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Form 8-K SCHULMAN A INC For: Jul 06

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July 6, 2015 4:54 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) July 6, 2015    

A. SCHULMAN, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
0-7459
 
34-0514850
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

3637 Ridgewood Rd, Fairlawn, Ohio
44333
(Address of principal executive offices)
(Zip Code)

(330) 666-3751
(Registrant’s telephone number, including area code)

 
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 6, 2015, A. Schulman, Inc. (the “Company”) announced earnings for the quarter ended May 31, 2015. A copy of the press release announcing these results is attached as Exhibit 99.1 hereto and incorporated by reference herein.

Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Furthermore, the information in this Item 2.02 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.


Exhibit Number
Description
 
 
99.1
Press Release, dated July 6, 2015 (filed herewith)




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 hereunto duly authorized.


 
 
 
A. Schulman, Inc.
 
 
 
 
 
 
By:
/s/ David C. Minc
 
 
 
David C. Minc
 
 
 
Executive Vice President, Chief Legal Officer and Secretary

Date: July 6, 2015




Exhibit 99.1FOR IMMEDIATE RELEASE     

A. SCHULMAN REPORTS FISCAL 2015 THIRD QUARTER RESULTS

•
Adjusted operating income growth grew by 32.1%, excluding the impact of foreign currency, in the Company’s fiscal 2015 third quarter
•
Quarterly cash flow from operating activities improved by 26% compared with the prior year period
•
On June 1, the acquisition of HGGC Citadel Plastics Holdings, Inc. (“Citadel”), for approximately $800 million was completed; the transaction:
◦
Almost doubles U.S. revenue, thus balancing Company’s geographic footprint
◦
Provides a new growth platform with industry-leading, high-margin specialty engineered composites business
◦
Is expected to be accretive in the first 12 months of ownership
◦
Will achieve approximately $25 million in synergies within 18 months
•
Fiscal 2015 adjusted net income guidance range updated to reflect the Citadel acquisition and related financing activities

AKRON, Ohio - July 6, 2015 - A. Schulman, Inc. (Nasdaq: SHLM) announced today earnings for the fiscal 2015 third quarter ended May 31, 2015.

Bernard Rzepka, president and chief executive officer, said, “I am excited to report another quarter of improved operating profitability at A. Schulman, a clear sign that our strategic initiatives to transform our Company into a specialty plastics materials leader are bearing fruit. In 2010 we set a challenging target of 6.2 cents of operating profit per pound by the end of fiscal 2015 to reflect our commitment to this transformational process. In the third quarter we achieved adjusted operating profit per pound of 6 cents, and if we held the Euro to USD currency rate at the same level that was in place when the target was established this metric would have been 7 cents. We continue to overcome the slow growth and foreign exchange environment by controlling what we can control and by focusing on our strategic initiatives, and as a result we were able to sequentially boost our gross margins across nearly every segment to deliver near record results. The steady performance improvement that we’ve accomplished this year, despite the many external challenges, gives us considerable confidence that our dedicated team will execute our strategy, deliver further profitable growth, and achieve our long term earnings goals.

“We are excited to have completed the acquisition of Citadel on June 1, and welcome their 1,200 talented associates to the A. Schulman team. This strategic acquisition greatly enhances our product scope, regional scale and efficiencies, and provides balance to our geographic footprint. With Citadel on board we are focused on leveraging the strength of the combined business, and expanding our growth potential,” added Rzepka.

Joseph Levanduski, executive vice president & chief financial officer, said, “We have put in place a new capital structure that provides flexibility, while taking advantage of the favorable conditions that currently exist in the financial markets. This structure puts us in a leverage environment that will be higher than we have experienced in the recent past, but we are confident in our ability to de-lever in a prudent and timely fashion. By combining two organizations that generate strong cash flow from operations, while driving synergies and executing our Smart Savings program, we will not only be able to de-lever to our stated goal of 2.5x net leverage within a reasonable period of time, but we will also be able to support our strategic and organic growth initiatives.”




Fiscal Third-Quarter Results
Consolidated net sales for the fiscal 2015 third quarter were $560.9 million, compared with $645.7 million in the same prior-year quarter. Of the $84.8 million change, foreign currency translation accounted for $91.4 million of the decrease. Net sales from plants acquired in 2014, which includes A. Schulman’s legacy volume consolidated during the integration process, contributed $33.9 million of revenue during the quarter. Adjusted gross margin in the third quarter as a percent of net sales improved to 16.2% compared with 14.3% in the prior-year period.

The Company reported a net loss from continuing operations of $0.34 per diluted share. On an adjusted basis, excluding financing, restructuring and acquisitions-related costs, the Company generated net income of $0.72 per diluted share.

Europe, Middle East and Africa (‘EMEA”) net sales were $326.3 million compared with $413.8 million in the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $79.7 million, net sales declined by 1.9%, primarily due to lower volumes in the engineered plastics and distribution services product families, partially offset by double digit volume growth in the masterbatch solutions product family. EMEA adjusted gross profit was $51.7 million. Excluding the negative impact of foreign currency translation of $11.3 million, adjusted gross profit increased by $6.2 million, or 10.9%, primarily due to improved product mix as well as the incremental contribution of the Specialty Plastics acquisition.

Net sales for the U.S. and Canada (“USCAN”) were $137.1 million, an increase of 4.1% in the third quarter compared with the same prior-year period. The incremental net sales were partially offset by lower net sales of $11.6 million in the specialty powders product family as a result of weaker oilfield services demand. The Specialty Plastics acquisition contributed $19.6 million of net sales growth during the quarter. USCAN adjusted gross profit was $22.1 million, a decrease of $1.7 million from the same prior-year period. The benefits of the recent Specialty Plastics acquisition and related integration were more than offset by unfavorable product mix.

