Attached files
| file | filename |
|---|---|
| 8-K - AVIENT CORP | v200779_8k.htm |
Exhibit
99.1
NEWS
RELEASE
FOR
IMMEDIATE RELEASE
PolyOne Announces
Third Quarter 2010
Results
|
·
|
Revenues
increase 24% versus third quarter
2009
|
|
·
|
Reports
earnings per share of $0.01; $0.28 excluding special items and one-time
tax adjustments
|
|
·
|
Balance
sheet further strengthened with refinancing of senior
notes
|
|
·
|
Record
operating income from the combined three strategic
platforms
|
CLEVELAND
–November 4, 2010 – PolyOne Corporation (NYSE: POL) today reported revenues of
$680.8 million for the third quarter of 2010, a 24% increase compared to
revenues of $548.3 million in the third quarter of 2009. Consolidated
revenue growth was driven by a 15% increase in volume and higher selling prices
principally associated with raw material cost increases.
Earnings
per share totaled $0.01 in the third quarter of 2010, compared to $0.51 per
diluted share in the third quarter of 2009. As a result of revenue
expansion and improved operating margins, earnings per share excluding special
items and one-time tax adjustments increased to $0.28 per diluted share for the
third quarter of 2010 compared with $0.13 per diluted share recorded in the
third quarter of 2009.
“I am
pleased with our third quarter results as each of our three strategic platforms
achieved new performance records,” said Stephen D. Newlin, chairman, president
and chief executive officer. “Both the Specialty Platform and PolyOne
Distribution achieved record levels of quarterly operating income while
operating margins in Performance Products and Solutions reached a new quarterly
return on sales record of 9.0%.”
“We feel
confident about our future, and for the first time in nearly two years, we hired
incremental resources during the third quarter,” added Newlin. “We
added over 100 full-time employees primarily in sales, marketing and technical
research and development positions. With an addressable market of
over $30 billion, we have a lot of room to grow, and our new associates will
help us drive new business gains, accelerate innovation and drive greater
efficiencies from lean six sigma.”
“The
successful refinancing of our long-term debt and the credit ratings upgrade
received from Standard and Poor’s in September speak to the improved earnings
profile and balance sheet strength of PolyOne,” Robert M. Patterson, senior vice
president and chief financial officer. “With $308 million of cash,
liquidity of $447 million and limited debt maturities between now and 2020, we
have ample cash to support our operating needs and fund acquisitions which we
view as the primary uses of cash for now.”
“Our
M&A focus is on specialty bolt-on acquisitions that would add technology,
expand our geographic presence and/or our exposure to attractive end markets,”
added Patterson. “In October, we acquired our first company in
Brazil, a specialty color business called Polimaster. Although it is
small, with $4 million in sales, Polimaster gives us a starting presence in
Brazil in attractive end markets, such as consumer and healthcare.”
Special
items in the third quarter of 2010 totaling $0.23 per share included a $29.4
million pre-tax charge associated with early retirement of debt, as PolyOne
repurchased $256 million aggregate principal amount of 8.875% Senior Notes
scheduled to mature in 2012 during the quarter pursuant to a tender
offer. The early retirement of debt was funded by the issuance of
$360 million aggregate principal amount of Senior Notes due 2020, with a coupon
of 7.375%.
Special
items in the third quarter of 2009 included reimbursement of previously incurred
environmental costs and curtailment gains associated with the elimination of
certain post-retirement benefits. In addition to the above-mentioned
special items the third quarters of 2010 and 2009 also included costs of
environmental remediation and previously announced restructuring
actions. Additionally, tax adjustments recorded in both periods were
principally related to changes in deferred tax asset valuation.
The table
below provides a comparison of third quarter 2010 results versus the third
quarter of 2009, showing the impact of the above-mentioned matters:
|
Q3
2010
|
EPS
|
Q3
2009
|
EPS
|
|||||||||||||
|
Net Income
|
$ | 1.0 | $ | 0.01 | $ | 48.3 | $ | 0.51 | ||||||||
|
Special items, after
tax
|
21.8 | 0.23 | (17.7 | ) | (0.19 | ) | ||||||||||
|
Tax adjustments
|
4.5 | 0.04 | (18.0 | ) | (0.19 | ) | ||||||||||
| $ | 27.3 | $ | 0.28 | $ | 12.6 | $ | 0.13 | |||||||||
“For the
first time this year, equity earnings from our SunBelt joint venture increased
versus the prior-year quarter,” said Patterson. “While we are
encouraged to see ECU pricing recover from its bottom earlier in the year, much
of SunBelt’s year over year gain was due to a 34% increase in volume as
SunBelt’s largest customer purchased chlorine ahead of their plant shutdown
scheduled for the fourth quarter.”
