UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ýQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 20172018
 
¨Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to             .
Commission file number 1-16091
 ________________________________________________
POLYONE CORPORATION
(Exact name of registrant as specified in its charter)

Ohio34-1730488
(State or other jurisdiction(I.R.S. Employer Identification No.)
of incorporation or organization) 
  
33587 Walker Road, Avon Lake, Ohio44012
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (440) 930-1000

Former name, former address and former fiscal year, if changed since last report: Not Applicable
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý    Yes   ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý    Yes   ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerýAccelerated filer¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
  Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨  Yes   ý  No
The number of the registrant’s outstanding common shares, $0.01 par value, as of March 31, 20172018 was 81,755,949.79,971,013.
 


Part I — Financial Information
Item 1. Financial Statements
PolyOne Corporation
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
Sales$898.8
 $847.0
$901.6
 $796.7
Cost of sales711.4
 661.5
703.1
 614.5
Gross margin187.4
 185.5
198.5
 182.2
Selling and administrative expense106.0
 114.2
119.7
 100.2
Operating income81.4
 71.3
78.8
 82.0
Interest expense, net(14.6) (14.6)(15.5) (14.6)
Debt extinguishment costs(0.3) —
—
 (0.3)
Other (expense) income, net(0.8) 0.3
Income before income taxes65.7
 57.0
Other income, net1.1
 0.9
Income from continuing operations before income taxes64.4
 68.0
Income tax expense(18.8) (18.0)(16.7) (19.7)
Net income46.9
 39.0
Net loss attributable to noncontrolling interests—
 0.1
Net income from continuing operations47.7
 48.3
Loss from discontinued operations, net of income taxes(0.8) (1.4)
Net income attributable to PolyOne common shareholders$46.9
 $39.1
$46.9
 $46.9
      
Earnings per common share attributable to PolyOne common shareholders - Basic:$0.57

$0.46
Earnings per common share attributable to PolyOne common shareholders - Diluted:$0.57

$0.46
Earnings (loss) per common share attributable to PolyOne common shareholders - Basic:Earnings (loss) per common share attributable to PolyOne common shareholders - Basic:
Continuing operations$0.59

$0.58
Discontinued operations(0.01) (0.01)
Total$0.58
 $0.57
Earnings (loss) per common share attributable to PolyOne common shareholders - Diluted:Earnings (loss) per common share attributable to PolyOne common shareholders - Diluted:
Continuing operations$0.59

$0.58
Discontinued operations(0.01) (0.01)
Total$0.58
 $0.57

      
Weighted-average shares used to compute earnings per common share:      
Basic82.1

84.7
80.4

82.1
Plus dilutive impact of share-based compensation0.6
 0.8
0.9
 0.6
Diluted82.7

85.5
81.3

82.7
      
Anti-dilutive shares not included in diluted common shares outstanding0.3
 0.3
0.1
 0.3
      
Cash dividends declared per share of common stock$0.135
 $0.120
$0.175
 $0.135
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.


PolyOne Corporation
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions)
Three Months Ended 
 March 31,		Three Months Ended March 31,
2017 20162018 2017
Net income$46.9
 $39.0
$46.9
 $46.9
Other comprehensive income      
Translation adjustments6.4
 (0.2)10.6
 6.4
Unrealized gain on available-for-sale securities0.1
 —
Total comprehensive income53.4
 38.8
Comprehensive loss attributable to noncontrolling interests—
 0.1
Other—
 0.1
Comprehensive income attributable to PolyOne common shareholders$53.4
 $38.9
$57.5
 $53.4
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.


PolyOne Corporation
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited) March 31, 2017 December 31, 2016(Unaudited) March 31, 2018 December 31, 2017
Assets      
Current assets:      
Cash and cash equivalents$157.7
 $226.7
$165.5
 $243.6
Accounts receivable, net453.5
 363.7
490.8
 392.4
Inventories, net337.2
 312.4
322.0
 327.8
Other current assets36.6
 46.7
57.0
 102.8
Total current assets985.0
 949.5
1,035.3
 1,066.6
Property, net605.6
 607.7
486.5
 461.6
Goodwill686.7
 677.4
635.6
 610.5
Intangible assets, net367.0
 363.5
426.6
 400.0
Other non-current assets132.4
 125.2
159.9
 166.6
Total assets$2,776.7
 $2,723.3
$2,743.9
 $2,705.3
      
Liabilities and Shareholders’ Equity      
Current liabilities:      
Short-term and current portion of long-term debt$17.9
 $18.5
$35.1
 $32.6
Accounts payable402.1
 361.5
416.2
 388.9
Accrued expenses and other current liabilities97.6
 129.6
120.6
 149.1
Total current liabilities517.6
 509.6
571.9
 570.6
Non-current liabilities:      
Long-term debt1,279.2
 1,239.8
1,318.8
 1,276.4
Pension and other post-retirement benefits63.1
 63.1
62.4
 62.3
Deferred income taxes43.8
 43.1
Other non-current liabilities138.6
 142.2
205.7
 196.6
Total non-current liabilities1,524.7
 1,488.2
1,586.9
 1,535.3
Shareholders’ equity:      
PolyOne shareholders’ equity733.6
 724.7
584.2
 598.5
Noncontrolling interests0.8
 0.8
0.9
 0.9
Total equity734.4
 725.5
585.1
 599.4
Total liabilities and shareholders’ equity$2,776.7
 $2,723.3
$2,743.9
 $2,705.3
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.


PolyOne Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
Operating Activities
 

 
Net income$46.9
 $39.0
$46.9
 $46.9
Adjustments to reconcile net income to net cash used by operating activities:
  
  
Depreciation and amortization26.1
 24.3
22.4
 26.1
Accelerated depreciation and fixed asset charges associated with restructuring activities0.4
 2.8
—
 0.4
Debt extinguishment costs0.3
 —
—
 0.3
Share-based compensation expense2.4
 2.2
2.7
 2.4
Change in assets and liabilities, net of the effect of acquisitions:
 

 
Increase in accounts receivable(86.7) (79.5)(82.4) (86.7)
Increase in inventories(22.4) (13.3)
Decrease (increase) in inventories17.0
 (22.4)
Increase in accounts payable38.5
 29.9
16.6
 38.5
Decrease in pension and other post-retirement benefits(3.3) (23.7)(2.3) (3.3)
Decrease in accrued expenses and other assets and liabilities - net(25.9) (5.2)
Net cash used by operating activities(23.7) (23.5)
Increase (decrease) in accrued expenses and other assets and liabilities - net5.8
 (25.9)
Net cash provided (used) by operating activities26.7
 (23.7)
Investing Activities
 

 
Capital expenditures(15.5) (19.6)(12.9) (15.5)
Business acquisitions(20.9) (72.8)
Business acquisitions, net of cash acquired(73.0) (20.9)
Sale of and proceeds from other assets0.9
 —
—
 0.9
Net cash used by investing activities(35.5) (92.4)(85.9) (35.5)
Financing Activities
 

 
Borrowings under credit facilities288.8
 221.9
286.6
 288.8
Repayments under credit facilities(248.4) (174.6)(249.1) (248.4)
Purchase of common shares for treasury(34.3) (39.6)(42.2) (34.3)
Cash dividends paid(11.3) (10.4)(14.2) (11.3)
Repayment of long-term debt(1.6) (1.4)(1.6) (1.6)
Payments of withholding tax on share awards(2.3) (5.1)(1.6) (2.3)
Debt financing costs(1.9) —
—
 (1.9)
Net cash used by financing activities(11.0) (9.2)(22.1) (11.0)
Effect of exchange rate changes on cash1.2
 0.7
3.2
 1.2
Decrease in cash and cash equivalents(69.0) (124.4)(78.1) (69.0)
Cash and cash equivalents at beginning of period226.7
 279.8
243.6
 226.7
Cash and cash equivalents at end of period$157.7
 $155.4
$165.5
 $157.7
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.


