<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 1997
------------------------------
OM GROUP, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 0-22572 52-1736882
(State or other (Commission IRS Employer
other jurisdiction File No.) Identification No.)
of incorporation)
50 Public Square, 3800 Terminal Tower, Cleveland, Ohio 44113-2204
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (216) 781-0083
----------------------------
Former name or former address, if changed since last report: N/A
--------------------
EXPLANATORY NOTE: Pursuant to Item 7(a)(4) of Form 8-K, this Form 8-K/A amends
the Registrant's Form 8-K filed on January 28, 1997, to include the
historical financial statements and pro forma financial information required by
Item 7(a) and (b).
<PAGE> 2
ITEM 2. AQUISITION OR DISPOSITION OF ASSETS.
-----------------------------------
On January 21, 1997, OM Group, Inc. completed the aquisition of the stock
of SCM Metal Products, Inc. ("SCM"), a subsidiary of U.S. Industries for a cash
purchase price of $122 million. SCM manufactures, distributes and sells a broad
range of specialty powders and chemicals, principally specialty powders from
copper, iron and stainless steel. This transaction was previously reported on
a Form 8-K filed on January 28, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
--------------------------------
(a) Financial Statements of Businesses Acquired
------------------------------------------
The following financial statements of SCM are filed as part of this Current
Report on Form 8-K/A:
1. Balance Sheets as of September 28, 1996 and December 28, 1996;
2. Statements of Income for the year ended September 28, 1996; and the
three months ended December 28, 1996 and December 30, 1995;
3. Statements of Cash Flows for the year ended September 28, 1996; and the
three months ended December 28, 1996 and December 30, 1995.
(b) Pro Forma Financial Information
-------------------------------
1. Pro Forma Combined Statement of Income for the year ended December 31,
1996;
2. Pro Forma Combined Condensed Balance Sheet as of December 31, 1996.
(c) Exhibits
--------
(23.1) Consent of Ernst & Young LLP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OM GROUP, INC
Date March 21, 1997 By: /s/ James M. Materna
-------- -------------------------------
James M. Materna
Chief Financial Officer
2
<PAGE> 3
Audited Financial Statements
SCM METAL PRODUCTS, INC.
<PAGE> 4
Report of Independent Auditors
Board of Directors
OM Group, Inc.
We have audited the accompanying balance sheet of SCM Metal Products, Inc. as of
September 28, 1996, and the related statements of income and cash flows for the
year then ended. These financial statements are the responsibility of the
management of SCM Metal Products, Inc. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SCM Metal Products, Inc. at
September 28, 1996, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Cleveland, Ohio
March 7, 1997
1
<PAGE> 5
SCM Metal Products, Inc.
Balance Sheets
(Thousands of Dollars)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 28,
1996 1996
--------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, less allowance of $383 $ 405 $ 366
at September 28 and $358 at December 28 11,293 10,661
Inventories 11,748 11,815
Other current assets 1,426 1,243
--------------------------------------
Total current assets 24,872 24,085
Property, plant and equipment:
Land 2,136 2,136
Buildings and improvements 8,252 8,252
Machinery and equipment 19,514 20,350
Furniture and fixtures 2,598 2,598
--------------------------------------
32,500 33,336
Less accumulated depreciation 18,620 18,912
--------------------------------------
13,880 14,424
Other assets:
Goodwill, less accumulated amortization of
$648 at September 28 and $666 at December 28 2,124 2,106
Deferred income taxes 3,844 3,908
Other assets 980 461
--------------------------------------
TOTAL ASSETS $ 45,700 $ 44,984
======================================
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 28,
1996 1996
--------------------------------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND PARENT COMPANY INVESTMENT
Current liabilities:
Accounts payable $ 5,709 $ 5,060
Accrued income taxes 3,156 4,199
Other accrued expenses 5,221 5,153
--------------------------------------
Total current liabilities 14,086 14,412
Deferred income taxes 2,176 2,176
Other long-term liabilities 10,910 10,958
Parent company investment 18,528 17,438
--------------------------------------
TOTAL LIABILITIES AND PARENT COMPANY INVESTMENT $ 45,700 $ 44,984
======================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 7
SCM Metal Products, Inc.
