Myers Industries - 10-K annual report

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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

[X]

For the Fiscal Year Ended December 31, 2001

Commission File Number 1-8524

MYERS INDUSTRIES, INC.

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. [ ]

     State the approximate aggregate market value of the voting stock held by non-affiliates of the registrant as of February 28, 2002: $263,645,212. Indicate the number of shares outstanding of registrant’s common stock as of February 28, 2002: 23,860,537 Shares of Common Stock, without par value.

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DOCUMENTS INCORPORATED BY REFERENCE

CROSS REFERENCE SHEET

PURSUANT TO FORM 10-K GENERAL INSTRUCTION G(4)

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PART I

     (a) General Development of Business

     In 2001, Myers Industries, Inc. (Company) experienced lower sales ending a nine year run of annual increases and record sales. In addition, net income declined, as the recession that began in 2000 accelerated and created weak demand in most markets served by the Company’s operations. The fourth quarter, typically a strong one for the Company, was particularly weak.

     Net sales for the fourth quarter were $148.5 million, a decrease of 13 percent from the same period last year. Net income of $2.3 million was down 48 percent compared to $4.5 million in the fourth quarter of 2000 and net income per share of $.10 declined 47 percent compared with $.19 last year.

     For the year, net sales were $608.0 million, a decrease of 7 percent from the $652.7 million reported last year. Net income was $15.2 million or $.64 per share, a decline of 37 percent from the $24.0 million and $1.01 per net share income in fiscal 2000.

     Despite the challenges, the Company remained profitable and there were some positive gains made. Cash flow from operations was a record $76.8 million and the Company was able to reduce total debt by $35.3 million. In addition, cash dividends were increased for the 26th consecutive year.

     (b) Financial Information About Industry Segments

     The response to this section of Item 1 is contained in the Industry Segments footnote of the Notes to Consolidated Financial Statements under Item 8 of this report.

     (c) Description of Business

     The Company conducts its business activities in two segments, Manufacturing and Distribution. For the fiscal year ended December 31, 2001, the Manufacturing Segment generated approximately 75% of sales, while the Distribution Segment contributed approximately 25% of sales.

     Our Manufacturing segment designs, manufactures, and markets a variety of plastic and rubber products, ranging from plastic material handling containers and storage boxes to rubber OEM parts and tire repair materials. These products are made through a variety of molding processes in 25 facilities located throughout North America and Europe.

     Our Distribution Segment is engaged in the distribution of tools, equipment, and supplies used for tire and wheel service and automotive underbody repair. The Distribution Segment operates through 43 branches located in major cities throughout the United States and in foreign countries through export and businesses in which we hold an equity interest.

     In our Manufacturing segment, we design, manufacture, and market more than 11,000 products from plastic and rubber. We currently operate 18 manufacturing facilities in the United States, six in Western Europe and one in Canada. Our manufactured plastic and rubber products are sold nationally and internationally by a direct sales force and through independent sales representatives.

     Key Manufactured Product Areas

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     Product Brands

     Manufacturing Capabilities

     Representative Markets

     Our largest product line is reusable plastic material handling containers. These products help customers efficiently and economically move products and reduce solid waste in closed-loop distribution systems. We are one of the leading manufacturers of these material handling products, which include collapsible bulk boxes, hand-held containers and trays, small parts bins, pallets, and a variety of other specialty items. We believe that we are one of the few manufacturers positioned to supply material handling product solutions to customers worldwide.

     Our material handling products are utilized for shipping and handling a wide range of industrial and commercial items, including automotive, appliance, and electronic components; food products such as meat, poultry, and produce; bulk seed and feed; health and beauty care products; apparel and textiles; and hardware. These products deliver specific cost-saving and productivity benefits to our customers. At the Saturn plant in Springhill, Tennessee, our containers and pallets are reused hundreds of times to carry fasteners and bumpers

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     Growers, retailers, and consumers use our plastic planters and trays to create plant and floral displays. We manufacture a broad line of indoor/outdoor decorative planters, pots, bowls, window boxes, urns, and grower containers and trays; we are also North America’s largest producer of hanging baskets. These items serve the needs of the grower at greenhouses and nurseries, as well as retail garden centers, home centers, and mass merchandisers such as Target®, K-Mart®, and Wal-Mart®.

