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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
þ
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2013
OR
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission File Number 1-8524
Myers Industries, Inc.
(Exact name of registrant as specified in its charter)
Ohio
34-0778636
(State or other jurisdiction of
(IRS Employer Identification
incorporation or organization)
Number)
 
 
1293 South Main Street
 
Akron, Ohio
44301
(Address of principal executive offices)
(Zip code)
(330) 253-5592
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o .
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ .
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding as of April 25, 2013
Common Stock, without par value
 
33,464,499 shares

 

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Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Exhibit 10 (s)
 Exhibit 31(a)
 Exhibit 31(b)
 Exhibit 32
 EX-101 INSTANCE DOCUMENT
 EX-101 SCHEMA DOCUMENT
 EX-101 CALCULATION LINKBASE DOCUMENT
 EX-101 LABELS LINKBASE DOCUMENT
 EX-101 PRESENTATION LINKBASE DOCUMENT
 EX-101 DEFINITION LINKBASE DOCUMENT


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Part I — Financial Information
Item 1. Financial Statements
Myers Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)

 
For the Three Months Ended
 
March 31,
2013
 
March 31,
2012
Net sales
$
214,980

 
$
198,789

Cost of sales
156,662

 
140,791

Gross profit
58,318

 
57,998

Selling, general and administrative expenses
45,074

 
40,881

Operating income
13,244

 
17,117

Interest expense, net
1,092

 
1,081

Income before income taxes
12,152

 
16,036

Income tax expense
4,269

 
6,051

Net income
$
7,883

 
$
9,985

Income per common share:
 
 
 
Basic
$
0.24

 
$
0.30

Diluted
$
0.23

 
$
0.29

Dividends declared per share
$
0.09

 
$
0.08

 
See notes to unaudited condensed consolidated financial statements.
 


1
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Myers Industries, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in thousands)


 
For the Three Months Ended
 
March 31,
2013
 
March 31,
2012
Net income
$
7,883

 
$
9,985

Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency translation adjustment
(851
)
 
1,385

Pension liability
(75
)
 
632

Total other comprehensive income (loss), net of tax
(926
)
 
2,017

Comprehensive income
$
6,957

 
$
12,002



See notes to unaudited condensed consolidated financial statements.



2
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Myers Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Position
(Dollars in thousands)

Assets
March 31,
2013
 
December 31,
2012
 
(Unaudited)
 
 
Current Assets
 
 
 
Cash
$
4,053

 
$
3,948

Accounts receivable-less allowances of $3,782 and $3,255, respectively
124,076

 
115,508

Inventories
 
 
 
Finished and in-process products
75,074

 
72,899

Raw materials and supplies
34,339

 
34,603

 
109,413

 
107,502

Prepaid expenses
9,232

 
9,033

Deferred income taxes
2,240

 
3,605

Total Current Assets
249,014

 
239,596

Other Assets
 

 
 
Goodwill
61,039

 
61,056

Patents and other intangible assets
25,002

 
25,839

Other
7,509

 
7,882

 
93,550

 
94,777

Property, Plant and Equipment, at Cost
 

 
 
Land
4,438

 
4,438

Buildings and leasehold improvements
57,056

 
57,058

Machinery and equipment
449,235

 
445,789

 
510,729

 
507,285

Less allowances for depreciation and amortization
(364,690
)
 
(356,802
)
Property, plant and equipment, net
146,039

 
150,483

Total Assets
$
488,603

 
$
484,856


See notes to unaudited condensed consolidated financial statements.
 

3
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MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Position
(Dollars in thousands, except share data)


Liabilities and Shareholders’ Equity
March 31,
2013
 
December 31,
2012
 
(Unaudited)
 
 
Current Liabilities
 
 
 
Accounts payable
$
63,773

 
$
72,417

Accrued expenses
 
 
 
Employee compensation
13,982

 
18,885

Income taxes
2,675

 
1,090

Taxes, other than income taxes
2,643

 
2,606

Accrued interest
841

 
240

Other
19,459

 
19,239

Total Current Liabilities
103,373

 
114,477

Long-term debt
103,578

 
92,814

Other liabilities
17,089

 
17,865

Deferred income taxes
30,470

 
29,678

Shareholders’ Equity
 
 
 
Serial Preferred Shares (authorized 1,000,000 shares; none issued and outstanding)
—

 
—

Common Shares, without par value (authorized 60,000,000 shares; outstanding
33,551,449 and 33,480,189; net of treasury shares of 4,148,683 and 4,356,160, respectively)
20,329

 
20,316

Additional paid-in capital
266,632

 
266,419

Accumulated other comprehensive income
9,717

 
10,643

Retained deficit
(62,585
)
 
(67,356
)
Total Shareholders' Equity
234,093

 
230,022

Total Liabilities and Shareholders' Equity
$
488,603

 
$
484,856


See notes to unaudited condensed consolidated financial statements.
 








4
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Myers Industries, Inc. and Subsidiaries
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)
(Dollars in thousands, except per share data)

 
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulative
Other
Comprehensive
Income
 
Retained
Income
(Deficit)
Balance at January 1, 2013
$
20,316

 
$
266,419

 
$
10,643

 
$
(67,356
)
Net income
—

 
—

 
—

 
7,883

Other comprehensive income (loss)
—

 
—

 
(926
)
 
—

Purchases for treasury
(83
)
 
(1,872
)
 
—

 
—

Common stock issued
96

 
1,610

 
—

 
—

Cancellations and terminations of share grants
—

 
37

 
—

 
—

Stock based compensation
—

 
438

 
—

 
—

Dividends declared - $.09 per share
—

 
—

 
—

 
(3,112
)
Balance at March 31, 2013
$
20,329

 
$
266,632

 
$
9,717

 
$
(62,585
)

See notes to unaudited condensed consolidated financial statements.
 


5
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Myers Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)

 
For the Three Months Ended
 
March 31,
2013
 
March 31,
2012
Cash Flows from Operating Activities
 
 
 
Net income
$
7,883

 
$
9,985

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
Depreciation
8,150

 
7,545

Amortization of intangible assets
1,001

 
757

Non-cash stock compensation
438

 
667

Provision for (recovery of) loss on accounts receivable
822

 
(627
)
Deferred taxes
2,227

 
(32
)
Other long-term liabilities
(834
)
 
586

Gain on sale of property, plant and equipment
—

 
(224
)
Other
—

 
50

Cash flow used for working capital:
 
 
 
Accounts receivable
(9,833
)
 
(7,679
)
Inventories
(2,224
)
 
(7,089
)
Prepaid expenses
(237
)
 
(1,726
)
Accounts payable and accrued expenses
(13,896
)
 
(8,623
)
Net cash used in operating activities
(6,503
)
 
(6,410
)
Cash Flows from Investing Activities
 
 
 
Additions to property, plant and equipment
(4,508
)
 
(3,138
)
Proceeds from sale of property, plant and equipment
—

 
1,332

Other
96

 
(3
)
Net cash used in investing activities
(4,412
)
 
(1,809
)
Cash Flows from Financing Activities
 
 
 
Repayment of long-term debt
—

 
(305
)
Net borrowing on credit facility
10,763

 
6,262

Cash dividends paid
—

 
(2,316
)
Proceeds from issuance of common stock
1,706

 
397

Tax benefit from options
37

 
—

Repurchase of common stock
(1,955
)
 
—

Net cash provided by financing activities
10,551

 
4,038

Foreign exchange rate effect on cash
469

 
676

Net increase (decrease) in cash
105

 
(3,505
)
Cash at January 1
3,948

 
6,801

Cash at March 31
$
4,053

 
$
3,296



See notes to unaudited condensed consolidated financial statements.  