Statements of Income
(Thousands of Dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED ----------------------------------------
SEPTEMBER 28, DECEMBER 28, DECEMBER 30,
1996 1996 1995
---------------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Net sales $ 94,279 $ 22,857 $ 23,557
Cost of products sold 71,252 16,714 17,644
---------------------------------------------------------
23,027 6,143 5,913
Selling, general and administrative expenses 10,765 2,580 2,813
---------------------------------------------------------
Income from operations 12,262 3,563 3,100
Interest expense (4,095) (975) (1,170)
---------------------------------------------------------
Income before income taxes 8,167 2,588 1,930
Income taxes 3,137 974 720
---------------------------------------------------------
NET INCOME $ 5,030 $ 1,614 $ 1,210
=========================================================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 8
SCM Metal Products, Inc.
Statements of Cash Flows
(Thousands of Dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED ---------------------------------------
SEPTEMBER 28, DECEMBER 28, DECEMBER 30,
1996 1996 1995
---------------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,030 $ 1,614 $ 1,210
Items not affecting cash:
Depreciation and amortization 1,147 310 352
Deferred income taxes (257) (64) (60)
Changes in operating assets and liabilities:
Accounts receivable (4,908) 632 (3,083)
Inventories (500) (67) (1,008)
Accounts payable and other accruals 2,004 326 461
Other 221 750 (57)
---------------------------------------------------------
Net cash provided by (used in)
operating activities 2,737 3,501 (2,185)
INVESTING ACTIVITIES
Expenditures for property, plant and equipment--net (1,254) (836) (68)
Acquisition of business (509)
---------------------------------------------------------
Net cash used in investing activities (1,763) (836) (68)
FINANCING ACTIVITIES
Intercompany transactions with USI--net (756) (2,704) 2,214
---------------------------------------------------------
Net cash (used in) provided by
financing activities (756) (2,704) 2,214
---------------------------------------------------------
Increase (decrease) in cash 218 (39) (39)
Cash and cash equivalents at
beginning of period 187 405 187
---------------------------------------------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 405 $ 366 $ 148
=========================================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 9
SCM Metal Products, Inc.
Notes to Financial Statements
September 28, 1996
(Thousands of Dollars)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
On January 21, 1997, pursuant to a Stock Purchase Agreement dated December 20,
1996, OM Group, Inc. (OMG) purchased all of the outstanding stock of SCM Metal
Products, Inc. (SCM or the Company), a subsidiary of U.S. Industries, Inc.
(USI). SCM manufactures, distributes and sells a broad range of specialty
powders and chemicals, principally specialty powders from copper, iron and
stainless steel. SCM's products are used in various markets, primarily within
the automotive, electronics, transportation and catalyst industries.
Headquartered in Research Triangle Park, North Carolina, SCM operates
manufacturing facilities in Research Triangle Park; Johnstown, Pennsylvania; and
Singapore, through a joint venture. The joint venture is accounted for by the
equity method.
USI provides certain services to the Company including employee benefits
management, tax and legal assistance. The cost for such services is included in
selling, general, and administrative expenses.
Historically, SCM's results of domestic operations have been included in the
consolidated U.S. federal income tax return of USI. Income tax expense and other
tax related information in the accompanying financial statements have been
presented as if SCM had not been eligible to be included in the consolidated tax
returns of USI. The calculation of tax provisions and deferred taxes necessarily
required certain assumptions, allocations and estimates which management
believes are reasonable to accurately reflect the tax reporting for SCM as a
stand-alone taxpayer.
CONSOLIDATION
The financial statements include the accounts of SCM after elimination of all
significant intercompany accounts. SCM reports on a 52-53 week year, ending on
the Saturday closest to September 30.
6
<PAGE> 10
SCM Metal Products, Inc.
Notes to Financial Statements--Continued
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
INVENTORIES
Inventories are stated at the lower of cost or market and are principally valued
using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at historical cost less accumulated
depreciation. Depreciation is provided by the straight-line method over the
useful lives of the various classes of assets. Long-lived assets are assessed
for impairment when operating profits for the related business indicate that the
carrying value may not be recoverable.
