July 8, 2010

A. Schulman Reports Strong Fiscal 2010 Third-Quarter Results

AKRON, Ohio, July 8, 2010 /PRNewswire via COMTEX News Network/ --

  • Reported net income of $25.8 million for the quarter compared with $7.4 million in last year's third quarter
  • Excluding certain one-time charges and acquisition-related items, net income for the quarter was $13.6 million or $0.48 per share, compared with $9.0 million, or $0.36 per share, for the prior-year period
  • During the quarter, the Company successfully completed its strategic acquisition of ICO, Inc.

A. Schulman, Inc. (Nasdaq: SHLM) announced today earnings for the fiscal 2010 third quarter ended May 31, 2010. The Company reported net income for the third quarter of $25.8 million compared with net income of $7.4 million for the comparable period last year. The translation effect of foreign currencies did not have a material impact in the quarter.

The fiscal 2010 third quarter included certain after-tax net benefits of approximately $12.2 million, which were primarily related to purchase accounting adjustments, asset impairments, acquisition-related costs and restructuring expenses. Last year's third quarter included certain non-operating after-tax charges of $1.6 million related to restructuring, impairments and accelerated depreciation. Excluding these charges, net income for the fiscal 2010 third quarter was $13.6 million, or $0.48 per diluted share, compared with $9.0 million, or $0.36 per diluted share, for the prior-year period. The Company's financial results contained one month of ICO, Inc.'s operations. The acquired operations of ICO, Inc. contributed approximately $0.9 million to adjusted net income in the fiscal 2010 third quarter.

"I am very pleased with our strong earnings performance in fiscal 2010 which was driven primarily by cost-reduction actions and improved mix in North America and Europe as well as the steadily recovering marketplace," said Joseph M. Gingo, Chairman, President and Chief Executive Officer. "Our volume has kept pace with the improvement in the marketplace and, excluding the recent ICO acquisition, increased 12% for the quarter with all manufacturing businesses showing increases. We are excited by our ICO acquisition and are satisfied that we're making solid progress with our ICO integration efforts. We are on track to achieve $15 million in annual cost-reduction synergies by fiscal 2012."

Net sales for the fiscal 2010 third quarter were $420.3 million, an increase of 41.2% compared with $297.6 million for the comparable period last year. Excluding ICO, sales increased 30.5% compared with net sales in the same period a year ago. Tonnage increased approximately 12% for the quarter excluding ICO. Price and mix accounted for approximately 18% of the increase while the translation effect of foreign currency had virtually no effect.

Gross profit for the quarter was $58.9 million, an increase of $12.4 million from $46.5 million for the third quarter of last year. ICO accounted for $2.3 million of the improvement in gross profit. Gross margin was 14.0% compared with 15.6% in the third quarter of last year. Excluding certain one-time charges and acquisition-related items, gross profit per pound increased year-over-year as the Company was generally successful in offsetting raw material cost increases through increasing prices, improving mix, and achieving lower manufacturing costs per pound sold.

Selling, general and administrative (SG&A) expense for the fiscal 2010 third quarter was $43.5 million, an increase of $10.7 million compared with $32.9 million in the fiscal 2009 third quarter. Major items driving the SG&A increase include incremental incentive compensation of $3.8 million, reflecting the Company's strong financial performance, the inclusion of $3.4 million of SG&A related to ICO in the current year's third quarter, and acquisition-related costs of $1.6 million. Foreign exchange was a positive variance of $0.5 million.

For the first nine months of fiscal 2010, the Company reported net income of $36.0 million, or $1.34 per diluted share, compared with $5.1 million, or $0.20 per diluted share, for the same period last year. Excluding certain one-time charges and acquisition-related items, net income was $36.5 million, or $1.36 per diluted share, for the current fiscal year to date, compared with $11.0 million, or $0.43 per diluted share, a year ago. Sales volume increased 16.2% for the nine-month period, or 12.9% excluding ICO, reflecting the slowly improving economic conditions the Company has recently experienced. The profitability improvement was driven by the significant increase in gross profit reflecting cost reductions, margin improvement initiatives and market improvement.

Europe - In the fiscal 2010 third quarter, sales in Europe were $304.8 million, an increase of $84.5 million or 38.3% compared with the prior-year period. ICO accounted for 6.7 percentage points of the increase. Tonnage for the quarter, excluding ICO, increased by 12.8%. Changes in prices and product mix increased sales by almost 19.4% compared with the same period last year. Foreign exchange was not a significant factor in the sales increase. During the quarter, the Company passed along price increases in the market to offset the increased raw material prices. Mix continues to remain favorable as growth in the higher-margin Masterbatch and Engineered Plastics businesses offset the lower-margin distribution business.

