e10vk
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For The Fiscal Year Ended
December 31,
2009
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Commission File Number
001-08524
MYERS INDUSTRIES,
INC.
(Exact name of registrant as
specified in its charter)
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OHIO
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34-0778636
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer Identification
Number)
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1293 S. Main Street, Akron, Ohio
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44301
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(330) 253-5592
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(Address of Principal Executive
Offices)
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(Zip Code)
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(Telephone Number)
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Securities Registered Pursuant
to
Section 12(b) of the Act:
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Name of Each Exchange
On which registered:
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Common Stock, Without Par Value
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New York Stock Exchange
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(Title of Class)
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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 o No þ
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 o No þ
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 the filing requirements for at least the past
90 days. Yes þ No o
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 o No o
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. þ
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-2
of the Exchange Act. (Check one):
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Large
accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company
(as defined in
Rule 12b-2
of the Securities Exchange Act of 1934).
Yes o No þ
State the aggregate market value of the voting and non-voting
common equity stock held by non-affiliates computed by reference
to the closing sale price on the New York Stock Exchange as of
June 30, 2009: $268,599,610.
Indicate the number of shares outstanding of registrants
common stock as of February 26, 2010:
35,289,970 Shares of Common Stock, without par value.
DOCUMENTS
INCORPORATED BY REFERENCE:
Portions of the Registrants Definitive Proxy Statement for
its 2010 Annual Meeting of Stockholders are incorporated by
reference in Part III of this
Form 10-K.
TABLE OF CONTENTS
PART I
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(a)
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General
Development of Business
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Myers Industries, Inc. (the Company or Myers
Industries) was founded in Akron, Ohio, in 1933. Since
then, the Company has grown from a small storefront distributing
tire service supplies into an international manufacturing and
distribution enterprise. In 1971, the Company went public, and
the stock is traded today on the New York Stock Exchange under
the ticker symbol MYE.
Still headquartered in Akron, Ohio, Myers Industries has become
a premier, international manufacturing and distribution
business. Today, the Company manufactures a diverse range of
polymer products for industrial, agricultural, automotive,
commercial and consumer markets. Myers Industries is a leader in
the manufacturing of plastic reusable material handling
containers and pallets and North Americas leading producer
of plastic horticultural pots, trays and flower planters. Other
principal product lines include plastic storage and organization
containers, plastic OEM parts, rubber tire repair products and
custom plastic and rubber products.
The Company is also the largest wholesale distributor of tools,
equipment and supplies for the tire, wheel and undervehicle
service industry in the United States. The distribution products
range from tire balancers and alignment systems to valve caps,
tire repair tools and other consumable service supplies.
As of March 10, 2010, the Company operates 18 manufacturing
facilities and 39 distribution branches located throughout
North, Central and South America; has approximately 12,000
manufactured products and 10,000 distributed products; and
approximately 3,100 employees.
Serving customers around the world, products and related
services from Myers Industries brands provide a wide range
of performance benefits to customers in diverse niche markets.
Some of these benefits include increasing productivity, lowering
material handling costs, improving product quality, reducing
labor costs, shortening assembly times, eliminating solid waste
and increasing profitability. The Companys business
strategy the Strategic Business
Evolution is focused on sustainable,
profitable growth guided by five key operating principles:
1) Business Growth, 2) Customer Satisfaction,
3) Cost Control, 4) Organizational Development and
5) Positioning the Business for the Future. Applying these
principles to our business, the Company emphasizes:
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Industry-leading innovation of niche, high margin products;
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Being the low-cost provider of certain commodity products where
our brands excel;
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Achieving leadership in key product areas through breadth of
offering, consistent quality and superior customer service;
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Concentrating our efforts on niche markets where our
capabilities create profit opportunities for our customers and
ourselves;
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Leveraging brand equity and capabilities to grow business with
existing customers and cultivate new ones, particularly in
emerging growth markets where we can deliver the greatest value
and achieve the best returns;
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Investing in new technologies and processes to reinforce
customer satisfaction and market strength across our key
business segments;
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Succession plans through our management teams at all levels in
the Company, ensuring the right people are in the right
positions to grow;
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Selective acquisitions as opportunities arise to enhance our
leadership in key markets;
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Potential divestiture of businesses with non-strategic products
or markets, aligning our resources with the best avenues for
long-term, profitable growth potential; and
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Consolidation and rationalization initiatives to reduce costs
and improve productivity within the Companys manufacturing
and distribution footprint.
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1
The Companys segments and brands are under continuous
review for strategic fit and growth potential. The review
process is dedicated to strengthening innovation, enhancing
brand leadership in our markets, building strong customer
relationships and positioning the Company to grow on a
sustainable basis.
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(b)
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Financial
Information About Segments
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The response to this section of Item 1 is contained in the
Industry Segments footnote of the Notes to the Consolidated
Financial Statements under Item 7 of this report.
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(c)
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Description
of Business
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The Company conducts its business activities in four distinct
business segments, including three in manufacturing and one in
distribution. The manufacturing segments consist of: Material
Handling, Lawn and Garden, and Automotive and Custom. In 2009,
the Company sold substantially all the assets of its Michigan
Rubber Products, Inc. and Buckhorn Rubber Products, Inc.
businesses which were included in the Automotive and Custom
segment. As a result, these businesses were moved to
discontinued operations in the third quarter of 2009.
In our manufacturing segments, we design, manufacture, and
market a variety of plastic and rubber products. These range
from plastic reusable material handling containers and small
parts storage bins to plastic horticultural pots and hanging
baskets, decorative resin planters, plastic OEM parts, tire
repair materials and custom plastic and rubber products.
The Distribution Segment is engaged in the distribution of
tools, equipment and supplies used for tire, wheel and
undervehicle service on passenger, heavy truck and off-road
vehicles.
2
The following table summarizes the key attributes of our
business segments in continuing operations for the year ended
December 31, 2009:
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2009
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Continuing
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Lawn and Garden
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Material Handling
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Distribution
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Automotive and Custom
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Operations
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Segment
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Segment
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Segment
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Segment
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Net Sales
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$220mm
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$254mm
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$163mm
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$86mm
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% of Total Net Sales
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31%
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36%
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23%
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10%
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Key Product Areas
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Plastic Horticultural Pots, Trays, Flats
& Hanging Baskets
Decorative Resin Planters
Custom Products
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Plastic Reusable Containers &
Pallets
Plastic Storage & Organization
Products
Plastic Carts
Metal Carts
Wooden Dollies
Custom Products
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Tire Valves & Accessories
Tire Changing & Balancing
Equipment
Lifts & Alignment Equipment
Service Equipment
Hand Tools
Tire Repair & Retread Equipment
& Supplies
Brake, Transmission & Allied
Service Equipment & Supplies
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Rubber & Plastic Original Equipment
& Replacement Parts
Tire Repair & Retreading
Products
Highway Markings
Industrial Rubber
Custom Rubber & Plastic Products
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Product Brands
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Dillen®
ITML®
Listotm
Pro
Cal®
Planters
Pride®
Akro-Mils Lawn &
Garden®
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Akro-Mils®
Buckhorn®
Myers do
Brasil®
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Myers Tire
Supply®
Myers Tire Supply
International®
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Ameri-Karttm
Patch
Rubbertm
WEK®
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Key Capabilities & Services
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Product Design
Prototyping
Testing
Material Formulation
Injection Molding
Thermoforming
Co-Extrusion Thermoforming
Custom Printing & Labeling
Material Regrind & Recycling
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Product Design
Prototyping
Product Testing
Material Formulation
Injection Molding
Structural Foam Molding
Metal Forming
Wood Fabrication
Powder Coating
Material Regrind & Recycling
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Broad Sales Coverage
Local Sales & Inventory
International Distribution
Personalized Service
National Accounts
Product Training
Repair/Service Training
New Products
Speed to Market
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Rubber Mixing
Rubber Compounding
Rubber Calendering
Rubber Extrusion
Rubber Injection Molding
Plastic Blow Molding
Co-Extrusion Blow Molding
Plastic Rotational Molding
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Representative
Markets
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Horticulture:
- Growers
- Nurseries
- Greenhouses
- Retail Garden Centers
Consumer
- Retail Garden Centers
- Retail Home Centers
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Agriculture
Automotive
Commercial
Food Processing
Food Distribution
Healthcare
Industrial
Manufacturing
Retail Distribution
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Retail Tire Dealers
Truck Tire Dealers
Auto Dealers
Commercial Auto & Truck Fleets
General Repair & Services
Facilities
Tire Retreaders
Governmental Agencies
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Automotive OEM
Industrial
Mining
Recreational Marine
Recreational Vehicle
Road Construction
Sporting Goods
Tire Repair
Telecommunications
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3
Manufacturing
Segments Overview
Lawn and
Garden Segment
The Companys Lawn and Garden Segment includes the
Dillen®,
ITML®,
Pro
Cal®,
Listotm,
and Planters Pride and Akro-Mils
Lawn &
Gardentm
brands, which serve the horticultural container needs of the
North American floriculture/ horticulture market. Our
product selection, manufacturing capabilities, quality and
customer service rank at the top of our category in the market,
which spans growers with 80-plus acre greenhouse facilities to
small regional nurseries to retail garden centers and retail
home centers.
In 2009, the Company completed a realignment of its Lawn and
Garden Segment. This resulted in the decision to close three
facilities and reallocate production to the segments other
remaining facilities. These initiatives enabled the Company to
consolidate manufacturing and capacity, optimize distribution
and supply chain channels, and drive increased productivity and
customer service excellence through improved forecasting,
workflow, and inventory management programs.
For growers, our products are available both direct and through
a network of leading horticultural distributors. Our product
range is one of the most extensive in North America. Products
include injection-molded and thermoformed pots, hanging baskets,
flats and carry trays, plug trays, nursery containers,
propagation sheets, and specialty pots. Product innovation is
centered on the changing needs of the professional grower,
including increased automation in growing operations, improving
efficiency and reducing costs, while focusing on environmental
friendliness. For example, a recent focus has been in
lightweight co-extruded (CoEx) thermoformed pots. CoEx pots have
a thinner wall construction compared to injection pots and
combine a color exterior with a dark interior layer made from
recycled material which helps to protect plant roots against
potential sunlight damage in both grower and retail operations
and helps protect the environment.
In addition to working with growers on product innovation, we
support their increasing needs for branding and retail
merchandising programs with services such as in-mold labeling,
multi-color offset printing and adhesive labeling. Once filled
with plant material by the grower and shipped to retail, these
customized pots serve as packaging for plants and create vibrant
point-of-sale
materials.
For retailers, our Listo brand encompasses decorative
resin planters that feature intricate molding details and unique
finishes in ceramic, metallic, weathered stone and textured
styles. The upscale look of these decorative planters captures
the retailers attention and the consumers
imagination. Products include a diverse offering of planters,
window boxes, urns and hanging baskets for indoor and outdoor
container gardening. Consistent new product development is key
to success in the retail garden center and mass merchandiser
channels. Proprietary molding and finishing processes, along
with creative designs, deliver the unique look in the decorative
resin planter category that sets our planters apart from the
competition in leading retail stores across North America.
In addition to Listo, two other brands in the retail channel of
the Lawn and Garden Segment include Planters
Pride®
and Akro-Mils Lawn & Garden
Products®.
Planters Pride, has a diverse product offering dedicated
to the beginning gardener. Featured products include a wide
range of Fiber
Grow®
seed starting kits with 100 percent peat free renewable
coir pellets and other garden accessories, backed by
customizable retail displays. Akro-Mils Lawn & Garden
provides a wide range of plastic patio pots, planters and
hanging baskets as well as watering cans and other related items
for the home gardener.
Myers Industries seeks to expand its market leadership in the
Lawn and Garden Segment through its current realignment of the
segment, unrivaled product innovation and selection, diverse
manufacturing processes, superior customer satisfaction and an
array of internal and external strategic growth initiatives. One
of these initiatives includes expanding the use of reprocessed
and recycled materials in the manufacturing process, which helps
to reduce the Companys exposure to higher costs for virgin
raw material. The Company has the capability to produce a wide
range of plastic materials for use across its many product lines
and is committed to being a green manufacturer to
protect the environment.
Weather conditions, grower consolidation and grower supply chain
adjustments to meet retail merchandising programs are some of
the key external factors that influence this industry. As one of
the industry leaders, however,
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the Company is well positioned to further align our capabilities
to effectively meet the external challenges and changing needs
of customers and the markets.
Material
Handling Segment
The Material Handling Segment is comprised of plastic reusable
material handling containers, pallets and bins, as well as metal
shelving, cabinet and racking systems. The two brands in this
segment,
Buckhorn®
and
Akro-Milstm,
have strong leadership positions across markets such as
automotive, appliance, general
industrial / manufacturing, distribution, agriculture,
retail and food processing. This leadership is built through
constant innovation, diverse manufacturing processes, consistent
quality and superior customer service resulting in significant
productivity and cost-saving benefits for our customers.
Buckhorns reusable containers and pallets are used
in closed-loop supply chains to help customers reduce material
handling costs by replacing single-use cardboard boxes, easily
damaged wooden pallets and high-cost steel containers.
Cost-reduction benefits include: improving product protection,
increasing handling efficiencies, reducing freight costs and
eliminating solid waste and disposal costs. Small parts bins,
storage systems and transport products from Akro-Mils provide
similar benefits by creating storage and organization efficiency
throughout customers operations.
The Buckhorn brand offers a product selection rich in both
breadth and depth, as well as a direct sales force with the
packaging and material handling expertise that makes Buckhorn a
key solutions partner for our customers. Buckhorns product
line spans injection-molded hand-held containers and totes;
injection and structural foam-molded bulk transport containers
in both collapsible and fixed-wall styles; and injection and
structural foam pallets. Buckhorn also produces custom material
handling packaging. Customers rely on Buckhorns
single-source efficiency and the productivity and profitability
benefits delivered through value-added innovation, broad product
selection, quality and packaging conversion services.
Buckhorn hand-held containers include attached lid, detached
lid, bi-color and specialty styles that stack
and/or nest
for efficient space usage, thus lowering freight and storage
costs. In manufacturing plants across North America, our
container and pallet systems are reused hundreds of times to
ship products such as small fasteners or large components from
suppliers directly to assembly areas protecting parts
throughout the supply chain and reducing scrap rates. Our
attached lid containers and pallets are used in retail
distribution centers to organize inventory, sort orders and then
transport products directly to stores. In the food processing
and distribution industry, our specialty containers provide
superior protection to food products while in transit and are
more sanitary than cardboard boxes. For example, case-ready,
packaged meats are delivered from processors to retailers in
containers designed to accommodate specific cuts and package
sizes, while maintaining optimal airflow for chilling.
Buckhorns selection of collapsible and fixed-wall bulk
transport containers leads the North American material handling
industry. Bulk containers perform both light and heavy-duty
tasks, whether distributing seed products, carrying large
automotive components or shipping liquids across long distances.
These containers range in size from footprints of 32 x
30 to 70 x 48; heights up to 65; and
weight capacities up to 3,000 lbs. Bulk containers are
compatible with forklifts for easy handling. Many of the
containers collapse to a third of their size for space-saving
stacking, storage and return transport, thus helping to reduce
freight and storage costs.
Examples of bulk container applications include our
SeedBoxestm,
which are used by leading seed distributors to efficiently
transport and dispense up to 2,500 lbs. of their products. The
unique SeedBox can be emptied in approximately 30 seconds, then
broken down for return shipping and refilling, thus eliminating
waste created by traditional seed bags. Manufacturers of tomato
paste employ our
Caliber®
and
Citadel®
bulk containers to move processed tomato products across the
country in railcars. The smooth-sided, impact-resistant
containers replace wooden crates and steel containers that can
cause product damage and contamination. Citadel containers can
carry up to 3,000 lbs. / 300 gallons of liquefied
product, safely stack when fully loaded and are designed for
long-term indoor or outdoor storage of loads. This product line
is applicable to other food processing and ingredient niches
such as concentrates, oils, syrups and similar products.
Buckhorns plastic pallets interwork with the hand-held
containers and totes to create a completely reusable system and
provide efficient space utilization in plants, warehouses and
truck trailers helping customers to
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reduce storage and freight costs. Buckhorn also produces a wide
range of specialty pallets for niche-type shipping applications,
such as drum pallets for chemical and liquid transport.
Our Akro-Mils brand provides customers with
everything needed to store, organize and transport for
greater productivity and profitability. This mix of
plastic, metal and wooden material handling products serves
industrial and commercial end-users through leading industrial
supply catalogers and material handling distributors. Products
range from
AkroBins®
the industrys leading small parts bins to
Super-Size AkroBins, metal panel and bin hanging systems, metal
storage cabinet and bin systems, wire shelving systems, plastic
and metal transport carts and a wide variety of custom storage
and transport products. Capabilities used throughout the
Akro-Mils product line include: injection molding, metal
forming, powder-coat painting / metal finishing and
wood fabrication, as well as the additional capabilities through
potential synergies with Buckhorn.
Akro-Mils products deliver storage and organization solutions in
a wide variety of applications, from creating assembly line
workstations to organizing medical supplies and retail displays.
Emphasis is placed on product bundling and customizing systems
to create specific storage and organization configurations for
customers operations. For example, industrial
manufacturers with specialized tool and parts storage
areas known as tool cribs use
a combination of Akro-Mils bins, racking, locking cabinets, work
tables and transport carts to speed assembly times, maintain
accurate inventories and reduce loss. Metal carts and dollies
are paired with custom-made containers to create unique
transport systems capable of handling parts and components both
small and large. Our powder coating / painting
capability allows for high-quality, scratch-resistant finishing
of metal products in a multitude of colors and finish styles.
Cross-marketing and cross-selling are key synergies between the
Material Handling Segment brands. Equally important are
cross-manufacturing capabilities that allow each brand to offer
customers a wider range of value-added design and molding
benefits. In addition to standard material handling products, we
utilize the extensive design and manufacturing capabilities
between Buckhorn and Akro-Mils for turnkey production of custom
material handling products.
Sustainable, profitable growth in this segment is fueled by: a
strong focus on innovation with value-added new products;
concentrating sales efforts on niche markets and applications;
increasing awareness of plastic reusable material handling
products to drive conversions from cardboard and wood products;
and managing the balance of product pricing and raw material
costs. The potential for strategic, bolt-on acquisitions also
provides opportunities to expand the scope of our brand
leadership and the value-added products and services we bring to
customers.
Automotive
and Custom Segment
Myers Industries serves diverse niche markets and customers with
rubber and plastic products from the Automotive and Custom
Segment. Through our
Ameri-Karttm,
Patch
Rubbertm
and
WEKtm
brands, we provide an array of engineered plastic original
equipment and replacement parts, tire repair materials and
custom rubber and plastic components and materials. We offer a
unique combination of product design, molding and finishing
expertise to support our customers needs for efficient,
single sourcing of parts and turnkey custom product development.
In addition to our plastics molding capabilities, we utilize a
full range of rubber molding processes that include: injection
molding; compounding, calendering and extrusion;
3-D
co-extrusion blow molding. Additional capabilities include
custom rubber formulation, mixing and testing.
The WEK brand supports passenger car and truck
manufacturers to create plastic components and assemblies for a
wide variety of vehicle platforms. Our molding and assembly
capabilities produce a diversified product mix, which includes:
HVAC components, tubing assemblies and other custom items. The
Companys focus in the automotive arena is on highly
engineered, niche products for select automotive platforms and
strategic, long-term customers who reward their value-added
manufacturing partners.
Manufacturers of recreational vehicles (RV) and
watercraft rely on our design expertise and production
capabilities to provide them an assortment of products. Through
our Ameri-Kart brand, we create rotationally-molded
plastic tanks for water, fuel and waste handling that are
assembled to fit the precise space constraints within RV and
marine craft designs. We utilize thermoforming and rotational
molding to manufacture plastic trim and interior parts for
RVs and helm consoles and seat frames for a wide variety
of watercraft.
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Our manufacturing of rubber products began more than
60 years ago with our Patch Rubber brand, initially
making tire patches. Today, we manufacture one of the most
comprehensive lines of tire repair and retreading products in
the United States. Service professionals rely on our extensive
product selection and quality for safe, cost-effective repairs
to passenger, truck and off-road tires. Products range from the
plug that fills a puncture, the cement that seats the plug, the
tire innerliner patch and the final sealing compound. Patch
brand repair products maintain a strong position in the tire
service markets with exclusive sales through our Distribution
Segments branch network.
Also within the capabilities of Patch Rubber, we apply our
rubber calendering and compounding expertise to create a diverse
portfolio of products outside of the tire repair market, such as
reflective highway marking tapes. Our rubber-based tape and
symbols provide the durability and brightness that construction
professionals demand to replace paint for marking road repair,
intersections and hazardous areas. Compared with traditional
highway paint, the tape stock is easier to apply, more
reflective and longer lasting. It is available in both temporary
and permanent grades to meet the customers specific
requirements.
Other custom products represent a wide range of markets and
applications. These include: plastic elevated toilet seats and
tub rails for the healthcare market, specialty tapes used for
cable splicing in the telecommunications industry and custom
rubber linings for material handling conveyors.
Distribution
Segment Overview
The Companys Distribution Segment includes the Myers
Tire
Supply®
and Myers Tire Supply
International®
brands. With these brands, the Company is the largest
U.S. distributor and single source for tire, wheel and
undervehicle service tools, equipment and supplies. We buy and
sell nearly 10,000 different items everything that
professionals need to service passenger, truck and off-road
tires, wheels and related components. Independent tire dealers,
mass merchandisers, commercial auto and truck fleets, tire
retreaders and general repair facilities rely on our broad
product selection, rapid availability and personal service to be
more productive and profitably grow their business.
Within the continental United States, we provide widespread
distribution and sales coverage from 33 branches positioned in
major metropolitan areas. Each branch operates as a profit
center and is staffed by a branch manager, sales and warehouse
personnel. Internationally, we have three branches in Canada and
three in Central America. Sales personnel from our Akron, Ohio
headquarters cover niche markets in the Far East, Middle East,
South Pacific and South America.
We purchase products from trusted, industry-leading
manufacturers to ensure quality is delivered to our customers.
Each of the brand-name products we sell is associated with
superior performance in its respective area. Some of these
well-known brands include: Chicago Pneumatic air tools;
Hennessy tire changing, balancing and alignment
equipment; Corghi tire changers and balancers;
Ingersoll-Rand air service equipment; John Bean Co.
tire balancing and changing equipment; Rotary lifts
and related equipment; and our own Patch Rubber brand tire
patches, and repair supplies.
An essential element of our success in the Distribution Segment
is the network field sales representatives, who deliver
personalized service on a local level. Customers rely on
Myers sales representatives to introduce the latest tools
and technologies and to provide training in new product features
and applications. Representatives also teach the proper use of
diagnostic equipment and present
on-site
workshops demonstrating industry-approved techniques for tire
repair and undervehicle service.
