SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of
report (Date of earliest event reported): November
5, 2008
POLYONE
CORPORATION
(Exact
name of registrant as specified in charter)
|
Ohio
|
1-16091
|
34-1730488
|
||
|
(State
or other
jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(I.R.S.
Employer
Identification
No.)
|
|
PolyOne
Center, 33587 Walker Road, Avon Lake, Ohio
|
44012
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (440)
930-1000
(Former
name or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing requirements of the registrant under any of the following
provisions:
¨
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13E-4(c))
Item
2.02. Results of Operations and Financial Condition.
On
November 5, 2008, the Registrant issued a press release, furnished herewith
as
Exhibit 99.1, announcing earnings for the third quarter of 2008. The press
release shall not be deemed to be "filed" under the Securities Exchange Act
of
1934.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
99.1 - Press release dated November 5, 2008.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
POLYONE
CORPORATION
|
|
|
By:
|
/s/
Robert M. Patterson
|
|
Name:
Robert M. Patterson
|
|
|
Title:
Senior Vice President and Chief Financial
Officer
|
|
Dated:
November 5, 2008
EXHIBIT
INDEX
|
No.
|
Description
|
|
|
99.1
|
Press
release dated November 5, 2008
|
NEWS
RELEASE
FOR
IMMEDIATE RELEASE
PolyOne
Announces Third Quarter 2008 Results
|
·
|
Third
quarter sales increase 10.6 percent, earnings decline from special
charges
and slightly lower operating
income.
|
|
·
|
Global
economic slowdown creates new industry
headwinds.
|
|
·
|
Debt
reduced - strong balance sheet positions PolyOne to weather economic
slump.
|
CLEVELAND,
November 5, 2008 - PolyOne Corporation (NYSE: POL), a premier global provider
of
specialized polymer materials, services and solutions, today reported fiscal
third quarter 2008 revenues of $735.1 million, a 10.6 percent increase compared
with revenues of $664.8 million in the third quarter of 2007.
PolyOne
reported a net loss of $5.6 million or $0.06 per share in the third quarter
of
2008 compared with net income of $2.3 million or $0.02 per diluted share in
the
third quarter of 2007. Included in the results for the third quarter of 2008
and
2007 are special items resulting in charges of $0.19 and $0.12, respectively
(see Attachment 1).
On
a
comparable basis, before special items, PolyOne reported $0.13 per share in
the
third quarter of 2008, compared with $0.14 per share in the third quarter of
last year.
"We’re
pleased that the third quarter impact of Hurricane Ike was not as significant
as
we initially anticipated, and that, for the quarter, we are able to report
slightly better than expected earnings per share before special items,” said
Stephen D. Newlin, chairman, president and chief executive officer. Newlin
added, “While our SunBelt joint venture had no choice but to close down
temporarily, our other facilities in the area did an exceptional job at managing
through power and supply interruptions to meet customer needs and exceed our
post-hurricane expectations for the quarter. This is a direct result of the
tireless efforts of our employees who helped positively manage our impacted
operations.”
“Our
International Color and Engineered Materials segment reported an operating
income decline versus the third quarter of 2007, and on a sequential basis
versus the second quarter of 2008. This confirms the concerns we have
communicated in our outlook updates that the economic slowdown already present
in the U.S. is taking hold in Europe and Asia,” Newlin continued. “We continue
to focus on our transformation strategy; however, we are not going to ignore
the
prevailing market dynamics. We recognize that now is a time to be prudent with
cash, control spending, preserve our liquidity and protect ourselves from
potential customer solvency issues.”
Commenting
on the Company’s financial position, senior vice president and chief financial
officer, Robert M. Patterson said, “As of September 30, 2008 we had $37 million
of cash, plus borrowing availability of $133 million under our accounts
receivable securitization facility, for total liquidity of $170 million. During
the third quarter, we paid down $8 million of debt and repurchased one million
of the Company’s outstanding common shares.”
Outlook
“While
our results for the third quarter were modestly better than anticipated, our
fourth quarter earnings may fall short of our previous expectations,” said
Newlin. “Accordingly, it may be a challenge to deliver full-year earnings per
share before special items within the range of guidance we provided in
September.”