RESEARCH AND DEVELOPMENT
Selling, general and administrative expenses include research and development
costs of approximately $2.0 million in fiscal 1996.
GOODWILL
Goodwill represents the excess of the acquisition purchase price over the fair
market value of the net tangible assets acquired. Goodwill is being amortized on
a straight line basis over its useful life of forty years. Goodwill is assessed
for impairment when operating profits for the related business indicate that the
carrying value may not be recoverable.
CASH EQUIVALENTS
For purposes of the statements of cash flows, all highly liquid investments with
a maturity of three months or less when purchased are considered to be cash
equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
certain circumstances that affect the amounts reported in the accompanying
financial statements and notes. Actual results could differ from those
estimates.
7
<PAGE> 11
SCM Metal Products, Inc.
Notes to Financial Statements--Continued
B. INVENTORIES
Inventories consist of the following as of September 28, 1996:
<TABLE>
<CAPTION>
<S> <C>
Raw materials and supplies $ 2,740
Work-in-process 1,715
Finished goods 7,293
----------------
$ 11,748
================
</TABLE>
C. INCOME TAXES
Income taxes are summarized as follows for the fiscal year ended September 28,
1996:
<TABLE>
<CAPTION>
<S> <C>
Current:
United States:
Federal $ 3,000
State and local 394
----------------
3,394
Deferred:
United States (257)
----------------
$ 3,137
================
</TABLE>
Significant components of SCM's deferred income taxes at September 28, 1996 are
as follows:
<TABLE>
<CAPTION>
<S> <C>
Current asset--Operating accruals $ 806
Current liability--Inventories (432)
Long-term asset--Employee benefits 3,844
Long-term liability--Accelerated depreciation (2,176)
----------------
$ 2,042
================
</TABLE>
8
<PAGE> 12
SCM Metal Products, Inc.
Notes to Financial Statements--Continued
C. INCOME TAXES--CONTINUED
A reconciliation of income taxes computed at the United States statutory rate to
the effective income tax rate for the fiscal year ended September 28, 1996 is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Income taxes at the United States statutory rate 35.0%
State income taxes, net of federal tax benefit 3.4
------------
38.4%
============
</TABLE>
D. PENSIONS
SCM has two noncontributory defined benefit pension plans covering substantially
all its U.S. employees. The benefits for these plans are based primarily on
years of credited service and average compensation as defined under the
respective plan provisions. SCM's funding policy is to contribute amounts to the
plans sufficient to meet the minimum funding requirements set forth in the
Employee Retirement Income Security Act of 1974, plus such additional amounts as
SCM may determine to be appropriate from time to time.
SCM also sponsors a defined contribution plan covering all salaried employees.
Contributions relating to the defined contribution plan are made based upon the
plan provisions.
Components of pension expense for the fiscal year ended September 28, 1996
follow:
<TABLE>
<CAPTION>
<S> <C>
Defined benefit plans:
Service cost-benefits earned during the year $ 470
Interest cost on projected benefit obligation 952
Actual return on plan assets (969)
Net amortization and deferral 4
----------
Net expense for defined benefit plans 457
Defined contribution plan 246
----------
$ 703
==========
</TABLE>
9
<PAGE> 13
SCM Metal Products, Inc.
Notes to Financial Statements--Continued
D. PENSIONS--CONTINUED
The following table sets forth the funded status and amounts recognized in the
balance sheet at September 28, 1996 for the Company's defined benefit pension
plans:
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of benefit obligation:
Vested benefits $ 9,604
Nonvested benefits 917
----------------
Accumulated benefit obligation $ 10,521
================
Projected benefit obligation $ 12,559
Plan assets at fair value 11,121
----------------
Projected benefit obligation in excess of plan assets (1,438)
Add (deduct):
Unrecognized prior service cost 45
Unrecognized net gain (1,628)
Adjustment to recognize minimum liability (523)
----------------
Net accrued pension liability $ (3,544)
================
</TABLE>
Plan assets consist primarily of equity securities and domestic governmental and
corporate obligations.
