PolyOne 2009 Annual Report
PolyOne 2009 Annual Report PolyOne 2009 Annual Report
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in interest rates on debt obligations and foreign currency exchange rates that could impact our financial condition, results of operations and cash flows. We manage our exposure to these and other market risks through regular operating and financing activities, including the use of derivative financial instruments. We intend to use these derivative financial instruments as risk management tools and not for speculative investment purposes. Interest rate exposure — We are subject to interest rate risk related to our floating rate debt. As of December 31, 2009, approximately 90% of the principal amount of our debt obligations were at fixed rates. Additionally, borrowings under the credit facility are based on the applicable LIBOR rate plus a fixed facility fee of 4.77%. There would be no significant impact on our interest expense or cash flows from either a 10% increase or decrease in market rates of interest on our outstanding variable rate debt as of December 31, 2009. Foreign currency exposure — We enter into intercompany lending transactions that are denominated in various foreign currencies and are subject to financial exposure from foreign exchange rate movement from the date a loan is recorded to the date it is settled or revalued. To mitigate this risk, we enter into foreign exchange contracts. Gains and losses on these contracts generally offset gains and losses on the assets and liabilities being hedged. Effective April 1, 2009, we changed the functional currency for our Canadian operations from the Canadian dollar to the U.S. dollar. Our sales in Canada are primarily denominated in U.S. dollars. Additionally, with the closure of our Niagara, Canada facility in the first quarter of 2009, the majority of our inventory is sourced from our U.S. operations. The change in functional currency is applied on a prospective basis. The U.S dollar translated amounts of nonmonetary assets and liabilities at March 31, 2009 became the historical accounting basis for those assets and liabilities at April 1, 2009. The change in functional currency in Canada did not have a material effect on our consolidated results of operations for 2009. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements POLYONE CORPORATION Page Management’s Report 33 Reports of Independent Registered Public Accounting Firm 34 Consolidated Financial Statements: Consolidated Statements of Operations 35 Consolidated Balance Sheets 36 Consolidated Statements of Cash Flows 37 Consolidated Statements of Shareholders’ Equity 38 Notes to Consolidated Financial Statements 39-61 32
MANAGEMENT’S REPORT The management of PolyOne Corporation is responsible for preparing the consolidated financial statements and disclosures included in this Annual Report on Form 10-K. The financial statements and disclosures included in this Annual Report fairly present in all material respects the financial position, results of operations, shareholders’ equity and cash flows of PolyOne Corporation as of and for the year ended December 31, 2009. Management is responsible for establishing and maintaining disclosure controls and procedures designed to ensure that the information required to be disclosed by the company is captured and reported in a timely manner. Management has evaluated the design and operation of the company’s disclosure controls and procedures at December 31, 2009 and found them to be effective. Management is also responsible for establishing and maintaining a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that provide reasonable assurance that: PolyOne Corporation’s accounting records accurately and fairly reflect the transactions and dispositions of the assets of the company; unauthorized or improper acquisition, use or disposal of company assets will be prevented or timely detected; the company’s transactions are properly recorded and reported to permit the preparation of the company’s financial statements in conformity with generally accepted accounting principles; and the company’s receipts and expenditures are made only in accordance with authorizations of management and the board of directors of the company. Management has assessed the effectiveness of PolyOne’s internal control over financial reporting as of December 31, 2009 and has prepared Management’s Annual Report On Internal Control Over Financial Reporting contained on page 62 of this Annual Report. This report concludes that internal control over financial reporting is effective and that no material weaknesses were identified. /s/ STEPHEN D. NEWLIN /s/ ROBERT M. PATTERSON Stephen D. Newlin Chairman, President and Chief Executive Officer Robert M. Patterson Senior Vice President and Chief Financial Officer February 18, 2010 POLYONE CORPORATION 33
- Page 1 and 2: 2009 ANNUAL REPORT leaner. stronger
- Page 3 and 4: fortified our strategic focus and t
- Page 5 and 6: The New PolyOne PolyOne launched Le
