##### 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 29, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto
 1-5911  (Commission File Number)
 SPARTECH CORPORATION
 (Exact name of Registrant as specified in its charter)
 
 Delaware
    
    43-0761773(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 120 S. Central Avenue, Suite 1700
Clayton, Missouri 63105
(314) 721-4242  (Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)
  Common Stock, $.75 par value
    
    New York Stock ExchangeTitle of Each Class
    
    Name of Exchange of Which Registered
 None
 þ o
 þ
 þ o
 o þ
 $620,813,936 32,045,270
 Documents incorporated by reference




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TABLE OF CONTENTS  PART IItem 1. BUSINESSItem 2. PROPERTIESItem 3. LEGAL PROCEEDINGSItem 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIItem 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESItem 6. SELECTED FINANCIAL DATAItem 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREItem 9A. CONTROLS AND PROCEDURESItem 9B. OTHER INFORMATIONPART IIIItem 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTItem 11. EXECUTIVE COMPENSATIONItem 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTItem 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSItem 14. PRINCIPAL ACCOUNTING FEES AND SERVICESPART IVItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESSCHEDULE II  VALUATION AND QUALIFYING ACCOUNTSSubsidiaries of RegistrantConsent of Independent Registered Public Accounting FirmPowers of AttorneysCertification Pursuant to Exchange Act Rule 13a-14(a)Certification Pursuant to Exchange Act Rule 13a-14(a)Certifications Pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350    Table of Contents  CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
   (a)
    
    adverse changes in economic or industry conditions generally, including global supply
and demand conditions and prices for products of the types produced by Spartech;(b)
    
    material adverse changes in the markets we serve, including the transportation,
packaging, building and construction, recreation and leisure, and other markets, some of
which tend to be cyclical;(c)
    
    our inability to achieve the level of cost savings, productivity improvements,
synergies, growth or other benefits anticipated from acquired businesses and their
integration;(d)
    
    volatility of prices and availability of supply of energy and of the raw materials that
are critical to the manufacture of our products, particularly plastic resins derived from
oil and natural gas, including future effects of natural disasters;(e)
    
    our inability to manage or pass through an adequate level of increases to customers in
the costs of materials, freight, utilities, or other conversion costs;(f)
    
    our inability to predict accurately the costs to be incurred or savings to be achieved
in connection with announced production plant restructurings;(g)
    
    adverse findings in significant legal or environmental proceedings or our inability to
comply with applicable environmental laws and regulations;(h)
    
    adverse developments with work stoppages or labor disruptions, particularly in the
automotive industry;(i)
    
    our inability to achieve operational efficiency goals or cost reduction initiatives;(j)
    
    our inability to develop and launch new products successfully;(k)
    
    restrictions imposed on us by instruments governing our indebtedness, and the possible
inability to comply with requirements of those instruments; and(l)
    
    weaknesses in internal controls.
  1




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PART I
 
 Item 1. BUSINESS
 General
  Custom Sheet and Rollstock
  Color and Specialty Compounds
  Engineered Products
   Industry Overview
  
    
    Sheet Extrusion
    
    Plastic sheet is produced by
forcing melted plastic through
a wide, flat die between
polished or textured metal
rollers and onto a flat
cooling bed for cutting to the
desired width and length.
    
    Rollstock Extrusion
    
    This production process is
similar to sheet extrusion,
except that the plastic is
wound onto rolls rather than
cut into flat pieces of a
specific length.
    
    Cell Cast Acrylics
    
    Acrylic sheet is produced by
pouring a reactive mixture of
liquid monomers, additives and
catalysts between two polished
glass sheets held together at
a desired thickness, and
allowing the mixture to
polymerize with time, heat,
and pressure in an oven or
water bath until solid.
 2




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
    
    Specialty Compounding
    
    Basic plastic resins are
melted and mixed with
additives, fillers, or other
plastics in order to impart
specific properties such as
gloss, strength or moldability
to the resulting mixture,
which is typically sold and
shipped in pellet form.
    
    Color Concentrates
    
    Basic plastic resins are
melted and mixed with pigments
in order to produce colored
pellets, which plastics
compounders or fabricators
blend with natural color
plastics to make products of
desired colors.
    
    Calendering
    
    Plastic film is produced by
drawing molten polymer between
two counter-rotating rollers
under pressure.
    
    Profile Extrusion
    
    Products having a desired
two-dimensional cross-section,
such as plastic fence rails or
window frames, are produced by
forcing melted plastic through
a die of the desired shape,
cooling it in air or in a
water bath, and cutting it to
the desired length.
    
    Injection Molding
    
    Three-dimensional products
such as wheels are formed by
forcing melted plastic into a
mold cavity under pressure so
that when cooled the plastic
reflects the shape of the
cavity.
    
    Cast Acrylic Rods
and Tubes
    
    Rods are produced from
reactive mixtures similar to
those used for cell cast
acrylics by curing the mixture
in a vertical, tubular mold
and then grinding and
polishing the rod to the
desired length and diameter.
Tubes are produced by curing a
similar mixture against the
inside of a drum shaped mold
of the desired length and
diameter while it revolves on
a horizontal axis.
   
    
    Greater focus on management transition issues by plastics entrepreneurs;
    
    The potential to achieve economies of scale, leverage, and fixed cost synergies;
    
    Processors seeking to focus on fewer core competencies and outsourcing non-core operations;
    
    Increased capital and technical capabilities necessary to increase production
efficiencies and expand capacity; and
    
    Customers seeking to work with fewer suppliers.
 Our Competitive Strengths
  Market Position
  New Product Development
  Benefits From Acquisitions
  3




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-
    
    Greater geographic presence to service customers and respond to certain
concentrated markets;-
    
    Broader product capabilities offered to our customers;-
    
    Centralized purchasing of raw materials and other cost synergies;-
    
    Improved resource utilization through manufacturing optimization; and-
    
    Greater absorption of fixed costs over an increased revenue base.
 Commitment to Customer Service
  Diversified Customer Base
  Geographic Presence
   Date Acquired
    
    Business Acquired
    
    Business TypeJune 2002
    
    GWB Plastics Holding Co.
    
    Color and Specialty CompoundsMarch 2003
    
    Polymer Extruded Products
    
    Film and Extruded SheetSeptember 2003
    
    TriEnda Division of Wilbert, Inc.
    
    Extruded SheetOctober 2004
    
    VPI Divisions -Sheet Products Division
    
    Extruded Sheet and RollstockContract Manufacturing Division
    
    Flexible Thick-gauge SheetFilm and Converting Division
    
    Calendered Film and Converting
  Operating Segments
  Custom Sheet and Rollstock
  4




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Fiscal Year2005
    
    
    2004
    
    
    2003(in millions)Net Sales
    
    $
    884.3
    
    
    $
    729.8
    
    
    $
    617.7Operating Earnings
    
    
    58.5
    
    
    
    72.7
    
    
    
    61.8
 Products
 New
Product Development
 Manufacturing
and Production
   Marketing,
Sales and Distribution
  Competition
 5




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Color and Specialty Compounds
  Fiscal Year2005
    
    
    2004
    
    
    2003(in millions)Net Sales
    
    $
    430.9
    
    
    $
    323.4
    
    
    $
    273.8Operating Earnings
    
    
    13.9
    
    
    
    27.1
    
    
    
    22.3
 Products
  New
Product Development
 Manufacturing
and Production
    6




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Marketing,
Sales and Distribution
 Competition
 Engineered Products
  Fiscal Year2005
    
    
    2004
    
    
    2003(in millions)Net Sales
    
    $
    81.7
    
    
    $
    68.6
    
    
    $
    64.6Operating Earnings
    
    
    (4.5
    )
    
    
    6.3
    
    
    
    5.4
 Products.
 
    
    Spartech Industries produces plastic tire and wheel assemblies for the
medical, lawn and garden, refuse container and toy markets, and high-performance
molded urethane tires for the medical, material handling, lawn and garden, and
recreational product applications. We also produce various injection molded and
profile extruded products that complement the wheels and tire offerings.
    
    Spartech Profiles manufactures products for various industries,
including window frames and fencing for the building and construction markets.
    
    Spartech Marine specializes in the fabrication of acrylic and other
custom products used in high-end marine applications.
    
    Spartech Townsend manufactures acrylic rods and tubes used primarily in
display, household and medical applications.
 New
Product Development
 Manufacturing
and Production
 Marketing,
Sales and Distribution
 7




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Competition
 Raw Materials
  Seasonality
  Backlog
  Employees
  Government Regulation and Environmental Matters
  8




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International Operations
  Internet Access
  9




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Item 2. PROPERTIES
  Custom Sheet and Rollstock
 Location
    
    Descriptions
    
    Size in Square Feet
    
    Owned/LeasedArlington, TX
    
    Extrusion plant & offices
    
    
    135,000
    
    
    LeasedAtlanta, GA
    
    Extrusion plant & offices
    
    
    85,000
    
    
    LeasedCape Girardeau, MO
    
    Extrusion plant & offices
    
    
    100,000
    
    
    Owned14,000
    
    
    LeasedClare, MI
    
    Extrusion plant & offices
    
    
    31,000
    
    
    OwnedEvanston, IL
    
    Extrusion plant & offices
    
    
    123,000
    
    
    LeasedGreenville, OH
    
    Extrusion plant & offices
    
    
    80,000
    
    
    Owned21,000
    
    
    LeasedHackensack, NJ
    
    Cast acrylic plant & offices
    
    
    81,000
    
    
    LeasedLa Mirada, CA
    
    Extrusion plant & offices
    
    
    64,000
    
    
    LeasedMankato, MN
    
    Extrusion plant & offices
    
    
    38,000
    
    
    Owned57,000
    
    
    LeasedMcMinnville, OR
    
    Extrusion plant & offices
    
    
    40,000
    
    
    OwnedMuncie, IN
    
    Extrusion plant & offices
    
    
    152,000
    
    
    OwnedPaulding, OH
    
    Extrusion plant  & offices
    
    
    71,000
    
    
    Owned69,000
    
    
    LeasedPhoenix, AZ
    
    Cast acrylic plant & offices
    
    
    33,000
    
    
    LeasedPortage #1, WI
    
    Extrusion plant & offices
    
    
    113,000
    
    
    Owned47,000
    
    
    LeasedPortage #2, WI
    
    Extrusion plant
    
    
    54,000
    
    
    LeasedRamos Arizpe,
Mexico *
    
    Extrusion plant & offices
    
    
    55,000
    
    
    OwnedRichmond, IN
    
    Extrusion plant & offices
    
    
    54,000
    
    
    Owned41,000
    
    
    LeasedSheboygan Falls, WI
    
    Extrusion plant & offices
    
    
    30,000
    
    
    Owned30,000
    
    
    LeasedStamford, CT
    
    Cast acrylic plant & offices
    
    
    87,000
    
    
    LeasedWarsaw, IN
    
    Extrusion plant & offices
    
    
    187,000
    
    
    Owned93,000
    
    
    LeasedWichita, KS
    
    Extrusion plant & offices
    
    
    62,000
    
    
    Owned110,000
    
    
    LeasedCornwall, Ontario
    
    Extrusion plant & offices
    
    
    48,000
    
    
    LeasedDonchery, France *
    
    Extrusion plant & offices
    
    
    92,000
    
    
    OwnedGranby, Quebec
    
    Extrusion plant & offices
    
    
    70,000
    
    
    OwnedSubtotal
    
    
    
    
    2,367,000
 10




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Color and Specialty Compounds
 Location
    
    Descriptions
    
    Size in Square Feet
    
    Owned/LeasedArlington #1, TX
    
    Compounding plant & offices
    
    
    70,000
    
    
    LeasedArlington #2, TX
    
    Compounding plant & offices
    
    
    63,000
    
    
    LeasedCape Girardeau, MO
    
    Compounding plant & offices
    
    
    56,000
    
    
    Owned60,000
    
    
    LeasedDonora #1, PA
    
    Compounding plant & offices
    
    
    142,000
    
    
    OwnedDonora #2, PA
    
    Compounding plant & offices
    
    
    88,000
    
    
    OwnedKearny, NJ
    
    Compounding plant & offices
    
    
    57,000
    
    
    OwnedLake Charles, LA
    
    Compounding plant & offices
    
    
    55,000
    
    
    OwnedLockport, NY
    
    Compounding plant & offices
    
    
    45,000
    
    
    OwnedManitowoc, WI
    
    Compounding plant & offices
    
    
    95,000
    
    
    OwnedNewark, NJ
    
    Extrusion plant & offices
    
    
    61,000
    
    
    OwnedRamos
Arizpe, Mexico *
    
    Compounding plant & offices
    
    
    50,000
    
    
    OwnedSalisbury, MD
    
    Calendering plant & offices
    
    
    130,000
    
    
    OwnedSt. Clair, MI
    
    Compounding plant & offices
    
    
    72,000
    
    
    OwnedStratford, Ontario
    
    Color plant & offices
    
    
    72,000
    
    
    OwnedDonchery, France *
    
    Compounding plant & offices
    
    
    25,000
    
    
    Leased30,000
    
    
    OwnedSubtotal
    
    
    
    
    1,171,00
 Engineered Products
 Location
    
    Descriptions
    
    Size in Square Feet
    
    Owned/LeasedDes Moines, IA
    
    Cast acrylic plant & offices
    
    
    72,000
    
    
    OwnedReynosa, Mexico
    
    Injection molding plant
    
    
    32,000
    
    
    LeasedRockledge, FL
    
    Marine products plant
    
    
    112,000
    
    
    LeasedTupelo, MS
    
    Injection molding plant
    
    
    104,000
    
    
    LeasedWarsaw, IN
    
    Injection molding plant & offices
    
    
    41,000
    
    
    OwnedWinnipeg, Manitoba
    
    Profile plant & offices
    
    
    47,000
    
    
    OwnedSubtotal
    
    
    
    
    408,000Total
    
    
    
    
    3,946,000
 *
    
    These plant locations represent joint production facilities for the Custom Sheet and
Rollstock and Color and Specialty Compounds segments.
   11




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Item 3. LEGAL PROCEEDINGS
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  12




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PART II
 
 Item 5.
   MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  Common Stock Data (per share)
    

1stQtr.
    
    

2ndQtr.
    
    

3rdQtr.
    
    
    4th Qtr.2005High
    
    $
    28.31
    
    
    $
    23.54
    
    
    $
    21.16
    
    
    $
    21.73Low
    
    
    23.03
    
    
    
    17.83
    
    
    
    16.00
    
    
    
    17.50Dividends declared
    
    $
    .12
    
    
    $
    .12
    
    
    $
    .12
    
    
    $
    .122004High
    
    $
    26.00
    
    
    $
    25.41
    
    
    $
    26.30
    
    
    $
    25.95Low
    
    
    21.58
    
    
    
    22.55
    
    
    
    21.36
    
    
    
    21.85Dividends declared
    
    $
    .11
    
    
    $
    .11
    
    
    $
    .11
    
    
    $
    .11
   Total Number of
    
    
    MaximumShares Purchased
    
    
    Number ofas Part of
    
    
    Shares That MayPublicly
    
    
    Yet Be PurchasedTotal Number
    
    
    
    
    
    
    Announced Plans
    
    
    Under the PlansOf Shares
    
    
    Average Price
    
    
    or
    
    
    orPeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Programs
    
    
    ProgramsAugust 2005
    
    
    
    
    
    $
    n/a
    
    
    
    
    
    
    
    656,700September 2005
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    656,700October 2005
    
    
    102,300
    
    
    
    18.16
    
    
    
    102,300
    
    
    
    554,400Total
    
    
    102,300
    
    
    $
    18.16
    
    
    
    102,300
    
    
    
    554,400
 13




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Item 6. SELECTED FINANCIAL DATA






Fiscal Year Ended2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(in thousands, except per share data)Statement of Operations Data:Net Sales:In Dollars
    
    $
    1,396,860
    
    
    $
    1,121,725
    
    
    $
    956,160
    
    
    $
    898,308
    
    
    $
    937,059
    
    
    $
    987,532In Pounds
    
    
    1,472,000
    
    
    
    1,383,000
    
    
    
    1,207,000
    
    
    
    1,179,000
    
    
    
    1,170,000
    
    
    
    1,286,000Gross Profit
    
    
    152,584
    
    
    
    154,762
    
    
    
    134,013
    
    
    
    135,163
    
    
    
    152,049
    
    
    
    171,669Depreciation & Amortization
    
    
    40,387
    
    
    
    35,056
    
    
    
    31,566
    
    
    
    28,120
    
    
    
    34,921
    
    
    
    31,905Operating Earnings (a)
    
    
    48,068
    
    
    
    92,801
    
    
    
    78,286
    
    
    
    80,879
    
    
    
    82,374
    
    
    
    109,761Interest Expense
    
    
    25,195
    
    
    
    25,436
    
    
    
    24,965
    
    
    
    26,816
    
    
    
    34,821
    
    
    
    29,131Net Earnings
    
    
    12,191
    
    
    
    42,063
    
    
    
    34,103
    
    
    
    34,270
    
    
    
    29,903
    
    
    
    49,907Per Share Information:Earnings per Share-Diluted
    
    $
    .38
    
    
    $
    1.32
    
    
    $
    1.15
    
    
    $
    1.21
    
    
    $
    1.11
    
    
    $
    1.72Dividends Declared per Share
    
    
    .48
    
    
    
    .44
    
    
    
    .40
    
    
    
    .38
    
    
    
    .38
    
    
    
    .34Book Value per Share
    
    
    12.91
    
    
    
    12.98
    
    
    
    10.98
    
    
    
    9.93
    
    
    
    8.11
    
    
    
    7.86Balance Sheet Data:Working Capital (b)
    
    $
    171,459
    
    
    $
    198,253
    
    
    $
    127,496
    
    
    $
    110,082
    
    
    $
    123,804
    
    
    $
    125,125Working Capital as a
percentage of Net Sales
    
    
    12.3
    %
    
    
    17.7
    %
    
    
    13.3
    %
    
    
    12.3
    %
    
    
    13.2
    %
    
    
    12.7
    %Total Debt
    
    $
    379,955
    
    
    $
    474,091
    
    
    $
    383,819
    
    
    $
    392,971
    
    
    $
    443,353
    
    
    $
    507,484Total Assets
    
    
    1,074,395
    
    
    
    1,141,932
    
    
    
    923,938
    
    
    
    872,577
    
    
    
    821,962
    
    
    
    896,120Shareholders Equity
    
    
    413,046
    
    
    
    417,732
    
    
    
    322,358
    
    
    
    290,698
    
    
    
    216,546
    
    
    
    211,022Ratios/Other Data:Cash Flow from Operations
    
    $
    105,018
    
    
    $
    31,647
    
    
    $
    69,485
    
    
    $
    85,688
    
    
    $
    69,022
    
    
    $
    58,497Capital Expenditures
    
    
    39,265
    
    
    
    35,003
    
    
    
    22,009
    
    
    
    28,217
    
    
    
    16,237
    
    
    
    29,192Operating Earnings
per pound sold (actual)
    
    
    3.3
    ¢
    
    
    6.7
    ¢
    
    
    6.5
    ¢
    
    
    6.9
    ¢
    
    
    7.0
    ¢
    
    
    8.5
    ¢Total Debt to
Total Debt and Equity
    
    
    47.9
    %
    
    
    53.2
    %
    
    
    54.4
    %
    
    
    57.5
    %
    
    
    67.2
    %
    
    
    70.6
    %Number of Employees (actual)
    
    
    3,500
    
    
    
    3,750
    
    
    
    3,325
    
    
    
    3,475
    
    
    
    3,300
    
    
    
    4,075Common Shares:Outstanding at Year-End
    
    
    31,988
    
    
    
    32,180
    
    
    
    29,352
    
    
    
    29,285
    
    
    
    26,700
    
    
    
    26,864Weighted Average-Diluted
    
    
    32,311
    
    
    
    33,468
    
    
    
    29,567
    
    
    
    28,379
    
    
    
    28,696
    
    
    
    31,874


Notes to table:





(a)
    
    Fiscal 2005 operating earnings were reduced by pre-tax charges of $28.9 million related to
restructuring and exit costs ($10.1 million), a retirement settlement with our former CEO
($3.6 million), fixed asset charges ($10.7 million) and goodwill impairment ($4.5 million).Fiscal 2001 operating earnings were reduced by pre-tax charges of $9.1 million related to
restructuring and exit costs ($3.5 million) and the impairment of long-lived assets ($5.6
million).(b)
    
    Calculated as total current assets excluding cash and cash equivalents less total current
liabilities excluding current maturities of long-term debt.


14



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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 The following discussion and analysis of our financial condition and results of operations
contains Forward-looking Statements. You should read the following discussion of our financial
condition and results of operations with Selected Financial Data and our consolidated financial
statements and related notes included elsewhere in this Form 10-K . We have based our
forward-looking statements about our markets and demand for our products and future results on
assumptions that we consider reasonable. Actual results may differ materially from those suggested
by our forward-looking statements for various reasons including those discussed in Cautionary
Statements Concerning Forward-Looking Statements on page 1 of this Form 10-K .
 Business Overview
  % of Fiscal2005 SalesCustom Sheet and Rollstock
    
    63%Color and Specialty Compounds
    
    31%Engineered Products *
    
    6 %
 
 *
    
    The segment formerly referred to as the Molded and Profile Products Segment was
renamed the Engineered Products Segment effective in the second quarter of fiscal 2005.
   Executive Summary
   15




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##### Table of Contents



Results of Operations
 Comparison of Fiscal Years 2005 and 2004
 Consolidated Summary
  Underlying volume
    
    
    (1
    )%VPI Acquisition
    
    
    9Price/Mix
    
    
    1725
    %
   16




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##### Table of Contents



2005
    
    
    2004Dollars and Pounds (in millions)Net sales
    
    $
    1,396.9
    
    
    $
    1,121.7Material costs
    
    
    900.6
    
    
    
    665.9Material margin
    
    
    496.3
    
    
    
    455.8Conversion costs
    
    
    343.7
    
    
    
    301.0Gross margin
    
    $
    152.6
    
    
    $
    154.8Pounds Sold
    
    
    1,472
    
    
    
    1,383Dollars per Pound SoldNet sales
    
    $
    .949
    
    
    $
    .811Material costs
    
    
    .612
    
    
    
    .481Material margin
    
    
    .337
    
    
    
    .330Conversion costs
    
    
    .233
    
    
    
    .218Gross margin
    
    $
    .104
    
    
    $
    .112
     Special Items
  17




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##### Table of Contents



Custom
    
    
    Color andSheet and
    
    
    Specialty
    
    
    Engineered(in millions)
    
    Rollstock
    
    
    Compounds
    
    
    Products
    
    
    Corporate
    
    
    TotalTotal Restructuring and Exit Costs
    
    $
    
    
    
    $
    7.4
    
    
    $
    1.9
    
    
    $
    0.8
    
    
    $
    10.1Total Former CEO Retirement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.6
    
    
    
    3.6Total Fixed Asset Charge
    
    
    6.7
    
    
    
    1.6
    
    
    
    1.8
    
    
    
    0.6
    
    
    
    10.7Total Goodwill Impairment
    
    
    
    
    
    
    2.0
    
    
    
    2.5
    
    
    
    
    
    
    
    4.5Total Special Items
    
    $
    6.7
    
    
    $
    11.0
    
    
    $
    6.2
    
    
    $
    5.0
    
    
    $
    28.9
     18




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##### Table of Contents



Custom Sheet and Rollstock Segment
  Underlying volume
    
    
    (1
    )%VPI Acquisition
    
    
    6Price/Mix
    
    
    1621
    %
   Color and Specialty Compounds Segment
  Underlying volume
    
    
    (4
    )%VPI Acquisition
    
    
    19Price/Mix
    
    
    1833
    %
  %2005
    
    
    2004
    
    
    ChangePounds Sold (in millions)Tolling and Resale Products
    
    
    167.5
    
    
    
    226.1
    
    
    
    (26
    )%Proprietary Products
    
    
    435.8
    
    
    
    401.3
    
    
    
    9Acquired Pounds (proprietary products)
    
    
    81.2
    
    
    
    7.2
    
    
    
    n/aTotal Pounds Sold
    
    
    684.5
    
    
    
    634.6
    
    
    
    8
    %
   19




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##### Table of Contents



Engineered Products Segment
  Underlying volume
    
    
    24
    %Price/Mix
    
    
    (5
    )19
    %
   Comparison of Fiscal Years 2004 and 2003
 Consolidated Summary
     20




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##### Table of Contents



Custom Sheet and Rollstock Segment
  Color and Specialty Compounds Segment
  Engineered Products Segment
  Other Matters
  21




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flow
  2005
    
    
    2004
    
    
    2003Cash Flows (in millions)Net cash provided by operating activities
    
    $
    105.0
    
    
    $
    31.6
    
    
    $
    69.5Net cash used in investing activities
    
    
    (31.4
    )
    
    
    (131.1
    )
    
    
    (49.3
    )Net cash (used for)/ provided by financing activities
    
    
    (110.3
    )
    
    
    137.5
    
    
    
    (21.6
    )Effect of exchange rate changes
    
    
    
    
    
    
    0.2
    
    
    
    0.2(Decrease) / increase in cash and equivalents
    
    $
    (36.7
    )
    
    $
    38.2
    
    
    $
    (1.2
    )
  22




---



##### Table of Contents



Financing Arrangements
     23




---



##### Table of Contents



Contractual Obligations
  (in millions)
    
    
    
    
    
    Less Than
    
    
    Years
    
    
    Years
    
    
    Greater thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    2 and 3
    
    
    4 and 5
    
    
    5 YearsLong-term Debt
    
    $
    550.7
    
    
    $
    32.7
    
    
    $
    49.2
    
    
    $
    89.5
    
    
    $
    379.3Capital Lease Obligations
    
    
    1.1
    
    
    
    0.3
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.2Operating Lease
Obligations
    
    
    24.4
    
    
    
    7.2
    
    
    
    8.8
    
    
    
    4.2
    
    
    
    4.2Purchase Obligations
    
    
    126.2
    
    
    
    124.5
    
    
    
    1.7
    
    
    
    
    
    
    
    Other Long-Term
Liabilities
    
    
    8.7
    
    
    
    0.6
    
    
    
    1.3
    
    
    
    1.1
    
    
    
    5.7Total
    
    $
    711.1
    
    
    $
    165.3
    
    
    $
    61.4
    
    
    $
    95.0
    
    
    $
    389.4
  Significant Accounting Policies, Estimates and Judgments
  Revenue
Recognition
 Accounts
Receivable
 24




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##### Table of Contents



Inventories
 Acquisition
Accounting
 Valuation
of Long-Lived Assets
 Contingencies
  Recently Issued Accounting Standards
  25




---



##### Table of Contents



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     26




---



##### 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




---



##### Table of Contents



Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
     /s/ Ernst & Young LLP 
 28




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##### Table of Contents



Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
     .
  /s/ Ernst & Young LLP 
 29




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 October 29,
    
    
    October 30,2005
    
    
    2004ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    4,601
    
    
    $
    41,272Receivables, net of allowance of $2,557 in 2005 and $2,997 in 2004
    
    
    213,996
    
    
    
    188,427Inventories
    
    
    119,401
    
    
    
    142,035Prepaids and other
    
    
    16,970
    
    
    
    20,718Total Current Assets
    
    
    354,968
    
    
    
    392,452Property, plant, and equipment, net
    
    
    307,386
    
    
    
    330,745Goodwill
    
    
    352,405
    
    
    
    361,957Other intangible assets, net
    
    
    40,710
    
    
    
    43,967Other assets
    
    
    18,926
    
    
    
    12,811Total Assets
    
    $
    1,074,395
    
    
    $
    1,141,932LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt
    
    $
    11,175
    
    
    $
    18,027Accounts payable
    
    
    121,682
    
    
    
    108,704Accrued liabilities
    
    
    57,226
    
    
    
    44,223Total Current Liabilities
    
    
    190,083
    
    
    
    170,954Long-Term Debt:Convertible subordinated debentures
    
    
    154,639
    
    
    
    154,639Other long-term debt, less current maturities
    
    
    214,141
    
    
    
    301,425Total Long-Term Debt
    
    
    368,780
    
    
    
    456,064Long-Term Liabilities:Deferred taxes
    
    
    91,605
    
    
    
    94,825Other liabilities
    
    
    10,881
    
    
    
    2,357Total Long-Term Liabilities
    
    
    471,266
    
    
    
    553,246Shareholders Equity:Common stock, 33,131,846 shares issued in 2005 and 2004
    
    
    24,849
    
    
    
    24,849Contributed capital
    
    
    196,811
    
    
    
    196,264Retained earnings
    
    
    216,928
    
    
    
    220,136Treasury stock, at cost, 1,143,701 shares in 2005 and 952,073
shares in 2004
    
    
    (26,019
    )
    
    
    (23,653
    )Accumulated other comprehensive income
    
    
    477
    
    
    
    136Total Shareholders Equity
    
    
    413,046
    
    
    
    417,732Total Liabilities and Shareholders Equity
    
    $
    1,074,395
    
    
    $
    1,141,932
 See accompanying notes to consolidated financial statements.
 30




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
 FISCAL YEAR
    
    2005
    
    
    2004
    
    
    2003Net Sales
    
    $
    1,396,860
    
    
    $
    1,121,725
    
    
    $
    956,160Costs and Expenses:Cost of sales
    
    
    1,244,276
    
    
    
    966,963
    
    
    
    822,147Selling, general, and administrative
    
    
    70,712
    
    
    
    58,898
    
    
    
    53,540Amortization of intangibles
    
    
    4,939
    
    
    
    2,840
    
    
    
    2,187Restructuring and exit costs
    
    
    10,088
    
    
    
    
    
    
    
    Former CEO retirement
    
    
    3,645
    
    
    
    
    
    
    
    Fixed asset charge
    
    
    10,664
    
    
    
    223
    
    
    
    Goodwill impairment
    
    
    4,468
    
    
    
    
    
    
    
    1,348,792
    
    
    
    1,028,924
    
    
    
    877,874Operating Earnings
    
    
    48,068
    
    
    
    92,801
    
    
    
    78,286Interest expense, (net of interest income: 2005, $488;
2004, $269; 2003, $146)
    
    
    25,195
    
    
    
    25,436
    
    
    
    24,965Earnings Before Income Taxes
    
    
    22,873
    
    
    
    67,365
    
    
    
    53,321Income taxes
    
    
    10,682
    
    
    
    25,302
    
    
    
    19,218Net Earnings
    
    $
    12,191
    
    
    $
    42,063
    
    
    $
    34,103Net Earnings Per Common Share:Basic
    
    $
    .38
    
    
    $
    1.34
    
    
    $
    1.17Diluted
    
    $
    .38
    
    
    $
    1.32
    
    
    $
    1.15
 See accompanying notes to consolidated financial statements.
 31




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Dollars in thousands)
 Accumulated OtherComprehensiveCommon
    
    
    Contributed
    
    
    Retained
    
    
    Treasury
    
    
    Income
    
    
    Total ShareholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    (Loss)
    
    
    EquityBalance, November 2, 2002
    
    $
    22,846
    
    
    $
    140,213
    
    
    $
    169,518
    
    
    $
    (28,701
    )
    
    $
    (13,178
    )
    
    $
    290,698Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    34,103
    
    
    
    
    
    
    
    
    
    
    
    34,103Other comprehensive income:Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,038
    
    
    
    6,038Cash flow hedge adjustments,
net of tax of $(1,633)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,639
    
    
    
    2,639Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,780Stock options exercised
    
    
    
    
    
    
    (970
    )
    
    
    
    
    
    
    4,275
    
    
    
    
    
    
    
    3,305Cash dividends
    
    
    
    
    
    
    
    
    
    
    (11,709
    )
    
    
    
    
    
    
    
    
    
    
    (11,709
    )Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,716
    )
    
    
    
    
    
    
    (2,716
    )Balance, November 1, 2003
    
    $
    22,846
    
    
    $
    139,243
    
    
    $
    191,912
    
    
    $
    (27,142
    )
    
    $
    (4,501
    )
    
    $
    322,358Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    42,063
    
    
    
    
    
    
    
    
    
    
    
    42,063Other comprehensive income:Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    941
    
    
    
    941Cash flow hedge adjustments,
net of tax of $(2,170)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,696
    
    
    
    3,696Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,700Common stock issuance
    
    
    2,003
    
    
    
    58,919
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,922Restricted stock grant
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180Stock options exercised
    
    
    
    
    
    
    (2,078
    )
    
    
    
    
    
    
    6,144
    
    
    
    
    
    
    
    4,066Cash dividends
    
    
    
    
    
    
    
    
    
    
    (13,839
    )
    
    
    
    
    
    
    
    
    
    
    (13,839
    )Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,655
    )
    
    
    
    
    
    
    (2,655
    )Balance, October 30, 2004
    
    $
    24,849
    
    
    $
    196,264
    
    
    $
    220,136
    
    
    $
    (23,653
    )
    
    $
    136
    
    
    $
    417,732Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    12,191
    
    
    
    
    
    
    
    
    
    
    
    12,191Other comprehensive income:Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    260Cash flow hedge adjustments,
net of tax of $(50)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    81Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,532Restricted stock grant
    
    
    
    
    
    
    217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217Stock options exercised
    
    
    
    
    
    
    330
    
    
    
    
    
    
    
    6,339
    
    
    
    
    
    
    
    6,669Cash dividends
    
    
    
    
    
    
    
    
    
    
    (15,399
    )
    
    
    
    
    
    
    
    
    
    
    (15,399
    )Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,705
    )
    
    
    
    
    
    
    (8,705
    )Balance, October 29, 2005
    
    $
    24,849
    
    
    $
    196,811
    
    
    $
    216,928
    
    
    $
    (26,019
    )
    
    $
    477
    
    
    $
    413,046
 See accompanying notes to consolidated financial statements.




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 Fiscal Year
    
    2005
    
    
    2004
    
    
    2003Cash Flows From Operating ActivitiesNet earnings
    
    $
    12,191
    
    
    $
    42,063
    
    
    $
    34,103Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation and amortization
    
    
    40,387
    
    
    
    35,056
    
    
    
    31,566Restructuring and exit costs
    
    
    7,198
    
    
    
    
    
    
    
    Former CEO retirement
    
    
    831
    
    
    
    
    
    
    
    Fixed asset charge
    
    
    10,664
    
    
    
    223
    
    
    
    Goodwill impairment
    
    
    4,468
    
    
    
    
    
    
    
    Change in current assets and liabilities, net of
effects of acquisitions and divestitures:Receivables
    
    
    (24,632
    )
    
    
    (21,599
    )
    
    
    (18,472
    )Inventories
    
    
    23,050
    
    
    
    (32,771
    )
    
    
    (713
    )Prepaids and other
    
    
    3,762
    
    
    
    (7,538
    )
    
    
    (2,192
    )Accounts payable
    
    
    14,883
    
    
    
    3,987
    
    
    
    13,468Accrued liabilities
    
    
    9,736
    
    
    
    2,914
    
    
    
    (3,881
    )Other, net
    
    
    2,480
    
    
    
    9,312
    
    
    
    15,606Net cash provided by operating activities
    
    
    105,018
    
    
    
    31,647
    
    
    
    69,485Cash Flows From Investing ActivitiesCapital expenditures
    
    
    (39,265
    )
    
    
    (35,003
    )
    
    
    (22,009
    )Business acquisitions
    
    
    (1,224
    )
    
    
    (87,952
    )
    
    
    (27,589
    )Outsourcing acquisitions
    
    
    
    
    
    
    (8,141
    )
    
    
    Dispositions of assets
    
    
    9,116
    
    
    
    
    
    
    
    293Net cash used in investing activities
    
    
    (31,373
    )
    
    
    (131,096
    )
    
    
    (49,305
    )Cash Flows From Financing ActivitiesBank credit facility (payments)/borrowings, net
    
