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
|
|
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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|
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3637 Ridgewood Road, Fairlawn, Ohio
|
|
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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Legal Proceedings
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||
|
|
|
|
|
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Exhibit 31.1
|
|
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Exhibit 31.2
|
|
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Exhibit 32
|
|
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EX-101 INSTANCE DOCUMENT
|
|
|
EX-101 SCHEMA DOCUMENT
|
|
|
EX-101 CALCULATION LINKBASE DOCUMENT
|
|
|
EX-101 DEFINITION LINKBASE DOCUMENT
|
|
|
EX-101 LABEL LINKBASE DOCUMENT
|
|
|
EX-101 PRESENTATION LINKBASE DOCUMENT
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands, except per share data)
|
||||||||||||||
Net sales
|
$
|
568,678
|
|
|
$
|
591,761
|
|
|
$
|
1,168,678
|
|
|
$
|
1,240,980
|
|
Cost of sales
|
479,492
|
|
|
501,937
|
|
|
978,477
|
|
|
1,046,227
|
|
||||
Selling, general and administrative expenses
|
65,967
|
|
|
71,604
|
|
|
138,342
|
|
|
148,841
|
|
||||
Restructuring expense
|
1,878
|
|
|
2,214
|
|
|
11,422
|
|
|
3,760
|
|
||||
Operating income (loss)
|
21,341
|
|
|
16,006
|
|
|
40,437
|
|
|
42,152
|
|
||||
Interest expense
|
13,107
|
|
|
13,790
|
|
|
26,271
|
|
|
27,408
|
|
||||
Foreign currency transaction (gains) losses
|
1,081
|
|
|
950
|
|
|
1,643
|
|
|
1,679
|
|
||||
Other (income) expense, net
|
674
|
|
|
(269
|
)
|
|
(459
|
)
|
|
(218
|
)
|
||||
Income (loss) before taxes
|
6,479
|
|
|
1,535
|
|
|
12,982
|
|
|
13,283
|
|
||||
Provision (benefit) for U.S. and foreign income taxes
|
1,143
|
|
|
(487
|
)
|
|
4,462
|
|
|
3,764
|
|
||||
Net income (loss)
|
5,336
|
|
|
2,022
|
|
|
8,520
|
|
|
9,519
|
|
||||
Noncontrolling interests
|
(306
|
)
|
|
(430
|
)
|
|
(547
|
)
|
|
(834
|
)
|
||||
Net income (loss) attributable to A. Schulman, Inc.
|
5,030
|
|
|
1,592
|
|
|
7,973
|
|
|
8,685
|
|
||||
Convertible special stock dividends
|
1,875
|
|
|
1,875
|
|
|
3,750
|
|
|
3,750
|
|
||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
3,155
|
|
|
$
|
(283
|
)
|
|
$
|
4,223
|
|
|
$
|
4,935
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
29,394
|
|
|
29,292
|
|
|
29,378
|
|
|
29,257
|
|
||||
Diluted
|
29,503
|
|
|
29,292
|
|
|
29,470
|
|
|
29,455
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share available to A. Schulman, Inc. common stockholders
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.11
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
Diluted
|
$
|
0.11
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends per common share
|
$
|
0.205
|
|
|
$
|
0.205
|
|
|
$
|
0.410
|
|
|
$
|
0.410
|
|
Cash dividends per share of convertible special stock
|
$
|
15.00
|
|
|
$
|
15.00
|
|
|
$
|
30.00
|
|
|
$
|
30.00
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
||||||||||||||
Net income (loss)
|
$
|
5,336
|
|
|
$
|
2,022
|
|
|
$
|
8,520
|
|
|
$
|
9,519
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gains (losses)
|
4,150
|
|
|
(9,243
|
)
|
|
(11,166
|
)
|
|
(20,019
|
)
|
||||
Defined benefit retirement plans, net of tax
|
610
|
|
|
150
|
|
|
1,204
|
|
|
1,165
|
|
||||
Other comprehensive income (loss)
|
4,760
|
|
|
(9,093
|
)
|
|
(9,962
|
)
|
|
(18,854
|
)
|
||||
Comprehensive income (loss)
|
10,096
|
|
|
(7,071
|
)
|
|
(1,442
|
)
|
|
(9,335
|
)
|
||||
Less: comprehensive income (loss) attributable to noncontrolling interests
|
333
|
|
|
(224
|
)
|
|
504
|
|
|
111
|
|
||||
Comprehensive income (loss) attributable to A. Schulman, Inc.
|
$
|
9,763
|
|
|
$
|
(6,847
|
)
|
|
$
|
(1,946
|
)
|
|
$
|
(9,446
|
)
|
|
February 28,
2017 |
|
August 31,
2016 |
||||
|
(In thousands)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
47,861
|
|
|
$
|
35,260
|
|
Restricted cash
|
1,623
|
|
|
8,143
|
|
||
Accounts receivable, less allowance for doubtful accounts of $11,411 at February 28, 2017 and $11,341 at August 31, 2016
|
380,791
|
|
|
376,786
|
|
||
Inventories
|
279,814
|
|
|
263,617
|
|
||
Prepaid expenses and other current assets
|
40,837
|
|
|
40,263
|
|
||
Assets held for sale
|
9,669
|
|
|
—
|
|
||
Total current assets
|
760,595
|
|
|
724,069
|
|
||
Property, plant and equipment, at cost:
|
|
|
|
||||
Land and improvements
|
29,798
|
|
|
32,957
|
|
||
Buildings and leasehold improvements
|
170,485
|
|
|
184,291
|
|
||
Machinery and equipment
|
434,993
|
|
|
447,932
|
|
||
Furniture and fixtures
|
32,720
|
|
|
34,457
|
|
||
Construction in progress
|
25,000
|
|
|
20,431
|
|
||
Gross property, plant and equipment
|
692,996
|
|
|
720,068
|
|
||
Accumulated depreciation
|
401,288
|
|
|
405,246
|
|
||
Net property, plant and equipment
|
291,708
|
|
|
314,822
|
|
||
Deferred charges and other noncurrent assets
|
85,364
|
|
|
88,161
|
|
||
Goodwill
|
257,507
|
|
|
257,773
|
|
||
Intangible assets, net
|
344,622
|
|
|
362,614
|
|
||
Total assets
|
$
|
1,739,796
|
|
|
$
|
1,747,439
|
|
LIABILITIES AND EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
303,160
|
|
|
$
|
280,060
|
|
U.S. and foreign income taxes payable
|
5,783
|
|
|
8,985
|
|
||
Accrued payroll, taxes and related benefits
|
41,039
|
|
|
47,569
|
|
||
Other accrued liabilities
|
66,844
|
|
|
67,704
|
|
||
Short-term debt
|
28,857
|
|
|
25,447
|
|
||
Total current liabilities
|
445,683
|
|
|
429,765
|
|
||
Long-term debt
|
921,312
|
|
|
919,349
|
|
||
Pension plans
|
138,574
|
|
|
145,108
|
|
||
Deferred income taxes
|
56,113
|
|
|
59,013
|
|
||
Other long-term liabilities
|
24,850
|
|
|
25,844
|
|
||
Total liabilities
|
1,586,532
|
|
|
1,579,079
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Convertible special stock, no par value
|
120,289
|
|
|
120,289
|
|
||
Common stock, $1 par value, authorized - 75,000 shares, issued - 48,553 shares at February 28, 2017 and 48,510 shares at August 31, 2016
|
48,553
|
|
|
48,510
|
|
||
Additional paid-in capital
|
277,165
|
|
|
275,115
|
|
||
Accumulated other comprehensive income (loss)
|
(130,640
|
)
|
|
(120,721
|
)
|
||
Retained earnings
|
211,205
|
|
|
219,039
|
|
||
Treasury stock, at cost, 19,066 shares at February 28, 2017 and 19,069 shares at August 31, 2016
|
(382,903
|
)
|
|
(382,963
|
)
|
||
Total A. Schulman, Inc.’s stockholders’ equity
|
143,669
|
|
|
159,269
|
|
||
Noncontrolling interests
|
9,595
|
|
|
9,091
|
|
||
Total equity
|
153,264
|
|
|
168,360
|
|
||
Total liabilities and equity
|
$
|
1,739,796
|
|
|
$
|
1,747,439
|
|
|
Six months ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
|
(In thousands)
|
||||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
8,520
|
|
|
$
|
9,519
|
|
Adjustments to reconcile net income to net cash provided from (used in) operating activities:
|
|
|
|
||||
Depreciation
|
22,215
|
|
|
25,053
|
|
||
Amortization
|
17,644
|
|
|
20,032
|
|
||
Deferred tax provision (benefit)
|
(4,493
|
)
|
|
(2,360
|
)
|
||
Pension, postretirement benefits and other compensation
|
3,361
|
|
|
2,621
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(15,866
|
)
|
|
10,822
|
|
||
Inventories
|
(24,670
|
)
|
|
4,772
|
|
||
Accounts payable
|
40,363
|
|
|
(30,846
|
)
|
||
Income taxes
|
(4,639
|
)
|
|
(1,491
|
)
|
||
Accrued payroll and other accrued liabilities
|
(4,311
|
)
|
|
(5,773
|
)
|
||
Other assets and long-term liabilities
|
2,025
|
|
|
(1,712
|
)
|
||
Net cash provided from (used in) operating activities
|
40,149
|
|
|
30,637
|
|
||
Investing activities
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(24,505
|
)
|
|
(20,365
|
)
|
||
Proceeds from the sale of assets
|
478
|
|
|
843
|
|
||
Other investing activities
|
125
|
|
|
—
|
|
||
Net cash provided from (used in) investing activities
|
(23,902
|
)
|
|
(19,522
|
)
|
||
Financing activities:
|
|
|
|
||||
Cash dividends paid to special stockholders
|
(3,750
|
)
|
|
(3,750
|
)
|
||
Cash dividends paid to common stockholders
|
(12,057
|
)
|
|
(12,043
|
)
|
||
Increase (decrease) in short-term debt
|
5,153
|
|
|
4,275
|
|
||
Borrowings on revolving credit facility
|
238,543
|
|
|
45,655
|
|
||
Repayments of revolving credit facility
|
(173,895
|
)
|
|
(29,900
|
)
|
||
Repayments of other long-term debt and capital leases
|
(63,139
|
)
|
|
(61,450
|
)
|
||
Issuances of stock, common and treasury
|
93
|
|
|
148
|
|
||
Redemptions of common stock
|
(620
|
)
|
|
(900
|
)
|
||
Net cash provided from (used in) financing activities
|
(9,672
|
)
|
|
(57,965
|
)
|
||
Effect of exchange rate changes on cash
|
(494
|
)
|
|
(3,144
|
)
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
6,081
|
|
|
(49,994
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
43,403
|
|
|
96,872
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
49,484
|
|
|
$
|
46,878
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
47,861
|
|
|
$
|
46,878
|
|
Restricted cash
|
1,623
|
|
|
—
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
49,484
|
|
|
$
|
46,878
|
|
(1)
|
GENERAL
|
(2)
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
|
EMEA
|
|
USCAN
|
|
LATAM
|
|
APAC
|
|
EC
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Balance as of August 31, 2016
|
$
|
54,031
|
|
|
$
|
116,369
|
|
|
$
|
11,928
|
|
|
$
|
936
|
|
|
$
|
74,509
|
|
|
$
|
257,773
|
|
Translation
|
(982
|
)
|
|
—
|
|
|
533
|
|
|
(32
|
)
|
|
215
|
|
|
(266
|
)
|
||||||
Balance as of February 28, 2017
|
$
|
53,049
|
|
|
$
|
116,369
|
|
|
$
|
12,461
|
|
|
$
|
904
|
|
|
$
|
74,724
|
|
|
$
|
257,507
|
|
|
February 28, 2017
|
|
August 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Customer related
|
$
|
357,341
|
|
|
$
|
(79,363
|
)
|
|
$
|
277,978
|
|
|
$
|
359,713
|
|
|
$
|
(67,207
|
)
|
|
$
|
292,506
|
|
Developed technology
|
72,260
|
|
|
(15,981
|
)
|
|
56,279
|
|
|
72,657
|
|
|
(13,864
|
)
|
|
58,793
|
|
||||||
Registered trademarks and tradenames
|
17,514
|
|
|
(7,149
|
)
|
|
10,365
|
|
|
18,097
|
|
|
(6,782
|
)
|
|
11,315
|
|
||||||
Total finite-lived intangible assets
|
$
|
447,115
|
|
|
$
|
(102,493
|
)
|
|
$
|
344,622
|
|
|
$
|
450,467
|
|
|
$
|
(87,853
|
)
|
|
$
|
362,614
|
|
(3)
|
LONG-TERM DEBT AND CREDIT ARRANGEMENTS
|
|
February 28, 2017
|
|
August 31, 2016
|
||||
|
(In thousands)
|
||||||
Notes payable and other, due within one year
|
$
|
15,357
|
|
|
$
|
10,333
|
|
Current portion of long-term debt
|
13,500
|
|
|
15,114
|
|
||
Short-term debt
|
$
|
28,857
|
|
|
$
|
25,447
|
|
|
|
|
|
||||
Revolving credit facility, LIBOR plus applicable spread, due June 2020
|
$
|
80,090
|
|
|
$
|
17,279
|
|
Term Loan A, LIBOR plus applicable spread, due June 2020
|
172,500
|
|
|
177,500
|
|
||
U.S. Term Loan B, LIBOR plus applicable spread, due June 2022
|
299,811
|
|
|
341,407
|
|
||
Euro Term Loan B, LIBOR plus applicable spread, due June 2022
|
—
|
|
|
14,678
|
|
||
Senior notes, 6.875%, due June 2023
|
375,000
|
|
|
375,000
|
|
||
Capital leases and other long-term debt
|
3,389
|
|
|
3,727
|
|
||
Unamortized debt issuance costs
|
(9,478
|
)
|
|
(10,242
|
)
|
||
Long-term debt
|
$
|
921,312
|
|
|
$
|
919,349
|
|
|
February 28, 2017
|
|
August 31, 2016
|
||||||||||||||||||||||||||||
|
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
|
$
|
2,558
|
|
|
$
|
—
|
|
|
$
|
2,558
|
|
|
$
|
—
|
|
|
$
|
487
|
|
|
$
|
—
|
|
|
$
|
487
|
|
|
$
|
—
|
|
Liabilities recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign exchange forward contracts
|
$
|
1,865
|
|
|
$
|
—
|
|
|
$
|
1,865
|
|
|
$
|
—
|
|
|
$
|
951
|
|
|
$
|
—
|
|
|
$
|
951
|
|
|
$
|
—
|
|
Liabilities not recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Long-term fixed-rate debt
|
$
|
397,031
|
|
|
$
|
—
|
|
|
$
|
397,031
|
|
|
$
|
—
|
|
|
$
|
378,750
|
|
|
$
|
—
|
|
|
$
|
378,750
|
|
|
$
|
—
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
||||||||||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1,344
|
|
|
$
|
1,275
|
|
|
$
|
2,739
|
|
|
$
|
2,569
|
|
Interest cost
|
570
|
|
|
1,041
|
|
|
1,157
|
|
|
2,104
|
|
||||
Expected return on plan assets
|
(367
|
)
|
|
(485
|
)
|
|
(743
|
)
|
|
(989
|
)
|
||||
Amortization of actuarial loss (gain)
|
961
|
|
|
712
|
|
|
1,958
|
|
|
1,436
|
|
||||
Net periodic pension benefit cost
|
$
|
2,508
|
|
|
$
|
2,543
|
|
|
$
|
5,111
|
|
|
$
|
5,120
|
|
|
|
|
|
|
|
|
|
||||||||
Other postretirement benefit plan:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
63
|
|
|
97
|
|
|
126
|
|
|
194
|
|
||||
Prior service cost (credit)
|
(135
|
)
|
|
(149
|
)
|
|
(271
|
)
|
|
(298
|
)
|
||||
Net periodic postretirement benefit cost (credit)
|
$
|
(71
|
)
|
|
$
|
(51
|
)
|
|
$
|
(143
|
)
|
|
$
|
(102
|
)
|
|
Convertible Special Stock
|
|
Common
Stock ($1 par value)
|
|
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 August 31, 2016
|
$
|
120,289
|
|
|
$
|
48,510
|
|
|
$
|
275,115
|
|
|
$
|
(120,721
|
)
|
|
$
|
219,039
|
|
|
$
|
(382,963
|
)
|
|
$
|
9,091
|
|
|
$
|
168,360
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
(9,919
|
)
|
|
7,973
|
|
|
|
|
504
|
|
|
(1,442
|
)
|
||||||||||||
Cash dividends paid on convertible special stock, $30.00 per share
|
|
|
|
|
|
|
|
|
(3,750
|
)
|
|
|
|
|
|
(3,750
|
)
|
||||||||||||||
Cash dividends paid on common stock, $0.410 per share
|
|
|
|
|
|
|
|
|
(12,057
|
)
|
|
|
|
|
|
(12,057
|
)
|
||||||||||||||
Issuance of treasury stock
|
|
|
|
|
33
|
|
|
|
|
|
|
60
|
|
|
|
|
93
|
|
|||||||||||||
Restricted stock issued, net of forfeitures
|
|
|
63
|
|
|
(63
|
)
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||
Redemption of common stock to cover tax withholdings
|
|
|
(20
|
)
|
|
(600
|
)
|
|
|
|
|
|
|
|
|
|
(620
|
)
|
|||||||||||||
Share-based compensation plans
|
|
|
|
|
2,680
|
|
|
|
|
|
|
|
|
|
|
2,680
|
|
||||||||||||||
Balance as of February 28, 2017
|
$
|
120,289
|
|
|
$
|
48,553
|
|
|
$
|
277,165
|
|
|
$
|
(130,640
|
)
|
|
$
|
211,205
|
|
|
$
|
(382,903
|
)
|
|
$
|
9,595
|
|
|
$
|
153,264
|
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of November 30, 2016
|
$
|
(84,963
|
)
|
|
$
|
(50,410
|
)
|
|
$
|
(135,373
|
)
|
Other comprehensive income (loss) before reclassifications
|
4,150
|
|
|
—
|
|
|
4,150
|
|
|||
Amounts reclassified to earnings
|
—
|
|
|
610
|
|
(2)
|
610
|
|
|||
Net current period other comprehensive income (loss)
|
4,150
|
|
|
610
|
|
|
4,760
|
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
27
|
|
|
—
|
|
|
27
|
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
4,123
|
|
|
610
|
|
|
4,733
|
|
|||
Balance as of February 28, 2017
|
$
|
(80,840
|
)
|
|
$
|
(49,800
|
)
|
|
$
|
(130,640
|
)
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of August 31, 2016
|
$
|
(69,717
|
)
|
|
$
|
(51,004
|
)
|
|
$
|
(120,721
|
)
|
Other comprehensive income (loss) before reclassifications
|
(11,166
|
)
|
|
—
|
|
|
(11,166
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
1,204
|
|
(2)
|
1,204
|
|
|||
Net current period other comprehensive income (loss)
|
(11,166
|
)
|
|
1,204
|
|
|
(9,962
|
)
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(43
|
)
|
|
—
|
|
|
(43
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
(11,123
|
)
|
|
1,204
|
|
|
(9,919
|
)
|
|||
Balance as of February 28, 2017
|
$
|
(80,840
|
)
|
|
$
|
(49,800
|
)
|
|
$
|
(130,640
|
)
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of November 30, 2015
|
$
|
(60,269
|
)
|
|
$
|
(32,883
|
)
|
|
$
|
(93,152
|
)
|
Other comprehensive income (loss) before reclassifications
|
(9,243
|
)
|
|
—
|
|
|
(9,243
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
150
|
|
(2)
|
150
|
|
|||
Net current period other comprehensive income (loss)
|
(9,243
|
)
|
|
150
|
|
|
(9,093
|
)
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(654
|
)
|
|
—
|
|
|
(654
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
(8,589
|
)
|
|
150
|
|
|
(8,439
|
)
|
|||
Balance as of February 29, 2016
|
$
|
(68,858
|
)
|
|
$
|
(32,733
|
)
|
|
$
|
(101,591
|
)
|
|
Foreign Currency Translation Gain (Loss)
|
|
Pension and Other Retiree Benefits
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance as of August 31, 2015
|
$
|
(49,562
|
)
|
|
$
|
(33,898
|
)
|
|
$
|
(83,460
|
)
|
Other comprehensive income (loss) before reclassifications
|
(20,019
|
)
|
|
—
|
|
|
(20,019
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
1,165
|
|
(2)
|
1,165
|
|
|||
Net current period other comprehensive income (loss)
|
(20,019
|
)
|
|
1,165
|
|
|
(18,854
|
)
|
|||
Less: comprehensive income (loss) attributable to
noncontrolling interests |
(723
|
)
|
|
—
|
|
|
(723
|
)
|
|||
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.
