UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
________________________________________________
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2017
 
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from              to              .
Commission file number 1-16091
 ________________________________________________
POLYONE CORPORATION
(Exact name of registrant as specified in its charter)
________________________________________________
Ohio
34-1730488
(State or other jurisdiction
(I.R.S. Employer Identification No.)
of incorporation or organization)
 
 
 
33587 Walker Road, Avon Lake, Ohio
44012
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (440) 930-1000
________________________________________________
Former name, former address and former fiscal year, if changed since last report: Not Applicable
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý     Yes   ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý     Yes   ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
ý
Accelerated filer
¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
¨
 
 
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨   Yes   ý   No
The number of the registrant’s outstanding common shares, $0.01 par value, as of September 30, 2017 was 80,804,215 .
 



Part I — Financial Information
Item 1. Financial Statements
PolyOne Corporation
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017

2016
Sales
$
818.5

 
$
746.7

 
$
2,429.3

 
$
2,243.8

Cost of sales
639.0

 
580.6

 
1,879.5

 
1,719.2

Gross margin
179.5

 
166.1

 
549.8

 
524.6

Selling and administrative expense
111.8

 
94.1

 
318.1

 
300.4

Operating income
67.7

 
72.0

 
231.7

 
224.2

Interest expense, net
(15.5
)
 
(15.1
)
 
(45.3
)
 
(44.3
)
Debt extinguishment costs
—

 
—

 
(0.3
)
 
(0.4
)
Other expense, net
(0.7
)
 
(0.1
)
 
(3.2
)
 
—

Income from continuing operations before income taxes
51.5

 
56.8

 
182.9

 
179.5

Income tax expense
(11.3
)
 
(14.0
)
 
(44.8
)
 
(48.4
)
Net income from continuing operations
40.2

 
42.8

 
138.1

 
131.1

(Loss) income from discontinued operations, net of income taxes
(1.4
)
 
(0.5
)
 
(233.8
)
 
0.2

Net income (loss)
$
38.8

 
$
42.3

 
$
(95.7
)
 
$
131.3

Net loss attributable to noncontrolling interests
—

 
—

 
—

 
0.1

Net income (loss) attributable to PolyOne common shareholders
$
38.8

 
$
42.3

 
$
(95.7
)
 
$
131.4

 
 
 
 
 
 
 
 
Earnings (loss) per common share attributable to PolyOne common shareholders - Basic:
 
 
 
 
Continuing operations
$
0.50


$
0.51

 
$
1.69

 
$
1.56

Discontinued operations
(0.02
)
 
(0.01
)
 
(2.86
)
 
—

Total
$
0.48

 
$
0.50

 
$
(1.17
)
 
$
1.56

Earnings (loss) per common share attributable to PolyOne common shareholders - Diluted:
 
 
 
 
Continuing operations
$
0.49


$
0.51

 
$
1.68

 
$
1.55

Discontinued operations
(0.02
)
 
(0.01
)
 
(2.84
)
 
—

Total
$
0.47

 
$
0.50

 
$
(1.16
)
 
$
1.55


 
 
 
 
 
 
 
Weighted-average shares used to compute earnings per common share:
 
 
 
 
 
 
 
Basic
81.2


83.9

 
81.7

 
84.2

Plus dilutive impact of share-based compensation
0.8

 
0.6

 
0.6

 
0.6

Diluted
82.0


84.5

 
82.3

 
84.8

 
 
 
 
 
 
 
 
Anti-dilutive shares not included in diluted common shares outstanding
—

 
0.2

 
—

 
0.2

 
 
 
 
 
 
 
 
Cash dividends declared per share of common stock
$
0.135

 
$
0.120

 
$
0.405

 
$
0.360

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2


PolyOne Corporation
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions)
 
Three Months Ended 
 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income (loss)
$
38.8

 
$
42.3

 
$
(95.7
)
 
$
131.3

Other comprehensive income (loss)
 
 
 
 
 
 
 
 Translation adjustments
16.0

 
0.7

 
35.4

 
(3.6
)
 Unrealized gain on available-for-sale securities
—

 
0.2

 
(0.1
)
 
0.2

Total comprehensive income (loss)
54.8

 
43.2

 
(60.4
)
 
127.9

 Comprehensive loss attributable to noncontrolling interests
—

 
—

 
—

 
0.1

Comprehensive income (loss) attributable to PolyOne common shareholders
$
54.8

 
$
43.2

 
$
(60.4
)
 
$
128.0

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

3


PolyOne Corporation
Condensed Consolidated Balance Sheets
(In millions)
 
(Unaudited) September 30, 2017
 
December 31, 2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
233.5

 
$
225.5

Accounts receivable, net
431.1

 
325.6

Inventories, net
308.9

 
266.4

Current assets held-for-sale
—


86.5

Other current assets
70.5

 
45.5

Total current assets
1,044.0

 
949.5

Property, net
447.8

 
426.3

Goodwill
608.9

 
532.7

Intangible assets, net
405.7

 
342.7

Non-current assets held for sale
—

 
347.4

Other non-current assets
143.1

 
139.8

Total assets
$
2,649.5

 
$
2,738.4

 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
Current liabilities:
 
 
 
Short-term and current portion of long-term debt
$
32.5

 
$
18.5

Accounts payable
378.2

 
320.9

Current liabilities held-for-sale
—

 
45.3

Accrued expenses and other current liabilities
123.2

 
125.2

Total current liabilities
533.9

 
509.9

Non-current liabilities:
 
 
 
Long-term debt
1,319.5

 
1,239.4

Pension and other post-retirement benefits
63.4

 
63.1

Non-current liabilities held for sale
—

 
52.8

Other non-current liabilities
164.0

 
147.7

Total non-current liabilities
1,546.9

 
1,503.0

Shareholders’ equity:
 
 
 
PolyOne shareholders’ equity
567.9

 
724.7

Noncontrolling interests
0.8

 
0.8

Total equity
568.7

 
725.5

Total liabilities and shareholders’ equity
$
2,649.5

 
$
2,738.4

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

4


PolyOne Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 
Nine Months Ended September 30,
 
2017
 
2016
Operating Activities

 

Net (loss) income
$
(95.7
)
 
$
131.3

Adjustments to reconcile net income to net cash used by operating activities:

 
 
Loss on sale of business, net of tax
228.7

 
—

Depreciation and amortization
75.7

 
74.7

Accelerated depreciation and fixed asset charges associated with restructuring activities
0.9

 
4.6

Gain from sale of closed facilities
(3.6
)
 
—

Debt extinguishment costs
0.3

 
0.4

Share-based compensation expense
8.0

 
6.5

Change in assets and liabilities, net of the effect of acquisitions:

 

Increase in accounts receivable
(83.6
)
 
(67.4
)
Increase in inventories
(21.7
)
 
(10.4
)
Increase in accounts payable
43.0

 
30.1

Decrease in pension and other post-retirement benefits
(10.4
)
 
(31.3
)
Decrease in accrued expenses and other assets and liabilities - net
(30.4
)
 
(6.0
)
Net cash provided by operating activities
111.2

 
132.5

Investing Activities

 

Capital expenditures
(52.0
)
 
(58.0
)
Business acquisitions, net of cash acquired
(163.8
)
 
(158.3
)
Proceeds from sale of business and other assets
123.0

 
9.8

Net cash used by investing activities
(92.8
)
 
(206.5
)
Financing Activities

 

Proceeds from long-term debt
—

 
100.0

Borrowings under credit facilities
1,111.2

 
805.9

Repayments under credit facilities
(1,013.3
)
 
(806.4
)
Purchase of common shares for treasury
(70.7
)
 
(50.7
)
Cash dividends paid
(33.2
)
 
(30.1
)
Repayment of long-term debt
(4.9
)
 
(4.4
)
Payments of withholding tax on share awards
(2.9
)
 
(4.7
)
Debt financing costs
(2.5
)
 
(1.9
)
Net cash (used) provided by financing activities
(16.3
)
 
7.7

Effect of exchange rate changes on cash
4.7

 
(1.3
)
Increase (decrease) in cash and cash equivalents
6.8

 
(67.6
)
Cash and cash equivalents at beginning of period
226.7

 
279.8

Cash and cash equivalents at end of period
$
233.5

 
$
212.2

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

5


PolyOne Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 — BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal recurring, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the annual report on Form 10-K for the year ended December 31, 2016 of PolyOne Corporation. When used in this quarterly report on Form 10-Q, the terms “we,” “us,” “our”, "PolyOne" and the “Company” mean PolyOne Corporation and its consolidated subsidiaries.
Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2017 . Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. Discontinued operations are further discussed in Note 3, Discontinued Operations .
Accounting Standards Adopted
In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which simplifies the accounting for share-based payment transactions. Excess tax benefits and deficiencies reflect the difference between the book expense and the tax deduction of share based compensation. Book expense is based on an estimated fair value of the award at the grant date and the tax deduction is based on the actual value of the award at the exercise or vesting date. Such book and tax differences are required to be recognized as income tax expense or benefit in the Consolidated Statements of Income rather than additional paid-in capital. Further, the update allows an entity to make a policy election to recognize forfeitures as they occur or estimate the number of awards expected to be forfeited. We have adopted ASU 2016-09 as of January 1, 2017.
As a result of this adoption, certain reclassifications of the prior period presentation have been made to conform to the presentation for the current period. The excess tax benefits are classified as an operating activity, rather than a financing activity, and the cash paid for shares withheld to satisfy statutory tax withholding obligations are classified as a financing activity ( $4.7 million for the nine months ended September 30, 2016) on the Consolidated Statement of Cash Flows. Also, we elected to continue to estimate forfeitures rather than account for them as they occur.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit were needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s fair value is less than its carrying value. Any impairment is not to exceed the respective carrying value of goodwill. We have adopted this update for any impairment test performed after January 1, 2017.
Accounting Standards Not Yet Adopted
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). Under this standard, a company recognizes revenue when it transfers promised goods or services to customers for an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard implements a five-step process for revenue recognition that focuses on transfer of control. We are analyzing the impact of the standard on our contract portfolio and reviewing our current accounting policies and practices to identify the impact of the new standard. The implementation team has identified our revenue streams and is currently assessing the expected impact that ASU 2014-09, along with the subsequent updates and clarifications collectively known as Accounting Standards Codification (ASC) 606, will have on our Consolidated Financial Statements as well as future disclosure requirements, processes and internal controls. We expect to adopt ASC 606 using the modified retrospective method. We do not expect a material impact to the Consolidated Financial Statements from the adoption of ASC 606. The Company will adopt ASC 606 no later than the required date of January 1, 2018.

