SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No.1
(Mark One) | ||||
x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||
For the quarterly period ended November 30, 2001 or | ||||
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||
For the transition period from ___________ to ____________ | ||||
Commission file number: 0-7459 | ||||
A. Schulman, Inc. | ||||
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(Exact Name of Registrant as Specified in its Charter) | ||||
Delaware | 34-0514850 | |||
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(State or Other Jurisdiction of
Incorporation or Organization) |
(I.R.S. Employer
Identification No.) |
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3550 West Market Street, Akron, Ohio | 44333 | |||
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(Address of Principal Executive Offices) | (Zip Code) | |||
(330) 666-3751 | ||||
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(Registrant's Telephone Number, including Area Code) | ||||
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
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 x No o
Number of common shares outstanding as of December 31, 2001 - 29,215,372
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The Registrant hereby amends its Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2001, to correct certain typographical errors appearing in the version of the Form 10-Q filed on the Securities and Exchange Commission's EDGAR System. The Registrant believes that the typographical errors are not significant. The corrections include the following:
Part I.
Item 1. Financial Statements
A. SCHULMAN, INC.
STATEMENT OF CONSOLIDATED NET INCOME (LOSS) (Notes 1 and 2)
For the three months ended
November 30, |
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2001 |
2000 |
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Unaudited | ||||||
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Net sales | $ | 238,148 | $ | 256,616 | ||
Interest and other income | 548 | 415 | ||||
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238,696 | 257,031 | |||||
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Cost and expenses: | ||||||
Cost of goods sold | 202,459 | 221,074 | ||||
Cost of plant closure (Note 7) | | 4,635 | ||||
Selling, general and administrative expense | 26,318 | 26,980 | ||||
Interest expense | 1,453 | 1,641 | ||||
Foreign currency transaction gain | (514 | ) | (893 | ) | ||
Minority interest | 185 | 343 | ||||
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229,901 | 253,780 | |||||
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Income before taxes | 8,795 | 3,251 | ||||
Provision for income taxes (Note 9) | 3,585 | 3,978 | ||||
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Net income (loss) | 5,210 | (727 | ) | |||
Less: Preferred stock dividends | (13 | ) | (13 | ) | ||
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Net income (loss) applicable to common stock | $ | 5,197 | $ | (740 | ) | |
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Weighted average number of shares outstanding (Note 5): | ||||||
Basic | 29,213 | 29,203 | ||||
Fully diluted | 29,213 | 29,203 | ||||
Basic and diluted earnings (loss) per common share (Note 5): | $ | 0.18 | $ | (0.03 | ) | |
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The accompanying notes are an integral part of the consolidated financial statements.
November 30,
2001 |
August 31,
2001 |
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Unaudited | ||||
Assets | |
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Current assets: | ||||
Cash and cash equivalents (Note 3) | $ | 61,653 | $ | 52,586 |
Accounts receivable, less allowance for doubtful accounts of $6,394 at
November 30, 2001 and $6,458 at August 31, 2001 |
160,279 | 162,131 | ||
Inventories, average cost or market, whichever is lower | 150,666 | 159,808 | ||
Prepaids, including tax effect of temporary differences | 16,103 | 15,023 | ||
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Total current assets | 388,701 | 389,548 | ||
Other assets: | ||||
Cash surrender value of life insurance | 636 | 639 | ||
Deferred charges, etc., including tax effect of timing differences | 11,989 | 11,685 | ||
Goodwill (Note 8) | 6,485 | 6,548 | ||
Intangible assets (Note 8) | 596 | 644 | ||
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19,706 | 19,516 | |||
Property, plant and equipment, at cost: | ||||
Land and improvements | 10,898 | 10,978 | ||
Buildings and leasehold improvements | 86,526 | 83,039 | ||
Machinery and equipment | 231,230 | 222,554 | ||
Furniture and fixtures | 23,897 | 23,828 | ||
Construction in progress | 17,557 | 26,415 | ||
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370,108 | 366,814 | |||
Accumulated depreciation and investment grants of $855 at November 30, 2001
and $885 at August 31, 2001 |
200,534 | 197,207 | ||
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169,574 | 169,607 | |||
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$ | 577,981 | $ | 578,671 | |
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The accompanying notes are an integral part of the consolidated financial statements.