|
(19,296
|
)
|
|
1,165
|
|
|
(18,131
|
)
|
|||
Balance as of February 29, 2016
|
$
|
(68,858
|
)
|
|
$
|
(32,733
|
)
|
|
$
|
(101,591
|
)
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
||||||||||||||
Time-based and performance-based restricted stock awards
|
$
|
446
|
|
|
$
|
842
|
|
|
$
|
1,347
|
|
|
$
|
1,267
|
|
Stock options
|
68
|
|
|
—
|
|
|
68
|
|
|
—
|
|
||||
Unrestricted awards
|
531
|
|
|
564
|
|
|
1,253
|
|
|
564
|
|
||||
Total share-based incentive compensation
|
$
|
1,045
|
|
|
$
|
1,406
|
|
|
$
|
2,668
|
|
|
$
|
1,831
|
|
|
Three months ended
|
|
Six months ended
|
||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||
|
(In thousands)
|
||||||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Basic
|
29,394
|
|
|
29,292
|
|
|
29,378
|
|
|
29,257
|
|
Incremental shares from equity awards
|
109
|
|
|
—
|
|
|
92
|
|
|
198
|
|
Incremental shares from convertible special stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted
|
29,503
|
|
|
29,292
|
|
|
29,470
|
|
|
29,455
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
276,902
|
|
|
$
|
290,330
|
|
|
$
|
572,974
|
|
|
$
|
618,426
|
|
USCAN
|
151,918
|
|
|
170,817
|
|
|
308,336
|
|
|
349,099
|
|
||||
LATAM
|
39,662
|
|
|
38,158
|
|
|
81,878
|
|
|
83,361
|
|
||||
APAC
|
48,914
|
|
|
45,063
|
|
|
99,651
|
|
|
90,755
|
|
||||
EC
|
51,282
|
|
|
47,393
|
|
|
105,839
|
|
|
99,339
|
|
||||
Total net sales to unaffiliated customers
|
$
|
568,678
|
|
|
$
|
591,761
|
|
|
$
|
1,168,678
|
|
|
$
|
1,240,980
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
39,130
|
|
|
$
|
38,953
|
|
|
$
|
83,788
|
|
|
$
|
86,637
|
|
USCAN
|
20,060
|
|
|
27,241
|
|
|
44,576
|
|
|
57,535
|
|
||||
LATAM
|
9,595
|
|
|
8,466
|
|
|
19,012
|
|
|
18,171
|
|
||||
APAC
|
8,908
|
|
|
8,199
|
|
|
18,034
|
|
|
16,073
|
|
||||
EC
|
12,831
|
|
|
10,987
|
|
|
26,799
|
|
|
24,195
|
|
||||
Total segment gross profit
|
90,524
|
|
|
93,846
|
|
|
192,209
|
|
|
202,611
|
|
||||
Accelerated depreciation and restructuring related costs
|
(1,338
|
)
|
|
(2,504
|
)
|
|
(1,865
|
)
|
|
(4,381
|
)
|
||||
Costs related to acquisitions and integrations
|
—
|
|
|
(1,970
|
)
|
|
(57
|
)
|
|
(2,099
|
)
|
||||
Lucent costs
(1)
|
—
|
|
|
452
|
|
|
(86
|
)
|
|
(1,378
|
)
|
||||
Total gross profit
|
$
|
89,186
|
|
|
$
|
89,824
|
|
|
$
|
190,201
|
|
|
$
|
194,753
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
16,527
|
|
|
$
|
15,612
|
|
|
$
|
36,295
|
|
|
$
|
35,765
|
|
USCAN
|
5,447
|
|
|
10,427
|
|
|
13,943
|
|
|
22,590
|
|
||||
LATAM
|
5,459
|
|
|
4,229
|
|
|
10,894
|
|
|
9,833
|
|
||||
APAC
|
4,901
|
|
|
4,670
|
|
|
9,914
|
|
|
8,977
|
|
||||
EC
|
4,111
|
|
|
1,450
|
|
|
9,222
|
|
|
5,552
|
|
||||
Total segment operating income
|
36,445
|
|
|
36,388
|
|
|
80,268
|
|
|
82,717
|
|
||||
Corporate
|
(9,065
|
)
|
|
(7,684
|
)
|
|
(17,881
|
)
|
|
(16,172
|
)
|
||||
Costs related to acquisitions and integrations
|
—
|
|
|
(4,261
|
)
|
|
(605
|
)
|
|
(6,127
|
)
|
||||
Restructuring and related costs
(2)
|
(4,970
|
)
|
|
(5,769
|
)
|
|
(18,243
|
)
|
|
(10,439
|
)
|
||||
Accelerated depreciation
|
(467
|
)
|
|
(2,057
|
)
|
|
(823
|
)
|
|
(3,510
|
)
|
||||
Lucent costs
(1)
|
(596
|
)
|
|
(611
|
)
|
|
(1,405
|
)
|
|
(4,317
|
)
|
||||
Asset impairment
|
—
|
|
|
—
|
|
|
(678
|
)
|
|
—
|
|
||||
CEO transition costs
|
(6
|
)
|
|
—
|
|
|
(196
|
)
|
|
—
|
|
||||
Operating income (loss)
|
21,341
|
|
|
16,006
|
|
|
40,437
|
|
|
42,152
|
|
||||
Interest expense
|
(13,107
|
)
|
|
(13,790
|
)
|
|
(26,271
|
)
|
|
(27,408
|
)
|
||||
Foreign currency transaction gains (losses)
|
(1,081
|
)
|
|
(950
|
)
|
|
(1,643
|
)
|
|
(1,679
|
)
|
||||
Other income (expense), net
|
(674
|
)
|
|
269
|
|
|
459
|
|
|
218
|
|
||||
Income (loss) before taxes
|
$
|
6,479
|
|
|
$
|
1,535
|
|
|
$
|
12,982
|
|
|
$
|
13,283
|
|
|
Three months ended
|
||||||||||||
|
February 28, 2017
|
|
February 29, 2016
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Engineered Composites
|
$
|
51,282
|
|
|
9
|
%
|
|
$
|
47,393
|
|
|
8
|
%
|
Custom Concentrates and Services
|
259,586
|
|
|
46
|
|
|
268,459
|
|
|
45
|
|
||
Performance Materials
|
257,810
|
|
|
45
|
|
|
275,909
|
|
|
47
|
|
||
Total consolidated net sales
|
$
|
568,678
|
|
|
100
|
%
|
|
$
|
591,761
|
|
|
100
|
%
|
|
Six months ended
|
||||||||||||
|
February 28, 2017
|
|
February 29, 2016
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Engineered Composites
|
$
|
105,839
|
|
|
9
|
%
|
|
$
|
99,339
|
|
|
8
|
%
|
Custom Concentrates and Services
|
535,505
|
|
|
46
|
|
|
564,296
|
|
|
45
|
|
||
Performance Materials
|
527,334
|
|
|
45
|
|
|
577,345
|
|
|
47
|
|
||
Total consolidated net sales
|
$
|
1,168,678
|
|
|
100
|
%
|
|
$
|
1,240,980
|
|
|
100
|
%
|
|
Employee-related Costs
|
|
Other Costs
|
|
Total Restructuring Costs
|
||||||
|
(In thousands)
|
||||||||||
Accrual balance as of August 31, 2016
|
$
|
3,542
|
|
|
$
|
402
|
|
|
$
|
3,944
|
|
Fiscal 2017 charges
|
10,718
|
|
|
704
|
|
|
11,422
|
|
|||
Fiscal 2017 payments
|
(7,980
|
)
|
|
(857
|
)
|
|
(8,837
|
)
|
|||
Translation
|
(134
|
)
|
|
(8
|
)
|
|
(142
|
)
|
|||
Accrual balance as of February 28, 2017
|
$
|
6,146
|
|
|
$
|
241
|
|
|
$
|
6,387
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
EMEA
|
$
|
830
|
|
|
$
|
759
|
|
|
$
|
8,844
|
|
|
$
|
1,970
|
|
USCAN
|
813
|
|
|
490
|
|
|
2,280
|
|
|
724
|
|
||||
LATAM
|
—
|
|
|
94
|
|
|
59
|
|
|
164
|
|
||||
APAC
|
88
|
|
|
—
|
|
|
92
|
|
|
31
|
|
||||
EC
|
147
|
|
|
871
|
|
|
147
|
|
|
871
|
|
||||
Total restructuring expense
|
$
|
1,878
|
|
|
$
|
2,214
|
|
|
$
|
11,422
|
|
|
$
|
3,760
|
|
|
Condensed Consolidating Balance Sheet
|
||||||||||||||||||
|
February 28, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
870
|
|
|
$
|
—
|
|
|
$
|
46,991
|
|
|
$
|
—
|
|
|
$
|
47,861
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
1,623
|
|
|
—
|
|
|
1,623
|
|
|||||
Accounts receivable, net
|
41,538
|
|
|
56,885
|
|
|
282,368
|
|
|
—
|
|
|
380,791
|
|
|||||
Accounts receivable, intercompany
|
29,366
|
|
|
3,744
|
|
|
25,209
|
|
|
(58,319
|
)
|
|
—
|
|
|||||
Inventories
|
38,118
|
|
|
48,118
|
|
|
193,578
|
|
|
—
|
|
|
279,814
|
|
|||||
Prepaid expenses and other current assets
|
9,437
|
|
|
2,876
|
|
|
28,524
|
|
|
—
|
|
|
40,837
|
|
|||||
Assets held for sale
|
2,933
|
|
|
5,067
|
|
|
1,669
|
|
|
—
|
|
|
9,669
|
|
|||||
Total current assets
|
122,262
|
|
|
116,690
|
|
|
579,962
|
|
|
(58,319
|
)
|
|
760,595
|
|
|||||
Net property, plant and equipment
|
46,779
|
|
|
70,993
|
|
|
173,936
|
|
|
—
|
|
|
291,708
|
|
|||||
Deferred charges and other noncurrent assets
|
83,430
|
|
|
4,045
|
|
|
61,348
|
|
|
(63,459
|
)
|
|
85,364
|
|
|||||
Intercompany loans receivable
|
2,593
|
|
|
33,491
|
|
|
—
|
|
|
(36,084
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
829,061
|
|
|
243,005
|
|
|
—
|
|
|
(1,072,066
|
)
|
|
—
|
|
|||||
Goodwill
|
26,862
|
|
|
110,289
|
|
|
120,356
|
|
|
—
|
|
|
257,507
|
|
|||||
Intangible assets, net
|
28,966
|
|
|
195,729
|
|
|
119,927
|
|
|
—
|
|
|
344,622
|
|
|||||
Total assets
|
$
|
1,139,953
|
|
|
$
|
774,242
|
|
|
$
|
1,055,529
|
|
|
$
|
(1,229,928
|
)
|
|
$
|
1,739,796
|
|
LIABILITIES AND EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
42,013
|
|
|
$
|
47,427
|
|
|
$
|
213,720
|
|
|
$
|
—
|
|
|
$
|
303,160
|
|
Accounts payable, intercompany
|
12,564
|
|
|
29,979
|
|
|
15,776
|
|
|
(58,319
|
)
|
|
—
|
|
|||||
U.S. and foreign income taxes payable
|
—
|
|
|
174
|
|
|
5,609
|
|
|
—
|
|
|
5,783
|
|
|||||
Accrued payroll, taxes and related benefits
|
11,347
|
|
|
6,855
|
|
|
22,837
|
|
|
—
|
|
|
41,039
|
|
|||||
Other accrued liabilities
|
19,110
|
|
|
5,823
|
|
|
41,911
|
|
|
—
|
|
|
66,844
|
|
|||||
Short-term debt
|
13,674
|
|
|
28
|
|
|
15,155
|
|
|
—
|
|
|
28,857
|
|
|||||
Total current liabilities
|
98,708
|
|
|
90,286
|
|
|
315,008
|
|
|
(58,319
|
)
|
|
445,683
|
|
|||||
Long-term debt
|
881,103
|
|
|
63
|
|
|
40,146
|
|
|
—
|
|
|
921,312
|
|
|||||
Intercompany debt
|
—
|
|
|
—
|
|
|
36,084
|
|
|
(36,084
|
)
|
|
—
|
|
|||||
Pension plans
|
2,382
|
|
|
1,374
|
|
|
134,818
|
|
|
—
|
|
|
138,574
|
|
|||||
Deferred income taxes
|
—
|
|
|
72,148
|
|
|
47,424
|
|
|
(63,459
|
)
|
|
56,113
|
|
|||||
Other long-term liabilities
|
14,091
|
|
|
1,040
|
|
|
9,719
|
|
|
—
|
|
|
24,850
|
|
|||||
Total liabilities
|
996,284
|
|
|
164,911
|
|
|
583,199
|
|
|
(157,862
|
)
|
|
1,586,532
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Convertible special stock, no par value
|
120,289
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120,289
|
|
|||||
Common stock
|
48,553
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,553
|
|
|||||
Other equity
|
(25,173
|
)
|
|
609,331
|
|
|
462,735
|
|
|
(1,072,066
|
)
|
|
(25,173
|
)
|
|||||
Total A. Schulman, Inc.’s stockholders’ equity
|
143,669
|
|
|
609,331
|
|
|
462,735
|
|
|
(1,072,066
|
)
|
|
143,669
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
9,595
|
|
|
—
|
|
|
9,595
|
|
|||||
Total equity
|
143,669
|
|
|
609,331
|
|
|
472,330
|
|
|
(1,072,066
|
)
|
|
153,264
|
|
|||||
Total liabilities and equity
|
$
|
1,139,953
|
|
|
$
|
774,242
|
|
|
$
|
1,055,529
|
|
|
$
|
(1,229,928
|
)
|
|
$
|
1,739,796
|
|
|
Condensed Consolidating Balance Sheet
|
||||||||||||||||||
|
August 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,260
|
|
|
$
|
—
|
|
|
$
|
35,260
|
|
Restricted cash
|
4,400
|
|
|
—
|
|
|
3,743
|
|
|
—
|
|
|
8,143
|
|
|||||
Accounts receivable, net
|
40,017
|
|
|
56,995
|
|
|
279,774
|
|
|
—
|
|
|
376,786
|
|
|||||
Accounts receivable, intercompany
|
16,245
|
|
|
9,906
|
|
|
26,839
|
|
|
(52,990
|
)
|
|
—
|
|
|||||
Inventories
|
33,702
|
|
|
41,895
|
|
|
188,020
|
|
|
—
|
|
|
263,617
|
|
|||||
Prepaid expenses and other current assets
|
6,874
|
|
|
4,006
|
|
|
29,383
|
|
|
—
|
|
|
40,263
|
|
|||||
Total current assets
|
101,238
|
|
|
112,802
|
|
|
563,019
|
|
|
(52,990
|
)
|
|
724,069
|
|
|||||
Net property, plant and equipment
|
52,653
|
|
|
77,800
|
|
|
184,369
|
|
|
—
|
|
|
314,822
|
|
|||||
Deferred charges and other noncurrent assets
|
74,463
|
|
|
4,205
|
|
|
66,038
|
|
|
(56,545
|
)
|
|
88,161
|
|
|||||
Intercompany loans receivable
|
2,593
|
|
|
33,015
|
|
|
200
|
|
|
(35,808
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
871,441
|
|
|
245,202
|
|
|
—
|
|
|
(1,116,643
|
)
|
|
—
|
|
|||||
Goodwill
|
36,533
|
|
|
110,289
|
|
|
110,951
|
|
|
—
|
|
|
257,773
|
|
|||||
Intangible assets, net
|
30,316
|
|
|
204,026
|
|
|
128,272
|
|
|
—
|
|
|
362,614
|
|
|||||
Total assets
|
$
|
1,169,237
|
|
|
$
|
787,339
|
|
|
$
|
1,052,849
|
|
|
$
|
(1,261,986
|
)
|
|
$
|
1,747,439
|
|
LIABILITIES AND EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
36,671
|
|
|
$
|
36,157
|
|
|
$
|
207,232
|
|
|
$
|
—
|
|
|
$
|
280,060
|
|
Accounts payable, intercompany
|
17,886
|
|
|
20,050
|
|
|
15,054
|
|
|
(52,990
|
)
|
|
—
|
|
|||||
U.S. and foreign income taxes payable
|
1,242
|
|
|
100
|
|
|
7,643
|
|
|
—
|
|
|
8,985
|
|
|||||
Accrued payroll, taxes and related benefits
|
10,326
|
|
|
5,980
|
|
|
31,263
|
|
|
—
|
|
|
47,569
|
|
|||||
Other accrued liabilities
|
17,684
|
|
|
14,195
|
|
|
35,825
|
|
|
—
|
|
|
67,704
|
|
|||||
Short-term debt
|
13,626
|
|
|
—
|
|
|
11,821
|
|
|
—
|
|
|
25,447
|
|
|||||
Total current liabilities
|
97,435
|
|
|
76,482
|
|
|
308,838
|
|
|
(52,990
|
)
|
|
429,765
|
|
|||||
Long-term debt
|
894,441
|
|
|
—
|
|
|
24,908
|
|
|
—
|
|
|
919,349
|
|
|||||
Intercompany debt
|
—
|
|
|
200
|
|
|
35,608
|
|
|
(35,808
|
)
|
|
—
|
|
|||||
Pension plans
|
2,444
|
|
|
1,450
|
|
|
141,214
|
|
|
—
|
|
|
145,108
|
|
|||||
Deferred income taxes
|
—
|
|
|
77,507
|
|
|
38,051
|
|
|
(56,545
|
)
|
|
59,013
|
|
|||||
Other long-term liabilities
|
15,648
|
|
|
1,037
|
|
|
9,159
|
|
|
—
|
|
|
25,844
|
|
|||||
Total liabilities
|
1,009,968
|
|
|
156,676
|
|
|
557,778
|
|
|
(145,343
|
)
|
|
1,579,079
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Convertible special stock, no par value
|
120,289
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120,289
|
|
|||||
Common stock
|
48,510
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,510
|
|
|||||
Other equity
|
(9,530
|
)
|
|
630,663
|
|
|
485,980
|
|
|
(1,116,643
|
)
|
|
(9,530
|
)
|
|||||
Total A. Schulman, Inc.’s stockholders’ equity
|
159,269
|
|
|
630,663
|
|
|
485,980
|
|
|
(1,116,643
|
)
|
|
159,269
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
9,091
|
|
|
—
|
|
|
9,091
|
|
|||||
Total equity
|
159,269
|
|
|
630,663
|
|
|
495,071
|
|
|
(1,116,643
|
)
|
|
168,360
|
|
|||||
Total liabilities and equity
|
$
|
1,169,237
|
|
|
$
|
787,339
|
|
|
$
|
1,052,849
|
|
|
$
|
(1,261,986
|
)
|
|
$
|
1,747,439
|
|
|
Consolidating Statement of Operations
|
||||||||||||||||||
|
Three months ended February 28, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net sales
|
$
|
78,095
|
|
|
$
|
98,650
|
|
|
$
|
403,859
|
|
|
$
|
(11,926
|
)
|
|
$
|
568,678
|
|
Cost of sales
|
64,938
|
|
|
90,179
|
|
|
336,301
|
|
|
(11,926
|
)
|
|
479,492
|
|
|||||
Selling, general and administrative expenses
|
9,357
|
|
|
14,549
|
|
|
42,061
|
|
|
—
|
|
|
65,967
|
|
|||||
Restructuring expense
|
674
|
|
|
277
|
|
|
927
|
|
|
—
|
|
|
1,878
|
|
|||||
Operating income (loss)
|
3,126
|
|
|
(6,355
|
)
|
|
24,570
|
|
|
—
|
|
|
21,341
|
|
|||||
Interest expense
|
12,056
|
|
|
21
|
|
|
1,291
|
|
|
(261
|
)
|
|
13,107
|
|
|||||
Intercompany charges
|
6
|
|
|
—
|
|
|
3,043
|
|
|
(3,049
|
)
|
|
—
|
|
|||||
Intercompany income
|
(1,915
|
)
|
|
(1,127
|
)
|
|
(7
|
)
|
|
3,049
|
|
|
—
|
|
|||||
Foreign currency transaction (gains) losses
|
1,056
|
|
|
(2
|
)
|
|
27
|
|
|
—
|
|
|
1,081
|
|
|||||
Other (income) expense, net
|
(94
|
)
|
|
(274
|
)
|
|
781
|
|
|
261
|
|
|
674
|
|
|||||
(Gain) loss on intercompany investments
|
(8,808
|
)
|
|
(2,047
|
)
|
|
—
|
|
|
10,855
|
|
|
—
|
|
|||||
Income (loss) before taxes
|
825
|
|
|
(2,926
|
)
|
|
19,435
|
|
|
(10,855
|
)
|
|
6,479
|
|
|||||
Provision (benefit) for U.S. and foreign income taxes
|
(4,205
|
)
|
|
530
|
|
|
4,818
|
|
|
—
|
|
|
1,143
|
|
|||||
Net income (loss)
|
5,030
|
|
|
(3,456
|
)
|
|
14,617
|
|
|
(10,855
|
)
|
|
5,336
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
(306
|
)
|
|
—
|
|
|
(306
|
)
|
|||||
Net income (loss) attributable to A. Schulman, Inc.
