993)
John E. Burrows, Jr. Vice President-North America 47 1990
(1992)
Jose Luiz Bregolato Vice President-South America 48 1993
(1993)
Ira R. Dolich Vice President-Quality and 58 1981
Training (1990)
(Retired December 31, 1993)
William G. Hamilton Corporate Treasurer (1985) 57 1985
(Retired December 31, 1993)
Marcus C. J. Meijer Vice President-Europe (1990) 46 1990
Clifford E. Montgomery Vice President-Human Resources 46 1990
(1990)
Karl H. Spaeth Vice President (1981) and 65 1972
Corporate Secretary (1972)
Joseph F. Spanier Vice President (1990), 47 1985
Corporate Controller (1985),
and Corporate Treasurer (1994)
All of the Executive Officers with the exception of Mr. Bregolato, Mr.
Meijer, Mr. Burrows, and Mr. Montgomery have served as an officer of the
Registrant for more than the past five years. Prior to being elected Chief
Executive Officer of the Registrant, Mr. Lubsen served as Managing Director of
Quaker Chemical B.V., a position to which he was appointed in 1984, and
President and Chief Operating Officer to which he was elected in 1988. Prior
to his election as an officer of the Registrant, Mr. Bregolato served as
Financial Consultant and Administrative Director of Fabrica Carioca de
Catalisadores, S.A. to which he was appointed in 1985. Prior to his election
as an officer of the Registrant, Mr. Meijer served as Managing Director of
Quaker Chemical B.V. to which he was appointed in 1988. Prior to that, he
served as President of a Brazilian subsidiary and subsequently as Commercial
Director, Chemical
7
Division of the Akzo N.V. group. Prior to his election as an officer of
the Registrant, Mr. Burrows served as Division Manager, Marine Colloids
Division of FMC Corporation, a position to which he was appointed in 1986.
Prior to being elected Vice President-Human Resources, Mr. Montgomery served
as Manager of Human Resources, General Electric's Worldwide Marketing and
Product Management Organization, and, prior to that, he served as Director,
Human Resources, GE Plastics Europe. Mr. Spanier was elected Treasurer
effective January 1, 1994 on the retirement of Mr. Hamilton.
There is no family relationship between any of the Registrant's
Executive Officers. Each Officer is elected for a term of one year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
-----------------------------------------
Incorporated by reference is the information appearing under the caption
"Stock Market and Related Security Holder Matters" on page 28 of the
Registrant's 1993 Annual Report to Shareholders, the incorporated portions of
which are included as Exhibit 13 to this Report.
ITEM 6. SELECTED FINANCIAL DATA.
-----------------------
Incorporated by reference is the information appearing under the caption
"Selected Financial Information" on page 29 of the Registrant's 1993 Annual
Report to Shareholders, the incorporated portions of which are included as
Exhibit 13 to this Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
-------------------------------------------------
Incorporated by reference is the information appearing under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 30 and 31 of the Registrant's 1993 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-------------------------------------------
Incorporated by reference is the information appearing on pages 14 through
27 of the Registrant's 1993 Annual Report to Shareholders, the incorporated
portions of which are included as Exhibit 13 to this Report.
8
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
---------------------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------
Incorporated by reference is the information beginning immediately
following the caption "Election of Directors" to, but not including, the
caption "Executive Compensation" contained in the Registrant's definitive
Proxy Statement to be filed no later than 120 days after the close of its
fiscal year ended December 31, 1993 and the information appearing in Item 4(a)
of this Report. Based on the Company's review of certain reports filed
with the Securities and Exchange Commission pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended, and written representations
of the Company's officers and directors, the Company believes that all of
such reports were filed on a timely basis, except for one filing on Form 4
covering one transaction each for Mr. Benoliel and Mr. Delattre.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
Incorporated by reference is the information beginning immediately
following the caption "Executive Compensation" to, but not including, the
caption "Compensation/Management Development Committee and Long-Term
Performance Incentive Plan Committee Report on Executive Compensation"
contained in the Registrant's definitive Proxy Statement to be filed no later
than 120 days after the close of its fiscal year ended December 31, 1993.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
-----------------------------------------------
Incorporated by reference is the information beginning immediately
following the caption "Security Ownership of Certain Beneficial Owners and
Management" to, but not including, the caption "Election of Directors"
contained in the Registrant's definitive Proxy Statement to be filed no later
than 120 days after the close of its fiscal year ended December 31, 1993.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
No information is required to be provided in response to this Item 13.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.
--------------------------------------------
(a) Exhibits and Financial Statement Schedules
9
1. FINANCIAL STATEMENTS
The following is a list of the Financial State-
ments which have been incorporated by reference from
the Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1993, as set forth in
Item 8:
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Consolidated Balance Sheet
Notes to Consolidated Financial Statements
Report of Independent Accountants
2. FINANCIAL STATEMENT SCHEDULES
The following is a list of the Financial State-
ment Schedules filed herewith, all of which should be
read in conjunction with the financial statements
listed in Item 14(a) 1, above:
Report of Independent Accountants on Financial
Statement Schedules
Schedule V-Property, plant, and equipment
Schedule VI-Accumulated depreciation of proper-
ty, plant, and equipment
Schedule VIII-Valuation and qualifying accounts
Schedule IX-Short-term borrowings
All other schedules are omitted because they are
not applicable or the required information is shown in
the financial statements or notes thereto.
Financial statements of 50% or less owned
companies have been omitted because none of the
companies meets the criteria requiring inclusion of
such statements.
3. EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF
REGULATION S-K)
10
3(a)--Articles of Incorporation.
Incorporated by reference to Exhibit
3(a) to Form 10-Q as filed by the Regis-
trant for the Quarter ended March 31,
1987.
3(b)--By-Laws.
Incorporated by reference to Exhibit 3(b)
to Form 10-Q as filed by the Registrant
for the Quarter ended March 31, 1987.
3(c)--Amendment to Section 3.13 of the By-Laws
dated May 2, 1990 and Amendment to Sec-
tion 8.1 of the By-Laws dated July 11,
1990. Incorporated by reference to Exhib-
it 3(c) as filed by Registrant with Form
10-K for the year 1990.
4 --Shareholder Rights Plan. Incorporated by
reference to Form 8-K as filed by the
Registrant, February 20, 1990.
10(a)--Long-Term Performance Incentive Plan as
approved May 5, 1993.
10(b)--Employment agreement by and between the
Registrant and Peter A. Benoliel, as
amended July 1, 1989. Incorporated by
reference to Exhibit 10(b) as filed by
Registrant with Form 10-K for the year
1989.*
10(c)--Employment agreement by and between the
Registrant and S. W. W. Lubsen. Incor-
porated by reference to Exhibit 10(c) as
filed by Registrant with Form 10-K for
the year 1989.*
10(d)--Restricted Stock and Cash Bonus Plan and
Agreement by and between the Registrant
and S. W. W. Lubsen. Incorporated by
reference to Exhibit 10(d) as filed by
Registrant with Form 10-K for the year
1989.*
10(e)--Employment agreement by and between Reg-
istrant and John E. Burrows, Jr. Incor-
porated by reference to Exhibit 10(h) as
filed by Registrant with Form 10-K for
the year 1990.*
10(f)--Employment agreement by and between
Registrant and Clifford E. Montgomery.
Incorporated by reference to Exhibit
10(i) as filed by Registrant with Form
10-K for the year 1990.*
10(g)--Employment agreement by and between
Registrant and Joseph F. Spanier. Incor-
porated by reference to Exhibit 10(g) as
filed by Registrant with Form 10-K for
the year 1992.*
11
10(h)--Documents constituting employment contract
by and between Quaker Chemical Europe B.V.
and M. C. J. Meijer.*
10(i)--Documents constituting retirement agreement
by and between Registrant and Ira R.
Dolich.*
13 --Portions of the 1993 Annual Report to
Shareholders incorporated by reference.
21 --Subsidiaries and Affiliates of the
Registrant.
23 --Consent of Independent Accountants.
* A management contract or compensatory plan or arrange-
ment required to be filed as an exhibit to this
report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Registrant
during the last quarter of the period covered by this
Report.
(c) The exhibits required by Item 601 of Regulation S-K filed
as part of this Report or incorporated herein by refer-
ence are listed in subparagraph (a)(3) of this Item 14.
(d) The financial statement schedules filed as part of this
Report are listed in subparagraph (a)(2) of this Item 14.
12
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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
Date: March 30, 1994 By: S. W. W. LUBSEN
--------------------------------
S. W. W. Lubsen
President and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE CAPACITY DATE
--------- -------- ----
PETER A. BENOLIEL
- ------------------------------ Director March 30, 1994
Peter A. Benoliel,
Chairman of the Board
JOSEPH F. SPANIER
- ------------------------------ Principal Financial March 30, 1994
Joseph F. Spanier, Vice and Accounting Officer
President, Corporate
Controller, and Corporate
Treasurer
SIGISMUNDUS W. W. LUBSEN
- ------------------------------ Principal Executive March 30, 1994
Sigismundus W. W. Lubsen Officer and Director
President and Chief Executive
Officer
- ------------------------------ Director
Joseph B. Anderson, Jr.
PATRICIA C. BARRON
- ------------------------------ Director March 30, 1994
Patricia C. Barron
WILLIAM L. BATCHELOR
- ------------------------------ Director March 30, 1994
William L. Batchelor
- ------------------------------ Director
Lennox K. Black
EDWIN J. DELATTRE
- ------------------------------ Director March 30, 1994
Edwin J. Delattre
FRANCIS J. DUNLEAVY
- ------------------------------ Director March 30, 1994
Francis J. Dunleavy
ROBERT P. HAUPTFUHRER
- ------------------------------ Director March 30, 1994
Robert P. Hauptfuhrer
FREDERICK HELDRING
- ------------------------------ Director March 30, 1994
Frederick Heldring
RONALD J. NAPLES
- ------------------------------ Director March 30, 1994
Ronald J. Naples
ALEX SATINSKY
- ------------------------------ Director March 30, 1994
Alex Satinsky
- ------------------------------ Director
D. Robert Yarnall, Jr.
13
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Board of Directors
Quaker Chemical Corporation
Our audits of the consolidated financial statements referred to in our
report dated February 18, 1994 appearing on page 26 of the 1993 Annual Report
to Shareholders of Quaker Chemical Corporation (which report and financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an examination of the Financial Statement Schedules listed in
Item 14(a) of this Form 10-K. In our opinion, these Financial Statement
Schedules present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 18, 1994
14
QUAKER CHEMICAL CORPORATION
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
BALANCE AT ADDITIONS RETIREMENTS OTHER BALANCE AT
BEGINNING AT OR CHANGES, ADD END OF
CLASSIFICATION OF PERIOD COST SALES (DEDUCT)(1) PERIOD
- --------------- ---------- --------- ----------- ------------ ----------
YEAR ENDED DECEMBER 31, 1993
Land........... $ 6,042,000 $ 144,000 $ (61,000) $ 315,000 $ 6,440,000
Buildings and
improvements. 32,873,000 2,234,000 (1,261,000) 1,744,000 35,590,000
Machinery and
equipment.... 57,306,000 6,174,000 (1,295,000) 881,000 63,066,000
Construction
in progress.. 1,477,000 408,000 95,000 1,980,000
----------- ----------- ----------- ----------- ------------
$97,698,000 $ 8,960,000 $(2,617,000) $ 3,035,000 $107,076,000
=========== =========== =========== =========== ============
YEAR ENDED DECEMBER 31, 1992
Land........... $ 3,169,000 $ 488,000 $ 2,385,000 $ 6,042,000
Buildings and
improvements. 31,284,000 355,000 $ (6,000) 1,240,000 32,873,000
Machinery and
equipment.... 52,474,000 6,257,000 (3,506,000) 2,081,000 57,306,000
Construction
in progress.. 2,077,000 126,000 (726,000) 1,477,000
----------- ----------- ----------- ----------- ------------
$89,004,000 $ 7,226,000 $(3,512,000) $ 4,980,000 $ 97,698,000
=========== =========== =========== =========== ============
YEAR ENDED DECEMBER 31, 1991
Land........... $ 3,152,000 $ (43,000) $ 60,000 $ 3,169,000
Buildings and
improvements. 29,414,000 $ 332,000 (659,000) 2,197,000 31,284,000
Machinery and
equipment.... 48,385,000 2,567,000 (2,048,000) 3,570,000 52,474,000
Construction
in progress.. 2,746,000 5,521,000 (6,190,000) 2,077,000
----------- ----------- ----------- ----------- ------------
$83,697,000 $ 8,420,000 $(2,750,000) $ (363,000) $ 89,004,000
=========== =========== =========== =========== ============
- ---------------
(1) Represents primarily companies acquired and fluctuations resulting
from the translation of foreign currencies in 1993 and 1992, and
fluctuations resulting from the translation of foreign currencies in 1991.
15
QUAKER CHEMICAL CORPORATION
SCHEDULE VI -- ACCUMULATED DEPRECIATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
BALANCE AT ADDITIONS RETIREMENTS OTHER BALANCE AT
BEGINNING AT OR CHANGES, ADD END OF
CLASSIFICATION OF PERIOD COST SALES (DEDUCT)(1) PERIOD
- --------------- ---------- --------- ----------- ------------ ----------
YEAR ENDED DECEMBER 31, 1993
Buildings and
improvements. $12,144,000 $ 1,203,000 $ (560,000) $ (296,000) $ 12,491,000
Machinery and
equipment.... 33,375,000 5,342,000 (578,000) (105,000) 38,034,000
----------- ----------- ----------- ----------- ------------
$45,519,000 $ 6,545,000 $(1,138,000) $ (401,000) $ 50,525,000
=========== =========== =========== =========== ============
YEAR ENDED DECEMBER 31, 1992
Buildings and
improvements. $11,105,000 $ 1,183,000 $ (6,000) $ (138,000) $ 12,144,000
Machinery and
equipment.... 29,238,000 5,244,000 (1,864,000) 757,000 33,375,000
----------- ----------- ----------- ----------- ------------
$40,343,000 $ 6,427,000 $(1,870,000) $ 619,000 $ 45,519,000
=========== =========== =========== =========== ============
YEAR ENDED DECEMBER 31, 1991
Buildings and
improvements. $10,552,000 $ 1,012,000 $ (446,000) $ (13,000) $ 11,105,000
Machinery and
equipment.... 26,829,000 4,176,000 (1,675,000) (92,000) 29,238,000
----------- ----------- ----------- ----------- ------------
$37,381,000 $ 5,188,000 $(2,121,000) $ (105,000) $ 40,343,000
=========== =========== =========== =========== ============
- ---------------
(1) Represents primarily companies acquired and fluctuations resulting
from the translation of foreign currencies in 1993 and 1992, and
fluctuations resulting from the translation of foreign currencies in 1991.
16
QUAKER CHEMICAL CORPORATION AND SUBSIDIARIES
--------------------------------------------
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
-------------------------------
ADDITIONS
----------------------
CHARGED OR
BALANCE AT CHARGED TO (CREDITED) BALANCE AT
FOR THE YEAR BEGINNING TO TO OTHER END OF
ENDED OF PERIOD INCOME ACCOUNTS DEDUCTIONS PERIOD
- ------------ ---------- ---------- ---------- ---------- ----------
1993 $ 834,000 $693,000 ($68,000)(1) $215,000 $1,244,000
1992 837,000 772,000 84,000 (2) 859,000 834,000
1991 1,101,000 358,000 (20,000)(1) 602,000 837,000
- ------------
(1) Represents primarily fluctuations resulting from the translation of
foreign currencies.
(2) Represents primarily additions due to companies acquired and fluctuations
resulting from the translation of foreign currencies.
QUAKER CHEMICAL CORPORATION AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS(1)
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
WEIGHTED
MAXIMUM AVERAGE AVERAGE
CATEGORY OF BALANCE WEIGHTED AMOUNT OUT- AMOUNT OUT- INTEREST
AGGREGAGE AT AVERAGE STANDING STANDING RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD(2) PERIOD(2) PERIOD(3)
- ---------- ------- -------- ----------- ----------- ----------
1993
Bank loans:
Parent and
subsidiary
companies.. $ 1,168,000 10.0% $ 3,168,000 $ 619,000 6.1%
1992
Bank loans:
Parent and
subsidiary
companies.. 971,000 6.6% 21,264,000 10,042,000 6.0%
1991
Bank loans:
Parent and
subsidiary
companies.. 14,500,000 7.0% 22,398,000 17,607,000 7.8%
- ----------
(1) Short-term borrowings are principally short-term notes payable to
banks and, in the case of certain subsidiary companies, various revolving
lines of credit available to the subsidiary. Generally they may be
renewed or extended beyond the maturity period as specified in the
agreement.
