þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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34-0514850
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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3637 Ridgewood Road, Fairlawn, Ohio
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44333
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(Address of Principal Executive Offices)
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(ZIP Code)
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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PAGE
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Exhibit 3.1
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Exhibit 31.1
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|
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Exhibit 31.2
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Exhibit 32
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EX-101 INSTANCE DOCUMENT
|
|
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EX-101 SCHEMA DOCUMENT
|
|
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EX-101 CALCULATION LINKBASE DOCUMENT
|
|
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EX-101 DEFINITION LINKBASE DOCUMENT
|
|
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EX-101 LABEL LINKBASE DOCUMENT
|
|
|
EX-101 PRESENTATION LINKBASE DOCUMENT
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Unaudited
(In thousands, except per share data)
|
||||||||||||||
Net sales
|
$
|
560,858
|
|
|
$
|
645,735
|
|
|
$
|
1,718,206
|
|
|
$
|
1,819,640
|
|
Cost of sales
|
470,101
|
|
|
553,771
|
|
|
1,462,531
|
|
|
1,574,269
|
|
||||
Selling, general and administrative expenses
|
64,842
|
|
|
65,536
|
|
|
195,482
|
|
|
181,647
|
|
||||
Restructuring expense
|
2,649
|
|
|
1,078
|
|
|
10,530
|
|
|
4,583
|
|
||||
Asset impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
104
|
|
||||
Operating income
|
23,266
|
|
|
25,350
|
|
|
49,663
|
|
|
59,037
|
|
||||
Interest expense
|
2,618
|
|
|
1,433
|
|
|
7,288
|
|
|
6,112
|
|
||||
Bridge financing fees
|
18,750
|
|
|
—
|
|
|
18,750
|
|
|
—
|
|
||||
Foreign currency transaction (gains) losses
|
857
|
|
|
(28
|
)
|
|
3,097
|
|
|
2,120
|
|
||||
Other (income) expense, net
|
(335
|
)
|
|
(64
|
)
|
|
(900
|
)
|
|
(478
|
)
|
||||
Gain on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(1,290
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before taxes
|
1,376
|
|
|
24,009
|
|
|
22,718
|
|
|
51,283
|
|
||||
Provision (benefit) for U.S. and foreign income taxes
|
10,344
|
|
|
4,662
|
|
|
18,801
|
|
|
12,657
|
|
||||
Income (loss) from continuing operations
|
(8,968
|
)
|
|
19,347
|
|
|
3,917
|
|
|
38,626
|
|
||||
Income (loss) from discontinued operations, net of tax
|
(18
|
)
|
|
(23
|
)
|
|
(86
|
)
|
|
2,979
|
|
||||
Net income (loss)
|
(8,986
|
)
|
|
19,324
|
|
|
3,831
|
|
|
41,605
|
|
||||
Noncontrolling interests
|
(343
|
)
|
|
(233
|
)
|
|
(890
|
)
|
|
(584
|
)
|
||||
Net income (loss) attributable to A. Schulman, Inc.
|
(9,329
|
)
|
|
19,091
|
|
|
2,941
|
|
|
41,021
|
|
||||
Convertible special stock dividends
|
(563
|
)
|
|
—
|
|
|
(563
|
)
|
|
—
|
|
||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
(9,892
|
)
|
|
$
|
19,091
|
|
|
$
|
2,378
|
|
|
$
|
41,021
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
29,219
|
|
|
29,081
|
|
|
29,125
|
|
|
29,052
|
|
||||
Diluted
|
29,219
|
|
|
29,375
|
|
|
29,547
|
|
|
29,300
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share available to A. Schulman, Inc. common stockholders
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations
|
$
|
(0.34
|
)
|
|
$
|
0.66
|
|
|
$
|
0.08
|
|
|
$
|
1.31
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
(0.34
|
)
|
|
$
|
0.66
|
|
|
$
|
0.08
|
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share available to A. Schulman, Inc. common stockholders
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations
|
$
|
(0.34
|
)
|
|
$
|
0.65
|
|
|
$
|
0.08
|
|
|
$
|
1.30
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
(0.34
|
)
|
|
$
|
0.65
|
|
|
$
|
0.08
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends per common share
|
$
|
0.205
|
|
|
$
|
0.200
|
|
|
$
|
0.615
|
|
|
$
|
0.600
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Unaudited
(In thousands)
|
||||||||||||||
Net income (loss)
|
$
|
(8,986
|
)
|
|
$
|
19,324
|
|
|
$
|
3,831
|
|
|
$
|
41,605
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gains (losses)
|
(7,786
|
)
|
|
(1,290
|
)
|
|
(65,892
|
)
|
|
15,076
|
|
||||
Defined benefit retirement plans, net of tax
|
429
|
|
|
78
|
|
|
1,364
|
|
|
312
|
|
||||
Other comprehensive income (loss)
|
(7,357
|
)
|
|
(1,212
|
)
|
|
(64,528
|
)
|
|
15,388
|
|
||||
Comprehensive income (loss)
|
(16,343
|
)
|
|
18,112
|
|
|
(60,697
|
)
|
|
56,993
|
|
||||
Less: comprehensive income (loss) attributable to noncontrolling interests
|
282
|
|
|
225
|
|
|
768
|
|
|
462
|
|
||||
Comprehensive income (loss) attributable to
A. Schulman, Inc. |
$
|
(16,625
|
)
|
|
$
|
17,887
|
|
|
$
|
(61,465
|
)
|
|
$
|
56,531
|
|
|
May 31,
2015 |
|
August 31,
2014 |
||||
|
Unaudited
(In thousands)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
107,043
|
|
|
$
|
135,493
|
|
Restricted cash
|
378,509
|
|
|
—
|
|
||
Accounts receivable, less allowance for doubtful accounts of $9,537 at May 31, 2015 and $10,844 at August 31, 2014
|
357,688
|
|
|
384,444
|
|
||
Inventories
|
270,227
|
|
|
292,141
|
|
||
Prepaid expenses and other current assets
|
38,867
|
|
|
40,473
|
|
||
Total current assets
|
1,152,334
|
|
|
852,551
|
|
||
Property, plant and equipment, at cost:
|
|
|
|
||||
Land and improvements
|
25,568
|
|
|
28,439
|
|
||
Buildings and leasehold improvements
|
143,002
|
|
|
160,858
|
|
||
Machinery and equipment
|
372,030
|
|
|
398,563
|
|
||
Furniture and fixtures
|
31,896
|
|
|
41,255
|
|
||
Construction in progress
|
23,015
|
|
|
16,718
|
|
||
Gross property, plant and equipment
|
595,511
|
|
|
645,833
|
|
||
Accumulated depreciation
|
358,979
|
|
|
391,912
|
|
||
Net property, plant and equipment
|
236,532
|
|
|
253,921
|
|
||
Deferred charges and other noncurrent assets
|
83,149
|
|
|
65,079
|
|
||
Goodwill
|
191,489
|
|
|
202,299
|
|
||
Intangible assets, net
|
119,508
|
|
|
138,634
|
|
||
Total assets
|
$
|
1,783,012
|
|
|
$
|
1,512,484
|
|
LIABILITIES AND EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
293,203
|
|
|
$
|
314,957
|
|
U.S. and foreign income taxes payable
|
7,350
|
|
|
6,385
|
|
||
Accrued payroll, taxes and related benefits
|
46,513
|
|
|
54,199
|
|
||
Other accrued liabilities
|
78,558
|
|
|
46,054
|
|
||
Short-term debt
|
14,290
|
|
|
31,748
|
|
||
Total current liabilities
|
439,914
|
|
|
453,343
|
|
||
Long-term debt
|
607,585
|
|
|
339,546
|
|
||
Pension plans
|
110,498
|
|
|
129,949
|
|
||
Deferred income taxes
|
20,681
|
|
|
23,826
|
|
||
Other long-term liabilities
|
25,571
|
|
|
29,369
|
|
||
Total liabilities
|
1,204,249
|
|
|
976,033
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $1 par value, authorized - 75,000 shares, issued - 48,367 shares at May 31, 2015 and 48,185 shares at August 31, 2014
|
48,367
|
|
|
48,185
|
|
||
Convertible special stock, no par value
