April 4, 2011

A. Schulman Reports Improved Fiscal 2011 Second-Quarter Results

AKRON, Ohio, April 4, 2011 /PRNewswire/ --

  • Net income was $7.1 million for the quarter compared with a loss of $6.8 million in last year's second quarter
  • Excluding certain one-time charges, net income for the quarter was $12.1 million, or $0.39 per share, compared with $3.2 million, or $0.12 per share, for the prior-year period
  • Fiscal 2011 net income guidance is reaffirmed and is expected to reach record levels between $57 million and $62 million
  • The Company repurchased 625,000 shares for approximately $13.6 million during the quarter under the Company's current share repurchase program

A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal 2011 second quarter ended February 28, 2011.  The Company reported net income for the second quarter of $7.1 million, or $0.23 per diluted share, compared with a net loss of $6.8 million, or $0.26 per share, for the comparable period last year.  The translation effect of foreign currencies was negligible in the quarter.  

The fiscal 2011 second quarter included certain after-tax charges of approximately $5.0 million primarily related to restructuring expenses, unwinding of inventory step-ups, asset impairments and acquisition-related costs.  Last year's second quarter included certain after-tax charges of $10.0 million related to asset impairments, acquisition-related costs and restructuring expenses.  Excluding these charges, net income for the fiscal 2011 second quarter was $12.1 million, or $0.39 per diluted share, compared with $3.2 million, or $0.12 per diluted share, for the prior-year period.

"Our earnings showed significant improvement over the second quarter of last year, due to favorable volume stemming from steady improvement in customer demand and the mix effect as we continue to focus on more profitable businesses," said Joseph M. Gingo, Chairman, President and Chief Executive Officer.  "We will continue to manage our business to take advantage of profitable growth opportunities and strong demand throughout our expanding global footprint, as we further optimize our operations."

Net sales for the fiscal 2011 second quarter were $508.3 million, an increase of 53.6% compared with $331.0 million for the same period last year. Currency translation negatively impacted sales by 2% or $6.7 million. The majority of the increase was due to the impact of the acquisition of ICO, Inc., which was completed during the third quarter of fiscal 2010. Volume reached 497 million pounds, up 58% from 315 million pounds reported last year. Had the Company owned ICO at the beginning of fiscal 2010, sales growth would have been 22% and volume growth would have been 6%.  

Gross profit for the quarter was $66.6 million, compared with $51.3 million last year. Currency translation negatively impacted gross profit by $0.8 million. Overall gross profit per pound for the quarter was 13.4 cents, which was lower than the 16.3 cents in last year's second quarter. Had the Company owned ICO at the beginning of fiscal 2010, the increase in gross profit for the 2011 second quarter would have been approximately $3.8 million and the gross profit per pound would have been flat.  

The Company's selling, general and administrative expenses, excluding the effect of foreign currency translation, increased $1.1 million for the quarter. The increase is primarily the result of increases in global headcount, as a result of the ICO acquisition. Had the Company owned ICO at the beginning of fiscal 2010 and excluding costs related to acquisitions, selling, general and administrative expenses would have decreased $8.9 million for the quarter. The decrease is primarily attributable to a $6.8 million reduction in bad debt expense, as fiscal 2010 included a large bad debt charge in Europe for a certain customer. The decrease is also a result of lower stock-based compensation expense of $1.9 million primarily due to mark-to-market adjustments which declined significantly in the second quarter of fiscal 2011. Additionally, the Company is realizing some synergies in its selling, general and administrative expenses as a result of the acquisitions completed over the previous 12 months.

For the fiscal 2011 year-to-date results, the Company reported net income of $16.4 million, or $0.52 per diluted share, compared with net income of $10.3 million, or $0.39 per diluted share, for the same period last year.  Excluding the effect of certain items including asset impairments, acquisition-related costs and restructuring-related charges, year-to-date net income was $22.7 million, or $0.73 per diluted share, compared with $22.9 million, or $0.87 per diluted share, a year ago.  Sales volume increased by 44.7% for the six-month period compared with the prior-year period, primarily due to the ICO acquisition.  Had the Company owned ICO at the beginning of fiscal 2010, sales would have increased 16% and volume would have increased 4%.

