-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T3mINmXEoMNrDpI5AghIDKk9eFJey2Thv3oEwWaaEUrJU3bBVbNsMFtN3BkJzHmO dDlrhj1jdp72jkfhwRqupQ== 0000950152-98-002488.txt : 19980327 0000950152-98-002488.hdr.sgml : 19980327 ACCESSION NUMBER: 0000950152-98-002488 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980326 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MYERS INDUSTRIES INC CENTRAL INDEX KEY: 0000069488 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 340778636 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-08524 FILM NUMBER: 98574790 BUSINESS ADDRESS: STREET 1: 1293 S MAIN ST CITY: AKRON STATE: OH ZIP: 44301 BUSINESS PHONE: 2162535592 MAIL ADDRESS: STREET 1: 1293 SOUTH MAIN STREET CITY: AKRON STATE: OH ZIP: 44301 FORMER COMPANY: FORMER CONFORMED NAME: MYERS TIRE SUPPLY CO DATE OF NAME CHANGE: 19720609 10-K 1 MYERS INDUSTRIES, INC. FORM 10-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 COMMISSION FILE NUMBER 1-8524 MYERS INDUSTRIES, INC. (Exact name of registrant as specified in its charter) OHIO 34-0778636 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 1293 S. MAIN STREET, AKRON, OHIO 44301 (330) 253-5592 (Address of Principal Executive Offices) (Zip Code) (Telephone Number) SECURITIES REGISTERED PURSUANT TO NAME OF EACH EXCHANGE SECTION 12(B) OF THE ACT: ON WHICH REGISTERED: Common Stock, Without Par Value American Stock Exchange (Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes [X] No [ ] 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. [ ] State the approximate aggregate market value of the voting stock held by non-affiliates of the registrant as of February 28, 1998: $273,791,184. Indicate the number of shares outstanding of registrant's common stock as of February 28, 1998: 18,282,578 Shares of Common Stock, without par value. ================================================================================ 2 DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of Registrant's Notice of 1998 Annual Meeting and Proxy Statement, dated March 20, 1998, in Part III (Items 10, 11, 12 and 13) CROSS REFERENCE SHEET PURSUANT TO FORM 10-K GENERAL INSTRUCTION G(4)
PART/ITEM FORM 10-K HEADING REFERENCE MATERIAL - --------- ----------------- ------------------ III/10 Directors and Executive Officers of the Registrant....... Proxy Statement(1) pages 3 through 7 III/11 Executive Compensation................................... Proxy Statement pages 8 through 12 III/12 Security Ownership of Certain Beneficial Owners and Management............................................... Proxy Statement pages 3 through 7, page 10, and page 15 III/13 Certain Relationships and Related Transactions........... Proxy Statement page 7
- --------------- (1) Registrant's Notice of 1998 Annual Meeting of Shareholders and Proxy Statement 3 PART I ITEM 1. BUSINESS (a) GENERAL DEVELOPMENT OF BUSINESS Net sales for the fourth quarter were $95.5 million, up 5 percent from the $90.6 million reported in the same year ago period. Net income for the period was $8.3 million, a 28 percent increase from the $6.5 million reported in 1996. Net income per share was $.45, up 29 percent from 1996's $.35 per share. For the full year, net sales increased 6 percent, finishing at $339.6 million, up from the $320.9 million produced in 1996. Net income for the year was $22.3 million, a 6 percent increase from the $21.0 million reported in 1996. Net income per share was $1.21, a 7 percent increase from the $1.13 earned in 1996. Our capital position is excellent. Shareholders' equity increased $14.3 million to $176.7 million. Working capital at December 31, 1997 was $67.7 million while total debt remains low at 3% of total capitalization. Cash flow from operating activities was $36.2 million. We invested approximately $19 million to continue modernizing and expanding our manufacturing plants. We expect annual capital expenditures for expansion of physical plant and equipment to continue in the range of $15 to $20 million. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
1997 1996 1995 ---- ---- ---- (DOLLARS IN THOUSANDS) NET SALES Distribution of aftermarket repair products and services............................................. $147,543 $136,526 $126,902 Manufacturing of polymer and metal products............. 204,970 197,319 186,307 Intra-segment elimination............................... (12,887) (12,901) (12,510) -------- -------- -------- $339,626 $320,944 $300,699 ======== ======== ======== INCOME BEFORE INCOME TAXES Distribution of aftermarket repair products and services............................................. $ 14,504 $ 12,209 $ 11,793 Manufacturing of polymer and metal products............. 30,040 29,021 23,145 Corporate............................................... (6,230) (5,330) (7,098) Interest expense -- net................................. (248) (285) (784) -------- -------- -------- $ 38,066 $ 35,615 $ 27,056 ======== ======== ======== IDENTIFIABLE ASSETS Distribution of aftermarket repair products and services............................................. $ 53,604 $ 49,605 $ 48,416 Manufacturing of polymer and metal products............. 163,130 148,708 140,291 Corporate............................................... 8,703 9,981 5,622 Intra-segment elimination............................... (1,359) (1,172) (725) -------- -------- -------- $224,078 $207,122 $193,604 ======== ======== ======== CAPITAL ADDITIONS, NET Distribution of aftermarket repair products and services............................................. $ 603 $ 426 $ 227 Manufacturing of polymer and metal products............. 16,015 20,433 10,722 Corporate............................................... 2,162 601 1,038 -------- -------- -------- $ 18,780 $ 21,460 $ 11,987 ======== ======== ======== DEPRECIATION/AMORTIZATION Distribution of aftermarket repair products and services............................................. $ 546 $ 598 $ 689 Manufacturing of polymer and metal products............. 10,847 9,352 8,747 Corporate............................................... 275 280 283 -------- -------- -------- $ 11,668 $ 10,230 $ 9,719 ======== ======== ========
1 4 (c) DESCRIPTION OF BUSINESS The Company conducts its business activities in two distinct segments: manufacturing of polymer and metal products ("the Manufacturing business") and distribution of aftermarket repair products ("the Distribution business"). The Company believes it is one of the largest manufacturers of plastic and metal storage systems in the United States and has the only nationwide distribution network supplying the tire servicing and automotive underbody repair industries. The Company's Manufacturing business designs, manufactures and markets reusable plastic storage systems for use in distribution and material handling, and other plastic and metal products for storage, assembly and material handling applications. The Company also manufactures and sells molded rubber products and other materials used primarily in the tire and tire repair industries and for various other uses including OEM automotive and construction applications. In its Distribution business, the Company is engaged in the nationwide distribution of equipment, tools and supplies used for tire servicing and automotive underbody repair. MANUFACTURING BUSINESS The Company markets reusable plastic containers under the brand names NesTier(R), Akro-Bins(R) and Buckhorn(R). These reusable plastic containers are utilized in industrial applications including the distribution of food items, such as poultry, meat and baked goods, and the distribution of non-food items such as apparel, electronic, automotive, and industrial components, health and beauty aids and hardware. Reusable containers are also used for storage and handling in manufacturing plants and for agricultural products. Other products sold to the industrial and commercial market include tote boxes, various styles of bins, tubs, straight-walled boxes, and a line of modular cabinets for small parts storage and organization. The Company's products are sold throughout the United States and Canada by a direct sales force, independent dealers and through independent representatives. The Company's consumer products include the Keepbox(R) line of household storage containers, plastic tool boxes and other products to organize the home workshop, plastic containers to facilitate consumer recycling, and a line of plastic pots, planters and urns sold to consumers through lawn and garden retailers and other similar specialty outlets. Consumer products are marketed nationally to a variety of customers including mass-merchandisers, such as Target(R) and Wal-Mart,(R) and major department stores and hardware chains, warehouse outlets and specialty shops. Products are mainly marketed under the Akro-Mils(R) name and other registered trade names, and to a lesser extent, under private label arrangements. The Company's products are sold throughout the United States by a direct sales force and independent representatives. The Company designs, manufactures, and markets molded rubber products, such as air intake hoses, rubber boots, mounts, and hood hold-down latches for diesel-powered vehicles and equipment used in the transportation, construction and agricultural industries. It also manufactures molded rubber products, rubber adhesives and materials used primarily in the tire retreading and repair industries, as well as products used in hydroelectric dams, locks and other water works systems. The Company has utilized its manufacturing systems and expertise to custom compound and calendar rubber materials to meet specific customer needs for a growing and diverse customer base. These products are sold nationally and internationally to manufacturers, construction companies and wholesale distributors, including the Distribution business, by a direct sales force and through independent sales representatives. The Company is continuously engaged in the refinement of its existing product lines and the development of new products. A large portion of the current products offered by the Company have been developed in the last five years. The Company's Manufacturing business is dependent upon outside suppliers for raw materials, principally polyethylene, polypropylene, polystyrene and synthetic and natural rubber. The Company believes that the loss of any one supplier or group of suppliers would not materially adversely affect its business, since in most instances identical or similar materials can be obtained readily from other suppliers. 2 5 DISTRIBUTION BUSINESS The Company's Distribution business is conducted primarily by the Myers Tire Supply division. Products distributed by Myers Tire Supply include air compressors, mechanic's hand tools, tire changers, tire display and storage equipment, valves, tire balancing and wheel alignment equipment, curing rims and presses, retread presses and tire repair materials for the retreading industry. The Company believes it is the only nationwide distributor supplying such products. The Company's customers include independent tire dealers, tire retreaders, tire service centers, automotive supply chains and rubber companies. Myers Tire Supply's domestic distribution system includes 42 owned branch warehouse distributors located in major cities in 31 states. Each branch services customers in an assigned territory, sells all products of the division, and operates like a stand-alone business with the branch manager bearing profit/loss, inventory and credit responsibilities. Internationally, this business has two wholly owned warehouse distributors located in Canada and owns an interest in several other foreign warehouse distributors. Myers Tire Supply supplies its domestic and international distribution facilities from its main distribution center. This distribution center stocks approximately 10,000 items which are purchased from numerous suppliers, including certain of the Company's manufacturing businesses. The Company's extensive national distribution network enables it to work closely with manufacturers in the development and distribution of new products. COMPETITION Competition in the Manufacturing business is substantial and varied in form and size from manufacturers of similar products and of other products which can be readily substituted for those produced by the Company. Competition in the Distribution business is generally from local and regional businesses. EMPLOYEES As of December 31, 1997 the Company had a total of 2,083 full-time and part-time employees. Of these employees, 1,498 were engaged in the Manufacturing business and 585 were employed in the Distribution business. Approximately 11% of the Company's employees are members of unions. The Company believes it has a good relationship with its employees. (d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES The Company operates principally in two areas of business, the first being the distribution of aftermarket repair products and services. These products are distributed both domestically through branches in the major cities in the United States and in foreign countries where, in some cases, the Company has an interest in companies located in those countries. No single foreign country represents more than 10 percent of the total sales, income or assets of the Company. The second major area of the Company's business is polymer and metal products which are manufactured in Company-owned facilities and distributed through mass merchandisers, warehouse distributors, sales representatives and in-house salesmen, principally in the United States. 3 6 ITEM 2. PROPERTIES The following table sets forth by segment certain information with respect to properties owned by the Registrant: DISTRIBUTION OF AFTERMARKET REPAIR PRODUCTS AND SERVICES:
