OMNOVA Solutions Inc. Annual Report 2006

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FY2006 Annual Report · OMNOVA Solutions Inc.

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2 0 0 6

A n n u a l

R e p o r t

a n d 1 0 K

A B E T T E R P L A C E

Products and services

Performance Chemicals

Decorative Products

from OMNOVA Solutions

mers and process chemicals that impart distinct product

like scratch- and stain-resistant coatings, to create products

This segment produces highly engineered emulsion poly-

This segment combines design with functional attributes,

touch people’s lives

every day. OMNOVA

helps make the world

a better place with

innovations from its

two business segments.

performance characteristics – such as strength, dimensional

that are value-added and on-trend. The major product lines

stability, opacity and printability. The Performance Chemi-

– commercial wallcovering, laminates, coated upholstery

cals business serves the paper and carpet markets, as well

fabrics and ﬁ lms – serve numerous commercial, residential,

as a variety of specialty applications, including nonwovens,

transportation and marine applications. Interior products

ﬂ oor care, tape and adhesives, construction, industrial coat-

are predominantly used in commercial settings such as ho-

ings, tire cord and textiles.

tels, ofﬁ ces, restaurants, hospitals and retail outlets.

Applications depicted on the cover and cityscape in-
clude chemicals used in: paper, carpet, ﬂ oor polish, tapes

Applications depicted on the cover and cityscape
include: wallcovering, automotive and marine upholstery,

and adhesive labels, disposable diapers, oil/gas drilling,

ofﬁ ce and restaurant furniture upholstery, vehicle soft tops,

body soaps, apparel, heavy truck hoods, serving tray sur-

demountable wall surfaces, furniture and store ﬁ xture 3-D

faces, auto ﬁ ltration, tires, rooﬁ ng mat, wallboard, running

and ﬂ at laminates, recreational vehicle 3-D work surface

tracks, components for athletic shoes and caps.

laminates, awnings and tents, and digital wall murals.

1 | OMNOVA SOLUTIONS INC.

To Our Shareholders:

For the third consecutive year, OMNOVA Solutions achieved signiﬁ cant performance

In September 2006,

improvement, reaching key operating milestones on our journey to become a company that

OMNOVA Solutions sold its

consistently delivers value to our investors. We successfully leveraged leadership positions to gain

GenFlex Building Products

share in our core markets, expanded our presence in new, adjacent markets and increased our

single-ply commercial

global footprint. At the same time, we continue to streamline and standardize operations and attain

rooﬁ ng business to

new levels of productivity. As a result, we achieved a solid improvement in earnings and dramatically

Firestone Building Products

improved our balance sheet.

Company, a division of BFS

While we made substantial progress in improving the performance of our core businesses

Diversiﬁ ed Products, LLC.

– growing our position and improving our margins – we also took a hard look at our portfolio and

Where applicable, ﬁ nancial

decided to exit the non-strategic Building Products business. We completed the transaction in the

information in this annual

fourth quarter on terms very favorable to our shareholders.

report, including the letter

During the year, the commercial construction and refurbishment markets strengthened after a

to shareholders, is presented

prolonged recession, and more and more customers enthusiastically embraced the many OMNOVA

pro forma for OMNOVA’s

products and services that help make the world a better place. Although we continued to face tough

continuing businesses.

challenges, particularly another year of new record high raw material costs and weakening residential

housing, the actions we have taken enabled us to address these issues, seize opportunities and

create a stronger company.

We made solid progress on our number one priority in 2006 – to improve proﬁ tability. This

effort was led by the continuing turnaround of the Decorative Products business segment, which

took advantage of improving commercial markets to increase sales by over 6%. (Sales were up 7.5%

on a pro forma basis, excluding the sales from a divested product line in the ﬁ rst quarter of 2005.)

Operating proﬁ t in Decorative Products improved by $11.8 million for the year and has increased

$15.8 million since 2004.