(2) Based on amounts outstanding at the end of each monthly accounting
period.
(3) The weighted average interest rate was calculated by dividing the
interest expense for the period by the average amount outstanding during
the period.
17
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
10(a) Long-Term Performance Incentive Plan
10(h) Documents constituting employment contract
by and between Quaker Chemical Europe B.V.
and M. C. J. Meijer.
10(i) Documents constituting retirement agreement
by and between Registrant and Ira R.
Dolich.
13 Portions of the 1993 Annual Report to Shareholders
Incorporated by Reference
21 Subsidiaries and Affiliates of the Registrant
23 Consent of Independent Accountants
18
EXHIBIT 10(a)
QUAKER CHEMICAL CORPORATION
1993 LONG-TERM PERFORMANCE INCENTIVE PLAN
1. PURPOSE OF THE PLAN
This Long-Term Performance Incentive Plan (the "Plan") has been
established to provide incentives and awards to those employees largely
responsible for the long-term success of the Quaker Chemical Corporation (the
"Company") and its subsidiaries. In addition, the Plan is intended to enable
the Company to attract and retain executives in the future and to encourage
key employees to acquire a proprietary interest in the performance of the
Company by purchasing and owning shares of Common Stock of the Company.
2. GENERAL PROVISIONS
2.1 Definitions.
As used in the Plan:
(a) "Act" means the Securities Exchange Act of 1934,
as amended.
(b) "Board of Directors" means the Board of Directors
of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Long-Term Performance
Incentive Committee of the Board of Directors.
(e) "Common Stock" means the Common Stock, par value
$1.00 per share, of the Company.
(f) "Fair Market Value" means, with respect to the
date a given Stock Option or Stock Appreciation
Right is granted or exercised, the last sale price
(or, if no last sale price is reported, the
average of the high bid and low asked price) for a
share of Common Stock in the over-the-counter
market, as reported on NASDAQ or, if not reported
on NASDAQ, as quoted by the National Quotation
Bureau Incorporated, or, if the Common Stock is
listed on a national securities exchange, on the
principal exchange on which the Common Stock is
listed. If for any day the Fair Market Value of a
share of Common Stock is not determinable by any
of the foregoing means, then the Fair Market Value
for such day shall be determined in good faith by
the Committee on the basis of such quotations and
other considerations as the Committee deems
appropriate.
(g) "Incentive Stock Option" means an option granted
under the Plan, which is intended to qualify as an
incentive stock option under Section 422 of the
Code.
(h) "NASDAQ" means the National Association of
Securities Dealers National Market.
(i) "Non-Qualified Stock Option" means an option
granted under the Plan which is not an Incentive
Stock Option.
(j) "Option Event" means the date on which beneficial
ownership (determined in accordance with Rule 13d-
3 under the Act) of shares of the Company's Common
Stock are acquired (other than directly from the
Company in exchange for cash or property) by any
Person (as used in Section 13 or 14 of the Act, as
amended), other than a person who is an officer or
director of the Company on December 23, 1992, who
thereby becomes the beneficial owner (as defined
in Rule 13d-3 under the Act) of more than 10% of
the issued and outstanding shares of the Company's
Common Stock.
(k) "Participant" means an employee of the Company or
one or more of its Subsidiaries to whom a Stock
Option, a Stock Appreciation Right and/or a
Performance Incentive Unit has been granted under
the Plan.
(l) "Performance Award Period" means a period of four
(4) consecutive calendar years, the first of which
shall commence on January 1, 1993 and the balance
of which shall commence on January 1, of every
second calendar year thereafter through 2001.
(m) "Performance Incentive Unit" means a unit granted
in accordance with the provisions of Section 4.1
of the Plan.
(n) "Performance Program Target" means the performance
program targets fixed by the Committee for a
particular Performance Award Period.
Exhibit 10(a) Page
2
(o) "Rule 16b-3" means Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended
from time to time, or any successor Rule.
(p) "Stock Appreciation Right" means a right granted,
pursuant to Section 3.7 of the Plan, to a holder
of a Stock Option.
(q) "Stock Option" means an Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.
(r) "Subsidiary" means any corporation whose
outstanding voting securities having ordinary
voting power to elect directors (other than
securities having such power only by reason of the
happening of a contingency) shall at the time be
50% or more owned, directly or indirectly, by the
Company.
2.2 Administration of the Plan.
(a) The Plan shall be administered by the Committee
which shall have the full power, subject to and
within the limits of the Plan, to: (i) interpret
and administer the Plan, and Stock Options,
Performance Incentive Units and Stock Appreciation
Rights granted under it; and (ii) make and
interpret rules and regulations for the
administration of the Plan and to make changes in
and revoke such rules and regulations. The
Committee, in the exercise of this powers, shall
(i) generally determine all questions of policy
and expediency that may arise and may correct any
defect, omission, or inconsistency in the Plan or
any agreement evidencing the grant of any Stock
Option, Performance Incentive Unit or Stock
Appreciation Right in a manner and to the extent
it shall deem necessary to make the Plan fully
effective; (ii) determine those eligible employees
to whom Stock Options, Stock Appreciation Rights,
and/or Performance Incentive Units shall be
granted and the number of any thereof to be
granted to any eligible employee, consistent with
the provisions of the Plan; (iii) determine the
terms of Stock Options, Stock Appreciation Rights,
and Performance Incentive Units granted under the
Plan, consistent with the provisions of the Plan;
and (iv) generally, exercise such powers and
perform such acts in connection with the Plan as
are deemed necessary or expedient to promote the
best interests of the Company.
Exhibit 10(a) Page
3
(b) The Committee shall consist of not less than two
(2) members of the Board of Directors who are not,
and who were not at any time within one year prior
to their appointment to the Committee, either a
Participant under the Plan or granted or awarded
equity securities under any other plan of the
Company or any affiliate of the Company which
would disqualify them from being a "disinterested
person" (as defined in Rule 16b-3) with respect to
the Plan. The Board may also select one or more
directors who satisfy the requirements in the
preceding sentence as alternate members of the
Committee who may take the place of any absent
member or members of the Committee at any meeting
of the Committee. The Committee may act only by a
majority of its members then in office; the
Committee may authorize any one or more of its
members or any officer of the Company to execute
and deliver documents on behalf of the Committee.
2.3 Effective Date.
This Plan shall be effective as of January 1, 1993,
provided that the Plan is approved by the Company's
shareholders on or before December 31, 1993. If the
Plan is not approved by the Company's shareholders on
or before December 31, 1993, this Plan and all awards
previously granted thereunder become null and void.
2.4 Duration.
If approved by the shareholders of the Company, as
provided in Section 2.3, unless sooner terminated by
the Board of Directors, the Plan shall remain in effect
until December 31, 2002.
2.5 Shares Subject to the Plan.
The maximum number of shares of Common Stock which may
be subject to Stock Options granted under the Plan
shall be 1,000,000, subject to adjustment in accordance
with Section 5.1, which shares may be either authorized
and unissued shares of Common Stock or authorized and
issued shares of Common Stock purchased or acquired by
the Company for any purpose. If a Stock Option or
portion thereof shall expire or be terminated,
cancelled or surrendered (other than in connection with
the surrender of a Stock Option pursuant to Section
3.7(a)) for any reason without being exercised in full,
the unpurchased shares of Common Stock which were
subject to such Stock Option or portion thereof shall
Exhibit 10(a) Page
4
be available for future grants of Stock Options under
the Plan.
2.6 Amendments.
The Plan may be suspended, terminated or reinstated, in
whole or in part, at any time by the Board of
Directors. The Board of Directors may from time to
time make such amendments to the Plan as it may deem
advisable, including, with respect to Incentive Stock
Options, amendments deemed necessary or desirable to
comply with Section 422 of the Code and any regulations
issued thereunder; provided, however, that, without the
approval of the Company's shareholders no amendment
shall be made which:
(a) Increases the maximum number of shares of Common
Stock which may be subject to Stock Options
granted under the Plan (other than as provided in
Section 5.1); or
(b) Extends the term of the Plan; or
(c) Increases the period during which a Stock Option
may be exercised beyond ten years from the date of
grant; or
(d) Otherwise materially increases the benefits
accruing to Participants under the Plan; or
(e) Materially modifies the requirements as to
eligibility for participation in the Plan; or
(f) Will cause Stock Options, Stock Appreciation
Rights or Performance Incentive Units issued or
granted under the Plan to fail to meet the
requirements of Rule 16b-3.
Termination or amendment of the Plan shall not, without
the consent of the Participant, affect such
Participant's rights under any Stock Option, Stock
Appreciation Right or Performance Incentive Unit
previously granted to such Participant.
2.7 Participants and Grants.
Stock Options, Stock Appreciation Rights and
Performance Incentive Units may be granted by the
Committee to those full-time salaried employees of the
Company and its Subsidiaries who the Committee
determines hold positions which enable them to have a
Exhibit 10(a) Page
5
significant impact on the Company's long-term financial
performance. The Committee may grant to eligible
employees Incentive Stock Options and/or Non-Qualified
Stock Options to purchase such number of shares of
Common Stock (subject to the limitations of Section
2.5) and Stock Appreciation Rights and/or such number
of Performance Incentive Units as the Committee may, in
its sole discretion, determine. In determining the
number of shares of Common Stock subject to a Stock
Option and/or the number of Performance Incentive Units
to be granted to an eligible employee, the Committee
shall consider the employee's base salary, his expected
contribution to the long-term performance of the
Company, and such other relevant facts as the Committee
shall deem appropriate. In granting Stock Options,
Stock Appreciation Rights and Performance Incentive
Units under the Plan, the Committee may vary the number
of Incentive Stock Options, Non-Qualified Options,
Stock Appreciation Rights and/or Performance Incentive
Units to an eligible employee in such amounts as the
Committee may determine in its discretion.
3. STOCK OPTIONS
3.1 General.
All Stock Options granted under the Plan shall be
evidenced by written agreements executed by the Company
and the employee to whom granted which agreement shall
state the number of shares of Common Stock which may be
purchased upon the exercise thereof and shall contain
such investment representations and other terms and
conditions as the Committee may from time to time
determine, or, in the case of Incentive Stock Options,
as may be required by Section 422 of the Code, or any
other applicable law.
3.2 Price.
Subject to the provisions of Section 3.6(d) and Section
5.1, the purchase price per share of Common Stock
subject to a Stock Option shall, in no case, be less
than 100 percent (100%) of the Fair Market Value of a
share of Common Stock on the date the Stock Option is
granted.
3.3 Period.
The duration or term of each Stock Option granted under
the Plan shall be for such period as the Committee
Exhibit 10(a) Page
6
shall determine, but in no event more than ten (10)
years from the date of grant thereof.
3.4 Exercise.
Subject to Section 5.1, no Stock Option shall be
exercisable prior to the expiration of one (1) year
from the date it is granted. Once exercisable, a Stock
Option shall be exercisable, in whole or in part, by
delivery of a written notice of exercise to the
Secretary of the Company at the principal office of the
Company specifying the number shares of Common Stock as
to which the Stock Option is then being exercised
together with payment of the full purchase price for
the shares being purchased upon such exercise. Until
the shares of Common Stock as to which a Stock Option
is exercised are paid for in full and issued, the
Participant shall have none of the rights of a
shareholder of the Company.
3.5 Payment.
The purchase price for shares of Common Stock as to
which a Stock Option has been exercised, may be paid:
(a) In United States dollars in cash, or by check,
bank draft or money order payable in United States
dollars to the order of the Company; or
(b) In the discretion of the Committee by note; or
(c) In the discretion of the Committee, by the
delivery by the Participant to the Company of
whole shares of Common Stock having an aggregate
Fair Market Value on the date of payment equal to
the aggregate of the purchase price of Common
Stock as to which the Stock Option is then being
exercised or by the withholding of whole shares of
Common Stock having such Fair Market Value upon
the exercise of such Stock Option; or
(d) In the discretion of the Committee, in United
States dollars in cash, or by check, bank draft or
money order payable in United States dollars to
the order of the Company delivered to the Company
by a broker in exchange for its receipt of stock
certificates from the Company in accordance with
instructions of the Participant to the broker
pursuant to which the broker is required to
deliver to the Company the amount of sale or loan
proceeds required to pay the purchase price; or
Exhibit 10(a) Page
7
(e) In the discretion of the Committee, by a
combination of any number of the foregoing.
The Committee may, in its discretion, impose
limitations, conditions and prohibitions on the use by
a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the
exercise of a Stock Option.
3.6 Special rules for Incentive Stock Options.
Notwithstanding any other provision of the Plan, the
following provisions shall apply to Incentive Stock
Options granted under the Plan:
(a) Incentive Stock Options shall only be granted to
Participants who are employees of the Company or
its Subsidiaries.
(b) To the extent that the aggregate Fair Market Value
of stock, with respect to which Incentive Stock
Options are exercisable for the first time by a
Participant during any calendar year under this
Plan and any other Plan of the Company or a
Subsidiary, exceeds $100,000, such Stock Options
shall be treated as Non-Qualified Stock Options.
(c) Any Participant who disposes of shares of Common
Stock acquired upon the exercise of an Incentive
Stock Option by sale or exchange either within two
(2) years after the date of the grant of the
Incentive Stock Option under which the shares were
acquired or within one (1) year of the acquisition
of such shares, shall promptly notify the
Secretary of the Company at the principal office
of the Company of such disposition, the amount
realized, the purchase price per share paid upon
exercise and the date of disposition.
(d) No Incentive Stock Option shall be granted to a
Participant who, at the time of the grant, owns
stock representing more than ten percent (10%) of
the total combined voting power of all classes of
stock either of the Company or any parent or
Subsidiary of the Company, unless the purchase
price of the shares of Common Stock purchasable
upon exercise of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair
Market Value (at the time the Incentive Stock
Option is granted) of the Common Stock and the
Exhibit 10(a) Page
8
Incentive Stock Option is not exercisable more
than five (5) years from the date it is granted.
3.7 Stock Appreciation Rights.
(a) Grant.
Stock Appreciation Rights may be granted under the
Plan by the Committee, but only in connection with
all or any part of a Stock Option granted under
the Plan. Stock Appreciation Rights may be
granted either concurrently with the grant of a
Stock Option or at any time thereafter during the
term of the Stock Option. A Stock Appreciation
Right shall be exercisable only upon surrender of
the related Stock Option or portion thereof and
shall entitle the Participant to receive the
excess of the Fair Market Value of the shares of
Common Stock for which the Stock Appreciation
Right is exercised on the date of such exercise
over the purchase price per share of Common Stock
under the related Stock Option. Such excess is
hereafter call the "Spread."
(b) Exercise of Stock Appreciation Right.
Stock Appreciation Rights shall be exercisable at
such time as and to the extent, but only to the
extent, that the Stock Option to which they relate
shall be exercisable and shall be subject to any
other terms and conditions, not inconsistent with
the Plan, as may be fixed by the Committee at the
time the Stock Appreciation Right is granted. No
Stock Appreciation Right shall be exercisable
prior to the later of: (i) six (6) months and one
(1) day following the date on which such Stock
Appreciation Right was granted, or (ii) the date
on which the related Stock Option or any portion
thereof first becomes exercisable. Shares of
Common Stock subject to a Stock Option surrendered
by a Participant in connection with an exercise of
Stock Appreciation Rights may not again be
subjected to Stock Options under the Plan. Upon
the exercise of Stock Appreciation Rights the
Participant shall be entitled to receive from the
Company in exchange for the surrendered Stock
Option or portion thereof, an amount equal to the
Spread either in cash, or in shares of Common
Stock having a Fair Market Value equal to the
Spread, or both, as the Committee may determine;
provided, however, that the number of shares of
Exhibit 10(a) Page
9
Common Stock which a Participant may receive upon
the exercise of Stock Appreciation Rights may not
exceed the number of shares of Common Stock
subject to the Stock Option or portion thereof
surrendered upon exercise of such Stock
Appreciation Rights. The shares of Common Stock
issuable upon exercise of Stock Appreciation
Rights may consist either in whole or in part of
authorized and unissued shares of Common Stock or
authorized and issued shares of Common Stock
purchased or acquired by the Company for any
purpose. If shares of Common Stock are to be
issued to a Participant upon exercise by the
Participant of Stock Appreciation Rights, such
Participant shall have none of the rights of a
shareholder of the Company until the shares of
Common Stock are issued.
