SPARTECH CORP, S-3, 1999-03-22

SPARTECH CORP
S-3, 1999-03-22
MISCELLANEOUS PLASTICS PRODUCTS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1999.
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------------------
SPARTECH CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S> <C>
DELAWARE 43-0761773
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
</TABLE>

7733 FORSYTH BOULEVARD, SUITE 1450, CLAYTON, MISSOURI 63105 (314) 721-4242
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------------
RANDY C. MARTIN
VICE PRESIDENT -- FINANCE AND CHIEF FINANCIAL OFFICER
SPARTECH CORPORATION
7733 FORSYTH BOULEVARD, SUITE 1450, CLAYTON, MISSOURI 63105
(314) 721-4242
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
------------------------------------
WITH COPIES TO:

<TABLE>
<S> <C>
JEFFREY D. FISHER, ESQ. THOMAS J. MURPHY, ESQ.
ARMSTRONG TEASDALE LLP MCDERMOTT, WILL & EMERY
ONE METROPOLITAN SQUARE, SUITE 2600 227 WEST MONROE STREET
ST. LOUIS, MISSOURI 63102-2740 CHICAGO, ILLINOIS 60606-5096
(314) 621-5070 (312) 372-2000
</TABLE>

------------------------------------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
- ---------

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NUMBER OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SHARES TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE (1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.75 par value.... 2,678,968 $24.28 $65,045,343 $18,083.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes 350,000 shares which may be purchased by the Underwriters pursuant
to an over-allotment option.
(2) Based upon the average of the high and low sale prices of the common stock
on the NYSE on March 17, 1999 solely for purposes of calculating the
registration fee pursuant to Rule 457 under the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

The information contained in this preliminary prospectus is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This preliminary prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.

SUBJECT TO COMPLETION
MARCH 19, 1999

2,328,968 SHARES
SPARTECH CORPORATION

COMMON STOCK
[LOGO]

The selling stockholders named in this prospectus under "Principal and Selling
Stockholders" are offering 2,328,968 shares of common stock with this
prospectus. Spartech will not receive any proceeds from the sale of shares by
the selling stockholders.
Our common stock is listed on the New York Stock Exchange under the symbol
"SEH." On March 18, 1999, the closing sale price of the common stock on the New
York Stock Exchange was $24 3/16 per share.
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----------
<S> <C> <C>
Public offering price.................................... $ $
Underwriting discount.................................... $ $
Proceeds to the selling stockholders..................... $ $
</TABLE>

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Spartech has granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of 350,000 shares of
common stock from Spartech within 30 days following the date of this prospectus
to cover over-allotments.

------------------------------------
The underwriters are severally underwriting the shares of common stock being
offered. The underwriters expect to deliver the shares against payment in New
York, New York on , 1999.
FIRST ANALYSIS SECURITIES CORPORATION
EVEREN SECURITIES, INC.
JANNEY MONTGOMERY SCOTT INC.
------------------------------------
Prospectus dated , 1999.
<PAGE> 3

[MAP OF COMPANY LOCATIONS]

[PHOTO OF PRODUCTS IN EXTRUDED SHEET & ROLLSTOCK GROUP]

Our Extruded Sheet & Rollstock group operates 18 manufacturing facilities and is
the largest extruder of custom rigid plastic sheet & rollstock in North America.

[PHOTO OF PRODUCTS IN COLOR & SPECIALTY COMPOUNDS GROUP]

Our Color & Specialty Compounds group operates 15 manufacturing facilities in
North America and one in Europe. They custom manufacture color concentrates,
plastic compounds and calendered film for a large group of manufacturing
customers.

[PHOTO OF PRODUCTS IN MOLDED & PROFILE PRODUCTS GROUP]

Our Molded & Profile Products group has six manufacturing facilities in North
America. They manufacture a number of items, including: thin-walled, printed
plastic food packaging and industrial containers; tires and wheels for the lawn
and garden, refuse container and toy markets; and profile extruded products for
a variety of industries.

2
<PAGE> 4

PROSPECTUS SUMMARY

This summary highlights information contained in other parts of this
prospectus. It is not complete and may not contain all of the information that
you should consider before investing in the shares. You should read the entire
prospectus carefully.

As used in this prospectus, the terms "we," "us," "our" and "Spartech" mean
Spartech Corporation and its subsidiaries, and the term "common stock" means
Spartech common stock, $0.75 par value. Unless otherwise stated, reference to a
"year" in this prospectus means our fiscal year, which ends on the Saturday
closest to October 31.

ABOUT SPARTECH

GENERAL

We are a leading producer of engineered thermoplastics (plastics capable of
being formed and reformed by heating), compounded polymers and other proprietary
plastic products. We operate as a plastics intermediary processor, which means
that we convert base polymers, or resins, from commodity suppliers into extruded
plastic sheet and rollstock, color concentrates and blended resin compounds, and
injection molded and profile extruded products. The plastics industry is large
and continues to grow faster than the U.S. gross domestic product, due partly to
the continuing substitution of plastics for traditional materials such as metal,
fiberglass and wood, which we refer to as product transformations. The Society
of Plastics Engineers estimates that the U.S. plastics industry produced over 90
billion pounds of plastic in 1997 and grew at a 6% compound annual growth rate
from 1992 to 1997.

We have recorded 29 consecutive quarters of earnings improvement over the
comparable prior year's quarter. From 1994 to 1998, our net sales increased from
$256.6 million to $653.9 million, a compound annual growth rate of 26%, and
diluted earnings per share grew from $0.46 to $1.18, a compound annual growth
rate of 27%. During the same period, our volume of product sold grew from 310
million pounds to 902 million pounds, a compound annual growth rate of 31%. Our
leading market share position, improving margins and ability to capitalize on
the plastics industry's consolidation and product transformation trends position
us to sustain strong growth into the future.

We provide value through formulation and processing technology, our cost
efficient operations, our broad range of problem-solving products and
capabilities, and our locations close to customers' manufacturing facilities. We
are organized into three lines of business, or operating groups:

- Extruded Sheet & Rollstock. This group processes a variety of plastic
materials into cut sheets or rolls (rollstock), depending on their
thickness. Our customers then further process the material into products
such as food and medical packaging, signs, spas and showers, vehicle
interiors, boats and appliances. This group's 1998 net sales were $455
million, or 70% of our total 1998 net sales.

- Color & Specialty Compounds. This group manufactures color concentrates
(pellets of resin used for coloring plastics), proprietary or
custom-designed plastic compounds, and calendered film (film produced by
pressure between two counter-rotating rolls) for a large group of
manufacturing customers who produce footwear, appliance components, lawn
and garden equipment, cosmetics and medical packaging, vehicle components
and numerous other products. This group's 1998 net sales were $158
million, or 24% of our total 1998 net sales.

- Molded & Profile Products. This group manufactures a wide range of
molded plastic products, including thin-walled, printed plastic food
packaging and industrial containers, and
3
<PAGE> 5

tires and wheels for the lawn and garden, refuse container and toy
markets. It also manufactures profile extrusion products (plastic rods,
tubes, bars or other shapes with a specified cross-section or profile)
for a variety of end markets. This group's 1998 net sales were $41
million, or 6% of our total 1998 net sales.

Our principal executive offices are located at 7733 Forsyth Boulevard,
Suite 1450, Clayton, Missouri 63105. Our telephone number is (314) 721-4242. Our
web site address is http://www.spartech.com. INFORMATION CONTAINED ON OUR WEB
SITE IS NOT PART OF THIS PROSPECTUS.

COMPETITIVE STRENGTHS

Our competitive strengths include:

- Leading Market Position. We are the largest extruder of custom rigid
plastic sheet and rollstock in North America, and have a growing market
position in color and specialty compounds.

- Diversified Customer Base and Geographic Presence. We sell our products
to over 4,500 customers in a broad range of end markets. Our 39 plants
are strategically located in 35 cities throughout the United States as
well as in eastern Canada and France.

- Low-Cost Supplier. Our commitment to reduce expenses has contributed to
improvements in gross margins from 14.4% in 1994 to 17.0% in 1998. During
the same period, we reduced our selling, general and administrative
expenses as a percentage of sales from 7.8% to 5.9%. Our size helps us
obtain volume discounts on raw materials, and the strategic location of
our plants saves shipping costs and reduces delivery times to our
customers.

- Decentralized Management Structure. Our day-to-day operating decisions
are made at each of our operating locations. This promotes operating
efficiency and timely decision making by the persons who have direct
contact with customers and suppliers.

- Commitment to Customer Service. We work closely with customers to
provide products which meet their evolving needs. We seek to
differentiate ourselves from our competitors by emphasizing consistent
product quality and outstanding customer service. We capitalize on the
technical expertise of our personnel to provide cost effective,
innovative solutions for our customers.

GROWTH STRATEGY

In late 1991, we began building a new senior management team with the
appointment of our current chief executive officer. Concurrently with this
management transition, we began to develop and implement a comprehensive growth
strategy. This strategy has two components. The first, which we refer to as our
"Four Cornerstones for Growth", emphasizes volume growth through internal means
- -- new product developments, product transformation initiatives and business
partnerships -- and through strategic acquisitions. We pursue an aggressive but
disciplined acquisition program and have successfully integrated numerous
acquisitions that have all contributed to profitable growth. The second strategy
component, our "Pyramids of Productivity," emphasizes earnings growth through
ongoing cost containment and productivity improvement efforts to increase
operating earnings and further enhance stockholder returns.
4
<PAGE> 6

THE OFFERING

Unless otherwise stated, all information contained in this prospectus
assumes no exercise of the over-allotment option granted to the underwriters.

Shares offered by the
selling stockholders....... 2,328,968 shares

Shares outstanding after
the offering............... 26,914,282 shares

Use of proceeds............ We will not receive any proceeds from the sale of
shares by the selling stockholders. If the
underwriters exercise their over-allotment option,
we intend to use the net proceeds from the sale of
those shares to repay borrowings under our bank
credit facility.

Dividend policy............ We currently pay quarterly cash dividends at the
annual rate of $0.28 per share.

Risk factors............... For a discussion of certain risks you should
consider before investing in the shares, see "Risk
Factors" on page 7.

NYSE symbol................ SEH
5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except ratios and per share data)

The following summary consolidated financial information for the five years
from 1994 through 1998 has been derived from our audited consolidated financial
statements. The summary consolidated financial information for the three months
ended January 31, 1998 and January 30, 1999 has been derived from our unaudited
quarterly financial statements. Results for the three months ended January 30,
1999 are not necessarily indicative of the results that may be expected for the
entire 1999 fiscal year and do not project our results of operations for any
future period or our financial condition at any future date.

The information below should be read in conjunction with our consolidated
financial statements, and the sections captioned "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
JAN. 31, JAN. 30,
1994 1995 1996(A) 1997 1998 1998 1999
-------- -------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales................................... $256,593 $352,273 $391,348 $502,715 $653,855 $133,081 $167,801
Gross Profit................................ 36,998 49,879 60,572 82,215 111,215 22,480 30,197
Depreciation and Amortization............... 4,422 5,798 7,211 11,548 18,530 3,546 5,667
Operating Earnings.......................... 16,410 24,604 34,492 49,701 69,728 13,778 19,075
Interest Expense............................ 3,125 4,960 5,062 8,393 13,602 2,345 3,851
Net Earnings................................ 10,835 14,534 18,317 25,493 33,720 7,021 9,157
Diluted Earnings Per Share.................. $ 0.46 $ 0.60 $ 0.74 $ 0.92 $ 1.18 $ 0.25 $ 0.32
Dividends Per Share......................... $ -- $ 0.09 $ 0.15 $ 0.20 $ 0.24 $ 0.06 $ 0.07
OTHER DATA:
Return on Equity (b)........................ 20.8% 22.3% 20.0% 21.2% 23.9% 21.7% 23.2%
Gross Margin................................ 14.4% 14.2% 15.5% 16.4% 17.0% 16.9% 18.0%
Operating Margin............................ 6.4% 7.0% 8.8% 9.9% 10.7% 10.4% 11.4%
EBITDA (c).................................. $ 20,832 $ 30,402 $ 41,703 $ 61,249 $ 88,258 $ 17,324 $ 24,742
EBITDA Margin............................... 8.1% 8.6% 10.7% 12.2% 13.5% 13.0% 14.7%
Capital Expenditures........................ $ 8,152 $ 10,015 $ 9,566 $ 12,172 $ 17,859 $ 2,056 $ 4,956
Effective Tax Rate.......................... 18% 26% 38% 38% 40% 39% 40%
</TABLE>

<TABLE>
<CAPTION>
AT JAN. 31, AT JAN. 30,
1998 1999
----------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working Capital............................................. $ 71,523 $ 78,124
Total Assets................................................ 355,659 542,994
Total Long-Term Debt, Less Current Maturities............... 144,245 246,919
Total Stockholders' Equity.................................. 130,763 161,632
</TABLE>

- ---------------

(a) Fiscal year 1996 included 53 weeks compared to 52 weeks for all other fiscal
years presented.

(b) Represents net earnings divided by average equity.

(c) "EBITDA," which means net income before interest expense, income taxes,
depreciation and amortization, discontinued operations, non-recurring
charges, extraordinary items and accounting changes, is not a measure of
performance under generally accepted accounting principles ("GAAP"). While
EBITDA should not be considered in isolation or as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity, EBITDA is customarily used in evaluating the
financial strength of companies. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" for a discussion of other
measures of performance determined in accordance with GAAP.
6
<PAGE> 8

RISK FACTORS

You should carefully consider the risks described below before deciding to
invest in our common stock. These risks could materially and adversely affect
our business, financial condition and results of future operations. If that were
to happen, the trading price of our common stock could decline, and you could
lose all or part of your investment.

The risks described below are not the only ones we face. Our business
operations could also be impaired by additional risks and uncertainties that are
not presently known to us, that we currently consider immaterial, or that are
similar to those faced by other companies in our industry or business.

This prospectus also contains forward-looking statements, primarily in the
sections captioned "Prospectus Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business." Forward-looking statements represent our judgment relating to, among
other things, future results of operations, growth plans, sales, capital
requirements and general industry and business conditions applicable to us. They
are based largely on our current expectations. Our actual results could differ
materially from the information contained in the forward-looking statements due
to a number of factors, including the risks described below, changes in the
economy or the plastics industry in general, and other unanticipated events that
may prevent us from competing successfully in existing or new markets, and our
ability to manage our growth effectively.

HIGHLY COMPETITIVE INDUSTRY

The markets in which we conduct our business are highly competitive. We may
not be able to continue to compete successfully in these markets or to utilize
our strengths successfully in new markets. Competitive pressures, including
industry consolidation, or other factors could cause us to lose existing
business or opportunities to generate new business or could result in
significant price erosion. Since we manufacture a wide variety of products, we
compete in different areas with many other companies, some of which are much
larger than we are and have more extensive production facilities, larger sales
and marketing staffs, and substantially greater financial resources. The
industries in which we compete are also periodically characterized by
oversupply, resulting in intense price competition. We compete generally on the
basis of price, product performance and customer service. In addition, we may
experience competition from new entrants into the markets that we serve and
increased competition from companies offering products based on alternative
technologies and processes that may be competitive or superior in price and
performance. Moreover, some of our customers may be large enough to justify
developing in-house production capabilities. Any material reduction in orders to
us by our customers as a result of a shift to in-house production could
adversely affect our business, financial condition and results of operations.

USE OF SIGNIFICANT DEBT FINANCING

Our consolidated long-term indebtedness was approximately $255.7 million at
January 30, 1999, or approximately 61% of total consolidated capitalization. Our
debt levels and the operating and financial restrictions imposed by the debt
instruments governing our indebtedness may limit or prohibit, among other
things, our ability to incur additional indebtedness or create liens, sell
assets, engage in mergers, acquisitions or joint ventures, pay cash dividends,
redeem stock, or respond to changing business or economic conditions.