6


In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The Company will adopt ASU 2016-02 no later than the required date of January 1, 2019. We are currently assessing the impact this standard will have on our Consolidated Financial Statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other than Inventory (ASU 2016-16), which requires companies to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period the sale or transfer occurs. There would be no material impact on our Consolidated Financial Statements from intercompany transactions completed as of December 31, 2016 and September 30, 2017. We will continue to assess the impact of ASU 2016-16 on future transactions and the Company will adopt ASU 2016-16 no later than the required date of January 1, 2018.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07) . This standard requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. All other components of net periodic benefit cost will be presented below operating income. The Company will adopt ASU 2017-07 no later than the required date of January 1, 2018. For detail on the components of our annual net periodic benefit cost please see Note 10, Employee Benefit Plans in our annual report on Form 10-K for the year ended December 31, 2016 .
Note 2 — BUSINESS COMBINATIONS
On July 5, 2017, the Company completed the acquisition of Mesa Industries, Inc. (Mesa), a producer of solid and liquid colorant technologies. Goodwill recognized as a result of this acquisition is deductible for tax purposes.
On June 8, 2017, the Company completed the acquisition of Rutland Plastic Technologies, Inc. (Rutland). Rutland is a leading producer of specialty inks and an innovator in textile screen printing solutions and services. Goodwill recognized as a result of this acquisition is not deductible for tax purposes.
On January 3, 2017, the Company completed the acquisition of SilCoTec, Inc. (SilCoTec), a leading producer of innovative silicone colorants, dispersions and formulations. Goodwill recognized as a result of this acquisition is deductible for tax purposes.
The combined purchase price of Mesa, Rutland and SilCoTec was $163.8 million , net of cash acquired. The preliminary purchase price allocation for Mesa, Rutland and SilCoTec resulted in goodwill of $76.8 million , intangible assets of $76.8 million , net working capital of $21.9 million and deferred tax liabilities of $25.1 million . The intangible assets that have been acquired are being amortized over a period of 5 to 20 years. The results of operations of Mesa, Rutland and SilCoTec are reported in the Color, Additives and Inks segment subsequent to the acquisition dates. Sales of Mesa, Rutland and SilCoTec included in our three and nine month ended September 30, 2017 results were $23.8 million and $35.5 million , respectively.
Note 3 — DISCONTINUED OPERATIONS
On July 19, 2017, PolyOne divested its Designed Structures and Solutions segment (DSS) to an affiliate of Arsenal Capital Partners for $115.0 million cash. The sale resulted in the recognition of an after-tax loss of $228.7 million , which is reflected within the Loss from discontinued operations, net of income taxes line of the Condensed Consolidated Statements of Income.
PolyOne has classified the DSS assets and liabilities as held-for-sale as of December 31, 2016 in the accompanying Condensed Consolidated Balance Sheets and has classified the DSS operating results and the loss on the sale, net of tax, as discontinued operations in the accompanying Condensed Consolidated Statement of Income for all periods presented. Previously, DSS was included as a separate operating segment.

7


The following table summarizes the discontinued operations associated with DSS for the three and nine months ended September 30, 2017 and 2016:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2017
 
2016
 
2017
 
2016
Sales
$
15.8

 
$
96.9

 
$
222.1

 
$
308.3

 
 
 
 
 
 
 
 
Loss on sale
$
0.5

 
$
—

 
$
(295.4
)
 
$
—

Loss from operations
(3.3
)
 
(0.9
)
 
(8.6
)
 
—

Loss before taxes
(2.8
)
 
(0.9
)
 
(304.0
)
 
—

Income tax benefit
1.4

 
0.4

 
70.2

 
0.2

     (Loss) income from discontinued operations, net of taxes
$
(1.4
)
 
$
(0.5
)
 
$
(233.8
)
 
$
0.2


The following table summarizes the assets and liabilities of DSS as of December 31, 2016:
(In millions)
December 31, 2016
Assets:
 
Current assets:
 
Total current assets
$
86.5

Non-current assets:
 
      Property, net
181.4

      Goodwill
144.7

      Intangible assets, net
20.8

      Other non-current assets
0.5

Total non-current assets
347.4

 

Assets held-for-sale
$
433.9

 
 
Liabilities:
 
Current liabilities:
 
Total current liabilities
$
45.3

Non-current liabilities:
 
      Deferred income taxes
51.3

      Other
1.5

Total non-current liabilities
52.8

 
 
Liabilities held-for-sale
$
98.1



8


Note 4 — GOODWILL AND INTANGIBLE ASSETS
Goodwill as of September 30, 2017 and December 31, 2016 , and changes in the carrying amount of goodwill by segment were as follows:  
(In millions)
Specialty
Engineered
Materials
 
Color,
Additives and
Inks
 
Performance
Products  and
Solutions
 
PolyOne
Distribution
 
Total
Balance December 31, 2016
$
173.5

 
$
346.4

 
$
11.2

 
$
1.6

 
$
532.7

Acquisition of businesses
—

 
75.4

 
—

 
—

 
75.4

Currency translation and other adjustments
(0.2
)
 
1.0

 
—

 
—

 
0.8

Balance September 30, 2017
$
173.3

 
$
422.8

 
$
11.2

 
$
1.6

 
$
608.9

Indefinite and finite-lived intangible assets consisted of the following:  
 
As of September 30, 2017
(In millions)
Acquisition
Cost
 
Accumulated
Amortization
 
Currency
Translation
 
Net
Customer relationships
$
257.3

 
$
(58.3
)
 
$
—

 
$
199.0

Patents, technology and other
158.2

 
(51.7
)
 
(0.1
)
 
106.4

Indefinite-lived trade names
100.3

 
—

 
—

 
100.3

Total
$
515.8

 
$
(110.0
)
 
$
(0.1
)
 
$
405.7

 
As of December 31, 2016
(In millions)
Acquisition
Cost
 
Accumulated
Amortization
 
Currency
Translation
 
Net
Customer relationships
$
205.1

 
$
(49.9
)
 
$
(0.3
)
 
$
154.9

Patents, technology and other
132.3

 
(44.4
)
 
(0.4
)
 
87.5

Indefinite-lived trade names
100.3

 
—

 
—

 
100.3

Total
$
437.7

 
$
(94.3
)
 
$
(0.7
)
 
$
342.7

Note 5 — INVENTORIES, NET
Components of Inventories, net are as follows:  
(In millions)
September 30, 2017
 
December 31, 2016
Finished products
$
183.0

 
$
177.4

Work in process
6.2

 
4.5

Raw materials and supplies
119.7

 
84.5

Inventories, net
$
308.9

 
$
266.4

Note 6 — PROPERTY, NET
Components of Property, net are as follows:  
(In millions)
September 30, 2017
 
December 31, 2016
Land and land improvements
$
40.5

 
$
38.7

Buildings
300.2

 
285.2

Machinery and equipment
1,020.1

 
966.3

Property, gross
1,360.8

 
1,290.2

Less accumulated depreciation and amortization
(913.0
)
 
(863.9
)
Property, net
$
447.8

 
$
426.3

Note 7 — INCOME TAXES
During the three months ended September 30, 2017 and 2016, the Company’s effective tax rate of 21.9% and 24.6% , respectively, was below the Company's federal statutory rate of 35.0% primarily due to the favorable impact of foreign tax rate differences on foreign earnings.

9


During the nine months ended September 30, 2017 and 2016, the Company’s effective tax rate of 24.5% and 27.0% , respectively, was below the Company's federal statutory rate of 35.0% primarily due to the favorable impact of foreign tax rate differences on foreign earnings.
Note 8 — FINANCING ARRANGEMENTS
Debt consists of the following instruments:
As of September 30, 2017  (In millions)
Principal Amount
 
Unamortized discount and debt issuance cost
 
Net Debt
 
Weighted average interest rate
Senior secured term loan due 2022
$
639.1

 
$
8.8

 
$
630.3

 
3.27
%
Senior secured revolving credit facility due 2022
98.5

 
—

 
98.5

 
2.71
%
5.25% senior notes due 2023
600.0

 
6.2

 
593.8

 
5.25
%
Other debt (1)
29.4

 
—

 
29.4

 
 
Total long-term debt
$
1,367.0

 
$
15.0

 
$
1,352.0

 
 
Less short-term and current portion of long-term debt
32.5

 
—

 
32.5

 
 
Total long-term debt, net of current portion
$
1,334.5

 
$
15.0

 
$
1,319.5

 
 
As of December 31, 2016  (In millions)
Principal Amount
 
Unamortized discount and debt issuance cost
 
Net Debt
 
Weighted average interest rate
Senior secured term loan due 2022
$
644.0

 
$
8.7

 
$
635.3

 
3.61
%
5.25% senior notes due 2023
600.0

 
7.1

 
592.9

 
5.25
%
Other debt (1)
29.7

 
—

 
29.7

 
 
Total long-term debt
$
1,273.7

 
$
15.8

 
$
1,257.9

 
 
Less short-term and current portion of long-term debt
18.5

 
—

 
18.5

 
 
Total long-term debt, net of current portion
$
1,255.2

 
$
15.8

 
$
1,239.4

 
 
