UNITED STATES
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 quarterly period ended September 30, 1999
Commission File Number 0-22572
OM GROUP, INC.
(exact name of registrant as specified in its charter)
Delaware 52-1736882
(state or other jurisdiction of (I.R.S., Employer
incorporation or organization) Identification Number)
Tower City
50 Public Square
3800 Terminal Tower
Cleveland, Ohio 44113-2204
(Address of principal executive offices)
(zip code)
(216) 781-0083
(Registrant's telephone number, including area code)
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 _____X______ No ___________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1999: Common Stock, $.01 Par Value -
23,782,362 shares.
<PAGE>
INDEX
OM GROUP, INC.
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- September 30, 1999 and
December 31, 1998
Condensed consolidated statements of income -- Three months ended
September 30, 1999 and 1998; Nine months ended September 30, 1999
and 1998
Condensed consolidated statements of cash flows -- Nine months
ended September 30, 1999 and 1998
Notes to condensed consolidated financial statements - September
30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Part II. Other Information
Item 1. Legal Proceedings - Not applicable
Item 2. Changes in Securities - Not applicable
Item 3. Defaults upon Senior Securities - Not applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not
applicable
Item 5. Other information - Not applicable
Item 6. Exhibits and Reports on Form 8-K
(15) Independent Accountants' Review Report
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule
<PAGE>
Part I Financial Information
Item 1 Financial Statements
OM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except per share data)
(Unaudited)
September 30, December 31,
1999 1998
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,240 $ 7,750
Accounts receivable 90,832 80,906
Inventories 359,675 283,264
Other current assets 37,861 48,321
-------- --------
Total Current Assets 497,608 420,241
PROPERTY, PLANT AND EQUIPMENT
Land 5,315 4,241
Buildings and improvements 82,424 80,148
Machinery and equipment 295,242 242,137
Furniture and fixtures 13,500 12,242
-------- --------
396,481 338,768
Less accumulated depreciation 108,389 93,423
-------- --------
288,092 245,345
OTHER ASSETS
Goodwill and other intangible assets 185,018 188,486
Other assets 16,330 16,647
-------- --------
TOTAL ASSETS $987,048 $870,719
======== ========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 5 $ 141
Short-term debt 7,000 2,000
Accounts payable 75,685 76,412
Other accrued expenses 41,095 41,014
-------- --------
Total Current Liabilities 123,785 119,567
LONG-TERM LIABILITIES
Long-term debt 384,909 309,964
Deferred income taxes 32,562 29,950
Other long-term liabilities 8,199 7,095
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value:
Authorized 2,000,000 shares; no shares
issued or outstanding
Common stock, $0.01 par value:
Authorized 60,000,000 shares;
issued 23,959,346 shares 240 240
Capital in excess of par value 258,085 258,085
Retained earnings 186,834 155,691
Treasury stock (176,984 shares in 1999
and 234,847 shares in 1998, at cost) (6,072) (8,494)
Accumulated other comprehensive (loss) (1,494) (1,379)
-------- --------
Total Stockholders' Equity 437,593 404,143
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $987,048 $870,719
======== ========
See notes to condensed Consolidated Financial Statements
<PAGE>
OM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- ---------
Net sales $132,092 $124,683 $369,911 $401,935
Cost of products sold 91,207 88,522 252,455 295,235
------- ------- ------- -------
40,885 36,161 117,456 106,700
Selling, general and
administrative expenses 15,065 14,018 44,203 42,374
------- ------- ------- --------
INCOME FROM OPERATIONS 25,820 22,143 73,253 64,326
OTHER INCOME (EXPENSE)
Interest expense (4,929) (3,330) (14,151) (11,689)
Interest income 37 19 107 199
Foreign exchange (loss)gain (426) (246) 254 (128)
------- ------- -------- --------
(5,318) (3,557) (13,790) (11,618)
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 20,502 18,586 59,463 52,708
Income taxes 6,242 5,862 18,182 17,279
-------- -------- -------- --------
NET INCOME $ 14,260 $ 12,724 $ 41,281 $ 35,429
======== ======== ======== ========
Net income per common share $0.60 $0.54 $1.74 $1.57
Net income per common share -
assuming dilution $0.59 $0.53 $1.70 $1.52
Dividends paid per common share $0.10 $0.09 $0.30 $0.27
See notes to condensed Consolidated Financial Statements
<PAGE>
OM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Nine Months Ended
September 30,
-------------------
1999 1998
-------- --------
OPERATING ACTIVITIES
Net income $41,281 $35,429
Items not affecting cash:
Depreciation and amortization 20,533 19,507
Foreign exchange gain 254 128
Deferred income taxes 5,626 1,497
Changes in operating assets and liabilities (78,898) (49,858)
------- -------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (11,204) 6,703
INVESTING ACTIVITIES
Expenditures for property, plant and equipment, net (56,230) (65,017)