PolyOne Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 — BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal recurring, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the annual report on Form 10-K for the year ended December 31, 20162017 of PolyOne Corporation. When used in this quarterly report on Form 10-Q, the terms “we,” “us,” “our”, "PolyOne" and the “Company” mean PolyOne Corporation and its consolidated subsidiaries.
Operating results for the three months ended March 31, 20172018 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2018. Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. Discontinued operations are further detailed in Note 3, Discontinued Operations in our annual report on Form 10-K for the year ended December 31, 2017.
Accounting Standards Adopted
On January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers and all related amendments (the Standard), for all contracts using the modified retrospective method. The Standard implements a five-step process for revenue recognition that focuses on transfer of control and defines a contract as “an agreement between two or more parties that creates legally enforceable rights and obligations." The adoption of the Standard did not significantly impact the timing and measurement of revenue recognition. Additionally, we concluded that the methodology for which we historically estimated and recognized variable consideration (e.g. rebates) is consistent with the requirements of the Standard. As a result, we did not recognize a cumulative effect adjustment to the opening balance of retained earnings.
At contract inception, PolyOne assesses the goods and services promised to a customer and identifies a performance obligation for each promised good or service that is distinct. Our contracts, generally in the form of a purchase order or written contract, specifies the product or service that is promised to the customer. The typical contract life is less than 12 months and contains only one performance obligation, to provide conforming goods or services to the customer. Revenue is recognized at the point in time when control of the product is transferred to the customer, which typically occurs when products are shipped from our facilities with the exception of certain contract manufacturing arrangements.
Within the Performance Products & Solutions (PP&S) segment, there are certain contract manufacturing arrangements where PolyOne charges the customer a conversion fee for processing raw materials that are owned and controlled by the customer. PolyOne will recognize revenue for these contract manufacturing arrangements over time, as we convert customer owned material, and have elected the “right to invoice” practical expedient available within ASC 606-10-55-18 as our measure of progress. Order fulfillment cycles are short and at any given time we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed to-date.
The revenue streams within the Company are consistent with those disclosed for our reportable segments, within Note 8, Segment Information. For descriptions of our product offerings and segments see Note 14, Segment Information in our annual report on Form 10-K for the year ended December 31, 2017. We offer more than 35,000 polymer solutions to over 10,000 customers across the world. No customer accounts for more than 3% of our consolidated revenues and we do not have a high concentration of business in one particular end market.
In MarchOctober 2016, the Financial Accounting Standards Board (FASB)FASB issued Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation2016-16, Income Taxes (Topic 718): Improvements to Employee Share-Based Payment Accounting740), Intra-Entity Transfers of Assets Other than Inventory (ASU 2016-09)2016-16), which simplifiesrequires companies to recognize the accounting for share-based payment transactions. Excessincome tax benefits and deficiencies reflecteffects of intercompany sales or transfers of assets, other than inventory, in the difference between the book expense and the tax deduction of share based compensation. Book expense is based on an estimated fair value of the award at the grant date and the tax deduction is based on the actual value of the award at the grant or vesting date. Such book and tax differences are required to be recognizedincome statement as income tax expense (or benefit) in the period the sale or transfer occurs. We recognized an adjustment of $17.0 million to beginning retained earnings upon adoption of this standard on January 1, 2018 from transactions completed as of December 31, 2017.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). This standard


requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. All other components of net periodic benefit cost must be presented below operating income. The Company has adopted ASU 2017-07 as of January 1, 2018.
ASU 2017-07 provides a practical expedient to utilize previously disclosed components of net periodic benefit costs as an estimate for retrospective presentation. Utilizing this practical expedient, the Company reclassified non-service components of net periodic benefit cost from Cost of sales and Selling and administrative expense into Other income, net on the Consolidated Statements of Income rather than additional paid-in capital. Further, the update allows an entity to make a policy election to recognize forfeitures as they occur or estimate the numberIncome. The adoption of awards expected to be forfeited. We have adopted ASU 2016-09 as of January 1, 2017.
As a result of this adoption, certain reclassifications2017-07 resulted in $1.4 million and $2.0 million of the prior period presentation have been made to conform to the presentation for the current period. The excess tax benefits are classified as an operating activity, rather than a financing activity, and the cash paid for shares withheld to satisfy statutory tax withholding obligations are classified as a financing activity ($5.1 millionnon-service components of net periodic benefit gain presented in Other income, net for the three months ended March 31, 2016)2018 and 2017, respectively. For additional detail on the Consolidated Statementcomponents of Cash Flows. Also, we elected to continue to estimate forfeitures rather than accountour annual net periodic benefit cost please see Note 10, Employee Benefit Plans in our annual report on Form 10-K for them as they occur.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit were needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We have adopted this update for any impairment test performed after January 1,year ended December 31, 2017.
Accounting Standards Not Yet Adopted
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09). Under this standard, a company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard implements a five-step process for customer contract revenue recognition that focuses on transfer of control. We are analyzing the impact of the standard on our contract portfolio and reviewing our current accounting policies and practices to identify the impact of the new standard. The implementation team has identified our revenue streams and is currently assessing the adoption method and the expected impact that ASU 2014-09, along with the subsequent updates and clarifications, will have on our Consolidated Financial Statements as well as future disclosure requirements. The Company will adopt ASU 2014-09 no later than the required date of January 1, 2018.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a


lease. The Company will adopt ASU 2016-02 no later than the required date of January 1, 2019. We are currentlyThe implementation team is analyzing our current lease portfolio and assessing the transition method and impact this standard will have on our Consolidated Financial Statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which requires companies to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statementStatements as income tax expense (or benefit) in the period the sale or transfer occurs. There would be no material impact on our Consolidated Financial Statements from intercompany transactions completedwell as of December 31, 2016 and March 31, 2017. We will continue to assess the impact of ASU 2016-16 on future transactions and the Company will adopt ASU 2016-16 no later than the required date of January 1, 2018.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). This standard requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. All other components of net periodic benefit cost will be presented below operating income. Additionally, only the service cost component will be eligible for capitalization in assets. The Company will adopt ASU 2017-07 no later than the required date of January 1, 2018. For detail on the components of our annual net periodic benefit cost please see Note 10, Employee Benefit Plans in our annual report on Form 10-K for the year ended December 31, 2016 and Note 8, Employee Benefit Plans included herein.disclosure requirements.
Note 2 — BUSINESS COMBINATIONS
On January 3, 2017,2, 2018, the Company completedacquired the acquisitionoutstanding shares of SilCoTec, Inc. (SilCoTec), a leading producerIQAP Masterbatch Group S.L. (IQAP) for $73.0 million, net of cash acquired. IQAP is an innovative siliconeprovider of specialty colorants dispersions and formulations.additives based in Spain with customers throughout Europe. The IQAP results of operations of SilCoTec will beare reported in the Color, Additives and Inks segment.
On July 26, 2016, the Company completed the acquisition of substantially all of the assets of Gordon Composites, Inc. (Gordon Composites), Polystrand, Inc. (Polystrand) and Gordon Holdings, Inc. (Gordon Holdings). Gordon Composites develops high strength profiles and laminates for use in vertical and crossbow archery, sports and recreation equipment, prosthetics and office furniture systems. Polystrand operates in the advanced area of continuous reinforced thermoplastic composite technology space, a next generation material science that delivers the high strength and lightweight characteristics of composites, further enhanced with the design flexibility to form more complex shapes.
The purchase price was $85.5 million for Gordon Composites, Polystrand and Gordon Holdings and the results of operations of the acquired businesses are included in the Company's Consolidated Statements of Income for the period subsequent to the date of the acquisition and are reported in the Specialty Engineered Materials segment. The finalpreliminary purchase price allocation resulted in goodwill of $36.2 million and in intangible assets of $30.0$31.9 million, property, plant and equipment of which $4.0$24.1 million, represent indefinite-lived trade names.goodwill of $23.8 million, other liabilities of $21.1 million and net working capital of $14.4 million. Goodwill recognized as a result of this acquisition is not deductible for tax purposes. The definite-lived intangible assets that have been acquired are being amortized over a period of 13 to 20 years. IQAP's sales included in our three month ended March 31, 2018 results were $16.7 million.
Note 3 — GOODWILL AND INTANGIBLE ASSETS
Goodwill as of March 31, 20172018 and December 31, 2016,2017, and changes in the carrying amount of goodwill by segment were as follows: 
(In millions)Specialty
Engineered
Materials		 Color,
Additives and
Inks		 Designed Structures and Solutions Performance
Products  and
Solutions		 PolyOne
Distribution		 Total
Balance December 31, 2016$173.5
 $346.4
 $144.7
 $11.2
 $1.6
 $677.4
Acquisitions of businesses—
 9.2
 —
 —
 —
 9.2
Currency translation and other adjustments(0.1) 0.2
 —
 —
 —
 0.1
Balance March 31, 2017$173.4
 $355.8
 $144.7
 $11.2
 $1.6
 $686.7