|
120,296
|
|
|
—
|
|
||
Additional paid-in capital
|
274,138
|
|
|
268,545
|
|
||
Accumulated other comprehensive income (loss)
|
(81,097
|
)
|
|
(16,691
|
)
|
||
Retained earnings
|
591,781
|
|
|
606,898
|
|
||
Treasury stock, at cost, 19,078 shares at May 31, 2015 and 18,973 shares at August 31, 2014
|
(383,148
|
)
|
|
(379,894
|
)
|
||
Total A. Schulman, Inc.’s stockholders’ equity
|
570,337
|
|
|
527,043
|
|
||
Noncontrolling interests
|
8,426
|
|
|
9,408
|
|
||
Total equity
|
578,763
|
|
|
536,451
|
|
||
Total liabilities and equity
|
$
|
1,783,012
|
|
|
$
|
1,512,484
|
|
|
Nine months ended May 31,
|
||||||
|
2015
|
|
2014
|
||||
|
Unaudited
(In thousands)
|
||||||
Operating from continuing and discontinued operations:
|
|
|
|
||||
Net income
|
$
|
3,831
|
|
|
$
|
41,605
|
|
Adjustments to reconcile net income to net cash provided from (used in) operating activities:
|
|
|
|
||||
Depreciation
|
26,481
|
|
|
24,751
|
|
||
Amortization
|
11,899
|
|
|
10,308
|
|
||
Bridge financing fees
|
18,750
|
|
|
—
|
|
||
Deferred tax provision (benefit)
|
(1,143
|
)
|
|
(3,182
|
)
|
||
Pension, postretirement benefits and other compensation
|
8,318
|
|
|
9,157
|
|
||
Restricted stock compensation - CEO transition costs, net of cash
|
4,789
|
|
|
—
|
|
||
Asset impairment
|
—
|
|
|
104
|
|
||
Gain on sale of assets from discontinued operations
|
—
|
|
|
(3,344
|
)
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(13,610
|
)
|
|
(26,048
|
)
|
||
Inventories
|
(13,309
|
)
|
|
(15,330
|
)
|
||
Accounts payable
|
9,599
|
|
|
2,847
|
|
||
Income taxes
|
2,598
|
|
|
204
|
|
||
Accrued payroll and other accrued liabilities
|
4,776
|
|
|
260
|
|
||
Other assets and long-term liabilities
|
(6,698
|
)
|
|
(6,296
|
)
|
||
Net cash provided from (used in) operating activities
|
56,281
|
|
|
35,036
|
|
||
Investing from continuing and discontinued operations:
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(32,662
|
)
|
|
(24,126
|
)
|
||
Investment in equity investees
|
(12,456
|
)
|
|
—
|
|
||
Proceeds from the sale of assets
|
1,411
|
|
|
5,255
|
|
||
Restricted cash
|
(3,509
|
)
|
|
—
|
|
||
Business acquisitions, net of cash
|
(6,698
|
)
|
|
(115,624
|
)
|
||
Net cash provided from (used in) investing activities
|
(53,914
|
)
|
|
(134,495
|
)
|
||
Financing from continuing and discontinued operations:
|
|
|
|
||||
Cash dividends paid to common stockholders
|
(18,058
|
)
|
|
(17,717
|
)
|
||
Increase (decrease) in short-term debt
|
(12,995
|
)
|
|
3,747
|
|
||
Borrowings on long-term debt
|
255,196
|
|
|
703,141
|
|
||
Repayments on long-term debt including current portion
|
(353,647
|
)
|
|
(609,501
|
)
|
||
Payment of debt issuance costs
|
—
|
|
|
(1,782
|
)
|
||
Noncontrolling interests' contributions (distributions)
|
(1,750
|
)
|
|
—
|
|
||
Issuances of stock, common and treasury
|
231
|
|
|
403
|
|
||
Issuances of convertible special stock, net
|
120,296
|
|
|
—
|
|
||
Redemptions of common stock
|
(4,999
|
)
|
|
(361
|
)
|
||
Purchases of treasury stock
|
(3,335
|
)
|
|
(1,116
|
)
|
||
Net cash provided from (used in) financing activities
|
(19,061
|
)
|
|
76,814
|
|
||
Effect of exchange rate changes on cash
|
(11,756
|
)
|
|
(605
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(28,450
|
)
|
|
(23,250
|
)
|
||
Cash and cash equivalents at beginning of period
|
135,493
|
|
|
134,054
|
|
||
Cash and cash equivalents at end of period
|
$
|
107,043
|
|
|
$
|
110,804
|
|
|
|
|
|
||||
Non-cash Activity:
|
|||||||
Senior Notes funding held in restricted cash
|
$
|
375,000
|
|
|
$
|
—
|
|
Unpaid debt issuance costs
|
$
|
11,116
|
|
|
$
|
—
|
|
(1)
|
GENERAL
|
(2)
|
BUSINESS ACQUISITIONS
|
|
|
As of June 1, 2015
|
||
|
|
(In thousands)
|
||
Accounts receivable
|
|
$
|
72,926
|
|
Inventories
|
|
44,300
|
|
|
Prepaid expenses and other current assets
|
|
7,755
|
|
|
Property, plant and equipment
|
|
81,551
|
|
|
Intangible assets
|
|
321,900
|
|
|
Other long-term assets
|
|
3,967
|
|
|
Total assets acquired
|
|
$
|
532,399
|
|
|
|
|
||
Accounts payable
|
|
32,278
|
|
|
Accrued liabilities
|
|
10,517
|
|
|
Deferred income taxes
|
|
124,067
|
|
|
Other long-term liabilities
|
|
1,265
|
|
|
Total liabilities assumed
|
|
$
|
168,127
|
|
Identifiable net assets acquired
|
|
$
|
364,272
|
|
Goodwill
|
|
437,628
|
|
|
Net assets acquired
|
|
$
|
801,900
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Unaudited
(In thousands, except per share data)
|
||||||||||||||
Net sales
|
$
|
688,823
|
|
|
$
|
753,458
|
|
|
$
|
2,095,541
|
|
|
$
|
2,142,810
|
|
Net income available to A. Schulman, Inc. common stockholders
|
$
|
6,393
|
|
|
$
|
14,711
|
|
|
$
|
2,504
|
|
|
$
|
(9,999
|
)
|
Net income per share of common stock attributable to A. Schulman, Inc. - diluted
|
$
|
0.22
|
|
|
$
|
0.50
|
|
|
$
|
0.08
|
|
|
$
|
(0.34
|
)
|
•
|
Citadel acquired The Composites Group (“TCG”) in November of 2014. For purposes of the pro forma information disclosed above, the TCG acquisition was included as if the acquisition date was as of the earliest presented period.
|
•
|
Additional depreciation and amortization expenses that would have been recognized assuming fair value adjustments to the existing Citadel assets acquired and liabilities assumed, including intangible assets, fixed assets and expense associated with the fair value step-up of inventory acquired.
|
•
|
Increased interest expense due to additional borrowings to fund the acquisition.
|
•
|
Adjustment of valuation allowances associated with US deferred tax assets.
|
•
|
Acquisition-related costs of
$4.9 million
, which were included in the Company’s results of operations for the
nine months ended May 31, 2015
.
|
•
|
Costs associated with the Bridge Financing discussed in Note 4 of this Form 10-Q of
$18.8 million
, which were expensed during the
three months ended
May 31, 2015
.
|
|
|
As of July 1, 2014
|
||
|
|
(In thousands)
|
||
Accounts receivable
|
|
$
|
27,850
|
|
Inventories
|
|
12,781
|
|
|
Prepaid expenses and other current assets
|
|
553
|
|
|
Property, plant and equipment
|
|
20,049
|
|
|
Intangible assets
|
|
26,985
|
|
|
Total assets acquired
|
|
$
|
88,218
|
|
|
|
|
||
Accounts payable
|
|
15,192
|
|
|
Accrued payroll, taxes and related benefits
|
|
1,690
|
|
|
Other accrued liabilities
|
|
951
|
|
|
Other long-term liabilities
|
|
181
|
|
|
Total liabilities assumed
|
|
$
|
18,014
|
|
Identifiable net assets acquired
|
|
$
|
70,204
|
|
Goodwill
|
|
20,796
|
|
|
Net assets acquired
|
|
$
|
91,000
|
|
|
Three months ended May 31, 2014
|
|
Nine months ended May 31, 2014
|
||||
|
Unaudited
(In thousands, except per share data)
|
||||||
Net sales
|
$
|
688,334
|
|
|
$
|
1,938,731
|
|
Net income available to A. Schulman, Inc. common stockholders
|
$
|
21,715
|
|
|
$
|
46,067
|
|
Net income per share of common stock attributable to A. Schulman, Inc. - diluted
|
$
|
0.74
|
|
|
$
|
1.57
|
|
Transaction Description
|
Date of Transaction
|
|
Purchase
Consideration
(In millions)
|
|
Segment
|
||
Perrite Group
|
September 2, 2013
|
|
$
|
51.3
|
|
|
EMEA and APAC
|
Network Polymers, Inc.
|
December 2, 2013
|
|
$
|
49.2
|
|
|
USCAN
|
Prime Colorants
|
December 31, 2013
|
|
$
|
15.1
|
|
|
USCAN
|
Compco Pty. Ltd.
