FAIRLAWN, Ohio, June 28, 2011 /PRNewswire/ --
- For the second quarter ended May 31,
2011, Net Income was $6.2
million, compared to $15.1
million in the second quarter of 2010. Second quarter
2011 Adjusted Net Income was $7.3
million, compared to second quarter 2010 Pro Forma Adjusted
Net Income of $12.8 million.
- Second quarter 2011 Diluted Earnings Per Share was $0.14 compared to $0.33 in the second quarter of 2010. Second
quarter 2011 Adjusted Diluted Earnings Per Share was $0.16, compared to second quarter 2010 Pro Forma
Adjusted Diluted Earnings Per Share of $0.29.
- Raw material costs were $26.3
million higher in the second quarter of 2011 compared to a
year ago, as several key raw material components hit all-time
record highs. OMNOVA's pricing increased $22.5 million in the quarter, or an 86% recovery,
with index-price contracts lagging slightly due to contractual
timing of raw material cost pass-through.
- Refer to the accompanying "Non-GAAP and Other Financial
Measures" tables of this release for further explanation and
reconciliation regarding 2011 Adjusted Segment Operating Profit,
Adjusted Net Income and Adjusted Diluted Earnings Per Share, and
2010 Pro Forma Adjusted Segment Operating Profit, Pro Forma
Adjusted Net Income and Pro Forma Adjusted Diluted Earnings Per
Share.
OMNOVA Solutions Inc. (NYSE: OMN) today announced Net Income of
$6.2 million, or $0.14 Diluted Earnings Per Share, for the second
quarter ended May 31, 2011.
This compares to Net Income of $15.1
million, or Diluted Earnings Per Share of $0.33 for the second quarter of 2010. In the
second quarter of 2011, there were a number of non-recurring
charges totaling $1.1 million
resulting primarily from the acquisition of specialty chemicals
producer ELIOKEM. Excluding these items, Adjusted Net Income
for the second quarter of 2011 was $7.3 million, with Adjusted Diluted Earnings
Per Share of $0.16, as compared to
the Adjusted Pro Forma Net Income of $12.8
million or $0.29 per diluted
share for the second quarter of 2010. The Adjusted Net Income
for the second quarter of 2011 also includes, net of tax,
unrecovered raw material costs of $2.4
million, lower margin on weaker volumes of $ 2.2 million, foreign exchange currency losses
of $1.8 million and new plant
start-up costs of $0.3 million. The
Diluted Earnings Per Share impact of these items was approximately
$(0.14).
"The Company faced stiff headwinds in the second quarter with
record high raw material costs, weaker demand in certain end-use
markets and start-up costs for a new plant in China," said Kevin
McMullen, OMNOVA Solutions' Chairman and Chief Executive
Officer. "In the face of these market challenges, our second
quarter results, while below our prior expectations, reflect the
Company's improved, more robust and global business model. The
integration of ELIOKEM has added numerous innovative products,
expanded our penetration into new and adjacent markets and
accelerated the globalization of our business."
Consolidated Results for the Quarter Ending May 31, 2011 – Net sales increased
$103.5 million, or 45.7%, to
$329.9 million for the second quarter
of 2011, compared to $226.4 million for the second quarter of
2010. The sales improvement was driven by $94.8 million of revenues from the ELIOKEM
acquisition, and increased OMNOVA legacy sales of $8.7 million. The higher OMNOVA legacy
sales resulted from price increases of $22.5
million and $3.0 million of
favorable currency translation effects which were partially offset
by volume decreases of $16.8 million.
Gross profit in the second quarter of 2011 increased to
$65.1 million, compared to
$47.2 million in the second
quarter of 2010, primarily due to the ELIOKEM acquisition.
Raw material costs in OMNOVA's legacy business increased
$26.3 million in the second quarter
versus the same period last year. Gross profit margins in the
second quarter of 2011 were 19.7%, compared to margins of 20.8% in
the second quarter of 2010. The decline in gross profit
margin percentage was due primarily to the significant raw material
inflation; the effect of Performance Chemicals index pricing in
which higher raw material costs are passed to customers, subject to
a contractual time lag, with no gross margin benefit; new plant
start-up costs; and changes in product mix.