3.8 Termination of Employment.
(a) In the event a Participant's employment by the
Company or its Subsidiaries shall be terminated
for cause, as determined by the Committee, while
the Participant holds Stock Options granted under
the Plan, all Stock Options held by the
Participant shall expire immediately.
(b) If a Participant, while holding Stock Options, (i)
retires upon reaching his normal retirement date
or having elected early retirement under a formal
plan or policy of the Company, or (ii) dies, then
each Stock Option held by the Participant shall be
exercisable by the Participant (or, in the case of
death, by the executor or administrator of the
Participant's estate or by the person or persons
to whom the deceased Participant's rights
thereunder shall have passed by will or by the
laws of descent or distribution) until the earlier
of (A) its stated expiration date, or, (B) the
date occurring three (3) years after the date of
such retirement or death, as the case may be. If
a Participant's employment by the Company or its
Subsidiaries shall terminate as a result of the
Participant's total disability, while such
Participant is holding Stock Options, then each
Stock Option held by the Participant shall be
exercisable by the Participant until its stated
expiration date. For purposes of the foregoing
sentence, "total disability" shall mean a
permanent mental or physical disability as
determined by the Committee.
Exhibit 10(a) Page
10
(c) If a Participant's employment by the Company or
its Subsidiaries shall terminate for any reason
not specified in Sections 3.8(a) or (b), the
Participant shall, to the extent otherwise
exercisable, have the right to exercise the Stock
Options held by him or her at the date of
termination for a period of three (3) months;
provided, however, that in no event shall such
Stock Options be exercisable after their stated
expiration date.
(d) Stock Options held by a Participant at the time of
the termination of his employment by the Company
or its Subsidiaries which, by their terms are not
then exercisable, shall, subject to, and except as
otherwise provided by, the provisions of (i) this
Section 3.8 regarding expiration or lapse, and
(ii) Section 3.10 regarding acceleration and
redemption become exercisable (if at all) at the
times, and otherwise in the manner, set forth in
connection with their original grant.
3.9 Effect of Leaves of Absence.
It shall not be considered a termination of employment
when a Participant is on military or sick leave or such
other type of leave of absence which is considered as
continuing intact the employment relationship of the
Participant with the Company or its Subsidiaries. In
case of such leave of absence, the employment
relationship shall be continued until the later of the
date when such leave equals ninety days or the date
when the Participant's right to reemployment shall no
longer be guaranteed either by statute or contract.
3.10 Acceleration and Redemption.
Upon the occurrence of an Option Event, (a) all Stock
Options granted and outstanding under the Plan shall
become immediately exercisable in full regardless of
any terms of said Stock Option to the contrary; and (b)
until the earlier to occur of the stated expiration
date of the Stock Option and the expiration of the
ninety (90) day period following written notice from
the Company to all Participants of the occurrence of
the Option Event, all Participants shall have the right
to demand that the Company cancel and redeem any and
all Stock Options held by the Participant by paying
with respect to each such Stock Option a price equal to
the difference between the purchase price per share of
Common Stock subject to such Stock Option and the
Exhibit 10(a) Page
11
highest price that can be determined to have been paid
by any Person (as that word is used in Section 2.1(j))
for any share or shares of the Company's Common Stock
prior to the earlier to occur of the stated expiration
date of the Stock Option and the expiration of the
aforementioned ninety (90) day demand period.
4. PERFORMANCE INCENTIVE UNITS
4.1 Grant.
From time to time during each Performance Award Period,
the Committee may grant Performance Incentive Units to
eligible employees in conjunction with or separately
from a grant of Stock options; provided, however, that
Performance Incentive Units shall not be granted to any
one eligible employee more often than once with respect
to a Performance Award Period.
4.2 Establishment of Stated Value and Performance Program
Targets.
At the beginning of each Performance Award Period, the
Committee shall establish the Performance Program
Targets applicable to that Performance Award Period
(which may be expressed as increases in the Company's
earnings per share, return or average return on
invested capital or in terms of any financial or other
standard, or combinations thereof, as the Committee may
determine in its discretion), the Stated Value (which
shall be expressed in dollars) of Performance Incentive
Units to be granted with respect to such Performance
Award Period, and shall fix the percentage, if any, of
the Stated Value to be earned upon the achievement of
the Performance Program Targets established for the
relevant performance Award Period; provided, however,
that the percentage of Stated Value to be earned upon
achievement of the maximum Performance Program Target
established with respect to a Performance Award Period
shall in no event exceed 200% of Stated Value fixed for
that Performance Award Period.
If the Committee determines that an unforeseen change
during a Performance Award Period in the Company's
business operations, corporate structure, capital
structure or manner in which it conducts business is
extraordinary and material and that the Performance
Program Targets established for the Performance Award
Period are no longer suitable, the Committee may, but
only with the concurrence of the Board of Directors,
modify the Performance Program Targets as it deems
Exhibit 10(a) Page
12
appropriate and equitable; provided, however, that no
such modification shall increase the Performance
Program Targets in effect for any Performance Award
Period (i.e., establish a target that is more difficult
to achieve than the original Performance Program
Target).
4.3 Payment.
As promptly as practicable after the end of each
Performance Award Period, the Committee shall, pursuant
to Section 4.2 of the Plan, determine the earned
percentage of Stated Value of the Performance Incentive
Units granted with respect to such completed
Performance Award Period. The Company shall, as soon
as practicable after such determination has been made,
pay to each Participant holding Performance Incentive
Units granted with respect to such completed
Performance Award Period, for each such Performance
Incentive Units held by him or her an amount equal to
the product obtained by multiplying Stated Value by the
earned percentage of Stated Value.
4.4 Termination of Employment.
If a Participant's employment by the Company and its
Subsidiaries terminates for any reason, the Performance
Incentive Units held by the Participant with respect to
any Performance Award Period which has not ended at the
date of such termination shall become null and void;
provided, however, that the Committee, in its sole
discretion, shall have the right to authorize
proportionate payment in cases of death or retirement
at the normal retirement date or under a formal early
retirement plan or policy of the Company, if the
Committee in its discretion determines a payment to be
appropriate and equitable.
5. MISCELLANEOUS PROVISIONS
5.1 Adjustments Upon Changes in Capitalization.
In the event of changes to the outstanding shares of
Common Stock of the Company through reorganization,
merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, stock
consolidation or otherwise, or in the event of a sale
of all or substantially all of the assets of the
Company, an appropriate and proportionate adjustment
shall be made in the number and kind of shares as to
which Stock Options may be granted. A corresponding
Exhibit 10(a) Page
13
adjustment changing the number or kind of shares and/or
the purchase price per share of unexercised Stock
Options or portions thereof which shall have been
granted prior to any such change shall likewise be
made. Notwithstanding the foregoing, in the case of a
reorganization, merger or consolidation, or sale of all
or substantially all of the assets of the Company, in
lieu of adjustments as aforesaid, the Committee may in
is discretion accelerate the date after which a Stock
Option may or may not be exercised or the stated
expiration date thereof and may accelerate the
termination date of any Performance Award Period then
in effect. Adjustments or changes under this Section
shall be made by the Committee, whose determination as
to what adjustments or changes shall be made, and the
extent thereof, shall be final, binding and conclusive.
5.2 Non-Transferability.
No Stock Option, Stock Appreciation Right or
Performance Incentive Unit granted under the Plan shall
be transferable by the Participant except by will or
the laws of descent and distribution, nor shall any
Stock Option be exercisable during the Participant's
lifetime by any person other than the Participant or
his guardian or legal representative.
5.3 Withholding.
The Company's obligations in connection with this Plan
shall be subject to applicable federal, state and local
tax withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the
exercise of any Stock Option may, in the discretion of
the Committee, be paid in shares of Common Stock
already owned by the Participant or through the
withholding of shares otherwise issuable to such
Participant, upon such terms and conditions as the
Committee shall determine. If the Participant shall
either fail to pay, or make arrangements satisfactory
to the Committee for the payment, to the Company of all
such federal, state and local taxes required to be
withheld by the Company, then the Company shall, to the
extent permitted by law, have the right to deduct from
any payment of any kind otherwise due to such
Participant an amount equal to any federal, state or
local taxes of any kind required to be withheld by the
Company.
Exhibit 10(a) Page
14
5.4 Compliance with Law and Approval of Regulatory Bodies.
No Stock Option, Stock Appreciation Right or
Performance Incentive Unit shall be exercisable and no
shares will be delivered under the Plan except in
compliance with all applicable federal and state laws
and regulations including, without limitation,
compliance with all federal and state securities laws
and withholding tax requirements and with the rules of
NASDAQ and of all domestic stock exchanges on which the
Common Stock may be listed. Any share certificate
issued to evidence shares for which a Stock Option is
exercised may bear legends and statements the Committee
shall deem advisable to assure compliance with federal
and state laws and regulations. No Stock Option, Stock
Appreciation Right or Performance Incentive Unit shall
be exercisable and no shares will be delivered under
the Plan, until the Company has obtained consent or
approval from regulatory bodies, federal or state,
having jurisdiction over such matters as the Committee
may deem advisable. In the case of the exercise of a
Stock Option or Stock Appreciation Right by a person or
estate acquiring the right to exercise the Stock Option
or Stock Appreciation Right as a result of the death of
the Participant, the Committee may require reasonable
evidence as to the ownership of the Stock Option or
Stock Appreciation Right and may require consents and
releases of taxing authorities that it may deem
advisable.
5.5 No Right to Employment.
Neither the adoption of the Plan nor its operation, nor
any document describing or referring to the Plan, or
any part thereof, nor the granting of any Stock
Options, Stock Appreciation Rights or Performance
Incentive Units hereunder, shall confer upon any
Participant under the Plan any right to continue in the
employ of the Company or any Subsidiary, or shall in
any way affect the right and power of the Company or
any Subsidiary to terminate the employment of any
Participant at any time with or without assigning a
reason therefor, to the same extent as might have been
done if the Plan had not been adopted.
5.6 Exclusion from Pension Computations.
By acceptance of a grant of a Stock Option, Stock
Appreciation Right or Performance Incentive Unit under
the Plan, the recipient shall be deemed to agree that
any income realized upon the receipt or exercise
Exhibit 10(a) Page
15
thereof or upon the disposition of the shares received
upon exercise will not be taken into account as "base
remuneration", "wages", "salary" or "compensation" in
determining the amount of any contribution to or
payment or any other benefit under any pension,
retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
5.7 Separability.
If any of the terms of provisions of the Plan conflict
with the requirements of Rule 16b-3, then such terms or
provisions shall be deemed inoperative to the extent
they so conflict with the requirements of Rule 16b-3.
5.8 Interpretation of the Plan.
Headings are given to the Sections of the Plan solely
as a convenience to facilitate reference, such
headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the
construction of the Plan or any provision hereof. The
use of the masculine gender shall also include within
its meaning the feminine. The use of the singular
shall also include within its meaning the plural and
vice versa.
5.9 Use of Proceeds.
Funds received by the Company upon the exercise of
Stock Options granted under the Plan shall be used for
the general corporate purposes of the Company.
5.10 Construction of Plan.
The place of administration of the Plan shall be in the
Commonwealth of Pennsylvania, and the validity,
construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely
in accordance with the laws of the Commonwealth of
Pennsylvania.
Exhibit 10(a) Page
16
EXHIBIT 10(h)
DOCUMENTS CONSTITUTING EMPLOYMENT CONTRACT
BY AND BETWEEN
QUAKER CHEMICAL EUROPE B.V.
AND
M. C. J. MEIJER
Mr. M. C. J. Meijer
Bruglaan 3
3743 JB BAARN
Uithoorn, April 10, 1990
Dear Marc,
With reference to your appointment in the position of Vice
President in the to be established Quaker Chemical Europe B.V.
organization, please find herewith:
- your letter of appointment;
- an overview of your main actual employment conditions and your
employment conditions effective January 1, 1991;
- a summary of general terms of employment for members of the
Quaker Europe Management Team;
- your position description;
- the Declaration of Secrecy and Non-competition.
You are kindly requested to return the enclosures, each single page
signed for agreement to the Personnel Department.
As you know, the current status of Quaker Chemical Europe B.V. is
that of a dormant company. As soon as the Quaker Chemical Europe
B.V. has been established, you will have to sign the official
contract plus enclosures.
Compared with your actual salary the incorporation of 15% of the
"old" bonus will be compensated to you in December 1990.
During 1990, the Employment Conditions for Quaker Chemical
(Holland) B.V. will remain applicable to you.
Best regards,
QUAKER CHEMICAL (HOLLAND) B.V.
M. J. van der Burgt
Personnel Manager
Exhibit 10(h) Page
PAGE 1 - LETTER OF APPOINTMENT OF MR. M. C. J. MEIJER
- ------------------------------------------------------------------
Referring to earlier discussions with you, we are pleased to
confirm that we have offered you the position of Vice President in
our Quaker Europe organization effective January 1, 1991.
As per January 1, 1991, your actual position will no longer exist
in Quaker Chemical (Holland) B.V.; consequently, your employment
contract with Quaker Chemical (Holland) B.V. will be terminated per
that date. Instead, your employment agreement as of January 1,
1991 shall be with Quaker Chemical Europe B.V.
As Addendum 1 to this letter of appointment, you will find an
overview of employment conditions that formed the basis for our
discussion with you on March 20, 1990 in which we reached formal
agreement. In fact, Addendum 1 provides for a comparison between
the main conditions agreed upon for your current employment
agreement with Quaker Chemical (Holland) B.V. and the main
conditions agreed upon for your future employment agreement with
Quaker Chemical Europe B.V.
Addendum 2 to this letter of appointment contains the General Terms
of Employment of the Quaker Chemical Europe B.V. Management Team.
These General Terms form part of your employment agreement with
Quaker Chemical Europe B.V.
The individual terms of your employment agreement with Quaker
Chemical Europe B.V. read as follows:
1.a. The agreement is entered into for an indefinite period of time
and may be terminated at any time by either party upon the
giving of notice of six months prior to the effective date of
such termination.
1.b. If the Company acts to terminate the employment for reasons
which are in the Company's opinion beyond the Vice President's
fault, a settlement shall be paid at the expiration of the six
months notice period. The amount of the settlement shall be
two months income per full year of service at the termination
date with a maximum of 24 months. For the purpose of this
paragraph b, "income" shall mean base salary in addition to
the vacation allowance (8-1/2% of the base salary) and a bonus
payment equal to 1/12th of the base salary as referred to in
Article 7 hereof.
In the event Quaker Chemical Corporation is acquired or
otherwise falls under the majority control of a third party,
a 24 month salary, bonus, and vacation allowance will be paid
if the Vice President elects to resign his position within 12
months of such change in control.
Exhibit 10(h) Page
2
PAGE 2 - LETTER OF APPOINTMENT OF MR. M. C. J. MEIJER
- ------------------------------------------------------------------
1.c. If the employment is terminated for reasons other than
described in Article 1b above, no settlement will be due.
2. The applicable position description is attached hereto as
Addendum 3 and forms part of the terms of your employment
agreement.
3. Effective January 1, 1991, your monthly salary will amount to
Dfl. 23.326,--, excluding a possible general salary increase
or merit increase as per that date.
The position of Vice President Europe is included in position
class 19 with a minimum salary of Dfl. 19.222,38, a job rate
salary of Dfl. 28.664,95 and a maximum salary of Dfl.
33.723,48 per month.
In your specific situation the maximum salary to be reached
amounts to Dfl. 36.414,48 per month. Your relative salary
position towards job rate is 81% and towards "personal"
maximum is 64%.
See Article 1 of Addendum 2.
4. The character of the position of Vice President implies that
you will obtain detailed knowledge of Quaker technology and
know-how. In view hereof, the Declaration of Secrecy and Non-
competition, which is attached hereto as Addendum 4, forms
part of the terms of your employment agreement.
5. You will be entitled to a vacation allowance of 8.5% of your
annual base salary (12 x monthly salary), which will be paid
out to you in April of each year.
