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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 November 1, 1997
Commission file number 1-5911
SPARTECH CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
43-0761773
(I.R.S. Employer Identification Number)
7733 FORSYTH, SUITE 1450, CLAYTON, MISSOURI 63105-1817
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 721-4242
Securities registered pursuant to Section 12(d) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, $.75 par value New York Stock Exchange
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, and (2) has been subject to such
filing requirements for 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. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $164,151,988 on December 31, 1997.
There were 26,439,948 total shares of common stock outstanding as of
December 31, 1997.
Documents incorporated by reference
1) Portions of the 1997 Annual Report to Shareholders are incorporated
by reference into Parts I, II and IV.
2) Portions of the Definitive Proxy Statement for the 1998 Annual
Meeting of Shareholders are incorporated
by reference into Part III.
PART I
Item 1. BUSINESS
General
Spartech Corporation, together with its subsidiaries ("Spartech" or the
"Company"), operates in one industry segment as a leading producer of
engineered thermoplastic materials, polymeric compounds, molded and profile
products for a wide spectrum of customers in the plastics industry. The
Company's 26 facilities throughout North America operate in the following
three lines of business:
Extruded Sheet & Rollstock - which sells its products to various
manufacturers who use plastic components in their industrial products.
The principal uses of the Company's extruded sheet & rollstock are food
and medical packaging products, signs, spas and showers, burial vault
liners, vehicle interiors, boats, and refrigerators. The Company is
North America's largest extruder of custom rigid plastic sheet &
rollstock, operating 17 facilities in the United States and Canada
under the name Spartech Plastics.
Color & Specialty Compounds - which sells custom designed plastic
alloys, compounds, color concentrates, and calendered film for
utilization by a large group of manufacturing customers for specialized
footwear, loose-leaf binders, lawn and garden equipment, cosmetics and
medical packaging products, automotive equipment, and numerous other
applications. The Company produces and distributes these products from
five facilities under the names Spartech Compounding, Korlin
Concentrates, and Spartech Vy-Cal Plastics in the United States and
Canada.
Molded & Profile Products - which manufactures custom and proprietary
products including: (1) thin-walled, printed plastic food packaging
and industrial containers, (2) thermoplastic tires and wheels for the
lawn and garden, refuse container, and toy markets, (3) a limited line
of tableware and housewares products, and (4) profile extruded products
for a variety of industries. The Company produces these molded and
profile products from five facilities in the United States and Canada
under the names GenPak, Hamelin Industries, Spartech Enterprises, and
Spartech Profiles.
The Company's principal executive office is located at 7733 Forsyth
Boulevard, Suite 1450, Clayton, Missouri 63105-1817, telephone (314) 721-
4242. The Company was incorporated in the State of Delaware in 1968,
succeeding a business which had commenced operations in 1960. In late
1983, the Company began a restructuring program designed to expand its
plastics processing business and dispose of all of its non-plastics
operating businesses. Since that time, the Company has expanded its
plastics business through both internal growth and 11 acquisitions.
Acquisitions completed over the last five years are summarized below:
Date
Acquired Business Acquired Principal Products
January 1993 Penda Corporation (a) Extruded Sheet & Rollstock
February 1994 Product Components Extruded Sheet & Rollstock
November 1994 Pawnee Industries (b) Extruded Sheet & Rollstock
and Color Concentrates
May 1996 Portage Industries (c) Extruded Sheet & Rollstock
September 1996 Hamelin Group (c) Extruded Sheet & Rollstock,
Color Concentrates, and
Molded Products
August 1997 Preferred Plastic Extruded Sheet & Rollstock
Plastic Sheet Division and Profile Products
of Echlin Inc. (c)
(a) Includes Penda Corporation Extrusion Division's polystyrene, print
grade lithographic styrene and PET businesses.
(b) Includes only Pawnee's Extrusion and Color Divisions.
(c) Information with respect to Spartech's recent acquisition activity is
set forth in Note (2) to the Consolidated Financial Statements on page
18 of the 1997 Annual Report to Shareholders, attached as Exhibit 13.
