##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
    20549
  FORM 10-K
  x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934   For the fiscal year ended December 31, 2009

Commission file number 001-12515   OR
  o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   OM GROUP,
    INC.
 (Exact name of Registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

52-1736882(I.R.S. Employer
    Identification No.)127 Public Square,
    1500 Key Tower,
    Cleveland, Ohio(Address of principal executive
    offices)

44114-1221(Zip Code)   216-781-0083 Registrants
    telephone number, including area code
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock, par value $0.01 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
   o x
  o x
  x o
  o o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated filer  x

Accelerated filer o

Non-accelerated filero
    (Do not check if a smaller reporting company)

Smaller Reporting company o   Rule 12b-2 o x
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





OM Group, Inc.
  TABLE OF
    CONTENTS
   
 PART IItem 1.

Business


2Item 1A.

Risk Factors


9Item 1B.

Unresolved Staff Comments


16Item 2.

Properties


16Item 3.

Legal Proceedings


17Item 4.

Submission of Matters to a Vote of Security
    Holders


17PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


18Item 6.

Selected Financial Data


19Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


20Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


44Item 8.

Financial Statements and Supplementary Data


47Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


98Item 9A.

Controls and Procedures


98Item 9B.

Other Information


98PART IIIItem 10.

Directors and Executive Officers of the
    Registrant amd Corporate Governance


99Item 11.

Executive Compensation


99Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


99Item 13.

Certain Relationships and Related Transactions,
    Director Independence


100Item 14.

Principal Accountant Fees and Services


100PART IVItem 15.

Exhibits and Financial Statement Schedules


101Signatures


106EX-10.8EX-21EX-23EX-24EX-31.1EX-31.2EX-32   1




---



##### Table of Contents



PART I  Item 1.
    Business General
       Form 10-K
  Segments
 Form 10-K.
  Advanced
    Materials segment
   Specialty
    Chemicals segment
  2




---



##### Table of Contents



Electronic Chemicals:
  Advanced Organics:
  Ultra Pure Chemicals:
  Photomasks:
  Products
 and/or
 3




---



##### Table of Contents



Chemical 
  Pigments and Ceramics:
  Ceramic Pigments 
  Plastic Pigments 
  Glass Pigments 
  Powder Metallurgy 
  Battery Materials:
  Precursors 
  Raw Materials 
    
    Electronic Chemicals:  This unit works
    with electroless nickel, precious metals and related products
    used in the production of printed circuit board assemblies,
    memory disks, general metal finishing and electronic packaging.
    Products/processes in Electronic Chemicals, grouped by end
    market, are:  Printed Circuit Board Chemistry  ® E-PREP ®
  Memory Disk 
  General Metal Finishing 
  Electronic Packaging and Finishing
    Technologies 
  
    Advanced Organics:  Metal-based
    specialty chemicals from this business are used to meet the
    critical needs of a range of industries, including coatings and
    inks, tire, catalyst, and lubricant and fuel additives. Advanced
    Organics products, grouped by end market, include:  Coatings & Inks 
  Tire 
  Chemicals 
  Additives 
 4




---



##### Table of Contents



Ultra Pure Chemicals:
  Cleaner 
  Etchant 
  Photolithography 
  Services 
  
    Photomasks:  The Photomasks
    business manufactures photo-imaging masks (high-purity quartz or
    glass plates containing precision, microscopic images of
    integrated circuits) and reticles for the semiconductor,
    optoelectronics and microelectronics industries under the
    Compugraphics brand name. Photomasks are a key component of the
    semiconductor and integrated circuit value chains and perform a
    function similar to that of a negative in conventional
    photography.  Raw
    Materials
      5




---



##### Table of Contents



Metal Bulletin
  
    Competition
     
    Advanced Materials:  Sherritt
    International Corporation, Umicore S.A., Eurotungstene Poudres
    S.A.S., and The Shepherd Chemical Company
    Advanced Organics:  Dura
    Chemicals Inc.; Elementis plc; Troy Corporation; Byk-Chemie;
    Ciba Inc. (a subsidiary of BASF Group); Shepherd Chemical
    Company; Dainippon Ink and Chemicals, Incorporated; and Taekwang
    Industrial Co., Ltd
    Electronic Chemicals:  Atotech (a
    subsidiary of Total S.A.); Cookson Group plc; MacDermid
    Incorporated; Rohm & Haas Company (a subsidiary of Dow
    Chemical Company.); and Uyemura International, Inc.
    UPC:  Kanto Chemical Co., Inc.;
    Mitsubishi Chemical Corporation; KMG Chemicals, Inc.; Honeywell
    International Inc.; and BASF Group
    Photomasks:  Photronics, Inc.;
    Toppan Photomasks, Inc. (a wholly-owned subsidiary of Toppan
    Printing Co., Ltd.) 6




---



##### Table of Contents



Customers
       Foreign
    Currency
 non-U.S. operating
  Research
    and Development
          7




---



##### Table of Contents



Patents
    and Trademarks
   Environmental
    Matters
 and/or
        Employees
  8




---



##### Table of Contents



SEC
    Reports
 Forms 10-K, 10-Q 8-K 44114-1221
  Item 1A.
    Risk
    Factors Form 10-K.
  THE
    GLOBAL ECONOMIC DOWNTURN HAS HAD AND MAY CONTINUE TO HAVE A
    NEGATIVE EFFECT ON OUR BUSINESS AND OPERATIONS.
     CONTINUED
    OR FURTHER DETERIORATION OF THE ECONOMY COULD LEAD TO REDUCED
    EARNINGS AND COULD RESULT IN FUTURE GOODWILL OR INTANGIBLE ASSET
    IMPAIRMENTS.
    9




---



##### Table of Contents




    significant underperformance relative to projected operating
    results;
    significant changes in estimates of future cash flows from
    ongoing operations
    and/or from
    future opportunities related to current license agreements;
    significant changes in discount rates used in our impairment
    testing;
    further market capitalization deterioration;
    significant negative industry or economic trends.  and/or
  WE ARE AT
    RISK AS A RESULT OF CURRENT CIRCUMSTANCES AND DEVELOPMENTS IN
    THE DRC.
 and/or
  EXTENDED
    BUSINESS INTERRUPTION AT OUR FACILITIES COULD HAVE AN ADVERSE
    IMPACT ON OPERATING RESULTS.
 day-to-day and/or
 10




---



##### Table of Contents



WE ARE AT
    RISK FROM UNCERTAINTIES IN THE SUPPLY OF UNREFINED COBALT, WHICH
    IS OUR PRIMARY RAW MATERIAL.
     WE ARE AT
    RISK FROM FLUCTUATIONS IN THE PRICE OF COBALT AND OTHER RAW
    MATERIALS.
     THE
    MAJORITY OF OUR OPERATIONS ARE OUTSIDE THE UNITED STATES, WHICH
    SUBJECTS US TO RISKS THAT MAY ADVERSELY AFFECT OUR OPERATING
    RESULTS.
   
    potential supply disruptions as a result of political
    instability, civil unrest or labor difficulties in countries in
    which we have operations, especially the DRC and surrounding
    countries;
    agreements may be difficult to enforce, may be subject to
    government renegotiation, and receivables difficult to collect
    through a foreign countrys legal system;
    Customers in certain regions may have longer payment cycles;
    foreign countries may impose additional withholding taxes or
    otherwise tax our foreign income, impose tariffs or adopt other
    restrictions on foreign trade or investment, including currency
    exchange controls;
    unexpected adverse changes in foreign laws or regulatory
    requirements may occur, including with respect to labor,
    taxation, royalties, divestment, imports, exports, trade
    regulations, currency and environmental matters; and
    submission to the jurisdiction and judgments of foreign courts
    or arbitration panels, including judgments that may involve a
    sovereign nation, may adversely affect our business.   11




---



##### Table of Contents



WE MAY
    EXPERIENCE DIFFICULTIES TRANSITIONING EAGLEPICHER TECHNOLOGIES
    TO OM GROUP, INC. AND MAY NOT REALIZE THE EXPECTED BENEFITS OF
    THE ACQUISITION.
       WE INTEND
    TO CONTINUE TO SEEK ADDITIONAL ACQUISITIONS, BUT WE MAY NOT BE
    ABLE TO IDENTIFY OR COMPLETE TRANSACTIONS, WHICH COULD ADVERSELY
    AFFECT OUR STRATEGY.
     WE ARE
    EXPOSED TO FLUCTUATIONS IN FOREIGN EXCHANGE RATES, WHICH MAY
    ADVERSELY AFFECT OUR OPERATING RESULTS.
  12




---



##### Table of Contents



non-U.S. operating
  WE ARE
    SUBJECT TO STRINGENT ENVIRONMENTAL REGULATION AND MAY INCUR
    UNANTICIPATED COSTS OR LIABILITIES ARISING OUT OF ENVIRONMENTAL
    MATTERS.
     CHANGES
    IN ENVIRONMENTAL, HEALTH AND SAFETY REGULATORY REQUIREMENTS
    COULD AFFECT SALES OF OUR PRODUCTS.
 and/or
  OUR
    RESTRUCTURING ACTIVITIES MAY NOT ACHIEVE THE RESULTS WE
    ANTICIPATE.
 and/or
  WE MAY
    NOT BE ABLE TO RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGES IN
    OUR INDUSTRY OR IN OUR CUSTOMERS PRODUCTS.
  13




---



##### Table of Contents



BECAUSE
    WE DEPEND ON SEVERAL LARGE CUSTOMERS FOR A SIGNIFICANT PORTION
    OF OUR REVENUES, OUR OPERATING RESULTS COULD BE ADVERSELY
    AFFECTED BY ANY DISRUPTION OF OUR RELATIONSHIP WITH THESE
    CUSTOMERS OR ANY MATERIAL ADVERSE CHANGE IN THEIR
    BUSINESSES.
   WE
    OPERATE IN VERY COMPETITIVE INDUSTRIES, WHICH COULD ADVERSELY
    AFFECT OUR PROFITABILITY.
   INDUSTRY
    CONSOLIDATION BY COMPETITORS MAY LEAD TO INCREASED COMPETITION
    AND MAY HARM OUR OPERATING RESULTS.
   FAILURE
    TO RETAIN AND RECRUIT KEY PERSONNEL WOULD HARM OUR ABILITY TO
    MEET KEY OBJECTIVES.
  14




---



##### Table of Contents



CHANGES
    IN EFFECTIVE TAX RATES OR ADVERSE OUTCOMES RESULTING FROM
    EXAMINATION OF OUR INCOME TAX RETURNS COULD ADVERSELY AFFECT OUR
    FINANCIAL CONDITION OR OPERATING RESULTS.
   
    earnings being lower than anticipated in countries where we have
    lower statutory rates and higher than anticipated in countries
    where we have higher statutory rates
    changes in the valuation of our deferred tax assets and
    liabilities
    the timing and amount of earnings of foreign subsidiaries that
    we repatriate to the United States
    changes in the relevant tax, accounting and other laws,
    regulations, principles and interpretations.    WE MAY
    NOT BE ABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL
    PROPERTY RIGHTS, WHICH MAY ADVERSELY AFFECT OUR BUSINESS,
    FINANCIAL CONDITION, OR RESULTS OF OPERATIONS.
     OUR STOCK
    PRICE MAY CONTINUE TO BE VOLATILE.
   WE
    MAINTAIN CASH BALANCES IN U.S. AND FOREIGN FINANCIAL
    INSTITUTIONS WHICH COULD ADVERSELY AFFECT OUR
    LIQUIDITY.
   THE
    INSURANCE THAT WE MAINTAIN MAY NOT FULLY COVER ALL POTENTIAL
    EXPOSURES.
  15