While the needs and composition of our distribution markets
constantly change, we adapt and deliver the new products and
services that are crucial to our customers success. The
new product pipeline is driven by innovations from auto and tire
manufacturers, which in turn prompts Myers and its suppliers to
develop new equipment, supplies and service techniques to keep
cars and trucks moving down the road with confidence.
The Companys Distribution Segment is well positioned to
continue its steady growth. The Myers Tire Supply (U.S.) brand
is positioned to expand its leadership through superior product
selection, rapid delivery and the personal service that is the
hallmark of the Companys success in the tire, wheel, and
undervehicle service marketplace. The Myers Tire Supply
International brand is positioned to expand distribution of both
tire supply and our plastic products in select regions of the
world, presenting new growth opportunities for our diverse
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manufacturing businesses. All of this can be achieved through:
1) ongoing productivity improvements in our distribution
network, 2) growing within key domestic market sectors and
emerging international markets, 3) delivering a continuous
flow of new products with
first-to-market
speed and 4) improving efficiency and customer satisfaction
through implementation of innovative supply chain management
technologies. Strategic, adjacent acquisitions are also a
potential growth avenue in this segment.
Raw
Materials & Suppliers Manufacturing and
Distribution Segments
For the manufacturing segments, the Company purchases
substantially all of its raw materials from a wide range of
third-party suppliers. These materials are primarily
polyethylene, polypropylene, and polystyrene plastic resins, as
well as synthetic and natural rubber. Most raw materials are
commodity products and available from several domestic
suppliers. We believe that the loss of any one supplier or group
of suppliers would not have a material adverse effect on our
business.
The Distribution Segment purchases substantially all of its
components from third-party suppliers and has multiple sources
for its products.
Competition
Competition in the manufacturing segments is substantial and
varied in form and size from manufacturers of similar products
and of other products which can be substituted for those
produced by the Company. In general, most direct competitors
with the Companys brands are private entities. Myers
Industries maintains strong brand presence and market positions
in the niche sectors of the markets it serves. The Company does
not command substantial, overall market presence in the broad
market sectors.
Competition in the Distribution Segment is generally from
private, smaller local and regional businesses. Within the
overall tire, wheel and undervehicle service market, Myers is
the largest North American distributor of tools, equipment and
supplies.
Customer
Dependence
In 2009, the Companys largest customer accounted for
approximately 13% of total net sales. During 2008 and 2007, no
single customer accounted for more than four percent of the
Companys total net sales. Myers Industries serves
thousands of customers who demand value through product
selection, innovation, quality, delivery and responsive,
personal service. Our brands foster satisfied, loyal customers
who have recognized our performance through numerous supplier
quality awards.
Employees
As of December 31, 2009, Myers Industries had a total of
3,099 full-time and part-time employees. Of these, 2,538
were employed in the Companys manufacturing segments,
including: 790 in the Material Handling Segment, 591 in the
Automotive and Custom Segment, and 1,157 in the Lawn and Garden
Segment. The Distribution Segment employed 487 personnel.
The Companys corporate offices had 74 employees.
As of December 31, 2009, the Company had no employees who
were members of unions.
|
|
(d)
|
Financial
Information About Geographic Areas
|
The response to this section of Item 1 is contained in the
Industry Segments footnote of the Notes to Consolidated
Financial Statements under Item 8 of this report.
|
|
(e)
|
Available
Information
|
Filings with the SEC. As a public
company, we regularly file reports and proxy statements with the
Securities and Exchange Commission (SEC), such as:
* annual reports on
Form 10-K;
8
* quarterly reports on
Form 10-Q;
* current reports on
Form 8-K; and
* proxy statements on Schedule 14A.
Anyone may read and copy any of the materials we file with the
SEC at its Public Reference Room at
100 F Street, N.E., Room 1580, Washington, DC
20549. Information regarding operations of the Public Reference
Room may also be obtained by calling the SEC at
1-800-SEC-0330.
The SEC also maintains an internet website that contains our
reports, proxy and information statements, and our other SEC
filings; the address of that site is
http://www.sec.gov.
Also, we make our SEC filings available free of charge on our
own internet site as soon as reasonably practicable after we
have filed with the SEC. Our internet address is
http://www.myersind.com.
The content on the Companys website is available for
informational purposes only, and is not incorporated by
reference into this
Form 10-K.
Corporate Governance. We have a
Code of Business Conduct for our employees and members of our
Board of Directors. A copy of this Code is posted on our
website. We will satisfy any disclosure requirement under
Item 5.05 of
Form 8-K
regarding an amendment to, or waiver from, any provision of this
Code with respect to our executive officers or directors by
disclosing the nature of that amendment or waiver.
Our website also contains additional information about our
corporate governance policies, including the charters of our
standing board committees. Any of these items are available in
print to any shareholder who requests them. Requests should be
sent to Corporate Secretary, Myers Industries, Inc.,
1293 S. Main Street, Akron, Ohio 44301.
This
Form 10-K
and the information we are incorporating by reference contain
forward-looking statements within the meaning of federal
securities laws, including information regarding the
Companys 2010 financial outlook, future plans, objectives,
business prospects and anticipated financial performance. You
can identify these statements by the fact that they include
words such as will, believe,
anticipate, expect,
estimate, intend, plan, or
variations of these words, or similar expressions. These
forward-looking statements are not statements of historical
facts and represent only our current expectations regarding such
matters. These statements inherently involve a wide range of
known and unknown uncertainties. The Companys actual
actions and results could differ materially from what is
expressed or implied by these statements. Specific factors that
could cause such a difference include, those set forth below and
other important factors disclosed previously and from time to
time in our other filings with the Securities and Exchange
Commission. Given these factors, as well as other variables that
may affect our operating results, you should not rely on
forward-looking statements, assume that past financial
performance will be a reliable indicator of future performance,
nor use historical trends to anticipate results or trends in
future periods. We expressly disclaim any obligation or
intention to provide updates to the forward-looking statements
and the estimates and assumptions associated with them.
Risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in the
applicable statements include:
Any
significant increase in the cost of raw materials or disruption
in the availability of raw materials could adversely affect our
performance.
Our ability to manage our cost structure can be adversely
affected by movements in commodity and other raw material
prices. Our primary raw materials include plastic resins,
colorants and natural and synthetic rubbers. Plastic resins in
particular are subject to substantial short term price
fluctuations, including those arising from supply shortages and
changes in the price of natural gas, crude oil and other
petrochemical intermediates from which resins are produced, as
well as other factors. Over the past several years, we have at
times experienced rapidly increasing resin prices. The
Companys revenue and profitability may be materially and
adversely affected by these price fluctuations.
9
We attempt to reduce our exposure to increases by working with
existing suppliers, evaluating new suppliers, improving material
efficiencies and adjusting prices. Market conditions, however,
may limit our ability to raise selling prices to offset
increases in our raw material input costs. If we are
unsuccessful in developing ways to mitigate raw material cost
increases, we may not be able to improve productivity or realize
our ongoing cost reduction programs sufficiently to help offset
the impact of these increased raw material costs. As a result,
higher raw material costs could result in declining margins and
operating results.
Changes in raw material availability may also occur due to
events beyond our control, including natural disasters such as
floods, tornados and hurricanes. Our specific molding
technologies and/or product specifications can limit our ability
to locate alternative supplies to produce certain products.
We
incur inherent risks associated with our strategic growth
initiatives.
Our growth initiatives include: internal growth driven by strong
brands and new product innovation; development of new,
high-growth markets and expansion in existing niche markets;
strengthened customer relationships through value-added
initiatives and key product partnerships; investments in new
technology and processes to reinforce market strength and
capabilities in key business groups; consolidation and
rationalization activities to further reduce costs and improve
productivity within our manufacturing and distribution
footprint; an opportunistic and disciplined approach to
strategic, bolt-on acquisitions to accelerate growth in our
market positions; and potential divestitures of businesses with
non-strategic products or markets.
While this is a continuous process, all of these activities and
initiatives have inherent risks and there remain significant
challenges and uncertainties, including economic and general
business conditions that could limit our ability to achieve
anticipated benefits associated with announced strategic
initiatives and affect our financial results. We may not achieve
any or all of these goals and are unable to predict whether
these initiatives will produce significant revenues or profits.
We may
not realize the improved operating results that we anticipate
from past acquisitions or from acquisitions we may make in the
future and we may experience difficulties in integrating the
acquired businesses or may inherit significant liabilities
related to such businesses.
We explore opportunities to acquire businesses that we believe
are related to our core competencies from time to time, some of
which may be material to us. We expect such acquisitions will
produce operating results consistent with our other operations;
however, we may be unable to achieve the benefits expected to be
realized from our acquisitions. In addition, we may incur
additional costs and our managements attention may be
diverted because of unforeseen expenses, difficulties,
complications, delays and other risks inherent in acquiring
businesses, including the following:
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we may have difficulty integrating the acquired businesses as
planned, which may include integration of systems of internal
controls over financial reporting and other financial and
administrative functions;
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acquisitions may divert managements attention from our
existing operations;
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we may have difficulty in competing successfully for available
acquisition candidates, completing future acquisitions or
accurately estimating the financial effect of any businesses we
acquire;
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we may have delays in realizing the benefits of our strategies
for an acquired business;
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we may not be able to retain key employees necessary to continue
the operations of an acquired business;
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acquisition costs may be met with cash or debt, increasing the
risk that we will be unable to satisfy current financial
obligations;
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we may acquire businesses that are less profitable or have lower
profit margins than our historical profit margins; and
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acquired companies may have unknown liabilities that could
require us to spend significant amounts of additional capital.
|
10
Our
results of operations and financial condition could be adversely
affected by a downturn in the general markets or the general
economic environment.
We operate in a wide range of geographies, primarily North
America, Central America and South America. Worldwide and
regional economic, business and political conditions, including
changes in the economic conditions of the broader markets and in
our individual niche markets, could have an adverse affect on
one or more of our operating segments.
We
operate in a very competitive business
environment.
Each of our segments participates in markets that are highly
competitive. Many of our competitors sell their products at
prices lower than ours and we compete primarily on the basis of
product quality, product performance, value, supply chain
competency and customer relationships. Our competitive success
also depends on our ability to maintain strong brands and the
belief that customers will need our products and services to
meet their growth requirements. The development and maintenance
of such brands requires continuous investment in brand building,
marketing initiatives and advertising. The competition that we
face in all of our markets which varies depending on
the particular business segment, product lines and
customers may prevent us from achieving sales,
product pricing and income goals, which could affect our
financial condition and results of operations.
The
results of operations for our Lawn and Garden Segment are
influenced by weather conditions.
Demand for our Lawn and Garden Segment products is influenced by
weather, particularly weekend weather during the peak gardening
season. Additionally, product demand in this segment is
strongest in the first and fourth quarters and weakest in the
third quarter, as our customers (in particular greenhouses and
nurseries) order our products in advance of the growing season.
As a result, our business, financial results, cash flow and our
ability to service our debt could be adversely affected by
certain weather patterns such as unseasonably cool or warm
temperatures, hurricanes, water shortages or floods.
Our
operations depend on our ability to maintain continuous,
uninterrupted production at our manufacturing facilities, which
are subject to physical and other risks that could disrupt
production.
We are subject to inherent risks in our diverse manufacturing
and distribution activities, including, but not limited to:
product quality, safety, licensing requirements and other
regulatory issues, environmental events, loss or impairment of
key manufacturing or distribution sites, disruptions in
logistics and transportation services, labor disputes and
industrial accidents. While we maintain insurance covering our
manufacturing and production facilities, including business
interruption insurance, a catastrophic loss of the use of all or
a portion of our facilities due to accident, fire, explosion, or
natural disaster, whether short or long-term, could have a
material adverse effect on our business, financial condition and
results of operations.
Unexpected failures of our equipment and machinery may also
result in production delays, revenue loss and significant repair
costs, as well as injuries to our employees. Any interruption in
production capability may require us to make large capital
expenditures to remedy the situation, which could have a
negative impact on our profitability and cash flows. Our
business interruption insurance may not be sufficient to offset
the lost revenues or increased costs that we may experience
during a disruption of our operations. A temporary or long-term
business disruption could result in a permanent loss of
customers. If this were to occur, our future sales levels and
therefore our profitability, could be materially adversely
affected.
We
derive a portion of our revenues from direct and indirect sales
outside the United States and are subject to the risks of doing
business in foreign countries.
We currently operate manufacturing, sales and service facilities
outside of the United States, particularly in Canada and Brazil.
For the twelve months ended December 31, 2009,
international net sales accounted for approximately 14% of our
total net sales from continuing operations. Accordingly, we are
subject to risks associated with operations in foreign
countries, including:
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fluctuations in currency exchange rates;
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11
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limitations on the remittance of dividends and other payments by
foreign subsidiaries;
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limitations on foreign investment;
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additional costs of compliance with local regulations; and
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in certain countries, higher rates of inflation than in the
United States.
|
In addition, our operations outside the United States are
subject to the risk of new and different legal and regulatory
requirements in local jurisdictions, potential difficulties in
staffing and managing local operations and potentially adverse
tax consequences. The costs related to our international
operations could adversely affect our operations and financial
results in the future.
A
significant portion of our sales are derived from a single
customer.
Approximately 13% of our total net sales from continuing
operations for the year ended December 31, 2009 were with a
single customer. We anticipate that sales to this customer will
also be more than 10% of total sales in 2010. There can be no
assurances that this relationship will continue or that we will
be able to maintain this volume of sales from this relationship
in the future. A substantial decrease or loss of these sales
could have a material adverse effect on our operating
performance. There can be no assurance that in such event, the
Company will be able to redeploy its machinery and equipment in
such a manner as to avoid an adverse impact on its utilization
of manufacturing capacity or how long such impact may continue.
Our
future performance depends in part on our ability to develop and
market new products if there are changes in technology,
regulatory requirements or competitive processes.
Changes in technology, regulatory requirements and competitive
processes may render certain products obsolete or less
attractive. Our performance in the future will depend in part on
our ability to develop and market new products that will gain
customer acceptance and loyalty, as well as our ability to adapt
our product offerings and control our costs to meet changing
market conditions. Our operating performance would be adversely
affected if we were to incur delays in developing new products
or if such products did not gain market acceptance. There can be
no assurance that existing or future products will be
sufficiently successful to enable us to effectively compete in
our markets or, should new product offerings meet with
significant customer acceptance, that one or more current or
future competitors will not introduce products that render our
products noncompetitive.
We may
not be successful in protecting our intellectual property
rights, including our unpatented proprietary know-how and trade
secrets, or in avoiding claims that we infringed on the
intellectual property rights of others.
In addition to relying on patent and trademark rights, we rely
on unpatented proprietary know-how and trade secrets and employ
various methods, including confidentiality agreements with
employees and consultants, to protect our know-how and trade
secrets. However, these methods and our patents and trademarks
may not afford complete protection and there can be no assurance
that others will not independently develop the know-how and
trade secrets or develop better production methods than us.
Further, we may not be able to deter current and former
employees, contractors and other parties from breaching
confidentiality agreements and misappropriating proprietary
information and it is possible that third parties may copy or
otherwise obtain and use our information and proprietary
technology without authorization or otherwise infringe on our
intellectual property rights. Additionally, in the future we may
license patents, trademarks, trade secrets and similar
proprietary rights to third parties. While we attempt to ensure
that our intellectual property and similar proprietary rights
are protected when entering into business relationships, third
parties may take actions that could materially and adversely
affect our rights or the value of our intellectual property,
similar proprietary rights or reputation. In the future, we may
also rely on litigation to enforce our intellectual property
rights and contractual rights and, if not successful, we may not
be able to protect the value of our intellectual property.
Furthermore, no assurance can be given that we will not be
subject to claims asserting the infringement of the intellectual
property rights of third parties seeking damages, the payment of
royalties or licensing fees
and/or
injunctions against the sale of our products. Any litigation
could be protracted and costly and could have a material adverse
effect on our business and results of operations regardless of
its outcome.
12
If we
are unable to maintain access to credit financing, our business
may be adversely affected.
The Companys ability to make payments and to refinance our
indebtedness, fund planned capital expenditures and acquisitions
and pay dividends will depend on our ability to generate cash in
the future and retain access to credit financing. This, to some
extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control.
We cannot provide assurance that our business will generate
sufficient cash flow from operating activities or that future
borrowings will be available to us under our credit facilities
in amounts sufficient to enable us to service debt, make
necessary capital expenditures or fund other liquidity needs. We
may need to refinance all or a portion of our indebtedness, on
or before maturity. We cannot be sure that we would be able to
refinance any of our indebtedness on commercially reasonable
terms or at all.
The credit facilities contain restrictive covenants and cross
default provisions that require us to maintain specified
financial ratios. The Companys ability to satisfy those
financial ratios can be affected by events beyond our control,
and we cannot be assured we will satisfy those ratios. A breach
of any of these financial ratio covenants or other covenants
could result in a default. Upon the occurrence of an event of
default, the lenders could elect to declare the applicable
outstanding indebtedness due immediately and payable and
terminate all commitments to extend further credit. We cannot be
sure that our lenders would waive a default or that we could pay
the indebtedness in full if it were accelerated.
Future
claims, litigation and regulatory actions could adversely affect
our financial condition and our ability to conduct our
business.
While we strive to ensure that our products comply with
applicable government regulatory standards and internal
requirements and that our products perform effectively and
safely, customers from time to time could claim that our
products do not meet contractual requirements, and users could
be harmed by use or misuse of our products. This could give rise
to breach of contract, warranty or recall claims, or claims for
negligence, product liability, strict liability, personal injury
or property damage. Product liability insurance coverage may not
be available or adequate in all circumstances. In addition,
claims may arise related to patent infringement, environmental
liabilities, distributor terminations, commercial contracts,
antitrust or competition law, employment law and employee
benefits issues and other regulatory matters. While we have in
place processes and policies to mitigate these risks and to
investigate and address such claims as they arise, we cannot
predict the underlying costs to defend or resolve such claims.
Current
and future environmental and other governmental laws and
requirements could adversely affect our financial condition and
our ability to conduct our business.
Our operations are subject to federal, state, local and foreign
environmental laws and regulations that impose limitations on
the discharge of pollutants into the air and water and establish
standards for the handling, use, treatment, storage and disposal
of, or exposure to, hazardous wastes and other materials and
require clean up of contaminated sites. Some of these laws and
regulations require us to obtain permits, which contain terms
and conditions that impose limitations on our ability to emit
and discharge hazardous materials into the environment and
periodically may be subject to modification, renewal and
revocation by issuing authorities. Fines, penalties and other
civil or criminal sanctions may be imposed for non-compliance
with applicable environmental laws and regulations and the
failure to have or to comply with the terms and conditions of
required permits. Certain environmental laws in the United
States, such as the federal Superfund law and similar state
laws, impose liability for the cost of investigation or
remediation of contaminated sites upon the current or, in some
cases, the former site owners or operators (or their predecessor
entities) and upon parties who arranged for the disposal of
wastes or transported or sent those wastes to an off-site
facility for treatment or disposal, regardless of when the
release of hazardous substances occurred or the lawfulness of
the activities giving rise to the release. Such liability can be
imposed without regard to fault and, under certain
circumstances, can be joint and several, resulting in one party
being held responsible for the entire obligation.
While we have not been required historically to make significant
capital expenditures in order to comply with applicable
environmental laws and regulations, we cannot predict with any
certainty our future capital expenditure
13
requirements because of continually changing compliance
standards and environmental technology. Furthermore, violations
or contaminated sites that we do not know about, including
contamination caused by prior owners and operators of such
sites, or at sites formerly owned or operated by us or our
predecessors in connection with discontinued operations, could
result in additional compliance or remediation costs or other
liabilities, which could be material.
We have limited insurance coverage for potential environmental
liabilities associated with historic and current operations and
we do not anticipate increasing such coverage in the future. We
may also assume significant environmental liabilities in
acquisitions. Such costs or liabilities could adversely affect
our financial situation and our ability to conduct our business.
Environmental
regulations specific to plastic products and containers could
adversely affect our ability to conduct our
business.
Federal, state, local and foreign governments could enact laws
or regulations concerning environmental matters that increase
the cost of producing, or otherwise adversely affect the demand
for, plastic products. Legislation that would prohibit, tax or
restrict the sale or use of certain types of plastic and other
containers, and would require diversion of solid wastes such as
packaging materials from disposal in landfills, has been or may
be introduced in the U.S. Congress, in state legislatures
and other legislative bodies. While container legislation has
been adopted in a few jurisdictions, similar legislation has
been defeated in public referenda in several states, local
elections and many state and local legislative sessions. There
can be no assurance that future legislation or regulation would
not have a material adverse effect on us. Furthermore, a decline
in consumer preference for plastic products due to environmental
considerations could have a negative effect on our business.
Our
insurance coverage may be inadequate to protect against
potential hazardous incidents to our business.
We maintain property, business interruption, product liability
and casualty insurance coverage, but such insurance may not
provide adequate coverage against potential claims, including
losses resulting from war risks, terrorist acts or product
liability claims relating to products we manufacture. Consistent
with market conditions in the insurance industry, premiums and
deductibles for some of our insurance policies have been
increasing and may continue to increase in the future. In some
instances, some types of insurance may become available only for
reduced amounts of coverage, if at all. In addition, there can
be no assurance that our insurers would not challenge coverage
for certain claims. If we were to incur a significant liability
for which we were not fully insured or that our insurers
disputed, it could have a material adverse effect on our
financial position, results of operations or cash flows.
Our
business operations could be significantly disrupted if members
of our senior management team were to leave.
Our success depends to a significant degree upon the continued
contributions of our senior management team. Our senior
management team has extensive manufacturing, finance and
engineering experience, and we believe that the depth of our
management team is instrumental to our continued success. The
loss of any of our key executive officers in the future could
significantly impede our ability to successfully implement our
business strategy, financial plans, expansion of services,
marketing and other objectives.
Unforeseen
future events may negatively impact our economic
condition.
Future events may occur that would adversely affect the reported
value of our assets. Such events may include, but are not
limited to, strategic decisions made in response to changes in
economic and competitive conditions, the impact of the economic
environment on our customer base, or a material adverse change
in our relationship with significant customers.
14
Equity
Ownership Concentration
Descendents of the Companys co-founder Louis S. Myers
beneficially owned approximately 12.34% of the Companys
outstanding common shares as of March 10, 2010. Stephen E.
Myers, former Chief Executive Officer of the Company
beneficially owned approximately 7.84% of the Companys
outstanding common shares as of such date, and Kathryn A. Myers
and Ellen J. Myers, as co-trustees of the trust established by
their late mother Mary S. Myers, beneficially owned
approximately 4.58% of the Companys outstanding common
shares as of such date. Combined, these individuals have
sufficient voting power to influence actions requiring the
approval of our shareholders.