Gross profit improved to $46.3 million for the quarter compared with $38.6 million for the same period last year. ICO accounted for $0.9 million of the increase. Gross profit per pound increased year over year, which was primarily driven by mix and the benefit of increased volume in the manufacturing facilities. Operating income for the fiscal 2010 third quarter was $21.3 million compared with $16.5 million in the same quarter last year. ICO was slightly unfavorable as a result of purchase accounting adjustments, which were primarily a result of the purchase accounting increase related to inventory value which accounted for a cost of almost $1.0 million. Foreign exchange was not a significant factor in the operating profit increase.

"We continue to see slow, steady improvement in Europe," Gingo said. "Our business is focused primarily in the stronger northern and eastern regions of Europe. We will continue to be vigilant in monitoring the credit worthiness of our European customers as we are with all of our customers around the world."

North America - North America combined operating income, including discontinued operations, was $0.9 million during the quarter, compared with last year's third-quarter loss of $2.1 million. ICO reported $0.1 million in operating income as a result of purchase accounting adjustments and higher depreciation and amortization resulting from the acquisition related increase fixed and intangible assets. Volume excluding ICO was up approximately 6%. Gross profit for the third quarter increased to $10.5 million from $5.3 million for the prior-year period. ICO accounted for $1.6 million of the increase in gross profit with the remainder coming from margin improvement initiatives, mix and favorable volume. For the year-to-date period, North America reported a total operating profit of $4.0 million compared with a loss of $13.4 million a year ago primarily driven by the stronger gross profit.

Asia - Sales were $22.9 million, an increase of almost 80% for the quarter compared with the same period last year. ICO accounted for 37.8 percentage points of that sales increase. Tonnage excluding ICO increased almost 28%. Gross profits were $2.1 million compared with $2.6 million in the comparable quarter last year. ICO accounted for $0.2 million of the decrease. Slight declines in the profitability of the Asian sales mix accounted for the remainder of the difference. Operating income was $0.2 million compared with $1.9 million for the prior-year quarter. ICO accounted for $0.7 million of the decline with the remainder coming from increased cost allocations from the European segment.

ICO - The combined ICO businesses contributed approximately $32 million to sales, $2.3 million to gross profit and recorded a loss of $1.1 million on the operating income line. Non-operating purchase accounting adjustments from increasing the value of the purchased inventory added $2.5 million to costs in the quarter, which reduced gross profit. These adjustments will be complete in July. In addition, the Company has increased the value of ICO's fixed assets and intangible assets. As a result, non-cash depreciation and amortization expense increased approximately $0.6 million during the month. Although the Company's purchase accounting adjustments are not finalized, and are anticipated to be substantially complete during the fourth quarter, the Company currently expects to expense an additional $7 million per year in these non-cash charges. Overall, excluding the acquisition-related expenses, ICO's performance was favorable compared with the prior year.

Cash Flow From Operations and Working Capital

Cash flow from operations was a negative $25 million for the year-to-date period, compared with a positive $150.6 million during the same period last year. The Company's liquidity position remained strong. Working capital dropped from 67 days at the end of the second quarter to 62 days at the end of the third quarter, or 60 days excluding ICO's working capital. After the effect of the ICO acquisition, re-payments of a significant portion of borrowings pertaining to ICO, payments of deal costs, the increased working capital balances driven by the sales increases, and the continued dividend, the Company has moved into a net debt position of approximately $54 million compared with the net cash position of approximately $110 million reported at the end of the fiscal second quarter. However, the Company still maintains strong liquidity with global availability on its lines of credit of more than $250 million.

Business Outlook

"We are very pleased that our liquidity remains strong and we are well-positioned to drive profitable growth," Gingo said. "We remain optimistic that our markets will continue their gradual recovery. With respect to the fourth quarter, we expect significant continued improvement in our North American performance compared with last year. While we are also pleased with our overall performance in Europe, it is not likely to approach pre-downturn fiscal 2008 levels until market volumes recover significantly. Additionally, the weakness in the euro, which is unrelated to our operating performance, is expected to put downward pressure on our fourth-quarter earnings. As a result of all of these factors, we are now expecting our fourth-quarter results, excluding ICO, to approximate our fourth-quarter results in fiscal 2008, which preceded the worst months of the recession. We now expect ICO to add $0.05 accretion for the year factoring in pre-tax non-cash depreciation and amortization."

Conference Call on the Web

A live Internet broadcast of A. Schulman's conference call regarding fiscal 2010 third-quarter earnings can be accessed at 1 p.m. Eastern time on Thursday, July 8, 2010, on the Company's website, www.aschulman.com. An archived replay of the call will also be available on the website.

