SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Fiscal year ended December 31, 1993 Commission file number 1-5222
M. A. HANNA COMPANY
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 34-0232435
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 E. NINTH STREET, SUITE 3600, CLEVELAND, OHIO 44114-1860
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 216-589-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $1 par value New York Stock Exchange
Chicago Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant, computed by reference to the price at which the stock was sold as
of February 18, 1994: $855,231,228.00.
Common Shares outstanding as of February 18, 1994: 23,756,423.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by
reference into the designated parts of this Form 10-K: (1)
Registrant's definitive proxy statement distributed to stockholders
dated March 17, 1994, filed with the Commission pursuant to
Regulation 14A and incorporated by reference into Parts I and III
of this Form 10-K; and (2) Registrant's Annual Report distributed
to stockholders for the fiscal year ended December 31, 1993,
incorporated by reference into Parts I and II of this Form 10-K.
With the exception of the information specifically incorporated by
reference, neither the Registrant's proxy statement nor the 1993
Annual Report to stockholders is deemed to be filed as part of this
Form 10-K.
Except as otherwise stated, the information contained in this
report is given as of December 31, 1993, the end of the
Registrant's last fiscal year.
PART I
ITEM 1. BUSINESS
(a) Acquisitions and Dispositions
In May 1993, the Registrant completed its previously
announced acquisition of Global Processing Company, a
specialty rubber compounder located in Santa Fe Springs,
California. With annual sales of approximately $10
million and 50 associates, Global Processing is one of
the leading fluoroelastomer compounders in the United
States.
Also in May 1993, the Registrant announced an
agreement to acquire the thermoplastic resin distribution
business of Plasticos Polisol S.A. de C.V., based in
Mexico City, as part of Registrant's program to establish
a polymer processing and distribution capability in
Mexico. In furtherance of this program, Registrant
through its Hanna Polimeros, S.A. de C.V. subsidiary,
began construction of a processing plant near Mexico City
in January 1994, which is scheduled for start-up in June
1994. Also, another subsidiary, M. A. Hanna de Mexico,
S.A. de C.V., was formed to engage in the polymers
distribution business in Mexico.
In June 1993, the Registrant completed its
previously announced acquisition of the engineered
materials division of Cookson America Inc., comprised of
certain assets of Monmouth Plastics, a leading producer
of flame retardant polyolefins, located in Freehold, New
Jersey, and Texapol Corporation, a major producer of
engineering thermoplastic compounds, located in
Bethlehem, Pennsylvania. With combined annual sales of
approximately $32 million, the two units serve end
markets that include the electrical/electronics, consumer
durables, appliances and automotive industries.
In August 1993, Amoco Performance Products, Inc., a
subsidiary of Amoco Chemical Company and a leading
producer of engineering thermoplastics, named Registrant
a distributor of Amodel polyphthalamide (PPA) resins.
Also, in July 1993, Himont, Incorporated, entered into an
agreement naming the Registrant as a distributor of
Himont's resin products in the United States.
Also in August 1993, the Registrant completed an
agreement with Sumika Polymers America Corporation, a
Sumitomo Chemical subsidiary, for the construction and
operation of a manufacturing facility to produce a family
of value-added thermoplastic compounds in Dyersburg,
Tennessee. The facility will be designed jointly by
Sumika and the Registrant's Colonial Plastics unit, with
start-up scheduled for August 1994.
In November 1993, the Registrant announced that it
had reached a preliminary agreement to sell its
elastomeric membrane roofing material business based in
Kingstree, South Carolina, to Firestone Building Products
Company, a division of Bridgestone/Firestone, Inc. The
sale is expected to close in the first quarter of 1994.
In December 1993, the Registrant sold its BenePlan
Strategies unit, a third-party administrator of medical
benefits based in Dayton, Ohio, to Harrington Services
Corporation, based in Columbus, Ohio.
Also in December 1993, the Registrant purchased for
$27.5 million warrants for 2.75 million shares of its
common stock held by Brascan Limited of Toronto. The
warrants had been issued to Brascan in 1991 as part of
the purchase of 7.7 million shares of the Registrant that
Brascan had acquired in 1982.
Two of Registrant's plastics color and additive
concentrate units, Allied Color Industries, Inc., based
in Broadview Heights, Ohio, and Avecor, Inc., based in
Vonore, Tennessee were merged effective January 1, 1994.
The combined businesses, with annual sales of
approximately $70 million and seven manufacturing
facilities, will operate as Allied Color Industries, Inc.
On March 16, 1994, the Registrant acquired North
Coast Compounders, a producer of thermoplastic elastomers
("TPEs"). Based in North Ridgeville, Ohio, with
approximately 50 employees, North Coast Compounders
produces proprietary TPEs, alloys and blends, and also
engages in toll compounding.