(1)
Other debt includes capital lease obligations of $17.7 million and $17.4 million as of September 30, 2017 and December 31, 2016, respectively.
On August 15, 2017, the Company entered into a fourth amendment to its senior secured term loan. Under the terms of the amended senior secured term loan, the margin was reduced by 25 basis points to 200 basis points. At the Company's discretion, interest is based upon (i) a margin rate of 200 basis points plus the 1-, 2-, 3-, or 6-month LIBOR, subject to a floor of 75 basis points or (ii) a margin rate of 100 basis points plus a Prime Rate, subject to a floor of 175 basis points.
The agreements governing our senior secured revolving credit facility and our secured term loan, and the indentures and credit agreements governing other debt, contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: consummate asset sales, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of September 30, 2017 , we were in compliance with all covenants.
The estimated fair value of PolyOne’s debt instruments at September 30, 2017 and December 31, 2016 was $ 1,396.0 million and $ 1,271.7 million , respectively, compared to carrying values of $ 1,352.0 million and $1,257.9 million as of September 30, 2017 and December 31, 2016 , respectively. The fair value of PolyOne’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy.
Note 9 — SEGMENT INFORMATION
Operating income is the primary measure that is reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant realignment costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs and other liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement

10


benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our chief operating decision maker. These costs are included in Corporate and eliminations .
PolyOne has four reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; (3) Performance Products and Solutions; and (4) PolyOne Distribution. Previously, PolyOne had five reportable segments. However, as a result of the divestiture of DSS, we have removed DSS as a separate operating segment and its results are presented as a discontinued operation. Historical information has been retrospectively adjusted to reflect these changes. Please see Note 3, Discontinued Operations for additional information.
Segment information for the three and nine months ended September 30, 2017 and 2016 is as follows:  
 
Three Months Ended September 30, 2017
 
Three Months Ended September 30, 2016
(In millions)
Sales to
External
Customers
 
Total Sales
 
Operating
Income
 
Sales to
External
Customers
 
Total Sales
 
Operating
Income
Color, Additives and Inks
$
232.6


$
235.1


$
36.4


$
191.3


$
195.9


$
31.4

Specialty Engineered Materials
143.9


156.3


18.3


132.6


146.2


20.5

Performance Products and Solutions
155.1


175.7


17.8


152.4


171.3


18.0

PolyOne Distribution
286.9


291.1


18.6


270.4


274.8


18.2

Corporate and eliminations
—


(39.7
)

(23.4
)

—


(41.5
)

(16.1
)
Total
$
818.5


$
818.5


$
67.7


$
746.7


$
746.7


$
72.0

 
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
(In millions)
Sales to
External
Customers
 
Total Sales
 
Operating
Income
 
Sales to
External
Customers
 
Total Sales
 
Operating
Income
Color, Additives and Inks
$
657.2

 
$
670.6

 
$
110.1

 
$
598.5

 
$
613.0

 
$
104.5

Specialty Engineered Materials
436.6

 
474.1

 
62.2

 
392.6

 
430.5

 
65.3

Performance Products and Solutions
480.6

 
543.6

 
62.2

 
449.6

 
510.3

 
59.0

PolyOne Distribution
854.9

 
868.0

 
57.5

 
803.1

 
816.2

 
53.5

Corporate and eliminations
—

 
(127.0
)
 
(60.3
)
 
—

 
(126.2
)
 
(58.1
)
Total
$
2,429.3

 
$
2,429.3

 
$
231.7

 
$
2,243.8

 
$
2,243.8

 
$
224.2

 

 
Total Assets
(In millions)
September 30, 2017
 
December 31, 2016
Color, Additives and Inks
$
1,161.8

 
$
923.8

Specialty Engineered Materials
543.2

 
542.8

Performance Products and Solutions
281.9

 
241.8

PolyOne Distribution
247.9

 
207.0

Corporate and eliminations
414.7

 
389.1

Total assets from continuing operations
2,649.5

 
2,304.5

Assets held for sale
—

 
433.9

Total assets
$
2,649.5

 
$
2,738.4

Note 10 — COMMITMENTS AND CONTINGENCIES
Environmental — We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to ensure safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows.

11


In September 2007, the United States District Court for the Western District of Kentucky in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., held that PolyOne must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls), together with certain defense costs of Goodrich Corporation. The rulings also provided that PolyOne can seek indemnification for contamination attributable to Westlake Vinyls. Following the Court rulings, the parties to the litigation agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls. While we do not currently assume any allocation of costs in our current accrual, we will adjust our accrual, in the future, consistent with any such future allocation of costs.
A remedial investigation and feasibility study (RIFS) is underway at Calvert City. The United States Environmental Protection Agency (USEPA) provided a remedial investigation report in 2015 and assumed responsibility for the completion of the feasibility study. In 2016, the USEPA conducted additional site investigations from which results are still being reviewed. We continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement.
On March 13, 2013, PolyOne acquired Spartech Corporation (Spartech). One of Spartech's subsidiaries, Franklin-Burlington Plastics, Inc. (Franklin-Burlington), operated a plastic resin compounding facility in Kearny, New Jersey, located adjacent to the Passaic River. The USEPA has requested that companies located in the area of the lower Passaic River, including Franklin-Burlington, cooperate in an investigation of contamination of approximately 17 miles of the lower Passaic River (the lower Passaic River Study Area). In response, Franklin-Burlington and approximately 70 other companies (collectively, the Cooperating Parties) agreed, pursuant to an Administrative Order on Consent (AOC) with the USEPA, to assume responsibility for development of a RIFS of the lower Passaic River Study Area. By agreeing to bear a portion of the cost of the RIFS, Franklin-Burlington did not admit to any liability or agree to bear any remediation or natural resource damage costs.
In 2015, the Cooperating Parties submitted to the USEPA a remedial investigation report for the lower Passaic River Study Area. In March 2016, the USEPA issued a Record of Decision selecting a remedy for an eight -mile portion of the lower Passaic River Study Area at an estimated and discounted cost of $1.4 billion . In September 2016, the USEPA reached an agreement with Occidental Chemical Corporation (OCC), which orders OCC to perform the remedial design for the lower eight mile portion of the Passaic River.
As of September 30, 2017 , we have concluded that the same uncertainties that limited our ability to reasonably estimate an accrual at December 31, 2016 still exist and any potential accrual will not be material to our Consolidated Financial Statements.
During the nine months ended September 30, 2017 and 2016 , PolyOne recognized $12.1 million and $6.2 million , respectively, of expense related to environmental remediation activities. During the nine months ended September 30, 2017 and 2016 , PolyOne received $6.3 million and $5.3 million , respectively, of insurance recoveries for previously incurred environmental costs. These expenses and insurance recoveries are included within Cost of sales within our Condensed Consolidated Statements of Income . Insurance recoveries are recognized as a gain when received.
Our Consolidated Balance Sheet includes accruals totaling $117.8 million and $117.3 million as of September 30, 2017 and December 31, 2016 , respectively, based on our estimates of probable future environmental expenditures relating to previously contaminated sites. These undiscounted amounts are included in Accrued expenses and other liabilities and Other non-current liabilities on the accompanying Consolidated Balance Sheets. The accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and our view of the most likely remedy. Depending upon the results of future testing, completion and results of remedial investigation and feasibility studies, the ultimate remediation alternatives undertaken, changes in regulations, technology development, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued at September 30, 2017 . However, such additional costs, if any, cannot be currently estimated.

12


Note 11 — EQUITY
Changes in accumulated other comprehensive loss year-to-date as of September 30, 2017 and 2016 were as follows:
(In millions)
Cumulative Translation Adjustment
 
Pension and Other Post-Retirement Benefits
 
Unrealized Gain in Available-for-Sale Securities
 
Total
Balance at January 1, 2017
$
(99.8
)
 
$
5.2

 
$
0.4

 
$
(94.2
)
Translation adjustments
35.4

 
—

 
—

 
35.4

Unrealized loss on available-for-sale securities
—

 
—

 
(0.1
)
 
(0.1
)
Balance at September 30, 2017
$
(64.4
)
 
$
5.2

 
$
0.3

 
$
(58.9
)
 
 
 
 
 
 
 
 
Balance at January 1, 2016
$
(76.8
)
 
$
5.2

 
$
0.3

 
$
(71.3
)
Translation adjustments
(3.6
)
 
—

 
—

 
(3.6
)
Unrecognized gain on available-for-sale securities
—

 
—

 
0.2

 
0.2

Balance at September 30, 2016
$
(80.4
)
 
$
5.2

 
$
0.5

 
$
(74.7
)

13


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
We are a premier provider of specialized polymer materials, services and solutions with operations in specialty engineered materials, color and additive systems and polymer distribution. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants, fluoropolymer and silicone colorants. Headquartered in Avon Lake, Ohio, we have employees at manufacturing sites and distribution facilities in North America, South America, Europe, Asia and Africa. We provide value to our customers through our ability to link our knowledge of polymers and formulation technology with our manufacturing and supply chain capabilities to provide value added solutions to designers, assemblers and processors of plastics (our customers). When used in this quarterly report on Form 10-Q, the terms “we,” “us,” “our”, "PolyOne" and the “Company” mean PolyOne Corporation and its consolidated subsidiaries.
Highlights and Executive Summary
A summary of PolyOne’s sales, operating income, net income and net income attributable to PolyOne common shareholders follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017

2016
 
2017
 
2016
(In millions)
Sales
$
818.5

 
$
746.7

 
$
2,429.3

 
$
2,243.8

 
 
 
 
 
 
 
 
Operating income
$
67.7

 
$
72.0

 
$
231.7

 
$
224.2

 
 
 
 
 
 
 
 
Net income from continuing operations
$
40.2

 
$
42.8

 
$
138.1

 
$
131.1

(Loss) income from discontinued operations, net of income taxes
(1.4
)
 
(0.5
)
 
(233.8
)
 
0.2

Net income (loss)
$
38.8

 
$
42.3

 
$
(95.7
)
 
$
131.3

 
 
 
 
 
 
 
 
Net income (loss) attributable to PolyOne common shareholders
$
38.8

 
$
42.3

 
$
(95.7
)
 
$
131.4

Recent Developments
On July 19, 2017, PolyOne divested its Designed Structures and Solutions (DSS) segment to an affiliate of Arsenal Capital Partners. Previously, DSS was included as a separate operating segment. As a result of the sale, the DSS operating segment results are now reported as discontinued operations. Historical information has been retrospectively adjusted to reflect these changes.
On July 5, 2017, the Company completed the acquisition of Mesa Industries, Inc. (Mesa), a United States producer of color and additive materials and services.
On June 8, 2017, the Company completed the acquisition of Rutland Plastic Technologies, Inc. (Rutland), a leading producer of specialty inks and an innovator in textile screen printing solutions and service.
On January 3, 2017, the Company completed the acquisition of SilCoTec, Inc. (SilCoTec), a leading producer of innovative silicone colorants, dispersions and formulations.
The results of operations of these acquisitions are included in the Color, Additives and Inks segment subsequent to the respective acquisition dates. These acquisitions are expected to add approximately $85.0 million in sales on an annual basis.