Extruded Sheet & Rollstock
Net sales and operating earnings (consisting of earnings before interest,
taxes and corporate operations/allocations) of the extruded sheet &
rollstock group for fiscal years 1997, 1996, and 1995 were as follows:
Fiscal Year
(Dollars in millions)
1997 1996 1995
Net Sales $375.8 $319.2 $283.2
Operating Earnings $39.6 $31.6 $25.7
Products - The Company's extruded sheet & rollstock group produces both
single and multilayer co-extruded plastic sheet on a custom basis for end
product manufacturers. The group's customers use the Company's plastic
sheet & rollstock to manufacture food and medical packaging products,
signs, spas and showers, burial vault liners, vehicle interiors, boats, and
refrigerators. Most of the group's customers thermoform, cut, and trim
their plastic sheet for these various end uses.
Manufacturing and Production - The principal raw materials used in
manufacturing extruded sheet & rollstock are plastic resins in pellet form,
which are crude oil or natural gas derivatives. The Company extrudes a
wide variety of plastic resins, including acrylonitrile butadiene styrene
("ABS"), polycarbonate, polypropylene ("PP"), acrylic, polyethylene
terephthalate ("PET"), polystyrene, polyethylene ("PE"), and polyvinyl
chloride ("PVC").
The Company produces plastic sheet of up to seven layers using a multi-
extrusion process, combining the materials in distinct layers as it is
extruded through the die into a sheet form. More than half of the Company's
plastic sheet is produced using this multi-extrusion process. The remainder
is produced in a single layer using conventional extrusion processes. In
some cases, the Company will coat the plastic sheet or laminate sheets
together in order to achieve performance characteristics desired by
customers for particular applications. The Company is actively involved in
new product developments, referred to as Alloy Plastics, which combine
advanced engineered thermoplastic compounds with new manufacturing
techniques. Spartech's Alloy Plastics represent new proprietary products
which offer end-product manufacturers a variety of solutions to design high
performance and environmentally-friendly products with cost effective
benefits. Spartech Plastics introduced five such new products in the
second half of fiscal 1997.
Marketing, Sales and Distribution - The custom sheet and rollstock
extrusion business has generally been a regional business supplying
manufacturers within an estimated 500 mile radius of each of the group's 17
facilities because of shipping costs for rigid plastic material and the
need for prompt response to customer requirements and specifications. The
outdoor sign and spa businesses, however, are slightly more national in
scope.
The Company sells its extruded sheet & rollstock products principally
through its own sales force, but also uses a limited number of independent
sales representatives. The Company generally does not sell products of the
extruded sheet & rollstock group under long-term contracts. During fiscal
1997, the extruded sheet & rollstock group sold its products to
approximately 2,500 customers.
Color & Specialty Compounds
Net sales and operating earnings (consisting of earnings before
interest, taxes and corporate operations/allocations) of the color &
specialty compound group for fiscal years 1997, 1996, and 1995 were as
follows:
Fiscal Year
(Dollars in millions)
1997 1996 1995
Net Sales $84.0 $68.2 $69.1
Operating Earnings $7.1 $5.4 $4.6
Products - The color & specialty compound group primarily manufactures
plastic alloys, compounds and color concentrates for end product
manufacturers. In addition, the Spartech Compounding-Cape Girardeau
facility distributes thermoplastic resins purchased from other resin
suppliers and Spartech Vy-Cal Plastics operates a vinyl calender, supplying
finished PVC film to manufacturers of loose-leaf binders, decorator grade
wallcoverings, and packaging products for the medical industry. Customers
of the color & specialty compound group primarily include extrusion and
injection molding businesses.
Spartech Compounding and Korlin produce a highly diversified range of
color and compound products, including: FDA clear compounds for food,
beverage, and medical applications; color concentrates for the film and
sheet extrusion markets; phosphorescent and fluorescent compounds; PVC
combinations incorporating nitrile, elvaloy, and polyurethane for chemical
and abrasion resistance for footwear, color compounds, and other specialty
applications. Spartech Vy-Cal Plastics operates as a custom specialty
house with its own laboratory facility for quality testing of color,
thickness, texture, tensile strength, and dimensional stability of its
specialized film output.
Manufacturing and Production - The principal raw materials used in
manufacturing specialty plastic alloys, compounds and color concentrates
are plastic resins in powder and pellet form, primarily PVC, ABS, and PE
with colorants, stabilizers, and several other additives used to obtain
particular qualities in the plastic resin once it is heated and extruded or
molded into end products.