|
September 2, 2014
|
|
$
|
6.7
|
|
|
APAC
|
(3)
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
|
EMEA
|
|
USCAN
|
(1)
|
LATAM
|
(1)
|
APAC
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance as of August 31, 2014
|
$
|
85,957
|
|
|
$
|
102,735
|
|
|
$
|
12,944
|
|
|
$
|
663
|
|
|
$
|
202,299
|
|
Acquisitions
|
(109
|
)
|
(2)
|
1,327
|
|
(2)
|
—
|
|
|
407
|
|
|
1,625
|
|
|||||
Translation
|
(11,314
|
)
|
|
—
|
|
|
(956
|
)
|
|
(165
|
)
|
|
(12,435
|
)
|
|||||
Balance as of May 31, 2015
|
$
|
74,534
|
|
|
$
|
104,062
|
|
|
$
|
11,988
|
|
|
$
|
905
|
|
|
$
|
191,489
|
|
|
May 31, 2015
|
|
August 31, 2014
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Customer related
|
$
|
130,626
|
|
|
$
|
(34,035
|
)
|
|
$
|
96,591
|
|
|
$
|
139,990
|
|
|
$
|
(29,088
|
)
|
|
$
|
110,902
|
|
Developed technology
|
18,053
|
|
|
(7,658
|
)
|
|
10,395
|
|
|
19,603
|
|
|
(6,914
|
)
|
|
12,689
|
|
||||||
Registered trademarks and tradenames
|
18,891
|
|
|
(6,369
|
)
|
|
12,522
|
|
|
20,945
|
|
|
(5,902
|
)
|
|
15,043
|
|
||||||
Total finite-lived intangible assets
|
$
|
167,570
|
|
|
$
|
(48,062
|
)
|
|
$
|
119,508
|
|
|
$
|
180,538
|
|
|
$
|
(41,904
|
)
|
|
$
|
138,634
|
|
|
May 31, 2015
|
|
August 31, 2014
|
||||
|
(in thousands)
|
||||||
Notes payable and other, due within one year
|
$
|
4,290
|
|
|
$
|
18,429
|
|
Current portion of long-term debt
|
10,000
|
|
|
13,319
|
|
||
Short-term debt
|
$
|
14,290
|
|
|
$
|
31,748
|
|
|
|
|
|
||||
Revolving credit loan, LIBOR plus applicable spread, due September 2018
|
$
|
164,174
|
|
|
$
|
105,400
|
|
Senior notes, 6.875%, due June 2023
|
375,000
|
|
|
—
|
|
||
Term loan, due September 2018
|
68,125
|
|
|
180,625
|
|
||
Euro notes, 4.485%, due March 2016
|
—
|
|
|
53,106
|
|
||
Capital leases and other long-term debt
|
286
|
|
|
415
|
|
||
Long-term debt
|
$
|
607,585
|
|
|
$
|
339,546
|
|
•
|
a multicurrency revolving credit facility in the aggregate principal amount of up to
$300 million
(the “Revolving Facility");
|
•
|
a
$200 million
term loan A facility (the "Term Loan A Facility") with quarterly payments due until maturity;
|
•
|
a
$350 million
U.S. term loan B facility (the "U.S. Term Loan B Facility") with quarterly payments due until maturity;
|
•
|
a
€145 million
term loan B facility (the "Euro Term Loan B Facility") with quarterly payments due until maturity; and
|
•
|
an expansion feature allowing the Company to incur additional revolving loans and/or term loans in an aggregate principal amount of up to
$250 million
plus additional amounts that are subject to certain terms and conditions (the "Incremental Facility" and, together with the Revolving Facility, the Term Loan A Facility, the U.S. Term Loan B Facility and the Euro Term Loan B Facility, the "Credit Facility").
|
|
May 31, 2015
|
|
August 31, 2014
|
||||
|
(In thousands)
|
||||||
Existing capacity:
|
|
|
|
||||
Revolving Facility, due September 2018
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Domestic short-term lines of credit
|
—
|
|
|
15,000
|
|
||
Foreign short-term lines of credit
|
47,734
|
|
|
53,520
|
|
||
Total capacity from credit lines
|
$
|
347,734
|
|
|
$
|
368,520
|
|
Availability:
|
|
|
|
||||
Revolving Facility, due September 2018
|
$
|
134,542
|
|
|
$
|
193,909
|
|
Foreign short-term lines of credit
|
41,194
|
|
|
49,250
|
|
||
Total available funds from credit lines
|
$
|
175,736
|
|
|
$
|
243,159
|
|
|
May 31, 2015
|
|
August 31, 2014
|
||||||||||||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||
Assets recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Foreign exchange forward contracts
|
$
|
876
|
|
|
$
|
—
|
|
|
$
|
876
|
|
|
$
|
—
|
|
|
$
|
713
|
|
|
$
|
—
|
|
|
$
|
713
|
|
|
$
|
—
|
|
Liabilities recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign exchange forward contracts
|
$
|
1,550
|
|
|
$
|
—
|
|
|
$
|
1,550
|
|
|
$
|
—
|
|
|
$
|
557
|
|
|
$
|
—
|
|
|
$
|
557
|
|
|
$
|
—
|
|
Liabilities not recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Long-term fixed-rate debt
|
$
|
382,268
|
|
|
$
|
—
|
|
|
$
|
382,268
|
|
|
$
|
—
|
|
|
$
|
58,882
|
|
|
$
|
—
|
|
|
$
|
58,882
|
|
|
$
|
—
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1,093
|
|
|
$
|
970
|
|
|
$
|
3,516
|
|
|
$
|
2,878
|
|
Interest cost
|
1,036
|
|
|
1,370
|
|
|
3,299
|
|
|
4,059
|
|
||||
Expected return on plan assets
|
(435
|
)
|
|
(461
|
)
|
|
(1,354
|
)
|
|
(1,360
|
)
|
||||
Actuarial loss (gain) and amortization of prior service cost (credit), net
|
692
|
|
|
359
|
|
|
2,213
|
|
|
1,063
|
|
||||
Net periodic pension benefit cost
|
$
|
2,386
|
|
|
$
|
2,238
|
|
|
$
|
7,674
|
|
|
$
|
6,640
|
|
|
|
|
|
|
|
|
|
||||||||
Other postretirement benefit plan:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Interest cost
|
110
|
|
|
123
|
|
|
330
|
|
|
369
|
|
||||
Actuarial loss (gain) and amortization of prior service cost (credit), net
|
(135
|
)
|
|
(139
|
)
|
|
(406
|
)
|
|
(419
|
)
|
||||
Net periodic postretirement benefit cost (credit)
|
$
|
(24
|
)
|
|
$
|
(15
|
)
|
|
$
|
(73
|
)
|
|
$
|
(47
|
)
|
|
Common
Stock ($1 par value)
|
|
Convertible Special Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Non-controlling
Interests
|
|
Total
Equity
|
||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||||
Balance as of September 1, 2014
|
$
|
48,185
|
|
|
$
|
—
|
|
|
$
|
268,545
|
|
|
$
|
(16,691
|
)
|
|
$
|
606,898
|
|
|
$
|
(379,894
|
)
|
|
$
|
9,408
|
|
|
$
|
536,451
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
(64,406
|
)
|
|
2,941
|
|
|
|
|
768
|
|
|
(60,697
|
)
|
||||||||||||
Cash dividends paid, $0.615 per share
|
|
|
|
|
|
|
|
|
(18,058
|
)
|
|
|
|
|
|
(18,058
|
)
|
||||||||||||||
Cash distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,750
|
)
|
|
(1,750
|
)
|
||||||||||||||
Purchase of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(3,335
|
)
|
|
|
|
(3,335
|
)
|
||||||||||||||
Issuance of treasury stock
|
|
|
|
|
86
|
|
|
|
|
|
|
81
|
|
|
|
|
167
|
|
|||||||||||||
Stock options exercised
|
3
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
||||||||||||
Restricted stock issued, net of forfeitures
|
329
|
|
|
|
|
(329
|
)
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||
Redemption of common stock to cover tax withholdings
|
(150
|
)
|
|
|
|
(4,849
|
)
|
|
|
|
|
|
|
|
|
|
(4,999
|
)
|
|||||||||||||
Amortization of restricted stock
|
|
|
|
|
10,624
|
|
|
|
|
|
|
|
|
|
|
10,624
|
|
||||||||||||||
Issuance of convertible special stock, net of issuance costs
|
|
|
120,296
|
|
|
|
|
|
|
|
|
|
|
|
|
120,296
|
|
||||||||||||||
Balance as of May 31, 2015
|
$
|
48,367
|
|
|
$
|
120,296
|
|
|
$
|
274,138
|
|
|
$
|
(81,097
|
)
|
|
$
|
591,781
|
|
|
$
|
(383,148
|
)
|
|
$
|
8,426
|
|
|
$
|
578,763
|
|
•
|
senior to the Company’s common stock and to all of the Company’s other capital stock issued in the future, unless the terms of that stock expressly provide that it ranks senior to, or on parity with, the Convertible Special Stock;
|
•
|
on parity with any of the Company’s capital stock issued in the future, the terms of which expressly provide that it will rank on parity with the Convertible Special Stock; and
|
•
|
junior to all of the Company’s capital stock issued in the future, the terms of which expressly provide that such stock will rank senior to the Convertible Special Stock.
