8-K

UNITED STATES

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) December 9, 2010

OMNOVA Solutions Inc.

(Exact name of registrant as specified in its charter)

Ohio	1-15147	34-1897652
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

175 Ghent Road Fairlawn, Ohio,	44333-3300
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:

(330) 869-4200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

As previously disclosed, on November 22, 2010, OMNOVA Solutions Inc. (“OMNOVA” or the “Company”) entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with two funds of AXA Investment Managers Private Equity Europe (the “AXA Funds”) and the other holders of the equity securities (collectively with the AXA Funds, the “Sellers”) of Eliokem International SAS (“Eliokem”). As described below under Item 2.01 of this Current Report, pursuant to the terms of the Purchase Agreement, on December 9, 2010, OMNOVA completed the acquisition of all of the outstanding ordinary shares of Eliokem (the “Shares”), as well as all warrants to purchase Shares, debt securities convertible into Shares and debt securities redeemable for Shares (the “Acquisition”).

In connection with the Acquisition, OMNOVA entered into a new term loan and a new revolving credit facility.

Term Loan Agreement

On December 9, 2010, OMNOVA entered into an Amended and Restated Term Loan Credit Agreement (the “Term Loan Agreement”) with the various lenders party thereto, as lenders, and Deutsche Bank Trust Company Americas, as administrative agent and collateral agent. The Term Loan Agreement initially provides the Company with a $200.0 million term loan (the “Initial Term Loan”). Additionally, the Company may request additional term loans (the “Additional Term Loans” and together with the Initial Term Loan, the “Term Loan”) in an aggregate amount up to the greater of (1) $75.0 million and (2) an aggregate principal amount such that, on a pro forma basis (giving effect to any additional term loans), the Company’s senior secured leverage ratio will not be greater than 2.0 to 1.0 upon satisfaction of certain requirements, including that the Company’s pro forma interest coverage ratio (giving effect to any Additional Term Loans) be greater than 2.0 to 1.0 on a pro forma basis giving effect to any Additional Term Loans.

The Initial Term Loan will mature on May 31, 2017. Additional Term Loans may have a longer maturity. For the Initial Term Loan, the Company is required to make quarterly principal repayments in the amount of $500,000 beginning with the fiscal quarter ending February 28, 2011. Borrowings under the Term Loans will bear interest, at the Company’s option, at either an alternate base rate or a eurodollar rate, in each case plus an applicable margin. The alternate base interest rate will be a fluctuating rate equal to the highest of (1) Deutsche Bank Trust Company America’s prime rate, (2) the Federal Funds Effective Rate plus 0.5% and (3) the eurodollar rate applicable for an interest period of one month plus 1.0%, in any case subject to a floor of 2.75% per annum, plus an applicable margin. The eurodollar rate will be a periodic fixed rate equal to LIBOR, subject to a floor of 1.75% per annum, plus an applicable margin. Borrowings under the Initial Term Loan will initially bear interest at LIBOR plus 4.0%, subject to a floor of 1.75%.

Borrowings under the Term Loan Agreement are guaranteed by the Company’s domestic subsidiaries, other than certain non-material subsidiaries. Borrowings under the Term Loan Agreement are secured by a first priority lien on all real property and equipment of the Company’s principal domestic facilities and all improvements thereto and the capital stock, other equity interests, promissory notes (including intercompany notes) owned by the Company or the guarantors and by a second priority lien on the Company’s domestic accounts receivable, inventory and intangible assets.

The Term Loan Agreement requires, among other things, that the Company maintain certain performance financial covenants, such as a maximum senior secured net leverage ratio, a minimum interest coverage ratio and a limitation on capital expenditures. The Term Loan contains various customary provisions for such financings, including affirmative and negative covenants such as limitations on the Company’s ability to incur additional indebtedness and incur liens, and representations and warranties and events of default. Amounts owed under the Term Loan Agreement may be accelerated upon the occurrence of various events of default set forth therein, including, without limitation, the failure to make principal or interest payments when due and breaches of covenants or representations and warranties set forth in the Term Loan Agreement.

Credit Agreement

Additionally on December 9, 2010, OMNOVA and Eliokem, Inc. entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with the financial institutions party thereto, as lenders, and JPMorgan Chase Bank, N.A., as agent for the lenders. The Credit Agreement provides for up to $100.0 million in borrowings, including a $15.0 million sublimit for the issuance of commercial and standby letters of credit and a $10.0 million sublimit for swingline loans. Additionally, the Company will be able to request an increase in additional borrowing availability of

$50.0 million upon satisfaction of certain requirements. Borrowing availability under the Credit Agreement will be limited to an eligible borrowing base determined by applying customary advance rates to eligible accounts receivable and inventory, in each case subject to reserves established by the lenders. Borrowings under the Credit Agreement mature on December 9, 2015.

Borrowings under the Credit Agreement will bear interest, at the Company’s option, at either a floating rate or a eurodollar rate, in each case plus an applicable margin. The floating rate will be a fluctuating rate equal to JPMorgan Chase Bank, N.A.’s prime rate, provided that the rate will never be less than an adjusted one-month LIBOR rate plus 2.50%. The eurodollar rate will be a periodic fixed rate equal to LIBOR.

Borrowings under the Credit Agreement are guaranteed by the Company’s domestic subsidiaries. Borrowings under the Credit Agreement are secured by a first priority lien on the Company’s domestic accounts receivable, inventory and intangible assets and by a second priority lien on all real property and equipment of the Company’s principal domestic facilities and all improvements thereto and the capital stock, other equity interests, promissory notes (including intercompany notes) owned by the Company or the guarantors.

The Credit Agreement requires the Company to pay the lenders a quarterly commitment fee based on the average daily unused portion of available borrowings under the Credit Agreement, which fee will vary depending on the Company’s average daily borrowing availability under the Credit Agreement. The Credit Agreement also requires the Company to pay the lenders customary fees in connection with the issuance of letters of credit.

The Credit Agreement requires, among other things, that the Company maintain certain performance financial covenants relating to minimum excess availability and a springing minimum fixed charge coverage ratio. If the average excess borrowing availability under the Credit Agreement for any fiscal quarter is less than $25.0 million, then the Company will have to maintain a fixed charge coverage ratio (which is generally the ratio of EBITDA (as defined in the Credit Agreement) less capital expenditures to fixed charges) of equal to or greater than 1.1 to 1.0 for each period of four consecutive fiscal quarters tested on the last day of each fiscal quarter until average excess borrowing availability in any subsequent fiscal quarter is at least $25.0 million.

The Credit Agreement contains various customary provisions for such financings, including affirmative and negative covenants such as limitations on the Company’s ability to incur additional indebtedness and incur liens, representations and warranties and events of default. Amounts owed under the Credit Agreement may be accelerated upon the occurrence of various events of default set forth therein, including, without limitation, the failure to make principal or interest payments when due and breaches of covenants or representations and warranties set forth in the Credit Agreement.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On December 9, 2010, OMNOVA completed the Acquisition pursuant to the terms of the Purchase Agreement from the Sellers for an aggregate purchase price of €227.5 million in cash, less amounts for Eliokem’s net debt and debt-like items, and subject to working capital and capital expenditure adjustments. OMNOVA used cash on hand, the net proceeds from the issuance of its 7.875% senior notes due 2018 and proceeds from the Initial Term Loan to fund the consummation of the Acquisition, including the repayment of Eliokem debt, and repay the Company’s existing term loan.

Eliokem is a worldwide manufacturer of specialty chemicals used in a diverse range of niche applications including coating resins, elastomeric modifiers, antioxidants, oilfield chemicals and latices for specialty applications. Eliokem is headquartered in Villejust, France and has facilities located in France, the United States, China and India.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The terms of the direct financial obligations under the Term Loan Agreement and the Credit Agreement are summarized in Item 1.01 of this Current Report and are incorporated herein by this reference.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The following audited financial statements of Eliokem International SAS are filed as Exhibit 99.1 to this Current Report and are incorporated herein by reference:

Independent Auditors’ Report;

Consolidated balance sheets as of December 31, 2009 and 2008;

Consolidated statements of income for the years ended December 31, 2009, 2008 and 2007;

Consolidated statement of cash flows for the years ended December 31 2009, 2008 and 2007;

Notes to Consolidated Financial Statements.

The following unaudited interim financial statements of Eliokem International SAS are filed as Exhibit 99.2 to this Current Report and are incorporated herein by reference:

Consolidated balance sheets as of September 30, 2010 and December 31, 2009;

Consolidated statements of income for the nine months ended September 30, 2010 and 2009;

Consolidated statement of cash flows for the nine months ended September 30, 2010 and 2009;

Notes to consolidated financial statements.

(b) Pro Forma Financial Information.

The following unaudited pro forma financial statements are filed as Exhibit 99.3 to this Current Report and are incorporated herein by reference:

Unaudited Pro Forma Combined Statements of Operations for the twelve months ended November 30, 2009;

Unaudited Pro Forma Combined Statements of Operations for the nine months ended August 31, 2010;

Unaudited Pro Forma Combined Balances Sheet as of August 31, 2010;

Notes to Unaudited Pro Forma Combined Financial Statements.

(d) Exhibits.

Exhibit Number	Description
23.1	Consent of Independent Auditors.
99.1	Annual audited financial statements of Eliokem International SAS as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.
99.2	Interim unaudited financial statements of Eliokem International SAS as of September 30, 2010 and 2009 and for the nine months ended September 30, 2010 and 2009.
99.3	Unaudited pro forma combined financial statements.

SIGNATURES

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 14, 2010	By:	/s/ Kristine C. Syrvalin
		Kristine C. Syrvalin
		Corporate Secretary

EXHIBIT INDEX

Exhibit Number	Description
23.1	Consent of Independent Auditors.
99.1	Annual audited financial statements of Eliokem International SAS as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.
99.2	Interim unaudited financial statements of Eliokem International SAS as of September 30, 2010 and 2009 and for the nine months ended September 30, 2010 and 2009.
99.3	Unaudited pro forma combined financial statements.

EX-23.1

Exhibit 23.1

Independent Auditors’ Consent

We consent to the incorporation by reference in:

1. Registration Statement No. 333-155731 on Form S-3 of OMNOVA Solutions Inc.;

2. Registration Statement No. 333-162305 on Form S-8 pertaining to the OMNOVA Solutions Inc. Second Amended and Restated 1999 Equity and Performance Incentive Plan;

3. Registration Statement No. 333-160509 on Form S-8 pertaining to the OMNOVA Solutions Retirement Savings Plan;

4. Registration Statement No. 333-100558 on Form S-8 pertaining to the OMNOVA Solutions Inc. Amended and Restated 1999 Equity and Performance Incentive Plan;

5. Registration Statement No. 333-88145 on Form S-8 pertaining to the OMNOVA Solutions Inc. 1999 Equity and Performance Incentive Plan;

6. Registration Statement No. 333-34938 on Form S-8 pertaining to the OMNOVA Solutions Retirement Savings Plan;

7. Post Effective Amendment No. 1 to Registration Statement No. 333-34938 on Form S-8 pertaining to the OMNOVA Solutions Retirement Savings Plan;

of our report dated July 12, 2010, with respect to the consolidated financial statements of Eliokem International SAS, appearing in Omnova Solutions Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2010

December 14, 2010

/s/ DELOITTE & ASSOCIES

      Neuilly-sur-Seine, France

EX-99.1

Exhibit 99.1

Eliokem International

SAS and Subsidiaries

Consolidated Financial Statements

as of December 31, 2009 and 2008 and for the three years

Ended December 31, 2009.

Independent Auditors’ Report

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
INDEPENDENT AUDITORS’ REPORT		1
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2009 AND 2008 AND FOR THE THREE YEARS ENDED DECEMBER 31, 2009:
Balance Sheets		2
Statements of Income		3
Statements of Shareholders’ Equity		4
Statements of Cash Flows		5
Notes to Consolidated Financial Statements		6–27

INDEPENDENT AUDITORS’ REPORT

To the President du Directoire of Eliokem International SAS

Eliokem International SAS

14, avenue des Tropiques

Z.A. de Courtaboeuf 2

Villejust

91955 Courtaboeuf Cedex

We have audited the accompanying balance sheets of Eliokem International SAS and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related statements of income, stockholders’ equity, and cash flows for the three years ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2009 and 2008, and the results of its operations and its cash flows for the three years ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & ASSOCIES

/s/ Deloitte & Associes

Neuilly-sur-Seine, France

July 12, 2010

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 AND 2008

(Euros in thousands)

	2009			2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	€	16,864		€	10,801
Accounts receivable — less allowance for doubtful accounts of €805 and €811 respectively		22,631			21,964
Inventories (Note 3)		23,263			26,283
Deferred income taxes (Note 9)		4,186			3,451
Other		4,620			4,969
Total current assets		71,564			67,468
PROPERTY, PLANT, AND EQUIPMENT (Note 4):
Property, plant, and equipment		90,281			84,966
Accumulated depreciation		(21,026	)		(14,413	)
Property, plant, and equipment — net		69,255			70,553
OTHER ASSETS:
Goodwill (Note 5)		35,966			36,026
Other intangible assets — net (Note 5)		21,059			24,023
Deferred loan costs — net of accumulated amortization of €1,102 and €772, respectively		1,429			1,774
Other		349			1,246
Total other assets		58,803			63,069
TOTAL	€	199,622		€	201,090

	2009			2008
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of debt (Note 7)	€	13,685		€	7,504
Accounts payable		10,667			11,717
Accrued expenses (Note 6) and other current liabilities (Note 11)		13,199			15,439
Total current liabilities		37,551			34,660
LONG-TERM LIABILITIES:
Debt — less current portion (Note 7)		129,675			134,500
Deferred income taxes (Note 9)		13,972			14,047
Pension obligations (Note 12)		5,763			6,136
Other		253			735
Total long-term liabilities		149,663			155,418
SHAREHOLDERS’ EQUITY (Note 10):
Capital stock and paid-in capital		16,132			16,049
Retained earnings		2,576			1,715
Accumulated other comprehensive income (loss)		(6,300	)		(6,752	)
Total shareholders’ equity		12,408			11,012
TOTAL	€	199,622		€	201,090

See notes to consolidated financial statements.