Note: The numbers below will sometimes refer to the Company's performance including the "ICO effect". The Company defines the "ICO effect" as if it had owned ICO at the beginning of fiscal 2010. These are non-GAAP presentations developed as a result of the way the Company is internally measuring the business. The results exclude one-time charges and acquisition-related items discussed above and include a consistent amount of purchasing accounting-related depreciation and amortization expense for each period. See the attached financial table (Non-GAAP Supplemental Segment Comparison Information) for non-GAAP supplemental financial information by business segment.

Europe, Middle East and Africa ("EMEA") — The EMEA business segment's performance was significantly better than the region's second quarter in fiscal 2010.  EMEA sales for the quarter were $356.5 million, an increase of 44.1% compared with the prior-year period. The foreign currency translation effect negatively impacted sales by $8.8 million. Including the ICO effect, sales increased approximately 25% as a result of a combination of favorable pricing in most of the Company's business lines, and increased volume of approximately 7% due to steady improvement in customer demand primarily in the Company's engineered plastics and specialty powders businesses.  

EMEA gross profit was $47.5 million for the fiscal 2011 second quarter, an increase from $41.5 million for the same three-month period last year. Gross profit per pound was 15.1 cents per pound in the quarter, a decrease of 11% compared with last year.  Foreign currency translation negatively impacted EMEA gross profit by $1.1 million. Including the ICO effect, gross profit increased $1.9 million, or approximately 4%, primarily due to volume increases. Including the ICO effect, gross profit per pound was relatively flat compared with the fiscal 2010 second quarter. Average selling prices increased approximately 17% compared with the prior year including the ICO effect.  During the quarter, the Company was able to pass along most cost increases with the exception of some fixed price contracts in its engineered plastics business which have yet to reset.  The gross margin decline in engineered plastics was primarily offset by an increase for specialty powders.  

Operating income for EMEA during the fiscal 2011 second quarter was $21.7 million, an increase of $12.5 million compared with last year. Including the ICO effect, operating income increased $12.1 million. The increase in operating income in fiscal 2011 was partially due to the increase in gross profit and a decrease in selling, general and administrative expenses of $10.2 million compared with the prior year.

The Americas — In the fiscal 2011 second quarter, sales for the Americas were $118.6 million, an increase of 71.2% compared with the prior-year period. Foreign currency translation increased sales by $1.7 million. Including the ICO effect, sales increased approximately 17% for the three-month period. Volume for the quarter was 150.6 million pounds, an increase of approximately 4% from the prior-year quarter, including the ICO effect.  The increase in sales and volume was primarily due to the growth of the masterbatch business, particularly in the United States, where the Company has focused its efforts.      

Gross profit for the Americas was $15.9 million for the fiscal 2011 second quarter, an increase of $8.2 million from the comparable period last year. Gross profit per pound was 10.6 cents per pound in the quarter, a decrease of 20% compared with last year.  Including the ICO effect, gross profit increased $2.1 million, or approximately 15%, and gross profit per pound increased approximately 10% for the fiscal 2011 second quarter.

Operating income for the Americas for the fiscal 2011 second quarter was $3.3 million compared with $0.2 million last year.  The $3.1 million increase in profitability was driven by an increase in gross profit based on higher volumes.  Including the ICO effect, operating income increased $1.2 million. Selling, general and administrative expenses increased $0.9 million due primarily to incremental expenses for the establishment of the Company's Americas management team.

