PolyOne News

PolyOne Realigns Manufacturing Assets to Enhance Competitiveness and Supply Chain Efficiency

CLEVELAND, July 28 PRNewswire-FirstCall — As a next step in its strategic transformation, PolyOne Corporation (NYSE: POL) today announced that it is realigning certain of its manufacturing assets, primarily in North America.

The decision to realign assets is a result of the Company's ongoing focus on both the operational excellence and specialization components of its transformation strategy. This realignment is designed to enable the Company to improve the competitiveness of its operations and supply chain across many platforms and businesses, consistent with current and anticipated customer requirements. The impact of these actions will be to enhance the Company's long-term performance, while helping to mitigate the effects of the current economic downturn and the increases in raw material and energy costs.

Over the next nine months, the Company will close certain production facilities, including seven in North America, and one in the United Kingdom, resulting in a net reduction of approximately 150 positions. Production at the affected facilities, as well as several manufacturing lines, will be moved to a limited number of the Company's more than 30 remaining plants. PolyOne expects no disruption of service, due to the Company's focus on improved product delivery systems and inventory management.

"As part of our transformation process, we are committed to driving operational excellence on a global basis, which includes improving service and efficiency throughout our supply chain," said Thomas J. Kedrowski, senior vice president, operations and supply chain. "After conducting a thorough review of our entire operation, our business teams identified opportunities to further align our capacity and production assets to improve the effectiveness of our global manufacturing footprint. These changes also reflect our focus on specialization, which is shifting our portfolio away from non-value-added commodity applications toward more specialized solutions."

Stephen D. Newlin, chairman, president and chief executive officer, said, "The recent unprecedented increases in raw material and energy costs, and longer-term fundamental changes in the global economy were critical factors in our decision-making. Declining demand in markets such as housing and automotive has created a timely opportunity to remove excess capacity and address supply chain efficiencies as important steps in mitigating the effects of the current economic conditions on PolyOne and its customers."

As a result of these actions, PolyOne expects to incur one-time charges of approximately $31 million, of which approximately $18 million are expected to be non-cash. These one-time charges will include costs related to severance and asset write-downs, which will be included in the Company's financial results over the next three quarters. The Company also expects to invest approximately $12 million in additional capital expenditures at its remaining locations to support these changes. The Company expects these actions to generate pre-tax savings of $17 million ($0.12 per share after tax), on an annualized basis.

Newlin said, "Difficult decisions like these are taken very seriously. After thorough study, it was determined that this capacity reduction is needed to improve our near-term operating efficiency while advancing our longer-term strategic position. We understand the impact of this announcement on affected employees, their families and local communities and are committed to handling these moves with great sensitivity."

About PolyOne

PolyOne Corporation, with annual revenues of more than $2.7 billion, is a premier provider of specialized polymer materials, services and solutions. Headquartered outside of Cleveland, Ohio USA, PolyOne has operations around the world. For additional information on PolyOne, visit our new Web site at www.polyone.com.

Forward-looking Statements

In this press release, statements that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance and/or sales. In particular, these forward-looking statements include statements regarding the anticipated future charges, cash expenditures and expected savings relating to the planned closure of certain production facilities, as well as future performance and financial results. Specifically, all of the charges in this press release are estimates and are therefore subject to change. Factors that could cause actual results to differ materially include, but are not limited to:

— the timing of the plant closings;

— separation and severance amounts that differ from original estimates because of the timing of employee terminations;

— amounts for non-cash charges relating to inventories and property, plant and equipment that differ from the original estimates because of the ultimate fair market value of such inventories and property, plant and equipment;

— PolyOne's ability to realize anticipated savings and operational benefits from its realigning of assets, including those related to closure of eight production facilities;

— the effect on foreign operations of currency fluctuations, tariffs, nationalization, exchange controls, limitations on foreign investment in local businesses and other political, economic and regulatory risks;

— changes in polymer consumption growth rates within the U.S., Europe or Asia or other countries where PolyOne conducts business;

— changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online in the polyvinyl chloride, chlor-alkali, vinyl chloride monomer or other industries in which PolyOne participates;

— fluctuations in raw material prices, quality and supply and in energy prices and supply, in particular fluctuations outside the normal range of industry cycles;

— production outages or material costs associated with scheduled or unscheduled maintenance programs;

— the cost of compliance with environmental laws and regulations, including any increased cost of complying with new or revised laws and regulations;

— unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters, including any developments that would require any increase in our costs and/or reserves for such contingencies;

— an inability to achieve or delays in achieving or achievement of less than the anticipated financial benefit from initiatives related to PolyOne's specialization strategy, operational excellence initiatives, cost reductions and employee productivity goals;

— an inability to raise or sustain prices for products or services;

— an inability to maintain appropriate relations with unions and employees in certain locations in order to avoid business disruptions;

— any change in any agreements with product suppliers to PolyOne Distribution that prohibits PolyOne from continuing to distribute a supplier's products to customers;

— the ability to successfully integrate GLS Corporation;

— the ability to successfully integrate Ngai Hing PlastChem Company Ltd., and

— other factors affecting our business beyond our control, including, without limitation, changes in the general economy, changes in interest rates and changes in the rate of inflation.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our reports on Form 10-Q, 8-K and 10-K that we provide to the Securities and Exchange Commission. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider any list to be a complete set of all potential risks or uncertainties.

SOURCE PolyOne

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