- 2 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Euros in thousands)

	2009			2008			2007
SALES LESS FREIGHT	€	164,353		€	194,973		€	166,406
OTHER COSTS OF SALES (including charge of €375 in 2008 for purchase accounting step up adjustment)		123,037			155,238			129,808
GROSS PROFIT		41,316			39,735			36,598
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES		25,158			27,120			25,446
INCOME BEFORE INCOME TAXES AND OTHER INCOME (EXPENSE)		16,158			12,615			11,152
OTHER INCOME (EXPENSE):
Interest expense		(12,421	)		(12,435	)		(11,339	)
Restructuring costs (Note 6)		(3,389	)
Foreign currency — net		1,420			(4,649	)		6,525
Miscellaneous income / (loss)					(334	)
Other income (expense) — net		(14,391	)		(17,418	)		(4,814	)
INCOME (LOSS) BEFORE INCOME TAXES		1,767			(4,803	)		6,338
PROVISION FOR INCOME TAXES (Note 9)		906			(2,758	)		1,759
NET INCOME (LOSS)	€	861		€	(2,045	)	€	4,579

See notes to consolidated financial statements.

- 3 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Euros in thousands, except share amounts)

	Bonds Reimbursible in Shares				Capital Stock				Paid-in Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Units		Amount		Shares		Amount		Amount
BALANCE — January 1, 2007		300,000	€	301		12,900,000	€	12,900	€	282	€	(819	)	€	(1,952	)	€	10,712
Comprehensive income:
Net income												4,579						4,579
Adjustment in value				3														3
Paid-in capital increase/(decrease)										80								80
Pension plans’ funded status adjustment — net of €78 of taxes (Note 13)															155			155
Interest rate swap															(428	)		(428	)
Foreign currency translation adjustment															(1,191	)		(1,191	)
Comprehensive income																		3,198
BALANCE — December 31, 2007		300,000		304		12,900,000		12,900		362		3,760			(3,416	)		13,910
Issuance of common shares						2,400,000		2,400										2,400
Comprehensive income:
Net income												(2,045	)					(2,045	)
Adjustment in value				3														3
Paid-in capital increase/(decrease)										80								80
Pension plans’ funded status adjustment — net of €96 of taxes (Note 13)															(192	)		(192	)
Interest rate swap															(1,761	)		(1,761	)
Foreign currency hedge															369			369
Foreign currency translation adjustment															(1,752	)		(1,752	)
Comprehensive income																		(5,298	)
BALANCE — December 31, 2008		300,000	€	307		15,300,000	€	15,300	€	442	€	1,715		€	(6,752	)	€	11,012
Comprehensive income:
Net income												861						861
Adjustment in value				3														3
Paid-in capital increase/(decrease)										80								80
Pension plans’ funded status adjustment — net of €138 of taxes (Note 12)															277			277
Interest rate swap															802			802
Foreign currency hedge															(215	)		(215	)
Foreign currency translation adjustment															(412	)		(412	)
Comprehensive income																		1,396
BALANCE — December 31, 2009		300,000	€	310		15,300,000	€	15,300	€	522	€	2,576		€	(6,300	)	€	12,408

See notes to consolidated financial statements.

- 4 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Euros in thousands)

	2009			2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	€	861		€	(2,045	)	€	4,579
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		6,994			7,417			6,549
Amortization of intangible assets		2,632			2,511			2,414
Noncash interest expense		5,258			4,792			4,077
Noncash compensation expense		80			80			80
(Gain)/loss on sale of property					334
Unrealized exchange (gain)/loss on dollar denominated debt		(2,577	)		4,370			(7,633	)
Deferred income taxes		(539	)		(4,316	)		842
Changes in operating assets and liabilities - net of effect of acquisition of a business in 2008:
Accounts receivable		(997	)		10,217			164
Inventory		2,889			3,233			279
Other assets		1,214			(1,892	)		(2,329	)
Accounts payable		(988	)		(20,760	)		301
Accrued and other liabilities		(1,959	)		1,538			1,892
Net cash provided by operating activities		12,868			5,478			11,215
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property					3,047
Purchase of a business, including acquisition costs - net of cash acquired					(17,230	)
Investment in the construction of a manufacturing facility		(1,934	)		(2,767	)
Capital expenditures		(4,083	)		(4,702	)		(7,350	)
Net cash used in investing activities		(6,017	)		(21,652	)		(7,350	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of shares					2,400
Issuance of bonds					5,600
Advance on capital expenditure facility					12,500
Borrowings under revolving facilities		3,000			3,095			2,500
Payments made on debt		(3,416	)		(3,252	)		(6,149	)
Net cash provided by/(used in) financing activities		(416	)		20,343			(3,649	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(373	)		(308	)		(1,209	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		6,062			3,861			(993	)
CASH AND CASH EQUIVALENTS — Beginning of year		10,801			6,940			7,933
CASH AND CASH EQUIVALENTS — End of year	€	16,863		€	10,801		€	6,940
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for income taxes	€	(68	)	€	2,128		€	2,927
Cash paid during the year for interest	€	9,700		€	6,770		€	5,579
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY:
Decrease in negative fair value of interest rate swap contract — net of taxes (Note 7)	€	(802	)	€	1,761		€	428
Capital expenditures in accounts payable	€	1,136		€	635		€	1,486

See notes to consolidated financial statements.

- 5 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Euros in thousands, except for per share information)

1. DESCRIPTION OF BUSINESS

Description of Business — Eliokem International SAS (“International”) and its wholly owned subsidiaries (collectively, “Eliokem” or the “Company”) manufacture resins, elastomeric modifiers and antioxidants for the specialty chemicals market throughout the world. These materials are used in a broad range of applications and industries including the production of paints and coatings, electrographic toners, thermoplastic compounds, and rubber and latex articles. Eliokem is headquartered in Villejust, France and its principal manufacturing facilities are located in Le Havre, France; Akron, Ohio; Ningbo, China; and Valia, India. Eliokem has five state of the art technical centers located in Villejust, France; Akron, Ohio; Singapore; Valia, India; and Shanghai, China that support the manufacturing facilities and serve as customer technical service centers.

Business and Credit Concentrations — Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and accounts receivable. Cash and cash equivalents, mostly composed of deposits, are maintained with a number of major financial institutions in each of the regions that the Company operates. Credit risk from the ordinary course of trade activities is managed by the regional business units applicable to where the receivables are located. The Company performs ongoing credit evaluation of its customers. As of balance sheet date, none of its customers’ individual exposure exceeds 5% of the Company’s global position.

Acquisition — On February 15, 2008, the Company acquired the Polymer Division of Apar Industries in India for a cash payment of €19,311 and the assumption of €13,802 of the Sellers liabilities. The acquisition, including €1,167 of transaction costs, was funded with €2,400 of additional equity, €5,600 of additional convertible bonds, €12,500 drawn on the capex facility, and working capital. Subsequent to the acquisition, the Seller made a €3,251 payment to the Company for a purchase price adjustment related to working capital targets. This payment reduced the purchase price and the proceeds were used to fund the initial working capital needs of the acquired operation.

The acquisition includes a plant located in Valia, a prominent petrochemical region in the Western state of Gujarat, about 400 km North of Mumbai. The Polymer Division is the sole Indian manufacturer of nitrile rubber and has a strong leadership position in India. Its products offer excellent mechanical properties (abrasion and tear resistance) as well as exceptional chemical, oil and fuel resistance. End-use applications for this nitrile rubber include automotive parts and industrial goods such as rice rollers, hoses or shoe soles.

In accordance with the purchase method of accounting, the €17,230 cost of this operation (including acquisition costs) has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisition. Accordingly, amounts recorded for the transaction at February 15, 2008 were as follows:

- 6 -

Cash and cash equivalents	€
Accounts receivable		7,191
Inventories		7,993
Property, plant, and equipment		12,266
Goodwill		0
Customer relationships		437
Other intangible assets		2,119
Other assets		1,026
Total assets acquired		31,032
Accounts payable and other liabilities		13,802
Liabilities assumed		13,802
Net assets acquired	€	17,230

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation — The consolidated financial statements of Eliokem International SAS, reported in Euros, have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and include the accounts of all majority-owned companies in which the Company has operating control. The Company has no investment in joint venture that would need to be accounted for under the equity method. All significant intercompany balances and transactions are eliminated in consolidation.

Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure, if any, of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the preparation of these Consolidated Financial Statements, estimates and assumptions have been made by management including the selection of useful lives of tangible and intangible assets, expected future cash flows from generating units to support impairment tests, income tax valuation allowances, provisions for legal disputes and assessment of the profitability of occurrence of hedged transactions. Actual results could differ from those estimates.

Cash Equivalents — Cash equivalents represent short-term, highly liquid investments that are readily convertible to known amounts of cash. Only investments with original maturities of three months or less are considered cash equivalents. The Company’s cash and cash equivalent deposits in the United States are held by 2 major banks and the balances will often exceed federal insurance limits.

Accounts Receivable Allowances — The Company provides allowances for losses estimated to be incurred on existing trade accounts receivable. The allowances are based on historical collection experience and specific identification. Credit limits, ongoing credit evaluations and account monitoring procedures are utilized to minimize the risk of loss. Collateral is generally not required.

Inventories — Inventories are valued at the lower of average cost or market. Provision for potentially obsolete or slow-moving inventory (if any) is made based on management’s analysis of inventory levels and future sales forecasts.

Property, Plant, and Equipment — Property, plant, and equipment is stated at cost. Additions, renewals and betterments are capitalized and maintenance and repair costs are expensed as incurred.

- 7 -

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are 40 years for buildings and improvements and 3 to 12 years for machinery and equipment. Leasehold improvements are amortized over the shorter of their useful life or the remaining lease term.

The Company assesses the potential impairment of its property upon the occurrence of triggering events indicative of potential impairment by determining whether the carrying value of the property can be recovered through projected, undiscounted cash flows from future operations over the property’s remaining estimated useful life. Any impairment recognized is the amount by which the carrying amount exceeds the fair value of the asset.

Deferred Loan Costs — Deferred loan costs are amortized using the effective interest method over the terms of the related loans. Amortization of loan costs is recognized as interest expense.

Intangible Assets — Intangible assets consist of identifiable intangibles (trademarks, patents, and customer relationships) and goodwill. Under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350, Intangibles - Goodwill and Other (formerly Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets), goodwill and other intangible assets, which have an indefinite useful life, are not amortized but required to be tested for impairment at least annually. The impairment test for goodwill involves: (1) identifying reporting units, (2) determining the carrying value of each reporting unit by assigning assets and liabilities, including existing goodwill and intangible assets, to those reporting units, and (3) determining the fair value of each reporting unit. If the carrying value of any reporting unit exceeds its fair value, then the amount of any goodwill impairment will be determined through a fair value analysis of each of the assigned assets (excluding goodwill) and liabilities. The impairment test for other intangible assets that have an indefinite useful life consists of a comparison of the fair value of the asset with its carrying value. The Company’s annual impairment test is performed as of its fiscal year end.

The Company assesses the recoverability of its amortizable intangible assets upon the occurrence of triggering events indicative of potential impairment by determining whether the amortization over their remaining life can be recovered through projected, undiscounted cash flows from future operations.

Intangible assets subject to amortization consist of the following:

Patents	6 years
Trademarks	23 years
Customer relationships	8 years
Other Intangibles	4 to 10 years

Derivative Financial Instruments — The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and interest rate swap contracts to manage foreign currency and interest rate risks. The Company does not intend to trade these contracts.

Open speculative positions are not entered into. Derivatives (foreign exchange forward and swap contracts) are accounted for in accordance with FASB ASC 815, Accounting for Derivative instruments and Hedging Activities (formerly SFAS No. 133, Accounting for Derivative instruments and Hedging Activities), as amended, which requires that all derivative instruments be reported on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships. If the derivative is designed as a cash flow hedge, the effective portions of the changes in the fair value of the derivative instrument are recorded in other comprehensive income in the consolidated balance sheet until the hedged item affects earning, and ineffective or excluded portions of changes in the fair value are recognized in the consolidated statements of operations as they arise. If the derivative instrument is

- 8 -

terminated or settled prior to the expected maturity or realization of the underlying hedged item or if the hedging relationship is otherwise terminated, hedge accounting is discontinued prospectively.

All derivatives are recognized as either assets or liabilities in the consolidated balance sheet at fair value.

Equity Based Compensation — The Company has an equity based employee compensation plan, which is described more fully in Note 10. The Company accounts for this plan under the recognition and measurement principles of FASB ASC 718, Compensation – Stock Compensation (formerly SFAS No. 123, Accounting for Stock-Based Compensation), and accordingly, measures compensation expense under the plan based on the estimated fair value of the awards on the grant dates and amortizes the expense over the options’ vesting periods.

Foreign Currency Translation — Assets and liabilities of subsidiaries operating outside of France with a functional currency other than the Euro are translated into Euros using exchange rates at the end of the respective period. Sales, cost of sales and expenses are translated at average exchange rates effective during the respective period. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive income. Foreign currency transaction gains and losses are included in the results of operations in the period incurred.

