October 25, 2010

A. Schulman Reports Strong Fiscal 2010 Fourth-Quarter Results

AKRON, Ohio, Oct 25, 2010 /PRNewswire via COMTEX News Network/ --

  • Net income of $7.9 million for the quarter represents a $15.8 million improvement from the loss of $7.9 million in last year's fourth quarter
  • Net income for the quarter was $11.7 million or $0.37 per share excluding certain one-time charges and acquisition-related items, compared with $5.4 million or $0.21 per share for the prior-year period
  • Net income for the full year was $48.2 million or $1.72 per share excluding certain one-time charges and acquisition-related items, compared with $16.4 million or $0.64 per share in fiscal 2009
  • Earnings for 2011 expected to reach record levels between $57 million to $62 million

A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal 2010 fourth quarter ended August 31, 2010. The Company reported net income for the fourth quarter of $7.9 million, or $0.25 per diluted share, a $15.8 million improvement from the net loss of $7.9 million for the comparable period last year. The translation effect of foreign currencies reduced net income by $1.2 million.

The fiscal 2010 fourth quarter included certain after-tax net charges of approximately $3.8 million, which were primarily related to purchase accounting adjustments, asset write-downs, costs related to acquisitions and restructuring-related expenses. Last year's fourth quarter included $13.3 million of after-tax, non-operating charges related to restructuring expenses and asset write-downs. Excluding these charges, net income for the fiscal 2010 fourth quarter was $11.7 million, or $0.37 per diluted share, compared with $5.4 million, or $0.21 per diluted share, for the prior-year period. The Company's fiscal 2010 fourth-quarter results contained a full quarter of the acquired ICO, Inc.'s operations, which contributed approximately $2.4 million to adjusted net income in the quarter, including $2.4 million of increased amortization and depreciation expense after tax.

"We are pleased with our strong earnings improvement for both the fourth quarter and the full year of fiscal 2010," said Joseph M. Gingo, Chairman, President and Chief Executive Officer. "Our performance shows that our strategy is working, and it reflects the strong culture we are developing at A. Schulman - a culture that is committed to shareholder value creation through long-term profitable growth. We saw the restoration of profitability in our legacy U.S. operations in fiscal 2010 as well as the strengthening of our position in key global markets."

Gingo continued, "During the fiscal year, we successfully completed two acquisitions - ICO, which expanded our global presence in the masterbatch and specialty powders markets, and McCann Color, which increased our capabilities in the North American masterbatch market. We are also excited about our agreement to acquire Mash Compostos Plasticos, which we announced on October 18, 2010, pending customary closing procedures. Based in Brazil, Mash produces masterbatch additives and engineered plastics compounds. Along with ICO, this marks our second acquisition in the past six months in Brazil that will help us expand our presence in this growing market."

Net sales for the fiscal 2010 fourth quarter were $476.2 million, an increase of 49% compared with $320.6 million for the comparable period last year. Excluding ICO, sales increased 17% compared with net sales in the same period a year ago. Volume reached 525 million pounds, up 60% from last year's reported 329 million pounds. ICO accounted for 183 million pounds. Excluding ICO, volume increased 4% for the quarter while price and mix accounted for a 20% increase in sales. Currency translation had the effect of reducing sales by 7%.

Reported gross profit for the quarter, excluding ICO, was $46.2 million, a decrease of $6.0 million from the fourth quarter of last year. ICO accounted for $13.3 million of the current period gross profit. Currency translation had the effect of reducing gross profit by $4.2 million. Gross margin, including ICO, was 12.5% compared with 16.3% in the fourth quarter of last year. Excluding certain one-time charges and acquisition-related items, gross profit was $60.9 million compared with $52.3 million last year. ICO contributed $14.7 million to gross profit, excluding these items. In the quarter, the Company's business in the Americas continued to see improvements in gross profit per pound and gross margin rates while the European business was impacted by higher raw material prices and manufacturing inefficiencies driven by the scarcity of certain raw materials as well as foreign currency translation.

Selling, general and administrative (SG&A) expense for the fiscal 2010 fourth quarter was $45.3 million, an increase of $3.5 million compared with the fiscal 2009 fourth quarter. ICO, excluding certain items, accounted for $11.3 million of SG&A for the quarter while the translation effect of foreign exchange reduced SG&A by $2.6 million. Other items reducing SG&A were bonus accrual adjustments, bad debt accrual reversals and the impact of equity incentive programs.

For fiscal 2010, the Company reported net income of $43.9 million, or $1.57 per diluted share, compared with a net loss of $2.8 million, or $0.11 per share last year. Excluding certain one-time charges and acquisition-related items, net income was $48.2 million, or $1.72 per diluted share, for fiscal 2010, compared with $16.4 million, or $0.64 per diluted share, a year ago. EBITDA, excluding certain items, increased 71% to $92.8 million reflecting the profitability increases experienced during the fiscal year. Sales volume increased 21% for the full year to 1.6 billion pounds. Excluding ICO, which reported 239 million pounds sold, sales volume was up 3%, reflecting the slowly improving economic conditions the Company has recently experienced. The net income improvement was driven by the significant increase in gross profit for the full year reflecting cost reductions, margin improvement initiatives and market improvement.

