Filed Pursuant To Rule 424(b)(3)
                                                      Registration No. 333-84128
PROSPECTUS

                               OFFER TO EXCHANGE

                   9 1/4% SENIOR SUBORDINATED NOTES DUE 2011
                 (REGISTERED UNDER THE SECURITIES ACT OF 1933)
                              FOR ALL OUTSTANDING
                   9 1/4% SENIOR SUBORDINATED NOTES DUE 2011
             ($400 MILLION AGGREGATE PRINCIPAL AMOUNT OUTSTANDING)
                                       OF

                                [OM GROUP LOGO]

                                 OM GROUP, INC.

                (All Notes Guaranteed by Subsidiary Guarantors)

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MAY 23,
2002, UNLESS EXTENDED.

     - The exchange notes are being registered with the Securities and Exchange
       Commission and are being offered in exchange for the original notes that
       were previously issued in an offering exempt from the registration
       requirements under the federal securities laws. The terms of the exchange
       offer are summarized below and more fully described in this prospectus.

     - We will exchange all original notes that are validly tendered and not
       withdrawn prior to the expiration of the exchange offer.

     - You may withdraw tenders of original notes at any time prior to the
       expiration of the exchange offer.

     - The terms of the exchange notes will be substantially identical to the
       terms of the original notes, except that the exchange notes are
       registered under the Securities Act and the transfer restrictions and
       registration rights applicable to the original notes will not apply to
       the exchange notes.

     - Our wholly-owned domestic subsidiaries guaranteed the original notes and
       will guarantee the exchange notes.

     - We will not receive any proceeds from the exchange offer.

                             ---------------------

     SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF THE RISKS THAT
SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING ORIGINAL NOTES.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                 The date of this prospectus is April 23, 2002.


                               ------------------

                               TABLE OF CONTENTS



                                        PAGE
                                        ----
                                     
FORWARD-LOOKING STATEMENTS............     i
WHERE YOU CAN FIND MORE INFORMATION...    ii
NOTICE TO NEW HAMPSHIRE RESIDENTS.....    ii
INDUSTRY AND MARKET DATA..............    ii
PROSPECTUS SUMMARY....................     1
RISK FACTORS..........................    13
THE TRANSACTIONS......................    21
USE OF PROCEEDS.......................    25
CAPITALIZATION........................    25
SELECTED HISTORICAL FINANCIAL DATA....    26
THE EXCHANGE OFFER....................    27
MANAGEMENT'S DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.......................    34
BUSINESS..............................    42
MANAGEMENT............................    55
SECURITY OWNERSHIP OF DIRECTORS,
  OFFICERS AND CERTAIN BENEFICIAL
  OWNERS..............................    62




                                        PAGE
                                        ----
                                     
RELATED PARTY TRANSACTIONS............    64
DESCRIPTION OF THE CREDIT
  FACILITIES..........................    65
DESCRIPTION OF THE NOTES..............    67
UNITED STATES FEDERAL INCOME TAX
  CONSEQUENCES........................   106
PLAN OF DISTRIBUTION..................   109
NOTICE TO CANADIAN RESIDENTS..........   110
LEGAL MATTERS.........................   111
EXPERTS...............................   111
INDEX TO UNAUDITED PRO FORMA CONDENSED
  COMBINED FINANCIAL STATEMENT........   P-1
INDEX TO OM GROUP, INC. FINANCIAL
  STATEMENTS..........................   F-1
INDEX TO DMC(2) DEGUSSA METALS
  CATALYSTS CERDEC AKTIENGESELLSCHAFT
  FINANCIAL STATEMENTS................   A-1


                               ------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY NOT BE ACCURATE
AFTER THE DATE OF THIS DOCUMENT.

                           FORWARD-LOOKING STATEMENTS

     This prospectus contains statements that we believe may be "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934. These forward-looking statements are
not historical facts and generally can be identified by use of statements that
include phrases such as "believe," "expect," "anticipate," "intend," "plan,"
"foresee" or other words or phrases of similar import. Similarly, statements
that describe our objectives, plans or goals also are forward-looking
statements. These forward-looking statements are subject to risks and
uncertainties that are difficult to predict, may be beyond our control and could
cause actual results to differ materially from those currently anticipated.
Factors that could materially affect these forward-looking statements can be
found in this prospectus, including immediately below and as described under
"Risk Factors." You are urged to consider these factors carefully in evaluating
the forward-looking statements and are cautioned not to place undue reliance on
the forward-looking statements. The forward-looking statements included in this
document are made only as of the date of this prospectus and we undertake no
obligation to publicly update these forward-looking statements to reflect new
information, future events or otherwise.

     Important facts that may affect our expectations, estimates or projections
include:

     - the price and supply of raw materials, particularly cobalt, copper,
       nickel, platinum, palladium, rhodium, gold and silver;

     - the demand for metal-based specialty chemicals and products in our
       markets;

     - the effect of non-currency risks of investing in and conducting
       operations in foreign countries, including political, social, economic
       and regulatory factors;

     - the effects of the substantial debt we have incurred in connection with
       our acquisition of the operations of dmc(2) and our ability to refinance
       or repay that debt;

     - our ability to successfully integrate the dmc(2) operations into our
      business; and

     - the effect of fluctuations in currency exchange rates on our
       international operations.

                                        i


                      WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's public reference rooms at the following locations:


                                             
Public Reference Room   Northeast Regional Office  Chicago Regional Office
450 Fifth Street, N.W.  233 Broadway               Citicorp Center
Room 1024               New York, NY 10279         500 West Madison Street, Suite 1400
Washington, D.C. 20549                             Chicago, Illinois 60661-2511


     Please call the SEC at 1-800-SEC-0330 for further information on the
operations of the public reference rooms. Our SEC filings also are available to
the public at the SEC's web site at http://www.sec.gov. Our common stock is
listed on the New York Stock Exchange under the symbol "OMG" and all such
reports, proxy statements and other information filed by us with the NYSE may be
inspected at the NYSE's offices at 20 Broad Street, New York, New York 10005.

     We have filed a registration statement on Form S-4, of which this
prospectus is a part, covering the exchange notes offered by this prospectus. As
allowed by SEC rules, this prospectus does not contain all the information set
forth in the registration statement and the related exhibits and financial
statements. We refer you to the registration statement, and the related exhibits
and financial statements for further information. This prospectus is qualified
in its entirety by such other information.

                       NOTICE TO NEW HAMPSHIRE RESIDENTS

     NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.

                            INDUSTRY AND MARKET DATA

     Industry and market data used throughout this prospectus were obtained
through our research, surveys and studies conducted by third parties and
industry and general publications. We have not independently verified market and
industry data from third-party sources. While we believe our internal surveys
are reliable and market definitions are appropriate, neither these surveys nor
these definitions have been verified by any independent sources.

                                        ii


                               PROSPECTUS SUMMARY

     The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. This
prospectus includes specific terms of the exchange notes we are offering in the
exchange offer, as well as information regarding our business and detailed
financial data. Financial information we designate as "pro forma" gives effect
to the original notes offering and to the transactions described under "The
Transactions" as if they had occurred on the first day of the period specified
as relates to income statement data. We encourage you to read this entire
prospectus and other documents to which we refer.

                              ABOUT OM GROUP, INC.

OVERVIEW

     We are a leading, vertically integrated international producer and marketer
of value-added, metal-based specialty chemicals and related materials. We apply
proprietary technology to a wide variety of raw material feedstocks to
manufacture, market and supply more than 625 different product offerings to more
than 1,700 customers in over 30 industries. Our products typically represent a
small portion of the customer's total manufacturing or processing costs and are
often essential ingredients for superior product performance. For the year ended
December 31, 2001, on a pro forma basis, our net sales were $5,687.6 million and
our EBITDA, defined as net income before interest, taxes, extraordinary item,
depreciation and amortization, was $285.2 million.

     We believe we are the world's leading producer of cobalt-based specialty
chemicals and a leading producer of nickel-based specialty chemicals and
platinum group metal catalysts and products. During 2001, on a pro forma basis,
and excluding net sales of our Metal Management segment, we derived
approximately 66% of our net sales from customers in Europe, 24% from customers
in the Americas and 10% from customers in Asia-Pacific. We operate 35
manufacturing facilities worldwide, including 14 in the Americas, 11 in Europe,
8 in Asia-Pacific and 2 in Africa, and employ approximately 5,200 employees in
24 countries.

     Our business is conducted through three segments: Base Metal Chemistry,
Precious Metal Chemistry and Metal Management.

[FLOW CHART]



                                                                     
                                               OM GROUP

                   --------------------------------------------------------------------------------
                   BASE METAL                  PRECIOUS METAL              METAL
                   CHEMISTRY                   CHEMISTRY                   MANAGEMENT



                                                                    
(DOLLARS IN MILLIONS)
     NET SALES (1)            $793.1                     $1,687.0                    $3,207.5
                              ------                     --------                    --------
     EBITDA (1)               $183.0                     $   74.5                    $   27.7
                              ------                     --------                    --------


---------------

(1) Pro forma for the year ended December 31, 2001

     Our BASE METAL CHEMISTRY segment develops, processes, manufactures and
markets specialty chemicals, powders and related products from various base
metals. We emphasize products that leverage our production capabilities and
bring value to our customers through superior product performance. These
products frequently are essential components in chemical and industrial
processes where they facilitate a chemical or physical reaction and/or enhance
the physical properties of end-products. Our base metal chemistry products can
be found in a variety of applications for catalysts, coatings, colorants, hard
metal tools, jet engines,
                                        1


lubricants, fuel and petroleum additives, magnetic media, metal finishing
agents, petrochemicals, plastics, printed circuit boards, rechargeable
batteries, stainless steel, super alloys and tires. In 2001, we sold these
products to over 1,500 customers serving more than 30 industries. Specific
examples of applications using our base metal chemistry products include the
following:

     - RECHARGEABLE BATTERIES -- battery-grade mixed metal oxides, low sodium
       cobalt oxides, cobalt lithium dioxides and spherical nickel hydroxides
       improve electrical conductivity and extend battery life between charges;

     - HARD METAL TOOLS -- extra-fine cobalt and tungsten powders enhance
       strength and durability of diamond-cutting tools and microtools for
       printed circuit boards and construction applications;

     - PETROCHEMICALS -- cobalt catalysts remove impurities from oil before
       refining in order to reduce pollutants;

     - PLASTICS -- nontoxic mixed-metal, phenol-free stabilizers boost
       flexibility and allow greater use of polyvinyl chloride in medical
       applications; and

     - COLORANTS -- cobalt oxides provide color for pigments, earthenware and
       glass.

     We use more than 15 metals as raw materials in this segment, with the most
widely used metals being cobalt, nickel and copper. Our base metal chemistry
products are generally categorized as organics (produced by reacting metals with
organic acids), inorganics (produced by reacting metals with inorganic acids),
powders (produced by chemical reactions using heat and/or water-based
technologies) and metals (produced by refining metal feedstock). These products
are sold in various forms such as solutions, crystals, powders, cathodes and
briquettes.

     Our PRECIOUS METAL CHEMISTRY segment develops, produces and markets
specialty chemicals and materials, predominantly from precious metals such as
platinum, palladium, rhodium, gold and silver. We also offer a variety of
refining and processing services to users of precious metals. Our precious metal
chemistry products are used in a variety of applications for automotive
catalysts, fuel cells and fuel processing catalysts, chemical catalysts,
electronics packaging and electroplating products, jewelry and glass
manufacturing for high-definition televisions. In 2001, on a pro forma basis, we
sold these products to over 200 customers serving more than a dozen industries.
Specific examples of applications using our precious metal chemistry products
include the following:

     - AUTOMOTIVE CATALYSTS -- platinum group metal, or PGM, catalysts reduce
       toxic emissions of internal combustion engines in order to meet
       increasingly strict environmental legislation for a wide range of fuels,
       including gasoline, diesel, natural gas and alternate fuels;

     - FUEL CELLS -- PGM-based catalysts for membrane electrode assemblies and
       fuel processing catalysts increase the efficiency of fuel cells and fuel
       processing systems; and

     - ELECTRONICS -- silver-based, hermetic sealing materials and ball-grid
       arrays used in packaging of microelectronic components enable a large
       number of interconnections and provide package integration.