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November 30,
2001 |
August 31,
2001 |
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Liabilities and Stockholders Equity | Unaudited |
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Current liabilities: | ||||||
Notes payable | $ | | $ | 313 | ||
Accounts payable | 56,229 | 55,426 | ||||
U.S. and foreign income taxes payable | 9,635 | 7,097 | ||||
Accrued payrolls, taxes and related benefits | 20,139 | 19,036 | ||||
Other accrued liabilities | 20,590 | 18,388 | ||||
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Total current liabilities | 106,593 | 100,260 | ||||
Long-term debt | 100,193 | 105,415 | ||||
Other long-term liabilities | 39,760 | 39,242 | ||||
Deferred income taxes | 6,009 | 6,115 | ||||
Minority interest | 5,746 | 5,560 | ||||
Stockholders equity (Note 4): | ||||||
Preferred stock, 5% cumulative, $100 par value, authorized, issued and
outstanding 10,567 shares at November 30, 2001 and August 31, 2001 |
1,057 | 1,057 | ||||
Special stock 1,000,000 shares authorized none outstanding | | | ||||
Common stock, $1 par value
Authorized 75,000,000 shares Issued 38,423,967 shares at November 30, 2001 and August 31, 2001 |
38,424 | 38,424 | ||||
Other capital | 48,504 | 48,504 | ||||
Accumulated other comprehensive income | (48,773 | ) | (44,945 | ) | ||
Retained earnings | 447,358 | 446,142 | ||||
Treasury stock, at cost, 9,211,095 shares at November 30, 2001 & August 31,
2001 |
(164,231 | ) | (164,231 | ) | ||
Unearned stock grant compensation | (2,659 | ) | (2,872 | ) | ||
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Common stockholders equity | 318,623 | 321,022 | ||||
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Total stockholders equity | 319,680 | 322,079 | ||||
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$ | 577,981 | $ | 578,671 | |||
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A. SCHULMAN, INC.
For the three months
ended November 30, |
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2001 |
2000 |
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Unaudited | ||||||
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Provided from (used in) operations: | ||||||
Net income (loss) | $ | 5,210 | $ | (727 | ) | |
Items not requiring the current use of cash: | ||||||
Depreciation | 5,568 | 5,516 | ||||
Non-current deferred taxes | 2,673 | 93 | ||||
Pension and other deferred compensation | 722 | 2,304 | ||||
Postretirement benefit obligation | 361 | (1,555 | ) | |||
Write-off of assets - plant closure | | 3,230 | ||||
Changes in working capital: | ||||||
Accounts receivable | (1,643 | ) | (17,896 | ) | ||
Inventories | 7,667 | (8,554 | ) | |||
Prepaids | (1,290 | ) | (2,670 | ) | ||
Accounts payable | 3,348 | 23,549 | ||||
Income taxes | 2,703 | 1,913 | ||||
Accrued payrolls and other accrued liabilities | 3,600 | 6,532 | ||||
Changes in other assets and other long-term liabilities | 601 | (3,501 | ) | |||
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Net cash provided from operating activities | 29,520 | 8,234 | ||||
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Provided from (used in) investing activities: | ||||||
Expenditures for property, plant and equipment | (7,286 | ) | (9,416 | ) | ||
Disposals of property, plant and equipment | 457 | 386 | ||||
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Net cash used in investing activities | (6,829 | ) | (9,030 | ) | ||
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Provided from (used in) financing activities: | ||||||
Cash dividends paid | (3,995 | ) | (3,988 | ) | ||
Decrease of notes payable | (308 | ) | (3,347 | ) | ||
Increase of long-term debt | | 8,000 | ||||
Reduction in long-term debt | (5,130 | ) | (125 | ) | ||
Minority interest | 185 | 343 | ||||
Purchase of treasury stock | | (1,841 | ) | |||
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Net cash used in financing activities | (9,248 | ) | (958 | ) | ||
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Effect of exchange rate changes on cash | (4,376 | ) | 2,117 | |||
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Net increase in cash and cash equivalents | 9,067 | 363 | ||||
Cash and cash equivalents at beginning of period | 52,586 | 26,866 | ||||
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Cash and cash equivalents at end of period | $ | 61,653 | $ | 27,229 | ||
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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) | The results of operations for the three months ended November 30, 2001 are not necessarily indicative of the results expected for the year ended August 31, 2002. |
(2) | The interim financial statements furnished reflect all adjustments, which are, in the opinion of management, necessary to a fair presentation of the results of the interim period presented. All such adjustments are of a normal recurring nature. |
(3) | All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. Such investments amounted to $21,668,000 at November 30, 2001 and $20,991,000 at August 31, 2001. |
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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) | A summary of the stockholders' equity section for the three months ended November 30, 2001 and 2000 is as follows: |
(In thousands)
(Unaudited)
Common
Stock |
Other
Capital |
Retained
Earnings |
Accumulated
Other Comprehensive Income |
Unearned
Stock Grant Compensation |
Total
Comprehensive Income |
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Balance-September 1, 2001 | $38,424 | $48,504 | $446,142 | $(44,945 | ) | $(2,872 | ) | |||||||||
Comprehensive income | ||||||||||||||||
Net income | | | 5,210 | | | |||||||||||
Foreign currency translation loss | | | | (3,828 | ) | | ||||||||||
Total Comprehensive income | $ 1,382 | |||||||||||||||