7
<PAGE> 9

RISKS ASSOCIATED WITH IDENTIFYING, COMPLETING AND MANAGING ACQUISITIONS

Acquiring businesses that complement our operations has been and continues
to be an important element of our business strategy. Some of our major
competitors have similar growth strategies, and the overall plastics
intermediary segment is continuing to consolidate. As a result, competition for
suitable acquisition candidates is increasing. We may not be able to acquire
additional companies in our industry on terms favorable to us. Furthermore,
integrating acquired businesses requires a significant amount of management time
and skill and may place significant demands on our operations and financial
resources. We may not be successful in integrating businesses we may acquire in
the future into our operations. If we fail to effectively integrate future
acquisitions into our operations it could have a material adverse effect on our
business, financial condition and results of operations. In addition, the
consideration used for any future acquisitions is expected to be derived from
issuances of capital stock or debt securities or from increased borrowings under
our bank credit facility. This financing may not be available to us on
satisfactory terms, or at all.

CHANGES IN COST AND AVAILABILITY OF RAW MATERIALS

The cost of raw materials used in our manufacturing processes represented
approximately 76% of cost of goods sold in 1998. These raw materials include
resins that are crude oil or natural gas derivatives and are to some extent
affected by supply, demand and price trends in the petroleum industry. Large
increases in the costs of these raw materials could materially and adversely
affect our operating profit. In addition, any major disruptions in the
availability of petroleum or natural gas to our suppliers could adversely impact
the availability of the resins used in our manufacturing process and could have
a material adverse effect on our business, financial condition and results of
operations.

CONTROL BY PRINCIPAL STOCKHOLDER

As of January 30, 1999, Vita International Limited, of Manchester, England,
held approximately 44.4% of the outstanding shares of our common stock. As a
result, if other stockholders acted in concert with Vita or did not choose to
exercise their voting rights, Vita could be in a position to effectively control
our management and policies. Vita is a manufacturer and distributor of cellular
polymers, engineered thermoplastics, fibers and fabrics, primarily in Europe.
Although we do not currently compete with Vita in any material respect, there
can be no assurance that our growth and business strategies will not conflict
with or be affected by those of Vita at some time in the future.

DEPENDENCE ON OUR SENIOR MANAGEMENT

We depend significantly on the services of the members of our senior
management team. The loss of the services of any of those persons might
materially and adversely affect our business, financial condition and results of
operations.

EXPOSURE TO CYCLICAL MARKETS

Our products are sold in a number of end markets which tend to be cyclical
in nature, including packaging, transportation, building and construction,
bath/pool and spa, and electronics and appliances. A downturn in one or more of
these end markets could have a material adverse effect on our business,
financial condition and results of operations.

8
<PAGE> 10

STOCK PRICE VOLATILITY

The trading price of our common stock has fluctuated widely, ranging
between $14 3/4 and $25 3/8 per share over the past 52 weeks. The overall market
and the price of our common stock may continue to fluctuate greatly. The trading
price of our common stock may be significantly affected by various factors,
including:

- Quarter to quarter variations in our operating results;

- Changes in investors' and analysts' perceptions of the business risks
and conditions of our business; and

- Our limited market capitalization and the limited float of our common
stock.

POTENTIAL COSTS OF ENVIRONMENTAL COMPLIANCE

We operate under numerous federal, state, local and non-U.S. laws and
regulations controlling the discharge of materials into the environment or
otherwise relating to the protection of the environment. We cannot predict
future costs for environmental compliance with precision. Modifications of
existing environmental regulations, the adoption of new environmental
regulations or unanticipated enforcement actions, particularly with respect to
environmental and safety standards, could require us to incur material capital
expenditures or could otherwise have a material adverse effect on our business,
financial condition and results of operations.

GOVERNMENT REGULATION

We are subject to federal and state government regulation, including
regulation by the Food and Drug Administration. The FDA regulates the material
content of medical and direct-contact food and beverage containers and packages
and periodically examines our operations. Future regulatory measures may
adversely affect our existing business or our ability to generate additional
business or introduce new packaging products. We must also adhere to applicable
regulations governing "good manufacturing practices," including testing, quality
control, manufacturing and documentation requirements. If violations of these
regulations are noted during inspections of our manufacturing facilities by
public health regulatory officials, we may be required to cease manufacturing
until the violation is corrected or to recall products that were manufactured
under improper conditions, either of which could have a material adverse effect
on the continued marketing of our products and on our business, financial
condition and results of operations.

IMPACT OF YEAR 2000

Our failure or the failure of our significant suppliers and customers to
adequately address the "Year 2000" issue could result in misstatement of
reported financial information, or could adversely affect our business,
financial condition and results of operations. For more information about our
Year 2000 compliance efforts, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Year 2000."

9
<PAGE> 11

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares by the
selling stockholders. If the underwriters fully exercise their over-allotment
option, we would receive approximately $ in proceeds from the sale of
those 350,000 shares, after deducting the underwriting discount on the shares
and the expenses of the offering. We will pay all expenses incurred in the
offering, except the expenses of the selling stockholders' counsel and any
underwriting discounts or commissions on the selling stockholders' shares. We
intend to use any net proceeds from the sale of the shares to repay borrowings
under our bank credit facility.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

Our common stock is traded on the New York Stock Exchange under the symbol
"SEH." The following table shows the high and low sales prices per share of the
common stock as reported by the New York Stock Exchange and the dividends
declared per share for the periods indicated.

<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
-------- -------- ---------
<S> <C> <C> <C>
FISCAL YEAR ENDED NOVEMBER 2, 1996
First Quarter....................................... $ 7 3/8 $ 6 $ .03
Second Quarter...................................... 10 1/4 6 7/8 .04
Third Quarter....................................... 12 8 7/8 .04
Fourth Quarter...................................... 11 9 1/2 .04
FISCAL YEAR ENDED NOVEMBER 1, 1997
First Quarter....................................... $11 1/2 $ 9 3/8 $ .05
Second Quarter...................................... 13 3/4 10 5/8 .05
Third Quarter....................................... 16 11 1/2 .05
Fourth Quarter...................................... 18 15 .05
FISCAL YEAR ENDED OCTOBER 31, 1998
First Quarter....................................... $17 9/16 $14 3/4 $ .06
Second Quarter...................................... 23 1/8 16 3/8 .06
Third Quarter....................................... 22 7/8 19 1/16 .06
Fourth Quarter...................................... 19 14 3/4 .06
FISCAL YEAR ENDING OCTOBER 30, 1999
First Quarter....................................... $24 3/8 $17 5/8 $ .07
Second Quarter, to March 18, 1999................... 25 3/8 23 1/16 .07
</TABLE>

On March 18, 1999, the closing sale price of the common stock on the New
York Stock Exchange was $24 3/16 per share. As of March 19, 1999, there were
approximately 5,500 holders of record of our common stock.

Dividends are declared and paid on the common stock at the discretion of
our board of directors and depend upon our profitability, financial condition,
capital needs, future prospects and other factors deemed relevant by the board.
Our current policy is to pay dividends on a quarterly basis, subject to the
financial covenants contained in our bank credit facility. The dividend for the
second quarter of 1999 will be paid on April 7, 1999 to stockholders of record
on March 24, 1999.

10
<PAGE> 12

CAPITALIZATION

The following table shows our capitalization as of January 30, 1999.

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Short-Term Debt:
Current maturities of long-term debt...................... $ 8,817
========
Long-Term Debt, less current portion:
7.0% Senior Notes......................................... $ 60,000
7.62% Guaranteed Senior Notes............................. 30,000
7.21% Senior Unsecured Notes.............................. 42,857
Unsecured Bank Credit Facility............................ 102,100
Other Long-Term debt...................................... 11,962
Stockholders' Equity:
Common stock; $0.75 par value, 45,000,000 shares
authorized, 27,550,107 shares issued (a)............... 20,663
Contributed capital....................................... 97,654
Retained earnings......................................... 57,459
Treasury stock, at cost, 604,725 shares................... (10,081)
Cumulative translation adjustments........................ (4,063)
--------
Total stockholders' equity............................. $161,632
--------
Total Capitalization........................................ $417,368
========
</TABLE>

- ---------------

(a) Does not include 3,458,000 shares of common stock issuable upon exercise of
outstanding stock options.

The above table does not reflect our issuance on March 5, 1999 of
$50,000,000 of 6.5% convertible subordinated debentures and related convertible
preferred securities of Spartech Capital Trust, and the application of the
proceeds to repay borrowings under our unsecured bank credit facility. This
issuance is described under "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources--Financing
Arrangements."

11
<PAGE> 13

SELECTED FINANCIAL DATA
(in thousands, except per share data)

The following table sets forth, for the periods and dates indicated,
selected financial data derived from the Consolidated Financial Statements of
Spartech for the five-year period ended October 31, 1998. The selected
historical financial data for the three months ended January 31, 1998 and
January 30, 1999 are unaudited and, in the opinion of management, include all
adjustments which are of a normal recurring nature necessary for a fair
presentation. The information for interim periods may not be indicative of a
full year's results. The Consolidated Financial Statements of Spartech for the
five-year period ended October 31, 1998 were audited by Arthur Andersen LLP. The
report of Arthur Andersen LLP appears elsewhere in this prospectus. This table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and the related Notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
-------------------
JAN. 31, JAN. 30,
1994 1995 1996(A) 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Net Sales................................ $256,593 $352,273.. $391,348 $502,715 $653,855 $133,081 $167,801
Cost of sales............................ 219,595 302,394 330,776 420,500 542,640 110,601 137,604
Selling, general and administrative...... 19,966 24,545 25,184 31,019 38,257 8,161 10,125
Amortization of intangibles.............. 622 730 896 1,495 3,230 541 997
-------- -------- -------- -------- -------- -------- --------
Operating Earnings....................... 16,410 24,604 34,492 49,701 69,728 13,778 19,075
Interest................................. 3,125 4,960 5,062 8,393 13,602 2,345 3,851
Earnings Before Income Taxes............. 13,285 19,644 29,430 41,308 56,126 11,433 15,224
Income taxes............................. 2,450 5,110 11,113 15,815 22,406 4,412 6,067
-------- -------- -------- -------- -------- -------- --------
Net Earnings............................. $ 10,835 $ 14,534 $ 18,317 $ 25,493 $ 33,720 $ 7,021 $ 9,157
======== ======== ======== ======== ======== ======== ========
Net Earnings Per Common Share:
Basic.................................. $ 1.06 $ .84 $ .77 $ .96 $ 1.26 $ .27 $ .34
======== ======== ======== ======== ======== ======== ========
Diluted................................ $ .46 $ .60 $ .74 $ .92 $ 1.18 $ .25 $ .32
======== ======== ======== ======== ======== ======== ========
Weighted Average Number of Common Shares:
Basic.................................. 8,239 15,956 23,714 26,418 26,807 26,398 26,896
======== ======== ======== ======== ======== ======== ========
Diluted................................ 23,434 24,111 24,874 27,838 28,609 28,101 28,748
======== ======== ======== ======== ======== ======== ========
Dividends Per Share...................... -- $0.09.... $ 0.15 $ 0.20 $ 0.24 $ 0.06 $ 0.07
======== ======== ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
AT AT
JAN. 31, JAN. 30,
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets............................. $135,720 $178,329 $288,960 $358,803 $533,309 $355,659 $542,994
Total Long-Term Debt, Less Current
Maturities............................. 36,419 59,510 97,471 141,693 245,272 144,245 246,919
</TABLE>

- ---------------
(a) Fiscal year 1996 included 53 weeks compared to 52 weeks for all other fiscal
years presented.

12
<PAGE> 14

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion together with the financial statements and
other financial information in this prospectus.

OVERVIEW

Our business is comprised of three operating lines of business, the largest
of which is the Extruded Sheet & Rollstock group. Due to our new product
development and acquisition programs, color and specialty compounds have become
a more significant line of business, and we have added a molded and profile
products group.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JANUARY 30, 1999 AND JANUARY 31, 1998

The following table shows the net sales of each of our operating groups for
the first three months of 1998 and 1999.

<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JANUARY 31, 1998 JANUARY 30, 1999
---------------------- ----------------------
NET SALES % OF TOTAL NET SALES % OF TOTAL
--------- ---------- --------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Extruded Sheet & Rollstock........................... $103.0 77% $105.0 63%
Color & Specialty Compounds.......................... 19.6 15 50.5 30
Molded & Profile Products............................ 10.5 8 12.3 7
------ ---- ------ ----
Total................................................ $133.1 100% $167.8 100%
====== ==== ====== ====
</TABLE>

Net sales increased 26%, from $133.1 million to $167.8 million. Net sales
of the Extruded Sheet & Rollstock group increased 2%, from $103.0 million to
$105.0 million. This was due primarily to a 7% increase in pounds sold and a 2%
increase in sales related to acquisitions, offset in part by a negative 7% price
and product mix change. Sales to the growing packaging and recreation and
leisure markets were the primary factor in the increase in pounds sold for the
sheet group. Net sales of the Color & Specialty Compounds group increased 158%,
from $19.6 million to $50.5 million. This was primarily the result of our 1998
midyear acquisitions of Polycom Huntsman, Inc. ("Polycom") and Prismaplast
Canada Ltd. (known as "Plasticolour"). Pounds sold increased by 8% while price
and product mix changes had a negative 12% effect on sales. Sales for the Molded
& Profile Products group increased 17%, from $10.5 million to $12.3 million,
primarily as a result of our October 1998 acquisition of Anjac-Doron Plastics,
Inc. ("Anjac-Doron").

Cost of sales increased from $110.6 million to $137.6 million, but as a
percentage of net sales decreased from 83.1% to 82.0%. The more favorable cost
of sales percentage in 1999 was primarily due to a decline in overall raw
material prices and improved production efficiencies, partially offset by an
increase in depreciation as a result of our capital expenditures during the last
24 months.

Selling, general and administrative expenses increased from $8.2 million to
$10.1 million, but as a percentage of net sales decreased from 6.1% to 6.0%.

Operating earnings increased 38%, from $13.8 million to $19.1 million.
Operating earnings as a percentage of net sales also increased from 10.4% to
11.4%. These gains in operating earnings were achieved through the increased
sales levels, improved production efficiencies and the declines in raw material
prices, discussed above.

13
<PAGE> 15

Interest expense increased 64%, from $2.3 million to $3.9 million, as a
result of borrowings related to the Polycom, Plasticolour, and Anjac-Doron
acquisitions.

Our effective tax rate increased from 38.6% to 39.9%, due primarily to the
impact of non-deductible goodwill resulting from the Polycom acquisition.

COMPARISON OF FISCAL YEARS 1998 AND 1997

The following table shows the net sales of each of our operating groups for
1997 and 1998.

<TABLE>
<CAPTION>
1997 1998
---------------------- ----------------------
NET SALES % OF TOTAL NET SALES % OF TOTAL
--------- ---------- --------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Extruded Sheet & Rollstock.......................... $375.8 75% $455.1 70%
Color & Specialty Compounds......................... 84.0 17 158.2 24
Molded & Profile Products........................... 42.9 8 40.6 6
------ ---- ------ ----
Total............................................... $502.7 100% $653.9 100%
====== ==== ====== ====
</TABLE>

Net sales increased 30%, from $502.7 million to $653.9 million. This was
primarily due to an increase in pounds sold from 535 million to 902 million.
This growth in sales volume included a 10% increase in pounds sold excluding
acquisitions and the effect of our late 1997 acquisition of the Preferred
Plastic Sheet Division of Echlin, Inc. ("Preferred Plastics") and our 1998
acquisitions of Polycom and Plasticolour.