6



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except where otherwise indicated)



1. Statement of Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (collectively, the “Company”), and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s latest annual report on Form 10-K.
In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2013 , and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2013 .
Recent Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income requiring new disclosures regarding reclassification adjustments from accumulated other comprehensive income ("AOCI"). ASU No. 2013-02 requires disclosure of amounts reclassified out of AOCI in its entirety, by component, which the Company has elected to disclose in the notes (see below). We adopted this guidance effective January 1, 2013.
Translation of Foreign Currencies

All asset and liability accounts of consolidated foreign subsidiaries are translated at the current exchange rate as of the end of the accounting period and income statement items are translated monthly at an average currency exchange rate for the period. The resulting translation adjustment is recorded in other comprehensive income (loss) as a separate component of shareholders' equity.
Fair Value Measurement
The Company follows guidance included in ASC 820, Fair Value Measurements and Disclosures , for its financial assets and liabilities, as required. The guidance established a common definition for fair value to be applied to U.S. GAAP requiring the use of fair value, established a framework for measuring fair value, and expanded disclosure requirements about such fair value measurements. The guidance did not require any new fair value measurements, but rather applied to all other accounting pronouncements that require or permit fair value measurements. Under ASC 820, the hierarchy that prioritizes the inputs to valuation techniques used to measure fair value is divided into three levels:
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are observable either directly or indirectly.
Level 3:
Unobservable inputs for which there is little or no market data or which reflect the entity’s own assumptions.
The fair value of the Company’s cash, accounts receivable, accounts payable and accrued expenses are considered to have a fair value which approximates carrying value due to the nature and relative short maturity of these assets and liabilities.
The fair value of debt under the Company’s Credit Agreement approximates carrying value due to the floating rates and relative short maturity (less than 90 days) of the revolving borrowings under this agreement. The fair value of the Company’s $35.0 million fixed rate senior notes was estimated at $36.2 million and $36.5 million at March 31, 2013 and December 31, 2012 , respectively, using market observable inputs for the Company’s comparable peers with public debt, including quoted prices in active markets and interest rate measurements which are considered level 2 inputs.

7



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

Revenue Recognition

The Company recognizes revenues from the sale of products, net of actual and estimated returns, at the point of passage of title and risk of loss, which is generally at time of shipment, and collectability of the fixed or determinable sales price is reasonably assured.

Accumulated Other Comprehensive Income

The balances in the Company’s accumulated other comprehensive income ("AOCI") as of March 31, 2013 and March 31, 2012 are as follows:
 
Foreign currency
 
Defined benefit pension plans
 
Total
Balance at January 1, 2012
$
9,994

 
$
(2,700
)
 
$
7,294

Other comprehensive income before reclassifications
1,385

 
—

 
1,385

Amounts reclassified from AOCI to income tax expense (benefit) in the Condensed Consolidated Statements of Income
—

 
632

 
632

Net current-period other comprehensive income
$
1,385

 
$
632

 
$
2,017

Balance at March 31, 2012
$
11,379

 
$
(2,068
)
 
$
9,311

 
 
 
 
 
 
Balance at January 1, 2013
$
12,784

 
$
(2,141
)
 
$
10,643

Other comprehensive income before reclassifications
(851
)
 
—

 
(851
)
Amounts reclassified from AOCI to income tax expense (benefit) in the Condensed Consolidated Statements of Income
—

 
(75
)
 
(75
)
Net current-period other comprehensive income
$
(851
)
 
$
(75
)
 
$
(926
)
Balance at March 31, 2013
$
11,933

 
$
(2,216
)
 
$
9,717

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. The Company maintains operating cash and reserves for replacement balances in financial institutions which, from time to time, may exceed federally insured limits. The Company periodically assesses the financial condition of these institutions and believes that the risk of loss is minimal.


2. Inventories
Approximately twenty-two percent of the Company’s inventories use the last-in, first-out (LIFO) method of determining cost. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management’s control, estimated interim results, which were immaterial, are subject to change in the final year-end LIFO inventory valuation and therefore, no adjustment was recorded as of March 31, 2013 .



8



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

3. Acquisitions
In October 2012, the Company acquired 100% of the stock of Jamco Products Inc. ("Jamco"), an Illinois corporation that is a leading designer and manufacturer of heavy-duty industrial steel carts and safety cabinets used across many markets. The total purchase price was approximately $15.1 million in cash, net of $0.1 million of cash acquired.
Jamco's assets and liabilities are recorded at fair value as of the date of acquisition using primarily level 2 and level 3 fair value inputs. Intangible assets included in the acquisition of Jamco are trade name of $1.2 million , technology of $2.0 million , non-compete agreement of $0.1 million and customer relationships of $2.4 million . The technology, non-compete agreement and customer relationships are subject to amortization and have estimated useful lives of ten , two and six years, respectively. The Jamco trade name has an indefinite life and will be subject to periodic (at least annual) evaluation for impairment.
In July 2012, the Company acquired 100% of the stock of Plasticos Novel do Nordeste S.A. ("Novel"), a Brazil-based designer and manufacturer of reusable plastic crates and containers used for closed-loop shipping and storage. Novel also produces a diverse range of plastic industrial safety products. The total purchase price was approximately $31.0 million , which includes a cash payment of $3.4 million , net of $0.6 million of cash acquired, assumed debt of approximately $26.0 million and contingent consideration of $0.9 million based on an earnout. The contingent consideration is contingent upon the results of Novel exceeding predefined earnings before interest, taxes, depreciation and amortization over the next four years.
Novel's assets and liabilities are recorded at fair value as of the date of acquisition using primarily level 3 fair value inputs. Intangible assets included in the acquisition of Novel include trade name of $1.6 million , know-how of $1.8 million and customer relationships of $2.4 million The know-how and customer relationships are subject to amortization and have estimated useful lives of ten and six years, respectively. The Novel trade name has an indefinite life and will be subject to periodic (at least annual) evaluation for impairment.
The following unaudited pro forma information presents a summary of consolidated results of operations for the Company including Novel and Jamco as if the acquisitions had occurred on January 1, 2012.
 
Three Months Ended
 March 31,
 
2012
Net sales
$
212,584

Cost of sales
150,477

Gross profit
62,107

Selling, general & administrative expenses
43,319

Operating income
18,788

Interest expense, net
2,215

Income before taxes
16,573

Income taxes
6,255

Net income
$
10,318

 
 
Income per basic share
$
0.31

Income per diluted share
$
0.30

These unaudited pro forma results have been prepared for comparative purposes only and may not be indicative of results of operations which actually would have occurred had the acquisitions taken place on January 1, 2012 or indicative of future results.

