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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________


Form			10-Q

_______________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended ~~August 31~~February 29, ~~2019~~2020

Commission File Number 1-15147

______________________________________________

OMNOVA SOLUTIONS INC

(Exact name of registrant as specified in its charter)

_______________________________________________


Ohio						34-1897652
(State of Incorporation)						(I.R.S. Employer Identification No.)

25435 Harvard Road, Beachwood, Ohio 44122-6201

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (216) 682-7000

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

OMN

The New York Stock Exchange

______________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer

Accelerated filer

Emerging growth company

Non-accelerated filer

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

At ~~August~~February 3129, ~~2019~~2020, there were 44,~~853~~923,~~732~~759 outstanding shares of OMNOVA Solutions’ Common Stock, par value $0.10.

Table of Contents

OMNOVA SOLUTIONS INC.

Table of Contents

		~~Page No.~~		Page No.
Part I. Financial Information
Item 1.	~~Financial Statements (Unaudited)~~		Financial Statements (Unaudited)
	Consolidated Statements of Operations – Three and Nine Months Ended August 31, 2019 and 2018	3
			Consolidated Statements of Operations – Three Months Ended February 29, 2020 and February 28, 2019	3
	Consolidated Statements of Comprehensive Income (Loss) – Three and Nine Months Ended August 31, 2019 and 2018	4
			Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended February 29, 2020 and February 28, 2019	4
	Consolidated Balance Sheets – August 31, 2019 and November 30, 2018	5
			Consolidated Balance Sheets – February 29, 2020 and November 30, 2019	5
	Consolidated Statements of Cash Flows – Nine Months Ended August 31, 2019 and 2018	6
			Consolidated Statements of Cash Flows – Three Months Ended February 29, 2020 and February 28, 2019	6
	Notes to Unaudited Interim Consolidated Financial Statements as of August 31, 2019	7
			Notes to Unaudited Interim Consolidated Financial Statements as of February 29, 2020	7
Item 2.	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	21	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	~~Quantitative and Qualitative Disclosure About Market Risk~~	38	Quantitative and Qualitative Disclosure About Market Risk	32
Item 4.	~~Controls and Procedures~~	38	Controls and Procedures	32
Part II. Other Information
Item 1.	~~Legal Proceedings~~	38	Legal Proceedings	33
Item 1A.	~~Risk Factors~~	38	Risk Factors	33
Item 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	39	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	~~Exhibits~~	41	Exhibits	34
Signatures		42			35
Index to Exhibits		43			36

Part I. Financial Information

Item 1. Financial Statements

OMNOVA SOLUTIONS INC.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended August 31,							Nine Months Ended August 31,
			Three Months Ended
	2019				2018			2019			2018
			February 29, 2020					February 28, 2019
	~~(Dollars and shares in millions, except per share data)~~		(Dollars and shares in millions, except per share data)
Net sales	$	~~192.4~~	$	155.6	$	~~193.6~~		$	~~567~~168.09		$	~~578.5~~
Cost of goods sold (exclusive of depreciation)	~~146.1~~		120.4		~~144.5~~			~~434~~132.70			~~431.3~~
Gross profit	~~46.3~~		35.2		~~49.1~~			~~132~~36.39			~~147.2~~
Other costs and expenses:
Selling, general and administrative	~~26.6~~		26.8		~~26.3~~			8528.67			~~83.4~~
Depreciation and amortization	~~7.5~~		7.7		~~7.8~~			238.40			~~22.3~~
Asset impairments	1.0				9.2			1.0			9.6
Restructuring and severance			0.2					1.1
(Gain) loss on asset sales	(.1		)		—			(4.2		)	—
Interest expense			4.6					5.0
Restructuring and severance	.8				.4			4.9			1.8
Merger, acquisition, and integration related expense			0.8					0.3
Interest expense	5.1				4.7			15.3			14.4
Other (income) expense, net			(0.1)					(0.8)
Debt issuance costs write-off	.2				—			.2			.8
Total other costs and expenses			40.0					42.3
Merger, acquisition, and integration related expense	5.9				(.3		)	6.1			.7
Income (loss) before income taxes			(4.8)					(5.4)
Other (income) expense, net	(1.6		)		.6			(2.7		)	.8
Income tax (benefit) expense			(0.9)					(0.8)
Total other costs and expenses	45.4				48.7			129.6			133.8
Net income (loss)			$	(3.9)				$	(4.6)
Income (loss) before income taxes	.9				.4			2.7			13.4
Net income (loss) per share - Basic and Diluted			$	(0.09)				$	(0.10)
Income tax (benefit) expense	.6				2.3			1.4			(.3		)
Weighted average shares outstanding - Basic and Diluted			44.9					44.7
Net income (loss)	$	.3			$	(1.9	)	$	1.3		$	13.7
Net income (loss) per share - Basic and Diluted	$	.01			$	(.04	)	$	.03		$	.31
Weighted average shares outstanding - Basic	44.8				44.5			44.8			44.6
Weighted average shares outstanding - Diluted	45.7				44.5			45.6			44.8

See notes to unaudited interim consolidated financial statements.

OMNOVA SOLUTIONS INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended August 31,							Nine Months Ended August 31,
			Three Months Ended
	2019				2018			2019			2018
			February 29, 2020					February 28, 2019
	~~(Dollars in millions)~~		(Dollars in millions)
Net income (loss)	$	.3	$	(3.9)	$	~~(1.9~~	)	$	1(4.36)		$	~~13.7~~
Components of other comprehensive income (loss):
Foreign currency translations:
Unrealized net change during the period	~~(2.3~~		(0.9)		~~(5.4~~		)	(3.67		)	~~(4.4~~		)
Unrealized net change on intercompany foreign debt during the period	~~(.2~~		)—		~~(.1~~		)	(0.61		)	~~(.4~~		)
Tax effect	—				—			—			(.1		)
Foreign currency translations, net of tax			(0.9)					3.8
Foreign currency translations, net of tax	(2.5		)		(5.5		)	(4.2		)	(4.9		)
Post retirement benefit plans:
Post retirement benefit plans:
Amortization of net loss included in net periodic benefit cost			1.5					0.8
Actuarial net (gain) loss:
Tax effect			—					(0.2)
Amortization of net loss included in net periodic benefit cost	.8				1.2			2.5			3.4
Post-retirement benefit plans, net of tax			1.5					0.6
Tax effect	(.2		)		—			(.4		)	—
Other comprehensive income (loss), net of tax			0.6					4.4
Post-retirement benefit plans, net of tax	.6				1.2			2.1			3.4
Comprehensive income (loss)			$	(3.3)				$	(0.2)
Other comprehensive income (loss), net of tax	(1.9		)		(4.3		)	(2.1		)	(1.5		)
Comprehensive income (loss)	$	(1.6	)		$	(6.2	)	$	(.8	)	$	12.2

See notes to unaudited interim consolidated financial statements.

OMNOVA SOLUTIONS INC.

Consolidated Balance Sheets

	August 31, 2019				November 30, 2018
			February 29, 2020					November 30, 2019
	~~(Unaudited)~~		(Unaudited)		~~(Audited)~~			(Audited)
	~~(Dollars in millions, except share amounts)~~		(Dollars in millions, except share amounts)
ASSETS:
Current Assets
Cash and cash equivalents	$	~~36.8~~	$	40.9	$	~~54.1~~		$	50.9
Accounts receivable, net	~~113.4~~		91.2		~~112.1~~			90.4
Inventories, net	~~78.6~~		82.0		~~78.8~~			81.5
Prepaid expenses and other	~~8.6~~		6.7		~~8.0~~			8.3
Total Current Assets	~~237.4~~		220.8		~~253.0~~			231.1
Property, plant and equipment, net	~~208.7~~		192.5		~~205.8~~			209.0
Intangible assets, net	~~48.9~~		40.1		~~53.5~~			41.0
Goodwill	~~69.5~~		69.4		~~70.9~~			69.4
Other non-current assets	5.7				6.0
Right of use assets			26.6					—
Total Assets	$	570.2			$	589.2
Other non-current assets			5.0					5.6
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Total Assets			$	554.4				$	556.1
Current Liabilities
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Short-term debt	$	4.3			$	4.2
Current Liabilities
Accounts payable	88.8				101.1
Short-term debt			$	4.3				$	4.3
Accrued payroll and personal property taxes	17.9				15.5
Accounts payable			78.1					85.3
Employee benefits	3.3				2.9
Accrued payroll and personal property taxes			14.9					17.8
Other current liabilities	5.4				10.1
Short-term operating lease liabilities			3.5					—
Total Current Liabilities	119.7				133.8
Employee benefits			3.2					3.1
Long-term debt	322.8				318.7
Other current liabilities			1.9					2.7
Post-retirement benefits other than pensions	5.0				5.3
Total Current Liabilities			105.9					113.2
Pension liabilities	46.0				51.6
Long-term debt			325.2					322.8
Deferred income taxes	10.7				13.4
Post-retirement benefits other than pensions			5.2					5.3
Other non-current liabilities	7.3				8.8
Pension liabilities			74.0					75.5
Total Liabilities	511.5				531.6
Long-term operating lease liabilities			10.0					—
Shareholders’ Equity
Deferred income taxes			9.1					10.9
Preferred stock - $1.00 par value; 15.0 million shares authorized; none outstanding	—				—
Other non-current liabilities			7.8					7.5
Common stock - $0.10 par value; 135.0 million shares authorized; 48.3 million shares issued; 44.9 million shares outstanding as of August 31, 2019 and November 30, 2018, respectively	4.8				4.8
Total Liabilities			537.2					535.2
Additional contributed capital	348.5				345.9
Shareholders’ Equity
Retained deficit	(144.6		)		(145.4		)
Preferred stock - $1.00 par value; 15.0 million shares authorized; none outstanding			—					—
Treasury stock at cost - 3.4 million shares as of August 31, 2019 and November 30, 2018, respectively	(25.5		)		(25.3		)
Common stock - $0.10 par value; 135.0 million shares authorized; 48.3 million shares issued; 44.9 million and 44.8 million shares outstanding as of February 29, 2020 and November 30, 2019, respectively			4.8					4.8
Accumulated other comprehensive loss	(124.5		)		(122.4		)
Additional contributed capital			348.4					348.6
Total Shareholders’ Equity	58.7				57.6
Retained deficit			(172.5)					(168.3)
Total Liabilities and Shareholders’ Equity	$	570.2			$	589.2
Treasury stock at cost - 3.4 million and 3.5 million shares as of February 29, 2020 and November 30, 2019, respectively			(25.3)					(25.4)
Accumulated other comprehensive loss			(138.2)					(138.8)
Total Shareholders’ Equity			17.2					20.9
Total Liabilities and Shareholders’ Equity			$	554.4				$	556.1

See notes to unaudited interim consolidated financial statements.

OMNOVA SOLUTIONS INC.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended August 31,
			Three Months Ended
	2019				2018
			February 29, 2020					February 28, 2019
	~~(Dollars in millions)~~		(Dollars in millions)
Operating Activities:
Net income (loss)	$	~~1.3~~	$	(3.9)	$	~~13.7~~		$	(4.6)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gain) loss on asset sales	(4.2		)		—
Depreciation and amortization			7.7					8.0
Depreciation and amortization	23.4				22.3
Amortization and write-off of debt issuance costs			0.4					0.4
Impairment of long-lived assets	1.0				9.6
Non-cash stock compensation expense			0.6					0.3
Amortization and write-off of deferred financing fees	1.1				1.8
Provision for uncollectible accounts			—					0.1
Non-cash stock compensation expense	2.8				2.1
Provision for obsolete inventories			0.6					0.6
Provision for uncollectible accounts	.5				.4
Deferred income taxes			(0.1)					(0.4)
Provision for obsolete inventories	(.1		)		1.3
Other			—					0.1
Deferred income taxes	(.9		)		(6.6		)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities:
Accounts receivable			1.3					4.0
Accounts receivable	(4.7		)		(3.8		)
Inventories			0.1					(11.5)
Inventories	(.8		)		(3.1		)
Other current assets			1.6					(3.9)
Other current assets	2.4				5.3
Current liabilities			(9.9)					2.2
Current liabilities	(3.8		)		1.4
Other non-current assets			(3.8)					(1.3)
Other non-current assets	(5.9		)		1.2
Other non-current liabilities			(0.7)					(2.3)
Other non-current liabilities	(5.6		)		(2.5		)
Payments on operating leases			(1.2)					—
Contributions to defined benefit plan	(3.0		)		(6.0		)
Net Cash Provided By (Used In) Operating Activities			(7.3)					(8.3)
Net Cash Provided By (Used In) Operating Activities	3.5				37.1
Investing Activities:
Investing Activities:
Capital expenditures			(4.0)					(7.4)
Capital expenditures	(25.9		)		(12.8		)
Business acquisition			—					(2.8)
Proceeds from asset sales	5.5				—
Net Cash Provided By (Used In) Investing Activities			(4.0)					(10.2)
Business acquisitions	(2.8		)		(.5		)
Financing Activities:
Net Cash Provided By (Used In) Investing Activities	(23.2		)		(13.3		)
Proceeds from borrowings			108.7					15.2
Financing Activities:
Repayment of debt obligations			(106.7)					(17.2)
Proceeds from borrowings	267.6				2.3
Payments on financing leases			(0.2)					—
Repayment of debt obligations	(264.5		)		(45.4		)
Employee tax withholdings related to redemption of common shares			(0.2)					(0.3)
Payments for debt refinancing	—				(1.0		)
Net Cash Provided By (Used In) Financing Activities			1.6					(2.3)
Employee tax withholdings related to redemption of common shares	(.5		)		(.5		)
Effect of exchange rate changes on cash and cash equivalents			(0.3)					0.8
Net Cash Provided By (Used In) Financing Activities	2.6				(44.6		)
Net Increase (Decrease) In Cash And Cash Equivalents			(10.0)					(20.0)
Effect of exchange rate changes on cash and cash equivalents	(.2		)		(1.0		)
Cash and cash equivalents at beginning of period			50.9					54.1
Net Increase (Decrease) In Cash And Cash Equivalents	(17.3		)		(21.8		)
Cash and Cash Equivalents at End of Period			$	40.9				$	34.1
Cash and cash equivalents at beginning of period	54.1				88.0
Supplemental Cash Flow Information:
Cash and Cash Equivalents at End of Period	$	36.8			$	66.2
Cash paid for:
Supplemental Cash Flow Information:
Interest			$	4.2				$	4.7
Cash paid for:
Income taxes			$	0.4				$	0.3
Interest	$	14.2			$	13.2
Income taxes	$	6.2			$	5.7

See notes to unaudited interim consolidated financial statements.

OMNOVA SOLUTIONS INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

As of ~~August~~February 3129, ~~2019~~2020

(Dollars In Millions, Except Share Data)

Note A – Pending Merger, Basis of Presentation, Description of Business, and Accounting Standards

Pending Merger

On July 3, 2019, OMNOVA Solutions Inc. (the "Company") announced that it entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Synthomer plc ("Synthomer"), Spirit USA Holdings Inc. ("Merger Sub"), and Synthomer USA LLC, pursuant to which Merger Sub, a wholly-owned subsidiary of Synthomer, would merge with and into the Company, subject to shareholder and regulatory approvals and other customary conditions (the "Merger").

Upon consummation of the Merger (the “Effective Time”), each common share, par value $0.10 per share, of the Company (“Company Common Shares”) issued and outstanding immediately prior to the Effective Time (other than dissenting shares, shares held in the treasury of the Company and shares held by Synthomer or any of its wholly owned subsidiaries) will be canceled and automatically converted into the right to receive $10.15 in cash, without interest and subject to any applicable withholding taxes (the “Per-Share Amount”).

Pursuant to the Merger Agreement, each unvested Company restricted share, restricted share unit, and performance share that is outstanding immediately prior to the Effective Time, will be canceled and converted into the right to receive an amount in cash equal to the Per-Share Amount. Each Company performance share will be considered to have vested at target achievement levels.

The Merger Agreement contains customary representations, warranties, and covenants, including, among others, covenants: (a) that each of the Company, Synthomer, and Merger Sub uses its reasonable best efforts to cause the proposed transactions to be consummated; (b) that require the Company, Synthomer and Merger Sub to take certain actions that may be necessary to obtain required antitrust approvals; (c) that require the Company (i) subject to certain restrictions, to operate in the ordinary course of business consistent with past practice until the Effective Time, (ii) not to initiate, solicit or knowingly facilitate or encourage the making of any inquiries or proposals relating to alternate transactions or, subject to certain exceptions, engage in any discussions or negotiations with respect thereto, and (iii) to convene a meeting of the Company’s shareholders and solicit proxies from its shareholders in favor of the adoption of the Merger Agreement; and (d) that require Synthomer (y) not to initiate, solicit or knowingly facilitate or encourage the making of any offers or proposals relating to certain acquisitions of Synthomer’s equity or assets or, subject to certain exceptions, engage or participate in any discussions or negotiations with respect thereto, and (z) to convene a meeting of Synthomer’s shareholders and solicit proxies from its shareholders in favor of approving the transactions and certain matters related thereto.

Subject to certain exceptions and limitations, either party may terminate the Merger Agreement if the proposed transactions are not consummated by nine (9) months after the date of the Merger Agreement, subject to an automatic extension for an additional period of three (3) months if necessary to obtain regulatory clearances. Consummation of the proposed transactions is not subject to any financing condition.

The Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under specified circumstances, including, without limitation, (i) a change in the recommendation of the Company’s Board of Directors or a termination of the Merger Agreement by the Company to enter into an agreement for a “superior proposal,” the Company will pay Synthomer a cash termination fee equal to $15.8 million, and (ii) a change in recommendation of Synthomer’s Board of Directors or a termination of the Merger Agreement by the Company or Synthomer due to a failure in certain circumstances to obtain certain antitrust approvals with respect to the transactions, Synthomer will pay the Company a cash termination fee equal to $15.8 million.

The proposed Merger has been unanimously approved by the respective Boards and shareholders of Synthomer and the Company, and athas ~~a special meeting of Synthomer’s shareholders on July 31, 2019, Synthomer~~ received ~~shareholder~~all ~~approval~~necessary ~~to,~~regulatory ~~among other things, consummate the Merger~~approvals. The closing of the Merger ~~remains~~is ~~subject~~expected to the satisfaction of customary closing conditions, including approval of the Merger Agreement by the Company’s shareholders and receiving regulatory clearance for the transaction in certain non-U.S. jurisdictions. The Company's shareholders will have the opportunity to vote on a proposal to adopt the Merger Agreement at a special meeting of Company shareholders scheduled to occur on ~~October~~April 101, ~~2019. The Company and Synthomer continue to target closing the transaction in late 2019 or early~~ 2020.

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 with the instructions to Form 10-Q and Article 10 of Regulation S-X 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the OMNOVA Solutions Inc. (“OMNOVA

of Regulation S-X 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the OMNOVA Solutions ~~Inc. (“OMNOVA Solutions~~”, "OMNOVA", the “Company”, "we", "us" or "our") Annual Report on Form 10-K for the year ended November 30, ~~2018~~2019, previously filed with the Securities and Exchange Commission (“SEC”).

The consolidated financial statements as of ~~August~~February 3129, ~~2019~~2020 have been derived from the unaudited interim consolidated financial statements at that date and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

These interim 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 the consolidated 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 consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

The consolidation method is followed to report investments in subsidiaries. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Inter-company accounts and transactions are eliminated during the consolidation process of these accounts.

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 November 30, ~~2018~~2019, included in the Company’s Form 10-K filed with the SEC.

Description of Business

The Company is ana global innovator of ~~emulsion~~performance ~~polymers,~~enhancing ~~specialty~~chemistries ~~chemicals,~~ and ~~engineered~~ surfaces for a variety of commercial, industrial, and residential end uses. The Company's products provide a variety of important functional and aesthetic benefits to hundreds of products that people use daily. The Company holds leading positions in key market categories, which have been built through innovative products, customized product solutions, strong technical expertise, well-established distribution channels, recognized brands, and long-standing customer relationships. The Company utilizes strategically-located manufacturing, technical, and other facilities in North America, Europe, China, and Thailand to service athe broad customer base. The Company has two business segments: Specialty Solutions, which is focused on the Company's higher growth specialty ~~businesses~~business lines, and Performance Materials, which is focused on the Company’s more mature ~~businesses~~business lines.

Specialty Solutions – The Specialty Solutions segment consists of three business lines: specialty coatings & ingredients, oil & gas, and laminates & films. The Specialty Solutions segment develops, designs, produces, and markets a broad line of specialty ~~polymers~~products for use in coatings, adhesives, sealants, elastomers, laminates, films, nonwovens, and oil & gas products~~, as well as laminates and films~~. These products are used in numerous applications, including architectural and industrial coatings; nonwovens used in hygiene products, filtration, and construction; drilling additives for oil and gas ~~exploration~~drilling, cementing and ~~production~~fracking; elastomeric modification of plastic casings and hoses used in household and industrial products and automobiles; tapes and adhesives; sports surfaces; textile finishes; commercial building refurbishment; new construction; residential cabinets; flooring; ceiling tile; furnishings; manufactured housing; health care patient and common area furniture; and a variety of industrial films applications. The segment's products ~~enhance~~improve ~~our~~the performance of customers’' products ~~performance~~, including stain, rust and aging resistance; surface modification; gloss; softness or hardness; dimensional stability; high heat and pressure tolerance; and binding and barrier (e.g.; moisture, oil) properties.

Performance Materials – The ~~Specialty~~Performance ~~Solutions~~Materials segment ~~consists~~serves ofmature ~~Specialty~~markets ~~Coatings~~including ~~& Ingredients~~plastics, ~~Oil & Gas~~paper, carpet and ~~Laminates~~coated &fabrics ~~Films.~~with ~~The~~a ~~Specialty~~broad ~~Coatings~~range &of ~~Ingredients~~polymers ~~business~~based ~~line~~primarily ~~encompasses~~on ~~products~~styrene ~~that~~butadiene ~~have~~(SB), ~~applications~~styrene ~~for~~butadiene ~~specialty~~acrylonitrile ~~coatings~~(SBA), ~~nonwovens~~styrene ~~(such~~butadiene asvinyl ~~disposable hygiene products~~pyridine, ~~engine~~high ~~filters,~~styrene ~~roofing mat~~pigments, ~~and~~polyvinyl ~~scrub pads)~~acetate, ~~construction~~acrylic, ~~adhesives,~~styrene ~~sealants~~acrylic, ~~tape,~~calcium ~~floor care~~stearate, ~~textiles~~glyoxal, ~~graphic arts,~~ and ~~various~~bio-based ~~other~~chemistries. ~~specialty~~Performance ~~applications.~~Materiarls' ~~Oil~~custom-formulated &products ~~Gas~~are ~~applications~~tailored ~~include~~latexes, ~~drilling~~resins, ~~fluid~~binders, ~~additives~~antioxidants, ~~which~~hollow ~~provide~~plastic ~~fluid~~pigment, ~~loss~~coated ~~control~~fabrics, and ~~sealing~~rubber toreinforcing ~~enhance~~which ~~wellbore~~are ~~integrity,~~used asin ~~well~~tire ascord, ~~cement~~polymer ~~additives~~stabilization, ~~for~~industrial ~~gas~~rubbers, ~~migration~~carpet, paper, and ~~fluid~~various ~~loss~~other applications. ~~The~~Its ~~Laminates~~products &provide ~~Films~~a ~~product~~variety ~~line~~of ~~applications~~functional ~~include~~properties ~~kitchen~~to ~~and~~enhance ~~bath~~the ~~cabinets,~~Company's ~~wall~~customers' ~~surfacing~~products, ~~manufactured~~including ~~housing~~greater ~~and recreational vehicle interiors~~strength, ~~flooring~~adhesion, ~~commercial~~dimensional ~~and residential furniture~~stability, ~~retail~~ultraviolet ~~display fixtures~~resistance, ~~home~~improved ~~furnishings~~processibility, ~~commercial appliances,~~ and aenhanced ~~variety of industrial film applications~~appearance.