Revenue Recognition — The Company recognizes revenue when title and risk of loss have passed to the customer, which generally occurs at the time of shipment to or receipt by the customer depending on the specific sales terms. Sales are recorded net of discounts, rebates and returns.

Research and Development — Research and development costs are expensed when incurred and totaled €5,136, €5,591 and €5,474 in 2009, 2008 and 2007, respectively.

Income Taxes — The Company and its subsidiaries are subject to federal income taxes in the countries in which they are organized. Current and deferred taxes are computed based upon each company’s book and taxable income (loss). Deferred income taxes are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of various assets and liabilities using enacted rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some or all of a deferred tax asset will not be realized.

French income taxes and foreign withholding taxes are not provided on the undistributed earnings of foreign subsidiaries which are considered to be indefinitely reinvested in the operations of such subsidiaries. The amount of these earnings was approximately €7.5, €5.4 and €2.5 million at December 31, 2009, 2008 and 2007, respectively.

The Company has not taken any significant, uncertain tax positions and consequently no liability for such matter is recorded in the Company financial statements in accordance with FASB, ASC 740 Income Taxes (formerly Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109).

Asset Retirement Obligations — The Company accounts for asset retirement obligations in accordance with FASB ASC 410, Asset Retirement and Environmental Obligation (formerly SFAS No. 143, Accounting for Asset Retirement Obligations, and Interpretation No. 47 of the Financial Accounting Standards Board (“FIN No. 47”), Accounting for Conditional Asset-Retirement Obligations — an interpretation of FASB Statement No. 143). FASB ASC 410 requires the recognition of a liability for the fair value of a legal obligation to perform asset-retirement obligations (“AROs”) that

- 9 -

are conditional on a future event if the amount can be reasonably estimated. The Company has identified AROs related to certain of its leased facilities and to asbestos remediation activities that may be required in the future. The Company records liabilities for AROs at the time they are identified and when they reasonably can be estimated. However, due to the long-term, productive nature of the Company’s manufacturing operations, absent plans to initiate asset retirement activities, the Company is unable to reasonably estimate the fair value of such asbestos remediation liabilities since the potential settlement dates cannot be determined at this time.

Defined Benefit Pension Plans — In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R), which is codified primarily in FASB ASC 715. FASB ASC 715 requires an employer to recognize a plan’s funded status in its statement of financial position, measure a plan’s assets and obligations as of the end of the employer’s fiscal year and recognize the changes in a plan’s funded status in comprehensive income in the year in which the changes occur. FASB ASC 715’s requirement to recognize a plan’s funded status and the new disclosure requirements were effective for the Company as of December 31, 2008. The requirement to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. Currently, the Company measures plan assets and benefit obligations as of the date of its fiscal year end. The Company adopted the provisions of FASB ASC 715 on December 31, 2007.

Comprehensive Income — The term “comprehensive income” represents the change in shareholders’ equity of the Company from transactions and other events and circumstances resulting from non-shareholder sources. The Company’s accumulated comprehensive income includes its net income plus or minus the effect of changes in the pension plans’ funded status and foreign currency translation adjustments, net of the effect of income taxes. These items are recorded directly in shareholders’ equity and are not included in net income.

Recently Adopted Accounting Pronouncements — In 2009, the Company adopted FASB Accounting Standards Update (ASU) 2009-01, Topic 105 – Generally Accepted Accounting Principles, (ASU 2009-01). This pronouncement establishes the ASC as the source of authoritative accounting principles recognized by the FASB to be used by non governmental entities in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the United States. Adoption of ASU 2009-01 did not have a material effect on our consolidated financial statements.

In 2009, the Company adopted SFAS No. 165, Subsequent Events, which is codified primarily in ASC. SFAS No. 165 provides guidance on management’s assessment of subsequent events and incorporates this guidance into accounting literature. The implementation of this pronouncement did not have a material effect on our consolidated financial statements. The Company has evaluated subsequent events through July 1, the date the consolidated financial statements were available for issuance.

- 10 -

3. INVENTORIES

Inventories at December 31, 2009 and 2008 are comprised of the following:

Description	2009			2008
Raw materials	€	6,602		€	6,891
Work-in-process		690			841
Finished goods		16,737			20,009
Total		24,029			27,741
Excess and obsolete inventory reserve		(766	)		(1,458	)
Inventory — net	€	23,263		€	26,283

4. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at December 31, 2009 and 2008 are comprised of the following:

Description	2009			2008
Land	€	7,790		€	6,018
Buildings and improvements		12,119			11,785
Leasehold improvements		565			590
Machinery and equipment		58,075			54,690
Computer software and hardware		2,215			2,004
Research and development equipment		323			340
Office equipment		1,475			1,327
Construction in process		7,718			8,212
Total		90,281			84,966
Accumulated depreciation		(21,026	)		(14,413	)
Property, plant, and equipment — net	€	69,255		€	70,553

Construction in progress is principally composed of costs incurred in connection with installation of various equipment at the manufacturing sites to increase capacity and efficiency and to maintain compliance with regulatory requirements. Substantially all of these projects are expected to be completed in 2010 and are financed principally through working capital.

- 11 -

5. INTANGIBLE ASSETS

Intangible assets subject to amortization at December 31, 2009 and 2008 consist of the following:

	2009
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life
Patents	€	10,838	€	(3,939	)	€	6,899	6 years
Trademarks		8,282		(1,063	)		7,219	23 years
Customer relationships		8,615		(2,727	)		5,888	8 years
Other Intangibles		1,604		(551	)		1,053	3 to 9 years
Total	€	29,339	€	(8,280	)	€	21,059
	2008
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life
Patents	€	10,838	€	(2,717	)	€	8,121	7 years
Trademarks		8,572		(758	)		7,814	24 years
Customer relationships		8,748		(1,907	)		6,841	9 years
Other Intangibles		1,606		(359	)		1,247	4 to 10 years
Total	€	29,764	€	(5,741	)	€	24,023

- 12 -

Information regarding the amortization expense of amortizable intangible assets is detailed below:

Actual Amortization Expense
Year ended December 31, 2007	€	2,414
Year ended December 31, 2008	€	2,511
Year ended December 31, 2009	€	2,632
Estimated Amortization Expense
Years Ending December 31
2010	€	2,643
2011		2,611
2012		2,495
2013		2,469
2014		2,469
Thereafter		8,371
Total	€	21,059

The Company performed its annual impairment test of its intangible assets that have indefinite lives (goodwill) as of December 31, 2009, 2008 and 2007, and determined that no impairment exists.

The changes in the carrying amount of goodwill during the years ended December 31, 2009, 2008 and 2007 were as follows:

Balance — January 1, 2007	€	35,471
Change in Goodwill, foreign currency impact		857
Balance — December 31, 2007	€	36,328
Change in Goodwill, foreign currency impact		(302	)
Balance — December 31, 2008	€	36,026
Change in Goodwill, foreign currency impact		(60	)
Balance — December 31, 2009	€	35,966

- 13 -

6. ACCRUED EXPENSES AND INTEREST

Accrued expenses and interest at December 31, 2009 and 2008 are comprised of the following:

Description	2009		2008
Employee compensation and benefits	€	7,627	€	7,800
Interest		306		1,768
Rebates		283		601
Restructuring		66
Other		3,055		2,128
Total	€	11,337	€	12,297

During 2009, the Company restructured its operations to reduce its operating costs and improve efficiencies. This restructuring plan was implemented on a voluntary basis and according to local social legislation, in particular in the legal framework of a “Plan de Sauvegarde pour l’Emploi” in France which related to 33 employees.

The costs of this effort are shown as a restructuring charge in the accompanying consolidated statement of income for the year ended December 31, 2009 and are principally composed of redundancy indemnities and payment of the legal notice periods.

Restructuring balance for the year ended December 31, 2009 is as follow:

Balance at January 1, 2009	€	0
Restructuring charge		3,389
Cash paid		(3,323	)
Balance at December 31, 2009	€	66

- 14 -

7. DEBT

Summary — Amounts due under debt arrangements at December 31, 2009 and 2008 are:

	2009
Company	Revolving Facilities		Term Loans		Subordinated Loan		Convertible Bonds		Other		Total
Eliokem International S.A.S.	€	12,746	€	41,540	€	20,824	€	42,165	€		€	117,275
Eliokem S.A.S.		9,500										9,500
Eliokem, Inc.				15,987								15,987
Eliokem India Pvt										597		597
Total		22,246		57,528		20,824		42,165		597		143,360
Less amount due within one year		10,811		2,277						597		13,685
Balance due after 2010	€	11,435	€	55,251	€	20,824	€	42,165	€		€	129,675
	2008
Company	Revolving Facilities		Term Loans		Subordinated Loan		Convertible Bonds		Other		Total
Eliokem International S.A.S.	€	13,194	€	44,957	€	20,418	€	38,332	€		€	116,901
Eliokem S.A.S.		6,500										6,500
Eliokem, Inc.				17,140								17,140
Eliokem India Pvt										1,463		1,463
Total		19,694		62,097		20,418		38,332		1,463		142,004
Less amount due within one year		4,000		2,041						1,463		7,504
Balance due after 2009	€	15,694	€	60,056	€	20,418	€	38,332	€		€	134,500

Required annual principal payments under the debt arrangements are:

Year	Amount
2010	€	13,685
2011		6,486
2012		6,884
2013		7,026
2014		23,145
Thereafter		86,134
Total	€	143,360

- 15 -

Revolving Facilities — Revolving facilities include a working capital revolving line of credit and a capital expenditure (capex) facility under the Company’s senior credit facility with certain financial institutions. The revolving facilities permit draws in multiple currencies.

The working capital facility provides a maximum of € 10,000 of revolving credit through October 2013. The purpose is to meet the general working capital requirements of the operating companies. Interest is variable at Euribor + 2.000% (weighted average rate of 2.481%, 7.345% and 7.009% at December 31, 2009, 2008 and 2007 respectively). The terms of the agreement require that the balance outstanding be less than the cash on hand for ten consecutive days each year. At December 31, 2009, €7,000 is outstanding under this facility.

The capex facility provided for borrowings up to € 15,000 through October 2009. Interest is variable at LIBOR (or Euribor when applicable) + 2.000% (weighted average rate of 2.254%, 5.043% and 7.025% at December 31, 2009, 2008 and 2007 respectively) and is payable quarterly. Principal is due in semiannual installments equal to one-eight ( ¹/8) of the amount advanced, provided that the first installment be repaid in April 2010, up to October 2013. At December 31, 2009, €15,246 is outstanding under this facility of which $18,362 (€ 12,746) is denominated in US Dollars.

Senior Term Loans — The Company has three term loans outstanding under its senior credit facility.

Term Loan A, with an original principal amount of $22,908, is payable in varying semiannual installments through 2013. The outstanding balance at December 31, 2009 is $16,189 (€11,238). Interest is variable at LIBOR + 2.000% (weighted average rate of 2.254%, 6.108% and 7.300% at December 31, 2009, 2008 and 2007 respectively). Interest payments may be made monthly, quarterly or semiannually at the Company’s option.

Term Loan B, with an original principal amount of $34,488, is payable in its entirety in 2014. The outstanding balance at December 31, 2009 is $33,342 (€23,145). Interest is at LIBOR + 2.625% (weighted average rate of 2.879%, 5.738% and 8.220% at December 31, 2009, 2008 and 2007 respectively). Interest payments may be made monthly, quarterly or semiannually at the Company’s option.

Term Loan C, with an original principal amount of $34,488, is payable in its entirety in 2015. The outstanding balance at December 31, 2009 is $33,342 (€23,145). Interest is at LIBOR + 3.125% (weighted average rate of 3.379%, 6.238% and 8.720% at December 31, 2009, 2008 and 2007 respectively). Interest payments may be made monthly, quarterly or semiannually at the Company’s option.

Subordinated Loan — The Subordinated Loan has a face value of $25,174. The loan is payable in its entirety on October 10, 2016, the repayment of which is subordinate to the senior term loans and the revolving facilities. Interest is at LIBOR + 10.000% (10.254%, 14.108% and 15.175% at December 31, 2009, 2008 and 2007 respectively). A portion of the interest, equal to 5.500%, is accrued each period, added to the outstanding principal balance and is due at maturity. The remaining interest payments may be made monthly, quarterly or semiannually at the Company’s option. At December 31, 2009, the recorded balance of the loan is $29,999 (€20,824), which is comprised of the outstanding principal balance of $25,174 (€17,475), plus accrued interest of $4,825 (€3,350).

Convertible Bonds — The Company issued 26,040,000 Convertible Bonds with a face value of €26,040 which were subscribed by the majority shareholder or related third parties. Interest at 10.000% is accrued each period, added to the outstanding principal balance and is due at maturity (January 10, 2016) or at the date of change of control of the Company. Principal and accrued interest are payable in

- 16 -

cash. The Bonds are convertible into shares at the ratio of 7 bonds into 1 common share. In 2008, a further 5,712,000 bonds were issued to fund the acquisition of the operation in India. At December 31, 2009, the recorded balance of the bonds is €42,165, which is comprised of the face value of €31,752, plus accrued interest of €10,413.

Other Debt — The Company has various lines of credit and similar facilities to meet the working capital needs of its operations in India. The maximum borrowing under these facilities is 275 million Indian Rupees (€4,102). Interest is 9.000% and 14.000% at December 31, 2009 and 2008 respectively. Payment is due upon demand. At December 31, 2009, €597 is outstanding under these facilities.

Collateral and Restrictive Covenants — Substantially all of the Company’s assets serve as collateral for the repayment of the Company’s obligations under the senior credit facility. The revolving facilities, the senior term loans and the Subordinated loan are subject to certain restrictive covenants that require, among other things, the maintenance of specified financial ratios, limit capital expenditures and restrict the payment of distributions to the shareholders.