6. In view of the representative character of your job, you will
be entitled to a representation allowance of Dfl. 600,-- per
month net. This allowance should not be seen as salary, but
is meant as compensation for expenses resulting from the
entertainment of business relations at home, etc. In case
there will be a change in the Dutch (tax) law, the new (tax)
legislation will be applied.
7. You will receive a yearly bonus payment, which will be paid in
December of each year. The bonus system is based on 0,75% of
the consolidated European Profit From Operations (P.F.O.) with
a maximum of 16.67% of 12 x monthly salary. For 1991, a
guaranteed bonus of 47.6% (=16.67%: 35%) of the subject B.V.
percentage will be applied. Consequently, the best of the two
will be applicable to you.
Exhibit 10(h) Page
3
PAGE 3 - LETTER OF APPOINTMENT OF MR. M. C. J. MEIJER
- ------------------------------------------------------------------
See Article 2 of Addendum 2.
8. You will be entitled to an annual performance incentive on
which you will find full details in Article 3 of Addendum 2.
The formula is based on the principle of the achievement of
your financial goals and your personal goals.
9. You will be entitled to a company automobile for business and
personal use with full maintenance and cost of fuel for both
business and personal travel. In accordance with the subject
Company Car Policy, for 1990, the car may cost a maximum of
Dfl. 67.275,--, excluding VAT which amount will be reviewed on
a yearly basis.
See Article 4 of Addendum 2.
10. You will be entitled to 100% reimbursement of your telephone
expenses upon receipt of the PTT-bill. If there should be a
change in the Dutch (tax) law, the new (tax) legislation will
be applied.
11. You will participate in the (premium free) Company Pension
Scheme; all pension rights resulting from your employment
contract with Quaker Chemical (Holland) B.V. will be taken
over by Quaker Chemical Europe B.V. Your pension base
consists of : 13 times the basic monthly salary plus the
vacation allowance (8.5% of 12 x monthly salary), less the
franchise; with the exception of this pension base, all
elements as stated in the Pension Regulations will be applica-
ble to you.
For details, also on widow(er) pension, early retirement and
extra payment on (early) retirement, see Article 5 of Addendum
2.
12. You will participate in the (premium free) Company Collective
Health Insurance Scheme, the Business Travel Accident Insur-
ance, the Travel Luggage Insurance, and the Supplementary
Disability Insurance.
See Article 6 of Addendum 2.
13. You are entitled to the "spouse travel arrangement," which
serves to compensate the family inconvenience by frequent
travel; you are allowed to be accompanied by your wife once
per year on one approved business trip with a maximum of seven
days paid by Quaker; the place is determined by the business
trip and the days are not in addition to the trip.
Exhibit 10(h) Page
4
PAGE 4 - LETTER OF APPOINTMENT OF MR. M. C. J. MEIJER
- ------------------------------------------------------------------
14. You will be entitled to a number of paid holidays in accor-
dance with the Company Holiday Arrangement.
See Article 7 of Addendum 2.
15. You are entitled to join the Company Premium Savings Plan.
See Article 8 of Addendum 2.
16. With regard to Jubilee gifts, see Article 9 of Addendum 2 for
details.
17. In case of relocation, you will be entitled to reimbursements
in accordance with Article 10 of Addendum 2.
18. The above provisions reflect all employment conditions
applicable to you as of January 1, 1991. Any other employment
conditions which might have been agreed upon with you previ-
ously either verbally or in writing are no longer applicable
as of January 1, 1991.
If you agree with the contents of this letter of appointment, we
expect you to return a signed copy of this letter and of its
Addenda, each single page signed by you.
We are convinced that you are able to contribute substantially to
the long-term growth and diversification strategy of our company.
Sincerely yours, Signed for agreement:
Quaker Chemical Europe B.V.
E. R. Aemisegger Name:
Vice President-International
Operations
Date: Date:
Exhibit 10(h) Page
5
April 1990
ADDENDUM 2
----------
To Letter of Appointment dated April 10, 1990
SUMMARY OF GENERAL TERMS OF EMPLOYMENT
--------------------------------------
FOR MANAGEMENT OF
-----------------
QUAKER CHEMICAL EUROPE B.V.
---------------------------
1. Salary
------
Salary ranges are laid down in a scale with minimums and
maximums. Salaries are based on job classification and years
of experience. Depending on the performance appraisal result,
merit increases may be granted until the maximum of the range
is reached.
2. Bonus
-----
The bonus system is based on 0.75% of the Profit From Opera-
tions (PFO) of the European consolidated result, with a
maximum of 16.67% of the basic annual salary (= 12 x monthly
salary).
3. Incentive Plan
--------------
This plan applies to the Vice President and the members of the
Quaker Chemical Europe Management Team. The exact formula
will be communicated with participants during 1990.
4. Company Car
-----------
The members of the Quaker Europe Management Team are eligible
for a company automobile for business and personal use, in
accordance with the company car policy. The car for the Vice
President Europe may cost f 67.275,--, excluding VAT (for
1990), to be reviewed on a yearly basis.
The car for the Quaker Europe Management Team members may cost
f 46.893,--, excl. VAT (for 1990), to be reviewed on a yearly
basis.
5. Old Age Pension
---------------
Employees of 25 years of age and older are building up an old
age pension of 1.75% per annum based on a final pay system.
The premium is fully paid by Quaker. The old age pension is
integrated and will be paid out together with the government
old age pension.
Exhibit 10(h) Page
6
Pensionable salary = 13 x monthly salary + vacation allowance
(8.5% of 12 x monthly salary) -/- the franchise.
- Widow/Widower Pension Arrangement
---------------------------------
In case of the death of an employee, the widow/widower
receives a pension of 70% of the employee's old age pension
and 14% for each child under 21 years of age.
- Early Retirement
----------------
Employees who have been in Quaker's employment for at least 10
consecutive years and wish to retire at the age of 62-1/2 years
are paid 90% of their annual income (base salary + holiday
allowance) during the first year and 80% during the following
1-1/2 year. The early retirement arrangement excludes specific
situations of participation.
- Extra Payment on the Occasion of Retirement/Early Retirement.
------------------------------------------------------------
On the occasion of retirement at the age of 65 or entrance in
the early retirement, the parting employee will receive an
extra payment of one month gross salary; possible taxes will
be deducted.
6. Insurance and Additional Arrangements
-------------------------------------
- Collective Health Insurance
---------------------------
Quaker has affected a Collective Health Insurance with
"Nationale Nederlanden." In principle, there is 100% cover-
age. The package also includes basic dentist insurance; the
premium is fully paid by Quaker.
- Business Travel Accident Insurance
----------------------------------
The Business Travel Accident Insurance provided by the parent
company covers all employees in case of accident while
travelling on company business. The principal sum of Acciden-
tal Death and Dismemberment Insurance is: $100,000.
* Apart from this there is a "24 hour Collective Accident/Dis-
ability Insurance" that provides coverage for all employees
equal to a maximum of three times the yearly income (basic
salary plus holiday allowance and 10% bonus).
Both policies contain certain exclusions.
Exhibit 10(h) Page
7
- Travel (Luggage) Insurance
--------------------------
Luggage of employees travelling abroad (world coverage) is
insured to a maximum of f 5.00,-- per occasion split up in:
Luggage: Dfl. 4000,-- with a maximum of 25% = Dfl. 1000,--
for high value items (camera, jewelry, etc.); cash: Dfl.
1000,--; each individual has an own risk of Dfl. 100,-- per
occasion, the premium is paid by Quaker.
- Supplementary Disability Insurance
----------------------------------
An additional disability insurance has been arranged since the
Government Disability Insurance covers annual salaries up to
a maximum of f 69.392,-- only. The insurance covers a
disability benefit of 80% of 12 x the monthly salary + holiday
allowance + a 13th month. The premium is fully paid by
Quaker. The policy may exclude certain "high risk" factors
depending on medical (non) acceptance.
- Income During Sickness and Permanent Disablement
------------------------------------------------
Employees who comply with the regulation of the Sickness
Benefits Act/Disablement Insurance Act will, in case of a
total disablement to work because of sickness, receive an
addition to 100% net income (including bonus and holiday
allowance) during and in total for a maximum period of 24
months.
- Natural Death
-------------
In case of natural death of an employee, heirs are paid an
amount equal to 3 months' salary net.
- Medical Examination
-------------------
Members of the European Management Team are entitled to a
yearly medical examination to be arranged by the Personnel
Department.
- Home Help Arrangement
---------------------
In case of illness of the wife/life partner of an employee or
in case of illness of a single employee with children, Quaker
will contribute 50% of the costs of a professional who will
take over the normal care of the family under certain condi-
tions.
Exhibit 10(h) Page
8
7. Holidays
--------
- Holiday Allowance
-----------------
All QCE employees are paid a holiday allowance of 8.5% of
their annual salaries. The holiday allowance is paid out in
April.
- The basic number of holidays is 26. This number is increased
according to the age to be reached in the year concerned if
over 35:
20 - 34 years of age: 26 days
35 - 39 years of age: 27 days
40 - 44 years of age: 28 days
45 - 49 years of age: 29 days
50 - 54 years of age: 30 days
55 - 65 years of age: 31 days
8. Savings
-------
- Company Premium Savings Plan
----------------------------
All QCE employees can join the company premium savings plan
after 6 months of service. Quaker gives a savings premium of
50% with a maximum of f 750,-- per year.
- Loan for Mortgages
------------------
Every employee is eligible for a loan when purchasing the
first house for self-occupance. Repayment of the loan is at
least 10% per year. The maximum of the loan is 50% of the
employee's annual salary, with a maximum of f 25.000,--. The
interest rate is prime rate ("promesse disconto") plus 1.5.
9. Jubilee Gift
------------
Employees will receive a Jubilee gift:
- on the occasion of 12-1/2 years of service a net amount of
f1.250,--;
- on the occasion of 25 years of service a net amount of
f 1.750,--;
- on the occasion of 40 years of service a net amount of
f2.500,--.
Exhibit 10(h) Page
9
10. Relocation
----------
- Relocation Expenses
-------------------
If an employee moves to an area within 40 KM from the place
where Quaker Chemical Europe is based, he/she will be reim-
bursed for the transportation of his/her household effects.
- Redecoration Allowance
----------------------
If an employee moves to an area within 40 KM from the place
where Quaker Chemical Europe is based, he/she will receive a
redecoration allowance to the amount of 1-1/2 times the gross
monthly salary net, up to a maximum amount of f 12.000,-- net.
Quaker Chemical Europe B.V. Signed for agreement
By: Name:
Date: Date:
Exhibit 10(h) Page
10
ADDENDUM 3
JOB DESCRIPTION
COMPANY : Quaker Chemical Europe B.V.
DEPARTMENT : Quaker Chemical Europe
POSITION : Vice President
POSITION HOLDER : M. C. J. Meijer
REPORTS TO (Title) : President, Quaker Chemical
Corporation
REPORTS TO (Name) : S. W. W. Lubsen
DATE : April 1990
APPROVED BY POSITION HOLDER :
APPROVED BY SUPERIOR :
FUNCTION
- --------
The establishment and maintenance of an organization for the
direction, control, and support of all European operations to
achieve the Corporate objectives of profit, growth, and return on
invested capital.
SCOPE
- -----
The European Vice President is responsible to the President, Quaker
Chemical Corporation, for Quaker Chemical Europe (QCE) activities
in all areas of Europe, Africa (excluding Southern Africa), and the
Middle East including the Persian Gulf states.
PRINCIPAL DUTIES
- ----------------
1. Consolidated Affiliates
Structure, direct, and control the marketing, technical,
manufacturing, financial, and administrative functions to best
meet Corporate objectives.
Organize and direct the liaison between European affiliates
and European Headquarters.
Organize and direct the liaison between European Headquarters
and Conshohocken.
Establish and ensure maintenance of legal, accounting, and
banking services in accordance with sound business procedures.
Exhibit 10(h) Page
11
In review and consultation with the Managing Director of each
affiliate, ensure effective management.
Provide short and longer term operating and capital budgets.
Review capital expenditure programs to ensure their adequacy
in support of anticipated operations but in conformity to
return on invested capital objectives.
Direct the organization and program for training employees
with special attention to management development and succes-
sion.
Provide guidance in establishing and maintaining the best
possible Corporate image in the European Arena and countries
of residence.
2. License Agreements
Responsible for assisting in the negotiation of new and
servicing of established licensing agreements.
Organize and direct the supply of technical and marketing
assistance.
Assure timely remission of license fees and reimbursable
expenses to Quaker Chemical Corporation.
Provide the organization and program for the indoctrination
and training of employees of the licensee company.
3. General
Management development: Responsible for the development and
maintenance of a climate --
- conducive to a free flow and exchange of ideas where job
experience and training of individuals enable realization
of optimal career potential.
- where managers can develop, and members of the top
management group will have maximum opportunities to
qualify for Vice Presidential, COO, and CEO positions.
Organizational Development: Ensures individually and collec-
tively an organizational structure designed for effective
implementation of internal development programs.
Exhibit 10(h) Page
12
Corporate Planning: Responsible for individual affiliates and
total European operations for the development and maintenance
of programs to ensure growth and conformity to the Management
Plan. While principal growth is envisioned to be generated
through internal programs, external means are to be explored
and possibly utilized.
Constantly explore, determine, and review potential in new
diversified areas of activity and submit to the President
specific recommendations in regard to new development.
Represent the Corporation's interest in negotiations for new
European associations.
Cooperate with Corporate operations to ensure a two-way flow
of technical and market information.
Maintain regular written and personal contact with all
European affiliated and licensee companies.
Act in an advisory capacity with other members of top manage-
ment to ensure integration of activities of European operation
with overall Corporate objectives and plans.
Development and maintenance of a strategic assessment of
Quaker's investments in Europe.
Exhibit 10(h) Page
13
ADDENDUM 4
TO LETTER OF APPOINTMENT DATED APRIL 10, 1990
DECLARATION OF SECRECY AND NON-COMPETITION
SECRECY
- -------
The undersigned Employee shall not, whether during his employment
agreement with Quaker Chemical Europe B.V. or at any time thereaf-
ter, reveal to third parties in any way, in whatever form, either
directly or indirectly, any information regarding or relating to
the business of Employer of which he reasonably may understand that
this is not intended for knowledge of third parties, irrespective
of the source of such information, on forfeiture of a penalty
payable forthwith in favour of Employer of Dfl. 100.000,-- for each
infringement, without prejudice, to the right of Employer to claim
actual damages in addition to such penalty. The aforementioned
information includes, for example, any specific Quaker formulation
and any specific Quaker working method or process, but does not
include any working methods in which Employee has gained experience
during his employment relationship with Employer and which are in
the public domain.
NON-COMPETITION
- ---------------
The undersigned Employee shall not, during a period of 12 months
after the termination of his employment agreement with Quaker
Chemical Europe and within Europe, without prior written approval
of Employer establish, carry on, or cause to be carried on a
business which is in any form competitive with the business of
Employer or have interest in or be active in or on behalf of such
business in whatever way.
The undersigned Employee forfeits in favour of Employer a penalty
payable forthwith of Dfl. 100.00,-- for each day of infringement of
the above-mentioned prohibition without prejudice to the right of
Employer to claim actual damages in addition to such penalty.
Employer may at any time at his own initiative or at the request of
the undersigned Employee, wholly or partly, waive the stipulation
referred to in this article. As long as the undersigned Employee
has not requested Employer to waive the stipulation as referred to
in this article, this stipulation shall be deemed between the
parties not to harm the Employee unreasonably nor to impede him in
a significant way to be employed otherwise than by Employer.
QUAKER CHEMICAL EUROPE B.V. Signed for agreement:
By:___________________________ Name:_________________________
Date:_________________________ Date:__________________________
Exhibit 10(h) Page
14
EXHIBIT 10(i)
December 1, 1993
Mr. Ira R. Dolich
108 S. Mansfield Boulevard
Cherry Hill, NJ 08034-3613
Dear Ira:
Confirming our discussion, as a result of our restructuring effort,
one of the alternatives I am considering includes the reassignment
of the tasks associated with the position of Vice President,
Quality and Information Services and, therefore, provide you with
the option of taking the following early retirement package.
TERMINATION OF EMPLOYMENT
- -------------------------
Under this agreement, your service would terminate December 31,
1993.