Results in the following segment discussion exclude the one-time charges and acquisition-related items discussed above.

Europe, Middle East and Africa ("EMEA") - In the fiscal 2010 fourth quarter, sales were $318.4 million, an increase of $82.4 million or 35% compared with the prior-year period. ICO accounted for $42.7 million of the sales increase while the translation effect of foreign exchange had the effect of reducing sales by $24.8 million. Volume for the quarter, excluding ICO, increased by 8%. Changes in prices and product mix increased sales by almost 20% compared with the same period last year.

Gross profit was reported at $37.6 million for the quarter, up slightly from last year, excluding the negative effect of foreign exchange. ICO contributed $4.4 million to the gross profit. EMEA's gross profit percentage was down approximately 5.6 percentage points excluding ICO. Despite the strong increase in sales due to price and mix as discussed above, contribution margin per pound in Euros dropped 9% as the Company was not able to fully pass on cost increases during the quarter. Additionally, shortages of a few key raw materials drove an increase in manufacturing inefficiencies. The Company notes that raw material prices have begun to moderate while the Company has been increasing prices.

Operating income for the fiscal 2010 fourth quarter was $12.6 million compared with $14.7 million last year. ICO accounted for $0.5 million of the quarterly result. Foreign exchange had the effect of reducing operating profit by $1.7 million.

"Our EMEA operations had a strong year overall. Margins were good, price and product mix improved, and our strategic realignment initiatives favorably impacted capacity utilization," Gingo said. "Over this raw material pricing cycle, we received significant benefit from lower raw material prices in our first quarter. However, this was offset in the fourth quarter, as margins were impacted by rising prices for raw materials which were not completely offset by our aggressive pricing actions for our products. We have worked hard to improve margins under current market conditions and have begun to see improved results as we move into fiscal 2011."

The Americas - Combined operating income for the Americas, including discontinued operations, was $7.0 million during the quarter, compared with last year's fourth-quarter loss of $1.4 million. ICO accounted for $4.0 million of that operating income. Gross profit for the fourth quarter more than doubled to $19.1 million from $8.3 million for the prior-year period. ICO accounted for $8.7 million of the increase in gross profit, with the remainder coming from margin improvement initiatives and mix. Volume was relatively flat. For the full year, the Americas, including discontinued operations, reported a total operating profit of $12.0 million, compared with a loss of $13.6 million a year ago, primarily driven by the stronger gross profit and, to a lesser extent, the ICO effect.

"The turnaround in our U.S. business, the continuing strength of our Mexican operations and the growth of our South American footprint combined to make fiscal 2010 a profitable one for the Americas," Gingo said. "We will continue to manage this portion of our business aggressively by pursuing the many opportunities for our high-value products in this region, especially in the masterbatch and specialty powders markets."

Asia Pacific - Sales were $33.0 million, an increase of approximately 130% for the quarter compared with the same period last year. Excluding ICO, sales were $17.8 million, up 25%. Volume excluding ICO increased almost 15%. Gross profits were $4.2 million compared with $2.5 million in the comparable quarter last year. ICO accounted for $1.6 million of the increase. Operating income was $0.5 million compared with income of $1.4 million for the prior-year quarter. ICO accounted for $0.1 million of the decline with the remainder coming from a realignment of cost allocations to more clearly reflect business practices going forward.

ICO - For the fiscal 2010 fourth quarter, the combined ICO businesses contributed approximately 183 million to pounds, $102 million to sales, $13.3 million to gross profit ($14.7 million excluding certain items) and $1.8 million to operating profit ($3.4 million excluding certain items). For the full year, ICO contributed 239.4 million to pounds, $134.2 million to sales, $15.6 million to gross profit ($19.5 million excluding certain items) and $0.8 million to operating income ($4.8 million excluding certain items). Non-operating purchase accounting adjustments increased the value of inventory, which led to $1.4 million of increased costs in the quarter and $3.9 million of increased costs for the full year, and reduced gross profit. This increase is excluded when the Company discusses results excluding certain adjustments. In addition, the Company has increased the value of ICO's fixed assets and intangible assets. As a result, incremental non-cash depreciation and amortization expense was approximately $2.7 million during the quarter and $3.4 million for the May through August period. During the fourth quarter, the Company continued to refine its purchase accounting adjustments. As a result, the Company increased its estimated incremental 2011 depreciation and amortization expense from $7.0 million pre-tax estimated at the end of the third quarter to $10 million and from $5.6 million after tax to $8.6 million.