14


Results of Operations — The three and nine months ended September 30, 2017 compared to three and nine months ended September 30, 2016 :
 
Three Months Ended September 30,
 
Variances —
Favorable (Unfavorable)
 
Nine Months Ended September 30,
 
Variances —
Favorable (Unfavorable)
(Dollars in millions, except per share data)
2017

2016

Change

%
Change
 
2017
 
2016
 
Change
 
%
Change
Sales
$
818.5

 
$
746.7

 
$
71.8

 
9.6
 %
 
$
2,429.3

 
$
2,243.8

 
$
185.5

 
8.3
 %
Cost of sales
639.0

 
580.6

 
(58.4
)
 
(10.1
)%
 
1,879.5

 
1,719.2

 
(160.3
)
 
(9.3
)%
Gross margin
179.5

 
166.1

 
13.4

 
8.1
 %
 
549.8

 
524.6

 
25.2

 
4.8
 %
Selling and administrative expense
111.8

 
94.1

 
(17.7
)
 
(18.8
)%
 
318.1

 
300.4

 
(17.7
)
 
(5.9
)%
Operating income
67.7

 
72.0

 
(4.3
)
 
(6.0
)%
 
231.7

 
224.2

 
7.5

 
3.3
 %
Interest expense, net
(15.5
)
 
(15.1
)
 
(0.4
)
 
(2.6
)%
 
(45.3
)
 
(44.3
)
 
(1.0
)
 
(2.3
)%
Debt extinguishment costs
—

 
—

 
—

 
—
 %
 
(0.3
)
 
(0.4
)
 
0.1

 
25.0
 %
Other expense, net
(0.7
)
 
(0.1
)
 
(0.6
)
 
nm

 
(3.2
)
 
—

 
(3.2
)
 
nm

Income from continuing operations before income taxes
51.5

 
56.8

 
(5.3
)
 
(9.3
)%
 
182.9

 
179.5

 
3.4

 
1.9
 %
Income tax expense
(11.3
)
 
(14.0
)
 
2.7

 
19.3
 %
 
(44.8
)
 
(48.4
)
 
3.6

 
7.4
 %
Net income from continuing operations
40.2

 
42.8

 
(2.6
)
 
(6.1
)%
 
138.1

 
131.1

 
7.0

 
5.3
 %
(Loss) income from discontinued operations, net of income taxes
(1.4
)
 
(0.5
)
 
(0.9
)
 
nm

 
(233.8
)
 
0.2

 
(234.0
)
 
nm

Net income (loss)
38.8

 
42.3

 
(3.5
)
 
(8.3
)%
 
(95.7
)
 
131.3

 
(227.0
)
 
nm

Net loss attributable to noncontrolling interests
—

 
—

 
—

 
—
 %
 
—

 
0.1

 
(0.1
)
 
(100.0
)%
Net income (loss) attributable to PolyOne common shareholders
$
38.8

 
$
42.3

 
$
(3.5
)
 
(8.3
)%
 
$
(95.7
)
 
$
131.4

 
$
(227.1
)
 
nm

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share attributable to PolyOne common shareholders - Basic:
 
 
 
 
Continuing operations
$
0.50

 
$
0.51

 
 
 
 
 
$
1.69

 
$
1.56

 
 
 
 
Discontinued operations
(0.02
)
 
(0.01
)
 
 
 
 
 
(2.86
)
 
—

 
 
 
 
Total
$
0.48

 
$
0.50

 
 
 
 
 
$
(1.17
)
 
$
1.56

 
 
 
 
Earnings (loss) per common share attributable to PolyOne common shareholders - Diluted:
 
 
 
 
Continuing operations
$
0.49

 
$
0.51

 
 
 
 
 
$
1.68

 
$
1.55

 
 
 
 
Discontinued operations
(0.02
)
 
(0.01
)
 
 
 
 
 
(2.84
)
 
—

 
 
 
 
Total
$
0.47

 
$
0.50

 
 
 
 
 
$
(1.16
)
 
$
1.55

 
 
 
 
nm - not meaningful
Sales
Sales increased $71.8 million , or 9.6% , in the three months ended September 30, 2017 compared to the three months ended September 30, 2016 . Previous commercial investments led to organic sales growth of 5.1%, acquisitions added 3.8% to the growth rate and favorable foreign exchange increased sales 0.7%.
Sales increased $185.5 million , or 8.3% , in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 . Previous commercial investments drove organic sales growth of 5.9% and acquisitions increased sales by 2.8%. Unfavorable foreign exchange partially offset sales by 0.4%.
Cost of sales
As a percent of sales, cost of sales increased from 77.8% in the three months ended September 30, 2016 to 78.1% in the three months ended September 30, 2017 and from 76.6% in the nine months ended September 30, 2016 to 77.4% in the nine months ended September 30, 2017 , primarily as a result of raw material cost inflation.
Selling and administrative expense
Selling and administrative expenses increased $17.7 million during the three months ended September 30, 2017 compared to the three months ended September 30, 2016 driven primarily by $9.6 million of additional incentives and other employee costs and $5.0 million associated with acquired businesses.

15


Selling and administrative expenses for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 increased $17.7 million primarily as a result of $10.7 million associated with acquired businesses, $8.8 million in additional compensation and employee costs. A $3.8 million reversal of certain non-income tax reserves due to the expiration of statute of limitations in 2017 partially offset these increases.
Income taxes
During the three months ended September 30, 2017, the Company’s effective tax rate was 21.9% versus 24.6% for the three months ended September 30, 2016, primarily due to a more favorable impact of foreign tax rate differences on foreign earnings.
During the nine months ended September 30, 2017, the Company’s effective tax rate of 24.5% was lower than the nine months ended September 30, 2016 rate of 27.0% primarily due to the overall mix of domestic and foreign earnings.
SEGMENT INFORMATION
Operating income is the primary measure that is reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant realignment costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs and other liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our chief operating decision maker. These costs are included in Corporate and eliminations .
PolyOne has four reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; (3) Performance Products and Solutions; and (4) PolyOne Distribution. Our segments are further discussed in Note 9, Segment Information , to the accompanying Consolidated Financial Statements.
As a result of the divestiture of DSS, we have removed DSS as a separate operating segment and its results are presented as a discontinued operation. Historical information has been retrospectively adjusted to reflect these changes. Discontinued operations are further discussed in Note 3, Discontinued Operations , to the accompanying Consolidated Financial Statements.

16


Sales and Operating Income — The three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016 : 
 
Three Months Ended September 30,
 
Variances — Favorable
(Unfavorable)
 
Nine Months Ended September 30,
 
Variances — Favorable
(Unfavorable)
(Dollars in millions)
2017

2016

Change

%  Change
 
2017
 
2016
 
Change
 
%  Change
Sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Color, Additives and Inks
$
235.1

 
$
195.9

 
$
39.2

 
20.0
 %
 
$
670.6

 
$
613.0

 
$
57.6

 
9.4
 %
Specialty Engineered Materials
156.3

 
146.2

 
10.1

 
6.9
 %
 
474.1

 
430.5

 
43.6

 
10.1
 %
Performance Products and Solutions
175.7

 
171.3

 
4.4

 
2.6
 %
 
543.6

 
510.3

 
33.3

 
6.5
 %
PolyOne Distribution
291.1

 
274.8

 
16.3

 
5.9
 %
 
868.0

 
816.2

 
51.8

 
6.3
 %
Corporate and eliminations
(39.7
)
 
(41.5
)
 
1.8

 
4.3
 %
 
(127.0
)
 
(126.2
)
 
(0.8
)
 
(0.6
)%
Total Sales
$
818.5

 
$
746.7

 
$
71.8

 
9.6
 %
 
$
2,429.3

 
$
2,243.8

 
$
185.5

 
8.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Color, Additives and Inks
$
36.4

 
$
31.4

 
$
5.0

 
15.9
 %
 
$
110.1

 
$
104.5

 
$
5.6

 
5.4
 %
Specialty Engineered Materials
18.3

 
20.5

 
(2.2
)
 
(10.7
)%
 
62.2

 
65.3

 
(3.1
)
 
(4.7
)%
Performance Products and Solutions
17.8

 
18.0

 
(0.2
)
 
(1.1
)%
 
62.2

 
59.0

 
3.2

 
5.4
 %
PolyOne Distribution
18.6

 
18.2

 
0.4

 
2.2
 %
 
57.5

 
53.5

 
4.0

 
7.5
 %
Corporate and eliminations
(23.4
)
 
(16.1
)
 
(7.3
)
 
(45.3
)%
 
(60.3
)
 
(58.1
)
 
(2.2
)
 
(3.8
)%
Total Operating Income
$
67.7

 
$
72.0

 
$
(4.3
)
 
(6.0
)%
 
$
231.7

 
$
224.2

 
$
7.5

 
3.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income as a percentage of sales:
 
 
 
 
 
 
 
 
 
 
Color, Additives and Inks
15.5
%
 
16.0
%
 
(0.5
)
 
nm

 
16.4
%
 
17.0
%
 
(0.6
)
 
nm

Specialty Engineered Materials
11.7
%
 
14.0
%
 
(2.3
)
 
nm

 
13.1
%
 
15.2
%
 
(2.1
)
 
nm

Performance Products and Solutions
10.1
%
 
10.5
%
 
(0.4
)
 
nm

 
11.4
%
 
11.6
%
 
(0.2
)
 
nm

PolyOne Distribution
6.4
%
 
6.6
%
 
(0.2
)
 
nm

 
6.6
%
 
6.6
%
 
—

 
nm

Total
8.3
%
 
9.6
%
 
(1.3
)
 
nm

 
9.5
%
 
10.0
%
 
(0.5
)
 
nm

nm - not meaningful
Color, Additives and Inks     
Sales grew by $39.2 million , or 20.0% , in the three months ended September 30, 2017 compared to the three months ended September 30, 2016 . Acquisitions increased sales by 13.3% and organic sales growth of 4.8% was primarily driven by the packaging, wire & cable and textile end markets. Favorable foreign exchange added 1.9% to the sales growth rate.
Sales grew by $57.6 million , or 9.4% , in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 . Acquisitions increased sales by 6.7% and organic sales growth of 3.1% was primarily driven by the packaging, wire & cable and textile end markets. Slightly offsetting these increases was unfavorable foreign exchange impacts of 0.4%.
Operating income rose by $5.0 million in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 , largely driven by $3.7 million from acquisitions, $2.7 million from higher organic sales and a favorable foreign exchange impact of $0.8 million. These increases were partially offset by raw material inflation and increased incentive costs.
Operating income rose by $5.6 million in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . This growth was largely driven by $6.7 million from acquisitions partially offset by unfavorable foreign exchange, raw material cost inflation and increased incentive costs.

