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, JANUARY 12, 2006
SPARTECH CORPORATION REVISES FOURTH QUARTER
FISCAL 2005 EARNINGS AND AFFIRMS PREVIOUS 2006 GUIDANCE
-----------------------
ST. LOUIS, JANUARY 12, 2006 -- Spartech Corporation (NYSE:SEH) announced today
that it was revising its net earnings for its fourth quarter ended October 29,
2005 downward from $6.1 million previously announced to $5.2 million. As a
result, the fourth quarter 2005 diluted earnings per share are revised from
$0.19 to $0.16.
This revision to the fourth quarter 2005 earnings is related to a pre-tax
adjustment of $1.5 million to increase the accrual for freight expenses as of
the end of fiscal 2005. An adjustment was necessary to reflect unrecorded
freight charges which resulted from unexpected delays in freight billings not
yet identified at the time of our December 15, 2005 earnings release. The
extended delay in freight bills was largely related to the disruption at many of
our freight carriers and bill processors due to the impact of hurricanes Katrina
and Rita which occurred shortly before our year end. Subsequent analyses of our
freight accrual, in addition to the freight bills received after the press
release, identified the need to record the additional expense.
We are reiterating our guidance for fiscal 2006 of $1.23 to $1.33 per diluted
share for the full year. The first quarter of 2006 guidance is reaffirmed at
$.17 to $.22 per diluted share compared to $0.09 per diluted share in the first
quarter of 2005. This guidance does not include the impact of the adoption of
FAS 123R on expensing of stock options which we estimate will amount in an
expense of $0.05 per share in the full year and $0.01-0.02 in the first quarter.
Selected financial statement information reflecting the adjustment noted above
is included with this release, including the GAAP to Non-GAAP reconciliations of
operating earnings, net earnings, and earnings per share. Full financial
statements and footnotes for fiscal year 2005 are available in our Annual Report
on Form 10-K filed today.
* * * * * * *
Spartech Corporation is a leading producer of engineered thermoplastic sheet
materials, polymeric compounds and concentrates, and engineered product
solutions. The Company has facilities located throughout the United States,
Canada, Mexico, and Europe with sales of approximately $1.4 billion, annually.
SPARTECH CORPORATION
FOURTH QUARTER 2005 REVISED EARNINGS
ADD 1
NON-GAAP MEASURES
We believe that operating earnings, net earnings, 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, impairment of goodwill, elimination of the corporate plane, the former
CEO retirement, and the tax valuation allowance) 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.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
relate to future events and expectations and include those containing such words
as "expects," "will," 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 we produce including the impact of rising
interest rates on the markets we serve; (b) material adverse changes in demand
from 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 including future effects of the natural disasters that have
caused price increases and supply problems in plastic resins; (e) our inability
to manage or pass through an adequate level of increases in the cost of freight,
utilities, or other conversion costs; (f) our inability to predict accurately
the costs to be incurred or savings to be achieved in connection with announced
production plant restructurings; (g) adverse findings in significant legal or
environmental proceedings or our inability to comply with applicable
environmental laws and regulations; (h) adverse developments with work stoppages
or labor disruptions in the automotive industry, (i) our inability to achieve
operational efficiency goals or cost reduction initiatives; (j) our inability to
develop and launch new products successfully; (k) restrictions imposed on us by
instruments governing our indebtedness, and the possible inability to comply
with requirements of those instruments; (l) weaknesses in internal controls; and
(m) other risk factors summarized in reports we file with the Securities and
Exchange Commission. We assume no duty to update our forward-looking statements.
