##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended October 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 1-5911(Commission File Number)
 SPARTECH CORPORATION
 (Exact name of Registrant as specified in its charter)
 Delaware(State or other jurisdiction 
of incorporation or organization)
    
    (SPARTECH LOGO)
    
    43-0761773(I.R.S. Employer
Identification No.)
 120 S. Central Avenue, Suite 1700
Clayton, Missouri 63105  (Address of principal executive offices) (Zip Code)
 (314) 721-4242  (Registrants telephone number, including area code)
  Common Stock, $.75 par value 
Series Z Preferred Stock, $1.00 par valueTitle of each class
    
    New York Stock ExchangeName of each exchange on which registered
  o þ
 o þ
 þ o
 þ o
 þ
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



SPARTECH CORPORATION
FORM 10-K FOR THE YEAR ENDED OCTOBER 30, 2010
TABLE OF CONTENTS
 Page No.Cautionary Statements Concerning Forward-Looking Statements
    
    
    2PART IITEM 1.
    
    Business
    
    
    3ITEM 1A.
    
    Risk Factors
    
    
    6ITEM 1B.
    
    Unresolved Staff Comments
    
    
    7ITEM 2.
    
    Properties
    
    
    8ITEM 3.
    
    Legal Proceedings
    
    
    8ITEM 4.
    
    [Removed and Reserved]
    
    
    9PART IIITEM 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    10ITEM 6.
    
    Selected Financial Data
    
    
    11ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26ITEM 8.
    
    Financial Statements and Supplementary DataManagements Responsibilities for Financial Statements and Managements
 Report on Internal Control Over Financial Reporting
    
    
    27Report of Independent Registered Public Accounting Firm on Consolidated
 Financial Statements
    
    
    28Report of Independent Registered Public Accounting Firm on Internal
 Control Over Financial Reporting
    
    
    29Consolidated Balance Sheets
    
    
    30Consolidated Statements of Operations
    
    
    31Consolidated Statements of Shareholders Equity
    
    
    32Consolidated Statement of Cash Flows
    
    
    33Notes to Consolidated Financial Statements
    
    
    34ITEM 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    58ITEM 9A.
    
    Controls and Procedures
    
    
    58ITEM 9B.
    
    Other Information
    
    
    58PART IIIITEM 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    59ITEM 11.
    
    Executive Compensation
    
    
    61ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    61ITEM 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    61ITEM 14.
    
    Principal Accounting Fees and Services
    
    
    61PART IVITEM 15.
    
    Exhibits and Financial Statement Schedules
    
    
    62SIGNATURES
    
    
    
    
    64FINANCIAL STATEMENT SCHEDULESchedule II  Valuation and Qualifying Accounts
    
    
    F-1EX-10.22EX-10.23EX-10.24EX-21EX-23EX-24EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



Cautionary Statements Concerning Forward-Looking Statements
  (a)
    
    Adverse changes in economic or industry conditions, including global supply and demand
conditions and prices for products of the types we produce(b)
    
    Our ability to compete effectively on product performance, quality, price,
availability, product development, and customer service(c)
    
    Adverse changes in the markets we serve, including the packaging, transportation,
building and construction, recreation and leisure, and other markets, some of which tend to
be cyclical(d)
    
    Volatility of prices and availability of supply of energy and raw materials that are
critical to the manufacture of our products, particularly plastic resins derived from oil
and natural gas, including future impacts of natural disasters(e)
    
    Our inability to manage or pass through to customers an adequate level of increases in
the costs of materials, freight, utilities, or other conversion costs(f)
    
    Our inability to achieve and sustain the level of cost savings, productivity
improvements, gross margin enhancements, growth or other benefits anticipated from our
improvement initiatives(g)
    
    Our inability to collect all or a portion of our receivables with large customers or a
number of customers(h)
    
    Loss of business with a limited number of customers that represent a significant
percentage of our revenues(i)
    
    Restrictions imposed on us by instruments governing our indebtedness, the possible
inability to comply with requirements of those instruments and inability to access capital
markets(j)
    
    Possible asset impairments(k)
    
    Our inability to predict accurately the costs to be incurred, time taken to complete,
operating disruptions therefrom, potential loss of business or savings to be achieved in
connection with announced production plant consolidations and line moves(l)
    
    Adverse findings in significant legal or environmental proceedings or our inability to
comply with applicable environmental laws and regulations(m)
    
    Our inability to develop and launch new products successfully(n)
    
    Possible weaknesses in internal controls
  2




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PART I
 
 ITEM 1.
    
    BUSINESS
 General
    Custom Sheet and Rollstock
  Packaging Technologies
  Color and Specialty Compounds
  Raw Materials
  3




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Production
  Intellectual Property and Trademarks
  Customer Base
  2010
    
    2009Packaging
    
    
    31
    %
    
    
    34
    %Transportation
    
    
    18
    %
    
    
    16
    %Building and Construction
    
    
    16
    %
    
    
    18
    %Recreation and Leisure
    
    
    9
    %
    
    
    8
    %Sign and Advertising
    
    
    9
    %
    
    
    8
    %Appliance and Electronics
    
    
    7
    %
    
    
    7
    %Lawn and Garden
    
    
    1
    %
    
    
    2
    %Other
    
    
    9
    %
    
    
    7
    %100
    %
    
    
    100
    %
 Distribution
  Backlog
  2010
    
    
    2009Custom Sheet and Rollstock
    
    $
    71.2
    
    
    $
    53.6Packaging Technologies
    
    
    16.0
    
    
    
    18.9Color and Specialty Compounds
    
    
    31.9
    
    
    
    16.1$
    119.1
    
    
    $
    88.6
 Competition
  4




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Seasonality
  Environmental
 Part 1  Item 3 Legal Proceedings
 Employees
  Geographic Areas
  Available Information
 www.spartech.com
  5




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##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
 IN EVALUATING THE COMPANY, CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE RISK FACTORS SET FORTH
BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS ANNUAL REPORT ON FORM 10-K. ALTHOUGH
THESE RISK FACTORS ARE MANY, THESE FACTORS SHOULD NOT BE REGARDED AS CONSTITUTING THE ONLY RISKS
ASSOCIATED WITH OUR BUSINESSES. EACH OF THESE RISK FACTORS COULD ADVERSELY AFFECT OUR BUSINESS,
OPERATING RESULTS, CASH FLOWS AND/OR FINANCIAL CONDITION. IN ADDITION TO THE FOLLOWING DISCLOSURES,
PLEASE REFER TO THE OTHER INFORMATION CONTAINED IN THIS REPORT INCLUDING THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE RELATED NOTES. UNLESS OTHERWISE NOTED, ALL RISK FACTORS LISTED BELOW SHOULD BE
CONSIDERED ATTRIBUTABLE TO ALL OUR OPERATIONS INCLUDING ALL OPERATIONS CLASSIFIED AS DISCONTINUED.
 Recessions, adverse market conditions or downturns in the end markets served by the Company may
negatively impact the Companys sales, profitability, operating results and cash flows.
  The cost and availability of raw materials and energy costs could adversely impact the Companys
operating results and financial condition.
  The Companys credit facility and senior notes contain a number of restrictive covenants; breaches
of these covenants are events of default and could cause the acceleration of debt beyond the
Companys ability to fund such debt.
  Access to funding through capital markets is essential to execution of the Companys future
business plans. An inability to maintain such access could have a material adverse effect on the
Companys business and financial results.
  The Companys business is highly competitive and increased competition could adversely affect its
sales and financial condition.
   6




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A limited number of customers account for a significant percentage of the Companys revenues and
the loss of several significant customers could adversely impact the Companys sales, operating
results and cash flows.
  A major failure to the Companys information systems could harm its business.
  The Companys foreign operations subject it to economic risk because results of operations are
affected by foreign currency fluctuations, changes in local government regulations and other
political, economic and social conditions.
  In the event of any significant delays in completing the Companys announced consolidation
activities or difficulties encountered in connection with integration of production from closed
facilities into existing facilities, the Companys business could be negatively impacted.
  The Company is subject to litigation and environmental regulations that could adversely impact the
Company.
 Part 1  Item 3 Legal Proceedings
 
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  7




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ITEM 2.
    
    PROPERTIES
    
 ITEM 3.
    
    LEGAL PROCEEDINGS
     8




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ITEM 4.
    
    [Removed and Reserved.]
 9




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  Common Stock Price
    
    
    
    
    
    1stQuarter
    
    2ndQuarter
    
    3rdQuarter
    
    4thQuarter
    
    Fiscal Year2010
    
    High
    
    $
    12.22
    
    
    $
    14.86
    
    
    $
    15.55
    
    
    $
    10.83
    
    
    $
    15.55Low
    
    
    9.03
    
    
    
    9.42
    
    
    
    9.40
    
    
    
    6.06
    
    
    
    6.062009
    
    High
    
    $
    7.37
    (1)
    
    $
    4.35
    
    
    $
    12.93
    
    
    $
    14.17
    
    
    $
    14.17Low
    
    
    3.16
    (1)
    
    
    1.29
    
    
    
    3.91
    
    
    
    9.22
    
    
    
    1.29
 
 (1)
    
    During the period from November 2, 2008 through January 31, 2009, Spartech declared a
dividend of $0.05 per share on December 8, 2008, which was payable on February 5, 2009.  10




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ITEM 6.
    
    SELECTED FINANCIAL DATA
  Fiscal Year Ended (a)(in thousands, except per share, per pound, and employee data)
    
    2010
    
    2009
    
    2008
    
    2007 (b)
    
    2006Statement of Operations Data:Net Sales:In Dollars
    
    $
    1,022,896
    
    
    $
    926,777
    
    
    $
    1,321,169
    
    
    $
    1,363,931
    
    
    $
    1,395,190In Volume (pounds) (c)
    
    
    914,990
    
    
    
    860,437
    
    
    
    1,166,282
    
    
    
    1,346,916
    
    
    
    1,373,368Gross Margin (d)
    
    $
    108,603
    
    
    $
    116,308
    
    
    $
    116,237
    
    
    $
    150,117
    
    
    $
    165,114Depreciation and Amortization
    
    
    36,632
    
    
    
    41,302
    
    
    
    43,278
    
    
    
    39,050
    
    
    
    36,830Operating Earnings (Loss) (e)
    
    
    (61,136
    )
    
    
    26,135
    
    
    
    (206,234
    )
    
    
    63,750
    
    
    
    87,911Interest Expense
    
    
    12,025
    
    
    
    15,379
    
    
    
    19,403
    
    
    
    16,393
    
    
    
    19,339Net (Loss) Earnings from Continuing Operations (e)(f)
    
    
    (49,643
    )
    
    
    3,305
    
    
    
    (171,649
    )
    
    
    28,765
    
    
    
    37,238Net (Loss) Earnings from Discontinued Operations
    
    
    (732
    )
    
    
    5,046
    
    
    
    (20,463
    )
    
    
    5,081
    
    
    
    1,560Net (Loss) Earnings (g)
    