(b) See the financial information regarding the
Registrant's business segments set forth at pages 30
through 31 of the Registrant's Annual Report distributed
to stockholders for the fiscal year ended December 31,
1993, which pages are incorporated herein by this
reference.
(c)
(1)(i)
Formulated Polymers
(a) Processing
The Registrant, through its Burton Rubber
Processing, Inc., Colonial Rubber Works, Inc., Global
Processing Company, MACH-I Compounding, Monmouth
Plastics, Plastic Distributing Corporation, Southwest
Chemical Services, Inc., and Texapol Corporation business
units, engages in the custom compounding of plastic and
rubber materials to the specifications of manufacturers
of plastic and rubber products for customers located
throughout the United States and Canada.
Through its Allied Color Industries, Inc., PMS
Consolidated, Inc., Synthecolor S.A. and Wilson Color
business units, the Registrant manufactures custom
formulated colorants in the form of color concentrates,
liquid dispersions, dry colorants, and additives for
customers in the plastics industry throughout the United
States, Canada and Europe. PMS Consolidated and Wilson
Color also produce specialty colorants and additives for
the automobile, vinyl siding and textile industries and
for the wire and cable industry, respectively. Through
its Hanna Polimeros unit, Registrant is scheduled to
begin manufacturing colorants in Mexico in 1994.
(b) Resin Distribution
Through its Bruck Plastics Company, Fiberchem, Inc.,
Plastic Distributing Corporation and M.A. Hanna de Mexico
business units, the Registrant distributes polymer resins
in North America.
(c) Polymer Products
Through its Cadillac Plastic Group business unit,
Registrant engages in the worldwide distribution of
plastic sheet, rod, tube, and film products to industrial
and retail customers as well as cutting and machining
plastic products to customers' specifications and
thermoforming plastic into products such as skylights and
signs.
Registrant, through its Day International Printing
and Textile Products business unit, engages in the
manufacture and worldwide sale of printing blankets and
print rollers for the printing industry and aprons, cots,
and other consumable supplies for the textile industry.
Through its Colonial Rubber Works, Inc. business
unit, Registrant manufactures molded sponge automotive
parts for customers located throughout the United States
and Canada.
Other Operations
Net sales and operating revenues from Registrant's
operations outside the formulated polymers industry do
not individually constitute 10 percent or more of
Registrant's consolidated revenues.
(1) (iii) In Registrant's formulated polymers processing
segment the primary raw materials required are natural
and synthetic rubbers, plastics, and chemicals, all of
which are available in adequate supply. The primary raw
materials required by Registrant's colorant subsidiaries
are plastics, chemicals, and organic and inorganic
pigments, all of which are available in adequate supply.
(1) (iv) Registrant's formulated polymers business units own
numerous patents and registered trademarks, which are
important in that they protect the Registrant's
corresponding inventions and trademarks against
infringement by others and thereby enhance Registrant's
position in the marketplace. The patents vary in
duration from 1 year to 17 years, and the trademarks have
an indefinite life which is based upon continued use.
(1) (x) The custom compounding of plastic and rubber
materials is highly competitive, with product quality and
service to customers being principal factors affecting
competition. Registrant is the largest independent
custom compounder of rubber and a leading compounder of
plastics in the United States in terms of pounds
produced.
The manufacture of custom formulated colorants for
the plastics industry is highly competitive with product
quality and service to customers being principal factors
affecting competition. Registrant is one of the leading
producers of custom formulated colorants in the United
States and Europe.
The distribution of plastic sheet, rod, tube, film
products, and polymer resins is highly competitive with
product quality and service to customers being principal
factors affecting competition. Registrant is one of the
leading distributors of such products in the world.
The manufacture of molded sponge automotive parts is
highly competitive, with quality, price and service to
customers being principal factors affecting competition.
Information generally available indicates that Registrant
is the leading supplier of such parts in the United
States.
The manufacture of printing blankets and rollers is
highly competitive, with image quality and durability
being principal factors affecting competition.
Registrant ranks as one of the world's leading producers
of these products. The manufacture of aprons, cots, and
other consumable supplies for the textile industry is
highly competitive, with quality and price being the
principal factors affecting competition. Registrant
ranks among the larger producers of such products in the
United States.
(1) (xii) At each of its operations the Registrant, its
subsidiaries, and associated companies are governed by
laws and regulations designed to protect the environment
and in this connection Registrant has adopted a corporate
policy which directs compliance with the various
requirements of these laws and regulations. The
Registrant believes that it, its subsidiaries and
associated companies are in substantial compliance with
all such laws and regulations, although it recognizes
that these laws and regulations are constantly changing.