-TABLE TO FOLLOW-
SPARTECH CORPORATION
FOURTH QUARTER 2005 REVISED EARNINGS
ADD 2
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited and dollars in thousands, except per share amounts)
QUARTER ENDED YEAR ENDED
------------------------------- ------------------------------
OCT 29, OCT 30, OCT 29, OCT 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
NET SALES $ 366,018 $ 304,636 $1,396,860 $1,121,725
---------- ---------- ---------- ----------
Costs and Expenses
Cost of sales 326,295 267,966 1,244,276 966,963
Selling and administrative 17,973 14,539 70,712 58,898
Restructuring & Exit Costs (2,170) -- 10,088 --
Former CEO Retirement -- -- 3,645 --
Fixed Asset Charge 72 223 10,664 223
Impairment of Goodwill 4,468 -- 4,468 --
Amortization of intangibles 1,003 890 4,939 2,840
---------- ---------- ---------- ----------
347,641 283,618 1,348,792 1,028,924
---------- ---------- ---------- ----------
OPERATING EARNINGS 18,377 21,018 48,068 92,801
Interest 5,981 6,950 25,195 25,436
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 12,396 14,068 22,873 67,365
Income Taxes 7,232 4,942 10,682 25,302
---------- ---------- ---------- ----------
NET EARNINGS $ 5,164 $ 9,126 $ 12,191 $ 42,063
========== ========== ========== ==========
NET EARNINGS PER COMMON SHARE:
Basic $ .16 $ .28 $ .38 $ 1.34
========== ========== ========== ==========
Diluted $ .16 $ .28 $ .38 $ 1.32
========== ========== ========== ==========
DIVIDENDS PER COMMON SHARE $ .12 $ .11 $ .48 $ .44
========== ========== ========== ==========
- MORE -
SPARTECH CORPORATION
FOURTH QUARTER 2005 REVISED EARNINGS
ADD 3
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands)
ASSETS
OCT. 29, 2005
(UNAUDITED) OCT. 30, 2004
------------- -------------
CURRENT ASSETS
Cash and equivalents $ 4,601 $ 41,272
Receivables, net 213,996 188,427
Inventories 119,401 142,035
Prepaids and other 16,970 20,718
---------- ----------
TOTAL CURRENT ASSETS 354,968 392,452
PROPERTY, PLANT AND EQUIPMENT, NET 307,386 330,745
GOODWILL 352,405 361,957
OTHER INTANGIBLE ASSETS, NET 40,710 43,967
OTHER ASSETS 18,926 12,811
---------- ----------
TOTAL ASSETS $1,074,395 $1,141,932
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 11,175 $ 18,027
Accounts payable 121,682 108,704
Accrued liabilities 57,226 44,223
---------- ----------
TOTAL CURRENT LIABILITIES 190,083 170,954
---------- ----------
LONG-TERM DEBT 368,780 456,064
DEFERRED TAXES AND OTHER LONG-TERM LIABILITIES 102,486 97,182
SHAREHOLDERS' EQUITY 413,046 417,732
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,074,395 $1,141,932
========== ==========
- MORE -
SPARTECH CORPORATION
FOURTH QUARTER 2005 REVISED EARNINGS
ADD 4
SPARTECH CORPORATION
We believe that operating earnings, net earnings, 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, impairment of goodwill, elimination of the corporate plane, the former
CEO retirement, and the tax valuation allowance) 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. Amounts are
in thousand, except per share data.
Three Months Ended Fiscal Year
------------------------------- ------------------------------
Oct. 29, Oct. 30, Oct. 29, Oct. 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
(Unaudited)
Operating Earnings (GAAP) $ 18,377 $ 21,018 $ 48,068 $ 92,801
Restructuring & Exit Costs, net (2,170) -- 10,088 --
Fixed Asset Charge 72 223 10,664 223
Impairment of Goodwill 4,468 -- 4,468 --
Former CEO Retirement -- -- 3,645 --
Tax Valuation Allowance -- -- -- --
---------- ---------- ---------- ----------
2,370 223 28,865 223
---------- ---------- ---------- ----------
Operating Earnings Excluding
Special Items (Non-GAAP) $ 20,747 $ 21,241 $ 76,933 $ 93,024
========== ========== ========== ==========
Net Earnings (GAAP) $ 5,164 $ 9,126 $ 12,191 $ 42,063
Restructuring & Exit Costs, net (1,052) -- 6,634 --
Fixed Asset Charge 44 138 6,624 138
Impairment of Goodwill 3,976 -- 3,976 --
Former CEO Retirement -- -- 2,250 --
Tax Valuation Allowance 1,133 -- 1,133 --
---------- ---------- ---------- ----------
4,101 138 20,617 138
---------- ---------- ---------- ----------
Net Earnings Excluding
Special Items (Non-GAAP) $ 9,265 $ 9,264 $ 32,808 $ 42,201
========== ========== ========== ==========
Earnings Per Diluted Share
(GAAP) $ .16 $ .28 $ .38 $ 1.32
Restructuring & Exit Costs, net (.03) -- .20 --
Fixed Asset Charge -- -- .20 --
Impairment of Goodwill .12 -- .12 --
Former CEO Retirement -- -- .07 --
Tax Valuation Allowance .04 -- .04 --
---------- ---------- ---------- ----------
.13 -- .63 --
---------- ---------- ---------- ----------
Earnings Per Diluted Share
Excluding Effect of Special Items
(Non-GAAP) $ .29 $ .28 $ 1.01 $ 1.32
========== ========== ========== ==========
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