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments   Item 2.
    Properties       Facility



ApproximateLocation

Function*

Segment

Square Feet


Leased/OwnedAfrica:Lubumbashi, DRC

M

Advanced Materials


116,000


joint venture (55% owned)North America:Cleveland, Ohio

A

Corporate


24,500


LeasedWestlake, Ohio

A, R

Specialty Chemicals


35,200


OwnedBelleville, Ontario

M

Specialty Chemicals


38,000


OwnedFranklin, Pennsylvania

M

Specialty Chemicals


331,500


OwnedSouth Plainfield, New Jersey

A, R

Specialty Chemicals


18,400


LeasedLos Gatos, California

M, A

Specialty Chemicals


24,912


LeasedFremont, California

M, A

Specialty Chemicals


16,000


LeasedMaple Plain, Minnesota

M, A, R

Specialty Chemicals


65,000


OwnedAsia-Pacific:Kuching, Malaysia

M, A, R,

Specialty Chemicals


55,000


Land-Leased 
    Building - OwnedTokyo, Japan

A

Advanced Materials


2,300


LeasedTaipei, Taiwan

A

Specialty Chemicals


2,350


LeasedChung-Li, Taiwan

M, A, R

Specialty Chemicals


88,000


LeasedSuzhou, China

M, A

Specialty Chemicals


85,530


OwnedWuzhong, Suzhou, China

M, A

Specialty Chemicals


30,000


LeasedShenzen, China

A, W

Specialty Chemicals


25,000


LeasedSingapore Electronic Chemicals

M, A, R

Specialty Chemicals


57,856


LeasedSingapore UPC

A, W

Specialty Chemicals


70,000


LeasedEurope:Manchester, England

M, A, R

Specialty Chemicals


73,300


OwnedKokkola, Finland

M, A, R

Advanced Materials


470,000


Land-Leased 
    Building - OwnedGlenrothes, Scotland

M, A

Specialty Chemicals


80,000


OwnedRiddings, England

M, A, R

Specialty Chemicals


30,000


LeasedSaint Cheron, France

W

Specialty Chemicals


42,030


OwnedSaint Fromond, France

M, A, R

Specialty Chemicals


99,207


OwnedRousset Cedex, France

A, W

Specialty Chemicals


14,400


LeasedCastres, France

M, A

Specialty Chemicals


43,000


OwnedLagenfeld, Germany

A, R

Specialty Chemicals


47,430


Leased     *
    
    M  Manufacturing/refining; A 
    Administrative; R  Research and Development;
    W  Warehouse 16




---



##### Table of Contents



Item 3.
    Legal
    Proceedings   Item 4.
    Submission
    of Matters to a Vote of Security Holders   Executive
    Officers of the Registrant
 Form 10-K.
      
    Chairman and Chief Executive Officer, August 2005
    Chief Executive Officer, June 2005
    President, Chief Operating Officer and Board Member, The
    Sherwin-Williams Company 1999  2005    
    Chief Financial Officer, March 2006
    Interim Chief Financial Officer, November 2005  March
    2006
    Owner and President, G&H Group Company, dba Partners
    in Success, May 2000  March 2006    
    Vice President, General Counsel and Secretary, September 2005
    Executive Vice President, General Counsel and Secretary, Jo-Ann
    Stores, Inc., 2003  2005    
    Vice President and General Manager, Specialties, January 2006
    Vice President and General Manager, Cobalt Group, August
    2003  January 2006    
    Vice President, Strategic Planning, Development and Investor
    Relations, February 2007
    Vice President, Corporate Affairs and Investor Relations,
    October 2005  February 2007
    Director of Investor Relations, July 2002  October
    2005 17




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities     2009

2008Sales Price

Cash

Sales Price

CashHigh

Low

Dividend

High

Low

DividendFirst quarter

$
24.38


$
13.90


$



$
66.00


$
49.00


$
Second quarter

$
30.10


$
18.94


$



$
62.14


$
32.65


$
Third quarter

$
35.97


$
25.24


$



$
37.84


$
20.36


$
Fourth quarter

$
34.44


$
26.41


$



$
25.62


$
12.20


$
    18




---



##### Table of Contents



Item 6.
    Selected
    Financial Data Year Ended December 31,2009


2008


2007


2006


2005(In millions, except per share data)Income Statement Data:Net sales

$
871.7


$
1,736.8


$
1,021.5


$
660.1


$
617.5Amounts attributable to OM Group, Inc. common
    shareholders:Income (loss) from continuing operations before cumulative
    effect of change in accounting principle, net of tax

$
(19.4
)

$
134.9


$
111.5


$
23.6


$
(12.4
)Income (loss) from discontinued operations, net of tax


1.5



0.1



135.4



192.2



49.0Cumulative effect of change in accounting principle, net of tax














0.3



2.3Net income (loss)

$
(17.9
)

$
135.0


$
246.9


$
216.1


$
38.9Net income (loss) per common share attribuable to OM Group,
    Inc.  basic:Continuing operations

$
(0.64
)

$
4.48


$
3.73


$
0.80


$
(0.43
)Discontinued operations


0.05







4.52



6.55



1.71Cumulative effect of change in accounting principle














0.01



0.08Net income

$
(0.59
)

$
4.48


$
8.25


$
7.36


$
1.36Net income (loss) per common share attribuable to OM Group,
    Inc.  assuming dilution:Continuing operations

$
(0.64
)

$
4.45


$
3.68


$
0.80


$
(0.43
)Discontinued operations


0.05







4.47



6.50



1.71Cumulative effect of a change in accounting principle














0.01



0.08Net income

$
(0.59
)

$
4.45


$
8.15


$
7.31


$
1.36Dividends declared and paid per common share

$



$



$



$



$
Balance Sheet Data:Total assets

$
1,444.1


$
1,434.4


$
1,469.2


$
1,618.2


$
1,220.3Long-term debt, excluding current portion(a)

$



$
26.1


$
1.1


$
1.2


$
416.1     (a)
    
    Amount in 2006 excludes the $400.0 million of outstanding
    Notes. On February 2, 2007, the Company notified its
    noteholders that it had called for redemption all
    $400.0 million of its outstanding Notes. The Notes were
    classified as a current liability at December 31, 2006.       19




---



##### Table of Contents



mark-to-market
  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   General
       Form 10-K
  Segments
    20




---



##### Table of Contents



Electronic Chemicals:
  Advanced Organics:
  Ultra Pure Chemicals:
  Photomasks:
  Key
    Factors Affecting Operations
        21




---



##### Table of Contents



non-U.S. operating
  Executive
    Overview
   Metal Bulletin
       22




---



##### Table of Contents



Consolidated
    Operating Results for 2009, 2008 and 2007
   2009





2008





2007(Millions of dollars & percent of net sales)Net sales

$
871.7






$
1,736.8






$
1,021.5Cost of products sold (excluding restructuring charges)


693.9







1,384.3







708.3Restructuring charges


12.0















Gross profit


165.8



19.0%



352.5



20.3%



313.2



30.7%Selling, general and administrative expenses


133.3



15.3%



166.1



9.6%



117.0



11.5%Goodwill impairment, net


37.5







8.8







Restructuring charges


0.7















Gain on termination of retiree medical plan


(4.7
)














Operating profit (loss)


(1.0
)


−0.1%



177.6



10.2%



196.2



19.2%Other income (expense), net


(0.1
)






(5.3
)






2.0Income tax expense


(20.9
)






(16.1
)






(76.3
)Income from continuing operations, net of tax


(22.0
)






156.2







121.9Discontinued operations:Income from discontinued operations, net of tax


1.5







0.1







63.1Gain on sale of discontinued operations, net of tax


















72.3Total income from discontinued operations, net of tax


1.5







0.1







135.4Consolidated net income (loss)


(20.5
)






156.3







257.3Net (income) loss attributable to noncontrolling interest


2.6







(21.3
)






(10.4
)Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(17.9
)





$
135.0






$
246.9Earnings per common share  basic:Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders

$
(0.64
)





$
4.48






$
3.73Income from discontinued operations attributable to OM Group,
    Inc. common shareholders


0.05















4.52Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(0.59
)





$
4.48






$
8.25Earnings per common share  assuming dilution:Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders

$
(0.64
)





$
4.45






$
3.68Income from discontinued operations attributable to OM Group,
    Inc. common shareholders


0.05















4.47Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(0.59
)





$
4.45






$
8.15Weighted average shares outstandingBasic


30,244







30,124







29,937Assuming dilution


30,244







30,358







30,276Amounts attributable to OM Group, Inc. common
    shareholders:Income (loss) from continuing operations, net of tax

$
(19.4
)





$
134.9






$
111.5Income from discontinued operations, net of tax


1.5







0.1







135.4Net income (loss)

$
(17.9
)





$
135.0






$
246.9  23




---



##### Table of Contents



2009
    Compared with 2008
   (In millions)2008 Net Sales

$
1,736.8Decrease in 2009 from:Advanced Materials


(720.0
)Specialty Chemicals


(144.9
)Intersegment items


(0.2
)2009 Net Sales

$
871.7        24




---



##### Table of Contents



Form 10-K
      (In millions)2008 Operating Profit

$
177.6Increase (decrease) in 2009 from:Advanced Materials


(150.2
)Specialty Chemicals


(38.2
)Corporate


10.2Intersegment items


(0.4
)2009 Operating Loss

$
(1.0
)     Year Ended December 31,2009


2008


Change(In thousands)Interest expense

$
(689
)

$
(1,597
)

$
908Interest income


928



1,920



(992
)Foreign exchange gain (loss)


(21
)


(3,744
)


3,723Other expense, net


(292
)


(1,913
)


1,621$
(74
)

$
(5,334
)

$
5,260    25




---



##### Table of Contents



2008
    Compared with 2007
   (In millions)2007 Net Sales

$
1,021.5Increase in 2008 from:Advanced Materials


470.5Specialty Chemicals


242.8Intersegment items


2.02008 Net Sales

$
1,736.8    26




---



##### Table of Contents



Metal Bulletin
        (In millions)2007 Operating Profit

$
196.2Increase (decrease) in 2008 from:Advanced Materials


(9.1
)Specialty Chemicals


(7.0
)Corporate


(1.7
)Intersegment items


(0.8
)2008 Operating Profit

$
177.6  27




---



##### Table of Contents



Year Ended December 31,(In thousands)

2008


2007


ChangeInterest expense

$
(1,597
)

$
(7,820
)

$
6,223Loss on redemption of Notes






(21,733
)


21,733Interest income


1,920



19,396



(17,476
)Interest income on Notes receivable from joint venture partner






4,526



(4,526
)Foreign exchange gain (loss)


(3,744
)


8,100



(11,844
)Other expense, net


(1,913
)


(449
)


(1,464
)$
(5,334
)

$
2,020


$
(7,354
)   Form 10-K).
     28




---



##### Table of Contents



Segment
    Results and Corporate Expenses
 Advanced
    Materials
   (Millions of dollars)