Acquisitions of businesses (2,650) (107,780)
------- --------
NET CASH USED IN INVESTING ACTIVITIES (58,880) (172,797)
FINANCING ACTIVITIES
Dividend payments (7,123) (6,113)
Long-term borrowings 81,863 160,917
Payments of long-term debt (2,054) (56,131)
Purchase of treasury stock (2,165) (7,071)
Proceeds from exercise of stock options 1,580 604
Sale of common stock 0 68,670
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 72,101 160,876
Effect of exchange rate changes on cash and
cash equivalents (527) (675)
------- -------
Increase (decrease) in cash and cash equivalents 1,490 (5,893)
Cash and cash equivalents at beginning of period 7,750 13,193
------- -------
Cash and cash equivalents at end of period $ 9,240 $ 7,300
======= =======
See notes to condensed Consolidated Financial Statements
<PAGE>
OM GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Thousands of dollars, except per share amounts)
Note A Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
financial presentation have been included. Past operating results
are not necessarily indicative of the results which may occur in
future periods. For further information refer to the consolidated
financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
In June, 1998, SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities" was issued. SFAS No. 133 provides a
comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. The Company
must adopt SFAS No. 133 no later than the first quarter of fiscal
year 2001; adoption of this statement is not expected to have a
material effect on earnings or the financial position of the
Company.
Note B Inventories
Inventories consist of the following:
September 30, December 31,
1999 1998
-------- ---------
Raw materials and supplies $149,932 $ 99,471
Finished goods 147,536 123,651
-------- --------
297,468 223,122
LIFO reserve 62,207 60,142
-------- --------
Total inventories $359,675 $283,264
======== ========
<PAGE>
Note C Contingent Matters
The Company 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, the Company faces exposure from actual or potential
claims and legal proceedings involving environmental matters.
Although it is very difficult to quantify the potential impact of
compliance with or liability under environmental protection laws,
management believes that the ultimate aggregate cost to the Company
of environmental remediation, as well as other legal proceedings
arising out of operations in the normal course of business, will
not result in a material adverse effect upon its financial
condition or results of operations.
Note D Computation of Earnings per Share
The following table sets forth the computation of net income per
common share and net income per common share - assuming dilution
(shares in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- ---------------
1999 1998 1999 1998
------- ------- ------- -------
Net income $14,260 $12,724 $41,281 $35,429
======= ======= ======= =======
Weighted average number of
shares outstanding 23,782 23,602 23,758 22,587
Dilutive effect of stock options 593 630 573 701
------ ------ ------ ------
Weighted average number of shares
outstanding - assuming dilution 24,375 24,232 24,331 23,288
====== ====== ====== ======
Net income per common share $.60 $.54 $1.74 $1.57
==== ==== ===== =====
Net income per common share -
assuming dilution $.59 $.53 $1.70 $1.52
==== ==== ===== =====
<PAGE>
Note E Comprehensive Income
The principal differences between net income as reported in the
condensed consolidated statements of income and comprehensive
income are foreign currency translation adjustments recorded in
stockholders' equity. Comprehensive income for the nine months
ended September 30, 1999 and 1998 was $41,166 and $35,812,
respectively, and did not differ materially from net income.
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 Compared to Three Months
Ended September 30, 1998
Net sales for the three months ended September 30, 1999 were $132.1
million, an increase of 5.9% compared to the same period for 1998.
The increase in sales resulted principally from an increase in
physical volume of cobalt-based products sold, which offset a
decline in the Company's product prices resulting principally from
lower cobalt raw material prices.
The following table summarizes market price fluctuations on the
primary raw materials used by the Company in manufacturing its
products:
Market Price Ranges per Pound
Three Months Ended September 30,
1999 1998
--------------- ----------------
Cobalt - 99.3% Grade $16.00 to $19.15 $17.50 to $19.83
Nickel $ 2.50 to $ 3.26 $ 1.83 to $ 2.05
Copper $ .74 to $ .83 $ .72 to $ .80
The following table sets forth the pounds of carboxylates, salts
and powders sold during each period:
Three Months Ended September 30, Percentage
(in millions of pounds) 1999 1998 Change
---- ---- ------
Carboxylates 17.6 15.6 12.8%
Salts 22.6 21.1 7.1%
Powders 10.9 9.7 12.4%
---- ---- -----
51.1 46.4 10.1%
==== ==== =====
<PAGE>
The increase in physical volume of carboxylate products sold was
primarily due to increased sales of cobalt catalysts in Europe.
