October 26, 2011

A. Schulman Reports Strong Improvement in Adjusted Net Income for Full Year and Fourth Quarter Fiscal 2011

AKRON, Ohio, Oct. 26, 2011 /PRNewswire/ --

  • Net sales increased 37.5% to $2.2 billion for fiscal 2011, compared with $1.6 billion in fiscal 2010, and $578.1 million for the quarter, compared with $476.2 million in last year's fourth quarter, an increase of 21.4%

  • Fiscal 2011 net income of $41.0 million compared with net income of $43.9 million in fiscal 2010, and $5.9 million for the quarter compared with net income of $7.9 million in last year's fourth quarter

  • Company reports a 20.3% increase in fiscal 2011 adjusted net income of $58.0 million, excluding certain one-time charges and acquisition-related items, compared with adjusted net income of $48.2 million in fiscal 2010

A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the full year and the fiscal 2011 fourth quarter ended August 31, 2011.  The Company reported full-year net income of $41.0 million, or $1.32 per diluted share, compared with $43.9 million, or $1.57 per diluted share, last year.  

For the fourth quarter, the Company reported net income of $5.9 million, or $0.19 per diluted share, compared with $7.9 million, or $0.25 per diluted share, for the same period last year.  The translation effect of foreign currencies favorably affected net income by $1.5 million in the fourth quarter of fiscal 2011.  

The Company's full-year and fourth-quarter 2011 net income and adjusted net income were negatively impacted by the previously announced special charges related to a dispute settlement and a harmonization of the methodology employed by the Company to calculate inventory reserves. These charges totaled $5.8 million after taxes, or $0.19 per diluted share, for the full year and fourth quarter of 2011.  

Reported gross profit for the quarter was $71.0 million, an increase of $11.5 million from the gross profit of $59.5 million a year ago.  The increase in gross profit was a result of improvement in the masterbatch product family across all segments. The currency translation effect favorably impacted gross profit by $6.8 million, which was offset by a $3.1 million charge related to the inventory reserve methodology harmonization.  

The Company uses non-GAAP financial measures, such as net income excluding certain items ("adjusted net income") and net income per diluted share excluding certain items. These financial measures are used by management to monitor and evaluate the ongoing performance of the Company and to allocate resources. The Company believes that the additional measures are useful to investors for financial analysis.  However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Please see the table in this release for reconciliation of non-GAAP measures to the nearest comparable GAAP results. Results in the following discussion exclude the one-time charges and acquisition-related items.  

Net sales increased 37.5% to $2.2 billion for fiscal 2011, compared with $1.6 billion in fiscal 2010. The primary driver behind the net sales increase was the full-year impact of the ICO acquisition. Adjusted net income was $58.0 million, or $1.86 per diluted share, for fiscal 2011, compared with $48.2 million, or $1.72 per diluted share, a year ago. The adjusted net income improvement was primarily a result of including a full year of ICO results, as well as improved operating performance. EBITDA, excluding certain items, increased to $121.6 million in fiscal 2011 from $92.8 million a year ago, reflecting the profitability improvement during the fiscal year.  

"We are pleased that we achieved strong results for fiscal 2011 as margins improved across all of our businesses during the fourth quarter, and we are also seeing the positive results of the aggressive and decisive actions we have taken to mitigate the effects of the weakening global economic environment," said Joseph M. Gingo, Chairman, President and Chief Executive Officer. "Throughout a year of unsettled global markets, we focused on continuous improvement in our organization while continuing to realign our manufacturing capacity to effectively utilize the existing assets, and expanding our product offerings. We also saw the expected contributions from our recent acquisitions, which have allowed us to expand our global operations and enhance our capabilities to serve growing, profitable and high-margin markets."