Asia Pacific ("APAC") — Sales for APAC for the fiscal 2011 second quarter were $33.3 million, an increase of $18.8 million compared with the prior-year period. Including the ICO effect, sales increased 14.1% as the selling price per pound increased approximately 10% and total pounds sold increased approximately 4% compared with the prior year based on strong customer demand. These increases were negatively impacted by the significant decline in the water tank market in Australia, and as previously announced, the Company is restructuring its capacity in this region.

Gross profit for the quarter was $3.4 million, or 10.4 cents per pound, an increase of $1.3 million compared with last year. Including the ICO effect, gross profit decreased $0.1 million and gross profit per pound declined approximately 7%, primarily as a result of increased raw material costs and the negative impact from the Australian market.  

Operating income for the quarter was $0.4 million compared with $0.6 million last year. Including the ICO effect, operating profit decreased by $0.1 million. The decrease in profitability was primarily due to the decrease in gross profit as selling, general and administrative expenses were flat compared with the prior year.

"Our unrelenting focus on profitable volume in the Asian region enabled us to offset operating losses of $1.1 million in Australia during the quarter which we experienced prior to our realignment of production operations in that market," Gingo said.

Cash Flow From Operations/Working Capital/Share Repurchase

Net cash used in operating activities was $16.5 million for the fiscal 2011 year-to-date period, compared with net cash provided from operating activities of $8.1 million during the same period last year.  The difference was primarily due to increases in accounts receivable, inventories and a decline in other liabilities, partially offset by the increases in net income and accounts payable.  Total days of working capital increased to 72 days at February 28, 2011, from 71 days at November 30, 2010, and 61 days at August 31, 2010. The increase was attributable to higher accounts receivable and inventory as general business conditions improved given higher customer demand and higher raw material costs.

The Company's net debt, defined as total debt less cash and cash equivalents, was in a net debt position of $102.4 million, an increase from $83.6 million as of the end of the first quarter and $31.9 million at August 31, 2010.  The key drivers of the year-to-date increase were working capital needs, acquisition costs and the repurchase of common stock.

The Company has repurchased 625,000 shares of its common stock at an average price of $21.75 per share during fiscal 2011. The Company has approximately 2.3 million shares remaining from the previous board-authorized share repurchase program.  

Business Outlook

Based upon year-to-date results, the Company reaffirms its fiscal 2011 net income guidance in the range of $57 million to $62 million.  The guidance assumes a euro exchange rate of $1.35 as well as the seasonal volume improvements typically seen in the Company's third and fourth quarters.  

Conference Call on the Web

A live Internet broadcast of A. Schulman's conference call regarding fiscal 2011 second-quarter earnings can be accessed at 10:00 a.m. Eastern time on Tuesday, April 5, 2011, on the Company's website, www.aschulman.com.  An archived replay of the call will also be available on the website.  

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 33 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.

Use of Non-GAAP Financial Measures

This release includes certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States ("GAAP").  These non-GAAP financial measures include: net income excluding certain items, net income per diluted share excluding certain items and EBITDA excluding certain items, as well as certain non-GAAP supplemental segment comparison financial information reflecting the operations of A. Schulman, Inc. (the "Company") as if it owned ICO, Inc. ("ICO") at the beginning first quarter of 2010. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures, and tables included in this release reconcile each non-GAAP financial measure with the most directly comparable GAAP financial measure. The most directly comparable GAAP financial measures for these purposes are income from continuing operations before taxes, net income and net income per diluted share.  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.

The Company uses these non-GAAP financial measures to monitor and evaluate Company performance and believes that they are useful to investors for financial analysis, particularly with respect to understanding the significance of the ICO acquisition in the third quarter of fiscal 2010. However, the non-GAAP supplemental financial information is not necessarily indicative of what the combined financial results would have actually been had the ICO acquisition taken place as of September 1, 2009, since such financial information does not reflect any cost savings, operating synergies, tax synergies or revenue enhancements, and includes certain estimated additional depreciation amounts and estimates for amortization of the intangibles recorded as part of the purchase price allocation.  

