SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Fiscal year ended December 31, 1995 Commission file number 1-5222
M. A. HANNA COMPANY
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 34-0232435
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SUITE 36-5000, 200 PUBLIC SQUARE,CLEVELAND, OHIO 44114-2304
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 216-589-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $1 par value New York Stock Exchange
Chicago Stock Exchange
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's 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. [ ]
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant, computed by reference to the price at which the stock was sold as
of February 16, 1996: $1,019,678,689.00.
Common Shares outstanding as of February 16, 1996: 34,712,466.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by
reference into the designated parts of this Form 10-K: (1)
Registrant's definitive proxy statement distributed to stockholders
dated March 20, 1996, filed with the Commission pursuant to
Regulation 14A and incorporated by reference into Parts I and III
of this Form 10-K; and (2) Registrant's Annual Report distributed
to stockholders for the fiscal year ended December 31, 1995,
incorporated by reference into Parts I and II of this Form 10-K.
With the exception of the information specifically incorporated by
reference, neither the Registrant's proxy statement nor the 1995
Annual Report to stockholders is deemed to be filed as part of this
Form 10-K.
Except as otherwise stated, the information contained in this
report is given as of December 31, 1995, the end of the
Registrant's last fiscal year.
PART I
ITEM 1. BUSINESS
(a) Acquisitions and Dispositions
On May 25, 1995, the Registrant sold its remaining
8.14 percent equity interest in Iron Ore Company of
Canada ("IOC") to IOC. With mining and processing
operations in Newfoundland and ore loading facilities in
Quebec, IOC sells iron ore concentrates and pellets to
major steel plants in North America, Europe and Asia.
The Registrant will continue to act as the managing agent
of IOC through December 31, 1996.
On June 6, 1995, the Registrant completed the
previously announced sale of its Day International, Inc.
subsidiary, based in Dayton, Ohio. Day International,
Inc., with annual sales of $120 million, produced highly
engineered printing blankets for offset printing presses,
as well as aprons, cots and other consumable parts used
in the textile industry.
<PAGE>
In January 1995 the Registrant merged its Bruck
Plastics Company, Fiberchem, Inc. and Plastic
Distributing Corporation business units, to form M. A.
Hanna Resin Distribution, headquartered in Lemont,
Illinois. In June 1995, the Registrant announced the
merger of its Allied Color Industries, Inc., PMS
Consolidated, Inc. and Wilson Color, Inc. business units
into a single unit named M. A. Hanna Color, headquartered
in Suwanee, Georgia. And in October 1995, the Registrant
announced the merger of its Burton Rubber Processing,
Inc. and Colonial Rubber Works, Inc. business units to
form a single unit named M. A. Hanna Rubber Compounding,
with headquarters in Chagrin Falls, Ohio.
On January 4, 1996, the Registrant announced that it
had entered into an agreement with Suzhou Plastic Factory
#1 ("SPF1") to form a plastics compounding joint venture
in Suzhou, Jiangsu Province, China, about 60 miles west
of Shanghai. The joint venture, to be known as Hanna Su
Xing Plastics Compounding (Suzhou) Company Limited, will
be housed in a new facility with 13 million pounds of
annual capacity, to be built in 1996 and to be operated
by approximately 65 associates, including management
transferred from SPF1's existing compounding operations.
The joint venture's primary products will be
polypropylene, nylon and ABS compounds for the automotive
and appliance markets.
On January 26, 1996, the Registrant completed its
previously announced tender offer for the shares of
CIMCO, Inc., a producer of thermoplastic compounds and
plastic components based in Costa Mesa, California. A
total of 2,896,412, or approximately 97.4 percent of all
outstanding shares of CIMCO stock, were tendered in
response to the $10.50 per share offer, and the balance
of the shares were acquired by cash offer. The
Registrant had previously announced its intention to sell
CIMCO's plastic components business, and to retain its
plastic compounding business, Compounding Technology,
Inc. ("CTi"), with plants in Singapore, Corona,
California, and Charlotte, North Carolina and a fourth
plant under construction in France.
On March 14, 1996, the Registrant announced that it
had reached an agreement to acquire Victor International
Plastics, Ltd., a leading producer of color masterbatch
in the United Kingdom, from Rexam, Plc. Victor
International Plastics has annual sales of more than $50
million, has 55 million pounds of capacity and serves the
injection and blow molding end markets. It employs 180
associates at its three operations in London, Manchester
and Coventry, England.
<PAGE>
(b) See the financial information regarding the
Registrant's business segments set forth at page 29 of
the Registrant's Annual Report distributed to
stockholders for the fiscal year ended December 31, 1995,
which page is incorporated herein by this reference.
(c)
(1)(i)
Formulated Polymers
(a) Processing
The Registrant, through its Bergmann, CTi, DH
Compounding, M.A. Hanna Engineered Materials, M. A. Hanna
Rubber Compounding, MACH-I Compounding, M. A. Hanna
Thermoplastic Elastomers, and Southwest Chemical Services
business units, engages in the custom compounding of
plastic and rubber materials to the specifications of
manufacturers of plastic and rubber products for
customers located throughout North America, Europe and
Asia.
Through its M. A. Hanna Color, Hanna Polimeros,
Synthecolor and Wilson Color business units, the
Registrant manufactures custom formulated colorants in
the form of color concentrates, liquid dispersions, dry
colorants, and additives for customers in the plastics
industry throughout North America, Europe, South America
and Asia. M. A. Hanna Color and Wilson Color also
produce specialty colorants and additives for the
automobile, vinyl siding and textile industries and for
the wire and cable industry, respectively.
(b) Distribution
Through its M. A. Hanna Resin Distribution and M.A.
Hanna de Mexico business units, the Registrant
distributes thermoplastic and thermoset resins and
fiberglass materials in North America.
Through its Cadillac Plastic business unit,
Registrant engages in the worldwide distribution of
engineered plastic sheet, rod, tube, and film products to
industrial and retail customers as well as cutting and
machining plastic products to customers' specifications
and thermoforming plastic into products such as skylights
and signs.
<PAGE>
Other Operations
Through its Colonial Diversified Polymer Products
business unit, Registrant manufactures molded sponge
automotive parts for customers located throughout the
United States and Canada.
Registrant also engages in the management of marine
terminals, management of an iron ore mine in Quebec,
Canada, and insurance services.
Net sales and operating revenues from Registrant's
operations outside the polymers industry do not
individually constitute 10 percent or more of
Registrant's consolidated revenues.
(1)(iii) In Registrant's processing segment the primary raw
materials required are natural and synthetic rubbers,
plastics, and chemicals, all of which are available in
adequate supply. The primary raw materials required by
Registrant's color and additive concentrate units are
plastics, chemicals, and organic and inorganic pigments,
all of which are available in adequate supply.
(1) (iv) Registrant's processing business units own numerous
patents and trademarks, which are important in that they
protect the Registrant's corresponding inventions and
product names against infringement by others and thereby
enhance Registrant's position in the marketplace. The
patents vary in duration from 1 year to 20 years, and the
trademarks have an indefinite life which is based upon
continued use.
(1)(x) The custom compounding of plastic and rubber
materials is highly competitive, with product quality and
service to customers being principal factors affecting
competition. Registrant believes it is the largest
independent custom compounder of rubber and a leading
compounder of plastics in North America in terms of
pounds produced.
The manufacture of custom formulated color and
additive concentrates for the plastics industry is highly
competitive with product quality and service to customers
being principal factors affecting competition.
Registrant believes it is one of the leading producers of
custom formulated color and additive concentrates in the
United States and Europe.
<PAGE>
The distribution of engineered plastic sheet, rod,
tube, film products, and polymer resins is highly
competitive with product quality and service to customers
being principal factors affecting competition.
Registrant believes it is one of the leading distributors
of such products in the world.
The manufacture of molded sponge automotive parts is
highly competitive, with quality, price and service to
customers being principal factors affecting competition.
Information generally available indicates that Registrant
is among the leading suppliers of such parts in the
United States.
(1)(xii) At each of its operations the Registrant, its
subsidiaries, and associated companies are governed by
laws and regulations designed to protect the environment
and in this connection Registrant has adopted a corporate
policy which directs compliance with the various
requirements of these laws and regulations. The
Registrant believes that it, its subsidiaries and
associated companies are in substantial compliance with
all such laws and regulations, although it recognizes
that these laws and regulations are constantly changing.
There are presently no material estimated capital
expenditures for further environmental control facilities
projected by the Registrant, its subsidiaries and
associated companies for any of its operations.
(1)(xiii) Registrant employs 5,695 persons at its consolidated
operations (6,799 in 1994) and manages operations for
others that employ 2,302 persons (2,245 in 1994).
(d)(1) See information regarding Registrant's international
operations at page 29 of Registrant's Annual Report
distributed to stockholders for the fiscal year ended
December 31, 1995, which page is incorporated herein by
this reference.
(2) The international operations in which the Registrant
and its subsidiaries have equity interests, and the
investments of the Registrant and its subsidiaries in
such companies, may be affected from time to time by
foreign political and economic developments, laws and
regulations, increases or decreases in costs in such
countries and changes in the relative values of the
various currencies involved.
<PAGE>
ITEM 2. PROPERTIES
The table below sets forth the principal plants and properties
owned or leased by the Registrant's formulated polymers business
units. For properties which are leased, the date of expiration of
the current term of the lease is indicated. Properties which are
shown as owned are owned in fee simple. Some properties may be
subject to minor encumbrances of a nature which do not materially
affect the Registrant's operations.
In addition, Registrant's Cadillac Plastic and M. A. Hanna
Resin Distribution business units lease floor space at various
locations within the United States. They are used by the regional
branches for sales offices, for the distribution of Registrant's
products, for fabrication, and for warehousing. These are short-
term leases.
Registrant's Cadillac Plastic business unit also leases space
for regional branches in various locations outside the United
States, including Australia, Belgium, Canada, France, Germany, Hong
Kong, Korea, Malaysia, Mexico, Netherlands, New Zealand, Singapore,
Spain, Sweden, Taiwan and Vietnam.
Approximate
Owned/ Size
Location Facility Leased (sq. ft.)
Burton, M. A. Hanna Rubber Owned 160,000
Ohio Compounding
_________________________________________________________________
Macedonia, MACH-1 Owned 87,000
Ohio Compounding
_________________________________________________________________
Tillsonburg, M. A. Hanna Rubber Owned 60,000
Ontario Compounding
_________________________________________________________________
Jonesboro, M. A. Hanna Rubber Owned 69,000
Tennessee Compounding
_________________________________________________________________
DeForest M. A. Hanna Rubber Owned 130,000
Wisconsin Compounding
_________________________________________________________________
Santa Fe Springs, M. A. Hanna Rubber Leased 13,231
California Compounding 1996
_________________________________________________________________
Broadview Heights, M. A. Hanna Color Owned 61,000
Ohio
_________________________________________________________________
<PAGE>
Approximate
Owned/ Size
Location Facility Leased (sq. ft.)
Greenville, M. A. Hanna Color Owned 65,000
South Carolina
_________________________________________________________________
Phoenix, M. A. Hanna Color Owned 20,500
Arizona
_________________________________________________________________
Vonore, M. A. Hanna Color Owned 47,000
Tennessee
_________________________________________________________________
North Kansas City, M. A. Hanna Color Leased 44,000
Missouri 1998
_________________________________________________________________
San Fernando, M. A. Hanna Color Leased 50,000
California 1998
_________________________________________________________________
Vancouver, M. A. Hanna Color Leased 35,000
Washington 2002
_________________________________________________________________
Troy, Cadillac Plastic Leased 29,175
Michigan (headquarters) 1998
_________________________________________________________________
Lemont, M. A. Hanna Resin Leased 103,000
Illinois Distribution 2008
(headquarters)
_________________________________________________________________
Seattle, M. A. Hanna Resin Leased 79,000
Washington Distribution 2005
_________________________________________________________________
Kingstree, M. A. Hanna Rubber Owned 156,174
South Carolina Compounding
_________________________________________________________________
Dyersburg, M. A. Hanna Owned 862,399
Tennessee Engineered Materials,
M. A. Hanna Rubber
Compounding and
Colonial Diversified
Polymer Products
_________________________________________________________________
<PAGE>
Approximate
Owned/ Size
Location Facility Leased (sq. ft.)
