Exhibit 99.1
FOR IMMEDIATE RELEASE
A. SCHULMAN REPORTS STRONG FISCAL 2010 FOURTH-QUARTER RESULTS
| | • | | Net income of $7.9 million for the quarter represents a $15.8 million improvement from the loss of $7.9 million in last year’s fourth quarter |
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| | • | | Net income for the quarter was $11.7 million or $0.37 per share excluding certain one-time charges and acquisition-related items, compared with $5.4 million or $0.21 per share for the prior-year period |
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| | • | | Net income for the full year was $48.2 million or $1.72 per share excluding certain one-time charges and acquisition-related items, compared with $16.4 million or $0.64 per share in fiscal 2009 |
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| | • | | Earnings for 2011 expected to reach record levels between $57 million to $62 million |
AKRON, Ohio — October 25, 2010 — A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal 2010 fourth quarter ended August 31, 2010. The Company reported net income for the fourth quarter of $7.9 million, or $0.25 per diluted share, a $15.8 million improvement from the net loss of $7.9 million for the comparable period last year. The translation effect of foreign currencies reduced net income by $1.2 million.
The fiscal 2010 fourth quarter included certain after-tax net charges of approximately $3.8 million, which were primarily related to purchase accounting adjustments, asset write-downs, costs related to acquisitions and restructuring-related expenses. Last year’s fourth quarter included $13.3 million of after-tax, non-operating charges related to restructuring expenses and asset write-downs. Excluding these charges, net income for the fiscal 2010 fourth quarter was $11.7 million, or $0.37 per diluted share, compared with $5.4 million, or $0.21 per diluted share, for the prior-year period. The Company’s fiscal 2010 fourth-quarter results contained a full quarter of the acquired ICO, Inc.’s operations, which contributed approximately $2.4 million to adjusted net income in the quarter, including $2.4 million of increased amortization and depreciation expense after tax.
“We are pleased with our strong earnings improvement for both the fourth quarter and the full year of fiscal 2010,” said Joseph M. Gingo, Chairman, President and Chief Executive Officer. “Our performance shows that our strategy is working, and it reflects the strong culture we are developing at A. Schulman — a culture that is committed to shareholder value creation through long-term profitable growth. We saw the restoration of profitability in our legacy U.S. operations in fiscal 2010 as well as the strengthening of our position in key global markets.”
Gingo continued, “During the fiscal year, we successfully completed two acquisitions — ICO, which expanded our global presence in the masterbatch and specialty powders markets, and McCann Color, which increased our capabilities in the North American masterbatch market. We are also excited about our agreement to acquire Mash Compostos Plasticos, which we announced on October 18, 2010, pending customary closing procedures. Based in Brazil, Mash produces masterbatch additives and engineered plastics compounds. Along with ICO, this marks our second acquisition in the past six months in Brazil that will help us expand our presence in this growing market.”
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Net sales for the fiscal 2010 fourth quarter were $476.2 million, an increase of 49% compared with $320.6 million for the comparable period last year. Excluding ICO, sales increased 17% compared with net sales in the same period a year ago. Volume reached 525 million pounds, up 60% from last year’s reported 329 million pounds. ICO accounted for 183 million pounds. Excluding ICO, volume increased 4% for the quarter while price and mix accounted for a 20% increase in sales. Currency translation had the effect of reducing sales by 7%.
Reported gross profit for the quarter, excluding ICO, was $46.2 million, a decrease of $6.0 million from the fourth quarter of last year. ICO accounted for $13.3 million of the current period gross profit. Currency translation had the effect of reducing gross profit by $4.2 million. Gross margin, including ICO, was 12.5% compared with 16.3% in the fourth quarter of last year. Excluding certain one-time charges and acquisition-related items, gross profit was $60.9 million compared with $52.3 million last year. ICO contributed $14.7 million to gross profit, excluding these items. In the quarter, the Company’s business in the Americas continued to see improvements in gross profit per pound and gross margin rates while the European business was impacted by higher raw material prices and manufacturing inefficiencies driven by the scarcity of certain raw materials as well as foreign currency translation.
Selling, general and administrative (SG&A) expense for the fiscal 2010 fourth quarter was $45.3 million, an increase of $3.5 million compared with the fiscal 2009 fourth quarter. ICO, excluding certain items, accounted for $11.3 million of SG&A for the quarter while the translation effect of foreign exchange reduced SG&A by $2.6 million. Other items reducing SG&A were bonus accrual adjustments, bad debt accrual reversals and the impact of equity incentive programs.
For fiscal 2010, the Company reported net income of $43.9 million, or $1.57 per diluted share, compared with a net loss of $2.8 million, or $0.11 per share last year. Excluding certain one-time charges and acquisition-related items, net income was $48.2 million, or $1.72 per diluted share, for fiscal 2010, compared with $16.4 million, or $0.64 per diluted share, a year ago. EBITDA, excluding certain items, increased 71% to $92.8 million reflecting the profitability increases experienced during the fiscal year. Sales volume increased 21% for the full year to 1.6 billion pounds. Excluding ICO, which reported 239 million pounds sold, sales volume was up 3%, reflecting the slowly improving economic conditions the Company has recently experienced. The net income improvement was driven by the significant increase in gross profit for the full year reflecting cost reductions, margin improvement initiatives and market improvement.
Results in the following segment discussion exclude the one-time charges and acquisition-related items discussed above.