Selling, general and administrative expenses (SG&A) in the
second quarter of 2011 increased to $34.3 million, or 10.4% of sales, compared
to $25.6 million, or 11.3% of
sales, in the second quarter of 2010. The increase of
$8.7 million in SG&A was
primarily due to the ELIOKEM acquisition. The decline as a
percentage of sales was due to higher sales and the Company's
focused ongoing efforts to control costs and to leverage SG&A
across its global operations and growing revenue base.
Interest expense in the second quarter of 2011 was $9.6 million, an increase of $7.7 million from the second quarter of
2010, due to higher borrowing levels and an increase in interest
rates resulting from the refinancing of the Company to facilitate
the ELIOKEM acquisition.
In the quarter, ELIOKEM acquisition and integration related
expenses were $0.8 million and
restructuring and severance expenses were $0.7 million.
For the second quarter of 2011, income tax expenses increased to
$3.5 million, a 36% effective income
tax rate, as compared to $0.9 million
and a 6% effective tax rate in the second quarter of 2010.
Minimal taxes were provided in last year's second quarter due
to the existence of a deferred tax asset valuation allowance in the
U.S. which was reversed in the fourth quarter of 2010 because of an
improvement in the Company's earnings outlook. The 2010
reversal of the valuation allowance resulted in the Company
recognizing higher tax expense in 2011 as compared to the second
quarter of 2010. Global cash taxes are expected to be minimal as
the Company has $118.9 million of
U.S. federal net operating loss carryforwards and $109.2 million of state and local tax net
operating loss carryforwards with expiration dates between 2021 and
2031.
As of May 31, 2011, the Company's
debt of $457.2 million was
comprised of $250.0 million of
7.875% Senior Notes maturing in 2017, a term loan of $197.2 million maturing in 2016 and
$10.0 million of foreign borrowings.
Cash and cash equivalents totaled $79.5 million. There were no
outstanding borrowings under the Company's U.S. revolving
asset-based credit facility and the available borrowing capacity
was $94.9 million.
Performance Chemicals - Net sales during the second
quarter of 2011 increased $106.9
million, to $245.5 million,
compared to $138.6 million in the
second quarter of 2010. The ELIOKEM acquisition added
$94.8 million of sales versus the
prior year. Performance Chemicals' legacy business sales
improvement of $12.1 million in the
second quarter of 2011 was due to pricing increases of $17.8 million and $0.6 million of foreign currency translation
effects partially offset by volume decreases of $6.3 million. Segment Operating Profit was
$23.9 million for the second quarter
of 2011 as compared to $26.7 million in the second quarter of 2010,
a decrease of $2.8 million.
Performance Chemicals Adjusted Segment Operating Profit for the
second quarter of 2011 was $24.2 million, excluding $0.3 million of restructuring and severance,
compared to the second quarter pro forma 2010 amount of
$29.7 million. The adjusted
operating profit margin was 9.9% for the second quarter of 2011,
compared to the pro forma adjusted operating profit margin of 13.9%
in the second quarter of 2010. The adjusted operating profit
margin declined due to higher raw material costs; the effect
of the index pricing in which higher raw material costs are passed
to customers, subject to a contractual time lag, with no gross
margin benefit; plant start-up costs, and changes in product
mix.
The former ELIOKEM product lines are now being managed on an
integrated global basis while offering highly focused local
customer service and applications support. The Company is focused
on significant cost and revenue synergy opportunities in specialty
coatings, specialty latices and oil field chemicals, supported by
strong product and application development centers in Europe, North
America and Asia.
Decorative Products – Net sales were $84.4 million during the second quarter of 2011,
a decrease of $3.4 million, or 3.9%,
compared to the second quarter of 2010. Sales as compared to
last year improved in global wallcovering and decorative laminates
but declined in global coated fabrics and performance films. In
total, volume declines, primarily related to the China coated fabric and domestic performance
film product lines, were $10.5
million in the quarter. These were partially offset by
price increases of approximately $4.7
million and favorable foreign exchange impact of
$2.4 million. Adjusted Segment
Operating results were breakeven in the second quarter of 2011,
compared to Pro Forma Adjusted Segment Operating Profit of
$2.4 million for the second quarter
of 2010. However, this is an improvement from the Adjusted
Segment Operating Loss of $1.7
million in the first quarter of 2011. The major
contributors to the year-over-year operating profit decline were
the reduction in sales volumes and increased raw material costs.