17


Specialty Engineered Materials
Sales increased $10.1 million , or 6.9% , in the three months ended September 30, 2017 compared to the three months ended September 30, 2016 , largely driven by organic growth of 4.1%, a 1.4% impact from acquisitions and favorable foreign exchange of 1.4%.
Sales increased $43.6 million , or 10.1% , in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 , largely driven by organic growth of 5.7% and a 5.0% impact from acquisitions. Unfavorable foreign exchange of 0.6% offset sales.
Operating income decreased $2.2 million in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 and $3.1 million in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 as the benefit of increased sales was more than offset by raw material cost inflation.
Performance Products and Solutions
Sales increased $4.4 million , or 2.6% , in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 due to volume growth in the electrical market as well as higher average selling prices, resulting from an increase in hydrocarbon based raw material costs.
Sales increased $33.3 million , or 6.5% , in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 primarily due to volume growth in the industrial and electrical markets as well as higher average selling prices resulting from an increase in hydrocarbon based raw material costs.
Operating income decreased $0.2 million in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 as the benefit of increased sales were more than offset by raw material cost inflation and higher manufacturing costs resulting from hurricane Harvey.
Operating income increased $3.2 million in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 as the benefit of increased sales was partially offset by raw material cost inflation.
PolyOne Distribution
Sales increased $16.3 million , or 5.9% , in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 and $51.8 million , or 6.3% , in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 as a result of growth in the consumer, appliance and industrial end markets, and higher overall average selling prices associated with hydrocarbon based raw material cost inflation.
Operating income increased $0.4 million in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 and $4.0 million in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 primarily as a result of increased sales and favorable mix, which was partially offset by increased costs related to our continued investment in commercial resources.
Corporate and Eliminations
Corporate and eliminations increased $7.3 million in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily as a result of higher compensation and employee costs.
Corporate and eliminations increased $2.2 million in the nine months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily as a result of increased compensation and employee costs, partially offset by a $3.8 million reversal of certain non-income tax reserves in 2017 due to the expiration of statute of limitations.
Liquidity and Capital Resources
Our objective is to finance our business through operating cash flow and an appropriate mix of debt and equity. By laddering the maturity structure, we avoid concentrations of debt maturities, reducing liquidity risk. We may from time to time seek to retire or purchase our outstanding debt with cash and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. We may also seek to repurchase our outstanding common shares. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved have been and may continue to be material.

18


The following table summarizes our liquidity as of September 30, 2017 and December 31, 2016 :
(In millions)
September 30, 2017
 
December 31, 2016
Cash and cash equivalents
$
233.5

 
$
225.5

Revolving credit availability
277.8

 
386.2

Liquidity
$
511.3

 
$
611.7

As of September 30, 2017 , approximately 83% of the Company’s cash and cash equivalents resided outside the United States. Repatriation of these funds could result in potential foreign and domestic taxes. To the extent foreign earnings previously treated as permanently reinvested were to be repatriated, the potential U.S. tax liability may be reduced by any foreign income taxes paid on these earnings. However, based on the Company’s policy of permanent reinvestment, it is not practicable to determine the U.S. federal income tax liability, if any, due to the complexities associated with this hypothetical calculation.
Cash Flows
The following describes the significant components of cash flows from operating, investing and financing activities for the nine months ended September 30, 2017 and 2016 .
Operating Activities — In the nine months ended September 30, 2017 , net cash provided by operating activities was $111.2 million as compared to net cash provided by operating activities of $ 132.5 million for the nine months ended September 30, 2016 reflecting an increase in working capital in support of higher revenues.
Working capital as a percentage of sales, which we define as the average accounts receivable, plus average inventory, less average accounts payable, divided by sales, for the third quarter of 2017 increased to 10.3% compared to 9.9% for the third quarter of 2016. This working capital increase is primarily due to the impact of recent acquisitions.
Investing Activities — Net cash used by investing activities during the nine months ended September 30, 2017 of $ 92.8 million reflects $163.8 million of acquisitions and $52.0 million of capital expenditures, partially offset by the proceeds from sale of business and other assets of $123.0 million .
Net cash used by investing activities during the nine months ended September 30, 2016 of $206.5 million reflects $158.3 million of acquisitions and $58.0 million of capital expenditures, partially offset by the sale of assets of $9.8 million .
Financing Activities — Net cash used by financing activities for the nine months ended September 30, 2017 of $16.3 million reflects the $70.7 million of repurchases of our outstanding common shares and $33.2 million of dividends paid, primarily offset by net borrowings of $97.9 million under our senior secured revolving credit facility.
Net cash provided by financing activities for the nine months ended September 30, 2016 of $7.7 million reflects the increase of $100.0 million to the senior secured term loan due 2022 for acquisitions, offset primarily by $50.7 million of repurchases of our outstanding common shares and $30.1 million of dividends paid.
Debt
As of September 30, 2017 , the principal amount of debt totaled $1,367.0 million . Aggregate maturities of the principal amount of debt for the current year, next five years and thereafter, are as follows:
(In millions)
 
 
2017
 
$
13.3

2018
 
20.8

2019
 
6.6

2020
 
6.6

2021
 
6.6

2022
 
710.1

Thereafter
 
603.0

Aggregate maturities
 
$
1,367.0

As of September 30, 2017 , we were in compliance with all customary financial and restrictive covenants pertaining to our debt. For additional information regarding our debt please see Note 8, Financing Arrangements.

19


On August 15, 2017, the Company entered into a fourth amendment to its senior secured term loan. Under the terms of the amended senior secured term loan, the margin was reduced by 25 basis points to 200 basis points. At the Company's discretion, interest is based upon (i) a margin rate of 200 basis points plus the 1-, 2-, 3-, or 6-month LIBOR, subject to a floor of 75 basis points or (ii) a margin rate of 100 basis points plus a Prime Rate, subject to a floor of 175 basis points.
Contractual Obligations
We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans and purchase obligations. During the nine months ended September 30, 2017 , there were no material changes to these obligations as reported in our annual report on Form 10-K for the year ended December 31, 2016 .
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
In this quarterly report on Form 10-Q, statements that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance and/or sales. In particular, these include statements relating to future actions; prospective changes in raw material costs, product pricing or product demand; future performance; estimated capital expenditures; results of current and anticipated market conditions and market strategies; sales efforts; expenses; the outcome of contingencies such as legal proceedings and environmental liabilities; and financial results. Factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to:

•
effects on foreign operations due to currency fluctuations, tariffs and other political, economic and regulatory risks;
•
changes in polymer consumption growth rates and laws and regulations regarding the disposal of plastic materials where we conduct business;
•
changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online in the industries in which we participate;
•
fluctuations in raw material prices, quality and supply, and in energy prices and supply;
•
production outages or material costs associated with scheduled or unscheduled maintenance programs;
•
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 acquisition and integration, working capital reductions, cost reductions and employee productivity goals;
•
disruptions, uncertainty or volatility in the credit markets that may limit our access to capital;
•
our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;
•
information systems failures and cyberattacks; and
•
other factors described in our annual report on Form 10-K for the year ended December 31, 2016 under Item 1A, “Risk Factors.”
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. You are advised, however,

20


to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K filed with the SEC. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to exposures to market risk as reported in our annual report on Form 10-K for the year ended December 31, 2016 .
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures
PolyOne’s management, under the supervision of and with the participation of its Chief Executive Officer and its Chief Financial Officer, has evaluated the effectiveness of the design and operation of PolyOne’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report. Based upon this evaluation, PolyOne’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, its disclosure controls and procedures were effective.
Changes in internal control over financial reporting
There were no changes in PolyOne’s internal control over financial reporting during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
PART II
ITEM 1.   LEGAL PROCEEDINGS
Information regarding certain legal proceedings can be found in Note 10, Commitments and Contingencies , to the consolidated financial statements and is incorporated by reference herein.
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information regarding repurchase of shares of our common shares during the period indicated.
Period
Total Number of Shares Purchased
 
Weighted Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Program
 
Maximum Number of Shares that May Yet be Purchased Under the Program  (1)
July 1 to July 31

439,640

 
$
37.08

 
439,640

 
7,046,288

August 1 to August 31
560,414

 
35.95

 
560,414

 
6,485,874

September 1 to September 30
—

 
—

 
—

 
6,485,874

Total
1,000,054

 
$
—

 
1,000,054

 
 
(1) On August 18, 2008, we announced that our Board of Directors approved a common shares repurchase program authorizing PolyOne to purchase up to 10.0 million of its common shares. On October 11, 2011 and October 23, 2012, we further announced that our Board of Directors had increased the common shares repurchase authorization by an additional 5.3 million and 13.2 million, respectively. On May 16, 2016, we announced that we would increase our share buyback by 7.3 million to 10.0 million. As of September 30, 2017, approximately 6.5 million shares remain available for purchase under these authorizations. Purchases of common shares may be made by open market purchases or privately negotiated transactions and may be made pursuant to Rule 10b5-1 plans and accelerated share repurchases.
ITEM 6.   EXHIBITS
EXHIBIT INDEX
 
 
 
Exhibit No.
 