    
    (76,370
    )
    
    
    (27,204
    )
    
    
    8,530Borrowings from issuance of notes
    
    
    
    
    
    
    150,000
    
    
    
    Payments on notes
    
    
    (17,857
    )
    
    
    (32,857
    )
    
    
    (17,857
    )Payments on bonds and leases
    
    
    (671
    )
    
    
    (133
    )
    
    
    (150
    )Issuance of common stock
    
    
    
    
    
    
    60,922
    
    
    
    Cash dividends on common stock
    
    
    (11,547
    )
    
    
    (13,839
    )
    
    
    (11,709
    )Stock options exercised
    
    
    4,083
    
    
    
    3,234
    
    
    
    2,993Treasury stock acquired
    
    
    (7,982
    )
    
    
    (2,655
    )
    
    
    (3,436
    )Net cash (used) provided by financing
activities
    
    
    (110,344
    )
    
    
    137,468
    
    
    
    (21,629
    )Effect of exchange rate changes on cash and
equivalents
    
    
    28
    
    
    
    199
    
    
    
    210(Decrease) increase in cash and equivalents
    
    
    (36,671
    )
    
    
    38,218
    
    
    
    (1,239
    )Cash and Equivalents at Beginning of Year
    
    
    41,272
    
    
    
    3,054
    
    
    
    4,293Cash and Equivalents at End of Year
    
    $
    4,601
    
    
    $
    41,272
    
    
    $
    3,054
 See accompanying notes to consolidated financial statements




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Dollars in thousands, except per share amounts)
 1) Significant Accounting Policies
 Basis of Presentation
 Principles of Consolidation
 Foreign Currency Translation
 Cash Equivalents
 Allowance for Doubtful Accounts
 Inventories
 Property, Plant, and Equipment
 YearsBuildings and leasehold improvements
    
    20-25Machinery and equipment
    
    12-16Furniture and fixtures
    
    5-10




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##### Table of Contents



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED  (Dollars in thousands, except per share amounts)
 Goodwill
and Intangible Assets
  Financial
Instruments
   
    
    Cash, accounts receivable, accounts payable, and accrued liabilities  the carrying
value of these instruments approximates fair value due to their short-term nature;
    
    Derivative financial instruments  based upon quoted market prices or market prices for
instruments with similar terms and maturities; and
    
    Long-term debt (including bank credit facilities and convertible subordinated
debentures)  based on quoted, current market prices for the same or similar issues. As
of October 29, 2005, the fair value of the convertible subordinated debentures was
approximately $156,082 compared to the carrying amount of $154,639 and the fair value of
other long-term debt was $213,678 compared to the carrying amount of $214,141.
 Stock-Based
Compensation




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
  2005
    
    
    2004
    
    
    2003Net Earnings as Reported
    
    $
    12,191
    
    
    $
    42,063
    
    
    $
    34,103Add: Stock-based compensation included in net
earnings as reported, net of tax
    
    
    649
    
    
    
    112
    
    
    
    Deduct: Total stock-based compensation, net of tax
    
    
    (2,535
    )
    
    
    (1,873
    )
    
    
    (2,089
    )Pro Forma Net Earnings
    
    $
    10,305
    
    
    $
    40,302
    
    
    $
    32,014
 Earnings Per ShareAs Reported:Basic
    
    $
    .38
    
    
    $
    1.34
    
    
    $
    1.17Diluted
    
    
    .38
    
    
    
    1.32
    
    
    
    1.15Pro Forma:Basic
    
    $
    .32
    
    
    $
    1.28
    
    
    $
    1.09
    *Diluted
    
    
    .32
    
    
    
    1.26
    
    
    
    1.08
    *
 
 *
    
    Pro forma amounts were previously reported as $1.11 basic and $1.10 diluted earnings per
share. These amounts were restated for corrections of errors.  2005
    
    2004
    
    2003Weighted Average Fair Value
    
    $
    7.65
    
    
    $
    6.94
    
    
    $
    5.58Assumptions:Expected Dividend Yield.
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %Expected Volatility
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Risk-Free Interest Rates
    
    
    3.59-3.79
    %
    
    
    2.95-3.70
    %
    
    
    2.52-3.50
    %Expected Lives
    
    5.5 years
    
    5.5 years
    
    5.0 years
   2005
    
    2004Fair value per share granted
    
    $
    26.02
    
    
    $
    23.70Compensation expense recognized
    
    $
    217
    
    
    $
    180
  36




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
  Revenue
Recognition
 Income
Taxes
 2) Acquisitions
    37




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
 3) Restructuring
      2005Fixed asset impairment, net
    
    $
    6,624Goodwill write-offs
    
    
    1,419Facility restructuring
    
    
    1,295Airplane lease buy-out
    
    
    750$
    10,088
  38




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
  2005Custom Sheet and Rollstock
    
    $
    (1,077
    )Color and Specialty Compounds
    
    
    6,655Engineered Products
    
    
    1,046$
    6,624
  2005Custom Sheet and Rollstock
    
    $
    896Color and Specialty Compounds
    
    
    Engineered Products
    
    
    523$
    1,419
  2005Custom Sheet and Rollstock
    
    $
    187Color and Specialty Compounds
    
    
    733Engineered Products
    
    
    375$
    1,295
  4) Former CEO Retirement
   39




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
 -
    
    A cash settlement paid June 3, 2005, based upon a multiple of Mr. Buechlers former
annual salary plus his previous deferred compensation arrangement, totaling $2,711.-
    
    A bonus to be paid based on the Companys fiscal 2005 results pro-rated for Mr.
Buechlers employment through the effective date of the Retirement Agreement.-
    
    An amendment to the terms of Mr. Buechlers vested stock options to permit him to
retire before having reached the minimum retirement age of 60 specified in his option
agreements, resulting in a new measurement of the options for accounting purposes and a
non-cash expense of $831.
  5) Fixed Asset Charge
    2005
    
    
    2004Custom Sheet and Rollstock
    
    $
    6,684
    
    
    $
    223Color and Specialty Compounds
    
    
    1,609
    
    
    
    Engineered Products
    
    
    1,753
    
    
    
    Corporate
    
    
    618
    
    
    
    $
    10,664
    
    
    $
    223
 6) Inventories
  2005
    
    
    2004Raw materials
    
    $
    64,262
    
    
    $
    73,228Production supplies
    
    
    9,479
    
    
    
    9,343Finished goods
    
    
    45,660
    
    
    
    59,464$
    119,401
    
    
    $
    142,035
 40




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
 7) Property, Plant, and Equipment
  2005
    
    
    2004Land
    
    $
    11,615
    
    
    $
    14,167Buildings and leasehold improvements
    
    
    78,735
    
    
    
    85,915Machinery and equipment
    
    
    412,903
    
    
    
    428,890Furniture and fixtures
    
    
    7,475
    
    
    
    9,299510,728
    
    
    
    538,271Less: Accumulated depreciation
    
    
    203,342
    
    
    
    207,526$
    307,386
    
    
    $
    330,745
 8) Goodwill and Identifiable Intangible Assets
  Color andCustom Sheet`
    
    
    Specialty
    
    
    Engineeredand Rollstock
    
    
    Compounds
    
    
    Products
    
    
    TotalBalance, November 1, 2003
    
    $
    201,041
    
    
    $
    95,737
    
    
    $
    37,614
    
    
    $
    334,392Acquisition
    
    
    11,088
    
    
    
    8,650
    
    
    
    478
    
    
    
    20,216Reclassifications
    
    
    721
    
    
    
    6,628
    
    
    
    
    
    
    
    7,349Balance, October 30, 2004
    
    $
    212,850
    
    
    $
    111,015
    
    
    $
    38,092
    
    
    $
    361,957Impairments
    
    
    
    
    
    
    (2,034
    )
    
    
    (2,434
    )
    
    
    (4,468
    )Business divestitures
    
    
    (896
    )
    
    
    
    
    
    
    (523
    )
    
    
    (1,419
    )Reclassifications
    
    
    (17,611
    )
    
    
    13,946
    
    
    
    
    
    
    
    (3,665
    )Balance, October 29, 2005
    
    $
    194,343
    
    
    $
    122,927
    
    
    $
    35,135
    
    
    $
    352,405
   41




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##### Table of Contents



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
  Gross
    
    
    AccumulatedCarrying Amount
    
    
    Amortization2005
    
    
    2004
    
    
    2005
    
    
    2004Non-compete agreements
    
    $
    3,680
    
    
    $
    3,960
    
    
    $
    2,122
    
    
    $
    1,242Customer contracts/relationships
    
    
    21,571
    
    
    
    18,981
    
    
    
    5,321
    
    
    
    2,380Product formulations
    
    
    17,476
    
    
    
    17,811
    
    
    
    3,474
    
    
    
    2,063$
    42,727
    
    
    $
    40,752
    
    
    $
    10,917
    
    
    $
    5,685
   IntangibleFiscal Year Ended
    
    Amortization2006
    
    $
    4,4802007
    
    
    4,0862008
    
    
    3,0082009
    
    
    2,5932010
    
    
    2,345$
    16,512
  9) Convertible Subordinated Debentures
  
    
    Are convertible along with the trusts preferred securities, at the option of the
preferred security holders, into shares of the Companys common stock at a conversion
price equivalent to $30.55 per share of common stock, for a total of 1,636,661 shares;
    
    Are redeemable along with the trusts preferred securities, at the Companys
option, at a price equal to 102.6% of the principal amount plus accrued interest
through March 1, 2006. This amount declines annually to a price equal to the principal
amount plus accrued and unpaid interest after March 1, 2009; and
    
    Mature and are payable, along with the trusts preferred securities, on March 31,
2014, if they have not been previously redeemed or converted.
  42




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##### Table of Contents



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
 
    
    Are convertible along with the trusts preferred securities, at the option of the
preferred security holders, into shares of the Companys common stock at a conversion
price equivalent to $34.00 per share of common stock, for a total of 2,941,176 shares;
    
    Are redeemable along with the trusts preferred securities, at the Companys
option, at a price equal to 103.5% of the principal amount plus accrued interest
through March 1, 2006. This amount declines annually to a price equal to the principal
amount plus accrued and unpaid interest after March 1, 2010; and
    
    Mature and are payable, along with the trusts preferred securities, on March 31,
2015, if they have not been previously redeemed or converted.
 10) Other Long-Term Debt
  2005
    
    
    20045.54% Senior Unsecured 2004 Notes
    
    $
    150,000
    
    
    $
    150,0007.0% Senior Unsecured 1997 Notes
    
    
    12,857
    
    
    
    19,2867.62% Guaranteed Senior Unsecured 1996 Notes
    
    
    4,286
    
    
    
    8,5717.21% Senior Unsecured 1995 Notes
    
    
    
    
    
    
    7,143Bank Credit Facilities
    
    
    24,200
    
    
    
    125,000Bank Term Loan
    
    
    24,126
    
    
    
    Other
    
    
    9,847
    
    
    
    9,452225,316
    
    
    
    319,452Less current maturities
    
    
    11,175
    
    
    
    18,027$
    214,141
    
    
    $
    301,425
   43




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##### Table of Contents



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
     Fiscal Year Ended
    
    Maturities2006
    
    $
    11,1752007
    
    
    6,6162008
    
    
    1552009
    
    
    24,3662010
    
    
    24,285Thereafter
    
    
    158,719$
    225,316
  44




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##### Table of Contents



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 (Dollars in thousands, except per share amounts)
 11)
Shareholders Equity and Equity Compensation
       2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedShares
    
    
    Average
    
    
    Shares
    
    
    Average
    
    
    Shares
    
    
    AverageUnder
    
    
    Exercise
    
    
    Under
    
    
    Exercise
    
    
    Under
    
    
    ExerciseOption
    
    
    Price
    
    
    Option
    
    
    Price
    
    
    Option
    
    
    PriceOutstanding, beginning
of year
    
    
    2,677
    
    
    $
    20.38
    
    
    
    2,522
    
    
    $
    19.50
    
    
    
    2,382
    
    
    $
    19.23Granted
    
    
    577
    
    
    
    24.46
    
    
    
    453
    
    
    
    22.08
    
    
    
    461
    
    
    
    18.74Exercised
    
    
    (280
    )
    
    
    15.80
    
    
    
    (298
    )
    
    
    15.03
    
    
    
    (250
    )
    
    
    15.25Canceled/Expired
    
    
    (797
    )
    
    
    22.70
    
    
    
    
    
    
    
    
    
    
    
    (71
    )
    
    
    20.78Outstanding, end of year
    
    
    2,177
    
    
    
    21.21
    
    
    
    2,677
    
    
    
    20.38
    
    
    
    2,522
    
    
    
    19.50Exercisable, end of year
    
    
    1,313
    
    
    
    
    
    
    
    1,606
    
    
    
    
    
    
    
    1,443
 45




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
  Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Remaining
    
    
    
    
    
    
    AverageOutstanding
    
    
    Exercise
    
    
    Contractual
    
    
    Exercisable
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    Price
    
    
    Life
    
    
    Shares
    
    
    Price$10.88 - 17.01
    
    
    491
    
    
    $
    14.10
    
    
    5.1 years
    
    
    391
    
    
    $
    13.35$18.00 - 21.00
    
    
    324
    
    
    
    18.20
    
    
    6.3 years
    
    
    193
    
    
    
    18.27$21.10 - 21.90
    
    
    535
    
    
    
    21.47
    
    
    6.6 years
    
    
    292
    
    
    
    21.27$21.94 - 28.94
    
    
    827
    
    
    
    26.45
    
    
    6.7 years
    
    
    437
    
    
    
    26.982,177
    
    
    
    
    
    
    
    
    
    
    
    1,313
  12) Income Taxes
  2005
    
    
    2004
    
    
    2003United States
    
    $
    21,968
    
    
    $
    61,369
    
    
    $
    49,559Non-U.S. operations
    
    
    905
    
    
    
    5,996
    
    
    
    3,762$
    22,873
    
    
    $
    67,365
    
    
    $
    53,321
  2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    9,474
    
    
    $
    13,269
    
    
    $
    8,614State and Local
    
    
    611
    
    
    
    1,866
    
    
    
    1,430Foreign
    
    
    2,482
    
    
    
    2,376
    
    
    
    1,268Total Current
    
    
    12,567
    
    
    
    17,511
    
    
    
    11,312Deferred:Federal
    
    
    (187
    )
    
    
    6,610
    
    
    
    6,984State and Local
    
    
    (91
    )
    
    
    883
    
    
    
    1,045Foreign
    
    
    (1,607
    )
    
    
    298
    
    
    
    (123
    )Total Deferred
    
    
    (1,885
    )
    
    
    7,791
    
    
    
    7,906Provision for Income Taxes
    
    $
    10,682
    
    
    $
    25,302
    
    
    $
    19,218
 46




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
  2005
    
    
    2004
    
    
    2003Federal income taxes at statutory rate
    
    $
    8,006
    
    
    $
    23,578
    
    
    $
    18,662Impairment of goodwill
    
    
    1,454
    
    
    
    
    
    
    
    Foreign valuation allowance
    
    
    1,133
    
    
    
    
    
    
    
    State income taxes, net of applicable
Federal income tax benefits
    
    
    338
    
    
    
    1,787
    
    
    
    1,609Research and development tax credit
    
    
    (524
    )
    
    
    (624
    )
    
    
    (649
    )Other
    
    
    275
    
    
    
    561
    
    
    
    (404
    )$
    10,682
    
    
    $
    25,302
    
    
    $
    19,218
   2005
    
    
    2004Deferred tax assets:Employee benefits and compensation
    
    $
    3,398
    
    
    $
    2,507Workers compensation
    
    
    1,668
    
    
    
    1,474Deferred compensation benefit plans
    
    
    1,266
    
    
    
    973Bad debt reserves
    
    
    1,068
    
    
    
    955Other
    
    
    441
    
    
    
    590Foreign net operating loss
    
    
    2,443
    
    
    
    Valuation allowance
    
    
    (1,133
    )
    
    
    Total deferred tax assets
    
    $
    9,151
    
    
    $
    6,499Deferred tax liabilities:Property, plant and equipment
    
    $
    (54,929
    )
    
    $
    (59,830
    )Goodwill and other intangibles
    
    
    (38,234
    )
    
    
    (36,095
    )Inventory capitalization and reserves
    
    
    (2,279
    )
    
    
    (970
    )Total deferred tax liabilities
    
    $
    (95,442
    )
    
    $
    (96,895
    )Net deferred income tax liability
    
    $
    (86,291
    )
    
    $
    (90,396
    )
    47




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
  13) Earnings Per Share
   2005
    
    
    2004
    
    
    2003Earnings
    
    
    Shares
    
    
    Earnings
    
    
    Shares
    
    
    Earnings
    
    
    SharesBasic Earnings Per Share
Computation
    
    $
    12,191
    
    
    
    32,074
    
    
    $
    42,063
    
    
    
    31,426
    
    
    $
    34,103
    
    
    
    29,268Effect of stock options
    
    
    
    
    
    
    237
    
    
    
    
    
    
    
    406
    
    
    
    
    
    
    
    299Effect of convertible
subordinated debentures
    
    
    
    
    
    
    
    
    
    
    2,010
    
    
    
    1,636
    
    
    
    
    
    
    
    Diluted Earnings Per Share
Computation
    
    $
    12,191
    
    
    
    32,311
    
    
    $
    44,073
    
    
    
    33,468
    
    
    $
    34,103
    
    
    
    29,567
  14) Employee Benefits
  48




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
 15) Cash Flow and Other Information
  2005
    
    
    2004
    
    
    2003Cash paid during the year for:Interest
    
    $
    26,328
    
    
    $
    25,524
    
    
    $
    26,690Income taxes
    
    
    8,182
    
    
    
    20,647
    
    
    
    8,896Schedule of business and outsourcing acquisitions:Fair value of assets acquired
    
    $
    
    
    
    $
    107,712
    
    
    $
    37,937Liabilities assumed

    
    
    
    
    
    (10,146
    )
    
    
    (10,348
    )Purchase
price adjustments/(holdback payments)
    
    
    1,224
    
    
    
    (1,473
    )
    
    
    Total cash paid
    
    $
    1,224
    
    
    $
    96,093
    
    
    $
    27,589
 16) Commitments and Contingencies
  OperatingFiscal Year ended
    
    Leases2006
    
    $
    7,1772007
    
    
    4,9092008
    
    
    3,8822009
    
    
    2,8712010
    
    
    1,364Thereafter
    
    
    4,186$
    24,389
  49




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
    17) Segment Information
  Custom
Sheet and Rollstock
 Color
and Specialty Compounds
 Engineered
Products
  2005
    
    
    2004
    
    
    2003Net Sales:Custom Sheet and Rollstock
    
    $
    884,312
    
    
    $
    729,754
    
    
    $
    617,734Color and Specialty Compounds
    
    
    430,893
    
    
    
    323,396
    
    
    
    273,835Engineered Products
    
    
    81,655
    
    
    
    68,575
    
    
    
    64,591$
    1,396,860
    
    
    $
    1,121,725
    
    
    $
    956,160Operating Earnings:Custom Sheet and Rollstock
    
    $
    58,479
    
    
    $
    72,742
    
    
    $
    61,828Color and Specialty Compounds
    
    
    13,919
    
    
    
    27,078
    
    
    
    22,254Engineered Products
    
    
    (4,535
    )
    
    
    6,319
    
    
    
    5,393Corporate
    
    
    (19,795
    )
    
    
    (13,338
    )
    
    
    (11,189
    )$
    48,068
    
    
    $
    92,801
    
    
    $
    78,286
 50




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
 2005
    
    
    2004
    
    
    2003Assets:Custom Sheet and Rollstock
    
    $
    575,178
    
    
    $
    634,123
    
    
    $
    555,821Color and Specialty Compounds
    
    
    399,311
    
    
    
    361,708
    
    
    
    265,947Engineered Products
    
    
    83,781
    
    
    
    89,153
    
    
    
    84,514Corporate
    
    
    16,125
    
    
    
    56,948
    
    
    
    17,656$
    1,074,395
    
    
    $
    1,141,932
    
    
    $
    923,938Depreciation and Amortization:Custom Sheet and Rollstock
    
    $
    20,430
    
    
    $
    18,074
    
    
    $
    17,293Color and Specialty Compounds
    
    
    14,304
    
    
    
    12,414
    
    
    
    10,914Engineered Products
    
    
    3,471
    
    
    
    3,279
    
    
    
    3,021Corporate
    
    
    2,182
    
    
    
    1,289
    
    
    
    338$
    40,387
    
    
    $
    35,056
    
    
    $
    31,566Capital Expenditures:Custom Sheet and Rollstock
    
    $
    15,858
    
    
    $
    20,573
    
    
    $
    10,218Color and Specialty Compounds
    
    
    12,353
    
    
    
    8,059
    
    
    
    6,825Engineered Products
    
    
    5,483
    
    
    
    3,658
    
    
    
    2,565Corporate
    
    
    5,571
    
    
    
    2,713
    
    
    
    2,401$
    39,265
    
    
    $
    35,003
    
    
    $
    22,009
    Net Sales By Destination
    
    
    Property, Plant and Equipment, Net2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003United States
    
    $
    1,145,643
    
    
    $
    935,321
    
    
    $
    815,009
    
    
    $
    261,582
    
    
    $
    282,947
    
    
    $
    239,825Canada
    
    
    116,197
    
    
    
    99,996
    
    
    
    79,023
    
    
    
    19,780
    
    
    
    26,437
    
    
    
    26,500Mexico
    
    
    70,605
    
    
    
    43,167
    
    
    
    31,400
    
    
    
    13,749
    
    
    
    14,465
    
    
    
    14,192Europe
    
    
    50,026
    
    
    
    29,452
    
    
    
    19,382
    
    
    
    12,275
    
    
    
    6,896
    
    
    
    3,407Asia and Other
    
    
    14,389
    
    
    
    13,789
    
    
    
    11,346
    
    
    
    
    
    
    
    
    
    
    
    $
    1,396,860
    
    
    $
    1,121,725
    
    
    $
    956,160
    
    
    $
    307,386
    
    
    $
    330,745
    
    
    $
    283,924
 18) Comprehensive Income
  51




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
(Dollars in thousands, except per share amounts)
 19) Quarterly Financial Information
  Quarter Ended
    
    FiscalJan.
    
    Apr.
    
    Jul.
    
    Oct.
    
    Year2005Net Sales
    
    $
    304,512
    
    
    $
    377,658
    
    
    $
    348,672
    
    
    $
    366,018
    
    
    $
    1,396,860Gross Profit
    
    
    28,416
    
    
    
    44,612
    
    
    
    39,833
    
    
    
    39,723
    
    
    
    152,584Operating Earnings (a)
    
    
    10,283
    
    
    
    6,252
    
    
    
    13,156
    
    
    
    18,377
    
    
    
    48,068Net Earnings (a)
    
    
    2,818
    
    
    
    (80
    )
    
    
    4,289
    
    
    
    5,164
    
    
    
    12,191Net Earnings Per Share  Basic
    
    
    .09
    
    
    
    
    
    
    
    .13
    
    
    
    .16
    
    
    
    .38 Diluted
    
    
    .09
    
    
    
    
    
    
    
    .13
    
    
    
    .16
    
    
    
    .38Dividends declared per common share
    
    
    .12
    
    
    
    .12
    
    
    
    .12
    
    
    
    .12
    
    
    
    .482004Net Sales
    
    $
    241,463
    
    
    $
    287,591
    
    
    $
    288,035
    
    
    $
    304,636
    
    
    $
    1,121,725Gross Profit (b)
    
    
    33,423
    
    
    
    43,712
    
    
    
    40,957
    
    
    
    36,670
    
    
    
    154,762Operating Earnings
    
    
    18,799
    
    
    
    28,050
    
    
    
    24,934
    
    
    
    21,018
    
    
    
    92,801Net Earnings
    
    
    7,706
    
    
    
    13,519
    
    
    
    11,712
    
    
    
    9,126
    
    
    
    42,063Net Earnings Per Share  Basic
    
    
    .26
    
    
    
    .42
    
    
    
    .36
    
    
    
    .28
    
    
    
    1.34 Diluted
    
    
    .26
    
    
    
    .41
    
    
    
    .36
    
    
    
    .28
    
    
    
    1.32Dividends declared per common share
    
    
    .11
    
    
    
    .11
    
    
    
    .11
    
    
    
    .11
    
    
    
    .44
 
 Notes to table:(a)
    
    Operating earnings and net earnings were impacted by restructuring and exit costs, the former
CEO retirement, fixed asset charge, goodwill impairment and the establishment of a tax
valuation allowance for each of the fiscal 2005 quarters as follows: Quarter Ended
    
    
    FiscalJan.
    
    
    Apr.
    
    
    Jul.
    
    
    Oct.
    
    
    2005Reduction to operating earnings:Restructuring and exit costs
    
    $
    
    
    
    $
    7,619
    
    
    $
    4,639
    
    
    $
    (2,170
    )
    
    $
    10,088Former CEO retirement
    
    
    
    
    
    
    
    
    
    
    3,645
    
    
    
    
    
    
    
    3,645Fixed asset charge
    
    
    
    
    
    
    10,386
    
    
    
    206
    
    
    
    72
    
    
    
    10,664Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,468
    
    
    
    4,468$
    
    
    
    $
    18,005
    
    
    $
    8,490
    
    
    $
    2,370
    
    
    $
    28,865Reduction to net earnings:Restructuring and exit costs
    
    $
    
    
    
    $
    5,085
    
    
    $
    2,862
    
    
    $
    (1,313
    )
    
    $
    6,634Former CEO retirement
    
    
    
    
    
    
    
    
    
    
    2,250
    
    
    
    
    
    
    
    2,250Fixed asset charge
    
    
    
    
    
    
    6,428
    
    
    
    152
    
    
    
    44
    
    
    
    6,624Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,976
    
    
    
    3,976Tax valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,133
    
    
    
    1,133$
    
    
    
    $
    11,513
    
    
    $
    5,264
    
    
    $
    3,840
    
    
    $
    20,617
 
 (b)
    
    In the fourth quarter of fiscal 2004, gross profit was impacted by approximately $1.8 million
of pre-tax, out-of-period charges to correct account balances identified from the
implementation of information technology systems. 52




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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
       
 Item 9B. OTHER INFORMATION
  53




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##### Table of Contents



PART III
 
 Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
      Executive Officers of the Registrant
  Name
    
    Age
    
    Current Office, and Prior Positions and EmploymentGeorge A. Abd
    
    42
    
    Chief Executive Officer and President (since May
2005), Executive Vice President, Color and
Specialty Compounds (September 2000 to May 2005)
and Engineered Products (May 2004 to May 2005);
Vice President of Compounding for the Companys
Spartech Polycom Division from March 1998 to
September 2000. Mr. Abd held various positions
with Polycom Huntsman, Inc. for eleven years
prior to its acquisition by the Company in March
1998. Mr. Abd is also a member of the board of
directors of the Company.Randy C. Martin
    