Performance Materials – The Performance Materials segment serves mature markets with a broad range of emulsion polymers based primarily on styrene butadiene (SB), styrene butadiene acrylonitrile (SBA), styrene butadiene vinyl pyridine, high styrene pigments, polyvinyl acetate, acrylic, styrene acrylic, calcium stearate, glyoxal, and bio-based chemistries. Performance Materials' custom-formulated products are tailored latexes, resins, binders, antioxidants, hollow plastic pigment, coated fabrics, and rubber reinforcing which are used in tire cord, polymer stabilization, industrial rubbers, carpet binders, paper coatings, and various other applications. Its products provide a variety of functional properties to enhance the Company’s

customers’ products, including greater strength, adhesion, dimensional stability, ultraviolet resistance, improved processibility, and enhanced appearance.

The Performance Materials segment encompasses performance additives, paper coatings, carpet binders, and coated fabrics. This segment includes products that have applications in the paper coatings, paperboard, carpet binders, polymer stabilization, industrial rubbers, and tire cord industries. Paper and paperboard coatings are used in magazines, catalogs, direct mail advertising, brochures, printed reports, food cartons, household, and other consumer and industrial packaging. Carpet binders are used to secure carpet fibers to carpet backing and meet stringent manufacturing, environmental, odor, flammability, and flexible installation requirements. Tire cord is used in automotive tires. The Coated Fabrics product line applications include upholstery used in refurbishment and new construction for the commercial office, hospitality, health care, retail, education and restaurant markets, marine and transportation seating, commercial and residential furniture, automotive soft tops, and automotive after-market applications.

Accounting Standards

Accounting Standards Adopted in ~~2019~~2020

In ~~May~~February ~~2014~~2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2014~~2016-0902, ~~Revenue~~Leases ~~from Contracts with Customers Accounting Standards Codification~~ (~~"ASC")~~ Topic ~~606~~842), which ~~clarified~~requires ~~existing~~a ~~accounting~~lessee ~~literature relating~~ to ~~how~~recognize ~~and~~on ~~when~~the abalance ~~company~~sheet ~~recognizes~~the ~~revenue.~~assets ~~This~~and ~~standard~~liabilities ~~prescribes a five-step model~~ for ~~recognizing revenue,~~ the ~~application~~rights ofand ~~which~~obligations ~~will~~created ~~require~~by athose ~~certain~~leases ~~amount~~with ofa ~~judgment.~~lease ~~The~~term ~~provisions~~ of ~~this~~more ~~ASU~~than ~~may~~twelve bemonths. ~~applied~~Leases ~~retroactively~~will orcontinue onto abe ~~modified~~classified ~~retrospective~~as ~~(cumulative~~either ~~effect)~~financing ~~basis.~~or ~~The~~operating, ~~standard~~with ~~requires~~classification ~~additional~~affecting ~~disclosures in~~ the ~~notes to the consolidated financial statements~~recognition, ~~including~~measurement ~~qualitative~~ and ~~quantitative~~presentation ~~disclosures~~of ~~identifying~~expenses ~~the nature, amount, timing~~ and ~~significant~~cash ~~judgments~~flows ~~impacting~~arising ~~revenue~~ from ~~contracts~~a ~~with customers~~lease. The ~~Company~~new ~~adopted~~guidance ~~ASU~~was ~~2014-09~~effective ~~during~~for the ~~first~~Company's ~~quarter of~~ fiscal year ~~2019~~that ~~and~~began ~~utilized~~on ~~the modified retrospective approach and recorded a cumulative effect adjustment to retained earnings of $0.5 million for the accounting impact of certain previously capitalized contract costs as of~~ December 1, ~~2018.~~2019 and

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable. ASU 2017-07 must be applied retrospectively for the presentation of the service cost component and the other components of net periodic benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic benefit cost in assets. The Company adopted ASU 2017-17 during the first quarter of fiscal year 2019. The Company elected to use the practical expedient to use amounts disclosed in the 2018 consolidated financial statements as an estimate for applying the retrospective presentation requirements. As a result, selling, general, and administrative expense ("SG&A") increased with an offsetting increase to other (income) expense of $0.7 million and $0.4 million in the three months ended August 31, 2019 and 2018, respectively, and $1.6 million and $1.4 million in the nine months ended August 31, 2019 and 2018, respectively. Other than this reclassification, the adoption of ASU 2017-07 did not have an impact on the Company’s consolidated financial statements as of and for the periods ended August 31, 2019 and 2018.8

Inrequired ~~August~~a ~~2016,~~modified ~~the~~retrospective ~~FASB~~approach ~~issued~~to ~~ASU~~the ~~2016-15,~~adoption ~~Statement~~for oflessees ~~Cash~~related ~~Flows~~to -capital ~~Classification of Certain Cash Receipts~~ and ~~Cash~~operating ~~Payments,~~leases ~~which clarifies~~ existing ~~guidance~~at, ~~related~~or toentered ~~accounting~~into ~~for~~after, ~~cash receipts and cash payments and classification on~~ the ~~statement~~earliest ofcomparative ~~cash flows. The amendments in this ASU should be applied using a retrospective transition method to each~~ period presented. ~~The~~in ~~Company adopted~~ the ~~amendments~~financial ~~of this ASU effective December 1~~statements, ~~2018,~~with ~~and~~certain ~~this~~practical ~~ASU~~expedients ~~did not have an impact on the Company's consolidated financial statements~~available.

InThe ~~November~~Company ~~2016~~adopted this standard, ~~the~~effective ~~FASB~~December ~~issued~~1, 2019, using this new transition method under ASU ~~2016~~2018-~~18,~~11. The ~~Statement~~Company elected to adopt the package of ~~Cash~~practical ~~Flows~~expedients -permitted ~~Restricted~~under ~~Cash~~the transition guidance, which ~~requires~~allowed ~~that~~the Company to carryforward historical lease classification, assessment on whether a ~~statement~~contract ofis ~~cash~~or ~~flows~~contains ~~explain~~a ~~the~~lease, ~~change~~and ~~during~~initial ~~the~~direct ~~period~~costs infor any leases that existed prior to the ~~total~~adoption of ~~cash,~~the ~~cash~~new ~~equivalents,~~standard. The Company also elected to combine lease and ~~amounts~~non-lease ~~generally~~components ~~described~~and asto ~~restricted~~not ~~cash~~recognize lease assets or ~~restricted~~liabilities ~~cash~~for ~~equivalents.~~leases ~~Therefore,~~with ~~amounts~~an ~~generally~~initial ~~described~~term asof ~~restricted~~12 ~~cash~~months ~~would~~or beless. ~~included~~The ~~with~~Company ~~cash~~has ~~and~~determined ~~cash~~the ~~equivalents~~initial ~~when~~impact ~~reconciling~~to ~~the~~be ~~beginning-~~approximately $27.0 million recognized as total rights of~~-period~~ use assets and ~~end-of-period~~approximately $28.5 million for total ~~amounts~~lease ~~shown~~liabilities on the ~~statement~~consolidated balance sheet as of ~~cash~~December ~~flows.~~1, ~~The~~2019, ~~amendments~~inclusive inof ~~this~~financing ~~ASU~~leases ~~should~~that bewere ~~applied~~previously ~~using~~recognized as capital leases. The Company also recognized a ~~retrospective~~cumulative ~~transition~~effect ~~method~~adjustment to ~~each~~retained ~~period~~earnings ~~presented~~of $0.3 ~~The~~million ~~Company~~for ~~adopted~~ the ~~amendments~~accounting impact of ~~this~~the ~~ASU~~fair ~~effective~~value ~~December~~of 1,right ~~2018,~~of ~~and~~use ~~this~~assets ~~ASU~~and ~~did~~previously ~~not~~recorded ~~have~~prepaid anlease ~~impact~~expense. Refer onto ~~the~~Note ~~Company's~~N ~~consolidated~~for ~~financial~~additional ~~statements~~information.

In ~~January~~February ~~2017~~2018, the FASB issued ASU ~~No. 2017~~2018-0102, ~~Clarifying~~Reclassification ~~the~~of ~~Definition~~Certain ofTax aEffects ~~Business~~from Accumulated Other Comprehensive Income (Loss), which ~~clarified~~allows ~~existing~~a ~~guidance~~reclassification onfrom ~~the~~accumulated ~~definition~~other ofcomprehensive aincome ~~business~~(loss) ~~with~~to ~~the~~retained ~~objective~~earnings offor ~~adding~~standard ~~guidance~~tax toeffects ~~assist~~resulting ~~entities~~from ~~with~~the ~~evaluating~~Tax ~~whether~~Cuts ~~transactions~~and ~~should~~Jobs Act. ASU 2018-02 must be ~~accounted~~applied ~~for~~either asin ~~acquisitions~~the (period of adoption or ~~disposals)~~retrospectively to each period in which the effect of ~~assets~~the orchange ~~businesses~~in the U.S. ~~The~~federal ~~Company~~corporate ~~adopted~~income tax rate in the ~~amendments~~Tax ofCuts and Jobs Act is recognized. The Company adopted this ~~ASU~~standard, effective December 1, ~~2018~~2019, and ~~this~~determined ~~ASU~~that it did not have ana material impact on ~~the~~its ~~Company's~~ consolidated financial statements and related disclosures.

Accounting Standards Not Yet Adopted

9In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20) Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, which allows employers that sponsor defined benefit pensions or other post-retirement plans to select modifications to the disclosure requirements, and includes clarification to the disclosure requirements regarding projected benefit obligations and accumulated benefit obligations. The ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted. The Company is currently evaluating the potential impact on its consolidated financial statements and related disclosures.

In ~~February~~December ~~2018~~2019, the FASB issued ASU ~~2018~~-2019-02, ~~Reclassification~~Simplifying ofthe ~~Certain~~Accounting ~~Tax~~for ~~Effects from Accumulated Other Comprehensive~~ Income ~~(Loss)~~Taxes, which ~~allows~~removes acertain ~~reclassification~~exceptions ~~from~~to ~~accumulated~~the ~~other~~general ~~comprehensive~~principles ~~income~~of ~~(loss)~~ASC to740 ~~retained~~in ~~earnings~~order ~~for~~to ~~standard~~reduce ~~tax~~the ~~effects~~cost ~~resulting~~and ~~from~~complexity ~~the~~of ~~Tax~~its ~~Cuts~~application. ~~and~~These ~~Jobs~~changes ~~Act.~~include ~~ASU~~eliminations ~~2018-02~~to ~~must~~the beexceptions ~~applied~~for ~~either~~(1) inIntraperiod ~~the~~tax ~~period~~allocation, of(2) ~~adoption~~Deferred ortax ~~retrospectively~~liabilities related to ~~each~~outside ~~period~~basis indifferences, ~~which~~and ~~the~~(3) ~~effect~~Year-to-date oflosses ~~the change~~ in ~~the~~interim Uperiods.S. ~~federal~~These ~~corporate~~changes ~~income~~will ~~tax~~be ~~rate~~applied inon ~~the~~a ~~Tax~~prospective ~~Cuts~~basis and ~~Jobs~~although ~~Act~~the isASU ~~recognized. This guidance~~ is not effective ~~for~~until ~~annual~~fiscal ~~periods,~~years ~~including interim periods within those annual periods,~~ beginning after December 15, ~~2018~~2020, ~~with~~ early adoption is permitted infor ~~any~~periods ~~interim~~where ~~period~~financial statements have not yet been issued. The Company is currently evaluating the potential impact on its consolidated financial statements and related disclosures.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging, which applies targeted improvements to the hedge accounting guidance, including removing the requirement to record the ineffective portion of a hedging instrument in current period income. The guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018 with early adoption permitted in any interim period. Amendments from this ASU are to be applied prospectively, with a cumulative effect adjustment recorded to retained earnings. The Company is currently evaluating the potential impact on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (ASC Topic 842), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The new guidance is effective for the Company’s fiscal year that begins on December 1, 2019. The Company will elect the optional transition method to account for finance and operating leases existing at, or entered into after, December 1, 2019, and the Company will record a cumulative effect adjustment to retained earnings on the same date, if necessary. This optional transition method will not require any prior period restatements. We have completed aggregating our worldwide lease contracts, extracted lease data into a centralized database, established implementation controls, and are implementing a new lease accounting system to support the accounting and disclosure requirements of this ASU. The Company continues to evaluate certain practical expedients available and implement controls to support recognition and disclosure under ASC 842. As the implementation project progresses, the Company will determine the extent of the impact on its consolidated financial statements and related disclosures.

Note B – Revenue Recognition

The Company recognizes revenues when control of the promised goods is transferred to customers, in an amount that reflects the consideration expected to be received in exchange for those goods in accordance with ASC 606. When recognizing revenue, the Company applies the following five-step approach: 1) identify the contract with a customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when a performance obligation is satisfied.

The Company considers confirmed customer purchase orders, which are typically governed by master sales agreements, to be the contracts, from an accounting perspective, with its customers. Under the Company's standard contract terms and conditions, the only performance obligation is the delivery of products and the performance obligation is satisfied at a point in time when the Company transfers control of the products to its customers. The Company may receive orders for products to be delivered over multiple dates that may extend across several reporting periods. The Company invoices its customers for each order and recognizes revenue for each distinct product upon shipment, once transfer of control has occurred. Payment terms used are standard for the industry and jurisdictions in which the Company operates. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment, to determine the net consideration to which the Company expects to receive. Discounts or rebates are specifically stated in customer contracts or invoices, and are recorded as a reduction of revenue in the period the related revenue is recognized. Rebates are estimated based on sales terms and past experience and typically are credited to customers based on achieving certain defined volume levels. The product price, as specified on the customer confirmed orders, is considered the standalone selling price. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The Company reviews material contracts to determine transfer of control based upon the business practices and legal requirements of each country.

reduction of revenue in the period the related revenue is recognized. Rebates are estimated based on sales terms and past experience and typically are credited to customers based on achieving certain defined volume levels. The product price, as specified on the customer confirmed orders, is considered the standalone selling price. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The Company reviews material contracts to determine transfer of control based upon the business practices and legal requirements of each country.

The Company enters into various payment terms with its customers by the type and location of the customer and the products offered. Generally, the time between when revenue is recognized and when payment is due is not significant. The amount of shipping and handling fees invoiced to our customers at the time our product is shipped is included in net sales as we are the principal in those activities. Sales tax, valued-added tax, and other taxes collected from the Company's customers and remitted to governmental authorities, where applicable, are excluded from net sales. The Company records returns as a reduction to sales when incurred. Generally, customers do not have a unilateral right to return products. The Company primarily offers an assurance-type standard warranty that the product will conform to the specifications as designed for a period of time or period of usage after delivery. These warranties do not represent a separate performance obligation.

10The following table summarizes disaggregated net sales by geographic region and reportable segment for the three months ended February 29, 2020 and February 28, 2019:

There were no changes in amounts previously reported in the Company’s consolidated financial statements due to the adoption of ASC 606.


	Americas		Asia		Europe		Total
Three months ended February 29, 2020	(Dollars in millions)
Specialty Solutions	$	70.0	$	10.4	$	32.4	$	112.8
Performance Materials	23.8		13.3		5.7		42.8
Total net sales	$	93.8	$	23.7	$	38.1	$	155.6


Three months ended February 28, 2019
Specialty Solutions	$	70.4	$	7.6	$	34.7	$	112.7
Performance Materials	33.3		11.2		11.7		56.2
Total net sales	$	103.7	$	18.8	$	46.4	$	168.9

	United States		Asia		Europe		Total
Three months ended August 31, 2019	(Dollars in millions)
Specialty Solutions	$	88.7	$	8.4	$	40.6	$	137.7
Performance Materials	33.1		10.9		10.7		54.7
Total net sales	$	121.8	$	19.3	$	51.3	$	192.4
Nine months ended August 31, 2019
Specialty Solutions	$	219.8	$	39.2	$	133.7	$	392.7
Performance Materials	110.4		42.4		21.5		174.3
Total net sales	$	330.2	$	81.6	$	155.2	$	567.0

Note C – Financial Instruments and Fair Value Measurements

Financial Risk Management Objectives and Policies

The Company is exposed primarily to credit, interest rate, and foreign currency rate risks, which arise in the normal course of business.

Credit Risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations with the Company as and when they fall due. The primary credit risk for the Company is its accounts receivable, which are generally unsecured. The Company has established credit limits for customers and monitors their balances to mitigate its risk of loss. Concentrations of credit risk with respect to accounts receivable are generally limited due to the wide variety of customers and markets using the Company's products. There was no single customer that represented more than 10% of the Company’s consolidated net sales during the three ~~and nine~~ month periods ending ~~August~~February 3129, ~~2019~~2020 and ~~2018~~February 28, 2019. There was no single customer who represented more than 10% of the Company’s net trade receivables at ~~August~~February 3129, ~~2019~~2020 or November 30, ~~2018~~2019.

Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s Term Loan B, Senior Secured Revolving Credit Facility, and various foreign subsidiary borrowings, all of which bear interest at variable rates, approximating market interest rates.

Foreign Currency Rate Risk

The Company incurs foreign currency rate risk on sales and purchases denominated in currencies other than the functional currency. The currencies giving rise to this risk are primarily the Euro, Great Britain Pound Sterling, Renminbi, and Thai Baht.

Foreign currency exchange contracts are used by the Company to manage risks from the change in market exchange rates on cash payments by the Company's foreign subsidiaries and U.S. Dollar cash holdings in foreign locations. These forward contracts are used on a continuing basis for periods of approximately 30thirty days, consistent with the underlying hedged transactions. Hedging intends to offset the impact of foreign exchange rate movements on the Company’s operating results. The counterparties to these instruments are investment-grade financial institutions and the Company does not anticipate any non-performance. The Company maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased or sold for trading purposes. These contracts are not designated as hedging instruments and changes in fair value of these instruments are recognized in earnings immediately. ~~Foreign~~Net ~~currency transaction gains and~~ losses, ~~including~~on ~~the impact of~~ foreign currency contracts, that were recorded in the Consolidated ~~Statements~~Statement of Operations, as a component of other income ~~(loss)~~, ~~was a loss of~~ were $0.1 million and ~~a gain of~~ $0.2 million for the ~~nine~~three-month periods ending ~~August~~February 3129, ~~2019~~2020 and ~~2018~~February 28, 2019, respectively.

Derivative Instruments

The Company recognizes the fair value of qualifying derivative instruments as either an asset or a liability within its Consolidated Balance Sheets. For derivative instruments not designated as hedges, the change in fair value of the derivative is recognized in earnings each reporting period. The Company defines fair value as the price that would be received to transfer an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a hierarchy of valuation inputs to measure fair value.

The hierarchy prioritizes the inputs into three broad levels:

Level 1 inputs—Quoted market prices in active markets for identical assets or liabilities.

Level 2 inputs—Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 inputs—Unobservable inputs that are not corroborated by market data.

Fair Value Measurements

The Company uses the market approach and the income approach to value assets and liabilities as appropriate. The following financial assets and liabilities are measured and presented at fair value on a recurring basis as of ~~August~~February 3129, ~~2019~~2020 and November 30, ~~2018~~2019:

	~~Notional Amount~~		Notional Amount		~~Fair Value~~		~~Level~~Fair 1Value		~~Level 2~~		Level 1		~~Level 3~~		Level 2		Level 3
	~~(Dollars in millions)~~		(Dollars in millions)
Fair value measurements - August 31, 2019:
Fair value measurements - February 29, 2020:
Financial liabilities
Financial assets
Foreign currency exchange contracts	$	~~17.3~~	$	11.6	$	.1	$	—0.1	$	.1	$	—	$	—	$	0.1	$	—
Contingent consideration (1)	—				—		—		—				—
Total assets			$	11.6			$	0.1			$	—			$	0.1	$	—
Total liabilities	$	17.3			$	.1	$	—	$	.1			$	—
Fair value measurements - November 30, 2019:
Fair value measurements - November 30, 2018:
Financial assets
Financial assets
Foreign currency exchange contracts			$	16.6			$	—			$	—			$	—	$	—
Foreign currency exchange contracts	$	16.5			$	.1	$	—	$	.1			$	—
Total assets			$	16.6			$	—			$	—			$	—	$	—
Total assets	$	16.5			$	.1	$	—	$	.1			$	—
Financial liabilities
Contingent consideration (1)	$	—			$	.6	$	—	$	—			$	.6
Total liabilities	$	—			$	.6	$	—	$	—			$	.6

~~(1) Contingent~~There ~~consideration~~were ~~obligations~~no ~~arise~~transfers ~~from~~into ~~business~~ or ~~product~~out ~~line acquisitions. The fair values are based on a probability weighted discounted cash flow analysis reflecting an estimated achievement~~ of ~~specified~~Level ~~performance~~3 ~~measures~~during of the ~~acquired~~first ~~product~~three ~~lines.~~months ~~Contingent~~of ~~consideration~~2020 ~~is classified in the consolidated balance sheets as other current liabilities~~ or ~~other non-current liabilities based on contractual payment dates~~2019.

The ~~changes~~fair invalue ~~Level~~of 3the ~~assets~~Company’s ~~and~~Term ~~liabilities~~Loan ~~measured~~B at February 29, 2020 approximated $291.8 million, which is less than its book value of $297.8 million as a result of prevailing market rates on the Company’s debt. The fair value of the Term Loan B is based on amarket ~~recurring~~price ~~basis~~information ~~during~~and is measured using the ~~first~~last ~~nine~~available ~~months~~trade of ~~2019~~the instrument on a secondary market in each respective period and therefore is considered a Level 2 measurement. The fair value is not indicative of the amount that the Company would have to pay to redeem these instruments since they are ~~summarized~~infrequently astraded ~~follows:~~and are not callable at this value. The carrying value of the Senior Secured Revolving Credit Facility approximates fair value. The fair value of the Company's

	Contingent Consideration
	(Dollars in millions)
Balance at November 30, 2018	$	.6
Adjustments	(.6		)
Balance at August 31, 2019	$	—

~~There~~capital ~~were~~lease noobligation ~~transfers~~approximates ~~into~~its orcarrying ~~out~~amount ofbased ~~Level~~on 3estimated ~~during~~borrowing ~~the~~rates ~~first~~to ~~nine~~discount ~~months of 2019 or 2018. During~~ the ~~second~~future ~~quarter~~cash offlows ~~fiscal~~to ~~2019,~~their ~~the~~present ~~Company removed the contingent consideration liability based on its expected~~ value. ~~Changes in expected value are recognized in other income within the consolidated statements of operations.~~

The fair value of the Company’s Term Loan B at August 31, 2019 approximated $299.1 million, which is slightly less than its book value of $299.5 million as a result of prevailing market rates on the Company’s debt. The fair value of the Term

Loan B is based on market price information and is measured using the last available trade of the instrument on a secondary market in each respective period and therefore is considered a Level 2 measurement. The fair value is not indicative of the amount that the Company would have to pay to redeem these instruments since they are infrequently traded and are not callable at this value. The carrying value of the Senior Secured Revolving Credit Facility approximates fair value. The fair value of the Company's capital lease obligation approximates its carrying amount based on estimated borrowing rates to discount the future cash flows to their present value.

Note D - Restructuring and Severance

The following table is a summary of restructuring and severance charges for the three ~~and nine~~ months ended ~~August~~February 3129, ~~2019~~2020 and ~~2018~~February 28, 2019:

	Three Months Ended August 31,						Nine Months Ended August 31,
			Three Months Ended
	2019				2018		2019		2018
			February 29, 2020				February 28, 2019
	~~(Dollars in millions)~~		(Dollars in millions)
Severance Expense:
Specialty Solutions	$	.3			$	—	$	.3	$	.7
Performance Materials			$	—			$	0.7
Performance Materials	.5				.4		2.2		.4
Total Severance Costs			—				0.7
Corporate	—				—		.2		.7
Facility Closure Costs:
Total Severance Costs	.8				.4		2.7		1.8
Performance Materials			0.2				0.4
Facility Closure Costs:
Total Restructuring and Severance Costs			$	0.2			$	1.1
Performance Materials	—				—		2.2		—
Total Restructuring and Severance Costs	$	.8			$	.4	$	4.9	$	1.8

Costs for restructuring plans are recognized as a component of restructuring and severance expense within the consolidated statements of operations. The Company initiated the following restructuring ~~plans~~plan:

2018 Restructuring Plan

During the third quarter of fiscal 2018, the Company announced its plan to close its styrene butadiene manufacturing facility in Green Bay, Wisconsin, moving production to its Mogadore, Ohio facility. The Company recorded $40.2 million of restructuring and severance expenses in ~~fiscal~~the ~~2019~~first 3 months of 2020 related to this plan. Total expense incurred to date for this plan is $6.03 million, all of which has been paid as of ~~August 31~~February 29, ~~2019~~2020. ~~The~~As ~~Company~~of ~~sold~~February ~~the Green Bay~~29, ~~Wisconsin facility in May 2019 for $4.9 million~~2020, ~~recognizing a gain of $4.4 million within~~ the ~~consolidated~~plan ~~statement~~was ofconsidered ~~operations.~~to ~~This~~be ~~gain~~substantially ~~is included in the Performance Materials segment operating results. This plan is~~ complete.

