<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
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 JUNE 30, 1997
-----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________________ TO _______________________
COMMISSION FILE NUMBER I-8524
---------------------------
MYERS INDUSTRIES, INC.
------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(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 .
----- -----
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 JULY 31, 1997, THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S
COMMON STOCK WAS:
16,891,598
==========
<PAGE> 2
-1-
PART I - FINANCIAL INFORMATION
---------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
- ----------- ------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $ 1,567,624 $ 5,600,349
Accounts receivable-less allowances
of $2,299,000 and $2,213,000,
respectively 54,006,723 57,604,506
Inventories
Finished and in-process products 34,277,646 33,042,266
Raw materials and supplies 6,394,835 6,788,086
------------ ------------
40,672,481 39,830,352
Prepaid expenses 5,451,975 3,274,673
------------ ------------
TOTAL CURRENT ASSETS 101,698,803 106,309,880
OTHER ASSETS
Excess of cost over fair value of net
assets of companies acquired 20,958,460 14,328,410
Patents and other intangible assets 2,589,082 2,750,530
Other 2,514,098 3,072,974
------------ ------------
26,061,640 20,151,914
PROPERTY, PLANT & EQUIPMENT, AT COST
Land 2,476,194 2,547,509
Buildings and leasehold improvements 40,623,135 38,918,648
Machinery and equipment 119,193,618 108,594,273
------------ ------------
162,292,947 150,060,430
Less allowances for depreciation and
amortization 74,940,266 69,400,497
------------ ------------
87,352,681 80,659,933
------------ ------------
$215,113,124 $207,121,727
============ ============
</TABLE>
<PAGE> 3
-2-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
- ------------------------------------ ------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 12,328,369 $ 15,189,488
Employee compensation and related
items 7,825,664 10,562,313
Accrued expenses
Taxes, other than income taxes 1,480,826 1,062,498
Income taxes 976,702 1,452,107
Other 9,659,546 8,066,838
Current portion of long-term debt 489,455 519,769
------------- -------------
TOTAL CURRENT LIABILITIES 32,760,562 36,853,013
LONG-TERM DEBT, less current portion 7,941,834 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 16,878,558 and
16,854,529, respectively) 10,680,646 10,659,714
Additional paid-in capital 110,202,998 109,864,137
Foreign currency translation
adjustment (297,636) (213,572)
Retained income 50,570,793 42,134,712
------------- -------------
171,156,801 162,444,991
------------- -------------
$ 215,113,124 $ 207,121,727
============= =============
</TABLE>
<PAGE> 4
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED INCOME
------------------------------------------
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
------------------------------ -------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 86,175,097 $ 79,951,159 $162,973,718 $152,505,415
Costs and expenses
Cost of sales 59,502,875 54,362,658 112,214,281 102,566,872
Operating expenses 17,482,144 16,036,739 33,412,690 31,344,308
Interest, net 99,609 84,774 106,775 254,312
------------ ------------ ------------ ------------
Total costs & expenses 77,084,628 70,484,171 145,733,746 134,165,492
Income before
income taxes 9,090,469 9,466,988 17,239,972 18,339,923
Income taxes 3,777,000 3,861,000 7,118,000 7,519,000
------------ ------------ ------------ ------------
Net income $ 5,313,469 $ 5,605,988 $ 10,121,972 $ 10,820,923
============ ============ ============ ============
Net income per
Common Share $ .31 $ .33 $ .60 $ .64
Dividends per
Common Share $ .05 $ .04 $ .10 $ .08
Weighted average
number of Common
Shares outstanding 16,873,205 16,941,003 16,867,437 16,929,908
</TABLE>
- ------------------------------
<PAGE> 5
-4-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
-----------------------------------------------
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES ------------ ------------
<S> <C> <C>
Net income $ 10,121,972 $ 10,820,923
Items not affecting use of cash
Depreciation 5,915,506 5,216,492
Amortization of excess of cost over fair
value of net assets of companies acquired 319,464 277,680