Newlin
cited several factors contributing to this assessment. “First, we are lowering
our earnings expectations as a result of latent supply and pricing uncertainties
associated with the Gulf storms. That being said, we are more concerned about
the recent deterioration in the global economy. We expect further pressure
on
our international results; first as it becomes increasingly clear that European
and Asian demand is slowing, and second due to the continued weakening of the
Euro relative to the U.S. Dollar. Additionally, the U.S. economy is under
tremendous strain on the heels of the global financial crisis, creating
significant uncertainty over the next few quarters for our customers.
Specifically, such key PolyOne end markets as housing, construction, automotive
and electronics face particularly troubling business conditions which we expect
may reverberate throughout other markets as the global economic slowdown gains
momentum.”
In
reaction to the uncertainties described above, PolyOne is taking actions to
reduce spending and preserve liquidity. Patterson stated, “We began the year
expecting to spend between $55 and $60 million for capital expenditures and
this
did not contemplate the incremental $6 to $7 million we will incur this year
as
a result of manufacturing realignment actions announced in July. Without
limiting spending related to the realignment we are now forecasting to spend
less than $55 million for the year.”
Patterson
further added, “The fourth quarter is typically our strongest cash flow quarter
and we expect that to be the case this year. Given our concerns about the
economy, we will be prioritizing free cash flow use first for required short
term debt repayment and second to ensure we have adequate liquidity to fund
seasonal working capital requirements. We will then consider additional capital
expenditures beyond maintenance levels prior to furthering our overall capital
structure objectives.”
Third
Quarter 2008 Earnings Release and Conference Call
PolyOne
will host a conference call at 9 a.m. Eastern on Wednesday, November 5, 2008.
The conference dial-in number is 866-543-6403 (domestic) or 617-213-8896
(international), pass code 55915037, conference topic: third quarter 2008
PolyOne earnings conference call. The replay number is 888-286-8010 (domestic)
or 617-801-6888 (international). The pass code for the replay is 19198595.
The
call will be broadcast live and then be available via replay until November
13,
2008, on the Company's Web site at www.polyone.com.
About
PolyOne
PolyOne
Corporation, with annual revenues of more than $2.7 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.
Contacts:
Robert
M.
Patterson
Senior
Vice President & Chief Financial Officer
PolyOne
Corporation
+1
440-930-3302
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 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
continued degradation in the North American residential construction market;
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
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 PolyOne conducts 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 cost
reductions and employee productivity goals; an inability to raise or sustain
prices for products or services; an inability to maintain appropriate relations
with unions and employees; 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.
#
#
#
Attachment
1
Supplemental
Information
Summary
of Consolidated Operating Results (Unaudited)
Third
Quarter 2008
(In
millions, except per share data)
|
3Q08
|
3Q07
|
2Q08
|
||||||||
|
Operating
results:
|
||||||||||
|
Sales
|
$
|
735.1
|
$
|
664.8
|
$
|
748.1
|
||||
|
Operating
income (loss)
|
1.3
|
(23.6
|
)
|
24.0
|
||||||
|
Net
income (loss)
|
(5.6
|
)
|
2.3
|
8.8
|
||||||
|
Earnings
per common share:
|
||||||||||
|
Basic
and diluted earnings per share
|
$
|
(0.06
|
)
|
$
|
0.02
|
$
|
0.09
|
|||
|
Total
diluted per share impact of special items after tax (1):
|
$
|
(0.19
|
)
|
$
|
(0.12
|
)
|
$
|
(0.03
|
)
|
|
| (1) |
Special
items is a non-GAAP financial measure. Special items includes charges
related to specific strategic initiatives such as: the consolidation
of
operations; restructuring activities, including employee separation
costs
resulting from personnel reduction programs, plant closure and phaseout
costs; executive separation agreements; asset impairments; environmental
remediation costs for facilities no longer owned or closed in prior
years;
gains and losses on the divestiture of joint ventures and equity
investments; and adjustments to reflect a tax benefit on domestic
losses.