Higher raw material costs of approximately $5.6 million were partially offset by price
increases of $4.7 million, or an 84%
recovery. Price recovery continued to improve throughout the
quarter.
The Laminates product line generated sales increases of over 13%
compared to a year ago and was profitable during the quarter.
North American wallcovering generated higher year-over-year
sales for the third consecutive quarter.
Earnings Conference Call - OMNOVA Solutions has scheduled
its Earnings Conference Call for Wednesday,
June 29, 2011, at 11:00 a.m.
ET. The live audio event will be hosted by OMNOVA
Solutions' Chairman and Chief Executive Officer, Kevin McMullen. It is anticipated to be
approximately one hour in length and may be accessed by the public
from the Company's website (www.omnova.com). Webcast
attendees will be in a listen-only mode. Following the live
webcast, OMNOVA will archive the call on its website until
noon ET, July 20, 2011. A
telephone replay will also be available beginning at 1:00 p.m. ET on June 29,
2011, and ending at 11:59 p.m., ET on July 20, 2011. To listen to the telephone
replay, callers should dial: (USA) 800-475-6701 or (Int'l) 320-365-3844.
The Access Code is 205911.
Non-GAAP and
Other Financial Measures
Reconciliation of Reported
Segment Sales and Operating Profit (Loss) to Net Sales and Net
Income
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
May
31,
|
|
May
31,
|
|
(Dollars in
millions)
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Performance Chemicals
|
$ 245.5
|
|
$138.6
|
|
$458.3
|
|
$251.4
|
|
Decorative Products
|
84.4
|
|
87.8
|
|
160.3
|
|
158.9
|
|
Total
Sales
|
$329.9
|
|
$226.4
|
|
$618.6
|
|
$410.3
|
|
Segment Operating Profit
(Loss)
|
|
|
|
|
|
|
|
|
Performance
Chemicals
|
$ 23.9
|
|
$ 26.7
|
|
$ 45.3
|
|
$ 40.5
|
|
Decorative
Products
|
(.5)
|
|
(4.5)
|
|
(2.3)
|
|
(4.6)
|
|
Interest expense
|
(9.6)
|
|
(1.9)
|
|
(18.9)
|
|
(3.7)
|
|
Corporate expense
|
(3.3)
|
|
(3.6)
|
|
(7.4)
|
|
(7.0)
|
|
Acquisition and integration
related expense
|
(.8)
|
|
(.7)
|
|
(2.7)
|
|
(.7)
|
|
Deferred financing fees
write-off
|
—
|
|
—
|
|
(1.0)
|
|
—
|
|
Income
Before Income Taxes
|
9.7
|
|
16.0
|
|
13.0
|
|
24.5
|
|
Income tax expense
|
3.5
|
|
.9
|
|
5.8
|
|
1.6
|
|
Net
Income
|
$
6.2
|
|
$
15.1
|
|
$
7.2
|
|
$
22.9
|
|
Depreciation and
amortization
|
$ 8.8
|
|
$ 5.5
|
|
$ 17.2
|
|
$ 11.0
|
|
Capital expenditures
|
$ 6.2
|
|
$ 2.5
|
|
$ 11.0
|
|
$ 5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
This Earnings Release includes adjusted segment operating profit
(loss), adjusted net income and adjusted diluted earnings per share
which are non-GAAP financial measures as defined by the Securities
and Exchange Commission. Management reviews the adjusted financial
measures in assessing the performance of the business segments and
in making decisions regarding the allocation of resources to the
business segments. Management also believes that the adjusted and
pro forma information is useful for providing investors with an
understanding of the Company's business and operating performance.
Management excludes the items shown in the tables below because
management does not consider them to be reflective of normal
operations. These adjusted financial measurements are not
measurements of financial performance under GAAP and such financial
measures should not be considered as an alternative to segment
operating profit (loss), net income, diluted earnings per share or
other measures of financial performance determined in accordance
with GAAP. These non-GAAP financial measures may not be comparable
to similarly titled measures reported by other companies. The table
below provides the reconciliation of these financial measures to
the comparable GAAP financial measures.
The second quarter and year to date 2011 adjusted segment
operating profit (loss), adjusted net income and adjusted diluted
earnings per share excludes certain items which management does not
consider to be reflective of normal operations.