     For consumers, we adapt storage solutions for industry to home and office settings. Our popular KeepBox®containers help consumers organize everything from holiday decorations to school supplies. Storage organizers and cabinets provide efficient storage for small items and accessories in the home workshop or at the office. Hobbyists and craftsmen use our popular CraftDesign® products for efficient, portable storage of craft, sewing, and art supplies.

     Part of our product line is plastic storage tanks used for storage and transport of a wide variety of solid and liquid materials. These tanks are produced in the United States using rotational molding and in Europe with both winding extrusion and rotational molding. Our extruded tanks are primarily used for storage in industries such as chemical and water treatment and are an effective alternative to stainless steel tanks, giving customers the same performance for a lower price. For industries such as agriculture, plastics, and food, our roto-molded tanks are commonly used as intermediate bulk containers (IBCs), transporting material from one location to another or as a temporary storage vessel; these uses are often “returnable” applications, in which the tanks can be reused for multiple round trips in a closed loop distribution system.

     We manufacture plastic carts used in material handling and waste collection. Manufacturers apply our carts and dumpers for in-plant transport of products and scrap. More than 600 municipalities use the carts for residential waste collection.

     From seals for water supply lines to hood latches and air hose assemblies for trucks, our engineered, molded OEM and replacement parts meet precise specifications for the waterworks, agriculture, transportation, and civil construction industries. Specialized manufacturing expertise enables us to create a range of specific-performance custom rubber products, including rubber-to-metal bonded items used in marine and maintenance equipment, watercontrol, and environmental applications.

     More than 50 years ago we started making tire patches. We now offer the most comprehensive line of tire repair and retreading products in the United States. To service the nearly 221 million damaged tires that occur each year, we make all the materials and products customers need to perform safe and profitable tire repairs: the plug that fills a puncture, the cement that seats the plug, the tire innerliner patch, and the final sealing compound. Our products are used to repair the smallest puncture in passenger tires and the most severe tear in large, off-the-road tires.

     Our calendered rubber sheet stock is used in many applications. The telecommunications industry splices cabling with our specialty tapes. In the mining industry, our materials are used to create linings for material handling conveyor systems. Another of our custom sheet stocks is used as the base material to produce the world’s top-selling line of golf grips, “Golf Pride®”.

     We have applied our rubber calendering and compounding expertise to create reflective marking products for the road repair and construction industry. Transportation professionals use our reflective tape striping, symbols, and legends for marking roadways, intersections, and hazardous areas. Our tape stock is easier to apply, more reflective, and longer lasting than paint. We make the tape in both temporary and permanent grades.

     The Company’s Manufacturing business is dependent upon outside suppliers for raw materials, principally polyethylene, polypropylene, polystyrene and synthetic and natural rubber. We believe that the loss of

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     In our Distribution Segment, we are the largest distributor of tools, equipment, and supplies to tire, wheel, and automotive underbody service specialists in the United States. We buy and sell nearly 10,000 different tool, equipment, and supply items ranging from computerized alignment systems and tire balancers to tire patches, repair cement, and small hand tools.

     Key Distribution Products

     Product Brand

     Capabilities

     Representative Markets

     Within the continental United States, we provide widespread distribution and sales coverage from 43 branches in 31 states. Each branch operates as a profit center and is staffed by a branch manager, salespeople, office, warehouse, and delivery personnel.

     Internationally, we have five wholly owned warehouse distributors located in Canada and Central America. We also own interests in several foreign warehouse distributors. Sales personnel from our Akron, Ohio headquarters cover the Far East, Middle East, South Pacific and South American territories.

     We buy products from top suppliers to ensure quality is delivered to our customers. Each of the brand-name products we sell is associated with superior performance in its respective area. Some of these leading brands include: Chicago Pneumatic air tools; Hennessy tire changing, balancing, and alignment equipment; Corghi tire changers and balancers; Ingersoll-Rand air service equipment; John Bean Co. tire balancing and changing equipment; our own Patch Rubber brand tire patches, cements, and repair supplies; and Rotary lifts and related equipment.

     An essential element of our success in the Distribution segment is our 170 sales representatives, who deliver personalized service on a local level. Customers rely on Myers’ sales representatives to introduce the latest tools and technologies and provide training in new product features and applications. Representatives also teach the proper use of diagnostic equipment, and present on-site workshops demonstrating industry approved techniques for tire repair and undercar service.

