July 6, 2011

A. Schulman Reports Fiscal 2011 Third-Quarter Results

AKRON, Ohio, July 6, 2011 /PRNewswire/ --

  • Operating results for the quarter improved over prior year in all three business segments
  • Net income was $18.8 million for the quarter compared with net income of $25.8 million in last year's third quarter
  • Excluding certain items, net income for the quarter was $20.3 million, or $0.65 per diluted share, compared with $13.6 million, or $0.48 per diluted share, for the prior-year period

A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal 2011 third quarter ended May 31, 2011.  The Company reported net income for the third quarter of $18.8 million, or $0.60 per diluted share, compared with net income of $25.8 million, or $0.91 per diluted share, for the comparable period last year.  The translation effect of foreign currencies was $1.1 million favorable for the quarter.

The fiscal 2011 third-quarter net income per diluted share of $0.60 included certain after-tax items of approximately $1.5 million, or $0.05 per diluted share, primarily related to restructuring and acquisition-related costs.  Excluding these items, net income for the fiscal 2011 third quarter was $20.3 million, or $0.65 per diluted share, compared with $13.6 million, or $0.48 per diluted share, for the prior-year period. The fiscal 2010 third-quarter net income per diluted share of $0.91 included certain after-tax net benefits of approximately $12.2 million, which were primarily related to a tax valuation allowance release as part of the April 30, 2010 acquisition of ICO, Inc. which was partially offset by asset impairments, acquisition-related costs and restructuring expenses.  

"Gross profit and operating income improved from a year ago in each of our three regions as our efforts to focus on a higher-margin product mix continue to bear fruit in the Americas, Europe and Asia," said Joseph M. Gingo, Chairman, President and Chief Executive Officer.  "We continue to see opportunities to expand our presence in high-value-added products in the current economic environment which will position us well to serve the needs of our customers."

Net sales for the fiscal 2011 third quarter were $611.1 million, an increase of 45.4% compared with $420.3 million for the same period last year. The translation effect of foreign currencies increased sales by $33.6 million in the quarter.  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 535.4 million pounds, up 28% from 418.3 million pounds reported last year.  Had the Company owned ICO at the beginning of fiscal 2010, sales growth would have been approximately 25% quarter-over-quarter, and volume growth would have been approximately flat.  

Gross profit for the quarter was $78.9 million, compared with $58.9 million last year. Foreign currency translation favorably impacted gross profit by $4.5 million.  Overall gross profit per pound, including certain items, was 14.7 cents, compared with 14.1 cents for the same period last year.  Had the Company owned ICO at the beginning of fiscal 2010, gross profit for the 2011 third quarter would have been approximately $7.1 million higher.  Had the Company owned ICO at the beginning of fiscal 2010, gross profit per pound would have improved by approximately 8% from the comparable period in fiscal 2010.  

The Company's selling, general and administrative expenses, excluding the effect of foreign currency translation, increased $5.6 million for the quarter. Had the Company owned ICO at the beginning of fiscal 2010 and excluding costs related to acquisitions, selling, general and administrative expenses would have increased $2.5 million for the quarter. The increase is primarily the result of increases in global headcount as a result of the ICO acquisition and an unfavorable foreign currency impact partially offset by a $1.2 million reduction in bad debt expense and a $2.7 million decrease in bonus expense.

For the first nine months of fiscal 2011, the Company reported net income of $35.1 million, or $1.12 per diluted share, compared with net income of $36.0 million, or $1.34 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 $43.0 million compared with $36.5 million a year ago.  Volume increased by 45% for the nine-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 approximately 19% and volume would have increased approximately 3%.

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 certain 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 improved in the fiscal 2011 third quarter.  EMEA sales for the quarter were $436.0 million, an increase of 43% compared with the prior-year period. The foreign currency translation effect favorably impacted sales by $29.9 million.  Including the ICO effect, sales would have increased approximately 29% as a result of successfully passing on the raw material price increases in most business lines. Average selling prices would have increased approximately 30% compared with the prior year including the ICO effect.  