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of February 28, 2015
|
$
|
(35,259
|
)
|
|
$
|
(38,542
|
)
|
|
$
|
(73,801
|
)
|
Other comprehensive income (loss) before reclassifications
|
(7,786
|
)
|
|
—
|
|
|
(7,786
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
429
|
|
(2)
|
429
|
|
|||
Net current period other comprehensive income (loss)
|
(7,786
|
)
|
|
429
|
|
|
(7,357
|
)
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(61
|
)
|
|
—
|
|
|
(61
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
(7,725
|
)
|
|
429
|
|
|
(7,296
|
)
|
|||
Balance as of May 31, 2015
|
$
|
(42,984
|
)
|
|
$
|
(38,113
|
)
|
|
$
|
(81,097
|
)
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of August 31, 2014
|
$
|
22,786
|
|
|
$
|
(39,477
|
)
|
|
$
|
(16,691
|
)
|
Other comprehensive income (loss) before reclassifications
|
(65,892
|
)
|
|
—
|
|
|
(65,892
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
1,364
|
|
(2)
|
1,364
|
|
|||
Net current period other comprehensive income (loss)
|
(65,892
|
)
|
|
1,364
|
|
|
(64,528
|
)
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(122
|
)
|
|
—
|
|
|
(122
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
(65,770
|
)
|
|
1,364
|
|
|
(64,406
|
)
|
|||
Balance as of May 31, 2015
|
$
|
(42,984
|
)
|
|
$
|
(38,113
|
)
|
|
$
|
(81,097
|
)
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of February 28, 2014
|
$
|
34,192
|
|
|
$
|
(16,796
|
)
|
|
$
|
17,396
|
|
Other comprehensive income (loss) before reclassifications
|
(1,290
|
)
|
|
—
|
|
|
(1,290
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
78
|
|
(2)
|
78
|
|
|||
Net current period other comprehensive income (loss)
|
(1,290
|
)
|
|
78
|
|
|
(1,212
|
)
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
(1,282
|
)
|
|
78
|
|
|
(1,204
|
)
|
|||
Balance as of May 31, 2014
|
$
|
32,910
|
|
|
$
|
(16,718
|
)
|
|
$
|
16,192
|
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of August 31, 2013
|
$
|
17,712
|
|
|
$
|
(17,030
|
)
|
|
$
|
682
|
|
Other comprehensive income (loss) before reclassifications
|
15,961
|
|
|
—
|
|
|
15,961
|
|
|||
Amounts reclassified to earnings
|
(885
|
)
|
(3)
|
312
|
|
(2)
|
(573
|
)
|
|||
Net current period other comprehensive income (loss)
|
15,076
|
|
|
312
|
|
|
15,388
|
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(122
|
)
|
|
—
|
|
|
(122
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
15,198
|
|
|
312
|
|
|
15,510
|
|
|||
Balance as of May 31, 2014
|
$
|
32,910
|
|
|
$
|
(16,718
|
)
|
|
$
|
16,192
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
Time-based and performance-based restricted stock awards
|
$
|
1,590
|
|
|
$
|
3,161
|
|
|
$
|
5,266
|
|
|
$
|
5,360
|
|
Board of Directors unrestricted awards
|
—
|
|
|
—
|
|
|
630
|
|
|
797
|
|
||||
CEO transition costs
|
—
|
|
|
—
|
|
|
6,167
|
|
|
—
|
|
||||
Total share-based incentive compensation
|
$
|
1,590
|
|
|
$
|
3,161
|
|
|
$
|
12,063
|
|
|
$
|
6,157
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
|
(In thousands)
|
||||||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Basic
|
29,219
|
|
|
29,081
|
|
|
29,125
|
|
|
29,052
|
|
Incremental shares from equity awards
|
—
|
|
|
294
|
|
|
422
|
|
|
248
|
|
Incremental shares from convertible special stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted
|
29,219
|
|
|
29,375
|
|
|
29,547
|
|
|
29,300
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
326,255
|
|
|
$
|
413,788
|
|
|
$
|
1,012,592
|
|
|
$
|
1,189,274
|
|
USCAN
|
137,080
|
|
|
131,645
|
|
|
415,221
|
|
|
336,277
|
|
||||
LATAM
|
44,821
|
|
|
49,754
|
|
|
132,135
|
|
|
148,748
|
|
||||
APAC
|
52,702
|
|
|
50,548
|
|
|
158,258
|
|
|
145,341
|
|
||||
Total net sales to unaffiliated customers
|
$
|
560,858
|
|
|
$
|
645,735
|
|
|
$
|
1,718,206
|
|
|
$
|
1,819,640
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
51,695
|
|
|
$
|
56,798
|
|
|
$
|
145,908
|
|
|
$
|
156,237
|
|
USCAN
|
22,104
|
|
|
23,791
|
|
|
66,478
|
|
|
50,911
|
|
||||
LATAM
|
9,324
|
|
|
4,472
|
|
|
22,075
|
|
|
20,011
|
|
||||
APAC
|
7,771
|
|
|
7,052
|
|
|
22,403
|
|
|
20,202
|
|
||||
Total segment gross profit
|
90,894
|
|
|
92,113
|
|
|
256,864
|
|
|
247,361
|
|
||||
Inventory step-up
|
—
|
|
|
—
|
|
|
(341
|
)
|
|
(1,199
|
)
|
||||
Accelerated depreciation, restructuring and related costs
|
(78
|
)
|
|
(149
|
)
|
|
(674
|
)
|
|
(791
|
)
|
||||
Costs related to acquisitions and integrations
|
(59
|
)
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
||||
Total gross profit
|
$
|
90,757
|
|
|
$
|
91,964
|
|
|
$
|
255,675
|
|
|
$
|
245,371
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
24,716
|
|
|
$
|
23,565
|
|
|
$
|
61,032
|
|
|
$
|
61,537
|
|
USCAN
|
7,982
|
|
|
11,906
|
|
|
25,299
|
|
|
18,603
|
|
||||
LATAM
|
4,654
|
|
|
(649
|
)
|
|
7,531
|
|
|
6,286
|
|
||||
APAC
|
3,972
|
|
|
3,328
|
|
|
10,903
|
|
|
9,870
|
|
||||
Total segment operating income
|
41,324
|
|
|
38,150
|
|
|
104,765
|
|
|
96,296
|
|
||||
Corporate
|
(8,502
|
)
|
|
(9,752
|
)
|
|
(24,992
|
)
|
|
(24,149
|
)
|
||||
Costs related to acquisitions and integrations
|
(3,590
|
)
|
|
(888
|
)
|
|
(7,972
|
)
|
|
(3,377
|
)
|
||||
Restructuring and related costs
|
(5,937
|
)
|
|
(2,160
|
)
|
|
(15,303
|
)
|
|
(8,322
|
)
|
||||
CEO transition costs
|
—
|
|
|
—
|
|
|
(6,167
|
)
|
|
—
|
|
||||
Asset impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
||||
Accelerated depreciation
|
(29
|
)
|
|
—
|
|
|
(327
|
)
|
|
(108
|
)
|
||||
Inventory step-up
|
—
|
|
|
—
|
|
|
(341
|
)
|
|
(1,199
|
)
|
||||
Operating income
|
23,266
|
|
|
25,350
|
|
|
49,663
|
|
|
59,037
|
|
||||
Interest expense
|
(2,618
|
)
|
|
(1,433
|
)
|
|
(7,288
|
)
|
|
(6,112
|
)
|
||||
Bridge financing fees
|
(18,750
|
)
|
|
—
|
|
|
(18,750
|
)
|
|
—
|
|
||||
Foreign currency transaction gains (losses)
|
(857
|
)
|
|
28
|
|
|
(3,097
|
)
|
|
(2,120
|
)
|
||||
Other income (expense), net
|
335
|
|
|
64
|
|
|
900
|
|
|
478
|
|
||||
Gain on early extinguishment of debt
|
—
|
|
|
—
|
|
|
1,290
|
|
|
—
|
|
||||
Income from continuing operations before taxes
|
$
|
1,376
|
|
|
$
|
24,009
|
|
|
$
|
22,718
|
|
|
$
|
51,283
|
|
|
Three months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Custom performance colors
|
$
|
45,305
|
|
|
8
|
%
|
|
$
|
50,212
|
|
|
8
|
%
|
Masterbatch solutions
|
187,927
|
|
|
34
|
|
|
202,273
|
|
|
31
|
|
||
Engineered plastics
|
181,725
|
|
|
32
|
|
|
195,661
|
|
|
30
|
|
||
Specialty powders
|
71,133
|
|
|
13
|
|
|
97,121
|
|
|
15
|
|
||
Distribution services
|
74,768
|
|
|
13
|
|
|
100,468
|
|
|
16
|
|
||
Total consolidated net sales
|
$
|
560,858
|
|
|
100
|
%
|
|
$
|
645,735
|
|
|
100
|
%
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Custom performance colors
|
$
|
136,649
|
|
|
8
|
%
|
|
$
|
140,918
|
|
|
8
|
%
|
Masterbatch solutions
|
568,408
|
|
|
33
|
|
|
564,750
|
|
|
31
|
|
||
Engineered plastics
|
549,072
|
|
|
32
|
|
|
559,399
|
|
|
31
|
|
||
Specialty powders
|
222,722
|
|
|
13
|
|
|
263,931
|
|
|
14
|
|
||
Distribution services
|
241,355
|
|
|
14
|
|
|
290,642
|
|
|
16
|
|
||
Total consolidated net sales
|
$
|
1,718,206
|
|
|
100
|
%
|
|
$
|
1,819,640
|
|
|
100
|
%
|
|
Employee-related Costs
|
|
Other Costs
|
|
Translation Effect
|
|
Total Restructuring Costs
|
||||||||
|
(In thousands)
|
||||||||||||||
Accrual balance as of August 31, 2014
|
$
|
1,745
|
|
|
$
|
371
|
|
|
$
|
(304
|
)
|
|
$
|
1,812
|
|
Fiscal 2015 charges
|
9,734
|
|
|
796
|
|
|
—
|
|
|
10,530
|
|
||||
Fiscal 2015 payments
|
(6,593
|
)
|
|
(852
|
)
|
|
—
|
|
|
(7,445
|
)
|
||||
Translation
|
—
|
|
|
—
|
|
|
(669
|
)
|
|
(669
|
)
|
||||
Accrual balance as of May 31, 2015
|
$
|
4,886
|
|
|
$
|
315
|
|
|
$
|
(973
|
)
|
|
$
|
4,228
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
2,091
|
|
|
$
|
313
|
|
|
$
|
7,710
|
|
|
$
|
938
|
|
USCAN
|
254
|
|
|
96
|
|
|
1,910
|
|
|
754
|
|
||||
LATAM
|
304
|
|
|
669
|
|
|
910
|
|
|
2,815
|
|
||||
APAC
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||
Total restructuring expense
|
$
|
2,649
|
|
|
$
|
1,078
|
|
|
$
|
10,530
|
|
|
$
|
4,583
|
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,372
|
|
Income (loss) from discontinued operations, net of tax
|
$
|
(18
|
)
|
|
$
|
(23
|
)
|
|
$
|
(86
|
)
|
|
$
|
2,979
|
|
•
|
Overview
: From management’s point of view, we discuss the following:
|
◦
|
Summary of our business and the markets in which we operate; and
|
◦
|
Significant events during the current fiscal year.
