MYERS INDUSTRIES INC, 10-Q filed on 5/5/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
Apr. 30, 2015
Document Information [Line Items]
 
 
Entity Registrant Name
MYERS INDUSTRIES INC 
 
Entity Central Index Key
0000069488 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
30,950,147 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Net sales
$ 156,348 
$ 150,485 
Cost of sales
110,591 
108,414 
Gross profit
45,757 
42,071 
Selling, general and administrative expenses
39,041 
33,188 
Operating income
6,716 
8,883 
Interest expense, net
2,702 
1,584 
Income from continuing operations before income taxes
4,014 
7,299 
Income tax expense
1,392 
2,536 
Income from continuing operations
2,622 
4,763 
Income (loss) from discontinued operations, net of income taxes
2,617 
(4,083)
Net income
$ 5,239 
$ 680 
Income per common share from continuing operations:
 
 
Basic (in dollars per share)
$ 0.08 
$ 0.14 
Diluted (in dollars per share)
$ 0.08 
$ 0.14 
Income (loss) per common share from discontinued operations:
 
 
Basic (in dollars per share)
$ 0.08 
$ (0.12)
Diluted (in dollars per share)
$ 0.08 
$ (0.12)
Net income per common share:
 
 
Basic (in dollars per share)
$ 0.16 
$ 0.02 
Diluted (in dollars per share)
$ 0.16 
$ 0.02 
Dividends declared per share (in dollars per share)
$ 0.14 
$ 0.13 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Net income
$ 5,239 
$ 680 
Other comprehensive income (loss), net of tax:
 
 
Foreign currency translation adjustment
(23,010)
54 
Total other comprehensive income (loss)
(23,010)
54 
Comprehensive income (loss)
$ (17,771)
$ 734 
Condensed Consolidated Statements of Financial Position (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Current Assets
 
 
Cash
$ 3,720 
$ 4,676 
Accounts receivable-less allowances of $697 and $782, respectively
95,454 
90,664 
Inventories
 
 
Finished and in-process products
45,412 
40,122 
Raw materials and supplies
22,190 
23,216 
Inventory net
67,602 
63,338 
Prepaid expenses and other
6,426 
6,591 
Deferred income taxes
3,096 
2,397 
Assets held for sale
117,775 
Total Current Assets
176,298 
285,441 
Other Assets
 
 
Goodwill
61,825 
66,639 
Intangible assets, net
67,545 
72,235 
Deferred income taxes
488 
545 
Other
29,764 
3,207 
Total other non current assets
159,622 
142,626 
Property, Plant and Equipment, at Cost
 
 
Land
7,953 
8,405 
Buildings and leasehold improvements
58,705 
57,537 
Machinery and equipment
330,736 
335,963 
Property, Plant and Equipment, at cost
397,394 
401,905 
Less allowances for depreciation and amortization
(267,628)
(265,139)
Property, plant and equipment, net
129,766 
136,766 
Total Assets
465,686 
564,833 
Current Liabilities
 
 
Accounts payable
73,844 
77,320 
Accrued expenses
 
 
Employee compensation
14,201 
14,967 
Income taxes
132 
3,086 
Taxes, other than income taxes
1,808 
1,940 
Accrued interest
2,057 
3,207 
Liabilities of Assets Held-for-sale
27,122 
Other
23,781 
26,172 
Total Current Liabilities
115,823 
153,814 
Long-term debt
204,671 
236,429 
Other liabilities
12,488 
13,738 
Deferred income taxes
13,216 
14,281 
Shareholders’ Equity
 
 
Serial Preferred Shares (authorized 1,000,000 shares; none issued and outstanding)
Common Shares, without par value (authorized 60,000,000 shares; outstanding 30,945,498 and 31,162,962; after deducting treasury shares of 6,885,624 and 6,604,175, respectively)
18,730 
18,855 
Additional paid-in capital
213,391 
218,394 
Accumulated other comprehensive loss
(34,698)
(11,688)
Retained deficit
(77,935)
(78,990)
Total Shareholders' Equity
119,488 
146,571 
Total Liabilities and Shareholders' Equity
$ 465,686 
$ 564,833 
Condensed Consolidated Statements of Financial Position (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Current Assets
 
 
Allowances for accounts receivable
$ 697 
$ 782 
Shareholders’ Equity
 
 
Preferred Shares, shares authorized (in shares)
1,000,000 
1,000,000 
Preferred Shares, shares issued (in shares)
Preferred Shares, shares outstanding (in shares)
Common Shares, shares authorized (in shares)
60,000,000 
60,000,000 
Common Shares, shares outstanding (in shares)
30,945,498 
31,162,962 
Common shares, treasury (in shares)
6,885,624 
6,604,175 
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (USD $)
In Thousands, unless otherwise specified
Total
Common Stock
Additional Paid-In Capital
Accumulative Other Comprehensive Loss
Retained Deficit
Beginning balance at Dec. 31, 2014
$ 146,571 
$ 18,855 
$ 218,394 
$ (11,688)
$ (78,990)
Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net income
5,239 
 
 
 
5,239 
Net sales under option plans
925 
65 
860 
 
 
Dividend reinvestment plan
39 
38 
 
 
Restricted stock vested
67 
(67)
 
 
Restricted stock and stock option grants
831 
831 
 
 
Tax benefit from options
214 
 
214 
 
 
Foreign currency translation adjustment
(23,010)
 
 
(23,010)
 
Purchases for treasury, net
(6,577)
(241)
(6,336)
 
 
Shares withheld for employee taxes on equity awards
(560)
(17)
(543)
 
 
Dividends declared - $.14 per share
(4,184)
 
 
 
(4,184)
Ending balance at Mar. 31, 2015
$ 119,488 
$ 18,730 
$ 213,391 
$ (34,698)
$ (77,935)
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (Parenthetical)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Stockholders' Equity [Abstract]
 
 
Dividends declared per share (in dollars per share)
$ 0.14 
$ 0.13 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Cash Flows [Abstract]
 
 
Proceeds from Sales of Business, Affiliate and Productive Assets
$ 69,787 
$ 0 
Cash Flows from Operating Activities
 
 
Net income
5,239 
680 
Income (loss) from discontinued operations, net of income taxes
2,617 
(4,083)
Income from continuing operations
2,622 
4,763 
Income (loss) from discontinued operations, net of income taxes
 
 
Depreciation
6,489 
5,378 
Amortization
2,638 
791 
Non-cash stock compensation
966 
788 
Provision for loss on accounts receivable
74 
341 
Deferred income taxes
(1,705)
179 
Other long-term liabilities
2,734 
1,081 
(Gain) loss from asset dispositions
(13)
735 
Tax benefit from options
(214)
(650)
Payments on performance based compensation
(1,219)
(1,293)
Cash flows used for working capital:
 
 
Accounts receivable
(5,840)
(14,132)
Inventories
(4,264)
(9,944)
Prepaid expenses and other assets
(569)
(671)
Accounts payable and accrued expenses
(19,617)
(27,512)
Net cash used for operating activities-continuing operations
(17,918)
(40,146)
Net cash used for operating activities-discontinued operations
(9,761)
(20,523)
Net cash used for operating activities
(27,679)
(60,669)
Net cash used for operating activities-continuing operations
 
 
Net cash used for operating activities-discontinued operations
(4,657)
(2,497)
Proceeds from sale of property, plant and equipment
15 
48 
Net cash provided by (used for) investing activities - continuing operations
65,145 
(2,449)
Net cash used for investing activities - discontinued operations
(581)
(2,156)
Net cash provided by (used for) investing activities
64,564 
(4,605)
Other
 
 
Proceeds from long-term debt
89,000 
Net repayment on credit facility
(27,700)
(16,700)
Cash dividends paid
(4,184)
(3,117)
Proceeds from issuance of common stock
964 
1,781 
Repayment of long-term debt
214 
650 
Repurchase of common stock
(6,577)
(5,062)
Shares withheld for employee taxes on equity awards
(560)
(1,083)
Deferred financing costs
(196)
Net cash provided by (used for) financing activities - continuing operations
(37,843)
65,273 
Net cash used for financing activities - discontinued operations
Net cash provided by (used for) financing activities
(37,843)
65,273 
Foreign Exchange Rate Effect on Cash
(800)
Net decrease in cash
(956)
(801)
Cash at January 1
4,676 
6,539 
Cash at March 31
3,720 
5,738 
Interest
3,741 
199 
Income taxes
$ 4,733 
$ 3,012 
Statement of Accounting Policies
Statement of Accounting Policy
Statement of Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (collectively, the “Company”), and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.
In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2015, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2015.
Segment Realignment and Discontinued Operations

During the second quarter of 2014, the Company realigned its reportable segments as a result of organizational changes to better align its resources to support its ongoing business strategy. The realignment is consistent with the manner in which our Chief Operating Decision Maker evaluates performance and makes resource allocation decisions. Historical segment information has been adjusted to reflect the effect of this change. Our segment information is more fully described in Note 13. Historical information also reflects discontinued operations presentation for businesses disposed of or meeting the held for sale criteria as described in Note 3. Accordingly, the accompanying consolidated statements of income, comprehensive income (loss), cash flows and the related notes to the consolidated financial statements of the Company for the three months ended March 31, 2014 have been retrospectively revised to reflect the operating results, net of tax of our businesses disposed of or meeting the held for sale criteria during 2014.

Recent Accounting Pronouncements
In April 2015, the Financial Accounting Standards Board ("FASB") issued Auditing Standards Update ("ASU") 2015-03, Interest- Imputation of Interest (Subtopic 835-03) - Simplifying the Presentation of Debt Issuance Costs which requires unamortized debt issuance costs to be presented as a reduction of the corresponding debt liability rather than a separate asset. ASU 2015-03 will be adopted on the effective date for the Company, which is January 1, 2016. The adoption of this standard is not expected to have a material impact on the Company's financial statement disclosures.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Under ASU 2014-15, management will be required to perform interim and annual assessments of the Company’s ability to continue as a going concern within one year of the date the financial statements are issued. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of this standard is not expected to have an impact on the Company’s financial statement disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance is effective for the Company on January 1, 2017 with early adoption not permitted. Companies can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated financial statements as well as the method by which the Company will adopt the new standard.
In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This guidance states that the disposal of a component of an entity is to be reported in discontinued operations only if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. The pronouncement also requires additional disclosures regarding individually significant disposals of components that do not meet the criteria to be recognized as a discontinued operation. This ASU is effective for the Company for applicable transactions occurring after January 1, 2015. We will prospectively apply the guidance to applicable transactions. The Lawn and Garden transaction described in Note 3 is not subject to this guidance.
Translation of Foreign Currencies

All asset and liability 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 monthly at an average currency exchange rate for the period. The resulting translation adjustment is recorded in other comprehensive income (loss) as a separate component of shareholders' equity.
Fair Value Measurement
The Company follows guidance included in ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), for its financial assets and liabilities, as required. The guidance established a common definition for fair value to be applied to U.S. GAAP requiring the use of fair value, established a framework for measuring fair value, and expanded disclosure requirements about such fair value measurements. The guidance did not require any new fair value measurements, but rather applied to all other accounting pronouncements that require or permit fair value measurements. Under ASC 820, the hierarchy that prioritizes the inputs to valuation techniques used to measure fair value is divided into three levels:
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are observable either directly or indirectly.
Level 3:
Unobservable inputs for which there is little or no market data or which reflect the entity’s own assumptions.
The fair value of the Company’s cash, accounts receivable, accounts payable and accrued expenses are considered to have a fair value which approximates carrying value due to the nature and relative short maturity of these assets and liabilities.
The fair value of debt under the Company’s Loan Agreement approximates carrying value due to the floating rates and relative short maturity (less than 90 days) of the revolving borrowings under this agreement. The fair value of the Company’s fixed rate senior unsecured notes was estimated using market observable inputs for the Company’s comparable peers with public debt, including quoted prices in active markets and interest rate measurements which are considered level 2 inputs. At March 31, 2015, the fair value of the Company's $100.0 million fixed rate senior unsecured notes was estimated at $108.7 million. At December 31, 2014, the fair value of the Company's $100.0 million fixed rate senior unsecured notes was estimated at $106.8 million.
Revenue Recognition

The Company recognizes revenues from the sale of products, net of actual and estimated returns, at the point of passage of title and risk of loss, which is generally at time of shipment, and collectability of the fixed or determinable sales price is reasonably assured.














Accumulated Other Comprehensive Loss

The balances in the Company’s accumulated other comprehensive income (loss) ("AOCI") as of March 31, 2015 and March 31, 2014 are as follows:
 
Foreign Currency
 
Defined Benefit Pension Plans
 
Total
Balance at January 1, 2014
$
3,493

 
$
(1,066
)
 
$
2,427

Other comprehensive income before reclassifications
54

 

 
54

Net current-period other comprehensive income
54

 

 
54

Balance at March 31, 2014
$
3,547

 
$
(1,066
)
 
$
2,481

 
 
 
 
 
 
Balance at January 1, 2015
$
(9,825
)
 
$
(1,863
)
 
$
(11,688
)
Other comprehensive loss before reclassifications
(12,519
)
 

 
(12,519
)
Amounts reclassified from accumulated other comprehensive income*
(10,491
)
 

 
(10,491
)
Net current-period other comprehensive income (loss)
(23,010
)
 

 
(23,010
)
Balance at March 31, 2015
$
(32,835
)
 
$
(1,863
)
 
$
(34,698
)

*Cumulative translation adjustment associated with the sale of the Lawn and Garden group was included in the carrying value of assets disposed of.
Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. The Company maintains operating cash and reserves for replacement balances in financial institutions which, from time to time, may exceed federally insured limits. The Company periodically assesses the financial condition of these institutions and believes that the risk of loss is minimal.
Acquisitions
Acquisitions
Acquisition

On July 2, 2014, CA Acquisition Inc., now known as Scepter Canada Inc. and a wholly-owned subsidiary of Myers Industries, Inc., completed the purchase of substantially all of the assets and assumption of certain liabilities of Scepter Corporation and certain real property of SHI Properties Inc., both located in Scarborough, Ontario, Canada. Contemporaneously with the asset acquisition, Crown US Acquisition Company, now known as Scepter US Holding Company and another wholly-owned subsidiary of Myers Industries, Inc., completed the purchase of all of the issued and outstanding membership interests of Eco One Leasing, LLC and Scepter Manufacturing, LLC, both located in Miami, Oklahoma. Eco One Leasing, LLC was subsequently merged into Scepter Manufacturing, LLC. The total purchase price for these acquisitions (collectively, “Scepter”) was approximately $156.6 million in cash, which includes a final working capital adjustment. The acquisition of Scepter was funded from net proceeds from additional borrowings of approximately $134.1 million under the Fourth Amended and Restated Loan Agreement and cash on hand of $22.5 million.
The acquisition of Scepter strengthens and expands the Company's position as an industry leading producer of portable marine fuel containers, portable fuel and water containers and accessories, ammunition containers, storage totes and environmental bins for the marine, military, consumer and industrial markets. The acquisition of Scepter is consistent with the Company's business strategy and the products fit well with the Company's overall portfolio. The operating results of Scepter have been included within our Condensed Consolidated Statement of Income (Unaudited) and within the Company's Material Handling Segment since the date of acquisition.
The Company accounted for the acquisition of Scepter using the acquisition method of accounting, which requires among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. As of March 31, 2015, the purchase price allocation remains preliminary as the Company has not finalized its assessment of contingent liabilities. As a result, additional adjustments may be recorded during the measurement period.
Scepter's assets and liabilities are recorded at fair value as of the date of acquisition using primarily level 3 fair value inputs. The purchase consideration, related preliminary estimated allocations, and resulting excess over fair value of net assets acquired are as follows:
Assets acquired:
 
