| Ohio | 34-1730488 | |
|
(State or other jurisdiction of
incorporation or organization) |
(IRS Employer Identification No.) | |
|
33587 Walker Road,
Avon Lake, Ohio (Address of principal executive offices) |
44012
(Zip Code) |
|
Title of each class
|
Name of each exchange on which registered
|
|
| Common Stock, par value $.01 per share | New York Stock Exchange |
| Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
| ITEM 1A. | RISK FACTORS |
| • | economic downturns in the significant end markets that we serve; | |
| • | product obsolescence, technological changes that unfavorably alter the value / cost proposition of our products and services; | |
| • | competition from existing and unforeseen polymer and non-polymer based products; | |
| • | declines in general economic conditions or reductions in industrial production growth rates, both domestically and globally, which could impact our customers ability to pay amounts owed to us; | |
| • | changes in environmental regulations that would limit our ability to sell our products and services in specific markets; and | |
| • | inability to obtain raw materials or supply products to customers due to factors such as supplier work stoppages, supply shortages, plant outages or regulatory changes that may limit or prohibit overland transportation of certain hazardous materials and exogenous factors, like severe weather. |
| • | explosions, fires, inclement weather and natural disasters; | |
| • | mechanical failure resulting in protracted or short duration unscheduled downtime; | |
| • | regulatory changes that affect or limit the transportation of raw materials; | |
| • | inability to obtain or maintain any required licenses or permits; | |
| • | interruptions and environmental hazards such as chemical spills, discharges or releases of toxic or hazardous substances or gases into the environment or workplace; and | |
| • | storage tank leaks or other issues resulting from remedial activities. |
| • | changes in local government regulations and policies, including, but not limited to foreign currency exchange controls or monetary policy; repatriation of earnings; expropriation of property; duty or tariff restrictions; investment limitations; and tax policies; | |
| • | political and economic instability and disruptions, including labor unrest, civil strife, acts of war, guerilla activities, insurrection and terrorism; | |
| • | legislation that regulates the use of chemicals; | |
| • | disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act; | |
| • | difficulties in staffing and managing multi-national operations; | |
| • | limitations on our ability to enforce legal rights and remedies; | |
| • | reduced protection of intellectual property rights; and | |
| • | other risks arising out of foreign sovereignty over the areas where our operations are conducted. |
| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
| ITEM 2. | PROPERTIES |
|
International Color and
|
North American
|
Specialty Inks and
|
||||
|
Vinyl Business
|
Engineered Materials
|
Color and Additives
|
Polymer Systems
|
|||
|
Commerce, California
Long Beach, California Kennesaw, Georgia Henry, Illinois Terre Haute, Indiana Louisville, Kentucky Plaquemine, Louisiana Sullivan, Missouri Pedricktown, New Jersey Avon Lake, Ohio North Baltimore, Ohio Pasadena, Texas Sussex, Wisconsin Niagara Falls, Ontario, Canada Orangeville, Ontario, Canada St. Remi de Napierville, Quebec, Canada Dongguan, China Shenzhen, China Cartagena, Colombia (joint venture) Bolton, England Hyde, England Widnes, England |
Assesse, Belgium
Pudong (Shanghai), China Shenzhen, China Suzhou, China Glostrup, Denmark Cergy, France Tossiat, France Bendorf, Germany Gaggenau, Germany Melle, Germany Gyor, Hungary Kutno, Poland Jurong, Singapore Barbastro, Spain Pamplona, Spain Angered, Sweden Bangkok, Thailand Istanbul, Turkey Producer Services Dyersburg, Tennessee Clinton, Tennessee Seabrook, Texas |
Glendale, Arizona
Suwanee, Georgia Elk Grove Village, Illinois St. Peters, Missouri Norwalk, Ohio Lehigh, Pennsylvania Vonore, Tennessee Toluca, Mexico North American Engineered Materials Avon Lake, Ohio Macedonia, Ohio Dyersburg, Tennessee Valleyfield, Quebec, Canada GLS Corporation facilities: McHenry, Illinois Suzhou, China Resin and Intermediates SunBelt joint venture — McIntosh, Alabama |
Commerce, California
Kennesaw, Georgia St. Louis, Missouri Massillon, Ohio Sussex, Wisconsin Melbourne, Australia Shenzhen, China Widnes, England PolyOne Distribution Livermore, California Rancho Cucamonga, California Denver, Colorado Lemont, Illinois Ayer, Massachusetts Chesterfield Township, Michigan Eagan, Minnesota Hazelwood, Missouri Statesville, North Carolina Massillon, Ohio La Porte, Texas Fife, Washington Mississauga, Ontario, Canada |
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
ITEM 5.
MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
2007 Quarters
2006 Quarters
Fourth
Third
Second
First
Fourth
Third
Second
First
$
8.60
$
9.29
$
7.59
$
7.76
$
8.76
$
9.18
$
9.89
$
9.88
$
5.93
$
6.93
$
6.14
$
5.99
$
6.71
$
7.70
$
7.45
$
6.31
(In millions, except per share data)
2007
2006
2005
2004
2003
$
2,642.7
$
2,622.4
$
2,450.6
$
2,267.7
$
2,048.1
$
33.9
$
190.6
$
141.3
$
129.1
$
(43.4
)
$
11.4
$
125.6
$
63.2
$
28.3
$
(134.8
)
—
(2.7
)
(15.3
)
(4.1
)
(144.7
)
$
11.4
$
122.9
$
47.9
$
24.2
$
(279.5
)
$
0.12
$
1.36
$
0.69
$
0.31
$
(1.48
)
—
(0.03
)
(0.17
)
(0.05
)
(1.59
)
$
0.12
$
1.33
$
0.52
$
0.26
$
(3.07
)
$
—
$
—
$
—
$
—
$
—
$
1,583.0
$
1,780.8
$
1,695.3
$
1,753.1
$
1,878.5
$
308.0
$
567.7
$
638.7
$
640.5
$
757.1
ITEM 7.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(In millions, except per share data)
2007
2006
2005
$
2,642.7
$
2,622.4
$
2,450.6
33.9
190.6
141.3
(51.4
)
(66.5
)
(68.1
)
4.5
3.4
1.9
(12.8
)
(4.4
)
—
$
(32.4
)
$
120.3
$
69.8
43.8
5.3
(6.6
)
11.4
125.6
63.2
—
(2.7
)
(15.3
)
$
11.4
$
122.9
$
47.9
$
0.12
$
1.36
$
0.69
—
(0.03
)
(0.17
)
$
0.12
$
1.33
$
0.52
Variances — Favorable (Unfavorable)
(In millions)
2007 versus 2006
2006 versus 2005
$
(17.7
)
$
5.6
5.3
5.8
2.9
(0.3
)
(68.1
)
11.0
12.3
4.6
(1.6
)
22.9
(2.3
)
0.2
(14.8
)
—
(30.7
)
(2.3
)
(15.6
)
—
(23.9
)
14.5
(2.2
)
5.5
0.7
(21.3
)
(0.4
)
—
(0.6
)
3.1
(91.4
)
22.6
(156.7
)
49.3
(8.4
)
(4.4
)
16.2
3.1
(3.8
)
2.5
$
(152.7
)
$
50.5
(a)
Our share of an asset write-down
was recorded in the third quarter of 2007 against the carrying
value of certain inventory, accounts receivable and intangible
assets at our equity affiliate in Colombia. In 2005, we
recognized a charge of $22.9 million related to the
write-down of a previously idled OxyVinyls facility.
(b)
An impairment of the carrying value
of certain patents and technology agreements and investments of
$2.5 million was recorded during 2007.
(c)
Our 24% equity investment in
OxyVinyls was adjusted at June 30, 2007 as the carrying
value was higher than the fair value and the
decrease was determined to be an
other than temporary decline in value.
(d)
Our accrual for costs related to
future remediation at inactive or formerly owned sites was
adjusted based on a U.S. District Court’s ruling on several
motions in the case of Westlake Vinyls, Inc v. Goodrich
Corporation et al. and a settlement agreement entered into in
connection with the case, which require us to pay remediation
costs at the Calvert City facility.
(e)
We recorded a $15.6 million
expense for remediation costs and certain legal costs as a
result of the court ruling mentioned above in note (d).
(f)
The benefit of insurance, legal
settlements and adjustments to related reserves was a charge of
$0.6 million in 2007 as compared to a net benefit of
$23.3 million during 2006.
(g)
We repurchased all of our
10.625% senior notes through early extinguishment,
repurchasing $58.6 million and $241.4 million in 2006
and 2007, respectively, at a premium of $4.4 million and
$12.8 million, respectively.
(h)
The early extinguishment of our
10.625% senior notes resulted in lower interest during 2007
as compared to a year ago. Included in interest expense was
unamortized deferred note issuance cost of $0.8 million and
$2.8 million during 2006 and 2007, respectively.
2007
2006
2005
88.4
%
87.1
%
88.0
%
9.1
%
7.7
%
7.5
%
(In millions)
2007
2006
2005
$
9.2
$
5.6
$
4.5
20.5
12.5
35.2
441.7
610.8
639.5
$
471.4
$
628.9
$
679.2
$
51.4
$
66.5
$
68.1
(In millions)
2007
2006
2005
$
(5.0
)
$
(1.3
)
$
(0.1
)
0.7
1.1
0.6
(2.0
)
(1.9
)
(5.5
)
—
—
(1.3
)
(0.3
)
(0.7
)
1.0
$
(6.6
)
$
(2.8
)
$
(5.3
)
(In millions)
2007
2006
2005
$
12.3
$
(54.2
)
$
(28.3
)
31.5
—
—
—
59.5
21.7
$
43.8
$
5.3
$
(6.6
)
(In millions)
2006
2005
$
9.6
$
119.6
$
0.4
$
0.5
—
(0.7
)
(3.1
)
(15.1
)
(2.7
)
(15.3
)
—
—
$
(2.7
)
$
(15.3
)
(In millions)
2007
2006
Change
% Change
$
933.0
$
1,025.1
$
(92.1
)
(9.0
)%
610.9
526.7
84.2
16.0
%
744.3
732.8
11.5
1.6
%
487.8
491.5
(3.7
)
(0.8
)%
(133.3
)
(153.7
)
20.4
13.3
%
$
2,642.7
$
2,622.4
$
20.3
0.8
%
$
50.8
$
68.5
$
(17.7
)
26.6
21.3
5.3
22.1
19.2
2.9
Intermediates
34.8
102.9
(68.1
)
10.0
(2.3
)
12.3
(110.4
)
(19.0
)
(91.4
)
$
33.9
$
190.6
$
(156.7
)
2007
2006
Change
5.4
%
6.7
%
(1.3)% points
4.4
%
4.0
%
0.4% points
3.0
%
2.6
%
0.4% points
2.1
%
(0.5
)%
2.6% points
1.3
%
7.3
%
(6.0)% points
Year Ended
Year Ended
December 31,
December 31,
(In millions)
2007
2006
$
(33.2
)
$
(2.5
)
(14.8
)
—
(15.6
)
—
(2.5
)
(0.2
)
(2.2
)
—
(1.6
)
—
(0.4
)
—
(0.6
)
23.3
2.5
3.1
(42.0
)
(42.7
)
$
(110.4
)
$
(19.0
)
(a)
In 2007, our accrual for costs
related to future remediation at inactive or formerly owned
sites was adjusted based on a U.S. District Court’s ruling
on several motions in the case of Westlake Vinyls, Inc. v.
Goodrich Corporation et al. and a settlement agreement entered
into in connection with the case, which require us to pay
remediation costs at the Calvert City, Kentucky facility.
(b)
Our 24% equity investment in
OxyVinyls was adjusted at June 30, 2007 as the carrying
value was higher than the fair value and the decrease was
determined to be an other than temporary decline in value.
(c)
In the third quarter of 2007, we
recorded $15.6 million for remediation costs and certain
legal costs related to the Calvert City facility.
(d)
An impairment of the carrying value
of certain patents and technology agreements and investments of
$2.5 million was recorded during 2007.
(e)
Severance, employee outplacement,
external outplacement consulting, lease termination, facility
closing costs and the write-down of the carrying value of plant
and equipment resulting from restructuring initiatives and
executive separation agreements.
(f)
Our share of an asset write-down
was recorded in the third quarter of 2007 against the carrying
value of certain inventory, accounts receivable and intangible
assets at our equity affiliate in Colombia.
(g)
The benefit of insurance, legal
settlements and adjustments to related reserves was a charge of
$0.6 million for 2007 as compared to a net benefit of
$23.3 million during the same period of 2006.
(h)
The gains on sale of assets in 2007
and 2006 relate to the sale of previously closed facilities and
other assets.
(i)
All other and eliminations is
comprised of intersegment eliminations and corporate general and
administrative costs that are not allocated to segments.
(In millions)
2006
2005
Change
% Change
$
1,025.1
$
1,022.1
$
3.0
0.3
%
526.7
465.4
61.3
13.2
%
732.8
679.2
53.6
7.9
%
491.5
435.0
56.5
13.0
%
(153.7
)
(151.1
)
(2.6
)
(1.7
)%
$
2,622.4
$
2,450.6
$
171.8
7.0
%
$
68.5
$
62.9
$
5.6
21.3
15.5
5.8
19.2
19.5
(0.3
)
102.9
91.9
11.0
(2.3
)
(6.9
)
4.6
(19.0
)
(41.6
)
22.6
$
190.6
$
141.3
$
49.3
2006
2005
Change
6.7
%
6.2
%
0.5% points
4.0
%
3.3
%
0.7% points
2.6
%
2.9
%
(0.3)% points
(0.5
)%
(1.6
)%
1.1% points
7.3
%
5.8
%
1.5% points
Year Ended
Year Ended
December 31,
December 31,
(In millions)
2006
2005
$
(2.5
)
$
(0.2
)
(0.2
)
(0.4
)
3.1
—
23.3
8.8
—
(5.5
)
—
(22.9
)
(42.7
)
(21.4
)
$
(19.0
)
$
(41.6
)
(a)
These charges represent
environmental remediation costs for facilities either no longer
owned or closed in prior years including, remediation costs and
certain legal costs
(b)
Impairments of community
development and internet investments were recorded during 2006
and 2005.
(c)
The gain on sale of assets in 2006
relates to the sale of previously closed facilities.
(d)
The benefit of insurance, legal
settlements and adjustments to related reserves were benefits of
$23.3 million and $8.8 million during 2006 and 2005,
respectively.
(e)
Employee separation charges of
$2.5 million were recorded in 2005 related to the terms of
a separation agreement between PolyOne and Thomas A. Waltermire.
Plant phaseout charges in 2005 included a $2.5 million loss
on the sale of facilities and equipment of previously idled
operations.
(f)
In 2005, we recognized a charge of
$22.9 million related to the write-down of a previously
idled OxyVinyls facility.
(g)
All other and eliminations is
comprised of intersegment eliminations and corporate general and
administrative costs that are not allocated to segments.
Unrecognized
(In millions)
2007
$
6.0
0.5
(0.2
)
(0.3
)
$
6.0
(In millions)
2007
2006
2005
$
67.2
$
111.7
$
63.7
215.3
(16.8
)
(24.2
)
(275.9
)
(63.4
)
(43.7
)
6.6
31.5
(4.2
)
6.6
1.9
(1.6
)
$
13.2
$
33.4
$
(5.8
)
(In millions)
2007
2006
2005
$
11.4
$
122.9
$
47.9
57.4
57.1
50.7
—
3.1
15.6
23.3
4.3
(9.6
)
(57.1
)
(12.9
)
2.0
12.8
4.4
—
4.3
4.5
(0.6
)
2.5
0.2
0.4
14.8
—
—
(42.5
)
(112.0
)
(79.9
)
37.6
97.7
67.4
(26.9
)
(13.9
)
(17.8
)
35.6
(33.8
)
(1.3
)
—
(7.9
)
7.9
(6.0
)
(1.9
)
(20.8
)
—
(0.1
)
1.8
$
67.2
$
111.7
$
63.7
(In days)
2007
2006
2005
54.5
53.1
49.8
39.5
42.2
37.6
(46.6
)
(44.3
)
(41.3
)
47.4
51.0
46.1
3.6
(4.9
)
3.7
(In millions)
2007
2006
$
(8.9
)
$
23.0
26.7
(39.6
)
17.8
(17.2
)
$
35.6
$
(33.8
)
$
18.7
$
(21.0
)
16.9
(12.8
)
$
35.6
$
(33.8
)
(In millions)
2007
2006
2005
$
(43.4
)
$
(41.1
)
$
(32.1
)
(11.2
)
(1.5
)
(2.7
)
9.4
8.7
12.3
260.5
—
—
—
17.3
—
—
(0.2
)
(1.7
)
$
215.3
$
(16.8
)
$
(24.2
)
(In millions)
2007
2006
2005
$
(0.2
)
$
(2.1
)
$
4.8
(264.1
)
(60.0
)
(49.0
)
(12.8
)
(4.4
)
—
1.2
3.1
0.5
$
(275.9
)
$
(63.4
)
$
(43.7
)
(In millions)
Outstanding
Available
$
330.6
$
—
—
151.2
6.1
—
$
336.7
$
151.2
Payment Due by Period
Less than
More than
(In millions)
Total
1 Year
1-3 Years
4-5 Years
5 Years
$
330.6
$
22.6
$
40.3
$
217.7
$
50.0
64.9
17.4
26.1
11.1
10.3
11.4
11.4
—
—
—
120.6
26.6
48.4
34.3
11.3
205.8
33.2
55.3
49.6
67.7
60.9
6.1
12.2
12.2
30.4
7.9
3.6
4.3
—
—
$
802.1
$
120.9
$
186.6
$
324.9
$
169.7
(1)
Interest obligations are stated at
the rate of interest that is defined by the debt instrument and
take into effect any impact of rate swap agreements, assuming
that the debt is paid at maturity.
(2)
Pension and post-retirement
obligations relate to our U.S. and international pension and
other post-retirement plans. Based upon our interpretation of
the new pension regulations, there will be minimum funding
requirements in 2008 of approximately $18.2 million for our
U.S. qualified defined benefit pension plans. Obligations are
based on the plans’ current funded status and actuarial
assumptions, and include funding requirements projected to be
made to our qualified pension plans, projected benefit payments
to participants in our other post-employment benefit plans, and
projected benefit payments to participants in our non-qualified
pension plans through 2017.
