<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
COMMISSION FILE NUMBER 1-8524
MYERS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
OHIO 34-0778636
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1293 S. MAIN STREET, AKRON, OHIO 44301 (330) 253-5592
(Address of Principal Executive Offices) (Zip Code) (Telephone Number)
SECURITIES REGISTERED PURSUANT TO NAME OF EACH EXCHANGE
SECTION 12(b) OF THE ACT: ON WHICH REGISTERED:
Common Stock, Without Par Value American Stock Exchange
(Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least 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. [ ]
State the approximate aggregate market value of the voting stock held by
non-affiliates of the registrant as of February 26, 1999: $262,657,910. Indicate
the number of shares outstanding of registrant's common stock as of February 26,
1999: 18,357,869 Shares of Common Stock, without par value.
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<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of Registrant's Notice of 1999 Annual Meeting and Proxy Statement,
dated March 19, 1999, in Part III (Items 10, 11, 12 and 13)
CROSS REFERENCE SHEET
PURSUANT TO FORM 10-K GENERAL INSTRUCTION G(4)
<TABLE>
<CAPTION>
PART/ITEM FORM 10-K HEADING REFERENCE MATERIAL
- --------- ----------------- ------------------
<C> <S> <C>
III/10 Directors and Executive Officers of the Registrant....... Proxy Statement(1)
pages 3 through 7
III/11 Executive Compensation................................... Proxy Statement
pages 8 through 12
III/12 Security Ownership of Certain Beneficial Owners and
Management............................................... Proxy Statement
pages 3 through 7,
page 10, and page 15
III/13 Certain Relationships and Related Transactions........... Proxy Statement
page 7
</TABLE>
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(1) Registrant's Notice of 1999 Annual Meeting of Shareholders and Proxy
Statement
<PAGE> 3
PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Myers Industries, Inc. (Company) has completed the most successful year in
the Company's history. Net sales, net income and net income per share were all
at record levels for both the fourth quarter and the year ended December 31,
1998.
Net sales for the fourth quarter were $110.5 million, an increase of 16
percent from the $95.5 million reported in the prior year. Net income for the
quarter was $9.2 million or $.50 per share, an increase of 11 percent from the
$8.3 million and $.45 per share reported in 1997.
For the full year, net sales were up 16 percent to $392.0 million with net
income increasing 28 percent to $28.7 million and net income per share
increasing 30 percent to $1.57. The Company reported record results for 1998 in
both of its business segments. During the year, the Company invested more than
$19 million in capital additions, primarily to increase efficiency and capacity
in its manufacturing facilities.
RECENT DEVELOPMENTS
On December 3, 1998 the Company announced it had entered into a definitive
agreement to acquire the plastic material handling division of Sommer Allibert,
including 100 percent of the membership interests of Allibert-Contico, LLC, a
joint venture between Sommer Allibert and Contico International, Inc. On
February 4, 1999 the acquisition transactions were completed with an expected
total purchase price of approximately $150 million (not including the assumption
of debt.) The acquired businesses have manufacturing facilities in France,
Spain, the United Kingdom and the United States. Collectively the acquired
businesses had sales of approximately $140 million in 1997 primarily in Western
Europe and North America. The acquisitions will significantly increase the
Company's international presence, broaden existing product lines and provide a
substantial increase in manufacturing capacity and market share. The Company
does not expect the acquisition to have a material impact on 1999 earnings,
however, it is expected to be accretive thereafter. The acquisition was financed
through a new $250 million multi-currency revolving credit and term loan
facility which the Company entered into on February 3, 1999. Initial borrowings
under the new loan agreement were used to fund the acquisition, retire existing
debt and for general corporate purposes.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The response to this section of Item 1 is contained in the Industry
Segments footnote of the Notes to Consolidated Financial Statements under Item 8
of this report.
(c) DESCRIPTION OF BUSINESS
The Company conducts its business activities in two distinct segments:
manufacturing of polymer and metal products ("the Manufacturing business") and
distribution of aftermarket repair products ("the Distribution business"). The
Company believes it is one of the largest manufacturers of plastic and metal
storage systems in the United States and has the largest nationwide distribution
network supplying the tire servicing and automotive underbody repair industries.
The Company's Manufacturing business designs, manufactures and markets
reusable plastic storage systems for use in distribution and material handling,
and other plastic and metal products for storage, assembly and material handling
applications. The Company also manufactures and sells molded rubber products and
other materials used primarily in the tire and tire repair industries and for
various other uses including OEM automotive and construction applications.
In its Distribution business, the Company is engaged in the nationwide
distribution of equipment, tools and supplies used for tire servicing and
automotive underbody repair.
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MANUFACTURING BUSINESS
The Company markets reusable plastic containers under the brand names
NesTier(R), Akro-Bins(R), Buckhorn(R), and raaco(R). These reusable plastic
containers are utilized in industrial applications including the distribution of
food items, such as poultry, meat and baked goods, and the distribution of
non-food items such as apparel, electronic, automotive, and industrial
components, health and beauty aids and hardware. Reusable containers are also
used for storage and handling in manufacturing plants and for agricultural
products. Other products sold to the industrial and commercial market include
tote boxes, various styles of bins, tubs, straight-walled boxes, and a line of
modular cabinets for small parts storage and organization. The Company's
products are sold throughout the United States, Canada and Europe by a direct
sales force, independent dealers and through independent representatives.
The Company's consumer products include the Keepbox(R) line of household
storage containers, plastic tool boxes and other products to organize the home
workshop, plastic containers to facilitate consumer recycling, and a line of
plastic pots, planters and urns sold to consumers through lawn and garden
retailers and other similar specialty outlets. Consumer products are marketed
nationally to a variety of customers including mass-merchandisers, such as
Target(R) and Wal-Mart,(R) and major department stores and hardware chains,
warehouse outlets and specialty shops. Products are mainly marketed under the
Akro-Mils(R) name and other registered trade names, and to a lesser extent,
under private label arrangements.
The Company designs, manufactures, and markets molded rubber products, such
as air intake hoses, rubber boots, mounts, and hood hold-down latches for
diesel-powered vehicles and equipment used in the transportation, construction
and agricultural industries. It also manufactures molded rubber products, rubber
adhesives and materials used primarily in the tire retreading and repair
industries, as well as products used in hydroelectric dams, locks and other
water works systems. The Company has utilized its manufacturing systems and
expertise to custom compound and calendar rubber materials to meet specific
customer needs for a growing and diverse customer base. These products are sold
nationally and internationally to manufacturers, construction companies and
wholesale distributors, including the Distribution business, by a direct sales
force and through independent sales representatives.
The Company is continuously engaged in the refinement of its existing
product lines and the development of new products. A large portion of the
current products offered by the Company have been developed in the last five
years.
The Company's Manufacturing business is dependent upon outside suppliers
for raw materials, principally polyethylene, polypropylene, polystyrene and
synthetic and natural rubber. The Company believes that the loss of any one
supplier or group of suppliers would not materially adversely affect its
business, since in most instances identical or similar materials can be obtained
readily from other suppliers.
DISTRIBUTION BUSINESS
The Company's Distribution business is conducted primarily by the Myers
Tire Supply division. Products distributed by Myers Tire Supply include air
compressors, mechanic's hand tools, tire changers, tire display and storage
equipment, valves, tire balancing and wheel alignment equipment, curing rims and
presses, retread presses and tire repair materials for the retreading industry.
The Company believes it is the largest nationwide distributor supplying such
products. The Company's customers include independent tire dealers, tire
retreaders, tire service centers, automotive supply chains and rubber companies.
Myers Tire Supply's domestic distribution system includes 42 owned branch
warehouse distributors located in major cities in 31 states. Each branch
services customers in an assigned territory, sells all products of the division,
and operates like a stand-alone business with the branch manager bearing
profit/loss, inventory and credit responsibilities. Internationally, this
business has three wholly owned warehouse distributors located in Canada and El
Salvador and owns an interest in several other foreign warehouse distributors.
Myers Tire Supply supplies its domestic and international distribution
facilities from its main distribution center. This distribution center stocks
approximately 10,000 items which are purchased from numerous suppliers,
including certain of the Company's manufacturing businesses. The Company's
extensive national
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distribution network enables it to work closely with manufacturers in the
development and distribution of new products.
COMPETITION
Competition in the Manufacturing business is substantial and varied in form
and size from manufacturers of similar products and of other products which can
be readily substituted for those produced by the Company. Competition in the
Distribution business is generally from local and regional businesses.
EMPLOYEES
As of December 31, 1998 the Company had a total of 2,503 full-time and
part-time employees. Of these employees, 1,885 were engaged in the Manufacturing
business and 618 were employed in the Distribution business. Approximately 11%
of the Company's employees are members of unions. The Company believes it has a
good relationship with its employees.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
The response to this section of Item 1 is contained in the Industry
Segments footnote of the Notes to Consolidated Financial Statements under Item 8
of this Report.
