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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 February 1, 2003
__ 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 1-5911
SPARTECH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 43-0761773
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 S. Central Suite 1700, Clayton, Missouri, 63105
(Address of principal executive offices)
(314) 721-4242
(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 Exchange Act).
Yes x No
Number of shares outstanding as of February 1, 2003:
Common Stock, $.75 par value per share 29,250,454
SPARTECH CORPORATION AND SUBSIDIARIES
INDEX
February 1, 2003
PART I. FINANCIAL INFORMATION PAGE
CONSOLIDATED CONDENSED BALANCE SHEET -
as of February 1, 2003 and November 2, 2002 3
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - for the quarter ended
February 1, 2003 and February 2, 2002 4
CONSOLIDATED CONDENSED STATEMENT OF
CASH FLOWS - for quarter ended
February 1, 2003 and February 2, 2002 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURES 18
CERTIFICATIONS 19
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands, except share amounts)
ASSETS
Feb. 1, 2003
(unaudited) Nov. 2, 2002
Current Assets
Cash and equivalents $ 6,469 $ 7,511
Receivables, net 119,678 124,966
Inventories 104,682 95,190
Prepayments and other 7,229 4,549
------- -------
Total Current Assets 238,058 232,216
Property, Plant and Equipment 428,338 422,520
Less accumulated depreciation 149,518 142,046
------- -------
Net Property, Plant and Equipment 278,820 280,474
Goodwill 319,070 318,841
Other Intangible Assets 15,868 16,360
Other Assets 16,314 17,363
------- -------
$868,130 $865,254
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 17,988 $ 21,087
Accounts payable 76,751 83,668
Accrued liabilities 31,099 34,173
------- -------
Total Current Liabilities 125,838 138,928
Long-Term Debt, Less Current Maturities 229,045 217,245
Other Liabilities 68,376 68,383
------- -------
Total Long-Term Liabilities 297,421 285,628
Company-obligated manditorily redeemable
convertible preferred securities of
Spartech Capital Trust holding solely
convertible subordinated debentures 150,000 150,000
Shareholders' Equity
Common stock, 30,460,682
shares issued in 2003 and 2002 22,846 22,846
Contributed capital 140,093 140,213
Retained earnings 172,751 169,518
Treasury stock, at cost, 1,210,228 shares
in 2003 and 1,175,228 shares in 2002 (29,020) (28,701)
Accumulated Other Comprehensive Income (11,799) (13,178)
------- -------
Total Shareholders' Equity 294,871 290,698
$868,130 $865,254
======== ========
See accompanying notes to consolidated financial statements.
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited and dollars in thousands, except per share data)
QUARTER ENDED
Feb. 1, 2003 Feb. 2, 2002
Net Sales $213,700 $190,668
Costs and Expenses
Cost of sales 184,470 163,507
Selling and administrative 12,995 12,574
Amortization of intangibles 492 -
------- -------
197,957 176,081
Operating Earnings 15,743 14,587
Interest 3,544 4,369
Distributions on
preferred securities of
Spartech Capital Trust 2,562 2,562
------- -------
Earnings Before Income Taxes 9,637 7,656
Income taxes 3,479 2,794
------- -------
Net Earnings $ 6,158 $ 4,862
======== =======
Net Earnings Per Common Share:
Basic $ .21 $ .18
======== =======
Diluted $ .21 $ .18
======== =======
Dividends Per Common Share $ .10 $ .095
======== =======
See accompanying notes to consolidated financial statements.
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited and dollars in thousands)
QUARTER ENDED
Feb. 1, 2003 Feb. 2, 2002
--------- --------
Cash Flows from Operating Activities
Net earnings $ 6,158 $ 4,862
Adjustments to reconcile net earnings
to net cash (used for)/provided by
operating activities:
Depreciation and amortization 7,714 6,750
Change in current assets and
liabilities (16,343) (3,262)
Other, net 1,366 (169)
-------- -------
Net cash (used for)/provided by
operating activities (1,105) 8,181
--------- --------
Cash Flows from Investing Activities
Capital expenditures (4,589) (3,771)
Business Acquisitions - (4,180)
Retirement of assets - -
------- -------
Net cash used for investing activities (4,589) (7,951)
--------- --------
Cash Flows from Financing Activities
Bank Borrowings for Business Acquisitions - 4,180
Net borrowings (payments) on revolving
credit facilities 8,710 (2,580)
Payments on bonds and leases (51) (81)
Cash dividends on common stock (2,925) (2,542)
Stock options exercised 310 922
Treasury stock acquired (1,495) -
------- -------
Net cash provided by/(used for)
financing activities 4,549 (101)
--------- --------
Effect of exchange rate changes on cash
and equivalents 103 -
(Decrease)/Increase In Cash and Equivalents (1,042) 129
--------- --------
Cash and Equivalents at Beginning of Period 7,511 8,572
--------- --------
Cash and Equivalents at End of Period $ 6,469 $ 8,701
========= ========
See accompanying notes to consolidated financial statements.
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
NOTE A - Basis of Presentation
The consolidated financial statements include the accounts of Spartech
Corporation and its wholly owned subsidiaries (the Company). These financial
statements have been prepared on a condensed basis and, accordingly, certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the financial statements
contain all adjustments (consisting solely of normal recurring adjustments) and
disclosures necessary to make the information presented therein not misleading.
These financial statements should be read in conjunction with the consolidated
financial statements and accompanying footnotes thereto included in the
Company's November 2, 2002 Annual Report on Form 10-K.
The Company's fiscal year ends on the Saturday closest to October 31.
Operating results for any quarter are traditionally seasonal in nature and are
not necessarily indicative of the results expected for the full year.
NOTE B - Inventories
Inventories are valued at the lower of cost (first-in, first-out) or
market. Inventories at February 1, 2003 and November 2, 2002 are comprised of
the following components:
2003 2002
Raw materials $ 61,348 $ 55,207
Finished goods 43,334 39,983
--------- --------
$ 104,682 $ 95,190
========= ========
NOTE C - Goodwill and Other Intangible Assets
At February 1, 2003 intangible assets are as follows:
Total Accumulated Net carrying
identifiable amortization amount
intangible
assets
Non compete and $ 4,990 $681 $ 4,309
customer contracts
Product formulations $12,030 $471 $11,559
Amortization expense for the current intangible assets over the next five
years is estimated to be: $1,967, $1,967, $1,689, $1,550, $1,051 for the one
year periods from February 2003 to January 2008.
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
The Company's changes in the carrying amount of goodwill for the quarter ended
February 1, 2003 are as follows:
Custom Color & Molded &
Sheet Compounds Profile Total
Balance November 2, $185,805 $95,422 $37,614 $318,841
2002
Goodwill - 229 - 229
acquired/adjusted
-------- ------- ------- --------
Balance February 1, $185,805 $95,651 $37,614 $319,070
2003 ======== ======= ======= ========
NOTE D - Cash Flow Information
Supplemental information on cash flows and noncash transactions for the
quarters ended February 1, 2003 and February 2, 2002 is as follows:
2003 2002
Cash paid for:
Interest $ 5,232 $ 5,559
Income taxes (refund) $ 706 $ (799)
Note E - Comprehensive Income
Comprehensive Income is an entity's change in equity during the period from
transactions, events and circumstances from non-owner sources. The
reconciliation of Net Earnings to Comprehensive Income for the quarters ended
February 1, 2003 and February 2, 2002 is as follows:
QUARTER ENDED
2003 2002
Net Earnings $ 6,158 $ 4,862
Foreign currency translation
adjustments 925 (61)
Cash flow hedge adjustments 454 1,547
-------- --------
Total Comprehensive Income $ 7,537 $ 6,348
======== ========
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
Note F - Segment Information
Spartech's forty-three facilities are organized into three reportable segments
based on the nature of the products manufactured.
Quarter Ended
Net Sales* Feb. 1, 2003 Feb. 2, 2002
Custom Sheet & Rollstock $ 139,767 $ 128,037
Color & Specialty Compounds 59,922 48,925
Molded & Profile Products 14,011 13,706
---------- ----------
Total Net Sales $ 213,700 $ 190,668
========== ==========
Operating Earnings
Custom Sheet & Rollstock $ 12,601 $ 11,158
Color & Specialty Compounds 5,369 5,044
Molded & Profile Products 540 812
Corporate/Other (2,767) (2,427)
---------- ----------
Total Operating Earnings $ 15,743 $ 14,587
========== ==========
* Excludes intersegment sales of $7,104 in 2003 and
$4,682 in 2002 primarily from the Color & Specialty
Compounds segment
Note G - Recently Issued Accounting Standards Not Yet Adopted
In December 2002, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation -Transition
and Disclosure" which amends FASB Statement No. 123. This statement provides
alternative methods of transition for a voluntary change to the fair value-based
method of accounting for stock-based employee compensation and amends the
disclosure requirements of FASB Statement No. 123. The transition guidance and
annual disclosure provisions are effective for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. The Company will include the required interim disclosure
provisions in its financial statements for the quarter ending May 3, 2003. The
adoption of this statement is not anticipated to have a material effect on the
Company's financial position or results of operations.
Items 2 and 3. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the first quarter 2003 increased by 12% to $213.7 million, as
compared to $190.7 million in the first quarter of 2002. The increase was a
result of a 6.9% increase in internal volume, approximately 4% added by the 3rd
quarter 2002 acquisition of GWB Plastics, and the effect of price/mix changes.
The company experienced overall stronger demand from nearly all markets as
compared to the first quarter 2002.
Cost of sales was $184.5 million for the first quarter 2003, compared with
$163.5 million for the first quarter of 2002, increased as a percentage of net
sales to 86.3% for 2003 from 85.8% for 2002, reflecting the effect of higher
resin prices and competitive pricing pressures.
Selling and administrative expenses of $13.0 million for the first quarter
of 2003 increased from $12.6 million for the first quarter of 2002, but
decreased to 6.1% of net sales from 6.6% in the first quarter of 2001 due to the
effect of the higher relative sales volumes on the fixed expenses in this
category.
Operating earnings for the quarter ended February 1, 2003 were $15.7
million, or 7.4% of net sales, compared to $14.6 million or 7.7% of net sales
for the corresponding period of 2002 principally due to competitive pricing
pressure in the current sluggish economic environment.
Interest expense and distributions on preferred securities of $6.1 million
for the first quarter of 2003 decreased from $6.9 million for the first quarter
of 2002 as a result of $55 million of debt repayments in fiscal 2002 generated
from operating cash flow.
The Company's effective tax rate was 36.1% for the first quarter of 2003
compared to 36.5% in first quarter 2002, reflecting an improvement in our
combined state tax rate and ongoing benefits from research and development
credits.
Net earnings of $6.2 million, or $.21 per diluted share, in the first
quarter 2003 increased by 27% to $4.9 million, or $.18 per diluted share, in the
first quarter 2002 as a result of the operating factors noted above.
Segment Results
Net sales of the Custom Sheet & Rollstock segment increased 9% to $139.8
million from $128.0 million in the prior year period as strong volume from
packaging and recreational and leisure customers offset some slowdown in
transportation and building & construction product sales. Net sales of the
Color & Specialty Compounds segment increased to $59.9 million from $48.9
million in the first quarter 2002 due to a 8% increase in internal volume growth
and a 7% increase being added via the acquisition of GWB Plastics last May
resulting in the segment's first double-digit volume growth since the third
quarter of 2000. The Molded & Profile Products segment net sales increased 2%
to $14.0 million from $13.7 million in the first quarter 2002.
The Custom Sheet & Rollstock segment's operating margin improved to 9.0%
versus 8.7% in 2002 as focused cost reduction and supply chain initiatives began
to produce some positive results. The Color & Specialty Compounds segment
experienced competitive pricing pressures and volatility in the cost of raw
materials resulting in a margin of less than 10% for the first time since we
acquired Polycom in 1998. The Molded & Profile segment saw a 2% decrease in
operating margin to 3.9% from the prior year 1st quarter, but improved from a
small operating loss in the 4th quarter of 2002.
Other Matters
The Company operates under various laws and regulations governing employee
safety, the quantities of specified substances that may be emitted into the air,
discharged into waterways, and otherwise disposed of on and off our properties.
The Company does not anticipate that future expenditures for compliance with
these laws and regulations will have a material effect on our capital
expenditures, earnings, or competitive position.
The plastic resins we use in our production process are crude oil or
natural gas derivatives, which are available from a number of domestic and
foreign suppliers. Our raw materials are only somewhat affected by supply,
demand and price trends of the petroleum industry; however, trends in pricing,
periods of anticipated or actual shortages and changes in supplier capacities
can have a significant impact on the cost of our raw materials in a short period
of time. Price spike in natural gas over the past three weeks, along with the
continued political unrest in oil producing countries has resulted in unusually
high short-term pricing pressures. These pressures may result in dramatic
increases in the prices of the company's raw material costs. The Company has
been able minimize the impact of past price increases in raw material costs
through control of inventory levels, increasing production efficiencies, the
pass-through of price changes to customers, and the negotiation of competitive
pricing with our suppliers. In the near term, these pricing changes will be more
difficult to manage and the volatility and direction of future pricing changes
is uncertain.
Liquidity and Capital Resources
Cash Flow
The Company's primary sources of liquidity have been cash flows from
operating activities and borrowings from third parties. The Company's principal
uses of cash have been to support our operating activities, invest in capital
improvements, and finance strategic acquisitions. Cash flows for the periods
indicated are summarized as follows:
First Quarter
2003 2002
(Dollars in millions)
Net cash (used for)/provided by
operating activities $ (1.1) $ 8.2
======== =======
Net cash used for
investing activities $ (4.6) $ (8.0)
======== =======
Net cash provided by/(used for)
financing activities $ 4.5 $ (.1)
======== =======
(Decrease)/increase in cash
and equivalents $ (1.0) $ .1
======== =======
Operating cash flow provided by net earnings increased 27%, to $6.2 million
for the first quarter 2003 from $4.9 million for the first quarter 2002.
Operating cash flows provided by changes in accounts receivable totaled $5.6
million due to seasonally lower sales in the first quarter. Operating cash
flows used for changes in inventory totaled $9.2 million due to the selective
pre-buys of raw materials and the typical transition to what is traditionally
the Company's highest sales level in the second quarter of our fiscal year.
Operating cash flows used for changes in accounts payable totaled $6.4 million.
The Company's primary investing activities are capital expenditures and
acquisitions of businesses in the plastics industry. Capital expenditures are
primarily incurred to maintain and improve productivity, as well as to modernize
and expand facilities. Capital expenditures for the first quarter 2003 were
$4.6 million, including $2.2 million for our new Ramos Arispe, Mexico facility,
as compared to $3.8 million for the first quarter of 2002, and anticipate total
capital expenditures of approximately $25 million for fiscal 2003.
The cash flows provided by financing activities were $4.5 million for the
first quarter of 2003. The primary activity was the net bank borrowings of $8.7
million, cash dividend payments of $2.9 million, and treasury stock purchases
net of stock option proceeds of $1.2 million.
Financing Arrangements
The following table summarizes the Company's obligations under financing
arrangements and lease commitments as of February 1, 2003:
Type of Total 0 - 1 1-3 Years 3 - 5 More Than
Commitment Amount Year Years 5 Years
Committed
(in thousands)
Bank Credit $ 152,101 - 152,101 - -
Facilities
Unsecured Notes 85,715 17,858 50,714 17,143 -
Other Debt 9,217 130 272 289 8,526
Obligations
Convertible 150,000 - - - 150,000
Debentures
Operating Lease 30,893 7,245 10,044 6,428 7,176
Commitments
Standby Letters 12,689 - - - -
of Credit
--------- --------- --------- --------- ---------
Total $ 440,615 $ 25,233 $ 213,131 $ 23,860 $ 165,702
Contractual ========= ========= ========= ========= =========
Cash
Obligations
At February 1, 2003, our total outstanding borrowings under the bank credit
facilities were $152.1 million at a weighted average rate of 6.0% (including the
effect of an interest rate swap). We had $104.4 million in total availability
under the $256 million in credit facilities, however this availability was
limited to $91.7 million due to bank covenant restrictions. We anticipate that
cash flows from operations, together with the financing and borrowings under our
bank credit facility, will satisfy our working capital needs, regular quarterly
dividends, and planned capital expenditures for the next year.
If our cash from operations was substantially reduced and our access to the
debt and equity markets became more limited, we might not be able to repay the
obligations as they became due. Our current credit facilities also contain
certain affirmative and negative covenants, including restrictions on the
incurrence of additional indebtedness, limitations on both the sale of assets
and merger transactions, and requirements to maintain certain financial and debt
service ratios and net worth levels. In addition, our combined payment of
dividends on our common stock and the repurchase of common shares for treasury
is limited to 60% of our cumulative consolidated net income since November 1,
1997. At February 1, 2003, we had approximately $37.8 million of unrestricted
retained earnings available for such payments. While we were in compliance with
such covenants in 2002 and currently expect to be in compliance during 2003, our
failure to comply with the covenants or other requirements of our financing
arrangements could result in an event of default and, among other things,
acceleration of the payment of our indebtedness which could adversely impact our
business, financial condition and results of operations.
Significant Accounting Policies, Estimates and Judgments
The Company prepares the consolidated financial statements in conformity
with accounting principles generally accepted in the United States. As such, we
are required to make estimates and judgments that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant accounting policies,
estimates and judgments which the Company believes are the most critical to aid
in fully understanding and evaluating our reported financial results include the
following:
* Revenue Recognition - The Company recognizes revenue as the product is
shipped and title passes to the customer. Our customers require us to meet
strict specifications for our products. The Company has quality controls in
place that attempt to ensure that customer specifications are met prior to
shipment. We continuously monitor and track product returns, which have
historically been within our expectations and the provisions established.
Despite the Company's efforts to improve our quality and service to customers,
we cannot guarantee that we will continue to experience the same or better
return rates than we have in the past. Any significant increase in returns
could have a material negative impact on our operating results.
* Accounts Receivable - The Company performs ongoing credit evaluations of
our customers and adjusts credit limits based upon payment history and the
customer's credit worthiness, as determined by our review of their current
credit information. We continuously monitor collections and payments from our
customers and maintain a provision for estimated credit losses based upon our
historical experience and any specific customer collection issues identified.
While such credit losses have historically been within our expectations and the
provisions established, we cannot guarantee that we will continue to experience
the same credit loss rates that we have in the past.
* Inventories - The Company values inventories at the lower of actual cost
(first-in, first-out) to purchase or manufacture the inventory or the current
estimated market value of the inventory. The Company also buys scrap and
recyclable material (including regrind material) to be used in future production
runs. We record these inventories initially at purchase price and, based on the
inventory aging and other considerations for realizable value, we write down the
carrying value to brokerage value, where appropriate. We regularly review
inventory on hand and record provisions for obsolete inventory. A significant
increase in the demand for our raw materials could result in a short-term
increase in the cost of inventory purchases while a significant decrease in
demand could result in an increase in the amount of excess inventory quantities
on hand. In addition, most of our business is custom products, where the loss
of a specific customer could increase the amount of excess or obsolete inventory
on hand. Although we make every effort to ensure the accuracy of our forecasts
of future product demand, any significant unanticipated changes in demand could
have a significant impact on the value of our inventory and the operating
results.
* Acquisition Accounting - The Company has made several acquisitions in
recent years. All of these acquisitions have been accounted for in accordance
with the purchase method, and accordingly, the results of operation were
included in our Consolidated Statement of Operations from the respective date of
acquisition. The purchase price has been allocated to the identifiable assets
and liabilities, and any excess of the cost over the fair value of the net
identifiable assets acquired is recorded as goodwill. The initial allocation of
purchase price is based on preliminary information, which is subject to
adjustments upon obtaining complete valuation information. While the delayed
finalization of purchase price has historically not had a material impact on the
consolidated results of operations, we cannot guarantee the same results in
future acquisitions.
* Valuation of Long-Lived Assets - The Company reviews the carrying value of
our long-lived assets whenever events and changes in business indicate the
carrying value of the assets may not be recoverable. The Company recognizes
impairment losses if expected future cash flows of the related assets (based on
our current projections of anticipated future cash flows) are less than carrying
value or where assets that are held for sale are deemed to be valued in excess
of the expected amount to be realized upon sale. While we believe that our
estimates of future cash flows are reasonable, different assumptions regarding
such cash flows could materially affect our evaluations.
For additional information regarding our significant accounting policies,
see Note 1 to our 2002 Consolidated Financial Statements contained in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Recently Issued Accounting Standards
In December 2002, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation -Transition
and Disclosure" which amends FASB Statement No. 123. This statement provides
alternative methods of transition for a voluntary change to the fair value-based
method of accounting for stock-based employee compensation and amends the
disclosure requirements of FASB Statement No. 123. The transition guidance and
annual disclosure provisions are effective for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. The Company will include the required interim disclosure
provisions in its financial statements for the quarter ending May 3, 2003. The
adoption of this statement is not anticipated to have a material effect on the
Company's financial position or results of operations.
Other
The information presented herein contains certain forward-looking
statements, defined in Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements represent our judgement relating to, among other
things, future results of operations, growth plans, sales, capital requirements
and general industry and business conditions applicable to us. They are based
largely on our current expectations. Our actual results could differ materially
from the information contained in the forward-looking statements due to a number
of factors, including changes in the availability and cost of raw materials,
changes in the economy or the plastics industry in general, other unanticipated
events that may prevent us from competing successfully in existing or new
markets, and our ability to manage our growth effectively. Investors are also
directed to the discussion of risks and uncertainties associated with forward-
looking statements contained in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
Item 4. CONTROLS AND PROCEDURES
Based upon an evaluation performed within 90 days of the date of this
report, the registrant's certifying officers have concluded that the Company's
disclosure controls and procedures were effective.
There have been no significant changes in internal controls or other
factors that significantly affect these controls subsequent to the date of the
evaluation.
PART II - OTHER INFORMATION
Item 6 (a). Exhibits
11 Statement re Computation of Per Share Earnings
Item 6 (b). Reports on Form 8-K
None
SIGNATURES
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 thereunto duly authorized.
SPARTECH CORPORATION
(Registrant)
Date: March 7, 2003 /s/Bradley B. Buechler
Bradley B. Buechler
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
/s/Randy C. Martin
Randy C. Martin
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the
undersigned certifies that this periodic report fully complies with the
requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934 and that the information contained in this quarterly report
on Form 10-Q fairly presents, in all material respects, the financial condition
and results of operations of Spartech Corporation.
Date: March 7, 2003
/s/Bradley B. Buechler
Bradley B. Buechler
Chairman, President and Chief Executive
Officer
/s/Randy C. Martin
Randy C. Martin
Executive Vice President and Chief
Financial Officer
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bradley B. Buechler, Chairman, President, and Chief Executive Officer of
Spartech Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Spartech Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statement were made,
not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the period presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's auditors any
material weakness in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
March 7, 2003 By: /s/Bradley B. Buechler
(Date) Bradley B. Buechler
Chairman, President and Chief
Executive Officer
Spartech Corporation
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Randy C. Martin, Executive Vice President and Chief Financial Officer of
Spartech Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Spartech Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statement were made,
not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the period presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's auditors any
material weakness in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
March 7, 2003 By: /s/Randy C. Martin
(Date) Randy C. Martin
Executive Vice President and
Chief Financial Officer
Spartech Corporation