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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended May 1, 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
    
    43-0761773(State or other jurisdiction 
of incorporation or organization)
    
    (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)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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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 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 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 the Companys 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 impairment charges;(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 restructurings;(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; and(n)
    
    possible weaknesses in internal controls.




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##### 



SPARTECH CORPORATION
FORM 10-Q FOR THE QUARTER AND SIX MONTHS ENDED MAY 1, 2010
TABLE OF CONTENTS
 PART I            FINANCIAL INFORMATIONItem 1. Financial Statements:Consolidated Condensed Balance Sheets  As of May 1, 2010 (Unaudited) and October 31, 2009
    
    
    1Unaudited Consolidated Condensed Statements of Operations  For the three and six months ended May 1, 2010 and
May 2, 2009
    
    
    2Unaudited Consolidated Condensed Statements of Cash Flows  For the six months ended May 1, 2010 and May 2, 2009
    
    
    3Unaudited Notes to the Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18PART II            OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19.Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    20Signatures
    
    
    20Certifications
and AgreementsEX-10.1EX-10.2EX-10.3EX-10.4EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    FINANCIAL STATEMENTS
 SPARTECH CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
  May 1, 2010
    
    
    October 31,(Unaudited)
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    3,858
    
    
    $
    26,925Trade receivables, net of allowances of $1,683 and $2,470, respectively
    
    
    147,382
    
    
    
    130,355Inventories, net of inventory reserves of $4,900 and $5,430, respectively
    
    
    75,743
    
    
    
    62,941Prepaid expenses and other current assets
    
    
    17,126
    
    
    
    24,916Assets held for sale
    
    
    4,541
    
    
    
    2,907Total current assets
    
    
    248,650
    
    
    
    248,044Property, plant, and equipment, net of accumulated depreciation of $315,417 and $304,424, respectively
    
    
    216,127
    
    
    
    229,003Goodwill
    
    
    144,070
    
    
    
    144,345Other intangible assets, net of accumulated amortization of
$19,565 and $17,733, respectively
    
    
    26,382
    
    
    
    28,404Other long-term assets
    
    
    3,388
    
    
    
    3,892Total assets
    
    $
    638,617
    
    
    $
    653,688Liabilities and shareholders equityCurrent liabilities:Current maturities of long-term debt
    
    $
    478
    
    
    $
    36,079Accounts payable
    
    
    123,407
    
    
    
    103,484Accrued liabilities
    
    
    23,504
    
    
    
    31,122Total current liabilities
    
    
    147,389
    
    
    
    170,685Long-term debt, less current maturities
    
    
    176,076
    
    
    
    180,355Other long-term liabilities:Deferred taxes
    
    
    57,307
    
    
    
    58,736Other long-term liabilities
    
    
    6,339
    
    
    
    7,033Total liabilities
    
    
    387,111
    
    
    
    416,809Shareholders equityPreferred stock (authorized: 4,000,000 shares, par value $1.00) Issued: None
    
    
    
    
    
    
    Issued: NoneCommon stock (authorized: 55,000,000 shares, par value $0.75)
    
    
    24,849
    
    
    
    24,849Issued:
33,131,846 shares; Outstanding: 30,913,153 and 30,719,277 shares, respectivelyContributed capital
    
    
    203,930
    
    
    
    204,183Retained earnings
    
    
    69,608
    
    
    
    60,411Treasury stock, at cost, 2,218,693 and 2,412,569 shares, respectively
    
    
    (52,849
    )
    
    
    (54,860
    )Accumulated other comprehensive income
    
    
    5,968
    
    
    
    2,296Total shareholders equity
    
    
    251,506
    
    
    
    236,879Total liabilities and shareholders equity
    
    $
    638,617
    
    
    $
    653,688
 See accompanying notes to consolidated condensed financial statements.
 1




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SPARTECH CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
  Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    268,524
    
    
    $
    216,412
    
    
    $
    493,687
    
    
    $
    453,713Costs and expensesCost of sales
    
    
    237,642
    
    
    
    185,289
    
    
    
    435,974
    
    
    
    401,535Selling, general and administrative expenses
    
    
    20,452
    
    
    
    17,806
    
    
    
    38,868
    
    
    
    39,857Amortization of intangibles
    
    
    963
    
    
    
    1,161
    
    
    
    1,928
    
    
    
    2,329Restructuring and exit costs
    
    
    1,596
    
    
    
    3,602
    
    
    
    2,266
    
    
    
    4,426Total costs and expenses
    
    
    260,653
    
    
    
    207,858
    
    
    
    479,036
    
    
    
    448,147Operating earnings
    
    
    7,871
    
    
    
    8,554
    
    
    
    14,651
    
    
    
    5,566Interest, net of interest income
    
    
    3,251
    
    
    
    3,797
    
    
    
    6,767
    
    
    
    8,132Earnings (loss) from continuing operations before income taxes
    
    
    4,620
    
    
    
    4,757
    
    
    
    7,884
    
    
    
    (2,566
    )Income tax expense (benefit)
    
    
    80
    
    
    
    2,608
    
    
    
    (1,393
    )
    
    
    228Net earnings (loss) from continuing operations
    
    
    4,540
    
    
    
    2,149
    
    
    
    9,277
    
    
    
    (2,794
    )(Loss) earnings from discontinued operations, net of tax
    
    
    (87
    )
    
    
    1,615
    
    
    
    (80
    )
    
    
    1,466Net earnings (loss)
    
    $
    4,453
    
    
    $
    3,764
    
    
    $
    9,197
    
    
    $
    (1,328
    )Basic earnings (loss) per share:Earnings (loss) from continuing operations
    
    $
    0.15
    
    
    $
    0.07
    
    
    $
    0.30
    
    
    $
    (0.09
    )Earnings (loss) of discontinued operations, net of tax
    
    
    (0.01
    )
    
    
    0.05
    
    
    
    0.00
    
    
    
    0.05Net earnings (loss) per share
    
    $
    0.14
    
    
    $
    0.12
    
    
    $
    0.30
    
    
    $
    (0.04
    )Diluted earnings (loss) per share:Earnings (loss) from continuing operations
    
    $
    0.15
    
    
    $
    0.07
    
    
    $
    0.30
    
    
    $
    (0.09
    )Earnings (loss) of discontinued operations, net of tax
    
    
    (0.01
    )
    
    
    0.05
    
    
    
    (0.01
    )
    
    
    0.05Net earnings (loss) per share
    
    $
    0.14
    
    
    $
    0.12
    
    
    $
    0.29
    
    
    $
    (0.04
    )Dividends declared per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.05
 See accompanying notes to consolidated condensed financial statements.
 2




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SPARTECH CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
  Six Months EndedMay 1,
    
    
    May 2,2010
    
    
    2009Cash flows from operating activitiesNet earnings (loss)
    
    $
    9,197
    
    
    $
    (1,328
    )Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:Restructuring and exit costs
    
    
    152
    
    
    
    823Depreciation and amortization
    
    
    19,013
    
    
    
    22,294Provision for bad debt expense
    
    
    25
    
    
    
    3,595Deferred taxes
    
    
    (1,449
    )
    
    
    633Stock-based compensation expense
    
    
    1,931
    
    
    
    1,275(Gain)/loss on disposition of assets
    
    
    (884
    )
    
    
    17Other, net
    
    
    (254
    )
    
    
    296Change in current assets and liabilities
    
    
    (8,161
    )
    
    
    (8,325
    )Net cash provided by operating activities
    
    
    19,570
    
    
    
    19,280Cash flows from investing activitiesCapital expenditures
    
    
    (7,579
    )
    
    
    (5,096
    )Proceeds from the disposition of assets
    
    
    2,876
    
    
    
    61Net cash used by investing activities
    
    
    (4,703
    )
    
    
    (5,035
    )Cash flows from financing activitiesBorrowings on bank credit facility, net
    
    
    11,900
    
    
    
    8,105Payments on notes and bank term loan
    
    
    (49,590
    )
    
    
    (18,912
    )Payments on bonds and leases, net
    
    
    (262
    )
    
    
    (528
    )Cash dividends on common stock
    
    
    
    
    
    
    (3,057
    )Net cash used by financing activities
    
    
    (37,952
    )
    
    
    (14,392
    )Effect of exchange rate changes on cash
and cash equivalents
    
    
    18
    
    
    
    (21
    )Decrease in cash and cash equivalents
    
    
    (23,067
    )
    
    
    (168
    )Cash and cash equivalents at beginning of year
    
    
    26,925
    
    
    
    2,118Cash and cash equivalents at end of period
    
    $
    3,858
    
    
    $
    1,950
 See
accompanying notes to consolidated condensed financial statements.
 3




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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and Dollars in thousands, except per share amounts)
 1) Basis of Presentation
  Discontinued Operations
 Segment Information
  2) Newly Adopted Accounting Standards
 Net Earnings (Loss) Per Share
 4




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3) Discontinued Operations
  Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Sales
    
    $
    6
    
    
    $
    17,922
    
    
    $
    6
    
    
    $
    29,771(Loss) earnings of discontinued operations
before income taxes
    
    
    (89
    )
    
    
    2,657
    
    
    
    (78
    )
    
    
    2,665Income tax expense (benefit)
    
    
    2
    
    
    
    (1,042
    )
    
    
    (2
    )
    
    
    (1,199
    )(Loss) earnings of discontinued operations, net of tax
    
    $
    (87
    )
    
    $
    1,615
    
    
    $
    (80
    )
    
    $
    1,466
 4) Inventories, net
  May 1,
    
    
    October 31,2010
    
    
    2009Raw materials
    
    $
    43,394
    
    
    $
    34,288Production supplies
    
    
    6,991
    
    
    
    7,055Finished goods
    
    
    25,358
    
    
    
    21,598Total inventories, net
    
    $
    75,743
    
    
    $
    62,941
 5) Goodwill
 Basis of Presentation
  Color andCustom Sheet and
    
    
    Packaging
    
    
    SpecialtyRollstock
    
    
    Technologies
    
    
    Compounds
    
    
    TotalGoodwill 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
    )
    
    
    Goodwill balance as of May 1, 2010
    
    $
    40,455
    
    
    $
    92,266
    
    
    $
    11,349
    
    
    $
    144,070
 6) Restructuring and Exit Costs
  5




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Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Restructuring and exit costs:Custom Sheet and Rollstock
    
    $
    771
    
    
    $
    1,895
    
    
    $
    853
    
    
    $
    2,182Packaging Technologies
    
    
    10
    
    
    
    780
    
    
    
    (719
    )
    
    
    1,116Color and Specialty Compounds
    
    
    787
    
    
    
    638
    
    
    
    2,104
    
    
    
    822Corporate
    
    
    28
    
    
    
    289
    
    
    
    28
    
    
    
    306Total restructuring and exit costs
    
    
    1,596
    
    
    
    3,602
    
    
    
    2,266
    
    
    
    4,426Income tax benefit
    
    
    (598
    )
    
    
    (1,245
    )
    
    
    (848
    )
    
    
    (1,637
    )Impact on net earnings from continuing operations
    
    $
    998
    
    
    $
    2,357
    
    
    $
    1,418
    
    
    $
    2,789
  Cumulative
    
    
    Six Monthsthrough
    
    
    Ended
    
    
    Cumulative2009
    
    
    May 1, 2010
    
    
    To-DateEmployee Severance
    
    $
    3,977
    
    
    $
    1,371
    
    
    $
    5,348Facility consolidation and shut-down costs
    
    
    1,925
    
    
    
    1,510
    
    
    
    3,435Accelerated depreciation, net
    
    
    1,084
    
    
    
    (615
    )
    
    
    469Total
    
    $
    6,986
    
    
    $
    2,266
    
    
    $
    9,252
   7) Long-Term Debt
  May 1,
    
    
    October 31,2010
    
    
    20092006 Senior Notes
    
    $
    37,992
    
    
    $
    45,6842004 Senior Notes
    
    
    113,972
    
    
    
    137,054Bank credit facility
    
    
    11,900
    
    
    
    Euro Bank term loan
    
    
    
    
    
    
    20,292Other
    
    
    12,690
    
    
    
    13,404Total debt
    
    
    176,554
    
    
    
    216,434Less current maturities
    
    
    478
    
    
    
    36,079Total long-term debt
    
    $
    176,076
    
    
    $
    180,355
  6




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8) Income Taxes
   9) Fair Value of Financial Instruments
  May 1, 2010
    
    October 31, 2009Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueTotal debt (including bank credit facilities)
    
    $
    176,554
    
    
    $
    171,377
    
    
    $
    216,434
    
    
    $
    205,776
  7




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10) Commitments and Contingencies
  .
   8




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11) Net Earnings (Loss) Per Share
   Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Antidilutive SharesSSARs
    
    
    1,113
    
    
    
    980
    
    
    
    1,166
    
    
    
    980Stock options
    
    
    842
    
    
    
    1,216
    
    
    
    927
    
    
    
    1,216Unvested restricted stock
    
    
    117
    
    
    
    372
    
    
    
    117
    
    
    
    372Performance shares
    
    
    84
    
    
    
    114
    
    
    
    84
    
    
    
    114Total antidilutive shares excluded from
diluted earnings per share
    
    
    2,156
    
    
    
    2,682
    
    
    
    2,294
    
    
    
    2,682
 Newly Adopted Accounting Standards
  9




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Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic and diluted net earnings:Net earnings (loss) from continuing operations
    
    $
    4,540
    
    
    $
    2,149
    
    
    $
    9,277
    
    
    $
    (2,794
    )Less: net earnings (loss) allocated to participating securities
    
    
    (65
    )
    
    
    (45
    )
    
    
    (137
    )
    
    
    16Net earnings (loss) from continuing operations attributable
to common shareholders
    
    
    4,475
    
    
    
    2,104
    
    
    
    9,140
    
    
    
    (2,778
    )(Loss) earnings of discontinued operations, net of tax
    
    
    (87
    )
    
    
    1,615
    
    
    
    (80
    )
    
    
    1,466Net earnings (loss) attributable to common shareholders
    
    $
    4,388
    
    
    $
    3,719
    
    
    $
    9,060
    
    
    $
    (1,312
    )Weighted average shares outstanding:Basic weighted average common and participating
shares outstanding
    
    
    30,556
    
    
    
    30,379
    
    
    
    30,515
    
    
    
    30,355Add: Dilutive shares from equity instruments (a)
    
    
    227
    
    
    
    
    
    
    
    215
    
    
    
    Diluted weighted average shares outstanding
    
    
    30,783
    
    
    
    30,379
    
    
    
    30,730
    
    
    
    30,355Basic earnings (loss) per share attributable
to common stockholders:Earnings (loss) from continuing operations
    
    $
    0.15
    
    
    $
    0.07
    
    
    $
    0.30
    
    
    $
    (0.09
    )Earnings of discontinued operations, net of tax
    
    
    (0.01
    )
    
    
    0.05
    
    
    
    0.00
    
    
    
    0.05Net earnings (loss) per share
    
    $
    0.14
    
    
    $
    0.12
    
    
    $
    0.30
    
    
    $
    (0.04
    )Diluted earnings (loss) per share attributable
to common shareholders:Earnings (loss) from continuing operations
    
    $
    0.15
    
    
    $
    0.07
    
    
    $
    0.30
    
    
    $
    (0.09
    )Earnings (loss) of discontinued operations, net of tax
    
    $
    (0.01
    )
    