EMEA gross profit was $54.7 million for the fiscal 2011 third quarter, an increase from $47.3 million for the same three-month period last year. Gross profit per pound was 16.2 cents per pound in the quarter, compared with 15.6 cents per pound last year.  Foreign currency translation favorably impacted EMEA gross profit by $4.0 million.  Including the ICO effect, gross profit would have increased approximately $3.0 million, or approximately 6%, and gross profit per pound would have increased approximately 6% compared with the fiscal 2010 third quarter. During the quarter, the Company was able to effectively pass along cost increases with the exception of some fixed price contracts in its engineered plastics business where some price increases have lagged the raw material market.

Operating income for EMEA during the fiscal 2011 third quarter was $25.7 million, an increase of $3.4 million compared with last year. Including the ICO effect, operating income would have increased approximately $1.9 million. The increase in operating income in fiscal 2011 was due to the increase in gross profit partially offset by an increase of $1.2 million in selling, general and administrative expenses.

The Americas In the fiscal 2011 third quarter, sales for the Americas were $137.9 million, an increase of $45.3 million, or 49%, compared with the prior-year period. Foreign currency translation increased sales by $2.6 million.  Including the ICO effect, sales would have increased approximately 17% for the three-month period. Volume for the quarter was 164.6 million pounds, which would have been an increase of approximately 5% from the prior-year quarter, including the ICO effect.  Sales increased as the Company was able to pass on raw material price increases. The volume increase was a result of improvements in the masterbatch business line.

Gross profit for the Americas was $19.4 million for the fiscal 2011 third quarter, an increase of $7.9 million from the comparable period last year. Gross profit per pound was 11.8 cents per pound in the quarter, compared with 12.2 cents per pound in the prior year.  Including the ICO effect, gross profit would have increased approximately $3.3 million, or approximately 21%, and gross profit per pound would have increased approximately 15% for the fiscal 2011 third quarter. The increases in gross profit and gross profit per pound were primarily due to effectively managing margins in light of raw material costs.

Operating income for the Americas for the fiscal 2011 third quarter was $4.9 million compared with $2.0 million last year.  The $2.9 million increase in profitability was primarily due to an increase in gross profit based on higher volumes.  Including the ICO effect, operating income would have increased approximately $0.5 million and selling, general and administrative expenses would have increased approximately $2.8 million due primarily to increased headcount.

Asia Pacific ("APAC") Sales for APAC for the fiscal 2011 third quarter were $37.2 million, an increase of $14.3 million compared with the prior-year period. Including the ICO effect, sales would have increased approximately 10%.  Sales increased compared with the prior year driven by strong customer demand throughout the APAC segment except Australia, where the Company has previously announced a restructuring of its capacity due to the declining water tank market.

Gross profit for the quarter was $4.8 million, or 14.7 cents per pound, an increase of $2.1 million compared with last year. Including the ICO effect, gross profit would have increased approximately $0.7 million and gross profit per pound would have increased approximately 20%, primarily due to higher sales margins in the masterbatch businesses in China, Malaysia and Indonesia, again offset by the market decline in Australia as noted above.  

Operating income for the quarter was $1.7 million compared with $0.8 million last year. Including the ICO effect, operating profit would have increased by approximately $1.3 million. The increase in profitability was due to improved gross profits and a decrease of $0.6 million in selling, general and administrative expenses compared with the prior year.

Cash Flow From Operations/Working Capital/Share Repurchase

Net cash used in operations was $6.0 million and $25.0 million for the nine months ended May 31, 2011 and 2010, respectively. For the nine months ended May 31, 2010, net income was impacted by a $19.5 million non-cash benefit from the reversal of tax valuation allowance in the U.S. related to the ICO acquisition.

The Company's net debt, defined as total debt less cash and cash equivalents, was in a net debt position of $98.7 million, an improvement from $102.4 million as of the end of the second quarter but an increase from $31.9 million at August 31, 2010.  The key drivers of the year-to-date increase were acquisition costs, dividend payments, share repurchases and working capital needs to support the sales and volume growth.

The Company has repurchased 662,900 shares of its common stock at an average price of $21.91 per share during fiscal 2011. Shares valued at approximately $99.1 million remain authorized for repurchase as of May 31, 2011.  

