Exhibit 99.1
(SPARTECH LOGO)
COMPANY CONTACTS:
George A. Abd Randy C. Martin
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
(314) 721-4242 (314) 721-4242
FOR IMMEDIATE RELEASE
THURSDAY, SEPTEMBER 8, 2005
SPARTECH CORPORATION ANNOUNCES
THIRD QUARTER FISCAL 2005 RESULTS
-----------------------
ST. LOUIS, SEPTEMBER 8, 2005 - Spartech Corporation (NYSE:SEH) announced today
its operating results for its third quarter ended July 30, 2005.
THIRD QUARTER 2005 HIGHLIGHTS:
- - NET SALES INCREASED BY 21% TO $348.7 MILLION FOR THE QUARTER RESULTING IN
OPERATING EARNINGS FOR THE QUARTER OF $13.2 MILLION, NEGATIVELY IMPACTED BY
$8.5 MILLION OF SPECIAL ITEMS, COMPARED TO $24.9 MILLION IN THE PRIOR YEAR
QUARTER.
- - REPORTED EARNINGS PER SHARE WERE $.13 PER DILUTED SHARE, AFTER SPECIAL
ITEMS, COMPARED TO $.36 PER DILUTED SHARE IN THE THIRD QUARTER OF 2004.
EARNINGS PER DILUTED SHARE BEFORE SPECIAL ITEMS WERE $.30.
- - CASH FLOWS PROVIDED BY OPERATIONS FOR THE QUARTER TOTALED $52.2 MILLION
COMPARED TO $18.4 MILLION IN THE PRIOR YEAR QUARTER, REPRESENTING THE
HIGHEST QUARTERLY CASH FLOWS FROM OPERATIONS IN OUR COMPANY'S HISTORY,
ALLOWING US TO PAY DOWN DEBT BY MORE THAN $38 MILLION.
- - THE RESTRUCTURING PLANS TO CONSOLIDATE, SELL OR CLOSE SEVEN PLANTS ARE
PROGRESSING AS ANNOUNCED IN OUR Q2 EARNINGS RELEASE.
EARNINGS OUTLOOK:
- - THE COMPANY IS ON TARGET WITH THE EARNINGS GUIDANCE GIVEN LAST QUARTER. AT
THAT TIME WE INDICATED EARNINGS FOR THE SECOND HALF OF FISCAL 2005 WOULD BE
$.56 TO $.61 PER DILUTED SHARE BEFORE SPECIAL ITEMS AND, WITH THE CURRENT
QUARTER'S PERFORMANCE AND OUR FOURTH QUARTER EARNINGS GUIDANCE OF $.26 TO
$.31 PER DILUTED SHARE BEFORE SPECIAL ITEMS, WE EXPECT TO MEET THAT GOAL.
NOT INCLUDED IS THE IMPACT OF THE BUSINESS AND ASSET SALES IN THE FOURTH
QUARTER OF 2005 WHICH ARE CURRENTLY EXPECTED TO RESULT IN A SPECIAL GAIN OF
$.03 TO $.04 PER DILUTED SHARE.
- - OUR GUIDANCE DOES NOT TAKE INTO ACCOUNT ANY IMPACT FROM THE RECENT NATURAL
DISASTER THAT HAS OCCURRED IN LOUISIANA, ALABAMA AND MISSISSIPPI. OUR
FACILITIES IN TUPELO, MS AND LAKE CHARLES, LA WERE ONLY MINIMALLY AFFECTED
PHYSICALLY, BUT THE REPERCUSSIONS RELATED TO LOGISTICS COSTS, RAW MATERIAL
SUPPLY, AND RAW MATERIAL PRICING HAVE YET TO BE DETERMINED.
- - OUR PRELIMINARY EARNINGS GUIDANCE FOR 2006 IS WITHIN THE CURRENT RANGE OF
ANALYST ESTIMATES AT $1.23 TO $1.33 PER DILUTED SHARE FOR THE FULL 2006
FISCAL YEAR WITH GUIDANCE FOR OUR SEASONALLY LOW FIRST QUARTER IN THE RANGE
OF $.17 TO $.20 PER SHARE.
