EXHIBIT 99.1
PRESS RELEASE DATED DECEMBER 15, 2005
[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, DECEMBER 15, 2005
SPARTECH CORPORATION ANNOUNCES
FOURTH QUARTER FISCAL 2005 RESULTS IN LINE WITH RECENT GUIDANCE
-----------------------
ST. LOUIS, DECEMBER 15, 2005 - Spartech Corporation (NYSE:SEH) announced
today its operating results for its fourth quarter ended October 29, 2005.
FOURTH QUARTER 2005 HIGHLIGHTS:
* NET SALES INCREASED BY 20% TO $366.0 MILLION FOR THE QUARTER
RESULTING IN OPERATING EARNINGS FOR THE QUARTER OF $19.8 MILLION,
NEGATIVELY IMPACTED BY $2.4 MILLION OF SPECIAL ITEMS, COMPARED TO $21.0
MILLION IN THE PRIOR YEAR QUARTER.
* REPORTED EARNINGS WERE $.19 PER DILUTED SHARE, AFTER SPECIAL ITEMS,
COMPARED TO $.28 PER DILUTED SHARE IN THE FOURTH QUARTER OF 2004. THE
REPORTED EARNINGS WERE IMPACTED BY A TAX VALUATION ALLOWANCE AND THE
NON-DEDUCTIBILITY OF CERTAIN OTHER SPECIAL ITEMS THAT RESULTED IN A 56%
EFFECTIVE TAX RATE FOR THE FOURTH QUARTER OF 2005.
* EARNINGS PER DILUTED SHARE BEFORE SPECIAL ITEMS (PRIMARILY RELATED
TO RESTRUCTURING & EXIT COSTS, IMPAIRMENT OF GOODWILL, AND A TAX
VALUATION ALLOWANCE) WERE $.32 WHICH WAS IN LINE WITH OUR LATEST
GUIDANCE OF $.31 TO .36 PER DILUTED SHARE.
* CASH FLOWS PROVIDED BY OPERATIONS TOTALED $40.5 MILLION FOR THE
QUARTER AND $105.0 MILLION FOR THE FULL YEAR, $91.6 MILLION GENERATED
IN THE SECOND HALF. THE CASH FLOW FROM OPERATIONS PLUS ASSET SALES AND
REDUCTIONS IN CASH, ENABLED THE COMPANY TO PAY DOWN DEBT BY $94.9
MILLION FOR THE YEAR.
EARNINGS OUTLOOK:
* THE COMPANY IS MAINTAINING ITS EARNINGS GUIDANCE FOR 2006 OF $1.23
TO $1.33 PER DILUTED SHARE FOR THE FULL FISCAL YEAR AND IS ADJUSTING
ITS GUIDANCE TO A RANGE OF $.17 TO $.22 PER SHARE FOR OUR SEASONALLY
LOW FIRST QUARTER. THIS REFLECTS OPTIMISM REGARDING CURRENT MARKET
CONDITIONS COMPARED TO THE FIRST QUARTER OF LAST YEAR BUT CONCERNS
REGARDING THE HEALTH OF SOME MARKETS, PARTICULARLY AUTOMOTIVE AND THE
CURRENTLY STRONG RV AND MANUFACTURED HOUSING SEGMENTS, FOR THE
REMAINDER OF 2006. THE GUIDANCE DOES NOT INCLUDE THE IMPACT OF 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.
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 1
OVERVIEW OF RESULTS
Net sales for the fourth quarter were $366.0 million compared to $304.6
million in the fourth quarter of 2004, representing an increase of 20%. This
total was driven by a 6% increase from the late 2004 acquisition of VPI and
a 17% positive price/mix impact following the significant resin price
increases in 2005, partially offset by a decrease in underlying volume of
3%. Over the past several quarters, comparisons of net sales to prior year
quarters have been negatively impacted by a decline in sales volume to a
sheet customer of lower-priced pallet materials and the loss of a
toll-compounding customer in the electronics market. The decline in sales
volume to these two customers resulted in a 6% decrease to overall volume
while all other business grew by 3%.