2
Patterson
added, “SunBelt has an annual take-or-pay contract with this customer, and we
expect they will limit purchases during the fourth quarter to offset that taken
during the third quarter. As a result, we anticipate SunBelt earnings
will decline sequentially by approximately $6 million versus the third quarter,
but will return to normalized levels during the first quarter of
2011.”
Commenting
on seasonality in the company’s businesses, Newlin said, “As we expected, and
versus the second quarter of 2010, we saw a decline in third quarter sales from
our Performance Products and Solutions and Distribution segments due to normal
seasonality. We expect seasonality will have a greater effect on business
activity during the fourth quarter, impacting all
segments. Seasonality, combined with the sequential SunBelt earnings
decline, will likely reduce fourth quarter sales approximately 10% and EPS
before special items and adjustments approximately 50% when compared to the
third quarter.” Newlin continued, “That being said, this represents
greater than 20% expansion of EPS before special items and adjustments over the
prior year fourth quarter.”
Newlin
added, “As we look beyond 2010, we expect to achieve double-digit growth in full
year EPS in 2011 and achieve new operating income or profitability records in
each of our three platforms.”
Third Quarter 2010
Conference Call
PolyOne
will host a conference call at 9 a.m. Eastern Time on Thursday, November 4,
2010. The conference dial-in number is 866-543-6403 (domestic) or 617-213-8896
(international), pass code 61301589, conference topic: Third Quarter 2010
PolyOne Earnings Conference Call. The call will be available for replay until
November 11, 2010 on the Company’s Web site at www.polyone.com/investor or
by phone at 888-286-8010 (domestic) or 617-801-6888 (international). The pass
code for the replay is 63292374.
# #
#
About
PolyOne
PolyOne
Corporation, with 2009 revenues of $2.1 billion, is a premier provider of
specialized polymer materials, services and solutions. Headquartered
outside of Cleveland, Ohio USA, PolyOne has operations around the world.
For additional information on PolyOne, visit our Web site at
www.polyone.com.
To access
PolyOne’s news library online, please visit www.polyone.com/news
Investor
Relations Contact:
Joseph P.
Kelley
Vice
President Planning & Investor Relations
PolyOne
Corporation
+1
440-930-3502
joseph.kelley@polyone.com
3
Media Contact:
Amanda
Marko
Director,
Corporate Communications
PolyOne
Corporation
+1
440-930-3162
amanda.marko@polyone.com
4
Forward-looking
Statements
In this
press release, statements that are not reported financial results or other
historical information are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements give current expectations or forecasts of future events and are not
guarantees of future performance. They are based on management’s
expectations that involve a number of business risks and uncertainties, any of
which could cause actual results to differ materially from those expressed in or
implied by the forward-looking statements. They use words such as
“will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” and other words and terms of similar meaning in connection with any
discussion of future operating or financial condition, performance and/or
sales. Factors that could cause actual results to differ materially
from those implied by these forward-looking statements include, but are not
limited to: disruptions, uncertainty or volatility in the credit markets that
could adversely impact the availability of credit already arranged and the
availability and cost of credit in the future; the financial condition of our
customers, including the ability of customers (especially those that may be
highly leveraged and those with inadequate liquidity) to maintain their credit
availability; the speed and extent of an economic recovery, including the
recovery of the housing and chlor-alkali markets; our ability to achieve new
business gains; the effect on foreign operations of currency fluctuations,
tariffs, and other political, economic and regulatory risks; changes in polymer
consumption growth rates in the markets where we conduct business; changes in
global industry capacity or in the rate at which anticipated changes in industry
capacity come online; fluctuations in raw material prices, quality and supply
and in energy prices and supply; production outages or material costs associated
with scheduled or unscheduled maintenance programs; unanticipated developments
that could occur with respect to contingencies such as litigation and
environmental matters; an inability to achieve or delays in achieving or
achievement of less than the anticipated financial benefit from initiatives
related to working capital reductions, cost reductions, employee productivity
goals and our new global organization structure; an inability to raise or
sustain prices for products or services; an inability to maintain appropriate
relations with unions and employees; the inability to achieve expected results
from our acquisition activities; and other factors affecting our business beyond
our control, including, without limitation, changes in the general economy,
changes in interest rates and changes in the rate of inflation. The
above list of factors is not exhaustive.