Use of Non-GAAP Financial Measures

This earnings release includes the use of both GAAP (generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measures are net income excluding certain items and net income per diluted share excluding certain items. The most directly comparable GAAP financial measures are net income and net income per diluted share. A table included in this news release reconciles each non-GAAP financial measure with the most directly comparable GAAP financial measure.

A. Schulman uses these financial measures to monitor and evaluate the ongoing performance of the Company and to allocate resources, and believes that the additional non-GAAP measures are useful to investors for financial analysis. In addition, the Company believes that providing this information is in the best interest of our investors so that they can accurately consider the non-GAAP financial information. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.

While management believes that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these measures. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company's competitors and may not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

About A. Schulman, Inc.

Headquartered in Akron, Ohio, A. Schulman is a leading international supplier of high-performance plastic compounds and resins. These materials are used in a variety of consumer, industrial, automotive and packaging applications. The Company employs about 2,900 people and has 37 manufacturing facilities in North America, South America, Europe and Asia. On April 30, 2010, the Company completed its acquisition of ICO, Inc., a global manufacturer of specialty resins and concentrates for rotomolding and a provider of specialty polymer services. A. Schulman reported revenues of $1.3 billion for the fiscal year ended August 31, 2009, and ICO reported revenues of $300 million for the fiscal year ended September 30, 2009. Additional information about A. Schulman can be found at www.aschulman.com.

Cautionary Note on Forward-Looking Statements

A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments and may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and relate to future events and expectations. Forward-looking statements contain such words as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. 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 suggested by these forward-looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:

  • worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company's major product markets;
  • the effectiveness of the Company's efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;
  • competitive factors, including intense price competition;
  • fluctuations in the value of currencies in major areas where the Company operates;
  • volatility of prices and availability of the supply of energy and raw materials that are critical to the manufacture of the Company's products, particularly plastic resins derived from oil and natural gas;
  • changes in customer demand and requirements;
  • effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions and restructuring initiatives;
  • escalation in the cost of providing employee health care;
  • uncertainties regarding the resolution of pending and future litigation and other claims;
  • the performance of the North American auto market; and
  • further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Company's performance are set forth in the Company's Annual Report on Form 10-K and the most recent Form 10-Q. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company's business, financial condition and results of operations. This document contains time-sensitive information that reflects management's best analysis only as of the date of this document. The Company does not undertake an obligation to publicly update or revise any forward-looking statements to reflect new events, information or circumstances, or otherwise. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in the Company's periodic filings with the Securities and Exchange Commission.

SHLM_CN, FN

                                 A. SCHULMAN, INC.
                         CONSOLIDATED STATEMENTS OF INCOME


                        Three months ended May          Nine months ended May
                                 31,                            31,
                      -----------------------        ----------------------
                          2010           2009            2010           2009
                          ----           ----            ----           ----
                                             Unaudited
                               (In thousands, except per share data)
    Net sales         $420,335       $297,644      $1,114,218       $958,609
    Cost of sales      361,450        251,111         940,839        840,801
    Selling,
     general and
     administrative
     expenses           43,531         32,861         133,046        105,106
    Interest
     expense             1,159          1,192           3,349          3,587
    Interest income       (201)          (530)           (652)        (1,961)
    Foreign
     currency
     transaction
     (gains) losses        468          2,430             389         (6,218)
    Other (income)
     expense              (269)        (1,218)         (2,155)        (2,231)
    Curtailment
     gain                    -              -               -         (2,609)
    Asset
     impairment            300            283           5,631          2,462
    Restructuring
     expense               862            981           2,509          6,230
                           ---            ---           -----          -----
                       407,300        287,110       1,082,956        945,167
                       -------        -------       ---------        -------
    Income from
     continuing
     operations
     before taxes       13,035         10,534          31,262         13,442
    Provision for
     (benefit from)
     U.S. and
     foreign income
     taxes          (12,890)      1,971       (4,984)      5,324
                       -------          -----          ------          -----
    Income from
     continuing
     operations         25,925          8,563          36,246          8,118
    Income (loss)
     from
     discontinued
     operations,
     net of tax of
     $0                 (23)       (823)         (14)     (2,870)
                           ---           ----             ---         ------
    Net income          25,902          7,740          36,232          5,248
    Noncontrolling
     interests            (141)          (291)           (211)          (141)
                          ----           ----            ----           ----
    Net income
     attributable
     to A.
     Schulman, Inc.     25,761          7,449          36,021          5,107
    Preferred stock
     dividends               -            (13)              -            (40)
    Net income
     attributable
     to A.
     Schulman, Inc.
     common
     stockholders   $25,761      $7,436      $36,021      $5,067
                       =======         ======         =======         ======

    Weighted-
     average number
     of shares
     outstanding:
      Basic             27,896         25,789          26,552         25,783
      Diluted           28,275         25,939          26,901         25,962