Legal &
Regulatory Actions
Changes in laws and regulations and approvals and decisions of
courts, regulators, and governmental bodies on any legal claims
known or unknown, could have an adverse affect on the
Companys financial results.
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ITEM 1B.
|
Unresolved
Staff Comments
|
None.
15
The following table sets forth by segment certain information
with respect to properties owned by the Company:
Distribution
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Approximate
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Approximate
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Floor Space
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Land Area
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Location
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(Square Feet)
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(Acres)
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Use
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Akron, Ohio
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129,000
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8
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Executive offices and warehousing
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Akron, Ohio
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60,000
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|
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5
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Warehousing
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Akron, Ohio
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31,000
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|
|
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2
|
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Warehousing
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Pomona, California
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17,700
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|
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1
|
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Sales and distribution
|
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Englewood, Colorado
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9,500
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1
|
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Sales and distribution
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Phoenix, Arizona
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8,200
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|
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1
|
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Sales and distribution
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Indianapolis, Indiana
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7,800
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|
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2
|
|
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Sales and distribution
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Cincinnati, Ohio
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7,500
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1
|
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Sales and distribution
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York, Pennsylvania
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7,400
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3
|
|
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Sales and distribution
|
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Minneapolis, Minnesota
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5,500
|
|
|
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1
|
|
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|
Sales and distribution
|
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Charlotte, North Carolina
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5,100
|
|
|
|
1
|
|
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|
Sales and distribution
|
|
Syracuse, New York
|
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4,800
|
|
|
|
1
|
|
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|
Sales and distribution
|
|
Franklin Park, Illinois
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4,400
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|
|
|
1
|
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|
Sales and distribution
|
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|
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|
|
|
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|
|
|
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|
Manufacturing
|
Sandusky, Ohio
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305,000
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|
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8
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|
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Manufacturing and distribution
|
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Springfield, Missouri
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227,000
|
|
|
|
19
|
|
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Manufacturing and distribution
|
|
Dawson Springs, Kentucky
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209,000
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|
|
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36
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Held for sale
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Wadsworth, Ohio
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197,000
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|
|
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23
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Manufacturing and distribution
|
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Sparks, Nevada
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185,000
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|
|
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11
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|
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Held for sale
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Bluffton, Indiana
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175,000
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17
|
|
|
|
Manufacturing and distribution
|
|
Roanoke Rapids, N. Carolina
|
|
|
172,000
|
|
|
|
20
|
|
|
|
Manufacturing and distribution
|
|
Shelbyville, Kentucky
|
|
|
160,000
|
|
|
|
8
|
|
|
|
Held for sale
|
|
Bristol, Indiana
|
|
|
166,000
|
|
|
|
12
|
|
|
|
Manufacturing and distribution
|
|
Jefferson, Ohio
|
|
|
115,000
|
|
|
|
11
|
|
|
|
Manufacturing and distribution
|
|
Lugoff, S. Carolina
|
|
|
115,000
|
|
|
|
12
|
|
|
|
Held for sale
|
|
Waco, Texas
|
|
|
60,000
|
|
|
|
5
|
|
|
|
Manufacturing and distribution
|
|
Reidsville, North Carolina
|
|
|
53,000
|
|
|
|
17
|
|
|
|
Manufacturing and distribution
|
|
The following table sets forth by segment certain information
with respect to facilities leased by the Company:
Manufacturing
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
|
|
|
|
|
|
|
Floor Space
|
|
|
Expiration Date
|
|
|
Location
|
|
(Square Feet)
|
|
|
of Lease
|
|
Use
|
|
Middlefield, Ohio
|
|
|
632,000
|
|
|
September 30, 2025
|
|
Manufacturing and distribution
|
Brantford, Ontario, Canada
|
|
|
216,000
|
|
|
January 9, 2012
|
|
Manufacturing and distribution
|
Cassopolis, Michigan
|
|
|
210,000
|
|
|
October 31, 2010
|
|
Manufacturing and distribution
|
Reidsville, N. Carolina
|
|
|
171,000
|
|
|
July 17, 2013
|
|
Manufacturing and distribution
|
Jaguariuna, Brazil
|
|
|
54,000
|
|
|
March 30, 2012
|
|
Manufacturing and distribution
|
Burlington, Ontario, Canada
|
|
|
46,000
|
|
|
January 9, 2012
|
|
Manufacturing and distribution
|
Milford, Ohio
|
|
|
22,000
|
|
|
August 31, 2010
|
|
Administration and sales
|
16
The Company also leases distribution facilities in 31 locations
throughout the United States and Canada which, in the aggregate,
amount to approximately 188,000 square feet of warehouse
and office space. All of these locations are used by the
Distribution Segment.
The Company believes that all of its properties, machinery and
equipment generally are well maintained and adequate for the
purposes for which they are used.
|
|
ITEM 3.
|
Legal
Proceedings
|
The Company is, in the ordinary course of business, a defendant
in various lawsuits and a party to various other legal
proceedings, some of which are covered in whole or in part by
insurance. We believe that the outcome of these lawsuits and
other proceedings will not individually or in the aggregate have
a future material adverse effect on our consolidated financial
position, results of operations or cash flows.
A number of parties, including the Company and its subsidiary,
Buckhorn, Inc., were identified in a planning document adopted
in October 2008 by the California Regional Water Quality Control
Board, San Francisco Bay Region (RWQCB). The planning
document relates to the presence of mercury, including amounts
contained in mining wastes, in and around the Guadalupe River
Watershed (Watershed) region in Santa Clara County,
California. Buckhorn has been alleged to be a successor in
interest to an entity that performed mining operations in a
portion of the Watershed area. The Company has not been
contacted by the RWQCB with respect to Watershed
clean-up
efforts that may result from the adoption of this planning
document. The extent of the mining wastes that may be the
subject of future cleanup has yet to be determined, and the
actions of the RWQCB have not yet advanced to the stage where a
reasonable estimate of remediation cost, if any is available.
Although assertion of a claim by the RWQCB is reasonably
possible, it is not possible at this time to estimate the amount
of any obligation the Company may incur for these cleanup
efforts within the Watershed region, or whether such cost would
be material to the Companys financial statements.
Executive
Officers of the Registrant
Set forth below is certain information concerning the executive
officers of the Registrant as of December 31, 2009.
Executive officers are appointed annually by the Board of
Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years as
|
|
|
|
Name
|
|
Age
|
|
|
Executive Officer
|
|
|
Title
|
|
John C. Orr
|
|
|
59
|
|
|
|
7
|
|
|
President and Chief Executive Officer
|
Donald A. Merril
|
|
|
45
|
|
|
|
4
|
|
|
Vice President, Chief Financial Officer and Corporate Secretary
|
David B. Knowles
|
|
|
49
|
|
|
|
1
|
|
|
Executive Vice President and Chief Operating Officer
|
Each executive officer has not been principally employed in the
capacities shown or similar ones with the Registrant for over
the past five years. Mr. Orr, President and Chief Executive
Officer, was appointed to his current position on May 1,
2005. Mr. Orr had been President and Chief Operating
Officer since 2003. Prior to that Mr. Orr was General
Manager of Buckhorn Inc., one of the Companys material
handling subsidiaries. Before coming to Myers Industries,
Mr. Orr had been employed by The Goodyear Tire and Rubber
Company for 28 years. His last position at Goodyear was
Vice President North America.
Mr. Merril, Vice President, Chief Financial Officer and
Corporate Secretary, was appointed to his current position on
April 26, 2006. Mr. Merril joined the Company on
January 25, 2006, prior to that he was with Newell
Rubbermaid Inc. Rubbermaid Home Products Division,
where he served as Vice President and Chief Financial Officer
since 2003. Mr. Merril joined Newell Rubbermaid in 2001
where he served as Chief Financial Officer of Newell
Rubbermaid Little Tikes.
Mr. Knowles joined the Company and was named Executive Vice
President and Chief Operating Officer on June 19, 2009.
Prior to that, he was President and Chief Executive Officer of
Aristech Acrylics LLC since 2003.
Section 16(a) of the Securities Exchange Act of 1934
requires the Registrants Directors, certain of its
executive officers and persons who own more than ten percent of
its Common Stock (Insiders) to file reports of
ownership and changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange, Inc., and
to furnish the Company with copies of all such forms they file.
The Company understands from the information provided to it by
the Insiders that they adhered to all filing requirements
applicable to the Section 16 Filers.
17
PART II
|
|
ITEM 5.
|
Market
for Registrants Common Stock and Related Stockholder
Matters and Issuer Purchases of Equity Securities
|
The Companys Common Stock is traded on the New York Stock
Exchange (ticker symbol MYE). The approximate number of
shareholders of record at December 31, 2009 was 1,665. High
and low stock prices and dividends for the last two years were:
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
Sales Price
|
|
|
|
|
Quarter Ended
|
|
High
|
|
|
Low
|
|
|
Dividends
|
|
|
March 31
|
|
$
|
8.28
|
|
|
$
|
2.91
|
|
|
|
.06
|
|
June 30
|
|
|
10.67
|
|
|
|
6.52
|
|
|
|
.06
|
|
September 30
|
|
|
11.00
|
|
|
|
7.52
|
|
|
|
.06
|
|
December 31
|
|
|
10.85
|
|
|
|
7.99
|
|
|
|
.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
Sales Price
|
|
|
|
|
Quarter Ended
|
|
High
|
|
|
Low
|
|
|
Dividends
|
|
|
March 31
|
|
$
|
15.09
|
|
|
$
|
9.73
|
|
|
|
.06
|
|
June 30
|
|
|
13.70
|
|
|
|
8.13
|
|
|
|
.06
|
|
September 30
|
|
|
14.20
|
|
|
|
7.43
|
|
|
|
.06
|
|
December 31
|
|
|
12.94
|
|
|
|
4.80
|
|
|
|
.06
|
|
18
See Item 12 of this
Form 10-K
for the Equity Compensation Plan Information Table which is
incorporated herein by reference.
Comparison
of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
Myers Industries Inc.
|
|
|
Return%
Cum $
|
|
|
|
100
|
|
|
|
|
15.15
135.36
|
|
|
|
|
8.75
147.20
|
|
|
|
|
-4.94
139.92
|
|
|
|
|
-43.24
79.42
|
|
|
|
|
17.18
79.70
|
|
S&P 500 Index
Total Return
|
|
|
Return%
Cum $
|
|
|
|
100
|
|
|
|
|
4.89
116.30
|
|
|
|
|
15.79
134.66
|
|
|
|
|
5.50
142.07
|
|
|
|
|
-36.99
89.51
|
|
|
|
|
26.45
102.08
|
|
S&P 600 Index
Total Return
|
|
|
Return%
Cum $
|
|
|
|
100
|
|
|
|
|
7.68
132.07
|
|
|
|
|
15.11
152.03
|
|
|
|
|
-0.30
151.58
|
|
|
|
|
-31.07
104.49
|
|
|
|
|
25.57
106.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
ITEM 6.
|
Selected
Financial Data
|
Thousands
of Dollars, Except Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Operations for the Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
701,834
|
|
|
$
|
813,541
|
|
|
$
|
855,705
|
|
|
$
|
699,312
|
|
|
$
|
654,642
|
|
Cost of sales
|
|
|
530,939
|
|
|
|
616,879
|
|
|
|
628,748
|
|
|
|
505,735
|
|
|
|
483,713
|
|
Selling
|
|
|
70,999
|
|
|
|
88,819
|
|
|
|
95,007
|
|
|
|
73,649
|
|
|
|
64,823
|
|
General and administrative
|
|
|
77,297
|
|
|
|
72,394
|
|
|
|
86,684
|
|
|
|
62,864
|
|
|
|
59,025
|
|
Impairment charges(1)
|
|
|
5,462
|
|
|
|
70,148
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other income(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
(26,750
|
)
|
|
|
0
|
|
|
|
0
|
|
Interest net
|
|
|
8,304
|
|
|
|
11,336
|
|
|
|
15,292
|
|
|
|
15,644
|
|
|
|
15,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
693,001
|
|
|
|
859,577
|
|
|
|
798,981
|
|
|
|
657,892
|
|
|
|
622,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
8,833
|
|
|
|
(46,035
|
)
|
|
|
56,724
|
|
|
|
41,420
|
|
|
|
31,783
|
|
Income taxes
|
|
|
1,838
|
|
|
|
(286
|
)
|
|
|
19,985
|
|
|
|
14,910
|
|
|
|
12,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
6,995
|
|
|
|
(45,749
|
)
|
|
|
36,739
|
|
|
|
26,510
|
|
|
|
19,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations per basic and diluted
share
|
|
$
|
.20
|
|
|
$
|
(1.30
|
)
|
|
$
|
1.05
|
|
|
$
|
.76
|
|
|
$
|
.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position At Year End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
509,966
|
|
|
$
|
568,900
|
|
|
$
|
697,552
|
|
|
$
|
661,983
|
|
|
$
|
765,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
206,548
|
|
|
|
232,648
|
|
|
|
277,809
|
|
|
|
307,523
|
|
|
|
289,581
|
|
Current liabilities
|
|
|
169,025
|
|
|
|
96,970
|
|
|
|
158,475
|
|
|
|
134,727
|
|
|
|
128,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
|
37,523
|
|
|
|
135,678
|
|
|
|
119,335
|
|
|
|
172,796
|
|
|
|
161,006
|
|
Other assets
|
|
|
145,000
|
|
|
|
137,347
|
|
|
|
205,773
|
|
|
|
203,160
|
|
|
|
279,958
|
|
Property, plant and equipment net
|
|
|
158,418
|
|
|
|
198,905
|
|
|
|
213,970
|
|
|
|
151,300
|
|
|
|
195,722
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
|
|
38,890
|
|
|
|
169,546
|
|
|
|
167,253
|
|
|
|
198,275
|
|
|
|
249,524
|
|
Other long term liabilities
|
|
|
5,682
|
|
|
|
6,396
|
|
|
|
4,014
|
|
|
|
12,922
|
|
|
|
12,667
|
|
Deferred income taxes
|
|
|
38,371
|
|
|
|
43,149
|
|
|
|
50,540
|
|
|
|
35,401
|
|
|
|
35,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity
|
|
|
257,998
|
|
|
|
252,839
|
|
|
|
317,270
|
|
|
|
280,659
|
|
|
$
|
339,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Outstanding
|
|
|
35,286,129
|
|
|
|
35,235,636
|
|
|
|
35,180,192
|
|
|
|
35,067,230
|
|
|
|
34,806,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Common Share
|
|
$
|
7.31
|
|
|
$
|
7.18
|
|
|
$
|
9.02
|
|
|
$
|
8.00
|
|
|
$
|
9.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends(3)
|
|
$
|
8,436
|
|
|
$
|
8,451
|
|
|
$
|
17,495
|
|
|
$
|
7,174
|
|
|
$
|
6,947
|
|
Dividends per Common Share(3)
|
|
|
0.24
|
|
|
|
0.24
|
|
|
|
0.50
|
|
|
|
0.20
|
|
|
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Basic Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding during the year
|
|
|
35,266,939
|
|
|
|
35,211,811
|
|
|
|
35,140,581
|
|
|
|
34,978,269
|
|
|
|
34,724,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In 2009, the Company had impairment charges of $5.5 million
related to certain property, plant and equipment related to the
restructuring plans in its manufacturing segments. The fourth
quarter of 2008, includes a goodwill impairment charge of
$60.1 million related to the Companys Automotive and
Custom segment and impairment charges of $10.0 million for
long-lived assets in the Lawn and Garden Segment. |
|
(2) |
|
A non-operating income gain of $26.8 million
($35.0 million, net of related expenses) was recognized
during the fourth quarter of 2007. This income resulted from a
termination fee paid in connection with the Companys
proposed merger. |
|
(3) |
|
Dividends in 2007 include a special dividend for
$9.9 million accrued but not paid until 2008. |
20
|
|
ITEM 7.
|
Managements
Discussion and Analysis of Results of Operations and Financial
Condition
|
Executive
Overview
The Company conducts its business activities in four distinct
business segments, including three in manufacturing and one in
distribution. The manufacturing segments consist of: Material
Handling, Lawn and Garden, and Automotive and Custom.
In our manufacturing segments, the Company designs,
manufactures, and markets a variety of plastic and rubber
products. These products range from plastic reusable material
handling containers and small parts storage bins to plastic
horticultural pots and hanging baskets, decorative resin
planters, plastic and rubber OEM parts, tire repair materials,
and custom plastic and rubber products. The Distribution Segment
is engaged in the distribution of tools, equipment and supplies
used for tire, wheel and undervehicle service on passenger,
heavy truck and off-road vehicles.
Results
of Operations: 2009 versus 2008
Net
Sales from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
% Change
|
|
|
Lawn & Garden
|
|
$
|
220.3
|
|
|
$
|
272.8
|
|
|
$
|
(52.5
|
)
|
|
|
(19
|
)%
|
Material Handling
|
|
$
|
254.1
|
|
|
$
|
261.2
|
|
|
$
|
(7.1
|
)
|
|
|
(3
|
)%
|
Distribution
|
|
$
|
163.0
|
|
|
$
|
187.1
|
|
|
$
|
(24.1
|
)
|
|
|
(13
|
)%
|
Auto & Custom
|
|
$
|
86.0
|
|
|
$
|
119.7
|
|
|
$
|
(33.7
|
)
|
|
|
(28
|
)%
|
Inter-segment elimination
|
|
$
|
(21.5
|
)
|
|
$
|
(27.3
|
)
|
|
$
|
(5.7
|
)
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
701.8
|
|
|
$
|
813.5
|
|
|
$
|
(111.7
|
)
|
|
|
(14
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for the 2009 were adversely affected by the weakness
in the general economy, which impacted all segments of the
Companys business. The sales decline was primarily due to
lower sales volumes. In addition, lower selling prices reduced
sales approximately $22 million and sales declined
$13 million from the adverse effect of foreign currency
translation, primarily the Canadian dollar.
Net sales in the Lawn and Garden segment in 2009 were down
$52.5 million or 19% compared to 2008. Approximately
$10.4 million of the decrease was due to foreign currency
translation from the unfavorable impact of the exchange rates
for the Canadian dollar. Excluding the impact of foreign
currency translation, sales declined due to reduced volumes of
$36.8 million and $5.3 million resulting from lower
selling prices.
In the Material Handling segment, sales decreased
$7.1 million or 3% in 2009 compared to the prior year. The
decrease reflects the impact of $14.3 million from lower
selling prices and $2.3 million of unfavorable impact from
foreign currency translation, which was partially offset by
higher volumes. Sales of custom molded pallets offset
significant declines for other reusable containers and storage
systems.
Net sales in the Distribution segment decreased
$24.1 million or 13% in 2009 compared to 2008. Sales were
down $17.6 million due to lower volumes from softer sales
of replacement tires and the impact of a weak economy which
reduced miles driven. These factors reduced demand for the
Companys tire service and retread consumable supplies. In
addition, sales of equipment in the Distribution segment
continued to be weak as tire dealers, auto dealers, fleet and
other customers reduced capital purchases. Slightly lower
selling prices also contributed to the decline in sales in 2009.
In the Auto and Custom segment, net sales in 2009 decreased
$33.7 million, or 28% compared to 2009. The decrease is due
to significant volume declines in the automotive, recreational
vehicle, marine and custom markets.
21
Cost of Sales & Gross Profit from Continuing
Operations:
|
|
|
|
|
|
|
|
|
Cost of Sales and Gross Profit
|
|
2009
|
|
|
2008
|
|
|
Cost of sales
|
|
$
|
530.9
|
|
|
$
|
616.9
|
|
Gross profit
|
|
$
|
170.9
|
|
|
$
|
196.7
|
|
Gross profit as a percentage of sales
|
|
|
24.3
|
%
|
|
|
24.2
|
%
|
Gross profit margin in 2009 of 24.3% was virtually unchanged
compared to 2008. Raw material costs, primarily for plastic
resins, were lower in 2009 compared to the prior year. In
addition, the liquidation of inventories valued at LIFO cost
reduced cost of sales by approximately $4.0 million in
2009. The impact of lower raw material costs and the liquidation
of LIFO inventories was offset by reductions in selling prices,
unfavorable product mix and increased unabsorbed overhead due to
lower volumes.
Selling,
General and Administrative (SG&A) Expenses from
Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A Expenses
|
|
2009
|
|
2008
|
|
Change
|
|
SG&A expenses
|
|
$
|
148.3
|
|
|
$
|
161.2
|
|
|
$
|
(12.9
|
)
|
SG&A expenses as a percentage of sales
|
|
|
21.1
|
%
|
|
|
19.8
|
%
|
|
|
(1.3
|
)
|
Selling and administrative expenses decreased $12.9 million
or 8% compared with 2008. Expenses in 2009 include charges of
approximately $16.6 million for consulting fees, severance,
movement of machinery and equipment and other restructuring
activities of the Companys manufacturing businesses.
SG&A expenses in 2008 included $7.4 million of charges
related to consulting and severance costs in restructuring the
Companys Lawn and Garden business. Excluding these
charges, SG&A expenses in 2009 declined $22.1 million
compared to 2008, primarily from reduced freight and selling
expenses due to lower sales volumes and savings from
restructuring and cost control initiatives.
Impairment
Charges from Continuing Operations:
In 2009, the Company continued the implementation of
restructuring plans and productivity programs in its
manufacturing businesses. In connection with these activities,
the Company recorded impairment charges of $2.0 million
related to restructuring its Lawn and Garden business,
$1.3 million for its Material Handling business, and
$2.2 million in the Auto and Custom Segment. The impairment
charges are the result of closing manufacturing facilities in
2009.
In 2008, the Company recorded impairment charges of
$70.1 million. This includes a charge of $60.1 million
for goodwill in the Automotive and Custom Segment. The
impairment was attributable to the significant decline in demand
over the latter part of 2008 and unfavorable projections for
sales in the automotive, heavy truck, recreational vehicle,
marine and other industrial markets at the end of 2008. Also, in
connection with the Companys restructuring of the Lawn and
Garden business, a charge of $10.0 million was recorded to
reflect the impairment of certain property, plant, and equipment
and intangible assets.
Interest
Expense from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Expense
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
% Change
|
|
|
Interest expense
|
|
$
|
8.3
|
|
|
$
|
11.3
|
|
|
$
|
(3.0
|
)
|
|
|
(27
|
)%
|
Outstanding borrowings
|
|
$
|
104.3
|
|
|
$
|
171.6
|
|
|
$
|
(67.3
|
)
|
|
|
(39
|
)%
|
Average borrowing rate
|
|
|
5.25
|
%
|
|
|
5.81
|
%
|
|
|
(.56
|
)
|
|
|
(10
|
)%
|
Net interest expense in 2009 decreased $3.0 million because
of lower average borrowing levels and lower interest rates.