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     Competition in the Manufacturing segment 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 segment is generally from local and regional businesses.

     As of December 31, 2001 the Company had a total of 4,114 full-time and part-time employees. Of these employees, 3,393 were engaged in the Manufacturing segment, 623 were employed in the Distribution segment and 98 were employed at the Company’s corporate offices. Approximately 10% of the Company’s employees are members of unions, however, in certain countries in which the Company operates union membership is not known due to confidentiality laws. The Company believes it has a good relationship with its union employees.

     (d) Financial Information about Foreign and Domestic Operations and Export Sales

     The Response to this section of Item 1 is contained in the Industry Segments footnote of the Notes to Consolidated Financial Statements under Item 8 of this Report.

     The following table sets forth by segment certain information with respect to properties owned by the Registrant:

Distribution:

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Manufacturing:

     The following table sets forth by segment certain information with respect to facilities leased by the Registrant:

Manufacturing

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     The Registrant also leases distribution facilities in 32 locations throughout the United States and Canada which, in the aggregate, amount to approximately 167,000 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.

     There are no material pending legal proceedings other than ordinary routine litigation incidental to the Registrant’s business.

     During the fourth quarter of the fiscal year ended December 31, 2001, 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.

     Each executive officer has been principally employed in the capacities shown or similar ones with the Registrant for over the past five years with the exception of Mr. O’Neil who consults as Assistant Secretary.

     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 New York 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 applicable to the Section 16 Filers, except that Mr. Wiskind sold 2,640 shares in October, 2001, which was reported on his February 2002 Form 4.

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PART II

     The Company’s Common Stock is traded on the New York Stock Exchange (ticker symbol MYE). The approximate number of record holders at December 31, 2001 was 2,200. High and low stock prices and dividends for the last two years were:

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2001 Results of Operations

     For the year ended December 31, 2001, net sales of $608.0 million were down 7 percent from the $652.7 million in 2000. Net income for 2001 of $15.2 million or $.64 per share decreased 37 percent from the $24.0 million and $1.01 per share reported in 2000.

     The Company experienced sales declines in both of its business segments. Distribution segments sales were down $7.2 million or 5 percent reflecting lower unit volumes, particularly for capital equipment. In the Manufacturing segment, sales decreased $37.7 million or 7 percent from the prior year as the Company experienced sharply lower demand brought on by the general recession and global economic slowdown affecting most of the industrial markets we serve. In addition, competitive pressures and lower raw material

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     Cost of sales decreased $32.1 million or 7 percent, reflecting the significant drop in fiscal 2001 sales. Gross profit, expressed as a percentage of sales, improved slightly to 33.7 percent for the year ended December 31, 2001, compared with 33.3 percent in the prior year. In the distribution segment, margins improved slightly reflecting a shift in sales mix to higher margin supplies versus capital equipment. In the manufacturing segment, margins were virtually unchanged as a benefit of lower raw material costs were offset by slightly lower selling prices and a decrease in the absorption of fixed manufacturing costs resulting from reduced production.

     Total operating expenses increased $4.7 million, or 3 percent, to $159.0 million. The increase in fiscal 2001 reflects the full year impact of expenses of companies acquired in the fourth quarter of last year as well as the amortization of related goodwill. In addition, the Company experienced substantially higher costs for medical insurance and bad debt expense, including approximately $1.0 million as a result of the K-Mart bankruptcy filing in January 2002. Expressed as a percentage of sales, operating expenses were 26.1 percent in 2001 compared with 23.6 percent in 2000. This decrease in operating expense leverage is a result of both the higher costs and reduced sales volume in the current year.

     Net interest expense for 2001 decreased $3.7 million or 16 percent compared with the prior year. This decrease reflects primarily the impact of lower interest rates. In addition, the Company reduced total debt by $35.3 million in fiscal 2001 and, therefore, received the benefit of lower average borrowing levels.

     Income taxes as a percent of income before taxes was 44.2 percent compared to 41.3 percent in the prior year. The higher effective tax rate reflects the more significant impact of non-deductible goodwill amortization resulting from lower pretax income combined with higher foreign tax rate difference.