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.

"The guidance range reflects our current view of customer demand, and our commitment to delivering upon our global growth strategies.  While we are confident with this range, we proceed with a sense of caution given the continuous flow of outside economic data that is signaling global economic softness as we approach our next fiscal year.  The uncertainty in the nature and timing of this softness leads us to view the lower end of our range with a higher degree of confidence," Gingo stated.

Conference Call on the Web

A live Internet broadcast of A. Schulman's conference call regarding fiscal 2011 third-quarter earnings can be accessed at 10:00 a.m. Eastern time on Thursday, July 7, 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 3,000 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 of the 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. 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 INCOME







Three months ended
May 31,


Nine months ended
May 31,




2011


2010


2011


2010














Unaudited




(In thousands, except per share data)











Net sales


$ 611,142


$ 420,335


$ 1,614,868


$ 1,114,218











Cost of sales


532,254


361,450


1,400,367


940,839

Selling, general and administrative expenses


51,746


43,531


154,081


133,046

Interest expense


1,802


1,159


4,729


3,349

Interest income


(200)


(201)


(591)


(652)

Foreign currency transaction (gains) losses


60


468


1,398


389

Other (income) expense


(1,637)


(269)


(2,074)


(2,155)

Asset impairment


125


300


1,925


5,631

Restructuring expense


1,843


862


5,779


2,509




585,993


407,300


1,565,614


1,082,956

Income from continuing operations before taxes


25,149


13,035


49,254


31,262

Provision for (benefit from) U.S. and foreign income taxes


6,225


(12,890)


13,675


(4,984)

Income from continuing operations


18,924


25,925


35,579


36,246

Income (loss) from discontinued operations


-


(23)


-


(14)

Net income


18,924


25,902


35,579


36,232

Noncontrolling interests


(170)


(141)


(441)


(211)

Net income attributable to A. Schulman, Inc.


$   18,754


$   25,761


$      35,138


$      36,021










-

Weighted-average number of shares outstanding:










Basic


30,853


27,896


31,092


26,552


Diluted


31,061


28,275


31,289


26,901











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







Income from continuing operations


$       0.61


$       0.92


$          1.13


$          1.36


Income (loss) from discontinued operations


-


-


-


-


Net income attributable to common stockholders


$       0.61


$       0.92


$          1.13


$          1.36











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







Income from continuing operations


$       0.60


$       0.91


$          1.12


$          1.34


Income (loss) from discontinued operations


-


-


-


-


Net income attributable to common stockholders


$       0.60


$       0.91


$          1.12


$          1.34



A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS






May 31, 2011


August 31, 2010


Unaudited

ASSETS

(In thousands, except share data)

Current assets:




Cash and cash equivalents

$      105,988


$      122,754

Accounts receivable, less allowance for doubtful accounts of $9,998 at May 31, 2011
   and $13,205 at August 31, 2010

375,542


282,953

Inventories, average cost or market, whichever is lower

307,733


209,228

Prepaid expenses and other current assets

32,697


29,128

Total current assets

821,960


644,063





Other assets:




Deferred charges and other assets

38,835


31,873

Goodwill

94,407


84,064

Intangible assets

77,696


72,352

Total other assets

210,938


188,289





Property, plant and equipment, at cost:




Land and improvements

31,800


30,891

Buildings and leasehold improvements

169,841


158,076

Machinery and equipment

395,484


357,270

Furniture and fixtures

41,963


37,078

Construction in progress

8,820


4,996


647,908


588,311

Accumulated depreciation and investment grants of $856 at May 31, 2011
   and $744 at August 31, 2010

404,468


349,348

Net property, plant and equipment

243,440


238,963

Total assets

$   1,276,338


$   1,071,315





LIABILITIES AND EQUITY








Current liabilities:




Short-term debt

$          9,337


$        60,876

Accounts payable

276,122


195,977

U.S. and foreign income taxes payable

10,184


6,615

Accrued payroll, taxes and related benefits

42,987


46,492

Other accrued liabilities

45,363


41,985

Total current liabilities

383,993


351,945





Long-term debt

195,356


93,834

Pension plans

99,658


86,872

Other long-term liabilities

28,139


25,297

Deferred income taxes

23,065


20,227

Commitments and contingencies

-


-

Stockholders' equity:




Common stock, $1 par value, authorized - 75,000,000 shares, issued - 47,795,184
   shares at May 31, 2011 and 47,690,024 shares at August 31, 2010

47,795


47,690

Other capital

252,851


249,734

Accumulated other comprehensive income (loss)

37,560


(6,278)

Retained earnings

540,228


519,649

Treasury stock, at cost, 16,861,491 shares at May 31, 2011 and 16,205,230 at
  August 31, 2010

(337,170)


(322,777)

Total A. Schulman, Inc. stockholders' equity

541,264


488,018

Noncontrolling interests

4,863


5,122

Total equity

546,127


493,140

Total liabilities and equity

$   1,276,338


$    1,071,315



A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS







Nine months ended May 31,






2011


2010














Unaudited






(In thousands)

Provided from (used in) operating activities:




Net income


$   35,579


$   36,232


Adjustments to reconcile net income to net cash







provided from (used in) operating activities:







Depreciation and amortization


30,413


17,492



Deferred tax provision


(1,550)


(21,486)



Pension, postretirement benefits and other deferred compensation


5,701


3,083



Net gains on asset sales


(775)


(230)



Asset impairment


1,925


5,635


Changes in assets and liabilities:







Accounts receivable


(55,523)


(40,703)



Inventories


(70,246)


(56,429)



Accounts payable


55,893


29,237



Income taxes


6,189


3,433



Accrued payrolls and other accrued liabilities


(7,869)


1,342



Changes in other assets and other long-term liabilities


(5,710)


(2,649)




Net cash used in operating activities


(5,973)


(25,043)









Provided from (used in) investing activities:






Expenditures for property, plant and equipment


(18,362)


(13,890)


Proceeds from the sale of assets


7,041


1,713


Business acquisitions, net of cash acquired


(15,071)


(99,223)




Net cash used in investing activities


(26,392)


(111,400)









Provided from (used in) financing activities:






Cash dividends paid


(14,559)


(11,970)


Increase (decrease) in notes payable


(3,475)


995


Repayments on long-term debt


(21)


(19,260)


Borrowings on revolving credit

facilities


213,000


75,500


Repayments on revolving credit facilities


(170,250)


(32,500)


Payment of debt issuance costs


(2,220)


-


Cash distributions to noncontrolling interests


(700)


-


Common stock issued (redeemed), net


(382)


3,100


Issuance (purchase) of treasury stock, net


(14,393)


-




Net cash provided from financing activities


7,000


15,865

Effect of exchange rate changes on cash


8,599


(16,319)

Net decrease in cash and cash equivalents


(16,766)


(136,897)

Cash and cash equivalents at beginning of period


122,754


228,674

Cash and cash equivalents at end of period


$ 105,988


$   91,777



A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION



Three months ended
May 31,


Nine months ended
May 31,


2011


2010


2011


2010


Unaudited


(In thousands, except for %)

Pounds sold to unaffiliated customers








EMEA

338,233


302,344


969,073


797,389

Americas

164,586


93,626


468,716


217,822

APAC

32,595


22,294


98,845


47,281

Total pounds sold to unaffiliated customers

535,414


418,264


1,536,634


1,062,492









Net sales to unaffiliated customers








EMEA

$ 435,982


$ 304,789


$ 1,139,197


$    824,107

Americas

137,940


92,642


371,611


238,199

APAC

37,220


22,904


104,060


51,912

Total net sales to unaffiliated customers

$ 611,142


$ 420,335


$ 1,614,868


$ 1,114,218









Segment gross profit








EMEA

$   54,742


$   47,286


$    150,314


$    139,411

Americas

19,363


11,468


51,749


29,124

APAC

4,783


2,667


12,721


7,449

Total segment gross profit

78,888


61,421


214,784


175,984

Asset write-downs

-


-


-


(69)

Inventory step-up

-


(2,536)