|
5,030
|
|
|
(3,456
|
)
|
|
14,311
|
|
|
(10,855
|
)
|
|
5,030
|
|
|||||
Convertible special stock dividends
|
1,875
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,875
|
|
|||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
3,155
|
|
|
$
|
(3,456
|
)
|
|
$
|
14,311
|
|
|
$
|
(10,855
|
)
|
|
$
|
3,155
|
|
Comprehensive income (loss)
|
$
|
9,763
|
|
|
$
|
(1,876
|
)
|
|
$
|
19,354
|
|
|
$
|
(17,145
|
)
|
|
$
|
10,096
|
|
Less: comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
333
|
|
|
—
|
|
|
333
|
|
|||||
Comprehensive income (loss) attributable to A. Schulman, Inc.
|
$
|
9,763
|
|
|
$
|
(1,876
|
)
|
|
$
|
19,021
|
|
|
$
|
(17,145
|
)
|
|
$
|
9,763
|
|
|
Consolidating Statement of Operations
|
||||||||||||||||||
|
Three months ended February 29, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net sales
|
$
|
79,214
|
|
|
$
|
112,022
|
|
|
$
|
412,236
|
|
|
$
|
(11,711
|
)
|
|
$
|
591,761
|
|
Cost of sales
|
65,289
|
|
|
100,036
|
|
|
348,323
|
|
|
(11,711
|
)
|
|
501,937
|
|
|||||
Selling, general and administrative expenses
|
12,135
|
|
|
16,160
|
|
|
43,309
|
|
|
—
|
|
|
71,604
|
|
|||||
Restructuring expense
|
339
|
|
|
1,022
|
|
|
853
|
|
|
—
|
|
|
2,214
|
|
|||||
Operating income (loss)
|
1,451
|
|
|
(5,196
|
)
|
|
19,751
|
|
|
—
|
|
|
16,006
|
|
|||||
Interest expense
|
12,063
|
|
|
—
|
|
|
2,151
|
|
|
(424
|
)
|
|
13,790
|
|
|||||
Intercompany charges
|
6
|
|
|
28
|
|
|
3,223
|
|
|
(3,257
|
)
|
|
—
|
|
|||||
Intercompany income
|
(2,161
|
)
|
|
(1,095
|
)
|
|
(1
|
)
|
|
3,257
|
|
|
—
|
|
|||||
Foreign currency transaction (gains) losses
|
696
|
|
|
(125
|
)
|
|
379
|
|
|
—
|
|
|
950
|
|
|||||
Other (income) expense, net
|
135
|
|
|
(381
|
)
|
|
(447
|
)
|
|
424
|
|
|
(269
|
)
|
|||||
(Gain) loss on intercompany investments
|
(9,520
|
)
|
|
1,602
|
|
|
—
|
|
|
7,918
|
|
|
—
|
|
|||||
Income (loss) before taxes
|
232
|
|
|
(5,225
|
)
|
|
14,446
|
|
|
(7,918
|
)
|
|
1,535
|
|
|||||
Provision (benefit) for U.S. and foreign income taxes
|
(1,360
|
)
|
|
276
|
|
|
597
|
|
|
—
|
|
|
(487
|
)
|
|||||
Net income (loss)
|
1,592
|
|
|
(5,501
|
)
|
|
13,849
|
|
|
(7,918
|
)
|
|
2,022
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
(430
|
)
|
|
—
|
|
|
(430
|
)
|
|||||
Net income (loss) attributable to A. Schulman, Inc.
|
1,592
|
|
|
(5,501
|
)
|
|
13,419
|
|
|
(7,918
|
)
|
|
1,592
|
|
|||||
Convertible special stock dividends
|
1,875
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,875
|
|
|||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
(283
|
)
|
|
$
|
(5,501
|
)
|
|
$
|
13,419
|
|
|
$
|
(7,918
|
)
|
|
$
|
(283
|
)
|
Comprehensive income (loss)
|
$
|
(6,847
|
)
|
|
$
|
(5,836
|
)
|
|
$
|
5,094
|
|
|
$
|
518
|
|
|
$
|
(7,071
|
)
|
Less: comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(224
|
)
|
|
—
|
|
|
(224
|
)
|
|||||
Comprehensive income (loss) attributable to A. Schulman, Inc.
|
$
|
(6,847
|
)
|
|
$
|
(5,836
|
)
|
|
$
|
5,318
|
|
|
$
|
518
|
|
|
$
|
(6,847
|
)
|
|
Consolidating Statement of Operations
|
||||||||||||||||||
|
Six months ended February 28, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net sales
|
$
|
154,270
|
|
|
$
|
201,605
|
|
|
$
|
835,880
|
|
|
$
|
(23,077
|
)
|
|
$
|
1,168,678
|
|
Cost of sales
|
128,021
|
|
|
181,068
|
|
|
692,465
|
|
|
(23,077
|
)
|
|
978,477
|
|
|||||
Selling, general and administrative expenses
|
21,915
|
|
|
29,436
|
|
|
86,991
|
|
|
—
|
|
|
138,342
|
|
|||||
Restructuring expense
|
1,758
|
|
|
557
|
|
|
9,107
|
|
|
—
|
|
|
11,422
|
|
|||||
Operating income (loss)
|
2,576
|
|
|
(9,456
|
)
|
|
47,317
|
|
|
—
|
|
|
40,437
|
|
|||||
Interest expense
|
23,983
|
|
|
26
|
|
|
2,783
|
|
|
(521
|
)
|
|
26,271
|
|
|||||
Intercompany charges
|
8
|
|
|
—
|
|
|
4,896
|
|
|
(4,904
|
)
|
|
—
|
|
|||||
Intercompany income
|
(2,459
|
)
|
|
(2,431
|
)
|
|
(14
|
)
|
|
4,904
|
|
|
—
|
|
|||||
Foreign currency transaction (gains) losses
|
2,008
|
|
|
(5
|
)
|
|
(360
|
)
|
|
—
|
|
|
1,643
|
|
|||||
Other (income) expense, net
|
(349
|
)
|
|
(563
|
)
|
|
(68
|
)
|
|
521
|
|
|
(459
|
)
|
|||||
(Gain) loss on intercompany investments
|
(17,935
|
)
|
|
(3,191
|
)
|
|
—
|
|
|
21,126
|
|
|
—
|
|
|||||
Income (loss) before taxes
|
(2,680
|
)
|
|
(3,292
|
)
|
|
40,080
|
|
|
(21,126
|
)
|
|
12,982
|
|
|||||
Provision (benefit) for U.S. and foreign income taxes
|
(10,653
|
)
|
|
(5,897
|
)
|
|
21,012
|
|
|
—
|
|
|
4,462
|
|
|||||
Net income (loss)
|
7,973
|
|
|
2,605
|
|
|
19,068
|
|
|
(21,126
|
)
|
|
8,520
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
(547
|
)
|
|
—
|
|
|
(547
|
)
|
|||||
Net income (loss) attributable to A. Schulman, Inc.
|
7,973
|
|
|
2,605
|
|
|
18,521
|
|
|
(21,126
|
)
|
|
7,973
|
|
|||||
Convertible special stock dividends
|
3,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,750
|
|
|||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
4,223
|
|
|
$
|
2,605
|
|
|
$
|
18,521
|
|
|
$
|
(21,126
|
)
|
|
$
|
4,223
|
|
Comprehensive income (loss)
|
$
|
(1,946
|
)
|
|
$
|
2,340
|
|
|
$
|
9,142
|
|
|
$
|
(10,978
|
)
|
|
$
|
(1,442
|
)
|
Less: comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
504
|
|
|
—
|
|
|
504
|
|
|||||
Comprehensive income (loss) attributable to A. Schulman, Inc.
|
$
|
(1,946
|
)
|
|
$
|
2,340
|
|
|
$
|
8,638
|
|
|
$
|
(10,978
|
)
|
|
$
|
(1,946
|
)
|
|
Consolidating Statement of Operations
|
||||||||||||||||||
|
Six months ended February 29, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net sales
|
$
|
160,401
|
|
|
$
|
231,930
|
|
|
$
|
872,317
|
|
|
$
|
(23,668
|
)
|
|
$
|
1,240,980
|
|
Cost of sales
|
132,424
|
|
|
203,447
|
|
|
734,024
|
|
|
(23,668
|
)
|
|
1,046,227
|
|
|||||
Selling, general and administrative expenses
|
24,925
|
|
|
33,546
|
|
|
90,370
|
|
|
—
|
|
|
148,841
|
|
|||||
Restructuring expense
|
573
|
|
|
1,022
|
|
|
2,165
|
|
|
—
|
|
|
3,760
|
|
|||||
Operating income (loss)
|
2,479
|
|
|
(6,085
|
)
|
|
45,758
|
|
|
—
|
|
|
42,152
|
|
|||||
Interest expense
|
23,915
|
|
|
5
|
|
|
4,430
|
|
|
(942
|
)
|
|
27,408
|
|
|||||
Intercompany charges
|
12
|
|
|
65
|
|
|
5,833
|
|
|
(5,910
|
)
|
|
—
|
|
|||||
Intercompany income
|
(3,613
|
)
|
|
(2,295
|
)
|
|
(2
|
)
|
|
5,910
|
|
|
—
|
|
|||||
Foreign currency transaction (gains) losses
|
735
|
|
|
(117
|
)
|
|
1,061
|
|
|
—
|
|
|
1,679
|
|
|||||
Other (income) expense, net
|
(51
|
)
|
|
(343
|
)
|
|
(766
|
)
|
|
942
|
|
|
(218
|
)
|
|||||
(Gain) loss on intercompany investments
|
(28,627
|
)
|
|
1,168
|
|
|
—
|
|
|
27,459
|
|
|
—
|
|
|||||
Income (loss) before taxes
|
10,108
|
|
|
(4,568
|
)
|
|
35,202
|
|
|
(27,459
|
)
|
|
13,283
|
|
|||||
Provision (benefit) for U.S. and foreign income taxes
|
1,423
|
|
|
395
|
|
|
1,946
|
|
|
—
|
|
|
3,764
|
|
|||||
Net income (loss)
|
8,685
|
|
|
(4,963
|
)
|
|
33,256
|
|
|
(27,459
|
)
|
|
9,519
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
(834
|
)
|
|
—
|
|
|
(834
|
)
|
|||||
Net income (loss) attributable to A. Schulman, Inc.
|
8,685
|
|
|
(4,963
|
)
|
|
32,422
|
|
|
(27,459
|
)
|
|
8,685
|
|
|||||
Convertible special stock dividends
|
3,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,750
|
|
|||||
Net income (loss) available to A. Schulman, Inc. common stockholders
|
$
|
4,935
|
|
|
$
|
(4,963
|
)
|
|
$
|
32,422
|
|
|
$
|
(27,459
|
)
|
|
$
|
4,935
|
|
Comprehensive income (loss)
|
$
|
(9,446
|
)
|
|
$
|
(5,830
|
)
|
|
$
|
14,008
|
|
|
$
|
(8,067
|
)
|
|
$
|
(9,335
|
)
|
Less: comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|||||
Comprehensive income (loss) attributable to A. Schulman, Inc.
