MYERS INDUSTRIES INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

[X]		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		for the quarterly period ended March 31, 2004.
		OR
[ ]		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		for the transition period from__________ to__________.

Commission File Number 1-8524
Myers Industries, Inc.
(Exact name of registrant as specified in its charter)


Ohio (State or other jurisdiction of incorporation or organization)		34-0778636 (IRS Employer Identification Number)

1293 South Main Street Akron, Ohio (Address of principal executive offices)		44301 (Zip code)

(330) 253-5592
(Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes  X   No     .

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes   X   No      .

    As of March 31, 2004, the number of shares outstanding of the issuer's Common Stock was 30,215,981.

Table of Contents
Part I -- Financial Information
	Condensed Statement of Consolidated Financial Position
	Condensed Statement of Consolidated Income
	Statement of Consolidated Cash Flows
	Statement of Shareholders' Equity
	Notes to Financial Statements
	Management's Discussion and Analysis of Financial Condition and Results of Operations
Part II -- Other Information
	Item 1 Legal Proceedings
	Item 6 Exhibits and Reports of Form 8-K
Signature
Exhibit Index

-1-

Part I - Financial Information

Item 1. Financial Statements

Myers Industries, Inc.
Condensed Statement of Consolidated Financial Position
As of March 31, 2004 and December 31, 2003

	March 31,	December 31,
Assets	2004	2003

Current Assets
Cash	$9,442,414	$5,666,997
Accounts receivable-less allowances of $4,956,000 and $4,245,000, respectively	134,011,055	114,038,680

Inventories
Finished and in-process products	63,739,498	61,240,225
Raw materials and supplies	23,444,614	22,613,029

	87,184,112	83,853,254
Prepaid expenses	6,919,069	4,374,210

Total Current Assets	237,556,650	207,933,141

Other Assets
Goodwill	261,028,916	224,298,302
Patents and other intangible assets	2,068,762	2,321,584
Other	5,219,380	3,229,351

	268,317,058	229,849,237
Property, Plant and Equipment, at Cost
Land	8,710,288	8,461,003
Buildings and leasehold improvements	86,873,667	80,588,395
Machinery and equipment	370,922,357	352,995,191

	466,506,312	442,044,589
Less allowances for depreciation and amortization	271,998,527	258,200,161

	194,507,785	183,844,428

	$700,381,493	$621,626,806

-2-

Part I - Financial Information

Myers Industries, Inc.
Condensed Statement of Consolidated Financial Position
As of March 31, 2004 and December 31, 2003

	March 31,	December 31,
Liabilities and Shareholders' Equity	2004	2003


Current Liabilities
Accounts payable	$50,188,215	$39,731,250
Accrued expenses
Employee compensation	29,605,792	30,975,836
Taxes, other than income taxes	3,328,980	2,874,171
Accrued interest	2,218,903	608,575
Other	19,511,710	15,533,529
Current portion of long-term debt	3,513,163	4,452,137


Total Current Liabilities	108,366,763	94,175,498

Long-term Debt, less current portion	268,704,850	211,002,691
Deferred Income Taxes	24,828,162	21,924,269

Shareholders' Equity
Serial Preferred Shares (authorized 1,000,000)	0	0
Common Shares, without par value (authorized 60,000,000 shares; outstanding 30,215,981 and 30,183,256 shares, respectively)	18,388,383	18,369,240
Additional paid-in capital	217,253,092	217,019,810
Accumulated other comprehensive income	7,294,323	10,934,860
Retained income	55,545,920	48,200,438


	298,481,718	294,524,348


	$700,381,493	$621,626,806

-3-

Part I - Financial Information

Myers Industries, Inc.
Condensed Statement of Consolidated Income
For the Three Months Ended March 31, 2004 and 2003

	March 31,	March 31,
	2004	2003


Net Sales	$185,518,527	$163,220,254

Costs of Sales	124,460,575	109,376,984

Gross Profit	61,057,952	53,843,270
Operating Expenses	43,906,135	39,937,720

Operating Income	17,151,817	13,905,550
Interest Expense	3,143,646	2,502,713


Income Before Income Taxes	14,008,171	11,402,837

Income Taxes	5,152,000	4,211,000


Net Income	$8,856,171	$7,191,837





Net income per Common Share	$0.29	$0.24

Dividends per Common Share	$0.05	$0.05

Weighted average number of
Common Shares outstanding	30,205,201	30,083,688

-4-

Part I - Financial Information

Myers Industries, Inc.
Statement of Consolidated Cash Flows
For the Three Months Ended March 31, 2004 and 2003