(In millions)Specialty
Engineered
Materials		 Color,
Additives and
Inks		 Performance
Products  and
Solutions		 PolyOne
Distribution		 Total
Balance December 31, 2017$173.2
 $424.5
 $11.2
 $1.6
 $610.5
Acquisition of businesses—
 23.8
 —
 —
 23.8
Currency translation and other adjustments—
 1.3
 —
 —
 1.3
Balance March 31, 2018$173.2
 $449.6
 $11.2
 $1.6
 $635.6
Indefinite and finite-lived intangible assets consisted of the following: 
As of March 31, 2017As of March 31, 2018
(In millions)Acquisition
Cost		 Accumulated
Amortization		 Currency
Translation		 NetAcquisition
Cost		 Accumulated
Amortization		 Currency
Translation		 Net
Customer relationships$224.7
 $(54.9) $(0.2) $169.6
$269.9
 $(64.8) $0.5
 $205.6
Patents, technology and other158.2
 (60.7) (0.4) 97.1
177.5
 (57.4) 0.6
 120.7
Indefinite-lived trade names100.3
 —
 —
 100.3
100.3
 —
 —
 100.3
Total$483.2
 $(115.6) $(0.6) $367.0
$547.7
 $(122.2) $1.1
 $426.6


 As of December 31, 2016
(In millions)Acquisition
Cost		 Accumulated
Amortization		 Currency
Translation		 Net
Customer relationships$217.1
 $(52.2) $(0.3) $164.6
Patents, technology and other156.6
 (57.6) (0.4) 98.6
Indefinite-lived trade names100.3
 —
 —
 100.3
Total$474.0
 $(109.8) $(0.7) $363.5
As previously reported in our annual report on Form 10-K for the year ended December 31, 2016, we performed our annual goodwill impairment analysis on October 1, 2016, which resulted in an excess of fair value over carrying value of 8.0% for our Custom Engineered Structures (CES) reporting unit, which is included in our Designed Structures and Solutions segment results. CES had goodwill of $108.8 million at March 31, 2017. We have continued to monitor the performance of CES in 2017 and our assessment for the quarter ended March 31, 2017 did not indicate the presence of any goodwill impairment triggering events for CES. If the timing of new business opportunities and operational improvements are not achieved, impairment of intangible assets, including goodwill, and our other long-lived assets, could result.
 As of December 31, 2017
(In millions)Acquisition
Cost		 Accumulated
Amortization		 Currency
Translation		 Net
Customer relationships$257.3
 $(61.5) $0.1
 $195.9
Patents, technology and other158.2
 (54.4) —
 103.8
Indefinite-lived trade names100.3
 —
 —
 100.3
Total$515.8
 $(115.9) $0.1
 $400.0
Note 4 — EMPLOYEE SEPARATION AND RESTRUCTURING COSTS
During the three months ended March 31, 2017, we recognized total employee separation and restructuring charges of $3.9 million, of which $0.4 million was recognized within Cost of goods sold and $3.5 million within Selling and administrative expenses. These costs were primarily related to actions taken across our North American and European locations.
During the three months ended March 31, 2016, we recognized total employee separation and restructuring charges of $7.1 million, of which $2.7 million was recognized within Cost of goods sold and $4.4 million within Selling and administrative expenses. These costs wereprimarily associated with the closure of two manufacturing facilities in 2015 within the Designed Structures and Solutions segment and other corporate actions to reduce costs.
Note 5 — INVENTORIES, NET
Components of Inventories, net are as follows: 
(In millions)March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Finished products$207.1
 $197.4
$190.1
 $203.3
Work in process7.8
 5.8
7.7
 5.1
Raw materials and supplies122.3
 109.2
124.2
 119.4
Inventories, net$337.2
 $312.4
$322.0
 $327.8
Note 65 — PROPERTY, NET
Components of Property, net are as follows: 
(In millions)March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Land and land improvements (1)
$49.5
 $49.0
$48.4
 $40.7
Buildings (2)
338.7
 335.5
327.0
 303.5
Machinery and equipment1,172.8
 1,159.9
1,088.0
 1,038.0
Property, gross1,561.0
 1,544.4
1,463.4
 1,382.2
Less accumulated depreciation and amortization(955.4) (936.7)(976.9) (920.6)
Property, net$605.6
 $607.7
$486.5
 $461.6
(1)Land and land improvements include properties under capital leases of $1.8$1.7 million as of March 31, 20172018 and December 31, 2016.2017.
(2)Buildings include properties under capital leases of $16.9$16.5 million as of March 31, 20172018 and December 31, 2016.2017.
Note 6 — INCOME TAXES
The Tax Cuts and Jobs Act (TCJA) was enacted on December 22, 2017. Among other things, effective in 2018, the TCJA reduces the U.S. federal corporate tax rate from 35% to 21%, exempts from U.S. federal income taxation dividends from certain foreign corporations to their U.S. shareholders, eliminates or reduces the effect of various federal tax deductions and creates new taxes on certain outbound payments and future foreign earnings generated after 2017. The TCJA also requires U.S. companies to pay a one-time transition tax on earnings of foreign corporate subsidiaries that are at least ten-percent owned by such U.S. companies and that were previously deferred from U.S. taxation.
We have not completed our accounting for the tax effects of the enactment of the TCJA; however, in compliance with the SEC's amendment to Staff Accounting Bulletin (SAB) 118 (issued December 22, 2017), we have made a reasonable estimate of the effects on our existing deferred income tax balances and the one-time transition tax, which was included as a component of income tax expense from continuing operations for the year ending December 31, 2017. Accordingly, we have not made any additional measurement period adjustments related to these items during the three months ended March 31, 2018. Once we have finalized our 2017 tax returns, we will update our estimates based on our completed review, including the consideration of additional clarifications on the TCJA from the U.S. government. Any adjustments to our provisional amounts will be disclosed in our respective filings within the one-year measurement period provided by SAB 118.
We have elected to recognize the resulting tax on the global intangible low-taxed income (GILTI) as a period expense in the period the tax is incurred and we have included a provisional estimate for GILTI in our estimated annual effective tax rate.
During the three months ended March 31, 2018, the Company’s effective tax rate of 25.9% was above the Company's U.S. federal statutory rate of 21.0%. This was primarily a result of a foreign withholding tax liability associated with the repatriation of certain foreign earnings (5.3%) and contemplation of GILTI to our current year operations (1.5%), which was partially offset by lower statutory tax rate differences on foreign earnings.


Depreciation expense was $20.3 million and $21.7 million forDuring the three months ended March 31, 2017, and 2016, respectively. Included in depreciation expense during the three months ended March 31, 2016 is accelerated depreciation of $2.8 million related to restructuring actions.
Note 7 — INCOME TAXES
During the first quarter of 2017, the Company’s effective tax rate of 28.6% differed from29.0% was below the Company's federal statutory rate of 35.0% primarily due to the favorable impact of foreignlower statutory tax rate differences on foreign earnings. The effective tax rate for the three months ended March 31, 2016 was 31.6%. The decrease in effective tax rate of 3.0% is primarily due to a more favorable foreign tax rate differential in 2017 compared to 2016.
Note 8 — EMPLOYEE BENEFIT PLANS
Weighted-average assumptions used to determine net periodic benefit (gain) cost for the periods ended March 31:
  Pension Benefits Health Care Benefits
  2017 2016 2017 2016
Discount rate 3.97% 4.10% 4.04% 4.12%
Expected long-term return on plan assets 6.08% 6.87% —% —%
Components of defined benefit pension plan net periodic gains and post-retirement health care plan benefit costs are as follows:
 Three Months Ended March 31,
(In millions)2017
2016
Defined benefit pension plan net periodic gains:   
Service cost$0.1
 $0.2
Interest cost4.8
 5.2
Expected return on plan assets(6.9) (7.9)
Net periodic benefit gains$(2.0) $(2.5)
    
