2018 Q1 Form 10-Q Financial Statement

#000008136218000006 Filed on April 30, 2018

View on sec.gov

Income Statement

Concept 2018 Q1 2017 Q1
Revenue $212.1M $194.9M
YoY Change 8.8% 9.45%
Cost Of Revenue $136.6M $124.0M
YoY Change 10.15% 12.65%
Gross Profit $75.45M $70.89M
YoY Change 6.43% 4.27%
Gross Profit Margin 35.58% 36.37%
Selling, General & Admin $50.01M $48.05M
YoY Change 4.06% -0.18%
% of Gross Profit 66.28% 67.79%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $3.194M $3.157M
YoY Change 1.17% 0.0%
% of Gross Profit 4.23% 4.45%
Operating Expenses $50.01M $48.05M
YoY Change 4.06% -0.18%
Operating Profit $20.23M $13.76M
YoY Change 47.05% -30.65%
Interest Expense $1.692M $656.0K
YoY Change 157.93% -11.47%
% of Operating Profit 8.36% 4.77%
Other Income/Expense, Net -$369.0K -$105.0K
YoY Change 251.43% -202.94%
Pretax Income $18.66M $13.52M
YoY Change 38.01% -30.83%
Income Tax $5.556M $6.865M
% Of Pretax Income 29.78% 50.78%
Net Earnings $12.73M $6.992M
YoY Change 82.09% -45.99%
Net Earnings / Revenue 6.0% 3.59%
Basic Earnings Per Share $0.96 $0.53
Diluted Earnings Per Share $0.95 $0.52
COMMON SHARES
Basic Shares Outstanding 13.25M shares 13.18M shares
Diluted Shares Outstanding 13.28M shares 13.22M shares

Balance Sheet

Concept 2018 Q1 2017 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $92.60M $90.60M
YoY Change 2.21% -4.03%
Cash & Equivalents $92.58M $90.59M
Short-Term Investments
Other Short-Term Assets $22.40M $15.20M
YoY Change 47.37% -25.85%
Inventory $96.30M $87.10M
Prepaid Expenses
Receivables $218.1M $201.9M
Other Receivables $0.00 $0.00
Total Short-Term Assets $429.3M $394.9M
YoY Change 8.72% 3.55%
LONG-TERM ASSETS
Property, Plant & Equipment $87.83M $85.23M
YoY Change 3.05% -2.29%
Goodwill $81.68M
YoY Change 2.1%
Intangibles $71.97M $72.95M
YoY Change -1.34% -0.83%
Long-Term Investments $25.03M $24.06M
YoY Change 4.03% 13.54%
Other Assets $44.70M $28.84M
YoY Change 54.99% -11.0%
Total Long-Term Assets $315.2M $314.1M
YoY Change 0.34% 0.29%
TOTAL ASSETS
Total Short-Term Assets $429.3M $394.9M
Total Long-Term Assets $315.2M $314.1M
Total Assets $744.5M $709.0M
YoY Change 5.01% 2.08%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $103.5M $90.22M
YoY Change 14.75% 29.34%
Accrued Expenses $14.90M $14.30M
YoY Change 4.2% -27.04%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $5.700M $700.0K
YoY Change 714.29% 16.67%
Total Short-Term Liabilities $157.4M $139.2M
YoY Change 13.11% 20.63%
LONG-TERM LIABILITIES
Long-Term Debt $69.65M $65.65M
YoY Change 6.09% -32.75%
Other Long-Term Liabilities $85.58M $70.09M
YoY Change 22.09% -11.23%
Total Long-Term Liabilities $155.2M $135.7M
YoY Change 14.36% -23.13%
TOTAL LIABILITIES
Total Short-Term Liabilities $157.4M $139.2M
Total Long-Term Liabilities $155.2M $135.7M
Total Liabilities $321.7M $287.0M
YoY Change 12.08% -5.28%
SHAREHOLDERS EQUITY
Retained Earnings $373.2M $366.8M
YoY Change 1.74% 11.26%
Common Stock $107.1M $126.1M
YoY Change -15.12% 4.08%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $421.5M $411.0M
YoY Change
Total Liabilities & Shareholders Equity $744.5M $709.0M
YoY Change 5.01% 2.08%

Cashflow Statement

Concept 2018 Q1 2017 Q1
OPERATING ACTIVITIES
Net Income $12.73M $6.992M
YoY Change 82.09% -45.99%
Depreciation, Depletion And Amortization $3.194M $3.157M
YoY Change 1.17% 0.0%
Cash From Operating Activities $2.746M $8.300M
YoY Change -66.92% -23.85%
INVESTING ACTIVITIES
Capital Expenditures $3.449M $2.531M
YoY Change 36.27% 16.53%
Acquisitions $500.0K $0.00
YoY Change -100.0%
Other Investing Activities -$500.0K $0.00
YoY Change -100.0%
Cash From Investing Activities -$3.901M -$2.500M
YoY Change 56.04% -24.24%
FINANCING ACTIVITIES
Cash Dividend Paid $4.724M $4.583M
YoY Change 3.08% 8.01%
Common Stock Issuance & Retirement, Net $0.00
YoY Change -100.0%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $1.545M -5.800M
YoY Change -126.64% -234.88%
NET CHANGE
Cash From Operating Activities $2.746M 8.300M
Cash From Investing Activities -$3.901M -2.500M
Cash From Financing Activities $1.545M -5.800M
Net Change In Cash $2.636M $1.544M
YoY Change 70.73% -87.03%
FREE CASH FLOW
Cash From Operating Activities $2.746M $8.300M
Capital Expenditures $3.449M $2.531M
Free Cash Flow -$703.0K $5.769M
YoY Change -112.19% -33.9%