APPROXIMATE FLOOR SPACE APPROXIMATE (SQUARE LAND AREA PLANT LOCATION FEET) (ACRES) USE -------------- ----------- ----------- --- Akron, Ohio............................ 129,000 8 Executive offices and warehousing Akron, Ohio............................ 60,000 5 Warehousing Akron, Ohio............................ 31,000 2 Warehousing Pomona, California..................... 17,700 1 Sales and distribution Englewood, Colorado.................... 9,500 1 Sales and distribution San Antonio, Texas..................... 4,500 1 Sales and distribution Phoenix, Arizona....................... 8,200 1 Sales and distribution Akron, Ohio............................ 8,000 1 Leased to non-affiliated party Houston, Texas......................... 7,900 1 Sales and distribution Indianapolis, Indiana.................. 7,800 2 Sales and distribution Cincinnati, Ohio....................... 7,500 1 Sales and distribution York, Pennsylvania..................... 7,400 3 Sales and distribution Atlanta, Georgia....................... 7,000 1 Sales and distribution Minneapolis, Minnesota................. 5,500 1 Sales and distribution Charlotte, North Carolina.............. 5,100 1 Sales and distribution Syracuse, New York..................... 4,800 1 Sales and distribution Franklin Park, Illinois................ 4,400 1 Sales and distribution POLYMER AND METAL PRODUCTS: Dawson Springs, Kentucky............... 209,000 36 Manufacturing and distribution Wadsworth, Ohio........................ 197,000 23 Manufacturing and distribution Hannibal, Missouri..................... 196,000 10 Manufacturing and distribution Bluffton, Indiana...................... 175,000 17 Manufacturing and distribution Roanoke Rapids, North Carolina......... 172,000 20 Manufacturing and distribution Bristol, Indiana....................... 139,000 12 Manufacturing and distribution Akron, Ohio............................ 121,000 17 Manufacturing and distribution Shelbyville, Kentucky.................. 105,000 8 Manufacturing and distribution Goddard, Kansas........................ 62,000 7 Manufacturing and distribution Akron, Ohio............................ 49,000 6 Manufacturing and distribution Ontario, California.................... 40,000 2 Distribution and warehousing Mebane, North Carolina................. 30,000 5 Manufacturing and distribution
4 7 The following table sets forth by segment certain information with respect to facilities leased by the Registrant:
APPROXIMATE FLOOR SPACE EXPIRATION DATE (SQUARE OF LEASE AND LOCATION FEET) OPTION PERIOD (IF ANY) USE -------- ----------- ---------------------- --- POLYMER AND METAL PRODUCTS: Brampton, Ontario, Canada... 43,000 September 30, 2005 Sales and distribution Milford, Ohio............... 22,000 August 31, 2001 Sales and administrative Stanton, Harcourt, England................... 12,000 December 31, 2001 Warehousing and distribution
- --------------- The Registrant also leases distribution facilities in 32 locations throughout the United States and Canada which, in the aggregate, amount to approximately 167,000 square feet of warehouse and office space. All of these locations are used by the distribution of aftermarket repair products and services segment. The Registrant believes that all of its properties, machinery and equipment generally are well maintained and adequate for the purposes for which they are used. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings other than ordinary routine litigation incidental to the Registrant's business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of the fiscal year ended December 31, 1997, there were no matters submitted to a vote of security holders. EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is certain information concerning the executive officers of the Registrant. Executive officers are elected annually by the Board of Directors and serve at the pleasure of the Board.
YEARS AS NAME AGE EXECUTIVE OFFICER TITLE ---- --- ----------------- ----- Stephen E. Myers................... 54 25 President and Chief Executive Officer Milton I. Wiskind.................. 72 26 Senior Vice President and Secretary Gregory J. Stodnick................ 55 18 Vice President -- Finance
Each executive officer has been principally employed in the capacities shown or similar ones with the Registrant for over the past five years. Years as an Executive Officer is stated as of the time the Company became a public company for reporting purposes. Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's Directors, certain of its executive officers and persons who own more than ten percent of its Common Stock ("Insiders") to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the American Stock Exchange, Inc., and to furnish the Company with copies of all such forms they file. The Company understands from the information provided to it by the Insiders that they adhered to all filing requirements. 5 8 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is traded on the American Stock Exchange (ticker symbol MYE). The approximate number of record holders at December 31, 1997 was 1,980. High and low stock prices and dividends for the last two years were:
SALES PRICE* 1997 ------------- DIVIDENDS* QUARTER ENDED HIGH LOW PAID ------------- ----- ---- ---------- MARCH 31............................................ 15 5/8 13 5/8 .04 JUNE 30............................................. 16 1/4 14 5/8 .04 SEPTEMBER 30........................................ 16 1/8 14 5/8 .05 DECEMBER 31......................................... 18 3/4 16 1/4 .05
SALES PRICE* 1996 ------------- DIVIDENDS* QUARTER ENDED HIGH LOW PAID ------------- ----- ---- ---------- March 31............................................ 17 3/4 13 1/8 .04 June 30............................................. 19 1/4 14 1/8 .04 September 30........................................ 17 13 .04 December 31......................................... 16 3/8 13 .04
- --------------- * Adjusted for the ten percent stock dividend distributed in August 1997. 6 9 ITEM 6. SELECTED FINANCIAL DATA MYERS INDUSTRIES, INC. AND SUBSIDIARIES FIVE-YEAR SUMMARY
1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ------------ OPERATIONS FOR THE YEAR Net sales........................ $339,625,585 $320,943,771 $300,699,109 $274,054,163 $245,136,189 Cost and expenses Cost of sales.................. 232,376,615 219,152,386 206,050,902 183,890,614 163,794,129 Selling........................ 39,322,295 36,170,478 33,973,656 32,238,245 30,428,260 General and administrative..... 29,613,322 29,720,351 32,834,285 27,258,865 24,373,483 Interest -- net................ 247,570 285,290 784,427 620,276 1,091,590 ------------ ------------ ------------ ------------ ------------ 301,559,802 285,328,505 273,643,270 244,008,000 219,687,462 ------------ ------------ ------------ ------------ ------------ Income before income taxes..... 38,065,783 35,615,266 27,055,839 30,046,163 25,448,727 Income taxes................... 15,727,000 14,612,000 11,087,000 12,215,000 10,054,000 ------------ ------------ ------------ ------------ ------------ Net Income..................... $ 22,338,783 $ 21,003,266 $ 15,968,839 $ 17,831,163 $ 15,394,727 ------------ ------------ ------------ ------------ ------------ Net income per share*.......... $ 1.21 $ 1.13 $ 0.86 $ 0.96 $ 0.86 ------------ ------------ ------------ ------------ ------------ FINANCIAL POSITION -- AT YEAR END Total Assets................... $224,077,922 $207,121,727 $193,603,873 $172,026,887 $152,386,302 ------------ ------------ ------------ ------------ ------------ Current assets................. 107,426,627 106,309,880 101,087,297 94,724,955 78,922,479 Current liabilities............ 39,643,522 36,853,013 32,372,026 34,093,593 24,380,541 ------------ ------------ ------------ ------------ ------------ Working capital................ 67,783,105 69,456,867 68,715,271 60,631,362 54,541,938 Other assets................... 26,100,386 20,151,914 23,086,827 15,923,620 15,769,611 Property, plant and equipment -- net............. 90,550,909 80,659,933 69,429,749 61,378,312 57,694,212 Less: Long-term debt............... 4,261,257 4,569,396 13,335,191 4,154,646 10,654,650 Deferred income taxes........ 3,496,196 3,254,327 2,713,106 2,869,976 2,064,399 ------------ ------------ ------------ ------------ ------------ SHAREHOLDERS' EQUITY............... $176,676,947 $162,444,991 $145,183,550 $130,908,672 $115,286,712 ------------ ------------ ------------ ------------ ------------ COMMON SHARES OUTSTANDING*......... 18,278,895 18,539,982 18,596,621 18,513,111 18,487,262 ------------ ------------ ------------ ------------ ------------ BOOK VALUE PER COMMON SHARE*....... $ 9.67 $ 8.76 $ 7.81 $ 7.07 $ 6.24 ------------ ------------ ------------ ------------ ------------ OTHER DATA Dividends paid................. $ 3,529,921 $ 3,049,642 $ 2,577,154 $ 2,326,964 $ 2,058,288 Dividends paid per Common Share*....................... 0.18 0.16 0.14 0.13 0.11 ------------ ------------ ------------ ------------ ------------ Average Common Shares Outstanding during the year......................... 18,471,084 18,619,178 18,558,502 18,513,418 17,816,764 ============ ============ ============ ============ ============