While the Company believes that these non-GAAP financial measures provide useful supplemental information to investors, there are very significant limitations associated with their use.  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.

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_ALL

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS







Three months ended
February 28,


Six months ended
February 28,




2011


2010


2011


2010




Unaudited




(In thousands, except per share data)











Net sales


$                  508,343


$                  331,023


$               1,003,726


$                  693,883

Cost of sales


441,731


279,686


868,113


579,389

Selling, general and administrative expenses


49,430


48,764


102,335


89,515

Interest expense


1,642


1,136


2,927


2,190

Interest income


(191)


(198)


(391)


(451)

Foreign currency transaction (gains) losses


667


(180)


1,338


(77)

Other (income) expense


(433)


(659)


(437)


(1,886)

Asset impairment


1,800


5,281


1,800


5,331

Restructuring expense


3,385


1,218


3,936


1,647




498,031


335,048


979,621


675,658

Income (loss) from continuing operations before taxes


10,312


(4,025)


24,105


18,225

Provision for U.S. and foreign income taxes


3,033


2,794


7,450


7,906

Income (loss) from continuing operations


7,279


(6,819)


16,655


10,319

Income (loss) from discontinued operations, net of tax of $0


-


12


-


9

Net income (loss)


7,279


(6,807)


16,655


10,328

Noncontrolling interests


(138)


32


(271)


(70)

Net income (loss) attributable to A. Schulman, Inc.


$                      7,141


$                    (6,775)


$                    16,384


$                    10,258










-

Weighted-average number of shares outstanding:










Basic


31,091


25,916


31,212


25,880


Diluted


31,181


25,916


31,245


26,346











Earnings (losses) per share of common stock attributable to A. Schulman, Inc. - Basic:










Income (loss) from continuing operations


$                        0.23


$                      (0.26)


$                        0.52


$                        0.40


Income (loss) from discontinued operations


-


-


-


-


Net income (loss) attributable to common stockholders


$                        0.23


$                      (0.26)


$                        0.52


$                        0.40











Earnings (losses) per share of common stock attributable to A. Schulman, Inc. - Diluted:










Income (loss) from continuing operations


$                        0.23


$                      (0.26)


$                        0.52


$                        0.39


Income (loss) from discontinued operations


-


-


-


-


Net income (loss) attributable to common stockholders


$                        0.23


$                      (0.26)


$                        0.52


$                        0.39




A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS






February 28, 2011


August 31, 2010


Unaudited

ASSETS

 (In thousands, except share data)


Current assets:




Cash and cash equivalents

$                                       96,350


$                                     122,754

Accounts receivable, less allowance for doubtful accounts of $10,922 at February 28, 2011
   and $13,205 at August 31, 2010

342,405


282,953

Inventories, average cost or market, whichever is lower

268,217


209,228

Prepaid expenses and other current assets

32,860


29,128

Total current assets

739,832


644,063





Other assets:




Deferred charges and other assets

38,922


31,873

Goodwill

93,400


84,064

Intangible assets

78,459


72,352


210,781


188,289





Property, plant and equipment, at cost:




Land and improvements

32,879


30,891

Buildings and leasehold improvements

167,223


158,076

Machinery and equipment

383,064


357,270

Furniture and fixtures

40,389


37,078

Construction in progress

7,286


4,996


630,841


588,311

Accumulated depreciation and investment grants of $869 at February 28, 2011
   and $744 at August 31, 2010

386,502


349,348

Net property, plant and equipment

244,339


238,963

Total assets

$                                  1,194,952


$                                  1,071,315





LIABILITIES AND EQUITY








Current liabilities:




Short-term debt

$                                         5,880


$                                       60,876

Accounts payable

238,303


195,977

U.S. and foreign income taxes payable

8,837


6,615

Accrued payrolls, taxes and related benefits

38,952


46,492

Other accrued liabilities

46,717


41,985

Total current liabilities

338,689


351,945





Long-term debt

192,928


93,834

Pension plans

95,408


86,872

Other long-term liabilities

27,620


25,297

Deferred income taxes

23,495


20,227

Commitments and contingencies

-


-

Stockholders' equity:




Common stock, $1 par value, authorized - 75,000,000 shares, issued - 47,786,892
   shares at February 28, 2011 and 47,690,024 shares at August 31, 2010

47,787


47,690

Other capital

251,292


249,734

Accumulated other comprehensive income

23,017


(6,278)

Retained earnings

526,300


519,649

Treasury stock, at cost, 16,825,652 shares at February 28, 2011 and 16,205,230 at
  August 31, 2010

(336,277)


(322,777)

Total A. Schulman, Inc. stockholders' equity

512,119


488,018

Noncontrolling interests

4,693


5,122

Total equity

516,812


493,140

Total liabilities and equity

$                                  1,194,952


$                                  1,071,315






A. SCHULMAN, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS




















Six months ended February 28,








2011


2010








Unaudited








(In thousands)

Provided from (used in) operating activities:




Net income




$                      16,655


$                      10,328


Adjustments to reconcile net income to net cash






provided from (used in) operating activities:






Depreciation and amortization



19,703


11,281



Deferred tax provision




(1,923)


(379)



Pension, postretirement benefits and other deferred compensation


3,597


3,305



Net losses (gains) on asset sales



262


(298)



Asset impairment




1,800


5,331


Changes in assets and liabilities:








Accounts receivable




(34,077)


(11,495)



Inventories




(39,331)


(33,281)



Accounts payable




25,958


11,457



Income taxes




3,130


3,681



Accrued payrolls and other accrued liabilities


(7,963)


4,748



Changes in other assets and other long-term liabilities

(4,333)


3,427




Net cash provided from (used in) operating activities

(16,522)


8,105











Provided from (used in) investing activities:






Expenditures for property, plant and equipment


(11,060)


(8,608)


Proceeds from the sale of assets



1,139


1,415


Business acquisitions, net of cash acquired


(15,071)


-




Net cash used in investing activities


(24,992)


(7,193)











Provided from (used in) financing activities:






Cash dividends paid




(9,733)


(7,954)


Increase (decrease) in notes payable and long-term debt

(3,204)


(48)


Borrowings on revolving credit facilities



181,000


10,000


Repayments on revolving credit facilities



(141,500)


(5,000)


Payment of debt issuance costs



(2,220)


-


Cash distributions to noncontrolling interests


(700)


-


Common stock issued (redeemed), net



(780)


252


Issuance (purchase) of treasury stock,   net



(13,500)


-




Net cash provided from (used in) financing activities

9,363


(2,750)

Effect of exchange rate changes on cash



5,747


(11,233)

Net increase (decrease) in cash and cash equivalents

(26,404)


(13,071)

Cash and cash equivalents at beginning of period


122,754


228,674

Cash and cash equivalents at end of period


$                      96,350


$                    215,603





A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION



Three Months ended
February 28,


Six Months ended
February 28,


2011


2010


2011


2010


Unaudited


(In thousands, except for %)

Pounds sold to unaffiliated customers








EMEA

314,359


244,241


630,840


495,045

Americas

150,550


58,397


304,130


124,196

APAC

32,353


12,397


66,250


24,987

Total pounds sold to unaffiliated customers

497,262


315,035


1,001,220


644,228









Net sales to unaffiliated customers








EMEA

$                  356,533


$                  247,374


$                  703,215


$                  519,317

Americas

118,550


69,228


233,671


145,557

APAC

33,260


14,421


66,840


29,009

Total net sales to unaffiliated customers

$                  508,343


$                  331,023


$               1,003,726


$                  693,883









Segment gross profit








EMEA

$                    47,487


$                    41,525


$                    95,572


$                    92,126

Americas

15,911


7,694


32,386


17,656

APAC

3,376


2,118


7,938


4,781

Total segment gross profit

66,774


51,337


135,896


114,563

Asset write-downs

-


-


-


(69)