    Earnings
     (losses) per
     share of
     common stock
     attributable
     to A.
     Schulman, Inc.
     -Basic:
      Income from
       continuing
       operations        $0.92          $0.32           $1.36          $0.31
      Income (loss)
       from
       discontinued
       operations            -          (0.03)              -          (0.11)
      Net income
       attributable
       to common
       stockholders      $0.92          $0.29           $1.36          $0.20
                         =====          =====           =====          =====

    Earnings
     (losses) per
     share of
     common stock
     attributable
     to A.
     Schulman, Inc.
     -Diluted:
      Income from
       continuing
       operations        $0.91          $0.32           $1.34          $0.31
      Income (loss)
       from
       discontinued
       operations            -          (0.03)              -          (0.11)
      Net income
       attributable
       to common
       stockholders      $0.91          $0.29           $1.34          $0.20
                         =====          =====           =====          =====


                             A. SCHULMAN, INC.
                        CONSOLIDATED BALANCE SHEETS


                                       May 31, 2010         August 31, 2009
                                       ------------         ---------------
                                                     Unaudited
                                                     ---------
                ASSETS                   (In thousands except share data)

    Current assets:
    Cash and cash equivalents                 $91,777               $228,674
    Accounts receivable, less
     allowance for doubtful
     accounts of $14,319 at May
     31, 2010 and $10,279 at
     August 31, 2009                          287,694             206,450
    Inventories, average cost or
     market, whichever is lower               216,195                133,536
    Prepaid expenses and other
     current assets                            28,007                 20,779
                                               ------                 ------
      Total current assets                    623,673                589,439
                                              -------                -------

    Other assets:
    Cash surrender value of life
     insurance                                  3,546                  3,101
    Deferred charges and other
     assets                                    22,490                 23,715
    Goodwill                                   81,753                 11,577
    Intangible assets                          77,859                    217
                                               ------                    ---
                                              185,648                 38,610
                                              -------                 ------

    Property, plant and equipment,
     at cost:
    Land and improvements                      31,300                 16,236
    Buildings and leasehold
     improvements                             156,664                147,121
    Machinery and equipment                   355,146                345,653
    Furniture and fixtures                     36,273                 39,581
    Construction in progress                    9,307                  4,546
                                                -----                  -----
                                              588,690                553,137
    Accumulated depreciation and
     investment grants of $756 at
     May 31, 2010 and $988 at
     August 31, 2009                          346,140                383,697
                                              -------                -------
      Net property, plant and
       equipment                              242,550                169,440
                                              -------                -------
      Total assets                         $1,051,871               $797,489
                                           ==========               ========

        LIABILITIES AND EQUITY

    Current liabilities:
    Current maturities of long-
     term debt and notes payable              $50,219                 $2,519
    Accounts payable                          198,892                147,476
    U.S. and foreign income taxes
     payable                                    7,270                  8,858
    Accrued payrolls, taxes and
     related benefits                          43,517                 36,207
    Other accrued liabilities                  47,252                 32,562
                                               ------                 ------
      Total current liabilities               347,150                227,622
                                              -------                -------

    Long-term debt                             95,741                102,254
    Other long-term liabilities                84,471                 92,688
    Deferred income taxes                      27,610                  3,954
    Commitments and contingencies                   -                      -
    Stockholders' equity:
    Preferred stock, 5%
     cumulative, $100 par value,
     authorized, issued and
     outstanding -15 shares at
     May 31, 2010 and August 31,
     2009                                           2                   2
    Common stock, $1 par value,
     authorized -75,000,000
     shares, issued -47,692,355
     shares at May 31, 2010 and
     42,295,492 shares at August
     31, 2009                                  47,692              42,295
    Other capital                             248,860                115,358
    Accumulated other
     comprehensive income                       1,481                 38,714
    Retained earnings                         516,564                492,513
    Treasury stock, at cost,
     16,207,011 shares at May 31,
     2010 and August 31, 2009                (322,812)              (322,812)
                                             --------               --------
      Total A. Schulman, Inc.
       stockholders'                          491,787                366,070
      equity
    Noncontrolling interests                    5,112                  4,901
      Total equity                            496,899                370,971
                                              -------                -------
      Total liabilities and equity         $1,051,871               $797,489
                                           ==========               ========





                                     A. SCHULMAN, INC.
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           Nine months ended May 31,
                                          2010             2009
                                          ----             ----
                                                Unaudited
                                                ---------
                                             (In thousands)
    Provided from (used in)
     operating activities:
       Net income                        $36,232           $5,248
       Adjustments to reconcile net
        income to net cash provided
        from (used in)operating
         activities:
          Depreciation and
           amortization, including $69
           and $1,185 of accelerated
           depreciation related to
           restructuring in fiscal 2010
           and 2009, respectively         17,492           19,111