2000 Results of Operations

     Net sales for the year ended December 31, 2000, increased $71.9 million or 12 percent to a record $652.7 million. Excluding contributions from acquisitions, total net sales would have increased 3 percent. Sales in the distribution segment decreased 2 percent for the year as sales of capital equipment, the more cyclical part of the distribution segment, continued to be weak. In the manufacturing segment, sales increased 18 percent over the comparable 12 months. Excluding acquisitions, sales in the manufacturing segment increased 5 percent for the year. The translation effect of the euro reduced total sales and manufacturing segment sales by $20.0 million for the year. Without the translation effect and excluding acquisitions, both total sales and manufacturing segment sales would have increased 6 percent for the year.

     Cost of sales increased $67.4 million, or 18 percent, reflecting the higher sales levels and increased cost of raw materials, mainly plastic resins, which reduced gross profit as a percentage of sales from 36.7 percent in 1999 to 33.3 percent in 2000.

     Total operating expenses increased $10.7 million, or 7 percent, to $154.3 million. Included in fourth quarter 2000 administrative expense were costs of approximately $3.2 million related to the closing of the Company’s Dayton, Ohio manufacturing facility. These costs were primarily to cover the estimated loss on disposition of the land, buildings, machinery and equipment and other fixed assets used at the closed facility. Expressed as a percentage of sales, operating expenses were 23.6 percent in 2000 and 24.7 percent in 1999. This improvement reflects the benefit from greater integration of the various acquisitions made in 1999.

     Net interest expense increased $7.2 million to $22.4 million for the year. This increase reflects the higher average borrowing levels resulting from acquisitions combined with slightly higher rates.

     Income taxes as a percent of income before taxes was 41.3 percent for 2000 compared to 42.6 percent in the prior year. This decrease is attributable to foreign tax rate differences.

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Financial Condition

Liquidity and Capital Resources

     In 2001, the Company generated cash from operating activities of $76.8 million. Investments in property, plant and equipment were $25.2 million. In 2001, total debt was reduced by $35.3 million and debt as a percentage of total capitalization was reduced from 58 percent to 55 percent. At December 31, 2001, the Company had working capital of $91.7 million and a current ration of 1.9 to 1.

     At December 31, 2001, available borrowing under the Company’s revolving credit facility was approximately $47 million. In addition, there is an uncommitted $25 million springing facility. During the next five years management anticipates on-going capital expenditures in the range of $25 to $30 million annually. Cash flows from operations and funds available under existing credit facilities will provide the Company’s primary source of future financing. Management believes that it has sufficient financial resources to meet anticipated business requirements in the foreseeable future, including capital expenditures, dividends, working capital and debt service.

Market Risk and Derivative Financial Instruments

     The Company has financing arrangements that require interest payments based on floating interest rates. As such, the Company’s financial results are subject to changes in the market rate of interest. Our objective in managing the exposure to interest rate changes is to limit the volatility and impact of rate changes on earnings while maintaining the lowest overall borrowing cost. At present, the Company has not entered into any interest rate swaps or other derivative instruments to fix the interest rate on any portion of its financing arrangements with floating rates. Accordingly, based on current debt levels at December 31, 2001, if market interest rates increased one percent, the Company’s interest expense would increase approximately $2.5 million.

     Some of the Company’s subsidiaries operate in foreign countries and, as such, their financial results are subject to the variability that arises from exchange rate movements. The Company believes that foreign currency exchange rate fluctuations do not represent a significant market risk due to the nature of the foreign countries in which we operate, primarily Canada and Western Europe, as well as the size of those operations relative to the total Company.

     The Company uses certain commodities, primarily plastic resins, in its manufacturing processes. As such, the cost of operations is subject to fluctuation as the market for these commodities changes. The Company monitors this risk but currently has no derivative contracts to hedge this risk, however, the Company also has no significant purchase obligations to purchase fixed quantities of such commodities in the future.

