Profile: Stepan Company (SCL)

Stepan Company, incorporated on February 19, 1959, along with its subsidiaries, produces specialty and intermediate chemicals, which are sold to other manufacturers and then made into a variety of end products. The Company operates in three segments: surfactants, polymers and specialty products. Surfactants refer to chemical agents that affect the interaction between two surfaces. They can provide actions, such as detergency (the ability of water to remove soil from another surface), wetting and foaming, dispersing, emulsification (aiding two dissimilar liquids to mix), demulsification, viscosity modifications and biocidal disinfectants. Polymers, which include phthalic anhydride, polyols and polyurethane foam systems, are used in plastics, building materials and refrigeration industries. Polymers are also used in coating, adhesive, sealant and elastomer applications. Specialty products include chemicals used in food, flavoring and pharmaceutical applications.

In September 2008, the Company entered into a joint venture agreement with Nalco Company. The joint venture TIORCO, LLC was formed to market chemical solutions for increased production of crude oil and gas from existing fields. On July 31, 2008, the Company sold select polyurethane system product lines to Bayer MaterialScience LLC (Bayer). In September 2008, the Company sold 88 acres of land at its Millsdale manufacturing facility in Elwood, Illinois, to an industrial park developer. Principal markets for surfactants are manufacturers of detergents, shampoos, lotions, fabric softeners, toothpastes and cosmetics. In addition, surfactants are sold to the producers of emulsifiers, lubricating products and biodiesel fuel. The Company also is a principal provider of polymers used in construction, refrigeration, automotive, boating and other consumer product industries. Specialty products are used primarily by food and pharmaceutical manufacturers.

Surfactants

Surfactants accounted for 75% of the Company’s consolidated net sales during the year ended December 31, 2008. Surfactants are principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos, lotions, fabric softeners, toothpastes and fabric softeners. Other applications include germicidal quaternary compounds, lubricating ingredients, emulsifiers for spreading agricultural products, plastics and composites and biodiesel. Surfactants are manufactured at six North American sites (five in the United States and one in Canada), three European sites (United Kingdom, France and Germany) and three Latin American sites (Mexico, Brazil and Colombia).

Polymers

Polymers accounted for 22% of Stepan Company’s consolidated net sales in 2008. Polymers include three primary product lines: phthalic anhydride, polyols and polyurethane systems. Phthalic anhydride is used in polyester alkyd resins and plasticizers for applications in construction materials and components of automotive, boating and other consumer products. Polyols are used in the manufacture of laminate insulation board for the construction industry and are also sold to the appliance, coatings, adhesives, sealants and elastomers (C.A.S.E) markets. Polyurethane systems products are used in specialty applications like aerospace and adhesives. In the United States, polymer product lines are manufactured at the Company’s Millsdale, Illinois site. Stepan Company also manufactures polyols at its Wesseling (Cologne), Germany facility, as well as at its joint venture in Nanjing, China.

Specialty Products

Specialty Products accounted for 3% of the Company’s consolidated net sales in 2008. Specialty products include flavors, emulsifiers and solubilizers used in the food and pharmaceutical industries. Specialty products are manufactured primarily at the Company’s Maywood, New Jersey site.