22
Income
Before Taxes from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
% Change
|
|
|
Lawn & Garden
|
|
$
|
16.7
|
|
|
$
|
(1.8
|
)
|
|
$
|
18.5
|
|
|
|
|
|
Material Handling
|
|
$
|
13.6
|
|
|
$
|
26.6
|
|
|
$
|
(13.0
|
)
|
|
|
(49
|
)%
|
Distribution
|
|
$
|
13.7
|
|
|
$
|
17.5
|
|
|
$
|
(3.8
|
)
|
|
|
(22
|
)%
|
Auto & Custom
|
|
$
|
0.8
|
|
|
$
|
(54.2
|
)
|
|
$
|
55.0
|
|
|
|
|
|
Corporate and interest
|
|
$
|
(35.9
|
)
|
|
$
|
(34.2
|
)
|
|
$
|
(1.7
|
)
|
|
|
(5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
|
|
$
|
8.8
|
|
|
$
|
(46.0
|
)
|
|
$
|
54.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes in 2009 was $8.8 million compared to a
loss of $46.0 million in 2008. Results were significantly
impacted by restructuring and impairment charges totaling
$24.8 million in 2009 and $78.1 million in 2008,
including a $60.1 million goodwill impairment charge.
|
|
|
|
|
|
|
|
|
Income Taxes from Continuing Operations
|
|
2009
|
|
|
2008
|
|
|
Income (loss) before taxes
|
|
$
|
8.8
|
|
|
$
|
(46.0
|
)
|
Income tax (benefit) expense
|
|
$
|
1.8
|
|
|
$
|
(0.3
|
)
|
Effective tax rate
|
|
|
20.8
|
%
|
|
|
0.6
|
%
|
The effective tax rate increased to 20.8% in 2009 compared to
0.6% in 2008. The 20.8% effective rate for 2009 is lower than
the 35% U.S. Federal statutory rate due in part to the mix
of domestic and foreign composition of income and the related
foreign tax rate differences. Also, in 2009 the Company made an
adjustment to record previously unrecognized deferred tax assets
which increased the income tax benefit and deferred tax assets
by approximately $0.4 million. The Company determined that
this adjustment was immaterial to its current and prior period
financial statements. In addition, in 2009 the Company
recognized tax benefits of $0.3 million from a reduction in
valuation allowances and approximately $0.2 million from a
reduction of uncertain tax liabilities. The effective rate of
0.6% in 2008 was primarily due to the impact of the
$41.9 million portion of goodwill impairment that was not
deductible for tax purposes.
Results
of Operations: 2008 versus 2007
Net
Sales from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
% Change
|
|
|
Lawn & Garden
|
|
$
|
272.8
|
|
|
$
|
300.9
|
|
|
$
|
(28.1
|
)
|
|
|
(9
|
)%
|
Material Handling
|
|
$
|
261.2
|
|
|
$
|
267.2
|
|
|
$
|
(6.0
|
)
|
|
|
(2
|
)%
|
Distribution
|
|
$
|
187.1
|
|
|
$
|
203.2
|
|
|
$
|
(16.1
|
)
|
|
|
(8
|
)%
|
Auto & Custom
|
|
$
|
119.7
|
|
|
$
|
107.8
|
|
|
$
|
11.9
|
|
|
|
11
|
%
|
Inter-segment elimination
|
|
$
|
(27.3
|
)
|
|
$
|
(23.4
|
)
|
|
$
|
(3.9
|
)
|
|
|
(16
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
813.5
|
|
|
$
|
855.7
|
|
|
$
|
(42.2
|
)
|
|
|
(5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for 2008 were $813.5 million, a decrease of 5%
from the $855.7 million reported in 2007. Sales in 2008
were adversely affected by the weakness in the general economy,
which impacted virtually all segments of the Companys
business and all markets in which the Company sells. The sales
decline is due to lower sales volumes which more than offset the
benefit of approximately $38 million from increased selling
prices.
Net sales in the Lawn and Garden segment in 2008 were down
$28.1 million or 9% compared to 2007. The decline in sales
in 2008 is due to lower unit volumes because of reduced consumer
purchasing due to the weak economy and a reduction in new
housing construction. In the Lawn and Garden Segment, the impact
of reduced volume more than offset the increase of approximately
$20.1 million due to higher selling prices. In the Material
Handling segment, sales decreased $6.0 million or 2% in
2008 compared to the prior year. The decrease reflects the
impact of volume declines in automotive, industrial and other
sectors which offset the benefit of approximately
$15.3 million from price increases.
23
Net sales in the Distribution segment decreased
$16.1 million or 8% in 2008 compared to the prior year.
Sales were down due to lower unit volumes of $15.6 million
from softer sales of replacement tires and the impact of higher
fuel prices and a weak economy which reduced miles driven. These
factors reduced demand for the Companys tire service and
retread consumable supplies. In addition, sales of equipment in
the Distribution segment were weak as tire dealers, auto
dealers, fleet and other customers deferred capital purchases.
In the Automotive and Custom segment, net sales in 2008
increased $11.9 million, or 11% compared to the prior year,
as higher selling prices of $3.6 million and gains in niche
custom molding markets offset significant volume declines in
automotive and heavy truck markets.
Cost
of Sales & Gross Profit from Continuing
Operations:
|
|
|
|
|
|
|
|
|
Cost of Sales and Gross Profit
|
|
2008
|
|
|
2007
|
|
|
Cost of sales
|
|
$
|
616.9
|
|
|
$
|
628.7
|
|
Gross profit
|
|
$
|
196.7
|
|
|
$
|
227.0
|
|
Gross profit as a percentage of sales
|
|
|
24.2
|
%
|
|
|
26.5
|
%
|
Gross profit margin declined to 24.2% in 2008 compared with
26.5% in the prior year. The decline in gross profit and margin
was primarily due to significantly higher raw material costs,
particularly for plastic resins. Prices for high-density
polyethylene and polypropylene resins were, on average, more
than 20% higher in 2008 compared to 2007. In addition, lower
volumes resulting from weakness in the U.S. economy reduced
capacity utilization in the Companys manufacturing
businesses and increased unabsorbed manufacturing overhead
costs. The negative impact of higher raw material costs and
reduced volumes in 2008 more than offset the reduction in cost
from 2007 which included, $7.0 million of restructuring
charges and purchase accounting adjustments.
Selling,
General and Administrative (SG&A) Expenses from
Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A Expenses
|
|
2008
|
|
2007
|
|
Change
|
|
SG&A expenses
|
|
$
|
161.2
|
|
|
$
|
181.7
|
|
|
$
|
(20.5
|
)
|
SG&A expenses as a percentage of sales
|
|
|
19.8
|
%
|
|
|
21.2
|
%
|
|
|
(1.4
|
)
|
Selling and administrative expenses decreased $20.5 million
or 11.3% compared with 2007. The reduction in SG&A expense
in 2008 reflects the impact of lower sales volumes on selling
expenses, including shipping and handling costs of
$4.7 million. SG&A expenses in 2008 contain unusual
items of approximately $7.4 million, including
approximately $5.7 million for consulting fees and other
expenses incurred in connection with the restructuring of its
Lawn & Garden business while expenses in 2007 included
approximately $12.7 million of unusual charges, including:
restructuring expenses, costs related to the Companys
proposed merger transaction and foreign currency transaction
losses. Excluding the impact of the unusual items, operating
expenses in 2008 were approximately 18.9% of sales compared with
19.7% in 2007. The improvement in operating expense leverage in
2008 reflects the benefit of restructuring programs undertaken
in 2007 and ongoing cost control programs and productivity
initiatives.
Impairment
Charges from Continuing Operations:
The Company recorded impairment charges of $70.1 million in
the fourth quarter of 2008. This includes a charge of
$60.1 million for goodwill in the Automotive and Custom
Segment. The impairment was attributable to the significant
decline in demand over the latter part of 2008 and future
projections for sales in the automotive, heavy truck,
recreational vehicle, marine and other industrial markets served
by the Automotive and Custom reporting unit. Also, in connection
with the Companys restructuring of the Lawn and Garden
Segment, a charge of $10.0 million was recorded to reflect
the impairment of certain property, plant, and equipment and
intangible assets.
24
Interest
Expense from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Expense
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
% Change
|
|
|
Interest expense
|
|
$
|
11.3
|
|
|
$
|
15.3
|
|
|
$
|
(4.0
|
)
|
|
|
(26
|
)%
|
Outstanding borrowings
|
|
$
|
171.6
|
|
|
$
|
170.9
|
|
|
$
|
0.7
|
|
|
|
1
|
%
|
Average borrowing rate
|
|
|
5.81
|
%
|
|
|
5.95
|
%
|
|
|
(.14
|
)
|
|
|
(2
|
)%
|
Net interest expense in 2008 decreased $4.0 million because
of lower interest rates and lower average borrowing levels.
Income
Before Taxes from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
% Change
|
|
|
Lawn & Garden
|
|
$
|
(1.8
|
)
|
|
$
|
0.9
|
|
|
$
|
(2.7
|
)
|
|
|
|
%
|
Material Handling
|
|
$
|
26.6
|
|
|
$
|
40.4
|
|
|
$
|
(13.8
|
)
|
|
|
(34
|
)%
|
Distribution
|
|
$
|
17.5
|
|
|
$
|
20.5
|
|
|
$
|
(3.0
|
)
|
|
|
(14.8
|
)%
|
Auto & Custom
|
|
$
|
(54.2
|
)
|
|
$
|
8.4
|
|
|
$
|
(62.6
|
)
|
|
|
|
|
Corporate and interest
|
|
$
|
(34.2
|
)
|
|
$
|
(13.5
|
)
|
|
$
|
(20.7
|
)
|
|
|
(153
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
|
|
$
|
(46.0
|
)
|
|
$
|
56.7
|
|
|
$
|
(102.7
|
)
|
|
|
(181
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key factors resulting in the 2008 loss include impairment
charges of $70.1 million on certain goodwill and other long
lived assets, lower sales volumes due to softness in the economy
and significantly higher raw material costs. In 2007, the impact
of restructuring expenses, foreign currency transaction losses,
costs incurred in connection with the proposed merger agreement
and other unusual items reduced income before taxes by an
aggregate $19.7 million.
Income
Taxes from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Income (loss) before taxes
|
|
$
|
(46.0
|
)
|
|
$
|
56.7
|
|
Income tax (benefit) expense
|
|
$
|
(0.3
|
)
|
|
$
|
20.0
|
|
Effective tax rate
|
|
|
0.6
|
%
|
|
|
35.2
|
%
|
The effective tax rate of 0.6% in 2008 was lower than the
statutory rate of 35%, primarily because of the impact of the
$41.9 million portion of the goodwill impairment that was
not deductible for tax purposes. As discussed above, the Company
recorded a total impairment charge of $60.1 million for
goodwill in the Automotive and Custom Segment.
Financial
Condition & Liquidity and Capital Resources
Cash provided by operating activities from continuing operations
was $73.2 million for the year ended December 31, 2009
compared to $61.0 million in 2008. The increase of
$12.2 million was primarily attributable to an increase of
approximately $26.3 million of cash from working capital in
2009 compared to the prior year. Income from continuing
operations was $7.0 million in 2009 compared to a loss of
$45.7 million in 2008. Income in 2009 included impairment
charges, depreciation and other non-cash charges of
$39.4 million compared to non-cash charges in 2008 of
$106.1 million, including goodwill and fixed asset
impairments of $70.1 million.
Cash provided from working capital was $26.8 million in
2009 compared to $0.6 million in 2008. During 2009, cash
was provided by working capital from reductions in inventories
of $10.9 million and accounts receivable of
$7.4 million as a result of restructuring activities and
aggressive working capital initiatives. In addition, cash of
$12.5 million was provided by an increase in accounts
payable and accruals. In 2008, working capital was unfavorably
impacted by a $31.8 million reduction in accounts payable
and accruals, in part due to payment of taxes of
$12.6 million and expenses of $5.8 million related to
the $35 million fee received in December 2007 in connection
with the termination of a proposed merger agreement.
25
Capital expenditures were approximately $16.0 million in
2009 compared to $40.6 million in 2008. Capital spending in
2009 was lower than the preceding year when higher than normal
investments were made for new manufacturing, molding and
automated handling technology. The Company anticipates capital
spending to be in the range of $20 to $25 million for 2010.
In 2009, the Company also paid $1.2 million for the
remaining 50% interest in Amerikan LLC, a previously held equity
investment, and received approximately $8.4 million in cash
proceeds from the sale of property, plant & equipment.
Total debt at December 31, 2009 was approximately
$104.3 million compared with $171.6 million at
December 31, 2008. Of the debt outstanding at
December 31, 2009, approximately $65.4 million is
currently payable, including $65 million of Senior Notes
due in December 2010. The Companys Credit Agreement
provides available borrowing up to $250 million and, as of
December 31, 2009, there was approximately
$248 million available under this agreement. The Credit
Agreement expires in October 2011 and, as of December 31,
2009 the Company was in compliance with all its debt covenants.
The most restrictive financial covenants for all of the
Companys debt are an interest coverage ratio and a
leverage ratio, defined as earnings before interest, taxes,
depreciation and amortization, as adjusted, compared to total
debt. The ratios as of and for the period ended
December 31, 2009 are shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
Required Level
|
|
Actual Level
|
|
Interest Coverage Ratio
|
|
|
2.5 to 1 (minimum
|
)
|
|
|
4.6
|
|
Leverage Ratio
|
|
|
3.5 to 1 (maximum
|
)
|
|
|
1.5
|
|
The Company believes that cash flows from operations and
available borrowing under its Credit Agreement will be
sufficient to meet expected business requirements including
capital expenditures, dividends, working capital, and debt
service into the foreseeable future.
The following summarizes the Companys estimated future
cash outflows from financial contracts and commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
2-3
|
|
|
4-5
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
Thereafter
|
|
|
Total
|
|
|
|
(Amounts in Thousands)
|
|
|
Principal payments on debt
|
|
$
|
65,425
|
|
|
$
|
3,250
|
|
|
$
|
35,640
|
|
|
|
0
|
|
|
$
|
104,315
|
|
Interest
|
|
|
6,540
|
|
|
|
6,850
|
|
|
|
5,024
|
|
|
|
0
|
|
|
|
18,414
|
|
Lease payments
|
|
|
9,784
|
|
|
|
11,886
|
|
|
|
7,020
|
|
|
|
22,610
|
|
|
|
51,300
|
|
Retirement benefits
|
|
|
396
|
|
|
|
812
|
|
|
|
832
|
|
|
|
5,597
|
|
|
|
7,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
82,145
|
|
|
$
|
22,798
|
|
|
$
|
48,516
|
|
|
$
|
28,207
|
|
|
$
|
181,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Market
Risk and Derivative Financial Instruments
The Company has certain financing arrangements that require
interest payments based on floating interest rates. The
Companys financial results are subject to changes in the
market rate of interest. At present, the Company has not entered
into any interest rate swaps or other derivative instruments to
fix the interest rate on any portion of its financing
arrangements with floating rates. Accordingly, based on current
debt levels at December 31, 2009, if market interest rates
increase one percent, the Companys interest expense would
increase approximately $24,000 annually.
Some of the Companys subsidiaries operate in foreign
countries and their financial results are subject to exchange
rate movements. The Company has operations in Canada with
foreign currency exposure, primarily due to sales made from
businesses in Canada to customers in the United States. These
sales are denominated in US dollars. In addition, the
Companys subsidiary in Brazil has loans denominated in
U.S. dollars. In the fourth quarter of 2007, the Company
began a systematic program to limit its exposure to fluctuations
in exchange rates related to certain assets and liabilities of
its operations in Canada and Brazil that are denominated in
U.S. dollars. The net exposure generally ranges from $5 to
$10 million. The foreign currency contracts and
arrangements created under this program are not designated as
hedged items under FASB ASC 815, Derivatives and Hedging,
and accordingly, the changes in the fair value of the foreign
currency arrangements, which have been immaterial, are recorded
in the
26
income statement. The Companys foreign currency
arrangements are generally three months or less and, as of
December 31, 2009, the Company had no foreign currency
arrangements or contracts in place.
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. The
Company currently has no derivative contracts to hedge this
risk; however, the Company also has no significant purchase
obligations to purchase fixed quantities of such commodities in
future periods. Significant future increases in the cost of
plastic resin or other adverse changes in the general economic
environment could have a material adverse impact on the
Companys financial position, results of operations or cash
flows.
Critical
Accounting Policies
Our discussion and analysis of the Companys financial
condition and results of operations are based on the
accompanying consolidated financial statements, which are
prepared in accordance with accounting principles generally
accepted in the United States of America. As indicated in the
Summary of Significant Accounting Policies included in the notes
to the consolidated financial statements (included in
Item 8 of this report), the amount of assets, liabilities,
revenue and expenses reported are affected by estimates and
judgements that are necessary to comply with generally accepted
accounting principles. We base our estimates on prior experience
and other assumptions that we consider reasonable to our
circumstances. We believe the following matters may involve a
high degree of judgement and complexity.
Bad Debts The Company evaluates the collectability
of accounts receivable based on a combination of factors. In
circumstances where the Company is aware of a specific
customers inability to meet its financial obligations, a
specific allowance for doubtful accounts is recorded against
amounts due to reduce the net recognized receivable to the
amount the Company reasonably believes will be collected.
Additionally, the Company also reviews historical trends for
collectability in determining an estimate for its allowance for
doubtful accounts. If economic circumstances change
substantially, estimates of the recoverability of amounts due
the Company could be reduced by a material amount.
Inventory Inventories are valued at the lower of
cost or market. Cost is determined by the
last-in,
first-out (LIFO) method for approximately 26 percent of the
Companys inventories and the
first-in,
first-out (FIFO) method for all other inventories. Where
appropriate, standard cost systems are utilized for purposes of
determining cost; the standards are adjusted as necessary to
ensure they approximate actual costs. Estimates of lower of cost
or market value of inventory are determined based upon current
economic conditions, historical sales quantities and patterns
and, in some cases, the specific risk of loss on specifically
identified inventories.
Goodwill Goodwill is subjected to annual impairment
testing, unless significant changes in circumstances indicate a
potential impairment may have occurred sooner. Goodwill
impairment testing requires, in part, that we estimate the fair
value of our business units which, in turn, requires that we
make judgments concerning future cash flows and appropriate
discount rates for those businesses. Fair values are established
using comparative market multiples in the current market
conditions and discounted cash flows. The discount rates used
are based on the weighted average cost of capital determined for
each of the Companys reporting units and ranged from 9.8%
to 13.0% in 2009. In addition we make certain judgments about
the selection of comparable companies used in determining market
multiples in valuing our business units. We also compare our
book value and the estimates of fair value of the reporting
units to our market capitalization as of and at dates near the
annual testing date. Management uses this comparison as
additional evidence of the fair value of the Company, as our
market capitalization may be suppressed by other factors such as
the control premium associated with a controlling shareholder,
our leverage or general expectations regarding future operating
results and cash flows. In situations where the implied value of
the Company under the Income or Market Approach are
significantly different than our market capitalization we
re-evaluate and adjust, if necessary, the assumptions underlying
our Income and Market Approach models.
Contingencies In the ordinary course of business, we
are involved in various legal proceedings and contingencies. We
have recorded liabilities for these matters in accordance with
FASB ASC 450, Contingencies. ASC 450 requires a
liability to be recorded based on our estimate of the probable
cost of the resolution of a contingency. The actual resolution
of these contingencies may differ from our estimates. If a
contingency were settled for an amount greater than our
estimates, a future charge to income would result. Likewise, if
a contingency were settled for an amount that is less than our
estimate, a future credit to income would result.
27
Income Taxes Deferred income taxes are provided to
recognize the effect of temporary differences between financial
and tax reporting. Deferred income taxes are not provided for
undistributed earnings of foreign consolidated subsidiaries as
it is our intention to reinvest such earnings for an indefinite
period of time. The Company has significant operations outside
the United States and in jurisdictions with statutory tax rates
lower than in the United States. As a result, significant tax
and treasury planning of future operations are necessary to
determine the proper amounts of tax assets, liabilities and
expense to be recognized. FASB ASC 740 Income Taxes, requires
that deferred tax assets be reduced by valuation allowance, if
based on all available evidence, it is more likely than not that
the deferred tax asset will not be realized. The Company
evaluates the recovery of its deferred tax assets by assessing
the adequacy of future expected taxable income from all sources,
including reversal of taxable temporary differences, forecasted
operating earnings and available tax planning strategies. These
sources of income inherently rely heavily on estimates.
Also, significant judgment is required in determining the
Companys tax expense and in evaluating its tax positions,
including evaluating uncertainties under ASC 740. We review
our tax positions quarterly and adjust the balances as new
information becomes available.
Recent
Pronouncements
In June 2009, the FASB issued Statement No. 168, The
FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles (SFAS 168).
SFAS 168 replaces FASB Statement No. 162, The
Hierarchy of Generally Accepted Accounting Principles, and
establishes the FASB Accounting Standards Codification (the
Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial
statements in conformity with generally accepted accounting
principles (GAAP). SFAS 168 is effective for interim and
annual periods ending after September 15, 2009. Beginning
in the third quarter of 2009, the Companys financial
statements refer to the Codification.
In December 2007, the FASB issued Statement No. 141R
Business Combinations and FASB Statement
No. 160, Non-Controlling Interests in Consolidated
Financial Statements (included in FASB ASC 805).
Statements 141R and 160 require most identifiable assets,
liabilities, non-controlling interests, and goodwill acquired in
a business combination to be recorded at full fair
value and require non-controlling interests (previously
referred to as minority interests) to be reported as a component
of equity, which changes the accounting for transactions with
non-controlling shareholders. The adoption of these standards
did not have a material impact to the Companys statement
of financial position, result of operations or cash flows. The
Company will apply the guidance of the statements to business
combinations in 2009 and beyond.
Effective January 1, 2009, the Company adopted
SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, and amendment of
SFAS No. 133 (FASB ASC 815). The Statement
requires enhanced disclosures about an entitys derivative
and hedging activities. The adoption of this standard did not
have a material impact to the Companys statement of
financial position, results of operations or cash flows.
The Company adopted SFAS No. 157, Fair Value
Measurements (FASB ASC 820) as of January 1,
2008. SFAS 157 establishes a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair
value. These tiers include: Level 1, defined as observable
inputs such as quoted prices in active markets; Level 2,
defined as inputs other than quoted prices in active markets
that are either directly or indirectly observable; and
Level 3, defined as unobservable inputs in which little or
no market data exists, therefore requiring an entity to develop
its own assumptions. FASB Staff Position
157-2,
Effective Date of FASB Statement No. 157,
applies to nonfinancial assets and nonfinancial liabilities and
was effective January 1, 2009. The adoption did not have a
material effect on the Companys statement of financial
position, results of operations or cash flows.