Gingo continued, "Additionally, we were able to increase our quarterly dividend by 10%, to $0.17 per common share, providing our shareholders with a strong yield in addition to an investment with solid growth opportunities. This increase in the dividend and our repurchase of 1.6 million shares under the current authorized program demonstrates the Company's high level of confidence in our strong cash generation capability and our ability to execute on our long-term strategic master plan. We believe that the combination of increasing the dividend, executing our share repurchase program, exploring strategic acquisition opportunities, and investing in our internal growth projects provides our shareholders with a very attractive investment in A. Schulman."

For the 2011 fourth quarter, net sales were $578.1 million, an increase of 21.4% compared with $476.2 million for the comparable period last year. Volume of 512 million pounds for the quarter declined from 525 million pounds a year ago. The increase in net sales was driven primarily by a 24.6% increase in price per pound and a favorable foreign currency translation.

Gross profit for the quarter was $71.4 million, compared with $60.9 million last year, an increase of 17.2%. The inventory reserve methodology harmonization charge of $3.1 million negatively impacted gross margins for the fourth quarter of 2011.

Selling, general and administrative (SG&A) expense for the fiscal 2011 fourth quarter was $51.8 million, an increase of $6.5 million compared with $45.3 million in the fiscal 2010 fourth quarter. The increase in SG&A is primarily due to the impact of the $3.0 million dispute settlement and $4.4 million of foreign currency effect.

For the fourth quarter, the Company had adjusted net income of $15.0 million, or $0.49 per diluted share, compared with $11.7 million, or $0.37 per diluted share, for the same period last year.  

Europe, Middle East and Africa (EMEA) For the full year, net sales in the EMEA segment were $1.5 billion, an increase of $0.4 billion from $1.1 billion last year. Operating income was $86.7 million, an increase of 24.9% from $69.4 million a year ago. The increase in net sales was primarily due to the ICO acquisition, along with a 17.2% improvement in average selling price per pound. The impact of including a full year of ICO contributed $11.2 million to operating income for the year.

In the fiscal 2011 fourth quarter, net sales were $394.8 million, an increase of $76.4 million, or 24.0%, compared with the prior-year period. The increase was primarily the result of a 27.8% increase in selling prices per pound with favorable product mix offset by a decrease in volume.  Volume for the quarter was 312 million pounds, a decrease of 3.0% from the prior-year period, primarily related to the masterbatch product family. The foreign currency impact increased net sales by approximately 13.6%.  

Gross profit was $46.9 million for the quarter, up from $37.6 million a year ago as a result of the increase in selling prices per pound and favorable product mix. Operating income was $19.8 million, up from $12.6 million in the prior-year quarter, due to the increase in gross profit offset by an increase of $2.1 million in SG&A. The increase in SG&A was primarily due to the negative effects of foreign currency translation of $3.3 million offset by reduced spending during the quarter. The foreign currency effect favorably impacted operating income by $5.6 million.

Americas For the full year, the Americas reported net sales of $516.8 million, an increase of 42.4% from $363.0 million last year, as a result of including a full year of ICO results in fiscal 2011 compared with four months in fiscal 2010. Annual operating income was $14.0 million, an increase of 16.7% from $12.0 million last year. The impact of including a full year of ICO contributed $15.2 million to operating income for the year.

Net sales in the Americas were $145.2 million in the fiscal 2011 fourth quarter, an increase of $20.4 million, or 16.3%, from $124.8 million a year ago due to an increase in selling price per pound of 18.2%.  Foreign currency effect favorably impacted net sales by $5.1 million.  Volume for the quarter was 167 million pounds, a slight decrease from 170 million pounds a year earlier.

Gross profit was $19.9 million for the quarter, compared with $19.1 million a year ago. The increase was due to improved gross profit per pound in the masterbatch and specialty powders product families, offset by lower gross profit per pound in the engineered plastics product families.  Operating income was $1.9 million during the quarter, compared with $7.0 million in the prior-year period.  The decrease in operating income was a result of an increase in SG&A expense of $5.9 million related to acquisitions and $3.0 million charge related to a settlement involving a business relationship.