Amortization of other intangible assets 253,843 238,640
Cash flow provided by (used for) working capital
Accounts receivable 4,129,576 (1,869,578)
Inventories (417,566) 3,723,508
Prepaid expenses (2,209,722) (259,531)
Accounts payable and accrued expenses (4,233,847) 1,949,419
------------ ------------
Net cash provided by operating activities 13,879,226 20,097,553
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (7,955,077) --
Additions to property, plant and
equipment, net (11,885,656) (9,164,891)
Other 417,021 (48,540)
------------ ------------
Net cash used for investing activities (19,423,712) (9,213,431)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) - net 2,837,859 (8,888,394)
Cash dividends paid (1,685,891) (1,354,789)
Proceeds from issuance of common stock 359,793 428,865
------------ ------------
Net cash provided by (used for) financing activities 1,511,761 (9,814,318)
(DECREASE) INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS (4,032,725) 1,069,804
CASH AND TEMPORARY CASH INVESTMENTS
JANUARY 1 5,600,349 3,387,562
------------ ------------
CASH AND TEMPORARY CASH INVESTMENTS
JUNE 30 $ 1,567,624 $ 4,457,366
============ ============
</TABLE>
<PAGE> 6
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
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 June 30, 1997, and the results of
operations and cash flows for the three months and six months ended June 30,
1997 and 1996.
(2) Supplemental Disclosure of Cash Flow Information
------------------------------------------------
The Company made cash payments for interest expense of $55,582 and
$120,674 for the three months ended June 30, 1997 and 1996, respectively. Cash
payments for interest expense were $200,784 and $517,656 for the six months
ended June 30, 1997 and 1996, respectively. Cash payments for income taxes for
the three months ended June 30, 1997 and June 30, 1996 were $6,687,748 and
$8,442,685, respectively. For the six month period the payments for income taxes
were $7,708,947 for 1997 and $9,712,303 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
-7-
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 but lower earnings for
both the quarter and six month periods ended June 30, 1997. For the quarter
sales rose 7.8 percent to $86.2 million while earnings declined 5.2 percent to
$5.3 million. Reported net earnings per share for the second quarter were $.31
down 6.1 percent from $.33 in the year earlier period. In the first six months,
sales reached $163.0 million an increase of 6.9 percent from $152.5 million a
year ago. Earnings in the first six months were $10.1 million or $.60 per share,
a decrease of 6 percent compared with $10.8 million and $.64 per share in 1996.
For the quarter and year-to-date periods net sales increased in both of
the Company's business segments, primarily on the strength of unit volume
increases. Net sales in the Distribution segment increased 10 percent for the
quarter ended June 30, 1997 and 9 percent year to date. In the Manufacturing
segment net sales increased 6 percent for the quarter and 5 percent year to date
compared to the same periods in 1996.
Cost of sales increased $5.1 million or 9.5 percent for the quarter and
$9.6 million or 9.4 percent for the six months ended June 30, 1997. Gross
profit, expressed as a percentage of sales declined to 31 percent for the
quarter and 31.1 percent for the six month period compared to 32.0 percent and
32.7 percent for the same periods in 1996. The decline in gross profit margin is
primarily due to higher raw material costs, principally plastic resins, used in
the manufacturing segment.
Operating expenses increased $1.4 million or 9.0 percent for the
quarter and $2.1 million or 6.6 percent for the six month period ended June 30,
1997. Operating expenses, expressed as a percentage of sales increased slightly
to 20.3 percent for the quarter compared with 20.1 percent in the second quarter
of 1996. For the six month period, operating expenses as a percentage of sales
decreased to 20.5 percent from 20.6 percent in the prior year.
Interest expense for the quarter increased to $99,609 from $84,774 in
1996 reflecting higher borrowing levels as a result of the Molded Solutions
acquisition. For the six month period interest expense decreased to $106,775
from $254,312 based on lower average borrowing levels.