Operating earnings reported for the fourth quarter of 2005 were $19.8
million compared to $21.0 million in the prior year fourth quarter. Included
in operating earnings for the quarter were $2.4 million of net special
charges related to plant restructurings, net gains on asset sales, and the
impairment of goodwill at two businesses (our calendered film operation and
profile extrusion operation). Operating earnings excluding special items
were $22.2 million for the fourth quarter of 2005 and reflect a material
margin that was 1.7 cents higher than last year's fourth quarter, on a per
pound sold basis, related to better mix and management of resin price
increases offset only somewhat by higher conversion costs. Conversion costs
were up .9 cents per pound sold due to the continuation of certain costs
associated with two businesses until their sale or shutdown within the
quarter, costs associated with the temporary disruption of business at our
Lake Charles, Louisiana facility following hurricane Rita, and increases in
freight and utilities from both temporary influences of the storms and
ongoing cost increases.
Reported net earnings totaled $6.1 million and diluted earnings per share of
$.19 for the fourth quarter of 2005 compared to $9.1 million or $.28 per
diluted share in the fourth quarter of 2004. Net earnings excluding special
items were $10.2 million or $.32 per diluted share for the fourth 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.
Commenting on the results, George A. Abd, President and CEO, stated,
"Overall we were pleased with the progress in our fourth quarter as we work
towards achieving our short and long term goals. As a result of our renewed
focus on working capital management and our sale of the corrugated business,
we were able to pay down $46.3 million of debt in our fourth quarter and
$84.5 million in our second half of 2005.
"The quarter was not without its unique challenges. Hurricane Katrina caused
an unprecedented run-up in raw material prices and created many issues
related to raw material availability. Hurricane Rita forced a temporary shut
down of our Lake Charles, Louisiana plant site negatively impacting the
operating profits of our color and compound segment by an estimated $0.5
million as many of the costs remained while the sales and earnings were
reduced due to our inability to fill orders. Offsetting the impact of this
disruption were significant increases in sales from our sheet segment to
markets benefiting from the recovery effort, in particular manufactured
housing and recreational vehicles.
"We made good progress on our restructuring efforts by finalizing the
shutdown and sale of most of the operations announced in our restructuring
plan earlier this year. We are also announcing an additional plant
consolidation as a continuation of the consolidation announced in September.
This effort will combine our two plants in Donora, Pennsylvania as well as
one of our compounding plants in Arlington, Texas into one large facility in
Donora. When complete, we expect this project will result in total annual
savings of $3.0 million and reduce our manufacturing footprint to a more
cost effective level with less redundancy and a net of two less facilities
in our compounding segment.
"The first step of our plan moving forward was to manage our business for
strong cash flow enabling the Company flexibility to invest that cash in
several accretive options: debt pay-down, accretive acquisitions,
investments that meet our new ROI criteria, and stock repurchases. This will
continue to be our cash deployment model moving forward and will give us a
great deal of flexibility to achieve earnings growth."
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 2
Mr. Abd also stated, "We feel reasonably optimistic going into 2006 given
the status of our new product development and market development efforts,
and the completion of both the significant restructuring activities this
year as well as the installation of six new production lines focused on
higher value product solutions. We have significant challenges ahead, but
our team is focused on the key components that will allow us to realize both
our short and long term goals."
SEGMENT RESULTS
CUSTOM SHEET & ROLLSTOCK--Net sales in our Custom Sheet & Rollstock segment
were $234.7 million in the fourth quarter of fiscal 2005, an increase of 17%
from the $200.1 million produced in the same three month period of 2004.
This sales increase was attributable to our late fiscal 2004 acquisition of
VPI contributing 4%, the 11% positive impact of price/mix changes driven
mostly by increases in resin prices and an increase in underlying volume of
2%. Excluding the effect of a decrease in volume from lower-priced pallet
material for this segment's largest customer, the increase in underlying
volume of 3% was spurred by a surge in volume from the recreational vehicle
and manufactured housing markets following the effects of Katrina and Rita
in the middle of the quarter partially offset by the divestiture of our
corrugated business and lower than normal packaging growth due to the timing
of various customer programs.
The segment's reported operating earnings include the positive impact of
$2.9 million of special items which primarily represent a gain on the sale
of our corrugated sheet business and the sale of idle properties net of
restructuring costs for the quarter. The segment's operating earnings,
excluding the net gains from special items, improved to $20.1 million from
$17.5 million in 2004, an increase of $2.6 million or 14%. On a per pound
sold basis, operating earnings improved from 9.4 cents in 2004 to 10.1 cents
in 2005. This segment's operating profit per pound sold in the fourth
quarter of 2005 benefited from a slightly higher material margin from mix
and slightly lower conversion costs per pound than 2004, as the effects of
the restructuring activities began to occur helping to offset higher freight
costs. The operating earnings in the fourth quarter of 2004 were also
impacted by $1.8 million of out-of-period charges to correct account
balances identified from the implementation of information technology
systems.