The group has well-equipped laboratory facilities, with experimental
extruders and various types of chemical analysis and testing equipment. In
addition to compounding technology, the group has developed enhanced
capabilities to produce color concentrates and additives.
Marketing, Sales and Distribution - The color & specialty compound
group sells most of its products to customers located in the East Coast and
Midwest U.S. and in Quebec and Ontario, Canada. The group sells its
products principally through its own sales force, but also uses independent
sales representatives. During fiscal 1997, the color & specialty compound
group sold its products to approximately 1,000 customers.
Molded & Profile Products
The five manufacturing facilities which comprise the molded and profile
products group were added to the Company's businesses with the August 22,
1997 acquisition of the Preferred Plastic Sheet Division of Echlin Inc. and
the September 27, 1996 acquisition of the Hamelin Group Inc. Therefore,
fiscal 1997 results include only two months of operations for Spartech
Profiles and fiscal 1996 results only include one month of operations for
GenPak, Spartech Enterprises, and Hamelin Industries. The group's net
sales and operating earnings (consisting of earnings before interest, taxes
and corporate operations/allocations) for these periods were as follows:
Fiscal Year
(Dollars in millions)
1997 1996 1995
Net Sales $42.9 $ 3.9 $ -
Operating Earnings $5.9 $ .4 $ -
Products - The molded & profile products group manufactures custom and
proprietary items for a large group of intermediate and end-user customers.
GenPak is a producer of thin-walled, printed plastic food packaging and
industrial containers for a large group of dairy, deli, and industrial
supply companies; Hamelin Industries manufacturers thermoplastic tire and
wheel assemblies for the lawn and garden, refuse container, and toy
markets; Spartech Enterprises manufactures a limited line of tableware and
housewares products; and Spartech Profiles manufactures products for
various industries, including the bedding and construction markets.
Manufacturing and Production - The principal raw materials used in the
Company's manufacturing of its molded and profile products are PE, PP, and
PVC. The group manufactures it under four major product lines --
containers, wheels, tableware/houseware goods, and profile extruded
products.
Marketing, Sales and Distribution - GenPak markets most of its products
to customers located in North America, as well as, the Caribbean and
Russia; Hamelin Industries markets its products throughout North America
from a centrally located plant in Warsaw, Indiana; Spartech Enterprises
sells its products primarily throughout Canada; and Spartech Profiles
markets its products throughout the United States. The group sells its
products principally through its own sales force, but also uses independent
sales representatives. During fiscal 1997, the molded & profile products
group sold its products to approximately 500 customers.
Raw Materials
The Company uses large amounts of various plastic resins in its
manufacturing processes. Such resins are crude oil or natural gas
derivatives and are to some extent affected by supply, demand, and price
trends in the petroleum industry. While the Company seeks to match cost
increases with corresponding price increases, large increases in the costs
of these raw materials could adversely affect the Company's operating
margins. In addition, any major disruptions in the availability of crude
oil or natural gas to the Company's suppliers could adversely impact the
availability of the resins. However, the Company does business with most
of the major resin manufacturers and has enjoyed good relationships with
such suppliers over the past several years. Related thereto, the Company
has been able to adequately obtain all of its required raw materials to
date and expects to be able to continue to satisfy its requirements in
fiscal 1998 and beyond.
Seasonality
The Company's sales are somewhat seasonal in nature. Fewer orders are
placed and less manufacturing activity occurs during the November through
January period. This seasonal variation tends to track the manufacturing
activities of the Company's various customers in each region.
Competition
The extruded sheet & rollstock, color & specialty compounds, and molded
& profile products markets are highly competitive. Since the Company
manufactures a wide variety of products, it competes in different areas
with many other companies, some of which are much larger than the Company
and have more extensive production facilities, larger sales and marketing
staffs, and substantially greater financial resources than the Company.
The markets in which the Company competes are also periodically
characterized by excess supply and intense price competition. The Company
competes generally on the basis of price, product performance, and customer
service. Important competitive factors in each of the Company's businesses
include the ability to: (1) manufacture consistently to required quality
levels, (2) meet demanding delivery times, (3) exercise skill in raw
material purchasing, and (4) achieve production efficiencies to process the
products profitably. In addition, the Company may experience competition
from new entrants into the markets that it serves and increased competition
from companies offering products based on advanced technologies or
processes. The Company believes it is competitive in these key areas.