We
undertake no obligation to publicly update forward-looking statements, whether
as a result of new information, future events or otherwise. You are
advised to consult any further disclosures we make on related subjects in our
reports on Form 10-Q, 8-K and 10-K that we provide to the Securities and
Exchange Commission.
# #
#
5
Attachment
1
Supplemental
Information
Summary
of Consolidated Operating Results (Unaudited)
Third
Quarter 2010
(In
millions, except per share data)
|
Operating
results:
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||||
|
2010
|
Adjusted
2009
|
2010
|
Adjusted
2009
|
|||||||||||||
|
Sales
|
$ | 680.8 | $ | 548.3 | $ | 2,004.1 | $ | 1,508.2 | ||||||||
|
Operating
income
|
44.6 | 54.9 | 137.2 | 57.7 | ||||||||||||
|
Net
income
|
1.0 | 48.3 | 65.1 | 28.7 | ||||||||||||
|
Basic earnings per
share
|
$ | 0.01 | $ | 0.52 | $ | 0.70 | $ | 0.31 | ||||||||
|
Diluted earnings per
share
|
$ | 0.01 | $ | 0.51 | $ | 0.68 | $ | 0.31 | ||||||||
|
Total
basic and diluted per share impact of special items (1)
|
$ | (0.23 | ) | $ | 0.19 | $ | (0.18 | ) | $ | 0.04 | ||||||
|
Special
items (1):
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Cost
of sales
|
||||||||||||||||
|
Employee
separation and plant phaseout costs
|
$ | (0.8 | ) | $ | (10.5 | ) | $ | (1.1 | ) | $ | (23.2 | ) | ||||
|
Reimbursement
of previously incurred environmental costs
|
– | 23.9 | 14.4 | 23.9 | ||||||||||||
|
Environmental
remediation costs
|
(3.9 | ) | (5.4 | ) | (10.2 | ) | (8.3 | ) | ||||||||
|
Impact
on cost of sales
|
(4.7 | ) | 8.0 | 3.1 | (7.6 | ) | ||||||||||
|
Selling
and administrative
|
||||||||||||||||
|
Employee
separation and plant phaseout costs
|
(0.5 | ) | (1.6 | ) | (0.8 | ) | (2.0 | ) | ||||||||
|
Legal
|
(0.3 | ) | – | (0.6 | ) | (0.2 | ) | |||||||||
|
Curtailment
gain
|
– | 21.1 | – | 21.1 | ||||||||||||
|
Impact
on selling and administrative
|
(0.8 | ) | 19.5 | (1.4 | ) | 18.9 | ||||||||||
|
Adjustment
to impairment of goodwill
|
– | – | – | (5.0 | ) | |||||||||||
|
Impact
on operating income
|
(5.5 | ) | 27.5 | 1.7 | 6.3 | |||||||||||
|
Debt
extinguishment costs
|
(29.4 | ) | – | (29.4 | ) | – | ||||||||||
|
Gain
on sale of investment in O’Sullivan
|
– | – | 0.4 | – | ||||||||||||
|
Impact
on income before income taxes
|
(34.9 | ) | 27.5 | (27.3 | ) | 6.3 | ||||||||||
|
Income
tax benefit (expense) on special items
|
13.1 | (9.8 | ) | 10.2 | (2.2 | ) | ||||||||||
|
Impact
of special items on net income
|
$ | (21.8 | ) | $ | 17.7 | $ | (17.1 | ) | $ | 4.1 | ||||||
|
Basic
and diluted impact per common share
|
$ | (0.23 | ) | $ | 0.19 | $ | (0.18 | ) | $ | 0.04 | ||||||
|
Weighted
average shares used to compute earnings per share:
|
||||||||||||||||
|
Basic
|
93.1 | 92.4 | 92.8 | 92.4 | ||||||||||||
|
Diluted
|
96.3 | 93.9 | 95.7 | 93.0 | ||||||||||||
|
|
(1)
Special items is a non-GAAP financial measure. Special items include
charges related to specific strategic initiatives or financial
restructurings such as: consolidation of operations; debt extinguishment
costs; employee separation costs resulting from personnel reduction
programs, plant phaseout costs, executive separation agreements; asset
impairments; environmental remediation costs, fines or penalties for
facilities no longer owned or closed in prior years; gains and losses on
the divestiture of operating businesses, joint ventures and equity
investments; gains and losses on facility or property sales or disposals;
results of litigation, fines or penalties, where such litigation (or
action relating to the fines or penalties) arose prior to the commencement
of the performance period; and the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results or the effect of adverse determinations by regulatory agencies
relating to accounting principles or
treatment.