(IN MILLIONS) FOURTH QUARTER FISCAL YEAR
-------------- -----------
2005 2004 2005 2004
---- ---- ---- -----
Net Sales $234.7 $200.1 $884.3 $729.8
====== ====== ====== ======
Operating Earnings $ 23.0 $ 17.3 $ 59.2 $ 72.7
====== ====== ====== ======
Operating Earnings,
excluding Special Items $ 20.1 $ 17.5 $ 65.8 $ 73.0
====== ====== ====== ======
COLOR & SPECIALTY COMPOUNDS--Our Color & Specialty Compounds segment net
sales increased to $113.8 million or 29% over last year's $88.2 million,
including 13% related to the VPI acquisition. Underlying pounds sold
experienced the continued mix change from tolling product (material provided
by the customer that is only converted by Spartech) sales to other
proprietary compounds due to the decrease in sales of toll-compound material
to one customer in the electronics market. The table that follows provides
underlying sales (pounds sold excluding recent acquisitions) trends for our
two major product categories: Tolling & Resale and Proprietary Products
(engineered compounds and color concentrates). The 15% growth in proprietary
pounds represents the concerted effort of the marketing team to replace the
decrease in tolling pounds with engineered compounds, color concentrates,
and new product development sales.
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 3
FOURTH QUARTER FISCAL YEAR
-------------- -----------
(IN MILLIONS OF POUNDS) 2005 2004 2005 2004
---- ---- ---- -----
Tolling & Resale 34.1 61.0 (44%) 167.5 226.1 (26%)
Proprietary Products 116.3 101.5 15% 435.8 401.3 9%
Acquired Pounds 20.6 7.2 81.2 7.2
----- ----- ----- -----
Total Pounds Sold 171.0 169.7 1% 684.5 634.6 8%
===== ===== ===== =====
The decrease in the segment's operating earnings includes the impact of the
special items related to the restructuring activities, a $2.0 million
impairment charge related to goodwill at its calendered film operation, and
an estimated $0.5 million negative impact to operating earnings related to a
three week shutdown of the Lake Charles plant. Operating earnings excluding
special items increased slightly as this segment's material margin continues
to benefit from the increased mix of engineered compounds replacing the
tolling pounds. This benefit was partially offset by higher conversion costs
related to the temporary shutdown of our Lake Charles facility from
hurricane Rita and increases in freight costs.
(IN MILLIONS) FOURTH QUARTER FISCAL YEAR
-------------- -----------
2005 2004 2005 2004
---- ---- ---- ----
Net Sales $113.8 $ 88.2 $430.9 $323.4
====== ======= ====== ======
Operating Earnings $ 3.4 $ 6.0 $ 14.7 $ 27.1
====== ======= ====== ======
Operating Earnings,
excluding Special Items $ 6.2 $ 6.0 $ 25.8 $ 27.1
====== ======= ====== ======
ENGINEERED PRODUCTS--Our Engineered Products segment recorded a sales
increase of 7% in the fourth quarter of 2005 to $17.5 million compared to
$16.3 million in last year's fourth quarter. New customers in the lawn &
garden market 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 primarily related to the $2.4 million charge for
the impairment of goodwill related to our profile operation which has
experienced a decrease in operating results. Operating results excluding
special items were a $0.8 million loss in the fourth quarter of 2005
compared to operating earnings of $1.1 million in the same period of 2004.
The operating losses for the fourth quarter of 2005 also include losses for
an operation held for sale of $0.9 million that were not classified as
special items. The remaining decrease in operating earnings represented
duplicate costs and start-up inefficiencies related to the migration of
wheels production from California to Reynosa, Mexico. The segment's acrylic
rod and tube business showed consistent performance and the Spartech Marine
operation has shown steady improvement over the past two years.