•
the effect on foreign operations of currency fluctuations,
tariffs, nationalization, exchange controls, limitations on
foreign investment in local businesses and other political,
economic and regulatory risks;
•
changes in polymer consumption growth rates within the U.S.,
Europe or Asia or other countries where PolyOne conducts
business;
•
changes in global industry capacity or in the rate at which
anticipated changes in industry capacity come online in the
polyvinyl chloride (PVC), chlor-alkali, vinyl chloride monomer
(VCM) or other industries in which PolyOne participates;
•
fluctuations in raw material prices, quality and supply and in
energy prices and supply, in particular fluctuations outside the
normal range of industry cycles;
•
production outages or material costs associated with scheduled
or unscheduled maintenance programs;
•
the cost of compliance with environmental laws and regulations,
including any increased cost of complying with new or revised
laws and regulations;
•
unanticipated developments that could occur with respect to
contingencies such as litigation and environmental matters,
including any developments that would require any increase in
our costs
and/or
reserves for such contingencies;
•
an inability to achieve or delays in achieving or achievement of
less than the anticipated financial benefit from initiatives
related to cost reductions and employee productivity goals;
•
an inability to raise or sustain prices for products or services;
•
an inability to maintain appropriate relations with unions and
employees in certain locations in order to avoid business
disruptions;
•
any change in any agreements with product suppliers to PolyOne
Distribution that prohibits PolyOne from continuing to
distribute a supplier’s products to customers;
•
the successful integration of acquired businesses, including
GLS Corporation;
•
the possibility that the degradation in the North American
residential construction market is more severe than anticipated;
•
other factors affecting our business beyond our control,
including, without limitation, changes in the general economy,
changes in interest rates and changes in the rate of inflation;
and
•
other factors described in this Annual Report on
Form 10-K
under Item 1A, “Risk Factors.”
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
Page
32
33
34
35
36
37
38-63
64
W. David Wilson
Senior Vice President
and Chief Financial Officer
Year Ended December 31,
(In millions, except per share data)
2007
2006
2005
$
2,642.7
$
2,622.4
$
2,450.6
2,337.3
2,284.1
2,155.7
241.8
202.6
182.8
57.4
57.1
50.7
27.7
112.0
79.9
33.9
190.6
141.3
(51.4
)
(66.5
)
(68.1
)
4.5
3.4
1.9
(12.8
)
(4.4
)
—
(6.6
)
(2.8
)
(5.3
)
(32.4
)
120.3
69.8
43.8
5.3
(6.6
)
11.4
125.6
63.2
—
(2.7
)
(15.3
)
$
11.4
$
122.9
$
47.9
$
0.12
$
1.36
$
0.69
—
(0.03
)
(0.17
)
$
0.12
$
1.33
$
0.52
92.8
92.4
91.9
93.1
92.8
92.0
$
—
$
—
$
—
Year Ended December 31,
(In millions)
2007
2006
2005
$
11.4
$
122.9
$
47.9
57.4
57.1
50.7
—
3.1
15.6
48.8
2.5
0.2
(25.5
)
1.8
(9.8
)
(57.1
)
(12.9
)
2.0
12.8
4.4
—
4.3
4.5
(0.6
)
2.5
0.2
0.4
14.8
—
—
(42.5
)
(112.0
)
(79.9
)
37.6
97.7
67.4
(26.9
)
(13.9
)
(17.8
)
(8.9
)
23.0
(23.6
)
26.7
(39.6
)
9.3
17.8
(17.2
)
13.0
—
(7.9
)
7.9
(6.0
)
(1.9
)
(20.8
)
—
(0.1
)
1.8
67.2
111.7
63.7
(43.4
)
(41.1
)
(32.1
)
(11.2
)
(1.5
)
(2.7
)
—
17.3
—
9.4
8.7
12.3
260.5
—
—
—
(0.2
)
(1.7
)
215.3
(16.8
)
(24.2
)
(0.2
)
(2.1
)
4.8
(264.1
)
(60.0
)
(49.0
)
(12.8
)
(4.4
)
—
1.2
3.1
0.5
(275.9
)
(63.4
)
(43.7
)
6.6
1.9
(1.6
)
13.2
33.4
(5.8
)
66.2
32.8
38.6
$
79.4
$
66.2
$
32.8
Shareholders’ Equity
Common Shares
Accumulated
Common
Additional
Retained
Common
Other
(In millions, except per share data;
Common
Shares Held
Common
Paid-in
Earnings
Stock Held
Comprehensive
shares in thousands)
Shares
in Treasury
Total
Stock
Capital
(Deficit)
in Treasury
Income (Loss)
122,192
30,480
$
352.1
$
1.2
$
1,067.2
$
(237.2
)
$
(339.0
)
$
(140.1
)
6.5
6.5
47.9
47.9
(9.3
)
(9.3
)
(2.4
)
(2.4
)
36.2
(225
)
0.1
(0.8
)
1.9
(1.0
)
122,192
30,255
$
394.9
$
1.2
$
1,066.4
$
(182.8
)
$
(337.1
)
$
(152.8
)
122.9
122.9
12.1
12.1
44.6
44.6
179.6
(2.3
)
(2.3
)
(871
)
9.5
(0.7
)
10.9
(0.7
)
122,192
29,384
$
581.7
$
1.2
$
1,065.7
$
(59.9
)
$
(326.2
)
$
(99.1
)
11.4
11.4
28.3
28.3
(4.0
)
(4.0
)
26.2
26.2
61.9
(325
)
5.8
(0.7
)
6.5
—
122,192
29,059
$
649.4
$
1.2
$
1,065.0
$
(48.5
)
$
(319.7
)
$
(48.6
)
(In millions)
2006
2005
$
9.6
$
119.6
$
0.4
$
0.5
—
(0.7
)
(3.1
)
(15.1
)
(2.7
)
(15.3
)
—
—
$
(2.7
)
$
(15.3
)
(In millions)
2007
2006
$
20.3
$
(8.0
)
(68.9
)
(91.1
)
$
(48.6
)
$
(99.1
)
Year Ended
December 31,
(In millions, except per share data)
2005
$
47.9
(0.6
)
(4.1
)
$
43.2
$
0.52
$
0.47
Unrecognized Tax
Benefits
(In millions)
2007
$
6.0
0.5
(0.2
)
(0.3
)
$
6.0
Year Ended December 31, 2006
Year Ended December 31, 2005
(In millions, except per share data)
As Originally Filed
Adjustment
Restated
As Originally Filed
Adjustment
Restated
$
111.6
$
0.4
$
112.0
$
78.9
$
1.0
$
79.9
6.0
(0.7
)
5.3
(6.6
)
—
(6.6
)
125.9
(0.3
)
125.6
62.2
1.0
63.2
123.2
(0.3
)
122.9
46.9
1.0
47.9
Before discontinued operations
$
1.36
$
—
$
1.36
$
0.68
$
0.01
$
0.69
1.33
—
1.33
0.51
0.01
0.52
December 31, 2006
(In millions)
As Originally Filed
Adjustment
Restated
$
276.1
$
11.1
$
287.2
25.0
(3.9
)
21.1
1,773.6
7.2
1,780.8
(67.1
)
7.2
(59.9
)
574.5
7.2
581.7
Year Ended December 31, 2006
Year Ended December 31, 2005
(In millions)
As Originally Filed
Adjustment
Restated
As Originally Filed
Adjustment
Restated
$
123.2
$
(0.3
)
$
122.9
$
46.9
$
1.0
$
47.9
(111.6
)
(0.4
)
(112.0
)
(78.9
)
(1.0
)
(79.9
)
(13.6
)
0.7
(12.9
)
December 31,
December 31,
(In millions)
2006
2007
$
181.4
$
179.6
72.0
72.0
33.8
33.8
1.6
1.6
$
288.8
$
287.0
As of December 31, 2007
Acquisition
Accumulated
Currency
(In millions)
Cost
Amortization
Translation
Net
$
8.6
$
(6.7
)
$
—
$
1.9
11.4
(10.0
)
—
1.4
4.7
(2.7
)
1.4
3.4
$
24.7
$
(19.4
)
$
1.4
$
6.7
As of December 31, 2006
Acquisition
Accumulated
Currency
(In millions)
Cost
Amortization
Translation
Net
$
8.6
$
(6.1
)
$
—
$
2.5
9.6
(9.1
)
—
0.5
8.0
(2.9
)
1.3
6.4
$
26.2
$
(18.1
)
$
1.3
$
9.4
Six Months Ended
June 30,
(In millions)
2007
2006
2005
$
1,107.4
$
2,476.0
$
2,502.0
$
11.6
$
274.8
$
200.3
$
(2.0
)
$
246.2
$
134.0
24
%
24
%
24
%
(0.5
)
59.1
32.2
0.3
0.6
0.6
$
(0.2
)
$
59.7
$
32.8
(In millions)
2007
2006
2005
$
180.6
$
186.7
$
167.0
$
91.3
$
104.3
$
92.2
$
82.0
$
94.6
$
81.3
50
%
50
%
50
%
$
41.0
$
47.3
$
40.7
(In millions)
2007
2006
$
116.8
$
122.9
$
8.1
$
12.0
$
6.5
$
10.7
(In millions)
2007
2006
$
37.0
$
30.7
14.6
14.0
$
51.6
$
44.7
$
32.2
$
28.7
3.1
2.7
$
35.3
$
31.4
(In millions)
2007
2006
$
—
$
241.4
199.2
199.1
50.0
50.0
76.1
91.7
5.3
8.0
$
330.6
$
590.2
22.6
22.5
$
308.0
$
567.7
Effective
Effective
Interest Rate
Interest Rate
during 2007
during 2006
9.5
%
—
—
8.8
%
(In millions)
2007
2006
$
169.8
$
160.7
175.8
161.6
(4.8
)
(5.9
)
$
340.8
$
316.4
December 31,
December 31,
(In millions)
2007
2006
$
169.5
$
165.4
100.1
111.7
269.6
277.1
(46.2
)
(36.3
)
$
223.4
$
240.8
December 31,
December 31,
(In millions)
2007
2006
$
40.3
$
39.8
271.8
263.2
903.6
854.9
1,215.7
1,157.9
(766.0
)
(715.5
)
$
449.7
$
442.4
Accrued Expenses
Non-current Liabilities
December 31,
December 31,
(In millions)
2007
2006
2007
2006
$
46.4
$
49.5
$
13.1
$
12.7
13.5
5.0
70.3
54.5
2.8
7.6
—
—
9.9
9.3
—
—
3.6
6.9
—
—
4.7
4.5
—
—
1.3
1.5
—
—
0.3
0.1
2.1
1.7
11.9
8.7
2.0
6.5
$
94.4
$
93.1
$
87.5
$
75.4
Pension
Health Care
(In millions)
Benefits
Benefits
$
61.6
$
—
0.1
—
35.2
32.3
167.5
109.6
(124.4
)
—
(124.4
)
—
$
(60.9
)
$
—
(0.1
)
—
0.6
6.2
(37.9
)
(16.7
)
(23.1
)
16.7
—
(2.7
)
(23.1
)
14.0
$
0.7
$
—
—
—
35.8
38.5
129.6
92.9
(147.5
)
16.7
—
(2.7
)
(147.5
)
14.0
Pension Benefits
Health Care Benefits
(In millions)
2007
2006
2007
2006
$
514.9
$
536.6
$
92.9
$
102.6
1.1
1.1
0.4
0.4
30.1
29.4
5.2
5.1
—
—
5.6
6.3
(36.8
)
(36.5
)
(12.1
)
(14.9
)
0.1
1.1
—
—
(22.3
)
(16.8
)
(0.5
)
(6.6
)
$
487.1
$
514.9
$
91.5
$
92.9
18.0
23.0
—
—
$
469.1
$
491.9
$
91.5
$
92.9
$
386.0
$
370.0
$
—
$
—
30.9
46.2
—
—
20.4
5.3
6.5
8.6
—
—
5.6
6.3
(36.8
)
(36.5
)
(12.1
)
(14.9
)
0.8
1.0
—
—
$
401.3
$
386.0
$
—
$
—
$
(85.8
)
$
(128.9
)
$
(91.5
)
$
(92.9
)
Pension Benefits
Health Care Benefits
(In millions)
2007
2006
2007
2006
$
1.5
$
0.7
$
—
$
—
$
4.7
$
4.5
$
9.9
$
9.3
$
82.6
$
125.1
$
81.6
$
83.6
Pension Benefits
Health Care Benefits
(In millions)
2007
2006
2007
2006
$
115.3
$
148.1
$
22.2
$
25.1
(0.5
)
(0.6
)
(36.0
)
(41.8
)
—
—
—
2.7
$
114.8
$
147.5
$
(13.8
)
$
(14.0
)
Pension Benefits
Health Care Benefits
(In millions)
2007
2006
2007
2006
$
147.5
$
169.0
$
(14.0
)
$
—
0.1
—
5.8
—
(9.9
)
—
(1.7
)
—
(22.9
)
—
(1.5
)
—
—
(44.9
)
—
—
23.1
—
(16.7
)
—
—
—
2.7
—
—
(2.7
)
—
—
0.3
0.3
—
$
114.8
$
147.5
$
(13.8
)
$
(14.0
)
Pension Benefits
Health Care Benefits
(In millions)
2007
2006
2007
2006
$
471.1
$
512.8
$
91.5
$
92.9
453.2
490.0
91.5
92.9
383.8
383.3
—
—
Pension Benefits
Health Care Benefits
2007
2006
2005
2007
2006
2005
6.78
%
6.07
%
5.66
%
6.61
%
6.02
%
5.56
%
3.5
%
3.5
%
3.5
%
—
—
—
—
—
—
10
%
11
%
11
%
—
—
—
5.00
%
5.25
%
5.25
%
—
—
—
2015
2013
2012
One Percentage
One Percentage
(In millions)
Point Increase
Point Decrease
$
0.4
$
(0.3
)
6.6
(5.5
)
Pension Benefits
Health Care Benefits
(Dollars in millions)
2007
2006
2005
2007
2006
2005
$
1.1
$
1.1
$
1.3
$
0.4
$
0.4
$
0.4
30.1
29.4
28.9
5.2
5.1
5.9
(31.8
)
(30.2
)
(31.7
)
—
—
—
9.6
13.3
13.0
1.7
1.6
1.2
0.3
—
0.4
—
—
—
(0.1
)
—
—
(5.8
)
(5.8
)
(4.5
)
$
9.2
$
13.6
$
11.9
$
1.5
$
1.3
$
3.0
Pension Benefits
Health Care Benefits
2007
2006
2005
2007
2006
2005
6.07
%
5.66
%
5.58
%
6.02
%
5.56
%
5.43
%
8.50
%
8.50
%
8.75
%
—
—
—
3.5
%
3.5
%
3.5
%
—
—
—
—
—
—
10
%
10
%
10
%
—
—
—
5.25
%
5.25
%
5.25
%
—
—
—
2013
2012
2011
(In millions)
Pension Benefits
Health Care Benefits
$
(0.1
)
$
(5.7
)
$
6.0
$
1.3
Plan Assets at
December 31,
Asset Category
2007
2006
64
%
62
%
15
17
21
21
100
%
100
%
Medicare
Pension
Health Care
Part D
(In millions)
Benefits
Benefits
Subsidy
$
35.8
$
9.9
$
1.6
36.2
10.1
1.7
36.8
10.1
1.7
36.5
10.1
1.8
36.8
10.0
1.8
192.8
45.6
7.9
(In millions)
2007
2006
2005
$
5.7
$
5.4
$
5.1
4.9
4.7
4.8
$
10.6
$
10.1
$
9.9
(In millions)
2007
2006
2005
$
(5.0
)
$
(1.3
)
$
(0.1
)
0.7
1.1
0.6
(2.0
)
(1.9
)
(5.5
)
—
—
(1.3
)
(0.3
)
(0.7
)
1.0
$
(6.6
)
$
(2.8
)
$
(5.3
)
(In millions)
2007
2006
2005
$
(57.7
)
$
101.9
$
53.6
25.3
18.4
16.2
$
(32.4
)
$
120.3
$
69.8
(In millions)
2007
2006
2005
$
(3.3
)
$
(2.5
)
$
(0.3
)
(3.2
)
(2.2
)
(0.7
)
(6.8
)
(2.9
)
(3.6
)
$
(13.3
)
$
(7.6
)
$
(4.6
)
$
55.3
$
13.5
$
—
2.6
1.6
—
(0.8
)
(2.2
)
(2.0
)
$
57.1
$
12.9
$
(2.0
)
$
43.8
$
5.3
$
(6.6
)
2007
2006
2005
35.0
%
(35.0
)%
(35.0
)%
(1.2
)
(1.2
)
(0.7
)
—
(8.7
)
(2.0
)
4.9
1.2
0.1
(0.7
)
(1.4
)
(3.0
)
38.0
%
(45.1
)%
(40.6
)%
97.2
—
—
—
49.5
31.1
135.2
%
4.4
%
(9.5
)%
(In millions)
2007
2006
$
40.8
$
45.9
5.6
5.0
1.9
122.0
8.9
7.3
$
57.2
$
180.2
$
36.5
$
38.5
26.8
39.9
28.9
20.8
23.2
94.1
3.3
1.6
12.2
8.5
2.4
1.4
16.6
16.0
$
149.9
$
220.8
(2.4
)
(1.4
)
$
90.3
$
39.2
March 8, 2007
May 10, 2007
September 10, 2007
October 4, 2007
1,536,900
20,000
60,000
10,000
$
6.585
$
7.250
$
7.675
$
7.555
March 8, 2014
May 10, 2014
September 10, 2014
October 4, 2014
2007
2006
2005
44.1%
44.0%
42.0%
—
—
—
4.0 — 4.4
3.7 — 4.3
5.2 — 5.5
3.88% — 4.30%
4.26% — 4.91%
3.8%
$2.68 — $3.05
$2.63 — $3.82
$4.05 — $4.31
Aggregate
Weighted-Average
Intrinsic
Shares
Weighted-Average
Remaining
Value
Stock Appreciation Rights
(in thousands)
Exercise Price
Contractual Term
(In millions)
1,640
$
7.90
1,627
6.64
(70
)
6.50
(206
)
7.17
2,991
$
7.30
5.36 years
$
—
899
$
7.98
4.52 years
$
—
Aggregate
Weighted-Average
Intrinsic
Shares
Weighted-Average
Remaining
Value
Stock Options
(in thousands)
Exercise Price
Contractual Term
(In millions)
7,385
$
11.47
—
—
(196
)
6.00
(1,036
)
14.31
6,153
$
11.17
1.61 years
$
0.3
Year Ended December 31, 2007
Sales to External
Operating
Depreciation and
Capital
Total
(in millions)
Customers
Intersegment Sales
Total Sales
Income (Loss)
Amortization
Expenditures
Assets
$
833.0
$
100.0
$
933.0
$
50.8
$
19.2
$
6.0
$
467.3
610.9
—
610.9
26.6
14.9
20.3
424.4
739.6
4.7
744.3
22.1
1.7
0.1
175.2
—
—
—
34.8
0.2
—
15.6
459.2
28.6
487.8
10.0
16.7
12.1
296.5
—
(133.3
)
(133.3
)
(110.4
)
4.7
4.9
204.0
$
2,642.7
$
—
$
2,642.7
$
33.9
$
57.4
$
43.4
$
1,583.0
Year Ended December 31, 2006
Sales to External
Operating
Depreciation and
Capital
Total
(in millions)
Customers
Intersegment Sales
Total Sales
Income (Loss)
Amortization
Expenditures
Assets
$
907.9
$
117.2
$
1,025.1
$
68.5
$
18.9
$
5.6
$
475.9
526.7
—
526.7
21.3
13.7
13.6
377.0
724.1
8.7
732.8
19.2
1.5
0.3
164.6
—
—
—
102.9
0.2
—
282.0
463.7
27.8
491.5
(2.3
)
17.7
17.3
313.6
—
(153.7
)
(153.7
)
(19.0
)
5.1
4.3
167.7
$
2,622.4
$
—
$
2,622.4
$
190.6
$
57.1
$
41.1
$
1,780.8
Year Ended December 31, 2005
Sales to External
Operating
Depreciation and
Capital
Total
(in millions)
Customers
Intersegment Sales
Total Sales
Income (Loss)
Amortization
Expenditures
Assets
$
908.2
$
113.9
$
1,022.1
$
62.9
$
15.5
$
6.1
$
503.4
465.4
—
465.4
15.5
13.1
12.6
330.7
672.0
7.2
679.2
19.5
1.3
0.3
178.8
—
—
—
91.9
0.2
—
270.7
405.0
30.0
435.0
(6.9
)
18.4
7.2
289.4
—
(151.1
)
(151.1
)
(41.6
)
2.2
5.9
122.3
$
2,450.6
$
—
$
2,450.6
$
141.3
$
50.7
$
32.1
$
1,695.3
(in millions)
2007
2006
2005
$
—
$
1.5
$
2.1
3.3
3.5
3.3
0.6
0.9
1.1
40.8
107.0
96.3
44.7
112.9
102.8
(0.2
)
(0.8
)
—
(16.8
)
(0.1
)
(22.9
)
$
27.7
$
112.0
$
79.9
$
—
$
—
2.2
1.5
13.2
14.2
4.5
271.5
$
19.9
$
287.2
(in millions)
2007
2006
2005
$
1,670.9
$
1,743.6
$
1,648.0
513.7
442.6
404.4
291.7
287.6
283.2
152.5
135.7
101.5
13.9
12.9
13.5
$
582.3
$
563.3
$
545.1
189.7
169.9
158.9
73.0
62.1
63.4
31.4
26.3
23.5
2.9
2.7
2.7
(in millions)
2007
2006
2005
93.0
92.5
91.9
0.2
0.1
—
92.8
92.4
91.9
92.8
92.4
91.9
0.3
0.4
0.1
93.1
92.8
92.0
December 31, 2007
December 31, 2006
Currency (In millions)
Buy
Sell
Buy
Sell
$
92.7
$
—
$
83.9
$
22.7
—
95.0
0.6
85.2
—
—
21.7
—
2007
2006
Carrying
Fair
Carrying
Fair
(In millions)
Amount
Value
Amount
Value
$
79.4
$
79.4
$
66.2
$
66.2
—
—
241.4
255.9
50.0
42.5
50.0
43.8
199.2
203.0
199.1
199.5
76.1
76.7
91.7
95.0
5.3
5.3
8.0
8.1
(2.3
)
(2.3
)
(1.7
)
(1.7
)
(1.7
)
(1.7
)
(5.1
)
(5.1
)
2007 Quarters
2006 Quarters
(In millions, except per share data)
Fourth
Third
Second
First
Fourth
Third
Second
First
$
631.3
$
664.8
$
688.8
$
657.8
$
595.2
$
666.2
$
686.4
$
674.6
612.7
688.4
676.4
631.3
572.6
629.8
622.8
606.6
18.6
(23.6
)
12.4
26.5
22.6
36.4
63.6
68.0
7.1
2.3
(5.4
)
7.4
14.5
19.6
42.5
49.0
—
—
—
—
(0.6
)
—
—
(2.1
)
7.1
2.3
(5.4
)
7.4
13.9
19.6
42.5
46.9
Before discontinued operations
$
0.08
$
0.02
$
(0.06
)
$
0.08
$
0.16
$
0.21
$
0.46
$
0.53
$
0.08
$
0.02
$
(0.06
)
$
0.08
$
0.15
$
0.21
$
0.46
$
0.51
(1)
Per share amounts for the quarter
and the full year have been computed separately. The sum of the
quarterly amounts may not equal the annual amounts presented
because of differences in the average shares outstanding during
each period.