|
6
Attachment
2
PolyOne
Corporation and Subsidiaries
Consolidated
Statements of Operations (Unaudited)
(In
millions, except per share data)
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
|
2010
|
Adjusted
2009
|
2010
|
Adjusted
2009
|
|||||||||||||
|
Sales
|
$ | 680.8 | $ | 548.3 | $ | 2,004.1 | $ | 1,508.2 | ||||||||
|
Cost
of sales
|
569.6 | 442.3 | 1,662.7 | 1,270.5 | ||||||||||||
|
Gross
margin
|
111.2 | 106.0 | 341.4 | 237.7 | ||||||||||||
|
Selling
and administrative
|
77.1 | 56.3 | 224.0 | 203.6 | ||||||||||||
|
Adjustment
to impairment of goodwill
|
– | – | – | 5.0 | ||||||||||||
|
Income
from equity affiliates
|
10.5 | 5.2 | 19.8 | 28.6 | ||||||||||||
|
Operating
income
|
44.6 | 54.9 | 137.2 | 57.7 | ||||||||||||
|
Interest
expense, net
|
(7.5 | ) | (8.5 | ) | (23.2 | ) | (26.1 | ) | ||||||||
|
Debt
extinguishment costs
|
(29.4 | ) | – | (29.4 | ) | – | ||||||||||
|
Other
expense, net
|
(0.3 | ) | (1.2 | ) | (2.2 | ) | (8.5 | ) | ||||||||
|
Income
before income taxes
|
7.4 | 45.2 | 82.4 | 23.1 | ||||||||||||
|
Income
tax (expense) benefit
|
(6.4 | ) | 3.1 | (17.3 | ) | 5.6 | ||||||||||
|
Net
income
|
$ | 1.0 | $ | 48.3 | $ | 65.1 | $ | 28.7 | ||||||||
|
Earnings
per common share:
|
||||||||||||||||
|
Basic
earnings
|
$ | 0.01 | $ | 0.52 | $ | 0.70 | $ | 0.31 | ||||||||
|
Diluted
earnings
|
$ | 0.01 | $ | 0.51 | $ | 0.68 | $ | 0.31 | ||||||||
|
Weighted-average
shares used to compute earnings per share:
|
||||||||||||||||
|
Basic
|
93.1 | 92.4 | 92.8 | 92.4 | ||||||||||||
|
Diluted
|
96.3 | 93.9 | 95.7 | 93.0 | ||||||||||||
|
Equity
affiliates earnings recorded by PolyOne:
|
||||||||||||||||
|
SunBelt
|
$ | 9.7 | $ | 4.8 | $ | 17.6 | $ | 26.6 | ||||||||
|
Other
equity affiliates
|
0.8 | 0.4 | 2.2 | 2.0 | ||||||||||||
|
Income
from equity affiliates
|
$ | 10.5 | $ | 5.2 | $ | 19.8 | $ | 28.6 | ||||||||
7
Attachment
3
PolyOne
Corporation and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
millions)
|
(Unaudited)
|
Adjusted
|
|||||||
|
September
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash and cash
equivalents
|
$ | 307.9 | $ | 222.7 | ||||
|
Accounts receivable,
net
|
349.4 | 274.4 | ||||||
|
Inventories
|
234.3 | 183.7 | ||||||
|
Other current
assets
|
28.1 | 38.0 | ||||||
|
Total current
assets
|
919.7 | 718.8 | ||||||
|
Property,
net
|
368.1 | 392.4 | ||||||
|
Investment
in equity affiliates and nonconsolidated subsidiary
|
12.4 | 5.8 | ||||||
|
Goodwill
|
163.7 | 163.5 | ||||||
|
Other
intangible assets, net
|
68.7 | 71.7 | ||||||
|
Deferred
income tax assets
|
6.5 | 8.1 | ||||||
|
Other
non-current assets
|
75.9 | 55.7 | ||||||
|
Total assets
|
$ | 1,615.0 | $ | 1,416.0 | ||||
|
Liabilities
and Shareholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Current portion of long-term
debt
|
$ | 19.9 | $ | 19.9 | ||||
|
Short-term debt
|
– | 0.5 | ||||||
|
Accounts payable
|
310.2 | 238.3 | ||||||
|
Accrued expenses and other
liabilities
|
135.4 | 117.0 | ||||||
|
Total current
liabilities
|
465.5 | 375.7 | ||||||
|
Long-term
debt
|
434.0 | 389.2 | ||||||
