HOUSTON, Dec. 2 /PRNewswire-FirstCall/ -- ICO, Inc. (NASDAQ:ICOC),
global producer of custom polymer powders and plastic film
concentrates, today announced the execution of a merger agreement
with A. Schulman, Inc. (NASDAQ: SHLM) and its results for the
fiscal year and quarter ended September 30, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO) ICO, Inc.
Merger Agreement with A. Schulman, Inc. -- Combined stock and cash
transaction valued at approximately $191.4 million -- Transaction
requires approval from ICO shareholders and customary regulatory
approvals -- ICO would strengthen A. Schulman's position in global
rotomolding and masterbatch markets Under the terms of the
agreement, the total consideration is comprised of $105.0 million
in cash and 5.1 million shares of A. Schulman common stock. ICO,
Inc. shareholders will receive approximately $6.79 per share of
ICO, Inc. stock, comprised of (a) $3.67 in cash and (b) $3.12 in A.
Schulman stock (0.184 shares of A. Schulman stock valued at the
closing price on December 2, 2009) assuming the cash-out of all
ICO, Inc. stock options at their "in the money" spread based on the
December 2, 2009 closing price. After the merger closes, ICO, Inc.
shareholders will own approximately 16% of the combined company.
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. A. Schulman
employs about two thousand people and has 16 manufacturing
facilities in North America, Europe and Asia. Revenues for the
fiscal year ended August 31, 2009 were $1.3 billion. "Our Board of
Directors has unanimously determined that the merger with A.
Schulman, Inc. is in the best interests of our shareholders, and
that the combined company will provide enhanced product and service
offerings to our customers and outstanding opportunities for our
employees," said A. John Knapp, Jr., President and Chief Executive
Officer of ICO, Inc. "A. Schulman is a strong global leader in the
manufacture of high-performance plastic compounds and resins, with
an outstanding management team and corporate culture. It is
well-positioned to pursue a long-term strategy of profitable growth
and value creation that is consistent with our vision at ICO, Inc.
The ICO and A. Schulman businesses are largely complementary and
synergistic with little overlap in end use and geographic markets.
We have built a great team at ICO, Inc., and during our years of
working together with A. Schulman, we have been highly impressed
with the enthusiasm and energy of their team. We believe the
chemistry will be outstanding when the integration takes place."
The two companies believe this transaction will bring significant
value and opportunity to the customers of the combined business as
a result of: -- Enhanced and complementary product offerings --
Expanded global reach -- Increased financial strength -- Shared
technology and product development focused on better solutions for
customers If the transaction is closed, current ICO, Inc. directors
Gregory T. Barmore and Eugene R. Allspach will join the A.
Schulman, Inc. board of directors. ICO, Inc. will make a subsequent
announcement of timing and location of the special meeting of
shareholders and record date for shareholders eligible to vote on
the proposed acquisition. Pending shareholder and regulatory
approvals and other customary closing conditions, the transaction
is expected to close in the spring of 2010. This transaction is not
subject to a financing contingency and does not require approval by
A. Schulman, Inc. shareholders. J.P. Morgan Securities Inc. acted
as ICO's exclusive financial advisor in the transaction. Baker
Botts L.L.P. and Locke Lord Bissell and Liddell LLP acted as legal
advisors. ICO's results for the fiscal year and quarter ended
September 30, 2009 Fourth Quarter Highlights -- Volumes increased
6% sequentially -- Revenues increased 15% sequentially -- Net
income of $1.6 million, or $.06 per share -- Net debt (total debt
outstanding less cash) at $9.9 million as of September 30, 2009
Fourth Quarter 2009 vs. Fourth Quarter 2008 Revenues for the three
months ended September 30, 2009 were $80.5 million, a decrease of
$27.5 million or 25% compared to the same quarter of the previous
year. The revenue decline was caused by several factors. Volumes,
which fell 7%, reduced revenues by $7.0 million. The volume decline
was a result of reduced customer demand as a result of the global
economic slowdown. Lower average selling prices, as a result of
lower resin prices, reduced revenues by $10.8 million. Finally, the
translation effect of a stronger U.S. Dollar reduced revenues by
$9.7 million. Net income was $1.6 million or $.06 per share in the
three months ended September 30, 2009 compared to net income of
$2.2 million or $.08 per share in the fourth quarter of fiscal year
2008. The decline in net income of 27% was primarily caused by the
decline in volumes. The impact from lower volumes was partially
offset by an increase in gross margin from 15.1% to 18.4% and lower
interest expense due to lower borrowings. "I am very pleased to
report an increase in sequential revenues, volumes and
profitability. This occurred despite the fourth quarter including
the month of August, which is traditionally a weak month in Europe
for us. During the quarter, we began to see the benefits from the
Chroma and Micro Pellets transactions, as well as an improvement in
our other operations," stated President and CEO, A. John Knapp, Jr.