    
    (50,375
    )
    
    
    8,351
    
    
    
    (192,112
    )
    
    
    33,846
    
    
    
    38,798Per Share Information:(Loss) Earnings per Share-Diluted from Continuing Operations
    
    $
    (1.60
    )
    
    $
    0.11
    
    
    $
    (5.61
    )
    
    $
    0.89
    
    
    $
    1.15(Loss) Earnings per Share-Diluted from Discontinued Operations
    
    
    (0.03
    )
    
    
    0.16
    
    
    
    (0.68
    )
    
    
    0.16
    
    
    
    0.05(Loss) Earnings per Share-Diluted
    
    
    (1.63
    )
    
    
    0.27
    
    
    
    (6.29
    )
    
    
    1.05
    
    
    
    1.20Dividends Declared per Share
    
    
    
    
    
    
    0.05
    
    
    
    0.37
    
    
    
    0.54
    
    
    
    0.50Book Value per Share (c)
    
    
    6.25
    
    
    
    7.71
    
    
    
    7.42
    
    
    
    14.37
    
    
    
    13.78Balance Sheet Data:Working Capital (h)
    
    $
    90,489
    
    
    $
    86,513
    
    
    $
    99,224
    
    
    $
    131,835
    
    
    $
    136,544Working Capital as a Percentage of Net Sales (c)
    
    
    8.8
    %
    
    
    9.3
    %
    
    
    7.5
    %
    
    
    9.7
    %
    
    
    9.8
    %Total Debt
    
    $
    172,472
    
    
    $
    216,434
    
    
    $
    274,654
    
    
    $
    334,283
    
    
    $
    289,223Total Assets
    
    
    577,141
    
    
    
    662,071
    
    
    
    762,419
    
    
    
    1,110,871
    
    
    
    1,041,794Shareholders Equity
    
    
    193,006
    
    
    
    236,879
    
    
    
    226,790
    
    
    
    439,280
    
    
    
    442,693Ratios/Other Data:Cash Flow from Operations
    
    $
    39,330
    
    
    $
    65,264
    
    
    $
    96,612
    
    
    $
    104,011
    
    
    $
    127,543Capital Expenditures
    
    
    21,432
    
    
    
    8,098
    
    
    
    17,276
    
    
    
    34,743
    
    
    
    23,966Cash Flow (used) provided by Investing Activities
    
    
    (17,872
    )
    
    
    24,579
    
    
    
    (17,484
    )
    
    
    (96,020
    )
    
    
    (21,538
    )Cash Flow used by Financing Activities
    
    
    (43,565
    )
    
    
    (65,006
    )
    
    
    (80,395
    )
    
    
    (9,972
    )
    
    
    (105,242
    )Operating (Loss) Earnings per Pound Sold (c)
    
    
    (0.067
    )
    
    
    0.030
    
    
    
    (0.177
    )
    
    
    0.047
    
    
    
    0.064Total Debt to Total Debt and Equity (c)
    
    
    47.2
    %
    
    
    47.7
    %
    
    
    54.8
    %
    
    
    43.2
    %
    
    
    39.5
    %Number of Employees (c)
    
    
    2,400
    
    
    
    2,350
    
    
    
    3,150
    
    
    
    3,600
    
    
    
    3,425Common Shares:Outstanding at Year-End
    
    
    30,884
    
    
    
    30,719
    
    
    
    30,564
    
    
    
    30,565
    
    
    
    32,124Weighted Average-Diluted
    
    
    30,536
    
    
    
    30,470
    
    
    
    30,264
    
    
    
    32,180
    
    
    
    32,297
 Notes to table:
 
 (a)
    
    The Companys fiscal year ends on the Saturday closest to October 31. Because of this
convention, every fifth or sixth fiscal year has an additional week, and 2007 was reported as
a 53-week year.(b)
    
    In 2007, the Company acquired Creative Forming (Creative) based in Ripon, Wisconsin.(c)
    
    Amounts are unaudited.(d)
    
    Calculated as net sales less cost of sales. Gross margin excludes the effect of amortization
expense.(e)
    
    2010 operating loss and net loss from continuing operations were impacted by charges totaling
$78.5 million ($54.7 million net of tax), comprising goodwill impairments of $56.1 million
($45.0 million net of tax), fixed asset and other intangible asset impairments of $13.7
million, ($8.3 million net of tax), restructuring and exit costs of $7.3 million, ($4.5
million net of tax) and expenses relating to a separation agreement with the Companys former
President and Chief Executive Officer of $1.4 million ($0.8 million net of tax). 2010 net
loss from continuing operations was also impacted by debt extinguishment costs of $0.7 million
($0.5 million net of tax) and tax benefits on restructuring of foreign operations of $4.4
million. 2009 operating earnings and net earnings from continuing operations were impacted by
fixed asset impairments of $2.6 million ($2.4 million net of tax) and restructuring and exit
costs of $5.2 million ($3.2 million net of tax). 2008 operating loss and net loss from
continuing operations were impacted by charges of $229.2 million ($176.5 million net of tax)
relating to goodwill impairments of $218.0 million ($168.8 million net of tax), fixed asset
and other intangible asset impairments of $9.0 million ($6.2 million net of tax), and
restructuring and exit costs of $2.2 million ($1.5 million net of tax). 2007 operating
earnings and net earnings from continuing operations were impacted by charges of $4.8 million
($2.9 million net of tax) relating to a separation agreement with the Companys former
President and Chief Executive Officer of $1.9 million ($1.1 million net of tax), an intangible
asset impairment of $1.6 million ($1.0 million net of tax) and restructuring and exit costs of
$1.3 million ($0.8 million net of tax). 2006 11




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operating earnings and net earnings from
continuing operations were reduced by restructuring and exit costs of $1.9 million ($1.2
million net of tax) and goodwill impairment of $3.2 million ($3.2 million net of tax).(f)
    
    2006 net earnings from continuing operations were reduced by a $5.5 million ($3.4 million net
of tax) charge related to the early extinguishment of the Companys convertible subordinated
debentures.(g)
    
    2009 net earnings included a gain of $6.2 million relating to the sale of the wheels and
profiles businesses.(h)
    
    Calculated as total current assets excluding cash and cash equivalents less total current
liabilities excluding current maturities of long-term debt. 12




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 The following discussion and analysis of the Companys financial condition and results of
operations contains forward-looking statements. The following discussion of the Companys
financial condition and results of operations should be read in conjunction with Selected
Financial Data and Spartechs consolidated financial statements and accompanying notes. The
Company has based its forward-looking statements about its markets and demand for its products and
future results on assumptions that the Company considers reasonable. Actual results may differ
materially from those suggested by such forward-looking statements for various reasons including
those discussed in Cautionary Statements Concerning Forward-Looking Statements and Part I  Item
1A, Risk Factors. Unless otherwise noted, all amounts and analyses are based on continuing
operations.
 Non-GAAP Financial Measures
   Business Overview
  Percentage of Net Sales2010
    
    2009Custom Sheet and Rollstock
    
    
    54
    %
    
    
    56
    %Packaging Technologies
    
    
    22
    %
    
    
    22
    %Color and Specialty Compounds
    
    
    24
    %
    
    
    22
    %100
    %
    
    
    100
    %
    13




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Executive Summary
  Outlook
  Results of Operations
 Comparison of 2010 and 2009:
 Consolidated Summary
  2010 vs. 2009Underlying volume
    
    
    5
    %Sales volume to a divested business
    
    
    1
    %Price/Mix
    
    
    4
    %Total
    
    
    10
    %
   14




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2010
    
    
    2009Dollars and Pounds
(in millions)Net sales
    
    $
    1,022.9
    
    
    $
    926.8Cost of sales
    
    
    914.3
    
    
    
    810.5Gross margin
    
    $
    108.6
    
    
    $
    116.3Pounds sold
    
    
    915
    
    
    
    860Dollars per Pound SoldNet sales
    
    $
    1.118
    
    
    $
    1.077Cost of sales
    
    
    0.999
    
    
    
    0.942Gross margin
    
    $
    0.119
    
    
    $
    0.135
            15




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Segment Results
  Custom Sheet and Rollstock Segment
  2010 vs. 2009Underlying volume
    
    
    6
    %Price/Mix
    
    
    3
    %Total
    
    
    9
    %
   Packaging Technologies
  2010 vs. 2009Underlying volume
    
    
    0
    %Price/Mix
    
    
    6
    %Total
    
    
    6
    %
   16




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Color and Specialty Compounds Segment
  2010 vs. 2009Underlying volume
    
    
    7
    %Sales volume to a divested business
    
    
    3
    %Price/Mix
    
    
    8
    %Total
    
    
    18
    %
   Corporate
  Comparison of 2009 and 2008:
 Consolidated Summary
  2009 vs. 2008Underlying volume
    
    
    -26
    %Price/Mix
    
    
    -4
    %Total
    
    
    -30
    %
   17




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2009
    
    
    2008Dollars and Pounds(in millions)Net sales
    
    $
    926.8
    
    
    $
    1,321.2Cost of sales
    
    
    810.5
    
    
    
    1,204.9Gross margin
    
    $
    116.3
    
    
    $
    116.3Pounds sold
    
    
    860
    
    
    
    1,166Dollars per Pound SoldNet sales
    
    $
    1.077
    
    
    $
    1.133Cost of sales
    
    
    0.942
    
    
    
    1.033Gross margin
    
    $
    0.135
    
    
    $
    0.100
           18




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Custom Sheet and Rollstock Segment
  2009 vs. 2008Underlying volume
    
    
    -19
    %Price/Mix
    
    
    -8
    %Total
    
    
    -27
    %
   Packaging Technologies Segment
  2009 vs. 2008Underlying volume
    
    
    -13
    %Price/Mix
    
    
    -6
    %Total
    
    
    -19
    %
   Color and Specialty Compounds Segment
  2009 vs. 2008Underlying volume
    
    
    -39
    %Price/Mix
    
    
    -4
    %Total
    
    
    -43
    %
   Corporate
  19




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Liquidity and Capital Resources
 Cash Flow
  2010
    
    
    2009
    
    
    2008Cash Flows (in thousands)Net cash provided by operating activities
    
    $
    39,330
    
    
    $
    65,264
    
    
    $
    96,612Net cash provided (used) by investing activities
    
    
    (17,872
    )
    
    
    24,579
    
    
    
    (17,484
    )Net cash used by financing activities
    
    
    (43,565
    )
    
    
    (65,006
    )
    
    
    (80,395
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    82
    
    
    
    (30
    )
    
    
    (24
    )Increase (decrease) in cash and cash equivalents
    
    $
    (22,025
    )
    
    $
    24,807
    
    
    $
    (1,291
    )
    Financing Arrangements
   20




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##### Table of Contents



Non-GAAP Reconciliations
  (in thousands, except per share data)
    
    2010
    
    
    2009Operating (loss) earnings (GAAP)
    
    $
    (61,136
    )
    
    $
    26,135CEO separation costs
    
    
    1,369
    
    
    