After posting much-improved results in 2005, the Performance Chemicals business segment

opened 2006 on a strong note, but was impacted by further petrochemical-based raw material

cost challenges. Oil prices averaged over $65 per barrel during the year, contributing to nearly

$17 million in raw material inﬂ ation. Also, the business experienced weakening conditions in some

of its end-use markets, particularly carpet chemicals, due to softening residential demand. Looking

ahead, many industry experts predict a residential housing recovery in the latter part of 2007,

OMNOVA SOLUTIONS INC. | 2

with excellent long-term fundamentals. In addition, OMNOVA’s

$28.8 million versus the 2005 year-end. Shareholders’ equity

aggressive actions on productivity and pricing are helping offset

improved to $48.5 million in 2006, from $(12.6) million the

the negative impact from raw material inﬂ ation.

prior year.

The cumulative effect of our actions across the Company

OMNOVA continued an excellent trend of reducing its

produced positive results in 2006. OMNOVA Solutions showed

leverage ratio (net debt-to-Adjusted EBITDA) over the past

signiﬁ cant improvement and our best performance in six years

couple of years, to 2.7 at 2006 year-end, compared to 3.4 in 2005

for both net income and diluted earnings per share. Net income

and 6.9 in 2004. (Deﬁ nitions of Adjusted EBITDA and net debt,

was $21.3 million versus a $1.8 million loss in 2005. Reported

plus reconciliations of Adjusted EBITDA to income or loss from

diluted earnings per share improved to $0.51 and diluted

continuing operations and net debt to total debt are provided

earnings per share for continuing operations improved to $0.08,

on page 3 of this report.) Our improved balance sheet provides

an increase of $0.55 and $0.14 per share, respectively, over the

us with the opportunity to call our $165.0 million of 11.25% high-

prior year.

A Better Balance Sheet

Proceeds from the Building Products sale, combined with

strong cash management, enabled us to achieve another solid

year of debt reduction. OMNOVA ended ﬁ scal 2006 with net

debt (deﬁ ned as total debt less cash, cash equivalents and

yield bonds in June 2007. This offers the potential for interest

savings of about $5 million in 2007 and greater savings and

ﬂ exibility in the future.

Reﬂ ecting our improved ﬁ nancial position, in October of

2006 Standard & Poor’s announced an upgrade of our credit

rating to B+.

restricted cash) of $126.3 million versus $166.5 million at the end

A Better Cost Structure

of 2005. The Company had total cash balances of $38.7 million

We continued to focus on improving our cost structure.

at the end of the ﬁ scal year, a record high and an increase of

Actions across both businesses yielded $16.5 million in cost

F I N A N C I A L H I G H L I G H T S

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

Segment Operating Proﬁ t (Loss)(1)
Performance Chemicals
Decorative Products

Interest expense
Corporate expenses
Income tax (expense) beneﬁ t
Income (Loss) from continuing operations
Discontinued operations(2)
Net Income (Loss)
Basic Income (Loss) Per Share
Income (Loss) per share from continuing operations
Discontinued operations
Net Income (Loss) Per Share
Diluted Income (Loss) Per Share
Income (Loss) per share from continuing operations
Discontinued operations
Net Income (Loss) Per 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,

2006

2005

2004

$ 441.6
257.5
$ 699.1

$ 29.7
9.0
$38.7
(20.3)
(15.1)
(.1)
3.2
18.1
$ 21.3

.08
.44
.52

.08
.43
.51

$ 13.0
$ 20.2
1,700
41.6

$ 452.8
242.2
$ 695.0

$ 372.9
257.8
$ 630.7

$
$

33.8
(2.8)
31.0
(21.2)
(12.8)
.3
(2.7)
.9
(1.8)

(.06)
.02
(.04)

12.4
21.1
1,700
40.7

$ 13.5
(6.8)
6.7
(20.7)
(11.7)
.3
(25.4)
1.0
(24.4)

(.64)
.03
(.61)

$ 11.2
$ 21.6
1,900
40.2

(1) Segment operating proﬁ t for the full year of 2006, 2005 and 2004 was impacted by a number of items which are discussed in this
Annual Report. These items include for 2006, trademark and asset impairment charges of $1.1 million and restructuring and severance of
$1.1 million; for 2005, restructuring and severance charges of $5.8 million, asset impairment charges of $2.5 million, a gain on 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; and for 2004, trademark impairment
charges of $3.9 million and restructuring and severance charges of $0.5 million. Management excludes certain of these items when evaluating
the results of the Company’s segments.

