SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________to____________
Commission file number 0-7154
------
A. Full title of plan and the address of the plan, if different from that
of the issuer named below:
Quaker Chemical Corporation
Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Quaker Chemical Corporation
One Quaker Park
901 Hector Street
Conshohocken, PA 19428
Quaker Chemical Corporation
Retirement Savings Plan
Table of Contents
- --------------------------------------------------------------------------------
Page Number
-----------
Report of Independent Accountants 1
Basic Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-6
Additional Information*
Schedule I - Schedule of Assets (Held at End of Year) 7
* Other supplemental schedules required by Section 2520.103-10 of the Department
of Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of the
Quaker Chemical Corporation Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Quaker Chemical Corporation Retirement Savings Plan (the "Plan") at
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PRICEWATERHOUSECOOPERS LLP
Philadelphia, Pennsylvania
June 18, 2002
QUAKER CHEMICAL CORPORATION
RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
- --------------------------------------------------------------------------------
As of December 31,
2001 2000
--------------- -----------------
Investments, at fair value
Registered investment companies:
Columbia Small Cap Fund, Inc. $ 989,123 $ 1,018,487
Vanguard 500 Index Fund * 9,628,883 * 11,555,335
Vanguard Balanced Index Fund 221,946 137,283
Vanguard Extended Market Index Fund 37,516 -
Vanguard International Growth Fund 260,806 290,489
Vanguard Total Bond Market Index Fund * 2,839,503 * 2,546,045
Vanguard U.S. Growth Fund 798,675 721,206
Vanguard Windsor II Fund 392,894 178,744
--------------- ---------------
15,169,346 16,447,589
--------------- ---------------
Vanguard Retirement Savings Trust * 3,349,859 * 2,756,422
Quaker Chemical Corporation Stock Fund * 1,568,157 * 1,262,152
Participant Loans 441,269 331,177
--------------- ---------------
Total investments 20,528,631 20,797,340
--------------- ---------------
Receivables
Employer's contributions - 666,752
--------------- ---------------
Total receivables - 666,752
--------------- ---------------
Net assets available for benefits $ 20,528,631 $ 21,464,092
=============== ===============
* Represents 5% or more of the Plan's assets.
The accompanying notes are an integral part of the financial statements.
2
QUAKER CHEMICAL CORPORATION
RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
- --------------------------------------------------------------------------------
Year Ended December 31,
Additions 2001 2000
------------- -------------
Investment income:
Interest and dividend income, investments $ 553,834 $ 759,855
Interest income, participant loans 28,967 7,633
Net depreciation in fair value of investments (1,844,707) (1,850,653)
------------- -------------
(1,261,906) (1,083,165)
------------- -------------
Contributions:
Employer 480,527 761,523
Participant 1,697,591 2,016,054
------------- -------------
2,178,118 2,777,577
------------- -------------
Total additions 916,212 1,694,412
------------- -------------
Deductions
Payment of benefits 1,851,673 1,925,660
------------- -------------
Total deductions 1,851,673 1,925,660
------------- -------------
Net decrease (935,461) (231,248)
Net assets available for plan benefits:
Beginning of year 21,464,092 21,695,340
------------- -------------
End of year $ 20,528,631 $ 21,464,092
============= =============
The accompanying notes are an integral part of the financial statements.
3
Quaker Chemical Corporation
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN
The following description of the Quaker Chemical Corporation Retirement Savings
Plan (formerly known as the "Quaker Chemical Corporation Profit Sharing and
Retirement Savings Plan"), or the "Plan", provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
General
The Plan is a defined contribution plan for all employees of the Quaker Chemical
Corporation (the "Company"). Effective February 28, 2000, the Plan changed
trustees from Principal Mutual Life Insurance Company ("PML") to Vanguard
Fiduciary Trust Company ("VFTC"). The Plan is administered by the Retirement
Savings Committee appointed by the Company's Board of Directors, and is subject
to the Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions
Participants may elect to contribute on a before-tax basis any whole percentage
of their compensation, up to 15%, during the year. Prior to January 1, 2001, the
Company made a matching contribution of $150 for each whole percentage of the
participant's compensation contributed to the Plan during the Plan year, with
the Company's matching contribution for each individual participant limited to
$450 in any calendar year. Effective January 1, 2001, the Company approved an
amendment to the Plan to change the matching contribution such that the Company
will match 50% of each participant's contribution up to 6% of compensation; 50%
of the Company match will be allocated to the Quaker Chemical Corporation Stock
Fund (the "Company Stock Fund") and 50% will be allocated to the investment
options selected by each participant; and upon reaching age 50, participants may
reallocate balances in the Company Stock Fund to other available investments
options within the Plan. The Company's 2001 and 2000 matching contributions were
$480,527 and $94,771, respectively.
Effective January 1, 2001, the Company approved an amendment to the Plan,
eliminating the profit sharing component, and reserving the right of the
Company's Board of Directors to make future discretionary contributions. Prior
to January 1, 2001, the Company made a contribution based on the level of
domestic company profit from operations (as defined) versus the target profit
(as defined). The target profit was determined as the average of the prior three
years' domestic company profit from operations increased by 15%. The Company's
Board of Directors, at its discretion, was permitted to increase the amount of
the contribution to the Plan for each Plan year. The Company's 2000 profit
sharing contribution was $666,752.