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Dividends paid or accrued: | ||||||||||||||||
Preferred | | | (13 | ) | | | ||||||||||
Common, $.135 per share | | | (3,981 | ) | | | ||||||||||
Amortization of restricted stock | | | | | 213 | |||||||||||
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Balance-November 30, 2001 | $38,424 | $48,504 | $447,358 | $(48,773 | ) | $(2,659 | ) | |||||||||
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Balance-September 1, 2000 | $38,381 | $47,652 | $449,368 | $(48,003 | ) | $(2,603 | ) | |||||||||
Comprehensive income | ||||||||||||||||
Net loss | | | (727 | ) | | | ||||||||||
Foreign currency translation loss | | | | (5,246 | ) | | ||||||||||
Total Comprehensive income | $(5,973 | ) | ||||||||||||||
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Dividends paid or accrued: | ||||||||||||||||
Preferred | | | (13 | ) | | | ||||||||||
Common, $.135 per share | | | (3,975 | ) | | | ||||||||||
Amortization of restricted stock | | | | | 210 | |||||||||||
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Balance-November 30, 2000 | $38,381 | $47,652 | $444,653 | $(53,249 | ) | $(2,393 | ) | |||||||||
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(5) | During the three months ended November 30, 2001, no shares were repurchased by the Company under its existing repurchase authorization of 1.7 million shares. The Company may repurchase additional common stock in fiscal year 2002 subject to market conditions. |
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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) | The Company is engaged in the sale of plastic resins in various forms, which are used as raw materials by its customers. The Company operates in two geographic business segments, North America and Europe. A reconciliation of segment income to consolidated income before tax is presented below. |
(In thousands)
(Unaudited)
North
America |
Europe |
Other |
Consolidated |
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Three months ended November 30, 2001 | |||||||||||
Sales to unaffiliated customers | $ | 94,124 | $ | 144,024 | | $ | 238,148 | ||||
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Gross Profit | $ | 12,852 | $ | 22,837 | | $ | 35,689 | ||||
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Operating income | $ | 237 | $ | 9,516 | | $ | 9,753 | ||||
Interest expense, net | $ | | $ | | $ | (958 | ) | $ | (958 | ) | |
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Income before taxes | $ | 237 | $ | 9,516 | $ | (958 | ) | $ | 8,795 | ||
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Three months ended November 30, 2000 | |||||||||||
Sales to unaffiliated customers | $ | 107,631 | $ | 148,985 | | $ | 256,616 | ||||
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Gross Profit | $ | 10,877 | $ | 24,665 | | $ | 35,542 | ||||
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Operating income (loss) | $ | (1,406 | ) | $ | 10,591 | | $ | 9,185 | |||
Cost of plant closure (Note 7) | $ | | $ | | $ | (4,635 | ) | $ | (4,635 | ) | |
Interest expense, net | $ | | $ | | $ | (1,299 | ) | $ | (1,299 | ) | |
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Income (loss) before taxes | $ | (1,406 | ) | $ | 10,591 | $ | (5,934 | ) | $ | 3,251 | |
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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(8) | On September 1, 2001 the Company adopted the provisions of SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that all business combinations be accounted for by the purchase method and that certain acquired intangible assets be recognized as assets apart from goodwill. SFAS No. 142 provides that goodwill should not be amortized but instead be tested for impairment annually at the reporting unit level. In accordance with SFAS No. 142, the Company intends to complete a transitional goodwill impairment test by February 28, 2002 and does not anticipate recognizing an impairment loss. Goodwill and intangible assets were reclassified from deferred charges for all reportable periods. |
Accumulated amortization for intangibles was approximately $200,000 and $150,0000 at November 30, 2001 and August 31, 2001 respectively. The amortization expense for intangibles was approximately $50,000 for the three months ended November 30, 2001 and 2000. The amortization expense for goodwill in the November 30, 2000 quarter was $148,000 and did not impact earnings per share. The Company does not anticipate any significant changes in amortization expense in future periods. | |
The changes in the carrying value of goodwill for the three months ended November 30, 2001 are as follows: |
(In thousands) | ||||||||||
North
America |
Europe | Total | ||||||||
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Balance as of September 1, 2001 | $ | 2,784 | $ | 3,764 | $
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Foreign currency translation | | (63 | ) | (63 | ) | |||||
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Balance as of November 30, 2001 | $ | 2,784 | $ | 3,701 | $ | 6,485 | ||||
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(9) | The effective tax rate of 40.8% in 2001 and 50.4% (122.4% including the effect of plant closures) in 2000 is greater than the statutory rate of 35% primarily because no tax benefit is available or has been recognized on losses in the United States. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: March 4 , 2002 | A. Schulman, Inc.
(Registrant) |
/s/ R.A. Stefanko | |
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R. A. Stefanko, Executive Vice President- Finance & Administration (Signing on behalf of Registrant as a duly authorized officer of Registrant and signing as the Principal Financial Officer of Registrant) |
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