1 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-8524 MYERS INDUSTRIES, INC. (Exact name of registrant as specified in its charter) <TABLE> <S> <C> OHIO 34-0778636 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 1293 S. MAIN STREET, AKRON, OHIO 44301 (330) 253-5592 (Address of Principal Executive (Zip Code) (Telephone Number) Offices) SECURITIES REGISTERED PURSUANT TO NAME OF EACH EXCHANGE SECTION 12(b) OF THE ACT: ON WHICH REGISTERED: Common Stock, Without Par Value American Stock Exchange (Title of Class) </TABLE> SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the approximate aggregate market value of the voting stock held by non-affiliates of the registrant as of February 29, 1996: $237,691,705. Indicate the number of shares outstanding of registrant's common stock as of February 29, 1996: 16,921,611 Shares of Common Stock, without par value. - - -------------------------------------------------------------------------------- - - --------------------------------------------------------------------------------
2 DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of Registrant's Notice of 1996 Annual Meeting and Proxy Statement, dated March 22, 1996, in Part III (Items 10, 11, 12 and 13) CROSS REFERENCE SHEET PURSUANT TO FORM 10-K GENERAL INSTRUCTION G(4) <TABLE> <CAPTION> PART/ITEM FORM 10-K HEADING REFERENCE MATERIAL - - --------- ------------------------------------------------------------ -------------------- <C> <S> <C> III/10 Directors and Executive Officers of the Registrant.......... Proxy Statement(1) pages 3 through 5 III/11 Executive Compensation...................................... Proxy Statement pages 7 through 10 III/12 Security Ownership of Certain Beneficial Owners and Management.............................................. Proxy Statement pages 3 through 5 and page 13 III/13 Certain Relationships and Related Transactions.............. Proxy Statement page 13 </TABLE> - - --------------- (1) Registrant's Notice of 1996 Annual Meeting of Shareholders and Proxy Statement
3 PART I ITEM 1. BUSINESS (a) GENERAL DEVELOPMENT OF BUSINESS Net sales for the fourth quarter were $82,963,267, up 4 percent from the $79,725,182 reported in the same year ago period. Net income for the period was $4,529,988, a 15 percent decrease from the $5,323,212 reported in 1994. Net income per share was $.27, down 16 percent from 1994's $.32 per share. For the full year, net sales increased 10 percent, finishing at $300,699,109, up from the $274,054,163 produced in 1994. Net income for the year was $15,968,839, a 10 percent decrease from the $17,831,163 reported in 1994. Net income per share was $.95, a 10 percent decrease from the $1.06 earned in 1994. All per share data have been adjusted for a 10 percent stock dividend distributed in August, 1995. Our capital position is excellent. Shareholders' equity increased $14.3 million to $145.2 million. Working capital increased $8.1 million to $68.7 million while total debt remains low at 9% of total capitalization. Cash flow from operating activities was $22.7 million. We invested approximately $12 million to continue modernizing and expanding our manufacturing plants. We expect capital expenditures for expansion of physical plant and equipment to continue in the range of $15 to $20 million. 1
4 (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS <TABLE> <CAPTION> 1995 1994 1993 -------- -------- -------- (DOLLARS IN THOUSANDS) <S> <C> <C> <C> NET SALES Distribution of aftermarket repair products and services.............................................. $126,902 $121,748 $107,214 Manufacturing of polymer and metal products.............. 186,307 163,513 147,673 Intra-segment elimination................................ (12,510) (11,207) (9,751) -------- -------- -------- $300,699 $274,054 $245,136 ======== ======== ======== OPERATING INCOME BEFORE INCOME TAXES Distribution of aftermarket repair products and services.............................................. $ 11,793 $ 11,387 $ 10,263 Manufacturing of polymer and metal products.............. 23,145 24,418 20,594 Corporate................................................ (7,098) (5,139) (4,317) Interest expense -- net.................................. (784) (620) (1,091) -------- -------- -------- $ 27,056 $ 30,046 $ 25,449 ======== ======== ======== IDENTIFIABLE ASSETS Distribution of aftermarket repair products and services.............................................. $ 48,416 $ 46,966 $ 40,780 Manufacturing of polymer and metal products.............. 140,291 121,635 108,549 Corporate................................................ 5,622 4,492 3,782 Intra-segment elimination................................ (725) (1,066) (725) -------- -------- -------- $193,604 $172,027 $152,386 ======== ======== ======== CAPITAL ADDITIONS, NET Distribution of aftermarket repair products and services.............................................. $ 227 $ 942 $ 452 Manufacturing of polymer and metal products.............. 10,722 11,071 13,449 Corporate................................................ 1,038 493 208 -------- -------- -------- $ 11,987 $ 12,506 $ 14,109 ======== ======== ======== DEPRECIATION/AMORTIZATION Distribution of aftermarket repair products and services.............................................. $ 689 $ 598 $ 565 Manufacturing of polymer and metal products.............. 8,747 7,949 6,249 Corporate................................................ 283 274 263 -------- -------- -------- $ 9,719 $ 8,821 $ 7,077 ======== ======== ======== </TABLE> (C) DESCRIPTION OF BUSINESS The Company conducts its business activities in two distinct segments: manufacturing of polymer and metal products ("the Manufacturing business") and distribution of aftermarket repair products ("the Distribution business"). The Company believes it is one of the largest manufacturers of plastic and metal storage systems in the United States and has the only nationwide distribution network supplying the tire servicing and automotive underbody repair industries. The Company's Manufacturing business designs, manufactures and markets reusable plastic storage systems for use in distribution and material handling, and other plastic and metal products for storage, assembly and material handling applications. The Company also manufactures and sells molded rubber products and other materials used primarily in the tire and tire repair industries and for various other uses including OEM automotive and construction applications. In its Distribution business, the Company is engaged in the nationwide distribution of equipment, tools and supplies used for tire servicing and automotive underbody repair. 2
5 MANUFACTURING BUSINESS The Company markets reusable plastic containers under the brand names NesTier(R), Akro-Bins(R) and Buckhorn(R). These reusable plastic containers are utilized in industrial applications including the distribution of food items, such as poultry, meat and baked goods, and the distribution of non-food items such as apparel, electronic, automotive, and industrial components, health and beauty aids and hardware. Reusable containers are also used for storage and handling in manufacturing plants and for agricultural products. Other products sold to the industrial and commercial market include tote boxes, various styles of bins, tubs, straight-walled boxes, and a line of modular cabinets for small parts storage and organization. The Company's products are sold throughout the United States and Canada by a direct sales force, independent dealers and through independent representatives. The Company's consumer products include the Keepbox(R) line of household storage containers, plastic tool boxes and other products to organize the home workshop, plastic containers to facilitate consumer recycling, and a line of plastic pots, planters and urns sold to consumers through lawn and garden retailers and other similar specialty outlets. Consumer products are marketed nationally to a variety of customers including mass-merchandisers, such as Target(R) and Wal-Mart(R), and major department stores and hardware chains, warehouse outlets and specialty shops. Products are mainly marketed under the Akro-Mils(R) name and other registered trade names, and to a lesser extent, under private label arrangements. The Company's products are sold throughout the United States by a direct sales force and independent representatives. The Company designs, manufactures, and markets molded rubber products, such as air intake hoses, rubber boots, mounts, and hood hold-down latches for diesel-powered vehicles and equipment used in the transportation, construction and agricultural industries. It also manufactures molded rubber products, rubber adhesives and materials used primarily in the tire retreading and repair industries, as well as products used in hydroelectric dams, locks and other water works systems. The Company has utilized its manufacturing systems and expertise to custom compound and calendar rubber materials to meet specific customer needs for a growing and diverse customer base. These products are sold nationally and internationally to manufacturers, construction companies and wholesale distributors, including the Distribution business, by a direct sales force and through independent sales representatives. The Company is continuously engaged in the refinement of its existing product lines and the development of new products. A large portion of the current products offered by the Company have been developed in the last five years. The Company's Manufacturing business is dependent upon outside suppliers for raw materials, principally polyethylene, polypropylene, polystyrene and synthetic and natural rubber. The Company believes that the loss of any one supplier or group of suppliers would not materially adversely affect its business, since in most instances identical or similar materials can be obtained readily from other suppliers. DISTRIBUTION BUSINESS The Company's Distribution business is conducted primarily by the Myers Tire Supply division. Products distributed by Myers Tire Supply include air compressors, mechanic's hand tools, tire changers, tire display and storage equipment, valves, tire balancing and wheel alignment equipment, curing rims and presses, retread presses and tire repair materials for the retreading industry. The Company believes it is the only nationwide distributor supplying such products. The Company's customers include independent tire dealers, tire retreaders, tire service centers, automotive supply chains and rubber companies. Myers Tire Supply's domestic distribution system includes 42 owned branch warehouse distributors located in major cities in 31 states. Each branch services customers in an assigned territory, sells all products of the division, and operates like a stand-alone business with the branch manager bearing profit/loss, inventory and credit responsibilities. Internationally, this business has two wholly owned warehouse distributors located in Canada and owns an interest in several other foreign warehouse distributors. Myers Tire Supply supplies its domestic and international distribution facilities from its main distribution center. This distribution center stocks approximately 12,000 items which are purchased from numerous 3
