2017 Q2 Form 10-Q Financial Statement

#000008136217000013 Filed on July 27, 2017

View on sec.gov

Income Statement

Concept 2017 Q2 2016 Q2
Revenue $201.2M $186.9M
YoY Change 7.63% 1.74%
Cost Of Revenue $129.3M $115.5M
YoY Change 11.98% 2.13%
Gross Profit $71.84M $71.40M
YoY Change 0.61% 1.11%
Gross Profit Margin 35.71% 38.2%
Selling, General & Admin $49.59M $48.70M
YoY Change 1.84% -0.96%
% of Gross Profit 69.04% 68.21%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $4.900M $4.900M
YoY Change 0.0% 6.52%
% of Gross Profit 6.82% 6.86%
Operating Expenses $49.59M $48.70M
YoY Change 1.84% -0.96%
Operating Profit $17.90M $22.70M
YoY Change -21.14% 5.86%
Interest Expense $780.0K $727.0K
YoY Change 7.29% 19.77%
% of Operating Profit 4.36% 3.2%
Other Income/Expense, Net -$1.571M -$337.0K
YoY Change 366.17% 282.95%
Pretax Income $16.09M $22.18M
YoY Change -27.45% 5.0%
Income Tax $4.224M $7.238M
% Of Pretax Income 26.25% 32.63%
Net Earnings $11.91M $15.02M
YoY Change -20.71% -0.15%
Net Earnings / Revenue 5.92% 8.03%
Basic Earnings Per Share $0.90 $1.13
Diluted Earnings Per Share $0.89 $1.13
COMMON SHARES
Basic Shares Outstanding 13.20M shares 13.13M shares
Diluted Shares Outstanding 13.24M shares 13.14M shares

Balance Sheet

Concept 2017 Q2 2016 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $98.80M $96.20M
YoY Change 2.7% 46.2%
Cash & Equivalents $98.82M $96.25M
Short-Term Investments
Other Short-Term Assets $21.50M $23.90M
YoY Change -10.04% 16.02%
Inventory $87.90M $78.30M
Prepaid Expenses
Receivables $201.5M $184.3M
Other Receivables $0.00 $0.00
Total Short-Term Assets $409.7M $382.7M
YoY Change 7.05% 9.07%
LONG-TERM ASSETS
Property, Plant & Equipment $86.73M $85.09M
YoY Change 1.92% 4.54%
Goodwill $84.76M $79.32M
YoY Change 6.86%
Intangibles $75.51M $72.63M
YoY Change 3.96%
Long-Term Investments $24.51M $22.32M
YoY Change 9.81% 11.06%
Other Assets $50.20M $32.22M
YoY Change 55.82% -40.01%
Total Long-Term Assets $320.6M $309.6M
YoY Change 3.56% 4.16%
TOTAL ASSETS
Total Short-Term Assets $409.7M $382.7M
Total Long-Term Assets $320.6M $309.6M
Total Assets $730.3M $692.3M
YoY Change 5.49% 6.82%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $91.46M $75.57M
YoY Change 21.03% 1.03%
Accrued Expenses $14.50M $18.50M
YoY Change -21.62% 34.06%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $700.0K $700.0K
YoY Change 0.0% 75.0%
Total Short-Term Liabilities $134.4M $119.3M
YoY Change 12.63% 4.75%
LONG-TERM LIABILITIES
Long-Term Debt $73.90M $83.60M
YoY Change -11.61% 35.5%
Other Long-Term Liabilities $69.92M $77.40M
YoY Change -9.66% -10.52%
Total Long-Term Liabilities $143.8M $161.0M
YoY Change -10.67% 8.64%
TOTAL LIABILITIES
Total Short-Term Liabilities $134.4M $119.3M
Total Long-Term Liabilities $143.8M $161.0M
Total Liabilities $290.7M $292.1M
YoY Change -0.48% 5.29%
SHAREHOLDERS EQUITY
Retained Earnings $374.0M $340.1M
YoY Change 9.96%
Common Stock $127.1M $123.0M
YoY Change 3.3%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $428.1M $391.3M
YoY Change
Total Liabilities & Shareholders Equity $730.3M $692.3M
YoY Change 5.49% 6.82%

Cashflow Statement

Concept 2017 Q2 2016 Q2
OPERATING ACTIVITIES
Net Income $11.91M $15.02M
YoY Change -20.71% -0.15%
Depreciation, Depletion And Amortization $4.900M $4.900M
YoY Change 0.0% 6.52%
Cash From Operating Activities $12.50M $25.10M
YoY Change -50.2% 30.73%
INVESTING ACTIVITIES
Capital Expenditures -$2.700M -$2.200M
YoY Change 22.73% 15.79%
Acquisitions
YoY Change
Other Investing Activities -$5.300M -$1.500M
YoY Change 253.33% -850.0%
Cash From Investing Activities -$8.000M -$3.700M
YoY Change 116.22% 131.25%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 2.100M -17.10M
YoY Change -112.28% 4.91%
NET CHANGE
Cash From Operating Activities 12.50M 25.10M
Cash From Investing Activities -8.000M -3.700M
Cash From Financing Activities 2.100M -17.10M
Net Change In Cash 6.600M 4.300M
YoY Change 53.49% 230.77%
FREE CASH FLOW
Cash From Operating Activities $12.50M $25.10M
Capital Expenditures -$2.700M -$2.200M
Free Cash Flow $15.20M $27.30M
YoY Change -44.32% 29.38%

Facts In Submission

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<div><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >As part of the Company&#8217;s chemical management services, certain third-party product sales to customers are managed by the Company. Where the Company acts as a principal, revenue is recognized on a gross reporting basis at the selling price negotiated </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >with</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > customers. Where the Company acts as an agent, such revenue is</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > recorded using net reporting of service revenue</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >, at the amount of the administrative fee earned by the Company for ordering the goods. </font></p></div>
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700000 USD
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6491000 USD
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6370000 USD
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82000 USD
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130000 USD
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82000 USD
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11824000 USD
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130000 USD
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14885000 USD
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479000 USD
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18523000 USD
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1432000 USD
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357000 USD
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847000 USD
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1526000 USD
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201183000 USD
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780000 USD
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486000 USD