TOTAL RETIREMENT BENEFIT
- ------------------------
Your annual benefit payable monthly from January 1, 1994 through
May 1, 1997 will be $94,181 and $83,345 thereafter for life. It is
composed of the following:
__________________________________________________________________
ANNUAL BENEFIT
SOURCE 1/94-5/95 6/95-5/97 6/97 & LATER
Qualified Plan --- $36,920 $36,920
SRIP --- 27,197 27,197
Quaker Social
Security Bridge $10,836 $10,836 ---
Quaker --
Additional Payment 83,345 19,228 19,228
------- ------- -------
TOTAL $94,181 $94,181 $83,345
__________________________________________________________________
Exhibit 10(i) Page
Mr. Ira R. Dolich
December 1, 1993
Page Two
These benefits are explained below:
QUALIFIED PLAN
- --------------
Your January 1, 1994 Quaker Chemical Pension Plan accrued benefit
reduced for early retirement at 60 with monthly payments starting
June 1, 1995 is $36,920. You may, of course, choose to start
payments on a later date.
SUPPLEMENTAL RETIREMENT INCOME PROGRAM (SRIP)
- ---------------------------------------------
Your January 1, 1994 SRIP accrued annual benefit reduced for early
retirement at 60 with monthly payments starting June 1, 1995 is
$27,197. If you choose to start Qualified Plan payments on a later
date, your SRIP benefit will start on that same later date.
SOCIAL SECURITY BRIDGE
- ----------------------
Additionally, we will provide you with an annual "Social Security
Bridge" payment of $10,836 beginning January 1, 1994 until such a
time as you turn 62 and are eligible to begin drawing Social
Security. If either you or your spouse dies before May 1, 1997,
the full unreduced amount will continue to be paid to the survivor
until the earlier of the survivor's death and May 1, 1997. No
payments go to anyone upon the survivor's death.
ADDITIONAL BENEFIT PAYMENT
- --------------------------
Beginning January 1, 1994, you will receive an additional temporary
annual benefit of $83,345 through May 1, 1995, reducing to $19,228
thereafter. These additional payments increase your total payout
to an amount equal to your January 1, 1994 accrued benefit plus a
temporary payment equal to your estimated age 62 Social Security
benefit.
PAYMENT OPTIONS
- ---------------
Except for the Social Security Bridge, the retirement incomes
stated in this letter are payable to you as a single life annuity
with no further payments to anyone after your death. You may elect
to receive your total benefit excluding the Social Security Bridge
Exhibit 10(i) Page
2
Mr. Ira R. Dolich
December 1, 1993
Page Three
as a reduced joint and survivor annuity based on actuarial
reduction factors specified in the Qualified Plan.
Irrespective of the payment option you elect to apply to the early
retirement benefits described herein, the Qualified Plan's
Qualified Pre-Retirement Survivor Annuity and Qualified Joint and
Survivor Annuity provisions continue to apply to your Qualified
Plan benefits and are, of course, unaffected by the early
retirement benefits described herein.
Finally, all of the payments you receive as described herein will
be subject to all applicable federal, state, and local withholding
and employment tax requirements.
EFFECT OF DEFERRED PAYMENT START DATE
- -------------------------------------
Quaker Chemical Corporation's benefit payment obligation outside
the Qualified Plan and SRIP is only for the $10,836 annual Social
Security Bridge and the $83,345 Additional Payment reducing to
$19,228 June 1, 1995. Thus, if you choose to defer receiving the
Qualified Plan and SRIP benefits beyond June 1, 1995, as mentioned
above, your total annual retirement benefit from Quaker and its
benefit plans is $10,836 + $19,228 = $30,064 beginning June 1,
1995, reducing to $19,228 June 1, 1997.
MEDICAL INSURANCE
- -----------------
You and your family will continue to be covered under Quaker's
Medical Insurance Plan -- including surgical, hospitalization,
major medical, and dental coverage -- until such time when you turn
65 and are eligible to apply for Medicare benefits. At 65, you
will receive medical benefits solely under the terms of the Quaker
Retiree Medical Plan in effect December 31, 1993, based on (a) the
assumption you are retiring at 65 and (b) the years of service you
would have earned had your employment continued to age 65.
LONG-TERM PERFORMANCE INCENTIVE PLAN
- ------------------------------------
You currently are the holder of stock options. Under the Long-Term
Performance Incentive Plan approved in 1993, you are entitled to
exercise such stock options for three (3) years after the effective
date of your retirement (or your death if that should occur first).
Stock options awarded under the Long-Term Performance Incentive
Plan approved in 1983 shall be exercisable up to the expiration
date set forth in the Stock Option Agreement. For Performance
Units issued under the 1991 and 1993 programs, you will be eligible
to receive a prorated portion of any payout generated by these
Exhibit 10(i) Page
3
Mr. Ira R. Dolich
December 1, 1993
Page Four
plans. Except as described above, further participation in the
Employee Stock Purchase Plan will end as of December 31, 1993.
OUTPLACEMENT ASSISTANCE
- -----------------------
Should you so choose, you will be provided executive outplacement
assistance to include office space and all support required in your
job search.
CONFIDENTIALITY
- ---------------
As a condition of the offer contained in this letter, at all times
hereafter, you will keep the terms, the amount, and the existence
of this Letter Agreement completely confidential, and you will not
hereafter disclose any information concerning this Letter Agreement
to anyone except your immediate family, attorney, accountant, or
tax advisor, or as otherwise required by law, provided that any
such person agrees to keep said information confidential and not
disclose it to others.
FULL AGREEMENT
- --------------
This Letter Agreement sets forth the entire understanding between
us and can be modified only in writing, signed by each of us. As
used throughout, the term "Letter Agreement" refers to this entire
document consisting of six (6) pages, including the release.
As consideration for our offer, you will be required to sign the
following release which is in customary form.
Ira, please review the early retirement offer carefully. You may
wish to consult independent advisors, including legal counsel, and
we would encourage you to do so. Cliff or I would be pleased to
discuss any questions you may have; however, should you elect not
to assume the additional responsibilities we have discussed and,
therefore, accept this package, I would need to have your signed
agreement no later than twenty-one (21) days after the date of
receipt of this letter.
Sincerely,
S. W. W. Lubsen
ACCEPTANCE:
_____________________________
Ira R. Dolich
Exhibit 10(i) Page
4
RELEASE OF ALL CLAIMS INCLUDING AGE DISCRIMINATION
IN EMPLOYMENT ACT CLAIM
A. I, IRA R. DOLICH, in consideration of the promises in
this letter of December 1, 1993, to which I am not otherwise
entitled, do unconditionally release and forever discharge QUAKER
CHEMICAL CORPORATION, its affiliated, subsidiary, and related
companies, all of their past and present officers, directors,
employees, partners, and agents and their respective heirs,
executors, personal representatives, successors, and assigns
(collectively hereafter "QUAKER"), from any and all causes of
action, suits, damages, claims, judgments, debts, duties, accounts,
bonds, warrants, contracts, agreements, interest, attorney fees,
costs, and expenses whatsoever, in law or in equity, relating to or
in connection with my employment or termination of employment by
QUAKER, either directly or indirectly, whether known or unknown,
for, upon, or by reason of any matter, cause or thing whatsoever,
including, but not limited to, any wrongful termination claims,
breach of contract claims, estoppel, claims, impairment of economic
opportunity, interference with contractual relations, infliction of
emotional harm, or any other tort claims, claims of discrimination,
claims for benefits, claims for unfair labor practices, claims
relating to my hire, employment, or termination of employment by
QUAKER, as well as any claims which I may have arising under or in
connection with any and all local, state, or federal ordinances,
statutes, or common law. The only exclusion from this release
provision is a claim that some term of this Letter Agreement has
been violated.
B. Without limiting the scope of Paragraph A, above, of this
release, I, IRA R. DOLICH, acknowledge that any right or claim for
age discrimination which I may have arising under the Age
Discrimination in Employment Act ("ADEA"), or any other law,
whether known or unknown, arising out of my hire, employment, or
termination of employment with QUAKER, up to and including the date
of execution of this Letter Agreement, is hereby released and
waived. I acknowledge that I am receiving consideration which is
in addition to anything of value to which I otherwise would have
been entitled.
C. I, IRA R. DOLICH, acknowledge that I was advised in
writing to consult with an attorney before signing this Letter
Agreement and that QUAKER advised me that I had twenty-one (21)
calendar days within which to consider this Letter Agreement before
signing it.
D. The waiver and release of my age discrimination claim
does not become effective or enforceable until seven (7) days after
this Letter Agreement is signed. I understand that I have seven
(7) calendar days after executing this Letter Agreement within
which to revoke this Letter Agreement. If the seventh day is a
weekend or national holiday, I have until the next business day to
revoke.
E. I, IRA R. DOLICH, ACKNOWLEDGE THAT I FULLY UNDERSTAND THE
Exhibit 10(i) Page
5
TERMS OF THIS LETTER AGREEMENT INCLUDING THE RELEASE AND THAT I AM
ENTERING INTO IT VOLUNTARILY WITHOUT ANY COERCION ON THE PART OF
ANY PERSON AND THAT I WAS GIVEN ADEQUATE TIME TO CONSIDER ALL
IMPLICATIONS AND TO FREELY AND FULLY CONSULT WITH AND SEEK THE
ADVICE OF WHOMEVER I DEEMED APPROPRIATE.
F. I, IRA R. DOLICH, represent that I have filed no suits,
charges, claims, or the like regarding my employment and/or its
termination; and I agree that I will not do so at any time
hereafter.
I HEREBY AGREE TO AND ACCEPT
THE EARLY RETIREMENT PACKAGE
AND RELEASE:
______________________________
Ira R. Dolich
Dated:________________________
Exhibit 10(i) Page
6
EXHIBIT 13
PORTIONS OF THE ANNUAL REPORT INCORPORATED BY REFERENCE
FINANCIAL REVIEW
- -------------------------------------------------------
QUAKER CHEMICAL CORPORATION 1993 ANNUAL REPORT
Consolidated Statement
of Operations ..................... 14
Consolidated Statement
of Cash Flows ....................... 15
Consolidated Balance Sheet .......... 16
Notes to Consolidated
Financial Statements ................ 18
Report of Independent
Accountants ......................... 26
Supplemental Financial
Information ......................... 27
Management's Discussion and
Analysis of Financial Condition and
Results of Operations ............... 30
Corporate Information ............... 32
13
Exhibit 13 Page
1
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31,
- -------------------------------------------------------------------------------
1993 1992(a) 1991(a)
- -------------------------------------------------------------------------------
Net sales............................ $195,004,000 $212,491,000 $191,051,000
Other income, net (Note 1)........... 1,421,000 904,000 1,237,000
------------ ------------ ------------
196,425,000 213,395,000 192,288,000
------------ ------------ ------------
Costs and expenses (Notes 1, 4
and 6):
Cost of goods sold................ 112,369,000 119,176,000 109,261,000
Selling, administrative and
general expenses............... 74,242,000 76,528,000 67,828,000
Repositioning charges (Note 2).... 11,900,000
------------ ------------ ------------
198,511,000 195,704,000 177,089,000
------------ ------------ ------------
Income (loss) from operations........ (2,086,000) 17,691,000 15,199,000
Interest expense..................... (1,467,000) (1,541,000) (1,756,000)
Interest income...................... 1,376,000 1,997,000 1,949,000
------------ ------------ ------------
Income (loss) before taxes........... (2,177,000) 18,147,000 15,392,000
Taxes on income (Note 5)............. 234,000 6,947,000 6,098,000
------------ ------------ ------------
(2,411,000) 11,200,000 9,294,000
Equity in net income of
associated companies (Note 1)..... 1,001,000 1,328,000 1,898,000
Minority interest in net income of
subsidiary........................ (348,000) (430,000) (402,000)
------------ ------------ ------------
Income (loss) before cumulative
effect of change in accounting
principle......................... (1,758,000) 12,098,000 10,790,000
Cumulative effect of change in
accounting for postretirement
benefits (Note 6)................. (5,675,000)
------------- ------------ ------------
Net income (loss)................. $ (1,758,000) $ 12,098,000 $ 5,115,000
============ ============ ============
Per share data (Note 1):
Income (loss) per share before
cumulative effect of change
in accounting principle........ $(.19) $1.33 $1.20
Cumulative effect of change in
accounting for postretirement
benefits (Note 6).............. (.63)
Net income (loss)................. (.19) 1.33 .57
Dividends......................... .60-1/2 .57 .53
- -------------------------------------------------------------------------------
(a) Restated for comparative purposes.
14
Exhibit 13 Page
2
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------
1993 1992 1993
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................... $ (1,758,000) $ 12,098,000 $ 5,115,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation........................................ 6,545,000 6,427,000 5,188,000
Amortization........................................ 1,021,000 1,385,000 1,554,000
Equity in net income of associated companies........ (1,001,000) (1,328,000) (1,898,000)
Minority interest in earnings of subsidiary......... 348,000 430,000 402,000
Deferred taxes...................................... (491,000) 76,000 494,000
Cumulative effect of change in accounting principle. 5,675,000
Deferred compensation and other
postretirement benefits........................... 254,000 427,000 212,000
Repositioning charges, net.......................... 9,700,000
Other............................................... (181,000) 98,000 512,000
Change in current assets and liabilities
Accounts receivable............................... 1,490,000 82,000 939,000
Inventories....................................... 444,000 1,352,000 1,369,000
Prepaid expenses (including taxes) and other
current assets.................................. (3,331,000) 621,000 (3,129,000)
Accounts payable and accrued liabilities............ 4,018,000 3,047,000 (6,378,000)
Estimated taxes on income........................... (261,000) (983,000) 177,000
------------ ------------ -----------
Net cash provided by operating activities... 16,797,000 23,732,000 10,232,000
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Short-term investments.............................. (854,000) 4,097,000 4,999,000
Dividends from associated companies................. 785,000 314,000 860,000
Purchase of property, plant and equipment........... (8,960,000) (7,226,000) (8,420,000)
Companies acquired excluding cash................... (11,271,000) (8,270,000)
Purchase of patent, production technology and
other related assets.............................. (854,000) (4,400,000) (2,500,000)
Proceeds from sale of patent, production technology
and other related assets.......................... 6,500,000
Proceeds from the sale of assets.................... 746,000 1,254,000
Other............................................... (332,000) (508,000) 17,000
------------ ------------ -----------
Net cash used in investing activities........ (14,240,000) (14,739,000) (5,044,000)
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term debt incurred............................ 2,740,000 1,487,000 2,629,000
Long-term debt and capital lease incurred........... 1,102,000 15,727,000
Repayment of short-term debt........................ (2,434,000) (15,164,000)
Repayment of long-term debt and capital lease....... (2,997,000) (2,104,000) (234,000)
Dividends paid...................................... (5,525,000) (5,096,000) (4,768,000)
Treasury stock issued............................... 971,000 2,451,000 1,297,000
Other............................................... (17,000) (126,000) (151,000)
------------ ------------ -----------
Net cash used in financing activities........ (6,160,000) (2,825,000) (1,227,000)
------------ ------------ -----------
Effect of exchange rate changes on cash............. (1,477,000) (2,828,000) (977,000)
------------ ------------ -----------
Net (decrease) increase in cash
and cash equivalents.............................. (5,080,000) 3,340,000 2,984,000
Cash and cash equivalents at beginning of year........ 24,373,000 21,033,000 18,049,000
------------ ------------ -----------
Cash and cash equivalents at end of year.............. $ 19,293,000 $ 24,373,000 $21,033,000
============ ============ ===========
Supplemental cash flow information
Cash paid for income taxes and interest was as follows:
Income taxes........................................ $ 5,535,000 $ 6,775,000 $ 9,068,000
Interest............................................ 1,448,000 1,207,000 1,988,000
In conjunction with an acquisition in 1993, the company assumed $1,295,000
in debt of which $646,000 was current.
