<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
| X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number I-8524
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MYERS INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
OHIO #34-0778636
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1293 SOUTH MAIN STREET, AKRON, OHIO 44301
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 253-5592
------------------------
Indicate whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
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Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes . No .
----- -----
As of October 31, 1997, the number of shares outstanding of the
issuer's Common Stock was:
18,269,181
==========
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PART I FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
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<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $ 543,179 $ 5,600,349
Accounts receivable-less allowances
of $2,211,000 and $2,213,000,
respectively 52,547,617 57,604,506
Inventories
Finished and in-process products 33,953,476 33,042,266
Raw materials and supplies 6,687,362 6,788,086
------------ ------------
40,640,838 39,830,352
Prepaid expenses 3,912,799 3,274,673
------------ ------------
TOTAL CURRENT ASSETS 97,644,433 106,309,880
OTHER ASSETS
Excess of cost over fair value of net
assets of companies acquired 20,721,544 14,328,410
Patents and other intangible assets 2,508,358 2,750,530
Other 2,673,733 3,072,974
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25,903,635 20,151,914
PROPERTY, PLANT & EQUIPMENT, AT COST
Land 2,476,194 2,547,509
Buildings and leasehold improvements 41,215,698 38,918,648
Machinery and equipment 125,462,356 108,594,273
------------ ------------
169,154,248 150,060,430
Less allowances for depreciation and
amortization 77,828,085 69,400,497
------------ ------------
91,326,163 80,659,933
------------ ------------
$214,874,231 $207,121,727
============ ============
</TABLE>
<PAGE> 3
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
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<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 14,733,464 $ 15,189,488
Employee compensation and related
items 8,725,229 10,562,313
Accrued expenses
Taxes, other than income taxes 1,349,846 1,062,498
Income taxes (1,147,706) 1,452,107
Other 9,678,352 8,066,838
Current portion of long-term debt 957,755 519,769
------------- -------------
TOTAL CURRENT LIABILITIES 34,296,940 36,853,013
LONG-TERM DEBT, less current portion 8,176,476 4,569,396
DEFERRED INCOME TAXES 3,253,927 3,254,327
SHAREHOLDERS' EQUITY
Serial Preferred Shares
(authorized 1,000,000) -- --
Common Shares, without par value
(authorized 30,000,000 shares;
outstanding 18,257,270 and
18,539,982, respectively)* 6,820,982 10,659,714
Additional paid-in capital 137,827,334 109,864,137
Foreign currency translation
adjustment (360,218) (213,572)
Retained income 24,858,790 42,134,712
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169,146,888 162,444,991
------------- -------------
$ 214,874,231 $ 207,121,727
============= =============
</TABLE>
*Adjusted for a ten percent stock dividend in August, 1997.
<PAGE> 4
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED INCOME
------------------------------------------
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
----------------------------- ------------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales $81,141,353 $77,879,982 $244,115,071 $230,385,397
Costs and expenses
Cost of sales 57,072,104 55,207,594 169,286,385 157,774,466
Operating expenses 17,347,176 16,337,585 50,759,866 47,681,893
Interest expense, net 55,369 47,556 162,144 301,868
----------- ----------- ------------ ------------
Total costs & expenses 74,474,649 71,592,735 220,208,395 205,758,227
Income before
income taxes 6,666,704 6,287,247 23,906,676 24,627,170
Income taxes 2,734,000 2,578,000 9,852,000 10,097,000
----------- ----------- ------------ ------------
Net income $ 3,932,704 $ 3,709,247 $ 14,054,676 $ 14,530,170
=========== =========== ============ ============
Net income per
Common Share* $ .21 $ .20 $ .76 $ .78
Dividends per
Common Share* $ .05 $ .045 $ .14 $ .12
Weighted average
number of Common
Shares outstanding* 18,496,143 18,639,360 18,529,742 18,628,000
</TABLE>
*Adjusted for a ten percent stock dividend in August, 1997.