          Deferred tax provision         (21,486)            (307)
          Pension, postretirement
           benefits and other              3,083              923
           deferred compensation
          Net (gains) losses on asset
           sales                            (230)             162
          Curtailment gain                     -           (2,609)
          Asset impairment                 5,635            2,462
       Changes in assets and
        liabilities:
          Accounts receivable            (40,703)          85,259
          Inventories                    (56,429)          82,381
          Accounts payable                29,237          (38,229)
          Restructuring accrual           (1,870)           2,381
          Income taxes                     3,433            4,768
          Accrued payrolls and other
           accrued liabilities             1,342           (9,153)
          Changes in other assets and
           other long-term                  (779)          (1,772)
           liabilities                      ----           ------
             Net cash provided from (used
              in) operating              (25,043)         150,625
              activities                 -------          -------
    Provided from (used in)
     investing activities:
       Expenditures for property,
        plant and equipment              (13,890)         (21,951)
       Proceeds from the sale of
        assets                             1,713              744
       Business acquisitions, net of
        cash acquired                    (99,223)               -
                                         -------              ---
                Net cash used in
                 Investing activities   (111,400)         (21,207)
                                        --------          -------
    Provided from (used in)
     financing activities:
       Cash dividends paid               (11,970)         (11,855)
       Increase (decrease) in notes
        payable                            5,995           (7,156)
       Repayments on long-term debt      (19,260)               -
       Borrowings on revolving
        credit facilities                 65,500           19,000
       Repayments on revolving
        credit facilities                (27,500)         (19,000)
       Cash distributions to
        noncontrolling interest                -             (980)
        shareholders
       Common stock issued, net            3,100              (34)
       Purchases of treasury stock             -           (1,646)
             Net cash provided from
             (used in) financing
              activities                  15,865          (21,671)
                                          ------          -------
    Effect of exchange rate
     changes on cash                     (16,319)          (2,958)
                                         -------           ------
    Net increase (decrease) in
     cash and cash equivalents          (136,897)         104,789
                                        --------          -------
    Cash and cash equivalents at
     beginning of period                 228,674           97,728
                                         -------           ------
    Cash and cash equivalents at
     end of period                       $91,777         $202,517
                                         =======         ========


                                   A. SCHULMAN, INC.
                            SUPPLEMENTAL SEGMENT INFORMATION


                                                    Nine months ended May
                    Three months ended May 31,                             31,
                        2010             2009        2010             2009
                        ----             ----        ----             ----
                            Unaudited                      Unaudited
                            ---------                      ---------
                       (In thousands, except         (In thousands, except
                              for %)                        for %)
    Net sales
     to
     unaffiliated
     customers
    Europe          $304,790         $220,337    $824,106         $699,829
    NAMB              35,164           26,922      89,867           78,212
    NAEP              31,535           26,137      94,957           95,783
    NARM              20,209           11,443      47,643           53,798
    Asia
     Pacific          22,904           12,805      51,912           30,987
    Bayshore
     Industries        5,733                -       5,733                -
      Total net
       sales to
       unaffiliated $420,335         $297,644  $1,114,218         $958,609
      customers     --------         --------  ----------         --------

    Segment
     gross
     profit
    Europe           $46,320          $38,634    $138,377          $99,582
    NAMB               4,588            2,167      11,231            4,687
    NAEP               3,304            1,540      10,916            4,869
    NARM               1,884            1,634       5,285            4,779
    Asia
     Pacific           2,099            2,558       6,880            3,891
    Bayshore
     Industries          690                -         690                -
      Total
       segment
       gross
       profit        $58,885          $46,533    $173,379         $117,808
                     -------          -------    --------         --------

    Segment
     operating
     income
     (loss)
    Europe           $21,333          $16,544     $55,724          $35,371
    NAMB               3,394            1,026       7,304              883
    NAEP                 267             (802)      2,977           (5,113)
    NARM                 320            1,027       2,130            1,965
    Asia
     Pacific             196            1,880       1,874            1,418
    Bayshore
     Industries          161                -         161                -
    All other
     North
     America          (3,186)          (2,534)     (8,529)          (8,243)
                      ------           ------      ------           ------
      Total
       segment
       operating
       income        $22,485          $17,141     $61,641          $26,281

    Corporate
     and other        (7,131)          (3,469)    (21,308)         (13,579)
    Interest
     expense,
     net                (958)            (662)     (2,697)          (1,626)
    Foreign
     currency
     transaction
     gains
     (losses)           (468)       (2,430)    (389)        6,218
    Other
     income
     (expense)           269            1,218       2,155            2,231
     Curtailment
     gain                  -                -           -            2,609
    Asset
     impairment         (300)            (283)     (5,631)          (2,462)
     Restructuring
     expense            (862)            (981)     (2,509)          (6,230)
      Income
       from
       continuing
       operations    $13,035          $10,534     $31,262          $13,442
      before
       taxes         =======          =======     =======          =======

