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):
August 6,
2009
POLYONE
CORPORATION
------------------------------------
(Exact
name of registrant as specified in charter)
|
Ohio
------
(State
or other
jurisdiction
of
incorporation)
|
1-16091
----------
(Commission
File
Number)
|
34-1730488
---------------
(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:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
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 August
6, 2009, the Registrant issued a press release, furnished herewith as Exhibit
99.1, announcing earnings for the second quarter of 2009. 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 August 6, 2009.
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
|
||
|
August
6, 2009
|
||
EXHIBIT
INDEX
|
Exhibit
|
Description
|
|
No.
|
|
|
99.1
|
Press
release dated August 6, 2009
|
Exhibit
99.1
NEWS
RELEASE
FOR
IMMEDIATE RELEASE
PolyOne Announces Second
Quarter 2009 Results
|
|
·
|
Reports
earnings per share of $0.04; $0.13 excluding special items, tax
charges
|
|
|
·
|
Cash
balance of $182 million; liquidity exceeds $250
million
|
|
|
·
|
Gross
margin improvement driven by restructuring actions completed ahead of
schedule and continued execution of four pillar
strategy
|
|
|
·
|
Working
capital days improve to 35, versus 57 days a year
ago
|
CLEVELAND
– August 6, 2009 – PolyOne Corporation (NYSE: POL) today reported 2009 second
quarter revenues of $496.5 million, a 34 percent decrease compared with revenues
of $748.1 million in the second quarter of 2008. The decline in sales was
principally due to continued weak global demand as volume fell 30
percent.
PolyOne
reported net income of $3.5 million, or $0.04 per diluted share in the second
quarter of 2009, compared with net income of $8.8 million or $0.09 per diluted
share in the second quarter of 2008. Included in the results for the second
quarter of 2009 are special items totaling $3.1 million of expense (after-tax)
principally related to previously announced restructuring actions and tax
adjustments totaling $5.3 million. The tax adjustments relate to a foreign tax
audit assessment which the Company intends to appeal and a valuation allowance
adjustment related to deferred tax assets. The Company began recording a
valuation allowance against U.S. deferred tax assets during the fourth quarter
of 2008.
The chart
below facilitates a comparison of second quarter 2009 results with the second
quarter of 2008, showing the impact of special items and the above-mentioned tax
matters:
| Q2 09 |
EPS
|
Q2 08 |
EPS
|
|||||||||||||
|
Net
income
|
$ | 3.5 | $ | 0.04 | $ | 8.8 | $ | 0.09 | ||||||||
|
Special
items, after-tax
|
3.1 | 0.03 | 2.5 | 0.03 | ||||||||||||
|
Tax
adjustments
|
5.3 | 0.06 | 0.3 | |||||||||||||
| $ | 11.9 | $ | 0.13 | $ | 11.6 | $ | 0.12 | |||||||||
On a
comparable basis, before special items and the tax items noted above, PolyOne
reported net income of $0.13 per share in the second quarter of 2009, versus the
$0.12 per share of income reported for the second quarter of 2008.
The
Company’s second quarter 2009 gross margin before special items of 18.2 percent
represents 600 basis points of improvement from the second quarter of 2008 and a
sequential improvement of 300 basis points versus the 15.2 percent for the first
quarter of 2009 (See attachment 6). The gross margin improvements highlighted
above can be summarized as follows:
|
Q2 09 vs. Q2 08
|
||||
|
Q2
08 Gross margin
|
11.8 | % | ||
|
Special
items in gross margin
|
0.4 | % | ||
|
Q2
08 Gross margin before special items
|
12.2 | % | ||
|
Restructuring
savings
|
1.9 | % | ||
|
Volume/price/mix
|
2.2 | % | ||
|
LIFO
reserve adjustments
|
1.9 | % | ||
|
Q2
09 Gross margin before special items
|
18.2 | % | ||
|
Special
items in gross margin
|
-0.8 | % | ||
|
Q2
09 Gross margin
|
17.4 | % | ||
|
Q2 09 vs. Q1 09
|
||||
|
Q1
09 Gross margin
|
12.8 | % | ||
|
Special
items in gross margin
|
2.4 | % | ||
|
Q1
09 Gross margin before special items
|
15.2 | % | ||
|
|
||||
|
Restructuring
savings
|
1.2 | % | ||
|
Volume/price/mix
|
2.4 | % | ||
|
LIFO
reserve adjustments
|
-0.6 | % | ||
|
Q2
09 Gross margin before special items
|
18.2 | % | ||
|
Special
items in gross margin
|
-0.8 | % | ||
|
Q2
09 Gross margin
|
17.4 | % | ||
“Our
second quarter gross margin expansion and earnings improvement provide further
evidence that we have radically reduced our manufacturing capacity and cost
structure,” said Stephen D. Newlin, chairman, president and chief executive
officer. “I am particularly pleased with our ability to accelerate the
previously announced restructuring actions and drive gross margin improvement,
which has allowed us to offset the negative impact of significantly lower sales
volume. Most notably, operating income from our Specialty Platform increased
$14.1 million from the first quarter to the second of 2009. This reflects not
only the aforementioned restructuring savings, but a nearly 50 percent increase
in sales in
Asia where demand appears to be recovering much faster than elsewhere in the
world.”