- ----------------------------------------------------------------------------------------------------
15
Exhibit 13 Page
3
CONSOLIDATED BALANCE SHEET
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------
ASSETS 1993 1992
- -------------------------------------------------------------------------------------------------------------
Current assets
Cash and cash equivalents (Note 1)........................................ $ 19,293,000 $ 24,373,000
Short-term investments, at cost which approximates market................. 1,000,000 135,000
Accounts receivable, less allowances for doubtful accounts of $1,244,000..
in 1993 and $834,000 in 1992............................................ 37,108,000 37,525,000
Inventories (Notes 1 and 4)
Work in process and finished goods...................................... 9,278,000 9,205,000
Raw materials and supplies.............................................. 8,269,000 8,531,000
Deferred taxes (Note 5)................................................... 2,857,000 445,000
Prepaid expenses and other current assets................................. 6,582,000 5,353,000
------------ ------------
Total current assets.................................................... 84,387,000 85,567,000
------------ ------------
Investments in associated companies, at equity (Notes 1 and 3)............... 6,224,000 6,001,000
------------ ------------
Property, plant and equipment, at cost (Notes 1 and 3)
Land...................................................................... 6,440,000 6,042,000
Buildings and improvements................................................ 35,590,000 32,873,000
Machinery and equipment................................................... 63,066,000 57,306,000
Construction in progress.................................................. 1,980,000 1,477,000
------------ ------------
107,076,000 97,698,000
Less accumulated depreciation............................................. 50,525,000 45,519,000
------------ ------------
56,551,000 52,179,000
------------ ------------
Excess of cost over net assets of acquired companies, net (Note 1)........... 14,472,000 9,529,000
Deferred taxes (Note 5)...................................................... 4,788,000 4,358,000
Other noncurrent assets (Note 1)............................................. 4,563,000 8,979,000
------------ ------------
23,823,000 22,866,000
------------ ------------
$170,985,000 $166,613,000
============ ============
- -------------------------------------------------------------------------------------------------------------
16
Exhibit 13 Page
4
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1993 1992
- ------------------------------------------------------------------------------------------------------
Current liabilities
Short-term borrowings and current portions of long-term
debt and capital leases (Note 7).................................. $ 4,953,000 $ 2,893,000
Accounts payable.................................................... 18,117,000 13,954,000
Dividends payable................................................... 1,432,000 1,379,000
Accrued liabilities
Compensation...................................................... 5,251,000 5,051,000
Other (Note 2).................................................... 12,476,000 4,130,000
Estimated taxes on income (Note 5).................................. 413,000 719,000
------------ ------------
Total current liabilities......................................... 42,642,000 28,126,000
------------ ------------
Long-term debt and capital leases (Note 7)............................. 16,095,000 18,604,000
Deferred taxes on income (Note 5)...................................... 3,043,000 3,302,000
Deferred foreign investment incentive benefits......................... 942,000 1,105,000
Accrued postretirement benefits (Note 6)............................... 8,968,000 8,898,000
Other noncurrent liabilities (Note 2).................................. 5,898,000 3,216,000
------------ ------------
Total noncurrent liabilities...................................... 34,946,000 35,125,000
------------ ------------
77,588,000 63,251,000
------------ ------------
Commitments and contingencies (Notes 1 and 11).........................
Minority interest in equity of subsidiary (Note 1)..................... 2,014,000 1,720,000
------------ ------------
Shareholders' equity (Note 8)
Common stock, $1 par value; authorized 30,000,000 shares;
issued (including treasury shares) 9,664,009 shares............... 9,664,000 9,664,000
Capital in excess of par value...................................... 529,000 301,000
Retained earnings................................................... 83,498,000 90,834,000
Equity adjustment from foreign currency translation................. 3,577,000 7,471,000
------------ ------------
97,268,000 108,270,000
Treasury stock, shares held at cost; 1993-421,842, 1992-475,838..... 5,885,000 6,628,000
------------ ------------
91,383,000 101,642,000
------------ ------------
$170,985,000 $166,613,000
============ ============
- -------------------------------------------------------------------------------------------------------------
17
Exhibit 13 Page
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
All majority owned subsidiaries are included in the consolidated financial
statements, with appropriate elimination of intercompany balances and
transactions. The consolidated balance sheet includes total assets of
$79,651,000 in 1993 and $75,402,000 in 1992 and total liabilities of
$19,221,000 in 1993 and $14,377,000 in 1992 of international subsidiaries.
The consolidated statement of operations includes net income of international
subsidiaries of $3,729,000 in 1993, $9,391,000 in 1992 and $7,812,000 in 1991.
Investments in associated (less than majority owned) companies are stated at
the company's equity in their underlying net assets.
TRANSLATION OF FOREIGN CURRENCY
Assets and liabilities of international subsidiaries and associated
companies, except for Mexico and Venezuela prior to 1992, are translated into
U.S. dollars at the respective rates of exchange prevailing at the end of the
year. Income accounts are translated at average exchange rates prevailing
during the year. Translation adjustments resulting from this process, except
for Mexico and Venezuela prior to 1992, are recorded directly in shareholders'
equity and will be included in income only upon sale or liquidation of the
underlying investment.
CASH AND CASH EQUIVALENTS
The company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
INVENTORIES
Inventories of the parent company are valued at the lower of cost or
market value, with cost determined using the last-in, first-out (LIFO) method.
Inventories of subsidiaries are valued primarily at first-in, first-out cost,
but not in excess of market value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost, and capital leases are
recorded at the present value of future minimum lease payments. Depreciation
is computed using the straight-line method on an individual asset basis over
the following estimated useful lives: buildings and improvements, 10 to 45
years; machinery and equipment, 3 to 15 years; and capital leases, remaining
life of the lease. At December 31, 1993 and 1992, respectively, $1,301,000
and $727,000 of leased equipment and accumulated depreciation thereon in the
amount $520,000 in 1993 and $214,000 in 1992 are included in the property,
plant and equipment accounts.
Expenditures for renewals and betterments which increase the estimated
useful life or capacity of the assets are capitalized; expenditures for
repairs and maintenance are charged to income.
EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES AND OTHER NONCURRENT
ASSETS
Excess of cost over net assets of acquired companies and other noncurrent
assets consist primarily of intangibles arising from acquisitions. They are
being amortized on a straight-line basis over periods of 5 to 40 years (5 to
20 years on acquisitions subsequent to 1991). At December 31, 1993 and 1992,
accumulated amortization of the excess of cost over net assets of acquired
companies amounted to $1,621,000 and $1,215,000, respectively.
PENSION AND POSTRETIREMENT BENEFIT PLANS
The company's policy is to fund pension costs allowable for income tax
purposes. See Note 6 for the cost of pension and postretirement benefits
other than pensions.
REVENUE RECOGNITION
Sales are recorded primarily when products are shipped to customers.
Other income, principally license fees offset by miscellaneous expenses, is
recorded when earned. License fees recorded by the company from its
nonconsolidated international associates amounted to $1,178,000, $1,135,000
and $1,313,000 in 1993, 1992 and 1991, respectively. Fees received from
independent licensees are immaterial.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Company
sponsored research and development expenses during 1993, 1992 and 1991 were
$11,037,000, $11,134,000, and $10,000,000, respectively.
EARNINGS PER SHARE
Earnings per share calculations are based on the weighted average number
of shares outstanding during the year.
CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the company to a
concentration of credit risk, principally consist of cash equivalents and of
short-term investments and trade receivables. The company invests temporary
and excess cash in money market securities and instruments in U.S. and foreign
commercial banks having maturities typically within 90 days. The company has
not experienced losses from the aforementioned investments.
The company sells its principal products to most of the major steel,
automotive and related companies around the world. The company maintains
allowances for potential credit losses. Historically, the company has
experienced some losses related to bankruptcy proceedings of major steel
companies in the U.S.
18
Exhibit 13 Page
6
NOTE 2--REPOSITIONING CHARGES
During 1993, the company implemented a broad scope program of changes
focused on reducing the company's operating costs to compete more effectively
in today's environment. This program includes consolidation and closure of
certain of the company's facilities, selected workforce reductions, and
planned divestitures of nonstrategic business operations. The consolidated
statement of operations for 1993 includes charges before income taxes of
$11,900,000 ($7,854,000 after tax, or $.85 per share) relating to this
program. Of the total, $5,200,000 relates to the cost of the workforce
reductions. The remaining $6,700,000 is to provide for the closure of a
manufacturing facility in Pomona, California, consolidation of European
manufacturing operations, and the divestiture of nonstrategic business
operations. As of December 31, 1993, $7,600,000 and $2,100,000 remained in
accrued liabilities and other noncurrent liabilities, respectively. Of the
$7,600,000, approximately $3,700,000 represents anticipated cash outlays in
1994.
NOTE 3--ASSOCIATED COMPANIES
Summarized financial information of the associated companies (less than
majority owned), in the aggregate, for 1993, 1992 and 1991 is as follows:
(Dollars in thousands)
----------------------------------------
1993 1992(a) 1991(a)
----------------------------------------
Current assets................ $22,515 $21,841 $30,173
Noncurrent assets............. 2,643 2,238 5,897
Current liabilities........... 12,888 11,432 13,115
Noncurrent liabilities........ 950 768 1,948
Net sales..................... $52,028 $44,244 $61,471
Operating income (b).......... 5,654 5,689 7,866
Income before taxes........... 4,287 5,183 6,966
Net income.................... 2,165 2,676 3,999
(a) Restated for comparative purposes.
(b) Net sales, less costs and expenses.
Operations of Alpine Labs are included since its formation on November 1,
1990 to February 12, 1992 when it became a wholly-owned subsidiary. Quaker
Chemical, S.A. is excluded from the summary after January 1, 1992 when it
became a wholly-owned subsidiary (see Note 10).
NOTE 4--INVENTORIES
Inventories valued under the LIFO method amounted to $4,879,000 and
$4,858,000 at December 31, 1993 and 1992, respectively. The estimated
replacement costs for these inventories using the first-in, first-out method
were approximately $6,115,000 and $6,080,000, respectively.
19
Exhibit 13 Page
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
NOTE 5--TAXES ON INCOME
Taxes on income included in the consolidated statement of operations
consist of the following:
- --------------------------------------------------------------------------------------------------------
Federal Foreign State Total
- --------------------------------------------------------------------------------------------------------
1993
CURRENTLY PAYABLE (RECOVERABLE)....... $ (598,000) $4,123,000 $144,000 $3,669,000
TAX EFFECT OF TEMPORARY DIFFERENCES
CURRENT............................ (2,310,000) (634,000) (2,944,000)
NONCURRENT......................... (478,000) (13,000) (491,000)
----------- ---------- -------- ----------
$(3,386,000) $3,476,000 $144,000 $ 234,000
=========== ========== ======== ==========
1992
Currently payable..................... $ 451,000 $6,213,000 $208,000 $6,872,000
Tax effect of temporary differences
Current............................ (1,000) (1,000)
Noncurrent......................... 453,000 (377,000) 76,000
----------- ---------- -------- ----------
$ 903,000 $5,836,000 $208,000 $6,947,000
=========== ========== ======== ==========
1991
Currently payable .................... $ 59,000 $5,257,000 $238,000 $5,554,000
Tax effect of temporary differences
Current............................ 416,000 (31,000) 385,000
Noncurrent......................... 180,000 (59,000) 38,000 159,000
----------- ---------- -------- ----------
$ 655,000 $5,198,000 $245,000 $6,098,000
=========== ========== ======== ==========
Total deferred tax assets and liabilities are comprised of the following
at December 31:
---------------------------------------------------------------
1993 1992
---------------------------------------------------------------
CURRENT DEFERRED Current Deferred
---------------------------------------------------------------
Retirement benefits.................. $ 212,000 $326,000
Postretirement benefits.............. $3,049,000 $3,025,000
Supplemental retirement benefits..... 530,000 483,000
Repositioning charges................ 2,252,000 726,000
Long-term performance incentives..... 189,000
Other................................ 393,000 483,000 119,000 661,000
----------- ---------- -------- ----------
Total deferred tax assets............ $2,857,000 $4,788,000 $445,000 $4,358,000
=========== ========== ======== ==========
Depreciation......................... $2,844,000 $2,839,000
Other................................ 199,000 463,000
---------- ----------
Total deferred tax liabilities....... $3,043,000 $3,302,000
========== ==========
The following is a reconciliation of income taxes at the Federal statutory
rate with income taxes recorded by the company:
-------------------------------------------------
1993 1992 1991
-------------------------------------------------
Income tax provision (benefit) at the
Federal statutory tax rate....................... $(740,000) $6,170,000 $5,233,000
State income tax provisions, net.................... 98,000 137,000 162,000
Foreign taxes on earnings at rates different than
the Federal statutory rate....................... 723,000 368,000 469,000
Miscellaneous items, net............................ 153,000 272,000 234,000
--------- ---------- ----------
Taxes on income..................................... $ 234,000 $6,947,000 $6,098,000
========= ========== ==========
20
Exhibit 13 Page
8
United States income taxes have not been provided on the undistributed
earnings of international subsidiaries since it is the company's intention to
continue to reinvest these earnings abroad for working capital and expansion
needs. The amount of such undistributed earnings at December 31, 1993 was
approximately $47,000,000. Any income tax liability which might result from
ultimate remittance of these earnings is expected to be substantially offset
by foreign tax credits. Effective January 1, 1991, the company adopted the
provisions of Statement of Financial Accounting Standards No. 109 (SFAS 109)
"Accounting for Income Taxes." The cumulative effect of adoption of SFAS 109
was not material.
NOTE 6--EMPLOYEE BENEFITS
PENSION PLANS
The company maintains various noncontributory retirement plans covering
substantially all of the employees of the parent company and its domestic
subsidiaries. The benefits for these plans are based primarily on years of
service and employees' pay near retirement.
The plans of international subsidiaries are, for the most part, either
fully insured or integrated with the local governments' plans and are not
subject to the provisions of the Statement of Financial Accounting Standards
No. 87 (SFAS 87), "Employers' Accounting for Pensions."
The pension costs for all plans include the following components:
-----------------------------------------------
1993 1992 1991
-----------------------------------------------
Service cost--benefits earned during the period.... $ 809,000 $ 834,000 $ 791,000
Interest cost on projected benefit obligation...... 2,335,000 2,251,000 2,158,000
Return on plan assets
--actual........................................ (2,820,000) (3,690,000) (4,551,000)
--deferred gain................................. 98,000 1,254,000 2,426,000
Other amortization--net............................ (110,000) (103,000) (111,000)
----------- ----------- -----------
Net pension costs of plans subject to SFAS 87...... 312,000 546,000 713,000
Pension costs of plans not subject to SFAS 87...... 904,000 872,000 828,000
----------- ----------- -----------
Total pension costs................................ $ 1,216,000 $ 1,418,000 $ 1,541,000
=========== =========== ===========
The following table summarizes the funded status of the company's defined
benefit pension plans and the related amounts recognized in the company's
consolidated balance sheets as of December 31:
---------------------------------
1993 1992
---------------------------------
Actuarial present value of:
Vested benefit obligation..................................... $29,542,000 $26,705,000
=========== ===========
Accumulated benefit obligation................................ $29,729,000 $26,831,000
=========== ===========
Projected benefit obligation..................................... $32,543,000 $30,025,000
Plan assets at market value...................................... 30,677,000 29,143,000
----------- -----------
Plan assets less than projected benefit obligation............... (1,866,000) (882,000)
Unrecognized cumulative net (gain) loss.......................... 222,000 (933,000)
Unrecognized prior service cost related to adjustment of
retirees' benefits and benefit update......................... 1,963,000 2,105,000
Unrecognized net gain at date of initial application of SFAS 87.. (2,425,000) (2,669,000)
----------- -----------
Accrued pension costs............................................ $(2,106,000) $(2,379,000)
=========== ===========
The significant assumptions for the plans were as follows:
---------------------------------------
1993 1992 1991
---------------------------------------
Discount rate for projected benefit obligation........... 7.5% 8.0% 8.25%
Assumed long-term rates of compensation increases........ 5.5% 6.0% 6.5%
Long-term rate of return on plan assets.................. 9.5% 9.5% 9.5%
21
Exhibit 13 Page
9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
PROFIT SHARING PLAN
The parent company also maintains a qualified profit sharing plan covering
all employees other than those who are compensated on a commission basis. No
contributions were made in 1993. Contributions for 1992 and 1991 were
$310,000 and $520,000, respectively.
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Effective January 1, 1991, the company adopted the provisions of Statement
of Financial Accounting Standards No. 106 (SFAS 106), "Employers' Accounting
for Postretirement Benefits Other Than Pensions," for its U.S. postretirement
benefit plans. The plans provide medical and life insurance benefits for
certain retired employees of the parent company. These benefits vary based on
age, years of service and retirement date. Coverage of health benefits under
the plan may require the retiree to make payments where the insured equivalent
costs exceed the company's fixed contribution. The cost of the life insurance
benefit plan, which provides a flat $2,000 per retiree, is noncontributory.