SCHEDULE II – VALUATION AND QUALIFYING
ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(In millions)
Balance at
Charged to
Charged
Beginning
Costs
to Other
Balance at End of
of Period
and Expenses
Accounts
(C)
Other Deductions
Period
$
5.9
$
1.9
$
0.3
$
(3.3
)
(A)
$
4.8
$
59.5
$
48.8
$
1.0
$
(25.5
)
(B)
$
83.8
$
6.4
$
3.3
$
—
$
( 3.8
)
(A)
$
5.9
$
55.2
$
2.5
$
—
$
1.8
(B)
$
59.5
$
8.0
$
2.8
$
—
$
(4.4
)
(A)
$
6.4
$
64.5
$
0.2
$
0.3
$
(9.8
)
(B)
$
55.2
(A)
Accounts written off.
(B)
Cash payments during the year, net
of insurance recoveries.
(C)
Translation adjustments.
ITEM 9.
CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
ITEM 9A.
CONTROLS AND
PROCEDURES
1.
PolyOne’s management is responsible for establishing and
maintaining adequate internal control over financial reporting.
2.
PolyOne’s management has used the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) framework to
evaluate the effectiveness of internal control over financial
reporting. Management believes that the COSO framework is a
suitable framework for its evaluation of financial reporting
because it is free from bias, permits reasonably consistent
qualitative and quantitative measurements of PolyOne’s
internal control over financial reporting, is sufficiently
complete so that those relevant factors that would alter a
conclusion about the effectiveness of PolyOne’s internal
control over financial reporting are not omitted and is relevant
to an evaluation of internal control over financial reporting.
3.
Management has assessed the effectiveness of PolyOne’s
internal control over financial reporting as of
December 31, 2007 and has concluded that such internal
control over financial reporting is effective. There were no
material weaknesses in internal control over financial reporting
identified by management.
4.
Ernst & Young LLP, who audited the consolidated
financial statements of PolyOne for the year ended
December 31, 2007, also issued an attestation report on
PolyOne’s internal control over financial reporting under
Auditing Standard No. 5 of the Public Company Accounting
Oversight Board. This attestation report is set forth on
page 32 of this Annual Report on
Form 10-K
and incorporated by reference into this Item 9A.
ITEM 9B.
OTHER
INFORMATION
ITEM 10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11.
EXECUTIVE
COMPENSATION
ITEM 12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
ITEM 13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
ITEM 14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
ITEM 15.
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES
Exhibit No.
Exhibit Description
3
.1
Articles of Incorporation (incorporated by reference to
Exhibit 3.I to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
3
.2
Amendment to the Second Article of the Articles of
Incorporation, as filed with the Ohio Secretary of State,
November 25, 2003 (incorporated by reference to
Exhibit 3.1a to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2003, SEC File
No. 1-16091)
3
.3
Regulations (incorporated by reference to Exhibit 3.II to
the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
4
.1
Indenture, dated as of December 1, 1995, between the
Company and NBD Bank, as trustee (incorporated by reference to
Exhibit 4.3 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
4
.2
Form of Indenture between the Company and NBD Bank, as trustee,
governing the Company’s Medium Term Notes (incorporated by
reference to Exhibit 4.1 to M.A. Hanna Company’s
Registration Statement on
Form S-3,
Registration Statement
No. 333-05763,
filed on June 12, 1996)
4
.3
Indenture, dated as of April 23, 2002, between the Company
and The Bank of New York, as trustee, governing the
Company’s 8.875% Senior Notes due May 15, 2012
(incorporated by reference to Exhibit 4.1 to the
Company’s Registration Statement on
Form S-4,
Registration Statement
No. 333-87472,
filed on May 2, 2002)
10
.1+
Long-Term Incentive Plan, as amended and restated as of
March 1, 2000 (incorporated by reference to Exhibit A
to M.A. Hanna Company’s Definitive Proxy Statement filed on
March 24, 2000, SEC File
No. 1-05222)
10
.2+
Form of Award Agreement for Performance Shares (incorporated by
reference to Exhibit 10.1 to the Company’s Current
Report on
Form 8-K
filed on January 11, 2005, SEC File
No. 1-16091)
10
.3+
Form of Award Agreement for Stock Appreciation Rights
(incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on
Form 8-K
filed on January 11, 2005, SEC File
No. 1-16091)
10
.4+
1995 Incentive Stock Plan, as amended and restated through
August 31, 2000 (incorporated by reference to
Exhibit 10.3 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
10
.5+
1998 Interim Stock Award Incentive Plan, as amended and restated
through August 31, 2000 (incorporated by reference to
Exhibit 10.4 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
10
.6+
1999 Incentive Stock Plan, as amended and restated through
August 31, 2000 (incorporated by reference to
Exhibit 10.5 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
10
.7+
2000 Stock Incentive Plan (incorporated by reference to
Annex D to Amendment No. 3 to The Geon Company’s
Registration Statement on
Form S-4,
Registration Statement
No. 333-37344,
filed on July 28, 2000)
10
.8+
Amended and Restated Benefit Restoration Plan
(Section 401(a)(17))
10
.9+
Strategic Improvement Incentive Plan (incorporated by reference
to Exhibit 10.9b to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2001, SEC File
No. 1-16091)
10
.10+
Senior Executive Annual Incentive Plan, effective
January 1, 2006 (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on
Form 8-K
filed on May 24, 2005, SEC File
No. 1-16091)
10
.11+
2005 Equity and Performance Incentive Plan (amended and restated
by the Board as of July 21, 2005) (incorporated by
reference to Exhibit 10.4 to the Company’s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2005, SEC File
No. 1-16091)
10
.12+
Amended and Restated Deferred Compensation Plan for Non-Employee
Directors
10
.13+
Form of Management Continuity Agreement
10
.14+
Schedule of Executives with Management Continuity Agreements
10
.15+
Amended and Restated PolyOne Supplemental Retirement Benefit Plan
10
.16+
Separation Agreement Term Sheet between the Company and Thomas
A. Waltermire, dated October 6, 2005 (incorporated by
reference to Exhibit 10.1 to the Company’s Current
Report on
Form 8-K
filed on October 11, 2005, SEC File
No. 1-16091)
10
.17+
Separation Agreement between the Company and Thomas A.
Waltermire, dated December 21, 2005 (incorporated by
reference to Exhibit 10.1 to the Company’s Current
Report on
Form 8-K
filed on December 21, 2005, SEC File
No. 1-16091)
10
.18+
Amended and Restated Letter Agreement between the Company and
Stephen D. Newlin, originally effective as of February 13,
2006
10
.19+
Form of Director and Officer Indemnification Agreement
(incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on
Form 8-K
filed on July 5, 2006, SEC File
No. 1-16091)
10
.20+
Amended and Restated PolyOne Corporation Executive Severance Plan
10
.21
Guarantee and Agreement, dated as of June 6, 2006, between
the Company, as guarantor, and the beneficiary banks party
thereto (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
10
.22
Second Amended and Restated Security Agreement, dated as of
June 6, 2006, between the Company, as grantor, and U.S.
Bank Trust National Association, as collateral trustee
(incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
Exhibit No.
Exhibit Description
10
.23
Amended and Restated Collateral Trust Agreement, dated as
of June 6, 2006, between the Company, as grantor, and U.S.
Bank Trust National Association, as collateral trustee
(incorporated by reference to Exhibit 10.3 to the
Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
10
.24
Amended and Restated Intercreditor Agreement, dated as of
June 6, 2006, between the Company, as grantor; Citicorp
USA, Inc., as receivables and bank agent; U.S. Bank
Trust National Association, as collateral trustee; PolyOne
Funding Corporation (incorporated by reference to
Exhibit 10.4 to the Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
10
.25
Amended and Restated Instrument Guaranty, dated as of
December 19, 1996 (incorporated by reference to
Exhibit 10.12 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
10
.26
Amended and Restated Plant Services Agreement, between the
Company and the B.F. Goodrich Company (incorporated by reference
to Exhibit 10.13 to The Geon Company’s Annual Report
on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
10
.27
Assumption of Liabilities and Indemnification Agreement, dated
March 1, 1993, amended and restated by Amended and Restated
Assumption of Liabilities and Indemnification Agreement, dated
April 27, 1993 (incorporated by reference to
Exhibit 10.14 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
10
.28
Partnership Agreement, by and between 1997 Chloralkali Venture,
Inc. and Olin Sunbelt, Inc. (incorporated by reference to
Exhibit 10(A) to The Geon Company’s Quarterly Report
on
Form 10-Q
for the quarter ended September 30, 1996, SEC File
No. 1-11804)
10
.29
Amendment to Partnership Agreement between Olin Sunbelt, Inc.
and 1997 Chloralkali Venture, Inc., addition of §5.03
(incorporated by reference to Exhibit 10.16b to The Geon
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1997, SEC File
No. 1-11804)
10
.30
Amendment to Partnership Agreement between Olin Sunbelt, Inc.
and 1997 Chloralkali Venture, Inc., addition of §1.12
(incorporated by reference to Exhibit 10.16c to The Geon
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1997, SEC File
No. 1-11804)
10
.31
Chlorine Sales Agreement, between Sunbelt Chlor Alkali
Partnership and the Company (incorporated by reference to
Exhibit 10(B) to The Geon Company’s Quarterly Report
on
Form 10-Q
for the quarter ended September 30, 1996, SEC File
No. 1-11804)
10
.32
Unconditional and Continuing Guaranty, between the Company and
Olin Corporation and Sunbelt Chlor Alkali Partnership
(incorporated by reference to Exhibit 10(C) to The Geon
Company’s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1996, SEC File
No. 1-11804)
10
.33
Guarantee by the Company in Favor of Sunbelt Chlor Alkali
Partnership of the Guaranteed Secure Senior Notes due 2017,
dated December 22, 1997 (incorporated by reference to
Exhibit 10.20 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1997, SEC File
No. 1-11804)
10
.34
Master Transaction Agreement between the Company and Occidental
Chemical Corporation, dated December 22, 1998 (incorporated
by reference to Annex B to The Geon Company’s Special
Meeting Proxy Statement filed on March 30, 1999, SEC File
No. 1-11804)
10
.35
First Amended and Restated Limited Partnership Agreement of Oxy
Vinyls, LP (incorporated by reference to Exhibit 10.2 to
The Geon Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.36
Asset Contribution Agreement — PVC Partnership (Geon)
(incorporated by reference to Exhibit 10.3 to The Geon
Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.37
Parent Agreement (Oxy Vinyls, LP) (incorporated by reference to
Exhibit 10.4 to The Geon Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.38
Parent Agreement (PVC Powder Blends, LP) and Business
Opportunity Agreement (incorporated by reference to
Exhibit 10.5 to The Geon Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.39
Stock Purchase Agreement among O’Sullivan Films Holding
Corporation, O’Sullivan Management, LLC, and Matrix Films,
LLC, dated as of February 15, 2006 (incorporated by
reference to Exhibit 10.25 to the Company’s Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2005, SEC File
No. 1-16091)
10
.40+
Form of Award Agreement for Stock-Settled Stock Appreciation
Rights (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007, SEC File
No. 1-16091)
10
.41+
Form of Award Agreement for Performance Units (incorporated by
reference to Exhibit 10.2 to the Company’s Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2007, SEC File
No. 1-16091)
10
.42
Sale and Agreement, by and among PolyOne Corporation, Occidental
Chemical Corporation, and their representative affiliates party
thereto, dated as of July 6, 2007 (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.43
Second Amended and Restated Receivables Purchase Agreement,
dated as of June 26, 2007, among PolyOne Funding
Corporation, as seller; the Company, as servicer; the banks and
other financial institutions party thereto, as purchasers;
Citicorp USA, Inc., as agent; and National City Business Credit,
Inc., as syndication agent (incorporated by reference to
Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.44
Second Amended and Restated Receivables Sale Agreement, dated as
of June 26, 2007, among the Company, as seller and as
servicer, and PolyOne Funding Corporation, as buyer
(incorporated by reference to Exhibit 10.3 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
Exhibit No.
Exhibit Description
10
.45
Canadian Receivables Purchase Agreement, dated as of
July 13, 2007, among PolyOne Funding Canada Corporation, as
seller; the Company, as servicer; the banks and other financial
institutions party thereto, as purchasers; Citicorp USA, Inc.,
as agent; and National City Business Credit, Inc., as
syndication agent (incorporated by reference to
Exhibit 10.4 to the Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.46
Canadian Receivables Sale Agreement, dated as of July 13,
2007, among PolyOne Canada Inc., as seller; PolyOne Funding
Canada Corporation, as buyer; and the Company, as servicer
(incorporated by reference to Exhibit 10.5 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.47
Credit Agreement, dated January 3, 2008, by and among
PolyOne Corporation, the lenders party thereto, Citicorp USA,
Inc., as administrative agent and as issuing bank, and The Bank
of New York, as paying agent (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on
Form 8-K
filed on January 3, 2008, SEC File
No. 1-16091)
21
.1
Subsidiaries of the Company
23
.1
Consent of Independent Registered Public Accounting
Firm — Ernst & Young LLP
23
.2
Consent of Independent Registered Public Accounting
Firm — KPMG LLP
23
.3
Consent of Independent Registered Public Accounting
Firm — Ernst & Young LLP
31
.1
Certification of Stephen D. Newlin, Chairman, President and
Chief Executive Officer, pursuant to SEC
Rules 13a-14(a)
and 15d-14(a), adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31
.2
Certification of W. David Wilson, Senior Vice President and
Chief Financial Officer, pursuant to SEC
Rules 13a-14(a)
and 15d-14(a), adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32
.1
Certification pursuant to 18 U.S.C. § 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
as signed by Stephen D. Newlin, Chairman, President and Chief
Executive Officer
32
.2
Certification pursuant to 18 U.S.C. § 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
as signed by W. David Wilson, Senior Vice President and Chief
Financial Officer
99
.1
Audited Financial Statements of Oxy Vinyls, LP
99
.2
Audited Financial Statements of SunBelt Chlor Alkali Partnership
+
Indicates management contract or
compensatory plan, contract or arrangement in which one or more
directors or executive officers of the Registrant may be
participants
By:
Signature
Title
Date
Chairman, President, Chief Executive Officer and Director
(Principal Executive Officer)
February 27, 2008
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Director
February 27, 2008
Exhibit No.