Asia Pacific (APAC)For the full year, APAC reported net sales of $142.1 million, an increase of 67.4% from $84.9 million last year, and operating income of $5.6 million, an increase of 86.7% from $3.0 million last year.  The increase in net sales was primarily due to the ICO acquisition and higher selling prices per pound, while the improvement in operating income was due to an increase in gross profit offset by a $3.0 million increase in SG&A expenses. Excluding ICO, operating income was $7.0 million for fiscal 2011.

Net sales were $38.1 million for the quarter, an increase of 15.5% from $33.0 million a year ago due to an increase of approximately 19.2% in selling price per pound. The foreign currency effect increased net sales by $5.8 million. Volume for the quarter was 33 million pounds, a decrease of approximately 3.2% from a year earlier. Volume decreased in Australia while the rest of the APAC segment increased compared with the prior year as a result of stronger customer demand.  

Gross profit increased to $4.6 million, compared with $4.2 million in the fourth quarter of last year, primarily due to an increase of $1.0 million in the masterbatch product families offset by the Australia specialty powders product family. Operating income was $1.7 million, up from $0.5 million a year ago, as a result of the increase in gross profit and a decrease in SG&A expense.

Cash Flow from Operations and Working Capital

The Company's liquidity position remains strong. Cash flow from operations was $68.9 million for fiscal 2011, compared with $4.4 million for the previous year.  Working capital improved to 60 days at the end of fiscal 2011, compared with 61 days a year earlier. Net debt (total debt less cash and cash equivalents) increased to $40.4 million from $32.0 million a year ago. In recognition of the Company's strong cash position, the Board of Directors declared a quarterly dividend of $0.17 per share, an increase of 10%, as announced October 14, 2011.  

As of October 10, 2011, the Company repurchased $30 million, or approximately 1.6 million shares, under the current authorization plan. The Company has remaining authorization to repurchase an additional $70 million of common stock under the board-approved program.

Fiscal 2012 Guidance and Business Outlook

"If the global economy and demand remain steady, we are confident that our recent actions will result in increased profitability for the Company in fiscal 2012. However, we live with significant volatility in the global macroeconomic environment that challenges us on a daily basis. Given the climate we face, which limits our visibility, we have decided to forgo providing specific guidance for fiscal 2012. We will continue to update our investors with changing trends throughout the year," Gingo said. 

The Company will continue to provide appropriate updates against its 2015 long-term targets as well as any interim directional guidance that is appropriate and meaningful.  

Conference Call on the Web

A live Internet broadcast of A. Schulman's conference call regarding fiscal 2011 fourth-quarter earnings can be accessed at 11 a.m. Eastern time on October 27, 2011, on the Company's website,.  An archived replay of the call will also be available on the website www.aschulman.com.  

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 adjusted net income, net income per diluted share excluding certain items and EBITDA.  The most directly comparable GAAP financial measures are net income and net income per diluted share.  Tables included in this earnings 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 3,000 people and has 35 manufacturing facilities globally.  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 or countries where the Company has operations;
  • 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 global 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 INCOME









Three months ended
August 31,


Year ended
August 31,





2011


2010


2011


2010











Unaudited





(In thousands, except per share data)













Net sales


$ 578,087


$ 476,224


$ 2,192,955


$ 1,590,443













Cost of sales


507,042


416,736


1,907,409


1,357,575


Selling, general and administrative expenses


52,325


46,773


206,406


179,821


Interest expense


1,724


1,661


6,453


5,010


Interest income


(331)


(693)


(922)


(1,345)


Foreign currency transaction (gains) losses


197


495


1,595


884


Other (income) expense


354


(271)


(1,720)


(2,425)


Asset impairment


6,225


37


8,150


5,668


Restructuring expense


2,338


2,545


8,117


5,054


Curtailment (gains) losses


-


270


-


270


Total costs and expenses, net


569,874


467,553


2,135,488


1,550,512


Income from continuing operations before taxes


8,213


8,671


57,467


39,931


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


2,107


565


15,782


(4,419)


Income from continuing operations


6,106


8,106


41,685


44,350


Loss from discontinued operations


-


(225)


-


(239)


Net income


6,106


7,881


41,685


44,111


Noncontrolling interests


(248)


(10)


(689)


(221)


Net income attributable to A. Schulman, Inc.