28
|
|
ITEM 8.
|
Financial
Statements and Supplementary Data
|
Summarized
Quarterly Results of Operations
Thousands of Dollars, Except Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 2009
|
|
March 31
|
|
|
June 30
|
|
|
Sept. 30
|
|
|
Dec. 31
|
|
|
Total
|
|
|
Net Sales
|
|
$
|
182,689
|
|
|
$
|
165,439
|
|
|
$
|
165,412
|
|
|
$
|
188,294
|
|
|
$
|
701,834
|
|
Gross Profit
|
|
|
55,480
|
|
|
|
41,305
|
|
|
|
36,526
|
|
|
|
37,585
|
|
|
|
170,895
|
|
Income (loss) from continuing operations
|
|
|
6,257
|
|
|
|
(725
|
)
|
|
|
(580
|
)
|
|
|
2,042
|
|
|
|
6,995
|
|
Per Basic and Diluted Share
|
|
|
.18
|
|
|
|
(.02
|
)
|
|
|
(.02
|
)
|
|
|
.06
|
|
|
|
.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 2008
|
|
March 31
|
|
|
June 30
|
|
|
Sept. 30
|
|
|
Dec. 31
|
|
|
Total
|
|
|
Net Sales
|
|
$
|
234,295
|
|
|
$
|
200,060
|
|
|
$
|
199,880
|
|
|
$
|
179,306
|
|
|
$
|
813,541
|
|
Gross Profit
|
|
|
57,872
|
|
|
|
47,600
|
|
|
|
46,736
|
|
|
|
44,455
|
|
|
|
196,662
|
|
Income (loss) from continuing operations
|
|
|
8,528
|
|
|
|
2,932
|
|
|
|
1,700
|
|
|
|
(58,909
|
)
|
|
|
(45,749
|
)
|
Per Basic and Diluted Share
|
|
|
.24
|
|
|
|
.08
|
|
|
|
.05
|
|
|
|
(1.67
|
)
|
|
|
(1.30
|
)
|
In the fourth quarter of 2009, the Company recognized a gain of
approximately $3.3 million from the sale of a closed
manufacturing facility in its Lawn and Garden Segment. In
addition, fourth quarter charges of $1.3 million for
impairment of long lived assets and $4.2 million for
severance, lease liability and other costs were incurred in
connection with restructuring activities in its Material
Handling and Lawn and Garden businesses.
In the fourth quarter of 2008, the Company recognized a goodwill
impairment charge of $60.1 million related to its
Automotive and Custom segment and charges of $13.5 million
for impairment of long-lived assets and other expenses in
connection with the restructuring of its Lawn and Garden
Segment. In addition, the fourth quarter of 2008 benefited
approximately $3.5 million from the reduction of accrued
bonus and profit sharing expenses.
29
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board
of Directors
Myers Industries, Inc.:
We have audited the accompanying statements of consolidated
financial position of Myers Industries, Inc. and subsidiaries
(Company) as of December 31, 2009 and 2008, and the related
statements of consolidated (loss) income, shareholders
equity and comprehensive (loss) income, and cash flows for each
of the years in the three-year period ended December 31,
2009. These consolidated financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our 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 audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Myers Industries, Inc. and subsidiaries as of
December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 2009, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
Companys internal control over financial reporting as of
December 31, 2009, based on criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated March 12, 2010,
expressed an unqualified opinion on the effectiveness of the
Companys internal control over financial reporting.
/s/ KPMG LLP
Cleveland, Ohio
March 12, 2010
30
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES
Statements of Consolidated (Loss) Income
For The Years Ended December 31, 2009, 2008 and 2007
(Dollars in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net sales
|
|
$
|
701,834
|
|
|
$
|
813,541
|
|
|
$
|
855,705
|
|
Cost of sales
|
|
|
530,939
|
|
|
|
616,879
|
|
|
|
628,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
170,895
|
|
|
|
196,662
|
|
|
|
226,957
|
|
Selling expenses
|
|
|
70,999
|
|
|
|
88,819
|
|
|
|
95,007
|
|
General and administrative expenses
|
|
|
77,297
|
|
|
|
72,394
|
|
|
|
86,684
|
|
Impairment charges
|
|
|
5,462
|
|
|
|
70,148
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,758
|
|
|
|
231,361
|
|
|
|
181,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
17,137
|
|
|
|
(34,699
|
)
|
|
|
45,266
|
|
Other income, net
|
|
|
0
|
|
|
|
0
|
|
|
|
26,750
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
(835
|
)
|
|
|
(1,262
|
)
|
|
|
(284
|
)
|
Expense
|
|
|
9,139
|
|
|
|
12,598
|
|
|
|
15,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,304
|
|
|
|
11,336
|
|
|
|
15,292
|
|
Income (loss) from continuing operations before income taxes
|
|
|
8,833
|
|
|
|
(46,035
|
)
|
|
|
56,724
|
|
Income tax (benefit) expense
|
|
|
1,838
|
|
|
|
(286
|
)
|
|
|
19,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) income from continuing operations
|
|
|
6,995
|
|
|
|
(45,749
|
)
|
|
|
36,739
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(7,678
|
)
|
|
|
1,256
|
|
|
|
17,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(683
|
)
|
|
$
|
(44,493
|
)
|
|
$
|
54,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
.20
|
|
|
$
|
(1.30
|
)
|
|
$
|
1.05
|
|
Discontinued operations
|
|
|
(.22
|
)
|
|
|
.04
|
|
|
|
.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(.02
|
)
|
|
$
|
(1.26
|
)
|
|
$
|
1.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
.20
|
|
|
$
|
(1.30
|
)
|
|
$
|
1.04
|
|
Discontinued operations
|
|
|
(.22
|
)
|
|
|
.04
|
|
|
|
.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(.02
|
)
|
|
$
|
(1.26
|
)
|
|
$
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
statements.
31
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES
Statements of Consolidated Financial Position
As of December 31, 2009 and 2008
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
4,728
|
|
|
$
|
10,417
|
|
Accounts receivable-less allowances of $4,402 and $6,489
respectively
|
|
|
86,674
|
|
|
|
94,780
|
|
Inventories
|
|
|
|
|
|
|
|
|
Finished and in-process products
|
|
|
65,522
|
|
|
|
79,381
|
|
Raw materials and supplies
|
|
|
34,679
|
|
|
|
34,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,201
|
|
|
|
113,533
|
|
Prepaid expenses
|
|
|
8,612
|
|
|
|
4,347
|
|
Deferred income taxes
|
|
|
6,333
|
|
|
|
9,571
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
206,548
|
|
|
|
232,648
|
|
Other Assets
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
111,927
|
|
|
|
109,862
|
|
Patents and other intangible assets
|
|
|
20,003
|
|
|
|
22,291
|
|
Other
|
|
|
13,070
|
|
|
|
5,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,000
|
|
|
|
137,347
|
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
Land
|
|
|
3,989
|
|
|
|
5,403
|
|
Buildings and leasehold improvements
|
|
|
53,283
|
|
|
|
79,419
|
|
Machinery and equipment
|
|
|
370,042
|
|
|
|
431,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
427,314
|
|
|
|
516,556
|
|
Less allowances for depreciation and amortization
|
|
|
(268,896
|
)
|
|
|
(317,651
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
158,418
|
|
|
|
198,905
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
509,966
|
|
|
$
|
568,900
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
statements.
32
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES
Statements of Consolidated Financial Position
As of December 31, 2009 and 2008
(Dollars in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Liabilities and Shareholders Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
63,916
|
|
|
$
|
54,993
|
|
Accrued expenses
|
|
|
|
|
|
|
|
|
Employee compensation
|
|
|
14,008
|
|
|
|
12,989
|
|
Taxes, other than income taxes
|
|
|
1,187
|
|
|
|
1,813
|
|
Income taxes
|
|
|
6,405
|
|
|
|
3,221
|
|
Accrued interest
|
|
|
397
|
|
|
|
791
|
|
Other
|
|
|
17,687
|
|
|
|
21,142
|
|
Current portion of long-term debt
|
|
|
65,425
|
|
|
|
2,021
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
169,025
|
|
|
|
96,970
|
|
Long-term debt, less current portion
|
|
|
38,890
|
|
|
|
169,546
|
|
Other liabilities
|
|
|
5,682
|
|
|
|
6,396
|
|
Deferred income taxes
|
|
|
38,371
|
|
|
|
43,149
|
|
Shareholders Equity
|
|
|
|
|
|
|
|
|
Serial Preferred Shares (authorized 1,000,000 shares; none
issued and outstanding)
|
|
|
0
|
|
|
|
0
|
|
Common Shares, without par value (authorized
60,000,000 shares; outstanding 35,286,129 and
35,235,636 shares, respectively)
|
|
|
21,474
|
|
|
|
21,451
|
|
Additional paid-in capital
|
|
|
278,894
|
|
|
|
275,987
|
|
Accumulated other comprehensive income (loss)
|
|
|
6,777
|
|
|
|
(4,570
|
)
|
Retained (deficit) income
|
|
|
(49,147
|
)
|
|
|
(40,029
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
257,998
|
|
|
|
252,839
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
509,966
|
|
|
$
|
568,900
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
statements.
33
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES
Statements of Consolidated Shareholders Equity
and Comprehensive Income (Loss)
For The Years Ended December 31, 2009, 2008 and 2007
(Dollars in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Comprehensive
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
|
Common Shares
|
|
|
Paid-In
|
|
|
(Loss)
|
|
|
Income
|
|
|
(Loss)
|
|
|
|
Number
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
(Deficit)
|
|
|
Income
|
|
|
Balance at December 31, 2006
|
|
|
35,067,230
|
|
|
$
|
21,348
|
|
|
$
|
270,836
|
|
|
$
|
12,497
|
|
|
$
|
(24,023
|
)
|
|
$
|
(50,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
54,736
|
|
|
|
54,736
|
|
Sales under option plans
|
|
|
83,232
|
|
|
|
51
|
|
|
|
755
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Employees stock purchase plan
|
|
|
24,697
|
|
|
|
15
|
|
|
|
400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax benefit for stock options exercised
|
|
|
0
|
|
|
|
0
|
|
|
|
161
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Dividend reinvestment plan
|
|
|
5,033
|
|
|
|
3
|
|
|
|
90
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Stock based compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
1,376
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Foreign currency translation adjustment
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7,564
|
|
|
|
0
|
|
|
|
7,564
|
|
Dividends $.50 per share
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(17,495
|
)
|
|
|
0
|
|
Pension liability
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8
|
)
|
|
|
0
|
|
|
|
(9
|
)
|
Adoption of FIN 48
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(302
|
)
|
|
|
0
|
|
Realization of amounts previously recognized in AOCI on sale of
discontinued operations
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(10,733
|
)
|
|
|
0
|
|
|
|
(10,733
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
35,180,192
|
|
|
$
|
21,417
|
|
|
$
|
273,618
|
|
|
$
|
9,320
|
|
|
$
|
12,915
|
|
|
$
|
51,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
(44,493
|
)
|
|
$
|
(44,493
|
)
|
Sales under option plans
|
|
|
16,407
|
|
|
|
20
|
|
|
|
319
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Employees stock purchase plan
|
|
|
32,566
|
|
|
|
10
|
|
|
|
115
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax benefit for stock options
|
|
|
0
|
|
|
|
0
|
|
|
|
5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Dividend reinvestment plan
|
|
|
6,471
|
|
|
|
4
|
|
|
|
56
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Stock based compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
1,875
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Foreign currency translation
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(11,728
|
)
|
|
|
0
|
|
|
|
(11,728
|
)
|
Dividends $.24 per share
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8,451
|
)
|
|
|
0
|
|
Pension liability
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(2,161
|
)
|
|
|
0
|
|
|
|
(2,161
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
35,235,636
|
|
|
$
|
21,451
|
|
|
$
|
275,987
|
|
|
$
|
(4,570
|
)
|
|
$
|
(40,029
|
)
|
|
$
|
(58,383
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(683
|
)
|
|
|
(683
|
)
|
Restricted shares issued
|
|
|
11,750
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Employees stock purchase plan
|
|
|
23,828
|
|
|
|
14
|
|
|
|
135
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Dividend reinvestment plan
|
|
|
14,915
|
|
|
|
9
|
|
|
|
113
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Stock based compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
2,660
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Foreign currency translation
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,643
|
|
|
|
0
|
|
|
|
10,643
|
|
Dividends $.24 per share
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8,436
|
)
|
|
|
0
|
|
Pension liability
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
704
|
|
|
|
0
|
|
|
|
704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
35,286,129
|
|
|
$
|
21,474
|
|
|
$
|
278,894
|
|
|
$
|
6,777
|
|
|
$
|
(49,147
|
)
|
|
$
|
10,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
statements.
34
MYERS
INDUSTRIES, INC.AND SUBSIDIARIES
Statements of Consolidated Cash Flows
For the
Years Ended December 31, 2009, 2008 and 2007
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(683
|
)
|
|
$
|
(44,493
|
)
|
|
$
|
54,736
|
|
Net (income) loss of discontinued operations
|
|
|
7,678
|
|
|
|
(1,256
|
)
|
|
|
(17,997
|
)
|
Non operating other income
|
|
|
0
|
|
|
|
0
|
|
|
|
(26,750
|
)
|
Items not affecting use of cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges
|
|
|
5,462
|
|
|
|
70,148
|
|
|
|
0
|
|
Depreciation
|
|
|
33,132
|
|
|
|
34,437
|
|
|
|
31,858
|
|
Amortization of other intangible assets
|
|
|
3,136
|
|
|
|
3,344
|
|
|
|
3,212
|
|
Non cash stock compensation
|
|
|
2,660
|
|
|
|
1,875
|
|
|
|
1,376
|
|
Deferred taxes
|
|
|
(1,405
|
)
|
|
|
(3,339
|
)
|
|
|
(3,093
|
)
|
Loss (gain) on disposition of property, plant and equipment
|
|
|
(3,621
|
)
|
|
|
(389
|
)
|
|
|
1,722
|
|
Cash flow provided by (used for) working capital
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
7,385
|
|
|
|
25,280
|
|
|
|
19,114
|
|
Inventories
|
|
|
10,872
|
|
|
|
6,002
|
|
|
|
13,042
|
|
Prepaid expenses
|
|
|
(3,962
|
)
|
|
|
1,102
|
|
|
|
547
|
|
Accounts payable and accrued expenses
|
|
|
12,501
|
|
|
|
(31,757
|
)
|
|
|
18,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities of continuing
operations
|
|
|
73,155
|
|
|
|
60,953
|
|
|
|
96,337
|
|
Net cash (used for) provided by operating activities of
discontinued operations
|
|
|
(817
|
)
|
|
|
996
|
|
|
|
732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
72,338
|
|
|
|
61,949
|
|
|
|
97,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired
|
|
|
(1,177
|
)
|
|
|
0
|
|
|
|
(95,698
|
)
|
Proceeds from merger termination
|
|
|
0
|
|
|
|
0
|
|
|
|
32,500
|
|
Proceeds from sale of property, plant and equipment
|
|
|
8,401
|
|
|
|
1,576
|
|
|
|
0
|
|
Additions to property, plant and equipment
|
|
|
(15,995
|
)
|
|
|
(40,577
|
)
|
|
|
(19,233
|
)
|
Other
|
|
|
737
|
|
|
|
408
|
|
|
|
1,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing activities of continuing operations
|
|
|
(8,034
|
)
|
|
|
(38,593
|
)
|
|
|
(81,428
|
)
|
Net cash provided by (used for) investing activities of
discontinued operations
|
|
|
10,036
|
|
|
|
(399
|
)
|
|
|
67,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
2,002
|
|
|
|
(38,992
|
)
|
|
|
(14,098
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long term debt
|
|
|
(6,950
|
)
|
|
|
0
|
|
|
|
(60,560
|
)
|
Net borrowing (repayment) under credit facility
|
|
|
(62,160
|
)
|
|
|
7,356
|
|
|
|
(42,374
|
)
|
Cash dividends
|
|
|
(8,436
|
)
|
|
|
(18,302
|
)
|
|
|
(7,645
|
)
|
Proceeds from issuance of common stock
|
|
|
271
|
|
|
|
523
|
|
|
|
1,312
|
|
Excess tax benefit from options exercised
|
|
|
0
|
|
|
|
5
|
|
|
|
161
|
|
Deferred financing costs
|
|
|
0
|
|
|
|
0
|
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for financing activities of continuing operations
|
|
|
(77,275
|
)
|
|
|
(10,417
|
)
|
|
|
(109,146
|
)
|
Net cash used for financing activities of discontinued operations
|
|
|
(4,000
|
)
|
|
|
0
|
|
|
|
(224
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(81,275
|
)
|
|
|
(10,417
|
)
|
|
|
(109,370
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Rate Effect on Cash
|
|
|
1,246
|
|
|
|
(9,682
|
)
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
(5,689
|
)
|
|
|
2,858
|
|
|
|
(26,165
|
)
|
Cash at January 1
|
|
|
10,417
|
|
|
|
7,559
|
|
|
|
33,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at December 31
|
|
$
|
4,728
|
|
|
$
|
10,417
|
|
|
$
|
7,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for
Interest
|
|
$
|
8,317
|
|
|
$
|
10,749
|
|
|
$
|
15,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
5,896
|
|
|
$
|
19,340
|
|
|
$
|
14,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
statements.
35
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to Consolidated Financial Statements
Amounts
in thousands, except as otherwise noted
Summary
of Significant Accounting Policies
Basis of
Presentation
The consolidated financial statements include the accounts of
Myers Industries, Inc. and all wholly owned subsidiaries
(Company). All intercompany accounts and transactions have been
eliminated in consolidation. All subsidiaries that are not
wholly owned and are not included in the consolidated results of
the Company are immaterial investments which have been accounted
for under the cost or equity method. The preparation of
financial statements in conformity with generally accepted
accounting principles in the United States of America requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures at
the date of the financial statements and the reported amount of
revenues and expenses during the reported period. Actual results
could differ from those estimates.
Translation
of Foreign Currencies
All asset and liability accounts of consolidated foreign
subsidiaries are translated at the current exchange rate as of
the end of the accounting period and income statement items are
translated monthly at an average currency exchange rate for the
period. The resulting translation adjustment is recorded in
other comprehensive (loss) income as a separate component of
shareholders equity.
Fair
Value Measurement
In January 2008, the Company adopted guidance included in ASC
820, Fair Value Measurements and Disclosures, for
its financial assets and liabilities, as required. The guidance
established a common definition for fair value to be applied to
U.S. GAAP requiring the use of fair value, established a
framework for measuring fair value, and expanded disclosure
requirements about such fair value measurements. The guidance
did not require any new fair value measurements, but rather
applied to all other accounting pronouncements that require or
permit fair value measurements. In January 2009, the Company
adopted updated guidance included in ASC 820 with respect to
non-financial assets and liabilities that are measured at fair
value on a non-recurring basis. The adoption of this updated
guidance did not have a material impact on the consolidated
financial statements. Under ASC 820, the hierarchy that
prioritizes the inputs to valuation techniques used to measure
fair value is divided into three levels:
Level 1: Unadjusted quoted prices in active markets for
identical assets or liabilities.
Level 2: Unadjusted quoted prices in active markets for
similar assets or liabilities, unadjusted quoted prices for
identical or similar assets or liabilities in markets that are
not active or inputs that are observable either directly or
indirectly.
Level 3: Unobservable inputs for which there is little or
no market data or which reflect the entitys own
assumptions.
The fair value of the Companys cash, accounts receivable,
accounts payable and accrued expenses are considered to have a
fair value which approximates carrying value due to the nature
and relative short maturity of these assets and liabilities.
The fair value of debt under the Companys Credit Agreement
approximates carrying value due to the floating interest rates
and relative short maturity (less than 90 days) of the
revolving borrowings under this agreement. The fair value of the
Companys $100 million fixed rate senior notes was
estimated at $102 million at December 31, 2009 using
market observable inputs for the Companys comparable peers
with public debt, including quoted prices in active markets and
interest rate measurements, which are considered level 2
inputs.
36
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
Concentration
of Credit Risk
Financial instruments that potentially subject the Company to
concentration of credit risk primarily consist of trade accounts
receivable. The concentration of accounts receivable credit risk
is generally limited based on the Companys diversified
operations, with customers spread across many industries and
countries. The Companys largest single customer accounts
for approximately 13 percent of total sales, with no other
customers greater than 3 percent. Outside of the United
States, only Canada, which accounts for approximately ten
percent of total sales, is significant to the Companys
operations. In addition, management has established certain
requirements that customers must meet before credit is extended.
The financial condition of customers is continually monitored
and collateral is usually not required. The Company evaluates
the collectability of accounts receivable based on a combination
of factors. In circumstances where the Company is aware of a
specific customers inability to meet its financial
obligations, a specific allowance for doubtful accounts is
recorded against amounts due to reduce the net recognized
receivable to the amount the Company reasonably believes will be
collected. Additionally, the Company also reviews historical
trends for collectability in determining an estimate for its
allowance for doubtful accounts. If economic circumstances
change substantially, estimates of the recoverability of amounts
due the Company could be reduced by a material amount. Expense
related to bad debts was approximately $861, $3,812 and $2,885
for the years 2009, 2008 and 2007, respectively.
Inventories
Inventories are stated at the lower of cost or market. For
approximately 26 percent of its inventories, the Company
uses the
last-in,
first-out (LIFO) method of determining cost. All other
inventories are valued at the
first-in,
first-out (FIFO) method of determining cost.
If the FIFO method of inventory cost valuation had been used
exclusively by the Company, inventories would have been $9,382,
$12,043 and $13,714 higher than reported at December 31,
2009, 2008 and 2007, respectively. In 2009, 2008 and 2007, the
liquidation of LIFO inventories decreased cost of sales, and
therefore increased income (loss) before taxes from continuing
operations by approximately $4.2 million, $0.8 million
and $1.6 million respectively.
Property,
Plant and Equipment
Property, plant and equipment are carried at cost less
accumulated depreciation and amortization. The Company provides
for depreciation and amortization on the basis of the
straight-line method over the estimated useful lives of the
assets as follows:
|
|
|
|
|
Buildings
|
|
|
20 to 30 years
|
|
Leasehold Improvements
|
|
|
7 to 10 years
|
|
Machinery and Equipment
|
|
|
3 to 12 years
|
|
Vehicles
|
|
|
1 to 3 years
|
|
Long-Lived
Assets
The Company reviews its long-lived assets and identifiable
intangible assets with finite lives for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Determination of
whether measurement of impairment is required related to assets
to be held and used is based upon undiscounted future cash flows
resulting from the use and ultimate disposition of the asset.