<PAGE> 9
-8-
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 after 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 $13.9 million for the six months ended June 30, 1997.
Long-term debt was increased by $3.4 million during the six months of 1997 and
debt as a percentage of total capitalization increased to 4.7 percent compared
to 3.0 percent at December 31, 1996. Working capital decreased to $68.9 million
at June 30, 1997 from $69.5 million at December 31, 1996.
Capital expenditures for the six months ended June 30, 1997 were $11.9
million. The Company currently anticipates annual capital expenditures in the
range of $15.0 to $20.0 million over the next five years, primarily for
increased polymer manufacturing capacity. 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
---------------------------
MYERS INDUSTRIES, INC.
----------------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Shareholders was held on April 24, 1997 and the
following matters were voted on at that meeting.
1. The election of eight Directors were voted upon. All of the
Directors nominated were elected. The results of this voting are as
follows:
<TABLE>
<CAPTION>
Votes Votes
Name of Director For Withheld
<S> <C> <C>
Stephen E. Myers 13,762,515 376,530
Milton I. Wiskind 13,741,253 397,792
Edwin P. Schrank 13,763,469 375,576
Karl S. Hay 13,699,730 439,315
Richard P. Johnston 13,736,433 402,612
Richard L. Osborne 13,757,699 381,346
Jon H. Outcalt 13,762,889 376,156
Samuel Salem 13,755,510 383,535
</TABLE>
2. Adoption of the Myers Industries, Inc. 1997 Incentive Stock Plan
was approved by the following vote:
<TABLE>
<S> <C>
For 12,286,418
Against 1,831,848
Abstain 199,155
</TABLE>
3. Proposal to amend the Code of Regulations to classify the board of
directors into three classes of directors serving staggered three
year terms was not approved by the following vote:
For 7,755,928
Against 4,100,155
Abstain 2,461,738
<PAGE> 11
-10-
4. Proposal to amend the Articles of Incorporation to require a super
majority vote of the shareholders for approval of certain
extraordinary transactions and/or certain amendments to the
Articles of Incorporation was not approved by the following vote:
<TABLE>
<S> <C>
For 7,606,785
Against 4,261,928
Abstain 2,449,108
</TABLE>
5. Proposal to amend the Code of Regulations to make the Ohio Control
Share Acquisition Statute inapplicable to the Company was approved
by the following vote:
<TABLE>
<S> <C>
For 10,046,382
Against 1,751,717
Abstain 2,519,722
</TABLE>
6. Ratification of the appointment of Arthur Andersen LLP as
independent auditors for the fiscal year ending December 31, 1997
was approved by the following vote:
<TABLE>
<S> <C>
For 14,077,743
Against 70,873
Abstain 169,205
</TABLE>
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.
8/12/97 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,567,624
<SECURITIES> 0
<RECEIVABLES> 56,305,723
<ALLOWANCES> 2,299,000
<INVENTORY> 40,672,481
<CURRENT-ASSETS> 101,698,803
<PP&E> 162,292,947
<DEPRECIATION> 74,940,266
<TOTAL-ASSETS> 215,113,124
<CURRENT-LIABILITIES> 32,760,562
<BONDS> 0
<COMMON> 10,680,646
0
0
<OTHER-SE> 160,476,155
<TOTAL-LIABILITY-AND-EQUITY> 215,113,124
<SALES> 162,973,718
<TOTAL-REVENUES> 162,973,718
<CGS> 112,214,281
<TOTAL-COSTS> 145,733,746
<OTHER-EXPENSES> 18,380,889
<LOSS-PROVISION> 2,299,000
<INTEREST-EXPENSE> 106,775
<INCOME-PRETAX> 17,239,972
<INCOME-TAX> 3,777,000
<INCOME-CONTINUING> 10,121,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,121,972
<EPS-PRIMARY> .6
<EPS-DILUTED> .6
</TABLE>
