Form 10-K SCHULMAN A INC For: Aug 31

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October 22, 2014 4:17 PM EDT

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)



�	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August�31, 2014



�	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from �� to ��.

Commission File No. 0-7459

A. SCHULMAN, INC.

(Exact Name of Registrant as Specified in its Charter)

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Delaware (State or Other Jurisdiction of Incorporation or Organization)	�	34-0514850 (I.R.S. Employer Identification No.)
3637 Ridgewood Road, Fairlawn, Ohio (Address of Principal Executive Offices)	�	44333 (ZIP Code)

Registrants telephone number, including area code: (330)�666-3751

Securities Registered Pursuant to Section�12(b) of the Act:

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Title of each class	�	Name of each exchange on which registered
Common Stock, $1.00 Par Value	�	The NASDAQ Stock Market LLC

Securities Registered Pursuant to Section�12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.��Yes�� No��

Indicate by check mark if the registrant is not required to file reports pursuant to Section�13 or Section�15(d) of the Exchange Act.��Yes��No��

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.��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 during the preceding 12�months (or for such shorter period that the registrant was required to submit and post such files).��Yes��No��

Indicate by check mark if disclosure of delinquent filers pursuant to Item�405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.��

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b of the Exchange Act. (Check one):

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Large accelerated�filer��	Accelerated�filer��o	Non-accelerated�filer��	Smaller�reporting�company��
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).��Yes�� No��

As of February�28, 2014, the aggregate market value of the registrants common stock held by non-affiliates of the registrant was approximately $979,000,000 based on the closing sale price as reported on the NASDAQ Global Select Market.

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date 29,143,212 shares of common stock, $1.00 par value, at October�15, 2014.

DOCUMENTS INCORPORATED BY REFERENCE



Document	Part�of�Form�10-K In�Which� Incorporated
Portions of the registrants proxy statement for the 2014 Annual Meeting of Stockholders	III

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TABLE OF CONTENTS

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PART I
ITEM�1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	10
ITEM 1B.	UNRESOLVED STAFF COMMENTS	18
ITEM 2.	PROPERTIES	18
ITEM 3.	LEGAL PROCEEDINGS	19
ITEM 4.	MINE SAFETY DISCLOSURES	20
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PART II
ITEM 5.	MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20
ITEM 6.	SELECTED FINANCIAL DATA	21
ITEM 7.	MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	44
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES	82
ITEM�9A.	CONTROLS AND PROCEDURES	82
ITEM�9B.	OTHER INFORMATION	84
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PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	85
ITEM 11.	EXECUTIVE COMPENSATION	85
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	85
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	86
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	86
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PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	87
SIGNATURES		91

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PART��I



ITEM 1.	BUSINESS

A. Schulman, Inc. (the Company, A. Schulman, we, our and us) was founded as an Ohio corporation in 1928 by Alex Schulman in Akron, Ohio as a processor of rubber compounds. During those early days, when Akron, Ohio was known as the rubber capital of the world, Mr.�Schulman saw opportunity in taking existing rubber products and compounding new formulations to meet under-served market needs. As the newly emerging science of polymers began to make market strides in the early 1950s, A. Schulman was there to advance the possibilities of the technology, leveraging its compounding expertise into developing solutions to meet exact customer application requirements. The Company later expanded into Europe, Latin America and Asia, establishing manufacturing plants, innovation centers and sales offices in numerous countries. The Company changed its state of incorporation to Delaware in 1969 and went public in 1972. Today, A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds, resins, and services and provides innovative solutions to meet its customers' demanding requirements through proprietary and custom-formulated products. The Company's customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, custom services, and sports, home & leisure. Recent acquisitions have strengthened the Company's core businesses serving its custom performance colors, masterbatch solutions, engineered plastics and specialty powders customers.

The Company leverages the following competitive advantages to develop and maintain strong customer relationships and drive continued profitable growth:

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"	The Company's sales and marketing teams partner with customers to understand needs and provide tailored solutions that enhance success through its broad and diverse product line.

The Company has a solid reputation in product innovation and application development driven by its market knowledge and insights, customer relationships and research and development capabilities. To further enhance these capabilities, the Company continues to leverage its four global innovation centers located in Belgium, Germany, Mexico and the United States. These centers combine research and innovation in plastics engineering and application technology with specific product developments. They manage the development of collaborative business projects through networks comprised of customers, suppliers, and in some instances, academic institutions and research centers. In addition, the Company also has over a dozen application development centers located within existing facilities. The Company has a long history of successful application development and these dedicated resources further the Companys advancement with customers and new markets.


"	The Company's procurement teams are critical to its success as its global purchasing leverage strategy positions the Company to formulate and manufacture products competitively.


"	The Company has manufacturing facilities worldwide allowing it to be an ideal partner by quickly servicing target markets for its local and global customers.


"	The Company's strong financial position provides the resources to effectively grow in the current economic environment as well as aggressively pursue growth through acquisitions.

The Company has successfully created a strong presence in the global market place, providing new and enhanced product solutions that result in a product portfolio that is strongly positioned in the markets we serve. With world-class innovation centers and manufacturing facilities that host application development centers strategically positioned around the world, A.�Schulman is able to anticipate and respond to changing market and customer needs. Accordingly, the Company's collaboration between development and production is especially important to the Company and its customers, as a quick response to meet their needs is critical. Of course, a quick response means little without quality. A. Schulman has a long and proud history of consistently supplying products of the highest standards, which is evidenced by the Company's numerous certifications and accreditations as well as supplier awards.

Business Segments

The Company considers its operating structure and the types of information subject to regular review by its President and Chief Executive Officer (CEO), who is the Chief Operating Decision Maker (CODM), to identify reportable segments. The CODM makes decisions, assesses performance and allocates resources by the following regions, which are also the Company's reportable segments: Europe, Middle East and Africa (EMEA), the Americas, and Asia Pacific (APAC).

The CODM uses net sales to unaffiliated customers, segment gross profit, and segment operating income in order to make decisions, assess performance and allocate resources to each segment. Segment operating income does not include items such as interest income or expense, other income or expense, foreign currency transaction gains or losses, restructuring and related costs

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including accelerated depreciation, asset impairments, or costs and inventory step-up charges related to business acquisitions. Corporate expenses include the compensation of certain personnel, certain audit expenses, Board of Directors related costs, certain insurance costs, costs associated with being a publicly traded entity and other miscellaneous legal and professional fees.

Information regarding the amount of net sales to unaffiliated customers, segment operating income and identifiable assets attributable to each of the Company's business segments for the last three years is set forth in the Notes to Consolidated Financial Statements of the Company appearing in ITEM�8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report on Form 10-K.

Recent Business Transactions

On September 2, 2013, the Company acquired the Perrite Group ("Perrite"), a thermoplastics manufacturing business with operations in Malaysia, the United Kingdom and France for $51.3 million, net of cash. Perrite has manufactured and distributed thermoplastic compounds for the household, electrical, automotive and industrial markets for more than 35 years, offering a broad portfolio of standard and custom compounded polymer products. Perrite employs approximately 200 people among the three facilities. Additionally, Perrite holds leading positions in attractive target markets such as electronics, appliances and niche automotive, and offers well-established and respected brands to global customers while maintaining a strong track record of profitable growth. The Perrite acquisition provides the opportunity to expand the custom performance colors and engineered plastics business in the APAC region and the manufacturing facility in Malaysia will enhance the Company's ability to serve key customers in the region, as well as globally. Additionally, the acquisition provides an opportunity to leverage the Company's broader portfolio of products through our successful color and niche engineered plastics business in the EMEA region.

On December 2, 2013, the Company completed the acquisition of Network Polymers, Inc., a niche engineered plastics compounding business with operations in Akron, Ohio for $49.2 million. The acquisition expands A. Schulman's product offerings with a broad spectrum of custom resins and alloys to meet customer-specific product design and manufacturing requirements. The acquisition also provides greater penetration in key markets such as building and construction, agricultural products, and lawn and garden, as well as the opportunity to leverage existing A. Schulman products and technology to a wider customer base.

On December 31, 2013 the Company acquired Prime Colorants, a leading manufacturer of custom color and additive concentrates in Franklin, Tennessee for $15.1 million. The acquisition grew the Company's custom color capabilities in the U.S., as well as further transformed the U.S. operations from commodity products to a business focused on niche products and services. This acquisition also provides an entry point for A. Schulman in the liquid color market.

On July 1, 2014, the Company acquired the majority of the assets of the specialty plastics business from Ferro Corporation for $91 million. The acquisition strategically expands the Company's geographic footprint with four facilities located in the U.S. and one facility located in Spain, diversifies the Company's product mix and strengthens its position in a broad range of attractive product markets. Additionally, the business offers a broad portfolio of proprietary products and recognized brand names serving a wide range of end markets including packaging, transportation, construction, appliances and agriculture. Approximately 300 employees support the five acquired facilities.

On September 2, 2014, the Company acquired Compco Pty. Ltd., a manufacturer of specialty masterbatches and custom colors in Melbourne, Australia for $6.7 million. The acquisition expands the capabilities of the Company's APAC operations and marks its first entry into the growing pipe and highly regulated wire and cable markets. This acquisition also provides additional growth into key markets that include packaging.

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Product Families

Globally, the Company operates in five product families: (1) custom performance colors, (2) masterbatch solutions, (3) engineered plastics, (4) specialty powders and (5) distribution services. The Company offers tolling services to customers primarily in the specialty powders product family.

Custom Performance Colors

Custom Performance Colors ("CPC") offers powdered or pelletized color concentrates custom-designed to enhance virtually all thermoplastic resins. These concentrates are available separately, or can be combined with additives as a complete package providing additional functionality such as weather resistance. In many instances, the Companys products are designed to deliver multiple attributes to meet customer needs. During fiscal 2014, the CPC product family provided 7% of the Company's consolidated net sales.

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The Company's expansive offering of color solutions includes:


"	A wide spectrum of standard and customized colors;


"	Organic and inorganic pigments;


"	High chroma colors in translucent or opaque formats; and


"	Special effects including but not limited to: metallic, pearlescent (shimmer), thermochromatic (heat sensitive), photochromatic (light sensitive), fluorescent, phosphorescent (glow-in-the-dark) and interference (color shift) technologies.

The Company first began expanding color concentrates through its European acquisition of Deltaplast in 2007. Since then, the Company aggressively grew its global network of custom performance colors capabilities through acquisitions as well as strategic investment in key markets. CPC provides customers with a solution-based approach driven by technical understanding, responsive service, and consistent quality to address evolving market needs. The Companys color business engages with customers at every stage of their product cycle, from color selection to product delivery and ongoing support. Color products are suitable for numerous processes, such as injection molding, blow molding, compression molding, profile extrusion, blown film, cast film, oriented film, rotational molding, sheet and thermoforming, among others.

The Companys color concentrates excel in many of the same markets as its masterbatch solutions product family (food packaging, industrial packaging, consumer products, etc.) and its engineered plastics product family, which provides an excellent platform for cross utilization of technology. They have become a trusted source for many of the worlds largest consumer products companies, providing aesthetic solutions for a wide range of bottles, caps and closures.

Masterbatch Solutions

Masterbatches (also referred to as concentrates) are often the key ingredient in a successful application product formula. These highly concentrated compounds are combined with polymer resins by the Companys customers at the point-of-process to provide a unique property portfolio that meets needed performance criteria for a given product application. During fiscal 2014, the masterbatch solutions product family provided 33% of the Company's consolidated net sales.

The Company first began supplying masterbatches through its application development center in Bornem, Belgium in the early 1960s. Since then, the Company has expanded its presence in masterbatch globally. Recent acquisitions have broadened the Companys product offerings in the high-quality masterbatch markets, provided capacity, flexibility and efficiency to advance our growth in targeted markets, and reduced dependence on large volume, commodity-type automotive applications. The Companys manufacturing facilities and innovation centers are strategically positioned around the world to ensure that orders are shipped within specification and on time.

The Company's masterbatch solutions product offerings include:


"	Concentrates designed to improve the performance, appearance, and processing of plastics for intended applications such as white color, absorptive, anti-fog, anti-static and carbon black, among others;


"	Additive solutions to enhance performance such as antibacterial, flame retardants, ultra-violet (UV), anti-static, barrier (optimal heat and light transmittance), antioxidants (protection of foods) and processing (foaming agents, slip, process aids, release agents, and anti-blocking) properties; and


"	Application solutions that have a reduced impact on the environment such as those that minimize the use of plastics or incorporate the use of either recycled plastics or renewable-based polymers.

Film for agricultural and packaging applications continues to be a primary focus for these products. The Companys film additives for food packaging are internationally renowned for their performance and cost benefits, and are commonly used in biaxially oriented films which are critical for protective packaging of shelf ready foods, snack foods, candy, as well as various consumer products and industrial applications. The Company also provides solutions for agriculture films, offering additives that provide UV control, barrier, and anti-fog solutions among others.

Many of the Companys masterbatch product offerings contain proprietary technology that plays a key role in providing application solutions that have a reduced impact on the environment. The Companys technical team works with customers to design and develop products that assist customers in meeting their sustainability goals. The Company continues to advance its additive technologies to support its customer development of more sustainable solutions from packaging to durable goods.

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Engineered Plastics

Engineered plastics provide unique performance characteristics by combining high-performance polymer resins with various modifiers, reinforcements, additives and pigments, which result in a compound tailored to meet stringent customer specifications for durable applications. The Companys products are often developed to replace metal or other traditional materials. During fiscal 2014, the engineered plastics product family provided 31% of the Company's consolidated net sales.

The Companys engineered plastics products typically comprise 100% of the plastics material used by its customers in their end products. The Company began formulating a variety of compounds in the early 1950s, meeting the needs of a newly forming plastics industry and has evolved into its current market leader position.

The result of this innovation forms a pipeline of products being produced in A. Schulman facilities around the world. The Company offers an extensive portfolio based on a variety of polymers within the engineered plastics product family, allowing customers to tailor solutions that meet their exact performance needs.

The Company focuses on the ability to develop enhanced polymer solutions that provide:

"Structural integrity such as strength, stiffness, low distortion, among others;

"Multi-component blends that include polyolefins, nylons, polyesters and elastomers, among others; and


"	Formulating know-how with fiber reinforcements such as glass and carbon, nano-reinforcements, flame retardants, impact modifiers, and UV stabilization.

The engineered plastics product family uses the Company's state-of-the-art innovation centers to drive technology and innovation. These centers are highly focused on developing niche solutions that meet the needs of existing and developing markets.

The Companys engineered plastics product family supplies numerous markets and applications. Durable consumer products and industrial applications are core markets where continued growth is planned, including such applications as building and construction materials, household appliances, electrical connectors, power tools, recreational items, and lawn and garden equipment. The Company also supplies materials for major, high-end, or specified automotive applications, working closely with major global manufacturers.

Specialty Powders

Specialty powders includes size reduction and resins for the injection, blow molding and rotational molding markets. During fiscal 2014, the specialty powders product family provided 14% of the Company's consolidated net sales.

Size reduction, or grinding, is a major component of the Companys specialty powders product family and is a specialized process whereby polymer resins produced by chemical manufacturers in pellet form are reduced to a specified powder size and form, depending on the customers specifications. The majority of the Companys size reduction services involve ambient grinding, a mechanical attrition milling process suitable for products which do not require ultrafine particle size and are not highly heat sensitive. The Company also provides jet milling services used for products requiring very fine particle size such as additives for printing ink, adhesives, waxes and cosmetics. Jet milling uses high velocity compressed air to reduce materials to sizes between 0.5 and 150 microns. For materials with specific thermal characteristics (such as heat sensitive materials) or which are soft and difficult to manage, the Company provides cryogenic milling services, which use liquid nitrogen to chill materials to extremely low temperatures to enable grinding and classification. The Company's cryogenic and jet milling capabilities are very unique in the grinding industry and give the Company a competitive advantage that customers value.

The Company supplies customers in the rotational molding market, while utilizing its compounding expertise and global footprint to add value in specialty powders (which includes custom size reduction service applications such as powder coatings, oil field services, cosmetic applications and additive manufacturing/3D printing). Specialty powders products for the injection, blow molding and rotational molding markets include compounded resin powders, such as gas and storage tanks, kayaks, playground slides, and other large applications.

The Company's specialty powders product portfolio includes:

"Compound colors offered in customized colors and specialty effects;

"Compounds and cross-linkable resins developed specifically for the rotational molding process; and

"Specialty powders for the oil and gas industry.

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Distribution Services

As a distributor, the Company works with leading global polymer producers to assist in servicing market segments that are not easily accessible to these producers, or does not fit into these producers' core customer segment or supply chain. As a merchant, the Company buys, repackages into A. Schulman labeled packaging, and resells producer grade polymers to our customers, providing sales, marketing and technical services where required. During fiscal 2014, the distribution services product family provided 15% of the Company's consolidated net sales.

A. Schulman leverages its global supply relationships to fill customer needs around the world for a variety of olefinic and non-olefinic resins, as well as selected styrenics and engineering plastics. This consumption of large quantities of base resins also helps support the customers of our other product families by providing purchasing leverage to help keep costs down and providing reliable, convenient access to bulk resin supplies to customers.

The Companys distribution services offerings include specialty polymers for all processing types, including injection molding, blow molding, thermoforming and film and sheet extruding. Offering various compliant grades, the Company has products that meet the most stringent of needs while allowing customers to optimize their cost-to-performance ratio. Most grades can be supplied in carton, bulk truck and rail car quantities, thus helping customers manage inventory levels and their working capital. The Companys products are supplied into every major plastics market segment such as packaging, mobility, building and construction, electronics and electrical, and agriculture, among others.

Non Wholly-owned Subsidiaries

A. Schulman International, Inc. is a wholly-owned subsidiary which owns a 65% interest in PT. A.�Schulman Plastics, Indonesia, an Indonesian joint venture. This joint venture has a manufacturing facility in East Java, Indonesia focusing on the masterbatch solutions and custom performance colors product families. The remaining 35% interest in this joint venture is owned by P.T. Prima Polycon Indah.

A. Schulman International, Inc. also owns a 63% interest in Surplast S.A., an Argentinean venture, with Alta Plastica S.A., one of the largest distributors of resins in Argentina. Surplast has one manufacturing facility in Buenos Aires, Argentina focusing on rotational molded specialty powders.

Prior to December 31, 2011, ASI Investments Holding Co., a wholly-owned subsidiary, owned a 70% partnership interest in The Sunprene Company in Bellevue, Ohio. Effective December 31, 2011, the Companys partnership with Mitsubishi Chemical MKV Company was dissolved by a vote of the partners.

Employee Information

As of August�31, 2014, the Company had approximately 3,900 employees. Approximately 45% of all of the Companys employees are represented by various unions under collective bargaining agreements, primarily outside of the United States.

Research and Development

The research and development of new products and the improvement of existing products are important for the Company to continuously improve its product offerings. New product innovation is a term used to describe the new product development process, beginning with the generation of new innovative ideas through their development into new products which are commercialized into the market. The Company has teams of dedicated individuals with varied backgrounds to lead its new product innovation, putting an aggressive global focus on the Companys research and development activities. New product innovation is a key component of the Company's organic growth strategy.

Research and development expenses totaled $16.9 million, $8.7 million, and $6.1 million in fiscal years 2014, 2013, and 2012, respectively, related to certain activities performed by manufacturing facilities, innovation and application centers, and analytical laboratories that contribute to the development and significant enhancement of the Company's current and new products and processes. The $8.2 million increase in research and development expense in fiscal 2014 is further evidence of the Company's commitment to innovation and belief that research and development is important to our organic growth strategy. Fiscal 2014 investments included improvements in our color matching capabilities within our custom performance colors product family, development of solutions for the mobility market within our engineered plastics product family, product development at manufacturing facilities acquired during the year and an increase in personnel dedicated to research and development efforts.

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The Company focuses on its organic growth strategy which is aimed at increasing the Company's ability to leverage new and existing products into new geographic markets, further explore adjacent markets and improve the profitability of the Company's product mix. Creating new and collaborative innovation models is key to the growth strategy; therefore, the Company has four global innovation centers located in Belgium, Germany, Mexico and the United States that create faster, focused solutions for customers and partners. The expansion of these critical relationships helps to align the Company's global technology and product development efforts with the current requirements and emerging needs of its customers and end-markets. The Company also has over a dozen application development centers located within its manufacturing facilities that assist in the discovery of new applications for existing technologies.

The Company utilizes a stage gate process globally for new product and technology development initiatives. A stage gate development process is internationally recognized as the most effective and efficient method to conduct new product development. The stage gate method is a development process that manages risk in new product development, so the Company's valuable resources of people and capital are invested to improve the success rate and accelerate the time to market for the Company's products. The stage gate process can be thought of as a blueprint that maps out the development process and helps to manage risk by the use of gate reviews at critical investment points in the project. Gate reviews ensure that only those projects with the highest probability of success are afforded investment resources during the product development process.

Compliance with Environmental Regulations

The Company believes that its stewardship responsibilities include attention to environmental concerns. The Company addresses its environmental responsibilities on a global basis and senior management regularly reports the Companys performance to the Board of Directors. Management believes that the Company is in material compliance with the national, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, and such compliance activity does not currently have a material effect upon the capital expenditures, results of operations, financial position or competitive position of the Company.

Dependence on Customers

During the year ended August�31, 2014, the Companys five largest customers accounted in the aggregate for less than 10% of net sales. In managements opinion, the Company is not dependent upon any single customer and the loss of any one customer would not have a materially adverse effect on the Companys business.

Availability of Raw Materials

The raw materials required by the Company are available from a number of major plastic resin producers or other suppliers. The Company does not distinguish between raw materials and finished goods because numerous products that can be sold as finished goods are also used as raw materials in the production of other inventory items. The principal materials used in the manufacture of the Companys proprietary plastic compounds are polypropylene, polyethylene, polystyrene, nylon and titanium dioxide. For additional information on the availability of raw materials, see ITEM�1A, RISK FACTORS, Shortages or price increases of raw materials and energy costs could adversely affect operating results and financial condition, of this Annual Report on Form�10-K.

Working Capital Practices

The nature of the Companys business does not require significant amounts of inventories to be held to meet rapid delivery requirements of its products or services or ensure the Company of a continuous allotment of materials from suppliers. The Companys manufacturing processes are generally performed with a short response time. The Company generally offers payment terms to its customers that factor in credit risk and industry practices. For additional information relating to the Companys working capital items, see ITEM�7, MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, of this Annual Report on Form 10-K.

Competition

The Companys business is highly competitive. The Company competes with producers of basic plastic resins, many of which also operate compounding plants, as well as other independent plastic compounders. The producers of basic plastic resins generally are large producers of petroleum and chemicals, which are much larger than the Company. Some of these producers compete with the Company principally in such competitors own respective local market areas, while other producers compete with the Company on a global basis.

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The Company also competes with other merchants and distributors of plastic resins and other products. Limited information is available to the Company as to the extent of its competitors sales and earnings in respect of these activities, but management believes that the Company has a fraction of the highly-fragmented distribution market.

The principal methods of competition in plastics manufacturing are innovation and development of proprietary formulations, application and processing know-how, price, availability of inventory, quality, quick delivery and service. The principal methods of competition for merchant and distribution activities are price, availability of inventory and service. Management believes it has strong financial capabilities, excellent supplier relationships and the ability to provide quality plastic compounds at competitive prices. In addition, A. Schulman has a strong global footprint which allows the Company to effectively serve multi-national customers globally while maintaining a solid local presence to quickly address changing markets, shorten delivery cycles and local customer demands.

Intellectual Property

The Company uses various trademarks and tradenames in its business. These trademarks and tradenames protect certain names of the Companys products and are significant to the extent they provide a certain amount of goodwill and name recognition in the industry. The Company also holds patents in various parts of the world for certain of its products. Additionally, the Company utilizes proprietary formulas in its product manufacturing and benefits from intangible assets acquired through acquisitions. Collectively, the Company's intellectual property, including other intangible assets, contribute to profitability.

International Operations

The Company has facilities and offices positioned throughout the world. Financial information related to the Companys geographic areas for the three-year period ended August�31, 2014 appears in Note 13 to the consolidated financial statements in ITEM�8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report on Form 10-K and is incorporated herein by reference. For additional information regarding the risks related to the Companys foreign operations, see ITEM�1A, RISK FACTORS, and ITEM�7A, QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, of this Annual Report on Form 10-K.

Executive Officers of the Company

The age, business experience during the past five years and offices held by each of the Companys executive officers are reported below. The Companys Amended and Restated By-Laws provide that officers shall hold office until their successors are elected and qualified.

Joseph M. Gingo:��Age 69; Chairman, President and Chief Executive Officer of the Company since January 2008. Previously, Mr.�Gingo served as Executive Vice President, Quality Systems and Chief Technical Officer for The Goodyear Tire�& Rubber Company since 2003. Prior to that, Mr.�Gingo held numerous leadership roles in both technology and business positions in his 41-year tenure at The Goodyear Tire�& Rubber Company. On June 19, 2014, the Companys Board of Directors nominated Mr. Gingo to continue as Chairman of the Board after his retirement as President and Chief Executive Officer. The change is part of the Companys succession planning process, and the nomination of Mr. Gingo as Chairman of the Board is subject to his re-election as a director by shareholders at the Companys annual meeting in December 2014.

Bernard Rzepka:��Age 54; Executive Vice President and Chief Operating Officer of the Company since April 2013. Mr. Rzepka formerly served as the General Manager and Chief Operating Officer EMEA since September 2008 and has been with the Company since 1992, serving in a variety of technology and commercial management positions. On June 19, 2014, the Companys Board of Directors appointed Mr. Rzepka as President and Chief Executive Officer of the Company, effective January 2015.

Joseph J. Levanduski:��Age 52; Vice President and Chief Financial Officer of the Company since June 2011. Previously, Mr.�Levanduski was with Hawk Corporation for approximately 15 years where he held various financial roles before becoming Senior Vice President and Chief Financial Officer. Mr. Levanduski also serves as the Company's Principal Accounting Officer.

Derek Bristow:��Age 54; Vice President and General Manager APAC since September 2010. Mr.�Bristow formerly was General Manager, of ICO Australasia, for ICO, Inc., which was acquired by the Company in April�2010. Mr.�Bristow had been with ICO, Inc. since 1998, serving in a variety of management positions.

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Heinrich Lingnau: Age 52; Vice President and General Manager EMEA since April 2013. Previously, Mr. Lingnau was the regional business leader for the masterbatch product family and held various management-level positions with the Company's EMEA operations since 1999.

Timothy J. McDannold: Age 52; Treasurer and Director of Risk Management of the Company since April 2013. Previously, Mr. McDannold served in various global management roles, including Vice President and Treasurer, and Vice President of Global Business Services for Diebold, Incorporated since 1988.

Donald B. McMillan:��Age 54; Vice President and Chief Information Officer of the Company since July 2013. Previously, Mr. McMillan served as the Chief Accounting Officer and Corporate Controller since April 2011, Corporate Controller since April 2006 and held various financial positions since joining the Company in 1996.

Gary A. Miller:��Age 68; Vice President, Global Supply Chain and Chief Procurement Officer of the Company since April 2008. Previously, Mr.�Miller served as Vice President and Chief Procurement Officer for The Goodyear Tire�& Rubber Company since 1992.

David C. Minc:�� Age 65; Vice President, Chief Legal Officer and Secretary of the Company since May 2008. Previously, Mr.�Minc served as General Counsel, Americas, for Flexsys America L.P. since 1996.

Patricia M. Mishic:��Age 49; Vice President and Chief Marketing Officer of the Company since January 2012. Previously, Ms.�Mishic served as Global Director of Marketing Excellence for Dow Chemical Company's Performance Materials and Performance Plastics divisions and held a variety of global business development, marketing and business management positions since 2000.

Gustavo Perez:��Age 50; Vice President and General Manager Americas since August 2010. Mr. Perez most recently served as the General Manager of Masterbatch for the Companys North America operations and has been with the Company since 1995, serving in a variety of management positions.

Stacy R. Walter: Age 52; Vice President, Internal Audit of the Company since April 2013. Ms. Walter has served as the Director of Internal Audit for the Company since June 2006 and Sarbanes-Oxley Audit Manager since joining the Company in 2005.

Kim L. Whiteman:��Age 57; Vice President, Global Human Resources of the Company since June 2009. Previously, Mr.�Whiteman held various human resource management roles at The Goodyear Tire and Rubber Company since 1979.

Available Information

The Company is subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), and, in accordance with these requirements, files annual, quarterly and other reports, as well as proxy statements and other information with the Securities and Exchange Commission (the Commission) relating to its business and financial results. Investors may inspect a copy of such reports, proxy statements and other information the Company files with the Commission on its website at http://www.sec.gov.

The Companys internet address is www.aschulman.com. The Companys Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, together with any amendments to those reports filed or furnished pursuant to the Exchange Act, will be made available on its website as soon as reasonably practicable after they are electronically filed with or furnished to the Commission.�



ITEM 1A.	RISK FACTORS

The following are certain risk factors that could materially and adversely affect our business, results of operations, cash flows and/or financial condition. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. The risks that are discussed below are not the only ones we face. If any of the following risks occur, our business, results of operations, cash flows and/or financial condition could be adversely affected.

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Risks Relating to Economic and Market Conditions

Our sales, profitability, operating results and cash flows are sensitive to global economic conditions, financial markets and cyclicality, and could be adversely affected during economic downturns or financial market instability.

The business of our customers can be cyclical in nature and sensitive to changes in general economic conditions. Deterioration in our customers financial position can adversely affect our sales and profitability. Historically, downturns in general economic conditions have resulted in diminished product demand, excess manufacturing capacity and lower average selling prices, and we may experience similar problems in the future. Recent global economic conditions have caused, among other things, significant reductions in available capital and liquidity from banks and other providers of credit, substantial reductions and fluctuations in equity and currency values worldwide, and concerns that the worldwide economy may enter into a prolonged recessionary or slow growth period, each of which may materially adversely affect our customers access to capital. Turbulent global economic conditions, even without a sustained downturn, may limit our customers access to capital or otherwise impair their creditworthiness, which could inhibit their ability to purchase our products or affect their ability to pay for products that they have already purchased from us. Such challenges can affect our ability to collect customer receivables on the intended terms and amounts. In addition, downturns in our customers industries, even during periods of strong general economic conditions, could adversely affect our sales, profitability, operating results and cash flows.

Although no one customer currently accounts for a significant portion of our sales, we are exposed to certain industries such as automotive, appliances and construction. Economic challenges which more acutely affect such particular industries may directly reduce demand for our products by customers within such industries. Bankruptcies by major original equipment manufacturers (OEM) could have a cascading effect on a group of our customers who supply to OEMs, directly affecting their ability to pay.

Similar to our customers situation, turbulent global economic conditions, even without a sustained downturn, may materially adversely affect our suppliers access to capital and liquidity with which they maintain their inventories, production levels and product quality, causing them to raise prices or lower production levels. An increase in prices could adversely affect our profitability, operating results and cash flows.

The future of the global economic and financial condition is difficult to forecast and mitigate, and therefore the impact on our operating results for a particular period is difficult to predict. Any of the foregoing effects could have a material adverse effect on our business, results of operations and cash flows.

Negative global financial or credit market conditions may significantly affect our access to capital, cost of capital and ability to meet liquidity needs.

Unstable conditions in the financial or credit markets or sustained poor financial performance may adversely impact our ability to access credit already arranged and the availability and cost of credit to us in the future. A volatile credit market may limit our ability to replace maturing credit facilities and access the capital necessary to grow and maintain our business. Accordingly, we may be required to enter into credit agreements that have terms that we do not prefer, which could require us to pay unattractive interest rates. This could increase our interest expense, decrease our profitability and significantly reduce our financial flexibility. There can be no assurances that government responses to disruptions in the financial markets will stabilize markets or increase liquidity and the availability of credit. Long term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until markets stabilize or until alternative credit arrangements or other funding sources can be arranged. Such measures could include deferring, eliminating or reducing capital expenditures, dividends, share repurchases or other discretionary uses of cash. Overall, our results of operations, financial condition and cash flows could be materially adversely affected by disruptions in the credit markets.

Shortages or price increases of raw materials and energy costs could adversely affect operating results and financial condition.

We purchase various plastic resins to produce our proprietary plastic compounds. These resins, derived from petroleum or natural gas, have on occasion been subject to periods of short supply as well as rapid and significant movements in price. These fluctuations in supply and price may be caused or intensified by a number of factors, including inclement weather, political instability or hostilities in oil-producing countries, other force majeure events affecting the production facilities of our suppliers, and more general supply and demand changes. We may not be able to obtain sufficient raw materials or pass on increases in the prices of raw materials and energy to our customers. Such shortages or higher petroleum or natural gas costs could lead to declining margins, operating results and financial conditions.

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An unanticipated increase in demand may result in the inability to meet customer needs and loss of sales.

If we experience an unforeseen increase in demand, we may have difficulty meeting our supply obligations to our customers due to limited capacity or delays from our suppliers. We may lose sales as a result of not meeting the demands of our customers in the timeline required and our results of operations may be adversely affected. We may be required to change suppliers or may need to outsource our operations where possible and, if so, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with our high quality standards and with all applicable regulations and guidelines.

The occurrence or threat of extraordinary events, including natural disasters, contagious diseases, political disruptions, domestic and international terrorist attacks and acts of war, could disrupt commerce and significantly decrease demand for our products.

Extraordinary events, including natural disasters, contagious diseases, political disruptions, domestic and international terrorist attacks and acts of war could adversely affect the economy generally, our business and operations specifically, and the demand for our products. The occurrence of extraordinary events cannot be predicted and their occurrence could adversely affect our results.

Risks Related to Our Business

Our substantial international operations subject us to risks of doing business in foreign countries, which could adversely affect our business, financial condition and results of operations.

We conduct a majority of our business outside of the United States. We expect sales from international markets to continue to represent a significant portion of our net sales. Accordingly, our business is subject to risks related to the differing legal, political, social and regulatory requirements and economic conditions of many jurisdictions. Risks inherent in international operations include, but are not limited to, the following:�


"	fluctuations in exchange rates may affect product demand and profitability due to volatility in U.S. dollars of products and services we provide in international markets where payment for our products and services is made in the local currency;


"	potential disruption that could be caused with the partial or complete reconfiguration of the European Union;


"	intellectual property rights may be more difficult to enforce;


"	foreign countries may impose additional withholding taxes or otherwise tax our foreign income, or adopt other restrictions on foreign trade or investment, including currency exchange controls;


"	unexpected adverse changes in foreign laws or regulatory requirements may occur;


"	agreements may be difficult to enforce and receivables difficult to collect;


"	compliance with a variety of foreign laws and regulations may be burdensome;


"	unexpected adverse changes may occur in export duties, quotas and tariffs and difficulties in obtaining export licenses;


"	general economic conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries and economic downturns in any particular country or region may have cascading adverse impacts on our business, financial conditions and results of operations in other countries or regions;


"	foreign operations may experience staffing difficulties and labor disputes;


"	foreign governments may nationalize private enterprises;


"	foreign governments may enact tax law changes to increase revenue;


"	our business and profitability in a particular country could be affected by political or economic repercussions on a domestic, country specific or global level from terrorist activities and the response to such activities, such as the imposition of economic sanctions or other measures; and


"	unanticipated geopolitical and other events, such as economic sanctions, could adversely impact our business and profitability in the country being sanctioned and retaliatory actions by such countries may also adversely impact the countries imposing the sanctions which could result in a write-down of some of our international investments.

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Our continued success as a global supplier will depend, in part, upon our ability to succeed in differing legal, regulatory, economic, social and political conditions by developing, implementing and maintaining policies and strategies that are effective in each location where we and our joint ventures do business.

Although the majority of our international business operations are currently in regions where the risk level and established legal systems are considered reasonable, our international business also includes projects in countries where governmental corruption has been known to exist. We emphasize compliance with the law and have policies, procedures and certain ongoing training of employees with regard to business ethics and key legal requirements such as the U.S. Foreign Corrupt Practices Act (FCPA); however, there can be no certain assurances that our employees or outside agents will adhere to our code of business conduct, other internal policies or the FCPA.�Additionally, in such high risk regions, our competitors who may not be subject to U.S.�laws and regulations, such as the FCPA, can gain competitive advantages over us by securing business awards, licenses or other preferential treatment in those jurisdictions using methods that U.S.�law and regulations prohibit us from using. We may be subject to competitive disadvantages to the extent that our competitors are able to secure business, licenses or other preferential treatment by making payments to government officials and others in positions of influence. If we fail to enforce our policies and procedures properly or maintain internal accounting practices to accurately record our international transactions, we may be subject to regulatory sanctions. Violations of these laws could result in significant monetary or criminal penalties for potential violations of the FCPA or other laws or regulations which, in turn, could negatively affect our results of operations, financial position, cash flows, damage our reputation and, therefore, our ability to do business.

Our manufacturing operations are subject to hazards and other risks associated with polymer processing production and the related storage and transportation of inventories, products and wastes.

Our manufacturing operations are subject to the potential hazards and risks associated with polymer production and the related storage and transportation of inventories and wastes, including explosions, fires, inclement weather, natural disasters, mechanical failure, unscheduled downtime, transportation interruptions, remediation, chemical spills, discharges or releases of toxic or hazardous substances or gases and other risks. These hazards can cause personal injury and loss of life, severe damage to, or destruction of, property and equipment and environmental contamination. In addition, the occurrence of material operating problems at our facilities due to any of these hazards may diminish our ability to meet our output goals. These hazards, and their consequences, could have a material adverse effect on our operations as a whole, including our results of operations and cash flows, both during and after the period of operational difficulties.

We face competition from other polymer companies, which could adversely affect our sales and financial condition.

We operate in a highly competitive industry, competing against a number of domestic and foreign polymer producers on a variety of key criteria, including product performance and quality, product price, pricing strategies, product availability and security of supply, responsiveness of product development in cooperation with customers and customer service. Some of our competitors are larger than we are and may have greater financial resources. These competitors may also be able to maintain significantly greater operating and financial flexibility than we do. As a result, these competitors may be better able to withstand changes in conditions within our industry, changes in the prices of raw materials and energy and in general economic conditions. Additionally, competitors pricing decisions could compel us to decrease our prices, which could adversely affect our margins and profitability. Our ability to maintain or increase our profitability is, and will continue to be, dependent upon our ability to offset decreases in the prices and margins of our products by improving production efficiency and volume, shifting to higher margin products and improving existing products through innovation and research and development. If we are unable to do so or to otherwise maintain our competitive position, we could lose market share to our competitors.

We expect that our competitors will continue to develop and introduce new and enhanced products, which could cause a decline in the market acceptance of our products. In addition, our competitors could lower prices which would cause a reduction in the selling prices of some of our products as a result of intensified price competition. Competitive pressures can also result in the loss of major customers. An inability to compete successfully could have an adverse effect on our results of operations, financial condition and cash flows. We may also experience increased competition from companies that offer products based on alternative technologies and processes that may be more competitive or better in price or performance, causing us to lose customers which would result in a decline in our sales volume and earnings.

We are dependent upon good relationships with our various suppliers, vendors and distributors.

We rely upon good relationships with a number of different suppliers, vendors and distributors. If our relationships with these parties were to deteriorate or if a number of these parties should elect to discontinue doing business with us, our business operations could be adversely affected.

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If we fail to develop and commercialize new products, our business operations would be adversely affected.

Successful development and commercialization of new products is a key driver in our anticipated growth plans. Also, on an ongoing basis a certain portion of our products slowly become obsolete or commoditized and, therefore, new products are necessary to maintain current volumes. The development and commercialization of new products requires significant investments in research and development, production, and marketing. The successful production and commercialization of these products is uncertain as is the acceptance of the new products in the marketplace. If we fail to successfully develop and commercialize new products, or if customers decline to purchase the new products, we will not be able to recover our development investment and the growth prospects and overall demand for our products will be adversely affected.

Increased indebtedness could restrict growth and adversely affect our financial health.

As of August�31, 2014, our debt on a consolidated basis was $371.3 million. A significant increase in the level of indebtedness could have significant consequences. For example, it could:�


"	limit our ability to satisfy current debt obligations;


"	increase interest expense due to the change in interest rates and increase in debt levels;


"	require us to dedicate a significant portion of cash flow to repay principal and pay interest on the debt, reducing the amount of funds that would be available to finance operations and other business activities;


"	impair our ability to obtain financing in the future for working capital, capital expenditures, research and development, or acquisitions;


"	make us vulnerable to economic downturns or adverse developments in our business or markets; and


"	place us at a competitive disadvantage compared to competitors with less debt.

We expect to pay expenses and to pay principal and interest on current and future debt from cash provided by operating activities. Therefore, our ability to meet these payment obligations will depend on future financial performance and regional cash availability, which is subject in part to numerous economic, business and financial factors beyond our control. If our cash flow and capital resources are insufficient to fund our debt obligations, we may be forced to reduce or delay expansion plans and capital expenditures, limit payment of dividends, sell material assets or operations, obtain additional capital or restructure our debt.

An impairment of goodwill would negatively impact our financial results.

At least annually, we perform an impairment test for goodwill. Under current accounting guidance, if the carrying value of goodwill exceeds the estimated fair value, impairment is deemed to have occurred and the carrying value of goodwill is written down to fair value with a charge against earnings. Accordingly, any determination requiring the write-off of a significant portion of goodwill could negatively impact the Companys results of operations.

We may not have adequate or cost-effective liquidity or capital resources.

We require cash or committed liquidity facilities for business purposes, such as funding our ongoing working capital, acquisition, and capital expenditure needs, as well as to make interest payments on and to refinance indebtedness and pay taxes. As of August�31, 2014, we had cash and cash equivalents of $135.5 million. In addition, we currently have access to committed credit lines of $559.1 million, with $243.2 million available as of August�31, 2014. Our ability to satisfy our cash needs depends on our ability to generate cash from operations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.

We may, in the future, need to access the financial markets to satisfy our cash needs. Our ability to obtain external financing is affected by various factors including general financial market conditions and our debt ratings. While, thus far, uncertainties in global credit markets have not significantly affected our access to capital, future financing could be difficult or more expensive. Further, any increase in our level of debt, change in status of our debt from unsecured to secured debt, or deterioration of our operating results may impact our ability to obtain favorable financing terms. Any tightening of credit availability could impair our ability to obtain additional financing or renew existing credit facilities on acceptable terms. Under the terms of any external financing, we may incur higher than expected financing expenses and become subject to additional restrictions and covenants. Our lack of access to cost-effective capital resources, an increase in our financing costs, or a breach of debt instrument covenants could have a material adverse effect on our business.

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On September 24, 2013 the Company entered into a new $500 million Credit Agreement with certain financial institutions. The agreement consists of a $300 million credit facility and a $200 million term loan, replacing a previous $300 million revolving credit facility which was scheduled to expire in January 2016. The new Credit Agreement expires in September 2018.

If we are unable to retain key personnel or attract new skilled personnel, it could have an adverse effect on our business.

The unanticipated departure of any key member of our management team or employee base could have an adverse effect on our business. In addition, because of the specialized and technical nature of our business, our future performance is dependent on the continued service of, and on our ability to attract and retain, qualified management, scientific, technical, marketing and support personnel. Competition for such personnel is intense, and we may be unable to continue to attract or retain such personnel.

Our business depends upon good relations with our employees.

We may experience difficulties in maintaining appropriate relations with unions and employees in certain locations. About 45% of our employees are represented by labor unions. In addition, problems or changes affecting employees in certain locations may affect relations with our employees at other locations. The risk of labor disputes, work stoppages or other disruptions in production could adversely affect us. If we cannot successfully negotiate or renegotiate collective bargaining agreements, or if negotiations take an excessive amount of time, there may be a heightened risk of a prolonged work stoppage. Work stoppages may be caused by the inability of national unions and the governments of countries that the Company operates in from reaching agreement, and are outside the control of the Company. Any work stoppage could have a material adverse effect on the productivity and profitability of a manufacturing facility or on our operations as a whole.

A major failure or breach of our information systems could harm our business.

We currently depend upon numerous local and several regionally integrated information systems to process orders, respond to customer inquiries, manage inventory, purchase, sell and ship goods on a timely basis, maintain cost-efficient operations, prepare financial information and reports, and operate our website. We are also in the process of reviewing our global information system options to help strengthen common business practices including security and improve operational efficiency.

While we have a comprehensive security program that is continuously reviewed and upgraded, we may experience operating problems with our information systems as a result of system security failures such as viruses, cyber attacks, breaches or other causes. Theft of sensitive data and our inability to protect intellectual property could have an adverse effect on our business, customers, suppliers and employees. Additionally, any significant disruption or slowdown of our current or future information systems as a result of a system security failure could disrupt the flow of operational information, cause orders to be lost or delayed and could damage our reputation with our customers or cause our customers to cancel orders, any of which could adversely affect our financial results.

Other increases in operating costs could affect our profitability.

Scheduled or unscheduled maintenance programs could cause significant production outages, higher costs and/or reduced production capacity at our suppliers due to the industry in which they operate. These events could also affect our future profitability.

Although our pension and postretirement plans currently meet all applicable minimum funding requirements, events could occur that would require us to make significant contributions to the plans and reduce the cash available for our business.

We have several defined benefit pension and postretirement plans around the world in which a substantial portion of our employees participate in. We are required to make cash contributions to our pension plans to the extent necessary to comply with minimum funding requirements imposed by the various countries benefit and tax laws. The amount of any such required contributions will be determined annually based on an actuarial valuation of the plans as performed by our outside actuaries and as required by law. The amount we may elect or be required to contribute to our pension plans in the future may increase significantly. Specifically, if year-end accumulated obligations exceed assets, we may elect to make a voluntary contribution, over and above the minimum required. These contributions could be substantial and would reduce the cash available for our business.

Increasing cost of employee healthcare may decrease our profitability.

The cost of providing healthcare coverage for our employees is a significant operating cost for the Company. If healthcare costs increase at a rapid pace, we may not be able to or willing to pass on those costs to employees. Therefore, if we are unable to offset rising healthcare costs through improved operating efficiencies and reduced expenditures, the increased costs of employee healthcare may result in declining margins and operating results.

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Risks Associated With Restructuring Initiatives

The inability to achieve, delays in achieving or achievement of less than the anticipated financial benefit from initiatives related to cost reductions and improving efficiencies could adversely affect our profitability.

From time to time, we undertake plans and initiatives that are expected to reduce costs and improve efficiencies. We could be unable to achieve, or may be delayed in achieving, some or all of the benefits from such initiatives because of limited resources or uncontrollable economic conditions. If these initiatives are not as successful as planned, the result could negatively impact our results of operations or financial condition. Additionally, even if we achieve these goals, we may not receive the expected benefits of the initiatives, or the costs of implementing these initiatives could exceed the related benefits.

We may incur significant charges in the event we close or relocate all or part of a manufacturing facility.

We periodically assess our manufacturing operations in order to manufacture and distribute our products in the most efficient manner. Based on our assessments, we may make capital improvements to modernize certain units, move manufacturing or distribution capabilities from one facility to another facility, discontinue manufacturing or distributing certain products or close all or part of a manufacturing facility. We also have shared services agreements at several of our facilities and if such agreements are terminated or revised, we would assess and potentially adjust our manufacturing operations. The closure or relocation of all or part of a manufacturing facility could create unintended challenges with production quality and result in future charges which could be significant.

Risks Associated With Acquisitions

We may experience difficulties in integrating acquired businesses, or acquisitions may not otherwise perform as expected.

During the past several fiscal years, we have acquired multiple businesses, and we may continue to acquire other businesses, intended to complement or expand our business. The successful integration of these acquisitions depends on our ability to manage the operations and personnel of the acquired businesses. Integrating operations is complex and requires significant efforts and expenses on the part of both the Company and the acquisitions. Personnel may voluntarily or involuntarily exit the Company because of the acquisitions. Our management team may have its attention diverted while trying to integrate the acquired companies. We may encounter obstacles when incorporating the acquired operations into our operations and management and achieving intended levels of manufacturing quality, or the acquired operations may not otherwise perform as expected or provide expected results. If such acquisitions are not integrated successfully or they do not perform as well as anticipated, our results of operations and financial condition could be adversely affected.

We may fail to realize all of the anticipated benefits of acquisitions, which could reduce our anticipated profitability.

We expect that our acquisitions will result in certain synergies, business opportunities and growth prospects, although we may not realize these expected synergies, business opportunities and growth prospects. Integrating operations is complex and requires significant efforts and expenses on the part of both the Company and the acquisitions. Personnel may voluntarily or involuntarily exit the Company because of the acquisitions. Our management team may have its attention diverted while trying to integrate the acquired companies. We may experience increased competition that limits our ability to expand our business. We may not be able to capitalize on expected business opportunities including successfully developing new geographic or product markets or retaining acquired current customers. Our assumptions underlying estimates of expected cost savings may be inaccurate or general industry and business conditions may deteriorate. In addition, our growth and operating strategies for acquired businesses may be different from the strategies that the acquired companies pursued. If these factors limit our ability to integrate or operate the acquired companies successfully or on a timely basis, our expectations of future results of operations, including certain cost savings and synergies expected to result from acquisitions, may not be met.

We may experience difficulties in identifying acquisitions that meet the objectives of our strategic plan and delays or other challenges in completing intended acquisitions and new ventures, particularly those in foreign jurisdictions.

We may acquire other businesses or form new ventures intended to complement or expand our business, both in the U.S. and in foreign jurisdictions, although, we may experience delays and other challenges in completing such acquisitions and ventures within our anticipated time frames which are difficult to predict, particularly in foreign jurisdictions. If such acquisitions or ventures are not completed within anticipated time frames, or are not completed successfully, our results of operations and financial condition could be adversely affected.

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Risks Related to the Legal and Regulatory Environment

Extensive environmental, health and safety laws and regulations impact our operations and assets, and compliance, or lack of compliance, with these regulations could adversely affect our results of operations.

Our operations on and ownership of real property are subject to extensive environmental, health and safety laws and regulations at the national, state and local governmental levels. The nature of our business exposes us to risks of liability under these laws and regulations due to the production, storage, transportation, recycling or disposal and/or sale of materials that can cause contamination or personal injury if they are released into the environment or workplace. Environmental laws may have a significant effect on the costs of these activities involving inventory and wastes. We may incur substantial costs, including fines, damages, criminal or civil sanctions, remediation costs, or experience interruptions in our operations for violations of these laws.

Also, national and state environmental statutes impose strict, and under some circumstances, joint and several liability for the cost of investigations and remedial actions on any company that generated the waste, arranged for disposal of the waste, transported the waste to the disposal site or selected the disposal site, as well as on the owners and operators of these sites. Any or all of the responsible parties may be required to bear all of the costs of clean up, regardless of fault or legality of the waste disposal or ownership of the site, and may also be subject to liability for natural resource damages. It is possible that we could be identified as a potentially responsible party at various sites in the future, which could result in being assessed substantial investigation or clean-up costs.

Accruals for estimated costs, including, among other things, the ranges associated with our accruals for future environmental compliance and remediation may be too low or we may not be able to quantify the potential costs. We may be subject to additional environmental liabilities or potential liabilities that have not yet been identified. We expect that we will continue to be subject to increasingly stringent environmental, health and safety laws and regulations. We believe that compliance with these laws and regulations may, but does not currently, require significant capital expenditures and operating costs, which could adversely affect our results of operations or financial condition.

Our business and financial condition could be adversely affected if we are unable to protect our material trademarks, tradenames and other proprietary information.

We have numerous patents, trade secrets and know-how, domain names, trademarks and tradenames, which are discussed under ITEM�1 of this Annual Report on Form 10-K. Despite our efforts to protect our trademarks, tradenames and other proprietary rights from unauthorized use or disclosure, other parties, including our former employees or consultants, may attempt to disclose, obtain or use our proprietary information or marks without our authorization. Unauthorized use of our trademarks or tradenames, or unauthorized use or disclosure of our other intellectual property, could negatively impact our business and financial condition.

Changes in tax laws could have an adverse impact on our earnings.

Changes to tax laws, rules and regulations, including changes in the interpretation or implementation of tax laws, rules and regulations by the Internal Revenue Service or other domestic or foreign governmental bodies, could affect us in substantial and unpredictable ways. Such changes could subject us to additional compliance costs and tax liabilities which could have an adverse impact on our earnings. Recently, several proposals to reform U.S. tax laws to effectively increase the U.S. taxation of income with respect to foreign operations have been announced. Whether any such initiatives will win Congressional or executive approval and become law is presently unknown; however, if any such initiatives were to become law and apply to our international operations, there could be a material impact on our financial condition and results of operations.

Litigation from customers, employees or others could adversely affect our financial condition.

From time to time, we may be subject to claims or legal action from customers, employees or others. Whether these claims and legal actions are founded or unfounded, if these claims and legal actions are not resolved in our favor, they may result in significant financial liability and/or adversely affect market perception of the Company and our products. Any financial liability or reputation damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. The Company could also incur costs in connection with defending these possible claims and legal actions.

