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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 29, 1999
OMNOVA Solutions Inc.
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(Exact Name of Registrant as Specified in Charter)
Ohio 1-15147 34-1897652
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
175 Ghent Road, Fairlawn, Ohio 44333-3300
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(Address of Principal Executive Offices) (Zip Code)
330-869-4200
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
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Attached hereto as Exhibit 99 and incorporated herein by reference is
the text of the press release of OMNOVA Solutions Inc. (the "Registrant")
released on November 29, 1999. In its press release, the Registrant announced
that it expects diluted earnings per share from operations for the fourth
quarter ending November 30, 1999 to be below the $0.35 diluted earnings per
share for continuing businesses from the same period a year ago. The
Registrant's earnings estimate for the fourth quarter is $0.20 - $0.22 per share
from operations excluding unusual items, and $0.18 - $0.20 per share including
unusual items.
The Registrant also announced that its Board of Directors authorized
the purchase from time to time of up to $25,000,000 of the Registrant's common
stock. Such purchases may be made in the open market or in privately-negotiated
transactions. Depending on market conditions and other factors, such purchases
may be commenced or suspended at any time without prior notice.
Item 7. Exhibits.
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Table Exhibit
Item No. Exhibit Description Number
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99 Press release dated November 29, 1999 regarding 99
fourth quarter earnings outlook and stock repurchase
plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
OMNOVA Solutions Inc.
Date: December 6, 1999 By: /s/ Cynthia A. Slack
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Name: Cynthia A. Slack
Title: Secretary
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EXHIBIT 99
NEWS RELEASE
CONTACT: Sandi Noah Michael Hicks
Communications Investor Relations
(330) 869-4292 (330) 869-4411
FOR IMMEDIATE RELEASE
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OMNOVA SOLUTIONS DISCUSSES FOURTH QUARTER EARNINGS OUTLOOK
AND ANNOUNCES STOCK REPURCHASE PLAN
FAIRLAWN, OHIO, NOVEMBER 29, 1999 (NYSE:OMN) - OMNOVA Solutions Inc.
said today that it expects diluted earnings per share from operations for
the fourth quarter ending November 30, 1999 to be below the $0.35 diluted
earnings per share for continuing businesses from the same period a year
ago. The Company's earnings estimate for the fourth quarter is $0.20 -
$0.22 per share from operations excluding unusual items, and $0.18 - $0.20
per share including unusual items. The Company will release actual fourth
quarter earnings on January 13, 2000. Additionally, the Company announced
today that its Board of Directors has authorized the purchase from time to
time of up to $25,000,000 of the Company's common stock.
OMNOVA Solutions was spun-off from GenCorp Inc. on October 1, 1999.
Sales for the fourth quarter ending November 30, 1998 were $176 million for
the OMNOVA businesses, with operating profit from continuing operations of
$27.3 million. Sales for the fourth quarter of 1999 are expected to
increase approximately 10% over 1998, while operating profit, excluding
unusual items, is forecasted to decline to approximately $20 million,
primarily due to rapidly rising raw material costs.
During the quarter, average raw material pricing for styrene monomer
increased 40% versus last year, with the potential for additional near-term
increases. Average PVC resin prices have increased over 50% versus last
year. In total, raw material price increases of approximately $6 million
have adversely affected OMNOVA's operating profit this quarter.
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OMNOVA Ad 1
OMNOVA Solutions announced price increases across targeted product
lines during the quarter. Several markets served by OMNOVA's businesses are
still evaluating these announcements, but it is anticipated that the need
for price increases will be recognized by the market due to the rapid price
escalation of raw material inputs.
"Our businesses, which have leading or significant share in many
of the markets they serve, are contributing operating margins of over 10%
in a very difficult environment," said John B. Yasinsky, OMNOVA Chairman
and Chief Executive Officer. "The projected shortfall in earnings for the
fourth quarter reflects the occurrence of business conditions which we
believe should improve in fiscal 2000 depending on the success of our
pricing strategies and the stabilization of raw materials pricing. We are
taking aggressive corrective actions to improve near-term results and
optimize operating margins, and our businesses continue to develop and
introduce new value-added products to meet our customers' most critical
needs. Also, we continue to invest aggressively in product and process
technologies which allow us to offer highly-differentiated products that
greatly enhance our future competitive position."
Regarding the share repurchase plan, Yasinsky added, "At current
price levels, OMNOVA stock represents a very attractive investment. Also,
this action reflects the continued confidence the Board of Directors and
management have in the future of our Company." The stock repurchases will
be made over a period of up to 18 months, principally through open market
transactions or in privately-negotiated transactions in accordance with
applicable regulations of the SEC. Depending on market conditions and other
factors, such purchases may be commenced or suspended at any time without
prior notice.
Volumes in Performance Chemicals will set a record this quarter,
and the business continues to gain share in several select growth markets,
led by increases in specialty products. In Decorative & Building Products,
GenFlex Roofing Systems and Coated Fabrics sales remain strong, while
Commercial Wallcovering volumes are lower than expected as market softness
continues in the U.S. and U.K.
The Company has taken and will continue to take aggressive cost
reduction actions which will reduce expenses and enhance future shareholder
returns. Recent actions include:
- - Sale of the Company's corporate aircraft and elimination of the flight
operations department.
- - Reduction of Performance Chemicals SG&A and manufacturing costs as a
percentage of sales to record low levels.
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OMNOVA Ad 2
New initiatives to enhance future sales growth are accelerating and
include:
- MemErase(TM), the new dry-erase product that utilizes patented
PolyFox(TM) technology for white board and wall finishes for school,
office and health care applications.
- Expanded new product offerings in contract and residential furniture
upholstery markets with urethane and breathable urethane products.
- New collections of wallcovering designs and the startup of digitally
printed sampling capability, providing customers with greater choices
of design and color options while significantly reducing the
concept-to-market cycle time.
- Expanded range of Decorative Laminate designs for furniture and
cabinet manufacturers featuring realistic woodgrain designs and new
technology-enhanced coatings for greater durability.
- Performance Chemicals' strategy to enter international markets, with
new sales of over $12 million in 1999 expected to increase
significantly next year.
- A new state-of-the-art pilot plant for Performance Chemicals,
operational in December 1999, to accelerate new product development
and provide additional capabilities to expand and diversify product
lines.
- Cross-selling of new products acquired via acquisitions during 1998
and 1999, with continued growth expected next year.
This release contains forward-looking statements as defined by the
Private Securities Litigation Reform Act of 1995. All statements in this
release and in subsequent discussions with the Company's management, other
than historical information, are forward-looking statements. A variety of
factors, which are listed in the Forward-Looking Statements section of
Management's Discussion and Analysis in the Company's Registration
Statement on Form 10 under the Securities Act of 1934, filed with the
Securities and Exchange Commission on July 9, 1999, as amended on July 22,
1999, August 23, 1999, and September 15, 1999, and in the Company's
Quarterly Report on Form 10-Q for the Quarter ended August 31, 1999, could
cause actual results or outcomes to differ materially from those expected
by the Company and expressed in the Company's forward-looking statements.
Additional risk factors may be described from time to time in OMNOVA
Solutions' filings with the Securities and Exchange Commission.
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OMNOVA Ad 3
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OMNOVA Solutions is a technology-based company with approximately
$765 million in sales and 2,600 employees worldwide. It is a major
innovator of decorative and functional surfaces, emulsion polymers and
specialty chemicals produced by its Decorative & Building Products and
Performance Chemicals businesses.
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FOR A FAX CALL 800-758-5804, EXT. 143306
Web Site: http://www.omnova.com