The extruded sheet & rollstock group is an intermediate processor of
plastics which manufactures sheet & rollstock for customers who shape it
for their end use with thermoforming equipment. Several of these customers
have, or upon expansion may acquire, extrusion machinery. Moreover, some
customers are large enough to justify building their own molds and shifting
from thermoforming to an injection molding process. Injection molding
techniques become competitive whenever large quantities are produced or
fine detailing or contouring is required on the end product. However,
thermoforming techniques have been improved in recent years and are
generally less expensive than other manufacturing methods due to equipment
costs and other associated start-up expenses. Any material reduction in
orders to the Company by its customers as a result of a shift to in-house
processing facilities could adversely affect the Company's business. In
addition, several customers of the Company's color & specialty compounds
division have the capability to formulate their own alloys, compounds and
color concentrates. However, the Company expects to benefit from a growing
trend of outsourcing of specialized semi-finished materials by many
manufacturers. Finally, the Company's molded & profile products group
operates in selective niches within highly-competitive markets.
Backlog
The Company estimates that the total dollar volume of its backlog as of
November 1, 1997 and November 2, 1996 was approximately $39.2 million and
$37.3 million, respectively, which represents approximately four to five
weeks of production for each year. The Company's backlog for 1996 was
approximately $37.3 million.
Employees
The Company's total employment approximates 2,125. There are 1,700
production personnel at the Company's 26 plants, approximately 32% of whom
are union employees covered by several collective bargaining agreements.
There have been no strikes in the past three years. Management personnel
total approximately 425 supervisory/clerical employees, none of whom is
unionized. The Company believes that all of its employee and union
relations are satisfactory.
Government Regulation
The Company is subject to various laws governing employee safety and
environmental matters. The Company believes it is in material compliance
with all such laws and does not anticipate large expenditures in fiscal
1998 to comply with any applicable regulations. The Company is subject to
federal, state, and local laws (including Canadian provincial) and
regulations governing the quantity of certain specified substances that may
be emitted into the air, discharged into interstate and intrastate waters,
and otherwise disposed of on and off the properties of the Company.
Modifications of existing environmental regulations, the adoption of new
environmental regulations, or unanticipated enforcement actions, could
require material capital expenditures or otherwise have a material adverse
effect on the Company's businesses. The Company has not incurred
significant expenditures in order to comply with such laws and regulations,
nor does it anticipate continued compliance therewith to materially affect
its earnings or competitive position.
International Operations
Information regarding the Company's operations in its two geographic
segments -- United States and Canada -- is located in Note (12) to the
Consolidated Financial Statements on page 23 of the 1997 Annual Report to
Shareholders, attached hereto as Exhibit 13. The Company's Canadian
operations may be affected periodically by foreign political and economic
developments, laws and regulations, and currency fluctuations.
Other
The Company has performed an initial overall review to assess the impact
of the year 2000 on its major systems. It will continue to address any
changes needed within its systems to ensure it can be fully compliant with
year 2000 requirements on a timely basis. At this time, the Company does
not expect it will incur significant expenditures to effect these changes.