We may be required to adopt accounting or financial reporting standards, the ultimate adoption of such standards could negatively impact our business, financial condition or results of operations.

We could be required to adopt new or modified accounting or financial reporting standards that are different than current accounting principles generally accepted in the United States of America. The impact and cost of implementation of new standards could unfavorably impact our business, financial condition or results of operations.

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ITEM�1B.	UNRESOLVED STAFF COMMENTS

��

None.



ITEM 2.	PROPERTIES

The following table indicates the location of each of the Companys 42 manufacturing facilities, the projected annual manufacturing capacity for fiscal 2015 and approximate floor area, including warehouse and office space and the segment that is principally supported by such plants as of August�31, 2014. The following locations are owned or leased by the Company:�



Location	Approximate Annual Capacity�(lbs.)(1)		�	Approximate Floor Area (Square�Feet)
�	(In thousands)
Akron, Ohio	71,600	(2)	�	236
North Canton, Ohio	4,800	��	�	48
Stryker, Ohio	25,000	�	�	107
Allentown, Pennsylvania	29,000	��	�	128
Fontana, California	40,000	��	�	46
East Chicago, Indiana	68,000	�	�	73
Plymouth, Indiana	6,000	�	�	42
Evansville, Indiana	53,000	�	�	189
Grand Junction, Tennessee	18,000	��	�	88
China, Texas	100,000	��	�	137
La Porte, Texas	294,000	��	�	252
Worcester, Massachusetts	43,800	�	�	216
Franklin, Tennessee	5,500	�	�	55
Carpentersville, Illinois	10,000	�	�	118
Contagem, Belo Horizonte, Brazil	14,300	��	�	26
Sumare, Brazil	41,400	�	�	241
Buenos Aires, Argentina	19,200	��	�	31
San Luis Potosi, Mexico	102,000	��	�	187
Total Americas Segment	945,600	��	�	2,220
Bornem, Belgium	147,200	��	�	455
Opglabbeek, Belgium	6,300	��	�	34
Givet, France	241,000	��	�	241
Beaucaire, France	43,900	��	�	76
Montereau, France	51,700	��	�	57
Bellignat, France	13,900	�	�	92
Savigny, France	17,600	�	�	27
Kerpen, Germany	130,400	��	�	653
Budapest, Hungary	600	��	�	45
Gorla Maggiore, Italy	76,900	��	�	166
s-Gravendeel, The Netherlands	88,200	��	�	172
Nowa Biala, Poland	4,100	��	�	49
Gainsborough, United Kingdom	57,600	��	�	68

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Crumlin Gwent, South Wales, United Kingdom	22,800	��	�	106
Warrington, United Kingdom	44,100	�	�	67
Astorp, Sweden	6,300	��	�	27
Castellon, Spain	34,300	�	�	108
Total EMEA Segment	986,900	��	�	2,443
Batu Pahat, Malaysia	68,800	��	�	62
Johor, Malaysia	48,500	�	�	120
Guangdong Province, China	64,800	��	�	112
East Java, Indonesia	37,000	��	�	136
Vadodara, India	14,500	�	�	491
Total APAC Segment	233,600	��	�	921
Total	2,166,100	��	�	5,584

The Company considers each of the foregoing facilities to be in good condition and suitable for its purposes. Approximate annual capacity amounts may fluctuate as a result of capital expenditures or lean process initiatives to increase capacity, a shutdown of certain equipment to reduce capacity or permanent changes in mix which could increase or decrease capacity.

�

(1)

The approximate annual capacity for fiscal 2015 set forth in this table is an estimate of practical capacity that is based upon several factors. It is determined as the production level at which the manufacturing facilities can operate with an acceptable degree of efficiency, taking into consideration factors such as longer term customer demand, permanent staffing levels, operating shifts, holidays, scheduled maintenance and mix of product. Capacity utilization is calculated by dividing actual production pounds by practical capacity at each plant.

The annual poundage of plastic compounds manufactured does not, in itself, reflect the extent of utilization of the Companys plants or the profitability of the plastic compounds produced.�


(2)	Akron, Ohio includes three manufacturing facilities: Akron plant, Innovation and Collaboration Center and Network Polymers.

Public warehouses are used wherever needed to store the Companys products to best service the needs of customers. The number of public warehouses in use varies from time to time. Currently, the Company utilizes approximately 60 warehouses worldwide. The Company believes an adequate supply of suitable public warehouse facilities is available.

The Company leases its corporate headquarters, which is located in Fairlawn, Ohio and contains approximately 34,000 square feet. The Company also leases sales and administrative offices in various locations globally.

�



ITEM 3.	LEGAL PROCEEDINGS

In the normal course of business, the Company is at times subject to pending and threatened legal actions, some for which the relief or damages sought may be substantial. Although the Company is not able to predict the outcome of such actions, after reviewing all pending and threatened actions with counsel and based on information currently available, management believes that the outcome of such actions, individually or in the aggregate, will not have a material adverse effect on the results of operations or financial position of the Company. However, it is possible that the ultimate resolution of such matters, if unfavorable, may be material to the results of operations in a particular future period as the time and amount of any resolution of such actions and its relationship to the future results of operations are not currently known.

Reserves are established for legal claims only when losses associated with the claims are judged to be probable, and the loss can be reasonably estimated. In many lawsuits and arbitrations, it is not considered probable that a liability has been incurred or not possible to estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve would be recognized until that time.

�

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ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

PART��II



ITEM 5.	MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

�

The Companys common stock is traded on the NASDAQ Global Select Market under the symbol SHLM. At October�15, 2014, there were 569 holders of record of the Companys common stock. This figure does not include beneficial owners who hold shares in nominee name. The closing stock price on October�15, 2014 was $29.95.

The quarterly high and low closing stock prices are presented in the table below:�



�	Fiscal 2014	�	Fiscal 2013
Common stock price range	High - Low	�	High - Low
1st Quarter	$34.53 - 27.27	�	$26.40 - 23.14
2nd Quarter	$35.50 - 32.21	�	$33.03 - 25.88
3rd Quarter	$37.26 - 33.42	�	$32.72 - 24.82
4th Quarter	$42.01 - 34.16	�	$28.83 - 25.73

The quarterly cash dividends declared are presented in the table below:�



Cash dividends per share	Fiscal 2014		�	Fiscal 2013
1st Quarter	$	0.200	�	$	0.195
2nd Quarter	0.200		�	0.195
3rd Quarter	0.200		�	0.195
4th Quarter	0.200		�	0.195
Total	$	0.800	�	$	0.780

On April 3, 2014, the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to $55 million of its common stock in the open market or in privately negotiated transactions, subject to market and other conditions (the Program). Repurchases under the Program may take place over a three-year period ending April 2, 2017, when the Program is scheduled to expire. During fiscal 2014, the Company did not repurchase any shares of common stock under the Program, which may be modified, suspended or terminated by the Company at any time. The Program replaces the Companys previous share repurchase program, which was authorized on April 1, 2011 and expired on March 31, 2014.

In fiscal 2014, the Company repurchased 40,327 shares of common stock under the previous share repurchase program at an average price of $27.68 per share for a total cost of $1.1 million. In total under the previous program, the Company acquired 2,192,612 shares at an average price of $20.33 per share.

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ITEM�6.	SELECTED FINANCIAL DATA

�



�	Year Ended August 31,
�	2014⁽¹⁾			�	2013^(1),(2)			�	2012^(1),(2)			�	2011⁽²⁾			�	2010⁽²⁾
�	(In thousands, except per share data)
Net sales	$	2,446,998		�	$	2,133,402		�	$	2,081,272		�	$	2,159,053		�	$	1,577,180
Cost of sales	2,116,990			�	1,852,223			�	1,802,029			�	1,868,443			�	1,340,134
Other costs and expenses	258,396			�	228,159			�	214,434			�	227,024			�	197,072
Interest and other income	(720		)	�	(712		)	�	(2,018		)	�	(2,553		)	�	(3,739		)
Total costs and expenses, net	2,374,666			�	2,079,670			�	2,014,445			�	2,092,914			�	1,533,467
Income from continuing operations before taxes	72,332			�	53,732			�	66,827			�	66,139			�	43,713
Provision (benefit) for U.S. and foreign income taxes	18,542			�	19,733			�	13,918			�	15,764			�	(4,218		)
Income from continuing operations	53,790			�	33,999			�	52,909			�	50,375			�	47,931
Income (loss) from discontinued operations, net of tax	3,202			�	(6,671		)	�	(860		)	�	(8,690		)	�	(3,820		)
Net income	56,992			�	27,328			�	52,049			�	41,685			�	44,111
Noncontrolling interests	(799		)	�	(1,229		)	�	(1,162		)	�	(689		)	�	(221		)
Net income attributable to A.�Schulman, Inc.	$	56,193		�	$	26,099		�	$	50,887		�	$	40,996		�	$	43,890
�	�			�	�			�	�			�	�			�	�
Total assets	$	1,512,484		�	$	1,238,342		�	$	1,193,767		�	$	1,239,987		�	$	1,071,315
Long-term debt	$	339,546		�	$	207,435		�	$	174,466		�	$	184,598		�	$	93,834
Total equity	$	536,451		�	$	514,744		�	$	507,689		�	$	554,305		�	$	493,140
�	�			�	�			�	�			�	�			�	�
Weighted-average number of shares outstanding:	�			�	�			�	�			�	�			�	�
Basic	29,061			�	29,260			�	29,389			�	30,978			�	27,746
Diluted	29,362			�	29,337			�	29,549			�	31,141			�	27,976
�	�			�	�			�	�			�	�			�	�
Basic earnings per share attributable to A. Schulman, Inc.				�	�			�	�			�	�			�	�
Income from continuing operations	$	1.82		�	$	1.12		�	$	1.76		�	$	1.60		�	$	1.72
Income (loss) from discontinued operations	0.11			�	(0.23		)	�	(0.03		)	�	(0.28		)	�	(0.14		)
Net income (loss) attributable to A. Schulman, Inc.	$	1.93		�	$	0.89		�	$	1.73		�	$	1.32		�	$	1.58
�	�			�	�			�	�			�	�			�	�
Diluted earnings per share attributable to A. Schulman, Inc.				�	�			�	�			�	�			�	�
Income from continuing operations	$	1.80		�	$	1.12		�	$	1.75		�	$	1.60		�	$	1.71
Income (loss) from discontinued operations	0.11			�	(0.23		)	�	(0.03		)	�	(0.28		)	�	(0.14		)
Net income (loss) attributable to A. Schulman, Inc.	$	1.91		�	$	0.89		�	$	1.72		�	$	1.32		�	$	1.57
�	�			�	�			�	�			�	�			�	�
Cash dividends per common share	$	0.80		�	$	0.78		�	$	0.72		�	$	0.62		�	$	0.60

�


⁽¹⁾�	For additional information, see ITEM�7, MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, of this Annual Report on Form 10-K.

⁽²⁾ Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2014 presentation.

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ITEM 7.	MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help investors understand our results of operations, financial condition and current business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and related notes included in this Annual Report on Form 10-K for the fiscal year ended August�31, 2014. The MD&A is organized as follows:


"	Overview: From managements point of view, we discuss the following:

�Summary of our business and the markets in which we operate;

�Key trends, developments and challenges; and

�Significant events during the current fiscal year.

Results of Operations: An analysis of our results of operations as reflected in our consolidated financial statements. Throughout this MD&A, the Company provides operating results for continuing operations exclusive of certain items such as costs related to acquisitions, restructuring and related expenses and asset write-downs, which are considered relevant to aid analysis and understanding of the Companys results and business trends.


"	Critical Accounting Policies: An overview of accounting policies identified by the Company as critical that, as a result of the judgments, uncertainties, and the operations involved, could result in material changes to its financial condition or results of operations under different conditions or using different assumptions.


"	Liquidity and Capital Resources: An analysis of our cash flows, working capital, debt structure, contractual obligations and other commercial commitments.

Overview

Business Summary

A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds and resins headquartered in Fairlawn, Ohio. The Companys customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, custom services, and sports, home & leisure. The Chief Operating Decision Maker makes decisions, assesses performance and allocates resources by the following regions which represent our reportable segments:


"	Europe, Middle East and Africa ("EMEA"),


"	Americas, and


"	Asia Pacific ("APAC").

The Company has approximately 3,900 employees and 42 manufacturing facilities worldwide. Globally, the Company operates in five product families: (1) custom performance colors, (2) masterbatch solutions, (3) engineered plastics, (4) specialty powders and (5) distribution services. The Company offers tolling services to customers primarily in the specialty powders product family.

Key Trends, Developments and Challenges

We continue the execution of our growth strategy, which is a set of initiatives aimed at increasing our ability to leverage our innovative products into different geographic markets and explore adjacent markets and applications in order to improve the profitability of the Company's product mix and sales volume.

The following present opportunities and challenges as we work toward our goal of providing attractive returns for all of our stakeholders:


"	Cross Selling. We engage in the cross selling of our products through the collaborative efforts and training of our sales teams. We encourage cross selling between different product families and promote cross regional sales to better service our valued customers.

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Development of New Products. We are dedicated to the development of new, higher-margin products and applications that optimize the appearance, performance, and processing of plastics to meet our customers' specifications. We strive to maintain a balanced position between low-cost production and technological leadership with focused application development. We are also committed to continuing our growth in high value-added markets and reducing our exposure to commodity markets. We look to enhance our efforts through strategic collaborations with leading innovators in key markets.

Innovation Centers. We have four global innovation centers located in Belgium, Germany, Mexico and the United States which promote collaborative partnerships between A. Schulman and our customers, suppliers, universities and other technical organizations. These innovation centers enable us to undertake research and development activities that align our technical and product development capabilities with the emerging needs of our customers and end markets.


"	Adjacent Markets. We are committed to identifying and pursuing adjacent markets, such as personal care and cosmetics, for our products that have sustainable growth opportunities.


"	Purchasing and Pricing. We pursue opportunities to continue our savings on purchasing and to optimize pricing strategies and vendor payment terms. We continue to leverage our global volume base to enhance savings and identify alternate supply sources.


"	Continuous Improvement. The Company's Six Sigma Black Belt and Green Belt associates continue to look for ways to improve our processes and optimize our performance. We remain determined to control and manage our selling, general and administrative expenses, especially in developed markets.


"	Acquisitions and Joint Ventures. We continue to seek acquisitions and joint ventures that are within our specialty plastics business to leverage our product innovation, technical know-how and market knowledge. We will also continue to explore opportunities for transformational acquisitions that will transition us into a premier specialty chemical company.

Significant Events

The following items represent significant events during fiscal year 2014:

Share Repurchases. On April 3, 2014, the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to $55 million of its common stock. During fiscal 2014, the Company did not repurchase any shares of common stock under this new Program. Under the previous share repurchase program, the Company repurchased 40,327 shares of common stock at an average price of $27.68 per share for a total cost of $1.1 million in fiscal 2014.


2.	Business Acquisitions. On September 2, 2013, the Company acquired the Perrite Group, a thermoplastics manufacturer with business in niche engineered plastics and custom color with operations in Malaysia, the United Kingdom and France, for $51.3 million, net of cash.

On December 2, 2013, the Company completed the acquisition of Network Polymers, a niche engineered plastics compounding business with operations in Akron, Ohio for $49.2 million.

On December 31, 2013, the Company acquired Prime Colorants, a leading manufacturer of custom color and additive concentrates in Franklin, Tennessee, for $15.1 million.

On July 1, 2014, the Company acquired the majority of the assets of the specialty plastics business from Ferro Corporation ("Specialty Plastics" acquisition) for $91 million which includes four facilities located in the U.S. and one facility located in Spain.


3.	Sale of Australia Business. The Company completed the sale of its rotational compounding business in Australia on September 3, 2013. The operating results for this business were previously included in the Company's specialty powders product family within the APAC segment and are reported as discontinued operations.

��


4.	Credit Agreement. On September 24, 2013, the Company entered into a new $500 million Credit Agreement. The

agreement consists of a $300 million Revolving Facility and a $200 million Term Loan Facility, replacing a previous

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$300 million revolving credit facility, and offers increased borrowing capacity and improved terms and covenants. The agreement expires in September 2018.


5.	Long-term Growth Targets. On April 10, 2014, the Company hosted an Investor Day where the Company introduced


	several new long-term financial targets, which are based largely on the Company's expectations for continued success with its organic growth initiatives and acquisition strategy, combined with our financial strength and the growth potential of our global markets. The adjusted earnings per share target for fiscal 2018 is $4.50 to $4.75 per diluted share.

Appointment of President and Chief Executive Officer. On June 19, 2014, the Company's Board of Directors named Bernard Rzepka as President and Chief Executive Officer of the Company, effective January 2015. In addition, the Board nominated Joseph M. Gingo to continue as the Chairman of the Board after his retirement as President and Chief Executive Officer. The nomination of Mr. Gingo as Chairman of the Board is subject to his re-election as a director by shareholders at the Company's annual meeting in December 2014.

The following items represent significant events during early fiscal 2015:


1.	Business Acquisition. On September 2, 2014, the Company acquired Compco Pty. Ltd., a manufacturer of masterbatches and custom colors in Melbourne, Australia for $6.7 million.


2.	Dividend Activities. In October 2014, the Company increased its regular quarterly cash dividend by 2.5% to $0.205 per common share. This reflected the Company's confidence in its ability to generate cash and its long-term growth prospects, along with a continued commitment to shareholders


3.	Restructuring Plan. In October 2014, the Company announced actions to optimize the back-office and support functions in EMEA. The Company expects to reduce headcount by approximately 40 and realize annual savings of approximately $4 million on completion of these actions.

Results of Operations

FISCAL YEAR 2014 COMPARED WITH FISCAL YEAR 2013

The Company uses net sales to unaffiliated customers, gross profit and operating income before certain items in order to make decisions, assess performance and allocate resources to each segment. The following discussion regarding the Companys segment gross profit and operating income does not include items such as interest income or expense, other income or expense, foreign currency transaction gains or losses, restructuring and related expenses including accelerated depreciation, asset impairments, or costs and inventory step-up charges related to business acquisitions. Corporate expenses include the compensation of certain personnel, certain audit expenses, Board of Directors related costs, certain insurance costs, costs associated with being a publicly traded entity and other miscellaneous legal and professional fees. For a reconciliation of segment operating income to operating income and income from continuing operations before taxes, please refer to Note 13 of the consolidated financial statements within this Form 10-K.

Segment Information



��	Year Ended August 31,
�	�			�	�			�	�					�	Favorable (unfavorable)
EMEA	2014			�	2013			�	Increase (decrease)					�	FX Impact		�	Excluding FX
�	(In�thousands,�except�for�%s�and�per�pound�data)
Pounds sold	1,262,027			�	1,167,603			�	94,424		�	8.1	%	�	�		�	�
Net sales	$	1,577,867		�	$	1,405,882		�	$	171,985	�	12.2	%	�	$	53,072	�	8.5	%
Segment gross profit	$	206,268		�	$	179,242		�	$	27,026	�	15.1	%	�	$	6,890	�	11.2	%
Segment gross profit percentage	13.1		%	�	12.7		%	�	�		�	�		�	�		�	�
Segment operating income	$	80,690		�	$	67,320		�	$	13,370	�	19.9	%	�	$	2,556	�	16.1	%
Price per pound	$	1.250		�	$	1.204		�	$	0.046	�	3.8	%	�	$	0.042	�	0.3	%
Segment operating income per pound	$	0.064		�	$	0.058		�	$	0.006	�	10.3	%	�	$	0.002	�	6.9	%

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EMEA net sales for the year ended August�31, 2014 were $1,577.9 million, an increase of $172.0 million or 12.2%, compared with the prior year. Excluding the favorable impact of foreign currency translation of $53.1 million, net sales increased $118.9 million. During fiscal 2014, the incremental contribution of the Perrite and Specialty Plastics acquisitions was $93.2 million and 60.8 million pounds in net sales and volume, respectively. Excluding acquisitions and foreign currency translation, organic sales increased $25.7 million, primarily driven by volume increases in all product families.

EMEA gross profit was $206.3 million for the year ended August�31, 2014, an increase of $27.0 million over prior year. The improvement over prior year was due to the positive contribution of the Perrite and Specialty Plastics acquisitions combined with the favorable impact of foreign currency translation of $6.9 million and organic growth across nearly all product families.

EMEA operating income for the year ended August�31, 2014 was $80.7 million, an increase of $13.4 million compared with the prior year. The increase in segment operating income in fiscal 2014 was primarily due to the aforementioned increase in segment gross profit, benefits from prior restructuring activities of $3.8 million and a reduction of bad debt expense of $1.8 million. Partially offsetting these items were incremental SG&A expenses from acquisitions of $5.0 million and increased variable incentive compensation and a government regulated increase in annual salaries of $5.4 million, and increased promotional trade show activities of $0.9 million. Foreign currency translation negatively impacted EMEA SG&A expense by $4.3 million. Segment operating income per pound increased $0.006 to $0.064 per pound primarily due to increased price per pound, partially offset by increased SG&A expense.



�	Year Ended August 31,
�	�			�	�			�	�		�	�		�	Favorable (unfavorable)
Americas	2014			�	2013			�	Increase (decrease)					�	FX Impact			�	Excluding FX
�	(In thousands, except for %s and per pound data)
Pounds sold	669,017			�	653,914			�	15,103		�	2.3	%	�	�			�	�
Net sales	$	673,363		�	$	600,824		�	$	72,539	�	12.1	%	�	$	(14,358	)	�	14.5	%
Segment gross profit	$	99,517		�	$	81,315		�	$	18,202	�	22.4	%	�	$	(1,678	)	�	24.4	%
Segment gross profit percentage	14.8		%	�	13.5		%	�	�		�	�		�	�			�	�
Segment operating income	$	38,806		�	$	28,351		�	$	10,455	�	36.9	%	�	$	(522	)	�	38.7	%
Price per pound	$	1.006		�	$	0.919		�	$	0.087	�	9.5	%	�	$	(0.022	)	�	11.9	%
Segment operating income per pound	$	0.058		�	$	0.043		�	$	0.015	�	34.9	%	�	$	(0.001	)	�	37.2	%

Net sales for the Americas for the years ended August�31, 2014 and 2013 were $673.4 million and $600.8 million, respectively, an increase of $72.5 million or 12.1%. Incremental net sales and volume from the Network Polymers, Prime Colorants and the Specialty Plastics acquisitions were $70.2 million and 46.7 million pounds for the year ended August 31, 2014, respectively. Excluding acquisitions, selling price per pound increased in all product families, while volume declined across all product families partially driven by the continued execution of the Companys strategy to increase specialty product sales and shift away from less profitable commodity sales.

Americas gross profit was $99.5 million for the year ended August�31, 2014, an increase of $18.2 million from the prior year. The benefits of prior restructuring initiatives of $1.5 million, as well as recent acquisitions and improved mix were partially offset by increased variable incentive compensation of $1.6 million and $1.7 million of unfavorable foreign currency translation.

�

Americas operating income for the year ended August�31, 2014 was $38.8 million compared with $28.4 million last year. Segment operating income benefited from the increase in segment gross profit, offset by increases in SG&A expense from recent acquisitions of $4.8 million and higher variable incentive compensation expense of $2.1 million. Foreign currency translation negatively impacted the Americas operating income by $0.5 million.

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�	Year Ended August 31,
�	�			�	�			�	�			�	�		�	Favorable (unfavorable)
APAC	2014			�	2013			�	Increase (decrease)						�	FX Impact			�	Excluding FX
�	(In thousands, except for %s and per pound data)
Pounds sold	153,899			�	95,994			�	57,905			�	60.3	�%	�	�			�	�
Net sales	$	195,768		�	$	126,696		�	$	69,072		�	54.5	�%	�	$	(649	)	�	55.0	�%
Segment gross profit	$	26,767		�	$	22,345		�	$	4,422		�	19.8	�%	�	$	(57	)	�	20.0	�%
Segment gross profit per pound	13.7		%	�	17.6		%	�	�			�	�		�	�			�	�
Segment operating income	$	12,527		�	$	12,108		�	$	419		�	3.5	�%	�	$	131		�	2.4	�%
Price per pound	$	1.272		�	$	1.320		�	$	(0.048	)	�	(3.6	)%	�	$	(0.004	)	�	(3.3	)%
Segment operating income per pound	$	0.081		�	$	0.126		�	$	(0.045	)	�	(35.7	)%	�	$			�	(35.7	)%

Net sales for APAC for the year ended August�31, 2014 were $195.8 million, an increase of $69.1 million or 54.5%. During fiscal 2014, the Perrite acquisition in APAC provided net sales and volume of $53.6 million and 40.3 million pounds, respectively. Excluding the Perrite acquisition, volumes increased across all product families, partially offset by decreased price per pound driven by competitive pricing pressures primarily in the masterbatch solutions product family. Foreign currency translation unfavorably impacted net sales by $0.6 million.

APAC gross profit for the year ended August�31, 2014 was $26.8 million, an increase of $4.4 million compared with last year. Segment gross profit benefited from the positive contribution of the Perrite acquisition. The APAC gross profit percentage declined as a result of product mix and the competitive pricing pressures, as noted above.

APAC operating income for the year ended August�31, 2014 was $12.5 million, compared with $12.1 million last year. The increase in segment operating income was primarily due to the increased segment gross profit and favorable foreign currency translation, partially offset by incremental SG&A expenses from the Perrite acquisition of $2.3 million.



�	Year Ended August 31,
�	�		�	�		�	�		�	�		�	Favorable (unfavorable)
Consolidated	2014		�	2013		�	Increase (decrease)					�	FX Impact		�	Excluding FX
�	(In thousands, except for %s and per pound data)
Pounds sold	2,084,943		�	1,917,511		�	167,432		�	8.7	%	�	�		�	�
Net sales	$	2,446,998	�	$	2,133,402	�	$	313,596	�	14.7	%	�	$	38,065	�	12.9	%
Operating income	$	82,321	�	$	63,103	�	$	19,218	�	30.5	%	�	$	2,135	�	27.1	%
Total operating income before certain items*	$	99,853	�	$	82,853	�	$	17,000	�	20.5	%	�	$	2,165	�	17.9	%
Price per pound	$	1.174	�	$	1.113	�	$	0.061	�	5.5	%	�	$	0.019	�	3.8	%
Total operating income per pound before certain items*	$	0.048	�	$	0.043	�	$	0.005	�	11.6	%	�	$	0.001	�	9.3	%

* Total operating income before certain items represents segment operating income combined with Corporate and other operating expenses. For a reconciliation of segment operating income to operating income and income from continuing operations before taxes, refer to Note 13 of the consolidated financial statements within this Form 10-K.

Consolidated net sales for the year ended August 31, 2014 were $2,447.0 million, an increase of $313.6 million, or 14.7%, compared with the same prior year period. Incremental net sales and volume from the Companys recent acquisitions contributed $217.0 million and 147.8 million pounds, respectively, for the year ended August 31, 2014. Excluding the impact of recent acquisitions, net sales were positively impacted by a 3.5% increase in price per pound and 1.0% increase in volume. Foreign currency translation favorably impacted net sales for the year ended August 31, 2014 by $38.1 million.

Operating income increased $19.2 million for the year ended August�31, 2014 compared to the prior year. Total operating income, before certain items, for the year ended August�31, 2014 was $99.9 million, an increase of $17.0 million compared with last fiscal year. The increase in both operating income and total operating income, before certain items, was primarily due to increased gross profit across all segments, partially offset by the increased SG&A expense noted below. Recent acquisitions contributed $12.3 million of operating income, before certain items.

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Excluding $9.8 million and $5.4 million of acquisition and restructuring related costs for the years ended August 31, 2014 and 2013, respectively, the Companys SG&A expenses increased $32.7 million for the year ended August 31, 2014 compared with the prior year. The increase was primarily attributable to incremental SG&A expense of $12.1 million from recent acquisitions, higher variable incentive compensation expense of $11.5 million and unfavorable foreign currency translation of $3.0 million. The increase in variable incentive compensation expense consists of $6.2 million of annual performance-based cash bonus primarily impacting the regions and $5.3 million of long-term incentive compensation primarily impacting Corporate.

Additional consolidated results

Interest expense, net of interest income, increased $1.1 million for the year ended August�31, 2014, as compared with the prior year primarily related to increased borrowings for recent acquisitions.

Generally, the foreign currency transaction gains or losses relate to the changes in the value of the U.S. dollar compared with the Euro and other local currencies throughout all regions, and also changes between the Euro and other non-Euro European currencies. The Company may enter into foreign exchange forward contracts to reduce the impact of changes in foreign exchange rates on the consolidated statements of operations. These contracts reduce exposure to currency movements affecting the remeasurement of foreign currency denominated assets and liabilities primarily related to trade receivables and payables, as well as intercompany activities. Any gains or losses associated with these contracts, as well as the offsetting gains or losses from the underlying assets or liabilities, are recognized on the foreign currency transaction line in the consolidated statements of operations. There were no foreign exchange forward contracts designated as hedging instruments as of August�31, 2014 and 2013.

Other income for the year ended August�31, 2014 was $0.4 million, compared with other income of $0.2 for the year ended August�31, 2013. In both fiscal 2014 and 2013, there were no individually significant transactions.

Noncontrolling interests represent a 37% equity position of Alta Plastica S.A. in an Argentinean venture with the Company and a 35% equity position of P.T. Prima Polycon Indah in an Indonesian joint venture with the Company.

Net income attributable to the Companys common stockholders was $56.2 million and $26.1 million for the years ended August�31, 2014 and 2013, respectively. Foreign currency translation had a favorable impact on net income of $3.0 million for the year ended August�31, 2014.

Product Family

The consolidated net sales for the Company's five product families are as follows:



�	Year Ended August 31,
�	2014					�	2013
�	(In thousands, except for %s)
Custom performance colors	$	174,007	�	7	%	�	$	150,890	�	7	%
Masterbatch solutions	805,798		�	33		�	781,770		�	37
Engineered plastics	745,493		�	31		�	534,777		�	25
Specialty powders	350,510		�	14		�	308,619		�	14
Distribution services	371,190		�	15		�	357,346		�	17
Total consolidated net sales	$	2,446,998	�	100	%	�	$	2,133,402	�	100	%

Fiscal 2013 includes a reclassification of revenue between product families to better reflect the way the businesses are managed.

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Capacity

The Companys practical capacity is not based on a theoretical 24-hour, seven-day operation, rather it is determined as the production level at which the manufacturing facilities can operate with an acceptable degree of efficiency, taking into consideration factors such as longer term customer demand, permanent staffing levels, operating shifts, holidays, scheduled maintenance and mix of product. Capacity utilization is calculated by dividing actual production pounds by practical capacity at each plant. A comparison of capacity utilization levels is as follows:�



�	Years�ended�August�31,
�	2014		�	2013
EMEA	82	%	�	77	%
Americas	65	%	�	67	%
APAC	70	%	�	68	%
Worldwide	73	%	�	72	%

Restructuring

Consolidated Restructuring Summary

The following table summarizes the activity related to the Companys restructuring plans:�



�	Employee-related Costs			�	Other Costs			�	Translation Effect			�	Total Restructuring Costs
�	(In thousands)
Accrual balance as of August 31, 2012	$	3,524		�	$	381		�	$	(539	)	�	$	3,366
Fiscal 2013 charges	8,669			�	1,831			�				�	10,500
Fiscal 2013 payments	(6,747		)	�	(1,812		)	�				�	(8,559		)
Translation				�				�	42			�	42
Accrual balance as of August 31, 2013	$	5,446		�	$	400		�	$	(497	)	�	$	5,349
Fiscal 2014 charges	2,223			�	2,660			�				�	4,883
Fiscal 2014 payments	(5,924		)	�	(2,689		)	�				�	(8,613		)
Translation				�				�	193			�	193
Accrual balance as of August 31, 2014	$	1,745		�	$	371		�	$	(304	)	�	$	1,812

See Note 15 of the consolidated financial statements within this Form 10-K for further details regarding the Company's restructuring activities.

Asset Impairment

The Company recorded $0.1 million and $1.9 million in pretax asset impairment charges during the years ended August�31, 2014 and 2013, respectively.

During fiscal 2014 and 2013, the Company recorded asset impairment charges of $0.1 million and $0.5 million, respectively, related to a reduction in the carrying value of one of the Companys facilities in Oyonnax, France, which was held for sale as of August 31, 2014 and 2013. The impairment charges were determined based on the estimated sales value of the facility less the estimated costs to sell utilizing information provided by a third-party real estate valuation source using the market approach. During early fiscal 2015, the Company sold this facility to a third-party for $0.6 million, which approximated its carrying value.

During fiscal 2013 and 2012, the Company recorded asset impairment charges of $1.4 million and $2.7 million related to a reduction in the carrying value of the Company's facility in Verolanuova, Italy using comparable prices for similar facilities provided by a third-party real estate valuation source using the market approach. During fiscal 2014, the Company sold this facility to a third-party for $1.5 million, which approximated its carrying value.

Refer to Note 19 of the consolidated financial statements within this Form 10-K for the discussion on impairment charges included in discontinued operations.

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Income Tax

A reconciliation of the statutory U.S. federal income tax rate with the effective tax rates is as follows:



�	Year Ended August 31,
�	2014						�	2013
�	(In thousands, except for %s)
U.S. statutory federal income tax rate	$	25,316		�	35.0	�%	�	$	18,806		�	35.0	�%
Amount of foreign taxes at less than U.S. statutory federal income tax rate	(13,602		)	�	(18.8	)	�	(9,189		)	�	(17.1	)
U.S. and foreign losses with no tax benefit	4,899			�	6.8		�	5,826			�	10.8
U.S. restructuring and other U.S. charges with no benefit	3,010			�	4.2		�	1,704			�	3.2
Valuation allowance charges				�			�	2,361			�	4.4
Establishment (resolution) of uncertain tax positions	(121		)	�	(0.2	)	�	(84		)	�	(0.2	)
Other	(960		)	�	(1.3	)	�	309			�	0.6
Provision (benefit) for U.S. and foreign income taxes	$	18,542		�	25.7	�%	�	$	19,733		�	36.7	�%

The effective tax rate for the year ended August 31, 2014 was less than the U.S. statutory federal income tax rate primarily because of the Companys overall foreign rate being less than the U.S. statutory federal income tax rate. This favorable effect of the Companys tax rate was partially offset by no tax benefits being recognized for U.S. restructuring and other U.S. charges and certain foreign losses. The change in the effective tax rate compared with the same period last year was driven primarily by lower U.S. and foreign losses with no benefit in fiscal 2014 as well as the valuation allowance established in the second quarter of fiscal 2013 against the net operating loss deferred tax asset of the Companys Brazilian entity due to the uncertainty in the realization of this asset.

FISCAL YEAR 2013 COMPARED WITH FISCAL YEAR 2012

Segment Information



�	Year ended August�31,
�	�			�	�			�	�						�	Favorable (unfavorable)
EMEA	2013			�	2012			�	Increase�(decrease)						�	FX Impact		�	Excluding FX
�	(In�thousands,�except�for�%s�and�per�pound�data)
Pounds sold	1,167,603			�	1,174,515			�	(6,912		)	�	(0.6	)%	�	�		�	�
Net sales	$	1,405,882		�	$	1,403,151		�	$	2,731		�	0.2	�%	�	$	4,226	�	(0.1	)%
Segment gross profit	$	179,242		�	$	175,669		�	$	3,573		�	2.0	�%	�	$	359	�	1.8	�%
Segment gross profit percentage	12.7		%	�	12.5		%	�	�			�	�		�	�		�	�
Segment operating income	$	67,320		�	$	71,849		�	$	(4,529	)	�	(6.3	)%	�	$	39	�	(6.4	)%
Price per pound	$	1.204		�	$	1.195		�	$	0.009		�	0.8	�%	�	$	0.004	�	0.4	�%
Segment operating income per pound	$	0.058		�	$	0.061		�	$	(0.003	)	�	(4.9	)%	�	$		�	(4.9	)%

EMEA net sales for the year ended August�31, 2013 were $1,405.9 million, an increase of $2.7 million or 0.2%, compared with the prior year. Excluding the favorable impact of foreign currency translation of $4.2 million, net sales decreased $1.5 million which was impacted by reduced volume, primarily in the specialty powders and engineered plastics product families due to the weak economic environment in Europe. During fiscal 2013, the incremental contribution of the Elian acquisition was $18.5 million and 5.9 million pounds in net sales and volume, respectively.

EMEA gross profit was $179.2 million for the year ended August�31, 2013, an increase of $3.6 million over prior year. The positive contribution of the Elian acquisition combined with the favorable impact of foreign currency translation of $0.4 million was partially offset by the challenging economic environment in Europe.

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EMEA operating income for the year ended August�31, 2013 was $67.3 million, a decrease of $4.5 million compared with the prior year. The decrease in segment operating income in fiscal 2013 was primarily due to an $8.1 million increase in selling, general and administrative expenses ("SG&A"). The increase in SG&A expense was primarily driven by increased compensation and benefits expense of $3.8 million, excluding Elian, which includes increased pension expense and annual government regulated compensation increases. SG&A expense was also impacted by increased bad debt expense of $1.0 million, increased information technology expense of $0.8 million, and incremental expenses of $2.5 million from Elian. These expenses were partially offset by savings from successful restructuring initiatives. Segment operating income per pound decreased $0.003 to $0.058 per pound primarily due to the aforementioned economic environment in Europe and increased SG&A expenses.

�



�	Year ended August�31,
�	�			�	�			�	�						�	Favorable (unfavorable)
Americas	2013			�	2012			�	Increase (decrease)						�	FX Impact			�	Excluding FX
�	(In thousands, except for %s and per pound data)
Pounds sold	653,914			�	610,418			�	43,496			�	7.1	�%	�	�			�	�
Net sales	$	600,824		�	$	558,910		�	$	41,914		�	7.5	�%	�	$	(680	)	�	7.6	�%
Segment gross profit	$	81,315		�	$	84,282		�	$	(2,967	)	�	(3.5	)%	�	$	180		�	(3.7	)%
Segment gross profit percentage	13.5		%	�	15.1		%	�	�			�	�		�	�			�	�
Segment operating income	$	28,351		�	$	28,872		�	$	(521	)	�	(1.8	)%	�	$	720		�	(4.3	)%
Price per pound	$	0.919		�	$	0.916		�	$	0.003		�	0.3	�%	�	$	(0.001	)	�	0.4	�%
Segment operating income per pound	$	0.043		�	$	0.047		�	$	(0.004	)	�	(8.5	)%	�	$	0.001		�	(10.6	)%

Net sales for the Americas for the years ended August�31, 2013 and 2012 were $600.8 million, and $558.9 million, respectively, an increase of $41.9 million or 7.5%. Incremental net sales and volume from the ECM Plastics, Inc. acquisition were $37.9 million and 33.8 million pounds for the year ended August 31, 2013, respectively. Excluding the impact of ECM Plastics, Inc., net sales and volume increased primarily in the specialty powders product family. Foreign currency translation negatively impacted net sales by $0.7 million.

Americas gross profit was $81.3 million for the year ended August�31, 2013, a decrease of $3.0 million from the prior year. Contribution from the ECM Plastics, Inc. acquisition was offset by increased costs in Mexico to meet customer demand in Brazil as a result of the shortfall in production caused by the facility consolidation. Additional expenses were incurred as the Company increased capacity in Mexico to address anticipated improvement in local market demand that did not materialize. During the fourth quarter of fiscal 2013, the Company initiated restructuring activities to address these issues as discussed below. Foreign currency translation favorably impacted segment gross profit by $0.2 million.

Americas operating income for the year ended August�31, 2013 was $28.4 million compared with $28.9 million last year. Segment operating income decreased as a result of the aforementioned decrease in segment gross profit, offset primarily by the favorable impact of $0.7 million from foreign currency translation and a $2.4 million decrease in SG&A expenses. The decrease in SG&A expenses was primarily due to successful restructuring initiatives and cost control efforts combined with reduced incentive compensation expense of $3.2 million, partially offset by the incremental expenses from ECM Plastics.



�	Year ended August�31,
�	�			�	�			�	�			�	�		�	Favorable (unfavorable)
APAC	2013			�	2012			�	Increase (decrease)						�	FX Impact		�	Excluding FX
�	(In thousands, except for %s and per pound data)
Pounds sold	95,994			�	96,893			�	(899		)	�	(0.9	)%	�	�		�	�
Net sales	$	126,696		�	$	119,211		�	$	7,485		�	6.3	�%	�	$	1,151	�	5.3	%
Segment gross profit	$	22,345		�	$	19,969		�	$	2,376		�	11.9	�%	�	$	253	�	10.6	%
Segment gross profit percentage	17.6		%	�	16.8		%	�	�			�	�		�	�		�	�
Segment operating income	$	12,108		�	$	10,908		�	$	1,200		�	11.0	�%	�	$	211	�	9.1	%
Price per pound	$	1.320		�	$	1.230		�	$	0.090		�	7.3	�%	�	$	0.012	�	6.3	%
Segment operating income per pound	$	0.126		�	$	0.113		�	$	0.013		�	11.5	�%	�	$	0.002	�	9.7	%

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Net sales for APAC for the year ended August�31, 2013 were $126.7 million, an increase of $7.5 million or 6.3% primarily due to improved selling price per pound and product mix. Decreased volumes in the masterbatch solutions and specialty powders product families were largely offset by the increased volumes in the engineered plastics product family. Foreign currency translation favorably impacted net sales by $1.2 million.

APAC gross profit for the year ended August�31, 2013 was $22.3 million, an increase of $2.4 million compared with last year. The increase in segment gross profit was primarily due to the 7.3% increase in price per pound combined with a continued focus on products with higher technical requirements, partially offset by increased plant costs in China and India associated with the start-up of new production lines.

APAC operating income for the year ended August�31, 2013 was $12.1 million, compared with $10.9 million last year. The increase in profitability was principally due to the increase in segment gross profit offset by an increase of $1.2 million in SG&A expenses mainly related to increased compensation expense to support growth in the region and the establishment of the APAC regional office in Hong Kong.



�	Year ended August�31,
�	�		�	�		�	�			�	�		�	Favorable (unfavorable)
Consolidated	2013		�	2012		�	Increase (decrease)						�	FX Impact		�	Excluding FX
�	(In thousands, except for %s and per pound data)
Pounds sold	1,917,511		�	1,881,826		�	35,685			�	1.9	�%	�	�		�	�
Net sales	2,133,402		�	2,081,272		�	$	52,130		�	2.5	�%	�	$	4,697	�	2.3	�%
Operating income	63,103		�	73,403		�	$	(10,300	)	�	(14.0	)%	�	$	965	�	(15.3	)%
Total operating income before certain items*	82,853		�	87,843		�	$	(4,990	)	�	(5.7	)%	�	$	971	�	(6.8	)%
Price per pound	$	1.113	�	$	1.106	�	$	0.007		�	0.6	�%	�	$	0.003	�	0.4	�%
Total operating income per pound before certain items*	$	0.043	�	$	0.047	�	$	(0.004	)	�	(8.5	)%	�	$		�	(8.5	)%

The increase of $52.1 million in consolidated net sales for the year ended August 31, 2013 compared with the prior fiscal year was primarily a result of incremental net sales and volume from the Elian and ECM Plastics, Inc. acquisitions of $56.4 million and 39.7 million pounds, respectively. Net sales were positively impacted by the $4.7 million favorable impact of foreign currency translation. Excluding the positive impact of acquisitions and foreign currency translation, net sales and volume decreased primarily due to the aforementioned economic environment in Europe.

The Companys SG&A expenses increased $7.9 million for the year ended August 31, 2013 compared with the prior year, excluding acquisition related transaction costs of $2.7 million and restructuring related costs of $2.7 million for fiscal 2013 and $1.4 million of acquisition related transaction costs for fiscal 2012. The increase was primarily attributable to incremental SG&A expense of $7.1 million from recent acquisitions, bad debt expense of $1.0 million and an increase in pension expense of $2.2 million. In addition, the Company invested in global marketing related initiatives, strategic planning in the APAC region, the establishment of the APAC regional headquarters in Hong Kong and the global ERP project. This was partially offset by savings from successful restructuring initiatives and cost control efforts, including $3.6 million related to the EMEA restructuring plans. Foreign currency translation favorably impacted SG&A expense by $0.2 million.

�

Operating income decreased $10.3 million for the year ended August�31, 2013 compared to the prior year. Total operating income, before certain items, for the year ended August�31, 2013 was $82.9 million, a decrease of $5.0 million compared with the prior year. The decrease in both operating income and total operating income, before certain items, was primarily due to the aforementioned increase in SG&A expense.

Additional consolidated results

Interest expense, net of interest income, decreased $0.5 million for the year ended August�31, 2013, as compared with the prior year primarily due to decreased borrowings.

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Foreign currency transaction gains or losses represent changes in the value of currencies in major areas where the Company operates. The Company experienced foreign currency transaction losses of $2.4 million and $0.2 million for the years ended August�31, 2013 and 2012, respectively. Foreign currency transaction losses during fiscal 2013 were primarily related to increased import activity in Brazil. Generally, the foreign currency transaction gains or losses relate to the changes in the value of the U.S. dollar compared with the Euro and other local currencies throughout all regions, and also changes between the Euro and other non-Euro European currencies. The Company may enter into foreign exchange forward contracts to reduce the impact of changes in foreign exchange rates on the consolidated statements of operations. These contracts reduce exposure to currency movements affecting the remeasurement of foreign currency denominated assets and liabilities primarily related to trade receivables and payables, as well as intercompany activities. Any gains or losses associated with these contracts, as well as the offsetting gains or losses from the underlying assets or liabilities, are recognized on the foreign currency transaction line in the consolidated statements of operations. There were no foreign exchange forward contracts designated as hedging instruments as of August�31, 2013 and 2012.

Other income for the year ended August�31, 2013 was $0.2 million, compared with other income of $1.3 million for the year ended August 31, 2012. In both fiscal 2013 and 2012, there were no individually significant transactions.

Noncontrolling interests represent a 49% equity position of Alta Plastica S.A. in an Argentinean venture with the Company and a 35% equity position of P.T. Prima Polycon Indah in an Indonesian joint venture with the Company. Effective December 31, 2011, the Company's partnership with Mitsubishi Chemical MKV Company, which held a 30% equity position in The Sunprene Company in Bellevue, Ohio, was dissolved by a vote of the partners.

Net income attributable to the Companys common stockholders was $26.1 million and $50.9 million for the years ended August�31, 2013 and 2012, respectively. Foreign currency translation had a positive impact on net income of $0.6 million for the year ended August�31, 2013.

Product Family

The consolidated net sales for the Company's five product families are as follows:



�	Year ended August�31,
�	2013					�	2012
�	(In thousands, except for %s)
Custom performance colors	$	150,890	�	7	%	�	$	125,595	�	6	%
Masterbatch solutions	781,770		�	37		�	750,531		�	36
Engineered plastics	534,777		�	25		�	547,090		�	26
Specialty powders	308,619		�	14		�	314,965		�	16
Distribution services	357,346		�	17		�	343,091		�	16
Total consolidated net sales	$	2,133,402	�	100	%	�	$	2,081,272	�	100	%

Fiscal 2013 includes a reclassification of revenue between product families to better reflect the way the businesses are managed.

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Capacity



�	Years�ended�August�31,
�	2013		�	2012
EMEA	77	%	�	79	%
Americas	67	%	�	70	%
APAC	68	%	�	81	%
Worldwide	72	%	�	76	%

During fiscal 2013, the Company's new facility in India became operational. Additionally, the Company's APAC segment experienced lower capacity utilization as additional manufacturing capacity was added to existing facilities to meet anticipated demand in the region.

Restructuring

Consolidated Restructuring Summary

The following table summarizes the activity related to the Companys restructuring plans:



�	Employee-related Costs			�	Other Costs			�	Translation Effect			�	Total Restructuring Costs
�	(In thousands)
Accrual balance as of August 31, 2011	$	3,322		�	$	403		�	$	70		�	$	3,795
Fiscal 2012 charges	7,581			�	1,675			�				�	9,256
Fiscal 2012 payments	(7,379		)	�	(1,697		)	�				�	(9,076		)
Translation				�				�	(609		)	�	(609		)
Accrual balance as of August 31, 2012	$	3,524		�	$	381		�	$	(539	)	�	$	3,366
Fiscal 2013 charges	8,669			�	1,831			�				�	10,500
Fiscal 2013 payments	(6,747		)	�	(1,812		)	�				�	(8,559		)
Translation				�				�	42			�	42
Accrual balance as of August 31, 2013	$	5,446		�	$	400		�	$	(497	)	�	$	5,349

For discussion on the Company's restructuring plans, refer to Note 15 of the consolidated financial statements within this Form 10-K.

Asset Impairment

The Company recorded $1.9 million and $3.4 million in pretax asset impairment charges during the years ended August�31, 2013 and 2012, respectively.

During fiscal 2013, the Company recorded $0.4 million in asset impairments related to the reduction of the carrying value of its facility in Oyonnax, France. Additionally, the Company reduced the carrying value of its facility in Verolanuova, Italy and recorded pretax impairment charges of $1.4 million and $2.7 million in fiscal 2013 and 2012, respectively. Refer to the fiscal 2014 asset impairment discussion above for further details on these two facilities.

In fiscal 2012, as a result of the Americas Engineered Plastics restructuring initiative, the Company reduced the carrying value of its facility, machinery and equipment in Nashville, Tennessee to its combined fair value of $3.8 million. The disposal value of the facility was determined as the estimated sales value of the assets less the costs to sell based on information provided by a third-party real estate valuation source. The disposal value of machinery and equipment to be sold or disposed of was determined based on estimated salvage value. The Company recorded pretax impairment charges of $0.5 million in fiscal 2012, primarily related to

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real estate, machinery and equipment at the Nashville, Tennessee facility. During fiscal 2013, the Company sold the Nashville, Tennessee facility which resulted in a minimal impact on the Company's consolidated financial results.

Refer to Note 19 of the consolidated financial statements within this Form 10-K for the discussion on impairment charges included in discontinued operations.

Income Tax

A reconciliation of the statutory U.S. federal income tax rate with the effective tax rates is as follows:�



�	Year Ended August 31,
�	2013						�	2012
�	(In thousands, except for %s)
U.S. statutory federal income tax rate	$	18,806		�	35.0	�%	�	$	23,389		�	35.0	�%
Amount of foreign taxes at less than U.S. statutory federal income tax rate	(9,189		)	�	(17.1	)	�	(11,373		)	�	(17.0	)
U.S. and foreign losses with no tax benefit	5,826			�	10.8		�	1,291			�	1.9
U.S. restructuring and other U.S. charges with no benefit	1,704			�	3.2		�	1,029			�	1.5
Valuation allowance charges	2,361			�	4.4		�	(2,380		)	�	(3.6	)
Establishment (resolution) of uncertain tax positions	(84		)	�	(0.2	)	�	1,718			�	2.6
Other	309			�	0.6		�	244			�	0.4
Provision (benefit) for U.S. and foreign income taxes	$	19,733		�	36.7	�%	�	$	13,918		�	20.8	�%

The effective tax rate for the year ended August 31, 2013 is greater than the U.S. statutory rate primarily because of no tax benefits being recognized for U.S. and certain foreign losses, realization of tax charges due to changes in valuation allowances, and U.S. restructuring and other U.S. charges with no benefit. These unfavorable effects on the Company tax rate were partially offset by the Company's overall foreign rate being less than the U.S. statutory rate. The change in the effective tax rate compared with the same prior year period was driven primarily by the valuation allowance established in the second quarter of fiscal 2013 against the net operating loss deferred tax asset of the Company's Brazilian entity due to the uncertainty in the realization of this asset and the adjustment to the Italian valuation allowance in fiscal 2012.

The effective tax rate for the year ended August�31, 2012 was less than the U.S. statutory rate primarily because of the Company's overall foreign rate being less than the U.S. statutory rate and an adjustment to the Italian valuation allowance. These favorable effects on the Company's tax rate were partially offset by no tax benefits being recognized for U.S. and certain foreign losses as well as the establishment of a liability for uncertain tax positions.

CRITICAL ACCOUNTING POLICIES

The Company has identified critical accounting policies that, as a result of the judgments, uncertainties, and the operations involved, could result in material changes to its financial condition or results of operations under different conditions or using different assumptions. The Companys critical accounting policies relate to the allowance for doubtful accounts, inventory reserve, restructuring charges, purchase accounting and goodwill, long-lived assets, income taxes, pension and other postretirement benefits and stock-based compensation.

Allowance for Doubtful Accounts

Management records an allowance for doubtful accounts receivable based on the current and projected credit quality of the Companys customers, customer payment history, and other factors that affect collectability. Changes in these factors or changes in economic circumstances could result in changes to the allowance for doubtful accounts.

Inventory Reserve

Management establishes an inventory reserve based on historical experience and amounts expected to be realized for slow-moving and obsolete inventory. The Company continuously monitors its slow-moving and obsolete inventory and makes adjustments as considered necessary. The proceeds from the sale or dispositions of these inventories may differ from the net recorded amount.