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237000 USD
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136000 USD
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200000 USD
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200000 USD
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29612000 USD
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200000 USD
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697000 USD
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3002000 USD
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1212000 USD
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136000 USD
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3800000 USD
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500000 USD
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us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
DescriptionOfNewAccountingPronouncementsNotYetAdopted
<div><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:13.8pt;' ><font style='font-family:Times New Roman;font-size:10pt;font-weight:bold;margin-left:0pt;color:#000000;' >Note 3</font><font style='font-family:Times New Roman;font-size:10pt;font-weight:bold;color:#000000;' > &#8211; </font><font style='font-family:Times New Roman;font-size:10pt;font-weight:bold;color:#000000;' >Recently Issued Accounting Standards</font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >Financial Accounting Standards Board (&quot;FASB&quot;) </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >issued an accounting standard update in </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >May</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > 2017</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > to </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >clarif</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >y</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > when changes to the terms or conditions of a share-based payment award must</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > b</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >e accounted for as modifications. </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > This accounting standard update </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >will reduce diversity in practice and</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >result in fewer changes to the terms of an award being accounted for as modifications.</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > This accounting standard update </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >will allow companies to make ce</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >rtain changes to awards without accounting</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > for them as modifications and </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >an entity is not required to estimate the value of the award immediately before and after the</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >change if the change doesn&#8217;t affect any of the inputs to the model used to value the </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >award.</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2017. The guidance within this accounting standard update should be applied prospectively to awards modified on or after t</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >he adoption date. Early adoption is permitted including adoption in any interim period for which financial statements have not been issued or made available for issuance. During the second quarter of 2017, the Company elected to early adopt this guidance</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > with no impact to its financial statements.</font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >FASB </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >issued an accounting standard update in </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >March</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > 2017 </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >to improve the presentation of net periodic pension and postretirement benefit cost. Defined benefit pension and postretirement benefit costs (&#8220;net be</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >nefit cost&#8221;) comprise several components that reflect different aspects of an employer&#8217;s financial arrangements as well as the cost </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >of benefits</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > provided to employees. This accounting standard update </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >require</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >s</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > that an employer disaggregate the service</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >cost</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > component from the other </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >components of net benefit cost, </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >provide</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >s</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > explicit guidance on how to present the service cost component and</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >the other components of net benefit cost in the income statement and allow</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >s</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > only</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >the service cost component of net benefit</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > cost to be eligible for capitalization.