Our Extruded Sheet & Rollstock group's net sales increased 21%, from $375.8
million to $455.1 million. This increase resulted from a 10% increase in pounds
sold excluding the effect of acquisitions and a 15% increase in sales related to
the August 1997 acquisition of Preferred Plastics. Price and product mix changes
had a negative 4% impact on sales. The increase in Extruded Sheet & Rollstock
pounds sold reflected strong sales of sign and specialty packaging products. The
Color & Specialty Compounds group's sales increased 88%, from $84.0 million to
$158.2 million. This was primarily the result of the $75.0 million in revenues
generated and approximately 240 million pounds sold by our 1998 acquisitions.
The nearly 14% growth in base volume for the Color & Specialty Compounds group
was offset in part by price and mix changes due to the increase in tolling
business (value-added conversion and processing of customer-owned material).
Molded & Profile Products group sales decreased 5%, from $42.9 million to $40.6
million, primarily due to the sale of our housewares business early in 1998.

Cost of sales increased from $420.5 million to $542.6 million, but
decreased from 83.6% of net sales to 83.0% of net sales. The more favorable cost
of sales percentage in 1998 represents a mix of higher margin product sales
generated by our new alloy plastics and product transformations and improved
production efficiencies, partially offset by an increase in depreciation as a
result of our capital expenditures during the last 24 months.

Selling, general, and administrative expenses increased from $31.0 million
to $38.3 million. However, selling, general, and administrative expenses as a
percentage of net sales decreased from 6.2% to 5.9%, primarily as a result of
continued cost containment efforts in 1998, ongoing synergies from acquisitions,
and the effect of the overall increase in sales volume on the fixed portion of
the costs.

Operating earnings increased 40%, from $49.7 million to $69.7 million.
Operating earnings as a percentage of net sales also increased from 9.9% to
10.7%. These gains in operating earnings were achieved through increased sales
levels, improved production efficiencies, cost containment efforts, and the new
product sales discussed above.

14
<PAGE> 16

Interest expense increased 62%, from $8.4 million to $13.6 million, as a
result of borrowings related to the Preferred Plastics and Polycom acquisitions.

Our effective tax rate increased from 38.3% to 39.9%, due primarily to the
impact of non-deductible goodwill resulting from the Polycom acquisition.

COMPARISON OF FISCAL YEARS 1997 AND 1996

Our fiscal year ends on the Saturday closest to October 31. Fiscal years
1998 and 1997 each represented 52 weeks while fiscal 1996 consisted of 53 weeks.
The discussion below describes the effect of the extra week in 1996 where
appropriate.

Net sales increased 28%, from $391.3 million to $502.7 million. Excluding
acquisitions, this growth in sales represented a 7% increase in pounds sold
offset in part by a 3% decrease from changes in price and mix of products sold
as well as a 2% decline related to the extra week in 1996. The Extruded Sheet &
Rollstock group's sales increased 18%, from $319.2 million to $375.8 million,
representing an 8% increase in pounds shipped excluding the effect of
acquisitions and a 15% increase in sales related to acquisitions, while price
and product mix changes and the extra week in 1996 had a negative impact on
sales. Net sales in the Color & Specialty Compounds group increased 23%, from
$68.2 million to $84.0 million, resulting from a 5% increase in pounds sold
excluding the effect of acquisitions and a 27% increase in sales from our late
1996 acquisition of the Hamelin Group, Inc. and an affiliated company
("Hamelin"), net of declines from changes in prices, mix of products sold, and
the extra week in 1996. The Molded & Profile Products group contributed $42.9
million in net sales in its first full year as a market segment for us and
benefitted from our late 1997 acquisition of Preferred Plastics' profile
extruded products operation.

Cost of sales decreased from 84.5% of net sales to 83.6% of net sales. The
more favorable cost of sales percentage in 1997 reflected improved production
efficiencies and a decline in some raw material prices, partially offset by an
increase in depreciation as a result of our capital expenditures during the last
18 months.

Selling, general and administrative expenses decreased from 6.4% of net
sales to 6.2% of net sales. The decrease reflected continued cost containment
efforts and economies of scale obtained through our acquisitions and sales
growth.

Operating earnings increased 44% from $34.5 million to $49.7 million.
Operating earnings as a percentage of net sales also increased from 8.8% to
9.9%. The gains in operating earnings were achieved through our increased sales
levels, improved production efficiencies, and cost containment efforts.

Interest expense increased 66%, from $5.1 million to $8.4 million,
reflecting additional borrowings related to our acquisitions of Portage
Industries Corporation ("Portage Industries"), Hamelin and Preferred Plastics,
net of paydowns throughout the year on our bank credit facility. In addition, we
borrowed, and subsequently paid down, $9.7 million in connection with our
acquisition of Hamelin.

Our effective tax rate increased from 37.8% to 38.3%.

ENVIRONMENTAL AND INFLATION

We operate under various laws and regulations governing employee safety and
the quantities of specified substances that may be emitted into the air,
discharged into waterways, or otherwise disposed of on and off our properties.
We do not anticipate that future expenditures for compliance with these laws and
regulations will have a material effect on our capital expenditures, earnings,
or competitive position.

15
<PAGE> 17

The plastic resins we use in our production process are crude oil or
natural gas derivatives which are available from a number of domestic and
foreign suppliers. Accordingly, our raw materials are only somewhat affected by
supply, demand and price trends of the petroleum industry. The pricing of resins
tends to be independent of crude oil or natural gas prices except in periods of
anticipated or actual shortages. We are not aware of any trends in the petroleum
industry which will significantly affect our sources of raw materials in 1999.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW

Our primary sources of liquidity have been cash flows from operating
activities and borrowings from third parties. Our principal uses of cash have
been to support our operating activities, invest in capital improvements, and
finance strategic acquisitions. Our cash flows for the periods indicated are
summarized as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
JANUARY 31, JANUARY 30,
1996 1997 1998 1998 1999
------ ------ ------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities.... $ 23.2 $ 48.4 $ 64.5 $ 5.2 $ 14.6
Net cash used for investing activities....... (76.5) (83.9) (146.2) (5.1) (15.4)
Net cash provided by financing activities.... 54.5 37.0 82.9 (1.1) (0.4)
</TABLE>

We continue to generate strong cash flows from operations, due in part to
the continuing increases in our net earnings. Operating cash flows provided by
changes in working capital were a positive $1.1 million in 1998 as a result of
consistent management of accounts receivable and inventories during periods of
revenue growth and higher days payables outstanding. Operating cash flows used
for changes in working capital totaled $1.2 million in the first quarter of 1999
due primarily to a reduction in accounts payable.

Our primary investing activities are capital expenditures and acquisitions
of businesses in the plastics industry. Capital expenditures are primarily
incurred to maintain and improve productivity, as well as to modernize and
expand facilities. Capital expenditures were $12.2 million for 1997 and $17.9
million for 1998. Our capital expenditures for the first quarter of 1999 were
$5.0 million compared to $2.1 million for the first quarter of 1998. We
anticipate total capital expenditures of approximately $22 million for 1999.

The net cash purchase price for Polycom, in March 1998, was approximately
$129 million (including estimated costs of the transaction and net of cash
acquired of $3 million). The acquisition was funded through our bank credit
facility and the issuance of $10 million of our common stock to Polycom
stockholders. In addition, we completed two other acquisitions in fiscal 1998
which, when combined with the Polycom purchase, totaled $132.6 million of cash
paid for acquired businesses. We continue to evaluate value-added acquisition
opportunities that meet our stringent acquisition criteria.

Our cash flows provided by financing activities were $82.9 million for
1998. The primary activities were bank borrowings of $132.6 million for
acquisitions, repayment of debt of $33.5 million, purchases of treasury stock of
$13.2 million, and proceeds from stock options exercised of $4.3 million.

Our cash flows used by financing activities were $0.4 million for the first
quarter of 1999. The primary activities were a bank borrowing of $10.4 million
for our January 1999 acquisition of Lustro Plastics Company, L.L.C. ("Lustro
Plastics"), repayment of debt of $9.0 million, and cash dividend payments of
$1.9 million.

16
<PAGE> 18

We paid common stock dividends of $6.4 million or $0.24 per share in 1998,
and at its December 1998 meeting our board of directors raised the dividend to
an annual rate of $0.28 per share.

FINANCING ARRANGEMENTS

In conjunction with the Polycom acquisition, on March 31, 1998 we increased
our $40 million bank credit facility to an aggregate availability of $150
million. The facility is unsecured and has a five-year term, with interest
payable at a rate chosen by us of either prime or LIBOR plus 0.5% to 1.0%. It
consists of a $50 million term loan, which has equal quarterly payments due of
$2.5 million over five years, and a $100 million revolving facility. At January
30, 1999, our total borrowings under the facility were $102.1 million at a
weighted average rate of 6.4%.

On March 5, 1999 we issued $50 million of 6.5% convertible subordinated
debentures to Spartech Capital Trust, a Delaware trust we control. We used the
proceeds to repay borrowings under our bank credit facility. The debentures are
the sole asset of the Trust and eliminate in consolidation. The Trust purchased
the debentures with the proceeds of a $50 million private placement of 6.5%
convertible preferred securities of the Trust having an aggregate liquidation
preference of $50 million and guaranteed by Spartech. The debentures:

- Are convertible along with the Trust preferred securities, at the option
of the preferred security holders, into shares of our common stock at a
conversion price equivalent to $30.55 per share of common stock, for a
total of 1,636,661 shares;

- Are redeemable along with the Trust preferred securities, at Spartech's
option on or after March 1, 2002, at a price equal to 104.56% of the
principal amount plus accrued interest, declining annually to a price
equal to the principal amount plus accrued interest by March 1, 2009; and

- Mature and are payable, along with the Trust preferred securities, on
March 1, 2014 if they have not been previously redeemed or converted.

We anticipate that cash flow from operations, together with the borrowings
under our bank credit facility and the proceeds from our debenture financing,
will satisfy our working capital needs, regular quarterly dividends, and planned
capital expenditures for the next year.

YEAR 2000

We have already modified substantially all of our computer systems to be
Year 2000 compliant. To date, we have needed to expend only a limited amount on
specific Year 2000 related issues, and we do not anticipate any significant
costs, problems or uncertainties associated with any additional Year 2000
compliance efforts. We implement new information systems and other software and
hardware replacements and upgrades in the normal course of our business. These
efforts have enhanced our Year 2000 readiness without incurring significant
incremental costs.

We could potentially experience disruption to some aspects of our
operations as a result of noncompliant systems used by other businesses and
governmental entities. We have communicated, and continue to communicate, with
our significant suppliers and customers to determine their Year 2000 compliance
readiness and the extent to which we are vulnerable to any Year 2000 issues
affecting them. These plans will evolve as 1999 progresses and we gain more
information on the Year 2000 readiness of our suppliers and customers.

We are developing contingency plans to mitigate the impact of any Year 2000
failure and to ensure that our critical operations continue uninterrupted in the
event of such a failure.

17
<PAGE> 19

BUSINESS

We are a leading producer of engineered thermoplastics, compounded polymers
and other proprietary plastic products. We operate as a plastics intermediary
processor, which means that we convert base polymers, or resins, from commodity
suppliers into extruded plastic sheet and rollstock, color concentrates and
blended resin compounds, and injection molded and profile extruded products. We
sell our products to over 4,500 original equipment manufacturers and other
customers in a wide range of end markets. We operate 38 production facilities in
North America and one in Europe, and are organized into three operating lines of
business: Extruded Sheet & Rollstock; Color & Specialty Compounds; and Molded &
Profile Products. We have recorded 29 consecutive quarters of earnings
improvement over the comparable prior year's quarter.

INDUSTRY OVERVIEW

The plastics industry is large and continues to grow faster than the U.S.
gross domestic product, due partly to the continuing substitution of plastics
for traditional materials such as metal, fiberglass and wood. The Society of
Plastics Engineers estimates that the U.S. plastics industry produced over 90
billion pounds of plastic in 1997 and grew at a 6% compound annual growth rate
from 1992 to 1997. The intermediary processor segment of the plastics industry
is fragmented, with over 2,000 plastic processing companies that generally
operate in one or more of the following areas:

- Sheet extrusion and thermoforming,

- Pipe and profile extrusion,

- Color and specialty compounding,

- Injection molding,

- Blow molding, and

- Rotational molding.

Each of these processing methods involves different production capabilities,
operating costs and equipment and requires a different level of capital
expenditure and operating expertise.

A large percentage of the plastics intermediaries in the United States are
small, regional operations that generate less than $50 million in annual sales
and are continuing to undergo consolidation. We believe that several current
trends contribute to this consolidation, including:

- Customers seeking to deal with fewer suppliers;

- The potential to achieve economies of scale;

- Increased capital and technical capabilities necessary to increase
production efficiencies and expand capacity; and

- Greater focus on management transition issues by plastics entrepreneurs.

Due to the size and breadth of our operations, we believe we are well positioned
to increase our market share through selective acquisitions.

OUR OPERATING GROUPS

EXTRUDED SHEET & ROLLSTOCK

- - Products. Our Extruded Sheet & Rollstock group, which operates under the
name Spartech Plastics, processes a variety of plastic materials into single
layer or multilayer sheets or rollstock. Our customers then further process
the material into products such as food and medical

18
<PAGE> 20

packaging, signs, spas and showers, vehicle interiors, boats and appliances.
This group's 1998 net sales were $455.1 million, or 70% of our total 1998 net
sales.

- - New Product Development. This group is actively involved in the development
of new proprietary products, which we call "alloy plastics." These products
offer end-product manufacturers a variety of solutions to design high
performance and environmentally-friendly products with cost effective
benefits. We currently offer ten alloy plastics, five of which were
introduced in the second half of 1998. We expect to introduce additional
alloy plastics in 1999.

- - Manufacturing and Production. This group operates 18 facilities in North
America. The principal raw materials used in manufacturing extruded sheet and
rollstock are plastic resins in pellet form, which are crude oil or natural
gas derivatives. We extrude a wide variety of plastic resins, including
acrylonitrile butadiene styrene ("ABS"), polycarbonate, polypropylene,
acrylic, polyethylene terephthalate ("PET"), polystyrene, polyethylene,
polyvinyl chloride ("PVC"), and polyethylene terephthalate glycol ("PETG").

We produce plastic sheet of up to seven layers using a multi-extrusion
process. This process combines the materials in distinct layers as they are
extruded through a die into sheet form. More than half of our plastic sheet
is produced using this multi-extrusion process. The remainder is produced in
a single layer using conventional extrusion processes. In some cases, we will
coat a plastic sheet or laminate sheets together to achieve performance
characteristics desired by customers for particular applications.

- - Marketing, Sales and Distribution. The custom sheet and rollstock extrusion
business has generally been a regional business supplying manufacturers
within an estimated 500 mile radius of each production facility. This is due
to shipping costs for rigid plastic material and the need for prompt response
to customer requirements and specifications. The outdoor sign and spa
markets, however, are slightly more national in scope.

We sell extruded sheet and rollstock products principally through our own
sales force, but also use a limited number of independent sales
representatives. During 1998, we sold products of the Extruded Sheet &
Rollstock group to over 2,500 customers, including Sub-Zero Freezer Company,
John Deere & Company, Jacuzzi Incorporated, Igloo Corporation, and Fleetwood
Enterprises, Inc.