~~2017~~The ~~Restructuring~~following ~~Plan~~table summarizes the Company's liabilities related to restructuring activities:

The Company recorded $0.7 million of restructuring and severance expenses in the first nine months of 2019 related to the One OMNOVA initiative announced during the first quarter of 2017. This initiative was focused on improving functional excellence in marketing, sales, operations, supply chain and technology, as well as various corporate functions. The plan was designed to reduce complexity and drive consistency across the global enterprise through a standardized, integrated business system. Total expense incurred for this initiative was $5.9 million, all of which has been paid as of August 31, 2019. This plan is substantially complete.


	November 30, 2019		2020						February 29, 2020
					Provision		Payments
	(Dollars in millions)
Total	$	—	$	0.2	$	0.2	$	—

The ~~following~~Company ~~table~~may ~~summarizes~~incur future costs related to its restructuring activities, as processes are continually evaluated to enhance the ~~Company's~~efficiency ~~liabilities~~and cost effectiveness of its operations, and to ensure competitiveness across its businesses and across geographic areas. Future costs could include costs related to closed facilities and restructuring plan implementation costs and ~~severance~~these ~~activities:~~will be recognized as incurred.

	November 30, 2018		2019				August 31, 2019
			Provision		Payments
	(Dollars in millions)
Total	$	1.1	$	4.9	$	6.0	$	—

The Company may incur future costs related to its restructuring activities, as processes are continually evaluated to enhance the efficiency and cost effectiveness of its operations, and to ensure competitiveness across its businesses and across

geographic areas. Future costs could include costs related to closed facilities and restructuring plan implementation costs and these will be recognized as incurred.

Note E – Income Taxes

OnThe ~~December~~Company ~~22,~~recorded ~~2017,~~income ~~U.S. federal~~ tax ~~legislation,~~benefit ~~commonly~~of ~~referred~~$0.9 tomillion ~~as the Tax Cuts~~ and ~~Job~~$0.8 ~~Act~~million ~~(the~~for ~~“Tax Act”) was signed into law which, among other changes: reduced~~ the ~~U.S.~~three ~~corporate~~months ~~income~~ended ~~tax~~February ~~rate effective January 1~~29, ~~2018;~~2020 ~~imposed a one-time transition tax on foreign earnings;~~ and ~~beginning~~February in28, ~~fiscal~~ 2019, ~~creates a new minimum tax on certain foreign-sourced earnings known as global intangible low-tax income ("GILTI")~~respectively. The Company’s ~~will~~effective ~~account for GILTI in the year the~~ tax israte ~~incurred~~for ~~as a period cost. The Company completed~~ the ~~analysis~~first ofquarters ~~the impact~~ of ~~the~~both ~~transition~~2020 ~~tax~~and in2019 ~~accordance~~were ~~with~~different ~~SAB~~than ~~118 and~~ the ~~amount of $27~~U.~~7 million is no longer considered provisional~~S. ~~The~~federal ~~Company~~statutory ~~finalized~~tax ~~the~~rate ~~position~~primarily todue ~~utilize existing net operating loss carryforwards ("NOLC's")~~ to ~~offset~~losses ~~the~~in ~~income~~jurisdictions ~~inclusion,~~in ~~and~~which ~~therefore will have~~ no ~~cash taxes or~~ tax ~~expense~~benefit ~~related~~was ~~to the transition tax~~recognized.

~~The~~As ~~Company recorded income tax expense~~ of ~~$0.6~~February ~~million and $2.3 million for the three months ended August 31~~29, ~~2019 and 2018~~2020, ~~respectively~~the ~~and~~Company ~~income~~has ~~tax expense of~~ $169.49 million ~~and income tax benefit~~ of $0U.3S. ~~million~~federal ~~for~~net ~~the~~operating ~~nine~~loss ~~months~~carryforwards ~~ended August 31~~("NOLC's"), ~~2019 and 2018, respectively~~$8.1 ~~The~~million ~~Company’s effective tax rate for the third quarters~~ of ~~both 2019 and 2018 were different than the~~ U.S. federal ~~statutory~~capital ~~tax~~loss ~~rate~~carryforwards, ~~primarily~~$18.4 ~~due~~million toof ~~losses~~deductible ininterest ~~jurisdictions~~expense incarryforwards, ~~which no tax benefit was recognized~~$0.1 ~~The~~million ~~Company's~~of ~~effective~~foreign tax ~~rate~~credit ~~for~~carryforwards, ~~the~~$0.1 ~~first~~million ~~nine months~~ of ~~2019~~AMT ~~was~~credit ~~different~~carryforwards, ~~than~~and ~~the U~~$82.S.1 ~~federal~~million ~~statutory~~of ~~tax~~state ~~rate~~NOLC's. ~~primarily~~As ~~due~~a toresult, ~~losses~~cash intax ~~jurisdictions~~payments in ~~which no tax benefit was recognized. The Company’s effective tax rate for~~ the ~~first nine months of 2018 was different than its~~ U.S. ~~federal~~are ~~statutory~~expected ~~tax rate primarily due~~ to ~~discrete~~be ~~items~~minimal ~~related~~for to the ~~Tax~~foreseeable ~~Act~~future. ~~These~~The ~~items~~majority ~~included a $4.1 million income tax benefit related to the re-measurement~~ of the ~~U.S. deferred taxes as the U.S.~~ federal, ~~tax~~state, ~~rate was reduced from 35.0% to 21.0%~~ and alocal ~~$0.9~~NOLC's ~~million~~will ~~income~~expire in tax ~~benefit~~years ~~associated~~2023 ~~with~~through ~~the~~2034 ~~reversal~~while of the ~~valuation~~foreign ~~allowance~~tax ~~against the existing AMT~~ credit ~~carryforward~~carryforwards aswill itexpire isin ~~refundable under~~ the ~~Tax~~tax ~~Act.~~years In2020 ~~addition~~through 2022, ~~during~~and the ~~first~~capital ~~quarter~~loss ofcarryforwards ~~2018,~~will ~~the~~expire ~~Company~~beginning ~~recognized~~in ~~a $0.8 million income~~ tax ~~benefit~~year ~~related~~2022. toThe ~~the~~Company ~~impact~~has of a ~~French~~valuation ~~tax~~allowance ~~rate~~against ~~change on~~ the ~~Company's deferred tax liabilities~~U. ~~The French tax rate was reduced to 25~~S.0% ~~beginning~~federal ~~in 2022~~ and ~~the~~state ~~Company~~NOLC's, ~~deferred~~the ~~tax liabilities were reduced to appropriately reflect this legislation as a current period tax benefit~~U.S. ~~These~~federal ~~discrete~~capital ~~tax~~loss ~~benefits~~carryforward, ~~were~~and ~~partially~~the ~~offset~~interest byexpense ~~losses in jurisdictions in which no tax benefit was recognized~~carryforward.

As of August 31, 2019, the Company has $75.3 million of U.S. federal NOLC's, $8.1 million of U.S. federal capital loss carryforwards, $0.1 million of foreign tax credit carryforwards, $0.3 million of AMT credit carryforwards, and $78.9 million of state NOLC's. The $75.3 million of U.S. NOLC's reflects the net impact of the $11.7 million NOL generation for the year ended November 30, 2018 and the $27.7 million utilization for transition tax as part of U.S. tax reform. Due to the NOLC's, cash tax payments in the U.S. are expected to be minimal for the foreseeable future. The majority of the federal, state, and local NOLC's will expire in tax years 2024 through 2034 while the foreign tax credit carryforwards will expire in the tax years 2020 through 2022, and the capital loss carryforwards will expire beginning in tax year 2022. The Company has a valuation allowance against the U.S. federal and state NOLC's and the U.S. federal capital loss carryforward. As of August 31, 2019, the Company had approximately $51.7 million of foreign NOLC's of which $31.8 million have an indefinite carryforward period. The Company has recognized a valuation allowance against the $31.8 million foreign NOLC's which have an indefinite carryforward period as the Company does not anticipate utilizing these carryforwards.12

~~The~~As ~~Company~~of ~~operates~~February in29, ~~numerous~~2020, ~~taxing~~the ~~jurisdictions~~Company ~~and~~had isapproximately ~~subject~~$2.1 tomillion ~~regular~~of ~~examinations~~foreign byNOLC's. ~~various~~The ~~tax~~Company ~~authorities.~~has ~~With~~recognized ~~limited~~a ~~exceptions,~~valuation ~~the~~allowance ~~Company~~against is$1.9 million noof ~~longer~~the ~~open~~foreign toNOLC's ~~audits~~as bythe ~~U.S.~~Company ~~and~~does ~~foreign~~not ~~jurisdictions~~anticipate ~~for~~utilizing ~~years~~this ~~prior~~portion toof ~~2014~~the carryforwards.

~~Note~~With Flimited –exceptions, ~~Earnings~~the ~~Per~~Company ~~Share~~is no longer open to audits under the statutes of limitation by the Internal Revenue Service and various states and foreign taxing jurisdictions for years prior to 2014.

~~The~~Note ~~following~~F ~~table~~– ~~summarizes~~Net ~~the~~Income ~~computation~~(Loss) ofPer ~~earnings per common share and earnings per common share, assuming dilution:~~Share

14The following table summarizes the computation of net income (loss) per common share and net income (loss) per common share, assuming dilution:

Table of Contents


		Three Months Ended
		February 29, 2020		February 28, 2019
	(Dollars and shares in millions, except per share data)
Numerator:
Net income (loss)		$	(3.9)	$	(4.6)

Denominator:
Denominator for basic earnings (loss) per share - weighted average shares outstanding		44.9		44.7
Effect of dilutive securities		—		—
Denominator for dilutive earnings (loss) per share - adjusted weighted average shares and assumed conversions		44.9		44.7

Net income (loss) per share - Basic and Diluted		$	(.09)	$	(.10)

	Three Months Ended August 31,					Nine Months Ended August 31,
	2019		2018			2019		2018
	(Dollars and shares in millions, except per share data)
Numerator:
Net income (loss)	$	.3	$	(1.9	)	$	1.3	$	13.7
Denominator:
Denominator for basic earnings (loss) per share - weighted average shares outstanding	44.8		44.5			44.8		44.6
Effect of dilutive securities	.9		—			.8		.2
Denominator for dilutive earnings (loss) per share - adjusted weighted average shares and assumed conversions	45.7		44.5			45.6		44.8
Net income (loss) per share - Basic and Diluted	$	.01	$	(.04	)	$	.03	$	.31

There are no anti-dilutive securities for the periods presented.

Note G – Accumulated Other Comprehensive Income (Loss)

	Foreign Currency Items			Defined Benefit Plans			Accumulated Other Comprehensive (Income) Loss
Three months ended August 31, 2019 and 2018	(Dollars in millions)
Balance May 31, 2019	$	(34.3	)	$	(88.3	)	$	(122.6	)
Other comprehensive income (loss) before reclassifications	(2.5		)	—			(2.5		)
Amounts reclassified to earnings (a)	—			.6			.6
Balance August 31, 2019	$	(36.8	)	$	(87.7	)	$	(124.5	)
Balance May 31, 2018	$	(22.5	)	$	(100.0	)	$	(122.5	)
Other comprehensive income (loss) before reclassifications	(5.5		)	—			(5.5		)
Amounts reclassified to earnings (a)	—			1.2			1.2
Balance August 31, 2018	$	(28.0	)	$	(98.8	)	$	(126.8	)
Nine months ended August 31, 2019 and 2018
Balance November 30, 2018	$	(32.6	)	$	(89.8	)	$	(122.4	)
Other comprehensive income (loss) before reclassifications	(4.2		)	—			(4.2		)
Amounts reclassified to earnings (a)	—			2.1			2.1
Balance August 31, 2019	$	(36.8	)	$	(87.7	)	$	(124.5	)
Balance November 30, 2017	$	(23.1	)	$	(102.2	)	$	(125.3	)
Other comprehensive income (loss) before reclassifications	(4.9		)	—			(4.9		)
Amounts reclassified to earnings (a)	—			3.4			3.4
Balance August 31, 2018	$	(28.0	)	$	(98.8	)	$	(126.8	)

The components of Accumulated Other Comprehensive Income (Loss), net of tax, for the three months ended February 29, 2020 and February 28, 2019 consisted of the following:


	Foreign Currency Items		Defined Benefit Plans		Accumulated Other Comprehensive (Income) Loss
Three months ended February 29, 2020 and February 28, 2019	(Dollars in millions)
Balance November 30, 2019	$	(19.0)	$	(119.8)	$	(138.8)
Other comprehensive income (loss) before reclassifications	(0.9)		—		(0.9)
Amounts reclassified to earnings (a)	—		1.5		1.5
Balance February 29, 2020	$	(19.9)	$	(118.3)	$	(138.2)



Balance November 30, 2018	$	(32.6)	$	(89.8)	$	(122.4)
Other comprehensive income (loss) before reclassifications	3.8		—		3.8
Amounts reclassified to earnings (a)	—		0.6		0.6
Balance February 28, 2019	$	(28.8)	$	(89.2)	$	(118.0)

^(a)Amounts reclassified from accumulated other comprehensive income (loss) related to defined benefit plans were included in net periodic benefit expense.

Note H – Shareholders' Equity

15The following tables reflect the changes in shareholders' equity for the three months ended February 29, 2020 and February 28, 2019:

The following tables reflect the changes in shareholders' equity for the nine months ended August 31, 2019 and 2018:


	Number of Common Shares Outstanding	Common Stock		Additional Contributed Capital		Retained Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
	(Dollars and shares in millions)













Balance November 30, 2019	44.8	$	4.8	$	348.6	$	(168.3)	$	(25.4)	$	(138.8)	$	20.9
Net income (loss)						(3.9)						(3.9)
Foreign currency translations										(0.9)		(0.9)
Adjustment for accounting change						(0.3)						(0.3)
Post-retirement benefit plans										1.5		1.5
Shared-based compensation				0.4								0.4
Other	0.1			(0.6)				0.1				(0.5)
Balance February 29, 2020	44.9	$	4.8	$	348.4	$	(172.5)	$	(25.3)	$	(138.2)	$	17.2














Balance November 30, 2018	44.9	$	4.8	$	345.9	$	(145.4)	$	(25.3)	$	(122.4)	$	57.6
Net income (loss)						(4.6)						(4.6)
Foreign currency translations										3.8		3.8
Adjustment for accounting change						(0.5)						(0.5)
Post-retirement benefit plans										0.6		0.6
Share-based compensation				0.3								0.3
Other	(0.1)							(0.2)				(0.2)
Balance February 28, 2019	44.8	$	4.8	$	346.2	$	(150.5)	$	(25.5)	$	(118.0)	$	57.0

	Number of Common Shares Outstanding		Common Stock		Additional Contributed Capital			Retained Deficit			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	(Dollars and shares in millions)
Balance November 30, 2018	44.9		$	4.8	$	345.9		$	(145.4	)	$	(25.3	)	$	(122.4	)	$	57.6
Net income (loss)								(4.6		)							(4.6		)
Foreign currency translations														3.8			3.8
Adjustment for accounting change								(.5		)							(.5		)
Post-retirement benefit plans														.6			.6
Share-based compensation					.3												.3
Other	(.1	)									(.2		)				(.2		)
Balance February 28, 2019	44.8		$	4.8	$	346.2		$	(150.5	)	$	(25.5	)	$	(118.0	)	$	57.0
Net income (loss)								5.6									5.6
Foreign currency translations														(5.5		)	(5.5		)
Post-retirement benefit plans														.9			.9
Share-based compensation					1.5												1.5
Other					.3						(.1		)				.2
Balance May 31, 2019	44.8		$	4.8	$	348.0		$	(144.9	)	$	(25.6	)	$	(122.6	)	$	59.7
Net income (loss)								.3									.3
Foreign currency translations														(2.5		)	(2.5		)
Post-retirement benefit plans														.6			.6
Shared-based compensation					1.0												1.0
Other	.1				(.5		)				.1						(.4		)
Balance August 31, 2019	44.9		4.8		348.5			(144.6		)	(25.5		)	(124.5		)	58.7
Balance November 30, 2017	44.8		$	4.8	$	343.4		$	(159.2	)	$	(25.5	)	$	(125.3	)	$	38.2
Net income (loss)								7.3									7.3
Foreign currency translations														6.3			6.3
Adjustment for accounting change								(6.9		)							(6.9		)
Post-retirement benefit plans														1.1			1.1
Share-based compensation					.5												.5
Other					.5						(.5		)				—
Balance February 28, 2018	44.8		$	4.8	$	344.4		$	(158.8	)	$	(26.0	)	$	(117.9	)	$	46.5
Net income (loss)								8.4									8.4
Foreign currency translations														(5.7		)	(5.7		)
Post-retirement benefit plans														1.1			1.1
Share-based compensation					.4												.4
Other	.1				.3												.3
Balance May 31, 2018	44.9		$	4.8	$	345.1		$	(150.4	)	$	(26.0	)	$	(122.5	)	$	51.0
Net income (loss)								(1.9		)							(1.9		)
Foreign currency translations														(5.5		)	(5.5		)
Post-retirement benefit plans														1.2			1.2
Share-based compensation					1.2												1.2
Other					(.6		)										(.6		)
Balance August 31, 2018	44.9		4.8		345.7			(152.3		)	(26.0		)	(126.8		)	45.4

Note I – Inventories

Inventories are stated at lower of cost or net realizable value. U.S. inventories are valued using the last-in, first-out (“LIFO”) method and represented approximately $4850.25 million, or 4748.96%, and $4748.64 million, or 4547.92%, of gross inventories at ~~August~~February 3129, ~~2019~~2020 and November 30, ~~2018~~2019, respectively. The remaining portion of inventories, which are located outside of the U.S., are valued using the first-in, first-out (“FIFO”) or an average cost method. Interim LIFO calculations are based on ~~management’~~Management's estimates of expected year-end inventory levels and costs and are subject to final year-end LIFO inventory valuations. Inventory costs include material, labor, and overhead. Inventories, net, consisted of the following:


	February 29, 2020		November 30, 2019
	(Dollars in millions)
Raw materials and supplies	$	32.2	$	31.4
Work-in-process	6.0		4.7
Finished goods	65.6		66.6
Inventories, gross	103.8		102.7
LIFO reserve	(15.6)		(15.1)
Obsolescence reserve	(6.2)		(6.1)
Inventories, net	$	82.0	$	81.5

~~Table of Contents~~14

	August 31, 2019			November 30, 2018
	(Dollars in millions)
Raw materials and supplies	$	35.3		$	35.0
Work-in-process	5.2			5.3
Finished goods	60.1			63.5
Inventories, gross	100.6			103.8
LIFO reserve	(15.4		)	(18.1		)
Obsolescence reserve	(6.6		)	(6.9		)
Inventories, net	$	78.6		$	78.8

Note J – Debt and Credit Lines

	August 31, 2019		November 30, 2018
	(Dollars in millions)
$350 million Term Loan B, due 2023, current portion (interest at 5.48% and 5.55%, respectively)	$	3.5	$	3.5
Capital lease obligations, current portion	.8		.7
Total	$	4.3	$	4.2

Short-term debt consists of the following debt obligations that are due within the next twelve months:

	August 31, 2019				November 30, 2018
			February 29, 2020					November 30, 2019
	~~(Dollars in millions)~~		(Dollars in millions)
$350 million Term Loan B, due 2023 (interest at 5.48% and 5.55%, respectively)	$	299.5			$	302.1
$350 million Term Loan B, due 2023, current portion (interest at 4.89% and 5.03%, respectively)			$	3.5				$	3.5
Senior Secured Revolving Credit, due 2021 (interest at 3.69% and 3.88%, respectively)	18.2				12.0
Finance lease obligations, current portion			0.8					0.8
Capital lease obligations	15.1				15.6
Total			$	4.3				$	4.3
Gross debt	332.8				329.7
Less: current portion	(4.3		)		(4.2		)
Unamortized original issue discount	(1.7		)		(2.1		)
Debt issuance costs	(4.0		)		(4.7		)
Total long-term debt, net of current portion	$	322.8			$	318.7

The ~~weighted-average interest rate on the~~ Company’s ~~short~~long-term debt ~~was~~consists ~~5.61%~~of ~~and 5.27% during~~ the ~~third quarters of 2019 and 2018, respectively.~~following:


	February 29, 2020		November 30, 2019
	(Dollars in millions)
$350 million Term Loan B, due 2023 (interest at 4.89% and 5.03%, respectively)	$	297.8	$	298.6
Senior Secured Revolving Credit Facility, due 2021 (interest at 3.44% and 3.25%, respectively)	22.0		19.0
Finance lease obligations	14.8		14.9
Gross debt	334.6		332.5
Less: current portion	(4.3)		(4.3)
Unamortized original issue discount	(1.6)		(1.7)
Debt issuance costs	(3.5)		(3.7)
Total long-term debt, net of current portion	$	325.2	$	322.8

The weighted-average interest rate on the Company’s short-term debt was 4.97% and 5.71% during the first quarter of 2020 and 2019, respectively.

Term Loan B

The Company's $350.0 million Term Loan B ("Term Loan B") matures on August 26, 2023 and is primarily secured by all real property, plant, and equipment of the Company's U.S. facilities and fully and unconditionally and jointly and severally guaranteed by the material U.S. subsidiaries of the Company. The Term Loan B contains affirmative and negative covenants, including a requirement to maintain a net debt leverage ratio of 5.0 to 1.0, limitations on additional debt, certain investments, and acquisitions outside of the Company’s line of business. The Company is in compliance with its Term Loan B covenants as of ~~August~~February 3129, ~~2019~~2020.

The Company's Term Loan B has an interest rate of LIBOR plus 3.25%. The Term Loan B agreement permits the Company to request additional term loans or incremental equivalent debt borrowings (the “Additional Term Loans”) in a maximum aggregate amount equal to the greater of (a) $120.0 million and (b) an aggregate principal amount such that, on a pro forma basis (giving effect to any Additional Term Loans), the Company’s senior secured net debt leverage ratio will not exceed 4.0 to 1.0.

Senior Secured Revolving Credit Facility

The Company's ~~has a~~ Senior Secured Revolving Credit Facility (the "Facility") ~~which~~ matures on August 26, 2021. ~~The~~and ~~Facility~~ is secured by U.S. accounts receivable, inventory, and intangible assets. The Facility contains affirmative and negative covenants, similar to the Term Loan B, including limitations on additional debt, certain investments and acquisitions outside of the Company’s line of business. If the average excess availability of the Facility falls below $25.0 million during any fiscal quarter, the Company must then maintain a fixed charge coverage ratio greater than 1.1 to 1.0 as defined in the agreement. The Company was in compliance with this requirement at February 29, 2020. At February 29, 2020 there was a balance of $22.0 million borrowed under the Facility and the amount available for borrowing under the Facility was $33.8 million.

covenants, similar to the Term Loan B, including limitations on additional debt, certain investments and acquisitions outside of the Company’s line of business. If the average excess availability of the Facility falls below $25.0 million during any fiscal quarter, the Company must then maintain a fixed charge coverage ratio greater than 1.1 to 1.0 as defined in the agreement. The Company was in compliance with this requirement at August 31, 2019. At August 31, 2019 there was a balance of $18.2 million borrowed under the Facility and the amount available for borrowing under the Facility was $46.5 million.

Eurodollar Revolving Loan

The Company ~~amended~~has ~~its~~a Eurodollar Revolving Loan ("Revolver") ~~effective~~with ~~June~~a ~~14, 2019. Total~~ borrowing capacity of ~~the Revolver was increased from~~ €~~16.0 million to €~~25.0 million. InThe ~~addition, the~~ Company has the ability to increase borrowing capacity through a €9.0 million expansion feature as needed. The Revolver is secured by European accounts receivable. All other material terms are ~~unchanged and~~ similar to the Company's U.S. Facility, including the maturity date of August 26, 2021. The Revolver provides additional liquidity and working capital flexibility in Europe. At ~~August~~February 3129, ~~2019~~2020 there were no amounts borrowed under the Revolver and the amount available for borrowing under the Revolver was €1916.37 million.

