<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, 1998
------------------------------------
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, 1998, the number of shares outstanding of the issuer's
Common Stock was:
18,311,033
==========
<PAGE> 2
-1-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
- ------ --------------- ------------------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $5,208,306 $6,297,726
Accounts receivable-less allowances
of $2,397,000 and $2,102,000,
respectively 62,064,436 54,940,671
Inventories
Finished and in-process products 39,327,846 35,427,355
Raw materials and supplies 8,675,069 7,627,878
--------------- ------------------
48,002,915 43,055,233
Prepaid expenses 2,479,449 3,132,997
--------------- ------------------
TOTAL CURRENT ASSETS 117,755,106 107,426,627
OTHER ASSETS
Excess of cost over fair value of net
assets of companies acquired 24,255,958 20,484,628
Patents and other intangible assets 2,266,185 2,427,633
Other 7,064,569 3,188,125
--------------- ------------------
33,586,712 26,100,386
PROPERTY, PLANT & EQUIPMENT, AT COST
Land 2,613,503 2,597,342
Buildings and leasehold improvements 48,114,474 42,043,716
Machinery and equipment 138,460,054 125,413,124
--------------- ------------------
189,188,031 170,054,182
Less allowances for depreciation and
amortization 85,913,103 79,503,273
--------------- ------------------
103,274,928 90,550,909
--------------- ------------------
$254,616,746 $224,077,922
=============== ==================
</TABLE>
<PAGE> 3
-2-
PART I FINANCIAL INFORMATION
----------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- ------------------------------------ --------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 14,720,075 $ 14,414,557
Accrued expenses
Employee compensation 10,826,345 12,014,848
Taxes, other than income taxes 1,623,366 1,162,642
Income taxes 30,614 1,208,327
Other 12,823,915 9,996,832
Current portion of long-term debt 1,934,108 846,316
--------------- --------------
TOTAL CURRENT LIABILITIES 41,958,423 39,643,522
LONG-TERM DEBIT, less current portion 19,031,507 4,261,257
DEFERRED INCOME TAXES 4,126,534 3,496,196
SHAREHOLDERS' EQUITY
Serial Preferred Shares
(authorized 1,000,000) -- --
Common Shares, without par value
(authorized 30,000,000 shares;
outstanding 18,301,247 and
18,278,895, respectively) 11,587,722 11,573,496
Additional paid-in capital 133,695,934 133,359,303
Foreign currency translation
adjustment (771,076) (484,820)
Retained income 44,987,702 32,228,968
--------------- --------------
189,500,282 176,676,947
--------------- --------------
$254,616,746 $224,077,922
=============== ==============
</TABLE>
<PAGE> 4
-3-
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
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $101,114,576 $ 86,175,097 $189,305,742 $162,973,718
Costs and expenses
Cost of sales 66,287,070 59,502,875 123,862,482 112,214,281
Operating expenses 21,830,293 17,482,144 40,464,975 33,412,690
Interest, net 161,607 99,609 294,348 106,775
------------ ------------ ------------ ------------
Total costs & expenses 88,278,970 77,084,628 164,621,805 145,733,746
Income before
income taxes 12,835,606 9,090,469 24,683,937 17,239,972
Income taxes 5,238,000 3,777,000 10,096,000 7,118,000
------------ ------------ ------------ ------------
Net income $ 7,597,606 $ 5,313,469 $ 14,587,937 $ 10,121,972
============ ============ ============ ============
Net income per
Common Share $ .42 $ .29 $ .80 $ .55
Dividends per
Common Share $ .05 $ .045 $ .10 $ .09
Weighted average
number of Common
Shares outstanding 18,296,586 18,560,526 18,289,943 18,554,181
</TABLE>
- -------------------------
<PAGE> 5
-3-
PART 1 - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
-----------------------------------------------
<TABLE>
<CAPTION>
June 30, June 30,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,587,937 $ 10,121,972
Items not affecting use of cash
Depreciation 7,414,491 5,915,506
Amortization of excess of cost over
fair value of net assets of companies
acquired 530,446 319,464
Amortization of other intangible assets 226,715 253,843
Cash flow provided by (used for) working capital
Accounts receivable (2,662,420) 4,129,576
Inventories (1,486,097) (417,566)
Prepaid expenses 779,963 (2,209,722)
Accounts payable and accrued expenses (493,684) (4,233,847)
------------ ------------
Net cash provided by operating activities 18,897,351 13,879,226
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (13,088,119) ( 7,955,077)
Additions to property, plant and
equipment, net (7,502,995) (11,885,656)
Other 91,989 417,021
------------ ------------
Net cash used for investing activities (20,499,125) (19,423,712)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) - net 1,990,700 2,837,859
Cash dividends paid (1,829,203) (1,685,891)
Proceeds from issuance of common stock 433,544 359,793
Repurchase of common stock (82,687) 0