Europe, Middle East and Africa(“EMEA”) — In the fiscal 2010 fourth quarter, sales were $318.4 million, an increase of $82.4 million or 35% compared with the prior-year period. ICO accounted for $42.7 million of the sales increase while the translation effect of foreign exchange had the effect of reducing sales by $24.8 million. Volume for the quarter, excluding ICO, increased by 8%. Changes in prices and product mix increased sales by almost 20% compared with the same period last year.
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Gross profit was reported at $37.6 million for the quarter, up slightly from last year, excluding the negative effect of foreign exchange. ICO contributed $4.4 million to the gross profit. EMEA’s gross profit percentage was down approximately 5.6 percentage points excluding ICO. Despite the strong increase in sales due to price and mix as discussed above, contribution margin per pound in Euros dropped 9% as the Company was not able to fully pass on cost increases during the quarter. Additionally, shortages of a few key raw materials drove an increase in manufacturing inefficiencies. The Company notes that raw material prices have begun to moderate while the Company has been increasing prices.
Operating income for the fiscal 2010 fourth quarter was $12.6 million compared with $14.7 million last year. ICO accounted for $0.5 million of the quarterly result. Foreign exchange had the effect of reducing operating profit by $1.7 million.
“Our EMEA operations had a strong year overall. Margins were good, price and product mix improved, and our strategic realignment initiatives favorably impacted capacity utilization,” Gingo said. “Over this raw material pricing cycle, we received significant benefit from lower raw material prices in our first quarter. However, this was offset in the fourth quarter, as margins were impacted by rising prices for raw materials which were not completely offset by our aggressive pricing actions for our products. We have worked hard to improve margins under current market conditions and have begun to see improved results as we move into fiscal 2011.”
The Americas— Combined operating income for the Americas, including discontinued operations, was $7.0 million during the quarter, compared with last year’s fourth-quarter loss of $1.4 million. ICO accounted for $4.0 million of that operating income. Gross profit for the fourth quarter more than doubled to $19.1 million from $8.3 million for the prior-year period. ICO accounted for $8.7 million of the increase in gross profit, with the remainder coming from margin improvement initiatives and mix. Volume was relatively flat. For the full year, the Americas, including discontinued operations, reported a total operating profit of $12.0 million, compared with a loss of $13.6 million a year ago, primarily driven by the stronger gross profit and, to a lesser extent, the ICO effect.
“The turnaround in our U.S. business, the continuing strength of our Mexican operations and the growth of our South American footprint combined to make fiscal 2010 a profitable one for the Americas,” Gingo said. “We will continue to manage this portion of our business aggressively by pursuing the many opportunities for our high-value products in this region, especially in the masterbatch and specialty powders markets.”
Asia Pacific— Sales were $33.0 million, an increase of approximately 130% for the quarter compared with the same period last year. Excluding ICO, sales were $17.8 million, up 25%. Volume excluding ICO increased almost 15%. Gross profits were $4.2 million compared with $2.5 million in the comparable quarter last year. ICO accounted for $1.6 million of the increase. Operating income was $0.5 million compared with income of $1.4 million for the prior-year quarter. ICO accounted for $0.1 million of the decline with the remainder coming from a realignment of cost allocations to more clearly reflect business practices going forward.
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ICO— For the fiscal 2010 fourth quarter, the combined ICO businesses contributed approximately 183 million to pounds, $102 million to sales, $13.3 million to gross profit ($14.7 million excluding certain items) and $1.8 million to operating profit ($3.4 million excluding certain items). For the full year, ICO contributed 239.4 million to pounds, $134.2 million to sales, $15.6 million to gross profit ($19.5 million excluding certain items) and $0.8 million to operating income ($4.8 million excluding certain items). Non-operating purchase accounting adjustments increased the value of inventory, which led to $1.4 million of increased costs in the quarter and $3.9 million of increased costs for the full year, and reduced gross profit. This increase is excluded when the Company discusses results excluding certain adjustments. In addition, the Company has increased the value of ICO’s fixed assets and intangible assets. As a result, incremental non-cash depreciation and amortization expense was approximately $2.7 million during the quarter and $3.4 million for the May through August period. During the fourth quarter, the Company continued to refine its purchase accounting adjustments. As a result, the Company increased its estimated incremental 2011 depreciation and amortization expense from $7.0 million pre-tax estimated at the end of the third quarter to $10 million and from $5.6 million after tax to $8.6 million.
Cash Flow From Operations and Working Capital
The Company’s liquidity position improved during the quarter. Working capital, excluding ICO, dropped to 59 days from 60 days at the end of the third quarter. Including ICO, the Company reported 63 days of working capital. Net debt decreased to $31.9 million from $54.1 million at the end of the third quarter. In recognition of the Company’s strong cash position, the quarterly dividend was increased 3.3% to $0.155 per share. Cash flow from operations was $4.4 million for fiscal 2010, compared with $181.5 million for the previous year.
Fiscal 2011 Guidance and Business Outlook
“Although the long-term prospects for the global economy remain uncertain, we are optimistic that the gradual recovery of our overall markets will continue,” Gingo said. “With a full year of impact from our acquisitions, and the addition of Mash, we expect to see continued strong global growth as we build on the momentum we established in fiscal 2010. Although margin comparisons are likely to be unfavorable in the first quarter of fiscal 2011, due largely to the very favorable raw material pricing we saw in the fiscal 2010 first quarter and the moderating margin squeeze noted in the EMEA discussion above, we expect to make up the shortfall in the subsequent quarters of the year.”