6 suppliers, including certain of the Company's manufacturing businesses. The Company's extensive national distribution network enables it to work closely with manufacturers in the development and distribution of new products. COMPETITION Competition in the Manufacturing business is substantial and varied in form and size from manufacturers of similar products and of other products which can be readily substituted for those produced by the Company. Competition in the Distribution business is generally from local and regional businesses. EMPLOYEES As of December 31, 1995, the Company had a total of 1,783 full-time and part-time employees. Of these employees, 1,260 were engaged in the Manufacturing business and 523 were employed in the Distribution business. Approximately 14% of the Company's employees are members of unions. The Company believes it has a good relationship with its employees. (D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES The Company operates principally in two areas of business, the first being the distribution of aftermarket repair products and services. These products are distributed both domestically through branches in the major cities in the United States and in foreign countries where, in some cases, the Company has controlling interest in companies located in those countries. No single foreign country represents more than 10 percent of the total sales, income or assets of the Company. The second major area of the Company's business is polymer and metal products which are manufactured in Company-owned facilities and distributed through mass merchandisers, warehouse distributors, sales representatives and in-house salesmen, principally in the United States. ITEM 2. PROPERTIES The following table sets forth by segment certain information with respect to properties owned by the Registrant: DISTRIBUTION OF AFTERMARKET REPAIR PRODUCTS AND SERVICES: <TABLE> <CAPTION> APPROXIMATE APPROXIMATE FLOOR SPACE LAND AREA PLANT LOCATION (SQUARE FEET) (ACRES) USE -------------------------- ------------- ----------- ---------------------------------- <S> <C> <C> <C> Akron, Ohio............... 129,000 8 Executive offices and warehousing Akron, Ohio............... 31,000 2 Warehousing Hialeah, Florida.......... 28,500 1 Sales and distribution Pomona, California........ 17,700 1 Sales and distribution Englewood, Colorado....... 9,500 1 Sales and distribution Pomona, California........ 9,200 1 Leased to non-affiliated party San Antonio, Texas........ 4,500 1 Sales and distribution Phoenix, Arizona.......... 8,200 1 Sales and distribution Akron, Ohio............... 8,000 1 Leased to non-affiliated party Houston, Texas............ 7,900 1 Sales and distribution Indianapolis, Indiana..... 7,800 2 Sales and distribution Cincinnati, Ohio.......... 7,500 1 Sales and distribution York, Pennsylvania........ 7,400 3 Sales and distribution Atlanta, Georgia.......... 7,000 1 Sales and distribution </TABLE> 4
7 <TABLE> <CAPTION> APPROXIMATE APPROXIMATE FLOOR SPACE LAND AREA PLANT LOCATION (SQUARE FEET) (ACRES) USE -------------------------- ------------- ----------- ---------------------------------- <S> <C> <C> <C> Minneapolis, Minnesota.... 5,500 1 Sales and distribution Charlotte, North Carolina................ 5,100 1 Sales and distribution Syracuse, New York........ 4,800 1 Sales and distribution Franklin Park, Illinois... 4,400 1 Sales and distribution POLYMER AND METAL PRODUCTS: Dawson Springs, Kentucky................ 209,000 36 Manufacturing and distribution Wadsworth, Ohio........... 197,000 23 Manufacturing and distribution Hannibal, Missouri........ 196,000 10 Manufacturing and distribution Bluffton, Indiana......... 175,000 17 Manufacturing and distribution Roanoke Rapids, North Carolina.......... 172,000 20 Manufacturing and distribution Bristol, Indiana.......... 125,000 12 Manufacturing and distribution Akron, Ohio............... 121,000 17 Manufacturing and distribution Weirton, West Virginia.... 117,000 11 Leased to non-affiliated party Shelbyville, Kentucky..... 105,000 8 Manufacturing and distribution Goddard, Kansas........... 62,000 7 Manufacturing and distribution Fairfield, Ohio........... 51,000 2 Manufacturing and distribution Akron, Ohio............... 49,000 6 Manufacturing and distribution Ontario, California....... 40,000 2 Distribution and warehousing </TABLE> The following table sets forth by segment certain information with respect to facilities leased by the Registrant: <TABLE> <CAPTION> EXPIRATION DATE OF APPROXIMATE LEASE AND RENEWAL FLOOR SPACE OPTION PERIOD (IF LOCATION (SQUARE FEET) ANY) USE - - ----------------------- ------------- ----------------- --------------------------------------- <S> <C> <C> <C> POLYMER AND METAL PRODUCTS: Mississauga, Ontario, Canada............... 23,000 December 31, 1996 Sales, administrative and distribution Milford, Ohio.......... 19,000 February 29, 1996 Sales and administrative Stanton, Harcourt, England.............. 12,000 December 31, 2001 Warehousing and distribution Witney, Oxon, England.............. 4,000 December 31, 2004 Sales, administration and distribution </TABLE> - - --------------- The Registrant also leases distribution facilities in thirty-one (31) locations throughout the United States and Canada which, in the aggregate, amount to approximately 159,000 square feet of warehouse and office space. All of these locations are used by the distribution of aftermarket repair products and services segment. The Registrant believes that all of its properties, machinery and equipment generally are well maintained and adequate for the purposes for which they are used. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings other than ordinary routine litigation incidental to the Registrant's business. 5
8 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of the fiscal year ended December 31, 1995, there were no matters submitted to a vote of security holders. EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is certain information concerning the executive officers of the Registrant. Executive officers are elected annually by the Board of Directors and serve at the pleasure of the Board. <TABLE> <CAPTION> YEARS AS NAME AGE EXECUTIVE OFFICER TITLE - - ----------------------------------- --- ----------------- -------------------------------------- <S> <C> <C> <C> Stephen E. Myers................... 52 23 President and Chief Executive Officer Milton I. Wiskind.................. 70 24 Senior Vice President and Secretary Gregory J. Stodnick................ 53 16 Vice President -- Finance </TABLE> Each executive officer has been principally employed in the capacities shown or similar ones with the Registrant for over the past five years. Years as an Executive Officer is stated as of the time the Company became a public company for reporting purposes. Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's Directors, certain of its executive officers and persons who own more than ten percent of its Common Stock ("Insiders") to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the American Stock Exchange, Inc., and to furnish the Company with copies of all such forms they file. The Company understands from the information provided to it by the Insiders that they adhered to all filing requirements. 6
9 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is traded on the American Stock Exchange (ticker symbol MYE). The approximate number of record holders at December 31, 1995 was 1,824. High and low stock prices and dividends for the last two years were: <TABLE> <CAPTION> SALES PRICE* 1995 ------------ DIVIDENDS QUARTER ENDED HIGH LOW PAID* ---------------------------------------------------- ---- ---- --------- <S> <C> <C> <C> MARCH 31............................................ 15 1/8 11 7/8 .036 JUNE 30............................................. 14 1/4 12 3/4 .036 SEPTEMBER 30........................................ 15 1/4 12 7/8 .04 DECEMBER 31......................................... 16 3/4 13 7/8 .04 </TABLE> <TABLE> <CAPTION> SALES PRICE* 1994 ------------ DIVIDENDS QUARTER ENDED HIGH LOW PAID* ---------------------------------------------------- ---- ---- --------- <S> <C> <C> <C> March 31............................................ 16 3/4 14 3/4 .032 June 30............................................. 15 3/4 13 3/4 .032 September 30........................................ 16 1/8 14 3/8 .036 December 31......................................... 16 1/8 11 3/4 .036 </TABLE> - - --------------- * Adjusted for the 10 percent stock dividend distributed in August, 1995. 7