Other Debt

The Company has borrowing facilities at certain of its foreign subsidiaries, which consist primarily of ~~overdraft lines,~~ working capital credit lines, and facilities for the issuance of letters of credit ~~and short-term borrowing needs~~. Total borrowing capacity for these facilities was $116.96 million and $712.01 million as of ~~August~~February 3129, ~~2019~~2020 and November 30, ~~2018~~2019, respectively. There were no amounts borrowed under these facilities at ~~August~~February 3129, ~~2019~~2020 and November 30, ~~2018~~2019.

Capital Lease Obligations

At August 31, 2019, the Company had net assets under capital leases totaling $14.0 million, which are included in property, plant, and equipment in the accompanying Consolidated Balance Sheets.

The following is a schedule by year of future minimum lease payments under the Company's capital leases together with the present value of the net future minimum lease payments as of August 31, 2019:

Year Ending November 30:	(Dollars in millions)
2019	$	.4
2020	1.5
2021	1.5
2022	1.4
2023	1.4
Thereafter	15.2
Total minimum lease payments	21.4
Less: Amount representing estimated executory costs	(.5		)
Net minimum lease payments	20.9
Less: Amount representing interest	(5.8		)
Present value of minimum lease payments	$	15.1

Debt Issuance Costs and Original Issue Discounts

Debt issuance costs and original issue discounts incurred in connection with the issuance of the Company's debt are being amortized over the respective terms of the underlying debt, including any amendments. Total amortization expense of debt issuance costs and original issue discounts is included as a component of interest expense and was $0.4 million for ~~both~~ the three months ended ~~August~~February 3129, ~~2019~~2020 and ~~2018,~~February ~~and $1.1 million and $1.0 million for the nine months ended August 31~~28, 2019 ~~and 2018~~, respectively.

During the quarter ended February 28, 2018, the Company made a $40.0 million prepayment and determined that this constituted a partial extinguishment of debt and as such, wrote-off $0.8 million of debt issuance costs and original issue discounts.

Note K – Share-Based Employee Compensation

The Company provides compensation benefits to employees under the OMNOVA Solutions 2017 Equity Incentive Plan (the “Plan”), which was approved by shareholders on March 22, 2017. The Plan permits the Company to grant to officers, key employees and non-employee directors of the Company incentives directly linked to the price of OMNOVA Solutions’ common shares. The Plan authorizes the issuance of Company common shares in the aggregate for (a) awards of options rights to purchase Company common shares, (b) performance shares and performance units, (c) restricted shares, (d) restricted share units, or (e) appreciation rights. Shares granted under the Plan may be either newly issued shares or treasury shares or both. As of February 29, 2020, approximately 1.1 million Company common shares remained available for grants under the Plan. All options granted under the Plan are granted at exercise prices equal to the market value of the Company’s common shares on the date of grant. Additionally, the Plan provides that the term of any option granted under the Plan may not exceed 10 years.

18During the year ended November 30, 2019, the Company granted performance share awards ("PSA's") to its executive officers. The PSA's provide recipients the right to receive the Company's common shares if specified performance goals, including a performance goal relative to peers, are met over a three fiscal year measurement period. Each grantee receives a target grant of PSA's, but may earn between 0% and 200% (or in the case of the Company's Chief Executive Officer, between 0% and 160% for awards granted prior to 2019, and between 0% and 143% for grants made in 2019) of the target grant depending on the Company's performance against the stated performance goals. The estimated fair value of performance share awards granted is based on the closing market price of the Company’s common shares at each reporting period and recorded based on achievement of target performance metrics.

ofShare-based ~~August 31~~compensation is measured at the grant date, ~~2019~~based on the calculated fair value of the award, ~~approximately~~and ~~1.9~~is ~~million~~recognized ~~Company~~as ~~common~~an ~~shares~~expense ~~remained~~over ~~available~~the ~~for~~requisite ~~grants~~service ~~under~~period (generally the ~~Plan~~vesting period). ~~All~~The ~~options~~fair ~~granted~~value ~~under~~of restricted share awards ("RSA's") and the ~~Plan~~fair ~~are~~value ~~granted~~of atrestricted ~~exercise~~share ~~prices~~units ~~equal~~("RSU's"), toand PSA's are determined based on the closing market ~~value~~price of the Company’s ~~common~~ordinary shares onat the date of grant. ~~Additionally,~~RSU's entitle the ~~Plan~~holder ~~provides~~to ~~that~~receive ~~the~~one ~~term~~ordinary ofshare ~~any~~for ~~option~~each ~~granted~~RSU ~~under~~at ~~the~~vesting, ~~Plan~~generally ~~may~~over ~~not~~a ~~exceed~~three 10year ~~years~~period from the date of grant. ~~Prior~~Estimates of fair value are not intended to ~~March~~predict ~~22,~~actual ~~2017,~~future events or the ~~Company~~value ~~granted~~ultimately realized by employees who receive equity ~~compensation~~awards, ~~under~~and ~~the~~subsequent ~~OMNOVA~~events ~~Solutions~~are ~~Third~~not ~~Amended~~indicative ~~and~~of ~~Restated~~the ~~1999~~reasonableness ~~Equity~~of ~~and~~the ~~Performance~~original ~~Incentive~~estimates ~~Plan,~~of ~~which~~fair ~~had~~value ~~substantially~~made ~~similar~~by ~~features~~the Company.

~~The~~Compensation ~~Company~~expense ~~grants~~for ~~Performance~~all ~~Share~~share-based ~~Units~~payments ~~("PSU's")~~included toin ~~its~~general ~~executive~~and ~~officers.~~administrative ~~The~~expense ~~PSU's~~was ~~provide~~$0.6 ~~recipients~~million ~~the~~and ~~right~~$0.3 tomillion ~~receive~~for the ~~Company's~~first ~~common shares if specified performance goals, including a performance goal relative to peers, are met over a~~ three ~~fiscal~~months ~~year measurement period. Each grantee receives a target grant~~ of ~~PSU's,~~2020 ~~but may earn between 0%~~ and ~~200% (or in the case of the Company's Chief Executive Officer, between 0% and 160% for awards granted prior to~~ 2019, ~~and between 0% and 143% for grants made in 2019) of the target grant depending on the Company's performance against the stated performance goals~~respectively.

~~Share-based~~As ~~compensation~~of ~~is measured at the grant date~~February 29, ~~based on the calculated fair value of the award~~2020, ~~and~~there iswas ~~recognized as an expense over the requisite service period (generally the vesting period)~~$3.3 ~~The~~million ~~fair value~~ of ~~Restricted~~unrecognized ~~Share~~compensation ~~Awards~~cost ~~("RSA's"),~~related ~~Restricted Share Units ("RSU's"), and PSU's are determined based on the closing market price of the Company’s ordinary shares at the date of grant. RSU's entitle the holder~~ to ~~receive~~non-vested ~~one ordinary~~ share-based ~~for~~compensation ~~each RSU at vesting, generally over a three year period from the date of grant~~arrangements. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.

~~Compensation~~A ~~expense~~summary ~~for~~of ~~all~~the ~~share-based~~RSA, ~~payments~~RSU, ~~included in general~~ and ~~administrative~~PSA ~~expense~~activity ~~was $2.8 million and $2.1 million~~ for ~~the~~2020 ~~first nine months of 2019 and 2018, respectively.~~follows:

As of August 31, 2019, there was $4.6 million of unrecognized compensation cost related to non-vested share-based compensation arrangements.


	Share Awards & Units	Weighted-Average Grant Date Fair Value per Share
Non-vested at December 1, 2019	1,712,496	$	8.02
Vested	(109,466)	$	8.69
Canceled and Forfeited	(168)	$	8.40
Non-vested at February 29, 2020	1,602,862	$	7.94

AThe ~~summary~~Company ofalso provides eligible employees the ~~RSA,~~opportunity ~~RSU,~~to ~~and~~purchase ~~PSU~~Company ~~activity~~common shares through payroll deductions under the OMNOVA Solutions Employee Share Purchase Plan (the "ESPP"). The purchase price for ~~2019~~common ~~follows:~~shares

	Share Awards & Units		Weighted-Average Grant Date Fair Value per Share
Nonvested at December 1, 2018	1,350,313		$	8.11
Granted	623,449		$	7.18
Vested	(226,646	)	$	6.50
Canceled and Forfeited	(30,587	)	$	7.92
Nonvested at August 31, 2019	1,716,529		$	7.99

The Company also provides eligible employees the opportunity to purchase Company common shares through payroll deductions under the OMNOVA Solutions Employee Share Purchase Plan (the "ESPP"). The purchase price for common shares purchased from the Company will be 85% of the closing price of the common shares on the New York Stock Exchange on the investment date. Participants may contribute funds to the ESPP, not to exceed ~~twenty-five~~$25,000 ~~thousand dollars~~ in any calendar year. If a participant terminates his or her employment with the Company or its subsidiaries, the participant's participation will immediately terminate, uncommitted funds will be applied to the purchase of common shares, and the participant's account will be converted to a regular brokerage account. As of ~~August~~February 3129, ~~2019~~2020, there were approximately 4757,000 shares purchased by eligible participants through the ESPP.

Note L – Employee Benefit Plans

The Company maintains a number of defined benefit and defined contribution plans to provide retirement benefits for employees. These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”), local statutory law, or as determined by the Board of Directors. The plans generally provide benefits based upon years of service and compensation. Pension plans are funded except for a U.S. non-qualified pension plan for certain key employees and certain foreign plans. Future service benefits are frozen for all participants under the Company's U.S. defined benefit plan. All benefits earned by affected employees through the dates on which such benefits were frozen have become fully vested with the affected employees eligible to receive benefits upon retirement, as described in the Plan document.

Net periodic benefit cost (income) consisted of the following for the three ~~and nine~~ month periods ending ~~August~~February 3129, ~~2019~~2020 and ~~2018~~February 28, 2019:


	Pension Plans						Health Care Plans
	(Dollars in millions)
Three months ended February 29, 2020 and February 28, 2019	2020		2019		2020		2019
Service costs	$	0.7	$	0.7	$	—	$	—
Interest costs	1.9		2.5		$	0.1	$	0.1
Expected return on plan assets	(3.9)		(3.9)		—		—
Amortization of net actuarial (gain) loss	1.7		1.1		$	(0.2)	$	(0.3)
Net periodic cost (benefit)	$	0.4	$	0.4	$	(0.1)	$	(0.2)

	PensionPlans						Health CarePlans
	(Dollars in millions)
Three months ended August 31, 2019 and 2018	2019			2018			2019			2018
Service costs	$	.8		$	.6		$	—		$	—
Interest costs	2.5			2.2			.1			.1
Expected return on plan assets	(4.0		)	(3.9		)	—			—
Amortization of net actuarial (gain) loss	1.1			1.4			(.4		)	(.2		)
Net periodic cost (benefit)	$	.4		$	.3		$	(.3	)	$	(.1	)
	PensionPlans						Health CarePlans
	(Dollars in millions)
Nine months ended August 31, 2019 and 2018	2019			2018			2019			2018
Service costs	$	2.2		$	1.9		$	—		$	—
Interest costs	7.6			6.7			.2			.2
Expected return on plan assets	(11.8		)	(11.7		)	—			—
Amortization of net actuarial (gain) loss	3.4			4.1			(1.0		)	(.7		)
Net periodic cost (benefit)	$	1.4		$	1.0		$	(.8	)	$	(.5	)

Service cost is recorded in SG&A, while other components of net periodic pension costs are recorded in Other (Income) Expense. Service cost represents plan administration expenses. The Company expects to contribute approximately $6.6 million to its pension plans during fiscal 2020. There were no contributions made during the first three months of 2020.

The ~~Service~~Company ~~cost~~also issponsors ~~recorded~~a indefined ~~SG&A,~~contribution ~~while~~401(k) ~~other~~plan. ~~components~~Participation ofin ~~net~~this ~~periodic~~plan ~~pension~~is ~~costs~~available ~~are~~to ~~recorded~~substantially inall ~~Other~~U.S. ~~(Income)~~salaried ~~Expense.~~employees ~~Service~~and ~~cost~~to ~~represents~~certain ~~plan~~groups ~~administration~~of ~~expenses~~U.S. ~~The~~hourly employees. Company ~~expects~~contributions to ~~contribute~~this ~~approximately~~plan ~~$6.4~~are ~~million~~based toon ~~its~~either ~~pension~~a ~~plans~~percentage ~~during~~of ~~fiscal~~employee ~~2019~~contributions or on a specified amount per hour based on the provisions of the applicable collective bargaining agreement. ~~There~~Contribution ~~were~~expense for this plan was $3.0.7 million ~~contributions~~for ~~made during~~ the first ~~nine~~three months of both 2020 and 2019.

The Company also sponsors a defined contribution 401(k) plan. Participation in this plan is voluntary and is available to substantially all U.S. salaried employees and to certain groups of U.S. hourly employees. Company contributions to this plan are based on either a percentage of employee contributions or on a specified amount per hour based on the provisions of the applicable collective bargaining agreement. Company contributions are made in cash. Expense for this plan was $0.6 million and $0.7 million for the third quarter of 2019 and 2018 respectively, and $2.0 million and $2.1 million for the first nine months of 2019 and 2018, respectively.

Note M – Contingencies

~~From~~China ~~time~~Customs to time, the Company is subject to various claims, proceedings, and lawsuits related to products, services, contracts, employment, environmental, safety, intellectual property, and other matters. The ultimate resolution of such claims, proceedings, and lawsuits is inherently unpredictable and, as a result, the Company’s estimates of liability, if any, are subject to change. Actual results may materially differ from the Company’s estimates and an unfavorable resolution of any matter could have a material adverse effect on the financial condition, results of operations, and/or cash flows of the Company. However, subject to the above and taking into account such amounts, if any, as are accrued from time to time on the Company’s balance sheet, the Company does not believe, based on the information currently available to it, that the ultimate resolution of these matters will have a material effect on the consolidated financial condition, results of operations or cash flows of the Company.Matter

~~Note~~In NDecember –2019, ~~Business~~the ~~Segment~~China ~~Information~~Customs office in Shanghai notified the Company that it intended to issue a finding that the Company had previously used an incorrect customs code in connection with exports from China in respect of a small product line. In January, 2020, the China Customs office issued its finding, which required the Company to pay a $500,000 penalty which was recorded in the Company’s consolidated financial statements for the quarter ended February 29, 2020. As a result of the finding by the China Customs office, the local Shanghai taxing authority may seek to recoup certain value added tax ("VAT") refunds previously received by the Company in respect of the exported products. The Company intends to vigorously defend its position if a proceeding is initiated. As of February 29, 2020, the Company does not have sufficient information to reasonably estimate the amount of possibly recoupment of historical VAT refunds and related amounts which may be payable, if any. Accordingly, no provision related to this matter has been recorded in the Company's consolidated financial statements as of February 29, 2020.

~~The~~Other Company's two reporting segments are Specialty Solutions and Performance Materials. These two reporting segments were determined based on products and services provided as defined under ASC 280, Segment Reporting. Accounting policies of the segments are the same as the Company’s accounting policies. The Company’s reporting segments are strategic business units that offer different products and services. They are managed separately based on certain differences in their operations, technology, and marketing strategies.Matters

From time to time, the Company is subject to various claims, proceedings, and lawsuits related to products, services, contracts, employment, environmental, safety, intellectual property, and other matters. The ultimate resolution of such claims, proceedings, and lawsuits is inherently unpredictable and, as a result, the Company’s estimates of liability, if any, are subject to change. Actual results may materially differ from the Company’s estimates and an unfavorable resolution of any matter could

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have a material adverse effect on the financial condition, results of operations, and/or cash flows of the Company. However, subject to the above and taking into account such amounts, if any, as are accrued from time to time on the Company’s balance sheet, the Company does not believe, based on the information currently available to it, that the ultimate resolution of these matters will have a material effect on the consolidated financial condition, results of operations or cash flows of the Company.

Note N - Leases

The Company enters into operating and finance leases for office buildings, manufacturing facilities and equipment, rail cars, information technology equipment, vehicles and certain other equipment. The Company determines whether an arrangement is a lease at inception.

Any lease arrangements with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet and lease costs for these lease arrangements are recognized on a straight-line basis over the lease term. Many of the Company’s lease arrangements provide the options to exercise one or more renewal terms or to terminate the lease arrangement. The Company includes these options when it is reasonably certain it will exercise them and includes the remaining period in the lease term used to establish the right of use assets and lease liabilities. Generally, the Company’s lease agreements do not include an option to purchase the leased asset, residual value guarantees, or material restrictive covenants.

The Company has two leased assets, land and the building for its corporate headquarters, which are classified as financing leases. Depreciation for assets under financing leases is included in depreciation expense. The current portion of finance lease obligations are included in short-term debt and non-current finance lease obligations are included in long-term debt in the Company's Consolidated Balance Sheets. The lease for the land commenced in November 2013 and expires in January 2036, at which time the Company can acquire the land for a nominal amount. The lease for the building commenced in November 2014 and expires in December 2033, at which time the Company is to retain ownership of the building at no cost.

The Company does not have any lease arrangements with variable rental payments.

As most of the Company’s lease arrangements do not provide an implicit interest rate, the Company applies an incremental borrowing rate based on information available at the lease arrangement commencement date to determine the present value of future minimum lease payments.

Lease expense for the three months ended February 29, 2020 was as follows:


	Three Months Ended
	February 29, 2020
	(Dollars in millions)
Operating lease expense	$	1.2
Interest on lease liabilities of finance leases	0.2
Amortization of right of use assets on finance leases	0.2
Total lease expense	$	1.6

The following tables present the impact of leases on the Consolidated Balance Sheet:


Operating Leases	February 29, 2020
	(Dollars in millions)
Right of use assets	$	13.6
Lease liabilities:
Short-term operating lease liabilities	$	3.5
Long-term operating lease liabilities	10.0
Total operating lease liabilities	$	13.5

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Finance Leases	February 29, 2020
	(Dollars in millions)
Right of use assets (a)	$	13.0
Lease liabilities:
Short-term debt	$	0.8
Long-term debt	14.0
Total finance lease liabilities	$	14.8

(a) net of accumulated amortization

Future minimum lease payments under non-cancellable leases at February 29, 2020 were as follows:


	Operating Leases		Finance Leases
	(Dollars in millions)
Remainder of Fiscal 2020	$	3.1	$	1.2
Fiscal 2021	3.1		1.5
Fiscal 2022	2.7		1.5
Fiscal 2023	1.8		1.5
Fiscal 2024	1.2		1.5
Thereafter	4.3		13.7
Total future minimum lease payments	16.2		20.9
Less: imputed interest	2.7		6.1
Total	$	13.5	$	14.8

The following tables present other information related to leases:


	Three Months Ended February 29, 2020
	(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1.2
Financing cash flows from finance leases	$	0.2
Lease assets added in the period:
Operating leases	$	2.1
Finance leases	$	—

The weighted-average remaining lease terms and weighted-average discount rates for the Company's leases are as follows:


	February 29, 2020
Weighted-average remaining lease term:
Operating leases	7.4 years
Finance leases	14.3 years
Weighted-average discount rate:
Operating leases	3.6	%
Finance leases	4.7	%

Note O – Business Segment Information

The Company's two reporting segments are Specialty Solutions and Performance Materials. These two reporting segments were determined based on products and services provided as defined under ASC 280, Segment Reporting. Accounting policies

of the segments are the same as the Company’s accounting policies. The Company’s reporting segments are strategic business units that offer different products and services. They are managed separately based on certain differences in their operations, technology, and marketing strategies.

Segment operating profit represents net sales less applicable costs, expenses and provisions for restructuring and severance costs, asset write-offs and acquisition and integration related expenses relating to operations. However, Management excludes restructuring and severance costs, asset write-offs, and acquisition and integration related costs when evaluating the results and allocating resources to the segments.

Segment operating profit excludes certain unallocated corporate headquarters expenses. Corporate headquarters expense includes the cost of providing and maintaining the corporate headquarters functions, including salaries, rent, travel and entertainment expenses, depreciation, utility costs, outside services, amortization of deferred financing costs and merger related costs.

entertainment expenses, depreciation, utility costs, outside services, amortization of deferred financing costs and Merger related costs.

The following table summarizes operations by segment and a reconciliation of segment sales to consolidated sales and segment operating profit to income (loss) before income taxes:

	Three Months Ended August 31,							Nine Months Ended August 31,
			Three Months Ended
	2019				2018			2019			2018
			February 29, 2020					February 28, 2019
	~~(Dollars in millions)~~		(Dollars in millions)
Net Sales:
Specialty Solutions	$	~~137.7~~	$	112.8	$	~~122.1~~		$	~~392~~112.7		$	~~360.0~~
Performance Materials	~~54.7~~		42.8		~~71.5~~			~~174~~56.32			~~218.5~~
Total Net Sales	$	~~192.4~~	$	155.6	$	~~193.6~~		$	~~567~~168.09		$	~~578.5~~
Segment Operating Profit:
Specialty Solutions	$	~~20.0~~	$	11.4	$	~~19.5~~		$	499.3		$	~~55.0~~
Performance Materials	~~(4.4~~		(4.7)		~~(7.9~~		)	(62.48)		)	~~(5.6~~		)
Total segment operating profit	~~15.6~~		6.7		~~11.6~~			426.95			~~49.4~~
Interest expense	~~(5.1~~		(4.6)		~~(4.7~~		)	(155.30)		)	~~(14.4~~		)
Corporate expenses	~~(9.6~~		(6.9)		~~(6.5~~		)	(246.9)		)	~~(21.6~~		)
Income (Loss) Before Income Taxes	$	.9	$	(4.8)	$	.4		$	2(5.74)		$	~~13.4~~

Note OP - ~~Asset~~Subsequent ~~Impairment~~Event

~~During~~As disclosed in the ~~third~~Company’s ~~quarter~~Current ofReport ~~2019~~on Form 8-K filed on March 26, 2020, on March 26, 2020 the ~~Company~~European ~~recognized~~Commission anconfirmed ~~impairment~~that ~~charge~~the conditions attached to its approval of $0the merger of Synthomer plc and OMNOVA Solutions Inc.9, ~~million~~granted ~~within~~on ~~the~~January ~~Performance~~15, ~~Materials~~2020, ~~segment~~had been satisfied. The ~~impairment~~confirmation ~~charge~~by the European Commission was ~~based~~the onlast ~~estimated~~condition ~~fair~~to ~~value~~the ~~utilizing~~completion of the ~~relief~~acquisition, ~~from~~other ~~royalty~~than ~~method~~customary ofclosing conditions. In accordance with the ~~Income~~merger ~~Approach.~~agreement, OMNOVA ~~Future~~and ~~reductions~~Synthomer inexpect ~~forecasted~~the ~~revenues~~acquisition orto ~~royalty~~be ~~rates~~completed ~~could~~on ~~result~~April in1, ~~additional~~2020, ~~trademark~~subject ~~impairments~~to satisfaction or waiver of customary closing conditions.

During the third quarter of 2018, the Company approved a plan close the Green Bay, Wisconsin plant shifting styrene butadiene manufacturing to its production plant in Mogadore, Ohio. As a result, the Company determined that certain plant and equipment were impaired and recognized an impairment charge of $9.2 million, primarily in the Performance Materials segment, to write-down the asset group to fair value based on the market approach analysis.20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

OMNOVA Solutions Inc. became an independent, publicly-traded company on October 1, 1999, when it was spun off by GenCorp Inc., its former parent company. OMNOVA Solutions is incorporated under the laws of the State of Ohio, and its headquarters is located at 25435 Harvard Road, Beachwood, Ohio 44122-6201.

OMNOVA Solutions is a global innovator of performance enhancing chemistries and surfaces for a variety of commercial, industrial and residential end uses. Our products provide a variety of important functional and aesthetic benefits to hundreds of products that people use daily. We hold leading positions in key market categories, which have been built through innovative products, customized product solutions, strong technical expertise, well-established distribution channels, recognized brands, and long-standing customer relationships. We have strategically located manufacturing, technical and other facilities globally to service our broad customer base.

OMNOVA operates two business segments: Specialty Solutions and Performance Materials. Financial information relating to the Company’s business segments is included in Note NO to the Consolidated Financial Statements of this report.