Fourth Quarter 2009 vs. Third Quarter 2009 In the fourth quarter of
2009, revenues increased 15% or $10.5 million over the revenues in
the third quarter of 2009. This was the first sequential revenue
improvement in five quarters. The revenue improvement was a result
of an increase in demand, as volumes sold improved 6%. Selling,
general and administrative expenses increased $1.2 million or 14%
due in part from merger related expenses incurred in the fourth
quarter of 2009. The benefit from the improved volumes partially
offset by the increase in SG&A led to a 27% improvement in net
income compared to the third quarter. Balance Sheet and Liquidity
Our net debt position as of September 30, 2009 was $9.9 million.
Cash at September 30, 2009 was $21.9 million and total outstanding
borrowings were $31.8 million. Our available global borrowing
capacity at September 30, 2009 was $50.5 million. In connection
with the merger agreement, the Company has canceled its share
repurchase plan. Conference Call on the Web A live Internet
broadcast of ICO, Inc.'s conference call regarding fiscal year and
quarter ended September 30, 2009 results and the proposed merger
can be accessed at 9:00 a.m. Central Standard Time on Thursday,
December 3, 2009 at http://www.videonewswire.com/event.asp?id=64376
where the webcast replay will be accessible for ninety days. The
webcast replay will also be accessible on the Company's website at
http://www.icopolymers.com/ for a period of twelve months Investors
are invited to participate in the conference by dialing
847-413-3235, passcode 25895059. A replay of the conference call
will be available by dialing 630-652-3044, passcode 25895059. A.
Schulman also will host a conference call regarding the merger
transaction. A live Internet broadcast of the conference call can
be accessed at 2:00 p.m. Eastern time on Thursday, December 3, on
the Company's website, http://www.aschulman.com/. An archived
replay of the call will also be available on the website. Use of
Non-GAAP Financial Measures This earnings release includes the use
of both GAAP (generally accepted accounting principles) and
non-GAAP financial measures. The non-GAAP financial measures are
net income (loss), as adjusted, net income (loss) per common share,
as adjusted, operating income (loss), as adjusted, and net debt.