|
Postretirement
benefits other than pensions
|
19.7 | 21.8 | ||||||
|
Pension
benefits
|
162.0 | 173.0 | ||||||
|
Other
non-current liabilities
|
110.7 | 98.6 | ||||||
|
Shareholders’
equity
|
423.1 | 357.7 | ||||||
|
Total liabilities and
shareholders’ equity
|
$ | 1,615.0 | $ | 1,416.0 | ||||
8
Attachment
4
PolyOne
Corporation and Subsidiaries
Consolidated
Statements of Cash Flows (Unaudited)
(In
millions)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2010
|
Adjusted
2009
|
2010
|
Adjusted
2009
|
|||||||||||||
|
Operating
Activities
|
||||||||||||||||
|
Net
income
|
$ | 1.0 | $ | 48.3 | $ | 65.1 | $ | 28.7 | ||||||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||
|
Depreciation
and amortization
|
13.7 | 15.8 | 41.5 | 49.8 | ||||||||||||
|
Deferred
income tax benefit
|
2.2 | 0.6 | 4.1 | 9.4 | ||||||||||||
|
Debt
extinguishment costs
|
27.7 | – | 27.7 | – | ||||||||||||
|
Provision
for doubtful accounts
|
(0.4 | ) | 1.5 | 2.0 | 3.0 | |||||||||||
|
Stock
compensation expense
|
1.1 | 0.8 | 3.2 | 2.2 | ||||||||||||
|
Adjustment
to impairment of goodwill
|
– | – | – | 5.0 | ||||||||||||
|
Asset
write-downs and impairment charges, net of gain on sale of
assets
|
0.3 | 6.3 | 0.4 | 7.7 | ||||||||||||
|
Companies
carried at equity:
|
||||||||||||||||
|
Income
from equity affiliates
|
(10.5 | ) | (5.2 | ) | (19.8 | ) | (28.6 | ) | ||||||||
|
Dividends
and distributions received
|
10.1 | 13.4 | 11.6 | 27.6 | ||||||||||||
|
Change
in assets and liabilities, net of acquisition:
|
||||||||||||||||
|
Decrease
(increase) in accounts receivable
|
22.2 | (10.8 | ) | (78.0 | ) | (20.2 | ) | |||||||||
|
(Increase)
decrease in inventories
|
(2.8 | ) | (5.8 | ) | (51.8 | ) | 55.0 | |||||||||
|
(Decrease)
increase in accounts payable
|
(27.2 | ) | 23.1 | 73.1 | 97.8 | |||||||||||
|
Decrease
in sale of accounts receivable
|
– | – | – | (14.2 | ) | |||||||||||
|
Increase
(Decrease) in accrued expenses and other
|
3.8 | (5.7 | ) | 3.3 | (6.3 | ) | ||||||||||
|
Net
cash provided by operating activities
|
41.2 | 82.3 | 82.4 | 216.9 | ||||||||||||
|
Investing
Activities
|
||||||||||||||||
|
Capital
expenditures
|
(8.0 | ) | (3.7 | ) | (18.9 | ) | (15.9 | ) | ||||||||
|
Proceeds
from sale of equity affiliate and other assets
|
– | – | 7.8 | – | ||||||||||||
|
Net
cash used by investing activities
|
(8.0 | ) | (3.7 | ) | (11.1 | ) | (15.9 | ) | ||||||||
|
Financing
Activities
|
||||||||||||||||
|
Change
in short-term debt
|
(0.4 | ) | (20.6 | ) | (0.4 | ) | (5.5 | ) | ||||||||
|
Issuance
of long-term debt, net of debt issuance cost
|
353.6 | – | 353.6 | – | ||||||||||||
|
Repayment
of long-term debt
|
(296.0 | ) | – | (316.0 | ) | – | ||||||||||
|
Payment
of debt extinguishment costs
|
(27.7 | ) | – | (27.7 | ) | – | ||||||||||
|
Proceeds
from exercise of stock options
|
2.3 | – | 3.9 | – | ||||||||||||
|
Net
cash provided (used) by financing activities
|
31.8 | (20.6 | ) | 13.4 | (5.5 | ) | ||||||||||
|
Effect
of exchange rate changes on cash
|
1.8 | 0.7 | 0.5 | 1.2 | ||||||||||||
|
Increase
