A. Schulman Focuses On High-Growth Markets, Value-Added Products and Cost Savings to Drive Future Earnings Growth
AKRON, Ohio--Dec. 6, 2001--A. Schulman Inc. plans to penetrate high-growth markets and develop a greater variety of value-added engineered products, Terry L. Haines, president and chief executive officer, said at the Company's annual stockholder meeting today."Technology and product innovation are essential for our future growth," Haines said. "Our centralized product and color technology centers provide us with worldwide research and development coordination. New products and applications developed at our technology centers can be quickly transferred to any of our 13 manufacturing locations. We have also added to our manufacturing capacity and capabilities where demand dictates."
During the fiscal year ended August 31, 2001, Haines said, the Company identified, and targeted, high-growth markets and value-added products in both the automotive and the film and packaging global markets. For example, the Company introduced Invision(TM), a lightweight, soft-to-the-touch, environmentally friendly alternative to polyvinyl chloride. In addition, A. Schulman has been pursuing new applications for Formion(TM), a highly durable, glossy, engineered resins product that features molded-in color with no need for painting. Also, more than 100 pounds of A. Schulman engineered products are approved for use on the interior, exterior and molding of the new Chevrolet Avalanche, a pick-up truck/SUV hybrid built in Mexico.
During the year, A. Schulman expanded manufacturing capacity for value-added products at several locations. A new engineered compounds line was added to the Company's Mexican facility. This line, with an annual capacity of 22 million pounds, began operation in the third fiscal quarter. The Company will also add two manufacturing lines for color concentrates at its facility in Mexico. It is currently expanding its German plant and warehouse, and is adding two new manufacturing lines with a combined annual capacity of 33 million pounds. It is also adding a manufacturing line to its Givet, France facility and to its Sunprene operation, its joint venture with Mitsubishi Chemical MKV Co.
Capital expenditures for fiscal 2001 were $33.4 million, bringing the total capital investments to $100 million over the last three years. Also during that time, the Company deployed new business systems worldwide and created the centralized Customer Sales Support Center for North America. These actions will enhance the Company's efficiency and customer service.
Despite the success in some markets, Haines acknowledged that fiscal 2001 overall was a very challenging and difficult year because of competitive price pressures, weaker demand and a lower value for the Euro. As a result, the Company implemented a number of cost reduction initiatives, including:
| -- | Closing the outdated Akron plant in December 2000, which has resulted in $10.5 million in annual savings. The Company also shut down manufacturing lines at three other plants in North America and reduced total head count in North America by nearly 200 workers, or almost 20 percent. |
| -- | Rationalizing under-performing products and re-focusing several of its manufacturing lines to enable plants to specialize, which has resulted in more efficient use of capacity. |
| -- | Closing eight district sales offices and consolidating sales functions into five regional offices in North America. |
"The last two fiscal years were extremely challenging," Haines said. "We had to make a number of difficult decisions along the way. We enhanced our customer service while improving our own efficiency. We now see opportunities for renewed growth, and we plan to pursue them."
Haines said A. Schulman plans to improve margins by continuing to develop and introduce value-added products, maintain or reduce operating expenses as a percentage of sales, and increase manufacturing capacity utilization. Haines said the Company has established fiscal 2002 performance goals of increasing tonnage and revenue by 5 percent; decreasing manufacturing costs by 5 percent; and targeting earnings per share growth of around 20 percent.
Sales for the year ended August 31, 2001 were $975.2 million. Fiscal 2001 earnings were $17,327,000 or $.59 per common share, before recognition of costs for closing A. Schulman's Akron, Ohio manufacturing facility. After deducting $4,635,000 or $.16 per share for costs relating to the plant closing, reported net income was $12,692,000 or $.43 per share.
Haines said A. Schulman's balance sheet remains a competitive advantage, especially in light of the October 2001 announcement of the Company's new $130 million, four-year revolving credit agreement with eight banks, including two foreign banks. The new agreement provides the Company with additional financing flexibility for working capital, capital expenditures and other corporate requirements.
"Fiscal 2002 will be another very challenging year, made even more difficult by the ongoing tension and uncertainty in the world's economic and political climate," Haines said. "Fortunately, we have core strengths in product innovation, customer service and global leadership that we can continue to build on. We believe the actions we have taken, along with our core strengths, will enable us to improve earnings in fiscal 2002."
During the annual meeting, A. Schulman shareholders re-elected the following members to the Board of Directors for three-year terms:
-- Terry Haines, A. Schulman president and chief executive
officer since 1991.
-- Dr. Paul Craig Roberts, a director since 1992 who is chairman
of the Institute for Political Economy, and a columnist for
The Washington Times and Investor's Business Daily.
-- James A. Karman, a director since 1995 who is vice chairman of
RPM Inc.
-- Joseph M. Gingo, a director since 2000 who is senior vice
president for technology and global products planning of The
Goodyear Tire & Rubber Company.
In addition, shareholders approved the retention of PriceWaterhouseCoopers LLP as the independent accountant for the fiscal year ending August 31, 2002.
About A. Schulman Inc.
Headquartered in Akron, Ohio, A. Schulman is a leading international supplier of high-performance plastic compounds and resins. These materials are used in a variety of consumer, industrial, automotive and packaging applications. The Company employs about 2,300 people and has 13 manufacturing facilities in North America, Europe, Mexico and the Asia-Pacific region. Revenues for the fiscal year ended August 31, 2001 were approximately $975 million. Additional information about A. Schulman can be found on the World Wide Web at www.aschulman.com.
Forward-Looking Statements
Statements in this release which are not historical facts are forward looking statements which involve risks and uncertainties and actual events or results could differ materially from those expressed or implied in this release. These "forward-looking statements" are based on currently available information. They are also inherently uncertain, and investors must recognize that events could turn out to be significantly different from what was expected. Examples of such uncertainties include, but are not limited to, the following:
-- Worldwide and regional economic, business and political
conditions
-- Fluctuations in the value of the currencies in major areas
where the Company operates, i.e., the U.S. dollar, the Euro,
U.K. pound sterling, Canadian dollar, Mexican peso and
Indonesian rupiah
-- Fluctuations in the prices of plastic resins and other raw
materials
-- Changes in customer demand and requirements
In addition, this release contains time-sensitive information that reflects management's best analysis only as of the date of this release. A. Schulman does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in A. Schulman's periodic filings with the Securities and Exchange Commission.