What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 711 added, 561 removed, 1053 unchanged (55% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of goods sold (

4 unchanged sentences

Operating income

Other (expense) income, net

Other income (expense), net

Interest expense, net

Income before taxes and equity in net (loss) income of

Income before taxes and equity in net income of

associated companies

Taxes on income before

equity in net (loss) income of associated

Income before equity in net (loss) income of associated

equity in net income of associated

Income before equity in net income of associated

Equity in net (loss) income of associated companies

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Other comprehensive (loss) income, net of tax

2 unchanged sentences

Current period change in fair value of derivatives

Unrealized (loss) gain on available-for-sale securities

Other comprehensive (loss) income

Unrealized loss on available-for-sale securities

Other comprehensive loss

Comprehensive (loss) income

Comprehensive

income (loss) attributable to

loss attributable to

noncontrolling interest

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

Current assets

43 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

7 unchanged sentences

Loss on extinguishment of debt

Loss (gain) on disposal of property,

plant, equipment and other assets

Gain on disposal of property, plant,

equipment and other assets

Combination and other acquisition-related expenses, net of payments

Restructuring and related charges

Restructuring and related (credits) charges

Pension and other postretirement benefits

5 unchanged sentences

Accounts payable and accrued liabilities

Net cash used in operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities

7 unchanged sentences

Proceeds from long-term debt

Borrowings on revolving credit facilities, net

Repayments on other debt, net

(Payments) borrowings on revolving credit facilities, net

Borrowings (payments) on other debt, net

Financing-related debt issuance costs

3 unchanged sentences

Effect of foreign exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

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Balance at June 30, 2021

Balance at December 31, 2021

Amounts reported in other

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compensation plans

Balance at September 30, 2021

Balance at December 31, 2021

Amounts reported in other

comprehensive (loss) income

Share issuance and equity-based

compensation plans

Balance at March 31, 2022

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Balance at June 30, 2022

Amounts reported in other

comprehensive loss

Share issuance and equity-based

compensation plans

Balance at September 30, 2022

The accompanying notes are an integral part

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this Quarterly Report on Form 10-Q for the period

ended June 30, 2022 (the “Report”),

ended September 30, 2022 (the “Report”),

the terms “Quaker Houghton,”

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for the interim periods.

The results for the six months ended June 30, 2022 are not necessarily indicative of the

results to be expected

for the full year.

The results for the nine months ended September 30, 2022 are not necessarily indicative

of the results to be

expected for the full year.

These financial statements should be read in conjunction with the Company’s

Annual Report filed on Form 10-K for

the year ended December 31, 2021 (the “2021 Form 10-K”).

Annual Report filed on Form

10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

Description of Business

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Based on various indices or index compilations being used to monitor inflation

in Argentina as well as economic instability,

effective July 1, 2018, Argentina’s

economy was considered hyper-inflationary under U.S.

As of, and for the three and six

months ended June 30, 2022, the Company's Argentine

subsidiaries represented less than

as well as economic instability,

Argentina’s and

Türkiye’s economies were

considered hyper-inflationary under U.S.

GAAP effective

July 1, 2018 and April 1, 2022, respectively.

of, and for the three and nine months ended September 30, 2022,

the Company's Argentine

and Turkish subsidiaries represented a

% of the Company’s consolidated

assets and net sales, respectively.

During the three and six months ended June 30, 2022, the Company recorded less than $

million, respectively, of remeasurement

losses associated with the applicable currency conversions related to Argentina.

Comparatively,

during the three and six months ended June 30, 2021, the Company recorded

total assets and net sales, respectively.

During the three and nine months ended

September 30, 2022, the Company recorded $

million and $

respectively, of remeasurement

losses associated with the applicable currency conversions

related to Argentina.

These losses were

recorded within foreign exchange losses, net, which is a component of other

(expense) income, net, in the Company’s Condensed

Consolidated Statements of Income.

million, respectively,

of remeasurement losses associated with the

applicable currency conversions related to Argentina

Comparatively, during the three

and nine months ended September

30, 2021, the Company recorded less than $

million and $

million, respectively, of

remeasurement losses associated with the

applicable currency conversions related to Argentina.

These losses were recorded within foreign exchange losses, net, which is a

component of other (expense) income, net, in the Company’s

Condensed Consolidated Statements of Income.

Note 2 – Business Acquisitions

2022 Acquisitions

Subsequent to the date of these financial statements, in October 2022,

the Company acquired a business that provides pickling and

rinsing products and services, which is part of the EMEA reportable segment,

for approximately

million EUR or approximately

This acquisition, along with the Company’s

January 2022 acquisition in the Americas (described below), which had

similar specializations and product offerings in pickling

inhibitor technologies, strengthens Quaker Houghton’s

position in pickling

inhibitors and additives, enabling the Company to better support

and optimize production processes for customers across the Metals

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

In January 2022, the Company acquired a business that provides pickling

inhibitor technologies for the steel industry,

lubricants and stamping oil for metalworking, and various other lubrication,

rust preventative, and cleaner applications, for its

Americas reportable segment for approximately $

inhibitor technologies, drawing lubricants and stamping

oil, and various other lubrication, rust preventative, and cleaner applications,

which is part of the Americas reportable segment for

approximately $

This business broadens the Company’s

product offerings within its

existing metals and metalworking business in the Americas region.

product offerings within its existing metals and metalworking

business in the Americas region.

The Company allocated $

million of the purchase price to

intangible assets, comprised of $

million of the purchase price to intangible assets, comprised of $

million of customer relationships to be amortized over

million of existing

product technologies to be amortized over

million of existing product technologies to be amortized

In addition, the Company recorded $

million of goodwill related to expected

value not allocated to other acquired assets, all of which is expected to be tax deductible

in various jurisdictions in which the

Company operates.

In January 2022, the Company acquired a business related to the sealing and impregnation

of metal castings for the automotive

million of goodwill related to expected value not allocated to other acquired

assets, all of which is expected to be tax deductible in various jurisdictions in which

the Company operates.

During the third quarter

of 2022 the Company finalized post-closing adjustments that resulted in

the Company paying less than $

million of additional

purchase consideration.

Factors contributing to the purchase price that resulted in goodwill included

the acquisition of business

processes and personnel that will allow Quaker Houghton to better serve

its customers.

In January 2022, the Company acquired a business related to the sealing

and impregnation of metal castings for the automotive

sector, as well as impregnation resin and

impregnation systems for metal parts, for its Global Specialty Businesses reportable segment

for approximately

impregnation systems for metal parts, which is part of the Global Specialty Businesses

reportable segment for approximately

million EUR or approximately $

This business expands the Company's geographic presence in

Germany as well as broadens its product offerings and

service capabilities within its existing impregnation business.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The results of operations of the 2022 acquisitions subsequent to the respective

acquisition dates are included in the unaudited

Condensed Consolidated Statements of Income for the six month period ended

June 30, 2022.