Bethlehem, M. A. Hanna Leased
Pennsylvania Engineered 2004 82,000
Materials 1999 25,400
_________________________________________________________________
Suwanee, M. A. Hanna Color Owned 20,000
Georgia (headquarters)
_________________________________________________________________
Suwanee, M. A. Hanna Color Owned 44,022
Georgia (technical center)
_________________________________________________________________
Somerset, M. A. Hanna Color Owned 44,300
New Jersey
_________________________________________________________________
Florence, M. A. Hanna Color Owned 30,000
Kentucky
_________________________________________________________________
Gastonia, M. A. Hanna Color Owned 43,992
North Carolina
_________________________________________________________________
Elk Grove Village, M. A. Hanna Color Owned 51,870
Illinois
_________________________________________________________________
St. Peters, M. A. Hanna Color Owned 32,480
Missouri
_________________________________________________________________
Fort Worth, M. A. Hanna Color Owned 75,080
Texas
_________________________________________________________________
Norwalk, M. A. Hanna Color Owned 94,000
Ohio
_________________________________________________________________
Gardena, M. A. Hanna Color Owned 46,652
California
_________________________________________________________________
Carolina, M. A. Hanna Color Leased 12,600
Puerto Rico 1999
_________________________________________________________________
<PAGE>
Approximate
Owned/ Size
Location Facility Leased (sq. ft.)
Buford, M. A. Hanna Color Leased 73,300
Georgia 1997
_________________________________________________________________
Milford, M. A. Hanna Color Leased 20,600
New Hampshire 2000
_________________________________________________________________
Toluca, Hanna Polimeros Owned 22,000
Mexico
_________________________________________________________________
LaPorte, Southwest Chemical Owned 200,000
Texas Services, Inc.
_________________________________________________________________
Ayer, M. A. Hanna Resin Leased 82,000
Massachusetts Distribution 2000
_________________________________________________________________
Houston, M. A. Hanna Leased
Texas Engineered 1997 88,000
Materials 1998 44,120
_________________________________________________________________
Statesville, M. A. Hanna Resin Leased 48,240
North Carolina Distribution 1998
_________________________________________________________________
Neshanic Station, M. A. Hanna Color Leased 123,000
New Jersey 1997
_________________________________________________________________
North Ridgeville M. A. Hanna Leased 40,750
Ohio Thermoplastic 1999
Elastomers
_________________________________________________________________
Assesse, Wilson Color Owned 120,976
Belgium
_________________________________________________________________
Tossiat, Wilson color Owned 87,188
France
_________________________________________________________________
<PAGE>
Approximate
Owned/ Size
Location Facility Leased (sq. ft.)
Bendorf, Wilson Color Owned 72,086
Germany
_________________________________________________________________
Angered, Wilson Color Owned 22,259
Sweden
_________________________________________________________________
Paris, Synthecolor Owned 46,285
France Leased 16,146
_________________________________________________________________
Gaggenau, Bergmann Owned 241,114
Germany
_________________________________________________________________
Barbastro, Polibasa (Bergmann) Owned 71,042
Spain
_________________________________________________________________
Corona, Compounding Leased 32,000
California Technology, Inc. 2001
_________________________________________________________________
Charlotte, Compounding Leased 20,100
North Carolina Technology, Inc. 1997
_________________________________________________________________
Singapore Compounding Leased 43,000
Technology, Inc. 1996
_________________________________________________________________
Registrant's combined annual plastic and rubber compounding
capacity and colorant manufacturing capacity, based on the
estimated design capacities of Registrant's plants, amounts to
approximately 700 million pounds of compounded rubber products, 825
million pounds of compounded plastic products and over 235 million
pounds of colorants. A variation in the mix of products produced
at a given plant results in a corresponding increase or decrease in
the quantity (in pounds) of products that can be produced at full
capacity. Beyond these estimated capacities for Registrant's
rubber and plastic compounding and colorant manufacturing
properties, there are no comparative measurement units of
production capacity that reasonably can be ascribed to Registrant's
other properties in the processing segment.
<PAGE>
Registrant's 50 percent-owned partnership, DH Compounding
Company, owns and operates an engineering plastics compounding
plant in Clinton, Tennessee. The 150,000 square foot plant has an
annual design capacity of 90 million pounds.
ITEM 3. LEGAL PROCEEDINGS
Registrant, directly and indirectly through a wholly-owned
subsidiary, is obligated for costs of environmental remediation
measures taken and to be taken in connection with certain
operations that have been sold or discontinued. These include the
clean-up of a Superfund site and participation with other companies
in the clean-up of hazardous waste disposal sites, several of which
have been designated as Superfund sites. Registrant has
established reserves for these anticipated liabilities for
environmental remediation, which do not reflect potential insurance
recoveries and which management believes are adequate to cover
Registrant's ultimate exposure. Registrant believes that these
liabilities will not have a material adverse effect on the
Registrant's business or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
_______ EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists information as of March 1, 1996, as
to each executive officer of the Registrant, including his position
with the Registrant as of that date and other positions held by him
during at least the past five years:
M. D. Walker Chairman and Chief Executive
Age - 63 Officer. Chairman and Chief
Executive Officer, September 1986 to
date; President, December 1988 -
May 1989.
<PAGE>
D. J. McGregor President and Chief Operating
Age - 55 Officer. Senior Vice President-
Operations of the Registrant, March
1988 - September 1988; Executive
Vice President, September 1988 -
May 1989; President and Chief
Operating Officer, May 1989 to date.
L. L. Beach Vice President, Human Resources.
Age - 51 Vice President, Human Resources of
Kraft USA (1989-1991) and of Kraft
Foods International (manufacturer
and distributor of consumer
products) 1991 to April 1995. Vice
President, Human Resources of the
Registrant, April 1995 to present.
S. P. Chong Vice President-Total Quality
Age - 53 Planning & Technical Services. Vice
President-Technical Services, 1986 -
May 1990; Vice President Total
Quality Planning & Technical
Services, May 1990 to date.
M. S. Duffey Vice President, Chief Financial
Age - 41 Officer and Treasurer. Vice
President and Treasurer, Outboard
Marine Corporation (manufacturer of
recreational boats and marine
engines), 1986-1992; Vice President
and Treasurer, Foote, Cone & Belding
Communications, Inc. (world-wide
advertising agency) 1992 - July
1994. Treasurer of the Registrant,
July 1994 - April 1995; Vice
President, Chief Financial Officer
and Treasurer of Registrant, April
1995 to date.
<PAGE>
G. W. Henry Vice President, International
Age - 50 Operations. Comptroller, 1985 -
July 1990; Vice President, 1987 -
July 1990; Vice President - Marine
Services and Special Projects, July
1990 - February 1992; Vice President
- Operations, February 1992 -
October 1994; Vice President,
International Operations, October
1994 to date.
J. S. Pyke, Jr. Vice President, General Counsel
Age - 57 and Secretary. Secretary, 1973 to
date; Vice President, 1979 to date.
D. R. Schrank Vice President, North American
Age - 47 Plastics Operations. Senior Vice
President and Chief Financial
Officer, Sealy, Inc. (bedding
manufacturer) 1989 to September
1993. Vice President and Chief
Financial Officer of the Registrant,
September 1993 - April 1995; Vice
President of the Registrant's North
American Plastics Operations, April
1995 to date.
T. E. Lindsey Controller. Assistant Controller
Age - 45 of the Registrant 1987 to July 1990;
Controller, July 1990 to date.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
See the tables regarding Registrant's Stock Price Data at
page 34 and Stock Information at page 35 of Registrant's
Annual Report distributed to stockholders for the fiscal
year ended December 31, 1995, which tables and
information are incorporated herein by this reference.
ITEM 6. SELECTED FINANCIAL DATA
See Selected Financial Data at page 35 of Registrant's
Annual Report distributed to stockholders for the fiscal
year ended December 31, 1995, which Selected Financial
Data is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
See pages 36 through 37 of Registrant's Annual Report
distributed to stockholders for the fiscal year ended
December 31, 1995, which pages are incorporated herein by
this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See pages 21 through 38 of Registrant's Annual Report
distributed to stockholders for the fiscal year ended
December 31, 1995, which pages and section are
incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
See Registrant's current report on Form 8-K/A dated
March 8, 1995, which report is incorporated herein by
this reference.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
See the table listing nominees for directors on page 2 of
Registrant's definitive proxy statement distributed to
stockholders dated March 20, 1996, filed with the
Commission pursuant to Regulation 14A, which table is
incorporated herein by this reference.
Executive Officers
See the item captioned "Executive Officers of the
Registrant" in Part I of this Form 10-K, which item is
incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
See the section captioned "Executive Compensation" at
pages 5 through 12 of Registrant's definitive proxy
statement distributed to stockholders dated March 20,
1996, filed with the Commission pursuant to Regulation
14A, which section is incorporated herein by this
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners:
See the section captioned "Holdings of Shares of the
Company's Common Stock" at page 4 of Registrant's
definitive proxy statement distributed to stockholders
dated March 20, 1996 filed with the Commission pursuant
to Regulation 14A, which section is incorporated herein
by this reference.
(b) Security Ownership by Management:
See the table, and footnotes thereto, regarding
beneficial ownership of the Registrant's Common Stock by
management, at page 3 of Registrant's definitive proxy
statement distributed to stockholders dated March 20,
1996 filed with the Commission pursuant to Regulation
14A, which table and footnotes are incorporated herein by
this reference.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. and 2. -- The response to this portion of Item 14 is
submitted as a separate section commencing on
page F-1 of this Form 10-K.
3. List of Exhibits. [Those documents listed below that are
incorporated herein by reference to Registrant's earlier
periodic reports were filed with the Commission under
Registrant's File No. 1-5222.]
(i) Exhibits filed pursuant to Regulation S-K (Item
601):
(2) Plan of Disposition.
Stock Purchase Agreement , dated April 11, 1995, as amended,
by and among Day International Group, Inc. (formerly known as
Day International Holdings Inc.), Cadillac Plastic Group, Inc.
and Registrant, filed as Exhibit 1 to Registrant's current
report on Form 8-K dated June 21, 1995, and incorporated
herein by this reference.
(3) Articles of Incorporation and By-laws.
(a) Registrant's Articles of Incorporation (as restated as of
November 13, 1989, and currently in effect), filed as Exhibit
3(b) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, and incorporated herein by this
reference.
(b) Registrant's By-laws (as amended and restated as of
March 2, 1988, and currently in effect), filed as Exhibit 3(d)
to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987 and incorporated herein by this
reference.
<PAGE>
(4) Instruments Defining the Rights of Security Holders:
(a) Rights Agreement, dated December 4, 1991, between the
Registrant and Ameritrust Company National Association, filed
as Exhibit 4.1 to Registrant's Form 8-K dated December 4,
1991, and incorporated herein by this reference.
(b) Credit Agreement, dated June 30, 1994 between the
Registrant, Citibank, N.A. and the other banks signatory
thereto, a copy of which will be provided to the Commission
upon request.
(c) Indenture dated September 15, 1991 between the Registrant
and Ameritrust Company, National Association, Trustee relating
to Registrant's $100,000,000 aggregate principal amount of 9%
Senior Notes due 1998 and $150,000,000 aggregate principal
amount of 9 3/8% Senior notes due 2003, filed as Exhibit 4 to
the Registrant's Form S-3 filed on September 18, 1991, and
incorporated herein by this reference.
(d) Indenture dated September 26, 1991 between the Registrant
and Ameritrust Texas, National Association, Trustee, relating
to Registrant's $50,000,000 aggregate principal amount of 9%
Notes due 1998, filed as Exhibit 4 to the Registrant's Form S-
3 filed on October 24, 1991, and incorporated herein by this
reference.