The increase in physical volume of salt products reflects higher
sales of memory disk chemicals in Asia Pacific. The increase in
physical volume of powders sold was primarily due to an increase
in sales of coarse grade cobalt powder to the Asia Pacific
rechargeable battery market and to an increase in sales of
stainless steel alloy powders to the automotive parts industry.
Gross profit increased to $40.9 million for the three month period
ended September 30, 1999, a 13.1% increase over the same period in
1998. The improvement in gross profit was primarily the result of
a combination of increased volumes and lower expenses. Cost of
products sold decreased to 69.0% for the three months ended
September 30, 1999 from 71.0% of net sales during the same period
of 1998 as a result of lower cobalt pricing and improved product
mix.
Selling, general and administrative expenses increased by $1.0
million in the three month period ended September 30, 1999 from
the same period in 1998, resulting from general increases in
administrative costs due to the Company's growth. Selling,
general and administrative expenses remained relatively constant
as a percentage of net sales for the third quarter of 1999
compared to the same period in 1998.
Other expense - net in the third quarter of 1999 increased to $5.3
million compared to $3.6 million in 1998, due primarily to
increased interest expense in 1999 on higher outstanding
borrowings resulting from provisional payments made on cobalt-
copper concentrate and capital expenditures.
Income taxes as a percentage of income before income taxes
decreased to 30.4% for the third quarter of 1999 from 31.5% in the
same period in 1998. The lower effective tax rate is due
primarily to higher income earned in the relatively low statutory
tax country of Finland and the tax holiday in Malaysia.
Net income for the three month period ended September 30, 1999 was
$14.3 million, an increase of $1.5 million from the same period in
1998, due to the aforementioned factors.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998
Net sales for the nine months ended September 30, 1999 were $369.9
million, a decrease of 8.0% compared to the same period for 1998.
The decrease in sales resulted principally from lower cobalt raw
material prices, which more than offset an increase in physical
volume.
The following table summarizes market price fluctuations on the
primary raw materials used by the Company in manufacturing its
products:
<PAGE>
Market Price Ranges per Pound
Nine Months Ended September 30,
1999 1998
------------------ ------------------
Cobalt - 99.3% Grade $6.70 to $20.00 $17.50 to $21.18
Nickel $1.81 to $ 3.26 $ 1.83 to $ 2.69
Copper $ .61 to $ .83 $ .72 to $ .85
The following table sets forth the pounds of carboxylates, salts
and powders sold during each period:
Nine Months Ended September 30, Percentage
(in millions of pounds) 1999 1998 Change
---- ---- ------
Carboxylates 52.9 46.3 14.3%
Salts 70.6 65.3 8.1%
Powders 31.8 31.0 2.6%
----- ----- -----
155.3 142.6 8.9%
===== ===== =====
The increase in physical volume of carboxylate products sold was
primarily due to increased sales of PVC plastic additives in Asia
Pacific. The increase in physical volume of salt products
reflects higher sales of memory disk and battery grade chemicals
in Asia Pacific. The increase in physical volume of powders sold
was due to a third quarter increase in sales of coarse grade
cobalt powder to the Asia Pacific rechargeable battery market; an
increase in sales of stainless steel alloy powders to the
automotive parts industry; and an improving trend in sales of copper
powder products.
Gross profit increased to $117.5 million for the nine month period
ended September 30, 1999, a 10.1% increase over the same period
in 1998. The improvement in gross profit was primarily the result
of a combination of increased volumes, improved product mix and
lower expenses. Cost of products sold decreased to 68.2% for the
nine months ended September 30, 1999 from 73.5% of net sales
during the same period of 1998 as a result of lower cobalt pricing
and improved product mix.
Selling, general and administrative expenses increased by $1.8
million in the nine month period ended September 30, 1999 from the
same period in 1998, resulting from general increases in
administrative costs due to the Company's growth. Selling,
general and administrative expenses remained relatively constant
as a percentage of net sales for the first nine months of 1999
compared to the same period in 1998.
Other expense - net in 1999 was $13.8 million compared to $11.6
million in 1998, due primarily to increased interest expense on
higher outstanding borrowings as a result of provisional payments
made on cobalt-copper concentrate and capital expenditures.
<PAGE>
Income taxes as a percentage of income before income taxes
decreased to 30.6% for the first nine months of 1999 from 32.8% in
the same period in 1998. The lower effective tax rate is due
primarily to higher income earned in the relatively low statutory
tax country of Finland and the tax holiday in Malaysia.