Cash Flow From Operations and Working Capital

The Company's liquidity position improved during the quarter. Working capital, excluding ICO, dropped to 59 days from 60 days at the end of the third quarter. Including ICO, the Company reported 63 days of working capital. Net debt decreased to $31.9 million from $54.1 million at the end of the third quarter. In recognition of the Company's strong cash position, the quarterly dividend was increased 3.3% to $0.155 per share. Cash flow from operations was $4.4 million for fiscal 2010, compared with $181.5 million for previous year.

Fiscal 2011 Guidance and Business Outlook

"Although the long-term prospects for the global economy remain uncertain, we are optimistic that the gradual recovery of our overall markets will continue," Gingo said. "With a full year of impact from our acquisitions, and the addition of Mash, we expect to see continued strong global growth as we build on the momentum we established in fiscal 2010. Although margin comparisons are likely to be unfavorable in the first quarter of fiscal 2011, due largely to the very favorable raw material pricing we saw in the fiscal 2010 first quarter and the moderating margin squeeze noted in the EMEA discussion above, we expect to make up the shortfall in the subsequent quarters of the year."

Based on these expectations, the Company is establishing guidance for fiscal 2011 net income to be in the range of $57 million to $62 million. This net income assumes a euro exchange rate of $1.35, and incremental full-year amortization and depreciation, as a result of the ICO acquisition, of $10 million pre-tax or $8.6 million after tax and an incremental $1.0 million after-tax increase in interest expense due to higher rates expected in the Company's new revolving credit agreement to be finalized early in the second quarter of fiscal 2011. The after-tax amortization and depreciation number, which is non-cash, is $3.0 million higher than the amount reported in the fiscal 2010 third quarter.

Conference Call on the Web

A live Internet broadcast of A. Schulman's conference call regarding fiscal 2010 fourth-quarter earnings can be accessed at 10 a.m. Eastern time on October 25, 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, net income per diluted share excluding certain items and EBITDA excluding certain items. The most directly comparable GAAP financial measures are net income and net income per diluted share. Tables included in this news release reconcile 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 36 manufacturing facilities in North America, South America, Europe and Asia. A. Schulman reported net sales of $1.6 billion for the fiscal year ended August 31, 2010. 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 OPERATIONS


                         Three months ended
                             August 31,                 Year ended August 31,
                         ------------------         ---------------------
                         2010            2009            2010            2009
                         ----            ----            ----            ----
                                            Unaudited
                                            ---------
                               (In thousands, except per share data)
    Net sales        $476,224        $320,639      $1,590,443      $1,279,248
    Cost of
     sales            416,736         268,409       1,357,575       1,109,211
    Selling,
     general
     and
     administrative
     expenses       46,773       43,038      179,821      148,143
    Interest
     expense            1,661           1,198           5,010           4,785
    Interest
     income              (693)           (388)         (1,345)         (2,348)
    Foreign
     currency
     transaction
     (gains)
     losses            485          573          874       (5,645)
    Other
     (income)
     expense             (271)            405          (2,425)         (1,826)
     Restructuring
     expense            2,545           2,435           5,054           8,665
    Asset
     impairment            37             146           5,668           2,608
     Curtailment
     (gains)
     losses               270            (196)            270          (2,805)
                          ---            ----             ---          ------
                      467,543         315,620       1,550,502       1,260,788
                      -------         -------       ---------       ---------
    Income
     from
     continuing
     operations
     before
     taxes           8,681        5,019       39,941       18,460
    Provision
     for
     (benefit
     from)
     U.S. and
     foreign
     income
     taxes             565        1,607       (4,419)       6,931
                          ---           -----          ------           -----
    Income
     from
     continuing
     operations         8,116           3,412          44,360          11,529
    Income
     (loss)
     from
     discontinued
     operations,
     net of
     tax of $0        (225)     (11,086)        (239)     (13,956)
                         ----         -------            ----         -------
    Net income
     (loss)             7,891          (7,674)         44,121          (2,427)
     Noncontrolling
     interests            (10)           (208)           (221)           (349)
                          ---            ----            ----            ----
    Net income
     (loss)
     attributable
     to A.
     Schulman,
     Inc.            7,881       (7,882)      43,900       (2,776)
    Preferred
     stock
     dividends              -             (13)              -             (53)
    Net income
     (loss)
     attributable
     to A.
     Schulman,
     Inc.
     common
     stockholders   $7,881      $(7,895)     $43,900      $(2,829)
                       ======         =======         =======         =======

    Weighted-
     average
     number of
     shares
     outstanding:
      Basic            31,329          25,812          27,746          25,790
      Diluted          31,490          26,202          27,976          26,070

    Earnings
     (losses)
     per share
     of common
     stock
     attributable
     to A.
     Schulman,
     Inc. -
     Basic:
      Income
       from
       continuing
       operations       $0.26           $0.12           $1.59           $0.43
      Income
       (loss)
       from
       discontinued
       operations    (0.01)       (0.43)       (0.01)       (0.54)
      Net income
       (loss)
       attributable
       to common
       stockholders  $0.25       $(0.31)       $1.58       $(0.11)
                        =====          ======           =====          ======