9



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

The operating results of both businesses acquired have been included in our Material Handling Segment since the date of acquisition. The allocation of the purchase price and the estimated goodwill, which is not deductible for income tax purposes, and other intangibles are as follows:
Assets acquired:
Novel
 
Jamco
Cash
$
630

 
$
88

Accounts receivable
5,467

 
1,690

Inventory
5,993

 
3,282

Property, plant and equipment
13,636

 
2,559

Intangibles
5,790

 
5,680

Deferred tax assets
435

 
28

Prepaid assets
1,451

 
48

Other
719

 
2

Assets acquired, less cash
$
33,491

 
$
13,289

 
 
 
 
Liabilities assumed:
 
 
 
Accounts payable and accruals
$
3,134

 
$
1,436

Other taxes
3,608

 
676

Other long-term liabilities
2,293

 
454

Debt
26,028

 
—

Deferred tax liabilities
3,804

 
3,044

Liabilities assumed
38,867

 
5,610

Goodwill
8,805

 
7,435

Total consideration, less cash acquired
$
3,429

 
$
15,114


4. Goodwill
The Company is required to test for impairment on at least an annual basis. In addition, the Company tests for impairment whenever events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount. Such events may include, but are not limited to, significant changes in economic and competitive conditions, the impact of the economic environment on the Company's customer base or its businesses, or a material negative change in its relationships with significant customers. The Company conducts its annual impairment assessment as of October 1.
The change in goodwill for the three months ended March 31, 2013 was as follows:

Segment
Balance at January 1, 2013
 
Acquisitions
 
Foreign
Currency
Translation

 
Impairment
 
Balance at March 31, 2013
Material Handling
$
50,521

 
$
—

 
$
114

 
$
—

 
$
50,635

Lawn and Garden
9,614

 
—

 
(131
)
 
—

 
9,483

Distribution
214

 
—

 
—

 
—

 
214

Engineered Products
707

 
—

 
—

 
—

 
707

Total
$
61,056

 
$
—

 
$
(17
)
 
$
—

 
$
61,039




10



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

5. Net Income Per Common Share
Net income per common share, as shown on the Condensed Consolidated Statements of Income (unaudited), is determined on the basis of the weighted average number of common shares outstanding during the period as follows:

 
Three Months Ended
March 31,
 
2013
 
2012
Weighted average common shares outstanding
 
 
 
Basic
33,504,222

 
33,439,012

Dilutive effect of stock options and restricted stock
355,194

 
473,153

Weighted average common shares outstanding diluted
33,859,416

 
33,912,165

Options to purchase 471,400 and 217,500 shares of common stock that were outstanding at March 31, 2013 and 2012, respectively, were not included in the computation of diluted earnings per share as the exercise prices of these options were greater than the average market price of common shares, and their effect would be anti-dilutive.

6. Supplemental Disclosure of Cash Flow Information

 
Three Months Ended
March 31,
 
2013
 
2012
Interest paid
$
526

 
$
296

Income taxes paid
$
435

 
$
2,455



7. Restructuring
The charges related to various restructuring programs implemented by the Company are included in selling, general and administrative ("SG&A") expenses and cost of sales. Our Distribution and Lawn and Garden Segments, as well as Corporate costs are recorded in SG&A, while all Engineered Products Segment expenses are recorded in cost of sales. Material Handling costs are recorded in both SG&A and cost of sales. The restructuring charges by segment are presented in the following table.
 
Three Months Ended
March 31,
Segment
2013
 
2012
Material Handling
$
210

 
$
—

Lawn and Garden
403

 
23

Distribution
74

 
430

Engineered Products
3

 
102

Corporate
17

 
—

Total
$
707

 
$
555




11



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)


The Company recorded total restructuring expenses of $0.5 million in SG&A, and $0.2 million in cost of sales for the three months ended March 31, 2013 . The Company recorded total restructuring expenses of $0.5 million in SG&A and $0.1 million in cost of sales for the three months ended March 31, 2012 . Estimated lease obligations associated with closed facilities were based on level 2 inputs.

The amounts for severance and personnel costs associated with restructuring have been included in other accrued expenses on the accompanying Condensed Consolidated Statements of Financial Position.

 
Severance and
 
Other
 
 
 
Personnel
 
Exit Costs
 
Total
Balance at January 1, 2012
$
—

 
$
605

 
$
605

Provision
239

 
316

 
555

Less: Payments
(239
)
 
(353
)
 
(592
)
Balance at March 31, 2012
$
—

 
$
568

 
$
568

 
 
 
 
 
 
Balance at January 1, 2013
$
318

 
$
—

 
$
318

Provision
231

 
476

 
707

Less: Payments
(549
)
 
(476
)
 
(1,025
)
Balance at March 31, 2013
$
—

 
$
—

 
$
—

Approximately $5.7 million of property, plant, and equipment has been classified as held for sale due to restructuring actions and are included in other assets in the Condensed Consolidated Statement of Financial Position at both March 31, 2013 and December 31, 2012 , The Company is actively pursuing the sale of these facilities.

8. Stock Compensation
The Company’s 2008 Incentive Stock Plan (the “2008 Plan”) authorizes the Compensation Committee of the Board of Directors to issue up to 3,000,000 shares of various types of stock based awards including stock options, restricted stock, stock units and stock appreciation rights to key employees and directors. In general, options granted and outstanding vest over a three year period and expire ten years from the date of grant.
Stock compensation expense reduced income before taxes approximately $0.4 million and $0.7 million for the three months ended March 31, 2013 and 2012, respectively. These expenses are included in SG&A expenses in the accompanying Condensed Consolidated Statements of Income (Unaudited). Total unrecognized compensation cost related to non-vested share based compensation arrangements at March 31, 2013 was approximately $5.2 million which will be recognized over the next three years, as such compensation is earned.
On March 1, 2013 , stock options for 323,400 shares were granted with a three year vesting period. The fair value of options granted is estimated using a binomial lattice option pricing model based on assumptions set forth in the following table. The Company uses historical data to estimate employee exercise and departure behavior. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and through the expected term. The dividend yield rate is based on the Company’s historical dividend yield. The expected volatility is derived from historical volatility of the Company’s shares and those of similar companies measured against the market as a whole.


12



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

 
 
Model
 
Risk free interest rate
1.86
%
Expected dividend yield
2.40
%
Expected life of award (years)
7.00

Expected volatility
50.00
%
Fair value per option share
$
5.39


The following table provides a summary of stock option activity for the period ended March 31, 2013 :

 
Shares
 
Average
Exercise
Price
 
Weighted
Average
Life
Outstanding at January 1, 2013
1,919,021

 
$
11.63

 
 
Options granted
323,400

 
14.77

 
 
Options exercised
(155,178
)
 
10.82

 
 
Cancelled or forfeited
(127,320
)
 
13.91

 
 
Outstanding at March 31, 2013
1,959,923

 
$
12.07

 
6.63 years
Exercisable at March 31, 2013
1,428,395

 
$
11.55

 
5.65 years

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of all stock options exercised during the three months ended March 31, 2013 and 2012 was approximately $0.6 million and $0.1 million , respectively.
On March 1, 2013 , 169,100 Restricted Stock Unit ("RSU") Awards were granted with a two or three year vesting period. The RSU's had a grant date fair value of $14.77 per share, which was the closing price of the common stock on the date of grant.
The following table provides a summary of RSU and restricted stock activity for the three months ended March 31, 2013 :
 
Awards
 
Average Grant-Date Fair Value
Unvested at January 1, 2013
363,125

 
 
Granted
169,100

 
$
14.77

Released
(110,800
)
 
9.97

Cancelled or forfeited
(122,500
)
 
13.87

Unvested at March 31, 2013
298,925

 
$
13.03

Restricted stock are rights to receive shares of common stock, subject to forfeiture and other restrictions, which vest over a two or three year period. Restricted shares are considered to be non-vested shares under the accounting guidance for share-based payment and are not reflected as issued and outstanding shares until the restrictions lapse. At that time, the shares are released to the grantee and the Company records the issuance of the shares. Restricted stock awards are valued based on the market price of the underlying shares on the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period. At March 31, 2013 , restricted stock awards had vesting periods up through March 2016 .



13



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

9. Contingencies

New Idria Mercury Mine

The Company is a defendant in various lawsuits and a party to various other legal proceedings, in the ordinary course of business, some of which are covered in whole or in part by insurance. Effective October 2011, the U.S. Environmental Protection Agency (“EPA”) added the New Idria Mercury Mine site located near Hollister, California to the Superfund National Priorities List because of alleged contaminants discharged to California waterways. The New Idria Quicksilver Mining Company, founded in 1936, and later renamed the New Idria Mining & Chemical Company ("NIMCC") owned and/or operated the New Idria Mine through 1976. In 1981 NIMCC was merged into Buckhorn Metal Products Inc. and subsequently acquired by Myers Industries in 1987. The EPA contends that past mining operations have resulted in mercury contamination and acid mine drainage in the San Carlos Creek, Silver Creek and a portion of Panoche Creek and that other downstream locations may also be impacted.