$     5,858


$     7,871


$      40,996


$      43,890











-


Weighted-average number of shares outstanding:











Basic


30,637


31,329


30,978


27,746



Diluted


30,721


31,490


31,141


27,976













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











Income from continuing operations


$       0.19


$       0.26


$          1.32


$          1.59



Loss from discontinued operations


-


(0.01)


-


(0.01)



Net income attributable to common stockholders


$       0.19


$       0.25


$          1.32


$          1.58













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










Income from continuing operations


$       0.19


$       0.26


$          1.32


$          1.58



Loss from discontinued operations


-


(0.01)


-


(0.01)



Net income attributable to common stockholders


$       0.19


$       0.25


$          1.32


$          1.57














Cash dividends declared per common share


0.155


0.150


0.620


0.600




A. SCHULMAN, INC.


CONSOLIDATED BALANCE SHEETS








August 31, 2011


August 31, 2010



Unaudited


ASSETS

(In thousands)


Current assets:





Cash and cash equivalents

$            155,753


$            122,754


Accounts receivable, net

347,036


282,953


Inventories, average cost or market, whichever is lower

264,747


209,228


Prepaid expenses and other current assets

34,376


29,128


Total current assets

801,912


644,063







Property, plant and equipment, at cost:





Land and improvements

30,826


30,891


Buildings and leasehold improvements

165,267


158,076


Machinery and equipment

382,828


357,270


Furniture and fixtures

41,860


37,078


Construction in progress

12,967


4,996


Gross property, plant and equipment

633,748


588,311


Accumulated depreciation and investment grants of $815 in 2011
and $744 in 2010

399,448


349,348


Net property, plant and equipment

234,300


238,963







Other assets:





Deferred charges and other noncurrent assets

35,947


31,873


Goodwill

91,753


84,064


Intangible assets

76,075


72,352


Total other assets

203,775


188,289


Total assets

$         1,239,987


$         1,071,315







LIABILITIES AND EQUITY










Current liabilities:





Accounts payable

$            254,405


$            195,977


U.S. and foreign income taxes payable

11,072


6,615


Accrued payroll, taxes and related benefits

44,560


46,492


Other accrued liabilities

50,608


41,985


Short-term debt

11,550


60,876


Total current liabilities

372,195


351,945


Long-term debt

184,598


93,834


Pension plans

84,673


86,872


Other long-term liabilities

24,161


25,297


Deferred income taxes

20,055


20,227


Total liabilities

685,682


578,175







Commitments and contingencies

-


-


Stockholders' equity:





Common stock, $1 par value, authorized - 75,000 shares, issued - 47,816
   shares in  2011 and 47,690 shares in 2010

47,816


47,690


Other capital

254,184


249,734


Accumulated other comprehensive income (loss)

50,007


(6,278)


Retained earnings

541,256


519,649


Treasury stock, at cost, 17,207 shares in 2011 and 16,205 in 2010

(344,759)


(322,777)


Total A. Schulman, Inc. stockholders' equity

548,504


488,018


Noncontrolling interests

5,801


5,122


Total equity

554,305


493,140


Total liabilities and equity

$         1,239,987


$         1,071,315



A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS




















Year ended August 31,









2011


2010









Unaudited









(In thousands)

Operating







Net income





$   41,685


$   44,111


Adjustments to reconcile net income to net cash







provided from (used in) operating activities:







Depreciation and amortization




40,274


27,449



Deferred tax provision





1,261


(25,742)



Pension, postretirement benefits and other deferred compensation


(909)


10,739



Net (gains) losses on asset sales




(140)