Following is a list of special items.
|
|
Special
items (in
millions, except per share data)
|
3Q08
|
3Q07
|
2Q08
|
|||||||
|
Employee
separation and plant phaseout costs (a)
|
$
|
(11.6
|
)
|
$
|
(1.5
|
)
|
$
|
(1.5
|
)
|
|
|
Write-down
of certain assets of and investment in equity affiliate
(b)
|
(4.7
|
)
|
(1.6
|
)
|
−
|
|||||
|
Impairment
of intangibles and other investments (c)
|
−
|
(2.5
|
)
|
−
|
||||||
|
Environmental
remediation costs (d)
|
(10.4
|
)
|
(30.0
|
)
|
(2.3
|
)
|
||||
|
Reimbursement
to Goodrich Corp. of environmental costs related to Calvert City
(e)
|
−
|
(15.6
|
)
|
−
|
||||||
|
Settlement
of legal issues and related reserves
|
−
|
(2.4
|
)
|
−
|
||||||
|
Impact
on operating income
|
(26.7
|
)
|
(53.6
|
)
|
(3.8
|
)
|
||||
|
Deferred
note issuance cost write-off
|
−
|
(1.6
|
)
|
−
|
||||||
|
Premium
on early extinguishment of debt
|
−
|
(7.5
|
)
|
−
|
||||||
|
Impact
on income before income taxes
|
(26.7
|
)
|
(62.7
|
)
|
(3.8
|
)
|
||||
|
Income
tax benefit on above items
|
9.0
|
21.7
|
1.3
|
|||||||
|
Reversal
of deferred tax liability associated with sale of equity affiliate
|
−
|
31.5
|
−
|
|||||||
|
Adjustment
to foreign income tax contingency and related interest
|
−
|
(1.0
|
)
|
−
|
||||||
|
Impact
on net income
|
$
|
(17.7
|
)
|
$
|
(10.5
|
)
|
$
|
(2.5
|
)
|
|
|
Per
diluted share impact
|
$
|
(0.19
|
)
|
$
|
(0.12
|
)
|
$
|
(0.03
|
)
|
|
| a. |
Severance,
employee outplacement, external outplacement consulting, lease
termination, facility closing costs, accelerated depreciation and
the
write-down of the carrying value of plant and equipment resulting
from
restructuring initiatives and executive separation agreements.
|
| b. |
Non-cash
write-down of certain inventory, receivables and intangible assets
of, and an impairment of our investment in, our equity affiliate
in
Colombia.
|
| c. |
Impairment
of the carrying value of certain intangibles and other
investments.
|
| d. |
Environmental
remediation costs for facilities either no longer owned or closed
in prior
years.
|
| e. |
Remediation
costs and certain legal costs related to the Calvert City, Kentucky
facility.
|
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,
|
||||||||||||
|
2008
|
2007
|
2008
|
2007
|
||||||||||
|
Sales
|
$
|
735.1
|
$
|
664.8
|
$
|
2,196.9
|
$
|
2,011.4
|
|||||
|
Cost
of sales
|
669.9
|
634.8
|
1,958.3
|
1,814.8
|
|||||||||
|
Gross
margin
|
65.2
|
30.0
|
238.6
|
196.6
|
|||||||||
|
Selling
and administrative
|
69.7
|
65.3
|
217.6
|
197.9
|
|||||||||
|
Income
from equity affiliates and minority interest
|
5.8
|
11.7
|
24.4
|
16.6
|
|||||||||
|
Operating
income (loss)
|
1.3
|
(23.6
|
)
|
45.4
|
15.3
|
||||||||
|
Interest
expense
|
(10.5
|
)
|
(11.9
|
)
|
(30.4
|
)
|
(43.2
|
)
|
|||||
|
Interest
income
|
0.8
|
1.6
|
2.5
|
3.4
|