     Our METAL MANAGEMENT segment acts as a metal sourcing and trading operation
for our other businesses and for our customers, primarily procuring precious
metals. The Metal Management segment centrally manages metal purchases and sales
by providing the necessary precious metal liquidity, financing and hedging for
our other businesses.

STRATEGY

     TARGET HIGH GROWTH APPLICATIONS AND VALUE-ADDED PRODUCTS.  We target
applications that we believe have high growth and high margin potential for our
products. For example, we have targeted the growing rechargeable battery and
nickel catalyst markets through our acquisition of a nickel refinery in
Harjavalta, Finland in April 2000. This acquisition has provided us with a solid
base from which to vertically integrate production of nickel chemicals and
powders. Other examples of value-added products used in targeted
                                        2


applications include stainless steel powders for automotive pressed metal parts,
cobalt salts and powders for rechargeable batteries used in laptop computers and
mobile phones, PGM-based catalysts for membrane electrode assemblies and fuel
processing catalysts for fuel cells used in stationary and mobile applications.

     APPLY METAL TECHNOLOGY TO MEET CUSTOMER NEEDS AND DEVELOP NEW PRODUCTS.  We
are focused on increasing sales of value-added products through our emphasis on
research, technology and customer service. For example, we have increased our
sales of cobalt extra-fine powders and created new market opportunities in
tungsten powders by applying our recycling technology to the needs of our
customers in the hard metal tool industry. We also have developed several
products, such as electroless nickel-gold for printed circuit boards, through
continued responsiveness to customer needs and through joint product development
efforts.

     Through our acquisition of the dmc(2) operations, we have obtained leading
technology positions in the development of fuel cell components and automotive
catalysts. For example, the flexibility derived from advances in catalyst
technology has enabled us to significantly grow the North American sales of the
dmc(2) operations by providing customers with automotive catalyst solutions
based on multiple precious metals. These new technologies allow our customers
the flexibility to choose the most advantageous or cost-effective catalyst
solution.

     CONTINUE TO IMPROVE OUR COST POSITION.  We have undertaken several
initiatives to improve the leading cost positions we have developed in nickel
and cobalt procurement and processing as a result of our vertical integration
strategy. Our majority-owned Big Hill smelter facility, which we expect to reach
full-scale production by mid-year 2002, will expand our base of long-term,
low-cost cobalt and copper raw material feedstocks. The conversion of our
Harjavalta, Finland nickel refinery from the processing of commodity products to
higher value-added products is designed to result in the cost-efficient,
vertically integrated production of nickel inorganics and powders. We intend to
continue to improve our cost positions in our other product lines as we begin to
integrate base metal and precious metal separation and processing technologies.

     INTEGRATE DMC(2) BUSINESS AND CAPITALIZE ON ACQUISITION-RELATED
OPPORTUNITIES.  As part of our plan to integrate the dmc(2) business with our
other operations, we are focused on combining the best practices of each
organization to drive top-line growth, increase manufacturing efficiency and
leverage our common technology platforms. The acquisition of the dmc(2)
operations will allow us to:

     - use our combined experience and technical expertise in base metal and
       precious metal chemistry to develop new products and improve processing
       technology;

     - use the combined strength of our respective sales forces to drive growth
       of precious metal chemistry products in North America, accelerate the
       growth of our base metal chemistry products in Europe and enhance our
       presence in Asia;

     - cross-sell products to existing customers that have both base metal and
       precious metal chemistry needs; and

     - enhance our metal management operation by integrating the expertise and
       scale of our base metal and precious metal procurement capabilities.

COMPETITIVE STRENGTHS

     LEADERSHIP POSITION IN EACH OF OUR CORE PRODUCTS.  We believe that as a
result of our high quality products, technological capabilities and focus on
providing customer service and support, we have achieved leading market
positions in the production of metal-based specialty chemicals, materials and
powders. We believe we are the world's leading producer, refiner and marketer of
cobalt and a leading worldwide producer of cobalt organics, cobalt inorganics,
cobalt powders, nickel inorganics, copper powders, automotive catalysts and PGM
compounds.

     DIVERSE GEOGRAPHIC AND CUSTOMER BASE.  Following our recent acquisition of
the operations of dmc(2), we offer more than 625 products to over 1,700
customers in over 30 industries, including automotive, chemicals, electronics,
industrial products and stainless steel. The diversity of the metals used in our
products and our worldwide presence are reflected in the following charts:
                                        3



                                                           
2001 PRO FORMA PRODUCT SALES                                  2001 PRO FORMA SALES
BY METAL CONTAINED (1)                                        BY GEOGRAPHY (1)(2)


[PIE CHARTS]



                                              Percent                                                       Percent
                                              -------                                                       -------
                                                                                                   
Precious Metals.............................    68%           Americas....................................    24%
Copper......................................     3%           Asia-Pacific................................    10%
Nickel......................................    15%           Europe......................................    66%
Cobalt......................................    10%
Other Base Metals...........................     4%


---------------

(1) Excludes net sales of the Metal Management segment

(2) Sales based on customer location

     TECHNOLOGICAL LEADERSHIP.  Our research and new product development program
is an integral part of our business. New products introduced in the last five
years, including new chemical formulations and new concentrations of components,
accounted for over 20% of our pro forma 2001 net sales (excluding net sales of
the Metal Management segment). Examples of new products that we have developed
and introduced to the marketplace over the last five years include the
following:

     - an electroless nickel-gold process used in printed circuit boards to
       increase performance and improve product yields;

     - stainless steel powders used in automotive metal parts to prevent
       corrosion;

     - cobalt catalysts used in air bags to provide safety and enhance
       performance; and

     - automotive catalysts used in diesel and gasoline direct-injection engines
       to improve emission control.

     LEADING RAW MATERIAL SOURCING AND PRODUCTION CAPABILITY.  We believe we are
the leading producer, refiner and marketer of cobalt and the fifth largest
producer of nickel in the world as a result, in part, of our vertical
integration strategy. We also believe we are among the world's largest
processors of PGMs. Our leading industry positions and long-term relationships
with our suppliers provide us with reliable sources of key raw materials. Our
major manufacturing plants, all of which have received ISO 9002 certification,
are capable of efficiently producing a broad range of metals, specialty
chemicals and powders. Our leading refining and metal separation capabilities
give us the flexibility to work with a variety of raw materials, including
low-grade feedstocks such as slag, concentrates and recycled materials, and
transform them into high-quality finished products. The ability to refine and
recycle these materials enables us to source many grades of feedstocks at
competitive prices and offer recycling services to our customers, giving us a
significant advantage in the marketplace. Through our Metal Management segment,
we are one of the world's leading precious metals sourcing businesses.

     EXPERIENCED AND INCENTIVIZED MANAGEMENT TEAM.  Our senior management team
has an average of over twenty years experience in the chemical industry. Led by
Chairman and Chief Executive Officer James P. Mooney and President and Chief
Operating Officer Edward "Bud" Kissel, we have consistently delivered strong
operating and financial performance. Our senior management team also has
significant experience in executing and integrating acquisitions. Since our
initial public offering in 1993, we have successfully integrated thirteen
acquisitions. Our management team collectively holds approximately 5.4% of our
common shares on a fully diluted basis, with a significant number of these
shares issuable under stock option programs.

                                        4


                              RECENT DEVELOPMENTS

ACQUISITION OF DMC(2) OPERATIONS AND SALE OF BUSINESSES TO FERRO

     On August 10, 2001, we acquired all of the operations of dmc(2) Degussa
Metals Catalysts Cerdec AG from Degussa AG for E1,200.0 million, or
approximately $1,072.0 million based on the exchange rate at closing. dmc(2) was
a worldwide provider of metal-based functional materials for a wide variety of
high-growth end markets and was a leading producer of PGM catalysts and
products. On September 7, 2001, we sold the Electronic Materials and Cerdec
divisions of dmc(2) to Ferro Corporation for approximately $525.5 million.

AMENDMENT TO CREDIT FACILITIES AND ISSUANCE OF BRIDGE NOTES

     On August 10, 2001, we amended and restated our existing senior secured
credit facilities to fund the acquisition of the dmc(2) operations, reduce
certain borrowings under our existing revolving credit facility and provide for
our ongoing working capital and other financing requirements. The amended credit
facilities included $325.0 million in aggregate revolving credit facility
commitments and $985.0 million in term loans. We repaid $350.0 million of the
term loans with proceeds from the sale of the dmc(2) divisions to Ferro and
permanently reduced the related commitment under the credit facilities.

     In connection with the acquisition of the dmc(2) operations, we also issued
$550.0 million of senior subordinated bridge notes. We repaid $173.0 million of
the bridge notes with proceeds from the sale of the dmc(2) divisions to Ferro.
We repaid the remaining amounts outstanding under the bridge notes with the
proceeds from the offering of original notes.

     The acquisition of the dmc(2) operations, the sale of the dmc(2) divisions
to Ferro, the amendments to the credit facilities and the issuance of bridge
notes are collectively referred to in this prospectus as the "Transactions."

EQUITY OFFERING

     On January 24, 2002, we issued 4,025,000 shares of our common stock with an
aggregate offering price of approximately $237.5 million. We used the net
proceeds of approximately $225.7 million from that offering to repay outstanding
debt under our credit facilities.

OTHER ACQUISITIONS

     On December 21, 2001, we acquired the metal organics business of Rhodia
Holdings Limited, including two manufacturing facilities in Bethlehem,
Pennsylvania and Manchester, England. The acquisition complements our existing
Base Metal Chemistry segment product offerings. We financed the acquisition with
debt incurred under our credit facilities.

     On December 27, 2001, we acquired the mineral rights and chemical
processing capabilities of Centaur Mining and Exploration Ltd.'s Cawse operation
in Western Australia. This will provide us with approximately 8,000 tonnes per
annum of nickel feedstock and approximately 800 tonnes per annum of cobalt
feedstock. We funded the acquisition with debt incurred under our credit
facilities.

     The aggregate purchase price of these other acquisitions was approximately
$46.0 million.

                                        5


                               THE EXCHANGE OFFER

     On December 12, 2001, we completed the private offering of $400.0 million
aggregate principal amount of 9 1/4% Senior Subordinated Notes due 2011. As part
of that offering of original notes, we agreed to undertake an exchange offer for
the original notes. The following summary contains basic information about the
exchange offer. It may not contain all the information that is important to you.
For a more complete understanding of the exchange offer, we encourage you to
read this entire prospectus and the other documents to which we refer.

Securities Offered............   $400.0 million aggregate principal amount of
                                 new 9 1/4% Senior Subordinated Notes due 2011,
                                 which have been registered under the Securities
                                 Act. The form and terms of these exchange notes
                                 are identical in all material respects to those
                                 of the original notes. The exchange notes,
                                 however, will not contain transfer restrictions
                                 and registration rights applicable to the
                                 original notes.

The Exchange Offer............   We are offering to exchange $1,000 principal
                                 amount of our new 9 1/4% Senior Subordinated
                                 Notes due 2011, which have been registered
                                 under the Securities Act, for each $1,000
                                 principal amount of our outstanding 9 1/4%
                                 Senior Subordinated Notes due 2011.

                                 In order to be exchanged, an original note must
                                 be properly tendered and accepted. All original
                                 notes that are validly tendered and not
                                 withdrawn will be exchanged. As of the date of
                                 this prospectus, there is $400.0 million in
                                 aggregate principal amount of original notes
                                 outstanding.

Expiration Date...............   5:00 p.m., New York City time, on May 23, 2002
                                 unless we extend the expiration date.