    Earnings
     (losses)
     per share
     of common
     stock
     attributable
     to A.
     Schulman,
     Inc. -
     Diluted:
      Income
       from
       continuing
       operations       $0.26           $0.12           $1.58           $0.43
      Income
       (loss)
       from
       discontinued
       operations    (0.01)       (0.42)       (0.01)       (0.54)
      Net income
       (loss)
       attributable
       to common
       stockholders  $0.25       $(0.30)       $1.57       $(0.11)
                        =====          ======           =====          ======


                             A. SCHULMAN, INC.
                        CONSOLIDATED BALANCE SHEETS


                                             August 31,          August 31,
                                                2010                2009
                                            -----------         -----------
                                                        Unaudited
                                                        ---------
                                                (In thousands except share
                   ASSETS                                 data)
    Current assets:
    Cash and cash equivalents                   $122,754            $228,674
    Accounts receivable, net                     282,953             206,450
    Inventories, average cost or market,
     whichever is lower                          209,228             133,536
    Prepaid expenses and other current
     assets                                       29,128              20,779
                                                  ------              ------
      Total current assets                       644,063             589,439
                                                 -------             -------

    Other assets:
    Deferred charges and other assets             31,883              26,816
    Goodwill                                      84,064              11,577
    Intangible assets                             72,352                 217
                                                  ------                 ---
                                                 188,299              38,610
                                                 -------              ------

    Property, plant and equipment, at
     cost:
    Land and improvements                         30,891              16,236
    Buildings and leasehold improvements         158,076             147,121
    Machinery and equipment                      357,270             345,653
    Furniture and fixtures                        37,078              39,581
    Construction in progress                       4,996               4,546
                                                   -----               -----
                                                 588,311             553,137
    Accumulated depreciation and
     investment grants of $744 in 2010
     and $988 in 2009                            349,348             383,697
                                                 -------             -------
      Net property, plant and equipment          238,963             169,440
                                                 -------             -------
      Total assets                            $1,071,325            $797,489
                                              ==========            ========

           LIABILITIES AND EQUITY

    Current liabilities:
    Short-term debt                              $60,876              $2,851
    Accounts payable                             195,977             147,476
    U.S. and foreign income taxes
     payable                                       6,615               8,858
    Accrued payrolls, taxes and related
     benefits                                     46,492              36,207
    Other accrued liabilities                     41,985              32,230
                                                  ------              ------
      Total current liabilities                  351,945             227,622
                                                 -------             -------

    Long-term debt                                93,834             102,254
    Pension plans                                 86,872              69,888
    Other long-term liabilities                   25,297              22,800
    Deferred income taxes                         20,227               3,954
    Commitments and contingencies                      -                   -
    Stockholders' equity:
    Preferred stock, 5% cumulative, $100
     par value, authorized, issued and
     outstanding -no shares in 2010 and
     15 shares in 2009                                 -                   2
    Common stock, $1 par value,
     authorized -75,000,000 shares,
     issued -47,690,024 shares in 2010
     and 42,295,492 in August 31, 2009            47,690              42,295
    Other capital                                249,734             115,358
    Accumulated other comprehensive
     income (loss)                                (6,278)             38,714
    Retained earnings                            519,659             492,513
    Treasury stock, at cost, 16,205,230
     shares in 2010 and 16,207,011
     shares in 2009                             (322,777)           (322,812)
                                                --------            --------
      Total A. Schulman, Inc.
       stockholders' equity                      488,028             366,070
    Noncontrolling interests                       5,122               4,901
      Total equity                               493,150             370,971
                                                 -------             -------
      Total liabilities and equity            $1,071,325            $797,489
                                              ==========            ========