There are presently no material estimated capital
expenditures for further environmental control facilities
projected by the Registrant, its subsidiaries and
associated companies for any of its operations.
(1) (xiii) Registrant employs 6,334 persons at its consolidated
operations (6,333 in 1992) and manages operations for
others that employ 2,235 persons (2,351 in 1992).
(d) (1) See information regarding Registrant's international
operations at page 30 of Registrant's Annual Report
distributed to stockholders for the fiscal year ended
December 31, 1993, which page is incorporated herein by
this reference.
(2) The international operations in which the Registrant
and its subsidiaries have equity interests, and the
investments of the Registrant and its subsidiaries in
such companies, may be affected from time to time by
foreign political and economic developments, laws and
regulations, increases or decreases in costs in such
countries and changes in the relative values of the
various currencies involved.
ITEM 2. PROPERTIES
The table below sets forth the principal plants and properties
owned or leased by the Registrant's formulated polymers business
units. For properties which are leased, the date of expiration of
the current term of the lease is indicated followed by an "R" if
the lease is subject to renewal or a "P" if the property is subject
to an option to purchase. Properties which are shown as owned are
owned in fee simple, subject to any mortgages on the properties.
In addition to mortgages, some properties are subject to minor
encumbrances of a nature which do not materially affect the
Registrant's operations.
In addition, several business units of Registrant lease floor
space at various locations within the United States. They are used
by the regional branches for sales offices, for the distribution of
Registrant's products, for fabrication, and for warehousing. These
are short-term leases.
Registrant and certain of its business units lease or own
space in various locations outside the United States, including
Australia, Belgium, Canada, the United Kingdom, France, Germany,
Mexico and Sweden.
Approximate
Owned/ Size
Location Facility Leased (sq. ft.)
Burton, Burton rubber Owned 160,000
Ohio compounding
_________________________________________________________________
Macedonia, Burton plastic Owned 87,000
Ohio compounding
_________________________________________________________________
Tillsonburg, Burton rubber Owned 60,000
Ontario compounding
_________________________________________________________________
Jonesboro, Burton rubber Owned 69,000
Tennessee compounding
_________________________________________________________________
Santa Fe Springs, Global rubber Leased 13,231
California compounding 1996
_________________________________________________________________
Broadview Heights, Allied colorant Owned 61,000
Ohio manufacturing
_________________________________________________________________
Greenville, Allied colorant Owned 11,000
South Carolina manufacturing
_________________________________________________________________
Phoenix, Allied colorant Owned 20,500
Arizona manufacturing
_________________________________________________________________
Vonore, Allied colorant Owned 47,000
Tennessee manufacturing
_________________________________________________________________
North Kansas City, Allied colorant Leased 44,000
Missouri manufacturing 1998
_________________________________________________________________
San Fernando, Allied colorant Leased 50,000
California manufacturing 1998
_________________________________________________________________
Vancouver, Allied colorant Leased 35,000
Washington manufacturing 2002-R
_________________________________________________________________
Troy, Cadillac Plastic Leased 28,620
Michigan headquarters 1998-R
_________________________________________________________________
Romeoville, Bruck headquarters Leased 103,000
Illinois & distribution 2008-P
_________________________________________________________________
Seattle, Fiberchem Leased 79,000
Washington headquarters & 2005-R-P
distribution
_________________________________________________________________
Three Rivers, Day printing Owned 57,943
Michigan products manufacturing
_________________________________________________________________
Dundee, Day printing/ Owned 101,000
Scotland textile products
manufacturing
_________________________________________________________________
Lerma, Day printing Owned 45,000
Mexico products manufacturing
_________________________________________________________________
Arden, Day printing/ Owned 240,580
North Carolina textile products
manufacturing
_________________________________________________________________
Kingstree, Colonial polymer Owned 381,354
South Carolina compounding and
products manufacturing
_________________________________________________________________
Dyersburg, Colonial polymer Owned 862,399
Tennessee compounding and
products manufacturing
_________________________________________________________________
Bethlehem, Texapol engineered Leased 82,000
Pennsylvania thermoplastic 2004-P
compounding
_________________________________________________________________
Suwanee, PMS Consolidated, Owned 20,000
Georgia Inc., headquarters
_________________________________________________________________
Somerset, PMS colorant Owned 44,300
New Jersey manufacturing
_________________________________________________________________
Florence, PMS colorant Leased 30,000
Kentucky manufacturing 1994-R-P
_________________________________________________________________
Gastonia, PMS colorant Leased 32,150
North Carolina manufacturing 1997
_________________________________________________________________
Elk Grove Village, PMS colorant Owned 51,870
Illinois manufacturing
_________________________________________________________________
St. Peters, PMS colorant Owned 32,480
Missouri manufacturing
_________________________________________________________________
Fort Worth, PMS colorant Owned 75,080
