Quaker Chemical Corp - Form 11-K
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UNITED STATES

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, 2006

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 001-12019

 


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

 



Table of Contents

Quaker Chemical Corporation

Retirement Savings Plan

Table of Contents


 

     Page
Number

Report of Independent Registered Public Accounting Firm

   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 - 7

Additional Information*

  

Schedule I – Schedule of Assets (Held at End of Year)

   8

*       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.

  

Signature

   9

Exhibits

  

Exhibit 23 – Consent of Independent Registered Public Accounting Firm

  


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Report of Independent Registered Public Accounting Firm

To the Participants and Administrator of the

Quaker Chemical Corporation Retirement Savings Plan

We have audited the accompanying statements of net assets available for benefits of the Quaker Chemical Corporation Retirement Savings Plan (the “Plan”) as of December 31, 2006 and 2005, and the related statements of changes in net assets available for benefits for each of the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Quaker Chemical Corporation Retirement Savings Plan as of December 31, 2006 and 2005, and the changes in its net assets available for benefits for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

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 supplemental 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 information 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/ ASHER & COMPANY, Ltd.

Philadelphia, Pennsylvania

June 27, 2007

 

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QUAKER CHEMICAL CORPORATION

RETIREMENT SAVINGS PLAN

Statements of Net Assets Available for Benefits


 

     As of December 31,  
     2006     2005  

Investments, at fair value

    

Registered investment companies:

    

Columbia Small Cap Growth Fund, Inc.

   $ 2,080,378 *   $ 1,775,083 *

Vanguard 500 Index Fund Investor Shares

     11,039,202 *     10,953,395 *

Vanguard Balanced Index Fund Investor Shares

     1,108,707       961,828  

Vanguard Extended Market Index Fund Investor Shares

     1,175,125       823,546  

Vanguard International Growth Fund

     1,856,183 *     1,154,935  

Vanguard Target Retirement 2005 Fund

     95,464       —    

Vanguard Target Retirement 2010 Fund

     419,086       —    

Vanguard Target Retirement 2015 Fund

     711,040       —    

Vanguard Target Retirement 2020 Fund

     238,958       —    

Vanguard Target Retirement 2025 Fund

     635,143       —    

Vanguard Target Retirement 2030 Fund

     216,994       —    

Vanguard Target Retirement 2035 Fund

     71,836       —    

Vanguard Target Retirement 2040 Fund

     77,138       —    

Vanguard Target Retirement 2045 Fund

     15,376       —    

Vanguard Target Retirement 2050 Fund

     306       —    

Vanguard Target Retirement Income

     301       —    

Vanguard LifeStrategy Conservative Growth Fund

     —         169,293  

Vanguard LifeStrategy Growth Fund

     —         541,395  

Vanguard LifeStrategy Income Fund

     —         272,629  

Vanguard LifeStrategy Moderate Growth Fund

     —         334,177  

Vanguard Total Bond Market Index Fund

     3,087,198 *     3,461,177 *

Vanguard U.S. Growth Fund

     1,203,611       1,486,712  

Vanguard Windsor II Fund

     2,228,893 *     2,243,155 *
                
     26,260,939       24,177,325  
                

Vanguard Retirement Savings Trust

     6,402,038 *     5,582,849 *

Quaker Chemical Corporation Stock Fund #

     3,004,479 *     2,803,683 *

Participant Loans

     634,517       522,983  

Vanguard Brokerage Option

    

Common Stock

     49,831       45,498  

Registered Investment Companies

     21,906       21,744  
                

Total investments

     36,373,710       33,154,082  
                

Receivables

    

Employer’s contributions

     75,681       68,595  

Due from broker for VBO unsettled trades

     8,435       —    
                

Total Receivables

     84,116       68,595  
                

Net assets available for benefits

   $ 36,457,826     $ 33,222,677  
                

* Represents 5% or more of net assets available for benefits.
# A portion of this investment option is nonparticipant-directed.

The accompanying notes are an integral part of the financial statements.

 

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QUAKER CHEMICAL CORPORATION

RETIREMENT SAVINGS PLAN

Statements of Changes in Net Assets Available for Benefits


 

     Year Ended December 31,
     2006    2005

Additions

     

Investment income:

     

Interest and dividend income, investments

   $ 1,422,908    $ 915,325

Interest income, participant loans

     37,146      27,585

Net appreciation in fair value of investments

     2,463,829      126,501
             
     3,923,883      1,069,411
             

Contributions:

     

Employer

     1,499,900      705,883

Participant

     2,590,237      2,696,879
             
     4,090,137      3,402,762
             

Total additions

     8,014,020      4,472,173
             

Deductions

     

Payment of benefits

     4,778,871      1,842,370
             

Total deductions

     4,778,871      1,842,370
             

Net increase

     3,235,149      2,629,803

Net assets available for plan benefits:

     

Beginning of year

     33,222,677      30,592,874
             

End of year

   $ 36,457,826    $ 33,222,677
             

The accompanying notes are an integral part of the financial statements.