|
$
|
(9,446
|
)
|
|
$
|
(5,830
|
)
|
|
$
|
13,897
|
|
|
$
|
(8,067
|
)
|
|
$
|
(9,446
|
)
|
|
Condensed Consolidating Statement of Cash Flows
|
||||||||||||||||||
|
Six months ended February 28, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided from (used in) operating activities
|
$
|
34,634
|
|
|
$
|
2,977
|
|
|
$
|
41,635
|
|
|
$
|
(39,097
|
)
|
|
$
|
40,149
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(7,557
|
)
|
|
(3,074
|
)
|
|
(13,874
|
)
|
|
—
|
|
|
(24,505
|
)
|
|||||
Proceeds from the sale of assets
|
121
|
|
|
—
|
|
|
357
|
|
|
—
|
|
|
478
|
|
|||||
Other investing activities
|
—
|
|
|
125
|
|
|
—
|
|
|
—
|
|
|
125
|
|
|||||
Net cash provided from (used in) investing activities
|
(7,436
|
)
|
|
(2,949
|
)
|
|
(13,517
|
)
|
|
—
|
|
|
(23,902
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends paid to common stockholders
|
(12,057
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,057
|
)
|
|||||
Cash dividends paid to special stockholders
|
(3,750
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,750
|
)
|
|||||
Intercompany dividends paid
|
—
|
|
|
—
|
|
|
(39,097
|
)
|
|
39,097
|
|
|
—
|
|
|||||
Increase (decrease) in short-term debt
|
—
|
|
|
—
|
|
|
5,153
|
|
|
—
|
|
|
5,153
|
|
|||||
Borrowings on long-term debt
|
107,800
|
|
|
—
|
|
|
130,743
|
|
|
—
|
|
|
238,543
|
|
|||||
Repayments on long-term debt including current portion
|
(122,194
|
)
|
|
(28
|
)
|
|
(114,812
|
)
|
|
—
|
|
|
(237,034
|
)
|
|||||
Issuances of stock, common and treasury
|
93
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93
|
|
|||||
Redemptions of common stock
|
(620
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(620
|
)
|
|||||
Net cash provided from (used in) financing activities
|
(30,728
|
)
|
|
(28
|
)
|
|
(18,013
|
)
|
|
39,097
|
|
|
(9,672
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
(494
|
)
|
|
—
|
|
|
(494
|
)
|
|||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
(3,530
|
)
|
|
—
|
|
|
9,611
|
|
|
—
|
|
|
6,081
|
|
|||||
Cash, cash equivalents, and restricted cash at beginning of period
|
4,400
|
|
|
—
|
|
|
39,003
|
|
|
—
|
|
|
43,403
|
|
|||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
870
|
|
|
$
|
—
|
|
|
$
|
48,614
|
|
|
$
|
—
|
|
|
$
|
49,484
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
870
|
|
|
$
|
—
|
|
|
$
|
46,991
|
|
|
$
|
—
|
|
|
$
|
47,861
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
1,623
|
|
|
—
|
|
|
1,623
|
|
|||||
Total cash, cash equivalents, and restricted cash
|
$
|
870
|
|
|
$
|
—
|
|
|
$
|
48,614
|
|
|
$
|
—
|
|
|
$
|
49,484
|
|
|
Condensed Consolidating Statement of Cash Flows
|
||||||||||||||||||
|
Six months ended February 29, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided from (used in) operating activities
|
$
|
1,551
|
|
|
$
|
3,636
|
|
|
$
|
26,206
|
|
|
$
|
(756
|
)
|
|
$
|
30,637
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(6,217
|
)
|
|
(3,936
|
)
|
|
(10,212
|
)
|
|
—
|
|
|
(20,365
|
)
|
|||||
Proceeds from the sale of assets
|
18
|
|
|
300
|
|
|
525
|
|
|
—
|
|
|
843
|
|
|||||
Intercompany investments
|
(140
|
)
|
|
—
|
|
|
—
|
|
|
140
|
|
|
—
|
|
|||||
Net cash provided from (used in) investing activities
|
(6,339
|
)
|
|
(3,636
|
)
|
|
(9,687
|
)
|
|
140
|
|
|
(19,522
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends paid to common stockholders
|
(12,043
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,043
|
)
|
|||||
Cash dividends paid to special stockholders
|
(3,750
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,750
|
)
|
|||||
Intercompany dividends paid
|
—
|
|
|
—
|
|
|
(756
|
)
|
|
756
|
|
|
—
|
|
|||||
Increase (decrease) in short-term debt
|
—
|
|
|
—
|
|
|
4,275
|
|
|
—
|
|
|
4,275
|
|
|||||
Borrowings on long-term debt
|
41,300
|
|
|
—
|
|
|
4,355
|
|
|
—
|
|
|
45,655
|
|
|||||
Repayments on long-term debt including current portion
|
(36,739
|
)
|
|
—
|
|
|
(54,611
|
)
|
|
—
|
|
|
(91,350
|
)
|
|||||
Intercompany loan borrowings (repayments)
|
11,081
|
|
|
—
|
|
|
(11,081
|
)
|
|
—
|
|
|
—
|
|
|||||
Issuances of stock, common and treasury
|
148
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148
|
|
|||||
Redemptions of common stock
|
(900
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(900
|
)
|
|||||
Intercompany equity contributions received
|
—
|
|
|
—
|
|
|
140
|
|
|
(140
|
)
|
|
—
|
|
|||||
Net cash provided from (used in) financing activities
|
(903
|
)
|
|
—
|
|
|
(57,678
|
)
|
|
616
|
|
|
(57,965
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
(3,144
|
)
|
|
—
|
|
|
(3,144
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(5,691
|
)
|
|
—
|
|
|
(44,303
|
)
|
|
—
|
|
|
(49,994
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
7,090
|
|
|
—
|
|
|
89,782
|
|
|
—
|
|
|
96,872
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
1,399
|
|
|
$
|
—
|
|
|
$
|
45,479
|
|
|
$
|
—
|
|
|
$
|
46,878
|
|
•
|
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 exclusive of certain items such as costs related to acquisitions and integration, restructuring and related expenses, asset impairments and asset write-downs, which are considered relevant to aid analysis and understanding of the Company’s results and business trends. The Company believes that operating income before certain items is a useful measure to investors and management in understanding current profitability levels that may serve as a basis for evaluating future performance and facilitating comparability of results. In addition, operating income before certain items is important to management as it is a component of the Company’s annual and long-term employee incentive compensation plans.
|
•
|
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"),
|
•
|
Asia Pacific ("APAC"), and
|
•
|
Engineered Composites ("EC").
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||
|
(In thousands)
|
|
|
|
|
||||||||||
Inventory rework, remediation actions, and investigative costs
|
$
|
—
|
|
|
$
|
611
|
|
|
$
|
145
|
|
|
$
|
4,317
|
|
Recurring additional costs to produce product to customer specifications
|
866
|
|
|
1,530
|
|
|
1,702
|
|
|
2,659
|
|
||||
Total Lucent remediation costs
|
866
|
|
|
2,141
|
|
|
1,847
|
|
|
6,976
|
|
||||
Litigation related costs
|
596
|
|
|
—
|
|
|
1,260
|
|
|
—
|
|
||||
Total Lucent Matter costs
|
$
|
1,462
|
|
|
$
|
2,141
|
|
|
$
|
3,107
|
|
|
$
|
6,976
|
|
1.
|
Restructuring Plans.
During the first six months of fiscal 2017, the Company announced restructuring actions that will simplify its product families, consolidate its manufacturing footprint, and optimize its back-office support functions. The Company expects to reduce headcount by approximately 120 from its fiscal 2017 plans and realize annual savings of approximately $11.0 million.
|
2.
|
CFO Transition.
On November 1, 2016, John W. Richardson was appointed as the Company’s Executive Vice President and Chief Financial Officer, succeeding Joseph J. Levanduski. Mr. Richardson had most recently served as Chief Financial Officer for Qwest Communications International. Prior to that, Mr. Richardson served in progressively senior financial roles at Goodyear Tire & Rubber Company, including Vice President - Corporate Finance and Chief Accounting Officer, and as Chairman and General Manager of the company's British subsidiary, spanning a 35-year career at Goodyear.
|
3.
|
EC Expansion.
On October 18, 2016, the Company announced plans to expand its EC operations in EMEA. The Company will expand its compounding capacity with the addition of a new sheet molding compound production line in Germany. The new line will be operational by the end of 2017. The new production line will allow the Company to produce its entire range of glass and carbon fiber sheet molding compounds in Europe, including its Quantum Engineered Structural Composites® portfolio.
|
4.
|
USCAN Distribution Center Expansion
. On February 27, 2017, the Company announced it will open a distribution center at its idle Stryker, Ohio plant to serve customers located in Indiana, Illinois, Michigan, Ohio and Wisconsin. This is an extension to the Company's existing warehousing and distribution business in order to address the needs of the local market. The Stryker distribution center will be operational by the end of fiscal 2017.
|
5.
|
Chief Commercial Officer.
On December 14, 2016, Gary Phillips was appointed as the Company's Chief Commercial Officer. In this capacity, Mr Phillips' newly created organization will work closely with all of the critical stakeholders, in order to build a customer centric, growth oriented sales culture. Mr. Phillips' ability to create impactful relationships with colleagues and customers alike will be critical to the Company's success in reinvigorating its growth plan in fiscal 2017 and beyond. Prior to joining A. Schulman, Mr. Phillips served as the Vice President and General Manager of Comcast Cable in West Palm Beach, Florida from 2014 through 2016 and various roles of increasing responsibility with CenturyLink, and its predecessor company Qwest Communications, from 2001 through 2012, where he ultimately served as the Vice President of business markets/central region.
|
|
Three months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
EMEA
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
285,194
|
|
|
288,350
|
|
|
(3,156
|
)
|
|
(1.1
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
276,902
|
|
|
$
|
290,330
|
|
|
$
|
(13,428
|
)
|
|
(4.6
|
)%
|
|
$
|
(13,236
|
)
|
|
(0.1
|
)%
|
Segment gross profit
|
$
|
39,130
|
|
|
$
|
38,953
|
|
|
$
|
177
|
|
|
0.5
|
%
|
|
$
|
(1,606
|
)
|
|
4.6
|
%
|
Segment gross profit percentage
|
14.1
|
%
|
|
13.4
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
16,527
|
|
|
$
|
15,612
|
|
|
$
|
915
|
|
|
5.9
|
%
|
|
$
|
(565
|
)
|
|
9.5
|
%
|
Price per pound
|
$
|
0.971
|
|
|
$
|
1.007
|
|
|
$
|
(0.036
|
)
|
|
(3.6
|
)%
|
|
$
|
(0.046
|
)
|
|
1.0
|
%
|
|
Six months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
EMEA
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
580,701
|
|
|
603,276
|
|
|
(22,575
|
)
|
|
(3.7
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
572,974
|
|
|
$
|
618,426
|
|
|
$
|
(45,452
|
)
|
|
(7.3
|
)%
|
|
$
|
(22,706
|
)
|
|
(3.7
|
)%
|
Segment gross profit
|
$
|
83,788
|
|
|
$
|
86,637
|
|
|
$
|
(2,849
|
)
|
|
(3.3
|
)%
|
|
$
|
(2,756
|
)
|
|
(0.1
|
)%
|
Segment gross profit percentage
|
14.6
|
%
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
36,295
|
|
|
$
|
35,765
|
|
|
$
|
530
|
|
|
1.5
|
%
|
|
$
|
(1,249
|
)
|
|
5.0
|
%
|
Price per pound
|
$
|
0.987
|
|
|
$
|
1.025
|
|
|
$
|
(0.038
|
)
|
|
(3.7
|
)%
|
|
$
|
(0.039
|
)
|
|
0.1
|
%
|
|
Three months ended
|
|||||||||||||
USCAN
|
February 28,
2017 |
|
February 29,
2016 |
|
Increase (decrease)
|
|||||||||
|
(In thousands, except for %’s)
|
|||||||||||||
Pounds sold
|
177,987
|
|
|
189,465
|
|
|
(11,478
|
)
|
|
(6.1
|
)%
|
|||
Net sales
|
$
|
151,918
|
|
|
$
|
170,817
|
|
|
$
|
(18,899
|
)
|
|
(11.1
|
)%
|
Segment gross profit
|
$
|
20,060
|
|
|
$
|
27,241
|
|
|
$
|
(7,181
|
)
|
|
(26.4
|
)%
|
Segment gross profit percentage
|
13.2
|
%
|
|
15.9
|
%
|
|
|
|
|
|||||
Segment operating income
|
$
|
5,447
|
|
|
$
|
10,427
|
|
|
$
|
(4,980
|
)
|
|
(47.8
|
)%
|
Price per pound
|
$
|
0.854
|
|
|
$
|
0.902
|
|
|
$
|
(0.048
|
)
|
|
(5.3
|
)%
|
|
Six months ended
|
|||||||||||||
USCAN
|
February 28,
2017 |
|
February 29,
2016 |
|
Increase (decrease)
|
|||||||||
|
(In thousands, except for %’s)
|
|||||||||||||
Pounds sold
|
357,259
|
|
|
387,910
|
|
|
(30,651
|
)
|
|
(7.9
|
)%
|
|||
Net sales
|
$
|
308,336
|
|
|
$
|
349,099
|
|
|
$
|
(40,763
|
)
|
|
(11.7
|
)%
|
Segment gross profit
|
$
|
44,576
|
|
|
$
|
57,535
|
|
|
$
|
(12,959
|
)
|
|
(22.5
|
)%
|
Segment gross profit percentage
|
14.5
|
%
|
|
16.5
|
%
|
|
|
|
|
|||||
Segment operating income
|
$
|
13,943
|
|
|
$
|
22,590
|
|
|
$
|
(8,647
|
)
|
|
(38.3
|
)%
|
Price per pound
|
$
|
0.863
|
|
|
$
|
0.900
|
|
|
$
|
(0.037
|
)
|
|
(4.1
|
)%
|
|
Three months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
LATAM
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
32,982
|
|
|
32,708
|
|
|
274
|
|
|
0.8
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
39,662
|
|
|
$
|
38,158
|
|
|
$
|
1,504
|
|
|
3.9
|
%
|
|
$
|
1,420
|
|
|
0.2
|
%
|
Segment gross profit
|
$
|
9,595
|
|
|
$
|
8,466
|
|
|
$
|
1,129
|
|
|
13.3
|
%
|
|
$
|
(29
|
)
|
|
13.7
|
%
|
Segment gross profit percentage
|
24.2
|
%
|
|
22.2
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
5,459
|
|
|
$
|
4,229
|
|
|
$
|
1,230
|
|
|
29.1
|
%
|
|
$
|
(184
|
)
|
|
33.4
|
%
|
Price per pound
|
$
|
1.203
|
|
|
$
|
1.167
|
|
|
$
|
0.036
|
|
|
3.1
|
%
|
|
$
|
0.044
|
|
|
(0.7
|
)%
|
|
Six months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
LATAM
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
67,170
|
|
|
70,066
|
|
|
(2,896
|
)
|
|
(4.1
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
81,878
|
|
|
$
|
83,361
|
|
|
$
|
(1,483
|
)
|
|
(1.8
|
)%
|
|
$
|
1,737
|
|
|
(3.9
|
)%
|
Segment gross profit
|
$
|
19,012
|
|
|
$
|
18,171
|
|
|
$
|
841
|
|
|
4.6
|
%
|
|
$
|
(102
|
)
|
|
5.2
|
%
|
Segment gross profit percentage
|
23.2
|
%
|
|
21.8
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
10,894
|
|
|
$
|
9,833
|
|
|
$
|
1,061
|
|
|
10.8
|
%
|
|
$
|
(309
|
)
|
|
13.9
|
%
|
Price per pound
|
$
|
1.219
|
|
|
$
|
1.190
|
|
|
$
|
0.029
|
|
|
2.4
|
%
|
|
$
|
0.026
|
|
|
0.3
|
%
|
|
Three months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
APAC
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
45,133
|
|
|
43,840
|
|
|
1,293
|
|
|
2.9
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
48,914
|
|
|
$
|
45,063
|
|
|
$
|
3,851
|
|
|
8.5
|
%
|
|
$
|
(1,345
|
)
|
|
11.5
|
%
|
Segment gross profit
|
$
|
8,908
|
|
|
$
|
8,199
|
|
|
$
|
709
|
|
|
8.6
|
%
|
|
$
|
(306
|
)
|
|
12.4
|
%
|
Segment gross profit percentage
|
18.2
|
%
|
|
18.2
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
4,901
|
|
|
$
|
4,670
|
|
|
$
|
231
|
|
|
4.9
|
%
|
|
$
|
(197
|
)
|
|
9.2
|
%
|
Price per pound
|
$
|
1.084
|
|
|
$
|
1.028
|
|
|
$
|
0.056
|
|
|
5.4
|
%
|
|
$
|
(0.030
|
)
|
|
8.4
|
%
|
|
Six months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
APAC
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
93,181
|
|
|
86,883
|
|
|
6,298
|
|
|
7.2
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
99,651
|
|
|
$
|
90,755
|
|
|
$
|
8,896
|
|
|
9.8
|
%
|
|
$
|
(1,793
|
)
|
|
11.9
|
%
|
Segment gross profit
|
$
|
18,034
|
|
|
$
|
16,073
|
|
|
$
|
1,961
|
|
|
12.2
|
%
|
|
$
|
(523
|
)
|
|
15.5
|
%
|
Segment gross profit percentage
|
18.1
|
%
|
|
17.7
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
9,914
|
|
|
$
|
8,977
|
|
|
$
|
937
|
|
|
10.4
|
%
|
|
$
|
(365
|
)
|
|
14.5
|
%
|
Price per pound
|
$
|
1.069
|
|
|
$
|
1.045
|
|
|
$
|
0.024
|
|
|
2.3
|
%
|
|
$
|
(0.020
|
)
|
|
4.2
|
%
|
|
Three months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
EC
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
40,556
|
|
|
40,825
|
|
|
(269
|
)
|
|
(0.7
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
51,282
|
|
|
$
|
47,393
|
|
|
$
|
3,889
|
|
|
8.2
|
%
|
|
$
|
317
|
|
|
7.5
|
%
|
Segment gross profit
|
$
|
12,831
|
|
|
$
|
10,987
|
|
|
$
|
1,844
|
|
|
16.8
|
%
|
|
$
|
72
|
|
|
16.1
|
%
|
Segment gross profit percentage
|
25.0
|
%
|
|
23.2
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
4,111
|
|
|
$
|
1,450
|
|
|
$
|
2,661
|
|
|
—
|
|
|
$
|
(142
|
)
|
|
—
|
|
Price per pound
|
$
|
1.264
|
|
|
$
|
1.161
|
|
|
$
|
0.103
|
|
|
8.9
|
%
|
|
$
|
0.007
|
|
|
8.3
|
%
|
|
Six months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
EC
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
85,761
|
|
|
84,921
|
|
|
840
|
|
|
1.0
|
%
|
|
|
|
|
||||||
Net sales
|
$
|
105,839
|
|
|
$
|
99,339
|
|
|
$
|
6,500
|
|
|
6.5
|
%
|
|
$
|
674
|
|
|
5.9
|
%
|
Segment gross profit
|
$
|
26,799
|
|
|
$
|
24,195
|
|
|
$
|
2,604
|
|
|
10.8
|
%
|
|
$
|
146
|
|
|
10.2
|
%
|
Segment gross profit percentage
|
25.3
|
%
|
|
24.4
|
%
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
9,222
|
|
|
$
|
5,552
|
|
|
$
|
3,670
|
|
|
66.1
|
%
|
|
$
|
(106
|
)
|
|
68.0
|
%
|
Price per pound
|
$
|
1.234
|
|
|
$
|
1.170
|
|
|
$
|
0.064
|
|
|
5.5
|
%
|
|
$
|
0.008
|
|
|
4.8
|
%
|
|
Three months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
Consolidated
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
581,852
|
|
|
595,188
|
|
|
(13,336
|
)
|
|
(2.2
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
568,678
|
|
|
$
|
591,761
|
|
|
$
|
(23,083
|
)
|
|
(3.9
|
)%
|
|
$
|
(12,640
|
)
|
|
(1.8
|
)%
|
Operating income
|
$
|
21,341
|
|
|
$
|
16,006
|
|
|
$
|
5,335
|
|
|
33.3
|
%
|
|
$
|
(1,036
|
)
|
|
39.8
|
%
|
Operating income before certain items*
|
$
|
27,380
|
|
|
$
|
28,704
|
|
|
$
|
(1,324
|
)
|
|
(4.6
|
)%
|
|
$
|
(1,072
|
)
|
|
(0.9
|
)%
|
Price per pound
|
$
|
0.977
|
|
|
$
|
0.994
|
|
|
$
|
(0.017
|
)
|
|
(1.7
|
)%
|
|
$
|
(0.022
|
)
|
|
0.5
|
%
|
|
Three months ended
|
||||||
|
February 28, 2017
|
|
February 29, 2016
|
||||
|
(In thousands)
|
||||||
Operating income (loss)
|
$
|
21,341
|
|
|
$
|
16,006
|
|
Costs related to acquisitions and integrations
|
—
|
|
|
4,261
|
|
||
Restructuring and related costs
(1)
|
4,970
|
|
|
5,769
|
|
||
Accelerated depreciation
|
467
|
|
|
2,057
|
|
||
Lucent costs
|
596
|
|
|
611
|
|
||
CEO transition costs
|
6
|
|
|
—
|
|
||
Total operating income before certain items
|
$
|
27,380
|
|
|
$
|
28,704
|
|
|
Six months ended
|
||||||||||||||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
|
|
Favorable (unfavorable)
|
||||||||||||||
Consolidated
|
|
|
Increase (decrease)
|
|
FX Impact
|
|
Excluding FX
|
||||||||||||||
|
(In thousands, except for %’s and per pound data)
|
||||||||||||||||||||
Pounds sold
|
1,184,072
|
|
|
1,233,056
|
|
|
(48,984
|
)
|
|
(4.0
|
)%
|
|
|
|
|
||||||
Net sales
|
$
|
1,168,678
|
|
|
$
|
1,240,980
|
|