</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >The guidance within this accounting standa</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >rd update should be applied</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >retrospectively</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > for the</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >presentation of the service cost component and the other components of net</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >periodic benefit cost in the income</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > statement</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > and prospectively</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > for the capitalization</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >of the service cost component of net periodic </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >benefit in assets. This accounting standard update is </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >effective for annual</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >periods</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >beginning after December 15, 2017, including interim periods within those</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >annual per</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >iods. </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >Early adoption is permitted as</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >of the beginning of an annual period for which financial statements (interim or</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >annual</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >) have not been issued or made available for issuance. During the first quarter of 2017, the Company elected to early adopt the </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >guidance within this accounting standard update</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >, including the use of a practical expedient which allows the Company to use amounts previously disclosed in its pension and other postretirement benefits note for the prior period as the estimation basis for </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >applying the required retrospective presentation. Adoption of this guidance</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > resulted in a reclassification to the Company&#8217;s Condensed Consolidated Statement of Income for the </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >three and </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >six months ended June 30, 2016, as previously reported cost of goods s</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >old (&#8220;COGS&#8221;) were reduced by </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >$0.2 and </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >$0.3 million</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >, respectively,</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > and selling, general and administrative expenses (&#8220;SG&amp;A&#8221;) were reduced by</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > $0.4 million and</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > $0.9 million, </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >respectively, </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >with a corresponding </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >increase</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > to other </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >expense, net, of $0.6 million an</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >d $1.2 million, respectively</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >.</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > In addition, these required retrospective reclassifications resulted in an immaterial adjustment to previously reported direct operating earnings within the Company&#8217;s reportable operating segment disclosures for the three and</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > six months ended June 30, 2016, respectively. </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >See Note 4, Note 7 and Note 8 of Notes to Condensed Consolidated Financial Statements.</font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >FASB</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >issued an accounting </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >standard update in January 2017</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > simplifying the test for goodwill impairment by eliminating</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > the Step 2 computation. The accounting standard update modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a report</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ing unit exceeds its fair value. The guidance removes the requirement to determine </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >a goodwill</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that repo</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >rting unit had been acquired in a business combination. The guidance within this accounting standard update should be applied on a prospective basis, and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is still evaluating the guidance but currently anticipates early adoption of the accounting standard upda</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >te for its next annual goodwill impairment test during 2017, and does not expect a material impact to its financial statements. </font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The FASB issued an accounting standard update in January 2017 to clarify the definition of a business with the objective </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this accounting standard update provide a more robust framework to use in determi</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ning when a set of assets and activities is a business. The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted in limited circumstances, and the amend</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ments in this accounting standard update should be applied prospectively, with no disclosures required at transition. The Company does not currently meet the criteria for early application of the amendments and therefore has not early adopted