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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 [NO FEE REQUIRED]
For the fiscal year ended November 2, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
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
(Address of principal executive offices)
63105-1817
(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 $123,579,000 on December 31, 1996.
There were 26,366,304 total shares of common stock outstanding as of
December 31, 1996.
Documents incorporated by reference
1) Portions of the 1996 Annual Report to Shareholders are incorporated
by reference into Parts I, II and IV.
2) Portions of the Definitive Proxy Statement for the 1997 Annual
Meeting of Shareholders are incorporated
by reference into Part III.
10k - page 1
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, and molded
products for a wide spectrum of customers in the plastics industry. The
Company's 22 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 rigid plastic sheet & rollstock,
operating 13 facilities in the United States and Canada under the names
Spartech Plastics and GM-Plastics.
Color & Specialty Compounds - which sells custom designed plastic
alloys, compounds, color concentrates, and calendered film are utilized
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 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, and (3) a limited line
of tableware and housewares products. The Company produces these
molded products from four facilities in the United States and Canada
under the names GenPak, Hamelin Industries, and Hamelin Enterprises.
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 including many notable acquisitions. The acquisitions
that are included in the Company's current operations follow:
Date
Acquired Business Acquired Principal Products
May 1984 Southwest Converting Extruded Sheet & Rollstock
January 1986 Franklin/Vy-Cal Plastics Specialty Alloys & Compounds
December 1986 Atlas Plastics Corp. Extruded Sheet & Rollstock
December 1986 The Resin Exchange Specialty Alloys & Compounds
July 1987 Eagle Plastics Extruded Sheet & Rollstock
January 1993 Penda Corporation (a) Extruded Sheet & Rollstock
February 1994 Product Components (c) Extruded Sheet & Rollstock
November 1994 Pawnee Industries (b) (c) Extruded Sheet & Rollstock
and Color Concentrates
May 1996 Portage Industries (c) Extruded Sheet & Rollstock
September 1996 Hamelin Group (c) Extruded Sheet & Rollstock,
ColorConcentrates, and
Molded Products
(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 1996 Annual Report to Shareholders, attached as Exhibit
13.
10k - page 2
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 1994, 1995, and 1996 were as follows:
Fiscal Year
(Dollars in millions)
1994 1995 1996
Net Sales $210.0 $283.2 $319.2
Operating Earnings $18.8 $25.7 $31.6
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, and polyethylene ("PE").
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.
Marketing, Sales and Distribution - The custom sheet extrusion business
has generally been a regional business supplying manufacturers within an
estimated 500 mile radius of each of the group's 13 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.
10k - page 3
The Company markets 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
1996, the extruded sheet & rollstock group sold its products to
approximately 2,100 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 1994, 1995, and 1996 were as
follows:
Fiscal Year
(Dollars in millions)
1994 1995 1996
Net Sales $46.6 $69.1 $68.2
Operating Earnings $2.8 $4.6 $5.4
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.
10k - page 4
Marketing, Sales and Distribution - The color & specialty compound
group markets most of its products to customers located in the East Coast
and Midwest U.S. and in Quebec and Ontario, Canada. The group markets its
products principally through its own sales force, but also uses independent
sales representatives. During fiscal 1996, the color & specialty compound
group sold its products to approximately 1000 customers.
Molded Products
The four manufacturing facilities which comprise the molded products
group were added to the Company's businesses with the September 27, 1996
acquisition of Hamelin Group Inc. Therefore, fiscal 1996 results only
include one month of operations. The group's net sales and operating
earnings (consisting of earnings before interest, taxes and corporate
operations/allocations) for this one month period in fiscal 1996 were $3.9
million and $.4 million, respectively.
Products - The molded 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; and
Hamelin Enterprises manufactures a limited line of tableware and housewares
products.
Manufacturing and Production - The principal raw materials used in the
Company's manufacturing of its molded products are PE, PP, and PVC. The
Company utilizes more than 65 molding machines and 19 printing presses to
manufacture its three major product lines -- containers, wheel, and
tableware/houseware goods.