Interest Rate Swaps — The Company has interest rate swap agreements with certain financial institutions. These swaps are used to limit the Company’s interest rate exposure on a portion of its variable rate term loans and the Subordinated loan. The swaps effectively fix the interest rate on the outstanding variable rate balance of these loans.

At December 31, 2009, the Company held interest rate swaps with a total notional value of K$260,000. These swaps fix the Company’s interest rate exposure on its variable rate term loans and Subordinated loan as follows: weighted average fixed rate of 2.649 % on K$125,000 of debt through December 2010; weighted average fixed rate of 2.373% on K$120,000 of debt through December 2011; and weighted average fixed rate of 2.818 % on K$85,000 of debt through December 2012. The notional value of the interest rate swaps held by the Company totaled K$125,000 at December 31, 2009, K$135,000 at December 31, 2008 and K$80,000 at December 31, 2007.

The Company has determined that the interest rate swaps held by the Company during 2009, 2008 and 2007 meet the criteria for cash flow hedge accounting. Accordingly, the change in fair value of the Company’s interest rate swap contracts is recorded as a component of other comprehensive income. The fair value of the interest rate swaps (see Note 11) is included in other current liabilities in the accompanying consolidated balance sheets.

Interest Rate Floors — Interest rate floor agreements represent a series of interest rate contracts under which the Company receives cash payments each quarter that the reference LIBOR rate is below the strike rate of the agreement.

In November 2006, the Company purchased an interest rate floor agreement with a notional amount of $40,000 and a strike rate of LIBOR 4.21%, payable quarterly beginning in December 2007 through December 2009. In May 2007, the Company purchased another interest rate floor agreement with a notional amount of $40,000 and a strike rate of LIBOR 4.83%, payable quarterly beginning in December 2007 through December 2009. The fair value of these interest rate floors is included in other current assets at December 31, 2007. In February and March, 2008, the Company sold their interest in the interest rate floor agreements for € 2,040. In June 2008, the Company purchased an additional floor agreement with a notional amount of $80,000 and a strike rate of Libor 3%. This contract was sold in October, 2008 for €370.

Hedge of Foreign Currency Exposure on Debt — The Company is exposed to currency fluctuations between the cash flow generated by the operations in India denominated in Indian rupees and the

- 17 -

underlying debt used to finance the purchase which is denominated in US dollars. In May, 2008, the Company entered into foreign currency forward contracts to minimize the impact of fluctuations between the US dollar and the Indian rupee. The Company has contracts that fix the exchange rate for 27 million rupees per calendar quarter into US dollars at rates ranging from 42.4 to 44.1 rupees per dollar through March 2011. The fair value of these forward contracts (see Note 11) is included in other current assets in the accompanying consolidated balance sheets.

Because the hedge is an effective cash flow hedge, the change in its fair value is recorded as a component of other comprehensive income and has no impact on the Company’s reported net income. The fair value of the foreign currency forward contracts is included in other current assets in the accompanying consolidated balance sheets.

8. LEASE COMMITMENTS

In December, 2008 the Company sold the headquarters facility in Villejust, France for €3,048. The sale included both the land and the building which houses offices and the European Technical Center. In conjunction with the sale, the Company entered into a lease agreement for the facility for 9 years at €305 per year.

The Company also leases office space, equipment and vehicles. Future minimum rental payments under all operating leases with initial or remaining non cancelable terms in excess of one year as of December 31, 2009 are as follows:

Year	Amount
2010	€	934
2011		658
2012		395
2013		316
2014		306
Thereafter		890
Total	€	3,499

The Company’s rent expense in 2009, 2008 and 2007 totaled €1,360, €1,154 and €799 respectively. There is no financial lease.

- 18 -

9. INCOME TAXES

Information regarding the income tax provision (benefit) by taxing jurisdiction for the years ended December 31, 2009, 2008 and 2007 is as follows:

Description	2009			2008			2007
France	€	(120	)	€	(3,542	)	€	1,537
United States		916			1,452			74
China		315			78			148
India		(205	)		(746	)
Total	€	906		€	(2,758	)	€	1,759

The income tax provision (benefit) for the years ended December 31, 2009, 2008 and 2007 consists of the following:

Description	2009			2008			2007
Current:
France	€	441		€			€	1,004
United States		1,131			1,218			1,717
China		303			132			141
India		105
Total current		1,980			1,350			2,862
Deferred:
France		(561	)		(3,553	)		(930	)
United States		(215	)		275			(180	)
China		13			(57	)		7
India		425			(1,635	)
Valuation allowance *		(736	)		862
Total deferred		(1,074	)		(4,108	)		(1,103	)
Total	€	906		€	(2,758	)	€	1,759

* Cancellation of Indian valuation allowance of KInr55,301 constituted in 2008 and fully recovered in 2009 (net impact of foreign rate of K€126)

The Company’s income tax provision, as shown in the accompanying consolidated statement of income, differs from the amounts that would be obtained by using the federal statutory income tax rate, principally due to the effect the following:

- 19 -

Description	2009			2008			2007
Income / (loss) before income taxes	€	1,767		€	(4,803	)	€	6,338
Tax at normative rate (33.33%)		589			(1,601	)		2,112
Other
Non deductible interests		1,200			667			479
India deferred tax assets recognition		(736	)		862
Permanent difference India					(338	)
France tax research credit		(486	)		(483	)		(492	)
Subsidiaries at different rate		(360	)		(59	)		(270	)
Forex to CTA		197			(1,207	)
Miscellaneous		502			(599	)		(70	)
Expected income tax provision / (benefit)	€	906		€	(2,758	)	€	1,759
Actual income tax provision / (benefit)	€	906		€	(2,758	)	€	1,759

The components of the Company’s deferred tax assets and liabilities at December 31, 2009 and 2008 are as follows:

Description	2009			2008
Current deferred income tax asset (liability):
Employee compensation and benefits	€	251		€	349
Inventory		(31	)		(67	)
Net operating loss carryforwards		3,660			2,864
Other		306			305
Total	€	4,186		€	3,451
Noncurrent deferred income tax (asset) liability:
Depreciation and amortization	€	15,333		€	15,782
Financial instruments (warrants and hedging activities)		(495	)		(931	)
Employee retirement benefits		(1,902	)		(2,057	)
Other		1,036			1,253
Total	€	13,972		€	14,047

The Company operates in several taxing jurisdictions and is subject to examination by foreign and domestic taxing authorities. The Company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which the Company does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the Company’s estimates of income tax liabilities may differ from actual payments or assessments. With few exceptions, the Company no longer is subject to federal, state and local or foreign tax examinations for years before 2005.

The Company includes penalties and interest resulting from income tax liabilities in its consolidated income tax provision, when applicable. No significant penalties or interest were incurred during the years ended December 31, 2009, 2008 and 2007.

- 20 -

10. CAPITAL STOCK AND MANAGEMENT WARRANTS

Common Units — The Company has 15,300,000 authorized common shares with a par value of €1 per share, all of which were outstanding at December 31, 2009. All of the shares have voting rights.

Management Warrants — During 2006, certain executives and key employees of the Company were granted warrants for the right to purchase shares as specified in the warrant agreements. Unless terminated earlier, the warrants expire ten years from the date of issue. The fair value of the warrant awards when they were issued in 2006 was determined using the following assumptions: risk free interest rate of 3.700%, expected option life equal to three years and no expected volatility or dividend yield.

A summary of the status of the Company’s management warrant plan as of December 31, 2009, and changes during the year then ended is provided below:

Description	Units		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term
Outstanding — January 1, 2007		2,640,000	€	1.27	10 years
Purchased
Exercised
Forfeited
Outstanding — December 31, 2007		2,640,000	€	1.27	9 years
Purchased
Exercised
Forfeited
Outstanding — December 31, 2008		2,640,000	€	1.27	8 years
Purchased
Exercised
Forfeited
Outstanding — December 31, 2009		2,640,000	€	1.27	7 years
Exercisable — end of year		0

Non-cash option compensation expense recognized in the accompanying consolidated statements of income during the years ended December 31, 2009 and 2008, totaled €80 and €80, respectively. As of December 31, 2009, there was no additional unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company’s management warrant plan.

Bonds Reimbursable in Common Shares – The Bonds reimbursable in common shares have a €300 face value. 300,000 Bonds reimbursable in common shares were issued and subscribed by a related third party. Interest at 1.000% is accrued each year, added to the outstanding principal balance and is due at maturity (October 10, 2021) or at the date of a change of control of the Company. Principal and interest are payable in cash. The Bonds are convertible into common shares at a ratio of 1 bond into 1 common share.

- 21 -

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

For its assets and liabilities that are measured at fair value on a recurring basis, the Company is required to classify and disclose the assets and liabilities based upon the lowest level of input that is significant to the measurement of their fair values. The classifications are based upon the fair value hierarchy specified in ACS Topic 820, Fair Value Measurements and Disclosures, and are based upon the reliability of the inputs used to determine fair value. Level 1 inputs represent quoted prices from active markets for identical assets or liabilities. Level 2 inputs represent quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable for the asset or liability. The following table sets forth, by level within the fair value hierarchy, a summary of the Company’s assets and liabilities that were measured at fair value at December 31, 2009 and 2008:

		2009				2008
	Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	1	€	16,864	€	16,864	€	10,801	€	10,801
Foreign currency forward contracts	2		153		153		553		553
Interest rate swap	2
Total		€	17,017	€	17,017	€	11,354	€	11,354
Liabilities:
Foreign currency forward contracts	2
Interest rate swap	2		1,862		1,862		3,142		3,142
Total		€	1,862	€	1,862	€	3,142	€	3,142

The fair value of cash and cash equivalents equals their redemption value due to their short-term nature. The fair values of the interest rate swaps are obtained from counterparty quotes, which use discounted cash flows and the then-applicable forward interest rates, and the fair values of the forward currency forward contracts are obtained from counterparty quotes based on current market activity. Additional details regarding the foreign currency forward contracts and interest rate swaps is provided in Note 7.

The carrying value of the Company’s accounts receivable, accounts payable and accrued liabilities approximates their fair value at December 31, 2009 and 2008 due to the short-term maturities of these assets and liabilities. The Company also believes that the aggregate fair values of its revolving, term and Subordinated loans approximates their carrying amounts at December 31, 2009 and 2008 because the interest rates on the debt are reset on a frequent basis and reflect current market rates

12. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans — The Company has defined contribution 401(k) profit sharing plans that cover substantially all of its eligible salary and hourly employees in Akron, Ohio. Participants may contribute between 1% and 15% of their compensation to the plan. The Company matches 100% of

- 22 -

participant contributions up to the first 6% of compensation. Expense recognized by the Company during 2009, 2008 and 2007 for contributions to the profit sharing plans was €186, €206 and €182 respectively.

Defined Benefit Plans — The Company sponsors noncontributory defined benefit pension plans which cover substantially all its employees in France. Employees are paid benefits at retirement using formulas based upon years of service and compensation rates near retirement. The Company’s funding policy is to contribute amounts to satisfy local regulations.

The Company also sponsors noncontributory defined benefit plans which cover substantially all its employees in India. Employees are paid benefits under certain circumstances and at retirement using formulas based upon years of service and compensation rates. The Company’s funding policy is to contribute amounts to satisfy local regulations.

The benefit obligations, fair value of plan assets, and funded status of the plans was as follows at December 31, 2009 and 2008:

Description	2009			2008
Accumulated benefit obligation	€	4,601		€	4,919
Projected benefit obligation	€	5,875		€	6,267
Fair value of the plans’ assets		(112	)		(131	)
Funded status	€	5,763		€	6,136

The change in the projected benefit obligations and assets of the plans for 2009 and 2008, and the amounts recognized in the accompanying consolidated balance sheet as of December 31, 2009 and 2008 were as follows:

- 23 -

	2009			2008
Change in Projected Benefit Obligations of the Plans:
Projected benefit obligation at the beginning of the year	€	6,036		€	5,661
Projected benefit obligation at the beginning of the year for the acquired companies	€	225		€	131
Service cost		997			282
Interest cost		289			305
Actuarial (gain) loss		49			552
Plan amendments		(226	)
Settlements/curtailments		(737	)
Benefits paid		(758	)		(664	)
Projected benefit obligation at the end of the year		5,875			6,267
Change in the Plans’ Assets:
Fair value of the plans’ assets at the beginning of the year	€			€
Actual return on the plans’ assets		133			123
Company contributions		737			673
Benefits paid		(758	)		(664	)
Fair value of the Plans’ assets at the end of the year		112			132
Funded Status of the Plans	€	(5,763	)	€	(6,135	)
Net Amounts Recognized in the Consolidated Balance Sheet:
Accrued expenses and other current liabilities		(969	)		(1,205	)
Long-term pension obligations		(4,793	)		(4,931	)
Funded Status of the Plans	€	(5,763	)	€	(6,136	)

The net periodic pension cost of the Company’s defined benefit pension plans consists of the following for the years ended December 31, 2009, 2008 and 2007:

	2009			2008			2007
Service cost — benefits earned during the period	€	981		€	267		€	294
Interest cost on projected benefit obligations		270			293			246
Expected return on the plans’ assets
Amortization of prior service costs		(8	)		(8	)		(17	)
Recognized net actuarial loss (gain)		243			269			160
Settlement/curtailment loss (gain)		(737	)
Net periodic pension cost	€	749		€	821		€	683

- 24 -

The amount of the actuarial net loss and prior service cost recognized in accumulated other comprehensive income (loss) related to the Company’s defined benefit pension plans are comprised of the following:

	Actuarial Net Loss			Prior Service Cost			Total
Balance — January 1, 2007	€	1		€	(1,547	)	€	(1,546	)
Adjustment to recognize changes in actuarial assumptions:
Pretax		515			(283	)		232
Tax (provision) benefit		(173	)		94			(79	)
Total		343			(189	)		154
Balance — December 31, 2007		344			(1,736	)		(1,392	)
Adjustment to recognize changes in actuarial assumptions:
Pretax		(478	)		189			(289	)
Tax (provision) benefit		159			(63	)		96
Total		(319	)		126			(193	)
Balance — December 31, 2008		25			(1,610	)		(1,585	)
Adjustment to recognize changes in actuarial assumptions:
Pretax		(77	)		492			415
Tax (provision) benefit		26			(164	)		(138	)
Total		(51	)		328			277
Balance — December 31, 2009	€	(26	)	€	(1,282	)	€	(1,308	)
Amount expected to be recognized as a component of net periodic pension cost in 2010	€	465		€	172		€	637

The Company amortizes actuarial gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over the average remaining service period of participating employees expected to receive benefits under the plans.