Since Buckhorn Inc. may be a potentially responsible party (“PRP”) of the New Idria Mercury Mine, the Company recognized an expense of $ 1.9 million in 2011 related to performing a remedial investigation and feasibility study to determine the extent of remediation and the screening of alternatives. Payments of approximately $ 0.4 million have been charged against the reserve classified in Other Liabilities on the Condensed Consolidated Statements of Financial Position as of March 31, 2013. As the Site Remedial Investigation and Feasibility Study ("RI/FS") proceeds, it is likely that adjustments to the recognized expense will be necessary to reflect new information regarding the nature and extent of site contamination, the range of remediation alternatives available, and evolving remediation standards.  The final remedial action will be selected after completion of the RI/FS.  At that time the Company is likely to have additional information regarding remedial action costs, the number and financial condition of other PRPs, the extent of their responsibility for the remediation, and the availability of insurance coverage for these expenses. At this time, further remediation cost estimates are not known and have not been prepared.

In November 2011 the EPA completed an interim removal project at the New Idria Mercury Mine site. It is expected this removal action will be part of the final remediation strategy for the site. According to informal reports, EPA's interim removal project costs were approximately $ 500,000 . It is possible that at some future date the EPA will seek recovery of the costs of this work from PRPs.
Other
When management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the estimated loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable of occurrence than another. As additional information becomes available, any potential liability related to these matters will be assessed and the estimates will be revised, if necessary.

Based on current available information, management believes that the ultimate outcome of these matters will not have a material adverse effect on our financial position or overall trends in our results of operations. However, these matters are subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which the ruling occurs, or in future periods.




14



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)

10. Long-Term Debt
Long-term debt consisted of the following:
 
 
March 31,
 
December 31,
 
2013
 
2012
Credit agreement
$
68,578

 
$
57,814

Senior notes
35,000

 
35,000

 
$
103,578

 
$
92,814

Under terms of the Credit Agreement with a group of banks, the Company may borrow up to $180 million , reduced for letters of credit issued. As of March 31, 2013 , the Company had $106.3 million available under the Credit Agreement.
In December 2003, the Company issued $100 million in Senior Unsecured Notes (the "Notes") consisting of $65 million of notes with an interest rate of 6.08 percent and a 7 year maturity and $35 million of notes with an interest rate of 6.81 percent and a 10 year maturity. Proceeds from the issuance of the Notes were used to pay down the term loan and revolving credit facility borrowing outstanding at that time. As of March 31, 2013 , the Company has classified the $35 million of Senior Notes due in December 2013 as a long-term liability since it has the intent to refinance the debt on a long-term basis and has demonstrated the ability via capacity available under the non-cancelable revolver feature of our current Credit Agreement.

11. Retirement Plans
The Company and certain of its subsidiaries have pension and profit sharing plans covering substantially all of their employees. The Company’s frozen defined benefit pension plan ("The Pension Agreement between Akro-Mils and United Steelworkers of America Local No. 1761-02") provides benefits primarily based upon a fixed amount for each year of service as of the date the plan was frozen.
Net periodic pension cost are as follows:
 
Three Months Ended
March 31,
 
2013
 
2012
Service cost
$
8

 
$
18

Interest cost
65

 
72

Expected return on assets
(91
)
 
(77
)
Amortization of actuarial net loss
28

 
25

Net periodic pension cost
$
10

 
$
38

Company contributions
$
123

 
$
76

The Company anticipates contributions totaling $0.4 million to its pension plan for the full year of 2013.

12. Income Taxes
The total amount of gross unrecognized tax benefit that would reduce the Company's effective tax rates at March 31, 2013 and March 31, 2012 , was $1.2 million and $0.5 million , respectively. The $0.7 million increase in the gross unrecognized tax benefits from March 31, 2012 to March 31, 2013 resulted from an increase in ASC 740-10-25-6, Accounting for Uncertainty in Income Taxes , reserves related to acquired businesses and previous year tax positions. Accrued interest expense included with accrued income taxes in the Company's Condensed Consolidated Statements of Financial Position was less than $0.1 million at March 31, 2013 and December 31, 2012 .

As of March 31, 2013 , the Company and its significant subsidiaries are subject to examination for the years after 2006 in Brazil, after 2007 in Canada, and after 2010 in the United States. The Company and its subsidiaries are subject to examination in certain states within the United States either after 2007 or after 2008.

15



Myers Industries, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements - (Continued)
(Dollar amounts in thousands, except where otherwise indicated)


13. Segment Information
Using the criteria of ASC 280 Segment Reporting, the Company has four operating segments: Material Handling, Lawn and Garden, Distribution, and Engineered Products. Each of these operating segments is also a reportable segment under the ASC 280 criteria.
None of the reportable segments include operating segments that have been aggregated. Some of these segments contain individual business components that have been aggregated on the basis of common management, customers, products, production processes and economic characteristics. The Company accounts for intersegment sales and transfers at cost plus a specified mark-up.
Income before income taxes for each business segment is based on net sales less cost of products sold, and the related selling, administrative and general expenses. In computing business segment operating income, general corporate overhead expenses and interest expenses are not included.
 
 
Three Months Ended
March 31,
Net Sales
2013
 
2012
Material Handling
$
79,989

 
$
65,221

Lawn and Garden
60,363

 
59,184

Distribution
42,649

 
42,738

Engineered Products
36,956

 
37,227

Inter-company Sales
(4,977
)
 
(5,581
)
Net Sales
$
214,980

 
$
198,789


 
Three Months Ended
March 31,
Income Before Income Taxes
2013
 
2012
Material Handling
$
9,705

 
$
13,150

Lawn and Garden
2,281

 
1,218

Distribution
2,839

 
3,511

Engineered Products
5,077

 
4,591

Corporate
(6,658
)
 
(5,353
)
Interest expense - net
(1,092
)
 
(1,081
)
Income before income taxes
$
12,152

 
$
16,036





16
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Item 2 . Management’s Discussion and Analysis of Financial Condition and Results of Operations


Results of Operations
Comparison of the First Quarter of 2013 to the First Quarter of 2012
Net Sales:

(dollars in millions)
Quarter Ended
March 31,
 
 
 
 
Segment
2013
 
2012
 
Change
 
% Change
Material Handling
$
80.0

 
$
65.2

 
$
14.8

 
23
%
Lawn and Garden
$
60.4

 
$
59.2

 
$
1.2

 
2
 %
Distribution
$
42.6

 
$
42.7

 
$
(0.1
)
 
—
 %
Engineered Products
$
37.0

 
$
37.2

 
$
(0.2
)
 
(1
%)
Inter-company Sales
$
(5.0
)
 
$
(5.5
)
 