Exhibit Description
3
.1
Articles of Incorporation (incorporated by reference to
Exhibit 3.I to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
3
.2
Amendment to the Second Article of the Articles of
Incorporation, as filed with the Ohio Secretary of State,
November 25, 2003 (incorporated by reference to
Exhibit 3.1a to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2003, SEC File
No. 1-16091)
3
.3
Regulations (incorporated by reference to Exhibit 3.II to
the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
4
.1
Indenture, dated as of December 1, 1995, between the
Company and NBD Bank, as trustee (incorporated by reference to
Exhibit 4.3 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
4
.2
Form of Indenture between the Company and NBD Bank, as trustee,
governing the Company’s Medium Term Notes (incorporated by
reference to Exhibit 4.1 to M.A. Hanna Company’s
Registration Statement on
Form S-3,
Registration Statement
No. 333-05763,
filed on June 12, 1996)
4
.3
Indenture, dated as of April 23, 2002, between the Company
and The Bank of New York, as trustee, governing the
Company’s 8.875% Senior Notes due May 15, 2012
(incorporated by reference to Exhibit 4.1 to the
Company’s Registration Statement on
Form S-4,
Registration Statement
No. 333-87472,
filed on May 2, 2002)
10
.1+
Long-Term Incentive Plan, as amended and restated as of
March 1, 2000 (incorporated by reference to Exhibit A
to M.A. Hanna Company’s Definitive Proxy Statement filed on
March 24, 2000, SEC File
No. 1-05222)
10
.2+
Form of Award Agreement for Performance Shares (incorporated by
reference to Exhibit 10.1 to the Company’s Current
Report on
Form 8-K
filed on January 11, 2005, SEC File
No. 1-16091)
10
.3+
Form of Award Agreement for Stock Appreciation Rights
(incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on
Form 8-K
filed on January 11, 2005, SEC File
No. 1-16091)
10
.4+
1995 Incentive Stock Plan, as amended and restated through
August 31, 2000 (incorporated by reference to
Exhibit 10.3 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
10
.5+
1998 Interim Stock Award Incentive Plan, as amended and restated
through August 31, 2000 (incorporated by reference to
Exhibit 10.4 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
10
.6+
1999 Incentive Stock Plan, as amended and restated through
August 31, 2000 (incorporated by reference to
Exhibit 10.5 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2000, SEC File
No. 1-16091)
10
.7+
2000 Stock Incentive Plan (incorporated by reference to
Annex D to Amendment No. 3 to The Geon Company’s
Registration Statement on
Form S-4,
Registration Statement
No. 333-37344,
filed on July 28, 2000)
10
.8+
Amended and Restated Benefit Restoration Plan
(Section 401(a)(17))
10
.9+
Strategic Improvement Incentive Plan (incorporated by reference
to Exhibit 10.9b to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2001, SEC File
No. 1-16091)
10
.10+
Senior Executive Annual Incentive Plan, effective
January 1, 2006 (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on
Form 8-K
filed on May 24, 2005, SEC File
No. 1-16091)
10
.11+
2005 Equity and Performance Incentive Plan (amended and restated
by the Board as of July 21, 2005) (incorporated by
reference to Exhibit 10.4 to the Company’s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2005, SEC File
No. 1-16091)
10
.12+
Amended and Restated Deferred Compensation Plan for Non-Employee
Directors
10
.13+
Form of Management Continuity Agreement
10
.14+
Schedule of Executives with Management Continuity Agreements
10
.15+
Amended and Restated PolyOne Supplemental Retirement Benefit Plan
10
.16+
Separation Agreement Term Sheet between the Company and Thomas
A. Waltermire, dated October 6, 2005 (incorporated by
reference to Exhibit 10.1 to the Company’s Current
Report on
Form 8-K
filed on October 11, 2005, SEC File
No. 1-16091)
10
.17+
Separation Agreement between the Company and Thomas A.
Waltermire, dated December 21, 2005 (incorporated by
reference to Exhibit 10.1 to the Company’s Current
Report on
Form 8-K
filed on December 21, 2005, SEC File
No. 1-16091)
10
.18+
Amended and Restated Letter Agreement between the Company and
Stephen D. Newlin, originally effective as of February 13,
2006
10
.19+
Form of Director and Officer Indemnification Agreement
(incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on
Form 8-K
filed on July 5, 2006, SEC File
No. 1-16091)
10
.20+
Amended and Restated PolyOne Corporation Executive Severance Plan
10
.21
Guarantee and Agreement, dated as of June 6, 2006, between
the Company, as guarantor, and the beneficiary banks party
thereto (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
10
.22
Second Amended and Restated Security Agreement, dated as of
June 6, 2006, between the Company, as grantor, and U.S.
Bank Trust National Association, as collateral trustee
(incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
10
.23
Amended and Restated Collateral Trust Agreement, dated as
of June 6, 2006, between the Company, as grantor, and U.S.
Bank Trust National Association, as collateral trustee
(incorporated by reference to Exhibit 10.3 to the
Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
10
.24
Amended and Restated Intercreditor Agreement, dated as of
June 6, 2006, between the Company, as grantor; Citicorp
USA, Inc., as receivables and bank agent; U.S. Bank
Trust National Association, as collateral trustee; PolyOne
Funding Corporation (incorporated by reference to
Exhibit 10.4 to the Company’s Current Report on
Form 8-K
filed on June 8, 2006, SEC File
No. 1-16091)
Exhibit No.
Exhibit Description
10
.25
Amended and Restated Instrument Guaranty, dated as of
December 19, 1996 (incorporated by reference to
Exhibit 10.12 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
10
.26
Amended and Restated Plant Services Agreement, between the
Company and the B.F. Goodrich Company (incorporated by reference
to Exhibit 10.13 to The Geon Company’s Annual Report
on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
10
.27
Assumption of Liabilities and Indemnification Agreement, dated
March 1, 1993, amended and restated by Amended and Restated
Assumption of Liabilities and Indemnification Agreement, dated
April 27, 1993 (incorporated by reference to
Exhibit 10.14 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1996, SEC File
No. 1-11804)
10
.28
Partnership Agreement, by and between 1997 Chloralkali Venture,
Inc. and Olin Sunbelt, Inc. (incorporated by reference to
Exhibit 10(A) to The Geon Company’s Quarterly Report
on
Form 10-Q
for the quarter ended September 30, 1996, SEC File
No. 1-11804)
10
.29
Amendment to Partnership Agreement between Olin Sunbelt, Inc.
and 1997 Chloralkali Venture, Inc., addition of §5.03
(incorporated by reference to Exhibit 10.16b to The Geon
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1997, SEC File
No. 1-11804)
10
.30
Amendment to Partnership Agreement between Olin Sunbelt, Inc.
and 1997 Chloralkali Venture, Inc., addition of §1.12
(incorporated by reference to Exhibit 10.16c to The Geon
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1997, SEC File
No. 1-11804)
10
.31
Chlorine Sales Agreement, between Sunbelt Chlor Alkali
Partnership and the Company (incorporated by reference to
Exhibit 10(B) to The Geon Company’s Quarterly Report
on
Form 10-Q
for the quarter ended September 30, 1996, SEC File
No. 1-11804)
10
.32
Unconditional and Continuing Guaranty, between the Company and
Olin Corporation and Sunbelt Chlor Alkali Partnership
(incorporated by reference to Exhibit 10(C) to The Geon
Company’s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1996, SEC File
No. 1-11804)
10
.33
Guarantee by the Company in Favor of Sunbelt Chlor Alkali
Partnership of the Guaranteed Secure Senior Notes due 2017,
dated December 22, 1997 (incorporated by reference to
Exhibit 10.20 to The Geon Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1997, SEC File
No. 1-11804)
10
.34
Master Transaction Agreement between the Company and Occidental
Chemical Corporation, dated December 22, 1998 (incorporated
by reference to Annex B to The Geon Company’s Special
Meeting Proxy Statement filed on March 30, 1999, SEC File
No. 1-11804)
10
.35
First Amended and Restated Limited Partnership Agreement of Oxy
Vinyls, LP (incorporated by reference to Exhibit 10.2 to
The Geon Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.36
Asset Contribution Agreement — PVC Partnership (Geon)
(incorporated by reference to Exhibit 10.3 to The Geon
Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.37
Parent Agreement (Oxy Vinyls, LP) (incorporated by reference to
Exhibit 10.4 to The Geon Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.38
Parent Agreement (PVC Powder Blends, LP) and Business
Opportunity Agreement (incorporated by reference to
Exhibit 10.5 to The Geon Company’s Current Report on
Form 8-K
filed on May 13, 1999, SEC File
No. 1-11804)
10
.39
Stock Purchase Agreement among O’Sullivan Films Holding
Corporation, O’Sullivan Management, LLC, and Matrix Films,
LLC, dated as of February 15, 2006 (incorporated by
reference to Exhibit 10.25 to the Company’s Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2005, SEC File
No. 1-16091)
10
.40+
Form of Award Agreement for Stock-Settled Stock Appreciation
Rights (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007, SEC File
No. 1-16091)
10
.41+
Form of Award Agreement for Performance Units (incorporated by
reference to Exhibit 10.2 to the Company’s Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2007, SEC File
No. 1-16091)
10
.42
Sale and Agreement, by and among PolyOne Corporation, Occidental
Chemical Corporation, and their representative affiliates party
thereto, dated as of July 6, 2007 (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.43
Second Amended and Restated Receivables Purchase Agreement,
dated as of June 26, 2007, among PolyOne Funding
Corporation, as seller; the Company, as servicer; the banks and
other financial institutions party thereto, as purchasers;
Citicorp USA, Inc., as agent; and National City Business Credit,
Inc., as syndication agent (incorporated by reference to
Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.44
Second Amended and Restated Receivables Sale Agreement, dated as
of June 26, 2007, among the Company, as seller and as
servicer, and PolyOne Funding Corporation, as buyer
(incorporated by reference to Exhibit 10.3 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.45
Canadian Receivables Purchase Agreement, dated as of
July 13, 2007, among PolyOne Funding Canada Corporation, as
seller; the Company, as servicer; the banks and other financial
institutions party thereto, as purchasers; Citicorp USA, Inc.,
as agent; and National City Business Credit, Inc., as
syndication agent (incorporated by reference to
Exhibit 10.4 to the Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.46
Canadian Receivables Sale Agreement, dated as of July 13,
2007, among PolyOne Canada Inc., as seller; PolyOne Funding
Canada Corporation, as buyer; and the Company, as servicer
(incorporated by reference to Exhibit 10.5 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, SEC File
No. 1-16091)
10
.47
Credit Agreement, dated January 3, 2008, by and among
PolyOne Corporation, the lenders party thereto, Citicorp USA,
Inc., as administrative agent and as issuing bank, and The Bank
of New York, as paying agent (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on
Form 8-K
filed on January 3, 2008, SEC File
No. 1-16091)
21
.1
Subsidiaries of the Company
23
.1
Consent of Independent Registered Public Accounting
Firm — Ernst & Young LLP
23
.2
Consent of Independent Registered Public Accounting
Firm — KPMG LLP
Exhibit No.
Exhibit Description
23
.3
Consent of Independent Registered Public Accounting
Firm — Ernst & Young LLP
31
.1
Certification of Stephen D. Newlin, Chairman, President and
Chief Executive Officer, pursuant to SEC
Rules 13a-14(a)
and 15d-14(a), adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31
.2
Certification of W. David Wilson, Senior Vice President and
Chief Financial Officer, pursuant to SEC
Rules 13a-14(a)
and 15d-14(a), adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32
.1
Certification pursuant to 18 U.S.C. § 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
as signed by Stephen D. Newlin, Chairman, President and Chief
Executive Officer
32
.2
Certification pursuant to 18 U.S.C. § 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
as signed by W. David Wilson, Senior Vice President and Chief
Financial Officer
99
.1
Audited Financial Statements of Oxy Vinyls, LP
99
.2
Audited Financial Statements of SunBelt Chlor Alkali Partnership
+
Indicates management contract or
compensatory plan, contract or arrangement in which one or more
directors or executive officers of the Registrant may be
participants
| Page | ||||||
|
SECTION I
|
DEFINITIONS | 2 | ||||
|
SECTION II
|
ELIGIBILITY TO PARTICIPATE | 7 | ||||
|
SECTION III
|
BENEFIT RESTORATION UNDER THE PENSION PLAN | 8 | ||||
|
SECTION IV
|
BENEFIT RESTORATION UNDER THE SAVINGS PLAN | 10 | ||||
|
SECTION V
|
PAYMENT OF BENEFITS | 13 | ||||
|
SECTION VI
|
LIMITATIONS ON BOTH PENSION AND SAVINGS PLANS | 18 | ||||
|
SECTION VII
|
MISCELLANEOUS | 19 | ||||
|
SECTION VIII
|
EFFECTIVE DATE | 26 | ||||
-i-
| 1.1 | Affiliate means any corporation, partnership or other organization which, during any period of employment of a Participant, was at least 50% controlled by the Company or an affiliate of the Company. | |
| 1.2 | Basic Pension Plan Benefit means the pension benefit that would be payable from the Pension Plan to a Participant, computed without regard to the benefit limitations imposed on the Pension Plan by Sections 415 and 401(a)(17) of the Code, and, in the case of an MIP/SIP Limited Participant, computed taking into account the MIP/SIP Limited Participant’s MIP/SIP Limited Compensation as eligible earnings under the Pension Plan. | |
| 1.3 | Committee means the Compensation Committee of the Board of Directors of the Company, or any person or entity to whom the Compensation Committee of the Board of Directors of the Company has delegated any authority or responsibility under the Plan. | |
| 1.4 | Code means the Internal Revenue Code of 1986, as amended. | |
| 1.5 | Company means (i) for periods prior to the Effective Time, The Geon Company, a Delaware corporation, and (ii) for periods from and after the Effective Time, PolyOne Corporation, an Ohio corporation. | |
| 1.6 | Effective Time means the Effective Time as defined in the Agreement and Plan of Consolidation, dated as of May 7, 2000, by and between M.A. Hanna Company and The Geon Company. |
-2-
| 1.7 | Excess Earnings means the amount of the Participant’s compensation that would be taken into account as Earnings under the Savings Plan but for the limitations under the Savings Plan in respect of Section 401(a)(17) of the Code. | |
| 1.8 | MIP/SIP Limited Compensation means the portion of an award under the Company’s Management Incentive Program and/or Sales Incentive Program, as applicable, of an MIP/SIP Limited Participant that, after January 31, 1995, would have been paid in cash if the Company’s Management Incentive Program and/or Sales Incentive Program, as applicable, did not provide for payment of all or a portion of the awards thereunder in a form other than cash and any portion of an MIP/SIP Limited Participant’s award payable in cash under the Company’s Management Incentive Plan and/or Sales Incentive Program, as applicable, the receipt of which is deferred at the election of the MIP/SIP Limited Participant; provided, however, that in no event shall MIP/SIP Limited Compensation include any premium related to payment of an award in a form other than cash under the Company’s Management Incentive Plan and/or Sales Incentive Program nor any amount that is eligible earnings under the Pension Plan and/or Savings Plan; and, provided, however, that any portion of an MIP/SIP Limited Participant’s award payable in cash under the Company’s Management Incentive Plan and/or Sales Incentive Program, as applicable, that is deferred at the election of the Participant shall be MIP/SIP Limited Compensation only for the period in which it would have been received but for the deferral. | |
| 1.9 | MIP/SIP Limited Participant means a Participant whose award under the Company’s Management Incentive Program and/or Sales Incentive Program, as applicable, is |
-3-
| mandatorily paid in a form other than cash at a percentage that exceeds twenty percent (20%) of the award (excluding any premium). | ||
| 1.10 | Participant means any employee or former employee who is receiving any of the benefits provided by this Plan. | |
| 1.11 | Plan means The Geon Company Section 401(a)(17) Benefit Restoration Plan. | |
| 1.12 | Plan Account means a book reserve account maintained under the Plan on behalf of a Participant, to which the amounts to which such Participant is entitled under Articles 4.1, 4.2, and 4.3 are credited. | |
| 1.13 | Pension Plan means the portion of the PolyOne Merged Pension Plan comprised of The Geon Pension Plan. | |
| 1.14 | Pension Plan Benefit means the pension benefit payable from the Pension Plan to a Participant (taking into account and including the limitations contained in Sections 415 and 401(a)(17) of the Code). | |
| 1.15 | Savings Plan means for the period prior to January 1, 2004, The Geon Retirement Savings Plan, which was renamed the PolyOne Retirement Savings Plan A (the “Geon Savings Plan”), and for the period after that date, means the PolyOne Retirement Savings Plan, into which the Geon Savings Plan was merged. | |
| 1.16 | Section 409A means Section 409A of the Code, as the same may be amended from time to time. |
-4-
| 1.17 | Section 409A Guidance means Section 409A, together with proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury or the Internal Revenue Service with respect thereto. | |
| 1.18 | Separation From Service means termination of employment (within the meaning of Treasury Regulation Section 1.409A-1(h)(1)(ii)). | |
| 1.19 | Specified Employee means a specified employee as determined by the Company in its Specified Employee Designation Procedures. | |
| 1.20 | Supplemental Restoration Benefit means an amount which is determined by subtracting the Participant’s Pension Plan Benefit from the Participant’s Basic Pension Plan Benefit. | |
| 1.21 | Supplemental Preretirement Surviving Spouse Death Benefit means the amount of Qualified Preretirement Survivor Annuity that would be payable from the Pension Plan to the surviving spouse of a Participant, computed without regard to the benefit limitations imposed on the Pension Plan by Sections 415 and 401(a)(17) of the Code and, in the case of an MIP/SIP Limited Participant, computed taking in to account the MIP/SIP Limited Participant’s MIP/SIP Limited Compensation as eligible earnings under the Pension Plan, minus the amount of Qualified Preretirement Survivor Annuity payable to such surviving spouse from the Pension Plan. | |
| 1.22 | Valuation Date means the last day on which the New York Stock Exchange is open for trading occurring in the calendar month immediately preceding the calendar month in which the Participant’s employment covered under the Plan terminates. |
-5-
| 1.23 | Words and phrases used herein with initial capital letters which are defined in the Savings Plan or the Pension Plan shall have the definitions given to them in such Plans. |
-6-
| 2.1 | Each participant in the Pension Plan shall participate in this Plan with respect to the Pension Plan if such participant’s Basic Pension Plan Benefit exceeds the amount of such participant’s Pension Plan Benefit. Effective May 31, 2003, no additional employees are eligible to participate in this Plan with respect to the Savings Plan. However, the Company shall continue to maintain Plan Accounts for Participants who had amounts credited to Plan Accounts prior to such date until such Plan Accounts are completely distributed pursuant to Section 5.2. |
-7-
| 3.1 | (a) The Company shall pay to a Participant who is participating in this Plan with respect to the Pension Plan a Supplemental Restoration Benefit. Such Supplemental Restoration Benefit shall be paid in accordance with Article 5.1. The Company shall pay to the surviving spouse of a Participant who is participating in this Plan with respect to the Pension Plan and who dies under circumstances entitling such surviving spouse to a Qualified Preretirement Survivor Annuity under the Pension Plan a Supplemental Preretirement Surviving Spouse Death Benefit. Such Supplemental Preretirement Surviving Spouse Death Benefit shall be paid in accordance with Article 5.1. |
| (b) Effective as of December 31, 2004, all Supplemental Restoration Benefits and Supplemental Preretirement Surviving Spouse Death Benefits under the Plan were temporarily frozen. In furtherance of, but without limiting the foregoing, for the period from January 1, 2005 through December 31, 2007, Participants did not receive credit under this Plan for any eligible earnings that were earned after December 31, 2004 (even if such eligible earnings are taken into account for purposes of determining Pension Plan Benefits under the Pension Plan). Effective December 31, 2007, all Supplemental Restoration Benefits and Supplemental Preretirement Surviving Spouse Death Benefits are retroactively unfrozen to January 1, 2005. As a result, Participants shall receive credit under the Plan for eligible earnings that are earned after December 31, 2004 to the extent that such eligible earnings would be taken into account for purposes of determining Supplemental Restoration Benefits and Supplemental Preretirement Surviving Spouse Death Benefits hereunder. |
-8-
| (c) Supplemental Restoration Benefits and Supplemental Preretirement Surviving Spouse Death Benefits that are accrued and vested on or before December 31, 2004, as determined under the Section 409A Guidance, including without limitation, the early retirement subsidy under the Pension Plan for Participants who, as of December 31, 2004, had met the requirements for an early retirement pension under the Pension Plan, will qualify for “grandfathered” status under Section 409A and will continue to be governed by the law applicable to nonqualified deferred compensation prior to the addition of Section 409A to the Code. |
-9-
| 4.1 | The Company shall maintain a Plan Account for each Participant who is participating in this Plan with respect to the Savings Plan. |
| (1) | for each Plan Year in which the Participant has Excess Earnings, an amount equal to the matching Company Contributions that would have been made to the Savings Plan with respect to such Excess Earnings if such Excess Earnings had been Earnings at the relevant time under the Savings Plan and the Participant had elected the maximum employee pre-tax contribution with respect to such Excess Earnings; | ||
| (2) | for each Plan Year beginning after December 31, 1999 in which the Participant has Excess Earnings and receives a 2% Nonelective Contribution under the Savings Plan, an amount equal to 2% of the Participant’s Excess Earnings for such Plan Year; | ||
| (3) | for periods after the first date on which the Participant has Excess Earnings, an amount equal to the matching Company Contributions that would have been made to the Savings Plan with respect to a MIP/SIP Limited Participant’s MIP/SIP Limited Compensation if such MIP/SIP Limited Compensation had been Earnings at the relevant time under the Savings Plan and the Participant had elected the |
-10-
| maximum employee pre-tax contribution with respect to such MIP/SIP Limited Compensation; and |
| (4) | for periods after December 31, 1999 and after the first date on which the Participant has Excess Earnings, for each Plan Year in which the Participant receives a 2% Nonelective Contribution under the Savings Plan and has MIP/SIP Limited Compensation, an amount equal to 2% of the MIP/SIP Limited Participant’s MIP/SIP Limited Compensation for such Plan Year. |
| Such credits to the Participant’s Plan Account shall occur at such time or times as the Company shall determine, but such credits shall be made not later than September 15 th of the calendar year following the calendar year to which the Excess Earnings or MIP/SIP Limited Compensation, as the case may be, relates. After being credited to the Participant’s Plan Account, the time as of which the credit occurred shall not be changed by the Company. | ||
| Notwithstanding the foregoing provisions of this Section 4.1, no Participant’s Plan Account shall be credited with an amount or amounts applicable to Excess Earnings attributable to any period after May 31, 2003. |