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 1
OVERVIEW OF RESULTS
Sales for the third quarter of 2005 were $348.7 million, a 21% increase compared
to the same period in 2004. This total was driven by a 10% increase from the
late 2004 acquisition of VPI and a 15% positive price/mix impact following the
significant resin price increases during the last half of 2004 and first half of
2005 partially offset by a decrease in underlying volume of 4%. Operating
earnings reported for the third quarter of 2005 were $13.2 million compared to
$24.9 million in the prior year third quarter. Included in operating earnings
for the quarter was $8.5 million of special charges primarily related to plant
restructurings, the termination of the lease on our corporate jet, and a charge
resulting from the retirement agreement with the former CEO of the Company.
Reported net earnings totaled $4.3 million and diluted earnings per share of
$.13 for the third quarter of 2005 compared to $11.7 million or $.36 per diluted
share in the third quarter of 2004. Net earnings, excluding special items of
$5.4 million after tax, were $9.6 million or $.30 per diluted share for the
third quarter of 2005. To clarify our discussions of performance compared to the
prior year periods we have included certain non-GAAP measures that exclude
special items, refer to the GAAP to non-GAAP financial measurements
reconciliations at the end of this release. The business generated the highest
level of quarterly cash flows from operations in the Company's history of $52.2
million and paid down more than $38 million of debt.
Commenting on the results, George A. Abd, President and CEO, stated, "Overall
our performance was consistent with our estimates and expectations going into
the quarter. Our primary goals were to make significant progress on our
restructuring activities, generate strong cash flows from operations, and
initiate further actions to improve our cost structure. We have made solid
progress on our restructuring activities and our change of focus, stressing free
cash flow as a key driver of return on investment, which has already begun to
achieve results and will remain a focused financial metric in our business model
moving forward.
"There were several external and internal factors that influenced the results.
Externally, resin prices saw some decreases early in the quarter, but regained
some momentum for increases by the end of the third quarter that kept the prices
at a 10-30% higher level on average than the comparable prior year period,
depending on the resin type. General demand softened related to both our
seasonal trends in the late summer months and slowing volumes in certain
markets, namely automotive, recreation & leisure, and film. In addition many
customers began reducing inventory early in the quarter as raw material prices
began retreating."
Mr. Abd further stated, "The key internal factors affecting performance were the
breadth of the effort involved in completing the plant restructurings announced
in February 2005, as well as the completion of four new production line
installations which occurred during the quarter. We have seen limited benefit
from the restructuring efforts to date, but we expect the previously announced
actions to be complete and the majority of the facilities to be sold by the end
of 2005. We continue to address further cost reduction efforts across our
operating facilities and expect that we will continue to initiate actions that
will help reduce our cost structure for 2006 and longer term, as evidenced by
the subsequent cost reduction item discussed later in this release.
"The four new lines which were installed in our Evanston, IL, Muncie, IN, Cape
Girardeau, MO and Donchery, France facilities, have significantly increased our
capacity and capabilities for our fastest growing market segments with high
technology, multi-layer, and high clarity sheet products. Combined with the new
product development activities at our Material and Product Development Centers,
these capabilities will be a driver for growth in these higher value markets.
"The focus on cost reduction, earnings improvement, and tight controls on
working capital and capital expenditures is being driven throughout our
organization. We plan to build a company that provides World Class levels of
Service, Quality and Cost, enabling strong growth in new application
opportunities that fuel our earnings enhancement. We are only one quarter into
this journey but the first steps have been positive."