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<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 </font><font style='font-family:Times New Roman;font-size:10pt;font-weight:bold;color:#000000;' >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:6pt;margin-bottom:6pt;line-height:12pt;' ><font style='font-family:Times New Roman;font-size:10pt;margin-left:18pt;' >The Financial Accounting Standards Board (&#8220;FASB&#8221;) issued an accounting standard update in February 2018 that allows a reclassification from accumulated other comprehensive income </font><font style='font-family:Times New Roman;font-size:10pt;' >(&#8220;AOCI&#8221;) </font><font style='font-family:Times New Roman;font-size:10pt;' >to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted in December 2017. The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2018, and should </font><font style='font-family:Times New Roman;font-size:10pt;' >be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. Early adoption is permitted. The Company has not ear</font><font style='font-family:Times New Roman;font-size:10pt;' >ly adopted the guidance and is currently evaluating </font><font style='font-family:Times New Roman;font-size:10pt;' >its</font><font style='font-family:Times New Roman;font-size:10pt;' > implementation.</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;' >The FASB issued an accounting standard update in January 2017 to clarify the definition of a business with the objective of adding guidance to assist companies with evaluating whether </font><font style='font-family:Times New Roman;font-size:10pt;' >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 determining when a set of assets and activities is a business. The gu</font><font style='font-family:Times New Roman;font-size:10pt;' >idance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2017. Early adoption was permitted in limited circumstances, and the amendments in this accounting standard update should be applied pro</font><font style='font-family:Times New Roman;font-size:10pt;' >spectively, with no disclosures required at transition. The Company adopted the guidance in the first quarter of 2018, as required, with no impa</font><font style='font-family:Times New Roman;font-size:10pt;' >ct to its financial statements.</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;' >The FASB issued an accounting standard update in November 2016 requiring that t</font><font style='font-family:Times New Roman;font-size:10pt;' >he statement of cash flows explain both the change in the total cash 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 re</font><font style='font-family:Times New Roman;font-size:10pt;' >stricted cash equivalents be included with cash and cash equivalents 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 be</font><font style='font-family:Times New Roman;font-size:10pt;' >ginning after December 15, 2017. Early adoption was permitted and the guidance requires application using a retrospective transition method to each period presented when adopted. The Company adopted the guidance in the first quarter of 2018, as required.</font><font style='font-family:Times New Roman;font-size:10pt;' > Adoption of the guidance did not have an impact on the Company&#8217;s earnings or balance sheet but did result in changes to certain disclosures within the statement of cash flows, including cash flows from investing activities and total cash, cash equivalent</font><font style='font-family:Times New Roman;font-size:10pt;' >s and restricted cash. See Note </font><font style='font-family:Times New Roman;font-size:10pt;' >12</font><font style='font-family:Times New Roman;font-size:10pt;' > of Notes to Condensed Cons</font><font style='font-family:Times New Roman;font-size:10pt;' >olidated Financial Statements.</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;' >The FASB issued an accounting standard update in October 2016 to improve the accounting for the income tax consequences of intra-entity transfers of assets other</font><font style='font-family:Times New Roman;font-size:10pt;' > than inventory.</font><font style='font-family:Times New Roman;font-size:10pt;' > T</font><font style='font-family:Times New Roman;font-size:10pt;' >he provisions in this update will allow an entity to recognize current and deferred income taxes of an intra-entity transfer of an asset other than inventory when the transfer occurs rather than when the asset has been sold to an outside</font><font style='font-family:Times New Roman;font-size:10pt;' > party.</font><font style='font-family:Times New Roman;font-size:10pt;' > </font><font style='font-family:Times New Roman;font-size:10pt;' >The guidance within this accounting standard update is effective for annual and interim periods beginning after December 15, 2017.