Latin America’s (“LATAM”) net sales for the quarter were $44.8 million, a decrease of $4.9 million compared with the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $8.5 million, net sales increased 7.2%. LATAM adjusted gross profit was $9.3 million, an increase of $4.9 million or 108.5% from the comparable period last year primarily due to the benefits of improved product mix and operating cost.

Asia Pacific (“APAC”) net sales were $52.7 million, an increase of $2.2 million or 4.3% compared with the same prior-year period. Incremental sales from the 2014 Compco acquisition were offset by the negative impact from foreign currency translation. APAC adjusted gross profit was $7.8 million, an increase of $0.7 million compared with the prior-year period. Gross profit benefited from the positive contribution of the Compco acquisition and increased organic volume.

Working Capital/Cash Flow
Cash provided from operations was $56.3 million in the nine months ended May 31, 2015, an improvement of $21.2 million or 60.6% over the comparable prior year period. Working capital days decreased by one day to 59 days in the third quarter of fiscal 2015 versus the comparable period in the prior year, and representing an 8-day improvement from the end of the second quarter of fiscal 2015.

Capital expenditures for the nine months ended May 31, 2015 were $32.7 million compared with $24.1 million last year. These expenditures were primarily related to strategic investments in the Company's global manufacturing facilities and technical innovation and collaboration centers focused on organic growth and new product development. During the nine months ended May 31, 2015, the Company declared and paid quarterly cash dividends of $18.1 million, or $0.615 per common share consistent with its ongoing strategy of providing an attractive yield to shareholders in addition to share price appreciation.

Year-to-Date Results
Net sales for the nine months ended May 31, 2015 were $1.7 billion, compared with $1.8 billion for the same prior-year period. Of the $101.4 million decrease in net sales, foreign currency translation accounted for $177.3 million of this change. Acquisitions contributed $130.0 million in net sales during the nine month period.




Operating income was $49.7 million, a decrease of $9.4 million compared with the same prior-year period. Total operating income before certain items was $79.8 million, an increase of $7.6 million or 10.6% compared with last year. Excluding the negative impact of foreign currency translation, total operating income before certain items increased 23.5% versus the comparable period. The growth in total operating income before certain items included the contribution from recent acquisitions of $12.4 million and the strategic focus on improving operating profit per pound, partially offset by the negative impact of foreign currency translation of $9.3 million.

Citadel and Refinancing Actions
On June 1, 2015, A. Schulman completed the previously announced acquisition of HGGC Citadel Plastics Holdings, Inc. for approximately $800 million. The Company anticipates the transaction will be accretive in the first 12 months of ownership and expects to realize approximately $25 million in synergies within the next 18 months. The Company financed the acquisition, with a component of this financing occurring in the third quarter in anticipation of the June 1 close. The third quarter of fiscal 2015 included interest expense of approximately $0.4 million or a $0.01 per diluted share impact resulting from the issuance of $375 million of Senior Notes. The cash raised during the third quarter from the Senior Notes is reflected as restricted cash on the Company’s balance sheet as of May 31, 2015.

Additionally, the Company elected to restructure its capital structure in tandem with this acquisition financing. As a component of this action, on May 4, 2015, the Company issued $125 million of convertible special stock bearing a 6% dividend rate. Earnings per diluted share for the third quarter of fiscal 2015 included $0.6 million of dividends or approximately $0.02 per diluted share impact related to the convertible special stock.

Business Outlook
Rzepka stated, “Our fiscal 2015 adjusted net income guidance previously provided of $2.50 to $2.55 per diluted share represented significant growth over our fiscal 2014 results, excluding any impact from the then pending acquisition of Citadel. While the Citadel acquisition has occurred, and related financing actions taken, it is important to take note that the previous guidance range is achievable excluding the dilution expected in our fourth quarter related to these strategic long-term actions.

“We believe that the fiscal 2015 dilution related to the Citadel acquisition, including the $0.01 per diluted share negative impact on our third quarter results, will be approximately $0.05 per diluted share. Additionally, the dividend on the convertible special stock will impact the calculation of diluted earnings per share by approximately $0.08 per share in fiscal 2015, including the $0.02 impact on our third quarter results,” he noted.

“The combination of our previous guidance, updated for the fiscal 2015 dilution from the Citadel acquisition and convertible special stock dividend results in our adjusted guidance range of $2.37 to $2.42 per diluted share.

“Our team is committed to profitable growth and achieving our fiscal 2018 targets. As we integrate Citadel, and meet or exceed our $25 million synergy target, we are confident that the accretive nature of this acquisition, combined with our operating income growth, will provide a significant return to our shareholders. We look forward to reporting our fiscal 2015 results, and providing fiscal 2016 earnings guidance, at the end of October. We are focused and committed to achieving our long-term strategic goals,” Rzepka added.

Conference Call on the Web
A live Internet broadcast of A. Schulman’s conference call regarding fiscal 2015 third-quarter earnings can be accessed at 10:00 a.m. Eastern Time on Tuesday, July 7, 2015, on the Company’s website, www.aschulman.com. An archived replay of the call will also be available on the website.

Investor Presentation Materials
Senior executives of the Company may participate in meetings with analysts and investors throughout the fiscal year. The Company has posted presentation materials, portions of which may be used during such meetings, in the Investors section of its website at www.aschulman.com. The presentation will remain on the website as long as it is in use.






About A. Schulman, Inc.
A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds and resins headquartered in Akron, Ohio. Since 1928, the Company has been providing innovative solutions to meet its customers' demanding requirements. The Company's customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, sports, leisure & home, custom services and others. The Company employs approximately 5,000 people and has 60 manufacturing facilities globally. A. Schulman reported net sales of approximately $2.5 billion for the fiscal year ended August 31, 2014. Additional information about A. Schulman can be found at www.aschulman.com.