in cash and cash equivalents
|
66.8 | 58.7 | 85.2 | 196.7 | ||||||||||||
|
Cash
and cash equivalents at beginning of period
|
241.1 | 182.3 | 222.7 | 44.3 | ||||||||||||
|
Cash
and cash equivalents at end of period
|
$ | 307.9 | $ | 241.0 | $ | 307.9 | $ | 241.0 | ||||||||
9
Attachment
5
Business
Segment and Platform Operations (Unaudited)
(In
millions)
Operating
income at the segment level does not include: special items as defined on
attachment 1; corporate general and administration costs that are not allocated
to segments; intersegment sales and profit eliminations; share-based
compensation costs; and certain other items that are not included in the measure
of segment profit and loss that is reported to and reviewed by the chief
operating decision maker. These costs are included in Corporate and
eliminations.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2010
|
Adjusted
2009
|
2010
|
Adjusted
2009
|
|||||||||||||
|
Sales:
|
||||||||||||||||
|
Global Specialty Engineered
Materials
|
$ | 136.9 | $ | 107.3 | $ | 390.7 | $ | 290.1 | ||||||||
|
Global Color, Additives and
Inks
|
135.2 | 122.9 | 403.2 | 344.7 | ||||||||||||
|
Specialty
Platform
|
272.1 | 230.2 | 793.9 | 634.8 | ||||||||||||
|
Performance Products and
Solutions
|
198.2 | 180.9 | 600.4 | 510.0 | ||||||||||||
|
PolyOne
Distribution
|
238.4 | 163.1 | 695.7 | 435.1 | ||||||||||||
|
Corporate and
eliminations
|
(27.9 | ) | (25.9 | ) | (85.9 | ) | (71.7 | ) | ||||||||
|
Sales
|
$ | 680.8 | $ | 548.3 | $ | 2,004.1 | $ | 1,508.2 | ||||||||
|
Gross
margin:
|
||||||||||||||||
|
Global Specialty Engineered
Materials
|
$ | 31.3 | $ | 24.9 | $ | 91.9 | $ | 60.4 | ||||||||
|
Global Color, Additives and
Inks
|
31.6 | 30.1 | 94.9 | 76.3 | ||||||||||||
|
Specialty
Platform
|
62.9 | 55.0 | 186.8 | 136.7 | ||||||||||||
|
Performance Products and
Solutions
|
30.4 | 26.3 | 85.7 | 64.6 | ||||||||||||
|
PolyOne
Distribution
|
23.5 | 16.6 | 66.9 | 43.7 | ||||||||||||
|
Corporate and
eliminations
|
(5.6 | ) | 8.1 | 2.0 | (7.3 | ) | ||||||||||
|
Gross
margin
|
$ | 111.2 | $ | 106.0 | $ | 341.4 | $ | 237.7 | ||||||||
|
Selling
and administrative:
|
||||||||||||||||
|
Global Specialty Engineered
Materials
|
$ | (17.2 | ) | $ | (16.8 | ) | $ | (53.6 | ) | $ | (48.1 | ) | ||||
|
Global Color, Additives and
Inks
|
(22.4 | ) | (21.2 | ) | (66.6 | ) | (60.8 | ) | ||||||||
|
Specialty
Platform
|
(39.6 | ) | (38.0 | ) | (120.2 | ) | (108.9 | ) | ||||||||
|
Performance Products and
Solutions
|
(12.5 | ) | (13.4 | ) | (38.1 | ) | (38.8 | ) | ||||||||
|
PolyOne
Distribution
|
(11.3 | ) | (10.1 | ) | (34.5 | ) | (28.4 | ) | ||||||||
|
SunBelt Joint
Venture
|
(1.1 | ) | (1.0 | ) | (3.2 | ) | (3.1 | ) | ||||||||
|
Corporate and
eliminations
|
(12.6 | ) | 6.2 | (28.0 | ) | (24.4 | ) | |||||||||
|
Selling and
administrative
|
$ | (77.1 | ) | $ | (56.3 | ) | $ | (224.0 | ) | $ | (203.6 | ) | ||||
|
Operating
income:
|
||||||||||||||||
|
Global Specialty Engineered
Materials
|
$ | 14.1 | $ | 8.1 | $ | 38.3 | $ | 12.3 | ||||||||
|
Global Color, Additives and
Inks