- --------------- * Adjusted for the ten percent stock dividend paid in August, 1997 and August, 1995; the five-for-four stock split distributed in August, 1994; and ten percent stock dividend paid in August, 1993. 7 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 1997 RESULTS OF OPERATIONS Net sales for the year ended December 31, 1997 increased by $18.7 million or 6 percent over 1996 to a record $339.6 million. In 1997 the Company recorded increases and record sales in both of its business segments. Sales in the Distribution segment increased $11.0 million or 8 percent as a result of higher unit volumes. Sales in the Manufacturing segment increased $7.7 million or 4 percent primarily due to higher unit volumes and the inclusion of Molded Solutions' operations subsequent to the April 25, 1997 acquisition. The Company experienced significant competitive pricing pressures in both of its business segments during 1997. Cost of sales was $232.4 million in 1997 an increase of 6 percent compared to $219.2 million in 1996. Gross profit increased $5.5 million to $107.2 million based on the increase in sales. Gross profit as a percentage of sales dropped to 31.6 percent from 31.7 percent primarily due to higher raw material costs in the Manufacturing segment. Operating expenses in 1997 increased by $3.0 million or 4.6 percent as a result of the increased sales volume. Operating expenses as a percent of sales decreased to 20.3 percent from 20.5 percent in 1996 as a result of improved leverage for general and administrative expenses which were virtually unchanged at $29.6 million for 1997 compared with $29.7 million in 1996. Net interest expense decreased 13.2 percent to $247,570 based on lower average borrowing levels but had no material net impact on the Company's financial results. 1996 RESULTS OF OPERATIONS Net sales for the year ended December 31, 1996 increased $20.2 million or 7 percent compared to 1995 as the Company experienced growth in both of its business segments. Sales in the Distribution segment increased $9.6 million or 8 percent primarily resulting from increased unit sales. The Manufacturing segment experienced a sales increase of $10.6 million or 6 percent principally due to the inclusion of Ameri-Kart's operations for a full year versus six months in 1995. Gross profit as a percentage of sales increased to 31.7 percent in 1996 from 31.5 percent in 1995. This increase was primarily achieved in the Manufacturing segment based on increased productivity combined with a better sales mix resulting from the disposition in 1995 of certain lower margin product lines. Operating expenses for the year ended December 31, 1996 were reduced by $917,112 or 1 percent compared with 1995. Expressed as a percentage of sales, operating expenses in 1996 were reduced to 20.5 percent from 22.2 percent in the prior year. This improvement reflects better fixed expense coverage from increased sales as well as the elimination of approximately $1.9 million of non-recurring charges in 1995. FINANCIAL CONDITION The Company generated cash from operating activities of $36.2 million in 1997 and $34.7 million in 1996. Working capital was $67.7 million at December 31, 1997 with a current ratio of 2.7 to 1. Total debt expressed as a percent of total capitalization was 3 percent at December 31, 1997. This strong capital position provides the Company with the flexibility to finance additional manufacturing capacity, working capital needs and other corporate requirements. Based on the Company's strong financial condition, 1997 saw a 10 percent stock dividend and an increase in cash dividends for the 22nd consecutive year. Investments in property, plant and equipment totaled $18.8 million in 1997 and $21.5 million in 1996. During the next five years, the Company anticipates on-going capital expenditures in the range of $15 to $20 million per year. Management believes available credit facilities and anticipated cash flows from operations will be sufficient to meet the needs of its business, both short-term and long-term. 8 11 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and accompanying notes and the reports of management and independent accountants follow Item 9 of this Report. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements with the Registrant's independent accountants on accounting and financial disclosure matters within the two year period ended December 31, 1997, or in any period subsequent to such date. 9 12 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED) SUMMARIZED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL QUARTER ENDED 1997 -------- ------- -------- ------- ----- NET SALES.................. $76,799 $86,175 $81,141 $95,511 $339,626 GROSS PROFIT............... 24,088 26,672 24,069 32,420 107,249 NET INCOME................. 4,809 5,313 3,933 8,284 22,339 PER SHARE.................. .26 .29 .21 .45 1.21
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL QUARTER ENDED 1996 -------- ------- -------- ------- -------- Net Sales.................. $72,554 $79,951 $77,880 $90,559 $320,944 Gross Profit............... 24,350 25,589 22,672 29,180 101,791 Net Income................. 5,215 5,606 3,709 6,473 21,003 Per Share.................. .28 .30 .20 .35 1.13
- --------------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS We have audited the accompanying statements of consolidated financial position of Myers Industries, Inc. (an Ohio Corporation) and Subsidiaries as of December 31, 1997 and 1996, and the related statements of consolidated income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Myers Industries, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP /s/ ARTHUR ANDERSEN LLP Cleveland, Ohio, February 9, 1998 10 13 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ------------ ------------ ------------ Net sales....................................... $339,625,585 $320,943,771 $300,699,109 Cost of sales................................... 232,376,615 219,152,386 206,050,902 ------------ ------------ ------------ Gross profit.................................. 107,248,970 101,791,385 94,648,207 ------------ ------------ ------------ Operating expenses Selling....................................... 39,322,295 36,170,478 33,973,656 General and administrative.................... 29,613,322 29,720,351 32,834,285 ------------ ------------ ------------ 68,935,617 65,890,829 66,807,941 ------------ ------------ ------------ Operating income........................... 38,313,353 35,900,556 27,840,266 ------------ ------------ ------------ Interest Income........................................ (348,746) (319,533) (212,708) Expense....................................... 596,316 604,823 997,135 ------------ ------------ ------------ 247,570 285,290 784,427 ------------ ------------ ------------ Income before income taxes...................... 38,065,783 35,615,266 27,055,839 Income taxes.................................... 15,727,000 14,612,000 11,087,000 ------------ ------------ ------------ Net income...................................... $ 22,338,783 $ 21,003,266 $ 15,968,839 ------------ ------------ ------------ Net income per share............................ $ 1.21 $ 1.13 $ 0.86 ============ ============ ============
The accompanying notes are an integral part of these statements. 11 14 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED FINANCIAL POSITION AS OF DECEMBER 31, 1997 AND 1996
1997 1996 ------------ ------------ ASSETS CURRENT ASSETS Cash and temporary cash investments....................... $ 6,297,726 $ 5,600,349 Accounts receivable -- less allowances of $2,102,000 and $2,213,000, respectively............................... 54,940,671 57,604,506 Inventories Finished and in-process products....................... 35,427,355 33,042,266 Raw materials and supplies............................. 7,627,878 6,788,086 ------------ ------------ 43,055,233 39,830,352 Prepaid expenses.......................................... 3,132,997 3,274,673 ------------ ------------ TOTAL CURRENT ASSETS........................................ 107,426,627 106,309,880 OTHER ASSETS Excess of cost over fair value of net assets of companies acquired............................................... 20,484,628 14,328,410 Patents and other intangible assets....................... 2,427,633 2,750,530 Other..................................................... 3,188,125 3,072,974 ------------ ------------ 26,100,386 20,151,914 PROPERTY, PLANT AND EQUIPMENT, AT COST Land...................................................... 2,597,342 2,547,509 Buildings and leasehold improvements...................... 42,043,716 38,918,648 Machinery and equipment................................... 125,413,124 108,594,273 ------------ ------------ 170,054,182 150,060,430 Less allowances for depreciation and amortization......... 79,503,273 69,400,497 ------------ ------------ 90,550,909 80,659,933 ------------ ------------ $224,077,922 $207,121,727 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable.......................................... $ 14,414,557 $ 15,189,488 Accrued expenses Employee compensation and related items................ 12,014,848 10,562,313 Taxes, other than income taxes......................... 1,162,642 1,062,498 Income taxes........................................... 1,208,327 1,452,107 Other.................................................. 9,996,832 8,066,838 Current portion of long-term debt......................... 846,316 519,769 ------------ ------------ TOTAL CURRENT LIABILITIES................................... 39,643,522 36,853,013 LONG-TERM DEBT, LESS CURRENT PORTION........................ 4,261,257 4,569,396 DEFERRED INCOME TAXES....................................... 3,496,196 3,254,327 SHAREHOLDERS' EQUITY Serial Preferred Shares (authorized 1,000,000 shares)..... -0- -0- Common Shares, without par value (authorized 30,000,000 shares; outstanding 18,278,895 and 18,539,982 shares, respectively).......................................... 11,573,496 10,659,714 Additional paid-in capital................................ 133,359,303 109,864,137 Foreign currency translation adjustment................... (484,820) (213,572) Retained income........................................... 32,228,968 42,134,712 ------------ ------------ 176,676,947 162,444,991 ------------ ------------ $224,077,922 $207,121,727 ============ ============
The accompanying notes are an integral part of these statements. 12 15 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
FOREIGN COMMON SHARES ADDITIONAL CURRENCY ------------------------ PAID-IN TRANSLATION RETAINED NUMBER AMOUNT CAPITAL ADJUSTMENT INCOME ------ ------ ---------- ----------- -------- BALANCE AT JANUARY 1, 1995...... 15,300,092 $ 8,303,598 $ 90,606,429 ($466,191) $ 32,464,836 Additions Net income.................... -0- -0- -0- -0- 15,968,839 Sales under option plans...... 36,986 314,615 -0- -0- -0- Employees stock purchase plan....................... 23,908 344,583 -0- -0- -0- Dividend reinvestment plan.... 11,205 161,770 -0- -0- -0- Foreign currency translation................ -0- -0- -0- 72,351 -0- Deductions Dividends -- $.14 per share... -0- -0- -0- -0- (2,577,154) 10% stock dividend............ 1,533,828 889,620 20,775,687 -0- (21,675,433) ---------- ----------- ------------ --------- ------------ BALANCE AT DECEMBER 31, 1995.... 16,906,019 $10,014,186 $111,382,116 ($393,840) $ 24,181,088 ---------- ----------- ------------ --------- ------------ Additions Net income.................... -0- -0- -0- -0- 21,003,266 Sales under option plans...... 25,235 215,857 -0- -0- -0- Employees stock purchase plan....................... 21,111 350,462 -0- -0- -0- Dividend reinvestment plan.... 8,764 145,995 -0- -0- -0- Foreign currency translation................ -0- -0- -0- 180,268 -0- Deductions Purchases for treasury........ (106,600) (66,786) (1,517,979) -0- -0- Dividends -- $.16 per share... -0- -0- -0- -0- (3,049,642) ---------- ----------- ------------ --------- ------------ BALANCE AT DECEMBER 31, 1996.... 16,854,529 $10,659,714 $109,864,137 ($213,572) $ 42,134,712 ---------- ----------- ------------ --------- ------------ Additions Net income.................... -0- -0- -0- -0- 22,338,783 Sales under option plans...... 32,204 24,902 357,976 -0- -0- Employees stock purchase plan....................... 22,720 12,920 366,787 -0- -0- Dividend reinvestment plan.... 7,012 4,005 114,201 -0- -0- Deductions Purchases for treasury........ (326,100) (208,704) (4,968,134) -0- -0- Dividends -- $.18 per share... -0- -0- -0- -0- (3,529,921) 10% stock dividend............ 1,688,530 1,080,659 27,624,336 -0- (28,714,606) Foreign currency translation................ -0- -0- -0- (271,248) -0- ---------- ----------- ------------ --------- ------------ BALANCE AT DECEMBER 31, 1997.... 18,278,895 $11,573,496 $133,359,303 ($484,820) $ 32,228,968 ========== =========== ============ ========= ============