Use of Non-GAAP Financial Measures
This release includes certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include segment gross profit, SG&A expenses excluding certain items, segment operating income, operating income before certain items, net income excluding certain items, net income per diluted share excluding certain items and adjusted EBITDA, as discussed further in the Reconciliation of GAAP and Non-GAAP Financial Measures below. These non-GAAP financial measures are considered relevant to aid analysis and understanding of the Company’s results and business trends. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures, and tables included in this release reconcile each non-GAAP financial measure with the most directly comparable GAAP financial measure. The most directly comparable GAAP financial measures for these purposes are gross profit, SG&A expenses, operating income, net income and net income per diluted share. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

While the Company believes that these non-GAAP financial measures provide useful supplemental information to investors, there are very significant limitations associated with their use. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company’s competitors and may not be directly comparable to similarly titled measures of the Company’s competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

Cautionary Statements
A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments and may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and relate to future events and expectations. Forward-looking statements contain such words 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. Forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which management is unable to predict or control, that may cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:
•
worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company's major product markets or countries where the Company has operations;
•
the effectiveness of the Company's efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;
•
competitive factors, including intense price competition;
•
fluctuations in the value of currencies in areas where the Company operates;
•
volatility of prices and availability of the supply of energy and raw materials that are critical to the manufacture of the Company's products, particularly plastic resins derived from oil and natural gas;
•
changes in customer demand and requirements;



•
effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions, joint ventures and restructuring initiatives;
•
escalation in the cost of providing employee health care and retirement benefits;
•
uncertainties regarding the resolution of pending and future litigation and other claims;
•
the performance of the global automotive market as well as other markets served;
•
further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products;
•
operating problems with our information systems as a result of system security failures such as viruses, cyber-attacks or other causes;
•
the impact of the indebtedness incurred to finance the transaction;
•
integration of the business of Citadel with our existing business, including the risk that the integration will be more costly or more time consuming and complex than anticipated;
•
our ability to achieve the anticipated synergies, cost savings and other benefits from the acquisition of Citadel;
•
transaction and acquisition-related costs incurred in connection with the acquisition of Citadel and related transactions; and
•
substantial time devoted by management to the integration of the Citadel acquisition.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Company's performance are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2014, as amended and superseded in part by the Company’s Current Report on Form 8-K filed on April 27, 2015. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company's business, financial condition and results of operations.

# # #
SHLM_ALL

Contact
Jennifer K. Beeman
Vice President, Corporate Communications & Investor Relations
A. Schulman, Inc.
3637 Ridgewood Road
Fairlawn, Ohio 44333
Tel: 330-668-7346
www.aschulman.com









A. SCHULMAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three months ended May 31,

Nine months ended May 31,
 
2015

2014

2015

2014
 
Unaudited
(In thousands, except per share data)
Net sales
$
560,858

 
$
645,735

 
$
1,718,206

 
$
1,819,640

Cost of sales
470,101

 
553,771

 
1,462,531

 
1,574,269

Selling, general and administrative expenses
64,842

 
65,536

 
195,482

 
181,647

Restructuring expense
2,649

 
1,078

 
10,530

 
4,583

Asset impairment
—

 
—

 
—

 
104

Operating income
23,266

 
25,350

 
49,663

 
59,037

Interest expense
2,618

 
1,433

 
7,288

 
6,112

Bridge financing fees
18,750

 
—

 
18,750

 
—

Foreign currency transaction (gains) losses
857

 
(28
)
 
3,097

 
2,120

Other (income) expense, net
(335
)
 
(64
)
 
(900
)
 
(478
)
Gain on early extinguishment of debt
—

 
—

 
(1,290
)
 
—

Income (loss) from continuing operations before taxes
1,376

 
24,009

 
22,718

 
51,283

Provision (benefit) for U.S. and foreign income taxes
10,344

 
4,662

 
18,801

 
12,657

Income (loss) from continuing operations
(8,968
)
 
19,347

 
3,917

 
38,626

Income (loss) from discontinued operations, net of tax
(18
)
 
(23
)
 
(86
)
 
2,979

Net income (loss)
(8,986
)
 
19,324

 
3,831

 
41,605

Noncontrolling interests
(343
)
 
(233
)
 
(890
)
 
(584
)
Net income (loss) attributable to A. Schulman, Inc.
(9,329
)
 
19,091

 
2,941

 
41,021

Convertible special stock dividends
(563
)
 
—

 
(563
)
 
—

Net income (loss) available to A. Schulman, Inc. common stockholders
$
(9,892
)
 
$
19,091

 
$
2,378

 
$
41,021

 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding:
 
 
 
 
 
 
 
Basic
29,219

 
29,081

 
29,125

 
29,052

Diluted
29,219

 
29,375

 
29,547

 
29,300

 
 
 
 
 
 
 
 
Basic earnings per share available to A. Schulman, Inc. common stockholders
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.34
)
 
$
0.66

 
$
0.08

 
$
1.31

Income (loss) from discontinued operations
—

 
—

 
—

 
0.10

Net income (loss) available to A. Schulman, Inc. common stockholders
$
(0.34
)
 
$
0.66

 
$
0.08

 
$
1.41

 
 
 
 
 
 
 
 
Diluted earnings per share available to A. Schulman, Inc. common stockholders
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.34
)
 
$
0.65

 
$
0.08

 
$
1.30

Income (loss) from discontinued operations
—

 
—

 
—

 
0.10

Net income (loss) available to A. Schulman, Inc. common stockholders
$
(0.34
)
 
$
0.65

 
$
0.08

 
$
1.40

 
 
 
 
 
 
 
 
Cash dividends per common share
$
0.205

 
$
0.200

 
$
0.615

 
$
0.600







A. SCHULMAN, INC.
CONSOLIDATED BALANCE SHEETS
 
May 31,
2015
 
August 31,
2014
 
Unaudited
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
107,043

 
$
135,493

Restricted cash
378,509

 
—

Accounts receivable, less allowance for doubtful accounts of $9,537 at May 31, 2015 and $10,844 at August 31, 2014
357,688