(e) Associates Ownership Trust Agreement dated September 12,
1991, between Registrant and Wachovia Bank of North Carolina,
filed as Exhibit 28.3 to Registrant's Current Report on Form
8-K dated September 12, 1991, and incorporated herein by this
reference.
(10) Material Contracts:
*(a) The Restated 1979 Executive Incentive Compensation Plan
of the Registrant, filed as Exhibit 5 to the Form S-8
Registration Statement No. 2-70755 filed with the Commission
on February 19, 1981 and incorporated herein by this
reference, and amendment to the Plan, as ratified and approved
by Registrant's stockholders on October 3, 1983, filed as
Exhibit 10(c) to Registrant's Form 10-K for the fiscal year
ended December 31, 1983 and incorporated herein by this
reference. Also amendment to the Plan as approved by
Registrant's stockholders on May 1, 1985, filed as Exhibit
10(c) to Registrant's Form 10-K for the fiscal year ended
December 31, 1985 and incorporated herein by this reference.
<PAGE>
*(b) Forms of 1985 Stock Option Agreement, 1985 Grant of
Appreciation Rights and 1985 Grant of Performance Rights under
the 1979 Executive Incentive Compensation Plan, filed as
Exhibit 10(g) to Registrant's Form 10-K for the fiscal year
ended December 31, 1985 and incorporated herein by this
reference.
*(c) Forms of 1987 Stock Option Agreement, 1987 Grant of
Appreciation Rights and 1987 Grant of Performance Rights under
the 1979 Executive Incentive Compensation Plan, filed as
Exhibit 10(e) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1986, and incorporated
herein by this reference.
*(d) 1988 Long-Term Incentive Plan, and forms of Grants of
Stock Options, Grants of Appreciation Rights and Grants of
Long-Term Incentive Units thereunder, filed as Exhibit 10(e)
to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by this
reference. Also forms of 1989 Stock Option Agreement, 1989
Grant of Appreciation Rights and 1989 Grant of Long-Term
Incentive Units, filed as Exhibit 10(e) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by this reference. Also 1990
Amendment to the Plan, filed as Exhibit 10(e) to Registrant's
Form 10-K for the fiscal year ended December 31, 1990 and
incorporated herein by this reference and forms of 1990 Stock
Option Agreement, 1990 Grant of Appreciation Rights and 1990
Grant of Long-Term Incentive Units, filed as Exhibit 10(e) to
Registrant's Form 10-K for the fiscal year ended December 31,
1990 and incorporated herein by this reference. Also 1991
Amendment to the Plan, and forms of 1991 Stock Option
Agreement, 1991 Grant of Appreciation Rights, 1991 Grant of
Long Term Incentive Units, and 1991 Stock Option Agreement
with non-employee directors of Registration, filed as Exhibit
10(f) to Registrant's Form 10-K for the fiscal year ended
December 31, 1991, and incorporated herein by this reference.
Also forms of 1992 Stock Option Agreement and 1992 Grant of
Long Term Incentive Units, filed as Exhibit 10(e) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated herein by this
reference. Also 1994 Amendment to the Plan, filed as Exhibit
A to Registrant's definitive proxy statement distributed to
stockholders dated March 17, 1994 and incorporated herein by
this reference.
*(e) Form of Supplemental Deferred Compensation agreement in
which any of the five most highly compensated executive
officers of the Registrant participates, filed as Exhibit
10(e) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and incorporated herein
by this reference.
<PAGE>
*(f) Form of Supplemental Death Benefits agreement in which
any of the five most highly compensated executive officers of
the Registrant participates, filed as Exhibit 10(f) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, and incorporated herein by this
reference.
*(g) Form of Employment Agreement dated as of February 17,
1989 between Registrant and certain of Registrant's executive
officers filed as Exhibit 10(h) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1988 and
incorporated herein by this reference. Also (i) Employment
Agreement dated as of September 27, 1993, between
D. R. Schrank and Registrant, filed as Exhibit (a) to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993, and incorporated herein by this
reference; and (ii) Employment Agreement dated March 1, 1993
between D. J. McGregor and Registrant, filed as Exhibit 10(g)
to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, and incorporated herein by this
reference.
*(h) Description of Directors' compensation and retirement
plan, set forth in the section captioned "Directors'
Compensation" on pages 12 through 13 of Registrant's
definitive proxy statement dated March 20, 1996, as
distributed to stockholders and filed with the Commission
pursuant to Regulation 14A, which section is incorporated
herein by this reference. Also, 1995 Amendments to Directors'
Deferred Fee Plan, filed as Exhibit B to Registrant's
definitive proxy statement distributed to stockholders dated
March 20, 1995 filed with the Commission pursuant to
Regulation 14A, which Exhibit B is incorporated herein by this
reference.
*(i) Excess Benefit Plan in which any of the five most highly
compensated executive officers of the Registrant participates,
filed as Exhibit 10(j) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1992 and
incorporated herein by this reference.
*(j) Supplemental Retirement Benefit Plan in which any of the
five most highly compensated executive officers of the
Registrant participates, filed as Exhibit 10 (k) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992 and incorporated herein by this
reference.
<PAGE>
*(k) Voluntary Non-Qualified Deferred Compensation Plan in
which any of the five most highly compensated executive
officers of the Registrant participates, filed as Exhibit A to
the Registrant's definitive proxy statement distributed to
stockholders dated March 20, 1995 filed with the Commission
pursuant to Regulation 14A, which Exhibit A is incorporated
herein by this reference.
[*- Identifies management contract or compensation plans or
arrangements filed pursuant to Item 601(b)(10)(iii)(A)]
(11) Computation of per share earnings, filed herewith.
(13) Registrant's Annual Report as distributed to stockholders for
the fiscal year ended December 31, 1995, filed herewith.
(16) Letter regarding Change in Certifying Accountants, filed as
Exhibit (16) to Registrant's current report on Form 8-K/A dated
March 8, 1995 and incorporated herein by this reference.
(21) Subsidiaries of the Registrant, filed herewith.
(23) Consent of Independent Auditors, filed herewith.
(24) Powers of Attorney of certain Directors of Registrant, filed
herewith.
(27) Financial Data Schedule, filed herewith.
(ii) Other exhibits:
Financial statements (and consent of independent
auditors) pursuant to Form 11-K and Rule 15d-21 for the year ended
December 31, 1995, for the Capital Accumulation Plan for Salaried
Employees of M. A. Hanna Company and Associated Companies, and for
stock purchase/savings plans of Registrant's subsidiaries and
divisions will be filed as exhibits to the Form 10-K under a Form
10-K/A amendment not later than June 28, 1996.
(b) Since September 30, 1995, Registrant has filed no reports on
Form 8-K.
(c) The response to this portion of Item 14 is submitted as a
separate Section commencing on page X-1 of this Form 10-K.
(d) The response to this portion of Item 14 is submitted as a
separate section commencing on page F-1 of this Form 10-K. <PAGE>
<PAGE>
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.
M. A. HANNA COMPANY
(Registrant)
Date: March 22, 1996 By /s/J. S. Pyke, Jr.
J. S. Pyke, Jr.
Vice President, General Counsel
and 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.
Date: March 22, 1996 By /s/M. D. Walker
M. D. Walker, Chairman and Chief
Executive Officer (Principal
Executive Officer) and Director
Date: March 22, 1996 By /s/M. S. Duffey
M. S. Duffey, Vice President,
Chief Financial Officer and
Treasurer
(Principal Financial Officer)
Date: March 22, 1996 By /s/T. E. Lindsey
T. E. Lindsey, Controller
(Principal Accounting Officer)
<PAGE>
B. C. Ames, Director
C. A. Cartwright, Director
W. R. Embry, Director
J. T. Eyton, Director
By /s/T. E. Lindsey G. D. Kirkham, Director
T. E. Lindsey
Attorney-in-Fact
M. L. Mann, Director
Date: March 22, 1996
D. J. McGregor, Director
R. W. Pogue, Director
FORM 10-K
ITEM 14(a)(1) and (2)
FINANCIAL STATEMENTS AND SCHEDULES
M.A. HANNA COMPANY
The following consolidated financial statements of the
Registrant and its consolidated subsidiaries, included in the
annual report of the Registrant to its stockholders for the
year ended December 31, 1995, are incorporated herein by
reference in Item 8:
Summary of accounting policies
Consolidated balance sheets - December 31, 1995 and 1994
Consolidated statements of income, stockholders' equity
and cash flows - years ended December 31, 1995, 1994 and
1993
Notes to financial statements
The following consolidated financial information, together
with the report of the independent accounts, are included in
Item 14(d):
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
Financial statements of unconsolidated subsidiaries or 50% or
less owned persons accounted for by the equity method have
been omitted because they do not, considered individually or
in the aggregate, constitute a significant subsidiary.
F-1
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors of M.A. Hanna Company
Our audit of the consolidated financial statements referred
to in our report dated January 29, 1996 appearing in the 1995
Annual Report to Shareholders of M.A. Hanna Company (which
report and consolidated financial statements are incorporated
by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedule as of
December 31, 1995 and for the year then ended listed in Item
14(a) of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects,
the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ Price Waterhouse LLP
Cleveland, Ohio
January 29, 1996
F-2
<PAGE>
Report of Independent Auditors
Board of Directors
M.A. Hanna Company
We have audited the consolidated balance sheet of M.A. Hanna
Company and subsidiaries as of December 31, 1994, and the related
consolidated statements of income, stockholders' equity, and cash
flows for each of the two years then ended listed in the Index at
Item 14(a)(1) and (2). Our audits also included the financial
statement schedule listed in the Index at Item 14(a)(1) and (2).
These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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 consolidated
financial position of M.A. Hanna Company and subsidiaries at
December 31, 1994 and the consolidated results of its operations
and its cash flows for each of the two years then ended, in
conformity with generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information
set forth therein.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
January 31, 1995
F-3
<PAGE>
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
M. A. HANNA COMPANY AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
COL. A COL. B COL. C
ADDITIONS
Balance at Beginning (1) (2)
DESCRIPTION of Period Charged to Cost Charged to Other
and Expenses Accounts - Describe
<S> <C> <C> <C>
Year ended December 31, 1995:
Deducted from asset accounts:
Allowance for doubtful accounts $11,346,000 $2,480,000
Year ended December 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts $9,993,000 $3,250,000 $531,000 <F1>
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts $7,233,000 $3,647,000 $188,000 <F1>
$1,321,000 <F2>
COL. A COL. D COL. E
DESCRIPTION Balance at End
Deductions - Describe of Period
<S> <C> <C>
Year ended December 31, 1995:
Deducted from asset accounts:
Allowance for doubtful accounts $2,792,000 <F3> $11,034,000
Year ended December 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts $2,428,000 <F3> $11,346,000
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts $2,396,000 <F3> $9,993,000
<FN>
<F1> Reserves of companies acquired.
<F2> Charge included in income(loss) from discontinued operations.
<F3> Uncollectible amounts written off.
</FN>
F-4
</TABLE>
<PAGE>
EXHIBIT 11
<TABLE>
M.A. HANNA COMPANY AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Year Ended December 31
1995 1994 1993
(Dollars in thousands except per share data)
<S> <C> <C> <C>
Primary
Income from continuing operations
before extraordinary charge $ 56,702 $ 37,004 $ 21,297
Income(loss) from discontinued operations 45,337 9,970 (19,279)
Extraordinary charge - (3,680) -
Net income $ 102,039 $ 43,294 $ 2,018
Average common shares outstanding 31,007,977 30,865,775 29,777,668
Net effect of dilutive stock options
and stock warrants - based on treasury
stock method using average market price - * - * 1,052,105
Total 31,007,977 30,865,775 30,829,773
Income(loss) per share
Continuing operations $ 1.83 $ 1.20 $ .69
Discontinued operations 1.46 .32 (.62)
Extraordinary charge - (.12) -
Net income $ 3.29 $ 1.40 $ .07
Fully diluted
Income from continuing operations
before extraordinary charge $ 56,702 $ 37,004 $ 21,297
Income(loss) from discontinued operations 45,337 9,970 (19,279)
Extraordinary charge - (3,680) -
Net income $ 102,039 $ 43,294 $ 2,018
Average common shares outstanding 31,007,977 30,865,775 29,777,668
Net effect of dilutive stock options
and stock warrants - based on treasury
stock method using the year-end market
price if higher than average market price 687,070 598,942 1,394,322
Total 31,695,047 31,464,717 31,171,990
Income(loss) per share
Continuing operations $ 1.79 $ 1.18 $ .68
Discontinued operations 1.43 .32 (.62)
Extraordinary charge - (.12) -
$ 3.22 $ 1.38 $ .06
* Not significant in 1995 and 1994.