|||||||||
|
Premium
on early extinguishment of long-term debt
|
−
|
(7.5
|
)
|
−
|
(12.8
|
)
|
|||||||
|
Other
expense, net
|
−
|
(1.8
|
)
|
(2.7
|
)
|
(4.5
|
)
|
||||||
|
Income
(loss) before income taxes
|
(8.4
|
)
|
(43.2
|
)
|
14.8
|
(41.8
|
)
|
||||||
|
Income
tax benefit (expense)
|
2.8
|
45.5
|
(5.1
|
)
|
46.1
|
||||||||
|
Net
income (loss)
|
$
|
(5.6
|
)
|
$
|
2.3
|
$
|
9.7
|
$
|
4.3
|
||||
|
Basic
and diluted earnings (loss) per common share
|
$
|
(0.06
|
)
|
$
|
0.02
|
$
|
0.10
|
$
|
0.05
|
||||
|
Weighted
average shares used to compute earnings per share:
|
|||||||||||||
|
Basic
|
92.9
|
92.8
|
92.9
|
92.7
|
|||||||||
|
Diluted
|
92.9
|
93.3
|
93.5
|
93.1
|
|||||||||
|
Dividends
declared per share of common stock
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
|
Equity
earnings (loss) recorded by PolyOne:
|
|||||||||||||
|
SunBelt
|
$
|
10.2
|
$
|
12.6
|
$
|
26.8
|
$
|
30.6
|
|||||
|
OxyVinyls
|
-
|
-
|
-
|
0.9
|
|||||||||
|
Impairment
of investment in OxyVinyls
|
-
|
-
|
-
|
(15.9
|
)
|
||||||||
|
Other
equity affiliates
|
0.3
|
0.7
|
2.3
|
2.8
|
|||||||||
|
Write-down
of certain assets of and investment in Geon/Polimeros
Andinos
|
(4.7
|
)
|
(1.6
|
)
|
(4.7
|
)
|
(1.6
|
)
|
|||||
|
Minority
interest
|
-
|
-
|
-
|
(0.2
|
)
|
||||||||
|
Income
from equity affiliates and minority interest
|
$
|
5.8
|
$
|
11.7
|
$
|
24.4
|
$
|
16.6
|
|||||
Attachment
3
PolyOne
Corporation and Subsidiaries
Condensed
Consolidated Balance Sheets (Unaudited)
(In
millions)
|
September 30,
|
December 31,
|
||||||
|
2008
|
2007
|
||||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
37.0
|
$
|
79.4
|
|||
|
Accounts
receivable, net
|
392.4
|
340.8
|
|||||
|
Inventories
|
273.1
|
223.4
|
|||||
|
Deferred
income tax assets
|
21.9
|
20.4
|
|||||
|
Other
current assets
|
19.7
|
19.8
|
|||||
|
Total
current assets
|
744.1
|
683.8
|
|||||
|
Property,
net
|
444.5
|
449.7
|
|||||
|
Investment
in equity affiliates
|
25.8
|
19.9
|
|||||
|
Goodwill
|
332.8
|
288.8
|
|||||
|
Other
intangible assets, net
|
70.4
|
6.7
|
|||||
|
Deferred
income tax assets
|
75.0
|
69.9
|
|||||
|
Other
non-current assets
|
67.1
|
64.2
|
|||||
|
Total
assets
|
$
|
1,759.7
|
$
|
1,583.0
|
|||
|
Liabilities
and Shareholders’ Equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Short-term
bank debt
|
$
|
77.3
|
$
|
6.1
|
|||
|
Accounts
payable
|
290.7
|
250.5
|
|||||
|
Accrued
expenses
|
112.7
|
94.4
|
|||||
|
Current
portion of long-term debt
|
2.9
|
22.6
|
|||||
|
Total
current liabilities
|
483.6
|
373.6
|
|||||
|
Long-term
debt
|
388.0
|
308.0
|
|||||
|
Post-retirement
benefits other than pensions
|
87.7
|
81.6
|
|||||
|
Pension
benefits
|
62.6
|
82.6
|
|||||
|
Other
non-current liabilities
|
91.3
|
87.8
|
|||||
|
Total
liabilities
|
1,113.2
|
933.6
|
|||||
|
Shareholders’