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 2
SEGMENT RESULTS
CUSTOM SHEET & ROLLSTOCK -- Net sales in our Custom Sheet & Rollstock segment
were $221.8 million in the third quarter of fiscal 2005, an increase of 16% from
the $190.8 million produced in the same three month period of 2004. This sales
increase was attributable to our late fiscal 2004 acquisition of VPI
contributing 7% and the 16% positive impact of price/mix changes driven mostly
by increases in resin prices, which were partially offset by the decline in
volume of 7%. Excluding the effect of a decrease in volume from lower-priced
dunnage material for this segment's largest customer, the decrease in underlying
volume was 4% related to a general softness in third quarter 2005 volume
compared to a particularly robust underlying volume growth quarter in 2004 of
20%. The decrease in the segment's operating earnings includes the impact of the
special items. The segment's operating earnings excluding special items declined
$1.1 million or 5% and represented 10.2 cents per pound sold in the third
quarter of 2005 compared to 10.6 cents per pound sold in the prior year period.
This per pound decrease is largely due to the lower underlying sales volume
coupled with an increase in conversion costs. Operating earnings for the third
quarter of 2005 also included operating losses for a business held for sale of
$.3 million that were not classified as special items.
(IN MILLIONS) THIRD QUARTER FIRST NINE MONTHS
------------------- -------------------
2005 2004 2005 2004
------- ------- -------- -------
Net Sales $ 221.8 $ 190.8 $ 649.6 $ 529.6
======= ======= ======== =======
Operating Earnings $ 18.7 $ 19.9 $ 36.2 $ 55.4
======= ======= ======== =======
Operating Earnings,
excluding Special Items $ 18.8 $ 19.9 $ 45.7 $ 55.4
======= ======= ======== =======
COLOR & SPECIALTY COMPOUNDS -- Our Color & Specialty Compounds segment saw its
sales increase sharply to $106.6 million or 32% greater than last year's $80.7
million. Approximately 19% of this increase was the result of the Company's VPI
acquisition, with an additional 15% increase driven by price/mix changes, and a
2% decline in underlying growth. The small decline in internal pounds sold
reflects a decrease in sales of toll-compound material to one customer in the
electronics market. Excluding the decrease for this tolling customer, the
underlying sales growth was 3%, primarily related to the Building & Construction
market for our roofing customers. The decrease in the segment's operating
earnings includes the impact of the special items. Operating earnings excluding
special items declined by about 8% or from 4.7 cents per pound sold in the third
quarter of 2004 to 3.9 cents per pound sold in third quarter of 2005. This
decrease in operating earnings reflects increases in conversion costs at our
Donchery, France facility, and the sluggish sales volume.
(IN MILLIONS) THIRD QUARTER FIRST NINE MONTHS
-------------------- ---------------------
2005 2004 2005 2004
-------- -------- -------- --------
Net Sales $ 106.6 $ 80.7 $ 317.1 $ 235.2
======== ======== ======== ========
Operating Earnings $ 2.9 $ 7.3 $ 11.3 $ 21.1
======== ======== ======== ========
Operating Earnings,
excluding Special Items $ 6.7 $ 7.3 $ 19.6 $ 21.1
======== ======== ======== ========
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 3
ENGINEERED PRODUCTS -- Our Engineered Products segment (formerly the Molded &
Profile Products segment) recorded a sales increase of 23% in the third quarter
of 2005 -- $20.3 million compared to $16.5 million in last year's third quarter.
New customers in Lawn & Garden added by our wheels business resulted in the
majority of this increase. The decrease in the segment's operating earnings
includes the impact of the special items. Operating earnings excluding special
items were $30 thousand in the third quarter of 2005 compared to $1.4 million in
the same period of 2004. The operating earnings for the third quarter of 2005
also included operating losses for an operation held for sale of $.5 million
that were not classified as special items. The remaining decrease in operating
earnings resulted from delays in the ramp up and higher than expected start-up
costs associated with new production capacity at two operations. The segment's
acrylic rod and tube business showed consistent performance and the Spartech
Marine operation has shown steady improvement over the past year.