- 25 -

The Company’s weighted-average actuarial assumptions used to determine its benefit obligations at December 31, 2009 and 2008 for its defined benefit pension plans were as follows:

	2009						2008						2007
	France			India			France			India			France
Discount rate		5.0	%		8.25	%		5.5	%		6.5	%		5.5	%
Rate of compensation increase		3.0	%		6.50	%		3.0	%		6.0	%		3.0	%

The Company’s weighted-average assumptions used to determine net periodic pension cost for 2009, 2008 and 2007 were as follows:

	2009						2008						2007
	France			India			France			India			France
Discount rate		5.0	%		8.25	%		5.5	%		6.5	%		5.5	%
Expected long-term rate of return on plan assets		n.a			8.25	%		n.a			6.5	%		n.a
Rate of compensation increase		3.0	%		6.5	%		3.0	%		6.0	%		3.0	%

The Company expects to contribute €721 to its defined benefit pension plan in 2010 and the following benefit payments, which reflect expected future service, as appropriate, are expected to be made from the plans:

2010	€	721
2011		173
2012		197
2013		161
2014		493
Years 2015–2018		2,540

13. CONTINGENCIES

Lawsuits and claims may be filed from time to time against the Company in the ordinary course of business. Management of the Company is of the opinion that the outcome of such matters will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity. The Company is subject to a wide variety of environmental laws that continue to be adopted and amended, including the requirement to perform certain restoration activities in France and other Company locations if operations were terminated. At this time, management has no plans to terminate such operations. Therefore, the ultimate extent of the Company’s liability for pending or potential fines, penalties, remedial costs, claims and litigation relating to environmental laws and health and safety matters and future capital expenditures that may be associated with environmental laws cannot be determined at this time. Management, with the assistance of outside environmental consultants, continually assesses the Company’s environmental contingencies. Management of the Company is of the opinion that the outcome of such matters will not have a material, adverse effect on the Company’s financial condition, results of operations or liquidity.

- 26 -

14. SUBSEQUENT EVENT

On January 28, 2010, the board of directors of the Company has decided to remove M. Philippe Carabin from his functions of President - Chief Executive Officer of the Company. M. Philippe Carabin has ceased any functions in the Company on June 21, 2010.

******

- 27 -

EX-99.2

Exhibit 99.2

Eliokem International

SAS and Subsidiaries

Unaudited Condensed Consolidated Financial Statements

as of September 30, 2010 and 2009 and for the nine-months

ended September 30, 2010 and 2009.

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 AND 2009 AND FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2010 AND 2009:
Balance Sheets		2
Statements of Income		3
Statements of Cash Flows		4
Notes to the unaudited condensed Consolidated Financial Statements		5–16

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

(Euros in thousands)

	September 30 2010			December 31, 2009
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	€	22,478		€	16,864
Accounts receivable — less allowance for doubtful accounts of €777 and €805 respectively		29,477			22,631
Inventories (Note 3)		27,443			23,263
Deferred income taxes (Note 8)		2,008			4,186
Other		6,178			4,620
Total current assets		87,585			71,564
PROPERTY, PLANT, AND EQUIPMENT (Note 4):
Property, plant, and equipment		100,826			90,281
Accumulated depreciation		(26,451	)		(21,026	)
Property, plant, and equipment — net		74,374			69,255
OTHER ASSETS:
Goodwill (Note 6)		35,496			35,966
Other intangible assets — net (Note 5)		19,907			21,059
Deferred loan costs — net of accumulated amortization of K€1,346 and K€1,102, respectively		1,209			1,429
Other		385			349
Total other assets		56,997			58,803
TOTAL	€	218,957		€	199,622

	September 30 2010			December 31, 2009
	(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of debt (Note 7)	€	16,021		€	13,685
Accounts payable		15,911			10,667
Accrued expenses and other current liabilities		18,134			13,199
Total current liabilities		50,067			37,551
LONG-TERM LIABILITIES:
Debt — less current portion (Note 7)		131,823			129,675
Deferred income taxes (Note 8)		13,352			13,972
Pension obligations		5,596			5,763
Other		174			253
Total long-term liabilities		150,945			149,663
SHAREHOLDERS’ EQUITY :
Capital stock and paid-in capital		16,135			16,132
Retained earnings		6,573			2,576
Accumulated other comprehensive income (loss) (Note 10)		(4,763	)		(6,300	)
Total shareholders’ equity		17,945			12,408
TOTAL	€	218,957		€	199,622

See notes to the unaudited condensed consolidated financial statements.

- 2 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Euros in thousands)

	September 30, 2010			September 30, 2009
	(unaudited)			(unaudited)
SALES LESS FREIGHT	€	168,344		€	123,597
OTHER COSTS OF SALES		124,236			92,441
GROSS PROFIT		44,108			31,156
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES		20,253			19,016
INCOME BEFORE INCOME TAXES AND OTHER INCOME (EXPENSE)		23,855			12,141
OTHER INCOME (EXPENSE):
Interest expense		(9,041	)		(9,282	)
Restructuring costs		(0	)		(3,411	)
Foreign currency — net		(6,549	)		2,822
Miscellaneous income / (loss)		(63	)
Other income (expense) — net		(15,653	)		(9,871	)
INCOME (LOSS) BEFORE INCOME TAXES		8,202			2,269
PROVISION FOR INCOME TAXES		4,206			1,164
NET INCOME (LOSS)	€	3,996		€	1,106

See notes to the unaudited condensed consolidated financial statements.

- 3 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Euros in thousands)

	September 30, 2010			September 30, 2009
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	€	3,996		€	1,106
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5,291			5,230
Amortization of intangible assets		1,836			1,814
Noncash interest expense		4,304			3,954
Noncash compensation expense					60
Unrealized exchange (gain)/loss on dollar denominated debt		4,210			(3,315	)
Deferred income taxes		1,881			1,120
Changes in operating assets and liabilities
Accounts receivable		(5,590	)		(3,804	)
Inventory		(3,617	)		2,741
Other assets		(1,560	)		106
Accounts payable		4,879			4,517
Accrued and other liabilities		2,952			858
Net cash provided by operating activities		18,581			14,387
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in the construction of a manufacturing facility		(5,488	)		(876	)
Capital expenditures		(2,951	)		(2,462	)
Net cash used in investing activities		(8,439	)		(3,339	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving facilities					3,000
Payments made on debt		(5,102	)		(2,249	)
Net cash provided by/(used in) financing activities		(5,102	)		751
EFFECT OF EXCHANGE RATE CHANGES ON CASH		573			(405	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		5,614			11,393
CASH AND CASH EQUIVALENTS — Beginning of year		16,864			10,801
CASH AND CASH EQUIVALENTS — End of period	€	22,478		€	22,194

See notes to the unaudited condensed consolidated financial statements.

- 4 -

ELIOKEM INTERNATIONAL SAS AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for per share information)

1. DESCRIPTION OF BUSINESS

Description of Business — Eliokem International SAS (“International”) and its wholly owned subsidiaries (collectively, “Eliokem” or the “Company”) manufacture resins, elastomeric modifiers and antioxidants for the specialty chemicals market throughout the world. These materials are used in a broad range of applications and industries including the production of paints and coatings, electrographic toners, thermoplastic compounds, and rubber and latex articles. Eliokem is headquartered in Villejust, France and its principal manufacturing facilities are located in Le Havre, France; Akron, Ohio; Ningbo, China; and Valia, India. Eliokem has four state of the art technical centers located in Villejust, France; Akron, Ohio; Valia, India; and Shanghai, China that support the manufacturing facilities and serve as customer technical service centers.

Business and Credit Concentrations — Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and accounts receivable. Cash and cash equivalents, mostly composed of deposits, are maintained with a number of major financial institutions in each of the regions that the Company operates. Credit risk from the ordinary course of trade activities is managed by the regional business units applicable to where the receivables are located. The Company performs ongoing credit evaluation of its customers. As of balance sheet date, none of its customers’ individual exposure exceeds 5% of the Company’s global position.

Significant Event of the period — In 2008, The Company has initiated a project to build another manufacturing plant in China. The plant will enhance the market position of the Company by placing certain manufacturing capability significantly closer to both the customers and to the sources of raw material supply. The total estimated cost of the project is $18,000 (RMB125,000). Through September 30, 2010 the Company has spent $16,000 and an additional $2,000 will be expensed to complete it.

On March 26, 2009, the Company has announced to the company’s central works council (Comité Central d’Entreprise) a PSE (Plan de Sauvegarde de l’Emploi). Its main goal was to get a more robust and nimble company to support recession period while securing the future by ensuring the business sustainability and growth. The costs of this effort are shown as a restructuring charge in the accompanying consolidated statement of income and are principally composed of severance expenses.

On January 28, 2010, the board of directors of the Company has decided to remove M. Philippe Carabin from his functions of President - - Chief Executive Officer of the Company. M. Philippe Carabin has ceased any functions in the Company on June 21, 2010.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and, therefore, do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These interim statements should be read in conjunction with the financial statements and notes of Eliokem International SAS (“Eliokem” or the “Company”) for the year ended December 31, 2009.

- 5 -

The balance sheet at December 31, 2009 has been derived from the audited consolidated financial statements at that date.

These interim condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature except as disclosed herein. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

In our opinion, our interim condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of September 30, 2010, the results of our operations for nine-month periods ended September 30, 2010, and September 30, 2009, and cash flows for the nine-month periods ended September 30, 2010, and September 30, 2009.

The Company has historically experienced stronger sales and income in its second and third quarters. The Company’s performance in the fourth quarter has historically been weaker due to generally lower levels of customer manufacturing, construction and refurbishment activities over the holidays and cold winter months.

A detailed description of the Company’s significant accounting policies and management judgments is located in the audited consolidated financial statements for the year ended December 31, 2009.

Recently Adopted Accounting Pronouncements — On January 1, 2010, the first day of the 2010 fiscal year, we adopted:

Accounting Standards Update No. 2009-16, “Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets” (“ASU No. 2009-16”) (former SFAS No. 166, “Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140”). Our adoption did not have a material impact on our financial statements.

Accounting Standards Update No. 2009-17, “Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU No. 2009-17”) (former SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),”). The adoption of these standards did not have an impact on the financial statements of the Company. Our adoption did not have a material impact on our financial statements.

Accounting Standards Update No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” (“ASU No. 2010-06”). Our adoption did not have a material impact on our financial statements or disclosures, as we had no transfers between Level 1 and Level 2 fair value measurements and no material classes of assets and liabilities that required additional disclosure.

Accounting Standards Update No. 2010-09 “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements” (“ASU No. 2010-09”). The Company has evaluated subsequent events from the date on the balance sheet through the date these financial statements are issued. No material events or transactions occurred during this subsequent event reporting period which required recognition or disclosure in the financial statements.

- 6 -

Future Adoption of Accounting Standards — Accounting Standards Update No. 2009-13 “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU No. 2009-13”). ASU No. 2009-13 addresses the accounting for multiple-deliverable arrangements (complex contracts or related contracts that require the separate delivery of multiple goods and/or services) by expanding the circumstances in which vendors may account for deliverables separately rather than as a combined unit. This update clarifies the guidance on how to separate such deliverables and how to measure and allocate consideration for these arrangements to one or more units of accounting. The existing guidance requires a vendor to use vendor-specific objective evidence or third-party evidence of selling price to separate deliverables in multiple-deliverable arrangements. In addition to retaining this guidance, in situations where vendor-specific objective evidence or third-party evidence is not available, ASU No. 2009-13 will require a vendor to allocate arrangement consideration to each deliverable in multiple-deliverable arrangements based on each deliverable’s relative selling price. This update also expands disclosure requirements for multiple deliverable arrangements, can be applied either prospectively or retrospectively, and is effective for fiscal years beginning on or after September 30, 2010, with early adoption permitted. We are assessing the impact that adoption of ASU No. 2009-13 will have on our financial statements.

ASU No. 2010-06 – Certain provisions of ASU No. 2010-06 are effective for fiscal years beginning after December 15, 2010, which for us will be our 2011 first quarter. Those provisions, which amended Subtopic 820-10, will require us to present as separate line items all purchases, sales, issuances, and settlements of financial instruments valued using significant unobservable inputs (Level 3) in the reconciliation for fair value measurements, in contrast to the current aggregate presentation as a single line item. Although this may change the appearance of our fair value reconciliations, we do not believe the adoption will have a material impact on our financial statements or disclosures.