the guidance</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >. The Company will evaluate the potential impact of this guidance on future transactions, as applicable. </font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The FASB issued an accounting standard update in November 2016 requiring that the statement of cash flows explain both the change in the total cash </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >and cash equivalents, and, also, the amounts generally described as restricted cash or restricted cash equivalents. This will require amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >when reconciling the beginning and ending amounts shown on the statement of cash flows. The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted and the</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > guidance requires application using a retrospective transition method to each period presented when adopted. While permitted, the Company has not early adopted the guidance and is currently evaluating the appropriate implementation strategy. Adoption of</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > the guidance will not have an impact on the Company&#8217;s earnings or balance sheet but will result in changes to certain disclosures within the statement of cash flows, notably cash flows from investing activities.</font></p><p style='text-align:left;margin-top:6pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The FASB issued an accounting standard upda</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >te in August 2016 to standardize how certain transactions are classified in the statement of cash flows. Specific transactions covered by the accounting standard update include debt prepayment or debt extinguishment costs, settlement of zero-coupon debt i</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >nstruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate and bank owned life insurance policies, distributions received from equity method i</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >nvestments and beneficial interest in securitization transactions. The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted, provided that all of the am</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >endments are adopted in the same period. The guidance requires application using a retrospective transition method. While permitted, the Company has not early adopted the guidance and is currently evaluating the appropriate implementation strategy. Adopt</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ion of the guidance will not have an impact on the Company&#8217;s earnings or balance sheet but may result in certain reclassifications on the statement of cash flows, including reclassifications between cash flows from operating activities, investing activitie</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >s and financing activities, respectively.</font></p><p style='text-align:left;margin-top:6pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The FASB issued an accounting standard update in March 2016 involving several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as eithe</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >r equity or liabilities, use of a forfeiture rate, and classification on the statement of cash flows. The guidance within this accounting standard update was effective for annual and interim periods beginning after December 15, 2016. When adopted, applic</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ation of the guidance will vary based on each aspect of the update, including adoption under retrospective, modified retrospective or prospective approaches. Early adoption was permitted. During the first quarter of 2017, the Company adopted the guidance</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > within the accounting standard update as required. The impact of adoption for the Company included the elimination of recording the tax effects of deductions in excess of compensation cost through equity as the guidance in this accounting standard update</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > requires all tax effects related to share-based payments to now be recorded through the income statement. The tax effects of awards are required to be treated as discrete items in the interim reporting period in which the stock compensation-related tax b</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >enefits occur. In addition, when applying the treasury stock method for computing diluted earnings per share, there are no longer assumed proceeds from the stock compensation-related tax benefits and as a result, there are fewer shares considered to be re</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >purchased in the calculation. This results in an assumption of more incremental shares being issued upon the exercise of share-based payment awards; therefore, equity awards will have a more dilutive effect on earnings per share. As required, the Company</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > has applied these changes in the guidance prospectively, beginning in the first quarter of 2017. The result of these changes was a tax benefit of $0.5 million and $0.8 million recorded during the three and six months ended June 30, 2017, respectively, an</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >d an immaterial number of dilutive shares added to the Company&#8217;s earnings per share calculation for the three and six months ended June 30, 2017, respectively. In addition, all tax-related cash flows resulting from share-based payments are now required to</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > be reported as operating activities in the statement of cash flows under this new guidance. Either prospective or retrospective transition of this provision was permitted, and the Company has elected to apply the cash flow classification guidance on a pr</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ospective basis, consistent with the prospective transition