$
0.5

 
9
 %
TOTAL
$
215.0

 
$
198.8

 
$
16.2

 
8
 %

Net sales for the quarter ended March 31, 2013 were $215.0 million , an increase of $16.2 million or 8% compared to the prior year's first quarter. The increase was driven by higher sales in our Material Handling and Lawn and Garden Segments. Overall net sales increased approximately $12.0 million from inclusion of our 2012 acquisitions of Plasticos Novel do Nordeste S.A. ("Novel") in July and Jamco Products Inc. ("Jamco") in October. In addition, higher volume of $6.2 million driven by our growth and innovation initiative more than offset lower pricing of $1.4 million and the effect of unfavorable foreign currency translation of $0.6 million in 2013 compared to 2012.
Net sales in the Material Handling Segment increased $14.8 million or 23% in the first quarter of 2013 compared to the same quarter in 2012. Sales from acquisitions contributed approximately $12.0 million quarter-over-quarter and through an increase of $5.7 million in higher sales volume, particularly in the automotive and agricultural markets. These increases were negatively impacted by lower pricing of $2.4 million and unfavorable foreign currency translation of $0.5 million.
Net sales in the Lawn and Garden Segment in the first quarter of 2013 increased $1.2 million or 2% compared to the first quarter of 2012. Sales reflect higher volume of $0.3 million compared to the first quarter of 2012 as a result of a delay in orders from the fourth quarter of 2012, as well as new product offerings generated through our growth and innovation initiative. Sales were also favorably impacted by improved pricing of $0.9 million in 2013 compared to the same quarter in 2012.
Net sales in the Distribution Segment decreased $0.1 million in the first quarter of 2013 compared to the first quarter of 2012 impacted by a decline in replacement tire shipments. Improved pricing, increased equipment and new product sales were more than offset by lower sales of supplies in line with the market.
Net Sales in the Engineered Products Segment decreased $0.2 million or 1% in the first quarter of 2013 compared to the prior year's first quarter. Volume decreased $0.3 million due to a more normalized demand in the transplant automotive market in the first quarter of 2013 compared to the first quarter of last year, as well as a decrease in custom market sales. These decreases were partially offset by an increase in sales in the marine market. Sales for the first quarter of 2013 were favorably impacted by higher selling prices of $0.1 million.
Cost of Sales & Gross Profit:
(dollars in millions)
Quarter Ended
March 31,
 
2013
 
2012
Cost of sales
$
156.7

 
$
140.8

Gross profit
$
58.3

 
$
58.0

Gross profit as a percentage of sales
27.1
%
 
29.2
%

Gross profit in the first quarter of 2013 was comparable to the first quarter of 2012, although gross profit as a percentage of sales decreased for the same period primarily due to unfavorable product and customer mix.

17



Selling, General and Administrative Expenses:

(dollars in millions)
Quarter Ended
March 31,
 
 
 
2013
 
2012
 
Change
SG&A expenses
$
45.1

 
$
40.9

 
$
4.2

SG&A expenses as a percentage of sales
21.0
%
 
20.6
%
 
 
Selling, general and administrative (“SG&A”) expenses for the quarter ended March 31, 2013 were $45.1 million , an increase of $4.2 million or 10% compared to the first quarter in the prior year. The increase in SG&A was due to the incremental impact of our 2012 acquisitions of Novel and Jamco of $3.0 million and investments in our information technology initiatives of $0.6 million, partially offset by lower selling expenses of $0.5 million. SG&A in the first quarter of 2012 was favorably impacted by the recovery of $1.1 million from bad debt expense associated with a specific customer. Restructuring and unusual charges of $0.5 million were recorded in SG&A in both the first quarter of 2013 and 2012.

Interest Expense:

(dollars in millions)
Quarter Ended
March 31,
 
 
 
 
 
2013
 
2012
 
Change
 
% Change
Net interest expense
$
1.1

 
$
1.1

 
$
—

 
—
%
Outstanding borrowings
$
103.6

 
$
80.2

 
$
23.4

 


Average borrowing rate
4.57
%
 
5.61
%
 
 
 
 
Net interest expense in both the first quarter of 2013 and 2012 was $1.1 million . Lower average borrowing rates resulting from a mix of debt outstanding offset a higher average borrowing base in the first quarter of 2013 compared to 2012, as indicated by the outstanding borrowings for each period presented.

Income Taxes:
(dollars in millions)
Quarter Ended
March 31,
 
2013
 
2012
Income before taxes
$
12.2

 
$
16.0

Income taxes
$
4.3

 
$
6.1

Effective tax rate
35.1
%
 
37.7
%

The effective tax rate was 35.1% for the quarter ended March 31, 2013 compared to 37.7% in the prior year. The lower effective tax rate is attributable to changes in the foreign rate differential including foreign incentive tax credits for the quarter ended March 31, 2013 .

Acquisitions
In October 2012, the Company acquired 100% of the stock of Jamco Products Inc. ("Jamco"), an Illinois corporation that is a leading designer and manufacturer of heavy-duty industrial steel carts and safety cabinets used across many markets. The total purchase price was approximately $15.1 million in cash, net of $0.1 million of cash acquired.
Jamco's assets and liabilities are recorded at fair value as of the date of acquisition using primarily level 2 and level 3 fair value inputs. Intangible assets included in the acquisition of Jamco are trade name of $1.2 million , technology of $2.0 million , non-compete agreement of $0.1 million and customer relationships of $2.4 million . The technology, non-compete agreement and customer relationships are subject to amortization and have estimated useful lives of ten , two and six years, respectively. The Jamco trade name has an indefinite life and will be subject to periodic (at least annual) evaluation for impairment.
In July 2012, the Company acquired 100% of the stock of Plasticos Novel do Nordeste S.A. ("Novel"), a Brazil-based designer and manufacturer of reusable plastic crates and containers used for closed-loop shipping and storage. Novel also produces a diverse

18
Table of contents





range of plastic industrial safety products. The total purchase price was approximately $31.0 million , which includes a cash payment of $3.4 million , net of $0.6 million of cash acquired, assumed debt of approximately $26.0 million and contingent consideration of $0.9 million based on an earnout. A majority of the debt was repaid shortly after acquisition. The contingent consideration is contingent upon the results of Novel exceeding predefined earnings before interest, taxes, depreciation and amortization over the next four years.

Liquidity and Capital Resources
Cash used in operating activities was $6.5 million for the three months ended March 31, 2013 compared to $6.4 million for the three months ended March 31, 2012 . For the three months ended March 31, 2013 and March 31, 2012 , cash of $26.2 million and $25.1 million was used for working capital, respectively.
Capital expenditures for the three months ended March 31, 2013 were $4.5 million and for the full year are expected to be approximately $30 to $35 million.
For the three months ended March 31, 2013, the Company used cash of $2.0 million to purchase 136 thousand shares of its own stock under a share repurchase program. The Company accelerated its fourth quarter dividend payment to reduce the tax impact for its shareholders which resulted in the payment in December 2012 rather than in the first quarter of 2013. The Company paid its fourth quarter 2011 dividends declared of $2.3 million during the three months ended March 31, 2012.
Debt, net of cash at March 31, 2013 was $99.5 million compared to $88.9 million at December 31, 2012 . As of March 31, 2013 , the Company was in compliance with all its debt covenants. The most restrictive financial covenants for all of the Company’s debt are an interest coverage ratio, (defined as earnings before interest and taxes divided by interest expense), and a leverage ratio, (defined as earnings before interest, taxes, depreciation and amortization, as adjusted, compared to total debt). The ratios as of and for the period ended March 31, 2013 are shown in the following table:

 
Required Level
 
Actual Level
Interest Coverage Ratio
2.25 to 1 (minimum)
 
10.50
Leverage Ratio
3.25 to 1 (maximum)
 
1.30

The Company believes that cash flows from operations and available borrowing under its Credit Agreement will be sufficient to meet expected business requirements including strategic initiatives, capital expenditures, dividends, working capital, debt service and to fund the stock repurchase program into the foreseeable future.

Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company has certain financing arrangements that require interest payments based on floating interest rates. The Company’s financial results are subject to changes in the market rate of interest. At present, the Company has not entered into any interest rate swaps or other derivative instruments to fix the interest rate on any portion of its financing arrangements with floating rates. Accordingly, based on current debt levels at March 31, 2013 , if market interest rates increase one percent, the Company’s interest expense would increase approximately $0.7 million annually.
Some of the Company’s subsidiaries operate in foreign countries and their financial results are subject to exchange rate movements. The Company has operations in Canada with foreign currency exposure, primarily due to sales made from businesses in Canada to customers in the United States. These sales are denominated in U.S. dollars. In addition, one of the Company's subsidiaries in Brazil has loans denominated in U.S. dollars. The Company has a systematic program to limit its exposure to fluctuations in exchange rates related to certain assets and liabilities of its operations in Canada and Brazil that are denominated in U.S. dollars. The net exposure generally ranges from $5 to $10 million. The foreign currency contracts and arrangements created under this program are not designated as hedged items under FASB ASC 815 Derivatives and Hedging , and accordingly, the changes in the fair value of the foreign currency arrangements, which have been immaterial, are recorded in the income statement. The Company’s foreign currency arrangements are generally three months or less and, as of March 31, 2013 , the Company had no foreign currency arrangements or contracts in place.
The Company uses certain commodities, primarily plastic resins, in its manufacturing processes. The cost of operations can be affected as the market and price for these commodities changes. The Company currently has no derivative contracts to hedge this risk and has no significant purchase obligations to purchase fixed quantities of such commodities in future periods. Significant future increases in the cost of plastic resin or other adverse changes in the general economic environment could have a material adverse impact on the Company’s financial position, results of operations or cash flows.

19
Table of contents







Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company carries out a variety of on-going procedures, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
We are undertaking a phased approach to implementation of enterprise resource planning systems in our Distribution Segment, Material Handling Segment and at Corporate, a significant portion of which will be completed in 2013, with the balance to be completed in 2014. We believe we are maintaining and monitoring appropriate internal controls during the implementation period. There have been no other changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


20
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Part II — Other Information
Item 1. Legal Proceedings

Certain legal proceedings in which the Company is involved are discussed in the Contingencies Note of the Unaudited Condensed Consolidated Financial Statements in Part I of this report and Part I, Item 3 of the Company's Annual Report on Form 10-K for the year ended December 31, 2012. The Company is a defendant in various lawsuits and a party to various other legal proceedings, in the ordinary course of business, some of which are covered in whole or in part by insurance. We believe that the outcome of these lawsuits and other proceedings will not individually or in the aggregate have a future material adverse effect on our consolidated financial position, results of operations or cash flows.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information regarding the Company’s stock repurchase plan during the three months ended March 31, 2013 .
 
Total Number of
Shares Purchased
 
Average Price Paid
per Share
 
Total Number of
Shares Purchased as
Part of the Publicly
Announced Program
 
Maximum number of
Shares that may yet
be Purchased Under
the Plan (1)
1/1/13 to 1/31/13
34,258

 
$
14.42

 
331,947

 
2,668,053

2/1/13 to 2/28/13
101,868

 
$
14.34

 
433,815

 
2,566,185

3/1/13 to 3/31/13
—

 
$
—

 
—

 
—


(1)
On November 20, 2012, the Company adopted a Rule 10b5-1 plan (the “Plan”) for the purpose of repurchasing up to two million one hundred fifty thousand shares of its common stock in accordance with the guidelines specified in Rule 10b5-1 of the Securities Exchange Act of 1934. The Plan was established in connection with the Board authorized repurchase of up to five million shares that was announced on May 2, 2011. The Company previously completed a repurchase of two million shares in 2011 pursuant to a previous Rule 10b5-1 plan, which was also in connection with the authorized five million share repurchase.


Item 6. Exhibits
(a) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
MYERS INDUSTRIES, INC.
 
May 1, 2013
By:  
/s/ Greggory W. Branning
 
 
Greggory W. Branning
 
 
Senior Vice President, Chief Financial Officer
and Corporate Secretary
(Duly Authorized Officer and Principal Financial and
Accounting Officer) 


21
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EXHIBIT INDEX
3(a)
Myers Industries, Inc. Amended and Restated Articles of Incorporation. Reference is made to Exhibit 3(a) to Form 10-K filed with the Commission on March 16, 2005.
3(b)
Myers Industries, Inc. Amended and Restated Code of Regulations. Reference is made to Exhibit 3.1 to Form 8-K filed with the Commission on April 12, 2013.
10(a)
Myers Industries, Inc. Amended and Restated Employee Stock Purchase Plan. Reference is made to Exhibit 10(a) to Form 10-K filed with the Commission on March 30, 2001.
10(b)
Form of Indemnification Agreement for Directors and Officers. Reference is made to Exhibit 10.1 to Form 10-Q filed with the Commission on May 1, 2009.
10(c)
Myers Industries, Inc. Amended and Restated Dividend Reinvestment and Stock Purchase Plan. Reference is made to Exhibit 99 to Post-Effective Amendment No. 2 to Form S-3 filed with the Commission on March 19, 2004.
10(d)
Myers Industries, Inc. Amended and Restated 1999 Incentive Stock Plan. Reference is made to Exhibit 10(f) to Form 10-Q filed with the Commission on August 9, 2006.*
10(e)
2008 Incentive Stock Plan of Myers Industries, Inc. Reference is made to Exhibit 4.3 to Form S-8 filed with the Commission on March 17, 2009.*
10(f)
Amendment No. 1 to the 2008 Incentive Stock Plan of Myers Industries, Inc. Reference is made to Exhibit 10.1 to Form 8-K filed with the Commission on August 3, 2010.*
10(g)
Myers Industries, Inc. Executive Supplemental Retirement Plan. Reference is made to Exhibit (10)(g) to Form 10-K filed with the Commission on March 26, 2003.*
10(h)
Severance Agreement between Myers Industries, Inc. and John C. Orr effective June 1, 2011. Reference is made to Exhibit 10.1 to Form 8-K filed with the Commission on March 7, 2011.*
10(i)
Non-Disclosure and Non-Competition Agreement between Myers Industries, Inc. and John C. Orr dated July 18, 2000. Reference is made to Exhibit 10(j) to Form 10-Q filed with the Commission on May 6, 2003.*
10(j)
Amendment to the Myers Industries, Inc. Executive Supplemental Retirement Plan (John C. Orr) effective June 1, 2008. Reference is made to Exhibit 10.2 to Form 8-K filed with the Commission on June 24, 2008.*
10(k)
Severance Agreement between Myers Industries, Inc. and David B. Knowles dated August 31, 2012. Reference is made to Exhibit 10.1 to Form 8-K filed with the Commission on August 31, 2012.*
10(l)
Non-Disclosure and Non-Competition Agreement between Myers Industries, Inc. and David B. Knowles dated June 19, 2009. Reference is made to Exhibit 10.2 to Form 8-K filed with the Commission on June 22, 2009.*
10(m)
Amendment to Myers Industries, Inc. Executive Supplemental Retirement Plan (David B. Knowles) effective June 19, 2009. Reference is made to Exhibit 10.3 to Form 8-K filed with the Commission on June 22, 2009.*
10(n)
Severance Agreement between Myers Industries, Inc. and Gregg Branning dated September 1, 2012. Reference is made to Exhibit 10.1 to Form 8-K filed with the Commission on September 4, 2012.*
10(o)
Third Amended and Restated Loan Agreement between Myers Industries, Inc. and JP Morgan Chase Bank, National Association, as Agent, dated as of November 19, 2010. Reference is made to Exhibit 10.1 to Form 8-K filed with the Commission on November 23, 2010.
10(p)
Note Purchase Agreement between Myers Industries, Inc. and the Note Purchasers, dated December 12, 2003, regarding the issuance of $35,000,000 of 6.81% Series 2003-A Senior Notes due December 12, 2013. Reference is made to Exhibit 10(o) to Form 10-K filed with the Commission on March 15, 2004.
10(q)
Third Amendment to the Myers Industries, Inc Executive Supplemental Retirement Plan (John C. Orr) effective June 1, 2011. Reference is made to Exhibit 10.2 to Form 8-K filed with the Commission on March 7, 2011.*
10(r)
Amendment No. 2 to the 2008 Incentive Stock Plan of Myers Industries, Inc. Reference is made to Exhibit 10(u) to Form 10-K filed with the Commission on March 4, 2013.*
10(s)
Non-Competition and Confidentiality Agreement between Myers Industries, Inc. and Gregg Branning dated September 1, 2012.*
10(t)
Performance Bonus Plan of Myers Industries, Inc.  Reference is made to Exhibit 10.1 to Form 8-K filed with the Commission on April 30, 2013.*
14(a)
Myers Industries, Inc. Code of Business Conduct and Ethics. Reference is made to Exhibit 14(a) to Form 10-K/A filed with the Commission on April 1, 2013.
14(b)
Myers Industries, Inc. Code of Ethical Conduct for the Finance Officers and Finance Department Personnel. Reference is made to Exhibit 14(b) to Form 10-K/A filed with the Commission on April 1, 2013.
21
List of Direct and Indirect Subsidiaries, and Operating Divisions, of Myers Industries, Inc. Reference is made to Exhibit 21 to Form 10-K filed with the Commission on March 4, 2013.
31(a)
Certification of John C. Orr, President and Chief Executive Officer of Myers Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)
Certification of Greggory W. Branning, Senior Vice President, Chief Financial Officer and Corporate Secretary of Myers Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
Certifications of John C. Orr, President and Chief Executive Officer, and Gregg W. Branning, Executive Vice President, Chief Financial Officer and Corporate Secretary, of Myers Industries, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following financial information from Myers Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed with the SEC on May 1, 2013, formatted in XBRL includes: (i) Condensed Consolidated Statements of Financial Position at March 31, 2013 and December 31, 2012, (ii) Condensed Consolidated Statements of Income For the fiscal periods ended March 31, 2013 and 2012, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) For the fiscal periods ended March 31, 2013 and 2012, (iv) Condensed Consolidated Statements of Cash Flows for the fiscal periods ended March 31, 2013 and 2012, (v) Condensed Consolidated Statement of Shareholders' Equity for the fiscal period ended March 31, 2013, and (vi) the Notes to Consolidated Financial Statements.
*
Indicates executive compensation plan or arrangement.
 