COLOR & SPECIALTY COMPOUNDS

- - Products. The Color & Specialty Compounds group manufactures color
concentrates, proprietary or custom-designed plastic compounds, and
calendered film for a large group of manufacturing customers who produce
footwear, appliance components, lawn and garden equipment, cosmetics and
medical packaging, vehicle components and numerous other products. The
group's 1998 net sales were $158.2 million, or 24% of our total 1998 net
sales. The group operates under three business names:

-- Spartech Polycom produces its own line of proprietary compounds and also
provides toll compounding services for engineered resins, flame
retardants and other specialty compounds.

-- Spartech Color, the largest color supplier in Canada, is focused on
service-oriented color concentrate applications for film and molding.

-- Spartech Vy-Cal Plastics operates a vinyl calendering machine, supplying
finished PVC film to manufacturers of such products as loose-leaf
binders, decorator-grade wallcoverings and packaging products for the
medical industry.

Customers of the Color & Specialty Compounds group range from major
integrated manufacturers to sole-proprietor subcontractors that use injection
molding, extrusion, blow molding and blown and cast film processes.
19
<PAGE> 21

- - New Product Development. This group has well-equipped laboratory facilities,
particularly the Spartech Polycom Technical Center in Donora, Pennsylvania.
These laboratories operate testing and simulated end-use process equipment as
well as small scale versions of our production equipment to ensure accurate
scale-up from development to production. In addition to compounding
technology, the group has developed enhanced capabilities to produce color
concentrates and additives.

- - Manufacturing and Production. This group operates 14 manufacturing
facilities in North America and one in Europe. The principal raw materials
used in manufacturing specialty plastic compounds and color concentrates are
plastic resins in powder and pellet form (primarily polypropylene,
polyethylene, polystyrene, ABS and PVC), colorants, mineral and glass
reinforcements and other additives to impart specific performance and
appearance characteristics to the compounds. The raw materials are mixed in a
blending process and then fed into an extruder and formed into pellets.

- - Marketing, Sales and Distribution. We generate most of the Color & Specialty
Compounds group's sales in the United States and Canada but also sell to
customers in Europe and Mexico. We sell the group's products principally
through our own sales force, but also use independent sales representatives.
During 1998, we sold products of the Color & Specialty Compounds group to
over 1,500 customers, including The Black & Decker Corporation,
DaimlerChrysler Corporation, First Brands Corporation and Tenneco Inc. The
group also supplies approximately $15 million worth of color concentrates
annually for internal use by the Extruded Sheet & Rollstock group.

MOLDED & PROFILE PRODUCTS

- - Products. Our Molded & Profile Products group manufactures a wide range of
injection molded and profile extruded products for a large group of
intermediate and end-user customers. The group's 1998 net sales were $40.6
million, or 6% of our total 1998 net sales. The group operates under three
business names:

-- GenPak produces thin-walled, printed plastic food packaging and industrial
containers for a large group of dairy, deli and industrial supply
companies.

-- Hamelin Industries manufactures plastic tire and wheel assemblies for the
lawn and garden, refuse container and toy markets.

-- Spartech Profiles manufactures products for various industries, including
the bedding and construction markets.

- - New Product Development. This group brings unique, recognized capabilities
to our customers such as print graphics and package design, patented
tread-cap wheel technologies and special fabrication of profile products. In
addition, this group's creativity, engineering and design principles enable
us to effectively respond to customer needs in the niche markets in which we
participate.

- - Manufacturing and Production. This group operates six manufacturing
facilities in North America. The principal raw materials used in our
manufacturing of molded and profile products are polyethylene, polypropylene
and PVC. Products are produced either through injection molding or profile
extrusion.

- - Marketing, Sales and Distribution. GenPak markets most of its products to
customers located in North America, as well as the Caribbean. Hamelin
Industries markets its products throughout North America. Spartech Profiles
markets its products throughout the United States. We sell the group's
products principally through our own sales force, but also use independent
sales

20
<PAGE> 22

representatives. During 1998, we sold products of the Molded & Profile
Products group to approximately 500 customers, including MTD Products, Dannon
Company, Select Comfort Corporation, The Toro Company and Waste Management,
Inc.

GROWTH STRATEGY

- - Business Partnerships. We are committed to building business partnerships
with customers and suppliers to develop new markets and applications for our
products. These partnerships provide long-term growth opportunities and
enhance customer relationships by broadening product lines and lowering the
cost of technological efforts. They foster shared technology and design
improvements to offer customers state-of-the-art products, and have
significantly contributed to strengthening our leading market position in the
plastics intermediary segment. In an effort to exceed customer expectations,
we have designed several continuous improvement initiatives such as the Total
Transaction Quality, Growth Through Training and Total Customer Satisfaction
programs. These programs involve customer contact and survey processes,
ISO9000 and QS9000 quality system certifications, customer training offerings
and quality management reviews.

- - Strategic Expansions. As a result of our size and breadth of operations, we
believe that we are well positioned for continued expansion through selective
acquisitions in the consolidating plastics intermediary segment. In
evaluating acquisition opportunities, we look for acquisition candidates that
provide us with one or more of the following:

-- Potential for market share growth,

-- New or expanded product lines and process technologies, with emphasis on
companies producing specialty or value-added plastic products,

-- Increased geographic presence, and

-- Operational synergies through increased purchasing volume, longer
production runs and enhanced customer service.

For example, our acquisition of Polycom expanded two product lines,
polypropylene compounds and black color concentrates, added eight
state-of-the-art manufacturing facilities in the U.S., a manufacturing
facility in France, our first outside North America, and a technical center,
and provided additional cost saving opportunities in purchasing and
administrative expenses.

- - Product Transformations. A key element of our internal growth is the ongoing
transition of products previously made from wood, metal or fiberglass to
thermoplastics. These products provide our customers with solutions that are
custom formable, are recyclable, or are less expensive, more durable or
lighter weight than the materials they replace. Thin gauge plastics continue
to replace paper and glass for food and other packaging applications. Heavier
gauge plastics are increasingly replacing sizeable metal, glass and
fiberglass specialty components in the agricultural equipment and
transportation markets, where advanced plastics can meet more demanding
specifications for durability and weather resistance. We utilize the
experience of our sales and production personnel, partnerships with
suppliers, and relationships with customers to identify and develop new
applications for our products. Product transformations have been, and should
continue to be, a key contributor to our internal growth.

- - Alloy Plastics. We aggressively develop new alloy plastics, which combine
advanced engineered thermoplastic compounds and additives with new
manufacturing techniques implemented by experienced operating personnel.
Alloy plastics represent advancements in formulation and

21
<PAGE> 23

production technologies, such as the ability to extrude new products that
combine the virtues of several polymers into a single sheet or to create new
specialty compounds by adding reinforcements such as talc, calcium carbonate
and glass fibers to base resins. Our alloy plastics offer end-product
manufacturers a variety of solutions for the design of high performance and
environmentally-friendly products with cost efficient benefits. They not only
permit product transformations in areas where plastics were formerly not
feasible, but can in some cases accelerate the development of new proprietary
products.

The Pyramids of Productivity component of our strategy emphasizes ongoing
cost containment and productivity improvement efforts to increase operating
earnings and further enhance stockholder returns. Its three initiatives are
results-driven communication, lean manufacturing, and supply chain management.

COMPETITIVE STRENGTHS

The ability to realize our growth strategy is supported by our various
competitive strengths, including:

- - Leading Market Position. We are the largest extruder of custom rigid plastic
sheet and rollstock in North America according to the Plastics News 1998
annual ranking of sheet manufacturers. We use our leading market position to
drive new product development and product transformation initiatives through
partnerships with both customers and suppliers and to obtain economies of
scale, particularly in the areas of raw material purchasing and longer
production runs. Our growing presence in the color and specialty compounds
business provides long-term growth opportunities through access to a new,
incremental customer base and additional product, technology and
manufacturing capabilities. Each of these two business groups provides our
customers with comprehensive capabilities that include broad product
offerings and technological expertise.

- - Diversified Customer Base and Geographic Presence. We sell our products to
over 4,500 customers, no single one of which accounts for more than 5% of our
sales. Our customers are located throughout North America and in Europe, and
operate in a broad range of end markets. Our 39 plants are strategically
located in 35 cities throughout the United States as well as in eastern
Canada and France. This allows us to provide efficient product delivery and
continuous customer contact. We believe that our broad customer base and
expanding geographic presence reduce our exposure to economic downturns.

- - Low-Cost Supplier. We strive to be a low-cost supplier. Our size helps us
obtain volume discounts on raw materials, and the strategic location of our
plants saves shipping costs and reduces delivery times to our customers. Our
commitment to reduce expenses has contributed to improvements in gross
margins from 14.4% in 1994 to 17.0% in 1998. We made substantial investments
in new equipment over that period to expand capacity, improve productivity
and reduce manufacturing labor and overhead costs. During the same period, we
reduced our selling and administrative expenses as a percentage of sales from
7.8% to 5.9%. The December 1998 issue of CFO Magazine identified us as one of
the five most successful companies in the rubber and plastic products
industry in controlling selling, general and administrative expenses as a
percentage of net sales for the 1994-1997 period.

- - Decentralized Management Structure. Our day-to-day operating decisions are
made at each of our operating locations. This promotes operating efficiency
and timely decision making by the persons who have direct contact with
customers and suppliers. Our corporate management team develops strategic
direction, identifies and assists in implementing business investment
opportunities, provides oversight of operating performance, and performs
other functions that are more cost

22
<PAGE> 24

effective on a centralized basis. In addition, our operating management meets
monthly with corporate management to exchange ideas on operating improvements
and to review financial performance.

- - Commitment to Customer Service. We work closely with our customers to
provide products which meet their evolving needs and seek to differentiate
ourselves from our competitors by emphasizing consistent product quality and
superior customer service. We drive internal sales growth through broad
interaction with our customers at all levels of the organization. Members of
our production, customer service and senior management teams regularly visit
customers' facilities to better understand each customer's needs. We
capitalize on the technical expertise of our personnel to provide cost
effective, innovative solutions for our customers. We believe our customer
service philosophy, focus on product quality, and ability to provide
solutions, such as new product transformations and alloy plastics
applications, create growth and diversification opportunities for existing
and potential customers.

- - Proven Acquisition Strategy. We pursue an aggressive but disciplined
acquisition program and have successfully integrated numerous acquisitions
that have all contributed to profitable growth. A key element of our
expansion strategy is to continue to acquire plastics intermediary companies
with profitable operations that will expand our geographic presence and
product offerings and make our operations more efficient.

ACQUISITION HISTORY

OVERVIEW

Since 1993, we have acquired ten businesses which have strengthened our
market position in extruded sheet and rollstock, added critical mass in color
and specialty compounds and initiated our presence in molded and profile
products. The following table summarizes these acquisitions.

<TABLE>
<CAPTION>
DATE ACQUIRED BUSINESS ACQUIRED SALES LEVEL(A) LINE OF BUSINESS ACQUIRED BENEFITS
- -------------- ------------------- -------------- ---------------------------- ------------------------
<S> <C> <C> <C> <C>
January 1999 Lustro Plastics $ 28 million Extruded sheet and rollstock PETG material, national
distribution network
October 1998 Anjac-Doron $ 9 million Profile products West Coast facility,
expanded capacity
April 1998 Plasticolour $ 10 million Color concentrates Quick color match,
Quebec market
March 1998 Polycom $115 million Color and specialty Polypropylene capacity,
compounds technical center,
European production
August 1997 Preferred Plastics $ 75 million Extruded sheet and Polyethylene expansion
rollstock, profile products and profile products
September 1996 Hamelin $ 80 million Extruded sheet and Canadian and
rollstock, color Northeastern U.S.
concentrates, molded markets, new business
products lines
May 1996 Portage Industries $ 35 million Extruded sheet and rollstock Thin-gauge and
multi-layer packaging
November 1994 Pawnee Industries $ 58 million Extruded sheet and Initial color, Central
rollstock, color U.S. market
concentrates
</TABLE>

23
<PAGE> 25

- ---------------

(a) Management's estimate of annualized net sales of acquired businesses at time
of acquisition.

RECENT ACQUISITIONS

- - Lustro Plastics. On January 7, 1999 we completed our purchase of the net
assets of Lustro Plastics Company, L.L.C., a custom extruder of sheet and
rollstock, particularly PETG. The cash purchase price was approximately $10.4
million, including estimated costs of the transaction. The acquisition was
funded through our existing bank credit facility.

- - Anjac-Doron. On October 30, 1998 we completed our acquisition of all of the
stock of Anjac-Doron Plastics, Inc., a custom profile extruder. The
acquisition price of approximately $6.7 million was funded through our
existing bank credit facility.

- - Plasticolour. On April 26, 1998, we completed our purchase of the net assets
of Prismaplast Canada Ltd. of Montreal. Prismaplast, commonly known as
Plasticolour, produces color concentrates and specialty compounds. The
acquisition price for Plasticolour was approximately $5 million, which was
financed through operating cash flow and our bank credit facility.
Plasticolour added product offerings in color additives, such as flame
retardants and UV stabilizers, techniques in the quick matching of custom
colors, and additional geographic reach.

- - Polycom. On March 31, 1998, we completed our acquisition of all of the stock
of Polycom Huntsman, Inc., a leading supplier of proprietary polymer
compounds, color and additive concentrates, and toll compounding services.
The net cash purchase price was approximately $129 million, including
estimated costs of the transaction and net of cash acquired of $3 million.
The acquisition was funded through our bank credit facility and the issuance
of $10 million of our common stock to Polycom stockholders. The acquisition
of Polycom added nine strategically located manufacturing plants in the
United States and France to our Color & Specialty Compounds group. This
acquisition significantly expanded the group's geographic coverage, added
strong technological leadership, including a fully staffed and equipped
technical center, expanded product capabilities and operating techniques,
particularly in filled and reinforced polypropylene compounds, and provided
operating efficiencies throughout the Color & Specialty Compounds group.

RAW MATERIALS

We use large amounts of plastic resin in our manufacturing processes. These
resins are crude oil or natural gas derivatives and are to some extent affected
by supply, demand and price trends in the petroleum industry. We seek to
maintain our operating margins by matching cost increases with corresponding
price increases and have generally been successful in doing so. We do business
with most of the major resin manufacturers and have enjoyed good relationships
with our suppliers over the past several years. We have been able to adequately
obtain all of our required raw materials to date and expect to be able to
continue to satisfy our requirements in the foreseeable future.

COMPETITION

Since we manufacture a wide variety of products, we compete in different
areas with many other companies, some of which are much larger than we are and
have more extensive production facilities,

24
<PAGE> 26

larger sales and marketing staffs and substantially greater financial resources.
We compete generally on the basis of price, product performance and customer
service. Important competitive factors in each of our businesses include the
ability to manufacture consistently to required quality levels, meet demanding
delivery times, exercise skill in raw material purchasing, and achieve
production efficiencies to process our products profitably. We believe we are
competitive in each of these key areas.

EMPLOYEES

We have approximately 2,800 employees. Approximately 2,200 of these are
production personnel at our 39 plants, and approximately 30% of these production
employees are covered by one of several collective bargaining agreements. We
have not experienced any strikes or work stoppages in the past five years. Our
management consists of approximately 600 supervisory and clerical employees,
none of whom are unionized. We believe that all of our employee and union
relations are satisfactory.

GOVERNMENT REGULATION

Our operations are regulated by various laws governing employee safety and
environmental matters. We believe we are in material compliance with all these
laws and do not anticipate large expenditures to comply with any applicable
regulations. We are subject to federal, state, local and non-U.S. laws and
regulations governing the quantity of specified substances that may be emitted
into the air, discharged into interstate and intrastate waters and otherwise
disposed of on and off our properties. We have not incurred significant
expenditures to comply with these laws and regulations, and we do not anticipate
continued compliance to materially affect our earnings or competitive position.