(283)


(2,536)

Total gross profit

$   78,888


$   58,885


$    214,501


$    173,379









Segment operating income








EMEA

$   25,726


$   22,297


$      66,850


$      56,754

Americas

4,892


1,965


12,091


5,050

APAC

1,698


764


3,890


2,443

Total segment operating income

32,316


25,026


82,831


64,247

Corporate and other

(5,493)


(5,507)


(21,252)


(15,993)

Interest expense, net

(1,602)


(958)


(4,138)


(2,697)

Foreign currency transaction gains (losses)

(60)


(468)


(1,398)


(389)

Other income (expense)

1,637


311


2,074


2,197

Asset write-downs

(125)


(300)


(1,925)


(5,700)

Costs related to acquisitions

319


(1,629)


(876)


(5,316)

Restructuring related

(1,843)


(904)


(5,779)


(2,551)

Inventory step-up

-


(2,536)


(283)


(2,536)

Income from continuing operations before taxes

$   25,149


$   13,035


$      49,254


$      31,262









Capacity utilization








EMEA

85%


91%


79%


91%

Americas

67%


69%


64%


70%

APAC

81%


88%


86%


83%

Worldwide

78%


84%


74%


85%



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

(In thousands, except per share data)

Three months ended May 31, 2011


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$      611,142


$                -


$                        -


$                  -


$                          -


$                -


$          611,142

Cost of sales


532,254


-


-


-


-


-


532,254

Selling, general and administrative expenses


51,746


-


319


-


-


-


52,065

Interest expense, net


1,602


-


-


-


-


-


1,602

Foreign currency transaction (gains) losses


60


-


-


-


-


-


60

Other (income) expense


(1,637)


-


-


-


-


-


(1,637)

Asset impairment


125


(125)


-


-


-


-


-

Restructuring expense


1,843


-


-


(1,843)


-


-


-



585,993


(125)


319


(1,843)


-


-


584,344

Income from continuing operations before taxes


25,149


125


(319)


1,843


-


-


26,798

Provision for U.S. and foreign income taxes


6,225


-


37


95


-


-


6,357

Income from continuing operations


18,924


125


(356)


1,748


-


-


20,441

Income (loss) from discontinued operations


-


-


-


-


-


-


-

Net income


18,924


125


(356)


1,748


-


-


20,441

Noncontrolling interests


(170)


-


-


-


-


-


(170)

Net income attributable to A. Schulman, Inc.


$        18,754


$             125


$                   (356)


$             1,748


$                          -


$                -


$            20,271
















Diluted EPS


$            0.60












$                0.65
















Weighted-average number of shares outstanding -diluted


31,061












31,061


















Three months ended May 31, 2010


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$      420,335


$                -


$                        -


$                  -


$                          -


$                -


$          420,335

Cost of sales


361,450


-


-


-


(2,536)


-


358,914

Selling, general and administrative expenses


43,531


-


(1,629)


-


-


-


41,902

Interest expense, net


958


-


-


-


-


-


958

Foreign currency transaction (gains) losses


468


-


-


-


-


-


468

Other (income) expense


(269)


-


-


(42)


-


-


(311)

Asset impairment


300


(300)


-


-


-


-


-

Restructuring expense


862


-


-


(862)


-


-


-



407,300


(300)


(1,629)


(904)


(2,536)


-


401,931

Income from continuing operations before taxes


13,035


300


1,629


904


2,536


-


18,404

Provision for (benefit from) U.S. and foreign income taxes


(12,890)


-


-


139


621


16,733


4,603

Income from continuing operations


25,925


300


1,629


765


1,915


(16,733)


13,801

Income (loss) from discontinued operations


(23)


-


-


-


-


-


(23)

Net income


25,902


300


1,629


765


1,915


(16,733)


13,778

Noncontrolling interests


(141)


-


-


-


-


-


(141)

Net income attributable to A. Schulman, Inc.


$        25,761


$             300


$                  1,629


$                765


$                    1,915


$      (16,733)


$            13,637
















Diluted EPS


$            0.91












$                0.48
















Weighted-average number of shares outstanding -diluted


28,275












28,275



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

(In thousands, except per share data)

Nine months ended May 31, 2011


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$   1,614,868


$                -


$                        -


$                  -


$                          -


$                -


$       1,614,868

Cost of sales


1,400,367


-


-


-


(283)


-


1,400,084

Selling, general and administrative expenses


154,081


-


(876)


-


-


-


153,205

Interest expense, net


4,138


-


-


-


-


-


4,138

Foreign currency transaction (gains) losses


1,398


-


-


-


-


-


1,398

Other (income) expense


(2,074)


-


-


-


-


-


(2,074)

Asset impairment


1,925


(1,925)


-


-


-


-


-

Restructuring expense


5,779


-


-


(5,779)


-


-


-



1,565,614


(1,925)


(876)


(5,779)


(283)


-


1,556,751

Income from continuing operations before taxes


49,254


1,925


876


5,779


283


-


58,117

Provision for U.S. and foreign income taxes


13,675


-


37


824


99


65


14,700

Income from continuing operations


35,579


1,925


839


4,955


184


(65)


43,417

Income (loss) from discontinued operations


-


-


-


-


-


-


-

Net income


35,579


1,925


839


4,955


184


(65)


43,417

Noncontrolling interests


(441)


-


-


-


-


-


(441)

Net income attributable to A. Schulman, Inc.


$        35,138


$          1,925


$                     839


$             4,955


$                       184


$             (65)


$            42,976
















Diluted EPS


$            1.12












$                1.37
















Weighted-average number of shares outstanding -diluted


31,289












31,289


















Nine months ended May 31, 2010


As Reported


Asset Write-downs


Costs Related to Acquisitions


Restructuring Related


Inventory Step-up


Tax Benefits  (Charges)


Before Certain Items
















Net sales


$   1,114,218


$                -


$                        -


$                  -


$                          -


$                -


$       1,114,218

Cost of sales


940,839


(69)


-


-


(2,536)


-


938,234

Selling, general and administrative expenses


133,046


-


(5,316)


-


-


-


127,730

Interest expense, net


2,697


-


-


-


-


-


2,697

Foreign currency transaction (gains) losses


389


-


-


-


-


-


389

Other (income) expense


(2,155)


-


-


(42)


-


-


(2,197)

Asset impairment


5,631


(5,631)


-


-


-


-


-

Restructuring expense


2,509


-


-


(2,509)


-


-


-



1,082,956


(5,700)


(5,316)


(2,551)


(2,536)


-


1,066,853

Income from continuing operations before taxes


31,262


5,700


5,316


2,551


2,536


-


47,365

Provision for (benefit from) U.S. and foreign income taxes


(4,984)


116


-


420


621


14,481


10,654

Income from continuing operations


36,246


5,584


5,316


2,131


1,915


(14,481)


36,711

Income (loss) from discontinued operations


(14)


-


-


-


-


-


(14)

Net income


36,232


5,584


5,316


2,131


1,915


(14,481)


36,697

Noncontrolling interests


(211)


-


-


-


-


-


(211)

Net income attributable to A. Schulman, Inc.


$        36,021


$          5,584


$                  5,316


$             2,131


$                    1,915


$      (14,481)


$            36,486
















Diluted EPS


$            1.34












$                1.36
















Weighted-average number of shares outstanding -diluted


26,901












26,901



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

EBITDA Excluding Certain Items Reconciliation

Unaudited

(In thousands)












Three months ended
May 31,


Nine months ended
May 31,



2011


2010


2011


2010










Income (loss) from continuing operations before taxes


$           25,149


$           13,035


$               49,254


$               31,262










Adjustments (pretax):









Depreciation and amortization


10,710


6,210


30,413


17,419

Interest expense, net


1,602


958


4,138


2,697

Asset write-downs


125


300


1,925


5,700

Costs related to acquisitions


(319)


1,629


876


5,316

Restructuring related


1,843


904


5,779


2,551

Inventory step-up


-


2,536


283


2,536

EBITDA excluding certain items


$           39,110


$           25,572


$               92,668


$               67,481



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 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 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 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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