96



Asset impairment





8,150


5,668



Curtailment (gains) losses




-


270


Changes in assets and liabilities, net of acquisitions:








Accounts receivable





(28,564)


(27,582)



Inventories





(27,269)


(43,067)



Accounts payable





32,803


21,621



Income taxes





9,052


(4,639)



Accrued payrolls and other accrued liabilities



(1,463)


(2,255)



Other assets and long-term liabilities




(5,934)


(2,226)




Net cash provided from (used in) operating activities


68,946


4,443












Investing









Expenditures for property, plant and equipment



(26,359)


(18,977)


Proceeds from the sale of assets




10,041


6,570


Business acquisitions, net of cash acquired



(15,944)


(99,223)




Net cash provided from (used in) investing activities


(32,262)


(111,630)












Financing









Cash dividends paid





(19,389)


(16,754)


Increase (decrease) in notes payable




(2,196)


3,975


Borrowings on revolving credit facilities




250,268


86,000


Repayments on revolving credit facilities




(218,768)


(32,500)


Repayments on long-term debt




(115)


(25,951)


Payment of debt issuance costs




(2,220)


-


Cash distributions to noncontrolling interests



(700)


-


Preferred stock redemption




-


(2)


Common stock issued (redeemed), net




(74)


3,054


Issuance (purchase) of treasury stock, net



(21,982)


35




Net cash provided from (used in) financing activities


(15,176)


17,857

Effect of exchange rate changes on cash




11,491


(16,590)

Net increase (decrease) in cash and cash equivalents


32,999


(105,920)

Cash and cash equivalents at beginning of year



122,754


228,674

Cash and cash equivalents at end of year



$ 155,753


$ 122,754



A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION



Three months ended
August 31,


Year ended
August 31,


2011


2010


2011


2010





Unaudited


(In thousands, except for %)

Pounds sold to unaffiliated customers








EMEA

311,993


321,650


1,281,066


1,119,039

Americas

166,984


169,644


635,700


387,466

APAC

32,781


33,862


131,626


81,143

Total pounds sold to unaffiliated customers

511,758


525,156


2,048,392


1,587,648









Net sales to unaffiliated customers








EMEA

$ 394,796


$ 318,416


$ 1,533,993


$ 1,142,523

Americas

145,203


124,811


516,814


363,011

APAC

38,088


32,997


142,148


84,909

Total net sales to unaffiliated customers

$ 578,087


$ 476,224


$ 2,192,955


$ 1,590,443









Segment gross profit








EMEA

$   46,857


$   37,602


$    197,171


$    177,010

Americas

19,949


19,085


71,698


48,213

APAC

4,563


4,207


17,284


11,656

Total segment gross profit

71,369


60,894


286,153


236,879

Asset write-downs

-


-


-


(69)

Inventory step-up

(324)


(1,406)


(607)


(3,942)

Total gross profit

$   71,045


$   59,488


$    285,546


$    232,868









Segment operating income








EMEA

$   19,813


$   12,638


$      86,663


$      69,393

Americas

1,941


6,986


14,032


12,036

APAC

1,697


538


5,587


2,981

Total segment operating income

23,451


20,162


106,282


84,410

Corporate and other

(3,854)


(4,543)


(25,106)


(20,538)

Interest expense, net

(1,393)


(968)


(5,531)


(3,665)

Foreign currency transaction gains (losses)

(197)


(495)


(1,595)


(884)

Other income (expense)

(354)


273


1,720


2,469

Asset write-downs

(6,225)


(37)


(8,150)


(5,737)

Costs related to acquisitions

(553)


(1,498)


(1,429)


(6,814)

Restructuring related costs

(2,338)


(2,817)


(8,117)


(5,368)

Inventory step-up

(324)


(1,406)


(607)


(3,942)