Applicable transaction expenses

associated with these acquisitions are included in Combination,

integration and other acquisition-related expenses in the Company’s

unaudited Condensed Consolidated Statements of Income.

Certain pro forma and other information is not presented, as the operations

of the acquisitions are not considered material to the overall operations

of the Company for the periods presented.

This business expands the Company's

geographic presence in Germany as well as broadens its product offerings

and service capabilities within its existing impregnation

The results of operations of the January 2022 acquisitions subsequent to

the respective acquisition dates are included in the

unaudited Condensed Consolidated Statements of Income for the nine month

period ended September 30, 2022.

transaction expenses associated with these acquisitions are included

in Combination, integration and other acquisition-related

expenses in the Company’s unaudited

Condensed Consolidated Statements of Income.

Certain pro forma and other information is not

presented, as the operations of the acquisitions are not considered material

to the overall operations of the Company for the periods

The results of operations of the October acquisition is not included in the Consolidated Statements of

Operations because

the date of closing was subsequent to September 30, 2022.

Preliminary purchase price allocation of assets acquired and liabilities

assumed for this business acquired has not been presented as that information

is not available as of the date of these Condensed

Consolidated Financial Statements.

Previous Acquisitions

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a privately held company that provides vacuum

impregnation services of castings, powder metals and electrical components for

its Global Specialty Businesses reportable segment for

impregnation services of castings, powder metals and electrical components

for its Global Specialty Businesses reportable segment for

million, including an initial cash payment of $

million, subject to post-closing adjustments as well as certain earn-out

provisions initially estimated at $

million that are payable at different times from 2022 through

The earn-out provisions

could total a maximum of $

provisions that are payable at various times from 2022 through 2025.

The earn-out provisions could total a maximum of $

In September 2022, the Company paid $

million related to certain of these earnout provisions.

The Company recorded an

incremental earn-out expense of $

million during the three and nine months ended September 30, 2022 related to

these earnout

provisions, recorded within the financial

statement caption “Combination, integration and other acquisition-related

expenses” on the

Company’s Condensed Consolidated

Statements of Income.

As of September 30, 2022, the Company has remaining earnout liabilities

recorded on its Condensed Consolidated Balance Sheet of $

The Company allocated $

million of the purchase price to intangible assets, $

property, plant and

equipment and $

million of other assets acquired net of liabilities assumed, which includes $

million of cash

In addition, the Company recorded $

million of goodwill, all of which is expected to be tax deductible.

million of the purchase price to

intangible assets, $

million of property, plant

and equipment and $

million of other assets acquired net of liabilities assumed,

which includes $

million of cash acquired.

In addition, the Company recorded $

million of goodwill, all of which is expected to

be tax deductible.

Intangible assets comprised $

million of customer relationships to be amortized over

million of existing product technology to be

amortized over

of existing product technology to be amortized over

Factors contributing to the purchase price that resulted in goodwill

included the acquisition of business processes and personnel that will allow Quaker

Houghton to better serve its customers.

the third quarter of 2022 the Company finalized post-closing adjustments

that resulted in the Company receiving less than $

In November 2021, the Company acquired a business that provides hydraulic

fluids, coolants, cleaners, and rust preventative oils

in Turkey for its EMEA reportable segment for

in Türkiye for its EMEA reportable segment for

million EUR or approximately $

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The Company recorded

its initial investment as an equity method investment within the Condensed Consolidated

Financial Statements and accounted for the

its initial investment as an equity method investment within the Condensed

Consolidated Financial Statements and accounted for the

purchase of the remaining interest as a step acquisition whereby the Company

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million EUR or approximately $

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

In February 2021, the Company acquired a tin-plating solutions business

10 unchanged sentences

the Company recorded $

million of goodwill related to expected value not allocated to other acquired

assets, all of which is

expected to be tax deductible in various jurisdictions in which we operate.

Factors contributing to the purchase price that resulted in

goodwill included the acquisition of business processes and personne

that will allow Quaker Houghton to better serve its customers.

As of June 30, 2022, the allocation of the purchase price of all of the Company’s

2022 acquisitions, Grindaix, the acquisition in

and Baron have not been finalized and the one-year measurement period has not ended.

million of goodwill, all of which is expected to be tax deductible in various jurisdictions

Factors contributing to the purchase price that resulted in goodwill included the

acquisition of business processes and

personnel that will allow Quaker Houghton to better serve its customers.

As of September 30, 2022, the allocation of the purchase price of all of the Company’s

2022 acquisitions, the acquisition in

Türkiye and Baron have not been finalized and the one-year measurement

period has not ended.

Further adjustments may be

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liabilities assumed.

In December 2020, the Company acquired Coral Chemical Corporation

(“Coral”), a privately held U.S.-based provider of metal

finishing fluid solutions.

Subsequent to the acquisition, the Company and the sellers of Coral (the “Sellers”) have worked

certain post-closing adjustments.

In December 2020, the Company acquired Coral Chemical Company,

LLC (“Coral”), a privately held U.S.-based provider of

metal finishing fluid solutions.

Subsequent to the acquisition, the Company and the sellers of Coral (the

“Sellers”) have worked to

finalize certain post-closing adjustments.

During the second quarter of 2022, after failing to reach resolution,

the Sellers filed suit asserting

certain amounts owed related to tax attributes of the acquisition.

Based on the facts and circumstances of the claim asserted by the

Sellers, the Company believes the potential range of exposure for this claim is $

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

the Sellers filed suit

asserting certain amounts owed related to tax attributes of the acquisition.

During the third quarter of 2022, there have been no

material changes to the facts and circumstances of the claim asserted by the

Sellers, and the Company continues to believe the

potential range of exposure for this claim is $

Note 3 – Recently Issued Accounting Standards

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The Company’s operating

segments, which are consistent with its reportable segments, reflect the structure of the

segments, which are consistent with its reportable segments, reflect the structure of the Company’s

internal organization, the method by which the Company’s

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unless otherwise stated)

The following table presents information about the performance of

the Company’s reportable segments for

the three and six

months ended June 30, 2022 and 2021.

The following table presents information about the performance of the Company’s

reportable segments for the three and nine

months ended September 30, 2022 and 2021.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Global Specialty Businesses

9 unchanged sentences

Operating income

Other (expense) income, net

Other income (expense), net

Interest expense, net

Income before taxes and equity in net (loss) income of

Income before taxes and equity in net income of

associated companies

Inter-segment revenues for the three and six months ended

June 30, 2022, were $

Inter-segment revenues for the three and nine months ended September

30, 2022, were $

million and $

million for Americas, $

million and $

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million and $

million for Global

Specialty Businesses, respectively.

Inter-segment revenues for the three and six months ended

June 30, 2021, were $

for Global Specialty Businesses, respectively.

Inter-segment revenues

for the three and nine months ended September 30, 2021, were

million and $

million for Americas, $

2 unchanged sentences

million and $

million for Asia/Pacific, and $

million for Asia/Pacific,

million and $

million for Global Specialty Businesses, respectively.