2009


2008


2007Net sales

$
472.4


$
1,192.4


$
721.9Operating profit

$
53.3


$
203.5


$
212.6     2009

2008

2007VolumesSales volume  metric tons*


27,073



31,450



25,432Cobalt refining volume  metric tons


8,962



9,639



9,158     *
    
    Sales volume includes cobalt metal resale and copper by-product
    sales.    2009


2008


2007Battery Materials


49
%


46
%


43
%Chemical


14
%


12
%


14
%Powder Metallurgy


7
%


11
%


12
%Ceramics


4
%


4
%


6
%Other*


26
%


27
%


25
%     *
    
    Other includes cobalt metal resale and copper by-product sales.    2009


2008


2007Americas


9
%


9
%


14
%Asia


55
%


49
%


51
%Europe


36
%


42
%


35
%     2009


2008


2007First Quarter

$
13.37


$
46.19


$
25.82Second Quarter

$
14.44


$
45.93


$
28.01Third Quarter

$
17.30


$
32.54


$
25.84Fourth Quarter

$
18.35


$
20.81


$
32.68Full Year

$
15.90


$
36.58


$
27.99  29




---



##### Table of Contents



2009


2008


2007First Quarter

$
1.56


$
3.52


$
2.69Second Quarter

$
2.12


$
3.83


$
3.47Third Quarter

$
2.65


$
3.49


$
3.50Fourth Quarter

$
3.01


$
1.80


$
3.28Full Year

$
2.34


$
3.16


$
3.52   2009
    Compared with 2008
 Net
    Sales
   (In millions)2008 Net Sales

$
1,192.4Increase (decrease) in 2009 from:Selling price


(398.7
)Cobalt metal resale


(169.0
)Volume


(122.0
)Copper (price and volume)


(28.6
)Other


(1.7
)2009 Net Sales

$
472.4     Operating
    Profit
   (In millions)2008 Operating Profit

$
203.5Increase (decrease) in 2009 from:2008 Lower of cost or market inventory charge


20.7Price (including cobalt metal resale)


(156.9
)Volume (including cobalt metal resale)


(51.9
)Copper by-product (price and volume)


(7.2
)Other by-product (price and volume)


(5.7
)Process-based material costs


15.22008 Loss on cobalt forward purchase contract


2.7Foreign currency


5.3Reductions in manufacturing and distribution expenses


23.7Reductions in SG&A expenses


8.0Other


(4.1
)2009 Operating Profit

$
53.3  30




---



##### Table of Contents



2008
    Compared with 2007
 Net
    Sales
     Operating
    Profit
   Specialty
    Chemicals Segment
   (Millions of dollars)

2009


2008


2007Net sales

$
401.8


$
546.7


$
303.9Operating profit (loss)

$
(27.0
)

$
11.2


$
18.2  31




---



##### Table of Contents



2009


2008


2007Semiconductor


27
%


24
%


3
%Coatings


18
%


18
%


20
%Tire


11
%


14
%


23
%Printed Circuit Boards


20
%


17
%


2
%Memory Disk


10
%


10
%


26
%Chemical


9
%


11
%


17
%General Metal Finishing


2
%


2
%


4
%Other


3
%


4
%


5
%     2009


2008


2007Americas


28
%


29
%


32
%Asia


44
%


39
%


43
%Europe


28
%


32
%


25
%     2009

2008

2007VolumesAdvanced Organics sales volume  metric tons*


21,787



28,956



30,272Electronic Chemicals sales volume  gallons
    (thousands)**


8,994



11,270



7,278Ultra Pure Chemicals sales volume  gallons (thousands)


4,564



5,152



n/aPhotomasks  number of masks


27,065



27,834



n/a     *
    
    2007 sales volumes include volume related to Borchers as of the
    acquisition date, October 1, 2007.**
    
    2007 sales volumes do not include volume related to the REM PCB
    business, which was acquired on December 31, 2007.  Net
    Sales
   (In millions)2008 Net Sales

$
546.7Increase (decrease) in 2009 from:Volume


(107.8
)Selling price/mix


(24.1
)Foreign currency


(14.3
)Other


1.32009 Net Sales

$
401.8    32




---



##### Table of Contents



Operating
    Profit
   (In millions)2008 Operating Profit





$
11.22008 Goodwill impairment






8.82008 Intangible asset impairment charge






0.22008 Lower of cost or market inventory charge






7.0Increase (decrease) in 2009 from:Volume


(36.8
)Price/Mix


0.7Reductions in manufacturing and distribution expenses


12.6Reductions in selling, general and administrative expenses


17.6Foreign currency


4.4Other


(0.9
)(2.4
)2009 Goodwill impairment, net






(37.5
)2009 Intangible asset impairment charges






(1.6
)2009 Restructuring charges






(12.7
)2009 Operating Loss





$
(27.0
)   Form 10-K Form 10-K
  2008
    Compared with 2007
 Net
    Sales
   Operating
    Profit
 step-up step-up
 33




---



##### Table of Contents



Corporate
    Expenses
   2009
    Compared with 2008
   2008
    Compared with 2007
   Liquidity
    and Capital Resources
 Cash Flow
    Summary
   2009


2008


changeNet cash provided by (used for):Operating activities

$
165.5


$
172.1


$
(6.6
)Investing activities


(30.5
)


(17.9
)


(12.6
)Financing activities


(26.7
)


(6.7
)


(20.0
)Discontinued operations-net cash used for operating activities


(0.4
)






(0.4
)Effect of exchange rate changes on cash


2.7



(2.9
)


5.6Net change in cash and cash equivalents

$
110.6


$
144.6


$
(34.0
)  34




---



##### Table of Contents




    the change in net working capital (defined as inventory plus
    accounts receivable less accounts payable) which contributed
    positive cash flows of $73.6 million in 2009 compared to
    $0.9 million in 2008;
    the impact of the $56.8 million change in refundable,
    prepaid and accrued income taxes. The 2008 refundable, prepaid
    and accrued income taxes included the impact of the tax benefit
    related to the recording of the tax benefit related to an
    election to take foreign tax credits on prior year U.S. tax
    returns of $46.6 million, which is expected to be received
    in 2010; and
    a $33.6 million change in cash flows associated with
    advances to suppliers.      2008


2007


changeNet cash provided by (used for):Operating activities

$
172.1


$
41.0


$
131.1Investing activities


(17.9
)


135.2



(153.1
)Financing activities


(6.7
)


(406.7
)


400.0Effect of exchange rate changes on cash


(2.9
)


1.4



(4.3
)Discontinued
    operations-net
    cash provided by operating activities






48.5



(48.5
)Discontinued
    operations-net
    cash used for investing activities






(1.5
)


1.5Net change in cash and cash equivalents

$
144.6


$
(182.1
)

$
326.7      35




---



##### Table of Contents



Debt and
    Other Financing Activities
 and/or debt-to-adjusted-earnings debt-to-adjusted-earnings
       36




---



##### Table of Contents



Capital
    Expenditures
   Contractual
    Obligations
   Payments due by period2010


2011


2012


2013


2014


Thereafter


TotalPurchase and other obligations(1)

$
278,342


$
253,460


$
56,243


$
4,981


$
1,319


$
1,313


$
595,658Debt obligations


























Interest payments


























Operating lease obligations


6,547



4,550



3,990



2,548



2,012



9,137



28,784Uncertain tax positions


6,627



















9,106



15,733Total

$
291,516


$
258,010


$
60,233


$
7,529


$
3,331


$
19,556


$
640,175     (1)
    
    For 2010 through 2014, purchase obligations include raw material
    contractual obligations reflecting estimated future payments
    based on committed tons of material per the applicable contract
    multiplied by the reference price of each metal. The price used
    in the computation is the average daily price for the last week
    of December 2009 for each respective metal. Commitments made
    under these contracts represent future purchases in line with
    expected usage.       37




---



##### Table of Contents



Off
    Balance Sheet Arrangements
 Form 10-K.
  Critical
    Accounting Policies
   Revenue Recognition
  Inventories first-in, end-of-the-reporting
    Goodwill and Other Intangible Assets
   38




---



##### Table of Contents



20-year
         39




---



##### Table of Contents



Other Intangible Assets
 40




---



##### Table of Contents



Long-Lived Assets
  Income Taxes
       41




---



##### Table of Contents



Share-Based Compensation
    Recently
    Issued Accounting Standards
 Accounting
    Guidance adopted in 2009:
     Form 10-K.
 42




---



##### Table of Contents



Form 10-K.
    Accounting
    Guidance Not Yet Adopted
  43




---



##### Table of Contents



Effects
    of Foreign Currency
 non-U.S. operating
    Environmental
    Matters
 and/or
    Form 10-K
  Cautionary
    Statement for Safe Harbor Purposes under the Private
    Securities Litigation Reform Act of 1995
 Form 10-K.
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk Quantitative
    and Qualitative Disclosures about Market Risk
 and/or
 44




---



##### Table of Contents



Commodity
    Price Risk
     Interest
    Rate Risk
     Credit
    Risk
   Market
    Risk
  45




---



##### Table of Contents



Foreign
    Currency Exchange Rate Risk
 non-U.S. operating
   46




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data   Report of
    Independent Registered Public Accounting Firm
                  47




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                    48




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Consolidated
    Balance Sheets
  December 31,


December 31,(In thousands, except share data)

2009


2008ASSETSCurrent assetsCash and cash equivalents

$
355,383


$
244,785Accounts receivable, less allowance of $6,884 in 2009 and $7,877
    in 2008


123,641



130,217Inventories


287,096



306,128Refundable and prepaid income taxes


44,474



55,059Other current assets


32,394



59,227Total current assets


842,988



795,416Property, plant and equipment, net


227,115



245,202Goodwill


234,189



268,677Intangible assets


79,229



84,824Notes receivable from joint venture partner,less
    allowance of $5,200 in 2009 and 2008


13,915



13,915Other non-current assets


46,700



26,393Total assets

$
1,444,136


$
1,434,427LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$



$
80Accounts payable


139,173



89,470Accrued income taxes


7,522



17,677Accrued employee costs


18,168



31,168Other current liabilities


24,099



21,074Total current liabilities


188,962



159,469Long-term debt






26,064Deferred income taxes


27,453



26,764Uncertain tax positions


15,733



6,123Other non-current liabilities


35,856



37,929Stockholders equity:Preferred stock, $.01 par value:Authorized 2,000,000 shares, no shares issued or outstanding






Common stock, $.01 par value:Authorized 90,000,000 shares; 30,435,569 shares issued
    in 2009 and 30,317,403 shares issued in 2008


304



303Capital in excess of par value


569,487



563,454Retained earnings


584,508



602,365Treasury stock (166,672 shares in 2009 and
    136,328 shares in 2008, at cost)


(6,025
)


(5,490
)Accumulated other comprehensive income (loss)


(16,969
)


(29,983
)Total OM Group, Inc. stockholders equity


1,131,305



1,130,649Noncontrolling interest


44,827



47,429Total equity


1,176,132



1,178,078Total liabilities and equity

$
1,444,136


$
1,434,427   See accompanying notes to consolidated financial
    statements.
 49




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Statements of
    Consolidated Operations
  Year Ended December 31(In thousands, except per share data)

2009


2008


2007Net sales

$
871,669


$
1,736,849


$
1,021,501Cost of products sold (excluding restructuring charges)