Income from continuing operations before taxes

$     8,213


$     8,671


$      57,467


$      39,931









Capacity utilization








EMEA

67%


74%


76%


87%

Americas

71%


69%


66%


68%

APAC

92%


87%


87%


85%

Worldwide

70%


73%


73%


81%



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

(In thousands, except per share data)

Three months ended August 31, 2011


As
Reported


Asset
Write-downs


Costs
Related to
Acquisitions


Restructuring
Related


Inventory
Step-up


Tax
Benefits
(Charges)


Before
Certain
Items
















Net sales


$    578,087


$              -


$             -


$               -


$                -


$              -


$       578,087

Cost of sales


507,042


-


-


-


(324)


-


506,718

Selling, general and administrative expenses


52,325


-


(553)


-


-


-


51,772

Interest expense, net


1,393


-


-


-


-


-


1,393

Foreign currency transaction (gains) losses


197


-


-


-


-


-


197

Other (income) expense


354


-


-


-


-


-


354

Asset impairment


6,225


(6,225)


-


-


-


-


-

Restructuring expense


2,338


-


-


(2,338)


-


-


-

Curtailment (gains) losses


-


-


-


-


-


-


-

Total costs and expenses, net


569,874


(6,225)


(553)


(2,338)


(324)


-


560,434

Income from continuing operations before taxes


8,213


6,225


553


2,338


324


-


17,653

Provision for U.S. and foreign income taxes


2,107


-


1


53


108


-


2,269

Income from continuing operations


6,106


6,225


552


2,285


216


-


15,384

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


-


-


-


-


-


-


-

Net income (loss)


6,106


6,225


552


2,285


216


-


15,384

Noncontrolling interests


(248)


-


-


-


(102)


-


(350)

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


$        5,858


$       6,225


$       552


$       2,285


$            114


$             -


$         15,034
















Diluted EPS


$          0.19












$             0.49
















Weighted-average number of shares outstanding - diluted


30,721












30,721
















Three months ended August 31, 2010


As
Reported


Asset
Write-downs


Costs
Related to Acquisitions


Restructuring
Related


Inventory
Step-up


Tax
Benefits
(Charges)


Before
Certain
Items
















Net sales


$    476,224


$            -


$               -


$                 -


$                -


$              -


$       476,224

Cost of sales


416,736


-


-


-


(1,406)


-


415,330

Selling, general and administrative expenses


46,773


-


(1,498)


-


-


-


45,275

Interest expense, net


968


-


-


-


-


-


968

Foreign currency transaction (gains) losses


495


-


-


-


-


-


495

Other (income) expense


(271)


-


-


(2)


-


-


(273)

Asset impairment


37


(37)


-


-


-


-


-

Restructuring expense


2,545


-


-


(2,545)


-


-


-

Curtailment (gains) losses


270


-


-


(270)


-


-


-

Total costs and expenses, net


467,553


(37)


(1,498)


(2,817)


(1,406)


-


461,795

Income from continuing operations before taxes


8,671


37


1,498


2,817


1,406


-


14,429

Provision for U.S. and foreign income taxes


565


12


6


794


415


967


2,759

Income from continuing operations


8,106


25


1,492


2,023


991


(967)


11,670

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


(225)


237


-


-


-


-


12

Net income (loss)


7,881


262


1,492


2,023


991


(967)


11,682

Noncontrolling interests


(10)


-


-


-


-


-


(10)

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


$       7,871


$          262


$        1,492


$         2,023


$            991


$         (967)


$         11,672
















Diluted EPS


$         0.25












$             0.37
















Weighted-average number of shares outstanding - diluted


31,490












31,490



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

(In thousands, except per share data)

Year Ended August 31, 2011


As
Reported


Asset
Write-downs


Costs Related to
Acquisitions


Restructuring
Related


Inventory
Step-up


Tax
Benefits
(Charges)


Before
Certain
Items
















Net sales


$ 2,192,955


$                -


$                   -


$                -


$                    -


$              -


$     2,192,955

Cost of sales


1,907,409


-


-


-


(607)