Exhibit Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.INS
 
XBRL Instance Document
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document



21


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
October 25, 2017
POLYONE CORPORATION
 
 
 
 
 
/s/ Bradley C. Richardson
 
 
Bradley C. Richardson
Executive Vice President, Chief Financial Officer

22
Exhibit 10.1
EXECUTION VERSION

AMENDMENT AGREEMENT NO. 4
AMENDMENT AGREEMENT NO. 4, dated as of August 15, 2017 (this “ Amendment ”), by and among POLYONE CORPORATION, an Ohio corporation (the “ Borrower ”), the other Loan Parties party hereto, the existing Lenders (the “ Existing Lenders ”) under, and as defined in, the Credit Agreement (as hereinafter defined) party hereto, CITIBANK, N.A. (“ Citibank ”), as the Administrative Agent, and the Additional Term B-3 Lender (as hereinafter defined).
RECITALS:
WHEREAS, reference is hereby made to the Credit Agreement, dated as of November 12, 2015 (as amended by Amendment Agreement No. 1, dated as of June 15, 2016, Amendment Agreement No. 2, dated as of August 3, 2016 and Amendment Agreement No. 3, dated as of January 24, 2017, and as the same may be otherwise amended, restated, amended and restated, supplemented, extended, refinanced or otherwise modified from time to time, the “ Credit Agreement ”), by and among the Borrower, the Lenders from time to time party thereto and Citibank in its capacity as Administrative Agent under the Credit Agreement (capitalized terms used in this Amendment but not defined herein shall have the meaning assigned to such terms in the Credit Agreement);
WHEREAS, on the date hereof, the Borrower, the Administrative Agent and the Lenders party hereto desire to amend the Credit Agreement pursuant to amendments authorized by Section 2.15 of the Credit Agreement to create the Term B-3 Loans (as defined in Section 1 hereto), the proceeds of which will be used to repay in full the outstanding principal amount of the Term B-2 Loans in accordance with Section 2.03(b)(ii) of the Credit Agreement;
WHEREAS, upon the effectiveness of this Amendment, each Lender that shall have executed and delivered a consent to this Amendment substantially in the form of Exhibit A hereto (an “ Amendment No. 4 Consent ”) indicating the “Cashless Settlement Option” (each, an “ Amendment No. 4 Cashless Option Lender ”) shall be deemed to have exchanged all of its Term B-2 Loans for Term B-3 Loans in the same aggregate principal amount as such Lender’s Term B-2 Loans as of the Amendment No. 4 Effective Date and prior to giving effect to this Amendment, and such Lenders shall thereafter become Term B-3 Lenders in accordance with the provisions hereof;
WHEREAS, upon the effectiveness of this Amendment, the Additional Term B-3 Lender will make Additional Term B-3 Loans (each as defined in Section 1 hereto) to the Borrower, the proceeds of which will be used by the Borrower to repay in full the outstanding principal amount of Term B-2 Loans that are not exchanged for Term B-3 Loans, as well as to prepay Term B-2 Loans from Lenders that execute and deliver an Amendment No. 4 Consent indicating the “Post-Closing Settlement Option” (each, an “ Amendment No. 4 Post-Closing Option Lender ”), and the Borrower shall pay to each Lender all accrued and unpaid interest through, but not including, the Amendment No. 4 Effective Date with respect to such Term B-2 Loans; and

-1-
 

NOW, THEREFORE, in consideration of the premises, agreements, provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. Amendment . Effective on the Amendment No. 4 Effective Date and subject to the satisfaction of the terms and conditions set forth herein:
(a)      The following definitions are hereby added to Section 1.01 of the Credit Agreement in the appropriate alphabetical location:
“ Additional Term B-3 Commitment ” means, with respect to the Additional Term B-3 Lender, the commitment of such Additional Term B-3 Lender to make Additional Term B-3 Loans on the Amendment No. 4 Effective Date, in an amount equal to $21,886,678.
“ Additional Term B-3 Lender ” means Citibank, N.A., in its capacity as a Lender of Additional Term B-3 Loans.
“ Additional Term B-3 Loan ” means a Term Loan that is made pursuant to Section 2.01(d)(ii) on the Amendment No. 4 Effective Date.
“ Amendment No. 4 ” means Amendment No. 4 to this Agreement, dated as of August 15, 2017.
“ Amendment No. 4 Cashless Option Lender ” means each Lender that has executed and delivered an Amendment No. 4 Consent indicating the “Cashless Settlement Option.”
“ Amendment No. 4 Consent ” means a consent to Amendment No. 4 substantially in the form of Exhibit A attached thereto.
“ Amendment No. 4 Effective Date ” means August 15, 2017, which is the first Business Day on which all of the conditions precedent set forth in Section 4 of Amendment No. 4 have been satisfied or waived and the Term B-3 Loans are funded or deemed funded through a cashless settlement pursuant to Section 2.01(d)(i) , as applicable.
“ Amendment No. 4 Non-Exchanging Lender ” means each Lender holding Term B-2 Loans on the Amendment No. 4 Effective Date that (i) did not execute and deliver an Amendment No. 4 Consent on or prior to the Amendment No. 4 Effective Date or (ii) is an Amendment No. 4 Post-Closing Option Lender.
“ Amendment No. 4 Post-Closing Option Lender ” means each Lender that executed and delivered an Amendment No. 4 Consent indicating the “Post-Closing Settlement Option.”
“ Term B-3 Commitment ” means the Additional Term B-3 Commitment and the Term B-3 Exchange Commitments. After giving effect to Amendment

-2-
 

No. 4, on the Amendment No. 4 Effective Date, the aggregate amount of the Term B-3 Commitments shall be $640,748,413.
“ Term B-3 Exchange Commitment ” means the agreement of a Lender to exchange its Term B-2 Loans for an equal aggregate principal amount of Term B-3 Loans on the Amendment No. 4 Effective Date, as evidenced by such Lender executing and delivering its Amendment No. 4 Consent and indicating the “Cashless Settlement Option.”
“ Term B-3 Lender ” means, collectively, (i) on the Amendment No. 4 Effective Date, each Lender that executes and delivers an Amendment No. 4 Consent and indicates the “Cashless Settlement Option” prior to the Amendment No. 4 Effective Date, (ii) on the Amendment No. 4 Effective Date, the Additional Term B-3 Lender and (iii) thereafter, each Lender with an outstanding Term B-3 Loan.
“ Term B-3 Loan ” means, collectively, (i) Term B-2 Loans exchanged for a like principal amount of Term B-3 Loans pursuant to Section 2.01(d)(i) and (ii) each Additional Term B-3 Loan made pursuant to Section 2.01(d)(ii) , in each case on the Amendment No. 4 Effective Date.
“ Term B-3 Maturity Date ” means November 12, 2022; provided , however , that if such date is not a Business Day, the Term B-3 Maturity Date shall be the next preceding Business Day.
(b)      The definition of “ Applicable Rate ” is hereby amended and restated in its entirety as follows:
“ Applicable Rate ” means (x) with respect to the Term B-3 Loans, 1.00% per annum for Base Rate Loans and 2.00% per annum for Eurodollar Rate Loans and (y) with respect to any Additional Term Loans, the Extended Term Loans and any additional Refinancing Term Loans, the applicable rates set forth in the Additional Credit Extension Amendment establishing such Additional Term Loans, the Extended Term Loans and the additional Refinancing Term Loans.
(c)      The definition of “ Class ” is hereby amended and restated in its entirety as follows:
“ Class ” means (i) with respect to any Commitment, its character as a commitment to make or otherwise fund Initial Loans, Term B-1 Loans, Term B-2 Loans, Term B-3 Loans, Additional Term Loans, Extended Term Loans and/or additional Refinancing Term Loans (whether established by way of new Commitments or by way of conversion or extension of existing Commitments or Loans) designated as a “Class” in an Additional Credit Extension Amendment and (ii) with respect to any Loans, its character as Initial Loans, Term B-1 Loans, Term B-2 Loans, Term B-3 Loans, Additional Term Loans, Extended Term Loans

-3-
 

and/or additional Refinancing Term Loans (whether made pursuant to new Commitments or by way of conversion or extension of existing Loans) designated as a “Class” in an Additional Credit Extension Amendment. Commitments or Loans that have different Maturity Dates, pricing (other than upfront fees) or other terms shall be designated separate Classes; provided that at no time shall there be more than five different Classes of Loans outstanding at any time.
(d)      The definition of “ Eurodollar Rate ” is hereby amended by replacing the reference to “0.75%” in the final proviso thereof with “0.00%”.
(e)      The definition of “ Loan Documents ” is hereby amended and restated in its entirety as follows:
“ Loan Documents ” means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral Documents, (e) any Intercreditor Agreement, (f) the Perfection Certificate, (g) the Intercompany Subordination Agreement, (h) Amendment No. 1, (i) Amendment No. 2 to this Agreement, dated as of August 3, 2016, (j) Amendment No. 3 and (k) Amendment No. 4.
(f)      The definition of “ Loans ” is hereby amended and restated in its entirety as follows:
“ Loans ” means the Initial Loans, the Term B-1 Loans, the Term B-2 Loans, the Term B-3 Loans, the Additional Term Loans, the Extended Term Loans and any additional Refinancing Term Loans.
(g)      The definition of “ Maturity Date ” is hereby amended and restated in its entirety as follows:
“ Maturity Date ” means (i) November 12, 2022 with respect to the Initial Loans, (ii) the Term B-1 Maturity Date with respect to the Term B-1 Loans, (iii) the Term B-2 Maturity Date with respect to the Term B-2 Loans, (iv) the Term B-3 Maturity Date with respect to the Term B-3 Loans and (v) with respect to any other Loans, the date specified as the maturity date for such Loans in the Additional Credit Extension Amendment related to such Loans; provided , however , that, in any such case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.
(h)      The definition of “ Repricing Transaction ” is hereby amended and restated in its entirety as follows:
“ Repricing Transaction ” shall mean (i) the incurrence by the Borrower of any Debt (a) with a Weighted Average Yield that is less than the Weighted Average Yield for the Term B-3 Loans being refinanced and (b) the proceeds of which are used substantially concurrently to prepay (or, in the case of a conversion, deemed to prepay or replace), in whole or in part, outstanding