| 4.2 | A Participant with Excess Earnings during any Plan Year commencing prior to December 31, 2002 and during the partial Plan Year of January 1, 2003 to May 31, 2003 may elect to reduce his or her compensation that would be Excess Earnings for such Plan Year at a percentage rate of Excess Earnings not in excess of 6% as elected by the Participant on a form provided by the Company and have the amount by which the Participant’s compensation is reduced credited to the Participant’s Plan Account. Such election shall |
-11-
| be made at such time and in such manner as the Company shall require, but such election shall be made prior to the date on which the compensation to which it relates is earned and shall be irrevocable for the period to which it relates. |
| 4.3 | The Plan Accounts hereunder will be credited on a monthly basis with earnings: (1) for periods prior to January 1, 1995, and for periods after February 28, 1997, at a rate equal to the monthly rate of earnings paid under the Fixed Income Fund of the Savings Plan; and (2) for periods after December 31, 1994 but prior to March 1, 1997, at a rate equal to the monthly rate of earnings paid under the Fixed Income Fund of the Savings Plan, rounded up to the next whole percent (if applicable), for the last full calendar month of the Plan Year ending most recently prior to the month for which the crediting is being done. In the event that the Fixed Income Fund of the Savings Plan no longer exists, the Company shall, in its sole discretion, establish an alternate rate of return for the immediately preceding sentence, which alternate rate of return shall be intended by the Company to provide a rate of return comparable to that of the Fixed Income Fund. Notwithstanding the foregoing provisions of this Article 4.3: the Committee may establish rules and procedures whereunder a Participant may elect that the Participant’s Account be credited or debited with earnings and losses equal to the earnings and losses on a specified investment or specified investments other than the Fixed Income Fund of the Savings Plan (or alternative rate of return, if applicable), provided, however, that PolyOne Corporation common stock may not be a specified investment for purposes of the Plan. Such election shall be made at such time(s) and in such manner as the Committee’s rules and procedures shall require, shall be prospective only, and shall be irrevocable with respect to the period to which it relates. |
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| 5.1 | Pension . |
| (a) Any Supplemental Restoration Benefit or Supplemental Preretirement Surviving Spouse Death Benefit that, under the Section 409A Guidance, is deemed to have been deferred prior to January 1, 2005 and that qualifies for “grandfathered” status under the Section 409A Guidance, including without limitation, the early retirement subsidy under the Pension Plan for Participants who, as of December 31, 2004, had met the requirements for an early retirement pension under the Pension Plan, shall continue to be governed by the law applicable to nonqualified deferred compensation prior to the addition of Section 409A to the Code and shall be subject to the terms and conditions specified in the Plan, including particularly, but not limited to, those respecting time and form of payment, as in effect prior to January 1, 2005. In furtherance of, but without limiting the foregoing, (1) the “grandfathered” Supplemental Restoration Benefit shall be payable in the same form as elected under the Pension Plan and in accordance with and subject to all of the terms and conditions applicable to the Participant’s benefits under the Pension Plan including the actuarial equivalents of, as provided in the Pension Plan, the optional benefits he or she has elected or is deemed to have elected, and (2) the “grandfathered” Supplemental Preretirement Surviving Spouse Death Benefit shall be payable in the same form as elected under the Pension Plan and in accordance with and subject to all of the terms and conditions applicable to the Surviving Spouse’s benefits under the Pension Plan including the actuarial equivalents of, as provided in the Pension Plan, the optional benefits he or she has elected or is deemed to have elected. |
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| (b) The remaining subsections of this Section 5.1 are applicable to the portion of a Participant’s Supplemental Restoration Benefit and the Participant’s Supplemental Preretirement Surviving Spouse Death Benefit that, under the Section 409A Guidance, are deemed to have been deferred on or after January 1, 2005 (the “non-grandfathered” benefit). | ||
| (c) Except as provided in Section 5.1(d), the Supplemental Restoration Benefit of a Participant who incurs a Separation from Service and commences payment of his or her Supplemental Restoration Benefit on or before December 31, 2008 shall be payable in the same form as elected under the Pension Plan and in accordance with and subject to all of the terms and conditions applicable to the Participant’s benefits under the Pension Plan, including the actuarial equivalents, as provided in the Pension Plan, of the optional Pension Plan benefits he or she has elected or is deemed to have elected. The Supplemental Preretirement Surviving Spouse Death Benefit payable with respect to a Participant who dies and with respect to whom the preretirement surviving spouse benefit under the Pension Plan commences to be paid on or before December 31, 2008 shall be payable in the same form as elected under the Pension Plan and in accordance with and subject to all of the terms and conditions applicable to the Surviving Spouse’s benefits under the Pension Plan, including the actuarial equivalents, as provided in the Pension Plan, of the optional benefits he or she has elected or is deemed to have elected. | ||
| (d) The non-grandfathered Supplemental Restoration Benefit of a Participant who commenced payment of his or her grandfathered Supplemental Restoration Benefit after December 31, 2004 but prior to December 31, 2007 shall commence to be paid on March 1, 2008 and shall be payable in the same form as elected under the Pension Plan and in |
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| accordance with and subject to all of the terms and conditions applicable to the Participant’s benefits under the Pension Plan, including the actuarial equivalents, as provided in the Pension Plan, of the optional Pension Plan benefits he or she has elected or is deemed to have elected. The initial annuity payment shall include a one-time payment of the Participant’s non-grandfathered Supplemental Restoration Benefit that was retroactively unfrozen. | ||
| (e) The Supplemental Restoration Benefit of a Participant that does not commence to be paid pursuant to Section 5.1(c) or Section 5.1(d) shall be paid in the form of an annuity payable monthly for the entire life of the Participant but in no event for a period less than 60 months (the “5-Year Certain Annuity”), commencing, subject to Section 5.1(g), on the later of (1) January 1, 2009, or (2) the first of the month following the later of the date the Participant (A) incurs a Separation from Service or (B) attains age 55. In lieu of receiving his or her benefit in the form of a 5-Year Certain Annuity, at any time prior to the date benefit payments commence, a Participant may elect, on a written form acceptable to the Company, to receive his or her benefit in one of the optional forms of benefit payment specified in the Pension Plan (the “Optional Forms”). The Optional Forms shall be subject to all of the terms and conditions applicable to such optional forms of benefit under the Pension Plan, including the actuarial equivalents set forth in the Pension Plan that are used to calculate the Optional Forms, but excluding the requirement to obtain spouse consent for particular forms of payment. | ||
| If a Participant elects an Optional Form that provides for a benefit to a joint pensioner or beneficiary, the Participant shall designate such joint pensioner or beneficiary at the time the Participant elects such Optional Form. |
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| (f) The Supplemental Preretirement Surviving Spouse Death Benefit payable to a Participant’s surviving spouse that does not commence to be paid pursuant to Section 5.1(c) or Section 5.1(d) shall be paid in the form of an annuity payable monthly for the entire life of the surviving spouse, commencing on the first of the month following the later of the date of the Participant’s death or the date on which the Participant would have attained age 55. | ||
| (g) Notwithstanding the foregoing, the Supplemental Restoration Benefit of a Participant who is a Specified Employee at the time of his or her Separation from Service shall commence to be paid no earlier than the earlier of (i) the first day of the seventh month following his or her Separation from Service with the Company or (ii) his or her death. The initial payment for such a Specified Employee shall include a one-time payment of the annuity payments that would have been paid absent the six-month delay required by the Section 409A Guidance. |
| 5.2 | Savings . | |
| (a) All credits to Plan Accounts under Sections 4.1 and 4.2 of the Plan were deferred and vested prior to January 1, 2005 and therefore qualify for “grandfathered” status under the Section 409A Guidance. As such, they shall continue to be governed by the law applicable to nonqualified deferred compensation prior to the addition of Section 409A to the Code and shall be subject to the terms and conditions specified in the Plan as in effect prior to January 1, 2005. In particular, all credits to Plan Accounts under Sections 4.1 and 4.2 of the Plan and earnings thereon credited to Plan Accounts under Section 4.3 of |
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| the Plan shall be considered “grandfathered” under Section 409A and shall be paid under the terms of the Plan as in effect prior to January 1, 2005, which are set forth in Sections 5.2(b) and 5.2(c). | ||
| (b) The Company shall distribute in a lump sum to each Participant in this Plan or his or her designated beneficiary under the Savings Plan, upon the termination of employment of such Participant under circumstances entitling him or her or such beneficiary to a distribution of the Participant’s interest in the Savings Plan, except as provided below, an amount in cash equal to (i) the value of his or her Plan Account attributable to the deemed matching contribution of the Company, as provided in paragraph 4.1 herein, to the extent vested determined in accordance with the terms of the Savings Plan, at the time of termination of employment, valued as of the close of business on the Valuation Date, and (ii) the value of his or her Plan Account attributable to contributions made pursuant to an election under Article 4.2, as of the close of business on the Valuation Date. A Participant employed by a Successor Company may, subject to Committee approval, be considered to have terminated employment with the Company for purposes of this Article 5.2 only. | ||
| (c) Notwithstanding Article 5.2(a) hereof, with respect to employment terminations occurring on and after November 1, 1996 and prior to February 6, 1997, a Participant who is subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended (a “Section 16 Insider”) at the time of employment termination, and who with respect to any portion of his or her Plan Account which, if not held for six months, would subject the Participant to short-swing liability under Section 16 of such Act, shall not be entitled to a distribution under the Plan of any portion of such Participant’s Plan Account |
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| as to which the Participant has elected to be credited or debited with earnings and losses equal to the earnings and losses on a specified investment which derives its return from the value of the equity securities of the Company (a “Company Equity Fund”) until such date that is six months and one day following the termination of such Participant’s employment under circumstances entitling him or her or his or her designated beneficiary to a distribution of the Participant’s interest in the Savings Plan. Any amounts distributed in accordance with this Article 5.2(b) shall be valued as of the close of business on the last day on which the New York Stock Exchange is open for trading occurring in the calendar month immediately preceding the calendar month in which the Participant is entitled to a distribution under this Article 5.2(b), rather than as of the Valuation Date. |
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| 6.1 | Where Section 415 of the Code places combined limits on both the Pension Plan and the Savings Plan, the Savings Plan will be the primary qualified plan. |
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| 7.1 | Administration . The Committee shall have full discretionary authority to administer the Plan, determine all questions arising in connection with the Plan, interpret the provisions of the Plan, adopt procedural rules, and employ and rely on such legal counsel, actuaries, accountants and agents as it may deem advisable to assist in the administration of the Plan. Decisions of the Committee shall be conclusive and binding on all persons. | |
| 7.2 | Termination . This Plan may be terminated at any time by the Board of Directors of the Company, in which event the rights of Participants to their accrued and vested Supplemental Restoration Benefits and to the balances in their Plan Accounts established under this Plan (if any) shall become nonforfeitable. Subject to the Section 409A Guidance, if the Company shall terminate the Pension Plan or the Savings Plan, any Supplemental Restoration Benefits or Plan Accounts payable to the Participants in accordance with this Plan shall be payable to them in accordance with all of the terms and conditions applicable to employee benefits under the Pension Plan in the event of its termination, as applicable, and, if applicable, the amounts to the credit of Participants in their Plan Accounts shall be distributed to such Participants as provided herein, but in accordance with any of the terms and conditions of the Savings Plan then applicable providing for earlier distribution, as applicable. Notwithstanding the immediately preceding sentence, a Participant who is subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended shall not be entitled to a distribution under the Plan of any portion of such Participant’s Plan Account as to which the Participant has elected to be credited or debited with earnings and losses equal to the earnings and losses |
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| on a specified investment which derives its return from the value of the equity securities of the Company until such time as is provided in Article 5.2. | ||
| 7.3 | No Assignability . The right of an employee or any other person to a benefit payment pursuant to this Plan shall not be assigned, transferred, pledged or encumbered except by will or the laws of descent and distribution. | |
| 7.4 | Rights . Nothing in this Plan shall be construed as giving any employee the right to be retained in the employ of the Company as an executive or in any other capacity. The Company expressly reserves the right to dismiss any employee at any time without regard to the effect which such dismissal might have upon him or her under the Plan. | |
| 7.5 | Amendment . This Plan may be amended at any time by or pursuant to action of the Committee, except that no such amendment shall: (1) deprive any Participant of his or her Supplemental Restoration Benefit accrued at the time of such amendment; (2) reduce the amount then credited to a Participant’s Plan Account (if any); (3) if approved or adopted after August 1, 1996, amend the Plan in any other manner that would not be permitted under Section 411(d)(6) of the Code, as in effect on August 1, 1996 (“1996 Section 411(d)(6)”), or the regulations thereunder as in effect on August 1, 1996, but not including any regulation in respect of Section 204(h) of ERISA (if the Plan were a plan subject to 1996 Section 411(d)(6)), except to the extent that a Participant who would be affected by the amendment consents in writing thereto; or (4) if approved or adopted after August 1, 1996, change the method of crediting hypothetical earnings (or losses) under Article 4.3 of the Plan to a method that would not be permissible under a plan qualified under Section 401 (a) of the Code, as in effect on August 1, 1996 (“1996 Section 401(a)”) |
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| except that the provisions of Article 4.3 of the Plan as in effect prior to August 1, 1996 and any provisions substantially similar to the provisions of Article 4.3 of the Plan as in effect on August 1, 1996 shall be deemed a method or methods permissible under 1996 Section 401(a), and that a provision shall not be deemed impermissible under a plan qualified under 1996 Section 401(a), because the provision credits hypothetical (as opposed to actual) earnings (or losses), and except to the extent that a Participant who would be affected by the amendment consents in writing thereto. |
| 7.6 | Funding . Benefits payable under this Plan shall not be funded and shall be paid out of the general funds of the Company. The Company shall not be required to segregate any assets with respect to this Plan. Nothing contained in this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any employee, former employee or any designated beneficiary of any Participant or any other person. Any amounts credited to a Participant under the provisions of this Plan shall continue for all purposes to be part of the general funds of the Company, and no person other than the Company shall by virtue of the provisions of this Plan have any interest in such funds. No person shall have any property interest whatsoever in any specific assets of the Company by reason of the Plan. Any right to receive payments pursuant to the Plan shall be no greater than the right of any unsecured creditor of the Company. | |
| 7.7 | Benefit Claims and Appeal Procedure . | |
| (a) Any Participant or beneficiary who believes that he is entitled to receive a benefit under the Plan which he has not received may file with the Committee a written claim |
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| specifying the basis for his claim and the facts upon which he relies in making such a claim. Such a claim must be signed by the claimant or his duly authorized representative (the “Claimant”). |
| (b) Whenever the Committee denies (in whole or in part), a claim for benefits filed by a Claimant, the Committee shall transmit a written notice of such decision to the Claimant, within 90 days after such claim was filed (plus an additional period of 90 days if required for processing, provided that notice of the extension of time is given to the Claimant within the first 90 day period). Such notice shall be written in a manner calculated to be understood by the Claimant and shall state (1) the specific reason(s) for the denial of the claim, (2) specific reference(s) to pertinent provisions of the Plan on which the denial of the claim was based, (3) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary, and (4) an explanation of the Plan’s review procedures under Subsection (c) below and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review. | ||
| (c) Within 60 days after the denial of his claim, the Claimant may request that the claim denial be reviewed by filing with the Committee a written request therefore. If such an appeal is not filed within this 60-day limit, the Claimant shall be deemed to have agreed with the Committee’s denial of the claim. If such an appeal is so filed within such 60-days, a named fiduciary designated by the Committee shall (1) conduct a full and fair review of such claim and (2) mail or deliver to the Claimant a written decision on the matter based on the facts and pertinent provisions of the Plan within a period of 60 days |
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| after the receipt of the request for review unless special circumstances require an extension of time, in which case such decision shall be rendered not later than 120 days after receipt of such request. If an extension of time for review is required, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. Such decision shall (1) be written in a manner calculated to be understood by the Claimant, (2) state the specific reason(s) for the decision, (3) make specific reference(s) to pertinent provisions of the Plan on which the decision is based and (4) to the extent permitted by applicable law, be final and binding on all interested persons. During such full review, the Claimant shall be given an opportunity to review documents that are pertinent to the Claimant’s claim and to submit issues and comments in writing. In addition, the notice of adverse determination shall also include statements that (1) the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim for benefits and (2) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA. | ||
| 7.8 | Continuation of Portion of Goodrich Plan . The Plan shall provide all payments in respect of similar benefits provided for under a similar plan (the “Goodrich Plan”) of The B.P. Goodrich Company (“Goodrich”) owed after April 29, 1993 to those persons who were last employed by Goodrich in the Geon Vinyl Division and those employees who were last employed by Goodrich in a department which became a part of the Geon Vinyl Division when the Geon Vinyl Division was formed, who were receiving such benefits under the Goodrich Plan as of April 29, 1993 or who would have commenced receiving such benefits under the Goodrich Plan on or after April 29, 1993 because of events |
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| occurring prior to April 29, 1993, all in accordance with the provisions of the Goodrich Plan (as in effect on April 28, 1993 or such prior date(s) as applicable to the time(s) at which such person accrued such benefits), if any. The Plan is a continuation of the Goodrich Plan with respect to those employees of the Company who were participants in the Goodrich Plan immediately prior to April 29, 1993. Whenever in this Plan it is necessary to calculate any compensation or earnings of any such Participant for any period prior to April 29, 1993, or to use any period of service prior to that date for any purpose in the Plan, such Participant’s period of service, compensation, and/or earnings taken into account under the Goodrich Plan prior to April 29, 1993 shall be taken into account under the Plan. | ||
| 7.9 | Section 409A of the Code | |
| (a) To the extent applicable, it is intended that the Plan (including all Amendments thereto) comply with the provisions of Section 409A so as to prevent the inclusion in gross income of any amount deferred hereunder in any taxable year that is prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Participants. The Plan shall be administered in a manner that will comply with the Section 409A Guidance. Any Plan provisions that would cause the Plan to fail to satisfy Section 409A shall have no force and effect until amended to comply with Section 409A (which amendment may be retroactive to the extent permitted by the Section 409A Guidance). | ||
| (b) The Committee shall not take any action that would violate any provision of the Section 409A Guidance. The Committee is authorized to adopt rules or regulations |
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| deemed necessary or appropriate in connection with the Section 409A Guidance to anticipate and/or comply with the requirements thereof (including any transition or grandfather rules thereunder). |
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| 8.1 | This Plan shall be construed, administered and enforced according to applicable federal law, and to the extent not preempted thereby, the laws of the state in which the Company is incorporated. |
| 8.2 | This Plan was established and became effective April 29, 1993. Except as otherwise provided herein, this amendment and restatement of the Plan shall be effective as of December 31, 2007 except that accruals described in Section 3.1(b) are unfrozen retroactively to January 1, 2005. |
|
POLYONE CORPORATION
|
||||
| By: | /s/ Kenneth M. Smith | |||
| Name: | Kenneth M. Smith | |||
| Title: |
Senior Vice President and
Chief Information Officer and Human Resources Officer |
|||
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| (a) | Grandfathered Account. |
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POLYONE CORPORATION
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| By: | /s/ Kenneth M. Smith | |||
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Accepted And Agreed To As Of The Date Hereof |
Sincerely,