for the treatment of excess tax benefits in the income statement. Lastly, the accounting standard update permitted Companies to make an accounting policy election to account for forfeitures as th</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ey occur for service condition aspects of certain share-based awards, rather than estimating forfeitures each period. While permitted, the Company has not elected to make this accounting policy decision, and instead has elected to continue utilizing a forf</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >eiture rate assumption. Based on historical experience, the Company has assumed a forfeiture rate of 13% on certain of its </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >nonvested</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > stock awards. </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >See Note 6, Note 9 and Note 10 of Notes to Condensed Consolidated Financial Statements.</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' > </font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;color:#000000;' >The FASB issu</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >ed an accounting standard update in February 2016 regarding the accounting and disclosure for leases. Specifically, the update will require entities that lease assets to recognize the assets and liabilities for the rights and obligations created by those </font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >leases on the balance sheet, in most instances. The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2018, and should be applied on a modified retrospective basis for the reporting pe</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >riods presented. Early adoption is permitted. The Company has not early adopted and is currently evaluating the potential impact of this guidance and an appropriate implementation strategy. The Company has begun its impact assessment, including taking a</font><font style='font-family:Times New Roman;font-size:10pt;color:#000000;' >n inventory of its outstanding leases globally. While the Company&#8217;s evaluation of this guidance is in the early stages, the Company currently expects adoption of this guidance to have an impact on its balance sheet.</font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;' >The FASB issued an accounting standard </font><font style='font-family:Times New Roman;font-size:10pt;' >update in May 2014 regarding the accounting for and disclosure of revenue recognition. Specifically, the update outlined a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, which will be common</font><font style='font-family:Times New Roman;font-size:10pt;' > to both U.S. GAAP and International Financial Reporting Standards. The guidance was effective for annual and interim periods beginning after December 15, 2016, and allowed for full retrospective adoption of prior period data or a modified retrospective a</font><font style='font-family:Times New Roman;font-size:10pt;' >doption. Early adoption was not permitted. In August 2015, the FASB issued an accounting standard update to delay the effective date of the new revenue standard by one year, or, in other words, to be effective for annual and interim periods beginning aft</font><font style='font-family:Times New Roman;font-size:10pt;' >er December 15, 2017. Entities </font><font style='font-family:Times New Roman;font-size:10pt;' >are</font><font style='font-family:Times New Roman;font-size:10pt;' > permitted to adopt the new revenue standard early but not before the original effective date. During 2016, the FASB issued a series of accounting standard updates to clarify and expand on the implementation guidance, in</font><font style='font-family:Times New Roman;font-size:10pt;' >cluding principal versus agent considerations, identification of performance obligations, licensing, other technical corrections and adding certain practical expedients. The amendments in these 2016 updates d</font><font style='font-family:Times New Roman;font-size:10pt;' >id</font><font style='font-family:Times New Roman;font-size:10pt;' > not change the core principle</font><font style='font-family:Times New Roman;font-size:10pt;' >s</font><font style='font-family:Times New Roman;font-size:10pt;' > of the </font><font style='font-family:Times New Roman;font-size:10pt;' >guidan</font><font style='font-family:Times New Roman;font-size:10pt;' >ce </font><font style='font-family:Times New Roman;font-size:10pt;' >previously issued in May 2014. </font></p><p style='text-align:left;margin-top:0pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;' >During 2016</font><font style='font-family:Times New Roman;font-size:10pt;' >,</font><font style='font-family:Times New Roman;font-size:10pt;' > the Company reviewed its historical accounting policies and practices to identify potential differences with the requirements of the new revenue</font><font style='font-family:Times New Roman;font-size:10pt;' > recognition</font><font style='font-family:Times New Roman;font-size:10pt;' > standard, as it relate</font><font style='font-family:Times New Roman;font-size:10pt;' >d</font><font style='font-family:Times New Roman;font-size:10pt;' > to the Company&#8217;s contracts </font><font style='font-family:Times New Roman;font-size:10pt;' >and sales arrangements. As of June 30, 2017, the Company has nearly completed its impact assessment for the implementation of the new revenue recognition guidance. This impact assessment and work performed to date included global and cross functional int</font><font style='font-family:Times New Roman;font-size:10pt;' >erviews and questionnaires, sales agreement and other sales document reviews</font><font style='font-family:Times New Roman;font-size:10pt;' >,</font><font style='font-family:Times New Roman;font-size:10pt;' > as well as technical considerations for the Company&#8217;s future transactional accounting, financial </font><font style='font-family:Times New Roman;font-size:10pt;' >reporting and disclosure requirements. The Company expects to adopt the guidance</font><font style='font-family:Times New Roman;font-size:10pt;' > in the first quarter of 201</font><font style='font-family:Times New Roman;font-size:10pt;' >8</font><font style='font-family:Times New Roman;font-size:10pt;' >, as required, using a modified retrospective adoption approach. </font><font style='font-family:Times New Roman;font-size:10pt;' >Also, the Company</font><font style='font-family:Times New Roman;font-size:10pt;' > has begun preliminary considerations for how the new revenue recognition guidance may impact Houghton, as it pertains to the potential Combinat</font><font style='font-family:Times New Roman;font-size:10pt;' >ion</font><font style='font-family:Times New Roman;font-size:10pt;' >.