    Goodwill impairment
    
    
    56,149
    
    
    
    Other intangible and fixed asset impairments
    
    
    13,674
    
    
    
    2,592Restructuring and exit costs
    
    
    7,290
    
    
    
    5,234Special items subtotal
    
    
    78,482
    
    
    
    7,826Operating earnings excluding special items (Non-GAAP)
    
    $
    17,346
    
    
    $
    33,961Net (loss) earnings from continuing operations (GAAP)
    
    $
    (49,643
    )
    
    $
    3,305CEO separation costs, net of tax
    
    
    833
    
    
    
    Goodwill impairment, net of tax
    
    
    45,033
    
    
    
    Other intangible and fixed asset impairments, net of tax
    
    
    8,319
    
    
    
    2,420Restructuring and exit costs, net of tax
    
    
    4,454
    
    
    
    3,248Debt extinguishment costs, net of tax
    
    
    456
    
    
    
    Tax benefits from restructuring of foreign operations
    
    
    (4,401
    )
    
    
    Special items subtotal
    
    
    54,694
    
    
    
    5,668Net earnings from continuing operations excluding special items (Non-GAAP)
    
    $
    5,051
    
    
    $
    8,973Net (loss) earnings from continuing operations
per diluted share (GAAP)
    
    $
    (1.60
    )
    
    $
    0.11CEO separation costs, net of tax
    
    
    0.03
    
    
    
    Goodwill impairment, net of tax
    
    
    1.46
    
    
    
    Other intangible and fixed asset impairments, net of tax
    
    
    0.27
    
    
    
    0.08Restructuring and exit costs, net of tax
    
    
    0.13
    
    
    
    0.10Debt extinguishment costs, net of tax
    
    
    0.01
    
    
    
    Tax benefit on restructuring of foreign operations
    
    
    (0.14
    )
    
    
    Special items subtotal
    
    
    1.76
    
    
    
    0.18Net earnings from continuing operations per diluted share excluding special items (Non-GAAP)
    
    $
    0.16
    
    
    $
    0.29
  2010
    
    
    2009Operating
    
    
    
    
    
    
    
    
    
    
    Operating (Loss)(Loss) Earnings
    
    
    
    
    
    
    
    
    
    
    EarningsExcluding
    
    
    Operating
    
    
    
    
    
    
    ExcludingOperating (Loss)
    
    
    Special
    
    
    Special Items
    
    
    (Loss) Earnings
    
    
    Special
    
    
    Special ItemsSegment
    
    Earnings (GAAP)
    
    
    Items
    
    
    (Non-GAAP)
    
    
    (GAAP)
    
    
    Items
    
    
    (Non-GAAP)Custom Sheet and Rollstock
    
    $
    21,034
    
    
    $
    3,295
    
    
    $
    24,329
    
    
    $
    27,256
    
    
    $
    3,309
    
    
    $
    30,565Packaging Technologies
    
    
    (30,916
    )
    
    
    53,483
    
    
    
    22,567
    
    
    
    30,556
    
    
    
    1,207
    
    
    
    31,763Color & Specialty Compounds
    
    
    (14,301
    )
    
    
    20,244
    
    
    
    5,943
    
    
    
    5,132
    
    
    
    3,004
    
    
    
    8,136Corporate
    
    
    (36,953
    )
    
    
    1,460
    
    
    
    (35,493
    )
    
    
    (36,809
    )
    
    
    306
    
    
    
    (36,503
    )Total
    
    $
    (61,136
    )
    
    $
    78,482
    
    
    $
    17,346
    
    
    $
    26,135
    
    
    $
    7,826
    
    
    $
    33,961
 22




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##### Table of Contents



Contractual Obligations
  Less than 1
    
    
    
    
    
    
    
    
    
    
    Greater thanContractual Obligations (in thousands)
    
    Total
    
    
    Year
    
    
    Years 2 & 3
    
    
    Years 4 & 5
    
    
    5 YearsLong-term debt obligations (principal and
interest)
    
    $
    209,488
    
    
    $
    10,123
    
    
    $
    63,509
    
    
    $
    101,074
    
    
    $
    34,782Capital lease obligations
    
    
    5,422
    
    
    
    683
    
    
    
    1,268
    
    
    
    1,172
    
    
    
    2,299Operating lease obligations
    
    
    15,240
    
    
    
    4,841
    
    
    
    4,554
    
    
    
    2,463
    
    
    
    3,382Purchase obligations
    
    
    87,163
    
    
    
    87,163
    
    
    
    
    
    
    
    
    
    
    
    Take-or-Pay obligations
    
    
    2,358
    
    
    
    2,358
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    319,671
    
    
    $
    105,168
    
    
    $
    69,331
    
    
    $
    104,709
    
    
    $
    40,463
  Critical Accounting Policies and Estimates
  Revenue Recognition
  Allowance for Doubtful Trade Receivables
  Inventory Valuation and Obsolescence
  23




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##### Table of Contents



Property, Plant and Equipment
 Property, Plant and Equipment
 Goodwill
 Business Combinations
 Other Intangible Assets
 Intangibles  Goodwill and Other
 Income Taxes
   Income Taxes
 24




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##### Table of Contents



Litigation and Other Contingencies
 Contingencies
 Restructuring and Exit Costs
 Exit or Disposal Cost Obligations
  25




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##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  Foreign Currency Exchange Risk
  Commodity Price Risk
  Risk Factors
 26




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##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 Managements Responsibility for Financial Statements
     Managements Report on Internal Control over Financial Reporting
   27




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
 28




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
        
 29




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 October 30,
    
    
    October 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,900
    
    
    $
    26,925Trade receivables, net of allowances of $3,404 and $2,470, respectively
    
    
    134,902
    
    
    
    130,355Inventories, net of inventory reserves of $6,539 and $5,430, respectively
    
    
    79,691
    
    
    
    62,941Prepaid expenses and other current assets, net
    
    
    35,789
    
    
    
    33,299Assets held for sale
    
    
    3,256
    
    
    
    2,907Total current assets
    
    
    258,538
    
    
    
    256,427Property, plant, and equipment, net
    
    
    211,844
    
    
    
    229,003Goodwill
    
    
    87,921
    
    
    
    144,345Other intangible assets, net
    
    
    14,559
    
    
    
    28,404Other long-term assets
    
    
    4,279
    
    
    
    3,892Total assets
    
    $
    577,141
    
    
    $
    662,071Liabilities
and shareholders equityCurrent liabilities:Current maturities of long-term debt
    
    $
    880
    
    
    $
    36,079Accounts payable
    
    
    129,037
    
    
    
    103,484Accrued liabilities
    
    
    34,112
    
    
    
    39,505Total current liabilities
    
    
    164,029
    
    
    
    179,068Long-term debt, less current maturities
    
    
    171,592
    
    
    
    180,355Other long-term liabilities:Deferred taxes
    
    
    42,648
    
    
    
    58,736Other long-term liabilities
    
    
    5,866
    
    
    
    7,033Total liabilities
    
    
    384,135
    
    
    
    425,192Shareholders equityPreferred stock (authorized: 4,000,000 shares, par value $1.00)
Issued: None
    
    
    
    
    
    
    Common stock (authorized: 55,000,000 shares, par value $0.75)
Issued: 33,131,846 shares; outstanding: 30,884,503
and 30,719,277 shares, respectively
    
    
    24,849
    
    
    
    24,849Contributed capital
    
    
    204,966
    
    
    
    204,183Retained earnings
    
    
    10,036
    
    
    
    60,411Treasury stock, at cost, 2,247,343 and 2,412,569 shares, respectively
    
    
    (52,730
    )
    
    
    (54,860
    )Accumulated other comprehensive income
    
    
    5,885
    
    
    
    2,296Total shareholders equity
    
    
    193,006
    
    
    
    236,879Total liabilities and shareholders equity
    
    $
    577,141
    
    
    $
    662,071
  30




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 2010
    
    
    2009
    
    
    2008Net sales
    
    $
    1,022,896
    
    
    $
    926,777
    
    
    $
    1,321,169Costs and expensesCost of sales
    
    
    914,293
    
    
    
    810,469
    
    
    
    1,204,932Selling, general and administrative expenses
    
    
    88,852
    
    
    
    77,868
    
    
    
    88,073Amortization of intangibles
    
    
    3,774
    
    
    
    4,479
    
    
    
    5,163Goodwill impairments
    
    
    56,149
    
    
    
    
    
    
    
    217,974Other intangible and fixed asset impairments
    
    
    13,674
    
    
    
    2,592
    
    
    
    9,031Restructuring and exit costs
    
    
    7,290
    
    
    
    5,234
    
    
    
    2,230Total costs and expenses
    
    
    1,084,032
    
    
    
    900,642
    
    
    
    1,527,403Operating (loss) earnings
    
    
    (61,136
    )
    
    
    26,135
    
    
    
    (206,234
    )Interest, net of interest income
    
    
    12,025
    
    
    
    15,379
    
    
    
    19,403Debt extinguishment costs
    
    
    729
    
    
    
    
    
    
    
    (Loss) earnings from continuing operations before income taxes
    
    
    (73,890
    )
    
    
    10,756
    
    
    
    (225,637
    )Income tax (benefit) expense
    
    
    (24,247
    )
    
    
    7,451
    
    
    
    (53,988
    )Net (loss) earnings from continuing operations
    
    
    (49,643
    )
    
    
    3,305
    
    
    
    (171,649
    )Net (loss) earnings from discontinued operations, net of tax
    
    
    (732
    )
    
    
    5,046
    
    
    
    (20,463
    )Net (loss) earnings
    
    $
    (50,375
    )
    
    $
    8,351
    
    
    $
    (192,112
    )Basic (loss) earnings per share:(Loss) earnings from continuing operations
    
    $
    (1.60
    )
    
    $
    0.11
    
    
    $
    (5.61
    )(Loss) earnings from discontinued operations, net of tax
    
    
    (0.03
    )
    
    
    0.16
    
    
    
    (0.68
    )Net (Loss) earnings per share
    
    $
    (1.63
    )
    
    $
    0.27
    
    
    $
    (6.29
    )Diluted (loss) earnings per share:(Loss) earnings from continuing operations
    
    $
    (1.60
    )
    
    $
    0.11
    
    
    $
    (5.61
    )(Loss) earnings from discontinued operations, net of tax
    
    
    (0.03
    )
    
    
    0.16
    
    
    
    (0.68
    )Net (Loss) earnings per share
    
    $
    (1.63
    )
    
    $
    0.27
    
    
    $
    (6.29
    )Dividends declared per share
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.37
  31




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Accumulated OtherComprehensive
    
    
    Total ShareholdersCommon Stock
    
    
    Contributed Capital
    
    
    Retained Earnings
    
    
    Treasury Stock
    
    
    Income (Loss)
    
    
    EquityBalance, November 3, 2007
    
    $
    24,849
    
    
    $
    200,485
    
    
    $
    257,111
    
    
    $
    (52,531
    )
    
    $
    9,366
    
    
    $
    439,280Net loss
    
    
    
    
    
    
    
    
    
    
    (192,112
    )
    
    
    
    
    
    
    
    
    
    
    (192,112
    )Other comprehensive loss:Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,280
    )
    
    
    (7,280
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199,392
    )Issuance of common stock
    
    
    
    
    
    
    (1,282
    )
    
    
    
    
    
    
    4,094
    
    
    
    
    
    
    
    2,812Stock-based compensation
    
    
    
    
    
    
    3,453
    
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    3,631Dividends declared
    
    
    
    
    
    
    
    
    
    
    (11,291
    )
    
    
    
    
    
    
    
    
    
    
    (11,291
    )Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,130
    )
    
    
    
    
    
    
    (8,130
    )Adjustment to initially apply FASB
guidance for income tax uncertainties
    
    
    
    
    
    
    
    
    
    
    (120
    )
    
    
    
    
    
    
    
    
    
    
    (120
    )Balance, November 1, 2008
    
    $
    24,849
    
    
    $
    202,656
    
    
    $
    53,588
    
    
    $
    (56,389
    )
    
    $
    2,086
    
    
    $
    226,790Net earnings
    
    
    
    
    
    
    
    
    
    
    8,351
    
    
    
    
    
    
    
    
    
    
    
    8,351Other comprehensive income:Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    210Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,561Stock-based compensation
    
    
    
    
    
    
    1,527
    
    
    
    
    
    
    
    1,529
    
    
    
    
    
    
    
    3,056Dividends declared
    
    
    
    
    
    
    
    
    
    
    (1,528
    )
    
    
    
    
    
    
    
    
    
    
    (1,528
    )Balance, October 31, 2009
    
    $
    24,849
    
    
    $
    204,183
    
    
    $
    60,411
    
    
    $
    (54,860
    )
    
    $
    2,296
    
    
    $
    236,879Net loss
    
    
    
    
    
    
    
    
    
    
    (50,375
    )
    
    
    
    
    
    
    
    
    
    
    (50,375
    )Other comprehensive income:Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,589
    
    
    
    3,589Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,786
    )Stock-based compensation
    
    
    
    
    
    
    783
    
    
    
    
    
    
    
    2,130
    
    
    
    
    
    
    
    2,913Balance, October 30, 2010
    
    $
    24,849
    
    
    $
    204,966
    
    
    $
    10,036
    
    
    $
    (52,730
    )
    
    $
    5,885
    
    
    $
    193,006
  32




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 2010
    
    
    2009
    
    
    2008Cash flows from operating activitiesNet (loss) earnings
    
    $
    (50,375
    )
    
    $
    8,351
    
    
    $
    (192,112
    )Adjustments to reconcile net (loss) earnings to net cash
provided by operating activities:Depreciation and amortization
    
    
    36,632
    
    
    
    44,030
    
    
    
    47,201Stock-based compensation expense
    
    
    3,107
    
    
    
    3,071
    
    
    
    3,634Goodwill impairment
    
    
    56,424
    
    
    
    
    
    
    
    238,641Other intangible and fixed asset impairments
    
    
    13,674
    
    
    
    2,592
    
    
    
    15,846Restructuring and exit costs
    
    
    2,849
    
    
    
    2,114
    
    
    
    659Gain on disposition of assets, net
    
    
    (1,116
    )
    
    
    (6,242
    )
    
    
    Provision for bad debt expense
    
    
    8,111
    
    
    
    4,321
    
    
    
    4,763Deferred taxes
    
    
    (22,067
    )
    
    
    2,523
    
    
    
    (59,100
    )Change in current assets and liabilities:Trade receivables
    
    
    (12,175
    )
    
    
    36,254
    
    
    
    31,326Inventories
    
    
    (16,467
    )
    
    
    29,343
    
    
    
    19,026Prepaid expenses and other current assets
    
    
    2,868
    
    
    
    (9,635
    )
    
    
    1,727Accounts payable
    
    
    24,283
    
    
    
    (47,519
    )
    
    
    (11,691
    )Accrued liabilities
    
    
    (5,837
    )
    
    
    (4,736
    )
    
    
    (2,766
    )Other, net
    
    
    (581
    )
    
    
    797
    
    
    
    (542
    )Net cash provided by operating activities
    
    
    39,330
    
    
    
    65,264
    
    
    
    96,612Cash flows from investing activitiesCapital expenditures
    
    
    (21,432
    )
    
    
    (8,098
    )
    
    
    (17,276
    )Proceeds from the disposition of assets
    
    
    3,560
    
    
    
    32,677
    
    
    
    584Business acquisitions
    
    
    
    
    
    
    
    
    
    
    (792
    )Net cash (used) provided by investing activities
    
    
    (17,872
    )
    
    
    24,579
    
    
    
    (17,484
    )Cash flows from financing activitiesBank credit facility borrowings (payments), net
    
    
    45,900
    
    
    
    (41,600
    )
    
    
    (49,903
    )Payments on notes and bank term loan
    
    
    (87,582
    )
    
    
    (18,936
    )
    
    
    (7,876
    )Payments on bonds and leases
    
    
    (515
    )
    
    
    (1,183
    )
    
    
    573Debt issuance costs
    
    
    (1,174
    )
    
    
    (215
    )
    
    
    (2,424
    )Cash dividends on common stock
    
    
    
    
    
    
    (3,057
    )
    
    
    (13,926
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    2,812Stock-based compensation exercised
    
    
    (194
    )
    
    
    (15
    )
    
    
    16Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    (9,667
    )Net cash used by financing activities
    
    
    (43,565
    )
    
    
    (65,006
    )
    
    
    (80,395
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    82
    
    
    
    (30
    )
    
    
    (24
    )(Decrease) increase in cash and cash equivalents
    
    
    (22,025
    )
    
    
    24,807
    
    
    
    (1,291
    )Cash and cash equivalents at beginning of year
    
    
    26,925
    
    
    
    2,118
    
    
    
    3,409Cash and cash equivalents at end of year
    
    $
    4,900
    
    
    $
    26,925
    
    
    $
    2,118Supplemental Disclosures:Cash paid during the year for:Interest
    
    $
    12,780
    
    
    $
    16,222
    
    
    $
    18,829Income taxes
    
    
    5,711
    
    
    
    6,598
    
    
    
    257Schedule of business acquisitions:Fair value of assets acquired
    
    
    
    
    
    
    
    
    
    
    187Liabilities assumed
    
    
    
    
    
    
    
    
    
    
    605Purchase price adjustments
    
    
    
    
    
    
    
    
    
    
    Total cash paid
    
    $
    
    
    
    $
    
    
    
    $
    792
  33




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##### Table of Contents



1) Significant Accounting Policies
 Basis of Presentation
  Discontinued Operations
  Basis of Consolidation
  Segments
  Revenue Recognition
 Revenue Recognition
 Use of Estimates
  Cash Equivalents
  34




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##### Table of Contents



Allowance for Doubtful Accounts
  Inventories
  Property, Plant and Equipment
  Classification
    
    YearsBuildings and leasehold improvements
    
    
    20-25Machinery and equipment
    
    
    12-16Furniture and fixtures
    
    
    5-10Computer equipment and software
    
    
    3-7
 Property, Plant and Equipment
 Goodwill
 Business Combinations
 Other Intangible Assets
 Intangibles  Goodwill and Other
 35




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##### Table of Contents



Fair Value of Financial Instruments
  
    
    Cash, accounts receivable, notes receivable, accounts payable and accrued
liabilities  The carrying value of these instruments approximates fair value due to their
short-term nature.
    
    Long-term debt (including bank credit facilities)  The estimated fair value
of the long-term debt is based on estimated borrowing rates to discount the cash flows to
their present value as provided by a broker, or otherwise, quoted, current market prices
for same or similar issues. See Note 3 for further details.
 Stock-Based Compensation
 Compensation  Stock Compensation
 Foreign Currency Translation
  Income Taxes
 Income Taxes
 Income Taxes
 Comprehensive Income
  Restructuring and Exit Costs
 Exit or Disposal Cost Obligations
 Litigation and Other Contingencies
 Contingencies
 36




---



##### Table of Contents



New Accounting Standards
 Fair Value Measurements and Disclosures
 Fair Value Measurements and Disclosures
  Business Combinations Business Combinations
 2) Discontinued Operations
 Wheels Business Divestiture
  Profiles Business Divestiture
  37




---



##### Table of Contents



Other Closures
  2010
    
    
    2009
    
    
    2008Net sales
    
    $
    8
    
    
    $
    48,857
    
    
    $
    77,724Costs and expenses
    
    
    533
    
    
    
    50,495
    
    
    
    100,993(525
    )
    
    
    (1,638
    )
    
    
    (23,269
    )(Loss) gain on the sale of discontinued operations
    
    
    (571
    )
    
    
    10,768
    
    
    
    (Loss) earnings from discontinued operations
before income taxes
    
    
    (1,096
    )
    
    
    9,130
    
    
    
    (23,269
    )(Benefit) provision for income taxes
    
    
    (364
    )
    
    
    4,084
    
    
    
    (2,806
    )(Loss) earnings from discontinued operations, net of tax
    
    $
    (732
    )
    
    $
    5,046
    
    
    $
    (20,463
    )
 Discontinued Operations
 3) Fair Value of Financial Instruments
 Fair Value Measurements and Disclosures Fair Value Measurements and Disclosures
       October 30, 2010
    
    October 31, 2009Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueTotal debt (including credit facilities)
    
    $
    172,472
    
    
    $
    176,631
    
    
    $
    216,434
    
    
    $
    205,776
 38




---



##### Table of Contents



October 30, 2010Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total LossesGoodwill
    
    $
    87,921
    
    
    $
    
    
    
    $
    
    
    
    $
    87,921
    
    
    $
    (56,149
    )Intangible assets, net
    
    
    14,559
    
    
    
    
    
    
    
    
    
    
    
    14,559
    
    
    
    (10,013
    )Assets held for sale
    
    
    3,256
    
    
    
    
    
    
    
    
    
    
    
    3,256
    
    
    
    (1,449
    )$
    105,736
    
    
    $
    
    
    
    $
    
    
    
    $
    105,736
    
    
    $
    (67,611
    )
   4) Goodwill and Identifiable Intangible Assets
 Goodwill
   
    
    Income approach: To determine fair value, the Company discounted the expected cash
flows of the reporting units. The Company calculated expected cash flows using forecasted
annual revenue growth rates between approximately 2%-11% for each reporting unit over the
next five years. We used discount rates between approximately 12%-14%, which represents
the estimated weighted average cost of capital and reflects the overall level of inherent
risk involved in the respective operations and the rate of return expected by market
participants. To estimate cash flows beyond the final year of our forecast of five years,
the Company used terminal growth rates of between approximately 2%-3% and incorporated the
present value of the resulting terminal value into its estimate of fair value.
    