Based on these expectations, the Company is establishing guidance for fiscal 2011 net income to be in the range of $57 million to $62 million. This net income assumes a euro exchange rate of $1.35, and incremental full-year amortization and depreciation, as a result of the ICO acquisition, of $10 million pre-tax or $8.6 million after tax and an incremental $1.0 million after-tax increase in interest expense due to higher rates expected in the Company’s new revolving credit agreement to be finalized early in the second quarter of fiscal 2011. The after-tax amortization and depreciation number, which is non-cash, is $3.0 million higher than the amount reported in the fiscal 2010 third quarter.
Conference Call on the Web
A live Internet broadcast of A. Schulman’s conference call regarding fiscal 2010 fourth-quarter earnings can be accessed at 10 a.m. Eastern time on October 25, 2010, on the Company’s website,www.aschulman.com. An archived replay of the call will also be available on the website.
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Use of Non-GAAP Financial Measures
This earnings release includes the use of both GAAP (generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measures are net income excluding certain items, net income per diluted share excluding certain items and EBITDA excluding certain items. The most directly comparable GAAP financial measures are net income and net income per diluted share. Tables included in this news release reconcile each non-GAAP financial measure with the most directly comparable GAAP financial measure.
A. Schulman uses these financial measures to monitor and evaluate the ongoing performance of the Company and to allocate resources, and believes that the additional non-GAAP measures are useful to investors for financial analysis. In addition, the Company believes that providing this information is in the best interest of our investors so that they can accurately consider the non-GAAP financial information. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.
While management believes that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these measures. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company’s competitors and may not be directly comparable to similarly titled measures of the Company’s competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.
The Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP.
About A. Schulman, Inc.
Headquartered in Akron, Ohio, A. Schulman is a leading international supplier of high-performance plastic compounds and resins. These materials are used in a variety of consumer, industrial, automotive and packaging applications. The Company employs about 2,900 people and has 36 manufacturing facilities in North America, South America, Europe and Asia. A. Schulman reported net sales of $1.6 billion for the fiscal year ended August 31, 2010. Additional information about A. Schulman can be found atwww.aschulman.com.
Cautionary Note on Forward-Looking Statements
A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and relate to future events and expectations. Forward-looking statements contain such words as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which management is unable to predict or control, that may cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company’s future financial performance, include, but are not limited to, the following:
| | • | | worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company’s major product markets; |
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| | • | | the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques; |
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| | • | | competitive factors, including intense price competition; |
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| | • | | fluctuations in the value of currencies in major areas where the Company operates; |
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| | • | | 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; |
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| | • | | changes in customer demand and requirements; |
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| | • | | effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions and restructuring initiatives; |
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| | • | | escalation in the cost of providing employee health care; |
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| | • | | uncertainties regarding the resolution of pending and future litigation and other claims; |
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| | • | | the performance of the North American auto market; and |
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| | • | | further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products. |
The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Company’s performance are set forth in the Company’s Annual Report on Form 10-K and the most recent Form 10-Q. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company’s business, financial condition and results of operations. This document contains time-sensitive information that reflects management’s best analysis only as of the date of this document. The Company does not undertake an obligation to publicly update or revise any forward-looking statements to reflect new events, information or circumstances, or otherwise. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in the Company’s periodic filings with the Securities and Exchange Commission.
SHLM_CN, FN
Contact information:
Jennifer K. Beeman
Director of Corporate Communications & Investor Relations
A. Schulman, Inc.
3550 W. Market St.