Texas manufacturing
_________________________________________________________________
Norwalk, PMS colorant Owned 94,000
Ohio manufacturing
_________________________________________________________________
Gardena, PMS colorant Owned 46,652
California manufacturing
________________________________________________________________
Carolina, PMS colorant Leased 12,600
Puerto Rico manufacturing 1994
_________________________________________________________________
Buford, PMS colorant Leased 73,000
Georgia manufacturing 1997-R
_________________________________________________________________
Milford, PMS colorant Leased 20,600
New Hampshire manufacturing 1995-R
_________________________________________________________________
Coral Springs, PMS research & Leased 18,000
Florida development
_________________________________________________________________
Toluca, Hanna Polimeros Owned 22,000
Mexico colorant
manufacturing (6/94)
_________________________________________________________________
LaPorte, Southwest Chemical Owned 200,000
Texas polymer compounding
_________________________________________________________________
Ayer, PDC headquarters & Leased 82,000
Massachusetts distribution 2000\2-P
_________________________________________________________________
Houston, PDC compounding & Leased
Texas distribution 1997 88,000
1998 44,120
_________________________________________________________________
Statesville, PDC distribution Leased 48,240
North Carolina 1998
_________________________________________________________________
Neshanic Station, Wilson headquarters Leased 123,000
New Jersey & colorant 1997-R-P
manufacturing
_________________________________________________________________
Assesse, Wilson colorant Owned 120,976
Belgium manufacturing
_________________________________________________________________
Tossiat, Wilson colorant Owned 87,188
France manufacturing
_________________________________________________________________
Bendorf, Wilson colorant Owned 72,086
Germany manufacturing
_________________________________________________________________
Angered, Wilson colorant Owned 22,259
Sweden manufacturing
_________________________________________________________________
Paris, Synthecolor Owned 46,285
France colorant Leased 16,146
manufacturing
________________________________________________________________
Registrant's combined annual plastic and rubber compounding
capacity and colorant manufacturing capacity, based on the
estimated design capacities of Registrant's plants amounts to
approximately 770 million pounds of compounded rubber products, 795
million pounds of compounded plastic products and over 235 million
pounds of colorants. A variation in the mix of products produced
at a given plant results in a corresponding increase or decrease in
the quantity (in pounds) of products that can be produced at full
capacity. Beyond these estimated capacities for Registrant's
rubber and plastic compounding and colorant manufacturing
properties, there are no comparative measurement units of
production capacity that reasonably can be ascribed to Registrant's
other properties in the formulated polymer segment.
Registrant's 50 percent-owned partnership, DH Compounding
Company, owns and operates an engineering plastics compounding
plant in Clinton, Tennessee. The 100,000 square foot plant has an
annual design capacity of 60 million pounds.
ITEM 3. LEGAL PROCEEDINGS
The State of Idaho filed suit in 1983 in the U.S. District
Court of the District of Idaho against the Registrant and certain
other named and unnamed defendants based on allegations of
violation of the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 and state environmental law
and upon allegations of strict liability and maintenance of public
nuisance. The state filed amended complaints in 1990 and 1993. In
1993 the U.S. Government also sued the Registrant and the other
defendants in the same court, advancing essentially the same
theories of liability. Plaintiffs are seeking reimbursement from
the defendants for damages to the environment and all costs for
clean-up of the area around the Blackbird Mine, now owned by a
limited partnership in which the Registrant is the limited partner.
The general partner in the limited partnership is a major North
American mining company which has been actively participating in
the defense of this action. The Registrant and the other
defendants filed answers asserting various defenses and served
third-party complaints against former owners and operators of the
Blackbird Mine and the U.S. Government and certain of its
departments and agencies, alleging that such third-party defendants
are legally responsible for the alleged natural resources damage.
The Registrant and the other defendants are conducting discovery.
An independent consulting firm undertook a study of the Blackbird
Mine and in 1985 presented several abatement alternatives with
estimated construction costs ranging from $3.4 to $8.2 million and
estimated operation and maintenance costs ranging from $200,000 to
$600,000 annually for an indeterminate period. However, to date no
definitive cost estimates or remediation plans have been prepared
and submitted to the regulatory authorities. Registrant's insurance
carrier has reserved its rights to deny coverage and has sued
Registrant for declaratory judgement on this coverage issue, but is
funding certain legal defense costs. If the Registrant is found
liable, it may seek to recover its costs from the general partner
pursuant to the limited partnership agreement. In view of the fact
that Registrant's liabilities have not been determined, the
remediation costs have not been definitively estimated and the
insurance coverage has not been accepted by the carrier, it is not
possible at this time to state the amount of Registrant's future
costs or liabilities or the probability of insurance recoveries;
however, Registrant believes that the matter will be resolved
without a material adverse effect on Registrant's business or
financial position.