ITEM 2. PROPERTIES
The following table sets forth by segment certain information with respect
to properties owned by the Registrant:
DISTRIBUTION OF AFTERMARKET REPAIR PRODUCTS AND SERVICES:
<TABLE>
<CAPTION>
APPROXIMATE
FLOOR SPACE APPROXIMATE
(SQUARE LAND AREA
LOCATION FEET) (ACRES) USE
-------- ----------- ----------- ---
<S> <C> <C> <C>
Akron, Ohio............................ 129,000 8 Executive offices and warehousing
Akron, Ohio............................ 60,000 5 Warehousing
Akron, Ohio............................ 31,000 2 Warehousing
Pomona, California..................... 17,700 1 Sales and distribution
Englewood, Colorado.................... 9,500 1 Sales and distribution
San Antonio, Texas..................... 4,500 1 Sales and distribution
Phoenix, Arizona....................... 8,200 1 Sales and distribution
Akron, Ohio............................ 8,000 1 Leased to non-affiliated party
Houston, Texas......................... 7,900 1 Sales and distribution
Indianapolis, Indiana.................. 7,800 2 Sales and distribution
Cincinnati, Ohio....................... 7,500 1 Sales and distribution
York, Pennsylvania..................... 7,400 3 Sales and distribution
Atlanta, Georgia....................... 7,000 1 Sales and distribution
Minneapolis, Minnesota................. 5,500 1 Sales and distribution
Charlotte, North Carolina.............. 5,100 1 Sales and distribution
Syracuse, New York..................... 4,800 1 Sales and distribution
Franklin Park, Illinois................ 4,400 1 Sales and distribution
</TABLE>
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<TABLE>
<CAPTION>
POLYMER AND METAL PRODUCTS:
APPROXIMATE
FLOOR SPACE APPROXIMATE
(SQUARE LAND AREA
LOCATION FEET) (ACRES) USE
- -------- ----------- ----------- ---
<S> <C> <C> <C>
Nykobing, Falster, Denmark............. 227,000 68 Manufacturing and distribution
Dawson Springs, Kentucky............... 209,000 36 Manufacturing and distribution
Wadsworth, Ohio........................ 197,000 23 Manufacturing and distribution
Hannibal, Missouri..................... 196,000 10 Manufacturing and distribution
Bluffton, Indiana...................... 175,000 17 Manufacturing and distribution
Roanoke Rapids, North Carolina......... 172,000 20 Manufacturing and distribution
Bristol, Indiana....................... 139,000 12 Manufacturing and distribution
Akron, Ohio............................ 121,000 17 Manufacturing and distribution
Shelbyville, Kentucky.................. 160,000 8 Manufacturing and distribution
Dayton, Ohio........................... 85,000 5 Manufacturing and distribution
Goddard, Kansas........................ 62,000 7 Manufacturing and distribution
Fostoria, Ohio......................... 50,000 3 Manufacturing and distribution
Akron, Ohio............................ 49,000 6 Manufacturing and distribution
Ontario, California.................... 40,000 2 Distribution and warehousing
Mebane, North Carolina................. 30,000 5 Manufacturing and distribution
</TABLE>
The following table sets forth by segment certain information with respect
to facilities leased by the Registrant:
POLYMER AND METAL PRODUCTS:
<TABLE>
<CAPTION>
APPROXIMATE
FLOOR SPACE EXPIRATION DATE
(SQUARE OF LEASE AND
LOCATION FEET) OPTION PERIOD (IF ANY) USE
- -------- ----------- ---------------------- ---
<S> <C> <C> <C>
Brampton, Ontario, Canada... 43,000 September 30, 2005 Sales and distribution
Milford, Ohio............... 22,000 August 31, 2001 Sales and administrative
Stanton, Harcourt,
England................... 12,000 December 31, 2001 Warehousing and distribution
</TABLE>
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The Registrant also leases distribution facilities in 32 locations
throughout the United States and Canada which, in the aggregate, amount to
approximately 167,000 square feet of warehouse and office space. All of these
locations are used by the distribution of aftermarket repair products and
services segment.
The Registrant believes that all of its properties, machinery and equipment
generally are well maintained and adequate for the purposes for which they are
used.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings other than ordinary routine
litigation incidental to the Registrant's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 1998, there
were no matters submitted to a vote of security holders.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information concerning the executive officers of
the Registrant. Executive officers are elected annually by the Board of
Directors and serve at the pleasure of the Board.
<TABLE>
<CAPTION>
YEARS AS
NAME AGE EXECUTIVE OFFICER TITLE
- ---- --- ----------------- -----
<S> <C> <C> <C>
Stephen E. Myers................... 55 26 President and Chief Executive Officer
Milton I. Wiskind.................. 73 27 Senior Vice President and Secretary
Gregory J. Stodnick................ 56 19 Vice President -- Finance
</TABLE>
Each executive officer has been principally employed in the capacities
shown or similar ones with the Registrant for over the past five years.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Registrant's Directors, certain of its executive officers and persons who own
more than ten percent of its Common Stock ("Insiders") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the American Stock Exchange, Inc., and to furnish the Company with copies of
all such forms they file. The Company understands from the information provided
to it by the Insiders that they adhered to all filing requirements.
5
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the American Stock Exchange (ticker
symbol MYE). The approximate number of record holders at December 31, 1998 was
2,000. High and low stock prices and dividends for the last two years were:
<TABLE>
<CAPTION>
SALES PRICE
1998 -------------- DIVIDENDS
QUARTER ENDED HIGH LOW PAID
- ------------- ---- --- ---------
<S> <C> <C> <C>
MARCH 31.......................................... 21.25 16.38 .05
JUNE 30........................................... 25.00 19.87 .05
SEPTEMBER 30...................................... 26.75 19.87 .06
DECEMBER 31....................................... 28.69 20.06 .06
</TABLE>
<TABLE>
<CAPTION>
SALES PRICE
1997 -------------- DIVIDENDS
QUARTER ENDED HIGH LOW PAID
- ------------- ---- --- ---------
<S> <C> <C> <C>
March 31.......................................... 15.63 13.63 .04
June 30........................................... 16.25 14.63 .04
September 30...................................... 16.13 14.63 .05
December 31....................................... 18.75 16.25 .05
</TABLE>
6
<PAGE> 9
ITEM 6. SELECTED FINANCIAL DATA
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
FIVE-YEAR SUMMARY
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATIONS FOR THE YEAR
Net sales........................ $392,019,900 $339,625,585 $320,943,771 $300,699,109 $274,054,163
Cost and expenses
Cost of sales.................. 256,506,103 232,376,615 219,152,386 206,050,902 183,890,614
Selling........................ 47,959,466 39,322,295 36,170,478 33,973,656 32,238,245
General and Administrative..... 38,181,368 29,613,322 29,720,351 32,834,285 27,258,865
Interest -- net................ 887,873 247,570 285,290 784,427 620,276
------------ ------------ ------------ ------------ ------------
343,534,810 301,559,802 285,328,505 273,643,270 244,008,000
------------ ------------ ------------ ------------ ------------
Income before income taxes..... 48,485,090 38,065,783 35,615,266 27,055,839 30,046,163
Income taxes................... 19,806,000 15,727,000 14,612,000 11,087,000 12,215,000
------------ ------------ ------------ ------------ ------------
Net Income..................... $ 28,679,090 $ 22,338,783 $ 21,003,266 $ 15,968,839 $ 17,831,163
------------ ------------ ------------ ------------ ------------
Net income per share*.......... $ 1.57 $ 1.21 $ 1.13 $ 0.86 $ 0.96
------------ ------------ ------------ ------------ ------------
FINANCIAL POSITION -- AT YEAR END
Total Assets................... $306,707,788 $224,077,922 $207,121,727 $193,603,873 $172,026,887
------------ ------------ ------------ ------------ ------------
Current assets................. 153,650,201 107,426,627 106,309,880 101,087,297 94,724,955
Current liabilities............ 51,233,510 39,643,522 36,853,013 32,372,026 34,093,593
------------ ------------ ------------ ------------ ------------
Working capital................ 102,416,691 67,783,105 69,456,867 68,715,271 60,631,362
Other assets................... 43,614,594 26,100,386 20,151,914 23,086,827 15,923,620
Property, plant and
equipment -- net............. 109,442,993 90,550,909 80,659,933 69,429,749 61,378,312
Less:
Long-term debt............... 48,832,240 4,261,257 4,569,396 13,335,191 4,154,646
Deferred income taxes........ 3,953,185 3,496,196 3,254,327 2,713,106 2,869,976
------------ ------------ ------------ ------------ ------------
SHAREHOLDERS' EQUITY............... $202,688,853 $176,676,947 $162,444,991 $145,183,550 $130,908,672
------------ ------------ ------------ ------------ ------------
COMMON SHARES OUTSTANDING*......... 18,338,061 18,278,895 18,539,982 18,596,621 18,513,111
------------ ------------ ------------ ------------ ------------
BOOK VALUE PER COMMON SHARE*....... $ 11.05 $ 9.67 $ 8.76 $ 7.81 $ 7.07
------------ ------------ ------------ ------------ ------------
OTHER DATA
Dividends paid................. $ 4,027,721 $ 3,529,921 $ 3,049,642 $ 2,577,154 $ 2,326,964
Dividends paid per Common
Share*....................... 0.22 0.18 0.16 0.14 0.13
------------ ------------ ------------ ------------ ------------
Average Common Shares
Outstanding during the
year......................... 18,304,802 18,471,084 18,619,178 18,558,502 18,513,418
============ ============ ============ ============ ============
</TABLE>
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* Adjusted for the ten percent stock dividend paid in August, 1997 and August,
1995 and five-for-four stock split distributed in August, 1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
1998 RESULTS OF OPERATIONS
Net sales for the year ended December 31, 1998 increased by $52.4 million
or 15 percent to a record $392.0 million. Sales in the Manufacturing segment
increased $39.3 million or 19 percent with approximately 70 percent of the
increase due to the inclusion of acquired businesses. The increase in sales of
the Company's existing Manufacturing businesses reflects primarily higher unit
volumes. Net sales in the Distribution
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segment increased $14.2 million or 10 percent as a result of higher unit
volumes. The Company experienced significant pressure on selling prices in both
of its business segments reflecting strong competition and the impact of lower
raw material costs.