 
**
Pursuant to Item 601(b)(2) of Regulation S-K, certain exhibits and schedules have been omitted from this filing. The registrant agrees to furnish the Commission on a supplemental basis a copy of any omitted exhibit or schedule.

22
EXECUTION VERSION


NON-COMPETITION AND CONFIDENTIALITY AGREEMENT


THIS NON-COMPETITION and CONFIDENTIALITY AGREEMENT (“Agreement”) is made and entered into this 1st day of September, 2012, by and between Myers Industries, Inc., an Ohio Corporation (the “Company”), and Gregg Branning (the “Employee”).
RECITALS:
1.    The Company is a diversified international manufacturer of polymer products for the industrial, agricultural, automotive, commercial and consumer markets and distributor of tools, equipment and supplies for tire service and under vehicle repair. The Company currently operates through four (4) business segments including Lawn & Garden, Material Handling, Distribution, and Engineered Products (collectively, the “Business Segments”).
2.    Employee is being employed by the Company as its Executive Vice President, Chief Financial Officer and Secretary.
3.    The Company has acquired and established valuable and competitively sensitive information through its business, research, development and practices, which information is described more extensively herein, and is collectively referred to as the “Confidential Information.” To protect the business interests of the Company and the competitive advantage derived from the Confidential Information, it is necessary that such Confidential Information be kept secret and confidential.
4.    The Employee, from and after the commencement of employment with the Company, will be engaged in activities such that the Employee will have extensive access to and become familiar with, and may develop or contribute to, some or all of the Company’s Confidential Information in all of its Business Segments. In addition, Employee may have extensive contact with the customers of the Company and may develop relationships with such customers on behalf of the Company. The Employee recognizes that the Confidential Information and the Company’s customer relationships are vital to the success of the Company and that extensive, irreparable harm would result were such Confidential Information to be disclosed outside the Company or if Employee were to engage in activity which competes with the Company.
NOW, THEREFORE, in view of the above and in consideration for the mutual covenants and promises set forth below, the parties agree as follows:
1. Confidential Information : For purposes of this Agreement, Confidential Information includes, but is not limited to, business plans and strategies, marketing plans and strategies, customer lists, customer purchasing information, customer contact information, product design and development information, methods of operation, technical services, non-public financial information, business development plans and strategies, system analyses, quality control programs and information, computer programs, software and hardware configurations, information regarding the terms of the Company’s relationships with suppliers, pricing information, processes and techniques, creations, innovations, and any other information which the Company may reasonably treat or designate as confidential from time to time. The Company believes that all Confidential Information constitutes trade secret information under applicable law. Employee shall, however, maintain the confidentiality of all Confidential Information whether or not ultimately determined to be a trade secret.
2.      Confidentiality and Non-Competition :
A.
Covenants