------------ ------------
Net cash provided by (used for) financing activities 512,354 1,511,761
(DECREASE) INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS (1,089,420) (4,032,725)
CASH AND TEMPORARY CASH INVESTMENTS
JANUARY 1 6,297,726 5,600,349
------------ ------------
CASH AND TEMPORARY CASH INVESTMENTS
JUNE 30 $ 5,208,306 $ 1,567,624
============ ============
</TABLE>
<PAGE> 6
-5-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
--------------------------------------
<TABLE>
<CAPTION>
Foreign
Additional Currency
Comprehensive Common Paid-In Translation Retained
Income Stock Capital Adjustment Income
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1997 $11,573,496 $133,359,303 ($484,820) $32,228,968
Net Income $14,587,937 14,587,937
Foreign Currency
Translation
Adjustment (286,256) (286,256)
------------
Comprehensive
Income $14,301,681
============
Common Stock
Issued 17,426 416,118
Purchases for
Treasury (3,200) (79,487)
Dividends (1,829,203)
------------------------------------------------------------------
June 30, 1998 $11,587,722 $133,695,934 ($771,076) $44,987,702
==================================================================
</TABLE>
<PAGE> 7
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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, 1998, and
the results of operations and cash flows for the three months and the six
months ended June 30, 1998 and 1997.
(2) Acquisitions
------------
Effective January 2, 1998, the Company acquired for cash all
outstanding shares of A/S E. Damberg Group, a manufacturer of plastic and
metal storage systems headquartered in Nykobing Falster, Denmark. Known by its
principal brand name, raaco, it produces products for both industrial and
consumer markets throughout Scandinavia and the European Common Market. The
Stock Purchase Agreement provides for payment of additional consideration
contingent upon the earnings of raaco during the 48 month period ending
December 31, 2001.
On April 25, 1997, the Company acquired substantially all of the
assets of Molded Solutions, Inc., a manufacturer of custom engineered molded
rubber products. As provided for in the Asset Purchase Agreement, an
additional payment, which was contingent upon the earnings of Molded
Solutions during the 12 month period ending April 25, 1998, was paid during
the second quarter.
These acquisitions have been accounted for using the purchase method
and, accordingly, the results of operations for the acquired businesses have
been included in the Company's consolidated financial statements from their
<PAGE> 8
-7-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(2) Acquisitions (Con't)
------------
respective dates of acquisition. Consolidated pro forma sales, net income and
net income per share, would not have been materially different from the
reported amounts for all periods presented. The purchase price allocations have
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 to 30 years.
(3) Net Income Per Share
--------------------
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 "primary" and "fully diluted" earnings per
share with "basic" and "diluted" earnings per share.
Basic net income per share on the Condensed Statements of Consolidated
Income, is determined on the basis of the weighted average number of Common
Shares outstanding during the period. The restatement of prior periods, as
required by FASB 128, did not effect the earnings per share amounts previously
reported and, for all periods shown, basic and diluted earnings per share are
identical. Prior year per share data has been adjusted for the ten percent stock
dividend distributed in August 1997.
(4) Supplemental Disclosure of Cash Flow Information
------------------------------------------------
The Company made cash payments for interest expense of $556,795 and
$55,582 for the three months ended June 30, 1998 and 1997, respectively. Cash
payments for interest expense were $1,006,781 and $200,784 for the six months
ended June 30, 1998 and 1997, respectively. Cash payments for income taxes were
$9,793,026 and $6,687,748 for the three months ended June 30, 1998 and 1997,
respectively. For the six month period the payments for income taxes were
$11,464,640 for 1998 and $7,708,947 for 1997.
<PAGE> 9
-8-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Net sales for the three months ended June 30, 1998 increased $14.9
million or 17.3 percent and $26.3 million or 16.2 percent for the six month
period as the Company experienced significant improvements in both of its
business segments. For both the quarter and year to date periods, approximately
42 percent of the sales increase was due to acquired companies not included in
the comparative prior year periods. The remaining increase in sales was
primarily the result of higher unit volumes experienced in both the
Manufacturing and Distribution business segments.