2
During
the second quarter of 2009, the Company generated $59 million of cash flow and
reported $182 million of cash on hand as of June 30, 2009. Combined with its
undrawn and available accounts receivable facility, liquidity increased 35
percent from $189 million on March 31, 2008, to $255 million as of June 30,
2009. Robert M. Patterson, senior vice president and chief financial
officer said, “We have made tremendous progress in reducing working capital this
year which has been the primary driver of cash flow growth. Most notably, we
have improved our inventory turnover to 11 times—a nearly 50 percent
improvement—as a result of our lean six sigma initiatives.”
Outlook
Update
Regarding
the Company’s second half outlook, Newlin made several remarks:
“We are
encouraged by the accelerated activity in Asia, and modest increases in sales in
Europe and North America from the first quarter to the second. That being said,
demand levels are still significantly below historic norms and this may continue
for some time.
“With
increasing levels of cash and a dramatically reduced cost structure, we are
gaining more confidence about the future and expect to emerge from the recession
a leaner, healthier organization. As new housing starts and auto production
appear to be bottoming, we remain cautiously optimistic the worst is behind us,
but we are mindful of rapidly changing conditions.
“Such
changes in the near term include our expectation that favorable increases in
chlorine prices will not be enough to offset unfavorable caustic soda price
trends and this will put pressure on earnings from our SunBelt joint venture in
the second half of 2009. We also expect LIFO benefits to diminish as commodity
costs moderate or increase. It is unfortunate that these items may overshadow
the progress we have made improving our core earnings, however, they are purely
a function of the current economic environment. We will continue to focus on our
strategic platforms and we remain confident our four pillar strategy of
specialization, globalization, and operating and commercial excellence are
transforming PolyOne into a specialty company.”
Second Quarter 2009 Earnings
Conference Call
PolyOne
will host a conference call at 9 a.m. Eastern Time on Thursday, August 6,
2009. The conference dial-in number is 866-543-6403 (domestic) or
617-213-8896 (international), passcode 26334516, conference topic: second
quarter 2009 PolyOne earnings conference call. The call will be
available for replay until August 20, 2009, 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
passcode for the replay is 93965590.
3
About
PolyOne
PolyOne
Corporation, with 2008 revenues of $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.
To access
PolyOne’s news library online, please visit www.polyone.com/news.
Investor
Relations Contact:
Robert M.
Patterson
Senior
Vice President & Chief Financial Officer
PolyOne
Corporation
+1
440-930-3302
Media
Contact:
Amanda
Marko
Director,
Corporate Communications
PolyOne
Corporation
+1
440-930-3162
amanda.marko@polyone.com
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 working capital reductions, 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.