Marketing, Sales and Distribution - GenPak markets most of its products
to customers located 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; and Hamelin Enterprises sells
its products primarily throughout Canada. The group markets its products
principally through its own sales force, but also uses independent sales
representatives. During fiscal 1996, the molded products group sold its
products to approximately 400 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 1997 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.
10k - page 5
Competition
The extruded sheet & rollstock, color & specialty compounds, and molded
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
oversupply 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
plastic sheet which is sold to 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 out-sourcing of specialized semi-finished materials by many
manufacturers. Finally, the Company's molded products group operates in
selective niches within the highly-competitive injection molding market.
Backlog
The Company estimates that the total dollar volume of its backlog as of
November 2, 1996, was approximately $37.3 million, which represents
approximately five weeks of production. The comparable backlog for 1995
was approximately $23.2 million.
Employees
The Company's total employment approximates 1,800. There are 1,300
production personnel at the Company's 22 plants, approximately 35% 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 500 supervisory/clerical employees, none of whom are
unionized. The Company believes that all of its employee and union
relations are satisfactory.
10k - page 6
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
1997 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 international operations is located
in Note (13) to the Consolidated Financial Statements on page 23 of the
1996 Annual Report to Shareholders, attached hereto as Exhibit 13. The
Company's international operations may be affected periodically by foreign
political and economic developments, laws and regulations, and currency
fluctuations.
Item 2. PROPERTIES
The Company operates in plants and offices aggregating approximately
1,795,000 square feet of space. Approximately 694,000 square feet of plant
and office space is leased with the remaining 1,101,000 square feet owned
by the Company. A summary of the Company's principal operating facilities
follows:
Extruded Sheet & Rollstock
Location Description Size in Square Owned/Leased
Feet
Arlington, TX Extrusion plant & 126,000 Leased
offices
Atlanta, GA Extrusion plant & 75,000 Leased
offices
Cape Extrusion plant & 100,000 Owned
Girardeau, MO offices
Clare, MI Extrusion plant & 27,000 Owned
offices
La Mirada, CA Extrusion plant & 98,000 Leased
offices
Mankato, MN Extrusion plant & 36,000 Owned
offices
50,000 Leased
McMinnville, Extrusion plant & 40,000 Owned
OR offices
Paulding, OH Extrusion plant & 68,000 Owned
offices
20,000 Leased
Portage, WI Extrusion plant & 115,000 Owned
offices
75,000 Leased
Richmond, IN Extrusion plant & 52,000 Owned
offices
29,000 Leased
Wichita, KS Extrusion plant & 63,000 Owned
offices
102,000 Leased
Cornwall, Extrusion plant & 38,000 Leased
Ontario offices
Granby, Quebec Extrusion plant & 50,000 Owned
offices
10k - page 7
Color & Specialty Compounds
Location Description Size in Square Owned/Leased
Feet
Cape Compounding plant & 57,000 Owned
Girardeau, MO offices
30,000 Leased
Conshohocken, Calendering plant & 50,000 Owned
PA offices
Goddard, KS Color plant & 38,000 Owned
offices
Kearny, NJ Compounding plant & 59,000 Owned
offices
Stratford, Compounding plant & 65,000 Owned
Ontario offices
Molded Products
Location Description Size in Square Owned/Leased
Feet
Toronto, Injection Molding 73,000 Leased
Ontario plant & offices
Cookshire, Injection Molding 140,000 Owned
Quebec plant & offices
Montreal, Injection Molding 100,000 Owned
Canada plant & offices
Warsaw, Injection Molding 41,000 Owned
Indiana plant & offices
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 65
sheet extrusion lines, 43 supplementary co-extruders, 9 compounding-milling
lines, 5 color compounding lines, 67 injection molding machines, 19
printing machines, a calendering line, cutting and grinding machinery,
resin storage facilities, warehouse equipment, and quality laboratories at
all locations. The Company believes that the present facilities are
adequate for the level of business anticipated in fiscal year 1997.
The Company also owns plants and office facilities in Monroe, Louisiana,
and Brooklyn, New York, the aggregate square footage of which is
approximately 200,000. The buildings are currently being leased to
independent third parties.