 
384,444

Inventories
270,227

 
292,141

Prepaid expenses and other current assets
38,867

 
40,473

Total current assets
1,152,334

 
852,551

Property, plant and equipment, at cost:
 
 
 
Land and improvements
25,568

 
28,439

Buildings and leasehold improvements
143,002

 
160,858

Machinery and equipment
372,030

 
398,563

Furniture and fixtures
31,896

 
41,255

Construction in progress
23,015

 
16,718

Gross property, plant and equipment
595,511

 
645,833

Accumulated depreciation
358,979

 
391,912

Net property, plant and equipment
236,532

 
253,921

Deferred charges and other noncurrent assets
83,149

 
65,079

Goodwill
191,489

 
202,299

Intangible assets, net
119,508

 
138,634

Total assets
$
1,783,012

 
$
1,512,484

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Accounts payable
$
293,203

 
$
314,957

U.S. and foreign income taxes payable
7,350

 
6,385

Accrued payroll, taxes and related benefits
46,513

 
54,199

Other accrued liabilities
78,558

 
46,054

Short-term debt
14,290

 
31,748

Total current liabilities
439,914

 
453,343

Long-term debt
607,585

 
339,546

Pension plans
110,498

 
129,949

Deferred income taxes
20,681

 
23,826

Other long-term liabilities
25,571

 
29,369

Total liabilities
1,204,249

 
976,033

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Common stock, $1 par value, authorized - 75,000 shares, issued - 48,367 shares at May 31, 2015 and 48,185 shares at August 31, 2014
48,367

 
48,185

Convertible special stock, no par value
120,296

 
—

Additional paid-in capital
274,138

 
268,545

Accumulated other comprehensive income (loss)
(81,097
)
 
(16,691
)
Retained earnings
591,781

 
606,898

Treasury stock, at cost, 19,078 shares at May 31, 2015 and 18,973 shares at August 31, 2014
(383,148
)
 
(379,894
)
Total A. Schulman, Inc.’s stockholders’ equity
570,337

 
527,043

Noncontrolling interests
8,426

 
9,408

Total equity
578,763

 
536,451

Total liabilities and equity
$
1,783,012

 
$
1,512,484





A. SCHULMAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine months ended May 31,
 
2015
 
2014
 
Unaudited
(In thousands)
Operating from continuing and discontinued operations:
 
 
 
Net income
$
3,831

 
$
41,605

Adjustments to reconcile net income to net cash provided from (used in) operating activities:
 
 
 
Depreciation
26,481

 
24,751

Amortization
11,899

 
10,308

Bridge financing fees
18,750

 
—

Deferred tax provision (benefit)
(1,143
)
 
(3,182
)
Pension, postretirement benefits and other compensation
8,318

 
9,157

Restricted stock compensation - CEO transition costs, net of cash
4,789

 
—

Asset impairment
—

 
104

Gain on sale of assets from discontinued operations
—

 
(3,344
)
Changes in assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable
(13,610
)
 
(26,048
)
Inventories
(13,309
)
 
(15,330
)
Accounts payable
9,599

 
2,847

Income taxes
2,598

 
204

Accrued payroll and other accrued liabilities
4,776

 
260

Other assets and long-term liabilities
(6,698
)
 
(6,296
)
Net cash provided from (used in) operating activities
56,281

 
35,036

Investing from continuing and discontinued operations:
 
 
 
Expenditures for property, plant and equipment
(32,662
)
 
(24,126
)
Investment in equity investees
(12,456
)
 
—

Proceeds from the sale of assets
1,411

 
5,255

Restricted cash
(3,509
)
 
—

Business acquisitions, net of cash
(6,698
)
 
(115,624
)
Net cash provided from (used in) investing activities
(53,914
)
 
(134,495
)
Financing from continuing and discontinued operations:
 
 
 
Cash dividends paid to common stockholders
(18,058
)
 
(17,717
)
Increase (decrease) in short-term debt
(12,995
)
 
3,747

Borrowings on long-term debt
255,196

 
703,141

Repayments on long-term debt including current portion
(353,647
)
 
(609,501
)
Payment of debt issuance costs
—

 
(1,782
)
Noncontrolling interests' contributions (distributions)
(1,750
)
 
—

Issuances of stock, common and treasury
231

 
403

Issuances of convertible special stock, net
120,296

 
—

Redemptions of common stock
(4,999
)
 
(361
)
Purchases of treasury stock
(3,335
)
 
(1,116
)
Net cash provided from (used in) financing activities
(19,061
)
 
76,814

Effect of exchange rate changes on cash
(11,756
)
 
(605
)
Net increase (decrease) in cash and cash equivalents
(28,450
)
 
(23,250
)
Cash and cash equivalents at beginning of period
135,493

 
134,054

Cash and cash equivalents at end of period
$
107,043

 
$
110,804

 
 
 
 
Non-cash Activity:
Senior Notes funding held in restricted cash
$
375,000

 
$
—

Unpaid debt issuance costs
$
11,116

 
$
—




A. SCHULMAN, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
Three months ended May 31, 2015
 
Cost of Sales
 
Gross Margin
 
SG&A
 
Restructuring Expense
 
Operating Income
 
Operating Income per Pound
 
Non Operating (Income) Expense
 
Income Tax Expense (benefit)
 
Net Income Available to A. Schulman, Inc. Common Stockholders
 
Diluted EPS
 
 
(In thousands, except for %'s, per pound and per share data)
As reported
 
$
470,101

 
16.2
%
 
$
64,842

 
$
2,649

 
$
23,266

 
$
0.043

 
$
21,890

 
$
10,344

 
$
(9,892
)
 
$
(0.34
)
Certain items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related interest expenses (1)
 
—

 
 
 
—

 
—

 
—

 
 
 
(19,134
)
 
—

 
19,134

 
0.66

Accelerated depreciation (5)
 
(29
)
 
 
 
—

 
—

 
29

 
 