Akron, Ohio 44333
Tel: 330-668-7346
email: Jennifer_Beeman@us.aschulman.com
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A. SCHULMAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | |
| | | Three months ended August 31, | | | Year ended August 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | Unaudited | |
| | | (In thousands, except per share data) | |
Net sales | | $ | 476,224 | | | $ | 320,639 | | | $ | 1,590,443 | | | $ | 1,279,248 | |
| Cost of sales | | | 416,736 | | | | 268,409 | | | | 1,357,575 | | | | 1,109,211 | |
| Selling, general and administrative expenses | | | 46,773 | | | | 43,038 | | | | 179,821 | | | | 148,143 | |
| Interest expense | | | 1,661 | | | | 1,198 | | | | 5,010 | | | | 4,785 | |
| Interest income | | | (693 | ) | | | (388 | ) | | | (1,345 | ) | | | (2,348 | ) |
| Foreign currency transaction (gains) losses | | | 485 | | | | 573 | | | | 874 | | | | (5,645 | ) |
| Other (income) expense | | | (271 | ) | | | 405 | | | | (2,425 | ) | | | (1,826 | ) |
| Restructuring expense | | | 2,545 | | | | 2,435 | | | | 5,054 | | | | 8,665 | |
| Asset impairment | | | 37 | | | | 146 | | | | 5,668 | | | | 2,608 | |
| Curtailment (gains) losses | | | 270 | | | | (196 | ) | | | 270 | | | | (2,805 | ) |
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| | | | 467,543 | | | | 315,620 | | | | 1,550,502 | | | | 1,260,788 | |
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Income from continuing operations before taxes | | | 8,681 | | | | 5,019 | | | | 39,941 | | | | 18,460 | |
Provision for (benefit from) U.S. and foreign income taxes | | | 565 | | | | 1,607 | | | | (4,419 | ) | | | 6,931 | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 8,116 | | | | 3,412 | | | | 44,360 | | | | 11,529 | |
| Income (loss) from discontinued operations, net of tax of $0 | | | (225 | ) | | | (11,086 | ) | | | (239 | ) | | | (13,956 | ) |
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Net income (loss) | | | 7,891 | | | | (7,674 | ) | | | 44,121 | | | | (2,427 | ) |
| Noncontrolling interests | | | (10 | ) | | | (208 | ) | | | (221 | ) | | | (349 | ) |
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Net income (loss) attributable to A. Schulman, Inc. | | | 7,881 | | | | (7,882 | ) | | | 43,900 | | | | (2,776 | ) |
| Preferred stock dividends | | | — | | | | (13 | ) | | | — | | | | (53 | ) |
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Net income (loss) attributable to A. Schulman, Inc. common stockholders | | $ | 7,881 | | | $ | (7,895 | ) | | $ | 43,900 | | | $ | (2,829 | ) |
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Weighted-average number of shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 31,329 | | | | 25,812 | | | | 27,746 | | | | 25,790 | |
| Diluted | | | 31,490 | | | | 26,202 | | | | 27,976 | | | | 26,070 | |
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Earnings (losses) per share of common stock attributable to A. Schulman, Inc. — Basic: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 0.26 | | | $ | 0.12 | | | $ | 1.59 | | | $ | 0.43 | |
| Income (loss) from discontinued operations | | | (0.01 | ) | | | (0.43 | ) | | | (0.01 | ) | | | (0.54 | ) |
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| Net income (loss) attributable to common stockholders | | $ | 0.25 | | | $ | (0.31 | ) | | $ | 1.58 | | | $ | (0.11 | ) |
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Earnings (losses) per share of common stock attributable to A. Schulman, Inc. — Diluted: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 0.26 | | | $ | 0.12 | | | $ | 1.58 | | | $ | 0.43 | |
| Income (loss) from discontinued operations | | | (0.01 | ) | | | (0.42 | ) | | | (0.01 | ) | | | (0.54 | ) |
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| Net income (loss) attributable to common stockholders | | $ | 0.25 | | | $ | (0.30 | ) | | $ | 1.57 | | | $ | (0.11 | ) |
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A. SCHULMAN, INC.
CONSOLIDATED BALANCE SHEETS
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| | | August 31, 2010 | | | August 31, 2009 | |
| | | Unaudited | |
| | | (In thousands except share data) | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 122,754 | | | $ | 228,674 | |
| Accounts receivable, net | | | 282,953 | | | | 206,450 | |
| Inventories, average cost or market, whichever is lower | | | 209,228 | | | | 133,536 | |
| Prepaid expenses and other current assets | | | 29,128 | | | | 20,779 | |
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Total current assets | | | 644,063 | | | | 589,439 | |
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Other assets: | | | | | | | | |
| Deferred charges and other assets | | | 31,883 | | | | 26,816 | |
| Goodwill | | | 84,064 | | | | 11,577 | |
| Intangible assets | | | 72,352 | | | | 217 | |
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| | | | 188,299 | | | | 38,610 | |
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Property, plant and equipment, at cost: | | | | | | | | |
| Land and improvements | | | 30,891 | | | | 16,236 | |
| Buildings and leasehold improvements | | | 158,076 | | | | 147,121 | |
| Machinery and equipment | | | 357,270 | | | | 345,653 | |
| Furniture and fixtures | | | 37,078 | | | | 39,581 | |
| Construction in progress | | | 4,996 | | | | 4,546 | |
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| | | | 588,311 | | | | 553,137 | |
| Accumulated depreciation and investment grants of $744 in 2010 and $988 in 2009 | | | 349,348 | | | | 383,697 | |
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Net property, plant and equipment | | | 238,963 | | | | 169,440 | |
