OMNOVA Solutions Inc. Annual Report 2005

← All annual reports

FY2005 Annual Report · OMNOVA Solutions Inc.

Loading PDF…

rethink

2005 Annual Report and 10K

ON THE COVER

OMNOVA’s memerase®

ﬂ exible dry-erase surfaces

offer the perfect opportunity

to collaborate and brainstorm.

Also pictured: Boltaﬂ ex®

upholstery, surf(x)® 3D

Laminates (on side tables),

ﬂ ooring laminates, and

chemicals used in coated

paper and packaging, carpet,

tape, ﬂ oor polish and apparel.

APPLICATIONS PIC TURED

THIS PAGE: coated paper,

commercial rooﬁ ng, furniture

laminates, construction

materials, oil/gas ﬁ eld

drilling, ﬂ oor care,

disposable diapers,

nonwoven wipes,

automotive upholstery.

OPPOSITE PAGE: tape

and adhesives, marine

upholstery.

Omnova05_CvrSingleWt 2

2/7/06 1:18:29 PM

1 | OMNOVA Solutions Inc.

rethinkOMNOVA
OMNOVA

TO OUR

SHAREHOLDERS

Today’s OMNOVA Solutions is a different company than it was a year ago. We have
improved margins, reduced costs, streamlined processes, entered attractive new markets and
geographies, and enhanced the skills and abilities of our team. These actions resulted in substantial
performance improvement in 2005, providing tangible evidence that OMNOVA’s turnaround is well
under way. Most importantly, we proved that we could increase proﬁ tability – our number-one priority
– despite facing the challenges of difﬁ cult outside economic and market forces. So if you thought
you knew what OMNOVA was all about, think again…and read on. I believe you will be impressed
with the progress your company is making.

OMNOVA Solutions had record sales of $810 million in

agreement to November 2009 and at more attractive terms – a

2005, up nearly 9%, as we improved signiﬁ cantly in virtually every

show of conﬁ dence by our lenders. These successes in cost and

key ﬁ nancial metric. Our Adjusted EBITDA doubled from the

debt reduction, and improved credit terms will provide greater

previous year, from $26 million to $52 million, led by Performance

operating leverage and ﬂ exibility for the future.

Chemicals and improved performance in Decorative Products.

We are proud of the improvements we have made, but also

[A deﬁ nition of Adjusted EBITDA and reconciliation to net

very mindful that this is just the ﬁ rst step, albeit an important one,

income are provided on page 3 of this Annual Report.] This was

in a journey to sustainable superior performance, and we realize

accomplished despite continuing record inﬂ ation in the costs of

that there is more work ahead to make that goal a reality. Likewise,

our oil-based raw materials.

we are keenly aware that our progress has not yet translated

The ﬁ rst quarter is typically OMNOVA’s weakest, and this

into positive returns to our shareholders. However, we are

was again the case in 2005. But we gained traction in the second

conﬁ dent that our ongoing strategy of investing in new products,

quarter and never looked back, ending the year with three

expanding to new markets, broadening our global presence

consecutive quarters of positive earnings per share. Year-over-

and continuing to drive down costs will further strengthen our

year, we achieved a $0.57 increase in earnings per share.

Company’s operating performance and,

turn, create

As a result of the many actions we have taken to streamline

shareholder value. This, we believe, will cause investors to

our cost structure, SG&A (sales, general and administrative)

RETHINK the exciting investment opportunity our Company

expenses of $122 million, or 15% of sales, were both record lows

presents.

for our Company. Continued strong cash ﬂ ow contributed

to another excellent year for debt reduction, as we

ended 2005 with a debt level of $176 million. We

improved our debt-to-Adjusted EBITDA ratio by

more than half year-over-year, from 6.9 to 3.4. In May,

OMNOVA announced an extension of its bank credit

Omnova05_Text_Wt 1

2/1/06 2:40:56 PM

OMNO VA So l ution s Inc. | 2

RETHINK: MARKET STR ATEGY

In Decorative Products, where many market segments have

Although there have been challenges in certain of our

experienced prolonged recessionary conditions, we captured key

traditional market segments in recent years, other market segments

opportunities in targeted high-potential segments such as kitchen

still offer attractive growth opportunities. We are continually

and bath cabinetry. As the year came to a close, OMNOVA was

identifying and seizing opportunities to leverage our competitive

awarded substantial new laminates business from one of the largest

strengths and value-added innovations to gain share in our

traditional market segments, and to move into new, related markets

and applications.