|
10.0 | 9.4 | 30.5 | 17.0 | ||||||||||||
|
Specialty
Platform
|
24.1 | 17.5 | 68.8 | 29.3 | ||||||||||||
|
Performance Products and
Solutions
|
17.9 | 12.8 | 47.6 | 26.3 | ||||||||||||
|
PolyOne
Distribution
|
12.2 | 6.5 | 32.4 | 15.3 | ||||||||||||
|
SunBelt Joint
Venture
|
8.6 | 3.8 | 14.4 | 23.5 | ||||||||||||
|
Corporate and
eliminations
|
(18.2 | ) | 14.3 | (26.0 | ) | (36.7 | ) | |||||||||
|
Operating income
|
$ | 44.6 | $ | 54.9 | $ | 137.2 | $ | 57.7 | ||||||||
Specialty
Platform consists of our two specialty businesses: Global Specialty Engineered
Materials; and Global Color, Additives and Inks. We present Specialty
Platform sales, gross margin, selling and administration, and operating income
because management believes that this is useful information to investors in
highlighting our collective progress in advancing our specialization
strategy.
10
Attachment
6
Reconciliation
of Non-GAAP Financial Measures (Unaudited)
(In
millions, except per share data)
Senior
management uses gross margin before special items and operating income before
special items to assess performance and allocate resources because senior
management believes that these measures are useful in understanding current
profitability levels and that current levels may serve as a base for future
performance. In addition, operating income before the effect of special items is
a component of various PolyOne annual and long-term employee incentive plans and
is used in debt covenant computations. Senior management uses free
cash flow to assess our ability to service our debt. Below is a reconciliation
of non-GAAP financial measures to the most directly comparable measures
calculated and presented in accordance with GAAP. See attachment 1 for a
definition of special items.
|
Reconciliation
to Consolidated Statements of Operations
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||||
|
2010
|
Adjusted
2009
|
2010
|
Adjusted
2009
|
|||||||||||||
|
Sales
|
$ | 680.8 | $ | 548.3 | $ | 2,004.1 | $ | 1,508.2 | ||||||||
|
Gross
margin before special items
|
$ | 115.9 | $ | 98.0 | $ | 338.3 | $ | 245.3 | ||||||||
|
Special
items in gross margin
|
(4.7 | ) | 8.0 | 3.1 | (7.6 | ) | ||||||||||
|
Gross
margin
|
$ | 111.2 | $ | 106.0 | $ | 341.4 | $ | 237.7 | ||||||||
|
Gross
margin before special items as a percent of sales
|
17.0 | % | 17.9 | % | 16.9 | % | 16.3 | % | ||||||||
|
Operating
income before special items
|
$ | 50.1 | $ | 27.4 | $ | 135.5 | $ | 51.4 | ||||||||
|
Special
items in operating income
|
(5.5 | ) | 27.5 | 1.7 | 6.3 | |||||||||||
|
Operating
income
|
$ | 44.6 | $ | 54.9 | $ | 137.2 | $ | 57.7 | ||||||||
Senior
management uses comparisons of net income (loss) and basic and diluted earnings
(loss) per share (EPS) before special items, tax gain and tax valuation
allowance to assess performance and facilitate comparability of results with
prior periods. Below is a reconciliation of these non-GAAP financial measures to
their most directly comparable measure calculated and presented in accordance
with GAAP.