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Total assets | | $ | 1,071,325 | | | $ | 797,489 | |
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LIABILITIES AND EQUITY | | | | | | | | |
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Current liabilities: | | | | | | | | |
| Short-term debt | | $ | 60,876 | | | $ | 2,851 | |
| Accounts payable | | | 195,977 | | | | 147,476 | |
| U.S. and foreign income taxes payable | | | 6,615 | | | | 8,858 | |
| Accrued payrolls, taxes and related benefits | | | 46,492 | | | | 36,207 | |
| Other accrued liabilities | | | 41,985 | | | | 32,230 | |
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Total current liabilities | | | 351,945 | | | | 227,622 | |
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Long-term debt | | | 93,834 | | | | 102,254 | |
Pension plans | | | 86,872 | | | | 69,888 | |
Other long-term liabilities | | | 25,297 | | | | 22,800 | |
Deferred income taxes | | | 20,227 | | | | 3,954 | |
Commitments and contingencies | | | — | | | | — | |
Stockholders’ equity: | | | | | | | | |
| Preferred stock, 5% cumulative, $100 par value, authorized, issued and outstanding — no shares in 2010 and 15 shares in 2009 | | | — | | | | 2 | |
| Common stock, $1 par value, authorized — 75,000,000 shares, issued — 47,690,024 shares in 2010 and 42,295,492 in August 31, 2009 | | | 47,690 | | | | 42,295 | |
| Other capital | | | 249,734 | | | | 115,358 | |
| Accumulated other comprehensive income (loss) | | | (6,278 | ) | | | 38,714 | |
| Retained earnings | | | 519,659 | | | | 492,513 | |
| Treasury stock, at cost, 16,205,230 shares in 2010 and 16,207,011 shares in 2009 | | | (322,777 | ) | | | (322,812 | ) |
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Total A. Schulman, Inc. stockholders’ equity | | | 488,028 | | | | 366,070 | |
| Noncontrolling interests | | | 5,122 | | | | 4,901 | |
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Total equity | | | 493,150 | | | | 370,971 | |
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Total liabilities and equity | | $ | 1,071,325 | | | $ | 797,489 | |
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A. SCHULMAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | |
| | | Year ended August 31, | |
| | | 2010 | | | 2009 | |
| | | Unaudited | |
| | | (In thousands) | |
Provided from (used in) operating activities: | | | | | | | | |
| Net income (loss) | | $ | 44,121 | | | $ | (2,427 | ) |
Adjustments to reconcile net income to net cash provided from (used in) operating activities: | | | | | | | | |
| Depreciation and amortization | | | 27,449 | | | | 24,958 | |
| Deferred tax provision | | | (25,742 | ) | | | (2,974 | ) |
| Pension, postretirement benefits and other deferred compensation | | | 10,739 | | | | 4,728 | |
| Net (gains) losses on asset sales | | | 96 | | | | 740 | |
| Curtailment (gains) losses | | | 270 | | | | (2,805 | ) |
| Asset impairment | | | 5,668 | | | | 12,925 | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (27,582 | ) | | | 91,218 | |
| Inventories | | | (43,067 | ) | | | 78,756 | |
| Accounts payable | | | 21,621 | | | | (17,856 | ) |
| Restructuring accrual | | | (4,620 | ) | | | 2,001 | |
| Income taxes | | | (4,639 | ) | | | 3,720 | |
| Accrued payrolls and other accrued liabilities | | | 2,365 | | | | (1,582 | ) |
| Changes in other assets and other long-term liabilities | | | (2,236 | ) | | | (9,905 | ) |
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| Net cash provided from (used in) operating activities | | | 4,443 | | | | 181,497 | |
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Provided from (used in) investing activities: | | | | | | | | |
| Expenditures for property, plant and equipment | | | (18,977 | ) | | | (24,787 | ) |
| Proceeds from the sale of assets | | | 6,570 | | | | 950 | |
| Business acquisitions, net of cash acquired | | | (99,223 | ) | | | — | |
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| Net cash used in investing activities | | | (111,630 | ) | | | (23,837 | ) |
| | | | | | | |
Provided from (used in) financing activities: | | | | | | | | |
| Cash dividends paid | | | (16,754 | ) | | | (15,812 | ) |
| Increase (decrease) in notes payable | | | 3,975 | | | | (7,343 | ) |
| Borrowings on revolving credit facilities | | | 86,000 | | | | 19,000 | |
| Repayments on revolving credit facilities | | | (32,500 | ) | | | (19,000 | ) |
| Repayments on long-term debt | | | (25,951 | ) | | | — | |
| Cash distributions to noncontrolling interest shareholders | | | — | | | | (981 | ) |
| Preferred stock redemption | | | (2 | ) | | | (1,055 | ) |
| Common stock issued, net | | | 3,054 | | | | 370 | |
| Releases (purchases) of treasury stock | | | 35 | | | | (1,646 | ) |
| | | | | | | |
| Net cash provided from (used in) financing activities | | | 17,857 | | | | (26,467 | ) |
| | | | | | | |
| Effect of exchange rate changes on cash | | | (16,590 | ) | | | (247 | ) |
| | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | (105,920 | ) | | | 130,946 | |
| | | | | | | |
Cash and cash equivalents at beginning of period | | | 228,674 | | | | 97,728 | |
| | | | | | | |
Cash and cash equivalents at end of period | | $ | 122,754 | | | $ | 228,674 | |
| | | | | | | |
9
A. SCHULMAN, INC.
SUPPLEMENTAL SEGMENT INFORMATION
| | | | | | | | | | | | | | | | | |
| | | Three Months ended August 31, | | | Year ended August 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | Unaudited | | | Unaudited | |
| | | (In thousands, except for %) | | | (In thousands, except for %) | |
Net sales to unaffiliated customers | | | | | | | | | | | | | | | | |
| EMEA | | $ | 318,416 | | | $ | 236,065 | | | $ | 1,142,523 | | | $ | 935,895 | |
| NAMB | | | 42,408 | | | | 30,263 | | | | 132,276 | | | | 108,474 | |