The accompanying notes are an integral part of these statements. 13 16 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income....................................... $ 22,338,783 $ 21,003,266 $ 15,968,839 Items not affecting use of cash Depreciation.................................. 11,667,787 10,229,957 9,718,545 Amortization of excess of cost over fair value of net assets of companies acquired......... 793,296 625,687 420,360 Amortization of other intangible assets....... 752,801 455,030 311,576 Deferred income taxes......................... 241,869 541,221 (473,870) Cash flow provided by (used for) working capital Accounts receivable........................... 3,195,634 (5,103,490) 2,159,910 Inventories................................... (2,800,318) 1,419,395 447,254 Prepaid expenses.............................. (225,746) 604,299 (1,504,288) Accounts payable and accrued expenses......... 235,850 4,937,322 (4,376,141) ------------ ------------ ------------ Net cash provided by operating activities..... 36,199,956 34,712,687 22,672,185 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment, net........................................... (18,779,760) (21,460,141) (11,986,974) Acquisition of business, net of cash acquired.... (7,955,077) -0- (14,519,740) Other............................................ (455,917) 2,104,464 313,685 ------------ ------------ ------------ Net cash used for investing activities........ (27,190,754) (19,355,677) (26,193,029) CASH FLOWS FROM FINANCING ACTIVITIES Purchases for treasury........................... (5,176,838) (1,584,765) 0 Proceeds from issuance of common stock........... 880,791 712,314 820,968 Cash dividends paid.............................. (3,529,921) (3,049,642) (2,577,154) Borrowings (repayments) net...................... (485,857) (9,222,130) 6,869,889 ------------ ------------ ------------ Net cash provided by (used for) financing activities.................................. (8,311,825) (13,144,223) 5,113,703 ------------ ------------ ------------ INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS.... 697,377 2,212,787 1,592,859 CASH AND TEMPORARY CASH INVESTMENTS January 1........................................ 5,600,349 3,387,562 1,794,703 ------------ ------------ ------------ CASH AND TEMPORARY CASH INVESTMENTS December 31...................................... $ 6,297,726 $ 5,600,349 $ 3,387,562 ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for Interest...................................... $ 574,062 $ 737,416 $ 874,602 Income taxes.................................. 15,857,230 15,387,482 10,450,330
The accompanying notes are an integral part of these statements. 14 17 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (Company). Significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. TRANSLATION OF FOREIGN CURRENCIES All balance sheet accounts of consolidated foreign subsidiaries are translated at the current exchange rate as of the end of the accounting period and income statement items are translated at an average currency exchange rate. The resulting translation adjustment is recorded as a separate component of shareholders' equity. FINANCIAL INSTRUMENTS Temporary cash investments, all of which have an original maturity of ninety days or less, are considered cash equivalents. Other financial instruments, consisting of trade and notes receivable, and long-term debt, are considered to have a fair value which approximates carrying value at December 31, 1997. INVENTORIES Inventories are stated at the lower of cost or market. For approximately 78 percent of its inventories, the Company uses the last-in, first-out (LIFO) method of determining cost. All other inventories are valued at the first-in, first-out (FIFO) method of determining cost. If the FIFO method of inventory cost valuation had been used exclusively by the Company, inventories would have been $5,207,000, $6,300,000, and $5,173,000 higher than reported at December 31, 1997, 1996 and 1995, respectively. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization on the basis of annual rates expected to amortize the cost of such assets over their estimated useful lives by the straight-line method. REVENUE RECOGNITION The Company recognizes revenue from sales when goods are shipped. INCOME TAXES Deferred income taxes are provided to recognize the timing differences between financial statement and income tax reporting, principally for depreciation and certain valuation allowances. Deferred taxes are not provided on the unremitted earnings of foreign subsidiaries as the Company's intention is to permanently reinvest these earnings in the operations of these subsidiaries. If these earnings would be remitted in future years, the taxes due after considering available foreign tax credits would not be material. EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF COMPANIES ACQUIRED This asset represents the excess of cost over the fair value of net assets of companies acquired and is being amortized on a straight-line basis over periods ranging from 15 to 40 years. Accumulated amortization at 15 18 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED December 31, 1997 and 1996 was $4,335,000 and $3,542,000, respectively. Management, which regularly evaluates its accounting for goodwill, considering primarily such factors as current and historical profitability, along with discounted cash flows, believes that the asset is realizable and the amortization periods are still appropriate. RESEARCH AND DEVELOPMENT Research, engineering, testing and product development costs are charged to current operations as incurred. NET INCOME PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" which eliminates the concept of common stock equivalents and replaces "primary" and "fully diluted" earnings per shares with "basic" and "diluted" earnings per share. Basic net income per share, as shown on the Statements on Consolidated Income, is determined on the basis of the weighted average number of Common Shares outstanding during the year. The restatement of prior periods, as required by FASB 128, did not effect the earnings per share amounts previously reported, and for all periods shown basic and diluted earnings per share are identical. During the years ended December 31, 1997 and December 31, 1995, the Company paid a ten percent stock dividend. All per share data has been adjusted for the stock dividends. ACQUISITIONS On April 25, 1997, the Company acquired substantially all of the assets of Molded Solutions, Inc., a manufacturer of custom engineered molded rubber products. The Asset Purchase Agreement provides for payment of additional consideration contingent upon the earning of Molded Solutions during the 12 month period ending April 25, 1998. The acquisition has been accounted for using the purchase method and accordingly, Molded Solution's results of operations, the amounts of which are not material, have been included in the Company's consolidated financial statements since the date of acquisition. The purchase price allocation has been based on preliminary estimates with the excess of cost over the fair value of assets acquired being amortized on a straight-line basis over 15 years. RETIREMENT PLANS The Company and certain of its subsidiaries have pension and profit sharing plans covering substantially all of their employees. Two plans are defined benefit plans with benefits primarily based upon a fixed amount for each year of service. It is the Company's policy to fund pension costs accrued, which are at least equal to the minimum required contribution as defined by the Employee Retirement Income Security Act of 1974. For the Company's existing defined benefit plans, net periodic pension costs were as follows:
1997 1996 1995 --------- --------- --------- Service cost-benefit earned during the year..... $ 130,062 $ 122,707 $ 92,754 Interest cost on projected benefit obligation... 197,685 187,704 167,255 Return on plan assets........................... (593,354) (252,263) (473,801) Net amortization................................ 380,612 69,795 327,479 --------- --------- --------- Net periodic pension cost....................... $ 115,005 $ 127,943 $ 113,687 ========= ========= =========
Assumptions used for these plans were as follows: discount rate, 7.0%; rate of return on plan assets, 8.0%. Future benefit increases were not considered as there is no substantive commitment to increase benefits. 16 19 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED The following table sets forth the plans' funded status at December 31, 1997 and 1996 (in thousands):
1997 1996 ----------- --------------------------- OVER-FUNDED OVER-FUNDED UNDER-FUNDED PLANS PLANS PLANS ----------- ----------- ------------ Projected benefit obligation Vested benefits........................... $2,968 $1,033 $1,800 Non-vested................................ 90 42 40 ------ ------ ------ Accumulated benefit obligation.............. 3,058 1,075 1,840 Fair value of plan assets................... 3,581 1,188 1,703 ------ ------ ------ Projected benefit obligation in excess of plan assets............................... 523 113 (137) Unrecognized net (gain)..................... (554) 1 (167) Unrecognized net obligation at date of adoption.................................. 215 72 170 ------ ------ ------ Net projected pension (liability) asset..... $ 184 $ 186 ($ 134) ====== ====== ======
A profit sharing plan is maintained for eligible employees, not covered under defined benefit plans, who have met eligibility service requirements. The amount to be contributed by the Company under the profit sharing plan is determined at the discretion of the Board of Directors. During 1997, the Company established a Supplemental Executive Retirement Plan (SERP) which will provide participating senior executives with retirement benefits in addition to amount payable under the profit sharing plan. The SERP is unfunded apart from the general assets of the Company. The aggregate cost of all retirement and profit sharing plans reflected in the accompanying statements of consolidated income is $2,737,000, $2,398,000 and $1,784,000 for the years 1997, 1996 and 1995, respectively. LONG-TERM DEBT AND CREDIT AGREEMENTS Long-term debt at December 31, consisted of the following:
1997 1996 ---------- ---------- Industrial revenue bonds.................................... 4,500,000 4,854,166 Other....................................................... 607,573 234,999 ---------- ---------- 5,107,573 5,089,165 Less current portion........................................ 846,316 519,769 ---------- ---------- $4,261,257 $4,569,396 ========== ==========
The Company has a revolving credit agreement with a group of banks which enables the Company to borrow up to $35,000,000 at prime rate on a variable basis, or on a short-term fixed basis at a rate based upon LIBOR or certificate of deposits at the participating banks. In addition, the Company is required to pay a commitment fee of 1/4 percent per annum on the daily unborrowed portion of the revolving credit commitment or 1/5 percent per annum at any time the unused portion of the aggregate revolving credit commitment is equal to or less than $20 million. The agreement is unsecured and expires on June 30, 2000. The industrial revenue bonds mature at various dates through 2010 with interest rates ranging from 3.88 percent to 4.10 percent. Two industrial revenue bonds are backed by standby letters of credit with an associated fee of 3/4 percent per annum. Other includes notes which mature in various amounts through 1999 and bear a weighted average interest rate of 7.84 percent. The maturities of long-term debt for the five years ending December 31, 2002, are $846,000 in 1998; $261,000 in 1999; and nothing in 2000, 2001 and 2002. The revolving credit agreement and certain of the industrial revenue bond issues contain customary covenants which include, among other things, maintenance of minimum tangible net worth and minimum 17 20 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED working capital, restrictions on certain additional indebtedness and requirements to maintain certain financial ratios. At December 31, 1997, the Company was in compliance with those covenants. LEASES The Company and certain of its subsidiaries are committed under non-cancelable operating leases involving certain facilities and equipment. Aggregate rental expense for all leased assets was $2,664,000, $2,361,000, and $2,306,000 for the years ended December 31, 1997, 1996 and 1995, respectively. Future minimum rental commitments for the next five years are as follows:
YEAR ENDED DECEMBER 31, COMMITMENT - ----------------------- ---------- 1998 $2,464,000 1999 2,066,000 2000 1,470,000 2001 953,000 2002 421,000
INCOME TAXES The effective tax rate was 41.3% in 1997, 41.0% in 1996 and 41.0% in 1995. A reconciliation of the Federal statutory income tax rate to the Company's effective tax rate is as follows:
PERCENT OF PRE-TAX INCOME --------------------------- 1997 1996 1995 ---- ---- ---- Statutory Federal income tax rate.......................... 35.0% 35.0% 35.0% State income taxes -- net of Federal tax benefit........... 4.8 5.0 4.6 Effect of non-deductible depreciation and amortization..... .5 .6 .7 Other...................................................... 1.0 .4 .7 ---- ---- ---- Effective tax rate for the year............................ 41.3% 41.0% 41.0% ==== ==== ====
Income taxes consisted of the following:
1997 1996 1995 ------------------ ------------------ ------------------ CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED ------- -------- ------- -------- ------- -------- (DOLLARS IN THOUSANDS) Federal...................... $12,427 $242 $11,258 399 $ 9,133 $(326) Foreign...................... 255 (22) 224 1 361 2 State and local.............. 2,835 (10) 2,589 141 2,066 (149) ------- ---- ------- ---- ------- ----- $15,517 $210 $14,071 $541 $11,560 $(473) ======= ==== ======= ==== ======= =====
18 21 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED INCOME TAXES Significant components of the Company's deferred tax liabilities as of December 31, 1997 and 1996 are as follows:
1997 1996 --------- --------- (DOLLARS IN THOUSANDS) ----------------------- Deferred income tax liabilities: Property, plant and equipment............................. $8,967 $8,450 Employee benefit trust.................................... 323 170 ------ ------ 9,290 8,620 ------ ------ Deferred income tax assets: Compensation.............................................. 2,170 1,575 Inventory valuation....................................... 607 648 Allowance for uncollectible accounts...................... 702 696 Non-deductible accruals................................... 2,170 2,243 Other..................................................... 145 204 ------ ------ 5,794 5,366 ------ ------ Net deferred income tax liability........................... $3,496 $3,254 ====== ======
STOCK OPTIONS In 1997, the Company adopted the 1997 Stock Option Plan allowing key employees to purchase Common Stock of the Company at the market price on the date of grant. The plan provides that stock options expire five years from date of grant and are exercisable up to 20 percent of the shares granted each year. The activity listed below covers both the 1997 Stock Option Plan and the 1992 Incentive Stock Option Plan. Stock options granted during the past three years were as follows: during 1997, 149,545 shares at prices from $14.55 to $16.50; during 1996, 88,165 shares at prices from $16.14 to $17.77; during 1995, 27,750 shares at prices from $11.87 to $13.52. Stock options exercised during the past three years were as follows: during 1997, 35,852 shares at prices from $10.80 to $16.14; during 1996, 27,944 shares at prices from $7.03 to $13.46; during 1995, 42,979 shares at prices from $6.57 to $13.46. At December 31, 1997, 1996 and 1995 there were outstanding options for the purchase of 367,449, 260,402 and 204,381 shares respectively, at prices ranging from $11.77 to $17.77 per shares in 1997; $10.80 to $17.77 per share in 1996 and $7.03 to $15.95 in 1995. At December 31, 1997 and 1996, there were options for 142,741 and 136,214 shares, respectively that were exercisable. The Company accounts for stock options under APB Opinion No. 25 and, therefore, does not recognize employee compensation for options granted using the fair value method set forth in FASB Statement No. 123 "Accounting for Stock Based Compensation." If the Company had followed FASB 123 rather than APB 25, net income and earnings per share would not have been materially different from the reported amounts for 1997, 1996 or 1995. INDUSTRY SEGMENTS The Company operates principally in two areas of business, the first being the distribution of aftermarket repair products and services. These products are distributed both domestically through branches in major cities in the United States and in foreign countries where, in some cases, the Company has controlling interest in companies located in those countries. The second major area of the Company's business is polymer and 19 22 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED metal products which are manufactured in Company-owned facilities and distributed through mass merchandisers, warehouse distributors, sales representatives and in-house salesmen, principally in the United States. No single customer represents 10 percent or more of total Company revenues. In addition, foreign countries and operations, individually and in the aggregate, do not represent more than 10 percent of the total sales, income or assets of the Company. Operating income before income taxes is total revenues less total operating expenses. In computing operating income for the major segments of the Company, general corporate overhead expense and interest expense are not included. The identifiable assets of each major segment of the Company include inventories, accounts receivable, net fixed assets, the excess of cost over fair value of net assets acquired, patents, and other intangible assets attributable to each segment. Corporate assets are principally land, buildings, computer equipment, cash and temporary cash investments. The table sets forth information relating to the Company's operations for the years ended December 31, 1997, 1996 and 1995, as required by the Statement of Financial Accounting Standards No. 14.
1997 1996 1995 ---- ---- ---- (DOLLARS IN THOUSANDS) NET SALES Distribution of aftermarket repair products and services............................................. $147,543 $136,526 $126,902 Manufacturing of polymer and metal products............. 204,970 197,319 186,307 Intra-segment elimination............................... (12,887) (12,901) (12,510) -------- -------- -------- $339,626 $320,944 $300,699 ======== ======== ======== INCOME BEFORE INCOME TAXES Distribution of aftermarket repair products and services............................................. $ 14,504 $ 12,209 $ 11,793 Manufacturing of polymer and metal products............. 30,040 29,021 23,145 Corporate............................................... (6,230) (5,330) (7,098) Interest expense-net.................................... (248) (285) (784) -------- -------- -------- $ 38,066 $ 35,615 $ 27,056 ======== ======== ======== IDENTIFIABLE ASSETS Distribution of aftermarket repair products and services............................................. $ 53,604 $ 49,605 $ 48,416 Manufacturing of polymer and metal products............. 163,130 148,708 140,291 Corporate............................................... 8,703 9,981 5,622 Intra-segment elimination............................... (1,359) (1,172) (725) -------- -------- -------- $224,078 $207,122 $193,604 ======== ======== ======== CAPITAL ADDITIONS, NET Distribution of aftermarket repair products and services............................................. $ 603 $ 426 $ 227 Manufacturing of polymer and metal products............. 16,015 20,433 10,722 Corporate............................................... 2,162 601 1,038 -------- -------- -------- $ 18,780 $ 21,460 $ 11,987 ======== ======== ======== DEPRECIATION/AMORTIZATION Distribution of aftermarket repair products and services............................................. $ 546 $ 598 $ 689 Manufacturing of polymer and metal products............. 10,847 9,352 8,747 Corporate............................................... 275 280 283 -------- -------- -------- $ 11,668 $ 10,230 $ 9,719 ======== ======== ========
20 23 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN CONTENTS Report of Independent Public Accountants for the Myers Industries, Inc. Employee Stock Purchase Plan Financial Statements for the Myers Industries, Inc. Employee Stock Purchase Plan: (1) Statements of Assets Available for Plan Benefits as of December 31, 1997 and 1996; and (2) Statements of Changes in Assets Available for Plan Benefits for the Years Ended December 31, 1997, 1996 and 1995. Notes to Financial Statements for the Myers Industries, Inc. Employee Stock Purchase Plan 21 24 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Myers Industries, Inc. Employee Stock Purchase Plan Administrator: We have audited the accompanying statements of assets available for plan benefits of the Myers Industries, Inc. Employee Stock Purchase Plan as of December 31, 1997 and 1996, and the related statements of changes in assets available for plan benefits for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Myers Industries, Inc. Employee Stock Purchase Plan as of December 31, 1997 and 1996, and the changes in its assets available for plan benefits for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP /s/ Arthur Andersen LLP Cleveland, Ohio, February 9, 1998 22 25 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 1997 AND 1996
1997 1996 ---- ---- Receivable from Trustee..................................... $84,839 $84,687 ======= ======= (Myers Industries, Inc.)
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ---- ---- ---- Contributions: Participants' contributions beginning of period......... $ 84,687 $ 77,531 $ 82,563 Participants' contributions during the period........... 341,806 322,503 305,000 --------- --------- --------- Assets Available for Stock Purchases.................... 426,493 400,034 387,563 Less: Assets Used for Stock Purchases......................... (341,654) (315,347) (310,032) --------- --------- --------- Assets Available for Plan Benefits at End of Period..... $ 84,839 $ 84,687 $ 77,531 ========= ========= =========
See the accompanying notes to financial statements. 23 26 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 1. DESCRIPTION OF PLAN The following description of the Myers Industries, Inc. Employee Stock Purchase Plan ("Stock Plan") provides only general information. Participants should refer to the Plan Agreement and Prospectus for the Stock Plan for a more complete description of the Plan's provisions. (a) GENERAL. The shareholders of the Company approved the adoption of a nonqualified Employee Stock Purchase Plan at the April 28, 1986 Annual Meeting. The Stock Plan is designed to encourage, facilitate and provide employees with an opportunity to share in the favorable performance of the Company through ownership of the Company's Common Stock. The total number of shares of the Common Stock which may be sold under the Stock Plan is currently limited to 188,176 shares. (b) PURPOSE. The purpose of the Stock Plan is to provide employees (including officers) of the Company and its subsidiaries with an opportunity to purchase Common Stock through payroll deductions. (c) ADMINISTRATION. The Stock Plan is administered by a committee appointed by the Board of Directors. All questions of interpretation or application of the Stock Plan are determined by the Board of Directors (or its appointed committee) and its decisions are final, conclusive and binding upon all participants. (d) ELIGIBILITY AND PARTICIPATION. Any permanent employee (including an officer) who has been employed for at least one calendar year by the Company, or its subsidiaries who have adopted the Stock Plan, is eligible to participate in the Stock Plan, provided that such employee is employed by the Company on the date his participation is effective and subject to limitations on stock ownership described in the Stock Plan. Eligible employees become participants in the Stock Plan by delivering to the Company a subscription agreement authorizing payroll deductions prior to the commencement of the applicable offering period. (e) OFFERING DATES. The Stock Plan is generally implemented by one offering during each calendar quarter. Offering periods commence on the last day of each calendar quarter. The Board of Directors has the power to alter the duration of the offering periods without shareholder approval. (f) PURCHASE PRICE. The price at which shares may be purchased in an offering under the Stock Plan is 90% of the fair market value of the Common Stock on the last day of the prior calendar quarter. The fair market value of the Common Stock on a given date is the closing price for that date as listed on the American Stock Exchange. (g) PAYROLL DEDUCTIONS. The purchase price of the shares to be acquired under the Stock Plan will be accumulated by payroll deductions over the offering period. The rate of deductions may not be less than five dollars ($5.00) per week or exceed 10% of a participant's compensation, and the aggregate of all payroll deductions during the offering may not exceed 10% of the participant's aggregate compensation for the offering period. A participant may discontinue his participation in the Stock Plan or may decrease or increase the rate of payroll deductions at any time during the offering period by filing with the Company