equity
|
646.5
|
649.4
|
|||||
|
Total
liabilities and shareholders’ equity
|
$
|
1,759.7
|
$
|
1,583.0
|
|||
Attachment
4
PolyOne
Corporation and Subsidiaries
Consolidated
Statements of Cash Flows (Unaudited)
(In
millions)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
September 30,
|
||||||||||||
|
2008
|
2007
|
2008
|
2007
|
||||||||||
|
Operating
Activities
|
|||||||||||||
|
Net
income (loss)
|
$
|
(5.6
|
)
|
$
|
2.3
|
$
|
9.7
|
$
|
4.3
|
||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||||||||
|
Depreciation
and amortization
|
20.1
|
14.1
|
51.8
|
42.7
|
|||||||||
|
Charges
for environmental remediation
|
10.4
|
45.6
|
14.3
|
47.5
|
|||||||||
|
Cash
payments for environmental remediation
|
(3.1
|
)
|
(1.7
|
)
|
(7.9
|
)
|
(4.6
|
)
|
|||||
|
Deferred
income tax benefit
|
(5.5
|
)
|
(46.8
|
)
|
(5.1
|
)
|
(52.2
|
)
|
|||||
|
Premium
on early extinguishment of long term debt
|
-
|
7.5
|
-
|
12.8
|
|||||||||
|
Stock
compensation expense
|
0.7
|
1.0
|
2.2
|
3.6
|
|||||||||
|
Asset
impairment charge
|
-
|
2.5
|
-
|
2.5
|
|||||||||
|
Companies
carried at equity and minority interest:
|
|||||||||||||
|
Impairment
of certain assets of and investment in equity affiliates
|
4.7
|
1.6
|
4.7
|
17.5
|
|||||||||
|
Income
from equity affiliates and minority interest
|
(10.5
|
)
|
(13.3
|
)
|
(29.1
|
)
|
(34.1
|
)
|
|||||
|
Dividends
and distributions received
|
12.5
|
14.4
|
20.8
|
24.2
|
|||||||||
|
Contributions
to pensions and other post-retirement plans
|
(5.5
|
)
|
(10.5
|
)
|
(25.5
|
)
|
(24.2
|
)
|
|||||
|
Change
in assets and liabilities:
|
|||||||||||||
|
Accounts
receivable
|
8.0
|
18.8
|
(69.1
|
)
|
(52.0
|
)
|
|||||||
|
Inventories
|
(1.5
|
)
|
8.0
|
(34.8
|
)
|
(9.0
|
)
|
||||||
|
Accounts
payable
|
(42.2
|
)
|
(11.1
|
)
|
36.1
|
68.7
|
|||||||
|
Increase
(decrease) in sale of accounts receivable
|
12.0
|
(89.2
|
)
|
25.8
|
-
|
||||||||
|
Accrued
expenses and other
|
22.8
|
(0.4
|
)
|
23.1
|
(4.3
|
)
|
|||||||
|
Net
cash provided (used) by operating activities
|
17.3
|
(57.2
|
)
|
17.0
|
43.4
|
||||||||
|
Investing
Activities
|
|||||||||||||
|
Capital
expenditures
|
(9.7
|
)
|
(14.8
|
)
|
(29.6
|
)
|
(36.7
|
)
|
|||||
|
Business
acquisitions, net of cash received
|
(0.2
|
)
|
(11.0
|
)
|
(150.2
|
)
|
(11.0
|
)
|
|||||
|
Investment
in affiliated company
|
(1.1
|
)
|
-
|
(1.1
|
)
|
-
|
|||||||
|
Proceeds
from sale of equity affiliate
|
-
|
260.5
|
-
|
260.5
|
|||||||||
|
Proceeds
from sale of assets
|
-
|
-
|
-
|
5.2
|
|||||||||
|
Net
cash (used) provided by investing activities
|
(11.0
|
)
|
234.7
|
(180.9
|
)
|
218.0
|
|||||||
|
Financing
Activities
|
|||||||||||||
|
Change
in short-term debt
|
(9.2
|
)
|
(17.7
|
)
|
73.4
|
(0.2
|
)
|
||||||
|
Issuance
of long-term debt, net of debt issuance cost
|
-
|
-
|
77.8
|
-
|