Both the medical and life insurance plans are currently unfunded.
The components of periodic postretirement benefit costs for 1993, 1992 and
1991 are as follows:
--------------------------------
1993 1992 1991
--------------------------------
Service cost--benefits attributed to
service during the period............... $ 79,000 $ 96,000 $ 92,000
Interest cost on accumulated benefit
obligation.............................. 650,000 664,000 683,000
-------- -------- --------
Postretirement benefit cost................ $729,000 $760,000 $775,000
======== ======== ========
The funded status of the plan at December 31, 1993 and 1992 is as follows:
------------------------
1993 1992
------------------------
Retirees............................................ $7,218,000 $6,824,000
Fully eligible active participants.................. 88,000 100,000
Other participants.................................. 1,712,000 1,952,000
---------- ----------
Total accumulated postretirement benefit obligation. 9,018,000 8,876,000
Unrecognized actuarial gain (loss).................. (50,000) 22,000
---------- ----------
Net unfunded post-retirement benefit
liability........................................ $8,968,000 $8,898,000
========== ==========
The discount rate used in determining the accumulated postretirement
benefit obligation is 7.5%.
In valuing costs and liabilities, different health care cost trend rates
were used for retirees under and over age 65. The average assumed rate for
medical benefits for all retirees was 8.9% in 1993--gradually decreasing to
5.5% over 13 years. A 1% increase in the health care cost trend rate would
increase aggregate service cost for 1993 by $46,000 and the accumulated
postretirement benefit obligation as of December 31, 1993 by $656,000.
The parent company maintains a plan under which the company will provide,
in certain cases, supplemental retirement benefits to officers of the parent
company. Benefits payable under the plan are based on a combination of years
of service and existing post-retirement benefits. Included in total pension
costs are charges of $270,000 in 1993, $330,000 in 1992 and $252,000 in 1991,
representing the annual accrued benefits under this plan.
Effective January 1, 1993, the company adopted the provisions of Statement
of Financial Accounting Standards No. 112 (SFAS 112), "Employer's Accounting
for Postemployment Benefits." The cumulative effect of adoption of SFAS 112
was not material.
NOTE 7--DEBT AND LEASE OBLIGATIONS
Long-term debt at December 31, consisted of the following:
---------------------------
1993 1992
---------------------------
Industrial development authority monthly
floating rate (2.6% at December 31, 1993)
demand bonds maturing 2014.................... $ 5,000,000 $ 5,000,000
6.64% note payable due July 8, 1997.............. 13,333,000 15,000,000
Capital lease obligations........................ 789,000 526,000
Other notes payable due 1994 to 1998, interest
ranges from 3.7% to 10.8% 758,000
----------- -----------
19,880,000 20,526,000
Less current portion............................. 3,785,000 1,922,000
----------- -----------
$16,095,000 $18,604,000
=========== ===========
In 1992, the company entered into an intermediate-term private placement
of $15,000,000 of 6.64% notes payable requiring semiannual principal payments
of $1,667,000 beginning July 8, 1993 and continuing through 1997. The
long-term financing agreements require, among other things, the maintenance of
working capital and net worth ratios. The company is in compliance with these
requirements.
During the next five years, payments on long-term debt are due as follows:
$3,785,000 in 1994; $3,748,000 in 1995; $3,514,000 in 1996; $3,392,000 in
1997; and $441,000 in 1998.
At December 31, 1993, a non-U.S. subsidiary of the company had an
outstanding note payable to a bank in the amount of $1,168,000 maturing in
March 1994. The interest rate on the note was 10.1%. The parent company also
has available a $10,000,000 unsecured line of credit. Any borrowings under
this line of credit will be at the bank's best rate of interest in effect at
the time. There were no borrowings against the line of credit during 1993 and
1992.
At December 31, 1993 and 1992, the value at which the financial
instruments are recorded approximated their fair market value.
22
Exhibit 13 Page
10
NOTE 8--SHAREHOLDERS' EQUITY
An analysis of the changes in consolidated shareholders' equity is as
follows:
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------------------------
Equity
adjustment
from
Capital in foreign
Common excess of Retained currency Treasury
Stock par value earnings translation stock Total
- ----------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31, 1990................. $9,655 $ 0 $83,674 $15,859 $(10,075) $ 99,113
Net income--1991.................... 5,115 5,115
Dividends--$.53 per share........... (4,768) (4,768)
Shares issued upon exercise
of options....................... 3 (215) (77) 852 563
Shares issued for employee stock
purchase plan.................... 221 442 663
Translation adjustment.............. (1,791) (1,791)
Other............................... 6 (6) 3 3
------ ----- ------- ------- -------- --------
BALANCE, DEC. 31, 1991................. 9,664 0 83,944 14,068 (8,778) 98,898
Net income--1992.................... 12,098 12,098
Dividends--$.57 per share........... (5,208) (5,208)
Shares issued upon exercise
of options....................... (389) 1,185 796
Shares issued for employee stock
purchase plan.................... 302 471 773
Shares issued for pension plan...... 348 416 764
Translation adjustment.............. (6,597) (6,597)
Other............................... 40 78 118
------ ----- ------- ------- -------- --------
BALANCE, DEC. 31, 1992................. 9,664 301 90,834 7,471 (6,628) 101,642
Net loss--1993...................... (1,758) (1,758)
Dividends--$.60-1/2 per share....... (5,578) (5,578)
Shares issued upon exercise
of options....................... (27) 109 82
Shares issued for employee
stock purchase plan.............. 196 528 724
Translation adjustment.............. (3,894) (3,894)
Other............................... 59 106 165
------ ----- ------- ------- -------- --------
BALANCE, DEC. 31, 1993................. $9,664 $ 529 $83,498 $ 3,577 $ (5,885) $ 91,383
====== ===== ======= ======= ======== ========
The treasury stock is held for use by the various company plans which
require the issuance of the company's common stock.
The company is authorized to issue 10,000,000 shares of preferred stock,
$1.00 par value, subject to approval by the Board of Directors. The Board of
Directors may designate one or more series of preferred stock and the number
of shares, rights, preferences and limitations of each series. None of the
preferred stock has been issued.
Under provisions of a stock purchase plan, which permits employees to
purchase shares of stock at 85% of the market value, 38,399 shares and 35,277
shares were issued from the treasury in 1993 and 1992, respectively. In 1991,
33,568 shares were issued from the treasury, and 2,413 shares were purchased
in the open market. The number of shares that may be purchased by an employee
in any one year is limited by factors dependent upon the market value of the
stock and the employee's base salary. At December 31, 1993,
23
Exhibit 13 Page
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
246,925 shares may be issued under the plan.
The company has a long-term performance incentive plan for key employees
which provides for the granting of options to purchase stock at prices not
less than market value on the date of the grant. Options are exercisable one
year after the date of the grant for a period of time determined by the
company not to exceed ten years from the date of the grant.
The table below summarizes transactions in the plan during 1993, 1992 and
1991.
- ------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF OPTION PRICE Number of Option price Number of Option price
SHARES PER SHARE shares per share shares per share
- ------------------------------------------------------------------------------------------------------------------
Options outstanding at January 1,... 445,776 $11.00-$19.75 571,535 $11.00-$19.53 465,601 $11.00-$15.91
Options granted..................... 206,444 $21.00-$24.20 2,598 $17.75-$19.75 220,000 $17.75-$19.53
Options exercised................... (13,686) $12.50-$19.75 (128,357) $11.00-$17.75 (114,066) $11.00-$14.50
------- ------- -------
Options outstanding at December 31,. 638,534 $11.00-$24.20 445,776 $11.00-$19.75 571,535 $11.00-$19.53
======= ============= ======= =======
Options exercisable at December 31,. 432,090 $11.00-$19.75 445,228 $11.00-$19.75 351,535 $11.00-$15.91
======= ======= =======
Options were exercised for cash and the surrender of 5,739, 41,770 and
46,402 previously outstanding shares in 1993, 1992 and 1991, respectively,
resulting in the net issuance of 7,947 shares in 1993, 86,587 shares in 1992
and 67,664 shares in 1991. Options to purchase 793,556 shares were available
at December 31, 1993 for future grant.
The plan also provides for the issuance of performance incentive units,
the value of which is determined based on operating results over a four-year
period. The effect on operations of the change in the estimated value of
incentive units during the year was nil in 1993 and 1991 and a credit of
$292,000 in 1992.
On February 7, 1990, the company declared a dividend distribution to
shareholders of record on February 20, 1990 which, after giving effect for the
three-for-two stock split effective July 30, 1990, was in the form of two
stock purchase rights (the "Rights") for each three shares of common stock
outstanding. The Rights become exercisable if a person or group acquires or
announces a tender offer which would result in such person's acquisition of
20% or more of the company's common stock. The Rights also become exercisable
if the Board of Directors declares a person to be an "adverse person" and that
person has obtained not less than 10% of the outstanding shares of the
company's common stock.
Each Right, when exercisable, entitles the registered holder to purchase
one one-hundredth of a share of a newly authorized Series A preferred stock at
an exercise price of $72 subject to certain anti-dilution adjustments. In
addition, if a person or group acquires 20% or more of the outstanding shares
of the company's common stock, without first obtaining Board of Directors'
approval, as required by the terms of the Rights Agreement, or a person is
declared an adverse person, each Right will then entitle its holder (other
than such persons or members of any such group) to purchase, at the Right's
then current exercise price, a number of shares of the company's common stock
having a total market value of twice the Right's exercise price.
In the event that the company merges with or transfers 50% or more of its
assets or earnings to any entity after the Rights become exercisable, holders
of Rights may purchase, at the Right's then current exercise price, common
stock of the acquiring entity having a value equal to twice the Right's
exercise price. In addition, at any time after a person acquires 20% of the
outstanding shares of common stock and prior to the acquisition by such person
of 50% or more of the outstanding shares of common stock, the company may
exchange the Rights (other than the Rights which have become null and void),
in whole or in part, at an exchange ratio of one share of common stock or
equivalent share of preferred stock, per Right.
The Board of Directors can redeem the Rights for $.01 per Right at any
time prior to the acquisition by a person or group of beneficial ownership of
20% or more of the company's common stock or a person being declared an
adverse person. Until a Right is exercised, the holder thereof will have no
rights as a shareholder of the company, including without limitation, the
right to vote or to receive dividends. Unless earlier redeemed or exchanged,
the Rights will expire on February 20, 2000.
24
Exhibit 13 Page
12
NOTE 9--BUSINESS SEGMENTS
The company operates primarily in one business segment -- the manufacture
and sale of industrial chemical specialty products. The company has both
United States and international operations which are summarized for 1993, 1992
and 1991 as follows:
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------------------------
European Consolidated
United Economic ---------------------------
States Community Other 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------
Net sales to unaffiliated customers:
1993................................ $110,067 $74,090 $10,847 $195,004
-------- ------- ------- ========
1992................................ 118,831 83,276 10,384 $212,491
-------- ------- ------- ========
1991................................ 114,988 65,888 10,175 $191,051
-------- ------- ------- ========
Operating profit:
1993................................ 5,164 10,745 652 $ 16,561
-------- ------- -------
1992................................ 7,196 16,025 1,368 $ 24,589
-------- ------- -------
1991................................ 6,754 13,262 1,419 $ 21,435
-------- ------- -------
Repositioning charges..................... (11,900)
Nonoperating expenses..................... (6,838) (6,442) (6,043)
Minority interests and equity in net
income of associated companies......... 653 898 1,496
-------- -------- --------
Income (loss) before taxes and cumulative
effect of change in accounting
principle.............................. (1,524) 19,045 16,888
Taxes on income........................... 234 6,947 6,098
Cumulative effect of change in
accounting principle................... (5,675)
-------- -------- --------
Net income (loss)................... $ (1,758) $ 12,098 $ 5,115
======== ======== ========
Identifiable assets:
1993................................ 70,889 55,427 6,988 $133,304
-------- ------- -------
1992................................ 82,727 56,372 4,994 $144,093
-------- ------- -------
1991................................ 75,793 49,547 5,041 $130,381
-------- ------- -------
Investments in associated companies....... 6,224 6,001 9,835
Nonoperating assets....................... 31,457 16,519 18,905
-------- -------- --------
Total assets........................ $170,985 $166,613 $159,121
======== ======== ========
Transfers between geographic areas are not material. Operating profit is
comprised of revenue less related costs and expenses, excluding dividends and
license fees paid to the parent company. Nonoperating expenses primarily
consist of general corporate expenses identified as not being a cost of
operations, interest expense, interest income and license fees from
nonconsolidated associates. Nonoperating assets, consisting primarily of cash
equivalents and short-term investments, have not been included with
identifiable assets. No single customer accounted for 10% of net sales in
1993, 1992, and 1991. A substantial portion of consolidated sales on a global
basis are made to the steel production market (see Classification of Products
by Markets Served on page 27 of this report), and as a result, accounts
receivable generally reflect a similar distribution of receivables from
customers in these markets.
25
Exhibit 13 Page
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
NOTE 10--BUSINESS ACQUISITIONS AND DIVESTITURES
In 1994, the company entered into an agreement for the creation of a joint
venture which is expected to enhance the Total Fluid Management (TFM) service
capabilities of the company. An initial cash investment of approximately
$3,000,000 has been made with additional investments expected based on the
growth of the venture.
Effective May 14, 1993, the company acquired for $10,693,000 in cash 100%
of the common stock of Raffineries de l'Ile de France (RIF), a metalworking
chemical specialty business in France. The results of the operations of RIF
are included in the consolidated financial statements from that date. The
effect on the consolidated statements has not been material.
As part of a plan to exit from the petroleum production chemicals market,
effective February 12, 1992, the company acquired for approximately $4,450,000
in cash the remaining 57.5% interest in Alpine Labs, making it wholly owned by
the company. The results of operations, which have not been material, are
included in the consolidated financial statements from that date. Pursuant to
the plan noted above, effective July 27, 1993, the company completed the sale
of its petroleum production chemical operations' assets, the principal
component of which was the SULFA-SCRUB(R) patents and technology, to the
Petrolite Corporation for $6,500,000 in cash, $2,000,000 due within three
years and future royalty payments. In addition, the agreement of sale
provides that the Petrolite Corporation grant back to the company a license to
sell products incorporating the technology in certain markets not serviced by
the Petrolite Corporation. The effect of the sale on the consolidated
statements was not material.
Effective January 1, 1992, the company acquired for $8,600,000 in cash 50%
of the common stock of Quaker Chemical, S.A. in Spain making it a wholly-owned
subsidiary. The results of operations of Quaker Chemical, S.A. are included
in the consolidated financial statements from that date. The effect on the
consolidated statements has not been material.
NOTE 11--COMMITMENTS AND CONTINGENCIES
A wholly-owned subsidiary of the company is a co-defendant in claims filed
by multiple claimants alleging injury due to exposure to asbestos. The
company has reached a settlement with a group of these claimants and has
petitioned the courts for a declaratory judgement against one of its insurance
carriers for certain coverage which is in dispute. The company believes that
the potential uninsured liability associated with this action is approximately
$1,200,000.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF QUAKER CHEMICAL CORPORATION
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations and of cash flows present
fairly, in all material respects, the financial position of Quaker Chemical
Corporation (the "Company") and its subsidiaries at December 31, 1993 and
1992, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company'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.
As discussed in Notes 5 and 6, the Company changed its methods of
accounting for income taxes and postretirement benefits other than pensions in
1991.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 18, 1994
26
Exhibit 13 Page
14
SUPPLEMENTAL FINANCIAL INFORMATION, YEAR ENDED DECEMBER 31
CLASSIFICATION OF PRODUCTS BY MARKETS SERVED (UNAUDITED)
Consolidated net sales comprise chemical specialty and other products
classified by markets served as follows:
(Dollars in thousands)
- -------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------------------------------
Steel production...... $ 89,255 46% $ 94,483 44% $ 78,357 41% $ 88,447 44% $ 78,230 43%
Metalworking.......... 57,826 30 58,719 28 51,106 27 49,916 25 40,298 22
Paper production...... 12,169 6 15,042 7 16,760 9 22,016 11 21,546 12
Other................. 35,754 18 44,247 21 44,828 23 41,095 20 41,586 23
-------- ---- -------- ---- --------- ---- -------- ---- -------- ----
$195,004 100% $212,491 100% $191,051 100% $201,474 100% $181,660 100%
======== ==== ======== ==== ========= ==== ======== ==== ======== ====
Information on Quaker's markets appear on the inside front cover of this
report.