Cost of sales increased $6.8 million or 11.4 percent for the three
month period and $11.6 million or 10.4 percent for the six month period ended
June 30, 1998 reflecting the higher sales level; however, gross profit as a
percentage of sales improved from 31.0 percent to 34.4 percent for the quarter
and from 31.1 percent to 34.6 percent for the six month period. The gross
margin improvement was primarily achieved in the Manufacturing segment
reflecting lower raw material costs and greater utilization of plant capacity.
Operating expenses increased $4.3 million or 24.9 percent for the
quarter and $7.0 million or 21.1 percent year to date. These increases reflect
the additional operating costs of acquired companies as well as costs associated
with the increase in sales. Expressed as a percentage of sales operating
expenses were 21.6 percent for the quarter ended June 30, 1998 compared with
20.3 percent in the prior year and 21.4 percent for the six month period
compared with 20.5 percent in the prior year. This decrease in operating expense
leverage is due to additional spending for sales training and systems in the
Distribution segment along with the impact of acquired companies.
Net interest expense increased to $161,609 for the quarter ended June
30, 1998 from $99,609 in the prior year. Net interest expense increased to
$294,350 for the six months ended June 30, 1998 from $106,775 for the prior
year. This increase reflects the higher borrowing levels resulting from business
acquisitions but had no material impact on the Company's financial results.
<PAGE> 10
-9-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash provided by operating activities is the primary source of
liquidity and amounted to $18.9 million for the six months ended June 30, 1998.
Long-term debt increased by $15.9 million since December 31, 1997 primarily due
to debt acquired and financing related to the acquisition of raaco. Debt as a
percentage of total capitalization increased to 10 percent compared to 3 percent
at December 31, 1997. Working capital increased to $75.8 million at June 30,
1998 from $67.7 million at December 31, 1997.
Capital expenditures for the six months ended June 30, 1998 were $7.5
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> 11
-10-
PART II - OTHER INFORMATION
---------------------------
MYERS INDUSTRIES, INC.
----------------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting Shareholders was held on April 30, 1998 and the
following matters were voted on at that meeting.
1. The election of nine Directors were voted upon. All of the
Directors nominated were elected. The results of this voting are
as follows:
Votes Votes
Name of Director For Withheld
Stephen E. Myers 14,492,038 118,049
Milton I. Wiskind 14,466,654 143,433
Edwin P. Schrank 14,486,656 123,431
Karl S. Hay 14,400,969 209,118
Richard P. Johnston 14,489,288 120,799
Richard Osborne 14,479,276 130,811
Jon H. Outcalt 13,796,372 813,715
Samuel Salem 14,467,762 142,325
Keith A. Brown 14,479,122 130,965
2. Proposal to amend the Myers Industries, Inc. Employee Stock
Purchase Plan was approved by the following vote:
For 14,397,742
Against 142,958
Abstain 69,387
3. Ratification of the appointment of Arthur Andersen LLP as
Independent auditors for the fiscal year ending
December 31, 1998 was approved by the following vote:
For 14,565,593
Against 16,763
Abstain 27,731
<PAGE> 12
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PART II - OTHER INFORMATION
---------------------------
MYERS INDUSTRIES, INC.
----------------------
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.
August 11, 1998 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> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,208,306
<SECURITIES> 0
<RECEIVABLES> 64,461,436
<ALLOWANCES> 2,397,000
<INVENTORY> 48,002,915
<CURRENT-ASSETS> 117,755,106
<PP&E> 189,188,031
<DEPRECIATION> 85,913,103
<TOTAL-ASSETS> 254,616,746
<CURRENT-LIABILITIES> 41,958,423
<BONDS> 0
0
0
<COMMON> 11,587,722
<OTHER-SE> 177,912,560
<TOTAL-LIABILITY-AND-EQUITY> 254,616,746
<SALES> 189,305,742
<TOTAL-REVENUES> 189,305,742
<CGS> 123,862,482
<TOTAL-COSTS> 164,621,805
<OTHER-EXPENSES> 40,464,975
<LOSS-PROVISION> 2,397,000
<INTEREST-EXPENSE> 294,348
<INCOME-PRETAX> 24,683,937
<INCOME-TAX> 10,960,000
<INCOME-CONTINUING> 14,587,937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,597,606
<EPS-PRIMARY> 0.8
<EPS-DILUTED> 0.8
</TABLE>