| NAEP | | | 32,104 | | | | 25,917 | | | | 127,061 | | | | 121,701 | |
| NARM | | | 29,908 | | | | 14,122 | | | | 77,550 | | | | 67,920 | |
| APAC | | | 32,997 | | | | 14,272 | | | | 84,909 | | | | 45,258 | |
| Bayshore | | | 20,391 | | | | — | | | | 26,124 | | | | — | |
| | | | | | | | | | | | | |
Total net sales to unaffiliated customers | | $ | 476,224 | | | $ | 320,639 | | | $ | 1,590,443 | | | $ | 1,279,248 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Segment gross profit | | | | | | | | | | | | | | | | |
| EMEA | | $ | 37,602 | | | $ | 41,545 | | | $ | 177,010 | | | $ | 141,137 | |
| NAMB | | | 5,814 | | | | 3,592 | | | | 17,204 | | | | 8,279 | |
| NAEP | | | 4,357 | | | | 2,796 | | | | 15,272 | | | | 8,849 | |
| NARM | | | 5,487 | | | | 1,890 | | | | 11,267 | | | | 6,670 | |
| APAC | | | 4,207 | | | | 2,482 | | | | 11,656 | | | | 6,372 | |
| Bayshore | | | 3,427 | | | | — | | | | 4,470 | | | | — | |
| | | | | | | | | | | | | |
Total segment gross profit before certain items | | | 60,894 | | | | 52,305 | | | | 236,879 | | | | 171,307 | |
| Asset write-downs | | | — | | | | (75 | ) | | | (69 | ) | | | (1,270 | ) |
| Inventory step-up | | | (1,406 | ) | | | — | | | | (3,942 | ) | | | — | |
| | | | | | | | | | | | | |
Total gross profit | | $ | 59,488 | | | $ | 52,230 | | | $ | 232,868 | | | $ | 170,037 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Segment operating income (loss) before certain items | | | | | | | | | | | | | | | | |
| EMEA | | $ | 12,638 | | | $ | 14,684 | | | $ | 69,393 | | | $ | 50,169 | |
| NAMB | | | 3,770 | | | | 1,926 | | | | 11,232 | | | | 2,809 | |
| NAEP | | | 2,225 | | | | (713 | ) | | | 5,202 | | | | (4,641 | ) |
| NARM | | | 2,639 | | | | 1,116 | | | | 5,260 | | | | 3,082 | |
| APAC | | | 538 | | | | 1,389 | | | | 2,981 | | | | 2,807 | |
| Bayshore | | | 1,476 | | | | — | | | | 1,990 | | | | — | |
| All other North America | | | (3,124 | ) | | | (3,013 | ) | | | (11,648 | ) | | | (11,265 | ) |
| | | | | | | | | | | | | |
Total segment operating income before certain items | | | 20,162 | | | | 15,389 | | | | 84,410 | | | | 42,961 | |
| | | | | | | | | | | | | | | | | |
| Corporate and other | | | (4,543 | ) | | | (4,859 | ) | | | (20,538 | ) | | | (18,438 | ) |
| Interest expense, net | | | (968 | ) | | | (810 | ) | | | (3,665 | ) | | | (2,437 | ) |
| Foreign currency transaction gains (losses) | | | (485 | ) | | | (573 | ) | | | (874 | ) | | | 5,645 | |
| Other income (expense) | | | 271 | | | | (405 | ) | | | 2,469 | | | | 1,826 | |
| Asset write-downs | | | (37 | ) | | | (221 | ) | | | (5,737 | ) | | | (3,878 | ) |
| Costs related to acquisitions | | | (1,498 | ) | | | — | | | | (6,814 | ) | | | — | |
| Restructuring related | | | (2,815 | ) | | | (3,502 | ) | | | (5,368 | ) | | | (7,219 | ) |
| Inventory step-up | | | (1,406 | ) | | | — | | | | (3,942 | ) | | | — | |
| | | | | | | | | | | | | |
Income from continuing operations before taxes | | $ | 8,681 | | | $ | 5,019 | | | $ | 39,941 | | | $ | 18,460 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Capacity utilization | | | | | | | | | | | | | | | | |
| EMEA | | | 74 | % | | | 82 | % | | | 87 | % | | | 75 | % |
| NAMB | | | 79 | % | | | 79 | % | | | 74 | % | | | 67 | % |
| NAEP | | | 62 | % | | | 74 | % | | | 65 | % | | | 63 | % |
| NARM | | | 47 | % | | | n/a | | | | 46 | % | | | n/a | |
| APAC | | | 87 | % | | | 81 | % | | | 85 | % | | | 61 | % |
| Bayshore | | | 88 | % | | | n/a | | | | 88 | % | | | n/a | |
| Worldwide | | | 73 | % | | | 81 | % | | | 81 | % | | | 72 | % |
10
A. SCHULMAN, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
Unaudited
(In thousands except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months ended | | As | | | Asset | | | Costs related to | | | Restructuring | | | Inventory | | | Tax Benefits | | | Before Certain | |
| August 31, 2010 | | Reported | | | Write-downs | | | Acquisitions | | | Related | | | Step-up | | | (Charges) | | | Items | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | | $ | 476,224 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 476,224 | |
| Cost of sales | | | 416,736 | | | | — | | | | — | | | | — | | | | (1,406 | ) | | | — | | | | 415,330 | |
| Selling, general and administrative expenses | | | 46,773 | | | | — | | | | (1,498 | ) | | | — | | | | — | | | | — | | | | 45,275 | |
| Interest expense, net | | | 968 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 968 | |
| Foreign currency transaction (gains) losses | | | 485 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 485 | |
| Other (income) expense | | | (271 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (271 | ) |
| Restructuring expense | | | 2,545 | | | | — | | | | — | | | | (2,545 | ) | | | — | | | | — | | | | — | |
| Asset impairment | | | 37 | | | | (37 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| Curtailment (gains) losses | | | 270 | | | | — | | | | — | | | | (270 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | 467,543 | | | | (37 | ) | | | (1,498 | ) | | | (2,815 | ) | | | (1,406 | ) | | | — | | | | 461,787 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations before taxes | | | 8,681 | | | | 37 | | | | 1,498 | | | | 2,815 | | | | 1,406 | | | | — | | | | 14,437 | |
Provision for (benefit from) U.S. and foreign income taxes | | | 565 | | | | 11 | | | | 6 | | | | 778 | | | | 415 | | | | 967 | | | | 2,742 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | | 8,116 | | | | 26 | | | | 1,492 | | | | 2,037 | | | | 991 | | | | (967 | ) | | | 11,695 | |
| Income (loss) from discontinued operations, net of tax of $0 | | | (225 | ) | | | 237 | | | | — | | | | — | | | | — | | | | — | | | | 12 | |
| | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 7,891 | | | | 263 | | | | 1,492 | | | | 2,037 | | | | 991 | | | | (967 | ) | | | 11,707 | |
| Noncontrolling interests | | | (10 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to A. Schulman, Inc. | | | 7,881 | | | | 263 | | | | 1,492 | | | | 2,037 | | | | 991 | | | | (967 | ) | | | 11,697 | |
| Preferred stock dividends | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to A. Schulman, Inc. common stockholders | | $ | 7,881 | | | $ | 263 | | | $ | 1,492 | | | $ | 2,037 | | | $ | 991 | | | $ | (967 | ) | | $ | 11,697 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted EPS impact | | $ | 0.25 | | | | | | | | | | | | | | | | | | | | | | | $ | 0.37 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted-average number of shares outstanding — diluted | | | 31,490 | | | | | | | | | | | | | | | | | | | | | | | | 31,490 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months ended | | As | | | Asset | | | Costs related to | | | Restructuring | | | Inventory | | | Tax Benefits | | | Before Certain | |
| August 31, 2009 | | Reported | | | Write-downs | | | Acquisitions | | | Related | | | Step-up | | | (Charges) | | | Items | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | | $ | 320,639 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 320,639 | |
| Cost of sales | | | 268,409 | | | | (75 | ) | | | — | | | | — | | | | — | | | | — | | | | 268,334 | |
| Selling, general and administrative expenses | | | 43,038 | | | | — | | | | — | | | | (1,263 | ) | | | — | | | | — | | | | 41,775 | |
| Interest expense, net | | | 810 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 810 | |
| Foreign currency transaction (gains) losses | | | 573 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 573 | |
| Other (income) expense | | | 405 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 405 | |
| Restructuring expense | | | 2,435 | | | | — | | | | — | | | | (2,435 | ) | | | — | | | | — | | | | — | |
| Asset impairment | | | 146 | | | | (146 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| Curtailment (gains) losses | | | (196 | ) | | | — | | | | — | | | | 196 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | 315,620 | | | | (221 | ) | | | — | | | | (3,502 | ) | | | — | | | | — | | | | 311,897 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations before taxes | | | 5,019 | | | | 221 | | | | — | | | | 3,502 | | | | — | | | | — | | | | 8,742 | |
Provision for U.S. and foreign income taxes | | | 1,607 | | | | 70 | | | | — | | | | 708 | | | | — | | | | — | | | | 2,385 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | | 3,412 | | | | 151 | | | | — | | | | 2,794 | | | | — | | | | — | | | | 6,357 | |
| Income (loss) from discontinued operations, net of tax of $0 | | | (11,086 | ) | | | 10,317 | | | | — | | | | 20 | | | | — | | | | — | | | | (749 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | (7,674 | ) | | | 10,468 | | | | — | | | | 2,814 | | | | — | | | | — | | | | 5,608 | |
| Noncontrolling interests | | | (208 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (208 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to A. Schulman, Inc. | | | (7,882 | ) | | | 10,468 | | | | — | | | | 2,814 | | | | — | | | | — | | | | 5,400 | |
| Preferred stock dividends | | | (13 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (13 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to A. Schulman, Inc. common stockholders | | $ | (7,895 | ) | | $ | 10,468 | | | $ | — | | | $ | 2,814 | | | $ | — | | | $ | — | | | $ | 5,387 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted EPS impact | | $ | (0.30 | ) | | | | | | | | | | | | | | | | | | | | | | $ | 0.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted-average number of shares outstanding — diluted | | | 26,202 | | | | | | | | | | | | | | | | | | | | | | | | 26,202 | |
11
A. SCHULMAN, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
Unaudited
(In thousands except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As | | | Asset | | | Costs related to | | | Restructuring | | | Inventory | | | Tax Benefits | | | Before Certain | |
| Year ended August 31, 2010 | | Reported | | | Write-downs | | | Acquisitions | | | Related | | | Step-up | | | (Charges) | | | Items | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | | $ | 1,590,443 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,590,443 | |
| Cost of sales | | | 1,357,575 | | | | (69 | ) | | | — | | | | — | | | | (3,942 | ) | | | — | | | | 1,353,564 | |
| Selling, general and administrative expenses | | | 179,821 | | | | — | | | | (6,814 | ) | | | — | | | | — | | | | — | | | | 173,007 | |
| Interest expense, net | | | 3,665 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,665 | |
| Foreign currency transaction (gains) losses | | | 874 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 874 | |
| Other (income) expense | | | (2,425 | ) | | | — | | | | — | | | | (44 | ) | | | — | | | | — | | | | (2,469 | ) |
| Restructuring expense | | | 5,054 | | | | — | | | | — | | | | (5,054 | ) | | | — | | | | — | | | | — | |
| Asset impairment | | | 5,668 | | | | (5,668 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| Curtailment (gains) losses | | | 270 | | | | | | | | | | | | (270 | ) | | | | | | | | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | 1,550,502 | | | | (5,737 | ) | | | (6,814 | ) | | | (5,368 | ) | | | (3,942 | ) | | | — | | | | 1,528,641 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations before taxes | | | 39,941 | | | | 5,737 | | | | 6,814 | | | | 5,368 | | | | 3,942 | | | | — | | | | 61,802 | |