Registrant, through its indirect wholly-owned subsidiary,
Cadillac Plastic Group, Inc. (formerly Day International
Corporation), is obligated for costs of environmental remediation
measures taken and to be taken in connection with certain of
Cadillac's businesses related to operations that have been sold or
discontinued. These include the clean-up of Superfund sites and
participation with other companies in the clean-up of hazardous
waste disposal sites, several of which have been designated as
Superfund sites. Registrant has established reserves for
Cadillac's liabilities for environmental remediation, which do not
reflect potential insurance recoveries and which management
believes is adequate to cover Cadillac's ultimate exposure.
Registrant believes that these liabilities will not have a material
adverse effect on the Registrant's business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
_______ EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists information as of March 18 1994, as
to each executive officer of the Registrant, including his position
with the Registrant as of that date and other positions held by him
during at least the past five years:
M. D. Walker Chairman and Chief Executive
Age - 61 Officer. Chairman and Chief
Executive Officer, September 1986 to
date; President, December 1988 -
May 1989.
D. J. McGregor President and Chief Operating
Age - 53 Officer. Senior Vice President-
Operations of the Registrant, March
1988 - September 1988; Executive
Vice President, September 1988 -
May 1989; President and Chief
Operating Officer, May 1989 to date.
S. P. Chong Vice President-Total Quality
Age - 51 Planning & Technical Services. Vice
President-Technical Services, 1986 -
May 1990; Vice President Total
Quality Planning & Technical
Services, May 1990 to date.
G. W. Henry Vice President - Operations.
Age - 48 Comptroller, 1985 - July 1990; Vice
President, 1987 - July 1990; Vice
President - Marine Services and
Special Projects, July 1990 -
February 1992; Vice President -
Operations, February 1992 to date.
J. S. Pyke, Jr. Vice President and Secretary.
Age - 55 Secretary, 1973 to date; Vice
President, 1979 to date.
D. R. Schrank Vice President and Chief Financial
Age - 45 Officer. Senior Vice President and
Chief Financial Officer, Sealy, Inc.
(bedding manufacturer) 1989 to
September 1993. Vice President and
Chief Financial Officer of the
Registrant, September 1993 to date.
W. J. Tremblay Vice President - Taxes,
Age - 62 1983 to date.
L. C. Van Hoeven, Jr. Vice President and Treasurer.
Age - 57 Treasurer, 1980 to date. Vice
President, November 1987 to date.
T. E. Lindsey Comptroller. Assistant Comptroller
Age - 43 of the Registrant 1987 to July 1990;
Comptroller, July 1990 to date.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
See the tables regarding Registrant's Stock Price Data at
page 35 and Stock Information at page 36 of Registrant's
Annual Report distributed to stockholders for the fiscal
year ended December 31, 1993, which tables are
incorporated herein by this reference.
ITEM 6. SELECTED FINANCIAL DATA
See Selected Financial Data at page 36 of Registrant's
Annual Report distributed to stockholders for the fiscal
year ended December 31, 1993, which Selected Financial
Data is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
See pages 37 through 38 of Registrant's Annual Report
distributed to stockholders for the fiscal year ended
December 31, 1993, which pages are incorporated herein by
this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See pages 22 through 39 of Registrant's Annual Report
distributed to stockholders for the fiscal year ended
December 31, 1993, which pages and section are
incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
See the table listing nominees for directors on page 2 of
Registrant's definitive proxy statement distributed to
stockholders dated March 17, 1994, filed with the
Commission pursuant to Regulation 14A, which table is
incorporated herein by this reference.
Executive Officers
See the item captioned "Executive Officers of the
Registrant" in Part I of this Form 10-K, which item is
incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
See the section captioned "Executive Compensation"
through the section captioned "Directors' Compensation"
at pages 5 through 13 of Registrant's definitive proxy
statement distributed to stockholders dated March 17,
1994, filed with the Commission pursuant to Regulation
14A, which sections are incorporated herein by this
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners:
See the section captioned "Holdings of Shares of the
Company's Common Stock" at pages 4 through 5 of
Registrant's definitive proxy statement distributed to
stockholders dated March 17, 1994 filed with the
Commission pursuant to Regulation 14A, which section is
incorporated herein by this reference.