</TABLE>
EXHIBIT 13
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
M.A. Hanna Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
Dollars in thousands except per share data 1995 1994 1993
<S> <C> <C> <C>
Net Sales $1,901,954 $1,719,356 $1,412,071
Costs and Expenses
Cost of goods sold 1,552,643 1,393,036 1,146,191
Selling, general and administrative 218,823 213,318 179,228
Other income (15,979) (4,066) (5,016)
Other expense 7,399 9,839 9,750
Interest on debt 26,278 28,549 32,258
Amortization of intangibles 13,969 12,458 12,006
1,803,133 1,653,134 1,374,417
Income from Continuing Operations Before
Income Taxes and Extraordinary Charge 98,821 66,222 37,654
Income taxes 42,119 29,218 16,357
Income from Continuing Operations
Before Extraordinary Charge 56,702 37,004 21,297
Income(loss) from discontinued operations 45,337 9,970 (19,279)
Extraordinary charge - (3,680) -
Net Income $ 102,039 $ 43,294 $ 2,018
Net Income Per Share
Primary
Continuing operations $ 1.83 $ 1.20 $ .69
Discontinued operations 1.46 .32 (.62)
Extraordinary charge - (.12) -
Net income $ 3.29 $ 1.40 $ .07
Fully diluted
Continuing operations $ 1.79 $ 1.18 $ .68
Discontinued operations 1.43 .32 (.62)
Extraordinary charge - (.12) -
Net income $ 3.22 $ 1.38 $ .06
See summary of accounting policies and notes to consolidated financial statements
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
M. A. Hanna Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
Dollars in thousands 1995 1994 1993
<S> <C> <C> <C>
Cash Provided from (Used for) Operating Activities
Net income $102,039 $ 43,294 $ 2,018
Discontinued operations 4,797 13,910 41,345
Depreciation and amortization 47,241 41,904 38,182
Companies carried at equity:
Income (6,459) (6,112) (4,286)
Dividends received 8,213 7,033 5,729
Changes in operating assets and liabilities:
Receivables (23,212) (40,103) (10,531)
Inventories (10,934) (31,145) (9,239)
Prepaid expenses (2,031) 725 1,774
Trade payables and accrued expenses 4,066 74,895 10,452
Gain from sales of assets (84,427) - (1,730)
Restructuring payments (17,289) (10,540) (16,594)
Other 11,911 12,664 10,730
Extraordinary charge - 6,034 -
Net operating activities 33,915 112,559 67,850
Cash Provided from (Used for) Investing
Activities
Capital expenditures (55,885) (46,982) (23,379)
Acquisitions of businesses, less cash acquired - (53,331) (28,803)
Acquisition payments (2,969) (4,106) (3,410)
Sales of assets 223,500 13,874 7,127
Investments in associated and other companies (4,775) - -
Return of cash from associated and other companies 1,367 8,805 -
Purchase of short-term securities (69,703) - (5,061)
Sale of short-term securities 69,703 5,061 25,702
Other (7,211) 445 (2,000)
Net investment activities 154,027 (76,234) (29,824)
Cash Provided from (Used for) Financing
Activities
Purchase of common stock warrants - - (27,500)
Cash dividends paid (16,962) (15,688) (14,003)
Proceeds from the sale of common stock 1,996 14,165 14,582
Purchase of shares for treasury (24,969) (1,472) -
Increase in debt 57,458 131,649 12,228
Reduction in debt (118,622) (179,879) (39,144)
Net financing activities (101,099) (51,225) (53,837)
Effect of exchange rate changes on cash 1,287 360 (821)
Cash and Cash Equivalents
Increase(decrease) 88,130 (14,540) (16,632)
Beginning of year 23,105 37,645 54,277
End of year $111,235 $ 23,105 $ 37,645
Cash Paid During Year
Interest $ 26,724 $ 30,114 $ 33,001
Income taxes 85,830 19,927 19,165
See summary of accounting policies and notes to consolidated financial statements
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
M. A. Hanna Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
December 31
Dollars in thousands 1995 1994
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 111,235 $ 23,105
Receivables
Trade (less allowance of $11,034 in 1995
and $11,346 in 1994) 258,274 236,737
Other 9,742 10,379
268,016 247,116
Inventories
Finished products 126,411 116,718
Raw materials and supplies 40,390 44,542
166,801 161,260
Prepaid expenses 5,693 3,981
Deferred income taxes 22,867 26,938
Net assets of discontinued operations - 103,215
Total current assets 574,612 565,615
Property, Plant and Equipment
Land 14,655 13,288
Buildings 95,941 78,289
Machinery and equipment 282,718 250,966
393,314 342,543
Less allowances for depreciation 166,293 138,408
227,021 204,135
Other Assets
Goodwill and other intangibles 321,778 330,757
Investments and other assets 73,067 79,803
Deferred income taxes 35,118 34,850
429,963 445,410
Total assets $1,231,596 $1,215,160
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to banks $ 1,328 $ 931
Trade payables and accrued expenses 333,176 335,877
Current portion of long-term debt 747 683
Total current liabilities 335,251 337,491
Other Liabilities 179,580 173,888
Long-term Debt
Senior notes 227,270 235,770
Other 4,717 53,099
Stockholders' Equity
Preferred stock, without par value:
authorized 5,000,000 shares:
issued 0 shares in 1995 and 132 shares in 1994 - -
Common stock, par value $1.00 per share:
authorized 50,000,000 shares; issued
43,274,273 shares in 1995 and 43,015,494
shares in 1994 43,274 43,015
Capital surplus 324,273 299,725
Retained earnings 381,709 296,632
Associates ownership trust (4,301,006
shares in 1995 and 4,693,518 shares in 1994) (121,363) (111,471)
Cost of treasury stock (8,631,355 shares
in 1995 and 7,321,400 shares in 1994) (137,181) (103,731)
Minimum pension liability adjustment (7,522) (7,262)
Accumulated translation adjustment 1,588 (1,996)
Total stockholders' equity 484,778 414,912
Total liabilities and stockholders' equity $1,231,596 $1,215,160
See summary of accounting policies and notes to consolidated financial statements
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
M. A. Hanna Company and Consolidated Subsidiaries
<TABLE>
Dollars in thousands except per share data
<CAPTION>
Common Associates
Preferred Common Stock Capital Retained Ownership Treasury
Stock Stock Warrants Surplus Earnings Trust Stock
<S> <C> <C> <C> <C> <C> <C> <C>
Balance January 1, 1993 $ - $28,274 $14,621 $288,708 $280,420 $(111,221) $(102,379)
Net income 2,018
Cash dividends - $.475 per share (14,003)
Exercise of stock options 311 8,813 (1,675)
Sale of common stock (21,273 shares) 21 609
Purchase of common stock warrants (14,621) (12,879)
Payment of incentive compensation awards
and associate benefits 2,525 8,260 569
Acquisition of business (640) 591 691
Adjustment to market value 12,253 (12,253)
Minimum pension adjustment
Translation adjustment
Balance December 31, 1993 - 28,606 - 299,389 269,026 (115,214) (102,794)
Net income 43,294
Cash dividends - $.51 per share (15,688)
Exercise of stock options 61 1,335 (38)
Purchase of shares for treasury (1,472)
Sale of common stock (25,383 shares) 25 706
Payment of incentive compensation awards
and associate benefits 3,115 13,246 573
Three-for-two common stock split 14,323 (14,323)
Adjustment to market value 9,503 (9,503)
Minimum pension adjustment
Translation adjustment
Balance December 31, 1994 - 43,015 - 299,725 296,632 (111,471) (103,731)
Net income 102,039
Cash dividends - $.55 per share (16,962)
Exercise of stock options 228 4,678 (1,483)
Purchase of shares for treasury (33,008)
Sale of common stock (30,502 shares) 31 755
Payment of incentive compensation awards
and associate benefits 595 8,628 1,041
Adjustment to market value 18,520 (18,520)
Minimum pension adjustment
Translation adjustment
Balance December 31, 1995 $ - $43,274 $ - $324,273 $381,709 $(121,363) $(137,181)
Minimum
Pension Accumulated Total
Liability Translation Stockholders'
Adjustment Adjustment Equity
<S> <C> <C> <C>
Balance January 1, 1993 $ - $ (480) $397,943
Net income 2,018
Cash dividends - $.475 per share (14,003)
Exercise of stock options 7,449
Sale of common stock (21,273 shares) 630
Purchase of common stock warrants (27,500)
Payment of incentive compensation awards
and associate benefits 11,354
Acquisition of business 642
Adjustment to market value -
Minimum pension adjustment (8,577) (8,577)
Translation adjustment (4,500) (4,500)
Balance December 31, 1993 (8,577) (4,980) 365,456
Net income 43,294
Cash dividends - $.51 per share (15,688)
Exercise of stock options 1,358
Purchase of shares for treasury (1,472)
Sale of common stock (25,383 shares) 731
Payment of incentive compensation awards
and associate benefits 16,934
Three-for-two common stock split -
Adjustment to market value -
Minimum pension adjustment 1,315 1,315
Translation adjustment 2,984 2,984
Balance December 31, 1994 (7,262) (1,996) 414,912
Net income 102,039
Cash dividends - $.55 per share (16,962)
Exercise of stock options 3,423
Purchase of shares for treasury (33,008)
Sale of common stock (30,502 shares) 786
Payment of incentive compensation awards
and associate benefits 10,264
Adjustment to market value -
Minimum pension adjustment (260) (260)
Translation adjustment 3,584 3,584
Balance December 31, 1995 $(7,522) $1,588 $484,778
See summary of accounting policies and notes to consolidated financial statements
</TABLE>
<PAGE>
SUMMARY OF ACCOUNTING POLICIES
Dollars in thousands except per share data
PRINCIPLES OF CONSOLIDATION
Majority-owned subsidiaries are consolidated in the
financial statements and all significant intercompany
accounts and transactions have been eliminated.
Investments in less than majority-owned companies are
carried at cost adjusted for undistributed earnings and
losses since acquisition, or at cost.
REVENUE RECOGNITION
Revenues are recognized when a product is shipped or a
service is performed.
NET INCOME PER SHARE
Primary net income per share is computed by dividing net
income by the average number of shares of common stock
outstanding during the year. Shares of common stock held by
the Associates Ownership Trust (AOT) enter into the
determination of the average number of shares outstanding
when the shares are released from the AOT to fund
obligations under certain associate compensation and benefit
plans. The effect of assuming the exercise of stock options
and stock warrants (common stock equivalents) was not
significant in 1995 and 1994.
For fully-diluted net income per share, the number of shares
used for primary net income per share are increased by the
common stock equivalents which would arise from the exercise
of stock options and stock warrants.
CASH EQUIVALENTS AND SHORT-TERM SECURITIES
Cash equivalents are highly liquid investments with an
original purchased maturity of three months or less. Both
cash equivalents and short-term securities are stated at
cost, which approximates fair value.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company
to credit risk are trade accounts receivable and foreign
exchange contracts. Concentration of credit risk with
respect to trade accounts receivable is limited due to the
large number of customers comprising the Company's customer
base and their break down among many different industries
and geographical locations. The Company is exposed to
credit risk with respect to foreign exchange contracts in
the event of nonperformance by the counterparties to these
financial instruments, which are major financial
institutions. The risk of incurring losses related to this
credit risk is remote.
INVENTORIES
Inventories are stated at the lower of cost or market.