QUARTERLY RESULTS (UNAUDITED)
(Dollars in thousands, except per share figures)
- -------------------------------------------------------------------------------
First Second Third Fourth
- -------------------------------------------------------------------------------
1993
NET SALES.......................... $48,361 $51,343 $48,441 $46,859 (5)
OPERATING INCOME (LOSS) (1 AND 6).. 3,214 (1,268) 739 (6,192) (5)
NET INCOME (LOSS).................. 2,724 (449) 730 (4,763)
NET INCOME (LOSS) PER SHARE (3).... $.30 $(.05) $.08 $(.52)
1992
Net sales.......................... $54,850 $55,853 $54,057 $47,731 (5)
Operating income (1 and 2)......... 5,279 4,769 4,592 2,147 (5)
Net income......................... 3,710 3,322 3,204 1,862
Net income per share (3)........... $.41 $.37 $.35 $.20
1991 (4)
Net sales.......................... $46,977 $49,459 $48,759 $45,856
Operating income (1 and 2)......... 3,872 4,532 3,694 1,864
Income before cumulative effect of.
change in accounting principle.. 3,256 3,162 2,705 1,667
Cumulative effect of change in
accounting for postretirement
benefits......................... (5,675) -- -- --
Net income (loss).................. (2,419) 3,162 2,705 1,667
Income per share before cumulative
effect of change in accounting
principle....................... $ .36 $.35 $.30 $.19
Cumulative per share effect of
change in accounting for
postretirement benefits......... (.63) -- -- --
Net income (loss) per share (3).... $(.27) $.35 $.30 $.19
(1) Net sales, less costs and expenses.
(2) Restated for comparative purposes.
(3) Based on weighted average number of shares outstanding.
(4) Restated first, second and third quarters to reflect adoption of SFAS
106 effective January 1, 1991 (see Note 6 to the Consolidated Financial
Statements).
(5) See Operations section of Management's Discussion and Analysis of
Financial Condition and Results of Operations on pages 30 and 31 of
this report.
(6) The second and fourth quarters include repositioning charges of $3,500
and $8,400, respectively.
27
Exhibit 13 Page
15
SUPPLEMENTAL FINANCIAL INFORMATION, continued
STOCK MARKET AND RELATED SECURITY HOLDER MATTERS
During the past two years, the common stock of the company has been traded
in the Nasdaq National Market at the price ranges indicated below, and the
following quarterly dividends per share have been declared as indicated:
- -------------------------------------------------------------------------------
Range of NASDAQ System
Quotations Dividends
1993 1992 Declared
HIGH LOW High Low 1993 1992
- -------------------------------------------------------------------------------
First quarter......... $24-5/8 $20-3/4 $22-1/4 $18-3/4 $.15 $.14
Second quarter........ 23 17-3/4 26 21 .15 .14
Third quarter......... 20 16-1/2 24-3/4 19-1/2 .15 .14
Fourth quarter........ 18-1/2 14-1/4 23-1/2 19-3/4 .15-1/2 .15
As of January 15, 1994, there were 1,044 shareholders of record of the
company's common stock, $1 par value, its only outstanding class of equity
securities.
- -------------------------------------------------------------------------------
COPIES OF THE COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1993 AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED WITHOUT
CHARGE ON REQUEST TO QUAKER CHEMICAL CORPORATION, ATTENTION KARL H. SPAETH,
VICE PRESIDENT AND CORPORATE SECRETARY, CONSHOHOCKEN, PA 19428.
- -------------------------------------------------------------------------------
28
Exhibit 13 Page
16
SELECTED FINANCIAL INFORMATION
(Numbers in thousands, except per share figures and number of employees)
- --------------------------------------------------------------------------------------------------------
1993(1) 1992 1991 1990 1989 1984
- --------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
Net sales........................ $195,004 $212,491 $191,051 $201,474 $181,660 $115,813
Income (loss) before taxes
and cumulative effect of
change in accounting
principle...................... (1,524) 19,045 16,888 22,580 19,647 12,355
Cumulative effect of change
in accounting for
postretirement benefits........ (5,675)
Net income (loss)................ (1,758) 12,098 5,115 14,106 12,840 7,289
Per share (2)
Income (loss) before cumulative
effect of change in
accounting principle......... (.19) 1.33 1.20 1.51 1.35 .70
Cumulative effect of change in
accounting for postretirement
benefits..................... (.63)
Net income (loss).............. (.19) 1.33 .57 1.51 1.35 .70
Dividends...................... .60-1/2 .57 .53 .47 .41 .23
FINANCIAL POSITION
Current assets................... 84,387 85,567 82,725 84,833 75,427 45,588
Current liabilities.............. 42,642 28,126 36,592 40,342 27,848 14,352
Working capital.................. 41,745 57,441 46,133 44,491 47,579 31,236
Property, plant and equipment,
net............................ 56,551 52,179 48,661 46,315 36,539 18,567
Total assets..................... 170,985 166,613 159,121 152,408 131,430 78,616
Long-term debt and capital
leases........................ 16,095 18,604 5,219 5,453 5,665 9,565
Shareholders' equity............. 91,383 101,642 98,898 99,113 90,440 49,104
OTHER DATA
Current ratio.................... 2.0/1 3.0/1 2.3/1 2.1/1 2.7/1 3.2/1
Capital expenditures (3)......... 8,960 7,226 8,420 12,663 7,553 3,547
Net income (loss) as a % of
net sales (6).................. (0.9)% 5.7% 5.6% 7.0% 7.1% 6.3%
Return on average shareholders'
equity (6)..................... (1.8)% 12.1% 10.9% 14.9% 14.8% 15.2%
Shareholders' equity per share
at end of year (4)............. 9.89 11.06 10.95 11.11 9.55 4.73
Common stock price range (5):
High......................... 24-5/8 26 22-1/4 19-1/4 15-5/8 9-1/2
Low.......................... 14-1/4 18-3/4 15 12 12-1/2 6-3/4
Number of shares outstanding at
end of year (4)................ 9,242 9,188 9,028 8,921 9,473 10,386
Number of employees at end of
year........................... 1,006 972 1,027 1,080 983 904
(1) The results of operations for 1993 include net repositioning charges of
$7,854 ($0.85 per share). Excluding these charges, net income for 1993
was $6,096 ($0.66 per share).
(2) Based on the weighted average shares outstanding, giving retroactive
effect to a three-for-two split in 1990 and a two-for-one split in 1985.
(3) Capital expenditures prior to 1986 are stated net of dispositions.
(4) Based on the shares outstanding at year end, giving retroactive effect to
a three-for-two split in 1990 and a two-for-one split in 1985.
(5) Restated to give retroactive effect to a three-for-two split in 1990 and a
two-for-one split in 1985.
(6) Calculated for 1991 using $10,790 which is the net income before the
cumulative effect of change in accounting principle.
29
Exhibit 13 Page
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
In spite of lower operating results experienced in 1993, the company
remains strong in its ability to generate adequate cash to meet the needs of
current operations and to fund programs for future growth and expansion.
Major sources and uses of cash during 1993 included: a cash receipt of $6.5
million related to the sale of certain of the company's petroleum production
chemical operations assets, the principal component of which was the
SULFA-SCRUB(R) patents and technology, effectively completing the company's
planned exit from the petroleum production chemicals market; the purchase of
Raffineries de l'Ile de France (RIF), a metalworking chemical specialty
business in France, for $10.7 million; and $9.0 million in expenditures for
additions to property, plant and equipment. These items, along with lower
regular operating activities, were the principal reasons for the decrease of
$6.3 million in 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 leases) to $15.3 million. Also, the current ratio
declined to 2.0/1 in 1993 from 3.0/1 in 1992 primarily as a result of the
aforementioned net uses of cash and an increase in current liabilities of
approximately $7.6 million related to the company's 1993 repositioning charges
(see Note 2 on page 19). Cash outlays associated with the repositioning
charges, which will be funded internally, are anticipated to be approximately
$3.7 million in 1994 and $2.1 million in the years thereafter.
Expenditures for property, plant and equipment in 1993 included the
purchase of new computer equipment and related software systems in the United
States, construction of a new office/laboratory in Australia, expenditures for
environmental and regulatory compliance in the amount of $1.0 million, and
upgrades of manufacturing capabilities at various locations. Capital
expenditures for 1994 are expected to be in the range of $9-$11 million and
include continued investment in major software systems in the United States,
various upgrades to manufacturing capabilities in the United States and
Europe, and expenditures, estimated at approximately $1.6 million, for
environmental and regulatory compliance. The company believes that funds
generated internally should be sufficient to finance the capital expenditure
program.
The parent company has available $10 million in a line of credit and,
based on its debt-equity ratio and current levels of operating performance,
believes that additional bank borrowings could be negotiated at competitive
rates, if required. The company is capable of supporting the anticipated
growth in operations during 1994, continued growth in dividends to
shareholders, stock repurchases and possible acquisition opportunities closely
aligned with key business strategies through internally generated funds
supplemented with debt as needed. In this regard, during 1994 the company
entered into an agreement for the creation of a joint venture (see Note 10 on
page 26) which required an initial cash investment of approximately $3.0
million with additional investments expected based on the growth of the
venture.
OPERATIONS
COMPARISON OF 1993 WITH 1992
Consolidated net sales for 1993 decreased $17.5 million (8%) while income
from operations before repositioning charges decreased $7.9 million (45%)
versus 1992. In 1993, the company recorded repositioning charges of $11.9
million ($7.9 million after tax, or $.85 per share) for the costs associated
with a broad scope program of changes, which includes consolidation and
closure of certain of the company's facilities, selected workforce reductions,
and planned divestitures of nonstrategic business operations. When the
overall program is completed in late 1994, the expected workforce reduction
versus mid-year 1993 levels will be approximately 8 to 10 percent. The
company expects to generate ongoing after-tax financial benefits from the
program of $1.4 million to $1.9 million ($.15-$.20 per share) starting in
1994.
The 1993 consolidated sales decrease was due to two main factors, a 4%
decline in volume and a 4% reduction associated with currency translation
(fluctuations in foreign currency exchange rates used to translate local
currency statements to dollars) as the U.S. dollar strengthened against most
major currencies during 1993. The decrease in volume for the year was
attributable primarily to a reduction in orders shipped to the
30
Exhibit 13 Page
18
People's Republic of China as that country worked down an earlier buildup
of inventory; the European recession's impact on customer production levels in
markets served by the company; and the adverse effect of lower production
rates in the aircraft and aerospace industry. Shipments to the People's
Republic of China are expected to resume in the second half of 1994 under a
more consistent order pattern. Other principal challenges still facing the
company are continued pricing pressures in key markets and increased customer
efficiencies in the usage of chemical products, particularly in North America.
While United States operating conditions signal stabilization or slight
improvement, the operations in Europe depend on that economy coming out of the
recession.
Operating margins, before the repositioning charges, declined in 1993,
when compared to 1992, due mainly to the negative leverage effect of fixed
costs on reduced sales volume. In 1993, the combination of lower operating
results, foreign taxes on earnings at rates different than the U.S. federal
tax rate, and the influence of non-deductible expenses, such as good-will
amortization, required a tax expense on a loss before taxes. The negative
influence of currency translation on net income in 1993 was $.8 million ($.09
per share). The decrease in equity in net income from associated companies
was primarily due to lower earnings from the company's Mexican affiliate.
COMPARISON OF 1992 WITH 1991
Consolidated net sales in the year 1992 increased $21.4 million (11%)
while income from operations increased $2.5 million (16%) over 1991. The
increase in sales was due to increases in volume 4%, price/mix 1%,
fluctuations in rates used to translate foreign currencies 2% (producing a
positive effect on net income of $.5 million) and the net effect of
acquisitions and divestitures 4%. The increase in volume for the year was
attributable primarily to orders shipped to the People's Republic of China and
increases in Quaker Construction Products and the European operations. The
net increase of 4% due to acquisitions and divestitures relates to the
inclusion of the subsidiary in Spain for the full year 1992, inclusion of
Alpine Labs for part of 1992, and divestiture of Overdale during 1991.
In the steel market, sales, after a very strong start in the first
quarter, softened in the United States market in the middle quarters and
decreased significantly in the fourth quarter. The metalworking market in
both the U.S. and Europe was stable until the fourth quarter when a
significant downturn in production in Europe and decreased orders driven by
cyclical consumption in the U.S. caused sales to drop. Therefore, the gross
profit in the fourth quarter fell well below the first three quarters. Sales
to the paper production market decreased mainly as a result of a deemphasis of
sales of one of the paper product lines.
Cost of goods sold as a percent of net sales decreased 1.1% in 1992, as
compared to 1991, mainly as a result of capitalizing on increased sales volume
and enhanced cost control. Raw material prices remained relatively stable
during 1992. Notwithstanding the increase in volume in 1992, selling,
administration and general expenses as a percent of sales generally remained
constant as compared to 1991. Programs for product and market development, as
well as quality enhancements, have contributed to this situation. The
decrease in equity in net income from associated companies is due to the
subsidiary in Spain being included in consolidated results (previously
reported as an associated company).
GENERAL
The company does not use financial instruments which expose it to
significant risk involving foreign currency transactions; however, the size of
international activities has a significant impact on reported operating
results and the attendant net assets. During the past three years, sales by
non-U.S. subsidiaries accounted for approximately 40-44% of the dollar amount
of consolidated sales. In the same period, these subsidiaries accounted for
approximately 68-71% of consolidated operating profit (see Note 9 on page 25).
The greater profitability of non-U.S. sales during this period is attributable
to higher unit selling prices and lower fixed overhead and selling costs.
31
Exhibit 13 Page
19
EXHIBIT 21
SUBSIDIARIES AND AFFILIATES OF THE REGISTRANT
PERCENTAGE OF
VOTING SECURITIES
JURISDICTION OF OWNED DIRECTLY OR
NAME INCORPORATION INDIRECTLY BY QUAKER
---- --------------- --------------------
*Quaker Chemical Europe B.V. Holland 100%
*Quaker Chemical B.V. Holland 100%
*Quaker Chemical, S.p.A. Italy 100%
*Quaker Chemical Holdings UK United Kingdom 100%
Limited
*Quaker Chemical Limited United Kingdom 100%
*Quaker Chemical S.A.R.L. France 100%
*Raffineries de l'Ile de France France 100%
**Quaker Chemical South Republic of South 50%
Africa (Pty.) Limited Africa
*Quaker Chemical, S.A. Spain 100%
*Quaker Chemical, S.A. Argentina 100%
*Quaker Chemical Industria e Brazil 100%
Comercia Ltda.
**Kelko Quaker Chemical, S.A. Venezuela 50%
*Quaker Chemical Limited Hong Kong 100%
*Quaker Chemical South East Singapore 100%
Asia Pte. Ltd.
**Nippon Quaker Chemical, Ltd. Japan 50%
*Quaker Chemical (Austral- State of New South 51%
asia) Pty. Limited Wales, Australia
*QuakerChem Canada Limited Canada 100%
**TecniQuimia Mexicana Mexico 40%
S.A. de C.V.
*Selby, Battersby & Co. Delaware, U.S.A. 100%
*Quaker Chemical Corporation Delaware, U.S.A. 100%
19
*AC Products, Inc. California, U.S.A. 100%
*Quaker Construction Products, Pennsylvania, U.S.A. 100%
Inc.
*QSC Products, Ltd. Pennsylvania, U.S.A. 100%
*Multi-Chemical Products, California, U.S.A. 100%
Inc.
*Quaker Petroleum Chemicals Pennsylvania, U.S.A. 100%
Company
__________________
* Included in the consolidated financial statements.
** Accounted for in the consolidated financial statements under the
equity method.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 2-57924, No. 33-54158, and No. 33-51655) of
Quaker Chemical Corporation of our report dated February 18, 1994 appearing
on page 26 of the 1993 Annual Report to Shareholders which is incorporated
in this Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules which
appears on page 14 of this Form 10-K.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
March 30, 1994