(2) Discontinued operations for ﬁ scal 2006 include the gain on the sale of the Company’s Building Products business of approximately
$18.2 million.

savings, which were critical given sharply increasing utility

are simple and clear: to eliminate waste in all areas of our

and freight costs that jumped a record $4.4 million in 2006, in

Company and streamline key processes, thereby delivering

addition to the raw material inﬂ ation mentioned earlier.

signiﬁ cant bottom line impact.

OMNOVA’s LEAN SixSigma operating approach continues

Over 50% of our workforce has participated in LEAN

to have a growing impact on working capital, cost reductions

SixSigma Kaizens, which are focused, intensive process im-

and cash ﬂ ow improvements. Our LEAN SixSigma objectives

provement events that collect, evaluate and rapidly implement

3 | OMNOVA SOLUTIONS INC.

Net
Income
Dollars in millions

U p $ 4 5 . 7 M

3
.
1
2

)
8
.
1
(

)
4
.
4
2
(

Segment
Operating
Profit
Dollars in millions

8 %

U p 4

7
.
8
3

0
.
1
3

7
.
6

Diluted
Earnings
Per Share
Dollars
1 . 1
. 7

U p $
U p $

1
5
.
0

8
0
.
0

)
4
0
.
0

(

)
6
0

.
0
(

Reported

Continuing
Operations

)
1
6
.
0
(

)
4
6
.
0
(

Net
Year-End
Debt
Dollars in millions

Down 24%

7
.
6
6
1

5
.
6
6
1

.
6
2
1

RECONCI LIATION OF INC OME (LOSS) FR OM CONTIN UING OPERATIONS TO ADJUSTED EBITDA AND
TOT AL DEBT TO NET DE BT
This Annual Report also includes Adjusted EBITDA and Net Debt which are non-GAAP ﬁ nancial measures 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 and amortization,
restructuring and severance, work stoppage, goodwill and trademark write-offs, amortization of deferred ﬁ nancing costs, net earnings of joint ventures
less cash dividends, gains or losses on asset sales, and non-cash charges for the 401(k) company match. Net Debt is calculated as total debt less cash, cash
equivalents and restricted cash. Adjusted EBITDA and Net Debt are not measures of ﬁ nancial performance under GAAP. Adjusted EBITDA and Net Debt
are not calculated in the same manner by all companies and accordingly are 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 and Net Debt should not be construed as
indicators 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 and Net Debt are 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 they are commonly used as analytical indicators to evaluate performance,
allocate resources and measure leverage capacity and debt service ability. Set forth below are the reconciliations of these non-GAAP ﬁ nancial measures to
their most directly comparable GAAP ﬁ nancial measures.

Reconciliation of income (loss)
from continuing operations to Adjusted EBITDA

(Dollars in millions)

Income (Loss) from continuing operations
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
Goodwill and trademark write-offs
Adjusted EBITDA

Reconciliation of total debt to Net Debt

(Dollars in millions)

Total debt
Cash and cash equivalents
Restricted cash
Net Debt

Years Ended November 30,

2006

2005

2004

$ 3.2
20.3
.1
20.2
1.4
–
–
1.0
(1.8)
–
2.1
1.0
$ 47.5

(2.7)
21.2
(.3)
21.1
5.9
1.6
1.7
1.4
(.7)
(1.1)
1.4
–
$ 49.5

$ (25.4)
20.7
(.3)
21.6
.4

–
–
1.8
–
–
1.4
3.9
$ 24.1

Years Ended November 30,

2006

2005

2004

$ 165.0
(26.4)
(12.3)
$ 126.3

$ 176.4
(9.9)
–
$ 166.5

$ 181.7
(15.0)
–

$ 166.7

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 the risk factors that could cause actual results or outcomes to differ materially from those described in
the forward-looking statements, see Item 1A Risk Factors in the Business Section of the 10K.