3. INVENTORIES

Inventories at September 30, 2010 and December 31, 2009 are comprised of the following:

Description	September 30, 2010			December 31, 2009
	(unaudited)
Raw materials	€	7,750		€	6,602
Work-in-process		1,250			690
Finished goods		19,241			16,737
Total		28,242			24,029
Excess and obsolete inventory reserve		(798	)		(766	)
Inventory — net	€	27,443		€	23,263

- 7 -

4. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at September 30, 2010 and December 31, 2009 are comprised of the following:

Description	September 30, 2010			December 31, 2009
	(unaudited)
Land	€	8,067		€	7,790
Buildings and improvements		12,484			12,119
Leasehold improvements		597			565
Machinery and equipment		60,187			58,075
Research and development equipment		342			323
Office equipment		1,444			1,475
Computer software and hardware		2,359			2,215
Construction in progress		15,346			7,718
Total		100,826			90,281
Accumulated depreciation		(26,451	)		(21,026	)
Property, plant, and equipment — net	€	74,374		€	69,255

Construction in progress is principally composed of costs incurred in connection with the installation of various equipment at manufacturing sites to enhance capacity and efficiency and to maintain compliance with regulatory requirements. Substantially all of these projects are expected to be completed in the course 2010 and are financed principally through working capital.

- 8 -

5. INTANGIBLE ASSETS

Intangible assets subject to amortization at September 30, 2010 and December 31, 2009 consist of the following:

	September 30,
	2010
	(unaudited)
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life
Patents	€	10,838	€	(4,855	)	€	5,983		6 years
Trademarks		8,740		(1,384	)		7,356		23 years
Customer relationships		8,873		(3,440	)		5,433		8 years
Other Intangibles		1,737		(603	)		1,134		3 to 9 years
Total	€	30,189	€	(10,282	)	€	19,907

	December 31,
	2009
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life
Patents	€	10,838	€	(3,939	)	€	6,899		6 years
Trademarks		8,282		(1,063	)		7,219		23 years
Customer relationships		8,615		(2,727	)		5,888		8 years
Other Intangibles		1,604		(551	)		1,053		3 to 9 years
Total	€	29,339	€	(8,280	)	€	21,059

Gross carrying amount variations are due to currency fluctuation. Amortization for the nine-month period ended September 30, 2010 was €1,836. Information regarding amortization expense for the next years is detailed below:

Estimated Amortization Expense
2010	€	2,643
2011		2,611
2012		2,495
2013		2,469
2014		2,469
Thereafter		8,371
Total	€	21,059

- 9 -

6. GOODWILL

Goodwill variation is due to currency fluctuation. Goodwill is not subject to amortization. The Company did not identify any triggering events that would impair its value.

7. DEBT

Summary — Amounts due under debt arrangements at September 30, 2010 and December 31, 2009 are:

	September 30,
	2010
	(unaudited)
	Revolving		Term		Subordinated		Convertible
Company	Facilities		Loans		Loan		Bonds		Other		Total
Eliokem International S.A.S.	€	11,773	€	40,241	€	22,887	€	45,265	€		€	120,166
Eliokem S.A.S.		9,188										9,188
Eliokem, Inc.				15,576								15,576
Eliokem India Pvt										2,915		2,915
Total		20,960		55,817		22,887		45,265		2,915		147,844
Less amount due within one year		10,989		2,117						2,915		16,021
Balance due after September 2011	€	9,971	€	53,700	€	22,887	€	45,265	€		€	131,823

	December 31,
	2009
	Revolving		Term		Subordinated		Convertible
Company	Facilities		Loans		Loan		Bonds		Other		Total
Eliokem International S.A.S.	€	12,746	€	41,540	€	20,824	€	42,165	€		€	117,275
Eliokem S.A.S.		9,500										9,500
Eliokem, Inc.				15,987								15,987
Eliokem India Pvt										597		597
Total		22,246		57,528		20,824		42,165		597		143,360
Less amount due within one year		10,811		2,277						597		13,685
Balance due after December 2010	€	11,435	€	55,251	€	20,824	€	42,165	€		€	129,675

Revolving Facilities — Revolving facilities include a working capital revolving line of credit and a capital expenditure (capex) facility under the Company’s senior credit facility with certain financial institutions. The revolving facilities permit draws in multiple currencies.

The working capital facility provides a maximum of €10,000 of revolving credit through October 2013. The purpose is to meet the general working capital requirements of the operating companies. Interest is variable at Euribor + 1.250% (weighted average rate of 1,871% and 2.481% at September 30, 2010 and December 31, 2009, respectively). The terms of the agreement require that the balance outstanding be

- 10 -

less than the cash on hand for ten consecutive days each year. At September 30, 2010, €7,000 is outstanding under this facility.

The capex facility provided for borrowings up to €15,000 through October 2013. Interest is variable at LIBOR (or Euribor when applicable) + 1.250% (weighted average rate of 1,560% and 2.254%, at September 30, 2010 and December 31, 2009, respectively) and is payable monthly, quarterly or semiannually at the Company’s option. At September 30, 2010, €13,960 is outstanding under this facility of which $16,067 (€11,773) is denominated in US Dollars.

Senior Term Loans — The Company has three term loans outstanding under its senior credit facility.

Term Loan A, with an original principal amount of $22,908, is payable in varying semiannual installments through 2013. The outstanding balance at September 30, 2010, is $13,688 (€10,029). Interest is variable at LIBOR + 1.250% (weighted average rate of 1.502% and 2.254%, at September 30, 2010 and December 31, 2009, respectively). Interest payments may be made monthly, quarterly or semiannually at the Company’s option.

Term Loan B, with an original principal amount of $34,488, is payable in its entirety in 2014. The outstanding balance at September 30, 2010 is $31,246 (€22,894). Interest is at LIBOR + 2.250% (weighted average rate of 2.502% and 2.879%, at September 30, 2010 and December 31, 2009, respectively). Interest payments may be made monthly, quarterly or semiannually at the Company’s option.

Term Loan C, with an original principal amount of $34,488, is payable in its entirety in 2015. The outstanding balance at September 30, 2010 is $31,246 (€22,894). Interest is at LIBOR + 3.125% (weighted average rate of 3.377% and 3.379% at September 30, 2010 and December 31, 2009, respectively). Interest payments may be made monthly, quarterly or semiannually at the Company’s option.

Subordinated Loan — The Subordinated Loan has a face value of $25,174. The loan is payable in its entirety on October 10, 2016, the repayment of which is subordinate to the senior term loans and the revolving facilities. Interest is at LIBOR + 10.000% (10.252% and 10.254% at September 30, 2010 and December 31, 2009, respectively). A portion of the interest, equal to 5.500%, is accrued each period, added to the outstanding principal balance and is due at maturity. The remaining interest payments may be made monthly, quarterly or semiannually at the Company’s option. At September 30, 2010, the recorded balance of the loan is $31,236 (€22,887), which is comprised of the outstanding principal balance of $25,174 (€18,445), plus accrued interest of $6,022 (€4,442).

Convertible Bonds — The Company issued 26,040,000 Convertible Bonds with a face value of €26,040 which were subscribed by the majority shareholder or related third parties. Interest at 10.000% is accrued each period, added to the outstanding principal balance and is due at maturity (January 10, 2016) or at the date of change of control of the Company. Principal and accrued interest are payable in cash. The Bonds are convertible into shares at the ratio of 7 bonds into 1 common share. In 2008, a further 5,712,000 bonds were issued to fund the acquisition of the operation in India. At September 30, 2010, the recorded balance of the bonds is €45,265, which is comprised of the face value of €31,752, plus accrued interest of €13,513.

Other Debt — The Company has various lines of credit and similar facilities to meet the working capital needs of its operations in India. The maximum borrowing under these facilities is 275 million Indian Rupees (€4,830). Interest is 10.000% and 9.000% and at September 30, 2010 and December 31,

- 11 -

2009, respectively. Payment is due upon demand. At September 30, 2010, €2,915 is outstanding under these facilities.

Collateral and Restrictive Covenants — Substantially all of the Company’s assets serve as collateral for the repayment of the Company’s obligations under the senior credit facility. The revolving facilities, the senior term loans and the Subordinated loan are subject to certain restrictive covenants that require, among other things, the maintenance of specified financial ratios, limit capital expenditures and restrict the payment of distributions to the shareholders. During the period, the Company fully complied with its specified financial ratios.

Interest Rate Swaps — The Company has interest rate swap agreements with certain financial institutions. These swaps are used to limit the Company’s interest rate exposure on a portion of its variable rate term loans and the Subordinated loan. The swaps effectively fix the interest rate on the outstanding variable rate balance of these loans.

At September 30, 2010, the Company held interest rate swaps with a total notional value of $260,000. These swaps fix the Company’s interest rate exposure on its variable rate term loans and Subordinated loan as follows: weighted average fixed rate of 2.649 % on $125,000 of debt through December 2010; weighted average fixed rate of 2.373% on $120,000 of debt through December 2011; and weighted average fixed rate of 2.818 % on $85,000 of debt through December 2012.

The Company has determined that the interest rate swaps held by the Company during 2010 and 2009, meet the criteria for cash flow hedge accounting. Accordingly, the change in fair value of the Company’s interest rate swap contracts is recorded as a component of other comprehensive income. The fair value of the interest rate swaps (see Note 9) is included in other current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Hedge of Foreign Currency Exposure on Debt — The Company is exposed to currency fluctuations between the cash flow generated by the operations in India denominated in Indian rupees and the underlying debt used to finance the purchase which is denominated in US dollars. In May, 2008, the Company entered into foreign currency forward contracts to minimize the impact of fluctuations between the US dollar and the Indian rupee. The Company has contracts that fix the exchange rate for 27 million rupees per calendar quarter into US dollars at rates ranging from 42.4 to 44.1 rupees per dollar through March 2011. The fair value of these forward contracts (see Note 9) is included in other current assets in the accompanying consolidated balance sheets.

Because the hedge is an effective cash flow hedge, the change in its fair value is recorded as a component of other comprehensive income and has no impact on the Company’s reported net income. The fair value of the foreign currency forward contracts is included in other current assets in the accompanying consolidated balance sheets.

- 12 -

8. INCOME TAXES

The income tax provision (benefit) for the nine-month period ended September 30, 2009 of €1,164 has been calculated applying the audited December 31, 2009 Group effective tax rate to the profit before income tax of the period.

The income tax provision (benefit) for the nine-month period ended September 30, 2010 of €4,206 has been calculated applying an estimated December 31, 2010 group effective tax rate of 51% to the profit before income tax of the period.

The components of the Company’s deferred tax assets and liabilities at September 30, 2010 and December 31, 2009 are as follows:

	September 30,			December 31,
Description	2010			2009
	(unaudited)
Current deferred income tax asset (liability):
Employee compensation and benefits	€	411		€	251
Inventory		566			(31	)
Net operating loss carryforwards		1,526			3,660
Other		(494	)		306
Total	€	2,008		€	4,186
Noncurrent deferred income tax (asset) liability:
Depreciation and amortization	€	15,159		€	15,333
Financial instruments (warrants and hedging activities)		(1,097	)		(495	)
Employee retirement benefits		(1,808	)		(1,902	)
Other		1,097			1,036
Total	€	13,352		€	13,972

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

For its assets and liabilities that are measured at fair value on a recurring basis, the Company is required to classify and disclose the assets and liabilities based upon the lowest level of input that is significant to the measurement of their fair values. The classifications are based upon the fair value hierarchy specified in ACS Topic 820, Fair Value Measurements and Disclosures, and are based upon the reliability of the inputs used to determine fair value. Level 1 inputs represent quoted prices from active markets for identical assets or liabilities. Level 2 inputs represent quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable for the asset or liability. The following table sets forth, by level within the fair value hierarchy, a summary of the Company’s assets and liabilities that were measured at fair value at September 30, 2010 and December 31, 2009:

- 13 -

		September 30, 2010 (unaudited)				December 31, 2009
		Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	1	€	22,478	€	22,478	€	16,864	€	16,864
Foreign currency forward contracts	2		27		27		153		153
Interest rate swap	2
Total		€	22,506	€	22,506	€	17,017	€	17,017
Liabilities:
Foreign currency forward contracts	2
Interest rate swap	2		3,318		3,318		1,862		1,862
Total		€	3,318	€	3,318	€	1,862	€	1,862

The fair value of cash and cash equivalents equals their redemption value due to their short-term nature. The fair values of the interest rate swaps are obtained from counterparty quotes, which use discounted cash flows and the then-applicable forward interest rates. These values are reviewed and agreed by management. The fair values of the forward currency forward contracts are obtained from counterparty quotes based on current market activity. Additional details regarding the foreign currency forward contracts and interest rate swaps is provided in Note 7.

The carrying value of the Company’s accounts receivable, accounts payable and accrued liabilities approximates their fair value at September 30, 2010 and December 31, 2009 due to the short-term maturities of these assets and liabilities. The Company also believes that the aggregate fair values of its revolving, term and Subordinated loans approximates their carrying amounts at September 30, 2010 and December 31, 2009 because the interest rates on the debt are reset on a frequent basis and reflect current market rates.

- 14 -

10. ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income at September 30, 2010 and December 31, 2009 are comprised of the following:

BALANCE — December 31, 2008	€	(6,753	)
Pension plans’ funded status adjustment — net of € 138 of taxes		277
Interest rate swap		802
Foreign currency hedge		(215	)
Foreign currency translation adjustment		(411	)
BALANCE — December 31, 2009	€	(6,300	)
Pension plans’ funded status adjustment — net of €0 of taxes
Interest rate swap		(919	)
Foreign currency hedge		(135	)
Foreign currency translation adjustment		2,592
UNAUDITED BALANCE — September 30, 2010	€	(4,763	)

11. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans — The Company has defined contribution 401(k) profit sharing plans that cover substantially all of its eligible salary and hourly employees in Akron, Ohio. Participants may contribute between 1% and 15% of their compensation to the plan. The Company matches 100% of participant contributions up to the first 6% of compensation. Expense recognized by the Company for the nine-months ended September 30 of 2010 and 2009 for contributions to the profit sharing plans was €161 and €142 respectively.