The Company uses these financial measures to monitor and evaluate
the ongoing performance of the Company, and believes that the
additional non-GAAP measures are useful to investors for financial
analysis. There are limitations associated with the use of these
measures. These non-GAAP financial measures are not prepared in
accordance with GAAP, may not be reported by all of the Company's
competitors and may not be directly comparable to similarly titled
measures of the Company's competitors due to potential differences
in the exact method of calculation. The Company compensates for
these limitations by using these non-GAAP financial measures as
supplements to GAAP financial measures and by providing the
reconciliations of the non-GAAP financial measures to their most
comparable GAAP financial measures. About ICO, Inc. With 20
locations in 9 countries, ICO produces custom polymer powders for
rotational molding and other polymer related businesses, such as
the textile, metal coating and masterbatch markets. ICO remains an
industry leader in size reduction, compounding and other tolling
services for plastic and non-plastic materials. ICO's Bayshore
Industrial subsidiary produces specialty compounds, concentrates
and additives primarily for the plastic film industry. Additional
information about ICO, Inc. can be found on the Company's website
at http://www.icopolymers.com/. Certain matters discussed in this
press release are "forward-looking statements," involving certain
risks, uncertainties, and assumptions, intended to qualify for the
safe harbors from liability established by the Private Securities
Litigation Reform Act of 1995. The Company's statements regarding
trends in the marketplace, potential future results, and statements
regarding the merger (including the valuation, benefits, results,
effects and timing thereof), the combined company and attributes
thereof, and whether and when the transactions contemplated by the
merger agreement will be consummated are examples of such
forward-looking statements. The following is a non-exclusive list
of risks and uncertainties, and circumstances that present risks,
that could cause the forward-looking statements; the failure to
receive the approval of the Company's shareholders; satisfaction of
the conditions to the closing of the merger; costs and difficulties
related to integration of businesses and operations; delays, costs
and difficulties relating to the merger and related transactions;
results of cash/stock elections of shareholders; restrictions
imposed by the Company's outstanding indebtedness; changes in the
cost and availability of resins (polymers) and other raw materials;
changes in demand for the Company's services and products; business
cycles and other industry conditions; general economic conditions;
international risks; operational risks; currency translation risks;
the Company's lack of asset diversification; the Company's ability
to manage global inventory, develop technology and proprietary
know-how, and attract and retain key personnel; failure of closing
conditions in any transaction to be satisfied; integration of
acquired businesses; as well as risk factors and other factors
detailed in the Company's and A. Schulman's respective most recent
form 10-K and other filings with the Securities and Exchange
Commission. Should one or more of such risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated. Any
forward-looking statements are made only as of the date of this
press release, and the Company undertakes no obligation to publicly
update any such forward-looking statements to reflect subsequent
events or circumstances. Additional Information In connection with
the proposed merger, A. Schulman and the Company intend to file
materials relating to the transaction with the Securities and
Exchange Commission ("SEC"), including a registration statement of
A. Schulman, which will include a prospectus of A. Schulman and a
proxy statement of the Company. INVESTORS AND SECURITY HOLDERS OF
THE COMPANY ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT
AND THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER MATERIALS
REGARDING THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT A. SCHULMAN, THE
COMPANY AND THE PROPOSED TRANSACTION. Investors and security
holders may obtain a free copy of the registration statement and
the proxy statement/prospectus when they are available and other
documents containing information about A. Schulman and the Company,
without charge, at the SEC's web site at http://www.sec.gov/.
Copies of A. Schulman's SEC filings may also be obtained for free
by directing a request to Investor Relations Department at
330-668-7302. Copies of the Company's SEC filings may also be
obtained for free by directing a request to Investor Relations
Department at 713-351-4100. The Company expects to file a Current
Report on Form 8-K that will contain additional information with
regard to the merger. Participants in Solicitation A. Schulman and
the Company and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies
from the Company's stockholders in respect of the merger.
Information about these persons can be found in A. Schulman's proxy
statement relating to its 2009 Annual Meeting of Stockholders, as
filed with the SEC on November 6, 2009, A. Schulman's Current
Reports on Form 8-K, as filed with the SEC on September 2, 2009 and
October 30, 2009, the Company's proxy statement relating to its
2009 Annual Meeting of Shareholders, as filed with the SEC on
January 23, 2009, and the Company's Current Reports on Form 8-K, as
filed with the SEC on December 11, 2008, January 22, 2009, May 12,
2009 and August 6, 2009. These documents can be obtained free of
charge from the sources indicated above. Additional information
about the interests of such persons in the solicitation of proxies
in respect of the merger will be included in the registration
statement and the proxy statement/prospectus to be filed with the
SEC in connection with the proposed transaction. ICO, Inc.
