In 2000, Myers Industries achieved record sales for the ninth straight year, but net income fell below 1999 levels and ended a four-year run of record earnings achievement.

Fourth Quarter and Full Year Financial Overview

Net sales for the fourth quarter were $171.3 million, up 3 percent from the $166.6 million reported a year earlier. Net income was $4.5 million, down 54 percent from $9.8 million in 1999, and net income per share was $.21, down 52 percent from $.44 per share last year. Both net income and net income per share figures include a $1.9 million after-tax restructuring charge, or $.09 per share, taken in the fourth quarter for closing one of our manufacturing facilities.

For the year, net sales were a record $652.7 million, 12 percent greater than the $580.8 million reported in 1999. Including the fourth quarter restructuring charge, net income for the year was $24.0 million, down 23 percent from $31.2 million in 1999, and net income per share was $1.11, a 21 percent decrease from the $1.41 earned last year.

Excluding contributions from acquisitions, total net sales would have increased 1 percent for the quarter and would have increased 3 percent for the year. On a segment basis, sales in the distribution segment decreased 3 percent for the quarter and 2 percent for the year, compared to 1999. Sales of capital equipment, the more cyclical part of the distribution business, continued to be weak. In the manufacturing segment, sales increased 5 percent over last year’s fourth quarter results and 18 percent over the comparable 12 months. Excluding acquisitions, sales in the manufacturing segment increased 2 percent for the quarter and 5 percent for the year.

The translation effect of the euro weakened both total sales and manufacturing segment sales. Total sales and manufacturing segment sales were reduced $6.9 million for the quarter and $20.0 million for the year. Without the translation effect and excluding acquisitions, total sales would have increased 5 percent for the quarter and 6 percent for the year, and manufacturing segment sales would have increased 8 percent for the quarter and 6 percent for the year. The translation effect also decreased net income $105,000 for the quarter and $335,000 for the 12 months.

For the year, the Company generated cash from operations of $67.3 million, a record amount. Capital expenditures were a record $43.6 million for new products, tooling, machinery, and manufacturing expansion. We expended $18.2 million for two small acquisitions in the manufacturing segment, discussed later. The Company also spent $5.5 million in the repurchase of its own shares on the open market.

We believe it proper that shareholders receive an ongoing return on their investment. In 2000, the Board of Directors increased the Company’s cash payout for the 25th consecutive year. In a year when all major indices showed negative returns, Myers shares showed a positive, however slight, increase in price. Shareholders’ equity increased to $213.9 million, a 3 percent increase from 1999, and book value per share increased to $9.91, 5 percent greater than last year.

Manufacturing Segment Overview

In the course of integrating the operations of Allibert-Contico and Kadon into our Buckhorn material handling brand, we closed a small manufacturing facility and distributed its operations to larger plants. We did that at the end of the year. All costs incurred and anticipated from that closure are included in our financial statements for the year.

In October, we purchased RB Manufacturing Company, a manufacturer of metal and wooden carts. The product line augments our Akro-Mils line of storage, organization, and material handling products. Later that month, we acquired Best Plastics, whose processes and products complement our Ameri-Kart brand and expand our ability to make rotationally molded and vacuum formed products such as plastic storage tanks and specialty parts.

We also purchased a production facility in Nevada. Primarily intended for the production of plastic flowerpots and trays for the grower market, the facility is our second large operation on the West Coast and gives us a substantial manufacturing base in that region.

Consolidation of U.S. business, both among our suppliers and within the markets we serve, has increased the volatility of everyday business. The attempts of a shrinking number of major suppliers to manage demand has caused wide fluctuations in the pricing of their output over the past several years. At the same time, consolidation among the channels serving our markets and among our competitors has increased pricing pressures, making it difficult to realize full value for our products and services.

Myers is a major supplier of rubber original equipment and replacement parts to many markets. In the second half of the year, we suffered along with our good customers from the swift decline in production of heavy-duty trucks. The virtual cessation of sales in and to that market, combined with the slowing of automotive and other manufacturing operations during the fourth quarter, severely affected our profitability from those markets.

Distribution Segment Overview

Total sales and profits for the year were lower than the record-setting volumes attained in 1999, a reflection of the slowdown in the automotive aftermarket across the economy. During the year, we focused on increasing our presence with customers and developing new internal training programs. We believe that these actions and investments will accrue to our benefit in the long run. Several factors present a positive outlook for our supply business of tire, wheel, and underbody service products: a slowing economy, a plateau in vehicle leasing, the increasing age of all vehicles in operation, and continued rise in annual miles driven.

Summary

To continue to thrive under the conditions in which we now find ourselves, we have been trying to adapt in two basic manners. We have been trying to grow in size, both as a consumer of our suppliers’ products and as a supplier to our customers. That approach has been most evident in recent years as we acquired businesses, processes, and geographies within our existing competencies and markets. The other activity has been to find and establish ourselves within niche markets that remain high in the value stream and closer to the customer, essentially choosing those markets and customers to which our products and services offer more value. We then develop products and competence to bring greater value to those markets and customers.

During the course of 2001, our primary concern, apart from rededicating ourselves to the second proposition above, will be to lower the absolute amount of debt we now carry on our balance sheet. We feel that we can do that without substantially limiting our new product development activities or competitive infrastructure. We do not foresee any further acquisition activity during the course of the coming year. We will be working to "get our house in order."

Finally, we wish to recognize three new appointments during the year 2000. In April, two new directors were elected to the Board: Michael Kane, president of M. Kane & Company in Los Angeles, California; and Edward Kissel, president of O.M. Group in Cleveland, Ohio. The Company benefits from their wisdom and counsel. In June, the Board approved the appointment of Jean-Paul Lesage as vice president of the Company. Jean-Paul remains CEO of our Allibert Équipement operation, and we think his appointment not only reflects his extraordinary abilities, but is a necessary act to extend the voice of the Corporation to the European continent and to formally recognize our substantial commitment to that marketplace.

We thank our valued customers, suppliers, and shareholders for continued confidence and support. That, along with the dedication of our nearly 4,400 employees creates value for our enterprise and helps us to succeed. As always, I welcome your thoughts and comments.

March 9, 2001
semyers@po.myersind.com