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Restructuring Charges

The Companys policy is to recognize restructuring costs in accordance with the accounting rules related to exit or disposal activities and compensation and non-retirement post-employment benefits. Detailed contemporaneous documentation is maintained and updated to ensure that accruals are properly supported. If management determines that there is a change in estimate, the accruals are adjusted to reflect this change.

Purchase Accounting and Goodwill

Business combinations are accounted for using the purchase method of accounting. This method requires the Company to record assets and liabilities of the business acquired at their estimated fair market values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. The Company generally uses valuation specialists to perform appraisals and assist in the determination of the fair values of the assets acquired and liabilities assumed. These valuations require management to make estimates and assumptions.

Goodwill is tested for impairment annually as of June 1. If circumstances change during interim periods between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying value, the Company would test goodwill for impairment. Factors which would necessitate an interim goodwill impairment assessment include a sustained decline in the Company's stock price, prolonged negative industry or economic trends, and significant underperformance relative to expected historical or projected future operating results.

Management uses judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for its goodwill impairment testing. The Company's fair value measurement approach combines the income and market valuation techniques for each of the Companys reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparables, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions.

Effective September 1, 2012, the masterbatch product family was split into two separate product families, custom performance colors and masterbatch solutions. Consequently, the related goodwill was allocated to the custom performance colors and masterbatch solutions reporting units in EMEA and the Americas based on the relative fair value of these reporting units. Additional goodwill was recorded in fiscal 2013 as a result of the ECM Plastics, Inc. acquisition and in fiscal 2014 due to the Perrite Group, Network Polymers, Inc., Prime Colorants and Specialty Plastics acquisitions. All acquired goodwill was allocated to appropriate reporting units based on relative fair values.

2014 Annual Goodwill Impairment Test

As of June 1, 2014, the annual goodwill impairment test date for fiscal 2014, goodwill exists in five of the Company's reporting units in EMEA (masterbatch solutions, engineered plastics, specialty powders, custom performance colors and distribution services), four reporting units in the Americas (masterbatch solutions, custom performance colors, engineered plastics and specialty powders) and one reporting unit in APAC (engineered plastics).

Qualitative Analysis

The Company applied the qualitative goodwill impairment accounting guidance to its EMEA masterbatch, EMEA distribution services, Americas masterbatch and Americas custom performance color reporting units as of June 1, 2014. Qualitative trends and factors considered in the Company's analysis included overall economic conditions, access to capital markets, industry projections, competitive environment, actual and forecast operating results, business strategy, stock price and market capitalization, and other relevant qualitative trends and factors. These trends and factors were both compared to, and based on, the assumptions used in the quantitative assessment performed in fiscal 2013. As of June 1, 2014, the Company concluded that there were no indicators of impairment to the goodwill for the Company's EMEA masterbatch, EMEA distribution services, Americas masterbatch and Americas custom performance color reporting units.

Quantitative Analysis

Management used the quantitative fair value measurement for its annual goodwill impairment test as of June 1, 2014 for the EMEA engineered plastics, EMEA specialty powders, EMEA custom performance color, Americas engineered plastics, Americas specialty powders and APAC engineered plastics. The fair values of all these reporting units were established using a combination of the income and market approaches. These valuation methodologies use estimates and assumptions, as noted above.

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Based on this quantitative analysis, management concluded that as of June 1, 2014, the EMEA engineered plastics, EMEA custom performance color, the Americas specialty powders and APAC engineered plastics reporting units had fair values that substantially exceeded their carrying values.

Management also concluded, based on the quantitative fair value measurements performed, that as of June 1, 2014, the fair values of the EMEA specialty powders and Americas engineered plastics reporting units exceeded their carrying values by 13% in each instance. As of August 31, 2014, the EMEA specialty powders reporting unit had goodwill of $19.0 million while goodwill in the Americas engineered plastics reporting unit was $28.4 million. The goodwill associated with these reporting units is primarily the result of the acquisitions made within the last few years. Generally, goodwill recorded in business combinations is more susceptible to risk of impairment soon after the acquisition primarily because the business combination is recorded at fair value based on operating plans and economic conditions present at the time of the acquisition. If operating results or economic conditions deteriorate soon after an acquisition, it could result in the impairment of the acquired goodwill. A change in macroeconomic conditions in the Americas and EMEA regions, as well as future changes in the judgments, assumptions and estimates that were used in the Company's goodwill impairment testing for these two reporting units, including the discount rate and future cash flow projections, could result in a significantly different estimate of the fair value.

See Note 4 to the consolidated financial statements within this Form 10-K for further discussion on goodwill.

Long-lived Assets

Long-lived assets, except goodwill and indefinite-lived intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of the asset group to future undiscounted net cash flows estimated by the Company to be generated by such asset groups. Fair value is the basis for the measurement of any asset write-downs that are recorded. Adjustments to the estimated remaining useful lives may result in accelerated depreciation, which is included in cost of sales.

Income Taxes

The Companys provision for income taxes involves a significant amount of judgment by management. This provision is impacted by the income and tax rates of the countries where the Company operates. A change in the geographical source of the Companys income can have a significant effect on the tax rate. No taxes are provided on certain foreign earnings which are permanently reinvested.

Various taxing authorities periodically audit the Companys tax returns. These audits may include questions regarding the Companys tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures associated with these various tax filing positions, the Company records tax liabilities for uncertain tax positions where the likelihood of sustaining the position is not more-likely-than-not based on its technical merits. A significant period of time may elapse before a particular matter, for which the Company has recorded a tax liability, is audited and fully resolved.

The establishment of the Companys tax liabilities relies on the judgment of management to estimate the exposures associated with its various filing positions. Although management believes those estimates and judgments are reasonable, actual results could differ, resulting in gains or losses that may be material to the Companys consolidated statements of operations.

To the extent that the Company prevails in matters for which tax liabilities have been recorded, or are required to pay amounts in excess of these tax liabilities, the Companys effective tax rate in any given financial statement period could be materially affected. An unfavorable tax settlement could result in an increase in the Companys effective tax rate in the financial statement period of resolution. A favorable tax settlement could be recognized as a reduction in the Companys effective tax rate in the financial statement period of resolution.

The Company records a valuation allowance to reduce its deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. All available evidence, both positive and negative, is considered to determine whether a valuation allowance is needed. Evidence, such as the results of operations for the current and preceding years, is given more weight than projections of future income, which is inherently uncertain. The Companys losses in the U.S. in recent periods provide sufficient negative evidence to require a full valuation allowance against its net deferred tax assets in the U.S. The Company intends to maintain a valuation allowance against its net deferred tax assets in the U.S. until sufficient positive evidence exists to support realization of such assets.

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Pension and Other Postretirement Benefits

The Company has several postretirement benefit plans worldwide. These plans consist primarily of defined benefit and defined contribution pension plans and other postretirement benefit plans. These benefit plans are a significant cost of doing business that represents obligations that will be ultimately settled far into the future. Pension and postretirement benefit accounting is intended to reflect the recognition of future benefit costs over the employees approximate period of employment based on the terms of the plans and the investment and funding decisions made by the Company.

For financial statements prepared in conformity with accounting principles generally accepted in the United States of America, management is required to make many assumptions in order to value the plans liabilities on a projected and accumulated basis, as well as to determine the annual expense for the plans. The assumptions chosen take into account historical experience, the current economic environment and managements best judgment regarding future experience. Assumptions include the discount rate, the expected long-term rate of return on assets, future salary increases, health care escalation rates, cost of living increases, turnover, retirement ages and mortality. While management believes the Companys assumptions are appropriate, significant differences in the Companys actual experience or significant changes in the Companys assumptions, including the discount rate used and the expected long-term rate of return on plan assets, may materially affect the Companys pension and postretirement obligations and future expenses.

Accounting guidance requires the full unfunded liability to be recognized on the consolidated balance sheet. The cumulative difference between actual experience and assumed experience is included in accumulated other comprehensive income (loss). For most of the plans, these gains or losses are recognized in expense over the average future service period of employees to the extent that they exceed 10% of the greater of the Projected Benefit Obligation (or Accumulated Postretirement Benefit Obligation for other postretirement benefits) and assets. The effects of any plan changes are also included as a component of accumulated other comprehensive income (loss) and then recognized in expense over the average future service period of the affected plan.

The Company consults with various actuaries at least annually when reviewing and selecting the discount rates to be used. The discount rates used by the Company are based on yields of various local corporate and governmental bond indices with actual maturity dates that approximate the estimated benefit payment streams of the related pension plans. The discount rates are also reviewed in comparison with current benchmark indices, economic market conditions and the movement in the benchmark yield since the previous fiscal year. The liability weighted-average discount rate for the defined benefit pension plans is 2.8% as of August 31, 2014, compared with 4.0% as of August 31, 2013. For the other postretirement benefit plan, the rate is 3.8% as of August 31, 2014 and 4.5% as of August 31, 2013. This rate represents the interest rates generally available in the United States, which is the Companys only country with other postretirement benefit liabilities. Another assumption that affects the Companys pension expense is the expected long-term rate of return on assets. Some of the Companys plans are funded. The weighted-average expected long-term rate of return on assets assumption is 5.2% for fiscal 2014. In consultation with its actuaries, the Company estimates its pension expense will increase by $2.5 million in fiscal 2015 compared with fiscal 2014 primarily as a result of a decrease in the weighted-average discount rate assumption.

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The following table illustrates the sensitivity to a change in the assumed discount rate and expected long-term rate of return on assets for the Companys pension plans and other postretirement plans as of August�31, 2014:�



Change in Assumption	Impact�on Fiscal�2014 Benefits�Expense			�	Impact on August�31,�2014 Projected�Benefit Obligation�for Pension�Plans			�	Impact on August�31, 2014 Projected Benefit Obligation for Postretirement�Plans
�	�			�	(In thousands)			�	�
25 basis point decrease in discount rate	$	489		�	$	8,422		�	$	306
25 basis point increase in discount rate	$	(456	)	�	$	(7,887	)	�	$	(293	)
25 basis point decrease in expected long-term rate of return on assets	$	82		�	$			�	$
25 basis point increase in expected long- term rate of return on assets	$	(82	)	�	$			�	$

Share-based Compensation

The Company grants certain types of equity awards as part of its long-term incentive compensation strategy. All such awards are expensed based on the fair value of the respective award. Fair value for awards that involve service or performance conditions for vesting is determined based on the market price on the grant date, while fair value for awards which include market conditions for vesting requires the use of a valuation model. The concept of modeling is used with such awards because observable market prices for these types of awards are not available. The modeling technique that is generally considered to most appropriately value this type of award is the Monte Carlo valuation model.

The Monte Carlo valuation model requires assumptions based on managements judgment regarding, among others, the volatility of the Companys stock, the correlation between the Companys stock price and that of its peer companies and the expected rate of interest. The Company uses historical data, corresponding to the vesting period, to determine the assumptions to be used in the Monte Carlo valuation model and has no reason to believe that future data is likely to materially differ from historical data. However, changes in the assumptions to reflect future stock price volatility, future correlation experience and future interest rates may result in a material change to the fair value of such awards. While management believes the Companys assumptions used are appropriate, significant differences in the Companys actual experience or significant changes in the Companys assumptions, including the volatility of the Companys stock, the correlation rate and the interest rate, may materially affect the Companys future share-based compensation expense.

The awards with a market condition granted prior to fiscal 2013 are accounted for as equity awards given that recipients receive shares of stock upon vesting, and expense for these awards is recognized over the service period regardless of whether the market condition is achieved and the awards ultimately vest. Awards with a market condition granted in fiscal 2014 and 2013 provide recipients an option to receive cash or shares of common stock upon vesting. Consequently, such awards are accounted for as liability awards and the Company remeasures these awards at fair value on a quarterly basis over the service period. Expense for these awards is recognized only to the extent the market conditions are achieved and the awards ultimately vest.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided from operations was $113.1 million, $83.7 million and $99.5 million for the years ended August�31, 2014, 2013 and 2012, respectively. The increase of $29.4 million in cash provided by operations was primarily due to the increase in net income in fiscal 2014 as compared with 2013. The Company has generated $296.4 million in net cash from operations in fiscal 2014, 2013 and 2012 combined.

The Companys cash and cash equivalents increased $1.4 million since August 31, 2013. This increase was driven primarily by cash provided from operations in fiscal 2014, coupled with proceeds from the sale of assets of $6.0 million and increased net borrowings of $142.4 million to fund the fiscal 2014 acquisitions. This was offset by the fiscal 2014 acquisitions for $206.6 million in cash consideration, expenditures for capital projects of $35.1 million and dividend payments of $23.7 million.

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The Companys approximate working capital days are summarized as follows:�



�	August�31, 2014	�	August�31, 2013
Days in receivables	55	�	53
Days in inventory	50	�	53
Days in payables	48	�	48
Total working capital days	57	�	58

The following table summarizes certain key balances on the Companys consolidated balance sheets and related metrics:�



�	August�31, 2014		�	August�31, 2013		�	$ Change		�	%�Change
�	(In thousands, except for %s)
Cash and cash equivalents	$	135,493	�	$	134,054	�	$	1,439	�	1.1	%
Working�capital,�excluding�cash	$	263,715	�	$	243,910	�	$	19,805	�	8.1	%
Long-term debt	$	339,546	�	$	207,435	�	$	132,111	�	63.7	%
Total debt	$	371,294	�	$	215,808	�	$	155,486	�	72.0	%
Net debt *	$	235,801	�	$	81,754	�	$	154,047	�	188.4	%
Total A. Schulman, Inc.s Stockholders equity	$	527,043	�	$	507,377	�	$	19,666	�	3.9	%

* Net debt, a non-GAAP financial measure, represents total debt less cash and cash equivalents. The Company believes that net debt provides useful supplemental liquidity information to investors.

As of August 31, 2014 and August 31, 2013, 95% of the Companys cash and cash equivalents were held by its foreign subsidiaries. The majority of these foreign cash balances are associated with earnings that we have asserted are permanently reinvested and which we plan to use to support continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, operating expenses or other similar cash needs of foreign operations. From time to time, we repatriate cash from foreign subsidiaries to the U.S. through intercompany dividends for normal operating needs and service outstanding debt. These dividends are typically paid out of current year earnings. In addition, excess cash in the U.S. is generally used to repay outstanding debt.

Working capital, excluding cash, was $263.7 million as of August�31, 2014, an increase of $19.8 million from August�31, 2013. The fiscal 2014 acquisitions contributed $42 million to working capital. The translation effect of foreign currencies, primarily the Euro, increased working capital by $5.9 million. Excluding the impact of fiscal 2014 acquisitions, working capital decreased $20.8 million largely due to decreases in inventory and other current assets of $9.3 million and $3.3 million, respectively.

Capital expenditures for the year ended August�31, 2014 were $35.1 million compared with $26.6 million last year. Capital expenditures for fiscal year 2014 primarily related to the regular and ongoing investment in the Company's manufacturing facilities.

In the first quarter of fiscal 2014, the Company and certain of its wholly-owned subsidiaries entered into an amended and restated Credit Agreement, dated September 24, 2013, and containing a maturity date of September 24, 2018, with JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Europe Limited, as global agent, the lenders named in the Credit Agreement and J.P. Morgan Securities LLC, Wells Fargo Securities, LLC and PNC Capital Markets LLC as lead arrangers ("the Credit Agreement"). The Credit Agreement provides for:


"	a multicurrency revolving credit facility in the aggregate principal amount of up to $300 million (the Revolving Facility");


"	a $200 million term loan facility (the "Term Loan Facility") with quarterly payments due until maturity; and


"	an expansion feature allowing the Company to incur, subject to certain terms and conditions, up to an additional $250 million of revolving loans and/or term loans ("the Incremental Facility" and, together with the Revolving Facility and the Term Loan Facility, the "Credit Facility").

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and cannot exceed a maximum net debt leverage ratio. The Company was in compliance with these covenants and does not believe a subsequent covenant violation is reasonably possible as of August 31, 2014.

Interest rates under the Credit Agreement are based on LIBOR or EURIBOR (depending on the borrowing currency) plus a spread determined by the Company's total leverage ratio. The Company is also required to pay a facility fee on the commitments, whether used or unused. The Revolving Facility provides for a portion of the funds to be made available as a short-term swing-line loan. The swing-line loan interest rate varies based on a mutually agreed upon rate between the bank and the Company. As of August�31, 2014, the amount available under the Credit Facility was reduced by outstanding letters of credit of $0.7 million and borrowings of $296.0 million. Outstanding letters of credit and borrowings under the previous credit agreement as of August 31, 2013 were $1.0 million and $150.0 million, respectively.

On February 14, 2014, the Company obtained a $15.0 million uncommitted line of credit from a regional financial institution, available until September 24, 2018. The interest rate is based upon the 30-day LIBOR index that is 10 basis points below the applicable spread on the Revolving Facility, noted above. The Company has $15.0 million of outstanding borrowings under this line of credit as of August�31, 2014 which are included in short-term debt on the Company's consolidated balance sheet.

On March 1, 2006, the Company issued �50.3 million of senior guaranteed notes in Germany in the private placement market maturing on March�1, 2016, with a fixed interest rate of 4.485% (the Euro Notes). The Euro Notes require annual principal payments of �2.5 million beginning in fiscal 2012. As of August�31, 2014, the amount of Euro Notes outstanding approximated �42.8 million, or $56.4 million. Repayment of the Euro Notes prior to maturity would cost approximately $7.1 million in early termination fees as of August�31, 2014.

The Euro Notes are guaranteed by certain material domestic subsidiaries and contain covenants similar to those in the Credit Agreement discussed above. The Company was in compliance with its covenants relating to the Euro Notes and does not believe a subsequent covenant violation is reasonably possible as of August�31, 2014.

The Companys interest bearing short-term debt of $31.7 million as of August�31, 2014 had a weighted-average interest rate of approximately 3.1%. Interest bearing short-term debt as of August�31, 2013 was $8.4 million with a weighted-average interest rate of approximately 10.1%.

Below summarizes the Companys available funds:�



�	As of August�31,
�	2014		�	2013
�	(In thousands)
Existing capacity:	�		�	�
Revolving Facility	$	300,000	�	$	300,000
Term Loan Facility	190,625		�
Domestic short-term lines of credit	15,000		�
Foreign short-term lines of credit	53,520		�	56,178
Total capacity from credit lines and notes	$	559,145	�	$	356,178
Availability:	�		�	�
Revolving Facility	$	193,909	�	$	149,024
Foreign short-term lines of credit	49,250		�	49,302
Total available funds from credit lines and notes	$	243,159	�	$	198,326

Total available funds from credit lines and notes represents the total capacity from credit lines and notes less outstanding borrowings of $315.3 million and $156.9 million as of August�31, 2014 and 2013, respectively, and issued letters of credit of $0.7 million and $1.0 million as of August�31, 2014 and 2013, respectively.

The Companys underfunded pension liability is $133.1 million as of August�31, 2014. This amount is primarily due to an underfunded plan of $107.4 million maintained by the Companys German subsidiary. Under this plan, no separate vehicle is required to accumulate assets to provide for the payment of benefits. The benefits are paid directly by the Company to the participants. It is anticipated that the German subsidiary will generate sufficient funds from operations to pay these benefits in the future.

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During the year ended August�31, 2014, the Company paid cash dividends aggregating to $0.80 per share. The total amount of these dividends was $23.7 million. Cash flow has been sufficient to fund the payment of these dividends.

The Company has foreign currency exposures primarily related to the Euro, British pound sterling, Polish zloty, Mexican peso, Brazilian real, and Argentine peso, among others. The assets and liabilities of the Companys foreign subsidiaries are translated into U.S. dollars using current exchange rates. Income statement items are translated at average exchange rates prevailing during the period. The resulting translation adjustments are recorded in the accumulated other comprehensive income (loss) account in stockholders equity. A significant portion of the Companys operations uses the Euro as its functional currency. The change in the value of various foreign currencies, primarily the Euro, during the year ended August 31, 2014 increased the accumulated other comprehensive income (loss) account by $5.0 million which was primarily the result of a 4.1% increase in the twelve-month average value of the Euro from 1.308 Euros to 1 U.S. dollar in fiscal 2013 to 1.361 Euros to 1 U.S. dollar in fiscal 2014. Overall, the value of the Euro decreased 0.4% from 1.324 Euros to 1 U.S. dollar as of August 31, 2013 to 1.319 as of August 31, 2014.

Cash flow from operations, borrowing capacity under the credit facilities and current cash and cash equivalents are expected to provide sufficient liquidity to maintain the Companys current operations and capital expenditure requirements, pay dividends, repurchase shares, pursue acquisitions and service outstanding debt.

A summary of the Companys future obligations subsequent to August�31, 2014 is presented below:�



�	Less than 1 year		�	1-3�years		�	3-5 years		�	More�than�5 years		�	Total
�	(In thousands)
Short-Term Debt^(a)	$	31,646	�	$		�	$		�	$		�	$	31,646
Long-Term Debt^(a),(h)			�	75,665		�	263,525		�			�	339,190
Capital Lease Obligations^(a)	102		�	216		�	137		�	3		�	458
Operating Lease Obligations^(b)	11,378		�	14,078		�	8,128		�	18,227		�	51,811
Purchase Obligations^(c)	123,801		�	27,790		�	12,723		�			�	164,314
Pension Obligations^(d)	5,636		�			�			�			�	5,636
Postretirement Benefit Obligations^(e)	890		�	1,719		�	1,697		�	4,001		�	8,307
Deferred Compensation Obligations^(f)	200		�	350		�			�			�	550
Interest Payments^(g)	8,618		�	13,908		�	5,829		�			�	28,355
NATPET Investment⁽ⁱ⁾	12,792		�			�			�			�	12,792
�	$	195,063	�	$	133,726	�	$	292,039	�	$	22,231	�	$	643,059


^(a)�	Short-term debt, long-term debt and capital lease information is provided in the Notes to the Consolidated Financial Statements. Short-term debt and long-term debt in the table above exclude capital lease obligations.


^(b)�	Operating lease information is provided in the Notes to the Consolidated Financial Statements.


^(c)�	Purchase obligations include purchase contracts and purchase orders for inventory.


^(d)�	Pension obligations represent future estimated pension payments to comply with local funding requirements, as well as estimated benefit payments. The projected payments beyond fiscal year 2015 are not currently determinable.


^(e)�	Postretirement benefit obligations represent the estimated benefit payments of the U.S. postretirement benefit plan using the plan provisions in effect as of August 31, 2014.


^(f)�	Deferred compensation obligations represent payments in accordance with agreements for two individuals for a ten-year period through fiscal 2018.


^(g)�	Interest obligations on the Companys short and long-term debt are included assuming the outstanding debt levels and interest rates will be consistent with those as of August�31, 2014.

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^(h)�	The Company's long-term debt was refinanced in September 2013 and matures in September 2018.


⁽ⁱ⁾�	The NATPET investment represents the Company's commitment for an investment of �9.7 million in a joint venture agreement with NATPET of Jeddah, Saudi Arabia.

The Company had $3.8 million of gross unrecognized tax benefits and $0.9 million of accrued interest and penalties on unrecognized tax benefits as of August�31, 2014 for which it could not reasonably estimate the timing and amount of future payments; therefore, no amounts were included in the Companys future obligations table. Additional information on unrecognized tax benefits is provided in the Notes to the Consolidated Financial Statements.

The Companys outstanding commercial commitments as of August�31, 2014 are not material to the Companys financial position, liquidity or results of operations except as discussed in the Notes to the Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

NEW ACCOUNTING PRONOUNCEMENTS

For a discussion of new accounting pronouncements, see Note 1 to the consolidated financial statements in ITEM�8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report on Form 10-K.

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 managements 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 Companys 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 Companys major product markets or countries where the Company has operations;


"	the effectiveness of the Companys 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 major 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 Companys 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;

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"	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; and


"	operating problems with our information systems as a result of system security failures such as viruses, computer "hackers" or other causes.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Companys performance are set forth in ITEM�1A, RISK FACTORS, of this Annual Report on Form 10-K. 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 Companys business, financial condition and results of operations.



ITEM�7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The Companys exposure to market risk from changes in interest rates relates primarily to variable rate debt obligations which include the Revolving Facility, Term Loan Facility, foreign short-term lines of credit and other floating rate debt. As of August�31, 2014, the Company had $315.0 million outstanding against these facilities. Borrowing costs may fluctuate depending upon the volatility of interest rates and amounts borrowed. There would be an estimated $0.5 million impact on annual interest expense from a 10% increase or decrease in market rates of interest on outstanding variable rate borrowings as of August�31, 2014. The terms of the new credit facility entered into on September 24, 2013 include a 50 basis point rate improvement over the prior agreement in effect as of August 31, 2013.

Foreign Currency Exchange Risk

The Company conducts business on a multinational basis in a variety of foreign currencies. The Companys exposure to market risk for changes in foreign currency exchange rates arises from anticipated transactions from international trade and repatriation of foreign earnings. The Companys principal foreign currency exposures relate to the Euro, British pound sterling, Polish zloty, Mexican peso, Brazilian real and Argentine peso, among others.

The Company enters into forward exchange contracts to reduce its exposure to fluctuations in related foreign currencies. These contracts are with major financial institutions and the risk of loss is considered remote. The total value of open contracts and any risk to the Company as a result of these arrangements is not material to the Companys financial position, liquidity or results of operations. The potential change in fair value as of August�31, 2014 for such financial instruments from an increase or decrease of 10% in quoted foreign currency exchange rates would be $0.1 million.

Commodity Price Risk

The Company uses certain commodities, primarily plastic resins, in its manufacturing processes. The cost of operations can be affected as the market for these commodities changes. As the price of resin increases or decreases, market prices for the Companys products will also generally increase or decrease. This will typically lead to higher or lower average selling prices and will impact the Companys gross profit and operating income. The impact on operating income is due to a lag in matching the change in raw material cost of sales and the change in product sales prices. The Company attempts to minimize its exposure to resin price changes by monitoring and carefully managing the quantity of its inventory on hand and product sales prices.

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ITEM�8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

A. Schulman, Inc.

Index to the Consolidated Financial Statements

�



�	Page
Report of Independent Registered Public Accounting Firm	45
Consolidated Statements of Operations for the three years ended August�31, 2014	46
Consolidated Statements of Comprehensive Income for the three years ended August 31, 2014	47
Consolidated Balance Sheets as of August�31, 2014 and 2013	48
Consolidated Statements of Stockholders Equity for the three years ended August�31, 2014	49
Consolidated Statements of Cash Flows for the three years ended August�31, 2014	50
Notes to Consolidated Financial Statements	51

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of A. Schulman, Inc.

In our opinion, the consolidated financial statements listed in the index appearing under Item�15(a)(1) present fairly, in all material respects, the financial position of A. Schulman, Inc. and its subsidiaries at August 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2014 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item�15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2014, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992. The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A companys internal control over financial reporting is a process designed 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. A companys internal control over financial reporting includes those policies and procedures that (i)�pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii)�provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii)�provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A, management has excluded the Perrite Group, Network Polymers, Inc., Prime Colorants, and the specialty plastics business of Ferro Corporation from its assessment of internal control over financial reporting as of August 31, 2014, because they were acquired by the Company in purchase business combinations during fiscal 2014. We have also excluded the above acquisitions from our audit of internal control over financial reporting. All of the acquisitions are wholly-owned subsidiaries. The total assets for the Perrite Group, Network Polymers, Inc., Prime Colorants and the specialty plastics business of Ferro Corporation represent 6.5%, 3.2%, 1.2%, and 7.4% respectively, of the related consolidated financial statement amounts as of August 31, 2014. The total revenue for the Perrite Group, Network Polymers, Inc., Prime Colorants and the specialty plastics business of Ferro Corporation represent 5.8%, 1.9%, 0.3%, and 1.0% respectively, of the related consolidated financial statement amounts for the year ended August 31, 2014.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

October�22, 2014

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A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS�



�	Year Ended August 31,
�	2014			�	2013			�	2012
�	(In thousands, except per share data)
Net sales	$	2,446,998		�	$	2,133,402		�	$	2,081,272
Cost of sales	2,116,990			�	1,852,223			�	1,802,029
Selling, general and administrative expenses	242,486			�	205,370			�	193,502
Restructuring expense	4,883			�	10,500			�	9,256
Asset impairment	104			�	1,873			�	3,392
Curtailment and settlement (gains) losses	214			�	333			�	(310		)
Operating income	82,321			�	63,103			�	73,403
Interest expense	8,503			�	7,657			�	8,351
Interest income	(286		)	�	(495		)	�	(676		)
Foreign currency transaction (gains) losses	2,206			�	2,426			�	243
Other (income) expense, net	(434		)	�	(217		)	�	(1,342		)
Income from continuing operations before taxes	72,332			�	53,732			�	66,827
Provision (benefit) for U.S. and foreign income taxes	18,542			�	19,733			�	13,918
Income from continuing operations	53,790			�	33,999			�	52,909
Income (loss) from discontinued operations, net of tax	3,202			�	(6,671		)	�	(860		)
Net income	56,992			�	27,328			�	52,049
Noncontrolling interests	(799		)	�	(1,229		)	�	(1,162		)
Net income attributable to A. Schulman, Inc.	$	56,193		�	$	26,099		�	$	50,887
�	�			�	�			�	�
Weighted-average number of shares outstanding:	�			�	�			�	�
Basic	29,061			�	29,260			�	29,389
Diluted	29,362			�	29,337			�	29,549
�	�			�	�			�	�
Basic earnings per share attributable to A. Schulman, Inc.	�			�	�			�	�
Income from continuing operations	$	1.82		�	$	1.12		�	$	1.76
Income (loss) from discontinued operations	0.11			�	(0.23		)	�	(0.03		)
Net income attributable to A. Schulman, Inc.	$	1.93		�	$	0.89		�	$	1.73
�	�			�	�			�	�
Diluted earnings per share attributable to A. Schulman, Inc.	�			�	�			�	�
Income from continuing operations	$	1.80		�	$	1.12		�	$	1.75
Income (loss) from discontinued operations	0.11			�	(0.23		)	�	(0.03		)
Net income attributable to A. Schulman, Inc.	$	1.91		�	$	0.89		�	$	1.72
�	�			�	�			�	�
Cash dividends per common share	$	0.80		�	$	0.78		�	$	0.72

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME�



�	�	Year Ended August 31,
�	�	2014			�	2013			�	2012
�	�	(In thousands)
Net Income	�	$	56,992		�	$	27,328		�	$	52,049
Other comprehensive income (loss):	�	�			�	�			�	�
Foreign currency translation gains (losses), net of tax of $0	�	4,987			�	4,174			�	(46,647		)
Net change in net actuarial gains (losses), net of tax of $8,262 in 2014, $55 in 2013 and $4,204 in 2012	�	(21,813		)	�	2,710			�	(6,200		)
��Net change in prior service (costs) credits, net of tax of $0	�	(634		)	�	(436		)	�	(3,171		)
Other comprehensive income (loss)	�	(17,460		)	�	6,448			�	(56,018		)
Comprehensive income (loss)	�	39,532			�	33,776			�	(3,969		)
Less: comprehensive income (loss) attributable to noncontrolling interests	�	712			�	1,074			�	1,072
Comprehensive income (loss) attributable to A. Schulman, Inc.	�	$	38,820		�	$	32,702		�	$	(5,041	)

The accompanying notes are an integral part of the consolidated financial statements.

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A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS



�	August�31, 2014			�	August�31, 2013
�	(In thousands)
ASSETS
Current assets:	�			�	�
Cash and cash equivalents	$	135,493		�	$	134,054
Accounts receivable, net	384,444			�	310,749
Inventories	292,141			�	261,658
Prepaid expenses and other current assets	40,473			�	41,224
Total current assets	852,551			�	747,685
Property, plant and equipment, at cost:	�			�	�
Land and improvements	28,439			�	27,954
Buildings and leasehold improvements	160,858			�	146,647
Machinery and equipment	398,563			�	356,144
Furniture and fixtures	41,255			�	39,065
Construction in progress	16,718			�	7,149
Gross property, plant and equipment	645,833			�	576,959
Accumulated depreciation	391,912			�	366,438
Net property, plant and equipment	253,921			�	210,521
Deferred charges and other noncurrent assets	65,079			�	48,723
Goodwill	202,299			�	139,526
Intangible assets, net	138,634			�	91,887
Total assets	$	1,512,484		�	$	1,238,342
LIABILITIES AND EQUITY
Current liabilities:	�			�	�
Accounts payable	$	314,957		�	$	265,477
U.S. and foreign income taxes payable	6,385			�	6,423
Accrued payroll, taxes and related benefits	54,199			�	40,759
Other accrued liabilities	46,054			�	48,689
Short-term debt	31,748			�	8,373
Total current liabilities	453,343			�	369,721
Long-term debt	339,546			�	207,435
Pension plans	129,949			�	98,599
Deferred income taxes	23,826			�	20,873
Other long-term liabilities	29,369			�	26,970
Total liabilities	976,033			�	723,598
Commitments and contingencies				�
Stockholders equity:	�			�	�
Common stock, $1 par value, authorized - 75,000 shares, issued - 48,185 shares in 2014 and 48,094 shares in 2013	48,185			�	48,094
Additional paid-in capital	268,545			�	263,158
Accumulated other comprehensive income (loss)	(16,691		)	�	682
Retained earnings	606,898			�	574,370
Treasury stock, at cost, 18,973 shares in 2014 and 18,940 shares in 2013	(379,894		)	�	(378,927		)
Total A. Schulman, Inc.s stockholders equity	527,043			�	507,377
Noncontrolling interests	9,408			�	7,367
Total equity	536,451			�	514,744
Total liabilities and equity	$	1,512,484		�	$	1,238,342

The accompanying notes are an integral part of the consolidated financial statements.

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A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

�

Common

Stock

($1 par

value)

�

Additional Paid-In Capital

�

Accumulated

Other

Comprehensive

Income (Loss)

�

Retained

Earnings

�

Treasury

Stock

�

Non-controlling

Interests

�

Total

Equity

�

(In thousands, except per share data)

Balance at August 31, 2011

47,816

�

254,184

�

50,007

�

541,256

�

(344,759

)

�

5,801

�

554,305

Comprehensive income (loss)

�

(55,928

)

�

50,887

�

1,072

�

(3,969

)

Cash dividends paid, $0.72 per share

�

(20,938

)

�

(20,938

)

Noncontrolling interests' contributions
(distributions)

�

(580

)

�

(580

)

Purchase 1,463 shares of treasury stock

�

(26,752

)

�

(26,752

)

Issuance of treasury stock

�

412

�

432

Stock options exercised

�

864

�

915

Restricted stock issued, net of forfeitures

108

�

(108

)

�

Redemption of common stock to cover tax
withholdings

(17

)

�

(365

)

�

(382

)

Amortization of restricted stock

�

4,658

�

4,658

Balance at August 31, 2012

47,958

�

259,253

�

(5,921

)

�

571,205

�

(371,099

)

�

6,293

�

507,689

Comprehensive income (loss)

�

6,603

�

26,099

�

1,074

�

33,776

Cash dividends paid, $0.78 per share

�

(22,934

)

�

(22,934

)

Purchase 304 shares of treasury stock

�

(8,091

)

�

(8,091

)

Issuance of treasury stock

�

263

�

356

Stock options exercised

�

1,141

�

1,205

Restricted stock issued, net of forfeitures

�

(93

)

�

Redemption of common stock to cover tax
withholdings

(21

)

�

(375

)

�

(396

)

Amortization of restricted stock

�

3,139

�

3,139

Balance at August 31, 2013

48,094

�

263,158

�

682

�

574,370

�

(378,927

)

�

7,367

�

514,744

Comprehensive income (loss)

�

(17,373

)

�

56,193

�

712

�

39,532

Noncontrolling interests' contributions
(distributions)

�

600

�

600

Change in ownership interest

�

(729

)

�

729

�

Cash dividends paid, $0.80 per share

�

(23,665

)

�

(23,665

)

Purchase 40 shares of treasury stock

�

(1,116

)

�

(1,116

)

Issuance of treasury stock

�

105

�

149

�

254

Stock options exercised

�

220

�

233

Restricted stock issued, net of forfeitures

�

(88

)

�

Redemption of common stock to cover tax
withholdings

(10

)

�

(351

)

�

(361

)

Amortization of restricted stock

�

6,230

�

6,230

Balance at August 31, 2014

48,185

�

268,545

�

(16,691

)

�

606,898

�

(379,894

)

�

9,408

�

536,451

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



�	Year Ended August 31,
�	2014			�	2013			�	2012
�	(In thousands)
Operating from continuing and discontinued operations:	�			�	�			�	�
Net income	$	56,992		�	$	27,328		�	$	52,049
Adjustments to reconcile net income to net cash provided from (used in) operating activities:	�			�	�			�	�
Depreciation	33,697			�	29,982			�	29,176
Amortization	14,207			�	11,469			�	9,608
Deferred tax provision	(3,007		)	�	(1,194		)	�	(10,867		)
Pension, postretirement benefits and other compensation	10,802			�	6,282			�	6,410
Asset impairment	104			�	5,873			�	3,392
Curtailment and settlement (gains) losses	214			�	333			�	(310		)
Gain on sale of assets from discontinued operations	(3,365		)	�				�
Changes in assets and liabilities, net of acquisitions:	�			�	�			�	�
Accounts receivable	(5,875		)	�	1,790			�	16,788
Inventories	7,099			�	(6,376		)	�	(6,222		)
Accounts payable	(3,497		)	�	8,924			�	9,584
Income taxes	(1,372		)	�	(320		)	�	(4,832		)
Accrued payroll and other accrued liabilities	5,189			�	5,415			�	(11,563		)
Other assets and long-term liabilities	1,954			�	(5,793		)	�	6,284
Net cash provided from (used in) operating activities	113,142			�	83,713			�	99,497
Investing from continuing and discontinued operations:	�			�	�			�	�
Expenditures for property, plant and equipment	(35,089		)	�	(26,568		)	�	(34,003		)
Proceeds from the sale of assets	6,004			�	13,886			�	1,581
Business acquisitions, net of cash	(206,625		)	�	(36,805		)	�	(64,918		)
Net cash provided from (used in) investing activities	(235,710		)	�	(49,487		)	�	(97,340		)
Financing from continuing and discontinued operations:	�			�	�			�	�
Cash dividends paid	(23,665		)	�	(22,934		)	�	(20,938		)
Increase (decrease) in short-term debt	13,774			�	3,324			�	(6,339		)
Borrowings on long-term debt	795,745			�	264,908			�	188,832
Repayments on long-term debt including current portion	(653,894		)	�	(264,613		)	�	(159,323		)
Payment of debt issuance costs	(1,782		)	�				�
Noncontrolling interests' contributions (distributions)	600			�				�	(580		)
Issuances of stock, common and treasury	487			�	1,561			�	1,347
Redemptions of common stock	(361		)	�	(396		)	�	(382		)
Purchases of treasury stock	(1,116		)	�	(8,091		)	�	(26,752		)
Net cash provided from (used in) financing activities	129,788			�	(26,241		)	�	(24,135		)
Effect of exchange rate changes on cash	(5,781		)	�	2,038			�	(9,744		)
Net increase (decrease) in cash and cash equivalents	1,439			�	10,023			�	(31,722		)
Cash and cash equivalents at beginning of year	134,054			�	124,031			�	155,753
Cash and cash equivalents at end of year	$	135,493		�	$	134,054		�	$	124,031
�	�			�	�			�	�
Cash paid during the year for:	�			�	�			�	�
Interest	$	7,578		�	$	5,487		�	$	7,472
Income taxes	$	21,720		�	$	15,598		�	$	26,964

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

A. Schulman, Inc. (the Company) is a leading international supplier of high-performance plastic compounds and resins. The Companys customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, custom services, and sports, home & leisure. The Company employs approximately 3,900 people and has 42 manufacturing facilities in the Americas, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries in which a controlling interest is maintained. All significant intercompany transactions have been eliminated.

The financial position and results of operations of the Companys foreign subsidiaries are generally recorded using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rate in effect at each reporting period end. Income statement accounts are translated each month at the average rate of exchange during the month. Other comprehensive income and accumulated other comprehensive income (loss) in stockholders equity include translation adjustments arising from the use of different exchange rates from period to period.

Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2014 presentation.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. Actual results could differ from those estimates. Such estimates include the value of purchase consideration, valuation of accounts receivables, inventories, goodwill, other intangible assets, other long-lived assets, contingencies, and assumptions used in the calculation of income taxes, pension and other postretirement benefits, stock-based compensation, and restructuring, among others. These estimates and assumptions are based on managements judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors. Management monitors any factors which may have an impact and adjusts such estimates and assumptions when required. Changes in those estimates are reflected in the consolidated financial statements in the period of change.

Revenue Recognition

The Companys accounting policy regarding revenue recognition is to recognize revenue when there is persuasive evidence of a sales agreement, the delivery of goods has occurred where both title and the risks and rewards of ownership are transferred, the sales price is fixed or determinable and collection of related billings is reasonably assured. A provision for payment discounts is recorded as a reduction of sales in the same period that the revenue is recognized.

The Company provides tolling services for a fee to process materials provided and owned by customers. While providing these services, the Company may provide certain amounts of its materials, such as additives. These materials are charged to the customer as an addition to the tolling fees. The Company records revenues from tolling services and related materials when such services are performed.

Cost of Sales

Cost of sales is primarily comprised of direct materials and supplies consumed in the manufacturing, distribution and tolling of product, as well as related labor, depreciation and overhead expense necessary to acquire and convert the purchased materials and supplies into finished products. Cost of sales also includes freight, packaging and warehousing.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share-based Compensation

The Company accounts for share-based compensation expense based on the fair value of the awards granted in accordance with applicable accounting guidance. The fair value of awards with service and performance conditions is based on quoted market prices of the Companys stock on the respective grant date. The fair value of awards that include market conditions for vesting is estimated using the Monte Carlo valuation model.

The Monte Carlo valuation model requires assumptions based on managements judgment regarding the volatility of the Companys stock, the correlation between the Companys stock price and that of its peer companies and the expected rates of interest. The Company uses historical data, corresponding to the vesting period, to determine all of the assumptions used in the Monte Carlo valuation model. The expected volatility assumption is based on historical volatility. The Company used the daily stock prices in fiscal 2014 and 2013 and weekly stock prices in fiscal 2012 to determine historical volatility. The correlation between the Companys stock price and each of the peer companies is determined based on historical daily stock prices of the Company and each of the peer companies. The risk-free interest rate is based on zero coupon treasury bond rates corresponding to the expected life of the awards.

Awards that are expected to settle through the issuance of the Companys common stock are accounted for as equity-classified awards and related compensation expense is recognized based on grant date fair value over the related service period. Awards that may be settled in cash, at the election of the recipient, are accounted for as liability-classified awards. The fair value of such awards is remeasured at the end of each reporting period and expense is recognized over the requisite service period. The Company uses an estimate of expected forfeitures in the recognition of all share-based compensation expense that is based on historical experience. See Note 10 of this Form 10-K for further discussion on share-based compensation.

Restructuring

The Company records restructuring costs related to the actions implemented to reduce excess and high-cost manufacturing capacity, and to reduce associate headcount. Employee-related costs include severance, supplemental unemployment compensation and benefits, medical benefits, pension curtailments and settlements, and other termination benefits. For ongoing benefit arrangements, a liability is recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. These conditions are generally met when the restructuring plan is approved by management. For one-time benefit arrangements, a liability is incurred and accrued at the date the plan is communicated to employees, unless they will be retained beyond a minimum retention period. In this case, the liability is estimated at the date the plan is communicated to employees and is accrued ratably over the future service period. Other costs generally include non-cancelable lease costs, contract terminations, and relocation costs. A liability for these costs is recognized in the period in which the liability is incurred. Restructuring charges related to accelerated depreciation and asset impairments are recorded separately within the consolidated statements of operations. See Note 15 of this Form 10-K for further discussion on restructuring charges.

Asset Impairment

Long-lived assets, except goodwill, are reviewed for impairment when circumstances indicate the carrying value of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of the asset group to future undiscounted net cash flows estimated by the Company to be generated by such asset groups. If such asset groups are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value. Assets held for sale are recorded at the lower of carrying value or fair value less costs to sell. See Note 16 of this Form 10-K for further discussion on asset impairments.

Income Taxes

The Company recognizes income taxes during the period in which transactions enter into the determination of financial statement income. Accordingly, deferred taxes are provided for temporary differences between the book and tax bases of assets and liabilities. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. No taxes are provided on certain foreign earnings which are permanently reinvested. Accruals for uncertain tax positions are provided for in accordance with accounting rules related to uncertainty in income taxes. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense. See Note 7 of this Form 10-K for further discussion on income taxes.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash Equivalents and Short-Term Investments

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The Companys cash equivalents are diversified with numerous financial institutions which management believes to have acceptable credit ratings. These cash equivalents are primarily money-market funds and short-term time deposits. The money-market funds are rated primarily A or higher by third parties. Management monitors the placement of its cash given the current credit market. The recorded amount of these cash equivalents approximates fair value. Investments with maturities between three and twelve months are considered to be short-term investments. As of August�31, 2014 and 2013, the Company did not hold any short-term investments.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Management records an allowance for doubtful accounts receivable based on the current and projected credit quality of the Companys customers, customer payment history and other factors that affect collectability. Changes in these factors or changes in economic circumstances could result in changes to the allowance for doubtful accounts. The Company reviews its allowance for doubtful accounts on a periodic basis. Trade accounts receivables are charged off against the allowance for doubtful accounts when the Company determines it is probable the account receivable will not be collected. Trade accounts receivables, less allowance for doubtful accounts, reflect the net realizable value of receivables, and approximate fair value. The Company does not have any off-balance sheet exposure related to its customers. See Note 3 of this Form 10-K for further discussion on the allowance for doubtful accounts.

Inventories

Inventories are recorded at lower of average cost or market. The Company generally does not distinguish between raw materials and finished goods because numerous products that can be sold as finished goods are also used as raw materials in the production of other inventory items. Management establishes an estimated excess and obsolete inventory reserve based on historical experience and amounts expected to be realized for slow-moving and obsolete inventory.

Property, Plant and Equipment and Depreciation

Property, plant and equipment is recorded at cost. The cost of renewals and betterments is capitalized in the property accounts. Capital expenditures exclude related accruals of $4.4 million, $1.9 million and $3.4 million in fiscal 2014, 2013 and 2012, respectively.

It is the Companys policy to depreciate the cost of property, plant and equipment over the estimated useful lives of the assets, and for leasehold improvements over the shorter of the applicable lease term or the estimated useful life of the asset, using the straight-line method. The estimated useful lives used in the computation of depreciation are as follows:

�



Buildings and leasehold improvements	7	to	40	years
Machinery and equipment	5	to	10	years
Furniture and fixtures	5	to	10	years

Estimated useful lives are reviewed when certain events occur or operating conditions change and when appropriate, changes are made prospectively.

The cost of assets sold or otherwise disposed of is eliminated from the related accounts. Gains or losses are recognized when sales or disposals occur. Maintenance and repair costs are expensed as incurred.

Purchase Accounting, Goodwill and Other Intangible Assets

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is tested for impairment annually as of June 1 for all reporting units. If circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, the Company would test goodwill for impairment during interim periods between annual tests. The fair value used in the analysis is established using a combination of the income and market approaches. These valuation methodologies use estimates and assumptions including, but not limited to, the determination of appropriate market comparables, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions.

Other intangible assets with finite useful lives, which consist primarily of registered trademarks and tradenames, customer related intangibles, and developed technology, are amortized over their estimated useful lives on either a straight-line or double-declining basis, reflective of the pattern of economic benefits consumed. The estimated useful lives for each major category of intangible assets with finite useful lives are:�



Registered trademarks and tradenames	3	to	25	years
Customer related intangibles	9	to	20	years
Developed technology	10	to	15	years

See Note 4 of this Form 10-K for further discussion on goodwill and other intangible assets.

Retirement Plans

The Company has several defined benefit and defined contribution pension plans, covering certain employees in the U.S. and in foreign countries. The pension and postretirement benefit accounting reflects the recognition of future benefit costs over the employees approximate period of employment based on the terms of the plans and the investment and funding decisions made by the Company. Generally, the defined benefit pension plans accrue the current and prior service costs annually and funding is not required for all plans. See Note 8 of this Form 10-K for further discussion on retirement plans.

Derivative Instruments and Hedging Activities

The Company accounts for its derivative instruments in accordance with the applicable accounting guidance which requires all derivatives, whether designated in hedging relationships or not, to be recorded on the consolidated balance sheet at fair value. The Companys foreign exchange forward contracts are adjusted to their fair market value through the consolidated statement of operations. Gains or losses on foreign exchange forward contracts that hedge specific transactions are recognized in the consolidated statement of operations offsetting the underlying foreign currency gains or losses. Currently, the Company does not designate any of these contracts as hedges. See Note 6 of this Form 10-K for further discussion on derivative instruments and hedging activities.

Fair Value Measurement

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value under accounting principles generally accepted in the United States. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value as follows:

�


"	Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;


"	Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and


"	Level 3: Unobservable inputs which reflect an entitys own assumptions.

See Note 6 and Note 16 of this Form 10-K for further discussion on fair value measurements.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

New Accounting Pronouncements

In May 2014, the FASB issued new accounting guidance that creates a single revenue recognition model, while clarifying the principles for recognizing revenue. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods, and the Company will adopt the new guidance on September 1, 2017. Early adoption is not permitted. The Company will evaluate the effects, if any, that the adoption of this guidance will have on its consolidated financial statements.

In April 2014, the FASB issued new accounting guidance related to reporting discontinued operations that changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. The standard is effective for fiscal years beginning on or after December 15, 2014 on a prospective basis, including interim periods, with early adoption permitted. The Company will evaluate the effects, if any, that the adoption of this guidance will have on its consolidated financial statements.

In February 2013, the FASB issued new accounting guidance related to the reporting of the amounts reclassified out of accumulated other comprehensive income in the consolidated financial statements. The new accounting guidance requires all companies to report the effect of items reclassified out of accumulated other comprehensive income on the respective line items of net income either on the face of the financial statements where net income is presented or in a tabular format in the notes to the financial statements. This standard was effective on a prospective basis for fiscal years beginning after December 15, 2012, including interim periods. The Company adopted this standard for the first quarter of fiscal 2014.

No other new accounting pronouncements issued or with effective dates during fiscal 2014 had or are expected to have a material impact on the Company's consolidated financial statements.

NOTE 2 BUSINESS ACQUISITIONS

Specialty Plastics Business of Ferro Corporation

On July 1, 2014, the Company acquired the majority of the assets of the specialty plastics business of Ferro Corporation ("Specialty Plastics" acquisition) for $91.0 million. The results of operations for this business have been included in the consolidated financial statements since the date of acquisition.

The acquisition strategically expands the Company's geographic reach with four facilities located in the U.S. and one facility located in Spain and diversifies the Company's product mix and strengthens its position in a broad range of attractive product markets. Additionally, the business offers a broad portfolio of proprietary products and recognized brand names serving a wide range of end markets including packaging, transportation, construction, appliances and agriculture.

The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of assets acquired and liabilities assumed which were determined with the assistance of independent valuations using discounted cash flow and comparative market multiple approaches, quoted market prices and estimates made by management. The purchase price allocation is subject to further adjustment until all pertinent information regarding the inventory, intangible assets, property, plant & equipment, accounts receivable, other long-term liabilities, and deferred income tax assets and liabilities acquired are fully evaluated by the Company.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the preliminary estimated fair value of the assets acquired and liabilities assumed from the Specialty Plastics acquisition at the date of acquisition:



�	�	As of July 1, 2014
�	�	(In thousands)
Accounts receivable	�	$	27,870
Inventories	�	12,800
Prepaid expenses and other current assets	�	415
Property, plant and equipment	�	21,025
Intangible assets	�	26,985
Total assets acquired	�	$	89,095
�	�	�
Accounts payable	�	15,327
Accrued payroll, taxes and related benefits	�	1,552
Other accrued liabilities	�	638
Other long-term liabilities	�	181
Total liabilities assumed	�	$	17,698
Identifiable net assets acquired	�	$	71,397
Goodwill	�	19,603
Net assets acquired	�	$	91,000

The Company preliminarily recorded acquired intangible assets of $27.0 million, all of which are customer related intangibles with an estimated weighted-average useful life of 13.6 years.

Goodwill is calculated as the excess of the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition, and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The amount allocated to goodwill associated with the Specialty Plastics acquisition is primarily the result of anticipated synergies and market expansion.

The estimated fair value of accounts receivable acquired was $27.9 million with the gross contractual amount being $28.1 million.