 
Current assets
 
$
34,572

Property, plant and equipment
 
44,613

Intangible assets
 
66,500

Assets acquired
 
$
145,685

 
 
 
Liabilities assumed:
 
 
Current liabilities
 
$
8,877

Total liabilities assumed
 
8,877

 
 
 
Goodwill
 
19,812

Total consideration
 
$
156,620


Goodwill is calculated as the excess of the consideration transferred over the assets acquired and liabilities assumed and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The Company expects that approximately $16.4 million of goodwill recognized for the acquisition will be deductible for tax purposes.
Identifiable intangible assets acquired in connection with the acquisition of Scepter are as follows:
 
 
 
 
Estimated
 
 
 
 
Fair Value
 
Useful Life
 
Valuation Method
Intangible assets not subject to amortization:
 

 
 
 
 
Trademarks and trade names
 
$
8,900

 
Indefinite
 
Relief from royalty
 
 

 
 
 
 
Intangible assets subject to amortization:
 

 
 
 
 
Technology
 
22,300

 
10 years
 
Relief from royalty
Customer relationships
 
35,300

 
6 years
 
Multi-period excess earnings
 
 
57,600

 
 
 
 
Total
 
$
66,500

 
 
 
 

















The following unaudited pro forma information presents a summary of the consolidated results of operations for the Company as if the acquisition of Scepter had occurred on January 1, 2014:
 
 
For the Three Months Ended
 
 
 
March 31, 2014
Net sales
 
 
$
175,102

 
 
 

Net income from continuing operations
 
 
$
6,316

 
 
 

Net income per share from continuing operations:
 
 

Basic
 
 
$
0.19

Diluted
 
 
$
0.19


The unaudited pro forma consolidated results are based on the Company’s historical financial statements and those of Scepter and do not necessarily indicate the results of operations that would have resulted had the acquisition actually been completed at the beginning of the applicable period presented. The pro forma financial information assumes that the companies were combined as of January 1, 2014. The pro forma results reflect the business combination accounting effects from the acquisition including amortization charges from the acquired intangible assets, inventory purchase accounting adjustments charged to cost of sales as the inventory is sold and increased interest expense associated with debt incurred to fund the acquisition. The unaudited pro forma consolidated results do not give effect to the synergies of the acquisition and are not indicative of the results of operations in future periods.
Discontinued Operations
Discontinued Operations
Discontinued Operations

On June 20, 2014, the Company completed the sale of the assets and associated liabilities of its wholly-owned subsidiaries WEK Industries, Inc. and Whiteridge Plastics LLC (collectively “WEK”) for approximately $20.7 million, which includes a working capital adjustment of approximately $0.8 million. Of the total proceeds from the sale of WEK, approximately $1.0 million are held in escrow to be received in December 2015. The Company recorded a gain on the sale of WEK of approximately $3.0 million, net of tax of $1.6 million in the second quarter of 2014. WEK was previously reported as part of our former Engineered Products Segment.

During the second quarter of 2014, the Company’s Board of Directors approved the commencement of the sale process to divest its Lawn and Garden business to allow it to focus resources on its core growth platforms. The Lawn and Garden business serves the North American horticulture market with plastic products such as seedling trays, nursery products, hanging baskets, custom print containers as well as decorative resin planters. The business was sold February 17, 2015 to an entity controlled by Wingate Partners V, L.P., a private equity firm, for $110.0 million, subject to a working capital adjustment. The sale of the Lawn & Garden business includes manufacturing facilities and offices located in: Twinsburg, Ohio; Middlefield, Ohio; Elyria, Ohio; Sparks, Nevada; Sebring, Florida; Brantford, Ontario and Burlington, Ontario. The terms of the agreement include a $90.0 million cash payment, promissory notes totaling $20.0 million that carry a five year maturity, a 6% interest rate and amounts placed in escrow. The fair market value of the notes receivable at March 31, 2015 was $17.9 million and is included in other assets in the accompanying consolidated balance sheet. The fair value of the notes receivable was calculated using level 2 inputs as defined in Note 1. A gain on the sale of the Lawn and Garden business of $3.8 million was recognized during the first quarter of 2015 and is included in income from discontinued operations in the accompanying statement of income.

Since the second quarter of 2014 and until the business was sold on February 17, 2015, the Lawn and Garden business met the held-for-sale criteria under the requirements of ASC 360. Accordingly, at December 31, 2014, the Company has classified and accounted for the assets and liabilities of the Lawn and Garden business as held for sale in the accompanying Consolidated Statements of Financial Position and the operating results of Lawn and Garden and WEK for periods prior to the sale, net of tax, as discontinued operations in the accompanying Consolidated Statements of Operations. In addition, the Company performed a fair value assessment of the Lawn and Garden business. The fair value, determined as sales price less cost to sell the business, was less than its carrying value at December 31, 2014, resulting in an $18.9 million impairment charge reported as discontinued operations in the Consolidated Statements of Operations for the year ended December 31, 2014.
Summarized selected financial information for the Lawn and Garden Segment and WEK for the three months ended March 31, 2015 and 2014, are presented in the following table:
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2015*
 
2014
 
Net sales
 
$
29,335

 
$
58,308

 
Loss from discontinued operations before income taxes
 
$
(963
)
 
$
(6,876
)
 
Income tax expense (benefit)
 
254

 
(2,498
)
 
Loss from discontinued operations
 
(1,217
)
 
(4,378
)
 
Gain on sale of discontinued operations, inclusive of tax benefit of ($2,191)
 
3,834

 

 
Income (loss) from discontinued operations, net of income taxes
 
$
2,617

 
$
(4,378
)
 
 
 
 
 
 
 
* Includes Lawn and Garden operating results through February 17, 2015.

The assets and liabilities of discontinued operations are stated separately as of December 31, 2014, in the Condensed Consolidated Statements of Financial Position (Unaudited) and are comprised of the following items:
 
 
 
December 31,
 
 
 
2014
Assets
 
 
 
Accounts receivable-net
 
 
$
29,794

Inventories
 
 
50,951

Prepaid expenses and other current assets
 
 
1,709

Goodwill
 
 
9,107

Patents and other intangible assets, net
 
 
6,030

Property, plant and equipment, net
 
 
38,168

Net asset impairment*
 
 
(18,858
)
Other
 
 
874

Total Assets Held for Sale
 
 
$
117,775

 
 
 
 
Liabilities
 
 
 
 Accounts payable
 
 
$
22,239

 Accrued expenses and other liabilities
 
 
4,883

Total Liabilities Held for Sale
 
 
$
27,122



*Impairment includes cumulative translation credit adjustment associated with the Lawn and Garden group.


The Lawn and Garden Segment restructuring plan, announced in July 2013, detailed the closure of two manufacturing plants: one in Brantford, Ontario and the second in Waco, Texas. The restructuring actions included closure, relocation and employee related costs. During the three months ended March 31, 2014, the Lawn and Garden Segment recognized approximately $4.4 million of severance charges and personnel costs under its restructuring plan. Restructuring actions under the plan were completed as of December 31, 2014.
Inventories
Inventories
Inventories
Inventories are stated at the lower of cost or market. Approximately forty percent of the Company’s inventories use 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. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management’s control, estimated interim results, which were immaterial, are subject to change in the final year-end LIFO inventory valuation and therefore, no adjustment was recorded as of March 31, 2015.
Other Accrued Expenses
Other Accrued Expenses
Other Accrued Expenses

Other accrued expenses consisted of the following:
 
 
March 31, 2015
 
December 31, 2014
Deposits and amounts due to customers
 
$
5,439

 
$
10,591

Dividends payable
 
4,265

 
4,267

Accrued legal and professional fees
 
5,064

 
3,458

Other accrued expenses
 
9,013

 
7,856

 
 
$
23,781

 
$
26,172

Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
The change in goodwill for the three months ended March 31, 2015 was as follows:
Segment
Balance at January 1, 2015
 
Foreign
Currency
Translation
 
Balance at March 31, 2015
Material Handling
$
66,134

 
$
(4,814
)
 
$
61,320

Distribution
505

 

 
505

 
$
66,639

 
$
(4,814
)
 
$
61,825


Intangible assets other than goodwill primarily consist of trade names, customer relationships, patents and technology assets established in connection with acquisitions. These intangible assets, other than certain trade names, are amortized over their estimated useful lives. The Company has indefinite lived trade names which had a carrying value of $11.0 million and $11.3 million at March 31, 2015 and December 31, 2014, respectively.
Net Income Per Common Share
Net Income (Loss) Per Common Share
Net Income Per Common Share
Net income per common share, as shown on the Condensed Consolidated Statements of Income (Unaudited), is determined on the basis of the weighted average number of common shares outstanding during the period as follows:
 
Three Months Ended
 
 
March 31,
 
 
2015
 
2014
 
Weighted average common shares outstanding
 
 
 
 
Basic
31,026,468

 
33,518,543

 
Dilutive effect of stock options and restricted stock
344,244

 
499,932

 
Weighted average common shares outstanding diluted
31,370,712

 
34,018,475

 

Options to purchase 400,866 shares of common stock that were outstanding for the three month period ended March 31, 2015, were not included in the computation of diluted earnings per share as the exercise prices of these options were greater than the average market price of common shares, and were therefore anti-dilutive. Options to purchase 209,500 shares of common stock that were outstanding for the three month period ended March 31, 2014, were not included in the computation of diluted earnings per share as the exercise prices of these options were greater than the average market price of common shares and were therefore anti-dilutive.
Stock Compensation
Stock Compensation
Stock Compensation
The Company’s Amended and Restated 2008 Incentive Stock Plan (the “2008 Plan”) authorizes the Compensation Committee of the Board of Directors to issue up to 4,000,000 shares of various types of stock based awards including stock options, restricted stock and stock appreciation rights to key employees and directors. In general, options granted and outstanding vest over a three year period and expire ten years from the date of grant.
The Company recorded stock compensation expense of approximately $1.0 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively. These expenses are included in SG&A expenses in the accompanying Condensed Consolidated Statements of Income (Unaudited). Total unrecognized compensation cost related to non-vested share based compensation arrangements at March 31, 2015 was approximately $5.9 million which will be recognized over the next three years, as such compensation is earned.
In March 2015, stock options for 208,200 shares were granted with a three year vesting period. The fair value of options granted is estimated using a binomial lattice option pricing model based on assumptions set forth in the following table. The Company uses historical data to estimate employee exercise and departure behavior. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and through the expected term. The dividend yield rate is based on the Company’s historical dividend yield. The expected volatility is derived from historical volatility of the Company’s shares and those of similar companies measured against the market as a whole.
Model
 
Risk free interest rate
2.10
%
Expected dividend yield
2.90
%
Expected life of award (years)
8.0

Expected volatility
50.00
%
Fair value per option share
$
6.03








The following table provides a summary of stock option activity for the period ended March 31, 2015:
 
Shares
 
Average
Exercise
Price
 
Weighted
Average
Life
Outstanding at January 1, 2015
1,512,756

 
$
13.24

 
 
Options granted
208,200

 
18.67

 
 
Options exercised
(74,110
)
 
12.42

 
 
Canceled or forfeited
(21,234
)
 
18.64

 
 
Outstanding at March 31, 2015
1,625,612

 
$
13.91

 
5.90 years
Exercisable at March 31, 2015
1,217,909

 
$
12.35

 
4.74 years


The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of all stock options exercised during the three months ended March 31, 2015 and 2014 was approximately $0.5 million and $1.2 million, respectively.
In March 2015, 93,500 Restricted Stock Unit ("RSU") Awards were granted with a three year vesting period. The RSUs had a grant date fair value of $18.69 per share, which was the closing price of the common stock on the date of grant.
The following table provides a summary of combined RSU and restricted stock activity for the period ended March 31, 2015:
 
Awards
 
Average Grant-Date Fair Value
Unvested at January 1, 2015
236,196

 
 
Granted
93,500

 
$
18.69

Vested
(132,969
)
 
15.40

Canceled or forfeited
(13,632
)
 
18.84

Unvested at March 31, 2015
183,095

 
$
18.08


Restricted stock units are rights to receive shares of common stock, subject to forfeiture and other restrictions, which vest over a three year period. Restricted shares are considered to be non-vested shares under the accounting guidance for share-based payment and are not reflected as issued and outstanding shares until the restrictions lapse. At that time, the shares are released to the grantee and the Company records the issuance of the shares. Restricted stock awards are valued based on the market price of the underlying shares on the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period. At March 31, 2015, restricted stock awards had vesting periods up through March 2018.
Contingencies
Contingencies
Contingencies
The Company is a defendant in various lawsuits and a party to various other legal proceedings, in the ordinary course of business, some of which are covered in whole or in part by insurance.
New Idria Mercury Mine
Effective October 2011, the U.S. Environmental Protection Agency (“EPA”) added the New Idria Mercury Mine site located near Hollister, California to the Superfund National Priorities List because of alleged contaminants discharged to California waterways. The New Idria Quicksilver Mining Company, founded in 1936, and later renamed the New Idria Mining & Chemical Company ("NIMCC") owned and/or operated the New Idria Mine through 1976. In 1981 NIMCC, after another name change, was merged into Buckhorn Metal Products Inc. which was subsequently acquired by Myers Industries in 1987. The EPA contends that past mining operations have resulted in mercury contamination and acid mine drainage at the mine site, in the San Carlos Creek, Silver Creek and a portion of Panoche Creek, and that other downstream locations may also be impacted.
As of the date of this disclosure, no formal claim or allegation relating to the New Idria Mine Site against the Company or its subsidiary Buckhorn Inc. ("Buckhorn") has been received. However, since Buckhorn may be a potentially responsible party (“PRP”) at the New Idria Mercury Mine, the Company recognized an expense of $1.9 million, on an undiscounted basis, in 2011 related to performing a remedial investigation and feasibility study to determine the extent of remediation and the screening of alternatives. Payments of approximately $0.9 million have been made and charged against the reserve classified in Other Liabilities on the Consolidated Statements of Financial Position as of March 31, 2015. As the investigation and remediation proceed, it is possible that adjustments to the reserved expense will be necessary to reflect new information. Estimates of the Company’s liability are based on current facts, laws, regulations and technology. Estimates of the Company’s environmental liabilities are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluation and cost estimates, the extent of remedial actions that may be required, the number and financial condition of other PRPs as well as the extent of their responsibility for the remediation, and the availability of insurance coverage for these expenses. At this time, further remediation cost estimates are not known and have not been prepared.
In November 2011, the EPA completed an interim removal project at the New Idria Mercury Mine site. It is expected this removal action will be part of the final remediation strategy for the site. According to informal reports, EPA’s interim removal project costs were approximately $0.5 million. The Company and Buckhorn have received indications that the EPA intends to seek recovery of the costs of this work and other past costs from the Company and Buckhorn and to initiate the administrative processes whereby the Company and/or Buckhorn would perform the remedial investigation and feasibility study described above.
Guadelupe River Watershed TMDL
A number of parties, including the Company and its subsidiary, Buckhorn, were identified in a planning document adopted in October 2008 by the California Regional Water Quality Control Board, San Francisco Bay Region (“RWQCB”). The planning document relates to the presence of mercury, including amounts contained in mining wastes, in and around the Guadalupe River Watershed (“Watershed”) region in Santa Clara County, California and specifically to the development of a "total maximum daily load" ("TMDL") for mercury deposits into the Watershed. The RWQCB has since completed the development and adoption of the Watershed mercury TMDL. Buckhorn has previously been alleged to be a successor in interest to NIMCC, which owned property and performed mining operations in a portion of the Watershed area. The Company has not been contacted by the RWQCB or by other parties who have been involved in Watershed clean-up efforts that have been initiated as a result of the adoption of the TMDL. Although assertion of a claim by the RWQCB or another party involved in this clean up effort is reasonably possible, it is not possible at this time to estimate the amount of any obligation the Company may incur for these cleanup efforts within the Watershed region, or whether such cost would be material to the Company’s consolidated financial statements.

Other
Buckhorn and Schoeller Arca Systems, Inc. (“SAS”) were plaintiffs in a patent infringement lawsuit against Orbis Corp. and Orbis Material Handling, Inc. (“Orbis”) for alleged breach by Orbis of an exclusive patent license agreement from SAS to Buckhorn.  SAS is an affiliate of Schoeller Arca Systems Services B.V. (“SASS B.V.”), a Dutch company.  SAS manufactures and sells plastic returnable packaging systems for material handling.  In the course of the litigation, it was discovered that SAS had given a patent license agreement to a predecessor of Orbis that pre-dated the one that SAS sold to Buckhorn.  As a result, judgment was entered in favor of Orbis, and the court awarded attorney fees and costs to Orbis in the amount of $3.1 million, plus interest and costs.  In May 2014, Orbis made demand to SAS that SAS pay the judgment in full, and subsequently in July 2014, Orbis made the same demand to Buckhorn.  Although the range of exposure is $0 - $3.1 million, plus interest, Buckhorn’s responsibility as a co-judgment debtor is not specified.  Buckhorn believes it is not responsible for any of the award because it is not a party to the Orbis license and will continue to aggressively pursue any and all legal actions both with respect to appealing the award requesting SAS be named solely responsible for payment of the judgment, as well as pursuing SAS and SASS B.V. for fraudulently selling an exclusive patent license they could not sell.   In August 2014, SASS B.V. informed Buckhorn that SAS may not have the financial ability to pay the judgment and provided financial statements to Buckhorn indicating SAS is in financial distress and while SASS B.V is financially stable, the award is against SAS, not SASS B.V.  Given the uncertainty of SAS’s financial ability to meet the obligation and the judgment is joint and several, Myers recorded an expense of $3.0 million during 2014 for the entire amount of the unpaid judgment, despite the belief we will ultimately be successful in the appeal and suing SAS and SASS B.V. The matter is presently under appeal and Buckhorn is also suing SAS and SASS B.V.
When management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the estimated loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable of occurrence than another. As additional information becomes available, any potential liability related to these matters will be assessed and the estimates will be revised, if necessary.
Based on current available information, management believes that the ultimate outcome of these matters will not have a material adverse effect on our financial position, cash flows or overall trends in our results of operations. However, these matters are subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which the ruling occurs, or in future periods.
Debt
Debt Disclosure
Long-Term Debt and Loan Agreement
Long-term debt consisted of the following:
 
March 31,
 
December 31,
 
2015
 
2014
Loan Agreement
$
105,307

 
$
137,109

4.67% Senior Unsecured Notes due 2021
40,000

 
40,000

5.25% Senior Unsecured Notes due 2024
11,000

 
11,000

5.30% Senior Unsecured Notes due 2024
29,000

 
29,000

5.45% Senior Unsecured Notes due 2026
20,000

 
20,000

 
205,307

 
237,109

Less unamortized deferred financing fees
636

 
680

 
$
204,671

 
$
236,429


On December 13, 2013, the Company entered into a Fourth Amended and Restated Loan Agreement (the “Loan Agreement”). The Loan Agreement provided for a $200 million senior revolving credit facility expiring on December 13, 2018. In addition, on May 30, 2014, the Company entered into a First Amendment to the Loan Agreement (the "Loan Amendment"). The Loan Amendment increased the senior revolving credit facility from $200 million to $300 million through December 2018 and provided for an additional subsidiary of the Company as a borrower and as a guarantor of the credit facility. On July 2, 2014, the Company borrowed approximately $135.3 million under the Loan Agreement to fund the acquisition of Scepter. Amounts borrowed under the agreement are secured by pledges of stock of certain of our foreign and domestic subsidiaries.
Under the terms of the Loan Agreement, the Company may borrow up to $300 million, reduced for letters of credit issued. As of March 31, 2015, the Company had $190.4 million available under the Loan Agreement. The Company also had $4.3 million of letters of credit issued related to insurance and other financing contracts in the ordinary course of business at March 31, 2015. Borrowings under the Loan Agreement bear interest at the LIBOR rate, prime rate, federal funds effective rate, the Canadian deposit offered rate, or the eurocurrency reference rate depending on the type of loan requested by the Company, in each case plus the applicable margin as set forth in the Loan Agreement. The average interest rate on borrowings under our loan agreements were 4.54% at March 31, 2015 and 5.58% at March 31, 2014, which includes a quarterly facility fee on the used and unused portion.
Long-term debt at March 31, 2015 and December 31, 2014 includes $0.6 million and $0.7 million, respectively, of unamortized deferred financing costs, which are accounted for as debt valuation accounts.
Retirement Plans
Retirement Plans
Retirement Plans
The Company and certain of its subsidiaries have pension and profit sharing plans covering substantially all of their employees. The Company’s frozen defined benefit pension plan ("The Pension Agreement between Akro-Mils and United Steelworkers of America Local No. 1761-02") provides benefits primarily based upon a fixed amount for each year of service as of the date the plan was frozen.



Net periodic pension cost are as follows:
 
Three Months Ended
March 31,
 
 
2015
 
2014
 
Interest cost
$
68

 
$
70

 
Expected return on assets
(83
)
 
(93
)
 
Amortization of actuarial net loss
22

 
11

 
Net periodic pension (benefit) cost
$
7

 
$
(12
)
 
Company contributions
$
78

 
$
80

 

The Company anticipates making contributions totaling $0.5 million to its pension plan for the full year of 2015.
Income Taxes
Income Taxes
Income Taxes
The total amount of gross unrecognized tax benefit that would reduce the Company's effective tax rates at March 31, 2015 and March 31, 2014, was $0.5 million and $1.2 million, respectively. Accrued interest expense included within accrued income taxes in the Company's Condensed Consolidated Statements of Financial Position (Unaudited) was less than $0.1 million at both March 31, 2015 and December 31, 2014. The March 31, 2015 balance of unrecognized tax benefits includes approximately $0.5 million of unrecognized tax benefits for which it is reasonably possible that they will be recognized within the next twelve months.