    Guideline public company multiples: The Company used the guideline public company
method to select reasonably similar/guideline publicly traded companies for each of the
Companys reporting units. Using the guideline public company method, the Company
calculated EBITDA multiples for each of the public companies using both historical and
forecasted EBITDA figures. By applying these multiples to the appropriate historical and
forecasted EBITDA figures for each reporting unit, fair value estimates were calculated.
    
    Mergers and acquisitions transaction multiples: The Company calculated EBITDA multiples
realized in actual mergers and acquisition transactions for the acquisition of comparable
companies. Using the transaction multiples, the Company calculated EBITDA multiples for
each of the seller companies using historical EBITDA figures. By applying these multiples
to the appropriate historical EBITDA figures for each reporting unit, fair value estimates
were calculated.
   39




---



##### Table of Contents



Custom Sheet and
    
    
    Packaging
    
    
    Color and Specialty
    
    
    EngineeredRollstock
    
    
    Technologies
    
    
    Compounds
    
    
    Products
    
    
    TotalGoodwill balance as of November 1, 2008
    
    $
    21,023
    
    
    $
    94,636
    
    
    $
    18,402
    
    
    $
    11,437
    
    
    $
    145,498Transfer of business
    
    
    10,284
    
    
    
    
    
    
    
    
    
    
    
    (10,284
    )
    
    
    Wheels divesture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,153
    )
    
    
    (1,153
    )Goodwill balance as of October 31, 2009
    
    
    31,307
    
    
    
    94,636
    
    
    
    18,402
    
    
    
    
    
    
    
    144,345Discontinuance of business
    
    
    (275
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (275
    )Segment reorganization
    
    
    9,423
    
    
    
    (2,370
    )
    
    
    (7,053
    )
    
    
    
    
    
    
    Impairment
    
    
    
    
    
    
    (44,800
    )
    
    
    (11,349
    )
    
    
    
    
    
    
    (56,149
    )Goodwill balance as of October 30, 2010
    
    $
    40,455
    
    
    $
    47,466
    
    
    $
    
    
    
    $
    
    
    
    $
    87,921
  Identifiable Intangible Assets
 Property, Plant and Equipment
  2010
    
    
    2009Gross Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Net Carrying
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Impairments
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountNon-compete agreements
    
    $
    980
    
    
    $
    (776
    )
    
    $
    (204
    )
    
    $
    
    
    
    $
    980
    
    
    $
    (711
    )
    
    $
    269Customer contracts / relationships
    
    
    21,579
    
    
    
    (9,812
    )
    
    
    (8,862
    )
    
    
    2,905
    
    
    
    21,587
    
    
    
    (7,942
    )
    
    
    13,645Product formulations / trademarks
    
    
    23,520
    
    
    
    (10,919
    )
    
    
    (947
    )
    
    
    11,654
    
    
    
    23,570
    
    
    
    (9,080
    )
    
    
    14,490$
    46,079
    
    
    $
    (21,507
    )
    
    $
    (10,013
    )
    
    $
    14,559
    
    
    $
    46,137
    
    
    $
    (17,733
    )
    
    $
    28,404
  40




---



##### Table of Contents



IntangibleYear Ended
    
    Amortization2011
    
    $
    1,6892012
    
    
    1,6892013
    
    
    1,6892014
    
    
    1,6772015
    
    
    1,546Thereafter
    
    
    6,269$
    14,559
 Property, Plant and Equipment
 5) Property, Plant and Equipment
  2010
    
    
    2009Land
    
    $
    9,820
    
    
    $
    11,211Buildings and leasehold improvements
    
    
    96,946
    
    
    
    102,155Machinery and equipment
    
    
    373,898
    
    
    
    376,360Computer equipment and software
    
    
    39,428
    
    
    
    38,456Furniture and fixtures
    
    
    4,663
    
    
    
    5,245524,755
    
    
    
    533,427Accumulated depreciation
    
    
    (312,911
    )
    
    
    (304,424
    )$
    211,844
    
    
    $
    229,003
 Property, Plant and Equipment
 Property, Plant and Equipment
 41




---



##### Table of Contents



6) Restructuring
  2010
    
    
    2009
    
    
    2008Restructuring and exit costs:Custom Sheet and Rollstock
    
    $
    2,585
    
    
    $
    2,711
    
    
    $
    636Packaging Technologies
    
    
    (662
    )
    
    
    623
    
    
    
    762Color and Specialty Compounds
    
    
    5,276
    
    
    
    1,593
    
    
    
    821Corporate
    
    
    91
    
    
    
    307
    
    
    
    11Total restructuring and exit costs
    
    
    7,290
    
    
    
    5,234
    
    
    
    2,230Income tax benefit
    
    
    (2,836
    )
    
    
    (1,986
    )
    
    
    (753
    )Impact on net earnings from continuing operations
    
    $
    4,454
    
    
    $
    3,248
    
    
    $
    1,477
 2008 Restructuring Plan
  Cumulative2010
    
    
    2009
    
    
    2008
    
    
    To-DateEmployee severance
    
    $
    1,821
    
    
    $
    3,150
    
    
    $
    827
    
    
    $
    5,798Facility consolidation and shut-down costs
    
    
    3,386
    
    
    
    1,667
    
    
    
    258
    
    
    
    5,311Fixed asset valuation adjustments, net
    
    
    2,083
    
    
    
    417
    
    
    
    667
    
    
    
    3,167Total
    
    $
    7,290
    
    
    $
    5,234
    
    
    $
    1,752
    
    
    $
    14,276
     2006 Restructuring Plan
  42




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##### Table of Contents



7) Inventories
  2010
    
    
    2009Raw materials
    
    $
    50,258
    
    
    $
    36,707Production supplies
    
    
    6,547
    
    
    
    7,055Finished goods
    
    
    29,425
    
    
    
    24,609Inventory reserves
    
    
    (6,539
    )
    
    
    (5,430
    )Total inventories, net
    
    $
    79,691
    
    
    $
    62,941
 8) Stock-Based Compensation
  General
  2010
    
    
    2009
    
    
    2008Cost of sales
    
    $
    129
    
    
    $
    160
    
    
    $
    253Selling, general and administrative
    
    
    2,978
    
    
    
    2,878
    
    
    
    3,284Total stock-based compensation expense included inoperating earnings (loss)
    
    
    3,107
    
    
    
    3,038
    
    
    
    3,537Income taxes benefit
    
    
    (1,182
    )
    
    
    (1,187
    )
    
    
    (1,076
    )Impact on net earnings (loss) from continuing operations
    
    $
    1,925
    
    
    $
    1,851
    
    
    $
    2,461Effect on basic and diluted earnings (loss) from continuing operations
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.08
  SARs
  2010
    
    2009
    
    2008Weighted average fair value
    
    $
    5.62
    
    
    $
    1.69
    
    
    $
    4.08Assumptions used:Expected dividend yield
    
    
    0
    %
    
    
    2
    %
    
    
    3
    %Volatility
    
    
    70
    %
    
    
    55
    %
    
    
    40
    %Risk-free interest rates
    
    
    1.4-2.3
    %
    
    
    1.6-1.8
    %
    
    
    2.5-3.7
    %Expected lives
    
    5.5 Years
    
    5.5 years
    
    5.5 years
 43




---



##### Table of Contents



WeightedAverageShares
    
    
    Exercise PriceOutstanding, beginning of the year
    
    
    956
    
    
    $
    10.80Granted
    
    
    930
    
    
    
    9.18Exercised
    
    
    4
    
    
    
    5.62Forfeited
    
    
    526
    
    
    
    10.44Outstanding, end of the year
    
    
    1,356
    
    
    $
    9.84Exercisable, end of the year
    
    
    331
    
    
    $
    12.99
  Weighted
    
    Remaining
    
    
    
    
    
    WeightedOutstanding
    
    Average Exercise
    
    Contractual Life
    
    Exercisable
    
    AverageRange of Exercise Prices
    
    Shares
    
    Price
    
    (in Years)
    
    Shares
    
    Exercise Price$2.33 - 4.60
    
    
    289
    
    
    $
    3.84
    
    
    
    8.3
    
    
    
    102
    
    
    $
    3.90$6.98 - 9.92
    
    
    647
    
    
    
    8.71
    
    
    
    9.3
    
    
    
    24
    
    
    
    9.92$10.47 - 29.12
    
    
    420
    
    
    
    15.72
    
    
    
    7.6
    
    
    
    205
    
    
    
    17.891,356
    
    
    
    
    
    
    
    
    
    
    
    331
  Restricted Stock and Performance Shares
   2009
    
    2008Weighted average fair value
    
    $
    3.51
    
    
    $
    9.08Assumptions used:Volatility
    
    
    71
    %
    
    
    40
    %Risk-free interest rates
    
    
    1.2
    %
    
    
    3.1
    %
  Restricted Stock
    
    
    Performance SharesWeighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceNon-vested , beginning of the year
    
    
    364
    
    
    $
    9.37
    
    
    
    214
    
    
    $
    6.14Granted
    
    
    355
    
    
    
    8.76
    
    
    
    
    
    
    
    Vested
    
    
    116
    
    
    
    10.61
    
    
    
    
    
    
    
    Forfeited
    
    
    174
    
    
    
    8.95
    
    
    
    163
    
    
    
    9.89Non-vested , end of the year
    
    
    429
    
    
    $
    8.70
    
    
    
    51
    
    
    $
    3.51
 44




---



##### Table of Contents



Restricted Stock Units
  Stock Options
   WeightedAverageShares
    
    
    Exercise PriceOutstanding, beginning of the year
    
    
    994
    
    
    $
    21.18Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    231
    
    
    
    21.16Outstanding, end of the year
    
    
    763
    
    
    $
    21.20Exercisable, end of the year
    
    
    763
    
    
    $
    21.20
  Weighted
    
    Remaining
    
    
    
    
    
    WeightedOutstanding
    
    Average
    
    Contractual
    
    Exercisable
    
    AverageRange of Exercise Prices
    
    Shares
    
    Exercise Price
    
    Life (in Years)
    
    Shares
    
    Exercise Price$11.19 - 21.10
    
    
    314
    
    
    $
    17.82
    
    
    
    1.1
    
    
    
    314
    
    
    $
    17.82$21.19 - 23.18
    
    
    231
    
    
    
    21.77
    
    
    
    3.7
    
    
    
    231
    
    
    
    21.77$23.48 - 26.02
    
    
    218
    
    
    
    25.48
    
    
    
    3.8
    
    
    
    218
    
    
    
    25.48763
    
    
    
    
    
    
    
    
    
    
    
    763
   45




---



##### Table of Contents



9) Long-Term Debt
  2010
    
    
    20092006 Senior Notes
    
    $
    
    
    
    $
    45,6842004 Senior Notes
    
    
    113,972
    
    
    
    137,054Credit facility
    
    
    45,900
    
    
    
    Euro Bank term loan
    
    
    
    
    
    
    20,292Other
    
    
    12,600
    
    
    
    13,404Total debt
    
    
    172,472
    
    
    
    216,434Less current maturities
    
    
    880
    
    
    