However, all inter-segment transactions

have been eliminated from

each reportable operating segment’s

However, all inter-segment

transactions have been

eliminated from each reportable operating segment’s

net sales and earnings for all periods presented in the above tables.

6 unchanged sentences

million and $

for the three and six months ended June 30, 2022, respectively,

for the three and nine months ended September 30, 2022, respectively,

million and $

million for the three and six months ended

June 30, 2021, respectively.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

million for the three and nine

months ended September 30, 2021, respectively.

Customer Concentration

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As previously disclosed in the

Company’s 2021 Form 10-K, during

Company’s 2021 Form 10-K, for

the year ended December 31, 2021, the Company’s

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% of consolidated net sales.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Contract Assets and Liabilities

The Company had no material contract assets recorded on its Condensed

Consolidated Balance Sheets as of June 30, 2022 or

December 31, 2021.

Consolidated Balance Sheets as of September 30, 2022

or December 31, 2021.

The Company had approximately $

million and $

million of deferred revenue as of June 30, 2022 and December 31, 2021,

million of deferred revenue as of September 30, 2022 and December 31,

2021, respectively.

For the six months ended June 30, 2022, the Company satisfied all of the associated

performance obligations and

recognized into revenue the advance payments received and recorded

as of December 31, 2021.

For the nine months ended September 30, 2022, the Company satisfied all of the

associated performance

obligations and recognized into revenue the advance payments received

and recorded as of December 31, 2021.

Disaggregated Revenue

1 unchanged sentence

and its technical expertise as a global product

The Company generally manages and evaluates its performance by segment first, and

then by customer industry,

The Company generally manages and evaluates its performance by segment

first, and then by customer industry,

by individual product lines.

2 unchanged sentences

the Company’s geographic

regions, and in most cases, approximately proportionate to the level of total

sales in each region.

regions, and in most cases, are approximately proportionate to the level of

total sales in each region.

The following tables disaggregate the Company’s

1 unchanged sentence

and timing of

revenue recognized for the three and six months ended June 30, 2022

Three Months Ended June 30, 2022

revenue recognized for the three and nine months ended September 30, 2022

Three Months Ended September 30, 2022

Customer Industries

4 unchanged sentences

Services transferred over time

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Customer Industries

8 unchanged sentences

unless otherwise stated)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Customer Industries

4 unchanged sentences

Services transferred over time

Six Months Ended June 30, 2021

Nine Months Ended September

Customer Industries

7 unchanged sentences

and equipment with remaining lease terms up to

Operating lease expense is recognized on a straight-line basis over the lease term.

the Company has certain land

Operating lease expense is recognized on a straight-line basis over the

In addition, the Company has certain land

use leases with remaining lease terms up to

The Company has

material variable lease costs, sublease income or finance leases for three and six months ended

2022 and 2021.

The following table sets forth the components of the Company’s

lease cost for three and six months ended June 30,

material variable lease costs, sublease income or finance leases for three and nine

months ended September

30, 2022 and 2021.

The following table sets forth the components of

the Company’s lease cost for three and nine

September 30, 2022 and 2021:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease expense

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cash paid for amounts included in the

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leases is as follows:

September 30,

Right of use lease assets

7 unchanged sentences

Maturities of operating lease liabilities were as follows:

September 30,

For the remainder of 2022

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synergies associated with the Combination in the third quarter of 2019.

The QH Program includes restructuring and associated

severance costs to reduce total headcount by approximately 400 people globally, as well as plans for the closure of certain

manufacturing and non-manufacturing facilities.

The exact timing and total costs associated with the QH Program depend on a

The QH Program included restructuring and associated

severance costs to reduce total headcount by approximately 400 people globally, as well as the closure of certain manufacturing and

non-manufacturing facilities.

The exact timing to complete all actions and final costs associated with the QH Program depend on a

number of factors and are subject to change;

however, the Company currently expects reduction in headcount and site closures under

the QH Program to continue to occur throughout 2022 and into 2023.

Employee separation benefits will vary depending on local

regulations within certain foreign countries and will include severance and other benefits.

All costs incurred to date relate to severance costs to reduce headcount,

including customary and routine adjustments to initial

estimates for employee separation costs, as well as costs to close certain facilities

and are recorded in Restructuring and related

charges in the Company’s

Condensed Consolidated Statements of Income.

As described in Note 4 of Notes to Condensed

Consolidated Financial Statements, restructuring and related charges

are not included in the Company’s

calculation of reportable

segments’ measure of operating earnings and therefore these costs are not reviewed

by or recorded to reportable segments.

however, the Company had reduction in headcount and site closures under the QH

Program in 2022 and expects final headcount reductions to continue into 2023.

Employee separation benefits varied depending on

local regulations within certain foreign countries and included severance and other benefits.

Quaker Chemical Corporation

2 unchanged sentences

unless otherwise stated)

All costs incurred related to severance costs to reduce headcount, including customary

and routine adjustments to initial estimates

for employee separation costs, as well as costs to close certain facilities are recorded

in Restructuring and related (credits) charges in

the Company’s Condensed

Consolidated Statements of Income.

The credits recognized in the nine months ended September 30, 2022

reflect customary and routine adjustments to initial estimates for

employee separation costs.

At this time, the Company does not

expect to incur material additional costs under the QH Program.

As described in Note 4 of the Notes to Condensed Consolidated

Financial Statements, restructuring and related charges

are not included in the Company’s calculation of

reportable segments’ measure

of operating earnings and therefore these costs are not reviewed by or recorded

to reportable segments.

Activity in the Company’s accrual

for restructuring under the QH Program for the six months ended June 30, 2022

is as follows:

for restructuring under the QH Program for the nine months ended September 30, 2022

Accrued restructuring as of December 31, 2021

Restructuring and related charges

Restructuring and related (credits)

Cash payments

Currency translation adjustments

Accrued restructuring as of June 30, 2022

Accrued restructuring as of September 30, 2022

Note 8 – Share-Based Compensation

1 unchanged sentence

in its Condensed Consolidated Statements of Income

for the three and six months ended June 30, 2022 and 2021:

for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Stock options

5 unchanged sentences

compensation expense

Share-based compensation expense is recorded in SG&A, except for $

Share-based compensation expense is recorded in SG&A, except for less than

million and $

million for the three and six months

ended June 30, 2022, respectively,

million for the three and nine

months ended September 30, 2022, respectively,

million and $

million for the three and six months ended June 30, 2021, respectively,

recorded within Combination, integration and other acquisition-related

million for the three and nine months ended September 30,

respectively, recorded within

Combination, integration and other acquisition-related expenses.

Stock Options

During the first six months of 2022, the Company granted stock options under

its long-term incentive plan (“LTIP”)

During the first nine months of 2022, the Company granted stock options

under its long-term incentive plan (“LTIP”)

subject only to time vesting over a

9 unchanged sentences

vesting period.

As of June 30, 2022, unrecognized

compensation expense related to all stock options granted

million, to be recognized over a weighted average remaining

As of September 30, 2022,

unrecognized compensation expense related to all stock options granted was $

million, to be recognized over a weighted average

remaining period of

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Restricted Stock Awards

and Restricted Stock Units

During the six months ended June 30, 2022, the Company granted

During the nine months ended September 30, 2022, the Company granted

non-vested restricted shares and

restricted stock units under its LTIP,

vested restricted stock units under its LTIP,

which are subject to time-based vesting, generally over a

The fair value of

these grants is based on the trading price of the Company’s

The fair value

of these grants is based on the trading price of the Company’s

common stock on the date of grant.

The Company adjusts the grant date

fair value of these awards for expected forfeitures based on historical experience.

As of June 30, 2022, unrecognized compensation

expense related to the non-vested restricted shares was $

million, to be recognized over a weighted average remaining period

years, and unrecognized compensation expense related to non-vested

restricted stock units was $

million, to be recognized over a

weighted average remaining period of

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Company adjusts the grant

date fair value of these awards for expected forfeitures based on historical experience.

As of September 30, 2022, unrecognized

compensation expense related to the non-vested restricted

million, to be recognized over a weighted average

remaining period of

years, and unrecognized compensation expense related to non-vested restricted

stock units was $

to be recognized over a weighted average remaining period of

Performance Stock Units

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Expected term (years)

As of June 30, 2022, based on the conditions of the PSUs and performance to date for

each award, the Company estimates that it

t issue any fully vested shares as of the applicable settlement date of all outstanding PSUs awards.

As of June 30, 2022, there

was approximately $

As of September 30, 2022, based on the conditions of the PSUs and performance

to date for each award, the Company estimates

t issue any fully vested shares as of the applicable settlement date of all outstanding

As of September 30,

2022, there was approximately $

million of total unrecognized compensation cost related to PSUs which the Company

expects to recognize

over a weighted-average period of

recognize over a weighted-average period of

Defined Contribution Plan

11 unchanged sentences

in fully vested shares of the Company’s common

matching contributions in stock for the three and six months ended June 30, 2022.

For the six months ended

June 30, 2021, total contributions were $

matching contributions in stock for the three and nine months ended September 30, 2022.

months ended September 30, 2021, total contributions were $

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 9 – Pension and Other Postretirement

The components of net periodic benefit (income) cost for the three and

six months ended June 30, 2022 and 2021 are as follows:

Months Ended June 30,

Six Months Ended June 30,

nine months ended September 30, 2022 and 2021 are as

Three Months Ended September 30,

Nine Months Ended September 30,

Postretirement

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Pension Benefits

Interest cost

Service cost (income)

Interest cost (income)

Expected return on plan assets

Actuarial loss amortization

Prior service cost amortization

Actuarial loss (gain)

Prior service cost (income)

Net periodic benefit (income)

Employer Contributions

As of June 30, 2022, $

As of September 30, 2022, $

million and $

million of contributions have been made to the Company’s

and foreign pension

plans and its other postretirement benefit plans, respectively.

pension plans and its other postretirement benefit plans, respectively

Taking into consideration

5 unchanged sentences

million to its other postretirement benefit plans in 2022

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 10 – Other (Expense) Income, Net

The components of other (expense) income, net, for the three and six months ended June

30, 2022 and 2021 are as follows:

Note 10 – Other Income (Expense), Net

The components of other income (expense), net, for the three and nine months

ended September 30, 2022 and 2021 are as

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Income from third party license fees

Foreign exchange losses, net

(Loss) gain on disposals of property,

Foreign exchange (losses) gain, net

Gain (loss) on disposals of property,

plant, equipment and other

Non-income tax refunds and other related (expense) credits

Non-income tax refunds and other related credits (expense)

Pension and postretirement benefit income,

1 unchanged sentence

Loss on extinguishment of debt

Gain on insurance recoveries

Other non-operating income, net

Total other (expense)

Non-income tax refunds and other related (expense) credits during

the three and six months ended June 30, 2022, includes

Total other income

(expense), net

Gain (loss) on disposals of property,

plant, equipment and other assets, net, during the three months ended September 30, 2021,

includes losses related to certain fixed asset disposals resulting from property

See Note 18 of Notes to Condensed

Consolidated Financial Statements.

During the nine months ended September 30, 2021, this caption also includes

the gain on the sale

of certain held-for-sale real property assets related to

the Combination.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Non-income tax refunds and other related credits (expense) during

the nine months ended September 30, 2022, includes

adjustments to Combination-related indemnification assets associated with the

4 unchanged sentences

Financial Statements.

During the second quarter of 2022, the Company recorded a loss on extinguishment

of debt of approximately

million which includes the write-off of certain previously unamortized

deferred financing costs as well as a portion of the third

party and creditor debt issuance costs incurred to execute an amendment

to the Company’s primary credit facility.

See Note 14 of

Notes to the Condensed Consolidated Financial Statements.

Loss (gain) on disposals of property,

plant, equipment and other assets, net, during the six months ended June 30, 2021,

gain on the sale of certain held-for-sale real property assets related

to the Combination.

During the nine months ended September 30, 2021 this caption includes certain

non-income tax credits for the

Company’s Brazilian subsidiaries.

See Note 18 of Notes to Condensed Consolidated Financial Statements.

Loss on extinguishment of debt during the nine months ended September

30, 2022 includes the write-off of certain previously

unamortized deferred financing costs as well as a portion of the third

party and creditor debt issuance costs incurred to execute an

amendment to the Company’s primary

credit facility.

See Note 14 of Notes to the Condensed Consolidated Financial Statements.

Gain on insurance recoveries during the three and nine months ended September

30, 2022, reflects payments received from

insurers related to the property damage incurred during the three

months ended September 2021, noted above.

See Note 18 of Notes

to the Condensed Consolidated Financial Statements.

Note 11 – Income Taxes

1 unchanged sentence

The Company’s effective

tax rates for the three and six months ended June 30, 2022 were

tax rates for the three and nine months ended September 30, 2022 were

%, respectively,

% for the three and six months ended June 30, 2021, respectively.

% for the three and nine months ended September 30, 2021, respectively.

The Company’s effective

the six months ended June 30, 2022 was largely driven by

state tax benefits, changes in the valuation allowance for foreign tax credits

due to recently issued legislative guidance,

the impact of audit settlements reached with German and Italian tax authorities, a deferred

tax benefit associated with an intercompany asset transfer,

a reduction in reserves for uncertain tax positions relating to management

fees, withholding taxes for increased forecasted dividends and the effects

of lower pre-tax earnings and the mix of such earnings.

addition, the Company incurred higher tax expense during the three and six months ended

June 30, 2022 at one of its subsidiaries as it

accrued taxes at a statutory tax rate of

rate for the nine months ended September 30, 2022 was impacted by various

items including a decline in forecasted profits and

earnings mix, foreign tax inclusions, changes in the valuation allowance

for foreign tax credits, the impact of audit settlements reached

with Italian tax authorities, a reduction in reserves for uncertain tax positions

and withholding taxes.

In addition, the Company

incurred higher tax expense during the three and nine months ended

September 30, 2022 at one of its subsidiaries as it accrued taxes at

a statutory tax rate of

% while it awaits recertification of a concessionary

% tax rate, which was available to the

Company during all of 2021.

Comparatively,

the prior year effective tax rates were largely impacted

by the sale of a subsidiary which

included certain held-for-sale real property assets related to the Combination

changes in foreign tax credit valuation allowances, tax

law changes in a foreign jurisdiction and the income tax impacts of certain

% tax rate, which was available to the Company during

Comparatively, the prior year

effective tax rates were largely impacted by changes in permanent

reinvestment assertions,

changes in foreign tax credit valuation allowances, tax law changes in a foreign

jurisdiction, deferred tax benefits related to an

intercompany intangible asset transfer and the income tax impacts of certain

non-income tax credits recorded by the Company’s

6 unchanged sentences

earnings to the U.S.

As of June 30, 2022 this deferred tax liability balance was $

As of June 30, 2022, the Company’s

cumulative liability for gross unrecognized tax benefits was $

As of September 30, 2022 this deferred tax liability balance was $

As of September 30, 2022, the

Company’s cumulative liability

for gross unrecognized tax benefits was $

million, a decrease of approximately $

million from the

cumulative liability accrued as of December 31, 2021.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

the cumulative liability accrued as of December 31, 2021.

The Company continues to recognize interest and penalties associated with uncertain

2 unchanged sentences

Consolidated Statements of Income.

recognized a benefit for interest of less than $

million and $

million and an expense of less than of $

million and a benefit of

recognized an expense for interest of $

million and a benefit for interest of $

million and a benefit of less than $

million for penalties in its Condensed Consolidated Statement of Income for

the three and six months ended June 30, 2022,

respectively, and recognized

an expense for interest of approximately $

the three and nine months ended September 30,

2022, respectively,

and recognized an expense for interest of approximately $

million and $

1 unchanged sentence

million and $

million for penalties in its Condensed Consolidated Statement of Income for

the three and six months ended June 30,

2021, respectively.

As of June 30, 2022, the Company had accrued $

million for penalties in its Condensed Consolidated Statement of Income for the

three and nine months ended

September 30, 2021, respectively.

As of September 30, 2022, the Company had accrued $

million for cumulative interest and $

cumulative penalties in its Condensed Consolidated Balance Sheets, compared

million for cumulative penalties in its Condensed Consolidated

Balance Sheets, compared to $

million for cumulative interest and

for cumulative penalties accrued at December 31, 2021.

During the six months ended June 30, 2022 and 2021, the Company recognized

decreases of $

million for cumulative penalties accrued at December 31, 2021.

During the nine months ended September 30, 2022 and 2021, the Company

recognized decreases of $

million and $

respectively,

in its cumulative liability for gross unrecognized tax benefits due to the settlement

of income tax audits with both the

Italian and German tax authorities, as well as the expiration of the applicable

statutes of limitations for certain tax years.

million, respectively,

in its cumulative liability for gross unrecognized tax benefits due to the settlement of

income tax audits with

both the Italian and German tax authorities, as well as the expiration of the

applicable statutes of limitations for certain tax years.

The Company estimates that during the year ending December 31, 202

16 unchanged sentences

, Brazil from

, the Netherlands and Mexico from

, Canada, China, Spain and the U.S.

, the United Kingdom

the Netherlands from

, Canada, China, Mexico and the U.S.

, Germany, Spain and the United

India from fiscal year beginning April 1, 2017 and ending March 31,

1 unchanged sentence

state tax jurisdictions from

As previously reported, the Italian tax authorities have assessed additional tax due from the Company’s subsidiary, Quaker Italia

S.r.l., relating to the tax years 2007 through 2015 .

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

As previously reported, the Italian tax authorities have assessed additional

tax due from the Company’s subsidiary,

Quaker Italia

S.r.l., relating to the tax years

The Company has filed for competent authority relief from these assessments under

the Mutual Agreement Procedures (“MAP”) of the Organization for Economic Co-Operation and Development for all years except

In 2020, the respective tax authorities in Italy, Spain and the Netherlands reached agreement with respect to the MAP

the Mutual Agreement Procedures (“MAP”) of the Organization

for Economic Co-Operation and Development for all years except

In 2020, the respective tax authorities in Italy,

Spain and the Netherlands reached agreement with respect to the MAP

proceedings which the Company had accepted.

As of June 30, 2022, the Company received $

As of September 30, 2022, the Company received $

million in refunds from the

5 unchanged sentences

to utilize its remaining net operating losses to partially offset

As of June 30, 2022, the Company has paid the full settlement amount, of which approximately

million may be

Houghton Italia, S.r.l is also involved

As of September 30, 2022, the Company has paid the full settlement amount,

of which approximately $

confirmed to be refundable.

Houghton Italia, S.r.l was involved

in a corporate income tax audit with the Italian tax authorities covering tax years

During the fourth quarter of 2021, the Company settled a portion of the Houghton Italia,

corporate income tax

audit with the Italian tax authorities for the tax years 2014 and 2015.

During the six months ended June 30, 2022, the Company

settled tax years 2016 through 2018 for a total of $

During the fourth quarter of 2021, the Company settled a portion of the Houghton

Italia, S.r.l.

corporate income tax audit

the Italian tax authorities for the tax years 2014 and 2015.

During the nine months ended September 30, 2022, the Company settled

tax years 2016 through 2018 for a total of $

In total, the Company has now settled all years 2014 through 2018 for $

4 unchanged sentences

to the tax provision of $

million during the first six months of

The Company has an indemnification receivable of $

million in connection with its claim against the former owners of

Houghton for any pre-Combination tax liabilities arising from this matter.

As previously reported, Houghton Deutschland GmbH is also under

audit by the German tax authorities for the tax years

In the second quarter of 2022 the Company settled the corporate tax audit for the

tax years 2015-2017 with the German

tax authorities for a total of $

The Company has an indemnification receivable of $

million in connection with its claim

against the former owners of Houghton for any pre-Combination tax

liabilities arising from this matter.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

million during the first nine months

The Company has an indemnification receivable of approximately $

million in connection with its claim against the

former owners of Houghton for any pre-Combination tax

liabilities arising from this matter, as well as other audit

Note 12 – Earnings Per Share

The following table summarizes earnings per share calculations for

the three and six months ended June 30, 2022 and 2021:

the three and nine months ended September 30, 2022 and

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Basic earnings per common share

17 unchanged sentences

for the three

and six months ended June 30, 2022, respectively,

for the three and six months ended June 30, 2021, respectively.

and nine months ended September 30, 2022, respectively,

for the three and nine months ended September 30,

2021, respectively.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 13 – Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six months ended June 30, 2022

were as follows:

Changes in the carrying amount of goodwill for the nine months ended

September 30, 2022 were as follows:

Balance as of December 31, 2021

Goodwill additions

Goodwill additions (reductions)

Currency translation adjustments

Balance as of June 30, 2022

Balance as of September 30, 2022

Gross carrying amounts and accumulated amortization for definite-lived

intangible assets as of June 30, 2022 and December 31,

2021 were as follows:

intangible assets as of September 30, 2022 and

December 31, 2021 were as follows:

Gross Carrying

7 unchanged sentences

million and $

million of amortization expense for the three and six months ended June

million of amortization expense for the three and nine months ended September

30, 2022, respectively.

2 unchanged sentences

million and $

million of amortization expense for the three and six months ended

June 30, 2021, respectively.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

million of amortization expense for the three and nine months ended

September 30, 2021, respectively.

Estimated annual aggregate amortization expense for the current year

and subsequent five years is as follows:

and subsequent five years and beyond is as follows:

For the year ended December 31, 2022

5 unchanged sentences

The Company had four indefinite-lived intangible assets totaling

million as of June 30, 2022, including $

indefinite-lived intangible assets for trademarks and tradename associated

million as of September 30, 2022, including $

million of indefinite-lived intangible assets for trademarks and tradenames associated

with the Combination.

Comparatively, the Company had

four indefinite-lived intangible assets for trademarks and tradename

Comparatively, the

Company had four indefinite-lived intangible assets for trademarks and

tradenames totaling $

million as of December 31, 2021.

4 unchanged sentences

The Company continually evaluates financial

performance, economic conditions and other relevant developments

in assessing if a triggering event indicates that it is more likely

than not that the carrying value of any of the Company’s

reporting units or indefinite-lived or long-lived assets is not recoverable.

Company continues to monitor various financial, economic and

performance, economic conditions and other recent developments in

assessing if a triggering event indicates that the carrying values

of goodwill, indefinite-lived, or long-lived assets are impaired.

The Company continues to monitor various financial, economic and

geopolitical conditions impacting the Company,

including the Russia-

Ukraine war and the Company’s decision

to cease operations in Russia, raw material, supply chain, and logistics cost escalation,

rising interest rates and cost of capital among other factors.

The Company concluded that these and other factors which have and

continue to impact the Company did not represent a triggering event as of June 30, 2022.

The Company continues to take action to

offset these headwinds including, but not limited to, implementing

selling price increases aimed at offsetting raw material costs and

ongoing inflationary pressures.

However, if the Company is unable to successfully

implement these actions and future or projected

financial performance declines, then it is possible any of these financial, economic

or geopolitical conditions could represent a

triggering event in the future and could lead to a potential impairment of the

Company’s reporting unit goodwill

or other indefinite-

lived or long-lived assets.

including the ongoing Russia-Ukraine war and the Company’s

decision to cease

operations in Russia, continued raw material cost escalation, supply chain

constraints and disruptions, as well as rising interest rates

and the cost of capital among other factors.

The Company concluded that these and other factors, which have and continue to

the Company, did not

represent a triggering event during the third quarter of 2022, except for

the Company’s EMEA reporting unit

and the associated goodwill, as well as the related asset group.

The Company concluded that during the third quarter of 2022 the

escalation of these events adversely impacted EMEA’s

financial performance and represented a triggering event.

As a result of this conclusion, the Company completed an interim impairment

assessment for its EMEA reporting unit, as well as

the related asset group, during the third quarter of 2022.

The Company concluded that the undiscounted cash flows exceeded the

carrying value of the long-lived assets, and it is not more likely than not that

an impairment exists.

In completing a quantitative

goodwill impairment test, the Company compares the reporting unit

’s fair value, primarily based on future

discounted cash flows, to

its carrying value in order to determine if an impairment charge is warranted.

The estimates of future discounted cash flows involve

considerable management judgment and are based upon certain significant

assumptions including the weighted average cost of capital

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

as well as projected EBITDA, which includes assumptions related to revenue

growth rates, gross margin levels and operating

As a result of this interim impairment assessment,

the estimated fair value of the EMEA reporting unit exceeded its

carrying value by approximately

% and the Company concluded no impairment was warranted.

Notwithstanding the results of the Company’s

interim impairment assessment, if the Company is unable to successfully

implement selling price increases aimed at more than offsetting

raw material costs and ongoing inflationary pressures and the financial

performance of the EMEA reporting unit declines further,

or interest rates continue to rise and this leads to an increase in the cost of

then it is possible these financial, economic and geopolitical conditions could

result in another triggering event for the EMEA

reporting unit in the future and could lead to a potential impairment

In addition, if any of these financial, economic or geopolitical

conditions has a more significant adverse effect on the Company,

these could lead to a potential impairment of the Company’s

goodwill or other indefinite-lived or long-lived assets.

Note 14 – Debt

Debt as of June 30, 2022 and December 31, 2021 includes the following:

As of June 30, 2022

Debt as of September 30, 2022 and December 31, 2021 includes the following:

As of September 30, 2022

As of December 31, 2021

26 unchanged sentences

a Dutch subsidiary of the Company as borrower,

each with a five-year term, maturing in

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

term, maturing in

During June 2022, the Company,

26 unchanged sentences

Dollar borrowings reference rate from LIBOR to SOFR;

(iii) extended the maturity date of the Original Credit Facility from August 2024 to June 2027;

(iii) extended the maturity date of the Original Credit Facility from

(iv) effected certain other changes to the Original Credit

Facility as set forth in the Amended Credit Facility.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Company used the proceeds of the Amended Credit Facility to repay

2 unchanged sentences

Credit Facility and certain expenses and fees.

denominated borrowings under the Amended Credit Facility bear

interest, at the Company’s election, at

the base rate or term SOFR

borrowings under the Amended Credit Facility bear interest, at the Company’s

election, at the base rate or term SOFR

plus an applicable rate ranging from

4 unchanged sentences

Loans based on term SOFR also include a spread adjustment equal to

Borrowings under the Amended Credit Facility denominated in currencies other

Borrowings under the Amended Credit Facility denominated

in currencies other than U.S.

Dollars bear interest at the

13 unchanged sentences

EBITDA if there is no default.

All restricted payments may be made if there is no default and if the consolidated

net leverage ratio is

If the consolidated net leverage ratio is less than

, then the Company is no longer subject to

restricted payments.

Financial covenants contained in the Amended Credit Facility include

18 unchanged sentences

Credit Facility being terminated.

As of June 30, 2022, the

As of September 30, 2022, the

Company was in compliance with all of the Amended Credit Facility covenants.

1 unchanged sentence

borrowings under the Original Credit Facility and the

Amended Credit Facility during the six months ended June 30,

Amended Credit Facility during the nine months ended September

30, 2022 was approximately

As of June 30, 2022, the interest rate on

the outstanding borrowings under the Amended Credit Facility was approximately

In addition to paying interest on outstanding

principal under the Original Credit Facility,

As of September 30, 2022, the

interest rate on the outstanding borrowings under the Amended Credit

Facility was approximately

In addition to paying interest

on outstanding principal under the Original Credit Facility,

the Company was required to pay a commitment fee ranging from

% depending on the Company’s consolidated

net leverage ratio under the Original Revolver in respect of the unutilized commitments

net leverage ratio under the Original Revolver in respect of the unutilized

commitments thereunder.