Specialty Solutions – The Specialty Solutions segment consists of three business lines: ~~Specialty~~specialty ~~Coatings~~coatings & ~~Ingredients~~ingredients, ~~Oil~~oil & ~~Gas~~gas, and ~~Laminates~~laminates & ~~Films~~films. The Specialty Solutions segment develops, designs, produces, and markets a broad line of specialty products for use in coatings, adhesives, sealants, elastomers, laminates, films, nonwovens, and oil & gas products. These products are used in numerous applications, including architectural and industrial coatings; nonwovens used in hygiene products, filtration and construction; drilling additives for oil and gas drilling, cementing and fracking; elastomeric modification of plastic casings and hoses used in household and industrial products and automobiles; tapes and adhesives; sports surfaces; textile finishes; commercial building refurbishment; new construction; residential cabinets; flooring; ceiling tile; furnishings; manufactured housing; health care patient and common area furniture; and a variety of industrial films applications. The segment's products improve the performance of customers’ products, including stain, rust and aging resistance; surface modification; gloss; softness or hardness; dimensional stability; high heat and pressure tolerance; and binding and barrier (e.g. moisture, oil) properties.

Specialty coatings & ingredients. OMNOVA specialty coatings & ingredients is a leading global supplier of polymers, waterborne and solvent borne dispersions, elastomers, and other specialty chemicals for a variety of product categories. Applications for our specialty polymers and chemicals include: specialty coatings; nonwovens (such as disposable hygiene products, engine filters, roofing mat, scrub pads); construction; adhesives; tape; floor care; textiles; graphic arts; home & personal care; and various other specialty applications. Our focus is on developing unique products for custom applications that address specific customer needs, including enhanced functionality, improved durability, high temperature, chemical and UV resistance, corrosion resistance, improved environmental performance, and improved processibility.

Laminates & films. OMNOVA's laminates & films business line is a leading supplier of vinyl, paper, and specialty laminates, and performance films. Our laminates are used as alternatives to wood, paint, stone, stainless steel, high pressure laminates, and thermally fused laminates in markets where durability, design, and cost are key requirements. We offer our customers a broad range of designs and textures, as well as proprietary coating technology that provides enhanced durability and scratch and stain resistance. Applications for our laminates include: kitchen and bath cabinets; manufactured housing and recreational vehicle interiors; flooring; commercial and residential furniture; retail display fixtures; home furnishings; consumer appliances; bath and spa surrounds; food service tables; wall protection; and architectural accents. Films applications include: luxury vinyl tile (LVT); awnings; tents; flooring; promotional graphics; medical products; movie screens; decking; ceiling tile; and shower pan liners.

Oil & gas. OMNOVA's oil & gas is a leading supplier of specialty wellbore chemicals used in demanding applications all over the world. We offer a wide range of solutions including fluid loss control and sealing, emulsifiers, lubricants, and rheological modifiers for drilling fluids. The business also offers flow control and properties enhancement in cementing operations, gel additives for hydraulic fracturing fluids, and strengthening agents. We design unique polymers that meet conventional and unconventional drilling and completion requirements.

Performance Materials – The Performance Materials segment serves mature markets including plastics, paper, carpet and coated fabrics with a broad range of polymers based primarily on styrene butadiene (SB), styrene butadiene acrylonitrile (SBA), styrene butadiene vinyl pyridine, high styrene pigments, polyvinyl acetate, acrylic, styrene acrylic, calcium stearate, glyoxal, and bio-based chemistries. Performance Materials' custom-formulated products are tailored latexes, resins, binders, antioxidants, hollow plastic pigment, coated fabrics, and rubber reinforcing which are used in tire cord, polymer stabilization, industrial rubbers, carpet, paper, and various other applications. Its products provide a variety of functional properties to

~~elastomeric~~enhance ~~modification~~the of plastic casings and hoses used in household and industrial products and automobiles; tapes and adhesives; sports surfaces; textile finishes; commercial building refurbishment; new construction; residential cabinets; flooring; ceiling tile; furnishings; manufactured housing; health care patient and common area furniture; and a variety of industrial films applications. The segment'Company’s ~~products improve the performance of~~ customers’ products, including ~~stain~~greater strength, ~~rust~~adhesion, ~~and aging resistance; surface modification; gloss; softness or hardness;~~ dimensional stability;, ~~high~~ultraviolet ~~heat~~resistance, ~~and~~improved ~~pressure~~processibility, ~~tolerance;~~ and ~~binding~~enhanced ~~and barrier (e~~appearance.~~g. moisture, oil) properties.~~

~~Specialty~~Performance ~~Coatings & Ingredients~~additives. OMNOVA ~~Specialty Coatings & Ingredients~~ is also a leading global supplier of ~~polymers,~~vinyl ~~waterborne~~pyridine ~~and solvent borne dispersions~~latex, ~~elastomers,~~which ~~and~~is ~~other~~used ~~specialty~~in ~~chemicals~~bonding ~~for~~fabric ato ~~variety~~rubber ~~of product categories. Applications~~ for ~~our~~tire ~~specialty polymers~~ and ~~chemicals~~belting ~~include: specialty coatings; nonwovens (such as disposable hygiene products~~applications, ~~engine~~and ~~filters,~~reinforcing ~~roofing~~resins ~~mat,~~which ~~scrub~~are ~~pads);~~used ~~construction;~~in ~~adhesives; tape; floor care; textiles; graphic arts; home & personal care; and various~~ other ~~specialty~~rubber ~~applications~~goods. ~~Our~~In ~~focus is on developing unique products for custom applications that address specific customer needs~~addition, ~~including~~the ~~enhanced~~Company ~~functionality,~~is ~~improved~~a ~~durability,~~leading ~~high~~global ~~temperature,~~supplier ~~chemical~~of ~~and~~antioxidants UVused ~~resistance,~~in ~~corrosion~~polymer ~~resistance,~~stabilization ~~improved environmental performance,~~ and ~~improved~~synthetic ~~processibility~~latex gloves.

~~Oil~~Paper &and ~~Gas~~carpet. OMNOVA's ~~Oil~~Solutions ~~& Gas~~ is aan ~~leading~~innovative supplier of ~~specialty~~custom-formulated ~~wellbore~~SB ~~chemicals~~and ~~used~~SBA inlatex ~~demanding~~and ~~applications~~hollow ~~all~~plastic ~~over~~pigments ~~the~~for ~~world~~carpet, paper and paperboard coatings. WeApplications ~~offer~~for aour ~~wide~~products ~~range~~include ofpaper ~~solutions~~and ~~including~~paperboard ~~fluid~~coatings ~~loss~~used ~~control~~in specialty papers, food cartons, household and ~~sealing~~other consumer and industrial packaging, ~~emulsifiers~~magazines, ~~lubricants~~catalogs, direct mail advertising, and ~~rheological~~brochures. ~~modifiers~~Our products for ~~drilling~~the ~~fluids.~~carpet ~~The~~industry ~~business~~secure ~~also~~carpet ~~offers~~fibers ~~flow~~to ~~control~~the carpet backing and ~~properties~~adhere ~~enhancement~~the inprimary ~~cementing~~backing ~~operations~~to the secondary backing, ~~gel~~while ~~additives~~meeting ~~for~~the ~~hydraulic~~stringent ~~fracturing~~manufacturing, ~~fluids~~environmental, odor, flammability, and ~~strengthening~~flexible ~~agents~~installation requirements of our customers. WeOur ~~design~~strong ~~unique~~historical ~~polymers~~position in residential carpeting has been enhanced by new products to serve that ~~meet~~market, ~~conventional~~as ~~and~~well ~~unconventional~~as ~~drilling~~innovations in commercial carpet backing binders that provide moisture barrier and ~~completion~~other ~~requirements~~properties, enabling the replacement of higher cost polyurethane binders.

~~Laminates~~Coated ~~& Films~~fabrics. OMNOVA's ~~Laminates~~Solutions &is ~~Films~~a ~~business~~leading ~~line~~North isAmerican aand ~~leading~~Asian supplier of vinyl, ~~paper,~~ and ~~specialty~~urethane ~~laminates,~~coated ~~and~~fabrics ~~performance~~for ~~films. Our laminates are used as alternatives to wood~~transportation, ~~paint~~marine, ~~stone~~commercial, ~~stainless steel~~residential, ~~high~~and ~~pressure~~health ~~laminates,~~care ~~and~~applications. ~~thermally~~Our ~~fused~~durable ~~laminates~~coated infabrics ~~markets~~are ~~where~~well-suited ~~durability,~~for ~~design~~demanding, ~~and~~high-use ~~cost~~environments ~~are~~and ~~key requirements. We~~ offer ~~our customers~~ a ~~broad~~cost ~~range~~effective ofalternative ~~designs~~to ~~and~~other ~~textures~~surfacing materials, assuch ~~well~~ as ~~proprietary~~leather ~~coating technology that provides enhanced durability~~ and ~~scratch~~textile ~~and stain resistance~~fabrics. Applications for our ~~laminates~~coated fabrics include: ~~kitchen~~transportation ~~and~~seating ~~bath~~(automotive ~~cabinets;~~OEM, ~~manufactured~~bus ~~housing~~ and ~~recreational~~other ~~vehicle~~mass ~~interiors;~~transit, ~~flooring;~~marine, ~~commercial~~ and ~~residential furniture~~motorcycle); ~~retail~~automotive ~~display~~aftermarket ~~fixtures~~applications; ~~home~~contract ~~furnishings; consumer appliances; bath~~ and ~~spa~~health ~~surrounds;~~care ~~food service tables~~furniture; ~~wall~~residential ~~protection; and architectural accents. Films~~ applications ~~include: luxury vinyl tile (LVT)~~; ~~awnings;~~stadium ~~tents;~~and ~~flooring;~~arena ~~promotional graphics~~seating; ~~medical products; movie screens; decking; ceiling tile;~~ and ~~shower~~healthcare ~~pan liners~~equipment. A key ~~strength~~differentiator offor our ~~laminates~~coated ~~business~~fabrics products is our ~~coating~~PreFixx® ~~technology,~~protective ~~including ultraviolet~~coating, ~~melamine,~~long ~~urethane,~~recognized ~~and thermally cured coatings, which provide greater durability~~ for ~~high-wear~~delivering ~~applications. In addition, our laminates business has differentiated itself in~~ the ~~market~~industry's ~~as a single~~best-source supplier through its harmony programTM of integrated vinyl and paper laminate designs for the furniture and cabinet industries by building a unique library of matched vinyl and paper laminate designs, with a variety of patterns and textures, and developing rapid make-to-order production capabilities. We also offer SURF(X)® 3D Laminates for multi-dimensional applications for the office and health care furniture and retail display fixture and food service markets. These laminates offer a cost effective alternative to high pressure laminates, thermally fused melamine and real wood veneers. They provide furniture makers with design flexibility in ~~rounded surfaces, eliminating the need for unsightly and expensive edge~~-~~banding,~~class ~~and providing enhanced cleanability/disinfection and durability with increased chip and crack resistance~~performance.

~~Performance Materials –~~ The ~~Performance~~Company ~~Materials~~primarily ~~segment~~sells ~~serves~~its ~~mature~~products ~~markets~~directly ~~including~~to ~~plastics~~manufacturers, ~~paper, carpet~~ and ~~coated~~has ~~fabrics~~manufacturing ~~with~~facilities ain ~~broad~~the ~~range~~United ~~of polymers based primarily on styrene butadiene (SB)~~States, ~~styrene butadiene acrylonitrile (SBA)~~France, ~~styrene butadiene vinyl pyridine~~Portugal, ~~high styrene pigments~~China, ~~polyvinyl acetate, acrylic, styrene acrylic, calcium stearate, glyoxal,~~ and ~~bio-based chemistries~~Thailand. ~~Performance~~For ~~Materials'~~additional ~~custom-formulated~~information ~~products~~about ~~are~~the ~~tailored~~Company's ~~latexes,~~business ~~resins,~~(other ~~binders,~~than ~~antioxidants,~~the ~~hollow~~description ~~plastic~~of ~~pigment,~~the ~~coated~~Company's ~~fabrics,~~reporting ~~and rubber reinforcing which are used in tire cord~~segments), ~~polymer~~please ~~stabilization,~~refer ~~industrial~~to ~~rubbers,~~Item 1 ~~carpet,~~Business ~~paper, and various other applications. Its products provide a variety~~ of ~~functional properties to enhance~~ the Company’s ~~customers’~~2019 ~~products,~~Annual ~~including~~Report ~~greater~~on ~~strength,~~Form ~~adhesion, dimensional stability, ultraviolet resistance, improved processibility, and enhanced appearance~~10-K.

Paper and Carpet. OMNOVA Solutions is an innovative supplier of custom-formulated SB and SBA latex and hollow plastic pigments for carpet, paper and paperboard coatings. Applications for our products include paper and paperboard coatings used in specialty papers, food cartons, household and other consumer and industrial packaging, magazines, catalogs, direct mail advertising, and brochures. Our products for the carpet industry secure carpet fibers to the carpet backing and adhere the primary backing to the secondary backing, while meeting the stringent manufacturing, environmental, odor, flammability, and flexible installation requirements of our customers. Our strong historical position in residential carpeting has been enhanced by new products to serve that market, as well as innovations in commercial carpet backing binders that provide moisture barrier and other properties, enabling the replacement of higher cost polyurethane binders.

Performance Additives. OMNOVA is also a leading global supplier of vinyl pyridine latex which is used in bonding fabric to rubber for tire and belting applications. In addition, the Company is a leading global supplier of antioxidants used in polymer stabilization and synthetic latex gloves.

Coated Fabrics. OMNOVA Solutions is a leading North American and Asian supplier of vinyl and urethane coated fabrics for transportation, marine, commercial, residential, and health care applications. Our durable coated fabrics are well-suited for demanding, high-use environments and offer a cost effective alternative to other surfacing materials, such as leather and textile fabrics. Applications for our coated fabrics include: transportation seating (automotive OEM, bus and other mass transit, marine, and motorcycle); automotive aftermarket applications; contract and health care furniture; residential applications; stadium and arena seating; and healthcare equipment. A key differentiator for our coated fabrics products is our PreFixx® protective coating, long recognized for delivering the industry's best-in-class performance.

The Company primarily sells its products directly to manufacturers, and has manufacturing facilities in the United States, France, Portugal, China, and Thailand. For additional information about the Company's business (other than the description of the Company's reporting segments), please refer to Item 1 Business of the Company’s 2018 Annual Report on Form 10-K.

The Company has historically experienced stronger sales and income in its second, third, and fourth quarters, comprised of the three-month periods ending May 31, August 31, and November 30. Performance in the first quarter (December through February) has historically been affected by generally lower levels of customer manufacturing, construction, and refurbishment activities during the holidays and cold weather months.

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer ("CEO"), ~~evaluates~~makes decisions, assesses performance, and allocates resources prospectively by ~~operating~~reporting segment. Segment information has been prepared in accordance with ~~authoritative~~ guidance promulgated by the ~~Financial Accounting Standards Board (“~~FASB”). The Company’s two operating segments were determined based on the products and services provided. Accounting policies of the segments are the same as those described in Note A of the Company’s Unaudited Interim Consolidated Financial Statements. For a reconciliation of the Company’s segment operating performance information, please refer to the Business Segment Information footnote of the Company’s Unaudited Interim Consolidated Financial Statements.

The Company has two operating segments: "Specialty Solutions", a segment focused on the Company's higher growth specialty business, and "Performance Materials," a segment comprised of the Company's businesses which are focused on more mature markets. These reporting segments were determined based on the products and services provided. Accounting policies of the segments are the same as those described in Note A - Pending Merger, Basis of Presentation, Description of Business and Accounting Standards. For a reconciliation of the Company’s segment operating performance information, please refer to Note O of the Company’s Consolidated Financial Statements.

Impacts of COVID-19 on OMNOVA’s Business

The Company did not observe significant impacts on its business or results of operations for the quarter ended February 29, 2020 due to the global emergence of Coronavirus disease (COVID-19). However, the ultimate impacts of COVID-19 on our business are currently unknown. We will continue to actively monitor the situation and may take further precautionary and preemptive actions as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, partners, suppliers and shareholders. We cannot predict the effects that such actions may have on our business or strategy, including the effects on our customers and prospects, or on our financial results, in particular with respect to demand for our products.

Raw Materials

A majority of the Company’s raw materials are derived from petrochemicals and chemical feedstocks, where prices can be cyclical and volatile. Styrene, aand butadiene, key raw material ~~component~~components, isare generally available worldwide, and OMNOVA has supply contracts with several producers. OMNOVA believes there is adequate global capacity to serve demand. ~~OMNOVA’s~~At ~~styrene~~times, ~~purchases~~when ~~for~~the ~~2018~~demand ~~and~~of ~~estimated~~butadiene ~~purchases~~exceeds ~~for~~supply, ~~2019~~it ~~and~~is ansold ~~estimated~~on ~~range~~an ofallocated ~~market~~basis. ~~prices are as follows:~~

	Pounds Purchased(in millions)	Market Price RangePer Pound
2019 (estimated)	84	$0.43 - $0.53
2018	102	$0.53 - $0.73

Other key raw materials utilized by the Company include acrylites, polyvinyl chloride (PVC) resins, textiles, and plasticizers. These raw materials are generally available worldwide from several suppliers.

Butadiene, a key raw material component, is generally available worldwide. OMNOVA has supply contracts with several producers. At times, when the demand of butadiene exceeds supply, it is sold on an allocated basis. OMNOVA’s butadiene purchases for 2018 and estimated purchases for 2019 and an estimated range of market prices are as follows:22

	Pounds Purchased(in millions)	Market Price RangePer Pound
2019 (estimated)	70	$0.36 - $0.54
2018	77	$0.36 - $0.79

The Company negotiates pricing with a majority of customers considering the value-added performance attributes of those products and the cost of the raw materials. The Company's pricing objective, which may or may not be met, is to recover raw material prices increases for non-indexed contracts within three months.

~~The~~OMNOVA ~~Company~~had ~~negotiates~~indexed ~~pricing~~sales ~~with~~price ~~the~~contracts ~~majority~~covering approximately 25% of its ~~customers~~sales. ~~based~~These oncontract ~~the~~indexes ~~cost~~are ofgenerally ~~the~~comprised ~~raw~~of ~~material~~several components: ofa ~~the~~negotiated ~~products~~fixed ~~being~~amount ~~purchased~~per pound, and the ~~value-added~~market ~~performance~~price ~~attributes~~ of ~~those~~key ~~products.~~raw ~~The~~materials ~~Company's pricing objective~~(i.e., ~~which~~styrene ~~may~~and orbutadiene). ~~may~~The ~~not~~indexed becontracts ~~met,~~provide isthat toOMNOVA ~~recover~~will ~~raw~~pass ~~material~~through ~~price~~the increases ~~for~~or ~~its~~decreases ~~non-indexed~~of ~~contracts~~key ~~within~~raw ~~three~~materials, ~~months.~~generally ~~OMNOVA~~within ~~also~~a ~~has~~30 ~~sales~~to ~~price~~60 ~~index~~day period. Indexed contracts ~~with~~vary ~~customers~~in ~~that~~length, ~~represents~~generally ~~approximately~~from 12% ofto ~~its~~36 ~~net sales~~months.

Key Indicators

Key economic measures relevant to the Company include global economic growth rates, discretionary spending for durable goods, oil and gas consumption and drilling levels, U.S. commercial real estate occupancy rates, U.S. office furniture sales, manufactured housing shipments (including recreational vehicles), housing starts and sales of existing homes, and forecasts of raw material pricing for certain petrochemical feed stocks. Key Original Equipment Manufacturer ("OEM") industries, which provide a general indication of demand drivers to the Company, include commercial and residential construction and refurbishment, automotive and tire production, furniture, flooring, and ABS manufacturing. These measures provide general information on trends relevant to the demand for the Company’s products, but the trend information does not necessarily directly correlate with demand levels in the markets which ultimately use the Company’s products in part because the Company's market share is relatively small in a number of specialty markets.

forecasts of raw material pricing for certain petrochemical feed stocks. Key Original Equipment Manufacturer ("OEM") industries, which provide a general indication of demand drivers to the Company, include commercial and residential construction and refurbishment, automotive and tire production, furniture, flooring, and ABS manufacturing. These measures provide general information on trends relevant to the demand for the Company’s products, but the trend information does not necessarily directly correlate with demand levels in the markets which ultimately use the Company’s products in part because the Company's market share is relatively small in a number of specialty markets.

Key operating measures utilized by the business segments include: orders; sales and pricing; working capital days; inventory; productivity; plant utilization; new product vitality; cost of quality; order fill-rates, which provide key indicators of business trends; and safety and other internal metrics. These measures are reported on various cycles including daily, weekly and monthly, depending on the needs established by operating management.

Key financial measures utilized by Management to evaluate the results of its businesses and to understand the key variables impacting the current and future results of the Company include sales and pricing; gross profit; SG&A; adjusted operating profit (loss); adjusted net income (loss); consolidated earnings (loss) before interest, taxes, depreciation, and amortization (“EBITDA”) as set forth in the Net Leverage Ratio in the Company’s $350,000,000 Term Loan B agreement; Adjusted EBITDA, working capital; operating cash flows; capital expenditures; cash interest expense; adjusted earnings per share; and applicable ratios, such as inventory turnover; working capital turnover; return on sales and assets; and leverage ratios. These measures, as well as objectives established by the Company's Board of Directors, are reviewed at monthly, quarterly, and annual intervals and compared with historical periods.

Results of Operations for the Three months ended ~~August~~February 3129, ~~2019~~2020 Compared to the Three months ended ~~August~~February 3128, ~~2018~~2019

The Company's net sales in the ~~third~~first quarter of ~~2019~~2020 were $155.6 million, a decrease of $~~192~~13.43 million, ~~were~~or ~~flat~~7.9%, compared to $~~193~~168.69 million in the ~~third~~first quarter of ~~2018~~2019. The ~~acquisition~~Specialty ofSolutions ~~OMNOVA~~business ~~Portugal~~segment ~~during~~revenue in 2020 was flat with 2019, and the ~~fourth~~Performance ~~quarter~~Materials ofbusiness ~~2018~~revenue ~~accounted~~decreased ~~for~~by $1513.04 million, ofor ~~current quarter sales~~23.8%. The ~~Specialty~~overall ~~Solutions~~decrease ~~business~~was ~~segment~~due ~~revenue~~to ~~increased~~lower ~~$15.6 million~~volume, orprimarily ~~12.8%~~in paper and carpet, and the ~~Performance~~negative ~~Materials~~impact ~~business~~of ~~revenue~~foreign ~~decreased~~currency, partially offset by ~~$16.8~~favorable ~~million,~~pricing orand 23mix.~~5%.~~

Gross profit in the ~~third~~first quarter of ~~2019~~2020 was $4635.32 million with a gross profit margin of 2422.16%, compared to gross profit of $4936.19 million and a gross profit margin of 2521.48% in the ~~third~~first quarter of ~~2018~~2019. The ~~decrease~~increase in gross profit ~~dollars~~margin ~~resulted~~was primarily ~~from~~due ~~unfavorable~~to ~~foreign~~improved ~~currency~~product ~~exchange~~mix and lower raw material costs.

SG&A in the ~~third~~first quarter of ~~2019~~2020 was $26.68 million, ~~flat~~ compared to $2628.37 million in the ~~third~~first quarter of ~~2018~~2019. The decrease was primarily due to lower employee incentive compensation costs and an overall focus on controlling SG&A expense.

Interest expense in the ~~third~~first quarter of ~~2019~~2020 was $54.16 million, compared to $45.70 million in the ~~third~~first quarter of ~~2018~~2019. The ~~increase~~decrease of $0.4 million, or 8.50%, was primarily ~~attributed~~due to alower ~~higher~~interest ~~average~~rates on outstanding debt ~~balance~~.

The Company recorded income tax ~~expense~~benefits of $0.69 million and $20.38 million for the three months ended ~~August~~February 3129, ~~2019~~2020 and ~~2018~~February 28, 2019, respectively. The Company’s effective tax rate for the ~~third~~first quarters of both ~~2019~~2020 and ~~2018~~2019 were different than the U.S. federal statutory tax rate primarily due to losses in jurisdictions in which no tax benefit was recognized.