 
—

 
—

 
29

 
—

Costs related to acquisitions and integrations (2)
 
(59
)
 
 
 
(3,531
)
 
—

 
3,590

 
 
 
—

 
29

 
3,561

 
0.12

Restructuring and related costs (3)
 
(49
)
 
 
 
(3,239
)
 
(2,649
)
 
5,937

 
 
 
—

 
1,144

 
4,793

 
0.16

Tax benefits (charges) (8)
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
(3,559
)
 
3,559

 
0.12

Loss (income) from discontinued operations
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
—

 
18

 
—

Total certain items
 
(137
)
 
—
%
 
(6,770
)
 
(2,649
)
 
9,556

 
0.017

 
(19,134
)
 
(2,386
)
 
31,094

 
1.06

As Adjusted
 
$
469,964

 
16.2
%
 
$
58,072

 
$
—

 
$
32,822

 
$
0.060

 
$
2,756

 
$
7,958

 
$
21,202

 
$
0.72

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenue
 
 
 
 
 
10.4
%
 
 
 
5.9
%
 
 
 
 
 
 
 
3.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended May 31, 2014
 
Cost of Sales
 
Gross Margin
 
SG&A
 
Restructuring Expense
 
Operating Income
 
Operating Income per Pound
 
Non Operating (Income) Expense
 
Income Tax Expense (benefit)
 
Net Income Available to A. Schulman, Inc. Common Stockholders
 
Diluted EPS
 
 
(In thousands, except for %'s, per pound and per share data)
As reported
 
$
553,771

 
14.2
%
 
$
65,536

 
$
1,078

 
$
25,350

 
$
0.046

 
$
1,341

 
$
4,662

 
$
19,091

 
$
0.65

Certain items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs related to acquisitions and integrations (2)
 
—

 
 
 
(888
)
 
—

 
888

 
 
 
—

 
16

 
872

 
0.03

Restructuring and related costs (3)
 
(149
)
 
 
 
(933
)
 
(1,078
)
 
2,160

 
 
 
—

 
320

 
1,840

 
0.06

Loss (income) from discontinued operations
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
—

 
23

 
—

Total certain items
 
(149
)
 
0.1
%
 
(1,821
)
 
(1,078
)
 
3,048

 
0.006

 
—

 
336

 
2,735

 
0.09

As Adjusted
 
$
553,622

 
14.3
%
 
$
63,715

 
$
—

 
$
28,398

 
$
0.052

 
$
1,341

 
$
4,998

 
$
21,826

 
$
0.74

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenue
 
 
 
 
 
9.9
%
 
 
 
4.4
%
 
 
 
 
 
 
 
3.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18.5
%
 
 
 
 



Nine months ended May 31, 2015
 
Cost of Sales
 
Gross Margin
 
SG&A
 
Restructuring Expense
 
Operating Income
 
Operating Income per Pound
 
Non Operating (Income) Expense
 
Income Tax Expense (benefit)
 
Net Income Available to A. Schulman, Inc. Common Stockholders
 
Diluted EPS
 
 
(In thousands, except for %'s, per pound and per share data)
As reported
 
$
1,462,531

 
14.9
%
 
$
195,482

 
$
10,530

 
$
49,663

 
$
0.031

 
$
26,945

 
$
18,801

 
$
2,378

 
$
0.08

Certain items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related interest expenses (1)
 
—

 
 
 
—

 
—

 
—

 
 
 
(19,134
)
 
—

 
19,134

 
0.65

Accelerated depreciation (5)
 
(327
)
 
 
 
—

 
—

 
327

 
 
 
—

 
—

 
327

 
0.01

Costs related to acquisitions and integrations (2)
 
(174
)
 
 
 
(7,798
)
 
—

 
7,972

 
 
 
—

 
307

 
7,665

 
0.26

Restructuring and related costs (3)
 
(347
)
 
 
 
(4,426
)
 
(10,530
)
 
15,303

 
 
 
—

 
3,146

 
12,157

 
0.41

CEO transition costs (4)
 
—

 
 
 
(6,167
)
 
—

 
6,167

 
 
 
—

 
—

 
6,167

 
0.21

Inventory step-up (6)
 
(341
)
 
 
 
—

 
—

 
341

 
 
 
—

 
102

 
239

 
0.01

Gain on early extinguishment of debt (7)
 
—

 
 
 
—

 
—

 
—

 
 
 
1,290

 
(428
)
 
(862
)
 
(0.03
)
Tax benefits (charges) (8)
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
(3,841
)
 
3,841

 
0.13

Loss (income) from discontinued operations
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
—

 
86

 
—

Total certain items
 
(1,189
)
 
—
%
 
(18,391
)
 
(10,530
)
 
30,110

 
0.019

 
(17,844
)
 
(714
)
 
48,754

 
1.65

As Adjusted
 
$
1,461,342

 
14.9
%
 
$
177,091

 
$
—

 
$
79,773

 
$
0.050

 
$
9,101

 
$
18,087

 
$
51,132

 
$
1.73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenue
 
 
 
 
 
10.3
%
 
 
 
4.6
%
 
 
 
 
 
 
 
3.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended May 31, 2014
 
Cost of Sales
 
Gross Margin
 
SG&A
 
Restructuring Expense
 
Operating Income
 
Operating Income per Pound
 
Non Operating (Income) Expense
 
Income Tax Expense (benefit)
 
Net Income Available to A. Schulman, Inc. Common Stockholders
 
Diluted EPS
 
 
(In thousands, except for %'s, per pound and per share data)
As reported
 
$
1,574,269

 
13.5
%
 
$
181,647

 
$
4,583

 
$
59,037

 
$
0.038

 
$
7,754

 
$
12,657

 
$
41,021

 
$
1.40

Certain items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs related to acquisitions and integrations (2)
 
(34
)
 
 
 
(3,343
)
 
—

 
3,377

 
 
 
(8
)
 