Domestic inventories ($121,060) are valued principally by
the last-in, first-out (LIFO) cost method. Inventories of
international subsidiaries are valued by the first-in, first-
out (FIFO) method. The excess of current cost over LIFO
cost was $12,769 at December 31, 1995 and $9,937 at December
31, 1994.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost.
Depreciation is computed principally by the straight-line
method. Estimated asset lives are:
Building and improvements 20 - 40 years
Machinery and equipment 5 - 10 years
Property items retired or otherwise disposed of are removed
from the property and related allowance for depreciation
accounts, and any profit or loss is included in operations.
GOODWILL AND INTANGIBLES
Goodwill is being amortized over 40 years by the straight-
line method. Other intangibles ($21,174 net at December 31,
1995) are being amortized on a straight-line basis over 4 to
40 years. Accumulated amortization at December 31, 1995 and
1994 was $85,845 and $71,398 respectively. In 1993, net
goodwill of $26,482 was written off in connection with the
discontinuance of the elastomeric membrane roofing business.
The carrying value of goodwill and other intangibles is
evaluated if circumstances indicate a possible impairment in
value. If undiscounted cash flows over the remaining
amortization period indicate that goodwill and other
intangibles may not be recoverable, the carrying value of
goodwill and other intangibles will be reduced by the
estimated shortfall of cash flows on a discounted basis.
INCOME TAXES
Deferred tax liabilities and assets are determined based on
the differences between financial reporting and tax basis of
assets and liabilities and are measured using the enacted
tax rate and laws that will be in effect when the
differences are expected to reverse.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the reported financial
statements and the reported amounts or revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
M. A. Hanna Company and Consolidated Subsidiaries
ACQUISITIONS
In December 1995, the Company announced it had entered into a
definitive merger agreement to acquire for $10.50 per share
in cash all of the outstanding stock of CIMCO, Inc., a
producer of thermoplastic compounds and plastic components.
Consistent with its strategy as an intermediary between the
polymer producer and end product manufacturer, the Company
intends to sell CIMCO's plastic components business. In
January 1996, the Company announced the successful completion
of its tender offer for the outstanding stock of CIMCO.
In March 1994, the Company acquired certain assets of North
Coast Compounders, a producer of thermoplastic elastomers and
other materials and in July 1994, acquired Th. Bergmann
Kunststoffwerk GmbH, one of Germany's largest producers of
specialty and reinforced compounds. Both acquisitions were
accounted for using the purchase method of accounting and
operations from the respective dates of acquisition are
included in the Consolidated Statements of Income. Had the
acquisitions been made at the beginning of 1994, reported pro
forma results of operations for 1994 would not be materially
different.
DISCONTINUED OPERATIONS
In December 1994, the Company adopted a plan to sell its Day
International printing and textile business. The business
consists of the manufacturing of printing blankets and other
consumable supplies for the printing industry and the
manufacturing of engineered consumable supplies for the
textile industry. In April 1995, the Company announced it
had entered into an agreement to sell the business to
American Industrial Partners Capital Fund. The sale
consummated on June 6, 1995 with the Company realizing an
after-tax gain of $40,254. Had the sale consummated on
January 1, 1994, fully diluted earnings per share from
continuing operations would have been $1.85 and $1.26 for the
years ended December 31, 1995 and 1994, respectively.
In November 1993, the Company reached an agreement to sell
its elastomeric membrane roofing business to Firestone
Building Products Company, a division of
Bridgestone/Firestone, Inc. The sale was consummated in the
third quarter of 1994, resulting in an additional charge to
earnings of $1,828 ($1,115 after tax) for costs incurred
while obtaining government antitrust clearance for the sale.
The Company recognized an after-tax charge of $30,000 in 1993
for the writeoff of goodwill and restructuring charges
associated with the sale.
The Company received $2,320 during 1993 representing the
recovery of a prepetition bankruptcy claim Colowyo Coal
Company had against a customer. The Company sold its interest
in Colowyo in 1991.
Summary operating results of these discontinued businesses
are as follows:
1995 1994 1993
Net sales $55,454 $120,083 $148,699
Income from operations
before income taxes $ 9,075 $ 18,891 $ 17,051
Income taxes 3,992 7,806 7,812
5,083 11,085 9,239
Gain(loss) net of income taxes
on disposal 40,254 (1,115) (28,518)
$45,337 $ 9,970 $(19,279)
At December 31, 1994, net assets of discontinued operations
consisted of current assets of $31,724, current liabilities
of $18,015, net fixed assets of $26,942, other noncurrent
assets of $72,155 and other noncurrent liabilities of $9,591.
INCOME TAXES
Income taxes from continuing operations consist of the
following:
1995 1994 1993
Current:
Federal $26,311 $20,740 $ 9,205
State 4,541 4,664 2,660
Foreign 6,311 4,809 2,907
37,163 30,213 14,772
Deferred:
Federal 3,704 110 2,730
State 497 (1,023) (319)
Foreign 755 (82) (826)
4,956 (995) 1,585
$42,119 $29,218 $16,357
<PAGE>
The provision for income taxes from continuing operations
differs from the amount computed by applying the U.S.
statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Provision at statutory tax rate $34,587 35.0% $23,178 35.0% $13,179 35.0%
State income taxes 3,274 3.3 2,367 3.6 1,528 4.1
Goodwill amortization 2,613 2.6 2,784 4.2 3,169 8.4
Change in income tax rate - - - - (578) (1.5)
Utilization of capital loss
and tax credit carryforwards - - (1,820) (2.7) (1,062) (2.8)
Other - net 1,645 1.7 2,709 4.0 121 .2
$42,119 42.6% $29,218 44.1% $16,357 43.4%
</TABLE>
Deferred income taxes reflect the net effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. The Company has not provided
deferred taxes on undistributed earnings of international
subsidiaries and joint ventures because it is not practical
to estimate the amount of tax payable associated with the
remittance of these earnings.
Significant components of the Company's deferred tax assets
(liabilities) are as follows:
1995 1994
Basis differences from purchase accounting $(9,359) $(13,705)
Depreciation (14,186) (13,665)
Other post-retirement benefits 30,681 32,467
Associate benefits 21,152 22,064
Restructuring and plant closedown costs 4,483 7,699
Environmental costs 6,816 7,353
Inventory and receivable reserves 6,256 6,734
Other 12,142 11,983
Tax credit carryforwards - 858
Capital loss carryforwards - 23,317
Valuation allowance - (23,317)
$57,985 $ 61,788
During 1995, the valuation allowance was reduced by $23,317
due to the utilization of capital loss carryforwards in
discontinued operations. The valuation allowance in 1994
was increased by $375 due to increases in capital loss
carryforwards and reduced $1,820 due to the utilization of
tax credit carryforwards.
Income before income taxes includes $17,577, $12,624, and
$3,799 in 1995, 1994, and 1993, respectively, from international
operations.
LONG-TERM DEBT
Long-term debt at December 31 consists of the following:
1995 1994
9% Senior Notes due 1998 $109,245 $117,745
9.375% Senior Notes due 2003 118,025 118,025
Credit agreements - 12,650
Other 5,464 41,132
232,734 289,552
Less current portion 747 683
$231,987 $288,869
Annual maturities of long-term debt for the next five years
are: 1996--$747; 1997--$680; 1998--$109,950; 1999--$663 and
2000--$673.
On June 30, 1994, the Company entered into a new revolving
credit agreement with a group of financial institutions. The
agreement provides for borrowings up to $200 million through
June 1998 with interest rates determined at the time of the
borrowing based on a choice of formulas specified in the
agreement. At December 31, 1994, borrowings supported by
this agreement were $12,650 at a rate of 6.70%. There were
no borrowings supported by this agreement at December 31,
1995.
Other debt at December 31, 1995 and 1994 consists primarily
of mortgages, industrial revenue bonds, and notes including
$35.5 million of foreign borrowings related to an acquisition
which were repaid in 1995. These obligations mature in
various installments through September 2005 and are at
interest rates ranging from 4.00% to 9.50%. The weighted
average interest rate on short-term borrowings was 8.37% and
7.28% at December 31, 1995 and 1994, respectively.
<PAGE>
In 1994, the Company repurchased $64,230 principal amount of
Senior Notes in the open market, resulting in an
extraordinary charge of $6,034 ($3,680 after tax). The
Company also repurchased $8,500 principal amount of Senior
Notes in the open market in 1995.
The Senior Note agreements contain certain restrictions and
conditions among which are limitations on cash dividends and
other payments. Under the most restrictive of these
agreements, approximately $180,416 of retained earnings was
free of such limitations at December 31, 1995.
STOCKHOLDERS' EQUITY
In May 1994, the Company issued 14,322,624 shares of common
stock to effect a three-for-two stock split. The par value
($1 per share) of the additional shares issued was charged to
capital surplus.
The Associates Ownership Trust (AOT) acquired shares of
common stock from the Company in 1991 for a promissory note
in the amount of $100,049. The shares acquired are to fund a
portion of the Company's obligations under certain of its
associate compensation and associate benefit plans for the 15-
year term of the AOT. Such shares are adjusted at each
balance sheet date to their respective market value with an
offsetting adjustment to capital surplus.
Under the Company's Stock Purchase Rights Plan each Right
entitles the holder of common stock to buy from the Company
one one-hundredth of a share of Cumulative Series A Preferred
Stock, without par value for $95, subject to adjustment. The
Rights become exercisable if certain triggering events occur,
including the acquisition of 15% or more of the Company's
common stock. The Company is entitled to redeem the Rights
at $.01 per Right at any time until ten days after any person
or group has acquired 20% of the Company's common stock and
in certain circumstances thereafter. If a party owning 20%
or more of the Company's common stock merges with the Company
or engages in certain other transactions with the Company,
each Right, other than the Rights held by the acquiring
party, entitles the holder to purchase that number of
additional common shares having a market value of two times
the exercise price of the Right. The Rights expire on
December 16, 2001.
The Company's stock option plans provide for granting
options, including options to nonassociate directors, at the
market value at date of grant. Options are exercisable for
ten years from the date of grant.
The following table summarizes the changes in the outstanding
options for the three years ended December 31, 1995.
Shares Price Range
Outstanding January 1, 1993 1,694,251 $ 8.167 - $18.833
Granted 375,465 19.833 - 20.50
Exercised (464,794) 8.167 - 16.833
Canceled or expired (25,275) 11.167 - 18.833
Outstanding December 31, 1993 1,579,647 8.167 - 20.50
Granted 342,913 22.125 - 27.125
Exercised (77,320) 8.889 - 20.50
Canceled or expired (3,667) 14.833 - 20.50
Outstanding December 31, 1994 1,841,573 8.167 - 27.125
Granted 281,465 26.00
Exercised (228,277) 8.167 - 20.50
Canceled or expired (13,772) 14.833 - 22.125
Outstanding December 31, 1995 1,880,989 8.167 - 27.125
At December 31, 1995, options were exercisable for 1,142,125
shares (1,099,126 shares at December 31, 1994) at prices from
$8.167 to $27.125 and 791,370 shares were reserved for future
grants.
In October 1995, the Financial Accounting Standards Board
issued Statement No. 123 "Accounting for Stock-Based
Compensation", which establishes financial accounting and
reporting standards for stock-based compensation plans. The
Company will adopt Statement No. 123 in 1996.
Statement No. 123 defines a fair value based method of
accounting for employee stock options which allows for an
element of compensation cost to be charged to earnings on an
annual basis. Statement No. 123 also permits entities to
continue to measure compensation cost using the intrinsic
value based method of accounting prescribed by APB Opinion
No. 25, which may result in no compensation cost being
recognized.
The Company anticipates it will continue to follow the
intrinsic value based method of accounting prescribed in APB
Opinion No. 25 and will make pro forma disclosures of net
income and earnings per share as if the fair value based
method had been applied.