The Company and its subsidiaries file U.S. Federal, state and local, and non-U.S. income tax returns. As of March 31, 2015, the Company is no longer subject to U.S. Federal examination by tax authorities for tax years before 2011. The Company is subject to state and local examinations for tax years of 2010 through 2014. In addition, the Company is subject to non-U.S. income tax examinations for tax years of 2009 through 2014.
Segment Information
Segment Information
Segment Information

During the second quarter of 2014, the Company realigned its reportable segments as a result of organizational changes to better support its ongoing business strategy. The realignment is consistent with the manner in which our Chief Operating Decision Maker evaluates performance and makes resource allocation decisions. Using the criteria of ASC 280, Segment Reporting, the Company currently manages its business under two operating segments: Material Handling and Distribution. Certain business units that formerly reported in the Engineered Products Segment are now part of the Material Handling and Distribution Segments. Historical segment information has been adjusted to reflect the effect of these changes. Each of these operating segments is also a reportable segment under the ASC 280 criteria.

None of the reportable segments include operating segments that have been aggregated. Some of these segments contain individual business components that have been aggregated on the basis of common management, customers, products, production processes and other economic characteristics. The Company accounts for intersegment sales and transfers at cost plus a specified mark-up.

Income before income taxes for each business segment is based on net sales less cost of products sold, and the related selling, administrative and general expenses. In computing business segment operating income, general corporate overhead expenses and interest expenses are not included.

Material Handling

The Material Handling Segment manufactures a broad selection of plastic reusable containers, pallets, small parts bins, bulk shipping containers, storage and organization products and rotationally-molded plastic tanks for water, fuel and waste handling. This segment conducts its primary operations in the United States, but also operates in Brazil and Canada. Markets served encompass various niches of industrial manufacturing, food processing, retail/wholesale products distribution, agriculture, automotive, recreational vehicles, marine vehicles, healthcare, appliance, bakery, electronics, textiles, consumer, and others. Products are sold both directly to end-users and through distributors.

Distribution

The Distribution Segment is engaged in the distribution of equipment, tools, and supplies used for tire servicing and automotive undervehicle repair and the manufacture of tire repair and retreading products. The product line includes categories such as tire valves and accessories, tire changing and balancing equipment, lifts and alignment equipment, service equipment and tools, and tire repair/retread supplies. The Distribution Segment operates domestically through sales offices, and four regional distribution centers in the United States and in foreign countries through export sales. In addition, the Distribution Segment operates directly in certain foreign markets, principally Central America, through foreign branch operations. Markets served include retail and truck tire dealers, commercial auto and truck fleets, auto dealers, general service and repair centers, tire retreaders, and government agencies.
Summarized segment detail for the three months ended March 31, 2015 and 2014 are presented in the following table:

 
Three Months Ended
March 31,
Net Sales
2015
 
2014
Material Handling
$
112,280

 
$
106,677

Distribution
44,105

 
43,883

Inter-company Sales
(37
)
 
(75
)
 
$
156,348

 
$
150,485


 
Three Months Ended
March 31,
Income From Continuing Operations Before Income Taxes
2015
 
2014
Material Handling
$
13,407

 
$
12,772

Distribution
3,491

 
3,530

Corporate
(10,182
)
 
(7,419
)
Interest expense - net
(2,702
)
 
(1,584
)
 
$
4,014

 
$
7,299



Identifiable Assets
March 31, 2015
 
December 31, 2014
Material Handling
$
371,628

 
$
370,501

Distribution
63,276

 
57,523

Corporate
30,782

 
19,034

Discontinued operations

 
117,775

 
$
465,686

 
$
564,833



Discontinued Operations

During the quarter ended June 30, 2014, the Company’s Board of Directors approved the commencement of the sale process to divest its Lawn and Garden Segment. As a result, the Company has classified and accounted for its assets and liabilities as held for sale and its operating results, net of tax, as discontinued operations for all periods presented through February 17, 2015 which was the date of sale.

In addition, on June 20, 2014, the Company completed the sale of the assets and associated liabilities of WEK. As a result, the Company has classified and accounted for its operating results, net of tax, as discontinued operations for all periods presented through the date of sale. WEK was previously reported as part of our former Engineered Products Segment through the date of sale.
Statement of Accounting Policies (Policies)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (collectively, the “Company”), and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.
In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2015, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2015.
Translation of Foreign Currencies

All asset and liability 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 monthly at an average currency exchange rate for the period. The resulting translation adjustment is recorded in other comprehensive income (loss) as a separate component of shareholders' equity.
Fair Value Measurement
The Company follows guidance included in ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), for its financial assets and liabilities, as required. The guidance established a common definition for fair value to be applied to U.S. GAAP requiring the use of fair value, established a framework for measuring fair value, and expanded disclosure requirements about such fair value measurements. The guidance did not require any new fair value measurements, but rather applied to all other accounting pronouncements that require or permit fair value measurements. Under ASC 820, the hierarchy that prioritizes the inputs to valuation techniques used to measure fair value is divided into three levels:
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are observable either directly or indirectly.
Level 3:
Unobservable inputs for which there is little or no market data or which reflect the entity’s own assumptions.
The fair value of the Company’s cash, accounts receivable, accounts payable and accrued expenses are considered to have a fair value which approximates carrying value due to the nature and relative short maturity of these assets and liabilities.
The fair value of debt under the Company’s Loan Agreement approximates carrying value due to the floating rates and relative short maturity (less than 90 days) of the revolving borrowings under this agreement. The fair value of the Company’s fixed rate senior unsecured notes was estimated using market observable inputs for the Company’s comparable peers with public debt, including quoted prices in active markets and interest rate measurements which are considered level 2 inputs. At March 31, 2015, the fair value of the Company's $100.0 million fixed rate senior unsecured notes was estimated at $108.7 million. At December 31, 2014, the fair value of the Company's $100.0 million fixed rate senior unsecured notes was estimated at $106.8 million.
Revenue Recognition

The Company recognizes revenues from the sale of products, net of actual and estimated returns, at the point of passage of title and risk of loss, which is generally at time of shipment, and collectability of the fixed or determinable sales price is reasonably assured.
Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. The Company maintains operating cash and reserves for replacement balances in financial institutions which, from time to time, may exceed federally insured limits. The Company periodically assesses the financial condition of these institutions and believes that the risk of loss is minimal.
Statement of Accounting Policies (Tables)
The balances in the Company's accumulated other comprehensive income














Accumulated Other Comprehensive Loss

The balances in the Company’s accumulated other comprehensive income (loss) ("AOCI") as of March 31, 2015 and March 31, 2014 are as follows:
 
Foreign Currency
 
Defined Benefit Pension Plans
 
Total
Balance at January 1, 2014
$
3,493

 
$
(1,066
)
 
$
2,427

Other comprehensive income before reclassifications
54

 

 
54

Net current-period other comprehensive income
54

 

 
54

Balance at March 31, 2014
$
3,547

 
$
(1,066
)
 
$
2,481

 
 
 
 
 
 
Balance at January 1, 2015
$
(9,825
)
 
$
(1,863
)
 
$
(11,688
)
Other comprehensive loss before reclassifications
(12,519
)
 

 
(12,519
)
Amounts reclassified from accumulated other comprehensive income*
(10,491
)
 

 
(10,491
)
Net current-period other comprehensive income (loss)
(23,010
)
 

 
(23,010
)
Balance at March 31, 2015
$
(32,835
)
 
$
(1,863
)
 
$
(34,698
)
Acquisitions (Tables)
The purchase consideration, related preliminary estimated allocations, and resulting excess over fair value of net assets acquired are as follows:
Assets acquired:
 
 
Current assets
 
$
34,572

Property, plant and equipment
 
44,613

Intangible assets
 
66,500

Assets acquired
 
$
145,685

 
 
 
Liabilities assumed:
 
 
Current liabilities
 
$
8,877

Total liabilities assumed
 
8,877

 
 
 
Goodwill
 
19,812

Total consideration
 
$
156,620

Identifiable intangible assets acquired in connection with the acquisition of Scepter are as follows:
 
 
 
 
Estimated
 
 
 
 
Fair Value
 
Useful Life
 
Valuation Method
Intangible assets not subject to amortization:
 

 
 
 
 
Trademarks and trade names
 
$
8,900

 
Indefinite
 
Relief from royalty
 
 

 
 
 
 
Intangible assets subject to amortization:
 

 
 
 
 
Technology
 
22,300

 
10 years
 
Relief from royalty
Customer relationships
 
35,300

 
6 years
 
Multi-period excess earnings
 
 
57,600

 
 
 
 
Total
 
$
66,500

 
 
 
 
The following unaudited pro forma information presents a summary of the consolidated results of operations for the Company as if the acquisition of Scepter had occurred on January 1, 2014:
 
 
For the Three Months Ended
 
 
 
March 31, 2014
Net sales
 
 
$
175,102

 
 
 

Net income from continuing operations
 
 
$
6,316

 
 
 

Net income per share from continuing operations:
 
 

Basic
 
 
$
0.19

Diluted
 
 
$
0.19

Discontinued Operations (Tables) (Lawn and Garden Segment and WEK)
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures
Summarized selected financial information for the Lawn and Garden Segment and WEK for the three months ended March 31, 2015 and 2014, are presented in the following table:
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2015*
 
2014
 
Net sales
 
$
29,335

 
$
58,308

 
Loss from discontinued operations before income taxes
 
$
(963
)
 
$
(6,876
)
 
Income tax expense (benefit)
 
254

 
(2,498
)
 
Loss from discontinued operations
 
(1,217
)
 
(4,378
)
 
Gain on sale of discontinued operations, inclusive of tax benefit of ($2,191)
 
3,834

 

 
Income (loss) from discontinued operations, net of income taxes
 
$
2,617

 
$
(4,378
)
 
 
 
 
 
 
 
* Includes Lawn and Garden operating results through February 17, 2015.

The assets and liabilities of discontinued operations are stated separately as of December 31, 2014, in the Condensed Consolidated Statements of Financial Position (Unaudited) and are comprised of the following items:
 
 
 
December 31,
 
 
 
2014
Assets
 
 
 
Accounts receivable-net
 
 
$
29,794

Inventories
 
 
50,951

Prepaid expenses and other current assets
 
 
1,709

Goodwill
 
 
9,107

Patents and other intangible assets, net
 
 
6,030

Property, plant and equipment, net
 
 
38,168

Net asset impairment*
 
 
(18,858
)
Other
 
 
874

Total Assets Held for Sale
 
 
$
117,775

 
 
 
 
Liabilities
 
 
 
 Accounts payable
 
 
$
22,239

 Accrued expenses and other liabilities
 
 
4,883

Total Liabilities Held for Sale
 
 
$
27,122

Other Accrued Expenses (Tables)
Schedule of Accounts Other Accrued Expenses
Other accrued expenses consisted of the following:
 
 
March 31, 2015
 
December 31, 2014
Deposits and amounts due to customers
 
$
5,439

 
$
10,591

Dividends payable
 
4,265

 
4,267

Accrued legal and professional fees
 
5,064

 
3,458

Other accrued expenses
 
9,013

 
7,856

 
 
$
23,781

 
$
26,172

Goodwill and Intangible Assets (Tables)
The change in goodwill
The change in goodwill for the three months ended March 31, 2015 was as follows:
Segment
Balance at January 1, 2015
 
Foreign
Currency
Translation
 
Balance at March 31, 2015
Material Handling
$
66,134

 
$
(4,814
)
 
$
61,320

Distribution
505

 

 
505

 
$
66,639

 
$
(4,814
)
 
$
61,825

Net Income (Loss) Per Common Share (Tables)
Weighted average number of common shares outstanding during the period
Net income per common share, as shown on the Condensed Consolidated Statements of Income (Unaudited), is determined on the basis of the weighted average number of common shares outstanding during the period as follows:
 
Three Months Ended
 
 
March 31,
 
 
2015
 
2014
 
Weighted average common shares outstanding
 
 
 
 
Basic
31,026,468

 
33,518,543

 
Dilutive effect of stock options and restricted stock
344,244

 
499,932

 
Weighted average common shares outstanding diluted
31,370,712

 
34,018,475

 
Stock Compensation (Tables)
The expected volatility is derived from historical volatility of the Company’s shares and those of similar companies measured against the market as a whole.
Model
 
Risk free interest rate
2.10
%
Expected dividend yield
2.90
%
Expected life of award (years)
8.0

Expected volatility
50.00
%
Fair value per option share
$
6.03

The following table provides a summary of stock option activity for the period ended March 31, 2015:
 
Shares
 
Average
Exercise
Price
 
Weighted
Average
Life
Outstanding at January 1, 2015
1,512,756

 
$
13.24

 
 
Options granted
208,200

 
18.67

 
 
Options exercised
(74,110
)
 
12.42

 
 
Canceled or forfeited
(21,234
)
 
18.64

 
 
Outstanding at March 31, 2015
1,625,612

 
$
13.91

 
5.90 years
Exercisable at March 31, 2015
1,217,909

 
$
12.35

 
4.74 years
The following table provides a summary of combined RSU and restricted stock activity for the period ended March 31, 2015:
 
Awards
 
Average Grant-Date Fair Value
Unvested at January 1, 2015
236,196

 
 
Granted
93,500

 
$
18.69

Vested
(132,969
)
 
15.40

Canceled or forfeited
(13,632
)
 
18.84

Unvested at March 31, 2015
183,095

 
$
18.08

Debt (Tables)
Schedule of Long-term Debt Instruments [Table Text Block]
Long-term debt consisted of the following:
 
March 31,
 
December 31,
 
2015
 
2014
Loan Agreement
$
105,307

 
$
137,109

4.67% Senior Unsecured Notes due 2021
40,000

 
40,000

5.25% Senior Unsecured Notes due 2024
11,000

 
11,000

5.30% Senior Unsecured Notes due 2024
29,000

 
29,000

5.45% Senior Unsecured Notes due 2026
20,000

 
20,000

 
205,307

 
237,109

Less unamortized deferred financing fees
636

 
680

 
$
204,671

 
$
236,429

Retirement Plans (Tables)
Net periodic pension cost
Net periodic pension cost are as follows:
 
Three Months Ended
March 31,
 
 
2015
 
2014
 
Interest cost
$
68

 
$
70

 
Expected return on assets
(83
)
 
(93
)
 
Amortization of actuarial net loss
22

 
11

 
Net periodic pension (benefit) cost
$
7

 
$
(12
)
 
Company contributions
$
78

 
$
80

 
Segment Information (Tables)
 
Three Months Ended
March 31,
Net Sales
2015
 
2014
Material Handling
$
112,280

 
$
106,677

Distribution
44,105

 
43,883

Inter-company Sales
(37
)
 
(75
)
 
$
156,348

 
$
150,485


 
Three Months Ended
March 31,
Income From Continuing Operations Before Income Taxes
2015
 
2014
Material Handling
$
13,407

 
$
12,772

Distribution
3,491

 
3,530

Corporate
(10,182
)
 
(7,419
)
Interest expense - net
(2,702
)
 
(1,584
)
 
$
4,014

 
$
7,299


 
Three Months Ended
March 31,
Income From Continuing Operations Before Income Taxes
2015
 
2014
Material Handling
$
13,407

 
$
12,772

Distribution
3,491

 
3,530

Corporate
(10,182
)
 
(7,419
)
Interest expense - net
(2,702
)
 
(1,584
)
 
$
4,014

 
$
7,299

Identifiable Assets
March 31, 2015
 
December 31, 2014
Material Handling
$
371,628

 
$
370,501

Distribution
63,276

 
57,523

Corporate
30,782

 
19,034

Discontinued operations

 
117,775

 
$
465,686

 
$
564,833

Statement of Accounting Policies (Details) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Mar. 31, 2015
Foreign Currency
Mar. 31, 2014
Foreign Currency
Mar. 31, 2015
Defined Benefit Pension Plans
Mar. 31, 2014
Defined Benefit Pension Plans
Mar. 31, 2015
Accumulative Other Comprehensive Loss
Mar. 31, 2014
Accumulative Other Comprehensive Loss
Mar. 31, 2015
Carrying (Reported) Amount, Fair Value Disclosure
Less unamortized deferred financing fees
Dec. 31, 2013
Carrying (Reported) Amount, Fair Value Disclosure
Less unamortized deferred financing fees
Mar. 31, 2015
Estimate of Fair Value, Fair Value Disclosure
Less unamortized deferred financing fees
Dec. 31, 2014
Estimate of Fair Value, Fair Value Disclosure
Less unamortized deferred financing fees
Organization, Consolidation and Presentation of Financial Statements [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Notes Payable, Fair Value Disclosure
 
 
 
 
 
 
 
 
$ 100,000,000 
$ 100,000,000 
$ 108,700,000 
$ 106,800,000 
Accumlated Other Comprehensive Income (Loss) [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
(11,688,000)
 
(9,825,000)
3,493,000 
(1,863,000)
(1,066,000)
(11,688,000)
2,427,000 
 
 
 
 
Other comprehensive income before reclassifications
 
 
(12,519,000)
54,000 
(12,519,000)
54,000 
 
 
 
 
Amounts reclassified from accumulated other comprehensive income
 
 
(10,491,000)
 
 
(10,491,000)
 
 
 
 
 
Total other comprehensive income (loss)
(23,010,000)
54,000 
(23,010,000)
54,000 
(23,010,000)
54,000 
 
 
 
 
Ending balance
$ (34,698,000)
 
$ (32,835,000)
$ 3,547,000 
$ (1,863,000)
$ (1,066,000)
$ (34,698,000)
$ 2,481,000 
 
 
 
 
Acquisitions (Details) (Scepter acquisition, USD $)
In Millions, unless otherwise specified
0 Months Ended
Jul. 2, 2014
Scepter acquisition
 
Business Acquisition [Line Items]
 
Purchase price
$ 156.6 
Company borrowed under loan agreement to fund Scepter acquisition
134.1 
Payments to acquire Sceptor
$ 22.5 
Acquisitions (Recognized Identified Asset Acquired and Liabilities Assumed) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Jul. 2, 2014
Scepter acquisition
Business Acquisition [Line Items]
 
 
 
Current assets
 
 
$ 34,572 
Property, plant and equipment
 
 
44,613 
Intangible assets
 
 
66,500 
Assets acquired
 
 
145,685 
Current liabilities
 
 
8,877 
Total liabilities assumed
 
 
8,877 
Goodwill
61,825 
66,639 
19,812 
Total consideration
 
 
$ 156,620 
Acquisitions (Intangibles Acquired) (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended
Jul. 2, 2014
Scepter acquisition
 
Business Acquisition [Line Items]
 
Intangible assets acquired, subject to amortization
$ 57,600 
Intangibles acquired
66,500 
Trademarks and trade names |
Scepter acquisition
 
Business Acquisition [Line Items]
 
Intangible assets acquired not subject to amortization
8,900 
Technology
 
Business Acquisition [Line Items]
 
Estimated useful life
10 years 
Technology |
Scepter acquisition
 
Business Acquisition [Line Items]
 
Intangible assets acquired, subject to amortization
22,300 
Customer relationships
 
Business Acquisition [Line Items]
 
Estimated useful life
6 years 
Customer relationships |
Scepter acquisition
 
Business Acquisition [Line Items]
 
Intangible assets acquired, subject to amortization
$ 35,300 
Acquisitions (Proforma Information) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Business Combinations [Abstract]
 
Net sales
$ 175,102 
Net income from continuing operations
$ 6,316 
Income per share from continuing operations, basic
$ 0.19 
Income per share from continuing operations, diluted
$ 0.19 
Discontinued Operations (Details) (USD $)
3 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Jun. 20, 2014
WEK
Jun. 30, 2014
WEK
Mar. 31, 2015
Lawn and Garden Segment and WEK
Mar. 31, 2014
Lawn and Garden Segment and WEK
Dec. 31, 2014
Lawn and Garden Segment and WEK
Feb. 17, 2015
Lawn and Garden Business
Mar. 31, 2015
Lawn and Garden Business
Dec. 31, 2014
Lawn and Garden Business
Feb. 17, 2015
Lawn and Garden Business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Interest rate
 
 
 
 
 
 
 
 
 
 
6.00% 
Proceeds from divestiture of businesses
 
 
$ 20,700,000 
 
 
 
 
$ 90,000,000 
 
 
 
Adjustment to working capital
 
 
800,000 
 
 
 
 
 
 
 
 
Proceeds from divestiture of businesses, held in escrow
 
 
1,000,000 
 
 
 
 
 
 
 
 
Tax (expense) benefit from provision for (gain) Loss on disposal
 
 
 
1,600,000 
(2,191)
 
 
 
 
 
 
Amount of consideration received
 
 
 
 
 
 
 
110,000,000 
 
 
 
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
29,335,000 
58,308,000 
 
 
 
 
 
Loss from discontinued operations before income taxes
 
 
 
 
(963,000)
(6,876,000)
 
 
 
 
 
Income tax expense (benefit)
 
 
 
 
254,000 
(2,498,000)
 
 
 
 
 
Loss from discontinued operations
 
 
 
 
(1,217,000)
(4,378,000)
 
 
 
 
 
Gain on sale of discontinued operations, inclusive of tax benefit of ($2,191)
 
 
 
3,000,000 
3,834,000 
 
 
 
 
 
Income (loss) from discontinued operations, net of income taxes
2,617,000 
(4,083,000)
 
 
2,617,000 
(4,378,000)
 
 
 
 
 
Assets of Disposal Group, Including Discontinued Operation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable-net
 
 
 
 
 
 
29,794,000 
 
 
 
 
Inventories
 
 
 
 
 
 
50,951,000 
 
 
 
 
Prepaid expenses and other current assets
 
 
 
 
 
 
1,709,000 
 
 
 
 
Goodwill
 
 
 
 
 
 
9,107,000 
 
 
 
 
Patents and other intangible assets, net
 
 
 
 
 
 
6,030,000 
 
 
 
 
Property, plant and equipment, net
 
 
 
 
 
 
38,168,000 
 
 
 
 
Net asset impairment
 
 
 
 
 
 
(18,858,000)
 
 
 
 
Other
 
 
 
 
 
 
874,000 
 
 
 
 
Total Assets Held for Sale
 
 
 
 
 
 
117,775,000 
 
 
 
 
Liabilities of Disposal Group, Including Discontinued Operation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
 
 
 
 
 
22,239,000 
 
 
 
 
Accrued expenses and other liabilities
 
 
 
 
 
 
4,883,000 
 
 
 
 
Total Liabilities Held for Sale
 
 
 
 
 
 
27,122,000 
 
 
 
 
Fair value of debt
 
 
 
 
 
 
 
 
17,900,000 
 
 
Gain sale of business
 
 
 
 
 
 
 
 
3,800,000 
 
 
Promissory note receivable
 
 
 
 
 
 
 
 
 
 
20,000,000 
Note receivable, term
 
 
 
 
 
 
 
5 years 
 
 
 
Asset impairment charge
 
 
 
 
 
 
 
 
 
18,900,000 
 
Translation adjustment
 
 
 
 
 
 
 
 
 
$ 8,300,000 
 
Discontinued Operations (Restructuring) (Details) (USD $)
In Millions, unless otherwise specified
15 Months Ended