Post-retirement health care plan benefit costs:   
Interest cost$0.1
 $0.1
Net periodic benefit costs$0.1
 $0.1
Note 97 — FINANCING ARRANGEMENTS
Debt consists of the following instruments:
As of March 31, 2017 (In millions)
Principal Amount Unamortized discount and debt issuance cost Net Debt
As of March 31, 2018 (In millions)
Principal Amount Unamortized discount and debt issuance cost Net Debt Weighted average interest rate
Senior secured revolving credit facility due 2022$94.2
 $—
 $94.2
 3.22%
Senior secured term loan due 2022$642.4
 $9.1
 $633.3
635.9
 8.0
 627.9
 3.59%
Revolving credit facility due 202241.0
 —
 41.0
5.25% senior notes due 2023600.0
 6.8
 593.2
600.0
 5.7
 594.3
 5.25%
Other debt (1)
29.6
 —
 29.6
37.5
 —
 37.5
  
Total long-term debt$1,313.0
 $15.9
 $1,297.1
Total debt$1,367.6
 $13.7
 $1,353.9
  
Less short-term and current portion of long-term debt17.9
 —
 17.9
35.1
 —
 35.1
  
Total long-term debt, net of current portion$1,295.1
 $15.9
 $1,279.2
$1,332.5
 $13.7
 $1,318.8
  
As of December 31, 2016 (In millions)
Principal Amount Unamortized discount and debt issuance cost Net Debt
As of December 31, 2017 (In millions)
Principal Amount Unamortized discount and debt issuance cost Net Debt Weighted average interest rate
Senior secured revolving credit facility due 2022$56.5
 $—
 $56.5
 2.77%
Senior secured term loan due 2022$644.0
 $8.7
 $635.3
637.5
 8.5
 629.0
 3.27%
5.25% senior notes due 2023600.0
 7.1
 592.9
600.0
 6.0
 594.0
 5.25%
Other debt (1)
30.1
 —
 30.1
29.5
 —
 29.5
  
Total long-term debt$1,274.1
 $15.8
 $1,258.3
Total debt$1,323.5
 $14.5
 $1,309.0
  
Less short-term and current portion of long-term debt18.5
 —
 18.5
32.6
 —
 32.6
  
Total long-term debt, net of current portion$1,255.6
 $15.8
 $1,239.8
$1,290.9
 $14.5
 $1,276.4
  
(1)Other debt includes capital lease obligations of $17.9 million and $17.8 million as of March 31, 20172018 and December 31, 2016, respectively.2017.


On January 24, 2017,April 11, 2018, the Company entered into a thirdfifth amendment to its senior secured term loan. Under the terms of the amended senior secured term loan, the margin was reduced by 5025 basis points to 225175 basis points. At the Company's discretion, interest is based upon (i) a margin rate of 225175 basis points plus the 1-, 2-, 3-, or 6-month LIBOR, subject to a floor of 75 basis points or (ii) a margin rate of 12575 basis points plus a Prime Rate, subject to a floor of 175 basis points. Repayments in the amount of one percent of the aggregate principal amount as of January 24, 2017 are payable annually, while the remaining balance matures on November 12, 2022.
The weighted average annual interest rate for the senior secured term loan for the three months ended March 31, 2017 was 3.17%.
PolyOne has outstanding $600.0 million aggregate principal amount of senior notes, which mature on March 15, 2023. The senior notes bear an interest rate of 5.25% per year, payable semi-annually, in arrears, on March 15 and September 15 of each year.
On February 24, 2017, PolyOne amended and restated itsagreements governing our senior secured revolving credit facility increasing the maximum borrowing facility size from $400.0 million to $450.0 million, subject to a borrowing base with advances against certain U.S. and Canadian accounts receivable, inventory and other assets as specified in the agreement. Under the terms of the amended and restated senior secured revolving facility the maturity date was extended to February 24, 2022. The senior secured revolving credit facility has a U.S. and a Canadian line of credit. Currently there are no borrowings on the Canadian portion of the facility. Advances under the U.S. portion of our revolving credit facility bear interest, at the Company’s option, at a Base Rate or a LIBOR Rate plus an applicable margin. The Base Rate is a fluctuating rate equal to the greater of (i) the Federal Funds Rate plus one-half percent, (ii) the prevailing LIBOR Rate plus one percent, and (iii) the prevailing Prime Rate. The applicable margins vary based on the Company’s daily average excess availability during the previous quarter. The weighted average annual interest rate under this facility for the three months ended March 31, 2017 was 2.88%. As of March 31, 2017, we had $41.0 million outstanding borrowings and had availability of $389.7 million under this facility.
The agreements governing our revolving credit facility and our senior secured term loan, and the indentures and credit agreements governing other debt, contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: consummate asset sales, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of March 31, 2017,2018, we were in compliance with all covenants.
The estimated fair value of PolyOne’s debt instruments at March 31, 20172018 and December 31, 20162017 was $1,306.3$1,372.6 million and $1,272.1$1,343.3 million, respectively, compared to carrying values of $1,297.1$1,353.9 million and $1,258.3$1,309.0 million as of March 31, 20172018 and December 31, 2016,2017, respectively. The fair value of PolyOne’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy.
Note 108 — SEGMENT INFORMATION
Operating income is the primary measure that is reported to our chief operating decision maker (CODM) for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant realignment costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs and other liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment


profit or loss that is reported to and reviewed by our chief operating decision maker. These costs are included in Corporate and eliminations.
PolyOne has fivefour reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; (3) Designed Structures and Solutions; (4) Performance Products and Solutions; and (5)(4) PolyOne Distribution.


Segment information for the three months ended March 31, 20172018 and 20162017 is as follows: 
Three Months Ended March 31, 2017
Three Months Ended March 31, 2016Three Months Ended March 31, 2018 Three Months Ended March 31, 2017
(In millions)Sales to
External
Customers		 Total Sales Operating
Income		 Sales to
External
Customers		 Total Sales Operating
Income		Sales to
External
Customers		 Total Sales Operating
Income		 Sales to
External
Customers		 Total Sales Operating
Income
Color, Additives and Inks$206.5

$211.8

$35.1

$201.2

$204.9

$34.9
$269.1

$270.9

$42.1

$206.5

$211.8

$35.1
Specialty Engineered Materials146.6

159.1

23.6

128.4

141.0

23.4
150.7

163.1

20.1

146.6

159.1

22.9
Designed Structures and Solutions102.1

102.1

(3.3)
108.1

108.5

0.4
Performance Products and Solutions162.2

183.7

22.1

145.2

166.2

19.7
170.6

191.0

22.7

162.2

183.7

22.1
PolyOne Distribution281.4

286.1

18.6

264.1

268.8

17.5
311.2

315.5

18.2

281.4

286.1

18.6
Corporate and eliminations—

(44.0)
(14.7)
—

(42.4)
(24.6)—

(38.9)
(24.3)
—

(44.0)
(16.7)
Total$898.8

$898.8

$81.4

$847.0

$847.0

$71.3
$901.6

$901.6

$78.8

$796.7

$796.7

$82.0
 
Total AssetsTotal Assets
(In millions)March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Color, Additives and Inks$966.4
 $919.1
$1,275.1
 $1,146.8
Specialty Engineered Materials549.0
 539.0
559.9
 545.1
Designed Structures and Solutions454.7
 442.9
Performance Products and Solutions259.5
 238.6
291.0
 275.8
PolyOne Distribution243.4
 206.9
260.0
 250.9
Corporate and eliminations303.7
 376.8
357.9
 486.7
Total assets$2,776.7
 $2,723.3
2,743.9
 2,705.3
Note 119 — COMMITMENTS AND CONTINGENCIES
Environmental — We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to ensure safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows.
In September 2007, the United States District Court for the Western District of Kentucky in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., held that PolyOne must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls), together with certain defense costs of Goodrich Corporation. The rulings also provided that PolyOne can seek indemnification for contamination attributable to Westlake Vinyls.
Following the Court rulings, the parties to the litigation agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls. While we do not currently assume any allocation of costs in our current accrual, weWe will adjust our accrual, in the future, consistent with any such future allocation of costs.
A remedial investigation and feasibility study (RIFS) is underway at Calvert City. The United States Environmental Protection Agency (USEPA) provided a final remedial investigation report in 2015 and assumed responsibility for the completion of the feasibility study. In 2016, the USEPA conducted additional site investigations from which results are still being reviewed. WeAdditionally, we continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement.
The environmental obligation at the site arose as a result of an agreement between The B.F.Goodrich Company (n/k/a Goodrich Corporation) and our predecessor, The Geon Company, at the time of the initial public offering in 1993. Under the agreement, The Geon Company agreed to indemnify Goodrich Corporation for certain environmental costs at the site. Neither PolyOne nor The Geon Company ever operated the facility.
Since 2009, PolyOne, along with respondents Westlake Vinyls, Inc., and Goodrich Corporation, have worked with the United States Environmental Protection Agency (USEPA) on the investigation of contamination at the site as well as evaluation of potential remedies to address the contamination. As recently as November 2017, the USEPA indicated