Net income for the nine month period ended September 30, 1999 was
$41.3 million, an increase of $5.9 million from the same period in
1998, due to the aforementioned factors.
LIQUIDITY AND CAPITAL RESOURCES
During the nine month period ended September 30, 1999, the
Company's net working capital increased by approximately $73
million, compared to December 31, 1998. This increase was
primarily the result of provisional payments made on cobalt-copper
concentrate that was funded primarily through additional long-term
bank borrowings. Capital expenditures in 1999 were primarily due
to the completion of the Company's solvent extraction unit in
Kokkola, Finland and the continuing smelter construction project
in Lumbumbashi, Democratic Republic of Congo. These capital
expenditures were funded through additional borrowings under the
Company's revolving credit facility.
In January, 1999, the Company's revolving credit facility was
revised to increase available credit to $325 million to finance
the purchase of cobalt-copper concentrate, and to expand its
sources of capital by adding three new institutions. The Company
may also borrow up to $15 million under a revolving credit
agreement expiring March 31, 2000 in order to finance the
completion of the smelter construction project. At September 30,
1999, borrowings under this agreement totaled $7 million.
The Company believes that it will have sufficient cash generated
by operations and through its credit facilities to provide for its
future working capital and capital expenditure requirements and to
pay quarterly dividends on its common stock, subject to the
Board's discretion. Subject to several limitations in its credit
facilities, the Company may incur additional borrowings under this
line to finance working capital and certain capital expenditures,
including, without limitation, the purchase of additional raw
materials.
YEAR 2000
Based on ongoing reviews of the Company's systems, the Company
presently believes that with modifications to existing computer
software and conversions to new software, the Year 2000 Issue will
not pose significant operational problems to its normal business
activities.
<PAGE>
The Company's plan to resolve the Year 2000 Issue involves the
following four phases: assessment, remediation, testing and
implementation. The following table summarizes the Company's
progress on these Year 2000 phases, with respect to: 1) the nature
and potential effects of the Year 2000 on information (IT) and
non-IT systems; 2) the status of the Company's progress in
becoming Year 2000 ready for both IT and non-IT systems, including
estimated timetable for completion of each phase; and 3) third
parties and their exposure to the Year 2000.
Exposure Type Resolution Phases
---------------------- ---------------------------------------
Assess Remedi- Imple-
-ment ation Testing mentation
-------- -------- -------- ---------
INFORMATION SYSTEMS
------------------------
% Complete at 9/30/99 100% 100% 100% 90%
Expected Completion Date Nov 1999
NON-INFORMATION SYSTEMS
------------------------
Production and
Manufacturing Systems
% Complete at 9/30/99 100% 100% 100% 90%
Expected Completion Date Nov 1999
Products
% Complete at 9/30/99 100% N/A N/A N/A
Expected Completion Date
THIRD PARTIES
------------------------
System Interface
% Complete at 9/30/99 100% N/A N/A N/A
Expected Completion Date
Other Material Exposures
% Complete at 9/30/99 100% N/A N/A N/A
Expected Completion Date
This project will be completed using a combination of existing
internal and external resources. The total cost of the Year 2000
project is estimated at $2.5 million and is being funded through
operating cash flows. As of September 30, 1999, approximately
$2.2 million has been incurred. Of the total project cost,
approximately $.8 million is attributable to a new software
purchase, which has been capitalized. The remaining $1.7 million,
which is being expensed as incurred, is not expected to have a
material effect on the results of operations of the
Company.
<PAGE>
Management of the Company believes it has an effective program in
place to resolve the Year 2000 issue in a timely manner. As noted
above, the Company has not yet completed all necessary phases of
the Year 2000 program. Disruptions in the economy generally
resulting from Year 2000 issues could also materially adversely
affect the Company. The amount of potential liability and lost
revenue cannot be reasonably estimated at this time.
The Company does not believe that lack of completion of all phases
of the Year 2000 program by December 31, 1999 would materially
disrupt its operations, based on an evaluation of the status of
the program in September, 1999, and has determined that a
contingency plan is not necessary.
EURO CONVERSION
The Company has converted and/or installed the necessary software
modifications and is successfully operating in the post-euro
conversion European economy since the introduction of the euro
currency on January 1, 1999.
FORWARD LOOKING STATEMENTS
The Company is making this statement in order to satisfy the "safe
harbor" provisions contained in the Private Securities Litigation
Reform Act of 1995. The foregoing discussion includes forward-
looking statements relating to the business of the Company. Such
forward-looking statements are subject to uncertainties and
factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of
which are beyond the control of the Company, that could cause
actual results of the Company to differ materially from those
matters expressed in or implied by such forward-looking
statements. The Company believes that the following factors,
among others, could affect its future performance and cause actual
results of the Company to differ materially from those expressed
in or implied by forward-looking statements made by or on behalf
of the Company: (a) the price and supply of raw materials,
particularly cobalt, copper and nickel; (b) demand for metal-based
specialty chemicals in the mature markets in the United States and
Europe; (c) demand for metal-based specialty chemicals in Asia-
Pacific and other less mature markets; (d) the effect of non-
currency risks of investing in and conducting operations in
foreign countries, together with fluctuations in currency exchange
rates upon the Company's international operations, including those
relating to political, social, economic and regulatory factors;
and (e) the Company's ability and its customers' and suppliers'
ability to replace, modify or upgrade computer programs in ways
that adequately address the Year 2000 Issue.
<PAGE>
Item 3 Quantitative and Qualitative Disclosures About Market Risk
A discussion of market risk exposures is included in Part II, Item
7a, "Qualitative and Quantitative Disclosure About Market Risk",
of the Company's 1998 Annual Report on Form 10-K. There have been
no material changes during the nine months ended September 30,
1999.
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K
The following exhibits are included herein:
Exhibit (15) Independent Accountants' Review Report
Exhibit (15) Letter re: Unaudited Interim Financial Information
Exhibit (27) Financial Data Schedule
There were no reports on Form 8-K filed during the three months
ended September 30, 1999.
<PAGE>
SIGNATURE
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.
November 4, 1999 OM GROUP, INC.
/s/ James M. Materna
--------------------
James M. Materna
Chief Financial Officer
(Duly authorized signatory of OM Group, Inc.)
<PAGE>
Independent Accountants' Review Report
Stockholders and Board of Directors
OM Group, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of OM
Group, Inc. as of September 30, 1999, and the related condensed consolidated
statements of income for the three-month and nine-month periods ended
September 30, 1999 and 1998, and the condensed consolidated statements of
cash flows for the nine-month periods ended September 30, 1999 and 1998.
These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of OM Group, Inc. as of December
31, 1998, and the related consolidated statements of income, stockholders'
equity, and cash flows for the year then ended, not presented herein, and in
our report dated February 12, 1999, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December
31, 1998, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
------------------------
Cleveland, Ohio
November 4, 1999
<PAGE>
Acknowledgment of Independent Accountants
Stockholders and Board of Directors
OM Group, Inc.
We are aware of the incorporation by reference in the following Registration
Statements of OM Group, Inc. of our reports dated May 6, 1999, August 9, 1999
and November 4, 1999, relating to the unaudited condensed consolidated
interim financial statements of OM Group, Inc. which are included in its Form
10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30,
1999.
Registration
Number Description Filing Date
- ----------- ----------------------------------------- ----------------
33-74674 OM Group, Inc. Long-Term Incentive
Compensation Plan - Form S-8 Registration
Statement - 1,015,625 Shares 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-Employees Directors'
Equity Plan -- Form S-8 Registration
Statement -- 250,000 Shares July 3, 1996
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statements prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
------------------------
Cleveland, Ohio
November 4, 1999
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This schedule contains summary financial information extracted from the OM
Group, Inc. Condensed Consolidated Balance Sheet at September 30, 1999
(Unaudited) and the OM Group, Inc. Condensed Consolidated Statements of
Income for the three and nine months ended September 30, 1999 (Unaudited) and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> Dec-31-1999 Dec-31-1999
<PERIOD-END> Sep-30-1999 Sep-30-1999
<CASH> 9,240 9,240
<SECURITIES> 0 0
<RECEIVABLES> 90,832 90,832
<ALLOWANCES> 0 0
<INVENTORY> 359,675 359,675
<CURRENT-ASSETS> 497,608 497,608
<PP&E> 396,481 396,481
<DEPRECIATION> 108,389 108,389
<TOTAL-ASSETS> 987,048 987,048
<CURRENT-LIABILITIES> 123,785 123,785
<BONDS> 0 0
0 0
0 0
<COMMON> 240 240
<OTHER-SE> 437,353 437,353
<TOTAL-LIABILITY-AND-EQUITY> 987,048 987,048
<SALES> 132,092 369,911
<TOTAL-REVENUES> 132,092 369,911
<CGS> 91,207 252,455
<TOTAL-COSTS> 106,272 296,658
<OTHER-EXPENSES> 389 (361)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,929 14,151
<INCOME-PRETAX> 20,502 59,463
<INCOME-TAX> 6,242 18,182
<INCOME-CONTINUING> 14,260 41,281
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,260 41,281
<EPS-BASIC> .60 1.74
<EPS-DILUTED> .59 1.70
</TABLE>