    43
    
    Executive Vice President (since September 2000)
Corporate Development (since May 2004) and Chief
Financial Officer (since May 1996); Corporate
Controller from September 1995 to May 1996; Vice
President, Finance from May 1996 to September
2000. Mr. Martin, a CPA and CMA, was with KPMG
Peat Marwick LLP for eleven years before joining
the Company in 1995. Mr. Martin is also a member
of the board of directors of the Company.
 54




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##### Table of Contents



Name
    
    Age
    
    Current Office, and Prior Positions and EmploymentSteven J. Ploeger
    
    44
    
    Executive Vice President Custom Sheet and
Rollstock and Engineered Products (since May
2004); Vice President Spartech Plastics from 2000
to 2004; General Manager Spartech Plastics 
North Region from 1996 to 2000. Mr. Ploeger also
held various sales management positions with the
Company from 1985 to 1996.Jeffrey D. Fisher
    
    57
    
    Senior Vice President and General Counsel (since
July 1999); and Secretary (since September 2000).
Mr. Fisher, an attorney, was with the law firm
of Armstrong Teasdale LLP for 24 years, the last
17 years as a partner, before joining the Company
in July 1999.Darrel W. Betz
    
    42
    
    Senior Vice President of Global Human Resources
(since April 2005). Mr. Betz was with Emerson
Electric for 16 years in various human resource
positions prior to joining the Company in April
2005.Michael G. Marcely
    
    38
    
    Vice President (since December 2004) and
Corporate Controller (since July 2004), 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.Phillip M. Karig
    
    49
    
    Vice President-Purchasing and Supply Chain
Management (since September 2001), Director of
Purchasing from February 2000 to September 2001.
Mr. Karig was with Uniroyal Technology
Corporation for 12 years in various purchasing,
logistics, and materials management positions
before joining the Company in February 2000.
 
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  55




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) Financial Statements and Financial Statement Schedules
  Report of Independent Registered Public Accounting Firm
    
    
    28Financial StatementsConsolidated Balance Sheets
    
    
    30Consolidated Statements of Operations
    
    
    31Consolidated Statements of Shareholders Equity
    
    
    32Consolidated Statements of Cash Flows
    
    
    33Notes To Consolidated Financial Statements
    
    
    34Schedule II  Valuation and Qualifying Accounts
    
    
    F-1
 (c) Exhibits
  3.1
    
    
    (a)
    
    Restated Certificate of Incorporation3.2
    
    
    (b)
    
    Amended and Restated By-Laws, as amended4
    
    
    (c)
    
    Rights Agreement dated April 2, 2001 between Spartech
Corporation and Mellon Investor Services LLC, as Rights Agent10.1
    
    
    (d)
    
    Retirement Agreement and Release dated May 6, 2005, between
Bradley B. Buechler and Spartech Corporation10.2
    
    
    (e)
    
    Employment Agreement dated December 10, 2003 between George
A. Abd and Spartech Corporation10.3
    
    
    (f)
    
    Employment Agreement dated July 1, 2004 between William F.
Phillips and Spartech Corporation10.4
    
    
    (g)
    
    Employment Agreement dated December 1, 2003 between Jeffrey
D. Fisher and Spartech Corporation10.5
    
    
    (h)
    
    Employment Agreement dated May 1, 2004 between Steven J.
Ploeger and Spartech Corporation10.6
    
    
    (i)
    
    Form of Indemnification Agreement entered into between
Spartech Corporation and each of its officers and directors10.7
    
    
    (j)
    
    Spartech Corporation 2004 Equity Compensation Plan dated December 11, 200310.8
    
    
    (k)
    
    Form of Incentive Stock Option10.9
    
    
    (l)
    
    Form of Nonqualified Stock Option10.10
    
    
    (m)
    
    Form of Restricted Stock Unit Award10.11
    
    
    (n)
    
    Spartech Corporation 2006 Executive Bonus Plan10.12
    
    
    (o)
    
    Spartech Corporation Deferred Compensation Plan, as amended21
    
    
    
    
    Subsidiaries of Registrant23.1
    
    
    
    
    Consent of Independent Registered Public Accounting Firm24
    
    
    
    
    Powers of Attorney31
    
    
    
    
    Certifications pursuant to Exchange Act Rule 13a-14(a)32
    
    
    
    
    Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350
 56




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##### Table of Contents



Notes to Exhibits
 (a)
    
    Filed as Exhibit 3.1 to the Companys Form S-8 (File No. 333-60381), filed
with the Commission on July 31, 1998 and incorporated herein by reference.(b)
    
    Filed as Exhibit 3.2 to the Companys Form 10-K filed with the Commission
on January 13, 2005 and incorporated herein by reference.(c)
    
    Filed as Exhibit 99.1 to the Companys Form 8-K filed with the Commission
on April 5, 2001 and incorporated herein by reference.(d)
    
    Filed as Exhibit 10.1 to the Companys Form 10-Q filed with the Commission
on September 8, 2005 and incorporated herein by reference.(e)
    
    Filed as Exhibit 10.6 to the Companys Form 10-K filed with the Commission
on January 16, 2004 and incorporated herein by reference.(f)
    
    Filed as Exhibit 10.7 to the Companys Form 10-K filed with the Commission
on January 13, 2005 and incorporated herein by reference.(g)
    
    Filed as Exhibit 10.11 to the Companys Form 10-K filed with the Commission
on January 16, 2004 and incorporated herein by reference.(h)
    
    Filed as Exhibit 10.9 to the Companys Form 10-K filed with the Commission
on January 13, 2005 and incorporated herein by reference.(i)
    
    Filed as Exhibit 10.10 to the Companys Form 10-K filed with the Commission
on January 17, 2003 and incorporated herein by reference.(j)
    
    Filed as Exhibit 4.1 to the Companys Form S-8 (File No. 333-113752) filed
with the Commission on March 19, 2004 and incorporated herein by reference.(k)
    
    Filed as Exhibit 1.01(2) to the Companys Form 8-K dated December 8, 2004
and incorporated herein by reference.(l)
    
    Filed as Exhibit 1.01(3) to the Companys Form 8-K dated December 8, 2004
and incorporated herein by reference.(m)
    
    Filed as Exhibit 1.01(4) to the Companys Form 8-K dated December 8, 2004
and incorporated herein by reference.(n)
    
    Filed as Exhibit 1.01(a) to the Companys Form 8-K filed with the
Commission on December 21, 2005 and incorporated herein by reference.(o)
    
    Filed as Exhibit 1.01(b) to the Companys Form 8-K filed with the
Commission on December 21, 2005 and incorporated herein by reference.
 
 57




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##### Table of Contents



SIGNATURES
  SPARTECH CORPORATION/s/
George A. AbdGeorge A. AbdJanuary 12, 2006
    
    
    
    President and Chief Executive Officer
  Date
    
    Signature
    
    TitleJanuary 12, 2006
    
    /s/ George A. Abd

George A. Abd
    
    President and Chief
Executive Officer and
Director (Principal
Executive Officer)January 12, 2006
    
    /s/ Ralph B. Andy
    
    DirectorRalph B. AndyJanuary 12, 2006
    
    /s/ Lloyd E. Campbell
    
    DirectorLloyd E. CampbellJanuary 12, 2006
    
    /s/ Victoria M. Holt
    
    DirectorVictoria M. HoltJanuary 12, 2006
    
    /s/ Walter J. Klein
    
    DirectorWalter J. KleinJanuary 12, 2006
    
    /s/ Pamela F. Lenehan
    
    DirectorPamela F. LenehanJanuary 12, 2006
    
    /s/ Randy C. Martin

Randy C. Martin
    
    Executive Vice President
Corporate Development &
Chief Financial Officer and
Director (Principal
Financial and Accounting
Officer)January 12, 2006
    
    /s/ Jackson W. Robinson
    
    DirectorJackson W. RobinsonJanuary 12, 2006
    
    /s/ Richard B. Scherrer
    
    DirectorRichard B. ScherrerJanuary 12, 2006
    
    /s/ Craig A. Wolfanger
    
    DirectorCraig A. Wolfanger
 58




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##### Table of Contents



SPARTECH CORPORATION AND SUBSIDIARIES
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
FOR FISCAL YEARS ENDED 2005, 2004, AND 2003.
(Dollars in thousands)
 ADDITIONS ANDBALANCE AT
    
    CHARGES TO COSTSBEGINNING OF
    
    AND
    
    
    
    
    
    BALANCE ATDESCRIPTION
    
    PERIOD
    
    EXPENSES
    
    WRITE-OFFS
    
    END OF PERIODOctober 29, 2005Allowance for
Doubtful Accounts
    
    $
    2,997
    
    
    $
    1,705
    
    
    $
    (2,145
    )
    
    $
    2,557October 30, 2004Allowance for
Doubtful Accounts
    
    $
    3,737
    
    
    $
    1,372
    
    
    $
    (2,112
    )
    
    $
    2,997November 1, 2003Allowance for
Doubtful Accounts
    
    $
    4,058
    
    
    $
    1,133
    
    
    $
    (1,454
    )
    
    $
    3,737
  F-1