and fastest growing cabinet makers in America. In addition, our
surf(x)® 3D Laminates continue to win business from an expanding

customer base that values the design ﬂ exibility offered by this

In 2005, we were particularly successful in growing market

dynamic product. The store ﬁ xtures and ofﬁ ce furniture market

share in our paper coating and carpet chemical product lines.

segments are increasingly important for surf(x) laminates which can

Customers have been very excited by the performance advantages
offered by our new GenCryl® Platinum Pt™ paper latex as well as

provide a cost-effective solution for contoured edges that are so

popular in today’s designs.

our 4200 Series advanced coating lubricants. These technologies

Commercial wallcovering has been especially impacted by

have helped us boost share in the North American coated paper

several years of challenging market conditions. However, the

market. At the same time, an array of recently introduced products,

hospitality segment – OMNOVA’s fastest growing wallcovering

combined with truly superior technical service, have continued to

end use – improved in 2005. In addition, ofﬁ ce occupancy rates

win new business for OMNOVA in the carpet market.

began to pick up toward the end of the year, which is a good

Polymers for nonwoven applications, both for durables and

leading indicator of future improvement in our largest commercial

nondurables, remain an area of strength for us. Disposable diapers,

wallcovering segment. To make the most of these market rebounds

construction materials and ﬁ ltration media are examples of growth

going forward, OMNOVA Solutions took several actions designed

opportunities for our nonwoven business. We are also receiving

to sharpen our focus in this business. Those actions included the

excellent customer reaction and increased sales from our products

closure of our wallcovering distribution facility in Massachusetts,

for adhesives and tape with our technical advances in tape release

the divestiture of selected brands – while retaining long-term

systems.

manufacturing supply agreements – and an exciting partnership

FINANCIAL HIGHLIGHTS

(Dollars in millions, except per share data)
Net Sales
Performance Chemicals
Decorative Products
Building Products

Segment Operating Proﬁ t (Loss)
Performance Chemicals
Decorative Products
Building Products

Interest expense
Corporate expenses
Deferred ﬁ nancing costs write-off
Income tax beneﬁ t
Net Loss
Basic and Diluted Loss Per Share
Net Loss Per Basic and Diluted Share
Other Data
Capital expenditures
Depreciation and amortization
Number of employees at year-end
Number of outstanding shares for diluted EPS (millions)

Years Ended November 30,

2005

2004

2003

$ 452.8
242.2
115.1
$ 810.1

$ 33.8
(2.8)
.9
$31.91
(21.2)
(12.8)
–

.3
(1.8)

(.04)

$ 13.2
$ 22.3
1,800
40.7

$ 372.9
257.8
115.0
$ 745.7

$ 327.0
257.6
98.0
$ 682.6

$
$

13.5
(6.8)
1.0
7.71
(20.7)
(11.7)
–

.3
(24.4)

$ 11.2
(70.0)
3.0
(55.8)1
(15.3)
(10.2)
(3.1)
.6
(83.8)

(.61)

(2.10)

11.8
22.8
2,000
40.2

$
8.8
$ 33.7
2,100
39.9

1Segment operating proﬁ t for the full year of 2005, 2004 and 2003 was impacted by a number of items which are discussed in this Annual
Report. Management excludes certain of these items when evaluating the results of the Company’s segments. These items include, for the
full year of 2005, restructuring and severance charges of $5.8 million, asset impairment charges of $2.5 million, a gain on a legal settlement
of $0.9 million, a gain on the sale of a brand of $0.8 million and work stoppage charges of $1.7 million; for the full year of 2004, trademark
impairment charges of $3.9 million and restructuring and severance charges of $0.5 million; and for the full year of 2003, restructuring
and severance charges of $8.8 million, goodwill and trademark impairment charges of $49.6 million and asset impairment charges of
$5.7 million.

Omnova05_Text_Wt 2

2/1/06 2:41:43 PM

3 | OMNOVA Solutions I nc.

with leading wallcovering designer DLM Studio to create a new
design direction for our Bolta®, Genon® and Tower® brands. At the

two most notable examples of this focus on adjacent markets are in

our coated fabrics product line. While we continue to offer leading-

same time, we have made signiﬁ cant improvements in our custom

edge designs for traditional furniture applications, over the past

wallcovering business and in the breadth of our printing capability,

further enhancing our industry leadership in both areas.

As you can see, there are still many exciting opportunities for

growth in our traditional markets. However, we also recognize that it

is critical for us to ﬁ nd applications for our products in new, related

two years OMNOVA Solutions has gained signiﬁ cant new business
in marine upholstery and trim with our respected Nautolex® fabrics
protected with our proprietary PreFixx® coating. We have also

entered OEM and aftermarket automotive seating with our new
BoltaSoft® upholstery. In fact, as we began the 2006 ﬁ scal year, we

markets where our technology can bring value to customers. The

announced an agreement with a major OEM seating customer to

rethinkOMNOVA
OMNOVA

Segment Operating Proﬁ t
Dollars in millions

Total Year-End Debt
Dollars in millions

Net Sales
Dollars in millions

U p 1 9 %

6
4
7

0
1
8

3
8
6

8 M

U p $

2
3

)
6
5
(

Down 8%

2
9
1

2
8
1

6
7
1

2003

2004

2005

2003

2004

2005

2003

2004

2005

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

This Annual Report also includes Adjusted EBITDA, which is a non-GAAP ﬁ nancial measure as deﬁ ned by the Securities and Exchange
Commission. Adjusted EBITDA is calculated in accordance with the deﬁ nition of adjusted net earnings from operations as set forth in the
Company’s senior secured revolving credit facility dated May 28, 2003, as subsequently amended, and excludes charges for interest, taxes,
depreciation, amortization, restructuring and severance, work stoppage, goodwill and trademark impairments, amortization of deferred ﬁ nancing
costs, net earnings of joint ventures less cash dividends, gains or losses on asset sales, non-cash charge for 401(k) company match, pension
income, commercial paper costs and deferred ﬁ nancing costs write-off. Adjusted EBITDA is not a measure of ﬁ nancial performance under GAAP.
Adjusted EBITDA is not calculated in the same manner by all companies and accordingly is not necessarily comparable to similarly titled measures
of other companies and may not be an appropriate measure for comparing performance relative to other companies. Adjusted EBITDA should
not be construed as an indicator of the Company’s operating performance or liquidity and should not be considered in isolation from or as a
substitute for net income (loss), cash ﬂ ows from operations or cash ﬂ ow data which are all prepared in accordance with GAAP. Adjusted EBITDA
is not intended to represent and should not be considered more meaningful than, or as an alternative to, measures of operating performance as
determined in accordance with GAAP. Management believes that presenting this information is useful to investors because it is commonly used
as an analytical indicator to evaluate performance, allocate resources and measure leverage capacity and debt service ability. Set forth below is
a reconciliation of this non-GAAP ﬁ nancial measure to the most directly comparable GAAP ﬁ nancial measure.

(Dollars in millions, except per share data)

Net income (loss)
Interest
Taxes
Depreciation and amortization
Restructuring and severance
Calender line restructuring
Work stoppage
Amortization of deferred ﬁ nancing costs
Net earnings of joint ventures less cash dividends
Gains or losses on asset sales
Non-cash charge for 401(k) company match
Pension income
Goodwill and trademark write-offs
Commercial paper costs
Deferred ﬁ nancing costs write-off
Adjusted EBITDA

Years Ended November 30,

2005

2004

2003

(1.8)
$
21.2

(.3)

22.3
5.9
1.6
1.7
1.4
(.7)
(1.1)
1.5
–
–
–
–
$ 51.7

(24.4)
20.7
(.3)
22.8
.4
–
–
1.8
–
–
1.4
–
3.9
–
–
$ 26.3

$ (83.8)
15.3
(.6)
26.5
9.0
–
–
1.7
–
–

.5
(1.7)
60.1
.7
3.1
$ 30.8

Certain information included in this annual report is forward-looking and, accordingly, involves estimates, assumptions, judgments and uncertainties. Forward-looking statements may
generally be identiﬁ ed by the use of forward-looking terms such as “may,” “should,” “projects,” “forecasts,” “seeks,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,”
“targets,” “likely,” “will,” “would,” “could,” or similar terms. For information regarding some of the factors that could cause actual results or outcomes to differ materially from those described
in the forward-looking statements, see the Forward-Looking Statements section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Omnova05_Text_Wt 3

2/1/06 2:41:43 PM

OMNO VA So l ution s Inc. | 4

“The transformation we are undergoing
complements and builds upon
[long-standing] strengths.”

APPLICATIONS
PIC TURED

health & beauty

products, digital murals,

ﬁ ltration, tire cord

produce upholstery at OMNOVA’s joint venture facility in Shanghai,

of that related to increased volume, primarily driven by latex growth

China, for the fast-growing Asian automotive market.

in nonwovens in Europe and tire cord adhesives in Asia.

Additional examples of our extension into related markets with

Our Decorative Products joint ventures in Asia serve local and

exciting potential include:

multinational customers in this fast-growing region in addition to

• viewnique® digitally printed full wall graphics – These

providing targeted low-cost supply capabilities for product imports

custom, one-of-a-kind murals enhance a unique visitor experience

to North America and Europe. We made signiﬁ cant strides in 2005

and promote strong branding in establishments such as restaurants,

to integrate these joint ventures into our core businesses and

ﬁ tness centers, retail outlets, ofﬁ ce lobbies, and educational or

improve their overall capabilities and quality systems.

entertainment venues.

During the summer, Performance Chemicals expanded its Asia

• GenCeal™ latex for ocean natural gas well drilling oper-

Paciﬁ c presence with the opening of an ofﬁ ce in Shanghai, China.

ations, and for construction – This unique product improves

We are beginning to actively market and promote our portfolio

resistance to salt and extremely high temperatures encountered

of specialty chemicals in targeted applications in the region while

in deep wells in challenging high-growth drilling applications.

seeking potential local supply sources for our products. This is an

GenCeal latex is also being used in construction applications to

excellent market for our tire cord adhesives, tape release systems,

help improve water resistance of exterior sheathing.

PolyFox ﬂ uorosurfactants and textile chemicals.

• PolyFox™ ﬂ uorosurfactants – Excellent ﬂ ow and leveling

While Asian markets offer substantial potential for future

characteristics and environmental preferability provide advantages

growth, most of the increase in our international chemical

in the manufacture of construction materials, electronics and

sales in 2005 resulted from the continued outstanding work of

industrial coatings, ﬂ oor care and household cleaning products.

our Performance Chemicals team in Europe to ﬁ nd exciting

• Lytron® opaciﬁ ers for health and beauty products –

opportunities to leverage our technology for growth in that part

Originally developed for the paper industry, this technology has

of the world. Two-thousand-ﬁ ve marked the sixth consecutive year

found a home in consumer health and beauty product applications

of chemical sales growth in Europe, up 47% over 2004. We look

where a luxuriously creamy, opaque product is desired.

forward to expanding on the solid foundation we have built both in

• Geomembranes and waterprooﬁ ng membranes – Our
GenFlex® single-ply rooﬁ ng technology is being extended into

Asia and in Europe to achieve our future growth objectives.

Our Building Products business unit, too, is aggressively

applications for above-ground and below-surface protection of

pursuing new business for our commercial rooﬁ ng products outside

structures and containment systems.

the United States. In 2005, we delivered systems to South Korea,

RETHINK: GLOBAL POSITION

If you thought OMNOVA Solutions was exclusively a domestic

Turkey and Mexico and established distribution relationships in

Western Europe, Singapore and the Middle East.

company, think again. Not including the sales of our two Asian joint

RETHINK: R AW MATERIALS AND SOURCING

ventures, sales outside the United States were about $100 million

As we all know, the impact of rising energy and raw material

in 2005. In total, our unconsolidated China and Thailand joint

prices is a major concern. Raw material inﬂ ation in our business has

ventures in Decorative Products set record sales in 2005 of

been unrelenting in the last several years. We have seen the price

approximately $81 million, up $29 million from 2003. Though we do

of oil move from under $20 a barrel in 2002 to a high of over $70 a

not consolidate the joint venture sales in our ﬁ nancial statements,

barrel in 2005. During that same period, OMNOVA’s raw material

this revenue

improvement made a positive contribution to

costs rose approximately $160 million. Again in 2005, we saw new

our reported operating proﬁ t. Total international sales in our

record-high costs in many of our oil-based raw materials, totaling

Performance Chemicals business increased 52% in 2005, with 28%

$83 million in increases for the year.

Omnova05_Text_Wt 4

2/1/06 2:41:46 PM

5 | OMNOVA Solutions Inc.

We have taken many actions to reduce our operating costs to

independent Board of Directors, a strong management team,

protect our customers from the full brunt of these unprecedented

and a never-ending focus on increasing shareholder value. The

increases. However, with this prolonged inﬂ ation, pricing actions

transformation we are undergoing complements and builds upon

were an absolute must for our business and we have worked closely

those strengths, offering a unique opportunity to investors.

with our customers to communicate the rationale and timing

Intense market and economic pressures have made the

of these increases. While proﬁ t margins are still not at levels we

past few years very challenging and required us to rethink our

ultimately expect them to be, through productivity and cost actions

opportunities. Through targeted investment in capability building,

and our pricing efforts, we did make progress in expanding what

we are seeing a signiﬁ cant increase in the active involvement of our

had been unacceptably low margins.

associates to implement changes that will elevate our competitive

Our Strategic Sourcing organization continues to extend

position and drive continuous improvement in all aspects of our

its reach, identifying new global supply sources and developing

business. We are fortunate to have people who dare to believe

innovative relationships with our key suppliers. If the raw material

that a fresh outlook, a ﬁ rm commitment, and effective planning and

situation wasn’t challenging enough, hurricanes in the Gulf of

execution will continue to transform our Company.

Mexico in the fourth quarter put increased pressure on already tight

Our focus in 2006 will be proﬁ table growth and margin

North American petrochemical supplies. However, our team was

expansion to demonstrate the sustainability of our much-improved

able to keep materials ﬂ owing into and out of our facilities without

Company and provide a positive return to shareholders. We will

any disruption to customers. This situation demonstrated OMNOVA

accomplish this by leveraging the changes we have already made,

Solutions’ long-standing commitment to meet our customers’

gaining share through investments in value-added products and

needs, even under the most difﬁ cult of circumstances.

services, further extending our reach in traditional and new markets

by better articulating that value to our customers, expanding

our global presence and evaluating selective acquisitions made

possible by our improved balance sheet.

Thank you for your continued support of OMNOVA Solutions.

These are exciting times. We are moving forward with a renewed

sense of conﬁ dence as we challenge ourselves, our customers

and our shareholders to RETHINK the company we are and

can become.

Kevin M. McMullen

Chairman and CEO

RETHINK: OPER ATIONAL EXCELLENCE

We are successfully transforming into a leaner, nimbler

company through our hard work to signiﬁ cantly reduce our cost

structure and respond to the realities of the markets we serve.

We have taken action on a number of fronts, including reducing

our workforce by approximately 10% over the past year and 33%

since our spin-off from GenCorp in 1999. While productivity and

“operating lean” will always be among our top priorities, during

2005 we made some critical investments in our capabilities, business

processes and infrastructure that will better enable us to drive future

growth.

Our implementation of an SAP enterprise resource manage-

ment system was a signiﬁ cant achievement that will help in

the standardization and streamlining of key processes in our

Performance Chemicals business. We have all seen the headlines

about companies that have struggled in implementing new

enterprise business systems, but thanks to our disciplined approach,

an appropriate balance of internal and external resources and great

teamwork, we completed the project on time, on budget, on target

for delivering key business beneﬁ ts and, most importantly, without

disruption to our customers.

Our LEAN SixSigma operating approach continues to gain

momentum across the Company. LEAN SixSigma, which is focused

on eliminating waste and optimizing processes, has helped us

deliver faster inventory turns, lowered our capital expenditures due

to improved cycle times, and contributed to OMNOVA’s success in

reducing debt. More than 400 of our associates were involved in

Kaizen events in 2005. These events are an important LEAN tool to

engage associates that are closest to the work – and who therefore

have the deepest insights into the processes – to make rapid

improvements that achieve sustainable, positive change.

RETHINK: OMNOVA

OMNOVA Solutions has long-standing strengths, including

a leading position in most of the market categories we serve, a

broad portfolio of innovative products and services, a seasoned,

Omnova05_Text_Wt 5

2/1/06 2:42:04 PM

OMNO VA So l ution s Inc. | 6

directors&officers

BOARD OF DIREC TORS

Edward P. Campbell 2
Chairman and

Chief Executive Officer,

Nordson Corporation

David A. Daberko 2,3
Chairman and

Chief Executive Officer,

National City Corporation

David J. D’Antoni 1
Retired Senior Vice President

Steven W. Percy 1
Former Chairman and

and Group Operating Officer,

Chief Executive Officer,

Ashland Inc.

BP America Inc.

Diane E. McGarry 1
Retired Chief Marketing Officer,

Xerox Corporation

Kevin M. McMullen 3
Chairman, Chief Executive Officer

and President,

Dr. R. Byron Pipes 2,3
John L. Bray Distinguished

Professor of Engineering,

Purdue University

William R. Seelbach 2
President and Chief Executive Officer,

OMNOVA Solutions Inc.

Ohio Aerospace Institute

COMMITTEES

1 Audit Committee
Chairman:
Steven W. Percy

2 Compensation and Corporate
Governance Committee
Chairman:
David A. Daberko

Executive Committee
Chairman:
Kevin M. McMullen

E XECUTIVE OFFICERS

Kevin M. McMullen
Chairman, Chief Executive Officer

and President

Gregory T. Troy
Senior Vice President,

Human Resources

Michael E. Hicks
Senior Vice President and

Chief Financial Officer; Treasurer

Douglas E. Wenger
Senior Vice President and

Chief Information Officer

James C. LeMay
Senior Vice President, Business

Development; General Counsel

James J. Hohman
Vice President; President,

Performance Chemicals

Robert H. Coleman
President, Decorative Products

Harold P. Franze
President, Building Products

Sandra L. Klaasse
Vice President, LEAN SixSigma

FRONT ROW L-R:

James LeMay

Kevin McMullen

Michael Hicks

BACK ROW L-R:

Robert Coleman

Harold Franze

Gregory Troy

Sandra Klaasse

James Hohman

Douglas Wenger

Omnova05_Text_Wt 6

2/1/06 2:42:15 PM

corporateinformation

SHAREHOLDER INFORMATION

NYSE Annual CEO Certification

BuyDIRECT

Common Stock Listing

OMNOVA Solutions Foundation

The annual CEO certification required by

(A direct purchase, sale and dividend

New York Stock Exchange

175 Ghent Road

Section 303A.12(a) of the New York Stock

reinvestment plan) BuyDIRECT is

Ticker Symbol: OMN

Fairlawn, OH 44333-3300

Exchange Listed Company Manual was

available to shareholders and

330-869-4289

submitted by Kevin M. McMullen without

interested first-time investors and

Annual Meeting of Shareholders

qualification on April 21, 2005.

offers a convenient method of

March 23, 2006 at 9:00 a.m.

Communications

increasing investment in the Company.

Hilton Akron – Fairlawn

General inquiries, contact:

Transfer Agent and Registrar

All brokerage commissions and

3180 West Market Street

Corporate Communications,

The Bank of New York

1-800-524-4458

bank service fees incurred on behalf

Fairlawn, OH 44333

330-869-4271.

of the participants in connection

Financial literature requests,

1-610-382-7833 (outside U.S.)

with stock purchases and dividend

Independent Registered

contact: World Investor Link,

1-888-269-5221 (hearing impaired – TDD phone)

reinvestments are paid by the Company.

Public Accounting Firm

1-888-400-7789.

Shareowners@bankofny.com (Email)

Subject to terms and conditions of

Ernst & Young LLP

www.stockbny.com (stock transfer website)

the plan, dividends, together with

Akron, OH

Send shareholder inquiries to:

$120,000 per year, are used to buy

Form 10-K

optional cash investments of up to

Internet Website

www.omnova.com

The Bank of New York

more shares of the Company’s

Additional copies available after

OMNOVA Solutions is an equal

Shareholder Relations Department 11-E

Common Stock.

March 1, 2006 on the internet at

opportunity employer.

P.O. Box 11258

Church Street Station

New York, NY 10286

BuyDIRECT Contact:

The Bank of New York

www.omnova.com or by writing to:

OMNOVA Solutions Inc.

175 Ghent Road

Send certificates for transfer and

P.O. Box 1958

Attention: Secretary

Dividend Reinvestment Department

Fairlawn, OH 44333-3300

address changes to:

The Bank of New York

Newark, NJ 07101-9774

1-800-524-4458

Receive and Deliver Department 11-W

P.O. Box 11002

Church Street Station

New York, NY 10286

Shareholder Services

1-800-735-5160

Investor Relations Contact

Michael E. Hicks

Senior Vice President and

Chief Financial Officer; Treasurer

330-869-4411

OMNOVA enhanced its sales and marketing

efforts with the launch of a new website

in 2005. It features an interactive Design

Center that allows customers to browse

thousands of decorative products, create

project folders and order samples online.

The site also includes an expanded section

for investors.

n
o
t
a
E
&
x
D
y
b
n
g
i
s
e
D

PAPER STOCK: The cover and inside glossy pages of this report are printed on paper coated with GenFlo® latex.

PHOTOS: Automotive upholstery photo courtesy of Distinctive Industries Inc. (cid:127) Marine upholstery photo courtesy of Stingray Boats (cid:127) Cover photo shot at BIE – Business Interiors and

Environments, Inc., Cleveland, Ohio.

DIGITAL MURAL ON PAGE 4: Design by Becky Wagley, of Wagley Design

Omnova05_CvrSingleWt 3

2/7/06 1:19:25 PM

OMNOVA SOLUTIONS INC.

175 Ghent Road

Fairlawn, OH 44333

Telephone: 330-869-4200

www.omnova.com

MEMERASE, BOLTAFLEX, SURF(x), GENCRYL, BOLTA, GENON, NAUTOLEX, PREFIXX, BOLTASOFT, VIEWNIQUE, LYTRON, GENFLEX and GENFLO
are registered trademarks of OMNOVA Solutions Inc.

POLYFOX and TOWER are registered trademarks used under license by OMNOVA Solutions Inc.

PLATINUM PT and GENCEAL are trademarks of OMNOVA Solutions Inc.

ALL OMNOVA PRODUCTS AND SERVICES ARE OFFERED AND SOLD SUBJECT TO THE OMNOVA
STANDARD TERMS AND CONDITIONS OF SALE AGREEMENT SET FORTH AT WWW.OMNOVA.COM.

Omnova05_CvrSingleWt 4

2/7/06 1:19:25 PM