<PAGE>
BUSINESS SEGMENTS
The Company operates principally in the formulated polymers
industry which consists of two major segments - processing
and distribution. Processing includes production of custom
plastic and rubber compounds and custom formulated colorants
for the plastics industry. Distribution includes
distributors of thermoplastic and thermoset resins and
fiberglass materials and distributors of engineered plastic
shapes. Sales are made through the Company's organization,
distributors and representatives.
Other operations include the Company's diversified polymer
products business, its marine and insurance operations and
management fees. The Company is Managing Agent for Iron Ore
Company of Canada (IOC) and through May 1995 owned
approximately 8% of IOC's common stock. The sale of the
Company's investment in IOC resulted in a pre-tax gain of
$9,334. The Company will continue to serve as the Managing
Agent for IOC until December 1996. IOC incurred management
expense of $3,162 in 1995 ($3,064 in 1994 and $2,648 in 1993)
payable to the Company and commission expense of $5,169 in
1995 ($4,302 in 1994 and $3,317 in 1993) payable to 50%
owned companies carried at equity.
Net sales, operating profit and identifiable assets by
geographic area are as follows:
1995 1994 1993
Net sales
Domestic $1,579,424 $1,475,277 $1,220,555
International
Europe 187,790 130,461 93,595
Other 134,740 113,618 97,921
$1,901,954 $1,719,356 $1,412,071
Operating profit
Domestic $ 112,919 $ 104,484 $ 83,104
International
Europe 13,982 10,565 4,172
Other 10,274 6,764 5,070
$ 137,175 $ 121,813 $ 92,346
Identifiable assets
Domestic $ 991,667 $ 868,201 $ 859,193
International
Europe 175,767 180,842 89,556
Other 64,162 62,902 49,087
Discontinued operations - 103,215 125,774
$1,231,596 $1,215,160 $1,123,610
<TABLE>
<CAPTION>
Depreciation
Operating and Capital Identifiable
Net Sales Profit Amortization Expenditures Assets
<S> <C> <C> <C> <C> <C>
1995
Processing $1,023,672 $ 92,404 $39,745 $49,542 $ 656,655
Distribution 862,077 35,509 5,991 3,804 354,599
Other 33,421 9,262 890 250 16,323
Intersegment activity (17,216) - - - -
Corporate - (12,076)<F1> 615 760 204,019
Discontinued operations - - - 1,529 -
$1,901,954 $125,099 $47,241 $55,885 $1,231,596
1994
Processing $ 942,999 $ 88,175 $34,254 $36,193 $ 615,715
Distribution 766,711 24,086 6,368 3,363 345,929
Other 32,129 9,552 823 - 16,751
Intersegment activity (22,483) - - - -
Corporate - (27,042) 459 3,862 133,550
Discontinued operations - - - 3,564 103,215
$1,719,356 $ 94,771 $41,904 $46,982 $1,215,160
1993
Processing $ 784,951 $ 65,427 <F2> $29,842 $15,494 $ 522,122
Distribution 628,887 19,409 6,930 3,185 296,449
Other 33,479 7,510 936 727 16,281
Intersegment activity (35,246) - - - -
Corporate - (22,434)<F3> 474 38 162,984
Discontinued operations - - - 3,935 125,774
$1,412,071 $ 69,912 $38,182 $23,379 $1,123,610
<FN>
<F1> Includes $9,334 gain from sale of assets.
<F2> Includes $1,300 of restructuring costs.
<F3> Includes $1,730 gain from sale of assets.
</FN>
</TABLE>
<PAGE>
PENSION AND OTHER POST-RETIREMENT BENEFITS
The Company has noncontributory defined benefit plans
covering certain of its associates which comply with federal
funding requirements. Benefits for these plans are based
primarily on years of service and qualifying compensation
during the final years of employment. Plan assets include
marketable equity securities, money market funds and fixed
income securities.
The Company also sponsors defined contribution plans for
certain of its associates, which provide for Company
contributions of a specified percentage of each associate's
total compensation.
A summary of the components of net pension cost for the
defined benefit plans and the total contributions charged to
expense for the defined contribution plans follows:
1995 1994 1993
Defined benefit plans
Service cost $ 306 $ 743 $ 617
Interest cost on projected
benefit obligation 6,161 5,838 6,300
Return on plan assets (6,215) (5,073) (6,258)
Net amortization and deferral 1,869 930 815
Net pension cost 2,121 2,438 1,474
Defined contribution plans 5,006 3,785 3,236
$7,127 $6,223 $4,710
The Company has recorded a minimum pension liability
representing the excess of the accumulated benefit
obligation over the fair value of plan assets and accrued
pension liabilities. The liability has been offset by
intangible assets to the extent possible. Because the
intangible assets recognized may not exceed the amount of
unrecognized prior service cost plus unrecognized
obligations at transition that remain at December 31 each
year, the balance of the liability at the end of 1995 and
1994 is reported as a separate reduction of stockholders'
equity, net of applicable deferred income taxes.
The following table sets forth the funded status of the
Company's defined benefit plans:
<TABLE>
<CAPTION>
Accumulated Benefits Assets Exceed
Exceed Assets Accumulated Benefits
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations
including vested benefits of
$80,996 in 1995 and $73,428 in 1994 $48,369 $43,467 $34,442 $31,521
Projected benefit obligation $49,617 $44,414 $34,966 $31,981
Plan assets at fair value 37,804 30,182 41,198 36,909
Projected benefits in excess of
(less than) plan assets 11,813 14,232 (6,232) (4,928)
Consisting of:
Unrecognized net transition obligation 994 1,190 143 135
Unrecognized net actuarial (gains) or losses 14,507 14,022 (3,411) (1,389)
Adjustment to recognize minimum liability 14,334 14,265 - -
Accrued(prepaid) pension cost
recognized in balance sheet $10,646 $13,285 $(2,964) $(3,674)
</TABLE>
The projected benefit obligation was determined using an
assumed discount rate of 7.25% (8.25% in 1994) and an
assumed long-term rate of increase in compensation of 5%.
The assumed long-term rate of return on plan assets is 8.5%.
The 1995 change in the discount rate caused the accumulated
benefit obligation to increase approximately $6,996.
In addition to providing pension benefits, the Company
provides certain contributory and noncontributory health
care and life insurance benefits for certain retired
associates. Certain associates of the Company may become
eligible for these post-retirement benefits if they reach
retirement age while working for the Company.
<PAGE>
The status of the Company's plans, which are unfunded, at
December 31, 1995 and 1994 is as follows:
1995 1994
Accumulated post-retirement benefit obligation
Retirees $53,924 $57,134
Fully eligible active plan participants 4,421 3,747
Other active plan participants 10,528 9,732
68,873 70,613
Unrecognized actuarial gain 14,819 12,634
Accrued post-retirement benefit obligation $83,692 $83,247
Net periodic post-retirement benefit cost includes the
following components:
1995 1994 1993
Service cost $ 915 $1,069 $1,201
Interest cost 5,196 5,605 6,512
Amortization of unrecognized actuarial gain (799) - -
Net periodic post-retirement benefit cost $5,312 $6,674 $7,713
The weighted-average assumed rate of increase in the per
capita cost of covered benefits (i.e., health care cost
trend rate) is assumed to be 11.5% (12.0% in 1994) and
decreasing gradually to 5.25% in 2009 (6.25% in 2007 in
1994) and remaining at that level thereafter. A one
percentage point increase in the assumed health care cost
trend rate would have increased the accumulated benefit
obligation by $10,185 at December 31, 1995 and the aggregate
service and interest costs components of net periodic post-
retirement benefit costs for 1995 by $1,084.
A discount rate of 7.25% (8.25% in 1994) was used in
determining the accumulated benefit obligation. The change
in the discount rate caused the accumulated benefit
obligation to increase approximately $7,879.
FINANCIAL INSTRUMENTS
The Company conducts business in various foreign currencies.
As a result, it is subject to transaction exposures that
arise from foreign exchange movements between the date that
the foreign currency transaction is recorded and the date it
is consummated. The Company has a policy of entering into
firm intercompany lending transactions and hedging the
foreign exchange through foreign exchange forward contracts.
The Company has entered into such cross-currency foreign
exchange contracts with maturities of up to five years to
protect the Company from the risk that the future
intercompany cash flows will be adversely affected by changes
in exchange rates. The Company does not hold or issue
financial instruments for trading purposes.
The table below summarizes by currency the contractual
amounts of the Company's foreign exchange contracts at
December 31, 1995. Foreign currency amounts are translated
at exchange rates as of December 31, 1995. The "Buy" amounts
represent the U.S. dollar equivalent of commitments to
purchase foreign currencies, and the "Sell" amounts represent
the U.S. dollar equivalent of commitments to sell foreign
currencies.
Buy Sell
Currency:
British pound sterling $21,797 $ -
French franc - 19,742
German deutschmark - 52,692
Other 2,243 -
$24,040 $72,434
The following methods and assumptions were used by the
Company in estimating fair value disclosures for financial
instruments:
Cash, Cash Equivalents and Short-Term Securities: The
carrying amounts reported in the balance sheet approximate
fair value.
Long and Short-Term Debt: The carrying amount of the
Company's short-term borrowings approximates fair value. The
fair value of the Company's Senior Notes is based on quoted
market prices. The carrying amount of the Company's
borrowings under its long-term revolving credit agreements
and other long-term borrowings approximates fair value.
<PAGE>
Foreign Exchange Contracts: The fair value of short-term
foreign exchange contracts is based on exchange rates at
December 31, 1995. The fair value of long-term foreign
exchange contracts is based on quoted market prices.
The carrying amounts and fair values of the Company's
financial instruments at December 31, 1995 and 1994 are as
follows:
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash and cash equivalents $111,235 $111,235 $ 23,105 $ 23,105
Notes payable to banks 1,328 1,328 931 931
Long-term debt
9% Senior Notes 109,245 117,471 117,745 119,252
9.375% Senior Notes 118,025 138,951 118,025 122,002
Credit agreements - - 12,650 12,650
Other 5,464 5,464 41,132 41,132
Foreign exchange contracts - (2,372) - (1,681)
LEASE COMMITMENTS
Rental expense under operating leases for certain
manufacturing facilities, warehouses, transportation
equipment and data processing and office equipment was
$17,843 in 1995, $16,890 in 1994 and $15,859 in 1993.
Certain of the Company's leases have options to renew, and
there are no significant contingent rentals.
At December 31, 1995, future minimum lease commitments for
noncancelable operating leases are $10,655 in 1996, $9,502
in 1997, $7,192 in 1998, $5,166 in 1999, $2,996 in 2000 and
$14,202 thereafter.
CONTINGENCIES
The Company has been involved in certain legal actions and
claims arising in the ordinary course of business including
lawsuits brought by the State of Idaho in 1983 and the United
States government in 1993 seeking reimbursement from the
Company and other defendants for alleged damages to the
environment and clean-up costs for the area around the
Blackbird Mine in Idaho. The Company and other principal
defendants entered into a settlement agreement among
themselves which allocated a minor share of responsibility to
the Company. In turn, a Consent Decree among the principal
defendants and the State of Idaho and the United States
government was entered by the Court in September 1995
settling all liability issues affecting the Company in those
legal proceedings without a material adverse effect on the
results of operations of the Company.
Claims have also been made against a subsidiary of the
Company for the costs of environmental remediation measures
taken or to be taken in connection with operations that have
been sold or closed. These include the clean-up of Superfund
sites and participation with other companies in the clean-up
of hazardous waste disposal sites, several of which have been
designated as Superfund sites. Reserves for such liabilities
have been established and no insurance recoveries have been
anticipated in the determination of the reserves. In
management's opinion, the aforementioned claims will be
resolved without material adverse effect on the financial
position of the Company.