</font><font style='font-family:Times New Roman;font-size:10pt;' > </font><font style='font-family:Times New Roman;font-size:10pt;' >Early adoption was permitted and the guidance requires application on a modified retrospective basis through a cumu</font><font style='font-family:Times New Roman;font-size:10pt;' >lative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.</font><font style='font-family:Times New Roman;font-size:10pt;' > </font><font style='font-family:Times New Roman;font-size:10pt;' >The Company adopted the guidance in the first quarter of 2018, as required, with no impac</font><font style='font-family:Times New Roman;font-size:10pt;' >t to its financial statements.</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;' >The FASB issued an accounting sta</font><font style='font-family:Times New Roman;font-size:10pt;' >ndard update 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-cou</font><font style='font-family:Times New Roman;font-size:10pt;' >pon debt instruments, 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 equit</font><font style='font-family:Times New Roman;font-size:10pt;' >y method investments 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 was permitted, provided that al</font><font style='font-family:Times New Roman;font-size:10pt;' >l of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted the guidance in the first quarter of 2018, as required, with no impac</font><font style='font-family:Times New Roman;font-size:10pt;' >t to its financial statements.</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;' >The FAS</font><font style='font-family:Times New Roman;font-size:10pt;' >B issued 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 </font><font style='font-family:Times New Roman;font-size:10pt;' >those 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 report</font><font style='font-family:Times New Roman;font-size:10pt;' >ing periods presented. Early adoption is permitted</font><font style='font-family:Times New Roman;font-size:10pt;' >, but t</font><font style='font-family:Times New Roman;font-size:10pt;' >he Company has not early adopted</font><font style='font-family:Times New Roman;font-size:10pt;' >. </font><font style='font-family:Times New Roman;font-size:10pt;' >As of March 31, 2018, the Company has begun its impact assessment and implementation planning, including taking an inventory of its outstanding leases globally, es</font><font style='font-family:Times New Roman;font-size:10pt;' >tablishing a cross functional project team and evaluating software solutions that could potentially assist in facilitating the end-to-end leasing process, including adoption of this lease accounting guidance. While the Company&#8217;s evaluation of this guidanc</font><font style='font-family:Times New Roman;font-size:10pt;' >e is in the early stages, the Company </font><font style='font-family:Times New Roman;font-size:10pt;' >anticipates</font><font style='font-family:Times New Roman;font-size:10pt;' > adoption of this guidance to have an impact on its balance sheet as </font><font style='font-family:Times New Roman;font-size:10pt;' >it expects the majority of its </font><font style='font-family:Times New Roman;font-size:10pt;' >operating leases will be recorded on</font><font style='font-family:Times New Roman;font-size:10pt;' > its </font><font style='font-family:Times New Roman;font-size:10pt;' >balance sheet by establishing right of use assets and associated </font><font style='font-family:Times New Roman;font-size:10pt;' >lease liabilities.</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;' >The FASB issued an accounting standard 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 a</font><font style='font-family:Times New Roman;font-size:10pt;' >rising from contracts with customers, which will be common 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 a</font><font style='font-family:Times New Roman;font-size:10pt;' >doption of prior period data or a modified retrospective adoption. 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</font><font style='font-family:Times New Roman;font-size:10pt;' > be effective for annual and interim periods beginning after December 15, 2017. Entities </font><font style='font-family:Times New Roman;font-size:10pt;' >were</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 and 2017, the FASB issued a series of accounting stand</font><font style='font-family:Times New Roman;font-size:10pt;' >ard updates to clarify and expand on </font><font style='font-family:Times New Roman;font-size:10pt;' >the implementation guidance, including principal versus agent considerations, identification of performance obligations, licensing, other technical corrections and adding certain practical expedients. The amendments in</font><font style='font-family:Times New Roman;font-size:10pt;' > these 2016 and 2017 updates did not change the core principles of the guidance previously issued in May 2014.