UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): May 1, 2013
PolyOne Corporation
(Exact Name of Registrant as Specified in Its Charter)
Ohio | 1-16091 | 34-1730488 | ||
(State or Other Jurisdiction | (Commission | (IRS Employer | ||
of Incorporation) | File Number) | Identification No.) |
PolyOne Center
33587 Walker Road
Avon Lake, Ohio 44012
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (440) 930-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On March 25, 2013, PolyOne Corporation, a premier global provider of specialized polymer materials, services and solutions, with operations in specialty polymer formulations, color additive systems, liquid colorants, fluoropolymer and silicone colorants, plastic sheet and packaging solutions and polymer distribution announced an agreement to sell its resins business. As a result of this agreement, the resins business will be reported as a discontinued operation. Further, in conjunction with the announced sale, PolyOnes Specialty Coatings business, which was historically reported within its Performance Products and Solutions segment will be reported within its Global Color, Additives and Inks segment to align with PolyOnes new reporting structure. These changes are required to be applied retrospectively to conform to current period presentation.
For informational purposes, included in Exhibit 99.1 to this Current Report on Form 8-K are historical unaudited consolidated statements of income, business segment information, and adjusted earnings per share information, adjusted to reflect the aforementioned changes.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit |
Description | |
99.1 | Consolidated Statements of Income, Business Segment Information and Adjusted Earnings Per Share, as Adjusted. |
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 hereunto duly authorized.
Date: May 1, 2013
POLYONE CORPORATION | ||
By: | /s/ Richard J. Diemer, Jr. | |
Name: | Richard J. Diemer, Jr. | |
Title: | Senior Vice President and Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Consolidated Statements of Income, Business Segment Information and Adjusted Earnings Per Share, as Adjusted. |
Exhibit 99.1
PolyOne Corporation
Consolidated Statements of Income, as Adjusted (Unaudited)
(In millions, except per share data)
1Q12 | 2Q12 | 3Q12 | 4Q12 | 2012Y | ||||||||||||||||
Sales |
$ | 745.5 | $ | 756.6 | $ | 707.7 | $ | 651.0 | $ | 2,860.8 | ||||||||||
Cost of sales |
613.2 | 612.6 | 572.6 | 531.3 | 2,329.7 | |||||||||||||||
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Gross margin |
132.3 | 144.0 | 135.1 | 119.7 | 531.1 | |||||||||||||||
Selling and administrative expense |
95.3 | 100.7 | 91.6 | 129.4 | 417.0 | |||||||||||||||
Income related to previously owned equity affiliates |
0.4 | | | 23.0 | 23.4 | |||||||||||||||
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Operating income |
37.4 | 43.3 | 43.5 | 13.3 | 137.5 | |||||||||||||||
Interest expense, net |
(12.3 | ) | (12.4 | ) | (12.4 | ) | (13.7 | ) | (50.8 | ) | ||||||||||
Other expense, net |
(1.3 | ) | (0.9 | ) | (0.5 | ) | (0.7 | ) | (3.4 | ) | ||||||||||
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Income (loss) from continuing operations before income taxes |
23.8 | 30.0 | 30.6 | (1.1 | ) | 83.3 | ||||||||||||||
Income tax (expense) benefit |
(8.5 | ) | (11.6 | ) | (11.2 | ) | 1.2 | (30.1 | ) | |||||||||||
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Net income from continuing operations |
15.3 | 18.4 | 19.4 | 0.1 | 53.2 | |||||||||||||||
Income from discontinued operations, net of income taxes |
4.9 | 6.2 | 4.6 | 2.9 | 18.6 | |||||||||||||||
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Net income |
20.2 | 24.6 | 24.0 | 3.0 | 71.8 | |||||||||||||||
Net loss attributable to noncontrolling interests |
| | | 0.1 | 0.1 | |||||||||||||||
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Net income attributable to PolyOne common shareholders |
$ | 20.2 | $ | 24.6 | $ | 24.0 | $ | 3.1 | $ | 71.9 | ||||||||||
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Earnings per share attributable to PolyOne shareholders basic: |
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Continuing operations |
$ | 0.17 | $ | 0.21 | $ | 0.22 | $ | | $ | 0.60 | ||||||||||
Discontinued operations |
0.06 | 0.07 | 0.05 | 0.03 | 0.21 | |||||||||||||||
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Total |
$ | 0.23 | $ | 0.28 | $ | 0.27 | $ | 0.03 | $ | 0.81 | ||||||||||
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Earnings per share attributable to PolyOne shareholders diluted: |
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Continuing |
$ | 0.17 | $ | 0.21 | $ | 0.22 | $ | | $ | 0.59 | ||||||||||
Discontinued |
0.05 | 0.06 | 0.05 | 0.03 | 0.21 | |||||||||||||||
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Total |
$ | 0.22 | $ | 0.27 | $ | 0.27 | $ | 0.03 | $ | 0.80 | ||||||||||
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Weighted-average shares used to compute earnings per share: |
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Basic |
89.1 | 89.1 | 88.8 | 89.2 | 89.1 | |||||||||||||||
Diluted |
90.7 | 90.7 | 90.2 | 90.5 | 89.8 |
1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011Y | ||||||||||||||||
Sales |
$ | 682.8 | $ | 723.4 | $ | 694.0 | $ | 609.2 | $ | 2,709.4 | ||||||||||
Cost of sales |
567.3 | 603.2 | 590.1 | 519.5 | 2,280.1 | |||||||||||||||
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Gross margin |
115.5 | 120.2 | 103.9 | 89.7 | 429.3 | |||||||||||||||
Selling and administrative expense |
76.0 | 77.8 | 70.5 | 154.0 | 378.3 | |||||||||||||||
Income related to previously owned equity affiliates |
133.9 | | | 18.1 | 152.0 | |||||||||||||||
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Operating income (loss) |
173.4 | 42.4 | 33.4 | (46.2 | ) | 203.0 | ||||||||||||||
Interest expense, net |
(8.5 | ) | (8.3 | ) | (8.4 | ) | (8.5 | ) | (33.7 | ) | ||||||||||
Premium on early extinguishment of debt |
| | | (0.9 | ) | (0.9 | ) | |||||||||||||
Other (expense) benefit, net |
(0.4 | ) | 1.3 | (0.5 | ) | 0.1 | 0.5 | |||||||||||||
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Income (loss) from continuing operations before income taxes |
164.5 | 35.4 | 24.5 | (55.5 | ) | 168.9 | ||||||||||||||
Income tax (expense) benefit |
(58.5 | ) | (12.3 | ) | (8.5 | ) | 63.8 | (15.5 | ) | |||||||||||
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Net income from continuing operations |
106.0 | 23.1 | 16.0 | 8.3 | 153.4 | |||||||||||||||
Income from discontinued operations, net of income taxes |
4.2 | 5.4 | 5.6 | 4.0 | 19.2 | |||||||||||||||
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Net income |
$ | 110.2 | $ | 28.5 | $ | 21.6 | $ | 12.3 | $ | 172.6 | ||||||||||
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Earnings per share attributable to PolyOne shareholders basic: |
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Continuing operations |
$ | 1.13 | $ | 0.25 | $ | 0.17 | $ | 0.09 | $ | 1.66 | ||||||||||
Discontinued operations |
0.04 | 0.06 | 0.07 | 0.05 | 0.21 | |||||||||||||||
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Total |
$ | 1.17 | $ | 0.31 | $ | 0.24 | $ | 0.14 | $ | 1.87 | ||||||||||
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Earnings per share attributable to PolyOne shareholders diluted: |
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Continuing |
$ | 1.10 | $ | 0.24 | $ | 0.17 | $ | 0.09 | $ | 1.63 | ||||||||||
Discontinued |
0.04 | 0.06 | 0.07 | 0.04 | 0.20 | |||||||||||||||
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Total |
$ | 1.14 | $ | 0.30 | $ | 0.23 | $ | 0.13 | $ | 1.83 | ||||||||||
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Weighted-average shares used to compute earnings per share: |
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Basic |
93.9 | 93.1 | 91.8 | 89.9 | 92.2 | |||||||||||||||
Diluted |
96.4 | 95.5 | 94.0 | 91.9 | 94.3 |
1
Business Segment Information, as Adjusted (Unaudited)
(In millions)
Operating income at the segment level does not include: special items as defined on Attachment 3; 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.
Business Segments | 1Q12 | 2Q12 | 3Q12 | 4Q12 | 2012Y | |||||||||||||||
Sales: |
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Global Specialty Engineered Materials |
$ | 142.0 | $ | 138.9 | $ | 136.6 | $ | 126.1 | $ | 543.6 | ||||||||||
Global Color, Additives and Inks |
202.4 | 211.5 | 191.1 | 173.2 | 778.2 | |||||||||||||||
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Specialty Platform |
344.4 | 350.4 | 327.7 | 299.3 | 1,321.8 | |||||||||||||||
Performance Products and Solutions |
168.5 | 167.5 | 156.3 | 138.0 | 630.3 | |||||||||||||||
PolyOne Distribution |
263.0 | 270.6 | 254.4 | 242.3 | 1,030.3 | |||||||||||||||
Corporate and eliminations |
(30.4 | ) | (31.9 | ) | (30.7 | ) | (28.6 | ) | (121.6 | ) | ||||||||||
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Sales |
$ | 745.5 | $ | 756.6 | $ | 707.7 | $ | 651.0 | $ | 2,860.8 | ||||||||||
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Gross margin: |
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Global Specialty Engineered Materials |
$ | 33.2 | $ | 32.6 | $ | 33.9 | $ | 30.1 | $ | 129.8 | ||||||||||
Global Color, Additives and Inks |
60.5 | 65.2 | 57.9 | 52.9 | 236.5 | |||||||||||||||
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Specialty Platform |
93.7 | 97.8 | 91.8 | 83.0 | 366.3 | |||||||||||||||
Performance Products and Solutions |
18.5 | 20.6 | 22.2 | 16.6 | 77.9 | |||||||||||||||
PolyOne Distribution |
29.1 | 28.9 | 27.7 | 26.3 | 112.0 | |||||||||||||||
Corporate and eliminations |
(9.0 | ) | (3.3 | ) | (6.6 | ) | (6.2 | ) | (25.1 | ) | ||||||||||
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Gross margin |
$ | 132.3 | $ | 144.0 | $ | 135.1 | $ | 119.7 | $ | 531.1 | ||||||||||
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Selling and administrative expense: |
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Global Specialty Engineered Materials |
$ | (21.4 | ) | $ | (19.8 | ) | $ | (20.8 | ) | $ | (20.8 | ) | $ | (82.8 | ) | |||||
Global Color, Additives and Inks |
(40.9 | ) | (40.8 | ) | (39.3 | ) | (40.2 | ) | (161.2 | ) | ||||||||||
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Specialty Platform |
(62.3 | ) | (60.6 | ) | (60.1 | ) | (61.0 | ) | (244.0 | ) | ||||||||||
Performance Products and Solutions |
(10.0 | ) | (9.8 | ) | (9.9 | ) | (9.4 | ) | (39.1 | ) | ||||||||||
PolyOne Distribution |
(12.4 | ) | (12.2 | ) | (11.3 | ) | (10.1 | ) | (46.0 | ) | ||||||||||
Corporate and eliminations |
(10.6 | ) | (18.1 | ) | (10.3 | ) | (48.9 | ) | (87.9 | ) | ||||||||||
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Selling and administrative expense |
$ | (95.3 | ) | $ | (100.7 | ) | $ | (91.6 | ) | $ | (129.4 | ) | $ | (417.0 | ) | |||||
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Operating income: |
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Global Specialty Engineered Materials |
$ | 11.8 | $ | 12.8 | $ | 13.1 | $ | 9.3 | $ | 47.0 | ||||||||||
Global Color, Additives and Inks |
19.6 | 24.4 | 18.6 | 12.7 | 75.3 | |||||||||||||||
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Specialty Platform |
31.4 | 37.2 | 31.7 | 22.0 | 122.3 | |||||||||||||||
Performance Products and Solutions |
8.5 | 10.8 | 12.3 | 7.2 | 38.8 | |||||||||||||||
PolyOne Distribution |
16.7 | 16.7 | 16.4 | 16.2 | 66.0 | |||||||||||||||
Corporate and eliminations |
(19.2 | ) | (21.4 | ) | (16.9 | ) | (32.1 | ) | (89.6 | ) | ||||||||||
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Operating income |
$ | 37.4 | $ | 43.3 | $ | 43.5 | $ | 13.3 | $ | 137.5 | ||||||||||
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For 2012 and 2011, the Specialty Platform consists of our two specialty businesses: Global Specialty Engineered Materials; and Global Color, Additives and Inks. We present Specialty Platform sales, gross margin, selling and administration, and operating income because management believes that this is useful information to investors by highlighting our collective progress in advancing our specialization strategy.
2
Business Segment Information, as Adjusted (Unaudited)
(In millions)
Operating income at the segment level does not include: special items as defined on Attachment 3; 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.
Business Segments | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011Y | |||||||||||||||
Sales: |
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Global Specialty Engineered Materials |
$ | 151.9 | $ | 147.5 | $ | 147.5 | $ | 128.2 | $ | 575.1 | ||||||||||
Global Color, Additives and Inks |
159.0 | 165.3 | 157.0 | 136.4 | 617.7 | |||||||||||||||
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Specialty Platform |
310.9 | 312.8 | 304.5 | 264.6 | 1,192.8 | |||||||||||||||
Performance Products and Solutions |
154.5 | 177.2 | 165.9 | 141.5 | 639.1 | |||||||||||||||
PolyOne Distribution |
247.0 | 265.5 | 255.0 | 229.0 | 996.5 | |||||||||||||||
Corporate and eliminations |
(29.6 | ) | (32.1 | ) | (31.4 | ) | (25.9 | ) | (119.0 | ) | ||||||||||
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Sales |
$ | 682.8 | $ | 723.4 | $ | 694.0 | $ | 609.2 | $ | 2,709.4 | ||||||||||
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Gross margin: |
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Global Specialty Engineered Materials |
$ | 34.7 | $ | 33.4 | $ | 30.7 | $ | 26.5 | $ | 125.3 | ||||||||||
Global Color, Additives and Inks |
38.5 | 40.6 | 38.1 | 34.4 | 151.6 | |||||||||||||||
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Specialty Platform |
73.2 | 74.0 | 68.8 | 60.9 | 276.9 | |||||||||||||||
Performance Products and Solutions |
16.6 | 21.8 | 14.9 | 12.4 | 65.7 | |||||||||||||||
PolyOne Distribution |
26.2 | 27.5 | 25.3 | 22.4 | 101.4 | |||||||||||||||
Corporate and eliminations |
(0.5 | ) | (3.1 | ) | (5.1 | ) | (6.0 | ) | (14.7 | ) | ||||||||||
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Gross margin |
$ | 115.5 | $ | 120.2 | $ | 103.9 | $ | 89.7 | $ | 429.3 | ||||||||||
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Selling and administrative expense: |
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Global Specialty Engineered Materials |
$ | (20.7 | ) | $ | (20.7 | ) | $ | (19.7 | ) | $ | (18.3 | ) | $ | (79.4 | ) | |||||
Global Color, Additives and Inks |
(25.4 | ) | (26.4 | ) | (25.4 | ) | (24.2 | ) | (101.4 | ) | ||||||||||
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Specialty Platform |
(46.1 | ) | (47.1 | ) | (45.1 | ) | (42.5 | ) | (180.8 | ) | ||||||||||
Performance Products and Solutions |
(10.0 | ) | (9.7 | ) | (8.8 | ) | (9.5 | ) | (38.0 | ) | ||||||||||
PolyOne Distribution |
(11.5 | ) | (12.2 | ) | (11.2 | ) | (10.5 | ) | (45.4 | ) | ||||||||||
Corporate and eliminations |
(8.4 | ) | (8.8 | ) | (5.4 | ) | (91.5 | ) | (114.1 | ) | ||||||||||
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Selling and administrative expense |
$ | (76.0 | ) | $ | (77.8 | ) | $ | (70.5 | ) | $ | (154.0 | ) | $ | (378.3 | ) | |||||
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Operating income (loss): |
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Global Specialty Engineered Materials |
$ | 14.0 | $ | 12.7 | $ | 11.0 | $ | 8.2 | $ | 45.9 | ||||||||||
Global Color, Additives and Inks |
13.1 | 14.2 | 12.7 | 10.2 | 50.2 | |||||||||||||||
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Specialty Platform |
27.1 | 26.9 | 23.7 | 18.4 | 96.1 | |||||||||||||||
Performance Products and Solutions |
6.6 | 12.1 | 6.1 | 2.9 | 27.7 | |||||||||||||||
PolyOne Distribution |
14.7 | 15.3 | 14.1 | 11.9 | 56.0 | |||||||||||||||
Corporate and eliminations |
125.0 | (11.9 | ) | (10.5 | ) | (79.4 | ) | 23.2 | ||||||||||||
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Operating income (loss) |
$ | 173.4 | $ | 42.4 | $ | 33.4 | $ | (46.2 | ) | $ | 203.0 | |||||||||
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For 2012 and 2011, the Specialty Platform consists of our two specialty businesses: Global Specialty Engineered Materials; and Global Color, Additives and Inks. We present Specialty Platform sales, gross margin, selling and administration, and operating income because management believes that this is useful information to investors by highlighting our collective progress in advancing our specialization strategy.
3
Reconciliation of Non-GAAP Financial Measures, as Adjusted (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. Below is a reconciliation of non-GAAP financial measures to the most directly comparable measures calculated and presented in accordance with GAAP.
Reconciliation to Consolidated Statements of Income | 1Q12 | 2Q12 | 3Q12 | 4Q12 | 2012Y | |||||||||||||||
Sales |
$ | 745.5 | $ | 756.6 | $ | 707.7 | $ | 651.0 | $ | 2,860.8 | ||||||||||
Gross margin before special items |
$ | 139.7 | $ | 146.9 | $ | 140.3 | $ | 124.1 | $ | 551.0 | ||||||||||
Special items in gross margin |
(7.4 | ) | (2.9 | ) | (5.2 | ) | (4.4 | ) | (19.9 | ) | ||||||||||
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Gross margin GAAP |
$ | 132.3 | $ | 144.0 | $ | 135.1 | $ | 119.7 | $ | 531.1 | ||||||||||
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Gross margin before special items as a percent of sales |
18.7 | % | 19.4 | % | 19.8 | % | 19.1 | % | 19.3 | % | ||||||||||
Operating income before special items |
$ | 45.9 | $ | 55.1 | $ | 51.8 | $ | 38.6 | $ | 191.4 | ||||||||||
Special items in operating income |
(8.5 | ) | (11.8 | ) | (8.3 | ) | (25.3 | ) | (53.9 | ) | ||||||||||
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Operating income GAAP |
$ | 37.4 | $ | 43.3 | $ | 43.5 | $ | 13.3 | $ | 137.5 | ||||||||||
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Net income from continuing operations attributable to PolyOne shareholders |
$ | 15.3 | $ | 18.4 | $ | 19.4 | $ | 0.2 | $ | 53.3 | ||||||||||
Special items, after tax (1) |
6.1 | 8.0 | 5.3 | 16.3 | 35.7 | |||||||||||||||
Tax adjustments (2) |
0.1 | 0.9 | 0.1 | (0.6 | ) | 0.5 | ||||||||||||||
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Net Income, Adjusted |
$ | 21.5 | $ | 27.3 | $ | 24.8 | $ | 15.9 | $ | 89.5 | ||||||||||
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Earnings per share from continuing operations, adjusted: |
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Basic |
$ | 0.24 | $ | 0.31 | $ | 0.28 | $ | 0.18 | $ | 1.00 | ||||||||||
Diluted |
$ | 0.24 | $ | 0.30 | $ | 0.27 | $ | 0.18 | $ | 1.00 | ||||||||||
Reconciliation to Consolidated Statements of Income | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011Y | |||||||||||||||
Sales |
$ | 682.8 | $ | 723.4 | $ | 694.0 | $ | 609.2 | $ | 2,709.4 | ||||||||||
Gross margin before special items |
$ | 115.4 | $ | 122.1 | $ | 108.0 | $ | 95.3 | $ | 440.8 | ||||||||||
Special items in gross margin |
0.1 | (1.9 | ) | (4.1 | ) | (5.6 | ) | (11.5 | ) | |||||||||||
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Gross margin GAAP |
$ | 115.5 | $ | 120.2 | $ | 103.9 | $ | 89.7 | $ | 429.3 | ||||||||||
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Gross margin before special items as a percent of sales |
16.9 | % | 16.9 | % | 15.6 | % | 15.6 | % | 16.3 | % | ||||||||||
Operating income before special items and SunBelt equity income |
$ | 40.5 | $ | 45.1 | $ | 38.3 | $ | 26.7 | $ | 150.6 | ||||||||||
SunBelt equity income |
5.7 | | | | 5.7 | |||||||||||||||
Special items in operating income |
127.2 | (2.7 | ) | (4.9 | ) | (72.9 | ) | 46.7 | ||||||||||||
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Operating income (loss) GAAP |
$ | 173.4 | $ | 42.4 | $ | 33.4 | $ | (46.2 | ) | $ | 203.0 | |||||||||
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Net income from continuing operations |
$ | 106.0 | $ | 23.1 | $ | 16.0 | $ | 8.3 | $ | 153.4 | ||||||||||
SunBelt equity earnings, after tax |
(3.7 | ) | | | | (3.7 | ) | |||||||||||||
Special items, after tax (1) |
(79.8 | ) | 0.9 | 3.1 | 45.3 | (30.5 | ) | |||||||||||||
Tax adjustments (2) |
(1.5 | ) | 0.4 | (0.3 | ) | (40.9 | ) | (42.3 | ) | |||||||||||
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Net Income, Adjusted |
$ | 21.0 | $ | 24.4 | $ | 18.8 | $ | 12.7 | $ | 76.9 | ||||||||||
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Earnings per share from continuing operations, adjusted: |
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Basic |
$ | 0.22 | $ | 0.26 | $ | 0.20 | $ | 0.14 | $ | 0.83 | ||||||||||
Diluted |
$ | 0.22 | $ | 0.26 | $ | 0.20 | $ | 0.14 | $ | 0.82 |
(1) | Special items is a non-GAAP financial measure. Special items include charges related to specific strategic initiatives or financial restructurings such as: consolidation of operations; debt extinguishment costs; employee separation costs resulting from personnel reduction programs, plant phase-out costs, executive separation agreements; asset impairments; mark-to-market adjustments associated with actuarial gains and losses on pension and other postretirement benefit plans; 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; unrealized gains and losses from foreign currency option contracts; one-time, non-recurring items; and the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results. |
(2) | Tax adjustments include the net tax expense (benefit) from one-time foreign and domestic income tax items and deferred income tax valuation allowance adjustments on deferred tax assets. |
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