Cost of sales increased $24.1 million or 10 percent reflecting the higher
sales level; however, gross profit as a percentage of sales increased to 34.6
percent in 1998 from 31.6 percent in the prior year. This improvement in gross
profit margin was primarily achieved in the Manufacturing segment based on lower
raw material costs and greater utilization of plant capacity.
Total operating expenses for 1998 increased $17.2 million or 25 percent to
$86.1 million. This increase reflects higher selling costs resulting from
greater sales volume and the additional operating costs of acquired companies.
Expressed as a percentage of sales, operating expenses were 22.0 percent in 1998
compared with 20.3 percent in the prior year. This reduction in operating
expense leverage is due to additional spending related to sales training and
education combined with the impact of acquired companies.
Net interest expense increased $640,303 due to higher borrowing levels
resulting from business acquisitions. Interest expense increased $1.8 million
based on the increase in average borrowings which was partially offset by an
increase in interest income of $1.2 million due to the existing financial
structure of acquired businesses.
The Company's effective tax rate decreased slightly to 40.8 percent form
41.3 percent.
1997 RESULTS OF OPERATIONS
Net sales for the year ended December 31, 1997 increased by $18.7 million
or 6 percent over the prior year. In 1997 the Company recorded increases and
record sales in both of its business segments. Sales in the Distribution segment
increased $11.0 million or 8 percent as a result of higher unit volumes. Sales
in the Manufacturing segment increased $7.7 million or 4 percent primarily due
to higher unit volumes and the inclusion of Molded Solutions' operations
subsequent to the April 25, 1997 acquisition. The Company experienced
significant competitive pricing pressures in both of its business segments
during 1997.
Cost of sales was $232.4 million in 1997 an increase of 6 percent compared
to $219.2 million in 1996. Gross profit increased $5.5 million to $107.2 million
based on the increase in sales. Gross profit as a percentage of sales dropped to
31.6 percent from 31.7 percent primarily due to higher raw material costs in the
Manufacturing segment.
Operating expenses in 1997 increased by $3.0 million or 5 percent as a
result of the increased sales volume. Operating expenses as a percent of sales
decreased to 20.3 percent from 20.5 percent in 1996 as a result of improved
leverage for general and administrative expenses which were virtually unchanged
at $29.6 million for 1997 compared with $29.7 million in 1996.
Net interest expense decreased 13 percent to $247,570 based on lower
average borrowings but had no material net impact on the Company's financial
results.
FINANCIAL CONDITION
In 1998, the Company generated cash from operating activities of $42.3
million compared to $36.2 million in 1997. Investments in property, plan and
equipment were $19.4 million and additional funds of $30.1 million were used to
make business acquisitions. At December 31, 1998, the Company had working
capital of $102.4 million and a current ratio of 3.0 to 1.
On February 3, 1999, the Company entered into a new $250 million loan
agreement with a group of banks which provides a $75 million term loan facility
and a $175 million multi-currency revolving credit facility. Borrowings under
the new loan agreement were used to retire most of the Company's existing debt
and fund the acquisition of Allibert Equipement. Funds available under the new
loan agreement combined with cash flows from operations will provide the
Company's primary source of future financing. During the next five years
management anticipates on-going capital expenditures in the range of $20 to $30
million per year. Management believes that it has sufficient financial resources
to meet anticipated business requirements in the
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foreseeable future, including capital expenditures, working capital and debt
service requirements and dividends.
YEAR 2000
The Company has conducted a review to identity potential Year 2000 issues
related to both information technology (IT) and non-information technology
(non-IT) matters. The Company has developed plans for each of its business units
to correct or replace existing IT systems where significant potential Year 2000
failures could occur. The majority of core business software utilized by the
Company was acquired from third parties. As of December 31, 1998, core Corporate
financial software is Year 2000 compliant, and core business software for the
business units is either Year 2000 compliant or has been upgraded, tested and is
ready for implementation. The Company is also in the process of verifying Year
2000 readiness of non-IT systems, including production equipment as well as
evaluating the status of key vendors and service providers to determine Year
2000 readiness and determine alternatives and contingency plan requirements. To
date, no material problems have been identified, and the Company is confident
that the Year 2000 issue will not create significant operational problems. To
date, the funds which have been spent on Year 2000 issues have not been material
and based on current assessments remaining expenses are not expected to be
material.
FORWARD LOOKING INFORMATION
Statements contained in this report concerning the Company's goals,
strategies, and expectations for business and financial results may be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are based on current indicators and
expectations. These statements involve a number of risks and uncertainties that
could cause actual results to differ materially from those expressed or implied
in the applicable statements. Such risks include, but are not limited to,
fluctuations in product demand, market acceptance, general economic conditions
in domestic and international markets, competition, difficulties in
manufacturing operations, raw material availability, and others.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and accompanying notes and the
reports of management and independent accountants follow Item 9 of this Report.
SUMMARIZED QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED) THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
QUARTER ENDED 1998 -------- ------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
NET SALES................ $88,191 $101,115 $92,196 $110,518 $392,020
GROSS PROFIT............. 30,616 34,827 30,481 39,590 135,514
NET INCOME............... 6,990 7,598 4,918 9,173 28,679
PER SHARE................ .38 .42 .27 .50 1.57
</TABLE>
<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
QUARTER ENDED 1997 -------- ------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Net Sales................ $76,799 $ 86,175 $81,141 $ 95,511 $339,626
Gross Profit............. 24,088 26,672 24,069 32,420 107,249
Net Income............... 4,809 5,313 3,933 8,284 22,339
Per Share................ .26 .29 .21 .45 1.21
</TABLE>
- ---------------
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited the accompanying statements of consolidated financial
position of Myers Industries, Inc. (an Ohio Corporation) and Subsidiaries as of
December 31, 1998 and 1997, and the related statements of consolidated income,
shareholders' equity and comprehensive income and cash flows for each of the
three years in the period ended December 31, 1998. 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 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 financial statements referred to above present fairly,
in all material respects, the financial position of Myers Industries, Inc. and
Subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
/s/ ARTHUR ANDERSEN LLP
Cleveland, Ohio,
February 9, 1999
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MYERS INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net sales....................................... $392,019,900 $339,625,585 $320,943,771
Cost of sales................................... 256,506,103 232,376,615 219,152,386
------------ ------------ ------------
Gross profit.................................. 135,513,797 107,248,970 101,791,385
------------ ------------ ------------
Operating expenses
Selling....................................... 47,959,466 39,322,295 36,170,478
General and administrative.................... 38,181,368 29,613,322 29,720,351
------------ ------------ ------------
86,140,834 68,935,617 65,890,829
------------ ------------ ------------
Operating income........................... 49,372,963 38,313,353 35,900,556
------------ ------------ ------------
Interest
Income........................................ (1,515,186) (348,746) (319,533)
Expense....................................... 2,403,059 596,316 604,823
------------ ------------ ------------
887,873 247,570 285,290
------------ ------------ ------------
Income before income taxes...................... 48,485,090 38,065,783 35,615,266
Income taxes.................................... 19,806,000 15,727,000 14,612,000
------------ ------------ ------------
Net income...................................... $ 28,679,090 $ 22,338,783 $ 21,003,266
------------ ------------ ------------
Net income per share............................ $ 1.57 $ 1.21 $ 1.13
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
11
<PAGE> 14
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
AS OF DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary cash investments....................... $ 34,832,151 $ 6,297,726
Accounts receivable -- less allowances of $2,396,000 and
$2,102,000 respectively................................ 62,855,111 54,940,671
Inventories
Finished and in-process products....................... 44,182,030 35,427,355
Raw materials and supplies............................. 9,236,913 7,627,878
------------ ------------
53,418,943 43,055,233
Prepaid expenses.......................................... 2,543,996 3,132,997
------------ ------------
TOTAL CURRENT ASSETS........................................ 153,650,201 107,426,627
OTHER ASSETS
Excess of cost over fair value of net assets of companies
acquired............................................... 37,481,612 20,484,628
Patents and other intangible assets....................... 2,104,327 2,427,633
Other..................................................... 4,028,655 3,188,125
------------ ------------
43,614,594 26,100,386
PROPERTY, PLANT AND EQUIPMENT, AT COST
Land...................................................... 2,854,905 2,597,342
Buildings and leasehold improvements...................... 53,484,959 42,043,716
Machinery and equipment................................... 147,405,559 125,413,124
------------ ------------
203,745,423 170,054,182
Less allowances for depreciation and amortization......... 94,302,430 79,503,273
------------ ------------
109,442,993 90,550,909
------------ ------------
$306,707,788 $224,077,922
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.......................................... $ 15,863,124 $ 14,414,557
Accrued expenses
Employee compensation and related items................ 13,094,384 12,014,848
Taxes, other than income taxes......................... 1,316,457 1,162,642
Income taxes........................................... 1,357,241 1,208,327
Other.................................................. 13,214,158 9,996,832
Current portion of long-term debt......................... 6,388,146 846,316
------------ ------------
TOTAL CURRENT LIABILITIES................................... 51,233,510 39,643,522
LONG-TERM DEBT, LESS CURRENT PORTION........................ 48,832,240 4,261,257
DEFERRED INCOME TAXES....................................... 3,953,185 3,496,196
SHAREHOLDERS' EQUITY
Serial Preferred Shares (authorized 1,000,000 shares)..... -0- -0-
Common Shares, without par value (authorized 30,000,000
shares; outstanding 18,338,061 and 18,278,895 shares,
respectively).......................................... 11,610,996 11,573,496
Additional paid-in capital................................ 134,280,522 133,359,303
Accumulated other comprehensive income.................... (83,002) (484,820)
Retained income........................................... 56,880,337 32,228,968
------------ ------------
202,688,853 176,676,947
------------ ------------
$306,707,788 $224,077,922
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
12
<PAGE> 15
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ACCUMULATED
COMMON SHARES ADDITIONAL OTHER
------------------------ PAID-IN COMPREHENSIVE RETAINED COMPREHENSIVE
NUMBER AMOUNT CAPITAL INCOME INCOME INCOME
------ ------ ---------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996... 16,906,019 $10,014,186 $111,382,116 $(393,840) $ 24,181,088 $ -0-
Additions
Net income................. -0- -0- -0- -0- 21,003,266 21,003,266
Sales under option plans... 25,235 215,857 -0- -0- -0- -0-
Employees stock purchase
plan..................... 21,111 350,462 -0- -0- -0- -0-
Dividend reinvestment
plan..................... 8,764 145,995 -0- -0- -0- -0-
Foreign currency
translation.............. -0- -0- -0- 180,268 -0- 180,268
Deductions
Purchases for treasury..... (106,600) (66,786) (1,517,979) -0- -0- -0-
Dividends -- $.16 per
share.................... -0- -0- -0- -0- (3,049,642) -0-
---------- ----------- ------------ --------- ------------ -----------
BALANCE AT DECEMBER 31,
1996....................... 16,854,529 $10,659,714 $109,864,137 $(213,572) $ 42,134,712 $21,183,534
========== =========== ============ ========= ============ ===========
Additions
Net income................. -0- -0- -0- -0- 22,338,783 22,338,783
Sales under option plans... 32,204 24,902 357,976 -0- -0- -0-
Employees stock purchase
plan..................... 22,720 12,920 366,787 -0- -0- -0-
Dividend reinvestment
plan..................... 7,012 4,005 114,201 -0- -0- -0-
Deductions
Purchases for treasury..... (326,100) (208,704) (4,968,134) -0- -0- -0-
Dividends -- $.18 per
share.................... -0- -0- -0- -0- (3,529,921) -0-
10% stock dividend......... 1,688,530 1,080,659 27,624,336 -0- (28,714,606) -0-
Foreign currency
translation.............. -0- -0- -0- (271,248) -0- (271,248)
---------- ----------- ------------ --------- ------------ -----------
BALANCE AT DECEMBER 31,
1997....................... 18,278,895 $11,573,496 $133,359,303 $(484,820) $ 32,228,968 $22,067,535
========== =========== ============ ========= ============ ===========
Additions
Net income................. -0- -0- -0- -0- 28,679,090 28,679,090
Sales under option plans... 37,144 23,608 450,602 -0- -0- -0-
Employees stock purchase
plan..................... 18,210 11,519 373,295 -0- -0- -0-
Dividend reinvestment
plan..................... 8,812 5,573 176,809 -0- -0- -0-
Foreign currency
translation adj.......... -0- -0- -0- 401,818 -0- 401,818
Deductions
Purchases for treasury..... (5,000) (3,200) (79,487) -0- -0- -0-
Dividends -- $.22 per
share.................... -0- -0- -0- -0- (4,027,721) -0-
---------- ----------- ------------ --------- ------------ -----------
BALANCE AT DECEMBER 31,
1998....................... 18,338,061 $11,610,996 $134,280,522 $ (83,002) $ 56,880,337 $29,080,908
========== =========== ============ ========= ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
13
<PAGE> 16
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income......................................... $ 28,679,090 $ 22,338,783 $ 21,003,266
Items not affecting use of cash
Depreciation.................................... 15,803,285 11,667,787 10,229,957
Amortization of excess of cost over fair value
of net assets of companies acquired........... 1,261,245 793,296 625,687
Amortization of other intangible assets......... 453,319 752,801 455,030
Deferred income taxes........................... 68,567 241,869 541,221
Cash flow provided by (used for) working capital
Accounts receivable............................. (796,995) 3,195,634 (5,103,490)
Inventories..................................... (5,138,339) (2,800,318) 1,419,395
Prepaid expenses................................ 794,952 (225,746) 604,299
Accounts payable and accrued expenses........... 1,128,406 235,850 4,937,322
------------ ------------ ------------
Net cash provided by operating activities....... 42,253,530 36,199,956 34,712,687
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment, net.... (19,401,795) (18,779,760) (21,460,141)
Acquisition of business, net of cash acquired...... (30,141,171) (7,955,077) 0
Other.............................................. 373,521 (455,917) 2,104,464
------------ ------------ ------------
Net cash used for investing activities.......... (49,169,445) (27,190,754) (19,355,677)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchases for treasury............................. (82,687) (5,176,838) (1,584,765)
Proceeds from issuance of common stock............. 1,041,406 880,791 712,314
Cash dividends paid................................ (4,027,721) (3,529,921) (3,049,642)
Borrowings (repayments) net........................ 38,519,342 (485,857) (9,222,130)
------------ ------------ ------------
Net cash provided by (used for) financing
activities.................................... 35,450,340 (8,311,825) (13,144,223)
------------ ------------ ------------
INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS...... 28,534,425 697,377 2,212,787
CASH AND TEMPORARY CASH INVESTMENTS
January 1.......................................... 6,297,726 5,600,349 3,387,562
------------ ------------ ------------
CASH AND TEMPORARY CASH INVESTMENTS
December 31........................................ $ 34,832,151 $ 6,297,726 $ 5,600,349
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for
Interest........................................ $ 2,151,885 $ 574,062 $ 737,416
Income taxes.................................... 20,154,032 15,857,230 15,387,482
</TABLE>
The accompanying notes are an integral part of these statements.
14
<PAGE> 17
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Myers
Industries, Inc. and all wholly owned subsidiaries (Company). Significant
intercompany accounts and transactions have been eliminated in consolidation.
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 disclosures at the
date of the financial statements and the reported amount of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
TRANSLATION OF FOREIGN CURRENCIES
All balance sheet accounts of consolidated foreign subsidiaries are
translated at the current exchange rate as of the end of the accounting period
and income statement items are translated at an average currency exchange rate.
The resulting translation adjustment is recorded as a separate component of
shareholders' equity and other comprehensive income.
FINANCIAL INSTRUMENTS
Temporary cash investments, all of which have an original maturity of
ninety days or less, are considered cash equivalents. Other financial
instruments, consisting of trade and notes receivable, and long-term debt, are
considered to have a fair value which approximates carrying value at December
31, 1998.
INVENTORIES
Inventories are stated at the lower of cost or market. For approximately 71
percent of its inventories, the Company uses the last-in, first-out (LIFO)
method of determining cost. All other inventories are valued at the first-in,
first-out (FIFO) method of determining cost.
If the FIFO method of inventory cost valuation had been used exclusively by
the Company, inventories would have been $4,716,000, $5,207,000, and $6,300,000
higher than reported at December 31, 1998, 1997 and 1996, respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost less accumulated
depreciation and amortization. The Company provides for depreciation and
amortization on the basis of annual rates expected to amortize the cost of such
assets over their estimated useful lives by the straight-line method.
REVENUE RECOGNITION
The Company recognizes revenue from sales when goods are shipped.
INCOME TAXES
Deferred income taxes are provided to recognize the timing differences
between financial statement and income tax reporting, principally for
depreciation and certain valuation allowances. Deferred taxes are not provided
on the unremitted earnings of foreign subsidiaries as the Company's intention is
to permanently reinvest these earnings in the operations of these subsidiaries.
If these earnings would be remitted in future years, the taxes due after
considering available foreign tax credits would not be material.
15
<PAGE> 18
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF COMPANIES ACQUIRED
This asset represents the excess of cost over the fair value of net assets
of companies acquired and is being amortized on a straight-line basis over
periods ranging from 15 to 40 years. Accumulated amortization at December 31,
1998 and 1997 was $5,526,000 and $4,335,000, respectively. Management, which
regularly evaluates its accounting for goodwill, considering primarily such
factors as current and historical profitability, along with discounted cash
flows, believes that the asset is realizable and the amortization periods are
still appropriate.
RESEARCH AND DEVELOPMENT
Research, engineering, testing and product development costs are charged to
current operations as incurred.
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 shares
with "basic" and "diluted" earnings per share.
Basic net income per share, as shown on the Statements on Consolidated
Income, is determined on the basis of the weighted average number of Common
Shares outstanding during the year. 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. During the year ended December 31, 1997, the Company paid a ten
percent stock dividend. All per share data has been adjusted for the stock
dividend.
ACQUISITIONS
During 1997 and 1998, the Company acquired substantially all of the assets
or shares of the entities described below. Each transaction was accounted for by
the purchase method of accounting, and, accordingly, the results of operations,
each of which was deemed immaterial, have been included in the Company's
consolidated financial statements since the respective acquisition dates.
On April 25, 1997, the Company acquired substantially all of the assets of
Molded Solutions, Inc., a manufacturer of custom engineered molded rubber
products.
On January 2, 1998, the Company acquired all of the outstanding shares of
raaco International, a Danish manufacturer of injection molded plastic material
handling products.
On July 31, 1998, the Company acquired all of the outstanding shares of
Sherwood Plastics. Inc., a manufacturer of custom engineered rotationally molded
plastic products.
On October 22, 1998, the Company acquired substantially all of the assets
of Kadon Corporation, a manufacturer of structural foam and injection molded
plastic material handling products.
The aggregate purchase price for these transactions approximates $37.4
million. The purchase price allocations were based on estimates with the excess
of purchase price over fair value of net assets acquired being amortized on a
straight-line basis over estimated lives of 15 to 30 years.
SUBSEQUENT EVENT
On February 4, 1999, the Company completed the acquisition of the shares of
Allibert Equipement, the plastic material handling division of Sommer Allibert,
S.A., a publicly traded French company for approximately $150 million (not
including the assumption of debt). Allibert Equipement has approximately 900
16
<PAGE> 19
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
employees, five manufacturing facilities in Europe and a North American
manufacturing facility. With 1997 annual sales of approximately $140 million,
Allibert Equipement extends the Company's reach to new markets, and solidifies
its leadership position in structural foam manufacturing within the North
American markets.
The acquisition was financed through a new multi-currency revolving credit
and term loan facility which increased the amount of credit available from $35
million to $250 million and extended the term to February, 2005.
The acquisition will be accounted for under the purchase method of
accounting in 1999. The purchase price will be allocated to the assets acquired
and liabilities assumed based upon their estimated fair values. Results of
Allibert Equipement will be included with those of the Company for periods
subsequent to the date of acquisition.
The excess of the purchase price over the net assets, which is expected to
approximate $100 million, will be amortized over a period not exceeding 40
years. The purchase price allocation will be determined during 1999 when
appraisals, other studies and additional information become available.
LONG-TERM DEBT AND CREDIT AGREEMENTS
Long-term debt at December 31, consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revolving credit agreement......................... $35,000,000 0
Industrial revenue bonds........................... 4,250,000 $4,500,000
Other.............................................. 15,970,386 607,573
----------- ----------
55,220,386 5,107,573
Less Current Portion............................... 6,388,146 846,316
----------- ----------
$48,832,240 $4,261,257
=========== ==========
</TABLE>
At December 31, 1998, the Company had a Revolving Credit Agreement which
enabled the Company to borrow up to $35 million at prime rate on a variable
basis, or on a short-term fixed basis at a rate based upon LIBOR or certificate
of deposits at the participating banks. The industrial revenue bonds mature in
2010 with interest rates at 3.30 percent. Other includes notes which mature in
various amounts through 2016 and bear a weighted average interest rate of 6.32
percent.
On February 3, 1999, the Company entered into a $250 million Loan Agreement
with a group of banks which provides a $75 million term loan facility and a $175
million multi-currency revolving credit facility. Borrowings under the new Loan
Agreement were used to retire the existing Revolving Credit Agreement, fund the
acquisition of Allibert Equipement (see Subsequent Event) and for general
corporate purposes. Interest is based on LIBOR or Euro LIBOR with an applicable
margin that varies depending on the Company's ratio of total funded debt to
earnings before interest, taxes, depreciation and amortization (EBITDA). The
interest rate on initial borrowings was 6.06 percent for the term loan and 5.35
percent for the revolving credit facility. In addition, the Company pays a
quarterly facility fee of 30 basis points in connection with the revolving
credit facility. The term loan facility requires the Company to make quarterly
principal payments beginning June 30, 1999. The Loan Agreement expires in
February 2005.
Maturities of long-term debt, adjusted to reflect payments under the new
Loan Agreement, for the five years ending December 31, 2003, are $1,855,000 in
1999; $8,000,000 in 2000, $12,000,000 in 2001, $12,000,000 in 2002 and
$16,000,000 in 2003.
17
<PAGE> 20
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The Loan Agreement and certain of the industrial revenue bond issues
contain customary covenants which include, among other things, maintenance of
minimum tangible net worth and restrictions on certain additional indebtedness
and requirements to maintain certain financial ratios.
LEASES
The Company and certain of its subsidiaries are committed under
non-cancelable operating leases involving certain facilities and equipment.
Aggregate rental expense for all leased assets was $2,845,000, $2,664,000 and
$2,361,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
Future minimum rental commitments for the next five years are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, COMMITMENT
- ----------------------- ----------
<S> <C>
1999........................................... $2,790,000
2000........................................... 2,059,000
2001........................................... 1,315,000
2002........................................... 619,000
2003........................................... 480,000
</TABLE>
RETIREMENT PLANS
The Company and certain of its subsidiaries have pension and profit sharing
plans covering substantially all of their employees. Two plans are defined
benefit plans with benefits primarily based upon a fixed amount for each year of
service. It is the Company's policy to fund pension costs accrued, which are at
least equal to the minimum required contribution as defined by the Employee
Retirement Income Security Act of 1974.
In accordance with FASB Statement No. 132 the following tables reflect the
re-statements of prior periods. For the Company's existing defined benefit
plans, the reconciliation of benefit obligations are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Benefit obligation at beginning of year................ $3,058,193 $2,914,705 $2,600,600
Service Cost......................................... 138,064 130,062 122,707
Interest Cost........................................ 223,907 197,685 187,703
Actuarial loss (gain)................................ 195,624 (49,117) 78,672
Benefits paid........................................ (140,463) (135,142) (74,977)
---------- ---------- ----------
Benefit obligation at end of year...................... $3,475,325 $3,058,193 $2,914,705
========== ========== ==========
</TABLE>
The following table reflects the change in fair value of plan assets:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Fair value of plan assets at beginning of year......... $3,581,525 $2,890,919 $2,647,493
Actual return on plan assets........................... 402,854 593,352 202,065
Company contribution................................... 77,116 246,695 135,403
Expenses paid.......................................... (19,073) (14,299) (19,065)
Benefits paid.......................................... (140,463) (135,142) (74,977)
---------- ---------- ----------
Fair value of plan assets at end of year............... $3,901,959 $3,581,525 $2,890,919
========== ========== ==========
</TABLE>
18
<PAGE> 21
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table reflects the funded status of the plans at December 31,
1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Funded Status............................................... $426,634 $523,333
Unrecognized net (asset) obligation......................... 9,632 16,129
Unrecognized prior service cost............................. 178,242 198,688
Unrecognized net (gain)/loss................................ (459,565) (554,593)
-------- --------
Prepaid (accrued) benefit cost.............................. $154,943 $183,557
======== ========
</TABLE>
Assumptions used for these plans were as follows: discount rate, 7.0
percent; rate of return on plan assets, 8.0 percent. Future benefit increases
were not considered as there is no substantive commitment to increase benefits.
A profit sharing plan is maintained for employees, not covered under
defined benefit plans, who have met eligibility service requirements. The amount
to be contributed by the Company under the profit sharing plan is determined at
the discretion of the Board of Directors. During 1997, the Company established a
Supplemental Executive Retirement Plan (SERP) which will provide participating
senior executives with retirement benefits in addition to amounts payable under
the profit sharing plan. The SERP is unfunded apart from the general assets of
the Company.
The aggregate cost of all retirement and profit sharing plans reflected in
the accompanying statements of consolidated income is $1,841,000, $2,737,000 and
$2,398,000 for the years 1998, 1997 and 1996, respectively.
INCOME TAXES
The effective tax rate was 40.8% in 1998, 41.3% in 1997 and 41.0% in 1996.
A reconciliation of the Federal statutory income tax rate to the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
PERCENT OF PRE-TAX
INCOME
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory Federal income tax rate........................... 35.0% 35.0% 35.0%
State income taxes -- net of Federal tax benefit............ 5.0 4.8 5.0
Effect of non-deductible depreciation and amortization...... 0.5 0.5 0.6
Other....................................................... 0.3 1.0 0.4
---- ---- ----
Effective tax rate for the year............................. 40.8% 41.3% 41.0%
==== ==== ====
</TABLE>
Income taxes consisted of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
1998 1997 1996
------------------- ------------------- -------------------
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Federal................. $15,492 $ 733 $12,427 $242 $11,258 $399
Foreign................. 665 (824) 255 (22) 224 1
State and Local......... 3,581 159 2,835 (10) 2,589 141
------- ----- ------- ---- ------- ----
$19,738 $ 68 $15,517 $210 $14,071 $541
======= ===== ======= ==== ======= ====
</TABLE>
19
<PAGE> 22
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Significant components of the Company's deferred tax liabilities as of
December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred income tax liabilities
Property, plant and equipment............................. $9,717 $8,967
Employee benefit trust.................................... 396 323
------ ------
10,113 9,290
------ ------
Deferred income tax assets
Compensation.............................................. 2,517 2,170
Inventory valuation....................................... 910 607
Allowance for uncollectible accounts...................... 675 702
Non-deductible accruals................................... 1,725 2,170
Other..................................................... 333 145
------ ------
6,160 5,794
------ ------
Net deferred income tax liability........................... $3,953 $3,496
====== ======
</TABLE>
STOCK OPTIONS
In 1997, the Company and its shareholders adopted the 1997 Stock Option
Plan allowing key employees to purchase Common Stock of the Company at the
market price on the date of grant. The plan provides that stock options expire
five years from date of grant and are exercisable up to 20 percent of the shares
granted each year. The activity listed below covers both the 1997 Stock Option
Plan and the 1992 Incentive Stock Option Plan.
Stock options granted during the past three years were as follows: during
1998, 221,018 shares at prices from $16.625 to $24.875; during 1997, 149,545
shares at prices from $14.55 to $16.50; during 1996, 88,165 shares at prices
from $16.14 to $17.77.
Stock options exercised during the past three years were as follows: during
1998, 42,830 shares at prices from $11.77 to $17.188; during 1997, 35,852 shares
at prices from $10.80 to $16.14; during 1996, 27,944 shares at prices from $7.03
to $13.46.
At December 31, 1998, 1997 and 1996 there were outstanding options for the
purchase of 535,944, 367,449 and 260,402 shares respectively, at prices ranging
from $11.77 to $24.875 per share in 1998 and $11.77 to $17.77 per share in 1997
and $10.80 to $17.77 in 1996.
At December 31, 1998 and 1997, there were options for 197,385 and 142,741
shares, respectively that were exercisable.
The Company accounts for stock options under APB Opinion No. 25 and,
therefore, does not recognize employee compensation for options granted using
the fair value method set forth in the FASB Statement No. 123 "Accounting for
Stock-Based Compensation." If the Company had followed FASB 123 rather that APB
25, net income and earnings per share would not have been materially different
than the reported amounts for 1998, 1997 or 1996.
20
<PAGE> 23
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
INDUSTRY SEGMENTS
In 1998, the Company was required to adopt FASB Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
replaces Statement No. 14 and establishes new standards for defining the
Company's business segments and disclosing information about them.
The Company's business units have separate management teams and offer
different products and services. Using the criteria of FASB No. 131, these
business units have been aggregated into two reportable segments; Distribution
of aftermarket repair products and services and Manufacturing of polymer and
metal products. The aggregation of business units is based on management by the
chief operating decision maker for the segment as well as similarities of
production processes, distribution methods and economic characteristics (e.g.
average gross margin and the impact of economic conditions on long-term
financial performance).
The Company's distribution segment is engaged in the distribution of
equipment, tools and supplies used for tire servicing and automotive underbody
repair. The distribution segment operates domestically through 42 branches
located in major cities throughout the United States and in foreign countries
through export and businesses in which the Company holds an equity interest.
The Company's manufacturing segment designs, manufacturers and markets a
variety of polymer based plastic and rubber products. These products are
manufactured primarily through the molding process in facilities throughout the
United States and in Europe.
Operating income for each segment is based on net sales less cost of
products sold, and the related selling, administrative and general expenses. In
computing segment operating income general corporate overhead expenses and
interest expenses are not included. The identifiable assets of each segment
include: accounts receivable, inventory, net fixed assets, excess of cost over
fair value of net assets acquired, patents and other intangible assets.
Corporate assets are principally land, buildings, computer equipment, cash and
temporary cash investments.
Total sales from foreign business units and export were approximately $61.3
million, $39.9 million and $35.3 million for the years 1998, 1997 and 1996,
respectively. There are no individual foreign countries for which sales are
material. Long-lived assets in foreign countries consist primarily of property,
plant and equipment and were approximately $13.4 million at December 31, 1998,
$528,000 at December 31, 1997 and $778,000 at December 31, 1996. No single
customer accounts for 10 percent or more of total company net sales or the net
sales of either business segment.
21
<PAGE> 24
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NET SALES
Distribution of aftermarket repair products and
services............................................. $161,737 $147,543 $136,526
Manufacturing of polymer and metal products............. 244,244 204,970 197,319
Intra-segment elimination............................... (13,961) (12,887) (12,901)
-------- -------- --------
$392,020 $339,626 $320,944
======== ======== ========
INCOME BEFORE INCOME TAXES
Distribution of aftermarket repair products and
services............................................. $ 16,043 $ 14,504 $ 12,209
Manufacturing of polymer and metal products............. 40,062 30,040 29,021
Corporate............................................... (6,732) (6,230) (5,330)
Interest expense-net.................................... (888) (248) (285)
-------- -------- --------
$ 48,485 $ 38,066 $ 35,615
======== ======== ========
IDENTIFIABLE ASSETS
Distribution of aftermarket repair products and
services............................................. $ 59,883 $ 53,604 $ 49,605
Manufacturing of polymer and metal products............. 211,672 163,130 148,708
Corporate............................................... 40,543 8,703 9,981
Intra-segment elimination............................... (5,390) (1,359) (1,172)
-------- -------- --------
$306,708 $224,078 $207,122
======== ======== ========
CAPITAL ADDITIONS, NET
Distribution of aftermarket repair products and
services............................................. $ 234 $ 603 $ 426
Manufacturing of polymer and metal products............. 18,943 16,015 20,433
Corporate............................................... 225 2,162 601
-------- -------- --------
$ 19,402 $ 18,780 $ 21,460
======== ======== ========
DEPRECIATION/AMORTIZATION
Distribution of aftermarket repair products and
services............................................. $ 493 $ 546 $ 598
Manufacturing of polymer and metal products............. 15,006 10,847 9,352
Corporate............................................... 304 275 280
-------- -------- --------
$ 15,803 $ 11,668 $ 10,230
======== ======== ========
</TABLE>
22
<PAGE> 25
MYERS INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
CONTENTS
Report of Independent Public Accountants for the Myers Industries, Inc.
Employee Stock Purchase Plan
Financial Statements for the Myers Industries, Inc. Employee Stock Purchase
Plan:
(1) Statements of Assets Available for Plan Benefits as of December 31,
1998 and 1997; and
(2) Statements of Changes in Assets Available for Plan Benefits for the
Years Ended December 31, 1998, 1997 and 1996.
Notes to Financial Statements for the Myers Industries, Inc. Employee Stock
Purchase Plan
23
<PAGE> 26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Myers Industries, Inc. Employee
Stock Purchase Plan Administrator:
We have audited the accompanying statements of assets available for plan
benefits of the Myers Industries, Inc. Employee Stock Purchase Plan as of
December 31, 1998 and 1997, and the related statements of changes in assets
available for plan benefits for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on these financial
statements 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 financial statements referred to above present fairly,
in all material respects, the assets available for plan benefits of the Myers
Industries, Inc. Employee Stock Purchase Plan as of December 31, 1998 and 1997,
and the changes in its assets available for plan benefits for each of the three
years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
/s/ ARTHUR ANDERSEN LLP
Cleveland, Ohio,
February 9, 1999
24
<PAGE> 27
MYERS INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Receivable from Trustee..................................... $108,088 $84,839
======== =======
(Myers Industries, Inc.)
</TABLE>
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Contributions:
Participants' contributions beginning of period......... $ 84,839 $ 84,687 $ 77,531
Participants' contributions during the period........... 365,794 341,806 322,503
--------- --------- ---------
Assets Available for Stock Purchases.................... 450,633 426,493 400,034
Less:
Assets Used for Stock Purchases......................... (342,545) (341,654) (315,347)
--------- --------- ---------
Assets Available for Plan Benefits at End of Period..... $ 108,088 $ 84,839 $ 84,687
========= ========= =========
</TABLE>
See the accompanying notes to financial statements.
25
<PAGE> 28
MYERS INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. DESCRIPTION OF PLAN
The following description of the Myers Industries, Inc. Employee Stock
Purchase Plan ("Stock Plan") provides only general information. Participants
should refer to the Plan Agreement and Prospectus for the Stock Plan for a more
complete description of the Plan's provisions.
(a) GENERAL. The shareholders of the Company approved the adoption of a
nonqualified Employee Stock Purchase Plan at the April 28, 1986 Annual Meeting.
The Stock Plan is designed to encourage, facilitate and provide employees with
an opportunity to share in the favorable performance of the Company through
ownership of the Company's Common Stock. The total number of shares of the
Common Stock which may be sold under the Stock Plan is currently limited to
188,176 shares.
(b) PURPOSE. The purpose of the Stock Plan is to provide employees
(including officers) of the Company and its subsidiaries with an opportunity to
purchase Common Stock through payroll deductions.
(c) ADMINISTRATION. The Stock Plan is administered by a committee
appointed by the Board of Directors. All questions of interpretation or
application of the Stock Plan are determined by the Board of Directors (or its
appointed committee) and its decisions are final, conclusive and binding upon
all participants.
(d) ELIGIBILITY AND PARTICIPATION. Any permanent employee (including an
officer) who has been employed for at least one calendar year by the Company, or
its subsidiaries who have adopted the Stock Plan, is eligible to participate in
the Stock Plan, provided that such employee is employed by the Company on the
date his participation is effective and subject to limitations on stock
ownership described in the Stock Plan. Eligible employees become participants in
the Stock Plan by delivering to the Company a subscription agreement authorizing
payroll deductions prior to the commencement of the applicable offering period.
(e) OFFERING DATES. The Stock Plan is generally implemented by one
offering during each calendar quarter. Offering periods commence on the last day
of each calendar quarter. The Board of Directors has the power to alter the
duration of the offering periods without shareholder approval.
(f) PURCHASE PRICE. The price at which shares may be purchased in an
offering under the Stock Plan is 90% of the fair market value of the Common
Stock on the last day of the prior calendar quarter. The fair market value of
the Common Stock on a given date is the closing price for that date as listed on
the American Stock Exchange.
(g) PAYROLL DEDUCTIONS. The purchase price of the shares to be acquired
under the Stock Plan will be accumulated by payroll deductions over the offering
period. The rate of deductions may not be less than five dollars ($5.00) per
week or exceed 10% of a participant's compensation, and the aggregate of all
payroll deductions during the offering may not exceed 10% of the participant's
aggregate compensation for the offering period. A participant may discontinue
his participation in the Stock Plan or may decrease or increase the rate of
payroll deductions at any time during the offering period by filing with the
Company a new authorization for payroll deductions.
All payroll deductions made for a participant are credited to their account
under the Stock Plan and are deposited with the general funds of the Company to
be used for any corporate purpose. The amount by which an employee's payroll
deductions exceed the amount required to purchase whole shares will be placed in
a suspense account for the employee with no interest thereon and rolled over
into the next offering period.
(h) WITHDRAWAL. A participant in the Stock Plan may terminate his interest
in a given offering in whole, but not in part, by giving written notice to the
Company of his election to withdraw at any time prior to the end of the
applicable offering period. Such withdrawal automatically terminates the
participant's interest
26
<PAGE> 29
MYERS INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
in that offering, but does not have any effect upon such participant's
eligibility to participate in subsequent offerings under the Stock Plan.
(i) TERMINATION OF EMPLOYMENT. Termination of a participant's employment
for any reason, including retirement or death, cancels his or her participation
in the Stock Plan immediately.
(j) NONASSIGNABILITY. No rights or accumulated payroll deductions of an
employee under the Stock Plan may be pledged, assigned, transferred or otherwise
disposed of in any way for any reason, other than on account of death. Any
attempt to do so may be treated by the Company as an election to withdraw from
the Stock Plan.
(k) AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may at
any time amend or terminate the Stock Plan. Except as provided above, no
amendment may be made to the Stock Plan without prior approval of the
shareholders if such amendment would increase the number of shares reserved
under the Stock Plan, permit payroll deductions at a rate in excess of 10% of a
participant's compensation, materially modify the eligibility requirements or
materially increase the benefits which may accrue to participants under the
Stock Plan.
(l) TAXATION. Participants in the Stock Plan, which is nonqualified for
federal income tax purposes, are taxed currently on the 10% discount in the
purchase price granted by the Stock Plan in the year in which stock is
purchased. The 10% discount is treated as ordinary income to the participant and
that amount is currently deductible by the Company to the extent the
participant's total compensation from the Company is within the "reasonable
compensation" limits imposed by Section 162 of the Internal Revenue Code of
1986, as amended.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION. The accompanying statements of assets available
for plan benefits and statements of changes in assets available for plan
benefits are prepared on the accrual basis of accounting.
(b) ADMINISTRATIVE EXPENSES. Administrative costs and expenses are
absorbed by the Trustee.
27
<PAGE> 30
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information about the directors of the Registrant, see "Election of
Directors" on pages 3 through 7 of Registrant's Proxy Statement dated March 19,
1999 ("Proxy Statement"), which is incorporated herein by reference.
Information about the Executive Officers of Registrant appears in Part I of
this Report.
Disclosures by the Registrant with respect to compliance with Section 16(a)
appear on page 7 of the Proxy Statement, and are incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
See "Executive Compensation and Other Information" on pages 8 through 12 of
the Proxy Statement, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Principal Shareholders" and "Election of Directors" on page 15, and
pages 3 through 6, respectively, of the Proxy Statement, which are incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Certain Relationships and Related Transactions" at page 7 of the Proxy
Statement, which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following consolidated financial statements of the Registrant appear in
Part II of this Report:
14. (A)(1) FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF MYERS INDUSTRIES, INC. AND
SUBSIDIARIES
Report of Independent Public Accountants
Statements of Consolidated Financial Position As Of December 31,
1998 and 1997
Statements of Consolidated Income For The Years Ended December 31,
1998, 1997 and 1996
Statements of Consolidated Shareholders' Equity and Comprehensive
Income For The Years Ended December 31, 1998, 1997 and 1996
Statements of Consolidated Cash Flows For The Years Ended December
31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements For The Years Ended
December 31, 1998, 1997 and 1996
FINANCIAL STATEMENTS FOR THE MYERS INDUSTRIES, INC. EMPLOYEE STOCK
PURCHASE PLAN
Statements of Assets Available for Plan Benefits As Of December 31,
1998 and 1997
Statements of Changes in Assets Available for Plan Benefits For The
Years Ended December 31, 1998, 1997 and 1996
28
<PAGE> 31
14. (A)(2) FINANCIAL STATEMENT SCHEDULES
Selected Quarterly Financial Data For The Years Ended December 31,
1998 and 1997
All other schedules are omitted because they are inapplicable, not
required, or because the information is included in the consolidated financial
statements or notes thereto which appear in Part II of this Report.
14. (A)(3) EXHIBITS
3(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED ARTICLES OF
INCORPORATION. Reference is made to Exhibit (3)(i) to Form
8-K filed with the Commission on May 14, 1994.
3(b) MYERS INDUSTRIES, INC. AMENDED AND RESTATED CODE OF
REGULATIONS. Reference is made to Exhibit (3)(ii) to Form
10-Q filed with the Commission on May 14, 1997.
10(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED 1982 INCENTIVE
STOCK OPTION PLAN. Reference is made to Exhibit 10(a) to
Form 10-K filed with the Commission on March 24, 1995.
10(b) MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE
PLAN. Reference is made to Exhibit 10(b) to Form 10-K filed
with the Commission on March 24, 1995.
10(c) FORM OF INDEMNIFICATION AGREEMENT FOR DIRECTORS AND
OFFICERS. Reference is made to Exhibit 10(c) to Form 10-K
filed with the Commission on March 24, 1995.
10(d) MYERS INDUSTRIES, INC. 1992 STOCK OPTION PLAN. Reference is
made to Exhibit 10(d) to Form 10-K filed with the Commission
on March 24, 1995.
10(e) MYERS INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN. Reference is made to Exhibit 10(e) to Form
10-K filed with the Commission on March 24, 1995.
10(f) MYERS INDUSTRIES, INC. 1997 INCENTIVE STOCK PLAN. Reference
is made to Exhibit 10(f) to Form 10-K filed with the
Commission on March 21, 1997.
10(g) MILTON I. WISKIND SUPPLEMENTAL COMPENSATION AGREEMENT.
Reference is made to Exhibit 10 to Form 10-Q filed with the
Commission on May 14, 1997.
10(h) MYERS INDUSTRIES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT
PLAN. Reference is made to Exhibit 10(h) to Form 10-K filed
with the Commission on March 26, 1998.
10(i) LOAN AGREEMENT BETWEEN MYERS INDUSTRIES, INC. AND NBD BANK
DATED AS OF FEBRUARY 3, 1999. Reference is made to Exhibit
10(f) to Form 8-K filed with the Commission on February 19,
1999.
21 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants
27 Financial Data Schedule
29
<PAGE> 32
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
<TABLE>
<CAPTION>
PLAN OR ARRANGEMENT REFERENCE LOCATION
- ------------------- ------------------
<S> <C>
Myers Industries, Inc. Amended and Exhibit (10)(a) to Form 10-K
Restated 1982 Incentive Stock Option Plan for fiscal year ended December 31, 1994
Myers Industries, Inc. 1992 Exhibit 10(d) to Form 10-K
Stock Option Plan for fiscal year ended December 31, 1994
Myers Industries, Inc. 1997 Exhibit 10(f) to Form 10-K
Incentive Stock Plan for fiscal year ended December 31, 1996
Milton I. Wiskind Supplemental Compensation Exhibit 10 to Form 10-Q
Agreement for period ended March 31, 1997
Myers Industries Inc. Executive Supplemental Exhibit 10(h) to Form 10-K
Retirement Plan for fiscal year ended December 31, 1997
</TABLE>
14. (B) REPORTS ON FORM 8-K: Form 8-K filed with the Commission on December
17, 1998 regarding the definitive purchase agreement between Myers
Industries, Inc. and Sommer Allibert, S.A.
14. (C) EXHIBITS: See subparagraph 14(A)(3) above.
30
<PAGE> 33
SIGNATURES
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.
<TABLE>
<S> <C>
MYERS INDUSTRIES, INC.
Dated: March 26, 1999 /s/ GREGORY J. STODNICK
By: ----------------------------------------------------
GREGORY J. STODNICK
Vice President -- Finance and
Chief Financial Officer
</TABLE>
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GREGORY J. STODNICK Vice President -- Finance and March 26, 1999
- --------------------------------------------------- Chief Financial Officer
GREGORY J. STODNICK (Principal Financial and
Accounting Officer)
/s/ KEITH A. BROWN Director March 26, 1999
- ---------------------------------------------------
KEITH A. BROWN
Director
- ---------------------------------------------------
KARL S. HAY
Director
- ---------------------------------------------------
RICHARD P. JOHNSTON
President, Chief Executive
- --------------------------------------------------- Officer and Director (Principal
STEPHEN E. MYERS Executive Officer)
/s/ RICHARD L. OSBORNE Director March 26, 1999
- ---------------------------------------------------
RICHARD L. OSBORNE
/s/ JON H. OUTCALT Director March 26, 1999
- ---------------------------------------------------
JON H. OUTCALT
/s/ SAMUEL SALEM Director March 26, 1999
- ---------------------------------------------------
SAMUEL SALEM
Director
- ---------------------------------------------------
EDWIN P. SCHRANK
/s/ MILTON I. WISKIND Senior Vice President, Secretary March 26, 1999
- --------------------------------------------------- and Director
MILTON I. WISKIND
</TABLE>
31
<PAGE> 34
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
3(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED ARTICLES OF
INCORPORATION. Reference is made to Exhibit (3)(i) to Form
8-K filed with the Commission on May 14, 1994.
(b) MYERS INDUSTRIES, INC. AMENDED AND RESTATED CODE OF
REGULATIONS. Reference is made to Exhibit (3)(ii) to Form
10-Q filed with the Commission on May 14, 1994.
10(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED 1982 INCENTIVE
STOCK OPTION PLAN. Reference is made to Exhibit 10(a) to
Form 10-K filed with the Commission on March 24, 1995.
(b) MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN.
Reference is made to Exhibit 10(b) to Form 10-K filed with
the Commission on March 24, 1995.
(c) FORM OF INDEMNIFICATION AGREEMENT FOR DIRECTORS AND
OFFICERS. Reference is made to Exhibit 10(c) to Form 10-K
filed with the Commission on March 24, 1995.
(d) MYERS INDUSTRIES, INC. 1992 STOCK OPTION PLAN. Reference is
made to Exhibit 10(d) to Form 10-K filed with the Commission
on March 24, 1995.
(e) MYERS INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN. Reference is made to Exhibit 10(e) to Form
10-K filed with the Commission on March 24, 1995.
(f) MYERS INDUSTRIES, INC. 1997 INCENTIVE STOCK PLAN. Reference
is made to Exhibit 10(f) to Form 10-K filed with the
Commission on March 21, 1997.
(g) MILTON I. WISKIND SUPPLEMENTAL COMPENSATION AGREEMENT.
Reference is made to Exhibit 10 to Form 10-Q filed with the
Commission on May 14, 1997.
(h) MYERS INDUSTRIES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT
PLAN. Reference is made to Exhibit 10(h) to Form 10-K filed
with the Commission on March 26, 1999.
(i) LOAN AGREEMENT BETWEEN MYERS INDUSTRIES, INC. AND NBD BANK
DATED AS OF FEBRUARY 3, 1999. Reference is made to Exhibit
10(f) to Form 8-K filed with the Commission on February 19,
1999.
21 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants
27 Financial Data Schedule
</TABLE>
32
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
SUBSIDIARY NAME JURISDICTION
<S> <C>
Ameri-Kart Corp. Kansas
Buckhorn Inc.
-Buckhorn Rubber Products Inc. Missouri
-Buckhorn of California, Inc. Ohio
-Buckhorn Canada, Inc. Ontario, Canada
-Buckhorn LTD United Kingdom
Eastern Tire Equipment & Supplies, Limited Quebec, Canada
Elrick Industries, Inc. California
The James C. Heintz Company Ohio
MICO, Inc. U.S. Virgin Islands
Midland Tire Supply, Inc. Indiana
MYEcap Financial Corp. Ohio
Myers Industries International, Inc. Ohio
Myers Missouri, Inc. Missouri
Myers Systems, Inc. Ohio
Myers Tire Supply (Canada) Limited Ontario, Canada
Myers Tire Supply (Chicago), Inc. Illinois
Myers Tire Supply (New York), Inc. New York
Myers Tire Supply (Nevada), Inc. Nevada
Myers Tire Supply (Va.), Inc. Virginia
Patch Rubber Company North Carolina
Plastic Parts, Inc. Kentucky
raaco International A/S Denmark
-raaco Denmark A/S Denmark
-Moderne Dansk Lagerindretning Denmark
-raaco Germany Germany
-raaco Austria Austria
-raaco France France
-raaco Suisse Switzerland
-raaco Great Britain UK
-raaco Sweden Sweden
-raaco Benelux B.V. Netherlands
Myers de ElSalvador S.A. De C.V. El Salvador
-Orientadores Comerciales S.A. Guatemala
-Myers de Panama S.A. Panama
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included and incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statements on Form S-8 (Registration
Statement Nos. 81693, 33-9038 and 33-47600) and Registration Statement on Form
S-3 (Registration Statement No. 33-50286).
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Cleveland, Ohio
March 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 34,832,151
<SECURITIES> 0
<RECEIVABLES> 65,251,111
<ALLOWANCES> 2,396,000
<INVENTORY> 53,418,943
<CURRENT-ASSETS> 153,650,201
<PP&E> 203,745,423
<DEPRECIATION> 94,302,430
<TOTAL-ASSETS> 306,707,788
<CURRENT-LIABILITIES> 51,233,510
<BONDS> 0
11,610,996
0
<COMMON> 0
<OTHER-SE> 191,077,857
<TOTAL-LIABILITY-AND-EQUITY> 306,707,788
<SALES> 392,019,900
<TOTAL-REVENUES> 392,019,900
<CGS> 256,506,103
<TOTAL-COSTS> 304,465,569
<OTHER-EXPENSES> 38,181,368
<LOSS-PROVISION> 2,396,000
<INTEREST-EXPENSE> 2,403,059
<INCOME-PRETAX> 48,485,090
<INCOME-TAX> 19,806,000
<INCOME-CONTINUING> 28,679,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,679,090
<EPS-PRIMARY> 1.57
<EPS-DILUTED> 1.57
</TABLE>