Item 2. PROPERTIES
The Company operates in plants and offices aggregating approximately
2,052,000 square feet of space. Approximately 792,000 square feet of plant
and office space is leased with the remaining 1,260,000 square feet owned
by the Company. A summary of the Company's principal operating facilities
follows:
Extruded Sheet & Rollstock
Location Description Size in Square Feet Owned/Leased
Arlington, TX Extrusion plant &
offices 126,000 Leased
Atlanta, GA Extrusion plant &
offices 75,000 Leased
Cape Girardeau, MO Extrusion plant &
offices 100,000 Owned
Clare, MI Extrusion plant &
offices 27,000 Owned
Greenville, OH Extrusion plant &
offices 54,000 Owned
4,000 Leased
Greensboro, GA Extrusion plant &
offices 42,000 Owned
La Mirada, CA Extrusion plant &
offices 98,000 Leased
Mankato, MN Extrusion plant &
offices 36,000 Owned
McMinnville, OR Extrusion plant &
offices 40,000 Owned
McPherson, KS Extrusion plant
& offices 101,000 Owned
Paulding, OH Extrusion plant &
offices 68,000 Owned
20,000 Leased
Portage, WI Extrusion plant &
offices 115,000 Owned
Richmond, IN Extrusion plant &
offices 52,000 Owned
29,000 Leased
Taylorville, IL Extrusion plant &
offices 40,000 Owned
Wichita, KS Extrusion plant &
offices 63,000 Owned
102,000 Leased
Cornwall, Ontario Extrusion plant &
offices 41,000 Leased
Granby, Quebec Extrusion plant &
offices 50,000 Owned
22,000 Leased
Color & Specialty Compounds
Location Description Size in Square Feet Owned/Leased
Cape Girardeau, MO Compounding plant &
offices 57,000 Owned
43,000 Leased
Conshohocken, PA Calendering plant &
offices 39,000 Owned
Goddard, KS Color plant & offices 38,000 Owned
Kearny, NJ Compounding plant &
offices 59,000 Owned
Stratford, Ontario Color plant & offices 65,000 Owned
Molded & Profile Products
Location Description Size in Square Feet Owned/Leased
Toronto, Ontario Injection Molding
plant & offices 73,000 Leased
Cookshire, Quebec Injection Molding
plant & offices 140,000 Owned
McPherson, KS Profile Plant -*
Montreal, Canada Injection Molding
plant & offices 100,000 Leased
15,000 Owned
Warsaw,Indiana Injection Molding
plant & offices 41,000 Owned
* Profile production conducted in same facility as the Extruded
Sheet & Rollstock plant noted above.
In addition, the Company leases office facilities in St. Louis,
Missouri, the aggregate square footage of which is approximately 5,500.
The plants located at the premises listed above are equipped with 93
sheet extrusion lines, 55 supplementary co-extruders, 9 profile extrusion
lines, 9 compounding-milling lines, 10 color compounding lines, 68
injection molding machines, 20 printing machines, 5 compression molding
machines, a calendering line, cutting and grinding machinery, resin storage
facilities, warehouse equipment, and quality laboratories at all locations.
The Company believes that its present facilities are adequate for the level
of business anticipated in fiscal year 1998.
Item 3. LEGAL PROCEEDINGS
On June 2, 1992, Mr. Lawrence M. Powers, a former Director, Chairman of
the Board, and Chief Executive Officer of the Company, filed a lawsuit in
the United States District Court for the Southern District of New York
against the Company and certain of its Directors and major shareholders.
In the suit, Mr. Powers claimed that, by reason of the Company's April 30,
1992 debt-to-equity restructuring (which he had previously, on April 13,
1992, voted in favor of as a Director), the Company should have adjusted
his existing stock options, provided for the issuance of additional shares
of common stock, and awarded to him attorney's fees and interest. In
January 1996, Mr. Powers filed a similar lawsuit in the Circuit Court of
St. Louis County, Missouri against the Company and two officer directors.
In February 1997, the Company settled both lawsuits. The settlement
resolved all claims and terminated all disputes between the respective
parties and general releases were executed to prevent further action on
such disputes. The settlement was reflected in the Company's first quarter
financial statements and, after consideration of amounts previously
accrued, did not result in a net charge to earnings.
The Company is also subject to various other claims, lawsuits, and
administrative proceedings arising in the ordinary course of business with
respect to commercial, product liability, employment, and other matters,
several which claim substantial amounts of damages. While it is not
possible to estimate with certainty the ultimate legal and financial
liability with respect to these claims, lawsuits, and administrative
proceedings, the Company believes that the outcome of these other matters
will not have a material adverse effect on the Company's financial position
or results of operations. The Company currently has no litigation with
respect to any environmental matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal
year ended November 1, 1997.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information on page 25 and 28 of the 1997 Annual Report to
Shareholders, attached hereto as Exhibit 13, is incorporated by reference
in response to this item. The common stock dividend amounts on page 25
present the cash dividends declared in 1996 consisting of one quarter at
three cents per share and the last three quarters at four cents per share
and the cash dividends declared in 1997 consisting of all four quarters at
five cents per share. On December 9, 1997, the Company declared a
dividend of six cents per share payable on January 6, 1998. The Company's
Board of Directors reviews the dividend policy each December based on the
Company's business plan and cash flow projections for the next fiscal year.