Consolidated Statement of Operations (Unaudited and in thousands,
except per share data and percentages) Three Months Ended Twelve
Months Ended September 30, June 30, September 30, -------------
-------- ------------- 2009 2008 2009 2009 2008 ---- ---- ---- ----
---- Revenues $80,480 $107,992 $69,997 $299,965 $446,701 Cost of
sales and services (exclusive of depreciation and amortization
shown separately below) 65,705 91,712 57,383 250,583 373,557 ------
------ ------ ------- ------- Gross Profit (1) 14,775 16,280 12,614
49,382 73,144 Selling, general and administrative expense 9,854
9,823 8,677 36,679 41,254 Depreciation and amortization 2,094 1,951
1,835 7,361 7,531 Goodwill Impairment - - - 3,450 - Long-lived
asset impairment, restructuring and other costs (income) 185 408
(87) (175) (1,348) --- --- --- ---- ------ Operating income 2,642
4,098 2,189 2,067 25,707 Other income (expense): Interest expense,
net (517) (904) (539) (2,230) (4,062) Other income (expense) (11)
(395) (192) (582) (431) --- ---- ---- ---- ---- Income (loss) from
continuing operations before income taxes 2,114 2,799 1,458 (745)
21,214 Provision for income taxes 518 569 199 494 5,832 --- --- ---
--- ----- Income (loss) from continuing operations 1,596 2,230
1,259 (1,239) 15,382 Income (loss) from discontinued operations,
net of income taxes - (52) - - (68) --- --- --- --- --- Net income
(loss) $1,596 $2,178 $1,259 $(1,239) $15,314 Preferred Stock
dividends - - - - (1) --- --- --- --- --- Net income (loss)
applicable to Common Stock $1,596 $2,178 $1,259 $(1,239) $15,313
====== ====== ====== ======= ======= Basic income (loss) from
continuing operations per common share $0.06 $0.08 $0.05 $(0.05)
$0.56 ===== ===== ===== ====== ===== Basic net income (loss) per
common share $0.06 $0.08 $0.05 $(0.05) $0.56 ===== ===== =====
====== ===== Diluted income (loss) from continuing operations per
common share $0.06 $0.08 $0.05 $(0.05) $0.55 ===== ===== =====
====== ===== Diluted net income (loss) per common share $0.06 $0.08
$0.05 $(0.05) $0.55 ===== ===== ===== ====== ===== Basic weighted
average shares outstanding 27,077,000 27,474,000 27,077,000
27,081,000 27,271,000 ========== ========== ========== ==========
========== Diluted weighted average shares outstanding 27,593,000
27,864,000 27,221,000 27,081,000 27,994,000 ========== ==========
========== ========== ========== Gross Margin (2) 18.4% 15.1% 18.0%
16.5% 16.4% (1) Calculated as Total Revenues minus Cost of Sales
and Services, exclusive of Depreciation and Amortization Expense.
(2) Calculated as Gross Profit divided by Total Revenues. ICO, Inc.