it supported a containment remedy that is technologically feasible and would protect human health and the environment, minimize disruption to the ongoing operations at the site, and appropriately balance cost with effectiveness.
Contrary to prior understanding, the USEPA issued a proposed plan for the site on December 1, 2017 identifying significant remedial actions beyond containment. The public comment period for the USEPA’s proposed plan ended on February 13, 2018. During the public comment period, we had meaningful discussions with the USEPA regarding an alternative remedy, performed additional technical analysis to support our remedy, and have provided this information to the USEPA in our formal comment response. We believe this alternative is equally protective of human health and the environment, can commence contamination removal much more quickly, is less disruptive to the business operating at the site, and is more cost effective. These discussions, along with our technical analysis of an alternative remedy, give us reason to believe that there are two likely outcomes, the EPA’s proposed plan and our proposed alternative remedy, with neither outcome being more likely than the other. As such, we have not adjusted our current reserve of $107.0 million, which reflects the low end of the range of these two outcomes. Based on the USEPA's proposed plan issued on December 1, 2017, the cost estimate for their proposed remedy is $244.0 million. The USEPA is expected to issue its Record of Decision in 2018, and if the USEPA determines our alternative remedy is not appropriate, there could be an adjustment to increase our current reserve based on the proposed plan issued on December 1, 2017.
On March 13, 2013, PolyOne acquired Spartech.Spartech Corporation (Spartech). One of Spartech's subsidiaries, Franklin-Burlington Plastics, Inc. (Franklin-Burlington), operated a plastic resin compounding facility in Kearny, New Jersey, located adjacent to the Passaic River. The USEPA has requested that companies located in the area of the lower Passaic River, including Franklin-Burlington, cooperate in an investigation of contamination of approximately 17 miles of the lower Passaic River Study Area (the lower Passaic River Study Area)LPRSA). In response, Franklin-Burlington and approximately 70 other companies (collectively, the Cooperating Parties) agreed, pursuant to an Administrative Order on Consent (AOC) with the USEPA, to assume responsibility for development of a RIFSRemedial Investigation and Feasibility Study (RIFS) of the lower Passaic River Study Area.LPRSA. The RIFS costs are exclusive of any costs that may ultimately be required to remediate the LPRSA or costs associated with natural resource damages that may be assessed. By agreeing to bear a portion of the cost of the RIFS, Franklin-Burlington did not admit to any liability or agree to bear any such remediation or natural resource damage costs.
In 2015, the Cooperating Parties submitted to the USEPA a remedial investigation report and feasibility study for the lower Passaic River Study AreaLPRSA, and Franklin-Burlington, alongare currently engaged in technical discussions with nine other PRPs, submitted a de minimis settlement petition to the USEPA asserting the ten entities contributed littleregarding those documents. Neither of those documents contemplates who is responsible for remediation or no impacthow such costs might be allocated to the lower Passaic River. OnPRPs. In March 4, 2016, the USEPA issued a Record of Decision selecting a remedy for an eight-mile portion of the lower Passaic River Study AreaLPRSA at an estimated and discounted cost of $1.4 billion. On March 31, 2016, the USEPA sent a Notice of Potential Liability to over 100 companies, including Franklin-Burlington, and several municipalities for this eight-mile portion. In September 30, 2016, the USEPA reached an agreement with Occidental Chemical Corporation (OCC), which orders OCC to perform the remedial design for the lower eight mile portion of the Passaic River. In September 2017, the USEPA sent a letter to over 80 companies, including Franklin-Burlington indicating that the USEPA would engage the recipients in an allocation process for the lower eight miles of the LPRSA and has engaged a third party allocator as part of that process. Franklin-Burlington is participating in the development of the allocation process with the other parties and the allocator identified by the USEPA, and any allocation for the lower eight miles of the LPRSA is expected to continue into at least 2019.
Based on the currently available information, we have found no evidence that Franklin-Burlington contributed any of the primary contaminants of concern to the lower Passaic River. A timeline as to when an allocation of the remedial costs may be determined is not yet known and any allocation to Franklin-Burlington has not been determined. As a result of these uncertainties, we are unable to estimate a liability related to this matter and, as of March 31, 2017,2018, we have concluded thatnot accrued for costs of remediation related to the same uncertainties that limited our ability to reasonably estimate an accrual at December 31, 2016 still exist and it will not be material to our Consolidated Financial Statements.lower Passaic River.
During the three months ended March 31, 20172018 and 2016,2017, PolyOne recognized $2.2$3.1 million and $1.7$2.2 million, respectively, of expense related to environmental remediation activities. During the three months ended March 31, 2018 PolyOne received $0.7 million of insurance recoveries for previously incurred environmental costs. These expenses and insurance recoveries are included within Cost of sales within our Condensed Consolidated Statements of Income. Insurance recoveries are recognized as a gain when received.
Our Consolidated Balance Sheet includes accruals totaling $116.9$116.5 million and $117.3$117.1 million as of March 31, 20172018 and December 31, 2016,2017, respectively, based on our estimates of probable future environmental expenditures relating to previously contaminated sites. These undiscounted amounts are included in Accrued expenses and other liabilities and Other non-current liabilities on the accompanying Consolidated Balance Sheets. The accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and our view of the most likely remedy. Depending upon the results of future testing, completion and results


of remedial investigation and feasibility studies, the ultimate remediation alternatives undertaken, changes in regulations, technology development, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued at March 31, 2017.2018. However, such additional costs, if any, cannot be currently estimated.
Note 1210 — EQUITY
Changes in accumulated other comprehensive loss year-to-date as of March 31, 20172018 and 20162017 were as follows:
(In millions)Cumulative Translation Adjustment Pension and Other Post-Retirement Benefits Unrealized Gain in Available-for-Sale Securities TotalCumulative Translation Adjustment Pension and Other Post-Retirement Benefits Other Total
Balance at January 1, 2018$(58.6) $5.2
 $—
 $(53.4)
Translation adjustments10.6
 —
 —
 10.6
Balance at March 31, 2018$(48.0) $5.2
 $—
 $(42.8)
       
Balance at January 1, 2017$(99.8) $5.2
 $0.4
 $(94.2)$(99.8) $5.2
 $0.4
 $(94.2)
Translation adjustments6.4
 —
 —
 6.4
6.4
 —
 —
 6.4
Unrealized gain on available-for-sale securities—
 —
 0.1
 0.1
Unrecognized gain—
 —
 0.1
 0.1
Balance at March 31, 2017$(93.4) $5.2
 $0.5
 $(87.7)$(93.4) $5.2
 $0.5
 $(87.7)
       
Balance at January 1, 2016$(76.8) $5.2
 $0.3
 $(71.3)
Translation adjustments(0.2) —
 —
 (0.2)
Balance at March 31, 2016$(77.0) $5.2
 $0.3
 $(71.5)


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
We are a premier provider of specialized polymer materials, services and solutions with operations in specialty engineered materials, advanced composites, color and additive systems plastic sheet and packaging solutions and polymer distribution. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants, and fluoropolymer and silicone colorants. Headquartered in Avon Lake, Ohio, we have employees at manufacturing sites and distribution facilities in North America, South America, Europe Asia and Africa.Asia. We provide value to our customers through our ability to link our knowledge of polymers and formulation technology with our manufacturing and supply chain capabilities to provide value addedvalue-added solutions to designers, assemblers and processors of plastics (our customers). When used in this quarterly report on Form 10-Q, the terms “we,” “us,” “our”, "PolyOne" and the “Company” mean PolyOne Corporation and its consolidated subsidiaries.
Highlights and Executive Summary
A summary of PolyOne’s sales, operating income, net income and net income attributable to PolyOne common shareholders follows:
Three Months Ended March 31,
2017
2016Three Months Ended March 31,
(In millions)2018 2017
Sales$898.8
 $847.0
$901.6
 $796.7
   
Operating income81.4
 71.3
$78.8
 $82.0
   
Net income from continuing operations$47.7
 $48.3
Loss from discontinued operations, net of income taxes(0.8) (1.4)
Net income46.9
 39.0
$46.9
 $46.9
   
Net income attributable to PolyOne common shareholders46.9
 39.1
$46.9
 $46.9
Recent Developments
On January 2, 2018, the Company completed the acquisition of IQAP Masterbatch Group S.L. (IQAP) for $73.0 million, net of cash acquired. IQAP is an innovative provider of specialty colorants and additives based in Spain with customers throughout Europe. The IQAP results are reported in the Color, Additives and Inks segment. IQAP is expected to add approximately $56.0 million to total sales on an annual basis.