</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;' >As part of the Company&#8217;s impact assessment for the implementation of the new revenue recognition guidance, the Company reviewed its historical ac</font><font style='font-family:Times New Roman;font-size:10pt;' >counting policies and practices to identify potential differences with the requirements of the new revenue recognition standard, as it related to the Company&#8217;s contracts and sales arrangements. In addition, the impact assessment and work performed include</font><font style='font-family:Times New Roman;font-size:10pt;' >d global and cross functional interviews and questionnaires, sales agreement and other sales document reviews, as well as technical considerations for the Company&#8217;s future transactional accounting, financial reporting and disclosure requirements. The Comp</font><font style='font-family:Times New Roman;font-size:10pt;' >any has also begun </font><font style='font-family:Times New Roman;font-size:10pt;' >a </font><font style='font-family:Times New Roman;font-size:10pt;' >preliminary </font><font style='font-family:Times New Roman;font-size:10pt;' >assessment of</font><font style='font-family:Times New Roman;font-size:10pt;' > how the new revenue recognition guidance may impact Houghton, as it pertains to the </font><font style='font-family:Times New Roman;font-size:10pt;' >pending</font><font style='font-family:Times New Roman;font-size:10pt;' > Combination.</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;' >The Company adopted the guidance in the first quarter of 2018, as required, electing to use a modified r</font><font style='font-family:Times New Roman;font-size:10pt;' >etrospective adoption approach applied to those contracts which were not completed as of January 1, 2018. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. In addition, </font><font style='font-family:Times New Roman;font-size:10pt;' >the Company elected to apply certain of the permitted practical expedients within the revenue recognition guidance and make certain accounting policy elections including those related to significant financing components, sales taxes and shipping and handli</font><font style='font-family:Times New Roman;font-size:10pt;' >ng activities. </font><font style='font-family:Times New Roman;font-size:10pt;' >Adoption of the revenue recognition guidance did not have a material impact on the Company&#8217;s reported earnings</font><font style='font-family:Times New Roman;font-size:10pt;' > or</font><font style='font-family:Times New Roman;font-size:10pt;' > cash flows, however, adoption did increase the amount and level of disclosures concerning the Company&#8217;s n</font><font style='font-family:Times New Roman;font-size:10pt;' >et sales and did resu</font><font style='font-family:Times New Roman;font-size:10pt;' >lt in one a</font><font style='font-family:Times New Roman;font-size:10pt;' >djustment</font><font style='font-family:Times New Roman;font-size:10pt;' > to the Company&#8217;s balance sheet</font><font style='font-family:Times New Roman;font-size:10pt;' >. As a result of the Company&#8217;s impact assessment and adoption using the modified retrospective adoption approach the Company recorded an adjustment to its Condensed Consolidated Balance Sheet as of Decemb</font><font style='font-family:Times New Roman;font-size:10pt;' >er 31, 2017 to </font><font style='font-family:Times New Roman;font-size:10pt;' >adjust </font><font style='font-family:Times New Roman;font-size:10pt;' >the Company&#8217;s estimate of variable consideration relating to customers</font><font style='font-family:Times New Roman;font-size:10pt;' >&#8217; expected rights to</font><font style='font-family:Times New Roman;font-size:10pt;' > return</font><font style='font-family:Times New Roman;font-size:10pt;' > product</font><font style='font-family:Times New Roman;font-size:10pt;' >. This adjustment resulted in an increase to other current liabilities of $1.0 million, an increase to non-current deferred tax </font><font style='font-family:Times New Roman;font-size:10pt;' >assets of $0.2 million and a decrease to retained earnings of $0.8 million. There were no other impacts recorded as a result of adopting the revenue recognition guidance. The impact of adoption of the new revenue recognition guidance was immaterial for t</font><font style='font-family:Times New Roman;font-size:10pt;' >he three months ended March 31, 2018 and the Company expects the impact to be immaterial on an ongoing basis. </font><font style='font-family:Times New Roman;font-size:10pt;' > </font><font style='font-family:Times New Roman;font-size:10pt;' >See Note </font><font style='font-family:Times New Roman;font-size:10pt;' >4 </font><font style='font-family:Times New Roman;font-size:10pt;' >of Notes to Condensed Cons</font><font style='font-family:Times New Roman;font-size:10pt;' >olidated Financial Statements.</font></p></div>
CY2018Q1 us-gaap Deferred Revenue
DeferredRevenue
1300000 USD
CY2017Q4 us-gaap Deferred Revenue
DeferredRevenue
1500000 USD
CY2018Q1 us-gaap Deferred Revenue Revenue Recognized1
DeferredRevenueRevenueRecognized1
1500000 USD
CY2018Q1 kwr Net Reporting Amount
NetReportingAmount
11600000 USD
CY2017Q1 kwr Net Reporting Amount
NetReportingAmount
10400000 USD
CY2018Q1 us-gaap Common Stock Shares Issued
CommonStockSharesIssued
13322550 shares
CY2018Q1 us-gaap Finite Lived Customer Lists Gross
FiniteLivedCustomerListsGross
76663000 USD
CY2018Q1 us-gaap Other Finite Lived Intangible Assets Gross
OtherFiniteLivedIntangibleAssetsGross
6123000 USD
CY2018Q1 us-gaap Finite Lived Intangible Assets Gross
FiniteLivedIntangibleAssetsGross
117007000 USD
CY2018Q1 us-gaap Minority Interest Decrease From Distributions To Noncontrolling Interest Holders
MinorityInterestDecreaseFromDistributionsToNoncontrollingInterestHolders
834000 USD
CY2017Q4 us-gaap Business Combination Separately Recognized Transactions Liabilities Recognized
BusinessCombinationSeparatelyRecognizedTransactionsLiabilitiesRecognized
5500000 USD
CY2018Q1 us-gaap Business Combination Separately Recognized Transactions Liabilities Recognized
BusinessCombinationSeparatelyRecognizedTransactionsLiabilitiesRecognized
7600000 USD
CY2017Q1 us-gaap Business Combination Separately Recognized Transactions Additional Disclosures Acquisition Cost Expensed
BusinessCombinationSeparatelyRecognizedTransactionsAdditionalDisclosuresAcquisitionCostExpensed
9100000 USD
CY2018Q1 us-gaap Business Combination Separately Recognized Transactions Additional Disclosures Acquisition Cost Expensed
BusinessCombinationSeparatelyRecognizedTransactionsAdditionalDisclosuresAcquisitionCostExpensed
6100000 USD
CY2018Q1 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 was approximately $690 million at signing. 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, and has since replaced these commitments with a syndicated bank agreement (“the New Credit Facility”) with a group of lenders for $1.15 billion. The New Credit Facility is contingent upon and will not be effective until the closing of the Combination. During April 2018, the Company extended the bank commitment for the New Credit Facility through August 4, 2018. In connection with this extension, the Company adjusted slightly the currency mix of the term loan component of the New Credit Facility. As adjusted, the New Credit Facility is now comprised of a $400.0 million multicurrency revolver, a $600.0 million USD term loan and a $150.0 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 bear interest at a base rate or LIBOR rate plus a margin. The Company currently estimates the annual floating rate cost will be in the 3.50% to 3.75% range based on current market interest rates. The New Credit Facility will be subject to certain financial and other covenants, including covenants that the Company’s consolidated net debt to adjusted EBITDA ratio cannot initially exceed 4.25 to 1 and the Company’s consolidated adjusted EBITDA to interest expense ratio cannot be less 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. Until closing, the Company will incur certain interest costs paid to maintain the bank commitment (“ticking fees”), which began to accrue on September 29, 2017 and bear an interest rate of 0.30% per annum. In addition, the issuance of the Company’s shares at closing of the Combination was subject to approval by Quaker’s shareholders under the rules of the New York Stock Exchange. This approval was received at a meeting of the Company’s shareholders during the third quarter of 2017. Also, the Combination is subject to regulatory approval in the United States, Europe, China and Australia. The Company received regulatory approval from China and Australia in 2017. Depending on the timing of the remaining regulatory approvals and other customary terms and conditions set forth in the share purchase agreement, the Company currently estimates closing of the Combination will occur over the next few months.