OTHER INCOME
Other income includes the following:
1995 1994 1993
Interest and dividends $ 4,809 $3,025 $1,680
Gain on sale of assets 9,334 - 1,730
Other 1,836 1,041 1,606
$15,979 $4,066 $5,016
OTHER EXPENSE
Other expense includes the following:
1995 1994 1993
Expenses of closed facilities $4,854 $5,930 $7,031
Restructuring costs - 865 1,300
Other 2,545 3,044 1,419
$7,399 $9,839 $9,750
<PAGE>
DETAIL OF CURRENT AND OTHER LIABILITIES
Included in trade payables and accrued expenses and other
liabilities at December 31 are:
1995 1994
Trade payables and accrued expenses:
Trade payables $188,265 $178,166
Salaries and wages 16,288 14,744
Associate benefits 38,882 37,933
Restructuring and acquisition costs 13,540 19,808
Other liabilities:
Plant closedown costs 11,864 13,460
Environmental costs 14,217 12,808
Associate benefits 18,557 17,605
Other post-retirement benefits 79,160 77,898
SUPPLEMENTAL CASH FLOW DATA
The following is a summary of noncash investing and financing
activities.
1995 1994 1993
Acquisition of businesses
Assets acquired $70,456 $33,130
Liabilities assumed 13,752 4,327
Cash paid 56,704 28,803
Less cash acquired 3,373 -
$53,331 $28,803
Debt of companies acquired $ 4,692
Payment of incentive compensation
awards with treasury stock $ 1,636 $ 990 $ 780
Release of common stock held by
Associates Ownership Trust $ 8,628 $13,246 $ 8,260
Payment of stock option exercised
with shares of common stock $ 1,483 $ 38 $ 1,675
Transfer of common stock released
from Associates Ownership Trust
to treasury stock $(8,039)
<PAGE>
Quarterly Financial and Stock Price Data
M.A. Hanna Company and Consolidated Subsidiaries
Summarized unaudited quarterly financial and stock price data for 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1995
Net sales $492,772 $483,295 $464,078 $461,809
Gross margin 90,504 90,077 85,032 83,698
Income
Continuing operations 12,014 19,360 13,311 12,017
Discontinued operations 2,931 42,406 - -
Net income 14,945 61,766 13,311 12,017
Income per common share (fully diluted)
Continuing operations .38 .61 .42 .39
Discontinued operations .09 1.33 - -
Net income .47 1.94 .42 .39
Price range
High 25.88 27.50 30.00 28.00
Low 23.00 24.00 25.75 23.50
Cash dividends paid .135 .135 .135 .145
1994
Net sales $388,520 $422,516 $448,650 $459,670
Gross margin 72,214 80,575 84,130 89,401
Income(loss)
Continuing operations 6,210 9,370 11,269 10,155
Discontinued operations 2,047 2,573 1,625 3,725
Extraordinary charge - (3,680) - -
Net income 8,257 8,263 12,894 13,880
Income(loss) per common share (fully diluted)
Continuing operations .19 .30 .36 .32
Discontinued operations .07 .08 .05 .12
Extraordinary charge - (.12) - -
Net income .26 .26 .41 .44
Price range
High 25.58 26.50 28.88 26.00
Low 21.42 23.17 23.50 21.62
Cash dividends paid .125 .125 .125 .135
Income per share calculations for each of the quarters are based on the weighted average number of
shares outstanding for each period, and the sum of the quarters may not necessarily be equal to the
full year income per share amount.
</TABLE>
<PAGE>
SELECTED FINANCIAL DATA
M. A. Hanna Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $ 1,901,954 $ 1,719,356 $ 1,412,071 $ 1,188,541 $ 1,006,638
Cost of goods sold 1,552,643 1,393,036 1,146,191 961,925 797,892
Selling, general and administrative 218,823 213,318 179,228 152,366 147,998
Amortization of intangibles 13,969 12,458 12,006 11,069 10,146
Interest on debt 26,278 28,549 32,258 32,509 23,221
Income(loss) from continuing operations before
income taxes, extraordinary charge and cumulative
effect of changes in accounting principles 98,821 66,222 37,654 27,005 (16,195)
Income taxes 42,119 29,218 16,357 8,819 8,225
Income(loss) from continuing operations before
extraordinary charge and cumulative effect
of changes in accounting principles 56,702 37,004 21,297 18,186 (24,420)
Net income 102,039 43,294 2,018 19,025 1,875
Per share of common stock
Income(loss) from continuing operations 1.83 1.20 .69 .63 (.72)
Net income 3.29 1.40 .07 .66 .02
Dividends paid .55 .51 .48 .44 .42
Cash dividends paid on
Common stock 16,962 15,688 14,003 12,630 15,267
Preferred stock - - - - 1,031
Balance Sheet
Current assets $ 574,612 $ 565,615 $ 405,782 $ 416,739 $ 275,060
Current liabilities 335,251 337,491 259,680 229,327 195,610
Working capital 239,361 228,124 146,102 187,412 79,450
Property, plant and equipment - net 227,021 204,135 184,296 195,117 184,877
Other assets 429,963 445,410 438,628 440,873 443,702
Net long-term assets of discontinued operations - - 94,904 99,836 121,374
Other liabilities (179,580) (173,888) (176,422) (174,558) (118,082)
Long-term debt (231,987) (288,869) (322,052) (350,737) (330,863)
Total stockholders' equity $ 484,778 $ 414,912 $ 365,456 $ 397,943 $ 380,458
Shares of common stock outstanding 34,642,918 35,694,094 35,611,522 35,100,108 34,245,075
Average fully diluted shares outstanding 31,695,047 31,464,717 31,171,990 29,662,698 36,319,580
Book value per share of common stock $ 13.99 $ 11.62 $ 10.26 $ 11.34 $ 11.11
1990 1989 1988 (1)
<S> <C> <C> <C>
Summary of Operations
Net sales $ 960,228 $ 918,276 $ 797,563
Cost of goods sold 749,071 718,636 614,465
Selling, general and administrative 137,674 135,741 128,573
Amortization of intangibles 9,704 8,886 6,456
Interest on debt 18,301 21,128 23,622
Income(loss) from continuing operations before
income taxes, extraordinary charge and cumulative
effect of changes in accounting principles 44,023 44,797 28,554
Income taxes 12,830 7,608 4,107
Income(loss) from continuing operations before
extraordinary charge and cumulative effect
of changes in accounting principles 31,193 37,189 24,447
Net income 55,871 86,920 83,223
Per share of common stock
Income(loss) from continuing operations .75 .92 .49
Net income 1.35 2.23 2.32
Dividends paid .37 .30 .22
Cash dividends paid on
Common stock 15,175 11,812 7,169
Preferred stock - 2,125 8,501
Balance Sheet
Current assets $ 276,711 $ 264,772 $ 240,029
Current liabilities 181,471 167,272 166,185
Working capital 95,240 97,500 73,844
Property, plant and equipment - net 183,536 173,477 154,477
Other assets 458,394 444,479 406,426
Net long-term assets of discontinued operations 129,869 137,304 141,552
Other liabilities (161,674) (175,310) (169,470)
Long-term debt (137,691) (134,834) (137,725)
Total stockholders' equity $ 567,674 $ 542,616 $ 469,104
Shares of common stock outstanding 39,937,572 41,682,807 32,331,271
Average fully diluted shares outstanding 42,081,134 42,332,346 41,848,449
Book value per share of common stock $ 14.21 $ 13.02 $ 11.41
(1) Prior to 1988, the Company was a natural resources company and not in the
specialty chemicals business. Results for 1985-1987 are excluded because
they are not comparable to results for 1988-1995.
Shareowner Information
M.A. Hanna Company common stock is listed on the New York and Chicago stock
exchanges under the symbol MAH. At December 31, 1995, the number of
shareowners of record of the Company's common stock was 4,173.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Your company reached significant strategic and financial
milestones in 1995 including signing a definitive agreement
to acquire CIMCO, Inc., a producer of thermoplastic
compounds and plastic components, a joint venture agreement
with Suzhou Plastics Factory #1 to form a venture to serve
the high growth plastics processing markets in China, the
divestiture of Day International, Inc., and the sale of our
final interest in the Iron Ore Company of Canada (IOC). Net
sales were a record $1,902.0 million in 1995, an increase of
10.6% over 1994 levels. Income from continuing operations,
excluding the nonrecurring gain from the IOC sale, was $51.0
million, a 37.8% increase over 1994 levels.
1995 Compared with 1994
Sales from processing businesses increased $80.7 million
from 1994 levels due to acquisitions consummated in 1994 and
higher pricing partially offset by lower unit volumes.
Distribution sales increased $95.4 million to $862.1 million
in 1995 due to higher pricing and higher unit volumes.
Sales from other operations were comparable with 1994
levels.
Cost of goods sold increased from $1,393.0 million in 1994
to $1,552.6 million in 1995 due to higher raw material
costs, partially offset by lower unit volumes. Gross
margins were 18.4% in 1995 and 19.0% in 1994. The
deterioration in gross margin is due in part to the mix of
sales between processing and distribution businesses.
Distribution businesses, which carry a lower gross margin,
had a higher overall growth rate in sales than the
processing businesses. In addition, although the Company
was able to pass through most raw material price increases,
it was not able to maintain the comparable historical gross
margin relationship.
Selling, general and administrative expenses, as a
percentage of sales, were 11.5% in 1995 compared with 12.4%
in 1994. Selling, general and administrative costs
increased 2.6% or $5.5 million from 1994 levels due to a
higher level of sales and acquisitions consummated in 1994,
partially offset by lower costs associated with the
Company's incentive compensation programs.
Other income in 1995 includes a gain of $9.3 million from
the sale of the Company's remaining interest in IOC and
higher levels of interest income due to the funds invested
from the sale of IOC and Day International.
Other expense in 1994 includes $2.6 million related to the
relocation of the Company's technical center and costs
associated with the combination of the Company's resin
distribution businesses.
Interest on debt decreased $2.3 million to $26.3 million in
1995. During 1994, the Company repurchased $64.2 million of
its Senior Notes in the open market. An additional $8.5
million of its Senior Notes were repurchased in 1995. In
addition, the financing for the acquisition of Th. Bergmann
in 1994 was repaid in 1995.
The Company's effective tax rate was 42.6% in 1995 and 44.1%
in 1994. The tax rate in 1995 was favorably impacted by 1.6
percentage points due to the relationship of the level of
nondeductible goodwill to pre-tax income.
In December 1994, the Company adopted a plan to sell its Day
International printing and textile business and accordingly
the operating results of that business were reclassified as
discontinued operations. The sale of the Day business was
consummated in June 1995 with the Company recognizing a gain
of $40.3 million.
1994 Compared with 1993
Net sales were $1,719.4 million, an increase of 21.8% over
net sales in 1993 of $1,412.1 million. Sales from
processing businesses increased from $784.9 million in 1993
to $943.0 million in 1994 due to acquisitions in 1994 and
1993, higher unit volumes and pricing. Distribution sales
increased $137.8 million to $766.7 million in 1994 due to
higher unit volumes and pricing. Sales from other
operations were comparable with 1993 levels.
Cost of goods sold increased from $1,146.2 million in 1993
to $1,393.0 million in 1994 due to higher unit volumes and
raw material costs. Gross margins were 19.0% in 1994 and
18.8% in 1993. Gross margin dollars in 1994 were $326.3
million compared with $265.9 million in 1993 or an increase
of 22.7%, which exceeds the growth in sales of 21.8%. Gross
margins were favorably impacted by higher volumes and
productivity improvements, partially offset by the mix of
sales between processing and distribution businesses.
Distribution businesses, which had a higher growth rate in
net sales than processing businesses, carry a lower gross
margin. Also impacting gross margins in 1994 was a $3.3
million provision for inventories valued by the last-in
first-out cost method.
Selling, general and administrative expenses increased $34.1
million in 1994 to $213.3 million and were attributable to
the higher level of sales, acquisitions made in 1994 and
increased costs associated with the Company's incentive
<PAGE>
compensation programs due to the higher level of earnings.
Selling, general and administrative expenses, as a percentage
of sales were 12.4% in 1994 compared with 12.7% in 1993.
Interest on debt decreased from $32.3 million in 1993 to
$28.5 million in 1994 due to lower average borrowings
outstanding and lower effective interest rates. During
1994, the Company repurchased $64.2 million of its Senior
Notes in the open market, resulting in an extraordinary
charge of $6.0 million ($3.7 million after-tax). Funds to
repurchase the Senior Notes were obtained from existing cash
flows as well as borrowings under the Company's credit
agreement, which carry a lower rate of interest.