|
$
|
(72,302
|
)
|
|
(5.8
|
)%
|
|
$
|
(21,903
|
)
|
|
(4.1
|
)%
|
Operating income
|
$
|
40,437
|
|
|
$
|
42,152
|
|
|
$
|
(1,715
|
)
|
|
(4.1
|
)%
|
|
$
|
(1,981
|
)
|
|
0.6
|
%
|
Operating income before certain items*
|
$
|
62,387
|
|
|
$
|
66,545
|
|
|
$
|
(4,158
|
)
|
|
(6.2
|
)%
|
|
$
|
(2,027
|
)
|
|
(3.2
|
)%
|
Price per pound
|
$
|
0.987
|
|
|
$
|
1.006
|
|
|
$
|
(0.019
|
)
|
|
(1.9
|
)%
|
|
$
|
(0.018
|
)
|
|
(0.1
|
)%
|
|
Six months ended
|
||||||
|
February 28, 2017
|
|
February 29, 2016
|
||||
|
(In thousands)
|
||||||
Operating income (loss)
|
$
|
40,437
|
|
|
$
|
42,152
|
|
Costs related to acquisitions and integrations
|
605
|
|
|
6,127
|
|
||
Restructuring and related costs
(1)
|
18,243
|
|
|
10,439
|
|
||
Accelerated depreciation
|
823
|
|
|
3,510
|
|
||
Lucent costs
|
1,405
|
|
|
4,317
|
|
||
Asset impairment
|
678
|
|
|
—
|
|
||
CEO transition costs
|
196
|
|
|
—
|
|
||
Total operating income before certain items
|
$
|
62,387
|
|
|
$
|
66,545
|
|
|
Three months ended
|
||||||||||||
|
February 28, 2017
|
|
February 29, 2016
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Engineered Composites
|
$
|
51,282
|
|
|
9
|
%
|
|
$
|
47,393
|
|
|
8
|
%
|
Custom Concentrates and Services
|
259,586
|
|
|
46
|
|
|
268,459
|
|
|
45
|
|
||
Performance Materials
|
257,810
|
|
|
45
|
|
|
275,909
|
|
|
47
|
|
||
Total consolidated net sales
|
$
|
568,678
|
|
|
100
|
%
|
|
$
|
591,761
|
|
|
100
|
%
|
|
Six months ended
|
||||||||||||
|
February 28, 2017
|
|
February 29, 2016
|
||||||||||
|
(In thousands, except for %'s)
|
||||||||||||
Engineered Composites
|
$
|
105,839
|
|
|
9
|
%
|
|
$
|
99,339
|
|
|
8
|
%
|
Custom Concentrates and Services
|
535,505
|
|
|
46
|
|
|
564,296
|
|
|
45
|
|
||
Performance Materials
|
527,334
|
|
|
45
|
|
|
577,345
|
|
|
47
|
|
||
Total consolidated net sales
|
$
|
1,168,678
|
|
|
100
|
%
|
|
$
|
1,240,980
|
|
|
100
|
%
|
|
Employee-related Costs
|
|
Other Costs
|
|
Total Restructuring Costs
|
||||||
|
(In thousands)
|
||||||||||
Accrual balance as of August 31, 2016
|
$
|
3,542
|
|
|
$
|
402
|
|
|
3,944
|
|
|
Fiscal 2017 charges
|
10,718
|
|
|
704
|
|
|
11,422
|
|
|||
Fiscal 2017 payments
|
(7,980
|
)
|
|
(857
|
)
|
|
(8,837
|
)
|
|||
Translation
|
(134
|
)
|
|
(8
|
)
|
|
(142
|
)
|
|||
Accrual balance as of February 28, 2017
|
$
|
6,146
|
|
|
$
|
241
|
|
|
$
|
6,387
|
|
|
February 28, 2017
|
|
August 31, 2016
|
|
February 29, 2016
|
Days in receivables
|
60
|
|
56
|
|
59
|
Days in inventory
|
54
|
|
48
|
|
55
|
Days in payables
|
66
|
|
56
|
|
56
|
Total working capital days
|
48
|
|
48
|
|
58
|
|
February 28, 2017
|
|
August 31, 2016
|
|
$ Change
|
|
% Change
|
|||||||
|
(In thousands, except for %’s)
|
|||||||||||||
Cash and cash equivalents, and restricted cash
|
$
|
49,484
|
|
|
$
|
43,403
|
|
|
$
|
6,081
|
|
|
14.0
|
%
|
Working capital, excluding cash and assets held for sale
|
$
|
255,759
|
|
|
$
|
250,901
|
|
|
$
|
4,858
|
|
|
1.9
|
%
|
Long-term debt
(1)
|
$
|
921,312
|
|
|
$
|
919,349
|
|
|
$
|
1,963
|
|
|
0.2
|
%
|
Total debt
(1)
|
$
|
950,169
|
|
|
$
|
944,796
|
|
|
$
|
5,373
|
|
|
0.6
|
%
|
Net debt
(1) (2)
|
$
|
900,685
|
|
|
$
|
901,393
|
|
|
$
|
(708
|
)
|
|
(0.1
|
)%
|
Total A. Schulman, Inc. stockholders’ equity
|
$
|
143,669
|
|
|
$
|
159,269
|
|
|
$
|
(15,600
|
)
|
|
(9.8
|
)%
|
|
February 28, 2017
|
|
August 31, 2016
|
||||
|
(In thousands)
|
||||||
Existing capacity:
|
|
|
|
||||
Revolving Facility
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Foreign short-term lines of credit
|
29,606
|
|
|
37,953
|
|
||
Total capacity from credit lines
|
$
|
329,606
|
|
|
$
|
337,953
|
|
Availability:
|
|
|
|
||||
Revolving Facility
|
$
|
216,551
|
|
|
$
|
279,120
|
|
Foreign short-term lines of credit
|
14,179
|
|
|
27,959
|
|
||
Total available funds from credit lines
|
$
|
230,730
|
|
|
$
|
307,079
|
|
•
|
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 and unanticipated developments regarding contingencies, such as pending and future litigation and other claims, including developments that would require increases in our costs and/or reserves for such contingencies;
|
•
|
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;
|
•
|
our current debt position could adversely affect our financial health and prevent us from fulfilling our financial obligations; and
|
•
|
failure of counterparties to perform under the terms and conditions of contractual arrangements, including suppliers, customers, buyers and sellers of a business and other third parties with which the Company contracts.
|
•
|
Control owners were educated and re-trained regarding risks, controls and maintaining adequate evidence.
|
•
|
We clarified and communicated appropriate roles and responsibilities for process and systems controls for both information technology and business users, including ensuring effective mitigating controls to reduce the related segregation of duties risks.
|
•
|
Process owners are ensuring that procedures for appropriate review and approval of cash disbursements and revenue transactions, including approval of product pricing, subsequent issuances of credit memos and accounting for rebate arrangements, are being followed.
|
(a)
|
Exhibits
|
Exhibit Number
|
|
Exhibit
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of the Company, as amended (for purposes of Commission reporting compliance only) (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed with the Commission on July 7, 2015).
|
|
|
|
3.2
|
|
Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 4, 2017).
|
|
|
|
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 to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 3, 2015).
|
|
|
|
4.3
|
|
Second Supplemental Indenture, dated as of August 31, 2016, by and among A. Schulman, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K filed with the Commission on October 26, 2016).
|
|
|
|
4.4
|
|
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).
|
|
|
|
4.5
|
|
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).
|
|
|
|
4.6
|
|
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*
|
|
Form of 2017 Notice of Equity Grant and Award Agreement for Non-Employee Directors (filed herewith).
|
|
|
|
10.2*
|
|
Form of 2017 Notice of Grant of Restricted Stock Units and Incentive Stock Options (U.S. Employees) (filed herewith).
|
|
|
|
10.3*
|
|
Form of 2017 Notice of Grant of Restricted Stock Units, Incentive Stock Options, and Nonqualified Stock Options (U.S. Employees) (filed herewith).
|
|
|
|
10.4*
|
|
Form of 2017 Notice of Grant of Restricted Stock Units and Nonqualified Stock Options (Non-U.S. Employees) (filed herewith).
|
|
|
|
10.5*
|
|
Form of 2017 Restricted Stock Unit Award Agreement (U.S. Employees) (filed herewith).
|
|
|
|
10.6
|
|
Form of 2017 Restricted Stock Unit Award Agreement (Non-U.S. Employees) (filed herewith).
|
|
|
|
10.7
|
|
Form of 2017 Incentive Stock Option Award Agreement (U.S. Employees) (filed herewith).
|
|
|
|
10.8
|
|
Form of 2017 Nonqualified Stock Option Award Agreement (filed herewith).
|
|
|
|
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/ John W. Richardson
|
|
John W. Richardson, 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:
|
April 4, 2017
|
Notice of Director Equity Grant
|
[Name]
|
Grant Date:
|
January 11, 2017
|
Number of Shares:
|
Your Award consists of 2,331 unrestricted Whole Shares
1
|
Vesting Schedule:
|
None
|
Settlement:
|
Your Award will be settled in Shares
|
•
|
Read the Plan carefully to ensure you understand how the Plan works; and
|
•
|
Read this Notice of Grant and corresponding Award Agreement carefully to ensure you understand the nature of your Award and what you must do to earn it.
|
1.
|
Nature of Award
. Effective as of the date specified (the “Grant Date”) in the attached Notice of Grant (the “Grant Notice”), the Company hereby grants to the individual identified in the Grant Notice (the “Participant”) an award as set forth in the Grant Notice (the “Award”). The Award is subject to the terms and conditions described in the Plan, this Award Agreement and the Grant Notice.
|
2.
|
Number of Shares
. The number of Shares in your Award is set forth in the Grant Notice. The number of your Shares was determined by dividing the Director target amount for the equity portion of your annual retainer by the average reported closing price of a Share during the 30-day period ending on the last trading day prior to the Grant Date, and rounding the resulting number of Shares to the nearest whole Share.
|
3.
|
Other Terms and Conditions
.
|
(a)
|
Governing Law
. This Award Agreement will be construed in accordance with and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio, except to the extent that the Delaware General Corporation Law is mandatorily applicable.
|
(b)
|
Other Agreements
. Your Award is subject to the terms of any other written agreements between you and the Company or a Related Entity or Affiliate to the extent that those other agreements do not directly conflict with the terms of the Plan or this Award Agreement.
|
Notice of Grant of
Restricted Stock Units and Incentive Stock Options
|
[Name]
|
Grant Date:
|
January 11, 2017
|
Number of Shares:
|
Your Awards consist of the following:
Restricted Stock Units (each a “Unit”)
1
Restricted Stock Units (ROIC) (each a “Unit”)
2
Restricted Stock Units (EPS) (each a “Unit”)
3
Incentive Stock Options (ISO) (each an “Option”)
|
Vesting Schedule:
|
Your Units and Options will be subject to vesting on the third anniversary of the Grant Date.
|
Settlement:
|
Your Awards of Units will be settled in Shares, the number of which will depend on whether the terms and conditions described in the Award Agreement, the Summary of Performance Objectives, this Notice of Grant, and the Plan are satisfied. Payment for Shares purchased upon the exercise of Options may be made in cash, by tendering previously acquired Shares, by cashless exercise (including by withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law), or by a combination of these methods.
|
•
|
Read the Plans carefully to ensure you understand how the Plans works; and
|
•
|
Read this Notice of Grant and the corresponding Award Agreements and Summary of Performance Objectives carefully to ensure you understand the nature of your Awards and what you must do to earn them.
|
Notice of Grant of
Restricted Stock Units, Incentive Stock Options and Nonqualified Stock Options
|
[Name]
|
Grant Date:
|
January 11, 2017
|
Number of Shares:
|
Your Awards consist of the following:
Restricted Stock Units (each a “Unit”)
1
Restricted Stock Units (ROIC) (each a “Unit”)
2
Restricted Stock Units (EPS) (each a “Unit”)
3
Incentive Stock Options (ISO) (each an “Option”)
Nonqualified Stock Options (NQSO) (each an “Option”)
|
Vesting Schedule:
|
Your Units and Options will be subject to vesting on the third anniversary of the Grant Date.
|
Settlement:
|
Your Awards of Units will be settled in Shares, the number of which will depend on whether the terms and conditions described in the Award Agreement, the Summary of Performance Objectives, this Notice of Grant, and the Plan are satisfied. Payment for Shares purchased upon the exercise of Options may be made in cash, by tendering previously acquired Shares, by cashless exercise (including by withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law), or by a combination of these methods.
|
•
|
Read the Plans carefully to ensure you understand how the Plans works; and
|
•
|
Read this Notice of Grant and the corresponding Award Agreements and Summary of Performance Objectives carefully to ensure you understand the nature of your Awards and what you must do to earn them.
|
Notice of Grant of
Restricted Stock Units [and Nonqualified Stock Options]
|
[Name]
|
Grant Date:
|
January 11, 2017
|
Number of Shares:
|
Your Awards consist of the following:
Restricted Stock Units (each a “Unit”)
1
Restricted Stock Units (ROIC) (each a “Unit”)
2
Restricted Stock Units (EPS) (each a “Unit”)
3
[
Nonqualified Stock Options (NQSO) (each an “Option”)]
|
Vesting Schedule:
|
Your Units and Options will be subject to vesting on the third anniversary of the Grant Date.
|
Settlement:
|
You will receive one Share for each Unit that vests in accordance with the terms and conditions described in the Award Agreements, the Summary of Performance Objectives (if applicable), this Notice of Grant, and the Plan. The Committee may, however, in its sole discretion, determine instead to settle Units that vest in cash. Payment for Shares purchased upon the exercise of Options may be made in cash, by tendering previously acquired Shares, by cashless exercise (including by withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law), or by a combination of these methods.
|
•
|
Read the Plans carefully to ensure you understand how the Plans works; and
|
•
|
Read this Notice of Grant and the corresponding Award Agreements and Summary of Performance Objectives carefully to ensure you understand the nature of your Awards and what you must do to earn them.
|
1.
|
Nature of Award
. Effective as of the date (the “Grant Date”) specified in the accompanying Notice of Grant (the “Grant Notice”), the Company hereby grants to the individual identified in the Grant Notice (the “Participant”) awards of Units as set forth in the Grant Notice (the “Awards”). The Awards are subject to the terms and conditions described in the Grant Notice, this Restricted Stock Unit Award Agreement (“Award Agreement”), the Summary of Performance Objectives attached hereto, and the Plans.
|
2.
|
Number of Units
. The number of Units in your Awards are set forth in the Grant Notice. For purposes of this Award Agreement, each whole Unit represents the right to receive one Share upon settlement of the respective Awards, as applicable under the Grant Notice.
|
3.
|
Vesting
. Your Units will be settled or will be forfeited depending on whether the terms and conditions described in this Award Agreement, the Summary of Performance Objectives, the Plans and the Grant Notice are satisfied.
|
(a)
|
Normal Vesting Date
. Your Units will be subject to vesting in accordance with the schedule identified in the Grant Notice (the “Normal Vesting Date”) and the number of Units that actually vest may be between 0% and 100% of your Units. If the scheduled Normal Vesting Date is a non-business day, the next following business day will be considered the Normal Vesting Date.
|
(b)
|
Restricted Stock Units not subject to Performance Objectives
. All of your Restricted Stock Units not subject to performance objectives will vest on the third anniversary of the Grant Date, provided your employment has not terminated prior to that date.
|
(c)
|
Performance Objectives for Restricted Stock Units (ROIC) Award
.
Your Award of Restricted Stock Units (ROIC) described in the Grant Notice will vest depending on the Company’s ROIC for the Performance Period, determined at the end of the Performance Period. The Company’s ROIC at the end of the Performance Period may be achieved at “threshold”, “target” or “maximum” levels. The number of these Restricted Stock Units that vest on the Normal Vesting Date will be determined by multiplying by the vesting percentage that corresponds to the level of achievement of the Company’s ROIC at the end of the Performance Period relative to the goals set forth in your Summary of Performance Objectives (i.e., 25% at “threshold”, 50% at “target”, or 100% at “maximum”).
|
(i)
|
Definitions
. As used in this Agreement with respect to an Award of Restricted Stock Units (ROIC):
|
A.
|
Performance Period
. The three-year period beginning on the September 1 last preceding the Grant Date.
|
B.
|
ROIC
. The three-year average annual Return on Invested Capital. Return on Invested Capital is calculated for each fiscal year in the Performance Period by dividing the Company’s NOPAT for such period by the Company’s Average Invested Capital for such period. The ROIC is compared to the performance objectives set forth in your Summary of Performance Objectives to determine the vesting percentage.
|
C.
|
NOPAT
. The Company’s net operating profit after taxes from continuing operations (based on an assumed effective tax rate of 30%), based on non-GAAP earnings, for each fiscal year in the Performance Period.
|
D.
|
Average Invested Capital
. The sum of the Company’s total shareholders’ equity, minus cash and cash equivalents and goodwill, and plus total debt at the end of each month during the Performance Period. Average Invested Capital for each fiscal year in the Performance Period is the average of the twelve month-end invested capital amounts.
|
(d)
|
Performance Objectives for Restricted Stock Units (EPS) Award
. Your Award of Restricted Stock Units (EPS) described in the Grant Notice will vest depending on the Company’s Cumulative EPS for the Performance Period, determined at the end of the Performance Period. The Company’s Cumulative EPS at the end of the Performance Period may be achieved at “threshold”, “target” or “maximum” levels. The number of these Restricted Stock Units that vest on the Normal Vesting Date will be determined by multiplying by the vesting percentage that corresponds to the level of achievement of the Company’s Cumulative EPS at the end of the Performance Period relative to the goals set forth in your Summary of Performance Objectives (i.e., 25% at “threshold”, 50% at “target”, or 100% at “maximum”).
|
(i)
|
Definitions
. As used in this Agreement with respect to an Award of Restricted Stock Units (EPS):
|
A.
|
Cumulative EPS
. Cumulative EPS is calculated as the sum of diluted EPS for each fiscal year in the Performance Period. The three-year Cumulative EPS is compared to the performance objectives set forth in your Summary of Performance Objectives to determine the vesting percentage.
|
B.
|
Diluted EPS.