Inventory Step-up

(162)


-


(283)


-

Total gross profit

$                    66,612


$                    51,337


$                  135,613


$                  114,494









Segment operating income








EMEA

$                    21,722


$                      9,235


$                    41,124


$                    34,459

Americas

3,340


216


7,199


3,088

APAC

384


564


2,192


1,678

Total segment operating income

25,446


10,015


50,515


39,225









Corporate and other

(7,788)


(6,021)


(15,759)


(10,490)

Interest expense, net

(1,451)


(938)


(2,536)


(1,739)

Foreign currency transaction gains (losses)

(667)


180


(1,338)


77

Other income (expense)

433


659


437


1,886

Asset write-downs

(1,800)


(5,281)


(1,800)


(5,400)

Costs related to acquisitions

(314)


(1,421)


(1,195)


(3,687)

Restructuring related

(3,385)


(1,218)


(3,936)


(1,647)

Inventory step-up

(162)


-


(283)


-

Income (loss) from continuing operations before taxes

$                    10,312


$                    (4,025)


$                    24,105


$                    18,225









Capacity utilization








EMEA

73%


87%


77%


92%

Americas

62%


66%


63%


71%

APAC

90%


74%


89%


80%

Worldwide

70%


82%


72%


86%




A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

(In thousands, except per share data)

Three Months ended February 28, 2011


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$                  508,343


$                           -


$                           -


$                           -


$                           -


$                           -


$                  508,343

Cost of sales


441,731


-


-


-


(162)


-


441,569

Selling, general and administrative expenses


49,430


-


(314)


-


-


-


49,116

Interest expense, net


1,451


-


-


-


-


-


1,451

Foreign currency transaction (gains) losses


667


-


-


-


-


-


667

Other (income) expense


(433)


-


-


-


-


-


(433)

Asset impairment


1,800


(1,800)


-


-


-


-


-

Restructuring expense


3,385


-


-


(3,385)


-


-


-



498,031


(1,800)


(314)


(3,385)


(162)


-


492,370

Income from continuing operations before taxes


10,312


1,800


314


3,385


162


-


15,973

Provision for U.S. and foreign income taxes


3,033


-


-


613


58


-


3,704

Income from continuing operations


7,279


1,800


314


2,772


104


-


12,269

Income (loss) from discontinued operations, net of tax of $0


-


-


-


-


-


-


-

Net income


7,279


1,800


314


2,772


104


-


12,269

Noncontrolling interests


(138)


-


-


-


-


-


(138)

Net income attributable to A. Schulman, Inc.


$                      7,141


$                      1,800


$                         314


$                      2,772


$                         104


$                           -


$                    12,131
















Diluted EPS


$                        0.23












$                        0.39
















Weighted-average number of shares outstanding -diluted


31,181












31,181
















Three Months ended February 28, 2010


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$                  331,023


$                           -


$                           -


$                           -


$                           -


$                           -


$                  331,023

Cost of sales


279,686


-


-


-


-


-


279,686

Selling, general and administrative expenses


48,764


-


(1,421)


-


-


-


47,343

Interest expense, net


938


-


-


-


-


-


938

Foreign currency transaction (gains) losses


(180)


-


-


-


-


-


(180)

Other (income) expense


(659)


-


-


-


-


-


(659)

Asset impairment


5,281


(5,281)


-


-


-


-


-

Restructuring expense


1,218


-


-


(1,218)


-


-


-



335,048


(5,281)


(1,421)


(1,218)


-


-


327,128

Income (loss) from continuing operations before taxes


(4,025)


5,281


1,421


1,218


-


-


3,895

Provision for U.S. and foreign income taxes


2,794


94


-


135


-


(2,252)


771

Income (loss) from continuing operations


(6,819)


5,187


1,421


1,083


-


2,252


3,124

Income (loss) from discontinued operations, net of tax of $0


12


-


-


-


-


-


12

Net income (loss)


(6,807)


5,187


1,421


1,083


-


2,252


3,136

Noncontrolling interests


32


-


-


-


-


-


32

Net income (loss) attributable to A. Schulman, Inc.