- Page 7 and 8: United States Securities and Exchan
- Page 9 and 10: manufacturing sites and 11 distribu
- Page 11 and 12: Vinyl is one of the most widely use
- Page 13 and 14: A number of foreign countries and d
- Page 15 and 16: We also conduct investigations and
- Page 17 and 18: and the availability and cost of cr
- Page 19 and 20: Executive officers are elected by o
- Page 21 and 22: PART II ITEM 5. MARKET FOR REGISTRA
- Page 23 and 24: on the opportunity to accelerate de
- Page 25 and 26: Results of Operations Variances—F
- Page 27 and 28: Sales and Operating Income (Loss)
- Page 29 and 30: Sales and Operating Income (Loss)
- Page 31 and 32: $5.7 million. Additionally, liquidi
- Page 33 and 34: issuing standby letters of credit a
- Page 35 and 36: Description Pension and Other Post-
- Page 37: Description Share-Based Compensatio
- Page 41 and 42: Consolidated Statements of Operatio
- Page 43 and 44: Consolidated Statements of Cash Flo
- Page 45 and 46: Note 1 — DESCRIPTION OF BUSINESS
- Page 47 and 48: As of December 31, 2009, included i
- Page 49 and 50: derivative agreements. This new gui
- Page 51 and 52: OxyVinyls, a former 24% owned affil
- Page 53 and 54: $127.2 million and is included in a
- Page 55 and 56: Change in AOCI: Pension Benefits He
- Page 57 and 58: pricing the asset. Unobservable inp
- Page 59 and 60: 2029. Various foreign subsidiaries
- Page 61 and 62: During 2008, RSUs were granted to e
- Page 63 and 64: partner, Producer Services offers r
- Page 65 and 66: Outstanding stock options with exer
- Page 67 and 68: for approximately $8.9 million. The
- Page 69 and 70: ITEM 12. SECURITY OWNERSHIP OF CERT
- Page 71 and 72: Exhibit No. Exhibit Description 10.
- Page 73 and 74: SIGNATURES Pursuant to the requirem
- Page 75 and 76: Exhibit No. Exhibit Description 10.
- Page 77 and 78: Exhibit 31.1 CERTIFICATION I, Steph
- Page 79 and 80: Exhibit 32.1 CERTIFICATION PURSUANT
- Page 81 and 82: THIS PAGE IS NOT PART OF POLYONE’
MANAGEMENT’S REPORT<br />
The management of <strong>PolyOne</strong> Corporation is responsible for preparing<br />
the consolidated financial statements and disclosures included<br />
in this <strong>Annual</strong> <strong>Report</strong> on Form 10-K. The financial statements and<br />
disclosures included in this <strong>Annual</strong> <strong>Report</strong> fairly present in all<br />
material respects the financial position, results of operations,<br />
shareholders’ equity and cash flows of <strong>PolyOne</strong> Corporation as of<br />
and for the year ended December 31, <strong>2009</strong>.<br />
Management is responsible for establishing and maintaining<br />
disclosure controls and procedures designed to ensure that the<br />
information required to be disclosed by the company is captured<br />
and reported in a timely manner. Management has evaluated the<br />
design and operation of the company’s disclosure controls and<br />
procedures at December 31, <strong>2009</strong> and found them to be effective.<br />
Management is also responsible for establishing and maintaining<br />
a system of internal control over financial reporting that is<br />
designed to provide reasonable assurance regarding the reliability<br />
of financial reporting and the preparation of financial statements<br />
for external purposes in accordance with generally accepted<br />
accounting principles. Internal control over financial reporting<br />
includes policies and procedures that provide reasonable assurance<br />
that: <strong>PolyOne</strong> Corporation’s accounting records accurately and<br />
fairly reflect the transactions and dispositions of the assets of the<br />
company; unauthorized or improper acquisition, use or disposal of<br />
company assets will be prevented or timely detected; the company’s<br />
transactions are properly recorded and reported to permit the<br />
preparation of the company’s financial statements in conformity<br />
with generally accepted accounting principles; and the company’s<br />
receipts and expenditures are made only in accordance with authorizations<br />
of management and the board of directors of the company.<br />
Management has assessed the effectiveness of <strong>PolyOne</strong>’s<br />
internal control over financial reporting as of December 31,<br />
<strong>2009</strong> and has prepared Management’s <strong>Annual</strong> <strong>Report</strong> On Internal<br />
Control Over Financial <strong>Report</strong>ing contained on page 62 of this<br />
<strong>Annual</strong> <strong>Report</strong>. This report concludes that internal control over<br />
financial reporting is effective and that no material weaknesses<br />
were identified.<br />
/s/ STEPHEN D. NEWLIN /s/ ROBERT M. PATTERSON<br />
Stephen D. Newlin<br />
Chairman, President and<br />
Chief Executive Officer<br />
Robert M. Patterson<br />
Senior Vice President<br />
and Chief Financial Officer<br />
February 18, 2010<br />
POLYONE CORPORATION<br />
33
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