|
•
|
Results of Operations
: An analysis of our results of operations as reflected in our consolidated financial statements. Throughout this MD&A, the Company provides operating results for continuing operations exclusive of certain items such as costs related to acquisitions and integration, restructuring and related expenses, and asset write-downs, which are considered relevant to aid analysis and understanding of the Company’s results and business trends.
|
•
|
Liquidity and Capital Resources
: An analysis of our cash flows, working capital, debt structure, contractual obligations and other commercial commitments.
|
•
|
Europe, Middle East and Africa (“EMEA”),
|
•
|
United States & Canada (“USCAN”),
|
•
|
Latin America (“LATAM”), and
|
•
|
Asia Pacific (“APAC”).
|
1.
|
Business Acquisitions.
On June 1, 2015, the Company acquired all of the issued and outstanding shares of privately held Citadel, a portfolio company of certain private equity firms, for approximately
$800 million
. Citadel is a leading plastics materials science business that produces engineered composites and engineered plastics for specialty product applications spanning multiple industries including transportation, industrial & construction, consumer, electrical, energy and healthcare & safety. In conjunction with the acquisition of Citadel, the Company raised approximately $1.2 billion through a combination of debt and equity financing. Refer to Notes 2, 4 and 9 of this Form 10-Q for further discussion.
|
2.
|
CEO Transition
. On January 1, 2015, Bernard Rzepka succeeded Joseph M. Gingo as the Company’s President and Chief Executive Officer. On December 12, 2014, Mr. Gingo was re-elected as the Chairman of the Company’s Board of Directors and Mr. Rzepka was elected to the Board.
|
3.
|
Dividend Activities.
In October 2014, the Company increased its regular quarterly cash dividend by 2.5% to $0.205 per common share which reflects the Company's confidence in its ability to generate cash and its long-term growth prospects, along with a continued commitment to shareholders. This continues the Company's history of annual dividend payments that began in 1972.
|
4.
|
APAC Expansion.
In December 2014, the Company announced that it has added equipment in its manufacturing facility in Dongguan, China to accommodate an increase in demand in the masterbatch solutions product family. This new production line will double the current masterbatch solutions production capacity at the facility.
|
5.
|
Restructuring Plans.
In the first nine months of fiscal 2015, the Company announced six restructuring actions that will further optimize its back-office and support functions as well as consolidate its manufacturing footprint. The Company expects to reduce headcount by approximately 200 and realize annual savings of approximately $17.0 million on completion of these activities.
|
6.
|
Share Repurchases.
The Company repurchased
109,422
shares of its common stock during the first quarter of fiscal 2015 at an average price of
$30.46
per share for a total cost of
$3.3 million
.
|
|
Three months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
EMEA
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
322,891
|
|
|
328,784
|
|
|
(5,893
|
)
|
|
(1.8
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
326,255
|
|
|
$
|
413,788
|
|
|
$
|
(87,533
|
)
|
|
(21.2
|
)%
|
|
$
|
(79,707
|
)
|
|
(1.9
|
)%
|
Segment gross profit
|
$
|
51,695
|
|
|
$
|
56,798
|
|
|
$
|
(5,103
|
)
|
|
(9.0
|
)%
|
|
$
|
(11,277
|
)
|
|
10.9
|
%
|
Segment gross profit percentage
|
15.8
|
%
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
24,716
|
|
|
$
|
23,565
|
|
|
$
|
1,151
|
|
|
4.9
|
%
|
|
$
|
(4,905
|
)
|
|
25.7
|
%
|
Price per pound
|
$
|
1.010
|
|
|
$
|
1.259
|
|
|
$
|
(0.249
|
)
|
|
(19.8
|
)%
|
|
$
|
(0.247
|
)
|
|
(0.2
|
)%
|
Segment operating income per pound
|
$
|
0.077
|
|
|
$
|
0.072
|
|
|
$
|
0.005
|
|
|
6.9
|
%
|
|
$
|
(0.015
|
)
|
|
27.8
|
%
|
|
Nine months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
EMEA
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
948,207
|
|
|
947,220
|
|
|
987
|
|
|
0.1
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
1,012,592
|
|
|
$
|
1,189,274
|
|
|
$
|
(176,682
|
)
|
|
(14.9
|
)%
|
|
$
|
(152,888
|
)
|
|
(2.0
|
)%
|
Segment gross profit
|
$
|
145,908
|
|
|
$
|
156,237
|
|
|
$
|
(10,329
|
)
|
|
(6.6
|
)%
|
|
$
|
(20,862
|
)
|
|
6.7
|
%
|
Segment gross profit percentage
|
14.4
|
%
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
61,032
|
|
|
$
|
61,537
|
|
|
$
|
(505
|
)
|
|
(0.8
|
)%
|
|
$
|
(8,624
|
)
|
|
13.2
|
%
|
Price per pound
|
$
|
1.068
|
|
|
$
|
1.256
|
|
|
$
|
(0.188
|
)
|
|
(15.0
|
)%
|
|
$
|
(0.161
|
)
|
|
(2.1
|
)%
|
Segment operating income per pound
|
$
|
0.064
|
|
|
$
|
0.065
|
|
|
$
|
(0.001
|
)
|
|
(1.5
|
)%
|
|
$
|
(0.009
|
)
|
|
12.3
|
%
|
|
Three months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
USCAN
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
142,481
|
|
|
140,989
|
|
|
1,492
|
|
|
1.1
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
137,080
|
|
|
$
|
131,645
|
|
|
$
|
5,435
|
|
|
4.1
|
%
|
|
$
|
(518
|
)
|
|
4.5
|
%
|
Segment gross profit
|
$
|
22,104
|
|
|
$
|
23,791
|
|
|
$
|
(1,687
|
)
|
|
(7.1
|
)%
|
|
$
|
(79
|
)
|
|
(6.8
|
)%
|
Segment gross profit percentage
|
16.1
|
%
|
|
18.1
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
7,982
|
|
|
$
|
11,906
|
|
|
$
|
(3,924
|
)
|
|
(33.0
|
)%
|
|
$
|
(78
|
)
|
|
(32.3
|
)%
|
Price per pound
|
$
|
0.962
|
|
|
$
|
0.934
|
|
|
$
|
0.028
|
|
|
3.0
|
%
|
|
$
|
(0.004
|
)
|
|
3.4
|
%
|
Segment operating income per pound
|
$
|
0.056
|
|
|
$
|
0.084
|
|
|
$
|
(0.028
|
)
|
|
(33.3
|
)%
|
|
$
|
(0.001
|
)
|
|
(32.1
|
)%
|
|
Nine months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
USCAN
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
428,914
|
|
|
381,337
|
|
|
47,577
|
|
|
12.5
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
415,221
|
|
|
$
|
336,277
|
|
|
$
|
78,944
|
|
|
23.5
|
%
|
|
$
|
(1,241
|
)
|
|
23.8
|
%
|
Segment gross profit
|
$
|
66,478
|
|
|
$
|
50,911
|
|
|
$
|
15,567
|
|
|
30.6
|
%
|
|
$
|
(182
|
)
|
|
30.9
|
%
|
Segment gross profit percentage
|
16.0
|
%
|
|
15.1
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
25,299
|
|
|
$
|
18,603
|
|
|
$
|
6,696
|
|
|
36.0
|
%
|
|
$
|
(182
|
)
|
|
37.0
|
%
|
Price per pound
|
$
|
0.968
|
|
|
$
|
0.882
|
|
|
$
|
0.086
|
|
|
9.8
|
%
|
|
$
|
(0.003
|
)
|
|
10.1
|
%
|
Segment operating income per pound
|
$
|
0.059
|
|
|
$
|
0.049
|
|
|
$
|
0.010
|
|
|
20.4
|
%
|
|
$
|
—
|
|
|
20.4
|
%
|
|
Three months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
LATAM