Defined Benefit Plans — The Company sponsors noncontributory defined benefit pension plans which cover substantially all its employees in France. Employees are paid benefits at retirement using formulas based upon years of service and compensation rates near retirement. The Company’s funding policy is to contribute amounts to satisfy local regulations.

The Company also sponsors noncontributory defined benefit plans which cover substantially all its employees in India. Employees are paid benefits under certain circumstances and at retirement using formulas based upon years of service and compensation rates. The Company’s funding policy is to contribute amounts to satisfy local regulations.

At the end of each fiscal year, an actuarial appraisal is done for the following year, and is used by the Company to estimate its monthly accruals. Based on this method the net periodic pension cost recognized for the nine-month period ended September 30, 2010 was €81 (including a curtailment gain of €459) and €584 as of September 30, 2009.

12. CONTINGENCIES

Lawsuits and claims may be filed from time to time against the Company in the ordinary course of business. Management of the Company is of the opinion that the outcome of such matters will not have a

- 15 -

material adverse effect on the Company’s financial condition, results of operations or liquidity. The Company is subject to a wide variety of environmental laws that continue to be adopted and amended, including the requirement to perform certain restoration activities in France and other Company locations if operations were terminated. At this time, management has no plans to terminate such operations. Therefore, the ultimate extent of the Company’s liability for pending or potential fines, penalties, remedial costs, claims and litigation relating to environmental laws and health and safety matters and future capital expenditures that may be associated with environmental laws cannot be determined at this time. Management, with the assistance of outside environmental consultants, continually assesses the Company’s environmental contingencies. Management of the Company is of the opinion that the outcome of such matters will not have a material, adverse effect on the Company’s financial condition, results of operations or liquidity.

13. SUBSEQUENT EVENT

No event has occurred subsequent to September 30, 2010 and up to November 16, 2010.

******

- 16 -

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements (“pro forma financial statements”) give effect to the acquisition (the “Acquisition”) by OMNOVA Solutions Inc. (“OMNOVA” or the “Company”) of Eliokem International SAS (“Eliokem”) and the related financings on the historical financial position and results of operations of OMNOVA and Eliokem. The historical financial information set forth below has been derived from, and should be read in connection with, the financial statements of OMNOVA, which are derived from OMNOVA’s audited financial statements included in its Current Report on Form 8-K filed with the SEC on October 5, 2010 and its unaudited financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2010, and the financial statements of Eliokem, which are derived from Eliokem’s audited financial statements included in Exhibit 99.1 of this Current Report on Form 8-K and its unaudited financial statements included in Exhibit 99.2 of this Current Report on Form 8-K.

The pro forma statements give effect to the Acquisition and the related financings as if the transactions had been consummated for the combined statements of operations on December 1, 2008 and for the combined balance sheet on August 31, 2010 under the acquisition method of accounting.

The pro forma statements are provided for informational purposes only and do not purport to represent what the combined financial position or results of operations actually would have been had the Acquisition and related financings and other pro forma adjustments occurred on the dates indicated. Additionally, the pro forma statements are not necessarily indicative of the future financial condition or results of operations of OMNOVA.

We have translated the historical financial information of Eliokem set forth below from euros into U.S. dollars based on historical exchange rates.

The Acquisition

On November 22, 2010, OMNOVA entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with the equity holders of Eliokem (the “Sellers”) in respect of the Acquisition. On December 9, 2010, the Company completed the Acquisition pursuant to the terms of the Purchase Agreement.

Eliokem is a worldwide manufacturer of specialty chemicals used in a diverse range of niche applications including coating resins, elastomeric modifiers, antioxidants, oilfield chemicals and latices for specialty applications. Eliokem is headquartered in Villejust, France and has facilities located in France, the United States, China and India.

Pursuant to the terms of the Purchase Agreement, OMNOVA has acquired all of the outstanding ordinary shares of Eliokem (the “Shares”), as well as all warrants to purchase Shares, debt securities convertible into Shares and debt securities redeemable for Shares, from the Sellers for an aggregate purchase price of €227.5 million in cash, less amounts for Eliokem’s net debt and debt-like items, and subject to working capital and capital expenditure adjustments.

OMNOVA SOLUTIONS INC.

Unaudited Pro Forma Combined Statements of Operations

For the Twelve Months Ended November 30, 2009

(Dollars in millions, except per share amounts)

	Historical
	Twelve Months Ended
	November 30, 2009			December 31, 2009			Pro Forma Adjustments
	OMNOVA			Eliokem			Debt Transactions			Acquisition Transactions			Pro Forma Combined
Net Sales	$	696.4		$	229.4		$	—		$	—		$	925.8
Cost of goods sold		536.7			162.9			—			—			699.6
Gross profit		159.7			66.5			—			—			226.2
Selling, general and administrative		99.9			30.6			—			—			130.5
Depreciation and amortization		22.9			13.4						4.3	(a)		40.6
Fixed asset impairment		1.1			—			—			—			1.1
Restructuring and severance		2.1			6.7			—			—			8.8
Interest expense		8.1			17.3			9.8	(b)(c)					35.2
Other (income) expense, net		(2.3	)		(4.0	)		—			—			(6.3	)
		131.8			64.0			9.8			4.3			209.9
Income from continuing operations before income taxes		27.9			2.5			(9.8	)		(4.3	)		16.3
Income tax expense		1.7			1.3			—			(1.3	)(e)		1.7
Net income	$	26.2		$	1.2		$	(9.8	)	$	(3.0	)	$	14.6
Weighted average shares outstanding:
Basic		44.1												44.1
Diluted		44.1												44.1
Earnings per share:
Basic	$	.59											$	.33
Diluted	$	.59											$	.33

See notes to unaudited pro forma combined financial statements.

- 2 -

OMNOVA SOLUTIONS INC.

Unaudited Pro Forma Combined Statements of Operations

For the Nine Months Ended August 31, 2010

(Dollars in millions, except per share amounts)

	Historical
	Nine Months Ended
	August 31, 2010			September 30, 2010		Pro Forma Adjustments
	OMNOVA			Eliokem		Debt Transactions			Acquisition Transactions			Pro Forma Combined
Net Sales	$	638.2		$	221.3	$	—		$	—		$	859.5
Cost of goods sold		511.6			156.7		—			—			668.3
Gross profit		126.6			64.6		—			—			191.2
Selling, general and administrative		74.5			24.8		—			—			99.3
Depreciation and amortization		15.7			9.4					3.2	(a)		38.3
Fixed asset impairment		6.2			—		—			—			6.2
Restructuring and severance		.5			—		—			—			.5
Interest expense		5.6			11.9		9.8	(b)(c)		—			27.3
Other (income) expense, net		(4.0	)		7.8		—			(2.6	)(d)		1.2
		98.5			53.9		9.8			.6			162.8
Income (loss) from continuing operations before income taxes		28.1			10.7		(9.8	)		(.6	)		28.4
Income tax expense		1.7			5.5		—			(5.5	)(e)		1.7
Net income	$	26.4		$	5.2	$	(9.8	)	$	4.9		$	26.7
Weighted average shares outstanding:
Basic		44.6											44.6
Diluted		45.0											45.0
Earnings per share:
Basic	$	.61										$	.60
Diluted	$	.61										$	.59

See notes to unaudited pro forma combined financial statements.

- 3 -

OMNOVA SOLUTIONS INC.

Unaudited Pro Forma Combined Balance Sheets

As of August 31, 2010

(Dollars in million, except share data)

	Historical
							Pro Forma Adjustments
	OMNOVA			Eliokem			Debt Transactions			Acquisition Transactions			Pro Forma Combined
ASSETS:
Current Assets
Cash and cash equivalents	$	59.7		$	30.7		$	287.1	(f)(h)	$	(322.4	)(i)	$	55.1
Accounts receivable, net		125.4			40.2			—			—			165.6
Inventories		51.0			37.4			—			4.0	(j)		92.4
Prepaid expenses and other		3.1			8.4			—			—			11.5
Deferred income taxes		—			2.7			—			—			2.7
Total Current Assets		239.2			119.4			287.1			(318.4	)		327.3
Property, plant and equipment, net		129.6			101.4			—			15.5	(j)		246.5
Trademarks and other intangible assets, net		6.1			27.1			—			49.7	(j)		82.9
Goodwill		—			48.4			—			49.3			97.7
Deferred income taxes		1.2			—			—			—			1.2
Other assets		2.8			2.2			14.3	(g)		(1.6	)(j)		17.7
Total Assets	$	378.9		$	298.5		$	301.4		$	(205.5	)	$	773.3
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities
Amounts due banks	$	4.7		$	21.8		$	.5	(f)	$	(21.8	)(i)	$	5.2
Accounts payable		81.9			21.7			—			—			103.6
Accrued payroll and personal property taxes		15.8			20.0			—			—			35.8
Employee benefit obligations		2.6			—			—			—			2.6
Deferred income taxes		.9			—			—			—			.9
Other current liabilities		5.1			4.8			—			—			9.9
Total Current Liabilities		111.0			68.3			.5			(21.8	)		158.0
Long-term debt		139.7			179.7			306.3	(f)		(179.7	)(i)		446.0
Postretirement benefits other than pensions		8.1			—			—			—			8.1
Pension liability		60.2			7.6			—			—			67.8
Deferred income taxes		.9			18.2						22.1	(j)		41.2
Other liabilities		14.3			.2			(4.3	)(h)		—			10.2
Total liabilities		334.2			274.0			302.5			(179.4	)		731.3
Shareholders’ Equity
Preference stock		—			—			—			—			—
Common stock		4.5			—			—			—			4.5
Additional contributed capital		316.8			22.0			—			(22.0	)(k)		316.8
Retained deficit		(193.5	)		9.0			(1.1	)(g)(h)		(10.6	)(i)(k)		(196.2	)
Treasury stock at cost.		(1.3	)		—			—			—			(1.3	)
Accumulated other comprehensive loss		(81.8	)		(6.5	)		—	(h)		6.5	(k)		(81.8	)
Total Shareholders’ Equity		44.7			24.5			(1.1	)		(26.1	)		42.0
Total Liabilities and Shareholders’ Equity	$	378.9		$	298.5		$	301.4		$	(205.5	)	$	773.3

See notes to unaudited pro forma combined financial statements.

- 4 -

1. Basis of Pro Forma Presentation

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical consolidated financial statements of OMNOVA and Eliokem after giving effect to OMNOVA’s acquisition of Eliokem and the related financing arrangements. All pro forma statements use OMNOVA’s period end date. All pro forma amounts for Eliokem have been translated into U.S. dollars for presentation purposes by converting the monthly results of operations of Eliokem from euros into U.S. dollars using the average exchange rate for the statement of operating data and the period-end exchange rate for the balance sheet data.

OMNOVA’s fiscal year ends on November 30 with interim periods ending on February 28 or 29, May 31 and August 31. Eliokem’s fiscal year ends on December 31 with interim periods ending on March 31, June 30 and September 30.

The unaudited pro forma combined balance sheet as of August 31, 2010 is presented as if the Acquisition occurred on August 31, 2010. The unaudited pro forma combined statements of operations for all periods are presented as if the contemplated Acquisition had taken place on December 1, 2008. The unaudited pro forma combined statement of operations for the twelve months ended November 30, 2009 include results of operations of (1) OMNOVA for the twelve months ended November 30, 2009 and (2) Eliokem for the twelve months ended December 31, 2009. The unaudited pro forma combined statement of operations for the nine months ended August 31, 2010 include results of operations of (1) OMNOVA for the nine months ended August 31, 2010 and (2) Eliokem for the nine months ended September 30, 2010. No adjustments were made to Eliokem’s historical information for its different period end dates.

The allocation of the purchase price used in the unaudited pro forma combined financial statements is based on preliminary estimates of the fair value of assets acquired and liabilities assumed, and the related income tax impact of the acquisition accounting adjustments. OMNOVA expects the purchase price allocation to be completed upon the finalization of the related valuations. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after completion of a final valuation to determine the fair values of the tangible assets, identifiable intangible assets, and liabilities as of the date the Acquisition was completed. Accordingly, the final purchase accounting adjustments may be materially different from the pro forma adjustments presented in these unaudited pro forma combined financial statements. Increases or decreases in the fair value of the net assets may change the amount of the purchase price allocated to goodwill and other assets and liabilities. This may impact the unaudited pro forma combined statements of operations due to an increase or decrease in the amount of amortization or depreciation of the adjusted assets.

The acquisition method of accounting is based on Accounting Standards Codification (“ASC”) Subtopic 805-10, “Business Combinations,” and uses the fair value concepts defined in ASC Subtopic 820-10, “Fair Value Measurements and Disclosures,” which OMNOVA has adopted. ASC Subtopic 805-10 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date

ASC Subtopic 820-10 defines the term “fair value” and sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in ASC Subtopic 820-10 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, OMNOVA may be required to record assets that are not intended to be used or sold and/or to value assets at fair value measures that do not reflect OMNOVA’s intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

- 5 -

1. Basis of Pro Forma Presentation (continued)

Under the acquisition method of accounting, the assets acquired and liabilities assumed will be recorded as of the completion of the Acquisition, at their respective fair values and added to those of OMNOVA. Financial statements and reported results of operations of OMNOVA issued after completion of the Acquisition will reflect these values, but will not be retroactively restated to reflect the historical financial position or results of operations of Eliokem.