POLYONE CORPORATION By direction of the Compensation and Governance Committee of the Board of Directors |
||||
| By | |||||
| [Name] | [Name] | ||||
19
| Title | Name | Years/Comp* | ||||
|
Chairman, President and Chief Executive
Officer
|
Stephen D. Newlin | 3 | ||||
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Senior Vice President and General
Manager, Distribution
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Michael L. Rademacher | 3 | ||||
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Senior Vice President , Operations
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Thomas J. Kedrowski | 3 | ||||
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Senior Vice President and Chief
Information and Human Resources Officer
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Kenneth M. Smith | 3 | ||||
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Senior Vice President and
Chief Financial Officer
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W. David Wilson | 3 | ||||
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Senior Vice President, Commercial
Development |
Michael E. Kahler | 3 | ||||
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Senior Vice President and General Manager,
Vinyl Business
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Robert M. Rosenau | 3 | ||||
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Senior Vice President and General
Manager, Colors and Engineered
Materials, Europe and Asia
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Bernard P. Baert | 2 | ||||
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Vice President, General Counsel and
Secretary
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Lisa K. Kunkle | 3 | ||||
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Vice President and General Manager,
Producer Services
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Patrick F. Burke | 1 | ||||
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Vice President, Color and Engineered
Materials — Asia
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Willie Chien | 1 | ||||
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Vice President and General Manager, North
America Engineered Materials
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Craig M. Nikrant | 1 | ||||
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Vice President and General Manager, North
America Color and Additives
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John V. Van Hulle | 1 | ||||
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Vice President, Research and Innovation
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Cecil Chappelow | 1 | ||||
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Corporate Vice President, Technology
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Roger W. Avakian | 1 | ||||
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Vice President and General Manager,
Specialty Coatings and Resins
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Daniel L. Kickel | 1 | ||||
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Treasurer
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John L. Rastetter | 1 | ||||
| * | Years of compensation payable upon change of control. |
| 2.1 | “Administrator” means the Retirement Plan Committee appointed by the Board. | |
| 2.2 | “Beneficiary” means the person or entity determined to be a Participant’s beneficiary pursuant to Section 13. | |
| 2.3 | “Board” means the board of directors of PolyOne Corporation. | |
| 2.4 | “Code” means the Internal Revenue Code of 1986, as amended from time to time. | |
| 2.5 | “Compensation” shall have the meaning set forth in the Retirement Plan, without regard to the limit contained in Section 401(a)(17) of the Code. | |
| 2.6 | “Employer” shall mean PolyOne Corporation and each other affiliate (within the meaning of Sections 414(b), (c) and (m) of the Code), employees of which are selected to participate in the Plan. | |
| 2.7 | “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. | |
| 2.8 | “Participant” means an employee or former employee of the Employer who is eligible to |
2
3
| Years of Service | Vested Percentage | |||
|
Less than 3 years
|
0 | % | ||
|
3 years and thereafter
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100 | % | ||
| Years of Service | Vested Percentage | |||
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Less than 1 year
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0 | % | ||
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1, but less than 2
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20 | % | ||
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2, but less than 3
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40 | % | ||
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3 or more
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100 | % | ||
4
| (A) | A single lump sum in cash; or | ||
| (B) | Substantially equal annual cash installments over a period not exceeding 10 years. |
| (A) | A single lump sum in cash; or | ||
| (B) | Substantially equal annual cash installments over a period not exceeding 10 years. |
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| (i) | the specific reason or reasons for the denial of the claim; | |
| (ii) | the specific references to the pertinent Plan provisions on which the denial is based; | |
| (iii) | a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary; | |
| (iv) | a statement that any appeal of the denial must be made by giving to the Administrator, within sixty (60) days after receipt of the denial of the claim, written notice of such appeal, such notice to include a full description of the pertinent issues and basis of the claim; | |
| (v) | a description of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following a denial of a claim on review; and | |
| (vi) | if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion, or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the claimant upon request. |
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| (i) | specific reasons for the decision; | |
| (ii) | specific references to the pertinent Plan provisions on which the decision is based; | |
| (iii) | a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; | |
| (iv) | a statement of the claimant’s right to bring an action under Section 502(a) of ERISA following a denial of a claim on review; and | |
| (v) | if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion, or a statement that such rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of the rule, guideline, protocol, or other similar criterion will be provided free of charge to the claimant upon request. |
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POLYONE CORPORATION
|
||||
| By: | /s/ Kenneth M. Smith | |||
| Authorized Officer | ||||
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| February 21, 2008 | Exhibit 10.18 |
| 1. | Position and Duties . |
| 2. | Compensation . |
| (a) | Salary . Your initial base salary during the Employment Period (as defined below) will be equal to $700,000 per year and will be subject to annual review by the Board or the Compensation and Governance Committee of the Board (the “Committee”). | ||
| (b) | Bonus/Annual Incentive. |
| (i) | You will be entitled to a signing bonus of $600,000, payable within 30 calendar days of the Effective Date. | ||
| (ii) | In addition, during the Employment Period, you will be eligible for an annual incentive award based on achievement of specified performance goals (as determined by the Committee). For 2006, you will be eligible to |
| participate in the 2006 Senior Executive Annual Incentive Plan, with a target attainment equal to 100% of your base salary. |
| (c) | Equity/Long-Term Incentive Awards. |
| (i) | You will be entitled to receive a grant, effective upon the Effective Date, of 200,000 shares of restricted stock (the “Restricted Shares”) under the PolyOne Corporation 2005 Equity and Performance Incentive Plan (the “Plan”) and upon the following terms: |
| (A) | The Restricted Shares will be subject to a risk of forfeiture until the third anniversary of the date of grant. | ||
| (B) | The Restricted Shares will be forfeited if your employment is terminated for any reason prior to their becoming nonforfeitable, except that if your employment terminates by reason of death or your permanent and total disability (as defined under the relevant disability plan or program of PolyOne in which you then participate) (“Disability”) or if a change in control (as defined in PolyOne’s standard award agreements) (a “Change in Control”) of PolyOne shall occur, all restrictions with respect to the Restricted Shares will lapse. | ||
| (C) | The Restricted Shares will not be transferable by you, except by will or the laws of descent and distribution, until the shares become nonforfeitable as provided herein. | ||
| (D) | You will be entitled to all rights as a shareholder with respect to the Restricted Shares granted (including the right to vote and receive dividends thereon). | ||
| (E) | Any additional shares or other securities that you may be entitled to receive under the terms of the Plan pursuant to a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, separation or reorganization or any other change in the capital structure of the Company (a “Change in Capitalization”) will be subject to the same restrictions as the Restricted Shares granted. | ||
| (F) | Any tax withholding obligation of the Company in connection with the Restricted Shares will be satisfied by PolyOne withholding shares otherwise deliverable pursuant to the award of Restricted Shares in order to satisfy the minimum withholding amount permissible under the method that results in the least amount withheld. |
| (ii) | You will also be entitled to participate in PolyOne’s 2006-2008 Long-Term Incentive Plan, consisting of awards of SARs and cash-settled performance units, granted under the Plan. The total award value for the 2006-2008 award will be equal in value to $1,505,000, provided that in no event will the number of SARs granted exceed 250,000, and the grant of such 2006-2008 award will be made on the Effective Date. | ||
| (iii) | You will also be entitled to participate in a two-year cash incentive plan for the period January 1, 2006 through December 31, 2007 (the “Performance Period”) upon the following terms: |
| (A) | Such cash incentive plan will be in the form of a grant to you, effective upon the Effective Date, of 87,000 phantom units (the “Units”). Each Unit will be equal in value to one share of PolyOne’s common stock. Any earned Units will entitle you to a cash payment, to be made in the year immediately following the end of the Performance Period and by March 15 of such year, equal to the number of Units earned multiplied by the high-low average of PolyOne’s common stock on the day immediately preceding the date of the approval of the payment by the Committee. | ||
| (B) | Payment of the Units is contingent on the attainment of certain pre-established metrics (including, threshold, target and maximum levels of achievement), as most recently approved by the Committee relating to the following equally-weighted financial performance measures: Return on Invested Capital, Ratio of Debt-to-EBITDA and Operating Cash Flow (as defined and approved by the Committee); provided , however , that the actual payout of the Units shall be not less than the targeted number of Units (87,000) at the grant date stock price of $9.185. | ||
| (C) | Payment of the Units is also contingent upon your remaining in the continuous employ of PolyOne or a subsidiary through the end of the Performance Period and if your employment terminates before the end of the Performance Period (except as set forth below), the Units will be forfeited. Notwithstanding the preceding sentence, upon a Change in Control, you will be entitled to payment of 100% of the Units awarded and if your employment with PolyOne terminates during the Performance Period due to your death or Disability, PolyOne will pay to you or your executor or administrator, as the case may be, after the end of the Performance Period, the portion of the Units to which you would have been entitled had you remained employed by PolyOne through the end of the Performance Period, prorated based on the portion of the Performance Period during which you were employed by PolyOne. |
| (D) | The Units will not be transferable by you, except by will or the laws of descent and distribution. | ||
| (E) | The Units will be adjusted by the Committee in the event of any Change in Capitalization. |
| (iv) | In future years, you will be eligible to receive long-term incentive awards, together with PolyOne’s other executive officers, as approved by the Committee. |
| (d) | Expense Reimbursement . PolyOne will reimburse you for all reasonable business expenses incurred by you during the Employment Period in the course of performing your duties under this agreement that are consistent with PolyOne’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to PolyOne’s requirements applicable generally with respect to reporting and documentation of such expenses. | ||
| (e) | Standard Benefits . You will be entitled during the Employment Period to participate, on the same basis as other salaried employees of PolyOne, in PolyOne’s standard benefit programs (the “Standard Benefits Package”). The Standard Benefits Package means those benefits (including the PolyOne Retirement Savings Plan, the PolyOne Supplemental Retirement Savings Plan, the health care programs, short-term and long-term disability benefits, life insurance, business travel accident coverage, flexible spending accounts, and an employee assistance program) for which PolyOne salaried employees are from time to time generally eligible, as determined from time to time by the Committee or the Board. As part of the Standard Benefits Package, you will also be entitled to reimbursement of relocation expenses under the PolyOne Plus Relocation Program (the “Relocation Program”) (except that PolyOne will provide reimbursement for up to 24 months). Notwithstanding anything to the contrary contained in this agreement, the Standard Benefits Package will not include the right to participate in the PolyOne Employee Transition Plan (the “ETP”) or the Executive Severance Plan (“ESP”), both of which the parties agree do not apply to you. | ||
| (f) | Additional Relocation Benefits . As an additional benefit, PolyOne will reimburse you for reasonable expenses relating to lodging, meals and travel between your residence and work (Avon Lake, Ohio) during the 90-day period immediately following the Effective Date, provided that, following such 90-day period and until such time as you initiate your relocation under the Relocation Program, you will be responsible for any and all expenses associated with commuting between your residence and work (Avon Lake, Ohio) locations, together with your living expenses. | ||
| (g) | Other . You will also be entitled to the following: (i) five weeks of paid vacation per year; (ii) a car allowance equal to $1200 per month; (iii) an annual allowance for financial planning and tax preparation in an amount equal to up to $13,000 per |
| year, payable upon submission of itemized invoices; and (iv) participation in the PolyOne Group Excess Liability policy. | |||
| (h) | Reimbursement . Any reimbursement of expenses under this Paragraph 2 shall be for expenses incurred by you during the Employment Period and such reimbursement shall be made not later than December 31 of the year following the year in which you incur the expense. In no event will the amount of expenses so reimbursed by PolyOne in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. |
| 3. | Other Agreements . You agree, in connection with your employment with PolyOne, to execute and be bound by the terms and conditions of PolyOne’s standard: (a) Management Continuity Agreement for executive officers (providing for 36 months of compensation upon the terms and conditions in such agreement); (b) Confidential Information, Invention and Non-Solicitation Agreement; (c) Code of Conduct; and (d) Code of Ethics for Senior Officers (collectively, the “Other Agreements”). | |
| 4. | Employment Period . |
| (a) | The Employment Period . Except as otherwise provided herein, the Employment Period will commence on the Effective Date and will continue thereafter until terminated as provided in this Paragraph 4 (the “Employment Period”). | ||
| (b) | Termination . Notwithstanding anything to the contrary contained in this agreement, the Employment Period will end on the first to occur of any of the following events: (i) your death; (ii) PolyOne’s termination of your employment on account of your Disability; (iii) a voluntary termination of your employment by you (including your retirement); (iv) an involuntary termination of your employment by PolyOne for Serious Cause (as defined below); or (v) an involuntary termination of your employment by PolyOne without Serious Cause (as defined below). | ||
| (c) | Serious Cause . For purposes of this agreement, “Serious Cause” will have the meaning ascribed to such term in the ETP, as such ETP may be amended from time to time, and will also include any breach of a provision of this agreement or of any of the Other Agreements. A copy of the current definition of “Serious Cause” has been delivered to you concurrently with this agreement. |
| 5. | Post-Employment Period Payments . |
| (a) | Accrued Compensation/Benefits . Except as provided in Paragraph 5(b) below, at the end of the Employment Period for any reason, you will cease to have any rights to compensation or benefits and you shall be entitled only to (i) any base salary that has accrued but is unpaid, any reimbursable expenses that have been incurred but are unpaid, and any unexpired vacation days that have accrued under PolyOne’s vacation policy but are unused, as of the end of the Employment Period; (ii) any plan benefits that by their terms extend beyond termination of |
| your employment (but only to the extent provided in any such benefit plan in which you have participated as an employee of PolyOne and excluding the ETP and the ESP); and (iii) any benefits to which you are entitled under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”). | |||
| (b) | Severance Payments . Notwithstanding the foregoing, if (i) your Employment Period ends early for any reason other than as set forth in subparagraphs 4(b)(i) through 4(b)(iv) above and the end of your Employment Period constitutes a “separation from service,” as defined for purposes of Section 409A (a “Separation From Service”), (ii) such termination is not following a change in control of PolyOne entitling you to benefits under your Management Continuity Agreement and (iii) on or before the 45th day following such end of your Employment Period, you agree to standard non-compete and non-solicitation covenants for a period of 36 months following the date of termination and to other standard terms and conditions, including a full release of claims, you will also be entitled to the following amounts and benefits, all payable in accordance with the requirements of Section 409A: |
| (A) | 36 months of salary continuation, car allowance and financial planning/tax preparation allowance, with monthly payments to commence, except as provided in Paragraph 5(d), with the first normal pay period that occurs on or after 60 calendar days after the end of your Employment Period (the “Initial Payment Date”); | ||
| (B) | An annual incentive amount as earned for the year in which termination of employment occurs, to be paid in the year following the year in which your Employment Period terminates but no later than March 15 of such year, prorated for the amount of time that has elapsed from the beginning of the applicable performance period until the date of termination of employment; and | ||
| (C) | 24 months of continuation in PolyOne’s medical and dental plans (the “Health Plans”), provided that Health Plans expressly do not include life insurance, short-term disability or long-term disability. You will be required to pay the full cost of the continuation coverage in the Health Plans on an after-tax basis. On the Initial Payment Date and on January 2 of the year following the year in which the Initial Payment Date occurs, PolyOne will make a payment to you (the “Health Plans Premium Reimbursement”) equal to the difference between (A) the amount you are required to pay during the calendar year of payment for such continuation coverage and, with respect to the payment on the Initial Payment Date, the amount, if any, you are required to pay for such continuation coverage in the prior year, and (B) the amount you would have been required to pay during such years for such continuation coverage if you had paid the same percentage of the cost that a similarly situated active employee would pay, as of the date your employment terminated. PolyOne will reimburse the |
| amount of the federal, state and local taxes imposed on you as a result of your receipt of the Health Plans Premium Reimbursement, such reimbursement to be made, subject to Paragraph 5(d), no later than December 31 of the year following the year in which you remitted the applicable taxes. Your right to continuation coverage under the Health Plans pursuant to this Paragraph 5(b)(C) shall satisfy the Health Plans’ obligation to provide you continuation coverage pursuant to COBRA. |
| The monthly financial planning/tax preparation allowance to be provided pursuant to subparagraph (A) above shall be in an amount equal to one-twelfth of the full annual financial planning/tax preparation allowance to which you are entitled pursuant to Paragraph 2(g)(iii) as of the end of your Employment Period (without the requirement to submit itemized invoices). | |||
| Each cash payment made by PolyOne pursuant to this Paragraph 5(b) and Paragraph 5(c), including but not limited to reimbursement of financial planning/tax preparation expenses, shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. | |||
| (c) | Possible Additional Severance Payment . Notwithstanding anything to the contrary contained herein, in the event that your employment with PolyOne is involuntarily terminated by PolyOne without Serious Cause (as defined in Paragraph 4(c) above) prior to the three year anniversary of the Effective Date, you will be entitled to the following cash payments, payable, except as provided in Paragraph 5(d), on the Initial Payment Date: |
| (i) | If your employment is terminated at any time before the one year anniversary of the Effective Date, you will be entitled to a cash payment equal to the amount determined by multiplying 66,667 by the fair market value of one share of PolyOne common stock on the date of termination of your employment. | ||
| (ii) | If your employment is terminated on or following the one year anniversary of the Effective Date but before the 18 month anniversary of the Effective Date, you will be entitled to a cash payment equal to the amount determined by multiplying 100,000 by the fair market value of one share of PolyOne common stock on the date of termination of your employment. | ||
| (iii) | If your employment is terminated on or following the 18 month anniversary of the Effective Date but before the two year anniversary of the Effective Date, you will be entitled to a cash payment equal to the amount determined by multiplying 133,334 by the fair market value of one share of PolyOne common stock on the date of termination of your employment. | ||
| (iv) | If your employment is terminated on or following the two year anniversary of the Effective Date but before the three year anniversary of |
| the Effective Date, you will be entitled to a cash payment equal to the amount determined by multiplying 166,667 by the fair market value of one share of PolyOne common stock on the date of termination of your employment. | |||
| (v) | If your employment is terminated on or following the three year anniversary of the Effective Date, you will not be entitled to any additional cash payment under this Paragraph 5(c). |
| (d) | Notwithstanding the foregoing, if you are a “specified employee,” as determined by PolyOne in its Specified Employee Designation Procedure, on the date of your Separation from Service and any payment under Paragraph 5(b)(A), 5(b)(C) or 5(c) would be considered to be deferred compensation under Section 409A, then any such payment that is considered to be deferred compensation that would otherwise be payable during the six-month period following your Separation from Service will instead be paid on the earlier of (1) the first business day of the seventh month following the date of your Separation from Service, or (2) your death. |