Net sales, income before taxes and net income attributable to A. Schulman, Inc. from the Specialty Plastics acquisition included in the Companys results since the July 1, 2014 acquisition are as follows:



�	July 1, 2014 to August 31, 2014
�	(In thousands)
Net sales	$	25,351
Income before taxes	$	1,644
Net income attributable to A. Schulman, Inc.	$	1,475

Income before taxes for the Specialty Plastics acquisition from July 1, 2014 to August�31, 2014 includes pretax depreciation and amortization costs of $0.6 million due to the increased estimated fair value of fixed assets and intangibles, and $0.6 million of pretax purchase accounting inventory step-up charges.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following pro forma information represents the consolidated results of the Company as if the Specialty Plastics acquisition occurred as of September�1, 2012:�



�	For the Years Ended August 31,
�	2014		�	2013
�	Unaudited
�	(In�thousands,�except�per�share�data)
Net sales	$	2,580,646	�	$	2,289,719
Net income attributable to A. Schulman, Inc.	$	65,639	�	$	33,480
Net income per share of common stock attributable to A. Schulman, Inc. - diluted	$	2.24	�	$	1.14

The pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense on assets included in the Specialty Plastics acquisition resulting from the valuation of assets acquired and increased interest expense due to additional borrowings to fund the acquisition. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of the acquired business. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed as of September�1, 2012, nor are they indicative of the future operating results of the Company.

Elian SAS

On January�31, 2012, the Company acquired all of the issued share capital of Elian SAS (Elian), a French portfolio company of British Vita plc, for $66.5 million, which included the repayment of $4.3 million in debt. The results of Elians operations have been included in the consolidated financial statements since the date of acquisition.

Elian provides specialty formulated color concentrates to over 1,000 customers in end markets such as packaging, cosmetics, personal hygiene, healthcare, and pipes and tubing products that require demanding specifications. Elian offers superior quality, technology and responsiveness to its diversified customer base. The acquisition of Elian moved the Company into Frances color masterbatch market and improved the Company's product mix in the EMEA region.

Net sales, income before taxes and net income attributable to A. Schulman, Inc. from Elian included in the Companys results in the year of acquisition are as follows:



�	January 31, 2012 to August 31, 2012
�	(In thousands)
Net sales	$	20,306
Income before taxes	$	640
Net income attributable to A. Schulman, Inc.	$	402

Income before taxes for Elian from January�31, 2012 to August�31, 2012 includes pretax depreciation and amortization costs of $2.3 million due to the increased value of fixed assets and intangibles, and $0.7 million of pretax purchase accounting inventory step-up charges.

The following pro forma information represents the consolidated results of the Company as if the acquisition of Elian occurred as of September�1, 2011:�



�	Year ended August 31, 2012
�	Unaudited (In thousands, except per share data)
Net sales	$	2,097,043
Net income attributable to A. Schulman, Inc.	$	52,423
Net income per share of common stock attributable to A. Schulman, Inc. - diluted	$	1.77

The pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense on assets acquired from Elian resulting from the valuation of assets acquired, increased interest expense due to additional

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

borrowings to fund the acquisition of Elian partially offset by the repayment of Elian debt, and decreased interest income from lower cash levels which were also used to fund the acquisition. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of Elian. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed as of September�1, 2011, nor are they indicative of the future operating results of the consolidated Company.

Other Business Transactions

The following table summarizes the Company's other business transactions for the periods presented as well as the Compco Pty. Ltd. acquisition completed in the first quarter of fiscal 2015:



Transaction Description	Date of Transaction	�	Purchase Consideration (In millions)	�	Segment
ECM Plastics, Inc.	September 4, 2012	�	$36.8	�	Americas
A Massachusetts producer of custom color, specialty additive masterbatch and niche engineered plastics products, with a strong presence in personal care and cosmetics	�	�	�	�	�
Perrite Group	September 2, 2013	�	$51.3	�	EMEA and APAC
A thermoplastics manufacturer with business in niche engineered plastics and custom color with operations in Malaysia, the United Kingdom and France	�	�	�	�	�
Network Polymers, Inc.	December 2, 2013	�	$49.2	�	Americas
An Ohio niche engineered plastics compounding business that is a leading single source provider of thermoplastic resins and alloys	�	�	�	�	�
Prime Colorants	December 31, 2013	�	$15.1	�	Americas
A Tennessee manufacturer of custom color and additive concentrates	�	�	�	�	�
Compco Pty. Ltd.	September 2, 2014	�	$6.7	�	APAC
A manufacturer of masterbatches and custom color with operations in Australia.	�	�	�	�	�

The Company incurred $6.0 million and $2.7 million of acquisition related costs, primarily included in selling, general & administrative expenses, during fiscal 2014 and 2013, respectively.

NOTE 3 ALLOWANCE FOR DOUBTFUL ACCOUNTS

The changes in the Companys allowance for doubtful accounts are as follows:�



�	For the Year Ended August 31,
�	2014			�	2013			�	2012
�	(In thousands)
Beginning balance	$	10,434		�	$	9,190		�	$	9,475
Provision	907			�	2,441			�	1,724
Write-offs, net of recoveries	(491		)	�	(1,481		)	�	(1,007		)
Translation effect	(6		)	�	284			�	(1,002		)
Ending balance	$	10,844		�	$	10,434		�	$	9,190

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the Companys carrying value of goodwill are as follows:�



�	EMEA		�	Americas			�	APAC		�	Total
�	(In thousands)
Balance as of August 31, 2012	$	68,540	�	$	59,813		�	$		�	$	128,353
Acquisitions			�	9,921			�			�	9,921
Translation and other	1,726		�	(474		)	�			�	1,252
Balance as of August 31, 2013	70,266		�	69,260			�			�	139,526
Acquisitions	14,015		�	46,269			�	637		�	60,921
Translation and other	1,676		�	150			�	26		�	1,852
Balance as of August 31, 2014	$	85,957	�	$	115,679		�	$	663	�	$	202,299

The increase in goodwill during fiscal 2014 is due to the Perrite Group, Network Polymers, Inc., Prime Colorants and Specialty Plastics acquisitions. Goodwill associated with the Perrite Group transaction is included in the EMEA and APAC segments and none of the goodwill is deductible for income tax purposes. Goodwill associated with both the Network Polymers and Prime Colorants transactions is included in the Americas segment and is deductible for income tax purposes. The goodwill associated with the Specialty Plastics acquisition is included in the Americas and EMEA segments and is deductible for income tax purposes. The increase in goodwill during fiscal 2013 was due to the acquisition of ECM Plastics, Inc. in the Americas segment and the goodwill is deductible for income tax purposes.

The Company completed its annual impairment review of goodwill as of June 1, 2014 and noted no impairment. The Company is not aware of any triggers which would require a goodwill impairment test as of August 31, 2014.

�

The following table summarizes intangible assets with finite useful lives by major category:�



�	As of August 31, 2014									�	As of August 31, 2013
�	Gross Carrying Amount		�	Accumulated Amortization			�	Net�Carrying Amount		�	Gross Carrying Amount		�	Accumulated Amortization			�	Net�Carrying Amount
�	(In thousands)
Customer related	$	139,990	�	$	(29,088	)	�	$	110,902	�	$	85,129	�	$	(19,605	)	�	$	65,524
Developed technology	19,603		�	(6,914		)	�	12,689		�	19,641		�	(5,156		)	�	14,485
Registered trademarks ��and tradenames	20,945		�	(5,902		)	�	15,043		�	15,991		�	(4,113		)	�	11,878
Total finite-lived ��intangible assets	$	180,538	�	$	(41,904	)	�	$	138,634	�	$	120,761	�	$	(28,874	)	�	$	91,887

The increase in intangible assets from August 31, 2013 is due to the fiscal 2014 acquisitions. Amortization expense for intangible assets was $13.0 million, $10.3 million and $8.7 million for fiscal 2014, 2013 and 2012, respectively. The weighted-average useful life of our finite-lived intangible assets as of August�31, 2014 is 12.5 years.

Estimated future amortization expense for intangible assets is as follows:



�	Estimated�Future Amortization�Expense
�	(In thousands)
Year ended August 31,	�
2015	$	16,594
2016	15,301
2017	14,615
2018	14,028
2019	13,123

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 LONG-TERM DEBT AND CREDIT ARRANGEMENTS

The following table summarizes short-term and long-term debt obligations outstanding:�



�	As of August�31,
�	2014		�	2013
�	(In thousands)
Notes payable and other, due within one year	$	18,429	�	$	5,042
Current portion of long-term debt	13,319		�	3,331
Short-term debt	$	31,748	�	$	8,373
�	�		�	�
Revolving credit loan, LIBOR plus applicable spread, due January 2016	$		�	$	150,000
Revolving credit loan, LIBOR plus applicable spread, due September 2018	105,400		�
Term loan, due September 2018	180,625		�
Euro notes, 4.485%, due March 2016	53,106		�	56,626
Capital leases and other long-term debt	415		�	809
Long-term debt	$	339,546	�	$	207,435

"a multicurrency revolving credit facility in the aggregate principal amount of up to $300 million (the Revolving Facility");

"a $200 million term loan facility (the "Term Loan Facility") with quarterly payments due until maturity; and


"	an expansion feature allowing the Company to incur, subject to certain terms and conditions, up to an additional $250 million of revolving loans and/or term loans ("the Incremental Facility" and, together with the Revolving Facility and the Term Loan Facility, the "Credit Facility").

The Credit Facility is jointly and severally guaranteed by certain material domestic subsidiaries. The Credit Agreement contains certain covenants that, among other things, restrict the Company's ability to incur indebtedness and grant liens other than certain types of permitted indebtedness and permitted liens. The Company is also required to maintain a minimum interest coverage ratio and cannot exceed a maximum net debt leverage ratio. The Company was in compliance with these covenants and does not believe a subsequent covenant violation is reasonably possible as of August�31, 2014.

Interest rates under the Credit Agreement are based on LIBOR or EURIBOR (depending on the borrowing currency) plus a spread determined by the Company's total leverage ratio. The Company is also required to pay a facility fee on the commitments, whether used or unused. The Revolving Facility provides for a portion of the funds to be made available as a short-term swing-line loan. The swing-line loan interest rate varies based on a mutually agreed upon rate between the bank and the Company. As of August 31, 2014, the amount available under the Credit Facility was reduced by outstanding letters of credit of $0.7 million and borrowings of $296.0 million. Outstanding letters of credit and borrowings under the previous credit agreement as of August 31, 2013 were $1.0 million and $150.0 million, respectively.

On February 14, 2014, the Company obtained a $15.0 million uncommitted line of credit from a regional financial institution, available until September 24, 2018. The interest rate is based upon the 30-day LIBOR index that is 10 basis points below the applicable spread on the Revolving Facility, noted above. The Company has $15.0 million of outstanding borrowings under this line of credit as of August 31, 2014 which are included in short-term debt on the Company's consolidated balance sheet.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below summarizes the Companys available funds:�



�	As of August�31,
�	2014		�	2013
�	(In thousands)
Existing capacity:	�		�	�
Revolving Facility	$	300,000	�	$	300,000
Term Loan Facility	190,625		�
Domestic short-term lines of credit	15,000		�
Foreign short-term lines of credit	53,520		�	56,178
Total capacity from credit lines and notes	$	559,145	�	$	356,178
Availability:	�		�	�
Revolving Facility	$	193,909	�	$	149,024
Foreign short-term lines of credit	49,250		�	49,302
Total available funds from credit lines and notes	$	243,159	�	$	198,326

Aggregate maturities of debt, including capital lease obligations, subsequent to August�31, 2014 are as follows (in thousands):�



Fiscal 2015	$	31,748
2016	63,275
2017	12,606
2018	15,091
2019	248,574

NOTE 6 FAIR VALUE MEASUREMENT

The following table presents information about the Companys assets and liabilities measured at fair value:�

�

August�31, 2014

�

August�31, 2013

�

Total

�

Level 1

�

Level�2

�

Level�3

�

Total

�

Level 1

�

Level�2

�

Level�3

�

(In thousands)

Assets recorded at fair value:

�

Foreign�exchange

��forward contracts

713

�

713

�

151

�

151

�

Liabilities recorded at fair value:

�

Foreign�exchange

��forward contracts

557

�

557

�

1,224

�

1,224

�

Liabilities not recorded at fair value:

�

Long-term fixed-rate

��debt

58,882

�

58,882

�

63,460

�

63,460

�

Cash and cash equivalents are recorded at cost, which approximates fair value. Additionally, the carrying value of the Company's variable-rate debt approximates fair value.

The Company measures the fair value of its foreign exchange forward contracts using an internal model. The model maximizes the use of Level 2 market observable inputs including interest rate curves, currency forward and spot prices, and credit spreads. The total contract value of foreign exchange forward contracts outstanding was $118.0 million and $138.0 million as of August�31, 2014 and 2013, respectively. The amount of foreign exchange forward contracts outstanding as of the end of the period is indicative of the exposure of current balances and the forecasted change in exposures for the following quarter. Any gains or losses associated with these contracts as well as the offsetting gains or losses from the underlying assets or liabilities are included in the foreign currency transaction (gains) losses line in the Companys consolidated statements of operations. The fair value of the Companys foreign exchange forward contracts is recognized in other current assets or other accrued liabilities in the consolidated balance sheets based on the net settlement value. The foreign exchange forward contracts are entered into with credit-worthy financial institutions, generally have a term of three months or less, and the Company does not hold or issue foreign exchange forward contracts for trading purposes. There were no foreign exchange forward contracts designated as hedging instruments as of August�31, 2014 and 2013.

Long-term fixed-rate debt issued in Euros is recorded at cost and is presented at fair value for disclosure purposes as shown in the table above. The Level 2 fair value of the Company's long-term fixed-rate debt was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities. As of August�31, 2014 and 2013, the carrying value of the Company's long-term fixed-rate debt recorded on the consolidated balance sheets was $56.4 million and $60.0 million, respectively.

The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during fiscal 2014, and transfers between levels within the fair value hierarchy, if any, are recognized at the end of each quarter. There were no transfers between levels during the years presented.

Additionally, the Company remeasures assets to fair value, using Level 3 measurements, as a result of the occurrence of triggering events, generally in conjunction with restructuring initiatives. For further discussion on asset impairments, refer to Note 16 of this Form 10-K.

There were no additional significant assets or liabilities that were remeasured at fair value on a non-recurring basis during the periods presented.

NOTE 7 INCOME TAXES

Income (loss) from continuing operations before taxes is as follows:



�	Year Ended August�31,
�	2014			�	2013			�	2012
�	(In thousands)
U.S.	$	(2,426	)	�	$	(8,334	)	�	$	(4,637	)
Foreign	74,758			�	62,066			�	71,464
Income from continuing operations before taxes	$	72,332		�	$	53,732		�	$	66,827

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The provisions for U.S. and foreign income taxes consist of the following:�



�	Year Ended August�31,
�	2014			�	2013			�	2012
�	(In thousands)
Current taxes:	�			�	�			�	�
U.S.	$	435		�	$	214		�	$	228
Foreign	19,794			�	23,210			�	22,927
Total current tax expense (benefit)	20,229			�	23,424			�	23,155
Deferred taxes:	�			�	�			�	�
U.S.	589			�	213			�	16
Foreign	(2,276		)	�	(3,904		)	�	(9,253		)
Total deferred tax expense (benefit)	(1,687		)	�	(3,691		)	�	(9,237		)
Total income tax expense (benefit)	$	18,542		�	$	19,733		�	$	13,918

A reconciliation of the statutory U.S. federal income tax rate with the effective tax rates of 25.7% in 2014, 36.7% in 2013, and 20.8% in 2012 is as follows:�



�	Year Ended August 31,
�	2014						�	2013						�	2012
�	Amount			�	% of Pretax Income		�	Amount			�	% of Pretax Income		�	Amount			�	% of Pretax Income
�	(In thousands, except for %s)
U.S. statutory federal income tax rate	$	25,316		�	35.0	�%	�	$	18,806		�	35.0	�%	�	$	23,389		�	35.0	�%
Amount of foreign taxes at less than U.S. ��statutory federal income tax rate	(13,602		)	�	(18.8	)	�	(9,189		)	�	(17.1	)	�	(11,373		)	�	(17.0	)
U.S. and foreign losses with no tax benefit	4,899			�	6.8		�	5,826			�	10.8		�	1,291			�	1.9
U.S. restructuring and other U.S. charges with ��no benefit	3,010			�	4.2		�	1,704			�	3.2		�	1,029			�	1.5
Valuation allowance charges				�			�	2,361			�	4.4		�	(2,380		)	�	(3.6	)
Establishment (resolution) of uncertain tax ��positions	(121		)	�	(0.2	)	�	(84		)	�	(0.2	)	�	1,718			�	2.6
Other	(960		)	�	(1.3	)	�	309			�	0.6		�	244			�	0.4
Provision (benefit) for U.S. and foreign income taxes	$	18,542		�	25.7	�%	�	$	19,733		�	36.7	�%	�	$	13,918		�	20.8	�%

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets and (liabilities) consist of the following:�



�	As of August 31,
�	2014			�	2013
�	(In thousands)
Pensions	$	20,890		�	$	12,751
Inventory reserves	1,549			�	1,136
Bad debt reserves	1,337			�	1,040
Accruals	7,095			�	4,831
Postretirement benefits other than pensions	6,185			�	5,293
Depreciation	2,733			�	2,036
Foreign net operating loss carryforwards	16,417			�	14,396
Foreign tax credit carryforwards	502			�	28,111
Alternative minimum tax carryforwards	3,893			�	4,452
Interest carryforwards	3,214			�	10,113
Other	17,929			�	13,898
Gross deferred tax assets	81,744			�	98,057
Valuation allowance	(21,716		)	�	(23,252		)
Total deferred tax assets	60,028			�	74,805
Depreciation	(19,897		)	�	(17,232		)
Intangibles	(25,927		)	�	(25,465		)
Unremitted foreign earnings				�	(26,050		)
Other	(1,554		)	�	(1,245		)
Gross deferred tax liabilities	(47,378		)	�	(69,992		)
Net deferred tax assets (liabilities)	$	12,650		�	$	4,813

The valuation allowance covers benefits which are not likely to be utilized for foreign tax credit carryforwards and other deferred tax assets primarily in the United States, Brazil and Germany.

As of August 31, 2014, the Company has foreign net operating loss carryforwards of $50.4 million resulting in a deferred tax asset of $16.4 million, primarily from countries with unlimited carryforward periods.

As of August 31, 2014, the Company has domestic state and local net operating loss carryforwards of $33.5 million resulting in a deferred tax asset of $1.3 million offset by a corresponding valuation allowance. These net operating loss carryforwards expire in years 2015 to 2023.

The Company has $3.7 million in foreign tax credit carryforwards that will expire in 2019. The amount of foreign tax credit carryforwards shown in the table above has been reduced by unrealized stock compensation attributes of $3.2 million. During 2014, the Company utilized approximately $27.6 million in foreign tax credit carryforwards primarily related to a large distribution from Europe. In 2013, a deferred tax liability of $25.5 million was recorded for the expected tax impact of this 2014 distribution along with a corresponding reduction in the valuation allowance of $25.5 million against the foreign tax credit carryforwards.

In recent years, the Companys U.S. operations have generated federal tax net operating losses, before considering dividend income from foreign subsidiaries. Such net operating losses are offset against the foreign dividend income, which would otherwise generate U.S. taxable income. The dividend income from foreign subsidiaries also generates foreign tax credits, which either partially offset the tax on any U.S. taxable income remaining after the offset of the net operating losses, or are carried forward. The net effect of foreign dividends received from foreign countries is to place the Company into a position in which it does not generate net operating loss carryforwards for its U.S. operating losses.

The tax effect of temporary differences included in prepaid expenses and other current assets was $8.4 million and $5.7 million at August 31, 2014 and 2013, respectively. Deferred charges included $29.3 million and $22.0 million from the tax effect of temporary differences at August 31, 2014 and 2013, respectively. The tax effect of temporary differences included in other accrued liabilities was $1.2 million and $1.7 million at August, 31, 2014 and 2013, respectively.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of August 31, 2014, the Companys gross unrecognized tax benefits totaled $3.8 million. If recognized $3.0 million of the total unrecognized tax benefits would favorably affect the Companys effective tax rate. The company elects to report interest and penalties related to income tax matters in income tax expense. At August 31, 2014, the Company had $0.9 million of accrued interest and penalties on unrecognized tax benefits.

The Company's statute of limitations is open in various jurisdictions as follows: Germany - from 2005 onward, U.S. - from 2011 onward, Belgium - from 2012 onward, other foreign jurisdictions - from 2009 onward.

The amount of unrecognized tax benefits is expected to change in the next 12 months; however, the change is not expected to have a significant impact on the financial position of the Company.

A reconciliation of unrecognized tax benefits is as follows:�



�	Year Ended August 31,
�	2014			�	2013			�	2012
�	(In thousands)
Beginning balance	$	4,986		�	$	6,877		�	$	4,716
Decreases related to prior year tax positions	(576		)	�	(1,165		)	�	(390		)
Increases related to prior year tax positions				�	11			�	2,360
Increases related to current year tax positions	512			�	308			�	627
Settlements	(38		)	�	(1,077		)	�
Lapse of statute of limitations	(1,040		)	�	(228		)	�	4
Foreign currency impact	1			�	260			�	(440		)
Ending balance	$	3,845		�	$	4,986		�	$	6,877

As of August�31, 2014, no taxes have been provided on the undistributed earnings of certain foreign subsidiaries amounting to $442.6 million because the Company intends to permanently reinvest these earnings. Quantification of the deferred tax liability associated with these undistributed earnings is not practicable.

NOTE 8 PENSION AND POSTRETIREMENT BENEFIT PLANS

The Company has defined benefit pension plans that cover employees primarily in its foreign subsidiaries, and other postretirement benefit plans that primarily include health care and life insurance plans in the U.S. Benefits for the defined benefit pension plans are based primarily on years of service and qualifying compensation during the final years of employment. The measurement date for all plans is August�31.

Postretirement health care and life insurance benefits are provided to certain U.S. employees that have met certain age and length of service requirements while working for the Company. The U.S. postretirement health care and life insurance ("OPEB") plan is closed to new participants.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of the plan obligations and assets, the recorded liability and accumulated other comprehensive income (loss) ("AOCI") are as follows:�



�	Pension Benefits							�	Other Postretirement Benefits
�	2014			�	2013			�	2014			�	2013
�	(In thousands)
Benefit obligation at beginning of year	$	(133,866	)	�	$	(124,948	)	�	$	(11,372	)	�	$	(13,556	)
Service cost	(3,795		)	�	(3,838		)	�	(5		)	�	(14		)
Interest cost	(5,413		)	�	(4,779		)	�	(491		)	�	(450		)
Participant contributions	(228		)	�	(246		)	�	(62		)	�	(105		)
Actuarial gains (losses)	(34,191		)	�	448			�	(1,271		)	�	1,994
Settlement (gains) losses	328			�				�				�
Benefits paid	3,928			�	3,921			�	1,010			�	1,059
Business combinations	(131		)	�				�				�
Curtailment gains (losses)				�				�				�	(358		)
Contractual termination benefits				�				�				�
Plan amendments	(117		)	�	(459		)	�				�	58
Translation adjustment	(498		)	�	(3,965		)	�				�
Benefit obligation at end of year	$	(173,983	)	�	$	(133,866	)	�	$	(12,191	)	�	$	(11,372	)
Fair value of plan assets at beginning of year	$	32,417		�	$	30,190		�	$			�	$
Actual return on assets	6,009			�	1,043			�				�
Employer contributions	5,073			�	4,601			�	948			�	954
Participant contributions	228			�	246			�	62			�	105
Benefits paid	(3,928		)	�	(3,921		)	�	(1,010		)	�	(1,059		)
Translation adjustment	1,105			�	258			�				�
Fair value of plan assets at end of year	$	40,904		�	$	32,417		�	$			�	$
Underfunded	$	(133,079	)	�	$	(101,449	)	�	$	(12,191	)	�	$	(11,372	)
Classification of net amount recognized:	�			�	�			�	�			�	�
Accrued payroll, taxes and related benefits	$	(3,130	)	�	$	(2,850	)	�	$	(880	)	�	$	(880	)
Long-term liabilities	(129,949		)	�	(98,599		)	�	(11,311		)	�	(10,492		)
Net amount recognized	$	(133,079	)	�	$	(101,449	)	�	$	(12,191	)	�	$	(11,372	)
Amounts recognized in AOCI:	�			�	�			�	�			�	�
Net actuarial (gain) loss	$	57,632		�	$	29,434		�	$	(79	)	�	$	(1,368	)
Net prior service cost (credit)	430			�	323			�	(1,982		)	�	(2,523		)
Net amount recognized in AOCI	$	58,062		�	$	29,757		�	$	(2,061	)	�	$	(3,891	)
Change in plan assets and benefit obligations recognized in AOCI:	�			�	�			�	�			�	�
Net actuarial (gain) loss	$	30,002		�	$	(101	)	�	$	1,271		�	$	(1,994	)
Prior service cost (credit)	117			�	459			�				�	(58		)
Amortization of net actuarial loss	(1,373		)	�	(1,438		)	�	18			�
Amortization of prior service (cost) credit	(24		)	�	(505		)	�	541			�	540
Settlement/curtailment gains (losses)	(214		)	�				�				�	25
Translation adjustment	(203		)	�	853			�				�
Total change in AOCI	$	28,305		�	$	(732	)	�	$	1,830		�	$	(1,487	)

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of net periodic benefit cost are as follows:�



�	Pension Benefits											�	Other�Postretirement�Benefits
�	Year Ended August 31,											�	Year Ended August 31,
�	2014			�	2013			�	2012			�	2014			�	2013			�	2012
�	(In thousands)
Service cost	$	3,795		�	$	3,838		�	$	2,759		�	$	5		�	$	14		�	$	28
Interest cost	5,413			�	4,779			�	5,099			�	491			�	450			�	607
Expected return on plan assets	(1,819		)	�	(1,485		)	�	(1,298		)	�				�				�
Amortization of prior service cost (credit)	24			�	505			�	48			�	(541		)	�	(540		)	�	(731		)
Recognized losses due to plan settlements	214			�				�				�				�				�
Contractual termination benefits				�				�	79			�				�				�
Recognized (gains) losses due to plan curtailments				�				�	(310		)	�				�	333			�
Recognized net actuarial loss	1,373			�	1,438			�	468			�	(18		)	�				�	171
Total net periodic benefit cost	$	9,000		�	$	9,075		�	$	6,845		�	$	(63	)	�	$	257		�	$	75

�

Amounts expected to be amortized from AOCI and included in total net periodic benefit cost during the year ended August 31, 2015, are as follows:



�	Pension Benefits		�	Other�Postretirement Benefits
�	(In thousands)
Net actuarial loss (gain)	$	3,225	�	$
Prior service cost (credit)	38		�	(541		)
��Total	$	3,263	�	$	(541	)

Selected information regarding the Companys pension and OPEB plans is as follows:�



�	As of August 31,
�	2014		�	2013
�	(In thousands)
Pension Plans:	�		�	�
All plans:	�		�	�
Accumulated benefit obligation	$	154,788	�	$	119,761
Plans with projected benefit obligations in excess of plan assets:	�		�	�
Projected benefit obligation	$	173,983	�	$	133,806
Accumulated benefit obligation	$	154,788	�	$	119,717
Fair value of plan assets	$	40,904	�	$	32,353
Plans with projected benefit obligations less than plan assets:	�		�	�
Projected benefit obligation	$		�	$	60
Accumulated benefit obligation	$		�	$	44
Fair value of plan assets	$		�	$	64
�	�		�	�
OPEB Plan:	�		�	�
Accumulated benefit obligation	$	12,191	�	$	11,372
Plans with projected benefit obligations in excess of plan assets:	�		�	�
Projected benefit obligation	$	12,191	�	$	11,372
Accumulated benefit obligation	$	12,191	�	$	11,372
Fair value of plan assets	$		�	$

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The underfunded position of the pension plans is primarily related to the Companys German and United Kingdom pension plans. As of August�31, 2014, the Companys German and United Kingdom pension plans are underfunded by $120.0 million. In Germany, there are no statutory requirements for funding while in the United Kingdom there are certain statutory minimum funding requirements.

Actuarial assumptions used in the calculation of the recorded liability are as follows:�



Weighted Average Assumptions as of August 31 :	2014		�	2013		�	2012
Discount rate on pension plans	2.8	%	�	4.0	%	�	3.8	%
Discount rate on other postretirement obligation	3.8	%	�	4.5	%	�	3.5	%
Rate of compensation increase	2.4	%	�	2.4	%	�	2.2	%

Actuarial assumptions used in the calculation of the recorded benefit expense are as follows:�



Weighted Average Assumptions for the year ended August�31 :	2014		�	2013		�	2012
Discount rate on pension plans	4.0	%	�	3.8	%	�	4.9	%
Discount rate on other postretirement obligation	4.5	%	�	3.5	%	�	4.5	%
Return on pension plan assets	5.2	%	�	5.1	%	�	6.4	%
Rate of compensation increase	2.4	%	�	2.2	%	�	2.5	%
Projected health care cost trend rate	7.5	%	�	8.0	%	�	8.0	%
Ultimate health care rate	5.0	%	�	5.0	%	�	5.0	%
Year ultimate health care trend rate is achieved	2019		�	2019		�	2019

The Company, in consultation with its actuaries, annually, or as needed for interim remeasurements, reviews and selects the discount rates to be used in connection with its defined benefit pension plans. The discount rates used by the Company are based on the yields of various corporate bond indices with actual maturity dates that approximate the estimated benefit payment streams of the related pension plans. For countries in which there are no deep corporate bond markets, discount rates used by the Company are based on yields of various government bond indices with varying maturity dates. The discount rates are also reviewed in comparison with current benchmark indices, economic market conditions and the movement in the benchmark yield since the previous fiscal year.

�

The Company, in consultation with its actuaries, annually, or as needed for interim remeasurements, reviews and selects the discount rate to be used in connection with its postretirement obligation. When selecting the discount rate the Company uses a model that considers the demographics of the participants and the resulting expected benefit payment stream over the participants lifetime.

For fiscal 2015, the Company, in consultation with its actuaries, has selected a weighted-average discount rate of 2.8%, expected long-term return on plan assets of 4.7% and rate of compensation increase of 2.4% for its defined benefit pension plans. For its postretirement benefit plan, the Company, in consultation with its actuaries, has selected a discount rate of 3.8% for fiscal 2015.

Assumed health care cost trend rates have a significant effect on the amounts reported for the OPEB plan. A one-percentage point change in assumed health care cost trend rates would have the following effects as of August�31, 2014:�



�	One-Percentage�- Point Increase		�	One-Percentage�- Point Decrease
�	(In thousands)
Effect on aggregate of service and interest cost components�of�net�periodic�postretirement�benefit�cost	$	48	�	$	(41	)
Effect�on�accumulated�postretirement�benefit�obligation	$	1,209	�	$	(1,045	)

�

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Companys pension plan weighted-average asset allocation and target allocation, by asset category are as follows:�



�	Plan�Assets					�	Target Allocation
�	As of August 31,					�	As of August 31,
Asset Category	2014		�	2013		�	2014		�	2013
Equity securities	27	%	�	25	%	�	22	%	�	23	%
Debt securities	24	%	�	15	%	�	12	%	�	13	%
Fixed insurance contracts	45	%	�	39	%	�	58	%	�	31	%
Cash	4	%	�	21	%	�	8	%	�	33	%
Total	100	%	�	100	%	�	100	%	�	100	%

The Companys principal objective is to ensure that sufficient funds are available to provide benefits as and when required under the terms of the plans. The Company utilizes investments that provide benefits and maximizes the long-term investment performance of the plans without taking on undue risk while complying with various legal funding requirements. The Company, through its investment advisors, has developed detailed asset and liability models to aid in implementing optimal asset allocation strategies. The equity securities are invested in equity indexed funds, which minimizes concentration risk while offering market returns. The debt securities are invested in a long-term bond indexed fund which provides a stable low risk return. The fixed insurance contracts allow the Company to closely match a portion of the liability to the expected payout of benefit with little risk. The Company, in consultation with its actuaries, analyzes current market trends, the current plan performance and expected market performance of both the equity and bond markets to arrive at the expected return on each asset category over the long term. The Companys plan assets which are invested in equity and debt securities are valued utilizing Level 1 and Level 2 inputs. In consultation with the Company's actuaries, plan assets invested in fixed insurance contracts are valued utilizing Level 3 inputs primarily based on the present value of discounted future cash flows taking into account the estimated future benefits of a profit sharing arrangement with an insurance company. The Company believes there is not a significant concentration of risk within its plan assets. During fiscal 2014, the Company determined that Level 2 was a more appropriate classification for $10.3 million of certain securities which were previously classified as Level 1. Accordingly, we have revised the presentation in the asset level table below to correct the 2013 classification.

�

The fair values of the Companys pension plan assets, all of which are for foreign plans, are as follows:�



�	As of August�31, 2014											�	As of August�31, 2013
�	Total		�	Level 1		�	Level�2		�	Level 3		�	Total		�	Level 1		�	Level�2		�	Level 3
�	(In thousands)
Equity securities	$	11,081	�	$	6,607	�	$	4,474	�	$		�	$	8,080	�	$	1,328	�	$	6,752	�	$
Debt securities	9,646		�	1,563		�	8,083		�			�	5,007		�	1,457		�	3,550		�
Fixed insurance contracts	18,399		�			�			�	18,399		�	12,435		�			�			�	12,435
Cash	1,611		�	1,611		�			�			�	6,822		�	6,822		�			�
Other	167		�			�			�	167		�	73		�			�			�	73
Total	$	40,904	�	$	9,781	�	$	12,557	�	$	18,566	�	$	32,417	�	$	9,607	�	$	10,302	�	$	12,508

The change in fair value of the Companys pension plan assets classified as Level 3, all of which are for foreign plans, is as follows:



�	2014			�	2013
�	(In thousands)
Balance, beginning of fiscal year	$	12,508		�	$	12,013
Actual return on plan assets	5,466			�	(533		)
Purchases, sales, issuances, and settlements, net	711			�	440
Foreign currency translation	(119		)	�	588
Balance, end of fiscal year	$	18,566		�	$	12,508

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company expects to contribute $5.6 million for its pension obligations and $0.9 million to its other postretirement plan in 2015. The benefit payments, which reflect expected future service, are as follows:



Year Ended August 31,	Pension Benefits		�	OPEB Benefits
�	(In�thousands)
2015	$	4,263	�	$	890
2016	4,335		�	859
2017	5,214		�	860
2018	4,837		�	839
2019	5,244		�	858
Years 2020 2024	29,849		�	4,001

The Company maintains several defined contribution plans that cover domestic and foreign employees. The plan in which each employee is eligible to participate depends upon the subsidiary for which the employee works. Certain plans have eligibility requirements related to age and period of service with the Company. Certain plans have salary deferral features that enable participating employees to contribute up to a certain percentage of their earnings, subject to statutory limits and certain foreign plans require the Company to match employee contributions in cash. Employee contributions to the Companys U.S. 401(k) plans have matching features whereas the Company will match a participants contribution up to a pre-approved amount of the participants annual salary. The total expense for defined contribution plans was $3.0 million, $2.7 million and $3.3 million in 2014, 2013 and 2012, respectively.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss) are as follows⁽¹⁾:



�	Foreign Currency Translation Gain (Loss)			�	Pension and Other Retiree Benefits⁽²⁾			�	Total Accumulated Other Comprehensive Income (Loss)
�	(In thousands)
Balance, August 31, 2012	$	13,383		�	$	(19,304	)	�	$	(5,921	)
Other comprehensive income (loss) before reclassifications, net of tax of $21	4,174			�	862			�	5,036
Amounts reclassified to earnings, net of tax of $34				�	1,412			�	1,412
Net current period other comprehensive income (loss)	4,174			�	2,274			�	6,448
Less: comprehensive income (loss) attributable to noncontrolling interests	(155		)	�				�	(155		)
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.	4,329			�	2,274			�	6,603
Balance, August 31, 2013	17,712			�	(17,030		)	�	682
Other comprehensive income (loss) before reclassifications, net of tax of $8,718	5,872			�	(23,043		)	�	(17,171		)
Amounts reclassified to earnings, net of tax of ($456)	(885		)	⁽³⁾�	596			⁽⁴⁾�	(289		)
Net current period other comprehensive income (loss)	4,987			�	(22,447		)	�	(17,460		)
Less: comprehensive income (loss) attributable to noncontrolling interests	(87		)	�				�	(87		)
Net current period other comprehensive income (loss) attributable to A. Schulman, Inc.	5,074			�	(22,447		)	�	(17,373		)
Balance, August 31, 2014	$	22,786		�	$	(39,477	)	�	$	(16,691	)

⁽¹⁾ All amounts presented are net of tax. All tax amounts are related to pension and other retiree benefits.

⁽²⁾Reclassified from accumulated other comprehensive income into cost of sales and selling, general & administrative expenses on the consolidated statements of operations. These components are included in the computation of net periodic pension cost. Refer to Note 8 of this Form 10-K for further details.

⁽³⁾Reclassified from accumulated other comprehensive income into income (loss) from discontinued operations on the consolidated statements of operations on the sale of the rotational compounding business in Australia. Refer to Note 19 of this Form 10-K for further details.

⁽⁴⁾Represents amortization of net actuarial loss and prior service costs, including settlement charges of $214.

NOTE 10 SHARE-BASED INCENTIVE COMPENSATION PLANS

On December�7, 2006, the Company adopted the 2006 Incentive Plan, which provides for the grant of various stock-based incentive compensation awards. Upon adoption of the 2006 Incentive Plan, all remaining shares eligible for award under a previous plan were added to the 2006 Incentive Plan. On December�9, 2010, the Companys stockholders approved the adoption of the A. Schulman, Inc. 2010 Value Creation Rewards Plan (2010 Rewards Plan) which also provides for similar grants. It has been the Companys practice to issue new shares of common stock upon stock option exercise and the vesting of awards under these plans. As of August�31, 2014, there were 524,749 shares and 22,949 shares of common stock available for grant pursuant to the Companys 2006 Incentive Plan and the 2010 Rewards Plan, respectively. The restricted stock awards outstanding under these plans have service vesting periods of three years following the date of grant. Also, certain of these awards have market or performance vesting conditions.

Table of Contents

A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity of time-based and performance-based restricted stock awards:�



�	Awards Outstanding					�	Weighted-Average Fair Market Value (per share)
�	Time- Based		�	Performance- Based		�	Time- Based		�	Performance- Based
Outstanding at August 31, 2013	133,359		�	1,081,585		�	$	25.20	�	$	20.41
Granted	42,138		�	315,941		�	$	34.42	�	$	34.42
Vested	(19,405	)	�	(30,366	)	�	$	21.63	�	$	11.62
Forfeited			�	(265,723	)	�	$		�	$	15.21
Outstanding at August 31, 2014	156,092		�	1,101,437		�	$	28.14	�	$	25.93

Time-based awards are valued at the fair market value on the date of grant, have voting rights and earn dividends throughout the vesting period which are subject to the same vesting terms as the underlying restricted stock awards. The weighted-average grant date fair value of time-based awards granted during the years ended August�31, 2014, 2013 and 2012 were $34.42, $29.18 and $22.64, respectively.

Performance-based awards vest based on market or performance conditions and do not have voting rights. Included in the outstanding performance-based awards as of August�31, 2014 are 485,065 performance-based awards, which earn dividends throughout the vesting period, and the remaining performance-based awards which do not earn dividends. Earned dividends are subject to the same vesting terms as the underlying performance-based awards.

The performance-based awards in the table above include 441,282 shares which vest based on market conditions and are valued based upon a Monte Carlo valuation model. Vesting of the ultimate number of shares underlying such performance-based awards, if any, will be dependent upon the Companys total stockholder return in relation to the total stockholder return of a select group of peer companies over a three-year period. The probability of meeting the market criteria is considered when calculating the estimated fair market value using a Monte Carlo valuation model. Such awards granted prior to fiscal 2013 are accounted for as equity awards with market conditions given that recipients receive shares of stock upon vesting, and expense for these awards is recognized over the service period regardless of whether the market condition is achieved and the awards ultimately vest. Awards granted in fiscal 2013 and 2014 provide recipients an option to receive cash or shares of common stock upon vesting. As such, the fiscal 2013 and 2014 awards are accounted for as liability awards with a market condition, and the Company remeasures these awards at fair value on a quarterly basis over the service period. Expense for these awards is recognized only to the extent the market conditions are achieved and the awards ultimately vest.

The fair values of the performance-based awards with market conditions were estimated using a Monte Carlo valuation model using the following assumptions:�



�	2014^(a)		�	2013^(a)		�	2012^(b)
Dividend yield		%	�		%	�	3.00	%
Expected volatility	31.00	%	�	35.00	%	�	43.00	%
Risk-free interest rate	1.03	%	�	0.77	%	�	0.42	%
Correlation	53.00	%	�	56.00	%	�	61.00	%

^(a)Assumptions as of August 31 for the respective years related to liability classified awards

^(b)Weighted average grant date assumptions related to equity classified awards

The fair value of the remaining 660,155 performance-based awards in the table above is based on the closing price of the Companys common stock on the date of the grant. Vesting of the ultimate number of shares underlying such performance-based awards, if any, will be dependent upon the Company's return on invested capital ("ROIC") in relation to an internal targeted ROIC over a three-year period.

The weighted-average grant date fair value of the performance-based awards granted in fiscal 2014, 2013 and 2012 were $34.42, $29.08 and $17.71 per share, respectively.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of stock option activity is as follows:



�	Outstanding Shares Under Option		�	Weighted-Average Exercise Price
Outstanding at August 31, 2013	19,002		�	$	19.13
Exercised	(12,167	)	�	$	19.06
Forfeited and expired	(1,834	)	�	$	19.16
Outstanding at August 31, 2014	5,001		�	$	19.29
Exercisable at August 31, 2014	5,001		�	$	19.29

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value for stock options outstanding and exercisable as of August�31, 2014 was $0.1 million with a remaining term for options outstanding and exercisable of 1 year. The total intrinsic value of options exercised for the years ended August�31, 2014, 2013, and 2012 was $0.2 million, $0.6 million and $0.4 million, respectively. All outstanding and exercisable stock options are fully vested as of August�31, 2014. The Company did not grant stock options in fiscal years 2014, 2013 or 2012.

Total unrecognized compensation cost, including a provision for estimated forfeitures, related to nonvested stock-based compensation arrangements as of August�31, 2014 was $11.6 million. This cost is expected to be recognized over a weighted-average period of 1.3 years.

The Company made no cash payments for cash-settled restricted stock units and cash-based awards during fiscal 2014. During fiscal 2013 and 2012, the Company made payments of $0.2 million and $0.3 million for cash-settled restricted stock units and cash-based awards, respectively.

During fiscal 2014 and 2013, the Company granted non-employee directors 23,150 shares and 27,860 shares of unrestricted common stock, respectively.

The Company has an Employee Stock Purchase Plan (ESPP) whereby employees may purchase Company stock through a payroll deduction plan. Purchases are made from the plan and credited to each participants account at the end of each calendar quarter (the Investment Date). The purchase price of the stock is 85% of the fair market value on the Investment Date. The plan is compensatory and the 15% discount is expensed ratably over the three month offering period. All employees, including officers, are eligible to participate in this plan. An employee whose stock ownership of the Company exceeds five percent of the outstanding common stock is not eligible to participate in this plan. The Company recorded minimal expense related to the ESPP during fiscal 2014, 2013 and 2012. It is the Companys current practice to use treasury shares for the share settlement on the Investment Date.

The following table summarizes the impact to the Companys consolidated statements of operations from share-based incentive compensation plans, which is primarily included in selling, general and administrative expenses in the accompanying consolidated statements of operations:�



�	Year Ended August�31,
�	2014		�	2013		�	2012
�	(In thousands)
Time-based and performance-based restricted stock awards	$	7,105	�	$	2,454	�	$	3,813
Board of Directors unrestricted awards	797		�	850		�	845
Total share-based incentive compensation	$	7,902	�	$	3,304	�	$	4,658

NOTE 11 EARNINGS PER SHARE

Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if common stock equivalents are exercised as well as the impact of restricted stock awards expected to vest, which combined would then share in the earnings of the Company.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The difference between basic and diluted weighted-average shares results from the assumed exercise of outstanding stock options and vesting of restricted stock awards, calculated using the treasury stock method. The following table presents the number of incremental weighted-average shares used in computing diluted per share amounts:�



�	Year Ended August�31,
�	2014	�	2013	�	2012
�	(In thousands)
Weighted-average shares outstanding:	�	�	�	�	�
Basic	29,061	�	29,260	�	29,389
Incremental shares from equity awards	301	�	77	�	160
Diluted	29,362	�	29,337	�	29,549

During fiscal year 2014, there were no anti-dilutive shares related to share-based incentive compensation plans that were excluded from diluted weighted-average shares outstanding. In fiscal years 2013 and 2012, there were 21,000, and 36,000, respectively, of equivalent shares related to share-based incentive compensation plans that were excluded from diluted weighted-average shares outstanding because inclusion of these shares would have been anti-dilutive.

The Companys Amended and Restated Certificate of Incorporation authorizes 1,000,000 shares of special stock. The Board of Directors may designate these shares of special stock with special designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions prior to issuance. As of August�31, 2014, no shares of special stock were issued and outstanding.

�

NOTE 12 LEASES

The Company leases certain equipment, buildings, vehicles and computer equipment. Total rental expense was $16.6 million in 2014, $12.7 million in 2013 and $10.4 million in 2012. The approximate future minimum rental commitments for non-cancelable operating leases, excluding obligations for taxes and insurance, are as follows:�



Year Ended August 31,	Minimum�Rental Commitments
�	(In thousands)
2015	$	11,378
2016	7,862
2017	6,217
2018	4,501
2019	3,627
2020 and thereafter	18,227
Total minimum rental commitments	$	51,812

NOTE 13 SEGMENT INFORMATION

The Company considers its operating structure and the types of information subject to regular review by its President and Chief Executive Officer (CEO), who is the Chief Operating Decision Maker (CODM), to identify reportable segments. The CODM makes decisions, assesses performance and allocates resources by the following regions, which are also the Companys reportable segments: Europe, Middle East and Africa (EMEA), the Americas, and Asia Pacific (APAC).

The CODM uses net sales to unaffiliated customers, segment gross profit and segment operating income in order to make decisions, assess performance and allocate resources to each segment. Segment operating income does not include items such as interest income or expense, other income or expense, foreign currency transaction gains or losses, restructuring and related costs including accelerated depreciation, asset impairments, or costs and inventory step-up charges related to business acquisitions. Corporate expenses include the compensation of certain personnel, certain audit expenses, Board of Directors related costs, certain insurance costs, costs associated with being a publicly traded entity and other miscellaneous legal and professional fees.

��

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes net sales to unaffiliated customers by segment:�



�	Year Ended August�31,
�	2014		�	2013		�	2012
�	(In thousands)
EMEA	$	1,577,867	�	$	1,405,882	�	$	1,403,151
Americas	673,363		�	600,824		�	558,910
APAC	195,768		�	126,696		�	119,211
Total net sales to unaffiliated customers	$	2,446,998	�	$	2,133,402	�	$	2,081,272

Below the Company presents gross profit by segment:�



�	Year Ended August�31,
�	2014			�	2013			�	2012
�	(In thousands)
EMEA	$	206,268		�	$	179,242		�	$	175,669
Americas	99,517			�	81,315			�	84,282
APAC	26,767			�	22,345			�	19,969
Total segment gross profit	332,552			�	282,902			�	279,920
Inventory step-up	(1,468		)	�	(138		)	�	(677		)
Accelerated depreciation and restructuring related costs	(1,076		)	�	(1,585		)	�
Total gross profit	$	330,008		�	$	281,179		�	$	279,243

Below is a reconciliation of segment operating income to operating income and income from continuing operations before taxes:



�	Year Ended August�31,
�	2014			�	2013			�	2012
�	(In thousands)
EMEA	$	80,690		�	$	67,320		�	$	71,849
Americas	38,806			�	28,351			�	28,872
APAC	12,527			�	12,108			�	10,908
Total segment operating income	132,023			�	107,779			�	111,629
Corporate	(32,170		)	�	(24,926		)	�	(23,786		)
Costs related to acquisitions	(6,021		)	�	(2,661		)	�	(1,425		)
Restructuring and related costs	(9,618		)	�	(13,687		)	�	(9,256		)
Accelerated depreciation	(107		)	�	(1,058		)	�
Asset impairment	(104		)	�	(1,873		)	�	(3,392		)
Curtailment and settlement gains (losses)	(214		)	�	(333		)	�	310
Inventory step-up	(1,468		)	�	(138		)	�	(677		)
Operating income	82,321			�	63,103			�	73,403
Interest expense, net	(8,217		)	�	(7,162		)	�	(7,675		)
Foreign currency transaction gains (losses)	(2,206		)	�	(2,426		)	�	(243		)
Other income (expense), net	434			�	217			�	1,342
Income from continuing operations before taxes	$	72,332		�	$	53,732		�	$	66,827

�

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes identifiable assets by segment:�



�	As of August�31,
�	2014		�	2013		�	2012
�	(In thousands)
Identifiable assets:	�		�	�		�	�
EMEA	$	809,670	�	$	735,684	�	$	677,066
Americas	569,235		�	413,438		�	426,963
APAC	133,579		�	89,220		�	89,738
Total identifiable assets	$	1,512,484	�	$	1,238,342	�	$	1,193,767

The following tables summarize depreciation and amortization and capital expenditures by segment:�



�	Year Ended August�31,
�	2014		�	2013		�	2012
�	(In thousands)
Depreciation and amortization expense:	�		�	�		�	�
EMEA	$	21,832	�	$	18,072	�	$	17,534
Americas	20,650		�	19,481		�	17,531
APAC	5,422		�	3,898		�	3,719
Total depreciation and amortization expense	$	47,904	�	$	41,451	�	$	38,784
Capital expenditures:	�		�	�		�	�
EMEA	$	13,199	�	$	9,157	�	$	11,383
Americas	16,615		�	15,038		�	17,725
APAC	5,275		�	2,373		�	4,895
Total capital expenditures	$	35,089	�	$	26,568	�	$	34,003

Below is a summary of net sales by point of origin and long-lived assets by location:�



�	Year Ended August�31,
�	2014		�	2013		�	2012
�	(In thousands)
Net sales:	�		�	�		�	�
United States	$	457,225	�	$	383,964	�	$	358,376
Germany	548,454		�	536,833		�	571,876
France	238,029		�	221,521		�	196,103
Other international	1,203,290		�	991,084		�	954,917
Total net sales	$	2,446,998	�	$	2,133,402	�	$	2,081,272

�



�	As of August 31,
�	2014		�	2013		�	2012
�	(In thousands)
Long lived assets:	�		�	�		�	�
United States	$	95,349	�	$	70,197	�	$	76,699
Germany	22,716		�	23,316		�	23,020
France	22,758		�	21,854		�	22,832
Other international	113,098		�	95,154		�	103,325
Total long lived assets	$	253,921	�	$	210,521	�	$	225,876

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



�	Year Ended August 31,
�	2014					�	2013					�	2012
�	(In thousands, except for %s)
Custom performance colors	$	174,007	�	7	%	�	$	150,890	�	7	%	�	$	125,595	�	6	%
Masterbatch solutions	805,798		�	33		�	781,770		�	37		�	750,531		�	36
Engineered plastics	745,493		�	31		�	534,777		�	25		�	547,090		�	26
Specialty powders	350,510		�	14		�	308,619		�	14		�	314,965		�	16
Distribution services	371,190		�	15		�	357,346		�	17		�	343,091		�	16
Total consolidated net sales	$	2,446,998	�	100	%	�	$	2,133,402	�	100	%	�	$	2,081,272	�	100	%

Fiscal 2013 includes a reclassification of revenue between product families to better reflect the way the businesses are managed.

NOTE 14 RESEARCH AND DEVELOPMENT

Research and development expenditures were $16.9 million, $8.7 million and $6.1 million in fiscal years 2014, 2013 and 2012, respectively. The increase in research and development expense in fiscal 2014 is further evidence of the Company's commitment to innovation and belief that research and development is important to our organic growth strategy.

NOTE 15 RESTRUCTURING

Fiscal 2015 Restructuring Plans

EMEA Reorganization Plan

In October 2014, the Company announced actions to optimize the back-office and support functions in EMEA. The Company plans to reduce headcount in EMEA by approximately 40, with the majority of reductions expected to occur during the first half of fiscal 2015. The Company expects to record pretax employee-related and other restructuring costs of approximately $10 million, primarily in the first half of fiscal 2015. There were no charges recorded during fiscal 2014 related to this plan.

Fiscal 2013 Restructuring Plans

��

Americas Reorganization Plan

In the fourth quarter of fiscal 2013, the Company conducted restructuring activities primarily in Mexico and Grand Junction, Tennessee to better align capacity with demand. As part of this restructuring, the Company reduced headcount in the Americas by approximately 85, of which the majority of reductions occurred during fiscal 2013. The Company recorded $0.7 million and $1.5 million of pretax employee-related restructuring costs during fiscal 2014 and 2013, respectively. As of August 31, 2014, the Company expects no further charges and has no remaining accrual related to this plan as it is considered complete.