Results of Operations — The three months ended March 31, 20172018 compared to three months ended March 31, 2016:2017:
Three Months Ended March 31, Variances —
Favorable (Unfavorable)		Three Months Ended March 31, Variances —
Favorable (Unfavorable)
(Dollars in millions, except per share data)2017
2016
Change
%
Change		2018
2017
Change
%
Change
Sales$898.8
 $847.0
 $51.8
 6.1 %$901.6
 $796.7
 $104.9
 13.2 %
Cost of sales711.4
 661.5
 (49.9) (7.5)%703.1
 614.5
 (88.6) (14.4)%
Gross margin187.4
 185.5
 1.9
 1.0 %198.5
 182.2
 16.3
 8.9 %
Selling and administrative expense106.0
 114.2
 8.2
 7.2 %119.7
 100.2
 (19.5) (19.5)%
Operating income81.4
 71.3
 10.1
 14.2 %78.8
 82.0
 (3.2) (3.9)%
Interest expense, net(14.6) (14.6) —
 — %(15.5) (14.6) (0.9) (6.2)%
Debt extinguishment costs(0.3) —
 (0.3) (100.0)%—
 (0.3) 0.3
 100.0 %
Other (expense) income, net(0.8) 0.3
 (1.1) (366.7)%
Income before income taxes65.7
 57.0
 8.7
 15.3 %
Other income, net1.1
 0.9
 0.2
 22.2 %
Income from continuing operations before income taxes64.4
 68.0
 (3.6) (5.3)%
Income tax expense(18.8) (18.0) (0.8) (4.4)%(16.7) (19.7) 3.0
 15.2 %
Net income46.9
 39.0
 7.9
 20.3 %
Net loss attributable to noncontrolling interests—
 0.1
 (0.1) (100.0)%
Net income from continuing operations47.7
 48.3
 (0.6) (1.2)%
Loss from discontinued operations, net of income taxes(0.8) (1.4) 0.6
 42.9 %
Net income attributable to PolyOne common shareholders$46.9
 $39.1
 $7.8
 19.9 %$46.9
 $46.9
 $—
 — %
              
Earnings per common share attributable to PolyOne common shareholders - Basic:$0.57
 $0.46
    
Earnings per common share attributable to PolyOne common shareholders - Diluted:$0.57
 $0.46
    
Earnings (loss) per common share attributable to PolyOne common shareholders - Basic:Earnings (loss) per common share attributable to PolyOne common shareholders - Basic:
Continuing operations$0.59
 $0.58
    
Discontinued operations(0.01) (0.01)    
Total$0.58
 $0.57
    
Earnings (loss) per common share attributable to PolyOne common shareholders - Diluted:Earnings (loss) per common share attributable to PolyOne common shareholders - Diluted:
Continuing operations$0.59
 $0.58
    
Discontinued operations(0.01) (0.01)    
Total$0.58
 $0.57
    
Sales
Sales increased $51.8$104.9 million, or 6.1%13.2%, in the first quarter of 2017three months ended March 31, 2018 compared to the first quarter of 2016. Previous commercial investments drovethree months ended March 31, 2017 driven by organic volumesales growth of 7.1%5.9%, an increase from acquisitions of 4.4% and acquisitions increased sales by 2.3%. Partially offsetting these increases was unfavorable mix and price of 2.4% and a favorable foreign exchange impact of 0.9%2.9%.

Cost of sales

As a percent of sales, cost of sales increased from 77.1% in the three months ended March 31, 2017 to 78.0% in the three months ended March 31, 2018, primarily as a result of raw material cost inflation and increased logistics costs in North America.
Selling and administrative expense
Selling and administrative expenses decreased $8.2expense increased $19.5 million during the first quarter of 2017three months ended March 31, 2018 compared to the first quarter of 2016.three months ended March 31, 2017. This increase was driven primarily by $6.9 million associated with acquired businesses, a $4.3 million favorable legal settlement received in 2017, and a $3.8 million reversal of certain non-income tax reserves in 2017 due to the expiration of statute of limitations and $2.0 million of additional compensation and employee costs, which included increases associated with our continued investment in 2017.commercial resources.
Interest expense, netIncome taxes
Interest expense, netDuring the three months ended March 31, 2018, the Company’s effective tax rate was 25.9% versus 29.0% for the three months ended March 31, 2017, as comparedprimarily due to the three months ended March 31, 2016 remained consistent. A decrease in interest expense relatedenactment of the Tax Cuts and Jobs Act (TCJA), which lowered the U.S. federal corporate tax rate from 35% to 21%. Although the rate primarily decreased due to the senior secured term loan debt refinancing was offset by an increase in interest expense related to the capital lease obligations obtained in the acquisitions subsequent to March 31, 2016.
Income taxes
During the first quarter of 2017, the Company’s effective tax rate of 28.6% differed from the effective taxlower U.S. rate for the three months ended March 31, 2016 of 31.6% primarily due to a more favorable foreign tax rate differential in 20172018, the following items offset such decrease as compared to 2016.2017: foreign withholding tax from the anticipated repatriation of certain foreign earnings and the contemplation of GILTI to our current operations.


SEGMENT INFORMATION
Operating income is the primary measure that is reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant realignment costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs and other liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our chief operating decision maker. These costs are included in Corporate and eliminations.
PolyOne has fivefour reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; (3) Designed Structures and Solutions; (4) Performance Products and Solutions; and (5)(4) PolyOne Distribution. Our segments are further discussed in Note 10,8, Segment Information, to the accompanying Consolidated Financial Statements. Restructuring actions are further discussed in Note 4, Employee Separation and Restructuring Costs, to the accompanying Consolidated Financial Statements. We do not expect the remaining charges or further benefits associated with these actions to have a material impact to our segments or the Consolidated Financial Statements going forward.
As previously reported in our annual report on Form 10-K for the year ended December 31, 2016, we performed our annual goodwill impairment analysis on October 1, 2016, which resulted in an excess of fair value over carrying value of 8.0% for our Custom Engineered Structures (CES) reporting unit, which is included in our Designed Structures and Solutions segment results. CES had goodwill of $108.8 million at March 31, 2017. We have continued to monitor the performance of CES in 2017 and our assessment for the quarter ended March 31, 2017 did not indicate the presence of any goodwill impairment triggering events for CES. If the timing of new business opportunities and operational improvements are not achieved, impairment of intangible assets, including goodwill, and our other long-lived assets, could result.