| 6. | Miscellaneous . |
|
Sincerely,
POLYONE CORPORATION |
||||
| By: | /s/ Gordon D. Harnett | |||
| Name: | Gordon D. Harnett | |||
| Title: |
Chairperson of the Compensation
and Governance Committee |
|||
| Date: | February 21, 2008 | |||
|
I agree to the terms and conditions
in this letter agreement. |
||||
| /s/ Stephen D. Newlin | ||||
| Name: | Stephen D. Newlin | |||
| Date: | February 21, 2008 | |||
2
3
4
5
6
7
8
9
10
11
|
POLYONE CORPORATION
|
||||
| By: | /s/ Kenneth M. Smith | |||
12
| NAME | FORMATION JURISDICTION | |||
|
1997 Chloralkali Venture, Inc.
|
Alabama | |||
|
Altona Properties Pty Ltd. (37.4% owned)
|
Australia | |||
|
Auseon Limited
|
Australia | |||
|
BayOne Canada, Inc. (50% owned)
|
Canada | |||
|
BayOne Urethane Systems, LLC (50% owned)
|
Delaware | |||
|
Conexus, Inc.
|
Nevada | |||
|
DH Compounding Company
|
Delaware | |||
|
GLS Corporation
|
Illinois | |||
|
GLS Hong Kong Limited
|
China | |||
|
GLS International, Inc.
|
Illinois | |||
|
GLS Thermoplastic Alloys (Suzhou) Co., Ltd
|
China | |||
|
GLS Trading (Suzhou) Co., Ltd.
|
China | |||
|
Geon Development, Inc.
|
Ohio | |||
|
Geon Polimeros Andinos S.A. (50% owned)
|
Colombia | |||
|
Hanna France SARL
|
France | |||
|
Hanna PAR Corporation
|
Delaware | |||
|
Hollinger Development Company
|
Nevada | |||
|
L. E. Carpenter & Company
|
Delaware | |||
|
LP Holdings
|
Canada | |||
|
M.A. Hanna Asia Holding Company
|
Delaware | |||
|
M.A. Hanna Export Services Company
|
Barbados | |||
|
M.A. Hanna Plastic Group, Inc.
|
Michigan | |||
|
MAH Plastics Company
|
Delaware | |||
|
O’Sullivan Films, Inc.
|
Delaware | |||
|
O’Sullivan Plastics Corporation
|
Nevada | |||
|
O’Sullivan Films Holding Corporation
|
Delaware | |||
|
P.I. Europe CV
|
Netherlands | |||
|
POL Plastics Company
|
Delaware | |||
|
Polimeks Plastik San. ve Tic. A.S.
|
Turkey | |||
|
Polymer Diagnostics, Inc.
|
Ohio | |||
|
PolyOne, LLC
|
Delaware | |||
|
PolyOne Belgium SA
|
Belgium | |||
|
PolyOne Canada, Inc.
|
Canada | |||
|
PolyOne Color and Additives Germany, GmbH
|
Germany | |||
|
PolyOne Controladora SA de CV
|
Mexico | |||
|
PolyOne Corporation UK Limited
|
England | |||
|
PolyOne CR s.r.o.
|
Czech Republic | |||
1
|
|
Exhibit 21.1 (cont’d) |
| NAME | FORMATION JURISDICTION | |||
|
PolyOne Deutschland, GmbH
|
Germany | |||
|
PolyOne Distribution de Mexico S.A. de C.V.
|
Mexico | |||
|
PolyOne Engineered Films, Inc.
|
Virginia | |||
|
PolyOne Espana, S.L.
|
Spain | |||
|
PolyOne Funding Corporation
|
Delaware | |||
|
PolyOne Funding Canada Corporation
|
Canada | |||
|
PolyOne International Financial Services Company
|
Ireland | |||
|
PolyOne International Trading (Shanghai) Co., Ltd.
|
China | |||
|
PolyOne Italy, Srl
|
Italy | |||
|
PolyOne Management International Holding, S.L.
|
Spain | |||
|
PolyOne France S.A.S.
|
France | |||
|
PolyOne Hong Kong Holding Ltd.
|
Hong Kong | |||
|
PolyOne Hungary, Ltd.
|
Hungary | |||
|
PolyOne Polska, Sp.z.o.o.
|
Poland | |||
|
PolyOne Poland Manufacturing, Sp.z.o.o.
|
Poland | |||
|
PolyOne-Shenzhen Co. Ltd.
|
China | |||
|
PolyOne Shanghai, China
|
China | |||
|
PolyOne Singapore, Ltd.
|
Singapore | |||
|
PolyOne-Suzhou, China
|
China | |||
|
PolyOne Sweden, AB
|
Sweden | |||
|
PolyOne Termoplasticos do Brasil Ltda.
|
Brazil | |||
|
PolyOne Th. Bergmann, GmbH
|
Germany | |||
|
PolyOne Tianjin, China
|
China | |||
|
PolyOne Vinyl Compounds Asia Holdings Limited
|
British Virgin Islands | |||
|
PolyOne Vinyl Compounds Dongguan Co. Ltd.
|
China | |||
|
PolyOne Wilflex Australasia Pty Ltd.
|
Australia | |||
|
Powder Blends LP
|
Delaware | |||
|
Regalite Plastics Corporation
|
Massachusetts | |||
|
Shawnee Holdings, Inc.
|
Virginia | |||
|
Star Color Co. Ltd.
|
Thailand | |||
|
Sunbelt Chlor-Alkali Partnership (50% owned)
|
Delaware | |||
|
Tekno Polimer Muhendislik Plastikleri San. ve Tic. A.S.
|
Turkey | |||
|
Tekno
Ticaret Muhendislik Plastikleri San. ve. Tic. A.S.
|
Turkey | |||
2
| (1) | Registration Statement (Form S-8 No. 333-47796) pertaining to Post Effective Amendment No. 3 on Form S-8 to Form S-4 pertaining to the Geon Company 1993 Incentive Stock Plan, the Geon Company 1995 Incentive Stock Plan, the Geon Company 1998 Interim Stock Award Plan, the Geon Company 1999 Incentive Stock Plan, the PolyOne Corporation Deferred Compensation Plan for Non-Employee Directors and the M.A. Hanna Company Long-Term Incentive Plan, | ||
| (2) | Registration Statement (Form S-8 No. 333-141029) pertaining to the PolyOne Retirement Savings Plan and the DH Compounding Company Savings and Retirement Plan and Trust, | ||
| (3) | Registration Statement (Form S-8 No. 333-141028) pertaining to the M.A. Hanna Company Long-Term Incentive Plan, | ||
| (4) | Registration Statement (Form S-8 No. 333-128283) pertaining to the 2005 Equity and Performance Incentive Plan, and | ||
| (5) | Registration Statement (Form S-8 No. 333-48002) pertaining to the PolyOne Corporation 2000 Stock Incentive Plan; |
| (1) | Registration Statement (Form S-8 No. 333-47796) pertaining to Post Effective Amendment No. 3 on Form S-8 to Form S-4 pertaining to the Geon Company 1993 Incentive Stock Plan, the Geon Company 1995 Incentive Stock Plan, the Geon Company 1998 Interim Stock Award Plan, the Geon Company 1999 Incentive Stock Plan, the PolyOne Corporation Deferred Compensation Plan for Non-Employee Directors and the M.A. Hanna Company Long-Term Incentive Plan, | ||
| (2) | Registration Statement (Form S-8 No. 333-141029) pertaining to the PolyOne Retirement Savings Plan and the DH Compounding Company Savings and Retirement Plan and Trust, | ||
| (3) | Registration Statement (Form S-8 No. 333-141028) pertaining to the M.A. Hanna Company Long-Term Incentive Plan, | ||
| (4) | Registration Statement (Form S-8 No. 333-128283) pertaining to the 2005 Equity and Performance Incentive Plan, and | ||
| (5) | Registration Statement (Form S-8 No. 333-48002) pertaining to the PolyOne Corporation 2000 Stock Incentive Plan; |
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| /s/ Stephen D. Newlin | ||||
| Stephen D. Newlin | ||||
| Chairman, President and Chief Executive Officer | ||||
| February 29, 2008 | ||||
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| /s/ W. David Wilson | ||||
| W. David Wilson | ||||
| Senior Vice President and Chief Financial Officer | ||||
| February 29, 2008 | ||||
1
| Six Months Ended | Year Ended | Year Ended | ||||||||||
| 6/30/2007 | 12/31/2006 | 12/31/2005 | ||||||||||
|
REVENUES:
|
||||||||||||
|
|
||||||||||||
|
Net sales
|
$ | 1,107,393 | $ | 2,475,996 | $ | 2,501,986 | ||||||
|
|
||||||||||||
|
COSTS AND OTHER DEDUCTIONS:
|
||||||||||||
|
|
||||||||||||
|
Cost of sales
|
1,087,327 | 2,189,337 | 2,170,347 | |||||||||
|
|
||||||||||||
|
Selling, general and administrative and other operating expenses, net
|
9,400 | 30,757 | 26,609 | |||||||||
|
|
||||||||||||
|
Restructuring and asset writedowns
|
— | — | 104,686 | |||||||||
|
|
||||||||||||
|
Gain on sale of assets
|
(887 | ) | (18,899 | ) | — | |||||||
|
|
||||||||||||
|
Interest expense, net
|
6,275 | 16,472 | 26,741 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
INCOME FROM OPERATIONS BEFORE MINORITY
INTEREST AND TAXES
|
5,278 | 258,329 | 173,603 | |||||||||
|
|
||||||||||||
|
Minority interest
|
3,552 | 8,081 | 36,701 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
INCOME FROM OPERATIONS BEFORE TAXES
|
1,726 | 250,248 | 136,902 | |||||||||
|
|
||||||||||||
|
Provision for income taxes
|
3,773 | 4,079 | 2,921 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
NET (LOSS) INCOME
|
(2,047 | ) | 246,169 | 133,981 | ||||||||
|
|
||||||||||||
|
Other comprehensive loss on postretirement liability adjustment
|
(2,688 | ) | — | — | ||||||||
|
|
||||||||||||
|
|
||||||||||||
|
COMPREHENSIVE (LOSS) INCOME
|
$ | (4,735 | ) | $ | 246,169 | $ | 133,981 | |||||
|
|
||||||||||||
2
| Occidental | Occidental | 1999 PVC | |||||||||||||||||||||||||||
| PVC LP Inc. | PVC LLC | Partner Inc. | Total | ||||||||||||||||||||||||||
| Partners’ Capital & | |||||||||||||||||||||||||||||
| Accumulated | Accumulated | Accumulated | Accumulated | ||||||||||||||||||||||||||
| Other | Other | Other | Other | ||||||||||||||||||||||||||
| Partner’s | Comprehensive | Partner’s | Comprehensive | Partner’s | Comprehensive | Comprehensive | |||||||||||||||||||||||
| Capital | Loss | Capital | Loss | Capital | Loss | Loss | |||||||||||||||||||||||
|
Balance at December 31, 2004
|
$ | 805,084 | $ | — | $ | 10,739 | $ | — | $ | 257,622 | $ | — | $ | 1,073,445 | |||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Net income
|
100,486 | 1,340 | 32,155 | 133,981 | |||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Distributions to partners
|
(84,375 | ) | (1,125 | ) | (27,000 | ) | (112,500 | ) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Balance at December 31, 2005
|
821,195 | — | 10,954 | — | 262,777 | — | 1,094,926 | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Net income
|
184,627 | 2,462 | 59,080 | 246,169 | |||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Distributions to partners
|
(140,625 | ) | (1,875 | ) | (45,000 | ) | (187,500 | ) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Adjustment to liability for unfunded
postretirement benefit obligation
(Note 3)
|
— | (8,576 | ) | — | (115 | ) | — | (2,744 | ) | (11,435 | ) | ||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Balance at December 31, 2006
|
865,197 | (8,576 | ) | 11,541 | (115 | ) | 276,857 | (2,744 | ) | 1,142,160 | |||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Net loss
|
(1,535 | ) | (21 | ) | (491 | ) | (2,047 | ) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Increase in liability for unfunded
postretirement benefit obligation
|
— | (2,016 | ) | — | (27 | ) | — | (645 | ) | (2,688 | ) | ||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
Balance at June 30, 2007
|
$ | 863,662 | $ | (10,592 | ) | $ | 11,520 | $ | (142 | ) | $ | 276,366 | $ | (3,389 | ) | $ | 1,137,425 | ||||||||||||
3
| Six Months Ended | Year Ended | Year Ended | ||||||||||
| 6/30/2007 | 12/31/2006 | 12/31/2005 | ||||||||||
|
CASH FLOW FROM OPERATING ACTIVITIES:
|
||||||||||||
|
Net (loss) income
|
$ | (2,047 | ) | $ | 246,169 | $ | 133,981 | |||||
|
Adjustments
to reconcile net (loss) income to net cash
(used) provided by operating activities:
|
||||||||||||
|
Depreciation and amortization
|
68,878 | 113,660 | 122,587 | |||||||||
|
Minority interest
|
3,552 | 8,081 | 36,701 | |||||||||
|
Other noncash charges to income, net
|
1,203 | 4,982 | 5,820 | |||||||||
|
Loss on retirement of assets, net
|
1,831 | 8,524 | 9,414 | |||||||||
|
Restructuring and asset writedowns
|
— | — | 104,686 | |||||||||
|
Gain on sale of assets
|
(887 | ) | (18,899 | ) | — | |||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
(Increase) decrease in trade and other receivables
|
(68,208 | ) | 30,369 | (178,947 | ) | |||||||
|
(Increase) decrease in inventories
|
(4,115 | ) | 36,550 | (33,933 | ) | |||||||
|
Decrease (increase) in prepaid expenses
|
45 | 6,907 | (7,338 | ) | ||||||||
|
Decrease in receivable from OXY Receivables Corporation
|
— | — | 172,147 | |||||||||
|
Increase in major maintenance spending
|
(2,718 | ) | (2,006 | ) | (4,510 | ) | ||||||
|
Decrease in accounts payable, property taxes and other accrued
liabilities
|
(17,182 | ) | (4,805 | ) | (94 | ) | ||||||
|
Increase (decrease) in current foreign income taxes payable
|
57 | (31 | ) | 279 | ||||||||
|
Increase in foreign income taxes payable
|
1,443 | — | — | |||||||||
|
Increase (decrease) in payable to Occidental Chemical Corporation, net
|
19,222 | (22,460 | ) | (4,110 | ) | |||||||
|
(Increase) decrease in receivable from PolyOne Corporation, net
|
(12,607 | ) | 10,622 | (28,995 | ) | |||||||
|
Other operating, net
|
(1,825 | ) | (8,122 | ) | (9,830 | ) | ||||||
|
|
||||||||||||
|
|
||||||||||||
|
Net cash (used) provided by operating activities
|
(13,358 | ) | 409,541 | 317,858 | ||||||||
|
|
||||||||||||
|
CASH FLOW FROM INVESTING ACTIVITIES:
|
||||||||||||
|
Capital expenditures
|
(34,746 | ) | (136,135 | ) | (87,786 | ) | ||||||
|
Proceeds from sale of assets
|
1,655 | 11,348 | — | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
Net cash used by investing activities
|
(33,091 | ) | (124,787 | ) | (87,786 | ) | ||||||
|
|
||||||||||||
|
CASH FLOW FROM FINANCING ACTIVITIES:
|
||||||||||||
|
Payments of long term-debt
|
(24,750 | ) | (133,465 | ) | — | |||||||
|
Distributions to partners
|
— | (187,500 | ) | (112,500 | ) | |||||||
|
Payment of notes to Occidental Chemical Corporation
|
— | (9,964 | ) | — | ||||||||
|
Increase in minority interest in OxyMar due to capital contributions from OCC
|
— | 54,901 | — | |||||||||
|
Increase (decrease) in loans payable to Occidental Petroleum Investment Co.