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
33,557
|
|
|
35,034
|
|
|
(1,477
|
)
|
|
(4.2
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
44,821
|
|
|
$
|
49,754
|
|
|
$
|
(4,933
|
)
|
|
(9.9
|
)%
|
|
$
|
(8,536
|
)
|
|
7.2
|
%
|
Segment gross profit
|
$
|
9,324
|
|
|
$
|
4,472
|
|
|
$
|
4,852
|
|
|
108.5
|
%
|
|
$
|
(465
|
)
|
|
118.9
|
%
|
Segment gross profit percentage
|
20.8
|
%
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
4,654
|
|
|
$
|
(649
|
)
|
|
$
|
5,303
|
|
|
n/m
|
|
|
$
|
329
|
|
|
n/m
|
|
Price per pound
|
$
|
1.336
|
|
|
$
|
1.420
|
|
|
$
|
(0.084
|
)
|
|
(5.9
|
)%
|
|
$
|
(0.254
|
)
|
|
12.0
|
%
|
Segment operating income per pound
|
$
|
0.139
|
|
|
$
|
(0.019
|
)
|
|
$
|
0.158
|
|
|
n/m
|
|
|
$
|
0.010
|
|
|
n/m
|
|
|
Nine months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
LATAM
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
96,894
|
|
|
106,154
|
|
|
(9,260
|
)
|
|
(8.7
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
132,135
|
|
|
$
|
148,748
|
|
|
$
|
(16,613
|
)
|
|
(11.2
|
)%
|
|
$
|
(18,001
|
)
|
|
0.9
|
%
|
Segment gross profit
|
$
|
22,075
|
|
|
$
|
20,011
|
|
|
$
|
2,064
|
|
|
10.3
|
%
|
|
$
|
(1,901
|
)
|
|
19.8
|
%
|
Segment gross profit percentage
|
16.7
|
%
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
7,531
|
|
|
$
|
6,286
|
|
|
$
|
1,245
|
|
|
19.8
|
%
|
|
$
|
(350
|
)
|
|
25.4
|
%
|
Price per pound
|
$
|
1.364
|
|
|
$
|
1.401
|
|
|
$
|
(0.037
|
)
|
|
(2.6
|
)%
|
|
$
|
(0.185
|
)
|
|
10.6
|
%
|
Segment operating income per pound
|
$
|
0.078
|
|
|
$
|
0.059
|
|
|
$
|
0.019
|
|
|
32.2
|
%
|
|
$
|
(0.003
|
)
|
|
37.3
|
%
|
|
Three months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
APAC
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
46,177
|
|
|
40,447
|
|
|
5,730
|
|
|
14.2
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
52,702
|
|
|
$
|
50,548
|
|
|
$
|
2,154
|
|
|
4.3
|
%
|
|
$
|
(2,631
|
)
|
|
9.5
|
%
|
Segment gross profit
|
$
|
7,771
|
|
|
$
|
7,052
|
|
|
$
|
719
|
|
|
10.2
|
%
|
|
$
|
(211
|
)
|
|
13.2
|
%
|
Segment gross profit percentage
|
14.7
|
%
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
3,972
|
|
|
$
|
3,328
|
|
|
$
|
644
|
|
|
19.4
|
%
|
|
$
|
(50
|
)
|
|
20.9
|
%
|
Price per pound
|
$
|
1.141
|
|
|
$
|
1.250
|
|
|
$
|
(0.109
|
)
|
|
(8.7
|
)%
|
|
$
|
(0.057
|
)
|
|
(4.2
|
)%
|
Segment operating income per pound
|
$
|
0.086
|
|
|
$
|
0.082
|
|
|
$
|
0.004
|
|
|
4.9
|
%
|
|
$
|
(0.001
|
)
|
|
6.1
|
%
|
|
Nine months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
APAC
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
132,664
|
|
|
113,903
|
|
|
18,761
|
|
|
16.5
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
158,258
|
|
|
$
|
145,341
|
|
|
$
|
12,917
|
|
|
8.9
|
%
|
|
$
|
(5,158
|
)
|
|
12.4
|
%
|
Segment gross profit
|
$
|
22,403
|
|
|
$
|
20,202
|
|
|
$
|
2,201
|
|
|
10.9
|
%
|
|
$
|
(480
|
)
|
|
13.3
|
%
|
Segment gross profit percentage
|
14.2
|
%
|
|
13.9
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
10,903
|
|
|
$
|
9,870
|
|
|
$
|
1,033
|
|
|
10.5
|
%
|
|
$
|
(173
|
)
|
|
12.2
|
%
|
Price per pound
|
$
|
1.193
|
|
|
$
|
1.276
|
|
|
$
|
(0.083
|
)
|
|
(6.5
|
)%
|
|
$
|
(0.039
|
)
|
|
(3.4
|
)%
|
Segment operating income per pound
|
$
|
0.082
|
|
|
$
|
0.087
|
|
|
$
|
(0.005
|
)
|
|
(5.7
|
)%
|
|
$
|
(0.001
|
)
|
|
(4.6
|
)%
|
|
Three months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
Consolidated
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
545,106
|
|
|
545,254
|
|
|
(148
|
)
|
|
—
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
560,858
|
|
|
$
|
645,735
|
|
|
$
|
(84,877
|
)
|
|
(13.1
|
)%
|
|
$
|
(91,392
|
)
|
|
1.0
|
%
|
Operating income
|
$
|
23,266
|
|
|
$
|
25,350
|
|
|
$
|
(2,084
|
)
|
|
(8.2
|
)%
|
|
$
|
(4,468
|
)
|
|
9.4
|
%
|
Total operating income before certain items*
|
$
|
32,822
|
|
|
$
|
28,398
|
|
|
$
|
4,424
|
|
|
15.6
|
%
|
|
$
|
(4,703
|
)
|
|
32.1
|
%
|
Price per pound
|
$
|
1.029
|
|
|
$
|
1.184
|
|
|
$
|
(0.155
|
)
|
|
(13.1
|
)%
|
|
$
|
(0.168
|
)
|
|
1.1
|
%
|
Total operating income per pound before certain items*
|
$
|
0.060
|
|
|
$
|
0.052
|
|
|
$
|
0.008
|
|
|
15.4
|
%
|
|
$
|
(0.009
|
)
|
|
32.7
|
%
|
|
Nine months ended May 31,
|
||||||||||||||||||||
|
|
|
|
|
|
|
Favorable (unfavorable)
|
||||||||||||||
Consolidated
|
2015
|
|
2014
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
1,606,679
|
|
|
1,548,614
|
|
|
58,065
|
|
|
3.7
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
1,718,206
|
|
|
$
|
1,819,640
|
|
|
$
|
(101,434
|
)
|
|
(5.6
|
)%
|
|
$
|
(177,288
|
)
|
|
4.2
|
%
|
Operating income
|
$
|
49,663
|
|
|
$
|
59,037
|
|
|
$
|
(9,374
|
)
|
|
(15.9
|
)%
|
|
$
|
(8,890
|
)
|
|
(0.8
|
)%
|
Total operating income before certain items*
|
$
|
79,773
|
|
|
$
|
72,147
|
|
|
$
|
7,626
|
|
|
10.6
|
%
|
|
$
|
(9,330
|
)
|
|
23.5
|
%
|
Price per pound
|
$
|
1.069
|
|
|
$
|
1.175
|
|
|
$
|
(0.106
|
)
|
|
(9.0
|
)%
|
|
$
|
(0.111
|
)
|
|
0.4
|
%
|
Total operating income per pound before certain items*
|
$
|
0.050
|
|
|
$
|
0.047
|
|
|
$
|
0.003
|
|
|
6.4
|
%
|
|
$
|
(0.005
|
)
|
|
17.0
|
%
|
|
Three months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Custom performance colors
|
$
|
45,305
|
|
|
8
|
%
|
|
$
|
50,212
|
|
|
8
|
%
|
Masterbatch solutions
|
187,927
|
|
|
34
|
|
|
202,273
|
|
|
31
|
|
||
Engineered plastics
|
181,725
|
|
|
32
|
|
|
195,661
|
|
|
30
|
|
||
Specialty powders
|
71,133
|
|
|
13
|
|
|
97,121
|
|
|
15
|
|
||
Distribution services
|
74,768
|
|
|
13
|
|
|
100,468
|
|
|
16
|
|
||
Total consolidated net sales
|
$
|
560,858
|
|
|
100
|
%
|
|
$
|
645,735
|
|
|
100
|
%
|
|
Nine months ended May 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Custom performance colors
|
$
|
136,649
|
|
|
8
|
%
|
|
$
|
140,918
|
|
|
8
|
%
|
Masterbatch solutions
|
568,408
|
|
|
33
|
|
|
564,750
|
|
|
31
|
|
||
Engineered plastics
|
549,072
|
|
|
32
|
|
|
559,399
|
|
|
31
|
|
||
Specialty powders
|
222,722
|
|
|
13
|
|
|
263,931
|
|
|
14
|
|
||
Distribution services
|
241,355
|
|
|
14
|
|
|
290,642
|
|
|
16
|
|
||
Total consolidated net sales
|
$
|
1,718,206
|
|
|
100
|
%
|
|
$
|
1,819,640
|
|
|
100
|
%
|
|
Three months ended May 31,
|
|
Nine months ended May 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
EMEA
|
90
|
%
|
|
87
|
%
|
|
84
|
%
|
|
84
|
%
|
USCAN
|
61
|
%
|
|
67
|
%
|
|
63
|
%
|
|
62
|
%
|
LATAM
|
76
|
%
|
|
68
|
%
|
|
71
|
%
|
|
76
|
%
|
APAC
|
67
|
%
|
|
73
|
%
|
|
65
|
%
|
|
71
|
%
|
Worldwide
|
76
|
%
|
|
77
|
%
|
|
73
|
%
|
|
74
|
%
|
|
Employee-related Costs
|
|
Other Costs
|
|
Translation Effect
|
|
Total Restructuring Costs
|
||||||||
|
(In thousands)
|
||||||||||||||
Accrual balance as of August 31, 2014
|
$
|
1,745
|
|
|
$