693,832



1,384,301



708,257Restructuring charges


12,054







Gross profit


165,783



352,548



313,244Selling, general and administrative expenses


133,302



166,126



117,009Goodwill impairment, net


37,504



8,800



Restructuring charges


654







Gain on termination of retiree medical plan


(4,693
)






Operating profit (loss)


(984
)


177,622



196,235Other income (expense):Interest expense


(689
)


(1,597
)


(7,820
)Loss on redemption of Notes










(21,733
)Interest income


928



1,920



19,396Interest income on Notes receivable from joint venture partner










4,526Foreign exchange gain (loss)


(21
)


(3,744
)


8,100Other expense, net


(292
)


(1,913
)


(449
)(74
)


(5,334
)


2,020Income (loss) from continuing operations before income tax
    expense


(1,058
)


172,288



198,255Income tax expense


(20,899
)


(16,076
)


(76,311
)Income (loss) from continuing operations, net of tax


(21,957
)


156,212



121,944Income from discontinued operations, net of tax


1,496



92



63,057Gain on sale of discontinued operations, net of tax










72,270Total income from discontinued operations, net of tax


1,496



92



135,327Consolidated net income (loss)


(20,461
)


156,304



257,271Net (income) loss attributable to noncontrolling interest


2,604



(21,301
)


(10,405
)Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(17,857
)

$
135,003


$
246,866Earnings per common share  basic:Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders

$
(0.64
)

$
4.48


$
3.73Income from discontinued operations attributable to OM Group,
    Inc. common shareholders


0.05







4.52Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(0.59
)

$
4.48


$
8.25Earnings per common share  assuming dilution:Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders

$
(0.64
)

$
4.45


$
3.68Income from discontinued operations attributable to OM Group,
    Inc. common shareholders


0.05







4.47Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(0.59
)

$
4.45


$
8.15Weighted average shares outstandingBasic


30,244



30,124



29,937Assuming dilution


30,244



30,358



30,276Amounts attributable to OM Group, Inc. common
    shareholders:Income (loss) from continuing operations, net of tax

$
(19,353
)

$
134,911


$
111,539Income from discontinued operations, net of tax


1,496



92



135,327Net income (loss)

$
(17,857
)

$
135,003


$
246,866   See accompanying notes to consolidated financial
    statements.
 50




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Statements of
    Consolidated Comprehensive Income (Loss)
  Year Ended December 312009


2008


2007(In thousands)Consolidated net income (loss)

$
(20,461
)

$
156,304


$
257,271Foreign currency translation adjustments


12,741



(36,109
)


(11,014
)Reclassification of hedging activities into earnings, net of tax


615







(9,824
)Unrealized loss on cash flow hedges, net of tax


(591
)Reversal of accumulated unrecognized gain on retiree medical plan


(137
)






Pension and post-retirement obligation


386



(1,539
)


(390
)Net change in accumulated other comprehensive income (loss)


13,014



(37,648
)


(21,228
)Comprehensive income (loss)


(7,447
)


118,656



236,043Comprehensive (income) loss attributable to noncontrolling
    interest


2,606



(21,303
)


(10,432
)Comprehensive income (loss) attributable to OM Group,
    Inc.

$
(4,841
)

$
97,353


$
225,611   See accompanying notes to consolidated financial
    statements.
 51




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Statements of
    Consolidated Cash Flows
 Year Ended December 31(In thousands)

2009


2008


2007Operating activitiesConsolidated net income (loss)

$
(20,461
)

$
156,304


$
257,271Adjustments to reconcile consolidated net income (loss) to net
    cash provided by operating activities:Total income from discontinued operations


(1,496
)


(92
)


(135,327
)Gain on termination of retiree medical plan


(4,693
)






Loss on redemption of Notes










21,733Depreciation and amortization


53,765



56,116



33,229Share-based compensation expense


6,026



7,621



7,364Excess tax benefit on exercise/vesting of share awards






(28
)


(1,744
)Foreign exchange (gain) loss


21



3,744



(8,100
)Gain on cobalt forward purchase contracts






(4,002
)


(6,735
)Interest income receivable from joint venture partner






3,776



(3,776
)Deferred income tax provision (benefit)


(7,471
)


(894
)


(15,756
)Lower of cost or market inventory charge






27,728



Goodwill impairment charges, net


37,504



8,800



Restructuring charges


12,708







Other non-cash items


801



4,536



431Changes in operating assets and liabilities, excluding the
    effect of business acquisitionsAccounts receivable


6,739



48,641



(38,364
)Inventories


17,142



76,985



(165,694
)Advances to suppliers


21,507



(12,131
)


(11,553
)Accounts payable


49,703



(124,712
)


92,161Refundable, prepaid and accrued income taxes


(7,675
)


(64,455
)


17,455Other, net


1,326



(15,813
)


(1,591
)Net cash provided by operating activities


165,446



172,124



41,004Investing activitiesExpenditures for property, plant and equipment


(25,686
)


(30,712
)


(19,357
)Proceeds from settlement of cobalt forward purchase contracts






10,736



Net proceeds from the sale of the Nickel business










490,036Proceeds from loans to consolidated joint venture partner






10,264



Proceeds from loans to non-consolidated joint ventures










7,568Acquisitions






(5,799
)


(336,976
)Other, net


(4,797
)


(2,423
)


(6,022
)Net cash provided by (used for) investing activities


(30,483
)


(17,934
)


135,249Financing activitiesPayments of long-term debt and revolving line of credit


(26,141
)


(45,513
)


(400,000
)Proceeds from the revolving line of credit






70,000



Premium for redemption of notes










(18,500
)Payment of loan from consolidated joint venture partner






(2,657
)Payment related to surrendered shares


(535
)


(3,251
)


Distribution to joint venture partners






(26,184
)


(1,350
)Proceeds from exercise of stock options


11



874



11,344Excess tax benefit on exercise of share awards






28



1,744Net cash used for financing activities


(26,665
)


(6,703
)


(406,762
)Effect of exchange rate changes on cash


2,697



(2,889
)


1,440Cash and cash equivalentsIncrease (decrease) from continuing operations


110,995



144,598



(229,069
)Discontinued operations  net cash provided by (used
    for) operating activities


(397
)






48,508Discontinued operations  net cash used for investing
    activities










(1,540
)Balance at the beginning of the year


244,785



100,187



282,288Balance at the end of the year

$
355,383


$
244,785


$
100,187   See accompanying notes to consolidated financial
    statements
 52




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Statements of
    Consolidated Total Equity
  Year Ended December 31(In thousands)

2009


2008


2007Common Stock  Shares Outstanding, net of
    Treasury SharesBeginning balance


30,181



30,061



29,740Shares issued under share-based compensation plans


88



120



32130,269



30,181



30,061Common Stock  DollarsBeginning balance

$
303


$
301


$
297Shares issued under share-based compensation plans


1



2



4304



303



301Capital in Excess of Par ValueBeginning balance


563,454



554,933



533,818Shares issued under share-based compensation plans


10



872



11,340(Tax deficiency) excess tax benefit on the exercise/vesting of
    share awards


(3
)


28



1,744Share-based compensation  employees


5,756



7,279



7,929Share-based compensation  non-employee directors


270



342



102569,487



563,454



554,933Retained EarningsBeginning balance, as originally reported


602,365



467,726



221,310Adoption of SFAS No. 158 in 2008






(171
)


Adoption of EITF
    No. 06-10
    in 2008






(193
)


Adoption of FIN No. 48 in 2007










(450
)Beginning balance, as adjusted


602,365



467,362



220,860Net income (loss) attributable to OM Group, Inc.


(17,857
)


135,003



246,866584,508



602,365



467,726Treasury StockBeginning balance


(5,490
)


(2,239
)


(2,239
)Reacquired shares


(535
)


(3,251
)


(6,025
)


(5,490
)


(2,239
)Accumulated Other Comprehensive Income (Loss)Beginning balance


(29,983
)


7,665



28,893Foreign currency translation


12,741



(36,109
)


(11,014
)Reclassification of hedging activities into earnings, net of tax
    expense of $216 in 2009 and $3,452 in 2007.


615







(9,824
)Unrealized loss on cash flow hedges, net of tax benefit of $208


(591
)






Reversal of accumulated unrecognized gain on retiree medical plan


(137
)






Pension and post-retirement obligation


386



(1,599
)


(390
)Change in measurement date for pension and post-retirement
    obligations






60



(16,969
)


(29,983
)


7,665Total OM Group Inc. Stockholders Equity


1,131,305



1,130,649



1,028,386Noncontrolling interestBeginning balance


47,429



52,314



43,286Net income (loss) attributable to the noncontrolling interest


(2,604
)


21,301



10,405Distributions to joint venture partners






(26,184
)


(1,350
)Foreign currency translation


(2
)


2



2744,827



47,429



52,314Total Equity

$
1,176,132


$
1,178,078


$
1,080,700   See accompanying notes to consolidated financial
    statements
 53




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and Subsidiaries
  (In thousands, except as noted and share and per share
    amounts)
  Note 1 
    Significant
    Accounting Policies Principles of Consolidation 
    Use of Estimates 
  Cash Equivalents
  Revenue Recognition 
      Cost of Products Sold 
  Restructuring  and/or
  Allowance for Doubtful Accounts 
 54




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Inventories  first-in, end-of-the-reporting
  Receivables from Joint Venture Partners and Noncontrolling
    Interests 
          Property, Plant and Equipment 
    Internal Use Software  350-40,
 55




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Long-lived Assets other than Goodwill 
  Goodwill and Intangible Assets 
    Retained Liabilities of Businesses Sold 
  Research and Development 
  Repairs and Maintenance 
  Accounting for Leases 
  Income Taxes 
  Foreign Currency Translation 
 56




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Derivative Instruments 
        Note 2 
    Recently Issued
    Accounting Guidance Accounting Guidance adopted in 2009:
    57




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
           58




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      Accounting Guidance Not Yet Adopted
   Note 3 
    Inventories   2009


2008Raw materials and supplies

$
150,113


$
168,060Work-in-process


15,952



14,797Finished goods


121,031



123,271$
287,096


$
306,128     Note 4 
    Property, Plant
    and Equipment, net   2009


2008Land and improvements

$
12,839


$
9,180Buildings and improvements


142,472



140,082Machinery and equipment


446,282



431,893Furniture and fixtures


12,361



12,118Property, plant and equipment, at cost


613,954



593,273Less accumulated depreciation


386,839



348,071$
227,115


$
245,202     Note 5 
    Investments  59




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      Note 6 
    Acquisitions       Cash

$
15,754Accounts receivable


47,919Inventories


20,527Other current assets


7,925Property, plant and equipment


63,127Intangibles


82,318Other assets


269Goodwill


164,224Total assets acquired


402,063Accounts payable


24,322Other current liabilities


11,980Other liabilities


28,512Total liabilities assumed


64,814Net assets acquired


337,249Cash acquired


15,754Purchase price, net of cash acquired

$
321,495    60




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
        Note 7 
    Goodwill and
    Other Intangible Assets          61




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
             62




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Advanced


SpecialtyMaterials


Chemicals


ConsolidatedBalance at January 1, 2008

$
103,326


$
218,846


$
322,172Final purchase price adjustments  REM






(15,731
)


(15,731
)Final purchase price adjustments  Borchers






1,062



1,062Income tax adjustment (valuation allowance)(a)






(11,500
)


(11,500
)Goodwill impairment charge






(8,800
)


(8,800
)Foreign currency translation adjustments






(18,526
)


(18,526
)Balance at December 31, 2008


103,326



165,351



268,6772008 goodwill impairment charge adjustment






4,139



4,139Goodwill impairment charge






(41,643
)


(41,643
)Foreign currency translation adjustments






3,016



3,016Balance at December 31, 2009

$
103,326


$
130,863


$
234,189     (a)
    
    The acquired deferred tax liabilities of the U.S. REM entities
    reduced the amount of the deferred tax valuation allowance
    against the Companys deferred tax assets which would have
    otherwise been required at the date of acquisition. As a result,
    the valuation allowance was reduced, with a corresponding
    reduction in goodwill.    AccumulatedGoodwillCarrying


ImpairmentAmount


ChargesAdvanced Materials

$
103,326


$
Advanced Organics






6,768Electronic Chemicals


114,991



Ultra Pure Chemicals


12,828



20,459Photomasks


3,044



19,077$
234,189


$
46,304    63




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    ForeignGross Carrying


Accumulated


CurrencyAmount


Amortization


Translation


Impairment


Net BalanceIntangible assets not subject to amortization:Tradenames

$
8,185


$



$
252


$
(667
)

$
7,770Intangible assets subject to amortization:Customer relationships


67,723



(15,767
)


1,362







53,318Developed technology


12,369



(1,577
)


153







10,945Capitalized software


12,788



(7,665
)


(70
)


(179
)


4,874License agreements


3,370



(482
)


(46
)


(883
)


1,959Other intangibles


918



(220
)


(335
)






36397,168



(25,711
)


1,064



(1,062
)


71,459Balance at December 31, 2009

$
105,353


$
(25,711
)

$
1,316


$
(1,729
)

$
79,229Intangible assets not subject to amortization:Tradenames

$
8,398


$



$
(13
)

$
(200
)

$
8,185Intangible assets subject to amortization:Customer relationships


67,723



(9,840
)


(19
)






57,864Developed technology


12,369



(851
)


(11
)






11,507Capitalized software


10,491



(4,217
)


(215
)






6,059License agreements


870















870Other intangibles


3,021



(2,384
)


(298
)






33994,474



(17,292
)


(543
)






76,639Balance at December 31, 2008

$
102,872


$
(17,292
)

$
(556
)

$
(200
)

$
84,824     Customer relationships


10Technology


16Capitalized software


2License agreements


4Other intangibles


3      64




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
          2010

$
9,3332011

$
7,7452012

$
7,3622013

$
6,6462014

$
6,329   Note 8 
    Restructuring     
    Employee severance and health care continuation of
    $5.0 million;
    An asset impairment charge of $5.5 million relating to
    property, plant and equipment;
    An inventory impairment charge attributable to the restructuring
    of $1.9 million; and
    Other charges, including intangible asset impairment, of
    $0.3 million. 65




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
     Additional Charges


TotalCharges Incurred in


Expected to


Charges Expected2009


be Incurred


to be IncurredCash chargesWorkforce reductions

$
4,967


$
2,461


$
7,428Decommissioning, demolition and lease termination charges


25



2,438



2,4634,992



4,899



9,891Non-cash chargesFixed asset impairment


5,536







5,536Inventory impairment


1,890







1,890Other charges


290







2907,716







7,716Total charges

$
12,708


$
4,899


$
17,607     Fixed Asset andWorkforce


InventoryReductions


Impairments


Other Charges


TotalBalance at December 31, 2008

$



$



$



$
Charge


4,967



7,426



315



12,708Foreign currency translation adjustment


(68
)










(68
)Cash payments


(40
)










(40
)Non-cash charges






(7,426
)


(290
)


(7,716
)Balance at December 31, 2009

$
4,859


$



$
25


$
4,884    66




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Note 9 
    Discontinued
    Operations and Disposition of the Nickel Business   2009


2008


2007Net sales

$



$



$
193,091Income from discontinued operations before income taxes

$
1,981


$
92


$
82,699Income tax expense


485







19,642Income from discontinued operations


1,496



92



63,057Gain on sale of discontinued operations










76,991Income tax expense










(4,721
)Total income from discontinued operations, net of tax

$
1,496


$
92


$
135,327       Note 10 
    Debt
 and/or debt-to-adjusted-earnings debt-to-adjusted-earnings
 67




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
            2009


2008Revolving credit agreement

$



$
25,000Notes payable  bank






1,144



26,144Less: Short-term debt






Less: Current portion of long-term debt






80Total long-term debt

$



$
26,064       Note 11 
    Derivative Instruments
  68




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Commodity
    Price Risk
     Cash Flow
    Hedges
   Fair
    Value Hedges
   Other
    Forward Contracts
   Foreign
    Currency Exchange Rate Risk
  69




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      Derivative AssetsDecember 31, 2009


December 31,2008Balance sheetBalance sheet Location


Fair Value


location


Fair ValueEuro forward contracts


Other current assets


$
258



n/a


$
Commodity contracts


n/a







Other current assets



143Total





$
258






$
143   Derivative LiabilitiesDecember 31, 2009


December 31, 2008Balance sheetBalance Sheet Location


Fair value


Location


Fair ValueCommodity contracts


Other current liabilities


$
226



Other current liabilities


$
200Total





$
226






$
200     Derivatives in Fair Value Hedging RelationshipsAmount of Gain (Loss) on DerivativeLocation of Gain (Loss)


Recognized in Income for the Yearon Derivative


Ended December 31,Recognized in Income


2009


2008


2007Commodity contracts


Cost of products sold


$
227


$
(6,753
)

$
   Location of Gain (Loss)Hedged Items in Fair


on Related Hedged


Amount of Gain (Loss) on Related Hedged ItemValue Hedging


Item Recognized in


Recognized in Income for the year ended December 31,Relationships


Income


2009


2008


2007Commodity contracts


Firm commitment



Cost of products sold


$
(227
)

$
6,753


$
   70




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Derivatives in Cash Flow Hedging RelationshipsAmount of Gain (Loss) on Derivative Recognized in AOCI(L)(Effective Portion) for the Year Ended2009


2008


2007Euro forward contracts

$
1,252


$



$
Commodity contracts


(1,843
)


624



504Total

$
(591
)

$
624


$
504   Location of Gain(Loss) Reclassified


Amount of Gain (Loss) Reclassified fromfrom AOCI(L) into


AOCI(L) into Income (Effective Portion)Income (Effective


for the year endedPortion)


2009


2008


2007Euro forward contracts


Cost of products sold


$
1,061


$



$
Commodity contracts


Net sales



(1,676
)


624



504Total





$
(615
)

$
624


$
504   Derivatives Not Designated as Hedging InstrumentsAmount of Gain Recognized inLocation of Gain

Income on Derivative for theRecognized in

Year EndedIncome on Derivative

2009


2008


2007Commodity contracts

Cost of products sold

$



$
4,002


$
6,735Total



$



$
4,002


$
6,735   Note 12 
    Fair Value Disclosures
   Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets for


Significant Other


SignificantDecember 31,


Identical Assets


Observable Inputs


Unobservable InputsDescription

2009


(Level 1)


(Level 2)


(Level 3)Assets:Foreign currency forward contracts

$
258


$



$
258


$
Total

$
258


$



$
258


$
Liabilities:Commodity contracts

$
226


$



$
226


$
Total

$
226


$



$
226


$
      71




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Fair ValueMeasurementsUsingSignificantUnobservableInputs(Level 3)DerivativesJanuary 1, 2008

$
6,735Realized or unrealized gains (losses) included in earnings


(2,752
)Purchases, issuances, and settlements


(4,040
)Transfers in and/or out of Level 3


December 31, 2008


(57
)Realized or unrealized gains (losses) included in earnings


227Purchases, issuances, and settlements


(170
)Transfers in and/or out of Level 3


December 31, 2009

$
  Non-recurring fair value measurements
       72




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
          Note 13 
    Income Taxes
   Year Ended December 312009


2008


2007United States

$
(43,099
)

$
(41,813
)

$
(50,638
)Outside the United States


42,041



214,101



248,893$
(1,058
)

$
172,288


$
198,255  73




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Year Ended December 312009


2008


2007Current tax provision (benefit):United States:Federal

$
7,122


$
(44,927
)

$
51,195State and local


144



167



80Outside the United States


21,104



61,730



40,792Total current


28,370



16,970



92,067Deferred tax provision (benefit):United States


(6,949
)


5,437



(18,997
)Outside the United States


(522
)


(6,331
)


3,241Total deferred


(7,471
)


(894
)


(15,756
)$
20,899


$
16,076


$
76,311     Year Ended December 312009


2008


2007Income (loss) from continuing operations before income tax
    expense

$
(1,058
)

$
172,288


$
198,255Income taxes at the United States statutory rate (35)%

$
(370
)

$
60,301


$
69,389Increase (decrease) in taxes resulting from:Effective tax rate differential on income (loss) outside of the
    United States


5,260



(17,673
)


(38,845
)Repatriation of foreign earnings


2,537



10,284



45,709Goodwill impairment


11,853



2,200



Malaysian tax holiday


(3,946
)


(4,962
)


(6,975
)U.S. losses with no tax benefit






4,611



Valuation allowance


1,025



1,808



4,103Liability for uncertain tax positions


8,160



2,317



240Foreign tax credits on amended prior year tax returns


(5,985
)


(46,636
)


Other, net


2,365



3,826



2,690Income tax expense

$
20,899


$
16,076


$
76,311Effective income tax rate


(a
)


9.3
%


38.5
%     (a)
    
    not meaningful   74




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
            non-U.S. income
   75




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    December 312009


2008Current asset  operating accruals

$
11,328


$
14,961Current liability  earnings repatriation


(611
)


(893
)Current liability  prepaid expenses


(5,683
)


(11,158
)Non-current asset  employee benefit and other accruals


14,133



17,189Non-current asset  domestic credit carryforwards


8,257



Non-current asset  foreign operating loss and credit
    carryforwards


2,753



2,385Non-current asset  state operating loss carryforwards


7,711



11,870Non-current liability  accelerated depreciation


(27,282
)


(31,701
)Valuation allowance


(24,141
)


(23,037
)Net deferred tax liability

$
(13,535
)

$
(20,384
)     December 312009


2008Other current assets

$
6,519


$
6,299Other non-current assets


8,077



85Other current liabilities


(678
)


(4
)Deferred income taxes  non-current liabilities


(27,453
)


(26,764
)$
(13,535
)

$
(20,384
)   2010-2011.
 76




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Balance at January 1, 2007

$
2,045Additions for tax positions related to the current year


7,976Additions for tax positions of prior years


379Reductions for tax positions of prior years


(78
)Balance at December 31, 2007


10,322Additions for tax positions related to the current year


662Additions for tax positions of prior years


4,177Reductions for tax positions of prior years


(8,649
)Foreign currency translation


(157
)Balance at December 31, 2008

$
6,355Additions for tax positions related to the current year


2,519Additions for tax positions of prior years


9,812Reductions for tax positions of prior years


(1,520
)Reductions for lapses of statute of limitations


(618
)Foreign currency translation


96Balance at December 31, 2009

$
16,644         Note 14 
    Pension and Other Post-Retirement Benefit Plans
  77




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    non-U.S. employees non-U.S. plans
        2009

2008U.S. PlansWeighted-average discount rate

5.50%

5.50%Expected return on pension plan assets

7.00%

7.00%Projected health care cost trend rate

n/a

8.00%Ultimate health care cost trend rate

n/a

5.00%Year ultimate health care trend rate is achieved

n/a

2012Non U.S. PlansWeighted-average discount rate

5.25% - 6.25%

5.0% - 6.25%Expected return on pension plan assets

5.0% - 6.0%

5.0% - 6.0%  78




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Pension BenefitsU.S. Plans2009


2008


2007Interest cost

$
1,307


$
1,295


$
1,317Amortization of unrecognized net loss


390



273



302Expected return on plan assets


(711
)


(857
)


(788
)Net periodic benefit cost


986



711



831Net (gain) loss arising during the year


(473
)


3,966



(408
)Net (gain) loss recognized during the year


(390
)


(273
)


(302
)Change in measurement date






(46
)


Total recognized in other comprehensive income


(863
)


3,647



(710
)Total recognized in net periodic benefit cost and other
    comprehensive income

$
123


$
4,358


$
121   Pension BenefitsNon-U.S. Plans2009


2008


2007Service cost

$
173


$
130


$
4Interest cost


122



120



8Expected return on plan assets


(17
)


(17
)


(2
)Net periodic benefit cost


278



233



10Net (gain) loss arising during the year


375



(325
)


9Net (gain) loss recognized during the year


7







Amortization of prior service credit


89







Exchange rate gain (loss)


6



17



Total recognized in other comprehensive income


477



(308
)


9Total recognized in net periodic benefit cost and other
    comprehensive income

$
755


$
(75
)

$
19  79




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Pension BenefitsU.S. Plans


Non-U.S. Plans2009


2008


2009


2008Change in benefit obligationProjected benefit obligation at beginning of year

$
(23,670
)

$
(24,472
)

$
(2,086
)

$
(1,937
)Change in measurement date






(141
)






(43
)Service cost










(173
)


(130
)Interest cost


(1,307
)


(1,295
)


(122
)


(120
)Actuarial loss (gain)


(893
)


516



(365
)


364Benefits paid


1,137



1,050



71



165Acquisition














(505
)Plan amendments










(89
)


Transfers out of the plan










32



Foreign currency exchange rate changes










(81
)


120SERP payments related to former CEO


672



672







Projected benefit obligation at end of year


(24,061
)


(23,670
)


(2,813
)


(2,086
)Change in plan assetsFair value of plan assets at beginning of year


8,845



12,686



293



330Change in measurement date






143







3Actual return on plan assets


2,076



(3,624
)


7



(23
)Employer contributions


229



690



71



165Foreign currency exchange rate changes










9



(17
)Benefits paid


(1,137
)


(1,050
)


(71
)


(165
)Fair value of plan assets at end of year


10,013



8,845



309



293Funded status  plan assets less than benefit
    obligations


(14,048
)


(14,825
)


(2,504
)


(1,793
)Recognized in accumulated other comprehensive income:Net actuarial (gain) loss


11,528



12,391



177



(299
)Amounts not yet recognized as a component of net
    postretirement benefit cost

$
11,528


$
12,391


$
177


$
(299
)Amounts recorded in the balance sheet consist of:Accrued benefit liability  current

$
(704
)

$
(704
)

$
(49
)

$
Accrued benefit liability  long-term


(13,344
)


(14,121
)


(2,455
)


(1,793
)Accumulated other comprehensive loss


11,528



12,391



177



(299
)Net amount recognized

$
(2,520
)

$
(2,434
)

$
(2,327
)

$
(2,092
)  80




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  non-U.S. plans. non-U.S. defined
        PensionExpected Benefit Payments

U.S. Plans

Non-U.S. Plans2010

$
1,762


$
1112011

$
1,777


$
1332012

$
1,811


$
1382013

$
1,787


$
742014

$
1,790


$
1072015-2019

$
9,064


$
798     PensionNet actuarial loss

$
339Prior service cost


6Total

$
345      81




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    December 31, 2009Actual Allocation%Equity securities


28
%Corporate bonds


29
%Government bonds


12
%Other fixed income


18
%Foreign assets


8
%Cash


5
%Total assets


100
%   December 31, 2008Target Allocation


Actual AllocationEquity securities


50
%


60
%Debt securities


50
%


39
%Cash






1
%Total assets


100
%


100
%     Quoted Prices in


SignificantActive Markets


Other


SignificantDecember 31,


for Identical


Observable


UnobservableCategory

2009


Assets (Level 1)


Inputs (Level 2)


Inputs (Level 3)Equity securities

$
2,822


$
2,822







Corporate bonds


2,924



2,924







Government bonds


1,181



1,181







Other fixed income


1,745



1,745







Foreign assets


824



824







Insurance contracts


66







66



Cash


760



760







Total

$
10,322


$
10,256


$
66


$
   non-U.S. companies
     82




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Other Post-retirement BenefitsU.S. Plans2009


2008


2007Service cost

$
25


$
112


$
82Interest cost


162



324



264Gain on termination of plan


(4,693
)






Net amortization






86



40Net periodic benefit cost


(4,506
)


522



386Net (gain) loss arising during the year






(1,700
)


1,131Net (gain) loss recognized during the year


137



(46
)


Amortization of prior service credit






(40
)


(40
)Change in measurement date






(14
)


Total recognized in other comprehensive income


137



(1,800
)


1,091Total recognized in net periodic benefit cost and other
    comprehensive income

$
(4,369
)

$
(1,278
)

$
1,477  83




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Other Post-retirement BenefitsU.S. Plans2009


2008Change in benefit obligationProjected benefit obligation at beginning of year

$
(4,506
)

$
(6,080
)Change in measurement date






(73
)Service cost


(25
)


(112
)Interest cost


(162
)


(324
)Actuarial loss (gain)






1,700Termination of plan


4,693



Benefits paid






383Projected benefit obligation at end of year






(4,506
)Funded status  plan assets less than benefit
    obligations

$



$
(4,506
)Recognized in accumulated other comprehensive income:Net actuarial gain






(351
)Prior service cost






214Amounts not yet recognized as a component of net
    postretirement benefit cost

$



$
(137
)Amounts recorded in the balance sheet consist of:Accrued benefit liability  current

$



$
(344
)Accrued benefit liability  non-current






(4,162
)Accumulated other comprehensive loss






(137
)Net amount recognized

$



$
(4,633
)  84




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Note 15 
    Accumulated Other Comprehensive Income (Loss)
 UnrealizedGains and





AccumulatedForeign


Losses on Cash


Pension and


OtherCurrency


Flow Hedging


Post-Retirement


ComprehensiveTranslation


Derivatives


Obligation


Income (Loss)Balance at January 1, 2007

$
29,094


$
9,824


$
(10,025
)

$
28,893Reclassification adjustments






(875
)






(875
)Current period credit (charge)


4,465



3,340



(390
)


7,415Disposal of Nickel business


(15,479
)


(12,289
)






(27,768
)Balance at December 31, 2007


18,080







(10,415
)


7,665Change in measurement date










60



60Current period credit (charge)


(36,109
)






(1,599
)


(37,708
)Balance at December 31, 2008


(18,029
)






(11,954
)


(29,983
)Reversal of accumulated unrecognized gain on retiree medical plan










(137
)


(137
)Reclassification adjustments






615







615Current period credit (charge)


12,741



(591
)


386



12,536Balance at December 31, 2009

$
(5,288
)

$
24


$
(11,705
)

$
(16,969
)   Note 16 
    Earnings Per Share
   2009


2008


2007(in thousands, except per share amounts)Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders

$
(19,353
)

$
134,911


$
111,539Weighted average shares outstanding  basic


30,244



30,124



29,937Dilutive effect of stock options and restricted stock






234



339Weighted average shares outstanding  assuming dilution


30,244



30,358



30,276Earnings per common share:Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders  basic

$
(0.64
)

$
4.48


$
3.73Income (loss) from continuing operations attributable to OM
    Group, Inc. common shareholders  assuming dilution

$
(0.64
)

$
4.45


$
3.68  85




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    2009


2008


2007(in thousands, except per share amounts)Net income (loss) attributable to OM Group, Inc. common
    shareholders

$
(17,857
)

$
135,003


$
246,866Weighted average shares outstanding  basic


30,244



30,124



29,937Dilutive effect of stock options and restricted stock






234



339Weighted average shares outstanding  assuming dilution


30,244



30,358



30,276Earnings per common share:Net income (loss) attributable to OM Group, Inc. common
    shareholders  basic

$
(0.59
)

$
4.48


$
8.25Net income (loss) attributable to OM Group, Inc. common
    shareholders  assuming dilution

$
(0.59
)

$
4.45


$
8.15       Note 17 
    Share-Based Compensation
    86




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
          Stock
    Options
     2009


2008


2007Risk-free interest rate


2.1
%


2.6
%


4.7
%Dividend yield










Volatility factor of Company common stock


0.59



0.47



0.47Weighted-average expected option term (years)


6.0



6.0



6.0Weighted-average grant-date fair value

$
11.23


$
27.72


$
26.24  87




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      Weighted-AverageFair Value atShares

Grant DateNon-vested at December 31, 2007


364,343


$
18.46Granted during 2008


168,175


$
27.72Vested during 2008


215,977


$
15.42Forfeited during 2008


9,252


$
25.62Non-vested at December 31, 2008


307,289


$
26.10Granted during 2009


188,003


$
11.23Vested during 2009


135,446


$
24.45Forfeited during 2009


22,034


$
16.62Non-vested at December 31, 2009


337,812


$
18.96     WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term


ValueOutstanding at January 1, 2009


890,589


$
38.86Granted


188,003



20.12Exercised


(550
)


20.12Expired unexercised


(20,066
)


51.03Forfeited


(22,034
)


32.17Outstanding at December 31, 2009


1,035,942


$
35.37



6.68


$
4,270Vested or expected to vest at December 31, 2009


1,015,507


$
35.23



6.65


$
4,186Exercisable at December 31, 2009


698,130


$
34.49



5.82


$
2,274      88




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Restricted
    Stock  Performance-Based Awards
          89




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    WeightedAverageGrant DateShares


Fair ValueNon-vested at January 1, 2009


226,814


$
41.03Granted


87,250



18.87Vested


(86,610
)


28.61Forfeited


(5,875
)


27.36Non-vested at December 31, 2009


221,579


$
37.52Expected to vest as of December 31, 2009


76,200   Restricted
    Stock Units  Performance-Based Awards
         UnitsNon-vested at January 1, 2009


Granted


22,480Forfeited


(3,100
)Non-vested at December 31, 2009


19,380Expected to vest at December 31, 2009


   Restricted
    Stock  Time-Based Awards
  90




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
        WeightedAverageGrant DateShares


Fair ValueNon-vested at January 1, 2009


60,235


$
45.63Granted


28,977


$
20.12Vested


(19,750
)

$
29.16Forfeitures


(3,800
)

$
29.77Non-vested at December 31, 2009


65,662


$
40.25Expected to vest as of December 31, 2009


64,874     Restricted
    Stock Units  Time-Based Awards
     UnitsNonvested at January 1, 2009


Granted


4,400Forfeited


(900
)Nonvested at December 31, 2009


3,500Expected to vest at December 31, 2009


3,500  91




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Note 18 
    Commitments and Contingencies
         Note 19 
    Lease Obligations
  92




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    2010

$
6,5472011


4,5502012


3,9902013


2,5482014


2,0122015 and thereafter


9,137Total minimum lease payments

$
28,784   Note 20 
    Reportable Segments and Geographic Information
       2009


2008


2007Net SalesElectronic chemicals

$
132,612


$
167,335


$
109,276Advanced organics


163,216



258,441



194,621Ultra Pure Chemicals


72,942



82,068



Photomasks


33,428



39,366



Eliminations


(397
)


(535
)


$
401,801


$
546,675


$
303,897    93




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      2009


2008


2007Business Segment InformationNet SalesAdvanced Materials

$
472,412


$
1,192,423


$
721,874Specialty Chemicals


401,801



546,675



303,897Intersegment items


(2,544
)


(2,249
)


(4,270
)$
871,669


$
1,736,849


$
1,021,501Operating profit (loss)Advanced Materials

$
53,301


$
203,545


$
212,609Specialty Chemicals(a)


(26,981
)


11,168



18,176Corporate(b)


(27,304
)


(37,540
)


(35,807
)Intersegment items






449



1,257(984
)


177,622



196,235Interest expense


(689
)


(1,597
)


(7,820
)Interest income


928



1,920



23,922Loss on redemption of Notes










(21,733
)Foreign exchange gain (loss)


(21
)


(3,744
)


8,100Other expense, net


(292
)


(1,913
)


(449
)(74
)


(5,334
)


2,020Income (loss) from continuing operations before income taxes

$
(1,058
)

$
172,288


$
198,255Expenditures for property, plant & equipmentAdvanced Materials

$
18,996


$
21,783


$
15,336Specialty Chemicals


6,690



8,929



4,021$
25,686


$
30,712


$
19,357Depreciation and amortizationAdvanced Materials

$
26,303


$
26,331


$
26,043Specialty Chemicals


26,508



28,727



6,290Corporate


954



1,058



896$
53,765


$
56,116


$
33,229Total assetsAdvanced Materials

$
795,186


$
746,347Specialty Chemicals


503,737



579,185Corporate


145,213



108,895$
1,444,136


$
1,434,427     (a)
    
    Specialty Chemicals includes a $37.5 million non-cash
    goodwill impairment charge and a $12.7 million
    restructuring charge in 2009.  (b)
    
    Corporate includes a $4.7 million gain on the termination
    of the Companys retiree medical plan in 2009.  94




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Long-LivedNet Sales(a)


Assets(b)Geographic Region Information2009Finland

$
260,361


$
89,610United States


153,539



36,388Japan


190,122



91Other


267,647



48,774Democratic Republic of Congo






52,252$
871,669


$
227,1152008Finland

$
581,260


$
85,904United States


280,275



40,762Japan


536,620



102Other


338,694



55,731Democratic Republic of Congo






62,703$
1,736,849


$
245,2022007Finland

$
373,148United States


178,894Japan


313,195Other


156,264$
1,021,501     (a)
    
    Net sales attributed to the geographic area are based on the
    location of the manufacturing facility, except for Japan, which
    is a sales office.  (b)
    
    Long-lived assets consists of property, plant and equipment, net.  Note 21 
    Subsequent Events
  95




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      Note 22 
    Quarterly Results of Operations (Unaudited)
 2009First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Full YearNet sales

$
191,706


$
203,352


$
235,239


$
241,372


$
871,669Gross profit

$
26,615


$
34,434


$
42,679


$
62,055


$
165,783Amounts attributable to OM Group, Inc. common shareholders:Income (loss) from continuing operations, net of tax

$
(8,541
)

$
(35,006
)

$
9,579


$
14,615


$
(19,353
)Income (loss) from discontinued operations, net of tax


264



(325
)


1,846



(289
)

$
1,496Net income (loss)

$
(8,277
)

$
(35,331
)

$
11,425


$
14,326


$
(17,857
)Net income (loss) per common share  basicContinuing operations

$
(0.28
)

$
(1.16
)

$
0.32


$
0.48


$
(0.64
)Discontinued operations


0.01



(0.01
)


0.06



(0.01
)


0.05Net income (loss)

$
(0.27
)

$
(1.17
)

$
0.38


$
0.47


$
(0.59
)Net income (loss) per common share  assuming dilutionContinuing operations

$
(0.28
)

$
(1.16
)

$
0.32


$
0.48


$
(0.64
)Discontinued operations


0.01



(0.01
)


0.06



(0.01
)


0.05Net income (loss)

$
(0.27
)

$
(1.17
)

$
0.38


$
0.47


$
(0.59
)             96




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  2008First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Full YearNet sales

$
480,795


$
510,825


$
448,630


$
296,599


$
1,736,849Gross profit

$
136,666


$
126,023


$
86,261


$
3,598


$
352,548Amounts attributable to OM Group, Inc. common shareholders:Income (loss) from continuing operations

$
55,589


$
56,594


$
55,746


$
(33,018
)

$
134,911Income (loss) from discontinued operations, net of tax


(369
)


(362
)


520



303


$
92Net income (loss)

$
55,220


$
56,232


$
56,266


$
(32,715
)

$
135,003Net income (loss) per common share  basicContinuing operations

$
1.85


$
1.88


$
1.85


$
(1.09
)

$
4.48Discontinued operations


(0.01
)


(0.01
)


0.01



0.01



Net income (loss)

$
1.84


$
1.87


$
1.86


$
(1.08
)

$
4.48Net income (loss) per common share  assuming dilutionContinuing operations

$
1.82


$
1.86


$
1.84


$
(1.09
)

$
4.45Discontinued operations


(0.01
)


(0.01
)


0.01



0.01



Net income (loss)

$
1.81


$
1.85


$
1.85


$
(1.08
)

$
4.45      97




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   Item 9A.
    Controls
    and Procedures Evaluation
    of Disclosure Controls and Procedures
 Rule 13a-15(e)
    
 Managements
    Report on Internal Control over Financial Reporting
 Rules 13a-15(f).
    Changes
    in Internal Controls
   Item 9B.
    Other
    Information  98




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers of the Registrant and Corporate
    Governance Form 10-K.
      www.omgi.com 44114-1221
    Item 11.
    Executive
    Compensation   Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  99




---



##### Table of Contents



Equity
    Compensation Plan Information
   Number of securitiesremaining available forfuture issuance underNumber of securities



equity compensation plansto be issued upon

Weighted-average

(excluding securitiesexercise of

exercise price of

issuable underoutstanding options

outstanding options

outstanding options)Equity Compensation Plans Approved by the Stockholders


947,008


$
35.53



2,427,729Equity Compensation Plans Not Approved by the Stockholders(a)


88,934


$
33.67



     (a)
    
    As an inducement to join the Company, on June 13, 2005, the
    Chief Executive Officer was granted options to purchase
    88,934 shares of common stock that are not covered by the
    equity compensation plans approved by the Companys
    stockholders. These options have an exercise price of $33.67 per
    share (the market price of Company stock on the grant date was
    $24.89) and became exercisable on May 31, 2008. The options
    have an expiration date of June 13, 2015.  Item 13.
    Certain
    Relationships and Related Transactions, Director
    Independence   Item 14.
    Principal
    Accountant Fees and Services  100




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules   Consolidated Balance Sheets at December 31, 2009 and 2008Statements of Consolidated Operations for the years ended
    December 31, 2009, 2008 and 2007Statements of Consolidated Comprehensive Income for the years
    ended December 31, 2009, 2008 and 2007Statements of Consolidated Cash Flows for the years ended
    December 31, 2009, 2008 and 2007Statements of Consolidated Stockholders Equity for the
    years ended December 31, 2009, 2008 and 2007Notes to Consolidated Financial Statements        Form 10-K:
  (3) Articles of Incorporation and By-laws3.1

Restated Certificate of Incorporation of OM Group, Inc.
    (incorporated by reference to Exhibit 3.1 of the Companys
    Quarterly Report on Form 10-Q filed on November 6, 2008).3.2

Amended and Restated Bylaws of OM Group, Inc. (incorporated by
    reference to Exhibit 3.2 to the Companys Annual Report on
    Form 10-K filed on February 28, 2008).(4) Instruments defining rights of security holders
    including indentures.4.1

Form of Common Stock Certificate of the Company.(10) Material Contracts10.1

Technology Agreement among Outokumpu Oy, Outokumpu Engineering
    Contractors Oy, Outokumpu Research Oy, Outokumpu Harjavalta
    Metals Oy and Kokkola Chemicals Oy dated March 24, 1993. *10.2

OM Group, Inc. Benefit Restoration Plan, effective January 1,
    1995 (incorporated by reference to Exhibit 10.9 to the
    Companys Registration Statement on Form S-4 (No.
    333-84128) filed on March 11, 2002).*10.3

Trust under OM Group, Inc. Benefit Restoration Plan, effective
    January 1, 1995 (incorporated by reference to Exhibit 10.10 to
    the Companys Registration Statement on Form S-4 (No.
    333-84128) filed on March 11, 2002).*10.4

Amendment to OM Group, Inc., Benefit Restoration Plan (frozen
    Post-2004/Pre-2008 Terms).(incorporated by reference to Exhibit
    10.4 of the Companys Annual Report filed on Form 10-K on
    February 28, 2008).10.5

Stock Purchase Agreement dated as of October 7, 2007 by and
    between Rockwood Specialties Group, Inc. and OM Group, Inc.
    (incorporated by reference to Exhibit 10.5 of the Companys
    Annual Report filed on Form 10-K on February 28, 2008).*10.6

OM Group, Inc. Bonus Program for Key Executives and Middle
    Management.  101




---



##### Table of Contents



+10.7

Joint Venture Agreement among OMG B.V., Groupe George Forrest
    S.A., La Generale Des Carrieres Et Des Mines and OM Group,
    Inc. to partially or totally process the slag located in the
    site of Lubumbashi, Democratic Republic of Congo (incorporated
    by reference to Exhibit 10.17 to the Companys Annual
    Report on Form 10-K filed on March 31, 2005).10.8

Sale and purchase agreement dated as of December 23, 2009 by and
    among EaglePicher Corporation, as guarantor of the Seller,
    EaglePicher Technologies Holdings, LLC, as the Seller,
    EaglePicher Technologies, LLC, as the Company, OM Group, Inc.,
    as limited guarantor of the Buyer, and OMG Energy Holdings,
    Inc., as the Buyer.+10.9

Long Term Slag Sales Agreement between La Generale Des
    Carriers Et Des Mines and J.V. Groupement Pour Le Traitement Du
    Terril De Lubumbashi (filed as an Annex to Exhibit10.7).+10.10

Long Term Cobalt Alloy Sales Agreement between J.V. Groupement
    Pour Le Traitement Du Terril De Lubumbashi and OMG Kokkola
    Chemicals Oy (filed as an Annex to Exhibit10.7).+10.11

Tolling Agreement between Groupement Pour Le Traitement Du
    Terril De Lubumbashi and Societe De Traitement Due Terril De
    Lubumbashi (filed as an Annex to Exhibit10.7).*10.12

OM Group, Inc. 1998 Long-Term Incentive Compensation Plan
    (incorporated by reference to Exhibit 10.22 to the
    Companys Annual Report on Form 10-K filed on March 31,
    2005).*10.13

Separation Agreement by and between OM Group, Inc. and Thomas R.
    Miklich dated October 17, 2003 (incorporated by reference to
    Exhibit 10.33 to the Companys Annual Report on Form 10-K
    filed on March 31, 2005).*10.14

Form of Stock Option Agreement between OM Group, Inc. and Joseph
    M. Scaminace (incorporated by reference to Exhibit 10.37 to the
    Companys Annual Report on Form 10-K filed on August 22,
    2005).*10.15

Form of Restricted Stock Agreement between OM Group, Inc. and
    Joseph M. Scaminace (incorporated by reference to Exhibit 10.38
    to the Companys Annual Report on Form 10-K filed on August
    22, 2005).*10.16

Employment Agreement by and between OM Group, Inc. and Joseph M.
    Scaminace, dated May 15, 2008 (incorporated by reference to
    Exhibit 99 to the Companys Current Report on Form 8-K
    filed on May 21, 2008).*10.17

Form of Indemnification Agreement between OM Group, Inc. and its
    directors and certain officers (incorporated by reference to
    Exhibit 10.42 to the Companys Annual Report on Form 10-K
    filed on August 22, 2005).*10.18

Employment Agreement by and between OM Group, Inc. and Valerie
    Gentile Sachs dated September 8, 2005 (incorporated by reference
    to Exhibit 10.43 to the Companys Quarterly Report on Form
    10-Q filed on November 8, 2005).*10.19

Severance Agreement by and between OM Group, Inc. and Valerie
    Gentile Sachs dated November 7, 2005 (incorporated by reference
    to Exhibit 10.44 to the Companys Quarterly Report on Form
    10-Q filed on November 8, 2005).*10.20

Form of Non-Incentive Stock Option Agreement under the 1998
    Long-Term Incentive Compensation Plan (incorporated by reference
    to Exhibit 99.1 to the Companys Current Report on Form 8-K
    filed on December 21, 2005).*10.21

OM Group, Inc. 2002 Stock Incentive Plan (incorporated by
    reference to Exhibit 99 to the Companys Current Report on
    Form 8-K filed May 5, 2006).*10.22

Form of Restricted Stock Agreement for Joseph M. Scaminace under
    the 1998 Long-Term Incentive Compensation Plan, as amended
    (incorporated by reference to Exhibit 99.1 to the Companys
    Current Report on Form 8-K filed on August 11, 2006). 102




---



##### Table of Contents



*10.23

Form of Restricted Stock Agreement (time-based) under the 1998
    Long-Term Incentive Compensation Plan and the 2002 Stock
    Incentive Plan (incorporated by reference to Exhibit 99.2 to the
    Companys Current Report on Form 8-K filed on August 11,
    2006).*10.24

Form of Restricted Stock Agreement (performance-based) under the
    1998 Long-Term Incentive Compensation Plan and the 2002 Stock
    Incentive Plan (incorporated by reference to Exhibit 99.3 to the
    Companys Current Report on Form 8-K filed on August 11,
    2006).*10.25

Employment Agreement by and between OM Group, Inc. and Kenneth
    Haber dated March 6, 2006 (incorporated by reference to Exhibit
    10.1 to the Companys Quarterly Report on Form 10-Q filed
    on May 9, 2006).*10.26

Form of Severance Agreement between OM Group, Inc. and certain
    executive officers (incorporated by reference to Exhibit 99.1 to
    the Companys Current Report on Form 8-K filed on November
    14, 2006).*10.27

Form of Amended and Restated Change in Control Agreement between
    OM Group, Inc. and certain executive officers (incorporated by
    reference to Exhibit 99.2 to the Companys Current Report
    on Form 8-K filed on November 14, 2006).10.28

Reserved*10.29

Amended and Restated Change in Control Agreement dated as of
    November 13, 2006 between OM Group, Inc. and Joseph M. Scaminace
    (incorporated by reference to Exhibit 99.4 to the Companys
    Current Report on Form 8-K filed on November 14, 2006).*10.30

Amended and Restated Severance Agreement dated as of November
    13, 2006 between OM Group, Inc. and Valerie Gentile Sachs
    (incorporated by reference to Exhibit 99.5 to the Companys
    Current Report on Form 8-K filed on November 14, 2006).10.31

Reserved10.32

Stock Purchase Agreement Among OMG Kokkola Chemicals Holding
    (Two) BV, OMG Harjavalta Chemicals Holding BV, OMG Finland Oy,
    OM Group, Inc., Norilsk Nickel (Cyprus) Limited And OJSC MMC
    Norilsk Nickel (incorporated by reference to Exhibit 2 to the
    Companys Current Report on Form 8-K filed on March 7,
    2007).*10.33

OM Group, Inc. 2007 Incentive Compensation Plan (incorporated by
    reference to Exhibit 99 to the Companys Quarterly Report
    on Form 10-Q filed on August 2, 2007).*10.34

Form of Stock Option Agreement under the 2007 Incentive
    Compensation Plan (incorporated by reference to Exhibit 10.1 to
    the Companys Quarterly Report on Form 10-Q filed on
    November 2, 2007).*10.35

Form of Restricted Stock Agreement (time-based) under the 2007
    Incentive Compensation Plan (incorporated by reference to
    Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q
    filed on November 2, 2007).*10.36

Form of Restricted Stock Agreement (performance-based) under the
    2007 Incentive Compensation Plan (incorporated by reference to
    Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q
    filed on November 2, 2007).*10.37

OM Group, Inc. Deferred Compensation Plan (incorporated by
    reference to Exhibit 10 to the Companys Current Report on
    Form 8-K filed May 21, 2008).*10.38

Form of Amendment to Severance Agreement between OM Group, Inc.
    and certain executive officers (incorporated by reference to the
    Companys Current Report on Form 8-K filed on December 19,
    2008).10.39

Revolving Credit Agreement, dated as of December 20, 2005, among
    OM Group, Inc. as the borrower, the lending institutions named
    therein as lenders; National City Bank, as a Lender, the Swing
    Line Lender, the Letter of Credit Issuer, the Administrative
    Agent, the Collateral Agent, the Lead Arranger, and the Book
    Running Manager (incorporated by reference to Exhibit 4.6 to the
    Companys Annual Report on Form 10-K filed on March 9,
    2006). 103




---



##### Table of Contents



10.40

First Amendment to the Revolving Credit Agreement, dated as of
    November 10, 2006, among OM Group, Inc. as the borrower, the
    lending institutions named therein as lenders; National City
    Bank, as a Lender, the Swing Line Lender, the Letter of Credit
    Issuer, the Administrative Agent, the Collateral Agent, the Lead
    Arranger, and the Book Running Manager (incorporated by
    reference to Exhibit 4.4 to the Companys Annual Report on
    Form 10-K filed on February 28, 2007).10.41

Second Amendment to the Revolving Credit Agreement, dated as of
    January 31, 2007, among OM Group, Inc. as the borrower, the
    lending institutions named therein as lenders; National City
    Bank, as a Lender, the Swing Line Lender, the Letter of Credit
    Issuer, the Administrative Agent, the Collateral Agent, the Lead
    Arranger, and the Book Running Manager (incorporated by
    reference to Exhibit 4.5 to the Companys Annual Report on
    Form 10-K filed on February 28, 2007).21

List of Subsidiaries23

Consent of Ernst & Young LLP24

Powers of Attorney31.1

Certification of Principal Executive Officer Pursuant to Rule
    13a-14(a)31.2

Certification of Principal Financial Officer Pursuant to Rule
    13a-14(a)32

Certification of Principal Executive Officer and Principal
    Financial Officer Pursuant to 18 U.S.C. 1350      *
    
    Indicates a management contract, executive compensation plan or
    arrangement.+
    
    Portions of Exhibit have been omitted and filed separately with
    the Securities and Exchange Commission in reliance on
    Rule 24b-2
    and an Order from the Commission granting the Companys
    request for confidential treatment dated June 26, 1998.
    
    These documents were filed as exhibits to the Companys
    Form S-1
    Registration Statement (Registration
    No. 33-60444)
    which became effective on October 12, 1993, and are
    incorporated herein by reference. 104




---



##### Table of Contents



OM Group,
    Inc.
    Schedule II  Valuation and Qualifying
    Accounts
    Years Ended December 31, 2009, 2008 and 2007
    (Dollars in Millions)
  Balance





Charged


Chargedat





to


to





Balance atBeginning





Costs and


Other





End ofClassifications

of Year


Acquisitions


Expenses


Accounts


Deductions


Year2009:Allowance for doubtful accounts

$
7.9







0.3
(1)


0.4
(5)


(1.7
)(3)

$
6.9Allowance for note receivable from joint venture partner


5.2



















5.2Environmental reserve


3.4







0.2
(2)


0.1
(5)


(0.9
)(4)


2.8$
16.5


$



$
0.5


$
0.5


$
(2.6
)

$
14.92008:Allowance for doubtful accounts

$
1.5



3.7
(6)


4.3
(1)






(1.6
)(3)

$
7.9Allowance for note receivable from joint venture partner


5.2



















5.2Environmental reserve


4.9







0.4
(2)


(0.1
)(5)


(1.8
)(4)


3.4$
11.6


$
3.7


$
4.7


$
(0.1
)

$
(3.4
)

$
16.52007:Allowance for doubtful accounts

$
1.1







0.5
(1)






(0.1
)(3)

$
1.5Allowance for note receivable from joint venture partner


5.2



















5.2Environmental reserve


8.0







4.9
(3)


0.3
(5)


(8.3
)(4)


4.9$
14.3


$



$
5.4


$
0.3


$
(8.4
)

$
11.6     (1)
    
    Provision for uncollectible accounts included in selling,
    general and administrative expenses.(2)
    
    Provision for environmental costs included in selling, general
    and administrative expenses.(3)
    
    Actual accounts written-off against the allowance.(4)
    
    Actual cash expenditures charged against the accrual.(5)
    
    Foreign currency translation adjustment.(6)
    
    Allowance for doubtful accounts related to the Rockwood
    acquisition were not included in the December 31, 2007
    balance. 105




---



##### Table of Contents



Signatures  Form 10-K
    By:
    /s/  Kenneth
    Haber     Form 10-K
  Signature

Title/s/  Joseph
    M. ScaminaceJoseph
    M. Scaminace

Chairman and Chief Executive Officer
    (Principal Executive Officer)/s/  Kenneth
    HaberKenneth
    Haber

Chief Financial Officer
    (Principal Financial Officer)/s/  Robert
    T. PierceRobert
    T. Pierce

Vice President and Corporate Controller
    (Principal Accounting Officer)/s/  Richard
    W. BlackburnRichard
    W. Blackburn

Director/s/  Steven
    J. DemetriouSteven
    J. Demetriou

Director/s/  Katharine
    L. PlourdeKatharine
    L. Plourde

Director/s/  David
    L. PughDavid
    L. Pugh

Director/s/  William
    J. ReidyWilliam
    J. Reidy

Director/s/  Gordon
    A. UlshGordon
    A. Ulsh

Director/s/  Kenneth
    HaberKenneth
    HaberAttorney-in-Fact  106