|
83,151 | (9,172 | ) | (116,634 | ) | |||||||
|
|
||||||||||||
|
|
||||||||||||
|
Net cash provided (used) by financing activities
|
58,401 | (285,200 | ) | (229,134 | ) | |||||||
|
|
||||||||||||
|
|
||||||||||||
|
Increase (decrease) in cash and cash equivalents
|
11,952 | (446 | ) | 938 | ||||||||
|
|
||||||||||||
|
Cash and cash equivalents, beginning of period
|
517 | 963 | 25 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
Cash and cash equivalents, end of period
|
$ | 12,469 | $ | 517 | $ | 963 | ||||||
|
|
||||||||||||
4
5
6
7
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
|
Beginning balance
|
$ | 6,344 | $ | 14,453 | ||||
|
Liabilities settled
|
— | (1,179 | ) | |||||
|
Accretion expense
|
212 | 626 | ||||||
|
Divestitures
|
— | (7,861 | ) | |||||
|
Revisions to estimated cash flows
|
— | 305 | ||||||
|
|
||||||||
|
Ending balance
|
$ | 6,556 | $ | 6,344 | ||||
|
|
||||||||
8
9
10
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
|
Raw materials
|
$ | 26,450 | $ | 22,892 | ||||
|
Materials and supplies
|
17,491 | 18,066 | ||||||
|
Finished goods
|
158,091 | 134,677 | ||||||
|
|
||||||||
|
|
202,032 | 175,635 | ||||||
|
LIFO and lower of cost or market reserve
|
(67,716 | ) | (45,464 | ) | ||||
|
|
||||||||
|
Total inventories
|
$ | 134,316 | $ | 130,171 | ||||
|
|
||||||||
11
12
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
|
Land and land improvements
|
$ | 49,276 | $ | 48,862 | ||||
|
Buildings
|
72,084 | 71,523 | ||||||
|
Machinery and equipment
|
2,074,951 | 2,024,106 | ||||||
|
Construction in progress
|
75,450 | 93,046 | ||||||
|
|
||||||||
|
|
2,271,761 | 2,237,537 | ||||||
|
Accumulated depreciation
|
(1,054,891 | ) | (994,982 | ) | ||||
|
|
||||||||
|
Property, plant and equipment, net
|
$ | 1,216,870 | $ | 1,242,555 | ||||
|
|
||||||||
13
14
15
|
July 1 through December 31, 2007
|
$ | 9,475 | ||
|
January 1 through December 31, 2008
|
27,881 | |||
|
2009
|
13,219 | |||
|
2010
|
18,079 | |||
|
2011
|
5,285 | |||
|
2012
|
1,975 | |||
|
Thereafter
|
5,865 | |||
|
|
||||
|
|
$ | 81,779 | ||
|
|
||||
16
17
| For the year ended December 31, 2006, (in thousands): | Debit/(Credit) | |||
|
Accrued liabilities
|
$ | (11,435 | ) | |
|
Accumulated OCI
|
$ | 11,435 | ||
| June 30, | December 31, | |||||||
| For the periods ended, (in thousands): | 2007 | 2006 | ||||||
|
Changes in benefit obligation:
|
||||||||
|
Benefit obligation – beginning of period
|
$ | 38,654 | $ | 35,851 | ||||
|
Service cost – benefits earned during the period
|
492 | 851 | ||||||
|
Interest cost on projected benefit obligation
|
1,096 | 2,004 | ||||||
|
Actuarial loss
|
3,065 | 1,093 | ||||||
|
Benefits paid
|
(856 | ) | (1,145 | ) | ||||
|
|
||||||||
|
Benefit obligation – end of period
|
$ | 42,451 | $ | 38,654 | ||||
|
|
||||||||
|
|
||||||||
|
Funded status:
|
||||||||
|
Unfunded obligation
|
$ | (42,451 | ) | $ | (38,654 | ) | ||
|
Unrecognized net loss
|
— | — | ||||||
|
|
||||||||
|
Net amount recognized
|
$ | (42,451 | ) | $ | (38,654 | ) | ||
|
|
||||||||
|
Accrued benefit liability
|
$ | (42,451 | ) | $ | (38,654 | ) | ||
|
Net amount recognized
|
$ | (42,451 | ) | $ | (38,654 | ) | ||
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
|
Other accrued liabilities
|
$ | (1,666 | ) | $ | (1,125 | ) | ||
|
Postretirement benefit obligations
|
(40,785 | ) | (37,529 | ) | ||||
|
|
||||||||
|
|
$ | (42,451 | ) | $ | (38,654 | ) | ||
|
|
||||||||
18
| June 30, | December 31, | December 31, | ||||||||||
| For the periods ended, (in thousands): | 2007 | 2006 | 2005 | |||||||||
|
Net periodic benefit cost:
|
||||||||||||
|
Service cost – benefits earned during the period
|
$ | 492 | $ | 851 | $ | 881 | ||||||
|
Interest cost on benefit obligation
|
1,096 | 2,004 | 1,792 | |||||||||
|
Recognized actuarial loss
|
377 | 887 | 675 | |||||||||
|
|
||||||||||||
|
Net periodic benefit cost
|
$ | 1,965 | $ | 3,742 | $ | 3,348 | ||||||
|
|
||||||||||||
| June 30, | December 31, | |||||||||||
| For the periods ended,: | 2007 | 2006 | ||||||||||
|
Discount rates:
|
||||||||||||
|
Benefit obligation
|
5.53 | % | 5.53 | % | ||||||||
|
Net period benefit cost
|
5.53 | % | 5.33 | % | ||||||||
|
July 1 through December 31, 2007
|
$ | 856 | ||
|
January 1 through December 31, 2008
|
1,700 | |||
|
2009
|
1,900 | |||
|
2010
|
2,100 | |||
|
2011
|
2,300 | |||
|
2012
|
2,500 | |||
|
2013-2017
|
15,000 |
19
| June 30, | December 31, | |||||||
| Tax effects of temporary differences: | 2007 | 2006 | ||||||
|
Net operating losses
|
$ | 22.0 | $ | 15.3 | ||||
|
Property, plant and equipment
|
1.1 | 1.9 | ||||||
|
All other differences
|
1.1 | .7 | ||||||
|
|
||||||||
|
Total deferred tax assets
|
$ | 24.2 | $ | 17.9 | ||||
|
|
||||||||
|
Property, plant and equipment differences
|
$ | (2.9 | ) | $ | (1.5 | ) | ||
|
|
||||||||
|
Total deferred tax liabilities
|
$ | — | $ | (1.5 | ) | |||
|
|
||||||||
|
Valuation allowance
|
$ | (24.2 | ) | $ | (17.9 | ) | ||
|
|
||||||||
|
|
||||||||
|
Total deferred taxes
|
$ | (2.9 | ) | $ | (1.5 | ) | ||
|
|
||||||||
20
| U.S. | State & | |||||||||||||||
| Federal | Local | Foreign | Total | |||||||||||||
|
Six months ended June 30, 2007:
|
||||||||||||||||
|
Current
|
$ | .5 | $ | .3 | $ | .2 | $ | 1.0 | ||||||||
|
Non-current
|
— | — | 1.4 | 1.4 | ||||||||||||
|
Deferred
|
— | 1.4 | — | 1.4 | ||||||||||||
|
|
||||||||||||||||
|
|
$ | .5 | $ | 1.7 | $ | 1.6 | $ | 3.8 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Year ended December 31, 2006:
|
||||||||||||||||
|
Current
|
$ | — | $ | 2.5 | $ | .1 | $ | 2.6 | ||||||||
|
Deferred
|
— | 1.5 | — | 1.5 | ||||||||||||
|
|
||||||||||||||||
|
|
$ | — | $ | 4.0 | $ | .1 | $ | 4.1 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Year ended December 31, 2005:
|
||||||||||||||||
|
Current
|
$ | 1.4 | $ | 1.3 | $ | .2 | $ | 2.9 | ||||||||
|
Deferred
|
— | — | — | — | ||||||||||||
|
|
||||||||||||||||
|
|
$ | 1.4 | $ | 1.3 | $ | .2 | $ | 2.9 | ||||||||
|
|
||||||||||||||||
21
22
| OCC | PolyOne | |||||||
|
Administrative and other support services:
|
||||||||
|
For the six months ended June 30, 2007
|
$ | 10.0 | $ | .7 | ||||
|
For the year ended December 31, 2006
|
19.3 | 1.5 | ||||||
|
For the year ended December 31, 2005
|
20.7 | 1.7 | ||||||
|
|
||||||||
|
OxyMar support and services fee:
|
||||||||
|
For the six months ended June 30, 2007
|
$ | 2.5 | $ | — | ||||
|
For the year ended December 31, 2006
|
5.0 | — | ||||||
|
For the year ended December 31, 2005
|
5.0 | — | ||||||
|
|
||||||||
|
Net railcar rent expense:
|
||||||||
|
For the six months ended June 30, 2007
|
$ | 1.4 | $ | — | ||||
|
For the year ended December 31, 2006
|
3.1 | — | ||||||
|
For the year ended December 31, 2005
|
3.1 | — | ||||||
23
| Balance at | Balance at | |||||||||||||||||||
| Beginning | Charged to | End of | ||||||||||||||||||
| of Period | Expense | Deductions | Adjustment | Period | ||||||||||||||||
|
For the six months ended June 30, 2007:
|
||||||||||||||||||||
|
Allowance for doubtful accounts
|
$ | 1.3 | $ | — | $ | — | $ | — | $ | 1.3 | ||||||||||
|
Severance and other obligations
|
$ | .6 | $ | .2 | $ | (.7 | )(a) | $ | — | $ | .1 | |||||||||
|
Deferred tax valuation allowance
|
$ | 17.9 | $ | 6.3 | $ | — | $ | — | $ | 24.2 | ||||||||||
|
|
||||||||||||||||||||
|
For the year ended December 31, 2006:
|
||||||||||||||||||||
|
Allowance for doubtful accounts
|
$ | 1.9 | $ | — | $ | (.6 | ) | $ | — | $ | 1.3 | |||||||||
|
Severance and other obligations
|
$ | 4.2 | $ | (.3 | ) | $ | (3.3 | ) | $ | — | $ | .6 | ||||||||
|
Deferred tax valuation allowance
|
$ | 17.4 | $ | .5 | $ | — | $ | — | $ | 17.9 | ||||||||||
|
|
||||||||||||||||||||
|
For the year ended December 31, 2005:
|
||||||||||||||||||||
|
Allowance for doubtful accounts
|
$ | — | $ | — | $ | (.2 | ) | $ | 2.1 | (b) | $ | 1.9 | ||||||||
|
Severance and other obligations
|
$ | .3 | $ | 4.4 | $ | (.5 | )(a) | $ | — | $ | 4.2 | |||||||||
|
Deferred tax valuation allowance
|
$ | 3.0 | $ | 14.4 | $ | — | $ | — | $ | 17.4 | ||||||||||
| (a) | Payments under the Partnership’s plan for termination and relocation of certain employees | |
| (b) | Allowance balance transferred to/from an affiliate, OXY Receivables Corporation, net |
24
25
Years Ended December 31, 2007 and 2006
With Report of Independent Registered Public Accounting Firm
1
2
3
4
5
6
1
| December 31 | ||||||||
| 2007 | 2006 | |||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash
|
$ | 1,000 | $ | 1,000 | ||||
|
Receivable
from Oxy Vinyls, LP
|
6,026,774 | 7,732,638 | ||||||
|
Receivables from partners
|
18,807,135 | 14,303,282 | ||||||
|
Less
allowance for doubtful accounts
|
— | — | ||||||
|
Inventories
|
1,813,647 | 1,607,134 | ||||||
|
Prepaid expenses and other current assets
|
1,133,302 | 1,460,770 | ||||||
|
Total current assets
|
27,781,858 | 25,104,824 | ||||||
|
|
||||||||
|
Property, plant and equipment, net
|
108,811,756 | 112,783,125 | ||||||
|
Deferred financing costs, net
|
801,478 | 881,626 | ||||||
|
Total assets
|
$ | 137,395,092 | $ | 138,769,575 | ||||
|
|
||||||||
|
Liabilities and partners’ capital (deficit)
|
||||||||
|
Current liabilities:
|
||||||||
|
Amounts payable to partners
|
$ | 8,837,007 | $ | 9,933,013 | ||||
|
Current portion of long-term debt
|
12,187,500 | 12,187,500 | ||||||
|
Total current liabilities
|
21,024,507 | 22,120,513 | ||||||
|
Long-term debt
|
109,687,500 | 121,875,000 | ||||||
|
Partners’ capital (deficit)
|
6,683,085 | (5,225,938 | ) | |||||
|
Total liabilities and partners’ capital (deficit)
|
$ | 137,395,092 | $ | 138,769,575 | ||||
2
| Year Ended December 31 | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Revenues
|
$ | 180,555,764 | $ | 186,742,652 | $ | 166,967,651 | ||||||
|
|
||||||||||||
|
Operating costs and expenses
|
||||||||||||
|
Cost of sales
|
62,255,321 | 56,316,784 | 48,699,088 | |||||||||
|
Depreciation and amortization
|
14,866,744 | 14,554,150 | 14,347,268 | |||||||||
|
Administrative and general expenses
|
12,160,372 | 11,591,056 | 11,694,524 | |||||||||
|
|
89,282,437 | 82,461,990 | 74,740,880 | |||||||||
|
Operating income
|
91,273,327 | 104,280,662 | 92,226,771 | |||||||||
|
|
||||||||||||
|
Interest expense
|
(9,692,719 | ) | (10,573,875 | ) | (11,455,031 | ) | ||||||
|
Interest income
|
802,271 | 853,823 | 537,421 | |||||||||
|
Income before taxes
|
82,382,879 | 94,560,610 | 81,309,161 | |||||||||
|
State income tax expense
|
(376,271 | ) | — | — | ||||||||
|
Net income (loss)
|
$ | 82,006,608 | $ | 94,560,610 | $ | 81,309,161 | ||||||
3
| Partners | ||||||||||||||||
| Olin | 1997 | |||||||||||||||
| SunBelt Inc. | Venture, Inc. | Total | ||||||||||||||
|
Balance at December 31, 2004
|
$ | (9,925,548 | ) | $ | (9,925,548 | ) | $ | (19,851,096 | ) | |||||||
|
Cash distributions to partners
|
(33,020,033 | ) | (33,020,033 | ) | (66,040,066 | ) | ||||||||||
|
Net Income
|
40,654,581 | 40,654,581 | 81,309,161 | |||||||||||||
|
Balance at December 31, 2005
|
(2,291,000 | ) | (2,291,000 | ) | (4,582,000 | ) | ||||||||||
|
Cash distributions to partners
|
(47,602,274 | ) | (47,602,274 | ) | (95,204,548 | ) | ||||||||||
|
Net Income
|
47,280,305 | 47,280,305 | 94,560,610 | |||||||||||||
|
Balance at December 31, 2006
|
(2,612,969 | ) | (2,612,969 | ) | (5,225,938 | ) | ||||||||||
|
Cash distributions to partners
|
(35,048,793 | ) | (35,048,793 | ) | (70,097,585 | ) | ||||||||||
|
Net Income
|
41,003,304 | 41,003,304 | 82,006,608 | |||||||||||||
|
Balance at December 31, 2007
|
$ | 3,341,542 | $ | 3,341,542 | $ | 6,683,085 | ||||||||||
4
| Period Ended December 31 | ||||||||||||
| 2007 | 2006 | 2005 | ||||||||||
|
Operating activities
|
||||||||||||
|
Net income
|
$ | 82,006,608 | $ | 94,560,610 | $ | 81,309,161 | ||||||
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
||||||||||||
|
Depreciation
|
14,786,596 | 14,474,002 | 14,267,120 | |||||||||
|
Bad debt expense
|
— | |||||||||||
|
Amortization
|
80,148 | 80,148 | 80,148 | |||||||||
|
Loss on disposal of assets
|
118,249 | 282,063 | 164,435 | |||||||||
|
Accretion of discount
|
— | (328,493 | ) | — | ||||||||
|
Changes in assets and liabilities:
|
||||||||||||
|
Receivables from Oxy Vinyls
|
1,705,864 | (717,183 | ) | 245,961 | ||||||||
|
Receivables from partners
|
(4,503,853 | ) | 3,633,362 | (9,507,354 | ) | |||||||
|
Inventories
|
(206,513 | ) | 462,762 | 41,122 | ||||||||
|
Amounts payable to partners
|
(1,096,006 | ) | 2,715,700 | 1,405,976 | ||||||||
|
Accrued interest on long-term debt
|
— | — | — | |||||||||
|
Prepaid expenses and other assets
|
327,468 | (169,169 | ) | (175,224 | ) | |||||||
|
Net cash provided by operating activities
|
93,218,561 | 114,993,802 | 87,831,345 | |||||||||
|
|
||||||||||||
|
Investing activities
|
||||||||||||
|
Purchases of property, plant and equipment
|
(10,933,476 | ) | (8,043,515 | ) | (9,645,152 | ) | ||||||
|
Proceeds on sale of property, plant and equipment
|
— | 70,256 | 62,776 | |||||||||
|
Purchases of short-term investments
|
— | (22,697,270 | ) | — | ||||||||
|
Proceeds from maturity of short-term investments
|
— | 23,025,763 | — | |||||||||
|
Net cash used by investing activities
|
(10,933,476 | ) | (7,644,766 | ) | (9,582,376 | ) | ||||||
|
|
||||||||||||
|
Financing activities
|
||||||||||||
|
Cash distributions to partners
|
(70,097,585 | ) | (95,204,548 | ) | (66,040,065 | ) | ||||||
|
Principal payments on long-term debt
|
(12,187,500 | ) | (12,187,500 | ) | (12,187,500 | ) | ||||||
|
Net cash provided by financing activities
|
(82,285,085 | ) | (107,392,048 | ) | (78,227,565 | ) | ||||||
|
|
||||||||||||
|
Net increase (decrease) in cash
|
— | (43,013 | ) | 21,404 | ||||||||
|
Cash at beginning of year
|
1,000 | 44,013 | 22,609 | |||||||||
|
Cash and cash equivalents at end of year
|
$ | 1,000 | $ | 1,000 | $ | 44,013 | ||||||
5
6
|
Land improvements
|
20 years | |||
|
Buildings
|
20 years | |||
|
Machinery and equipment
|
5-20 years | |||
7
| December 31 | ||||||||
| 2007 | 2006 | |||||||
|
Finished goods
|
$ | 657,326 | $ | 244,500 | ||||
|
Production parts
|
1,156,321 | 1,362,634 | ||||||
|
|
$ | 1,813,647 | $ | 1,607,134 | ||||
8
| December 31 | ||||||||
| 2007 | 2006 | |||||||
|
Land and land improvements
|
$ | 4,862,826 | $ | 4,862,826 | ||||
|
Building
|
3,869,389 | 3,869,389 | ||||||
|
Machinery and equipment
|
215,630,740 | 213,997,068 | ||||||
|
Construction in process
|
14,173,958 | 5,217,473 | ||||||
|
|
238,536,913 | 227,946,756 | ||||||
|
Less allowance for depreciation
|
129,725,157 | 115,163,631 | ||||||
|
|
$ | 108,811,756 | $ | 112,783,125 | ||||
9
|
2008
|
$ | 1,719,036 | ||
|
2009
|
1,688,076 | |||
|
2010
|
1,688,076 | |||
|
2011
|
1,688,076 | |||
|
2012
|
1,688,076 | |||
|
Thereafter
|
5,101,094 | |||
|
|
||||
|
Total minimum future lease payments
|
$ | 13,572,434 | ||
|
|
||||
10