10 ITEM 6. SELECTED FINANCIAL DATA MYERS INDUSTRIES, INC. AND SUBSIDIARIES ELEVEN-YEAR SUMMARY <TABLE> <CAPTION> 1995 1994 1993 1992 1991 ------------- ------------- ------------- ------------- ------------- <S> <C> <C> <C> <C> <C> OPERATIONS FOR THE YEAR Net sales.............................. $ 300,699,109 $ 274,054,163 $ 245,136,189 $ 229,255,085 $ 195,581,070 Cost and expenses Cost of sales........................ 206,050,902 183,890,614 163,794,129 154,007,502 129,148,273 Selling.............................. 33,973,656 32,238,245 30,428,260 27,286,626 24,442,225 General and administrative........... 32,834,285 27,258,865 24,373,483 24,782,393 22,407,924 Interest -- net...................... 784,427 620,276 1,091,590 1,341,811 1,738,878 ------------- ------------- ------------- ------------- ------------- 273,643,270 244,008,000 219,687,462 207,418,332 177,737,300 ------------- ------------- ------------- ------------- ------------- Income before income taxes........... 27,055,839 30,046,163 25,448,727 21,836,753 17,843,770 Income taxes......................... 11,087,000 12,215,000 10,054,000 8,727,000 7,308,000 ------------- ------------- ------------- ------------- ------------- Net income........................... $ 15,968,839 $ 17,831,163 $ 15,394,727 $ 13,109,753 $ 10,535,770 ------------- ------------- ------------- ------------- ------------- Net income per share*.................... $.95 $1.06 $.95 $.85 $.69 ------------- ------------- ------------- ------------- ------------- FINANCIAL POSITION -- AT YEAR END Total Assets......................... $ 193,603,873 $ 172,026,887 $ 152,386,302 $ 142,081,023 $ 113,030,476 ------------- ------------- ------------- ------------- ------------- Current assets....................... 101,087,297 94,724,955 78,922,479 74,892,471 60,723,337 Current liabilities.................. 32,372,026 34,093,593 24,380,541 31,685,772 25,346,105 ------------- ------------- ------------- ------------- ------------- Working capital...................... 68,715,271 60,631,362 54,541,938 43,206,699 35,377,232 Other assets......................... 23,086,827 15,923,620 15,769,611 16,525,900 12,969,476 Property, plant and equipment -- net................................ 69,429,749 61,378,312 57,694,212 50,662,652 39,337,663 Less: Long-term debt..................... 13,335,191 4,154,646 10,654,650 24,917,426 14,559,630 Deferred income taxes.............. 2,713,106 2,869,976 2,064,399 1,594,855 670,922 ------------- ------------- ------------- ------------- ------------- SHAREHOLDERS' EQUITY..................... $ 145,183,550 $ 130,908,672 $ 115,286,712 $ 83,882,970 $ 72,453,819 ------------- ------------- ------------- ------------- ------------- COMMON SHARES OUTSTANDING*............... 16,906,019 16,830,101 16,806,602 15,502,487 15,264,038 ------------- ------------- ------------- ------------- ------------- BOOK VALUE PER COMMON SHARE*............. $8.59 $7.78 $6.86 $5.41 $4.75 ------------- ------------- ------------- ------------- ------------- OTHER DATA Dividends paid....................... $ 2,577,154 $ 2,326,964 $ 2,058,288 $ 1,746,780 $ 1,530,455 Dividends paid per Common Share*..... .15 .14 .125 .11 .10 ------------- ------------- ------------- ------------- ------------- Average Common Shares* outstanding during the year........ 16,871,365 16,830,380 16,197,058 15,469,111 15,248,228 =========== =========== =========== =========== =========== </TABLE> - - --------------- * Adjusted for the ten percent stock dividend paid in August, 1995; the five-for-four stock split distributed in August, 1994; the ten percent stock dividend paid in August, 1993; the five-for-four stock split distributed in August, 1992; the ten percent stock dividends paid in August, 1991; August, 1990; September, 1989; and September, 1988; the three-for-two stock split distributed in September, 1987; and the ten percent stock dividends paid in August, 1986; and in August, 1985. 8
11 ITEM 6. SELECTED FINANCIAL DATA -- CONTINUED MYERS INDUSTRIES, INC. AND SUBSIDIARIES ELEVEN-YEAR SUMMARY -- CONTINUED <TABLE> <CAPTION> 1990 1989 1988 1987 1986 1985 ------------ ------------ ------------ ------------ ----------- ----------- <S> <C> <C> <C> <C> <C> <C> OPERATIONS FOR THE YEAR Net sales...................... $202,104,203 $194,771,836 $183,810,747 $131,710,204 $89,645,730 $85,250,021 Cost and expenses Cost of sales................ 136,602,663 134,234,037 129,065,978 90,243,676 60,089,248 58,173,213 Selling...................... 23,054,815 20,732,345 18,528,963 15,276,676 10,767,736 10,151,414 General and administrative... 21,674,409 19,896,487 18,726,786 14,854,167 11,355,895 10,423,738 Interest -- net.............. 2,780,598 3,692,592 3,624,112 1,759,659 275,179 197,252 ------------ ------------ ------------ ------------ ----------- ----------- 184,112,485 178,555,461 169,945,839 122,134,178 82,488,058 78,945,617 ------------ ------------ ------------ ------------ ----------- ----------- Income before income taxes... 17,991,718 16,216,375 13,864,908 9,576,026 7,157,672 6,304,404 Income taxes................. 7,234,000 6,595,000 5,797,000 4,358,000 3,443,000 2,881,000 ------------ ------------ ------------ ------------ ----------- ----------- Net Income................... $ 10,757,718 $ 9,621,375 $ 8,067,908 $ 5,218,026 $ 3,714,672 $ 3,423,404 ------------ ------------ ------------ ------------ ----------- ----------- Net income per share*............ $.71 .63 .53 .35 .25 .22 ------------ ------------ ------------ ------------ ----------- ----------- FINANCIAL POSITION -- AT YEAR END Total Assets................. $116,373,153 $111,104,356 $109,668,585 $103,401,944 $52,736,836 $51,432,421 ------------ ------------ ------------ ------------ ----------- ----------- Current assets............... 63,310,846 61,479,468 58,852,930 52,171,313 38,173,150 36,362,072 Current liabilities.......... 26,345,655 26,397,909 24,796,004 28,326,238 10,605,351 9,755,442 ------------ ------------ ------------ ------------ ----------- ----------- Working capital.............. 36,965,191 35,081,559 34,056,926 23,845,075 27,567,799 26,606,630 Other assets................. 14,363,401 15,612,316 18,057,080 21,275,608 1,146,427 1,119,083 Property, plant and equipment -- net..................... 38,698,906 34,012,572 32,758,575 29,955,023 13,417,259 13,951,266 Less: Long-term debt............. 25,361,688 29,833,585 38,433,060 35,502,197 6,063,666 8,633,323 Deferred income taxes...... 1,471,796 1,579,955 1,672,313 1,570,207 2,545,724 2,391,589 ------------ ------------ ------------ ------------ ----------- ----------- SHAREHOLDERS' EQUITY............. $ 63,194,014 $ 53,292,907 $ 44,767,208 $ 38,003,302 $33,522,095 $30,652,067 ------------ ------------ ------------ ------------ ----------- ----------- COMMON SHARES OUTSTANDING*....... 15,219,196 15,182,504 15,119,973 15,008,593 14,986,601 14,897,259 ------------ ------------ ------------ ------------ ----------- ----------- BOOK VALUE PER COMMON SHARE*..... $4.15 $3.51 $2.96 $2.53 $2.24 $2.06 ------------ ------------ ------------ ------------ ----------- ----------- OTHER DATA Dividends paid............... $ 1,395,850 $ 1,265,208 $ 1,134,314 $ 1,049,550 972,065 $ 899,278 Dividends paid per Common Share*..................... .09 .085 .075 .07 .065 .06 ------------ ------------ ------------ ------------ ----------- ----------- Average Common Shares* outstanding during the year....................... 15,203,290 15,155,487 15,102,726 14,999,411 14,980,238 15,624,594 =========== =========== =========== =========== ========== ========== </TABLE> - - --------------- * Adjusted for the ten percent stock dividend paid in August, 1995; the five-for-four stock split distributed in August, 1994; the ten percent stock dividend paid in August, 1993; the five-for-four stock split distributed in August, 1992; the ten percent stock dividends paid in August, 1991; August, 1990; September, 1989; and September, 1988; the three-for-two stock split distributed in September, 1987; and the ten percent stock dividends paid in August, 1986; and August, 1985. 9
12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the year ended December 31, 1995 increased $26.6 million or 10 percent compared to 1994 based on increases in both of the Company's business segments. The increase in the Distribution segment of $5.2 million or 4 percent was primarily the result of increased unit sales. Sales in the Manufacturing segment increased $22.8 million or 14 percent due to the inclusion of Ameri-Kart's operations subsequent to the June 30, 1995 acquisition combined with sustained demand for existing industrial products. Net sales for the year ended December 31, 1994 increased $28.9 million or 12 percent compared to 1993. This was the result of strong growth in both of the Company's business segments. The increase in the Distribution segment of $14.5 million or 14 percent resulted from strong equipment sales, a pick-up in international activity and the acquisition of a distributor. Sales in the Manufacturing segment increased $15.8 million or 11 percent. Improved sales of existing products, the introduction of new products and extensions of existing product lines were the main factors for the increase. Cost of sales for the year ended December 31, 1995 increased $22.1 million or 12 percent over 1994 as the result of higher sales volume. Gross profit, expressed as a percentage of sales, decreased to 31.5 percent in 1995 from 32.9 percent in 1994. The decrease in the gross profit percent was primarily attributable to unfavorable raw material prices in the manufacturing segment. Cost of sales for the year ended December 31, 1994 increased $20.1 million or 12 percent over 1993 as the result of the higher sales volume. Gross profit, expressed as a percent of sales, decreased to 32.9 percent in 1994 from 33.2 percent in 1993. The decrease in the gross profit percent is the result of increased raw material prices, mainly resin and rubber, which were partially offset by the increased plant utilization caused by the higher sales volume. Operating expenses for the year ended December 31, 1995 increased $7.3 million or 12 percent over 1994. Operating expenses as a percentage of sales, increased to 22.2 percent in 1995 as compared to 21.7 percent in 1994 as a result of certain non-recurring charges related to the disposition of various manufacturing product lines and production facilities. Operating expenses for the year ended December 31, 1994 increased $4.7 million or 9 percent over 1993. The increase was principally due to the higher sales volume. As a percent of sales, operating expenses decreased to 21.7 percent in 1994 as compared to 22.4 percent in 1993. This improvement was the result of on-going cost control programs and better fixed expense coverage. Interest expense for the year ended December 31, 1995 increased $206,131 or 26 percent from 1994. The increase in interest expense reflects higher borrowing levels under the Revolving Credit Facility used to finance the Ameri-Kart acquisition. Interest expense for the year ended December 31, 1994 decreased $421,275 or 35 percent from 1993 as a result of lower long-term debt levels. Proceeds from the Company's Common Stock offering in May of 1993 were used to pay down debt levels, which led to the reduced interest expense. Income taxes as a percent of income before taxes were 41 percent in 1995, up from 40.7 percent in 1994. The higher effective tax rate was attributable to an increase in non-deductible amortization expense and foreign tax rate differences. The 1994 effective tax rate of 40.7 percent was up from 39.5 percent in 1993, primarily due to the Company's adoption in 1993 of the Financial Accounting Standards Board (FASB) Statement 109, "Accounting for Income Taxes" which reduced 1993 income tax expense by $210,000. FINANCIAL CONDITION Working capital increased to $68.7 million for the year ended December 31, 1995 compared to $60.6 million for 1994. Total debt expressed as a percent of total capitalization increased to 9 percent for the year ended December 31, 1995 compared to 4 percent in 1994. This strong capital position provides the 10