      A. SCHULMAN, INC.
      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                             Year ended August 31,
                                             ---------------------
                                               2010                   2009
                                               ----                   ----
                                                   Unaudited
                                                 (In thousands)
    Provided from (used in) operating
     activities:
      Net income (loss)                     $44,121                $(2,427)
      Adjustments to reconcile net income
       to net cash
        provided from (used in) operating
         activities:
        Depreciation and amortization        27,449                 24,958
        Deferred tax provision              (25,742)                (2,974)
        Pension, postretirement benefits
         and other deferred compensation     10,739                  4,728
        Net (gains) losses on asset sales        96                    740
        Curtailment (gains) losses              270                 (2,805)
        Asset impairment                      5,668                 12,925
      Changes in assets and liabilities:
        Accounts receivable                 (27,582)                91,218
        Inventories                         (43,067)                78,756
        Accounts payable                     21,621                (17,856)
        Restructuring accrual                (4,620)                 2,001
        Income taxes                         (4,639)                 3,720
        Accrued payrolls and other accrued
         liabilities                          2,365                 (1,582)
        Changes in other assets and other
         long-term liabilities               (2,236)                (9,905)
                                             ------                 ------
          Net cash provided from (used in)
           operating activities               4,443                181,497
                                              -----                -------
    Provided from (used in) investing
     activities:
      Expenditures for property, plant
       and equipment                        (18,977)               (24,787)
      Proceeds from the sale of assets        6,570                    950
      Business acquisitions, net of cash
       acquired                             (99,223)                     -
                                            -------                    ---
          Net cash used in investing
           activities                      (111,630)               (23,837)
                                           --------                -------
    Provided from (used in) financing
     activities:
      Cash dividends paid                   (16,754)               (15,812)
      Increase (decrease) in notes
       payable                                3,975                 (7,343)
      Borrowings on revolving credit
       facilities                            86,000                 19,000
      Repayments on revolving credit
       facilities                           (32,500)               (19,000)
      Repayments on long-term debt          (25,951)                     -
      Cash distributions to
       noncontrolling interest
       shareholders                               -                   (981)
      Preferred stock redemption                 (2)                (1,055)
      Common stock issued, net                3,054                    370
      Releases (purchases) of treasury
       stock                                     35                 (1,646)
                                                ---                 ------
          Net cash provided from (used in)
           financing activities              17,857                (26,467)
                                             ------                -------
    Effect of exchange rate changes on
     cash                                   (16,590)                  (247)
                                            -------                   ----
    Net increase (decrease) in cash and
     cash equivalents                      (105,920)               130,946
                                           --------                -------
    Cash and cash equivalents at
     beginning of period                    228,674                 97,728
                                                                    ------
    Cash and cash equivalents at end of
     period                                $122,754               $228,674
                                           ========               ========


                                    A. SCHULMAN, INC.
                             SUPPLEMENTAL SEGMENT INFORMATION


                     Three Months ended August
                                31,                    Year ended August 31,
                    -------------------------          ---------------------
                          2010            2009           2010            2009
                           ---             ---            ---             ---
                            Unaudited                         Unaudited
                     (In thousands, except for           (In thousands, except
                                 %)                             for %)
    Net sales
     to
     unaffiliated
     customers
    EMEA              $318,416        $236,065     $1,142,523        $935,895
    NAMB                42,408          30,263        132,276         108,474
    NAEP                32,104          25,917        127,061         121,701
    NARM                29,908          14,122         77,550          67,920
    APAC                32,997          14,272         84,909          45,258
    Bayshore            20,391               -         26,124               -
      Total net
       sales to
       unaffiliated
       customers      $476,224        $320,639     $1,590,443      $1,279,248
                      --------        --------     ----------      ----------

    Segment
     gross
     profit
    EMEA               $37,602         $41,545       $177,010        $141,137
    NAMB                 5,814           3,592         17,204           8,279
    NAEP                 4,357           2,796         15,272           8,849
    NARM                 5,487           1,890         11,267           6,670
    APAC                 4,207           2,482         11,656           6,372
    Bayshore             3,427               -          4,470               -
                         -----             ---          -----             ---
      Total
       segment
       gross
       profit
       before
       certain
       items            60,894       52,305     236,879      171,307
    Asset
     write-
     downs                   -             (75)           (69)         (1,270)
    Inventory
     step-up            (1,406)              -         (3,942)              -
                        ------             ---         ------             ---
      Total gross
       profit          $59,488         $52,230       $232,868        $170,037
                       -------         -------       --------        --------

    Segment
     operating
     income
     (loss)
     before
     certain
     items
    EMEA               $12,638         $14,684        $69,393         $50,169
    NAMB                 3,770           1,926         11,232           2,809
    NAEP                 2,225            (713)         5,202          (4,641)
    NARM                 2,639           1,116          5,260           3,082
    APAC                   538           1,389          2,981           2,807
    Bayshore             1,476               -          1,990               -
    All other
     North
     America            (3,124)         (3,013)       (11,648)        (11,265)
                        ------          ------        -------         -------
      Total
       segment
       operating
       income
       before
       certain
       items            20,162       15,389      84,410       42,961

    Corporate
     and other          (4,543)         (4,859)       (20,538)        (18,438)
    Interest
     expense,
     net                  (968)           (810)        (3,665)         (2,437)
    Foreign
     currency
     transaction
     gains
     (losses)             (485)        (573)       (874)       5,645
    Other
     income
     (expense)             271            (405)         2,469           1,826
    Asset
     write-
     downs                 (37)           (221)        (5,737)         (3,878)
    Costs
     related to
     acquisitions       (1,498)              -         (6,814)              -
     Restructuring
     related            (2,815)         (3,502)        (5,368)         (7,219)
    Inventory
     step-up            (1,406)              -         (3,942)              -
      Income from
       continuing
       operations
       before
       taxes            $8,681       $5,019     $39,941      $18,460
                        ======          ======        =======         =======

    Capacity
     utilization
    EMEA                    74%             82%            87%             75%
    NAMB                    79%             79%            74%             67%
    NAEP                    62%             74%            65%             63%
    NARM                    47%            n/a             46%            n/a
    APAC                    87%             81%            85%             61%
    Bayshore                88%            n/a             88%            n/a
    Worldwide               73%             81%            81%             72%