    Capacity
     utilization
    Europe                91%              81%         91%              73%
    NAMB                  78%              55%         72%              62%
    NAEP                  70%              50%         72%              61%
    NARM                  41%             n/a          41%             n/a
    Asia
     Pacific              88%              73%         83%              54%
    Bayshore
     Industries           87%             n/a          87%             n/a
    Worldwide             84%              73%         85%              69%


                     A. SCHULMAN, INC.
       Reconciliation of Non-GAAP Financial Measures
     Net Income and Earnings Per Share Reconciliation
                         Unaudited
           (In thousands except per share data)

    Three months ended            Asset Write-   Costs
     May 31, 2010      As Reported    downs     related to Restructuring
                       ----------- ------------ ---------- -------------
                                                 acquisitions  Related
                                                 ------------  -------

    Net sales              $420,335          $-            $-          $-
    Cost of sales           361,450           -             -           -
    Selling, general
     and
     administrative
     expenses                43,531           -        (1,629)          -
    Interest expense,
     net                        958           -             -           -
    Foreign currency
     transaction
     (gains) losses             468           -             -           -
    Other (income)
     expense                   (269)          -             -         (42)
    Asset impairment            300        (300)            -           -
    Restructuring
     expense                    862           -             -        (862)
                            407,300        (300)       (1,629)       (904)
                            -------        ----        ------        ----
    Income from
     continuing
     operations before
     taxes                   13,035         300         1,629         904
    Provision for
     (benefit from)
     U.S. and               (12,890)          -             -         139
       foreign income
        taxes               -------         ---           ---         ---
    Income from
     continuing
     operations              25,925         300         1,629         765
    Income (loss) from
     discontinued
     operations, net
     of tax of $0               (23)          -             -           -
                                ---         ---           ---         ---
    Net income               25,902         300         1,629         765
    Noncontrolling
     interests                 (141)          -             -           -
                               ----         ---           ---         ---
    Net income
     attributable to
     A. Schulman, Inc.       25,761         300         1,629         765
    Preferred stock
     dividends                    -           -             -           -
    Net income
     attributable to
     A. Schulman, Inc.      $25,761        $300        $1,629        $765
       common
        stockholders        =======        ====        ======        ====

    Diluted EPS impact        $0.91
                              =====

    Weighted-average
     number of shares
     outstanding -
     diluted                 28,275




    Three months ended May 31, Inventory
     2010                       Step-up     Tax Benefits   Before Certain
                                 ---------  ------------   --------------
                                              (Charges)         Items
                                              ---------         -----

    Net sales                           $-             $-        $420,335
    Cost of sales                   (2,536)             -         358,914
    Selling, general and
     administrative expenses             -              -          41,902
    Interest expense, net                -              -             958
    Foreign currency
     transaction (gains)
     losses                              -              -             468
    Other (income) expense               -              -            (311)
    Asset impairment                     -              -               -
    Restructuring expense                -              -               -
                                    (2,536)             -         401,931
                                    ------            ---         -------
    Income from continuing
     operations before taxes         2,536              -          18,404
    Provision for (benefit
     from) U.S. and                    621         16,733           4,603
       foreign income taxes            ---         ------           -----
    Income from continuing
     operations                      1,915        (16,733)         13,801
    Income (loss) from
     discontinued operations,
     net of tax of $0                    -              -             (23)
                                       ---            ---             ---
    Net income                       1,915        (16,733)         13,778
    Noncontrolling interests             -              -            (141)
                                       ---            ---            ----
    Net income attributable to
     A. Schulman, Inc.               1,915        (16,733)         13,637
    Preferred stock dividends            -              -               -
    Net income attributable to
     A. Schulman, Inc.              $1,915       $(16,733)        $13,637
       common stockholders          ======       ========         =======

    Diluted EPS impact                                              $0.48
                                                                    =====

    Weighted-average number
     of shares outstanding -
     diluted                                                       28,275



 
    Three months ended                            Costs
     May 31, 2009      As Reported Asset Write- related to Restructuring
                       ----------- ------------ ---------- -------------
                                       downs      acquisitions Related
                                       -----      ------------ -------

