1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number I-8524
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MYERS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
OHIO #34-0778636
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1293 SOUTH MAIN STREET, AKRON, OHIO 44301
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 253-5592
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Indicate 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes . No .
--- ---
As of April 30, 1998, the number of shares outstanding of the issuer's
Common Stock was:
18,299,441
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
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March 31, December 31,
ASSETS 1998 1997
- ------ ------------ ------------
CURRENT ASSETS
Cash and temporary cash investments $ 2,113,611 $ 6,297,726
Accounts receivable-less allowances
of $2,347,000 and $2,102,000,
respectively 58,888,111 54,940,671
Inventories
Finished and in-process products 39,463,925 35,427,355
Raw materials and supplies 8,347,108 7,627,878
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47,811,033 43,055,233
Prepaid expenses 3,968,309 3,132,997
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TOTAL CURRENT ASSETS 112,781,064 107,426,627
OTHER ASSETS
Excess of cost over fair value of net
assets of companies acquired 23,207,950 20,484,628
Patents and other intangible assets 2,346,909 2,427,633
Other 7,158,162 3,188,125
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32,713,021 26,100,386
PROPERTY, PLANT & EQUIPMENT, AT COST
Land 2,615,578 2,597,342
Buildings and leasehold improvements 48,050,817 42,043,716
Machinery and equipment 135,195,071 125,413,124
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185,861,466 170,054,182
Less allowances for depreciation and
amortization 83,048,606 79,503,273
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102,812,860 90,550,909
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$248,306,945 $224,077,922
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
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March 31, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- ------------------------------------ ------------- --------------
CURRENT LIABILITIES
Accounts payable $ 14,883,232 $ 14,414,557
Accrued expenses
Employee compensation 10,217,373 12,014,848
Taxes, other than income taxes 1,326,902 1,162,642
Income taxes 4,564,858 1,208,327
Other 13,048,665 9,996,832
Current portion of long-term debt 771,947 846,316
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TOTAL CURRENT LIABILITIES 44,812,977 39,643,522
LONG-TERM DEBT, less current portion 16,699,618 4,261,257
DEFERRED INCOME TAXES 3,970,164 3,496,196
SHAREHOLDERS' EQUITY
Serial Preferred Shares
(authorized 1,000,000) ----- -----
Common Shares, without par value
(authorized 30,000,000 shares;
outstanding 18,285,126 and
18,278,895, respectively) 11,577,401 11,573,496
Additional paid-in capital 133,454,892 133,359,303
Foreign currency translation
adjustment (513,230) (484,820)
Retained income 38,305,123 32,228,968
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182,824,186 176,676,947
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$ 248,306,945 $ 224,077,922
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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CONDENSED STATEMENT OF CONSOLIDATED INCOME
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FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
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March 31, March 31,
1998 1997
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Net sales $88,191,166 $76,798,621
Costs and expenses
Cost of sales 57,575,412 52,711,406
Operating expenses 18,634,682 15,930,546
Interest expense, net 132,741 7,166
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Total costs & expenses 76,342,835 68,649,118
Income before income taxes 11,848,331 8,149,503
Income taxes 4,858,000 3,341,000
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Net income $ 6,990,331 $ 4,808,503
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Net income per common share $ .38 $ .26
Dividends per common share $ .05 $ .04
Weighted average number of
common shares outstanding 18,282,096 18,546,438
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
--------------------------------------------------
March 31, March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES ------------ ------------
Net income $ 6,990,331 $ 4,808,503
Items not affecting use of cash
Depreciation 3,640,688 2,891,801
Amortization of excess of cost over fair
value of net assets of companies acquired 253,454 121,140
Amortization of other intangible assets 112,854 113,559
Cash flow provided by (used for) working capital
Accounts receivable 513,905 841,925
Inventories (1,294,215) (3,077,185)
Prepaid expenses (691,398) 878,864
Accounts payable and accrued expenses 3,408,032 3,316,100
------------ ------------
Net cash provided by operating activities 12,933,651 9,894,707
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (11,763,119) --
Additions to property, plant and
equipment, net (3,152,125) (7,519,301)
Other 115,510 388,276
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Net cash used for investing activities (14,799,734) (7,131,025)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) - net (1,503,350) (117,287)
Cash dividends paid (914,176) (843,118)
Proceeds from issuance of common stock 182,181 131,167
Repurchase of common stock (82,687) 0
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Net cash provided by (used for) financing activities (2,318,032) (829,238)
(DECREASE) INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS (4,184,115) 1,934,444
CASH AND TEMPORARY CASH INVESTMENTS
JANUARY 1 6,297,726 5,600,349
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CASH AND TEMPORARY CASH INVESTMENTS
MARCH 31 $ 2,113,611 $ 7,534,793
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
----------------------
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
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Foreign
Additional Currency
Comprehensive Common Paid-In Translation Retained
Income Stock Capital Adjustment Income
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DECEMBER 31, 1997 $11,573,496 $133,359,303 ($484,820) $32,228,968
Net Income $6,990,331 6,990,331
Foreign Currency
Translation
Adjustment (28,410) (28,410)
Comprehensive
Income $6,961,921
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Common Stock
Issued 7,105 175,076
Purchases for
Treasury (3,200) (79,487)
Dividends (914,176)
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MARCH 31, 1998 $11,577,401 $133,454,892 ($513,230) $38,305,123
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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NOTES TO FINANCIAL STATEMENTS
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(1) Statement of Accounting Policy
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The accompanying financial statements include the accounts of Myers
Industries, Inc. and subsidiaries (Company), and have been prepared without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures are adequate to
make the information not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's latest annual report on Form 10-K.