Net ~~income~~loss for the ~~third~~first quarter of ~~2019~~2020 was $0.3.9 million, or $0.0109 per diluted share, compared to a net loss of $14.96 million, or $0.0410 per diluted share, during the same quarter in the prior year.

Segment Discussion

The following Segment Discussion presents information used by the Company in assessing the results of operations by business segment. The Company believes that this presentation is useful for providing the investor with an understanding of the Company’s business and operating performance because these measures are used by the CODM in ~~evaluating~~making decisions, assessing performance and allocating resources.

The following table reconciles segment sales to consolidated net sales and segment operating profit to consolidated income (loss) before income taxes:


	Three Months Ended
	February 29, 2020		February 28, 2019
	(Dollars in millions)
Net Sales:
Specialty Solutions	$	112.8	$	112.7
Performance Materials	42.8		56.2
Consolidated Net Sales	$	155.6	$	168.9

Segment Operating Profit:
Specialty Solutions	$	11.4	$	9.3
Performance Materials	(4.7)		(2.8)
Total Segment Operating Profit	6.7		6.5
Interest expense	(4.6)		(5.0)
Corporate expense	(6.9)		(6.9)
Consolidated Income (Loss) Before Income Taxes	$	(4.8)	$	(5.4)

	Three Months Ended August 31,
	2019			2018
	(Dollars in millions)
Net Sales:
Specialty Solutions	$	137.7		$	122.1
Performance Materials	54.7			71.5
Consolidated Net Sales	$	192.4		$	193.6
Segment Operating Profit:
Specialty Solutions	$	20.0		$	19.5
Performance Materials	(4.4		)	(7.9		)
Total Segment Operating Profit	15.6			11.6
Interest expense	(5.1		)	(4.7		)
Corporate expense	(9.6		)	(6.5		)
Consolidated Income (Loss) Before Income Taxes	$	.9		$	.4

Specialty Solutions

Specialty Solutions' net sales ~~increased~~were ~~$15.6~~approximately ~~million,~~flat orat 12$112.8%, ~~to $137.7~~ million in the ~~third~~first quarter of ~~2019~~2020, ~~from~~compared to $~~122~~112.17 million in the ~~third~~first quarter of ~~2018~~2019. ~~The~~Higher ~~improvement~~volumes ~~was~~in ~~primarily~~oil ~~driven by favorable volume of $13.9 million~~ and ~~price/mix~~gas, ofdecorative ~~$2.9 million~~laminates, ~~partially~~and ~~offset~~performance byfilms ~~unfavorable~~and ~~foreign~~favorable ~~currency~~mix ~~exchange of $1.1 million. Volumes were up~~ in ~~coatings,~~decorative ~~adhesives~~laminates ~~& sealants,~~ and ~~oil~~performance &films ~~gas. These volume increases~~ were partially offset by ~~declines~~lower volumes in coatings, home &and personal care, ~~elastomeric modifiers, decorative laminates,~~ and ~~performance films when compared to the same quarter last year~~nonwovens. ~~Foreign currency exchange had an unfavorable impact across all markets.~~

Segment operating profit was $2011.04 million for the ~~third~~first quarter of ~~2019~~2020 compared to $199.53 million for the ~~third~~first quarter of ~~2018~~2019. The increase of $02.51 million, or 222.6%, from the ~~third~~first quarter of ~~2018~~2019 was due to favorable ~~volume and price/~~mix, primarily in ~~oil~~decorative &laminates, ~~gas~~and favorable raw material costs, ~~which~~primarily ~~was~~in ~~partially~~nonwovens, ~~offset~~coatings, byand ~~higher~~oil ~~manufacturing~~and ~~costs~~gas. Segment operating profit includes items that Management excludes when evaluating the results of the Company's segments. Those items for the ~~third~~first quarter of ~~2019~~2020 included a $0.23 million ~~favorable~~for ~~adjustment to~~ acquisition and integration expenses and $0.32 million for ~~restructuring~~a ~~and~~customs ~~severance~~duty penalty. Those items for the ~~third~~first quarter of ~~2018~~2019 were $0.21 million of ~~asset~~acquisition ~~impairment, facility~~ and ~~other~~integration ~~closure~~related ~~costs~~expenses.

Performance Materials

Performance Materials net sales decreased $1613.84 million, or 23.58%, to $5442.78 million during the ~~third~~first quarter of ~~2019~~2020, compared to $7156.52 million during the ~~third~~first quarter of ~~2018~~2019. The decrease was primarily driven by unfavorable volume of $1312.34 million, unfavorable price/mix of $30.16 million, and unfavorable foreign currency exchange of $0.42 million compared to the same quarter last year. Volumes were down in carpet, paper, ~~carpet~~antioxidants, and tire cord ~~and antioxidants~~, which were partially offset by increases in coated fabrics and ~~contract manufacturing~~reinforcing, when compared to the same quarter last year.

Segment operating loss was $4.47 million for the ~~third~~first quarter of ~~2019~~2020 compared to an operating loss of $72.98 million in the ~~third~~first quarter of ~~2018~~2019. Segment operating loss includes items that Management excludes when evaluating the results of the Company's segments. Those items for the ~~third~~first quarter of ~~2019~~2020 primarily consisted of $0.53 million of ~~restructuring~~a ~~and~~customs ~~severance~~duty penalty and $10.62 million of asset impairment, facility and other closure costs. Those items for ~~2018~~2019 included $0.4 million of ~~restructuring~~facility ~~and~~closure ~~severance~~costs, ~~and~~ $90.6 million of ~~asset~~accelerated ~~impairment~~depreciation, ~~facility~~ and ~~other~~$0.7 ~~closure~~million of restructuring and severance costs.

Corporate

Corporate expenses were $9.6.9 million in the ~~third~~first quarter of ~~2019~~2020, flat compared to ~~$6.5 million in~~ the ~~third~~first quarter of ~~2018~~2019. ~~SG&A expenses were higher during the current year primarily due to Merger related costs.~~

~~Results~~Financial ~~of Operations for the Nine Months Ended August 31, 2019 Compared to the Nine Months Ended August 31, 2018~~Resources


	Three Months Ended
	February 29, 2020		February 28, 2019		Change
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	(7.3)	$	(8.3)	$	1.0
Net cash provided by (used in) investing activities	$	(4.0)	$	(10.2)	$	6.2
Net cash provided by (used in) financing activities	$	1.6	$	(2.3)	$	3.9
Net increase (decrease) in cash and cash equivalents	$	(10.0)	$	(20.0)	$	10.0

~~The~~Cash ~~Company's~~used ~~net sales~~ in ~~the~~operating ~~first~~activities ~~nine~~was ~~months of 2019 were~~ $~~567~~7.03 million, ~~compared~~during ~~to $578.5 million in~~ the first ~~nine~~three months of ~~2018.~~2020 ~~The~~compared ~~acquisition~~to of$8.3 ~~OMNOVA~~million ~~Portugal~~used ~~during~~ the ~~fourth~~first ~~quarter~~three ofmonths ~~2018 accounted for $43.5 million~~ of ~~current year sales~~2019. The ~~Specialty~~decrease ~~Solutions~~in ~~business~~cash ~~segment~~used ~~sales increased $32.7 million, or 9.1%, and Performance Materials business segment sales decreased~~ by ~~$44.2~~operating ~~million,~~activities orwas ~~20.2%.~~generally ~~Contributing~~due to ~~the~~a ~~net sales decrease in 2019 were~~ lower ~~volumes~~year-over-year ofoperating $5loss.~~4 million, primarily in paper and carpet, and unfavorable foreign currency exchange of $8.4 million, which were partially offset by favorable price/mix of $2.3 million.~~

~~Gross~~Cash ~~profit~~used in investing activities was $4.0 million during the first ~~nine~~three months of ~~2019~~2020 ~~was~~compared to $~~132~~10.32 million ~~with~~in athe ~~gross~~first ~~profit~~three ~~margin~~months of 232019.~~3%,~~ ~~compared~~Cash touse ~~$147.2~~in ~~million~~both 2020 and 252019 was primarily for ongoing capital expenditures.4% The Company incurred higher capital expenditures in the first ~~nine~~quarter ~~months~~of 2019 to facilitate the transfer of ~~2018.~~styrene ~~The~~butadiene ~~decrease~~manufacturing from ~~the~~its ~~comparable~~Green ~~first~~Bay, ~~nine~~Wisconsin plant ~~months~~to ~~period~~its ~~resulted~~Mogadore, ~~from~~Ohio ~~unfavorable~~plant. In ~~foreign~~addition, ~~currency~~2019 ~~exchange~~included a working capital settlement payment for ~~both~~the ~~Specialty~~OMNOVA ~~Solutions~~Portugal ~~and~~acquisition ~~Performance~~of ~~Materials~~approximately $2.8 million. The Company expects approximately $35.0 million of capital expenditures during 2020. Generally, ~~unfavorable~~capital ~~price/mix~~expenditures ~~and~~are ~~volume~~planned for ~~Performance~~asset ~~Materials~~replacement, ~~which~~new ~~were~~production ~~partially~~capability, ~~offset~~cost byreduction, ~~favorable~~safety ~~volume~~and productivity improvements and ~~price/mix~~environmental ~~within~~protection. ~~Specialty~~The ~~Solutions~~Company expects to fund remaining capital expenditures with cash flow generated from operations.

~~SG&A~~Cash inprovided ~~the~~by ~~first~~financing ~~nine~~activities ~~months of 2019~~ was $851.6 million, orduring ~~15.1%~~the offirst ~~net~~three ~~sales,~~months of 2020 compared to ~~$83.4~~cash ~~million,~~used ~~or 14.4% of net sales,~~ in ~~the~~financing ~~first~~activities ~~nine months~~ of ~~2018. The~~ $2.23 million ~~increase~~during ~~in expense for~~ the first ~~nine~~three months of 2019, ~~reflects~~primarily ~~increased~~as ~~costs~~a ~~related~~result toof ~~personnel,~~additional ~~outside~~borrowings ~~services,~~on ~~OMNOVA~~its ~~Portugal,~~Senior ~~and~~Secured ~~Merger~~Revolving ~~related costs~~Facility.

~~Interest~~The ~~expense~~Company’s ~~was~~cash balance of $1540.9 million as of February 29, 2020 consists of $3.5 million in the ~~first~~U.S., ~~nine~~$26.9 ~~months~~million ofin ~~2019~~Asia, ~~compared~~and to $1410.45 million ~~for~~in ~~the~~Europe. ~~first~~The ~~nine~~Company ~~months~~is not aware of ~~2018~~any restrictions regarding the repatriation of its non-U.S. ~~The~~cash, ~~increase~~however, inrepatriation ~~the~~of ~~current~~cash ~~year~~from iscertain ~~primarily~~countries ~~due~~may have certain tax consequences and may not be able to abe ~~higher~~completed ~~average~~in ~~outstanding~~a ~~debt~~timely ~~balance~~manner.

The Company recorded income tax expense of $1.4 million and an income tax benefit of $0.3 million for the nine months ended August 31, 2019 and 2018, respectively. The Company’s effective tax rate for the first nine months of 2019 was different than its U.S. federal statutory tax rate primarily due to losses in jurisdictions in which no tax benefit was recognized. The Company's effective tax rate for the first nine months of 2018 was different than its U.S. federal statutory rate primarily due to discrete items related to the Tax Act that were recorded in the first quarter of 2018. These items included a $4.1 million income tax benefit related to the re-measurement of the U.S. deferred taxes as the U.S. federal tax rate was reduced from 35% to 21% and a $0.9 million income tax benefit associated with the reversal of the valuation allowance against the existing AMT credit carryforward as it is refundable under the Tax Act. In addition, during the first quarter of 2018, the Company recognized a $0.8 million income tax benefit related to the impact of a French tax rate change on the Company’s deferred tax liabilities. These discrete tax benefits were partially offset by losses in jurisdictions in which no tax benefit was recognized.

The Company generated net income of $1.3 million, or $0.03 per diluted share, in the first nine months of 2019, compared to net income of $13.7 million, or $0.31 per diluted share, in the first nine months of 2018.

Segment Discussion

The following table reconciles segment sales to consolidated net sales and segment operating profit to consolidated income (loss) before income taxes:

	Nine Months Ended August 31,
	2019			2018
	(Dollars in millions)
Net Sales:
Specialty Solutions	$	392.7		$	360.0
Performance Materials	174.3			218.5
Consolidated Net Sales	$	567.0		$	578.5
Segment Operating Profit:
Specialty Solutions	$	49.3		55.0
Performance Materials	(6.4		)	(5.6		)
Total Segment Operating Profit	42.9			49.4
Interest expense	(15.3		)	(14.4		)
Corporate expense	(24.9		)	(21.6		)
Consolidated Income (Loss) Before Income Taxes	$	2.7		$	13.4

Specialty Solutions

Specialty Solutions net sales increased $32.7 million, or 9.1%, to $392.7 million in the first nine months of 2019 from $360.0 million in the first nine months of 2018. The improvement was driven by increased volume of $29.8 million and favorable price/mix of $8.4 million, partially offset by unfavorable foreign currency exchange of $5.5 million compared to the

first nine months of 2018. Volumes were favorable in coatings, adhesives & sealants, and oil & gas, but down in performance films, elastomeric modifiers, home & personal care compared to the first nine months of 2018.

Segment operating profit was $49.3 million for the first nine months of 2019, compared to $55.0 million for the first nine months of 2018. Segment operating profit decreased $5.7 million, or 10.4%, in the first nine months of 2019 as a result of unfavorable manufacturing and raw material costs, which were partially offset by favorable volume and price/mix. Segment operating profit includes items which management excludes when evaluating the results of the Company's segments. Those items for the first nine months of 2019 consisted of $0.3 million of restructuring and severance charges. Those items for 2018 included $0.7 million of restructuring and severance and $0.8 million of asset impairment, facility, and other closure costs.

Performance Materials

Performance Materials' net sales decreased $44.2 million, or 20.2%, to $174.3 million during the first nine months of 2019, compared to $218.5 million during the first nine months of 2018. The decrease was driven primarily from lower volumes of $36.4, unfavorable foreign currency exchange of $2.9 million and unfavorable price/mix of $5.1 million. Volumes increased within coated fabrics and contract manufacturing, but decreased in paper, carpet, tire cord, and reinforcing resins compared to the first nine months of 2018.

This segment generated an operating loss of $6.4 million in the first nine months of 2019 compared to operating loss of $5.6 million in the first nine months of 2018. Segment operating loss includes items which management excludes when evaluating the results of the Company's segments. Those items for the first nine months of 2019 primarily consisted of $2.2 million of restructuring and severance charges, $3.6 million of asset impairment, facility, and other closure costs, $1.0 million of accelerated depreciation on production transfer, $0.4 million of acquisition and integration related charges, and $4.4 million gain on sale of assets. Those items for the first nine months of 2018 included $10.0 million of asset impairment, facility, and other closure costs, accelerated depreciation on product transfer of $0.4 million, and $0.4 million of restructuring and severance charges.

Corporate

Corporate expenses were $24.9 million in the first nine months of 2019, compared to $21.6 million in the first nine months of 2018 primarily as a result of Merger related costs.

	Nine Months Ended August 31,
	2019			2018			Change
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	3.5		$	37.1		$	(33.6	)
Net cash provided by (used in) investing activities	$	(23.2	)	$	(13.3	)	$	(9.9	)
Net cash provided by (used in) financing activities	$	2.6		$	(44.6	)	$	47.2
Net increase (decrease) in cash and cash equivalents	$	(17.3	)	$	(21.8	)	$	4.5

Cash provided by operating activities was $3.5 million during the first nine months of 2019 compared to $37.1 million for the first nine months of 2018. The decrease in cash provided by operating activities is generally due to lower operating income and higher working capital.

Cash used in investing activities was $23.2 million during the first nine months of 2019 compared to $13.3 million in the first nine months of 2018. Cash use in both 2019 and 2018 was primarily for ongoing capital expenditures and business acquisitions. The Company expects approximately $35.0 million of capital expenditures during 2019, primarily for the transfer of production from Green Bay, Wisconsin to Mogadore, Ohio. Generally, capital expenditures are planned for asset replacement, new production capability, cost reduction, safety and productivity improvements and environmental protection. The Company expects to fund remaining capital expenditures with cash flow generated from operations.

Cash provided by financing activities was $2.6 million during the first nine months of 2019 compared to cash used in financing activities of $44.6 million during the first nine months of 2018, primarily as a result of a $40.0 million debt prepayment made during 2018.

The Company’s cash balance of $36.8 million as of August 31, 2019 consists of $2.0 million in the U.S., $22.6 million in Asia, and $12.2 million in Europe. The Company is not aware of any restrictions regarding the repatriation of its non-U.S. cash,

however, repatriation of cash from certain countries may have certain tax consequences and may not be able to be completed in a timely manner.

The Company believes that its cash flows from operations, together with existing credit facilities and cash on hand will be adequate to fund its cash requirements for at least the next twelve months.

~~Share~~Treasury ~~Repurchase~~Stock ~~Program~~Purchases

~~During~~On ~~the~~September ~~fourth~~25, ~~quarter of~~ 2018, the Company's Board of Directors authorized the repurchase of up to $20.0 million of the Company's common ~~stock~~shares, which authorization expires upon the completion of the $20.0 million in repurchases. The Company may use various methods to make the repurchases, including open market repurchases, negotiated block transactions, or open market solicitations for shares,. ~~all~~Because orthe ~~some~~Company ofhas ~~which~~not ~~may~~adopted bea ~~effected through~~ Rule 10b5-1 ~~plans.~~plan ~~The~~for ~~timing~~these ofrepurchases, repurchases ~~will~~may ~~depend~~only be made during open window periods depending upon ~~several~~relevant factors including market ~~and~~or business conditions,. ~~and~~Repurchases ~~repurchases~~ may be discontinued at any time. ~~No repurchases have been made under this authorization as of August 31, 2019.~~

The Company did not repurchase any shares during the first quarter of 2020 under the approved plan. Pursuant to the Company's Merger Agreement with Synthomer, the Company is prohibited from executing share repurchases under the plan. Shares acquired during 2020 or 2019 resulted from common shares deemed surrendered by employees in connection with the Company's equity compensation and benefit plans to satisfy employee income tax obligations upon vesting.

Debt

Information regarding the Company's debt is disclosed in the Debt and Credit Lines footnote to the Company's Unaudited Interim Consolidated Financial Statements.

~~Non-GAAP Financial Measures for Periods Ended August 31, 2019 and August 31, 2018~~25

~~The following discussion includes~~ Non-GAAP ~~financial~~Financial ~~measures.~~Measures Anfor ~~explanation~~Periods ofEnded ~~managements~~February ~~reasons~~29, ~~for~~2020 ~~reviewing~~ and ~~presenting~~February ~~these Non-GAAP measures~~28, ~~and a reconciliation of the Non-GAAP financial measures to GAAP is provided below under the heading "GAAP to Non-GAAP Reconciliations."~~2019

The following discussion includes Non-GAAP financial measures. An explanation of Managements' reasons for reviewing and presenting these Non-GAAP measures, and a reconciliation of the Non-GAAP financial measures to GAAP is provided below under the heading "GAAP to Non-GAAP Reconciliations."

Consolidated Results

For the ~~third~~first quarter of ~~2019~~2020, segment operating ~~profit~~loss was $6.0.2 million compared to $50.14 million last year. Segment operating ~~profit~~loss for the ~~third~~first quarter of ~~2019~~2020 included $72.92 million of items primarily related to ~~merger~~asset ~~transaction~~impairment costs, ~~severance~~facility closures, acquisition and ~~restructuring~~integration related expenses, and ~~asset~~a ~~impairment~~customs ~~costs~~duty penalty. Segment operating ~~profit~~loss for the ~~third~~first quarter of ~~2018~~2019 included $102.40 million of items primarily related to ~~asset~~restructuring ~~impairment charges~~ and severance costs, ~~for~~accelerated ~~the~~depreciation ~~closure~~on ofproduction ~~the~~transfer, ~~Company’s~~acquisition ~~Green~~and ~~Bay~~integration related expense, ~~Wisconsin~~and asset impairment charges and facility closure costs. Adjusted Segment Operating ~~Profit~~Loss, which excludes those items, was $82.86 million for the ~~third~~first quarter of ~~2019~~2020 compared to $103.84 million for the ~~third~~first quarter of ~~2018~~2019, with Specialty Solutions Adjusted Segment Operating Profit up 426.16% to $2011.59 million, offset by a decline in Performance Materials Adjusted Segment Operating Profit (See Tables A and B). Adjusted Diluted ~~Earnings~~Loss per Share, which also excludes those items, ~~were~~was $0.1504 for the ~~third~~first quarter of ~~2019~~2020, compared to $0.1806 last year. The ~~decline~~improvement was ~~primarily~~driven ~~due~~by tostrength ~~weakness~~broadly inacross the ~~laminates~~Specialty &Solutions ~~films~~businesses ~~business and in Performance Materials,~~ partially offset by ~~improvements~~ongoing challenges in ~~the~~certain ~~oil~~Performance &Materials ~~gas and adhesives & sealants~~ businesses.

~~For~~Trailing ~~the~~Twelve ~~nine~~Month ~~months~~Adjusted ~~ended~~Segment ~~August~~EBITDA ~~2019, segment operating profit~~ was $1870.06 million, compared to $2777.89 million inlast ~~the prior~~ year. ~~The~~While ~~2019~~Trailing ~~results~~Twelve ~~included~~Month ~~$9.8~~Adjusted ~~million~~Segment ofEBITDA ~~items~~was ~~primarily~~relatively ~~related~~flat tofor ~~merger~~Specialty ~~transaction costs~~Solutions, ~~severance~~at ~~and restructuring, accelerated depreciation, and asset impairment costs~~$88.1 ~~The~~million ~~2018~~compared ~~results~~to ~~included~~ $1487.51 million, ofthe ~~items~~Trailing ~~primarily~~Twelve ~~related~~Month toAdjusted ~~asset~~Segment ~~impairments~~EBITDA ~~and costs~~ for ~~the~~Performance ~~closure~~Materials ofdeclined ~~the Company’s Green Bay, Wisconsin facility~~$13.0 ~~Adjusted Segment Operating Profit~~million, ~~excluding~~from ~~those items, was~~ $1214.5 million ~~for~~at the ~~nine~~end ~~months~~of ~~ended~~February ~~August~~ 2019 ~~compared~~ to $271.95 million ~~for~~at the ~~nine~~end ~~months~~of ~~ended~~February ~~August~~2020. ~~2018~~ (See Tables C and D). Adjusted Diluted Earnings per Share were $0.21 for the year to date period, compared to $0.47 for the same period last year. The period-to-period decline in nine-month Adjusted Diluted Earnings Per Share primarily occurred during the first and second quarters of 2019.)

Trailing Twelve Month Adjusted Segment EBITDA was $72.3 million compared to $83.2 million last year. While Trailing Twelve Month Adjusted Segment EBITDA was relatively flat for Specialty Solutions, at $86.7 million compared to $87.9 million, the Trailing Twelve Month Adjusted Segment EBITDA for Performance Materials declined $11.3 million, from $19.7 million at the end of August 2018 to $8.4 million at the end of August 2019. (See Tables E and F.)

During the third quarter of 2019, the Company experienced broad economic pressures in Asia, affecting several key end markets including construction, automotive and tires.

Specialty Solutions Segment Results

For the ~~third~~first quarter of ~~2019~~2020, Specialty Solutions operating profit was $2011.04 million, compared with $199.53 million last year. Adjusted Segment Operating Profit for Specialty Solutions was $2011.59 million, or 1410.95% of net sales, compared to $199.74 million, or 8.3% of net sales, last year. (See Tables A and B.) The Company's laminates & films business was the primary driver of growth over 2019, as its markets stabilized following a weak fiscal 2019 performance. The oil & gas business and the elastic modifier business were also favorable compared to 2019.

28Year-to-date, the Company’s vitality index (sales from new products introduced over the last five years as a percentage of total sales) for Specialty Solutions was 23.0%, up from 19.4% last year.

million, or 16.1% of net sales, last year. (See Tables A and B.) The Company’s oil & gas business again demonstrated strong growth in revenue and profit during the quarter, as the Company’s differentiated offerings continue to find traction with end users. The growth in the oil & gas business, together with new product success in the Company’s adhesive & sealants business, and above-plan performance by the Company’s Portuguese business (acquired in September 2018), was partially offset by declines in the Company’s laminates & films business. The laminates & films business, which faced a comparison to a particularly strong quarter last year, continues to see challenging conditions in its end markets (particularly in recreational vehicles).