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 claims 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 adjust his
existing stock options, provide for the issuance of additional shares of
common stock, and award to him attorney's fees and interest. Mr. Powers
seeks judgment against the Company and the other defendants: (1) in excess
10k - page 8
of $13 million, plus punitive damages, (2) to issue an additional 167,744
shares of common stock, (3) to increase his then-outstanding options to
purchase the Company's common stock from 1,871,201 shares to 4,080,000
shares, and (4) for attorney's fees and interest. In June 1993, in
responding to the Company's request for summary judgment, the court ruled
the Board of Director's decision to not adjust Mr. Powers' options was
"final, binding and conclusive" unless Mr. Powers can establish that the
Board was not acting independently and that it could not have acted
appropriately. Discovery has concluded in the litigation, and the Company,
together with the other defendants, has moved for summary judgment
dismissing the complaint. 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. The Company believes that this lawsuit
is simply a restatement of the claims made in the 1992 lawsuit and a motion
to dismiss or stay this lawsuit was filed pending the outcome of the 1992
lawsuit. On December 3, 1996, the Circuit Court of St. Louis County,
Missouri granted the motion to dismiss and ordered the St. Louis lawsuit to
be dismissed without prejudice. The company was notified on January 6,
1997 that Mr.Powers filed a Notice of Appeal to the Missouri Court of Appeals.
The Company believes Mr. Powers' litigation is without merit and will
continue to defend against it vigorously.
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. 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 2, 1996.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information on page 28 of the 1996 Annual Report to Shareholders,
attached hereto as Exhibit 13, is incorporated by reference in response to
this item. The chart of common stock dividends on page 28 presents the cash
dividends declared in 1995, consisting of three quarterly dividends of
three cents per share each, and 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. On December 9, 1996, the Company
declared a dividend of five cents per share payable on January 7, 1997.
Item 6. SELECTED FINANCIAL DATA
The information on page 25 of the 1996 Annual Report to Shareholders,
attached hereto as Exhibit 13, is incorporated by reference in response to
this item.
10k - page 9
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information on pages 12 and 13 of the 1996 Annual Report to
Shareholders, attached hereto as Exhibit 13, is incorporated by reference
in response to this item. In addition to the historical information
presented in the "Management's Discussion and Analysis" and contained
elsewhere herein, the discussion of certain matters, presented in or
incorporated by reference in this Form 10-K, includes forward-looking
information and assumptions concerning Spartech's operations, future
results, and prospects. These forward-looking statements, as defined in
the Private Securities Litigation Reform Act (PSLRA) of 1995, are based on
current expectations and are subject to risk and uncertainties. The
Company desires to take advantage of the "safe harbor" provisions of the
PSLRA by cautioning that numerous important factors, in some cases have
affected, and in the future could affect, the Company's actual results and
could cause its consolidated results to differ materially from those
expressed in or implied by the forward-looking statements or related
assumptions.
In addition to the risk factors discussed in Item 1 (Business, under the
headings Raw Materials, Seasonality, Competition, Government Regulations,
and International Operations) included herein on pages 2 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 1996 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.
10k - page 10
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 1997 Annual Meeting of Shareholders to be filed with the Commission
on or about January 15, 1997, 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:
Position with the Company and
Name Age Date Appointed
Bradley B. Buechler 48 President (April 1987), Chief
Executive Officer (October
1991), and Director (February 1984)
David B. Mueller 43 Exectuive Vice President and
Chief Operating Officer (May
1996), Secretary (October
1991), and Director (March 1994)
Daniel J. Yoder 55 Vice President of Engineering
and Technology (May 1990)
Randy C. Martin 34 Vice President-Finance and
Chief Financial Officer (May 1996)
David G. Pocost 35 Vice President of Quality and
Environmental Affairs
(December 1996)
Mr. Buechler, a CPA, was with Arthur Andersen & Co. 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 and Chief Operating Officer from
1985 - 1996.
Mr. Mueller, a CPA, was previously with Arthur Andersen & Co. 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.
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.