Actuarial assumptions used in the calculation of the defined benefit pension
liability were as follows:
<TABLE>
<CAPTION>
<S> <C>
Discount rate 7.75%
Compensation growth rate 4.5%
Long-term rate of return on plan assets 9.0%
</TABLE>
E. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
SCM provides postretirement benefits other than pensions to employees and
employees' beneficiaries and covered dependents. These benefits include life
insurance, health and dental benefits. SCM accrues for the expected cost of
providing these benefits during the years that employees render employment
services; claims are paid as incurred.
10
<PAGE> 14
SCM Metal Products, Inc.
Notes to Financial Statements--Continued
E. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--CONTINUED
The expense for postretirement benefits other than pensions for the fiscal year
ended September 28, 1996 follows:
<TABLE>
<CAPTION>
<S> <C>
Service cost $ 150
Interest cost 266
Amortization of unrecognized net gain (171)
---------------
$ 245
===============
</TABLE>
The liability for postretirement benefits other than pensions included in the
September 28, 1996 balance sheet follows:
<TABLE>
<CAPTION>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees and related beneficiaries $ 1,171
Other fully eligible participants 630
Other active participants not fully eligible 1,525
---------------
3,326
Unrecognized net gain 3,307
---------------
$ 6,633
===============
</TABLE>
For measurement purposes, an assumed health care cost trend rate of 10.5% was
used, decreasing by .5% per year to an ultimate rate of 5.5%. An increase of 1%
in the assumed health care cost trend rate would increase the accumulated
benefit obligation as of September 28, 1996 by $567 and the aggregate annual
service and interest cost by $88. The discount rate used in determining the
accumulated benefit obligation as of September 28, 1996 was 7.75%.
F. INTEREST
SCM receives a charge from USI for the carrying cost of parent company
investment in the form of interest expense. The charge is based on the liability
component of the net investment. SCM's allocated interest expense was $4.1
million in 1996. The effective annual percentage rate for interest expense was
approximately 7.8% in fiscal 1996. For purposes of the accompanying financial
statements, interest expense is assumed to equal interest paid.
11
<PAGE> 15
SCM Metal Products, Inc.
Notes to Financial Statements--Continued
G. PARENT COMPANY INVESTMENT
As SCM is an operating unit and wholly-owned subsidiary of USI, customary equity
and capital accounts are not maintained. Instead, parent company investment is
utilized by SCM and USI to account for all interunit transactions. Activity in
parent company investment for the year ended September 28, 1996 follows:
<TABLE>
<CAPTION>
<S> <C>
Balance beginning of year $ 14,254
Net income 5,030
Intercompany transactions with USI--net (756)
-----------------
$ 18,528
=================
</TABLE>
H. COMMITMENTS AND CONTINGENCIES
SCM is a party to various legal proceedings incidental to its business and is
subject to a variety of environmental and pollution control laws and regulations
in the jurisdictions in which it operates. As is the case with other companies
in similar industries, SCM faces exposure from actual or potential claims and
legal proceedings involving environmental matters. Although it is difficult to
quantify the potential impact of compliance with or liability under
environmental protection laws, management believes that the ultimate aggregate
cost to SCM of environmental remediation, as well as other legal proceedings
arising out of the normal course of business, will not result in a material
adverse effect upon its financial condition or results of operations.
I. INTERIM FINANCIAL INFORMATION (UNAUDITED)
The accompanying unaudited interim financial statements have been prepared from
the historical books and records of SCM. These financial statements have been
prepared by management in accordance with generally accepted accounting
principles and include such estimates and adjustments as deemed necessary to
present fairly the financial position, results of operations, and cash flows of
SCM.
12
<PAGE> 16
OM GROUP, INC. AND SCM METAL PRODUCTS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements have
been prepared by OMG's management. These financial statements reflect OMG's
acquisition of SCM and combine for the periods or date indicated the historical
consolidated financial statements of OMG and SCM, using the purchase method of
accounting.