13 Company with the flexibility to finance additional manufacturing capacity, working capital needs, and other corporate requirements. During the next five years, the Company anticipates on-going capital expenditures in the range of $15 to $20 million per year, primarily for increased polymer manufacturing capacity. Management believes available credit facilities and anticipated cash flows from operations will be sufficient to meet the needs of its business, both short-term and long-term. RECENTLY ISSUED ACCOUNTING STANDARDS In March 1995, the FASB issued Statement No. 121, "Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed Of." This Statement requires that long-lived assets and certain indentifiable intangibles to be held and used, be reviewed for impairment, based on fair value, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In addition, long-lived assets and intangibles to be disposed of must be reported at the lower of carrying amount or fair value less cost to sell. The Company will be required to adopt this new standard in fiscal 1996 and restatement of previously issued financial statements is not permitted, however, adoption would not materially impact the Company's reported financial condition or results of operations. FASB Statement No. 123, "Accounting for Stock Based Compensation," was issued which establishes a method of accounting for stock based compensation that is based on the fair value of stock options and similar instruments and encourages, but does not require, adoption of that method. The Statement allows an entity to continue to account for stock-based employee compensation using the intrinsic value based method in APB Opinion No. 25, with pro forma disclosures of net income and earnings per share, as if the fair value method had been applied. The new Standard is applicable to financial statements for fiscal years beginning after December 15, 1995. The Company expects to continue following the accounting of APB Opinion No. 25 in 1996 and future periods. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and accompanying notes and the reports of management and independent accountants follow Item 9 of this Report. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements with the Registrant's independent accountants on accounting and financial disclosure matters within the two year period ended December 31, 1995, or in any period subsequent to such date. 11
14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED) COMMON STOCK MARKET PRICES AND DIVIDENDS The Company's Common Stock is traded on the American Stock Exchange (ticker symbol MYE). The approximate number of record holders at December 31, 1995 was 1,824. High and low stock prices and dividends for the last two years were: <TABLE> <CAPTION> SALES PRICE* ------------ HIGH LOW DIVIDENDS PAID* ---- --- --------------- <S> <C> <C> <C> QUARTER ENDED 1995 MARCH 31............................................. 15 1/8 11 7/8 .036 JUNE 30.............................................. 14 1/4 12 3/4 .036 SEPTEMBER 30......................................... 15 1/4 12 7/8 .04 DECEMBER 31.......................................... 16 3/4 13 7/8 .04 </TABLE> <TABLE> <CAPTION> SALES PRICE* ------------ HIGH LOW DIVIDENDS PAID* ---- --- --------------- <S> <C> <C> <C> Quarter Ended 1994 March 31............................................. 16 3/4 14 3/4 .032 June 30.............................................. 15 3/4 13 3/4 .032 September 30......................................... 16 1/8 14 3/8 .036 December 31.......................................... 16 1/8 11 3/4 .036 </TABLE> SUMMARIZED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA <TABLE> <CAPTION> QUARTER ENDED 1995 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL -------- ------- -------- ------- -------- <S> <C> <C> <C> <C> <C> NET SALES................................. $67,501 $75,584 $ 74,651 $82,963 $300,699 GROSS PROFIT.............................. 21,210 22,864 22,127 28,447 94,648 NET INCOME................................ 3,767 4,355 3,317 4,530 15,969 PER SHARE*................................ .22 .26 .20 .27 .95 </TABLE> <TABLE> <CAPTION> Quarter Ended 1994 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL -------- ------- -------- ------- -------- <S> <C> <C> <C> <C> <C> Net sales................................. $59,695 $68,442 $ 66,192 $79,725 $274,054 Gross profit.............................. 19,308 23,536 21,174 26,146 90,164 Net income................................ 3,498 5,144 3,866 5,323 17,831 Per share*................................ .21 .30 .23 .32 1.06 </TABLE> - - --------------- * Adjusted for the 10 percent stock dividend distributed in August, 1995. 12
15 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS We have audited the accompanying statements of consolidated financial position of Myers Industries, Inc. (an Ohio Corporation) and Subsidiaries as of December 31, 1995 and 1994, and the related statements of consolidated income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Myers Industries, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP Cleveland, Ohio February 9, 1996 13
16 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 <TABLE> <CAPTION> 1995 1994 1993 ------------ ------------ ------------ <S> <C> <C> <C> Net sales........................................ $300,699,109 $274,054,163 $245,136,189 Cost of sales.................................... 206,050,902 183,890,614 163,794,129 ------------ ------------ ------------ Gross profit................................... 94,648,207 90,163,549 81,342,060 ------------ ------------ ------------ Operating expenses Selling........................................ 33,973,656 32,238,245 30,428,260 General and administrative..................... 32,834,285 27,258,865 24,373,483 ------------ ------------ ------------ 66,807,941 59,497,110 54,801,743 ------------ ------------ ------------ Operating income............................ 27,840,266 30,666,439 26,540,317 ------------ ------------ ------------ Interest Income......................................... (212,708) (170,728) (120,689) Expense........................................ 997,135 791,004 1,212,279 ------------ ------------ ------------ 784,427 620,276 1,091,590 ------------ ------------ ------------ Income before income taxes....................... 27,055,839 30,046,163 25,448,727 Income taxes..................................... 11,087,000 12,215,000 10,054,000 ------------ ------------ ------------ Net income....................................... $ 15,968,839 $ 17,831,163 $ 15,394,727 ------------ ------------ ------------ Net income per share............................. $.95 $1.06 $.95 =========== =========== =========== </TABLE> The accompanying notes are an integral part of these statements. 14
17 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED FINANCIAL POSITION AS OF DECEMBER 31, 1995 AND 1994 <TABLE> <CAPTION> 1995 1994 ------------ ------------ <S> <C> <C> ASSETS CURRENT ASSETS Cash and temporary cash investments........................... $ 3,387,562 $ 1,794,703 Accounts receivable -- less allowances of $1,594,000 and $1,479,000, respectively................................... 52,501,016 51,226,688 Inventories Finished and in-process products........................... 34,614,735 33,572,557 Raw materials and supplies................................. 6,635,012 5,809,158 ------------ ------------ 41,249,747 39,381,715 Prepaid expenses.............................................. 3,948,972 2,321,849 ------------ ------------ TOTAL CURRENT ASSETS............................................ 101,087,297 94,724,955 OTHER ASSETS Excess of cost over fair value of net assets of companies acquired................................................... 17,015,358 9,289,115 Patents and other intangible assets........................... 2,924,256 3,219,371 Other......................................................... 3,147,213 3,415,134 ------------ ------------ 23,086,827 15,923,620 PROPERTY, PLANT AND EQUIPMENT, AT COST Land.......................................................... 1,989,508 1,836,637 Buildings and leasehold improvements.......................... 35,325,705 29,010,268 Machinery and equipment....................................... 93,646,662 85,710,088 ------------ ------------ 130,961,875 116,556,993 Less allowances for depreciation and amortization............. 61,532,126 55,178,681 ------------ ------------ 69,429,749 61,378,312 ------------ ------------ $193,603,873 $172,026,887 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable.............................................. $ 11,865,636 $ 19,751,167 Employee compensation and related items....................... 9,736,457 8,911,996 Accrued expenses Interest................................................... 182,262 59,729 Taxes, other than income taxes............................. 1,160,766 974,853 Income taxes............................................... 1,068,474 431,805 Other...................................................... 7,382,327 3,271,664 Current portion of long-term debt............................. 976,104 692,379 ------------ ------------ TOTAL CURRENT LIABILITIES....................................... 32,372,026 34,093,593 LONG-TERM DEBT, LESS CURRENT PORTION............................ 13,335,191 4,154,646 DEFERRED INCOME TAXES........................................... 2,713,106 2,869,976 SHAREHOLDERS' EQUITY Serial Preferred Shares (authorized 1,000,000 shares)......... -0- -0- Common Shares, without par value (authorized 30,000,000 shares; outstanding 16,906,019 and 16,830,101 shares, respectively).............................................. 10,014,186 8,303,598 Additional paid-in capital.................................... 111,382,116 90,606,429 Foreign currency translation adjustment....................... (393,840) (466,191) Retained income............................................... 24,181,088 32,464,836 ------------ ------------ 145,183,550 130,908,672 ------------ ------------ $193,603,873 $172,026,887 =========== =========== </TABLE> The accompanying notes are an integral part of these statements. 15