(b) Security Ownership by Management:
See the table, and footnotes thereto, regarding
beneficial ownership of the Registrant's Common Stock by
management, at page 3 of Registrant's definitive proxy
statement distributed to stockholders dated March 17,
1994 filed with the Commission pursuant to Regulation
14A, which table and footnotes are incorporated herein by
this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the section captioned "Transactions with Directors"
at page 4 of Registrant's definitive proxy statement
distributed to stockholders dated March 17, 1994 filed
with the Commission pursuant to Regulation 14A, which
section is incorporated herein by this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. and 2. -- The response to this portion of Item 14 is
submitted as a separate section commencing on
page F-1 of this Form 10-K.
3. List of Exhibits. [Those documents listed below that are
incorporated herein by reference to Registrant's earlier
periodic reports were filed with the Commission under
Registrant's File No. 1-5222.]
(i) Exhibits filed pursuant to Regulation S-K (Item
601):
(3) Articles of Incorporation and By-laws.
(a) Registrant's Articles of Incorporation (as restated as of
November 13, 1989, and currently in effect), filed as Exhibit
3(b) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, and incorporated herein by this
reference.
(b) Registrant's By-laws (as amended and restated as of
March 2, 1988, and currently in effect), filed as Exhibit 3(d)
to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987 and incorporated herein by this
reference.
(4) Instruments Defining the Rights of Security Holders:
(a) Rights Agreement, dated December 4, 1991, between the
Registrant and Ameritrust Company National Association, filed
as Exhibit 4.1 to Registrant's Form 8-K dated December 4,
1991, and incorporated herein by this reference.
(b) Credit Agreement, dated September 15, 1989 between the
Registrant, Citibank, N.A. and the other banks signatory
thereto, a copy of which will be provided to the Commission
upon request.
(c) Indenture dated September 15, 1991 between the Registrant
and Ameritrust Company, National Association, Trustee relating
to Registrant's $100,000,000 aggregate principal amount of 9%
Senior Notes due 1998 and $150,000 aggregate principal amount
of 9 3/8% Senior notes due 2003, filed as Exhibit 4 to the
Registrant's Form S-3 filed on September 18, 1991, and
incorporated herein by this reference.
(d) Indenture dated September 26, 1991 between the Registrant
and Ameritrust Texas, National Association, Trustee, relating
to Registrant's $50,000,000 aggregate principal amount of 9%
Notes due 1998, filed as Exhibit 4 to the Registrant's Form S-
3 filed on October 24, 1991, and incorporated herein by this
reference.
(e) Associates Ownership Trust Agreement dated September 12,
1991, between Registrant and Wachovia Bank of North Carolina,
filed as Exhibit 28.3 to Registrant's Current Report on Form
8-K dated September 12, 1991, and incorporated herein by this
reference.
(10) Material Contracts:
*(a) The Restated 1979 Executive Incentive Compensation Plan
of the Registrant, filed as Exhibit 5 to the Form S-8
Registration Statement No. 2-70755 filed with the Commission
on February 19, 1981 and incorporated herein by this
reference, and amendment to the Plan, as ratified and approved
by Registrant's stockholders on October 3, 1983, filed as
Exhibit 10(c) to Registrant's Form 10-K for the fiscal year
ended December 31, 1983 and incorporated herein by this
reference. Also amendment to the Plan as approved by
Registrant's stockholders on May 1, 1985, filed as Exhibit
10(c) to Registrant's Form 10-K for the fiscal year ended
December 31, 1985 and incorporated herein by this reference.
*(b) Forms of 1985 Stock Option Agreement, 1985 Grant of
Appreciation Rights and 1985 Grant of Performance Rights under
the 1979 Executive Incentive Compensation Plan, filed as
Exhibit 10(g) to Registrant's Form 10-K for the fiscal year
ended December 31, 1985 and incorporated herein by this
reference.
*(c) Forms of 1987 Stock Option Agreement, 1987 Grant of
Appreciation Rights and 1987 Grant of Performance Rights under
the 1979 Executive Incentive Compensation Plan, filed as
Exhibit 10(e) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1986, and incorporated
herein by this reference.