Brazil Consolidation Plan

During fiscal 2013, the Company initiated restructuring activities to consolidate two of its three existing leased manufacturing facilities in Brazil. In fiscal 2014, manufacturing activities at two facilities in the State of Sao Paulo, Brazil were relocated to a new facility. The Company offered eligible associates the ability to transfer from the two existing manufacturing facilities to the new facility. As a result of this consolidation, the Company reduced headcount in Brazil by approximately 55 in fiscal 2013, partially offset by the addition of approximately 35 associates at the Company's new manufacturing facility, including associate transfers and new hires. The Company recorded $3.1 million and $1.6 million of pretax employee-related and other restructuring costs during fiscal 2014 and 2013, respectively. Additionally, the Company recorded $0.1 million and $0.7 million of accelerated depreciation included in cost of sales during fiscal 2014 and 2013, respectively. As of August 31, 2014, the Company has a balance of $0.1 million related to this plan and expects to recognize minimal additional pretax employee-related and other cash charges during fiscal 2015. Cash payments associated with this plan are expected to occur through fiscal 2015 as the plan is completed.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMEA Reorganization Plan

In fiscal 2013, the Company executed restructuring activities to better reflect its current business footprint and customer needs in the challenging economic environment in Europe. As part of this restructuring, the EMEA regional team reduced headcount by approximately 45, of which the majority of the reductions occurred in fiscal 2013. The Company recorded $0.6 million and $6.4 million of pretax employee-related restructuring costs during fiscal 2014 and 2013, respectively. As of August 31, 2014, the Company has a balance of $0.3 million accrued for employee-related costs related to this plan. The Company expects to recognize minimal additional pretax employee-related cash charges during fiscal 2015. Cash payments associated with this plan are expected to occur through fiscal 2016 as the plan is completed.

Bellevue, Ohio Facility Plan

In the first quarter of fiscal 2013, the Company sold its Bellevue, Ohio facility to continue its focus on higher-value technical products. As part of this sale, the Company recorded minimal charges related to this plan during fiscal 2014 and $0.3 million of pretax employee-related costs and other restructuring expenses in fiscal 2013. Additionally, the Company recorded $0.4 million of accelerated depreciation associated with this plan during fiscal 2013. The Company expects no further charges and has no remaining accrual as of August 31, 2014 related to this plan as it is considered complete.

Fiscal 2012 Restructuring Plans

Masterbatch Reorganization Plan

Effective September 1, 2012 the masterbatch product family was split into two separate product families, Custom Performance Colors and Masterbatch Solutions. As a result, the Company reduced headcount in the EMEA and APAC segments in the fourth quarter of fiscal 2012. The Company recorded $0.4 million in fiscal 2014, minimal charges related to this plan during fiscal 2013 and $2.3 million of pretax employee-related restructuring costs in fiscal 2012, of which the majority was related to the EMEA segment. As of August 31, 2014, the Company has a balance of $1.2 million accrued related to the EMEA segment for employee-related costs and expects minimal charges related to this plan to be recognized in fiscal 2015. Cash payments associated with this plan are expected to occur through fiscal 2016 as the plan is completed.

EMEA Operations and Back-Office Plan

In November 2011, the Company initiated a restructuring plan of EMEAs operations and back-office functions to better leverage savings from its Shared Service Center located in Belgium. As part of this plan, the Company reduced headcount in EMEA by approximately 50, and the majority of the reductions occurred in the first and second quarters of fiscal 2012. The Company recorded minimal charges during fiscal 2014 and $0.3 million and $4.7 million of pretax employee-related restructuring expense during fiscal 2013 and 2012, respectively. As of August 31, 2014, the Company has a balance of $0.1 million accrued for employee-related costs related to this plan and expects minimal employee-related charges during fiscal 2015. Cash payments associated with this plan are expected to occur through fiscal 2015 as the plan is completed.

Fiscal 2011 Restructuring Plans

During fiscal 2012, the Company recognized charges of $1.6 million and $0.5 million related to the Americas Engineered Plastics and Italy plans, respectively, which are considered complete.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Restructuring Summary

The following table summarizes the activity related to the Companys restructuring plans:�



�	Employee-related Costs			�	Other Costs			�	Translation Effect			�	Total Restructuring Costs
�	(In thousands)
Accrual balance as of August 31, 2012	3,524			�	381			�	(539		)	�	3,366
Fiscal 2013 charges	8,669			�	1,831			�				�	10,500
Fiscal 2013 payments	(6,747		)	�	(1,812		)	�				�	(8,559		)
Translation				�				�	42			�	42
Accrual balance as of August 31, 2013	$	5,446		�	$	400		�	$	(497	)	�	$	5,349
Fiscal 2014 charges	2,223			�	2,660			�				�	4,883
Fiscal 2014 payments	(5,924		)	�	(2,689		)	�				�	(8,613		)
Translation				�				�	193			�	193
Accrual balance as of August 31, 2014	$	1,745		�	$	371		�	$	(304	)	�	$	1,812

Restructuring costs are excluded from segment operating income but are attributable to the reportable segments as follows:�



�	Year Ended August�31,
�	2014		�	2013		�	2012
�	(In thousands)
EMEA	$	1,000	�	$	6,704	�	$	7,531
Americas	3,807		�	3,616		�	1,603
APAC	76		�	180		�	122
Total	$	4,883	�	$	10,500	�	$	9,256

NOTE 16 ASSET IMPAIRMENTS

The Company recorded $0.1 million, $1.9 million and $3.4 million in pretax asset impairment charges during the years ended August 31, 2014, 2013 and 2012, respectively.

See Note 19 of this Form 10-K for further discussion on impairment charges included in discontinued operations.

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NOTE 17 CONTINGENCIES AND CLAIMS

In the normal course of business, the Company is at times subject to pending and threatened legal actions, some for which the relief or damages sought may be substantial. Although the Company is not able to predict the outcome of such legal actions, after reviewing all pending and threatened legal actions with counsel and based on information currently available, management believes that the outcome of such actions, individually or in the aggregate, will not have a material adverse effect on the results of operations or financial position of the Company. However, it is possible that the ultimate resolution of such matters, if unfavorable, may be material to the results of operations in a particular future period as the time and amount of any resolution of such legal actions and its relationship to the future results of operations are not currently known.

NOTE 18 SHARE REPURCHASE PROGRAM

NOTE 19 DISCONTINUED OPERATIONS

The Company completed the sale of all of the fixed and intangible assets of its rotational compounding business in Australia for $3.0 million on September 3, 2013. The operating results for this business were previously included in the Company's specialty powders product family within the APAC segment. The assets and liabilities of this business were classified as held for sale in the Company's consolidated balance sheet as of August 31, 2013 and included in prepaid expenses and other current assets and other accrued liabilities, respectively.

The following summarizes select financial information included in net earnings from discontinued operations:



�	Year ended August 31,
�	2014		�	2013			�	2012
�	(In thousands)
Net sales	$	1,372	�	$	30,009		�	$	25,482
Income (loss) from discontinued operations, net of tax	$	3,202	�	$	(6,671	)	�	$	(860	)

During fiscal 2014, the Company recorded a gain on the sale of assets of $3.4 million. The results for fiscal 2013 include an impairment charge of $4.0 million which represented the difference between the estimated fair market value and the carrying value of the net assets. The estimated fair value was determined based on expected sale price. Income taxes were minimal for all periods presented.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 QUARTERLY FINANCIAL HIGHLIGHTS (UNAUDITED)�



�	Quarter Ended															�	Year�Ended
�	Nov�30, 2013			�	Feb�28, 2014			�	May�31, 2014			�	Aug�31, 2014			�	Aug 31, 2014
�	Unaudited
�	(In thousands, except per share data)
Net sales	$	585,397		�	$	588,508		�	$	645,735		�	$	627,358		�	$	2,446,998
Gross profit	$	79,108		�	$	74,299		�	$	91,964		�	$	84,637		�	$	330,008
Income (loss) from continuing operations	$	12,631		�	$	6,648		�	$	19,347		�	$	15,164		�	$	53,790
Income (loss) from discontinued operations, net of tax	2,655			�	347			�	(23		)	�	223			�	3,202
Net income (loss)	15,286			�	6,995			�	19,324			�	15,387			�	56,992
Noncontrolling interests	(215		)	�	(136		)	�	(233		)	�	(215		)	�	(799		)
Net income (loss) attributable to A. Schulman, Inc.	$	15,071		�	$	6,859		�	$	19,091		�	$	15,172		�	$	56,193
�	�			�	�			�	�			�	�			�	�
Basic earnings per share attributable to A. Schulman, Inc.^(a)				�	�			�	�			�	�			�	�
Income (loss) from continuing operations	$	0.43		�	$	0.23		�	$	0.66		�	$	0.51		�	$	1.82
Income (loss) from discontinued operations	0.09			�	0.01			�				�	0.01			�	0.11
Net income attributable to A. Schulman, Inc.	$	0.52		�	$	0.24		�	$	0.66		�	$	0.52		�	$	1.93
�	�			�	�			�	�			�	�			�	�
Diluted earnings per share attributable to A. Schulman, Inc.^(a)				�	�			�	�			�	�			�	�
Income (loss) from continuing operations	$	0.43		�	$	0.22		�	$	0.65		�	$	0.51		�	$	1.80
Income (loss) from discontinued operations	0.09			�	0.01			�				�	0.01			�	0.11
Net income (loss) attributable to A. Schulman, Inc.	$	0.52		�	$	0.23		�	$	0.65		�	$	0.52		�	$	1.91
�	�			�	�			�	�			�	�			�	�
Certain items included in income from continuing operations, net of tax are as follows:
Asset write-downs^(b)	$	107		�	$	70		�	$			�	$			�	$	177
Costs related to acquisitions^(c)	546			�	1,822			�	872			�	2,635			�	5,875
Restructuring and related costs^(d)	3,340			�	2,513			�	1,840			�	1,463			�	9,156
Inventory step-up^(e)	319			�	782			�				�	323			�	1,424
Tax charges (benefits)				�	(426		)	�				�	110			�	(316		)
Total	$	4,312		�	$	4,761		�	$	2,712		�	$	4,531		�	$	16,316


^(a)�	The sum of the four quarters does not equal the earnings per share amount calculated for the year due to rounding.


^(b)�	Asset write-downs include charges primarily related to the write-down of the facility in Oyonnax, France. Refer to Note 16 of this Form 10-K for further discussion.


^(c)�	Costs related to acquisitions include professional, legal and other expenses associated with the Perrite Group, Network Polymers, Inc., Prime Colorants and the Specialty Plastics acquisitions, along with other potential acquisitions.


^(d)�	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. Refer to Note 15 of this Form 10-K for further discussion.


^(e)�	Inventory step-up relates to the fiscal 2014 acquisitions noted above.

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A. SCHULMAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



�	Quarter Ended															�	Year Ended
�	Nov�30, 2012			�	Feb�28, 2013			�	May�31, 2013			�	Aug�31, 2013			�	Aug 31, 2013
�	Unaudited
�	(In thousands, except per share data)
Net sales	$	532,085		�	$	515,440		�	$	548,589		�	$	537,288		�	$	2,133,402
Gross profit	$	71,667		�	$	63,199		�	$	74,044		�	$	72,269		�	$	281,179
Income (loss) from continuing operations	$	12,142		�	$	12,306		�	$	10,313		�	$	(762	)	�	$	33,999
Income (loss) from discontinued operations, net of tax	3			�	(282		)	�	(4,821		)	�	(1,571		)	�	(6,671		)
Net income (loss)	12,145			�	12,024			�	5,492			�	(2,333		)	�	27,328
Noncontrolling interests	(366		)	�	(239		)	�	(275		)	�	(349		)	�	(1,229		)
Net income (loss) attributable to A. Schulman, Inc.	$	11,779		�	$	11,785		�	$	5,217		�	$	(2,682	)	�	$	26,099
�	�			�	�			�	�			�	�			�	�
Basic earnings per share attributable to A. Schulman, Inc.^(f)				�	�			�	�			�	�			�	�
Income (loss) from continuing operations	$	0.40		�	$	0.41		�	$	0.34		�	$	(0.04	)	�	$	1.12
Income (loss) from discontinued operations				�	(0.01		)	�	(0.16		)	�	(0.05		)	�	(0.23		)
Net income attributable to A. Schulman, Inc.	$	0.40		�	$	0.40		�	$	0.18		�	$	(0.09	)	�	$	0.89
�	�			�	�			�	�			�	�			�	�
Diluted earnings per share attributable to A. Schulman, Inc.^(f)				�	�			�	�			�	�			�	�
Income (loss) from continuing operations	$	0.40		�	$	0.41		�	$	0.34		�	$	(0.04	)	�	$	1.12
Income (loss) from discontinued operations				�	(0.01		)	�	(0.16		)	�	(0.05		)	�	(0.23		)
Net income attributable to A. Schulman, Inc.	$	0.40		�	$	0.40		�	$	0.18		�	$	(0.09	)	�	$	0.89
�	�			�	�			�	�			�	�			�	�
Certain items included in income from continuing operations, net of tax are as follows:
Asset write-downs^(g)	$	628		�	$	404		�	$	1,386		�	$	365		�	$	2,783
Costs related to acquisitions^(h)	313			�	596			�	890			�	736			�	2,535
Restructuring and related costs⁽ⁱ⁾	1,762			�	1,320			�	2,472			�	5,577			�	11,131
Inventory step-up^(j)	138			�				�				�				�	138
Tax charges (benefits)^(k)				�	(6,160		)	�	(17		)	�	10,595			�	4,418
Total	$	2,841		�	$	(3,840	)	�	$	4,731		�	$	17,273		�	$	21,005


^(f)�	The sum of the four quarters does not equal the earnings per share amount calculated for the year due to rounding.


^(g)�	Asset write-downs include charges primarily related to the write-down of the facility in Oyonnax, France and the facility in Verolanuova, Italy during fiscal 2013. Refer to Note 16 of this Form 10-K for further discussion.


^(h)�	Costs related to acquisitions include professional, legal and other expenses associated with the acquisitions of ECM, the Perrite Group and other potential acquisitions.


⁽ⁱ⁾�	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. Refer to Note 15 of this Form 10-K for further discussion.


^(j)�	Inventory step-up relates to the ECM acquisition.


^(k)�	Tax charges (benefits) include the effect of the adjustment to the German and Brazilian valuation allowances in fiscal 2013.

�

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ITEM�9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

�



ITEM�9A.	CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commissions rules and forms and that such information is accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company carries out a variety of on-going procedures, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Companys disclosure controls and procedures. During fiscal 2014, the Company acquired the Perrite Group, Network Polymers, Inc., Prime Colorants and the specialty plastics business of Ferro Corporation. The scope of the Company's assessment of the effectiveness of internal control over financial reporting did not include these fiscal 2014 acquisitions. The total assets for the Perrite Group, Network Polymers, Inc., Prime Colorants and the specialty plastics business of Ferro Corporation represent 6.5%, 3.2%, 1.2%, and 7.4% respectively, of the related consolidated financial statement amounts as of August 31, 2014. The total revenue for the Perrite Group, Network Polymers, Inc., Prime Colorants and the specialty plastics business of Ferro Corporation represent 5.8%, 1.9%, 0.3%, and 1.0% respectively, of the related consolidated financial statement amounts for the year ended August 31, 2014.

This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the Company's scope in the year of acquisition. Based on that evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

There has been no change in the Companys internal controls over financial reporting during the Companys most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal controls over financial reporting.

Managements Report On Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Companys internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that the internal control over financial reporting was effective as of August�31, 2014.

Management's assessment of the effectiveness of the Company's internal control over financial reporting as of August 31, 2014 excluded from the scope of its assessment of internal control over financial reporting the operations and related assets of the Perrite Group, Network Polymers, Inc., Prime Colorants and the specialty plastics business of Ferro Corporation, which were all acquired during fiscal year 2014. SEC guidelines permit companies to omit an acquired business's internal controls over financial reporting from its management's assessment during the first year of the acquisition.

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Managements assessment of the effectiveness of the Companys internal control over financial reporting as of August�31, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.

�

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ITEM 9B.	OTHER INFORMATION

None.

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PART III



ITEM�10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers of the Company

The information required by Item�401 of Regulation S-K concerning the Companys directors and all persons nominated for election as directors at the Annual Meeting of Stockholders to be held on December�12, 2014 (the 2014 Annual Meeting) is incorporated herein by reference from the disclosure to be included under the caption Proposal One Election of Directors in the Companys definitive proxy statement relating to the 2014 Annual Meeting to be filed with the Commission (the 2014 Proxy Statement).

The information required by Item�401 of Regulation S-K concerning the Companys executive officers is incorporated herein by reference from the disclosure provided under the caption Executive Officers of the Company included in Part I of this Annual Report on Form 10-K.

The information required by Item�405 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption Section 16(a) Beneficial Ownership Reporting Compliance in the Companys 2014 Proxy Statement.

Code of Conduct

The information required by Item�406 of Regulation S-K regarding the Companys Global Code of Conduct is incorporated herein by reference from the disclosure to be included under the caption Code of Conduct in the Companys 2014 Proxy Statement.

Procedures for Recommending Directors Nominees

The information required by Item�407(c)(3) of Regulation S-K concerning the procedures by which stockholders may recommend nominees to the Board of Directors is incorporated herein by reference from the disclosure to be included under the caption Director Nominations in the Companys 2014 Proxy Statement. These procedures have not materially changed from those described in the Companys definitive proxy materials for the 2013 Annual Meeting of Stockholders held on December�12, 2013.

Audit Committee

The information required by Items 407(d)(4) and 407(d)(5) of Regulation S-K regarding the Audit Committee and the Audit Committee financial expert is incorporated herein by reference from the disclosure to be included under the caption Audit Committee in the Companys 2014 Proxy Statement.

�



ITEM�11.	EXECUTIVE COMPENSATION

The information required by Item�402 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions Compensation Discussion and Analysis and Compensation Tables in the Companys 2014 Proxy Statement.

The information required by Item�407(e)(4) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions Compensation Committee Interlocks and Insider Participation in the Companys 2014 Proxy Statement.

The information required by Item�407(e)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption The Compensation Committee Report in the Companys 2014 Proxy Statement.



ITEM�12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item�403 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption Security Ownership of Management and Certain Beneficial Owners in the Companys 2014 Proxy Statement.

The information by Item�201(d) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption Equity Compensation Plan Information in the Companys 2014 Proxy Statement.�

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ITEM�13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item�404 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption Certain Relationships and Related Transactions in the Companys 2014 Proxy Statement.

The information required by Item�407(a) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption Director Independence in the Companys 2014 Proxy Statement.

�



ITEM�14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item�14 is incorporated herein by reference from the disclosure to be included under the captions Fees Incurred by Independent Registered Public Accounting Firm and Pre-Approval of Fees in the Companys 2014 Proxy Statement.

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PART IV
�	�
ITEM�15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as a part of this Annual Report on Form 10-K:

(1) Financial Statements:�



The consolidated financial statements filed as part of this Form 10-K are as follows:	�
Consolidated Statements of Operations for the three years ended August�31, 2014	46
Consolidated Statements of Comprehensive Income for the three years ended August 31, 2014	47
Consolidated Balance Sheets as of August�31, 2014 and 2013	48
Consolidated Statements of Stockholders Equity for the three years ended August�31, 2014	49
Consolidated Statements of Cash Flows for the three years ended August�31, 2014	50
Notes to Consolidated Financial Statements	51

(2) Financial Statement Schedules:�



Valuation and Qualifying Accounts	90

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(3) Exhibits:�



2.1	Agreement, dated January 30, 2012, by and between Vita Polymers France SAS and ICO Europe B.V., to purchase 100 percent of the shares of Elian SAS (incorporated by reference from Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Commission on February 2, 2012).
2.2	Agreement, dated June 3, 2014, by and among the Company and its wholly-owned subsidiary, A. Schulman Castellon, S.L.U., and Ferro Corporation and its wholly-owned subsidiary, Ferro Spain, S.A. (filed herewith)
3.1	Amended and Restated Certificate of Incorporation of the Company (for purposes of Commission reporting compliance only) (incorporated by reference from Exhibit 3(a) to the Companys Annual Report on Form 10-K for the fiscal year ended August�31, 2009).
3.2	Amended and Restated By-laws of A. Schulman (incorporated by reference from Exhibit 3.2 to the Companys Current Report on Form 8-K filed with the Commission on June�27, 2011).
10.1*	A. Schulman 2002 Equity Incentive Plan (incorporated by reference from Exhibit 4(l) to the Companys Registration Statement on Form S-8, dated January�24, 2003 (Registration No.�333-102718)).
10.2*	Form of Indemnification Agreement for all Executive Officers and Directors of A.�Schulman (incorporated by reference from Exhibit 99.2 to the Companys Current Report on Form 8-K filed with the Commission on October�20, 2006).
10.3*	A. Schulman Second Amended and Restated Directors Deferred Units Plan (incorporated by reference from Exhibit 10.6 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended November�30, 2008).
10.4*	First Amendment to Form of Indemnification Agreement for all Executive Officers and Directors of A. Schulman (incorporated by reference from Exhibit 10.7 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended November�30, 2008).
10.5*	A. Schulman Amended and Restated Nonqualified Profit Sharing Plan (incorporated by reference from Exhibit 10.8 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended November�30, 2008).
10.6*	First Amendment to the A. Schulman 2002 Equity Incentive Plan (incorporated by reference from Exhibit 10.9 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended November�30, 2008).
10.7*	A. Schulman Amended and Restated 2006 Incentive Plan (incorporated by reference from Exhibit 10.10 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended November�30, 2008).
10.8*	A. Schulman 2006 Incentive Plan Form of Performance Share Award Agreement for Employees (incorporated by reference from Exhibit 10.5 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended February�28, 2009).
10.9*	A. Schulman 2006 Incentive Plan Form of Time-Based and Performance-Based Cash Award Agreement for Employees in Mexico, Canada and Europe (incorporated by reference from Exhibit 10.6 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended February�28, 2009).

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10.10*	Non-Employee Directors Compensation (filed herewith)
10.11*	The Companys 2014 Bonus Plan (incorporated by reference from the Companys Current Report on Form 8-K filed with the Commission on October�17, 2013).
10.12*	A. Schulman, Inc. 2010 Value Creation Rewards Plan (incorporated by reference from Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Commission on December�10, 2010).
10.13*	Form of 2012 Time-Based Restricted Stock Award Agreement for Employees (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.14*	Form of 2012 Time-Based Restricted Stock Unit Award Agreement for Foreign Employees (incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.15*	Form of 2012 Whole Share Award Agreement for Non-Employee Directors (incorporated by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.16*	Form of 2012 Performance Share Award Agreement (ROIC) for Employees (incorporated by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.17*	Form of 2012 Performance Share Award Agreement (TSR) for Employees (incorporated by reference from Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.18*	Form of 2012 Performance Unit Award Agreement (ROIC) for Foreign Employees (incorporated by reference from Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.19*	Form of 2012 Performance Unit Award Agreement (TSR) for Foreign Employees (incorporated by reference from Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012).
10.20*	A. Schulman, Inc. Executives and Directors Stock Ownership Guidelines Compliance Program Plan (incorporated by reference from Exhibit 99.1 to the Company's Registration Statement on Form S-8 dated November 23, 2011 (Registration No.�333-178159)).
10.21*	Amended and Restated Employment Agreement, by and between A. Schulman, Inc. and Joseph M. Gingo, dated May�19, 2011 (incorporated by reference from Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Commission on May�23, 2011).
10.22*	Form of A. Schulman, Inc. Change-in-Control Agreement (incorporated by reference from Exhibit 10.2 to the Companys Current Report on Form 8-K filed with the Commission on May�23, 2011).
10.23*	Employment Agreement, by and between A. Schulman, Inc. and Joseph J. Levanduski, dated June�10, 2011 (incorporated by reference from Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Commission on June�13, 2011).
10.24	Joint Venture Agreement between A. Schulman, Inc. and National Petrochemical Industrial Company of Jeddah, Saudi Arabia dated June 9, 2012 (incorporated by reference from Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Commission on June 12, 2012).
10.25*	Form of 2013 Restricted Stock Unit Award Agreement for Foreign Employees (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013).
10.26*	Notice of 2013 Restricted Stock Unit Award for Foreign Employees (incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013).
10.27*	Form of 2013 Restricted Stock Award Agreement for Employees (incorporated by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013).
10.28*	Notice of 2013 Restricted Stock Award for Employees (incorporated by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013).
10.29*	Form of 2013 Whole Share Award Agreement for Non-Employee Directors (incorporated by reference from Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013).
10.30	Credit Agreement, dated September 24, 2013 by and among A. Schulman, Inc., A. Schulman International Services BVBA and A. Schulman Plastics BVBA, and JPMorgan Chase Bank, N.A., as Administrative agent and J.P. Morgan Europe Limited as Global Agent, the lenders named in the Credit Agreement. (incorporated by reference from Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Commission on September 27, 2013).
10.31*	Form of 2014 Restricted Stock Unit Award Agreement for Foreign Employees (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2014).
10.32*	Form of Notice of 2014 Restricted Stock Unit Awards for Foreign Employees (incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2014).
10.33*	Form of 2014 Restricted Stock Award Agreement for Employees (incorporated by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2014).
10.34*	Form of Notice of 2014 Restricted Stock Award for Employees (incorporated by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2014).

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10.35*	Form of Notice of 2014 Whole Share Award Agreement for Non-Employee Directors (incorporated by reference from Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2014).
11	Statement re Computation of Per Share Earnings.**
21	Subsidiaries of the Company (filed herewith).
23	Consent of Independent Registered Public Accounting Firm (filed herewith).
24	Powers of Attorney (filed herewith).
31	Certifications of Principal Executive and Principal Financial Officers pursuant to Rule 13a-14(a)/15d-14(a) (filed herewith).
32	Certifications of Principal Executive and Principal Financial Officers pursuant to 18 U.S.C. 1350 (filed herewith).
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.***


*	Management contract or compensatory plan or arrangement required to be filed as an Exhibit hereto.


**	Information required to be presented in Exhibit 11 is provided in Note 11 of the Notes to Consolidated Financial Statements under Part II, ITEM�8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Form 10-K in accordance with accounting rules related to accounting for earnings per share.

*** In accordance with Rule 406T of Regulation S-T, the XBRL (Extensible Business Reporting Language) information in these exhibits 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 liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

�


(b)	Exhibits.

See subparagraph (a)(3) above

�


(c)	Financial Statement Schedules.

See subparagraph (a)(2) above

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A. SCHULMAN, INC.

VALUATION AND QUALIFYING ACCOUNTS

Schedule F-1

�



�	Balance�at beginning of period		�	Charges�to cost and expenses			�	Net write-offs	�	Other	�	Translation adjustment	�	Balance�at close of period
�	(In thousands)
Valuation allowance deferred tax assets	�		�	�			�	�	�	�	�	�	�	�
Year Ended August 31, 2014	$	23,252	�	$	(1,536	)	�	$	�	$	�	$	�	$	21,716
Year Ended August 31, 2013	$	50,478	�	$	(27,226	)	�	$	�	$	�	$	�	$	23,252
Year Ended August 31, 2012	$	60,578	�	$	(10,100	)	�	$	�	$	�	$	�	$	50,478

The reduction in the valuation allowance during the year ended August 31, 2013 includes approximately $25.5 million related to the expected utilization of foreign tax credit carryforwards against the planned fiscal 2014 foreign distribution tax liability which was also recorded at August 31, 2013. Accordingly, this reduction in the valuation allowance had no net impact on net income in the year ended August 31, 2013.

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SIGNATURES

Pursuant to the requirements of Section�13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

�



�	�	A. SCHULMAN, INC.
�	�	By:	/s/��Joseph J. Levanduski
�	�	�	Joseph J. Levanduski, Vice President, Chief Financial Officer (Signing as the Principal Financial Officer of Registrant)
�	�	�	�
Date:	October�22, 2014	�	�

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated.

�



Signature	��	Title	�	Date
�	�	�	�	�
/s/��Joseph M. Gingo	��	Chairman, President and Chief Executive Officer (Director and Principal Executive Officer)	�	October�22, 2014
Joseph M. Gingo	�	�	�	�
�	�	�	�	�
/s/��Joseph J. Levanduski	��	Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	�	October�22, 2014
Joseph J. Levanduski	�	�	�	�
�	�	�	�	�
�	�	�	�	�
/s/��Eugene R. Allspach*	��	Director	�	October�22, 2014
Eugene R. Allspach	�	�	�	�
�	�	�	�	�
/s/��Gregory T. Barmore*	��	Director	�	October�22, 2014
Gregory T. Barmore	�	�	�	�
�	�	�	�	�
/s/��David G. Birney*	��	Director	�	October�22, 2014
David G. Birney	�	�	�	�
�	�	�	�	�
/s/��Howard R. Curd*	��	Director	�	October�22, 2014
Howard R. Curd	�	�	�	�
�	�	�	�	�
/s/��Michael A. McManus, Jr.*	��	Director	�	October�22, 2014
Michael A. McManus, Jr.	�	�	�	�
�	�	�	�	�
/s/��Lee D. Meyer*	��	Director	�	October�22, 2014
Lee D. Meyer	�	�	�	�
�	�	�	�	�
/s/��James A. Mitarotonda*	��	Director	�	October�22, 2014
James A. Mitarotonda	�	�	�	�
�	�	�	�	�
/s/��Ernest J. Novak, Jr.*	��	Director	�	October�22, 2014
Ernest J. Novak, Jr.	�	�	�	�
�	�	�	�	�
/s/��Dr. Irvin D. Reid*	��	Director	�	October�22, 2014
Dr. Irvin D. Reid	�	�	�	�
�	�	�	�	�
/s/��John B. Yasinsky*	��	Director	�	October�22, 2014
John B. Yasinsky	�	�	�	�

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*	The undersigned, by signing his name hereto, does hereby sign and execute this Annual Report on Form 10-K on behalf of each of the indicated directors pursuant to a Power of Attorney executed by each such director and filed with this Annual Report on Form 10-K.

�



*By:	/s/��Joseph M. Gingo
�	Joseph M. Gingo Attorney-in-Fact
October�22, 2014

Exhibit 2.2

EXECUTION VERSION

STRICTLY PRIVATE AND CONFIDENTIAL

ASSET PURCHASE AGREEMENT

BY AND AMONG

FERRO CORPORATION,

FERRO SPAIN, S.A.,

A. SCHULMAN, INC.

AND

A. SCHULMAN CASTELLON, S.L.U.

DATED AS OF

June 3, 2014



TABLE OF CONTENTS
�	�	Page
ARTICLE I	DEFINITIONS	1
Section 1.01	Definitions	1
Section 1.02	Certain Interpretive Matters	9
ARTICLE II	PURCHASE AND SALE	10
Section 2.01	Purchase and Sale of the Sold Assets	10
Section 2.02	Excluded Assets	11
Section 2.03	Assumption of Liabilities	12
Section 2.04	Excluded Liabilities	12
Section 2.05	Non-Assignable Sold Contracts	13
ARTICLE III	PURCHASE PRICE	13
Section 3.01	Payment of Purchase Price	13
Section 3.02	Net Working Capital Adjustment	14
Section 3.03	Allocation of the Total Consideration	15
Section 3.04	Prorations	15
ARTICLE IV	CLOSING; DELIVERIES AT CLOSING	15
Section 4.01	Closing	15
Section 4.02	Deliveries by Sellers	16
Section 4.03	Deliveries by Buyers	17
Section 4.04	Spain Transfer Agreement	18
Section 4.05	Further Assurances	18
ARTICLE V	REPRESENTATIONS AND WARRANTIES OF FERRO	18
Section 5.01	Organization	18
Section 5.02	Authorization; Enforceability	18
Section 5.03	No Approvals or Conflicts	18
Section 5.04	Financial Information	19
Section 5.05	Absence of Certain Changes, Events and Conditions	19
Section 5.06	Compliance with Laws; Permits	20
Section 5.07	Proceedings	20
Section 5.08	Tax Matters	20
Section 5.09	Intellectual Property	21
Section 5.10	Contracts	22
Section 5.11	Title to and Condition and Sufficiency of Sold Assets	23
Section 5.12	Real Property	24
Section 5.13	Environmental Matters	24
Section 5.14	Employee Relations	25
Section 5.15	Employee Benefit Plans	26
Section 5.16	Customers and Suppliers	29
Section 5.17	Product Warranty and Liability	29
Section 5.18	Accounts Receivable	29
Section 5.19	No Brokers or Other Fees	29
Section 5.20	No Other Representations or Warranties	29



TABLE OF CONTENTS (continued)
�	�	Page
ARTICLE VI	REPRESENTATIONS AND WARRANTIES OF BUYERS	30
Section 6.01	Organization	30
Section 6.02	Authorization; Enforceability	30
Section 6.03	No Approvals or Conflicts	30
Section 6.04	Compliance with Laws	30
Section 6.05	Proceedings	31
Section 6.06	Financing	31
Section 6.07	No Brokers or Other Fees	31
Section 6.08	No Other Representations or Warranties	31
ARTICLE VII	TAX MATTERS	32
Section 7.01	General	32
Section 7.02	Cooperation	32
Section 7.03	Real and Personal Property Taxes	32
Section 7.04	Transfer and Other Taxes	32
ARTICLE VIII	EMPLOYEE MATTERS	33
Section 8.01	Employees; Employment Matters	33
Section 8.02	Labor Matters	39
Section 8.03	Workers Compensation	40
ARTICLE IX	OTHER COVENANTS	40
Section 9.01	Conduct of Business Prior to the Closing	40
Section 9.02	Governmental Approvals and Consents	41
Section 9.03	Access to Books and Records; Cooperation	42
Section 9.04	Non-Competition and Non-Solicitation	42
Section 9.05	Severability; Reformation	43
Section 9.06	Materiality	43
Section 9.07	Corporate Names; License	43
Section 9.08	Further Actions	44
Section 9.09	Wrong Pocket	44
Section 9.10	Bulk Transfer Laws	44
Section 9.11	Confidentiality	44
Section 9.12	Public Announcements	44
Section 9.13	Product Warranties	45
Section 9.14	Removal of Excluded Assets	45
Section 9.15	No Solicitation of Offers	45
Section 9.16	Environmental Insurance	45
ARTICLE X	CLOSING CONDITIONS	46
Section 10.01	Conditions to Obligations of All Parties	46
Section 10.02	Conditions to the Obligation of each Buyers	46
Section 10.03	Conditions to the Obligation of each Seller	47



TABLE OF CONTENTS (continued)
�	�	Page
ARTICLE XI	SURVIVAL AND INDEMNIFICATION	47
Section 11.01	Indemnification by Sellers	47
Section 11.02	Indemnification Limitations	47
Section 11.03	Indemnification by Buyers	48
Section 11.04	Indemnification as Exclusive Remedy	48
Section 11.05	Environmental Indemnification Exclusive Remedy and Limitations	48
Section 11.06	Indemnification Calculations	50
Section 11.07	Survival	50
Section 11.08	Notice and Opportunity to Defend	50
Section 11.09	Additional Limitations	51
Section 11.10	Subrogation	51
ARTICLE XII	TERMINATION	51
Section 12.01	Termination	51
Section 12.02	Effect of Termination	52
ARTICLE XIII	MISCELLANEOUS	52
Section 13.01	Fees and Expenses	52
Section 13.02	Governing Law	52
Section 13.03	Projections	52
Section 13.04	Amendment	52
Section 13.05	No Assignment	52
Section 13.06	Waiver	53
Section 13.07	Notices	53
Section 13.08	Complete Agreement	53
Section 13.09	Counterparts	54
Section 13.10	Severability	54
Section 13.11	Third Parties	54
Section 13.12	Non-Recourse	54
Section 13.13	Dispute Resolution	54
Section 13.14	Specific Performance	55
Section 13.15	Legal and Tax Advice	55

iii

EXHIBITS AND SCHEDULES



Exhibit A	Escrow Agreement
Exhibit B	Allocation
Exhibit C	Bill of Sale
Exhibit D	Assignment and Assumption Agreement
Exhibit E	Spanish Transfer Agreement
Exhibit F	Lease Assignment
Exhibit G	Spain Lease
Exhibit H	IP Assignment
Exhibit I	TSA
Exhibit J	Deeds



Schedule 1.01(a)	Employees
Schedule 1.01(b)	Permitted Encumbrances
Schedule 2.01(a)	Sold Equipment
Schedule 2.01(b)	Sold Inventory
Schedule 2.01(c)	Sold Contracts
Schedule 2.01(e)	Sold Intellectual Property
Schedule 2.01(f)	Permits
Schedule 2.01(l)	Sold Real Property
Schedule 2.03(d)	Scheduled Assumed Liabilities
Schedule 3.02(a)(i)	Closing Working Capital Statement
Schedule 4.02(o)	Deliverable Consents
Schedule 5.03	Approvals and Conflicts
Schedule 5.04	Certain Financial Information
Schedule 5.05	Absence of Changes
Schedule 5.06	Compliance with Laws
Schedule 5.07	Proceedings
Schedule 5.08	Tax Matters
Schedule 5.09	Intellectual Property Matters
Schedule 5.10	Contracts
Schedule 5.11	Title to Sold Assets
Schedule 5.13	Environmental Matters
Schedule 5.14	Employee Relations
Schedule 5.15	Employee Benefit Plans
Schedule 5.15(c)(i)	Transferred Ferro Spain Employees
Schedule 5.16(a)	Material Customers
Schedule 5.16(b)	Material Suppliers
Schedule 5.17	Product Warranty and Liability
Schedule 5.18	Sold Accounts Receivable
Schedule 8.01(d)(v)	Severance Obligations
Schedule 9.07(b)	Licensed IP

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the Agreement) is made and entered into as of June 3, 2014 by and among Ferro Corporation, an Ohio corporation (Ferro), Ferro Spain, S.A., a Spanish company and a subsidiary of Ferro (Ferro Spain), A. Schulman, Inc., a Delaware corporation (ASI), and A. Schulman Castellon, S.L.U., a Spanish company and an indirect subsidiary of ASI (ASI Spain). Each of Ferro and Ferro Spain is sometimes referred to herein as a Seller, and Ferro and Ferro Spain are collectively referred to herein as Sellers. Each of ASI and ASI Spain is sometimes referred to herein as a Buyer, and ASI and ASI Spain are collectively referred to herein as Buyers. Buyers and Sellers are sometimes collectively referred to herein as the Parties and individually referred to herein as a Party.

RECITALS:

A.��Sellers are engaged in the Specialty Plastics Business (as defined below).


B.	Sellers desire to sell to Buyers, and Buyers desire to purchase from Sellers, the Sold Assets (as defined below), subject to the terms and conditions set forth in this Agreement.

Accordingly, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01��Definitions. For purposes of this Agreement, the following terms will have the meanings set forth below:

Acquisition Notice has the meaning set forth in Section 9.04(b).

Affiliate means, with respect to any Person, any other Person controlling, controlled by or under common control with such Person as of the date on which, or at any time during the period for which, the determination of affiliation is made. For purposes of this definition, control (including the terms controlling, controlled by and under common control with) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

Agreement has the meaning set forth in the preamble.

AIP has the meaning set forth in Section 8.01(l).

Allocation has the meaning set forth in Section 3.03.

Amended Collective Bargaining Agreements has the meaning set forth in Section 8.01(m).

Ancillary Agreements means the Bill of Sale, the Assignment and Assumption Agreement, the Lease Assignment, the Spain Lease, the Spain Transfer Agreement, the IP Assignment, the TSA, the Escrow Agreement, the Lien Release, the Deeds and the other deliverable documents set forth in Sections 4.02 and 4.03.

ASI has the meaning set forth in the preamble.

ASI Spain has the meaning set forth in the preamble.

Assignment and Assumption Agreement has the meaning set forth in Section 4.02(c).

Assumed Liabilities has the meaning set forth in Section 2.03.

Basket has the meaning set forth in Section 11.02.

Benefit Arrangement has the meaning set forth in Section 5.15.

Bill of Sale has the meaning set forth in Section 4.02(a).

Business Day means any day other than a Saturday or a Sunday or other day on which banking institutions in the State of Ohio are authorized or required by Law or other governmental action to close.

Buyer or Buyers has the meaning set forth in the preamble.

Buyer Indemnified Persons means, collectively, Buyers, their respective Affiliates and their respective officers, directors, employees, agents and representatives.

Buyers Accountants means PricewaterhouseCoopers LLP.

Cap has the meaning set forth in Section 11.02.

Claim Notice has the meaning set forth in Section 11.08.

Closing has the meaning set forth in Section 4.01.

Closing COBRA Payment has the meaning set forth in Section 8.01(e)(iii).

Closing Date has the meaning set forth in Section 4.01.

Closing Working Capital means (a) Current Assets, minus (b) Current Liabilities, determined as of (i) 12:01 a.m., Cleveland time, on the Closing Date if the Closing Date is the first day of a month, or (ii) 11:59 p.m., Cleveland time, on the Closing Date if the Closing Date is the last day of a month or any other day but the first day of a month.

Closing Working Capital Statement has the meaning set forth in Section 3.02(a)(i).

COBRA means Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and the regulations thereunder.

COBRA End Date has the meaning set forth in Section 8.01(e)(vii)(C).

COBRA Escrow Account has the meaning set forth in Section 8.01(e)(vi).

COBRA Escrow Amount has the meaning set forth in Section 8.01(e)(vi).

COBRA Premium has the meaning set forth in Section 8.01(e)(ii).

COBRA Year has the meaning set forth in Section 8.01(e)(iv).

Code means the Internal Revenue Code of 1986, as amended.

Collective Agreement has the meaning set forth in Section 5.15(c)(xxii).

Confidentiality Agreement means that certain Confidentiality Agreement, dated November 1, 2013, between ASI and Ferro.

Contract means any contract, lease, deed, mortgage, license, instrument, note, commitment, undertaking, indenture, and all other agreements, commitments and legally binding arrangements, whether written or oral.

Covered Participants has the meaning set forth in Section 8.01(e)(i).

Current Assets means the current assets of the Specialty Plastics Business included in the line items set forth on Schedule 3.02(a)(i).

Current Liabilities means the current liabilities of the Specialty Plastics Business included in the line items set forth on Schedule 3.02(a)(i).

Data Room means that certain virtual data room relating to the Specialty Plastics Business established by Sellers through Intralinks as such data room existed on the Business Day immediately preceding the date of this Agreement.

Deeds has the meaning set forth in Section 4.02(g).

Disputed Amounts has the meaning set forth in Section 3.02(b)(iii).

Employee means (i) any individual who is employed by a Seller at a Facility and (ii) any individual set forth on Schedule 1.01(a).

Employee Plan has the meaning set forth in Section 5.15.

Encumbrances means all security interests, pledges, mortgages, liens, transfer restrictions, leases, charges, options, easements, claims or rights of first refusal.

Environment means soil, subsurface strata, surface waters, groundwater, stream sediments and ambient or indoor air.

Environmental Insurance Policy means the Pollution Legal Liability Select Policy issued by Chartis Specialty Insurance Company as of March 1, 2012 with Ferro as the named insured, as modified prior to the Closing (i) to exclude Ferros Edison, New Jersey facility from coverage, (ii) to make ASI a named insured, and (iii) to exclude ASI from the prior owner exception from coverage.

Environmental Laws means applicable Laws concerning human health (with respect to exposure to Hazardous Materials), pollution or protection of the Environment, including all those relating to the generation, handling, transportation, treatment, storage, disposal, distribution, labeling, discharge, Release, control or cleanup of any Hazardous Materials and the protection and restoration of natural resources.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate has the meaning set forth in Section 5.15(b).

Escrow Agent has the meaning set forth in Section 3.01(b).

Escrow Amount has the meaning set forth in Section 3.01(a).

Escrow Agreement has the meaning set forth in Section 3.01(b).

Excluded Assets has the meaning set forth in Section 2.02.

Excluded Liabilities has the meaning set forth in Section 2.04.

Facility or Facilities means the Sold Real Property and the Leased Real Property.

Facility Environmental Liabilities means any violation of or Liability under any Environmental Law with respect to conditions at any of the Facilities (other than the property subject to the Spain Lease), or any Release at, on, under or migrating to or from any of the Facilities (other than the property subject to the Spain Lease).

Facility Environmental Period has the meaning set forth in Section 11.07.

Ferro has the meaning set forth in the preamble.

Ferro COBRA Plans has the meaning set forth in Section 8.01(e)(i).

Ferros FSA has the meaning set forth in Section 8.01(d)(iv).

Ferro Spain has the meaning set forth in the preamble.

Final Payments has the meaning set forth in Section 8.01(e)(vii)(C).

Final Plan Expenses has the meaning set forth in Section 8.01(e)(vii)(C).

Foreign Competition/Investment Law means any Law other than the Laws of the United States that prohibits, restricts or regulates (a) foreign investment, (b) antitrust, monopolization or restraint of trade or (c) competition.

GAAP means generally accepted accounting principles in the United States.

General Enforceability Exceptions means, collectively, the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors rights generally and general equitable principles (whether considered in a Proceeding in equity or at Law).

Governmental Authority means any federal, state, local or foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, judicial body or arbitrator (public or private).

Governmental Order means any order, writ, injunction, decree, judgment, assessment or arbitration award of a Governmental Authority.

Hazardous Materials means (a) any element, compound or chemical substance that is characterized, regulated, defined, listed or identified as hazardous waste, hazardous material, toxic substance, contaminant, pollutant, or hazardous substance, or extremely hazardous substance, or as a medical, biohazardous, infectious or special waste or terms of similar import under any Environmental Law; (b) petroleum, petroleum-based or petroleum-derived products; (c) polychlorinated biphenyls; (d) any substance exhibiting a hazardous waste characteristic including but not limited to corrosivity, ignitibility, toxicity or reactivity as well as any radioactive or explosive materials; and (e) any asbestos or asbestos-containing materials.

Illinois Lease means that certain Lease, dated August 29, 2000, by and between TKJ Enterprises, LLC (successor to Invensys Metering Property Corporation) and Ferro (as amended), for premises generally known as 400 Maple Avenue, Carpentersville, Illinois.

Indemnified Party has the meaning set forth in Section 11.08.

Indemnifying Party has the meaning set forth in Section 11.08.

Independent Accountants has the meaning set forth in Section 3.02(b)(iii).

Initial COBRA Period has the meaning set forth in Section 8.01(e)(ii).

Initial Payments has the meaning set forth in Section 8.01(e)(vii)(A).

Initial Plan Expenses has the meaning set forth in Section 8.01(e)(vii)(A).

Intellectual Property means all intellectual property (and all applications and records relating thereto) recognized anywhere in the world including (a) all inventions (whether patentable or un-patentable and whether or not reduced to practice), all improvements thereto, and all patents, utility models, patent applications, utility model applications, patent disclosures and invention disclosures, together with all re-issuances, continuations, continuations-in-part, revisions, extensions and re-examinations thereof; (b) all trademarks, service marks, trade dress, logos and trade names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith specific to the Sold Assets, but specifically excluding the Retained Names and Marks; (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith; (d) all trade secrets and other confidential information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know how, manufacturing, assembly, construction, production and service processes and techniques, research and development information, drawings, specifications, designs, creative works, plans, proposals, technical data, copyrightable works (including training manuals and operating manuals), financial and marketing plans, customer and vendor lists and information (Trade Secrets); (e) all rights with respect to confidentiality and assignment of intellectual property; (f) all licenses, sublicenses and other agreement to which the Sellers are a party and pursuant to which it is authorized to use any third party intellectual property; (g) all computer software (including data and related documentation and any CRM tools); (h) other intellectual property rights; (i) all copies and tangible embodiments thereof (in whatever form or medium), (j) all goodwill associated with any of the foregoing and (h) any and all rights to sue for past infringement of any and/or all of the rights arising from (a)-(j).

Interim Payments has the meaning set forth in Section 8.01(e)(vii)(B).

Interim Plan Expenses has the meaning set forth in Section 8.01(e)(vii)(B).

IP Assignment has the meaning set forth in Section 4.02(e).

Knowledge of Buyers means the actual knowledge after a commercially reasonable inquiry of any one or more of James Irwin and Joe Levanduski.

Knowledge of Sellers means the actual knowledge after a commercially reasonable inquiry of any one or more of Paul Angus, Jim Barna, John Glassmeyer, Joe Vitale and Albert Weber.

Land Use Covenants and Restrictions means those measures (including institutional and engineering controls) affecting the title and/or use of property, including obligations to maintain cover and containment structures and to monitor and test environmental media, and conditions and restrictions to protect persons from unacceptable exposures to Hazardous Materials and which may be memorialized in documents of title to run with the land such as described in deed notices or restrictions.

Law means any law, statute, ordinance, regulation or rule of any Governmental Authority.

Lease Assignment has the meaning set forth in Section 4.02(c).

Leased Real Property means the real property together with the improvements thereon, fixtures related thereto and any rights or easements appurtenant thereto (i) leased by Ferro pursuant to the Illinois Lease, and (ii) leased by ASI Spain from Ferro Spain pursuant to the Spain Lease.

Liability or Liabilities means any debts, claims, liabilities or obligations (whether direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or unliquidated or due or to become due), including all costs and expenses relating thereto.

License has the meaning set forth in Section 9.07(b).

Licensed Marks has the meaning set forth in Section 9.07(b).

Lien Release means the release by PNC Bank and certain other lenders of any liens applicable to the Sold Assets pursuant to (i) the Third Amended and Restated Credit Agreement dated August 24, 2010 (as amended), and (ii) the Amended and Restated Receivables Purchase Agreement dated May 31, 2011 (as amended).

Losses means, collectively, all losses, damages, costs, deficiencies, actions, demands, judgments and expenses (including expenses and reasonable fees of attorneys and accountants).

Material Adverse Effect means any event, occurrence, fact, condition or change that is, or that could reasonably be expected to become, materially adverse to (a) the business, results of operations, or financial condition or assets of the Specialty Plastics Business, taken as a whole, or (b) the ability of Sellers to consummate the transactions contemplated hereby; provided, however, that Material Adverse Effect does not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Specialty Plastics Business operates; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Buyers; (vi) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation of such Laws or accounting rules; (vii) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Specialty Plastics Business; (viii) any natural disaster or acts of God; or (ix) any failure by the Specialty Plastics Business to meet any projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) are not be excluded), and further provided that, notwithstanding the foregoing, any event, occurrence, fact, condition or change referred to in clauses (i), (ii) or (vi) immediately above will be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a materially disproportionate adverse effect on the Specialty Plastics Business compared to other participants in the industries in which it operates.

Material Customers has the meaning set forth in Section 5.16(a).

Material Suppliers has the meaning set forth in Section 5.16(b).

Multiemployer Plan has the meaning set forth in Section 5.15(b).

Multiple Employer Plan has the meaning set forth in Section 5.15(b).

Outside Date has the meaning set forth in Section 12.01(b)(i).

Parties or Party has the meaning set forth in the preamble.

Pension Plan has the meaning set forth in Section 5.15.

Permits means permits, licenses, franchises, approvals, authorizations and consents required to be obtained from Governmental Authorities.

Permitted Encumbrances means (a) Encumbrances for Taxes, assessments and other charges of Governmental Authorities that are not yet due and payable or that are disclosed on Schedule 1.01(b) and being contested in good faith, (b) Encumbrances in respect of property or assets imposed by Law that were incurred in the ordinary course of business, such as carriers, warehousemens, materialmens and mechanics liens and other similar liens, (c) pledges or deposits made in the ordinary course of business to secure obligations under workers compensation or similar Laws, (d) with respect to the Sold Real Property (i) the effect of zoning, entitlement and other land use, (ii) imperfections or irregularities in title, charges, easements, matters that would be disclosed by an accurate survey, and other customary encumbrances on title to or use of real property which do not materially interfere with the operation of the Sold Real Property, (iii) leases, subleases, license agreements and other occupancy agreements set forth on Schedule 1.01(b), (iv) any utility company or Governmental Authority rights, easements or franchises for electricity, water, sanitary sewer, steam, surface water drainage, gas, telephone or other service or the right to use and maintain poles, lines, wires, cables, pipes, boxes and other fixtures and facilities in, over, under and upon any of the Sold Real Property or other general easements granted to Governmental Authorities in the ordinary course of developing or operating any of the Sold Real Property, (e) Encumbrances that may be created by or on behalf of Buyers and (g) any other matters disclosed on Schedule 1.01(b).

Person means any individual, partnership, firm, corporation, association, trust, unincorporated organization, joint venture, limited liability company, Governmental Authority or other entity.