|||||||||
|
Repayment
of long-term debt
|
(10.8
|
)
|
(142.0
|
)
|
(22.2
|
)
|
(263.4
|
)
|
|||||
|
Purchase
of common stock for treasury
|
(8.0
|
)
|
-
|
(8.0
|
)
|
-
|
|||||||
|
Premium
on early extinguishment of long-term debt
|
-
|
(7.5
|
)
|
-
|
(12.8
|
)
|
|||||||
|
Proceeds
from exercise of stock options
|
1.1
|
0.2
|
1.1
|
0.9
|
|||||||||
|
Net
cash (used) provided by financing activities
|
(26.9
|
)
|
(167.0
|
)
|
122.1
|
(275.5
|
)
|
||||||
|
Effect
of exchange rate changes on cash
|
(2.2
|
)
|
1.7
|
(0.6
|
)
|
4.1
|
|||||||
|
Increase
(decrease) in cash and cash equivalents
|
(22.8
|
)
|
12.2
|
(42.4
|
)
|
(10.0
|
)
|
||||||
|
Cash
and cash equivalents at beginning of period
|
59.8
|
44.0
|
79.4
|
66.2
|
|||||||||
|
Cash
and cash equivalents at end of period
|
$
|
37.0
|
$
|
56.2
|
$
|
37.0
|
$
|
56.2
|
|||||
Attachment
5
Business
Segment and Platform Operations (Unaudited)
(In
millions)
Operating
income at the segment level does not include: corporate general and
administration costs that are not allocated to segments; intersegment sales
and
profit eliminations; charges related to specific initiatives, such as the
consolidation of operations; restructuring activities, including employee
separation costs resulting from personnel reduction programs, plant closure
and
phaseout costs; executive separation agreements; share-based compensation costs;
asset impairments; environmental remediation costs for facilities no longer
owned or closed in prior years; gains and losses on the divestiture of joint
ventures and equity investments; 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.
|
3Q08
|
2Q08
|
1Q08
|
4Q07
|
3Q07
|
||||||||||||
|
Sales:
|
||||||||||||||||
|
International
Color and Engineered Materials
|
$
|
153.7
|
$
|
172.1
|
$
|
165.2
|
$
|
146.9
|
$
|
147.4
|
||||||
|
Specialty
Engineered Materials
|
66.1
|
67.3
|
64.5
|
28.7
|
31.8
|
|||||||||||
|
Specialty
Color, Additives and Inks
|
60.1
|
60.8
|
58.4
|
53.0
|
58.7
|
|||||||||||
|
Specialty
Platform
|
279.9
|
300.2
|
288.1
|
228.6
|
237.9
|
|||||||||||
|
Performance
Products and Solutions
|
274.4
|
273.7
|
259.3
|
246.1
|
274.5
|
|||||||||||
|
PolyOne
Distribution
|
214.7
|
208.2
|
201.1
|
184.0
|
185.8
|
|||||||||||
|
Corporate
and eliminations
|
(33.9
|
)
|
(34.0
|
)
|
(34.8
|
)
|
(27.4
|
)
|
(33.4
|
)
|
||||||
|
Sales
|
$
|
735.1
|
$
|
748.1
|
$
|
713.7
|
$
|
631.3
|
$
|
664.8
|
||||||
|
Gross
margin:
|
||||||||||||||||
|
International
Color and Engineered Materials
|
$
|
23.3
|
$
|
30.7
|
$
|
28.8
|
$
|
23.0
|
$
|
23.9
|
||||||
|
Specialty
Engineered Materials
|
13.3
|
12.5
|
11.6
|
2.9
|
3.4
|
|||||||||||
|
Specialty
Color, Additives and Inks
|
13.4
|
12.4
|
11.2
|
9.5
|
11.2
|
|||||||||||
|
Specialty
Platform
|
50.0
|
55.6
|
51.6
|
35.4
|
38.5
|
|||||||||||
|
Performance