For the nine months ended August 2019, Specialty Solutions operating profit was $49.3 million, compared with $55.0 million last year. Adjusted Segment Operating Profit for the period was $49.6 million, or 12.6% of net sales, compared to $56.5 million, or 15.7% of net sales, for the comparable period last year. (See Tables C and D.) The period to period decline was the result of a slow start to the year in nonwovens and overall weakness in laminates & films (in particular, the recreational vehicle end market), compared against a historically strong first nine months of 2018. The contribution to profitability by the oil & gas business was up by approximately 50% from the prior period, but this was not sufficient to offset the declines in nonwovens and laminates & films.

Year-to-date, the Company’s vitality index (sales from new products introduced over the last five years as a percentage of total sales) for Specialty Solutions is 20.2%, up from 18.9% last year, and the profitability of the Company’s new product portfolio in Specialty Solutions has increased by 370 basis points.

Performance Materials Segment Results

Performance Materials’ segment operating loss for the quarter was $4.47 million, compared with a loss of $72.98 million last year. Adjusted Segment Operating Loss for Performance Materials was $24.32 million, compared to ~~earnings~~a loss of $21.21 million last year. (See Tables A and B.) The primary drivers of the year-over-year decline include the Company’s exit from the commodity paper market, volume reductions in the commodity carpet market, and increased competitive intensity in tire cord markets. These declines were partially offset by the benefits of closing the Company’s Green Bay, Wisconsin plant, which are expected to yield annual benefits of $7 million to $8 million by the second half of 2020, primarily benefiting the Performance Materials segment.

Performance Materials’ segment operating loss for the nine months ended August 2019 was $6.4 million, compared with a loss of $5.6 million for the same period last year. Adjusted Segment Operating Loss in the period was $3.6 million, compared to earnings of $5.1 million in the prior year period. (See Tables C and D.) The primary drivers of the decline are consistent with those of the quarter, and were partially offset by the benefits of closing the Company’s Green Bay, Wisconsin plant.

The challenges in commodity-based markets like tire cord continue to mask the performance of the Company’s smaller but more profitable Performance Material’s businesses, including the coated fabrics, reinforcing resins, and antioxidants businesses. The segment is continuing to execute its strategy of growing the profitable business while reducing exposure to the least profitable businesses through repurposing assets and reducing sales and investments in the most commoditized end markets.

GAAP to Non-GAAP Reconciliations

Adjusted Segment Operating Profit, Adjusted Income, Adjusted Diluted Earnings Per Share, and Adjusted EBITDA are non-GAAP financial measures as defined by the Securities and Exchange Commission. Management reviews adjusted financial measures in assessing the performance of the business segments and in making decisions regarding the allocation of resources to the business segments. Management believes that the adjusted information is useful for providing investors with an understanding of the Company’s business and operating performance. Management excludes the items shown in the tables below because Management does not consider them to be reflective of normal operations. These adjusted financial measurements are not measurements of financial performance under GAAP and such financial measures should not be considered as an alternative to Segment Operating Profit, Net Income, Diluted Earnings Per Share or other measures of financial performance determined in accordance with GAAP. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. The tables below provide the reconciliation of these financial measures to the comparable GAAP financial measures.



Non-GAAP and other Financial Matters
Three Months Ended February 29, 2020
													Table A

(In millions except per share data)	Specialty Solutions				Performance Materials			Combined Segments			Corporate		Consolidated
Net Sales	$	112.8			$	42.8		$	155.6		$	—	$	155.6

Segment Operating Profit / Corporate Expense	$	11.4			$	(4.7)		$	6.7		$	(6.9)	$	(0.2)
Interest expense	—				—			—			(4.6)		(4.6)
Income (Loss) Before Income Taxes	$	11.4		11400000	$	(4.7)		$	6.7		$	(11.5)	$	(4.8)
Management Excluded Items



Asset impairment, facility closure costs and other	0.3				0.2			0.5			0.4		0.9


Customs duty penalty	0.2				0.3			0.5			—		0.5



Acquisition and integration related expense	—				—			—			0.8		0.8

Subtotal for management excluded Items	0.5				0.5			1.0			1.2		2.2
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	11.9			$	(4.2)		$	7.7		$	(10.3)	$	(2.6)
Income tax expense (25% rate)*													0.7
Adjusted Income (Loss)													$	(1.9)
Adjusted Diluted Earnings (Loss) Per Share from Adjusted Income																$	(0.04)

*Income Tax rate is based on the Company's estimated normalized annual effective tax rate

Adjusted Segment Operating Profit as a % of Sales	10.5		%		(9.8)		%	4.9		%
Segment / Corporate Capital Expenditures	$	3.0			$	0.8		$	3.8		$	0.2	$	4.0


Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	11.9			$	(4.2)		$	7.7		$	(10.3)	$	(2.6)
Unallocated corporate interest expense	—				—			—			4.6		4.6
Depreciation and amortization	4.7				2.6			7.3			0.4		7.7
Segment / Consolidated Adjusted EBITDA	$	16.6			$	(1.6)		$	15.0		$	(5.3)	$	9.7

Adjusted EBITDA as a % of sales	14.7		%		(3.7)		%	9.6		%			6.2		%



Non-GAAP and other Financial Matters (Continued)
Three Months Ended February 28, 2019
												Table B

(In millions except per share data)	Specialty Solutions			Performance Materials			Combined Segments			Corporate		Consolidated
Net Sales	$	112.7		$	56.2		$	168.9		$	—	$	168.9

Segment Operating Profit / Corporate Expense	$	9.3		$	(2.8)		$	6.5		$	(6.9)	$	(.4)
Interest expense	—			—			—			(5.0)		(5.0)
Income (Loss) Before Income Taxes	$	9.3		$	(2.8)		$	6.5		$	(11.9)	$	(5.4)
Management Excluded Items
Restructuring and severance	—			0.7			0.7			—		0.7
Accelerated depreciation on production transfer	—			0.6			0.6			—		0.6

Acquisition and integration related expense	0.1			—			0.1			0.2		0.3






Asset impairment, facility closure costs and other	—			0.4			0.4			—		0.4

Subtotal for management excluded Items	0.1			1.7			1.8			0.2		2.0
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	9.4		$	(1.1)		$	8.3		$	(11.7)	$	(3.4)
Income tax expense (25% rate)*												0.8
Adjusted Income (Loss)												$	(2.6)
AAdjusted Diluted Earnings (Loss) Per Share from Adjusted Income															$	(0.06)

*Income Tax rate is based on the Company's estimated normalized annual effective tax rate

Adjusted Segment Operating Profit as a % of Sales	8.3		%	(2.0)		%	4.9		%
Segment / Corporate Capital Expenditures	$	5.0		$	2.0		$	7.0		$	.4	$	7.4


Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	9.4		$	(1.1)		$	8.3		$	(11.7)	$	(3.4)
Unallocated corporate interest expense	—			—			—			5.0		5.0
Segment / Consolidated Adjusted EBIT	9.4			(1.1)			8.3			(6.7)		1.6
Depreciation and amortization	4.9			2.4			7.3			.1		7.4
Segment / Consolidated Adjusted EBITDA	$	14.3		$	1.3		$	15.6		$	(6.6)	$	9.0

Adjusted EBITDA as a % of sales	12.7		%	2.3		%	9.2		%			5.3		%



Non-GAAP and other Financial Matters (Continued)
Trailing Twelve Months Ended February 29, 2020
													Table C
(In millions except per share data)	Specialty Solutions				Performance Materials			Combined Segments			Corporate		Consolidated
Net Sales	$	513.1			$	209.8		$	722.9		$	—	$	722.9

Segment Operating Profit / Corporate Expense	$	68.3			$	(17.7)		$	50.6		$	(49.3)	$	1.3
Interest expense	—				—			—			(19.6)		(19.6)
Income (Loss) Before Income Taxes	$	68.3			$	(17.7)		$	50.6		$	(68.9)	$	(18.3)
Management Excluded Items
Restructuring and severance	0.4				1.5			1.9			0.3		2.2
Accelerated depreciation on production transfer	—				0.4			0.4			—		0.4
Operational Improvements costs	—				—			—			0.3		0.3
Asset impairment, facility closure costs and other	0.1				10.5			10.6			0.7		11.3
Customs duty penalty	0.2				0.3			0.5			—		0.5
(Gain)/ loss on asset sales	—				(4.4)			(4.4)			0.2		(4.2)
Deferred financing fees written-off	—				—			—			0.2		0.2
Merger transaction costs	—				—			—			9.4		9.4
Other financing	(0.4)				—			(0.4)			—		(0.4)
Realized foreign currency translation losses	—				—			—			17.9		17.9
Acquisition and integration related expense	0.4				0.4			0.8			0.3		1.1

Subtotal for management excluded items	0.7			0.7	8.7			9.4			29.3		38.7
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	69.0			$	(9.0)		$	60.0		$	(39.6)	$	20.4
Income tax expense													5.1
Adjusted Income (Loss)													$	25.5
Adjusted Diluted Earnings (Loss) Per Share From Adjusted Income																$	0.57


Adjusted Segment Operating Profit as a % of Sales	13.4		%		(4.3)		%	8.2		%
Segment / Corporate Capital Expenditures	$	21.2			$	7.0		$	28.2		$	1.6	$	29.8

Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	69.0			$	(9.0)		$	60.0		$	(39.6)	$	20.4
Unallocated corporate interest	—				—			—			19.6		19.6
Depreciation and amortization	19.4				10.5			29.9			0.7		30.6
Segment / Consolidated Adjusted EBITDA	$	88.4		88400000	$	1.5		$	89.9		$	(19.3)	$	70.6

Adjusted EBITDA as a % of sales	17.2		%		.7		%	12.5		%			9.8		%

Non-GAAP and other Financial Matters
Non-GAAP and other Financial Matters (Continued)
Three Months Ended August 31, 2019
Trailing Twelve Months Ended February 28, 2019
														Table A
																			Table D
(In millions except per share data)	~~Specialty Solutions~~			~~PerformanceMaterials~~Specialty Solutions			~~Combined Segments~~		PerformanceMaterials		~~Corporate~~			~~Consolidated~~Combined Segments			Corporate		Consolidated
Net Sales	$	~~137.7~~		$	54491.72		$	~~192.4~~	$	268.8	$	—		$	~~192~~760.40		$	—	$	760.0
Segment Operating Profit / Corporate Expense	$	~~20.0~~		$	(466.43	)	$	~~15.6~~	$	(14.7)	$	~~(9.6~~	)	$	651.06		$	(25.5)	$	26.1
Interest expense	—			—			—		—		~~(5.1~~		)	~~(5.1~~—		)	(19.2)		$	(19.2)
Income (Loss) Before Income Taxes	$	~~20.0~~		$	(466.43	)	$	~~15.6~~	$	(14.7)	$	~~(14.7~~	)	$51.6	.9		$	(44.7)	$	6.9
Management Excluded Items
Restructuring and severance	.3			.5—			.8		1.8		—			1.8			.3		2.1
Operational Improvements costs	—			—			—				(.4		)	(.4		)
Accelerated depreciation on production transfer				.1					1.7					1.8			—		1.8
Asset impairment, facility closure costs and other	—			1.61			~~1.6~~		14.9		~~(.2~~		)	116.40			.1		16.1
Deferred financing fees written-off	—			—			—				.2			.2
Environmental costs				—					(.1)					(.1)			—		(.1)
Merger transaction costs	—			—			—				5.7			5.7
Gain on sale of assets				—					—					—			(.9)		(.9)
Acquisition and integration related expense	.2			—1.3			.2		.2		—			1.25			2.1		3.6
Subtotal for management excluded Items	.5			2.1			2.6				5.3			7.9
Subtotal for management excluded items				2.5					18.5					21.0			1.6		22.6
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	20.5		$	(2.3	)	$	18.2			$	(9.4	)	$	8.8
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes				$	68.8				$	3.8				72.6			$	(43.1)	$	29.5
Income tax expense (25% rate)*														(2.2		)
Income tax expense																			(7.4)
Adjusted Income (Loss)														$	~~6.6~~				$	22.1
Adjusted Diluted Earnings Per Share from Adjusted Income														$	0.15
Adjusted Diluted Earnings (Loss) Per Share from Adjusted Income																						$	0.49
*Income Tax rate is based on the Company's estimated normalized annual effective tax rate
Adjusted Segment Operating Profit as a % of Sales				14.0		%			1.4		%			9.6		%
Adjusted Segment Operating Profit as a % of Sales	14.9		%	(4.2		)%	9.5		%
Segment / Corporate Capital Expenditures				$	19.4				$	7.3				$	26.7		$	1.3	$	28.0
Segment / Corporate Capital Expenditures	$	5.0		$	1.6		$	6.6			$	.6		$	7.2
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes				$	68.8				$	3.8				$	72.6		$	(43.1)	$	29.5
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	20.5		$	(2.3	)	$	18.2			$	(9.4	)	$	8.8
Unallocated corporate interest expense				—					—					—			19.2		19.2
Unallocated corporate interest expense	—			—			—				5.1			5.1
Segment / Consolidated Adjusted EBIT				68.8					3.8					72.6			(23.9)		48.7
Segment / Consolidated Adjusted EBIT	20.5			(2.3		)	18.2				(4.3		)	13.9
Depreciation and amortization				18.3					10.7					29.0			0.2		29.2
Depreciation and amortization	4.8			2.7			7.5				.1			7.6
Segment / Consolidated Adjusted EBITDA				$	87.1				$	14.5				$	101.6		$	(23.7)	$	77.9
Segment / Consolidated Adjusted EBITDA	$	25.3		$	0.4		$	25.7			$	(4.2	)	$	21.5
Adjusted EBITDA as a % of sales				17.7		%			5.4		%			13.4		%			10.3		%
Adjusted EBITDA as a % of sales	18.4		%	0.7		%	13.4		%					11.2		%

Non-GAAP and other Financial Matters (Continued)
Three Months Ended August 31, 2018
													Table B
(In millions except per share data)	Specialty Solutions			PerformanceMaterials			Combined Segments			Corporate			Consolidated
Net Sales	$	122.1		$	71.5		$	193.6		$	—		$	193.6
Segment Operating Profit / Corporate Expense	$	19.5		$	(7.9	)	$	11.6		$	(6.5	)	$	5.1
Interest expense	—			—			—			(4.7		)	(4.7		)
Income (Loss) Before Income Taxes	$	19.5		$	(7.9	)	$	11.6		$	(11.2	)	$	.4
Management Excluded Items
Restructuring and severance	—			.4			.4			—			.4
Accelerated depreciation on production transfer	—			.5			.5			—			.5
Acquisition and integration related expense	(.5		)	(.3		)	(.8		)	.1			(.7		)
Other financing costs	(.1		)	(.1		)	(.2		)	—			(.2		)
Asset impairment, facility closure costs and other	.8			9.6			10.4			—			10.4
Subtotal for management excluded Items	.2			10.1			10.3			.1			10.4
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	19.7		$	2.2		$	21.9		$	(11.1	)	$	10.8
Income tax expense (25% rate)*													(2.7		)
Adjusted Income (Loss)													$	8.1
Adjusted Diluted Earnings Per Share from Adjusted Income													$	0.18
*Income Tax rate is based on the Company's estimated normalized annual effective tax rate
Adjusted Segment Operating Profit as a % of Sales	16.1		%	3.1		%	11.3		%
Segment / Corporate Capital Expenditures	$	3.7		$	1.6		$	5.3		$	.4		$	5.7
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	19.7		$	2.2		$	21.9		$	(11.1	)	$	10.8
Unallocated corporate interest expense	—			—			—			4.7			4.7
Segment / Consolidated Adjusted EBIT	19.7			2.2			21.9			(6.4		)	15.5
Depreciation and amortization	4.6			2.6			7.2			.1			7.3
Segment / Consolidated Adjusted EBITDA	$	24.3		$	4.8		$	29.1		$	(6.3	)	$	22.8
Adjusted EBITDA as a % of sales	19.9		%	6.7		%	15.0		%				11.8		%

Non-GAAP and other Financial Matters (Continued)
Nine Months Ended August 31, 2019
													Table C
(In millions except per share data)	Specialty Solutions			PerformanceMaterials			Combined Segments			Corporate			Consolidated
Net Sales	$	392.7		$	174.3		$	567.0		$	—		$	567.0
Segment Operating Profit / Corporate Expense	$	49.3		$	(6.4	)	$	42.9		$	(24.9	)	$	18.0
Interest expense	—			—			—			(15.3		)	(15.3		)
Income (Loss) Before Income Taxes	$	49.3		$	(6.4	)	$	42.9		$	(40.2	)	$	2.7
Management Excluded Items
Restructuring and severance	.3			2.2			2.5			.2			2.7
Accelerated depreciation on production transfer	—			1.0			1.0			—			1.0
Operational Improvements costs	—			—			—			.3			.3
Asset impairment, facility closure costs and other	—			3.6			3.6			.1			3.7
(Gain) loss on sale of assets	—			(4.4		)	(4.4		)	.2			(4.2		)
Deferred financing fees written-off	—			—			—			.2			.2
Merger transaction costs	—			—			—			5.4			5.4
Acquisition and integration related expense	—			.4			.4			.3			.7
Subtotal for management excluded items	.3			2.8			3.1			6.7			9.8
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes	$	49.6		$	(3.6	)	$	46.0		$	(33.5	)	$	12.5
Tax expense (25% rate)*													(3.1		)
Adjusted Income (Loss)													$	9.4
Adjusted Diluted Earnings Per Share from Adjusted Income													$	0.21
*Tax rate is based on the Company's estimated normalized annual effective tax rate
Adjusted Segment Operating Profit As A % Of Sales	12.6		%	(2.1		)%	8.1		%
Segment / Corporate Capital Expenditures	$	17.3		$	6.9		$	24.2		$	1.7		$	25.9
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	49.6		$	(3.6	)	$	46.0		$	(33.5	)	$	12.5
Unallocated corporate interest expense	—			—			—			15.3			15.3
Segment / Consolidated Adjusted EBIT	49.6			(3.6		)	46.0			(18.2		)	27.8
Depreciation and amortization	14.7			7.5			22.2			.2			22.4
Segment / Consolidated Adjusted EBITDA	$	64.3		$	3.9		$	68.2		$	(18.0	)	$	50.2
Adjusted EBITDA as a % of sales	16.4		%	2.2		%	12.0		%				8.9		%

Non-GAAP and other Financial Matters (Continued)
Nine Months Ended August 31, 2018
													Table D
(In millions except per share data)	Specialty Solutions			PerformanceMaterials			Combined Segments			Corporate			Consolidated
Net Sales	$	360.0		$	218.5		$	578.5		$	—		$	578.5
Segment Operating Profit / Corporate Expense	$	55.0		$	(5.6	)	$	49.4		$	(21.6	)	$	27.8
Interest expense	—			—			—			(14.4		)	(14.4		)
Income (Loss) Before Income Taxes	55.0			(5.6		)	49.4			(36.0		)	13.4
Management Excluded Items
Restructuring and severance	.7			.4			1.1			.7			1.8
Accelerated depreciation on production transfer	.1			.4			.5			—			.5
Asset impairment, facility closure costs and other	.9			10.0			10.9			.1			11.0
Environmental costs	—			.2			.2			—			.2
Deferred financing fees written-off	—			—			—			.8			.8
Other financing costs	(.1		)	(.1		)	(.2		)	—			(.2		)
Acquisition and integration related expense	(.1		)	(.2		)	(.3		)	.7			.4
Subtotal for management excluded items	1.5			10.7			12.2			2.3			14.5
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes	$	56.5		$	5.1		$	61.6		$	(33.7	)	$	27.9
Tax expense (25% rate)*													(7.0		)
Adjusted Income													$	20.9
Adjusted Diluted Earnings Per Share from Adjusted Income													$	0.47
*Tax rate is based on the Company's estimated normalized annual effective tax rate
Adjusted Segment Operating Profit As A % Of Sales	15.7		%	2.3		%	10.6		%
Segment / Corporate Capital Expenditures	$	8.7		$	3.4		$	12.1		$	.7		$	12.8
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	56.5		$	5.1		$	61.6		$	(33.7	)	$	27.9
Unallocated corporate interest expense	—			—			—			14.4			14.4
Segment / Consolidated Adjusted EBIT	56.5			5.1			61.6			(19.3		)	42.3
Depreciation and amortization	12.9			8.7			21.6			.2			21.8
Segment / Consolidated Adjusted EBITDA	$	69.4		$	13.8		$	83.2		$	(19.1	)	$	64.1
Adjusted EBITDA as a % of sales	19.3		%	6.3		%	14.4		%				11.1		%

Non-GAAP and other Financial Matters (Continued)
Trailing Twelve Months Ended August 31, 2019
													Table E
(In millions except per share data)	Specialty Solutions			Performance Materials			Combined Segments			Corporate			Consolidated
Net Sales	$	520.2		$	238.1		$	758.3		$	—		$	758.3
Segment Operating Profit / Corporate Expense	$	65.0		$	(10.6	)	$	54.4		$	(30.5	)	$	23.9
Interest expense	—			—			—			(20.2		)	(20.2		)
Income (Loss) Before Income Taxes	$	65.0		$	(10.6	)	$	54.4		$	(50.7	)	$	3.7
Management Excluded Items
Restructuring and severance	.3			2.9			3.2			.4			3.6
Accelerated depreciation on production transfer	—			1.7			1.7			—			1.7
Operational Improvements costs	—			—			—			.3			.3
Asset impairment, facility closure costs and other	.2			8.1			8.3			.1			8.4
(Gain) loss on sale of assets	—			(4.4		)	(4.4		)	(.7		)	(5.1		)
Deferred financing fees written-off	—			—			—			.2			.2
Merger transaction costs	—			—			—			5.4			5.4
Acquisition and integration related expense	1.9			.6			2.5			1.8			4.3
Subtotal for management excluded items	2.4			8.9			11.3			7.5			18.8
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	67.4		$	(1.7	)	$	65.7		$	(43.2	)	$	22.5
Income tax expense													(5.6		)
Adjusted Income (Loss)													$	16.9
Adjusted Diluted Earnings Per Share From Adjusted Income													$	0.37
Adjusted Segment Operating Profit as a % of Sales	13.0		%	(0.7		)%	8.7		%
Segment / Corporate Capital Expenditures	$	25.4		$	9.6		$	35.0		$	1.9		$	36.9
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	67.4		$	(1.7	)	$	65.7		$	(43.2	)	$	22.5
Unallocated corporate interest	—			—			—			20.2			20.2
Segment / Consolidated Adjusted EBIT	67.4			(1.7		)	65.7			(23.0		)	42.7
Depreciation and amortization	19.3			10.1			29.4			.2			29.6
Segment / Consolidated Adjusted EBITDA	$	86.7		$	8.4		$	95.1		$	(22.8	)	$	72.3
Adjusted EBITDA as a % of sales	16.7		%	3.5		%	12.5		%				9.5		%
Net Leverage
Total short and long-term debt (excluding OID and deferred financing fees of $5.7M.)													$	332.8
Less cash													(36.8		)
Net Debt (Debt less Cash)													$	296.0
Net Leverage Ratio**													4.1x
** The above calculation is not intended to be used for purposes of calculating debt covenant compliance.