    36,079Total long-term debt
    
    $
    171,592
    
    
    $
    180,355
        46




---



##### Table of Contents



Year Ended
    
    Maturities2011
    
    $
    8802012
    
    
    23,3332013
    
    
    23,1862014
    
    
    69,0072015
    
    
    23,133Thereafter
    
    
    32,933$
    172,472
  47




---



##### Table of Contents



10) Shareholders Equity
      11) Income Taxes
  2010
    
    
    2009
    
    
    2008United States
    
    $
    (77,334
    )
    
    $
    12,627
    
    
    $
    (219,918
    )Non-U.S. operations
    
    
    3,444
    
    
    
    (1,871
    )
    
    
    (5,719
    )$
    (73,890
    )
    
    $
    10,756
    
    
    $
    (225,637
    )
  2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    (3,041
    )
    
    $
    (76
    )
    
    $
    (881
    )State and local
    
    
    (159
    )
    
    
    (743
    )
    
    
    (1,303
    )Foreign
    
    
    1,090
    
    
    
    432
    
    
    
    1,131Total current provision
    
    
    (2,110
    )
    
    
    (387
    )
    
    
    (1,053
    )Deferred tax (benefit) provision:Federal
    
    
    (20,081
    )
    
    
    6,059
    
    
    
    (43,646
    )State and local
    
    
    (1,754
    )
    
    
    1,629
    
    
    
    (7,249
    )Foreign
    
    
    (302
    )
    
    
    150
    
    
    
    (2,040
    )Total deferred (benefit) provision
    
    
    (22,137
    )
    
    
    7,838
    
    
    
    (52,935
    )Total tax provision
    
    $
    (24,247
    )
    
    $
    7,451
    
    
    $
    (53,988
    )
 48




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008Federal income tax provision (benefit) at statutory rate
    
    $
    (25,861
    )
    
    $
    3,764
    
    
    $
    (78,973
    )State income taxes, net of applicable federal income tax benefit
    
    
    (2,051
    )
    
    
    546
    
    
    
    (4,471
    )Impairment of non-deductible goodwill
    
    
    9,679
    
    
    
    
    
    
    
    31,229Foreign valuation allowance
    
    
    
    
    
    
    1,648
    
    
    
    680Net changes in uncertain tax positions
    
    
    172
    
    
    
    84
    
    
    
    (1,764
    )Net change due to change in rates
    
    
    207
    
    
    
    625
    
    
    
    985Research and development tax credit
    
    
    
    
    
    
    (250
    )
    
    
    (500
    )Return to provision adjustments
    
    
    (1,953
    )
    
    
    663
    
    
    
    (452
    )Deemed liquidation of subsidiary
    
    
    (2,770
    )
    
    
    
    
    
    
    Reversal of APB 23 assertion
    
    
    (1,631
    )
    
    
    
    
    
    
    Other, net
    
    
    (39
    )
    
    
    371
    
    
    
    (722
    )Total tax provision
    
    $
    (24,247
    )
    
    $
    7,451
    
    
    $
    (53,988
    )
    49




---



##### Table of Contents



2010
    
    
    2009Deferred tax assetsEmployee benefits and compensation
    
    $
    4,957
    
    
    $
    3,414Workers compensation
    
    
    1,570
    
    
    
    1,147Inventory capitalization of reserves
    
    
    1,715
    
    
    
    1,261Reserve for product returns
    
    
    1,226
    
    
    
    650Deferred compensation benefit plans
    
    
    958
    
    
    
    935Bad debt reserves
    
    
    3,100
    
    
    
    838Foreign net operating loss
    
    
    3,488
    
    
    
    4,466Installment note
    
    
    688
    
    
    
    685Goodwill and other intangible assets
    
    
    222
    
    
    
    Other
    
    
    4,485
    
    
    
    3,096Total deferred tax assets
    
    
    22,409
    
    
    
    16,492Valuation allowance
    
    
    (6,701
    )
    
    
    (7,579
    )Net deferred tax assets
    
    
    15,708
    
    
    
    8,913Deferred tax liabilitiesProperty, plant and equipment
    
    
    37,038
    
    
    
    46,951Goodwill and other intangible assets
    
    
    
    
    
    
    9,466Inventory capitalization of reserves
    
    
    1,010
    
    
    
    537Basis adjustment
    
    
    4,814
    
    
    
    Other
    
    
    1,251
    
    
    
    2,451Total deferred tax liabilities
    
    
    44,113
    
    
    
    59,405Net deferred income tax liability
    
    $
    28,405
    
    
    $
    50,492
    2010
    
    
    2009Unrecognized tax benefits, beginning of the year
    
    $
    757
    
    
    $
    774Additions based on current year tax positions
    
    
    
    
    
    
    63Additions for prior year tax positions
    
    
    33
    
    
    
    84Reductions for prior year tax positions
    
    
    (21
    )
    
    
    (128
    )Settlements with tax authorities
    
    
    (124
    )
    
    
    (104
    )Lapses in statutes of limitations
    
    
    (142
    )
    
    
    68Unrecognized tax benefits, end of year
    
    $
    503
    
    
    $
    757
 Accounting for Uncertainty in
Income Taxes Income Taxes Accounting for Income Taxes Income Taxes
 50




---



##### Table of Contents



12) Earnings (Loss) Per Share
  2010
    
    2009
    
    2008Antidilutive shares:SSARs
    
    
    838
    
    
    
    477
    
    
    
    593Stock options
    
    
    763
    
    
    
    924
    
    
    
    665Unvested restricted stock
    
    
    103
    
    
    
    189
    
    
    
    284Total antidilutive shares excluded from
diluted earnings per share
    
    
    1,704
    
    
    
    1,590
    
    
    
    1,542
  2010
    
    
    2009
    
    
    2008Basic and diluted net earnings:Net (loss) earnings from continuing operations
    
    $
    (49,643
    )
    
    $
    3,305
    
    
    $
    (171,649
    )Less: net (loss) earnings allocated to participating securities
    
    
    (699
    )
    
    
    98
    
    
    
    (1,788
    )Net (loss) earnings from continuing operations attributable
to common shareholders
    
    
    (48,944
    )
    
    
    3,207
    
    
    
    (169,861
    )(Loss) earnings from discontinued operations, net of tax
    
    
    (732
    )
    
    
    5,046
    
    
    
    (20,463
    )Net (loss) earnings attributable to common shareholders
    
    $
    (49,676
    )
    
    $
    8,253
    
    
    $
    (190,324
    )Weighted average shares outstanding:Basic weighted average common shares outstanding
    
    
    30,536
    
    
    
    30,382
    
    
    
    30,264Add: dilutive shares from equity instruments
    
    
    
    
    
    
    88
    
    
    
    Diluted weighted average shares outstanding
    
    
    30,536
    
    
    
    30,470
    
    
    
    30,264
 13) Employee Benefits
  51




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##### Table of Contents



14) Commitments and Contingencies
  OperatingYear Ended
    
    Leases2011
    
    $
    4,8412012
    
    
    2,6632013
    
    
    1,8912014
    
    
    1,4212015
    
    
    1,042Thereafter
    
    
    3,382$
    15,240
      52




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##### Table of Contents



15) Segment Information
     Custom Sheet and Rollstock
  53




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##### Table of Contents



Packaging Technologies
  Color and Specialty Compounds
  2010
    
    
    2009
    
    
    2008Net sales: (a)(b)Custom Sheet and Rollstock
    
    $
    558,371
    
    
    $
    511,789
    
    
    $
    701,825Packaging Technologies
    
    
    221,218
    
    
    
    208,391
    
    
    
    258,428Color and Specialty Compounds
    
    
    243,307
    
    
    
    206,597
    
    
    
    360,916$
    1,022,896
    
    
    $
    926,777
    
    
    $
    1,321,169Operating earnings (loss): (b)Custom Sheet and Rollstock
    
    $
    21,034
    
    
    $
    27,256
    
    
    $
    (95,350
    )Packaging Technologies
    
    
    (30,916
    )
    
    
    30,556
    
    
    
    20,222Color and Specialty Compounds
    
    
    (14,301
    )
    
    
    5,132
    
    
    
    (95,441
    )Corporate
    
    
    (36,953
    )
    
    
    (36,809
    )
    
    
    (35,665
    )$
    (61,136
    )
    
    $
    26,135
    
    
    $
    (206,234
    )Assets:Custom Sheet and Rollstock
    
    $
    277,337
    
    
    $
    244,992
    
    
    $
    293,948Packaging Technologies
    
    
    140,177
    
    
    
    196,221
    
    
    
    207,427Color and Specialty Compounds
    
    
    108,790
    
    
    
    155,743
    
    
    
    190,196Corporate and other (c)
    
    
    50,837
    
    
    
    65,115
    
    
    
    70,848$
    577,141
    
    
    $
    662,071
    
    
    $
    762,419Depreciation and amortization: (b)Custom Sheet and Rollstock
    
    $
    15,221
    
    
    $
    15,661
    
    
    $
    15,666Packaging Technologies
    
    
    8,427
    
    
    
    9,018
    
    
    
    9,292Color and Specialty Compounds
    
    
    8,856
    
    
    
    11,712
    
    
    
    13,190Corporate
    
    
    4,128
    
    
    
    4,911
    
    
    
    5,130$
    36,632
    
    
    $
    41,302
    
    
    $
    43,278Capital expenditures: (b)Custom Sheet and Rollstock
    
    $
    11,013
    
    
    $
    3,113
    
    
    $
    6,086Packaging Technologies
    
    
    3,440
    
    
    
    1,054
    
    
    
    2,073Color and Specialty Compounds
    
    
    3,269
    
    
    
    1,372
    
    
    
    3,706Corporate
    
    
    3,710
    
    
    
    1,931
    
    
    
    4,262$
    21,432
    
    
    $
    7,470
    
    
    $
    16,127
 54




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##### Table of Contents



Net Sales by Destination (a)(b)
    
    
    Property, Plant and Equipment, net2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008United States
    
    $
    837,173
    
    
    $
    762,481
    
    
    $
    1,089,875
    
    
    $
    183,231
    
    
    $
    200,202
    
    
    $
    236,400Mexico
    
    
    65,713
    
    
    
    73,800
    
    
    
    104,154
    
    
    
    15,887
    
    
    
    16,633
    
    
    
    20,414Canada
    
    
    78,566
    
    
    
    59,783
    
    
    
    75,253
    
    
    
    10,119
    
    
    
    9,850
    
    
    
    14,087Europe
    
    
    33,731
    
    
    
    21,745
    
    
    
    40,624
    
    
    
    2,607
    
    
    
    2,318
    
    
    
    9,301Asia and other
    
    
    7,713
    
    
    
    8,968
    
    
    
    11,263
    
    
    
    
    
    
    
    
    
    
    
    $
    1,022,896
    
    
    $
    926,777
    
    
    $
    1,321,169
    
    
    $
    211,844
    
    
    $
    229,003
    
    
    $
    280,202
 
 Notes to tables:(a)
    