Diluted EPS for each fiscal year in the Performance Period is the non-GAAP diluted EPS as reported by the Company.
|
C.
|
Performance Period
. The three-year period beginning on the September 1 last preceding the Grant Date.
|
(e)
|
Committee Certification for Performance-Based Restricted Stock Units (ROIC or EPS) Awards
. Notwithstanding the foregoing, to the extent that the Company intends these Units to constitute “performance-based compensation” for purposes of Code Section 162(m), no performance-based Units will vest until the Committee (as defined in the Plans) certifies the extent to which the performance objectives described in Section 3(c) or 3(d) have been satisfied during the relevant Performance Period.
|
(f)
|
Change in Control
. Notwithstanding the foregoing, in the event of a Change in Control:
|
(i)
|
Restricted Stock Units (ROIC) Award
. You will immediately vest in the number of Restricted Stock Units (ROIC) at the “target” level of performance in the event of a Change in Control before the Normal Vesting Date.
|
(ii)
|
Restricted Stock Units (EPS) Award
. You will immediately vest in the number of Restricted Stock Units (EPS) at the “target” level of performance in the event of a Change in Control before the Normal Vesting Date.
|
(iii)
|
Restricted Stock Units Award
. Your non-performance Restricted Stock Units will immediately vest in the event of a Change in Control before the Normal Vesting Date.
|
4.
|
Effect of Termination
. You may forfeit your Awards if you terminate employment prior to the Normal Vesting Date, although this will depend on the reason for your termination, as provided below:
|
(a)
|
Restricted Stock Units (ROIC or EPS)
.
|
(i)
|
Termination Due to Death, Disability, or Retirement
. If you terminate employment due to your death, Disability, or Retirement (provided that the Committee agrees to treat such termination as Retirement), you will vest in a prorated number of your ROIC- or EPS-based Restricted Stock Units. The prorated number will be equal to the product of: (x) the number of these Units that would have vested if you terminated on the Normal Vesting Date, and (y) a fraction, the numerator of which is the number of whole months between the Grant Date and your termination date, and the denominator of which is 36. Further, your prorated ROIC- or EPS-based Restricted Stock Units will vest only to the extent that the performance criteria described in Sections 3(c) or 3(d), as applicable, are satisfied at the Normal Vesting Date. For purposes of this calculation, a whole month will be determined on the basis of each monthly anniversary of the Grant Date occurring before the date of death, Disability, or Retirement.
|
(ii)
|
Termination for Any Other Reason
. If you terminate for any reason other than due to death, Disability, or Retirement as specified in Section 4(a)(i), all of your performance-based Units will be forfeited.
|
(b)
|
Restricted Stock Units (service-based)
.
|
(i)
|
Termination Due to Death or Disability
. If you die or become Disabled, your service-based Restricted Stock Units will fully vest on the date of your death or Disability.
|
(ii)
|
Termination Due to Retirement
. If you terminate due to Retirement, and provided that the Committee agrees to treat your termination as a Retirement, you will vest in a prorated portion of your Restricted Stock Units determined by multiplying the number of Restricted Stock Units by a fraction, the numerator of which is the number of whole months you were employed from the Grant Date to the date of Retirement, and the denominator of which is 36. For purposes of this calculation, a whole month will be determined on the basis of each monthly anniversary of the Grant Date occurring before the date of Retirement.
|
(iii)
|
Termination for any Other Reason
. If you terminate under any other circumstances, all non-performance based Restricted Stock Units will be forfeited on your termination date.
|
5.
|
Settlement
. If all applicable terms and conditions have been met, your Awards will be settled according to the terms in the Grant Notice as soon as administratively practicable, but no later than 60 days after the later of (a) the Normal Vesting Date, or (b) the date on which the Committee certifies the satisfaction of the performance objectives (if applicable) pursuant to Section 3(e).
|
6.
|
Other Terms and Conditions.
|
(a)
|
Rights With Respect to Units
.
|
(i)
|
Rights During Performance Period for Awards of Restricted Stock Units (ROIC or EPS)
.
|
A.
|
Voting Rights
. During the Performance Period, you will have no voting rights with respect to these Units.
|
B.
|
Dividend Rights
.
You shall be granted dividend equivalent rights entitling you to a payment equal to the amount of any cash dividends that are declared and paid during the Performance Period with respect to the target vesting level of Units (i.e., 50% of your ROIC- or EPS-based Restricted Stock Units), subject to the terms and conditions of the Plans and this Award Agreement. Your dividend equivalent rights shall be subject to the same terms and conditions as the related Units and shall vest and be settled in cash if, when and only to the extent the related Units vest and are settled. In the event a Unit is forfeited under this Award Agreement, the related dividend equivalent right also will be forfeited.
|
(ii)
|
Rights Prior to Vesting for Restricted Stock Units not subject to Performance Objectives
.
|
A.
|
Voting Rights
. Until your Units vest, you will have no voting rights with respect to the Units.
|
B.
|
Dividend Rights
.
You shall be granted dividend equivalent rights entitling you to a payment equal to the amount of any cash dividends that are declared and paid with respect to your Restricted Stock Units, subject to the terms and conditions of the Plans and this Award Agreement. Your dividend equivalent rights shall be subject to the same terms and conditions as the related Restricted Stock Units and shall vest and be settled in cash if, when and to the extent the related Restricted Stock Units vest and are settled, depending on whether or not you have met the conditions described in this Award Agreement, the Grant Notice and in the Plans. In the event that a Restricted Stock Unit is forfeited under this Award Agreement, the related dividend equivalent rights will also be forfeited.
|
(b)
|
Beneficiary Designation
. You may name a beneficiary(ies) to receive any portion of your Awards and any other right under the Plans that is unsettled at your death. To do so, you must complete a beneficiary designation form by contacting Katie Pickle, Total Rewards Manager, by telephone ((832) 663-3107) or email (Katie.Pickle@aschulman.com). If you previously completed a valid beneficiary designation form, such form will apply to the Awards until it is changed or revoked. If you die without correctly completing a beneficiary designation form, or if your designated beneficiary does not survive you, your beneficiary will be your surviving spouse or, if you do not have a surviving spouse, your estate.
|
(c)
|
Taxes and Tax Withholding
. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any tax, social security contribution, payroll tax or other amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the Awards. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to you (e.g. from your salary), (ii) withheld from the value of any Awards being settled or any Shares transferred in connection
|
(d)
|
Transferring Your Awards
. Normally, your Awards may not be transferred to another person. However, as described above, you may complete a beneficiary designation form to name the person to receive any portion of your Awards that are settled after you die.
|
(e)
|
Not an Employment Agreement
. This Award imposes no obligation on the Company or any Affiliate to employ the Participant for any period. This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Participant and the Company or any Affiliate or to guarantee the right to remain employed by the Company or any Affiliate for any specified term.
|
(f)
|
Requirements of Law
. This Award shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Shares pursuant to this Award, at any time, if the offering of the Shares covered by this Award violates or is not in compliance with any laws, rules or regulations of the United States or any state or country.
|
(g)
|
Governing Law
. This Award Agreement will be interpreted and construed in accordance with and governed and enforced by the laws (other than laws governing conflicts of laws) of the State of Ohio, except to the extent that the Delaware General Corporation Law is mandatorily applicable.
|
(h)
|
Severability
. The provisions of this Award Agreement are severable, and if any one or more of the provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
|
(i)
|
Waiver
. No failure or delay by the Company to enforce any provision of this Award Agreement or exercise any right or remedy provided by law shall constitute a waiver of that or any other provision, right or remedy, nor shall it prevent or restrict the further exercise of that or any other provision, right or remedy. No single or partial exercise of such provision, right or remedy shall prevent or restrict the further exercise of that or any other provision, right or remedy.
|
(j)
|
Data Privacy.
In order to perform its obligations under the Plans or for the implementation and administration of the Plans, the Company or Affiliate may collect, transfer, use, process, or hold certain personal data about you. Such data includes, but is not limited to, your name, nationality, citizenship, work authorization, date of birth, age, government or tax identification number, passport number, brokerage account information, address, compensation and equity award history, and beneficiaries’ contact information.
|
(k)
|
Other Agreements
. Your Awards are subject to the terms of any other written agreements between you and the Company or a Related Entity or Affiliate to the extent that those other agreements do not directly conflict with the terms of the Plans or this Award Agreement.
|
(l)
|
Adjustments to Your Awards
. Subject to the terms of the Plans, your Awards will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of your Units will be adjusted to reflect a stock split, a stock dividend, recapitalization, including an extraordinary dividend, merger, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or other similar corporate change affecting Shares).
|
(m)
|
Clawback
. The Units and any Shares issued in connection with the settlement of the Units are subject to any clawback policy adopted by the Company from time to time.
|
(n)
|
Acceptance
. You must accept the Award and agree to the terms and conditions of the Award as described above by electronically accepting this Award Agreement within 60 days of the Grant Date.
|
1.
|
Nature of Award
. Effective as of the date (the “Grant Date”) specified in the accompanying Notice of Grant (the “Grant Notice”), the Company hereby grants to the individual identified in the Grant Notice (the “Participant”) awards of Units as set forth in the Grant Notice (the “Awards”). The Awards are subject to the terms and conditions described in the Grant Notice, this Restricted Stock Unit Award Agreement (“Award Agreement”), the Appendix and Summary of Performance Objectives attached hereto, and the Plans.
Please note that the Appendix contains country-specific notices, disclaimers and/or terms and conditions which may apply to you and may be material to your participation in the Plans.
|
2.
|
Number of Units
. The number of Units in your Awards are set forth in the Grant Notice. For purposes of this Award Agreement, each whole Unit represents the right to receive one Share upon settlement of the respective Awards, as applicable under the Grant Notice.
|
3.
|
Vesting
. Your Units will be settled or will be forfeited depending on whether the terms and conditions described in this Award Agreement, the Summary of Performance Objectives, the Plans and the Grant Notice are satisfied.
|
(a)
|
Normal Vesting Date
. Your Units will be subject to vesting in accordance with the schedule identified in the Grant Notice (the “Normal Vesting Date”) and the number of Units that actually vest may be between 0% and 100% of your Units. If the scheduled Normal Vesting Date is a non-business day, the next following business day will be considered the Normal Vesting Date.
|
(b)
|
Restricted Stock Units not subject to Performance Objectives
. All of your Restricted Stock Units not subject to performance objectives will vest on the third anniversary of the Grant Date, provided your employment has not terminated prior to that date.
|
(c)
|
Performance Objectives for Restricted Stock Units (ROIC) Award
.
Your Award of Restricted Stock Units (ROIC) described in the Grant Notice will vest depending on the Company’s ROIC for the Performance Period, determined at the end of the Performance Period. The Company’s ROIC at the end of the Performance Period may be achieved at “threshold”, “target” or “maximum” levels. The number of these Restricted Stock Units that vest on the Normal Vesting Date will be determined by multiplying by the vesting percentage that corresponds to the level of achievement of the Company’s ROIC at the end of the Performance Period relative to the goals set forth in your Summary of Performance Objectives (i.e., 25% at “threshold”, 50% at “target”, or 100% at “maximum”).
|
(i)
|
Definitions
. As used in this Agreement with respect to an Award of Restricted Stock Units (ROIC):
|
A.
|
Performance Period
. The three-year period beginning on the September 1 last preceding the Grant Date.
|
B.
|
ROIC
. The three-year average annual Return on Invested Capital. Return on Invested Capital is calculated for each fiscal year in the Performance Period by dividing the Company’s NOPAT for such period by the Company’s Average Invested Capital for such period. The ROIC is compared to the performance objectives set forth in your Summary of Performance Objectives to determine the vesting percentage.
|
C.
|
NOPAT
. The Company’s net operating profit after taxes from continuing operations (based on an assumed effective tax rate of 30%), based on non-GAAP earnings, for each fiscal year in the Performance Period.
|
D.
|
Average Invested Capital
. The sum of the Company’s total shareholders’ equity, minus cash and cash equivalents and goodwill, and plus total debt at the end of each month during the Performance Period. Average Invested Capital for each fiscal year in the Performance Period is the average of the twelve month-end invested capital amounts.
|
(d)
|
Performance Objectives for Restricted Stock Units (EPS) Award
. Your Award of Restricted Stock Units (EPS) described in the Grant Notice will vest depending on the Company’s Cumulative EPS for the Performance Period, determined at the end of the Performance Period. The Company’s Cumulative EPS at the end of the Performance Period may be achieved at “threshold”, “target” or “maximum” levels. The number of these Restricted Stock Units that vest on the Normal Vesting Date will be determined by multiplying by the vesting percentage that corresponds to the level of achievement of the Company’s Cumulative EPS at the end of the Performance Period relative to the goals set forth in your Summary of Performance Objectives (i.e., 25% at “threshold”, 50% at “target”, or 100% at “maximum”).
|
(i)
|
Definitions
. As used in this Agreement with respect to an Award of Restricted Stock Units (EPS):
|
A.
|
Cumulative EPS
. Cumulative EPS is calculated as the sum of diluted EPS for each fiscal year in the Performance Period. The three-year Cumulative EPS is compared to the performance objectives set forth in your Summary of Performance Objectives to determine the vesting percentage.
|
B.
|
Diluted EPS.
Diluted EPS for each fiscal year in the Performance Period is the non-GAAP diluted EPS as reported by the Company.
|
C.
|
Performance Period
. The three-year period beginning on the September 1 last preceding the Grant Date.
|
(e)
|
Committee Certification for Performance-Based Restricted Stock Units (ROIC or EPS) Awards
. Notwithstanding the foregoing, to the extent that the Company intends these Units to constitute “performance-based compensation” for purposes of Code Section 162(m), no performance-based Units will vest until the Committee
|
(f)
|
Change in Control
. Notwithstanding the foregoing, in the event of a Change in Control:
|
(i)
|
Restricted Stock Units (ROIC) Award
. You will immediately vest in the number of Restricted Stock Units (ROIC) at the “target” level of performance in the event of a Change in Control before the Normal Vesting Date.
|
(ii)
|
Restricted Stock Units (EPS) Award
. You will immediately vest in the number of Restricted Stock Units (EPS) at the “target” level of performance in the event of a Change in Control before the Normal Vesting Date.
|
(iii)
|
Restricted Stock Units Award
. Your non-performance Restricted Stock Units will immediately vest in the event of a Change in Control before the Normal Vesting Date.
|
4.
|
Effect of Termination
. You may forfeit your Awards if you terminate employment prior to the Normal Vesting Date, although this will depend on the reason for your termination, as provided below:
|
(a)
|
Restricted Stock Units (ROIC or EPS)
.
|
(i)
|
Termination Due to Death, Disability, or Retirement
. If you terminate employment due to your death, Disability, or Retirement (provided that the Committee agrees to treat such termination as Retirement), you will vest in a prorated number of your ROIC- or EPS-based Restricted Stock Units. The prorated number will be equal to the product of: (x) the number of these Units that would have vested if you terminated on the Normal Vesting Date, and (y) a fraction, the numerator of which is the number of whole months between the Grant Date and your termination date, and the denominator of which is 36. Further, your prorated ROIC- or EPS-based Restricted Stock Units will vest only to the extent that the performance criteria described in Sections 3(c) or 3(d), as applicable, are satisfied at the Normal Vesting Date. For purposes of this calculation, a whole month will be determined on the basis of each monthly anniversary of the Grant Date occurring before the date of death, Disability, or Retirement.
|
(ii)
|
Termination for Any Other Reason
. If you terminate for any reason other than due to death, Disability, or Retirement as specified in Section 4(a)(i), all of your performance-based Units will be forfeited.
|
(b)
|
Restricted Stock Units (service-based)
.
|
(i)
|
Termination Due to Death or Disability
. If you die or become Disabled, your service-based Restricted Stock Units will fully vest on the date of your death or Disability.
|
(ii)
|
Termination Due to Retirement
. If you terminate due to Retirement, and provided that the Committee agrees to treat your termination as a Retirement, you will vest in a prorated portion of your Restricted Stock Units determined by multiplying the number of Restricted Stock Units by a fraction, the numerator of which is the number of whole months you were employed from the Grant Date to the date of Retirement, and the denominator of which is 36. For purposes of this calculation, a whole month will be determined on the basis of each monthly anniversary of the Grant Date occurring before the date of Retirement.
|
(iii)
|
Termination for any Other Reason
. If you terminate under any other circumstances, all non-performance based Restricted Stock Units will be forfeited on your termination date.
|
5.
|
Settlement
. If all applicable terms and conditions have been met, your Awards will be settled according to the terms in the Grant Notice as soon as administratively practicable, but no later than 60 days after the later of (a) the Normal Vesting Date, or (b) the date on which the Committee certifies the satisfaction of the performance objectives (if applicable) pursuant to Section 3(e).
|
6.
|
Other Terms and Conditions.
|
(a)
|
Rights With Respect to Units
.
|
(i)
|
Rights During Performance Period for Awards of Restricted Stock Units (ROIC or EPS)
.
|
A.
|
Voting Rights
. During the Performance Period, you will have no voting rights with respect to these Units.
|
B.
|
Dividend Rights
.
You shall be granted dividend equivalent rights entitling you to a payment equal to the amount of any cash dividends that are declared and paid during the Performance Period with respect to the target vesting level of Units (i.e., 50% of your ROIC- or EPS-based Restricted Stock Units), subject to the terms and conditions of the Plans and this Award Agreement. Your dividend equivalent rights shall be subject to the same terms and conditions as the related Units and shall vest and be settled in cash if, when and only to the extent the related Units vest and are settled. In the event a Unit is forfeited under this Award Agreement, the related dividend equivalent right also will be forfeited.
|
(ii)
|
Rights Prior to Vesting for Restricted Stock Units not subject to Performance Objectives
.
|
A.
|
Voting Rights
. Until your Units vest, you will have no voting rights with respect to the Units.
|
B.
|
Dividend Rights
.