<PAGE> 5
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
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<TABLE>
<CAPTION>
Sept. 30, Sept. 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES ------------ ------------
<S> <C> <C>
Net income $ 14,054,676 $ 14,530,170
Items not affecting use of cash
Depreciation 8,925,178 8,046,707
Amortization of excess of cost over fair
value of net assets of companies acquired 556,380 416,520
Amortization of other intangible assets 409,917 357,752
Cash flow provided by (used for) working capital
Accounts receivable 5,588,688 (1,037,260)
Inventories (385,923) 2,777,840
Prepaid expenses (730,245) 1,438,333
Accounts payable and accrued expenses (3,165,769) (495,111)
------------ ------------
Net cash provided by operating activities 25,252,902 26,034,951
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (7,955,077) --
Additions to property, plant and
equipment, net (18,868,810) (13,639,879)
Other 168,441 (24,503)
------------ ------------
Net cash used for investing activities (26,655,446) (13,664,382)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) - net 3,540,801 (9,178,573)
Cash dividends paid (2,614,897) (2,202,350)
Proceeds from issuance of common stock 596,308 564,993
Repurchase of common stock (5,176,838) (273,072)
------------ ------------
Net cash provided by (used for) financing activities (3,654,626) (11,089,002)
(DECREASE) INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS (5,057,170) 1,281,567
CASH AND TEMPORARY CASH INVESTMENTS
JANUARY 1 5,600,349 3,387,562
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CASH AND TEMPORARY CASH INVESTMENTS
SEPTEMBER 30 $ 543,179 $ 4,669,129
============ ============
</TABLE>
<PAGE> 6
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PART I - FINANCIAL INFORMATION
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MYERS INDUSTRIES, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) Statement of Accounting Policy
------------------------------
The accompanying financial statements include the accounts of Myers
Industries, Inc. and subsidiaries (Company), and have been prepared without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures are adequate to
make the information not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's latest annual report on Form 10-K.
In the opinion of the Company, the accompanying financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position as of September 30, 1997, and the
results of operations and cash flows for the three months and nine months ended
September 30, 1997 and 1996.
(2) Supplemental Disclosure of Cash Flow Information
------------------------------------------------
The Company made cash payments for interest expense of $197,064 and
$135,583 for the three months ended September 30, 1997 and 1996, respectively.
Cash payments for interest expense were $397,848 and $653,239 for the nine
months ended September 30, 1997 and 1996, respectively. Cash payments for income
taxes for the three months ended September 30, 1997 and September 30, 1996 were
$4,901,731 and $3,616,502, respectively. For the nine month period the payments
for income taxes were $12,610,677 for 1997 and $13,328,805 for 1996.
<PAGE> 7
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(3) Acquisition
-----------
On April 25, 1997, the Company acquired substantially all of the assets
of Molded Solutions, Inc., a manufacturer of custom engineered molded rubber
products. The Asset Purchase Agreement provides for payment of additional
consideration contingent upon the earnings of Molded Solutions during the 12
month period ending April 25, 1998. The acquisition has been accounted for using
the purchase method and, accordingly, Molded Solution's results of operations,
the amounts of which are not material, have been included in the Company's
consolidated financial statements since the date of acquisition. The purchase
price allocation has been based on preliminary estimates with the excess of
purchase price over the fair value of assets acquired being amortized on a
straight line basis over 15 years.
<PAGE> 8
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Myers Industries, Inc. reported increased sales for both the quarter
and nine month period ended September 30, 1997. Sales rose 4.2 percent to $81.1
million for the quarter as compared to $77.9 million in 1996. In the first nine
months, sales increased to $244.1 million, an increase of 6.0 percent from
$230.4 million a year ago. Net income for the third quarter ended September 30,
1997 was $3.9 million an increase of 6 percent from $3.7 million in the prior
year. Net income per share was $.21 for the quarter, an increase of 5 percent
from the $.20 per share reported in 1996. Earnings in the first nine months were
$14.1 million or $.76 per share, a decrease of 3 percent compared with the $14.5
million and $.78 per share in 1996.
For the quarter net sales increased primarily on the strength of unit
volume increases in the Distribution segment. For the quarter, sales in the
Distribution segment increased 9.6 percent while sales in the Manufacturing
segment were basically flat. Year to date, sales in the Distribution segment are
up 9.7 percent and Manufacturing segment sales have increased 3.8 percent.