Sales and Operating Income — The three months ended March 31, 20172018 compared to the three months ended March 31, 20162017: 
 Three Months Ended March 31, Variances — Favorable
(Unfavorable)
(Dollars in millions)2017
2016
Change
%  Change
Sales:       
Color, Additives and Inks$211.8
 $204.9
 $6.9
 3.4 %
Specialty Engineered Materials159.1
 141.0
 18.1
 12.8 %
Designed Structures and Solutions102.1
 108.5
 (6.4) (5.9)%
Performance Products and Solutions183.7
 166.2
 17.5
 10.5 %
PolyOne Distribution286.1
 268.8
 17.3
 6.4 %
Corporate and eliminations(44.0) (42.4) (1.6) (3.8)%
Total Sales$898.8
 $847.0
 $51.8
 6.1 %
        
Operating income:       
Color, Additives and Inks$35.1
 $34.9
 $0.2
 0.6 %
Specialty Engineered Materials23.6
 23.4
 0.2
 0.9 %
Designed Structures and Solutions(3.3) 0.4
 (3.7) nm
Performance Products and Solutions22.1
 19.7
 2.4
 12.2 %
PolyOne Distribution18.6
 17.5
 1.1
 6.3 %
Corporate and eliminations(14.7) (24.6) 9.9
 40.2 %
Total Operating Income$81.4
 $71.3
 $10.1
 14.2 %
        
Operating income as a percentage of sales:       
Color, Additives and Inks16.6 % 17.0% (0.4) nm
Specialty Engineered Materials14.8 % 16.6% (1.8) nm
Designed Structures and Solutions(3.2)% 0.4% (3.6) nm
Performance Products and Solutions12.0 % 11.9% 0.1
 nm
PolyOne Distribution6.5 % 6.5% —
 nm
Total9.1 % 8.4% 0.7
 nm
nm - not meaningful
 Three Months Ended March 31, Variances — Favorable
(Unfavorable)
(Dollars in millions)2018
2017
Change
%  Change
Sales:       
Color, Additives and Inks$270.9
 $211.8
 $59.1
 27.9 %
Specialty Engineered Materials163.1
 159.1
 4.0
 2.5 %
Performance Products and Solutions191.0
 183.7
 7.3
 4.0 %
PolyOne Distribution315.5
 286.1
 29.4
 10.3 %
Corporate and eliminations(38.9) (44.0) 5.1
 11.6 %
Total Sales$901.6
 $796.7
 $104.9
 13.2 %
        
Operating income:       
Color, Additives and Inks$42.1
 $35.1
 $7.0
 19.9 %
Specialty Engineered Materials20.1
 22.9
 (2.8) (12.2)%
Performance Products and Solutions22.7
 22.1
 0.6
 2.7 %
PolyOne Distribution18.2
 18.6
 (0.4) (2.2)%
Corporate and eliminations(24.3) (16.7) (7.6) (45.5)%
Total Operating Income$78.8
 $82.0
 $(3.2) (3.9)%
        
Operating income as a percentage of sales:  
Color, Additives and Inks15.5% 16.6% (1.1) % points
Specialty Engineered Materials12.3% 14.4% (2.1) % points
Performance Products and Solutions11.9% 12.0% (0.1) % points
PolyOne Distribution5.8% 6.5% (0.7) % points
Total8.7% 10.3% (1.6) % points
Color, Additives and Inks    
Sales increased $6.9by $59.1 million, or 3.4%27.9%, in the first quarter of 2017three months ended March 31, 2018 compared to the first quarter of 2016. Organic sales increased 2.3% driven largely by increases in the packaging and textile markets.three months ended March 31, 2017. Acquisitions increased sales by 2.7%16.6%, while unfavorablefavorable foreign exchange rates negatively impactedadded 5.9% and organic sales increased 5.4% driven by 1.6%.growth in all regions.
Operating income increased $0.2rose by $7.0 million in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarterthree months ended March 31, 2017 as a result of 2016 as the benefit from higherincreased sales, was largelypartially offset by the impacts of unfavorable exchange rates andhigher raw material cost inflation.costs and increased costs from our continued investment in commercial resources.


Specialty Engineered Materials
Sales increased $18.1$4.0 million, or 12.8%2.5%, in the first quarter of 2017three months ended March 31, 2018 compared to the first quarterthree months ended March 31, 2017. Sales growth in Europe and Asia contributed 7.0% (including favorable foreign exchange of 2016. Acquisitions added 9.7% while organic sales growth of 4.8%5.8%) and was partially offset by unfavorable foreign exchange of 1.6%.lower sales in North America, primarily in wire and cable applications.
Operating income increased $0.2decreased $2.8 million in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarter of 2016 primarilythree months ended March 31, 2017 due to increasedlower sales which was offset by unfavorable mix,in North America, the impact of raw material cost inflation and foreign exchange.
Designed Structures and Solutions
Sales decreased $6.4 million, or 5.9%,increased costs from our continued investment in the first quarter of 2017 compared to the first quarter of 2016. Sales growth of 0.7% from business gains was more than offset by unfavorable mix.


Operating income decreased $3.7 million in the first quarter of 2017 as compared to the first quarter of 2016 as a result of unfavorable mix.commercial resources.
Performance Products and Solutions
Sales increased $17.5$7.3 million, or 10.5%4.0%, in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarter of 2016 primarilythree months ended March 31, 2017 due to volume growth.growth as well as higher average selling prices, resulting from an increase in hydrocarbon based raw material costs.
Operating income increased $2.4$0.6 million in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarterthree months ended March 31, 2017 as the benefit of 2016 resultingincreased sales was partially offset by raw material cost inflation, increased costs from our continued investment in commercial resources and higher sales.logistics costs.
PolyOne Distribution
Sales increased $17.3$29.4 million, or 6.4%10.3%, in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarterthree months ended March 31, 2017 as a result of 2016. Volumevolume growth of 8.5% was partially offset by unfavorable mix.and higher overall average selling prices associated with hydrocarbon based raw material cost inflation.
Operating income increased $1.1decreased $0.4 million in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarter of 2016three months ended March 31, 2017 primarily as a result of increased sales.selling and administrative expense, including our continued investment in commercial resources and higher logistics costs.
Corporate and Eliminations
Corporate and eliminations decreased $9.9increased $7.6 million in the first quarter of 2017three months ended March 31, 2018 as compared to the first quarter of 2016. This improvement wasthree months ended March 31, 2017 primarily as a result of a $4.3 million favorable legal settlement received in 2017 and a $3.8 million reversal of certain non-income tax reserves in 2017 due to the expiration of statute of limitations and lower restructuring costs of $3.2 million.limitations.
Liquidity and Capital Resources
Our objective is to finance our business through operating cash flow and an appropriate mix of debt and equity. By laddering the maturity structure, we avoid concentrations of debt maturities, reducing liquidity risk. We may from time to time seek to retire or purchase our outstanding debt with cash and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. We may also seek to repurchase our outstanding common shares. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved have been and may continue to be material.
The following table summarizes our liquidity as of March 31, 20172018 and December 31, 2016:2017:
(In millions)March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Cash and cash equivalents$157.7
 $226.7
$165.5
 $243.6
Revolving credit availability393.8
 386.2
305.9
 330.3
Liquidity$551.5
 $612.9
$471.4
 $573.9
As of March 31, 2017,2018, approximately 95%91% of the Company’s cash and cash equivalents resided outside the United States. Repatriation of these fundssuch foreign cash and cash equivalents are exempt from domestic taxation pursuant to the enactment of the TCJA, but in certain cases may be subject to foreign taxes. During the first quarter of 2018, in contemplation of the TCJA enactment, we determined we would repatriate certain foreign earnings. This repatriation of cash is subject to foreign withholding taxes and a deferred tax liability of $3.4 million was recorded as of March 31, 2018. As we continue to assess the impacts of the TCJA and the geopolitical environment in foreign countries, strategic repatriation opportunities may arise and could result in potentiala recognition of additional tax liabilities.
After considering the impact of foreign and domestic taxes. Totax credit carryforwards, we anticipate that the extentresulting cash tax payable as a result of the one-time transition tax on previously deferred foreign earnings previously treated as permanently reinvested wereis estimated to be repatriated, the potential U.S. tax liability may be reduced by any foreign income taxes paid on these earnings. However, based on the Company’s policy of permanent reinvestment, it is not practicable to determine the U.S. federal income tax liability, if any. Determination of the amount of unrecognized deferred tax liabilities and related foreign withholding taxes is not practicable due to the complexities associated with this hypothetical calculation and the Company’s permanent reinvestment policy.less than $10.0 million.


Cash Flows
The following describes the materialsignificant components of cash flows from operating, investing and financing activities for the three months ended March 31, 20172018 and 2016.2017.
Operating Activities — In the three months ended March 31, 2017,2018, net cash usedprovided by operating activities was $23.7$26.7 million as compared to net cash used by operating activities of $23.5$23.7 million for the three months ended March 31, 2016. The increase2017 primarily reflecting a receipt of $27.9 million of U.S. federal income tax refunds and a decrease in net cash used by operating activities of $0.2 million is primarily a result of an increase in working capital of $7.7 million, which was offset by higher earnings.inventory during the three months ended March, 31, 2018.