OMNOVA SOLUTIONS INC. | 4

ideas that result in positive change. We held 125 such events

efforts are supported by our deep market and application

in 2006 alone, and will continue to build on their success with

knowledge and expertise.

a goal of 100% participation by our associates. Employee

One of the best examples can be found in our largest

empowerment is key, along with the disciplined leadership of

market, paper chemicals. Extensive trials of our innovative new

our 50 BlackBelt and 230 GreenBelt trained internal experts.

GenCryl® Pt™ latex coatings led to signiﬁ cant new business

We are especially pleased with the growing involvement

late in the fourth quarter and early in 2007. Likewise, exciting

of our customers in LEAN SixSigma, many of whom are taking

performance features in OMNOVA’s advanced line of paper

advantage of the training conducted by OMNOVA to master

processing chemicals attracted enthusiastic customer interest

the tools and techniques. This is a very special way we can

resulting in increased sales volumes. Our ability to offer truly

add value for our customers and, at the same time, learn

differentiated products such as these drove a solid year in paper

more about their challenges and opportunities so we can serve

chemicals despite weakness in the industry as a whole.

them better.

Other examples of market share gains in chemicals include

Process and customer service improvements have been

key wins in tape release and saturants, and in our functional

further enhanced by our successful (on-budget, on-time,

in-mold coatings product line. We haven’t talked a lot about

on-target) implementation of an SAP business system in

the latter, but our coatings applications expertise along with

Performance Chemicals. Since SAP went live in mid-2005,

improved products have been instrumental in growing this

the chemicals segment has realized $1.5 million in savings,

capability, which saves steps in the priming/painting process

established a single, integrated platform on which to continue

and promotes a Class A ﬁ nish on compression-molded ﬁ ber-

to drive productivity, and beneﬁ ted from having quick access

glass parts. The growing number of end uses for this product

to mission-critical information. In Decorative Products, a team

line include molded heavy truck cabs and personal watercraft.

made up primarily of OMNOVA internal experts will launch the

Improving trends in commercial interiors contributed

full-scale implementation of SAP in the ﬁ rst quarter of 2007. We

to market share gains in Decorative Products. With the

look forward to the beneﬁ ts of having the entire enterprise on a

rebound in the hospitality market and steady improvement

common business system platform.

in ofﬁ ce construction and refurbishment, customers had a

A Better Position For Growth

Our strategic intent from a portfolio perspective is to focus

on those businesses where we have, or can create, leading

market positions that can be leveraged for proﬁ table growth,

and where we can generate attractive returns. After assessing a

number of strategic options, we determined that divesting the

Building Products segment was the best course for the Company

and our shareholders. We believe the terms of the transaction

were quite favorable, including receipt of $25.9 million in cash,

retention of $10.5 million in fully collected receivables, and

assumption by the buyer of all warranty liabilities associated

with the business. Building Products generated $0.9 million of

operating proﬁ t in 2005.

The Building Products sale allows us to focus on our

remaining portfolio of businesses that are better positioned

for growth. We believe superior execution along three

complementary paths – expanding market share, moving into

adjacent markets and increasing globalization – will allow us to

proﬁ tably grow these businesses at above-market rates. We are

making progress on all three fronts.

Market Share

fresh opportunity to explore the many new products we have

introduced in recent years.