Products and Solutions
|
17.1
|
19.0
|
21.0
|
15.6
|
23.9
|
|||||||||||
|
PolyOne
Distribution
|
22.2
|
18.1
|
17.2
|
15.4
|
14.8
|
|||||||||||
|
Corporate
and eliminations
|
(24.1
|
)
|
(4.2
|
)
|
(4.9
|
)
|
(2.0
|
)
|
(47.2
|
)
|
||||||
|
Gross
margin
|
$
|
65.2
|
$
|
88.5
|
$
|
84.9
|
$
|
64.4
|
$
|
30.0
|
||||||
|
Operating
income (loss):
|
||||||||||||||||
|
International
Color and Engineered Materials
|
$
|
4.6
|
$
|
10.4
|
$
|
7.8
|
$
|
4.8
|
$
|
6.5
|
||||||
|
Specialty
Engineered Materials
|
5.0
|
3.2
|
2.9
|
(1.0
|
)
|
−
|
||||||||||
|
Specialty
Color, Additives and Inks
|
4.7
|
3.5
|
2.8
|
1.3
|
3.2
|
|||||||||||
|
Specialty
Platform
|
14.3
|
17.1
|
13.5
|
5.1
|
9.7
|
|||||||||||
|
Performance
Products and Solutions
|
5.3
|
5.3
|
8.3
|
4.3
|
12.6
|
|||||||||||
|
PolyOne
Distribution
|
9.4
|
7.0
|
5.5
|
5.7
|
5.3
|
|||||||||||
|
Resin
and Intermediates
|
9.6
|
8.7
|
5.9
|
7.3
|
11.2
|
|||||||||||
|
Corporate
and eliminations
|
(37.3
|
)
|
(14.1
|
)
|
(13.1
|
)
|
(3.8
|
)
|
(62.4
|
)
|
||||||
|
Operating
income (loss)
|
$
|
1.3
|
$
|
24.0
|
$
|
20.1
|
$
|
18.6
|
$
|
(23.6
|
)
|
|||||
Specialty
Platform consists of our three specialty businesses: International Color and
Engineered Materials; Specialty Engineered Materials; and Specialty Color,
Additives and Inks.
Attachment
6
Reconciliation
of Non-GAAP Financial Measures (Unaudited)
(In
millions, except per share data)
Senior
management uses operating income before the effect of special items to assess
performance and allocate resources because senior management believes that
this
measure is 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.
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 list of special items.
|
3Q08
|
3Q07
|
2Q08
|
||||||||
|
Operating
income before special items
|
$
|
28.0
|
$
|
30.0
|
$
|
27.8
|
||||
|
Special
items in operating income
|
(26.7
|
)
|
(53.6
|
)
|
(3.8
|
)
|
||||
|
Operating
income (loss)
|
$
|
1.3
|
$
|
(23.6
|
)
|
$
|
24.0
|
|||
|
Income
per share before impact of special items
|
$
|
0.13
|
$
|
0.14
|
$
|
0.12
|
||||
|
Per
share impact of special items, after tax
|
(0.19
|
)
|
(0.12
|
)
|
(0.03
|
)
|
||||
|
Diluted
earnings (loss) per common share
|
$
|
(0.06
|
)
|
$
|
0.02
|
$
|
0.09
|
|||
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||
|
Reconciliation to Condensed Consolidated Statement of Cash Flows
|
2008
|
2007
|
2008
|
2007
|
|||||||||
|
Net
cash (used) provided by operating activities
|
$
|
17.3
|
$
|
(57.2
|
)
|
$
|
17.0
|
$
|
43.4
|
||||
|
Net
cash (used) provided by investing activities
|
(11.0
|
)
|
234.7
|
(180.9
|
)
|
218.0
|
|||||||
|
Decrease
(increase) in sale of accounts receivable
|
(12.0
|
)
|
89.2
|
(25.8
|
)
|
-
|
|||||||
|
Free
cash flow
|
$
|
(5.7
|
)
|
$
|
266.7
|
$
|
(189.7
|
)
|
$
|
261.4
|
|||