Accounting Standards for Business Combinations and Goodwill

     The Financial Accounting Standards Board recently issued Statement of Financial Accounting Standard No. 141 (SFAS 141), “Business Combinations,” and SFAS 142, “Goodwill and Other Intangible Assets.” The statements are effective for the Company on January 1, 2002. These statements will result in modifications relative to the Company’s accounting for goodwill and other intangible assets. Specifically, the Company will cease goodwill and certain intangible asset amortization beginning January 1, 2002. Upon adopting the new standards and cessation of amortization for goodwill, the Company anticipates increases in annual income before taxes of $9.2 million and earnings per shares of approximately $.30 per share. Additionally, intangible assets, including goodwill, will be subject to new impairment testing criteria. Other than the impact to future earnings of eliminating goodwill amortization, the Company has not yet made a complete evaluation regarding the impact of adoption on the Company’s financial statements, including the possible impairment of goodwill as recorded on the December 31, 2001, balance sheet.

Forward-Looking Information

     Statements contained in this report concerning the Company’s goals, strategies, and expectations for business and financial results may be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current indicators and expectations. These

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     The consolidated financial statements and accompanying notes and the reports of management and independent accountants follow Item 9 of this Report.

Summarized Quarterly Results of Operations
(Unaudited) Thousands of Dollars, Except Per Share Data

     There were no disagreements with the Registrant’s independent accountants on accounting and financial disclosure matters within the two-year period ended December 31, 2001, or in any period subsequent to such date.

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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, 2001 and 2000, and the related statements of consolidated income, shareholders’ equity and comprehensive income and cash flows for each of the three years in the period ended December 31, 2001. 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 auditing standards generally accepted in the United States. 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 consolidated financial position of Myers Industries, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

/s/ Arthur Andersen LLP

Cleveland, Ohio,

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MYERS INDUSTRIES, INC. AND SUBSIDIARIES

For The Years Ended December 31, 2001, 2000 and 1999

The accompanying notes are an integral part of these statements.

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MYERS INDUSTRIES, INC. AND SUBSIDIARIES

As of December 31, 2001 and 2000

The accompanying notes are an integral part of these statements.

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MYERS INDUSTRIES, INC. AND SUBSIDIARIES

For The Years Ended December 31, 2001, 2000 and 1999

The accompanying notes are an integral part of these statements.

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MYERS INDUSTRIES, INC. AND SUBSIDIARIES

For the Years Ended December 31, 2001, 2000, and 1999

The accompanying notes are an integral part of these statements.

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MYERS INDUSTRIES, INC. AND SUBSIDIARIES

For The Years Ended December 31, 2001, 2000 and 1999

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 amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Certain amounts in the fiscal 2000 and 1999 financial statements have been reclassified to conform with the fiscal year 2001 presentation.

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 and other comprehensive income.

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, 2001.

Inventories

     Inventories are stated at the lower of cost or market. For approximately 45 percent of its inventories, the Company uses the last-in, first-out (LIFO) method of determining cost. All other inventories are valued at the 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 $3,731,000, $4,756,000 and $3,779,000 higher than reported at December 31, 2001, 2000 and 1999, 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 the straight-line method over the estimated useful lives of the assets as follows:

Revenue Recognition

     The Company recognizes revenue from sales when goods are shipped and title has passed to the customer.

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Notes to Consolidated Financial Statements — Continued

Income Taxes

     Deferred income taxes are provided to recognize the timing differences between financial statement and income tax reporting, principally for depreciation, non-deductible reserves and certain valuation allowances. Deferred taxes are not 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 15 to 40 years. Accumulated amortization at December 31, 2001 and 2000 was $30,706,000 and $21,483,000, respectively.

     In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS 141), “Business Combinations”, and SFAS 142, “Goodwill and Other Intangible Assets”. These statements are effective for the Company on January 1, 2002 and will result in modifications relative to the accounting for goodwill and other intangible assets. Specifically, the Company will no longer amortize goodwill and certain intangible assets, however, such assets will be subject to periodic testing for potential impairment. Upon adopting the new standards and cessation of amortization for goodwill, the Company anticipates increases in annual income before taxes of $9.2 million and earnings per share of approximately $.30 per share, however, the Company has not yet made a complete evaluation regarding the impact of the new standards, including the possible impairment of goodwill as recorded on the December 31, 2001 balance sheet.

Net Income Per Share

     Basic net income per share, as shown on the Statements of Consolidated Income, is determined on the basis of the weighted average number of common shares outstanding during the year, and for all periods shown basic and diluted earnings per share are identical. During the years ended December 31, 2001, 2000 and 1999, the Company paid a ten percent stock dividend. All per share data has been adjusted for the stock dividends.