    
    0.05
    
    
    
    (0.01
    )
    
    
    0.05Net earnings (loss) per share
    
    $
    0.14
    
    
    $
    0.12
    
    
    $
    0.29
    
    
    $
    (0.04
    )
 
 (a)
    
    For the three and six month periods ended May 2, 2009, all outstanding equity
compensation instruments were excluded from the calculation of diluted earnings per
share because they were antidilutive. 12) Segment Information
   10




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Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales (a)(b):Custom Sheet and Rollstock
    
    $
    150,577
    
    
    $
    115,712
    
    
    $
    275,745
    
    
    $
    239,183Packaging Technologies
    
    
    54,869
    
    
    
    51,980
    
    
    
    102,972
    
    
    
    105,997Color and Specialty Compounds
    
    
    63,078
    
    
    
    48,720
    
    
    
    114,970
    
    
    
    108,533Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net sales
    
    $
    268,524
    
    
    $
    216,412
    
    
    $
    493,687
    
    
    $
    453,713Operating earnings (loss) from continuing operations:Custom Sheet and Rollstock
    
    $
    9,815
    
    
    $
    5,043
    
    
    $
    18,106
    
    
    $
    4,829Packaging Technologies
    
    
    5,467
    
    
    
    9,578
    
    
    
    11,472
    
    
    
    15,988Color and Specialty Compounds
    
    
    2,191
    
    
    
    2,347
    
    
    
    3,089
    
    
    
    2,602Corporate expenses
    
    
    (9,602
    )
    
    
    (8,414
    )
    
    
    (18,016
    )
    
    
    (17,853
    )Operating earnings from continuing operations
    
    $
    7,871
    
    
    $
    8,554
    
    
    $
    14,651
    
    
    $
    5,566
 
 (a)
    
    Excludes intersegment sales of $13,388, $12,924, $23,533 and $21,487,
respectively.(b)
    
    Excludes discontinued operations. 13) Comprehensive Income (Loss)
  Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Net earnings (loss)
    
    $
    4,453
    
    
    $
    3,764
    
    
    $
    9,197
    
    
    $
    (1,328
    )Foreign currency translation adjustments
    
    
    2,437
    
    
    
    820
    
    
    
    3,672
    
    
    
    257Total comprehensive income (loss)
    
    $
    6,890
    
    
    $
    4,584
    
    
    $
    12,869
    
    
    $
    (1,071
    )
  14) Subsequent Event
 Long-Term Debt
 11




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    Highlights
   Outlook
  12




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##### Table of Contents



Consolidated Results
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedUnderlying volume
    
    
    12
    %
    
    
    7
    %Sales volume to a divested business
    
    
    2
    %
    
    
    2
    %Price/Mix
    
    
    10
    %
    
    
    0
    %Total
    
    
    24
    %
    
    
    9
    %
    Three Months Ended
    
    
    Six Months EndedMay 1,
    
    
    May 2,
    
    
    May 1,
    
    
    May 2,2010
    
    
    2009
    
    
    2010
    
    
    2009Dollars and Pounds (in millions)Net sales
    
    $
    268.5
    
    
    $
    216.4
    
    
    $
    493.7
    
    
    $
    453.7Cost of sales
    
    
    237.6
    
    
    
    185.3
    
    
    
    436.0
    
    
    
    401.5Gross margin
    
    $
    30.9
    
    
    $
    31.1
    
    
    $
    57.7
    
    
    $
    52.2Pounds sold
    
    
    242.1
    
    
    
    211.8
    
    
    
    452.7
    
    
    
    416.0Dollars per Pound SoldNet sales
    
    $
    1.109
    
    
    $
    1.022
    
    
    $
    1.091
    
    
    $
    1.091Cost of sales
    
    
    0.982
    
    
    
    0.875
    
    
    
    0.963
    
    
    
    0.965Gross margin
    
    $
    0.127
    
    
    $
    0.147
    
    
    $
    0.128
    
    
    $
    0.126
  13




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##### Table of Contents



Comprehensive Income (Loss)
      Segment Results
  Custom Sheet and Rollstock Segment
  14