(IN MILLIONS) FOURTH QUARTER FISCAL YEAR
-------------- -----------
2005 2004 2005 2004
---- ---- ---- ----
Net Sales $ 17.5 $ 16.3 $ 81.7 $ 68.6
======= ======= ======= =======
Operating Earnings $ (3.3) $ 1.1 $ (4.5) $ 6.3
======= ======= ======= =======
Operating Earnings,
excluding Special Items $ (.8) $ 1.1 $ 1.6 $ 6.3
======= ======= ======= =======
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 4
CASH FLOW PERFORMANCE
Changes in working capital provided $18.9 million of cash flow in the fourth
quarter of fiscal 2005. This improvement is partially due to a concerted
effort to reduce inventories on hand and a small reduction in average days
sales outstanding reflecting additional focus on the management of net
working capital levels. The fourth quarter's $40.5 million of cash flow from
operations following the third quarter's record performance of $51.2 million
resulted in the highest level of net cash provided by operating activities
for any year in the Company's history, totaling $105.0 million. As a result,
including asset sales and reduction in our cash balance, we were able to pay
down approximately $95 million in debt for the year. We continue to
implement aggressive goals and expand management tracking and analysis
techniques to further lower our net working capital levels from the current
12% of annual sales reflected in 2005.
SPECIAL ITEMS
The special items recognized in the fourth quarter of 2005 primarily relate
to the completion of the various cost reduction activities announced in the
second quarter of the year, the combination of two of our compounding
production facilities into one plant in Donora, Pennsylvania, the
recognition of goodwill impairments related to two of our businesses, and
the recognition of a valuation allowance for a deferred tax asset.
We have substantially completed the closing, sale, or consolidation of seven
plant facilities announced in February of 2005. The completion of these
activities and sales of other idle properties resulted in a $2.7 million
gain on the sale of assets to third parties and $0.5 million in
restructuring and exit costs in the fourth quarter of 2005. After these
disposals, we have only two idled facilities considered as properties held
for sale at the end of fiscal 2005.
In September 2005, we announced the conversion of one of our Donora
facilities into a warehouse and combining production from both plants into
one. The implementation of this plan has also resulted in the planned
closure of one of our Arlington, Texas compounding operations, communicated
to employees in November 2005. This combined project is estimated to incur
$0.9 million in restructuring costs; $0.2 million has already been incurred
in the fourth quarter of 2005 and an additional $0.7 million in exit costs
is estimated to be spent in the first half of 2006. When complete, the
project is estimated to save more than $3.0 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.
Poor operating performance at two of our reporting units resulted in an
impairment of goodwill in accordance with the provisions of Financial
Accounting Standards Board SFAS No. 142, Goodwill and Other Intangible
Assets. We recorded an impairment of goodwill at Spartech Calendered Film
which is reported in the Color & Specialty Compounds segment with annual
sales of approximately $30 million and Spartech Profiles which is reported
in the Engineered Products segment with annual sales of approximately $9
million. Spartech Calendered Film recorded a non-cash $2.0 million goodwill
impairment loss primarily related to the loss of a top five customer
representing 7% of the division's sales. Spartech Profiles recorded a
non-cash $2.4 million goodwill impairment loss primarily related to
underperforming operations and the failure to realize its business plan.
The quarter's income tax expense reflects the non-deductibility of certain
goodwill impairment charges and the fact that income tax benefit was not
recognized on approximately $3.4 million of net operating losses at our
Donchery, France operation which underwent a substantial expansion to
introduce sheet production capabilities in Europe, integration of production
of a new compounds product line, and ramp-up of production for a significant
new customer. The effect of the recording of a valuation allowance was a
$1.1 million non-cash charge to current tax expense. These items resulted in
an effective tax rate of 56% for the fourth quarter of 2005, however, we
expect our effective tax rate going forward to approximate 37.0%.
The total net charges for special items were $4.1 million after tax in the
fourth quarter of 2005 and $20.6 million after tax for fiscal 2005. We
expect $0.7 million of additional pre-tax restructuring costs in the first
half of 2006 related to the combination of our Donora and one of our
Arlington compounding plants.
SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 5
EARNINGS GUIDANCE
We are reiterating our guidance for 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. We are adjusting our earnings guidance for the first quarter to a
range of $.17 to $.22 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 strong underlying sales growth in
November 2005 compared to 2004 and the implementation of the restructuring
activities that have already been announced, but also continuing concerns
related to the recent signals of instability in the U.S. automotive market
and a challenging petrochemical pricing environment related to record high
oil and natural gas prices which are dramatically impacting utility and
freight costs and could effect end market demand. This guidance does not
include the impact of 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.