*(d) 1988 Long-Term Incentive Plan, and forms of Grants of
Stock Options, Grants of Appreciation Rights and Grants of
Long-Term Incentive Units thereunder, filed as Exhibit 10(e)
to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by this
reference. Also forms of 1989 Stock Option Agreement, 1989
Grant of Appreciation Rights and 1989 Grant of Long-Term
Incentive Units, filed as Exhibit 10(e) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by this reference. Also 1990
Amendment to the Plan, filed as Exhibit 10(e) to Registrant's
Form 10-K for the fiscal year ended December 31, 1990 and
incorporated herein by this reference and forms of 1990 Stock
Option Agreement, 1990 Grant of Appreciation Rights and 1990
Grant of Long-Term Incentive Units, filed as Exhibit 10(e) to
Registrant's Form 10-K for the fiscal year ended December 31,
1990 and incorporated herein by this reference. Also 1991
Amendment to the Plan, and forms of 1991 Stock Option
Agreement, 1991 Grant of Appreciation Rights, 1991 Grant of
Long Term Incentive Units, and 1991 Stock Option Agreement
with non-employee directors of Registration, filed as Exhibit
10(f) to Registrant's Form 10-K for the fiscal year ended
December 31, 1991, and incorporated herein by this reference.
Also forms of 1992 Stock Option Agreement and 1992 Grant of
Long Term Incentive Units, filed as Exhibit 10(e) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated herein by this
reference.
*(e) Form of Supplemental Deferred Compensation agreement in
which any of the five most highly compensated executive
officers of the Registrant participates, refiled herewith.
*(f) Form of Supplemental Death Benefits agreement in which
any of the five most highly compensated executive officers of
the Registrant participates, refiled herewith.
*(g) Form of Employment Agreement dated as of February 17,
1989 between Registrant and certain of Registrant's executive
officers filed as Exhibit 10(h) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1988 and
incorporated herein by this reference. Also (i) Employment
Agreement dated August 6, 1986, as amended March 5, 1987 and
December 1, 1992 between M. D. Walker and the Registrant,
filed as Exhibit 10(h)(i) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992, and
incorporated herein by this reference; (ii) Employment
Agreement dated as of September 27, 1993, between
D. R. Schrank and Registrant, filed as Exhibit (a) to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993, and incorporated herein by this
reference; and (iii) Employment Agreement dated March 1, 1993
between D. J. McGregor and Registrant, filed herewith.
*(h) Description of Directors' compensation and retirement
plan, set forth in the section captioned "Directors'
Compensation" on pages 12 and 13 of Registrant's definitive
proxy statement dated March 17, 1994, as distributed to
stockholders and filed with the Commission pursuant to
Regulation 14A, which section is incorporated herein by this
reference.
*(i) Excess Benefit Plan in which any of the five most highly
compensated executive officers of the Registrant participates,
filed as Exhibit 10(j) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1992 and
incorporated herein by this reference.
*(j) Supplemental Retirement Benefit Plan in which any of the
five most highly compensated executive officers of the
Registrant participates, filed as Exhibit 10 (k) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992 and incorporated herein by this
reference.
[*- Identifies management contract or compensation plans or
arrangements filed pursuant to Item 601(b)(10)(iii)(A)]
(11) Computation of per share earnings, filed herewith.
(13) Registrant's Annual Report as distributed to stockholders for
the fiscal year ended December 31, 1993, filed herewith.
(21) Subsidiaries of the Registrant, filed herewith.
(23) Consent of Independent Auditors, filed herewith.
(24) Powers of Attorney of certain Directors of Registrant, filed
herewith.
(ii) Other exhibits:
Financial statements (and consent of independent
auditors) pursuant to Form 11-K and Rule 15d-21 for the year ended
December 31, 1993, for the Capital Accumulation Plan for Salaried
Employees of M. A. Hanna Company and Associated Companies, and for
stock purchase/savings plans of Registrant's subsidiaries and
divisions will be filed as exhibits to the Form 10-K under a Form
10-KA amendment not later than June 30, 1994.
(b) Since September 30, 1993, Registrant has filed no reports on
Form 8-K.
(c) The response to this portion of Item 14 is submitted as a
separate Section commencing on page X-1 of this Form 10-K.
(d) The response to this portion of Item 14 is submitted as a
separate section commencing on page F-1 of this Form 10-K.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
M. A. HANNA COMPANY
(Registrant)
Date: March 18, 1994 By /s/J. S. Pyke, Jr.