Item 6. SELECTED FINANCIAL DATA
The information on page 25 of the 1997 Annual Report to Shareholders,
attached hereto as Exhibit 13, is incorporated by reference in response to
this item.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information on pages 12 and 13 of the 1997 Annual Report to
Shareholders, attached hereto as Exhibit 13, is incorporated by reference
in response to this item.
Safe Harbor Statement - Statements in this Annual Report that are not
purely historical, including statements which express the Company's belief,
anticipation or expectation about future events, are forward-looking
statements. These statements may be found in the descriptions of the
Company's business in Item 1 and legal proceedings in Item 2, and include
statements in "Management's Discussion and Analysis," incorporated herein
by reference, about future capital expenditures, expenditures for
environmental compliance, and anticipated cash flow and borrowings.
Forward looking statements involve certain risks and uncertainties that
could cause actual results to differ materially from such statements. In
addition to the risk factors discussed in Item 1 (Business, under the
headings Raw Materials, Seasonality, Competition, Government Regulation,
and International Operations) included herein on pages 5 through 7, other
important factors which have and could impact the Company's operations and
results, include: (1) the Company's financial leverage and the operating
and financial restrictions imposed by the instruments governing its
indebtedness may limit or prohibit its ability to incur additional
indebtedness, create liens, sell assets, engage in mergers, acquisitions or
joint ventures, pay cash dividends, or make certain other payments. In
addition, the Company's leverage and such restrictions could limit its
ability to respond to changing business or economic conditions; and (2) the
successful expansion through acquisitions, in which Spartech looks for
candidates that can complement its existing product lines, expand
geographic coverage, and provide superior shareholder returns, is not
assured. Acquiring businesses that meet these criteria continues to be an
important element of the Company's business strategy. Some of the
Company's major competitors have similar growth strategies. As a result,
competition for qualifying acquisition candidates is increasing and there
can be no assurance that such future candidates will exist on terms
agreeable to the Company. Furthermore, integrating acquired businesses
requires significant management time and skill and places additional
demands on Company operations and financial resources. However, the
Company continues to seek value-added acquisitions which meet its stringent
acquisition criteria and complement its existing businesses.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information entitled "Quarterly Financial Information" on page 23 of
the 1997 Annual Report to Shareholders, attached hereto as Exhibit 13, is
incorporated by reference in response to this item.
In addition, the financial statements of the Registrant filed herewith
are set forth in Item 14 and included in Part IV of this Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning Directors of the Company contained in the
section entitled "Election of Directors" of the Definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders to be filed with the
Commission on or about January 26, 1998, is incorporated herein by
reference in response to this item.
In addition, the following table sets forth certain information with
respect to the Company's executive officers:
Name Age Position with the Company and
Date Appointed
Bradley B. Buechler 49 President (April 1987), Chief
Executive Officer (October
1991), and Director (February
1984)
David B. Mueller 44 Executive Vice President and
Chief Operating Officer (May
1996), Secretary (October
1991), and Director (March
1994)
Daniel J. Yoder 56 Vice President of Engineering
and Technology (May 1990)
Randy C. Martin 35 Vice President-Finance and
Chief Financial Officer (May
1996)
David G. Pocost 36 Vice President of Quality and
Environmental Affairs
(December 1996)
Mr. Buechler, a CPA, was with Arthur Andersen LLP before the
commencement of his employment with the Company in 1981. Prior to the
positions currently held, he was the Company's Corporate Controller and
Vice President - Finance from 1981-1984, Chief Financial Officer from 1983
- - 1987 and Chief Operating Officer from 1985 - 1996.
Mr. Mueller, a CPA, was previously with Arthur Andersen LLP for seven
years. More recently he was Corporate Controller of Apex Oil Company, a
large independent oil company, from 1981-1988. Prior to the positions
currently held, he was the Company's Vice President of Finance, Chief
Financial Officer from 1988 - 1996.