-4-
 

principal of Term B-3 Loans, or (ii) any transaction, the primary purposes of which is the effective reduction in the Weighted Average Yield for the Term B-3 Loans. Any determination by the Administrative Agent with respect to whether a Repricing Transaction shall have occurred shall be conclusive and binding on all Lenders holding the Term B-3 Loans.
(i)      Section 2.01 of the Credit Agreement is hereby amended by adding a new clause (d) as follows at the end of such section:
(d)(i) each Amendment No. 4 Cashless Option Lender agrees to exchange its Term B-2 Loans for a like principal amount of Term B-3 Loans on the Amendment No. 4 Effective Date, (ii) the Additional Term B-3 Lender agrees to make Additional Term B-3 Loans to the Borrower on the Amendment No. 4 Effective Date in a principal amount not to exceed its Additional Term B-3 Commitment on the Amendment No. 4 Effective Date and the Borrower shall prepay all Term B-2 Loans of Amendment No. 4 Non-Exchanging Lenders with the gross proceeds of the Additional Term B-3 Loans and (iii) the Term B-3 Loans are established pursuant to Section 2.15 and Amendment No. 4 which, for the avoidance of doubt, constitutes an Additional Credit Extension Amendment.
(j)      Section 2.03(a)(ii) of the Credit Agreement is hereby amended and restated in its entirety as follows:
Notwithstanding the foregoing, in the event that, prior to the six-month anniversary of the Amendment No. 4 Effective Date, the Borrower (i) makes any prepayment of Term B-3 Loans in connection with any Repricing Transaction the primary purpose (as determined by the Borrower in good faith) of which is to decrease the Weighted Average Yield on such Term B-3 Loans or (ii) effects any amendment of this Agreement resulting in a Repricing Transaction the primary purpose (as determined by the Borrower in good faith) of which is to decrease the Weighted Average Yield on the Term B-3 Loans, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (x) in the case of clause (i), a prepayment premium of 1.00% of the principal amount of Term B-3 Loans being prepaid in connection with such Repricing Transaction and (y) in the case of clause (ii), a premium equal to 1.00% of the aggregate principal amount of the applicable Term B-3 Loans outstanding immediately prior to such amendment that are subject to an effective pricing reduction pursuant to such Repricing Transaction.
(k)      Section 2.03(b)(i)(B) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(B) with respect to any Net Cash Proceeds realized or received with respect to any Disposition, at the option of the Borrower, and so long as no Event of Default shall have occurred and be continuing, the Borrower may use all or any portion of such Net Cash Proceeds to acquire, maintain, develop, construct,

-5-
 

improve, upgrade or repair assets useful for its business (including for making Acquisitions) within (i) 365 days of the receipt of such Net Cash Proceeds or (ii) if the Borrower enters into a legally binding commitment to use such Net Cash Proceeds to acquire, maintain, develop, construct, improve, upgrade or repair assets useful for its business within 365 days after receipt of such Net Cash Proceeds, within 540 days after receipt of such Net Cash Proceeds; provided further that if any Net Cash Proceeds are not so used within the time period set forth above in this Section 2.03(b)(i)(B) or are no longer intended to be so used at any time after delivery of a notice of such election, an amount equal to any such Net Cash Proceeds shall be promptly applied to the prepayment of the Loans as set forth in this Section 2.03. In addition to the foregoing, any reinvestment of the type described in this Section 2.03(b)(i)(B), in each case made within 180 days prior to a Disposition, shall be deemed to satisfy this Section 2.03(b)(i)(B) with respect to the application of the Net Cash Proceeds from such Disposition.

(l)      Section 2.05 of the Credit Agreement is hereby amended and restated in its entirety as follows:
On each Quarterly Payment Date, beginning with the Quarterly Payment Date in September 2017, the Borrower shall repay to the Administrative Agent for the ratable account of the Lenders the principal amount of Term B-3 Loans then outstanding in an amount equal to $1,626,256.00 (which amount shall be reduced as a result of application of prepayments in accordance with the order of priority set forth in Sections 2.03(a) or (b) , as applicable). The remaining unpaid principal amount of the Term B-3 Loans and all other Obligations under or in respect of the Term B-3 Loans shall be due and payable in full, if not earlier in accordance with this Agreement, on the Maturity Date and in any event shall be in an amount equal to the aggregate principal amount of all Term B-3 Loans outstanding on such date.
(m)      Section 2.14 of the Credit Agreement is hereby amended by replacing all references to “Term B-2 Loans” therein with references to “Term B-3 Loans”.
(n)      Section 10.06(b)(i)(A) of the Credit Agreement is hereby amended and restated in its entirety as follows:
in the case of an assignment (i) in connection with the initial syndication of the Initial Loans held by Citibank, N.A., (ii) in connection with initial syndication of any Additional Term B-1 Loans held by the Additional Term B-1 Lender, (iii) of any Additional Term B-1 Loans by the Additional Term B-1 Lender to a Non-Exchanging Lender, (iv) in connection with initial syndication of any Additional Term B-2 Loans held by the Additional Term B-2 Lender, (v) of any Additional Term B-2 Loans by the Additional Term B-2 Lender to an Amendment No. 3 Non-Exchanging Lender, (vi) in connection with initial syndication of any Additional Term B-3 Loans held by the Additional Term B-3 Lender, (vii) of any Additional Term B-3 Loans by the Additional Term B-3

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Lender to an Amendment No. 4 Non-Exchanging Lender and (viii) of the entire remaining amount of the assigning Lender’s Commitment under any Facility and the Loans at the time owing to it under such Facility or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(o)      Section 10.06(b)(iii)(A) of the Credit Agreement is hereby amended and restated in its entirety as follows:
except in the case of (w) an assignment in connection with the initial syndication of the Initial Loans held by Citibank, N.A., (x) an initial assignment of the Additional Term B-1 Loans held by the Additional Term B-1 Lender either to a Non-Exchanging Lender or in connection with the initial syndication of such Additional Term B-1 Loans, (y) an initial assignment of the Additional Term B-2 Loans held by the Additional Term B-2 Lender either to an Amendment No. 3 Non-Exchanging Lender or in connection with the initial syndication of such Additional Term B-2 Loans, or (z) an initial assignment of the Additional Term B-3 Loans held by the Additional Term B-3 Lender either to an Amendment No. 4 Non-Exchanging Lender or in connection with the initial syndication of such Additional Term B-3 Loans, the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof; and
Section 2.      Waiver of Breakage Reimbursement . The Lenders party hereto waive the payment of any breakage loss or expense under Section 3.05 of the Credit Agreement in connection with the exchange of Term B-2 Loans into Term B-3 Loans.
Section 3.      Credit Agreement Governs . Except as set forth in this Amendment, the Term B-3 Loans shall otherwise be subject to the provisions, including any provisions restricting the rights, or regarding the obligations, of the Loan Parties or any provisions regarding the rights of the Lenders, of the Credit Agreement and the other Loan Documents and, from and after the Amendment No. 4 Effective Date, each reference to a “Loan” or “Loans” in the Credit Agreement, as in effect on the Amendment No. 4 Effective Date, shall be deemed to include the Term B-3 Loans, each reference to a “Commitment” shall be deemed to include the “Term B-3 Commitment” and each reference to a “Lender” or “Lenders” in the Credit Agreement shall be deemed to include the Term B-3 Lenders, and other related terms will have correlative meanings mutatis mutandis .
Section 4.      Conditions to Effectiveness . The effectiveness of this Amendment and the obligations of the Term B-3 Lenders to make the Term B-3 Loans shall become effective on the Amendment No. 4 Effective Date, which shall be the first Business Day on which the following conditions are satisfied or waived:

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(i)      the Administrative Agent (or its counsel) shall have received counterparts of this Amendment or Amendment No. 4 Consent that, when taken together, bear the signatures of (A) each Amendment No. 4 Cashless Option Lender and each Amendment No. 4 Post-Closing Option Lender, (B) the Administrative Agent, (C) the Additional Term B-3 Lender, (D) the Borrower and (E) each Guarantor;
(ii)      the Administrative Agent shall have received a notice of Borrowing for the Additional Term B-3 Loans (whether in writing or by telephone) in accordance with the Credit Agreement;
(iii)      the Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles or electronic copies (followed promptly by originals) unless otherwise specified:
(A)      a favorable opinion of Jones Day, counsel for the Loan Parties, in a form and substance reasonably satisfactory to the Administrative Agent;
(B)      a certificate from a Responsible Officer of each Loan Party dated as of the Amendment No. 4 Effective Date, and attaching the documents referred to in clause (C) below;
(C)      the Administrative Agent shall have received (i) resolutions of the Board of Directors and/or similar governing bodies of each Loan Party approving and authorizing (a) the execution, delivery and performance of the Amendment (and any agreements relating thereto) to which it is a party and (b) in the case of the Borrower, the extensions of credit contemplated hereunder, certified as of the Amendment No. 4 Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (ii) a good standing certificate as of a recent date from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation;
(D)      before and after giving effect to this Amendment and the borrowing of or exchange into the Term B-3 Loans and to the application of any proceeds therefrom (i) no Default or Event of Default shall exist and (ii) all of the representations and warranties contained in the Credit Agreement and in the other Loan Documents shall be true and correct in all material respects at such time (unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date);
(E)      the Administrative Agent shall have received from the Borrower an Officer’s Certificate certifying as to compliance with the preceding clause (D); and