(IN MILLIONS) THIRD QUARTER FIRST NINE MONTHS
---------------------- -----------------------
2005 2004 2005 2004
-------- -------- -------- --------
Net Sales $ 20.3 $ 16.5 $ 64.1 $ 52.2
======== ======== ======== ========
Operating Earnings $ (.2) $ 1.4 $ (1.3) $ 5.2
======== ======== ======== ========
Operating Earnings,
excluding Special Items $ -- $ 1.4 $ 2.4 $ 5.2
======== ======== ======== ========
CASH FLOW PERFORMANCE
Changes in working capital accounts provided $32.1 million of cash flow in the
third quarter of fiscal 2005. This improvement is partially due to the decrease
in underlying sales volume, but also reflects improvement in average days sales
outstanding and inventory turnover in the third quarter of fiscal 2005
reflecting additional focus on the management of net working capital levels. The
quarter's performance resulted in the Company's highest level of net cash
provided by operating activities for any one quarter in the Company's history,
totaling $52.2 million in the third quarter of this year, and drove the increase
in net cash provided by operating activities from $16.6 million in the nine
months ended July 31, 2004 to $62.3 million in the nine months ended July 30,
2005. As a result, we paid down more than $38 million in debt in the third
quarter of 2005 and expect to exceed our target of $50 million of debt reduction
in the second half of fiscal 2005. We continue to implement aggressive goals and
expand management tracking and analysis techniques to further improve our
working capital levels, as well as new criteria for capital investments for
greater focus on competing projects that can produce the highest level of return
on invested capital.
SPECIAL ITEMS
In the second quarter of fiscal 2005, the Company initiated several operational
changes to enhance short-term operating performance and longer term operating
efficiencies. The plan involved the closing and sale of certain plant facilities
segregated into three categories: (i) the elimination of two non-core
operations, (ii) the consolidation of capacity for three similar operations, and
(iii) the transfer of synergistic or new business to two other existing
operations. We made solid progress in executing this plan in the third quarter.
Subsequent to July 30, 2005, we have reached agreements to sell three operations
and we expect further sales of some of the other facilities by the end of 2005.
The agreements reached on these activities to date would result in an
approximately $2 million non-operating pre-tax gain upon sale in the fourth
quarter of 2005, but the remaining assets held for sale could offset some
portion of this amount depending on the timing and amount of proceeds received
from the remaining disposals.
In May 2005, we made a decision to sell an operating line that had been added to
the Color & Specialty Compounds segment in 2004. This decision was made possible
as a result of the late 2004 VPI acquisition and analysis of the capabilities
and capacity within the newly acquired facility. A non-cash impairment charge of
$3.7 million was recognized as part of the restructuring and exit costs in the
third quarter. We are
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 4
continuing to evaluate the Company's other operations which may lead to further
plant restructuring decisions, related exit costs, and property, plant and
equipment write downs for opportunities where additional short and longer term
efficiencies are deemed to be achievable. Any such charges would be recorded
when those decisions are made and a plan is initiated. Refer to our subsequent
cost reduction item discussion below.
In May, we also decided to terminate the lease on our Company jet, which
resulted in termination fees and selling expenses of $.8 million in the third
quarter of 2005, but savings in operating expenses of approximately $1.0 million
annually. We entered into a retirement agreement with the former CEO of the
Company. The retirement agreement includes various terms and conditions
pertaining to payments and benefits paid to him that resulted in a charge to our
operating earnings in the third quarter of fiscal 2005 of $3.6 million,
including $.8 million of non-cash expenses.
In our second quarter release, we estimated these special items would
collectively result in a $8.7 million charge in the third quarter of 2005. The
actual charges for special items in the third quarter of 2005 totaled $8.5
million, $4.6 million of which was non-cash. We expect $.3 million of additional
special item costs in the fourth quarter of 2005, primarily related to transfer
of production from the final operation of the original seven plants
restructured.
SUBSEQUENT COST REDUCTION ITEM
In addition to the impending sales of the assets related to the original
seven-plant restructuring in 2005, we have initiated a plan to consolidate two
of our compounding production facilities into one plant in Donora, Pennsylvania.