    Net sales              $297,644           $-            $-         $-
    Cost of sales           251,111         (711)            -          -
    Selling, general
     and
     administrative
     expenses                32,861            -             -          -
    Interest expense,
     net                        662            -             -          -
    Foreign currency
     transaction
     (gains) losses           2,430            -             -          -
    Other (income)
     expense                 (1,218)           -             -          -
    Asset impairment            283         (283)            -          -
    Restructuring
     expense                    981            -             -       (981)
                            287,110         (994)            -       (981)
                            -------         ----           ---       ----
    Income from
     continuing
     operations before
     taxes                   10,534          994             -        981
    Provision for U.S.
     and foreign
     income taxes             1,971           95             -        277
                              -----          ---           ---        ---
    Income from
     continuing
     operations               8,563          899             -        704
    Income (loss) from
     discontinued
     operations, net
     of tax of $0              (823)           -             -          -
                               ----          ---           ---        ---
    Net income                7,740          899             -        704
    Noncontrolling
     interests                 (291)           -             -          -
                               ----          ---           ---        ---
    Net income
     attributable to
     A. Schulman, Inc.        7,449          899             -        704
    Preferred stock
     dividends                  (13)           -             -          -
    Net income
     attributable to
     A. Schulman, Inc.       $7,436         $899            $-       $704
       common
        stockholders         ======         ====           ===       ====

    Diluted EPS impact        $0.29
                              =====

    Weighted-average
     number of shares
     outstanding -
     diluted                 25,939




                                    Inventory
    Three months ended May 31, 2009  Step-up    Tax Benefits  Before Certain
                                      --------- ------------  --------------
                                                  (Charges)        Items
                                                  ---------        -----

    Net sales                                $-            $-       $297,644
    Cost of sales                             -             -        250,400
    Selling, general and
     administrative expenses                  -             -         32,861
    Interest expense, net                     -             -            662
    Foreign currency transaction
     (gains) losses                           -             -          2,430
    Other (income) expense                    -             -         (1,218)
    Asset impairment                          -             -              -
    Restructuring expense                     -             -              -
                                              -             -        285,135
                                            ---           ---        -------
    Income from continuing
     operations before taxes                  -             -         12,509
    Provision for U.S. and foreign
     income taxes                             -             -          2,343
                                            ---           ---          -----
    Income from continuing
     operations                               -             -         10,166
    Income (loss) from discontinued
     operations, net of tax of $0             -             -           (823)
                                            ---           ---           ----
    Net income                                -             -          9,343
    Noncontrolling interests                  -             -           (291)
                                            ---           ---           ----
    Net income attributable to A.
     Schulman, Inc.                           -             -          9,052
    Preferred stock dividends                 -             -            (13)
    Net income attributable to A.
     Schulman, Inc.                          $-            $-         $9,039
       common stockholders                  ===           ===         ======

    Diluted EPS impact                                                 $0.36
                                                                       =====

    Weighted-average number of
     shares outstanding -diluted                                      25,939



 
    Nine months ended             Asset Write-   Costs
     May 31, 2010      As Reported    downs     related to Restructuring
                       ----------- ------------ ---------- -------------
                                                 acquisitions  Related
                                                 ------------  -------

    Net sales            $1,114,218          $-            $-          $-
    Cost of sales           940,839         (69)            -           -
    Selling, general
     and
     administrative
     expenses               133,046           -        (5,316)          -
    Interest expense,
     net                      2,697           -             -           -
    Foreign currency
     transaction
     (gains) losses             389           -             -           -
    Other (income)
     expense                 (2,155)          -             -         (42)
    Asset impairment          5,631      (5,631)            -           -
    Restructuring
     expense                  2,509           -             -      (2,509)
                          1,082,956      (5,700)       (5,316)     (2,551)
                          ---------      ------        ------      ------
    Income from
     continuing
     operations before
     taxes                   31,262       5,700         5,316       2,551
    Provision for
     (benefit from)
     U.S. and                (4,984)        116             -         420
       foreign income
        taxes                ------         ---           ---         ---
    Income from
     continuing
     operations              36,246       5,584         5,316       2,131
    Income (loss) from
     discontinued
     operations, net
     of tax of $0               (14)          -             -           -
                                ---         ---           ---         ---
    Net income               36,232       5,584         5,316       2,131
    Noncontrolling
     interests                 (211)          -             -           -
                               ----         ---           ---         ---
    Net income
     attributable to
     A. Schulman, Inc.       36,021       5,584         5,316       2,131
    Preferred stock
     dividends                    -           -             -           -
    Net income
     attributable to
     A. Schulman, Inc.      $36,021      $5,584        $5,316      $2,131
       common
        stockholders        =======      ======        ======      ======

    Diluted EPS impact        $1.34
                              =====

    Weighted-average
     number of shares
     outstanding -
     diluted                 26,901




    Nine months ended May 31,  Inventory
     2010                       Step-up     Tax Benefits   Before Certain
                                 ---------  ------------   --------------
                                              (Charges)         Items
                                              ---------         -----