18 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 <TABLE> <CAPTION> FOREIGN COMMON SHARES ADDITIONAL CURRENCY ------------------------ PAID-IN TRANSLATION RETAINED NUMBER AMOUNT CAPITAL ADJUSTMENT INCOME ---------- ----------- ------------ ---------- ------------ <S> <C> <C> <C> <C> <C> BALANCE AT JANUARY 1, 1993...... 10,249,578 $ 5,934,720 $ 47,548,808 $ (262,676) $ 30,662,118 Additions Shares issued through public offering................... 820,000 492,000 17,142,206 -0- -0- Net income.................... -0- -0- -0- -0- 15,394,727 Sales under option plans...... 29,997 237,262 -0- -0- -0- Employees stock purchase plan....................... 12,211 288,858 -0- -0- -0- Dividend reinvestment plan.... 2,856 68,104 -0- -0- -0- Deductions Foreign currency translation adjustment................. -0- -0- -0- (149,985) -0- Dividends -- $.125 per share...................... -0- -0- -0- -0- (2,058,288) 10% stock dividend............ 1,108,341 676,088 26,339,701 -0- (27,026,931) ---------- ----------- ------------ ---------- ------------ BALANCE AT DECEMBER 31, 1993.... 12,222,983 $ 7,697,032 $ 91,030,715 $ (412,661) $ 16,971,626 ---------- ----------- ------------ ---------- ------------ Additions Net income.................... -0- -0- -0- -0- 17,831,163 Sales under option plans...... 25,747 162,552 -0- -0- -0- Employees stock purchase plan....................... 16,358 326,588 -0- -0- -0- Five-for-four stock split..... 3,061,333 -0- -0- -0- -0- Dividend reinvestment plan.... 6,971 135,408 -0- -0- -0- Deductions Foreign currency translation adjustment................. -0- -0- -0- (53,530) -0- Purchases for treasury........ (33,300) (17,982) (424,286) -0- (10,989) Dividends -- $.14 per share... -0- -0- -0- -0- (2,326,964) ---------- ----------- ------------ ---------- ------------ BALANCE AT DECEMBER 31, 1994.... 15,300,092 $ 8,303,598 $ 90,606,429 $ (466,191) $ 32,464,836 ---------- ----------- ------------ ---------- ------------ Additions Net income.................... -0- -0- -0- -0- 15,968,839 Sales under option plans...... 36,986 314,615 -0- -0- -0- Employees stock purchase plan....................... 23,908 344,583 -0- -0- -0- Dividend reinvestment plan.... 11,205 161,770 -0- -0- -0- Foreign currency translation adjustment................. -0- -0- -0- 72,351 -0- Deductions Dividends -- $.15 per share... -0- -0- -0- -0- (2,577,154) 10% stock dividends........... 1,533,828 889,620 20,775,687 -0- (21,675,433) ---------- ----------- ------------ ---------- ------------ BALANCE AT DECEMBER 31, 1995.... 16,906,019 $10,014,186 $111,382,116 $ (393,840) $ 24,181,088 ========= ========== =========== ========= =========== </TABLE> The accompanying notes are an integral part of these statements. 16
19 MYERS INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 <TABLE> <CAPTION> 1995 1994 1993 ------------ ------------ ------------ <S> <C> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net income....................................... $ 15,968,839 $ 17,831,163 $ 15,394,727 Items not affecting use of cash Depreciation.................................. 9,718,545 8,821,426 7,077,089 Amortization of excess of cost over fair value of net assets of companies acquired......... 420,360 285,360 243,808 Amortization of deferred financing costs...... 16,461 78,436 56,972 Amortization of patents and other intangible assets...................................... 295,115 295,115 312,297 Tax benefit of net operating loss and credit carryforwards............................... -0- -0- 56,600 Deferred income taxes......................... (473,870) 805,577 469,544 Cash flow provided by (used for) working capital Accounts receivable........................... 2,159,910 (10,821,847) (2,094,805) Inventories................................... 447,254 (4,439,975) (4,065,048) Prepaid expenses.............................. (1,504,288) (407,734) 375,272 Accounts payable and accrued expenses......... (4,376,141) 10,450,114 (4,167,661) ------------ ------------ ------------ Net cash provided by operating activities..... 22,672,185 22,897,635 13,658,795 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment, net........................................... (11,986,974) (12,505,526) (14,108,649) Acquisition of business, net of cash............. (14,519,740) -0- -0- Cash dividends paid.............................. (2,577,154) (2,326,964) (2,058,288) Other............................................ 313,685 (866,450) (74,515) ------------ ------------ ------------ Net cash used for investing activities........ (28,770,183) (15,698,940) (16,241,452) CASH FLOWS FROM FINANCING ACTIVITIES Purchases for treasury........................... -0- (453,257) -0- Proceeds from issuance of common stock........... 820,968 624,548 18,228,430 Borrowings (repayments) net...................... 6,869,889 (7,237,066) (17,400,346) ------------ ------------ ------------ Net cash provided by (used for) financing activities.................................. 7,690,857 (7,065,775) 828,084 ------------ ------------ ------------ INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS...................................... 1,592,859 132,920 (1,754,573) CASH AND TEMPORARY CASH INVESTMENTS January 1........................................ 1,794,703 1,661,783 3,416,356 ------------ ------------ ------------ CASH AND TEMPORARY CASH INVESTMENTS December 31...................................... $ 3,387,562 $ 1,794,703 $ 1,661,783 =========== =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for Interest...................................... $ 874,602 $ 749,540 $ 1,354,776 Income taxes.................................. 10,450,330 11,138,152 9,372,275 </TABLE> The accompanying notes are an integral part of these statements. 17
20 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (Company). Significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. RECLASSIFICATIONS Certain amounts in the fiscal 1994 and 1993 financial statements have been reclassified in order to conform with the presentation for fiscal 1995. TRANSLATION OF FOREIGN CURRENCIES All balance sheet accounts of consolidated foreign subsidiaries are translated at the current exchange rate as of the end of the accounting period and income statement items are translated at an average currency exchange rate. The resulting translation adjustment is recorded as a separate component of shareholders' equity. FINANCIAL INSTRUMENTS Temporary cash investments, all of which have an original maturity of ninety days or less, are considered cash equivalents. Other financial instruments, consisting of trade and notes receivable, and long-term debt, are considered to have a fair value which approximates carrying value at December 31, 1995. INVENTORIES Inventories are stated at the lower of cost or market. For approximately 74 percent of its inventories, the Company uses the last-in, first-out (LIFO) method of determining cost. All other inventories are valued at first-in, first-out (FIFO) method of determining cost. If the FIFO method of inventory cost valuation had been used exclusively by the Company, inventories would have been $5,173,000, $5,196,000 and $3,906,000 higher than reported at December 31, 1995, 1994 and 1993, respectively. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization on the basis of annual rates expected to amortize the cost of such assets over their estimated useful lives by the straight-line method. REVENUE RECOGNITION The Company's revenue recognition policy is to recognize revenue from sales when goods are shipped. INCOME TAXES Deferred income taxes are provided to recognize the timing differences between financial statement and income tax reporting, principally for depreciation and certain valuation allowances. Deferred taxes are not 18
21 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) provided on the unremitted earnings of foreign subsidiaries as the Company's intention is to permanently reinvest these earnings in the operations of these subsidiaries. If these earnings would be remitted in future years, the taxes due after considering available foreign tax credits would not be material. EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF COMPANIES ACQUIRED This asset represents the excess of cost over the fair value of net assets of companies acquired and is being amortized on a straight-line basis over periods ranging from 30 to 40 years. Accumulated amortization at December 31, 1995 and 1994 was $2,916,000 and $2,496,000, respectively. Management, which regularly evaluates its accounting for goodwill, considering primarily such factors as current and historical profitability, along with discounted cash flows, believes that the asset is realizable and the amortization periods are still appropriate. RESEARCH AND DEVELOPMENT Research, engineering, testing and product development costs are charged to current operations as incurred. NET INCOME PER SHARE Income per share is determined on the basis of the weighted average number of Common Shares and common stock equivalents outstanding during the year. During the year ended December 31, 1995 and 1993 the Company paid a ten percent stock dividend and during the year ended December 31, 1994 the Company distributed a five-for-four stock split. All per share data has been adjusted for the stock dividends and the stock split. The impact of stock options has not been included in the calculation of earnings per share as the effect of their exercise is not material. ACQUISITIONS Effective June 30, 1995, the Company acquired Ameri-Kart Corp. (Ameri-Kart), a manufacturer of plastic residential waste carts, material handling containers and hydraulic dumping devices. The transaction was effected through the exchange of cash for all the issued and outstanding shares of Ameri-Kart. The cost of the acquisition, including expenses, was approximately $15 million. The acquisition has been accounted for as a purchase and accordingly, the assets and liabilities of Ameri-Kart have been recorded at their estimated fair values for financial reporting purposes at the date of acquisition. The excess of purchase price over the fair value of assets acquired was approximately $8.1 million which is being amortized on a straight-line basis over 30 years. Ameri-Kart's results of operations have been included in the accompanying consolidated financial statements from June 30, 1995. Consolidated pro forma sales, income and earnings per share would not have been materially different from the reported amounts for fiscal years 1995 or 1994. RETIREMENT PLANS The Company and certain of its subsidiaries have pension and profit sharing plans covering substantially all of their employees. Two plans are defined benefit plans with benefits primarily based upon a fixed amount for each year of service. It is the Company's policy to fund pension costs accrued, which are at least equal to the minimum required contribution as defined by the Employee Retirement Income Security Act of 1974. 19