Accrued Interest on the
Exchange Notes and Original
  Notes.......................   The exchange notes will bear interest from the
                                 most recent date to which interest has been
                                 paid on the original notes, or if no interest
                                 has been paid on the original notes, from the
                                 date of issue of the original notes.

Conditions to the Exchange
Offer.........................   The exchange offer is subject to customary
                                 conditions. We may assert or waive these
                                 conditions in our sole discretion. If we
                                 materially change the terms of the exchange
                                 offer, we will resolicit tenders of the
                                 original notes. See "The Exchange Offer --
                                 Conditions to the Exchange Offer" for more
                                 information regarding conditions to the
                                 exchange offer.

Procedures for Tendering
Original Notes................   Except as described under the heading "The
                                 Exchange Offer -- Guaranteed Delivery
                                 Procedures," a tendering holder must, on or
                                 prior to the expiration date:

                                 - transmit a properly completed and duly
                                   executed letter of transmittal, together with
                                   all other documents required by the letter of
                                   transmittal, to The Bank of New York at the
                                   address listed in this prospectus; or

                                 - if original notes are tendered in accordance
                                   with the book-entry procedures described in
                                   this prospectus, the tendering holder must
                                   transmit an agent's message to the exchange
                                   agent at the address listed in this
                                   prospectus.

                                        6


                                 See "The Exchange Offer -- Procedures for
                                 Tendering."

Special Procedures for
Beneficial Holders............   If you are the beneficial holder of original
                                 notes that are registered in the name of your
                                 broker, dealer, commercial bank, trust company
                                 or other nominee, and you wish to tender
                                 original notes in the exchange offer, you
                                 should promptly contact the person in whose
                                 name your original notes are registered and
                                 instruct that person to tender on your behalf.
                                 See "The Exchange Offer -- Procedures for
                                 Tendering."

Guaranteed Delivery
Procedures....................   If you wish to tender your original notes and
                                 you cannot deliver your original notes, the
                                 letter of transmittal or any other required
                                 documents to the exchange agent before the
                                 expiration date, you may tender your original
                                 notes by following the guaranteed delivery
                                 procedures under the heading "The Exchange
                                 Offer -- Guaranteed Delivery Procedures."

Withdrawal Rights.............   Tenders of original notes may be withdrawn at
                                 any time before 5:00 p.m., New York City time,
                                 on the expiration date.

Acceptance of Original Notes
and Delivery of Exchange
  Notes.......................   Subject to the conditions stated under the
                                 heading "The Exchange Offer -- Conditions to
                                 the Exchange Offer," we will accept for
                                 exchange any and all original notes that are
                                 properly tendered in the exchange offer before
                                 5:00 p.m., New York City time, on the
                                 expiration date. The exchange notes will be
                                 delivered promptly after the expiration date.
                                 See "The Exchange Offer -- Terms of the
                                 Exchange Offer."

United States Federal Income
Tax Considerations............   We believe that your exchange of original notes
                                 for exchange notes in the exchange offer will
                                 not result in any gain or loss to you for U.S.
                                 federal income tax purposes. See "United States
                                 Federal Income Tax Considerations."

Exchange Agent................   The Bank of New York is serving as exchange
                                 agent in connection with the exchange offer.
                                 The address and telephone number of the
                                 exchange agent are listed under the heading
                                 "The Exchange Offer -- Exchange Agent."

Use of Proceeds...............   We will not receive any proceeds from the
                                 issuance of exchange notes in the exchange
                                 offer. We will pay all expenses incident to the
                                 exchange offer. See "Use of Proceeds."

                                        7


                               THE EXCHANGE NOTES

     The form and terms of the exchange notes and the original notes are
identical in all material respects, except that transfer restrictions and
registration rights applicable to the original notes will not apply to the
exchange notes. The exchange notes will evidence the same debt as the original
notes and will be governed by the same indenture. Where we refer to "notes" in
this prospectus, we are referring to both the original notes and the exchange
notes.

Issuer........................   OM Group, Inc.

Exchange Notes Offered........   $400.0 million aggregate principal amount of
                                 9 1/4% Senior Subordinated Notes due 2011.

Maturity Date.................   December 15, 2011.

Interest......................   9 1/4% per annum, payable semiannually in
                                 arrears on June 15 and December 15, commencing
                                 June 15, 2002.

Subsidiary Guarantees.........   The original notes are, and the exchange notes
                                 will be, jointly and severally guaranteed on a
                                 senior subordinated unsecured basis by all of
                                 our existing and future wholly owned domestic
                                 subsidiaries.

Ranking.......................   The original notes and the related subsidiary
                                 guarantees rank, and the exchange notes and the
                                 related subsidiary guarantees will rank:

                                 - junior to all of our and the guarantors'
                                   existing and future senior indebtedness and
                                   secured indebtedness, including any
                                   borrowings under our credit facilities;

                                 - equally with any of our and the guarantors'
                                   future senior subordinated indebtedness,
                                   including trade payables;

                                 - senior to any of our and the guarantors'
                                   future subordinated indebtedness; and

                                 - effectively junior to all of the liabilities
                                   of our subsidiaries that have not guaranteed
                                   the notes.

                                 At December 31, 2001, the original notes and
                                 the related guarantees ranked junior to:

                                 - $920.7 million of senior secured
                                   indebtedness; and

                                 - $712.5 million of liabilities, including
                                   trade payables but excluding intercompany
                                   obligations and minority interests, of our
                                   non-guarantor subsidiaries.

Optional Redemption...........   We may redeem any of the notes at any time on
                                 or after December 15, 2006, in whole or in
                                 part, in cash at the redemption prices
                                 described in this prospectus, plus accrued and
                                 unpaid interest to the date of redemption.

                                 In addition, we may redeem up to 35% of the
                                 aggregate principal amount of notes on or prior
                                 to December 15, 2004 with the net proceeds of
                                 equity offerings. If such redemption had
                                 occurred prior to April 12, 2002, the
                                 redemption price would have been 104% of the
                                 principal amount of notes redeemed. Commencing
                                 on April 12, 2002, the redemption price became
                                 109.250% of the principal amount of notes
                                 redeemed.

Change of Control.............   Upon a change of control, as defined in
                                 "Description of the Notes," we will have the
                                 option, at any time prior to December 15, 2006,
                                 to redeem all of the notes at a redemption
                                        8


                                 price equal to 100% of their principal amount
                                 plus the "applicable premium," as defined in
                                 "Description of the Notes," together with
                                 accrued and unpaid interest. If a change of
                                 control occurs and we do not exercise our
                                 option to redeem the notes, we will be required
                                 to make an offer to purchase the notes. The
                                 purchase price would equal 101% of the
                                 principal amount of the notes on the date of
                                 purchase, plus accrued and unpaid interest to
                                 the date of repurchase.

Certain Covenants.............   The indenture contains covenants that, among
                                 other things, limit our ability and the ability
                                 of our restricted subsidiaries to:

                                 - incur additional indebtedness;

                                 - create liens;

                                 - engage in sale-leaseback transactions;

                                 - pay dividends or make other equity
                                   distributions;

                                 - issue redeemable preferred stock, in our
                                   case, or issue capital stock, in the case of
                                   our subsidiaries;

                                 - make investments;

                                 - sell assets;

                                 - engage in transactions with affiliates; and

                                 - effect a consolidation or merger.

                                 These limitations are subject to a number of
                                 important qualifications and exceptions. For
                                 more details, see "Description of the Notes --
                                 Certain Covenants."

Resales.......................   Based on interpretations by the staff of the
                                 SEC, as detailed in a series of no-action
                                 letters issued by the SEC to third parties, we
                                 believe that the exchange notes issued in the
                                 exchange offer may be offered for resale,
                                 resold or otherwise transferred by you without
                                 compliance with the registration and prospectus
                                 delivery requirements of the Securities Act as
                                 long as:

                                 - you are acquiring the exchange notes in the
                                   ordinary course of your business;

                                 - you are not participating, do not intend to
                                   participate and have no arrangement or
                                   understanding with any person to participate,
                                   in a distribution of the exchange notes; and

                                 - you are not an "affiliate" of ours.

                                 If you are an affiliate of ours, are engaged in
                                 or intend to engage in or have any arrangement
                                 or understanding with any person to participate
                                 in the distribution of the exchange notes:

                                 - you cannot rely on the applicable
                                   interpretations of the staff of the SEC; and

                                 - you must comply with the registration
                                   requirements of the Securities Act in
                                   connection with any resale transaction.

                                 Each broker or dealer that receives exchange
                                 notes for its own account in exchange for
                                 original notes that were acquired as a result
                                 of market-making or other trading activities
                                 must acknowledge that it will comply with the
                                 registration and prospectus delivery
                                 requirements of the Securities Act in

                                        9


                                 connection with any offer to resell, resale, or
                                 other transfer of the exchange notes issued in
                                 the exchange offer, including the delivery of a
                                 prospectus that contains information with
                                 respect to any selling holder required by the
                                 Securities Act in connection with any resale of
                                 the exchange notes.

                                 Furthermore, any broker-dealer that acquired
                                 any of its original notes directly from us:

                                 - may not rely on the applicable
                                   interpretations of the staff of the SEC
                                   contained in Exxon Capital Holdings Corp.,
                                   SEC no-action letter (May 13, 1988); Morgan,
                                   Stanley & Co. Inc., SEC no-action letter
                                   (June 5, 1991); and Shearman & Sterling, SEC
                                   no-action letter (July 2, 1993); and

                                 - must also be named as a selling noteholder in
                                   connection with the registration and
                                   prospectus delivery requirements of the
                                   Securities Act relating to any resale
                                   transaction.

                                  RISK FACTORS

     See "Risk Factors" immediately following this summary for a discussion of
risks that should be considered by holders prior to tendering original notes in
the exchange offer.

                             ADDITIONAL INFORMATION

     Our principal executive offices are located at 50 Public Square, Suite
3500, Cleveland, Ohio 44113 and our telephone number is (216) 781-0083.

     The principal executive offices and telephone numbers of our subsidiary
guarantors are as follows:


                                                       
     OMG Americas, Inc.             OMG Fidelity, Inc.              OMG Jett, Inc.
      811 Sharon Drive           470 Frelinghuysen Avenue    50 Public Square, Suite 3500
    Westlake, Ohio 44145         Newark, New Jersey 07114       Cleveland, Ohio 44113
       (440) 808-2950                 (973) 242-4110                (216) 781-0083



                                                       

  SCM Metal Products, Inc.          OM Holdings, Inc.           OMG KG Holdings, Inc.
      101 Bridge Street        50 Public Square, Suite 3500  50 Public Square, Suite 3500
Johnstown, Pennsylvania 15902     Cleveland, Ohio 44113         Cleveland, Ohio 44113
       (814) 533-7800                 (216) 781-0083                (216) 781-0083



                                
                                      dmc(2) Electronic Components
        OMG Michigan, Inc.                    Corporation
      2347 Commercial Drive                1300 Marrows Road
   Auburn Hills, Michigan 48326          Newark, Delaware 19711
          (248) 340-1040                     (302) 456-6232


                                        10


     SUMMARY CONSOLIDATED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA

     The following table displays our summary financial data for the periods
ended and as of the dates indicated. We derived the historical data for the
years ended December 31, 1999, 2000 and 2001 from our audited consolidated
financial statements. The summary unaudited pro forma income statement data
gives effect to the Transactions and the offering of original notes as if they
occurred on the first day of the period specified. See "Index to Unaudited Pro
Forma Combined Condensed Financial Statements." The summary financial data
should be read in conjunction with "Use of Proceeds," "Selected Historical
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the consolidated financial statements (and
related notes) of OM Group, Inc., or "OMG", contained elsewhere in this
prospectus. The pro forma financial data is not intended to represent our
results of operations had the offering of original notes and the Transactions
been completed as of the first day of the period specified or to project our
results of operations for any future period or date.



