Rohm and Haas Company was incorporated in 1917 under the laws of the State of Delaware. Our shares are traded on the New York Stock Exchange under the symbol “ROH”.
We are a global specialty materials company that began approximately 100 years ago when a chemist, Otto Rohm, and a businessman, Otto Haas, decided to form a partnership to make a unique chemical product for the leather industry. That once tiny firm, now known as Rohm and Haas Company, reported sales of $9.6 billion in 2008 on a portfolio of global businesses including electronic materials, specialty materials and salt. Our products enable the creation of leading-edge consumer goods and other products found in a broad segment of dynamic markets, the largest of which include: building and construction, electronics, packaging and paper, industrial and other, transportation, household and personal care, water and food. To serve these markets, we have significant operations with approximately 98 manufacturing and 33 research facilities in 30 countries with approximately 15,490 employees.
Throughout our history, Rohm and Haas has remained true to the original vision of its founders: to be a high-quality and innovative supplier of highly specialized materials that improve quality of life. In the late 1990’s, we began to diversify our portfolio of product offerings to enhance our specialty chemical business by acquiring Morton International Inc. We also expanded our electronic materials business through the acquisitions of LeaRonal and Rodel, as well as the formation of a joint venture with SKC in 2007 and the acquisition of Gracel Display, Inc. in 2008. To expand our global footprint, we acquired FINNDISP, a paint emulsions operation supporting Northern Europe and the Commonwealth of Independent States (former Soviet Union) in April 2008. During the same period, we have repositioned our portfolio to divest non-strategic businesses including the divestiture of our Automotive Coatings business in 2006. As a result of this activity, we have significantly increased our sales, improved the balance of our portfolio, expanded our geographic reach and product opportunities to meet market needs, and enhanced our cash generating capabilities, while delivering enhanced value for our stockholders.
The businesses within our electronic materials, as well as our specialty chemical portfolio and salt businesses will be discussed in more detail later in this section.
Our Strategic Focus
In September 2006, the Rohm and Haas Board of Directors approved a strategic plan, referred to as Vision 2010, which was designed to create a more focused, more profitable, faster growing company, and which was presented to investors in October 2006. The key elements of Vision 2010 are:
Position Our Portfolio For Accelerated Growth — by leveraging our integrated acrylic monomer and polymer chain; accelerating investment in Electronic Materials; creating or expanding platforms that address the growing needs in food, health, water, energy, and other areas in the developed and developing worlds; and supplementing our organic growth with highly selective acquisitions which bring a growth platform technology or geographic supplement to our core businesses.
Build Value-Creating Business Models in Rapidly Developing Economies — by tailoring products to specific local or regional needs; finding solutions that are affordable and meet local requirements; organizing in a manner that enables rapid decision-making; investing in local talent; and building plant facilities that can compete effectively with local and regional players as well as multinational players.
Innovate with a Market / Customer Focus — by increasingly shifting the focus and delivery of technology programs closer to the customer, driving to faster and more tailored output.
Operational Excellence / Continuous Improvement - by maintaining flat conversion costs over the next three years; building more capital-efficient plants in emerging markets; continuing to optimize our global footprint; and increasing global sourcing, especially from low-cost countries.
Deploy Right Talent in Right Places - by ensuring that leadership talent with the right depth and breadth is in place to drive the profitable growth of our businesses through shifting deployment of more key leaders to locations outside the U.S.; and continuing to drive the nurturing and development of our global workforce.
As more fully described in our definitive proxy statement, filed with the Securities and Exchange Commission on September 29, 2008, for the Special Meeting of Stockholders held on October 29, 2008, we entered into a definitive merger agreement with The Dow Chemical Company on July 10, 2008.
In the period following the signing of the definitive merger agreement with Dow, Rohm and Haas has allocated substantial managerial and other resources to a broad-based effort to plan, within the appropriate legal and regulatory boundaries, for the post-close integration of Rohm and Haas into Dow. Rohm and Haas’ primary strategic focus in the period following entering the definitive merger agreement with Dow has been preparing for the closing of the transaction, and operating in compliance with the interim covenants in the merger agreement.
We generated $1,040 million, $963 million and $840 million in cash from operating activities during 2008, 2007 and 2006, respectively. During this period, we deployed this cash to enhance stockholder value through strategic investments in our core businesses and technologies, higher dividends, and stock repurchases. In light of the current global recession, we intend to conserve cash while supporting essential business investments through our capital expenditure program and through very selective, small acquisitions.
Our company was built upon a strong foundation of core values, which continue today. These values are the bedrock of our success. We strive to operate at the highest levels of integrity and ethics and, in support of this, require that all employees, as well as all the members of our Board of Directors, receive compliance training and annually certify their compliance with our internal Code of Business Conduct and Ethics. Our core values are best summarized as: Ethical and legal behavior at all times; Integrity in all business interactions; and Trust by doing what we promise.
Our Board of Directors devotes substantial time to reviewing our business practices with regard to the norms of institutional integrity. Our Board is comprised of 12 directors, of which 11 are non-employees. The Audit, Nominating and Governance, and Executive Compensation committees of the Board are all entirely composed of independent directors.
Our portfolio of businesses is strong, seasonally diverse and well positioned for future growth. Effective January 1, 2007, we realigned our reporting segments and managerial organization as a part of the implementation of our Vision 2010 strategy. The chart below summarizes sales recorded by our seven reportable segments in 2008, 2007, and 2006.
LECTRONIC MATERIALS GROUP
The Electronic Materials group is comprised of two reportable segments: Electronic Technologies and Display Technologies, which are managed under one executive. This group develops, manufactures and delivers materials for use in applications such as telecommunications, consumer electronics and household appliances.
The Display Technologies segment was created in the fourth quarter of 2007 as a result of the significant allocation of resources to our flat panel display business. Previously, the results of our flat panel display business were included in Semiconductor Technologies. The Electronic Technologies segment is an aggregation of our Circuit Board Technologies, Packaging and Finishing Technologies and Semiconductor Technologies businesses. Circuit Board Technologies develops, manufactures and delivers the technology, materials and fabrication services for increasingly powerful, high-density printed circuit boards in computers, cell phones, automobiles and many other electronic devices. We are a leading global supplier of specialty chemicals and materials used in the fabrication of printed circuit boards, and are focused on the development of metallization and imaging technologies.
Packaging and Finishing Technologies develops, manufactures and delivers innovative materials and processes that boost the performance of a diverse range of electronic, optoelectronic and industrial finishing applications. We supply integrated metallization processes critical for interconnection, corrosion resistance, metal finishing, and decorative applications.
Semiconductor Technologies develops, manufactures and supplies integrated products and technologies on a global basis. We enable our customers to drive leading edge semiconductor design, and to boost performance of semiconductor devices powered by smaller and faster chips. This business also develops and delivers materials used for chemical mechanical planarization (CMP), a process that creates the flawless surfaces required to make faster and more powerful integrated circuits and electronic substrates.