a new authorization for payroll deductions. All payroll deductions made for a participant are credited to their account under the Stock Plan and are deposited with the general funds of the Company to be used for any corporate purpose. The amount by which an employee's payroll deductions exceed the amount required to purchase whole shares will be placed in a suspense account for the employee with no interest thereon and rolled over into the next offering period. (h) WITHDRAWAL. A participant in the Stock Plan may terminate his interest in a given offering in whole, but not in part, by giving written notice to the Company of his election to withdraw at any time prior to the end of the applicable offering period. Such withdrawal automatically terminates the participant's interest in that offering, but does not have any effect upon such participant's eligibility to participate in subsequent offerings under the Stock Plan. 24 27 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) (i) TERMINATION OF EMPLOYMENT. Termination of a participant's employment for any reason, including retirement or death, cancels his or her participation in the Stock Plan immediately. (j) NONASSIGNABILITY. No rights or accumulated payroll deductions of an employee under the Stock Plan may be pledged, assigned, transferred or otherwise disposed of in any way for any reason, other than on account of death. Any attempt to do so may be treated by the Company as an election to withdraw from the Stock Plan. (k) AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may at any time amend or terminate the Stock Plan. Except as provided above, no amendment may be made to the Stock Plan without prior approval of the shareholders if such amendment would increase the number of shares reserved under the Stock Plan, permit payroll deductions at a rate in excess of 10% of a participant's compensation, materially modify the eligibility requirements or materially increase the benefits which may accrue to participants under the Stock Plan. (l) TAXATION. Participants in the Stock Plan, which is nonqualified for federal income tax purposes, are taxed currently on the 10% discount in the purchase price granted by the Stock Plan in the year in which stock is purchased. The 10% discount is treated as ordinary income to the participant and that amount is currently deductible by the Company to the extent the participant's total compensation from the Company is within the "reasonable compensation" limits imposed by Section 162 of the Internal Revenue Code of 1986, as amended. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) BASIS OF PRESENTATION. The accompanying statements of assets available for plan benefits and statements of changes in assets available for plan benefits are prepared on the accrual basis of accounting. (b) ADMINISTRATIVE EXPENSES. Administrative costs and expenses are absorbed by the Trustee. 25 28 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT For information about the directors of the Registrant, see "Election of Directors" on pages 3 through 6 of Registrant's Proxy Statement dated March 20, 1998 ("Proxy Statement"), which is incorporated herein by reference. Information about the Executive Officers of Registrant appears in Part I of this Report. Disclosures by the Registrant with respect to compliance with Section 16(a) appear on page 7 of the Proxy Statement, and are incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION See "Executive Compensation and Other Information" on pages 8 through 12 of the Proxy Statement, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT See "Principal Shareholders" and "Election of Directors" on page 15, and pages 3 through 6, respectively, of the Proxy Statement, which are incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See "Certain Relationships and Related Transactions" at page 7 of the Proxy Statement, which is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K The following consolidated financial statements of the Registrant appear in Part II of this Report: 14. (A)(1) FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS OF MYERS INDUSTRIES, INC. AND SUBSIDIARIES Report of Independent Public Accountants Statements of Consolidated Financial Position As Of December 31, 1997 and 1996 Statements of Consolidated Income For The Years Ended December 31, 1997, 1996 and 1995 Statements of Consolidated Shareholders' Equity For The Years Ended December 31, 1997, 1996 and 1995 Statements of Consolidated Cash Flows For The Years Ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements For The Years Ended December 31, 1997, 1996 and 1995 FINANCIAL STATEMENTS FOR THE MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Assets Available for Plan Benefits As Of December 31, 1997 and 1996 Statements of Changes in Assets Available for Plan Benefits For The Years Ended December 31, 1997, 1996 and 1995 14. (A)(2) FINANCIAL STATEMENT SCHEDULES Selected Quarterly Financial Data For The Years Ended December 31, 1997 and 1996 All other schedules are omitted because they are inapplicable, not required, or because the information is included in the consolidated financial statements or notes thereto which appear in Part II of this Report. 26 29 14. (A)(3) EXHIBITS 3(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED ARTICLES OF INCORPORATION. Reference is made to Exhibit (3)(i) to Form 8-K filed with the Commission on May 14, 1994. 3(b) MYERS INDUSTRIES, INC. AMENDED AND RESTATED CODE OF REGULATIONS. Reference is made to Exhibit (3)(ii) to Form 10-Q filed with the Commission on May 14, 1997. MYERS INDUSTRIES, INC. AMENDED AND RESTATED 1982 INCENTIVE 10(a) STOCK OPTION PLAN. Reference is made to Exhibit 10(a) to Form 10-K filed with the Commission on March 24, 1995. MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE 10(b) PLAN. Reference is made to Exhibit 10(b) to Form 10-K filed with the Commission on March 24, 1995. FORM OF INDEMNIFICATION AGREEMENT FOR DIRECTORS AND 10(c) OFFICERS. Reference is made to Exhibit 10(c) to Form 10-K filed with the Commission on March 24, 1995. MYERS INDUSTRIES, INC. 1992 STOCK OPTION PLAN. Reference is 10(d) made to Exhibit 10(d) to Form 10-K filed with the Commission on March 24, 1995. MYERS INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK 10(e) PURCHASE PLAN. Reference is made to Exhibit 10(e) to Form 10-K filed with the Commission on March 24, 1995. 10(f) MYERS INDUSTRIES, INC. 1997 INCENTIVE STOCK PLAN. Reference is made to Exhibit 10(f) to Form 10-K filed with the Commission on March 21, 1997. MILTON I. WISKIND SUPPLEMENTAL COMPENSATION 10(g) AGREEMENT. Reference is made to Exhibit 10 to Form 10-Q filed with the Commission on May 14, 1997. MYERS INDUSTRIES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT 10(h) PLAN. 21 Subsidiaries of the Registrant 23 Consent of Independent Public Accountants 27 Financial Data Schedule
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
PLAN OR ARRANGEMENT REFERENCE LOCATION ------------------- ------------------ Myers Industries, Inc. Amended and Exhibit (10)(a) to Form 10-K Restated 1982 Incentive Stock Option Plan for fiscal year ended December 31, 1994 Myers Industries, Inc. 1992 Exhibit 10(d) to Form 10-K Stock Option Plan for fiscal year ended December 31, 1994 Myers Industries, Inc. 1997 Exhibit 10(f) to Form 10-K Incentive Stock Plan for fiscal year ended December 31, 1996 Milton I. Wiskind Supplemental Compensation Exhibit 10 to Form 10-Q Agreement for period ended March 31, 1997 Myers Industries Inc. Executive Supplemental Exhibit 10(h) to Form 10-K Retirement Plan for fiscal year ended December 31, 1997
14.(B) REPORTS ON FORM 8-K: None 14.(C) EXHIBITS: See subparagraph 14(A)(3) above. 27 30 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. MYERS INDUSTRIES, INC. Dated: March 25, 1998 /s/ GREGORY J. STODNICK By: ---------------------------------------------------- GREGORY J. STODNICK Vice President -- Finance and Chief Financial Officer
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 dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ GREGORY J. STODNICK Vice President -- Finance and March 25, 1998 - --------------------------------------------------- Chief Financial Officer GREGORY J. STODNICK (Principal Financial and Accounting Officer) Director - --------------------------------------------------- KEITH A. BROWN /s/ KARL S. HAY Director March 25, 1998 - --------------------------------------------------- KARL S. HAY Director - --------------------------------------------------- RICHARD P. JOHNSTON /s/ STEPHEN E. MYERS President, Chief Executive - --------------------------------------------------- Officer and Director (Principal STEPHEN E. MYERS Executive Officer) /s/ RICHARD L. OSBORNE Director March 25, 1998 - --------------------------------------------------- RICHARD L. OSBORNE /s/ JON H. OUTCALT Director March 25, 1998 - --------------------------------------------------- JON H. OUTCALT /s/ SAMUEL SALEM Director March 25, 1998 - --------------------------------------------------- SAMUEL SALEM Director - --------------------------------------------------- EDWIN P. SCHRANK /s/ MILTON I. WISKIND Senior Vice President, Secretary March 25, 1998 - --------------------------------------------------- and Director MILTON I. WISKIND
28 31 INDEX OF EXHIBITS
EXHIBIT NO. - ----------- 3(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED ARTICLES OF INCORPORATION. Reference is made to Exhibit (3)(i) to Form 8-K filed with the Commission on May 14, 1994. (b) MYERS INDUSTRIES, INC. AMENDED AND RESTATED CODE OF REGULATIONS. Reference is made to Exhibit (3)(ii) to Form 10-Q filed with the Commission on May 14, 1997. 10(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED 1982 INCENTIVE STOCK OPTION PLAN. Reference is made to Exhibit 10(a) to Form 10-K filed with the Commission on March 24, 1995. (b) MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN. Reference is made to Exhibit 10(b) to Form 10-K filed with the Commission on March 24, 1995. (c) FORM OF INDEMNIFICATION AGREEMENT FOR DIRECTORS AND OFFICERS. Reference is made to Exhibit 10(c) to Form 10-K filed with the Commission on March 24, 1995. (d) MYERS INDUSTRIES, INC. 1992 STOCK OPTION PLAN. Reference is made to Exhibit 10(d) to Form 10-K filed with the Commission on March 24, 1995. (e) MYERS INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN. Reference is made to Exhibit 10(e) to Form 10-K filed with the Commission on March 24, 1995. (f) MYERS INDUSTRIES, INC. 1997 INCENTIVE STOCK PLAN. Reference is made to Exhibit 10(f) to Form 10-K filed with the Commission on March 21, 1997. (g) MILTON I. WISKIND SUPPLEMENTAL COMPENSATION AGREEMENT. Reference is made to Exhibit 10 to Form 10-Q filed with the Commission on May 14, 1997. (h) MYERS INDUSTRIES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN. 21 Subsidiaries of the Registrant 23 Consent of Independent Public Accountants 27 Financial Data Schedule