                                                                                       UNAUDITED
                                                                 HISTORICAL            PRO FORMA
                                                         --------------------------   ------------
                                                                  YEAR ENDED DECEMBER 31,
                                                         -----------------------------------------
                                                          1999     2000      2001         2001
                                                         ------   ------   --------   ------------
                                                           (DOLLARS IN MILLIONS, EXCEPT RATIOS)
                                                                          
Net sales..............................................  $507.0   $887.7   $2,367.4     $5,687.6
Cost of products sold..................................   347.5    673.9    2,032.8      5,245.6
                                                         ------   ------   --------     --------
Gross profit...........................................   159.5    213.8      334.6        442.0
Selling, general and administrative expenses...........    60.8     75.4      165.4        234.3
                                                         ------   ------   --------     --------
Income from operations.................................    98.7    138.4      169.2        207.7
Interest expense, net..................................   (18.9)   (37.4)     (57.1)       (85.8)
Other income (expense), net............................     0.5     (1.1)      (4.2)        (0.4)
                                                         ------   ------   --------     --------
Income before income taxes and extraordinary item......    80.3     99.9      107.9        121.5
Income taxes...........................................    24.5     28.4       27.7         29.6
                                                         ------   ------   --------     --------
Income before extraordinary item.......................    55.8     71.5       80.2         91.9
Extraordinary item.....................................      --       --       (4.6)        (4.6)
                                                         ------   ------   --------     --------
Net income.............................................  $ 55.8   $ 71.5   $   75.6     $   87.3
                                                         ======   ======   ========     ========
RATIO OF EARNINGS TO FIXED CHARGES (1).................     3.8x     2.7x       2.3x         1.9x
OTHER DATA:
EBITDA (2).............................................  $126.1   $176.6   $  228.5     $  285.2
Cash flow from operations..............................    12.4     81.0       58.3
Depreciation and amortization..........................    26.9     39.3       63.5         77.9
Capital expenditures...................................    70.2     55.0      108.5        137.2
Interest expense, net of interest income...............    18.9     37.4       57.1         85.8
Ratio of EBITDA to interest expense, net...............     6.7x     4.7x       4.0x         3.3x
PRO FORMA DATA:
Ratio of net debt to LTM EBITDA (3)....................                                      4.4x
BALANCE SHEET DATA:
Cash and cash equivalents..............................  $  9.4   $ 13.5   $   78.2
Working capital, net (4)...............................   359.1    411.8      971.3
Total assets...........................................  1,012.5  1,357.5   2,541.2
Total debt (including current portion).................   384.9    571.9    1,320.7
Stockholders' equity...................................   449.2    506.1      569.5


---------------

(1) The ratio of earnings to fixed charges is computed by dividing earnings
    available for fixed charges by fixed charges. Earnings available for fixed
    charges consist of earnings before income taxes, minority interests, equity
    income and extraordinary item plus fixed charges, less capitalized interest.
    Fixed charges

                                        11


    consist of interest, whether expensed or capitalized, amortized capitalized
    expenses related to indebtedness, and the portion of operating lease rental
    expense that represents the interest factor.

(2) EBITDA is defined as net income before interest, taxes, extraordinary item,
    depreciation and amortization. EBITDA is not a measure of operating income,
    operating performance or liquidity under GAAP. We include EBITDA and related
    credit statistics because we understand these data are used by some
    investors to determine our historical ability to service our indebtedness.
    Nevertheless, this measure should not be considered in isolation or as a
    substitute for operating income (as determined in accordance with GAAP) as
    an indicator of our operating performance, or to cash flows from operating
    activities (as determined in accordance with GAAP) as a measure of
    liquidity. In addition, it should be noted that companies calculate EBITDA
    differently and, therefore, EBITDA as presented for us may not be comparable
    to EBITDA reported by other companies. See the audited consolidated
    financial statements and related notes included elsewhere in this prospectus
    for the cash used in and provided by operating activities.

(3) Net debt is long-term debt, including the current portion of long-term debt,
    less cash and cash equivalents after giving pro forma effect to the offering
    of original notes.

(4) Working capital, net is defined as current assets excluding cash and cash
    equivalents minus current liabilities excluding short-term debt and the
    current portion of long-term debt.

                                        12


                                  RISK FACTORS

     You should consider carefully the following risk factors, in addition to
the other information contained in this prospectus, before tendering your
original notes.

RISKS RELATING TO OUR BUSINESS

WE INCURRED SUBSTANTIAL INDEBTEDNESS IN CONNECTION WITH THE ACQUISITION OF THE
DMC(2) OPERATIONS, AND OUR INDEBTEDNESS COULD RESTRICT OUR OPERATIONS AND MAKE
US MORE VULNERABLE TO ADVERSE ECONOMIC CONDITIONS.

     As a result of the Transactions and the original notes offering, we have
substantial indebtedness and significant debt service and other obligations. As
of December 31, 2001, and for the year then ended, on a pro forma basis, we had
total debt, stockholders' equity and EBITDA, defined as net income before
interest, taxes, extraordinary item, depreciation and amortization, as follows:



                                                              (DOLLARS IN MILLIONS)
                                                           
Total debt..................................................        $1,320.7
Stockholders' equity........................................           569.5
EBITDA......................................................           285.2


We also may have significant post-closing obligations in connection with the
acquisition of the dmc(2) operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

     Our high level of debt and debt service requirements could have important
consequences for our business. For example, it could:

     - require us to dedicate a substantial portion of our cash flow from
       operations to payments on our indebtedness, thereby reducing the
       availability of our cash flow to fund working capital, capital
       expenditures and research and development efforts, and for other general
       corporate purposes;

     - limit our ability to obtain additional funds for working capital, capital
       expenditures, acquisitions and general corporate purposes;

     - increase our vulnerability to interest rate increases to the extent our
       variable-rate debt is not effectively hedged;

     - restrict our ability to dispose of assets or to pay cash dividends on, or
       repurchase, preferred or common stock;

     - increase our vulnerability to adverse economic and industry conditions
       and competition;

     - limit our flexibility in planning for, or reacting to, changes in our
       business and our industry; and

     - place us at a competitive disadvantage compared to our competitors that
       have less debt.

Any of the foregoing consequences could have a material adverse effect on us.

     Our ability to make principal and interest payments, or to refinance our
indebtedness, including the notes, depends on our future performance. Our future
performance is, to a certain extent, subject to economic, financial, competitive
and other factors beyond our control. We cannot guarantee that our business will
generate sufficient cash flow from operations in the future to service our debt
and fund necessary capital expenditures. If we are unable to generate sufficient
cash flow, we may be required to refinance all or a portion of our existing
debt, including the notes, sell assets or obtain additional financing. We cannot
guarantee that any refinancing or sale of assets or additional financing would
be possible on terms reasonably favorable to us, or at all. Some of our
competitors currently operate on a less leveraged basis and may have greater
operating and financial flexibility.

                                        13


WE MAY INCUR MORE DEBT, WHICH COULD EXACERBATE THE RISKS DESCRIBED ABOVE.

     We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. The credit facilities and the indenture for the
notes will limit us from incurring additional indebtedness but will not fully
prohibit us or our subsidiaries from doing so. If new debt is added to our and
our subsidiaries' current debt levels, the related risks that we and they now
face could intensify. See "Capitalization," "Selected Historical Financial Data"
and "Description of the Credit Facilities."

THE OPERATING AND FINANCIAL RESTRICTIONS IMPOSED BY OUR DEBT AGREEMENTS,
INCLUDING OUR CREDIT FACILITIES AND THE INDENTURE RELATING TO THE NOTES, LIMIT
OUR ABILITY TO FINANCE OPERATIONS AND CAPITAL NEEDS OR ENGAGE IN OTHER BUSINESS
ACTIVITIES.

     Our debt agreements contain covenants that restrict our ability to:

     - incur additional indebtedness (including guarantees);

     - incur liens;

     - dispose of assets;

     - make some acquisitions;

     - pay dividends and make other restricted payments;

     - issue preferred stock containing redemption provisions requiring a
       payment before the maturity of the notes or, in the case of our
       subsidiaries, issue capital stock;

     - enter into sale and leaseback transactions;

     - make loans and investments;

     - enter into new lines of business;

     - enter into some leases; and

     - engage in some transactions with affiliates.

     In addition, our credit facilities require us to comply with specified
financial covenants including minimum interest coverage ratios, maximum leverage
ratios and minimum fixed charge coverage ratios.

     Our ability to meet these covenants and requirements in the future may be
affected by events beyond our control, including prevailing economic, financial
and industry conditions. Our breach or failure to comply with any of these
covenants could result in a default under our credit facilities or the indenture
governing the notes. If we default under our credit facilities, the lenders
could cease to make further extensions of credit, cause all of our outstanding
debt obligations under these credit facilities to become due and payable,
require us to apply all of our available cash to repay the indebtedness under
these credit facilities, prevent us from making debt service payments on any
other indebtedness we owe and/or proceed against the collateral granted to them
to secure repayment of those amounts. If a default under the indenture occurs,
the holders of the notes could elect to declare the notes immediately due and
payable. If the indebtedness under our credit facilities or the notes is
accelerated, we may not have sufficient assets to repay amounts due under these
existing debt agreements or on other debt securities then outstanding. We also
may amend the provisions and limitations of our credit facilities from time to
time in a manner that could adversely affect, without their consent, the holders
of the notes. See "Description of the Credit Facilities" and "Description of the
Notes."

WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE THE DMC(2) OPERATIONS INTO OUR
BUSINESS.

     The process of integrating the retained dmc(2) businesses into our existing
businesses may result in unforeseen operating difficulties and may require
significant financial resources that would otherwise be available for the
ongoing development or expansion of existing operations. We cannot assure you
that we will

                                        14


realize all of the anticipated benefits of the acquisition. Some of the
integration difficulties or costs associated with the acquisition of the dmc(2)
operations may arise from:

     - unexpected losses of key employees or customers of dmc(2);

     - conforming dmc(2) standards, processes, procedures and controls with our
       operations;

     - coordinating new product and process development;

     - hiring additional management and other critical personnel;

     - negotiating with labor unions;

     - statutory liabilities associated with a health care fund covering Degussa
       AG and dmc(2) employees if the fund is closed or liquidated; and

     - increasing the scope, geographic diversity and complexity of our
       operations.

In addition, we may encounter unforeseen obstacles, liabilities or costs
associated with the dmc(2) integration, including those related to the renewal
of insurance covering some dmc(2) operations. The presence of one or more
material liabilities related to the dmc(2) operations that were unknown to us at
the time of the acquisition of those operations may have a material adverse
effect on our business, financial condition or results of operations.

     Historically, we have not been engaged to a significant extent in the
precious metals businesses that we have acquired from dmc(2). The precious
metals businesses involve risks related to price fluctuations, as discussed in
the next risk factor. We will be dependent on the former dmc(2) management team
to operate those businesses, and our ability to operate those businesses
profitably may be impaired if we are unable to retain that management team.
Additionally, the acquisition of the dmc(2) operations has significantly
increased the complexity of our internal financial and accounting processes,
including accounting period closing and auditing processes.

WE ARE AT RISK FROM FLUCTUATIONS IN THE PRICE OF OUR PRINCIPAL RAW MATERIALS,
INCLUDING OUR PRECIOUS METALS INVENTORY, AND FROM OUR PRECIOUS METALS MANAGEMENT
ACTIVITIES.

     The primary raw materials we use in manufacturing base metal chemistry
products are cobalt, nickel and copper. The cost of raw materials fluctuates due
to actual or perceived changes in supply and demand. Generally, we are able to
pass increases and decreases in raw material prices through to our customers by
increasing or decreasing, respectively, the prices of our products. The extent
of our profitability depends, in part, on our ability to maintain the
differential between our product prices and raw material prices, and we cannot
guarantee that we will be able to maintain an appropriate differential at all
times.