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

                                          Asset    Costs
    Three Months ended August      As     Write-  related
     31, 2010                   Reported  downs         to   Restructuring
                                -------- ------      ------- -------------
                                                  Acquisitions  Related
                                                  ------------  -------

    Net sales                   $476,224      $-            $-          $-
    Cost of sales                416,736       -             -           -
    Selling, general and
     administrative expenses      46,773       -        (1,498)          -
    Interest expense, net            968       -             -           -
    Foreign currency
     transaction (gains) losses      485       -             -           -
    Other (income) expense          (271)      -             -           -
    Restructuring expense          2,545       -             -      (2,545)
    Asset impairment                  37     (37)            -           -
    Curtailment (gains) losses       270       -             -        (270)
                                 467,543     (37)       (1,498)     (2,815)
                                 -------     ---        ------      ------
    Income from continuing
     operations before taxes       8,681      37         1,498       2,815
    Provision for (benefit
     from) U.S. and foreign
     income taxes                    565      11             6         778
                                     ---     ---           ---         ---
    Income from continuing
     operations                    8,116      26         1,492       2,037
    Income (loss) from
     discontinued operations,
     net of tax of $0               (225)    237             -           -
                                    ----     ---           ---         ---
    Net income                     7,891     263         1,492       2,037
    Noncontrolling interests         (10)      -             -           -
                                     ---     ---           ---         ---
    Net income attributable to
     A. Schulman, Inc.             7,881     263         1,492       2,037
    Preferred stock dividends          -       -             -           -
                                     ---
    Net income attributable to
     A. Schulman, Inc. common
     stockholders                 $7,881    $263        $1,492      $2,037
                                  ======    ====        ======      ======

    Diluted EPS impact             $0.25
                                   =====

    Weighted-average number of
     shares outstanding -
     diluted                      31,490



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

    Net sales                            $-              $-      $476,224
    Cost of sales                    (1,406)              -       415,330
    Selling, general and
     administrative expenses              -               -        45,275
    Interest expense, net                 -               -           968
    Foreign currency
     transaction (gains) losses           -               -           485
    Other (income) expense                -               -          (271)
    Restructuring expense                 -               -             -
    Asset impairment                      -               -             -
    Curtailment (gains) losses            -               -             -
                                     (1,406)              -       461,787
                                     ------             ---       -------
    Income from continuing
     operations before taxes          1,406               -        14,437
    Provision for (benefit
     from) U.S. and foreign
     income taxes                       415             967         2,742
                                        ---             ---         -----
    Income from continuing
     operations                         991            (967)       11,695
    Income (loss) from
     discontinued operations,
     net of tax of $0                     -               -            12
                                        ---             ---           ---
    Net income                          991            (967)       11,707
    Noncontrolling interests              -               -           (10)
                                        ---             ---           ---
    Net income attributable to
     A. Schulman, Inc.                  991            (967)       11,697
    Preferred stock dividends             -               -             -
    Net income attributable to
     A. Schulman, Inc. common
     stockholders                      $991           $(967)      $11,697
                                       ====           =====       =======

    Diluted EPS impact                                              $0.37
                                                                    =====

    Weighted-average number of
     shares outstanding -
     diluted                                                       31,490




                                         Asset       Costs
    Three Months ended August    As     Write-      related
     31, 2009                 Reported   downs         to     Restructuring
                              --------  ------      -------   -------------
                                                 Acquisitions    Related
                                                 ------------    -------

    Net sales                 $320,639       $-            $-            $-
    Cost of sales              268,409      (75)            -             -
    Selling, general and
     administrative expenses    43,038        -             -        (1,263)
    Interest expense, net          810        -             -             -
    Foreign currency
     transaction (gains)
     losses                        573        -             -             -
    Other (income) expense         405        -             -             -
    Restructuring expense        2,435        -             -        (2,435)
    Asset impairment               146     (146)            -             -
    Curtailment (gains)
     losses                       (196)       -             -           196
                               315,620     (221)            -        (3,502)
                               -------     ----           ---        ------
    Income from continuing
     operations before taxes     5,019      221             -         3,502
    Provision for U.S. and
     foreign income taxes        1,607       70             -           708
                                 -----      ---           ---           ---
    Income from continuing
     operations                  3,412      151             -         2,794
    Income (loss) from
     discontinued operations,
     net of tax of $0          (11,086)  10,317             -            20
                               -------   ------           ---           ---
    Net income (loss)           (7,674)  10,468             -         2,814
    Noncontrolling interests      (208)       -             -             -
                                  ----      ---           ---           ---
    Net income (loss)
     attributable to A.
     Schulman, Inc.             (7,882)  10,468             -         2,814
    Preferred stock dividends      (13)       -             -             -
    Net income (loss)
     attributable to A.
     Schulman, Inc. common
     stockholders              $(7,895) $10,468            $-        $2,814
                               =======  =======           ===        ======