OMG has a December 31 year end, while SCM has historically utilized a September
year end. For purposes of developing the pro forma financial statements, OMG and
SCM have been combined utilizing their respective fiscal years. The unaudited
pro forma combined condensed balance sheet reflects the adjustments as if the
acquisition had occurred on December 31, 1996. The unaudited pro forma combined
statement of income reflects adjustments as if the acquisition had occurred at
the beginning of the year indicated. These pro forma financial statements should
be read in conjunction with the historical financial statements and related
notes of OMG and SCM. The pro forma financial statements include preliminary
estimates and assumptions which OMG's management believes are reasonable. The
pro forma results are not necessarily indicative of the results which would have
occurred if the business combination had been in effect on the dates indicated,
or which may result in the future, and do not include any cost savings or other
effects of the planned integration of OMG and SCM.
The pro forma financial statements have been prepared using the following facts
and assumptions:
1. OMG acquires the assets and liabilities of SCM in exchange for a
total cash payment of $122 million.
2. OMG borrows $124 million to finance the acquisition price and
related transaction costs of $2 million.
3. The acquired assets and liabilities of SCM are recorded at
estimated fair values, as determined by OMG's management, based on
information currently available and on current tentative
assumptions as to the future operations of SCM. Accordingly, the
allocation of the purchase price to the acquired assets and
liabilities of SCM is subject to revision as a result of the final
determination of appraised and other fair values.
13
<PAGE> 17
OM Group, Inc. and SCM Metal Products, Inc.
Unaudited Pro Forma Combined Condensed Balance Sheet
December 31, 1996
(Thousands of Dollars)
<TABLE>
<CAPTION>
OMG SCM Pro Forma Pro Forma
Historical Historical Adjustments Combined
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,818 $ 405 $ 8,223
Accounts receivable 60,054 11,293 71,347
Inventories 195,050 11,748 206,798
Other current assets 8,245 1,426 9,671
------------------------------------------------------------------------
Total current assets 271,167 24,872 296,039
Property, plant and equipment--net 110,621 13,880 $ 8,573 (2a) 133,074
Other assets:
Unprocessed inventory 27,499 27,499
Goodwill and other intangible assets 23,036 2,124 3,230 (2b)
(2,124) (2c)
97,000 (2d) 123,266
Deferred income taxes 3,844 (1,576) (2f) 2,268
Other assets 6,310 980 7,290
------------------------------------------------------------------------
TOTAL ASSETS $ 438,633 $ 45,700 $ 105,103 $ 589,436
========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 3,586 $ 3,586
Accounts payable 77,330 $ 5,709 83,039
Accrued income taxes 2,753 3,156 5,909
Other accrued expenses 13,637 5,221 18,858
------------------------------------------------------------------------
Total current liabilities 97,306 14,086 111,392
Long-term debt 109,295 $ 124,000 (1) 233,295
Contract payable 27,499 27,499
Deferred income taxes 17,773 2,176 4,131 (2e) 24,080
Other long-term liabilities 1,438 10,910 (4,500) (2g) 7,848
Stockholders' equity 185,322 18,528 (18,528) (2h) 185,322
------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 438,633 $ 45,700 $ 105,103 $ 589,436
========================================================================
</TABLE>
See accompanying notes.
14
<PAGE> 18
OM Group, Inc. and SCM Metal Products, Inc.
Notes to Unaudited Pro Forma Combined Condensed Balance Sheet
The adjustments to give pro forma effect to reflect OMG's acquisition of SCM and
the estimated purchase price allocation at December 31, 1996 are as follows:
1. The borrowing by OMG to finance the $122 million acquisition price
and related transaction costs of $2 million.