You shall be granted dividend equivalent rights entitling you to a payment equal to the amount of any cash dividends that are declared and paid with respect to your Restricted Stock Units, subject to the terms and conditions of the Plans and this Award Agreement. Your dividend equivalent rights shall be subject to the same terms and conditions as the related Restricted Stock Units and shall vest and be settled in cash if, when and to the extent the related Restricted Stock Units vest and are settled, depending on whether or not you have met the conditions described in this Award Agreement, the Grant Notice and in the Plans. In the event that a Restricted Stock Unit is forfeited under this Award Agreement, the related dividend equivalent rights will also be forfeited.
|
(b)
|
Beneficiary Designation
. You may name a beneficiary(ies) to receive any portion of your Awards and any other right under the Plans that is unsettled at your death. To do so, you must complete a beneficiary designation form by contacting Katie Pickle, Global Total Rewards Manager, by telephone ((832) 663-3107 or by email (Katie.Pickle@aschulman.com). If you previously completed a valid beneficiary designation form, such form will apply to the Awards until it is changed or revoked. If you die without correctly completing a beneficiary designation form, or if your designated beneficiary does not survive you, your beneficiary will be your surviving spouse or, if you do not have a surviving spouse, your estate.
|
(c)
|
Taxes and Tax Withholding
. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any tax, social security contribution, payroll tax or other amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the Awards. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to you (e.g. from your salary), (ii) withheld from the value of any Awards being settled or any Shares transferred in connection with payment of the Awards, (iii) withheld from the vested portion of any Awards (including Shares transferable
|
(d)
|
Foreign Exchange Restrictions
. You understand and agree that neither the Company nor any Affiliate is responsible or liable for (i) any foreign exchange fluctuation between your local currency (if applicable) and the United States Dollar (or the selection by the Company or Affiliate of any applicable foreign exchange rate it may determine in its discretion to be appropriate) that may affect the value of this Award or the calculated income, taxes or other amounts thereunder, or any related taxes or other amounts, or (ii) any decrease in the value of Shares.
|
(e)
|
Transferring Your Awards
. Normally, your Awards may not be transferred to another person. However, as described above, you may complete a beneficiary designation form to name the person to receive any portion of your Awards that are settled after you die.
|
(f)
|
Not an Employment Agreement
. This Award imposes no obligation on the Company or any Affiliate to employ the Participant for any period. This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Participant and the Company or any Affiliate or to guarantee the right to remain employed by the Company or any Affiliate for any specified term.
|
(g)
|
Requirements of Law
. This Award shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Shares pursuant to this Award, at any time, if the offering of the Shares covered by this Award violates or is not in compliance with any laws, rules or regulations of the United States or any state or country.
|
(h)
|
Governing Law
. This Award Agreement will be interpreted and construed in accordance with and governed and enforced by the laws (other than laws governing conflicts of laws) of the State of Ohio, except to the extent that the Delaware General Corporation Law is mandatorily applicable.
|
(i)
|
Severability
. The provisions of this Award Agreement are severable, and if any one or more of the provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
|
(j)
|
Waiver
. No failure or delay by the Company to enforce any provision of this Award Agreement or exercise any right or remedy provided by law shall constitute a waiver of that or any other provision, right or remedy, nor shall it prevent or restrict the further exercise of that or any other provision, right or remedy. No single or partial exercise of such provision, right or remedy shall prevent or restrict the further exercise of that or any other provision, right or remedy.
|
(k)
|
Data Privacy.
In order to perform its obligations under the Plans or for the implementation and administration of the Plans, the Company or Affiliate may collect, transfer, use, process, or hold certain personal data about you. Such data includes, but is not limited to, your name, nationality, citizenship, work authorization, date of birth, age, government or tax identification number, passport number, brokerage account information, address, compensation and equity award history, and beneficiaries’ contact information.
|
(l)
|
Other Agreements
. Your Awards are subject to the terms of any other written agreements between you and the Company or a Related Entity or Affiliate to the extent that those other agreements do not directly conflict with the terms of the Plans or this Award Agreement.
|
(m)
|
Adjustments to Your Awards
. Subject to the terms of the Plans, your Awards will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of your Units will be adjusted to reflect a stock split, a stock dividend, recapitalization, including an extraordinary dividend, merger, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or other similar corporate change affecting Shares).
|
(n)
|
Other Rules
. Your Awards are subject to additional rules as described in the Plans. You should read the Plans carefully to ensure you fully understand all the terms and conditions of your Awards. In the event of a conflict between the terms of the Plans and the terms of this Award Agreement, the terms of the Plans will govern. The Committee has the sole responsibility of interpreting the Plans and this Award Agreement, and its determination
|
(o)
|
Clawback
. The Units and any Shares issued in connection with the settlement of the Units are subject to any clawback policy adopted by the Company from time to time.
|
(p)
|
Appendix
. Notwithstanding any provisions in this Award Agreement, if you reside outside of the United States, certain additional general terms and conditions as set forth in the Appendix will apply to you. In addition, the Restricted Stock Units shall be subject to any special terms and conditions set forth in the Appendix for the jurisdiction in which you reside. If you relocate from the United States to a country outside the United States or relocate between the jurisdictions specified in the Appendix, the additional general and special terms and conditions, as applicable, will apply to you, to the extent that the Committee determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plans. The Appendix constitutes part of this Award Agreement.
|
(q)
|
Acceptance
. You must accept the Award and agree to the terms and conditions of the Award as described above by electronically accepting this Award Agreement within 60 days of the Grant Date.
|
European Union
|
Data Privacy
|
Australia
|
Important information for Australian participants
|
•
|
the extent to which the Performance Objectives attached to your Awards are satisfied - this will impact the number of Awards that vest (and therefore, the number of Shares that will be ultimately allocated to you); and
|
•
|
the market value of the Company’s Shares (which may fluctuate and fall depending on these factors) - this will impact the value of the Shares you receive upon vesting of your Awards, the
|
1.
|
Nature of Award
. Effective as of the date (the “Grant Date”) specified in the attached Notice of Grant (the “Grant Notice”), the Company hereby grants to the individual identified in the Grant Notice (the “Participant”) an award of Incentive Stock Options (“Options”) as set forth in the Grant Notice (the “Award”). The Award is subject to the terms and conditions described in the Grant Notice, this Incentive Stock Option Award Agreement (“Award Agreement”), and the Plan. The Options are intended to qualify as “incentive stock options” under Section 422 of the Code. If for any reason the Options do not qualify as an incentive stock options, then, to the extent they do not so qualify, the Options will be treated as Non-Qualified Options.
|
2.
|
Number of Options
. The number of Options in this Award is set forth in the Grant Notice. For purposes of this Award Agreement, each Option represents the right to receive one Share per Option on the terms and conditions and at the Exercise Price all as set forth in this Award Agreement. The Options may be exercised in whole or in part and from time to time as hereinafter provided.
|
3.
|
Exercise Price per Share.
The “Exercise Price” per Share at which the Participant will be
|
4.
|
Vesting.
Your Options will be subject to vesting and may be then exercised in accordance with the following schedule (the “Normal Vesting Date(s)”), subject to your continued employment with the Company on the Normal Vesting Date.
|
Date of Vesting
|
Percentage of Options to Vest
|
Third Anniversary of Grant Date
|
100%
|
5.
|
Effect of Termination
. You may forfeit your Award if you terminate employment prior to a Normal Vesting Date, although this will depend on the reason for your termination, as provided below:
|
(a)
|
Termination for Any Reason other than Death, Disability, or Retirement
. If you terminate for any reason other than due to death, Disability, or Retirement, then:
|
(a)
|
any Option that is unvested on the date of termination will be forfeited on that date; and
|
(b)
|
Participant may at any time within ninety (90) days after the effective date of termination of employment exercise the Options were vested immediately prior to the date of termination, provided that all unexercised vested Options shall lapse immediately upon a termination for Cause, and provided further that in no event shall the Options be exercisable after the Expiration Date.
|
(b)
|
Death; Disability
. If you die or become Disabled, all unvested Options will fully vest and become exercisable on the date of your death or Disability. The Options may be exercised for a period of one (1) year following termination of employment due to death or Disability, provided that in no event shall the Options be exercisable after the Expiration Date.
|
(c)
|
Retirement
. If you terminate due to Retirement, and provided that the Committee agrees to treat your termination as a Retirement, you will vest in a prorated portion of your then unvested Options determined by multiplying the number of Options by a fraction, the numerator of which is the number of whole months you were employed from the Grant Date to the date of Retirement, and the denominator of which is 36. For purposes of this calculation, a whole month will be determined on the basis of each monthly anniversary of the Grant Date occurring before the date of Retirement.
|
(d)
|
Change in Control
. Notwithstanding the foregoing, in the event of a Change in Control, All unvested Options shall become fully vested and exercisable (subject to the expirations provisions otherwise applicable to the Options). To the extent that your Options are subject to the requirements of Section 409A of the Code, any Change in Control must also constitute a “change in control event” as defined in Section 409A of the Code.
|
6.
|
Term of Options
. The Options granted under this Award Agreement will expire, unless otherwise exercised, ten (10) years from the Grant Date, through and including the normal close of business of the Company on such tenth anniversary (the “Expiration Date”), subject to earlier termination as provided in Section 5 hereof.
|
7.
|
Exercise of Options.
The vested Options may be exercised by the Participant in whole or in part by delivery to the Company of written notice of exercise in the form attached hereto as Exhibit A (“Exercise Notice”) and payment of the applicable Exercise Price as provided in Sections 8 and 9 hereof.
|
8.
|
Method of Exercising Options
.
|
(a)
|
General
. Subject to the terms and conditions of this Award Agreement and the Plan, you may exercise vested Options by timely delivery to the Company of the Exercise Notice, which notice will be effective on the date received by the Company. The Exercise Notice will state Participant’s election to exercise all or part of the Options, the number of Shares in respect of which an election to exercise has been made, and the method of payment elected (see Section 9 hereof). Such Exercise Notice will be signed by Participant (or other permitted person) and will be accompanied by payment of the applicable Exercise Price of such Shares. In the event the Options will be exercised by a person or persons other than the Participant pursuant to Section 12(a) hereof, such Exercise Notice will be signed by such other person or persons, will include the exact name or names in which the Shares will be registered and the Social Security number of such person or persons and will be accompanied by proof acceptable to the Company of the legal right of such person or persons to exercise the Options. All Shares delivered by the Company upon exercise of the Options will be fully paid and nonassessable upon delivery.
|
(b)
|
Taxes.
No Shares will be delivered to the Participant or other person pursuant to the exercise of the Options until the Participant or other person has made arrangements acceptable to the Committee or the Company for the satisfaction of foreign, federal, state, and local income and employment tax withholding obligations as described in Section 12(c) hereof.
|
(c)
|
Participant’s Representations
. In the event the Shares purchasable pursuant to the exercise of the Options have not been registered under the Securities Act of 1933, as amended, at the time the Options are exercised, the Participant will, if requested by the Company, concurrently with the exercise of all or any portion of the Options, deliver to the Company a standard investment representation statement.
|
9.
|
Method of Payment for Options.
Payment for Shares purchased upon the exercise of Options will be made by Participant in cash; by tendering previously acquired Shares having a Fair Market Value at the time of exercise equal to the aggregate exercise price (provided that such Shares had been held for at least six months or such other period required to obtain favorable accounting treatment and to comply with the requirements of Section 16 of the Act); by cashless exercise (including by withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law); by a combination of these methods; or through any other method approved by the Committee.
|
10.
|
Delivery of Shares.
No Shares will be delivered upon exercise of the Options until the following occurs: (i) the Exercise Price will have been paid in full in the manner herein provided; (ii) applicable taxes required to be withheld have been paid or withheld in full; and (iii) approval of any governmental authority required in connection with the Options, or the issuance of Shares thereunder, has been received by the Company. Participant understands and agrees that Company may cause certain legends as appropriate to reflect applicable state and federal securities laws or applicable contractual restrictions to be placed upon any certificate(s) evidencing ownership of the Shares delivered upon exercise of the Options.
|
11.
|
Securities Act.
The Company will not be required to deliver any Shares pursuant to the exercise of all or any part of the Options if, in the opinion of counsel for the Company, such issuance would violate the Securities Act or any other applicable federal or state securities laws or regulations.
|
12.
|
Miscellaneous:
|
(a)
|
Beneficiary.
You may designate a Beneficiar(ies) to receive any portion of your Award and any other right granted herein under the Plan that is unsettled at your death. To do so, you must complete a beneficiary designation form by contacting Katie Pickle, Global Total Rewards Manager, by telephone ((832) 663-3107 or by email (
Katie.Pickle@aschulman.com
). If you previously completed a valid beneficiary designation form, such form will apply to the Awards until it is changed or revoked. If you die without correctly completing a beneficiary
|
(b)
|
Nontransferability
. The Options may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution. However, as described above, you may complete a beneficiary designation form to name the person to receive any portion of your Awards that are settled after you die.
|
(c)
|
Taxes and Tax Withholding.
The Company or a Subsidiary, as applicable, will have the power and right to deduct, withhold or collect any tax, social security contribution, payroll tax or other amount required by law or regulation, or elected by the Participant, to be withheld with respect to any taxable event arising with respect to the Options. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Shares transferred in connection with the exercise of the Options, or (iii) collected directly from the Participant. The amount to be withheld may relate to amounts due in more than one jurisdiction and in all cases shall be as determined by the Committee in its discretion. Unless the Participant has otherwise irrevocably elected a different method to satisfy the withholding, the Participant shall be deemed to have elected to satisfy the withholding requirement by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.
|
(d)
|
Not an Employment Agreement
. This grant of Options imposes no obligation on the Company or any Affiliate to employ the Participant for any period. This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Participant and the Company or any Affiliate or to guarantee the right to remain employed by the Company or any Affiliate for any specified term.
|
(e)
|
Requirements of Law
. This grant of Options shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Shares pursuant to this Award, at any time, if the offering of the Shares covered by this Award violates or is not in compliance with any laws, rules or regulations of the United States or any state or country.
|
(f)
|
Governing Law
. This Award Agreement will be interpreted and construed in accordance with and governed and enforced by the laws (other than laws governing conflicts of laws) of the State of Ohio, except to the extent that the Delaware General Corporation Law is mandatorily applicable.
|
(g)
|
Severability
. The provisions of this Award Agreement are severable, and if any one or more of the provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
|
(h)
|
Waiver
. No failure or delay by the Company to enforce any provision of this Award Agreement or exercise any right or remedy provided by law shall constitute a waiver of that or any other provision, right or remedy, nor shall it prevent or restrict the further exercise of that or any other provision, right or remedy. No single or partial exercise of such provision, right or remedy shall prevent or restrict the further exercise of that or any other provision, right or remedy.
|
(i)
|
Data Privacy.
In order to perform its obligations under the Plans or for the implementation and administration of the Plans, the Company or Affiliate may collect, transfer, use, process, or hold certain personal data about you. Such data includes, but is not limited to, your name, nationality, citizenship, work authorization, date of birth, age, government or tax identification number, passport number, brokerage account information, address, compensation and equity award history, and beneficiaries’ contact information.
|
(j)
|
Other Agreements
. Your Award of Options is subject to the terms of any other written agreements between you and the Company or a Related Entity or Affiliate to the extent that those other agreements do not directly conflict with the terms of the Plan or this Award Agreement.
|
(k)
|
Adjustments to Your Awards
. Subject to the terms of the Plan, your Options will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of your Shares will be adjusted to reflect a stock split, a stock dividend, recapitalization, including an extraordinary dividend, merger, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or other similar corporate change affecting Shares).
|
(l)
|
Other Rules
. Your Awards are subject to additional rules as described in the Plan. You should read the Plan carefully to ensure you fully understand all the terms and conditions of your Awards. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant.
|
(m)
|
Section 409A of the Code.
This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be
|
(n)
|
Clawback
. The Options and any Shares issued in connection with the exercise of the Options are subject to any clawback policy adopted by the Company from time to time.
|
(o)
|
Obligation to Exercise
. Participant will have no obligation to exercise any Option granted by this Award Agreement.
|
(p)
|
Tax Characterization
. The Option is intended to qualify as an “incentive stock option” as defined in Section 422 of the Code. However, notwithstanding such designation, to the extent that the Option does not qualify as an incentive stock option for any reason, then, to the extent that the Option is not so qualified, it will be treated as a Non-Qualified Option. For purposes of the $100,000 aggregate Fair Market Value test, Incentive Stock Options will be taken into account in the order in which they were granted, and the Fair Market Value of the Stock will be determined as of the date the Option with respect to such Stock is awarded.
|
(q)
|
Mandatory Notice of Disqualifying Disposition
. Whether this Option will receive such tax treatment as an incentive stock option will depend, in part, on the actions by Participant after exercise of this Option. For example, if Participant disposes of any of the Shares acquired upon exercise of this Option within two years after the Date of Grant and within one year of the date of exercise of this Option, Participant may lose the benefits of Code Section 422. Accordingly, the Company makes no representations by way of the Notice, the Plan, this Option Agreement or otherwise with respect to the actual tax consequences of the grant or exercise of this Option or the subsequent disposition of the Shares acquired under this Option.
|
(r)
|
Acceptance
. You must accept the Award and agree to the terms and conditions of the Award as described above by electronically accepting this Award Agreement within 60 days of the Grant Date.
|
1.
|
Effective as of today, the undersigned Participant, Participant’s Beneficiary or Participant’s legal representative (“Exerciser”) hereby elects to exercise the Participant’ option to purchase the above referenced number of shares of the common stock, $1.00 par value (the “Shares”) of A. Schulman, Inc., a Delaware corporation (the “Company”) under and pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”) and the Incentive Stock Option Award Agreement (the “Award Agreement”) described above. To the extent not specifically provided herein, all capitalized terms used in this Exercise Notice will have the same meanings ascribed to them in the Plan and the Award Agreement, as the case may be.
|
2.
|
Representation of Exerciser other than the Participant
. Any Exerciser other than the Participant acknowledges that such person (a) has the right to exercise the Option as either the Participant’s Beneficiary following Participant’s death or as Participant’s legal representative following Participant’s Disability; (b) has attached to this Exercise Notice the exact name(s) and social security number(s) for the person to whom the Shares should be issued; and (c) has attached to this Exercise Notice evidence acceptable to the Company that the Participant has died or become Disabled and that such Exerciser has the authority to exercise the Options.
|
3.
|
Representations of the Exerciser
. The Exerciser acknowledges that the Exerciser has received, read, and understood the Plan and the Award Agreement and agrees to abide by and be bound by their terms and conditions.
|
4.
|
Rights as Shareholder
. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in of the Plan.
|
5.
|
Delivery of Payment
. The Exerciser herewith delivers to the Company as payment for Shares purchased upon the exercise of Options in an amount equal to the full Exercise Price for the Shares, plus any taxes referenced in section 7 hereof:
|
•
|
cash, by personal check or money order payable to A. Schulman, Inc.;
|
•
|
tender of previously acquired Shares;
|
•
|
cashless exercise (by authorizing withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law); or
|
•
|
a combination of these methods, as described as follows:
|
6.