Non-GAAP and other Financial Matters (Continued)
Trailing Twelve Months Ended August 31, 2018
													Table F
(In millions except per share data)	Specialty Solutions			PerformanceMaterials			Combined Segments			Corporate			Consolidated
Net Sales	$	471.1		$	293.5		$	764.6		$	—		$	764.6
Segment Operating Profit / Corporate Expense	$	69.3		$	(24.0	)	$	45.3		$	(28.1	)	$	17.2
Interest expense	—			—			—			(19.9		)	$	(19.9	)
Income (Loss) Before Income Taxes	$	69.3		$	(24.0	)	45.3			$	(48.0	)	$	(2.7	)
Management Excluded Items
Restructuring and severance	.7			.4			1.1			1.0			2.1
Accelerated depreciation on production transfer	.1			.4			.5			—			.5
Operational improvements costs	—			—			—			—			—
Asset impairment, facility closure costs and other	1.2			31.3			32.5			.5			33.0
Environmental costs	—			.4			.4			—			.4
Deferred financing fees written-off	—			—			—			.8			.8
Corporate headquarters relocation costs	—			—			—			—			—
Pension settlement	—			—			—			—			—
Pension settlement	(.1		)	(.1		)	(.2		)	—			(.2		)
Acquisition and integration related expense	(.1		)	(.2		)	(.3		)	.7			.4
Subtotal for management excluded items	1.8			32.2			34.0			3.0			37.0
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes	$	71.1		$	8.2		79.3			$	(45.0	)	$	34.3
Income tax expense													(10.3		)
Adjusted Income (Loss)													$	24.0
Adjusted Diluted Earnings Per Share from Adjusted Income													$	0.54
Adjusted Segment Operating Profit as a % of Sales	15.1		%	2.8		%	10.4		%
Segment / Corporate Capital Expenditures	$	13.7		$	6.3		$	20.0		$	.9		$	20.9
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes	$	71.1		$	8.2		$	79.3		$	(45.0	)	$	34.3
Unallocated corporate interest expense	—			—			—			19.9			19.9
Segment / Consolidated Adjusted EBIT	71.1			8.2			79.3			(25.1		)	54.2
Depreciation and amortization	16.8			11.5			28.3			0.7			29.0
Segment / Consolidated Adjusted EBITDA	$	87.9		$	19.7		$	107.6		$	(24.4	)	$	83.2
Adjusted EBITDA as a % of sales	18.7		%	6.7		%	14.1		%				10.9		%
Net Leverage
Total short and long-term debt (excluding OID and deferred financing fees of $7.2M.)													$	318.8
Less cash													(66.2		)
Net Debt (Debt less Cash)													$	252.6
Net Leverage Ratio**													3.0 x
** The above calculation is not intended to be used for purposes of calculating debt covenant compliance.

Significant Accounting Policies and Management Judgments

The Company’s discussion and analysis of its results of operations, financial condition, and liquidity are based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the Company to make estimates and judgments that affect the amounts of assets and liabilities, revenues, and expenses and disclosure of contingent assets and liabilities as of the date of the financial statements. The Company periodically reviews its estimates and judgments including those related to product returns, accounts receivable, inventories, litigation and environmental reserves, pensions, and income taxes. The Company bases its estimates and judgments on historical experience and on various assumptions that it believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments under different assumptions.

35Information with respect to the Company’s significant accounting policies and management judgments which the Company believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended November 30, 2019, as filed with the SEC. The Company has not made any changes in estimates or judgments that have had a significant effect on the reported amounts.

Company bases its estimates and judgments on historical experience and on various assumptions that it believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments under different assumptions.30

Information with respect to the Company’s significant accounting policies and management judgments which the Company believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended November 30, 2018, as filed with the SEC. The Company has not made any changes in estimates or judgments that have had a significant effect on the reported amounts.

Environmental Matters

The Company’s policy is to conduct its businesses with due regard for the preservation and protection of the environment. The Company devotes significant resources and management attention to comply with environmental laws and regulations. The Company’s Consolidated Balance Sheet as of ~~August~~February 3129, ~~2019~~2020 reflects reserves for environmental remediation of $1.4 million. The Company’s estimates are subject to change and actual results may materially differ from the Company’s estimates. Management believes, on the basis of presently available information, that resolution of known environmental matters will not materially affect liquidity, capital resources, or the consolidated financial condition of the Company.

Employee Matters

AtAs ~~August~~of February 3129, ~~2019~~2020, the Company employed approximately 1,~~900~~850 employees globally. Approximately 12% of the Company’s U.S. employees are covered by collective bargaining agreements in the United States of which approximately 20 employees are covered by agreements that will expire within the next 12 months. In addition, certain of our foreign employees are also covered by collective bargaining agreements.

New Accounting Pronouncements

New accounting pronouncements impacting the Company are disclosed in Note A to the Company’s Unaudited Consolidated Financial Statements.

Shareholder Communications Pending the Merger

Pending its merger with Synthomer ~~plc~~, the Company has suspended the distribution of earnings releases and has discontinued earnings teleconferences, and the Company’s shareholders should not rely on the Company issuing any future forward-looking guidance or on any existing forward-looking guidance. The ~~Company currently expects to obtain all regulatory, and other approvals that are required for the~~ completion of the ~~merger~~Merger ~~by late 2019 or early 2020. This timing, however,~~ is anexpected ~~estimate~~to ~~and~~occur ~~there~~on ~~can~~April ~~be no assurance when any such approvals will be obtained~~1, ~~or that they will be obtained at all~~2020. ~~Please refer to the disclosures below concerning risk factors relating to the consummation of the Merger.~~

Forward-Looking Statements

This quarterly report on Form 10-Q includes descriptions of our current business, operations, assets and other matters affecting the Company as well as “forward-looking statements” as defined by federal securities laws. All forward-looking statements by the Company, including verbal statements, are intended to qualify for the protections afforded forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management’s current expectation, judgment, belief, assumption, estimate or forecast about future events, circumstances or results and may address business conditions and prospects, strategy, capital structure, debt and cash levels, sales, profits, earnings, markets, products, technology, operations, customers, raw materials, claims and litigation, financial condition, and accounting policies among other matters. Words such as, but not limited to, “will,” “may,” “should,” “projects,” “forecasts,” “seeks,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” “optimistic,” “likely,” “would,” “could,” “committed,” and similar expressions or phrases identify forward-looking statements.

All descriptions of our business, operations and assets, as well as all forward-looking statements, involve risks and uncertainties. Many risks and uncertainties are inherent in business generally and the markets in which the Company operates or proposes to operate. Other risks and uncertainties are more specific to the Company’s businesses including businesses the Company acquires. There also may be risks and uncertainties not currently known to us. The occurrence of any such risks and uncertainties and the impact of such occurrences is often not predictable or within the Company’s control. Such impacts could adversely affect the Company’s business, operations or assets as well as the Company's results and the value of your investment in OMNOVA and, in some cases, such effect could be material. Certain risks and uncertainties facing the Company are described below or elsewhere in this Form 10-Q.

All written and verbal descriptions of our business, operations and assets and all forward-looking statements attributable to the Company or any person acting on the Company’s behalf are expressly qualified in their entirety by the risks, uncertainties, and cautionary statements contained and referenced herein.

All such descriptions and any forward-looking statement speak only as of the date on which such description or statement is made, and the Company undertakes no obligation, and specifically declines any obligation, other than that imposed by law, to publicly update or revise any such description or forward-looking statements whether as a result of new information, future events or otherwise.

Risks and uncertainties that may adversely affect our business, operations, assets, or other matters affecting the Company and may cause actual results and the value of your investment in OMNOVA to materially differ from expectations include, but are not limited to: (1) the Company's exposure to general economic, business, and industry conditions; (2) changes in raw material prices and availability; (3) extraordinary events such as natural disasters, political disruptions, terrorist attacks and acts of war; (4) the risk of doing business in foreign countries and markets; (5) the highly competitive markets the Company serves and continued consolidations among its competitors and customer base; (6) extensive and increasing governmental regulation, including environmental, health and safety regulations; (7) the Company's inability to protect its intellectual property or successfully defend itself from intellectual property claims; (8) claims and litigation; (9) changes in accounting policies, standards, and interpretations; (10) the actions of activist shareholders; (11) risks inherent in the operation of manufacturing facilities; (12) the Company's inability to achieve or achieve in a timely manner the objectives and benefits of cost reduction initiatives; (13) the Company's ability to develop and commercialize new products that can be value priced; (14) the Company's ability to identify and complete strategic transactions; (15) the Company’s ability to successfully integrate acquired companies; (16) information system failures and breaches in security; (17) the Company's use of purchase orders rather than long-term contracts for most of its business; (18) the disproportionate impact of certain product lines on the Company's operating profitability; (19) customer credit risk; (20) continued increases in healthcare costs; (21) the Company's ability retain or attract key employees; (22) the Company's ability to renew collective bargaining agreements with employees on acceptable terms and the risk of work stoppages; (23) the Company's contribution obligations under its U.S. pension plan; (24) the Company's reliance on foreign financial institutions to hold some of its funds; (25) the effect of goodwill impairment charges; (26) the volatility in the market price of the Company’s common shares; (27) the Company's substantial debt position; (28) a decision to incur additional debt; (29) the operational and financial restrictions contained in the Company's debt agreements; (30) the effects of a default under the Company's term loan or revolving credit facility; (31) the Company's ability to generate sufficient cash to service its outstanding debt; and (32) potential changes in the LIBOR calculation method and the expected phase-out of LIBOR.

In relation to the proposed acquisition of the Company by Synthomer, the following uncertainties and other factors could cause actual outcomes to differ from those set forth in the forward-looking statements: (i) the risk that the contemplated transactions may not be consummated in a timely manner, if at all; (ii) the risk that the definitive merger agreement may be terminated in circumstances that require the Company to pay Synthomer a termination fee; (iii) risks related to the diversion of management’s attention from the Company’s ongoing business operations; (iv) the effect of the announcement of the proposed transaction on the Company’s business relationships (including, without limitation, customers and suppliers), operating results and business generally; (v) risks related to obtaining the requisite consents to the proposed transaction, including, without limitation, the receipt of approval from the Company’s shareholders and Synthomer’s shareholders, the timing (including possible delays) and receipt of regulatory clearance from governmental authorities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental authority may deny any such approval; and (vi) the conditions of the capital markets during the period covered by the forward-looking statements. Further risks that could cause actual results to differ materially from those matters expressed in or implied by such forward-looking statements are set forth under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2018, and its subsequent quarterly reports on Form 10-Q. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, although its situation and circumstances may change in the future.31

Wematerial ~~provide~~prices ~~greater~~and ~~detail~~availability; ~~regarding~~(3) ~~these~~extraordinary ~~risks~~events such as natural disasters, political disruptions, terrorist attacks, public health issues, and ~~uncertainties~~acts of war; (4) the risk of doing business in ~~our~~foreign ~~2018~~countries ~~Form~~and markets; (5) the highly competitive markets the Company serves and continued consolidations among its competitors and customer base; (6) extensive and increasing governmental regulation, including environmental, health and safety regulations; (7) the Company's inability to protect its intellectual property or successfully defend itself from intellectual property claims; (8) claims and litigation; (9) changes in accounting policies, standards, and interpretations; (10) the actions of activist shareholders; (11) risks inherent in the operation of manufacturing facilities; (12) the Company's inability to achieve or achieve in a timely manner the objectives and benefits of cost reduction initiatives; (13) the Company's ability to develop and commercialize new products that can be value priced; (14) the Company's ability to identify and complete strategic transactions; (15) the Company’s ability to successfully integrate acquired companies; (16) information system failures and breaches in security; (17) the Company's use of purchase orders rather than long-Kterm contracts for most of its business; (18) the disproportionate impact of certain product lines on the Company's operating profitability; (19) customer credit risk; (20) continued increases in healthcare costs; (21) the Company's ability retain or attract key employees; (22) the Company's ability to renew collective bargaining agreements with employees on acceptable terms and ~~subsequent~~the ~~filings,~~risk ~~which~~of ~~are~~work ~~available~~stoppages; ~~online~~(23) atthe ~~www~~Company's contribution obligations under its U.~~omnova~~S.~~com~~ pension plan; (24) the Company's reliance on foreign financial institutions to hold some of its funds; (25) the effect of goodwill impairment charges; (26) the volatility in the market price of the Company’s common shares; (27) the Company's substantial debt position; (28) a decision to incur additional debt; (29) the operational and ~~www~~financial restrictions contained in the Company's debt agreements; (30) the effects of a default under the Company's term loan or revolving credit facility; (31) the Company's ability to generate sufficient cash to service its outstanding debt; and (32) potential changes in the LIBOR calculation method and the expected phase-out of LIBOR.~~sec.gov.~~

37In relation to the proposed acquisition of the Company by Synthomer, the following uncertainties and other factors could cause actual outcomes to differ from those set forth in the forward-looking statements: (i) business and operational impacts due to the announcement of the proposed merger; (ii) the risk that the contemplated transactions may not be consummated in a timely manner, if at all; and (iii) the expected delisting and deregistration of OMNOVA shares following completion of the Merger. Further risks that could cause actual results to differ materially from those matters expressed in or implied by such forward-looking statements are set forth under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019, and its subsequent quarterly reports on Form 10-Q. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, although its situation and circumstances may change in the future.

~~Table~~We ofprovide ~~Contents~~greater detail regarding these risks and uncertainties in our 2019 Form 10-K and subsequent filings, which are available online at www.omnova.com and www.sec.gov.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Quantitative and Qualitative Disclosure About Market Risk

The Company is exposed to market risk from changes in interest rates on its long-term debt obligations. As described in the Debt and Credit Lines note to the Unaudited Consolidated Financial Statements, the Company’s debt bears interest at variable rates. Total borrowings for the Company's variable rate debt were $~~317~~319.78 million as of ~~August~~February 3129, ~~2019~~2020. The weighted average effective interest rate of the Company’s outstanding debt was 54.3696% as of ~~August~~February 3129, ~~2019~~2020. A hypothetical increase or decrease of 100 basis points would impact the Company’s interest expense on its variable rate debt by $3.2 million annually.

The Company is subject to foreign currency exchange rate risk. The Company has an accumulated currency translation loss of $3619.89 million as of ~~August~~February 3129, ~~2019~~2020, which is included in accumulated other comprehensive loss.

The Company does not enter into derivatives or other financial instruments for trading or speculative purposes.

Item 4. Controls and Procedures

Controls and Procedures

Management of the Company, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a–15(e) under the Securities Exchange Act of 1934) as of ~~August~~February 3129, ~~2019~~2020 and based on this evaluation, has determined that the Company’s disclosure controls and procedures are effective as of such date. There were no changes in the Company’s internal control over financial reporting during the quarter ended ~~August~~February 3129, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

From time to time, the Company is subject to various claims, proceedings and lawsuits related to products, services, contracts, employment, environmental, safety, intellectual property, and other matters. The ultimate resolution of such claims, proceedings, and lawsuits is inherently unpredictable and, as a result, the Company’s estimates of liability, if any, are subject to change. Actual results may materially differ from the Company’s estimates and an unfavorable resolution of any matter could have a material adverse effect on the financial condition, results of operations, and/or cash flows of the Company. However, subject to the above and taking into account such amounts, if any, as are accrued from time to time on the Company’s balance sheet, the Company does not believe, based on the information currently available to it, that the ultimate resolution of these matters will have a material effect on the consolidated financial condition, results of operations, or cash flows of the Company.

The information in the "Legal Proceedings" section of Note M ("Contingencies") of the Notes to our Consolidated Financial Statements is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended November 30, ~~2018~~2019 except that some of these risk factors, including risk factors relating to our debt and leverage levels, may be triggered or exacerbated by ongoing developments or extended disruptions relating to the spread of COVID-19. Those risk factors, in addition to the other information set forth in this report, could materially affect the Company’s consolidated financial condition, results of operations, or cash flows. Additional unrecognized risks and uncertainties may materially adversely affect the Company’s consolidated financial condition, results of operations, or cash flows.

In Item 1A of the Company’s Annual Report on Form 10-K for the year ended November 30, ~~2018~~2019, the Company disclosed risk factors and other information that could materially affect the Company’s consolidated financial condition, results of operations, or cash flows. Other risks associated with the proposed transaction between the Company and Synthomer plc ("Synthomer"), Spirit USA Holdings Inc., and Synthomer USA LLC are more fully discussed in the Company’s definitive proxy statement filed with the SEC on September 9, 2019 in connection with the proposed transaction. InThere ~~addition~~have tobeen ~~such~~no ~~previously~~material ~~disclosed~~changes to such risk factors and other information, ~~the~~previously ~~Company has identified additional material risks that could affect the Company’s consolidated financial condition, results of operations, or cash flows, which are~~ disclosed ~~below:~~.

The list of factors presented here is, and the list of factors presented in the Company’s Form 10-K and proxy statement should not be considered to be a complete statement of all potential risks and uncertainties. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any

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known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company’s business, financial condition and results of operations. The Company is under no obligation, and expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.

Risks associated with the proposed merger of the Company with Synthomer

We may face business and operational impacts due to the announcement of our proposed merger with Synthomer and the pendency of the proposed merger.

On July 3, 2019, the Company announced it had entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Synthomer, Spirit USA Holdings Inc., and Synthomer USA LLC, pursuant to which Spirit USA Holdings Inc., a wholly-owned subsidiary of Synthomer, would merge with and into the Company, subject to shareholder and regulatory approvals and other customary conditions (the "Merger"). Uncertainty about the effect of the Merger on our employees, customers, suppliers, distributors and other parties may have a material adverse effect on our business. There can be no assurance that our employees, including key personnel, can be retained to the same extent that we have previously been able to attract and retain employees. In addition, we have diverted, and will continue to divert, significant management resources towards the completion of the Merger, which may limit the amount of time that can be focused on our business and operations by such persons. Parties with which we do business, including our suppliers and distributors, may experience uncertainty associated with the Merger, including with respect to current or future business relationships with us, with Synthomer, or with the combined enterprise if the Merger is consummated. In addition, costs, fees, expenses and charges related to the Merger Agreement, the Merger, or pending and future litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against us and others, cannot be quantified. The Company is required to operate under certain restrictions on its business pursuant to the terms of the Merger Agreement, including, among other things, restrictions on the ability in certain cases to enter into contracts or to enter into contracts having certain terms, to acquire or dispose of assets, or to incur indebtedness or incur capital expenditures, until the Merger becomes effective or the Merger Agreement terminates. These restrictions may prevent us from taking actions with respect to our business that we may consider advantageous and result in our inability to respond effectively to competitive pressures and industry developments. Finally, the Company may experience a loss of business based on the expectation that Synthomer will own the Company following the closing of the Merger.

The proposed merger of the Company with Synthomer may not be completed on a timely basis, or at all, and the failure to complete or delays in completing the proposed merger could adversely affect our business, financial results and stock price.

Completion of the Merger with Synthomer is subject to several conditions outside of our or Synthomer’s control that may prevent or delay its completion, including approval of the Merger Agreement by the Company’s shareholders and certain regulatory approvals. If the Merger is not completed, the Company’s share price could decrease if and to the extent that the current market price for the Company’s common shares reflects an assumption that a transaction will be consummated. Additionally, the Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under specified circumstances, including a change in the recommendation of the Company’s Board of Directors that shareholders approve the Merger Agreement or a termination of the Merger Agreement by the Company to enter into an agreement for a superior proposal, the Company will pay Synthomer a cash termination fee of $15.8 million. Further, a failed transaction may result in negative publicity and a negative impression of the Company in the capital markets and among the investment community. Finally, any disruption to our business resulting from the announcement and pendency of the Merger, including any adverse impact in our relationships with employees, distributors or suppliers could continue or accelerate in the event of a failed transaction.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

From time to time, the Company may seek to retire, repurchase, or exchange its outstanding debt or capital securities through various methods including open market repurchases, negotiated block transactions, or open market solicitations for shares, all or some of which may be effected through Rule 10b5-1 plans. Such transactions, if any, depend on prevailing market conditions, our liquidity and capital requirements, contractual restrictions, and other factors, and may involve material amounts.

39The following table summarizes the Company’s activity related to its common shares for the three months ended February 29, 2020.

Month	~~Total Number of shares repurchased (a)~~	~~Average price paid per share~~	Total Number of shares repurchased (a)	~~Total number of shares purchased as part of publicly announced plans or programs~~	~~Maximum dollar value of shares that may yet be purchased under the plans or programs~~		Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs	Maximum dollar value of shares that may yet be purchased under the plans or programs
June 1 -30	25,697	$5.61		—	$	20,000,000
December 1 - 31			1,493				$5.61	—	$	20,000,000
July 1 - 31	—	N/A		—	$	20,000,000
January 1 - 31			603				N/A	—	$	20,000,000
August 1 -31	—	N/A		—	$	20,000,000
February 1 - 29			32,740				N/A	—	$	20,000,000
Total	~~25,697~~	~~$5.61~~	34,836	—			$5.61	—

(a) Share repurchases resulted from common shares deemed surrendered by employees in connection with the Company’s stock compensation and benefit plans to satisfy tax obligations.

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Item 6. Exhibits

2.1	Agreement and Plan of Merger, dated July 3, 2019 among Synthomer plc, Spirit USA Holdings Inc., Synthomer USA LLC and OMNOVA Solutions Inc. (incorporated by reference to Exhibit 2.1 of the Company's Current Report filed July 3, 2019 (File No. 1-15147)).	Agreement and Plan of Merger, dated July 3, 2019 among Synthomer plc, Spirit USA Holdings Inc., Synthomer USA LLC and OMNOVA Solutions Inc. (incorporated by reference to Exhibit 2.1 of the Company's Quarterly Report filed July 3, 2019 (File No. 1-15147)).
31.1	~~Rule 13a-14(a) Certification of the Company's Chief Executive Officer.(x)~~	Rule 13a-14(a) Certification of the Company's Chief Executive Officer.(x)
31.2	~~Rule 13a-14(a) Certification of the Company's Chief Financial Officer.(x)~~	Rule 13a-14(a) Certification of the Company's Chief Financial Officer.(x)
32.1	~~Section 1350 Certification of the Company's Chief Executive Officer and Chief Financial Officer.(x)~~	Section 1350 Certification of the Company's Chief Executive Officer and Chief Financial Officer.(x)
101	The following financial information from our Quarterly Report on Form 10-Q for the third quarter of 2019, filed with the SEC on September 26, 2019, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations for the three and nine months ended August 31, 2019 and 2018; (ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended August 31, 2019 and 2018; (iii) the Consolidated Balance Sheets at August 31, 2019 and November 30, 2018; (iv) the Consolidated Statements of Cash Flows for the nine months ended August 31, 2019 and 2018; and (v) the Notes to the Unaudited Interim Consolidated Financial Statements.	Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, Item 1 "Consolidated Financial Statements and Supplementary Data" of this Quarterly Report on Form 10-Q.
104		Inline XBRL for the Cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

(x) Filed herewith.

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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 thereunto duly authorized.

~~OMNOVA Solutions Inc.~~

OMNOVA Solutions Inc.

Date:

~~September 26, 2019~~

March 30, 2020

~~/s/ Paul F. DeSantis~~

/s/ Paul F. DeSantis

~~Paul F. DeSantisSenior Vice President and Chief Financial Officer; Treasurer(Principal Financial Officer)~~

Paul F. DeSantisSenior Vice President and Chief Financial Officer; Treasurer(Principal Financial Officer)

Date:

~~September 26, 2019~~

March 30, 2020

~~/s/ Donald B. McMillan~~

/s/ Donald B. McMillan

~~Donald B. McMillanVice President, Chief Accounting Officer(Principal Accounting Officer)~~

Donald B. McMillanVice President, Chief Accounting Officer(Principal Accounting Officer)

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INDEX TO EXHIBITS

ExhibitNumber	~~Description~~	Description
2.1	Agreement and Plan of Merger, dated July 3, 2019 among Synthomer plc, Spirit USA Holdings Inc., Synthomer USA LLC and OMNOVA Solutions Inc. (incorporated by reference to Exhibit 2.1 of the Company's Current Report filed July 3, 2019 (File No. 1-15147)).	Agreement and Plan of Merger, dated July 3, 2019 among Synthomer plc, Spirit USA Holdings Inc., Synthomer USA LLC and OMNOVA Solutions Inc. (incorporated by reference to Exhibit 2.1 of the Company's Quarterly Report filed July 3, 2019 (File No. 1-15147)).
31.1	~~Principal Executive Officer’s Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	Principal Executive Officer’s Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	~~Principal Financial Officer’s Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	Principal Financial Officer’s Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from our Quarterly Report on Form 10-Q for the third quarter of 2019, filed with the SEC on September 26, 2019, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations for the three and nine months ended August 31, 2019 and 2018; (ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended August 31, 2019 and 2018; (iii) the Consolidated Balance Sheets at August 31, 2019 and November 30, 2018; (iv) the Consolidated Statements of Cash Flows for the nine months ended August 31, 2019 and 2018; and (v) the Notes to the Unaudited Interim Consolidated Financial Statements.	Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, Item 1 "Consolidated Financial Statements and Supplementary Data" of this Quarterly Report on Form 10-Q.
104		Inline XBRL for the Cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

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