PROPERTIES

We have 39 operating facilities aggregating approximately 2,987,000 square
feet of space in 35 cities throughout the United States and in eastern Canada
and France. We lease approximately 1,203,000 square feet of plant and office
space and own the remaining 1,784,000 square feet. We also lease approximately
5,500 square feet of office facilities in St. Louis, Missouri and approximately
5,000 square feet of office facilities in Montreal, Quebec.

Our plants are equipped with 95 sheet extrusion lines, 65 supplementary
co-extruders, 31 profile extrusion lines, 40 general compounding lines, 20 color
compounding lines, 63 injection molding machines, five compression molding
machines, 20 printing machines, a calendering line, cutting and grinding
machinery, resin storage facilities, warehouse equipment and quality
laboratories at all locations. We believe that our present facilities are
adequate for the current level of our business.

LEGAL PROCEEDINGS

We are subject to various claims, lawsuits and administrative proceedings
arising in the ordinary course of our business with respect to commercial,
product liability, employment and other matters, several of which claim
substantial amounts of damages. While we cannot estimate with certainty our
ultimate legal and financial liability with respect to these claims, lawsuits
and administrative proceedings, we do not believe that the outcome of these
matters will have a material adverse effect on our business, financial position
or results of operations. We are not involved in any litigation with respect to
any environmental matters.

25
<PAGE> 27

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table provides information about our directors and executive
officers.

<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION
- ---- --- -------------- --------
<S> <C> <C> <C>
Bradley B. Buechler............ 50 1984 Chairman of the Board, President, Chief
Executive Officer and Director
David B. Mueller............... 45 1994 Executive Vice President, Chief Operating
Officer, Secretary and Director
Randy C. Martin................ 36 -- Vice President--Finance and Chief Financial
Officer
David G. Pocost................ 38 -- Vice President--Engineering, Quality and
Management Information Systems
Daniel J. Yoder................ 57 -- Vice President--Materials and Technology
Ralph B. Andy.................. 54 1998 Director
Thomas L. Cassidy.............. 70 1986 Director
W.R. Clerihue.................. 75 1990 Director
John R. Kennedy................ 68 1997 Director
Calvin J. O'Connor............. 46 1998 Director
Jackson W. Robinson............ 56 1993 Director
Alan R. Teague................. 51 1997 Director
</TABLE>

Mr. Buechler is a CPA and was with Arthur Andersen & Co. before becoming
the Corporate Controller of Spartech in 1981. He was Corporate Controller and
Vice President, Finance of Spartech from 1981 to 1984 and Chief Financial
Officer from 1983 to 1987. He became Chief Operating Officer of Spartech in
1985, President in 1987, Chief Executive Officer in 1991 and Chairman of the
Board in March, 1999. Mr. Buechler is a member of the Executive Committee of the
Sheet Producers Division of the Society of Plastics Industry ("SPI"), and is
also a member of the National Board of Directors of the SPI.

Mr. Mueller is a CPA and was with Arthur Andersen & Co. from 1974 to 1981.
He was Corporate Controller of Apex Oil Company from 1981 to 1988. He became
Vice President and Chief Financial Officer of Spartech in 1988, Secretary in
1991 and Executive Vice President and Chief Operating Officer in 1996.

Mr. Martin is a CPA and was with KPMG Peat Marwick LLP from 1984 to 1995.
He became Corporate Controller of Spartech in 1995, and Vice President--Finance
and Chief Financial Officer in 1996.

Mr. Pocost was previously with Moog Automotive as Division Quality
Assurance Manager and Senior Materials Engineer for eight years. He was
Spartech's Director of Quality and Environmental Affairs from 1994 to 1996, when
he became a Vice President.

Mr. Yoder was General Manager of Spartech Plastics' Central Region from
1986 to 1990, when he became a Vice President. From 1983 to 1986 he was Vice
President of Manufacturing for Atlas Plastics Corp., before its acquisition by
Spartech.

Mr. Andy founded Polycom in 1977. Before then, he held positions ranging
from Salesman and Plant Manager to Vice President of Washington Penn Plastics.
He was the Chairman of the Board of Directors and President of Polycom before
its acquisition.

26
<PAGE> 28

Mr. Cassidy has been a Managing Director of Trust Company of the West and a
senior partner of TCW Capital since 1984. Before then, he was a Managing
Director of The First Boston Corporation. Mr. Cassidy serves on the boards of
directors of DeVlieg--Bullard, Inc. and Reunion Industries, Inc.

Mr. Clerihue was Chairman of the Board from 1991 until March, 1999. He is
retired from Celanese Corporation, where he last served as Executive Vice
President and Chief of Staff. Mr. Clerihue also serves on the board of directors
of Reunion Industries, Inc.

Mr. Kennedy is the retired President and Chief Executive Officer of Federal
Paper Board Company, Inc. Mr. Kennedy serves on the boards of directors of
International Paper Company, DeVlieg-Bullard, Inc., Chase Brass Industries, Inc.
and Holnam Inc. and is Chairman of the Georgetown University board of directors.

Mr. O'Connor is a Chartered Accountant in the United Kingdom. He was
appointed to the board of directors of British Vita PLC in June 1996 and became
the Finance Director of British Vita in November 1996. Before joining British
Vita, he was the Group Financial Controller at Courtaulds Textiles, PLC.

Mr. Robinson is President of Winslow Management Company, an operating
division of Eaton Vance Management in Boston, having held that position since
1983. He is also a director of Jupiter International Green Investment Trust and
Jupiter-European Investment Trust, and a Trustee of Suffield Academy.

Mr. Teague is a director of Vita International Limited and the Secretary of
British Vita PLC.

27
<PAGE> 29

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth, as of January 30, 1999, information
concerning the beneficial ownership of our common stock by:

- Each director,

- The Chief Executive Officer and each other executive officer whose total
annual compensation exceeded $100,000 for 1998,

- All directors and executive officers as a group,

- Each stockholder who is known by us to own beneficially in excess of 5%
of the outstanding common stock, and

- The other selling stockholder.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP NUMBER OF BENEFICIAL OWNERSHIP
BEFORE OFFERING SHARES OF AFTER OFFERING
--------------------- COMMON ---------------------
NUMBER PERCENT STOCK SOLD IN NUMBER PERCENT
NAME OF BENEFICIAL OWNER OF SHARES OF CLASS THE OFFERING OF SHARES OF CLASS
- ------------------------ ---------- -------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Directors and named executive
officers:
Calvin J. O'Connor and Alan R.
Teague(a)........................ 11,950,769 44.4% -- 11,950,769 44.4%
Thomas L. Cassidy(b)............... 2,012,011 7.5% 2,012,011 -- --
Bradley B. Buechler(c)............. 1,093,165 3.9% -- 1,093,165 3.9%
David B. Mueller(d)................ 460,935 1.7% -- 460,935 1.7%
Ralph B. Andy(e)................... 286,761 1.1% -- 286,761 1.1%
Daniel J. Yoder(f)................. 69,266 * -- 69,266 *
W.R. Clerihue(g)................... 60,000 * -- 60,000 *
John R. Kennedy(h)................. 40,000 * -- 40,000 *
David G. Pocost(i)................. 31,078 * -- 31,078 *
Randy C. Martin(j)................. 29,762 * -- 29,762 *
Jackson W. Robinson(k)............. 26,000 * -- 26,000 *
All directors and executive
officers as a group(l)........... 16,059,747 56.3% 2,012,011 14,047,736 49.3%
Beneficial owners in excess of 5%
of the outstanding common stock:
Vita International Limited (a)..... 11,950,769 44.4% -- 11,950,769 44.4%
Oldham Road
Middleton, Manchester
M24 2DB England
The TCW Group, Inc.(b)............. 2,012,011 7.5% 2,012,011 -- --
865 South Figueroa Street, Suite
1800
Los Angeles, CA 90017
FMR Corp.(m)....................... 1,636,500 6.1% -- 1,636,500 6.1%
Fidelity Management & Research
Company
82 Devonshire Street
Boston, MA 02109
Other Selling Stockholder:
Huntsman International
Corporation(n)................... 316,957 1.2% 316,957 -- --
</TABLE>

- ---------------

* Represents less than 1% of the common stock outstanding.

(footnotes on following page)

28
<PAGE> 30

(a) Messrs. O'Connor and Teague, each a Director of Spartech, are also
directors of Vita International Limited. As such, these amounts represent
common stock owned by Vita International Limited.

(b) The TCW Group, Inc. is comprised of TCW Special Placements Fund I, TCW
Special Placements Fund II, California limited partnerships, and TCW
Capital, a California general partnership. Mr. Cassidy, a director, is
Managing Director of Trust Company of the West and is a Senior Partner of
TCW Capital; as such, this amount represents the common stock owned by The
TCW Group, Inc. The shares of common stock are held beneficially by TCW
Special Placements Fund I (1,591,461 shares), TCW Special Placements Fund
II (408,221 shares), and TCW Capital (12,329 shares), as Investment
Manager, under an Investment Management Agreement dated as of June 30,
1987. The TCW Group, Inc. owns 100% of the stock of TCW Asset Management
Company ("TAMCO"). TAMCO is the managing general partner of TCW Capital.
TCW Capital is the general partner of TCW Special Placements Fund I and TCW
Special Placements Fund II. An Investment Committee of TAMCO, of which Mr.
Cassidy is a member, controls the investment decisions and voting of the
shares of common stock beneficially owned by the TCW Group, Inc.; we do not
know the identities of the other members of the investment committee.

(d) Includes 425,000 shares issuable upon exercise of options presently
exercisable.
(e) Includes 1,500 shares owned by Mr. Andy's daughter, and 285,261 shares
owned by RBA Partners, L.P. Mr. Andy is the sole stockholder of RBA
Investments, Inc., a 0.1% general partner of RBA Partners, L.P. As such,
Mr. Andy, through RBA Investments, Inc. has investment and voting power
over the shares owned by RBA Partners, L.P.

(f) Includes 50,750 shares issuable upon exercise of options presently
exercisable.

(g) Includes 30,000 shares issuable upon exercise of options presently
exercisable.

(h) Includes 35,000 shares issuable upon exercise of options presently
exercisable.

(i) Includes 24,750 shares issuable upon exercise of options presently
exercisable.

(j) Includes 24,000 shares issuable upon exercise of options presently
exercisable.

(k) Includes 15,000 shares issuable upon exercise of options presently
exercisable.

(l) Includes 1,564,500 shares issuable upon exercise of options presently
exercisable.

(m) Based on information presented as of December 31, 1998 in FMR Corp.'s
latest available Schedule 13G, FMR Corp. beneficially owned 1,636,500
shares of common stock including 1,077,500 shares beneficially owned by
Fidelity Management & Research Company as a result of it serving as
investment advisor to various investment companies and other funds and
559,000 shares beneficially owned by Fidelity Management Trust Company as
trustee or managing agent for various private investment accounts and other
funds. FMR Corp. has sole voting power with respect to the 559,000 shares
and sole investment power with respect to all 1,636,500 shares.

(n) These shares are being sold under contractual registration rights arising
from Spartech's purchase of Polycom.

29
<PAGE> 31

UNDERWRITING

Spartech and the selling stockholders have entered into an underwriting
agreement with the underwriters named below. First Analysis Securities
Corporation ("First Analysis"), EVEREN Securities, Inc. and Janney Montgomery
Scott Inc. are acting as representatives (the "Representatives") for the
underwriters.

The underwriting agreement provides for each underwriter to purchase the
number of shares of common stock shown opposite its name below, subject to the
terms and conditions of the underwriting agreement. The underwriters'
obligations are several, which means that each underwriter is required to
purchase the specified number of shares, but is not responsible for the
commitment of any other underwriter to purchase shares.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
First Analysis Securities Corporation.......................
EVEREN Securities, Inc. ....................................
Janney Montgomery Scott Inc. ...............................
---------
Total....................................................... 2,328,968
=========
</TABLE>

This is a firm commitment underwriting, which means that the underwriters
have agreed to purchase all of the shares offered by this prospectus if they
purchase any shares (other than those covered by the over-allotment option
described below). The underwriting agreement provides that if an underwriter
defaults in its commitment to purchase shares, the commitments of non-defaulting
underwriters may be increased or the underwriting agreement may be terminated,
depending on the circumstances.

Spartech and the selling stockholders have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, and to contribute to payments the underwriters may be
required to make to satisfy any such liabilities.

The Representatives have advised Spartech and the selling stockholders that
the underwriters propose to offer the shares directly to the public at the
public offering price that appears on the cover page of this prospectus. In
addition, the underwriters may offer some of the shares to selected securities
dealers at the public offering price less a concession of $ per share.
The underwriters may also allow, and these dealers may reallow, a concession not
in excess of $ per share to other dealers. After the shares are
released for sale to the public, the underwriters may change the offering price
and other selling terms at various times.

Spartech has granted the underwriters an over-allotment option. This
option, which is exercisable for up to 30 days after the date of this
prospectus, permits the underwriters to purchase a maximum of 350,000 additional
shares from Spartech to cover over-allotments. If the underwriters exercise all
or part of this option, they will purchase shares covered by the option at the
initial public offering price that appears on the cover page of this prospectus,
less the underwriting discount. The underwriters have severally agreed that, to
the extent the over-allotment option is exercised, they will each purchase a
number of additional shares proportionate to each underwriter's initial
commitment reflected in the foregoing table.

The following table shows the underwriting fees to be paid to the
underwriters by Spartech and the selling stockholders in connection with this
offering. The fees to be paid by Spartech and the

30
<PAGE> 32

selling stockholders are shown assuming both no exercise and full exercise of
the underwriters' over-allotment option.

<TABLE>
<CAPTION>
PAID BY SELLING
PAID BY COMPANY STOCKHOLDERS
-------------------- --------------------
NO EXERCISE FULL NO EXERCISE FULL
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Per share.................................. $ $ $ $
Total...................................... $ $ $ $
</TABLE>

We will pay the offering expenses, estimated to be $ .

Vita and Spartech's officers and directors have agreed to a 90-day "lockup"
with respect to the shares of common stock and other Spartech securities that
they beneficially own or have the right to acquire upon exercise of options.
Spartech has agreed to a similar lockup with respect to previously-unissued or
treasury shares. This means that, with certain exceptions, for a period of 90
days after the date of this prospectus, Spartech, Vita and these officers and
directors may not offer, sell, pledge or otherwise dispose of Spartech common
stock without the prior written consent of First Analysis.

The rules of the Securities and Exchange Commission may limit the ability
of the underwriters to bid for or purchase shares before the distribution of the
shares is completed. However, the underwriters may engage in the following
activities under the rules:

- Stabilizing transactions--The underwriters may make bids or purchases
for the purpose of pegging, fixing or maintaining the price of shares, so
long as stabilizing bids do not exceed a specified maximum.

- Over-allotments and syndicate covering transactions--The underwriters
may create a short position in the shares by selling more shares than are
shown on the cover page of this prospectus. If a short position is
created in connection with the offering, the representatives may engage
in syndicate covering transactions by purchasing shares in the open
market. The representatives may also elect to reduce any short position
by exercising all or part of the over-allotment option.

31
<PAGE> 33

LEGAL MATTERS; EXPERTS

The validity of the shares of common stock offered by this prospectus will
be passed upon for Spartech by Armstrong Teasdale LLP, St. Louis, Missouri, a
partnership including professional corporations. Certain other legal matters
will be passed upon for the underwriters by McDermott, Will & Emery, Chicago,
Illinois.

