| MYERS INDUSTRIES INC ITEM 1A Risk Factors This Form 10-K and the information we are incorporating by reference contain forward-looking statements within the meaning of federal securities laws, including information regarding the Company’s 2006 financial outlook, future plans, objectives, business prospects and anticipated financial performance |
| You can identify these statements by the fact that they include words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” or variations of these words, or similar expressions |
| These forward-looking statements are not statements of historical facts and represent only our current expectations regarding such matters |
| These statements inherently involve a wide range of known and unknown uncertainties |
| The Company’s actual actions and results could differ materially from what is expressed or implied by these statements |
| Specific factors that could cause such a difference include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission |
| Given these factors, as well as other variables that may affect our operating results, you should not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, nor use historical trends to anticipate results or trends in future periods |
| We expressly disclaim any obligation or intention to provide updates to the forward-looking statements and the estimates and assumptions associated with them |
| Risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements include, but are not limited to: General Economic, Business & Political Conditions The Company operates in a wide range of geographies, primarily North America, Central America, South America, and Europe |
| Worldwide and regional economic, business, and political conditions, including changes in the economic conditions of the broader markets and in the Company’s individual niche markets, could have an adverse affect on one or more of the Company’s business segments |
| Competition Each of our segments participates in markets that are highly competitive |
| Many of our competitors sell their products at prices lower than ours, and we compete primarily on the basis of product quality, product performance, value, supply chain competency, and customer relationships |
| The Company’s competitive success also depends on its ability to maintain strong brands/ brand leadership within its markets so that customers will need the Company’s products and services to meet their growth requirements |
| The development and maintenance of such brands requires continuous investment in brand building, marketing initiatives, and advertising |
| The competition that we face in all of our markets — which varies depending on the Company’s particular business segment, product line(s), and customers — may prevent us from achieving sales, product pricing, and income goals, which could affect our financial condition and results of operations |
| 9 _________________________________________________________________ [52]Table of Contents Global Economic Performance & Foreign Currency Exposures We currently operate manufacturing, sales and service facilities outside of North America, particularly in France, Spain, the United Kingdom, Denmark, Canada, and Brazil |
| In 2005, international net sales accounted for approximately 23prca of our total net sales |
| Accordingly, we are subject to risks associated with operations in foreign countries, including: • fluctuations in currency exchange rates; • limitations on the remittance of dividends and other payments by foreign subsidiaries; • limitations on foreign investment; • additional costs of compliance with local regulations; and • in certain countries, higher rates of inflation than in the United States |
| In addition, our operations outside the United States are subject to the risk of new and different legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations and potentially adverse tax consequences |
| The costs related to our international operations could adversely affect our operations and financial results in the future |
| The Company’s primary raw materials include plastic resins, colorants, and natural and synthetic rubbers |
| The Company attempts to reduce its exposure to increases in those costs through a variety of programs and selling price adjustments |
| Market conditions, however, may limit the Company’s ability to raise selling prices to offset increases in our raw material input costs |
| Raw Material Availability Changes in raw material availability may occur due to events beyond our control |
| The Company believes, however, that its sources for its primary materials will continue to be adequate to meet its requirements |
| Manufacturing & Distribution Activities We are subject to the inherent risks in our diverse manufacturing and distribution activities, including, but not limited to: product quality, safety, licensing requirements and other regulatory issues, environmental events, loss or impairment of key manufacturing or distribution sites, disruptions in logistics and transportation services, labor disputes, and industrial accidents |
| In addition, the Company is subject to natural disasters and other factors over which it has no control |
| Strategic Growth Initiatives The Company is undergoing a “Strategic Business Evolution” process within its business segments to focus resources on what it deems the best platforms for long-term, sustainable growth — including, but not limited to: internal growth driven by strong brands and new product innovation; development of new, high-growth markets and expansion in existing niche markets; strengthening customer relationships through value-added initiatives and key product partnerships; investments in new technology and processes to reinforce markets strength and capabilities in key business groups; consolidation and rationalization activities to further reduce costs and improve productivity within the Company’s manufacturing and distribution footprint; strategic, bolt-on acquisitions to accelerate growth in the Company’s market positions; and potential divestiture of businesses with non-strategic products or markets |
| Although the process is underway, all of these activities and initiatives have inherent risks, and there remain significant challenges and uncertainties, including economic and general business conditions, that could limit the Company’s ability to achieve anticipated benefits associated with announced strategic initiatives and affect the Company’s financial results |
| 10 _________________________________________________________________ [53]Table of Contents Future Events Future events may occur that would adversely affect the reported value of the Company’s assets |
| Such events may include, but are not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment on the Company’s customer base, or a material adverse change in its relationship with significant customers |
| Equity Ownership Concentration Mary S Myers, widow of the Company’s co-founder Louis S Myers, and Stephen E Myers, former Chief Executive Officer of the Company, beneficially owned approximately 15dtta3prca and 7dtta7prca, respectively, of the Company’s outstanding common shares as of February 14, 2006, and combined have sufficient voting power to influence actions requiring the approval of our shareholders |
| Legal & Regulatory Actions Changes in laws and regulations and approvals and decisions of courts, regulators, and governmental bodies on any legal claims known or unknown, could have an adverse affect on the Company’s financial results |