|
371
|
|
|
$
|
(304
|
)
|
|
$
|
1,812
|
|
Fiscal 2015 charges
|
9,734
|
|
|
796
|
|
|
—
|
|
|
10,530
|
|
||||
Fiscal 2015 payments
|
(6,593
|
)
|
|
(852
|
)
|
|
—
|
|
|
(7,445
|
)
|
||||
Translation
|
—
|
|
|
—
|
|
|
(669
|
)
|
|
(669
|
)
|
||||
Accrual balance as of May 31, 2015
|
$
|
4,886
|
|
|
$
|
315
|
|
|
$
|
(973
|
)
|
|
$
|
4,228
|
|
|
May 31, 2015
|
|
August 31, 2014
|
|
May 31, 2014
|
Days in receivables
|
57
|
|
55
|
|
54
|
Days in inventory
|
53
|
|
50
|
|
52
|
Days in payables
|
51
|
|
48
|
|
46
|
Total working capital days
|
59
|
|
57
|
|
60
|
|
May 31, 2015
|
|
August 31, 2014
|
|
$ Change
|
|
% Change
|
|||||||
|
(In thousands, except for %’s)
|
|||||||||||||
Cash and cash equivalents
|
$
|
107,043
|
|
|
$
|
135,493
|
|
|
$
|
(28,450
|
)
|
|
(21.0
|
)%
|
Restricted cash
|
$
|
378,509
|
|
|
$
|
—
|
|
|
$
|
378,509
|
|
|
100.0
|
%
|
Working capital, excluding cash and restricted cash
|
$
|
226,868
|
|
|
$
|
263,715
|
|
|
$
|
(36,847
|
)
|
|
(14.0
|
)%
|
Long-term debt
|
$
|
607,585
|
|
|
$
|
339,546
|
|
|
$
|
268,039
|
|
|
78.9
|
%
|
Total debt
|
$
|
621,875
|
|
|
$
|
371,294
|
|
|
$
|
250,581
|
|
|
67.5
|
%
|
Net debt*
|
$
|
136,323
|
|
|
$
|
235,801
|
|
|
$
|
(99,478
|
)
|
|
(42.2
|
)%
|
Total A. Schulman, Inc.’s stockholders’ equity
|
$
|
570,337
|
|
|
$
|
527,043
|
|
|
$
|
43,294
|
|
|
8.2
|
%
|
•
|
a multicurrency revolving credit facility in the aggregate principal amount of up to
$300 million
(the “Revolving Facility");
|
•
|
a
$200 million
term loan A facility (the "Term Loan A Facility") with quarterly payments due until maturity;
|
•
|
a
$350 million
U.S. term loan B facility (the "U.S. Term Loan B Facility") with quarterly payments due until maturity;
|
•
|
a
€145 million
term loan B facility (the "Euro Term Loan B Facility") with quarterly payments due until maturity; and
|
•
|
an expansion feature allowing the Company to incur additional revolving loans and/or term loans in an aggregate principal amount of up to
$250 million
plus additional amounts that are subject to certain terms and conditions (the "Incremental Facility" and, together with the Revolving Facility, the Term Loan A Facility, the U.S. Term Loan B Facility and the Euro Term Loan B Facility, the "Credit Facility").
|
|
May 31, 2015
|
|
August 31, 2014
|
||||
|
(In thousands)
|
||||||
Existing capacity:
|
|
|
|
||||
Revolving Facility, due September 2018
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Domestic short-term lines of credit
|
—
|
|
|
15,000
|
|
||
Foreign short-term lines of credit
|
47,734
|
|
|
53,520
|
|
||
Total capacity from credit lines
|
$
|
347,734
|
|
|
$
|
368,520
|
|
Availability:
|
|
|
|
||||
Revolving Facility, due September 2018
|
$
|
134,542
|
|
|
$
|
193,909
|
|
Foreign short-term lines of credit
|
41,194
|
|
|
49,250
|
|
||
Total available funds from credit lines
|
$
|
175,736
|
|
|
$
|
243,159
|
|
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
|
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Short-Term Debt
|
|
$
|
19,278
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,278
|
|
Long-Term Debt
|
|
—
|
|
|
30,181
|
|
|
218,181
|
|
|
858,612
|
|
|
1,106,974
|
|
|||||
Convertible Special Stock Dividends
|
|
7,500
|
|
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
37,500
|
|
|||||
Interest Payments
|
|
13,300
|
|
|
116,200
|
|
|
124,900
|
|
|
176,700
|
|
|
431,100
|
|
|||||
|
|
$
|
40,078
|
|
|
$
|
161,381
|
|
|
$
|
358,081
|
|
|
$
|
1,035,312
|
|
|
$
|
1,594,852
|
|
•
|
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 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 the integration thereof, joint ventures 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 automotive market as well as other markets served;
|
•
|
further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products;
|
•
|
operating problems with our information systems as a result of system security failures such as viruses, cyber-attacks or other causes;
|
•
|
the impact of the indebtedness incurred to finance the Citadel acquisition;
|
•
|
integration of the business of Citadel with our existing business, including the risk that the integration will be more costly or more time consuming and complex or simply less effective than anticipated;
|
•
|
our ability to achieve the anticipated synergies, cost savings and other benefits from the Citadel acquisition;
|
•
|
transaction and acquisition-related costs incurred in connection with the Citadel acquisition and related transactions; and
|
•
|
substantial time devoted by management to the integration of the Citadel acquisition.
|
(a)
|
Exhibits
|
Exhibit Number
|
|
Exhibit
|
|
|
|
2.1
|
|
Stock Purchase Agreement, dated as of March 15, 2015, by and among A. Schulman, Inc., HGGC Citadel Plastics Holdings, Inc., Citadel Plastics Holdings, LLC (in its capacity as the representative of the holders of securities of the company), and certain other individual persons (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-3 filed with the Commission on April 27, 2015 (Reg. No. 333-203670)).*
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of the Company, as amended (for purposes of Commission reporting compliance only).
|
|
|
|
3.2
|
|
Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 27, 2011).
|
|
|
|
4.1
|
|
Indenture, dated as of May 26, 2015, by and among A. Schulman, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (including the Form of 6.875% Senior Note due 2023) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 28, 2015).
|
|
|
|
4.2
|
|
First Supplemental Indenture, dated as of June 1, 2015, by and among A. Schulman, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 3, 2015).
|
|
|
|
4.3
|
|
Registration Rights Agreement, dated as of May 26, 2015, by and among A. Schulman, Inc., the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the initial purchasers of the Notes ) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on May 28, 2015).
|
|
|
|
4.4
|
|
Joinder to Registration Rights Agreement, dated as of June 1, 2015, by and among A. Schulman, Inc., the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the initial purchasers (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 3, 2015).
|
|
|
|
4.5
|
|
Specimen Certificate for 6.00% Cumulative Perpetual Convertible Special Stock (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 4, 2015).
|
|
|
|
10.1
|
|
Credit Agreement, dated as of June 1, 2015, by and among A. Schulman, Inc., A. Schulman S.a.r.l., and JPMorgan Chase Bank, N.A., as Administrative agent and J.P. Morgan Europe Limited as Global Agent, and the lenders named in the Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 3, 2015).