-


1,906,802

Selling, general and administrative expenses


206,406


-


(1,429)


-


-


-


204,977

Interest expense, net


5,531


-


-


-


-


-


5,531

Foreign currency transaction (gains) losses


1,595


-


-


-


-


-


1,595

Other (income) expense


(1,720)


-


-


-


-


-


(1,720)

Asset impairment


8,150


(8,150)


-


-


-


-


-

Restructuring expense


8,117


-


-


(8,117)


-


-


-

Curtailment (gains) losses


-


-


-


-


-


-


-

Total costs and expenses, net


2,135,488


(8,150)


(1,429)


(8,117)


(607)


-


2,117,185

Income from continuing operations before taxes


57,467


8,150


1,429


8,117


607


-


75,770

Provision for U.S. and foreign income taxes


15,782


-


38


874


209


65


16,968

Income from continuing operations


41,685


8,150


1,391


7,243


398


(65)


58,802

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


-


-


-


-


-


-


-

Net income (loss)


41,685


8,150


1,391


7,243


398


(65)


58,802

Noncontrolling interests


(689)


-


-


-


(102)


-


(791)

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


$      40,996


$        8,150


$            1,391


$        7,243


$                296


$           (65)


$ 58,011
















Diluted EPS


$          1.32












$ 1.86
















Weighted-average number of shares outstanding - diluted


31,141












31,141
















Year ended August 31, 2010


As
Reported


Asset
Write-downs


Costs related to
Acquisitions


Restructuring
Related


Inventory
Step-up


Tax
Benefits
(Charges)


Before
Certain
Items
















Net sales


$ 1,590,443


$                -


$                   -


$                -


$                   -


$              -


$     1,590,443

Cost of sales


1,357,575


(69)


-


-


(3,942)


-


1,353,564

Selling, general and administrative expenses


179,821


-


(6,814)


-


-


-


173,007

Interest expense, net


3,665


-


-


-


-


-


3,665

Foreign currency transaction (gains) losses


884


-


-


-


-


-


884

Other (income) expense


(2,425)


-


-


(44)


-


-


(2,469)

Asset impairment


5,668


(5,668)


-


-


-


-


-

Restructuring expense


5,054


-


-


(5,054)


-


-


-

Curtailment (gains) losses


270


-


-


(270)


-


-


-

Total costs and expenses, net


1,550,512


(5,737)


(6,814)


(5,368)


(3,942)


-


1,528,651

Income from continuing operations before taxes


39,931


5,737


6,814


5,368


3,942


-


61,792

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


(4,419)


127


6


1,198


1,036


15,448


13,396

Income from continuing operations


44,350


5,610


6,808


4,170


2,906


(15,448)


48,396

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


(239)


237


-


-


-


-


(2)

Net income (loss)


44,111


5,847


6,808


4,170


2,906


(15,448)


48,394

Noncontrolling interests


(221)


-


-


-


-


-


(221)

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


$      43,890


$        5,847


$           6,808


$         4,170


$           2,906


$    (15,448)


$          48,173
















Diluted EPS


$          1.57












$              1.72
















Weighted-average number of shares outstanding - diluted


27,976












27,976



A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

EBITDA Excluding Certain Items Reconciliation

Unaudited

(In thousands)





















Three months ended
August 31,


Year ended
August 31,



2011


2010


2011


2010










Income from continuing operations before taxes


$   8,213


$   8,671


$   57,467


$ 39,931










Adjustments (pretax):









Depreciation and amortization


9,861


9,957


40,274


27,380

Interest expense, net


1,393


968


5,531


3,665

Asset write-downs


6,225


37


8,150


5,737

Costs related to acquisitions


553


1,498


1,429


6,814

Restructuring related costs


2,338


2,817


8,117


5,368

Inventory step-up


324


1,406


607


3,942

EBITDA excluding certain items


$ 28,907


$ 25,354


$ 121,575


$ 92,837



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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