Under ASC Subtopic 805-10, acquisition-related transaction costs (e.g., advisory, legal, valuation, other professional fees) and certain acquisition-related restructuring charges impacting the target company are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. Total acquisition-related transaction costs expected to be incurred by OMNOVA are estimated to be approximately $4.3 million, of which $2.6 million has been recognized through August 31, 2010. The un-incurred balance of $1.7 million is reflected in the unaudited pro forma combined balance sheets as a reduction to cash and retained earnings. These costs are not reflected in the unaudited pro forma combined statements of operations due to their non-recurring nature. The unaudited pro forma combined financial statements do not reflect any acquisition-related restructuring charges incurred in connection with the Acquisition but these costs, if any, will be expensed as incurred.

The unaudited pro forma combined financial statements are not intended to represent or be indicative of the consolidated results of operations or financial position of OMNOVA that would have been reported had the contemplated Acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial position of OMNOVA. The unaudited pro forma combined financial statements should be read in conjunction with OMNOVA’s financial statements for the three and nine months ended August 31, 2010 and for the year ended November 30, 2009, which have been previously filed with the Securities and Exchange Commission (“SEC”). Eliokem’s financial statements for the nine months ended September 30, 2010 and the year ended December 31, 2009 are included in this Current Report on Form 8-K.

2. Eliokem Acquisition

On November 22, 2010, OMNOVA entered into the Purchase Agreement with the Sellers in respect of the Acquisition. On December 9, 2010, the Company completed the Acquisition pursuant to the terms of the Purchase Agreement.

Eliokem is a worldwide manufacturer of specialty chemicals used in a diverse range of niche applications including coating resins, elastomeric modifiers, antioxidants, oilfield chemicals and latices for specialty applications. Eliokem is headquartered in Villejust, France and has facilities located in France, the United States, China and India.

Pursuant to the terms of the Purchase Agreement, OMNOVA has acquired all of the outstanding Shares, as well as all warrants to purchase Shares, debt securities convertible into Shares and debt securities redeemable for Shares, from the Sellers for an aggregate purchase price of €227.5 million in cash, less amounts for Eliokem’s net debt and debt-like items, and subject to working capital and capital expenditure adjustments.

- 6 -

3. Financing

In connection with the Acquisition, OMNOVA issued $250 million aggregate principal amount of senior notes with a fixed interest rate per annum of 7.875%, payable semi-annually. The notes have a term of eight years and are unsecured.

Additionally, OMNOVA refinanced its existing $150 million term loan that had a balance of $141.2 million as of August 31, 2010 with a new $200 million term loan. The new term loan has a term of six and one-half years. Required annual payments on the new term loan are $2.0 million, payable in quarterly installments with any remaining balance payable at maturity. The new term loan is secured by the property, plant and equipment and intangible assets of the combined companies. Interest on the new term loan initially is at LIBOR plus 4.0% with a floor on LIBOR of 1.75%.

OMNOVA issued the new term loan at a discount of $2.0 million. This discount is reflected as a reduction of outstanding debt and amortized over the respective terms of the debt. OMNOVA also unwound its current $50 million notional amount interest rate swap at a settlement cost to OMNOVA of approximately $4.3 million, and is reflected in the unaudited pro forma combined balance sheets as a reduction to cash and a corresponding reduction to other liabilities. The associated costs are not reflected in the unaudited pro forma combined statements of operations due to their non-recurring nature.

Net proceeds from the senior notes and the new term loan were used for the Acquisition (including the repayment of Eliokem’s debt), the repayment of amounts outstanding under OMNOVA’s existing term loan, which had a balance of $141.2 million as of August 31, 2010, related fees and expenses and for general working capital purposes.

OMNOVA expects to incur approximately $15.4 million of deferred financing costs in connection with the issuance of the senior notes and the new term loan. These deferred financing costs will be amortized over the respective terms of the underlying debt. OMNOVA’s deferred financing fees of $1.1 million as of August 31 2010 related to the existing term loan will be written-off. Additionally, Eliokem’s deferred financing fees of $1.6 million at August 31, 2010 will not be assumed in the Acquisition.

4. Estimate of Assets Acquired and Liabilities Assumed

The preliminary estimate of the fair values of assets acquired and liabilities to be assumed as of the closing of the Acquisition were allocated to each of Eliokem’s assets, liabilities and identifiable intangible assets. The excess of purchase price over the estimated fair values of assets acquired and liabilities assumed is allocated to goodwill.

The preliminary estimate of the fair values of assets acquired and liabilities assumed (in millions) is as follows:

	Book Value			Adjustment to Fair Value			Fair Value
Working capital (a)	$	70.2		$	4.0		$	74.2
Net fixed assets(b)		101.4			15.5			116.9
Identifiable intangible assets (b)		27.1			49.7			76.8
Deferred tax assets		2.7			—			2.7
Other net assets		2.2			(1.6	)		.6
Goodwill (c)		48.4			49.3			97.7
Deferred tax liabilities (d)		(18.2	)		(22.1	)		(40.3	)
Other liabilities		(7.9	)		—			(7.9	)
Total consideration paid							$	320.7

(a) The adjustment to working capital is due to an estimated increase in the fair value of inventory acquired.

- 7 -

4. Estimate of Assets Acquired and Liabilities Assumed (continued)

(b) The fair value of net fixed assets were determined based on management’s estimate of the replacement cost of similar fixed assets. The fair value of the identifiable intangible assets was determined based on management’s best estimate of the preliminary estimated cash flows associated with these identifiable intangible assets. Some of the more significant assumptions inherent in the development of intangible asset values, from the perspective of a market participant, include: the amount and timing of projected future cash flows (including revenue, cost of sales, research and development costs, sales and marketing expenses, and working capital); the discount rate selected to measure the risks inherent in the future cash flows; and the assessment of the asset’s life cycle and the competitive trends impacting the asset, as well as other factors.

(c) Goodwill is calculated as the difference between the acquisition date fair value of the consideration expected to be transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized.

(d) As of the completion of the Acquisition, OMNOVA will provide deferred taxes and other tax adjustments as part of the allocation of the purchase price due to differences between book valuations and tax valuations, primarily related to the estimated fair value adjustments for net acquired long-lived assets.

OMNOVA expects the purchase price allocation to be finalized upon the completion of the related valuations pursuant to ASC 805. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after completion of a final analysis to determine the fair values of the tangible assets, identifiable intangible assets, and liabilities as of the date the acquisition is complete. Accordingly, the final purchase accounting adjustments may be materially different from the pro forma adjustments presented in these unaudited pro forma combined financial statements. Increases or decreases in the fair value of the net assets may change the amount of the purchase price allocated to goodwill and other assets and liabilities. This may impact the unaudited pro forma combined statements of operations due to an increase or decrease in the amount of amortization or depreciation of the adjusted assets.

The preliminary estimated fair value of the identifiable intangible assets and their weighted-average useful lives have been estimated as follows (dollars in millions):

	Estimated Fair Value		Estimated Useful Life
Definite lived assets:
Trademarks	$	1.1		13 years
Customer relationships		35.9		10 –14 years
Other intangibles		11.8		4 – 14 years
Total definite lived assets		48.8
Indefinite lived assets:
Trademarks		28.0		N/A
Total identifiable intangible assets	$	76.8

Trademarks and other intangible assets will be amortized on a straight-line basis over their estimated useful lives. Customer relationships will be amortized on an accelerated basis according over their estimated useful lives based on estimated attrition rates. Intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill are also tested for impairment when certain indicators are present. In the future, if it is determined that intangible assets or goodwill are impaired, an impairment charge would be recorded at that time.

- 8 -

5. Pro Forma Adjustments

Pro forma adjustments include the following (all adjustments in millions):

(a) To record the estimated additional depreciation and amortization.

	Year ended November 30, 2009			Nine Months Ended August 31, 2010
Reverse Eliokem depreciation and amortization recognized	$	(13.4	)	$	(8.2	)
Estimated amortization of identifiable intangible assets		4.8			3.6
Estimated depreciation		12.9			7.8
Pro forma adjustment	$	4.3		$	3.2

(b) To record incremental amortization of new deferred financing costs and original issue discounts.

	Year ended November 30, 2009			Nine Months Ended August 31, 2010
Reverse OMNOVA’s amortization of existing deferred financing fees		(.3	)		(.2	)
Reverse Eliokem’s amortization of existing deferred financing fees		(.5	)		(.4	)
Record estimated amortization of original issue discount fees		.3			.2
Record estimated amortization of new deferred financing fees		2.2			1.7
Pro forma adjustment	$	1.7		$	1.3

OMNOVA estimates it will incur $15.4 million of deferred financing fees and $2.0 million of original issue discounts in connection with the issuance of the senior notes and the new term loan. The fees that OMNOVA will ultimately pay under this new debt could vary significantly from what is assumed in these unaudited pro forma combined financial statements, and will depend on the actual timing and repayments under the new debt, among other factors.

- 9 -

5. Pro Forma Adjustments (continued)

(c) To record the estimated interest expense on debt.

	Year ended November 30, 2009			Nine Months Ended August 31, 2010
Reverse OMNOVA’s existing term loan interest expense	$	(6.8	)	$	(4.9	)
Reverse Eliokem’s interest expense		(16.8	)		(10.3	)
Estimated interest expense		31.7			23.7
Pro forma adjustment	$	8.1		$	8.5

Interest on the senior notes is 7.875% per annum, payable semi-annually. Interest on the new term loan initially is at LIBOR plus 4.0% with a floor on LIBOR of 1.75%. Additionally, the new term loan will have required quarterly payments of $0.5 million.

(d) To reverse acquisition costs of $2.6 million which have been recorded by OMNOVA during 2010. The associated costs are not reflected in the unaudited pro forma combined statements of operations due to their non-recurring nature.

(e) OMNOVA performed an analysis of income by jurisdiction and concluded that OMNOVA’s existing deferred tax assets, specifically net operating loss carrryforwards, would be utilized to offset incremental Eliokem pro forma income and accordingly, recognized this benefit within the unaudited pro forma combined statements of operations.

- 10 -

5. Pro Forma Adjustments (continued)

(f) To record anticipated cash and anticipated debt transactions from financing activities.

	August 31, 2010
Debt: (1)
Senior Notes	$	250.0
New term loan		200.0
Original issue discounts		(2.0	)
Pay off existing term loan		(141.2	)
Net change in OMNOVA’s debt		306.8
Less: change in OMNOVA’s short-term debt		(.5	)
Net change in OMNOVA’s long-term debt	$	306.3
Cash
Received from net change in debt	$	306.8
Less: Cash settlement of existing interest rate swap		(4.3	)
Debt issuance costs on notes		(8.1	)
Debt issuance costs on new term loan		(6.3	)
Debt issuance costs on new revolving credit facility		(1.0	)
Net change in cash from debt issuance	$	287.1

(1) See note 3 to these unaudited pro forma combined financial statements for detail of debt transactions.

(g) To record estimated deferred financing costs at August 31, 2010.

	August 31, 2010
Record new deferred financing costs on:
Senior notes	$	8.1
New term loan		6.3
Revolving credit facility		1.0
Write-off OMNOVA’s existing deferred financing costs (retained earnings)		(1.1	)
Net increase in other assets	$	14.3

See pro forma adjustment (b) above. The existing OMNOVA deferred financing fees relate to August 31, 2010 unamortized balance of costs incurred in connection with OMNOVA’s existing term loan, which was repaid in connection with the entry into the new term loan and the issuance of the senior notes.

(h) To record cash settlement of OMNOVA’s outstanding interest rate swap at a settlement cost to OMNOVA of approximately $4.3 million, which is reflected as a reduction to cash and a reduction to other liabilities.

- 11 -

(i) To recognize the acquisition of Eliokem and the net increase in fair value of assets acquired and liabilities to be assumed.

Cash payment for acquisition of Eliokem:
Cash payment to Eliokem sellers for:
Payment of Eliokem existing debt
Amount due banks	$	21.8
Long-term debt (1)		179.7
Total Eliokem debt repayments		201.5
Payment to Eliokem equity owners		88.5
		290.0
Adjustment for Eliokem’s cash received		30.7
Cash payment for acquisition of Eliokem (2)		320.7
Acquisition related costs (3)		1.7
Net cash payments	$	322.4

(1) Total debt of Eliokem includes convertible bonds that are payable to the Sellers or other related parties. These convertible bonds bear interest at 10.0%, with interest and principal due at maturity in 2016 and payable in cash upon a change in control in ownership of Eliokem. These convertible bonds were redeemable for Shares at the election of Eliokem. As required under U.S. GAAP, these convertible bonds are included as debt in Eliokem’s consolidated financial statements due to the potential cash payment features of the convertible bonds.

(2) The estimated purchase price consists of cash paid of $320.7 million less Eliokem’s existing cash balance of $30.7 million (as of September 30, 2010) for a net cash payment of $290.0 million.

(3) Estimated acquisition costs that have not been incurred by OMNOVA through August 31, 2010 are also recorded as a charge to the retained earnings in the unaudited pro forma balance sheet.

(j) To recognize the net increase in fair value of assets acquired and liabilities assumed.

Adjustments to fair value for assets acquired and liabilities to be assumed (4):
Net inventory	$	4.0
Net property, plant & equipment		15.5
Net identifiable intangible assets		49.7
Goodwill		49.3
Eliokem’s deferred financing costs		(1.6	)
Deferred tax liability (5)		(22.1	)
	$	94.8

(4) See Note 4.

(5) Deferred taxes are estimated based on the increase in the fair values of property, plant and equipment and identifiable intangible assets over historical values recorded by Eliokem prior to the Acquisition.

(k) To eliminate historical shareholders’ equity of Eliokem as of September 30, 2010.

	Common Stock
Additional paid in capital	$	(22.0	)
Retained earnings		(9.0	)
Accumulated other comprehensive income		6.5
Total	$	(24.5	)

- 12 -