In the opinion of the Company, the accompanying financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position as of March 31, 1998, and the results
of operations and cash flows for the three months ended March 31, 1998 and 1997.
(2) Acquisitions
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Effective January 2, 1998, the Company acquired for cash all
outstanding shares of A/S E. Damberg Group, a manufacturer of plastic and metal
storage systems headquartered in Nykobing Falster, Denmark. Known by its
principal brand name, raaco, it produces products for both industrial and
consumer markets throughout Scandinavia and the European Common Market. The
Stock Purchase Agreement provides for payment of additional consideration
contingent upon the earnings of raaco during the 48 month period ending December
31, 2001.
On April 25, 1997, the Company acquired substantially all of the assets
of Molded Solutions, Inc., a manufacturer of custom engineered molded rubber
products. The Asset Purchase Agreement provides for payment of additional
consideration contingent upon the earnings of Molded Solutions during the 12
month period ending April 25, 1998.
These acquisitions have been accounted for using the purchase method
and, accordingly, the results of operations for the acquired businesses have
been included in the Company=s consolidated financial statements from their
respective dates of acquisition. Consolidated pro forma sales, net income and
net income per share, would not have been materially different from the
reported amounts for all periods presented. The purchase price allocations have
been based on preliminary estimates with the excess of purchase price over the
fair value of assets acquired being amortized on a straight line basis over 15
to 30 years.
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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NOTES TO FINANCIAL STATEMENTS
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(3) Net Income Per Share
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In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement No.128, "Earnings per Share" which eliminates the concept of
common stock equivalents and replaces "primary" and "fully diluted" earnings per
share with "basic" and "diluted" earnings per share.
Basic net income per share on the Condensed Statements of Consolidated
Income, is determined on the basis of the weighted average number of Common
Shares outstanding during the period. The restatement of prior periods, as
required by FASB 128, did not effect the earnings per share amounts previously
reported and, for all periods shown, basic and diluted earnings per share are
identical. Prior year per share data has been adjusted for the ten percent stock
dividend distributed in August 1997.
(4) Supplemental Disclosure of Cash Flow Information
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The Company made cash payments for interest expense of $440,270 and
$145,202 for the three months ended March 31, 1998 and 1997, respectively. Cash
payments for income taxes were $1,671,614 and $1,021,198 for the three months
ended March 31, 1998 and 1997, respectively.
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
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Net sales for the three months ended March 31, 1998 increased $11.4
million or 14.8 percent as the Company experienced significant improvements in
both of its business segments. Sales in the Distribution segment increased $2.1
million or 7.0 percent primarily as a result of higher unit volumes. Sales in
the Manufacturing segment increased $9.3 million or 20 percent with
approximately 55 percent of the increase due to acquired companies not included
in the prior year period. The remaining increase in sales for the Manufacturing
segment was the result of higher unit volumes.
Cost of sales increased $4.9 million or 9.2 percent reflecting the
higher sales level; however, gross profit as a percentage of sales improved from
31.4 percent to 34.7 percent. The gross margin improvement was primarily
achieved in the Manufacturing segment reflecting lower raw material costs and
greater utilization of plant capacity.
Operating expenses for the quarter increased $2.7 million or 17.0
percent reflecting the additional operating costs of acquired companies as well
as costs associated with the increase in sales. Expressed as a percentage of
sales operating expenses were 21.1 percent for the quarter ended March 31, 1998
compared with 20.7 percent in the prior year.
Net interest expense increased to $132,741 for the quarter ended
March 31, 1998 from $7,166 in the prior year. This increase reflects the higher
borrowing levels resulting from business acquisitions but had no material impact
on the Company's financial results.
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
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Cash provided by operating activities is the primary source of
liquidity and amounted to $12.9 million for the three months ended March 31,
1998. Long-term debt increased by $12.4 million during the three months of 1998
and debt as a percentage of total capitalization increased to 9 percent compared
to 3 percent at December 31, 1997. Working capital increased slightly to $68.0
million at March 31, 1998 from $67.7 million at December 31, 1997.
Capital expenditures for the three months ended March 31, 1998 were
$3.2 million. The Company currently anticipates annual capital expenditures in
the range of $15.0 to $20.0 million over the next five years. Management
believes that anticipated cash flows from operations and available credit
facilities will be sufficient to fund capital expenditures and meet its
short-term and long-term needs.
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PART II - OTHER INFORMATION
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MYERS INDUSTRIES, INC.
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Item 6. Exhibits and Reports on Form 8-K
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(a) Financial Date Schedule
(b) Form 8-K
None
SIGNATURE
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Pursuant to the requirements 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.
MYERS INDUSTRIES, INC.
05/08/98 By: \s\ Gregory J. Stodnick
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Date Gregory J. Stodnick
Vice President-Finance
Financial Officer (Duly
Authorized Officer and
Principal Financial and
Accounting Officer)