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.
* * * * * * *
Spartech Corporation is a leading producer of engineered thermoplastic sheet
materials, polymeric compounds and concentrates, and engineered product
solutions. The company has 43 facilities located throughout the United
States, Canada, Mexico, and Europe with sales of approximately $1.4 billion,
annually.
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 EARNINGS
ADD 6
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 324,824 267,966 1,242,805 966,963
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
-------- -------- ---------- ----------
346,170 283,618 1,347,321 1,028,924
-------- -------- ---------- ----------
OPERATING EARNINGS 19,848 21,018 49,539 92,801
Interest 5,981 6,950 25,195 25,436
-------- -------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 13,867 14,068 24,344 67,365
Income Taxes 7,793 4,942 11,243 25,302
-------- -------- ---------- ----------
NET EARNINGS $ 6,074 $ 9,126 $ 13,101 $ 42,063
======== ======== ========== ==========
NET EARNINGS PER COMMON SHARE:
Basic $ .19 $ .28 $ .41 $ 1.34
======== ======== ========== ==========
Diluted $ .19 $ .28 $ .41 $ 1.32
======== ======== ========== ==========
DIVIDENDS PER COMMON SHARE $ .12 $ .11 $ .48 $ .44
======== ======== ========== ==========
<FN>
* For a description of prior quarter special items, please refer to our
disclosures and discussions provided in our previously filed Quarterly
Reports on Form 10-Q in 2005.
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 7
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 17,377 20,718
---------- ----------
TOTAL CURRENT ASSETS 355,375 392,452
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 $1,074,802 $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 56,723 44,223
---------- ----------
TOTAL CURRENT LIABILITIES 189,580 170,954
---------- ----------
LONG-TERM DEBT 368,780 456,064
DEFERRED TAXES AND OTHER LONG-TERM LIABILITIES 102,486 97,182
SHAREHOLDERS' EQUITY 413,956 417,732
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,074,802 $1,141,932
========== ==========
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 8
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited and dollars in thousands)
YEAR ENDED
------------------------------------------------
OCT. 29, 2005 OCT. 30, 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 13,101 $ 42,063
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Fixed asset charge 10,664 223
Restructuring & exit costs 7,522 -
Impairment of goodwill 4,468 -
Former CEO retirement 831 -
Depreciation and amortization 40,387 35,056
Change in current assets and liabilities,
net of the effects of acquisitions and divestitures 25,889 (55,007)
Other, net 2,156 8,480
----------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 105,018 30,815
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (39,265) (35,003)
Disposition of assets 9,116 -
Business acquisition (1,224) (87,952)
Outsourcing acquisition - (8,141)
----------- ----------
NET CASH USED FOR INVESTING ACTIVITIES (31,373) (131,096)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank credit facility (payments)/
borrowings, net (76,370) (27,204)
Borrowings from issuance of notes - 150,000
Payments on notes (17,857) (32,857)
Issuance of common stock - 60,922
Payments on bonds and leases (671) (133)
Cash dividends on common stock (11,547) (13,839)
Stock options exercised 4,083 4,066
Treasury stock acquired (7,982) (2,655)
----------- ----------
NET CASH (USED FOR)/PROVIDED BY
FINANCING ACTIVITIES (110,344) 138,300
----------- ----------
Effect of exchange rate changes on cash and equivalents 28 199
----------- ----------
(DECREASE)/INCREASE IN CASH AND EQUIVALENTS (36,671) 38,218
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 41,272 3,054
----------- ----------
CASH AND EQUIVALENTS AT END OF PERIOD $ 4,601 $ 41,272
=========== ==========
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SPARTECH CORPORATION
FOURTH QUARTER 2005 EARNINGS
ADD 9
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) $ 19,848 $ 21,018 $ 49,539 $ 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) $ 22,218 $ 21,241 $ 78,404 $ 93,024
========= ========= ========= =========
Net Earnings (GAAP) $ 6,074 $ 9,126 $ 13,101 $ 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) $ 10,175 $ 9,264 $ 33,718 $ 42,201
========= ========= ========= =========
Earnings Per Diluted Share
(GAAP) $ .19 $ .28 $ .41 $ 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) $ .32 $ .28 $ 1.04 $ 1.32
========= ========= ========= =========
-30-