Consolidated Balance Sheet (Unaudited and in thousands, except
share data and ratios) September 30, September 30, 2009 2008 ----
---- ASSETS Current assets: Cash and cash equivalents $21,880
$5,589 Trade receivables, net 57,124 75,756 Inventories 37,397
53,458 Deferred income taxes 1,848 2,056 Prepaid and other current
assets 6,446 10,514 ----- ------ Total current assets 124,695
147,373 ------- ------- Property, plant and equipment, net 57,144
61,164 Goodwill 4,549 8,689 Deferred Income Taxes 4,128 2,709 Other
assets 1,757 1,161 ----- ----- Total assets $192,273 $221,096
======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Short-term borrowings under credit facilities $-
$9,607 Current portion of long-term debt 12,980 15,201 Accounts
payable 33,281 37,674 Accrued salaries and wages 4,997 5,978 Other
current liabilities 9,344 11,912 ----- ------ Total current
liabilities 60,602 80,372 ------ ------ Long-term debt, net of
current portion 18,823 25,122 Deferred income taxes 4,786 5,039
Other long-term liabilities 2,907 2,728 ----- ----- Total
liabilities 87,118 113,261 ------ ------- Commitments and
contingencies - - Stockholders' equity: Undesignated preferred
stock - - Common stock 55,248 54,756 Additional paid-in capital
73,081 72,241 Accumulated other comprehensive income 2,723 3,022
Accumulated deficit (22,880) (21,641) Treasury Stock (3,017) (543)
------ ---- Total stockholders' equity 105,155 107,835 -------
------- Total liabilities and stockholders' equity $192,273
$221,096 ======== ======== OTHER BALANCE SHEET DATA Working capital
$64,093 $67,001 Current ratio 2.1 1.8 Total debt $31,803 $49,930
Debt-to-capitalization 23.2% 31.6% ICO, Inc. Supplemental Segment
Information (Unaudited and in thousands, except percentages)
Revenues Three Months Ended % of September 30: 2009 Total 2008 % of
Total Change % ---- ----- ---- ---------- ------ --- ICO Europe
$35,895 44% $48,489 45% $(12,594) (26%) Bayshore Industrial 15,046
19% 19,173 18% (4,127) (22%) ICO Asia Pacific 16,760 21% 23,401 22%
(6,641) (28%) ICO Polymers North America 8,489 11% 10,119 9%
(1,630) (16%) ICO Brazil 4,290 5% 6,810 6% (2,520) (37%) ----- ---
----- --- ------ Consolidated $80,480 100% $107,992 100% $(27,512)
(25%) ======= === ======== === ======== Fiscal Year Ended % of
September 30: 2009 Total 2008 % of Total Change % ---- ----- ----
---------- ------ --- ICO Europe $135,006 45% $207,209 46%
$(72,203) (35%) Bayshore Industrial 65,221 22% 90,736 20% (25,515)
(28%) ICO Asia Pacific 54,397 18% 82,390 19% (27,993) (34%) ICO
Polymers North America 32,248 11% 45,090 10% (12,842) (28%) ICO
Brazil 13,093 4% 21,276 5% (8,183) (38%) ------ --- ------ ---
------ Consolidated $299,965 100% $446,701 100% $(146,736) (33%)
======== === ======== === ========= === Operating income (loss)
Three Months Ended September 30: 2009 2008 Change % ---- ----
------ --- ICO Europe $2,620 $2,782 $(162) (6%) Bayshore Industrial
1,067 1,486 (419) (28%) ICO Asia Pacific (5) 210 (215) (102%) ICO
Polymers North America 572 424 148 35% ICO Brazil 218 429 (211)
(49%) --- --- ---- Total Operations 4,472 5,331 (859) (16%)
Unallocated General Corporate Expense (1,830) (1,233) (597) 48%
------ ------ ---- Consolidated $2,642 $4,098 $(1,456) (36%) ======
====== ======= Fiscal Year Ended September 30: 2009 2008 Change %
---- ---- ------ --- ICO Europe $5,728 $13,201 $(7,473) (57%)
Bayshore Industrial 6,157 10,241 (4,084) (40%) ICO Asia Pacific
(6,125) 1,822 (7,947) (436%) ICO Polymers North America 2,025 5,618
(3,593) (64%) ICO Brazil 178 982 (804) (82%) --- --- ---- Total
Operations 7,963 31,864 (23,901) (75%) Unallocated General