$                    (6,775)


$                      5,187


$                      1,421


$                      1,083


$                           -


$                      2,252


$                      3,168
















Diluted EPS


$                      (0.26)












$                        0.12
















Weighted-average number of shares outstanding -diluted


25,916












25,916



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

(In thousands, except per share data)

Six Months ended February 28, 2011


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$               1,003,726


$                           -


$                           -


$                           -


$                           -


$                           -


$               1,003,726

Cost of sales


868,113


-


-


-


(283)


-


867,830

Selling, general and administrative expenses


102,335


-


(1,195)


-


-


-


101,140

Interest expense, net


2,536


-


-


-


-


-


2,536

Foreign currency transaction (gains) losses


1,338


-


-


-


-


-


1,338

Other (income) expense


(437)


-


-


-


-


-


(437)

Asset impairment


1,800


(1,800)


-


-


-


-


-

Restructuring expense


3,936


-


-


(3,936)


-


-


-



979,621


(1,800)


(1,195)


(3,936)


(283)


-


972,407

Income from continuing operations before taxes


24,105


1,800


1,195


3,936


283


-


31,319

Provision for U.S. and foreign income taxes


7,450


-


-


729


99


65


8,343

Income from continuing operations


16,655


1,800


1,195


3,207


184


(65)


22,976

Income (loss) from discontinued operations, net of tax of $0


-


-


-


-


-


-


-

Net income


16,655


1,800


1,195


3,207


184


(65)


22,976

Noncontrolling interests


(271)


-


-


-


-


-


(271)

Net income attributable to A. Schulman, Inc.


$                    16,384


$                      1,800


$                      1,195


$                      3,207


$                         184


$                         (65)


$                    22,705
















Diluted EPS


$                        0.52












$                        0.73
















Weighted-average number of shares outstanding -diluted


31,245












31,245
















Six Months ended February 28, 2010


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$                  693,883


$                           -


$                           -


$                           -


$                           -


$                           -


$                  693,883

Cost of sales


579,389


(69)


-


-


-


-


579,320

Selling, general and administrative expenses


89,515


-


(3,687)


-


-


-


85,828

Interest expense, net


1,739


-


-


-


-


-


1,739

Foreign currency transaction (gains) losses


(77)


-


-


-


-


-


(77)

Other (income) expense


(1,886)


-


-


-


-


-


(1,886)

Asset impairment


5,331


(5,331)


-


-


-


-


-

Restructuring expense


1,647


-


-


(1,647)


-


-


-



675,658


(5,400)


(3,687)


(1,647)


-


-


664,924

Income from continuing operations before taxes


18,225


5,400


3,687


1,647


-


-


28,959

Provision for U.S. and foreign income taxes


7,906


115


-


265


-


(2,252)


6,034

Income from continuing operations


10,319


5,285


3,687


1,382


-


2,252


22,925

Income (loss) from discontinued operations, net of tax of $0


9


-


-


-


-


-


9

Net income


10,328


5,285


3,687


1,382


-


2,252


22,934

Noncontrolling interests


(70)


-


-


-


-


-


(70)

Net income attributable to A. Schulman, Inc.