Sales in our commercial wallcovering business received

an additional boost with the completion of a multi-year brand

and distributor realignment. We are now focused on four major

brands with the strongest and most aggressive national and

regional distributors, and we can also boast a best-in-class

custom wallcovering capability. At the end of the year, we

combined management responsibilities for our commercial

upholstery product line with wallcovering to take advantage of

market speciﬁ cation and distribution synergies.

Laminates made the most impressive market share gains in

Decorative Products. The substantial new business OMNOVA

won at the end of 2005 with one of America’s largest and fastest

growing kitchen and bath cabinet makers had a major impact in

2006, despite the slowdown in residential housing that reduced

cabinet industry volumes.

This and other new laminate opportunities are the

result of product innovations and new business we were able

to capture during a period of consolidation across many

decorative products markets. Prolonged weakness in the

commercial markets took its toll on other suppliers who did

To achieve expansion of share in markets we have

not have the depth and scale of OMNOVA Solutions. We were

historically served, we are focused on building upon our

well-positioned to weather the downturn and respond quickly

leading positions with exciting new products and services that

to these opportunities. This included the acquisition in late

are designed to deliver greater value to our customers. These

summer of certain manufacturing assets from a competitor that

5 | OMNOVA SOLUTIONS INC.

“Our strategic intent…is to focus on those businesses

where we have, or can create, leading market positions

that can be leveraged for proﬁ table growth,

and where we can generate attractive returns.”

Kevin M. McMullen
Chairman and CEO

exited the business. These assets will enable OMNOVA to serve

an attractive niche for thin extruded-ﬁ lm laminates, further

broadening our full line of laminate products.

Rounding out an excellent year for laminates were

signiﬁ cant account wins in the recreational vehicle and store

ﬁ xtures markets. Customers chose our popular surf(x)® laminates

because of the design ﬂ exibility they offer for three-dimensional

applications.

Adjacent Markets

Decorative Products has led our expansion into new

adjacent markets – the second element of our organic growth

strategy – where our current or related products and expertise

may be applied in areas we have not traditionally served. An

excellent example is OMNOVA’s upholstery and trim for the

marine market. The American Boatbuilders Association, a

large buying consortium of boat manufacturers, renewed our

supplier-of-choice status in 2006. In addition, we have secured

several new accounts in the marine industry.

During the year, OMNOVA reached an important milestone

for another adjacent market opportunity: automotive

OEM seating upholstery. Our Shanghai, China, joint

venture manufacturing facility achieved the TS16949

certiﬁ cation, a rigorous quality speciﬁ cation required of

automotive suppliers in the region.

OMNOVA’s digital wall mural business, featuring

our expansive viewnique® product offering and turn-

key installation service, doubled sales over the prior

year. Franchisers, such as the Yum/KFC and

Hurricane Wings restaurants, ﬁ nd custom

wall murals to be a creative, durable and

cost effective way to convey a unique brand

image consistently across their facilities.

Other adjacent market successes

include a signiﬁ cant new account in interior

wall systems, also known as demountable

walls, where OMNOVA has developed a new

custom wall surface product for a leading

manufacturer.

In chemicals, our unique

OMNOVA SOLUTIONS INC. | 6

product for oil and natural gas drilling had another big year as a

A Better Place

result of the increased urgency globally for energy exploration.

As you can see, OMNOVA Solutions is in a much better

Additionally, our new OMNAPEL™ polymer system – featuring

place as a result of actions taken to focus our portfolio,

signiﬁ cant water repellent properties – is gaining sales in

streamline operations, improve our balance sheet, develop

chemicals for exterior applications such as boat covers, awnings

differentiated products and services, and deliver above-

and high-end rooﬁ ng underlay.

Globalization

The third element in our organic growth strategy is

globalization. We are taking advantage of opportunities to

grow internationally by leveraging our leadership positions in

key domestic markets with winning products, technologies and

market growth. We have come a long way in just a few years in

improving the operating performance of our Company despite

challenging external headwinds. However, we recognize that

our shareholders have not enjoyed a corresponding increase

in value. We are clearly not pleased or satisﬁ ed with that and

continue to be focused on taking all actions within our control

services. Both OMNOVA business segments are making critical

to increase shareholder value.

inroads around the globe.