Working capital as a percentage of sales, which we define as the average accounts receivable, plus average inventory, less average accounts payable, divided by sales, for the first quarter of 20172018 increased to 9.9%10.6% compared to 9.7%10.1% for the first quarter of 2016.2017. This working capital percentage increase is primarily due to the impact of recent acquisitions.
Investing Activities — Net cash used by investing activities during the three months ended March 31, 20172018 of $35.5$85.9 million reflects $20.9$73.0 million for the acquisition of acquisitionsIQAP and $15.5$12.9 million of capital expenditures.
Net cash used by investing activities during the three months ended March 31, 20162017 of $92.4$35.5 million reflects $20.9 million for the acquisition of certain businesses for $72.8 millionSilCoTec, Inc. and $19.6$15.5 million of capital expenditures.
Financing Activities — Net cash used by financing activities for the three months ended March 31, 2018 of $22.1 million reflects $42.2 million of repurchases of our outstanding common shares and $14.2 million of dividends paid, offset by net borrowings of $37.5 million under our senior secured revolving credit facility.
Net cash used by financing activities for the three months ended March 31, 2017 of $11.0 millionreflects the net borrowings of $40.4 million under our senior secured revolving credit facility, primarily offset by $34.3 million of repurchases of our outstanding common shares and $11.3 million of dividends paid.
Net cash used by financing activities for the three months ended March 31, 2016 of $9.2 million reflects $39.6 million of repurchases of our outstanding common shares and $10.4 million of dividends paid. These cash outflows were partially offset by net borrowings of $47.3 million under our revolving credit facility.
Debt
As of March 31, 2017,2018, the principal amount of debt totaled $1,313.0$1,367.6 million. Aggregate maturities of the principal amount of debt for the current year, next five years and thereafter, are as follows:
(In millions)    
2017 $16.4
2018 20.9
 $33.4
2019 6.6
 6.6
2020 6.7
 8.0
2021 6.7
 7.4
2022 652.7
 707.3
2023 600.4
Thereafter 603.0
 4.5
Aggregate maturities $1,313.0
 $1,367.6
As of March 31, 2017,2018, we were in compliance with all customary financial and restrictive covenants pertaining to our debt. For additional information regarding our debt please see Note 9,7, Financing Arrangements.
Contractual Obligations
We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans and purchase obligations. During the three months ended March 31, 2017,2018, there were no material changes to these obligations as reported in our annual report on Form 10-K for the year ended December 31, 2016.2017.



CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
In this quarterly report on Form 10-Q, 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 “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 include statements relating to future actions; prospective changes in raw material costs, product pricing or product demand; future performance; estimated capital expenditures; results of current and anticipated market conditions and market strategies; sales efforts; expenses; the outcome of contingencies such as legal proceedings and environmental liabilities; and financial results. Factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to:

effectsdisruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future;
the effect on foreign operations due toof currency fluctuations, tariffs and other political, economic and regulatory risks;
changes in polymer consumption growth rates and laws and regulations regarding the disposal of plastic materialsin jurisdictions where we conduct business;
changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online in the industries in which we participate;online;
fluctuations in raw material prices, quality and supply, and in energy prices and supply;
production outages or material costs associated with scheduled or unscheduled maintenance programs;
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 working capital reductions, cost reductions and employee productivity goals;
an inability to maintain appropriate relations with unions and employees;
the strength and timing of economic recoveries;
the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability;
disruptions, uncertainty or volatility in the credit markets that may limit our access to capital;
the amount and timing of repurchases, if any, of PolyOne common shares;
our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;
our ability to realize anticipated savings and operational benefits from the realignment of assets, including the closure of manufacturing facilities; the timing of closings and shifts of production to new facilities related to asset realignments and any unforeseen loss of customers and/or disruptions of service or quality caused by such closings and/or production shifts; separation and severance amounts that differ from original estimates, amounts for non-cash charges related to asset write-offs and accelerated depreciation realignments of property, plant and equipment, that differ from original estimates;
the ability to successfully identify, evaluate and integrate acquired businesses into our operations, including whether such businesses will be accretive to our earnings, retain the management teams of acquired businesses, and retain relationships with customers of acquired businesses, including, without limitation, SilCoTec, Comptek and substantially all of the assets of Gordon Composites, Polystrand and Gordon Holdings;matters;
information systems failures and cyberattacks;
an inability to raise or sustain prices for products or services;
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; and
other factors described in our annual report on Form 10-K for the year ended December 31, 20162017 under Item 1A, “Risk Factors.”


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 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, except as otherwise required by law. You are advised, however, to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K filed with the SEC. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to exposures to market risk as reported in our annual report on Form 10-K for the year ended December 31, 2016.2017.


ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures
PolyOne’s management, under the supervision of and with the participation of its Chief Executive Officer and its Chief Financial Officer, has evaluated the effectiveness of the design and operation of PolyOne’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report. Based upon this evaluation, PolyOne’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, its disclosure controls and procedures were effective.
Changes in internal control over financial reporting
There were no changes in PolyOne’s internal control over financial reporting during the quarter ended March 31, 20172018 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
Information regarding certain legal proceedings can be found in Note 11,9, Commitments and Contingencies, to the consolidated financial statements and is incorporated by reference herein.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information regarding repurchase of shares of our common shares during the period indicated.
PeriodTotal Number of Shares Purchased Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program 
Maximum Number of Shares that May Yet be Purchased Under the Program (1)
Total Number of Shares Purchased Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program 
Maximum Number of Shares that May Yet be Purchased Under the Program (1)
January 1 to January 31405,358
 $34.13
 405,358
 8,081,180
89,427
 $43.79
 89,427
 6,396,447
February 1 to February 28595,252
 34.28
 595,252
 7,485,928
910,573
 42.05
 910,573
 5,485,874
March 1 to March 31—
 —
 —
 7,485,928


 —
 

 5,485,874
Total1,000,610
 $34.22
 1,000,610
  1,000,000
 $42.21
 1,000,000
  
(1) On August 18, 2008, we announced that our Board of Directors approved a common shares repurchase program authorizing PolyOne to purchase up to 10.0 million of its common shares. On October 11, 2011 and October 23, 2012, we further announced that our Board of Directors had increased the common shares repurchase authorization by an additional 5.3 million and 13.2 million, respectively. On May 16, 2016, we announced that we would increase our share buyback by 7.3 million to 10.0 million. As of March 31, 2017,2018, approximately 7.55.5 million shares remain available for purchase under these authorizations. Purchases of common shares may be made by open market purchases or privately negotiated transactions and may be made pursuant to Rule 10b5-1 plans and accelerated share repurchases.


ITEM 6. EXHIBITS
Exhibits - Refer to the Exhibit Index attached, which is incorporated herein by reference.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
April 27, 2017POLYONE CORPORATION
/s/ Bradley C. Richardson
Bradley C. Richardson
Executive Vice President, Chief Financial Officer


EXHIBIT INDEX
Exhibit No. Exhibit Description
   
10.1
31.1
 Amendment Agreement No. 3, dated January 24, 2017, by and among PolyOne Corporation, the subsidiaries of PolyOne Corporation party thereto, Citibank, N.A., as administrative agent, and the lenders party thereto.
10.2Second Amended and Restated Credit Agreement, dated February 24, 2017, by and among PolyOne Corporation, the subsidiaries of PolyOne Corporation party thereto, Wells Fargo Capital Finance, LLC, as administrative agent, and the various lenders and other agents party thereto.
31.1
Certification of Robert M. Patterson, Chairman, President and Chief Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2
 
Certification of Bradley C. Richardson, Executive Vice President, Chief Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32.1
 
Certification pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by Robert M. Patterson, Chairman, President and Chief Executive Officer
   
32.2
 
Certification pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by Bradley C. Richardson, Executive Vice President, Chief Financial Officer
   
101.INS XBRL Instance Document
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
April 26, 2018POLYONE CORPORATION
/s/ Bradley C. Richardson
Bradley C. Richardson
Executive Vice President, Chief Financial Officer

21