|
Reconciliation
to Consolidated Statements of Operations
|
Three
Months Ended
September
30, 2010
|
Adjusted
Three Months Ended September 30, 2009
|
||||||||||||||
| $ EPS | $ EPS | |||||||||||||||
|
Net
income
|
$ | 1.0 | $ | 0.01 | $ | 48.3 | $ | 0.51 | ||||||||
|
Special
items, after-tax (attachment 1)
|
21.8 | 0.23 | (17.7 | ) | (0.19 | ) | ||||||||||
|
Tax
(a)
|
4.5 | 0.04 | (18.0 | ) | (0.19 | ) | ||||||||||
|
Non-recurring
items, after tax
|
– | – | – | – | ||||||||||||
| $ | 27.3 | $ | 0.28 | $ | 12.6 | $ | 0.13 | |||||||||
|
Reconciliation
to Consolidated Statements of Operations
|
Nine
Months Ended
September
30, 2010
|
Adjusted
Nine Months Ended September 30, 2009
|
||||||||||||||
| $ EPS | $ EPS | |||||||||||||||
|
Net
income
|
$ | 65.1 | $ | 0.68 | $ | 28.7 | $ | 0.31 | ||||||||
|
Special
items, after-tax (attachment 1)
|
17.1 | 0.18 | (4.1 | ) | (0.04 | ) | ||||||||||
|
Tax
(a)
|
(10.1 | ) | (0.10 | ) | (12.3 | ) | (0.14 | ) | ||||||||
|
Non-recurring
items, after tax
|
(4.5 | ) | (0.05 | ) | – | – | ||||||||||
| $ | 67.6 | $ | 0.71 | $ | 12.3 | $ | 0.13 | |||||||||
|
(a)
|
Net
tax (benefit) loss from one-time foreign and domestic income tax items and
deferred income tax valuation allowance adjustments on deferred tax
assets
|
Senior
management uses free cash flow to assess our ability to service our debt. Below
is a reconciliation of this non-GAAP financial measure to the most directly
comparable measure calculated and presented in accordance with
GAAP.
|
Reconciliation
to Consolidated Statements of Cash Flows
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
cash provided by operating activities
|
$ | 41.2 | $ | 82.3 | $ | 82.4 | $ | 216.9 | ||||||||
|
Net
cash used by investing activities
|
(8.0 | ) | (3.7 | ) | (11.1 | ) | (15.9 | ) | ||||||||
|
Decrease
in sale of accounts receivable
|
– | – | – | 14.2 | ||||||||||||
|
Free
cash flow
|
$ | 33.2 | $ | 78.6 | $ | 71.3 | $ | 215.2 | ||||||||
11
Senior management uses net debt as
a measure of our financial position. Below is a reconciliation of this non-GAAP
financial measure to the most directly comparable measure calculated and
presented in accordance with GAAP.
|
(Unaudited)
|
Adjusted
|
|||||||
|
September
30,
|
December
31,
|
|||||||
|
Reconciliation
to Condensed Consolidated Balance Sheets
|
2010
|
2009
|
||||||
|
Current
portion of long-term debt
|
$ | 19.9 | $ | 19.9 | ||||
|
Long-term
debt
|
434.0 | 389.2 | ||||||
|
SunBelt
guarantee
|
48.8 | 48.8 | ||||||
|
Less
cash and cash equivalents
|
(307.9 | ) | (222.7 | ) | ||||
|
Net
debt
|
$ | 194.8 | $ | 235.2 | ||||
12