<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 September 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.
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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
- --------------------------------------------------------------------------------
(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 October 31, 1998, the number of shares outstanding of the
issuer's Common Stock was:
18,325,212
==========
<PAGE> 2
-1-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1998 1997
- ----------- -------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $ 3,676,240 $ 6,297,726
Accounts receivable-less allowances
of $2,576,000 and $2,102,000,
respectively 58,422,817 54,940,671
Inventories
Finished and in-process products 39,303,354 35,427,355
Raw materials and supplies 9,660,909 7,627,878
------------ ------------
48,964,263 43,055,233
Prepaid expenses 2,162,298 3,132,997
------------ ------------
TOTAL CURRENT ASSETS 113,225,618 107,426,627
OTHER ASSETS
Excess of cost over fair value of net
assets of companies acquired 28,019,090 20,484,628
Patents and other intangible assets 2,185,461 2,427,633
Other 7,185,891 3,188,125
------------ ------------
37,390,442 26,100,386
PROPERTY, PLANT & EQUIPMENT, AT COST
Land 2,646,021 2,597,342
Buildings and leasehold improvements 49,198,840 42,043,716
Machinery and equipment 143,641,911 125,413,124
------------ ------------
195,486,772 170,054,182
Less allowances for depreciation and
amortization 89,783,107 79,503,273
------------ ------------
105,703,665 90,550,909
------------ ------------
$256,319,725 $224,077,922
============ ============
</TABLE>
<PAGE> 3
-2-
PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- ------------------------------------ ------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 14,428,435 $ 14,414,557
Accrued expenses
Employee compensation 11,415,550 12,014,848
Taxes, other than income taxes 1,641,083 1,162,642
Income taxes (1,737,306) 1,208,327
Other 13,090,714 9,996,832
Current portion of long-term debt 2,716,250 846,316
------------- -------------
TOTAL CURRENT LIABILITIES 41,554,726 39,643,522
LONG-TERM DEBT, less current portion 16,880,644 4,261,257
DEFERRED INCOME TAXES 3,947,992 3,496,196
SHAREHOLDERS' EQUITY
Serial Preferred Shares
(authorized 1,000,000) ----- -----
Common Shares, without par value
(authorized 30,000,000 shares;
outstanding 18,318,365 and
18,278,895, respectively) 11,598,581 11,573,496
Additional paid-in capital 133,977,328 133,359,303
Foreign currency translation
adjustment (446,119) (484,820)
Retained income 48,806,573 32,228,968
------------- -------------
193,936,363 176,676,947
------------- -------------
$ 256,319,725 $ 224,077,922
============= =============
</TABLE>
<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
-------------------------------- --------------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 92,196,199 $ 81,141,353 $281,501,941 $244,115,071
Costs and expenses
Cost of sales 61,714,821 57,072,104 185,577,303 169,286,385
Operating expenses 21,681,702 17,347,176 62,146,677 50,759,866
Interest expense, net 437,946 55,369 732,294 162,144
------------ ------------ ------------ ------------
Total costs & expenses 83,834,469 74,474,649 248,456,274 220,208,395
Income before
income taxes 8,361,730 6,666,704 33,045,667 23,906,676
Income taxes 3,444,000 2,734,000 13,540,000 9,852,000
------------ ------------ ------------ ------------
Net income $ 4,917,730 $ 3,932,704 $ 19,505,667 $ 14,054,676
============ ============ ============ ============
Net income per
Common Share* $ .27 $ .21 $ 1.07 $ .76
Dividends per
Common Share* $ .06 $ .05 $ .16 $ .14
Weighted average
number of Common
Shares outstanding* 18,311,241 18,496,143 18,297,332 18,529,742
</TABLE>
*Adjusted for a ten percent stock dividend in August, 1997.
<PAGE> 5
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
-----------------------------------------------------
<TABLE>
<CAPTION>
Sept. 30, Sept, 30,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 19,505,667 $ 14,054,676
Items not affecting use of cash
Depreciation 11,204,958 8,925,178
Amortization of excess of cost over fair
value of net assets of companies acquired 838,432 556,380
Amortization of other intangible assets 339,770 409,917
Cash flow provided by (used for) working capital
Accounts receivable 1,813,539 5,588,688
Inventories (1,947,377) (385,923)
Prepaid expenses 1,143,534 (730,245)
Accounts payable and accrued expenses (2,221,037) (3,165,769)
------------ ------------
Net cash provided by operating activities 30,677,486 25,252,902
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (18,267,610) (7,955,077)
Additions to property, plant and
equipment, net (12,483,822) (18,868,810)
Other 289,475 168,441
------------ ------------
Net cash used for investing activities (30,461,957) (26,655,446)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) - net (552,063) 3,540,801
Cash dividends paid (2,928,062) (2,614,897)
Proceeds from issuance of common stock 725,797 596,308
Repurchase of common stock (82,687) (5,176,838)
------------ ------------
Net cash provided by (used for) financing activities (2,837,015) (3,654,626)
(DECREASE) INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS (2,621,486) (5,057,170)
CASH AND TEMPORARY CASH INVESTMENTS
JANUARY 1 6,297,726 5,600,349
------------ ------------
CASH AND TEMPORARY CASH INVESTMENTS
SEPTEMBER 30 $ 3,676,240 $ 543,179
============ ============
</TABLE>
<PAGE> 6
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 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 $19,505,667 19,505,667
Foreign Currency
Translation
Adjustment 38,701 38,701
------------
Comprehensive
Income $19,544,368
============
Common Stock
Issued 28,285 697,512
Purchases for
Treasury (3,200) (79,487)
Dividends (2,928,062)
----------------------------------------------------------
September 30, 1998 $11,598,581 $133,977,328 ($446,119) $48,806,573
==========================================================
</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 September 30, 1998, and the
results of operations and cash flows for the three months and the nine months
ended September 30, 1998 and 1997.
(2) Acquisitions
------------
Effective July 31, 1998, the Company acquired for cash all outstanding
shares of Sherwood Plastics, Inc. Sherwood Plastics is a rotational molding
manufacturer of transportation, medical, recreational and consumer products.
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 quarter ended June
30, 1998.
<PAGE> 8
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PART I - FINANCIAL INFORMATION
------------------------------
MYERS INDUSTRIES, INC.
----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(2) Acquisitions (Con't)
------------
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
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 $580,930 and
$197,064 for the three months ended September 30, 1998 and 1997, respectively.
Cash payments for interest expense were $1,587,712 and $397,848 for the nine
months ended September 30, 1998 and 1997, respectively. Cash payments for income
taxes were $5,199,443 and $4,901,731 for the three months ended September 30,
1998 and 1997, respectively. For the nine month period the payments for income
taxes were $16,664,083 for 1998 and $12,610,677 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
- ---------------------
For the quarter ended September 30, 1998 net sales increased 13.6
percent to a record $92.2 million as the Company experienced significant sales
gains in both of its business segments. Net sales in the Distribution segment
increased $3.3 million or 8.3 percent primarily resulting from higher unit
volume. In the Manufacturing segment sales increased $7.8 million or 18.7
percent reflecting increased unit volumes combined with the contribution of
acquired companies not included in the comparative prior year quarter. These
acquisitions accounted for approximately 48 percent of the total sales increase
for the quarter. Year-to-date net sales increased $37.4 million or 15.3 percent
based on sales increases of 9.7 percent in the Distribution segment and 19.7
percent in the Manufacturing segment.
Cost of sales for the quarter increased $4.6 million or 8.1 percent
reflecting the higher sales levels; however, gross profit as a percentage of
sales increased to 33.1 percent from 29.7 percent in the prior year. For the
nine months ended September 30, 1998 gross profit increased to 34.1 percent of
sales from 30.7 percent in the prior year. For both the quarter and
year-to-date periods this improvement in gross margin was primarily achieved in
the Manufacturing segment based on lower raw material costs and greater
utilization of plant capacity.
Operating expenses increased $4.3 million or 26.5 percent for the
quarter and $11.4 million or 22.4 percent year to date. These increases reflect
the additional operating costs of acquired companies combined with higher
selling costs resulting from the increased sales volume. Expressed as a
percentage of sales operating expenses were 23.5 percent for the quarter
compared to 21.4 percent in the prior year. This reduction in operating expense
leverage is due to additional spending for information systems along with the
impact of acquired companies.
Net interest expense increased to $437,946 for the quarter and $732,294
year to date compared with $55,369 and $162,144 in the prior year periods. This
increase reflects the higher borrowing levels resulting from business
acquisitions.
<PAGE> 10
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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 (con't)
The Company's effective tax rate for the quarter increased slightly to
41.2 percent from 41.0 percent in the prior year. This increase reflects the
impact of slightly higher tax rates experienced by foreign operations.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash provided by operating activities is the primary source of
liquidity and amounted to $30.7 million for the nine months ended September 30,
1998. Long-term debt increased by $12.6 million during the nine months of 1998
and debt as a percentage of total capitalization increased to 9.2 percent
compared to 3.0 percent at December 31, 1997. Working capital increased to $71.7
million at September 30, 1998 from $67.7 million at December 31, 1997.
Capital expenditures for the nine months ended September 30, 1998 were
$12.5 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
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PART II - OTHER INFORMATION
---------------------------
MYERS INDUSTRIES, INC.
----------------------
Item 4. 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.
11/4/98 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> SEP-30-1998
<CASH> 3,676,240
<SECURITIES> 0
<RECEIVABLES> 60,998,817
<ALLOWANCES> 2,576,000
<INVENTORY> 48,964,263
<CURRENT-ASSETS> 113,225,618
<PP&E> 195,486,772
<DEPRECIATION> 89,783,107
<TOTAL-ASSETS> 256,319,725
<CURRENT-LIABILITIES> 41,554,726
<BONDS> 0
0
0
<COMMON> 11,598,581
<OTHER-SE> 182,783,901
<TOTAL-LIABILITY-AND-EQUITY> 256,319,725
<SALES> 281,501,941
<TOTAL-REVENUES> 281,501,941
<CGS> 185,577,303
<TOTAL-COSTS> 248,456,274
<OTHER-EXPENSES> 62,146,677
<LOSS-PROVISION> 2,576,000
<INTEREST-EXPENSE> 732,294
<INCOME-PRETAX> 33,045,667
<INCOME-TAX> 13,540,000
<INCOME-CONTINUING> 19,505,667
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,505,667
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