    Diluted EPS impact          $(0.30)
                                ======

    Weighted-average number
     of shares outstanding -
     diluted                    26,202





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

    Net sales                              $-              $-      $320,639
    Cost of sales                           -               -       268,334
    Selling, general and
     administrative expenses                -               -        41,775
    Interest expense, net                   -               -           810
    Foreign currency
     transaction (gains)
     losses                                 -               -           573
    Other (income) expense                  -               -           405
    Restructuring expense                   -               -             -
    Asset impairment                        -               -             -
    Curtailment (gains)
     losses                                 -               -             -
                                            -               -       311,897
                                          ---             ---       -------
    Income from continuing
     operations before taxes                -               -         8,742
    Provision for U.S. and
     foreign income taxes                   -               -         2,385
                                          ---             ---         -----
    Income from continuing
     operations                             -               -         6,357
    Income (loss) from
     discontinued operations,
     net of tax of $0                       -               -          (749)
                                          ---             ---          ----
    Net income (loss)                       -               -         5,608
    Noncontrolling interests                -               -          (208)
                                          ---             ---          ----
    Net income (loss)
     attributable to A.
     Schulman, Inc.                         -               -         5,400
    Preferred stock dividends               -               -           (13)
                                                                        ---
    Net income (loss)
     attributable to A.
     Schulman, Inc. common
     stockholders                          $-              $-        $5,387
                                          ===             ===        ======

    Diluted EPS impact                                                $0.21
                                                                      =====

    Weighted-average number
     of shares outstanding -
     diluted                                                         26,202





                             A. SCHULMAN, INC.
           Reconciliation of GAAP and Non-GAAP Financial Measures
                                Unaudited
                     (In thousands except per share data)
    Year ended
    August 31, 2010
                                                 Costs
                                  Asset        Related to      Restructuring
                  As Reported  Write-downs     Acquisition        Related


    Net sales   $1,590,443         $-             $-                  $-
    Cost of
     sales      1,357,575         (69)             -                   -
    Selling,
     general
     and
     administrative
     expenses     179,821          -           (6,814)                 -
    Interest
     expense,
     net            3,665          -                -                  -
    Foreign
     currency
     transaction
     (gains)
     losses          874           -                -                   -
    Other
     (income)
     expense      (2,425)          -                -                 (44)
    Restructuring
     expense        5,054          -                -              (5,054)
    Asset
     Impairment     5,668     (5,668)               -                   -
    Curtailment
     (gains)
     losses           270                                            (270)
                1,550,502     (5,737)           (6,814)            (5,368)
    Income
     from
     continuing
     operations
     before
     taxes         39,941      5,737             6,814              5,368
    Provision
     for
     (benefit
     from)
     U.S. and
     foreign
     income
     taxes         (4,419)       127                 6              1,198
    Income
     from
     continuing
     operations    44,360      5,610              6,808             4,170
    Income
     (loss)
     from
     discontinued
     operations,
     net of
     tax of $0       (239)       237                  -                  -
    Net income
     (loss)        44,121      5,847              6,808               4,170
    Noncontrolling
     interests       (221)         -                  -                   -
    Net income (loss)
     attributable
     to A.
     Schulman,
     Inc.          43,900      5,847              6,808               4,170
    Preferred
     stock
     dividends          -          -                  -                   -
    Net income (loss)
     attributable
     to A.
     Schulman,
     Inc.
     common
     stockholders   $43,900    $5,847            $6,808              $4,170
    Diluted
     EPS
     impact          $1.57
    Weighted-
     average
     number of
     shares
     outstanding
     -diluted        27,976



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

                              Inventory     Tax         Before
    Year ended August 31,       Step-     Benefits     Certain
     2010                         up      (Charges)     Items
                              ---------  ---------     -------

    Net sales                        $-          $-  $1,590,443
    Cost of sales                (3,942)          -   1,353,564
    Selling, general and
     administrative expenses          -           -     173,007
    Interest expense, net             -           -       3,665
    Foreign currency
     transaction (gains)
     losses                           -           -         874
    Other (income) expense            -           -      (2,469)
    Restructuring expense             -           -           -
    Asset impairment                  -           -           -
    Curtailment (gains)
     losses                                                   -
                                 (3,942)          -   1,528,641
                                 ------         ---   ---------
    Income from continuing
     operations before taxes      3,942           -      61,802
    Provision for (benefit
     from) U.S. and foreign
     income taxes                 1,036      15,448      13,396
                                  -----      ------      ------
    Income from continuing
     operations                   2,906     (15,448)     48,406
    Income (loss) from
     discontinued operations,
     net of tax of $0                 -           -          (2)
                                    ---         ---         ---
    Net income (loss)             2,906     (15,448)     48,404
    Noncontrolling interests          -           -        (221)
                                    ---         ---        ----
    Net income (loss) attributable
     to A. Schulman, Inc.         2,906     (15,448)     48,183
    Preferred stock dividends         -           -           -
    Net income (loss)attributable
     to A. Schulman, Inc.
     common stockholders         $2,906    $(15,448)    $48,183
                                 ======    ========     =======