March 31,

March 31,

2004

2003

CASH FLOWS FROM OPERATING ACTIVITIES

    Net income

$8,856,171

$7,191,837

    Items not affecting use of cash

        Depreciation

9,095,825

8,931,239

        Amortization of other intangible assets

723,603

280,543

        Deferred taxes

1,521,775

985,017

    Cash flow provided by (used for) working capital

        Accounts receivable

(11,266,025

)

(11,223,716

)

        Inventories

(189,899

)

2,001,623

        Prepaid expenses

(1,527,873

)

1,369,067

        Accounts payable and accrued expenses

6,841,126

(5,799,104

)

    Net cash provided by operating activities

14,054,703

3,736,506

CASH FLOWS FROM INVESTING ACTIVITIES

    Acquisition of business, net
        of cash acquired

(33,814,682

)

0

    Additions to property, plant and
        equipment, net

(5,374,979

)

(5,728,439

)

    Other

700,045

(158,196

)

    Net cash used for investing activities

(38,489,616

)

(5,886,635

)

CASH FLOWS FROM FINANCING ACTIVITIES

    Long-term debt repayment

0

(4,000,000

)

    Net borrowing (repayment) of credit facility

31,005,440

12,200,117

    Deferred financing costs

(1,536,846

)

0

    Cash dividends paid

(1,510,689

)

(1,504,356

)

    Proceeds from issuance of common stock

252,425

162,032

    Net cash provided by (used for) financing activities

28,210,330

6,857,793

INCREASE IN CASH

3,775,417

4,707,664

CASH AT JANUARY 1

5,666,997

1,702,334

CASH AT MARCH 31

$9,442,414

$6,409,998

-5-

Part I - Financial Information

Myers Industries, Inc.
Statement of Shareholders' Equity
For the Three Months Ended March 31, 2004

	Comprehensive Income		Common Stock	Additional Paid-In Capital	Accumulative Other Comprehensive Income		Retained Income

December 31, 2003			$18,369,240	$217,019,810	$10,934,860		$48,200,438

Net income	$8,856,171						8,856,171


Foreign currency translation adjustment	(3,640,537	)			(3,640,537	)


Comprehensive income	$5,215,634




Common Stock issued			19,143	233,282

Dividends							(1,510,689	)

March 31, 2004			$18,388,383	$217,253,092	$7,294,323		$55,545,920

-6-

Part I - Financial Information

Myers Industries, Inc.
Notes to Financial Statements

(1) Statement of Accounting Policy

         The accompanying financial statements include the accounts of Myers Industries, Inc. and subsidiaries (Company), and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's latest annual report on Form 10-K.

        In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of
March 31, 2004, and the results of operations and cash flows for the three months ended March 31, 2004 and 2003.

(2)     Acquisition

On March 10, 2004, the Company acquired all of the shares of ATP Automotive, Inc. (ATP), a subsidiary of Applied Tech LLC. ATP and its operating subsidiaries Michigan Rubber Products (MRP) and WEK Industries (WEK) is a manufacturer of molded rubber and plastic products for the automotive industry with manufacturing facilities in Michigan (MRP) and Ohio (WEK). The acquired businesses had 2003 annual sales of approximately $60 million. The total purchase price was approximately $60 million, which includes the assumption of ATP debt outstanding as of the acquisition date. The purchase price will be allocated to the assets acquired and liabilities assumed based upon their estimated fair values when appraisals, other studies and additional information become available. The results of ATP's operations are included in the Company's consolidated results of operations from the date of acquisition, and are reported within the Company's manufacturing segment.

The following unaudited proforma information presents a summary of consolidated results of operations for the Company and ATP as if the acquisition had occurred January 1, 2003.