</font><font style='font-family:Times New Roman;font-size:10pt;' > The Company anticipates using the second half of 2017 to finalize all aspects of its impact assessment, including its materiality assessment for accounting requirements specific to certain of the Company&#8217;s sales arrangements</font><font style='font-family:Times New Roman;font-size:10pt;' >,</font><font style='font-family:Times New Roman;font-size:10pt;' > as well as</font><font style='font-family:Times New Roman;font-size:10pt;' > further devel</font><font style='font-family:Times New Roman;font-size:10pt;' >op its</font><font style='font-family:Times New Roman;font-size:10pt;' > considerations for the potential Houghton Combination. Based on information reviewed to date and the draft impact assessment conclusions reached, the Company does not expect its adoption of this revenue recognition guidance to have a material impac</font><font style='font-family:Times New Roman;font-size:10pt;' >t on its reported earnings, cash flows, or balance sheet</font><font style='font-family:Times New Roman;font-size:10pt;' >;</font><font style='font-family:Times New Roman;font-size:10pt;' > however</font><font style='font-family:Times New Roman;font-size:10pt;' >,</font><font style='font-family:Times New Roman;font-size:10pt;' > the Company does expect its adoption to increase the amount and level of disclosures concerning the Company&#8217;s net sales.</font></p></div>
CY2016Q2 kwr Net Reporting Amount
NetReportingAmount
11000000 USD
CY2017Q2 kwr Net Reporting Amount
NetReportingAmount
11400000 USD
CY2016Q2 us-gaap Business Combination Acquisition Related Costs
BusinessCombinationAcquisitionRelatedCosts
0 USD
CY2017Q2 us-gaap Business Combination Separately Recognized Transactions Additional Disclosures Acquisition Cost Expensed
BusinessCombinationSeparatelyRecognizedTransactionsAdditionalDisclosuresAcquisitionCostExpensed
4300000 USD
CY2017Q2 kwr Effectofcombinationrelatedexpensesperdilutedshare
Effectofcombinationrelatedexpensesperdilutedshare
0.27
CY2017Q2 kwr Pension And Post Retirement Benefit Costs Nonservice Components
PensionAndPostRetirementBenefitCostsNonserviceComponents
2436000 USD
CY2016Q2 kwr Pension And Post Retirement Benefit Costs Nonservice Components
PensionAndPostRetirementBenefitCostsNonserviceComponents
608000 USD
CY2017Q2 us-gaap Effective Income Tax Rate Continuing Operations
EffectiveIncomeTaxRateContinuingOperations
0.262 pure
CY2017Q2 us-gaap Unrecognized Tax Benefits Income Tax Penalties Expense
UnrecognizedTaxBenefitsIncomeTaxPenaltiesExpense
100000 USD
us-gaap Unrecognized Tax Benefits Income Tax Penalties Expense
UnrecognizedTaxBenefitsIncomeTaxPenaltiesExpense
100000 USD
us-gaap Unrecognized Tax Benefits Income Tax Penalties Expense
UnrecognizedTaxBenefitsIncomeTaxPenaltiesExpense
200000 USD
CY2017Q2 us-gaap Unrecognized Tax Benefits Interest On Income Taxes Expense
UnrecognizedTaxBenefitsInterestOnIncomeTaxesExpense
100000 USD
kwr Unrecognized Tax Benefits Interest Income On Income Taxes
UnrecognizedTaxBenefitsInterestIncomeOnIncomeTaxes
100000 USD
CY2016Q2 us-gaap Unrecognized Tax Benefits Interest On Income Taxes Expense
UnrecognizedTaxBenefitsInterestOnIncomeTaxesExpense
100000 USD
us-gaap Unrecognized Tax Benefits Interest On Income Taxes Expense
UnrecognizedTaxBenefitsInterestOnIncomeTaxesExpense
100000 USD
CY2017Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
49594000 USD
kwr Combinationrelatedexpensesnetofpayements
Combinationrelatedexpensesnetofpayements
3306000 USD
CY2016Q4 us-gaap Restructuring Reserve
RestructuringReserve
670000 USD
kwr Combinationrelatedexpensesnetofpayements
Combinationrelatedexpensesnetofpayements
0 USD
CY2017Q2 us-gaap Finite Lived Intangible Assets Accumulated Amortization
FiniteLivedIntangibleAssetsAccumulatedAmortization
41246000 USD
CY2017Q2 us-gaap Decrease In Unrecognized Tax Benefits Is Reasonably Possible
DecreaseInUnrecognizedTaxBenefitsIsReasonablyPossible
400000 USD
CY2016Q2 us-gaap Decrease In Unrecognized Tax Benefits Is Reasonably Possible
DecreaseInUnrecognizedTaxBenefitsIsReasonablyPossible
800000 USD
CY2017Q2 kwr Finite Lived Trademarks Formulations And Product Technology
FiniteLivedTrademarksFormulationsAndProductTechnology
32618000 USD
CY2017Q2 us-gaap Other Finite Lived Intangible Assets Gross
OtherFiniteLivedIntangibleAssetsGross
6090000 USD
CY2017Q2 us-gaap Finite Lived Intangible Assets Gross
FiniteLivedIntangibleAssetsGross
114552000 USD
CY2017Q2 us-gaap Defined Benefit Plan Description Of Settlements And Curtailments
DefinedBenefitPlanDescriptionOfSettlementsAndCurtailments
During the second quarter of 2017, the Company’s U.S. pension plan offered a cash settlement to its vested terminated participants, which allowed them to receive the value of their pension benefits as a single lump sum payment. As payments from the U.S. pension plan for this cash out offering exceeded the service and interest cost components of the U.S. pension plan expense for 2017, the Company recorded a settlement charge of approximately $1.9 million, or $0.09 per diluted share. This settlement charge represents the immediate recognition into expense of a portion of the unrecognized loss within accumulated other comprehensive loss (“AOCI”) on the balance sheet in proportion to the share of the projected benefit obligation that was settled by these payments.