J. S. Pyke, Jr.
Vice President and Secretary
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Date: March 18, 1994 By /s/M. D. Walker
M. D. Walker, Chairman and Chief
Executive Officer (Principal
Executive Officer) and Director
Date: March 18, 1994 By /s/D. R. Schrank
D. R. Schrank, Vice President
and Chief Financial Officer
(Principal Financial Officer)
Date: March 18, 1994 By /s/T. E. Lindsey
T. E. Lindsey, Comptroller
(Principal Accounting Officer)
B. C. Ames, Director
W. R. Embry, Director
J. T. Eyton, Director
By /s/T. E. Lindsey G. D. Kirkham, Director
T. E. Lindsey
Attorney-in-Fact
M. L. Mann, Director
Date: March 18, 1994
P. M. Marshall, Director
D. J. McGregor, Director
R. W. Pogue, Director
FORM 10-K
ITEM 14(a) (1) and (2)
FINANCIAL STATEMENTS AND SCHEDULES
M. A. HANNA COMPANY
The following consolidated financial statements of the Registrant and its
consolidated subsidiaries, included in the annual report of the Registrant
to its stockholders for the year ended December 31, 1993, are incorporated
herein by reference in Item 8:
Summary of accounting policies
Consolidated balance sheets - December 31, 1993 and 1992
Consolidated statements of income, stockholders' equity and cash
flows - years ended December 31, 1993, 1992 and 1991
Notes to financial statements
The following consolidated financial information, together with the
report of the independent accountants, are included in Item 14 (d):
Schedule VIII - Valuation and qualifying accounts
Schedule IX - Short-term borrowings
Schedule X - Supplementary income statement information
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been
omitted.
Financial statements of unconsolidated subsidiaries or 50% or less owned
persons accounted for by the equity method have been omitted because they
do not, considered individually or in the aggregate, constitute a
significant subsidiary.
F-1
Report Of Independent Auditors
Board of Directors
M.A. Hanna Company
We have audited the accompanying consolidated balance sheets of
M.A. Hanna Company and subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1993. Our audits also included the
financial statement schedules listed in the Index at Item 14(a)(1)
and (2). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of M.A. Hanna and subsidiaries at December 31,
1993 and 1992, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material
respects the information set forth therein.
As discussed in notes to the financial statements, in 1992 the Company
changed its method of accounting for post-retirement benefits other than
pensions and income taxes.
/s/ Ernst & Young
January 31, 1994
F-2
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
M. A. HANNA COMPANY AND CONSOLIDATED SUBSIDIARIES
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
Balance at Beginning (1) (2) Balance at End
DESCRIPTION of Period Charged to Costs Charged to Other Deductions - Describe of Period
and Expenses Accounts - Describe
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts $8,003,000 $3,939,000 $188,000 (a) $2,539,000 (c) $10,912,000
1,321,000 (b)
Year ended December 31, 1992:
Deducted from asset accounts:
Allowance for doubtful accounts $6,329,000 $2,373,000 $1,067,000 (a) $2,657,000 (c) $8,003,000
891,000 (b)
Year ended December 31, 1991:
Deducted from asset accounts:
Allowance for doubtful accounts $7,473,000 $2,790,000 $793,000 (a) $4,954,000 (c) $6,329,000
227,000 (b)
(a) Reserves of companies acquired.
(b) Charge included in income(loss) from discontinued operations.
(c) Uncollectible amounts written off.
F-3
SCHEDULE IX - SHORT-TERM BORROWINGS
M. A. HANNA COMPANY AND CONSOLIDATED SUBSIDIARIES
COL. A COL. B COL. C COL. D COL. E COL. F
Balance Weighted Maximum Average Weighted
CATEGORY OF AGGREGATE at End of Average Amount Amount Average
SHORT-TERM BORROWINGS of Period Interest Outstanding Outstanding Interest Rate
Rate During the Period During the Period During the Period
Year ended December 31, 1993
Notes payable to banks
by foreign subsidiaries $2,478,108 7.08% $3,960,008 $2,012,417 (1) 8.03% (2)
Year ended December 31, 1992
Notes payable to banks
by foreign subsidiaries $2,311,958 6.45% $2,826,279 $1,828,051 (1) 7.22% (2)
Year ended December 31, 1991
Notes payable to banks
by foreign subsidiaries $2,145,434 9.19% $7,178,279 $4,197,706 (1) 10.82% (2)
(1) The average amount outstanding during the period was computed by dividing the total of
month-end outstanding principal balance by 12.
(2) The weighted average interest rate during the period was computed by dividing the actual
interest expense by average short-term debt outstanding.
F-4
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
M. A. HANNA COMPANY AND CONSOLIDATED SUBSIDIARIES
COL. A COL. B
ITEM Charged to Costs and Expenses
Year ended December 31
1993 1992 1991
Maintenance and repairs $21,177,000 $19,051,755 $17,291,633
Amortization of intangibles:
Goodwill 9,794,000 9,394,000 9,203,000
Other intangibles 7,518,000 7,014,734 6,283,038
Taxes, other than payroll and income taxes:
Real estate and personal property (A) (A) (A)
Other (A) (A) (A)
Royalties (A) (A) (A)
Advertising (A) (A) (A)
Note A - Not presented as such amount is less
than 1% of total sales and revenues.
F-5