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedUnderlying volume
    
    
    26
    %
    
    
    19
    %Price/Mix
    
    
    4
    %
    
    
    -4
    %Total
    
    
    30
    %
    
    
    15
    %
   Packaging Technologies
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedUnderlying volume
    
    
    -5
    %
    
    
    -3
    %Price/Mix
    
    
    11
    %
    
    
    0
    %Total
    
    
    6
    %
    
    
    -3
    %
   Color and Specialty Compounds Segment
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedUnderlying volume
    
    
    5
    %
    
    
    -3
    %Sales volume to a divested business
    
    
    5
    %
    
    
    5
    %Price/Mix
    
    
    19
    %
    
    
    4
    %Total
    
    
    29
    %
    
    
    6
    %
 15




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##### Table of Contents



Corporate
  Liquidity and Capital Resources
 Cash Flow
  Six Months EndedMay 1,
    
    
    May 2,2010
    
    
    2009Cash Flows (in millions)Net cash provided by operating activities
    
    $
    19,570
    
    
    $
    19,280Net cash used by investing activities
    
    
    (4,703
    )
    
    
    (5,035
    )Net cash used by financing activities
    
    
    (37,952
    )
    
    
    (14,392
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    18
    
    
    
    (21
    )Decrease in cash and cash equivalents
    
    $
    (23,067
    )
    
    $
    (168
    )
    16




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##### Table of Contents



Financing Arrangements
      17




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##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  18




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1A. RISK FACTORS
   
 Item 5. OTHER INFORMATION
  Proposal 1
 BROKERNAME
    
    FOR
    
    AGAINST
    
    ABSTAIN
    
    NON-VOTESEdward J. Dineen
    
    
    25,610,734
    
    
    
    1,012,788
    
    
    
    17,376
    
    
    
    1,322,322Victoria M. Holt
    
    
    25,625,540
    
    
    
    1,007,984
    
    
    
    7,374
    
    
    
    1,322,322Walter J. Klein
    
    
    26,388,580
    
    
    
    244,665
    
    
    
    7,653
    
    
    
    1,322,322Pamela F. Lenehan
    
    
    26,328,995
    
    
    
    305,721
    
    
    
    6,182
    
    
    
    1,322,322Myles S. Odaniell
    
    
    26,226,488
    
    
    
    408,264
    
    
    
    6,146
    
    
    
    1,322,322Craig A. Wolfanger
    
    
    26,328,287
    
    
    
    306,224
    
    
    
    6,387
    
    
    
    1,322,322
 19




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##### Table of Contents



Proposal 2
 FOR
    
    AGAINST
    
    ABSTAIN27,110,268
    
    845,151
    
    7,801
  
 Item 6. EXHIBITS
 Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K)
 10.1
    
    Amended and Restated Credit Agreement Dated as of June 9, 201010.2
    
    Second Amendment to Amended and Restated Note Purchase Agreement Dated as of June 9, 201010.3
    
    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 Noteholders10.4
    
    Amended and Restated Security Agreement Dated as of June 9, 2010 by and Among PNC Bank,
National Association, as Collateral Agent for the Secured Parties31.1
    
    Section 302 Certification of CEO31.2
    
    Section 302 Certification of CFO32.1
    
    Section 1350 Certification of CEO32.2
    
    Section 1350 Certification of CFO
 
 SIGNATURES
  SPARTECH CORPORATION
(Registrant)Date:      June 9, 2010
    By:
    /s/ Myles S. OdaniellMyles S. OdaniellPresident and Chief Executive Officer
(Principal Executive Officer)/s/ Randy C. MartinRandy C. MartinExecutive Vice President and Chief Financial Officer
(Principal Financial Officer)/s/ Michael G. MarcelyMichael G. MarcelySenior Vice President Planning and Controller
(Principal Accounting Officer) 20