For any assets not deemed recoverable on the undiscounted basis,
as well as assets held for disposal, the amount of any
impairment may be based upon appraisal of the asset, estimated
market value of similar assets or estimated cash flow from the
disposition of the asset. At December 31, 2009 and 2008,
the Company has approximately $11.9 million and
$2.9 million, respectively, of property, plant, and
equipment held for sale, which represents the lower of net book
value or estimated fair value based on level 2 inputs, and
is included in other assets on the accompanying statement
37
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
of consolidated financial position. In 2009, the Company
recorded impairment charges of $5.5 million for impairment
of certain property, plant and equipment as a result of
restructuring its Material Handling and Lawn and Garden
businesses. In 2008, the Company recorded $10.1 million for
the impairment of certain property, plant, equipment and certain
intangible assets in association with the restructuring of its
Lawn and Garden businesses. In 2007, the Company recorded
expense of $0.7 million to write down the value of certain
assets of its Lawn and Garden business no longer used in
production.
Revenue
Recognition
The Company recognizes revenues from the sale of products, net
of actual and estimated returns, at the point of passage of
title, which is at the time of shipment, and collectability of
the fixed or determinable sales price is reasonably assured.
Accumulated
Other Comprehensive (Loss) Income
As of December 31, 2009, 2008, and 2007, the balance in the
Companys accumulated other comprehensive (loss) income is
comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Foreign currency translation adjustments
|
|
$
|
8,821
|
|
|
$
|
(1,822
|
)
|
|
$
|
9,906
|
|
Pension adjustments
|
|
|
(2,044
|
)
|
|
|
(2,748
|
)
|
|
|
(586
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,777
|
|
|
$
|
(4,570
|
)
|
|
$
|
9,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipping
and Handling
Shipping and handling expenses are classified as selling
expenses in the accompanying statements of consolidated income
(loss). The Company incurred shipping and handling costs of
approximately $20.9 million, $28.9 million and
$33.4 million for the years ended December 31, 2009,
2008 and 2007, respectively.
Stock
Based Compensation
The Company has stock plans that provides for the granting of
stock-based compensation to employees and, in certain instances,
to non-employee directors. Shares are issued upon exercise from
authorized, unissued shares. The Company records the costs of
the plan under the provisions of FASB ASC 718,
Compensation Stock Compensation. For
transactions in which we obtain employee services in exchange
for an award of equity instruments, we measure the cost of the
services based on the grant date fair value of the award. The
Company recognizes the cost over the period during which an
employee is required to provide services in exchange for the
award, known as the requisite service period (usually the
vesting period). Cash flows resulting from tax benefits for
deductions in excess of compensation cost recognized are
included in financing cash flows.
Income
Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of assets and
liabilities and their respective tax bases and operating loss
and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those differences
are expected to be received or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
In July 2006, the FASB issued Interpretation No. 48,
Accounting of Uncertainty in Income Taxes An
Interpretation of FASB Statement No. 109, (included in
FASB ASC 740, Income Taxes). ASC 740 provides detailed
38
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
guidance for the financial statement recognition, measurement
and disclosure of uncertain tax positions recognized in an
enterprises financial statements. Income tax positions
must meet a more-likely-than-not recognition threshold at the
effective date to be recognized upon the adoption and in
subsequent periods. The Company recognizes potential accrued
interest and penalties related to unrecognized tax benefits
within operations as income tax expense. The cumulative effect
of applying the provisions of ASC 740, totaling $302, has
been reported as an adjustment to the opening balance of our
retained deficit as of January 1, 2007.
Goodwill
and Intangible Assets
The Company is required to test for impairment on at least an
annual basis. The Company conducts its annual impairment
assessment as of October 1. In addition, the Company will
test for impairment whenever events or circumstances indicate
that it is more likely than not that the fair value of a
reporting unit is below its carrying amount. Such events may
include, but are not limited to, significant changes in economic
and competitive conditions, the impact of the economic
environment on the Companys customer base or its
businesses, or a material negative change in its relationships
with significant customers.
In evaluating goodwill for impairment the Company uses a
combination of valuation techniques primarily using discounted
cash flows to determine the fair values of its business
reporting units and market based multiples as supporting
evidence. Key assumptions, all of which are level 3 fair value
inputs, include projections of future revenues and expenses,
working capital, terminal values, discount rates and long term
growth rates. The market multiples observed in sale transactions
are determined separately for each reporting unit and discount
rates are based on the weighted average cost of capital
determined for each of the Companys reporting units and
ranged from 9.8% to 13.0% in 2009. In addition we make certain
judgements about the selection of comparable companies used in
determining market multiples in valuing our business units, as
well as certain assumptions to allocate shared assets and
liabilities to calculate values for each of our business units.
The underlying assumptions used are based on historical actual
experience and future expectations that are consistent with
those used in the Companys strategic plan. The Company
compares the fair value of each of its reporting units to their
respective carrying values, including related goodwill. We also
compare our book value and the estimates of fair value of the
reporting units to our market capitalization as of and at dates
near the annual testing date. Management uses this comparison as
additional evidence of the fair value of the Company, as our
market capitalization may be suppressed by other factors such as
the control premium associated with a controlling shareholder,
our leverage or general expectations regarding future operating
results and cash flows. In situations where the implied value of
the Company under the Income or Market Approach are
significantly different than our market capitalization we
re-evaluate and adjust, if necessary, the assumptions underlying
our Income and Market Approach models. Our estimate of the fair
values of these business units, and the related goodwill, could
change over time based on a variety of factors, including the
aggregate market value of the Companys common stock,
actual operating performance of the underlying businesses or the
impact of future events on the cost of capital and the related
discount rates used.
In completing its 2008 annual test of goodwill which the Company
also evaluated given year end market conditions, the Company
determined that the Automotive and Custom reporting unit failed
Step 1 of the impairment test, requiring a Step 2 test to
determine the amount, if any, of impairment charge. Based on the
results of Step 2 testing, which included a valuation of the
reporting units net assets in accordance with
ASC 805, Business Combinations, the Company
recorded an impairment charge of $60.1 million in the
fourth quarter of 2008. The impairment was attributable to the
significant decline in demand over the latter part of 2008 and
future projections for sales in the automotive, heavy truck,
recreational vehicle, marine and other industrial markets served
by the Automotive and Custom unit.
39
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
The change in goodwill for the years ended December 31,
2009 and 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive and
|
|
|
Lawn and
|
|
|
|
|
|
|
Distribution
|
|
|
Material Handling
|
|
|
Custom
|
|
|
Garden
|
|
|
Total
|
|
|
December 31, 2007
|
|
$
|
214
|
|
|
$
|
30,383
|
|
|
$
|
60,074
|
|
|
$
|
80,791
|
|
|
$
|
171,462
|
|
Impairments
|
|
|
0
|
|
|
|
0
|
|
|
|
(60,074
|
)
|
|
|
0
|
|
|
|
(60,074
|
)
|
Foreign currency translation
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(1,526
|
)
|
|
|
(1,526
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
$
|
214
|
|
|
$
|
30,383
|
|
|
|
0
|
|
|
$
|
79,265
|
|
|
$
|
109,862
|
|
Acquisitions
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,376
|
|
|
|
1,376
|
|
Impairments
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Foreign currency translation
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
689
|
|
|
|
689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
$
|
214
|
|
|
$
|
30,383
|
|
|
|
0
|
|
|
$
|
81,330
|
|
|
$
|
111,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets other than goodwill primarily consist of trade
names, customer relationship, patents, and technology assets
established in connection with previous acquisitions. These
intangible assets, other than trade names, are amortized over
their estimated useful lives. The Company performs an annual
impairment assessment for the indefinite lived trade name as of
December 31. In performing this assessment the Company uses an
income approach, based primarily on level 3 inputs, to estimate
the fair value of the trade name. The Company records an
impairment charge if the carrying value of the trade name
exceeds the estimated fair value at the date of assessment.
Estimated annual amortization expense for intangible assets with
definite lives for the five years ending December 31, 2014
is: $2,611 in 2010; $2,595 in 2011; $2,545 in 2012, $2,008 in
2013 and $1,654 in 2014.
Intangible assets at December 31, 2009 and 2008 consisted
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Life
|
|
Gross
|
|
|
Amortization
|
|
|
Net
|
|
|
Gross
|
|
|
Amortization
|
|
|
Net
|
|
|
Tradename
|
|
Indefinite
|
|
$
|
4,043
|
|
|
|
0
|
|
|
$
|
4,043
|
|
|
$
|
3,493
|
|
|
|
0
|
|
|
$
|
3,493
|
|
Customer Relationships(2)
|
|
6 - 13 years
|
|
|
13,564
|
|
|
|
(5,432
|
)
|
|
|
8,133
|
|
|
|
15,497
|
|
|
$
|
(5,749
|
)
|
|
|
9,748
|
|
Technology(1)
|
|
7.5 years
|
|
|
2,100
|
|
|
|
(2,100
|
)
|
|
|
0
|
|
|
|
2,100
|
|
|
|
(2,100
|
)
|
|
|
0
|
|
Patents
|
|
10 years
|
|
|
10,900
|
|
|
|
(3,088
|
)
|
|
|
7,812
|
|
|
|
10,900
|
|
|
|
(1,999
|
)
|
|
|
8,901
|
|
Non-Compete
|
|
3 years
|
|
|
412
|
|
|
|
(396
|
)
|
|
|
17
|
|
|
|
397
|
|
|
|
(248
|
)
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
31,019
|
|
|
$
|
(11,016
|
)
|
|
$
|
20,003
|
|
|
$
|
32,387
|
|
|
$
|
(10,096
|
)
|
|
$
|
22,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Accumulated amortization for 2008 includes an impairment charge
of $840 related to a discontinued manufacturing process.
|
|
(2)
|
Accumulated amortization for 2009 includes an impairment charge
of $528 for an intangible asset associated with discontinued
operations.
|
40
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
Net
Income (Loss) Per Share
Net income (loss) per share, as shown on the statements of
consolidated (loss) income, is determined on the basis of the
weighted average number of common shares outstanding during the
periods as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
35,266,939
|
|
|
|
35,211,811
|
|
|
|
35,140,581
|
|
Dilutive effect of stock options and restricted stock
|
|
|
0
|
|
|
|
0
|
|
|
|
108,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding diluted
|
|
|
35,266,939
|
|
|
|
35,211,811
|
|
|
|
35,249,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options to purchase 1,681,169 shares of common stock that
were outstanding at December 31, 2009 were not included in
the computation of diluted earnings per share as the exercise
prices of these options was greater than the average market
price of common shares. Additionally, 93,696 dilutive
common shares were excluded from the computation of the loss per
common share in 2008 due to the Companys net loss position.
Merger
Agreement
On April 3, 2008, the Company entered into a letter
agreement mutually terminating the Agreement and Plan of Merger
(the Merger Agreement) with MYEH Corporation, a
Delaware corporation (the Parent) and MYEH
Acquisition Corporation, an Ohio corporation
(MergerCo). Under the terms of the Merger Agreement,
MergerCo would have been merged with and into the Company, with
the Company continuing as the surviving corporation and becoming
a wholly-owned subsidiary of Parent (the Merger).
Parent is owned by GS Capital Partners, LP (GSCP) and other
private equity funds sponsored by Goldman, Sachs & Co.
The Merger Agreement contained termination rights for both the
Company and Parent in the event the Merger was not consummated
by December 15, 2007. In December 2007, an agreement was
made to extend this date from December 15, 2007 to
April 30, 2008. This extension did not provide GSCP
additional rights with respect to the potential merger and any
consummation of the merger would have remained subject to
satisfaction of the conditions to the closing in the Merger
Agreement. In connection with the extension, GSCP paid the
Company a previously agreed upon $35.0 million termination
fee in 2007. This non refundable termination fee, net of related
expenses of $8.3 million, was recorded as other income by
the Company in the fourth quarter of 2007. In addition, as
permitted by the extension, the Company paid a special dividend
of $0.28 per common share totaling approximately
$9.9 million on January 2, 2008 to shareholders of
record as of December 20, 2007.
Discontinued
Operations
On October 30, 2009, the Company sold substantially all the
assets of its Michigan Rubber Products, Inc. (MRP) and Buckhorn
Rubber Products, Inc. (BRP) businesses to Zhongding Sealing
Parts, (USA) Inc. Based on the terms of the sale, the Company
recorded a loss of $8.4 million, including a charge of
$7.8 million for impairment of long lived assets, which is
included in the results of discontinued operations for the year
ended December 31, 2009.
In accordance with U.S. generally accepted accounting
principles, the operating results related to these businesses
have been included in discontinued operations in the
Companys statements of consolidated income (loss) for all
periods presented. The operating results for the MRP and BRP
discontinued operations does not include any allocation of the
$60.1 million goodwill impairment recorded in the
Companys Automotive and Custom reporting unit in 2008.
41
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
The operating results of the MRP and BRP discontinued operations
are as follows for the year ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net sales
|
|
$
|
26,604
|
|
|
$
|
54,289
|
|
|
$
|
63,088
|
|
Income (loss) before income taxes
|
|
|
(11,806
|
)
|
|
|
(957
|
)
|
|
|
327
|
|
Income tax benefit
|
|
|
(4,128
|
)
|
|
|
(481
|
)
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(7,678
|
)
|
|
$
|
(476
|
)
|
|
$
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On February 1, 2007 the Company sold its former Material
Handling Europe business segment with net proceeds
of $68.1 million received. Included in net income for the
year ended December 31, 2007 was a gain of approximately
$17.8 million, net of taxes of $3.3 million, from the
disposition of these businesses. These discontinued operations
had sales of $14.9 million and net income from operations
of $2 in 2007 prior to the disposition. In 2008, the Company
also recorded net income of approximately $1.7 million as a
result of net proceeds received from the settlement of certain
contingencies in connection with the disposal of these
businesses.
Acquisitions
On August 18, 2009, the Company purchased the remaining 50%
interest in Amerikan LLC (Amerikan), an entity previously
accounted for under the equity method. The acquisition was
accounted for in accordance with ASC 805. Amerikan is a
manufacturer of horticultural containers with annual sales of
approximately $4 million. The Amerikan results of
operations are included in the Companys Lawn and Garden
segment from the date of acquisition. The Company paid
approximately $1.2 million for the remaining shares of
Amerikan and assumed approximately $7 million of debt which
was paid off in 2009. In the purchase of Amerikan, the Company
acquired approximately $5.8 million of property, plant and
equipment, $1.7 million of other assets and recorded
approximately $1.4 million of goodwill. These assets were
recorded at fair value as of the date of acquisition, using
primarily level 2 inputs.
On January 9, 2007, the Company acquired all the shares of
ITML Horticultural Products, Inc., an Ontario corporation
(ITML). ITML designs, manufactures and sells plastic
containers and related products for professional
floriculture / horticulture grower markets across
North America, utilizing injection molding, blow molding, and
thermoforming processes. Additionally, ITML utilizes extensive
technology and expertise for resin reprocessing and recycling
for use in its products. The acquired business had fiscal 2006
annual sales of approximately $169.5 million. The total
purchase price was approximately $118.6 million, which
includes the assumption of approximately $64.6 million of
debt outstanding as of the acquisition date. In addition, the
acquisition allowed for additional purchase consideration to be
paid contingent upon results of the Companys Lawn and
Garden segment in 2008, specifically the achievement of earnings
before interest, taxes, depreciation and amortization compared
to targeted amounts. Based upon operating results in 2008, no
additional purchase consideration was paid under this
contingency.
On March 8, 2007, the Company acquired select equipment,
molds and inventory related to the Xytec and Combo product lines
of Schoeller Arca Systems Inc., a subsidiary of Schoeller Arca
Systems N.V., in North America (SASNA). These
product lines include collapsible bulk containers used for
diverse shipping and handling applications in markets from
manufacturing to food to liquid transport. The acquired business
had 2006 annual sales of approximately $50 million. The
total purchase price was approximately $41.6 million.
The results for both ITML and SASNA product lines are included
in the consolidated results of operations from the dates of
acquisition. ITML is included in the Companys Lawn and
Garden Segment and the SASNA
42
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
product lines are included in the Material Handling Segment. The
allocation of the purchase price and the estimated goodwill and
other intangibles are as follows:
|
|
|
|
|
|
|
|
|
|
|
ITML
|
|
|
Schoeller Arca
|
|
|
Assets acquired:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
45,252
|
|
|
$
|
0
|
|
Inventory
|
|
|
37,107
|
|
|
|
8,825
|
|
Property, plant & equipment
|
|
|
56,142
|
|
|
|
18,100
|
|
Intangibles
|
|
|
9,200
|
|
|
|
14,700
|
|
Other
|
|
|
4,409
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152,110
|
|
|
|
41,625
|
|
Liabilities assumed:
|
|
|
|
|
|
|
|
|
Accounts payable and accruals
|
|
|
(25,496
|
)
|
|
|
0
|
|
Debt
|
|
|
(64,570
|
)
|
|
|
0
|
|
Deferred Income Taxes
|
|
|
(17,182
|
)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(107,248
|
)
|
|
|
0
|
|
Goodwill
|
|
|
9,211
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total consideration
|
|
$
|
54,073
|
|
|
$
|
41,625
|
|
|
|
|
|
|
|
|
|
|
In the second quarter of 2007, the Company approved a plan for
ITML integration activities, which resulted in the closure of
two facilities in the Lawn and Garden Segment, including the
acquired ITML plants in Brampton, Ontario, and Lugoff, South
Carolina. These facilities, which were part of the
Companys acquisition of ITML in January 2007, produced
nursery containers, specialty retail horticultural products, and
custom plastic products. Total costs related to the plan were
approximately $4.3 million, including the $2.3 million
accrued at acquisition and $2.0 million expensed and paid
in 2007.
In connection with the above integration activities, the Company
recorded accruals for severance, exit and relocation costs as
part of the purchase price allocation of ITML. A reconciliation
of the accrual balance included in Other Accrued Expenses on the
accompanying statement of consolidated financial position is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
Contract
|
|
|
|
|
|
|
and
|
|
|
Termination
|
|
|
|
|
|
|
Personnel
|
|
|
Fees
|
|
|
Total
|
|
|
Accrued at acquisition date
|
|
$
|
2,023
|
|
|
$
|
241
|
|
|
$
|
2,264
|
|
Provision
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Less: Payments
|
|
|
(1,703
|
)
|
|
|
(241
|
)
|
|
|
(1,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
320
|
|
|
$
|
0
|
|
|
$
|
320
|
|
Less: Payments
|
|
|
(320
|
)
|
|
|
0
|
|
|
|
(320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring &
Impairment Charges
In the fourth quarter of 2008, the Company adopted a plan to
restructure its Lawn and Garden Segment and announced the
permanent closure of its Surrey, B.C., Canada and Sparks, Nevada
manufacturing facilities. In 2009, the Company completed its
restructuring of the businesses in the Lawn and Garden segment.
For the years ended December 31, 2009 and 2008, the Company
recorded impairment charges of $2.0 and $10.0 million,
respectively,
43
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
related to certain property, plant, and equipment at these and
other Lawn and Garden manufacturing facilities. The Company also
incurred $11.2 and $5.7 million for severance, consulting,
and other costs associated with the restructuring including
lease obligations for the years ended December 31, 2009 and
2008, respectively. The amount of any impairment is based upon
appraisal of the asset or estimated market value of similar
assets which are considered level 2 inputs. The estimated lease
obligation associated with closed facilities was determined
based upon level 2 inputs. Also, in the fourth quarter of 2009,
the Company sold its previously closed manufacturing facility in
Surrey, B.C. Canada for $5.1 million and recognized a gain
on the sale of $3.3 million.
The Company also assessed its resources and strategies in the
Material Handling segment. As a result of this assessment, the
Company recorded impairment charges of $1.3 million and
severance, consulting and other restructuring costs of
$6.6 million in 2009. Also, the Shelbyville, Kentucky
manufacturing facility was closed in the fourth quarter. This
facility and certain property, plant, and equipment was sold in
the first quarter of 2010. The proceeds for the sale were
approximately $5.1 million and the estimated gain on the
transaction is $0.7 million. The transaction will be
recorded in the first quarter of 2010.
In the Automotive and Custom segment, the Company closed its
Fostoria, Ohio and Reidsville, North Carolina facilities. In
conjunction with the closures, impairment charges of
$2.2 million for the real estate and certain property,
plant, and other restructuring costs, including severance and
lease related obligations of $1.5 million were incurred.
In 2007, the Company closed its Dawson Springs, Kentucky
manufacturing facility, included in the Companys Material
Handling Segment. Certain product lines were shifted to the
Companys other existing manufacturing facilities in North
America.
The accrued liability balance for severance and other exit costs
is included in Other Accrued Expenses on the accompanying
statement of consolidated financial position.
Activity related to the Companys restructuring plans for
2009, 2008, and 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
and
|
|
|
Other
|
|
|
|
|
|
|
Personnel
|
|
|
Exit Costs
|
|
|
Total
|
|
|
Balance at January 1, 2007
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Provision
|
|
|
937
|
|
|
|
90
|
|
|
|
1,027
|
|
Less: Payments
|
|
|
(918
|
)
|
|
|
(90
|
)
|
|
|
(1,008
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
19
|
|
|
$
|
0
|
|
|
$
|
19
|
|
Provision
|
|
|
92
|
|
|
|
5,588
|
|
|
|
5,680
|
|
Less: Payments
|
|
|
(111
|
)
|
|
|
(5,588
|
)
|
|
|
(5,699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
|
|
|
3,102
|
|
|
|
15,938
|
|
|
|
19,040
|
|
Less: Payments
|
|
|
(2,679
|
)
|
|
|
(14,287
|
)
|
|
|
(16,966
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
423
|
|
|
$
|
1,651
|
|
|
$
|
2,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result of restructuring activity and plant closures,
approximately $11.9 million of property, plant and
equipment has been classified as held for sale as of
December 31, 2009 and is included in other assets in the
statements of consolidated financial position.
44
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
Stock
Compensation
On April 30, 2009, the shareholders of the Company approved
the adoption of the 2008 Incentive Stock Plan (the 2008 Plan).
The full text of the 2008 Plan is attached as Exhibit 4.3
to the registration statement on
Form S-8
filed with the SEC on March 17, 2009. As a result of this
approval, the Company granted 584,869 options with an exercise
price of $10.92 that were conditionally awarded to certain
employees on October 3, 2008 pending shareholder approval.
Under the 2008 Plan, the Compensation Committee of the Board of
Directors is authorized to issue up to 3,000,000 shares of
various types of stock based awards including stock options,
restricted stock and stock appreciation rights to key employees
and Directors. In general, options granted and outstanding vest
over three to five years and expire ten years from the date of
grant.