    In addition to external sales to customers, intersegment sales were $50,344, $44,428, and
$57,126, in 2010, 2009 and 2008, respectively.(b)
    
    Excludes discontinued operations.(c)
    
    Includes assets of discontinued operations relating to wheels, profiles and marine businesses
that were previously reported in the Companys Engineered Products group. 16) Comprehensive Income
     55




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##### Table of Contents



17) Quarterly Financial Information (Unaudited)
  Quarter1st
    
    2nd
    
    3rd
    
    4th
    
    Year2010Net sales
    
    $
    225,164
    
    
    $
    268,524
    
    
    $
    269,635
    
    
    $
    259,573
    
    
    $
    1,022,896Gross profit (a)
    
    
    25,866
    
    
    
    29,919
    
    
    
    27,022
    
    
    
    22,021
    
    
    
    104,828Operating earnings (loss)
    
    
    6,779
    
    
    
    7,871
    
    
    
    (2,659
    )
    
    
    (73,127
    )
    
    
    (61,136
    )Net earnings (loss) from continuing operations (b)
    
    
    4,736
    
    
    
    4,540
    
    
    
    (3,826
    )
    
    
    (55,093
    )
    
    
    (49,643
    )Net earnings (loss) from discontinued operations
    
    
    8
    
    
    
    (87
    )
    
    
    (43
    )
    
    
    (610
    )
    
    
    (732
    )Net earnings (loss) (b)
    
    
    4,744
    
    
    
    4,453
    
    
    
    (3,869
    )
    
    
    (55,703
    )
    
    
    (50,375
    )Basic earnings (loss) per share attributable to common stockholders:Earnings (loss) from continuing operations
    
    
    0.16
    
    
    
    0.15
    
    
    
    (0.12
    )
    
    
    (1.78
    )
    
    
    (1.60
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.02
    )
    
    
    (0.03
    )Net earnings (loss) per share
    
    
    0.16
    
    
    
    0.14
    
    
    
    (0.12
    )
    
    
    (1.80
    )
    
    
    (1.63
    )Diluted earnings (loss) per share attributable
to common shareholders:Earnings (loss) from continuing operations
    
    
    0.15
    
    
    
    0.15
    
    
    
    (0.12
    )
    
    
    (1.78
    )
    
    
    (1.60
    )(Loss) from discontinued operations, net of tax
    
    
    
    
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.02
    )
    
    
    (0.03
    )Net earnings (loss) per share
    
    
    0.15
    
    
    
    0.14
    
    
    
    (0.12
    )
    
    
    (1.80
    )
    
    
    (1.63
    )Dividends declared per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2009Net sales
    
    $
    237,301
    
    
    $
    216,412
    
    
    $
    230,506
    
    
    $
    242,558
    
    
    
    926,777Gross profit (a)
    
    
    19,887
    
    
    
    29,962
    
    
    
    31,096
    
    
    
    30,884
    
    
    
    111,829Operating earnings (loss)
    
    
    (2,988
    )
    
    
    8,554
    
    
    
    11,301
    
    
    
    9,268
    
    
    
    26,135Net (loss) earnings from continuing operations (c)
    
    
    (4,942
    )
    
    
    2,148
    
    
    
    3,910
    
    
    
    2,189
    
    
    
    3,305Net (loss) earnings from discontinued operations (d)
    
    
    (148
    )
    
    
    1,615
    
    
    
    (2,418
    )
    
    
    5,997
    
    
    
    5,046Net (loss) earnings (c)
    
    
    (5,090
    )
    
    
    3,763
    
    
    
    1,492
    
    
    
    8,186
    
    
    
    8,351Basic earnings (loss) per share attributable to common stockholders:(Loss) earnings from continuing operations
    
    
    (0.16
    )
    
    
    0.07
    
    
    
    0.13
    
    
    
    0.07
    
    
    
    0.11(Loss) earnings from discontinued operations, net of tax
    
    
    (0.01
    )
    
    
    0.05
    
    
    
    (0.08
    )
    
    
    0.20
    
    
    
    0.16Net (loss) earnings per share
    
    
    (0.17
    )
    
    
    0.12
    
    
    
    0.05
    
    
    
    0.27
    
    
    
    0.27Diluted earnings (loss) per share attributable
to common shareholders:(Loss) earnings from continuing operations
    
    
    (0.16
    )
    
    
    0.07
    
    
    
    0.13
    
    
    
    0.07
    
    
    
    0.11(Loss) earnings from discontinued operations, net of tax
    
    
    (0.01
    )
    
    
    0.05
    
    
    
    (0.08
    )
    
    
    0.19
    
    
    
    0.16Net (loss) earnings per share
    
    
    (0.17
    )
    
    
    0.12
    
    
    
    0.05
    
    
    
    0.26
    
    
    
    0.27Dividends declared per common share
    
    
    0.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.05
 
 Notes to tables:(a)
    
    Gross profit is calculated as net sales less cost of sales and amortization expense.(b)
    
    Operating earnings and net earnings from continuing operations in the fourth quarter of 2010
were impacted by charges totaling $73,260 ($55,409 net of tax), comprising goodwill
impairments of $56,149 ($45,033 net of tax), fixed asset and other intangible asset
impairments of $13,621 ($8,287 net of tax), restructuring and exit costs of $2,121 ($1,256 net
of tax), and expenses relating to a separation agreement with the Companys former President
and Chief Executive Officer of $1,369 ($833 net of tax).(c)
    
    Operating earnings and net earnings from continuing operations in the fourth quarter of 2009
were impacted by fixed asset impairments of $1,846 ($1,964 net of tax) and restructuring and
exit costs of $683 ($424 net of tax).(d)
    
    Net earnings from discontinued operations and net earnings in the fourth quarter of 2009
included an after-tax gain of $6,242 from sales of businesses. 56




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##### Table of Contents



18) Former President and Chief Executive Officers Arrangement
  
    
    Severance compensation of $1,998 representing an amount equal to two times his former
salary and the average of the bonus payments he earned during the prior two fiscal years.
Of this amount, $490 was paid in 2010, and the remaining $1,508 will be paid over the two
year period following the Separation Date.
    
    As a result of stock-based compensation and bonus forfeitures, $494 of stock-based
compensation expense and $218 of accrued bonus expense was recaptured during 2010. The
Company also recorded $100 of expense for estimated health care coverage costs and other
supplementary benefits. The net charge to operating earnings was $1,369 during the fourth
quarter and is included in selling, general and administrative expenses in the consolidated
statements of operations.
 19) Subsequent Events
  Long-Term Debt
 57




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Evaluation of Internal Control Over Financial Reporting
   
 ITEM 9B.
    
    OTHER INFORMATION
  58




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Directors
  Audit Committee
  Code of Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
  Recommendation of Director Nominees by Shareholders
  Executive Officers of the Registrant
  Name
    
    Age
    
    Current Office, Prior Positions and EmploymentVictoria M. Holt
    
    
    53
    
    
    President and Chief Executive Officer (since
September 2010). From January 2003 to
September 2010, Ms. Holt was a Senior Vice
President, Glass and Fiber Glass, for PPG
Industries, Inc., a global manufacturer of
coatings, chemicals and glass products.
Prior to joining PPG Industries, Inc. in
January 2003, she was Vice President of
Performance Films for Solutia Inc. Ms. Holt
began her career at Solutias predecessor,
Monsanto Company, where she held various
sales, marketing and global general
management positions.Randy C. Martin
    
    
    48
    
    
    Executive Vice President (since September
2000) Corporate Development and Chief
Financial Officer (since May 1996); Interim
President and Chief Executive Officer (July
2007 to January 2008); Vice President,
Finance (May 1996 to September 2000);
Corporate Controller (September 1995 to May
1996). Mr. Martin, a CPA and CMA, was with
KPMG Peat Marwick LLP for 11 years before
joining the Company in 1995.
 59




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##### Table of Contents



Name
    
    Age
    
    Current Office, Prior Positions and EmploymentCarol L. ONeill
    
    
    47
    
    
    Senior Vice President, Packaging Technologies
(since April 2010). Prior to joining the
Company, Ms. ONeill was President of Flying
Food Group, a privately held food company
(2007 to 2010). Prior to Flying Food Group,
Ms. ONeill held various leadership and
management roles at Sealed Air Corporation,
including Vice President Business
Development, responsible for corporate
strategy, mergers and acquisitions, and
management of several acquired businesses
(1996 to 2007).Michael L. Marcum
    
    
    62
    
    
    Senior Vice President, Color and Specialty
Compounds (since April 2006). Mr. Marcum was
most recently President and Chief Executive
Officer of American Decorative Surfaces Inc.
(2001 to 2006) and was with Monsanto Company
for 29 years in various general management,
corporate strategic planning, and sales and
marketing executive positions, both
domestically as well as internationally,
before joining the Company in 2006.Janet E. Mann
    
    
    56
    
    
    Senior Vice President, Custom Sheet and
Rollstock and Chief Technology Officer (since
April 2010); Senior Vice President of
Marketing, Technology and Commercial
Development (June 2008 to April 2010). Prior
to joining the Company, Ms. Mann was General
Manager, Industrial Chemicals at Archer
Daniels Midland Corporation in Decatur,
Illinois (2007 to 2008). Prior to Archer
Daniels Midland Corporation, Ms. Mann held
various executive roles at Chemtura
Corporation, Dow Chemical Company and ANGUS
Chemicals, Inc.Rosemary L. Klein
    
    
    43
    
    
    Senior Vice President, General Counsel and
Corporate Secretary (since March 2009).
Prior to joining the Company, Ms. Klein was
Senior Vice President, General Counsel and
Corporate Secretary at Solutia Inc. (2004 to
2008). Prior to Solutia in June 2003, Ms.
Klein held various senior level legal roles
at Premcor Inc. and Arch Coal, Inc.Michael L. Roane
    
    
    55
    
    
    Senior Vice President, Human Resources (since
June 2008). Prior to joining the Company,
Mr. Roane was the Senior Vice President of
Human Resources at the Sage Software
Healthcare Division (2007 to 2008). Prior to
Sage, Mr. Roane spent 10 years at Greif
Brothers Corporation, where he held the
position of Senior Vice President of Global
Human Resources and Communications. Mr.
Roane previously held various vice president
and human resource roles at Owens & Minor,
Inc., and Philip Morris, Inc.Marc A. Roberts
    
    
    48
    
    
    Senior Vice President, Operations (since
October 2008); Vice President, Sheet
Operations (2006 to 2008). Mr. Roberts
previously held positions as a manufacturing
consultant with a private equity group (2005
to 2006), President and Director of
Aerostructures at Precision Castparts
Corporation (2001 to 2005), and various
positions at Johnson Controls, Inc. and Price
Corporation (1993 to 2001).Michael G. Marcely
    
    
    43
    
    
    Senior Vice President, Finance (since
September 2010); Senior Vice President,
Planning and Controller (July 2009 to
September 2010); Vice President, Financial
Planning and Analysis (April 2008 to July
2009); Vice President, Corporate Controller
(July 2004 to April 2008); Director of
Internal Audit (January 2003 to July 2004).
Mr. Marcely, a CPA, was with Ernst & Young
LLP for four years, Emerson Electric for four
years and KPMG LLP for six years before
joining the Company in 2003.Robert J. Byrne
    
    
    52
    
    
    Vice President and Chief Information Officer
(since December 2008). Prior to joining the
Company, Mr. Byrne spent more than 25 years
in various plant operations and information
technology positions with Anheuser-Busch
Companies Inc., including six years as Vice
President and Chief Information Officer.
 60




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##### Table of Contents



Name
    
    Age
    
    Current Office, Prior Positions and EmploymentRichard A. Locke
    
    
    57
    
    
    Vice President, Procurement (since April
2010). Prior to joining the Company, Mr.
Locke was Vice President, Supply Chain for
Alcan Packaging Americas responsible for its
supply chain and procurement function (2005
to 2010). Prior to Alcan Packaging Americas,
he held similar leadership roles at Pactiv
and Sweetheart Cup Company.
 