CY2018Q1 us-gaap Effective Income Tax Rate Reconciliation Change In Enacted Tax Rate
EffectiveIncomeTaxRateReconciliationChangeInEnactedTaxRate
0.21 pure
CY2018Q1 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate
0.35 pure
CY2018Q1 kwr Ustaxreformact
Ustaxreformact
As previously disclosed in its Annual Report filed on Form 10-K for the year ended December 31, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as U.S. Tax Reform on December 22, 2017. U.S. Tax Reform includes multiple changes to the U.S. tax code with varying effects on the Company’s results for the three months ended March 31, 2018. The SEC staff issued guidance on accounting for the tax effects of U.S. Tax Reform and provided a one-year measurement period for companies to complete the accounting. Companies are required to reflect the income tax effects of those aspects of U.S. Tax Reform for which the accounting is complete. To the extent that a company’s accounting for certain income tax effects of U.S. Tax Reform are incomplete but the company is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. The Company has made reasonable interpretations and assumptions with regard to various uncertainties and ambiguities in the application of certain provisions of U.S. Tax Reform. It is possible that the Internal Revenue Service (“IRS”) could issue subsequent guidance or take positions on audit that differ from the Company’s interpretations and assumptions. The Company currently believes subsequent guidance issued or interpretations made by the IRS will not be materially different from the Company’s application of the provisions of U.S. Tax Reform. The Company is continuing to evaluate all of the provisions of U.S. Tax Reform and expects to finalize its assessment during the one-year measurement period provided for by the SEC to complete the accounting for U.S. Tax Reform. During the three months ended March 31, 2018, the Company has not made any significant changes to its initial assessments made during the fourth quarter of 2017.
CY2018Q1 us-gaap New Accounting Pronouncement Or Change In Accounting Principle Description Of Priorperiod Information Retrospectively Adjusted
NewAccountingPronouncementOrChangeInAccountingPrincipleDescriptionOfPriorperiodInformationRetrospectivelyAdjusted
Adoption of the revenue recognition guidance did not have a material impact on the Company’s reported earnings or cash flows, however, adoption did increase the amount and level of disclosures concerning the Company’s net sales and did result in one adjustment to the Company’s balance sheet. As a result of the Company’s impact assessment and adoption using the modified retrospective adoption approach the Company recorded an adjustment to its Condensed Consolidated Balance Sheet as of December 31, 2017 to adjust the Company’s estimate of variable consideration relating to customers’ expected rights to return product. This adjustment resulted in an increase to other current liabilities of $1.0 million, an increase to non-current deferred tax assets of $0.2 million and a decrease to retained earnings of $0.8 million. There were no other impacts recorded as a result of adopting the revenue recognition guidance. The impact of adoption of the new revenue recognition guidance was immaterial for the three months ended March 31, 2018 and the Company expects the impact to be immaterial on an ongoing basis.
CY2018Q1 us-gaap Loss Contingency Settlement Agreement Terms
LossContingencySettlementAgreementTerms
The Company has restricted cash recorded in other assets related to proceeds from an inactive subsidiary of the Company which previously executed separate settlement and release agreements with two of its insurance carriers for $35.0 million. The proceeds of both settlements are restricted and can only be used to pay claims and costs of defense associated with the subsidiary’s asbestos litigation
CY2017Q1 us-gaap Cash And Cash Equivalents At Carrying Value
CashAndCashEquivalentsAtCarryingValue
90593000 USD
CY2016Q4 us-gaap Cash And Cash Equivalents At Carrying Value
CashAndCashEquivalentsAtCarryingValue
88818000 USD
CY2018Q1 us-gaap Restricted Cash
RestrictedCash
21105000 USD
CY2017Q4 us-gaap Restricted Cash
RestrictedCash
21171000 USD
CY2017Q1 us-gaap Restricted Cash
RestrictedCash
21652000 USD
CY2016Q4 us-gaap Restricted Cash
RestrictedCash
21883000 USD
CY2018Q1 kwr Finite Lived Trademarks Formulations And Product Technology
FiniteLivedTrademarksFormulationsAndProductTechnology
34221000 USD
CY2017Q4 kwr Finite Lived Trademarks Formulations And Product Technology
FiniteLivedTrademarksFormulationsAndProductTechnology
33025000 USD
CY2018Q1 us-gaap Finite Lived Intangible Assets Accumulated Amortization
FiniteLivedIntangibleAssetsAccumulatedAmortization
47235000 USD
CY2017Q1 us-gaap Payments For Restructuring
PaymentsForRestructuring
148000 USD
CY2017Q1 us-gaap Restructuring Reserve Translation Adjustment
RestructuringReserveTranslationAdjustment
-8000 USD
CY2017Q1 us-gaap Restructuring Reserve
RestructuringReserve
530000 USD
CY2018Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Award Requisite Service Period1
ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardRequisiteServicePeriod1
P3Y
CY2018Q1 us-gaap Unrecognized Tax Benefits Interest On Income Taxes Expense
UnrecognizedTaxBenefitsInterestOnIncomeTaxesExpense
100000 USD
CY2017Q1 us-gaap Unrecognized Tax Benefits Income Tax Penalties Expense
UnrecognizedTaxBenefitsIncomeTaxPenaltiesExpense
100000 USD
CY2018Q1 us-gaap Revenue Recognition Accounting Policy Gross And Net Revenue Disclosure
RevenueRecognitionAccountingPolicyGrossAndNetRevenueDisclosure
<div><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;' >As part of</font><font style='font-family:Times New Roman;font-size:10pt;' > the Company&#8217;s CMS</font><font style='font-family:Times New Roman;font-size:10pt;' >, certain third-party product sales to customers are managed by the Company. Where the Company acts as a principal, revenues are recognized on a gross reporting basis at the selling price negotiated with</font><font style='font-family:Times New Roman;font-size:10pt;' > its customers. Where the Company acts as an agent, revenue is recognized on a net reporting basis at the amount of the administrative fee earned by the Company for ordering the goods.</font></p></div>
CY2018Q1 us-gaap Revenue Recognition Deferred Revenue
RevenueRecognitionDeferredRevenue
<div><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;' >A contract liability is recognized when the Company receives consideration, or if it has the unconditional right to receive consideration, in advance of performance. A contract liability is the Comp</font><font style='font-family:Times New Roman;font-size:10pt;' >any&#8217;s obligation to transfer goods or services to a customer for which the Company has received consideration, or </font><font style='font-family:Times New Roman;font-size:10pt;' >a specified</font><font style='font-family:Times New Roman;font-size:10pt;' > amount of consideration is due, from the customer. The Company&#8217;s contract liabilities primarily represent deferred revenue record</font><font style='font-family:Times New Roman;font-size:10pt;' >ed for customer payments received by the Company prior to the Company satisfying the associated performance obligation. Deferred revenues are presented within other current liabilities in the Company&#8217;s Condensed Consolidated Balance Sheets.</font></p></div>
CY2017Q1 us-gaap Minority Interest Decrease From Distributions To Noncontrolling Interest Holders
MinorityInterestDecreaseFromDistributionsToNoncontrollingInterestHolders
0 USD

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