2. The allocation of the aggregate purchase price of SCM, and the
recognition of the excess of aggregate purchase price over the
estimated fair value of net assets acquired, is as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
a. Adjust property, plant and equipment to estimated fair
value $ 8,573
b. Adjust intangible assets to estimated fair value 3,230
c. Eliminate the excess of cost over net assets acquired related to
SCM's acquisitions of businesses in prior
years (2,124)
d. Adjust for excess of purchase price over estimated fair value of
net assets acquired 97,000
e. Establish deferred income tax liability resulting from
the application of purchase accounting, assuming a
35% tax rate (4,131)
f. Reverse deferred income tax asset resulting from the application
of purchase accounting, assuming a 35%
tax rate (1,576)
g. Adjust benefit plan liabilities to current value 4,500
h. Eliminate net equity, prior to purchase accounting adjustments 18,528
--------------
AGGREGATE PURCHASE PRICE AND RELATED TRANSACTION COSTS $ 124,000
==============
</TABLE>
15
<PAGE> 19
OM Group, Inc. and SCM Metal Products, Inc.
Unaudited Pro Forma Combined Statement of Income
For the Twelve Months Ended December 31, 1996
(Thousands of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
OMG SCM Pro Forma Pro Forma
Historical Historical Adjustments Combined
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 387,999 $ 94,279 $ 482,278
Cost of products sold 304,025 71,252 $ 857 (1a)
(72) (1b) 376,062
------------------------------------------------------------------------
83,974 23,027 (785) 106,216
Selling, general and administrative
expenses 32,553 10,765 323 (1c)
2,425 (1d) 46,066
------------------------------------------------------------------------
Income from operations 51,421 12,262 (3,533) 60,150
Other income (expense):
Interest expense (7,485) (4,095) (4,275) (1e) (15,855)
Interest income 244 244
Foreign exchange gain 223 223
------------------------------------------------------------------------
(7,018) (4,095) (4,275) (15,388)
------------------------------------------------------------------------
Income before income taxes 44,403 8,167 (7,808) 44,762
Income taxes 14,356 3,137 (1,918) (1f) 15,575
------------------------------------------------------------------------
NET INCOME $ 30,047 $ 5,030 $ (5,890) $ 29,187
========================================================================
Weighted average number of common shares
outstanding (in thousands) 19,266 19,266
Net income per share (1g) $1.56 $1.52
</TABLE>
See accompanying notes.
16
<PAGE> 20
OM Group, Inc. and SCM Metal Products, Inc.
Notes to Unaudited Pro Forma Combined Statement of Income
The adjustments to give pro forma effect to OMG's acquisition of SCM and the
estimated purchase price allocation are as follows:
1. To reflect OMG's acquisition of SCM:
<TABLE>
<CAPTION>
<S> <C>
a. Recognize over ten years additional depreciation for write-up of
property, plant and equipment to fair value $ 857
b. Add back eliminated goodwill amortization expense 72
c. Recognize over ten years additional amortization for write-up of
intangible assets to estimated fair value 323
d. Amortize over a forty year period the excess of purchase price of
SCM over estimated fair value of net assets acquired 2,425
e. Recognize additional interest expense due to $124 million increase
in consolidated long-term debt to finance the acquisition and
related transaction costs 4,275
f. Record the income tax effect of the previous adjustments assuming
a 35% income tax rate 1,918
g. Pro forma net income per Common Share is computed
by dividing net income by the weighted average number of shares
outstanding
</TABLE>
17
<PAGE> 1
EXHIBIT 23.1
We consent to the incorporation by reference in the following Registration
Statements of our report dated March 7, 1997, with respect to the financial
statements of SCM Metal Products, Inc. for the year ended September 28, 1996
included in the Current Report on Form 8-K/A:
<TABLE>
<CAPTION>
Registration Number Description Filing Date
- - ------------------- ----------- -----------
<S> <C> <C>
33-74674 OM Group, Inc. Long-Term Incentive Compensation
Plan -- Form S-8 Registration Statement--
1,015,625 January 27, 1994
333-07529 OMG Americas, Inc. Employees' Profit Sharing Plan
-- Form S-8 Registration Statement -- 250,000
Shares July 3, 1996
333-07531 OM Group, Inc. Non-Employee Directors' Equity
Plan -- Form S-8 Registration Statement--
250,000 Shares July 3, 1996
</TABLE>
/S/ ERNST & YOUNG LLP
Cleveland, Ohio
March 21, 1997
