Back to GetFilings.com



Table of Contents

 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarter Ended May 31, 2002
 
Commission File Number 1-15147
 

 
OMNOVA Solutions Inc.
(Exact name of registrant as specified in its charter)
 
Ohio
 
34-1897652
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
 
175 Ghent Road
Fairlawn, Ohio
 
44333-3300
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code (330) 869-4200
 

 
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.  YES  x  NO  ¨
 
At June 30, 2002, there were 39,672,789 outstanding shares of OMNOVA Solutions’ Common Stock, par value $0.10.
 


Table of Contents
 
OMNOVA SOLUTIONS INC.
 
TABLE OF CONTENTS
 
      
Page No.

Part I.    Financial Information
      
Item 1.    Financial Statements (Unaudited)
      
    
  3
    
  4
    
  5
    
  6
    
13
    
17
Part II.    Other Information
      
Item 1.     Legal Proceedings
    
18
    
19
    
19
    
20

2


Table of Contents
 
PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
OMNOVA SOLUTIONS INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per-Share Data)
(Unaudited)
 
    
Three Months Ended
May 31,

    
Six Months Ended
May 31,

 
    
2002

    
2001

    
2002

    
2001

 
Net Sales
  
$
175.0
 
  
$
190.2
 
  
$
331.3
 
  
$
355.3
 
Costs and Expenses
                                   
Cost of products sold
  
 
124.5
 
  
 
140.7
 
  
 
235.2
 
  
 
266.1
 
Selling, general and administrative
  
 
36.5
 
  
 
37.6
 
  
 
71.1
 
  
 
71.0
 
Depreciation and amortization
  
 
7.3
 
  
 
8.9
 
  
 
14.5
 
  
 
17.8
 
Interest expense
  
 
2.1
 
  
 
3.8
 
  
 
4.4
 
  
 
7.2
 
Other (income) expense, net
  
 
1.0
 
  
 
(.3
)
  
 
1.7
 
  
 
.5
 
Unusual and nonrecurring items
  
 
(2.0
)
  
 
17.5
 
  
 
(2.0
)
  
 
16.5
 
    


  


  


  


    
 
169.4
 
  
 
208.2
 
  
 
324.9
 
  
 
379.1
 
    


  


  


  


Income (Loss) Before Income Taxes
  
 
5.6
 
  
 
(18.0
)
  
 
6.4
 
  
 
(23.8
)
Income tax provision (benefit)
  
 
.1
 
  
 
(7.2
)
  
 
.4
 
  
 
(9.5
)
    


  


  


  


Income (Loss) Before Cumulative Effect of Accounting Change
  
 
5.5
 
  
 
(10.8
)
  
 
6.0
 
  
 
(14.3
)
Cumulative Effect of Accounting Change
  
 
—  
 
  
 
—  
 
  
 
(142.5
)
  
 
—  
 
    


  


  


  


Net Income (Loss)
  
$
5.5
 
  
$
(10.8
)
  
$
(136.5
)
  
$
(14.3
)
    


  


  


  


Per Share Data:
                                   
Basic earnings (loss) per common share:
                                   
Before cumulative effect of accounting change
  
$
.14
 
  
$
(.27
)
  
$
.15
 
  
$
(.36
)
Cumulative effect of accounting change
  
 
—  
 
  
 
—  
 
  
 
(3.60
)
  
$
—  
 
    


  


  


  


Net income (loss)
  
$
.14
 
  
$
(.27
)
  
$
(3.45
)
  
$
(.36
)
    


  


  


  


Diluted earnings (loss) per common share:
                                   
Before cumulative effect of accounting change
  
$
.14
 
  
$
(.27
)
  
$
.15
 
  
$
(.36
)
Cumulative effect of accounting change
  
 
—  
 
  
 
—  
 
  
 
(3.60
)
  
$
—  
 
    


  


  


  


Net income (loss)
  
$
.14
 
  
$
(.27
)
  
$
(3.45
)
  
$
(.36
)
    


  


  


  


Average shares outstanding (in millions)
                                   
—Basic
  
 
39.6
 
  
 
39.6
 
  
 
39.6
 
  
 
39.6
 
—Diluted
  
 
40.0
 
  
 
39.6
 
  
 
39.6
 
  
 
39.6
 
Cash dividends declared
  
$
—  
 
  
$
.05
 
  
$
—  
 
  
$
.10
 
 
See notes to the unaudited interim condensed consolidated financial statements.

3


Table of Contents
 
OMNOVA SOLUTIONS INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    
May 31,
2002

      
November 30,
2001

 
    
(Dollars in millions)
 
ASSETS:
                   
Current Assets
                   
Cash and cash equivalents
  
$
8.3
 
    
$
8.5
 
Accounts receivable, net
  
 
51.8
 
    
 
51.9
 
Inventories
  
 
56.3
 
    
 
56.7
 
Deferred income taxes, net
  
 
12.5
 
    
 
12.8
 
Prepaid expenses and other
  
 
5.0
 
    
 
4.9
 
    


    


Total Current Assets
  
 
133.9
 
    
 
134.8
 
Property, plant and equipment, net
  
 
201.5
 
    
 
208.9
 
Goodwill, net
  
 
40.0
 
    
 
142.7
 
Patents and other intangible assets, net
  
 
37.3
 
    
 
76.9
 
Prepaid pension
  
 
52.7
 
    
 
49.6
 
Other assets
  
 
27.4
 
    
 
26.2
 
    


    


Total Assets
  
$
492.8
 
    
$
639.1
 
    


    


LIABILITIES AND SHAREHOLDERS’ EQUITY:
                   
Current Liabilities
                   
Notes payable
  
$
6.0
 
    
$
3.5
 
Accounts payable
  
 
87.5
 
    
 
92.2
 
Accrued payroll and personal property taxes
  
 
13.3
 
    
 
15.2
 
Other current liabilities
  
 
16.7
 
    
 
15.1
 
    


    


Total Current Liabilities
  
 
123.5
 
    
 
126.0
 
Long-term debt
  
 
153.5
 
    
 
157.8
 
Postretirement benefits other than pensions
  
 
50.6
 
    
 
50.5
 
Deferred income taxes
  
 
11.1
 
    
 
14.4
 
Other liabilities
  
 
12.3
 
    
 
12.3
 
Shareholders’ Equity
                   
Preference stock—$1.00 par value; 15 million shares authorized; none outstanding
  
 
—  
 
    
 
—  
 
Common stock—$0.10 par value; 135 million shares authorized; 41.8 million shares outstanding
  
 
4.2
 
    
 
4.2
 
Additional contributed capital
  
 
309.2
 
    
 
308.7
 
Retained deficit
  
 
(149.0
)
    
 
(12.5
)
Accumulated other comprehensive loss
  
 
(8.5
)
    
 
(8.2
)
Treasury stock at cost; 2.2 million shares
  
 
(14.1
)
    
 
(14.1
)
    


    


Total Shareholders’ Equity
  
 
141.8
 
    
 
278.1
 
    


    


Total Liabilities and Shareholders’ Equity
  
$
492.8
 
    
$
639.1
 
    


    


 
See notes to the unaudited interim condensed consolidated financial statements.

4


Table of Contents
 
OMNOVA SOLUTIONS INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
<
    
Six Months Ended
May 31,

 
    
2002

    
2001

 
    
(Dollars in millions)
 
Operating Activities
                 
Net loss
  
$
(136.5
)
  
$
(14.3
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                 
Cumulative effect of accounting change
  
 
142.5
 
  
 
—  
 
Unusual and nonrecurring items
  
 
(2.8
)
  
 
18.3
 
Depreciation, amortization and (gain)/loss on sale of fixed assets
  
 
14.5
 
  
 
17.3
 
Changes in operating assets and liabilities net of effects of acquisitions and dispositions of businesses:
                 
Current assets
  
 
(3.0
)
  
 
(23.0
)
Current liabilities
  
 
(4.7
)
  
 
(29.2
)
Other noncurrent assets
  
 
(4.6
)
  
 
(7.6
)
Other noncurrent liabilities
  
 
(.4
)
  
 
3.6
 
    


  


Net Cash Provided By (Used In) Operating Activities
  
 
5.0
 
  
 
(34.9
)