us-gaap Business Combination Separately Recognized Transactions Description
BusinessCombinationSeparatelyRecognizedTransactionsDescription
On April 4, 2017, Quaker entered into a share purchase agreement with Gulf Houghton Lubricants, Ltd. to purchase the entire issued and outstanding share capital of Houghton International, Inc. (“Houghton”) (herein referred to as “the Combination”). The shares will be bought for aggregate purchase consideration consisting of: (i) $172.5 million in cash; (ii) a number of shares of common stock, $1.00 par value per share, of the Company comprising 24.5% of the common stock outstanding upon the closing of the Combination; and (iii) the Company’s assumption of Houghton’s net indebtedness as of the closing of the Combination, which is estimated to be approximately $690 million. At closing, the total aggregate purchase consideration is dependent on the Company’s stock price and the level of Houghton’s indebtedness. The Company secured $1.15 billion in commitments from Bank of America Merrill Lynch and Deutsche Bank to fund the Combination and to provide additional liquidity. As of June 30, 2017, the Company replaced these commitments with a syndicated bank agreement (“the New Credit Facility”) with a group of lenders for $1.15 billion. Funding of the New Credit Facility is contingent upon closing of the Combination, and the Company will only incur interest costs to maintain the banks’ committed capital until closing. The New Credit Facility will include a $400.0 million multicurrency revolver, a $575.0 million USD term loan and a $175.0 million EUR equivalent term loan, each with a five year term from the date the New Credit Facility becomes effective. The maximum amount available under the New Credit Facility can be increased by $200.0 million at the Company’s option if the lenders agree and the Company satisfies certain conditions. Borrowings under the New Credit Facility will generally bear interest at a base rate or LIBOR rate plus a margin, which the Company currently estimates the annual floating rate cost will be in the 3.25% area based on current market interest rates. Access to the New Credit Facility will be dependent on meeting certain financial and other covenants, but primarily depends on the Company’s consolidated net debt to adjusted EBITDA ratio which cannot exceed 4.25 to 1 and the Company’s consolidated adjusted EBITDA to interest expense ratio which cannot be lower than 3.0 to 1. Both the USD and EUR equivalent term loans will have quarterly principal amortization during their respective five year terms, with 5% amortization of the principal balance due in years 1 and 2, 7.5% in year 3, and 10% in years 4 and 5, with the remaining principal amounts due at maturity. In addition, the issuance of the Company’s shares at closing of the Combination is subject to approval by Quaker’s shareholders under the rules of the New York Stock Exchange. The Company expects to seek approval of the share issuance at a meeting of the Company’s shareholders in the third quarter of 2017. Also, the Combination is subject to regulatory approval in the United States, Europe, China and Australia. During July 2017, the Company received regulatory approval from China. Depending on the shareholder and regulatory approvals noted above, as well as other customary terms and conditions set forth in the share purchase agreement, the Company currently estimates closing of the Combination to occur either in the fourth quarter of 2017 or the first quarter of 2018.
CY2017Q2 kwr Statutory Tax Rate
StatutoryTaxRate
0.25 pure

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