Our consolidated financial statements as of November 1, 1997 and October
31, 1998 and for each of the three years in the period ended October 31, 1998
included in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of that firm as
experts in accounting and auditing in giving said report.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission in connection with this offering. In addition, we file
annual, quarterly and periodic reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy the
registration and any other documents filed by us at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the Public Reference Room. Our Securities and Exchange
Commission filings are also available to the public at the Securities and
Exchange Commission's Internet site at http://www.sec.gov.

This prospectus is part of the registration statement and does not contain
all of the information included in the registration statement. Whenever a
reference is made in this prospectus to any contract or other document of
Spartech the reference may not be complete and you should refer to the exhibits
that are a part of the registration statement for a copy of the contract or
document.

The Securities and Exchange Commission allows us to "incorporate by
reference" into this prospectus the information we file with it, which means
that we can disclose important information to you by referring you to those
documents. Information incorporated by reference is part of this prospectus.
Later information filed with the Securities and Exchange Commission will update
and supersede this information.

We incorporate by reference the documents listed below and any documents we
subsequently file with the Securities and Exchange Commission under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this
offering is completed:

- Our annual report on Form 10-K for the year ended October 31, 1998,

- Our quarterly report on Form 10-Q for the quarter ended January 30,
1999,

- Our current report on Form 8-K filed April 14, 1998, as amended on June
15, 1998,

- Our current report on Form 8-K filed March 18, 1999, and

- The description of our common stock in our Registration Statement on
Form 8-A dated November 28, 1994, filed with the Commission on December
1, 1994 under the Securities Exchange Act of 1934.

You may request a copy of these filings, at no cost, by contacting us at:
Spartech Corporation
7733 Forsyth Boulevard, Suite 1450
Clayton, Missouri 63105
Attention: Secretary

Our telephone number for copy requests is (314) 721-4242.

32
<PAGE> 34

SPARTECH CORPORATION

INDEX TO FINANCIAL STATEMENTS

SPARTECH CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Public Accountants............... F-2
Consolidated Balance Sheet as of November 1, 1997 and
October 31, 1998...................................... F-3
Consolidated Statement of Operations for the Years
Ended November 2, 1996, November 1, 1997 and October
31, 1998.............................................. F-4
Consolidated Statement of Shareholders' Equity as of
November 2, 1996, November 1, 1997 and October 31,
1998.................................................. F-5
Consolidated Statement of Cash Flows for the Years
Ended November 2, 1996, November 1, 1997 and October
31, 1998.............................................. F-6
Notes to Consolidated Financial Statements............. F-7

CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS:
Consolidated Condensed Balance Sheet (Unaudited) as of
October 31, 1998 and January 30, 1999................. F-17
Consolidated Condensed Statement of Operations
(Unaudited) for the Three Months Ended January 31,
1998 and January 30, 1999............................. F-18
Consolidated Condensed Statement of Cash Flows
(Unaudited) for the Three Months Ended January 31,
1998 and January 30, 1999............................. F-19
Notes to Consolidated Financial Statements............. F-20
</TABLE>

F-1
<PAGE> 35

REPORT OF INDEPENDENT ACCOUNTANTS

TO SPARTECH CORPORATION

We have audited the accompanying consolidated balance sheet of Spartech
Corporation (a Delaware Corporation) and subsidiaries as of October 31, 1998 and
November 1, 1997, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three fiscal years in the
period ended October 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 Spartech Corporation and
subsidiaries as of October 31, 1998 and November 1, 1997, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended October 31, 1998 in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

St. Louis, Missouri
December 4, 1998

F-2
<PAGE> 36

CONSOLIDATED BALANCE SHEET
(in thousands, except share amounts)

<TABLE>
<CAPTION>
NOVEMBER 1, OCTOBER 31,
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents...................................... $ 6,058 $ 7,247
Receivables, net of allowances of $2,212 in 1997 and
$2,430 in 1998......................................... 74,271 91,631
Inventories............................................... 55,851 64,859
Prepayments and other..................................... 4,517 9,459
-------- --------
TOTAL CURRENT ASSETS...................................... 140,697 173,196
PROPERTY, PLANT AND EQUIPMENT, NET.......................... 129,362 206,887
GOODWILL.................................................... 83,565 148,668
OTHER ASSETS................................................ 5,179 4,558
-------- --------
$358,803 $533,309
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt...................... $ 921 $ 8,948
Accounts payable.......................................... 47,221 59,578
Accrued liabilities....................................... 29,126 32,466
-------- --------
TOTAL CURRENT LIABILITIES................................. 77,268 100,992
-------- --------
LONG-TERM DEBT, LESS CURRENT MATURITIES..................... 141,693 245,272
OTHER LIABILITIES........................................... 11,453 33,449
-------- --------
TOTAL LONG-TERM LIABILITIES............................... 153,146 278,721
-------- --------

SHAREHOLDERS' EQUITY
Common stock, 26,628,154 and 27,550,107 shares issued in
1997 and 1998, respectively............................ 19,971 20,663
Contributed capital....................................... 89,301 99,407
Retained earnings......................................... 22,912 50,185
Treasury stock, at cost, 147,691 shares in 1997 and
688,917 shares in 1998................................. (2,127) (11,875)
Cumulative translation adjustments........................ (1,668) (4,784)
-------- --------
TOTAL SHAREHOLDERS' EQUITY................................ 128,389 153,596
-------- --------
$358,803 $533,309
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-3
<PAGE> 37

CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
NET SALES................................................ $391,348 $502,715 $653,855
-------- -------- --------
COSTS AND EXPENSES
Cost of sales.......................................... 330,776 420,500 542,640
Selling, general and administrative.................... 25,184 31,019 38,257
Amortization of intangibles............................ 896 1,495 3,230
-------- -------- --------
356,856 453,014 584,127
-------- -------- --------
OPERATING EARNINGS....................................... 34,492 49,701 69,728
Interest............................................... 5,062 8,393 13,602
-------- -------- --------
EARNINGS BEFORE INCOME TAXES............................. 29,430 41,308 56,126
Income taxes........................................... 11,113 15,815 22,406
-------- -------- --------
NET EARNINGS............................................. $ 18,317 $ 25,493 $ 33,720
======== ======== ========
NET EARNINGS PER COMMON SHARE:
Basic.................................................. $ .77 $ .96 $ 1.26
======== ======== ========
Diluted................................................ $ .74 $ .92 $ 1.18
======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic.................................................. 23,714 26,418 26,807
======== ======== ========
Diluted................................................ 24,874 27,838 28,609
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-4
<PAGE> 38

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands)

<TABLE>
<CAPTION>
RETAINED CUMULATIVE TOTAL
COMMON CONTRIBUTED EARNINGS TREASURY TRANSLATION SHAREHOLDERS'
STOCK CAPITAL (DEFICIT) STOCK ADJUSTMENTS EQUITY
------- ----------- --------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 28, 1995................. $17,523 $66,771 $(12,099) $ (67) $ -- $ 72,128
------- ------- -------- -------- ------- --------
Common stock issuance................... 2,250 23,632 -- -- -- 25,882
Stock options exercised................. 184 305 -- 2,127 -- 2,616
Cash dividends.......................... -- -- (3,515) -- -- (3,515)
Treasury stock purchases................ -- -- -- (4,121) -- (4,121)
Net earnings............................ -- -- 18,317 -- -- 18,317
Translation adjustments................. -- -- -- -- 1,088 1,088
------- ------- -------- -------- ------- --------
BALANCE, NOVEMBER 2, 1996................. $19,957 $90,708 $ 2,703 $ (2,061) $ 1,088 $112,395
------- ------- -------- -------- ------- --------
Stock options exercised................. 14 (1,407) -- 4,335 -- 2,942
Cash dividends.......................... -- -- (5,284) -- -- (5,284)
Treasury stock purchases................ -- -- -- (4,401) -- (4,401)
Net earnings............................ -- -- 25,493 -- -- 25,493
Translation adjustments................. -- -- -- -- (2,756) (2,756)
------- ------- -------- -------- ------- --------
BALANCE, NOVEMBER 1, 1997................. $19,971 $89,301 $ 22,912 $ (2,127) $(1,668) $128,389
------- ------- -------- -------- ------- --------
Common stock issuance................... 476 9,524 -- -- -- 10,000
Stock options exercised................. 216 582 -- 3,459 -- 4,257
Cash dividends.......................... -- -- (6,447) -- -- (6,447)
Treasury stock purchases................ -- -- -- (13,207) -- (13,207)
Net earnings............................ -- -- 33,720 -- -- 33,720
Translation adjustments................. -- -- -- -- (3,116) (3,116)
------- ------- -------- -------- ------- --------
BALANCE, OCTOBER 31, 1998................. $20,663 $99,407 $ 50,185 $(11,875) $(4,784) $153,596
======= ======= ======== ======== ======= ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 39

CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------
1996 1997 1998
--------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings...................................... $ 18,317 $ 25,493 $ 33,720
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization................ 7,211 11,548 18,530
Change in current assets and liabilities, net
of effects of acquisitions
Receivables............................... 365 1,072 (2,383)
Inventories............................... (8,458) 1,296 (2,268)
Prepayments and other..................... (21) 538 1,314
Accounts payable.......................... (3,034) 2,902 4,257
Accrued liabilities....................... 6,146 (311) 151
Other, net................................ 2,634 5,852 11,225
--------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES...... 23,160 48,390 64,546
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures.............................. (9,566) (12,172) (17,859)
Business acquisitions............................. (67,285) (71,920) (132,590)
Dispositions of assets............................ 346 215 4,264
--------- -------- --------
NET CASH USED FOR INVESTING ACTIVITIES......... (76,505) (83,877) (146,185)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank borrowings for business acquisitions......... 21,104 11,920 132,590
Net borrowings (payments) on bank credit
facility....................................... (14,914) (27,320) (32,190)
Payments on bonds and leases...................... (1,210) (409) (1,272)
Issuance of 7.0% Senior Notes..................... -- 60,000 --
Issuance of 7.62% Guaranteed Senior Notes......... 30,000 -- --
Issuance of common stock.......................... 25,882 -- --
Debt issuance costs............................... (444) (451) (801)
Cash dividends on common stock.................... (3,515) (5,284) (6,447)
Stock options exercised........................... 1,704 2,942 4,257
Treasury stock acquired........................... (4,121) (4,401) (13,207)
--------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES...... 54,486 36,997 82,930
--------- -------- --------
Effect of exchange rate changes on cash and
equivalents.................................... 39 (137) (102)
--------- -------- --------
INCREASE IN CASH AND EQUIVALENTS.................... 1,180 1,373 1,189
CASH AND EQUIVALENTS AT BEGINNING OF YEAR........... 3,505 4,685 6,058
--------- -------- --------
CASH AND EQUIVALENTS AT END OF YEAR................. $ 4,685 $ 6,058 $ 7,247
========= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-6
<PAGE> 40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)

1) SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts and related
disclosures. Actual results could differ from those estimates. Certain prior
year amounts have been reclassified to conform to the current year presentation.
The Company's fiscal year ends on the Saturday closest to October 31. Fiscal
year 1998 and 1997 each consisted of 52 weeks, while 1996 included 53 weeks.

PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
statements include the accounts of Spartech Corporation and its wholly-owned
subsidiaries (the "Company"). All significant intercompany transactions and
balances have been eliminated.

FOREIGN CURRENCY TRANSLATION - Assets and liabilities of the Company's
Non-U.S. operations are translated from their functional currency to U.S.
dollars using exchange rates in effect at the balance sheet date. Results of
operations are translated using average rates during the period. Adjustments
resulting from the translation process are included as a separate component of
shareholders' equity. The Company may periodically enter into foreign currency
contracts to manage exposures to market risks from prospective changes in
exchange rates. No such contracts were outstanding as of October 31, 1998.

CASH EQUIVALENTS - Cash equivalents consist of highly liquid investments
with original maturities of three months or less.

INVENTORIES - Inventories are valued at the lower of cost (first-in,
first-out) or market. Finished goods include the costs of material, labor, and
overhead.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are carried
at cost. Depreciation is provided on a straight-line basis over the estimated
useful lives of the related assets as follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and leasehold improvements........................ 25
Machinery and equipment..................................... 12-16
Furniture and fixtures...................................... 5-10
</TABLE>

Major renewals and betterments are capitalized. Maintenance and repairs are
expensed as incurred. Upon disposition, the net book value is eliminated from
the accounts, with the resultant gain or loss reflected in operations.

GOODWILL - Goodwill, representing the excess of the purchase price over the
fair value of net assets acquired, is charged against operations on a
straight-line basis over the periods estimated to be benefited, not exceeding 40
years. Goodwill amortization totaled $896, $1,495, and $3,230 in 1996, 1997, and
1998, respectively. Accumulated amortization at October 31, 1998 totaled
$10,472.

F-7
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

FINANCIAL INSTRUMENTS - The Company uses the following methods and
assumptions in estimating the fair value of financial instruments:

Cash, accounts receivable, accounts payable, and accrued liabilities - the
carrying value of these instruments approximates fair value due to their
short-term nature; and

Long-term debt (including bank credit facility) - based on borrowing rates
currently available for debt instruments with similar terms and maturities, the
carrying value of these instruments approximates fair value.

REVENUE RECOGNITION - The Company manufactures products for specific
customer orders and for standard stock inventory. Revenues are recognized and
billings are rendered as the product is shipped to the customer.

INCOME TAXES - Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of assets and liabilities and their
respective tax bases. Deferred tax assets are also recognized for credit
carryforwards based on an assessment (which includes anticipating future income)
in determining the likelihood of realization. Deferred tax assets and
liabilities are measured using the rates expected to apply to taxable income in
the years in which the temporary differences are expected to reverse and the
credits are expected to be used. The effect of a change in tax rates on deferred
tax assets and liabilities is recognized in income in the period that includes
the enactment date.

2) ACQUISITIONS

On March 31, 1998, the Company completed its acquisition of all the stock
of Polycom Huntsman, Inc. ("Polycom"), a manufacturer of color & specialty
compounds. The net cash purchase price was approximately $129,000 (including
estimated costs of the transaction and net of cash acquired of $3,000). The
acquisition was funded through the Company's bank credit facility and the
issuance of $10,000 in Spartech common stock to Polycom shareholders. The fair
value of the assets acquired (including approximately $65,000 in goodwill) and
liabilities assumed (consisting of accounts payable, accrued liabilities, lease
liabilities, and industrial revenue bonds) were $171,000 and $39,000,
respectively. For its fiscal year ended March 31, 1998, Polycom's color,
specialty, and toll compounding businesses generated annual sales of
approximately $115,000.

On April 26, 1998, the Company completed the purchase of the net assets of
Prismaplast Canada Ltd. of Montreal. Prismaplast, commonly known as
Plasticolour, produces color concentrates and specialty compounds with net sales
for 1997 of approximately $10,000. The acquisition price for Plasticolour
approximated $5,000, which was financed through operating cash flow and our bank
credit facility.

On October 30, 1998, the Company completed its purchase of all the stock of
Anjac-Doron Plastics, Inc. ("Anjac"), a custom profile extruder with annual
sales of approximately $9,000. The acquisition price of approximately $6,700 was
financed through our bank credit facility.

On August 22, 1997, the Company completed the acquisition of the net assets
of the Preferred Plastic Sheet Division of Echlin Inc. ("Preferred"). The
purchase of the extruded plastic sheet and profile extruded product operations
included four manufacturing facilities with annual sales of approximately
$75,000. The purchase price for the net assets acquired from Preferred was
$65,074 in cash, including costs of the transaction. The fair value of assets
acquired (including $39,199 of goodwill) and liabilities assumed (including
accounts payable and accrued liabilities) was $73,517

F-8
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

and $8,443, respectively. The purchase price and related costs of the
acquisition were funded by a $60,000 private placement of debt with a fixed
interest rate of 7.0% and borrowings on the Company's existing bank credit
facility.