     In manufacturing precious metal chemistry products, we primarily use
platinum, palladium, rhodium, gold and silver. We intend to continue the dmc(2)
practice of protecting against precious metal price volatility, to the extent
possible, by pricing agreements with customers and by hedging through derivative
financial instruments such as forward or futures contracts. These pricing
agreements and hedging strategies may not be adequate to protect us fully from
fluctuations in precious metal prices, and those fluctuations could materially
and adversely affect the results of the precious metals businesses we have
acquired from dmc(2).

     dmc(2) historically obtained a portion of its precious metal inventory
through short-term and medium-term leases, rather than by purchasing the metals,
and we intend to continue this practice. We will be exposed to the risk that
changes in lease rates will increase our lease expense on those leases. Degussa
AG has agreed to lease us precious metals up to an aggregate amount of DM 650.0
million until August 10, 2002 if we are otherwise unable to lease precious
metals. After this period expires, we may not be able to enter into metal leases
on terms comparable to those historically obtained by dmc(2).

                                        15


WE ARE AT RISK FROM UNCERTAINTIES IN THE SUPPLY OF SOME OF OUR PRINCIPAL RAW
MATERIALS.

     While copper, gold and silver are worldwide commodities and generally
available, we can be less certain of the availability of cobalt, nickel and
platinum group metals, including platinum, palladium and rhodium. Historically,
we have sourced our supply of cobalt primarily from the Democratic Republic of
the Congo (DRC), Australia, Finland and Zambia. Although we have never
experienced a material shortage of cobalt, production problems or political or
civil instability in specific supplier countries may affect the supply and
market price of cobalt. In particular, political and civil instability in the
DRC may affect the availability of raw materials from that country. If a
substantial interruption should occur in the supply of cobalt from the DRC or
elsewhere, we may not be able to obtain as much cobalt from other sources as
would be necessary to satisfy our requirements at prices comparable to our
current arrangements.

     Historically, we have sourced our supply of nickel primarily from Australia
and Brazil. Although we have never experienced a material shortage of nickel, if
a substantial interruption should occur in the supply of nickel, we may not be
able to obtain as much nickel from other sources as would be necessary to
satisfy our requirements at prices comparable to our current arrangements.

     Historically, we have sourced our supply of platinum group metals primarily
from South Africa, where they are found in primary deposits, and from Russia and
Canada, where they are by-products of copper and nickel mining. We source a
significant portion of our PGM feedstock from one of the largest global
suppliers of platinum group metals, primarily under contract, and obtain the
remainder through a variety of channels. Although we have never experienced a
material shortage of platinum group metals, if a substantial interruption should
occur in the supply of platinum group metals, we may not be able to obtain as
much platinum group metals from other sources as would be necessary to satisfy
our requirements at prices comparable to our current arrangements.

WE MAY NOT BE ABLE TO RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGES IN OUR
INDUSTRY OR IN OUR CUSTOMERS' PRODUCTS.

     Our future business success will depend in part upon our ability to
maintain and enhance our technological capabilities, develop and market products
and applications that meet changing customer needs and successfully anticipate
or respond to technological changes on a cost-effective and timely basis. Our
inability to anticipate, respond to or utilize changing technologies could have
an adverse effect on our business, financial condition or results of operations.
Moreover, technological and other changes in our customers' products or
processes may render some of our specialty chemicals unnecessary, which would
reduce the demand for those chemicals.

WE OPERATE IN A VERY COMPETITIVE INDUSTRY.

     We have many competitors. Some of our principal competitors have greater
financial and other resources, less leverage and greater brand recognition than
we have. Accordingly, these competitors may be better able to withstand changes
in conditions within the industries in which we operate and may have
significantly greater operating and financial flexibility than we do. As a
result of the competitive environment in the markets in which we operate, we
currently face and will continue to face pressure on the sales prices of our
products from competitors and large customers. With these pricing pressures, we
may experience future reductions in the profit margins on our sales, or may be
unable to pass on future raw material price or labor cost increases to our
customers, which also would reduce profit margins. In addition, we cannot
guarantee that we will not encounter increased competition in the future, which
could have a material adverse effect on our business. Since we conduct our
business mainly on a purchase order basis, with few long-term commitments from
our customers, this competitive environment could give rise to a sudden loss of
business.

IF WE LOSE KEY PERSONNEL, OUR BUSINESS MAY BE ADVERSELY AFFECTED.

     Our success depends to a large degree on a number of key employees, and the
loss of their services could have a material adverse effect on our business. In
particular, the loss of James P. Mooney, our Chairman of the Board and Chief
Executive Officer, could have a material adverse effect on our business. We
                                        16


have entered into employment agreements with some of our key employees,
including Mr. Mooney. We cannot guarantee, however, that any of these employment
agreements will prevent us from losing the services of any of our key employees,
including Mr. Mooney.

WE ARE SUBJECT TO STRINGENT ENVIRONMENTAL REGULATION AND MAY INCUR UNANTICIPATED
COSTS OR LIABILITIES ARISING OUT OF ENVIRONMENTAL MATTERS.

     We are subject to stringent laws and regulations relating to the storage,
handling, disposal, emission and discharge of materials into the environment,
and we have expended, and may be required to expend in the future, substantial
funds for compliance with such laws and regulations. In addition, we may from
time to time be subjected to claims for personal injury, property damages or
natural resource damages made by third parties or regulators. Our annual
environmental compliance costs approximated $7.8 million in 2001. In addition,
we made capital expenditures of approximately $6.5 million in 2001 in connection
with environmental compliance. We expect that these expenditures will increase
as a result of our acquisition of the dmc(2) operations.

     Some risk of environmental liability is inherent in the nature of our
business and in the ownership and operation of real property, and we can provide
no assurance that additional environmental costs, which may be material, will
not arise in the future. In addition, we have not previously operated the 20
plants acquired as part of the dmc(2) operations and have limited information
regarding their environmental condition and compliance. Environmental
considerations may affect customer acceptance of some of our products.

WE ARE EXPOSED TO FLUCTUATIONS IN FOREIGN EXCHANGE RATES, WHICH MAY ADVERSELY
AFFECT OUR OPERATING RESULTS AND NET INCOME.

     We have manufacturing and other facilities in the Americas, Europe,
Asia-Pacific and Africa, and we market our products worldwide. Although most of
our raw material purchases and product sales are transacted in U.S. dollars,
liabilities for non-U.S. operating expenses and income taxes are denominated in
local currencies. In addition, fluctuations in exchange rates may affect product
demand and may adversely affect the profitability in U.S. dollars of products
and services provided by us in foreign markets where payment for our products
and services is made in the local currency. Accordingly, fluctuations in
currency rates may affect our operating results and net income. In order to
partially hedge our balance sheet exposure to fluctuating rates, we enter into
forward contracts to purchase euros. Such transactions cannot, however,
eliminate all of the risks associated with currency fluctuations.

OUR SUBSTANTIAL INTERNATIONAL OPERATIONS SUBJECT US TO RISKS NOT FACED BY
DOMESTIC COMPETITORS, WHICH MAY INCLUDE UNFAVORABLE POLITICAL, REGULATORY, LABOR
AND TAX CONDITIONS IN OTHER COUNTRIES.

     About 67% of our net sales in 2001 were derived from our foreign
facilities. As a result of our acquisition of the dmc(2) operations, we estimate
that our sales from our foreign facilities will increase to more than 70% of our
net sales (excluding net sales of the Metal Management segment). Accordingly,
our business is subject to risks related to the differing legal and regulatory
requirements and the social, political and economic conditions of many
jurisdictions. In addition to risks associated with fluctuations in foreign
exchange rates, risks inherent in international operations include the
following:

     - agreements may be difficult to enforce and receivables difficult to
       collect through a foreign country's legal system;

     - foreign customers may have longer payment cycles;

     - foreign countries may impose additional withholding taxes or otherwise
       tax our foreign income, impose tariffs or adopt other restrictions on
       foreign trade or investment, including currency exchange controls;

     - U.S. export licenses may be difficult to obtain;

     - intellectual property rights may be more difficult to enforce in foreign
       countries;

                                        17


     - general economic conditions in the countries in which we operate could
       have an adverse effect on our earnings from operations in those
       countries;

     - unexpected adverse changes in foreign laws or regulatory requirements may
       occur, including with respect to export duties and quotas;

     - compliance with a variety of foreign laws and regulations may be
       difficult; and

     - overlap of different tax structures may subject us to additional taxes.

     Our business in emerging markets requires us to respond to rapid changes in
market conditions in these countries. Our overall success as a global business
depends, in part, upon our ability to succeed in differing legal, regulatory,
economic, social and political conditions. We cannot assure you that we will
continue to succeed in developing and implementing policies and strategies that
will be effective in each location where we do business. Furthermore, we cannot
be sure that any of the foregoing factors will not have a material adverse
effect on our business, financial condition or results of operations.

BECAUSE WE ARE A HOLDING COMPANY, OUR INCOME COMES ENTIRELY FROM DISTRIBUTIONS
FROM OUR SUBSIDIARIES.

     We are a holding company with no significant assets other than our
investments in our subsidiaries. Accordingly, we rely entirely upon
distributions from our subsidiaries to generate the funds necessary to meet our
obligations, including the payment of principal and interest on the notes. The
indenture governing the notes and our credit facilities limit the ability of our
subsidiaries to contractually restrict the payment of dividends and other
payments to us, although these limitations are subject to a number of
significant qualifications. See "Description of the Notes -- Certain
Covenants -- Dividend and Other Payment Restrictions Affecting Subsidiaries."

RISKS RELATING TO THE NOTES

NOT ALL OF OUR SUBSIDIARIES GUARANTEE OUR OBLIGATIONS UNDER THE NOTES, AND THE
ASSETS OF THE NON-GUARANTOR SUBSIDIARIES MAY NOT BE AVAILABLE TO MAKE PAYMENTS
ON THE NOTES.

     Our present and future wholly-owned domestic subsidiaries guarantee the
original notes and will guarantee the exchange notes, except domestic
subsidiaries that may be designated as unrestricted with respect to the
indenture. Our present and future foreign subsidiaries are not guarantors of the
original notes and will not be guarantors of the exchange notes. Payments on the
notes will be required to be made only by us and the subsidiary guarantors. As a
result, no payments will be required to be made from assets of subsidiaries that
do not guarantee the notes, unless those assets are transferred by dividend or
otherwise to us or a subsidiary guarantor. The historical consolidated financial
statements included in this prospectus are presented on a consolidated basis,
including both our domestic and foreign subsidiaries. The aggregate sales,
EBITDA and assets of our subsidiaries that are not and will not be guarantors of
the notes represented 64%, 95% and 73%, respectively, of our total sales, EBITDA
and assets for 2001, on a pro forma basis.

     In the event of a bankruptcy, liquidation or reorganization of any of the
non-guarantor subsidiaries, holders of their indebtedness, including their trade
creditors, will generally be entitled to payment of their claims from the assets
of those subsidiaries before any assets are made available for distribution to
us. As a result, the notes are effectively subordinated to the indebtedness of
the non-guarantor subsidiaries.

THE NOTES ARE SUBORDINATED TO ANY CURRENT AND FUTURE SENIOR AND SECURED DEBT.

     The notes rank equally in right of payment with all of our and our
subsidiary guarantors' existing and future senior subordinated indebtedness.
However, the notes are subordinated to all of our future and existing senior and
secured indebtedness, including borrowings under our credit facilities, and the
senior and secured indebtedness of the subsidiary guarantors, and are
effectively subordinated to all liabilities of subsidiaries not guaranteeing the
notes. As of December 31, 2001, the aggregate amount of senior and secured
indebtedness, including that of the subsidiary guarantors, and liabilities of
non-guaranteeing subsidiaries that effectively

                                        18


ranked senior to the notes was approximately $1,633.2 million. In addition, at
that date we had the ability to incur approximately $130.6 million of additional
secured indebtedness under our credit facilities.

WE MAY NOT BE ABLE TO REPURCHASE THE NOTES UPON A CHANGE OF CONTROL.