Corporate Expense (5,896) (6,157) 261 (4%) ------ ------ ---
Consolidated $2,067 $25,707 $(23,640) (92%) ====== ======= ========
Operating income (loss) as a percentage of revenues Three Months
Ended Fiscal Year Ended September 30, September 30,
--------------------------- -------------------------- 2009 2008
Change 2009 2008 Change ---- ---- ------ ---- ---- ------ ICO
Europe 7% 6% 1% 4% 6% (2%) Bayshore Industrial 7% 8% (1%) 9% 11%
(2%) ICO Asia Pacific 0% 1% (1%) (11%) 2% (13%) ICO Polymers North
America 7% 4% 3% 6% 12% (6%) ICO Brazil 5% 6% (1%) 1% 5% (4%)
Consolidated 3% 4% (1%) 1% 6% (5%) ICO, Inc. Supplemental Segment
Information (cont'd.) (Unaudited and in thousands, except
percentages) Revenues Three Months Ended
----------------------------------------------------------
September 30, June 30, ------------- -------- 2009 % of Total 2009
% of Total Change % ---- ---------- ---- ---------- ------ --- ICO
Europe $35,895 44% $31,724 45% $4,171 13% Bayshore Industrial
15,046 19% 16,003 23% (957) (6%) ICO Asia Pacific 16,760 21% 11,974
17% 4,786 40% ICO Polymers North America 8,489 11% 7,113 10% 1,376
19% ICO Brazil 4,290 5% 3,183 5% 1,107 35% ----- --- ----- ---
----- --- Consolidated $80,480 100% $69,997 100% $10,483 15%
======= === ======= === ======= === Operating income (loss) Three
Months Ended ----------------------------------------- September
30, June 30, 2009 2009 Change % ---- ---- ------ --- ICO Europe
$2,620 $1,342 $1,278 95% Bayshore Industrial 1,067 1,772 (705)
(40%) ICO Asia Pacific (5) 171 (176) (103%) ICO Polymers North
America 572 210 362 172% ICO Brazil 218 (10) 228 N.M.* --- --- ---
Total Operations 4,472 3,485 987 28% Unallocated General Corporate
Expense (1,830) (1,296) (534) 41% ------ ------ ---- Consolidated
$2,642 $2,189 $453 21% ====== ====== ==== Operating Income (loss)
as a percentage of revenues Three Months Ended
-------------------------------- September 30, June 30, 2009 2009
Change ---- ---- ------ ICO Europe 7% 4% 3% Bayshor Industrial 7%
11% (4%) ICO Asia Pacific 0% 1% (1%) ICO Polymers North America 7%
3% 4% ICO Brazil 5% 0% 5% Consolidated 3% 3% 0% *Not meaningful
ICO, Inc. Reconciliation of Non-GAAP Financial Measures (Unaudited
and in thousands except per share data) Net Income (Loss) and
Income (Loss) Per Share Reconciliation Twelve Months Ended:
September 30, --------------------- 2009 2008 ---- ---- Net income
(loss) applicable to common stock $(1,239) $15,313 Goodwill
impairment 3,450 - ----- --- Net income (loss), as adjusted $2,211
$15,313 ====== ======= Basic net income (loss) per common share
$(0.05) $0.56 Goodwill impairment 0.13 - ---- --- Basic net income
(loss) per common share, as adjusted $0.08 $0.56 ===== =====
Diluted income (loss) per common share $(0.05) $0.55 Goodwill
impairment 0.13 - ---- --- Diluted net income (loss) per common
share, as adjusted $0.08 $0.55 ===== ===== Operating Income (Loss)
Reconciliation Twelve Months Ended: September 30,
---------------------- 2009 2008 ---- ---- Operating income (loss)
$2,067 $25,707 Goodwill impairment 3,450 - ----- --- Operating
income (loss), as adjusted $5,517 $25,707 ====== ======= Net Debt
Reconciliation September 30, ---------------------- 2009 2008 ----
---- Total debt $31,803 $49,930 Less cash and cash equivalents
21,880 5,589 ------ ----- Net debt $9,923 $44,341 ====== =======
http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO
http://photoarchive.ap.org/
http://www.videonewswire.com/event.asp?id=64376DATASOURCE: ICO,
Inc. CONTACT: Bradley T. Leuschner, CFO of ICO, Inc.,
+1-713-351-4100 Web Site: http://www.icopolymers.com/
Copyright