EX-99.1 2 d527496dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

PolyOne Corporation

Consolidated Statements of Income, as Adjusted (Unaudited)

(In millions, except per share data)

 

     1Q’12     2Q’12     3Q’12     4Q’12     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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     20.2        24.6        24.0        3.0        71.8   

Net loss attributable to noncontrolling interests

     —          —          —          0.1        0.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to PolyOne common shareholders

   $ 20.2      $ 24.6      $ 24.0      $ 3.1      $ 71.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to PolyOne shareholders – basic:

          

Continuing operations

   $ 0.17      $ 0.21      $ 0.22      $ —        $ 0.60   

Discontinued operations

     0.06        0.07        0.05        0.03        0.21   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 0.23      $ 0.28      $ 0.27      $ 0.03      $ 0.81   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to PolyOne shareholders – diluted:

          

Continuing

   $ 0.17      $ 0.21      $ 0.22      $ —        $ 0.59   

Discontinued

     0.05        0.06        0.05        0.03        0.21   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 0.22      $ 0.27      $ 0.27      $ 0.03      $ 0.80   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used to compute earnings per share:

          

Basic

     89.1        89.1        88.8        89.2        89.1   

Diluted

     90.7        90.7        90.2        90.5        89.8   

 

     1Q’11     2Q’11     3Q’11     4Q’11     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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 110.2      $ 28.5      $ 21.6      $ 12.3      $ 172.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to PolyOne shareholders – basic:

          

Continuing operations

   $ 1.13      $ 0.25      $ 0.17      $ 0.09      $ 1.66   

Discontinued operations

     0.04        0.06        0.07        0.05        0.21   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1.17      $ 0.31      $ 0.24      $ 0.14      $ 1.87   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to PolyOne shareholders – diluted:

          

Continuing

   $ 1.10      $ 0.24      $ 0.17      $ 0.09      $ 1.63   

Discontinued

     0.04        0.06        0.07        0.04        0.20   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1.14      $ 0.30      $ 0.23      $ 0.13      $ 1.83   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used to compute earnings per share:

          

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    1Q’12     2Q’12     3Q’12     4Q’12     2012Y  

Sales:

          

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales

   $ 745.5      $ 756.6      $ 707.7      $ 651.0      $ 2,860.8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin:

          

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 132.3      $ 144.0      $ 135.1      $ 119.7      $ 531.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expense:

          

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expense

   $ (95.3   $ (100.7   $ (91.6   $ (129.4   $ (417.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income:

          

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 37.4      $ 43.3      $ 43.5      $ 13.3      $ 137.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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    1Q’11     2Q’11     3Q’11     4Q’11     2011Y  

Sales:

          

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales

   $ 682.8      $ 723.4      $ 694.0      $ 609.2      $ 2,709.4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin:

          

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 115.5      $ 120.2      $ 103.9      $ 89.7      $ 429.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expense:

          

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expense

   $ (76.0   $ (77.8   $ (70.5   $ (154.0   $ (378.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss):

          

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 173.4      $ 42.4      $ 33.4      $ (46.2   $ 203.0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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    1Q’12     2Q’12     3Q’12     4Q’12     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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin – GAAP

   $ 132.3      $ 144.0      $ 135.1      $ 119.7      $ 531.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income – GAAP

   $ 37.4      $ 43.3      $ 43.5      $ 13.3      $ 137.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income, Adjusted

   $ 21.5      $ 27.3      $ 24.8      $ 15.9      $ 89.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share from continuing operations, adjusted:

          

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    1Q’11     2Q’11     3Q’11     4Q’11     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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin – GAAP

   $ 115.5      $ 120.2      $ 103.9      $ 89.7      $ 429.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss) – GAAP

   $ 173.4      $ 42.4      $ 33.4      $ (46.2   $ 203.0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income, Adjusted

   $ 21.0      $ 24.4      $ 18.8      $ 12.7      $ 76.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share from continuing operations, adjusted:

          

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.

 

4