    Net sales                           $-             $-      $1,114,218
    Cost of sales                   (2,536)             -         938,234
    Selling, general and
     administrative expenses             -              -         127,730
    Interest expense, net                -              -           2,697
    Foreign currency
     transaction (gains)
     losses                              -              -             389
    Other (income) expense               -              -          (2,197)
    Asset impairment                     -              -               -
    Restructuring expense                -              -               -
                                    (2,536)             -       1,066,853
                                    ------            ---       ---------
    Income from continuing
     operations before taxes         2,536              -          47,365
    Provision for (benefit
     from) U.S. and                    621         14,481          10,654
       foreign income taxes            ---         ------          ------
    Income from continuing
     operations                      1,915        (14,481)         36,711
    Income (loss) from
     discontinued operations,
     net of tax of $0                    -              -             (14)
                                       ---            ---             ---
    Net income                       1,915        (14,481)         36,697
    Noncontrolling interests             -              -            (211)
                                       ---            ---            ----
    Net income attributable to
     A. Schulman, Inc.               1,915        (14,481)         36,486
    Preferred stock dividends            -              -               -
    Net income attributable to
     A. Schulman, Inc.              $1,915       $(14,481)        $36,486
       common stockholders          ======       ========         =======

    Diluted EPS impact                                              $1.36
                                                                    =====

    Weighted-average number
     of shares outstanding -
     diluted                                                       26,901



 
    Nine months ended             Asset Write-    Costs
     May 31, 2009      As Reported    downs     related to Restructuring
                       ----------- ------------ ---------- -------------
                                                 acquisitions  Related
                                                 ------------  -------

    Net sales              $958,609          $-            $-          $-
    Cost of sales           840,801      (1,185)            -           -
    Selling, general
     and
     administrative
     expenses               105,106           -             -         (97)
    Interest expense,
     net                      1,626           -             -           -
    Foreign currency
     transaction
     (gains) losses          (6,218)          -             -           -
    Other (income)
     expense                 (2,231)          -             -           -
    Curtailment gain         (2,609)          -             -       2,609
    Asset impairment          2,462      (2,462)            -           -
    Restructuring
     expense                  6,230           -             -      (6,230)
                            945,167      (3,647)            -      (3,718)
                            -------      ------           ---      ------
    Income from
     continuing
     operations before
     taxes                   13,442       3,647             -       3,718
    Provision for U.S.
     and foreign
     income taxes             5,324         411             -       1,016
                              -----         ---           ---       -----
    Income from
     continuing
     operations               8,118       3,236             -       2,702
    Income (loss) from
     discontinued
     operations, net
     of tax of $0            (2,870)          -             -           -
                             ------         ---           ---         ---
    Net income                5,248       3,236             -       2,702
    Noncontrolling
     interests                 (141)          -             -           -
                               ----         ---           ---         ---
    Net income
     attributable to
     A. Schulman, Inc.        5,107       3,236             -       2,702
    Preferred stock
     dividends                  (40)          -             -           -
    Net income
     attributable to
     A. Schulman, Inc.       $5,067      $3,236            $-      $2,702
       common
        stockholders         ======      ======           ===      ======

    Diluted EPS impact        $0.20
                              =====

    Weighted-average
     number of shares
     outstanding -
     diluted                 25,962



                                    Inventory
    Nine months ended May 31, 2009   Step-up    Tax Benefits  Before Certain
                                      --------- ------------  --------------
                                                  (Charges)        Items
                                                  ---------        -----

    Net sales                                $-            $-       $958,609
    Cost of sales                             -             -        839,616
    Selling, general and
     administrative expenses                  -             -        105,009
    Interest expense, net                     -             -          1,626
    Foreign currency transaction
     (gains) losses                           -             -         (6,218)
    Other (income) expense                    -             -         (2,231)
    Curtailment gain                          -             -              -
    Asset impairment                          -             -              -
    Restructuring expense                     -             -              -
                                              -             -        937,802
                                            ---           ---        -------
    Income from continuing
     operations before taxes                  -             -         20,807
    Provision for U.S. and foreign
     income taxes                             -             -          6,751
                                            ---           ---          -----
    Income from continuing
     operations                               -             -         14,056
    Income (loss) from discontinued
     operations, net of tax of $0             -             -         (2,870)
                                            ---           ---         ------
    Net income                                -             -         11,186
    Noncontrolling interests                  -             -           (141)
                                            ---           ---           ----
    Net income attributable to A.
     Schulman, Inc.                           -             -         11,045
    Preferred stock dividends                 -             -            (40)
    Net income attributable to A.
     Schulman, Inc.                          $-            $-        $11,005
       common stockholders                  ===           ===        =======

    Diluted EPS impact                                                 $0.43
                                                                       =====

    Weighted-average number of
     shares outstanding -diluted                                      25,962


SOURCE A. Schulman, Inc.

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