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
|
|
|
32
|
|
Certifications of Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. 1350.
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
/s/ Joseph J. Levanduski
|
|
Joseph J. Levanduski , Executive Vice President, Chief Financial Officer of A. Schulman, Inc. (Signing on behalf of Registrant as a duly authorized officer of Registrant and signing as the Principal Financial Officer of Registrant)
|
|
Date:
|
July 6, 2015
|
A. SCHULMAN, INC.
|
||||
|
|
|||
By:
|
|
/s/ David C. Minc
|
||
|
|
Name:
|
|
David C. Minc
|
|
|
Title:
|
|
Vice President, Chief Legal Officer and Secretary
|
|
|
|
|
Stock Price
(1)
|
||||||||||||||||||||
Effective Date
|
|
$41.86
|
|
$45.00
|
|
$52.33
|
|
$60.00
|
|
$70.00
|
|
$78.50
|
|
$90.00
|
|
$100.00
|
|
$110.00
|
|
$130.00
|
|
$150.00
|
May 4, 2015
|
|
4.7778
|
|
4.4380
|
|
3.2642
|
|
2.4092
|
|
1.6465
|
|
1.1965
|
|
0.7700
|
|
0.5120
|
|
0.3253
|
|
0.0919
|
|
0.0000
|
May 1, 2016
|
|
4.7778
|
|
4.3185
|
|
3.1413
|
|
2.2920
|
|
1.5445
|
|
1.1100
|
|
0.7041
|
|
0.4619
|
|
0.2882
|
|
0.0735
|
|
0.0000
|
May 1,2017
|
|
4.7778
|
|
4.1886
|
|
2.9952
|
|
2.1429
|
|
1.4071
|
|
0.9899
|
|
0.6105
|
|
0.3898
|
|
0.2346
|
|
0.0471
|
|
0.0000
|
May 1, 2018
|
|
4.7778
|
|
4.0677
|
|
2.8385
|
|
1.9648
|
|
1.2275
|
|
0.8262
|
|
0.4797
|
|
0.2893
|
|
0.1610
|
|
0.0126
|
|
0.0000
|
May 1, 2019
|
|
4.7778
|
|
3.9820
|
|
2.6955
|
|
1.7622
|
|
0.9819
|
|
0.5839
|
|
0.2806
|
|
0.1397
|
|
0.0568
|
|
0.0000
|
|
0.0000
|
May 1, 2020 and thereafter
|
|
4.7778
|
|
4.0322
|
|
2.6400
|
|
1.6467
|
|
0.7155
|
|
0.0000
|
|
0.0000
|
|
0.0000
|
|
0.0000
|
|
0.0000
|
|
0.0000
|
(1)
|
The Stock Prices set forth in the table above shall be adjusted as of any date on which the Conversion Rate is adjusted. The adjusted Stock Prices shall be equal to the Stock Prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares in the table above will be adjusted in the same manner and at the same time as the Conversion Rate as set forth under Section 8.
|
|
|
|
|
|
|
OS
1
|
|
|
|
|
CR
1
= CR
0
|
|
x
|
|
OS
0
|
|
|
CR
0
|
|
=
|
|
the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as the case may be;
|
|
|
|
||
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution, or immediately after the open of business on the Effective Date of such share split or share combination, as the case may be;
|
|
|
|
||
OS
0
|
|
=
|
|
the number of shares of Common Stock outstanding immediately prior to the close of business on the Record Date for such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as the case may be; and
|
|
|
|
||
OS
1
|
|
=
|
|
the number of shares of Common Stock outstanding immediately after giving effect to such dividend or distribution, or such share split or share combination, as the case may be.
|
|
|
|
|
|
|
OS
0
+ X
|
|
|
|
|
CR
1
= CR
0
|
|
x
|
|
OS
0
+ Y
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Conversion Rate in effect immediately prior to the close of business on the Record Date for such distribution;
|
|
|
|
||
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the close of business on the Record Date for such distribution;
|
|
|
|
||
OS
0
|
|
=
|
|
the number of shares of Common Stock outstanding immediately prior to the close of business on the Record Date for such distribution;
|
|
|
|
||
X
|
|
=
|
|
the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
|
|
|
|
||
Y
|
|
=
|
|
the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants,
divided by
the average of the closing sale prices of Common Stock over the 15 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Date of such distribution.
|
|
|
|
|
|
|
SP
0
|
|
|
|
|
CR
1
= CR
0
|
|
x
|
|
SP
0
– FMV
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Conversion Rate in effect immediately prior to the close of business on the Record Date for such distribution;
|
|
|
|
||
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the close of business on the Record Date for such distribution;
|
|
|
|
||
SP
0
|
|
=
|
|
the average of the Closing Sale Prices of Common Stock over the 15 consecutive trading day period ending on, and including, the trading day immediately preceding the Ex-Date for such distribution; and
|
|
|
|
||
FMV
|
|
=
|
|
the fair market value as of the Record Date for such distribution (as determined by the Board) of Distributed Property with respect to each outstanding share of the Common Stock.
|
|
|
|
|
|
|
FMV + MP
0
|
|
|
|
|
CR
1
= CR
0
|
|
x
|
|
MP
0
|
|
|
CR
0
|
|
=
|
|
the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Ex-Date for the SpinOff;
|
|
|
|
||
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Ex-Date for the Spin-Off;
|
|
|
|
||
FMV
|
|
=
|
|
the average of the Closing Sale Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of the Common Stock over the 15 consecutive Trading Day period immediately following, and including, the Ex-Date for the Spin-Off; and
|
|
|
|
||
MP
0
|
|
=
|
|
the average of the Closing Sale Prices of the Common Stock over the 15 consecutive Trading-Day period immediately following, and including, the Ex-Date for the Spin-Off.
|
|
|
|
|
|
|
SP
0
|
|
|
|
|
CR
1
= CR
0
|
|
x
|
|
SP
0
– C
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution;
|
|
|
|
||
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution;
|
|
|
|
||
SP
0
|
|
=
|
|
the average of the Closing Sale Prices of the Common Stock over the 15 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Date for such dividend or distribution; and
|
|
|
|
||
C
|
|
=
|
|
the amount in cash per share of the Common Stock the Corporation distributes to all or substantially all holders of Common Stock; provided that in the case of a regular quarterly cash dividend or distribution, such amount shall only include the amount of such dividend or distribution in excess of the Initial Dividend Threshold.
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Conversion Rate in effect immediately prior to the close of business on the last Trading Day of the 15 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
|
|
|
|
||
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the close of business on the last Trading Day of the 15 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
|
|
|
|
||
AC
|
|
=
|
|
the aggregate value of all cash and any other consideration (as determined by the Board) paid or payable for shares purchased in such tender or exchange offer;
|
|
|
|
||
OS
0
|
|
=
|
|
the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);
|
|
|
|
||
OS
1
|
|
=
|
|
the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and
|
|
|
|
||
SP
1
|
|
=
|
|
the average of the closing sale prices of the Common Stock over the 15 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.
|
(1)
|
Insert if a global security.
|
|
|
|
|
|
Number of Shares of
Convertible Special Stock [ ]
|
|
|
|
|
|
CUSIP No.: 808194 302
|
|
|
ISIN No. US8081943024
|
A. SCHULMAN, INC.
|
||
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
Title:
|
Dated:
|
|
|
WELLS FARGO SHAREOWNER, as Transfer Agent
|
||
|
|
|
By:
|
|
|
|
|
Authorized Signatory
|
Date:
|
|
|
|
|
|
Signature:
|
|
|
Signature
|
|
|
|
(2)
|
Guarantee:
|
|
|
|
|
(2)
|
(Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
|
(3)
|
The Corporation is not required to issue shares of Common Stock until you (a) if required, furnish appropriate endorsements and transfer documents and (b) if required, pay funds equal to interest payable on the next Dividend Payment Date to which such Holder is not entitled.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of A. Schulman, Inc.;
|
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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedure (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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’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 registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
(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 registrant’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:
|
July 6, 2015
|
|
|
|
/s/ Bernard Rzepka
|
|
|
Bernard Rzepka
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of A. Schulman, Inc.;
|
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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedure (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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’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 registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
(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 registrant’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:
|
July 6, 2015
|
|
|
|
/s/ Joseph J. Levanduski
|
|
|
Joseph J. Levanduski
|
|
|
Executive Vice President, Chief Financial Officer
|
(a)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(b)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Bernard Rzepka
|
|
Bernard Rzepka
|
|
President and Chief Executive Officer of A. Schulman, Inc.
|
|
July 6, 2015
|
|
(a)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(b)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Joseph J. Levanduski
|
|
Joseph J. Levanduski
|
|
Executive Vice President, Chief Financial Officer of A. Schulman, Inc.
|
|
July 6, 2015
|
|