Mr. Yoder was General Manager of the Company's Spartech Plastics Central
Region from 1986-1990. From 1983-1986 he was Vice President of
Manufacturing for Atlas Plastics, Corp., prior to its acquisition by the
Company.
Mr. Martin, a CPA and CMA, was previously with KPMG Peat Marwick LLP for
eleven years before joining the Company in 1995. Prior to the positions
currently held, he was the Company's Corporate Controller from 1995 to
1996.
Mr. Pocost was previously with Moog Automotive as Division Quality
Assurance Manager and Senior Materials Engineer for eight years. Prior to
the position currently held, he was the Company's Director of Quality &
Environmental Affairs from 1994-1996.
Item 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled "Executive
Compensation" and "Board Committees and Compensation" of the Definitive
Proxy Statement for the 1998 Annual Meeting of Shareholders to be filed
with the Commission on or about January 26, 1998 is incorporated herein by
reference in response to this item.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the sections entitled "Security Ownership"
of the Definitive Proxy Statement for the 1998 Annual Meeting of
Shareholders to be filed with the Commission on or about January 26, 1998
is incorporated herein by reference in response to this item.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the section entitled "Election of
Directors" and "Executive Compensation" of the Definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders to be filed with the Commission
on or about January 26, 1998 is incorporated herein by reference in
response to this item.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
The following financial statements, financial statement schedules and
exhibits are incorporated by reference from the 1997 Annual Report to
Shareholders and/or filed as part of this Form 10-K:
Page
Annual Report
Form 10-K to Shareholders
Report of Independent Public Accountants F-1 24
Financial Statements
Consolidated Balance Sheet - 14
Consolidated Statement of Operations - 15
Consolidated Statement of
Shareholders' Equity - 16
Consolidated Statement of Cash Flows - 17
Notes To Consolidated Financial Statements - 18-23
Financial Statement Schedules
Schedule
Number Description
II. Valuation and
Qualifying Accounts F-2 -
Exhibits
Exhibits required to be filed by Item 601(a) of Regulation S-K are
included as Exhibits to this report as follows:
2(A)(1) Asset Purchase and Sale Agreement between Spartech Corporation
(Buyer) and Pawnee Industries, Inc. (Seller)
2(B)(2) Agreement of Plan of Merger between Spartech Corporation,
Spartech Plastics, Inc., and Portage Industries Corporation,
dated February 22, 1996
2(C)(3) Asset Purchase and Sale Agreement between Spartech Corporation
Hamelin Group Inc., Hamelin Industries Inc., Robert Hamelin and
Hamro Group, Inc. dated June 7, 1996
2(D)(4) Asset Purchase and Sale Agreement between Spartech Corporation;
Preferred Technical Group, Inc. And Echlin Inc. dated
August 22, 1997
3(5) Articles of Incorporation and By-Laws
10(A) Amended and Restated Employment Agreement dated November 1,
1997, between Bradley B. Buechler and Spartech Corporation
10(B) Amended and Restated Employment Agreement dated November 1,
1997, between David B. Mueller and Spartech Corporation
10(C)(6) Amended and Restated Employment Agreement dated June 30, 1995,
between Daniel J. Yoder and Spartech Corporation
10(D)(7) Spartech Corporation Incentive Stock Option Plan dated July 26,
1991
10(E)(7) Spartech Corporation Restricted Stock Option Plan dated July 26
1991
10(F)(8) Employment Agreement between Randy C. Martin and Spartech
Corporation dated as of March 31, 1997
10(G)(8) Employment Agreement between David G. Pocost and Spartech
Corporation dated as of February 1, 1997
11 Statement re Computation of Per Share Earnings
13 Pages 12 through 28 of 1997 Annual Report to Shareholders
21 Subsidiaries of Registrant
23 Consent of Independent Public Accountants
24 Powers of Attorney
27 Financial Data Schedule
(1) Filed as an exhibit to the Company's Form 8-K, dated
November 1, 1994, filed with the Commission on November 16,
1994, and incorporated herein by reference.
(2) Filed as an exhibit to the Company's quarterly report on
Form 10-Q for the quarter ended February 3, 1996, filed with
the Commission on March 1, 1996, and incorporated herein by
reference.
(3) Filed as an exhibit to the Company's Form 8-K, dated July 28,
1997, filed with the Commission on August 12, 1997, and
incorporated herein by reference.