We currently have two facilities in Donora that will be combined into one with
the other converting to a warehouse operation to service the customers and
production from both plants. The plan also involves moving certain lines or
production to other existing compounding facilities. The six-month project, with
some capital investment that will also benefit the existing operation, is
estimated to require $.7 million in exit costs and result in estimated savings,
when completed, of more than $1.5 million annually. The savings are primarily
related to personnel related costs and electricity rate advantages and are not
expected to show much benefit until late in the second half 2006 with the full
benefit impacting our fiscal year 2007. We expect to incur approximately $.3
million of the exit costs related to this project in the fourth quarter of 2005
and likely incur the remaining $.4 million of the costs in the first quarter of
2006.
EARNINGS GUIDANCE
The Company is on target with the earnings guidance given last quarter. At that
time, we indicated earnings for the second half of fiscal 2005 would be $.56 to
$.61 per diluted share before special items, and with the current quarter's
performance and our fourth quarter earnings guidance of $.26 to $.31 per diluted
share before special items, we expect to meet that goal. Not included is the
impact of the business and asset sales in the fourth quarter of 2005 which are
currently expected to result in a special gain of $.03 to $.04 per diluted
share. This guidance does not take into account any impact from the recent
natural disaster that has occurred in Louisiana, Alabama and Mississippi. Our
facilities in Tupelo, MS and Lake Charles, LA were only minimally affected
physically, but the repercussions related to logistics costs, raw material
supply, and raw material pricing have yet to be determined.
We are also providing preliminary guidance for the first quarter and the full
year of fiscal 2006. Given the seasonality of our business, we believe it is
important to emphasize the first quarter earnings expectations relative to the
full year, since the November through January quarter includes the holiday
season that traditionally experiences year end shutdowns by several markets that
we serve. Our earnings guidance for the first quarter is a range of $.17 to $.20
per diluted share. Our guidance for fiscal year 2006 is within the current range
of analyst estimates at $1.23 to $1.33 per diluted share. These estimates
consider the recent signals of a general softness in demand, the implementation
of the restructuring activities that have already been announced, and a
challenging petrochemical pricing environment related to record high oil and
natural gas prices. The current expected impact of the planned restructuring
activities for 2006 are included in our guidance. These restructuring activities
contemplate the completed closings, consolidations, or sale of the
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 5
seven facilities announced in 2005 and the recently announced consolidation of
production at our Donora, Pennsylvania compounding facility which is estimated
to incur costs of approximately $.4 million in our first quarter of 2006 with
future savings that will only marginally benefit the second half of fiscal 2006.
Our 2006 guidance does not include the impact of Statement of Financial
Accounting Standards 123R, Share-Based Payment, for recognizing expense related
to the award of equity instruments which will be required to be adopted in our
first quarter of 2006. An approximate impact of the adoption of this standard on
our historical earnings per share has been presented on a pro forma basis with
our quarterly and annual financial statements and has historically ranged from 5
cents to 10 cents dilutive on the reported fiscal year earnings per share.
NON-GAAP MEASURES
Management believes that operating earnings, net income, and earnings per share
excluding special items, which are non-GAAP measurements, are meaningful to
investors because they provide a view of the Company with respect to ongoing
operating results. Special items (restructuring & exit costs, fixed asset
charges, elimination of the corporate plane, and the former CEO retirement)
represent significant charges that are important to an understanding of the
Company's overall operating results in the periods presented. Such non-GAAP
measurements are not recognized in accordance with generally accepted accounting
principles (GAAP) and should not be viewed as an alternative to GAAP measures of
performance. A reconciliation of GAAP measurements to non-GAAP can be found at
the end of this release.