$                    10,258


$                      5,285


$                      3,687


$                      1,382


$                           -


$                      2,252


$                    22,864
















Diluted EPS


$                        0.39












$                        0.87
















Weighted-average number of shares outstanding -diluted


26,346












26,346



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

EBITDA Excluding Certain Items Reconciliation

Unaudited

(In thousands)





















Three Months Ended
February 28,


Six Months Ended
February 28,



2011


2010


2011


2010










Income (loss) from continuing operations before taxes


$               10,312


$               (4,025)


$               24,105


$               18,225










Adjustments (pretax):









Depreciation and amortization


10,049


5,531


19,703


11,209

Interest expense, net


1,451


938


2,536


1,739

Asset write-downs


1,800


5,281


1,800


5,400

Costs related to acquisitions


314


1,421


1,195


3,687

Restructuring related


3,385


1,218


3,936


1,647

Inventory step-up


162


-


283


-

EBITDA excluding certain items


$               27,473


$               10,364


$               53,558


$               41,907




A. SCHULMAN, INC.

NON-GAAP SUPPLEMENTAL SEGMENT COMPARISON INFORMATION

Unaudited

(In Millions)


Three Months ended November 30, 2009



EMEA


Americas


APAC


Corporate


Consolidated











Pounds sold to unaffiliated customers

304.2


151.8


37.1


-


493.1

Net sales to unaffiliated customers

$            312.4


$            107.2


$              33.3


$                  -


$                452.9

Gross profit before certain items

$              56.1


$              15.9


$                4.1


$                  -


$                  76.1











Segment operating income (loss) before certain items

$              27.0


$                4.6


$                1.0


$                  -


$                  32.7

Corporate and other

-


-


-


(6.3)


(6.3)

Income (loss) from continuing operations before certain non-segment related items

$              27.0


$                4.6


$                1.0


$               (6.3)


$                  26.4





















Three Months ended February 28, 2010




EMEA


Americas


APAC


Corporate


Consolidated





















Pounds sold to unaffiliated customers

293.8


144.2


31.2


-


469.2

Net sales to unaffiliated customers

$            285.2


$            101.1


$              29.1


$                  -


$                415.5

Gross profit before certain items

$              45.6


$              13.8


$                3.5


$                  -


$                  62.9











Segment operating income (loss) before certain items

$                9.7


$                2.2


$                0.5


$                  -


$                  12.4

Corporate and other

-


-


-


(7.4)


(7.4)

Income (loss) from continuing operations before certain non-segment related items

$                9.7


$                2.2


$                0.5


$               (7.4)


$                    5.0





















Three Months ended May 31, 2010




EMEA


Americas


APAC


Corporate


Consolidated











Pounds sold to unaffiliated customers

339.0


156.4


33.2


-


528.6

Net sales to unaffiliated customers

$            337.4


$            117.6


$              33.9


$                  -


$                488.8

Gross profit before certain items

$              51.7


$              16.1


$                4.1


$                  -


$                  71.8











Segment operating income before certain items

$              23.9


$                4.4


$                0.4


$                  -


$                  28.6

Corporate and other

-


-


-


(6.4)


(6.4)

Income (loss) from continuing operations before certain non-segment related items

$              23.9


$                4.4


$                0.4


$               (6.4)


$                  22.2





















Three Months ended August 31, 2010




EMEA


Americas


APAC


Corporate


Consolidated





















Pounds sold to unaffiliated customers

321.9


169.6


33.9


-


525.4

Net sales to unaffiliated customers

$            318.4


$            124.8


$              33.0


$                  -


$                476.2

Gross profit before certain items

$              37.6


$              19.1


$                4.2


$                  -


$                  60.9











Segment operating income (loss) before certain items

$              12.6


$                7.0


$                0.5


$                  -


$                  20.2

Corporate and other

-


-


-


(4.5)


(4.5)

Income (loss) from continuing operations before certain non-segment related items

$              12.6


$                7.0


$                0.5


$               (4.5)


$                  15.6











Note: The results above include ICO as if the Company had owned ICO at the beginning of fiscal year 2010.  The results exclude certain one-time charges and acquisition related items discussed above and include a consistent estimated amount of purchasing accounting-related depreciation and amortization expense for each period. Numbers may not add up due to rounding.



SOURCE A. Schulman, Inc.

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