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocation of (a) the Company's contributions and (b) Plan earnings. Allocations
are based on participant earnings or account balances, as defined.
Participant Loans
Participants may borrow from their fund accounts an amount limited to the lesser
of $50,000 or 50% of the participant's account balance. The loans bear interest
at a rate equal to the prevailing rate of interest charged for similar loans by
lending institutions in the community plus 1%. The term of each participant loan
may not exceed five years. Interest rates at December 31, 2001 range from 7.0%
to 10.5%.
4
Quaker Chemical Corporation
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Payment of Benefits
Upon separation of service due to death, disability or retirement, a participant
may elect to receive either a lump sum amount equal to the value of the
participant's account or substantially equal periodic installments over a period
equal to the life expectancy of the recipient or beneficiary. For termination of
service due to other reasons, a participant may receive the value of his or her
account through a lump-sum distribution.
Vesting
Participants are fully vested in all Company and employee voluntary
contributions plus actual earnings upon entering the Plan.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right to
terminate the Plan subject to the provisions of ERISA.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
The Plan's financial statements are prepared on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Investments Valuation and Income Recognition
Shares of registered investment companies are valued at quoted market prices,
which represent the net asset value of shares held by the Plan at year-end.
Units of the Retirement Savings Trust (a collective trust) are valued at net
asset value at year-end. The Company Stock Fund is valued at the year-end unit
closing prices (comprised of year-end market price plus uninvested cash
position). Participant loans are valued at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Capital gain distributions are included in dividend income.
Payment of Benefits
Benefits are recorded when paid.
NOTE 3 - NONPARTICIPANT-DIRECTED INVESTMENTS
Effective January 1, 2001, the Company directs a portion of its matching
contribution to the Company Stock Fund. Information about the components of the
changes in net assets relating to the nonparticipant-directed portion of this
Company Stock Fund is as follows:
5
Quaker Chemical Corporation
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
2001
------------
Changes in Net Assets
Interest & dividend income $ 8,053
Net appreciation 47,957
Contributions 260,495
Distributions (30,384)
-----------
$ 286,121
------------
NOTE 4 - RELATED PARTY TRANSACTIONS
The Plan invests in shares of mutual funds and a collective trust managed by an
affiliate of VFTC. Effective February 28, 2000, VFTC acts as trustee for
investments in the Plan. Transactions in such investments qualify as
party-in-interest transactions and are exempt from the prohibited transaction
rules.
Prior to February 28, 2000, certain Plan assets were invested in shares of
separate accounts managed by PML. PML was a custodian and recordkeeper as
defined by the Plan and, therefore, these investments qualified as
party-in-interest and were exempt from the prohibited transaction rules.
NOTE 5 - INVESTMENTS
The Plan's investments (including gains and losses on investments bought and
sold, as well as held during the year) (depreciated) appreciated in value as
follows:
For the Year Ended December 31,
-------------------------------
2001 2000
---- ----
Group annuity contract $ - $ (1,384,152)
Registered investment companies (1,986,657) (778,149)
Common stock 141,950 311,648
------------- ---------------
$ (1,844,707) $ (1,850,653)
============= ===============
NOTE 6 - PLAN EXPENSES
All administrative expenses are paid by the Company.
NOTE 7 - TAX STATUS
The Internal Revenue Service has determined and informed the Company by letter
dated August 18, 1995 that the Plan was qualified under Internal Revenue Code
("IRC") Section 401(a). The Plan has subsequently been amended and restated
since receiving the determination letter. The Plan has filed an application for
a new determination letter, which is currently pending. However, the Company
believes the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC.
6
QUAKER CHEMICAL CORPORATION Schedule I
RETIREMENT SAVINGS PLAN
Schedule of Assets (Held at End of Year)
- --------------------------------------------------------------------------------
Quaker Chemical Corporation Retirement Savings Plan, EIN 23-0993790
Attachment to Form 5500, Schedule H, Part IV, Line 4i:
Identity of Issue Investment Type Current Value
- -------------------------------------------------------------------------------------------------------
Columbia Small Cap Fund, Inc. Registered Investment Company $ 989,123
* Vanguard 500 Index Fund Registered Investment Company 9,628,883
* Vanguard Balanced Index Fund Registered Investment Company 221,946
* Vanguard Extended Market Index Fund Registered Investment Company 37,516
* Vanguard International Growth Fund Registered Investment Company 260,806
* Vanguard Total Bond Market Index Fund Registered Investment Company 2,839,503
* Vanguard U.S. Growth Fund Registered Investment Company 798,675
* Vanguard Windsor II Fund Registered Investment Company 392,894
* Vanguard Retirement Savings Trust Common/Collective Trust 3,349,859
* Quaker Chemical Corporation Common Stock Fund 1,568,157
Quaker Chemical Corporation Retirement Savings Plan Participant Loans (7.0% - 10.5%) 441,269
-------------
Total assets $ 20,528,631
-============
* Party in Interest
7
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed by the undersigned
hereunto duly authorized.
Quaker Chemical Corporation
Retirement Savings Plan
June 28, 2002 By /s/ James A. Geier
--------------------
Vice President- Human Resources