**Exhibit                                13**

*CEO                                performance review 2006*

| ·   | *Advanced                                          Surface Finishing*.                                          In our Advanced Surface Finishing segment,                                          our largest and most important,                                          we have seen a wholesale shift of industrial                                          production to Asia and other                                          low cost developing areas of the world.                                          Had we stayed firmly rooted in                                          North America and Europe we would be in                                          very tough shape today. Thankfully                                          we anticipated the market movement and                                          today, almost 40% of our revenues                                          in ASF are in those developing parts of                                          the world. We have invested                                          heavily in China. Our staffing in greater                                          China increased by 47% in the                                          last three years, including 60 people this                                          year. We commissioned our new                                          factory (our third in greater China) and                                          our technical center near                                          Shanghai. This represented the largest                                          capital investment in the history                                          of MacDermid, some $10 million. This is                                          a significant commitment by any                                          standard, and even greater when you consider                                          our Scottish heritage which                                          emphasizes frugality. We obviously believe                                          strongly in these moves,                                          especially since not one cent was needed                                          for current production. The                                          entire investment is for the future. Yes,                                          this reduced earnings this year,                                          but I believe this is a prime example of                                          lowering current cash flows in                                          exchange for more cash in the future. We                                          recognized the threat and                                          opportunity early. We then executed the                                          plan to transition our business                                          from the developed West to the new opportunities                                          in the developing world.                                          This investment is a “step investment” that won'tt have to be incurred                                          again in the next few years. As a result                                          we expect the cash flows from                                          this business will increase at very attractive                                          rates over the next few                                          years. I believe we rate an A+/A+ on this                                          one. Great strategy - great                                          execution. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Printing                                          Solutions - Packaging*.                                          Our Printing businesses have also faced                                          changes. In the case of packaging                                          the trend to digital and thermal plate                                          making is pronounced. As one of the                                          four leaders in the analog world of plate                                          making, we are in a race to                                          replace the old technology. We started                                          the race behind the competition in                                          both areas. When we acquired Polyfibron                                          we waited too long to                                          "MacDermidize" the business. As soon as                                          the MacDermidization began, we                                          recognized our position in innovation and                                          began investing in R&D. Only                                          towards the end of 2005 did we start to                                          see the benefits of those                                          investments. Grade B/D. Solid strategy                                          - execution not                                          acceptable. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Printing                                          Solutions - Offset*.                                          In our Offset printing business, we reviewed                                          our strategy and changed                                          management in 2005. Although we still believe                                          key segments of the Offset                                          world are best served by a “Bookends” model, i.e. dual emphasis on                                          innovation at the front end and technical                                          service on the back end, we now                                          believe this should not be our primary                                          approach. In 2006, we will take                                          steps to modify our strategy and improve                                          the results. Grade D/D. Poor                                          strategy - poor execution. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | There                                          were two very bright spots in the printing                                          business. In *Newspaper                                          plates*,                                          MacDermid has undertaken a strategy to                                          develop better technology for                                          printing newspapers by improving upon our                                          lexographic technology. 2005                                          marked a break through year as three new                                          newspaper facilities committed to                                          our offering. Many newspapers want to print                                          specialty publications in                                          addition to their standard newspapers.                                          Flexographic technology is better                                          able to print these publications than the                                          offset technology currently                                          employed. We have also demonstrated the                                          technical viability of a                                          computer-to-plate solution for flexography                                          that provides the digital                                          workflow desired by newspapers and are                                          close to commercial availability of                                          these systems. With the print capabilities                                          of flexography and a digital                                          workflow, we are now well positioned to                                          expand the print capabilities of a                                          newspaper. Not every newspaper is interested                                          in this capability, but the                                          newspaper market is a multi-billion dollar                                          opportunity, so even a small                                          portion of this market is still very attractive.                                          On our performance                                          scorecard I’d give us an A/A. Great strategy - great                                          execution. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                                          other printing success story is *ColorSpan*                                          our wide format digital printing business.                                          Shortly after we acquired this                                          business in 2001 we realized that the prior                                          owner had underinvested in                                          R&D. As a result we missed a generation of                                          technology. That caused a                                          painful retrenchment as we skipped to a                                          third generation development                                          effort without the second generation revenues                                          to pay for it. During this                                          period we wrote off a major portion of                                          the $47 million purchase price. Our                                          patience paid off this year. The third                                          generation technology was well                                          received by the market. As a result the                                          business is making an excellent                                          current return on our investment. Our Grade?                                          Another A/A. Great strategy -                                          great execution. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Autotype*.                                          In 2005 we acquired Autotype, a producer                                          of proprietary films. This                                          represents a good example of our approach                                          in acquisitions. Autotype has an                                          excellent market position in screen printing                                          and hard coated film for                                          membrane switches. These represent fairly                                          stable cash flows. We could get                                          a reasonable return on these businesses                                          by themselves. However, we are                                          looking for more than just a reasonable                                          return. We are looking for some                                          upside that would lead to an enhancement                                          of our overall growth prospects.                                          In Autotype’s case, change at the speed of light is                                          a reality. We are                                          commercializing light management films                                          for portable LCD screens that will                                          enhance the screens’ performance characteristics. This is a                                          big Asia play.                                          We have assigned one of our long standing                                          experienced senior managers to                                          lead this effort in Asia. The synergy of                                          Autotype's technology,                                          manufacturing and leadership team and our                                          Asia team is exciting to watch.                                          Autotype is a leader in in-mold decoration,                                          a technology that bridges                                          printing and industrial applications, especially                                          automotive. It is too                                          early to be sure how successful these new                                          technologies will become, but                                          they do offer exciting prospects. In the                                          meantime we are ahead of the cost                                          synergies we targeted in the acquisition                                          model, some of which is a direct                                          result of MacDermid’s unique management style and identification                                          of                                          “differentiated cost” where we treat costs in between the bookends                                          very                                          differently than the strategic bookend                                          costs. The business is doing well,                                          after a hiccup the first quarter immediately                                          after the acquisition.                                          Scorecard grade? Incomplete - Good strategy                                          - good execution so                                          far. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Corporate                                          strategy*.                                          Early in 2005 your Board of Directors thoroughly                                          reviewed our corporate                                          strategy. We brought in advisors to supplement                                          the data and help us                                          consider our future direction. We considered                                          the cash flow of our                                          businesses and the growth rates. The overarching                                          conclusion was that we                                          believe the MacDermid operating model is                                          unique. The ability to generate                                          high cash flow from businesses that share                                          a need for the “bookend”                                          strategy, i.e. high need for innovation                                          and high technical service is                                          leveragable. We decided to take a more                                          aggressive posture with                                          acquisitions. We considered using our excess                                          cash flow to buy back stock,                                          but determined that applying the MacDermid                                          business model to acquired                                          businesses offers the highest return and                                          best use of your capital. As a                                          result I spent a considerable amount of                                          my time pursuing acquisitions.                                          We’ll take an incomplete on this                                          one. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operations                                Overview**

| ·   | $2                                          million in expenses in 2005 for our China                                          step infrastructure described                                          above. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1                                          million for Middletown Delaware plant conversion                                          costs. This was a                                          decision to convert our dry film plant                                          to a multi-purpose film coating                                          plant. This will enable the plant to produce                                          Autotype products and film                                          for our printing business which we previously                                          purchased on the outside.                                          This conversion required us to take the                                          plant off line for a good portion                                          of the year. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.85                                          million for increased R&D and European plant start up costs for                                          our                                          newspaper plates business. We added production                                          capability in Europe to                                          support the growing business there. This                                          was all capacity to support                                          growth. We also accelerated our funding                                          for the development effort on our                                          computer-to-plate-project. Our equipment                                          partner was unwilling to fund                                          this investment so we undertook it                                          ourselves. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.8                                          million in increased R&D for the packaging business. We added                                          an                                          entirely new team in Europe to expand our                                          technological capability. In                                          addition we had a large number of product                                          introductions which consume                                          large amounts of sample materials as products                                          are fine                                          tuned. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Owner                                Earnings Management*

|                                                                                   |   | (amounts                                        in millions) |   |
|----------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                                   |   | **2005**                                                     |   | **2004** |   |
| Net                                        cash flows provided by operating activities |   | $                                        59.2                |   | $                                        85.3 |   |
| Capital                                        expenditures                            |   | (14.1)                                                       |   | (12.5) |   |
| Proceeds                                        from the disposition of fixed assets   |   | 1.4                                                          |   | 3.9 |   |
| Owner                                        earnings                                  |   | $                                        46.5                |   | $                                        76.7 |   |
|                                                                                   |   |                                                         |   |   |   |

**MANAGEMENT’S                              DISCUSSION AND ANALYSIS OF **

**FINANCIAL                              CONDITION AND RESULTS OF OPERATIONS**

*(in                              thousands of dollars, except shares and per share amounts)*

*References                              in this report include forward-looking statements within                              the meaning of the                              Private Securities Litigation Reform Act of 1995. These                              statements relate to                              analyses and other information that is based on forecasts                              of future results and                              estimates of amounts not yet determinable. These statements                              also relate to                              future prospects, developments and business strategies.                              The statements contained                              in this report that are not statements of historical                              fact may include                              forward-looking statements that involve a number of                              risks and uncertainties. We                              caution investors not to place undue reliance on these                              forward-looking                              statements, which speak only as of the date on which                              they were made. We                              undertake no obligation to publicly update or revise                              any forward-looking                              statement whether as a result of new information, future                              events or otherwise,                              except as required by law.*

*The                              words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,”“plan,” “predict,” “project,” “will” and similar terms and phrases, including                              references to assumptions, have been used to identify                              forward-looking                              statements. These forward-looking statements are made                              based on management's                              expectations and beliefs concerning future events affecting                              us and are subject                              to uncertainties and factors relating to our operations                              and business                              environment, all of which are difficult to predict                              and many of which are beyond                              our control, that could cause actual results to differ                              materially from those                              matters expressed in or implied by these forward-looking                              statements. The                              following factors, including the risk factors described                              in Item 1A, “Risk                              Factors”, found in our Annual Report on Form 10-K for the year                              ended December                              31, 2005,*
* *
*are                              among those that may cause actual results to differ                              materially from the                              forward-looking statements: *

| *·  * | *general                                        economic, business and industry conditions                                        in the markets in which we                                        operate;* |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *general                                        political conditions, including tax rates                                        or policies and inflation                                        rates;* |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *industry                                        and market changes, including the impact                                        of consolidations and changes in                                        competition;* |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *risks                                        associated with conducting business in foreign                                        countries, including                                        foreign currency fluctuations;* |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *changes                                        in current advertising, promotional and pricing                                        levels;* |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *changes                                        in sales mix and difficulty of forecasting                                        sales at various times in                                        various markets;* |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *the                                        impact of acquisitions and                                        dispositions;* |
|----------------------|------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *changes                                        in or compliance with laws and regulations,                                        particularly those relating to                                        taxation and protection of the                                        environment;* |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *significant                                        litigation adverse to the company, including                                        product liability                                        claims;* |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *disruptions                                        of established supply channels, including                                        channel conflicts or the                                        financial weakening of our channel                                        partners;* |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *degree                                        of acceptance of new products;* |
|----------------------|--------------------------------------------------------------------------------|

| *·  * | *our                                        ability to access the debt and equity markets,                                        which will depend on                                        general market conditions and the credit                                        ratings for our debt                                        obligations.* |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*New                              factors that could cause actual results to differ materially                              from those                              described in forward-looking statements emerge from                              time to time, and it is not                              possible for us to predict all such factors, or the                              extent to which any such                              factor or combination of factors may cause actual results                              to differ from those                              contained in any forward-looking statement. *

*Unless                              otherwise noted in this report, any description of                              us includes MacDermid, Inc.                              (“MacDermid”) as a consolidated entity, the Advanced Surface Finishing                              segment                              (“ASF”), the Printing Solutions segment (“MPS”), and our other corporate                              entities.*

*The                              following discussion and analysis explains our general                              financial condition,                              changes in financial condition and results of operations                              as a whole and each of                              our operating segments, including:*

| *·  * | *Factors                                        affecting our business* |
|----------------------|-------------------------------------------------------------------------|

| *·  * | *Our                                        revenues and profits* |
|----------------------|-------------------------------------------------------------------|

| *·  * | *The                                        source of our revenues and                                        profits* |
|----------------------|------------------------------------------------------------------------------------------------------------------------|

| *·  * | *Why                                        our revenues and profits were different from                                        year to                                        year* |
|----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *Where                                        our cash came from and how it was                                        used* |
|----------------------|------------------------------------------------------------------------------------------------------------------------------|

| *·  * | *How                                        the above factors affect our overall financial                                        condition* |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

**CONSOLIDATED                              OVERVIEW **

***Executive                              Overview***

| ·   | utilizing                                        our technical service and outstanding products                                        to penetrate global markets                                        for all products, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | supporting                                        working capital initiatives focused on maximizing                                        cash flows during a                                        period of continued economic uncertainty                                        in our primary                                        markets, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | emphasizing                                        efficiency improvements throughout the                                        organization, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adding                                        new products through internal research and                                        development, relying heavily on                                        our internal knowledge base, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | strengthening                                        the common identity of our products through                                        a new branding initiative                                        called "Yes We Can!", and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | strategic                                        acquisitions of companies, products, or                                        technologies. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

** **

**RESULTS                              OF OPERATIONS **

***Summary                              of the consolidated results for the years ended December                              31, 2005, 2004, and                              2003.***

|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|----------------------------------------------------------------------------------|---------------------------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------------------|
|                                                                             | **Year                                        Ended**   |   | **2004**                                           |   | **Year                                        Ended**          |   | **2003**                                           |
|                                                                             | **December                                        31,** |   | **to                                        2005** |   | **December                                        31,**        |   | **to                                        2004** |
|                                                                             | **2005**                                                |   | **2004**                                           |   | **%Change**                                                    |   | **2003**                                           |   | **%Change**                                                    |
|                                                                             |                                                    |   |                                               |   | Favorable                                        (Unfavorable) |   |                                               |   | Favorable                                        (Unfavorable) |
| Net                                        sales                                 | $                                        738,043        |   | $                                        660,785   |   | 11.7%                                                          |   | $                                        619,886   |   | 6.6%                                                           |
| Cost                                        of sales                             | 413,311                                                 |   | 347,544                                            |   | (18.9%)                                                        |   | 329,271                                            |   | (5.5%)                                                         |
|                                           Gross profit                 | 324,732                                                 |   | 313,241                                            |   | 3.7%                                                           |   | 290,615                                            |   | 7.8%                                                           |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Gross                                        profit percentage                   | 44.0%                                              |   | 47.4%                                         |   | **                                                             |   | 46.9%                                         |   | **                                                             |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Operating                                        expenses                        | 230,999                                                 |   | 207,831                                            |   | (11.1%)                                                        |   | 191,465                                            |   | (8.5%)                                                         |
|                                           Operating profit             | 93,733                                                  |   | 105,410                                            |   | (11.1%)                                                        |   | 99,150                                             |   | 6.3%                                                           |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Interest                                        income                           |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           (expense), net               | (28,082)                                                |   | (29,615)                                           |   | (5.2%)                                                         |   | (30,178)                                           |   | 1.9%                                                           |
| Other                                        income (expense)                    | (40)                                                    |   | 1,942                                              |   | **                                                             |   | 4,314                                              |   | **                                                             |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Earnings                                        from continuing                  |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           operations before income     |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           taxes and cumulative effect  |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           of accounting change         | 65,611                                                  |   | 77,737                                             |   | (15.6%)                                                        |   | 73,286                                             |   | 6.1%                                                           |
| Income                                        taxes                              | (18,568)                                                |   | (24,513)                                           |   | 24.3%                                                          |   | (23,466)                                           |   | (4.5%)                                                         |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Earnings                                        from continuing                  |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           operations before cumulative |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           effect of accounting change  | 47,043                                                  |   | 53,224                                             |   | (11.6%)                                                        |   | 49,820                                             |   | 6.8%                                                           |
| Discontinued                                        operations,                  |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           net of tax                   | -                                                       |   | -                                                  |   | **                                                             |   | 5,592                                              |   | **                                                             |
| Cumulative                                        effect of                      |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           accounting change            | -                                                       |   | -                                                  |   | **                                                             |   | 1,014                                              |   | **                                                             |
| Net                                        earnings                              | $                                        47,043         |   | $                                        53,224    |   | (11.6%)                                                        |   | $                                        56,426    |   | (5.7%)                                                         |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Basic                                        earnings                            |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           per share                    | $                                        1.55           |   | $                                        1.76      |   | (11.9%)                                                        |   | $                                        1.81      |   | (2.8%)                                                         |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
| Diluted                                        earnings                          |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |
|                                           per share                    | $                                        1.52           |   | $                                        1.72      |   | (11.6%)                                                        |   | $                                        1.80      |   | (4.4%)                                                         |
|                                                                             |                                                    |   |                                               |   |                                                           |   |                                               |   |                                                           |

***Not                              a                              meaningful statistic.*

***Summary                              of key segmented results for the years ended December                              31, 2005, 2004, and                              2003.***

|                                                           |   | **Year                                        Ended**   |   | **2004**                                           |   | **Year                                        Ended**              |   | **2003**                                           |
|----------------------------------------------------------------|--------|---------------------------------------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------------------------|--------|----------------------------------------------------|
|                                                           |   | **December                                        31,** |   | **to                                        2005** |   | **December                                        31,**            |   | **to                                        2004** |
|                                                           |   | **2005**                                                |   | **2004**                                           |   | **%Change**                                                        |   | **2003**                                           |   | **%Change** |
|                                                           |   |                                                    |   |                                               |   | **Favorable                                        (Unfavorable)** |   |                                               |   | **Favorable                                        (Unfavorable)** |
| **Advanced                                        Surface**    |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
| **Finishing**                                                  |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
| Total                                        net sales         |   | $                                        423,256        |   | $                                        386,723   |   | 9.4%                                                               |   | $                                        348,131   |   | 11.1% |
| Operating                                        profit        |   | $                                        61,632         |   | $                                        62,728    |   | (1.7%)                                                             |   | $                                        50,858    |   | 23.3% |
| Operating                                        profit        |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
|                                           percentage |   | 14.6%                                                   |   | 16.2%                                              |   | **                                                                 |   | 14.6%                                              |   | ** |
|                                                           |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
| **Printing                                        Solutions**  |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
| Total                                        net sales         |   | $                                        314,787        |   | $                                        274,062   |   | 14.9%                                                              |   | $                                        271,755   |   | 0.8% |
| Operating                                        profit        |   | $                                        32,101         |   | $                                        42,682    |   | (24.8%)                                                            |   | $                                        48,292    |   | (11.6%) |
| Operating                                        profit        |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
|                                           percentage |   | 10.2%                                                   |   | 15.6%                                              |   | **                                                                 |   | 17.8%                                              |   | ** |
|                                                           |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
| **Consolidated                                        Total**  |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
| Total                                        net sales         |   | $                                        738,043        |   | $                                        660,785   |   | 11.7%                                                              |   | $                                        619,886   |   | 6.6% |
| Operating                                        profit        |   | $                                        93,733         |   | $                                        105,410   |   | (11.1%)                                                            |   | $                                        99,150    |   | 6.3% |
| Operating                                        profit        |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |
|                                           percentage |   | 12.7%                                                   |   | 16.0%                                              |   | **                                                                 |   | 16.0%                                              |   | ** |
|                                                           |   |                                                    |   |                                               |   |                                                               |   |                                               |   |   |

***                              Not a meaningful statistic.*

**2005                                  vs. 2004**

***Net                                  sales***

***Cost                                  of sales and gross profit***

***Operating                              expenses***

***Operating                              profit***

***Interest                              income (expense)***

***Income                                  tax expense***

***Net                              earnings***

**2004                              vs. 2003**

***Net                              sales***

***Cost                              of sales and gross profit***

***Operating                              expenses***

***Operating                              profit***

***Interest                              income (expense)***

***Other                              income***

***Income                              tax expense***

***Earnings                              from continuing operations***

***Discontinued                              operations***

***Net                              earnings***

**LIQUIDITY                              AND CAPITAL RESOURCES**

**Overview**

|                                                                                                                                 | **2005**                                        |   | **2004**                                         |   | **2003**                                        |
|--------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------------------|
| **Financial                                        Position Summary:**                                                               |                                            |   |                                             |   |                                            |
| Cash                                        and cash equivalents                                                                     | $                                        80,932 |   | $                                        137,829 |   | $                                        61,294 |
| Net                                        working capital                                                                           | 218,521                                         |   | 260,103                                          |   | 179,692                                         |
| Net                                        working capital, excluding non-monetary items                                        *    | 94,811                                          |   | 151,172                                          |   | 72,820                                          |
| Short-term                                        debt                                                                               | 730                                             |   | 753                                              |   | 1,498                                           |
| Long-term                                        debt                                                                                | 301,043                                         |   | 301,077                                          |   | 301,203                                         |
| Stockholders’                                        equity                                                                    | 331,886                                         |   | 304,031                                          |   | 239,012                                         |
| *                                        Non-monetary items are inventories, prepaid                                        expenses |                                            |   |                                             |   |                                            |
| and                                        deferred income taxes.                                                                    |                                            |   |                                             |   |                                            |
| **Ratios:**                                                                                                                          |                                            |   |                                             |   |                                            |
| Long-term                                        debt to total capital ratio                                                         | 47.6%                                           |   | 49.8%                                            |   | 55.8%                                           |
| Total                                        debt to equity ratio                                                                    | 90.9%                                           |   | 99.3%                                            |   | 126.6%                                          |
|                                                                                                                                 |                                            |   |                                             |   |                                            |

**Cash                              Flow Activities**

|                                                                           |   | **2005**                                          |   | **2004**                                        |   | **2003**                                        |
|--------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|-------------------------------------------------|--------|-------------------------------------------------|
| **Cash                                        provided by (used in):**         |   |                                              |   |                                            |   |                                            |
|                                           Continuing operations      |   | $                                        59,168   |   | $                                        85,277 |   | $                                        94,552 |
|                                           Discontinued operations    |   | -                                                 |   | -                                               |   | (3,135)                                         |
| Total                                        Operating Activities              |   | 59,168                                            |   | 85,277                                          |   | 91,417                                          |
| Investing                                        Activities                    |   | (105,559)                                         |   | (8,534)                                         |   | (5,704)                                         |
| Financing                                        Activities                    |   | (3,625)                                           |   | (4,017)                                         |   | (57,972)                                        |
| Effect                                        of exchange rate changes on cash |   | (6,881)                                           |   | 3,809                                           |   | 1,534                                           |
|                                           Net change in cash         |   | $                                        (56,897) |   | $                                        76,535 |   | $                                        29,275 |
|                                                                           |   |                                              |   |                                            |   |                                            |

|                                                                                     |   | **2005** |   | **2004** |   | **2003** |
|------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                                                                     |   |     |   |     |   |     |
| Days                                        of sales outstanding in accounts receivable  |   | 71       |   | 74       |   | 76       |
| Days                                        of supply in inventory                       |   | 74       |   | 80       |   | 78       |
| Days                                        of purchases outstanding in accounts payable |   | (48)     |   | (55)     |   | (55)     |
| Cash                                        conversion cycle                             |   | 97       |   | 99       |   | 99       |
|                                                                                     |   |     |   |     |   |     |

**Contractual                              Obligations**

|                                                               |   |                                             |   | **Less                                        than** |   | **2                                        - 3** |   | **4                                        - 5** |   | **After                                        5** |
|--------------------------------------------------------------------|--------|--------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------|
|                                                               |   | **Total**                                        |   | **1                                        Year**    |   | **Years**                                        |   | **Years**                                        |   | **Years**                                          |
| Long-term                                        debt              |   | $                                        301,582 |   | $                                        -           |   | $                                        -       |   | $                                        -       |   | $                                        301,582   |
| Semi-annual                                        bond interest   |   | 165,072                                          |   | 27,512                                               |   | 55,024                                           |   | 55,024                                           |   | 27,512                                             |
| Capital                                        leases              |   | 677                                              |   | 233                                                  |   | 324                                              |   | 50                                               |   | 70                                                 |
| Operating                                        leases            |   | 58,829                                           |   | 8,892                                                |   | 10,360                                           |   | 7,601                                            |   | 31,976                                             |
| Purchase                                        oblisgations       |   |                                             |   |                                                 |   |                                             |   |                                             |   |                                               |
|                                           and other |   | 5,841                                            |   | 5,785                                                |   | 48                                               |   | 8                                                |   | -                                                  |
| Total                                        contractual cash      |   |                                             |   |                                                 |   |                                             |   |                                             |   |                                               |
|                                           commitments    |   | $                                        532,001 |   | $                                        42,422      |   | $                                        65,756  |   | $                                        62,683  |   | $                                        361,140   |
|                                                               |   |                                             |   |                                                 |   |                                             |   |                                             |   |                                               |

**Short-Term                              Liquidity**

| ·   | a                                        consolidated net worth greater than                                        $206,546 |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                                        ratio of bank-defined earnings before income                                        taxes (“EBIT”) to interest                                        expense greater than 2.75 to 1.0, and a ratio                                        of bank-defined total debt                                        to earnings before tax, depreciation and                                        amortization (“EBITDA”) of no                                        greater than 3.25 to 1.0 |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Cash                                        and cash equivalents as of December 31, 2005                                              |   | $                                        80,932  |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|
| Other                                        net current monetary assets and liabilities                                        as of |   |                                             |
|                                           December 31, 2005                                                                 |   | 13,879                                           |
|                                                                                                                                  |   | 94,811                                           |
|                                                                                                                                  |   |                                             |
| Available                                        borrowings under revolving loan facility                                             |   | 50,000                                           |
| Availability                                        under other uncommitted credit facilities                                         |   | 48,969                                           |
|                                           Total cash available and potentially available                                    |   | 193,780                                          |
|                                                                                                                                  |   |                                             |
| Contractual                                        cash commitments due in next year                                                  |   | 42,422                                           |
| Expected                                        2006 pension funding                                                                  |   | 12,600                                           |
| Expected                                        2006 capital expenditures                                                             |   | 15,000                                           |
| Expected                                        2006 dividend payments                                                                |   | 7,344                                            |
| Excess                                        of cash available and potentially available                                        over |   |                                             |
|                                           requirements                                                                      |   | $                                        116,414 |
|                                                                                                                                  |   |                                             |

**Capital                              and Other Funding Activities**

|                                                                  | **Year                                        Ended December 31,** |
|-----------------------------------------------------------------------|--------------------------------------------------------------------|
|                                                                  | **2005**                                                           |   | **2004** |   | **2003** |
|                                                                  |                                                               |   |   |   |   |
| Capital                                        additions              | $                                        14,059                    |   | $                                        12,447 |   | $                                        12,527 |
| Acquisition                                        of business        | 93,182                                                             |   | - |   | - |
| Common                                        stock dividends         | 6,693                                                              |   | 3,635 |   | 3,754 |
| Repayments                                        of long-term debt   | 494                                                                |   | 537 |   | 5,367 |
| Acquisition                                        of treasury shares | -                                                                  |   | - |   | 51,753 |
|                                                                  | $                                        114,428                   |   | $                                        16,619 |   | $                                        73,401 |
|                                                                  |                                                               |   |   |   |   |

*Capital                                  additions*

*Acquisition                              of business*

*Dividends*

*Common                              Stock Repurchases*

**Adequacy                              of Liquidity Sources**

**Off-Balance                              Sheet Arrangements**

**CUSTOMER                              CONCENTRATIONS**

**LEGAL                              AND ENVIRONMENTAL MATTERS**

*Environmental                              Issues:*

*Asset                              Retirement Obligations:*

*Environmental                              Remediation:*

| **·  ** | We                                        are named as a potentially responsible** **party                                        (“PRP”) at two Superfund sites (Fike-Artel in Nitro,                                        West Virginia, and                                        Solvents Recovery in Southington, Connecticut),                                        in which many other PRPs                                        are also involved. With respect to both of                                        these sites, we have entered                                        into cost sharing agreements that result                                        in costs of less than $10 per                                        year for funding the Company’s share of the ongoing cleanup costs at each                                        site. No reserve has been established, given                                        the deminimus nature of the                                        costs. Our cost sharing percentage at each                                        site is 0.2%. On October 31,                                        2005, the Environmental Protection Agency                                        (“EPA”) notified the Company of                                        alleged deminimus responsibility for certain                                        contamination at the Mercury                                        Refining Site in New York. MacDermid entered                                        into a settlement agreement                                        with the EPA to resolve this deminimus liability                                        for a payment of $1. |
|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Some                                        of our facilities have an extended history of                                        chemical and industrial                                        activity. We are directly involved in the                                        remediation of sites that have                                        environmental contamination arising from                                        its operations. These sites                                        include certain sites such as the Kearny,                                        New Jersey and Waukegan,                                        Illinois sites, which were acquired in the                                        December 1998 acquisition of W.                                        Canning plc. With respect to the Kearny,                                        New Jersey site, our Canning                                        subsidiary withheld, under the Acquisition                                        Agreement (“the Acquisition                                        Agreement”), a deferred purchase price payment of approximately                                        $1,600. We                                        estimate the range of clean-up costs at these                                        sites to be between $2,000                                        and $5,000. The owners of the Kearny, New                                        Jersey site have primary                                        responsibility for clean-up costs that exceed                                        the deferred purchase price.                                        Investigations into the extent of contamination                                        at these sites are,                                        however, ongoing. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                                        are in the process of characterizing contamination                                        at our Huntingdon                                        Avenue, Waterbury, Connecticut site, which                                        was closed in the quarter ended                                        September 30, 2003. The extent of required                                        remediation activities at the                                        Huntingdon Avenue site has not yet been determined;                                        however, we do not                                        anticipate that we will be materially affected                                        by the environmental                                        remediation costs. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Legal                              Proceedings:*

**CRITICAL                              ACCOUNTING ESTIMATES**

*General:*

*Allowance                              for doubtful receivables:*

*Reserve                              for obsolete inventories:*

*Goodwill                              and intangible assets*
*Goodwill                              and Other Intangible Assets *

*Income                              taxes*

*Environmental                              and Other Legal Matters*

*Accounting                              for Contingencies*

*Asset                              Retirement Obligations:*

*Restructuring                              Charges:*
*Accounting                              for Costs Associated with Exit or Disposal Activities*

*Employee                              Benefit Plans*
** **

**RECENT                              ACCOUNTING PRONOUNCEMENTS**

**CONSOLIDATED                              STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME**

***(In                              thousands, except share and per share amounts)***
** **

|                                                                                           | **Year                                            Ended December 31,** |
|------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                                                                           |                                                                   | **2005** |   | **2004** |   | **2003** |
|                                                                                           |                                                                   |   |   |   |   |   |
| Net                                            sales                                           |                                                                   | $                                            738,043 |   | $                                            660,785 |   | $                                            619,886 |
| Cost                                            of sales                                       |                                                                   | 413,311 |   | 347,544 |   | 329,271 |
|                                               Gross profit                           |                                                                   | 324,732 |   | 313,241 |   | 290,615 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Operating                                            expenses:                                 |                                                                   |   |   |   |   |   |
|                                               Selling, technical and administrative  |                                                                   | 200,536 |   | 185,915 |   | 171,510 |
|                                               Research and development               |                                                                   | 27,200 |   | 21,916 |   | 19,955 |
|                                               Restructuring and acquisition          |                                                                   | 3,263 |   | - |   | - |
|                                                                                                |                                                                   | 230,999 |   | 207,831 |   | 191,465 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Operating                                            profit                                    |                                                                   | 93,733 |   | 105,410 |   | 99,150 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Other                                            income (expense):                             |                                                                   |   |   |   |   |   |
|                                               Interest income                        |                                                                   | 2,315 |   | 1,399 |   | 873 |
|                                               Interest expense                       |                                                                   | (30,397) |   | (31,014) |   | (31,051) |
|                                               Miscellaneous (expense) income         |                                                                   | (40) |   | 1,942 |   | 4,314 |
|                                                                                           |                                                                   | (28,122) |   | (27,673) |   | (25,864) |
|                                                                                           |                                                                   |   |   |   |   |   |
| Earnings                                            before income taxes                        |                                                                   | 65,611 |   | 77,737 |   | 73,286 |
| Income                                            tax expense                                  |                                                                   | (18,568) |   | (24,513) |   | (23,466) |
|                                                                                           |                                                                   |   |   |   |   |   |
| Earnings                                            from continuing operations before          |                                                                   |   |   |   |   |   |
|                                               cumulative effect of accounting change |                                                                   | 47,043 |   | 53,224 |   | 49,820 |
| Discontinued                                            operations, net of tax                 |                                                                   | - |   | - |   | 5,592 |
| Cumulative                                            effect of accounting change, net         |                                                                   |   |   |   |   |   |
|                                               of tax                                 |                                                                   | - |   | - |   | 1,014 |
| Net                                            earnings                                        |                                                                   | $                                            47,043 |   | $                                            53,224 |   | $                                            56,426 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Basic                                            earnings per common share:                    |                                                                   |   |   |   |   |   |
|                                               Continuing operations                  |                                                                   | $                                            1.55 |   | $                                            1.76 |   | $                                            1.60 |
|                                               Discontinued operations                |                                                                   | - |   | - |   | 0.18 |
|                                               Cumulative effect of accounting change |                                                                   | - |   | - |   | 0.03 |
| Net                                            earnings per share                              |                                                                   | $                                            1.55 |   | $                                            1.76 |   | $                                            1.81 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Diluted                                            earnings per common share:                  |                                                                   |   |   |   |   |   |
|                                               Continuing operations                  |                                                                   | $                                            1.52 |   | $                                            1.72 |   | $                                            1.59 |
|                                               Discontinued operations                |                                                                   | - |   | - |   | 0.18 |
|                                               Cumulative effect of accounting change |                                                                   | - |   | - |   | 0.03 |
| Net                                            earnings per share                              |                                                                   | $                                            1.52 |   | $                                            1.72 |   | $                                            1.80 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Weighted                                            average number of common shares            |                                                                   |   |   |   |   |   |
|                                               outstanding:                           |                                                                   |   |   |   |   |   |
| Basic                                                                                          |                                                                   | 30,430,149 |   | 30,278,133 |   | 31,241,288 |
| Diluted                                                                                        |                                                                   | 30,893,216 |   | 30,961,108 |   | 31,430,398 |
|                                                                                           |                                                                   |   |   |   |   |   |
| Other                                            comprehensive income:                         |                                                                   |   |   |   |   |   |
|                                               Net earnings                           |                                                                   | $                                            47,043 |   | $                                            53,224 |   | $                                            56,426 |
|                                               Foreign currency translation           |                                                                   | (21,296) |   | 9,424 |   | 18,466 |
|                                               Minimum pension liability, net of tax  |                                                                   | (701) |   | (59) |   | (305) |
|                                               Mark-to-market of external investments |                                                                   | (17) |   | 52 |   | - |
| Comprehensive                                            income                                |                                                                   | $                                            25,029 |   | $                                            62,641 |   | $                                            74,587 |
|                                                                                           |                                                                   |   |   |   |   |   |

**See                                accompanying notes to consolidtaed financial                                statements**

**CONSOLIDATED                              BALANCE SHEETS**

***(In                              thousands, except share amounts)***

|                                                                                                                                       |   | **December                                          31,** |   | **December                                          31,** |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|-----------------------------------------------------------|
|                                                                                                                                       |   | **2005**                                                  |   | **2004**                                                  |
| Assets                                                                                                                                     |   |                                                      |   |                                                      |
| Current                                          assets:                                                                                   |   |                                                      |   |                                                      |
| Cash                                          and cash equivalents                                                                         |   | $                                          80,932         |   | $                                          137,829        |
| Accounts                                          receivable, net of allowance                                                             |   |                                                      |   |                                                      |
|                                             for doubtful receivables of $10,966                                                  |   |                                                      |   |                                                      |
|                                             and $11,822, respectively                                                            |   | 155,718                                                   |   | 142,455                                                   |
| Inventories,                                          net                                                                                  |   | 92,973                                                    |   | 80,445                                                    |
| Prepaid                                          expenses                                                                                  |   | 14,108                                                    |   | 10,183                                                    |
| Deferred                                          income taxes                                                                             |   | 16,629                                                    |   | 18,303                                                    |
|                                             Total current assets                                                                 |   | 360,360                                                   |   | 389,215                                                   |
|                                                                                                                                       |   |                                                      |   |                                                      |
| Property,                                          plant and equipment, net                                                                |   |                                                      |   |                                                      |
|                                             of accumulated depreciation of                                                       |   |                                                      |   |                                                      |
|                                             $184,499 and $189,167 respectively                                                   |   | 123,229                                                   |   | 110,463                                                   |
| Goodwill                                                                                                                                   |   | 236,532                                                   |   | 194,287                                                   |
| Intangibles,                                          net of accumulated amortization                                                      |   |                                                      |   |                                                      |
|                                             of $14,793 and $11,933, respectively                                                 |   | 40,128                                                    |   | 28,434                                                    |
| Deferred                                          income taxes                                                                             |   | 37,667                                                    |   | 34,675                                                    |
| Other                                          assets, net                                                                                 |   | 14,820                                                    |   | 16,645                                                    |
| Total                                          assets                                                                                      |   | $                                          812,736        |   | $                                          773,719        |
|                                                                                                                                       |   |                                                      |   |                                                      |
| Liabilities                                          and shareholders’ equity                                                        |   |                                                      |   |                                                      |
| Current                                          liabilities:                                                                              |   |                                                      |   |                                                      |
| Accounts                                          payable                                                                                  |   | 60,202                                                    |   | 54,732                                                    |
| Dividends                                          payable                                                                                 |   | 1,836                                                     |   | 1,212                                                     |
| Accrued                                          compensation                                                                              |   | 16,261                                                    |   | 12,370                                                    |
| Accrued                                          interest                                                                                  |   | 12,784                                                    |   | 12,700                                                    |
| Accrued                                          income taxes payable                                                                      |   | 11,461                                                    |   | 7,293                                                     |
| Short-term                                          notes payable                                                                          |   | 498                                                       |   | 489                                                       |
| Current                                          installments of long-term obligations                                                     |   | 232                                                       |   | 264                                                       |
| Other                                          current liabilities                                                                         |   | 38,565                                                    |   | 40,052                                                    |
|                                             Total current liabilities                                                            |   | 141,839                                                   |   | 129,112                                                   |
|                                                                                                                                       |   |                                                      |   |                                                      |
| Long-term                                          debt and capital lease obligations                                                      |   | 301,043                                                   |   | 301,077                                                   |
| Retirement                                          benefits, less current portion                                                         |   | 22,343                                                    |   | 26,588                                                    |
| Deferred                                          income taxes                                                                             |   | 11,489                                                    |   | 9,267                                                     |
| Other                                          long-term liabilities                                                                       |   | 4,136                                                     |   | 3,644                                                     |
| Total                                          liabilities                                                                                 |   | 480,850                                                   |   | 469,688                                                   |
|                                                                                                                                       |   |                                                      |   |                                                      |
| Commitments                                          and contingencies (Notes 9, 7, and 14)                                                |   |                                                      |   |                                                      |
|                                                                                                                                       |   |                                                      |   |                                                      |
| Shareholders’                                          equity                                                                        |   |                                                      |   |                                                      |
| Common                                          stock, authorized 75,000,000                                                               |   |                                                      |   |                                                      |
|                                             shares, issued 47,131,950 at December 31,                                            |   |                                                      |   |                                                      |
|                                             2005, and 46,838,700 shares at December                                          31, |   |                                                      |   |                                                      |
|    2004,                                          at stated value of $1.00 per share                                        |   | 47,132                                                    |   | 46,839                                                    |
| Additional                                          paid-in capital                                                                        |   | 42,869                                                    |   | 33,053                                                    |
| Retained                                          earnings                                                                                 |   | 366,807                                                   |   | 327,080                                                   |
| Accumulated                                          other comprehensive (loss) income                                                     |   | (10,242)                                                  |   | 11,772                                                    |
| Less                                          – cost of common shares held in                                                        |   |                                                      |   |                                                      |
|                                             treasury, 16,546,763 at December 31, 2005,                                           |   |                                                      |   |                                                      |
|                                             16,547,686 at December 31, 2004                                                      |   | (114,680)                                                 |   | (114,713)                                                 |
|                                             Total shareholders’ equity                                                     |   | 331,886                                                   |   | 304,031                                                   |
| Total                                          liabilities and shareholders’ equity                                                  |   | $                                          812,736        |   | $                                          773,719        |
|                                                                                                                                       |   |                                                      |   |                                                      |

***See                                accompanying notes to consolidated financial                                statements***

**CONSOLIDATED                              STATEMENTS OF CASH FLOWS**

*(In                              thousands)*
*** ***

|                                                                                              |   |                                                               |   |                                             |   |                                            |
|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------------------|
|                                                                                              |   | **Year                                        Ended December 31,** |
|                                                                                              |   | **2005**                                                           |   | **2004**                                         |   | **2003**                                        |
| Net                                        cash flows from operating activities:                  |   |                                                               |   |                                             |   |                                            |
| Net                                        earnings                                               |   | $                                        47,043                    |   | $                                        53,224  |   | $                                        56,426 |
| Adjustments                                        to reconcile net income to                     |   |                                                               |   |                                             |   |                                            |
|                                           net income from continuing operations:        |   |                                                               |   |                                             |   |                                            |
| Earnings                                        from discontinued operations, net of tax          |   | -                                                                  |   | -                                                |   | 5,592                                           |
| Income                                        from continuing operations                          |   | 47,043                                                             |   | 53,224                                           |   | 50,834                                          |
| Adjustments                                        to reconcile earnings from continuing          |   |                                                               |   |                                             |   |                                            |
|                                           operations to net cash provided by operating  |   |                                                               |   |                                             |   |                                            |
|                                           activities                                    |   |                                                               |   |                                             |   |                                            |
| Depreciation                                                                                      |   | 17,038                                                             |   | 16,148                                           |   | 15,793                                          |
| Amortization                                                                                      |   | 4,357                                                              |   | 3,009                                            |   | 3,301                                           |
| Provision                                        for bad debts                                    |   | 1,839                                                              |   | 3,562                                            |   | 2,606                                           |
| Deferred                                        income taxes                                      |   | (1,882)                                                            |   | 5,679                                            |   | 12,094                                          |
| Stock                                        compensation expense                                 |   | 6,779                                                              |   | 6,544                                            |   | 4,219                                           |
| Restructuring                                        and acquisition                              |   | 2,896                                                              |   | -                                                |   | -                                               |
| Changes                                        in assets and liabilities                          |   |                                                               |   |                                             |   |                                            |
|                                           (Increase) decrease in receivables            |   | (13,524)                                                           |   | (2,580)                                          |   | 3,450                                           |
|                                           (Increase) decrease in inventories            |   | (2,558)                                                            |   | (1,857)                                          |   | 8,059                                           |
|                                           Increase in prepaid expenses                  |   | (2,570)                                                            |   | (1,720)                                          |   | (2,283)                                         |
|                                           Increase (decrease) in accounts payable       |   | 1,056                                                              |   | (1,960)                                          |   | (554)                                           |
|                                           Increase (decrease) in accrued expenses       |   | 424                                                                |   | (3,661)                                          |   | (427)                                           |
|                                           Increase (decrease) in income tax liabilities |   | 30                                                                 |   | 3,843                                            |   | (8,890)                                         |
|                                           Other                                         |   | (1,760)                                                            |   | 5,046                                            |   | 6,350                                           |
| Cash                                        provided by continuing operations                     |   | 59,168                                                             |   | 85,277                                           |   | 94,552                                          |
| Cash                                        used by discontinued operations                       |   | -                                                                  |   | -                                                |   | (3,135)                                         |
| Net                                        cash flows provided by operating activities            |   | 59,168                                                             |   | 85,277                                           |   | 91,417                                          |
|                                                                                              |   |                                                               |   |                                             |   |                                            |
| Cash                                        flows from investing activities:                      |   |                                                               |   |                                             |   |                                            |
|                                           Capital expenditures                          |   | (14,059)                                                           |   | (12,447)                                         |   | (12,527)                                        |
|                                           Proceeds from disposition of fixed assets     |   | 1,420                                                              |   | 3,913                                            |   | 1,823                                           |
|                                           Acquisition of business, net of cash acquired |   | (93,182)                                                           |   | -                                                |   | -                                               |
|                                           Disposition of business                       |   | 262                                                                |   | -                                                |   | 5,000                                           |
| Net                                        cash flows used in investing activities                |   | (105,559)                                                          |   | (8,534)                                          |   | (5,704)                                         |
|                                                                                              |   |                                                               |   |                                             |   |                                            |
| Cash                                        flows from financing activities:                      |   |                                                               |   |                                             |   |                                            |
|                                           Net short-term borrowings (repayments)        |   | 198                                                                |   | (520)                                            |   | (1,480)                                         |
|                                           Proceeds from long-term borrowings            |   | -                                                                  |   | 24                                               |   | 3,570                                           |
|                                           Repayments of long-term borrowings            |   | (494)                                                              |   | (537)                                            |   | (5,367)                                         |
|                                           Issuance (acquisition) of treasury shares     |   | 33                                                                 |   | 32                                               |   | (51,753)                                        |
|                                           Proceeds from exercise of stock options       |   | 3,331                                                              |   | 619                                              |   | 812                                             |
|                                           Dividends paid                                |   | (6,693)                                                            |   | (3,635)                                          |   | (3,754)                                         |
| Net                                        cash flows used in financing activities                |   | (3,625)                                                            |   | (4,017)                                          |   | (57,972)                                        |
|                                                                                              |   |                                                               |   |                                             |   |                                            |
| Effect                                        of exchange rate changes on cash                    |   |                                                               |   |                                             |   |                                            |
|                                           and cash equivalents                          |   | (6,881)                                                            |   | 3,809                                            |   | 1,534                                           |
| Net                                        (decrease) increase in                                 |   |                                                               |   |                                             |   |                                            |
|    cash                                        and cash equivalents                |   | (56,897)                                                           |   | 76,535                                           |   | 29,275                                          |
| Cash                                        and cash equivalents at beginning of                  |   |                                                               |   |                                             |   |                                            |
|                                           year                                          |   | 137,829                                                            |   | 61,294                                           |   | 32,019                                          |
| Cash                                        and cash equivalents at end of year                   |   | $                                        80,932                    |   | $                                        137,829 |   | $                                        61,294 |
|                                                                                              |   |                                                               |   |                                             |   |                                            |
| Supplemental                                        disclosure information:                       |   |                                                               |   |                                             |   |                                            |
| Cash                                        paid for interest                                     |   | $                                        29,454                    |   | $                                        30,014  |   | $                                        31,467 |
| Cash                                        paid for income taxes                                 |   | $                                        18,459                    |   | $                                        16,804  |   | $                                        17,785 |
|                                                                                              |   |                                                               |   |                                             |   |                                            |

***See                              accompanying notes to consolidated financial                              statements***

**CONSOLIDATED                              STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

*(In                              thousands)*
*** ***

|                                                                      |                                            |   |                                            |   |                                             |   | **Accumulated**                                   |   |                                               |   |                                             |
|---------------------------------------------------------------------------|-------------------------------------------------|--------|-------------------------------------------------|--------|--------------------------------------------------|--------|---------------------------------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------|
|                                                                      |                                            |   | **Additional**                                  |   |                                             |   | **Other**                                         |   |                                               |   | **Total**                                        |
|                                                                      | **Common**                                      |   | **Paid-in**                                     |   | **Retained**                                     |   | **Comprehensive**                                 |   | **Treasury**                                       |   | **Shareholders'**                                |
|                                                                      | **Stock**                                       |   | **Capital**                                     |   | **Earnings**                                     |   | **Income**                                        |   | **Stock**                                          |   | **Equity**                                       |
|                                                                      |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
| Balance                                        at December 31, 2002       | $                                        46,640 |   | $                                        21,261 |   | $                                        225,387 |   | $                                        (15,786) |   | $                                        (59,764)  |   | $                                        217,738 |
|                                                                      |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
| Stock                                        awards                       | 5                                               |   | 109                                             |   | -                                                |   | -                                                 |   | -                                                  |   | 114                                              |
| Exercise                                        of stock options          | 168                                             |   | 644                                             |   | -                                                |   | -                                                 |   | -                                                  |   | 812                                              |
| Stock                                        compensation                 | -                                               |   | 4,104                                           |   | -                                                |   | -                                                 |   | -                                                  |   | 4,104                                            |
| Net                                        earnings                       | -                                               |   | -                                               |   | 56,426                                           |   | -                                                 |   | -                                                  |   | 56,426                                           |
| Dividends                                        declared                 | -                                               |   | -                                               |   | (3,108)                                          |   | -                                                 |   | -                                                  |   | (3,108)                                          |
| Tax                                        benefit adjustment             | -                                               |   | (234)                                           |   | -                                                |   | -                                                 |   | -                                                  |   | (234)                                            |
| Currency                                        translation               | -                                               |   | -                                               |   | -                                                |   | 18,446                                            |   | -                                                  |   | 18,446                                           |
| Increase                                        in minimum pension        |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   | -                                                |
|                                           liability, net of tax | -                                               |   | -                                               |   | -                                                |   | (305)                                             |   | -                                                  |   | (305)                                            |
| Shares                                        acquired                    | -                                               |   | -                                               |   | -                                                |   | -                                                 |   | (54,981)                                           |   | (54,981)                                         |
| Balance                                        at December 31, 2003       | 46,813                                          |   | 25,884                                          |   | 278,705                                          |   | 2,355                                             |   | (114,745)                                          |   | 239,012                                          |
|                                                                      |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
| Stock                                        awards                       | 2                                               |   | 68                                              |   | -                                                |   | -                                                 |   | -                                                  |   | 70                                               |
| Exercise                                        of stock options          | 24                                              |   | 595                                             |   | -                                                |   | -                                                 |   | -                                                  |   | 619                                              |
| Stock                                        compensation                 | -                                               |   | 6,474                                           |   | -                                                |   | -                                                 |   | -                                                  |   | 6,474                                            |
| Net                                        earnings                       | -                                               |   | -                                               |   | 53,224                                           |   | -                                                 |   | -                                                  |   | 53,224                                           |
| Dividends                                        declared                 | -                                               |   | -                                               |   | (4,849)                                          |   | -                                                 |   | -                                                  |   | (4,849)                                          |
| Tax                                        benefit adjustment             | -                                               |   | 32                                              |   | -                                                |   | -                                                 |   | -                                                  |   | 32                                               |
| Currency                                        translation               | -                                               |   | -                                               |   | -                                                |   | 9,424                                             |   | -                                                  |   | 9,424                                            |
| Increase                                        in minimum pension        |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
|                                           liability, net of tax | -                                               |   | -                                               |   | -                                                |   | (59)                                              |   | -                                                  |   | (59)                                             |
| Shares                                        released from treasury      | -                                               |   | -                                               |   | -                                                |   | -                                                 |   | 32                                                 |   | 32                                               |
| Other                                                                     | -                                               |   | -                                               |   | -                                                |   | 52                                                |   | -                                                  |   | 52                                               |
| Balance                                        at December 31, 2004       | 46,839                                          |   | 33,053                                          |   | 327,080                                          |   | 11,772                                            |   | (114,713)                                          |   | 304,031                                          |
|                                                                      |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
| Stock                                        awards                       | 4                                               |   | 130                                             |   | -                                                |   | -                                                 |   | -                                                  |   | 134                                              |
| Exercise                                        of stock options          | 289                                             |   | 2,877                                           |   | -                                                |   | -                                                 |   | -                                                  |   | 3,166                                            |
| Stock                                        compensation                 | -                                               |   | 6,645                                           |   | -                                                |   | -                                                 |   | -                                                  |   | 6,645                                            |
| Net                                        earnings                       | -                                               |   | -                                               |   | 47,043                                           |   | -                                                 |   | -                                                  |   | 47,043                                           |
| Dividends                                        declared                 | -                                               |   | -                                               |   | (7,316)                                          |   | -                                                 |   | -                                                  |   | (7,316)                                          |
| Tax                                        benefit adjustment             | -                                               |   | 164                                             |   | -                                                |   | -                                                 |   | -                                                  |   | 164                                              |
| Currency                                        translation               | -                                               |   | -                                               |   | -                                                |   | (21,296)                                          |   | -                                                  |   | (21,296)                                         |
| Increase                                        in minimum pension        |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
|                                           liability, net of tax | -                                               |   | -                                               |   | -                                                |   | (701)                                             |   | -                                                  |   | (701)                                            |
| Shares                                        purchased                   |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
|                                           from treasury         | -                                               |   | -                                               |   | -                                                |   | -                                                 |   | 33                                                 |   | 33                                               |
| Other                                                                     | -                                               |   | -                                               |   | -                                                |   | (17)                                              |   | -                                                  |   | (17)                                             |
|                                                                      |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |
| Balance                                        at December 31, 2005       | $                                        47,132 |   | $                                        42,869 |   | $                                        366,807 |   | $                                        (10,242) |   | $                                        (114,680) |   | $                                        331,886 |
|                                                                           |                                            |   |                                            |   |                                             |   |                                              |   |                                               |   |                                             |

***See                              accompanying notes to consolidated financial                              statements***

**NOTES                              TO CONSOLIDATED FINANCIAL STATEMENTS **

***(In                              thousands, except share and per share amounts)***

**1.                              BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING                              POLICIES**

*Business                              Description. *

*Principles                              of Consolidation. *

*Use                              of Estimates. *

*Cash                              and Cash Equivalents. *

*Credit                              Risk Management.*

*Inventories.                              *

*Property,                              Plant and Equipment.*

*Goodwill                              and Indefinite-Lived Purchased Intangible Assets. *
*                              Goodwill and Other Intangible Assets*

*Long-lived                              Assets Including Finite-Lived Purchased Intangible                              Assets. *

*Asset                              Retirement Obligations*

*Employee                              Benefits. *

*Retirement*
*Employers'                              Accounting for Pensions*

*Post-retirement.*

*Post-employment*

*Financial                              Instruments. *

*Foreign                              Operations. *

*Revenue                              Recognition. *

*Expenses:*

*Cost                              of Sales. *

*Selling,                              technical and administrative expenses.*

*Research                              and development.*

*Income                              Taxes. *

*Stock-based                              Plans. *

|                                                                                                                                                      |   | **Years                                        ended December 31,** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|
|                                                                                                                                                      |   | **2005**                                                            |   | **2004** |   | **2003** |
| Net                                        income available for common shareholders:                                                                      |   |                                                                |   |   |   |   |
|                                           As reported                                                                                           |   | $                                        47,043                     |   | $                                        53,224 |   | $                                        56,426 |
|                                           Add: stock based employee compensation                                                                |   |                                                                |   |   |   |   |
|                                              expense included in reported net income,                                        net |   |                                                                |   |   |   |   |
|                                              of related tax effects                                                              |   | 4,765                                                               |   | 4,385 |   | 2,868 |
|                                           Deduct: total stock based employee                                                                    |   |                                                                |   |   |   |   |
|                                              compensation expense determined under fair                                          |   |                                                                |   |   |   |   |
|                                              value based method for all awards, net of                                           |   |                                                                |   |   |   |   |
|       related                                        tax effects                                                            |   | (4,765)                                                             |   | (4,462) |   | (3,263) |
| Pro                                        forma net income                                                                                               |   | $                                        47,043                     |   | $                                        53,147 |   | $                                        56,031 |
|                                                                                                                                                      |   |                                                                |   |   |   |   |
| Net                                        income per common share:                                                                                       |   |                                                                |   |   |   |   |
|                                           Basic                                                                                                 |   |                                                                |   |   |   |   |
|                                              As reported                                                                         |   | $                                        1.55                       |   | $                                        1.76 |   | $                                        1.81 |
|                                              Pro forma                                                                           |   | $                                        1.55                       |   | $                                        1.76 |   | $                                        1.79 |
|                                                                                                                                                      |   |                                                                |   |   |   |   |
|                                           Diluted                                                                                               |   |                                                                |   |   |   |   |
|                                              As reported                                                                         |   | $                                        1.52                       |   | $                                        1.72 |   | $                                        1.80 |
|                                              Pro forma                                                                           |   | $                                        1.52                       |   | $                                        1.72 |   | $                                        1.78 |

*New                              Accounting Standards*

*Accounting                              Changes and Error Corrections — a replacement of APB Opinion No. 20                              and FASB Statement No. 3 *

*Inventory                              Costs, an amendment of ARB No. 43, Chapter 4 *

*Application                              of FASB Statement No. 109, Accounting for Income Taxes,                              to the Tax Deduction on                              Qualified Production Activities Provided by the American                              Jobs Creation Act of                              2004 *
*Accounting                              and Disclosure for the Foreign Earnings Provision within                              the American Jobs                              Creation Act of 2004 *

*Accounting                              for Stock-Based Compensation*
*Accounting                              for Stock Issued to Employees*

**2.                              EARNINGS PER SHARE**

|                                                                                               |   | **Year                                        Ended December 31,** |
|----------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                                               |   | **2005**                                                           |   | **2004** |   | **2003** |
| Earnings                                        from continuing operations before                  |   |                                                               |   |   |   |   |
|                                           cumulative effect of accounting change         |   | $                                        47,043                    |   | $                                        53,224 |   | $                                        49,820 |
| Discontinued                                        operations, net of tax                         |   | -                                                                  |   | - |   | 5,592 |
| Cumulative                                        effect of accounting change, net                 |   |                                                               |   |   |   |   |
|                                           of tax                                         |   | -                                                                  |   | - |   | 1,014 |
| Net                                        income                                                  |   | $                                        47,043                    |   | $                                        53,224 |   | $                                        56,426 |
|                                                                                               |   |                                                               |   |   |   |   |
| Basic                                        shares outstanding                                    |   | 30,430,149                                                         |   | 30,278,133 |   | 31,241,288 |
| Dilutive                                        effect of stock options                            |   | 463,067                                                            |   | 682,975 |   | 189,110 |
| Diluted                                        shares outstanding                                  |   | 30,893,216                                                         |   | 30,961,108 |   | 31,430,398 |
|                                                                                               |   |                                                               |   |   |   |   |
| Basic                                        earnings per common share:                            |   |                                                               |   |   |   |   |
|                                           Continuing operations                          |   | $                                        1.55                      |   | $                                        1.76 |   | $                                        1.60 |
|                                           Discontinued operations                        |   | -                                                                  |   | - |   | 0.18 |
|                                           Cumulative effect of accounting change         |   | -                                                                  |   | - |   | 0.03 |
|                                              Net earnings per share       |   | $                                        1.55                      |   | $                                        1.76 |   | $                                        1.81 |
|                                                                                               |   |                                                               |   |   |   |   |
| Diluted                                        earnings per common share:                          |   |                                                               |   |   |   |   |
|                                           Continuing operations                          |   | $                                        1.52                      |   | $                                        1.72 |   | $                                        1.59 |
|                                           Discontinued operations                        |   | -                                                                  |   | - |   | 0.18 |
|                                           Cumulative effect of accounting change         |   | -                                                                  |   | - |   | 0.03 |
|                                               Net earnings per share |   | $                                        1.52                      |   | $                                        1.72 |   | $                                        1.80 |
|                                                                                               |   |                                                               |   |   |   |   |

**3.                              INVENTORIES**

|                                                              |   | **As                                        of December 31,** |
|-------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                                              |   | **2005**                                                      |   | **2004** |
|                                                              |   |                                                          |   |   |
| Finished                                        goods             |   | $                                        51,820               |   | $                                        43,802 |
| Raw                                        materials and supplies |   | 35,679                                                        |   | 29,563 |
| Equipment                                                         |   | 5,474                                                         |   | 7,080 |
| Total                                        net inventories      |   | $                                        92,973               |   | $                                        80,445 |
|                                                              |   |                                                          |   |   |

**4.                              PROPERTY, PLANT, AND EQUIPMENT**

|                                                                                         |   | **As                                        of December 31,** |
|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                                                                         |   | **2005**                                                      |   | **2004** |
|                                                                                         |   |                                                          |   |   |
| Land                                        and improvements                                 |   | $                                        10,040               |   | $                                        11,256 |
| Buildings                                        and improvements                            |   | 99,506                                                        |   | 106,292 |
| Machinery,                                        equipment, and fixtures                    |   | 198,182                                                       |   | 182,082 |
|                                           Total property, gross of depreciation    |   | 307,728                                                       |   | 299,630 |
| Less                                        accumulated depreciation                         |   | (184,499)                                                     |   | (189,167) |
|                                           Total property, plant and equipment, net |   | $                                        123,229              |   | $                                        110,463 |
|                                                                                         |   |                                                          |   |   |

**5.                              GOODWILL AND OTHER INTANGIBLE ASSETS**

|       | **As                                        of** |
|------------|--------------------------------------------------|
|       |                                             | **December                                        31, 2005** |   | **December                                        31, 2004** |
|       |                                             | **Gross                                        Carrying** |   |  **Accumulated** |   |  **Net** |   | **Gross                                        Carrying** |   |  **Accumulated** |   |  **Net** |
|       |                                             | **Amount** |   | **Amortization** |   | **Amount** |   | **Amount** |   | **Amortization** |   | **Amount** |
| Patents    |                                             | $                                        17,573 |   | $                                        (9,276) |   | $                                        8,297 |   | $                                        17,566 |   | $                                        (8,087) |   | $                                        9,479 |
| Trademarks |                                             | 19,908 |   | (2,671) |   | 17,237 |   | 20,135 |   | (2,115) |   | 18,020 |
| Others     |                                             | 17,440 |   | (2,846) |   | 14,594 |   | 2,666 |   | (1,731) |   | 935 |
| Total      |                                             | $                                        54,921 |   | $                                        (14,793) |   | $                                        40,128 |   | $                                        40,367 |   | $                                        (11,933) |   | $                                        28,434 |
|       |                                             |   |   |   |   |   |   |   |   |   |   |   |

*Goodwill                              and Other Intangible Assets *

|                                                              |   |                                                         |   | **Acquisitions                                        and**    |   |                                                         |
|-------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------------------------|--------|--------------------------------------------------------------|
| **Reportable**                                                    |   | **Balance                                        at**        |   | **Purchase                                        Accounting** |   | **Balance                                        at**        |
| **Segment**                                                       |   | **December                                        31, 2004** |   | **Adjustments**                                                |   | **December                                        31, 2005** |
| Advanced                                        Surface Finishing |   | $                                        122,157             |   | $                                        33,796                |   | $                                        155,953             |
| Printing                                        Solutions         |   | 72,130                                                       |   | 8,449                                                          |   | 80,579                                                       |
| Total                                                             |   | $                                        194,287             |   | $                                        42,245                |   | $                                        236,532             |
|                                                              |   |                                                         |   |                                                           |   |                                                         |
|                                                              |   |                                                         |   |                                                           |   |                                                         |

*Goodwill                              and Other Intangible Assets *

**6.                              STOCK COMPENSATION PLANS**

*The                              1992 Plan*

** **

*The                              1998 Plan*

*The                              2001 Executive Plan*

| ·   | The                                        option price is variable, either up or down,                                        based upon the market price                                        at date of grant, adjusted for MacDermid’s stock price performance in                                        comparison to the Standard and Poor’s Specialty Chemicals Index during the                                        six years following the date of grant. The                                        options initially had exercise                                        prices ranging from $16.75 to $38.65 per                                        share; the exercise prices of                                        these options as of December 31, 2005 now                                        range from $19.72 to $38.65 per                                        share based on Company stock price performance. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                                        number of options exercisable is variable,                                        either up or down, based upon a                                        multiple either (a) determined by the cumulative                                        percentage of owner                                        earnings growth (defined as cash flow from                                        operations less net capital                                        expenditures), or (b) determined using earnings                                        per share growth during                                        the four year vesting period, based on targets                                        set at the time of grant.                                        The multiple can range from 50% to 200% of                                        the original shares issued. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*The                              2001 Employee Plan*

| **Fixed                                        Option Plans:**        |   |            |   |                                                      |   |                                                                             |   |                                                      |
|-----------------------------------------------------------------------|--------|-----------------|--------|-----------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
|                                                                  |   |            |   |                                                      |   | **Options                                        Exercisable at Year-end**  |
|                                                                  |   |            |   | **Weighted-**                                             |   |                                                                             |   | **Weighted-**                                             |
|                                                                  |   | **Outstanding** |   | **Average**                                               |   |                                                                             |   | **Average**                                               |
|                                                                  |   | **Options**     |   | **Exercise                                        Price** |   | **Shares**                                                                       |   | **Exercise                                        Price** |
| As                                        of December 31, 2002        |   | 1,716,465       |   | $                                        29.73            |   | 1,288,715                                                                        |   | $                                        33.97            |
|                                           Granted in 2003   |   | 50,100          |   | $                                        24.35            |   |                                                                             |   |                                                      |
|                                           Exercised in 2003 |   | (135,500)       |   | $                                        1.94             |   |                                                                             |   |                                                      |
|                                           Forfeited in 2003 |   | (92,375)        |   | $                                        18.11            |   |                                                                             |   |                                                      |
| As                                        of December 31, 2003        |   | 1,538,690       |   | $                                        32.69            |   | 1,153,715                                                                        |   | $                                        37.72            |
|                                           Granted in 2004   |   | 36,775          |   | $                                        32.33            |   |                                                                             |   |                                                      |
|                                           Exercised in 2004 |   | (14,250)        |   | $                                        27.23            |   |                                                                             |   |                                                      |
|                                           Forfeited in 2004 |   | (203,050)       |   | $                                        42.50            |   |                                                                             |   |                                                      |
| Allowed                                        to expire              |   | (135,000)       |   | $                                        1.79             |   |                                                                             |   |                                                      |
| As                                        of December 31, 2004        |   | 1,223,165       |   | $                                        34.53            |   | 841,665                                                                          |   | $                                        41.74            |
|                                           Extended in 2005  |   | 135,000         |   | $                                        1.79             |   |                                                                             |   |                                                      |
|                                           Exercised in 2005 |   | (222,280)       |   | $                                        7.60             |   |                                                                             |   |                                                      |
|                                           Forfeited in 2005 |   | (88,450)        |   | $                                        25.20            |   |                                                                             |   |                                                      |
| As                                        of December 31, 2005        |   | 1,047,435       |   | $                                        36.81            |   | 1,002,760                                                                        |   | $                                        37.23            |
|                                                                  |   |            |   |                                                      |   |                                                                             |   |                                                      |

|                                                                |   |       |   | **Weighted-average**                                        |   |                                                      |
|---------------------------------------------------------------------|--------|------------|--------|-------------------------------------------------------------|--------|-----------------------------------------------------------|
|                                                                |   |       |   | **remaining**                                               |   | **Weighted-**                                             |
|                                                                |   |       |   | **contractual                                        life** |   | **Average**                                               |
| **Range                                        of exercise prices** |   | **Shares** |   | **(years)**                                                 |   | **Exercise                                        Price** |
| $19.72                                        - $22.51              |   | 2,540,889  |   | 6.1                                                         |   | $                                        21.41            |
| $28.49                                        - $38.65              |   | 984,000    |   | 8.6                                                         |   | $                                        35.75            |
|                                                                |   | 3,524,889  |   | 6.8                                                         |   | $                                        25.41            |
|                                                                |   |       |   |                                                        |   |                                                      |

| **Indexed                                        Option Plans:** |   |            |   |                                                      |   |                                                                       |   |                                                                     |
|------------------------------------------------------------------|--------|-----------------|--------|-----------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|
|                                                             |   |            |   |                                                      |   | **Options                                        Exercisable at Year-end** |
|                                                             |   |            |   | **Weighted-**                                             |   |                                                                       |   | **Weighted-**                                                            |
|                                                             |   | **Outstanding** |   | **Average**                                               |   |                                                                       |   | **Average**                                                              |
|                                                             |   | **Options**     |   | **Exercise                                        Price** |   | **Shares**                                                                 |   | **Exercise                                        Price**                |
| As                                        of December 31, 2002   |   | 1,451,369       |   | $                                        18.50            |   | -                                                                          |   | $                                             - |
|                                           Granted      |   | 890,125         |   | $                                        22.96            |   |                                                                       |   |                                                                     |
|                                           Exercised    |   | (32,500)        |   | $                                        17.57            |   |                                                                       |   |                                                                     |
|                                           Forfeited    |   | (119,500)       |   | $                                        18.58            |   |                                                                       |   |                                                                     |
| As                                        of December 31, 2003   |   | 2,189,494       |   | $                                        20.33            |   | -                                                                          |   | $                                            -       |
|                                           Granted      |   | 505,000         |   | $                                        38.65            |   |                                                                       |   |                                                                     |
|                                           Exercised    |   | (9,500)         |   | $                                        21.17            |   |                                                                       |   |                                                                     |
|                                           Forfeited    |   | (177,500)       |   | $                                        24.50            |   |                                                                       |   |                                                                     |
| As                                        of December 31, 2004   |   | 2,507,494       |   | $                                        23.72            |   | -                                                                          |   | $                                           -             |
|                                           Granted      |   | 502,000         |   | $                                        33.25            |   |                                                                       |   |                                                                     |
|                                           Exercised    |   | (66,000)        |   | $                                        21.87            |   |                                                                       |   |                                                                     |
|                                           Forfeited    |   | (50,500)        |   | $                                        28.66            |   |                                                                       |   |                                                                     |
| Index                                        Effect              |   | 631,895         |   | $                                        25.82            |   |                                                                       |   |                                                                     |
| As                                        of December 31, 2005   |   | 3,524,889       |   | $                                        25.41            |   | 1,039,000                                                                  |   | $                                        21.87                           |
|                                                             |   |            |   |                                                      |   |                                                                       |   |                                                                     |

|                                                                |   |       |   | **Weighted-average**                                        |   |                                                      |
|---------------------------------------------------------------------|--------|------------|--------|-------------------------------------------------------------|--------|-----------------------------------------------------------|
|                                                                |   |       |   | **remaining**                                               |   | **Weighted-**                                             |
|                                                                |   |       |   | **contractual                                        life** |   | **Average**                                               |
| **Range                                        of exercise prices** |   | **Shares** |   | **(years)**                                                 |   | **Exercise                                        Price** |
| $19.72                                        - $22.51              |   | 2,540,889  |   | 6.1                                                         |   | $                                        21.41            |
| $28.49                                        - $38.65              |   | 984,000    |   | 8.6                                                         |   | $                                        35.75            |
|                                                                |   | 3,524,889  |   | 6.8                                                         |   | $                                        25.41            |
|                                                                |   |       |   |                                                        |   |                                                      |

|                                                                |   | **2005**                                       |   | **2004**                                       |   | **2003**                                       |
|---------------------------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------|
|                                                                |   | **Indexed**                                    |   | **Indexed**                                    |   | **Fixed**                                      |   | **Indexed** |   | **Fixed** |
| Weighted-average                                        fair value  |   | $                                        11.07 |   | $                                        10.46 |   | $                                        16.28 |   | $                                        7.63 |   | $                                        13.28 |
| Risk-free                                        interest rate      |   | 1.60%                                          |   | 1.60%                                          |   | 3.85%                                          |   | 2.03% |   | 2.94% |
| Expected                                        option life (years) |   | 6                                        years |   | 6                                        years |   | 6                                        years |   | 6                                        years |   | 6                                        years |
| Expected                                        volatility          |   | 31.9%                                          |   | 24.6%                                          |   | 50.0%                                          |   | 34.6% |   | 60.0% |
| Dividend                                        yield               |   | 0.49%                                          |   | 0.30%                                          |   | 0.51%                                          |   | 0.37% |   | 0.39% |
|                                                                |   |                                           |   |                                           |   |                                           |   |   |   |   |

**7.                              PENSION, POST-RETIREMENT AND POST-EMPLOYMENT PLANS**

*Defined                              Benefit Domestic Pension Plan*

*Supplemental                              Executive Retirement Plan*

*Foreign                              pension*

*Post-retirement                              Benefit Plan*

*Post-employment                              benefits *

|                                                                                 |   | **Pension                                        Benefits**  |   | **Postretirement                                        Benefits** |
|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                                 |   | **2005**                                                          |   | **2004**                                                           |   | **2005** |   | **2004** |
|                                                                                 |   | **Domestic**                                                      |   | **Foreign**                                                        |   | **Domestic** |   | **Foreign** |   | **Domestic** |   | **Domestic** |
| **Reconciliation                                        of Projected Benefit**       |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **                                          Obligation:**                  |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| Projected                                        benefit obligation at               |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           beginning of year                |   | $                                        66,761                   |   | $                                        69,636                    |   | $                                        61,050 |   | $                                        54,811 |   | $                                        6,391 |   | $                                        6,927 |
| Service                                        cost                                  |   | 3,316                                                             |   | 518                                                                |   | 3,857 |   | 541 |   | 98 |   | 128 |
| Interest                                        cost on projected benefit            |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           obligation                       |   | 3,966                                                             |   | 2,968                                                              |   | 3,755 |   | 2,895 |   | 372 |   | 421 |
| Plan                                        participant contributions                |   | -                                                                 |   | 325                                                                |   | - |   | 349 |   | 243 |   | 202 |
| Plan                                        amendments                               |   | 401                                                               |   | -                                                                  |   | (611) |   | - |   | - |   | - |
| Actuarial                                        (gain)/loss excluding               |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           assumption change                |   | (1,600)                                                           |   | 6,886                                                              |   | (958) |   | 6,686 |   | 124 |   | (531) |
| Actuarial                                        (gain)/loss due to                  |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           assumption change                |   | 11,432                                                            |   | -                                                                  |   | 1,636 |   | - |   | 430 |   | (171) |
| Benefits                                        paid                                 |   | (2,186)                                                           |   | (2,490)                                                            |   | (1,968) |   | (2,285) |   | (727) |   | (585) |
| Translation                                        difference                        |   | -                                                                 |   | (6,922)                                                            |   | - |   | 4,070 |   | - |   | - |
| Projected                                        benefit obligation at end of        |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           year                             |   | $                                        82,090                   |   | $                                        70,921                    |   | $                                        66,761 |   | $                                        67,067 |   | $                                        6,931 |   | $                                        6,391 |
|                                                                                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **Reconciliation                                        of Fair Value of Plan**      |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **                                          Assets:**                      |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| Fair                                        value of plan assets at beginning        |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           of year                          |   | $                                        46,874                   |   | $                                        53,876                    |   | $                                        43,101 |   | $                                        44,880 |   | $                                           - |   | $                                           - |
| Actual                                        return on plan assets, net of          |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           expenses                         |   | 1,469                                                             |   | 9,389                                                              |   | 2,358 |   | 3,785 |   | - |   | - |
| Employer                                        contribution                         |   | 2,824                                                             |   | 3,336                                                              |   | 3,383 |   | 1,608 |   | 484 |   | 383 |
| Plan                                        participant contribution                 |   | -                                                                 |   | 325                                                                |   | - |   | 349 |   | 243 |   | 202 |
| Benefits                                        paid                                 |   | (2,186)                                                           |   | (2,490)                                                            |   | (1,968) |   | (2,285) |   | (727) |   | (585) |
| Translation                                        difference                        |   | -                                                                 |   | (5,331)                                                            |   | - |   | 3,332 |   | - |   | - |
| Fair                                        value of plan assets at end of year      |   | $                                        48,981                   |   | $                                        59,105                    |   | $                                        46,874 |   | $                                        51,669 |   | $                                           - |   | $                                           - |
|                                                                                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **Funded                                        Status:**                            |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| Funded                                        status                                 |   | $                                        (33,109)                 |   | $                                        (11,816)                  |   | $                                        (19,887) |   | $                                        (15,398) |   | $                                        (6,931) |   | $                                        (6,391) |
| Unrecognized                                        net actuarial loss               |   | 23,771                                                            |   | 11,455                                                             |   | 12,067 |   | 15,398 |   | 1,606 |   | 1,142 |
| Contributions                                        after measurement date          |   | -                                                                 |   | -                                                                  |   | 1,000 |   | - |   | 121 |   | 96 |
| Unamortized                                        prior service cost                |   | (64)                                                              |   | -                                                                  |   | (457) |   | - |   | 138 |   | 156 |
| Net                                        amount recognized                         |   | $                                        (9,402)                  |   | $                                        (361)                     |   | $                                        (7,277) |   | $                                           - |   | $                                        (5,066) |   | $                                        (4,997) |
|                                                                                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **Amounts                                        Recognized in the**                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **                                          Consolidated Balance Sheets:** |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| Accrued                                        benefit liability                     |   | $                                        (9,402)                  |   | $                                        (11,816)                  |   | $                                        (7,277) |   | $                                        (15,398) |   | $                                        (5,066) |   | $                                        (4,997) |
| Accumulated                                        other comprehensive               |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                           income                           |   | (5,835)                                                           |   | 11,455                                                             |   | - |   | 15,398 |   | - |   | - |
| Net                                        amount recognized                         |   | $                                        (15,237)                 |   | $                                        (361)                     |   | $                                        (7,277) |   | $                                           - |   | $                                        (5,066) |   | $                                        (4,997) |
|                                                                                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **Weighted                                        Average Assumptions**              |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| **                                          Used at Disclosure:**          |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| Discount                                        rate                                 |   | 5.5%                                                              |   | 5.0%                                                               |   | 6.0% |   | 5.6% |   | 5.5% |   | 6.0% |
| Rate                                        of compensation increase                 |   | 4.5%                                                              |   | 2.8%                                                               |   | 4.5% |   | 3.0% |   | ** |   | ** |
| Long-term                                        rate of return on assets            |   | 8.0%                                                              |   | 7.0%                                                               |   | 8.0% |   | 7.5% |   | ** |   | ** |
|                                                                                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
| ***Not                                        a meaningful statistic.*               |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |
|                                                                                 |   |                                                              |   |                                                               |   |   |   |   |   |   |   |   |

| **Pension                                        Benefits:**             |   |                                                         |   |                                                         |   |                                                         |   |                                         |   |                                           |   |                                         |
|--------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------|
|                                                                     |   | **Year                                        Ended**        |   | **Year                                        Ended**        |   | **Year                                        Ended**        |
|                                                                     |   | **December                                        31, 2005** |   | **December                                        31, 2004** |   | **December                                        31, 2003** |
|                                                                     |   | **Domestic**                                                 |   | **Foreign**                                                  |   | **Domestic**                                                 |   | **Foreign**                                  |   | **Domestic**                                   |   | **Foreign**                                  |
| **Net                                        Periodic Benefit Expense:** |   |                                                         |   |                                                         |   |                                                         |   |                                         |   |                                           |   |                                         |
| Service                                        cost                      |   | $                                        3,316               |   | $                                        779                 |   | $                                        3,857               |   | $                                        541 |   | $                                        3,683 |   | $                                        568 |
| Interest                                      cost on the project        |   |                                                         |   |                                                         |   |                                                         |   |                                         |   |                                           |   |                                         |
|                                           benefit obligation   |   | 3,966                                                        |   | 3,005                                                        |   | 3,755                                                        |   | 2,895                                        |   | 3,417                                          |   | 2,702                                        |
| Expected                                        return on plan assets    |   | (3,781)                                                      |   | (2,962)                                                      |   | (3,505)                                                      |   | (3,359)                                      |   | (2,864)                                        |   | (3,127)                                      |
| Amortization                                      of prior service       |   |                                                         |   |                                                         |   |                                                         |   |                                         |   |                                           |   |                                         |
|                                           cost                 |   | 7                                                            |   | -                                                            |   | 28                                                           |   | -                                            |   | 28                                             |   | -                                            |
| Recognized                                        actuarial (gain)/loss  |   | 441                                                          |   | 1,040                                                        |   | 394                                                          |   | 812                                          |   | 282                                            |   | 684                                          |
| Net                                        periodic benefit cost         |   | $                                        3,949               |   | $                                        1,862               |   | $                                        4,529               |   | $                                        889 |   | $                                        4,546 |   | $                                        827 |
|                                                                     |   |                                                         |   |                                                         |   |                                                         |   |                                         |   |                                           |   |                                         |

|                                                                               |   | **Year                                        Ended**        |   | **Year                                        Ended**        |   | **Year                                        Ended**        |
|------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|
|                                                                               |   | **December                                        31, 2005** |   | **December                                        31, 2004** |   | **December                                        31, 2003** |
|                                                                               |   | **Domestic**                                                 |   | **Foreign**                                                  |   | **Domestic**                                                 |   | **Foreign** |   | **Domestic** |   | **Foreign** |
| **Weighted                                        Average Assumptions**            |   |                                                         |   |                                                         |   |                                                         |   |   |   |   |   |   |
| **                                          used to Determine Expense:** |   |                                                         |   |                                                         |   |                                                         |   |   |   |   |   |   |
| Discount                                        rate                               |   | 6.0%                                                         |   | 5.0%                                                         |   | 6.3%                                                         |   | 5.6% |   | 6.8% |   | 5.5% |
| Rate                                        of compensation increase               |   | 4.5%                                                         |   | 2.8%                                                         |   | 4.5%                                                         |   | 3.0% |   | 5.0% |   | 4.5% |
| Long-term                                        rate of return on assets          |   | 8.0%                                                         |   | 7.0%                                                         |   | 8.0%                                                         |   | 7.5% |   | 8.0% |   | 8.0% |
|                                                                               |   |                                                         |   |                                                         |   |                                                         |   |   |   |   |   |   |

| **Postretirement                                        Benefits:**           |   |                                                               |   |                                         |   |                                         |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------|
|                                                                          |   | **Year                                        Ended December 31,** |
|                                                                          |   | **2005**                                                           |   | **2004**                                     |   | **2003**                                     |
| **Net                                        Periodic Benefit Expense:**      |   |                                                               |   |                                         |   |                                         |
| Service                                        cost                           |   | $                                        98                        |   | $                                        128 |   | $                                        116 |
| Interest                                        cost on the projected benefit |   |                                                               |   |                                         |   |                                         |
| obligation                                                                    |   | 372                                                                |   | 421                                          |   | 405                                          |
| Expected                                        return on plan assets         |   | -                                                                  |   | -                                            |   | -                                            |
| Amortization                                        of prior service cost     |   | 17                                                                 |   | 18                                           |   | 17                                           |
| Amortization                                        of transition obligation  |   | 67                                                                 |   | 156                                          |   | 100                                          |
| Net                                        periodic benefit cost              |   | $                                        554                       |   | $                                        723 |   | $                                        638 |
|                                                                          |   |                                                               |   |                                         |   |                                         |

**8.                              INCOME TAXES**

|                                                                                            |   | **Year                                        Ended December 31,** |
|-------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                                            |   | **2005**                                                           |   | **2004** |   | **2003** |
|                                                                                            |   |                                                               |   |   |   |   |
| Income                                        tax expense                                       |   | $                                        18,568                    |   | $                                        24,513 |   | $                                        23,466 |
| Discontinued                                        operations                                  |   | -                                                                  |   | - |   | (902) |
| Shareholders'                                        equity for the tax effects of              |   |                                                               |   |   |   |   |
|                                           stock-based compensation expense in         |   |                                                               |   |   |   |   |
|                                           excess of amounts recognized for financial  |   |                                                               |   |   |   |   |
|                                           reporting purposes, and for the tax effects |   |                                                               |   |   |   |   |
|                                           of minimum pension liability, hedging       |   |                                                               |   |   |   |   |
|                                           activities and foreign currency translation |   | 878                                                                |   | (4) |   | 127 |
| Total                                                                                           |   | $                                        19,446                    |   | $                                        24,509 |   | $                                        22,691 |
|                                                                                            |   |                                                               |   |   |   |   |

|                                                   |   | **Current**                                                  |   | **Deferred**                                     |   | **Total**                                       |
|--------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------------------|
|                                                   |   | **December                                        31, 2005** |
| U.S.                                        Federal    |   | $                                        6,217               |   | $                                        (5,299) |   | $                                        918    |
| State                                        and local |   | 647                                                          |   | (59)                                             |   | 588                                             |
| Foreign                                                |   | 10,286                                                       |   | 6,776                                            |   | 17,062                                          |
|                                                   |   | $                                        17,150              |   | $                                        1,418   |   | $                                        18,568 |
|                                                   |   |                                                         |   |                                             |   |                                            |
|                                                   |   | **December                                        31, 2004** |
| U.S.                                        Federal    |   | $                                        3,534               |   | $                                        2,627   |   | $                                        6,161  |
| State                                        and local |   | 387                                                          |   | 499                                              |   | 886                                             |
| Foreign                                                |   | 18,646                                                       |   | (1,180)                                          |   | 17,466                                          |
|                                                   |   | $                                        22,567              |   | $                                        1,946   |   | $                                        24,513 |
|                                                   |   |                                                         |   |                                             |   |                                            |
|                                                   |   | **December                                        31, 2003** |
| U.S.                                        Federal    |   | $                                        6,186               |   | $                                        6,511   |   | $                                        12,697 |
| State                                        and local |   | 993                                                          |   | 2,610                                            |   | 3,603                                           |
| Foreign                                                |   | 4,193                                                        |   | 2,973                                            |   | 7,166                                           |
|                                                   |   | $                                        11,372              |   | $                                        12,094  |   | $                                        23,466 |
|                                                   |   |                                                         |   |                                             |   |                                            |

|                                                                              |   | **Year                                        Ended December 31,** |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                              |   | **2005**                                                           |   | **2004** |   | **2003** |
|                                                                              |   |                                                               |   |   |   |   |
| U.S.                                        Federal statutory tax rate            |   | 35.0%                                                              |   | 35.0% |   | 35.0% |
|                                                                              |   |                                                               |   |   |   |   |
| Taxes                                        computed at U.S. statutory rate      |   | $                                        22,964                    |   | $                                        27,208 |   | $                                        25,650 |
| State                                        income taxes, net of Federal benefit |   | 379                                                                |   | 576 |   | 792 |
| Foreign                                        tax rate differential              |   | (6,235)                                                            |   | 3,044 |   | 3,535 |
| Export                                        tax benefits                        |   | (1,250)                                                            |   | (1,160) |   | (1,273) |
| Net                                        change in valuation allowance          |   | 931                                                                |   | (5,294) |   | (3,995) |
| Other,                                        net                                 |   | 1,779                                                              |   | 139 |   | (1,243) |
| Actual                                        income taxes                        |   | $                                        18,568                    |   | $                                        24,513 |   | $                                        23,466 |
|                                                                              |   |                                                               |   |   |   |   |
| Effective                                        tax rate                         |   | 28.3%                                                              |   | 31.5% |   | 32.0% |
|                                                                              |   |                                                               |   |   |   |   |

*Application                              of FASB Statement No. 109, Accounting for Income Taxes,                              to the Tax Deduction on                              Qualified Production Activities Provided by the American                              Jobs Creation Act of                              2004 *
*Accounting                              and Disclosure for the Foreign Earnings Provision within                              the American Jobs                              Creation Act of 2004 *

|                                                                                                                                       |   | **As                                        of December 31,** |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                                                                                                                       |   | **2005**                                                      |   | **2004** |
| **Deferred                                        tax assets:**                                                                            |   |                                                          |   |   |
| Accounts                                        receivable, primarily due to allowance for                                        doubtful |   |                                                          |   |   |
|                                           doubtful accounts                                                                      |   | $                                        1,783                |   | $                                        1,550 |
| Inventories                                                                                                                                |   | 5,825                                                         |   | 5,313 |
| Accrued                                        liabilities                                                                                 |   | 3,538                                                         |   | 5,028 |
| Acquisition                                        accrued liabilities                                                                     |   | 4,532                                                         |   | 5,533 |
| Employee                                        benefits                                                                                   |   | 18,919                                                        |   | 15,830 |
| Research                                        and development tax credits                                                                |   | 2,075                                                         |   | 2,555 |
| Foreign                                        tax credits                                                                                 |   | 8,079                                                         |   | 3,655 |
| Net                                        operating losses                                                                                |   | 15,410                                                        |   | 19,665 |
| Impairment                                        and asset write-downs                                                                    |   | 26,569                                                        |   | 24,292 |
| Alternative                                        minimum tax credits                                                                     |   | 2,658                                                         |   | 1,055 |
|                                           Total gross assets                                                                     |   | 89,388                                                        |   | 84,476 |
|                                           Valuation reserve                                                                      |   | (12,883)                                                      |   | (11,952) |
| Total                                        gross deferred tax assets                                                                     |   | 76,505                                                        |   | 72,524 |
|                                                                                                                                       |   |                                                          |   |   |
| **Deferred                                        tax liabilities:**                                                                       |   |                                                          |   |   |
| Plant                                        and equipment, primarily due to depreciation                                                  |   | 5,481                                                         |   | 7,806 |
| Intangibles                                        and other assets                                                                        |   | 19,396                                                        |   | 16,927 |
| Other                                                                                                                                      |   | 8,821                                                         |   | 4,080 |
|                                           Total gross deferred tax liabilities                                                   |   | 33,698                                                        |   | 28,813 |
|                                           net deferred tax asset                                                                 |   | $                                        42,807               |   | $                                        43,711 |
|                                                                                                                                       |   |                                                          |   |   |

|                                                                         |   | **Year                                        Ended December 31,** |
|------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                         |   | **2005**                                                           |   | **2004** |
|                                                                         |   |                                                               |   |   |
| Net                                        current deferred tax asset        |   | $                                        16,629                    |   | $                                        18,303 |
| Net                                        noncurrent deferred tax asset     |   | 37,667                                                             |   | 34,675 |
|                                                                         |   | 54,296                                                             |   | 52,978 |
|                                                                         |   |                                                               |   |   |
| Net                                        noncurrent deferred tax liability |   | 11,489                                                             |   | 9,267 |
|                                                                         |   |                                                               |   |   |
| Total                                        net deferred tax asset          |   | $                                        42,807                    |   | $                                        43,711 |
|                                                                         |   |                                                               |   |   |

**9.                              DEBT AND CAPITAL LEASES**

|                                                                                                                                           |   | **As                                        of December 31,** |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                                                                                                                           |   | **2005**                                                      |   | **2004** |
|                                                                                                                                           |   |                                                          |   |   |
| Notes                                        payable                                                                                           |   | $                                        498                  |   | $                                        489 |
|                                                                                                                                           |   |                                                          |   |   |
| Senior                                        Subordinated Notes, 9 1/8%, unsecured, due                                        2011           |   | $                                        300,516              |   | $                                        300,385 |
| Other                                                                                                                                          |   | 82                                                            |   | 132 |
| Capitalized                                        lease obligations                                                                           |   | 677                                                           |   | 824 |
|                                          Total long-term obligations, inclusive of                                        current portion |   | 301,275                                                       |   | 301,341 |
| Less                                        current portion                                                                                    |   | (232)                                                         |   | (264) |
|                                           Total long-term borrowings                                                                 |   | $                                        301,043              |   | $                                        301,077 |
|                                                                                                                                           |   |                                                          |   |   |
| Unamortized                                        bond discount included in Senior                                                            |   |                                                          |   |   |
|                                           subordinated notes                                                                         |   | 984                                                           |   | 1,115 |
| Total                                        principal due on long-term borrowings                                                             |   | $                                        302,259              |   | $                                        302,456 |
|                                                                                                                                           |   |                                                          |   |   |

|                                                                        |   | **Capital                                        leases** |   | **Long-term                                        debt**    |   | **Total**                                        |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------|
| 2006                                                                        |   | $                                        233              |   | $                                           - |   | $                                        233     |
| 2007                                                                        |   | 176                                                       |   | -                                                            |   | 176                                              |
| 2008                                                                        |   | 148                                                       |   | -                                                            |   | 148                                              |
| 2009                                                                        |   | 24                                                        |   | -                                                            |   | 24                                               |
| 2010                                                                        |   | 26                                                        |   | -                                                            |   | 26                                               |
|                                           Thereafter              |   | 70                                                        |   | 301,582                                                      |   | 301,652                                          |
|                                              Total |   | $                                        677              |   | $                                        301,582             |   | $                                        302,259 |
|                                                                        |   |                                                      |   |                                                         |   |                                             |

*Notes                              payable*

*Senior                              subordinated notes*

*Revolving                              credit facility*

*Other                              debt facilities*

**10.                              SEGMENT REPORTING**

|                                                                                                    |   | **2005**                                         |   | **2004**                                         |   | **2003**                                         |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|--------------------------------------------------|--------|--------------------------------------------------|
|                                                                                                    |   |                                             |   |                                             |   |                                             |
| Net                                        sales:                                                       |   |                                             |   |                                             |   |                                             |
| Advanced                                        Surface Finishing                                       |   |                                             |   |                                             |   |                                             |
|                                           Total segment net sales                             |   | $                                        432,202 |   | $                                        395,062 |   | $                                        355,459 |
|                                           Intersegment sales                                  |   | (8,946)                                          |   | (8,339)                                          |   | (7,328)                                          |
|                                           Net external sales for the segment                  |   | $                                        423,256 |   | $                                        386,723 |   | $                                        348,131 |
|                                                                                                    |   |                                             |   |                                             |   |                                             |
| Printing                                        Solutions                                               |   | 314,787                                          |   | 274,062                                          |   | 271,755                                          |
|                                           Consolidated net sales                              |   | $                                        738,043 |   | $                                        660,785 |   | $                                        619,886 |
|                                                                                                    |   |                                             |   |                                             |   |                                             |
| Depreciation                                        and amortization:                                   |   |                                             |   |                                             |   |                                             |
|                                           Advanced Surface Finishing                          |   | $                                        11,863  |   | $                                        9,874   |   | $                                        9,705   |
|                                           Printing Solutions                                  |   | 9,532                                            |   | 9,283                                            |   | 9,389                                            |
|                                           Consolidated depreciation and amortization          |   | $                                        21,395  |   | $                                        19,157  |   | $                                        19,094  |
|                                                                                                    |   |                                             |   |                                             |   |                                             |
| Operating                                        profit:                                                |   |                                             |   |                                             |   |                                             |
|                                           Advanced Surface Finishing                          |   | $                                        61,632  |   | $                                        62,728  |   | $                                        50,858  |
|                                           Printing Solutions                                  |   | 32,101                                           |   | 42,682                                           |   | 48,292                                           |
|                                              Consolidated operating profit     |   | $                                        93,733  |   | $                                        105,410 |   | $                                        99,150  |
|                                                                                                    |   |                                             |   |                                             |   |                                             |
| Capital                                        expenditures:                                            |   |                                             |   |                                             |   |                                             |
|                                           Advanced Surface Finishing                          |   | $                                        9,971   |   | $                                        8,032   |   | $                                        6,348   |
|                                           Printing Solutions                                  |   | 3,264                                            |   | 2,282                                            |   | 2,481                                            |
|                                           Corporate                                           |   | 824                                              |   | 2,133                                            |   | 3,075                                            |
|                                           Discontinued Operations                             |   | -                                                |   | -                                                |   | 623                                              |
|                                              Consolidated capital expenditures |   | $                                        14,059  |   | $                                        12,447  |   | $                                        12,527  |
|                                                                                                    |   |                                             |   |                                             |   |                                             |

|                                                                        |   | **As                                            of**        |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------|
|                                                                        |   | **December                                            31,** |   | **December                                            31,** |
|                                                                        |   | **2005**                                                    |   | **2004** |
|                                                                        |   |                                                        |   |   |
| Advanced                                            Surface Finishing       |   | $                                            546,891        |   | $                                            499,119 |
| Printing                                            Solutions               |   | 312,332                                                     |   | 277,488 |
| Unallocated                                            corporate assets     |   | 95,430                                                      |   | 132,035 |
| Intercompany                                            eliminations        |   | (141,917)                                                   |   | (134,923) |
|                                               Consolidated assets |   | $                                            812,736        |   | $                                            773,719 |
|                                                                        |   |                                                        |   |   |

|                                                                  |   | **United**                                         |   | **Other**                                         |   |                                               |   | **Asia**                                           |   |                                               |
|-----------------------------------------------------------------------|--------|----------------------------------------------------|--------|---------------------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------|
|                                                                  |   | **States**                                         |   | **Americas**                                      |   | **Europe**                                         |   | **Pacific**                                        |   | **Consolidated**                                   |
| Year                                          Ended December 31, 2005 |   |                                               |   |                                              |   |                                               |   |                                               |   |                                               |
| Net                                          sales                    |   | $                                          275,518 |   | $                                          18,513 |   | $                                          258,248 |   | $                                          185,764 |   | $                                          738,043 |
| Identifiable                                          assets          |   | $                                          355,067 |   | $                                          7,550  |   | $                                          348,840 |   | $                                          101,279 |   | $                                          812,736 |
|                                                                  |   |                                               |   |                                              |   |                                               |   |                                               |   |                                               |
| Year                                          Ended December 31, 2004 |   |                                               |   |                                              |   |                                               |   |                                               |   |                                               |
| Net                                          sales                    |   | $                                          250,793 |   | $                                          18,986 |   | $                                          240,063 |   | $                                          150,943 |   | $                                          660,785 |
| Identifiable                                          assets          |   | $                                          328,814 |   | $                                          8,823  |   | $                                          342,695 |   | $                                          93,387  |   | $                                          773,719 |
|                                                                  |   |                                               |   |                                              |   |                                               |   |                                               |   |                                               |
| Year                                          Ended December 31, 2003 |   |                                               |   |                                              |   |                                               |   |                                               |   |                                               |
| Net                                          sales                    |   | $                                          247,883 |   | $                                          18,508 |   | $                                          220,568 |   | $                                          132,927 |   | $                                          619,886 |
| Identifiable                                          assets          |   | $                                          293,851 |   | $                                          8,710  |   | $                                          310,479 |   | $                                          84,195  |   | $                                          697,235 |
|                                                                  |   |                                               |   |                                              |   |                                               |   |                                               |   |                                               |

**11.                                  COMMON AND TREASURY STOCK**

|                                                                      |   | **Year                                            Ended December 31,**     |
|---------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|
|                                                                      |   | **2005**                                                                                       |   | **2004** |   | **2003** |
| Balance,                                            beginning of year     |   | 46,838,700                                                                                     |   | 46,813,138 |   | 46,639,757 |
|                                                                      |   |                                                                                           |   |   |   |   |
| Shares                                            issued:                 |   |                                                                                           |   |   |   |   |
|                                               Options exercised |   | 289,280                                                                                        |   | 23,750 |   | 168,000 |
|                                               Stock awards      |   | 3,970                                                                                          |   | 1,812 |   | 5,381 |
| Balance                                            - end of year          |   | 47,131,950                                                                                     |   | 46,838,700 |   | 46,813,138 |
|                                                                      |   |                                                                                           |   |   |   |   |

|                                                                  |   | **Year                                            Ended December 31,** |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------|
|                                                                  |   | **2005**                                                               |   | **2004** |   | **2003** |
| Balance,                                            beginning of year |   | 16,547,686                                                             |   | 16,548,604 |   | 14,349,453 |
| Shares                                            acquired            |   | -                                                                      |   | - |   | 2,201,720 |
| Shares                                            released            |   | (923)                                                                  |   | (918) |   | (2,569) |
| Balance                                            - end of year      |   | 16,546,763                                                             |   | 16,547,686 |   | 16,548,604 |
|                                                                  |   |                                                                   |   |   |   |   |

**12.                                  OPERATING LEASE COMMITMENTS**

|       |   | **Operating**                                       |   |
|------------|--------|-----------------------------------------------------|--------|
| 2006       |   | $                                            8,892  |   |
| 2007       |   | 5,975                                               |   |
| 2008       |   | 4,385                                               |   |
| 2009       |   | 3,902                                               |   |
| 2010       |   | 3,699                                               |   |
| Thereafter |   | 31,976                                              |   |
| Total      |   | $                                            58,829 |   |
|       |   |                                                |   |

**13.                                  OTHER INCOME (EXPENSE)**

|                                                                                        |   | **Year                                            Ended December 31,** |
|---------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
|                                                                                        |   | **2005**                                                               |   | **2004** |   | **2003** |
| **Miscellaneous                                            income:**                        |   |                                                                   |   |   |   |   |
| Interest                                            rate swaps                              |   | $                                            537                       |   | $                                            1,099 |   | $                                            633 |
|                                               Non-operating provision adjustments |   | -                                                                      |   | 892 |   | 919 |
|                                               Joint ventures                      |   | 392                                                                    |   | 810 |   | 11 |
|                                               Call and put gain                   |   | -                                                                      |   | - |   | 2,214 |
|                                               Foreign exchange                    |   | -                                                                      |   | - |   | 39 |
|                                               Other                               |   | 49                                                                     |   | 682 |   | 498 |
| Total                                            miscellaneous income                       |   | $                                            978                       |   | $                                            3,483 |   | $                                            4,314 |
|                                                                                        |   |                                                                   |   |   |   |   |
| **Miscellaneous                                            expense:**                       |   |                                                                   |   |   |   |   |
|                                               Foreign exchange                    |   | $                                            (711)                     |   | $                                            (1,541) |   | $                                               - |
|                                               Other                               |   | (306)                                                                  |   | - |   | - |
| Total                                            miscellaneous expense                      |   | $                                            (1,017)                   |   | $                                            (1,541) |   | $                                               - |
|                                                                                        |   |                                                                   |   |   |   |   |

**14.                                  CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS**

*Environmental                                  Issues:*

*Asset                                  Retirement Obligations:*

*Environmental                                  Remediation:*

| **·  ** | MacDermid                                            is named as a potentially responsible** **party                                            (“PRP”) at two Superfund sites (Fike-Artel                                            in Nitro, West Virginia, and                                            Solvents Recovery in Southington, Connecticut),                                            in which many other PRPs                                            are also involved. With respect to both                                            of these sites, the Company has                                            entered into cost sharing agreements                                            that result in costs of less than $10                                            per year for funding MacDermid’s share of the ongoing cleanup costs                                            at                                            each site. No reserve has been established,                                            given the deminimus nature of                                            the costs. The Company’s cost sharing percentage at each site                                            is 0.2%. On                                            October 31, 2005, the Environmental Protection                                            Agency (“EPA”) notified the                                            Company of alleged deminimus responsibility                                            for certain contamination at                                            the Mercury Refining Site in New York.                                            MacDermid entered into a settlement                                            agreement with the EPA to resolve this                                            deminimus liability for a payment                                            of $1. |
|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Some                                            of the Company’s facilities have an extended history                                            of chemical and                                            industrial activity. The Company is directly                                            involved in the remediation                                            of sites that have environmental contamination                                            arising from its                                            operations. These sites include certain                                            sites such as the Kearny, New                                            Jersey and Waukegan, Illinois sites,                                            which were acquired in the December                                            1998 acquisition of W. Canning plc. With                                            respect to the Kearny, New Jersey                                            site, the Canning subsidiary withheld,                                            under the Acquisition Agreement                                            (“the Acquisition Agreement”), a deferred purchase price payment                                            of                                            approximately $1,600. Clean-up costs                                            at these sites are estimated to be                                            between $2,000 and $5,000. The owners                                            of the Kearny, New Jersey site have                                            primary responsibility for clean-up costs                                            that exceed the deferred                                            purchase price. Investigations into the                                            extent of contamination at these                                            sites are, however, ongoing. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | MacDermid                                            is in the process of characterizing contamination                                            at the Huntingdon                                            Avenue, Waterbury, Connecticut site,                                            which was closed in the quarter ended                                            September 30, 2003. The extent of required                                            remediation activities at the                                            Huntingdon Avenue site has not yet been                                            determined; however, the Company                                            does not anticipate that it will be materially                                            affected by the                                            environmental remediation costs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Legal                                  Proceedings:*

**15.                                  DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS**

*Accounting                                  for Derivative Instruments and Hedging Activities*

**16.                                  DISCONTINUED OPERATIONS**

*Accounting                                  for the Impairment or Disposal of Long-Lived Assets*

|                                                                                  |   | **Year                                              Ended**   |   |
|---------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                                                                                  |   | **December                                              31,** |   |
|                                                                                  |   | **2003**                                                      |   |
| Net                                              sales                                |   | $                                              78,747         |   |
|                                                                                  |   |                                                          |   |
| Loss                                              before income taxes and minority    |   |                                                          |   |
|                                                 interest                    |   | (940)                                                         |   |
| Income                                              tax (expense) benefit             |   | (12)                                                          |   |
|                                                                                  |   |                                                          |   |
| Loss                                              from discontinued operations before |   |                                                          |   |
|                                                 gain on sale                |   | (952)                                                         |   |
| Gain                                              on sale of discontinued operations, |   |                                                          |   |
|                                                 net of tax                  |   | 6,544                                                         |   |
| Discontinued                                              operations, net of tax      |   | $                                              5,592          |   |
|                                                                                  |   |                                                          |   |

**17.                                  ACQUISITIONS**

| Current                                                assets, net of cash            |                                                    |   |
|---------------------------------------------------------------------------------------|---------------------------------------------------------|--------|
|                                                   acquired                  | $                                                30,673 |   |
| Fixed                                                assets and other                 | 22,911                                                  |   |
| Intangible                                                assets                      | 13,649                                                  |   |
| Acquired                                                in-process                    |                                                    |   |
|                                                   research and development  | 386                                                     |   |
| Goodwill                                                                              | 42,245                                                  |   |
| Total                                                assets acquired                  | 109,864                                                 |   |
|                                                                                  |                                                    |   |
| Current                                                liabilities                    | (11,663)                                                |   |
| Long-term                                                debt                         | (376)                                                   |   |
| Deferred                                                tax liability                 | (5,393)                                                 |   |
|                                                   Total liabilities assumed | (17,432)                                                |   |
|                                                                                  |                                                    |   |
| Net                                                assets acquired                    | $                                                92,432 |   |
|                                                                                  |                                                    |   |

**18.                                  **
**RESTRUCTURING                                  ACTIVITIES**

*Recognition                                  of Liabilities in Connection with a Purchase Business                                  Combination*

|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
|------------------------------------------------------|---------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   | **As                                            of December 31, 2005**             |
|                                                 | **Balance,                                            December 31, 2004** |   | **Fiscal                                            year 2005 charges** |   |  **Goodwill                                            adjustments** |   |  **Cash                                            payments** |   |  **Non-cash                                            adjustments** |   | **Total                                            costs and adjustments to date** |   | **Total                                            expected costs and adjustments** |
| *Printing*                                           |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| *Solutions:*                                         |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Equipment                                            |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| relocation                                           | $                                               -          |   | $                                            265                        |   | $                                               -          |   | $                                            (125)                 |   | $                                            (6)                          |   | $                                            134                                   |   | $                                            134                                    |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Asset                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| disposals                                            | -                                                                         |   | -                                                                       |   | 18                                                                        |   | -                                                                  |   | -                                                                         |   | 18                                                                                 |   | 18                                                                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Site                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| clean-up                                             |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| costs                                                | -                                                                         |   | -                                                                       |   | 45                                                                        |   | -                                                                  |   | -                                                                         |   | 45                                                                                 |   | 45                                                                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Severance                                            |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| and                                            other |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| benefits                                             | -                                                                         |   | 1,846                                                                   |   | 130                                                                       |   | (221)                                                              |   | (16)                                                                      |   | 1,739                                                                              |   | 1,739                                                                               |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Legal                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| and                                            other | -                                                                         |   | 6                                                                       |   | -                                                                         |   | -                                                                  |   | (1)                                                                       |   | 5                                                                                  |   | 5                                                                                   |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Total                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Printing                                             |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Solutions                                            | $                                               -          |   | $                                            2,117                      |   | $                                            193                          |   | $                                            (346)                 |   | $                                            (23)                         |   | $                                            1,941                                 |   | $                                            1,941                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| *Advanced*                                           |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| *Surface*                                            |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| *Finishing:*                                         |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Equipment                                            |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| relocation                                           | $                                               -          |   | $                                            57                         |   | $                                               -          |   | $                                            (21)                  |   | $                                               -          |   | $                                            36                                    |   | $                                            36                                     |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Asset                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| disposals                                            | -                                                                         |   | -                                                                       |   | 12                                                                        |   | -                                                                  |   | -                                                                         |   | 12                                                                                 |   | 12                                                                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Site                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| clean-up                                             |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| costs                                                | -                                                                         |   | -                                                                       |   | 30                                                                        |   | -                                                                  |   | -                                                                         |   | 30                                                                                 |   | 30                                                                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Severance                                            |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| and                                            other |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| benefits                                             | -                                                                         |   | 704                                                                     |   | 87                                                                        |   | -                                                                  |   | -                                                                         |   | 791                                                                                |   | 791                                                                                 |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Total                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Advanced                                             |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Surface                                              |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Finishing                                            | -                                                                         |   | 761                                                                     |   | 129                                                                       |   | (21)                                                               |   | -                                                                         |   | 869                                                                                |   | 869                                                                                 |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Total                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| restructuring                                        |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| charges                                              | $                                               -          |   | $                                            2,878                      |   | $                                            322                          |   | $                                            (367)                 |   | $                                            (23)                         |   | $                                            2,810                                 |   | $                                            2,810                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Other                                                |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| acquisition                                          |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| charges                                              | $                                               -          |   | $                                            385                        |   | $                                               -          |   | $                                               -   |   | $                                               -          |   | $                                            385                                   |   | $                                            385                                    |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |
| Total                                                | $                                               -          |   | $                                            3,263                      |   | $                                            322                          |   | $                                            (367)                 |   | $                                            (23)                         |   | $                                            3,195                                 |   | $                                            3,195                                  |
|                                                 |                                                                      |   |                                                                    |   |                                                                      |   |                                                               |   |                                                                      |   |                                                                               |   |                                                                                |

**19.                                  GUARANTOR FINANCIAL INFORMATION**

**CONSOLIDATING                                  STATEMENTS OF EARNINGS**

**YEAR                                  ENDED DECEMBER 31, 2005**

|                                                                      |   |                                                |   |                                                 |   |                                                 |   |                                                   |   | **MacDermid**                                                   |
|---------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                      |   |                                                |   | **Guarantor**                                        |   | **Nonguarantor**                                     |   |                                                   |   | **Incorporated**                                                |
|                                                                      |   | **Issuer**                                          |   | **Subsidiaries**                                     |   | **Subsidiaries**                                     |   | **Eliminations**                                       |   | **and                                            Subsidiaries** |
| Net                                            sales                      |   | $                                            90,209 |   | $                                            201,249 |   | $                                            480,443 |   | $                                            (33,858)  |   | **$                                            738,043**        |
| Cost                                            of sales                  |   | 62,888                                              |   | 102,733                                              |   | 281,548                                              |   | (33,858)                                               |   | **413,311**                                                     |
| Gross                                            profit                   |   | 27,321                                              |   | 98,516                                               |   | 198,895                                              |   | -                                                      |   | **324,732**                                                     |
|                                                                      |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Operating                                            expenses:            |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Selling,                                            technical and         |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               Administrative    |   | 40,004                                              |   | 42,476                                               |   | 118,056                                              |   | -                                                      |   | **200,536**                                                     |
| Research                                            and    |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               development       |   | 6,346                                               |   | 9,779                                                |   | 11,075                                               |   | -                                                      |   | **27,200**                                                      |
| Restructuring                                            and    |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               acquisition       |   |                                                |   | 379                                                  |   | 2,884                                                |   |                                                   |   | **3,263**                                                       |
|                                                                      |   | 46,350                                              |   | 52,634                                               |   | 132,015                                              |   | -                                                      |   | **230,999**                                                     |
| Operating                                            (loss) profit        |   | (19,029)                                            |   | 45,882                                               |   | 66,880                                               |   | -                                                      |   | **93,733**                                                      |
|                                                                      |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Equity                                            in earnings of          |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| subsidiaries                                                              |   | 75,818                                              |   | 46,571                                               |   | -                                                    |   | (122,389)                                              |   | **-**                                                           |
| Interest                                            income                |   | 1,029                                               |   | 32                                                   |   | 1,254                                                |   | -                                                      |   | **2,315**                                                       |
| Interest                                            expense               |   | (29,980)                                            |   | (3)                                                  |   | (414)                                                |   | -                                                      |   | **(30,397)**                                                    |
| Miscellaneous                                            income           |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               (expense), net    |   | 1,075                                               |   | 742                                                  |   | (1,857)                                              |   | -                                                      |   | **(40)**                                                        |
|                                                                      |   | 47,942                                              |   | 47,342                                               |   | (1,017)                                              |   | (122,389)                                              |   | **(28,122)**                                                    |
|                                                                      |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Earnings                                            before taxes          |   | 28,913                                              |   | 93,224                                               |   | 65,863                                               |   | (122,389)                                              |   | **65,611**                                                      |
| Income                                            tax benefit             |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               (expense)         |   | 18,130                                              |   | (17,406)                                             |   | (19,292)                                             |   | -                                                      |   | **(18,568)**                                                    |
| Net                                            earnings                   |   | $                                            47,043 |   | $                                            75,818  |   | $                                            46,571  |   | $                                            (122,389) |   | **$                                            47,043**         |
|                                                                      |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |

**CONSOLIDATING                                  STATEMENTS OF EARNINGS**

**YEAR                                  ENDED DECEMBER 31, 2004**

|                                                                   |   |                                                |   |                                                 |   |                                                 |   |                                                   |   | **MacDermid**                                                   |
|------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                   |   |                                                |   | **Guarantor**                                        |   | **Nonguarantor**                                     |   |                                                   |   | **Incorporated**                                                |
|                                                                   |   | **Issuer**                                          |   | **Subsidiaries**                                     |   | **Subsidiaries**                                     |   | **Eliminations**                                       |   | **and                                            Subsidiaries** |
| Net                                            sales                   |   | $                                            91,275 |   | $                                            163,300 |   | $                                            423,048 |   | $                                            (16,838)  |   | **$                                            660,785**        |
| Cost                                            of sales               |   | 58,852                                              |   | 70,301                                               |   | 235,229                                              |   | (16,838)                                               |   | **347,544**                                                     |
| Gross                                            profit                |   | 32,423                                              |   | 92,999                                               |   | 187,819                                              |   | -                                                      |   | **313,241**                                                     |
|                                                                   |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Operating                                            expenses:         |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Selling,                                            technical and      |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               administrative |   | 44,400                                              |   | 29,428                                               |   | 112,087                                              |   | -                                                      |   | **185,915**                                                     |
| Research                                            and           |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               development    |   | 6,647                                               |   | 7,497                                                |   | 7,772                                                |   | -                                                      |   | **21,916**                                                      |
|                                                                   |   | 51,047                                              |   | 36,925                                               |   | 119,859                                              |   | -                                                      |   | **207,831**                                                     |
| Operating                                            (loss) profit     |   | (18,624)                                            |   | 56,074                                               |   | 67,960                                               |   | -                                                      |   | **105,410**                                                     |
|                                                                   |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Equity                                            in earnings of       |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               subsidiaries   |   | 83,761                                              |   | 49,966                                               |   | -                                                    |   | (133,727)                                              |   | **-**                                                           |
| Interest                                            income             |   | 590                                                 |   | 41                                                   |   | 768                                                  |   | -                                                      |   | **1,399**                                                       |
| Interest                                            expense            |   | (30,606)                                            |   | (25)                                                 |   | (383)                                                |   | -                                                      |   | **(31,014)**                                                    |
| Miscellaneous                                            Income,  |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               net            |   | 1,288                                               |   | 260                                                  |   | 394                                                  |   | -                                                      |   | **1,942**                                                       |
|                                                                   |   | 55,033                                              |   | 50,242                                               |   | 779                                                  |   | (133,727)                                              |   | **(27,673)**                                                    |
|                                                                   |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Earnings                                            before taxes       |   | 36,409                                              |   | 106,316                                              |   | 68,739                                               |   | (133,727)                                              |   | **77,737**                                                      |
| Income                                            tax benefit          |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| (expense)                                                              |   | 16,815                                              |   | (22,555)                                             |   | (18,773)                                             |   | -                                                      |   | **(24,513)**                                                    |
| Net                                            earnings                |   | $                                            53,224 |   | $                                            83,761  |   | $                                            49,966  |   | $                                            (133,727) |   | **$                                            53,224**         |
|                                                                   |   |                                                |   |                                                 |   |                                                 |   |                                                   |   |                                                            |

**CONSOLIDATING                                  STATEMENTS OF EARNINGS **

**YEAR                                  ENDED DECEMBER 31, 2003**

|                                                                               |   |                                                |   |                                                 |   |                                                 |   | **Unrestricted**                                   |   |                                                   |   | **MacDermid**                                                   |
|------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                               |   |                                                |   | **Guarantor**                                        |   | **Nonguarantor**                                     |   | **Nonguarantor**                                   |   |                                                   |   | **Incorporated**                                                |
|                                                                               |   | **Issuer**                                          |   | **Subsidiaries**                                     |   | **Subsidiaries**                                     |   | **Subidiaries**                                    |   | **Eliminations**                                       |   | **and                                            Subsidiaries** |
| Net                                            sales                               |   | $                                            88,377 |   | $                                            167,451 |   | $                                            380,528 |   | -                                                  |   | $                                            (16,470)  |   | **$                                            619,886**        |
| Cost                                            of sales                           |   | 58,294                                              |   | 77,330                                               |   | 210,117                                              |   | -                                                  |   | (16,470)                                               |   | **329,271**                                                     |
| Gross                                            profit                            |   | 30,083                                              |   | 90,121                                               |   | 170,411                                              |   | -                                                  |   | -                                                      |   | **290,615**                                                     |
|                                                                               |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
| Operating                                            expenses:                     |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
| Selling,                                            technical and                  |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|                                               administrative             |   | 41,137                                              |   | 31,290                                               |   | 99,083                                               |   | -                                                  |   | -                                                      |   | **171,510**                                                     |
| Research                                            and                            |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|                                               development                |   | 6,689                                               |   | 6,998                                                |   | 6,268                                                |   | -                                                  |   | -                                                      |   | **19,955**                                                      |
|                                                                               |   | 47,826                                              |   | 38,288                                               |   | 105,351                                              |   | -                                                  |   | -                                                      |   | **191,465**                                                     |
| Operating                                            profit (loss)                 |   | (17,743)                                            |   | 51,833                                               |   | 65,060                                               |   | -                                                  |   | -                                                      |   | **99,150**                                                      |
|                                                                               |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
| Equity                                            in earnings of                   |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|                                               subsidiaries               |   | 97,767                                              |   | 61,825                                               |   | 5,592                                                |   | -                                                  |   | (165,184)                                              |   | **-**                                                           |
| Interest                                            income                         |   | 142                                                 |   | 173                                                  |   | 558                                                  |   | -                                                  |   | -                                                      |   | **873**                                                         |
| Interest                                            expense                        |   | (32,271)                                            |   | 4,570                                                |   | (3,350)                                              |   | -                                                  |   | -                                                      |   | **(31,051)**                                                    |
| Miscellaneous                                                                      |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|                                               income, net                |   | 3,558                                               |   | 302                                                  |   | 454                                                  |   | -                                                  |   | -                                                      |   | **4,314**                                                       |
|                                                                               |   | 69,196                                              |   | 66,870                                               |   | 3,254                                                |   | -                                                  |   | (165,184)                                              |   | **(25,864)**                                                    |
| Earnings                                            from                           |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|    continuing                                            operations |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|                                               before taxes               |   | 51,453                                              |   | 118,703                                              |   | 68,314                                               |   | -                                                  |   | (165,184)                                              |   | **73,286**                                                      |
| Income                                            tax benefit                      |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
| (expense)                                                                          |   | 3,959                                               |   | (20,936)                                             |   | (6,489)                                              |   | -                                                  |   | -                                                      |   | **(23,466)**                                                    |
| Earnings                                            from                           |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
|   continuing                                             operations |   | 55,412                                              |   | 97,767                                               |   | 61,825                                               |   | -                                                  |   | (165,184)                                              |   | **49,820**                                                      |
| Discontinued                                                                       |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
| operations                                                                         |   | -                                                   |   | -                                                    |   | -                                                    |   | 5,592                                              |   | -                                                      |   | **5,592**                                                       |
| Cumulative                                            effect of                    |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |
| accounting                                            change                       |   | 1,014                                               |   | -                                                    |   | -                                                    |   | -                                                  |   | -                                                      |   | **1,014**                                                       |
| Net                                            earnings                            |   | $                                            56,426 |   | $                                            97,767  |   | $                                            61,825  |   | $                                            5,592 |   | $                                            (165,184) |   | **$                                            56,426**         |
|                                                                               |   |                                                |   |                                                 |   |                                                 |   |                                               |   |                                                   |   |                                                            |

**CONDENSED                                  CONSOLIDATING BALANCE SHEETS**

**DECEMBER                                  31, 2005**

|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   | **MacDermid**                                                   |
|---------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                                  |   |                                                 |   | **Guarantor**                                        |   | **Nonguarantor**                                     |   |                                                   |   | **Incorporated**                                                |
|                                                                                  |   | **Issuer**                                           |   | **Subsidiaries**                                     |   | **Subsidiaries**                                     |   | **Eliminations**                                       |   | **and                                            Subsidiaries** |
| Assets                                                                                |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Current                                            assets:                            |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Cash                                            and cash equivalents                  |   | $                                            46,925  |   | $                                            3,131   |   | $                                            30,876  |   | $                                            -         |   | **$                                            80,932**         |
| Accounts                                            receivables, net                  |   | 10,811                                               |   | 22,799                                               |   | 122,108                                              |   | -                                                      |   | **155,718**                                                     |
| Due                                            (to) from affiliates                   |   | 23,496                                               |   | 94,217                                               |   | (117,713)                                            |   | -                                                      |   | **-**                                                           |
| Inventories,                                            net                           |   | 5,994                                                |   | 27,606                                               |   | 59,373                                               |   | -                                                      |   | **92,973**                                                      |
| Prepaid                                            expenses                           |   | 3,122                                                |   | 1,749                                                |   | 9,237                                                |   | -                                                      |   | **14,108**                                                      |
| Deferred                                            income taxes                      |   | 11,372                                               |   | -                                                    |   | 5,257                                                |   | -                                                      |   | **16,629**                                                      |
| Total                                            current assets                       |   | 101,720                                              |   | 149,502                                              |   | 109,138                                              |   | -                                                      |   | **360,360**                                                     |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Property,                                            plant and                        |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               equipment, net                |   | 16,362                                               |   | 28,924                                               |   | 77,943                                               |   | -                                                      |   | **123,229**                                                     |
| Goodwill                                                                              |   | 21,916                                               |   | 89,362                                               |   | 125,254                                              |   | -                                                      |   | **236,532**                                                     |
| Intangibles,                                            net                           |   | -                                                    |   | 4,882                                                |   | 35,246                                               |   | -                                                      |   | **40,128**                                                      |
| Investments                                            in subsidiaries                |   | 506,978                                              |   | 257,450                                              |   | -                                                    |   | (764,428)                                              |   | **-**                                                           |
| Deferred                                            income taxes                      |   | 25,550                                               |   | -                                                    |   | 12,117                                               |   | -                                                      |   | **37,667**                                                      |
| Other                                            assets, net                          |   | 6,222                                                |   | 3,866                                                |   | 4,732                                                |   | -                                                      |   | **14,820**                                                      |
|                                                                                  |   | $                                            678,748 |   | $                                            533,986 |   | $                                            364,430 |   | $                                            (764,428) |   | **$                                            812,736**        |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Liabilities                                            and Shareholders’ equity |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Current                                            liabilities:                       |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Accounts                                            and dividends                     |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               payable                       |   | $                                            9,122   |   | $                                            9,950   |   | $                                            42,966  |   | $                                            -         |   | **$                                            62,038**         |
| Accrued                                            compensation                       |   | 2,118                                                |   | 3,248                                                |   | 10,895                                               |   | -                                                      |   | **16,261**                                                      |
| Accrued                                            interest                           |   | 12,654                                               |   | 24                                                   |   | 106                                                  |   | -                                                      |   | **12,784**                                                      |
| Accrued                                            income taxes                       |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               payable                       |   | (2,350)                                              |   | 7,622                                                |   | 6,189                                                |   | -                                                      |   | **11,461**                                                      |
| Other                                            current liabilities                  |   | 18,301                                               |   | 5,643                                                |   | 17,187                                               |   | -                                                      |   | **41,131**                                                      |
| Total                                            current liabilities                  |   | 38,009                                               |   | 26,487                                               |   | 77,343                                               |   | -                                                      |   | **141,839**                                                     |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Long-term                                            obligations                      |   | 300,516                                              |   | 271                                                  |   | 256                                                  |   | -                                                      |   | **301,043**                                                     |
| Retirement                                            benefits, less                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               current portion               |   | 5,066                                                |   | -                                                    |   | 17,277                                               |   | -                                                      |   | **22,343**                                                      |
| Deferred                                            income taxes                      |   | -                                                    |   | -                                                    |   | 11,489                                               |   | -                                                      |   | **11,489**                                                      |
| Other                                            long-term liabilities                |   | 3,271                                                |   | 250                                                  |   | 615                                                  |   | -                                                      |   | **4,136**                                                       |
| Total                                            liabilities                          |   | 346,862                                              |   | 27,008                                               |   | 106,980                                              |   | -                                                      |   | **480,850**                                                     |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Total                                            shareholders' equity                 |   | 331,886                                              |   | 506,978                                              |   | 257,450                                              |   | (764,428)                                              |   | **331,886**                                                     |
| Total                                            Liabilities and                      |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Shareholders'                                            Equity                       |   | $                                            678,748 |   | $                                            533,986 |   | $                                            364,430 |   | $                                            (764,428) |   | **$                                            812,736**        |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |

**CONDENSED                                  CONSOLIDATING BALANCE SHEETS **

**DECEMBER                                  31, 2004**

|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   | **MacDermid**                                                   |
|---------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                                  |   |                                                 |   | **Guarantor**                                        |   | **Nonguarantor**                                     |   |                                                   |   | **Incorporated**                                                |
|                                                                                  |   | **Issuer**                                           |   | **Subsidiaries**                                     |   | **Subsidiaries**                                     |   | **Eliminations**                                       |   | **and                                            Subsidiaries** |
| Assets                                                                                |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Current                                            assets:                            |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Cash                                            and cash equivalents                  |   | $                                            69,512  |   | $                                            688     |   | $                                            67,629  |   | $                                            -         |   | **$                                            137,829**        |
| Accounts                                            receivables, net                  |   | 9,127                                                |   | 18,103                                               |   | 115,225                                              |   | -                                                      |   | **142,455**                                                     |
| Due                                            (to) from affiliates                   |   | 47,106                                               |   | 78,199                                               |   | (125,305)                                            |   | -                                                      |   | **-**                                                           |
| Inventories,                                            net                           |   | 5,002                                                |   | 22,996                                               |   | 52,447                                               |   | -                                                      |   | **80,445**                                                      |
| Prepaid                                            expenses                           |   | 1,125                                                |   | 2,240                                                |   | 6,818                                                |   | -                                                      |   | **10,183**                                                      |
| Deferred                                            income taxes                      |   | 12,908                                               |   | -                                                    |   | 5,395                                                |   | -                                                      |   | **18,303**                                                      |
| Total                                            current assets                       |   | 144,780                                              |   | 122,226                                              |   | 122,209                                              |   | -                                                      |   | **389,215**                                                     |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Property,                                            plant and                        |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               equipment, net                |   | 16,886                                               |   | 33,224                                               |   | 60,353                                               |   | -                                                      |   | **110,463**                                                     |
| Goodwill                                                                              |   | 21,680                                               |   | 68,574                                               |   | 104,033                                              |   | -                                                      |   | **194,287**                                                     |
| Intangibles,                                            net                           |   | -                                                    |   | 5,004                                                |   | 23,430                                               |   | -                                                      |   | **28,434**                                                      |
| Investments                                            in subsidiaries                |   | 449,641                                              |   | 238,254                                              |   | -                                                    |   | (687,895)                                              |   | **-**                                                           |
| Deferred                                            income taxes                      |   | 21,579                                               |   | -                                                    |   | 13,096                                               |   | -                                                      |   | **34,675**                                                      |
| Other                                            assets, net                          |   | 8,006                                                |   | 3,385                                                |   | 5,254                                                |   | -                                                      |   | **16,645**                                                      |
|                                                                                  |   | $                                            662,572 |   | $                                            470,667 |   | $                                            328,375 |   | $                                            (687,895) |   | **$                                            773,719**        |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Liabilities                                            and Shareholders’ equity |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Current                                            liabilities:                       |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Accounts                                            and dividends                     |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               payable                       |   | $                                            7,538   |   | $                                            7,363   |   | $                                            41,043  |   | $                                            -         |   | **$                                            55,944**         |
| Accrued                                            compensation                       |   | 3,645                                                |   | 1,884                                                |   | 6,841                                                |   | -                                                      |   | **12,370**                                                      |
| Accrued                                            interest                           |   | 12,692                                               |   | -                                                    |   | 8                                                    |   | -                                                      |   | **12,700**                                                      |
| Accrued                                            income taxes                       |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   | **-**                                                           |
|                                               payable                       |   | (3,467)                                              |   | 5,556                                                |   | 5,204                                                |   | -                                                      |   | **7,293**                                                       |
| Other                                            current liabilities                  |   | 14,621                                               |   | 5,911                                                |   | 20,273                                               |   | -                                                      |   | **40,805**                                                      |
| Total                                            current liabilities                  |   | 35,029                                               |   | 20,714                                               |   | 73,369                                               |   | -                                                      |   | **129,112**                                                     |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Long-term                                            obligations                      |   | 300,385                                              |   | 274                                                  |   | 418                                                  |   | -                                                      |   | **301,077**                                                     |
| Retirement                                            benefits, less                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
|                                               current portion               |   | 20,395                                               |   | -                                                    |   | 6,193                                                |   | -                                                      |   | **26,588**                                                      |
| Deferred                                            income taxes                      |   | -                                                    |   | -                                                    |   | 9,267                                                |   | -                                                      |   | **9,267**                                                       |
| Other                                            long-term liabilities                |   | 2,732                                                |   | 38                                                   |   | 874                                                  |   | -                                                      |   | **3,644**                                                       |
| Total                                            liabilities                          |   | 358,541                                              |   | 21,026                                               |   | 90,121                                               |   | -                                                      |   | **469,688**                                                     |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Total                                            shareholders' equity                 |   | 304,031                                              |   | 449,641                                              |   | 238,254                                              |   | (687,895)                                              |   | **304,031**                                                     |
| Total                                            Liabilities and                      |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |
| Shareholders'                                            Equity                       |   | $                                            662,572 |   | $                                            470,667 |   | $                                            328,375 |   | $                                            (687,895) |   | **$                                            773,719**        |
|                                                                                  |   |                                                 |   |                                                 |   |                                                 |   |                                                   |   |                                                            |

**CONDENSED                                  CONSOLIDATING STATEMENTS OF CASH FLOWS**

**YEAR                                  ENDED DECEMBER 31, 2005**

|                                                                               |   |                                                  |   |                                                |   |                                                |   | **MacDermid**                                                   |
|------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                               |   |                                                  |   | **Guarantor**                                       |   | **Nonguarantor**                                    |   | **Incorporated**                                                |
|                                                                               |   | **Issuer**                                            |   | **Subsidiaries**                                    |   | **Subsidiaries**                                    |   | **and                                            Subsidiaries** |
| Net                                            cash flows provided by              |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               (used in) operating        |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               activities                 |   | $                                            (17,144) |   | $                                            32,747 |   | $                                            43,565 |   | **$                                            59,168**         |
| Investing                                            activities:                   |   |                                                  |   |                                                |   |                                                |   |                                                            |
| Capital                                            expenditures                    |   | (2,773)                                               |   | (1,054)                                             |   | (10,232)                                            |   | **(14,059)**                                                    |
| Proceeds                                            from disposition of            |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               assets                     |   | 895                                                   |   | -                                                   |   | 525                                                 |   | **1,420**                                                       |
| Acquisition                                            of business                 |   | (237)                                                 |   | (29,247)                                            |   | (63,698)                                            |   | **(93,182)**                                                    |
| Disposition                                            of business                 |   | -                                                     |   | -                                                   |   | 262                                                 |   | **262**                                                         |
| Net                                            cash flows used in                  |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               investing activities       |   | (2,115)                                               |   | (30,301)                                            |   | (73,143)                                            |   | **(105,559)**                                                   |
| Financing                                            activities:                   |   |                                                  |   |                                                |   |                                                |   |                                                            |
| Net                                            proceeds from                       |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               short-term borrowings      |   | -                                                     |   | -                                                   |   | 198                                                 |   | **198**                                                         |
| Repayments                                            of long-term                 |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               borrowings                 |   | -                                                     |   | (3)                                                 |   | (491)                                               |   | **(494)**                                                       |
| Acquisition                                            of treasury shares          |   | 33                                                    |   | -                                                   |   | -                                                   |   | **33**                                                          |
| Proceeds                                            from exercise                  |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               of stock options           |   | 3,331                                                 |   | -                                                   |   | -                                                   |   | **3,331**                                                       |
| Dividends                                            paid                          |   | (6,693)                                               |   | -                                                   |   | -                                                   |   | **(6,693)**                                                     |
|                                                                               |   |                                                  |   |                                                |   |                                                |   |                                                            |
| Net                                            cash flows provided by              |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                                financing activities |   | (3,329)                                               |   | (3)                                                 |   | (293)                                               |   | **(3,625)**                                                     |
| Effect                                            of exchange rate                 |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               changes on cash and cash   |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               equivalents                |   | -                                                     |   | -                                                   |   | (6,881)                                             |   | **(6,881)**                                                     |
| Net                                            (decrease) increase in              |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               cash and cash equivalents  |   | (22,588)                                              |   | 2,443                                               |   | (36,752)                                            |   | **(56,897)**                                                    |
| Cash                                            and cash equivalents at            |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               beginning of year          |   | 69,512                                                |   | 688                                                 |   | 67,629                                              |   | **137,829**                                                     |
| Cash                                            and cash equivalents at            |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               end of year                |   | $                                            46,924   |   | $                                            3,131  |   | $                                            30,877 |   | **$                                            80,932**         |
|                                                                               |   |                                                  |   |                                                |   |                                                |   |                                                            |

**CONDENSED                                  CONSOLIDATING STATEMENTS OF CASH FLOWS**

**YEAR                                  ENDED DECEMBER 31, 2004**

|                                                                                   |   |                                                  |   |                                                |   |                                                |   | **MacDermid**                                                   |
|----------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                                   |   |                                                  |   | **Guarantor**                                       |   | **Nonguarantor**                                    |   | **Incorporated**                                                |
|                                                                                   |   | **Issuer**                                            |   | **Subsidiaries**                                    |   | **Subsidiaries**                                    |   | **and                                            Subsidiaries** |
| Net                                            cash flows (used in)                    |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               provided by operating          |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               activities                     |   | $                                            (31,175) |   | $                                            81,857 |   | $                                            34,595 |   | **$                                            85,277**         |
| Investing                                            activities:                       |   |                                                  |   |                                                |   |                                                |   |                                                            |
| Capital                                            expenditures                        |   | (5,184)                                               |   | (1,676)                                             |   | (5,587)                                             |   | **(12,447)**                                                    |
| Proceeds                                            from disposition of                |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               assets                         |   | 26                                                    |   | 2,212                                               |   | 1,675                                               |   | **3,913**                                                       |
| Net                                            cash flows (used in)                    |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               provided by investing          |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               activities                     |   | (5,158)                                               |   | 536                                                 |   | (3,912)                                             |   | **(8,534)**                                                     |
| Financing                                            activities:                       |   |                                                  |   |                                                |   |                                                |   |                                                            |
| Net                                            proceeds from                           |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               (repayments of) short-term     |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               borrowings                     |   | 49,882                                                |   | (70,688)                                            |   | 20,286                                              |   | **(520)**                                                       |
| Proceeds                                            from long-term                     |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               borrowings                     |   | -                                                     |   | -                                                   |   | 24                                                  |   | **24**                                                          |
| Repayments                                            of long-term                     |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               borrowings                     |   | -                                                     |   | (251)                                               |   | (286)                                               |   | **(537)**                                                       |
| Issuance                                            of treasury shares                 |   | 32                                                    |   | -                                                   |   | -                                                   |   | **32**                                                          |
| Proceeds                                            from exercise of                   |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               stock options                  |   | 619                                                   |   | -                                                   |   | -                                                   |   | **619**                                                         |
| Dividends                                            paid                              |   | 37,017                                                |   | (12,052)                                            |   | (28,600)                                            |   | **(3,635)**                                                     |
|                                                                                   |   |                                                  |   |                                                |   |                                                |   |                                                            |
| Net                                            cash flows provided by                  |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               (used in) financing activities |   | 87,550                                                |   | (82,991)                                            |   | (8,576)                                             |   | **(4,017)**                                                     |
| Effect                                            of exchange rate                     |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               changes on cash and cash       |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               equivalents                    |   | -                                                     |   | -                                                   |   | 3,809                                               |   | **3,809**                                                       |
| Net                                            increase (decrease) in                  |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               cash and cash equivalents      |   | 51,217                                                |   | (598)                                               |   | 25,916                                              |   | **76,535**                                                      |
| Cash                                            and cash equivalents at                |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               beginning of year              |   | 18,295                                                |   | 1,286                                               |   | 41,713                                              |   | **61,294**                                                      |
| Cash                                            and cash equivalents at                |   |                                                  |   |                                                |   |                                                |   |                                                            |
|                                               end of year                    |   | $                                            69,512   |   | $                                            688    |   | $                                            67,629 |   | **$                                            137,829**        |
|                                                                                   |   |                                                  |   |                                                |   |                                                |   |                                                            |

**CONDENSED                                  CONSOLIDATING STATEMENTS OF CASH FLOWS**

**YEAR                                  ENDED DECEMBER 31, 2003**

|                                                                                   |   |                                                  |   |                                                |   |                                                |   | **Unrestricted**                                     |   | **MacDermid**                                                   |
|----------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                                   |   |                                                  |   | **Guarantor**                                       |   | **Nonguarantor**                                    |   | **Nonguarantor**                                     |   | **Incorporated**                                                |
|                                                                                   |   | **Issuer**                                            |   | **Subsidiaries**                                    |   | **Subsidiaries**                                    |   | **Subsidiaries**                                     |   | **and                                            Subsidiaries** |
| Net                                            cash flows (used in)                    |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               provided by operating          |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               activities                     |   | $                                            (21,946) |   | $                                            49,882 |   | $                                            66,616 |   | $                                            (3,135) |   | **$                                            91,417**         |
|                                                                                   |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
| Investing                                            activities:                       |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
| Capital                                            expenditures                        |   | (3,854)                                               |   | (1,917)                                             |   | (6,133)                                             |   | (623)                                                |   | **(12,527)**                                                    |
| Proceeds                                            from disposition of                |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               business and fixed assets      |   | 1,590                                                 |   | -                                                   |   | 233                                                 |   | 5,000                                                |   | **6,823**                                                       |
| Net                                            cash flows (used in)                    |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               provided by investing          |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               activities                     |   | (2,264)                                               |   | (1,917)                                             |   | (5,900)                                             |   | 4,377                                                |   | **(5,704)**                                                     |
|                                                                                   |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
| Financing                                            activities:                       |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
| Net                                            proceeds from                           |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               (repayments of) short-term     |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               borrowings                     |   | 42,724                                                |   | (40,364)                                            |   | (3,728)                                             |   | (112)                                                |   | **(1,480)**                                                     |
| Proceeds                                            from long-term                     |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               borrowings                     |   | -                                                     |   | -                                                   |   | -                                                   |   | 3,570                                                |   | **3,570**                                                       |
| Repayments                                            of long-term                     |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               borrowings                     |   | -                                                     |   | -                                                   |   | (383)                                               |   | (4,984)                                              |   | **(5,367)**                                                     |
| Proceeds                                            from stock options                 |   | 812                                                   |   | -                                                   |   | -                                                   |   | -                                                    |   | **812**                                                         |
| Purchase                                            of treasury shares                 |   | (51,753)                                              |   | -                                                   |   | -                                                   |   | -                                                    |   | **(51,753)**                                                    |
| Dividends                                            paid                              |   | 36,569                                                |   | (8,629)                                             |   | (31,694)                                            |   | -                                                    |   | **(3,754)**                                                     |
| Net                                            cash flows provided by                  |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               (used in) financing activities |   | 28,352                                                |   | (48,993)                                            |   | (35,805)                                            |   | (1,526)                                              |   | **(57,972)**                                                    |
|                                                                                   |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
| Effect                                            of exchange rate                     |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               changes on cash and cash       |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               equivalents                    |   | -                                                     |   | -                                                   |   | 1,588                                               |   | (54)                                                 |   | **1,534**                                                       |
| Net                                            increase (decrease) in                  |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               cash and cash equivalents      |   | 4,142                                                 |   | (1,028)                                             |   | 26,499                                              |   | (338)                                                |   | **29,275**                                                      |
| Cash                                            and cash equivalents at                |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               beginning of year              |   | 14,153                                                |   | 2,314                                               |   | 15,214                                              |   | 338                                                  |   | **32,019**                                                      |
| Cash                                            and cash equivalents at                |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |
|                                               end of year                    |   | $                                            18,295   |   | $                                            1,286  |   | $                                            41,713 |   | -                                                    |   | **$                                            61,294**         |
|                                                                                   |   |                                                  |   |                                                |   |                                                |   |                                                 |   |                                                            |

*“Internal                                  Control — Integrated Framework” *

**FIVE                                  YEAR SELECTED FINANCIAL DATA:**

|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   | **Nine                                            Months** |   | **Twelve                                            Months** |
|--------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|----------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------------|--------|--------------------------------------------------------------|
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   | **Ended**                                                  |   | **Ended**                                                    |
|                                                                                 |   | **Twelve                                            Months Ended** |   | **December                                            31,** |   | **March                                            31,** |
|                                                                                 |   | **2005**                                                           |   | **2004**                                                    |   | **2003**                                                 |   | **2002**                                             |   | **2001**                                                   |   | **2001**                                                     |
| OPERATING                                            RESULTS:                        |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Net                                            sales                                 |   | $                                            738,043               |   | $                                            660,785        |   | $                                            619,886     |   | $                                            611,490 |   | $                                            472,010       |   | $                                            759,642         |
| Earnings                                            (loss) from continuing           |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               operations before cumulative |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               effect of accounting change  |   | $                                            47,043                |   | $                                            53,224         |   | $                                            49,820      |   | $                                            31,477  |   | $                                            (17,288)      |   | $                                            43,753          |
| Earnings                                            (loss) from discontinued         |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               operations, net of tax       |   | -                                                                  |   | -                                                           |   | 5,592                                                    |   | (22,128)                                             |   | (11,624)                                                   |   | (8,949)                                                      |
| Cumulative                                            effect of accounting           |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               change, net of tax           |   | -                                                                  |   | -                                                           |   | 1,014                                                    |   | -                                                    |   | -                                                          |   | -                                                            |
| Net                                            earnings (loss)                       |   | $                                            47,043                |   | $                                            53,224         |   | $                                            56,426      |   | $                                            9,349   |   | $                                            (28,912)      |   | $                                            34,804          |
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Basic                                            earnings (loss) per                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               common share:                |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Continuing                                            operations                     |   | $                                            1.55                  |   | $                                            1.76           |   | $                                            1.60        |   | $                                            0.98    |   | $                                            (0.54)        |   | $                                            1.40            |
| Discontinued                                            operations                   |   | -                                                                  |   | -                                                           |   | 0.18                                                     |   | (0.69)                                               |   | (0.37)                                                     |   | (0.28)                                                       |
| Cumulative                                            effect of accounting           |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               change                       |   | -                                                                  |   | -                                                           |   | 0.03                                                     |   | -                                                    |   | -                                                          |   | -                                                            |
| Net                                            income                                |   | $                                            1.55                  |   | $                                            1.76           |   | $                                            1.81        |   | $                                            0.29    |   | $                                            (0.91)        |   | $                                            1.12            |
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Diluted                                            earnings (loss) per               |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               common share:                |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Continuing                                            operations                     |   | $                                            1.52                  |   | $                                            1.72           |   | $                                            1.59        |   | $                                            0.98    |   | $                                            (0.54)        |   | $                                            1.35            |
| Discontinued                                            operations                   |   | -                                                                  |   | -                                                           |   | 0.18                                                     |   | (0.69)                                               |   | (0.37)                                                     |   | (0.28)                                                       |
| Cumulative                                            effect of accounting           |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               change                       |   | -                                                                  |   | -                                                           |   | 0.03                                                     |   | -                                                    |   | -                                                          |   | -                                                            |
| Net                                            income                                |   | $                                            1.52                  |   | $                                            1.72           |   | $                                            1.80        |   | $                                            0.29    |   | $                                            (0.91)        |   | $                                            1.07            |
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| FINANCIAL                                            POSITION AT                     |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| YEAR                                            END:                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Total                                            assets                              |   | $                                            812,736               |   | $                                            773,719        |   | $                                            697,235     |   | $                                            707,893 |   | $                                            790,885       |   | $                                            884,825         |
| Long-term                                            debt (including short-          |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               term portion)                |   | $                                            301,275               |   | $                                            301,341        |   | $                                            301,761     |   | $                                            316,467 |   | $                                            397,402       |   | $                                            459,102         |
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| SHARE                                            DATA:                               |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
| Cash                                            dividends declared per               |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |
|                                               common share                 |   | $                                            0.24                  |   | $                                            0.16           |   | $                                            0.10        |   | $                                            0.08    |   | $                                            0.06          |   | $                                            0.08            |
|                                                                                 |   |                                                               |   |                                                        |   |                                                     |   |                                                 |   |                                                       |   |                                                         |

**SELECTED                                  QUARTERLY FINANCIAL DATA:**

|                                                                     |   | **2005                                            by Quarters** |
|--------------------------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                                     |   | **March**                                                       |   | **June** |   | **September** |   | **December** |   | **TOTAL** |
|                                                                     |   |                                                            |   |   |   |   |   |   |   |   |
| Net                                            sales                     | $      | 170,247                                                         | $ | 178,281 | $ | 193,260 | $ | 196,255 | $ | 738,043 |
| Gross                                            profit                  | $      | 77,653                                                          | $ | 80,026 | $ | 83,282 | $ | 83,771 | $ | 324,732 |
| Net                                            earnings                  | $      | 11,785                                                          | $ | 11,928 | $ | 12,917 | $ | 10,413 | $ | 47,043 |
| Basic                                            net earnings            |   |                                                            |   |   |   |   |   |   |   |   |
| per                                            common share              | $      | 0.39                                                            | $ | 0.39 | $ | 0.42 | $ | 0.35 | $ | 1.55 |
| Diluted                                            net earnings          |   |                                                            |   |   |   |   |   |   |   |   |
|                                               per common share | $      | 0.37                                                            | $ | 0.39 | $ | 0.42 | $ | 0.34 | $ | 1.52 |
|                                                                     |   |                                                            |   |   |   |   |   |   |   |   |
|                                                                     |   | **2004                                            by Quarters** |
|                                                                     |   | **March**                                                       |   | **June** |   | **September** |   | **December** |   | **TOTAL** |
| Net                                            sales                     | $      | 162,012                                                         | $ | 165,053 | $ | 161,585 | $ | 172,135 | $ | 660,785 |
| Gross                                            profit                  | $      | 77,526                                                          | $ | 78,074 | $ | 76,375 | $ | 81,266 | $ | 313,241 |
| Net                                            earnings                  | $      | 12,893                                                          | $ | 13,385 | $ | 12,043 | $ | 14,903 | $ | 53,224 |
| Basic                                            net earnings            |   |                                                            |   |   |   |   |   |   |   |   |
|                                               per common share | $      | 0.43                                                            | $ | 0.44 | $ | 0.40 | $ | 0.49 | $ | 1.76 |
| Diluted                                            net earnings          |   |                                                            |   |   |   |   |   |   |   |   |
|                                               per common share | $      | 0.42                                                            | $ | 0.43 | $ | 0.39 | $ | 0.48 | $ | 1.72 |

**MARKET                                  RANGE TRADING RECORD:**

|                                                                 |   | **2005** |   |   |    |   | **2004** |   |   |    |
|----------------------------------------------------------------------|--------|----------|--------|--------|---------|--------|----------|--------|--------|---------|
| **Quarter**                                                          |   | **High** |   |   | **Low** |   | **High** |   |   | **Low** |
| March                                                                | $      | 36.05    |   | $      | 30.92   | $      | 39.73    |   | $      | 33.66   |
| June                                                                 | $      | 34.4     |   | $      | 28.12   | $      | 35.65    |   | $      | 30.1    |
| September                                                            | $      | 33.72    |   | $      | 25.45   | $      | 33.78    |   | $      | 26.43   |
| December                                                             | $      | 29.5     |   | $      | 25.99   | $      | 37.2     |   | $      | 27.55   |
| Closing                                            price December 31 |   | $27.90   |   |   |    |   | $36.10   |   |   |    |

**DIVIDEND                                  RECORD:**

|        |   | **2005**   |        | **2004** |
|-------------|--------|------------|-------------|----------|
|        |   | **Record** | **Payable** |     | **Amount** |   | **Record** | **Payable** |   | **Amount** |
| **Quarter** |   | **Date**   | **Date**    |     | **Declared** |   | **Date** | **Date** |   | **Declared** |
| March       |   | 3/18/2005  | 4/1/2005    | $        | 0.06 |   | 3/17/2004 | 4/1/2004 | $ | 0.04 |
| June        |   | 6/15/2005  | 7/1/2005    | $        | 0.06 |   | 6/15/2004 | 7/1/2004 | $ | 0.04 |
| September   |   | 9/15/2005  | 10/3/2005   | $        | 0.06 |   | 9/15/2004 | 10/1/2004 | $ | 0.04 |
| December    |   | 12/15/2005 | 1/3/2006    | $        | 0.06 |   | 12/15/2004 | 1/4/2005 | $ | 0.04 |

**DIRECTORS:**

**Daniel                                  H. Leever**

**Robert                                  Ecklin,**

**Donald                                  G. Ogilvie**

**Joseph                                  M. Silvestri,**

**James                                  C. Smith**

**T.                                  Quinn Spitzer**

**CORPORATE                                  HEADQUARTERS:**

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