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
  61




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1)
    
    The following financial statements of Spartech Corporation, supplemental information and
report of independent
registered public accounting firm are included in this Form 10-K:
 
    
    Managements Report on Internal Control over Financial Reporting
    
    Reports of Independent Registered Public Accounting Firm
    
    Consolidated Balance Sheets
    
    Consolidated Statements of Operations
    
    Consolidated Statements of Shareholders Equity
    
    Consolidated Statements of Cash Flows
    
    Notes to the Consolidated Financial Statements
 (2)
    
    List of financial statement schedules:
 
    
    Schedule II  Valuation and Qualifying Accounts
 (3)
    
    Exhibits:The following list of exhibits includes exhibits submitted with this Form 10-K as filed with
the SEC and those incorporated by reference to other filings as required by Item 601(a) of
Regulation S-K.
 ExhibitNumber
    
    Description
    
    Location3.1
    
    Certificate of Incorporation, as currently in effect
    
    Incorporated by
reference to
Exhibit 3.3 to the
Companys Form 8-K
filed with the SEC
on September 30,
20093.2
    
    Bylaws, as currently in effect
    
    Incorporated by
reference to
Exhibit 3.1 to the
Companys Form 8-K
filed with the SEC
on September 30,
20094
    
    Rights Agreement dated April 2, 2001, between
Spartech Corporation and Mellon Investor Services
LLC, as Rights Agent
    
    Incorporated by
reference to
Exhibit 99.1 to the
Companys Form 8-K
filed with the SEC
on April 5, 200110.1
    
    Form of Indemnification Agreement entered into
between the Company and each of its officers and
directors
    
    Incorporated by
reference to
Exhibit 10.1 to the
Companys Form 10-Q
filed with the SEC
on September 11,
200810.2*
    
    Spartech Corporation 2006 Executive Bonus Plan
    
    Incorporated by
reference to
Exhibit 1.01(a) to
the Companys Form
8-K filed with the
SEC on December 21,
200510.3*
    
    Spartech Corporation 2004 Equity Compensation Plan,
as amended
    
    Incorporated by
reference to
Exhibit 4.1 to the
Companys Form S-8
filed with the SEC
on July 17, 200910.4*
    
    Spartech Corporation Long-Term Equity Incentive
Program
    
    Incorporated by
reference to
Exhibit 5.02(1) to
the Companys Form
8-K filed with the
SEC on December 7,
200610.5*
    
    Form of Incentive Stock Option
    
    Incorporated by
reference to
Exhibit 1.01(2) to
the Companys Form
8-K filed with the
SEC on December 14,
200410.6*
    
    Form of Nonqualified Stock Option
    
    Incorporated by
reference to
Exhibit 1.01(3) to
the Companys Form
8-K filed with the
SEC on December 14,
200410.7*
    
    Form of Restricted Stock Unit Award (directors)
    
    Incorporated by
reference to
Exhibit 1.01(4) to
the Companys Form
8-K filed with the
SEC on December 14,
200410.8*
    
    Form of Restricted Stock Award (directors)
    
    Incorporated by
reference to
Exhibit 10.7 to the
Companys Form 10-Q
filed with the SEC
on March 12, 200710.9
    
    Amended and Restated Note Purchase Agreement
(Initially Dated as of September 15, 2004) dated
September 10, 2008, 6.58% Senior Notes due 2016
    
    Incorporated by
reference to
Exhibit 10.8 to the
Companys Form 10-Q
filed with the SEC
on September 11,
200810.10*
    
    Form of Stock Appreciation Right Award
    
    Incorporated by
reference to
Exhibit 5.02(1) to
the Companys Form
8-K filed with the
SEC on May 27, 2008
 62




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.11*
    
    Form of Restricted Stock Award
    
    Incorporated by
reference to
Exhibit 5.02(2) to
the Companys Form
8-K filed with the
SEC on May 27, 200810.12*
    
    Form of Performance Share Award
    
    Incorporated by
reference to
Exhibit 5.02(3) to
the Companys Form
8-K filed with the
SEC on May 27, 200810.13
    
    Amendment No. 1 to Amended and Restated Note
Purchase Agreement  2004 Senior Notes
    
    Incorporated by
reference to
Exhibit 10.2 to the
Companys Form 8-K
filed with the SEC
on July 23, 200910.14*
    
    Spartech Corporation Deferred Compensation Plan, as
amended
    
    Incorporated by
reference to
Exhibit 10.34 to
the Companys Form
10-K filed with the
SEC on January 14,
201010.15
    
    Amended and Restated Credit Agreement Dated as of
June 9, 2010
    
    Incorporated by
reference to
Exhibit 10.1 to the
Companys Form 10-Q
filed with the SEC
on June 9, 201010.16
    
    Second Amendment to Amended and Restated Note
Purchase Agreement Dated as of June 9, 2010
    
    Incorporated by
reference to
Exhibit 10.2 to the
Companys Form 10-Q
filed with the SEC
on June 9, 201010.17
    
    Amended and Restated Intercreditor and Collateral
Agency Agreement Dated as of June 9, 2010, by and
among PNC Bank, National Association, as Collateral
and Administrative Agent, the Lenders and Note
holders
    
    Incorporated by
reference to
Exhibit 10.3 to the
Companys Form 10-Q
filed with the SEC
on June 9, 201010.18
    
    Amended and Restated Security Agreement Dated as of
June 9, 2010, by and among PNC Bank, National
Association, as Collateral Agent for the Secured
Parties
    
    Incorporated by
reference to
Exhibit 10.4 to the
Companys Form 10-Q
filed with the SEC
on June 9, 201010.19
    
    Employment letter between Spartech Corporation and
Victoria M. Holt
    
    Incorporated by
reference to
Exhibit 10.1 to the
Companys Form 8-K
filed with the SEC
on September 10,
201010.20
    
    Severance and Noncompetition Agreement dated
September 8, 2010 by and between Spartech
Corporation and Victoria M. Holt
    
    Incorporated by
reference to
Exhibit 10.2 to the
Companys Form 8-K
filed with the SEC
on September 10,
201010.22
    
    Form of Spartech Corporation Severance and
Noncompetition Agreement for Named Executive
Officers: Randy C. Martin, Janet E. Mann, Michael
L. Marcum and Rosemary L. Klein
    
    Filed herewith10.23
    
    Second Amendment to Amended and Restated Credit
Agreement Dated as of January 12, 2011
    
    Filed herewith10.24
    
    Third Amendment to Amended and Restated Note
Purchase Agreement Dated as of January 12, 2011
    
    Filed herewith21
    
    Subsidiaries of Registrant
    
    Filed herewith23
    
    Consent of Independent Registered Public Accounting
Firm
    
    Filed herewith24
    
    Power of Attorney
    
    Filed herewith31.1
    
    Section 302 Certification of Chief Executive Officer
    
    Filed herewith31.2
    
    Section 302 Certification of Chief Financial Officer
    
    Filed herewith32.1
    
    Section 1350 Certification of Chief Executive
Officer
    
    Filed herewith32.2
    
    Section 1350 Certification of Chief Financial
Officer
    
    Filed herewith
 
 *
    
    Denotes management contract or compensatory plan arrangement. 63




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##### Table of Contents



SIGNATURES
  SPARTECH CORPORATION/s/ Victoria M. HoltVictoria M. HoltJanuary 13, 2011
    President and Chief Executive Officer  Date
    
    Signature
    
    TitleJanuary 13, 2011
    
    /s/ Victoria M. Holt

Victoria M. Holt
    
    President and Chief
Executive Officer (Principal
Executive Officer)January 13, 2011
    
    /s/ Randy C. Martin

Randy C. Martin
    
    Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)January 13, 2011
    
    /s/ Michael G. Marcely

Michael G. Marcely
    
    Senior Vice President of
Finance (Principal
Accounting Officer)January 13, 2011
    
    
    
    Director*Ralph B. AndyJanuary 13, 2011
    
    
    
    Director*Lloyd E. CampbellJanuary 13, 2011
    
    
    
    Director*Edward J. DineenJanuary 13, 2011
    
    
    
    Director*Walter J. KleinJanuary 13, 2011
    
    
    
    Director*Pamela F. LenehanJanuary 13, 2011
    
    
    
    Director*Jackson W. RobinsonJanuary 13, 2011
    
    
    
    Director*Craig A. Wolfanger
 
 *
    
    Rosemary L. Klein, by signing her name hereto, does sign this document on
behalf of the above noted individuals, pursuant to powers of attorney duly
executed by such individuals, which have been filed as an Exhibit to this Form
10-K. /s/ Rosemary L. KleinRosemary L. KleinAttorney-in-Fact 64




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED 2010, 2009 AND 2008
(Dollars in thousands)
 Additions andBalance at
    
    Charges toBeginning of
    
    Costs and
    
    
    
    
    
    Balance End ofDescription
    
    Period
    
    Expenses (1)
    
    Write-Offs (2)
    
    PeriodOctober 30, 2010Trade receivable
allowance for
doubtful accounts
    
    $
    2,470
    
    
    $
    1,566
    
    
    $
    (632
    )
    
    $
    3,404Note receivable
allowance for
doubtful accounts
    
    
    
    
    
    
    6,500
    
    
    
    
    
    
    
    6,500October 31, 2009Trade receivable
allowance for
doubtful accounts
    
    
    4,550
    
    
    
    4,321
    
    
    
    (6,401
    )
    
    
    2,470November 1, 2008Trade receivable
allowance for
doubtful accounts
    
    
    1,572
    
    
    
    4,763
    
    
    
    (1,785
    )
    
    
    4,550
 
 (1)
    
    Includes provision for bad debt expense related to discontinued operations of $0, $644
and $67 in 2010, 2009 and 2008, respectively.(2)
    
    Includes accounts receivable write-offs related to discontinued operations of $0, $129
and $124 in 2010, 2009 and 2008, respectively. Financial Statements and Supplementary Data
 F-1