##### 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, 2008

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
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated filer  x

Accelerated filer o

Non-accelerated filero

Smaller Reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o x
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





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

Business


2Item 1A.

Risk Factors


8Item 1B.

Unresolved Staff Comments


14Item 2.

Properties


14Item 3.

Legal Proceedings


15Item 4.

Submission of Matters to a Vote of Security
    Holders


15PART IIItem 5.

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


17Item 6.

Selected Financial Data


18Item 7.

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


19Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


41Item 8.

Financial Statements and Supplementary Data


43Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


88Item 9A.

Controls and Procedures


88Item 9B.

Other Information


88PART IIIItem 10.

Directors and Executive Officers of the
    Registrant amd Corporate Governance


89Item 11.

Executive Compensation


89Item 12.

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


89Item 13.

Certain Relationships and Related Transactions,
    Director Independence


90Item 14.

Principal Accountant Fees and Services


90PART IVItem 15.

Exhibits and Financial Statement Schedules


91Signatures


96EX-12EX-21EX-23EX-24EX-31.1EX-31.2EX-32   1




---



##### Table of Contents



PART I  Item 1.
    Business General
     
    On March 1, 2007, the Company completed the sale of its
    Nickel business to Norilsk Nickel (Norilsk) for cash
    proceeds of $490.0 million, net of transaction costs. The
    Nickel business consisted of the Harjavalta, Finland nickel
    refinery; the Cawse, Australia nickel mine and intermediate
    refining facility; a 20% equity interest in MPI Nickel Pty.
    Ltd.; and an 11% ownership interest in Talvivaara Mining
    Company, Ltd. In connection with the sale of the Nickel
    business, the Company entered into five-year supply agreements
    with Norilsk for cobalt and nickel raw materials, as described
    under Raw Materials below.
    On October 1, 2007, the Company completed the acquisition
    of Borchers GmbH (Borchers), a European-based
    specialty coatings additive supplier with locations in France
    and Germany, for $20.7 million, net of cash acquired.
    On December 31, 2007, the Company completed the acquisition
    of the Electronics businesses (REM) of Rockwood
    Specialties Group, Inc., which consisted of its Printed Circuit
    Board (PCB) business, its Ultra-Pure Chemicals
    (UPC) business, and its Compugraphics
    (Photomasks) business, for $321.5 million, net
    of cash acquired.        Electronic Chemicals:
 2




---



##### Table of Contents



Advanced Organics:
  Ultra Pure Chemicals:
  Photomasks:
    non-U.S. operating
 3




---



##### Table of Contents



Products
 and/or
    Chemical
  Pigments and Ceramics:
  Ceramic Pigments
  Plastic Pigments
  Glass Pigments
  Powder Metallurgy
  Battery:
  Precursors
  Battery Materials
  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
    application, are:  Printed Circuit Board Chemistry
  Memory Disk
  General Metal Finishing
 4




---



##### Table of Contents



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 application, include:  Coatings & Inks
  Tire
  Chemicals
  Additives
  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.  Competition
     
    Advanced Materials:  Sherritt
    International Corporation, Umicore S.A., Eurotungstene Poudres
    S.A.S., The Shepherd Chemical Company
    Advanced Organics:  Dura
    Chemicals Inc., Elementis plc, Troy Corporation, Byk-Chemie,
    Ciba Inc., Shepherd Chemical Company, Dainippon Ink and
    Chemicals, Incorporated, Taekwang Industrial Co., Ltd
    Electronic Chemicals:  Atotech (a
    subsidiary of Total S.A.), Cookson Group plc, MacDermid
    Incorporated, Rohm & Haas Company, Uyemura
    International, Inc.
    UPC:Kanto Chemical Co., Inc.;
    Mitsubishi Chemical Corporation; KMG Chemicals, Inc.; Honeywell
    International Inc.; BASF Group
    Photomasks:  Photronics, Inc.;
    Toppan Photomasks, Inc. (a wholly-owned subsidiary of Toppan
    Printing Co., Ltd.) 5




---



##### Table of Contents



Customers
     Raw
    Materials
        6




---



##### Table of Contents



Research
    and Development
         Patents
    and Trademarks
   Environmental
    Matters
 and/or
 7




---



##### Table of Contents



Employees
   SEC
    Reports
 www.omgi.com Forms 10-K, 10-Q 8-K 44114-1221
  Item 1A.
    Risk
    Factors  8




---



##### Table of Contents



THE
    RECENT GLOBAL ECONOMIC AND FINANCIAL MARKET CRISIS 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
    IMPAIRMENTS.
         
    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. 9




---



##### Table of Contents



and/or
  EXTENDED
    BUSINESS INTERRUPTION AT OUR FACILITIES COULD HAVE AN ADVERSE
    IMPACT ON OPERATING RESULTS.
 and/or
  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 UNREFINED COBALT AND
    OTHER RAW MATERIALS.
    10




---



##### Table of Contents



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;
    general economic conditions in the countries in which we operate
    could have an adverse effect on our earnings from operations in
    those countries;
    unexpected adverse changes in foreign laws or regulatory
    requirements may occur, including with respect to export duties
    and quotas; and
    compliance with a variety of foreign laws and regulations may be
    difficult.    WE ARE
    UNDERGOING A STRATEGIC TRANSFORMATION, WHICH INTRODUCES
    UNCERTAINTIES REGARDING OUR RESULTS OF OPERATIONS.
   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.
    11




---



##### Table of Contents



WE ARE
    EXPOSED TO FLUCTUATIONS IN FOREIGN EXCHANGE RATES, WHICH MAY
    ADVERSELY AFFECT OUR OPERATING RESULTS.
 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 THE COMPANYS PRODUCTS.
 and/or
  WE MAY
    NOT BE ABLE TO RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGES IN
    OUR INDUSTRY OR IN OUR CUSTOMERS PRODUCTS.
   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.
  12




---



##### Table of Contents



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.
   CHANGES
    IN EFFECTIVE TAX RATES OR ADVERSE OUTCOMES RESULTING FROM
    EXAMINATION OF OUR INCOME TAX RETURNS COULD ADVERSELY AFFECT OUR
    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.   13




---



##### Table of Contents



WE MAY
    NOT BE ABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL
    PROPERTY RIGHTS, WHICH MAY ADVERSELY AFFECT OUR RESULTS OF
    OPERATIONS.
     OUR STOCK
    PRICE MAY CONTINUE TO BE VOLATILE.
   CONTINUING
    DISRUPTION IN THE CREDIT MARKETS MAY REDUCE AVAILABILITY UNDER
    OUR CREDIT AGREEMENT AND OUR ABILITY TO RAISE CAPITAL.
 and/or
  WE
    MAINTAIN CASH BALANCES IN U.S. AND FOREIGN FINANCIAL
    INSTITUTIONS WHICH COULD ADVERSELY AFFECT OUR
    LIQUIDITY.
   Item 1B.
    Unresolved
    Staff Comments  Item 2.  Properties    14




---



##### Table of Contents



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


OwnedNewark, New Jersey

Held for sale

Specialty Chemicals


32,000


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


37,000


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  Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   Executive
    Officers of the Registrant
 Form 10-K.
   15




---



##### Table of Contents




    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    
    Vice President, Human Resources, June 2008
    Vice President, Human Resources, Danaher Tool Group
    2002  2007 16




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities     2008


2007Sales Price


Cash


Sales Price


CashHigh


Low


Dividend


High


Low


DividendFirst quarter

$
66.00


$
49.00


$



$
53.83


$
39.36


$
Second quarter

$
62.14


$
32.65


$



$
63.73


$
43.35


$
Third quarter

$
37.84


$
20.36


$



$
56.03


$
36.22


$
Fourth quarter

$
25.62


$
12.20


$



$
61.42


$
43.90


$
    17




---



##### Table of Contents



Item 6.
    Selected
    Financial Data Year Ended December 31,2008


2007


2006


2005


2004(In millions, except per share data)Income Statement Data:Net sales

$
1,736.8


$
1,021.5


$
660.1


$
617.5


$
689.5Cost of products sold (excluding lower of cost or market charge)


1,356.6



708.3



475.4



516.5



468.9Lower of cost or market inventory charge


27.7















Gross profit


352.5



313.2



184.7



101.0



220.6Goodwill impairment


8.8















Selling, general and administrative expenses


166.1



117.0



109.4



75.9



116.2Operating profit

$
177.6


$
196.2


$
75.3


$
25.1


$
104.4Income (loss) from continuing operations before cumulative
    effect of change in accounting principle

$
134.9


$
111.5


$
23.6


$
(12.4
)

$
40.1Income of discontinued operations, net of tax


0.1



63.1



192.2



49.0



88.5Gain on sale of discontinued operations, net of tax






72.3











Cumulative effect of a change in accounting principle










0.3



2.3



Net income

$
135.0


$
246.9


$
216.1


$
38.9


$
128.6Net income (loss) per common share  basic:Continuing operations

$
4.48


$
3.73


$
0.80


$
(0.43
)

$
1.41Discontinued operations






4.52



6.55



1.71



3.11Cumulative effect of change in accounting principle










0.01



0.08



Net income

$
4.48


$
8.25


$
7.36


$
1.36


$
4.52Net income (loss) per common share  assuming
    dilution:Continuing operations

$
4.45


$
3.68


$
0.80


$
(0.43
)

$
1.40Discontinued operations






4.47



6.50



1.71



3.09Cumulative effect of a change in accounting principle










0.01



0.08



Net income

$
4.45


$
8.15


$
7.31


$
1.36


$
4.49Dividends declared and paid per common share

$



$



$



$



$
Ratio of earnings to fixed charges(a)


n/a



n/a



2.5
x






2.5
xBalance Sheet Data:Total assets

$
1,434.4


$
1,469.2


$
1,618.2


$
1,220.3


$
1,334.7Long-term debt, excluding current portion(b)

$
26.1


$
1.1


$
1.2


$
416.1


$
24.7     (a)
    
    The ratio of earnings to fixed charges is not applicable for
    2008 and 2007 as a result of the redemption on March 7,
    2007 of the entire $400.0 million of the Companys
    outstanding 9.25% Senior Subordinated Notes due 2011 (the
    Notes). The ratio of earnings to fixed charges has
    been recalculated for all periods presented to reflect the
    Nickel business as discontinued operations. Earnings were
    inadequate to cover fixed charges by $16.6 million in 2005.  (b)
    
    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 and, 18




---



##### Table of Contents



accordingly, the Notes were classified as a current liability at
    December 31, 2006. Amount in 2004 excludes the
    $400.0 million of Notes, which were then in default and
    classified as a current liability.            Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   General
     
    On March 1, 2007, the Company completed the sale of its
    Nickel business to Norilsk Nickel (Norilsk) for cash
    proceeds of $490.0 million, net of transaction costs. The
    Nickel business consisted of the Harjavalta, Finland nickel
    refinery; the Cawse, Australia nickel mine and intermediate
    refining facility; a 20% equity interest in MPI Nickel Pty.
    Ltd.; and an 11% ownership interest in Talvivaara Mining
    Company, Ltd. In connection with the sale of the Nickel
    business, the Company entered into five-year supply agreements
    with Norilsk for cobalt and nickel raw materials.
    On October 1, 2007, the Company completed the acquisition
    of Borchers GmbH (Borchers), a European-based
    specialty coatings additive supplier with locations in France
    and Germany, for $20.7 million, net of cash acquired.
    On December 31, 2007, the Company completed the acquisition
    of the Electronics businesses (REM) of Rockwood
    Specialties Group, Inc., which consisted of its Printed Circuit
    Board (PCB) business, its Ultra-Pure 19




---



##### Table of Contents



Chemicals (UPC) business, and its Compugraphics
    (Photomasks) business, for $321.5 million, net
    of cash acquired.        Electronic Chemicals:
  Advanced Organics:
  Ultra Pure Chemicals:
 20




---



##### Table of Contents



Photomasks:
    non-U.S. operating
  Executive
    Overview
      21




---



##### Table of Contents



Consolidated
    Operating Results for 2008, 2007 and 2006
   2008





2007





2006(Millions of dollars & percent of net sales)Net sales

$
1,736.8






$
1,021.5






$
660.1Cost of products sold (excluding lower of cost or market charge)


1,356.6







708.3







475.4Lower of cost or market inventory charge


27.7















Gross profit


352.5



20.3%



313.2



30.7%



184.7



28.0%Goodwill impairment


8.8















Selling, general and administrative expenses


166.1



9.6%



117.0



11.5%



109.4



16.6%Operating profit


177.6



10.2%



196.2



19.2%



75.3



11.4%Other income (expense), net


(5.3
)






2.0







(14.8
)Income tax expense


(16.1
)






(76.3
)






(30.6
)Minority partners share of (income) loss


(21.3
)






(10.4
)






(6.3
)Income from continuing operations before cumulative effect of
    change in accounting principle


134.9







111.5







23.6Discontinued operations:Income from discontinued operations, net of tax


0.1







63.1







192.2Gain on sale of discontinued operations, net of tax










72.3







Total income from discontinued operations, net of tax


0.1







135.4







192.2Income before cumulative effect of change in accounting principle


135.0







246.9







215.8Cumulative effect of change in accounting principle


















0.3Net income

$
135.0






$
246.9






$
216.1Net income per common share  basic:Continuing operations

$
4.48






$
3.73






$
0.80Discontinued operations










4.52







6.55Cumulative effect of change in accounting principle


















0.01Net income

$
4.48






$
8.25






$
7.36Net income per common share  assuming dilution:Continuing operations

$
4.45






$
3.68






$
0.80Discontinued operations










4.47







6.50Cumulative effect of change in accounting principle


















0.01Net income

$
4.45






$
8.15






$
7.31Weighted average shares outstanding:Basic


30,124







29,937







29,362Assuming dilution


30,358







30,276







29,578  22




---



##### Table of Contents



2008
    Compared with 2007
            23




---



##### 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).
     24




---



##### Table of Contents



2007
    Compared with 2006
        25




---



##### Table of Contents



Year Ended December 31,(In thousands)

2007


2006


ChangeInterest expense

$
(7,820
)

$
(38,659
)

$
30,839Loss on redemption of Notes


(21,733
)






(21,733
)Interest income


19,396



8,566



10,830Interest income on Notes receivable from joint venture partner


4,526







4,526Foreign exchange gain


8,100



3,661



4,439Gain on sale of investment






12,223



(12,223
)Other income (expense), net


(449
)


(582
)


133$
2,020


$
(14,791
)

$
16,811   Form 10-K). Form 10-K).
       26




---



##### Table of Contents



Form 10-K.
    Segment
    Results and Corporate Expenses
 Advanced
    Materials
 For the Year Ended December 31,(Millions of dollars)

2008


2007


2006Net sales

$
1,192.4


$
721.9


$
428.6Operating profit

$
203.5


$
212.6


$
89.1     2008


2007


2006VolumesSales volume  metric tons


31,450



25,432



27,435Cobalt refining volume  metric tons


9,639



9,158



8,582     *
    
    Sales volume includes cobalt metal resale and copper by-product
    sales and excludes volume related to specialty nickel salts
    sales under the Norilsk distribution agreement, as explained
    below.    2008


2007


2006Batteries


46
%


43
%


41
%Chemical


12
%


14
%


14
%Powder Metallurgy


11
%


12
%


15
%Ceramics


4
%


6
%


8
%Other*


27
%


25
%


22
%     *
    
    Other includes cobalt metal resale and copper by-product sales.    2008


2007


2006Americas


9
%


14
%


13
%Asia


49
%


51
%


63
%Europe


42
%


35
%


24
%  27




---



##### Table of Contents



2008


2007


2006First Quarter

$
46.19


$
25.82


$
12.43Second Quarter

$
45.93


$
28.01


$
14.43Third Quarter

$
32.54


$
25.84


$
15.59Fourth Quarter

$
20.81


$
32.68


$
18.66Full Year

$
36.58


$
27.99


$
15.22   2008
    Compared with 2007
 Net
    Sales
     Operating
    Profit
   2007
    Compared with 2006
 Net
    Sales
   Operating
    Profit
  28




---



##### Table of Contents



Specialty
    Chemicals Segment
 For the Year Ended December 31,(Millions of dollars)

2008


2007


2006Net sales

$
546.7


$
303.9


$
237.6Operating profit

$
11.2


$
18.2


$
27.7     2008

2007

2006Semiconductor


24
%


3
%


3
%Coatings


18
%


20
%


20
%Tire


14
%


23
%


22
%PCB


17
%


2
%


4
%Memory Disk


10
%


26
%


26
%Chemical


11
%


17
%


17
%General Metal Finishing


2
%


4
%


4
%Other


4
%


5
%


4
%     2008

2007

2006Americas


29
%


32
%


39
%Asia


39
%


43
%


33
%Europe


32
%


25
%


28
%     2008

2007

2006VolumesAdvanced Organics sales volume  metric tons*


28,956



30,272



27,524Electronic Chemicals sales volume  gallons
    (thousands)**


11,270



7,278



6,635Ultra Pure Chemicals sales volume  liters (thousands)


19,502



n/a



n/aPhotomasks  # of masks


27,834



n/a



n/a     *
    
    2007 sales volumes include volume related to Borchers as of the
    acquisiton date  October 1, 2007.**
    
    2007 and 2006 sales volumes do not include volume related to the
    REM PCB business, which was acquired on December 31, 2007.  2008
    Compared with 2007
 Net
    Sales
  29




---



##### Table of Contents



Operating
    Profit
 step-up step-up
  2007
    Compared with 2006
 Net
    Sales
   Operating
    Profit
   Corporate
    Expenses
   2008
    Compared with 2007
   2007
    Compared with 2006
  30




---



##### Table of Contents



Liquidity
    and Capital Resources
 Cash Flow
    Summary
   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 used for 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         2007


2006


changeNet cash provided by (used for):Operating activities

$
41.0


$
95.0


$
(54.0
)Investing activities


135.2



(18.0
)


153.2Financing activities


(406.7
)


(5.7
)


(401.0
)Effect of exchange rate changes on cash


1.4



4.6



(3.2
)Discontinued
    operations-net
    cash used for operating activities


48.5



107.4



(58.9
)Discontinued
    operations-net
    cash used for investing activities


(1.5
)


(15.6
)


14.1Net change in cash and cash equivalents

$
(182.1
)

$
167.7


$
(349.8
)  31




---



##### Table of Contents



Debt and
    Other Financing Activities
      32




---



##### Table of Contents



Capital
    Expenditures
   Contractual
    Obligations
   Payments due by period2009


2010


2011


2012


2013


Thereafter


TotalPurchase and other obligations(1)

$
96,857


$
86,866


$
86,549


$
19,028


$
1,339


$



$
290,639Debt obligations


80



25,139



139



139



139



508



26,144Operating lease obligations


6,635



5,972



3,584



3,192



1,694



8,586



29,663Income tax contingencies


1,037



4,400















1,800



7,237Total

$
104,609


$
122,377


$
90,272


$
22,359


$
3,172


$
10,894


$
353,683     (1)
    
    For 2009 through 2013, 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 2008 for each respective metal. Commitments made
    under these contracts represent future purchases in line with
    expected usage.   33




---



##### Table of Contents



Off
    Balance Sheet Arrangements
   Critical
    Accounting Policies
   Revenue Recognition
  Inventories first-in,
    Goodwill and Other Intangible Assets
 34




---



##### Table of Contents



35




---



##### Table of Contents



Long-Lived Assets
  Income Taxes
 36




---



##### Table of Contents



Share-Based Compensation
    Recently
    Issued Accounting Standards
 Accounting
    Standards adopted in 2008:
 SFAS No. 157:
         37




---



##### Table of Contents



No. FAS 157-2,
  No. FAS 157-3,
  FSP 157-2,
  SFAS No. 158:
  14-month
  SFAS No. 159: instrument-by-instrument
  EITF
    No. 06-4: No. 06-4,
 38




---



##### Table of Contents



No. 06-4
  EITF
    No. 06-10: No. 06-10, No. 06-10 No. 06-10 No. 06-10
  Accounting
    Standards Not Yet Adopted
 SFAS No. 160:
  SFAS No. 141R:
  SFAS No. 161:
 39




---



##### Table of Contents



FSP
    FAS No. 142-3: FAS No. 142-3, FAS No. 142-3 FAS No. 142-3
  FSP FAS No. 132(R)-1:
  Effects
    of Foreign Currency
 non-U.S. operating
    Environmental
    Matters
 and/or
    Form 10-K
 40




---



##### Table of Contents



Cautionary
    Statement for Safe Harbor Purposes under the Private
    SecuritiesLitigation 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
  Commodity
    Price Risk
        41




---



##### Table of Contents



Interest
    Rate Risk
     Credit
    Risk
   Market
    Risk
   Foreign
    Currency Exchange Rate Risk
 non-U.S. operating
   42




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data   Report of
    Independent Registered Public Accounting Firm
          No. 04-6,
        43




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                       44




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Consolidated
    Balance Sheets
  December 31,2008


2007(In thousands, except share data)ASSETSCurrent assetsCash and cash equivalents

$
244,785


$
100,187Accounts receivable, less allowance of $7,877 in 2008 and $5,268
    in 2007


130,217



178,481Inventories


306,128



413,434Refundable and prepaid income taxes


55,059



9,986Other current assets


59,227



50,669Interest receivable from joint venture partner






3,776Total current assets


795,416



756,533Property, plant and equipment, net


245,202



288,834Goodwill


268,677



322,172Intangible assets


84,824



46,454Notes receivable from joint venture partner,less
    allowance of $5,200 in 2008 and 2007


13,915



24,179Other non-current assets


26,393



31,038Total assets

$
1,434,427


$
1,469,210LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesShort-term debt

$



$
347Current portion of long-term debt


80



166Accounts payable


89,470



214,244Accrued income taxes


17,677



32,040Accrued employee costs


31,168



34,707Other current liabilities


21,074



25,435Total current liabilities


159,469



306,939Long-term debt


26,064



1,136Deferred income taxes


26,764



29,645Minority interests


47,429



52,314Other non-current liabilities


44,052



50,790Stockholders 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 in 2008 and
    60,000,000 shares in 2007; 30,317,403 shares issued in
    2008 and 30,122,209 shares issued 2007


303



301Capital in excess of par value


563,454



554,933Retained earnings


602,365



467,726Treasury stock (136,328 shares in 2008 and
    61,541 shares in 2007, at cost)


(5,490
)


(2,239
)Accumulated other comprehensive income (loss)


(29,983
)


7,665Total stockholders equity


1,130,649



1,028,386Total liabilities and stockholders equity

$
1,434,427


$
1,469,210   See accompanying notes to consolidated financial
    statements.
 45




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Statements of
    Consolidated Income
  Year Ended December 312008


2007


2006(In thousands, except per share data)Net sales

$
1,736,849


$
1,021,501


$
660,104Cost of products sold (excluding lower of cost or market
    charge)


1,356,573



708,257



475,437Lower of cost or market inventory charge


27,728







Gross profit


352,548



313,244



184,667Goodwill impairment


8,800







Selling, general and administrative expenses


166,126



117,009



109,408Operating profit


177,622



196,235



75,259Other income (expense):Interest expense


(1,597
)


(7,820
)


(38,659
)Loss on redemption of Notes






(21,733
)


Interest income


1,920



19,396



8,566Interest income on Notes receivable from joint venture partner






4,526



Foreign exchange gain (loss)


(3,744
)


8,100



3,661Gain on sale of investment










12,223Other expense, net


(1,913
)


(449
)


(582
)(5,334
)


2,020



(14,791
)Income from continuing operations before income taxes,
    minority interest and cumulative effect of change in accounting
    principle


172,288



198,255



60,468Income tax expense


(16,076
)


(76,311
)


(30,554
)Minority partners share of (income) loss


(21,301
)


(10,405
)


(6,291
)Income from continuing operations before cumulative effect of
    change in accounting principle


134,911



111,539



23,623Discontinued operations:Income from discontinued operations, net of tax


92



63,057



192,163Gain on sale of discontinued operations, net of tax






72,270



Total income from discontinued operations, net of tax


92



135,327



192,163Income before cumulative effect of change in accounting
    principle


135,003



246,866



215,786Cumulative effect of change in accounting principle






0



287Net income

$
135,003


$
246,866


$
216,073Net income per common share  basic:Continuing operations

$
4.48


$
3.73


$
0.80Discontinued operations






4.52



6.55Cumulative effect of change in accounting principle










0.01Net income

$
4.48


$
8.25


$
7.36Net income per common share  assuming dilution:Continuing operations

$
4.45


$
3.68


$
0.80Discontinued operations






4.47



6.50Cumulative effect of change in accounting principle










0.01Net income

$
4.45


$
8.15


$
7.31Weighted average shares outstanding:Basic


30,124



29,937



29,362Assuming dilution


30,358



30,276



29,578   See accompanying notes to consolidated financial
    statements.
 46




---



##### Table of Contents



OM Group, Inc.
    and Subsidiaries
  Statements of
    Consolidated Comprehensive Income
  Year Ended December 312008


2007


2006(In thousands)Net income

$
135,003


$
246,866


$
216,073Foreign currency translation adjustments


(36,109
)


(11,014
)


10,394Reclassification of hedging activities into earnings, net of tax






(9,824
)


(954
)Unrealized gain on cash flow hedges, net of tax expense of
    $3,117 in 2006










9,824Realized gain on available-for-sale securities










(4,745
)Additional pension and post-retirement obligation


(1,539
)


(390
)


(199
)Net change in accumulated other comprehensive income (loss)


(37,648
)


(21,228
)


14,320Comprehensive income

$
97,355


$
225,638


$
230,393   See accompanying notes to consolidated financial
    statements.
 47




---



##### Table of Contents



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

2008


2007


2006Operating activitiesNet income

$
135,003


$
246,866


$
216,073Adjustments to reconcile net income to net cash provided by
    (used for) operating activities:Income from discontinued operations


(92
)


(63,057
)


(192,163
)Gain on sale of discontinued operations






(72,270
)


Income from cumulative effect of change in accounting principle










(287
)Gain on sale of investment










(12,223
)Loss on redemption of Notes






21,733



Depreciation and amortization


56,116



33,229



31,841Share-based compensation expense


7,621



7,364



5,227Excess tax benefit on exercise of stock options


(28
)


(1,744
)


Foreign exchange (gain) loss


3,744



(8,100
)


(3,661
)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)


(894
)


(15,756
)


13,864Lower of cost or market inventory charge


27,728







Goodwill impairment


8,800







Minority partners share of income


21,301



10,405



6,291Other non-cash items


4,536



431



(1,944
)Changes in operating assets and liabilities, excluding the
    effect of business acquisitionsAccounts receivable


48,641



(38,364
)


(3,879
)Inventories


76,985



(165,694
)


(27,613
)Accounts payable


(124,712
)


92,161



39,310Refundable, prepaid and accrued income taxes


(64,455
)


(5,984
)


(2,597
)Other, net


(27,944
)


10,295



26,728Net cash provided by operating activities


172,124



41,004



94,967Investing activitiesExpenditures for property, plant and equipment


(30,712
)


(19,357
)


(14,547
)Proceeds from settlement of cobalt forward purchase contracts


10,736







Net proceeds from the sale of the Nickel business






490,036



Proceeds from loans to consolidated joint venture partner


10,264







Proceeds from loans to non-consolidated joint ventures






7,568



Acquisitions


(5,799
)


(336,976
)


(5,418
)Expenditures for software


(1,673
)


(4,483
)


(3,329
)Other, net


(750
)


(1,539
)


5,335Net cash provided by (used for) investing activities


(17,934
)


135,249



(17,959
)Financing activitiesPayments of long-term debt and revolving line of credit


(45,513
)


(400,000
)


(17,250
)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


(3,251
)






Distribution to joint venture partners


(26,184
)


(1,350
)


Proceeds from exercise of stock options


874



11,344



11,558Excess tax benefit on exercise of stock options


28



1,744



Net cash used for financing activities


(6,703
)


(406,762
)


(5,692
)Effect of exchange rate changes on cash


(2,889
)


1,440



4,569Cash and cash equivalentsIncrease (decrease) from continuing operations


144,598



(229,069
)


75,885Discontinued operations  net cash provided by
    operating activities






48,508



107,379Discontinued operations  net cash used for investing
    activities






(1,540
)


(15,594
)Balance at the beginning of the year


100,187



282,288



114,618Balance at the end of the year

$
244,785


$
100,187


$
282,288   See accompanying notes to consolidated financial
    statements
 48




---



##### Table of Contents



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

2008


2007


2006Common Stock  Shares Outstanding, net of Treasury
    SharesBeginning balance


30,061



29,740



29,307Shares issued under share-based compensation plans


120



321



43330,181



30,061



29,740Common Stock  DollarsBeginning balance

$
301


$
297


$
293Shares issued under share-based compensation plans


2



4



4303



301



297Capital in Excess of Par ValueBeginning balance


554,933



533,818



516,510Shares issued under share-based compensation plans


872



11,340



11,555Excess tax benefit on the exercise of stock options


28



1,744



Share-based compensation  employees


7,279



7,929



5,753Share-based compensation  non-employee directors


342



102



563,454



554,933



533,818Retained EarningsBeginning balance, as originally reported


467,726



221,310



6,811Adoption of SFAS No. 158


(171
)






Adoption of EITF
    No. 06-10


(193
)






Adoption of FIN No. 48






(450
)


Adoption of EITF
    No. 04-6










(1,574
)Beginning balance, as adjusted


467,362



220,860



5,237Net income


135,003



246,866



216,073602,365



467,726



221,310Treasury StockBeginning balance


(2,239
)


(2,239
)


(2,226
)Reacquired shares


(3,251
)






(13
)(5,490
)


(2,239
)


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


7,665



28,893



15,145Foreign currency translation


(36,109
)


(11,014
)


10,394Reclassification of hedging activities into earnings, net of tax






(9,824
)


(954
)Unrealized gain on cash flow hedges, net of tax expense of
    $3,541 in 2006










9,824Reclassification of realized gain on available-for-sale
    securities into earnings










(4,745
)Additional pension and post-retirement obligation


(1,599
)


(390
)


(199
)Adoption of SFAS No. 158


60







(572
)(29,983
)


7,665



28,893Total Stockholders Equity

$
1,130,649


$
1,028,386


$
782,079   See accompanying notes to consolidated financial
    statements
 49




---



##### 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 
  Allowance for Doubtful Accounts 
 50




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Inventories  first-in,
  Receivables from Joint Venture Partners and Minority
    Interests 
          Property, Plant and Equipment 
    Internal Use Software  No. 98-1,
 51




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Long-lived Assets 
  Goodwill and Intangible Assets 
    Retained Liabilities of Businesses Sold 
  Research and Development 
  Repairs and Maintenance 
  Accounting for Leases 
  Income Taxes 
  Foreign Currency Translation 
 52




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Derivative Instruments 
        Note 2 
    Recently Issued
    Accounting Standards Accounting
    Standards adopted in 2008:
 SFAS No. 157:
       53




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    No. FAS 157-2,
  No. FAS 157-3,
  FSP 157-2,
  SFAS No. 158:
  14-month
  SFAS No. 159: instrument-by-instrument
 54




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    EITF
    No. 06-4: No. 06-4, No. 06-4
  EITF
    No. 06-10: No. 06-10, No. 06-10 No. 06-10 No. 06-10
  Accounting
    Standards Not Yet Adopted
 SFAS No. 160:
  SFAS No. 141R:
 55




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    SFAS No. 161:
  FSP
    No. 142-3: No. FAS 142-3, No. 142-3
  FSP FAS No. 132(R)-1:
  Note 3 
    Inventories   2008


2007Raw materials and supplies

$
168,060


$
199,901Work-in-process


14,797



32,565Finished goods


123,271



180,968$
306,128


$
413,434    56




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Note 4 
    Property, Plant
    and Equipment, net   2008


2007Land and improvements

$
9,180


$
10,482Buildings and improvements


140,082



140,742Machinery and equipment


431,893



440,350Furniture and fixtures


12,118



12,907Property, plant and equipment, at cost


593,273



604,481Less accumulated depreciation


348,071



315,647$
245,202


$
288,834     Note 5 
    Investments       Note 6 
    Acquisitions    57




---



##### Table of Contents



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




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
        Note 7 
    Goodwill and
    Other Intangible Assets      59




---



##### Table of Contents



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


SpecialtyMaterials


Chemicals


ConsolidatedBalance at January 1, 2007

$
103,326


$
34,217


$
137,543REM Acquisition  preliminary allocation






179,955



179,955Borchers Acquisition  preliminary allocation






2,660



2,660Foreign currency translation adjustments






2,014



2,014Balance at December 31, 2007


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)






(11,500
)


(11,500
)Goodwill impairment






(8,800
)


(8,800
)Foreign currency translation adjustments






(18,526
)


(18,526
)Balance at December 31, 2008

$
103,326


$
165,351


$
268,677    60




---



##### Table of Contents



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


AccumulatedAmount


Amortization


Impairment


Net BalanceIntangible assets not subject to amortization:Tradenames

$
8,385


$



$
(200
)

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


67,723



(9,859
)






57,864Technology


11,422



(862
)






10,560Capitalized software


10,362



(4,303
)






6,059Other intangibles


4,838



(2,682
)






2,15694,345



(17,706
)






76,639Balance at December 31, 2008

$
102,730


$
(17,706
)

$
(200
)

$
84,824Customer relationships

$
4,584


$
(3,896
)

$



$
688Capitalized software


8,944



(1,319
)






7,625Other intangibles


40,136



(1,995
)






38,141Balance at December 31, 2007

$
53,664


$
(7,210
)

$



$
46,454     Customer relationships


12Developed technology


16Capitalized software


3        61




---



##### Table of Contents



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

$
10,3652010

$
9,0142011

$
7,3082012

$
6,6462013

$
6,363   Note 8 
    Discontinued
    Operations and Disposition of the Nickel Business     Initial proceeds

$
413.3Final purchase price adjustment


83.2Transaction costs


(6.5
)$
490.0       No. 04-6,
   62




---



##### Table of Contents



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


2007


2006Net sales

$



$
193,091


$
790,939Income from discontinued operations before income taxes

$
92


$
82,699


$
236,325Income tax expense






19,642



44,162Income from discontinued operations


92



63,057



192,163Gain on sale of discontinued operations






76,991



Income tax expense






(4,721
)


Total income from discontinued operations, net of tax

$
92


$
135,327


$
192,163   Note 9 
    Debt        63




---



##### Table of Contents



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


2007Revolving credit agreement

$
25,000


$
Notes payable  bank


1,144



1,64926,144



1,649Less: Short-term debt






347Less: Current portion of long-term debt


80



166Total long-term debt

$
26,064


$
1,136     2009

$
802010


25,1392011


1392012


1392013


139thereafter


508$
26,144         Note 10 
    Financial
    Instruments and Fair Value Cash Flow
    Hedges
  64




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Fair
    Value Hedges
   Other
    Forward Contracts
     Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets for


Significant Other


SignificantDecember 31,


Identical Assets


Observable Inputs


Unobservable InputsDescription

2008


(Level 1)


(Level 2)


(Level 3)Derivative Assets

$
143


$



$



$
143Total

$
143


$



$



$
143Derivative Liabilities

$
200


$



$



$
200Total

$
200


$



$



$
200    65




---



##### Table of Contents



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

$
6,735Total realized or unrealized gains (losses):Included in earnings


(2,752
)Included in other comprehensive income


Purchases, issuances, and settlements


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


December 31, 2008

$
(57
)         Note 11 
    Income
    Taxes   Year Ended December 312008


2007


2006United States

$
(41,813
)

$
(50,638
)

$
(72,018
)Outside the United States


214,101



248,893



132,486$
172,288


$
198,255


$
60,468  66




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    Year Ended December 312008


2007


2006Current tax provision (benefit):United States:Federal

$
(44,927
)

$
51,195


$
422State and local


167



80



150Outside the United States


61,730



40,792



16,118Total current


16,970



92,067



16,690Deferred tax provision (benefit):United States


5,437



(18,997
)


14,077Outside the United States


(6,331
)


3,241



(213
)Total deferred


(894
)


(15,756
)


13,864$
16,076


$
76,311


$
30,554     Year Ended December 312008


2007


2006Income from continuing operations before income taxes, minority
    interest and cumulative effect of change in accounting principle

$
172,288


$
198,255


$
60,468Income taxes at the United States statutory rate (35)%

$
60,301


$
69,389


$
21,164Increase (decrease) in taxes resulting from:Effective tax rate differential on income (loss) outside of the
    United States


(17,673
)


(40,775
)


(23,966
)Repatriation of foreign earnings


10,284



45,709



92,841Goodwill impairment


2,200







Malaysian tax holiday


(4,962
)


(6,975
)


(6,963
)Change in deferred tax rates






1,930



U.S. losses with no tax benefit


4,611







Valuation allowance


1,808



4,103



(53,026
)Liability for uncertain tax positions


2,317



240



Foreign tax credits on amended prior year tax returns


(46,636
)






Other, net


3,826



2,690



504Income tax expense

$
16,076


$
76,311


$
30,554Effective income tax rate


9.3
%


38.5
%


50.5
%    67




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
            non-U.S. income
   68




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
    December 312008


2007Current asset  operating accruals

$
14,961


$
7,131Current liability  earnings repatriation


(893
)


Current liability  prepaid expenses


(11,158
)


(3,069
)Non-current asset  employee benefit and other accruals


17,189



16,462Non-current asset  foreign operating loss and credit
    carryforwards


2,385



Non-current asset  state operating loss carryforwards


11,870



7,827Non-current liability  accelerated depreciation


(31,701
)


(24,850
)Non-current liability  pensions and other
    post-retirement benefits






(4,793
)Valuation allowance


(23,037
)


(22,048
)Net deferred tax liability

$
(20,384
)

$
(23,340
)     December 312008


2007Other current assets

$
6,299


$
2,867Other non-current assets


85



6,507Other current liabilities


(4
)


(3,069
)Deferred income taxes  non-current liabilities


(26,764
)


(29,645
)$
(20,384
)

$
(23,340
)   2009-2010.
   69




---



##### 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

$
6,355       mark-ups
  Note 12 
    Pension and Other
    Post-Retirement Benefit Plans   non-U.S. employees non-U.S. plans
 70




---



##### Table of Contents



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

2007U.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

8.00%

9.00%Ultimate health care cost trend rate

5.00%

5.00%Year ultimate health care trend rate is achieved

2012

2012Non U.S. PlansWeighted-average discount rate

5.0% - 6.25%

5.0% - 5.25%Expected return on pension plan assets

5.0% - 6.0%

5.0% - 6.0%       Target


December 31,Allocation


2008


2007Equity securities


50
%


60
%


54
%Debt securities


50
%


39
%


45
%Cash






1
%


1
%Total assets


100
%


100
%


100
%     non-U.S. pension
   71




---



##### Table of Contents



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


Non-U.S. Plans2008


2007


2006


2008


2007Service cost

$



$



$



$
130


$
4Interest cost


1,295



1,317



1,272



120



8Amortization of unrecognized net loss


273



302



269







Expected return on plan assets


(857
)


(788
)


(922
)


(17
)


(2
)Amortization of unrecognized net transition obligation










9







SERP expense related to former CEO










1,413







Net periodic benefit cost


711



831



2,041



233



10Net (gain) loss arising during the year


3,966



(408
)


396



(325
)


9Net (gain) loss recognized during the year


(273
)


(302
)










Exchange rate gain (loss)














17



Adoption of SFAS No. 158


(46
)














Total recognized in other comprehensive income


3,647



(710
)


396



(308
)


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

$
4,358


$
121


$
2,437


$
(75
)

$
19   Other Post-retirement BenefitsU.S. Plans2008


2007


2006Service cost

$
112


$
82


$
131Interest cost


324



264



242Net amortization


86



40



40Net periodic benefit cost


522



386



413Net (gain) loss arising during the year


(1,700
)


1,131



271Net (gain) loss recognized during the year


(46
)






Amortization of prior service credit


(40
)


(40
)


301Adoption of SFAS No. 158


(14
)






Total recognized in other comprehensive income


(1,800
)


1,091



572Total recognized in net periodic benefit cost and other
    comprehensive income

$
(1,278
)

$
1,477


$
985  72




---



##### Table of Contents



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


Non-U.S. Plans2008


2007


2008


2007Change in benefit obligationProjected benefit obligation at beginning of year

$
(24,472
)

$
(24,902
)

$
(1,937
)

$
SFAS No. 158 adoption


(141
)






(43
)


Service cost










(130
)


(4
)Interest cost


(1,295
)


(1,317
)


(120
)


(8
)Actuarial loss (gain)


516



171



364



(9
)Benefits paid


1,050



904



165



14Acquisition










(505
)


(1,866
)Foreign currency exchange rate changes










120



(64
)SERP payments related to former CEO


672



672







Projected benefit obligation at end of year


(23,670
)


(24,472
)


(2,086
)


(1,937
)Change in plan assetsFair value of plan assets at beginning of year


12,686



10,940



330



SFAS No. 158 adoption


143







3



Actual return on plan assets


(3,624
)


1,025



(23
)


2Employer contributions


690



1,625



165



251Acquisition














81Foreign currency exchange rate changes










(17
)


10Benefits paid


(1,050
)


(904
)


(165
)


(14
)Fair value of plan assets at end of year


8,845



12,686



293



330Funded status  plan assets less than benefit
    obligations


(14,825
)


(11,786
)


(1,793
)


(1,607
)Recognized in accumulated other comprehensive income:Net actuarial (gain) loss


12,391



8,744



(299
)


9Amounts not yet recognized as a component of net
    postretirement benefit cost

$
12,391


$
8,744


$
(299
)

$
9Amounts recorded in the balance sheet consist of:Accrued benefit liability  current

$
(704
)

$
(672
)

$



$
Accrued benefit liability  long-term


(14,121
)


(11,114
)


(1,793
)


(1,607
)Accumulated other comprehensive loss


12,391



8,744



(299
)


9Net amount recognized

$
(2,434
)

$
(3,042
)

$
(2,092
)

$
(1,598
)   73




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Other Post-retirement BenefitsU.S. Plans2008


2007Change in benefit obligationProjected benefit obligation at beginning of year

$
(6,080
)

$
(4,988
)SFAS No. 158 adoption


(73
)


Service cost


(112
)


(82
)Interest cost


(324
)


(264
)Actuarial loss (gain)


1,700



(1,131
)Benefits paid


383



385Projected benefit obligation at end of year


(4,506
)


(6,080
)Change in plan assetsFair value of plan assets at beginning of year






Employer contributions


383



385Benefits paid


(383
)


(385
)Fair value of plan assets at end of year






Funded status  plan assets less than benefit
    obligations

$
(4,506
)

$
(6,080
)Recognized in accumulated other comprehensive income:Net actuarial gain


(351
)


1,431Prior service cost


214



231Amounts not yet recognized as a component of net
    postretirement benefit cost

$
(137
)

$
1,662Amounts recorded in the balance sheet consist of:Accrued benefit liability  current

$
(344
)

$
Accrued benefit liability  non-current


(4,162
)


(6,080
)Accumulated other comprehensive loss


(137
)


1,662Net amount recognized

$
(4,643
)

$
(4,418
)   non-U.S. plans. non-U.S. defined
     74




---



##### Table of Contents



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

PostretirementExpected Benefit Payments

U.S. Plans

Non-U.S. Plans

Benefits2009

$
1,722


$
76


$
3442010

$
1,744


$
60


$
3672011

$
1,740


$
136


$
3912012

$
1,730


$
100


$
3732013

$
1,723


$
90


$
3462014-2018

$
8,775


$
578


$
1,687     OtherPostretirementPension


BenefitsNet actuarial loss

$
389


$
Prior service cost






40Total

$
389


$
40     1% Increase

1% DecreaseBenefit cost

$
84


$
(66
)Projected benefit obligation

$
523


$
(448
)   Note 13 
    Accumulated
    Other Comprehensive Income (Loss)  UnrealizedGains andLosses, Net


Unrealized





AccumulatedForeign


on Cash Flow


Gain on


Pension and


OtherCurrency


Hedging


Available for 


Post-Retirement


ComprehensiveTranslation


Derivatives


Sale Securities


Obligation


Income (Loss)Balance January 1, 2006

$
18,700


$
954


$
4,745


$
(9,254
)

$
15,145Reclassification adjustments






(954
)


(4,745
)






(5,699
)Current period credit (charge)


10,394



12,941







(199
)


23,136Deferred taxes






(3,117
)










(3,117
)Adoption of SFAS No. 158














(572
)


(572
)Balance December 31, 2006


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 December 31, 2007


18,080











(10,415
)


7,665Adoption of SFAS No. 158   measurement date
    provisions














60



60Current period credit (charge)


(36,109
)










(1,599
)


(37,708
)Balance December 31, 2008

$
(18,029
)

$



$



$
(11,954
)

$
(29,983
)  75




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  Note 14 
    Earnings Per
    Share   2008


2007


2006(in thousands, except per share amounts)Income from continuing operations before cumulative effect of
    change in accounting principle

$
134,911


$
111,539


$
23,623Weighted average shares outstanding


30,124



29,937



29,362Dilutive effect of stock options and restricted stock


234



339



216Weighted average shares outstanding  assuming dilution


30,358



30,276



29,578Income per common share from continuing operations before
    cumulative effect of change in accounting principle

$
4.48


$
3.73


$
0.80Income per common share from continuing operations before
    cumulative effect of change in accounting principle 
    assuming dilution

$
4.45


$
3.68


$
0.80     2008


2007


2006(in thousands, except per share amounts)Net income

$
135,003


$
246,866


$
216,073Weighted average shares outstanding


30,124



29,937



29,362Dilutive effect of stock options and restricted stock


234



339



216Weighted average shares outstanding  assuming dilution


30,358



30,276



29,578Net income per common share

$
4.48


$
8.25


$
7.36Net income per common share  assuming dilution

$
4.45


$
8.15


$
7.31     Note 15 
    Share-Based
    Compensation    76




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
             77




---



##### Table of Contents



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

2007

2006Risk-free interest rate


2.6
%


4.7
%


4.9
%Dividend yield










Volatility factor of Company common stock


0.47



0.47



0.47Weighted-average expected option life (years)


6.0



6.0



6.1Weighted-average grant-date fair value

$
27.72


$
26.24


$
14.97    78




---



##### Table of Contents



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

Grant DateNon-vested at December 31, 2006


439,008


$
11.60Granted during 2007


184,750


$
26.24Vested during 2007


254,665


$
12.18Forfeited during 2007


4,750


$
24.45Non-vested at December 31, 2007


364,343


$
18.46Granted during 2008


168,175


$
27.72Vested during 2008


228,277


$
16.10Forfeited during 2008


9,252


$
25.62Non-vested at December 31, 2008


294,989


$
26.03       WeightedWeighted

AverageAverage

Remaining

AggregateExercise

Contractual

IntrinsicShares

Price

Term

ValueOutstanding at January 1, 2008


755,682


$
34.88Granted


168,175



57.66Exercised


(21,684
)


40.12Expired unexercised


(2,332
)


46.36Forfeited


(9,252
)


51.40Outstanding at December 31, 2008


890,589


$
38.86



7.17


$
216Vested or expected to vest at December 31, 2008


870,246


$
38.51



7.14


$
216Exercisable at December 31, 2008


595,601


$
32.05



6.46


$
209   Restricted
    Stock  Performance-Based Awards
  79




---



##### Table of Contents



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

Fair ValueNon-vested at January 1, 2008


171,064


$
35.46Granted


60,200



56.62Vested






Forfeited


(4,450
)


37.76Non-vested at December 31, 2008


226,814


$
41.03Expected to vest as of December 31, 2008


167,559   Restricted
    Stock  Time-Based Awards
      80




---



##### Table of Contents



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

Fair ValueNon-vested at January 1, 2008


209,504


$
28.25Granted


17,675


$
57.08Vested


(166,194
)

$
24.89Forfeitures


(750
)

$
54.62Non-vested at December 31, 2008


60,235


$
45.63Expected to vest as of December 31, 2008


58,507


$
45.45   Note 16 
    Commitments and
    Contingencies     2001-2003 and/or
   81




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
      Note 17 
    Lease Obligations
     2009

$
6,6352010


5,9722011


3,5842012


3,1922013


1,6942014 and thereafter


8,586Total minimum lease payments

$
29,663   Note 18 
    Reportable
    Segments and Geographic Information      82




---



##### Table of Contents



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


2007


2006Net SalesElectronic chemicals

$
167,335


$
109,276


$
86,494Advanced organics


258,441



194,621



151,114Ultra pure chemicals


82,068







Photomasks


39,366







Eliminations


(535
)






$
546,675


$
303,897


$
237,608       Form 10-K,
 83




---



##### Table of Contents



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


2007


2006Business Segment InformationNet SalesAdvanced Materials

$
1,192,423


$
721,874


$
428,635Specialty Chemicals


546,675



303,897



237,608Intersegment items


(2,249
)


(4,270
)


(6,139
)$
1,736,849


$
1,021,501


$
660,104Operating profitAdvanced Materials

$
203,545


$
212,609


$
89,075Specialty Chemicals


11,168



18,176



27,689Corporate(a)


(37,540
)


(35,807
)


(40,090
)Intersegment items


449



1,257



(1,415
)177,622



196,235



75,259Interest expense


(1,597
)


(7,820
)


(38,659
)Interest income


1,920



23,922



8,566Loss on redemption of Notes






(21,733
)


Foreign exchange gain (loss)


(3,744
)


8,100



3,661Gain on sale of investment










12,223Other expense, net


(1,913
)


(449
)


(582
)(5,334
)


2,020



(14,791
)Income from continuing operations before income taxes, minority
    partners share of income and cumulative effect of change
    in accounting principle

$
172,288


$
198,255


$
60,468Expenditures for property, plant & equipmentAdvanced Materials

$
21,783


$
15,336


$
10,154Specialty Chemicals


8,929



4,021



4,393$
30,712


$
19,357


$
14,547Depreciation and amortizationAdvanced Materials

$
26,331


$
26,043


$
25,006Specialty Chemicals


28,727



6,290



5,861Corporate


1,058



896



974$
56,116


$
33,229


$
31,841Total assetsAdvanced Materials

$
746,347


$
756,938Specialty Chemicals


579,185



679,691Corporate


108,895



32,581$
1,434,427


$
1,469,210  84




---



##### Table of Contents



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


Assets(c)Geographic Region Information2008Finland

$
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

$
373,148


$
76,491United States


178,894



48,461Japan


313,195



80Other


156,264



89,310Democratic Republic of Congo






74,492$
1,021,501


$
288,8342006Finland

$
209,603United States


147,395Japan


189,493Other


113,613Democratic Republic of Congo


$
660,104     (a)
    
    In 2006, the Corporate loss includes a $3.2 million charge
    related to the settlement of litigation with the Companys
    former CEO.  (b)
    
    Net sales attributed to the geographic area are based on the
    location of the manufacturing facility, except for Japan, which
    is a sales office.(c)
    
    Long-lived assets consists of property, plant and equipment, net. 85




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
   Note 19 
    Quarterly Results
    of Operations (Unaudited) 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


$
352,548Income (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       86




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
    OM Group, Inc. and
    Subsidiaries  Continued
  2007First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Full YearNet sales

$
216,196


$
231,298


$
264,640


$
309,367


$
1,021,501Gross profit

$
72,244


$
83,677


$
73,138


$
84,185


$
313,244Income (loss) from continuing operations

$
(18,541
)

$
44,132


$
39,507


$
46,441


$
111,539Income (loss) from discontinued operations, net of tax


61,019



1,904



(1,412
)


1,546



63,057Gain (loss) on sale of discontinued operations, net of tax


72,289



(19
)










72,270Net income

$
114,767


$
46,017


$
38,095


$
47,987


$
246,866Net income (loss) per common share  basicContinuing operations

$
(0.63
)

$
1.48


$
1.32


$
1.55


$
3.73Discontinued operations


4.48



0.06



(0.05
)


0.05



4.52Net income

$
3.85


$
1.54


$
1.27


$
1.60


$
8.25Net income (loss) per common share  assuming dilutionContinuing operations

$
(0.63
)

$
1.46


$
1.30


$
1.53


$
3.68Discontinued operations


4.48



0.06



(0.04
)


0.05



4.47Net income

$
3.85


$
1.52


$
1.26


$
1.58


$
8.15          87




---



##### 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) 15d-15(f).
    Changes
    in Internal Controls
     Item 9B.
    Other
    Information  88




---



##### 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  89




---



##### 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


801,654


$
39.43



2,746,215Equity 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  90




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules   Consolidated Balance Sheets at December 31, 2008 and 2007Statements of Consolidated Income for the years ended
    December 31, 2008, 2007 and 2006Statements of Consolidated Comprehensive Income for the years
    ended December 31, 2008, 2007 and 2006Statements of Consolidated Cash Flows for the years ended
    December 31, 2008, 2007 and 2006Statements of Consolidated Stockholders Equity for the
    years ended December 31, 2008, 2007 and 2006Notes 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.4.2

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).4.3

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).4.4

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).(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.
     91




---



##### Table of Contents



*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. +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

Contract for Sale of concentrate production between OMG Kokkola
    Chemicals OY and Central Trading of Africa Ltd dated
    October 4, 2007. (incorporated by reference to
    Exhibit 10.8 of the Companys Annual Report on
    Form 10-K
    filed on February 28, 2008).+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 Exhibit 10.7).+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 Exhibit 10.7).+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 Exhibit 10.7).*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). 92




---



##### Table of Contents



*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).*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

Retention and Severance Agreement by and between OM Group, Inc.
    and Marcus P. Bak dated February 9, 2007 (incorporated by
    reference to Exhibit 99.1 to the Companys Current
    Report on
    Form 8-K
    filed on February 15, 2007).10.32

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). 93




---



##### Table of Contents



*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).12

Computation of Ratio of Earnings to Fixed Charges21

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.++
    
    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 September 26, 2008.
    
    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. 94




---



##### Table of Contents



OM Group,
    Inc.
    Schedule II  Valuation and Qualifying
    Accounts
    Years Ended December 31, 2008, 2007 and 2006
    (Dollars in Millions)
  Balance





Charged


Chargedat





to


to





Balance atBeginning





Costs and


Other





End ofClassifications

of Year


Acquisitions


Expenses


Accounts


Deductions


Year2008: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
(2)


0.3
(5)


(8.3
)(4)


4.9$
14.3


$



$
5.4


$
0.3


$
(8.4
)

$
11.62006:Allowance for doubtful accounts

$
1.4


$



$
0.5
(1)

$
(0.1
)(5)

$
(0.7
)(3)

$
1.1Allowance for note receivable from joint venture partner


4.2







1.0
(1)










5.2Environmental reserve


8.8







4.2
(2)


(0.5
)(5)


(4.5
)(4)


8.0$
14.4


$



$
5.7


$
(0.6
)

$
(5.2
)

$
14.3     (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. 95




---



##### 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
    Haber
    Attorney-in-Fact  96