Plan Expenses means (a) the actual cost of the claims incurred under the Ferro COBRA Plans that are not paid by Ferros stop loss insurance carrier, (b) stop-loss, dental, vision, and HMO insurance premiums with respect to the Ferro COBRA Plans, (c) administrative service fees for the Ferro COBRA Plans and Ferros FSA, and COBRA administrative fees with respect to the Ferro COBRA Plans, and (d) the portion of the COBRA Premium for the Ferro COBRA Plans attributable to the 2% administrative charge.

Post-Closing Adjustment has the meaning set forth in Section 3.02(a)(ii).

Pre-Closing Appeals has the meaning set forth in Section 7.03(b).

Pre-Closing Tax Period means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

Proceeding means any civil, criminal, judicial, administrative or arbitral actions, investigations, inquiries, claims, complaints, suits or proceedings (public or private) by or before any Governmental Authority.

Prohibited Business has the meaning set forth in Section 9.04(b).

Purchase Price has the meaning set forth in Section 3.01.

REACH has the meaning set forth in Section 5.13(h).

Release means the releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any Hazardous Material into the Environment.

Resolution Period has the meaning set forth in Section 3.02(b)(ii).

Response Action means any environmental investigation, assessment, monitoring, cleanup, containment, restoration, removal, remediation or other corrective or response action involving the Facilities.

Restricted Period has the meaning set forth in Section 9.04(a).

Retained Businesses means all of Sellers businesses and operations other than the Specialty Plastics Business, including the liquid or paste dispersion, decorative glass coatings, organic and inorganic glass sealing, and electrical or heat conducting electronic material businesses including, for the avoidance of doubt, (i) the liquid color and paste business conducted by Ferro and its Affiliates other than at the Facilities, including the liquid color and paste business conducted at Ferros Edison, New Jersey facility, and (ii) businesses conducted solely within Venezuela by Ferro de Venezuela, C.A.

Retained Names and Marks has the meaning set forth in Section 9.07.

Review Period has the meaning set forth in Section 3.02(b)(i).

Sale has the meaning set forth in Section 9.15.

Seller and Sellers has the meaning set forth in the preamble.

Seller Indemnified Persons means, collectively, Sellers, their respective Affiliates and their respective officers, directors, employees, agents and representatives.

Sold Accounts Receivable has the meaning set forth in Section 2.01(h).

Sold Contracts has the meaning set forth in Section 2.01(c).

Sold Equipment has the meaning set forth in Section 2.01(a).

Sold Intellectual Property has the meaning set forth in Section 2.01(e).

Sold Inventory has the meaning set forth in Section 2.01(b).

Sold Real Property has the meaning set forth in Section 2.01(l).

Spain Lease has the meaning set forth in Section 4.02(e).

Spanish Tax Clearance Certificates means one or more certificates from the Spanish Tax Governmental Authorities that detail Sellers Tax Liabilities, if any, relating to the Sold Assets and Specialty Plastics Business in Spain, in accordance with articles 42.1(c) and 175 of Spanish General Tax Law 58/2003, of 17 December.

Spain Transfer Agreement has the meaning set forth in Section 4.04.

Spanish Assets has the meaning set forth in Section 4.04.

Specialty Plastics Business means Sellers business of developing, formulating, manufacturing and selling custom engineered or colored plastic compounds and master batches, thermoplastic elastomers, liquid/paste plastic color dispersions, plastic color concentrates, epoxy patching materials and gel coat materials at the Facilities. For the avoidance of doubt, the Specialty Plastics Business specifically excludes the Retained Businesses.

Statement of Objections has the meaning set forth in Section 3.02(b)(i).

Subsidy Termination Date has the meaning set forth in Section 8.01(e)(ii).

Target Working Capital Range has the meaning set forth in Section 3.02(a)(ii).

Tax or Taxes means any taxes of any kind, including without limitation those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, real property transfer, real property transfer gains, value added, property or windfall profits taxes, customs duties or similar fees, similar levies, similar assessments or similar charges, together with any related interest, penalties, additions to tax or additional amounts imposed by any Governmental Authority.

Tax Returns means any return, form, report or statement required to be filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto or amendment thereof.

Taxing Authority means any Governmental Authority responsible for the administration or imposition of any Tax.

Third Party Claim has the meaning set forth in Section 11.08.

Total Consideration has the meaning set forth in Section 3.01.

TSA has the meaning set forth in Section 4.02(g).

Transferred Employees has the meaning set forth in Section 8.01(a).

Transferred Ferro Spain Employees has the meaning set forth in Section 8.01(k).

Transfer Taxes has the meaning set forth in Section 7.04.

Undisputed Amounts has the meaning set forth in Section 3.02(b)(iii).

Union Employee has the meaning set forth in Section 8.02(a).

Union Pension Plan has the meaning set forth in Section 8.02(b).

USIP has the meaning set forth in Section 8.01(l).

Withdrawal Liability has the meaning set forth in Section 8.02(b).

Section 1.02��Certain Interpretive Matters.

(a)��The words hereof, herein, hereinafter and hereunder and words of similar import when used in this Agreement refer to this Agreement and not to any particular provision of this Agreement or the Ancillary Agreements. References to any Article, Section or Schedule refer to this Agreement unless otherwise expressly specified.

(b)��The meaning of defined terms will be equally applicable to the singular and plural forms of the defined terms. The term or is disjunctive but, depending on the context, not necessarily exclusive. Whenever the words include, includes, or including are used in this Agreement, they will be deemed to be followed by the words without limitation, whether or not they are in fact followed by those words or words of like import.

(c)��References to agreements and other documents will be deemed to include all subsequent amendments and other modifications thereto.

(d)��Any reference to any Law will be deemed also to refer to all rules and regulations promulgated under such Law, unless the context expressly requires otherwise.

(e)��The provision of a table of contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and will not affect or be utilized in construing or interpreting this Agreement.

(f)��The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

(g)��When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period will be excluded. If the last day of such period is a non-Business Day, the period in question will end on the next succeeding Business Day.

(h)��The Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any matter or item disclosed on one Schedule will be deemed to have been disclosed on each other Schedule, but only to the extent that the relevance of such disclosure to such other Schedules is reasonably apparent on its face and without review of any underlying documentation disclosed on such Schedules. No disclosure on a Schedule relating to a possible breach or violation of any contract or agreement, Law or Governmental Order will be construed as an admission or indication that such breach or violation exists or has actually occurred. Any capitalized terms used in any Schedule but not otherwise defined therein will be defined as set forth in this Agreement.

(i)��References to dollars or $ means U.S. dollars.

(j)��Any reference in this Agreement to gender will include all genders.

(k)��For purposes of this Agreement, the term commercially reasonable efforts will not be deemed to require any Person to give any guarantee or other consideration of any nature, including in connection with obtaining any consent or waiver, or to consent to any change in the terms of any agreement or arrangement.

ARTICLE II��

PURCHASE AND SALE

Section 2.01��Purchase and Sale of the Sold Assets. Subject to the terms and conditions set forth in this Agreement, at the Closing, Sellers will sell, assign, and transfer to Buyers, and Buyers will purchase and acquire all right, title and interest of Sellers in and to the Sold Assets, free and clear of all Encumbrances, other than, in the case of the Sold Real Property, Permitted Encumbrances. The term Sold Assets means the following properties, assets and rights of Sellers, as the same exist on the Closing Date:

(l)��all machinery, equipment, computer hardware, tools, office and laboratory equipment, business machines, furniture, furnishings and other tangible personal property located at the Facilities, including those described or listed on Schedule 2.01(a) (the Sold Equipment);

(m)��all inventory of raw materials, finished goods and work-in-process, packaging, supplies, parts and other inventories located at the Facilities, including those described or listed on Schedule 2.01(b) (the Sold Inventory);

(n)��all rights and interests of Sellers under and to (i) the Contracts set forth on Schedule 2.01(c) and (ii) any other Contract (including sales orders and purchase orders) entered into by Sellers in the ordinary course of business after the date of this Agreement for the Specialty Plastics Business in each case as entered into in accordance with the terms of this Agreement and whether or not set forth on Schedule 2.01(c) (collectively, the Sold Contracts);

(o)��all books and records, customer and supplier lists and other customer and supplier information, research and development files, product files, equipment logs, operating guides and manuals, personnel records relating to Transferred Employees and Union Employees, websites, domain names, internet and social media addresses, phone numbers and other lists and documents primarily related to the Specialty Plastics Business (other than Tax records, litigation files and books, records, lists or documents related to Excluded Assets or Excluded Liabilities), except that Sellers are entitled to retain copies of any such materials that are necessary in their reasonable judgment for Tax, accounting, personnel or legal purposes (including Securities and Exchange Commission reporting);

(p)��all Intellectual Property set forth on Schedule 2.01(e) (collectively, the Sold Intellectual Property);

(q)��all Permits listed on Schedule 2.01(f), but only to the extent such Permits may be transferred under applicable Law;

(r)��all guarantees, indemnities and warranties of third parties primarily related to the Specialty Plastics Business;

(s)��all accounts receivable primarily related to the Specialty Plastics Business (Sold Accounts Receivable);

(t)��all pre-paid expenses, deposits and refunds, including advances to suppliers, primarily related to the Specialty Plastics Business;

(u)��any rights to any insurance proceeds from insurance coverage relating to the Sold Assets or Assumed Liabilities from any Person for any period, and any other recovery from any Person constituting or relating to the Sold Assets or Assumed Liabilities;

(v)��all choses and causes of action, claims, credits, demands or rights of set-off of any nature, to the extent related to the Specialty Plastics Business, the Sold Assets or the Assumed Liabilities, whether arising by way of counterclaim or otherwise;

(w)��the real estate parcels that are specifically listed or described in Schedule 2.01(l), together with the buildings and improvements thereon, fixtures related thereto, and any rights or easements appurtenant thereto (collectively, the Sold Real Property); and

(x)��all other tangible and intangible property used or held for use primarily in connection with the Specialty Plastics Business.

Section 2.02��Excluded Assets. Buyers and Sellers acknowledge and agree that the Sold Assets will not include, and Sellers will not sell, assign or transfer to Buyers, and Buyers will not purchase or acquire any right, title or interest in or to, any of the Excluded Assets. The term Excluded Assets means, collectively, all properties, assets and rights of Sellers and their respective Affiliates other than the Sold Assets, including each of the following properties, assets and rights:

(a)��all properties, assets and rights of the Retained Businesses;

(b)��all cash and cash equivalents owned by Sellers;

(c)��all contracts and agreements that are not Sold Contracts;

(d)��all Intellectual Property that is not Sold Intellectual Property, including the Retained Names and Marks;

(e)��all real property owned by Sellers other than the Sold Real Property;

(f)��all rights and incidents of interest of, and benefits accruing to, each Seller pursuant to any leases in and to real property that are not Sold Contracts;

(g)��any rights to any insurance policies, premiums or proceeds from insurance coverage maintained by Sellers for any period, and any other recovery by each Seller from any Person, other than those proceeds or recoveries constituting or relating to Sold Assets;

(h)��all Employee Plans and trusts or other assets attributable thereto;

(i)��any rights to any refunds, credits, overpayments, prepayments and deposits, in each case relating to Taxes, of (i) of each Seller with any Governmental Authority, or (ii) with respect to the Sold Assets for any Pre-Closing Tax Period;

(j)��all Tax Returns and financial statements of each Seller relating to the Excluded Assets and Excluded Liabilities and all records (including working papers) related thereto;

(k)��all causes of action, claims, credits, demands or rights of set-off of each Seller against any Person, other than those related to Specialty Plastics Business; and

(l)��all rights that accrue to Sellers under this Agreement or any Ancillary Agreement.

Section 2.03��Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyers will assume, effective as of the Closing, and will thereafter pay, perform, be responsible for and discharge as and when due solely the following Liabilities (collectively, the Assumed Liabilities):

(a)��those Liabilities first arising or to be performed under the Sold Contracts after the Closing (but not any Liability arising out of or in connection with any breach of such Sold Contract occurring on or prior to the Closing Date);

(b)��Current Liabilities solely to the extent identified on the Closing Working Capital Statement as finally determined pursuant to Section 3.02;

(c)��those liabilities specifically identified on Schedule 2.03(c);

(d)��all other Liabilities arising out of or relating to Buyers operation of the Specialty Plastics Business on or after the Closing Date.

Section 2.04��Excluded Liabilities. Buyers will not assume, and will not have been deemed to assume, any of the Liabilities of either Seller other than the Assumed Liabilities (the Excluded Liabilities). The Excluded Liabilities shall include all Liabilities of Sellers (a) relating to the Specialties Plastics Business not specifically assumed by a Buyer in this Agreement, (b) all Liabilities of Sellers unrelated to the Specialty Plastics Business, (c) to any Seller or their respective Affiliates (including all intra company charges and

allocations to the Specialty Plastics Business), and (d) relating to Excluded Assets and the Liabilities expressly allocated to Seller in Section 8.02(b).

Section 2.05��Non-Assignable Sold Contracts. Notwithstanding anything to the contrary in this Agreement, and subject to the provisions of this Section 2.05, to the extent that the sale, assignment or transfer, or attempted sale, assignment or transfer to a Buyer of any Sold Contract (other than a Sold Contract listed Schedule 4.02(o)) that would require the consent, authorization, approval or waiver of any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement (including any Governmental Authority), and such consent, authorization, approval or waiver has not been obtained prior to the Closing, then this Agreement will not constitute a sale, assignment or transfer, or an attempted sale, assignment or transfer of such Sold Contract. To the extent that any such Sold Contract cannot be transferred to a Buyer following the Closing, Buyers and Sellers will use commercially reasonable efforts to enter into arrangements (such as subleasing, sublicensing or subcontracting) to provide to the Parties the economic and, to the extent permitted under applicable Law, operational equivalent of the transfer of such Sold Contract to Buyers as of the Closing. Following the Closing, Sellers and Buyers will use commercially reasonable efforts and cooperate with each other to obtain any such required consent, authorization, approval or waiver, except that neither of the Sellers nor Buyers will be required to pay any consideration to obtain any of the foregoing. Once such consent, authorization, approval or waiver is obtained, the applicable Seller will sell, assign and transfer to Buyers the relevant Sold Contracts to which such consent, authorization, approval or waiver relates for no additional consideration.

ARTICLE III��

PURCHASE PRICE

Section 3.01��Payment of Purchase Price.

(m)��The aggregate consideration for the Sold Assets will be $91,000,000.00, subject to adjustment pursuant to Section 3.02 (the Purchase Price), plus the assumption of the Assumed Liabilities (together with the Purchase Price, the Total Consideration). At the Closing, Buyers will pay $71,500,000 of the Purchase Price to Ferro (or its designee), $17,000,000 of the Purchase Price to Ferro Spain (or its designee) and $2,500,000 (the Escrow Amount) of the Purchase Price to the Escrow Agent (as defined below), in each case by wire transfer of immediately available U.S. funds pursuant to wire instructions delivered to Buyers in writing prior to the Closing. For avoidance of doubt, the entire Escrow Amount represents Purchase Price allocated to Ferro.

(n)��At the Closing, the Escrow Amount shall be deposited by Buyers into escrow with RBS�Citizens, N.A (the Escrow Agent), pursuant to an escrow agreement in the form of Exhibit A hereto (the Escrow Agreement) and shall be held to satisfy any claims made by Buyers or any of the Buyer Indemnified Persons against Sellers pursuant to Article XI for a period of eighteen (18) months. All costs and expenses related to holding in escrow the Escrow Amount shall be paid equally by the Buyers, on the one hand, and Sellers, on the other hand. One half of the Escrow Amount minus all amounts relating to unresolved Claims made by Buyers or any of the Buyer Indemnified Persons against Sellers pursuant to Article XI (plus any earnings accrued on the Escrow Amount) shall be released to Seller on the nine month anniversary of the Closing Date or any time thereafter upon Buyers receipt of the Spanish Tax Clearance Certificates and the balance of the Escrow Amount minus all amounts relating to unresolved Claims made by Buyers or any of the Buyer Indemnified Persons against Sellers pursuant to Article XI (plus any earnings accrued on the Escrow Amount) shall be released to Seller on the eighteen month anniversary of the Closing Date whether or not Buyer has received the Spanish Tax Clearance Certificates.

(o)��At the Closing, the COBRA Escrow Amount shall be deposited by Buyers into the COBRA Escrow Account pursuant to the Escrow Agreement and shall be held pursuant to Section 8.01(e)(vi). All costs and expenses related to holding in escrow the COBRA Escrow Amount shall be paid equally by the Buyers, on the one hand, and Sellers, on the other hand.

Section 3.02��Net Working Capital Adjustment.

(e)��Post-Closing Adjustment

(i)��Within 60 days after the Closing Date, Buyers will prepare and deliver to Ferro a statement setting forth the calculation of Closing Working Capital, which statement will be substantially in the form of Schedule 3.02(a)(i) (the Closing Working Capital Statement). The Closing Working Capital Statement will be prepared using the accounting methods, practices, principles, policies and procedures set forth on Schedule 3.02(a)(i).

(ii)��The "Post-Closing Adjustment" will be the amount by which the Closing Working Capital exceeds $24,420,000 or is less than $19,800,000 (the "Target Working Capital Range"). If the Post-Closing Adjustment is a positive number, ASI (for the account of Buyers) will pay to Ferro (for the account of Sellers) an amount equal to the Post-Closing Adjustment. If the Post-Closing Adjustment is a negative number, Ferro (for the account of Sellers) will pay to ASI (for the account of Buyers) an amount equal to the Post-Closing Adjustment.

(f)��Examination and Review.

(i)��After receipt of the Closing Working Capital Statement, Ferro will have 30 days (the "Review Period") to review the Closing Working Capital Statement. During the Review Period, Sellers and their accountants will have reasonable access during normal business hours to the relevant books and records of Buyers, the personnel of, and work papers prepared by, Buyers and Buyers Accountants to the extent that they relate to the Closing Working Capital Statement and to such historical financial information (to the extent in Buyers possession) relating to the Closing Working Capital Statement as Sellers may reasonably request for the purpose of reviewing the Closing Working Capital Statement and to prepare a Statement of Objections, provided that such access will be in a manner that does not interfere with Buyers normal business operations.

(ii)��On or prior to the last day of the Review Period, Sellers may object to the Closing Working Capital Statement by delivering to Buyers a written statement setting forth Sellers objections in reasonable detail, indicating each disputed item or amount and the basis for Buyers disagreement (the "Statement of Objections"). If Sellers fail to deliver a Statement of Objections before the expiration of the Review Period, the Closing Working Capital Statement and the Post-Closing Adjustment reflected in the Closing Working Capital Statement will be deemed accepted by Sellers. If Sellers delivers a Statement of Objections before the expiration of the Review Period, Buyers and Sellers will negotiate in good faith to resolve such objections within 30 days after the delivery of the Statement of Objections (the "Resolution Period"). If all objections set forth in the Statement of Objections are resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Working Capital Statement with such changes as Buyers and Sellers may agree in writing during the Resolution Period will be final and binding.

(iii)��If Sellers and Buyers fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute ("Disputed Amounts," and any amounts not so disputed, the "Undisputed Amounts") will be submitted for resolution to the Cleveland, Ohio office of Grant Thornton LLP or, if Grant Thornton LLP is unable to serve, Buyers and Sellers will appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Sellers accountants or Buyers Accountants (the "Independent Accountants") who, acting as experts and not arbitrators, will resolve the Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Working Capital Statement. The Independent Accountants will only decide the specific items under dispute by the Parties and their decision for each Disputed Amount must be equal to one of the values assigned to such item in the Closing Working Capital Statement and the Statement of Objections, respectively. The Independent

Accountants will make a determination as soon as practicable within 30 days (or such other time as the Parties may agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Working Capital Statement and the Post-Closing Adjustment will be conclusive and binding upon the Parties. Buyers on the one hand and Sellers on the other hand will pay 50% of the fees and expenses of the Independent Accountants.

(iv)��Except as otherwise provided in this Agreement, any payment of the Post-Closing Adjustment, together with interest calculated as set forth below, will (A) be due within five Business Days of the date on which the Post-Closing Adjustment is finally determined pursuant to this Section 3.02; and (B) be paid by wire transfer of immediately available funds to such account as is directed by Buyers or Sellers, as the case may be. The amount of any Post-Closing Adjustment will bear interest from and including the Closing Date to and including the date of payment at a rate per annum equal to the prime rate as published in the Wall Street Journal in effect on the date of such payment. Such interest will be calculated daily on the basis of a 365 day year and the actual number of days elapsed. The Parties will treat any payment made pursuant to this Section 3.02 as an adjustment to the Purchase Price for Tax purposes unless otherwise required by Law.

Section 3.03��Allocation of the Total Consideration. The Total Consideration will be allocated among the Sold Assets based on the fair market values of the Sold Assets immediately prior to the Closing (the Allocation), which fair market values will be agreed upon by the Parties prior to the Closing as set forth on Exhibit B and which Allocation will be updated after the Closing to reflect the Post-Closing Adjustment. The Allocation will be consistent with Section 1060 of the Code and the Treasury Regulations promulgated thereunder, and any analogous provisions of state, local or non-U.S. Law. Sellers and Buyers agree to (a) be bound by the Allocation for all purposes, including Tax and financial accounting purposes, (b) report, act, prepare and file Tax Returns on a basis consistent with the Allocation, (c) adopt and utilize the Allocation for purposes of filing any applicable Tax forms (including IRS Form 8594) and (d) take no position inconsistent with the Allocation before any Governmental Authority or otherwise for Tax purposes, unless required by applicable Law. Each of the Parties will notify the others if any Governmental Authority proposes to reallocate the Total Consideration and no Party will agree to any adjustment asserted by such Governmental Authority without the prior written consent of the other Parties, which consent will not be unreasonably withheld or delayed.

Section 3.04��Prorations. On the Closing Date, all utility charges and other similar periodic obligations (other than Taxes, which will be allocated as provided in Article�VII), related to the Sold Real Property will be prorated as of the Closing Date. Whenever possible, such prorations will be based on actual, current payments by the applicable Seller, and to the extent such actual amounts are not available, such prorations will be estimated as of the Closing Date based on actual amounts for the most recent comparable billing period. When the actual amounts become known, such prorations will be recalculated by the applicable Buyer and Seller, and such Buyer or such Seller, as the case may be, promptly (but not later than five Business Days after notice of payment due) will make any additional payment or refund so that the correct prorated amount is paid by each of such Buyer and such Seller.

ARTICLE IV��

CLOSING; DELIVERIES AT CLOSING

Section 4.01��Closing. The closing of the purchase and sale of the Sold Assets and the assumption of the Assumed Liabilities (the Closing) will take place at 8 a.m., Cleveland time, at the offices of Jones Day, 901 Lakeside Avenue, Cleveland, Ohio, at the later to occur of (i) July 1, 2014 and (ii) as soon as practicable, but in no event prior to the second Business Day following the satisfaction or waiver of the conditions set forth in Article X (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other date or place as Buyers and Sellers may agree (the date on which the Closing occurs is the Closing Date). Physical control, legal title, equitable title and risk of loss with respect to the Sold Assets will transfer to Buyers at the Closing, which

transfer will be deemed effective for Tax, accounting and other computational purposes as of (i) 12:01 a.m., Cleveland time on the Closing Date if the Closing Date is the first day of a month or (ii) 11:59 p.m., Cleveland time on the Closing Date if the Closing Date is the last day of a month or any other day but the first day of a month.

Section 4.02��Deliveries by Sellers. At the Closing, Sellers will deliver or cause to be delivered to Buyers the following items:

(a)��a bill of sale in substantially the form attached as Exhibit C (the Bill of Sale) duly executed by Ferro;

(b)��an assignment and assumption agreement in substantially the form attached as Exhibit D (the Assignment and Assumption Agreement) duly executed by Ferro;

(c)��subject to Section 4.04, the Spain Transfer Agreement in substantially the Form of Exhibit E, duly executed by Ferro Spain;

(d)��with respect to the Illinois Lease, an assignment and assumption of lease in substantially the form attached as Exhibit F (the Lease Assignment) duly executed by Ferro;

(e)��a lease and shared services agreement pursuant to which ASI Spain will lease a portion of Sellers real property located in Castellon, Spain in substantially the form attached as Exhibit G (the Spain Lease), duly executed by Ferro Spain;

(f)��an Intellectual Property assignment in substantially the form attached as Exhibit H (the IP Assignment) duly executed by Ferro, transferring the Sold Intellectual Property to ASI;

(g)��a transition services agreement in substantially the form attached as Exhibit I (the TSA) duly executed by Sellers;

(h)��limited or special warranty deeds in recordable form, or if such are not customary in the jurisdiction where the applicable Sold Real Property is located, then deeds customarily delivered in the applicable jurisdiction in connection with asset transactions similar to the transaction contemplated by this Agreement, and generally in the forms attached as Exhibit J, conveying the Sold Real Property to ASI as required in this Agreement (collectively, the Deeds), duly executed by Ferro;

(i)��the Escrow Agreement, duly executed by Sellers;

(j)��a certificate of good standing of Ferro, issued by the Secretary of State of the State of Ohio, dated as of the most recent practicable date;

(k)��a certificate, dated the Closing Date and signed by a duly authorized officer of each Seller, that each of the conditions set forth in Section 10.02(a) and Section 10.02(b) has been satisfied;

(l)��a certificate of the Secretary or Assistant Secretary (or equivalent officer) of Ferro certifying that (i) attached thereto are true and complete copies of all resolutions duly adopted by the Board of Directors of Ferro authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby and (ii) identifying the name and title and bearing the signatures of the officers of Ferro authorized to execute this Agreement and the Ancillary Agreements;

(m)��a certificate of the Secretary or Assistant Secretary (or equivalent officer) of Ferro Spain certifying that (i) attached thereto are true and complete copies of all resolutions duly adopted by the Board of Directors of Ferro Spain authorizing the execution, delivery and performance of this Agreement

and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby and (ii) identifying the name and title and bearing the signatures of the officers of Ferro Spain authorized to execute this Agreement and the Ancillary Agreements;

(n)��evidence that the Lien Release has been effected such that Sellers can deliver title to the Sold Assets free and clear of any Encumbrances other than, in the case of the Sold Real Property, Permitted Encumbrances;

(o)��copies of the consents identified on Schedule 4.02(o);

(p)��a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that Ferro is not a foreign person within the meaning of Section 1445 of the Code, duly executed by Ferro;

(q)��a fully effective assignment to ASI of the Environmental Insurance Policy naming ASI as a named insured; and

(r)��receipts evidencing payment of the Purchase Price (minus the Escrow Amount) (including separate receipt of payment by Ferro Spain for the Spanish Assets)

Section 4.03��Deliveries by Buyers. At or prior to the Closing, Buyers will deliver or cause to be delivered to Sellers or their designees the following items:

(a)��the Purchase Price (minus the Escrow Amount) payable in accordance with Section 3.01 (including separate payment to Ferro Spain for the Spanish Assets);

(b)��the Closing COBRA Payment payable pursuant to Section 8.01(e)(iii) and the COBRA Escrow Amount payable pursuant to Section 8.01(e)(vi);

(c)��the Bill of Sale, duly acknowledged by ASI;

(d)��the Assignment and Assumption Agreement, duly executed by ASI;

(e)��subject to Section 4.04, the Spain Transfer Agreement, duly executed by ASI Spain;

(f)��the Lease Assignment, duly executed by ASI;

(g)��the Spain Lease, duly executed by ASI Spain;

(h)��the IP Assignment, duly acknowledged by ASI;

(i)��the TSA, duly executed by Buyers;

(j)��the Escrow Agreement, duly executed by Buyers;

(k)��a certificate of good standing of ASI, issued by the Secretary of State of Delaware, dated as of the most recent practicable date;

(l)��a certificate, dated the Closing Date and signed by a duly authorized officer of each Buyer, that each of the conditions set forth in Section 10.03(a) and Section 10.03(b) has been satisfied; and

(m)��a certificate of the Secretary or Assistant Secretary (or equivalent officer) of each Buyer certifying that (i) attached thereto are true and complete copies of all resolutions duly adopted by the Board of Directors of Buyer authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby and (ii)

identifying the name and title and bearing the signatures of the officers of Buyer authorized to execute this Agreement and the Ancillary Agreements.

Section 4.04��Spain Transfer Agreement. Simultaneously with the Closing, Ferro Spain and ASI Spain will sign before a Spanish Notary Public a transfer agreement (the Spain Transfer Agreement) related to the Sold Assets located at the facility subject to the Spain Lease (the Spanish Assets), in order (i) to deliver evidence to the Spanish Labour Authorities that the employees of Ferro Spain have been transferred to ASI Spain, (ii) to include specific details of the allocation of the Purchase Price to Spanish Assets, (iii) to include a declaration by both Parties that Spanish Assets represent an economic unit, capable of developing a business activity with its own means and consequently, in accordance with article 7 of Law 37/1992, of 28 December, on VAT, the transfer of the Spanish Assets is not subject to VAT, and (iv) to include a declaration that Ferro Spain has issued and delivered to Buyer an invoice corresponding to the sale of the Spanish Assets. The Spain Transfer Agreement will be consistent with the terms of this Agreement, except to the extent modifications are required by the Laws of Spain. In the event of any conflict between the Spain Transfer Agreement and this Agreement, the provisions of this Agreement will control. The Parties agree that the Spain Transfer Agreement is not intended, and will not be construed in any way to enhance, modify or decrease any of the rights or obligations of the Buyers, the Sellers, or their respective Affiliates from those contained in this Agreement..

Section 4.05��Further Assurances. Each Party covenants that it will do, execute and deliver, or will cause to be done, executed and delivered, at no further expense to such Party, all such further acts and instruments that the other Party or any of its successors or permitted assigns may reasonably request in order to more fully evidence the assumption of the Assumed Liabilities and the sale, assignment and transfer of the Sold Assets.

ARTICLE V��

REPRESENTATIONS AND WARRANTIES OF FERRO

Ferro hereby represents and warrants to Buyer as follows:

Section 5.01��Organization. Each Seller is a corporation or company, as applicable, duly incorporated, formed or organized, as applicable, validly existing and (to the extent such jurisdiction recognizes the concept of good standing) in good standing under the Laws of its jurisdiction of incorporation, formation or organization, as applicable. Each Seller has all requisite power and authority to own, lease and operate its assets and to carry on its business as now being conducted and is duly qualified or licensed to do business and (to the extent any such jurisdiction recognizes the concept of good standing) is in good standing in the jurisdictions in which the ownership of its property or the conduct of its business requires such qualification or license, except where the failure to be so qualified or licensed would not have a Material Adverse Effect.

Section 5.02��Authorization; Enforceability. Each Seller has the power and authority to execute and deliver this Agreement and each Seller has the power and authority to execute and deliver each Ancillary Agreement to which it is a party and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement by each Seller and the execution and delivery of the Ancillary Agreements by each Seller, as applicable, and the performance by each of them of their respective obligations hereunder and thereunder have been duly authorized by all necessary action on the part of such Seller. This Agreement has been duly executed and delivered by Sellers and, assuming due authorization, execution and delivery by the Buyers, constitutes a valid and binding agreement of Sellers, enforceable against them in accordance with its terms.

Section 5.03��No Approvals or Conflicts. Except as set forth on Schedule 5.03, the execution, delivery and performance by Sellers of this Agreement and the Ancillary Agreements (as applicable) and the consummation by each of them of the transactions contemplated hereby and thereby

do not and will not (a) violate, conflict with or result in a breach by either Seller of its organizational documents, (b) violate, conflict with or result in a breach of, or constitute a default by either Seller (or create an event which, with notice or lapse of time or both, would constitute a default) in any material respect under, or give rise to any payment or other penalty or any right of termination, cancellation or acceleration under, or result in the creation of any Encumbrance upon any of the Sold Assets under, or require any notice, consent or waiver (other than notices provided or consents and waivers obtained prior to Closing) under, any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, Sold Contract or other instrument to which either Seller or any of the Sold Assets may be bound, (c) violate or result in a breach of any Governmental Order or Law applicable to either Seller or any of the Sold Assets or (d) require any order, consent, approval or authorization of, or notice to, or declaration, filing, application, qualification or registration with, any Governmental Authority or other Person.

Section 5.04��Financial Information. Sellers have provided to Buyers the internally prepared unaudited income statements and balance sheets of the Specialty Plastics Business for and as of the years ended December 31, 2013, 2012, and 2011, (the Financial Statements) attached as Schedule�5.04. The Financial Statements have been prepared consistent with Sellers standard practices, procedures and policies, which are based on GAAP, from the books and records of Sellers, which are true, correct and complete in all material respects.

Section 5.05��Absence of Certain Changes, Events and Conditions. Since December 31, 2013, Sellers have operated the Specialty Plastics Business in the usual and ordinary course of business in all material respects consistent with past practice. Except as expressly contemplated by this Agreement or as set forth on Schedule 5.05, since December 31, 2013 until the date of this Agreement, with respect to the Specialty Plastics Business, there has not occurred:

(a)��a material change in any Sellers methods of accounting or accounting practices;

(b)��a Sellers entry into, or the modification or termination of, any Sold Contract involving aggregate consideration in excess of $100,000 which cannot be cancelled without penalty or without more than 60 days notice;

(c)��capital expenditures in an aggregate amount exceeding $100,000;

(d)��the incurrence, assumption, or guarantee of any Liabilities, except unsecured current Liabilities incurred in the ordinary course of business consistent with past practice;

(e)��the transfer, assignment, sale or other disposition of any assets, except for (i) the sale of inventory in the ordinary course of business consistent with past practice, (ii) the collection of Accounts Receivable in the ordinary course of business consistent with past practice and (iii) other dispositions of assets in the ordinary course of business consistent with past practice which in the aggregate did not have a fair market value in excess of $100,000;

(f)��transfer, assignment, or grant of any license or sublicense of any material rights under or with respect to any Sold Intellectual Property;

(g)��any material damage or destruction, whether or not covered by insurance, affecting the assets, properties, or operations of the Specialty Plastics Business, or any real property used or held for use in the Specialty Plastics Business, including without limitation any consummated, pending or planned taking by eminent domain (or voluntary conveyance in lieu thereof) of all or part of the Facilities;

(h)��the termination, material modification to, or cancellation of any material Contract or Permit;

(i)��the imposition of any Encumbrance upon any of Sold Assets;

(j)��any labor dispute, labor organizing activity, strike, work stoppage, slowdown, lockout, boycott or other similar adverse employee action;

(k)��any material adverse change in a Sellers business relationship with a customer or supplier identified in Schedule 5.16(a) or Schedule 5.16(b);

(l)��any cancellation or compromise of any debt or claim related or any waiver or release of any right of substantial value, in the aggregate, in excess of $100,000;

(m)��an increase in the rate of compensation, commission, bonus or other direct or indirect remuneration payable to any Employee, other than in the ordinary course of business consistent with past practice;

(n)��a Sellers entry into any new employment contract with any Employee or any new Employee Plan or any material change in any Employee Plan;

(o)��any loan to or forgiveness of any loan to, or entry into any other transaction with, any director, officer, or employee;

(p)��any other transaction, event or condition that has had or is reasonably likely to have a Material Adverse Effect;

(q)��a Sellers purchase, lease, or other acquisition of the right to own, use, or lease any property or assets in an amount in excess of $100,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory and supplies in the ordinary course of business consistent with past practice;

(r)��any commitment or obligation on the part of Seller to take any of the foregoing actions.

Section 5.06��Compliance with Laws; Permits. Except as set forth on Schedule 5.06, the Specialty Plastics Business has been operated and the Sold Assets have been owned, operated and maintained by Sellers in material compliance with all applicable Laws. All material Permits required for Sellers to conduct the Specialty Plastics Business as currently conducted or for the ownership and use of the Sold Assets have been obtained by Sellers and are valid and in full force and effect.

Section 5.07��Proceedings. Except as set forth on Schedule 5.07, as of the date hereof, there are no Proceedings pending or, to the Knowledge of Sellers, threatened against either Seller (a) applicable to the Specialty Plastics Business, the Sold Assets or Assumed Liabilities and neither Seller is subject to any Governmental Order that applies to the Specialty Plastics Business, the Sold Assets or the Assumed Liabilities or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Knowledge of Sellers Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Proceeding. Except as disclosed on Schedule 5.07, no Proceeding has been instituted or prosecuted against either Seller in the past five years relating to the Specialty Plastics Business, the Sold Assets or Assumed Liabilities.

Section 5.08��Tax Matters. Except as set forth on Schedule 5.08:

(a)�� Each Seller has filed all Tax Returns and paid all Taxes that relate, directly or indirectly, to the Specialty Plastics Business that are required to have been filed and paid prior to the Closing Date, the non-filing or non-payment of which could result in an Encumbrance on any of the Sold Assets or could otherwise result in Buyers becoming responsible or liable therefor either directly or as a successor or transferee, and there are no Encumbrances relating to Taxes encumbering any of the Sold Assets, except,

in the case of Sold Real Property, for Permitted Encumbrances. To the Knowledge of Sellers, all Tax Returns filed with respect to the Specialty Plastics Business were correct and complete in all material respects.

(b)��Each Seller has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, and to the Knowledge of Sellers, all Forms W-2 and 1099 (or similar reporting form) required with respect thereto have been properly completed and timely filed with the appropriate foreign, federal, state or local Governmental Authority.

(c)��None of the Sold Contracts is a Tax allocation, sharing, indemnification, or similar agreement.

(d)��There is no material dispute or claim concerning any Tax Liability of a Seller related to the Specialty Plastics Business that has been claimed or raised by any Governmental Authority in writing. No written claim has ever been made by a Governmental Authority in a jurisdiction where either Seller does not file Tax Returns that such Seller is or may be subject to taxation by that jurisdiction as a result of the operation of the Specialty Plastics Business in that jurisdiction nor, to the Knowledge of Sellers, is there any material factual or legal basis for any such claim.

(e)��None of the Sold Contracts is an obligation to make a payment in connection with the transactions contemplated by this Agreement that will not be deductible under Section 280G of the Code.

Section 5.09��Intellectual Property.

(a)��Schedule 2.01(e) contains a correct and complete list of all of the Sold Intellectual Property. Schedule 2.01(e) also specifies which of the rights included within the Sold Intellectual Property are registered and the jurisdictions in which such rights are registered. Ferro is the sole owner of all right, title and interest in and to the Sold Intellectual Property, free and clear of all Encumbrances as of the Closing Date, and all of the Sold Intellectual Property has been properly registered to the extent registration is required for the exercise, protection or use thereof, except to the extent that the Sold Intellectual Property may lawfully embody the information of a Sellers suppliers or customers. All fees associated with the Sold Intellectual Property and payable to a Governmental Authority as of the Closing Date have been paid in full.

(b)��Except as set forth on Schedule 5.09(b), within the last three years from the date hereof, neither Seller has received any written notice of any claim and, to the Knowledge of Sellers, there is no threatened claim, against either Seller asserting that any of such Sellers activities with respect to the Sold Assets infringes upon or otherwise conflicts with the Intellectual Property of any Person, nor has either Seller within the last three years from the date hereof given any notice to any Person asserting infringement by any such Person of any of the Sold Intellectual Property.

(c)��Except as set forth on Schedule 5.09(c), all Sold Intellectual Property used in or necessary to the conduct the Specialty Plastics Business as presently conducted was created solely by either (i) employees of the Specialty Plastics Business acting within the scope of their employment who have validly assigned all of their rights in such Sold Intellectual Property including intellectual property rights therein, to a Seller, or (ii) other Persons who validly assigned all of their rights in such Sold Intellectual Property including intellectual property rights therein, to Sellers and no Person other than the Sellers has any right to use any of the Sold Intellectual Property, except for customers and suppliers who may be using the Sold Intellectual Property on an implied basis in the ordinary course of business for the benefit of the Sold Assets. Except pursuant to shrink wrap or click wrap software licenses, neither Seller licenses from any other Person or pays any royalties or other consideration for the right to use any Intellectual Property rights of any other Person in connection with the Sold Assets.

(d)��Each Seller has made a commercially reasonable effort to maintain the confidentiality of all Sold Intellectual Property to the extent necessary to maintain all material proprietary

rights therein. With respect to each Trade Secret used in the operation of the Specialty Plastics Business, to the Knowledge of Sellers, the documentation relating to such Trade Secret is current, accurate and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual other than an individual who is an employee of Buyer post-Closing of the transactions contemplated hereby. Sellers have taken reasonable precautions consistent with applicable Laws and practice in the jurisdictions in which the Specialty Plastics Business operates to protect the secrecy, confidentiality and value of all Trade Secrets. To the Knowledge of Sellers, the Trade Secrets are not part of the public knowledge or literature and, to the Knowledge of Sellers, have not been used, divulged or appropriated either for the benefit of any Person (other than Sellers) or to the detriment of Sellers.

(e)��Except as set forth in Schedule 5.09(e), each Seller has entered into written agreements with its employees sufficient to assign to such Seller all rights to any inventions, improvement, discoveries or information included within the Sold Intellectual Property.

Section 5.10��Contracts.

(a)��Schedule�5.10 identifies all of the following Contracts by which any of the Sold Assets are bound or affected or to which a Seller is a party or by which either Seller is bound in connection with the Specialty Plastics Business:

(i)��any Contract not made in the ordinary course involving aggregate consideration in excess of $100,000 and which cannot be cancelled without penalty or without more than 60 days notice;

(ii)��any Contract that requires Seller to purchase or sell a stated portion of the requirements or outputs of the Specialty Plastics Business or that contain take or pay provisions;

(iii)��any Contract for employment or personal services or with independent contractors or consultants which by its terms is not terminable without material cost or liability to Seller on notice of 60 days or less or any severance agreement;

(iv)��any supplier, dealer, distributor, sales agency, or brokerage Contract;

(v)��any Contract relating to the lease or sale to or by others of any of real property;

(vi)��any Contract for capital expenditures in excess of $100,000;

(vii)��any Contract for the purchase or sale of materials or supplies or the performance of services other than purchase orders in the ordinary course that involves aggregate consideration of more than $100,000;

(viii)��any rebate arrangement or other similar Contract given to any customer or received from any supplier;

(ix)��any consignment, committed inventory, ledger balance inventory, or similar Contract with either a supplier or a customer;

(x)��any Contract restricting Sellers ability to conduct the Specialty Plastics Business or use any trade names that constitute Sold Assets in any place in the world or during any period of time;

(xi)��any Contract relating to indebtedness (including without limitation guarantees) that will not be satisfied or released as of the Closing Date;

(xii)��any Contract providing for indemnification of any Person or the assumption of any Tax, environmental, or other Liability of any Person;

(xiii)��any Contract relating to a joint venture or partnership;

(xiv)��any Contract that relates to the acquisition or disposition by either Seller or any other Person of any portion of the Specialty Plastics Business or a material amount of stock or assets, or any real property used or held for use primarily in the Specialty Plastics Business;

(xv)��any Contract with or subcontract involving any Governmental Authority;

(xvi)��any Contract for the sale of any of the Sold Assets; or

(xvii)��any collective bargaining agreements or other Contracts with any labor union, trade unions, trade associations or labor organizations.

(b)��A true and complete copy of each of the Sold Contracts listed on Schedule 2.01(c) has been made available to Buyers or their representatives. Except as set forth on Schedule 5.10, as of the date hereof, each Sold Contract is in full force and effect, and is a valid and binding agreement of the Seller that is a party to such Sold Contract and, to the Knowledge of Sellers, each of the other parties thereto, enforceable by or against such Seller, and, to the Knowledge of Sellers, each of such other parties thereto, in accordance with its terms, subject to the General Enforceability Exceptions. Each Seller has performed and is performing all obligations required to be performed under the Sold Contracts in all material respects. Except as set forth on Schedule 5.10, no condition exists or event has occurred, with or without notice or lapse of time or both, that would constitute a material default by (i) either Seller under any Sold Contract or (ii) to the Knowledge of Sellers, any other party to any Sold Contract. To the Knowledge of Sellers, (i) no Sold Contract is subject to any impending cancellation and there are no material disputes pending or threatened under any Sold Contract and (ii) neither Seller is bound by any material commitments under any Sold Contract for the performance of services or delivery of products in connection with the Specialty Plastics Business that such Seller is unable to perform or deliver in the ordinary course of business.

Section 5.11��Title to and Condition and Sufficiency of Sold Assets.

(a)��Except as set forth on Schedule 5.11, Sellers have good, marketable and transferable title to or a leasehold interest in the Sold Assets (other than the Sold Real Property or Leased Real Property) free and clear of all Encumbrances.

(b)��Except as set forth on Schedule 5.11, the Sold Assets constituting tangible personal property are in reasonable operating condition and repair, ordinary wear and tear excepted.

(c)��Except as set forth on Schedule 5.11, the Sold Assets constitute all of the tangible and intangible assets used or held for use primarily in connection with, and, together with the services to be provided pursuant to the TSA, are sufficient for the continued conduct of the Specialty Plastics Business by the Buyers after the Closing in substantially the same manner as conducted by Sellers prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Specialty Plastics Business as currently conducted.

(d)��All of the Sold Inventory is of a quality, quantity and condition useable or saleable in the ordinary course of business and was acquired, and has been maintained, by Sellers in the ordinary course of the business. Schedule 5.11 identifies all of the locations of the Sold Inventory, other than the Facilities, including without limitation locations used by a Seller, a Sellers customers or suppliers, or otherwise, together with the amount of such Sold Inventory in kilograms at each such location. Except as otherwise described on Schedule�5.11, none of the Sold Inventory in either Sellers possession is held on consignment, none of the Sold Inventory is consigned to third parties, and all of the Sold Inventory is owned

by Sellers free and clear of all Encumbrances. Except as provided in its standard product warranty, neither Seller is under any Liability or obligation with respect to the repurchase or return of Sold Inventory in the possession of any third parties. Except as otherwise described on Schedule�5.11, none of the Sold Inventory or products sold by Sellers in connection with the Specialty Plastics Business contain or were manufactured using Conflict Minerals sourced from a Covered Country as such terms are used under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Section 5.12��Real Property. Ferro has good, valid and marketable title in fee simple to all of the Sold Real Property, free and clear of all Encumbrances except for Permitted Encumbrances. Ferro Spain is the registered owner of registered units numbers 30414 and 32184, of the Property Registry of Villareal 3 (Castell�n-Spain), free and clear of Encumbrances except for those recorded in such Property Registry. Ferro has a valid leasehold interest in the Illinois Lease, free and clear of all Encumbrances except for Permitted Encumbrances. Neither Seller has received any written notice of (i) existing, pending or threatened condemnation proceedings affecting the Sold Real Property or the Leased Real Property, or (ii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to adversely affect the ability to operate the Sold Real Property or the Leased Real Property as currently operated. Neither the whole nor any material portion of any Sold Real Property or Leased Real Property has been damaged or destroyed by fire or other casualty which has not been repaired or restored. Neither Seller has subleased, assigned, or otherwise granted to any Person the right to use or occupy the Sold Real Property or the Leased Real Property or any portion thereof. As of the date hereof, there is no pending, or, to the Knowledge of Sellers, threatened material Proceeding or material Governmental Authority action to modify the zoning classification of, or to take by the power of eminent domain (or to purchase in lieu thereof), or to classify as a landmark, or to impose special assessments on, or otherwise to take or restrict in any material way the right to use, develop or alter, all or any part of the Sold Real Property.

Section 5.13��Environmental Matters. Notwithstanding any other representation or warranty contained in this Article V, the representations and warranties contained in this Section 5.13 constitute the sole representations and warranties of Sellers relating to any Environmental Law. Except as disclosed on Schedule 5.13:

(a)��The Specialty Plastics Business is and during the five years prior to the date of this Agreement has been, operated by Sellers in material compliance with all applicable Environmental Laws and any Permits required pursuant to Environmental Laws.

(b)��During the five years prior to the date hereof, neither Seller has received any written notice of any Proceeding alleging a material violation of any Environmental Laws or any material Liability arising under any Environmental Laws, including any investigatory, remedial or corrective obligation, relating to the Sold Assets. There are no pending, or, to the Knowledge of Sellers, threatened Proceedings under any Environmental Laws including, without limitation investigations by any Governmental Authority with respect to the Specialty Plastics Business, the Sold Assets, the Sold Real Property or the Leased Real Property.

(c)��There are and have been no Releases at the Facilities that require or would reasonably be expected to require cleanup or remediation under any applicable Environmental Laws.

(d)��To Knowledge of Sellers, none of the Sold Real Property or Leased Real Property is identified on any current list of contaminated or potentially contaminated property established by any Governmental Authority.

(e)��During Sellers use of the Sold Real Property or Leased Real Property (other than the facility covered by the Spain Lease) and operation of the Specialty Plastics Business, Hazardous Materials have not been produced, generated or managed, treated or stored on the Sold Real Property or Leased

Real Property in a condition that currently violates any Environmental Law or would reasonably be expected to give rise to material liability for remedial costs under Environmental Laws.

(f)��To the Knowledge of Sellers, there are no conditions or circumstances which would reasonably be expected to prevent or materially interfere with the use of the Sold Real Property or the Leased Real Property or the operation of the Specialty Plastics Business as used or operated as of the Closing in material compliance with Environmental Laws.

(g)��To the Knowledge of Sellers, the Real Property contains no (A)�underground storage tanks; (B) asbestos or asbestos-containing materials; or (C) polychlorinated biphenyls.

(h)��Sellers have delivered or made available to Buyers copies and results of all material reports, studies and analyses in the possession or control of Sellers pertaining to the unpermitted Release of Hazardous Materials on or around the Sold Real Property or the Leased Real Property, or concerning material non-compliance of the Specialty Plastics Business with Environmental Laws during the five years prior to the date of this Agreement.

(i)��Schedule 5.13 contains a list of all chemical substances that have been registered by Sellers in connection with the Specialty Plastics Business under the Regulation concerning Registration, Evaluation, Authorisation and Restriction of Chemicals�(REACH) adopted by�European Union�Parliament and Council, as amended and interpreted to date. Sellers have complied with all requirements under REACH applicable to the Specialty Plastics Business

(j)��Neither Seller is subject as of the date hereof to any outstanding Governmental Order under any Environmental Law regarding either the Specialty Plastics Business or the Facilities.

(k)��Schedule 5.13 lists all Permits necessary under Environmental Laws for operation of the Specialty Plastics Business as operated as of Closing.

Section 5.14��Employee Relations.

(a)��Except as set forth on Schedule 5.14, as of the date hereof, neither Seller is involved in or, to the Knowledge of Sellers, threatened with, any labor dispute, grievance or litigation relating to labor safety or discrimination matters involving any Transferred Employee or Union Employee, including without limitation charges of unfair labor practices or discrimination complaints. Schedule 5.14 contains a list of all persons who are employees, independent contractors or consultants of the Specialty Plastics Business as of the date hereof, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full or part time); (iii) tenure; (iv) current annual base compensation rate; and (v) commission, bonus or other incentive-based compensation. Except as set forth on Schedule 5.14, as of the date hereof, all compensation, including wages, commissions and bonuses payable to employees, independent contractors or consultants, for services performed on or prior to the date hereof that are due and owing on or prior to the date hereof have been fully accrued for or paid in full. Except as set forth on Schedule�5.14, there are no outstanding agreements, understandings or commitments of Sellers with respect to any compensation, commissions or bonuses. Schedule�5.14 sets forth all collective bargaining agreements or other Contracts with a union, works council or labor organization (collectively, Union) to which either Seller is or has been a party to, bound by, or was negotiating during the past three years with any Union representing or purporting to represent any Employee of a Seller, and, to the Knowledge of Sellers, no Union or group of Employees is seeking or has sought to organize Employees for the purpose of collective bargaining. Except as set forth on Schedule�5.14, during the past three years, there has not been, nor, to the Knowledge of Sellers, has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting either Seller or any Employees. Except as otherwise set forth on Schedule 5.14, all Employees are at-will employees. All independent contractors providing services to the Specialty Plastics Business have been properly classified under the Law as independent contractors.

(b)��Sellers are in material compliance with all Laws, whether foreign, federal, state and local, respecting employment and employment practices, terms and conditions of employments, social security, health and safety at workplace, immigration, wages and hours, and non-discrimination in employment, and it is not engaged in any unfair labor practice. To the Knowledge of Sellers, there are no actual or threatened claims regarding violation of any Law relating to employment practices or employment relations.

Section 5.15��Employee Benefit Plans.

(a)��Schedule 5.15 sets forth a complete list of (i) all employee benefit plans, as defined in Section 3(3) of ERISA (other than a multiemployer plan as defined in Section 3(37) of ERISA (a Multiemployer Plan), (ii)�each employee pension benefit plan as defined in Section�3(2) of ERISA other than a Multiemployer Plan (a Pension Plan); (iii)�each employee welfare benefit plan, as defined in Section�3(1) of ERISA (a Welfare Plan); and (iv)�each compensation and employment arrangement or agreement, including, but not limited to, any fringe benefit, incentive compensation, phantom stock, bonus, severance, vacation, deferred compensation, supplemental executive compensation plan, employment agreement, salary continuation, incentive, stock option, retirement, pension, or profit sharing plans, contracts, programs, funds or arrangements of any kind other than, in each case, those described under clauses (i), (ii) and (iii) of this Section 5.15 and other than a Multiemployer Plan (a Benefit Arrangement), that is maintained by either Seller for the Employees (all of the above being hereinafter individually or collectively referred to as an Employee Plan or Employee Plans, respectively). Schedule 5.15 also sets forth a complete list of all Multiemployer Plans contributed to or required to be contributed to by either Seller with respect to the Employees. Each Employee Plan has been maintained, operated and administered in material compliance with its terms and any related documents or agreements and in material compliance with all applicable Laws.

(b)��Each Pension Plan listed on Schedule 5.15 that is intended to qualify under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service, the trust maintained thereunder has been determined to be exempt from taxation under Section 501(a) of the Code, and, to the Knowledge of Sellers, nothing has occurred since the date of such determinations that is likely to cause the loss of such qualification or exemption. Except as required by the Code or this Agreement, the consummation of the transactions contemplated by this Agreement will not accelerate the time of vesting or the time of payment, or increase the amount, of compensation due to any Employee. Except as set forth on Schedule 5.15, neither a Seller nor any ERISA Affiliate of a Seller has at any time within six years prior to the Effective Date sponsored, maintained or contributed to, or was required to contribute to, a Pension Plan subject to Title�IV of ERISA, a Multiemployer Plan or a multiple employer plan within the meaning of Section 210 of ERISA or Section 413(c) of the Code (a Multiple Employer Plan). Except as expressly provided in Article VIII, no Multiemployer Plans contributed to or required to be contributed to by either Sellers or any ERISA Affiliate will result in any Liability to Buyers or subject the Sold Assets to any Encumbrance under ERISA or the Code by reason of Sellers or any ERISA Affiliates participation in such Multiemployer Plan and no Employee Plan that is a Pension Plan, or Benefit Arrangement will result in any Liability to Buyers or subject the Sold Assets to any lien under ERISA, the Code, or the Laws of any state. As used herein, the term ERISA Affiliate shall mean any subsidiary of a Seller and any trade or business (whether or not incorporated) that is part of the same controlled group, or under common control with, or part of an affiliated service group that includes a Seller within the meaning of Sections�414(b), (c), (m) or (o) of the Code.

(c)��Spanish Employee Matters.

(i)��Schedule 5.15(c)(i) contains a list of the Transferred Ferro Spain Employees and the length of service, position, category, type of contract, and gross annual compensation (fixed, variable and in kind) of each Transferred Ferro Spain Employee. There are no negotiations underway, nor is there any undertaking or envisaged change with respect to such conditions. The employment contracts entered into by the Transferred Ferro Spain Employees respect and have respected applicable Law.

(ii)��Other than the Transferred Ferro Spain Employees, no other employees of Ferro Spain have the right to be transferred to ASI Spain with the Specialty Plastics Business and Ferro Spain represents and warrants that the Transferred Ferro Spain Employees constitute all of its employees assigned primarily to the Specialty Plastics Business.

(iii)��No director, executive or employee of Ferro Spain has any right to indemnification on any ground or in any amount other than as provided for by this Agreement, applicable Law or any applicable Collective Agreement.

(iv)��With regard to the Transferred Ferro Spain Employees, Ferro Spain has fulfilled all of its obligations of a labor, social security and employment nature.

(v)��Since the date which is six months prior to the date of this Agreement, no change has been made in the remuneration, benefit plans or other terms of employment, of any Transferred Ferro Spain Employee.

(vi)��No events or circumstances exist that would lead to a re-qualification into salary or secret commissions, vis-�-vis the individual performing the services, of the fees paid by Ferro Spain under any management, consultancy or independent contractor agreements or other arrangement entered into by Ferro Spain with the Transferred Ferro Spain Employees or other consultants or third parties whose contracts are Sold Assets.

(vii)��Any Transferred Ferro Spain Employees who are temporary employees have been hired on valid grounds and cannot claim to have an indefinite contractual relationship with Ferro Spain.

(viii)��There are no schemes or arrangements operated by Ferro Spain under which a Transferred Ferro Spain Employee or former employee of the Specialty Plastics Business or any other person is or will be entitled - whether on a discretionary, customary or other basis - to any bonus, benefit, share, option or other commission, remuneration or security of any kind whatsoever, whether fixed or calculated by reference to all or part of the turnover, profits, sales or other aspect of Ferro Spain.

(ix)��Ferro Spain has no outstanding fixed or contingent liability or obligation to any former employee or former independent contractor of the Specialty Plastics Business or to the beneficiaries or dependents of any such Person, including for breach of any contract of employment or contract for services or redundancy payments, protective awards, compensation for wrongful dismissal or unfair dismissal or for failure to comply with any order for the reinstatement or re-engagement of any employee or in respect of any other liability arising out of the termination of any contract of employment or contract for services.

(x)��Each of the Transferred Ferro Spain Employees has valid and subsisting permission to live and work full time in Spain.

(xi)��None of the Transferred Ferro Spain Employees is a protected employee within the meaning of applicable Spanish employment Laws.

(xii)��Ferro Spain has not concluded an employment agreement with any individual or relative related to the Transferred Ferro Spain Employees.

(xiii)��Other than mandatory payments stipulated under applicable legal requirements, no Transferred Ferro Spain Employee has been granted, nor is Ferro Spain committed to pay, any special termination payment in connection with the termination or proposed termination of his employment or his contractual relationship. No Transferred Ferro Spain Employee has a

contractual notice period or termination indemnity exceeding the statutory notice applicable in Spain, as applicable. No Transferred Ferro Spain Employee has been given any form of security of employment.

(xiv)��No payment or other obligation has been made or agreed or promised to be made or benefit given or agreed or promised to be given to any Transferred Ferro Spain Employee in connection with a change of control of Ferro Spain.

(xv)��Ferro Spain is in material compliance with, and has not received written notice of any claim that it has not complied with applicable individual employment and consulting or service agreements, and all legal requirements (including, but not limited those relating to wages, hours, collective bargaining, employment safety, unfair labor practices, discrimination, immigration, payment of social security and similar Taxes) in connection with the Transferred Ferro Spain Employees and the Specialty Plastics Business.

(xvi)��Ferro Spain will have in all material respects paid in full to the Transferred Ferro Spain Employees all wages, salaries, benefit plans, commissions and bonuses for all services performed up to Closing Date and has maintained current, adequate and suitable records relating to each Transferred Ferro Spain Employee (including details of the terms of employment, personal data of such employee, payments of statutory sick pay and maternity pay, disciplinary and grievance matters, health and safety matters, income tax and social security contributions, wage and time records, records detailing length of service accumulated benefits and entitlements) and regarding the termination of employment of any former employee.

(xvii)��No outstanding loans or advance payments have been made to any Transferred Ferro Spain Employee.

(xviii)��Ferro Spain has complied with all information and consultation requirements, if any, in regard of any of the Transferred Ferro Spain Employees, any employee representative bodies and of the trade unions in general and more specifically in connection with this Agreement.

(xix)��No Transferred Ferro Spain Employees are on secondment, maternity leave or absent on grounds of disability or other long term leave of absence. Ferro Spain has taken out proper insurance coverage for illness, injury or other disability in respect of the Transferred Ferro Spain Employees.

(xx)��In relation to the Specialty Plastics Business, no outstanding offer of employment has been made by Ferro Spain to any individual nor has any individual accepted an offer of employment made by Ferro Spain but who has not yet commenced such employment.

(xxi)��In the past three years, there has not been a collective labor dispute involving Ferro Spain. To the Knowledge of Sellers, there is no fact, circumstance or matter that might give rise to any such dispute as of the date of this Agreement.

(xxii)��Ferro Spain is not a party to any collective bargaining agreement other than collective bargaining agreements at sector level (each, a Collective Agreement) or required to comply with any Collective Agreement, and to the Knowledge of Sellers there is no organizational effort being made to apply for certification of a Collective Agreement. Where any Collective Agreement exists, Ferro Spain has complied and complies with all material terms and conditions of, and is not in default under, such Collective Agreement.

(xxiii)��During the past three years, Ferro Spain has not been engaged in any collective dismissal or reorganization procedure in relation to the Specialty Plastics Business.

(xxiv)��Currently, there is no dispute between Ferro Spain on the one hand and any Transferred Ferro Spain Employee nor to the Knowledge of Sellers is there a fact, circumstance or matter that may result in any such dispute.

Section 5.16��Customers and Suppliers.

(a)��Schedule 5.16(a) lists the top ten customers of each Facility (by aggregate consideration paid for goods or services in the 12 month period ended December 31, 2013) (collectively, the "Material Customers"). Except as set forth in Schedule 5.16(a), neither Seller has received any written notice that any of the Material Customers has ceased, or intends to cease, to use the goods or services of the Specialty Plastics Business or to otherwise terminate or materially reduce its relationship with the Specialty Plastics Business.

(b)��Schedule 5.16(b) lists the top ten suppliers of each Facility (by aggregate consideration paid by Sellers for goods or services in the 12 month period ended December 31, 2013) (collectively, the "Material Suppliers"). Except as set forth in Schedule 5.16(b), neither Seller has received any written notice that any of the Material Customers has ceased, or intends to cease, to supply goods or services to the Specialty Plastics Business or to otherwise terminate or materially reduce its relationship with the Specialty Plastics Business.

Section 5.17��Product Warranty and Liability. Except as set forth on Schedule 5.17, as of the date hereof (a) there are no pending claims pursuant to any warranty, whether express or implied, on products or services relating to the Sold Assets sold by either Seller on or prior to the date of this Agreement, and (b) during the five year period prior to the date hereof, there have been no Proceedings against Sellers with respect to any product manufactured, shipped, sold or delivered by or on behalf of any of them relating to or resulting from an alleged defect in design, manufacture, materials or workmanship of any such product. Neither Seller has received written notice of any claim of, or been subject to any Proceeding in connection with, death, personal injury or property damage with respect to any product manufactured, shipped, sold or delivered by or on behalf of any of them relating to or resulting from an alleged defect in design, manufacture, materials or workmanship of any such product.

Section 5.18��Accounts Receivable. Except as set forth on Schedule 5.18, all of the Sold Accounts Receivable represent valid and binding obligations of the respective debtors enforceable in accordance with their terms, arose from sales actually made or services actually performed in the ordinary course of business consistent with past practice and, to the Knowledge of Sellers, are collectible in the ordinary course of business consistent with past practice in the aggregate recorded amounts thereof, net of any applicable reserves reflected in the Financial Statements. Since December 31, 2013, Sellers have collected accounts receivable of the Specialty Plastics Business only in accordance with their regular collection practices and has not given or granted any rebates, discounts, advances or allowances to any customers not in the ordinary course of business consistent with past practice and has not otherwise sold, discounted or disposed of any accounts receivable of the Specialty Plastics Business. None of the Sold Accounts Receivable is the subject of any Proceeding or investigation by a Governmental Body brought against, by or on behalf of either Seller.

Section 5.19��No Brokers or Other Fees. Except for Lazard Group LLC, whose fees and expenses will be paid by Ferro, no Person has acted, directly or indirectly, as a broker, finder, financial advisor or investment banker for either Seller in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof.

Section 5.20��No Other Representations or Warranties. Except for the representations and warranties expressly contained in this Article V (as modified by the Schedules hereto), neither of the Sellers nor any other Person makes any other express or implied representation or warranty with respect to Sellers, their respective Affiliates, the Sold Assets, the Assumed Liabilities or the transactions contemplated by this Agreement, and Sellers disclaim all other representations or warranties, whether made by either

Seller, any of their respective Affiliates or any of their respective officers, directors, employees, agents or representatives. Except for the representations and warranties contained in this Article V (as modified by the Schedules hereto), Sellers hereby expressly disclaim (a) any representation or warranty, express or implied, at common law, by statute or otherwise relating to the condition of the Sold Assets (including any express or implied warranty of merchantability or fitness for a particular purpose, or of conformity to models or samples of materials) and (b) all liability and responsibility for any representation, warranty, statement or information made, communicated or furnished (orally or in writing) to Buyers, their respective Affiliates or any of their respective officers, directors, employees, agents or representatives (including any opinion, information or advice that may have been provided to Buyers by any director, officer, employee, agent, consultant or representative of either Seller or any of their respective Affiliates). Sellers make no representations or warranties to Buyers regarding the probable success or profitability of any business utilizing the Sold Assets.

ARTICLE VI��

REPRESENTATIONS AND WARRANTIES OF BUYERS

Buyers hereby represent and warrant to Sellers as follows:

Section 6.01��Organization. Each Buyer is a corporation or company, as applicable, duly incorporated, formed or organized, as applicable, validly existing and in good standing under the Laws of its jurisdiction of incorporation, formation or organization, as applicable. Each Buyer has all requisite power and authority to own, lease or operate its assets and to carry on its business as now being conducted and is duly qualified or licensed to do business and (to the extent that any such jurisdiction recognizes the concept of good standing) is in good standing in the jurisdictions in which the ownership of its property or the conduct of its business requires such qualification or licensing, except where the failure to be so qualified or licensed would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of such Buyer to consummate the transactions contemplated by this Agreement.

Section 6.02��Authorization; Enforceability. Each Buyer has the power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is a party and perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements by each Buyer, and the performance by each Buyer of its obligations hereunder and thereunder have been or will be duly authorized by all necessary action on the part of such Buyer. This Agreement has been duly executed and delivered by Buyers and, assuming due authorization, execution and delivery by Sellers, constitutes a valid and binding agreement of Buyers, enforceable against each of them in accordance with its terms.

Section 6.03��No Approvals or Conflicts. The execution, delivery and performance by each Buyer of this Agreement and the Ancillary Agreements to which it is a party and the consummation by Buyers of the transactions contemplated hereby and thereby do not and will not (a) violate, conflict with or result in a breach by either Buyer of its organizational documents, (b) violate, conflict with or result in a breach of, or constitute a default by either Buyer (or create an event which, with notice or lapse of time or both, would constitute a default) in any material respect under, or give rise to any payment or other penalty or any right of termination, cancellation or acceleration under, or result in the creation of any Encumbrance upon any of the properties of Buyers under, or require any notice, consent or waiver under, any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, agreement or other instrument to which Buyers or any of their properties may be bound, (c) violate or result in a breach in any material respect of any Governmental Order or Law applicable to Buyers or any of their properties or (d) require any order, consent, approval or authorization of, or notice to, or declaration, filing, application, qualification or registration with, any Governmental Authority or other Person.

Section 6.04��Compliance with Laws. Buyers are not in violation of any Governmental Order or Law applicable to them or any of their properties, except where non-compliance would not have a

material adverse effect on the ability of Buyers to consummate the transactions contemplated by this Agreement.

Section 6.05��Proceedings. There are no Proceedings pending or, to the Knowledge of Buyers, threatened against either Buyer that would have a material adverse effect on the ability of Buyers to consummate the transactions contemplated by this Agreement. Neither Buyer is subject to any Governmental Order that would have a material adverse effect on its ability to consummate the transactions contemplated by this Agreement.

Section 6.06��Financing. Buyers will have sufficient funds at the Closing to pay the Purchase Price and all related transaction expenses incurred by or on behalf of Buyers and to consummate the transactions contemplated by this Agreement.

Section 6.07��No Brokers or Other Fees. Except for Moelis & Company, no Person has acted, directly or indirectly, as a broker, finder, financial advisor or investment banker for Buyers in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof.

Section 6.08��No Other Representations or Warranties. Each Buyer acknowledges that it has conducted to its satisfaction an independent investigation and verification of the Sold Assets and Assumed Liabilities and, in making its determination to proceed with the transactions contemplated by this Agreement, such Buyer has relied solely on (a) the results of its own independent investigation and verification and (b) the representations and warranties of Ferro expressly and specifically set forth in Article V, as modified by the Schedules attached hereto, and has not relied on anything else. The representations and warranties of Ferro in Article V, as modified by the Schedules, constitute the sole and exclusive representations and warranties of Ferro to Buyers in connection with the transactions contemplated hereby. Each Buyer understands, acknowledges and agrees that all other representations and warranties of any kind or nature expressed or implied (including as to the accuracy or completeness of any of the information provided to Buyers in the due diligence process, or any information relating to the future or historical financial condition, results of operations, quality, quantity or condition of the Sold Assets or relating to any other information provided to Buyers) are specifically disclaimed by Sellers, and Buyers and their respective Affiliates, and their respective officers, directors, partners, members, employees, agents, representatives, successors and permitted assigns have not and will not rely on any such information, or other representations and warranties and such information and such other representations and warranties will not (except as otherwise expressly represented and warranted to in Article V of this Agreement) form the basis of any claim against Sellers of any of their respective Affiliates or representatives with respect thereto or with respect to any related matter. Neither of the Sellers nor any other Person will have or be subject to any liability to Buyers or any other Person resulting from the distribution to Buyers, or Buyers use of any such information, including any information, documents, projections, forecasts or other material made available to Buyers or their representatives through the Data Room, offering memoranda or management presentations or otherwise in expectation of the transactions contemplated by this Agreement. NEITHER SELLER MAKES OR PROVIDES, AND EACH BUYER HEREBY WAIVES, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO SAMPLES, OR CONDITION OF THE SOLD ASSETS OR ANY PART THEREOF, IN EACH CASE EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT. With respect to any projection or forecast delivered by or on behalf of Sellers to Buyers, each Buyer acknowledges that (w) there are uncertainties inherent in attempting to make such projections and other forecasts and plans, and that such Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it, including the reasonableness of the assumptions underlying such estimates, projections and forecasts, (x) the accuracy and correctness of such projections and forecasts may be affected by information which may become available through discovery or otherwise after the date of such projections and forecasts, (y) it is familiar with each of the foregoing and (z) neither Seller is making any representation or warranty with respect

to such projections or forecasts, including the reasonableness of the assumptions underlying such projections or forecasts.

ARTICLE VII��

TAX MATTERS

Section 7.01��General. Article VII will govern Tax matters arising out of the transactions contemplated by this Agreement.

Section 7.02��Cooperation.

(a)��Buyers and Sellers agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Specialty Plastics Business and any of the Sold Assets (including access to books and records, employees, contractors and representatives) as is reasonably necessary for the filing of all Tax Returns, the making of any election related to Taxes, the preparation for or defense of any audit by any Taxing Authority and the prosecution or defense of any claim, suit or Proceeding relating to any Tax Return. Further, subject to all applicable confidentiality obligations, each Seller will be permitted to retain, in its discretion, copies of any such books and records relating to any of the Sold Assets as are reasonably necessary for any of such purposes as set forth above. Buyers and Sellers will retain all books and records with respect to Taxes pertaining to the Specialty Plastics Business and the Sold Assets until the expiration of all relevant statutes of limitation (and, to the extent notified by Buyers and Sellers, any extensions thereof).

(b)��Sellers will authorize Buyers in writing to apply for and will use commercially reasonable efforts to assist Buyers to apply for and obtain, as soon as practicable after the date hereof, the Spanish Tax Clearance Certificates.

Section 7.03��Real and Personal Property Taxes.

(a)��Real and personal property Taxes imposed on or relating to the Sold Assets for the current Tax year will be prorated between Sellers and Buyers effective as of the Closing. Proration of Taxes that are undetermined as of the Closing Date (i) will be based on the most recently available Tax rate and valuation, giving effect to applicable exemptions, recently-voted millage, change in valuation and similar items, whether or not officially certified to the appropriate Taxing Authority as of the Closing Date and (ii) will use a 365-day year. On or before the Closing, Sellers will pay all delinquent property Taxes or special assessments not contested by Sellers in good faith, which contested Taxes or assessments will remain Sellers obligation. When the actual amounts become known, such prorations will be recalculated by the applicable Buyer and the applicable Seller, and such Buyer or such Seller, as the case may be, will promptly (but not later than five Business Days after notice of payment due) make any additional payment or refund so that the correct prorated amount is paid by each of such Buyer and such Seller.

(b)��If a property Tax refund that is an Excluded Asset is received by a Buyer, then such Buyer will remit such refund, including any interest paid by any Taxing Authority, to the applicable Seller within 14 calendar�days of receipt by such Buyer. Sellers and Buyers will reasonably cooperate with each other to pursue and obtain property Tax refunds; except that Sellers retain the exclusive right to apply for property Tax refunds and to appeal property Tax assessments pertaining to all periods ending on or before the Closing Date (collectively, the Pre-Closing Appeals). All proceedings relating to Pre-Closing Appeals, to the extent practicable, will be conducted by and in the name of Sellers and as directed by Sellers. The provisions of this Section 7.03(b) will survive the Closing.

Section 7.04��Transfer and Other Taxes. Buyers will timely file all Tax Returns with respect to all excise, sales, use, registration, stamp, recording, documentary, conveyancing, franchise, transfer, transaction privilege and similar Taxes, levies, charges and fees incurred in connection with the transactions

contemplated by this Agreement (collectively, the Transfer Taxes) and will pay all Transfer Taxes owed, whether or not reflected on any Tax Return. Within 30 days after payment, Buyers will provide Sellers with copies of all such Tax Returns and evidence that all such Taxes have been paid. Buyers and Sellers will reasonably cooperate to reduce or eliminate Transfer Taxes to the extent permitted by applicable Law. Buyers and Seller will each be responsible for one-half of all Transfer Taxes. The Parties acknowledge and agree that the transfer of the Spanish Specialty Plastics Business described in this Agreement and in the Spain Transfer Agreement qualifies as a transfer of an economic unit, capable of developing a business activity with its own means ("unidad econ�mica aut�noma) within the meaning of Article 7 of the Spanish VAT Act which is not subject to VAT. Notwithstanding the foregoing, if at any time a Governmental Authority finally determines that VAT is payable in connection with the transactions contemplated by this Agreement, (a) Buyers and Sellers shall use commercially reasonable efforts to defend the transaction from Taxes under the Spanish VAT Act, (b) Sellers shall promptly remit to the appropriate Governmental Authority the full amount of the VAT payable, plus any interest, fees or penalties payable, and (c) Buyers will, promptly upon receipt of written notice from Sellers, pay to the applicable Seller the amount of such applicable VAT, plus 50% of any interest, fees or penalties payable in connection with such Liability; provided, however, if it is determined that the VAT paid by Buyers pursuant to Section 7.04(c) is not fully recoverable by Buyers, then Sellers will, promptly upon a written notice from Buyers, pay to the applicable Buyer, an amount equal to 50% of the VAT not subject to full recoupment by Buyers.

ARTICLE VIII��

EMPLOYEE MATTERS

Section 8.01��Employees; Employment Matters.

(c)��Employment Offers. Effective as of the Closing Date, subject to ASIs pre-employment screening and drug testing (except in countries where such testing is not legally permissible), ASI will extend offers of employment to all of Ferros non-Union Employees who are not located in Spain, provided that ASI will not be required to extend offers of employment to non-Union Employees on long-term disability or reasonably expected to be on long-term disability, but for a period of up to six months from the Closing Date, subject to ASIs pre-employment screening and drug testing (except in countries where such testing is not legally permissible), ASI will extend an offer of employment to each non-Union Employee who was not extended an offer at the Closing Date due to such non-Union Employees disability, with such offers to be effective as of the date such non-Union Employee is able to perform the essential functions of his/her position with Ferro, with or without reasonable accommodation, provided there is an available similar position with ASI for which such non-Union Employee is qualified and provided further that Ferro will retain such non-Union Employees until at least the earlier of (x) the date that such non-Union Employee is able to perform the essential functions of his/her position with Ferro with or without reasonable accommodation or (y) the first anniversary of the Closing Date. Each Employee who accepts ASIs offer and passes such pre-employment screening and drug tests of ASI pursuant to this Section 8.01(a) (if applicable) is a Transferred Employee, provided that, as to non-Union Employees described in clause 8.01(a) that become Transferred Employees after the Closing Date, any references to the termination of any employment-related obligations of Ferro and the assumption of employment-related obligations by ASI as of the Closing or as of the Closing Date will, subject to Section 8.01(e)(ix), be deemed to apply instead as of the date such employee commences employment with ASI upon return from disability leave.

(d)��Each offer of employment contemplated by Section 8.01(a) will provide that the Employee receiving such offer will be entitled to receive, in each case as applicable, (A) a base salary or hourly base wage rate at least equal the base salary or hourly base wage rate in effect for such Employee immediately prior to the Closing and (B) subject to Section 8.01(e)(i), other employee benefits and compensation that are comparable to the employee benefits (excluding any pension, retirement or equity-based benefits or compensation) made available to such Employee by Ferro and its Affiliates immediately prior to the Closing Date.

(e)��Vacation. ASI will credit each Transferred Employee and each Union Employee with earned vacation for the current calendar year and shall be responsible for such vacation liability, to the extent accrued in the Closing Working Capital Statement. Ferro will be otherwise liable for all earned but unused vacation benefits of each Transferred Employee and each Union Employee, as determined in accordance with the applicable Ferros vacation policies and practices, which have not been paid by Ferro prior to the Closing.

(f)��Welfare Benefit Plans and 401(k) Plan.

(i)��ASI will provide the Transferred Employees and Union Employees with full service credit for their service with Ferro for purposes of eligibility to participate and vesting (but not benefit accrual) under ASIs 401(k) plan. Subject to Section 8.01(e), ASI will further ensure that the Transferred Employees and Union Employees receive full service credit for their service with Ferro for purposes of eligibility to participate in, and benefits under, ASIs medical plan and any other welfare benefit plan that ASI makes available to Transferred Employees and Union Employees and for purposes of determining the severance benefits and payments to be provided pursuant to Section 8.01(d)(v) and for purposes of vacation.

(ii)��Except as may be required under COBRA and as provided in Section 8.01(e), the Transferred Employees and Union Employees will cease to participate in and have coverage under all welfare benefit plans of Ferro as of the Closing Date. ASI will offer to all Transferred Employees and Union Employees who currently receive or are eligible to receive medical coverage from Ferro medical coverage that is reasonably comparable to the coverage in effect for such Transferred Employees and Union Employees immediately prior to the Closing Date.

(iii)��Subject to Section 8.01(e) in the case of health plans, ASI will cause each benefit plan of ASI and its Affiliates in which any Transferred Employee or Union Employee participates that is a health or welfare benefit plan to waive all limitations on participation eligibility in such health and welfare plan as to preexisting conditions, exclusions and service conditions, and insurability requirements applicable to Transferred Employees and Union Employees.

(iv)��To the extent Transferred Employees and Union Employees participate in a dependent care or medical expense reimbursement account under a U.S. Employee Plan (Ferros FSA) immediately prior to the Closing, Ferro will permit such Transferred Employees and Union Employees to continue participation in Ferros FSA through the end of the plan year in which the Closing occurs, subject to the terms and conditions of Ferros FSA but treating the Transferred Employees and Union Employees employment with ASI as employment with Ferro. ASI will take all necessary actions to recognize and implement the salary reduction elections in effect immediately prior to the Closing of each Transferred Employee and Union Employee under Ferros FSA and shall transfer to Ferro all such amounts that are deducted from each Transferred Employees and Union Employees payroll within ten days after each payroll date. All Transferred Employees and Union Employees shall cease participation in Ferros FSA as of the end of the plan year in which the Closing occurs, and ASIs dependent care and medical expense reimbursement account program shall cover the Transferred Employees thereafter. This Section 8.01(d)(iv) does not apply to Transferred Employees and Union Employees described in Section 8.01(a) who become Transferred Employees after December 31, 2014.

(v)��ASI will, or will cause one of its Affiliates to, provide each Transferred Employee whose employment is subject to nonvoluntary termination by ASI or its Affiliates with the severance payments and benefits as set forth on Schedule 8.01(d)(v) in the event such Transferred Employee experiences a qualifying termination of employment (as defined on Schedule 8.01(d)(v)) during the one year period beginning on the Closing Date.

(g)��Continuation Coverage.

(xviii)��Effective as of the Closing and in connection with the Closing, Ferro shall cause its group medical, dental, and vision benefit plans (Ferro COBRA Plans) in which the Transferred Employees or Union Employees participate immediately prior to the Closing to offer COBRA coverage to each such Transferred Employee and Union Employee and his or her covered spouse and dependents who, in each case, are qualified beneficiaries (within the meaning of COBRA) by reason of the Closing (collectively, the Covered Participants) under the normal terms and conditions of the Ferro COBRA Plans for providing COBRA coverage. Each such Covered Participant will be deemed to have initially elected the COBRA coverage unless a Covered Participant affirmatively declines the COBRA coverage. While the Covered Participants are covered under the Ferro COBRA Plans, ASI shall, as soon as administratively feasible, notify Ferro of any subsequent qualifying events (within the meaning of COBRA), terminations of employment, or other changes in status that could impact the Covered Participants coverage under the Ferro COBRA Plans. Effective as of January 1, 2015, ASI shall cause its medical, dental, and vision plans to cover the Transferred Employees, Union Employees and their spouses and dependents in accordance with Section 8.01(d)(ii).

(xix)��During the period beginning on the Closing Date and ending on December 31, 2014 (the Initial COBRA Period), ASI will be solely responsible for collecting any employee contributions towards the COBRA Premium, and ASI may subsidize the premium that would otherwise be charged to the Transferred Employees and Union Employees for coverage under the Ferro COBRA Plans. ASI shall cease providing any premium subsidy or reimbursement to the Transferred Employees, Union Employees (or any other Covered Participant) for premiums charged for continued coverage under the Ferro COBRA Plans (COBRA Premium) after the earlier of December 31, 2014 or the date the Transferred Employee or Union Employee, as applicable, ceases to be employed by ASI or any of its Affiliates (the Subsidy Termination Date). Ferro shall be responsible for collecting the COBRA Premiums owed by any Covered Participants for coverage under the Ferro COBRA Plans after December 31, 2014 if such Covered Participants continue coverage after December 31, 2014.

(xx)��At the Closing, ASI will pay to Ferro a lump sum cash amount equal to the product of (A)$1,091.81, provided that if the Closing Date occurs after the first day of any calendar month, such amount will be prorated based on the number of days in such partial calendar month occurring after the Closing Date, multiplied by (B) the number of Transferred Employees and Union Employees (the Closing COBRA Payment). On or prior to the first day of each calendar month after the Closing in the Initial COBRA Period, ASI will pay to Ferro a lump sum cash amount equal to the product of $1,091.81, multiplied by the number of Transferred Employees and Union Employees covered by the Ferro COBRA Plan on the date such payment is made to Ferro. For purposes of calculating the amount owed under the preceding sentence, a Transferred Employee and Union Employee will be considered covered by the Ferro COBRA Plan if any Covered Participant, who is covered by the Ferro COBRA Plan by reason of such Transferred Employee, continues to be covered by the Ferro COBRA Plan on the applicable date.

(xxi)��If during the Initial COBRA Period or during each subsequent calendar year thereafter during which a Covered Participant continues to receive COBRA coverage under Ferro COBRA Plans (each such calendar year and the Initial COBRA Period, a COBRA Year), the aggregate benefit claims for a Transferred Employee or Union Employee (including the claims of the Transferred Employees or Union Employees spouse or dependents and without regard to whether the Transferred Employee or Union Employee remains employed with ASI) incurred during such COBRA Year under the Ferro COBRA Plans exceed $50,000, ASI shall reimburse Ferro or the Ferro COBRA Plans for the full cost of such claims in excess of $50,000 but only to the extent that such claims are not paid by Ferros stop loss insurance carrier. Benefit claims incurred prior to the Initial COBRA Period shall not be included in the calculation of whether such claims exceed $50,000

for any Transferred Employee or Union Employee. Ferro shall send ASI invoices documenting such claims on a monthly basis, and ASI shall pay the reimbursements owed within 15 days of receiving the invoice from Ferro.

(xxii)��If any Covered Participant continues coverage under the Ferro COBRA Plans after December 31, 2014, then ASI will, no later than March 1, 2015, pay Ferro an amount equal to 10% of the total COBRA Premiums that such Covered Participant would pay from January 1, 2015 through the last day of such Covered Participants COBRA maximum coverage period. No amounts paid pursuant to this Section 8.01(e)(v) will reduce the COBRA Premium charged to the Covered Participant for his or her coverage under the Ferro COBRA Plans for such period.

(xxiii)��At the Closing, as provided in Section 3.01(c), ASI shall deposit $1,500,000 (the COBRA Escrow Amount) into a segregated account with the Escrow Agent (the COBRA Escrow Account) pursuant to the Escrow Agreement. The COBRA Escrow Amount and any other amounts deposited into the COBRA Escrow Account pursuant to this Section 8.01(e)(iv) will be held to satisfy ASIs obligations pursuant to this Section 8.01(e) (including the timely payment of COBRA Premiums and payments required pursuant to Section 8.01(e)) until the date that is 6 months after the date on which the last Covered Participant ceases to be covered under any Ferro COBRA Plans, at which time the balance of the COBRA Escrow Account will be released to ASI. If ASI fails to timely satisfy any of its payment obligations pursuant to Section 8.01(e), Ferro shall have the right, upon three Business Days advance written notice to ASI and the Escrow Agent, to withdraw an amount equal to the amount of such late payment from the COBRA Escrow Account, unless within such three Business Day period, ASI tenders to Ferro and the Escrow Agent written proof of payment of such alleged late payments. Within ten days following the date of any withdrawal by Ferro pursuant to this Section 8.01(e), ASI shall deposit the amount of such withdrawal into the COBRA Escrow Account. If at any time following a withdrawal from the COBRA Escrow Account Ferro receives a payment from ASI in satisfaction of the payment obligation giving rise to such withdrawal, Ferro shall either (A) refund such payment to ASI if ASI has already deposited an equal amount in the COBRA Escrow Account, or (B) deposit such payment in the COBRA Escrow Account on behalf of ASI if ASI has not deposited an equal amount in the COBRA Escrow Account. Ferro shall maintain, on its current terms, its stop loss insurance coverage for the Ferro COBRA Plans through the last day of the Initial COBRA Period. After the Initial COBRA Period, Ferro shall use commercially reasonable efforts to maintain its stop loss insurance on its current terms (provided Ferro is not required to incur any out-of-pocket expenses or pay any increased premium) and shall give ASI written notice of any change in such stop loss insurance coverage no later than 30 days prior to the end of the Initial COBRA Period.

(xxiv)��(A) As soon as reasonably practicable after March 15, 2015, Ferro shall send a statement to ASI showing all Plan Expenses incurred with respect to Covered Participants for the Initial COBRA Period (and that have been submitted to the Ferro COBRA Plans) (the Initial Plan Expenses) and all amounts paid by ASI to Ferro pursuant to Sections 8.01(e)(iii) and (iv) for the Initial COBRA Period (the Initial Payments). If the Initial Plan Expenses exceed the Initial Payments, ASI shall, within 30 days of receiving such statement from Ferro, pay to Ferro a lump sum cash payment equal to the amount by which the Initial Plan Expenses exceed the Initial Payments. If the Initial Payments exceed the Initial Plan Expenses, Ferro shall, within 30 days of providing such statement to ASI, pay to ASI a lump sum cash payment equal to the amount by which the Initial Payments exceed the Initial Plan Expenses.

(xxv)��As soon as reasonably practicable after July 31, 2015, Ferro shall send a statement to ASI showing (1) all Plan Expenses incurred with respect to Covered Participants for the Initial COBRA Period (that were not included in the Initial Plan Expenses) and for the period from January 1, 2015 through June 30, 2015 (and that have been submitted to the Ferro COBRA Plans) (the Interim Plan Expenses) and (2) (I) all amounts paid by ASI to Ferro pursuant to Section 8.01(e)(iv) for the period from the Closing Date through June 30, 2015 (to the extent not included in the

Initial Payments), and (II) all amounts paid by ASI to Ferro pursuant to Section 8.01(e)(v) for the period from January 1, 2015 through June 30, 2015, and (III) all COBRA Premiums paid by the Covered Participants for the period from January 1, 2015 through June 30, 2015 (together, clauses (I), (II), and (III), the Interim Payments). If the Interim Plan Expenses exceed the Interim Payments, ASI shall, within 30 days of receiving such statement from Ferro, pay to Ferro a lump sum cash payment equal to the amount by which the Interim Plan Expenses exceed the Interim Payments. If the Interim Payments exceed the Interim Plan Expenses, Ferro shall, within 30 days of providing such statement to ASI, pay to ASI a lump sum cash payment equal to the amount by which the Interim Payments exceed the Interim Plan Expenses.

(xxvi)��As soon as reasonably practicable after the 14 month anniversary of the date the last Covered Participant ceases to be covered under the Ferro COBRA Plans (the COBRA End Date), Ferro shall send a statement to ASI showing (1) all Plan Expenses incurred with respect to Covered Participants for all COBRA Years (that were not included in the Initial Plan Expenses or Interim Plan Expenses) (the Final Plan Expenses) and (2) (I) all amounts paid by ASI to Ferro pursuant to Section 8.01(e)(iv) for all COBRA Years (to the extent not included in the Initial Payments or Interim Payments), and (II) all amounts paid by ASI to Ferro pursuant to Section 8.01(e)(v) for the period from July 1, 2015 through the COBRA End Date, and (III) all COBRA Premiums paid by the Covered Participants for the period from July 1, 2015 through the COBRA End Date (together, clauses (I), (II), and (III), the Final Payments). If the Final Plan Expenses exceed the Final Payments, ASI shall, within 30 days of receiving such statement from Ferro, pay to Ferro a lump sum cash payment equal to the amount by which the Final Plan Expenses exceed the Final Payments. If the Final Payments exceed the Final Plan Expenses, Ferro shall, within 30 days of providing such statement to ASI, pay to ASI a lump sum cash payment equal to the amount by which the Final Payments exceed the Final Plan Expenses.

(xxvii)��If Ferro or the Ferro COBRA Plans incur any Plan Expenses related to a Covered Participants participation in the Ferro COBRA Plans with respect to a COBRA Year and such Plan Expenses were not included in the Initial Plan Expenses, Interim Plan Expenses, or Final Plan Expenses during the settlement processes described under clauses (A), (B), and (C), Ferro shall send a statement of such Plan Expenses to ASI as soon as practicable after Ferro receives a statement of such Plan Expenses, and ASI shall pay to Ferro an amount equal to such Plan Expenses within 30 days of receiving the statement from Ferro.

(xxviii)��Under this Section 8.01(e), a claim will be deemed incurred on the date that treatment or services are provided for purposes of health care benefits under the Ferro COBRA Plans.

(xxix)��Notwithstanding any provision of this Agreement to the contrary, (A) this Section 8.01(e) applies only to Transferred Employees and Union Employees in the United States who would otherwise be entitled to COBRA coverage in connection with the Closing, and (B) this Section 8.01(e)(i)-(viii) does not apply to Transferred Employees described in Section 8.01(a) who become Transferred Employees after December 31, 2014, and ASI shall cause its medical, dental, and vision plans to cover the Transferred Employees described in this clause (B) and their spouses and dependents effective on the date such Employee becomes a Transferred Employee.

(h)��Cooperation. The Parties agree to furnish each other with such information concerning Transferred Employees, Union Employees and Transferred Spain Employees payroll and benefit plans, subject to the other terms of this Agreement (including confidentiality and privacy considerations under the Health Insurance Portability and Accountability Act of 1996, as amended), and to take all such other action, as is reasonably necessary and appropriate to effect the transactions contemplated by this Section 8.01. The Parties agree to enter into a mutual agreed upon Business Associate Agreement or similar agreement to facility the sharing of protected health information.

(i)��Buyers Indemnity. Subject to Section 8.01(e), Buyers agree to indemnify and hold harmless the Seller Indemnified Persons from and against any Liability or Loss suffered, paid or incurred by any Seller Indemnified Person in relation to the wages, salaries, remuneration, compensation or any other benefits to the extent arising out of either Buyers employment after the Closing Date of any Transferred Employee, Transferred Ferro Spain Employee or Union Employee and payable to or accrued by them in connection therewith on or after the Closing Date, including annual leave, long service leave, sick leave and any entitlement to severance or redundancy payments. Except as explicitly provided for in this Article VIII or in the calculation of Closing Working Capital, Buyers shall not be responsible for any Liability or Loss suffered, paid or incurred by any Seller Indemnified Person in relation to a Sellers employment prior to the Closing of any Transferred Employee, Transferred Ferro Spain Employee or Union Employee in relation to the wages, salaries, remuneration, compensation, severance pay or any other benefits to the extent such salaries, remuneration, compensation, severance pay or any other benefits are earned, accrued and/or payable as of the Closing. For the avoidance of doubt, (i) Buyers shall not be responsible for any Liability or Losses incurred by Sellers relating to the payments described in Section 8.01 (l) to the extent the amounts to make such payments were not paid by Sellers as required by Section 8.01(l) and (ii) Buyers shall not be responsible for any Liabilities or Losses incurred by Sellers relating to any severance payments relating to a Transferred Employees pre-Closing employment with a Seller to the extent such employees separation from service was other than a nonvoluntary termination by ASI or its Affiliates.

(j)��No Right to Employment. Nothing herein expressed or implied will confer upon any Employee any additional rights or remedies, including any additional right to employment, or continued employment for any specified period, of any nature or kind whatsoever under or by reason of this Agreement.

(k)��No Third Party Beneficiary. No provision in this Section 8.01 will (i) create any third party beneficiary or other rights in any employee or former employee (including any beneficiary or dependent thereof) of either Seller, either Buyer or any other Person, other than the Parties hereto and their respective successors and permitted assigns, (ii) constitute or create, or be deemed to constitute or create, an employment agreement or (iii) constitute or be deemed to constitute an amendment to any employee benefit plan sponsored or maintained by Sellers or any of their respective Affiliates.

(l)��U.S. W-2 Preparation/Non-Successor Employer. Ferro agrees, pursuant to the standard procedure in Revenue Procedure 2004-53, to perform all the reporting duties for the wages and other compensation it pays to Transferred Employees and Union Employees, including the filing of quarterly Forms 941 and the furnishing and filing of Forms W-2 and W-3. Ferro agrees to furnish Forms W-2 to Transferred Employees and Union Employees, reporting wages and other compensation paid by Ferro to the respective Transferred Employees and Union Employees. Following December 31, 2014, ASI agrees to perform all the reporting duties for the wages and other compensation it pays to Transferred Employees and Union Employees, including the filing of quarterly Forms 941 and the furnishing and filing of Forms W-2 and W-3. ASI agrees to furnish Forms W-2, reporting wages and other compensation paid by ASI to the respective Transferred Employees and Union Employees. Notwithstanding the foregoing and to the extent permissible under applicable Laws, ASI will function as a successor employer with respect to the Transferred Employees and Union Employees for purposes of the Federal Insurance Contributions Act, as codified at 26 U.S.C. 3101-3128, the Federal Unemployment Act, as codified at 26 U.S.C. Sections 3101-3311 and, to the extent ASI elects, any applicable state unemployment compensation Laws.

(m)��Spain Employees. The Parties acknowledge and agree that, in accordance with the provisions of article 44 of Legislative Royal Decree 1/1995, (approving the rewritten text of the Workers' Statute Law of Spain), on the Closing Date, as a result of the transactions contemplated by this Agreement, ASI Spain will subrogate in the legal rights and obligations arising from the employment relationships undertaken by Ferro Spain in relation to Ferro Spain's Employees who are employed in connection with the Specialty Plastics Business on the Closing Date (the "Transferred Ferro Spain Employees"). No less than 10 Business Days prior to the reasonably anticipated Closing Date, Ferro Spain will provide to the Transferred Ferro Spain Employees legal representatives with the information required in article 44.6 of the Workers' Statute Law.

(n)��Incentive Plan Payments.

(xxv)��Subject to Buyers receiving sufficient funds from Ferro to make the payments provided for in this Section 8.01(l), upon the later of (A) the date on which bonuses earned under Ferros Annual Incentive Plan (the AIP) and U.S. Incentive Plan (the USIP) for calendar year 2014, if any, generally are paid to eligible employees of Sellers who are not Transferred Employees or Union Employees and (B) the date on which Buyer receives written notice, Buyer will pay (subject to applicable withholding by Buyer and payment by Buyer of any applicable payroll taxes) to the Transferred Employees and Union Employees who remain employed by Buyer or any of its Affiliates as of December 31, 2014, or who have retired between the Closing Date and December 31, 2014, the 2014 bonus amounts, if any, earned by such Transferred Employees or Union Employees under the AIP and the USIP for calendar year 2014, as calculated pursuant to this Section 8.01(l), in each case as determined by Ferro in its sole and absolute discretion.

(xxvi)��The bonus amounts payable to each eligible Transferred Employee and Union Employee under the AIP will be equal to the 2014 AIP payment such Transferred Employee and Union Employee would have received, if any, if such Person remained an employee of a Seller (and had not become a Transferred Employee or employee of a Buyer), multiplied by a fraction, the numerator of which is the number of days from January 1, 2014 to the Closing Date and the denominator of which is 365.

(xxvii)��The bonus amounts payable to each eligible Transferred Employee and Union Employees under the USIP will be equal to the sum of: (i) the site-specific performance amount payable to such Transferred Employee or Union Employee as of the Closing Date, plus (ii) 100% of such Transferred Employees or Union Employees 2014 corporate performance amount multiplied by a fraction, the numerator of which is the number of days from January 1, 2014 to the Closing Date and the denominator of which is 365.

(o)��Conflict. With respect to the Union Employees, to the extent that any provision of Section 8.01 of this Agreement conflicts with the terms of the collective bargaining agreements agreed to by ASI and the unions (the Amended Collective Bargaining Agreements), the terms of the Amended Collective Bargaining Agreements shall control.

Section 8.02��Labor Matters.

(c)��Collective Bargaining Agreements.

(i)��At or prior to the Closing and effective as of the Closing Date, subject to ASIs pre-employment screening and drug testing, (except in countries where such testing is not legally permissible), ASI will extend offers of employment to all Union Employees pursuant to the terms of the Amended Collective Bargaining Agreements with respect to Ferros unionized employees of the Specialty Plastics Business (each a Union Employee). Notwithstanding any provision of Section 8.01 to the contrary, Buyer will hire all Union Employees and the Amended Collective Bargaining Agreements will govern the terms and conditions (including compensation and benefits) of Buyers employment of the applicable Union Employees.

(ii)��Prior to or at the closing of the transaction between Ferro and ASI contemplated by the APA, ASI will extend offers of employment to all then-current employees employed at the Plant in the Bargaining Unit, subject to each employees successful completion of ASIs regular pre-hire processes, which include a background check and 10-panel drug test.� If prior to the closing of the transaction contemplated by the APA, a Bargaining Unit employee self-identifies to Ferro that he/she would not successfully pass ASIs pre-hire drug test, ASI will extend a conditional offer of employment to that employee conditioned on the employees agreement to participate in, participation in, and successful completion of, an appropriate substance abuse program.� The

abbreviated hiring process set forth herein shall only apply to ASIs initial offer of employment to Bargaining Unit employees incident to the transaction contemplated by the APA.� ASIs regular hiring practices shall apply at all times thereafter.

(d)��Multiemployer Plan. Ferro will be responsible for any liability incurred under Section 4201 of ERISA, including without limitation any withdrawal liability, as a result of Ferro withdrawing from the National Integrated Group Pension Plan (the Union Pension Plan) or any other Multiemployer Plan or Multiple Employer Plan pursuant to which Ferro contributed on behalf of the Union Employees (the Withdrawal Liability). Ferros responsibility for any such Withdrawal Liability shall survive the Closing and continue thereafter for so long as any claim of such Withdrawal Liability may be asserted.

(e)��Effects Bargaining. Prior to the Closing Date, Ferro will engage in good faith bargaining with the representatives of the Union Employees as to the effects of the transactions contemplated by this Agreement, to the extent required and permitted by applicable Law; provided, however, Ferro agrees that any agreement entered into as a result of any such effects bargaining shall impose no obligation or Liability on a Buyer either prior to or at any time after Closing.

(f)��Notifications. Sellers will use commercially reasonable efforts to take, or cause to be taken, any and all actions in connection with any required notification to, or any required consultation with, the employees, employee representatives, work councils, unions, labor boards and relevant Governmental Authorities concerning the transactions contemplated by this Agreement with respect to Transferred Employees and Union Employees, and Buyers will reasonably cooperate with Sellers in connection with the foregoing.

Section 8.03��Workers Compensation.

(a)��Subject to the terms of this Section 8.03, Sellers will be responsible for the entire cost and expense of all workers compensation claims made by Transferred Employees and Union Employees at any time with respect to injuries or conditions with a clearly identifiable occurrence date occurring before the Closing Date. Subject to the terms of this Section 8.03, Buyers will be solely responsible for the entire cost and expense of all workers compensation claims made by Transferred Employees and Union Employees with respect to injuries or conditions with a clearly identifiable occurrence date occurring after the Closing Date.

(b)��With respect to injuries or conditions without a clearly identifiable occurrence date, the Parties will share responsibility as follows: (i) Sellers will be responsible for the entire cost and expense of all such workers compensation claims relating to an event or condition where the first claim with respect to such event or condition is made within 60 days after the Closing Date and that is not covered by Buyers insurance and (ii) Buyers will be solely responsible for the entire cost and expense of all such workers compensation claims relating to an event or condition where the first claim with respect to such event or condition is made more than 60 days after the Closing Date.

ARTICLE IX��

OTHER COVENANTS

Section 9.01��Conduct of Business Prior to the Closing. From the date of this Agreement until the Closing, except as otherwise provided in this Agreement or consented to in writing by ASI, Sellers will operate or cause the Specialty Plastics Business to be operated in the ordinary course consistent in all material respects with past practice, and each Seller will use its commercially reasonable efforts to keep available to Sellers the services of its Employees and preserve for Sellers its relationships with suppliers and customers of the Specialty Plastics Business. Without limiting the generality of the foregoing, from the date of this Agreement until the Closing:

(g)��Sellers shall (i)�maintain the Sold Assets in good repair, working order and condition, reasonable wear and tear excepted; (ii) maintain its books of account and records in the usual and ordinary manner; (iii) comply in all material respects with all applicable Laws, including maintaining all Permits in full force and effect; (iv) maintain its present insurance in full force and effect, with policy limits and scope of coverage not less than is now provided by its present insurance; (v) pay all accounts payable and other obligations (including Taxes) on a basis consistent with the practices of the Specialty Plastics Business as of the date hereof; (vi) maintain its system of internal accounting controls.

(h)��Without the prior written consent of ASI (which consent shall not be unreasonably delayed, conditioned or withheld), Sellers shall not (i) waive, amend, supplement, terminate or cancel any Sold Contract or relinquish any rights thereunder other than in the ordinary course of business consistent with past practice; (ii)�other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money; (iii)�sell, assign, transfer, lease or otherwise dispose of any of the Sold Assets, other than the sale of inventory in the ordinary course of business consistent with past practice; (iv) grant to its Employees any increases in compensation or benefits, other than in the ordinary course of business consistent with past practice; (v) enter into any employment agreement with any individual with regard to the Specialty Plastics Business; (vi) materially modify the terms of employment of any Employee individually or the Employees as a whole; (vii) mortgage, pledge or encumber any material portion of the Sold Assets; (viii) acquire any assets outside of the ordinary course of business consistent with past practice; (ix) amend, modify or otherwise change the terms of any existing agreement to accelerate the payments due thereunder or accelerate the collection of any Accounts Receivable, other than in the ordinary course of business; (x) delay the payments of any accounts payable, other than in the ordinary course of business; and (xi) enter into any agreement to do any of the foregoing

(i)��Sellers will provide Buyers employees, agents and authorized representatives with reasonable access (subject to applicable Foreign Competition/Investment Law) during normal business hours upon reasonable advance written notice to the Facilities and to the documents books and records relating to the Specialty Plastics Business, to the extent necessary to enable Buyers to make a thorough investigation of the Specialty Plastics Business, to make a physical examination of the Sold Assets, to conduct reasonable environmental examinations (except that neither Buyer nor any of their respective representatives may conduct any environmental sampling or testing without the prior written consent of Ferro), and to examine documents, books and records; provided that such access does not interfere in any material respect with such Sellers normal business operations.

Section 9.02��Governmental Approvals and Consents. Each Party will, as promptly as possible, use commercially reasonable efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Agreements. Each Party will cooperate fully with the other Parties and their respective Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The Parties will not willfully take any action that would be reasonably likely to have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals. The Parties agree to cause to be made all appropriate filings under any applicable Foreign Competition/Investment Law as soon as is reasonably practicable following the date of this Agreement. The Parties will consult and cooperate with one another, and consider in good faith the views of one another in connection with, and provide to each other in advance, subject to the applicable Foreign Competition/Investment Law, any analyses, appearances, presentations, correspondence, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party in connection with, any Proceedings under or relating to any applicable Foreign Competition/Investment Law. Each Party agrees to furnish the others (or their respective outside counsel, consistent with applicable Foreign Competition/Investment Laws), with copies of all documents and correspondence (i) prepared by or on behalf of such Party for submission to any Governmental Authority and (ii) received by or on behalf of such Party from any Governmental Authority, in each case in connection with the transactions contemplated by this Agreement.