On May 9, 1996, the Company completed its acquisition of Portage Industries
Corporation ("Portage") and pursuant to the Agreement and Plan of Merger, each
share of Portage common stock was converted into the right to receive $6.60 in
cash. The price for all outstanding shares of Portage's stock (including
exercisable options) totaled approximately $17,600 in cash, including estimated
costs of the transaction. The fair value of assets acquired (including $9,500 of
goodwill) and liabilities assumed were $27,200 and $9,600, respectively. The
purchase price was funded by the Company's existing bank credit facility.

On September 27, 1996, the Company completed the purchase of substantially
all of the net assets of the extrusion, color, and molding divisions of Hamelin
Group Inc. ("Hamelin") in accordance with an Asset Purchase and Sale Agreement.
Hamelin was a leading manufacturer of extruded plastic sheet, color concentrate
materials, molded food packaging products, and injection molded wheels, based in
Montreal, Canada. Consolidated sales for the seven facilities were approximately
$80,000 for Hamelin's fiscal year ended April 30, 1996. The purchase price for
the net assets acquired from Hamelin was $59,400 in cash, including costs of the
transaction. The fair value of assets acquired (including $13,500 of goodwill)
and liabilities assumed (consisting of lease liabilities, accounts payable, and
accrued liabilities) were $70,900 and $11,500, respectively. The purchase price
was financed through a combination of a common stock offering of 3 million
shares and a private placement of $30,000 in debt.

All these acquisitions have been accounted for by the purchase method, and
accordingly, the results of operations were included in the Company's
Consolidated Statement of Operations from their respective date of acquisition.
The purchase price has been allocated to the assets and liabilities (on a
preliminary basis for the 1998 acquisitions), and the excess of cost over the
fair value of net assets acquired is being amortized over a forty-year period on
a straight-line basis.

The following summarizes unaudited pro forma consolidated results of
operations for fiscal year 1998 assuming the Polycom, Plasticolour, and Anjac
acquisitions had occurred at the beginning of the fiscal year. The results are
not necessarily indicative of what would have occurred had these transactions
been consummated as of the beginning of the fiscal year presented, or of future
operations of the consolidated companies.

<TABLE>
<CAPTION>
PRO FORMA
(UNAUDITED)
FISCAL YEAR
1998
-----------
<S> <C>
Net Sales................................................... $712,999
========
Earnings Before Income Taxes................................ $ 60,257
========
Net Earnings................................................ $ 36,252
========
Net Earnings Per Common Share--Diluted...................... $ 1.26
========
</TABLE>

F-9
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

3) INVENTORIES

Inventories at November 1, 1997 and October 31, 1998 are comprised of the
following components:

<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Raw materials............................................... $37,832 $42,016
Finished goods.............................................. 18,019 22,843
------- -------
$55,851 $64,859
======= =======
</TABLE>

4) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at November 1,
1997 and October 31, 1998:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Land........................................................ $ 5,264 $ 6,369
Buildings and leasehold improvements........................ 31,825 45,312
Machinery and equipment..................................... 132,895 205,124
Furniture and fixtures...................................... 3,759 6,821
-------- --------
173,743 263,626
Less accumulated depreciation............................... 44,381 56,739
-------- --------
Property, plant and equipment, net.......................... $129,362 $206,887
======== ========
</TABLE>

5) LONG-TERM DEBT

Long-term debt is comprised of the following at November 1, 1997 and
October 31, 1998:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
7.0% Senior Notes........................................... $ 60,000 $ 60,000
7.62% Guaranteed Senior Notes............................... 30,000 30,000
7.21% Senior Unsecured Notes................................ 50,000 50,000
Bank Credit Facility........................................ 300 100,700
Other....................................................... 2,314 13,520
-------- --------
142,614 254,220
Less current maturities..................................... 921 8,948
-------- --------
Total long-term debt........................................ $141,693 $245,272
======== ========
</TABLE>

On March 31, 1998, the Company amended its unsecured bank credit facility
to an aggregate availability of $150,000 for a new five-year term (the "Bank
Credit Facility"). The Bank Credit Facility consists of a $50,000 term loan,
which has equal quarterly payments due of $2,500 that reduce this availability
over the five-year term, and a $100,000 revolving facility. At October 31, 1998,
total availability under the bank credit facility was $145,000. Of the $100,700
outstanding, $45,000 was under the facility's term loan and $55,700 was under
the facility's revolver, all of which is classified as long term as no paydowns
of the aggregate facility are required within the next year. Interest on the
Bank Credit Facility is payable at a rate chosen by the Company of either prime
or

F-10
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

LIBOR plus .5% to 1.0%. At October 31, 1998, the Company had fixed LIBOR loans
outstanding under the Bank Credit Facility of $88,500 at 6.19% for a one-month
period. The remaining Bank Credit Facility was at the current prime rate which
at November 1, 1997 and October 31, 1998, was 8.50% and 8.00%, respectively.

On August 22, 1997, the Company completed a Private Placement of 7.0%
Senior Notes (the "1997 Notes") consisting of $45,000 designated as Series A and
$15,000 designated as Series B. The Series A 1997 Notes require equal annual
principal payments of approximately $6,429 commencing on August 22, 2001 and the
Series B 1997 Notes do not require principal payments before becoming due on
August 22, 2004. Interest on the 1997 Notes is payable semiannually on February
22 and August 22 of each year.

On September 27, 1996, the Company completed a $30,000 Private Placement of
7.62% Guaranteed Senior Notes (the "1996 Notes") which have a ten-year term. The
1996 Notes require equal annual principal payments of approximately $4,286
commencing on September 27, 2000. Interest on the 1996 Notes is payable
semiannually on March 27 and September 27 of each year.

On August 15, 1995, the Company completed a $50,000 Private Placement of
7.21% Senior Unsecured Notes (the "1995 Notes") which have a ten-year term. The
1995 Notes require equal annual principal payments of approximately $7,143
commencing on August 15, 1999. Interest on the 1995 Notes is payable
semiannually on February 15 and August 15 of each year.

The other debt consists of industrial revenue bonds, capital leases, and
other term notes utilized to finance capital expenditures. These financings
mature between 1999 and 2015 and have interest rates ranging from 2.00% to
9.38%.

Scheduled maturities of long-term debt for the next five fiscal years are:
1999-$8,948; 2000-$13,008; 2001-$18,733; 2002-$18,524; and 2003-$78,770.

The long-term debt contains certain covenants which, among other matters,
require the Company to restrict the incurrence of additional indebtedness,
satisfy certain ratios and net worth levels, and limit both the sale of assets
and acquisition transactions.

6) INCOME TAXES

The provision for income taxes for fiscal years 1996, 1997, and 1998 is
comprised of the following:

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Federal:
Current................................................... $ 7,758 $ 8,698 $14,844
Deferred.................................................. 1,480 3,631 3,483
State....................................................... 1,760 1,819 2,697
Foreign..................................................... 115 1,667 1,382
------- ------- -------
Provision for income taxes................................ $11,113 $15,815 $22,406
======= ======= =======
</TABLE>

F-11
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

Earnings before income taxes for 1996, 1997, and 1998 include $384, $4,924,
and $4,383, respectively from Non-U.S. operations. The income tax provision on
earnings of the Company differs from the amounts computed by applying the U.S.
Federal tax rate of 35% as follows:

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Federal income taxes at statutory rate...................... $10,301 $14,458 $19,644
State income taxes, net of applicable Federal income tax
benefits.................................................. 1,144 1,182 1,753
Other....................................................... (332) 175 1,009
------- ------- -------
$11,113 $15,815 $22,406
======= ======= =======
</TABLE>

At November 1, 1997 and October 31, 1998, the Company's principal
components of deferred tax assets and liabilities consisted of the following:

<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Tax carryforwards......................................... $ 1,019 $ 486
Bad debt reserves......................................... 712 675
Inventories............................................... 445 780
Accrued liabilities....................................... 4,137 6,571
------- -------
$ 6,313 $ 8,512
======= =======
Deferred tax liabilities:
Depreciation.............................................. $13,705 $34,531
Other..................................................... 520 1,295
------- -------
$14,225 $35,826
======= =======
</TABLE>

At November 1, 1997 and October 31, 1998, the net current deferred tax
asset was $3,541 and $5,969, respectively, and the net noncurrent deferred tax
liability was $11,453 and $33,283, respectively.

7) SHAREHOLDERS' EQUITY & STOCK OPTIONS

The authorized capital stock of the Company consists of 45 million shares
of $.75 par value common stock and 4 million shares of $1 par value preferred
stock.

The Company has an Incentive Stock Option Plan ("Incentive Plan") and
Restricted Stock Option Plan ("Restricted Plan") for executive officers and key
employees. The minimum option price is the fair market value per share at the
date of grant, which may be paid upon exercise in Company shares. The Incentive
Plan has 598,040 shares outstanding at October 31, 1998. The maximum number of
shares issuable annually under the Restricted Plan is limited to 10% of the
Company's outstanding common shares (excluding treasury shares) at each year end
through 2001. Notwithstanding the foregoing, the Board of Directors has resolved
that at no time will the total unexercised options issued to employees be in
excess of 10% of the then outstanding common shares. The options granted and
common shares purchased under the Restricted Plan may not be sold or disposed of
for a period of three years from the date of option grant. Subject to the
limitations discussed above, the number of shares issued, or options granted,
pursuant to these plans is at the discretion of the Compensation Committee of
the Board of Directors. The Restricted Plan has 2,460,600 shares

F-12
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

outstanding at October 31, 1998. Additional options, which have been issued
outside the Incentive and Restricted plans discussed above, totaled 234,000 at
October 31, 1998.

A summary of the combined activity for the Company's stock options for
fiscal years 1996, 1997, and 1998 follows (shares in thousands):

<TABLE>
<CAPTION>
1996 1997 1998
----------------------- ----------------------- -----------------------
SHARES WEIGHTED SHARES WEIGHTED SHARES WEIGHTED
UNDER AVERAGE UNDER AVERAGE UNDER AVERAGE
OPTION EXERCISE PRICE OPTION EXERCISE PRICE OPTION EXERCISE PRICE
------ -------------- ------ -------------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of
year....................... 2,267 $3.85 2,074 $4.37 3,015 $ 6.88
Granted...................... 315 $7.07 1,414* $9.84 793 $16.11
Exercised.................... (508) $3.70 (473) $4.74 (515) $ 5.29
----- ----- -----
Outstanding, end of year..... 2,074 $4.37 3,015 $6.88 3,293 $ 9.36
===== ===== =====
Weighted average fair value
of options granted......... $2.49 $3.95 $5.00
----- ----- -----
----- ----- -----
</TABLE>

- ---------------
* Amount includes an option for 900 shares issued in conjunction with the
settlement of litigation with a former employee-see note (11).

Information with respect to options outstanding at October 31, 1998, all of
which are presently exercisable, follows (shares in thousands):

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES UNDER REMAINING WEIGHTED AVERAGE
RANGE OF EXERCISE PRICES OPTION CONTRACTUAL LIFE EXERCISE PRICE
- ------------------------ ------------ ---------------- ----------------
<S> <C> <C> <C>
$ 1.25 - 5.38............................. 956 3.1 years $ 3.90
$ 6.75 - 9.00............................. 1,125 5.7 years $ 8.55
$10.88 - 13.50............................. 414 5.8 years $11.12
$15.88 - 21.94............................. 798 8.0 years $16.11
-----
3,293
=====
</TABLE>

The Company follows Accounting Principles Board Opinion No. 25 "Accounting
for Stock Issued to Employees" ("APB 25"), in accounting for its employee stock
options. Under APB 25, if the exercise price of the stock option equals the
market price of the underlying stock on the issuance date, no compensation
expense is recognized. The Company is required by Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" to
provide pro forma disclosures under an alternative fair value method of
accounting. The weighted average fair values of options granted were estimated
using the Black-Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Expected Dividend Yield........................ 1.25% 1.25% 1.30%
Expected Volatility............................ 35% 35% 31%
Risk-Free Interest Rates....................... 5.77-5.81% 5.77-5.81% 4.52-4.83%
Expected Lives................................. 5 Years 5 Years 5 Years
</TABLE>

F-13
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

Had compensation expense been recognized based on these hypothetical values
the Company's net income for 1996, 1997, and 1998 would have been $17,830,
$23,020, and $31,330, respectively, and diluted earnings per share for 1996,
1997, and 1998 would have been $.72, $.83, and $1.10, respectively. As a result
of changing assumptions, these hypothetical calculations are not necessarily
representative of future results.

8) EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128")
which specifies the computation, presentation and disclosure requirements for
earnings per share. Basic earnings per share excludes any dilution and is
computed by dividing net income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. All earnings per share data has been calculated in accordance with SFAS
128.

Earnings used in the computations of both basic and diluted earnings per
share represent net earnings as reported. The weighted average number of common
shares used in the computations of basic and diluted earnings per share for
1996, 1997, and 1998 follows:

<TABLE>
<CAPTION>
1996 1997 1998
------ ------- ------
<S> <C> <C> <C>
Basic earnings per share.................................. 23,714 26,418 26,807
Effect of stock options................................... 1,160 1,420 1,802
------ ------- ------
Diluted earnings per share................................ 24,874 27,838 28,609
====== ======= ======
</TABLE>

The effect of stock options represents the shares resulting from the
assumed exercise of outstanding stock options calculated using the treasury
stock method.

9) EMPLOYEE BENEFITS

The Company sponsors or contributes to various retirement benefit and
savings plans covering substantially all employees. The total cost of such plans
for fiscal years 1996, 1997, and 1998 was $698, $1,057, and $1,856,
respectively.

F-14
<PAGE> 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

10) CASH FLOW INFORMATION

Supplemental information on cash flows for fiscal years 1996, 1997, and
1998 was as follows:

<TABLE>
<CAPTION>
1996 1997 1998
-------- ------- --------
<S> <C> <C> <C>
CASH PAID DURING THE YEAR FOR:
Interest................................................ $ 4,558 $ 7,470 $ 14,535
======== ======= ========
Income taxes............................................ $ 10,846 $11,245 $ 15,642
======== ======= ========
SCHEDULE OF BUSINESS ACQUISITIONS:
Fair value of assets acquired........................... $ 98,062 $73,517 $183,073
Liabilities assumed..................................... (21,076) (8,443) (43,434)
Non-cash consideration/holdback payments................ (9,701) 6,846 (7,049)
-------- ------- --------
Total cash paid for the net assets acquired............. $ 67,285 $71,920 $132,590
======== ======= ========
</TABLE>

11) COMMITMENTS AND CONTINGENCIES

The Company conducts certain of its operations in facilities under
operating leases. Rental expense for 1996, 1997, and 1998 was $2,807, $3,780,
and $5,408, respectively.

Future minimum lease payments under non-cancelable operating leases, by
fiscal year, are: 1999--$3,979; 2000--$3,113; 2001--$2,507; 2002--$1,084;
2003--$944; and $1,289 thereafter.

In 1992 and 1996, a former Director, Chairman of the Board, and Chief
Executive Officer of the Company, filed lawsuits against the Company and certain
of its Directors and major shareholders. In the suits, it was claimed that the
Company should adjust his existing stock options, provide for the issuance of
additional shares of common stock, and award to him attorney's fees and
interest. In February 1997, the Company settled both lawsuits. The settlement
resolved all claims and terminated all disputes between the respective parties
and general releases were executed to prevent further action on such disputes.
The settlement was reflected in the Company's 1997 financial statements and,
after consideration of amounts previously accrued, did not result in a net
charge to earnings.

