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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-K
(Mark One)
[x] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended August 31, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from ___________ to _____________.
Commission File No. 0-7459
A. SCHULMAN, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 34-0514850
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(State of Incorporation) (I.R.S. Employer Identification No.)
3550 West Market Street, Akron, Ohio 44333
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(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code: (330)666-3751
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Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
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(Title of Class)
Special Stock Purchase Rights
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or l5(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No
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[Cover continued on following page]
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[Cover Continued From Previous Page]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates of the Registrant
on October 22, 1996: $798,363,263
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Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practical date:
37,806,131 Shares of Common Stock, $1.00 Par Value, at
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October 22, 1996.
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DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Document in Which Incorporated
- -------- ---------------------
Portions of the Registrant's Notice
of Annual Meeting and Proxy Statement
Dated November 12, 1996 III and IV
Portions of the Registrant's 1996
Annual Report to Stockholders I and II
Neither the Report of the Compensation Committee on Executive Compensation nor
the Performance Graph contained in the Registrant's Notice of Annual Meeting and
Proxy Statement dated November 12, 1996 shall be deemed incorporated by
reference herein.
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PART I
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ITEM I. BUSINESS
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A. Schulman, Inc. (the "Company") was organized as an Ohio
corporation in 1928 and changed its state of incorporation to
Delaware in 1969.
The Company operates in one industry segment which is the sale of
plastic resins to customers who use the products as raw materials in their
manufacturing operations. For informative purposes, the Company classifies its
activities within its only industry segment as manufacturing, merchant or
distribution. These activities are carried on in all markets and geographic
areas in which the Company operates. The Company purchases plastic resins and
other materials which either can be sold directly to customers or used by the
Company in the manufacture of other products for sale to customers. Because of
their interchangeable nature, inventories are not segregated as to
manufacturing, merchant or distribution activities. All of the products which
the Company sells are used for the same purpose--as raw material to be molded or
extruded by the Company's customers. The Company has one sales force for all of
its products and materials.
The first classification, manufacturing, involves primarily the
formulation and manufacture of proprietary plastic compounds engineered to
fulfill the application requirements of theCompany's customers. These compounds,
also known as engineered
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products, are formulated in the Company's laboratories and are manufactured in
the Company's twelve plastics compounding plants (including one plant acquired
on November 7, 1996) in North America and Europe. The Company combines basic
resins purchased from plastic resin producers with various additives in
accordance with formulae and specifications developed in the Company's
laboratories. Customers for the Company's proprietary plastic compounds include
manufacturers, custom molders and extruders of a wide variety of plastic
products and parts. Proprietary compounds are produced by the Company generally
on the basis of customer commitments. When necessary, compounds are produced for
future delivery and are stored in Company and public warehouses.
The Company's proprietary plastic compounds are sold to manufacturers
and suppliers in various markets such as consumer products, electrical/
electronics, packaging, office equipment, automotive and agriculture. For
example, these compounds are used in the consumer products industry for such
items as writing instruments, shelving, soft drink coolers, video tape
cassettes, batteries, outdoor furniture, lawn sprinklers, artificial turf,
skateboards, toys, games and plastic parts for various household appliances; in
the electrical/electronics industry for such products as outdoor lighting,
parts for telephones, connector blocks, transformers, capacitor housings and
wire and cable insulation for power generation, distribution and control
systems; in the packaging industry for such products as plastic bags and labels
and packaging materials for food, soap,
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fragrances, flowers, gardening supplies and various household necessities; in
the office equipment industry for such products as cases and housings for
computers, folders and binders, stack trays and panels and drawers for copying
machines; in the automotive industry for such products as grills, body side
moldings, bumper protective strips, window seals, valance panels, bumper guards,
air ducts, steering wheels, fan shrouds and other interior and exterior
components; and in the agriculture industry for such products as greenhouse
coverings, protective film for plants and agricultural mulch.
The Company manufactures various flame retardant engineered compounds,
including Polyman(R), Polyflam(R) and Polyvin(R). These compounds are used in
applications such as telephone system terminal blocks, parts for color
televisions, electrical components and housings for household appliances and
outdoor products.
Papermatch(R), one of the Company's newer product lines, is a plastic
alternative to paper used for packaging, menus, maps and other products.
Papermatch(R) is printable and resistant to tearing, moisture and chemicals.
Schulamid(R), a nylon compound, can be unfilled, reinforced or
impact-modified and is used in applications which require good impact strength
and resistance to high temperatures and chemicals. Typical applications include
under-the-hood automotive components and various building and consumer products.
The Company manufactures Superohm(R), a specialized elastomer-
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based compound for use as insulation for high and medium voltage wire and cable
which may be either flame retardant or resistant to high temperatures. The
Company also manufactures Formion(R), a specialized compound which has good
impact strength, is resistant to abrasion and has performance characteristics
which do not decrease in low temperatures. This product is sold principally to
the transportation industry for use in bumper blocks and protective rub strips.
In addition, the Company manufactures Polytrope(R), a thermoplastic
elastomer which has high resiliency and good impact resistance. Presently, the
principal market for this product is the domestic automotive industry. Typical
applications are valance panels, body side moldings, grills and bumper rub
strips. Parts molded from Polytrope(R) weigh less than equivalent metal parts,
are impact-resistant and may be painted to match adjoining exterior body parts.
Polypur(R), a polyurethane-based compound manufactured by the Company,
has good thermal stability, is easy to mold and can be finished with only one
coat of paint. It presently is used for automotive exterior body components and
trim parts such as body side moldings.
The Company also manufactures Polyfort(R), a reinforced polypropylene
compound for applications which require stiffness and resistance to heat
distortion. Examples of such applications are coffee makers, binders for
computer printouts, seatbacks and under-the-hood products for automobiles.
Schulink(R), a crosslink
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polyethylene-based compound, is used in rotational molding applications
requiring high strength and chemical resistance.
The Company's plastics compounding operations include the manufacture
of Polybatch(R), an additive or color concentrate used for modifying various
plastic resins. An additive concentrate provides various physical properties
required by customers. These properties include slip, anti-slip, UV stabilizers,
etc. A color concentrate is a clear or natural plastic resin into which a
substantial amount of color pigment is incorporated or dispersed. The Company
manufactures its proprietary concentrates using its formulae and purchased prime
natural resins. These concentrates are sold to manufacturers of plastic
products. The Company also manufactures Polyblak(R), a line of black
concentrates. In addition, the Company performs tolling of plastic compounds and
concentrates using resins and formulae supplied by customers.
Concentrates provide specific color and/or other physical properties
used in the manufacture of film for packaging, household goods, toys, automotive
parts, mechanical goods and other plastic items. Black concentrates, which are
resistant to weather and sunlight, are used by wire and cable manufacturers for
insulation coating and in the production of plastic pipe, black film and other
black plastic items.
Tolling, which accounted for less than 5% of the Company's revenues
from manufacturing in its latest fiscal year, involves the use of resins and
formulae provided by customers. Tolling is
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done principally for major plastic resin producers. The Company is compensated
on the basis of an agreed price per pound plus an additional charge for any
additives and packaging supplied by the Company.
On November 7, 1996, the Company acquired the business and assets of
a manufacturing facility in Sharon Center, Ohio. This facility has four
manufacturing lines and an annual capacity of approximately 15 million pounds.
In the second classification within its plastics industry segment, the
Company, through its sales offices in North America and Europe, acts as a
merchant which buys prime and off-grade plastic resins and resells these
commodities, without further processing, to a variety of users. The plastic
resins generally are purchased from major producers. Prime resins are purchased
from these producers and usually are sold to small and medium-sized customers.
In addition to prime resins, the Company also purchases supplies of resins
resulting from overruns, changes in customers' specifications and failure to
meet rigid prime specifications. Historically, these materials have been in
continuous supply, generally in proportion to the total industry production of
plastic resins.
In the third classification within its plastics industry segment, the
Company, through its European operations, acts as a distributor for several
major resin producers which include Huels AG, Vestolen GmbH, BASF, Dow Chemical,
Exxon Chemical, and ATOCHEM.
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The Company is the exclusive third-party United States, Canada and
Mexico distributor of rotational molding grades of nylon 11 and 12 for Elf
Atochem North America, Inc. Nylon 11 and 12 are used in the rotational molding
business and the extrusion and injection molding markets. The Company acts as a
distributor of polyvinyl chloride dispersion resin manufactured by Kaneka
Delaware Corporation of the United States. The Company also distributes ABS
resins in the United States for Nitriflex S.A. of Brazil.
In addition, the Company acts as United States distributor of
Escorene(R) polypropylene resins and Escorene(R) roto molding resins, both
manufactured by Exxon Chemical. The Company also is a distributor in the United
States for Exxon Chemical of polyethylene used in injection molding, EMA and
EVA. The Company also acts as a distributor of K-Resin(R) in the United States
for Phillips Petroleum and of polypropylene in Canada for Epsilon Products
Company.
Supplemental information regarding net sales and gross profit of the
Company's three classifications within its sole industry segment is set forth on
page 30 of the Company's 1996 Annual Report to Stockholders, which information
is incorporated herein by reference.
The Company's operations outside the United States are an important
part of its business. The Company's foreign subsidiaries manufacture additives,
concentrates, flame retardants and other proprietary and custom plastic
compounds,
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act as merchants of plastic resins, and distribute certain plastic resins for
foreign prime producers.
Information regarding the amount of sales, operating income and
identifiable assets attributable to each of the Company's geographic areas and
the amount of inter-geographic area sales for the last three years is set forth
in Note 10 of the Notes to Consolidated Financial Statements in the Company's
1996 Annual Report to Stockholders, which information is incorporated herein by
reference.
The Company's foreign subsidiaries are as follows:
N.V. A. Schulman Plastics, S.A., a Belgian subsidiary
located in Bornem, manufactures proprietary and custom concentrates and
compounds. These products principally are sold in Germany, France, the Benelux
countries, Italy and the Far East.
A. Schulman, Inc., Limited, a United Kingdom subsidiary located in
South Wales, manufactures proprietary and custom plastic concentrates which are
sold primarily in the United Kingdom.
A. Schulman GmbH, a German subsidiary located in Sindorf, operates
seven sales offices and manufactures proprietary and custom plastic compounds.
In addition, a major portion of the sales volume of this subsidiary is derived
from merchant activities consisting of the purchase and sale of prime and
off-grade plastic resins from major European producers. During the fiscal year
ended August 31, 1996, this subsidiary purchased
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approximately 30% of the compounds manufactured in the Bornem, Belgium plant.
Approximately 29% of the sales volume of A. Schulman GmbH during the same period
was derived from its distribution activity of selling plastic resins and
compounds of Huels AG and Vestolen GmbH, both members of the Veba AG group of
companies. This subsidiary also distributes products for Dow Chemical, Exxon
Chemical, Hoechst and Solvay.
A. Schulman Canada Ltd., a Canadian subsidiary located in St. Thomas,
Ontario, manufactures proprietary and custom plastic compounds, acts as a
merchant of prime and off-grade plastic resins and distributes polypropylene for
Epsilon Products Company. These products are sold primarily in Canada. Its
principal sales office is located in Toronto.
A. Schulman AG, a Swiss subsidiary located in Zurich, is engaged as a
merchant of plastic resins and sells plastic compounds and concentrates
manufactured by other European subsidiaries of the Company.
A. Schulman, S.A., a French subsidiary, has four sales offices in France
and is a distributor in France for ATOCHEM, a merchant of plastic resins, and
sells compounds manufactured by the Company's subsidiaries in Bornem, Belgium,
Sindorf, Germany and Givet, France.
Diffusion Plastique is a Paris-based distributor of plastic materials. A.
Schulman Plastics, S.A., another French subsidiary, is located in Givet, France.
This subsidiary produces plastic concentrates for the Company's European market.
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Both A. Schulman, S.A. and Diffusion Plastique are distributors in France for
BASF.
Through its Mexican subsidiary, A. Schulman de Mexico, S.A. de C.V., the
Company manufactures concentrates for the packaging industry and compounds for
the automotive, construction, appliance and consumer products markets.
The Company has a 70% partnership interest in The Sunprene Company, which
manufactures a line of PVC thermoplastic elastomers and compounds primarily for
the North American automotive market. The other partner is an indirect
wholly-owned subsidiary of Mitsubishi Chemical MKV Co., one of the largest
chemical companies in Japan. This partnership has a manufacturing line at the
Company's Bellevue, Ohio facility. The Company's partner provides technical and
manufacturing expertise.
As of August 31, 1996, the Company had approximately 989 employees in the
United States and approximately 1,029 employees in its foreign operations. More
than 90% of the Company's hourly production employees are represented by various
unions under collective bargaining agreements.
The Company has laboratory facilities at each of its plastics compounding
plants staffed by approximately 222 technical personnel. The Company's plastic
compounding business is to a degree dependent on its ability to hire and retain
qualified technical personnel. These personnel are involved in activities
relating to the development of new compounds and the testing and sampling of
material for conformity with product
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specifications. The Company has experienced no difficulty in hiring or retaining
such personnel.
A large part of the Company's technical activities relates to the
development of compounds for specific applications of customers. Research
activities relating to the development of new products and the improvement of
existing products are important to the Company; however, the amounts spent
during the last three fiscal years have not been material.
Management believes that compliance with Federal, state and local
provisions regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, have not had a material
effect upon the capital expenditures, earnings or competitive position of the
Company.
During the year ended August 31, 1996, the Company's five largest customers
accounted in the aggregate for less than 10% of total sales. In management's
opinion, the Company is not dependent upon any single customer and the loss of
any one customer would not have a materially adverse effect on the Company's
business other than on a temporary basis.
The raw materials required by the Company readily are available from major
plastic resin producers or other suppliers. The principal types of plastic
resins used in the manufacture of the Company's proprietary plastic compounds
are polypropylene, ABS (acrylontrile butadiene styrene), PVC (polyvinyl
chloride), polyethylene, polystyrene and polyurethane.
The Company's business is highly competitive. In its
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manufacturing classification, the Company competes with producers of the basic
plastic resins, many of which also operate compounding plants, and also competes
with other independent plastic compounders. The producers of basic plastic
resins generally are large producers of petroleum and chemicals, which are much
larger than the Company and have greater financial resources. Although no
industry statistics are available, the Company believes that it is one of the
largest of the ten to fifteen manufacturers of plastic compounds in the United
States and Europe which is not also engaged in the petrochemical industry or as
a basic producer of plastic resins. Certain of these competitors compete with
the Company generally in each such competitor's own local market area, while
other competitors compete with the Company on a global basis.
The Company also competes with other merchants and distributors of plastic
resins, synthetic rubber and other products. No accurate information is
available to the Company as to the extent of its competitors' sales and earnings
in these classifications, but management believes that the Company has only a
small fraction of the total market.
The principal methods of competition in plastics manufacturing and
distribution are innovation, quality, service and price. In the Company's
merchant classification, the principal methods of competition are service and
price. The primary competitive advantages of the Company arise from its
financial capabilities, its excellent supplier relationships and
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its ability to provide quality plastic compounds at competitive prices.
The Company uses various trademarks and trade names in its business. These
trademarks and trade names protect names of certain of the Company's products
and are significant to the extent they provide a certain amount of goodwill and
name recognition in the industry. Although these trademarks and trade names
contribute to profitability, the Company does not consider a material part of
its business to be dependent on such trademarks and trade names. The Company
also holds some patents in various parts of the world for certain of its
products. The products covered by these patents do not constitute a material
part of the Company's business.
ITEM 2. PROPERTIES
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The Company owns and operates eight plastics compounding plants in North
America and four in Europe. The following Table indicates the location of each
plastics compounding plant and the approximate annual plastics compounding
capacity and approximate floor area, including warehouse space:
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Approximate Approximate
Capacity Floor Area
Location (lbs.) (Square Feet)
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Akron, Ohio 73,000,000 164,000
Bellevue, Ohio 97,000,000(1) 160,000
Sharon Center, Ohio 15,000,000(2) 43,000
Orange, Texas 72,000,000 147,000
Orange, Texas--Texas
Polymer Services, Inc. 145,000,000 182,000
Nashville, Tennessee 80,000,000 131,000
San Luis Potosi, Mexico(3)(a) 25,000,000 78,000
Bornem, Belgium 130,000,000 356,000
Crumlin Gwent, South Wales 54,000,000 99,000(3)(b)
Givet, France 52,000,000 74,000
St. Thomas, Ontario, Canada 65,000,000 111,000
Sindorf, Germany 90,000,000 325,000
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883,000,000(3)(a),(b),(c)
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(1) Includes capacity of approximately 29 million pounds from two
manufacturing lines owned by The Sunprene Company, a partnership in
which the Company has a 70% partnership interest.
(2) The Company acquired this facility on November 7, 1996.
(3) Excludes the following capital projects:
(a) A new manufacturing line will be added to the facility in
Mexico. This line will have an annual capacity of
approximately 14 million pounds, is projected to cost $6
million and is scheduled to commence operations in fiscal
1997.
(b) The Company will replace an existing manufacturing line which
will increase capacity by approximately 8 million pounds. This
line will cost approximately $4 million and is scheduled to
commence operations in fiscal 1997.
(c) The Company is constructing a new manufacturing facility in
Indonesia at an anticipated cost of $6 million. This facility
is expected to have an initial annual capacity of
approximately 13 million pounds and is scheduled to commence
operations in fiscal year 1997.
The approximate annual plastics compounding capacity set forth in the
preceding Table is based upon several factors,
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including the weekly five-day, three-shift basis on which the Company
customarily operates. Another factor is the approximate historical mix of
specific types of plastic compounds manufactured at each plant, as a plant
operating at full capacity will produce a greater or lesser quantity (in pounds)
depending upon the specific plastic compound then being manufactured. The annual
poundage of plastic compounds manufactured does not, in itself, reflect the
extent of utilization of the Company's plants or the profitability of the
plastic compounds produced.
The Company considers each of the foregoing facilities to be in good
condition and suitable for its purposes.
Public warehouses are used wherever needed to store the Company's products
conveniently for shipment to customers. The number of public warehouses in use
varies from time to time, but a yearly average approximates 35. The Company also
leases approximately 100,000 square feet of warehouse space located in Sindorf
and Horrem, Germany.
The Company owns its corporate headquarters which is located in Akron, Ohio
and which contains approximately 48,000 square feet of usable floor space. The
Company leases sales offices in various locations in the United States, Canada,
Mexico, the United Kingdom, Europe and Asia.
ITEM 3. PENDING LEGAL PROCEEDINGS
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The Company is not a party to any material pending legal proceedings.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended August 31, 1996.
EXECUTIVE OFFICERS OF THE COMPANY
The age (as of October 22, 1996), business experience during the past five
years and offices presently held by each of the Company's Executive Officers are
reported below. The Company's By-Laws provide that officers shall hold office
until their successors are elected and qualified.
Terry L. Haines: Age 50; President and Chief Executive Officer of the
Company since January, 1991; formerly Chief Operating Officer, 1990-1991 and
Vice President--North American Sales, 1989-1990.
Robert A. Stefanko: Age 53; Chairman of the Board since January, 1991;
Executive Vice President--Finance and Administration of the Company since 1989;
and Chief Financial Officer of the Company since 1979.
Larry A. Kushkin: Age 56; Executive Vice President-- International
Automotive Operations of the Company since 1989.
Brian R. Colbow: Age 49; Treasurer of the Company since 1984.
Alain C. Adam: Age 48; Vice President--Automotive Marketing since 1990.
Leonard E. Emge: Age 66; Vice President--Manufacturing since 1993 and prior
to that time General Plant Manager--North America
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since 1985.
James H. Berick: Age 63; Secretary of the Company since 1979 and Chairman,
Berick, Pearlman & Mills Co., L.P.A., Cleveland, Ohio (attorneys).
PART II
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ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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The Company's Common Stock is traded in the over-the-counter market and is
quoted through the NASDAQ National Market System.
Additional information in response to this Item is set forth on page 1 of
the Company's 1996 Annual Report to Stockholders, which information is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
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Information in response to this Item is set forth on pages 30 and 31 of the
Company's 1996 Annual Report to Stockholders, which information is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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Information in response to this Item is set forth on pages 28 and 29 of the
Company's 1996 Annual Report to Stockholders, which information is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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(a) Financial Statements
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The financial statements, together with the report thereon of Price
Waterhouse LLP dated October 14, 1996, appearing on pages 16 through 27 of the
Company's 1996 Annual Report to Stockholders, are incorporated herein by
reference.
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(b) Supplementary Data
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Information in response to this Item is set forth in the financial
statement schedules set forth on pages F-1 through F-2 of this Form 10-K.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
- ------- -----------------------------------------------------
None.
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The information
- ------- -------------------------------------------------------------------
The information required in response to this Item in respect of Directors
is set forth under the captions "Election of Directors" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" in the Company's proxy
statement dated November 12, 1996, previously filed with the Commission, which
information is incorporated herein by reference. The information required by
this Item in respect of Executive Officers is set forth on pages 16 and 17 of
this Form 10-K and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
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Information in response to this Item is set forth under the caption
"Compensation of Executive Officers" in the Company's proxy statement dated
November 12, 1996, previously filed with the Commission, which information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
Information in response to this Item is set forth under the caption
"Election of Directors" in the Company's proxy statement
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dated November 12, 1996, previously filed with the Commission, which information
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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Information in response to this Item is set forth under the caption
"Compensation Committee Interlocks and Insider Participation" in the Company's
proxy statement dated November 12, 1996, previously filed with the Commission,
which information is incorporated herein by reference.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
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(a) The following documents are filed as part of this report:
Page
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(1) Financial Statements:
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Report of Independent Accountants 27*
Consolidated Statement of Income for
the three years ended August 31, 1996 16*
Consolidated Balance Sheet at August 31,
1996 and 1995 18*
Consolidated Statement of Cash Flows for
the three years ended August 31, 1996 20*
Consolidated Statement of Stockholders'
Equity for the three years ended
August 31, 1996 17*
Notes to Consolidated Financial
Statements 21*
- --------------------
*Incorporated by reference from the indicated page of the Company's 1996
Annual Report to Stockholders. With the exception of this information and the
information incorporated in Items 1, 5, 6, 7 and 8, the 1996 Annual Report to
Stockholders is not deemed filed as part of this report.
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(2) Financial Statement Schedules:
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Report of Independent Accountants
on Financial Statement Schedule F-1
VIII-Valuation and Qualifying Accounts F-2
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(3) Exhibits:
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Exhibit
Number
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3(a) Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3(a) to the Company's Form
10-K for fiscal year ended August 31, 1990).
3(b) Certificate of Amendment of Certificate of
Incorporation dated December 12, 1985 (incorporated
by reference to Exhibit 2(b) of the Company's
Registration Statement on Form 8-A dated
January 15, 1996).
3(c) Certificate of Amendment of Certificate of
Incorporation dated January 9, 1987 (incorporated by
reference to Exhibit 3(b) to the Company's Form 10-K
for fiscal year ended August 31, 1994).
3(d) Certificate of Amendment of Certificate of
Incorporation dated December 10, 1987 (incorporated
by reference to Exhibit 3(c) to the Company's Form
10-K for fiscal year ended August 31, 1991).
3(e) Certificate of Amendment of Certificate of
Incorporation dated December 6, 1990 (incorporated by
reference to Exhibit 3(d) to the Company's Form 10-K
for fiscal year ended August 31, 1991).
3(f) Certificate of Amendment of Certificate of
Incorporation dated December 9, 1993 (incorporated by
reference to Exhibit 2(f) to the Company's
Registration Statement on Form 8-A dated January 15,
1996).
3(g) By-Laws dated December 8, 1983 (incorporated by
reference to Exhibit 3(c) to the Company's Form 10-K
for fiscal year ended August 31, 1990).
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3(h) Amendment to By-Laws dated October 20, 1986
(incorporated by reference to Exhibit 3(f) to the
Company's Form 10-K for fiscal year ended August 31,
1991).
3(i) Amendment to By-Laws dated January 11, 1996
(incorporated by reference to Exhibit 3.3 to the
Company's Report on Form 8-K dated January 15, 1996).
4 Rights Agreement dated as of January 12, 1996,
between the Company and Society National Bank, as
Rights Agent, which includes as Exhibit B thereto the
Form of Rights Certificate (incorporated by reference
to Exhibit 1 to the Company's Registration Statement
on Form 8-A, dated January 15, 1996).
10(a)* A. Schulman, Inc. 1991 Stock Incentive Plan
(incorporated by reference to Exhibit 10(b) to the
Company's Form 10-K for fiscal year ended August 31,
1991).
10(b)* Amendment to A. Schulman, Inc. 1991 Stock Incentive
Plan (incorporated by reference to Exhibit 10.9 to
the Company's Form 10-Q for the fiscal quarter ended
February 29, 1996).
10(c)* A. Schulman, Inc. 1992 Non-Employee Directors' Stock
Option Plan (incorporated by reference to Exhibit A
to the Company's Proxy Statement dated November 12,
1992 filed as Exhibit 28 to the Company's Form 10-K
for fiscal year ended August 31, 1992).
10(d)* Amendment to A. Schulman, Inc. 1992 Non-Employee
Directors' Stock Option Plan (incorporated by
reference to Exhibit 10.10 to the Company's Form 10-Q
for the fiscal quarter ended February 29, 1996).
10(e)* Non-Qualified Profit Sharing Plan (incorporated by reference
to Exhibit 10(d) to the Company's Form 10-K for the fiscal
year ended August 31, 1995).
10(f)* Amendment to A. Schulman, Inc. Non-Qualified Profit
Sharing Plan (incorporated by reference to Exhibit
10.8 to the Company's Form 10-Q for the fiscal
quarter ended February 29, 1996).
10(g)* Employment Agreement between the Company and Robert A.
Stefanko dated January 31, 1996 (incorporated by reference to
Exhibit 10.2 to the Company's Form 10-Q for fiscal quarter
ended February 29, 1996).
21
24
10(h)* Employment Agreement between the Company and Terry L.
Haines dated January 31, 1996 (incorporated by
reference to Exhibit 10.3 to the Company's Form 10-Q
for fiscal quarter ended February 29, 1996).
10(i)* Employment Agreement between the Company and Larry A.
Kushkin dated January 31, 1996 (incorporated by
reference to Exhibit 10.4 to the Company's Form 10-Q
for fiscal quarter ended February 29, 1996).
10(j)* Employment Agreement between the Company and Leonard E. Emge
dated January 31, 1996 (incorporated by reference to Exhibit
10.5 to the Company's Form 10-Q for fiscal quarter ended
February 29, 1996).
10(k)* Employment Agreement between the Company and Brian R. Colbow
dated January 31, 1996 (incorporated by reference to Exhibit
10.7 to the Company's Form 10-Q for fiscal quarter ended
February 29, 1996).
10(l)* Employment Agreement between the Company and Alain C. Adam
dated January 31, 1996 (incorporated by reference to Exhibit
10.6 to the Company's Form 10-Q for fiscal quarter ended
February 29, 1996).
10(m)* Agreement between the Company and Robert A. Stefanko
dated as of August 1, 1985 (incorporated by reference
to Exhibit 10(h) to the Company's Form 10-K for
fiscal year ended August 31, 1991).
10(n)* Agreement between the Company and Larry A. Kushkin dated as of
August 31, 1985 (incorporated by reference to Exhibit 10(i) of
the Company's Form 10-K for fiscal year ended August 31,
1991).
10(o)* Agreement between the Company and Robert A. Stefanko
dated as of March 21, 1991 (incorporated by reference
to Exhibit 10(l) to the Company's Form 10-K for
fiscal year ended August 31, 1992).
10(p)* Agreement between the Company and Terry L. Haines dated as of
March 21, 1991 (incorporated by reference to Exhibit 10(m) to
the Company's Form 10-K for fiscal year ended August 31,
1992).
10(q)* Agreement between the Company and Larry A. Kushkin dated as of
August 31, 1993 (incorporated by reference to Exhibit 10(n) to
the Company's Form 10-K for fiscal year ended August 31,
1993).
22
25
10(r)* Form of Amendment to Deferred Compensation Agreements between
the Company and Robert A. Stefanko, Terry L. Haines and Larry
A. Kushkin (incorporated by reference to Exhibit 10.1 to the
Company's Form 10-Q for the fiscal quarter ended February 29,
1996).
10(s)* Agreement between the Company and Franz A. Loehr dated as of
August 31, 1994 (incorporated by reference to Exhibit 10(o) to
the Company's Form 10-K for the fiscal year ended August 31,
1995).
10(t)* Agreement between the Company and Franz A. Loehr
dated as of August 31, 1996.
10(u) Credit Agreement between the Company, The Banks and Society
National Bank, individually and as Agent, dated as of March
13, 1995 (incorporated by reference to Exhibit 10 of the
Company's Form 10-Q for fiscal quarter ended February 28,
1995).
10(v) First Amendment to Credit Agreement dated February 26, 1996,
among the Company and Society National Bank, individually and
as Agent, First National Bank of Ohio, Union Bank of
Switzerland and The First National Bank of Chicago
(incorporated by reference to Exhibit 10.11 to the Company's
Form 10-Q for the fiscal quarter ended February 29, 1996).
11 Computation of Earnings Per Common Share
13 Company's 1996 Annual Report to Stockholders
21 Subsidiaries of the Company
23 Consent of Independent Accountants
24 Powers of Attorney
27** Financial Data Schedule
99 Notice of Annual Meeting and Proxy Statement Dated November
12, 1996
*Management contract or compensatory plan or arrangement
required to be filed as an Exhibit hereto.
**Filed only in electronic format pursuant to Item 601(b)(27)
of Regulation S-K.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of the Company's
fiscal year ended August 31, 1996.
23
26
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
A. SCHULMAN, INC.
By: /s/Robert A. Stefanko
---------------------------
Robert A. Stefanko
Chairman of the Board of
Directors and Executive Vice
President - Finance and
Administration
Dated: November 26, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/Terry L. Haines Director and Principal November 26, 1996
- ------------------ Executive Officer
Terry L. Haines
/s/Robert A. Stefanko Director, Principal November 26, 1996
- --------------------- Financial Officer and
Robert A. Stefanko Principal Accounting Officer
James H. Berick* Director
Gordon E. Heffern* Director
Larry A. Kushkin* Director
Franz A. Loehr* Director
Alan L. Ockene* Director
Paul Craig Roberts* Director
Rene C. Rombouts* Director
Robert G. Wallace* Director
Peggy Gordon Elliott* Director
Willard R. Holland* Director
James A. Karman* Director
James S. Marlen* Director
*By: /s/Robert A. Stefanko November 26, 1996
---------------------
Robert A. Stefanko
Attorney-in-Fact
*Powers of attorney authorizing Robert A. Stefanko to sign this annual
report on Form 10-K on behalf of certain Directors of the Company are being
filed with the Securities and Exchange Commission herewith.
24
27
BP American Building Telephone 216 781 3700
200 Public Square
27th Floor
Price Waterhouse LLP Cleveland, Ohio 44114-2301
[LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS ON
------------------------------------
FINANCIAL STATEMENT SCHEDULE
----------------------------
To the Board of Directors
of A. Schulman, Inc
Our audits of the consolidated financial statements referred to in our report
dated October 14, 1996, appearing on page 27 of the 1996 Annual Report to the
Stockholders of A. Schulman, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP
PRICE WATFRHOUSE LLP
Cleveland, Ohio
October 14, 1996
F-1
28
SCHEDULE VIII
A. SCHULMAN, INC.
VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged to Net Balance at
beginning of cost and write Translation close of
period expense offs adjustment Other period
------------ ---------- ----- ----------- ----- ----------
Reserve for doubtful accounts
Year ended August 31, 1996 $4,859,000 $2,490,000 $(1,425,000) $(21,000) $ - $5,903,000
Year ended August 31, 1995 4,111,000 1,134,000 (565,000) 163,000 16,000(1) 4,859,000
Year ended August 31, 1994 3,974,000 298,000 (450,000) 139,000 150,000(2) 4,111,000
Valuation allowance - deferred tax assets
Year ended August 31, 1996 4,820,000 - - - (1,665,000)(3) 3,155,000
Year ended August 31, 1995 4,197,000 - - - 623,000 (3) 4,820,000
Year ended August 31, 1994 5,557,000 - - - (1,360,000)(3) 4,197,000
Note:
(1) Acquisition of assets of Texas Polymer Services.
(2) Acquisition of assets of ComAlloy International.
(3) Represents current year change in valuation allowance for foreign tax
credit carryforward benefits which are not likely to be utilized.
F-2