The second quarter and year to date 2010 pro forma presentation
reflects the pro forma results as if ELIOKEM was owned by the
Company from the beginning of the year; the post-acquisition
capital structure and related interest expense; the Company's
estimate of an effective tax rate of 33.5%; and other adjustments
related to non-operational items.
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
May
31,
|
|
May
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
(Dollars in
millions)
|
Actual
|
|
Pro
forma
|
|
Actual
|
|
Pro
forma
|
|
Sales
|
|
|
|
|
|
|
|
|
Performance Chemicals
(Legacy)
|
$150.7
|
|
$138.6
|
|
$288.8
|
|
$251.4
|
|
Performance Chemicals (ELIOKEM
International)
|
94.8
|
|
75.1
|
|
169.5
|
|
144.6
|
|
Total Performance
Chemicals
|
245.5
|
|
213.7
|
|
458.3
|
|
396.0
|
|
Decorative Products
|
84.4
|
|
87.8
|
|
160.3
|
|
158.9
|
|
Total Sales
|
$329.9
|
|
$301.5
|
|
$618.6
|
|
$554.9
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP and
Other Financial Measures (Continued)
Reconciliation Tables for: (A)
Adjusted Segment Operating Profit (Loss), (B) Adjusted Net Income,
(C) Adjusted Diluted Earnings Per Share
|
|
(A) Adjusted Segment Operating
Profit (Loss)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Reconciliation
|
May
31,
|
|
May
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
(Dollars in
millions)
|
Actual
|
|
Pro
forma
|
|
Actual
|
|
Pro
forma
|
|
Performance Chemicals Segment
Operating Profit
|
$23.9
|
|
$26.7
|
|
$45.3
|
|
$40.5
|
|
ELIOKEM operating profit - prior
year
|
—
|
|
12.7
|
|
—
|
|
22.6
|
|
Restructuring and
severance
|
.3
|
|
—
|
|
1.0
|
|
.2
|
|
Distribution rights
settlement
|
—
|
|
(9.7)
|
|
—
|
|
(9.7)
|
|
Fair value write-up of ELIOKEM
inventory acquired
|
—
|
|
—
|
|
2.7
|
|
—
|
|
Total adjustments to Performance
Chemicals'
|
|
|
|
|
|
|
|
|
segment operating
profit
|
.3
|
|
3.0
|
|
3.7
|
|
13.1
|
|
Performance Chemicals' Adjusted
Segment
|
$24.2
|
|
$29.7
|
|
$49.0
|
|
$53.6
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decorative Products Segment
Operating Loss
|
$ (.5)
|
|
$ (4.5)
|
|
$ (2.3)
|
|
$ (4.6)
|
|
Restructuring and
severance
|
.3
|
|
—
|
|
.4
|
|
.1
|
|
Tax indemnification
settlement
|
.2
|
|
—
|
|
.2
|
|
—
|
|
Asset impairment
|
—
|
|
6.2
|
|
—
|
|
6.2
|
|
Strike costs
|
—
|
|
.4
|
|
—
|
|
.4
|
|
Legal settlement
|
—
|
|
.3
|
|
—
|
|
.3
|
|
Total adjustments to Decorative
Products' segment
|
|
|
|
|
|
|
|
|
operating (loss)
profit
|
.5
|
|
6.9
|
|
.6
|
|
7.0
|
|
Decorative Products' Adjusted
Segment
|
|
|
|
|
|
|
|
|
Operating
Profit (Loss)
|
$
—
|
|
$
2.4
|
|
$
(1.7)
|
|
$
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B) Adjusted Net Income
Reconciliation
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
May
31,
|
|
May
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
(Dollars in millions, except per
share data)
|
Actual
|
|
Pro
forma
|
|
Actual
|
|
Pro
forma
|
|
Net Income
|
$6.2
|
|
$15.1
|
|
$ 7.2
|
|
$22.9
|
|
ELIOKEM operating profit - prior
year
|
—
|
|
12.7
|
|
—
|
|
22.6
|
|
Restructuring and
severance
|
.7
|
|
—
|
|
1.5
|
|
.3
|
|
Fair value adjustment of ELIOKEM
inventory acquired
|
—
|
|
—
|
|
2.7
|
|
—
|
|
Distribution rights
settlement
|
—
|
|
(9.7)
|
|
—
|
|
(9.7)
|
|
Asset impairment
|
—
|
|
6.2
|
|
—
|
|
6.2
|
|
Tax indemnification
settlement
|
.2
|
|
—
|
|
.2
|
|
—
|
|
Strike costs
|
—
|
|
.4
|
|
—
|
|
.4
|
|
Legal settlement
|
—
|
|
.3
|
|
—
|
|
.3
|
|
Additional interest
expense(1)
|
—
|
|
(7.3)
|
|
—
|
|
(14.7)
|
|
Acquisition and integration
expenses
|
.8
|
|
.7
|
|
2.7
|
|
.7
|
|
Deferred financing fees
written-off
|
—
|
|
—
|
|
1.0
|
|
—
|
|
Additional income tax
expense(2)
|
(.6)
|
|
(5.6)
|
|
(2.7)
|
|
(8.7)
|
|
Tax expense for liquidation of
foreign subsidiary
|
—
|
|
—
|
|
1.1
|
|
—
|
|
Adjusted Net
Income
|
$7.3
|
|
$12.8
|
|
$13.7
|
|
$20.3
|
|
(1)The
additional interest expense is estimated as if the Company's debt
refinancing activities in November and December 2010 were
effective December 1, 2009.
(2)The
additional tax expense is estimated as the additional tax expense
(benefit) attributed to the adjusted and pro forma items using the
Company's current estimated effective tax rate of 36.1% for 2011
and 33.5% for 2010 pro forma.
|
|
|
|
|
|
|
|
|
|
|
|
(C) Adjusted Diluted Earnings
Per Share
Reconciliation
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
May
31,
|
|
May
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
Actual
|
|
Pro
forma
|
|
Actual
|
|
Pro
forma
|
|
Diluted Earnings Per
Share
|
$.14
|
|
$.33
|
|
$.16
|
|
$.51
|
|
ELIOKEM operating profit - prior
year
|
—
|
|
.28
|
|
—
|
|
.50
|
|
Restructuring and
severance
|
.01
|
|
—
|
|
.03
|
|
—
|
|
Fair value
adjustment of ELIOKEM inventory acquired
|
—
|
|
—
|
|
.06
|
|
—
|
|
Distribution rights
settlement
|
—
|
|
(.21)
|
|
—
|
|
(.21)
|
|
Asset impairment
|
—
|
|
.14
|
|
—
|
|
.14
|
|
Strike costs
|
—
|
|
.01
|
|
—
|
|
.01
|
|
Legal settlement
|
—
|
|
—
|
|
—
|
|
—
|
|
Additional interest
expense
|
—
|
|
(.16)
|
|
—
|
|
(.33)
|
|
Acquisition and integration
expenses
|
.02
|
|
.02
|
|
.06
|
|
.02
|
|
Deferred financing fees
written-off
|
—
|
|
—
|
|
.02
|
|
—
|
|
Additional income tax
expense
|
(.01)
|
|
(.12)
|
|
(.05)
|
|
(.19)
|
|
Tax expense for liquidation of
foreign subsidiary
|
—
|
|
—
|
|
.02
|
|
—
|
|
Total Earnings Per Share Impact
of Adjusted Items
|
.02
|
|
(.04)
|
|
.14
|
|
(.06)
|
|
Adjusted Diluted Earnings Per
Share
|
$.16
|
|
$.29
|
|
$.30
|
|
$.45
|
|
|
|
|
|
|
|
|
|
|
|
This press release includes "forward-looking statements" as
defined by federal securities laws. These statements, as well
as any verbal statements by the Company in connection with this
press release, are intended to qualify for the protections afforded
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. Forward-looking statements reflect
management's current expectation, judgment, belief, assumption,
estimate or forecast about future events, circumstances or results
and may address business conditions and prospects, strategy,
capital structure, sales, profits, earnings, markets, products,
technology, operations, customers, raw materials, financial
condition, and accounting policies, among other matters.
Words such as, but not limited to, "will," "may," "should,"
"projects," "forecasts," "seeks," "believes," "expects,"
"anticipates," "estimates," "intends," "plans," "targets,"
"optimistic," "likely," "would," "could," and similar expressions
or phrases identify forward-looking statements.
All forward-looking statements involve risks and uncertainties.
Many risks and uncertainties are inherent in business
generally and the markets in which the Company operates or proposes
to operate. Other risks and uncertainties are more specific
to the Company's businesses including businesses the Company
acquires. The occurrence of such risks and uncertainties and
the impact of such occurrences is often not predictable or within
the Company's control. Such impacts could adversely affect
the Company's results and, in some cases, such effect could be
material.