At October 31, 1998, there were no other known contingent liabilities
(including guarantees, pending litigation, and environmental claims) that, in
the opinion of management, are expected to be material in relation to the
Company's financial position or results of operations, nor were there any
material commitments outside the normal course of business.

12) SEGMENT INFORMATION

The Company operates in one industry segment as a producer of engineered
thermoplastics, polymeric compounds, and molded and profile products for a wide
spectrum of manufacturing customers. The Company operates from 38 plants in 35
cities throughout the United States, Canada, and Europe and its customer base is
diverse--no one customer represents greater than 5% of total sales. The
Company's customers supply product to a broad range of markets (including
sign/advertising, transportation, recreation & leisure, building & construction,
medical, and packaging).

F-15
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Dollars in thousands, except per share amounts)

The Company operates in three reportable geographic areas--the United
States, Canada, and Europe. Geographic financial information for fiscal years
1996, 1997, and 1998 was as follows:

<TABLE>
<CAPTION>
OPERATING TOTAL
NET SALES EARNINGS ASSETS
------------------------------ --------------------------- ------------------------------
1996 1997 1998 1996 1997 1998 1996 1997 1998
-------- -------- -------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States........ $384,334 $427,530 $572,676 $33,856 $41,957 $61,807 $221,542 $295,511 $460,897
Canada............... 7,014 75,185 75,970 636 7,744 7,506 67,418 63,292 63,898
Europe............... -- -- 5,209 -- -- 415 -- -- 8,514
-------- -------- -------- ------- ------- ------- -------- -------- --------
$391,348 $502,715 $653,855 $34,492 $49,701 $69,728 $288,960 $358,803 $533,309
======== ======== ======== ======= ======= ======= ======== ======== ========
</TABLE>

13) QUARTERLY FINANCIAL INFORMATION

Certain unaudited quarterly financial information for the fiscal years
ended November 1, 1997 and October 31, 1998 was as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------- FISCAL
JAN APRIL JULY OCT YEAR
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1997
Net Sales.......................... $113,387 $129,815 $123,170 $136,343 $502,715
Gross Profit....................... 18,079 21,187 20,435 22,514 82,215
Net Earnings....................... 5,479 6,675 6,731 6,608 25,493
Net Earnings Per Share:
Basic............................ .21 .25 .25 .25 .96
Diluted.......................... .20 .24 .24 .23 .92
1998
Net Sales.......................... $133,081 $165,707 $177,702 $177,365 $653,855
Gross Profit....................... 22,480 27,918 30,190 30,627 111,215
Net Earnings....................... 7,021 8,863 9,020 8,816 33,720
Net Earnings Per Share:
Basic............................ .27 .33 .33 .33 1.26
Diluted.......................... .25 .31 .31 .31 1.18
</TABLE>

F-16
<PAGE> 50

SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands, except share amounts)

<TABLE>
<CAPTION>
OCT. 31, JAN. 30,
1998 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents...................................... $ 7,247 $ 6,024
Receivables, net.......................................... 91,631 92,430
Inventories............................................... 64,859 69,417
Prepayments and other..................................... 9,459 10,036
-------- --------
TOTAL CURRENT ASSETS................................... 173,196 177,907
PROPERTY, PLANT AND EQUIPMENT............................... 263,626 271,094
Less accumulated depreciation............................. 56,739 61,527
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT...................... 206,887 209,567
GOODWILL.................................................... 148,668 150,599
OTHER ASSETS................................................ 4,558 4,921
-------- --------
$533,309 $542,994
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt...................... $ 8,948 $ 8,817
Accounts payable.......................................... 59,578 58,049
Accrued liabilities....................................... 32,466 32,917
-------- --------
TOTAL CURRENT LIABILITIES.............................. 100,992 99,783
-------- --------
LONG-TERM DEBT, LESS CURRENT MATURITIES..................... 245,272 246,919
OTHER LIABILITIES........................................... 33,449 34,660
-------- --------
TOTAL LONG-TERM LIABILITIES............................ 278,721 281,579
-------- --------
SHAREHOLDERS' EQUITY
Common stock, 27,550,107 shares issued in 1998 and 1999... 20,663 20,663
Contributed capital....................................... 99,407 97,654
Retained earnings......................................... 50,185 57,459
Treasury stock, at cost, 688,917 shares in 1998 and
604,725 shares in 1999................................. (11,875) (10,081)
Cumulative translation adjustments..................... (4,784) (4,063)
-------- --------
TOTAL SHAREHOLDERS' EQUITY............................. 153,596 161,632
-------- --------
$533,309 $542,994
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-17
<PAGE> 51

SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited and in thousands, except per share amounts)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
JAN. 31, JAN. 30,
1998 1999
-------- --------
<S> <C> <C>
NET SALES................................................... $133,081 $167,801
-------- --------
COSTS AND EXPENSES
Cost of sales............................................. 110,601 137,604
Selling and administrative................................ 8,161 10,125
Amortization of intangibles............................... 541 997
-------- --------
119,303 148,726
-------- --------
OPERATING EARNINGS.......................................... 13,778 19,075
Interest.................................................. 2,345 3,851
-------- --------
EARNINGS BEFORE INCOME TAXES................................ 11,433 15,224
Income Taxes.............................................. 4,412 6,067
-------- --------
NET EARNINGS................................................ $ 7,021 $ 9,157
======== ========
NET EARNINGS PER COMMON SHARE:
Basic..................................................... $ .27 $ .34
======== ========
Diluted................................................... $ .25 $ .32
======== ========
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTING NET
EARNINGS PER COMMON SHARE:
Basic..................................................... 26,398 26,896
======== ========
Diluted................................................... 28,101 28,748
======== ========
DIVIDENDS PER COMMON SHARE.................................. $ .06 $ .07
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-18
<PAGE> 52

SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited and in thousands)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
JAN. 31, JAN. 30,
1998 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings.............................................. $ 7,021 $ 9,157
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization.......................... 3,546 5,667
Change in current assets and liabilities............... (6,089) (1,171)
Other, net................................................ 677 897
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.............. 5,155 14,550
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures...................................... (2,056) (4,956)
Business acquisitions..................................... (3,095) (10,437)
Retirement of assets...................................... 32 20
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES................. (5,119) (15,373)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Borrowings for Business Acquisitions................. 3,095 10,437
Net borrowings (payments) on revolving credit
facilities............................................. 55 (8,037)
Payments on bonds and leases.............................. (658) (962)
Cash dividends on common stock............................ (1,589) (1,883)
Stock options exercised................................... 329 480
Treasury stock acquired................................... (2,341) (439)
-------- --------
NET CASH USED FOR FINANCING ACTIVITIES................. (1,109) (404)
-------- --------
Effect of exchange rate changes on cash and equivalents... (58) 4
-------- --------
DECREASE IN CASH AND EQUIVALENTS............................ (1,131) (1,223)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD................. 6,058 7,247
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD....................... $ 4,927 $ 6,024
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-19
<PAGE> 53

SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands)

NOTE A--BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Spartech Corporation and its wholly owned subsidiaries (the "Company"). These
financial statements have been prepared on a condensed basis and, accordingly,
certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the financial
statements contain all adjustments (consisting solely of normal recurring
adjustments) and disclosures necessary to make the information presented therein
not misleading. These financial statements should be read in conjunction with
the consolidated audited financial statements and accompanying footnotes thereto
included in this prospectus.

The Company's fiscal year ends on the Saturday closest to October 31.
Operating results for the first quarter are traditionally seasonal in nature and
are not necessarily indicative of the results expected for the full year.

NOTE B -- INVENTORIES

Inventories are valued at the lower of cost (first-in, first-out) or
market. Inventories at October 31, 1998 and January 30, 1999 are comprised of
the following components:

<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Raw materials............................................... $42,016 $45,987
Finished goods.............................................. 22,843 23,430
------- -------
$64,859 $69,417
======= =======
</TABLE>

NOTE C -- CASH FLOW INFORMATION

Supplemental information on cash flows and noncash transactions for the
quarter ended January 31, 1998 and January 30, 1999 is as follows:

<TABLE>
<CAPTION>
1998 1999
---- ------
<S> <C> <C>
Cash paid for:
Interest.................................................. $ 61 $1,579
==== ======
Income taxes.............................................. $304 $ 312
==== ======
</TABLE>

NOTE D -- COMMITMENTS AND CONTINGENCIES

The Company currently has no litigation with respect to any environmental
matters.

NOTE E -- COMPREHENSIVE INCOME

On November 1, 1998 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130--"Reporting Comprehensive Income". Comprehensive Income
is an entities change in equity during the period from transactions, events and
circumstances from non-owner sources. A summary of the components of Total
Comprehensive Income follows:

F-20
<PAGE> 54
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands)--(continued)

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------
JAN. 31, JAN. 30,
1998 1999
-------- --------
<S> <C> <C>
Net Earnings................................................ $7,021 $9,157
Foreign currency translation adjustments.................... (1,046) 721
------ ------
Total Comprehensive Income................................ $5,975 $9,878
====== ======
</TABLE>

The Company's other comprehensive income consists solely of foreign
currency translation adjustments. Accumulated other comprehensive income is
represented on the balance sheet as cumulative translation adjustments as of
October 31, 1998 and January 30, 1999, respectively.

NOTE F -- ACQUISITIONS

On January 7, 1999 the Company completed its acquisition of the net assets
of Lustro Plastics Company, a custom sheet and rollstock extruder with annual
sales of approximately $28,000. The total purchase price was approximately
$10,400, including estimated costs of the transaction. The fair value of assets
acquired, including $2,800 of goodwill, and liabilities assumed were $13,900 and
$3,500, respectively. The acquisition was funded through the Company's existing
bank credit facility.

F-21
<PAGE> 55

[PHOTOS OF NEW PRODUCTS AND APPLICATIONS]
<PAGE> 56

- ----------------------------------------------------------
- ----------------------------------------------------------

You should rely only on the information contained in this prospectus. spartech
has not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is not an offer to sell, and it
does not seek an offer to buy, these securities in any jurisdiction where the
offer or sale is not permitted. The information in this prospectus is correct
only as of the date of this prospectus, regardless of when this prospectus is
delivered to you or these securities are sold

----------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................... 3
Risk Factors............................. 7
Use of Proceeds.......................... 10
Price Range of Common Stock and
Dividends.............................. 10
Capitalization........................... 11
Selected Financial Data.................. 12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 13
Business................................. 18
Management............................... 26
Principal and Selling Stockholders....... 28
Underwriting............................. 30
Legal Matters; Experts................... 32
Where You Can Find More Information...... 32
Index to Financial Statements............ F-1
</TABLE>

- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------

2,328,968 SHARES

LOGO
SPARTECH CORPORATION
COMMON STOCK
----------------------
PROSPECTUS

----------------------

FIRST ANALYSIS
SECURITIES CORPORATION

EVEREN SECURITIES, INC.

JANNEY MONTGOMERY SCOTT INC.

, 1999

- ----------------------------------------------------------
- ----------------------------------------------------------
<PAGE> 57

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
SEC Registration Fee........................................ $18,083
National Association of Securities Dealers, Inc. Fee........ 7,005
New York Stock Exchange Listing Fee......................... *
Printing Expenses........................................... 50,000
Legal Fees and Expenses..................................... *
Auditors' Fees and Expenses................................. *
Transfer Agent and Registrar Fees........................... *
Miscellaneous Expenses...................................... *
-------
Total....................................................... $ *
=======
</TABLE>

- ---------------

* To be filed by Amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware
provides generally and in pertinent part that a Delaware corporation may
indemnify its directors and officers against expenses, judgments, fines and
settlements actually and reasonably incurred by them in connection with any
civil suit or action, except actions by or in the right of the corporation, or
any administrative or investigative proceeding if, in connection with the
matters in issue, they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interest of the corporation, and
in connection with any criminal suit or proceeding, if in connection with the
matters in issue, they had no reasonable cause to believe their conduct was
unlawful. Section 145 further permits a Delaware corporation to grant its
directors and officers additional rights of indemnification through bylaw
provisions and otherwise and to purchase indemnity insurance on behalf of its
directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 16. EXHIBITS

A list of exhibits is set forth in the Exhibit Index appearing elsewhere in
this Registration Statement and is incorporated herein by reference.

II-1
<PAGE> 58

ITEM 17. UNDERTAKINGS.

A. The undertaking required by Item 512(h) of Regulation S-K is set forth
in the last paragraph of Item 15 above.

B. The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
County of St. Louis and State of Missouri on the 18th day of March, 1999.

SPARTECH CORPORATION

/s/ BRADLEY B. BUECHLER
By:
--------------------------------------

Bradley B. Buechler
Chairman of the Board, President
and Chief Executive Officer

Each person whose signature appears below constitutes and appoints Bradley
B. Buechler and David B. Mueller his true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and re-substitution
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to sign a Registration Statement pursuant to
Section 462(b) of the Securities Act, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each acting
alone, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

II-2
<PAGE> 59

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRADLEY B. BUECHLER Chairman of the Board, President, March 18, 1999
- --------------------------------------------- Chief Executive Officer and Director
Bradley B. Buechler

/s/ DAVID B. MUELLER Executive Vice President, Chief March 18, 1999
- --------------------------------------------- Operating Officer, Secretary and
David B. Mueller Director

/s/ RANDY C. MARTIN Vice President--Finance and Chief March 18, 1999
- --------------------------------------------- Financial Officer (Principal
Randy C. Martin Accounting Officer)

/s/ RALPH B. ANDY Director March 18, 1999
- ---------------------------------------------
Ralph B. Andy

/s/ THOMAS L. CASSIDY Director March 18, 1999
- ---------------------------------------------
Thomas L. Cassidy

/s/ W. R. CLERIHUE Director March 18, 1999
- ---------------------------------------------
W. R. Clerihue

/s/ JOHN R. KENNEDY Director March 18, 1999
- ---------------------------------------------
John R. Kennedy

/s/ CALVIN J. O'CONNOR Director March 18, 1999
- ---------------------------------------------
Calvin J. O'Connor

/s/ JACKSON W. ROBINSON Director March 19, 1999
- ---------------------------------------------
Jackson W. Robinson

/s/ ALAN R. TEAGUE Director March 18, 1999
- ---------------------------------------------
Alan R. Teague
</TABLE>

II-3
<PAGE> 60

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation of registrant,
incorporated by Reference to Exhibit 3.1 to Registration
Statement No. 333-60381, filed July 31, 1998
3.2 By-Laws of Registrant, as amended, incorporated by reference
to Exhibit 3.2 to Registration Statement No. 333-60381,
filed July 31, 1998
5.1* Opinion of Armstrong Teasdale LLP as to the legality of the
shares
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Ernst & Young LLP
23.3* Consent of Armstrong Teasdale LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on Page II-2)
</TABLE>

- ---------------

* To be filed by amendment.

II-4

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
included in this registration statement and to the incorporation by reference in
this registration statement of our reports dated December 4, 1998, incorporated
by reference in Spartech Corporation's Annual Report on Form 10-K for the fiscal
year ended October 31, 1998, and to all references to our firm included in or
made a part of this registration statement.

ARTHUR ANDERSEN LLP

St. Louis, Missouri,
March 19, 1999

<PAGE> 1
EXHIBIT 23.2
------------

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement
(Form S-3) of Spartech Corporation and in the related prospectus of our report
dated April 17, 1998, with respect to the consolidated financial statements of
Polycom Huntsman, Inc., included in the Current Report on Form 8-K/A, as filed
with the Securities and Exchange Commission on June 15, 1998.

Ernst & Young LLP

Pittsburgh, Pennsylvania
March 19, 1999