The following tables summarize stock option activity under the
2008 Plan and the expired 1999 Stock Plan in the past three
years:
Options granted in 2009, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
Year
|
|
Options
|
|
|
Price
|
|
2009
|
|
|
614,869
|
|
|
$8.19 to $10.92
|
2008
|
|
|
604,621
|
|
|
$9.00 to $12.55
|
2007
|
|
|
23,000
|
|
|
$18.62
|
Options exercised in 2009, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
Year
|
|
Options
|
|
|
Price
|
|
2009
|
|
|
0
|
|
|
0
|
2008
|
|
|
16,169
|
|
|
$8.00 to $11.15
|
2007
|
|
|
87,068
|
|
|
$8.00 to $17.02
|
In addition, options totaling 127,076, 49,885, and 62,342
expired or were forfeited during the years ended
December 31, 2009, 2008 and 2007, respectively. Options
outstanding and exercisable at December 31, 2009, 2008 and
2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise
|
|
|
|
|
|
Weighted Average
|
|
Year
|
|
Outstanding
|
|
|
Prices
|
|
|
Exercisable
|
|
|
Exercise Price
|
|
|
2009
|
|
|
1,681,169
|
|
|
$
|
8.00 to $18.62
|
|
|
|
1,095,383
|
|
|
$
|
12.21
|
|
2008
|
|
|
1,193,376
|
|
|
$
|
8.00 to $18.62
|
|
|
|
445,750
|
|
|
$
|
13.66
|
|
2007
|
|
|
654,809
|
|
|
$
|
8.00 to $18.62
|
|
|
|
329,156
|
|
|
$
|
12.71
|
|
Stock compensation expense reduced income before taxes
approximately $2,660, $1,875 and $1,376 for the years ended
December 31, 2009, 2008, and 2007, respectively. These
expenses are included in selling and administrative expenses in
the accompanying statement of consolidated (loss) income. Total
unrecognized compensation cost related to non-vested share based
compensation arrangements at December 31, 2009 was
approximately $2.9 million, which will be recognized over
the next four years.
The fair value of options granted is estimated using an option
pricing model based on assumptions set forth in the following
table. The Company uses historical data to estimate employee
exercise and departure behavior. The risk free interest rate is
based on the U.S. Treasury yield curve in effect at the
time of grant and through the expected term. The dividend yield
is based on the Companys historical dividend yield. The
expected volatility is derived from historical volatility of the
Companys shares and those of similar companies measured
against the market as a whole. The stock options granted in 2009
were valued using a Monte-Carlo pricing model which we believe
45
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
provides a better fair value calculation than the Black-Scholes
closed form model. There was no material difference in the
valuation of these options using the Monte Carlo model compared
with the Black-Scholes model.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Monte
|
|
|
Black
|
|
|
Black
|
|
Model
|
|
Carlo
|
|
|
Scholes
|
|
|
Scholes
|
|
|
Risk free interest rate
|
|
|
2.66
|
%
|
|
|
3.38
|
%
|
|
|
4.70
|
%
|
Expected dividend yield
|
|
|
1.67
|
%
|
|
|
1.91
|
%
|
|
|
1.23
|
%
|
Expected life of award (years)
|
|
|
4.83
|
|
|
|
5.25
|
|
|
|
6.0
|
|
Expected volatility
|
|
|
58.2
|
%
|
|
|
41.41
|
%
|
|
|
31.58
|
%
|
Fair value per option share
|
|
$
|
3.87
|
|
|
$
|
4.10
|
|
|
$
|
6.00
|
|
The following table summarizes the stock option activity for the
period ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
Life
|
|
|
Value
|
|
|
Outstanding at December 31, 2008
|
|
|
1,193,376
|
|
|
$
|
13.66
|
|
|
|
|
|
|
|
|
|
Options Granted
|
|
|
614,869
|
|
|
|
10.79
|
|
|
|
|
|
|
|
|
|
Options Exercised
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Cancelled or Forfeited
|
|
|
(127,076
|
)
|
|
|
12.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
1,681,169
|
|
|
$
|
11.93
|
|
|
|
7.67
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009
|
|
|
1,095,383
|
|
|
$
|
12.21
|
|
|
|
|
|
|
|
|
|
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. There were no options exercised in 2009, however,
the total intrinsic value of the options exercised during the
years ended December 31, 2008, and 2007 was approximately
$62 and $768 respectively.
At December 31, 2009, 2008, and 2007 the Company also had
outstanding 103,000, 124,250, and 63,000 shares of
restricted stock, respectively, with vesting periods up through
April 2011. The restricted stock awards are rights to receive
shares of common stock, subject to forfeiture and other
restrictions, which generally vest over a four year period.
Contingencies
The Company is a defendant in various lawsuits and a party
to various other legal proceedings, in the ordinary course of
business, some of which are covered in whole or in part by
insurance. We believe that the outcome of these lawsuits and
other proceedings will not individually or in the aggregate have
a future material adverse effect on our consolidated financial
position, results of operations or cash flows.
A number of parties, including the Company and its subsidiary,
Buckhorn, Inc., were identified in a planning document adopted
in October 2008 by the California Regional Water Quality Control
Board, San Francisco Bay Region (RWQCB). The planning
document relates to the presence of mercury, including amounts
contained in mining wastes, in and around the Guadalupe River
Watershed (Watershed) region in Santa Clara County,
California. Buckhorn has been alleged to be a successor in
interest to an entity that performed mining operations in a
portion of the Watershed area. The Company has not been
contacted by the RWQCB with respect to Watershed
clean-up
efforts that may result from the adoption of this planning
document. The extent of the mining wastes that may be the
subject of future cleanup has yet to be determined, and the
actions of the RWQCB have not yet advanced to the stage where a
reasonable estimate of remediation cost, if any, is available.
46
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
Although assertion of a claim by the RWQCB is reasonably
possible, it is not possible at this time to estimate the amount
of any obligation the Company may incur for these cleanup
efforts within the Watershed region, or whether such cost would
be material to the Companys financial statements.
In October 2009, an employee was fatally wounded while
performing maintenance at the Companys manufacturing
facility in Springfield, Missouri. The Occupational Safety and
Health Administration has commenced a comprehensive
investigation at the same facility. No litigation related to
this matter is currently pending and, at this time, the
likelihood of legal action and the likelihood of exposure
resulting from such legal action are not able to be determined.
The Company believes that it has adequate insurance to resolve
any claims resulting from this incident.
Long-Term
Debt and Credit Agreements
Long-term debt at December 31, 2009 and 2008 consisted of
the following:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Credit agreement
|
|
$
|
2,400
|
|
|
$
|
63,631
|
|
Senior notes
|
|
|
100,000
|
|
|
|
100,000
|
|
Industrial revenue bonds
|
|
|
1,915
|
|
|
|
6,340
|
|
Other
|
|
|
0
|
|
|
|
1,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,315
|
|
|
|
171,567
|
|
Less current portion
|
|
|
65,425
|
|
|
|
2,021
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
38,890
|
|
|
$
|
169,546
|
|
|
|
|
|
|
|
|
|
|
On October 26, 2006, the Company entered into an amendment
and restatement of its loan agreement (the Credit Agreement)
with a group of banks. Under terms of the Credit Agreement, the
Company may borrow up to $250 million, including up to
$80 million in certain foreign currencies, swing loans not
to exceed $20 million and letter of credit obligations up
to $25 million. As of December 31, 2009, the Company
had approximately $248 million available under the Credit
Agreement. Interest is based on the banks Prime rate or
Euro dollar rate plus an applicable margin that varies depending
on the Companys ratio of total debt to earnings before
interest, taxes, depreciation and amortization (EBITDA). The
average interest rate on borrowing under the Credit Agreement
was 1.69 percent at December 31, 2009 and
4.16 percent at December 31, 2008. In addition, the
Company pays a quarterly facility fee. The Credit Agreement
expires on October 26, 2011.
In December 2003, the Company issued $100 million in Senior
Unsecured Notes (the Notes) consisting of $65 million of
notes with an interest rate of 6.08 percent and a
7 year maturity and $35 million with an interest rate
of 6.81 percent and a 10 year maturity. Proceeds from
the issuance of the Notes were used to pay down the term loan
and revolving credit facility borrowing outstanding at that time.
In addition, at December 31, 2009, the Company had
approximately $1.9 million of industrial revenue bonds with
a weighted average interest rate of 0.34 percent. In 2009,
the Company retired $4.0 million of industrial revenue
bonds.
As of December 31, 2009, the Company also has
$6.2 million of letters of credit issued related to
insurance and other financing contracts in the ordinary course
of business.
As of December 31, 2009, the Company was in compliance with
all its debt covenants associated with its Credit Agreement and
the Notes. The significant financial covenants include an
interest coverage ratio and a
47
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
leverage ratio, defined as earnings before interest, taxes,
depreciation, and amortization, as adjusted, compared to total
debt. The ratios as of December 31, 2009 are shown in the
following table:
|
|
|
|
|
|
|
|
|
|
|
Required Level
|
|
Actual Level
|
|
Interest Coverage Ratio
|
|
|
2.5 to 1 (minimum
|
)
|
|
|
4.6
|
|
Leverage Ratio
|
|
|
3.5 to 1 (maximum
|
)
|
|
|
1.5
|
|
Maturities of long-term debt under the loan agreements in place
at December 31, 2009 for the five years ending
December 31, 2014 were approximately: $65,425 in 2010;
$2,825 in 2011; $425 in 2012; $35,425 in 2013 and $215 in 2014.
Retirement
Plans
The Company and certain of its subsidiaries have
pension and profit sharing plans covering substantially all of
their employees. During 2009, the Company merged its two frozen
defined benefit plans into a single plan which provides benefits
primarily based upon a fixed amount for each completed year of
service as defined.
Net periodic pension cost for the years ended December 31,
2009, 2008 and 2007 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Underfunded
|
|
|
Underfunded
|
|
|
Overfunded
|
|
|
Underfunded
|
|
|
Service cost
|
|
$
|
60
|
|
|
$
|
88
|
|
|
$
|
33
|
|
|
$
|
89
|
|
Interest cost
|
|
|
324
|
|
|
|
325
|
|
|
|
152
|
|
|
|
172
|
|
Expected return on assets
|
|
|
(259
|
)
|
|
|
(429
|
)
|
|
|
(216
|
)
|
|
|
(211
|
)
|
Amortization of prior service cost
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4
|
|
Amortization of net loss
|
|
|
94
|
|
|
|
10
|
|
|
|
0
|
|
|
|
8
|
|
Settlement/Curtailment
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
219
|
|
|
$
|
(6
|
)
|
|
$
|
(31
|
)
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of changes in projected benefit obligations
are as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Benefit obligation at beginning of year
|
|
$
|
5,782
|
|
|
$
|
5,774
|
|
Service cost
|
|
|
60
|
|
|
|
88
|
|
Interest cost
|
|
|
324
|
|
|
|
325
|
|
Actuarial loss
|
|
|
25
|
|
|
|
42
|
|
Expenses paid
|
|
|
(39
|
)
|
|
|
(60
|
)
|
Benefits paid
|
|
|
(396
|
)
|
|
|
(386
|
)
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
5,757
|
|
|
$
|
5,782
|
|
|
|
|
|
|
|
|
|
|
The assumptions used to determine the net periodic benefit cost
and benefit obligations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Discount rate for net periodic pension cost
|
|
|
5.75
|
%
|
|
|
5.75
|
%
|
|
|
5.75
|
%
|
Discount rate for benefit obligations
|
|
|
5.75
|
%
|
|
|
5.75
|
%
|
|
|
5.75
|
%
|
Expected long-term return of plan assets
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
Future benefit increases were not considered, as there is no
substantive commitment to increase benefits. The expected
long-term rate of return assumption is based on the actual
historical rate of return on assets adjusted to
48
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
reflect recent market conditions and future expectation
consistent with the Companys current asset allocation and
investment policy. The assumed discount rates represent
long-term high quality corporate bond rates commensurate with
the liability durations of its plans.
The following table reflects the change in the fair value of the
plans assets:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
3,492
|
|
|
$
|
5,639
|
|
Actual return on plan assets
|
|
|
894
|
|
|
|
(1,700
|
)
|
Company contributions
|
|
|
0
|
|
|
|
0
|
|
Expenses paid
|
|
|
(39
|
)
|
|
|
(60
|
)
|
Benefits paid
|
|
|
(396
|
)
|
|
|
(386
|
)
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
3,951
|
|
|
$
|
3,492
|
|
|
|
|
|
|
|
|
|
|
The fair value of plan assets are all categorized as level 1 and
were determined based on period end closing prices in active
markets. The weighted average asset allocations at
December 31, 2009 and 2008, are as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Equities securities
|
|
|
79
|
%
|
|
|
69
|
%
|
Debt securities
|
|
|
20
|
|
|
|
29
|
|
Cash
|
|
|
1
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of the funded
status of the plans at December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Projected benefit obligation
|
|
$
|
5,757
|
|
|
$
|
5,782
|
|
Plan assets at fair value
|
|
|
3,951
|
|
|
|
3,492
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(1,806
|
)
|
|
$
|
(2,290
|
)
|
|
|
|
|
|
|
|
|
|
The funded status shown above is included in other long term
liabilities in the Companys statements of consolidated
financial position at December 31, 2009 and 2008. The
Company does not expect to make a contribution to the plan in
2010.
Benefit payments projected for the plan are as follows:
|
|
|
|
|
2010
|
|
$
|
393
|
|
2011
|
|
|
392
|
|
2012
|
|
|
394
|
|
2013
|
|
|
391
|
|
2014
|
|
|
387
|
|
2015-2019
|
|
|
1,892
|
|
A profit sharing plan is maintained for the Companys
U.S. based employees, not covered under defined benefit
plans, who have met eligibility service requirements. The amount
to be contributed by the Company under the profit sharing plan
is determined at the discretion of the Board of Directors. For
2009, the Company has recognized profit sharing plan expense of
$420 and expects to make a contribution of that amount. In 2008,
the Company made no contribution to the profit sharing plan.
Profit sharing plan expense was $1,523 for the year ended
December 31, 2007.
49
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
In addition, the Company has a Supplemental Executive Retirement
Plan (SERP) to provide participating senior executives with
retirement benefits in addition to amounts payable under the
profit sharing plan. Expense related to the SERP was
approximately $161, $560, and $162 for the years ended December
2009, 2008 and 2007, respectively. The SERP liability is based
on the discounted present value of expected future benefit
payments using a discount rate of 5.75%. The SERP liability was
approximately $4.3 million and $4.5 million at
December 31, 2009 and 2008, respectively, and is included
in accrued employee compensation and other long term liabilities
on the accompanying statements of consolidated financial
position. The SERP is unfunded.
Leases
The Company and certain of its subsidiaries are committed under
non-cancelable operating leases involving certain facilities and
equipment. Aggregate rental expense for all leased assets was
$12,111, $12,419 and $13,097 for the years ended
December 31, 2009, 2008 and 2007, respectively
Future minimum rental commitments are as follows:
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
Commitment
|
|
|
2010
|
|
$
|
9,784
|
|
2011
|
|
|
7,096
|
|
2012
|
|
|
4,790
|
|
2013
|
|
|
3,695
|
|
2014
|
|
|
3,325
|
|
Thereafter
|
|
|
22,610
|
|
|
|
|
|
|
Total
|
|
$
|
51,300
|
|
|
|
|
|
|
Income
Taxes
The effective tax rate for continuing operations was 20.8% in
2009, 0.6% in 2008 and 35.2% in 2007. A reconciliation of the
Federal statutory income tax rate to the Companys
effective tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Pre-Tax Income
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Statutory Federal income tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
State income taxes net of Federal tax benefit
|
|
|
4.1
|
|
|
|
(0.9
|
)
|
|
|
2.1
|
|
Foreign tax rate differential
|
|
|
(21.0
|
)
|
|
|
0.9
|
|
|
|
(1.5
|
)
|
Non-deductible goodwill of $41.9 million
|
|
|
0
|
|
|
|
(31.9
|
)
|
|
|
0
|
|
Reduction in valuation allowances
|
|
|
(3.6
|
)
|
|
|
0
|
|
|
|
0
|
|
Domestic production deduction
|
|
|
(2.4
|
)
|
|
|
0
|
|
|
|
(1.8
|
)
|
Non-deductible expenses
|
|
|
3.9
|
|
|
|
(.5
|
)
|
|
|
0.5
|
|
Other
|
|
|
4.8
|
|
|
|
(2.0
|
)
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate for the year
|
|
|
20.8
|
%
|
|
|
0.6
|
%
|
|
|
35.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes was
attributable to the following sources:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
United States
|
|
$
|
3,431
|
|
|
$
|
(45,965
|
)
|
|
$
|
62,144
|
|
Foreign
|
|
|
5,402
|
|
|
|
(70
|
)
|
|
|
(5,420
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
8,833
|
|
|
$
|
(46,035
|
)
|
|
$
|
56,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
Income tax expense (benefit) from continuing operations
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Current
|
|
|
Deferred
|
|
|
Current
|
|
|
Deferred
|
|
|
Current
|
|
|
Deferred
|
|
|
Federal
|
|
$
|
1,080
|
|
|
$
|
171
|
|
|
$
|
610
|
|
|
$
|
(1,087
|
)
|
|
$
|
23,567
|
|
|
$
|
(2,678
|
)
|
Foreign
|
|
|
1,265
|
|
|
|
(1,227
|
)
|
|
|
2,705
|
|
|
|
(3,147
|
)
|
|
|
(2,552
|
)
|
|
|
(205
|
)
|
State and local
|
|
|
898
|
|
|
|
(349
|
)
|
|
|
(262
|
)
|
|
|
895
|
|
|
|
2,063
|
|
|
|
(210
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,243
|
|
|
$
|
(1,405
|
)
|
|
$
|
3,053
|
|
|
$
|
(3,339
|
)
|
|
$
|
23,078
|
|
|
$
|
(3,093
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant components of the Companys deferred taxes as
of December 31, 2009 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
23,895
|
|
|
$
|
27,519
|
|
Tax-deductible goodwill
|
|
|
14,453
|
|
|
|
11,973
|
|
Other intangibles
|
|
|
36
|
|
|
|
624
|
|
State deferred taxes
|
|
|
2,138
|
|
|
|
2,454
|
|
Other
|
|
|
610
|
|
|
|
708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,132
|
|
|
|
43,278
|
|
Deferred income tax assets
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
3,412
|
|
|
|
3,170
|
|
Inventory valuation
|
|
|
1,133
|
|
|
|
1,253
|
|
Allowance for uncollectible accounts
|
|
|
1,138
|
|
|
|
1,231
|
|
Non-deductible accruals
|
|
|
3,411
|
|
|
|
3,008
|
|
Capital loss carryforwards
|
|
|
26,138
|
|
|
|
27,061
|
|
Net operating loss carryforwards
|
|
|
1,160
|
|
|
|
2,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,392
|
|
|
|
37,786
|
|
Valuation Allowance
|
|
|
(27,298
|
)
|
|
|
(28,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
9,094
|
|
|
|
9,700
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax liability
|
|
$
|
32,038
|
|
|
$
|
33,578
|
|
|
|
|
|
|
|
|
|
|
ASC 740 Income Taxes, requires that deferred tax assets be
reduced by a valuation allowance, if based on all available
evidence, it is more likely than not that the deferred tax asset
will not be realized. Available evidence includes the reversal
of existing taxable temporary differences, future taxable income
exclusive of temporary differences, taxable income in carryback
years and tax planning strategies. In 2009, the Company made an
adjustment to record previously unrecognized deferred tax assets
which increased the income tax benefit and deferred tax assets
by approximately $0.4 million. The Company determined that
this adjustment was immaterial to its current and prior period
financial statements. The decrease in the valuation allowance of
$0.8 million resulted from a utilization of capital loss
and foreign net operating losses from jurisdictions with
uncertainty of future profitability. The Company has deferred
tax assets of $1.2 million resulting from state and foreign
net operating tax loss carryforwards of approximately
$12.3 million, with carryforward periods that expire
starting in 2019.
No provision has been recorded for unremitted earnings of
foreign subsidiaries as it is the Companys intention to
indefinitely reinvest these earnings of these subsidiaries.
Accordingly, at December 31, 2009, the Company had not
recorded a deferred tax liability for temporary differences
related to investments in its foreign subsidiaries that are
essentially permanent in duration. The amount of such temporary
differences was estimated to be approximately
$25.8 million. The amount may become taxable upon a
repatriation of assets or a sales or liquidation of the
subsidiaries. It is not practical to estimate the related amount
of unrecognized tax liability.
51
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
The following table summarized the activity related to the
Companys unrecognized tax benefits:
|
|
|
|
|
|
|
Total
|
|
|
Balance at January 1, 2008
|
|
$
|
1,880
|
|
Increases related to current year tax positions
|
|
|
5,300
|
|
Expiration of the statute of limitations for the assessment of
taxes
|
|
|
(527
|
)
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
6,653
|
|
|
|
|
|
|
Increases related to current year tax positions
|
|
|
157
|
|
Decreases related to previous year tax positions
|
|
|
(203
|
)
|
Expiration of the statute of limitations for the assessment of
taxes
|
|
|
(490
|
)
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
6,117
|
|
|
|
|
|
|
As of December 31, 2009 the total amount of gross
unrecognized tax benefits was $6.1 million of which
$5.7 million would reduce the Companys effective tax
rate. The increase in unrecognized tax benefits during 2008
includes $4.2 million from the tax position taken on the
Companys 2007 U.S. Corporate Income Tax Return
relating to the loss on the previous sales of its European
Material Handing business. If recognized, this loss would impact
the effective rate by the same amount. The amount of accrued
interest expense included as a liability within the
Companys consolidated balance sheet as of
December 31, 2009 and 2008 was $0.4 million.
As of December 31, 2009, the Company and its significant
subsidiaries are subject to examinations for the years after
2003 in Brazil and Canada, as well as after 2005 for the United
States, France and certain states within the United States. The
Company is also subject to examinations after 2005 in the
remaining states within the United States.
The Company does not expect any significant changes to its
unrecognized tax benefits in the next 12 months.
Industry
Segments
The Companys business units have separate management teams
and offer different products and services. These business units
have been aggregated into four reportable segments. These
include three manufacturing segments encompassing a diverse mix
of plastic and rubber products: 1) Material Handling
2) Automotive and Custom, and 3) Lawn and Garden. The
fourth segment is Distribution of tire, wheel, and undervehicle
service products. The aggregation of business units is based on
management by the chief operating decision-maker for the segment
as well as similarities of products, production processes,
distribution methods and economic characteristics (e.g. average
gross margin and the impact of economic conditions on long-term
financial performance). Intersegment sales are generally
recorded in segment operating results, at prices that management
believes approximate arms length transactions and are not
material to operating results.
In each of its manufacturing segments, the Company designs,
produces, and markets a wide range of polymer products for
diverse markets, customers, and applications. These products are
made through a variety of molding processes in facilities
located throughout North America and South America.