22 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) For the Company's existing defined benefit plans, net periodic pension costs were as follows: <TABLE> <CAPTION> 1995 1994 1993 --------- --------- --------- <S> <C> <C> <C> Service cost-benefit earned during the year..... $ 92,754 $ 107,451 $ 117,953 Interest cost on projected benefit obligation... 167,255 148,485 150,083 Return on plan assets........................... (473,801) 10,580 (136,481) Net amortization................................ 327,479 (154,358) (5,049) --------- --------- --------- Net periodic pension cost....................... $ 113,687 $ 112,158 $ 126,506 ========= ========= ========= </TABLE> Assumptions used for these plans were as follows: discount rate, 7.0%; rate of return on plan assets, 8.0%. Future benefit increases were not considered as there is no substantive commitment to increase benefits. The following table sets forth the plans' funded status at December 31, 1995 and 1994 (in thousands): <TABLE> <CAPTION> 1995 1994 ------------------ ------------------- OVER- UNDER- OVER- UNDER- FUNDED FUNDED FUNDED FUNDED PLANS PLANS PLANS PLANS ------ ------- ------- ------- <S> <C> <C> <C> <C> Projected benefit obligation Vested benefits............................... $ 955 $ 1,431 $ 652 $ 1,222 Non-vested.................................... 17 198 8 192 ------ ------- ------- ------- Accumulated benefit obligation.................. 972 1,629 660 1,414 Fair value of plan assets....................... 1,018 1,596 798 1,327 ------ ------- ------- ------- Projected benefit obligation in excess of plan assets........................................ 46 (33) 138 (87) Unrecognized net (gain)......................... (24) (169) (131) (128) Unrecognized net obligation at date of adoption...................................... 84 127 95 139 ------ ------- ------- ------- Net projected pension (liability) asset......... $ 106 $ (75) $ 102 $ (76) ====== ====== ===== ====== </TABLE> A profit sharing plan is maintained for eligible employees, not covered under defined benefit plans, who meet minimum tenure requirements. The amount to be contributed by the Company under the profit sharing plan is determined at the discretion of the Board of Directors. During 1994, the Company terminated a defined benefit pension plan and covered the employees under the Company's profit sharing plan. As a result, the Company recognized a $90,000 charge for the curtailment of this plan. The aggregate cost of all retirement and profit sharing plans reflected in the accompanying statements of consolidated income is $1,784,000, $1,224,000 and $1,104,000 for the years 1995, 1994 and 1993, respectively. LONG-TERM DEBT AND CREDIT AGREEMENTS Long-term debt at December 31, consisted of the following: <TABLE> <CAPTION> 1995 1994 ----------- ---------- <S> <C> <C> Revolving credit agreement......................... $ 8,000,000 $2,000,000 Industrial revenue bonds........................... 5,681,166 2,275,166 Other.............................................. 630,129 571,859 ----------- ---------- 14,311,295 4,847,025 Less current portion............................... 976,104 692,379 ----------- ---------- $13,335,191 $4,154,646 ========== ========= </TABLE> 20
23 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has a Revolving Credit Agreement with a group of banks which enables the Company to borrow up to $35,000,000 at prime rate on a variable basis, or on a short-term fixed basis at a rate based upon LIBOR or certificate of deposits at the participating banks. The agreement is unsecured and expires on June 30, 2000. The Revolving Credit Agreement currently bears interest on the outstanding balance at an average rate of 6.5 percent. In addition, the Company is required to pay on a quarterly basis a commitment fee of 1/4 percent per annum on the daily unborrowed portion of the revolving credit commitment, however, such commitment fee accrues at a rate of 1/5 percent per annum at any time the unused portion of the aggregate revolving credit commitment is equal to or less than $20 million. The industrial revenue bonds are secured by either standby letter of credit or plant and equipment purchased by the Company with the proceeds of the bonds. The bonds mature at various dates through 2010 with variable interest rates ranging from 4.70 percent to 6.97 percent. Two industrial revenue bonds are backed by standby letters of credit totaling $5,209,657 with an associated fee of 3/4 percent per annum. Other includes various notes and capitalized leases which mature in various amounts through 1999 and bear a weighted average interest rate of 8.64 percent. The maturities of long-term debt for the five years ending December 31, 2000, are $976,000 in 1996; $513,000 in 1997; $414,000 in 1998; $323,000 in 1999 and $8,069,000 in 2000. The Revolving Credit Agreement and certain of the industrial revenue bond issues contain customary covenants which include, among other things, maintenance of minimum tangible net worth and minimum working capital, restrictions on certain additional indebtedness and requirements to maintain certain financial ratios. At December 31, 1995, the Company was in compliance with these covenants. LEASES The Company and certain of its subsidiaries are committed under non-cancelable operating leases involving certain facilities and equipment. Aggregate rental expense for all leased assets was $2,306,000, $2,359,000 and $2,662,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Future minimum rental commitments for the next five years are as follows: <TABLE> <CAPTION> YEAR ENDED DECEMBER 31, COMMITMENT - - ----------------------- ---------- <S> <C> 1996 1,822,000 1997 1,530,000 1998 1,174,000 1999 939,000 2000 578,000 </TABLE> 21
24 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) INCOME TAXES The effective tax rate was 41.0% in 1995, 40.7% in 1994 and 39.5% in 1993. A reconciliation of the Federal statutory income tax rate to the Company's effective tax rate is as follows: <TABLE> <CAPTION> PERCENT OF PRE-TAX INCOME -------------------------- 1995 1994 1993 ---- ---- ---- <S> <C> <C> <C> Statutory Federal income tax rate.................. 35.0% 35.0% 35.0% State income taxes -- net of Federal tax benefit... 4.6 4.7 4.6 Effect of non-deductible depreciation and amortization..................................... .7 .6 .6 Other.............................................. .7 .4 (.7) ---- ---- ---- Effective tax rate for the year.................... 41.0% 40.7% 39.5% ==== ==== ==== </TABLE> Income taxes consisted of the following: <TABLE> <CAPTION> 1994 1993 1992 ------------------ ------------------ ------------------ CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED ------- -------- ------- -------- ------- -------- (DOLLARS IN THOUSANDS) <S> <C> <C> <C> <C> <C> <C> Federal.................... $ 9,133 $ (326) $ 9,015 $812 $ 7,707 $414 Foreign.................... 361 2 225 (3) 122 (2) State and local............ 2,066 (149) 2,169 (3) 1,755 58 ------- -------- ------- -------- ------- -------- $11,560 $ (473) $11,409 $806 $ 9,584 $470 ======= ====== ======= ====== ====== ====== </TABLE> INCOME TAXES Significant components of the Company's deferred tax liabilities as of December 31, 1995 and 1994 are as follows: <TABLE> <CAPTION> 1995 1994 ------ ------ (DOLLARS IN THOUSANDS) <S> <C> <C> Deferred income tax liabilities: Accelerated depreciation............................. $6,629 $5,114 Employee benefit trust............................... 578 227 Other................................................ 46 81 ------ ------ 7,253 5,422 ------ ------ Deferred income tax assets: Compensation......................................... 1,276 1,135 Inventory valuation.................................. 788 671 Allowance for uncollectible accounts................. 528 488 Non-deductible accruals.............................. 1,948 258 ------ ------ 4,540 2,552 ------ ------ Net deferred income tax liability...................... $2,713 $2,870 ====== ====== </TABLE> At December 31, 1995, the Company had a net operating loss carryforward from an acquired company of $203,000 which does not begin to expire until 1996. The benefit related to this loss carryforward will result in the restoration of previously deferred taxes. Effective January 1, 1993, the Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes," required the Company to change its method of accounting for income taxes to the asset 22