     Upon a change of control event, if we do not redeem the notes, each holder
of the notes will have the right to require us to repurchase its notes at 101%
of their principal amount, plus accrued and unpaid interest to the date of
repurchase. Our ability to repurchase the notes upon a change of control event
will be limited by the terms of our credit facilities. Upon a change of control
event, we may be required to repay immediately the outstanding principal, and
any accrued interest or any other amounts, owed by us under our credit
facilities. We may not be able to repay these amounts or obtain the necessary
consents under these credit facilities to repurchase the notes. The source of
funds for any repurchase of notes would be our available cash or cash generated
from other sources. However, we may not have enough available funds or be able
to generate the necessary funds upon a change of control to make any required
repurchases of tendered notes. This may result in our having to refinance our
outstanding indebtedness, which we may not be able to do on favorable terms or
at all.

YOU MAY HAVE DIFFICULTY SELLING ORIGINAL NOTES YOU DO NOT EXCHANGE.

     If you do not exchange your original notes for exchange notes in the
exchange offer, you will continue to be subject to the restrictions on transfer
of your original notes described in the legend on your original notes. These
restrictions on transfer are applicable because we issued the original notes
under exemptions from the registration requirements of the Securities Act and
applicable state securities laws. In general, you may only offer or sell the
original notes if they are registered under the Securities Act and applicable
state securities laws or offered and sold under an exemption from these
requirements. We do not intend to register the original notes under the
Securities Act. To the extent original notes are tendered and accepted in the
exchange offer, the trading market, if any, for any remaining untendered
original notes may be adversely affected. See "The Exchange
Offer -- Consequences of Exchanging or Failing to Exchange Original Notes."

WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE EXCHANGE
NOTES.

     You may find it difficult to sell your exchange notes because an active
trading market for the exchange notes may not develop. The exchange notes are
being offered to the holders of the original notes, which were issued on
December 12, 2001 primarily to a small number of institutional investors.

     Currently, there is no public market for the exchange notes. We do not
intend to list the exchange notes on any national securities exchange or to seek
an admission of these exchange notes to trading on the National Association of
Securities Dealers Automated Quotation System. The initial purchasers have
advised us that, subject to any legal or regulatory restrictions, they may make
a market in the exchange notes, but they are not obligated to do so and may
discontinue any such market making at any time. We cannot guarantee the
development or liquidity of any market for the exchange notes, and if an active
public market does not develop, the market price and liquidity of the exchange
notes may be adversely affected. If any of the exchange notes are traded after
we issue them, they may trade at a discount, depending on prevailing interest
rates, the market for similar securities and other factors, including general
economic conditions and our financial condition and performance.

BROKER-DEALERS OR NOTEHOLDERS MAY BECOME SUBJECT TO THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT.

     Any broker-dealer that:

     - exchanges its original notes in the exchange offer for the purpose of
       participating in a distribution of the exchange notes; or

     - resells exchange notes that were received by it for its own account in
       the exchange offer,

                                        19


may be deemed to have received restricted securities and may be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction by that broker-dealer.
Any profit on the resale of the exchange notes and any commission or concessions
received by a broker-dealer may be deemed to be underwriting compensation under
the Securities Act.

     In addition to broker-dealers, any noteholder that exchanges its original
notes in the exchange offer for the purpose of participating in a distribution
of the exchange notes may be deemed to have received restricted securities and
may be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction by
the noteholder.

IF A SUBSIDIARY GUARANTEE OF THE NOTES IS RULED TO BE A FRAUDULENT CONVEYANCE,
THAT GUARANTEE COULD BE VOIDED, YOUR CLAIMS UNDER THAT GUARANTEE COULD BE
SUBORDINATED AND/OR ANY PAYMENT MADE BY THAT GUARANTOR COULD BE REQUIRED TO BE
RETURNED.

     Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, if, among other things, any guarantor, at the time it
incurred the debt evidenced by its guarantee of the notes:

     - was insolvent or rendered insolvent by reason of such incurrence, or was
       engaged in a business or transaction for which the guarantor's remaining
       assets constituted unreasonably small capital, or intended to incur, or
       believed or should have believed that it would incur, debts beyond its
       ability to pay such debts as they mature, and

     - that guarantor received less than reasonably equivalent value or fair
       consideration for the incurrence of such debt,

then the guarantee of that guarantor could be voided or claims by holders of the
notes under that guarantee could be subordinated to all other debts of that
guarantor. In addition, any payment made by that guarantor pursuant to its
guarantee could be required to be returned to that guarantor, or to a fund for
the benefit of the creditors of that guarantor.

     The measures of insolvency for purposes of these considerations will vary
depending upon the law applied in any applicable proceeding. Generally, however,
a guarantor would be considered insolvent if:

     - the sum of its debts, including contingent liabilities, was greater than
       the saleable value of all of its assets at a fair valuation;

     - the present fair saleable value of its assets is less than the amount
       that would be required to satisfy its probable liability on its existing
       debts, including contingent liabilities, as they become absolute and
       mature; or

     - it could not pay its debts as they become due.

     On the basis of historical financial information, recent operating history
and other factors, we believe that each guarantor, after giving effect to the
debt incurred in connection with this offering, will not be insolvent, will not
have unreasonably small capital for the businesses in which it is engaged and
will not have incurred debts beyond its ability to pay such debts as they
mature. However, we cannot guarantee what standard a court would apply in making
such determinations or that a court would agree with our conclusions in this
regard.

                                        20


                                THE TRANSACTIONS

     The offering of original notes followed a series of transactions in which:

     - We acquired all of the operations of dmc(2) from Degussa AG for E1,200.0
       million in cash, or approximately $1,072.0 million based on the exchange
       rate at closing.

     - We amended and restated our existing senior secured credit facilities to
       fund the acquisition of the dmc(2) operations, reduce certain borrowings
       under our existing revolving credit facility and provide for our ongoing
       working capital and other financing requirements.

     - We issued $550.0 million of senior subordinated bridge notes to fund the
       acquisition of the dmc(2) operations.

     - We sold the Electronic Materials and Cerdec divisions of dmc(2) to Ferro
       Corporation for approximately $525.5 million in cash, the proceeds of
       which were used to repay a portion of the borrowings under the credit
       facilities and a portion of the bridge notes.

     We refer to these events collectively in this prospectus as the
"Transactions."

                         PURCHASE OF DMC(2) OPERATIONS

     The following is a summary of the material terms of the purchase agreement
among Degussa AG, dmc(2) and OMG dated August 10, 2001, regarding the purchase
of the dmc(2) operations. This summary describes only some provisions of the
purchase agreement and may not describe all terms that may be important to you.
See "Where You Can Find More Information."

REPRESENTATIONS AND WARRANTIES

     The purchase agreement contains customary representations and warranties
from dmc(2). However, our ability to recover damages for breach of these
representations and warranties is subject to restrictions, including the
following:

     - we can assert claims only if the total amount of claims exceeds E10.0
       million and, except for certain claims, any recovery is limited to a
       total of 25% of the purchase price prior to any adjustment;

     - we may not receive consequential damages or damages for loss of profit;

     - we may not recover damages that have been addressed through an adjustment
       of the purchase price or a specific reserve in the dmc(2) balance sheet;
       and

     - we have to assert most claims within 18 months from the closing of the
       purchase.

INDEMNIFICATION

     Degussa AG and dmc(2) have agreed to indemnify us for specific
environmental as well as contingent liabilities. These are described below:

     Environmental Liabilities.  In general, dmc(2) agreed to indemnify us
against non-compliance liabilities and cleanup obligations relating to
environmental conditions existing at the date of purchase, subject to specified
conditions and limitations. Limitations on the indemnity obligations of dmc(2)
include the following:

     - we may assert environmental claims only if the total amount of claims
       exceeds E10.0 million, but upon exceeding such threshold, we may claim
       the entire amount;

     - the aggregate exposure of dmc(2) for all claims under the purchase
       agreement, including environmental claims, is capped at 25% of the
       purchase price prior to any adjustment; and

     - environmental claims are subject to a cost-sharing formula under which we
       share an increasing percentage of costs over time, depending on when
       notice is given; accordingly, we pay 10% of claims asserted in the first
       year, 20% in the second year, 30% in the third year, 40% in the fourth
       year, 50%

                                        21


       in the fifth year, 60% in the sixth year, 75% in the seventh year, 90% in
       the eighth year, and 100% of claims afterward.

     The indemnity obligations of dmc(2) are also subject to various conditions
designed to exclude payment for work not required by applicable environmental
laws and to avoid double recovery. For example, our claims may be reduced to the
extent such claims have been provided for through a specific reserve in the
dmc(2) balance sheet, or to the extent we have received payments from a third
party or a tax benefit.

     Contingent Liabilities.  Degussa AG has agreed to indemnify us for various
claims brought by any third party for any obligation of dmc(2) or Degussa AG
created prior to the date the businesses of dmc(2) were separated from Degussa
AG and transferred to dmc(2). In addition, dmc(2) has agreed to indemnify us for
any losses arising from claims relating to the National Socialist Era and World
War II, including claims in connection with formal forced labor.

POST-CLOSING ADJUSTMENT

     The purchase price will be adjusted by any difference between the amount of
net debt (debt less cash) of dmc(2) on December 31, 2000 compared to the net
debt of dmc(2) on June 30, 2001. The purchase price is subject to further
adjustment based on changes in the net working capital of dmc(2) over the same
measurement period. Any amounts we receive as a result of a downward adjustment
of the purchase price may be used to reduce our debt under our credit
facilities.

OTHER PROVISIONS

     Guarantee and Non-Compete.  Degussa AG has guaranteed all of the
obligations of dmc(2) under the purchase agreement. Degussa AG has further
agreed not to engage or participate in a competing business for five years from
the closing date of the purchase. A competing business does not include the
dental alloy business or any publicly held entity provided Degussa AG holds less
than 25% of the voting shares of such entity. Degussa AG can acquire a business
that includes a competing business as long as the competing business represents
not more than 30% of the aggregate value of the acquired business and Degussa AG
sells the competing business within two years. If the competing business is not
sold, we have the right to purchase the competing business from Degussa AG.
Degussa AG also agreed not to solicit our employees for a period of two years
after the closing.

     Employees.  We are obligated to continue the employment of employees of
dmc(2) after the closing on terms and conditions that are at least as favorable
to them as the terms and conditions in effect prior to the closing.

     Maintenance of Partnership Structure and dmc(2).  Prior to the closing, the
German operations of dmc(2) were separated from Degussa AG and transferred to an
entity established as a partnership under German law. We purchased all
outstanding interests of this entity at closing. We are obligated to maintain
the entity as a German partnership until December 31, 2004. Degussa AG may not
dissolve or liquidate dmc(2) prior to December 31, 2005.

     Precious Metals Lease Facility.  We entered into a precious metals lease
facility with Degussa AG at closing. Under this facility, Degussa AG agreed to
lease to us a maximum of DM 650.0 million in gold, silver, platinum and
palladium. We may draw on this facility, which matures on August 10, 2002, if
and to the extent we are unable to otherwise lease precious metals. Any drawings
under this facility will be secured by liens on assets and real property located
in Germany.

                                   FINANCING

     The primary sources of financing for the acquisition of the dmc(2)
operations included our existing credit facilities (which were increased from
$658.0 million to $1,310.0 million) and $550.0 million in bridge notes. In
addition to funding the purchase price, approximately $139.2 million of the
proceeds from borrowings under the credit facilities and from the bridge notes
were used to reduce outstanding amounts under our existing revolving credit
facility and to pay fees and expenses incurred in connection with the
transaction.
                                        22


CREDIT FACILITIES

     The amended and restated credit facilities made available to us are
outlined below:



                     FACILITIES                               AMOUNT             MATURITY
                     ----------                               ------             --------
                                                      (DOLLARS IN MILLIONS)
                                                                         
Revolver............................................         $  325.0          April 1, 2006
Term Loan A.........................................            135.0          April 1, 2006
Term Loan B.........................................            500.0          April 1, 2007
Asset Sale Term Loan................................            350.0                 Repaid
                                                             --------
          TOTAL.....................................         $1,310.0


     At our option, the loans bear interest at either the lender's alternate
base rate or LIBOR plus an applicable margin. The initial LIBOR margin was 3.0%.
The applicable margin for the Revolver, Term Loan A and Term Loan B is subject
to performance-based adjustments. See "Description of the Credit Facilities."

     A portion of the Revolver has been made available in euros. Financial
covenants governing the credit facilities include minimum fixed charge coverage,
maximum leverage, minimum interest coverage and maximum debt to capitalization.
The credit facilities provide for a first priority perfected lien on all of our
domestic personal property assets and a first priority pledge of 100% of the
common stock of our domestic subsidiaries and of 65% of the common stock of our
first-tier foreign subsidiaries. The Asset Sale Term Loan was repaid in full
with proceeds from the sale of the Electronic Materials and Cerdec divisions of
dmc(2) to Ferro. Approximately $106.7 million of Term Loan A and approximately
$7.3 million of Term Loan B were repaid with proceeds from the sale of our
common stock on January 24, 2002.

BRIDGE NOTES

     In conjunction with the acquisition of the dmc(2) operations, we issued
$550.0 million of bridge notes. The bridge notes were unsecured obligations and
ranked subordinate to the credit facilities. We used $173.0 million of the
proceeds from the sale of the dmc(2) divisions to Ferro to repay a portion of
the outstanding bridge notes, and we used the proceeds from the original notes
offering to repay the remaining outstanding portion of the bridge notes.

                          SALE OF BUSINESSES TO FERRO

     On September 7, 2001, we sold the Electronic Materials and Cerdec divisions
of dmc(2) to Ferro Corporation for approximately $525.5 million in cash, subject
to adjustments. The following is a summary of the material terms of the heads of
agreement between OMG and Ferro, dated April 23, 2001 and the purchase agreement
between OMG and Ferro, dated as of August 31, 2001, relating to the sale and
purchase of these businesses. The following summary may not describe all of the
terms of the heads of agreement and the purchase agreement that may be important
to you.

RIGHTS AND OBLIGATIONS

     We agreed in general to share with Ferro our rights and obligations under
the purchase agreement with Degussa AG to the extent applicable to the
businesses sold to Ferro. Ferro similarly agreed to comply with any restrictions
or limitations imposed by that purchase agreement as regards the businesses sold
to Ferro. At Ferro's request, we will enforce our rights or secure the benefits
under the purchase agreement with Degussa AG with respect to the businesses sold
to Ferro. Ferro agreed to reimburse us for expenses incurred by us in doing so
and to indemnify us for claims relating to these businesses prior to the sale of
such businesses to Ferro.

                                        23


PURCHASE PRICE ADJUSTMENT

     The purchase price for the businesses sold to Ferro will be adjusted to
reflect changes in net working capital on December 31, 2000 compared to August
31, 2001 and for net debt and cash as of August 31, 2001. In addition, the
purchase price paid by Ferro included an amount reflecting a portion of the
investment banking fees and other costs paid by us for this transaction.

OTHER PROVISIONS

     No-Hire.  We agreed not to hire any employees transferred with the
businesses sold to Ferro for a period of two years from the transfer date. Ferro
agreed not to hire any employees of the dmc(2) businesses retained by us for a
period of two years from the transfer date.

     Non-Compete.  We agreed not to develop, produce, market or sell products or
services substantially similar to the products or services sold or provided by
the dmc(2) businesses transferred to Ferro for a period of five years from the
closing date of the purchase. Ferro also agreed not to develop, produce, market
or sell products or services substantially similar to the products or services
sold or provided by the dmc(2) businesses retained by us for the same period.

     Shared Services.  For a period of time after the closing date, we will
share some plants and facilities with Ferro. We entered into service agreements
with Ferro for the facilities located in South Plainfield, New Jersey and Hanau,
Germany. Under these agreements, each of us has agreed to provide the other with
specific services necessary for its respective operations at those facilities.

                                        24


                                USE OF PROCEEDS

     We will not receive any proceeds from the exchange offer. In consideration
for issuing the exchange notes, we will receive in exchange original notes of
like principal amount, the terms of which are identical in all material respects
to the exchange notes. The original notes surrendered in exchange for exchange
notes will be retired and canceled. Accordingly, issuance of the exchange notes
will not result in any increase in our indebtedness. We have agreed to bear the
expenses of the exchange offer. No underwriter is being used in connection with
the exchange offer.

     On December 12, 2001, we issued and sold the original notes. We used the
net proceeds from that offering, which after discounts to the initial purchasers
and other transaction fees and expenses paid by us, approximated $389.0 million,
to repay our remaining outstanding bridge notes and to repay a portion of the
outstanding indebtedness under our credit facilities. The maturity date of the
bridge notes was May 10, 2002, and the bridge notes bore interest at an annual
rate of 10.5% initially, which increased to 11.0% on November 10, 2001. The net
proceeds from the bridge notes were used to pay a portion of the purchase price
for our acquisition of the operations of dmc(2).

                                 CAPITALIZATION

     The following table sets forth our capitalization as of December 31, 2001,
on an actual basis and as adjusted to give effect to the offering of common
stock completed on January 24, 2002 and the application of the net proceeds of
that offering to repay outstanding debt under our credit facilities. The table
should be read in conjunction with "Use of Proceeds," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and our
consolidated financial statements and notes included elsewhere in this
prospectus. Stockholders' Equity does not include shares of common stock
issuable pursuant to outstanding options.



                                                              AS OF DECEMBER 31, 2001
                                                              -----------------------
                                                               ACTUAL     AS ADJUSTED
                                                               ------     -----------
                                                               (DOLLARS IN MILLIONS)
                                                                    
Cash and Cash Equivalents...................................  $   78.2     $   78.2
                                                              ========     ========
Debt:
     Revolving Credit Facility..............................  $  294.4     $  182.7
     Term Loan A............................................     127.2         20.5
     Term Loan B............................................     499.1        491.8
     Senior Subordinated Notes..............................     400.0        400.0
                                                              --------     --------
       Total Debt...........................................   1,320.7      1,095.0
                                                              --------     --------
Stockholders' Equity........................................     569.5        795.2
                                                              --------     --------
Total Capitalization........................................  $1,890.2     $1,890.2
                                                              ========     ========


                                        25


                       SELECTED HISTORICAL FINANCIAL DATA

     The following table sets forth our selected historical financial data for
each of the five years in the period ended December 31, 2001. We derived our
selected historical financial data for the years ended December 31, 1999, 2000
and 2001 from our audited consolidated financial statements for the years ended
December 31, 1999, 2000 and 2001 included elsewhere in this prospectus. We
derived our selected historical financial data for the years ended December 31,
1997 and 1998 from our audited consolidated financial statements for the years
ended December 31, 1997 and 1998 that are not included in this prospectus. The
selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our audited consolidated financial statements (and the related notes) included
elsewhere in this prospectus.



                                                                 YEAR ENDED DECEMBER 31,
                                                     ------------------------------------------------
                                                      1997     1998      1999       2000       2001
                                                     ------   ------   --------   --------   --------
                                                           (DOLLARS IN MILLIONS, EXCEPT RATIOS)
                                                                              
INCOME STATEMENT DATA:
Net sales..........................................  $487.3   $521.2   $  507.0   $  887.7   $2,367.4
Cost of products sold..............................   369.9    376.3      347.5      673.9    2,032.8
                                                     ------   ------   --------   --------   --------
Gross profit.......................................   117.4    144.9      159.5      213.8      334.6
Selling, general and administrative expenses.......    46.8     58.0       60.8       75.4      165.4
                                                     ------   ------   --------   --------   --------
Income from operations.............................    70.6     86.9       98.7      138.4      169.2
Interest expense, net..............................   (13.3)   (15.4)     (18.9)     (37.4)     (57.1)
Other income (expense), net........................     0.7     (0.2)       0.5       (1.1)      (4.2)
                                                     ------   ------   --------   --------   --------
Income before income taxes and extraordinary
  item.............................................    58.0     71.3       80.3       99.9      107.9
Income taxes.......................................    19.6     22.9       24.5       28.4       27.7
                                                     ------   ------   --------   --------   --------
Income before extraordinary item...................    38.4     48.4       55.8       71.5       80.2
Extraordinary item.................................      --       --         --         --       (4.6)
                                                     ------   ------   --------   --------   --------
Net income.........................................  $ 38.4   $ 48.4   $   55.8   $   71.5   $   75.6
                                                     ======   ======   ========   ========   ========
RATIO OF EARNINGS TO FIXED CHARGES (1).............     5.3x     5.0x       3.8x       2.7x       2.3x
BALANCE SHEET DATA:
Cash and cash equivalents..........................  $ 13.2   $  7.8   $    9.4   $   13.5   $   78.2
Working capital, net (2)...........................   210.8    294.9      359.1      411.8      971.3
Property, plant and equipment, net.................   150.2    245.3      318.8      485.4      732.0
Total assets.......................................   601.1    870.7    1,012.5    1,357.5    2,541.2
Total debt.........................................   170.6    312.1      384.9      571.9    1,320.7
Stockholders' equity...............................   301.2    404.1      449.2      506.1      569.5
OTHER DATA:
EBITDA (3).........................................  $ 92.5   $112.1   $  126.1   $  176.6   $  228.5
Cash flow from operations..........................    29.9     (1.1)      12.4       81.0       58.3
Depreciation and amortization......................    21.2     25.4       26.9       39.3       63.5
Capital expenditures...............................    34.8     91.9       70.2       55.0      108.5


---------------

(1) The ratio of earnings to fixed charges is computed by dividing earnings
    available for fixed charges by fixed charges. Earnings available for fixed
    charges consist of earnings before income taxes, minority interests, equity
    income and extraordinary item plus fixed charges, less capitalized interest.
    Fixed charges consist of interest, whether expensed or capitalized,
    amortized capitalized expenses related to indebtedness, and the portion of
    operating lease rental expense that represents the interest factor.

(2) Working capital, net is defined as current assets excluding cash and cash
    equivalents minus current liabilities excluding short-term debt and the
    current portion of long-term debt.

(3) EBITDA is defined as net income before interest, taxes, extraordinary item,
    depreciation and amortization. EBITDA is not a measure of operating income,
    operating performance or liquidity under GAAP. We include EBITDA data
    because we understand these data are used by some investors to determine our
    historical ability to service our indebtedness. Nevertheless, this measure
    should not be considered in isolation or as a substitute for operating
    income (as determined in accordance with GAAP) as an indicator of our
    operating performance, or to cash flows from operating activities (as
    determined in accordance with GAAP) as a measure of liquidity. In addition,
    it should be noted that companies calculate EBITDA differently and therefore
    EBITDA as presented for us may not be comparable to EBITDA reported by other
    companies. See the audited consolidated financial statements and related
    notes included elsewhere in this prospectus for the cash used in and
    provided by operating activities.

                                        26


                               THE EXCHANGE OFFER

TERMS OF THE EXCHANGE OFFER

     As of the date of this prospectus, $400.0 million aggregate principal
amount of the original notes is outstanding. This prospectus, together with the
letter of transmittal, is being sent to all holders of original notes known to
us. Our obligation to accept original notes for exchange in the exchange offer
is subject to the conditions described below under "-- Conditions to the
Exchange Offer."

     Upon the terms and conditions described in this prospectus and in the
accompanying letter of transmittal, we will accept for exchange original notes
that are properly tendered on or before the expiration date and not withdrawn as
permitted below. For each original note accepted for exchange, the holder of the
original note will receive an exchange note having a principal amount equal to
that of the surrendered original note. Original notes tendered in the exchange
offer must be in denominations of the principal amount of $1,000 and any
integral multiple of $1,000.