 

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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 (the “Plan”) provides only general information. The Plan document is a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan for certain U.S. employees of the Quaker Chemical Corporation (the “Company”) and adopting affiliates. The Plan is administered by a committee appointed by the Company’s Board of Directors, and is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).

Employees of the Company are eligible to participate in the Plan on their first day of employment or as soon as administratively practicable thereafter, unless specified differently in any bargaining unit agreement. Employees designated as AC Products, Inc. (“AC”) participants are eligible to participate in the Plan on the first day of the month coincident with or next following the employee’s completion of one year of service.

Contributions

Participants may elect to contribute on a before-tax basis any whole percentage of their compensation, up to 50%, during the year, not to exceed the annual Internal Revenue Code limits. The Company matches 50% of each participant’s contribution up to 6% of compensation, except for those participants designated by the Company as AC participants. The first 50% of the match can be allocated by each participant to any investment options available in the Plan. The second 50% of the Company match will be allocated to the Quaker Chemical Corporation Stock Fund (the “Company Stock Fund”); and upon reaching age 50, participants may reallocate the second 50% to other available investments options within the Plan. Effective January 1, 2006, the Plan provides for a nonelective contribution on behalf of Quaker Chemical Corporation non-bargaining participants who have completed one year of service equal to 3% of the eligible participant’s compensation.

The Company’s Board of Directors (AC’s Board of Directors with respect to AC participants) reserves the right to make future discretionary contributions, which would be allocated on the basis of eligible participants’ base compensation. Upon completing 1 year of service, each participant shall be eligible to receive discretionary contributions on the first day of the month coinciding with or next following the date on which the participant meets the 1 year of service requirement.

Participants who are eligible to make contributions and who have or will attain age 50 before the end of the Plan year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of the Internal Revenue Code Section 414(v). No Company matching contributions shall be made with respect to catch-up contributions.

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.

 

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Quaker Chemical Corporation

Retirement Savings Plan

Notes to Financial Statements


 

Participant Loans

Participants may borrow from their fund accounts (other than amounts invested in the Company Stock Fund) an amount limited to the lesser of $50,000 or 50% of the participant’s vested 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 generally may not exceed five years. Interest rates at December 31, 2006 range from 5.00% to 9.25%.

Payment of Benefits

Generally, upon separation of service, for any reason, a participant may receive a lump sum amount equal to the value of the participant’s account. If a participant’s vested account balance exceeds $1,000, the participant may defer payment until the first of the month coincident with or next following attainment of age 65.

Hardship Withdrawals

Participants who receive a hardship withdrawal from their account will not be eligible to make contributions for 6 months following the receipt of the hardship withdrawal.

Vesting

Participants are fully vested in Company matching contributions, Company discretionary contributions and employee voluntary contributions plus actual earnings upon entering the Plan. The non-elective Company contributions vest in accordance with the following schedule:

 

Years of Service

   Percentage  

Less than 3

   0 %

3 or more

   100 %

Forfeitures

As of the last day of each Plan year, any forfeited amounts shall, in the discretion of the Company, be used to reduce future Company matching contributions or pay any administrative expenses of 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. In the event of termination, affected participants shall become 100% vested in their employer contributions.

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.

 

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Quaker Chemical Corporation

Retirement Savings Plan

Notes to Financial Statements


 

Investments Valuation and Income Recognition

The Plan’s investments are stated at fair value. 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 are valued at net asset value at year-end. The Company Stock Fund is valued at its year-end unit closing price (comprised of year-end market price plus uninvested cash position). Equities are valued at last quoted sales price as of the close of trading at year-end; such securities not traded on the year-end date are valued at the last quoted bid prices. Fixed income securities are valued using the last quoted bid price. Participant loans are valued at cost which approximates fair value.

Purchases and sales of investments are recorded on a trade-date basis. Interest income is accrued when earned. Dividend income is 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

The Company directs a portion of its matching contribution to the Company Stock Fund. Information about the net assets and components of the changes in net assets relating to the nonparticipant-directed portion of this Company Stock Fund is as follows:

 

     As of December 31,  
     2006     2005  

Net Assets:

    

Company Stock Fund

   $ 1,557,273     $ 1,257,769  
                
     Year Ended December 31,  
     2006     2005  

Changes in Net Assets:

    

Interest & dividend income

   $ 57,026     $ 48,065  

Net appreciation (depreciation)

     194,172       (274,682 )

Contributions

     344,568       358,600  

Distributions

     (296,262 )     (132,262 )
                
   $ 299,504     $ (279 )
                

NOTE 4 – RELATED PARTY TRANSACTIONS

The Plan invests in shares of mutual funds and a collective trust managed by an affiliate of Vanguard Fiduciary Trust Company (“VFTC”). VFTC acts as trustee for only those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions and are exempt from the prohibited transaction rules.