25 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) and liability method. Under this method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Under the Statement, the effect on deferred taxes of a change in tax rates is recognized in the tax provision in the period that includes the enactment date. The adoption of this statement, which reduced income tax expense, resulted in additional net income of $210,000 or $.02 per share in 1993. STOCK OPTIONS In 1992, the Company adopted the 1992 Stock Option Plan allowing key employees to purchase Common Stock of the Company at the market price on the date of grant. The plan provides that stock options expire five years from date of grant and are exercisable up to 20 percent of the shares granted each year. The activity listed below covers both the 1992 Stock Option Plan and the 1982 Incentive Stock Option Plan which expired in 1992. Stock options granted during the past three years were as follows: during 1995, 25,227 shares at prices from $13.06 to $14.87; during 1994, 107,300 shares at prices from $12.95 to $16.73; during 1993, 7,288 shares at prices from $14.38 to $17.55. Stock options exercised during the past three years were as follows: during 1995, 39,072 shares at prices from $7.23 to $14.81; during 1994, 38,715 shares at prices from $7.23 to $12.97; during 1993, 42,653 shares at prices from $4.69 to $12.97. At December 31, 1995, 1994 and 1993 there were outstanding options for the purchase of 185,801, 205,488 and 148,649 shares respectively, at prices ranging from $7.73 to $17.54 per share in 1995 and $7.23 to $17.54 per share in 1994 and 1993. At December 31, 1995 and 1994, there were options for 101,894 and 88,794 shares, respectively that were exercisable. INDUSTRY SEGMENTS The Company operates principally in two areas of business, the first being the distribution of aftermarket repair products and services. These products are distributed both domestically through branches in major cities in the United States and in foreign countries where, in some cases, the Company has controlling interest in companies located in those countries. No single foreign country represents more than 10 percent of the total sales, income or assets of the Company. The second major area of the Company's business is polymer and metal products which are manufactured in Company-owned facilities and distributed through mass merchandisers, warehouse distributors, sales representatives and in-house salesmen, principally in the United States. Operating income before income taxes is total revenues less total operating expenses. In computing operating income for the major segments of the Company, general corporate overhead expense and interest expense are not included. The identifiable assets of each major segment of the Company include inventories, accounts receivable, net fixed assets, the excess of cost over fair value of net assets acquired, patents, and other intangible assets attributable to each segment. Corporate assets are principally land, buildings, computer equipment, cash and temporary cash investments. 23
26 MYERS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The table sets forth information relating to the Company's operations for the years ended December 31, 1995, 1994 and 1993, as required by the Statement of Financial Accounting Standards No. 14. <TABLE> <CAPTION> 1995 1994 1993 -------- -------- -------- (DOLLARS IN THOUSANDS) <S> <C> <C> <C> NET SALES Distribution of aftermarket repair products and services.............................................. $126,902 $121,748 $107,214 Manufacturing of polymer and metal products.............. 186,307 163,513 147,673 Intra-segment elimination................................ (12,510) (11,207) (9,751) -------- -------- -------- $300,699 $274,054 $245,136 ======== ======== ======== OPERATING INCOME BEFORE INCOME TAXES Distribution of aftermarket repair products and services.............................................. $ 11,793 $ 11,387 $ 10,263 Manufacturing of polymer and metal products.............. 23,145 24,418 20,594 Corporate................................................ (7,098) (5,139) (4,317) Interest expense-net..................................... (784) (620) (1,091) -------- -------- -------- $ 27,056 $ 30,046 $ 25,449 ======== ======== ======== IDENTIFIABLE ASSETS Distribution of aftermarket repair products and services.............................................. $ 48,416 $ 46,966 $ 40,780 Manufacturing of polymer and metal products.............. 140,291 121,635 108,549 Corporate................................................ 5,622 4,492 3,782 Intra-segment elimination................................ (725) (1,066) (725) -------- -------- -------- $193,604 $172,027 $152,386 ======== ======== ======== CAPITAL ADDITIONS, NET Distribution of aftermarket repair products and services.............................................. $ 227 $ 942 $ 452 Manufacturing of polymer and metal products.............. 10,722 11,071 13,449 Corporate................................................ 1,038 493 208 -------- -------- -------- $ 11,987 $ 12,506 $ 14,109 ======== ======== ======== DEPRECIATION/AMORTIZATION Distribution of aftermarket repair products and services.............................................. $ 689 $ 598 $ 565 Manufacturing of polymer and metal products.............. 8,747 7,949 6,249 Corporate................................................ 283 274 263 -------- -------- -------- $ 9,719 $ 8,821 $ 7,077 ======== ======== ======== </TABLE> 24
27 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN CONTENTS Report of Independent Public Accountants for the Myers Industries, Inc. Employee Stock Purchase Plan Financial Statements for the Myers Industries, Inc. Employee Stock Purchase Plan: (1) Statements of Assets Available for Plan Benefits for the Years Ended December 31, 1995 and 1994; and (2) Statements of Changes in Assets Available for Plan Benefits for the Years Ended December 31, 1995, 1994 and 1993. Notes to Financial Statements for the Myers Industries, Inc. Employee Stock Purchase Plan 25
28 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Myers Industries, Inc. Employee Stock Purchase Plan Administrator: We have audited the accompanying statements of assets available for plan benefits of the Myers Industries, Inc. Employee Stock Purchase Plan as of December 31, 1995 and 1994, and the related statements of changes in assets available for plan benefits for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Myers Industries, Inc. Employee Stock Purchase Plan as of December 31, 1995 and 1994, and the changes in its assets available for plan benefits for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP /s/ Arthur Andersen LLP Cleveland, Ohio, February 9, 1996 26
29 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 1995 AND 1994 <TABLE> <CAPTION> 1995 1994 ------- ------- <S> <C> <C> Receivable from Trustee.......................................... $77,531 $82,563 ======= ======= (Myers Industries, Inc.) </TABLE> STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 <TABLE> <CAPTION> 1995 1994 1993 --------- --------- --------- <S> <C> <C> <C> Contributions: Participants' contributions beginning of period......... $ 82,563 $ 77,438 $ 65,237 Participants' contributions during the period........... 305,000 299,007 272,147 Assets Available for Stock Purchase..................... 387,563 376,445 337,384 Less: Assets Used for Stock Purchases......................... (310,032) (293,882) (259,946) --------- --------- --------- Assets Available for Plan Benefits at End of Period..... $ 77,531 $ 82,563 $ 77,438 ========= ========= ========= </TABLE> See the accompanying notes to financial statements. 27
30 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1. DESCRIPTION OF PLAN The following description of the Myers Industries, Inc. Employee Stock Purchase Plan ("Stock Plan") provides only general information. Participants should refer to the Plan Agreement and Prospectus for the Stock Plan for a more complete description of the Plan's provisions. (a) GENERAL. The shareholders of the Company approved the adoption of a nonqualified Employee Stock Purchase Plan at the April 28, 1986 Annual Meeting. The Stock Plan is designed to encourage, facilitate and provide employees with an opportunity to share in the favorable performance of the Company through ownership of the Company's Common Stock. The total number of shares of the Common Stock which may be sold under the Stock Plan is currently limited to 188,176 shares. (b) PURPOSE. The purpose of the Stock Plan is to provide employees (including officers) of the Company and its subsidiaries with an opportunity to purchase Common Stock through payroll deductions. (c) ADMINISTRATION. The Stock Plan is administered by a committee appointed by the Board of Directors. All questions of interpretation or application of the Stock Plan are determined by the Board of Directors (or its appointed committee) and its decisions are final, conclusive and binding upon all participants. (d) ELIGIBILITY AND PARTICIPATION. Any permanent employee (including an officer) who has been employed for at least one calendar year by the Company, or its subsidiaries who have adopted the Stock Plan, is eligible to participate in the Stock Plan, provided that such employee is employed by the Company on the date his participation is effective and subject to limitations on stock ownership described in the Stock Plan. Eligible employees become participants in the Stock Plan by delivering to the Company a subscription agreement authorizing payroll deductions prior to the commencement of the applicable offering period. (e) OFFERING DATES. The Stock Plan is generally implemented by one offering during each calendar quarter. Offering periods commence on the last day of each calendar quarter. The Board of Directors has the power to alter the duration of the offering periods without shareholder approval. (f) PURCHASE PRICE. The price at which shares may be purchased in an offering under the Stock Plan is 90% of the fair market value of the Common Stock on the last day of the prior calendar quarter. The fair market value of the Common Stock on a given date is the closing price for that date as listed on the American Stock Exchange. (g) PAYROLL DEDUCTIONS. The purchase price of the shares to be acquired under the Stock Plan will be accumulated by payroll deductions over the offering period. The rate of deductions may not be less than five dollars ($5.00) per week or exceed 10% of a participant's compensation, and the aggregate of all payroll deductions during the offering may not exceed 10% of the participant's aggregate compensation for the offering period. A participant may discontinue his participation in the Stock Plan or may decrease or increase the rate of payroll deductions at any time during the offering period by filing with the Company a new authorization for payroll deductions. All payroll deductions made for a participant are credited to their account under the Stock Plan and are deposited with the general funds of the Company to be used for any corporate purpose. The amount by which an employee's payroll deductions exceed the amount required to purchase whole shares will be placed in a suspense account for the employee with no interest thereon and rolled over into the next offering period. (h) WITHDRAWAL. A participant in the Stock Plan may terminate his interest in a given offering in whole, but not in part, by giving written notice to the Company of his election to withdraw at any time prior to the end of the applicable offering period. Such withdrawal automatically terminates the participant's interest 28