The Company's effective tax rate in 1994 was 44.1% compared
with 43.4% in 1993. The tax rate in 1993 was favorably
impacted by 1.6 percentage points from the enactment of a
change in tax laws.
Included in income from discontinued operations in 1994 was
a charge of $1.1 million related to the Company's
elastomeric membrane roofing business for additional costs
incurred while obtaining government antitrust clearance for
the sale, which closed in the third quarter of 1994. The
Company recognized an after-tax charge of $30.0 million in
1993 for the writeoff of goodwill and restructuring charges
associated with the sale. Also included in discontinued
operations in 1993 was $1.5 million from the sale of a
former natural resources affiliate.
LIQUIDITY AND SOURCES OF CAPITAL
Cash flows from operating activities provided $33.9 million
in 1995. Included in this amount was a use of cash of $32.1
million for working capital reflecting an increase in days
sales outstanding, higher levels of inventory due to
increase in raw material costs and higher payments
pertaining to taxes on income, due in part to the taxes
associated on the gain recognized from the sale of Day
International. Payments of obligations from prior
restructurings used $17.3 million. Ignoring the tax
payments related to the Day sale and the payments on the
restructuring obligations, operating activities provided
$90.2 million, or $2.85 per share. Investing activities
provided $154.0 million and included $223.5 million in
proceeds from the sale of Day International and the
Company's interest in IOC. Capital expenditures utilized
$55.9 million. Financing activities used $101.1 million in
cash and include $17.0 million for the payment of dividends,
$25.0 million for the repurchase of 1.0 million shares for
treasury and $61.2 million in net reductions of outstanding
debt. During 1995, the Company repaid the financing related
to the 1994 acquisition of Th. Bergmann and also repurchased
$8.5 million of its Senior Notes in the open market.
The Company has a credit facility which provides commitments
for borrowings up to $200 million through June 1998. The
agreement provides for interest rates to be determined at
the time of borrowing based on a choice of formulas
specified in the agreement. At December 31, 1995, there
were no outstanding borrowings under this agreement.
The current ratio was 1.7:1 at December 31, 1995. Excluding
the net assets of discontinued operations reported as a
current asset in 1994, the current ratio at December 31,
1994 was 1.4:1. Long-term debt to total capital was 32.4%
at December 31, 1995 and 41.0% at December 31, 1994.
The Company believes that its existing cash balances, its
ability to generate cash flows from operations and the
availability of funds under existing credit facilities will
be sufficient to fund the cost of the CIMCO acquisition and
its obligations under the joint venture agreement with
Suzhou Plastics Factory #1, to meet anticipated capital
expenditure programs, payment of obligations from prior
restructurings, dividends and other planned financial
commitments in 1996 and throughout the terms of the existing
credit facilities.
ENVIRONMENTAL MATTERS
The Company is subject to various laws and regulations
concerning environmental matters. The Company is committed
to a long-term environmental protection program that reduces
releases of hazardous materials into the environment as well
as to the remediation of identified existing environmental
concerns.
Claims have been made against a subsidiary of the Company
for costs of environmental remediation measures taken or to
be taken in connection with operations that have been sold
or closed. These include the clean-up of Superfund sites
and participation with other companies in the clean-up of
hazardous waste disposal sites, several of which have been
designated as Superfund sites. Reserves for such
liabilities have been established and no insurance
recoveries have been anticipated in the determination of
reserves. While it is not possible to predict with
certainty, management believes that the aforementioned
claims will be resolved without material adverse effect on
the financial position, liquidity or results of operations
of the Company.
On behalf of M.A. Hanna Management,
/s/ Michael S. Duffey
Michael S. Duffey
Vice President, Chief Financial Officer and Treasurer
<PAGE>
Report of Independent Accountants
To the Board of Directors and
Stockholders of M.A. Hanna Company
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of income, of stockholders'
equity and of cash flows present fairly, in all material
respects, the financial position of M.A. Hanna Company and its
subsidiaries at December 31, 1995, and the results of their
operations and their cash flows for the year in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing
standards which 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, assessing
the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for the opinion expressed above. The consolidated
financial statements of M.A. Hanna Company for the years ended
December 31, 1994 and 1993 were audited by other independent
auditors whose report dated January 31, 1995 expressed an
unqualified opinion on those statements.
/s/ Price Waterhouse LLP
Cleveland, Ohio
January 29, 1996
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT:
Where
Incorporated
Name (or formed)
Burton Rubber Compounding , L.P. Delaware
(a limited partnership)
Burton Rubber Processing, Ltd. Ontario
Cadillac Plastic Group, Inc. Michigan
CIMCO, Inc., Delaware
DH Compounding Company Delaware
(a general partnership)
Erieview Insurance Company Limited Bermuda
Global Processing Company California
Hanna France SARL France
Hanna Hamilton Holdings Company Delaware
Hanna International Corporation Delaware
Hanna Polimeros, S.A. de C.V. Mexico
Hanna Su Xing Plastics Compounding (Suzhou)
Company Limited China
M. A. Hanna Export Services Company Barbados
M. A. Hanna International Financial
Services Company Ireland
M. A. Hanna de Mexico, S.A. de C.V. Mexico
M. A. Hanna Resin Distribution Company Delaware
M. A. Hanna Company Thermoplastic Elastomers Delaware
MAH Plastics Company Delaware
Monmouth Plastics Company Delaware
Poliamidas Barbastro, S.A. Spain
Synthecolor, S.A. France
Texapol Corporation Pennsylvania
The Lower Lake Dock Company Ohio
The Ohio & Western Pennsylvania
Dock Company Ohio
The Pennsylvania Tidewater
Dock Company Delaware
Theodor Bergmann GmbH & Co.
Kunststoffwerk KG Germany
Wilson Color S.A. Belgium
Wilson Color GmbH Germany
Wilson Color S.A. France
Wilson Color AB Sweden
The Registrant has other unconsolidated subsidiaries and 50
percent or less owned persons accounted for by the equity method,
which in the aggregate do not constitute a significant
subsidiary.
<PAGE>
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration
Statements on Form S-3 and the Registration Statements on
Form S-8 (appearing on Exhibit 1) of M.A. Hanna Company of
our report dated January 29, 1996 appearing on page 38 of
the Annual Report to Shareholders which is incorporated in
this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedule, which appears on page F-2 of this Form
10-K.
/s/ Price Waterhouse LLP
Cleveland, Ohio
March 22, 1996
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Exhibit 1) of M.A. Hanna Company of our report dated
January 31, 1995, with respect to the consolidated financial
statements and schedule of M.A. Hanna Company as of December 31,
1994 and for each of the two years then ended included in the
Annual Report (Form 10-K) of M.A. Hanna Company for the year
ended December 31, 1995.
/s/ Ernst & Young LLP
Cleveland, Ohio
March 22, 1996
<PAGE>
Consent of Independent Auditors
Exhibit 1
Form S-8 No. 2-70755 pertaining to the M.A. Hanna Company 1979
Executive Incentive Compensation Plan.
Form S-8 No. 33-29622 pertaining to the M.A. Hanna Company 1988
Long-Term Incentive Plan.
Form S-8 No. 33-35654 pertaining to the M.A. Hanna Company
Restated 1979 Executive Compensation Plan and 1988 Long-Term
Incentive Plan.
Form S-8 No. 33-38938 pertaining to the M.A. Hanna Company
Capital Accumulation Plan.
Form S-8 No. 33-41461 pertaining to the M.A. Hanna Company
Capital Accumulation and Savings Plan for Salaried Employees of
Day International Corporation.
Form S-8 No. 33-45420 pertaining to the M.A. Hanna Company Pay
for Performance Plans.
Form S-3 No. 33-29624 pertaining to the M.A. Hanna Company
Dividend Reinvestment and Stock Purchase Plan.
Form S-3 No. 33-66128 pertaining to various employee compensation
and benefit plans of M.A. Hanna Company.
Form S-8 No. 33-51517 pertaining to Wilson Color Profit Sharing
Plan.
Form S-8 No. 33-51519 pertaining to Texapol Corporation
Employees' 401(k) Savings Plan.
Form S-8 No. 33-51555 pertaining to PMS Profit Sharing and
Retirement Savings Plan.
Form S-8 No. 33-51513 pertaining to Fiberchem, Inc. 401(k) Plan.
Form S-8 No. 33-51497 pertaining to DH Compounding Company
Savings and Retirement Plan.
Form S-8 No. 33-51499 pertaining to Dayton Plastics Profit
Sharing Plan.
Form S-8 No. 33-51491 pertaining to Burton Rubber Processing,
Inc. Savings and Retirement Plan.
Form S-8 No. 33-51507 pertaining to Bruck Plastics Company Profit
Sharing Plan.
<PAGE>
Form S-8 No. 33-51503 pertaining to Allied Color Industries, Inc.
Savings and Retirement Plan for Associates of the Vonore, TN,
Kansas City, MO, San Francisco, CA and Vancouver, WA Operations,
formerly the Avecor, Inc. Savings and Retirement Plan.
Form S-8 No. 51501 pertaining to Allied Color Industries, Inc.
Profit Sharing Plan for Associates of the Broadview Heights, OH,
Greenville, SC, and Phoenix, AZ Operations, formerly the Allied
Color Industries, Inc. Profit Sharing Plan.
Form S-8 No. 33-53093 pertaining the M.A. Hanna Company
Directors' Deferred Fee Plan.
Form S-8 No. 33-57021 pertaining to 401(k) Savings and Retirement
Plan for Polymer Associates.
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ B. C. Ames Director of M. A. Hanna March 6, 1996
B. C. Ames Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite her signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, her attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ C. A. Cartwright Director of M. A. Hanna March 6, 1996
C. A. Cartwright Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ W. R. Embry Director of M. A. Hanna March 6, 1996
W. R. Embry Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ J. T. Eyton Director of M. A. Hanna March 6, 1996
J. T. Eyton Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ G. D. Kirkham Director of M. A. Hanna March 6, 1996
G. D. Kirkham Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ M. L. Mann Director of M. A. Hanna March 6, 1996
M. L. Mann Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ R. W. Pogue Director of M. A. Hanna March 6, 1996
R. W. Pogue Company
<PAGE>
POWER OF ATTORNEY
The undersigned, Director of the corporation named herein
opposite his signature, hereby appoints T. E. Lindsey,
J. S. Pyke, Jr., and M. S. Duffey, or any of them, his attorney
or attorneys in fact, with full power of substitution, to sign
the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, being filed with the Securities and Exchange
Commission by M. A. Hanna Company, and any and all amendments to
such Annual Report, with full power and authority to take any and
all such action as may be necessary or advisable in the
premises.
Capacity in which Annual Report
on Form 10-K is to be signed
Signature Date
/s/ D. J. McGregor Director of M. A. Hanna March 6, 1996
D. J. McGregor Company
<PAGE>
EXHIBIT 27
[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] DEC-31-1995
[CASH] 111,235
[SECURITIES] 0
[RECEIVABLES] 279,050
[ALLOWANCES] 11,034
[INVENTORY] 166,801
[CURRENT-ASSETS] 574,612
[PP&E] 393,314
[DEPRECIATION] 166,293
[TOTAL-ASSETS] 1,231,596
[CURRENT-LIABILITIES] 335,251
[BONDS] 231,987
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 43,274
[OTHER-SE] 441,504
[TOTAL-LIABILITY-AND-EQUITY] 1,231,596
[SALES] 1,901,954
[TOTAL-REVENUES] 1,901,954
[CGS] 1,552,643
[TOTAL-COSTS] 1,552,643
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 2,480
[INTEREST-EXPENSE] 26,278
[INCOME-PRETAX] 98,821
[INCOME-TAX] 42,119
[INCOME-CONTINUING] 56,702
[DISCONTINUED] 45,337
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 102,039
[EPS-PRIMARY] 3.29
[EPS-DILUTED] 3.22
</TABLE>
