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8-K - 8-K - OMNOVA SOLUTIONS INC | d270131d8k.htm |
Exhibit 99.1
OMNOVA SOLUTIONS INC.
Unaudited Pro Forma Statements of Operations
For the Nine Months Ended August 31, 2011
(Dollars in millions, except per share data)
As Reported | Adjustments to Reclassify Discontinued Operations |
Pro Forma | ||||||||||
Net Sales |
$ | 949.7 | $ | (19.8 | ) | $ | 929.9 | |||||
Cost of products sold |
773.0 | (19.2 | ) | 753.8 | ||||||||
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Gross profit |
176.7 | (.6 | ) | 176.1 | ||||||||
Selling, general and administrative |
98.9 | (2.8 | ) | 96.1 | ||||||||
Depreciation and amortization |
25.9 | (.6 | ) | 25.3 | ||||||||
Fixed asset impairment |
2.4 | | 2.4 | |||||||||
Restructuring and severance |
1.7 | | 1.7 | |||||||||
Interest expense |
28.4 | | 28.4 | |||||||||
Acquisition and integration expense |
2.3 | | 2.3 | |||||||||
Deferred financing fees write-off |
1.0 | | 1.0 | |||||||||
Other expense (income), net |
1.0 | (.1 | ) | .9 | ||||||||
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161.6 | (3.5 | ) | 158.1 | |||||||||
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Income (loss) from continuing operations before income taxes |
15.1 | 2.9 | 18.0 | |||||||||
Income tax expense (benefit) |
7.5 | 1.1 | 8.6 | |||||||||
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Income (loss) from continuing operations |
7.6 | 1.8 | 9.4 | |||||||||
Discontinued Operations, Net of Tax: |
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Income (loss) from operations |
| (1.8 | ) | (1.8 | ) | |||||||
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Net income |
$ | 7.6 | $ | | $ | 7.6 | ||||||
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Basic and Diluted Income (Loss) Per Share |
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Income (loss) from continuing operations |
$ | .17 | $ | .04 | $ | .21 | ||||||
Income (loss) from discontinued operations |
| (.04 | ) | (.04 | ) | |||||||
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Net income (loss) per share |
$ | .17 | $ | | $ | .17 | ||||||
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See notes to unaudited pro forma financial statements.
OMNOVA SOLUTIONS INC.
Unaudited Pro Forma Statements of Operations
For the Year Ended November 30, 2010
(Dollars in millions, except per share data)
As Reported | Adjustments to Reclassify Discontinued Operations |
Pro Forma | ||||||||||
Net Sales |
$ | 846.2 | $ | (23.6 | ) | $ | 822.6 | |||||
Cost of products sold |
684.8 | (26.2 | ) | 658.6 | ||||||||
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Gross profit |
161.4 | 2.6 | 164.0 | |||||||||
Selling, general and administrative |
99.6 | (4.5 | ) | 95.1 | ||||||||
Depreciation and amortization |
20.6 | (1.2 | ) | 19.4 | ||||||||
Fixed asset impairment |
6.2 | (3.5 | ) | 2.7 | ||||||||
Restructuring and severance |
.6 | | .6 | |||||||||
Interest expense |
8.7 | | 8.7 | |||||||||
Acquisition and integration expense |
5.5 | | 5.5 | |||||||||
Other expense (income), net |
1.7 | (1.6 | ) | .1 | ||||||||
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142.9 | (10.8 | ) | 132.1 | |||||||||
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Income (loss) from continuing operations before income taxes |
18.5 | 13.4 | 31.9 | |||||||||
Income tax (benefit) expense |
(89.4 | ) | 5.2 | (84.2 | ) | |||||||
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Income (loss) from continuing operations |
107.9 | 8.2 | 116.1 | |||||||||
Discontinued Operations, Net of Tax: |
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Income (loss) from operations |
| (8.2 | ) | (8.2 | ) | |||||||
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Net income |
$ | 107.9 | $ | | $ | 107.9 | ||||||
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Basic Income (Loss) Per Share |
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Income (loss) from continuing operations |
$ | 2.42 | $ | .19 | $ | 2.61 | ||||||
Income (loss) from discontinued operations |
| (.19 | ) | (.19 | ) | |||||||
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Net income (loss) per share |
$ | 2.42 | $ | | $ | 2.42 | ||||||
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Diluted Income (Loss) Per Share |
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Income (loss) from continuing operations |
$ | 2.40 | $ | .18 | $ | 2.58 | ||||||
Income (loss) from discontinued operations |
| (.18 | ) | (.18 | ) | |||||||
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Net income (loss) per share |
$ | 2.40 | $ | | $ | 2.40 | ||||||
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See notes to unaudited pro forma financial statements.