All written and verbal forward-looking statements attributable
to the Company or any person acting on the Company's behalf are
expressly qualified in their entirety by the risks, uncertainties,
and cautionary statements contained herein. Any
forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation, and
specifically declines any obligation other than that imposed by
law, to publicly update or revise any forward-looking statements
whether as a result of new information, future events or
otherwise.
Risks and uncertainties that may cause actual results to differ
materially from expected results include, among others: the
Company's ability to successfully integrate ELIOKEM into its
operations; the Company's ability to achieve fully the strategic
and financial objectives related to the acquisition of ELIOKEM,
including the acquisition becoming accretive to the Company's
earnings; and unexpected costs or liabilities that may arise from
the acquisition, ownership or operation of ELIOKEM.
Additional risk factors include: economic trends
affecting the economy in general and/or the Company's end-use
markets; prices and availability of raw materials including
styrene, butadiene, vinyl acetate monomer, polyvinyl chloride,
acrylonitrile, acrylics and textiles; ability to increase pricing
to offset raw material cost increases; product substitution and/or
demand destruction due to product technology, performance or cost
disadvantages; loss of a significant customer; customer and/or
competitor consolidation; customer bankruptcy; ability to
successfully develop and commercialize new products; a decrease in
demand for domestically manufactured products due to increased
foreign competition and off-shoring of production; ability to
successfully implement productivity enhancement and cost reduction
initiatives; unplanned full or partial suspension of plant
operations; losses from the Company's strategic alliance, joint
venture, acquisition and integration activities; loss or damage due
to acts of war or terrorism, natural disasters or accidents,
including fires, floods, explosions and releases of hazardous
substances; ability to comply, and cost of compliance with
legislative and regulatory changes, including changes impacting
environmental, health and safety compliance and changes which may
restrict or prohibit certain products and raw materials; rapid
inflation in health care costs and assumptions used in determining
health care cost estimates; risks associated with foreign
operations including political unrest and fluctuations in exchange
rates of foreign currencies; prolonged work stoppage resulting from
labor disputes with unionized workforce; changes in and compliance
with pension plan funding obligations; stock price volatility;
infringement or loss of the Company's intellectual property;
litigation and claims against the Company related to products,
services, contracts, employment, environmental, safety,
intellectual property and other matters; adverse litigation
judgments or settlements; absence of or inadequacy of insurance
coverage for litigation judgments, settlements or other losses;
availability of financing at anticipated rates and terms; and loan
covenant default arising from substantial debt and leverage and the
inability to service that debt, including increases in applicable
short-term or long-term borrowing rates.
For further information on risks and uncertainties, see the
Company's Form 10-K and 10-Q filings with the Securities and
Exchange Commission.
OMNOVA Solutions Inc. is a technology-based company with pro
forma sales for the twelve months ending May
31, 2011 of $1.2 billion and
an active global workforce of approximately 2,800. OMNOVA is
an innovator of emulsion polymers, specialty chemicals, and
decorative and functional surfaces for a variety of commercial,
industrial and residential end uses. Visit OMNOVA Solutions
on the internet at www.omnova.com.
OMNOVA
SOLUTIONS INC.
Consolidated
Statements of Operations
(Dollars in
Millions, Except Per Share Data)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
May
31,
|
|
May
31,
|
|
|
2011
|
2010
|
|
2011
|
2010
|
|
Net Sales
|
$329.9
|
$226.4
|
|
$618.6
|
$410.3
|
|
Cost of goods sold
|
264.8
|
179.2
|
|
496.8
|
323.1
|
|
Gross Profit
|
65.1
|
47.2
|
|
121.8
|
87.2
|
|
Selling, general and
administrative
|
34.3
|
25.6
|
|
66.8
|
49.6
|
|
Depreciation and
amortization
|
8.8
|
5.5
|
|
17.2
|
11.0
|
|
Restructuring and
severance
|
.7
|
—
|
|
1.5
|
.3
|
|
Asset impairment
|
—
|
6.2
|
|
—
|
6.2
|
|
Interest expense
|
9.6
|
1.9
|
|
18.9
|
3.7
|
|
Deferred financing fees
write-off
|
—
|
—
|
|
1.0
|
—
|
|
Acquisition and integration
related expense
|
.8
|
.7
|
|
2.7
|
.7
|
|
Other expense (income),
net
|
1.2
|
(8.7)
|
|
.7
|
(8.8)
|
|
|
55.4
|
31.2
|
|
108.8
|
62.7
|
|
Income Before Income
Taxes
|
9.7
|
16.0
|
|
13.0
|
24.5
|
|
Income tax expense
|
3.5
|
.9
|
|
5.8
|
1.6
|
|
Net Income
|
$
6.2
|
$
15.1
|
|
$
7.2
|
$
22.9
|
|
Income Per Share
|
|
|
|
|
|
|
Basic net income per
share
|
$
.14
|
$
.34
|
|
$
.16
|
$
.51
|
|
Diluted net income per
share
|
$
.14
|
$
.33
|
|
$
.16
|
$
.51
|
|
|
|
|
|
|
|
|
|
OMNOVA
SOLUTIONS INC.