141

 
3,244

 
0.11

Restructuring and related costs (3)
 
(649
)
 
 
 
(3,090
)
 
(4,583
)
 
8,322

 
 
 
(290
)
 
920

 
7,692

 
0.26

Asset write-downs (5)
 
(108
)
 
 
 
(104
)
 
—

 
212

 
 
 
—

 
34

 
178

 
0.01

Inventory step-up (6)
 
(1,199
)
 
 
 
—

 
—

 
1,199

 
 
 
—

 
98

 
1,101

 
0.04

Tax benefits (charges) (8)
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
427

 
(427
)
 
(0.02
)
Loss (income) from discontinued operations
 
—

 
 
 
—

 
—

 
—

 
 
 
—

 
—

 
(2,979
)
 
(0.10
)
Total certain items
 
(1,990
)
 
0.1
%
 
(6,537
)
 
(4,583
)
 
13,110

 
0.009

 
(298
)
 
1,620

 
8,809

 
0.30

As Adjusted
 
$
1,572,279

 
13.6
%
 
$
175,110

 
$
—

 
$
72,147

 
$
0.047

 
$
7,457

 
$
14,277

 
$
49,830

 
$
1.70

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenue
 
 
 
 
 
9.6
%
 
 
 
4.0
%
 
 
 
 
 
 
 
2.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17.9
%
 
 
 
 





1 - Primarily relates to $18.8 million in bridge financing fees.
2 - Costs related to acquisitions and integrations primarily include third party professional, legal, IT and other expenses associated with successful and unsuccessful full or partial acquisition and divestiture/dissolution transactions, as well as certain employee-related expenses such as travel, one-time bonuses and post-acquisition severance separate from a formal restructuring plan.
3 - Restructuring and related costs include items such as employee severance charges, lease termination charges, curtailment gains/losses, other employee termination costs and charges related to the reorganization of the legal entity structure.
4 - CEO transition costs represent a one-time charge for the modification and accelerated vesting upon retirement of the outstanding equity compensation awards granted to Joseph M. Gingo in 2013 and 2014.
5 - Asset write-downs primarily relate to asset impairments and accelerated depreciation.
6 - Inventory step-up costs represent the amortization of adjustments to fair value of inventory acquired for acquisition purchase accounting.
7 - Represents a pre-tax net gain of $1.3 million on the early extinguishment of debt.
8 - Tax benefits (charges) represent the Company's quarterly non-GAAP tax based on the overall estimated annual non-GAAP effective tax rates.




A. SCHULMAN, INC.
ADJUSTED EBITDA RECONCILIATION

 
Three months ended May 31,
 
Nine months ended May 31,
 
2015
 
2014
 
2015
 
2014
 
Unaudited
(In thousands)
 
 
 
 
 
 
 
 
Net income available to A. Schulman, Inc. common stockholders, as adjusted (1)
$
21,202

 
$
21,826

 
$
51,132

 
$
49,830

Interest expense
2,618

 
1,433

 
7,288

 
6,112

Provision for U.S. and foreign income taxes, as adjusted
7,958

 
4,998

 
18,087

 
14,277

Depreciation
8,491

 
8,332

 
26,481

 
24,751

Amortization
3,628

 
3,639

 
11,899

 
10,308

EBITDA, as adjusted
$
43,897

 
$
40,228

 
$
114,887

 
$
105,278

 
 
 
 
 
 
 
 

1 - For a list of certain items to reconcile between "net income available to A. Schulman, Inc. common stockholders" and "net income available to A. Schulman, Inc. common stockholders, as adjusted", refer to the reconciliation of GAAP and non-GAAP financial measures.





A. SCHULMAN, INC.
SUPPLEMENTAL SEGMENT INFORMATION
 
 
Net Sales
 
Pounds Sold
 
 
Three months ended May 31,
EMEA
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
30,475

 
$
39,505

 
$
(9,030
)
 
(22.9
)%
 
12,473

 
13,114

 
(641
)
 
(4.9
)%
Masterbatch Solutions
 
105,706

 
122,450

 
(16,744
)
 
(13.7
)%
 
105,809

 
94,228

 
11,581

 
12.3
 %
Engineered Plastics
 
95,210

 
123,634

 
(28,424
)
 
(23.0
)%
 
71,923

 
77,649

 
(5,726
)
 
(7.4
)%
Specialty Powders
 
37,903

 
47,533

 
(9,630
)
 
(20.3
)%
 
46,997

 
47,193

 
(196
)
 
(0.4
)%
Distribution Services
 
56,961

 
80,666

 
(23,705
)
 
(29.4
)%
 
85,689

 
96,600

 
(10,911
)
 
(11.3
)%
Total EMEA
 
$
326,255

 
$
413,788

 
$
(87,533
)
 
(21.2
)%
 
322,891

 
328,784

 
(5,893
)
 
(1.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
Pounds Sold
 
 
Three months ended May 31,
USCAN
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
11,209

 
$
8,817

 
$
2,392

 
27.1
 %
 
3,925

 
2,619

 
1,306

 
49.9
 %
Masterbatch Solutions
 
37,077

 
34,369

 
2,708

 
7.9
 %
 
51,659

 
53,248

 
(1,589
)
 
(3.0
)%
Engineered Plastics
 
48,172

 
34,617

 
13,555

 
39.2
 %
 
31,897

 
21,248

 
10,649

 
50.1
 %
Specialty Powders
 
22,914

 
34,552

 
(11,638
)
 
(33.7
)%
 
33,563

 
44,139

 
(10,576
)
 
(24.0
)%
Distribution Services
 
17,708

 
19,290

 
(1,582
)
 
(8.2
)%
 
21,437

 
19,735

 
1,702

 
8.6
 %
Total USCAN
 
$
137,080

 
$
131,645

 
$
5,435

 
4.1
 %
 
142,481

 
140,989

 
1,492

 
1.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
Pounds Sold
 
 
Three months ended May 31,
LATAM
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
1,054