Provision for (benefit from) U.S. and foreign income taxes | | | (4,419 | ) | | | 127 | | | | 6 | | | | 1,198 | | | | 1,036 | | | | 15,448 | | | | 13,396 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | | 44,360 | | | | 5,610 | | | | 6,808 | | | | 4,170 | | | | 2,906 | | | | (15,448 | ) | | | 48,406 | |
| Income (loss) from discontinued operations, net of tax of $0 | | | (239 | ) | | | 237 | | | | — | | | | — | | | | — | | | | — | | | | (2 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 44,121 | | | | 5,847 | | | | 6,808 | | | | 4,170 | | | | 2,906 | | | | (15,448 | ) | | | 48,404 | |
| Noncontrolling interests | | | (221 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (221 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to A. Schulman, Inc. | | | 43,900 | | | | 5,847 | | | | 6,808 | | | | 4,170 | | | | 2,906 | | | | (15,448 | ) | | | 48,183 | |
| Preferred stock dividends | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to A. Schulman, Inc. common stockholders | | $ | 43,900 | | | $ | 5,847 | | | $ | 6,808 | | | $ | 4,170 | | | $ | 2,906 | | | $ | (15,448 | ) | | $ | 48,183 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted EPS impact | | $ | 1.57 | | | | | | | | | | | | | | | | | | | | | | | $ | 1.72 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted-average number of shares outstanding - -diluted | | | 27,976 | | | | | | | | | | | | | | | | | | | | | | | | 27,976 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As | | | Asset | | | Costs related to | | | Restructuring | | | Inventory | | | Tax Benefits | | | Before Certain | |
| Year ended August 31, 2009 | | Reported | | | Write-downs | | | Acquisitions | | | Related | | | Step-up | | | (Charges) | | | Items | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net sales | | $ | 1,279,248 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,279,248 | |
| Cost of sales | | | 1,109,211 | | | | (1,270 | ) | | | — | | | | — | | | | — | | | | — | | | | 1,107,941 | |
| Selling, general and administrative expenses | | | 148,143 | | | | — | | | | — | | | | (1,359 | ) | | | — | | | | — | | | | 146,784 | |
| Interest expense, net | | | 2,437 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,437 | |
| Foreign currency transaction (gains) losses | | | (5,645 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,645 | ) |
| Other (income) expense | | | (1,826 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,826 | ) |
| Restructuring expense | | | 8,665 | | | | — | | | | — | | | | (8,665 | ) | | | — | | | | — | | | | — | |
| Asset impairment | | | 2,608 | | | | (2,608 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| Curtailment (gains) losses | | | (2,805 | ) | | | — | | | | — | | | | 2,805 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | 1,260,788 | | | | (3,878 | ) | | | — | | | | (7,219 | ) | | | — | | | | — | | | | 1,249,691 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations before taxes | | | 18,460 | | | | 3,878 | | | | — | | | | 7,219 | | | | — | | | | — | | | | 29,557 | |
Provision for U.S. and foreign income taxes | | | 6,931 | | | | 479 | | | | — | | | | 1,724 | | | | — | | | | — | | | | 9,134 | |
| | | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | | 11,529 | | | | 3,399 | | | | — | | | | 5,495 | | | | — | | | | — | | | | 20,423 | |
| Income (loss) from discontinued operations, net of tax of $0 | | | (13,956 | ) | | | 10,317 | | | | — | | | | 20 | | | | — | | | | — | | | | (3,619 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | (2,427 | ) | | | 13,716 | | | | — | | | | 5,515 | | | | — | | | | — | | | | 16,804 | |
| Noncontrolling interests | | | (349 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (349 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to A. Schulman, Inc. | | | (2,776 | ) | | | 13,716 | | | | — | | | | 5,515 | | | | — | | | | — | | | | 16,455 | |
| Preferred stock dividends | | | (53 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (53 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to A. Schulman, Inc. common stockholders | | $ | (2,829 | ) | | $ | 13,716 | | | $ | — | | | $ | 5,515 | | | $ | — | | | $ | — | | | $ | 16,402 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted EPS impact | | $ | (0.11 | ) | | | | | | | | | | | | | | | | | | | | | | $ | 0.64 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted-average number of shares outstanding -diluted | | | 26,070 | | | | | | | | | | | | | | | | | | | | | | | | 26,070 | |
12
A. SCHULMAN, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
EBITDA Excluding Certain Items Reconciliation
Unaudited
(In thousands except per share data)
| | | | | | | | | | | | | | | | | |
| | | Three Months | | | Three Months | | | | | | | |
| | | ended | | | ended | | | Year ended | | | Year ended | |
| | | August 31, 2010 | | | August 31, 2009 | | | August 31, 2010 | | | August 31, 2009 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations before taxes | | $ | 8,681 | | | $ | 5,019 | | | $ | 39,941 | | | $ | 18,460 | |
| | | | | | | | | | | | | | | | | |
| Adjustments (pretax): | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 9,957 | | | | 5,599 | | | | 27,380 | | | | 22,269 | |
| Interest expense, net | | | 968 | | | | 810 | | | | 3,665 | | | | 2,437 | |
| Asset write-downs | | | 37 | | | | 221 | | | | 5,737 | | | | 3,878 | |
| Costs related to acquisitions | | | 1,498 | | | | — | | | | 6,814 | | | | — | |
| Restructuring related | | | 2,815 | | | | 3,502 | | | | 5,368 | | | | 7,219 | |
| Inventory step-up | | | 1,406 | | | | — | | | | 3,942 | | | | — | |
| | | | | | | | | | | | | |
| EBITDA excluding certain items | | $ | 25,362 | | | $ | 15,151 | | | $ | 92,847 | | | $ | 54,263 | |
| | | | | | | | | | | | | |
13