|
Tax Consultation
. The Exerciser understands that the Exerciser may suffer adverse tax consequences as a result of the purchase or disposition of the Shares. The Exerciser represents that the Exerciser has consulted with any tax consultants the Exerciser deems advisable in connection with the purchase or disposition of the Shares and that the Exerciser is not relying on the Company for any tax advice.
|
7.
|
Taxes
. The Exerciser agrees to satisfy all applicable foreign, federal, state, and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations. The Exerciser also agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within 30 days of any disposition of any Shares acquired by exercise of the Option if such disposition occurs within two years from the Award Date or within one year from the date of exercise. If the Company is required to satisfy any foreign, federal, state, or local income or employment tax withholding obligations as a result of such early disposition, the Exerciser agrees to satisfy the amount of such withholding in a manner that the Committee prescribes.
|
8.
|
Restrictive Legends
. Exerciser understands and agrees that Company may cause certain legends as appropriate to reflect applicable state and federal securities laws or applicable contractual restrictions to be placed upon any certificate(s) evidencing ownership of the Shares delivered upon exercise of the Option.
|
9.
|
Successors and Assigns
. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice will be binding upon the Participant, the Exerciser, and their heirs, executors, administrators, successors, and assigns.
|
10.
|
Headings
. The captions used in this Exercise Notice are inserted for convenience and will not be deemed a part of this agreement for construction or interpretation.
|
11.
|
Interpretation
. Any dispute regarding the interpretation of this Exercise Notice will be submitted by the Exerciser or by the Company forthwith to the Committee, which will review such dispute at its next regular meeting. The resolution of such a dispute by the Committee will be final and binding on all persons.
|
12.
|
Governing Law; Severability
. This Exercise Notice is to be construed in accordance with and governed by the internal laws of the State of Ohio without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Ohio to the rights and duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, the other provisions will nevertheless remain effective and will remain enforceable.
|
13.
|
Notices
. Any notice required or permitted hereunder will be given in writing and will be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.
|
14.
|
Further Instruments
. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement.
|
15.
|
Entire Agreement
. The Plan and the Award Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s rights except by means of a writing signed by the Company and the Participant.
|
Submitted by:
|
Accepted by:
|
PARTICIPANT/EXERCISER:
|
A. SCHULMAN, INC.
|
|
By:
|
(Signature)
|
Title:
|
Address
:
|
Address
:
|
|
3637 Ridgewood Road
Fairlawn, OH 44333
Attn: Total Rewards Manager
|
1.
|
Nature of Award
. Effective as of the date (the “Grant Date”) specified in the attached Notice of Grant (the “Grant Notice”), the Company hereby grants to the individual identified in the Grant Notice (the “Participant”) an award of Nonqualified Stock Options (“Options”) as set forth in the Grant Notice (the “Award”). The Award is subject to the terms and conditions described in the Grant Notice, this Nonqualified Stock Option Award Agreement (“Award Agreement”), and the Plan. The Options are nonqualified stock options which are not intended to be governed by Section 422 of the Code or qualify as Incentive Stock Options thereunder.
|
2.
|
Number of Options
. The number of Options in this Award is set forth in the Grant Notice. For purposes of this Award Agreement, each Option represents the right to receive one Share per Option on the terms and conditions and at the Exercise Price all as set forth in this Award Agreement. The Options may be exercised in whole or in part and from time to time as hereinafter provided.
|
3.
|
Exercise Price per Share.
The “Exercise Price” per Share at which the Participant will be
|
4.
|
Vesting.
Your Options will be subject to vesting and then may be exercised in accordance with the following schedule (the “Normal Vesting Date(s)”), subject to your continued employment with the Company on the Normal Vesting Date.
|
Date of Vesting
|
Percentage of Options to Vest
|
Third Anniversary of Grant Date
|
100%
|
5.
|
Effect of Termination
. You may forfeit your Award if you terminate employment prior to a Normal Vesting Date, although this will depend on the reason for your termination, as provided below:
|
(a)
|
Termination for Any Reason other than Death, Disability, or Retirement
. If you terminate for any reason other than due to death, Disability, or Retirement, then:
|
(a)
|
any Option that is unvested on the date of termination will be forfeited on that date; and
|
(b)
|
Participant may at any time within ninety (90) days after the effective date of termination of employment exercise the Options were vested immediately prior to the date of termination, provided that all unexercised vested Options shall lapse immediately upon a termination for Cause, and provided further that in no event shall the Options be exercisable after the Expiration Date.
|
(b)
|
Death; Disability
. If you die or become Disabled, all unvested Options will fully vest and become exercisable on the date of your death or Disability. The Options may be exercised for a period of one (1) year following termination of employment due to death or Disability, provided that in no event shall the Options be exercisable after the Expiration Date.
|
(c)
|
Retirement
. If you terminate due to Retirement, and provided that the Committee agrees to treat your termination as a Retirement, you will vest in a prorated portion of your then unvested Options determined by multiplying the number of Options by a fraction, the numerator of which is the number of whole months you were employed from the Grant Date to the date of Retirement, and the denominator of which is 36. For purposes of this calculation, a whole month will be determined on the basis of each monthly anniversary of the Grant Date occurring before the date of Retirement.
|
(d)
|
Change in Control
. Notwithstanding the foregoing, in the event of a Change in Control, All unvested Options shall become fully vested and exercisable (subject to the expirations provisions otherwise applicable to the Options). To the extent that your Options are subject to the requirements of Section 409A of the Code, any Change in Control must also constitute a “change in control event” as defined in Section 409A of the Code.
|
6.
|
Term of Options
. The Options granted under this Award Agreement will expire, unless otherwise exercised, ten (10) years from the Grant Date, through and including the normal close of business of the Company on such tenth anniversary (the “Expiration Date”), subject to earlier termination as provided in Section 5 hereof.
|
7.
|
Exercise of Options.
The vested Options may be exercised by the Participant in whole or in part by delivery to the Company of written notice of exercise in the form attached hereto as Exhibit A (“Exercise Notice”) and payment of the applicable Exercise Price as provided in Sections 8 and 9 hereof.
|
8.
|
Method of Exercising Options
.
|
(a)
|
General
. Subject to the terms and conditions of this Award Agreement and the Plan, you may exercise vested Options by timely delivery to the Company of the Exercise Notice, which notice will be effective on the date received by the Company. The Exercise Notice will state Participant’s election to exercise all or part of the Options, the number of Shares in respect of which an election to exercise has been made, and the method of payment elected (see Section 9 hereof). Such Exercise Notice will be signed by Participant (or other permitted person) and will be accompanied by payment of the applicable Exercise Price of such Shares. In the event the Options will be exercised by a person or persons other than the Participant pursuant to Section 12(a) hereof, such Exercise Notice will be signed by such other person or persons, will include the exact name or names in which the Shares will be registered and the Social Security number of such person or persons and will be accompanied by proof acceptable to the Company of the legal right of such person or persons to exercise the Options. All Shares delivered by the Company upon exercise of the Options will be fully paid and nonassessable upon delivery.
|
(b)
|
Taxes.
No Shares will be delivered to the Participant or other person pursuant to the exercise of the Options until the Participant or other person has made arrangements acceptable to the Committee or the Company for the satisfaction of foreign, federal, state, and local income and employment tax withholding obligations as described in Section 12(c) hereof.
|
(c)
|
Participant’s Representations
. In the event the Shares purchasable pursuant to the exercise of the Options have not been registered under the Securities Act of 1933, as amended, at the time the Options are exercised, the Participant will, if requested by the Company, concurrently with the exercise of all or any portion of the Options, deliver to the Company a standard investment representation statement.
|
9.
|
Method of Payment for Options.
Payment for Shares purchased upon the exercise of Options will be made by Participant in cash; by tendering previously acquired Shares having a Fair Market Value at the time of exercise equal to the aggregate exercise price (provided that such Shares had been held for at least six months or such other period required to obtain favorable accounting treatment and to comply with the requirements of Section 16 of the Act); by cashless exercise (including by withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law); by a combination of these methods; or through any other method approved by the Committee.
|
10.
|
Delivery of Shares.
No Shares will be delivered upon exercise of the Options until the following occurs: (i) the Exercise Price will have been paid in full in the manner herein provided; (ii) applicable taxes required to be withheld have been paid or withheld in full; and (iii) approval of any governmental authority required in connection with the Options, or the issuance of Shares thereunder, has been received by the Company. Participant understands and agrees that Company may cause certain legends as appropriate to reflect applicable state and federal securities laws or applicable contractual restrictions to be placed upon any certificate(s) evidencing ownership of the Shares delivered upon exercise of the Options.
|
11.
|
Securities Act.
The Company will not be required to deliver any Shares pursuant to the exercise of all or any part of the Options if, in the opinion of counsel for the Company, such issuance would violate the Securities Act or any other applicable federal or state securities laws or regulations.
|
12.
|
Miscellaneous:
|
(a)
|
Beneficiary.
You may designate a Beneficiar(ies) to receive any portion of your Award and any other right granted herein under the Plan that is unsettled at your death. To do so, you must complete a beneficiary designation form by contacting Katie Pickle, Global Total Rewards Manager, by telephone ((832) 663-3107) or by email (Katie.Pickle@aschulman.com). If you previously completed a valid beneficiary designation form, such form will apply to the Awards until it is changed or revoked. If you die without correctly completing a beneficiary designation form, or if your designated beneficiary does not survive you, your beneficiary will be your surviving spouse or, if you do not have a surviving spouse, your estate.
|
(b)
|
Nontransferability
. The Options may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution. However, as described above, you may complete a beneficiary designation form to name the person to receive any portion of your Awards that are settled after you die.
|
(c)
|
Taxes and Tax Withholding.
The Company or a Subsidiary, as applicable, will have the power and right to deduct, withhold or collect any tax, social security contribution, payroll tax or other amount required by law or regulation, or elected by the Participant, to be withheld with respect to any taxable event arising with respect to the Options. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Shares transferred in connection with the exercise of the Options, or (iii) collected directly from the Participant. The amount to be withheld may relate to amounts due in more than one jurisdiction and in all cases shall be as determined by the Committee in its discretion. Unless the Participant has otherwise irrevocably elected a different method to satisfy the withholding, the Participant shall be deemed to have elected to satisfy the withholding requirement by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.
|
(d)
|
Foreign Exchange Restrictions
. You understand and agree that neither the Company nor any Affiliate is responsible or liable for (i) any foreign exchange fluctuation between your local currency (if applicable) and the United States Dollar (or the selection by the Company or Affiliate of any applicable foreign exchange rate it may determine in its discretion to be appropriate) that may affect the value of this Award or the calculated income, taxes or other amounts thereunder, or any related taxes or other amounts, or (ii) any decrease in the value of Shares.
|
(e)
|
Not an Employment Agreement
. This grant of Options imposes no obligation on the Company or any Affiliate to employ the Participant for any period. This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Participant and the Company or any Affiliate or to guarantee the right to remain employed by the Company or any Affiliate for any specified term.
|
(f)
|
Requirements of Law
. This grant of Options shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Shares pursuant to this Award, at any time, if the offering of
|
(g)
|
Governing Law
. This Award Agreement will be interpreted and construed in accordance with and governed and enforced by the laws (other than laws governing conflicts of laws) of the State of Ohio, except to the extent that the Delaware General Corporation Law is mandatorily applicable.
|
(h)
|
Severability
. The provisions of this Award Agreement are severable, and if any one or more of the provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
|
(i)
|
Waiver
. No failure or delay by the Company to enforce any provision of this Award Agreement or exercise any right or remedy provided by law shall constitute a waiver of that or any other provision, right or remedy, nor shall it prevent or restrict the further exercise of that or any other provision, right or remedy. No single or partial exercise of such provision, right or remedy shall prevent or restrict the further exercise of that or any other provision, right or remedy.
|
(j)
|
Data Privacy.
In order to perform its obligations under the Plans or for the implementation and administration of the Plans, the Company or Affiliate may collect, transfer, use, process, or hold certain personal data about you. Such data includes, but is not limited to, your name, nationality, citizenship, work authorization, date of birth, age, government or tax identification number, passport number, brokerage account information, address, compensation and equity award history, and beneficiaries’ contact information.
|
(k)
|
Other Agreements
. Your Award of Options is subject to the terms of any other written agreements between you and the Company or a Related Entity or Affiliate to the extent that those other agreements do not directly conflict with the terms of the Plan or this Award Agreement.
|
(l)
|
Adjustments to Your Awards
. Subject to the terms of the Plan, your Options will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of your Shares will be adjusted to reflect a stock split, a stock dividend, recapitalization, including an extraordinary dividend, merger, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or other similar corporate change affecting Shares).
|
(m)
|
Other Rules
. Your Awards are subject to additional rules as described in the Plan. You should read the Plan carefully to ensure you fully understand all the terms and conditions of your Awards. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The
|
(n)
|
Section 409A of the Code.
This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludable from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service,” as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any amount in connection with an Option that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Any payment or distribution that is delayed pursuant to the preceding sentence shall be paid or distributed on the first business day of the seventh month following such termination.
|
(o)
|
Clawback
. The Options and any Shares issued in connection with the exercise of the Options are subject to any clawback policy adopted by the Company from time to time.
|
(p)
|
Obligation to Exercise
. Participant will have no obligation to exercise any Option granted by this Award Agreement.
|
(q)
|
Tax Characterization
. The Option is not intended to qualify as an “incentive stock option” as defined in Section 422 of the Code.
|
(r)
|
Appendix
. Notwithstanding any provisions in this Award Agreement, if you reside outside of the United States, certain additional general terms and conditions as set forth in the Appendix will apply to you. In addition, the Options shall be subject to any special terms and conditions set forth in the Appendix for the jurisdiction in which you reside. If you relocate from the United States to a country outside the United States or relocate between the jurisdictions specified in the Appendix, the additional general and special terms and conditions, as applicable, will apply to you, to the extent that the Committee determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plans. The Appendix constitutes part of this Award Agreement.
|
(s)
|
Acceptance
. You must accept the Award and agree to the terms and conditions of the Award as described above by electronically accepting this Award Agreement within 60 days of the Grant Date.
|
1.
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Effective as of today, the undersigned Participant, Participant’s Beneficiary or Participant’s legal representative (“Exerciser”) hereby elects to exercise the Participant’ option to purchase the above referenced number of shares of the common stock, $1.00 par value (the “Shares”) of A. Schulman, Inc., a Delaware corporation (the “Company”) under and pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”) and the Nonqualified Stock Option Award Agreement (the “Award Agreement”) described above. To the extent not specifically provided herein, all capitalized terms used in this Exercise Notice will have the same meanings ascribed to them in the Plan and the Award Agreement, as the case may be.
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2.
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Representation of Exerciser other than the Participant
. Any Exerciser other than the Participant acknowledges that such person (a) has the right to exercise the Option as either the Participant’s Beneficiary following Participant’s death or as Participant’s legal representative following Participant’s Disability; (b) has attached to this Exercise Notice the exact name(s) and social security number(s) for the person to whom the Shares should be issued; and (c) has attached to this Exercise Notice evidence acceptable to the Company that the Participant has died or become Disabled and that such Exerciser has the authority to exercise the Options.
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3.
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Representations of the Exerciser
. The Exerciser acknowledges that the Exerciser has received, read, and understood the Plan and the Award Agreement and agrees to abide by and be bound by their terms and conditions.
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4.
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Rights as Shareholder
. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in of the Plan.
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5.
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Delivery of Payment
. The Exerciser herewith delivers to the Company as payment for Shares purchased upon the exercise of Options in an amount equal to the full Exercise Price for the Shares, plus any taxes referenced in section 7 hereof:
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•
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cash, by personal check or money order payable to A. Schulman, Inc.;
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•
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tender of previously acquired Shares;
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•
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cashless exercise (by authorizing withholding Shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable law); or
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•
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a combination of these methods, as described as follows:
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6.
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Tax Consultation
. The Exerciser understands that the Exerciser may suffer adverse tax consequences as a result of the purchase or disposition of the Shares. The Exerciser represents that the Exerciser has consulted with any tax consultants the Exerciser deems advisable in connection with the purchase or disposition of the Shares and that the Exerciser is not relying on the Company for any tax advice.
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7.
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Taxes
. The Exerciser agrees to satisfy all applicable foreign, federal, state, and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations.
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8.
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Restrictive Legends
. Exerciser understands and agrees that Company may cause certain legends as appropriate to reflect applicable state and federal securities laws or applicable contractual restrictions to be placed upon any certificate(s) evidencing ownership of the Shares delivered upon exercise of the Option.
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9.
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Successors and Assigns
. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice will be binding upon the Participant, the Exerciser, and their heirs, executors, administrators, successors, and assigns.
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10.
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Headings
. The captions used in this Exercise Notice are inserted for convenience and will not be deemed a part of this agreement for construction or interpretation.
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11.
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Interpretation
. Any dispute regarding the interpretation of this Exercise Notice will be submitted by the Exerciser or by the Company forthwith to the Committee, which will review such dispute at its next regular meeting. The resolution of such a dispute by the Committee will be final and binding on all persons.
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12.
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Governing Law; Severability
. This Exercise Notice is to be construed in accordance with and governed by the internal laws of the State of Ohio without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Ohio to the rights and duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, the other provisions will nevertheless remain effective and will remain enforceable.
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13.
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Notices
. Any notice required or permitted hereunder will be given in writing and will be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.
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14.
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Further Instruments
. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement.
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15.
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Entire Agreement
. The Plan and the Award Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s rights except by means of a writing signed by the Company and the Participant.
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Submitted by:
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Accepted by:
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PARTICIPANT/EXERCISER:
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A. SCHULMAN, INC.
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By:
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(Signature)
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Title:
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Address
:
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Address
:
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3637 Ridgewood Road
Fairlawn, OH 44333
Attn: Total Rewards Manager
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European Union
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Data Privacy
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1.
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I have reviewed this Quarterly Report on Form 10-Q of A. Schulman, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer(s) 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 registrant and have:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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 the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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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
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(b)
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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.
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Date:
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April 4, 2017
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/s/ Joseph M. Gingo
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Joseph M. Gingo
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President and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of A. Schulman, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer(s) 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 registrant and have:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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 the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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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
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(b)
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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.
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Date:
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April 4, 2017
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/s/ John W. Richardson
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John W. Richardson
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Executive Vice President, Chief Financial Officer
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(a)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(b)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Joseph M. Gingo
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Joseph M. Gingo
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President and Chief Executive Officer of A. Schulman, Inc.
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April 4, 2017
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(a)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(b)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ John W. Richardson
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John W. Richardson
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Executive Vice President, Chief Financial Officer of A. Schulman, Inc.
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April 4, 2017
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