Cost of sales increased 3.4 percent or $1.9 million for the quarter and
$11.5 million or 7.3 percent for the nine months ended September 30, 1997. Gross
profit, expressed as a percentage of sales, increased to 29.7 percent for the
quarter and decreased to 30.7 percent for the nine month period compared to 29.1
percent and 31.5 percent for the same periods in 1996. The year-to-date decline
in gross profit margin is primarily due to higher raw material costs,
principally plastic resins, used in the Manufacturing segment.
Operating expenses increased $1.0 million or 6.2 percent for the
quarter and $3.1 million or 6.5 percent for the nine month period ended
September 30, 1997. Operating expenses, expressed as a percentage of sales,
increased slightly to 21.4 percent for the quarter compared with 21.0 percent in
the same quarter of 1996. For the nine month period, operating expenses as a
percentage of sales also increased slightly to 20.8 percent from 20.7 percent in
the prior year.
Net interest expense for the quarter increased to $55,369 from $47,556
in 1996 reflecting higher borrowing levels as a result of the Molded Solutions
acquisition. For the nine month period, net interest expense decreased to
$162,144 from $301,868 based on lower average borrowing levels.
<PAGE> 9
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Results of Operations (Con't)
- -----------------------------
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement No. 128, "Earnings per Share" which eliminates the concept of
common stock equivalents and replaces the existing "primary" earnings per share
with "basic" earnings per share. Basic earnings per share excludes potential
dilution and is calculated by dividing income available to common shareholders
by the weighted average shares outstanding.
The new statement also changes the calculation of diluted earnings per
share and replaces the existing fully diluted earnings per share requirement.
FASB Statement No. 128 is effective for periods ending December 15, 1997, and
requires that all prior period earnings per share presented be restated. The
Company does not expect the new standard, when implemented, to have a material
effect on the current or historical earnings per share amounts presented.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash provided by operating activities is the primary source of
liquidity and amounted to $25.3 million for the nine months ended September 30,
1997. Long-term debt increased by $3.6 million during the nine months of 1997
and debt as a percentage of total capitalization increased to 5.1 percent
compared to 3.0 percent at December 31, 1996. Working capital decreased to
$63.3 million at September 30, 1997 from $69.5 million at December 31, 1996.
Capital expenditures for the nine months ended September 30, 1997 were
$18.9 million. The Company currently anticipates annual capital expenditures in
the range of $15.0 to $20.0 million over the next five years. Management
believes that anticipated cash flows from operations and available credit
facilities will be sufficient to fund capital expenditures and meet its
short-term and long-term needs.
<PAGE> 10
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PART II - OTHER INFORMATION
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MYERS INDUSTRIES, INC.
----------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Financial Data Schedule
(b) Form 8-K
None
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MYERS INDUSTRIES, INC.
11/7/97 By: \s\ Gregory J. Stodnick
- ----------------------------- ---------------------------
Date Gregory J. Stodnick
Vice President-Finance
Financial Officer (Duly
Authorized Officer and
Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 543,179
<SECURITIES> 0
<RECEIVABLES> 54,758,617
<ALLOWANCES> 2,211,000
<INVENTORY> 40,640,838
<CURRENT-ASSETS> 97,644,433
<PP&E> 169,154,248
<DEPRECIATION> 77,828,085
<TOTAL-ASSETS> 214,874,231
<CURRENT-LIABILITIES> 34,296,940
<BONDS> 0
0
0
<COMMON> 6,820,982
<OTHER-SE> 162,325,906
<TOTAL-LIABILITY-AND-EQUITY> 214,874,231
<SALES> 244,115,071
<TOTAL-REVENUES> 244,115,071
<CGS> 169,286,385
<TOTAL-COSTS> 220,208,395
<OTHER-EXPENSES> 28,231,475
<LOSS-PROVISION> 2,211,000
<INTEREST-EXPENSE> 162,144
<INCOME-PRETAX> 23,906,676
<INCOME-TAX> 9,852,000
<INCOME-CONTINUING> 14,054,676
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,054,676
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