The Material Handling Segment includes a broad selection of
plastic reusable containers, pallets, small parts bins, bulk
shipping containers, and storage and organization products. The
product selection, manufacturing processes, and markets served
by each segment are similar. This segment includes operations
conducted in the United States, Canada, and Brazil. The reusable
container products provide customers with cost-saving material
handling solutions for applications such as shipping heavy
automotive parts to assembly lines, transporting perishable food
products to retailers, organizing small parts, and creating
custom storage systems. Markets served encompass various niches
of industrial manufacturing, food processing, retail/wholesale
products distribution, agriculture, automotive, healthcare,
appliance, bakery, electronics, textiles, consumer, and others.
Products are sold both direct to end-users and through
distributors.
52
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
In the Automotive and Custom Segment, the Company engineers and
manufactures plastic and rubber original equipment and
replacement parts, rubber tire repair and retread products, and
a diverse array of custom plastic and rubber products.
Representative products include: plastic HVAC ducts,
water / waste storage tanks, and
interior / exterior vehicle trim components; rubber
air intake hoses, vibration isolators, emissions tubing
assemblies, and trailer bushings; and custom products such as
plastic tool boxes and calendered rubber sheet stock. This
segment serves a diverse group of niche markets: automotive,
recreational vehicle, recreational marine, heavy truck,
construction and agriculture equipment, healthcare, and
transportation, to name a few.
Myers Industries Lawn and Garden Segment serves the North
American horticultural market with plastic products such as
seedling trays, nursery pots, hanging baskets, and custom
printed containers, as well as decorative resin planters.
Markets / customers include professional growers,
greenhouses, nurseries, retail garden centers, mass
merchandisers, and consumers.
The Companys Distribution Segment is engaged in the
distribution of equipment, tools, and supplies used for tire
servicing and automotive undervehicle repair. The product line
includes categories such as tire valves and accessories, tire
changing and balancing equipment, lifts and alignment equipment,
service equipment and tools, and tire repair / retread
supplies. The Distribution Segment operates domestically through
branches located in major cities throughout the United States
and in foreign countries through export sales. In addition, the
Distribution Segment operates directly in certain foreign
markets, principally Canada and Central America, through foreign
branch operations. Markets served include retail and truck tire
dealers, commercial auto and truck fleets, auto dealers, general
service and repair centers, tire retreaders, and government
agencies.
Total sales from foreign business units and export to countries
outside the U.S. were approximately $100.1 million,
$140.7 million, and $121.1 million for the years ended
December 31, 2009, 2008 and 2007, respectively. Sales made
to customers in Canada accounted for approximately 10% of total
net sales in 2009, 12% in 2008 and 10% in 2007. There are no
other individual foreign countries for which sales are material.
Long-lived assets in foreign countries, consisting primarily of
property, plant and equipment, intangible assets and goodwill,
were approximately $33.5 million at December 31, 2009
and $43.1 million at December 31, 2008.
53
MYERS
INDUSTRIES, INC. AND SUBSIDIARIES.
Notes to
Consolidated Financial Statements
Amounts
in thousands, except as otherwise
noted (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawn and Garden
|
|
$
|
220,312
|
|
|
$
|
272,803
|
|
|
$
|
300,872
|
|
Material Handling
|
|
|
254,045
|
|
|
|
261,189
|
|
|
|
267,221
|
|
Distribution
|
|
|
162,991
|
|
|
|
187,132
|
|
|
|
203,230
|
|
Automotive and Custom
|
|
|
86,030
|
|
|
|
119,691
|
|
|
|
107,763
|
|
Intra-segment elimination
|
|
|
(21,544
|
)
|
|
|
(27,274
|
)
|
|
|
(23,381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
701,834
|
|
|
$
|
813,541
|
|
|
$
|
855,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawn and Garden
|
|
$
|
16,686
|
|
|
$
|
(1,794
|
)
|
|
$
|
897
|
|
Material Handling
|
|
|
13,625
|
|
|
|
26,638
|
|
|
|
40,360
|
|
Distribution
|
|
|
13,660
|
|
|
|
17,490
|
|
|
|
20,537
|
|
Automotive and Custom
|
|
|
787
|
|
|
|
(54,192
|
)
|
|
|
8,433
|
|
Corporate
|
|
|
(27,621
|
)
|
|
|
(22,840
|
)
|
|
|
1,788
|
|
Interest
expense-net
|
|
|
(8,304
|
)
|
|
|
(11,337
|
)
|
|
|
(15,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,833
|
|
|
$
|
(46,035
|
)
|
|
$
|
56,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawn and Garden
|
|
$
|
227,274
|
|
|
$
|
241,725
|
|
|
$
|
302,736
|
|
Material Handling
|
|
|
183,435
|
|
|
|
187,923
|
|
|
|
191,562
|
|
Distribution
|
|
|
43,870
|
|
|
|
44,654
|
|
|
|
46,944
|
|
Automotive and Custom
|
|
|
42,770
|
|
|
|
83,320
|
|
|
|
137,933
|
|
Corporate
|
|
|
12,617
|
|
|
|
11,278
|
|
|
|
18,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
509,966
|
|
|
$
|
568,900
|
|
|
$
|
697,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Additions, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawn and Garden
|
|
$
|
9,577
|
|
|
$
|
5,375
|
|
|
$
|
6,496
|
|
Material Handling
|
|
|
5,617
|
|
|
|
32,849
|
|
|
|
7,875
|
|
Distribution
|
|
|
90
|
|
|
|
332
|
|
|
|
190
|
|
Automotive and Custom
|
|
|
711
|
|
|
|
1,884
|
|
|
|
4,315
|
|
Corporate
|
|
|
0
|
|
|
|
137
|
|
|
|
357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,995
|
|
|
$
|
40,577
|
|
|
$
|
19,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawn and Garden
|
|
$
|
12,916
|
|
|
$
|
15,401
|
|
|
$
|
16,242
|
|
Material Handling
|
|
|
14,668
|
|
|
|
13,557
|
|
|
|
10,991
|
|
Distribution
|
|
|
309
|
|
|
|
336
|
|
|
|
372
|
|
Automotive and Custom
|
|
|
4,831
|
|
|
|
4,798
|
|
|
|
3,856
|
|
Corporate
|
|
|
408
|
|
|
|
345
|
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
33,132
|
|
|
$
|
34,437
|
|
|
$
|
31,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
|
|
ITEM 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure.
|
None.
|
|
ITEM 9.A.
|
Controls
and Procedures
|
Evaluation
of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures, as
defined under
Rules 13a-15(e)
and
15d-a5(e) of
the Securities Exchange Act of 1934, as amended, that are
designed to ensure that information required to be disclosed in
the Companys reports under the Securities Exchange Act of
1934 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. Based on the foregoing, 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.
Managements report on internal controls over financial
reporting, and the report of the independent registered public
accounting firm on internal control, are titled
Managements Annual Assessment of and Report on
Internal Control over Financial Reporting and Report
of Independent Registered Public Accounting Firm and are
included herein.
Changes
in Internal Control Over Financial Reporting
There have been no changes in the Companys internal
controls over financial reporting during the quarter ended
December 31, 2009 that have materially affected, or are
reasonably likely to materially affect, the Companys
internal control over financial reporting.
Managements
Annual Assessment of and 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.
Because of its inherent limitation, 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.
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 December 31, 2009.
55
The effectiveness of the Companys internal control over
financial reporting as of December 31, 2009 has been
audited by KPMG LLP, an independent registered public accounting
firm, as stated in their report included herein.
|
|
|
John C. Orr
|
|
Donald A. Merril
|
President and
|
|
Vice President,
|
Chief Executive Officer
|
|
Chief Financial Officer and
Corporate Secretary
|
56
Report of
Independent Registered Public Accounting Firm
The Board of
Directors
Myers Industries, Inc.:
We have audited Myers Industries, Inc. and subsidiaries
(Company) internal control over financial reporting as of
December 31, 2009, based on criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is responsible
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 Managements Annual Assessment of and Report
On Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit 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 audit also included performing such other
procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our
opinion.
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 (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) 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 (3) 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.
In our opinion, Myers Industries, Inc. and subsidiaries
maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2009, based on
criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
statements of consolidated financial position of Myers
Industries, Inc. and subsidiaries as of December 31, 2009
and 2008, and the related statements of consolidated (loss)
income, shareholders equity and comprehensive (loss)
income, and cash flows for each of the years in the three-year
period ended December 31, 2009, and our report dated
March 12, 2010 expressed an unqualified opinion on those
consolidated financial statements.
/s/ KPMG LLP
Cleveland, Ohio
March 12, 2010
57
|
|
ITEM 9B.
|
Other
Information.
|
None
PART III
|
|
ITEM 10.
|
Directors
and Executive Officers of the Registrant
|
For information about the directors of the Company, see the
sections titled Nominees, Director
Independence, Committees of the Board,
Committee Charters and Policies, Shareholder Nominations
of Director Candidates and Corporate Governance
Policies of the Companys Proxy Statement filed with
the Securities and Exchange Commission for the Companys
annual meeting of shareholders to be held on April 30, 2010
(Proxy Statement), which is incorporated herein by
reference.
Each member of the Companys Audit Committee is financially
literate and independent as defined under the Companys
Independence Criteria Policy and the independence standards set
by the New York Stock Exchange. The Board has identified Robert
A. Stefanko as Audit Committee Financial Expert.
Information about the Executive Officers of Registrant appears
in Part I of this Report.
Disclosures by the Company with respect to compliance with
Section 16(a) appears under the section entitled
Section 16(a) Beneficial Ownership Reporting
Compliance in the Proxy Statement, and is incorporated
herein by reference.
For information about our Code of Ethics see the section titled
Corporate Governance Policies of our Proxy
Statement, which is incorporated herein by reference.
|
|
ITEM 11.
|
Executive
Compensation
|
See the sections titled Executive Compensation and Related
Information, Compensation Committee Interlocks and
Insider Participation, Compensation Committee Report on
Executive Compensation, Risk Assessment of
Compensation Policies and Board Role in Risk
Oversight of the Proxy Statement, which are incorporated
herein by reference.
|
|
ITEM 12.
|
Security
Ownership of Certain Beneficial Owners and Management
|
See the sections titled Principal Shareholders,
Election of Directors and Beneficial
Ownership of the Proxy Statement, which are incorporated
herein by reference.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(C)
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
(A)
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities
|
|
|
(B)
|
|
|
Future Issuance Under
|
|
|
|
to be Issued Upon
|
|
|
Weighted-average
|
|
|
Equity Compensation
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
Warrants or Rights
|
|
|
Warrants or Rights
|
|
|
Column(A))
|
|
|
Equity Compensation Plans Approved by Security
Holders(1)
|
|
|
1,787,919
|
|
|
$
|
11.22
|
|
|
|
752,226
|
|
Equity Compensation Plans Not Approved by Security Holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
|
1,787,919
|
|
|
|
|
|
|
|
752,226
|
|
|
|
|
(1) |
|
This information is as of January 31, 2010 and includes the
2008 Stock Plan and 1999 Incentive Stock Plan. |
58
|
|
ITEM 13.
|
Certain
Relationships and Related Transactions
|
See the sections titled Policies and Procedures with
Respect to Related Party Transactions and Directors
Independence of the Proxy Statement, which are
incorporated herein by reference.
|
|
ITEM 14.
|
Principal
Account Fees and Services
|
Required information regarding fees paid to and services
provided by the Companys independent auditor during the
years ended December 31, 2009 and 2008 and the pre-approval
policies and procedures of the Audit Committee of the
Companys Board of Directors is set forth under the section
titled Matters Relating to the Independent Registered
Public Accounting Firm of the Proxy Statement , which is
incorporated herein by reference.
PART IV
|
|
ITEM 15.
|
Exhibits,
Financial Statement Schedules
|
The following consolidated financial statements of the
Registrant appear in Part II of this Report:
|
|
15.
|
(A)(1)
Financial Statements
|
Consolidated Financial Statements of Myers Industries, Inc.
and Subsidiaries
Report of Independent Registered Public Accounting Firm
Statements of Consolidated Financial Position As of
December 31, 2009 and 2008
Statements of Consolidated (Loss) Income For The Years Ended
December 31, 2009, 2008 and 2007
Statements of Consolidated Shareholders Equity and
Comprehensive Income (Loss) For The Years Ended
December 31, 2009, 2008 and 2007
Statements of Consolidated Cash Flows For The Years Ended
December 31, 2009, 2008 and 2007
Notes to Consolidated Financial Statements For The Years Ended
December 31, 2009, 2008 and 2007
|
|
15.
|
(A)(2)
Financial Statement Schedules
|
All other schedules are omitted because they are inapplicable,
not required, or because the information is included in the
consolidated financial statements or notes thereto which appear
in Part II of this Report.
|
|
|
|
|
EXHIBIT INDEX
|
|
2(a)
|
|
Stock Purchase Agreement among Myers Industries, Inc., ITML
Holdings Inc. and 2119188 Ontario Inc., dated December 27,
2006. Reference is made to Exhibit 2.1 to
Form 8-K
filed with the Commission on January 16, 2007.**
|
2(b)
|
|
Stock Purchase Agreement among Myers Industries, Inc., ITML
Holdings Inc. and 2117458 Ontario Inc., dated December 27,
2006. Reference is made to Exhibit 2.2 to
Form 8-K
filed with the Commission on January 16, 2007.**
|
2(c)
|
|
Sale and Purchase Agreement between Myers Industries, Inc. and
LINPAC Material Handling Limited, dated October 20, 2006.
Reference is made to Exhibit 1 to
Form 8-K
filed with the Commission on February 6, 2007.**
|
2(d)
|
|
Agreement and Plan of Merger among Myers Industries, Inc., MYEH
Corporation and MYEH Acquisition Corporation, dated
April 24, 2007. Reference is made to Exhibit 10.1 to
Form 8-K
filed with the Commission on April 26, 2007.**
|
59
|
|
|
|
|
EXHIBIT INDEX
|
|
2(e)
|
|
Letter Agreement among Myers Industries, Inc., Myers Holdings
Corporation (f/k/a MYEH Corporation) and Myers Acquisition
Corporation (f/k/a MYEH Acquisition Corporation), dated
December 10, 2007. Reference is made to Exhibit 99.1
to
Form 8-K
filed with the Commission on December 10, 2007.
|
2(f)
|
|
Letter Agreement among Myers Industries, Inc., Myers Holdings
Corporation (f/k/a MYEH Corporation) and Myers Acquisition
Corporation (f/k/a MYEH Acquisition Corporation), dated
April 3, 2008. Reference is made to Exhibit 99.1 to
Form 8-K
filed with the Commission on April 4, 2008.
|
3(a)
|
|
Myers Industries, Inc. Amended and Restated Articles of
Incorporation. Reference is made to Exhibit 3(a) to
Form 10-K
filed with the Commission on March 16, 2005.
|
3(b)
|
|
Myers Industries, Inc. Amended and Restated Code of Regulations
attached hereto or Exhibit 3.1.
|
10(a)
|
|
Myers Industries, Inc. Amended and Restated Employee Stock
Purchase Plan. Reference is made to Exhibit 10(a) to
Form 10-K
filed with the Commission on March 30, 2001.
|
10(b)
|
|
Form of Indemnification Agreement for Directors and Officers.
Reference is made to Exhibit 10.1 to
Form 10-Q
filed with the Commission on May 1, 2009.*
|
10(c)
|
|
Myers Industries, Inc. Amended and Restated Dividend
Reinvestment and Stock Purchase Plan. Reference is made to
Exhibit 10(d) to
Form 10-K
filed with the Commission on March 19, 2004.
|
10(d)
|
|
Myers Industries, Inc. Amended and Restated 1999 Incentive Stock
Plan. Reference is made to Exhibit 10(f) to
Form 10-Q
filed with the Commission on August 9, 2006.*
|
10(e)
|
|
2008 Incentive Stock Plan of Myers Industries, Inc. Reference is
made to Exhibit 4.3 to
Form S-8
filed with the Commission on March 17, 2009.*
|
10(f)
|
|
Myers Industries, Inc. Executive Supplemental Retirement Plan.
Reference is made to Exhibit (10)(g) to
Form 10-K
filed with the Commission on March 26, 2003.*
|
10(g)
|
|
Amended and Restated Employment Agreement between Myers
Industries, Inc. and John C. Orr effective June 1, 2008.
Reference is made to Exhibit 10.1 to
Form 8-K
filed with the Commission on June 24, 2008.*
|
10(h)
|
|
First Amendment to Amended and Restated Employment Agreement
between Myers Industries, Inc. and John C. Orr entered into as
of April 21, 2009. Reference is made to Exhibit 10.1
to
Form 8-K
filed with the Commission on April 22, 2009.*
|
10(i)
|
|
Second Amendment to Amended and Restated Employment Agreement
between Myers Industries, Inc. and John C. Orr entered into as
of March 8, 2010. Reference is made to Exhibit 10.1 to
Form 8-K
filed with the Commission on March 9, 2010.*
|
10(j)
|
|
Non-Disclosure and Non-Competition Agreement between Myers
Industries, Inc. and John C. Orr dated July 18, 2000.
Reference is made to Exhibit 10(j) to
Form 10-Q
filed with the Commission on May 6, 2003.*
|
10(k)
|
|
Amendment to the Myers Industries, Inc. Executive Supplemental
Retirement Plan (John C. Orr) effective June 1, 2008.
Reference is made to Exhibit 10.2 to
Form 8-K
filed with the Commission on June 24, 2008.*
|
10(l)
|
|
Employment Agreement between Myers Industries, Inc. and David B.
Knowles dated June 19, 2009. Reference is made to
Exhibit 10.1 to
Form 8-K
filed with the Commission on June 22, 2009.*
|
10(m)
|
|
Non-Disclosure and Non-Competition Agreement between Myers
Industries, Inc. and David B. Knowles dated June 19, 2009.
Reference is made to Exhibit 10.2 to
Form 8-K
filed with the Commission on June 22, 2009.*
|
10(n)
|
|
Amendment to Myers Industries, Inc. Executive Supplemental
Retirement Plan (David B. Knowles) effective June 19, 2009.
Reference is made to Exhibit 10.3 to
Form 8-K
filed with the Commission on June 22, 2009.*
|
10(o)
|
|
Employment Agreement between Myers Industries, Inc. and Donald
A. Merril dated January 24, 2006. Reference is made to
Exhibit 10(k) to
Form 10-K
filed with the Commission on March 16, 2006.*
|
10(p)
|
|
Amendment to the Myers Industries, Inc. Executive Supplemental
Retirement Plan (Donald A. Merril) dated January 24, 2006.
Reference is made to Exhibit 10(l) to
Form 10-K
filed with the Commission on March 16, 2006.*
|
60
|
|
|
|
|
EXHIBIT INDEX
|
|
10(q)
|
|
Non-Disclosure and Non-Competition Agreement between Myers
Industries, Inc. and Donald A. Merril dated January 24,
2006. Reference is made to Exhibit 10(m) to
Form 10-K
filed with the Commission on March 16, 2006.*
|
10(r)
|
|
Retirement and Separation Agreement between Myers Industries,
Inc. and Stephen E. Myers effective May 1, 2005. Reference
is made to Exhibit 10(k) to
Form 10-Q
filed with the Commission on August 10, 2005.*
|
10(s)
|
|
Second Amended and Restated Loan Agreement between Myers
Industries, Inc. and JP Morgan Chase Bank, Agent dated as of
October 26, 2006. Reference is made to Exhibit 10.1 to
Form 8-K
filed with the Commission on October 31, 2006.
|
10(t)
|
|
Note Purchase Agreement between Myers Industries, Inc. and the
Note Purchasers, dated December 12, 2003, regarding the
issuance of (i) $65,000,000 of 6.08%
Series 2003-A
Senior Notes due December 12, 2010, and
(ii) $35,000,000 of 6.81%
Series 2003-A
Senior Notes due December 12, 2013. Reference is made to
Exhibit 10(o) to
Form 10-K
filed with the Commission on March 15, 2004.
|
10(u)
|
|
Myers Industries, Inc. Non-Employee Board of Directors
Compensation Arrangement. Reference is made to
Exhibit 10(w) to
Form 10-K
filed with the Commission on March 16, 2006.*
|
14(a)
|
|
Myers Industries, Inc. Code of Business Conduct and Ethics.
Reference is made to Exhibit 14(a) to
Form 10-K
filed with the Commission on March 16, 2005.
|
14(b)
|
|
Myers Industries, Inc. Code of Ethical Conduct for the Finance
Officers and Finance Department Personnel. Reference is made to
Exhibit 14(b) to
Form 10-K
filed with the Commission on March 16, 2005.
|
21
|
|
List of Direct and Indirect Subsidiaries, and Operating
Divisions, of Myers Industries, Inc.
|
23
|
|
Consent of Independent Registered Public Accounting Firm (KPMG
LLP)
|
31(a)
|
|
Certification of John C. Orr, President and Chief Executive
Officer of Myers Industries, Inc, pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
31(b)
|
|
Certification of Donald A. Merril, Vice President, Chief
Financial Officer and Corporate Secretary of Myers Industries,
Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32
|
|
Certifications of John C. Orr, President and Chief Executive
Officer, and Donald A. Merril, Vice President, Chief Financial
Officer and Corporate Secretary, of Myers Industries, Inc.
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
* |
|
Indicates executive compensation plan or arrangement. |
|
|
|
** |
|
Pursuant to Item 601(b)(2) of
Regulation S-K,
certain exhibits and schedules have been omitted from this
filing. The registrant agrees to furnish the Commission on a
supplemental basis a copy of any omitted exhibit or schedule. |
61
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Myers Industries, Inc.
Donald A. Merril
Vice President,
Chief Financial Officer and
Corporate Secretary
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 Registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Donald
A. Merril
Donald
A. Merril
|
|
Vice President, Chief Financial Officer and Corporate Secretary
(Principal Financial and Accounting Officer)
|
|
March 12, 2010
|
|
|
|
|
|
/s/ Keith
A. Brown
Keith
A. Brown
|
|
Director
|
|
March 12, 2010
|
|
|
|
|
|
/s/ Vincent
Byrd
Vincent
Byrd
|
|
Director
|
|
March 12, 2010
|
|
|
|
|
|
/s/ Robert
A. Stefanko
Robert
A. Stefanko
|
|
Director
|
|
March 12, 2010
|
|
|
|
|
|
/s/ Richard
P. Johnston
Richard
P. Johnston
|
|
Director
|
|
March 12, 2010
|
|
|
|
|
|
/s/ Edward
W. Kissel
Edward
W. Kissel
|
|
Director
|
|
March 12, 2010
|
|
|
|
|
|
/s/ John
C. Orr
John
C. Orr
|
|
President, Chief Executive Officer and Director (Principal
Executive Officer)
|
|
March 12, 2010
|
|
|
|
|
|
/s/ John
B. Crowe
John
B. Crowe
|
|
Director
|
|
March 12, 2010
|
|
|
|
|
|
/s/ Jon
H. Outcalt
Jon
H. Outcalt
|
|
Director
|
|
March 12, 2010
|
62