Our Decorative Products joint ventures in China and

Thailand continue to grow. We do not consolidate sales

from our majority-owned JVs, but revenue growth of 15% to

$93 million in 2006, along with improvements in manufacturing

costs and integration with our domestic operations, delivered a

140% increase in operating proﬁ t contribution to OMNOVA.

Our Asian manufacturing capability has been instrumental

in securing contracts in marine upholstery, automotive OEM

and aftermarket upholstery, plus coated fabrics for OEM and

aftermarket vehicle soft-top applications. OMNOVA gained a

sole source relationship with a major vehicle soft-top customer

in 2006, based largely on our ability to manufacture both in

North America and Asia.

In fact, our decorative product manufacturing capability

extends to three continents. We streamlined our European

operations late in 2006 to reﬂ ect the current realities in the

commercial

interiors sector there, and have

introduced

unique products to the market, including Solaris Flare, a new

wallcovering which features color-changing inks.

Our Performance Chemicals business in Europe and

in other parts of the world continues to be very strong with

signiﬁ cant potential for future growth. Sales of chemicals into

Europe were up 19% in 2006, and increased 33% in other

international markets, such as Asia. The Shanghai sales ofﬁ ce

we opened in 2005 continues to aggressively pursue attractive

growth opportunities in the region with recent contract wins in

nonwovens, tape, tire cord and textiles.

Given the extraordinary growth potential of the Asia-

Paciﬁ c chemicals market, OMNOVA spent the year conducting

an extensive evaluation of possible expansion options in the

region. We plan to move forward aggressively on Asian growth

opportunities in 2007.

As we drive for proﬁ table growth and operating margin

improvement in our businesses, two other key beneﬁ ts will

help drive value creation in 2007 and beyond. OMNOVA has

$114.2 million of net operating loss carry-forwards which will

eliminate federal tax liabilities for the next several years. Also,

our 11.25% high-yield bonds which are callable in June 2007

present the opportunity for a signiﬁ cant reduction in interest

charges. These two beneﬁ ts should create substantial leverage

to net income and earnings per share for our shareholders.

Should new, unforeseen challenges arise and old nemeses such

as raw material inﬂ ation persist, we are in a better position today

to overcome adversity than at any time in OMNOVA’s history.

This view is shared by OMNOVA Solutions’ independent

Board of Directors and by our talented, hard-working associates

who come to work every day focused on delighting customers

with products and services that make the world a better place.

They can be proud of their role in the progress we have made

and our potential for greater future performance.

Make no mistake, we clearly have not yet reached our ﬁ nal

destination, but we draw energy from each new milestone on our

journey of performance improvement. We are better, stronger,

and well-positioned to increase our value to shareholders,

customers, employees and the communities in which we

operate. With another solid year of progress behind us, we are

eager to show what we can accomplish in 2007 and beyond.

Thank you for your continued support.

Kevin M. McMullen

Chairman and CEO

D I R E C T O R S & O F F I C E R S

Board of Directors

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

Diane E. McGarry 1
Retired Chief Marketing Officer,

Xerox Corporation

Kevin M. McMullen 3
Chairman, Chief Executive Officer

and President,

OMNOVA Solutions Inc.

Steven W. Percy 1
Former Chairman and

Chief Executive Officer,

and Group Operating Officer,

BP America Inc.

Ashland Inc.