Section 9.03��Access to Books and Records; Cooperation.

(a)��Each Buyer agrees that it will, and will cause its Affiliates to, preserve and keep all pre-Closing records of each Seller in its possession, as applicable, for a period of seven years commencing on the Closing Date. Each Seller agrees that it will preserve and keep all records held by it relating to the Specialty Plastics Business for a period of seven years commencing on the Closing Date. Each Party will make, or cause its Affiliates to make, such records and personnel available to the other Parties and their Affiliates as may be reasonably required in connection with any insurance claims by, Proceedings against (other than Proceedings by a Buyer or any of its Affiliates against Sellers or any of their respective Affiliates or vice versa) or governmental investigations involving, Buyers, Sellers or any of their respective Affiliates or in order to enable Buyers, Sellers or any of their respective Affiliates to comply with their respective obligations under this Agreement and the Ancillary Agreements. If a Buyer, a Seller, or any of their respective Affiliates wishes to destroy (or permit to be destroyed) such records prior to the end of the seven year period described above (in the case of a Buyer and its Affiliates) or prior to the applicable date(s) set forth in the established records retention policies of Sellers (in the case of either Seller), such Party will first give 90 calendar days prior written notice to the other Party, and the other Party will have the right at its option and expense, upon prior written notice given to the Party wishing to destroy such records within that ninety-day period, to take possession of the records within 180 calendar days after the date of such notice.��

(b)��Nothing in this Agreement will impose obligations on any Party or its counsel, accountants or other authorized representatives that (i) could reasonably be expected by such Party to cause it to be in breach of any duty of confidence or any other duty or obligation under applicable Law (including Laws affecting privacy, personal information and the collection, handling, storage, processing, use or disclosure of data), or (ii) would result in a loss of attorney-client privilege with respect to such information.

Section 9.04��Non-Competition and Non-Solicitation.

(a)��Neither of the Sellers nor any of their respective Affiliates will, directly or indirectly, during the two-year period commencing on the Closing Date (the Restricted Period, (i) engage anywhere in the world in any business that competes with the Specialty Plastics Business or (ii) employ or solicit for employment any Transferred Employee or Union Employee at any time during the two-year period following the Closing Date; except that it will not be deemed to be a breach of the foregoing for either of the Sellers or any of their respective Affiliates to hire any such individual who, at the time of the initial contact with such Seller or Affiliate regarding employment after the Closing Date, is (A) responding to a general advertisement or other non-directed search inquiry or (B) no longer employed by a Buyer.

(b)��Notwithstanding anything to the contrary in Section 9.04(a), (i) the operation, performance and development by Ferro and its Affiliates of the Retained Businesses will not be a violation of Section 9.04(a), and (ii) the acquisition by Sellers or any of their respective Affiliates following the Closing of a Person engaged in the Specialty Plastics Business will not be a violation of Section 9.04(a), provided that the business of the acquired Person otherwise prohibited by Section 9.04(a) (the Prohibited Business) represents less than the lesser of $15,000,000 of consolidated gross sales for such Persons most recent completed fiscal year or 10% of such Persons consolidated gross sales for its most recent completed fiscal year, and further provided that, promptly upon executing a definitive agreement in connection with its acquisition of a Prohibited Business (regardless of whether or not the closing of the acquisition occurs simultaneously with the execution of the definitive agreement), Ferro will notify ASI of the acquisition in writing (an Acquisition Notice) and provide ASI with reasonable access (subject to confidentiality restrictions) to information regarding the Prohibited Business for a period of 90 days following the delivery of an Acquisition Notice. During such 90-day period, ASI will have the exclusive right to make an offer to acquire the Prohibited Business from Sellers or their Affiliates, and if ASI elects to make such an offer, Sellers will negotiate in good faith with ASI in an attempt to reach a definitive agreement for ASIs acquisition of the Prohibited Business. If ASI fails to make an offer to acquire the Prohibited Business within the foregoing 90-day period, or if, following delivery of an Acquisition Notice to ASI, Sellers or their Affiliates do not acquire the Prohibited Business for any reason, Sellers obligation to negotiate in good faith with ASI pursuant to this Section 9.02

will be void. If ASI makes an offer to acquire the Prohibited Business but Sellers and ASI are unable to reach a definitive agreement for such acquisition, Sellers and their Affiliates must divest the Prohibited Business within one year of the date on which the good faith negotiations described in this Section 9.02 are terminated in writing, provided that if the Restricted Period expires prior to the expiration of the foregoing one-year period, Sellers will have no obligation to divest the Prohibited Business pursuant to this Section 9.02(b).

(c)��Neither Buyer nor any of their respective Affiliates will, directly or indirectly during the six-month period commencing on the Closing Date, employ, solicit for employment or enter into any consulting or similar arrangement or agreement with any employee of either Seller that is not a Transferred Employee or Union Employee; except that it will not be deemed to be a breach of the foregoing for a Buyer or any of its Affiliates to hire any such individual who, at the time of the initial contact with such Buyer or any of its Affiliates regarding employment after the Closing Date, is (A) responding to a general advertisement or other non-directed search inquiry or (B) no longer employed by a Seller.

(d)��The Parties agree that the covenants set forth in this Section 9.04 impose a reasonable restraint on the Parties in light of the activities and business of the Parties on the date of the execution of this Agreement and the current plans of the Parties.

Section 9.05��Severability; Reformation. The covenants in this Article IX are severable and separate, and the unenforceability of any specific covenant will not affect the provisions of any other covenant. Moreover, in the event any court of competent jurisdiction will determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the Parties that such restrictions be enforced to the fullest extent which the court deems reasonable, and the Agreement will thereby be reformed.

Section 9.06��Materiality. The Parties agree that the covenants set forth in this Article IX are a material and substantial part of the transactions contemplated by this Agreement, and are supported by adequate consideration.

Section 9.07��Corporate Names; License.

(a)��Buyers acknowledge that all right, title and interest in and to the names or designs Ferro and Ferros Check-in-a-Circle logo, together with all confusingly similar variations, derivations and abbreviations thereof, any trademarks, trade names, brand marks, brand names, trade dress, logos, URLs, websites and domain names relating to such names and any other identifiers of source containing or incorporating the foregoing (the Retained Names and Marks), are owned exclusively by Ferro, and, except as set forth in this Section 9.07, each Buyer further acknowledges that it has no rights, and is not acquiring any rights, to use the Retained Names and Marks. Subject to the License set forth in Section 9.07(b), as soon as reasonably practicable after the Closing Date, Buyers will remove or cover the Retained Names and Marks from all signs, billboards, advertising materials, telephone listings, labels, stationery, office forms, packaging or other materials included in the Sold Assets. After that time, Buyers will not use, or permit any of their respective Affiliates to use, the Retained Names and Marks for any purpose.

(b)��Subject to the restrictions, terms and conditions of this Agreement, Ferro grants to ASI a limited, personal, non-exclusive, non-transferable, royalty-free right and license (the License) to use the Intellectual Property set forth in Schedule 9.07(b) (the Licensed Marks) anywhere in the world in connection with the advertisement, promotion, manufacture and distribution of the products of the Specialty Plastics Business. ASI will have no right to sublicense the Licensed Marks (except to wholly owned Affiliates), and any use of the Licensed Marks by ASI (or its Affiliates) will inure to the benefit of Ferro. The term of the License commences on the Closing Date and will continue (unless earlier terminated pursuant to this Section 9.07) for five years thereafter, at which point the License will terminate automatically. Upon termination of the License for any reason, ASI will have no further right or license to use the Licensed Marks for any purpose. Beginning on the Closing Date, ASI will use commercially reasonable efforts to conclude its use of the Licensed Marks as soon as is reasonably possible prior to the expiration of the foregoing five-year term. For

as long as this License is in effect, ASI will use the Licensed Marks only in connection with the products of the Specialty Plastics Business, and ASI will not conduct the Specialty Plastics Business or use the Licensed Marks in any way that would bring discredit upon the Licensed IP or cause Ferros ownership of the Licensed Marks or the goodwill associated with the Licensed Marks to be impaired, reduced or otherwise adversely affected. If ASI violates any of the restrictions set forth in this Section 9.07(b), Ferro will have the right to terminate the License effective immediately upon written notice to ASI.

Section 9.08��Further Actions. Each of the Parties will use commercially reasonable efforts to take, or cause to be taken, all appropriate action, and do or cause to be done all things necessary, proper or advisable under applicable Law or otherwise, and execute and deliver such documents and other papers as may be reasonably required or advisable, to satisfy the conditions set forth in Article X and to consummate the transactions contemplated by this Agreement.

Section 9.09��Wrong Pocket. If any Party receives any payment after the Closing for any product or service sold by or on behalf of the other Parties or in satisfaction of any receivable or similar obligation that is a Sold Asset (in the case of Seller) or Excluded Asset (in the case of Buyers), then such Party will promptly remit such funds to the appropriate other Party. Nothing in this Section 9.09 will impose any duty or obligation of any of the Parties to collect any payments or amounts for the other Parties.

Section 9.10��Bulk Transfer Laws. Buyers and Sellers hereby waive compliance with any bulk transfer Laws applicable to the transactions contemplated by this Agreement.

Section 9.11��Confidentiality.

(d)��Sellers, for and on behalf of their Affiliates, hereby confirm and agree that, with respect to any information known to, or directly or indirectly possessed by or on behalf of Sellers or their Affiliates, whether before, on or after the date hereof, that relates to the Specialty Plastics Business, Sellers will keep and maintain such information as confidential and shall not use or disclose such information in any manner whatsoever; provided, this confidentiality covenant shall not restrict Sellers from disclosing such information if (i) compelled to disclose such confidential information by judicial or administrative process or, upon the advice of its legal counsel, as required by any applicable Law or regulation (including the regulations of the New York Stock Exchange), and in any such event, Sellers shall, to the extent practicable, give Buyers prompt written notice of any such requirement prior to any such disclosure, and may disclose to any third party requiring disclosure only the part of such confidential information that is compelled or required by Law or regulation to be disclosed, (ii) such confidential information is generally available to the public through no improper action of Sellers or any of their Affiliates or (iii) such confidential information is publicly disclosed by Buyers or their respective Affiliates.

(e)��Buyers, for and on behalf of their respective Affiliates, hereby confirm and agrees that, with respect to any information directly or indirectly furnished by or on behalf of either Seller, whether before, on or after the date hereof, that does not relate to the Specialty Plastics Business, Buyers and their respective Affiliates will continue to be bound by the terms of the Confidentiality Agreement relating to such information following the Closing Date.

(f)��Sellers understand and agree that the confidential information and trade secrets related to the Specialty Plastics Business would cause irreparable damage to Buyers and their respective Affiliates if disclosed to a competitor or made available to any other Person, and that such information is held by Sellers in confidence. Sellers acknowledge and agree that, without the posting of a bond, Buyers shall be entitled to equitable relief, including injunction and specific performance, in the event of any breach or threatened breach of the provisions of this Section 9.11, in addition to all other remedies available at law or in equity.

Section 9.12��Public Announcements. Prior to the Closing Date, unless otherwise required by applicable Law or by any applicable listing agreement with or rules of any applicable national securities

exchange, trading market or listing authority, no Party will make any public announcements concerning this Agreement or the transactions contemplated by this Agreement, or otherwise communicate with any news media without the prior written consent of the other Parties (which consent will not be unreasonably withheld or delayed), and the Parties will cooperate as to the timing and contents of any such announcement, provided that nothing in this Section 9.12 will restrict each Partys ability to communicate directly with Employees. Notwithstanding anything else provided in this Section 9.12, the Parties shall be under no restrictions with respect the republication of any information previously publicly disclosed by any Party pursuant to this Section 9.12.

Section 9.13��Product Warranties. After the Closing, Buyers will honor for Sellers account and at Sellers expense (limited only to refund or replacement), for products of the Specialty Plastics Business manufactured and shipped by Sellers prior to the Closing Date, those warranty claims made in accordance with the written warranties given by Sellers to the purchasers of such products; except that in the event that any such warranty claim is expected to exceed $50,000, the replacement of the product or refund must be approved in advance by Ferro. Buyers will make available for inspection by Sellers upon reasonable notice all records relating to the need for such work and the cost of performing such work. Buyers will promptly notify Sellers in writing of any warranty claim which Buyers expect, in good faith, to cost more than $50,000. If Sellers do not respond in writing within ten days after receipt of Buyers notice or Sellers deny liability for such claim, Buyers shall have no obligation to honor such warranty claim; provided, however, Buyers may elect to honor or deny such claim without prejudicing any of their rights or obligations under this Section 9.13 to reimbursement of any validly honored warranty claim.

Section 9.14��Removal of Excluded Assets. As soon as practical following the Closing Date, Sellers shall, at their sole cost and expense, remove all the Excluded Assets, if any, from the Facilities, and Buyers will provide Sellers with reasonable access during normal operating hours to all of the applicable Facilities for the purpose of such removal.

Section 9.15��No Solicitation of Offers. From the date of this Agreement until the termination of this Agreement pursuant to Article XII, neither Seller nor their Affiliates will, directly or indirectly, through any representative or otherwise, solicit, entertain any offers from, or negotiate or enter into an agreement with any Person other than Buyers and their respective Affiliates with respect to the sale, transfer or other conveyance of a material portion of the Sold Assets (a Sale). For the avoidance of doubt, any transaction to acquire voting control of Ferro or substantially all of the assets of Ferro (including by merger) will not constitute a Sale; provided that no such transaction shall affect the validity of this Agreement. If either Seller receives any offer, proposal or inquiry regarding a Sale, such Seller will promptly provide notice of such offer, proposal or inquiry to ASI.

Section 9.16��Environmental Insurance.

(a)��At the Closing, Ferro will assign the Environmental Insurance Policy to ASI subject to the consent of the insurer thereunder, with ASI as the named insured and Ferro as an additional insured. Buyers covenant and agree that, with respect to any Liability subject to indemnification by Sellers pursuant to Article XI, Buyer shall first use commercially reasonable efforts to obtain recovery under the Environmental Insurance Policy, to the extent of coverage. During the period that Buyers are pursuing recovery under the Environmental Insurance Policy, Sellers will be entitled, at their own cost and expense, to participate in, but not control, such pursuit of recovery. If, in Sellers view, the carrier of the Environmental Insurance Policy wrongly fails to defend or indemnify Buyers under the Environmental Insurance Policy to the detriment of Sellers, Buyers will (i) take all commercially reasonable steps necessary to allow Sellers to seek recovery from such insurer on behalf of, in the right of or in the name of Buyers, or to the extent permitted by Law, to transfer to Sellers their rights to such recovery or indemnification, and (ii) cooperate and cause their respective Affiliates to cooperate in the pursuit of recovery from such insurer and will furnish, or cause to be furnished, to Sellers such documents records and information as may be reasonably requested in connection with such efforts.

(b)��In addition to their obligations pursuant to Section 11.05, Buyers covenant and agree to (a) use commercially reasonable efforts to refrain from engaging in any act that invalidates coverage under the Environmental Insurance Policy, (b) provide Sellers with prior written notice of any contemplated act that would be reasonably likely to invalidate coverage under the Environmental Insurance Policy, (c) prior to undertaking any act that would be reasonably likely to invalidate coverage under the Environmental Insurance Policy, provide Sellers with a reasonable opportunity to discuss alternatives to such act with Buyers, or (d) prior to taking any action under Section 11.05 that Buyers believe is required by Environmental Law or in response to any third-party Proceeding, provide Sellers with reasonable opportunity to discuss and approve in writing Buyers determination (which approval shall not be unreasonably withheld or delayed), including its bases therefor; provided, however, that Buyers will not be responsible for any loss of coverage or determination under this Section 9.16 or under Section 11.05 resulting from a reasonable, good faith belief that a proposed action would not impair coverage or is required by Environmental Law or in response to any third-party Proceeding, as applicable, which belief could, but need not, be based on an opinion of counsel.

ARTICLE X��

CLOSING CONDITIONS

Section 10.01��Conditions to Obligations of All Parties. Each Partys obligation to consummate the transactions contemplated by this Agreement is subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(c)��All applicable waiting periods under Foreign Competition/Investment Laws relating to the transactions contemplated by this Agreement must have expired or been terminated.

(d)��No Governmental Authority will have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following their completion. No Proceeding shall be pending which, if sustained, would enjoin or prevent the consummation of the transactions contemplated by this Agreement or materially affect Buyers right to carry on the Specialty Plastics Business as currently conducted.

Section 10.02��Conditions to the Obligation of each Buyers. Each Buyers obligation to consummate the transactions contemplated by this Agreement is subject to the fulfillment or such Buyers waiver, at or prior to the Closing, of each of the following conditions:

(c)��The representations and warranties of Ferro contained in Article V must be true and correct in all material respects (provided that any such representation or warranty that is subject to a materiality or material adverse effect qualification will not be so qualified for purposes of determining any breach thereof on the part of Ferro under this Section 10.02(a)) as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which must be true and correct as of that specified date).

(d)��Each Seller must have duly performed and complied in all material respects with all agreements and covenants required by this Agreement and each of the other Ancillary Agreements to be performed or complied with by it prior to or on the Closing Date.

(e)��Each Seller must have delivered to Buyers duly executed counterparts to the Ancillary Agreements to which it is a party.

(f)��Since the date of this Agreement, no Material Adverse Effect shall have occurred and be continuing.

(g)��Sellers must have obtained the approvals, consents and waivers listed on Schedule 4.02(o).

Section 10.03��Conditions to the Obligation of each Seller. Each Sellers obligation to consummate the transactions contemplated by this Agreement is subject to the fulfillment or such Sellers waiver, at or prior to the Closing, of each of the following conditions:

(e)��The representations and warranties of Buyers contained in Article VI must be true and correct as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which must be true and correct as of that specified date), except where the failure of such representations and warranties to be true and correct would not have a material adverse effect on Buyers ability to consummate the transactions contemplated by this Agreement.

(f)��Buyers must have duly performed and complied in all material respects with all agreements and covenants required by this Agreement and each of the other Ancillary Agreements to be performed or complied with by it prior to or on the Closing Date.

(g)��Buyers must have delivered to Sellers the Purchase Price and duly executed counterparts to the Ancillary Agreements to which it each a party.

ARTICLE XI��

SURVIVAL AND INDEMNIFICATION

Section 11.01��Indemnification by Sellers. From and after the Closing, Sellers, jointly and severally, agree to indemnify and hold the Buyer Indemnified Persons harmless from and against any and all Losses that any Buyer Indemnified Person actually suffers or incurs arising out of or resulting from:

(h)��any breach, inaccuracy or misrepresentation of any representation or warranty made by Ferro in Article V;

(i)��either Sellers failure to perform any of its covenants or agreements contained in this Agreement; and

(j)��any Excluded Liabilities.

Section 11.02��Indemnification Limitations. Notwithstanding anything to the contrary contained in this Article XI, none of the Buyer Indemnified Persons will be entitled to recover from Ferro pursuant to Section 11.01(a) or, with regard to Facility Environmental Liabilities only, pursuant to Section 11.01(b) or (c): (a) unless the total of all Losses which are indemnifiable pursuant to Section 11.01(a) (or, with regard to Facility Environmental Liabilities only, pursuant to Section 11.01(b) or (c)) exceeds $875,000 (the Basket), in which event the Buyer Indemnified Persons will be entitled to indemnification only for such Losses (including any deductible incurred under the Environmental Insurance Policy) in excess of the Basket, and (b) in the aggregate, more than $9,100,000 (the Cap), provided that the Cap will be reduced by the amount of any recovery by Buyers under the Environmental Insurance Policy in connection with New Conditions (as such term is defined in the Environmental Insurance Policy) not caused by Ferro or its Affiliates occurring after the Closing. Notwithstanding the foregoing, the Basket and Cap will not apply with respect to the representations and warranties set forth in Section 5.01 (Organization), Section 5.02 (Authorization; Enforceability), Section 5.11(a) and (c) (Title and Sufficiency), and only the first two sentences of Section 5.12 (Real Property). For the avoidance of doubt, in no event will any adjustment made pursuant to Section 3.02 apply toward or be counted against the Basket or Cap.

Section 11.03��Indemnification by Buyers. From and after the Closing, Buyers, jointly and severally, agree to indemnify and hold the Seller Indemnified Persons harmless from and against any and all Losses that any Seller Indemnified Person actually suffers or incurs arising out of or resulting from:

(a)��any breach, inaccuracy or misrepresentation of any representation or warranty of Buyers contained in Article VI;

(b)��either Buyers failure to perform any of its covenants or agreements contained in this Agreement;

(c)��any Assumed Liabilities; and

(d)��except for matters subject to indemnification by Sellers, each Buyers possession, ownership, use, operation and management of the Sold Assets after the Closing.

Section 11.04��Indemnification as Exclusive Remedy. The indemnification provided in this Article XI, subject to the limitations set forth herein, will be the sole and exclusive post-Closing remedy available to the Seller Indemnified Persons and the Buyer Indemnified Persons for money damages in connection with any Losses arising out of or resulting from this Agreement, the transactions contemplated hereby, or either Buyers ownership or operation of the Sold Assets, whether based in contract or tort; except that the provisions of this Section 11.04 will not prevent or limit a cause of action at Law or in equity (a) based upon any fraudulent or intentional misrepresentation of any representation or warranty of Ferro set forth in Article V or (b) under Section 13.14 to obtain an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof.

Section 11.05��Environmental Indemnification Exclusive Remedy and Limitations.

(c)��Except for Buyers right to seek indemnification for any Losses for which Sellers are obligated to indemnify Buyer Indemnified Persons pursuant to Section 11.01 or pursuant to the Spain Lease, each Buyer Indemnified Person waives any right, whether arising at law or in equity, to seek contribution, cost recovery, damages, or any other recourse or remedy from any Seller and any of their respective Affiliates, and releases Sellers and their respective Affiliates from any claim, demand or Liability, in each case with respect any Losses arising under or relating to any Environmental Laws (including any matter arising under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. � 9601 et seq. and any other Environmental Laws); provided, however, nothing in this Section 11.05(a) shall prevent Buyers from asserting a Sellers ownership, operations, actions or failure to act as a defense in any Proceeding. Buyers understand and agree that each Buyer Indemnified Persons right to indemnification pursuant to Section 11.3 of the Spain Lease will constitute its sole and exclusive remedy against Sellers and their respective Affiliates with respect to Losses arising under or relating to any Environmental Laws relating to the Facility in Spain and the surrounding property and facilities, and each Buyer Indemnified Person waives any rights and claims under Section 11.01 of this Agreement for such matters.

(d)�� None of the Buyer Indemnified Persons will conduct or allow other Persons (besides Ferro) to conduct any sampling or testing of the Environment with respect to the Sold Real Property or Leased Real Property after the Closing unless such sampling or testing is required by Environmental Laws or required to be conducted in response to any third party Proceeding or would not constitute a Voluntary Site Investigation as set forth in Endorsement No. 9 to the Environmental Insurance Policy, and Ferro will have no obligation to indemnify the Buyer Indemnified Persons with respect to the portion of Losses otherwise subject to indemnification under Section 11.01 to the extent arising from any Releases identified through any sampling or testing of the Environment after the Closing Date, unless such sampling or testing would not constitute a Voluntary Site Investigation as set forth in Endorsement No. 9 to the Environmental Insurance Policy or is required by Environmental Law or required to be conducted in response to any third-party Proceeding.

(e)��Except in a Proceeding seeking indemnification under Section 11.01, none of the Buyer Indemnified Persons will report or disclose any Releases at or from the Facilities to any Governmental Authority or third party or solicit or importune any Governmental Authority to require any Response Action, unless required under Environmental Laws or other Applicable Law or required to do so under the Environmental Insurance Policy.

(f)��Ferros obligation to indemnify the Buyer Indemnified Persons with respect to any Response Action otherwise subject to indemnification under Section 11.01 will be limited to the lowest cost Response Action required by Environmental Law assuming continued utilization of the Facilities for industrial uses as occurring and situated/configured at the time of Closing, and taking into account long-term operating and maintenance costs. Buyers will implement and, if requested by Ferro, accept, execute and record mutually agreeable (subject to the parameters set forth in this Section 11.05(d)) Land Use Covenants and Restrictions that would reduce Losses in connection with Ferros obligations to indemnify the Buyer Indemnified Persons under Section 11.01 with respect to any Response Actions, provided that such Land Use Covenants and Restrictions do not materially adversely affect the value of a Facility or materially interfere with the continued utilization of the Facilities for industrial uses as occurring and situated/configured as of the Closing.

(g)��Ferro will have no obligation to indemnify any Buyer Indemnified Persons under Section 11.01 with respect to the portion of Losses to the extent arising from (i) any Releases resulting from the introduction or addition of Hazardous Materials into the Environment after the Closing or (ii) any costs of removal, abatement or disposal of Hazardous Materials (including asbestos) within building materials or building structures in connection with any post-Closing demolition, maintenance or renovation at the Sold Real Property or Leased Real Property unless such removal, abatement or disposal is required by Environmental Law as of the Closing for the condition of such Hazardous Materials within building materials or building structures as operated and maintained as of Closing. For the avoidance of doubt, this Section 11.05(e) shall not affect any rights of the parties to pursue claims against the insurer under the Environmental Insurance Policy.

(h)��The Buyer Indemnified Persons will promptly notify Ferro in writing upon becoming aware of the need to conduct any Response Action that would be subject to indemnification under Section 11.01, and Ferro will have the right, in its sole discretion, to the extent Ferro acknowledges it will pay the costs of such Response Action, to control and conduct any such Response Action and any related communications with any Governmental Authorities or third parties; provided that Ferro will take commercially reasonable steps to avoid unreasonably interfering with Buyers operations at the relevant Facility; and provided further that Ferro will utilize environmental contractors reasonably acceptable to Buyers and provide Buyers with a reasonable opportunity to review and comment on any proposed Response Action prior to implementation and final drafts of documents prepared for submission to any Governmental authority or other third party prior to submittal (and will utilize good faith reasonable efforts to accommodate reasonable comments provided by Buyers).

(i)��The Buyer Indemnified Persons will provide all reasonable access during normal operating hours to all of the applicable Facilities, books and records as Ferro or its agents may reasonably request to complete such Response Action consistent with applicable Environmental Laws, including use of any wastewater treatment systems and utilities located at such Facility (subject to reimbursement by Ferro for the reasonable pro rata costs of Ferro's usage of such systems and utilities, and provided that such use does not unreasonably interfere with Buyers operations). Ferro will restore any structures or improvements damaged by such access at the Facilities to substantially the same condition or equivalent functionality as existed prior to the performance of the Response Action.

(j)��Section 11.05 (other than Section 11.05(a)) shall expire at the end of the Facility Environmental Period or the end of the coverage period of the Environmental Insurance Policy, whichever is later.

Section 11.06��Indemnification Calculations. The amount of any Losses for which indemnification is provided under this Article XI will be computed net of any insurance proceeds actually paid to the Indemnified Party in connection with such Losses. If an Indemnified Party receives insurance proceeds in connection with Losses for which it has received indemnification, such Party will refund to the Indemnifying Party the amount of such insurance proceeds when received, up to the amount of indemnification received.

Section 11.07��Survival. The representations and warranties contained in this Agreement and will survive the Closing Date until the 18-month anniversary of the Closing Date; except that (a) the representations and warranties set forth in Section 5.13 (Environmental Matters) and Section 5.15 (Employee Benefit Plans) will survive until the 5-year anniversary of the Closing Date, and (b) the representations and warranties set forth in Section 5.01 (Organization) and Section 5.02 (Authorization; Enforceability), Section 5.08 (Tax Matters), Section 5.11(a) (Title and Sufficiency), and only the first two sentences of Section 5.12 (Real Property) will expire as of the date that is 30 days following expiry of the applicable statute of limitations therefor. All other covenants and agreements contained in this Agreement to be performed following the Closing Date will survive the Closing Date in accordance with their terms, except that Buyers will have no right to, and hereby covenant and agree not to, make any claim under Section 11.01(b) or (c) relating to any Facility Environmental Liabilities following the expiration of the five-year period following the Closing Date (the Facility Environmental Period); provided, however, that, for the avoidance of doubt, this sentence shall not affect any rights of the Parties to pursue claims against the insurer under the Environmental Insurance Policy. The Facility Environmental Period will serve as a contractual statute of limitations for all indemnification claims under Section 11.01(b) or (c) relating to any Facility Environmental Liabilities. Any claim for indemnification not made by a Buyer Indemnified Person on or prior to the date of termination of the applicable survival period, including without limitation the Facility Environmental Period, will be irrevocably and unconditionally released and waived, whether or not a longer period would be permitted by applicable Law.

Section 11.08��Notice and Opportunity to Defend. If there occurs an event which a Party asserts is an indemnifiable event pursuant to Section 11.01 or Section 11.03, the Party or Parties seeking indemnification (the Indemnified Party) will promptly notify the other Party or Parties obligated to provide indemnification (the Indemnifying Party), which notice will specify the nature and basis of such claim and the amount thereof, to the extent known. If such event involves a claim or demand made by any Person (other than a Party or Affiliate of a Party) against the Indemnified Party (a Third Party Claim), the Indemnified Party will give such Indemnifying Party prompt written notice of the Third Party Claim (the Claim Notice), which Claim Notice will specify the nature and basis of the Third Party Claim and the amount thereof, to the extent known, and will be accompanied by copies of all relevant documentation with respect to the Third Party Claim, including any summons, complaint or other pleadings that may have been served, any written demand or any other relevant document or instrument; except that the failure to provide such prompt notice will not relieve the Indemnifying Party of its obligations hereunder unless such failure prejudices the Indemnifying Party hereunder. In the case of a Third Party Claim, the Indemnifying Party will be entitled to assume the defense thereof, with counsel selected by the Indemnifying Party and, after notice from the Indemnifying Party to the Indemnified Party of such election so to assume the defense thereof, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof (unless an actual or potential conflict of interest will exist between the Indemnifying Party and the Indemnified Party, as reasonably determined by the Parties, in which case reasonable fees and expenses of separate counsel to the Indemnified Party will be included in the indemnified amount). The Indemnifying Party and the Indemnified Party agree to cooperate reasonably with each other and their respective counsel in connection with the defense, negotiation or settlement of any Third Party Claim. Notwithstanding anything else set forth in this Section 11.08 to the contrary, the Indemnified Party will at all times have the right to participate at its own expense in the defense of any Third Party Claim. If the Indemnifying Party assumes the defense of a Third Party Claim, no settlement or compromise thereof may be effected (i) by the Indemnifying Party without the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld, conditioned or delayed) unless the settlement involves money damages only and all such relief is paid or satisfied in full by the Indemnifying Party or (ii) by the Indemnified Party without the prior written consent of the Indemnifying Party. In no event will an Indemnifying Party be liable for any

settlement effected without its prior written consent. Notwithstanding anything to contrary in this Article XI, for any taxable period or portion of a taxable period that ends after the Closing Date principally related to the Specialty Plastics Business; provided, Sellers shall be entitled to participate therein.

Section 11.09��Additional Limitations.

(g)��Except for Losses resulting from a Third Party Claim (which shall not be subject to this sentence), no Person will be entitled to indemnification under this Article XI for punitive damages, consequential, incidental, exemplary or special damages. Notwithstanding anything in this Agreement to the contrary, no Person will be entitled to be compensated more than once for the same Loss.

(h)��No Person will be entitled to recover any indemnification payment or other amounts due from any other Party hereunder by retaining and setting off the amounts (whether or not such amounts are liquidated or reduced to judgment) against any amounts due or to become due from such Party hereunder or under any document delivered pursuant hereto or in connection herewith, including any Ancillary Agreement.

Section 11.10��Subrogation. Nothing in this Agreement will limit or be construed to limit the right of each Seller to assert any claims, demands or rights by subrogation against any Person (other than a Buyer Indemnified Person) for any amounts paid or reimbursed in respect of Losses successfully asserted by a Buyer Indemnified Person pursuant to Section 11.01.

ARTICLE XII��

TERMINATION

Section 12.01��Termination. This Agreement may be terminated at any time prior to the Closing:

(a)��By the mutual written consent of ASI and Ferro;

(b)��By ASI, by written notice to Ferro, if:

(i)��Buyers are not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by a Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article X and such breach, inaccuracy or failure cannot be cured by Sellers by September 30, 2014 (the Outside Date); or

(ii)��any of the conditions set forth in Section 10.01 or Section 10.02 has not been fulfilled by the Outside Date, unless such failure is due to a Buyers failure to perform or comply with any of the covenants or agreements to be performed or complied with by it prior to the Closing pursuant to this Agreement;

(c)��by Ferro, by written notice to ASI, if:

(i)��Sellers are not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by a Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article X and such breach, inaccuracy or failure cannot be cured by Buyers by the Outside Date; or

(ii)��any of the conditions set forth in Section 10.01 or Section 10.03 has not been fulfilled by the Outside Date, unless such failure is due to a Sellers failure to perform or comply

with any of the covenants or agreements to be performed or complied with by it prior to the Closing pursuant to this Agreement; or

(d)��by either ASI or Ferro, by written notice to the other, if:

(i)��there is any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited; or

(ii)��any Governmental Authority issues a final, non-appealable Governmental Order restraining or enjoining the transactions contemplated by this Agreement.

Section 12.02��Effect of Termination. If this Agreement is terminated pursuant to this Article XII, this Agreement will immediately become void and there will be no liability on the part of any Party hereto except:

(a)��as set forth in this Article XII, Section 9.11, Section 9.12 and Article XIII; and

(b)��that nothing in this Agreement will relieve any Party from liability for any material and willful breach of any provision of this Agreement.

ARTICLE XIII��

MISCELLANEOUS

Section 13.01��Fees and Expenses. Except as otherwise provided in this Agreement, each Party will be liable for and will bear its own expenses and the expenses of its Affiliates in connection with the preparation and negotiation of this Agreement and the Ancillary Agreements and the performance and consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, whether or not the Closing will have occurred.

Section 13.02��Governing Law. This Agreement will be construed under and governed by the State of Ohio applicable to contracts made and performed in such State, without giving effect to the conflict of laws principles of such State that would require or permit application of the Laws of another jurisdiction. The Parties expressly elect not to be bound in any way by the United Nations Convention on Contracts for the International Sale of Goods.

Section 13.03��Projections. In connection with Buyers investigation of the Sold Assets, Buyers may have received, or may receive, from or on behalf of Sellers and/or their representatives certain projections and other forecasts for the Sold Assets, and certain business plan and budget information. Each Buyer acknowledges that (a) there are uncertainties inherent in attempting to make such projections, forecasts, plans and budgets, (b)�such Buyer is familiar with such uncertainties, (c) such Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to it and (d) such Buyer will not assert any claim against Sellers, any of their respective Affiliates, or any of their respective directors, officers, employees or representatives, or hold any such Persons liable, with respect thereto. Accordingly, each Buyer acknowledges that neither of the Sellers makes any representation or warranty with respect to such estimates, projections, forecasts, plans or budgets.

Section 13.04��Amendment. This Agreement may not be amended, modified or supplemented except upon the execution and delivery of a written agreement executed by the Parties.

Section 13.05��No Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned or delegated by any Party without the prior written consent of ASI, in the case of any assignment by a Seller, and Ferro, in the case of any assignment by a Buyer. Subject to the

foregoing sentence, this Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns. Any purported assignment in contravention of this Section 13.05 will be void and of no force or effect. No delegation of any obligations hereunder will relieve the Parties of any such obligations.

Section 13.06��Waiver. Any of the terms or conditions of this Agreement which may be lawfully waived may be waived in writing at any time by each Party which is entitled to the benefits thereof. Any waiver of any of the provisions of this Agreement by any Party will be binding only if set forth in an instrument in writing signed on behalf of such Party. No failure to enforce any provision of this Agreement will be deemed to or will constitute a waiver of such provision and no waiver of any of the provisions of this Agreement will be deemed to or will constitute a waiver of any other provision hereof (whether or not similar) nor will such waiver constitute a continuing waiver.

Section 13.07��Notices. Any notice, demand or communication required or permitted to be given by any provision of this Agreement must be prepared in the English language and will be deemed to have been sufficiently given or served for all purposes if delivered by (a) email or (b) a nationally recognized overnight courier service, in each case to the recipient at the address below indicated:

If to Buyers:��A. Schulman, Inc.

3637 Ridgewood Road

Fairlawn, Ohio 44333

Attention: General Counsel

Email: [email protected]

With copy to: ��Squire Patton Boggs (US) LLP

4900 Key Tower

127 Public Square

Cleveland, Ohio 44114

Email: [email protected]��

If to Sellers:��Ferro Corporation

6060 Parkland Boulevard

Mayfield Heights, Ohio 44124

Attention: General Counsel

Email: [email protected]

With copy to: ��Jones Day

North Point

901 Lakeside Avenue

Cleveland, Ohio 44114-1190

Attn: Patrick J. Leddy, Esq.

Email: [email protected]

or to such other address as any Party may designate in writing. Any notice under this Agreement will be deemed to have been duly given (x) on the date such notice is delivered by email or (y) the next succeeding Business Day after the date such notice is delivered to the overnight courier service if sent by overnight courier; provided that in each case notices received after 4:00 p.m. (local time of the recipient) will be deemed to have been duly given on the next Business Day.

Section 13.08��Complete Agreement. This Agreement (including the Schedules hereto), the Confidentiality Agreement and the Ancillary Agreements contain the entire understanding of the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof.

Section 13.09��Counterparts. This Agreement may be executed in one or more counterparts, and counterparts may be exchanged by electronic submission, all of which will be considered one and the same agreement and each of which will be deemed an original.

Section 13.10��Severability. Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 13.11��Third Parties. Nothing herein expressed or implied is intended or will be construed to confer upon or give to any Person, other than the Parties and their permitted successors or assigns, any rights or remedies under or by reason of this Agreement.

Section 13.12��Non-Recourse. No past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or representative of either Seller, either Buyer or any of their respective Affiliates will have any Liability for any obligations or Liabilities of Sellers or Buyers (as the case may be) under this Agreement or the Ancillary Agreements or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby and thereby.

Section 13.13��Dispute Resolution.

(i)��Informal Dispute Resolution. The Parties will seek to resolve any disagreement, dispute, controversy or claim arising out of or in relation to or in connection with the construction, interpretation or validity of this Agreement or the other Ancillary Agreements or the alleged breach hereof or thereof or the transactions contemplated hereby or thereby amicably and in good faith through discussions between duly designated officers of the Parties. If the matter is not resolved through discussion of such individuals within 30 calendar days, each Party agrees to consider in good faith any reasonable request by the other Party to engage in mediation or any other means of alternative dispute resolution short of arbitration.

(j)��Exclusive Jurisdiction. Any legal suit, action or other Proceeding arising out of or based upon this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby may be instituted only in the federal courts of the United States of America or the courts of the State of Ohio, in each case located in the City of Cleveland and County of Cuyahoga, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or other Proceeding. Service of process, summons, notice or other document by mail to Partys address set forth herein will be effective service of process for any suit, action or other Proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any other Proceeding in such courts and irrevocably agree not to plead or claim in any such court that any such suit, action or other Proceeding brought in any such court has been brought in an inconvenient forum.

(k)��WAIVER OF TRIAL BY JURY. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTION CONTEMPLATED HEREBY OR THEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (II) SUCH PARTY HAS

CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH IN THIS SECTION 13.13(C).

Section 13.14��Specific Performance. Each Party acknowledges and agrees that a breach of this Agreement would cause irreparable damage to the other Parties and that such other Parties will not have an adequate remedy at Law. Therefore, the obligations of the Parties under this Agreement, including Buyers obligation to purchase the Sold Assets and assume the Assumed Liabilities, will be enforceable by a decree of specific performance issued by a court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith, without any requirement to post a bond or other security. Such remedies will, however, be cumulative, not exclusive, and will be in addition to any other remedies which any Party may have under this Agreement or otherwise.

Section 13.15��Legal and Tax Advice. Each Buyer has had an opportunity to discuss this Agreement and the other Ancillary Agreements with counsel of its choosing, and to have the legal consequences of this Agreement and the other Ancillary Agreements and the transactions contemplated hereby and thereby explained by such counsel. Each Buyer has also had an opportunity to seek and obtain the advice of tax professionals of its choosing with respect to the tax consequences of the transactions contemplated by this Agreement and the other Ancillary Agreements. Buyers are not relying on Sellers or any of their representatives or Affiliates for purposes of interpreting the provisions or assessing the consequences of the transactions contemplated by this Agreement or any of the other Ancillary Agreements or assessing the consequences hereof or thereof.

[Signatures on the following page]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first written above.

SELLERS:

Ferro Corporation

By: /s/ Peter T. Thomas ��

Name: Peter T. Thomas��

Title: Chairman, President and Chief Executive Officer

Ferro Spain, S.A.

By: /s/ Luca Pecorara��

Name: Luca Pecorara��

Title: Country Manager��

��

BUYERS:

��

A. Schulman Inc.

By: /s/ Joseph M. Gingo��

Name: ��Joseph M. Gingo ��

Title: Chairman, President and CEO��

A. Schulman Castellon, S.L.U.

By: /s/ Franck Pietrantoni��

Name: ��Franck Pietrantoni��

Title: Sole Director��

Exhibit 10.10

Director Compensation

��

Each director of A. Schulman, Inc. (the Corporation) who is not an employee of the Corporation shall receive an annual retainer fee of $160,000 for attending up to 24 meetings per fiscal year. For each meeting attended in excess of 24 meetings in a calendar year, each director shall receive an additional per meeting fee of $1,500. Directors with significant additional duties shall receive the following additional retainers: (i) $20,000 for the lead independent director; (ii) $17,500 for the Audit Committee and Compensation Committee chairperson; and (iii) $10,000 for all other committee chairpersons. Non-employee directors are also eligible for grants under the Corporations equity award plans.

Exhibit 21

Subsidiaries of A. Schulman, Inc.



�	�	�
�	Name	Jurisdiction of Incorporation/Organization
�	A. Schulman Plastics, BVBA (10)	Belgium
�	A. Schulman, S.A.S. (3)	France
�	A. Schulman Plastics, S.A.S. (3)	France
�	A. Schulman GmbH (9)	Germany
�	A. Schulman Inc. Limited (3)	United Kingdom
�	A. Schulman Canada, Ltd.	Ontario, Canada
�	A. Schulman A.G. (2)	Switzerland
�	ASI Investments Holding Co.	Delaware
�	ASI Akron Land Co.	Delaware
�	A. Schulman Custom Compounding NE, Inc.	Massachusetts
�	Prime Colorants, Inc.	Tennessee
�	A. Schulman International, Inc.	Delaware
�	A. Schulman de Mexico, S.A. de C.V. (4)	Mexico
�	ASI Employment, S.A. de C.V. (4)	Mexico
�	AS Mex Hold, S.A. de C.V. (5)	Mexico
�	Innovacion Y Desarrollo en Material Avanzados A.C. (31)	Mexico
�	A. Schulman Polska Sp. z O.O. (2)	Poland
�	A. Schulman Plastics S.r.l. (2)	Italy
�	A. Schulman International Services BVBA (2)	Belgium
�	A. Schulman Hungary Kft. (1)	Hungary
�	PT A. Schulman Plastics, Indonesia (7)	Indonesia
�	A. Schulman Plastics S.L. (10)	Spain
�	A. Schulman Castellon, S.L. (10)	Spain
�	A. Schulman Europe GmbH�& Co. KG (14)	Germany
�	A. Schulman Plastics (Dongguan) Ltd. (1)	China
�	A. Schulman Italia S.p.A. (2)	Italy
�	A. Schulman Asia Limited	Hong Kong
�	AS Worldwide, LLC (5)	Delaware
�	AS Global Holdings, Inc. (17)	Delaware
�	AS Worldwide LLC & Cie, S.C.S. (11)	Luxembourg
�	A. Schulman S.� r.l. (8)	Luxembourg
�	A. Schulman Holdings S.� r.l. (6)	Luxembourg
�	A. Schulman Nordic AB (2)	Sweden
�	A. Schulman Belgium (2)	Belgium
�	A. Schulman Plastik Sanayi Ve Tic A.S. (2)	Turkey
�	A. Schulman Holding Company France (22)	France
�	A. Schulman Holdings (France) S.A.S. (32)	France
�	A. Schulman Europe Verwaltungs GmbH (3)	Germany
�	A. Schulman Plastics s.r.o. (2)	Slovakia
�	Surplast S.A. (30)	Argentina
�	Bayshore Industrial, L.L.C. (16)	Texas



�	Courtenay Polymers Pty Ltd. (26)	Australia
�	ICO (UK) Limited (22)	United Kingdom
�	Elian SAS (3)	France
�	A. Schulman Europe International B.V. (2)	The Netherlands
�	ICO Global Services, Inc. (15)	Delaware
�	A. Schulman Australia Pty. Ltd (21)	Australia
�	ICO Holdings New Zealand Limited (21)	New Zealand
�	ICO Holland B.V. (22)	The Netherlands
�	ICO P&O, Inc. (12)	Delaware
�	A. Schulman Plasticos do Brasil Ltda. (29)	Brazil
�	Jackdaw Polymeres France S.A.S. (32)	France
�	A. Schulman Thermoplastic Compounds (UK) Limited (23)	United Kingdom
�	A. Schulman Thermoplastic Compounds Sdn. Bhd. (13)	Malaysia
�	ICO Polymers France S.A.S. (3)	France
�	ICO Polymers Italy S.r.l. (22)	Italy
�	ICO Polymers North America, Inc. (19)	New Jersey
�	ICO-Schulman, LLC	Texas
�	ICO Technology, Inc. (17)	Delaware
�	J.R. Courtenay (N.Z.) Limited (24)	New Zealand
�	A. Schulman Plastics (Malaysia) SDN. BHD. (25)	Malaysia
�	A. Schulman, LLC (22)	Russia
�	Wedco Technology, Inc. (17)	New Jersey
�	A. Schulman Plastics India Private Limited (2)	India
�	The Innovation Company, S.A. de C.V. (16)	Mexico
�	Worldwide LP LLC (16)	Delaware
�	ICO Polymers, Inc. (16)	Delaware
�	ICO Europe C.V. (20)	The Netherlands
�	ICO Petrochemical Cayman Islands (21)	Cayman Islands
�	ICO Holdings LLC (18)	Texas
�	ICO Polymers Cayman Islands (28)	Cayman Islands
�	ICO Australia RE Holdings Pty. Ltd. (27)	Australia
�	SCG ICO Polymers Company Limited (33)	Thailand
�	Natpet Schulman Specialty Plastic Compounds (34)	Saudi Arabia
�	A. Schulman Plastics Pty. Ltd. (5)	Australia
�	A. Schulman Ireland Ltd (10)	Ireland
�	�	�
(1)	Owned by A. Schulman Europe�GmbH & Co. KG	�
(2)	Owned by A. Schulman Plastics, BVBA	�
(3)	Owned by A. Schulman Holdings (France) SAS	�
(4)	Owned by AS Mex Hold, S.A. de C.V.	�
(5)	Owned by A. Schulman International, Inc.	�
(6)	Owned by A. Schulman S.� r.l	�
(7)	65% owned (in joint venture) by A. Schulman International, Inc.	�
(8)	Owned by AS Worldwide LLC & Cie, S.C.S.	�
(9)	Owned 90% by A. Schulman Europe�GmbH & Co. KG and 10% by A. Schulman, Inc.	�
(10)	Owned by A. Schulman Holdings S.�r.l	�



(11)	99.99% owned by A. Schulman International, Inc. and 0.008% owned by AS Worldwide, LLC	�
(12)	Owned by ICO-Schulman, LLC.	�
(13)	Owned by A. Schulman Asia Limited	�
(14)	Owned by ICO Holland B.V.	�
(15)	Owned by ICO P&O, Inc.	�
(16)	Owned by ICO Global Services, Inc.	�
(17)	Owned by ICO Polymers, Inc.	�
(18)	Owned by AS Global Holdings, Inc.	�
(19)	Owned by Wedco Technology, Inc.	�
(20)	Owned 99% by AS Global Holdings, Inc. and 1% by ICO Holdings, LLC	�
(21)	Owned by ICO Technology, Inc.	�
(22)	Owned by A. Schulman Europe International B.V.	�
(23)	Owned by ICO (UK) Limited	�
(24)	Owned by ICO Holdings New Zealand Limited	�
(25)	Owned by J.R. Courtney (N.Z.) Limited	�
(26)	Owned by A. Schulman Australia Pty. Ltd.	�
(27)	Owned by Courtenay Polymers Pty. Limited	�
(28)	Owned by ICO Petrochemical Cayman Islands	�
(29)	Owned 99.99% by ICO Petrochemical Cayman Islands and 0.01% by ICO Polymers Cayman Islands	�
(30)	63% owned (in venture) by A Schulman International, Inc.	�
(31)	Owned by A. Schulman de Mexico, S.A. de C.V.	�
(32)	Owned by A. Schulman Holding Company France	�
(33)	13% owned (in partnership) by A. Schulman Plastics (Malaysia) SDN. BHD.	�
(34)	50% owned (in partnership) by A. Schulman Europe International B.V.	�

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-164366, 333-93093, 333-102718, 333-139236, 333-171649, 333-178159) of A. Schulman, Inc. of our report dated October�22, 2014 relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

October�22, 2014

Exhibit 24

POWER OF ATTORNEY

Each director and/or officer of A. Schulman, Inc. (the Corporation) whose signature appears below hereby appoints JOSEPH M. GINGO, JOSEPH J. LEVANDUSKI and DAVID C. MINC, and each of them, with full power of substitution and resubstitution, as attorneys or attorney to sign for the undersigned and in his or her name, place and stead, and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the Commission), the Corporations Annual Report on Form 10-K for the fiscal year ended August�31, 2014, and likewise to sign and file with the Commission any and all amendments (on Form 10-K/A) and exhibits thereto, and any and all applications and documents to be filed with the Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as each of the undersigned could so if personally present, hereby ratifying and approving the acts of said attorneys and any of them and any such substitute.

�

IN WITNESS WHEREOF, we have hereunto set our hands effective as of the 16th day of October, 2014.



/s/ Joseph M. Gingo	�	/s/ Joseph J. Levanduski
Joseph M. Gingo Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)	�	Joseph J. Levanduski Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
�	�	�
/s/ Eugene R. Allspach	�	/s/ Gregory T. Barmore
Eugene R. Allspach Director	�	Gregory T. Barmore Director
�	�	�
/s/ David G. Birney	�	/s/ Howard R. Curd
David G. Birney Director	�	Howard R. Curd Director
�	�	�
/s/ Michael A. McManus, Jr.	�	/s/ Lee D. Meyer
Michael A. McManus, Jr. Director	�	Lee D. Meyer Director
�	�	�
/s/ James A. Mitarotonda	�	/s/ Ernest J. Novak, Jr.
James A. Mitarotonda Director	�	Ernest J. Novak, Jr. Director
�	�	�
/s/ Dr. Irvin D. Reid	�	/s/ John B. Yasinsky
Dr. Irvin D. Reid Director	�	John B. Yasinsky Director
�	�	�

Exhibit 31

Certifications of Principal Executive and Principal Financial Officers Pursuant to Rule 13a-14(a)/15d-14(a)

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a)/15D-14(a)

I, Joseph M. Gingo, certify that:


1.	I have reviewed this Annual Report on Form 10-K of A. Schulman, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrants 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 Rule 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and


5.	The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants 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 registrants 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 registrants internal control over financial reporting.



Date:	October�22, 2014	�	�
�	�	�	/s/ Joseph M. Gingo
�	�	�	Joseph M. Gingo
�	�	�	Chairman, President and Chief Executive Officer

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a)/15D-14(a)

I, Joseph J. Levanduski, certify that:


1.	I have reviewed this Annual Report on Form 10-K of A. Schulman, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrants 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 Rule 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and


5.	The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants 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 registrants 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 registrants internal control over financial reporting.



Date:	October�22, 2014	�	�
�	�	�	/s/ Joseph J. Levanduski
�	�	�	Joseph J. Levanduski
�	�	�	Vice President, Chief Financial Officer

Exhibit 32

Certifications of Principal Executive and Principal Financial Officers Pursuant to 18 U.S.C. 1350

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 Annual Report of A. Schulman, Inc. (the Company) on Form 10-K for the period ending August�31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned officer of the Company does hereby certify that:�


(a)	The Report fully complies with the requirements of Section�13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Joseph M. Gingo	�
Joseph M. Gingo	�
Chairman, President�and�Chief�Executive�Officer�of�A.�Schulman,�Inc.	�
October�22, 2014	�

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


(a)	The Report fully complies with the requirements of Section�13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Joseph J. Levanduski	�
Joseph J. Levanduski	�
Vice�President,�Chief�Financial�Officer of�A.�Schulman,�Inc.	�
October�22, 2014	�

�

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Form 10-K SCHULMAN A INC For: Aug 31

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