4
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)
Second
Quarter 2009
(In
millions, except per share data)
|
Operating
results:
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Sales
|
$ | 496.5 | $ | 748.1 | $ | 959.9 | $ | 1,461.8 | ||||||||
|
Operating
income
|
19.3 | 24.0 | 16.6 | 44.1 | ||||||||||||
|
Net
income (loss)
|
3.5 | 8.8 | (5.8 | ) | 15.3 | |||||||||||
|
Earnings
per common share:
|
||||||||||||||||
|
Basic earnings (loss) per
share
|
$ | 0.04 | $ | 0.09 | $ | (0.06 | ) | $ | 0.16 | |||||||
|
Diluted earnings (loss) per
share
|
$ | 0.04 | $ | 0.09 | $ | (0.06 | ) | $ | 0.16 | |||||||
|
Total
basic per share impact of special items (1)
|
$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.15 | ) | $ | (0.04 | ) | ||||
|
Total
diluted per share impact of special items (1)
|
$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.15 | ) | $ | (0.04 | ) | ||||
|
Special
items (1):
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Cost
of sales
|
||||||||||||||||
|
Employee
separation and plant phaseout costs
|
$ | (2.9 | ) | $ | (0.4 | ) | $ | (12.7 | ) | $ | (0.4 | ) | ||||
|
Environmental
remediation costs
|
(1.4 | ) | (2.3 | ) | (2.9 | ) | (3.9 | ) | ||||||||
|
Impact
on cost of sales
|
(4.3 | ) | (2.7 | ) | (15.6 | ) | (4.3 | ) | ||||||||
|
Selling
and administrative
|
||||||||||||||||
|
Legal
|
(0.2 | ) | – | (0.2 | ) | – | ||||||||||
|
Employee
separation and plant phaseout costs
|
(0.1 | ) | (1.1 | ) | (0.4 | ) | (1.1 | ) | ||||||||
|
Impact
on selling and administrative
|
(0.3 | ) | (1.1 | ) | (0.6 | ) | (1.1 | ) | ||||||||
|
Adjustment
to impairment of goodwill
|
– | – | (5.0 | ) | – | |||||||||||
|
Impact
on operating income and (loss) income before income taxes
|
(4.6 | ) | (3.8 | ) | (21.2 | ) | (5.4 | ) | ||||||||
|
Income
tax benefit on special items
|
1.5 | 1.3 | 7.6 | 1.9 | ||||||||||||
|
Impact
of special items on net income (loss)
|
$ | (3.1 | ) | $ | (2.5 | ) | $ | (13.6 | ) | $ | (3.5 | ) | ||||
|
Basic
and diluted impact per common share
|
$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.15 | ) | $ | (0.04 | ) | ||||
|
Weighted
average diluted shares used to compute earnings per share:
|
93.5 | 93.8 | 92.3 | 93.5 | ||||||||||||
|
|
(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; 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
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
Sales
|
$ | 496.5 | $ | 748.1 | $ | 959.9 | $ | 1,461.8 | |||||||||
|
Cost
of sales
|
410.2 | 659.6 | 814.4 | 1,288.4 | |||||||||||||
|
Gross
margin
|
86.3 | 88.5 | 145.5 | 173.4 | |||||||||||||
|
Selling
and administrative
|
77.1 | 75.0 | 147.3 | 147.9 | |||||||||||||
|
Adjustment
to impairment of goodwill
|
– | – | 5.0 | – | |||||||||||||
|
Income
from equity affiliates
|
10.1 | 10.5 | 23.4 | 18.6 | |||||||||||||
|
Operating
income
|
19.3 | 24.0 | 16.6 | 44.1 | |||||||||||||
|
Interest
expense, net
|
(8.8 | ) | (9.8 | ) | (17.6 | ) | (18.2 | ) | |||||||||
|
Other
expense, net
|
(0.7 | ) | (0.7 | ) | (7.3 | ) | (2.7 | ) | |||||||||
|
Income
(loss) before income taxes
|
9.8 | 13.5 | (8.3 | ) | 23.2 | ||||||||||||
|
Income
tax (expense) benefit
|
(6.3 | ) | (4.7 | ) | 2.5 | (7.9 | ) | ||||||||||
|
Net
income (loss)
|
$ | 3.5 | $ | 8.8 | $ | (5.8 | ) | $ | 15.3 | ||||||||
|
Earnings
(loss) per common share:
|
|||||||||||||||||
|
Basic
earnings (loss)
|
$ | 0.04 | $ | 0.09 | $ | (0.06 | ) | $ | 0.16 | ||||||||
|
Diluted
earnings (loss)
|
$ | 0.04 | $ | 0.09 | $ | (0.06 | ) | $ | 0.16 | ||||||||
|
Weighted
average shares used to compute earnings per share:
|
|||||||||||||||||
|
Basic
|
92.4 | 93.0 | 92.3 | 93.0 | |||||||||||||
|
Diluted
|
93.5 | 93.8 | 92.3 | 93.5 | |||||||||||||
|
Equity
affiliates earnings recorded by PolyOne:
|
|||||||||||||||||
|
SunBelt
|
$ | 9.0 | $ | 9.4 | $ | 21.8 | $ | 16.6 | |||||||||
|
Other equity
affiliates
|
1.1 | 1.1 | 1.6 | 2.0 | |||||||||||||
|
Income
from equity affiliates
|
$ | 10.1 | $ | 10.5 | $ | 23.4 | $ | 18.6 | |||||||||
7
Attachment
3
PolyOne
Corporation and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
millions)
|
(Unaudited)
|
||||||||
|
June
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash and cash
equivalents
|
$ | 182.3 | $ | 44.3 | ||||
|
Accounts receivable,
net
|
285.6 | 262.1 | ||||||
|
Inventories
|
149.5 | 197.8 | ||||||
|
Deferred income tax
assets
|
0.6 | 1.0 | ||||||
|
Other current
assets
|
18.6 | 19.9 | ||||||
|
Total current
assets
|
636.6 | 525.1 | ||||||
|
Property,
net
|
408.8 | 432.0 | ||||||
|
Investment
in equity affiliates and nonconsolidated subsidiary
|
29.5 | 20.5 | ||||||
|
Goodwill
|
159.0 | 163.9 | ||||||
|
Other
intangible assets, net
|
67.5 | 69.1 | ||||||
|
Deferred
income tax assets
|
– | 0.5 | ||||||
|
Other
non-current assets
|
61.4 | 66.6 | ||||||
|
Total assets
|
$ | 1,362.8 | $ | 1,277.7 | ||||
|
Liabilities
and Shareholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Current portion of long-term
debt
|
$ | 39.7 | $ | 19.8 | ||||
|
Short-term debt
|
22.1 | 6.2 | ||||||
|
Accounts payable
|
234.9 | 160.0 | ||||||
|
Accrued expenses
|
97.1 | 118.2 | ||||||
|
Total current
liabilities
|
393.8 | 304.2 | ||||||
|
Long-term
debt
|
388.9 | 408.3 | ||||||
|
Post-retirement
benefits other than pensions
|
81.9 | 80.9 | ||||||
|
Pension
benefits
|
208.7 | 225.0 | ||||||
|
Deferred
income tax liabilities
|
3.4 | – | ||||||
|
Other
non-current liabilities
|
91.0 | 83.4 | ||||||
|
Shareholders’
equity
|
195.1 | 175.9 | ||||||
|
Total liabilities and
shareholders’ equity
|
$ | 1,362.8 | $ | 1,277.7 | ||||
8
Attachment
4
PolyOne
Corporation and Subsidiaries
Consolidated
Statements of Cash Flows (Unaudited)
(In
millions)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Operating
Activities
|
||||||||||||||||
|
Net income (loss)
|
$ | 3.5 | $ | 8.8 | $ | (5.8 | ) | $ | 15.3 | |||||||
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
||||||||||||||||
|
Depreciation and
amortization
|
14.0 | 15.9 | 34.0 | 31.7 | ||||||||||||
|
Deferred
income tax expense
|
9.4 | 1.0 | 8.8 | 0.4 | ||||||||||||
|
Provision for doubtful
accounts
|
0.5 | 0.7 | 1.5 | 2.8 | ||||||||||||
|
Stock compensation
expense
|
0.8 | 0.7 | 1.4 | 1.5 | ||||||||||||
|
Adjustment to impairment of
goodwill
|
– | – | 5.0 | – | ||||||||||||
|
Asset write-downs and impairment
charges
|
0.2 | – | 1.4 | – | ||||||||||||
|
Companies carried at equity and
minority interest:
|
||||||||||||||||
|
Income
from equity affiliates and minority interest
|
(10.1 | ) | (10.5 | ) | (23.4 | ) | (18.6 | ) | ||||||||
|
Dividends and distributions
received
|
12.8 | 7.4 | 14.2 | 8.3 | ||||||||||||
|
Change in assets and
liabilities:
|
||||||||||||||||
|
Increase in accounts
receivable
|
(25.4 | ) | (28.2 | ) | (9.4 | ) | (79.9 | ) | ||||||||
|
Decrease (increase) in
inventories
|
11.2 | (4.8 | ) | 47.0 | (33.3 | ) | ||||||||||
|
Increase in accounts
payable
|
49.0 | 32.7 | 74.7 | 78.3 | ||||||||||||
|
Increase (decrease) in sale of
accounts receivable
|
– | (72.8 | ) | (14.2 | ) | 13.8 | ||||||||||
|
Decrease in accrued expenses and
other
|
(1.7 | ) | (8.3 | ) | (0.6 | ) | (20.6 | ) | ||||||||
|
Net
cash provided (used) by operating activities
|
64.2 | (57.4 | ) | 134.6 | (0.3 | ) | ||||||||||
|
Investing
Activities
|
||||||||||||||||
|
Capital
expenditures
|
(5.5 | ) | (11.5 | ) | (12.2 | ) | (19.9 | ) | ||||||||
|
Business acquisitions, net of cash
received
|
– | – | – | (150.0 | ) | |||||||||||
|
Net
cash used by investing activities
|
(5.5 | ) | (11.5 | ) | (12.2 | ) | (169.9 | ) | ||||||||
|
Financing
Activities
|
||||||||||||||||
|
Change in short-term
debt
|
(0.1 | ) | 0.7 | 15.1 | 82.6 | |||||||||||
|
Issuance of long-term debt, net of
debt issuance cost
|
– | 77.8 | – | 77.8 | ||||||||||||
|
Repayment of long-term
debt
|
– | (10.7 | ) | – | (11.4 | ) | ||||||||||
|
Net
cash (used) provided by financing activities
|
(0.1 | ) | 67.8 | 15.1 | 149.0 | |||||||||||
|
Effect
of exchange rate changes on cash
|
1.2 | 1.7 | 0.5 | 1.6 | ||||||||||||
|
Increase
(decrease) in cash and cash equivalents
|
59.8 | 0.6 | 138.0 | (19.6 | ) | |||||||||||
|
Cash
and cash equivalents at beginning of period
|
122.5 | 59.2 | 44.3 | 79.4 | ||||||||||||
|
Cash
and cash equivalents at end of period
|
$ | 182.3 | $ | 59.8 | $ | 182.3 | $ | 59.8 | ||||||||
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
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Sales:
|
||||||||||||||||
|
International Color and Engineered
Materials
|
$ | 115.0 | $ | 172.1 | $ | 209.1 | $ | 337.3 | ||||||||
|
Specialty Engineered
Materials
|
50.1 | 67.3 | 101.5 | 131.8 | ||||||||||||
|
Specialty Color, Additives and
Inks
|
49.2 | 60.8 | 94.0 | 119.2 | ||||||||||||
|
Specialty
Platform
|
214.3 | 300.2 | 404.6 | 588.3 | ||||||||||||
|
Performance Products and
Solutions
|
170.3 | 273.7 | 329.1 | 533.0 | ||||||||||||
|
PolyOne
Distribution
|
135.1 | 208.2 | 272.0 | 409.3 | ||||||||||||
|
Corporate and
eliminations
|
(23.2 | ) | (34.0 | ) | (45.8 | ) | (68.8 | ) | ||||||||
|
Sales
|
$ | 496.5 | $ | 748.1 | $ | 959.9 | $ | 1,461.8 | ||||||||
|
Gross
margin:
|
||||||||||||||||
|
International Color and Engineered
Materials
|
$ | 25.0 | $ | 30.7 | $ | 42.1 | $ | 59.5 | ||||||||
|
Specialty Engineered
Materials
|
13.0 | 12.5 | 22.0 | 23.3 | ||||||||||||
|
Specialty Color, Additives and
Inks
|
12.0 | 12.4 | 20.9 | 23.6 | ||||||||||||
|
Specialty
Platform
|
50.0 | 55.6 | 85.0 | 106.4 | ||||||||||||
|
Performance Products and
Solutions
|
27.1 | 19.0 | 48.2 | 40.0 | ||||||||||||
|
PolyOne
Distribution
|
13.3 | 18.1 | 27.1 | 35.3 | ||||||||||||
|
Corporate and
eliminations
|
(4.1 | ) | (4.2 | ) | (14.8 | ) | (8.3 | ) | ||||||||
|
Gross
margin
|
$ | 86.3 | $ | 88.5 | $ | 145.5 | $ | 173.4 | ||||||||
|
Operating
(loss) income:
|
||||||||||||||||
|
International Color and Engineered
Materials
|
$ | 5.9 | $ | 10.4 | $ | 5.5 | $ | 18.2 | ||||||||
|
Specialty Engineered
Materials
|
4.7 | 3.2 | 5.1 | 6.1 | ||||||||||||
|
Specialty Color, Additives and
Inks
|
4.0 | 3.5 | 4.5 | 6.3 | ||||||||||||
|
Specialty
Platform
|
14.6 | 17.1 | 15.1 | 30.6 | ||||||||||||
|
Performance Products and
Solutions
|
14.7 | 5.3 | 23.4 | 13.6 | ||||||||||||
|
PolyOne
Distribution
|
3.9 | 7.0 | 8.8 | 12.5 | ||||||||||||
|
Resin and
Intermediates
|
8.0 | 8.7 | 19.7 | 14.6 | ||||||||||||
|
Corporate and
eliminations
|
(21.9 | ) | (14.1 | ) | (50.4 | ) | (27.2 | ) | ||||||||
|
Operating income
|
$ | 19.3 | $ | 24.0 | $ | 16.6 | $ | 44.1 | ||||||||
Specialty
Platform consists of our three specialty businesses: International Color and
Engineered Materials; Specialty Engineered Materials; and Specialty Color,
Additives and Inks.
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
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Sales
|
$ | 496.5 | $ | 748.1 | $ | 959.9 | $ | 1,461.8 | ||||||||
|
Gross
margin before special items
|
$ | 90.6 | $ | 91.2 | $ | 161.1 | $ | 177.7 | ||||||||
|
Special
items in gross margin
|
(4.3 | ) | (2.7 | ) | (15.6 | ) | (4.3 | ) | ||||||||
|
Gross
margin
|
$ | 86.3 | $ | 88.5 | $ | 145.5 | $ | 173.4 | ||||||||
|
Gross
margin before special items as a percent of sales
|
18.2 | % | 12.2 | % | 16.8 | % | 12.2 | % | ||||||||
|
Operating
income before special items
|
$ | 23.9 | $ | 27.8 | $ | 37.8 | $ | 49.5 | ||||||||
|
Special
items in operating income
|
(4.6 | ) | (3.8 | ) | (21.2 | ) | (5.4 | ) | ||||||||
|
Operating
income
|
$ | 19.3 | $ | 24.0 | $ | 16.6 | $ | 44.1 | ||||||||
Senior
management uses comparisons of net (loss) income and basic and diluted (loss)
earnings 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
June
30, 2009
|
Three
Months Ended
June
30, 2008
|
||||||||||||||
|
$
|
EPS
|
$
|
EPS
|
|||||||||||||
|
Net
income
|
$ | 3.5 | $ | 0.04 | $ | 8.8 | $ | 0.09 | ||||||||
|
Special
items, after-tax (attachment 1)
|
3.1 | 0.03 | 2.5 | 0.03 | ||||||||||||
|
Tax
(a)
|
5.3 | 0.06 | 0.3 | – | ||||||||||||
| $ | 11.9 | $ | 0.13 | $ | 11.6 | $ | 0.12 | |||||||||
|
Reconciliation
to Consolidated Statements of Operations
|
Six
Months Ended
June
30, 2009
|
Six
Months Ended
June
30, 2008
|
||||||||||||||
|
$
|
EPS
|
$
|
EPS
|
|||||||||||||
|
Net
(loss) income
|
$ | (5.8 | ) | $ | (0.06 | ) | $ | 15.3 | $ | 0.16 | ||||||
|
Special
items, after-tax (attachment 1)
|
13.6 | 0.15 | 3.5 | 0.04 | ||||||||||||
|
Tax
(a)
|
0.7 | – | 0.5 | 0.01 | ||||||||||||
| $ | 8.5 | $ | 0.09 | $ | 19.3 | $ | 0.21 | |||||||||
|
(a)
|
Net
tax loss associated with foreign tax audits and deferred income tax
valuation allowance 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.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
|
Reconciliation
to Consolidated Statements of Cash Flows
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Net
cash provided (used) by operating activities
|
$ | 64.2 | $ | (57.4 | ) | $ | 134.6 | $ | (0.3 | ) | ||||||
|
Net
cash used by investing activities
|
(5.5 | ) | (11.5 | ) | (12.2 | ) | (169.9 | ) | ||||||||
|
Decrease
(increase) in sale of accounts receivable
|
– | 72.8 | 14.2 | (13.8 | ) | |||||||||||
|
Free
cash flow
|
$ | 58.7 | $ | 3.9 | $ | 136.6 | $ | (184.0 | ) | |||||||
11