* * * * * * *
Spartech Corporation is a leading producer of engineered thermoplastic
materials, polymeric compounds and concentrates, and engineered product
solutions, which following the 2005 announced plant restructurings, will have 43
facilities located throughout the United States, Canada, Mexico, and Europe,
with annual production capacity of more than 1.4 billion pounds and sales of
more than $1.2 billion, annually.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 that relate to future events
and expectations. Forward-looking statements include those containing such words
as "anticipates," "believes," "estimates," "expects," "would," "should," "will,"
"will likely result," "forecast," "outlook," "projects," and similar
expressions. 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 in the
forward-looking statements include: (a) adverse changes in economic or industry
conditions generally, including global supply and demand conditions and prices
for products of the types produced by Spartech; (b) material adverse changes in
the markets we serve, including the transportation, packaging, building and
construction, recreation and leisure, and other markets, some of which tend to
be cyclical; (c) our inability to achieve the level of cost savings,
productivity improvements, synergies, growth or other benefits anticipated from
acquired businesses and their integration; (d) volatility of prices and
availability of supply of energy and of the raw materials that are critical to
the manufacture of our products, particularly plastic resins derived from oil
and natural gas; (e) our inability to predict accurately the costs to be
incurred or savings to be achieved in connection with announced production plant
restructurings; (f) adverse findings in significant legal or environmental
proceedings or our inability to comply with applicable environmental laws and
regulations; (g) our inability to achieve operational efficiency goals or cost
reduction initiatives; (h) our inability to develop and launch new products
successfully (i) our inability to predict accurately the start-up costs
associated with the new Donchery, France facility or the expansion of the
existing wheel production capacity; (j) restrictions imposed on Spartech by
instruments governing its indebtedness, and the possible inability to comply
with requirements of those instruments, (k) weaknesses in internal controls; and
(l) other risk factors summarized in reports filed by Spartech with the
Securities and Exchange Commission. Spartech assumes no duty to update its
forward-looking statements.
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 6
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited and dollars in thousands, except per share amounts)
QUARTER ENDED NINE MONTHS ENDED
-------------------------- --------------------------
JULY 30, JULY 31, JULY 30, JULY 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
NET SALES $ 348,672 $ 288,035 $1,030,842 $ 817,089
---------- ---------- ---------- ----------
Costs and Expenses
Cost of sales 308,839 247,078 917,981 698,997
Selling and administrative 16,923 15,274 52,739 44,359
Restructuring & Exit Costs 4,639 -- 12,258 --
Former CEO Retirement 3,645 -- 3,645 --
Fixed Asset Charge 206 -- 10,592 --
Amortization of intangibles 1,264 749 3,936 1,950
---------- ---------- ---------- ----------
335,516 263,101 1,001,151 745,306
---------- ---------- ---------- ----------
OPERATING EARNINGS 13,156 24,934 29,691 71,783
Interest 6,362 5,981 19,214 18,486
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 6,794 18,953 10,477 53,297
Income Taxes 2,505 7,241 3,450 20,360
---------- ---------- ---------- ----------
NET EARNINGS $ 4,289 $ 11,712 $ 7,027 $ 32,937
========== ========== ========== ==========
NET EARNINGS PER COMMON SHARE:
Basic $ .13 $ .36 $ .22 $ 1.06
========== ========== ========== ==========
Diluted $ .13 $ .36 $ .22 $ 1.04
========== ========== ========== ==========
DIVIDENDS PER COMMON SHARE $ .12 $ .11 $ .36 $ .33
========== ========== ========== ==========
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 7
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands)
JULY 30, 2005
(UNAUDITED) OCT. 30, 2004
------------- -------------
ASSETS
CURRENT ASSETS
Cash and equivalents $ 13,830 $ 48,954
Receivables, net 193,596 188,427
Inventories 144,394 142,035
Prepaids and other 17,053 20,718
---------- ----------