(4) Filed as an exhibit to the Company's Form 8-K, dated June 7,
1996, filed with the Commission on June 19, 1996, and incorporated
herein by reference.
(5) Filed in response to the Commission's comments concerning
the Company's Proxy Statement relating to the Annual Meeting
of Shareholders held June 10, 1992, filed with the Commission
on May 27, 1992, and incorporated herein by reference.
(6) Filed as an exhibit to the Company's quarterly report on
Form 10-Q for the quarter ended July 29, 1995, filed with the
Commission on August 28, 1995, and incorporated herein by
reference.
(7) Filed as an exhibit to the Company's annual report on Form
10-K for the fiscal year ended November 2, 1991, filed with
the Commission on February 18, 1992, and incorporated herein
by reference.
(8) Filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ended August 2, 1997, filed with the
Commission on September 2, 1997, and incorporated herein by
reference.
All other financial statements and schedules not listed have been
omitted since the required information is included in the consolidated
financial statements or the notes thereto, or is not applicable or
required.
Reports on Form 8-K
A Form 8-K was filed on August 12, 1997 announcing the signing of an
Asset Purchase and Sale Agreement dated July 28, 1997 to purchase the net
assets of the Preferred Plastic Sheet Division of Echlin Inc. No financial
statements were required to be filed in the Form 8-K.
A Form 8-K/A was filed on November 4, 1997 for the completion of the
acquisition of the Preferred Plastic Sheet Division of Echlin Inc.
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.
SPARTECH CORPORATION
January 12, 1998 By: /S/ Bradley B. Buechler
(Date) Bradley B. Buechler
President and Chief Executive
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 date indicated.
DATE SIGNATURES TITLE
January 12, 1998 /S/ Bradley B. Buechler President, Chief
Bradley B. Buechler Executive Officer,
and Director (Principal
Executive Officer)
January 12, 1998 /S/ David B. Mueller Executive Vice
David B. Mueller President, Chief
Operating Officer,
and Director
January 12, 1998 /S/ Randy C. Martin Vice President-Finance
Randy C. Martin and Chief Financial
Officer (Principal
Financial and Accounting
Officer)
January 12, 1998 /S/ Thomas L. Cassidy Director
Thomas L. Cassidy*
January 12, 1998 /S/ W. R. Clerihue Chairman of the Board
W. R. Clerihue* and Director
January 12, 1998 /S/ Francis J. Eaton Director
Francis J. Eaton*
January 12, 1998 /S/ John R. Kennedy Director
John R. Kennedy*
January 12, 1998 /S/ Jackson W. Robinson Director
Jackson W. Robinson*
January 12, 1998 /S/ Alan R. Teague Director
Alan R. Teague*
* By Bradley B. Buechler as Attorney-in-Fact pursuant to Powers of Attorney
executed by the Directors listed above, which Powers of Attorney have been
filed with the Securities and Exchange Commission.
/S/ Bradley B. Buechler
Bradley B. Buechler
As Attorney-in-Fact
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO SPARTECH CORPORATION
We have audited in accordance with generally accepted auditing standards, the
financial statements included in SPARTECH Corporation's 1997 Annual Report to
Shareholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated December 5, 1997. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. Schedule II included
in this Form 10-K is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
St. Louis, Missouri
December 5, 1997
F-2
SPARTECH CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR FISCAL YEARS ENDED 1997, 1996 AND 1995
(Dollars in thousands)
ADDITIONS
AND
BALANCE AT CHARGESTO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS PERIOD
November 1, 1997:
Allowance for
Doubtful Accounts $ 1,946 $ 985 $ (719) $ 2,212
November 2, 1996:
Allowance for
Doubtful Accounts $ 1,592 $ 578 $ (224) $ 1,946
October 28, 1995:
Allowance for
Doubtful Accounts $ 1,415 $ 840 $ (663) $ 1,592
Fiscal year 1996 and 1997 additions and write-offs include activity relating
to the acquisition of certain of the businesses and assets of Portage
Industries Corporation, the Hamelin Group, Inc., and the Preferred Plastics
Sheet Division of Echlin Inc. in May 1996, September 1996, and August 1997,
respectively.
F-2