Officers

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

Professor of Engineering,

Purdue University

William R. Seelbach 2
Operating Executive,

The Riverside Company

Robert A. Stefanko 1
Retired Chairman and

Executive Vice President –

Finance and Administration,

A. Schulman, Inc.

COMMITTEES

1 Audit Committee
Chairman:
Steven W. Percy

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

3 Executive Committee

Chairman:
Kevin M. McMullen

Kevin M. McMullen
Chairman, Chief Executive Officer

James C. LeMay
Senior Vice President, Business

James J. Hohman
Vice President; President,

Sandra L. Klaasse
Vice President, LEAN SixSigma

and President

Development; General Counsel

Performance Chemicals

Michael E. Hicks
Senior Vice President and

Douglas E. Wenger
Senior Vice President and

Robert H. Coleman
President, Decorative Products

Chief Financial Officer; Treasurer

Chief Information Officer

Kristine C. Syrvalin
Corporate Secretary and

Assistant General Counsel

C O R P O R A T E I N F O R M A T I O N

Shareholder Information

NYSE Annual CEO Certification

BuyDIRECT

Annual Meeting of Shareholders

OMNOVA Solutions Foundation

The annual CEO certification required by

BuyDIRECT is a direct purchase,

March 22, 2007 at 9:00 a.m.

175 Ghent Road

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

sale and dividend reinvestment

Hilton Akron – Fairlawn

Fairlawn, OH 44333-3300

Exchange Listed Company Manual was

plan available to shareholders and

3180 West Market Street

330-869-4289

submitted by Kevin M. McMullen without

interested first-time investors.

Fairlawn, OH 44333

qualification on April 17, 2006.

It offers a convenient method of

Transfer Agent and Registrar

The Bank of New York

1-800-524-4458

1-212-815-3700 (outside U.S.)

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

Shareowners@bankofny.com (Email)

www.stockbny.com (stock transfer website)

Send shareholder inquiries to:

The Bank of New York

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P.O. Box 11258

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Send certificates for transfer and

address changes to:

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Receive and Deliver Department

P.O. Box 11002

New York, NY 10286

increasing investment in the Company.

Subject to terms and conditions of

the plan, dividends (if any), together

with optional cash investments of up

to $120,000 per year, are used to

buy more shares of the Company’s

Common Stock.

BuyDIRECT Contact:

The Bank of New York

Dividend Reinvestment Department

P.O. Box 1958

Newark, NJ 07101-9774

1-800-524-4458

Common Stock Listing

New York Stock Exchange

Ticker Symbol: OMN

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Independent Registered

Public Accounting Firm

Ernst & Young LLP

Akron, OH

Form 10-K

Additional copies available after

Communications

General inquiries, contact:

Corporate Communications,

330-869-4266.

Financial literature requests,

contact: PrecisionIR Group,

1-888-400-7789.

March 1, 2007 on the internet at

Internet Website

www.omnova.com or by writing to:

www.omnova.com

OMNOVA Solutions is an equal

opportunity employer.

OMNOVA Solutions Inc.

175 Ghent Road

Fairlawn, OH 44333-3300

Attention: Secretary

Shareholder Services

1-800-735-5160

Investor Relations Contact

Michael E. Hicks

Senior Vice President and

Chief Financial Officer; Treasurer

330-869-4411

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

PHOTOS: Automotive upholstery photo courtesy of Distinctive Industries Inc. (cid:127) Pontoon boat/upholstery photo courtesy of Voyager Marine (cid:127) Jeep® with Sailcloth Replace-a-top®
photo courtesy of Bestop, Inc

HURRICANE WINGS DIGITAL MURAL: Design by Dan Mackin (danmackin.com)

O M N O VA S O L U T I O N S I N C . | 1 7 5 G h e n t R o a d | F a i r l a w n , O H 4 4 3 3 3 | Te l e p h o n e : 3 3 0 - 8 6 9 - 4 2 0 0
w w w. o m n o v a . c o m

GENCRYL, SURF(X) and VIEWNIQUE are registered trademarks of OMNOVA Solutions Inc.
PT and OMNAPEL are trademarks of OMNOVA Solutions Inc.

JEEP is a registered trademark of DaimlerChrysler
SAILCLOTH REPLACE-A-TOP is a registered trademark of Bestop, Inc.