10k - page 11
Item 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled "Executive
Compensation" and "Board of Directors and Committees" of the Definitive
Proxy Statement for the 1997 Annual Meeting of Shareholders to be filed
with the Commission on or about January 15, 1997 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 1997 Annual Meeting of
Shareholders to be filed with the Commission on or about January 15, 1997
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 1997 Annual Meeting of Shareholders to be filed with the Commission
on or about January 15, 1997 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 1996 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
10k - page 12
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
3(4) Articles of Incorporation and By-Laws
10(A)(5) Amended and Restated Employment Agreement dated July 1, 1992,
between Bradley B. Buechler and Spartech Corporation
10(B)(5) Amended and Restated Employment Agreement dated July 1, 1992,
between David B. Mueller and Spartech Corporation
10(C)(5) Amended and Restated Employment Agreement dated June 30, 1995,
between Daniel J. Yoder and Spartech Corporation
10(D)(6) Spartech Corporation Incentive Stock Option Plan dated July
26, 1991
10(E)(6) Spartech Corporation Restricted Stock Option Plan dated
July 26, 1991
10(F) Amendment to the Amended and Restated Employment Agreement
between Bradley B. Buechler and Spartech Corporation
dated as of July 1, 1996
10(G) Amendment to the Amended and Restated Employment
Agreement
between David B. Mueller and Spartech Corporation dated as
of July 1, 1996
11 Statement re Computation of Per Share Earnings
13 Pages 12 through 28 of 1996 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.
10k - page 13
(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 June 7,
1996, filed with the Commission on June 19, 1996, and incorporated
herein by reference.
(4) 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.
(5) Filed as an exhibit to the Company's annual report on
Form 10-K for the fiscal year ended October 31, 1992, filed
with the Commission on January 7, 1993, and incorporated
herein by reference.
(6) 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.
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 27, 1996 incorporating the announcement
of the Company's third quarter and nine months operating results into the
Registration Statement No. 333-07917 on Form S-3 filed on July 10, 1996.
No financial statements were required to be filed in the Form 8-K.
A Form 8-K was filed on October 10, 1996 for the completion of the
acquisition of the Hamelin Group Inc. on September 27, 1996. No financial
statements were filed in the Form 8-K, as the required historical and pro
forma financial information was included in Amendment No. 1 to the
Registration Statement No. 333-07917 on Form S-3 filed on August 28, 1996.
10k - page 14
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 10, 1997 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 10, 1997 /S/ Bradley B. Buechler President, Chief
Bradley B. Buechler Executive Officer,
and Director (Principal
Executive Officer)
January 10, 1997 /S/ David B. Mueller Executive Vice President,
David B. Mueller Chief Operating Officer,
Director
January 10, 1997 /S/ Randy C. Martin Vice President-Finance
Randy C.Martin Chief Financial Officer
(Principal Financial and
Accounting Officer)
January 10, 1997 /S/ Thomas L. Cassidy Director
Thomas L. Cassidy*
January 10, 1997 /S/ W. R. Clerihue Chairman of the Board and
W. R. Clerihue* Director
January 10, 1997 /S/ Francis J. Eaton Director
Francis J. Eaton*
January 10, 1997 /S/ Jackson W. Robinson Director
Jackson W. Robinson*
January 10, 1997 /S/ Rodney H. Sellers Director
Rodney H. Sellers*
* 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
10k - page 15
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 1996
Annual Report to Shareholders incorporated by reference in this Form 10-K,
and have issued our report thereon dated December 6, 1996. 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 6, 1996
10k - page F-1
SPARTECH CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR FISCAL YEARS ENDED 1994, 1995 AND 1996
(Dollars in thousands)
ADDITIONS AND
BALANCE AT CHARGES TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS PERIOD
October 29, 1994:
Allowance for $ 1,044 $ 1,477 $ (1,106) $ 1,415
Doubtful
Accounts
October 28, 1995:
Allowance for $ 1,415 $ 840 $ (663) $ 1,592
Doubtful
Accounts
November 2, 1996:
Allowance for $ 1,592 $ 578 $ (224) $ 1,946
Doubtful
Accounts
Fiscal year 1994, 1995, and 1996 additions and write-offs include
activity relating to the acquisition of certain of the businesses and
assets of Product Components, Inc., Pawnee Industries, Inc., Portage
Industries Corporation, and Hamelin Group, Inc., in February 1994, November
1994, May 1996, and September 1996, respectively.
10k - page F-2