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(F)      the representations and warranties of each Loan Party set forth in Section 5 below shall be true and correct in all material respects;
(iv)      the fees in the amounts previously agreed in writing by Citigroup Global Markets Inc. (the “ Amendment No. 4 Arranger ”) to be received on the Amendment No. 4 Effective Date and all reasonable and documented or invoiced out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP, as counsel to the Amendment No. 4 Arranger) incurred in connection with the transactions contemplated hereby for which invoices have been presented at least one (1) Business Day prior to the Amendment No. 4 Effective Date shall, upon the Borrowing of the Term B-3 Loans, have been, or will be substantially simultaneously, paid in full; and
(v)      the Administrative Agent shall have received a “Life-of-Loan” flood determination notice for each real property encumbered by a Mortgage and if such real property is located in a special flood hazard area, (x) a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrower and (y) evidence of insurance as required by the Credit Agreement in form and substance satisfactory to the Administrative Agent.
Section 5.      Representations and Warranties . By its execution of this Amendment, each Loan Party hereby represents and warrants to the Administrative Agent, the Term B-3 Lenders and the Lenders that the representations and warranties of each Loan Party set forth in Article V of the Credit Agreement or in any other Loan Documents are, after giving effect to this Amendment, true and correct in all material respects on and as of the Amendment No. 4 Effective Date (unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).
Section 6.      Acknowledgments and Affirmations of the Loan Parties . Each Loan Party hereby expressly acknowledges the terms of this Amendment and confirms and reaffirms, as of the date hereof, (i) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated hereby and thereby, (ii) its guarantee of the Guaranteed Obligations (including, without limitation, the Term B-3 Loans) under the Guaranty and (iii) its grant of Liens on the Collateral to secure the Obligations (including, without limitation, the Obligations with respect to the Term B-3 Loans) pursuant to the Collateral Documents; provided that, on and after the effectiveness of this Amendment, each reference in the Guaranty and in each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment. Without limiting the generality of the foregoing, the Collateral Documents to which such Loan Party is a party and all of the Collateral described therein do, and shall continue to secure, payment of all of the Obligations.
Section 7.      Amendment, Modification and Waiver . This Amendment may not be amended, modified or waived except in accordance with Section 10.01 of the Credit Agreement.

-9-
 

Section 8.      Effectiveness of This Amendment . The provisions of this Amendment shall be subject to the satisfaction of the conditions to effectiveness set forth in Section 4 of this Amendment.
Section 9.      Liens Unimpaired . After giving effect to this Amendment, neither the modification of the Credit Agreement effected pursuant to this Amendment nor the execution, delivery, performance or effectiveness of this Amendment impairs the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document. This Amendment shall not constitute a novation of the Credit Agreement or any of the Loan Documents.
Section 10.      Mortgaged Properties . Within ninety (90) days after the Amendment No. 4 Effective Date, unless waived or extended by the Administrative Agent in its sole discretion, with respect to each real property encumbered by a Mortgage, the Administrative Agent shall have received, with respect to the existing Mortgages, the following, in each case in form and substance reasonably acceptable to the Administrative Agent:
(i)      an amendment to the existing Mortgage (the “ Mortgage Amendment ”) to reflect the matters set forth in this Amendment, duly executed and acknowledged by the applicable Loan Party, and in form for recording in the recording office where such Mortgage was recorded, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof under applicable law;
(ii)      a favorable opinion, addressed to the Administrative Agent and the Secured Parties covering, among other things, the due authorization, execution, delivery and enforceability of the applicable Mortgage as amended by the Mortgage Amendment (such opinion may take assumptions for any matters addressed in the local counsel opinion originally delivered in connection with the Mortgage);
(iii)      an ALTA 11-06 endorsement to the existing title policy, which shall be in form and substance reasonably satisfactory to the Administrative Agent, along with a title search of the real property to show that as of the date of such endorsement that the real property subject to the lien of such Mortgage is free and clear of all defects and encumbrances except those Liens permitted under such Mortgage;
(iv)      evidence of payment by the Borrower of all search and examination charges escrow charges and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgage Amendment referred to above; and
(v)      such affidavits, certificates, information and instruments of indemnification as shall be required to induce the title insurance company to issue the endorsement to the title policy contemplated in this Section 10 and evidence of payment of all applicable title insurance premiums, search and examination charges, mortgage recording taxes and related charges required for the issuance of the endorsement to the title policy contemplated in this Section 10.

-10-
 

Section 11.      Other .    This Amendment, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties hereto with respect to the subject matter hereof. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of any party under, the Credit Agreement, nor alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect. It is understood and agreed that each reference in each Loan Document to the Credit Agreement, whether direct or indirect, shall hereafter be deemed to be a reference to the Credit Agreement as amended by this Amendment and that this Amendment is a Loan Document.
(i)    This Amendment may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto. This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and other Loan Documents.
(ii)    THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTIONS 10.13 AND 10.14 OF THE CREDIT AGREEMENT ARE HEREBY INCORPORATED BY REFERENCE INTO THIS AMENDMENT AND SHALL APPLY MUTATIS MUTANDIS HERETO .
(iii)    Any term or provision of this Amendment which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Amendment or affecting the validity or enforceability of any of the terms or provisions of this Amendment in any other jurisdiction. If any provision of this Amendment is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.
(iv)    This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or e-mail (including in a “.pdf” format) shall be effective as delivery of a manually executed counterpart of this Amendment.
[signature pages follow]

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IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Amendment as of the date first written above.
POLYONE CORPORATION

BY:     /s/ James N. Sloan    
         NAME: JAMES N. SLOAN    
TITLE: VICE PRESIDENT AND TREASURER

CONEXUS, LLC
NEU SPECIALTY ENGINEERED MATERIALS, LLC
POLYMER DIAGNOSTICS, INC.
COLORMATRIX GROUP, INC.
COLORMATRIX HOLDINGS, INC.
THE COLORMATRIX CORPORATION
CHROMATICS, INC.
GSDI SPECIALTY DISPERSIONS, INC.
SILCOTEC, INC.

BY:     /s/ James N. Sloan    
NAME: JAMES N. SLOAN    
TITLE: TREASURER

POLYONE LLC

BY:     /s/ James N. Sloan    
         NAME: JAMES N. SLOAN    
         TITLE: MANAGER

GLASFORMS, INC.
POLYONE INTERNATIONAL REAL ESTATE CORPORATION

BY:     /s/ James N. Sloan    
         NAME: JAMES N. SLOAN
         TITLE: PRESIDENT AND ASSISTANT TREASURER




[Amendment No. 4 Signature Page]



RUTLAND HOLDING COMPANY
RUTLAND INTERMEDIATE HOLDING COMPANY
RUTLAND PLASTICS, INC.
RUTLAND GROUP, INC.


BY:     /s/ James N. Sloan    
         Name: James N. Sloan
         Title: Treasurer

[Amendment No. 4 Signature Page]




FRANKLIN-BURLINGTON PLASTICS, INC.


BY:     /s/ Robert K. James    
         NAME: ROBERT K. JAMES
         TITLE: SECRETARY


[Amendment No. 4 Signature Page]



Consented to by:

CITIBANK, N.A. , as Administrative Agent

By:     /s/ Kirkwood Roland    
        Name: Kirkwood Roland
        Title: Managing Director & Vice President

[Amendment No. 4 Signature Page]



CITIBANK, N.A. , as Additional Term B-3 Lender

By:     /s/ Kirkwood Roland    
        Name: Kirkwood Roland
        Title: Managing Director & Vice President

[Amendment No. 4 Signature Page]


EXHIBIT A
CONSENT TO AMENDMENT NO. 4
CONSENT (this “ Consent ”) to Amendment Agreement No. 4 (“ Amendment ”) to the Credit Agreement, dated as of November 12, 2015 (as amended by Amendment Agreement No. 1, dated as of June 15, 2016, Amendment Agreement No. 2, dated as of August 3, 2016 and Amendment Agreement No. 3, dated as of January 24, 2017 and as the same may be otherwise amended, restated, amended and restated, supplemented, extended, refinanced or otherwise modified from time to time, the “ Credit Agreement ”), by and among PolyOne Corporation, an Ohio corporation (the “ Borrower ”), the lending institutions from time to time parties thereto (each a “ Lender ” and, collectively, the “ Lenders ”), and Citibank, N.A., as Administrative Agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used in this Consent but not defined in this Consent have the meanings assigned to such terms in the Credit Agreement (as amended by the Amendment).
Existing Lenders of Term B-2 Loans.   The undersigned Lender hereby irrevocably and unconditionally approves the Amendment and consents as follows (check ONE option):
Cashless Settlement Option
  c         to convert 100% of the outstanding principal amount of the Term B-2 Loans held by such Lender (or such lesser amount allocated to such Lender by the Administrative Agent) into a Term B-3 Loan in a like principal amount.
Post-Closing Settlement Option
    c       to have 100% of the outstanding principal amount of the Term B-2 Loans held by such Lender prepaid on the Amendment No. 4 Effective Date and purchase by assignment the principal amount of Term B-3 Loans committed to separately by the undersigned (or such lesser amount allocated to such Lender by the Administrative Agent).

IN WITNESS WHEREOF, the undersigned has caused this Consent to be executed and delivered by a duly authorized officer as of the ______ of August, 2017.
________________________________________,
as a Lender (type name of the legal entity)
By: _____________________________________
Name:
Title:
If a second signature is necessary:
By: _____________________________________
Name:
Title:
Name of Fund Manager (if any):__________________




 


Exhibit 31.1
CERTIFICATION
I, Robert M. Patterson, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of PolyOne Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 25, 2017
 
/s/ Robert M. Patterson
Robert M. Patterson
Chairman, President and Chief Executive Officer




Exhibit 31.2
CERTIFICATION
I, Bradley C. Richardson, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of PolyOne Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 25, 2017
 
 
/s/ Bradley C. Richardson
Bradley C. Richardson
Executive Vice President, Chief Financial Officer




Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of PolyOne Corporation (the “Company”) for the period ended September 30, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert M. Patterson, President and Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(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/ Robert M. Patterson
Robert M. Patterson
Chairman, President and Chief Executive Officer
October 25, 2017
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.




Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of PolyOne Corporation (the “Company”) for the period ended September 30, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bradley C. Richardson, Executive Vice President, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(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/ Bradley C. Richardson
Bradley C. Richardson
Executive Vice President, Chief Financial Officer
October 25, 2017
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.