As part of the Amended Credit Facility,

1 unchanged sentence

% related to unutilized commitments under the Amended Revolver,

depending on the Company’s

consolidated net leverage

The Company had unused capacity under the Amended Revolver of

approximately $

million, net of bank letters of credit of

approximately $

million, as of June 30, 2022.

depending on the Company’s consolidated

leverage ratio.

The Company had unused capacity under the Amended Revolver of approximately

million, which is net of bank

letters of credit of approximately $

million, as of September 30, 2022.

The Company previously capitalized $

16 unchanged sentences

million of debt issuance costs recorded within Other

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

assets attributable to the Original Credit Facility.

30 unchanged sentences

were not written off will collectively be amortized into Interest expense

over the five-year term of the Amended Credit Facility.

June 30, 2022, the Company had $

million of debt issuance costs recorded as a reduction of Long-term

debt on the Condensed

Consolidated Balance Sheet and $

million of debt issuance costs recorded within Other assets on the Condensed Consolidated

Balance Sheet.

term of the Amended Credit Facility.

September 30, 2022, the Company had $

million of debt issuance costs recorded as a reduction of Long-term debt on the

Condensed Consolidated Balance Sheet and $

million of debt issuance costs recorded within Other assets on the Condensed

Consolidated Balance Sheet.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Original Credit Facility required the Company to fix its variable interest

10 unchanged sentences

consolidated net leverage ratio.

At the time the Company entered into the swaps, and as of June 30, 2022,

the aggregate interest rate

on the swaps, including the fixed base rate plus an applicable margin,

The Amended Credit Facility does not require the

Company to fix variable interest rates on any portion of its borrowings.

As of June 30, 2022, the Company has not amended its

current interest rate swaps.

See Note 17 of Notes to Condensed Consolidated Financial Statements.

At the time the Company entered into the swaps, and as of September 30,

2022, the aggregate interest

rate on the swaps, including the fixed base rate plus an applicable margin,

The Amended Credit Facility does not require

the Company to fix variable interest rates on any portion of its borrowings.

As of September 30, 2022, the Company had not amended

its current interest rate swaps.

In October 2022, the Company’s interest

rate swap contracts expired.

Upon expiration, the Company is

entitled to a cash payment from the counterparties, which is materially consistent

with the fair value as of September 30, 2022.

Note 17 of Notes to Condensed Consolidated Financial Statements.

Industrial development bonds

As of June 30, 2022 and December 31, 2021, the Company had fixed rate,

industrial development authority bonds totaling $

As of September 30, 2022 and December 31, 2021, the Company had fixed

rate, industrial development authority bonds totaling

million in principal amount due in

1 unchanged sentence

Bank lines of credit and other debt obligations

The Company has certain unsecured bank lines of credit and discount

ing facilities in certain foreign subsidiaries, which are not

The Company has certain unsecured bank lines of credit and discounting

facilities in certain foreign subsidiaries, which are not

collateralized.

3 unchanged sentences

and capital lease obligations.

capacity under these arrangements as of June 30, 2022 was approximately

capacity under these arrangements as of September 30, 2022 was approximately

In addition to the bank letters of credit described in the “Credit facilities” subsection above, the Company’s other off-balance

1 unchanged sentence

The Company’s total bank letters of credit and guarantees

outstanding as of June 30, 2022 were approximately $ 5 million.

outstanding as of September 30, 2022 were approximately $ 5 million.

The Company incurred the following debt related expenses included

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest expense

Amortization of debt issuance costs

Based on the variable interest rates associated with the Amended

Credit Facility, as of June 30,

2022 and the Original Credit

Facility as of December 31, 2021, the amounts at which the Company’s

total debt were recorded are not materially different from their

fair market value.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

On June 30, 2022, annual maturities on the Amended Credit Facility in the next

five fiscal years (excluding the reduction to

long-term debt attributed to capitalized and unamortized debt issuance costs)

are as follows:

Based on the variable interest rates associated with the Amended Credit Facility,

as of September 30, 2022 and the Original

Credit Facility as of December 31, 2021, the amounts at which the Company’s

total debt were recorded are not materially different

from their fair market value.

On September 30, 2022, annual maturities on the Amended Credit Facility in the

next five fiscal years (excluding the reduction to

long-term debt attributed to capitalized and unamortized debt issuance

costs) are as follows:

September 30,

For the remainder of 2022

5 unchanged sentences

Total payments

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 15 – Accumulated Other Comprehensive Income

1 unchanged sentence

of accumulated other comprehensive income

(“AOCI”) for the three and six months ended June 30, 2022 and 2021:

Gain (Loss) in

(“AOCI”) for the three and nine months ended September 30, 2022 and 2021:

(Loss) Gain in

Available-for-

Sale Securities

Balance at March 31, 2022

Balance at June 30, 2022

Other comprehensive (loss) income before

2 unchanged sentences

Related tax amounts

Balance at September 30, 2022

Balance at June 30, 2021

Balance at March 31, 2021

Other comprehensive income (loss) before

Other comprehensive (loss) income before

Reclassifications

1 unchanged sentence

Related tax amounts

Balance at June 30, 2021

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Balance at September 30, 2021

Gain (Loss) in

6 unchanged sentences

Related tax amounts

Balance at June 30, 2022

Balance at September 30, 2022

Balance at December 31, 2020

3 unchanged sentences

Related tax amounts

Balance at June 30, 2021

Balance at September 30, 2021

All reclassifications related to unrealized gain (loss) in available-for-sale securities relate

6 unchanged sentences

translation adjustments.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 16 – Fair Value

2 unchanged sentences

measurement as follows:

Measurements at June 30, 2022

Measurements at September 30, 2022

Using Fair Value

5 unchanged sentences

for like instruments with similar credit ratings and

The Company did not hold any Level 3 investments as of June 30, 2022 or

December 31, 2021, respectively,

The Company did

t hold any Level 3 investments as of September 30, 2022 or December 31,

2021, respectively, so related

disclosures have not been included.

1 unchanged sentence

In order to satisfy certain requirements of the Original Credit Facility as well as to manage

the Company’s exposure to variable

the Company’s exposure to

interest rate risk associated with the Original Credit Facility,

14 unchanged sentences

interest rates on any portion of its borrowings.

In October 2022, the Company’s

interest rate swap contracts expired.

Upon expiration, the Company is entitled to a cash payment

from the counterparties, which is materially consistent with the fair value as of

September 30, 2022.

The balance sheet classification and fair values of the Company’s

derivative instruments, which are Level 2 measurements, are as

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Condensed Consolidated

September 30,

Balance Sheet Location

4 unchanged sentences

The following table presents the net unrealized (gain) loss deferred to AOCI:

September 30,

Derivatives designated as cash flow hedges:

Interest rate swaps

The following table presents the net loss reclassified from AOCI to earnings:

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The following table presents the net gain (loss) reclassified from AOCI to earnings:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Amount and location of expense reclassified

Interest income

from AOCI into expense (effective portion)

Interest expense, net

(expense), net

Interest rate swaps are entered into with a limited number of counterparties,

each of which allows for net settlement of all

contracts through a single payment in a single currency in the event of a default

on or termination of any one contract.

contracts through a single payment in a single currency in the event

of a default on or termination of any one contract.

accordance with the Company’s accounting

14 unchanged sentences

the above condition for closure.

As of June 30, 2022, ACP continues to operate

the second groundwater treatment system, while the

Company discusses with the relevant authorities whether the second groundwater

treatment system meets the conditions for closure.

As of September 30, 2022, ACP continues

to operate the second groundwater treatment system, while

the Company discusses with the relevant authorities whether the second

groundwater treatment system meets the conditions for

In addition, the Santa Ana Regional Water

Quality Control Board requested that ACP conduct additional indoor

and outdoor soil

vapor testing on and near the ACP site to confirm that ACP continues to

meet the applicable local soil vapor standards.

As of June 30,

2022, ACP performed such testing and is awaiting the review of the results from

the Santa Ana Regional Water

Quality Control

As of June 30, 2022, the Company believes that the range of potential-known

liabilities associated with the balance of the ACP

water remediation program is approximately $

The low and high ends of the range are based on the length

of operation of the treatment system as determined by groundwater modeling.

soil vapor testing on and near the ACP site to confirm that ACP continues to meet the applicable

local soil vapor standards.

September 30, 2022, ACP performed such testing and is awaiting the review

of the results from the Santa Ana Regional Water

Control Board.

As of September 30, 2022, the Company believes that the range of pot

ential-known liabilities associated with the balance of the

ACP water remediation program is approximately $

The low and high ends of the range are based on the

length of operation of the treatment system as determined by groundwater

Costs of operation include the operation and

6 unchanged sentences

injury due to exposure to asbestos.

During the three and six months ended June 30, 2022, there have been no

significant changes to

the facts or circumstances of this previously disclosed matter,

aside from on-going claims and routine payments associated with this

During the three and nine months ended September 30, 2022, there have been

no significant

changes to the facts or circumstances of this previously disclosed matter,

aside from on-going claims and routine payments associated

with this litigation.

Based on a continued analysis of the existing and anticipated future claims against this subsidiary,

it is currently projected

that the subsidiary’s total liability over

the next 50 years for these claims is approximately $

million (excluding costs of defense).

it is currently

projected that the subsidiary’s total

liability over the next 50 years for these claims is approximately $

million (excluding costs of

The Company previously disclosed in its 2021 Form 10-K that it is party to certain environmental

4 unchanged sentences

maintenance at each of the applicable sites.

During the three and six months ended June 30, 2022, there have been no significant

changes to the facts or circumstances of these previously disclosed matters,

aside from on-going monitoring and maintenance

activities and routine payments associated with each of the sites.

The Company continually evaluates its obligations related to such

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

matters, and based on historical costs incurred and projected costs to be incurred

over the next approximately 30 years, has estimated

the range of costs for all of these environmental matters, on a discounted

basis, to be between approximately $

During the three and nine months ended September 30, 2022, there have

significant changes to the facts or circumstances of these previously disclosed

matters, aside from on-going monitoring and

maintenance activities and routine payments associated with each of

The Company continually evaluates its obligations

related to such matters, and based on historical costs incurred and

projected costs to be incurred over the next approximately 30 years,

has estimated the range of costs for all of these environmental matters, on

a discounted basis, to be between approximately $

million and $

million as of June 30, 2022, for which $

million was accrued within other accrued liabilities and other non-current

liabilities on the

Company’s Condensed Consolidated

Balance Sheet as of June 30, 2022.

Comparatively, as of December

31, 2021, the Company had

million as of September 30, 2022, for which $

million was accrued within other accrued liabilities and other non-

current liabilities on the Company’s

Condensed Consolidated Balance Sheet as of September 30, 2022.

Comparatively, as of

December 31, 2021, the Company had $

million accrued for with respect to these matters.

1 unchanged sentence

unrelated environmental matters, the Company believes that it

has made adequate accruals for costs associated with other environmental problems

has made adequate accruals for costs associated with other environmental matters

for which it is aware, and has accrued $

as of both June 30, 2022 and December 31, 2021, respectively,

to provide for such anticipated future environmental assessments and

remediation costs.

The Company previously disclosed in its 2021 Form 10-K that during the first six months

of 2021, one of the Company’s

Brazilian subsidiaries received a notice that it had prevailed on an existing

legal claim in regard to certain non-income (indirect) taxes

as of both September 30, 2022 and December 31, 2021, respectively,

to provide for such anticipated future environmental assessments

and remediation costs.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Company previously disclosed in its 2021 Form 10-K that during the first nine

months of 2021, one of the Company’s

Brazilian subsidiaries received a notice that it had prevailed on an existing legal

claim in regard to certain non-income (indirect) taxes

that had been previously charged and paid.

15 unchanged sentences

As a result of these court

rulings in the first six months of 2021, the Company recognized non-income

rulings in the first nine months of 2021, the Company recognized non-income

tax credits of

20 unchanged sentences

expectations and

position that there were no amounts owed by the Company.

position that there were

amounts owed by the Company.

The Company previously disclosed in its 2021 Form 10-K that two of the Company’s

locations suffered property damages as a

result of flooding and fire, respectively.

The Company maintains property insurance for all of its facilities globally.

During the six

months ended June 30, 2022, there have been no significant changes to

the facts or circumstances of these previously disclosed

matters, aside from the on-going restoration of both sites.

result of flooding and electrical fire, respectively.

The Company maintains property and flood insurance for all of its facilities

During the nine months ended September 30, 2022, there have been no significant changes

to the facts or circumstances of

these previously disclosed matters, aside from the on-going restoration

of both sites.

The Company, its insurance

adjuster and insurance carrier are actively

managing the remediation and restoration activities associated with these

events and at this time the Company has concluded, based on

all available information and discussions with its insurance adjuster and

insurance carrier, that the losses were covered under

Company’s property insurance

coverage, net of an aggregate deductible of $

The Company has received payments from

insurance carrier are actively managing the remediation and restoration

activities associated with these events and at this time the

Company has concluded, based on all available information and discussions

with its insurance adjuster and insurance carrier,

losses were covered under the Company’s

property and flood insurance coverage, net of an aggregate deductible of $

Through September 30, 2022, the Company has received payments from

its insurers of $

million and has recorded an insurance receivable associated with these events (and

a gain on insurance recoveries

for losses incurred) of $

million as of June 30, 2022.

million associated with these events.

During the three months ended September 30, 2022, the Company recognized

a gain on insurance recoveries of $

Company has recorded an insurance receivable of $

million as of September 30, 2022.

See Note 10 of Notes to the Condensed

Consolidated Financial Statements.

The Company is party to other litigation which management currently

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements