Om 10-Q 2000 Q2 Quarterly report

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 June 30, 2000
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 June 30, 2000: Common Stock, $.01 Par Value - 23,833,103 shares.

INDEX
OM GROUP, INC.
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed consolidated balance sheets -- June 30, 2000 and December 31, 1999
	Condensed statements of consolidated income -- Three months ended June 30, 2000 and      1999; Six months ended June 30, 2000 and 1999
	Condensed statements of consolidated cash flows -- Six months ended June 30, 2000 and      1999
	Notes to condensed consolidated financial statements -- June 30, 2000
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
Item 5.	Other information - Not applicable
Item 6.	Exhibits and Reports on Form 8-K
	(15.1)  Independent Accountants' Review Report      (15.2)  Letter re: Unaudited Interim Financial Information      (27)  Financial Data Schedule

OM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
(Unaudited)
	June 30,	December 31,
ASSETS	2000	1999
CURRENT ASSETS
Cash and cash equivalents	$     14,129	$       9,433
Accounts receivable	152,125	100,492
Inventories	367,677	332,810
Other current assets	84,694	54,289
Total Current Assets	618,625	497,024
PROPERTY, PLANT AND EQUIPMENT
Land	6,090	6,099
Buildings and improvements	129,089	93,819
Machinery and equipment	435,864	317,388
Furniture and fixtures	14,046	14,419
	585,089	431,725
Less accumulated depreciation	126,606	112,910
	458,483	318,815
OTHER ASSETS
Goodwill and other intangible assets	190,517	183,974
Other assets	40,112	18,108
TOTAL ASSETS	$1,307,737	$1,017,921
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt	$     12,839	$            25
Accounts payable	83,821	77,037
Other accrued expenses	59,022	47,794
Total Current Liabilities	155,682	124,856
LONG TERM LIABILITIES
Long-term debt	578,572	384,888
Deferred income taxes	51,672	31,434
Other long-term liabilities	45,531	27,515
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	258,895	258,815
Retained earnings	225,270	198,047
Treasury stock (126,243 shares in 2000
and 165,161 shares in 1999, at cost)	(5,436)	(5,537)
Accumulated other comprehensive loss	(2,246)	(1,837)
Unearned compensation	(443)	(500)
Total Stockholders' Equity	476,280	449,228
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$1,307,737	$1,017,921
See notes to condensed Consolidated Financial Statements

OM GROUP, INC.
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Thousands of dollars, except per share data)
(Unaudited)
	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2000	�� 1999	2000	1999
Net sales	$273,522	$123,706	$421,807	$237,819
Cost of products sold	218,122	84,244	324,405	161,248
	55,400	39,462	97,402	76,571
Selling, general and administrative expenses	18,488	14,832	33,449	29,138
INCOME FROM OPERATIONS	36,912	24,630	63,953	47,433
OTHER INCOME (EXPENSE)
Interest expense	(11,593)	(4,772)	(17,045)	(9,222)
Interest income	880	55	985	70
Foreign exchange (loss) gain	(167)	280	(239)	680
	(10,880)	(4,437)	(16,299)	(8,472)
INCOME BEFORE INCOME TAXES	26,032	20,193	47,654	38,961
Income taxes	7,604	6,145	14,076	11,940
NET INCOME	$  18,428	$  14,048	$  33,578	$  27,021
Net income per common share Net income per common share - assuming dilution	$0.77  $0.76	$0.59  $0.58	$1.41  $1.39	$1.14  $1.11
Dividends paid per common share	$0.11	$0.10	$0.22	$0.20
See notes to condensed Consolidated Financial Statements

OM GROUP, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Thousands of dollars)
(Unaudited)
	Six Months Ended
	June 30,
	2000	1999
OPERATING ACTIVITIES
Net income	$   33,578	$  27,021
Items not affecting cash:
Depreciation and amortization	18,499	13,453
Foreign exchange loss (gain)	239	(680)
Deferred income taxes	(1,762)	(1,067)
Changes in operating assets and liabilities	(25,604)	(57,631)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	24,950	(18,904)
INVESTING ACTIVITIES
Expenditures for property, plant and equipment, net	(27,735)	(43,850)
Acquisitions of businesses	(192,320)	(2,650)
NET CASH USED IN INVESTING ACTIVITIES	(220,055)	(46,500)
FINANCING ACTIVITIES
Dividend payments	(5,248)	(4,749)
Long-term borrowings	223,750	74,113
Payments of long-term debt	(17,252)	(2,023)
Purchase of treasury stock	(4,834)	(1,864)
Proceeds from exercise of stock options	3,808	1,477
NET CASH PROVIDED BY FINANCING ACTIVITIES	200,224	66,954
Effect of exchange rate changes on cash and cash equivalents	(423)	(573)
Increase in cash and cash equivalents	4,696	977
Cash and cash equivalents at beginning of period	9,433	7,750
Cash and cash equivalents at end of period	$   14,129	$    8,727
See notes to condensed Consolidated Financial Statements

Part I	Financial Information
Item 1	Financial Statements
OM GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2000
(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, 1999.
	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.
	In December, 1999, SAB No. 101 "Revenue Recognition in Financial Statements" was issued. SAB No. 101 provides clarification in applying generally accepted accounting principles to revenue recognition in financial statements. The Company must adopt SAB No. 101 by December 31, 2000; adoption of this statement is not expected to have a material effect on the earnings or the financial position of the Company.
Note B	Inventories
	Inventories consist of the following:

	June 30,	December 31,
	2000	1999
Raw materials and supplies Finished goods LIFO reserve Total inventories	$151,955   156,257 308,212     59,465 $367,677	$137,337      138,417    275,754        57,056    $332,810

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		Six Months Ended
		June 30,		June 30,
		2000	1999	2000	1999
	Net income	$18,428	$14,048	$33,578	$27,021
	Weighted average number of shares     outstanding	23,833	23,790	23,855	23,746
	Dilutive effect of stock options	444	582	389	562
	Weighted average number of shares     outstanding - assuming dilution	24,277	24,372	24,244	24,308
	Net income per common share	$.77	$.59	$1.41	$1.14
	Net income per common share -      assuming dilution	$.76	$.58	$1.39	$1.11
Note E	Comprehensive Income
	The principal differences between net income as reported in the condensed statements of consolidated income and comprehensive income are foreign currency translation adjustments recorded in stockholders' equity. Comprehensive income for the six months ended June 30, 2000 and 1999 was $33,169 and $26,823, respectively, and did not differ materially from net income.
Note F	Acquisition and Pro Forma Earnings Per Share
	On April 4, 2000, the Company acquired Outokumpu Nickel Oy (OKN) for a purchase price of $187.7 million, including related financing and transaction costs. The acquisition of OKN, which had fiscal 1999 sales of $341.5 million, was financed through bank borrowings and has been recorded using the purchase method of accounting. Accordingly, the Company's results of operations reflect the impact of OKN from the date of acquisition. The purchase price allocation was based on preliminary estimates and may be revised at a later date as fair value determinations are finalized.
	Pro forma net sales, net income and net income per share, for the six months ended June 30, 2000 and 1999, as if the acquisition had occurred as of January 1, 2000 and 1999, respectively, would have been as follows:

	Six Months Ended
	June 30, 2000	June 30, 1999
Net sales Net income Net income per common share Net income per common share - assuming dilution	$571,807     $  43,678     $1.83     $1.80	$376,140      $34,734      $1.46      $1.43
The pro forma results include estimates and assumptions which the Company's management believes are reasonable. However, the pro forma results are not necessarily indicative of the results which would have occurred if the acquisition had occurred on the dates indicated, or which may result in the future. Prior to the acquisition on April 4, 2000, OKN inventories were reduced. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of 2000 purchases. The effect of this liquidation was to increase net income during the six months ended June 30, 2000 by $6.1 million ($0.25 per share).
The aforementioned pro forma information reflects additional amortization of goodwill on a straight-line basis over 20 years; additional amortization of financing costs over 6 years; depreciation for the write-up of property, plant and equipment over 10 years; and an interest cost on the funds borrowed to finance the acquisition.
Results of Operations
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Net sales for the three months ended June 30, 2000 were $273.5 million, an increase of 121.1% compared to the same period for 1999. The increase in sales resulted principally through an increase in physical volume of products sold, due to the acquisition of OKN.
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 June 30,
	2000	1999
Cobalt - 99.3% Grade Nickel Copper	$ 12.73 to $15.15 $  3.62 to $  4.75 $  0.75 to $  0.84	$ 13.55 to $20.00 $  2.19 to $  2.49 $  0.62 to $  0.72

The following table sets forth the pounds of organics, inorganics, powders and metals sold during each period:

	Three Months Ended June 30,		Percentage
(in millions of pounds)	2000	1999	Change
Organics Inorganics Powders Metals	20.4        26.1        11.4        27.6        85.5	17.8        24.2        10.7          0.0        52.7	14.6%       7.9%       6.5%       - --%       62.2%

The increase in physical volume of organic products sold was primarily due to generally stronger cobalt catalyst sales in all geographic regions and increased sales of plastic additives in Asia Pacific. The increase in physical volume of inorganic products sold was primarily attributable to an increase in sales of nickel salts in the Americas to the steel industry. The increase in physical volume of powders sold reflects significant increases in cobalt powder sales to the Asia Pacific battery industry, increased sales of tungsten powders and cobalt extra fine to the hard metal and diamond tool industries, offsetting a decrease in sales of copper powders to the automotive industry. The increase in physical volume of metal products sold is a result of the acquisition of OKN and the resulting sales of nickel briquettes and cathodes to the European steel industry.

Gross profit increased to $55.4 million for the three month period ended June 30, 2000, a 40.4% increase over the same period in 1999. The improvement in gross profit was due to increased volumes of product sold. Cost of products sold increased to 79.7% for the three months ended June 30, 2000 from 68.1% of net sales during the same period of 1999 primarily as a result of the acquisition of OKN with lower value added nickel products, higher sales of lower value added cobalt containing products and higher nickel and copper pricing.

Selling, general and administrative expenses increased by $3.7 million in the three month period ended June 30, 2000, from the same period in 1999, resulting primarily from the OKN acquisition and general increases in administrative costs due to the Company's growth. Due to the relatively low selling, general and administrative expenses to support OKN and relatively high nickel prices, selling, general and administrative expenses decreased to 6.8% of net sales for the second quarter of 2000 compared to 12.0% of net sales for the same period in 1999.

Other expense - net in the second quarter of 2000 was $10.9 million compared to $4.4 million in 1999, due primarily to increased interest expense on higher outstanding borrowings as a result of the OKN acquisition and higher interest rates.

Income taxes as a percentage of income before income taxes decreased to 29.2% for the second quarter of 2000 from 30.4% in the same period in 1999. The lower effective tax rate is due primarily to higher income earned in the relatively low statutory tax country of Finland and a tax holiday in Malaysia.

Net income for the three month period ended June 30, 2000 was $18.4 million, an increase of $4.4 million from the same period in 1999, due to the aforementioned factors.

Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

Net sales for the six months ended June 30, 2000 were $421.8 million, an increase of 77.4% compared to the same period for 1999. The increase in sales resulted principally through an increase in physical volume of products sold, due to the acquisition of OKN.

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
	Six Months Ended June 30,
	2000	1999
Cobalt - 99.3% Grade Nickel Copper	$ 11.91 to $15.25 $  3.62 to $  4.75 $  0.75 to $  0.87	$6.70 to $20.00 $1.81 to $  2.49 $0.61 to $  0.72

The following table sets forth the pounds of organics, inorganics, powders and metals sold during each period:

	Six Months Ended June 30,		Percentage
(in millions of pounds)	2000	1999	Change
Organics Inorganics Powders Metals	39.8        53.3        23.4          27.6        144.1	35.3        48.0        20.9            0.0        104.2	12.7%       11.0%       12.0%       - --%       38.3%

	The increase in physical volume of organic products sold was primarily due to generally stronger cobalt catalyst sales in all geographic regions and increased sales of plastic additives in Asia Pacific. The increase in physical volume of inorganic products sold reflects higher sales of battery grade chemicals in Asia Pacific, strong demand for catalyst products in the United States and increased volume of electronics chemicals to the printed circuit board industry. The increase in physical volume of powders sold reflects significant increases in cobalt powder sales to the Asia Pacific battery industry, and increased sales of tungsten powders and cobalt extra fine to the hard metal and diamond tool industries. The increase in physical volume of metal products sold is a result of the acquisition of OKN and the resulting sales of nickel briquettes and cathodes to the European steel industry.
	Gross profit increased to $97.4 million for the six month period ended June 30, 2000, a 27.2% increase over the same period in 1999. The improvement in gross profit was due to increased volumes of product sold. Cost of products sold increased to 76.9% for the six months ended June 30, 2000 from 67.8% of net sales during the same period of 1999 primarily as a result of the acquisition of OKN with lower value added nickel products, higher sales of lower value added cobalt containing products and higher nickel and copper pricing.
	Selling, general and administrative expenses increased by $4.3 million in the six month period ended June 30, 2000, from the same period in 1999, resulting primarily from the OKN acquisition and general increases in administrative costs due to the Company's growth. Due to the relatively low selling, general and administrative expenses to support OKN and relatively high nickel prices, selling, general and administrative expenses decreased to 7.9% of net sales for the first six months of 2000 compared to 12.3% of net sales for the same period in 1999.
	Other expense - net in 2000 was $16.3 million compared to $8.5 million in 1999, due primarily to increased interest expense on higher outstanding borrowings as a result of the OKN acquisition and higher interest rates.
	Income taxes as a percentage of income before income taxes decreased to 29.5% for the first six months of 2000 from 30.6% in the same period in 1999. The lower effective tax rate is due primarily to higher income earned in the relatively low statutory tax country of Finland and a tax holiday in Malaysia.
	Net income for the six month period ended June 30, 2000 was $33.6 million, an increase of $6.6 million from the same period in 1999, due to the aforementioned factors.
	Liquidity and Capital Resources
	During the six month period ended June 30, 2000, the Company's net working capital increased by approximately $91 million, compared to December 31, 1999. This increase was primarily the result of the acquisition of OKN and reductions of current liabilities, through cash generated by operations. Capital expenditures in 2000 were primarily related to the continuing smelter construction project in Lubumbashi, Democratic Republic of Congo. These capital expenditures were funded through cash generated by operations as well as additional borrowings under the Company's revolving credit facility.
	In April, 2000, the Company's credit facilities were revised and increased to $675 million, in conjunction with the acquisition of OKN. These senior secured credit facilities are comprised of a $325 million revolving credit facility, a $150 million five-year term loan and a $200 million seven-year term loan.
	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.
	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 and products in the mature markets in the United States and Europe; (c) demand for metal-based specialty chemicals and products in Asia-Pacific and other less mature markets; and (d) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to political, social, economic and regulatory factors, together with fluctuations in currency exchange rates upon the Company's international operations.
	A discussion of market risk exposures is included in Part II, Item 7a, "Qualitative and Quantitative Disclosure About Market Risk", of the Company's 1999 Annual Report on Form 10-K. The acquisition of OKN on April 4, 2000 and subsequent assimilation into the Company's operations, increased the Company's exposure to changes in nickel commodity prices through its nickel refining operations, interest rates through increased variable rate borrowings, and foreign currency exchange rates through additional euro operating expenses and income taxes. The Company continues to manage the risks and/or costs associated with such exposure through its regular operating and financing activities.
Item 4	Submission of Matters to a Vote of Security Holders
	The annual meeting of stockholders of OM Group, Inc. was held on May 9, 2000. An election of Directors was held at which John E. Mooney and Markku Toivanen were nominated and elected for terms which expire in the year 2003. The following votes were cast with respect to each of the nominees:

Director	For	Against	Abstain
John E. Mooney Markku Toivanen	20,074,795 19,341,005	0     0	616,220 1,350,010
Other directors whose terms of office will continue after the meeting are:

	Term of
Director	Office Expires
Edward W. Kissel Frank E. Butler Lee R. Brodeur Thomas R. Miklich James P. Mooney	2001 2001 2002 2002 2002
Ernst & Young LLP was re-elected as independent auditors: For - 20,673,996; against - 5,861; abstain - 11,158.

Part II	Other Information
Item 6	Exhibits and Reports on Form 8-K
	The following exhibits are included herein:
	Exhibit (15.1) Independent Accountants' Review Report
	Exhibit (15.2) Letter re: Unaudited Interim Financial Information
	Exhibit (27) Financial Data Schedule
	The following reports on Form 8-K were filed during the three months ended June 30, 2000:
	1.	The Company's Current Report on Form 8-K filed with the Commission on April 18, 2000 regarding the Company's acquisition of Outokumpu Nickel Oy.
	2.	The Company's Current Report on Form 8-K/A filed with the Commission on June 19, 2000 regarding the Company's acquisition of Outokumpu Nickel Oy.

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.
August 11, 2000	OM GROUP, INC.
	/s/ James M. Materna

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 June 30, 2000, and the related condensed statements of consolidated income for the three-month and six-month periods ended June 30, 2000 and 1999, and the condensed statements of consolidated cash flows for the six-month periods ended June 30, 2000 and 1999. 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 auditing standards generally accepted in the United States, the consolidated balance sheet of OM Group, Inc. as of December 31, 1999, and the related statements of consolidated income, stockholders' equity, and cash flows for the year then ended, not presented herein, and in our report dated February 15, 2000, 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, 1999 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
August 11, 2000

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 10 and August 11, 2000, relating to the unaudited condensed consolidated interim financial statements of OM Group, Inc. that are included in its Forms 10-Q for the quarters ended March 31, 2000 and June 30, 2000.
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
August 11, 2000