Acquisitions

     In October, 2000, the Company acquired R.B. Manufacturing (RB), a Sandusky, Ohio manufacturer of material handling carts and Best Plastics, Inc. a Cassopolis, Michigan manufacturer of thermoformed and rotational molded plastic products. Total cost of the acquisitions was approximately $18.2 million and both acquisitions have been accounted for under the purchase method of accounting. The excess of purchase price over the fair value of assets acquired was approximately $12.4 million which is being amortized on a straight line basis over 30 years. Consolidated pro-forma sales, income and earning per share, adjusted to reflect the acquisitions of RB and Best, would not be materially different from the reported amounts for fiscal years 2000 or 1999.

     On February 4, 1999, the Company acquired all of the shares of the entities comprising Allibert Equipment (Allibert), the material handling division of Sommer Allibert S.A., and acquired Allibert-Contico, LLC, a joint venture between Sommer Allibert S.A. and Contico International, Inc. for a total purchase price of approximately $150 million. The acquired businesses have five manufacturing facilities in Europe and one in North America and had 1998 annual sales of approximately $145 million.

     In August 1999, the Company acquired substantially all of the assets of Dillen Products Companies (Dillen) of Middlefield, Ohio, for approximately $54 million and all of the outstanding shares of Listo Products, Ltd. (Listo) of Canada for approximately $15 million. In 2001, the Company paid approximately $7.5 million as additional and final consideration in connection with the acquisition of Dillen. The Listo

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Notes to Consolidated Financial Statements — Continued

     The acquisitions have been accounted for under the purchase method of accounting and, accordingly, the results of operations have been included in the Company’s consolidated financial statements since the dates of acquisition, and the acquisition costs have been allocated to the assets acquired and liabilities assumed based upon their estimated fair values. The excess of purchase price over fair value of net assets acquired of approximately $166 million is being amortized over lives of 15 to 40 years.

     The following unaudited pro-forma information presents a summary of consolidated results of operations of the Company and the acquisitions of Allibert, Dillen and Listo, as if the acquisitions of Allibert, Dillen and Listo had occurred January 1, 1999:

     These unaudited pro-forma results have been prepared for comparative purposes only and may not be indicative of results of operations which actually would have resulted had the combination been in effect on January 1, 1999, or of future results.

Long-Term Debt and Credit Agreements

     Long-term debt at December 31, 2001 and 2000, consisted of the following:

     The Company has a Multi-Currency Loan Agreement with a group of banks which provides for a $53.5 million term loan facility and a revolving credit facility in five currencies, approximating $240 million (US). In addition, there is an uncommitted $25 million springing facility. Amounts available under the revolving credit facility are 185 million US dollars, 30 million euros, 22 million Canadian dollars, 63 million Danish kroners, and three million pound sterling. At December 31, 2001, the amount borrowed was $53.5 million under the term loan, and 157 million US dollars, 21 million euros, 15 million Canadian dollars, 40 million Danish kroners and two million pound sterling under the revolving credit facility.

     The borrowing under this facility was used to retire the prior revolving credit agreement, fund acquisitions, and for general corporate purposes. Interest is based upon LIBOR for US dollars and similar bases for the other currencies plus an applicable margin that varies depending on the Company’s ratio of total

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Notes to Consolidated Financial Statements — Continued

     The Credit Agreement contains the customary covenants which include among other things, the maintenance of certain financial ratios regarding leverage, net worth, interest coverage, and limits as to payments for cash dividends and capital expenditures. At December 31, 2001, the Company was in compliance with all of its debt covenants. In addition, the facility restricts debt outside the facility to $35 million. At December 31, 2001, the Company had $18.4 million borrowed against this limit consisting of industrial revenue bonds, certain indebtedness of acquired companies, and in-country credit facilities for the Company’s international operations. The weighted average interest rate on these amounts outstanding is 4.7%.

     Maturities of long-term debt for the five years ending December 31, 2006 are: $18,000,000 in 2002; $17,000,000 in 2003; $27,000,000 in 2004; $195,000,000 in 2005 and $1,000,000 in 2006.

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 $9,493,000, $5,416,000 and $4,436,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

     Future minimum rental commitments for the next five years are as follows:

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 completed year of service as defined. 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.

     For the Company’s defined benefit plans, the net periodic pension cost was as follows: