A. SCHULMAN, INC. |
Delaware | 0-7459 | 34-0514850 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
3637 Ridgewood Road, Fairlawn, Ohio | 44333 | ||||
(Address of principal executive offices) | (Zip Code) |
(330) 666-3751 |
Exhibit Number | Description |
99.1 |
A. Schulman, Inc. | |||
By: | /s/ Andrean R. Horton | ||
Andrean R. Horton | |||
Executive Vice President & Chief Legal Officer |
• | worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company’s major product markets or countries where the Company has operations; |
• | risks and uncertainties posed by international operations, including foreign currency fluctuations; |
• | the business cyclicality of the chemical, polymers and refining industries; |
• | the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques; |
• | competitive factors, including intense price competition; |
• | fluctuations in the value of currencies in areas where the Company operates; |
• | volatility of prices and availability of the supply of energy and raw materials that are critical to the manufacture of the Company’s products, particularly plastic resins derived from oil and natural gas; |
• | changes in customer demand and requirements; |
• | the supply/demand balances for our and our joint ventures’ products, and the related effects of industry production capacities and operating rates; |
• | effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions and the integration thereof, joint ventures and restructuring initiatives; |
• | labor conditions; |
• | our ability to attract and retain key personnel; |
• | escalation in the cost of providing employee health care; |
• | uncertainties and unanticipated developments regarding contingencies, such as pending and future litigation and other claims, including legal and environmental proceedings, potential governmental regulatory actions, tax rulings and developments that would require increases in our costs and/or reserves for such contingencies; |
• | the performance of the global automotive market as well as other markets served; |
• | further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products; |
• | operating problems with our information systems as a result of system security failures such as viruses, cyber-attacks or other causes; |
• | operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental risks); |
• | our current debt position could adversely affect our financial health and prevent us from fulfilling our financial obligations; |
• | failure of counterparties to perform under the terms and conditions of contractual arrangements, including suppliers, customers, buyers and sellers of a business and other third parties with which the Company contracts; and |
• | the announcement and pendency of the LyondellBasell merger, including risks arising from the effect thereof on our business relationships (including employees, customers and suppliers), operating results, business generally, and the diversion of management’s attention from our ongoing business operations, risks of failing to consummate the merger in a timely manner, if at all, and risks related to obtaining the requisite consents to the merger could have an adverse effect on our business. |
Three months ended February 28, | Six months ended February 28, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Net sales | $ | 650,098 | $ | 568,678 | $ | 1,324,721 | $ | 1,168,678 | |||||||
Cost of sales | 558,403 | 479,492 | 1,127,941 | 978,477 | |||||||||||
Selling, general and administrative expenses | 78,356 | 65,967 | 153,483 | 138,342 | |||||||||||
Restructuring expense | 124 | 1,878 | 591 | 11,422 | |||||||||||
(Gain) loss on sale of assets | — | — | (3,077 | ) | — | ||||||||||
Operating income (loss) | 13,215 | 21,341 | 45,783 | 40,437 | |||||||||||
Interest expense | 13,435 | 13,107 | 26,876 | 26,271 | |||||||||||
Foreign currency transaction (gains) losses | 483 | 1,081 | 1,270 | 1,643 | |||||||||||
Other (income) expense, net | (849 | ) | 674 | (1,746 | ) | (459 | ) | ||||||||
Income (loss) before taxes | 146 | 6,479 | 19,383 | 12,982 | |||||||||||
Provision (benefit) for U.S. and foreign income taxes | (5,530 | ) | 1,143 | (1,373 | ) | 4,462 | |||||||||
Net income (loss) | 5,676 | 5,336 | 20,756 | 8,520 | |||||||||||
Noncontrolling interests | (289 | ) | (306 | ) | (654 | ) | (547 | ) | |||||||
Net income (loss) attributable to A. Schulman, Inc. | 5,387 | 5,030 | 20,102 | 7,973 | |||||||||||
Convertible special stock dividends | 1,875 | 1,875 | 3,750 | 3,750 | |||||||||||
Net income (loss) available to A. Schulman, Inc. common stockholders | $ | 3,512 | $ | 3,155 | $ | 16,352 | $ | 4,223 | |||||||
Weighted-average number of shares outstanding: | |||||||||||||||
Basic | 29,487 | 29,394 | 29,473 | 29,378 | |||||||||||
Diluted | 29,661 | 29,503 | 29,657 | 29,470 | |||||||||||
Net income (loss) per common share available to A. Schulman, Inc. common stockholders | |||||||||||||||
Basic | $ | 0.12 | $ | 0.11 | $ | 0.55 | $ | 0.14 | |||||||
Diluted | $ | 0.12 | $ | 0.11 | $ | 0.55 | $ | 0.14 | |||||||
Cash dividends per common share | $ | 0.205 | $ | 0.205 | $ | 0.410 | $ | 0.410 | |||||||
Cash dividends per share of convertible special stock | $ | 15.00 | $ | 15.00 | $ | 30.00 | $ | 30.00 |
February 28, 2018 | August 31, 2017 | ||||||
(In thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 51,475 | $ | 53,251 | |||
Restricted cash | 169 | 768 | |||||
Accounts receivable, less allowance for doubtful accounts of $10,419 at February 28, 2018 and $11,171 at August 31, 2017 | 439,454 | 408,439 | |||||
Inventories | 345,381 | 276,459 | |||||
Prepaid expenses and other current assets | 40,538 | 36,712 | |||||
Assets held for sale | 2,671 | 5,676 | |||||
Total current assets | 879,688 | 781,305 | |||||
Property, plant, and equipment, less accumulated depreciation of $474,073 at February 28, 2018 and $444,481 at August 31, 2017 | 292,977 | 298,703 | |||||
Deferred charges and other noncurrent assets | 78,612 | 77,847 | |||||
Goodwill | 265,253 | 263,735 | |||||
Intangible assets, net | 318,332 | 332,190 | |||||
Total assets | $ | 1,834,862 | $ | 1,753,780 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 351,430 | $ | 318,820 | |||
U.S. and foreign income taxes payable | 6,405 | 4,900 | |||||
Accrued payroll, taxes and related benefits | 46,922 | 46,951 | |||||
Other accrued liabilities | 65,961 | 61,761 | |||||
Short-term debt | 19,492 | 32,013 | |||||
Total current liabilities | 490,210 | 464,445 | |||||
Long-term debt | 930,632 | 885,178 | |||||
Pension plans | 140,353 | 135,691 | |||||
Deferred income taxes | 26,015 | 37,699 | |||||
Other long-term liabilities | 23,569 | 23,735 | |||||
Total liabilities | 1,610,779 | 1,546,748 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Convertible special stock, no par value | 120,289 | 120,289 | |||||
Common stock, $1 par value, authorized - 75,000 shares, issued - 48,585 shares at February 28, 2018 and 48,529 shares at August 31, 2017 | 48,585 | 48,529 | |||||
Additional paid-in capital | 280,331 | 279,207 | |||||
Accumulated other comprehensive income (loss) | (77,601 | ) | (88,523 | ) | |||
Retained earnings | 224,794 | 220,357 | |||||
Treasury stock, at cost, 19,060 shares at February 28, 2018 and 19,063 shares at August 31, 2017 | (382,807 | ) | (382,841 | ) | |||
Total A. Schulman, Inc.’s stockholders’ equity | 213,591 | 197,018 | |||||
Noncontrolling interests | 10,492 | 10,014 | |||||
Total equity | 224,083 | 207,032 | |||||
Total liabilities and equity | $ | 1,834,862 | $ | 1,753,780 |
Six months ended February 28, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Operating activities: | |||||||
Net income | $ | 5,676 | $ | 5,336 | |||
Adjustments to reconcile net income to net cash provided from (used in) operating activities: | |||||||
Depreciation | 21,218 | 22,215 | |||||
Amortization | 17,283 | 17,644 | |||||
Deferred tax provision (benefit) | (12,794 | ) | (4,493 | ) | |||
Pension, postretirement benefits and other compensation | 3,694 | 3,361 | |||||
(Gain) loss on sale of assets | (3,077 | ) | — | ||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (24,780 | ) | (15,866 | ) | |||
Inventories | (62,198 | ) | (24,670 | ) | |||
Accounts payable | 25,665 | 40,363 | |||||
Income taxes | 2,154 | (4,639 | ) | ||||
Accrued payroll and other accrued liabilities | 3,049 | (4,311 | ) | ||||
Other assets and long-term liabilities | (3,587 | ) | 2,025 | ||||
Net cash provided from (used in) operating activities | (12,617 | ) | 40,149 | ||||
Investing activities | |||||||
Expenditures for property, plant and equipment | (13,083 | ) | (24,505 | ) | |||
Proceeds from the sale of assets | 6,420 | 478 | |||||
Distributions from equity investees | 125 | 125 | |||||
Net cash provided from (used in) investing activities | (6,538 | ) | (23,902 | ) | |||
Financing activities: | |||||||
Cash dividends paid to special stockholders | (3,750 | ) | (3,750 | ) | |||
Cash dividends paid to common stockholders | (12,242 | ) | (12,057 | ) | |||
Increase (decrease) in short-term debt | (15,144 | ) | 5,153 | ||||
Borrowings on long-term debt | 399,923 | 238,543 | |||||
Repayments on long-term debt including current portion | (353,597 | ) | (237,034 | ) | |||
Noncontrolling interests' distributions | (27 | ) | — | ||||
Issuances of stock, common and treasury | 58 | 93 | |||||
Redemptions of common stock | (1,225 | ) | (620 | ) | |||
Net cash provided from (used in) financing activities | 13,996 | (9,672 | ) | ||||
Effect of exchange rate changes on cash | 2,784 | (494 | ) | ||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (2,375 | ) | 6,081 | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 54,019 | 43,403 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 51,644 | $ | 49,484 | |||
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