29 EX-10.H 2 EXHIBIT 10(H) 1 Exhibit 10(h) MYERS INDUSTRIES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN Myers Industries, Inc, a corporation organized under the laws of the state of Ohio, hereby adopts the following plan in order to provide supplemental retirement benefits for its President, Chief Executive Officer and such other management employees who may, in the future, be selected by the Board of Directors for participation in the Plan. ARTICLE I TITLE AND EFFECTIVE DATE ------------------------ SECTION 1.1 This Plan shall be known as the Myers Industries, Inc. Executive Supplemental Retirement Plan. SECTION 1.2 The effective date of the Plan is January 1, 1997. ARTICLE II DEFINITIONS ----------- As used herein, the following words and phrases shall have the meanings specified below unless a different meaning is clearly required by the context: SECTION 2.1 The terms "Actuarial Equivalent" or "Actuarially Determined" shall mean a benefit of equivalent value when computed using an interest rate of eight percent (8%) per annum and the UP-1984 Table of Pensioner Mortality. SECTION 2.2 The term "Attained Age" shall mean the age of a Participant as of his last birthday. SECTION 2.3 The term "Beneficiary" shall mean any person, persons, trust, or the estate of a Participant who or which is designated by the Participant to receive any Death Benefits payable under this Plan. SECTION 2.4 The term "Benefit Amount" shall mean an amount determined according to the following: (a) in the case of a Participant, who is an officer of the Employer, the lesser of (i) One Thousand Six Hundred Sixty-Six and 67/100 Dollars ($1,666.67) multiplied by the Participant's Years of Service or (ii) $50,000; and (b) in the case of each other Participant, the lesser of (i) One Thousand 2 and no/100 Dollars ($1,000.00) multiplied by the Participant's Years of Service or (ii) $30,000. Notwithstanding the foregoing, the Committee may, at any time and from time to time, in its sole discretion, revise the Benefit Amount assigned to any Participant provided, however, that a Participant's Benefit Amount may not be reduced without his written consent. SECTION 2.5 The term "Board of Directors" shall mean the Board of Directors of Myers Industries, Inc. SECTION 2.6 The term "Cause" means termination of employment upon the occurrence of one or more of the following acts of the Participant: (a) Felonious criminal activity whether or not affecting the Employer; (b) Dishonesty or breach of any contract with, or violation of any legal obligation to, the Employer; (c) Disclosure to unauthorized person of Employer information which is believed by the Board of Directors to be confidential; or (d) Gross negligence or insubordination in the performance of the duties assigned to the Participant. SECTION 2.7 The term "Change in Control" means a change in control of a nature that would be required to be reported by persons or entities subject to the reporting requirements of Section 14(a) of the Securities Exchange Act of 1934 in response to item 5(f) of Schedule 14A of Regulation 14(A) as in effect on the date hereof, or successor provisions thereto, provided that, without limitation, such a change in control shall be deemed to have occurred if (a) any unaffiliated "person," "entity," or "group" (as defined in Rule 13(d)-3 issued under the Securities Exchange Act of 1934) directly or indirectly becomes the owner of securities of the Employer representing 30% or more of the combined voting power of the Employer's then outstanding securities or (b) the Employer merges or consolidates with another entity where the Employer is not the surviving entity; (c) the Employer sells or transfers all or substantially all of its assets to a third party or entity that is not controlled by the Employer; or (d) at any time during any period of two consecutive calendar years, individuals, who at the beginning of such period constitute the Board of Directors, cease, for any reason, to constitute at least a majority of the Board of Directors, unless the election, or the nomination for election, by the Employer's shareholders of each new director was approved by the vote of at least two-thirds of the directors who were directors still in office who were directors of the Employer at the beginning of such two-year period. SECTION 2.8 The term "Committee" shall mean the Compensation Committee of the Board of Directors. 2 3 SECTION 2.9 The term "Death Benefit" shall mean any benefit paid to a Beneficiary upon the death of a Participant as provided under Article VI of this Plan. SECTION 2.10 A Participant shall be "Disabled" if he is eligible for disability benefits under the terms of the Employer's Group Long-Term Disability Plan in effect from time to time. SECTION 2.11 The term "Early Retirement Date" shall mean the date of a Participant's retirement during the period commencing on the first day of the month coincident with or immediately following the date as of which the Participant has attained age fifty-five (55) and has earned ten (10) Years of Service. SECTION 2.12 The term "Effective Date" shall mean January 1, 1997. SECTION 2.13 The term "Employer" shall mean Myers Industries, Inc., its successors, any subsidiary or affiliated organizations authorized by the Board of Directors or the Committee to participate in this Plan with respect to their employees, and any organization into which or with which the Employer may merge or consolidate or to which all or substantially all of its assets may be transferred. SECTION 2.14 The term "Good Reason" means voluntary termination of employment by a Participant, other than as a result of retirement, based upon the occurrence of any of the following: (a) Involuntary reduction in the Participant's base salary, as in effect immediately prior to a Change in Control, unless such reduction occurs simultaneously with an Employer-wide reduction in officers' salaries; (b) Significant reduction in the Participant's responsibilities and status within the Employer's organization or change in the Employee's title or office, without the prior written consent of the Employee; (c) Involuntary discontinuance of the Participant's participation in any employee benefit plans maintained by the Employer, unless such plans are discontinued by reason of law or loss of tax deductibility to the Employer with respect to contributions to such plans, or are discontinued as a matter of the Employer's policy applied equally to all participants in such plans; (d) Involuntary assignment to a place of business or office located more than 150 miles from the Participant's place of business or office at the time that the Change in Control occurs; or (e) Failure to obtain an assumption of the Employer's obligations under this Plan by any successor of the Employer following a Change in Control, 3 4 regardless of whether such entity becomes a successor to the Employer as a result of a merger, consolidation, sale of the assets of the Employer, or other form of reorganization. SECTION 2.15 The term "Participant" shall mean an employee of the Employer who is part of a select group of management and has become a Participant as provided in Article III hereof. SECTION 2.16 The term "Normal Retirement Date" shall mean the first day of the month coinciding with or immediately following the Participant's sixty-fifty (65) birthday. SECTION 2.17 The term "Plan" shall mean the Myers Industries, Inc. Executive Supplemental Retirement Plan. SECTION 2.18 The term "Plan Year" shall mean the calendar year. SECTION 2.19 The term "Retired Participant" shall mean any Participant in the Plan who has qualified for retirement and has retired and who is eligible to receive a Supplemental Pension by direction of the Committee. SECTION 2.20 The term "Retirement Date" shall mean the first day of the month coinciding with or immediately following the month in which the Participant terminates employment due to retirement. SECTION 2.21 The term "Supplemental Pension" shall mean a Supplemental Normal Retirement Pension payable under Section 4.1, a Supplemental Early Retirement Pension payable under Section 4.2, a Supplemental Late Retirement Pension payable under Section 4.3, or a Supplemental Vested Pension payable under Section 4.4. SECTION 2.22 A "Year of Service" shall mean a Plan Year commencing with the calendar year beginning on the Effective Date provided that the Participant is continuously employed by the Employer as a full-time employee throughout such Plan Year and that the Committee determines, in its sole discretion, to award a Year of Service to the Participant with respect to such Plan Year. If a Participant terminates employment with the Employer and is subsequently re-employed by the Employer he shall forfeit all Years of Service earned under this Plan prior to the termination of his employment. Notwithstanding the foregoing, the Committee, in its sole discretion, may credit a Participant with Years of Service with respect to any Plan Year prior to the Effective Date. Further, upon the occurrence of a Change in Control, the Committee may award such additional Years of Service to any or all Participants as the Committee may determine in its sole discretion. 4 5 ARTICLE III PARTICIPATION IN THE PLAN ------------------------- SECTION 3.1 Eligibility for participation in this Plan shall be determined by the Board of Directors, in its sole discretion, on an individual basis; provided, however, that no employee shall be eligible to participate in this Plan unless he is a "highly compensated employee" or is part of a "select group of management" as those terms are defined in Department of Labor Regulation Section 2520.104-23. ARTICLE IV MONTHLY SUPPLEMENTAL PENSIONS ----------------------------- SECTION 4.1 SUPPLEMENTAL NORMAL RETIREMENT PENSION. Subject to the provisions of Article XI, a Participant who retires on or after his Normal Retirement Date shall be entitled to receive a monthly Supplemental Normal Retirement Pension equal to one-twelfth (1/12th) of the Benefit Amount assigned to him by the Committee. SECTION 4.2 SUPPLEMENTAL EARLY RETIREMENT PENSION. Subject to the provisions of Article XI, a Participant who retires on or after his Early Retirement Date, shall be entitled to receive a monthly Supplemental Early Retirement Pension equal to one-twelfth (1/12th) of the Benefit Amount assigned to him by the Committee multiplied by the percentage determined from the following table based upon the Participant's Attained Age as of his Retirement Date:
SUPPLEMENTAL EARLY RETIREMENT PENSION ATTAINED AGE AS A PERCENT OF AT RETIREMENT BASIC BENEFIT 55 50% 56 55% 57 60% 58 65% 59 70% 60 75% 61 80% 62 85% 63 90% 64 95%
5 6 SECTION 4.3 SUPPLEMENTAL LATE RETIREMENT PENSION. If a Participant remains in the employ of the Employer subsequent to his Normal Retirement Date, no Supplemental Normal Retirement Pension shall be paid until his actual Retirement Date. At that time, subject to the provisions of Article XI, the Participant shall be entitled to receive a Supplemental Late Retirement Pension equal to one-twelfth (1/12th) of the Basic Benefit assigned to him by the Committee. SECTION 4.4 SUPPLEMENTAL VESTED PENSION. Subject to the provisions of Article XI, if, prior to the Participant's Normal or Early Retirement Dates, the Participant's employment with the Employer is terminated (a) by the Employer without Cause, or (b) by the Employee for Good Reason and within one (1) year after the occurrence of a Change in Control, the Participant shall be entitled to receive a Supplemental Vested Pension equal to one-twelfth (1/12th) of his Basic Benefit multiplied by the percentage determined from the following table based upon his Years of Service as of the date of termination of his employment:
YEARS OF SERVICE PERCENTAGE Less than one 0% One 10% Two 20% Three 30% Four 40% Five 50% Six 60% Seven 70% Eight 80% Nine 90% Ten or more 100%
Such Supplemental Vested Pension shall be paid commencing on the Participant's Normal Retirement Date. Notwithstanding the foregoing, the Participant may elect to receive his Supplemental Vested Pension commencing on or after his fifty-fifth (55th) birthday provided, however, that his Supplemental Vested Pension shall be further reduced by multiplying the amount that would otherwise be payable to him on his Normal Retirement Date under this Section 4.4 by the percentage determined from the table set forth in Section 4.2 based upon his Attained Age as of the date that his Supplemental Vested Pension commences. 4.5 A Participant shall not be entitled to receive any Supplemental Pension under this Plan if (a) the Participant terminates his employment with the Employer prior to the date that he is eligible to elect Early Retirement, unless the Participant terminates his employment for Good Reason within one (1) year after the occurrence of a Change in Control, or (b) the Employer terminates the Participant's employment with Cause. 6 7 ARTICLE V PAYMENT OF PENSIONS ------------------- SECTION 5.1 A Participant's Supplemental Pension shall be paid monthly commencing on the Participant's Retirement Date and continuing on the same day of each month thereafter until such time as the Participant has received one hundred and twenty (120) monthly payments. Alternatively, the Participant may elect to have his Supplemental Pension paid in any form that is the Actuarial Equivalent of the normal form of payment prescribed in the preceding sentence provided that such election is expressly approved in writing by the Committee. If the Committee shall not approve such election in writing, then the form of payment of the Participant's Supplemental Pension under this Plan shall be the normal form set forth in the first sentence of this Section 5.1. ARTICLE VI DEATH BENEFIT ------------- SECTION 6.1 If a Retired Participant dies before he has received 120 monthly pension payments, his Beneficiary shall continue to receive the same Supplemental Pension that was paid to the Retired Participant immediately prior to his death until such time as the Retired Participant and his Beneficiary have received a total of 120 monthly pension payments. SECTION 6.2 If a Participant dies prior to his Retirement Date, the Participant's Beneficiary shall be entitled to receive a Death Benefit equal to one hundred percent (100%) of the Supplemental Pension that the Participant would have been eligible to receive if he had retired on the day before his death. Such Death Benefit shall be calculated under Section 4.1, if the Participant's death occurs on or after his Normal Retirement Date, and under Section 4.2, if the Participant's death occurs on or after the date that the Participant would be eligible to elect Early Retirement but prior to his Normal Retirement Date. If the Participant's death occurs prior to his attainment of age 55, the death benefit provided under this Section 6.2 shall be determined under Section 4.4 as if the Participant had attained age 55 on the day before his death and had elected to begin receiving a Supplemental Vested Pension as of such date. Such death benefit shall be paid to the Participant's Beneficiary in accordance with the provisions of Section 5.1, except that it shall commence on the first day of the second month following the month in which the Participant's death occurs. 7 8 ARTICLE VII DISABILITY ---------- SECTION 7.1 Subject to the provisions of Article XI, if a Participant is determined to be Disabled prior to his Normal Retirement Date, the Participant shall be entitled to receive a Supplemental Normal Retirement Pension calculated pursuant to Section 4.1 commencing on the first to occur of (a) the Participant's sixty-fifth birthday, or (b) the date upon which the Participant ceases to receive any disability benefits under the Employer's Group Long-Term Disability Plan (other than as the result of the cessation of the Participant's disability). Such Supplemental Normal Retirement Pension shall be paid to the Participant in accordance with the provisions of Section 5.1. ARTICLE VIII PLAN ADMINISTRATION ------------------- SECTION 8.1 The Committee shall administer the Plan and keep records of individual Participant benefits. SECTION 8.2 The Committee shall have the authority to interpret the Plan, to adopt and review rules relating to the Plan and to make any other determinations required for the administration of the Plan. SECTION 8.3 Subject to the terms of the Plan, the Committee shall have exclusive jurisdiction (a) to determine the form and method of any benefit payments, (b) to establish the timing of benefit distributions, and (c) to settle claims according to the provisions in Article IX. ARTICLE IX NAMED FIDUCIARY AND CLAIMS PROCEDURE ------------------------------------ SECTION 9.1 (a) The Named Fiduciary of the Plan is the Chief Financial Officer of Myers Industries, Inc. (b) The Board of Directors shall have the right to change the Named Fiduciary at any time and from time to time. The Employer shall give the Participants written notice of any change of the Named Fiduciary or any change in the address of the Named Fiduciary. SECTION 9.2 Benefits shall be paid in accordance with the provisions of this Plan. The Participant, or his Beneficiary or contingent Beneficiary (hereinafter collectively referred to as the "Claimant") shall make a written request for the benefits provided under this Plan. Such written claim shall be mailed or delivered to the Named Fiduciary by registered mail. SECTION 9.3 If the claim is denied, either wholly or partially, notice of the decision shall be sent by registered mail to the Claimant within a 8 9 reasonable time period. Such time period shall not exceed ninety (90) days after the receipt of the claim by the Named Fiduciary. ARTICLE X MISCELLANEOUS ------------- SECTION 10.1 Nothing contained in this Plan shall be deemed to give any Participant or employee the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any Participant or employee at any time, regardless of the effect which such discharge shall have upon him as a Participant of the Plan. SECTION 10.2 The rights of the Participant, the Beneficiary of the Participant, or any other person claiming through the Participant under this Plan, shall be solely those of an unsecured general creditor of the Employer. The Employer is not obligated to separately fund the benefits to be provided by this Plan and such benefits shall be paid out of the operating funds of the Employer as such benefits become due. The Employer may, in its sole discretion, establish a grantor or "rabbi trust" for the purpose of segregating a portion of its operating funds in order to pay the benefits provided under this Plan or purchase life insurance on the lives of Participants in order to insure the payment of the Death Benefits provided hereunder. SECTION 10.3 The Plan does not involve a reduction in salary for the Participant or the foregoing of an increase in future salary by the Participant. SECTION 10.4 A Retired Participant shall not be considered an employee for any purpose under the law. SECTION 10.5 If no Beneficiary has been designated or survives a Participant, any amounts to be paid to the Participant's Beneficiary shall be paid to the Participant's estate. SECTION 10.6 Except insofar as this provision may be contrary to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization, or attachment of any benefits under this Plan shall be valid or recognized by the Committee. SECTION 10.7 The Employer reserves the right at any time and from time to time, by action its Board of Directors, to terminate, modify or amend, in whole or in part, any or all of the provisions of the Plan, including specifically the right to make any such amendments effective retroactively; provided that no such action shall reduce the benefits or rights of any Participant or his Beneficiary accrued prior to the date of any such amendment, modification or termination. In addition, the Employer may amend or modify any provision of this Plan as to any particular Participant by agreement with such Participant, provided that such agreement is in writing, is executed by both the Employer and the Participant, and is filed with the Plan records. The provisions of any amendment or modification made by agreement between a Participant and the Employer shall apply only to the Participant so agreeing and no other. SECTION 10.8 A Participant shall have the right to change his Beneficiary by notifying the Committee of such in writing. Such change shall 9 10 become effective upon written acknowledgment of same by the Committee. Any payments made by the Employer to a Beneficiary in good faith and under the terms of the Plan shall fully discharge the Employer from all further obligations with respect to such Beneficiary. SECTION 10.9 This Plan shall be binding upon and inure to the benefit of the Employer, its successors and assigns and each Participant and his heirs, executors, administrators, legal representatives, successors and assigns, provided however that a Participant may not assign his rights hereunder without the express written consent of the Employer. SECTION 10.10 This Plan shall be governed by the laws of Ohio. This Plan is solely between the Employer and the Participant. The Participant, his Beneficiary or other persons claiming through the Participant shall have recourse only against the Employer for enforcement of the Plan. SECTION 10.11 Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. SECTION 10.12 The obligations of the Employer under this Plan shall be subject to all applicable laws, rules and regulations, and such approvals by governmental agencies as may be required or as the Employer deems advisable. ARTICLE XI FORFEITURE OF BENEFITS ---------------------- SECTION 11.1 If a Participant competes against the Employer within a period of two (2) years immediately following the Participant's Retirement Date or termination of employment, the Committee shall suspend the continued payment of any Supplemental Pension to such Participant and the Participant shall forfeit any benefits to which he or his Beneficiary would otherwise be, or become, entitled to under this Plan. A Participant will be deemed to be competing with the Employer if he engages or becomes interested in or connected with any business or venture that is competitive with the business of the Employer. (a) A business or venture will be considered competitive with that of the Employer: (i) If it is conducted in whole or in part within the North American continent; and (ii) If it involves the manufacture, sale, or distribution of any of the products, which are manufactured, sold, or distributed by the Employer or being developed by the Employer for manufacture, sale or distribution, at any time on or prior to the second anniversary of the Participant's Retirement Date or the date that the Participant terminated his employment with the Employer. 10 11 (b) A Participant will be deemed to be directly or indirectly engaged, interested or participating in a business or venture if he is a stockholder, partner, proprietor, officer, director, consultant, agent or employee of such business or venture or an investor who, directly or indirectly, has advanced on loan, contributed to capital or expended for the purchase of stock an amount or amounts constituting five percent (5%) or more of the capital or assets of such business or venture. (c) If a court of competent jurisdiction shall refuse to enforce the provisions of this Section 11.1 because it deems the length of time or the geographical areas to be too broad, the court shall have the right to modify the length of time or geographical area to such length of time or geographical area as the court deems to be enforceable. 11 EX-21 3 EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF REGISTRANT SUBSIDIARY NAME JURISDICTION - ------------------------------------------------- ------------- Ameri-Kart Corp.................................... Kansas Buckhorn Inc....................................... Delaware - -Buckhorn Rubber Products Inc...................... Missouri - -BKHN Inc.......................................... Ohio -Buckhorn Material Handling Group Inc............. Ohio -Buckhorn Canada, Inc............................. Ontario, Canada -Buckhorn LTD..................................... United Kingdom Eastern Tire Equipment & Supplies, Limited......... Quebec, Canada Elrick Industries, Inc............................. California The James C. Heintz Company........................ Ohio MICO, Inc.......................................... U.S. Virgin Islands Midland Tire Supply, Inc........................... Indiana MYEcap Financial Corp.............................. Ohio Myers Industries International, Inc................ Ohio Myers Systems, Inc................................. Ohio Myers Tire Supply (Canada) Limited................. Ontario, Canada Myers Tire Supply (Chicago), Inc................... Illinois Myers Tire Supply (New York), Inc.................. New York Myers Tire Supply (Nevada), Inc.................... Nevada Myers Tire Supply (Va.), Inc....................... Virginia Patch Rubber Company............................... North Carolina Plastic Parts, Inc................................. Kentucky 30 EX-23 4 EXHIBIT 23 1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included and incorporated by reference in this Form 10-K, into the Company's previously filed Registration Statements on Form S-8 (Registration Statement Nos. 81693, 33-9038 and 33-47600) and Registration Statement on Form S-3 (Registration Statement No. 33-50286). ARTHUR ANDERSEN LLP /s/ Arthur Andersen LLP Cleveland, Ohio March 25, 1998 EX-27 5 EXHIBIT 27
5 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 6,297,726 0 57,042,671 2,102,000 43,055,233 107,426,627 170,054,182 79,503,273 224,077,922 39,643,522 0 0 0 11,573,496 165,103,451 224,077,922 339,625,585 339,625,585 232,376,615 271,698,910 29,613,322 2,102,000 596,316 37,065,783 15,727,000 22,338,783 0 0 0 22,338,783 1.21 1.21
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