Condensed
Balance Sheets
(Dollars in
millions, except per share amounts)
|
|
|
May
31,
|
|
November
30,
|
|
|
2011
|
|
2010
|
|
ASSETS:
|
(Unaudited)
|
|
|
|
Current Assets
|
|
|
|
|
Cash and cash
equivalents
|
$ 79.5
|
|
$ 75.6
|
|
Restricted cash
|
—
|
|
253.1
|
|
Accounts receivable,
net
|
183.9
|
|
106.8
|
|
Inventories
|
106.6
|
|
45.8
|
|
Prepaid expenses and
other
|
5.1
|
|
3.5
|
|
Deferred income taxes -
current
|
6.5
|
|
6.0
|
|
Total
Current Assets
|
381.6
|
|
490.8
|
|
Property, plant and equipment,
net
|
243.9
|
|
131.5
|
|
Trademarks and other intangible
assets, net
|
93.2
|
|
5.8
|
|
Goodwill
|
84.9
|
|
—
|
|
Deferred income taxes –
non-current
|
66.2
|
|
86.2
|
|
Deferred financing
fees
|
14.7
|
|
10.5
|
|
Other assets
|
11.0
|
|
1.2
|
|
Total
Assets
|
$895.5
|
|
$726.0
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY:
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Amounts due banks
|
$ 12.0
|
|
$ 4.8
|
|
Accounts payable
|
130.9
|
|
88.6
|
|
Accrued payroll and personal
property taxes
|
18.8
|
|
17.3
|
|
Employee benefit
obligations
|
2.4
|
|
2.4
|
|
Other current
liabilities
|
12.7
|
|
9.8
|
|
Total
Current Liabilities
|
176.8
|
|
122.9
|
|
Senior notes
|
250.0
|
|
250.0
|
|
Long-term debt -
other
|
195.2
|
|
139.4
|
|
Postretirement benefits other
than pensions
|
7.5
|
|
7.6
|
|
Pension liabilities
|
79.2
|
|
73.3
|
|
Deferred income taxes -
non-current
|
27.3
|
|
1.7
|
|
Other liabilities
|
17.0
|
|
7.7
|
|
Total
Liabilities
|
753.0
|
|
602.6
|
|
Shareholders'
Equity
|
|
|
|
|
Preference stock - $1.00 par
value; 15 million shares authorized;
|
|
|
|
|
none
outstanding
|
—
|
|
—
|
|
Common stock - $0.10 par value;
135 million shares authorized;
|
|
|
|
|
45.7 million and 45.2
million shares issued at May 31, 2011
|
|
|
|
|
and November 30, 2010,
respectively
|
4.5
|
|
4.5
|
|
Additional contributed
capital
|
322.5
|
|
318.0
|
|
Retained deficit
|
(104.8)
|
|
(112.0)
|
|
Treasury stock at cost; .2
million shares at May 31, 2011
|
|
|
|
|
and November 30,
2010
|
(1.3)
|
|
(1.3)
|
|
Accumulated other comprehensive
loss
|
(78.4)
|
|
(85.8)
|
|
Total
Shareholders' Equity
|
142.5
|
|
123.4
|
|
Total
Liabilities and Shareholders' Equity
|
$895.5
|
|
$726.0
|
|
|
|
|
|
|
|
|
SOURCE OMNOVA Solutions Inc.