Three Months Ended

March 31,

(In thousands,except per share)

2004

2003

Sales

$197,810

$178,225

Net Income
Net Income Per Share

9,259
..31

7,937
..26

-7-

Part I - Financial Information

Myers Industries, Inc.
Notes to Financial Statements

These unaudited proforma results have been prepared for comparative purposes only and may not be indicative of results of operations which actually would have resulted had the acquisition taken place on January 1, 2003, or of future results.

(3) Net Income Per Share

        Net income per share, as shown on the Condensed Statement of Consolidated Income, is determined on the basis of the weighted average number of common shares outstanding during the period, and for all periods shown basic and diluted earnings per share are identical.

(4)     Supplemental Disclosure of Cash Flow Information

        The Company made cash payments for interest expense of $1,534,000 and $2,559,000 for the three months ended March 31, 2004 and 2003, respectively. Cash payments for income taxes totaled $747,000 and $1,030,000 for the three months ended March 31, 2004 and 2003.

(5)     Long-Term Debit and Credit Agreements

        On February 27, 2004, the Company entered into a new unsecured revolving credit facility (the Credit Facility) which enables the Company to borrow up to $225 million, including up to $50 million available for multi-currency loans in freely traded foreign currencies. Borrowing under the new Credit Facility were used to refinance the Company's existing Multi-Currency Loan Agreement, fund the acquisition of ATP Automotive, Inc. and for general corporate purposes. Interest is based on the Prime rate or Euro dollar rate (for U.S. or Canadian dollar loans) or Eurocurrency Rate (for other multi-currency loans) plus an applicable margin that varies depending of the company's ratio of total debt to earnings before interest, taxes, and depreciation and amortization. Related financing costs will be amortized over the term o f the new Credit Facility which expires in February 2009.

(6)     Retirement Plans

        For the Company's two defined benefit pension plans, the net periodic benefit cost for the three months ended March 31, 2004 and 2003 was as follows:

	2004		2003

Service cost	$60,078		$49,576
Interest cost	83,443		79,823
Expected return on assets	(86,398	)	(59,971	)
Amortization of prior service cost	10,694		10,694
Amortization of a net loss	16,884		19,187
Amortization of transition obligation	-0-		(736	)

Net periodic pension cost	$84,701		$98,573

-8-
Part I - Financial Information

Myers Industries, Inc.
Notes to Financial Statements

        The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expects to contribute approximately $996,000 to its defined benefit plans in 2004. As of March 31, 2004, no contributions have been made, however, the Company still anticipates contributing approximately $996,000 to fund its defined benefit pension plans in 2004.

(7)     Segment Information

        The Company's business units have separate management teams and offer different products and services. Using the criteria of FASB No. 131, these business units have been aggregated into two reportable segments; Distribution of after-market repair products and services and Manufacturing of polymer products. The aggregation of business units is based on management by the chief operating decision maker for the segment as well as similarities of production processes, distribution methods and economic characteristics (e.g. average of gross margin and the impact of economic conditions on long-term financial performance).

The Company's distribution segment is engaged in the distribution of equipment, tools and supplies used for tire servicing and automotive underbody repair. The distribution segment operates domestically through 40 branches located in major cities throughout the United States and in foreign countries through export and businesses in which the Company holds an equity interest.

The Company's manufacturing segment designs, manufactures and markets a variety of polymer based plastic and rubber products. These products are manufactured primarily through the molding process in facilities throughout the United States and Europe.

Sales to external customers for manufactured plastic products, including WEK Industries, were $130.9 million for the three months ended March 31, 2004, while sales to external customers of rubber products, including Michigan Rubber Products, were $17.1 million. In the prior year, sales of plastic products to external customers were $119.5 million for the three months ended March 31, 2003 while sales to external customers of rubber products were $11.8 million for the quarter.

Operating income for each segment is based on net sales less cost of products sold and the related selling, administrative and general expenses. In computing segment operating income, general corporate overhead expenses and interest expenses are not included.

-9-

Part I - Financial Information

Myers Industries, Inc.
Notes to Financial Statements

Three Months Ended

March 31,

(In thousands)

2004

2003

	Three Months Ended
	March 31,
(In thousands,except per share)	2004	2003


Sales	$197,810	$178,225
Net Income Net Income Per Share	9,259 ..31	7,937 ..26