    Diluted EPS impact                                    $1.72
                                                          =====

    Weighted-average number
     of shares outstanding -
     diluted                                             27,976




                                           Asset       Costs
    Year ended August 31,          As     Write-      related
     2009                      Reported    downs         to     Restructuring
                                --------  ------      -------   -------------
                                                   Acquisitions    Related
                                                   ------------    -------

    Net sales                 $1,279,248       $-            $-            $-
    Cost of sales              1,109,211   (1,270)            -             -
    Selling, general and
     administrative expenses     148,143        -             -        (1,359)
    Interest expense, net          2,437        -             -             -
    Foreign currency
     transaction (gains)
     losses                       (5,645)       -             -             -
    Other (income) expense        (1,826)       -             -             -
    Restructuring expense          8,665        -             -        (8,665)
    Asset impairment               2,608   (2,608)            -             -
    Curtailment (gains)
     losses                       (2,805)       -             -         2,805
                               1,260,788   (3,878)            -        (7,219)
                               ---------   ------           ---        ------
    Income from continuing
     operations before taxes      18,460    3,878             -         7,219
    Provision for U.S. and
     foreign income taxes          6,931      479             -         1,724
                                   -----      ---           ---         -----
    Income from continuing
     operations                   11,529    3,399             -         5,495
    Income (loss) from
     discontinued operations,
     net of tax of $0            (13,956)  10,317             -            20
                                 -------   ------           ---           ---
    Net income                    (2,427)  13,716             -         5,515
    Noncontrolling interests        (349)       -             -             -
                                    ----      ---           ---           ---
    Net income attributable
     to A. Schulman, Inc.         (2,776)  13,716             -         5,515
    Preferred stock dividends        (53)       -             -             -
    Net income attributable
     to A. Schulman, Inc.
     common stockholders         $(2,829) $13,716            $-        $5,515
                                 =======  =======           ===        ======

    Diluted EPS impact            $(0.11)
                                  ======

    Weighted-average number
     of shares outstanding -
     diluted                      26,070




                                    Inventory
    Year ended August 31,             Step-            Tax            Before
     2009                               up          Benefits         Certain
                                    ---------        --------        -------
                                                    (Charges)         Items
                                                    ---------         -----

    Net sales                              $-              $-      $1,279,248
    Cost of sales                           -               -       1,107,941
    Selling, general and
     administrative expenses                -               -         146,784
    Interest expense, net                   -               -           2,437
    Foreign currency
     transaction (gains)
     losses                                 -               -          (5,645)
    Other (income) expense                  -               -          (1,826)
    Restructuring expense                   -               -               -
    Asset impairment                        -               -               -
    Curtailment (gains)
     losses                                 -               -               -
                                            -               -       1,249,691
                                          ---             ---       ---------
    Income from continuing
     operations before taxes                -               -          29,557
    Provision for U.S. and
     foreign income taxes                   -               -           9,134
                                          ---             ---           -----
    Income from continuing
     operations                             -               -          20,423
    Income (loss) from
     discontinued operations,
     net of tax of $0                       -               -          (3,619)
                                          ---             ---          ------
    Net income                              -               -          16,804
    Noncontrolling interests                -               -            (349)
                                          ---             ---            ----
    Net income attributable
     to A. Schulman, Inc.                   -               -          16,455
    Preferred stock dividends               -               -             (53)
                                                                          ---
    Net income attributable
     to A. Schulman, Inc.
     common stockholders                   $-              $-         $16,402
                                          ===             ===         =======

    Diluted EPS impact                                                  $0.64
                                                                        =====

    Weighted-average number
     of shares outstanding -
     diluted                                                           26,070


                        A. SCHULMAN, INC.
     Reconciliation of GAAP and Non-GAAP Financial Measures
          EBITDA Excluding Certain Items Reconciliation
                            Unaudited
              (In thousands except per share data)



                      Three Months  Three Months  Year ended   Year ended
                                                   August 31,   August 31,
                          ended         ended         2010         2009
                        August 31,    August 31,
                           2010          2009     -----------  -----------
                       -----------   -----------

    Income from
     continuing
     operations
     before taxes            $8,681        $5,019      $39,941      $18,460

    Adjustments
     (pretax):
      Depreciation
       and
       amortization           9,957         5,599       27,380       22,269
      Interest
       expense, net             968           810        3,665        2,437
      Asset write-
       downs                     37           221        5,737        3,878
      Costs related
       to
       acquisitions           1,498             -        6,814            -
      Restructuring
       related                2,815         3,502        5,368        7,219
      Inventory step-
       up                     1,406             -        3,942            -
    EBITDA
     excluding
     certain items          $25,362       $15,151      $92,847      $54,263
                            =======       =======      =======      =======


SOURCE A. Schulman, Inc.

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