(a)      Employee acknowledges that the Company would be irreparably injured and the good will of the Company would be irreparably damaged if Employee were to breach the covenants set forth in this Paragraph 2. Employee further acknowledges that the covenants set forth in this Paragraph 2 are reasonable in scope and duration and do not unreasonably restrict Employee’s association with other business entities, either as an employee or otherwise as set forth herein. For purposes of this Paragraph 2, the Company will include all its Business Segments now or subsequently existing.
(b)      During Employee’s employment with the Company and any time thereafter, except as may be required by law, Employee shall not, directly or indirectly, disclose, disseminate, reveal, divulge, discuss, copy or otherwise use or suffer to be used, any Confidential Information other than in the authorized scope of Employee’s employment with the Company. Upon termination of employment, no matter what the reason for such termination, and at any other time upon the request of the Company, Employee shall immediately return to the Company any and all Confidential Information, and all other materials, property and information in tangible or electronic form concerning the business and affairs of the Company and/or its customers.
(c)      Employee agrees that during Employee’s employment and for a period of three (3) years following the termination of such employment, no matter what the reason for such termination, Employee will not directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, do or suffer any of the following
(i)      Own, manage, control, participate in the ownership, management or control of, be employed or engaged by or otherwise affiliated or associated as a consultant, independent contractor or otherwise with, any person or business entity that competes with the Company in the United States or in any geographic area(s) outside the United States in which the Company does business (the “Restricted Territory”). Without limiting the generality and scope of the foregoing, any business entity or person providing products or services competitive with those of the Company in the Restricted Territory from either inside or outside the Restricted Territory is deemed to be competing within the Restricted Territory. For purposes of this Agreement, the phrase “competes with” means providing services and products which are the same as, similar to, reasonably substitutable for, or otherwise capable of displacing the services and products of the Company. Notwithstanding the foregoing, Employee’s passive investment ownership of not more than one percent (1%) of the stock of any publicly traded corporation shall not be deemed a violation of this provision.
(ii)      Solicit, provide, sell, attempt to provide or sell, or otherwise deliver or supply any products or services which compete with the products or services of the Company to any person or business entity which is or was a customer or prospective customer of the Company at any time during the last thirty-six (36) months of Employee’s employment, nor shall Employee in any way assist any other person or entity in such activity. For purposes of this Agreement, (1) the phrase “products or services which compete with the products or services of the Company means products or services which are the same as, similar to, reasonably substitutable for, or otherwise capable of displacing the products or services of the Company; and (2) the term “prospective customer” means any person or entity the Company solicited, called on or otherwise specifically identified as a target for the sale of its products or services.
(iii)      Solicit, hire or otherwise engage the services of any person who then currently is, or who at any time during Employee’s employment with the Company was, an employee, consultant or independent contractor of the Company, or otherwise encourage or induce any such person to discontinue his or her relationship with the Company. Employee will not engage in any business relationship with any subcontractor, supplier or service provider of the Company which interferes with the Company’s relationship with such subcontractor, supplier or service provider, or in any way causes such subcontractor, supplier or service provider to reduce, alter, modify or discontinue the business it (they) do(es) with the Company or any of its affiliates.
3.      Inventions : Employee hereby expressly agrees that all research discoveries, inventions and innovations (whether or not reduced to practice or documented), improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether patentable or unpatentable, and whether or not reduced to writing), Confidential Information and copyrightable works, and similar and related information (in whatever form or medium), which (3) either (i) relate to the Company’s or its affiliates’ actual or anticipated business, research and development or existing or future products or services or (ii) result from or are suggested by any work performed by the Employee for the Company or its affiliates and (3) are conceived, developed, made or contributed to in whole or in part by the Employee during his employment (“Work Product”) shall be and remain the sole and exclusive property of the Company or such affiliate.
(ii)      Work Made for Hire . The Employee acknowledges that, unless otherwise agreed in writing by the Company, all Work Product eligible for any form of copyright, trademark or patent protection made or contributed to in whole or in part by the Employee within the scope of Employee’s employment by the company during the period of Employee’s employment with the Company shall be deemed a “work made for hire” and shall be owned by the Company or its affiliates, as applicable.
(iii)      Assignment of Proprietary Rights . The Employee hereby assigns, transfers and conveys to the Company, and shall assign, transfer and convey to the Company, all right, title and interest in and to all inventions, ideas, improvements, designs, processes, patent rights, copyrights, trademarks, service marks, trade names, trade secrets, trade dress, data, discoveries and other proprietary assets and proprietary rights in and of the Work Product (the “Proprietary Rights”) for the Company’s exclusive ownership and use, together with all rights to sue and recover for past and future infringement or misappropriation thereof provided that if an affiliate of the Company is the owner thereof; such assignment, transfer and conveyance shall be made to such affiliate, which shall enjoy exclusive ownership and use, together with all rights to sue and recover for past and future infringement or misappropriation thereof.
(iv)      Further Instruments . At the request of the Company (or its affiliates, as the case may be), at all times during Employee’s employment with the Company and thereafter, the Employee will promptly and fully assist the Company (or its affiliates, as the case may be) in effecting the purpose of the foregoing assignment, including but not limited to the further acts of executing any and all documents necessary to secure for the Company (or its affiliates, as the case may be) such Proprietary Rights and other rights to all Work Product and all confidential information related thereto, providing cooperation and giving testimony.
(v)      Inapplicability of Section 3(d) In Certain Circumstances . The Company expressly acknowledges and agrees that, and the Employee is hereby advised that, this Section 3(d) does not apply to any invention for which no equipment, supplies, facilities, trade secret information or Confidential Information of the Company or its affiliates was used and which was developed entirely on the Employee’s own time, unless (3) the invention relates to the business of the Company or its affiliates, or to the Company’s or its affiliates’ actual or demonstrably anticipated research or development or (3) the invention results from or is suggested by any work performed or observed by the Employee for the Company or any of its affiliates.
4.      Remedies : Employee acknowledges that the restrictions contained in paragraphs 2 and 3 of this Agreement are reasonable in light of Employee’s position with the Company and are necessary to protect the Company from unfair competitive harm. Employee further acknowledges that any breach of this Agreement will result in immediate irreparable harm to the Company and that the Company shall be entitled to immediate injunctive relief upon any such breach, in addition to all other legal and equitable remedies the Company may have. This Agreement is to be construed as separate and independent from any other obligations and any claim by Employee asserted against the Company and shall not constitute a defense to the enforcement of this Agreement. In the event any court determines that the restrictions set forth herein are unreasonable or unenforceable for any reason, the court will enforce such restrictions to the fullest extent permitted by law.
5.      Position of Employment : Employee expressly acknowledges that the obligations contained in paragraphs 2 and 3 of this Agreement shall remain in full force and effect during Employee’s employment in any position with the Company, with respect to any Confidential Information of the Company.
6.      Validity : In the event any provision of this Agreement, or portion thereof, is held by a court of competent jurisdiction to be unreasonable, arbitrary, or against public policy, then such provision, or portion thereof, shall be enforced against the Employee to the extent the court deems to be reasonable or in accordance with public policy. In the event any provision of this Agreement shall for any reason be wholly invalid, or unenforceable in any respect, such invalidity shall not affect the validity of any remaining portion which shall remain in full force and effect as if the invalid portion was never part of this Agreement.
7.      Miscellaneous : Employee acknowledges that the Employee has carefully read this entire Agreement and fully agrees with and understands all of the provisions the hereof. This Agreement supersedes all prior agreements between the Company and the Employee regarding the subject matter of this Agreement and constitutes the entire agreement between the parties with respect to such subject matter. The Employee further agrees that in executing this Agreement, the Employee has not relied on any written or oral representations, promises, conditions, or understandings of the Company, express or implied, except as set forth herein. This Agreement may not be amended or modified other than in writing signed by the parties. This Agreement and any disputes arising thereunder shall be governed by the laws of the State of Ohio without regard to any State’s choice of law, rules or principles. Employee and the Company expressly agree that any legal action arising out of or related to this Agreement will be brought exclusively in the state or federal courts located in Summit County, Ohio, and each party expressly consents to the jurisdiction of such courts and waives any and all objections to the jurisdiction or venue thereof. This Agreement may be assigned to any successor-in-interest to the business of the Company without the consent of Employee, but may not be assigned by Employee to any third party. This Agreement is not a contract of employment for any definite period and Employee acknowledges that Employee’s employment with the Company is terminable at-will.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement as of the date first set forth above.



Date: _September 1, 2012__________
Myers Industries, Inc.


By: _/s/ John C. Orr_______________________
   




Date: _September 1, 2012___________
Employee


Signature: _/s/ Greggory W. Branning________

Print Name: Gregg Branning









7268294 v1
Exhibit 31 (a)
Certification Per Section 302 of the Sarbanes-Oxley Act of 2002
I, John C. Orr, certify that:
1. I have reviewed the quarterly report on Form 10-Q of Myers Industries, Inc. for the period ended March 31, 2013 which this certification accompanies;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:
May 1, 2013
/s/ John C. Orr
 
 
John C. Orr, President and
Chief Executive Officer


Exhibit 31 (b)
Certification Per Section 302 of the Sarbanes-Oxley Act of 2002
I, Greggory W. Branning, certify that:
1. I have reviewed the quarterly report on Form 10-Q of Myers Industries, Inc. for the period ended March 31, 2013 which this certification accompanies;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:
May 1, 2013
/s/ Greggory W. Branning
 
 
Greggory W. Branning, Senior Vice President, Chief Financial Officer and Corporate Secretary


Exhibit 32
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Myers Industries, Inc. (the Company) on Form 10-Q for the period ended March 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John C. Orr, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and to my knowledge:
(1) The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2013 which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated:
May 1, 2013
/s/ John C. Orr
 
 
John C. Orr, President and
Chief Executive Officer


Exhibit 32
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Myers Industries, Inc. (the Company) on Form 10-Q for the period ended March 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Greggory W. Branning, Senior Vice President, Chief Financial Officer and Corporate Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and to my knowledge:
(1) The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2013 which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated:
May 1, 2013
/s/ Greggory W. Branning
 
 
Greggory W. Branning, Senior Vice President, Chief Financial Officer and Corporate Secretary

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.