 
$
1,014

 
$
40

 
3.9
 %
 
395

 
502

 
(107
)
 
(21.3
)%
Masterbatch Solutions
 
23,769

 
24,182

 
(413
)
 
(1.7
)%
 
16,789

 
15,648

 
1,141

 
7.3
 %
Engineered Plastics
 
11,889

 
13,607

 
(1,718
)
 
(12.6
)%
 
9,196

 
9,614

 
(418
)
 
(4.3
)%
Specialty Powders
 
8,109

 
10,951

 
(2,842
)
 
(26.0
)%
 
7,177

 
9,270

 
(2,093
)
 
(22.6
)%
Distribution Services
 
—

 
—

 
—

 
N/A

 
—

 
—

 
—

 
N/A

Total LATAM
 
$
44,821

 
$
49,754

 
$
(4,933
)
 
(9.9
)%
 
33,557

 
35,034

 
(1,477
)
 
(4.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
Pounds Sold
 
 
Three months ended May 31,
APAC
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
2,567

 
$
876

 
$
1,691

 
193.0
 %
 
1,615

 
738

 
877

 
118.8
 %
Masterbatch Solutions
 
21,375

 
21,272

 
103

 
0.5
 %
 
22,331

 
19,651

 
2,680

 
13.6
 %
Engineered Plastics
 
26,454

 
23,803

 
2,651

 
11.1
 %
 
19,479

 
15,788

 
3,691

 
23.4
 %
Specialty Powders
 
2,207

 
4,085

 
(1,878
)
 
(46.0
)%
 
2,617

 
3,651

 
(1,034
)
 
(28.3
)%
Distribution Services
 
99

 
512

 
(413
)
 
(80.7
)%
 
135

 
619

 
(484
)
 
(78.2
)%
Total APAC
 
$
52,702

 
$
50,548

 
$
2,154

 
4.3
 %
 
46,177

 
40,447

 
5,730

 
14.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
Net Sales
 
Pounds Sold
 
 
Nine months ended May 31,
EMEA
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
93,168

 
$
111,490

 
$
(18,322
)
 
(16.4
)%
 
34,752

 
37,086

 
(2,334
)
 
(6.3
)%
Masterbatch Solutions
 
321,885

 
336,977

 
(15,092
)
 
(4.5
)%
 
296,207

 
262,785

 
33,422

 
12.7
 %
Engineered Plastics
 
294,179

 
360,983

 
(66,804
)
 
(18.5
)%
 
207,104

 
222,411

 
(15,307
)
 
(6.9
)%
Specialty Powders
 
114,637

 
137,941

 
(23,304
)
 
(16.9
)%
 
134,043

 
136,660

 
(2,617
)
 
(1.9
)%
Distribution Services
 
188,723

 
241,883

 
(53,160
)
 
(22.0
)%
 
276,101

 
288,278

 
(12,177
)
 
(4.2
)%
Total EMEA
 
$
1,012,592

 
$
1,189,274

 
$
(176,682
)
 
(14.9
)%
 
948,207

 
947,220

 
987

 
0.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
Pounds Sold
 
 
Nine months ended May 31,
USCAN
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
31,524

 
$
24,374

 
$
7,150

 
29.3
 %
 
10,742

 
7,647

 
3,095

 
40.5
 %
Masterbatch Solutions
 
119,514

 
95,464

 
24,050

 
25.2
 %
 
160,352

 
145,813

 
14,539

 
10.0
 %
Engineered Plastics
 
140,840

 
91,215

 
49,625

 
54.4
 %
 
89,950

 
58,648

 
31,302

 
53.4
 %
Specialty Powders
 
71,574

 
77,780

 
(6,206
)
 
(8.0
)%
 
111,383

 
119,384

 
(8,001
)
 
(6.7
)%
Distribution Services
 
51,769

 
47,444

 
4,325

 
9.1
 %
 
56,487

 
49,845

 
6,642

 
13.3
 %
Total USCAN
 
$
415,221

 
$
336,277

 
$
78,944

 
23.5
 %
 
428,914

 
381,337

 
47,577

 
12.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
Pounds Sold
 
 
Nine months ended May 31,
LATAM
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
3,457

 
$
2,905

 
$
552

 
19.0
 %
 
1,347

 
1,271

 
76

 
6.0
 %
Masterbatch Solutions
 
65,971

 
70,628

 
(4,657
)
 
(6.6
)%
 
46,316

 
46,272

 
44

 
0.1
 %
Engineered Plastics
 
34,857

 
38,116

 
(3,259
)
 
(8.6
)%
 
25,775

 
26,894

 
(1,119
)
 
(4.2
)%
Specialty Powders
 
27,850

 
37,099

 
(9,249
)
 
(24.9
)%
 
23,456

 
31,717

 
(8,261
)
 
(26.0
)%
Distribution Services
 
—

 
—

 
—

 
N/A

 
—

 
—

 
—

 
N/A

Total LATAM
 
$
132,135

 
$
148,748

 
$
(16,613
)
 
(11.2
)%
 
96,894

 
106,154

 
(9,260
)
 
(8.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
Pounds Sold
 
 
Nine months ended May 31,
APAC
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
8,500

 
$
2,149

 
$
6,351

 
295.5
 %
 
5,809

 
1,700

 
4,109

 
241.7
 %
Masterbatch Solutions
 
61,038

 
61,681

 
(643
)
 
(1.0
)%
 
60,900

 
55,126

 
5,774

 
10.5
 %
Engineered Plastics
 
79,196

 
69,085

 
10,111

 
14.6
 %
 
55,809

 
45,381

 
10,428

 
23.0
 %
Specialty Powders
 
8,661

 
11,111

 
(2,450
)
 
(22.1
)%
 
9,084

 
10,074

 
(990
)
 
(9.8
)%
Distribution Services
 
863

 
1,315

 
(452
)
 
