Discontinued Operations

6 Months Ended

May 31, 2012

Discontinued Operations

Note B – Discontinued Operations

As part of the Company’s strategy to focus on businesses with greater global growth potential, the Company committed to divesting its commercial wallcovering businesses in the fourth quarter of 2011.

On December 12, 2011, the Company completed the sale of its North American wallcovering business to J. Josephson, Inc., a private commercial wallcovering producer based in New Jersey. The sale included print cylinders, certain equipment, trademarks, contracts and other assets associated with the Company’s domestically-produced wallcovering. Under terms of the sale, the Company received $10.0 million in cash and may receive up to three years of royalty payments based on future sales of OMNOVA commercial wallcovering patterns. The Company retained the net working capital, the Columbus, Mississippi manufacturing facility and certain production assets, which are also used by its other businesses.

The Company recognized a net after-tax gain of approximately $6.0 million ($9.9 million before tax) from the sale transaction during the first quarter of 2012, which represents the excess of the sale price over the book value of the assets sold.

The Company will continue to manufacture commercial wallcovering products for J. Josephson as part of an orderly transition of production from the Company’s Columbus, Mississippi plant to J. Josephson’s plant in New Jersey. The Company expects the transition period to be completed by year-end, however it could be extended for an additional three months.

For the North American wallcovering business, the Company allocated the book value of certain shared manufacturing assets, as well as the associated shared manufacturing and selling costs between the wallcovering products and the coated fabrics products based on the relative shares of manufacturing volume produced in the Columbus, Mississippi facility. The Company will transition the manufacturing of certain coated fabrics products to other company facilities by the end of the year.

During and following the transition period, the Company expects to incur certain cash outflows related to severance and outplacement; equipment decommissioning and relocation; facility maintenance, security and idling; and increased inventory levels to facilitate the transfer of certain products to the Company’s other manufacturing facilities. After the transition, the Company expects to receive proceeds from the sale of excess equipment and the facility.

On March 6, 2012, the Company sold its U.K.-based Muraspec commercial wallcovering business to affiliates of a2e Venture Catalysts Limited and its principal Amin Amiri for $2.4 million in cash and a note receivable for $3.8 million. The Company recognized losses of $0.9 million related to this transaction in the first half of 2012 to reflect the fair value of the assets and liabilities sold to the buyer.

Held for Sale Classification

As a result of the decision to exit the commercial wallcovering business, the assets and liabilities of the commercial wallcovering business were reflected as assets and liabilities held for sale at November 30, 2011 and were comprised of the following:

(in Millions)	November 30, 2011
Cash	$	2.8
Accounts receivable		7.1
Inventories, net		4.0
Other current assets		2.7
Assets Held For Sale – Current	$	16.6
Accounts payable	$	6.6
Accrued payroll and personal property tax		1.1
Other current liabilities		.8
Liabilities Held For Sale – Current	$	8.5

Liabilities held for sale at May 31, 2012 represent estimated income taxes associated with the disposed wallcovering business.