TOTAL CURRENT ASSETS 368,873 400,134
PROPERTY, PLANT AND EQUIPMENT, NET 316,507 330,745
GOODWILL 358,382 361,957
OTHER INTANGIBLE ASSETS, NET 42,330 44,067
OTHER ASSETS 18,409 12,711
---------- ----------
TOTAL ASSETS $1,104,501 $1,149,614
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 18,315 $ 18,027
Accounts payable 121,226 116,386
Accrued liabilities 45,947 44,223
---------- ----------
TOTAL CURRENT LIABILITIES 185,488 178,636
---------- ----------
LONG-TERM DEBT 407,916 456,064
DEFERRED TAXES AND OTHER LONG-TERM LIABILITIES 99,549 97,182
SHAREHOLDERS' EQUITY 411,548 417,732
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,104,501 $1,149,614
========== ==========
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 8
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited and dollars in thousands)
NINE MONTHS ENDED
-----------------------------
JULY 30, 2005 JULY 31, 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 7,027 $ 32,937
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Fixed Asset Charge 10,592 --
Restructuring & Exit Costs 10,764 --
Former CEO Retirement 831 --
Depreciation and amortization 30,633 25,484
Change in current assets and liabilities,
net of the effects of acquisitions 4,750 (43,953)
Other, net (2,263) 2,181
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 62,334 16,649
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (31,267) (22,695)
Retirement of assets, net 89 --
Business acquisition (1,224) (1,418)
Outsourcing acquisition -- (8,141)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (32,402) (32,254)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank credit facility (payments)/
borrowings, net (48,020) (27,199)
Issuance of common stock -- 60,922
Payments on bonds and leases (624) (99)
Cash dividends on common stock (11,547) (10,297)
Stock options exercised 1,980 2,518
Treasury stock acquired (6,846) (677)
-------- --------
NET CASH (USED FOR)/PROVIDED BY
FINANCING ACTIVITIES (65,057) 25,168
-------- --------
Effect of exchange rate changes on cash and equivalents 1 75
-------- --------
(DECREASE)/INCREASE IN CASH AND EQUIVALENTS (35,124) 9,638
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 48,954 3,779
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 13,830 $ 13,417
======== ========
SPARTECH CORPORATION
THIRD QUARTER 2005 EARNINGS
ADD 9
SPARTECH CORPORATION
(IN THOUSANDS, UNAUDITED)
Management believes that operating earnings, net income, and earnings per share
excluding special items, which are non-GAAP measurements, are meaningful to
investors because they provide a view of the Company with respect to ongoing
operating results. Special items (restructuring & exit costs, fixed asset
charges, and the former CEO retirement) represent significant charges that are
important to an understanding of the Company's overall operating results in the
periods presented. Such non-GAAP measurements are not recognized in accordance
with generally accepted accounting principles (GAAP) and should not be viewed as
an alternative to GAAP measures of performance. The following reconciles GAAP to
non-GAAP measures for operating earnings, net income, and earnings per share
excluding special items used within this release.
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- ----------------------
JULY 30, July 31, JULY 30, July 31,
2005 2004 2005 2004
-------- -------- -------- --------
Operating Earnings (GAAP) $ 13,156 $ 24,934 $ 29,691 $ 71,783
Restructuring & Exit Costs 4,639 -- 12,258 --
Fixed Asset Charge 206 -- 10,592 --
Former CEO Retirement 3,645 -- 3,645 --
-------- -------- -------- --------
Operating Earnings Excluding
Special Items (Non-GAAP) $ 21,646 $ 24,934 $ 56,186 $ 71,783
======== ======== ======== ========
Net Earnings (GAAP) $ 4,289 $ 11,712 $ 7,027 $ 32,937
Restructuring & Exit Costs, net 2,927 -- 7,727 --
Fixed Asset Charge, net 130 -- 6,673 --
Former CEO Retirement, net 2,300 -- 2,300 --
-------- -------- -------- --------
Net Earnings Excluding
Special Items (Non-GAAP) $ 9,646 $ 11,712 $ 23,727 $ 32,937
======== ======== ======== ========
Earnings Per Diluted Share
(GAAP) $ .13 $ .36 $ .22 $ 1.04
Restructuring & Exit Costs, net .09 -- .24 --
Fixed Asset Charge, net .01 -- .21 --
Former CEO Retirement, net .07 -- .07 --
-------- -------- -------- --------
Earnings Per Diluted Share
Excluding Effect of Special Items
(Non-GAAP) $ .30 $ .36 $ .74 $ 1.04
======== ======== ======== ========