(34.4
)%
 
1,062

 
1,622

 
(560
)
 
(34.5
)%
Total APAC
 
$
158,258

 
$
145,341

 
$
12,917

 
8.9
 %
 
132,664

 
113,903

 
18,761

 
16.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
Net Sales
 
Pounds Sold
 
 
Three months ended May 31,
Consolidated
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
45,305

 
$
50,212

 
$
(4,907
)
 
(9.8
)%
 
18,408

 
16,973

 
1,435

 
8.5
 %
Masterbatch Solutions
 
187,927

 
202,273

 
(14,346
)
 
(7.1
)%
 
196,588

 
182,775

 
13,813

 
7.6
 %
Engineered Plastics
 
181,725

 
195,661

 
(13,936
)
 
(7.1
)%
 
132,495

 
124,299

 
8,196

 
6.6
 %
Specialty Powders
 
71,133

 
97,121

 
(25,988
)
 
(26.8
)%
 
90,354

 
104,253

 
(13,899
)
 
(13.3
)%
Distribution Services
 
74,768

 
100,468

 
(25,700
)
 
(25.6
)%
 
107,261

 
116,954

 
(9,693
)
 
(8.3
)%
Total Consolidated
 
$
560,858

 
$
645,735

 
$
(84,877
)
 
(13.1
)%
 
545,106

 
545,254

 
(148
)
 
—
 %

 
 
Net Sales
 
Pounds Sold
 
 
Nine months ended May 31,
Consolidated
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
Lbs. Change
 
% Change
 
 
(In thousands, except for %'s)
Custom Performance Color
 
$
136,649

 
$
140,918

 
$
(4,269
)
 
(3.0
)%
 
52,650

 
47,704

 
4,946

 
10.4
 %
Masterbatch Solutions
 
568,408

 
564,750

 
3,658

 
0.6
 %
 
563,775

 
509,996

 
53,779

 
10.5
 %
Engineered Plastics
 
549,072

 
559,399

 
(10,327
)
 
(1.8
)%
 
378,638

 
353,334

 
25,304

 
7.2
 %
Specialty Powders
 
222,722

 
263,931

 
(41,209
)
 
(15.6
)%
 
277,966

 
297,835

 
(19,869
)
 
(6.7
)%
Distribution Services
 
241,355

 
290,642

 
(49,287
)
 
(17.0
)%
 
333,650

 
339,745

 
(6,095
)
 
(1.8
)%
Total Consolidated
 
$
1,718,206

 
$
1,819,640

 
$
(101,434
)
 
(5.6
)%
 
1,606,679

 
1,548,614

 
58,065

 
3.7
 %





A. SCHULMAN, INC.
SUPPLEMENTAL SEGMENT INFORMATION
(continued)
 
 
Three months ended May 31,
 
Nine months ended May 31,
 
 
2015
 
2014
 
2015
 
2014
 
 
Unaudited
(In thousands, except for %'s)
Segment gross profit
 
 
 
 
 
 
 
 
EMEA
 
$
51,695

 
$
56,798

 
$
145,908

 
$
156,237

USCAN
 
22,104

 
23,791

 
66,478

 
50,911

LATAM
 
9,324

 
4,472

 
22,075

 
20,011

APAC
 
7,771

 
7,052

 
22,403

 
20,202

     Total segment gross profit
 
90,894

 
92,113

 
256,864

 
247,361

Inventory step-up
 
—

 
—

 
(341
)
 
(1,199
)
Accelerated depreciation, restructuring and related costs
 
(78
)
 
(149
)
 
(674
)
 
(791
)
Costs related to acquisitions and integrations
 
(59
)
 
—

 
(174
)
 
—

     Total gross profit
 
$
90,757

 
$
91,964

 
$
255,675

 
$
245,371

 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
EMEA
 
$
24,716

 
$
23,565

 
$
61,032

 
$
61,537

USCAN
 
7,982

 
11,906

 
25,299

 
18,603

LATAM
 
4,654

 
(649
)
 
7,531

 
6,286

APAC
 
3,972

 
3,328

 
10,903

 
9,870

Total segment operating income
 
41,324

 
38,150

 
104,765

 
96,296

Corporate
 
(8,502
)
 
(9,752
)
 
(24,992
)
 
(24,149
)
Costs related to acquisitions and integrations
 
(3,590
)
 
(888
)
 
(7,972
)
 
(3,377
)
Restructuring and related costs
 
(5,937
)
 
(2,160
)
 
(15,303
)
 
(8,322
)
CEO transition costs
 
—

 
—

 
(6,167
)
 
—

Asset impairment
 
—

 
—

 
—

 
(104
)
Accelerated depreciation
 
(29
)
 
—

 
(327
)
 
(108
)
Inventory step-up
 
—

 
—

 
(341
)
 
(1,199
)
Operating income
 
23,266

 
25,350

 
49,663

 
59,037

Interest expense
 
(2,618
)
 
(1,433
)
 
(7,288
)
 
(6,112
)
Bridge financing fees
 
(18,750
)
 
—

 
(18,750
)
 
—

Foreign currency transaction gains (losses)
 
(857
)
 
28

 
(3,097
)
 
(2,120
)
Other income (expense), net
 
335

 
64

 
900

 
478

Gain on early extinguishment of debt
 
—

 
—

 
1,290

 
—

Income from continuing operations before taxes
 
$
1,376

 
$
24,009

 
$
22,718

 
$
51,283

 
 
 
 
 
 
 
 
 
Capacity utilization
 
 
 
 
 
 
 
 
EMEA
 
90
%
 
87
%
 
84
%
 
84
%
USCAN
 
61
%
 
67
%
 
63
%
 
62
%
LATAM
 
76
%
 
68
%
 
71
%
 
76
%
APAC
 
67
%
 
73
%
 
65
%
 
71
%
Worldwide
 
76
%
 
77
%
 
73
%
 
74
%



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