OMNOVA SOLUTIONS INC.
Unaudited Pro Forma Statements of Operations
For the Year Ended November 30, 2009
(Dollars in millions, except per share data)
As Reported | Adjustments to Reclassify Discontinued Operations |
Pro Forma | ||||||||||
Net Sales |
$ | 696.4 | $ | (30.9 | ) | $ | 665.5 | |||||
Cost of products sold |
536.7 | (24.7 | ) | 512.0 | ||||||||
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Gross profit |
159.7 | (6.2 | ) | 153.5 | ||||||||
Selling, general and administrative |
99.9 | (5.6 | ) | 94.3 | ||||||||
Depreciation and amortization |
22.9 | (1.8 | ) | 21.1 | ||||||||
Fixed asset impairment |
1.1 | | 1.1 | |||||||||
Restructuring and severance |
2.1 | | 2.1 | |||||||||
Interest expense |
8.1 | | 8.1 | |||||||||
Other expense (income), net |
(2.3 | ) | .4 | (1.9 | ) | |||||||
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131.8 | (7.0 | ) | 124.8 | |||||||||
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Income (loss) from continuing operations before income taxes |
27.9 | .8 | 28.7 | |||||||||
Income tax expense (benefit) |
1.7 | | 1.7 | |||||||||
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Income (loss) from continuing operations |
26.2 | .8 | 27.0 | |||||||||
Discontinued Operations, Net of Tax: |
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Income (loss) from operations |
| (.8 | ) | (.8 | ) | |||||||
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Net income |
$ | 26.2 | $ | | $ | 26.2 | ||||||
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Basic and Diluted Income (Loss) Per Share |
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Income (loss) from continuing operations |
$ | .59 | $ | .02 | $ | .61 | ||||||
Income (loss) from discontinued operations |
| (.02 | ) | (.02 | ) | |||||||
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Net income (loss) per share |
$ | .59 | $ | | $ | .59 | ||||||
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See notes to unaudited pro forma financial statements.
OMNOVA SOLUTIONS INC.
Unaudited Pro Forma Statements of Operations
For the Year Ended November 30, 2008
(Dollars in millions, except per share data)
As Reported | Adjustment to Reclassify Discontinued Operations |
Pro Forma | ||||||||||
Net Sales |
$ | 869.4 | $ | (46.6 | ) | $ | 822.8 | |||||
Cost of products sold |
731.4 | (36.4 | ) | 695.0 | ||||||||
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Gross profit |
138.0 | (10.2 | ) | 127.8 | ||||||||
Selling, general and administrative |
104.8 | (7.1 | ) | 97.7 | ||||||||
Depreciation and amortization |
23.9 | (1.9 | ) | 22.0 | ||||||||
Restructuring and severance |
.6 | | .6 | |||||||||
Interest expense |
13.0 | | 13.0 | |||||||||
Equity (earnings) loss in affiliates, net |
(.2 | ) | | (.2 | ) | |||||||
Other expense (income), net |
(2.1 | ) | .5 | (1.6 | ) | |||||||
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140.0 | (8.5 | ) | 131.5 | |||||||||
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Income (loss) from continuing operations before income taxes |
(2.0 | ) | (1.7 | ) | (3.7 | ) | ||||||
Income tax expense (benefit) |
.2 | | .2 | |||||||||
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Income (loss) from continuing operations |
(2.2 | ) | (1.7 | ) | (3.9 | ) | ||||||
Discontinued Operations, Net of Tax: |
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Income (loss) from operations |
| (1.7 | ) | (1.7 | ) | |||||||
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Net income (loss) |
$ | (2.2 | ) | $ | | $ | (2.2 | ) | ||||
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Basic and Diluted Income (Loss) Per Share |
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Income (loss) from continuing operations |
$ | (.05 | ) | $ | (.04 | ) | $ | (.09 | ) | |||
Income (loss) from discontinued operations |
| .04 | .04 | |||||||||
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Net income (loss) per share |
$ | (.05 | ) | $ | | $ | (.05 | ) | ||||
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See notes to unaudited pro forma financial statements.
OMNOVA SOLUTIONS INC.
Unaudited Pro Forma Balance Sheets
As of August 31, 2011
(Dollars in millions, except share data)
As Reported | Adjustment to Reclassify Discontinued Operations |
Pro Forma | ||||||||||
ASSETS: |
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Current Assets |
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Cash and cash equivalents |
$ | 95.1 | $ | | $ | 95.1 | ||||||
Accounts receivable, net |
175.1 | (3.4 | ) | 171.7 | ||||||||
Inventories |
106.8 | (5.9 | ) | 100.9 | ||||||||
Deferred income taxes - current |
6.9 | | 6.9 | |||||||||
Prepaid expenses |
6.0 | (.1 | ) | 5.9 | ||||||||
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Total Current Assets |
389.9 | (9.4 | ) | 380.5 | ||||||||
Property, plant and equipment, net |
239.4 | (2.6 | ) | 236.8 | ||||||||
Trademarks and other intangible assets, net |
91.5 | | 91.5 | |||||||||
Goodwill |
84.8 | | 84.8 | |||||||||
Deferred financing fees |
14.1 | | 14.1 | |||||||||
Deferred income taxes non-current |
66.3 | | 66.3 | |||||||||
Other assets |
10.9 | | 10.9 | |||||||||
Discontinued operations |
| 8.7 | 8.7 | |||||||||
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Total Assets |
$ | 896.9 | $ | (3.3 | ) | $ | 893.6 | |||||
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LIABILITIES AND SHAREHOLDERS EQUITY: |
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Current Liabilities |
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Amounts due banks |
$ | 12.5 | $ | | $ | 12.5 | ||||||
Accounts payable |
126.9 | (1.5 | ) | 125.4 | ||||||||
Accrued payroll and personal property taxes |
15.8 | (1.3 | ) | 14.5 | ||||||||
Employee benefit obligations |
2.4 | | 2.4 | |||||||||
Deferred income taxes - current |
.3 | | .3 | |||||||||
Other current liabilities |
19.3 | (.5 | ) | 18.8 | ||||||||
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Total Current Liabilities |
177.2 | (3.3 | ) | 173.9 | ||||||||
Long-term debt |
444.7 | | 444.7 | |||||||||
Postretirement benefits other than pensions |
7.3 | | 7.3 | |||||||||
Pension liability |
77.8 | | 77.8 | |||||||||
Deferred income taxes non-current |
27.4 | | 27.4 | |||||||||
Other liabilities |
16.7 | | 16.7 | |||||||||
Discontinued operations |
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Total liabilities |
751.1 | (3.3 | ) | 747.8 | ||||||||
Shareholders Equity |
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Common stock |
4.6 | | 4.6 | |||||||||
Additional contributed capital |
323.7 | | 323.7 | |||||||||
Retained deficit |
(104.4 | ) | | (104.4 | ) | |||||||
Treasury stock at cost |
(2.7 | ) | | (2.7 | ) | |||||||
Accumulated other comprehensive loss |
(75.4 | ) | | (75.4 | ) | |||||||
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Total Shareholders Equity |
145.8 | | 145.8 | |||||||||
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Total Liabilities and Shareholders Equity |
$ | 896.9 | $ | (3.3 | ) | $ | 893.6 | |||||
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See notes to unaudited pro forma financial statements.
OMNOVA SOLUTIONS INC.
Unaudited Pro Forma Balance Sheets
As of November 30, 2010
(Dollars in millions, except share data)
As Reported | Adjustment to Reclassify Discontinued Operations |
Pro Forma | ||||||||||
ASSETS: |
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Current Assets |
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Cash and cash equivalents |
$ | 75.6 | $ | | $ | 75.6 | ||||||
Restricted cash |
253.1 | | 253.1 | |||||||||
Accounts receivable, net |
106.8 | (3.0 | ) | 103.8 | ||||||||
Inventories |
45.8 | (5.3 | ) | 40.5 | ||||||||
Deferred income taxes - current |
6.0 | | 6.0 | |||||||||
Prepaid expenses |
3.5 | | 3.5 | |||||||||
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Total Current Assets |
490.8 | (8.3 | ) | 482.5 | ||||||||
Property, plant and equipment, net |
131.5 | (2.8 | ) | 128.7 | ||||||||
Trademarks and other intangible assets, net |
5.8 | | 5.8 | |||||||||
Deferred financing fees |
10.5 | | 10.5 | |||||||||
Deferred income taxes non-current |
86.2 | | 86.2 | |||||||||
Other assets |
1.2 | | 1.2 | |||||||||
Discontinued operations |
| 7.5 | 7.5 | |||||||||
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Total Assets |
$ | 726.0 | $ | (3.6 | ) | $ | 722.4 | |||||
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LIABILITIES AND SHAREHOLDERS EQUITY: |
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Current Liabilities |
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Amounts due banks |
$ | 4.8 | $ | | $ | 4.8 | ||||||
Accounts payable |
88.6 | (1.5 | ) | 87.1 | ||||||||
Accrued payroll and personal property taxes |
17.3 | (1.7 | ) | 15.6 | ||||||||
Employee benefit obligations |
2.4 | | 2.4 | |||||||||
Other current liabilities |
9.8 | (.4 | ) | 9.4 | ||||||||
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Total Current Liabilities |
122.9 | (3.6 | ) | 119.3 | ||||||||
Long-term debt |
389.4 | | 389.4 | |||||||||
Postretirement benefits other than pensions |
7.6 | | 7.6 | |||||||||
Pension liability |
73.3 | | 73.3 | |||||||||
Deferred income taxes non-current |
1.7 | | 1.7 | |||||||||
Other liabilities |
7.7 | | 7.7 | |||||||||
Discontinued operations |
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Total liabilities |
602.6 | (3.6 | ) | 599.0 | ||||||||
Shareholders Equity |
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Common stock |
4.5 | | 4.5 | |||||||||
Additional contributed capital |
318.0 | | 318.0 | |||||||||
Retained deficit |
(112.0 | ) | | (112.0 | ) | |||||||
Treasury stock at cost |
(1.3 | ) | | (1.3 | ) | |||||||
Accumulated other comprehensive loss |
(85.8 | ) | | (85.8 | ) | |||||||
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Total Shareholders Equity |
123.4 | | 123.4 | |||||||||
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Total Liabilities and Shareholders Equity |
$ | 726.0 | $ | (3.6 | ) | $ | 722.4 | |||||
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See notes to unaudited pro forma financial statements.
OMNOVA Solutions Inc.
Notes to the Unaudited Pro Forma Financial Statements
1. | Basis of Pro Forma Presentation |
The unaudited pro forma financial statements are derived from the historical consolidated financial statements of OMNOVA Solutions Inc. (OMNOVA or the Company) and give effect to the reclassification of the results of operations and financial position of OMNOVAs North American commercial wallcovering business to discontinued operations on the statements of operations and balance sheets. On December 12, 2011, OMNOVA completed the sale of certain assets related to its North American commercial wallcovering business to J. Josephson, Inc., a private commercial wallcovering producer based in New Jersey, for $10.0 million in cash and up to three years of royalty payments based on the future sales of OMNOVA commercial wallcovering patterns. The sale includes print cylinders, certain equipment, trademarks, contracts and other assets associated with OMNOVAs domestically-produced commercial wallcovering. OMNOVA will retain approximately $7.0 million in net working capital, the Columbus, Mississippi manufacturing facility and certain production assets which are used by its other businesses.
The pro forma adjustments to our historical financial statements are made to reflect the disposition of this business. The Company allocated the book value of certain shared manufacturing assets, as well as the associated shared manufacturing and selling costs between the wallcovering business and the coated fabrics business produced in the Columbus, Mississippi facility based on production volumes. Income tax expenses (benefits) were allocated to the reclassified business on the basis of it being a stand-alone business using the Companys statutory tax rate of 39%.
Under the terms of the sale, OMNOVA will provide manufacturing and support services to J. Josephson for a period of approximately 12 to 15 months after the date of the sale under a transition services agreement, whereby OMNOVA will manufacture commercial wallcovering in the U.S. exclusively for J. Josephson as part of an orderly transition of production. OMNOVA has agreed not to compete in the manufacture or sale of commercial wallcoverings in North America.