31 MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) in that offering, but does not have any effect upon such participant's eligibility to participate in subsequent offerings under the Stock Plan. (i) TERMINATION OF EMPLOYMENT. Termination of a participant's employment for any reason, including retirement or death, cancels his or her participation in the Stock Plan immediately. (j) NONASSIGNABILITY. No rights or accumulated payroll deductions of an employee under the Stock Plan may be pledged, assigned, transferred or otherwise disposed of in any way for any reason, other than on account of death. Any attempt to do so may be treated by the Company as an election to withdraw from the Stock Plan. (k) AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may at any time amend or terminate the Stock Plan. Except as provided above, no amendment may be made to the Stock Plan without prior approval of the shareholders if such amendment would increase the number of shares reserved under the Stock Plan, permit payroll deductions at a rate in excess of 10% of a participant's compensation, materially modify the eligibility requirements or materially increase the benefits which may accrue to participants under the Stock Plan. (l) TAXATION. Participants in the Stock Plan, which is nonqualified for federal income tax purposes, are taxed currently on the 10% discount in the purchase price granted by the Stock Plan in the year in which stock is purchased. The 10% discount is treated as ordinary income to the participant and that amount is currently deductible by the Company to the extent the participant's total compensation from the Company is within the "reasonable compensation" limits imposed by Section 162 of the Internal Revenue Code of 1986, as amended. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) BASIS OF PRESENTATION. The accompanying statements of assets available for plan benefits and statements of changes in assets available for plan benefits are prepared on the accrual basis of accounting. (b) ADMINISTRATIVE EXPENSES. Administrative costs and expenses are absorbed by the Trustee. 29
32 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT For information about the directors of the Registrant, see "Election of Directors" on pages 3 through 5 of Registrant's Proxy Statement dated March 22, 1996 ("Proxy Statement"), which is incorporated herein by reference. Information about the Executive Officers of Registrant appears in Part I of this Report. Disclosures by the Registrant with respect to compliance with Section 16(a) appear on pages 6 and 7 of the Proxy Statement, and are incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION See "Executive Compensation and Other Information" on pages 7 through 10 of the Proxy Statement, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT See "Principal Shareholders" and "Election of Directors" at page 13, and pages 3 through 5, respectively, of the Proxy Statement, which are incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See "Certain Relationships and Related Transactions" at page 13 of the Proxy Statement, which is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K The following consolidated financial statements of the Registrant appear in Part II of this Report: 14. (a)(1) FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS OF MYERS INDUSTRIES, INC. AND SUBSIDIARIES Report of Independent Public Accountants Statements of Consolidated Financial Position as of December 31, 1995 and 1994 Statements of Consolidated Income Years Ended December 31, 1995, 1994 and 1993 Statements of Consolidated Shareholders' Equity Years Ended December 31, 1995, 1994 and 1993 Statements of Consolidated Cash Flows Years Ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements Years Ended December 31, 1995, 1994 and 1993 FINANCIAL STATEMENTS FOR THE MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Assets Available for Plan Benefits Years Ended December 31, 1995 and 1994 Statements of Changes in Assets Available for Plan Benefits Years Ended December 31, 1995, 1994 and 1993 14. (a)(2) FINANCIAL STATEMENT SCHEDULES Selected Quarterly Financial Data Years Ended December 31, 1995 and 1994 30
33 The following consolidated financial statement schedules of the Registrant are included in Item 14(d): Report of Independent Public Accountants on the Financial Statement Schedules Schedule II -- Valuation and Qualifying Accounts and Reserves Years Ended December 31, 1995, 1994 and 1993 All other schedules are omitted because they are inapplicable, not required, or because the information is included in the consolidated financial statements or notes thereto which appear in Part II of this Report. 14. (a)(3) EXHIBITS 3(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED ARTICLES OF INCORPORATION. Reference is made to Exhibit (3)(i) to Form 8-K filed with the Commission on May 14, 1994. 3(b) MYERS INDUSTRIES, INC. AMENDED AND RESTATED CODE OF REGULATIONS. Reference is made to Exhibit (3)(ii) to Form 8-K filed with the Commission on May 14, 1994. 10(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED 1982 INCENTIVE STOCK OPTION PLAN. Reference is made to Exhibit 10(a) to Form 10-K filed with the Commission on March 24, 1995. 10(b) MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN. Reference is made to Exhibit 10(b) to Form 10-K filed with the Commission on March 24, 1995. 10(c) FORM OF INDEMNIFICATION AGREEMENT FOR DIRECTORS AND OFFICERS. Reference is made to Exhibit 10(c) to Form 10-K filed with the Commission on March 24, 1995. 10(d) MYERS INDUSTRIES, INC. 1992 STOCK OPTION PLAN. Reference is made to Exhibit 10(d) to Form 10-K filed with the Commission on March 24, 1995. 10(e) MYERS INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN. Reference is made to Exhibit 10(e) to Form 10-K filed with the Commission on March 24, 1995. 21 Subsidiaries of the Registrant 23 Consent of Independent Public Accountants 27 Financial Data Schedule EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS <TABLE> <CAPTION> PLAN OR ARRANGEMENT REFERENCE LOCATION - - ------------------------------------------ --------------------------------------------------- <S> <C> Myers Industries, Inc. Amended Exhibit (10)(a) to Form 10-K Restated 1982 Incentive Stock Option Plan for fiscal year ended December 31, 1994 Myers Industries, Inc. 1992 Exhibit 10(d) to Form 10-K Stock Option Plan for fiscal year ended December 31, 1994 </TABLE> 14.(b) REPORTS ON FORM 8-K: None 14.(c) EXHIBITS: See subparagraph 14(a)(3) above. 31
34 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON THE FINANCIAL STATEMENT SCHEDULE To Myers Industries, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Myers Industries, Inc.'s annual report to shareholders included in this Form 10-K, and have issued our report thereon dated February 9, 1996. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under item 14(a)(2) of this Form 10-K is the responsibility of the Company's management and 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 the 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 /s/ Arthur Andersen LLP Cleveland, Ohio February 9, 1996 32
35 14.(d) FINANCIAL STATEMENTS AND SCHEDULES: SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 <TABLE> <CAPTION> ADDITIONS ------------------------ CHARGED CHARGED BALANCE AT TO COSTS TO OTHER BALANCE BEGINNING AND ACCOUNT DEDUCTIONS AT END DESCRIPTION OF PERIOD EXPENSES (DESCRIBED) (DESCRIBED) OF PERIOD - - ------------------------------------- ---------- ---------- ----------- ---------- ---------- <S> <C> <C> <C> <C> <C> Allowance for Doubtful Accounts 1993................................. $1,383,000 $ 900,796 $ -0- $758,796(1) $1,525,000 1994................................. $1,525,000 $ 711,683 $ -0- $757,683(1) $1,479,000 1995................................. $1,479,000 $1,000,959 $ -0- $885,959(1) $1,594,000 </TABLE> - - --------------- (1) Represents the write-off of uncollectible accounts receivable. 33
36 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. <TABLE> <S> <C> MYERS INDUSTRIES, INC. Dated: March 22, 1996 By: /s/ Gregory J. Stodnick ------------------------- GREGORY J. STODNICK Vice President -- Finance and Chief Financial Officer </TABLE> Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> SIGNATURE TITLE DATE - - ------------------------------------------ ------------------------------- --------------- <S> <C> <C> /s/ GREGORY J. STODNICK Vice President -- Finance and March 22, 1996 - - ------------------------------------------ Chief Financial Officer GREGORY J. STODNICK (Principal Financial and Accounting Officer) /s/ STEPHEN E. MYERS President, Chief Executive March 22, 1996 - - ------------------------------------------ Officer and Director STEPHEN E. MYERS (Principal Executive Officer) Director March , 1996 - - ------------------------------------------ EDWIN P. SCHRANK Director March , 1996 - - ------------------------------------------ KARL S. HAY /s/ MILTON I. WISKIND Senior Vice President, March 22, 1996 - - ------------------------------------------ Secretary and Director MILTON I. WISKIND /s/ RICHARD L. OSBORNE Director March 22, 1996 - - ------------------------------------------ RICHARD L. OSBORNE /s/ SAMUEL SALEM Director March 22, 1996 - - ------------------------------------------ SAMUEL SALEM /s/ JON H. OUTCALT Director March 22, 1996 - - ------------------------------------------ JON H. OUTCALT Director March , 1996 - - ------------------------------------------ RICHARD P. JOHNSTON </TABLE> 34
37 INDEX OF EXHIBITS <TABLE> <CAPTION> EXHIBIT NO. - - ----------- <C> <S> <C> 3(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED ARTICLES OF INCORPORATION. Reference is made to Exhibit (3)(i) to Form 8-K filed with the Commission on May 14, 1994. (b) MYERS INDUSTRIES, INC. AMENDED AND RESTATED CODE OF REGULATIONS. Reference is made to Exhibit (3)(ii) to Form 8-K filed with the Commission on May 14, 1994. 10(a) MYERS INDUSTRIES, INC. AMENDED AND RESTATED 1982 INCENTIVE STOCK OPTION PLAN. Reference is made to Exhibit 10(a) to Form 10-K filed with the Commission on March 24, 1995. (b) MYERS INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN. Reference is made to Exhibit 10(b) to Form 10-K filed with the Commission on March 24, 1995. (c) FORM OF INDEMNIFICATION AGREEMENT FOR DIRECTORS AND OFFICERS. Reference is made to Exhibit 10(c) to Form 10-K filed with the Commission on March 24, 1995. (d) MYERS INDUSTRIES, INC. 1992 STOCK OPTION PLAN. Reference is made to Exhibit 10(d) to Form 10-K filed with the Commission on March 24, 1995. (e) MYERS INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN. Reference is made to Exhibit 10(e) to Form 10-K filed with the Commission on March 24, 1995. 21 Subsidiaries of the Registrant 23 Consent of Independent Public Accountants 27 Financial Data Schedule </TABLE> 35