 

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Quaker Chemical Corporation

Retirement Savings Plan

Notes to Financial Statements


 

NOTE 5 – INVESTMENTS

The Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:

 

     Year Ended December 31,  
     2006    2005  

Registered investment companies

   $ 2,081,196    $ 787,869  

Common stock

     382,633      (661,368 )
               
   $ 2,463,829    $ 126,501  
               

NOTE 6 – PLAN EXPENSES

Substantially all administrative expenses, including audit fees, are paid by the Company.

NOTE 7 – TAX STATUS

The Internal Revenue Service has determined and informed the Company by letter dated December 4, 2003 that the Plan is qualified under Internal Revenue Code (“IRC”) Section 401(a). The Plan has been amended since receiving the determination letter. However, the plan administrator and counsel believe the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC.

NOTE 8 – RECONCILIATION TO FORM 5500

Payments of benefits included in the 2005 financial statements are not inclusive of $3,484 of deemed distributions related to employee loans.

NOTE 9 – CORRECTIVE DISTRIBUTIONS

Payments of Benefits of $4,778,871 for the plan year ended December 31, 2006 include payments of $98,579 made to certain active participants to return to them excess deferral contributions as required to satisfy the relevant nondiscrimination provisions of the Plan for the prior year.

NOTE 10 – SUBSEQUENT EVENTS

Subsequent to December 31, 2006 the Plan was amended to include the following significant provisions.

 

   

Effective January 1, 2007, the plan was amended to provide that all participants may diversify the investment of Plan funds that are invested in Quaker Stock. When the Company makes a matching contribution to the Plan, 50% of that contribution is invested in Quaker Chemical Corporation Common Stock. Prior to January 1, 2007 a participant was not permitted to change the investment of this amount until he reached age 50. This amendment was made to comply with the Pension Protection Act of 2006.

 

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QUAKER CHEMICAL CORPORATION    Schedule I

RETIREMENT SAVINGS PLAN

Schedule of Assets (Held at End of Year)

As of December 31, 2006


Quaker Chemical Corporation Retirement Savings Plan, EIN 23-0993790, PN 112

Attachment to Form 5500, Schedule H, Part IV, Line i:

 

    

Identity of Issue

  

Investment Type

   Current Value
   Columbia Small Cap Growth Fund, Inc.    Registered Investment Company    $ 2,080,378

*

   Vanguard 500 Index Fund Investor Shares    Registered Investment Company    $ 11,039,202

*

   Vanguard Balanced Index Fund Investor Shares    Registered Investment Company    $ 1,108,707

*

   Vanguard Extended Market Index Fund Investor Shares    Registered Investment Company    $ 1,175,125

*

   Vanguard International Growth Fund    Registered Investment Company    $ 1,856,183

*

   Vanguard Target Retirement 2005 Fund    Registered Investment Company    $ 95,464

*

   Vanguard Target Retirement 2010 Fund    Registered Investment Company    $ 419,086

*

   Vanguard Target Retirement 2015 Fund    Registered Investment Company    $ 711,040

*

   Vanguard Target Retirement 2020 Fund    Registered Investment Company    $ 238,958

*

   Vanguard Target Retirement 2025 Fund    Registered Investment Company    $ 635,143

*

   Vanguard Target Retirement 2030 Fund    Registered Investment Company    $ 216,994

*

   Vanguard Target Retirement 2035 Fund    Registered Investment Company    $ 71,836

*

   Vanguard Target Retirement 2040 Fund    Registered Investment Company    $ 77,138

*

   Vanguard Target Retirement 2045 Fund    Registered Investment Company    $ 15,376

*

   Vanguard Target Retirement 2050 Fund    Registered Investment Company    $ 306

*

   Vanguard Target Retirement Income    Registered Investment Company    $ 301

*

   Vanguard Total Bond Market Index Fund    Registered Investment Company    $ 3,087,198

*

   Vanguard U.S. Growth Fund    Registered Investment Company    $ 1,203,611

*

   Vanguard Windsor II Fund    Registered Investment Company    $ 2,228,893

*

   Vanguard Brokerage Option    Vanguard Brokerage Option    $ 71,737

*

   Vanguard Retirement Savings Trust    Common/Collective Trust    $ 6,402,038

*

   Quaker Chemical Corporation **    Common Stock Fund    $ 3,004,479

*

   Quaker Chemical Corporation Retirement Savings Plan    Participant Loans (5.00% - 9.25%)    $ 634,517
            

Total assets held for investment purposes

      $ 36,373,710
            

* Party in Interest
** In part, a nonparticipant-directed investment, for which cost is $2,691,552

 

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Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed by the undersigned hereunto duly authorized.

 

    Quaker Chemical Corporation Retirement Savings Plan
June 28, 2007   By:  

/s/ D. Jeffry Benoliel

    Vice President, Secretary and General Counsel

 

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