     As used in this prospectus, the term "expiration date" means 5:00 p.m., New
York City time, on May 23, 2002. However, if we, in our sole discretion, extend
the period of time for which the exchange offer is open, the term "expiration
date" means the latest time and date to which we extend the exchange offer. We
reserve the right to extend the period of time during which the exchange offer
is open. If the exchange offer period is extended, we would give notice of the
extension to the holders of original notes by means of a press release or other
public announcement no later than 9:00 a.m., New York City time, on the next
business day following the previously scheduled expiration date. During any
extension period, all original notes previously tendered will remain subject to
the exchange offer and may be accepted for exchange by us. Any original notes
not accepted for exchange will be returned to the tendering holder after the
expiration or termination of the exchange offer.

     We reserve the right to amend or terminate the exchange offer, and not to
accept for exchange any original notes not previously accepted for exchange,
upon the occurrence of any of the conditions of the exchange offer specified
below under "-- Conditions to the Exchange Offer." We will give notice of any
extension, amendment, non-acceptance or termination to the holders of the
original notes as described above. If we materially change the terms of the
exchange offer, we will resolicit tenders of the original notes and provide
notice to the noteholders. If the change is made less than five business days
before the expiration of the exchange offer, we will extend the offer so that
the noteholders have at least five business days to tender or withdraw.

     Our acceptance of the tender of original notes by a tendering holder will
form a binding agreement upon the terms and subject to the conditions provided
in this prospectus and in the accompanying letter of transmittal.

PROCEDURES FOR TENDERING

     Except as described below, a tendering holder must, on or prior to the
expiration date:

     - transmit a properly completed and duly executed letter of transmittal,
       including all other documents required by the letter of transmittal, to
       The Bank of New York at the address listed below under the heading
       "-- Exchange Agent"; or

     - if original notes are tendered in accordance with the book-entry
       procedures listed below, the tendering holder must transmit an agent's
       message to the exchange agent at the address listed below under the
       heading "-- Exchange Agent."

     In addition:

     - the exchange agent must receive, on or before the expiration date,
       certificates for the original notes or a timely confirmation of
       book-entry transfer of the original notes into the exchange agent's
       account at the Depository Trust Company, the book-entry transfer
       facility; or

                                        27


     - the holder must comply with the guaranteed delivery procedures described
       below.

     The Depository Trust Company will be referred to as DTC in this prospectus.

     The term "agent's message" means a message, transmitted to DTC and received
by the exchange agent and forming a part of a book-entry transfer, that states
that DTC has received an express acknowledgment that the tendering holder agrees
to be bound by the letter of transmittal and that we may enforce the letter of
transmittal against this holder.

     The method of delivery of original notes, letters of transmittal and all
other required documents is at your election and risk. In all cases, you should
allow sufficient time to assure timely delivery to the exchange agent. You
should not send any letter of transmittal, original notes or other related
documentation to us.

     If you are a beneficial owner whose original notes are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee, and
wish to tender original notes, you should promptly instruct the registered
holder to tender on your behalf. Any registered holder that is a participant in
DTC's book-entry transfer facility system may make book-entry delivery of the
original notes by causing DTC to transfer the original notes into the exchange
agent's account.

     Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed unless the original notes surrendered for exchange are tendered:

     - by a registered holder of the original notes who has not completed the
       box entitled "Special Issuance Instructions" or "Special Delivery
       Instructions" on the letter of transmittal, or

     - for the account of an "eligible institution."

     If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantees must be by an "eligible institution."
An "eligible institution" is a financial institution -- including most banks,
savings and loan associations and brokerage houses -- that is a participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.

     We will determine in our sole discretion all questions as to the validity,
form and eligibility of original notes tendered for exchange. This discretion
extends to the determination of all questions concerning the timing of receipts
and acceptance of tenders. These determinations will be final and binding.

     We reserve the right to reject any particular original note not properly
tendered or which acceptance of might, in our judgment or our counsel's
judgment, be unlawful. We also reserve the right to waive any defects or
irregularities or conditions of the exchange offer as to any particular original
note either before or after the expiration date, including the right to waive
the ineligibility of any tendering holder. Our interpretation of the terms and
conditions of the exchange offer as to any particular original note either
before or after the expiration date, including the letter of transmittal and the
instructions to the letter of transmittal, shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of original notes must be cured within a reasonable period of time. Neither we,
the exchange agent nor any other person will be under any duty to give
notification of any defect or irregularity in any tender of original notes. Nor
will we, the exchange agent or any other person incur any liability for failing
to give notification of any defect or irregularity.

     If the letter of transmittal is signed by a person other than the
registered holder of original notes, the letter of transmittal must be
accompanied by a written instrument of transfer or exchange in satisfactory form
duly executed by the registered holder with the signature guaranteed by an
eligible institution. The original notes must be endorsed or accompanied by
appropriate powers of attorney. In either case, the original notes must be
signed exactly as the name of any registered holder appears on the original
notes.

     If the letter of transmittal or any original notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, these persons should so indicate when signing. Unless waived by us,
proper evidence satisfactory to us of their authority to so act must be
submitted.
                                        28


     By tendering, each holder will represent to us that, among other things,

     - the exchange notes are being acquired in the ordinary course of business
       of the person receiving the exchange notes, whether or not that person is
       the holder, and

     - neither the holder nor the other person has any arrangement or
       understanding with any person to participate in the distribution of the
       exchange notes.

     In the case of a holder that is not a broker-dealer, that holder, by
tendering, will also represent to us that the holder is not engaged in and does
not intend to engage in a distribution of the exchange notes.

     If any holder or other person is an "affiliate" of ours, as defined under
Rule 405 of the Securities Act, or is engaged in, or intends to engage in, or
has an arrangement or understanding with any person to participate in, a
distribution of the exchange notes, that holder or other person cannot rely on
the applicable interpretations of the staff of the SEC and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.

     Each broker-dealer that receives exchange notes for its own account in
exchange for original notes, where the original notes were acquired by it as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus that meets the requirements of the Securities
Act in connection with any resale of the exchange notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. See "Plan of Distribution."

ACCEPTANCE OF ORIGINAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES

     Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all original notes properly
tendered and not withdrawn. We will issue the exchange notes promptly after
acceptance of the original notes. See "-- Conditions to the Exchange Offer"
below. For purposes of the exchange offer, we will deemed to have accepted
properly tendered original notes for exchange when, as and if we have given oral
or written notice to the exchange agent, with prompt written confirmation of any
oral notice.

     The exchange notes will bear interest from the most recent date to which
interest has been paid on the original notes, or if no interest has been paid on
the original notes, from the date of issue of the original notes. Holders whose
original notes are accepted for exchange will receive interest, as interest on
the exchange notes, accrued from the date of issue of the original notes and
will be deemed to have waived the right to receive interest accrued on the
original notes.

     Unaccepted or non-exchanged original notes will be returned without expense
to the tendering holder of the original notes. In the case of original notes
tendered by book-entry transfer in accordance with the book-entry procedures
described below, the non-exchanged original notes will be credited to an account
maintained with the book-entry transfer facility as promptly as practicable
after the expiration or termination of the exchange offer.

BOOK-ENTRY TRANSFER

     The exchange agent will make a request to establish an account for the
original notes at DTC for purposes of the exchange offer promptly after
commencement of the exchange offer. Any financial institution that is a
participant in DTC's systems must make book-entry delivery of original notes by
causing DTC to transfer those original notes into the exchange agent's account
at DTC in accordance with DTC's procedure for transfer. The participant should
transmit its acceptance to DTC on or prior to the expiration date or comply with
the guaranteed delivery procedures described below. DTC will verify this
acceptance, execute a book-entry transfer of the tendered original notes into
the exchange agent's account at DTC and then send to the exchange agent
confirmation of the book-entry transfer. The confirmation of the book-entry
transfer will include an agent's message confirming that DTC has received an
express acknowledgment from the participant that the participant has received
and agrees to be bound by the letter of transmittal and that we

                                        29


may enforce the letter of transmittal against the participant. Delivery of
exchange notes issued in the exchange offer may be effected through book-entry
transfer at DTC. However, the letter of transmittal or facsimile of it or an
agent's message, with any required signature guarantees and any other required
documents, must:

     (1) be transmitted to and received by the exchange agent at the address
         listed below under "-- Exchange Agent" on or prior to the expiration
         date; or

     (2) comply with the guaranteed delivery procedures described below.

GUARANTEED DELIVERY PROCEDURES

     If a registered holder of original notes desires to tender the original
notes, and the original notes are not immediately available, or time will not
permit the holder's original notes or other required documents to reach the
exchange agent before the expiration date, or the procedure for book-entry
transfer described above cannot be completed on a timely basis, a tender may
nonetheless be made if:

     - the tender is made through an eligible institution;

     - prior to the expiration date, the exchange agent received from an
       eligible institution a notice of guaranteed delivery, substantially in
       the form provided by us, by facsimile transmission, mail or hand
       delivery,

        (1) stating the name and address of the holder of original notes and the
            amount of original notes tendered,

        (2) stating that the tender is being made and

        (3) guaranteeing that within three New York Stock Exchange trading days
            after the expiration date, the certificates for all physically
            tendered original notes, in proper form for transfer, or a book-
            entry confirmation, as the case may be, together with a properly
            completed and duly executed letter of transmittal, or a facsimile of
            the letter of transmittal and any other documents required by the
            letter of transmittal, will be deposited by the eligible institution
            with the exchange agent; and

     - the certificates for all physically tendered original notes, in proper
       form for transfer, or a book-entry confirmation, as the case may be, a
       properly completed and duly executed letter of transmittal, or a
       facsimile of the letter of transmittal and all other documents required
       by the letter of transmittal, are received by the exchange agent within
       three New York Stock Exchange trading days after the expiration date.

WITHDRAWAL RIGHTS

     Tenders of original notes may be withdrawn at any time before 5:00 p.m.,
New York City time, on the expiration date.

     For a withdrawal to be effective, the exchange agent must receive a written
notice of withdrawal at the address or, in the case of eligible institutions, at
the facsimile number, indicated below under "-- Exchange Agent" before 5:00
p.m., New York City time, on the expiration date. Any notice of withdrawal must:

     - specify the name of the person, referred to as the depositor, having
       tendered the original notes to be withdrawn;

     - identify the original notes to be withdrawn, including the certificate
       number or numbers and principal amount of the original notes;

     - contain a statement that the holder is withdrawing its election to have
       the original notes exchanged;

     - be signed by the holder in the same manner as the original signature on
       the letter of transmittal by which the original notes were tendered,
       including any required signature guarantees, or be

                                        30


       accompanied by documents of transfer to have the trustee with respect to
       the original notes register the transfer of the original notes in the
       name of the person withdrawing the tender; and

     - specify the name in which the original notes are registered, if different
       from that of the depositor.

     If certificates for original notes have been delivered or otherwise
identified to the exchange agent, then prior to the release of these
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless this holder is an
eligible institution. If original notes have been tendered in accordance with
the procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at the book-entry transfer
facility to be credited with the withdrawn original notes. We will determine all
questions as to the validity, form and eligibility, including time of receipt,
of notices of withdrawal. Any original notes so withdrawn will be deemed not to
have been validly tendered for exchange. No exchange notes will be issued unless
the original notes so withdrawn are validly re-tendered. Properly withdrawn
original notes may be re-tendered by following the procedures described under
"-- Procedures for Tendering" above at any time on or before 5:00 p.m., New York
City time, on the expiration date.

CONDITIONS TO THE EXCHANGE OFFER

     Notwithstanding any other provision of the exchange offer, we shall not be
required to accept original notes for exchange, or to issue exchange notes in
exchange for any original notes, and may terminate or amend the exchange offer,
if at any time before the acceptance of the original notes for exchange or the
issuance of the exchange notes for the original notes:

     - there has been instituted any proceeding seeking to restrain or prohibit
       the making or completion of the exchange offer, or assessing or seeking
       any damages as a result of the exchange offer, or resulting in a material
       delay in our ability to accept for exchange or exchange some or all of
       the original notes in the exchange offer; or

     - any action shall have been taken, proposed or threatened by any
       governmental authority, domestic or foreign, that in our sole judgment
       might directly or indirectly result in any of such consequences or, in
       our sole judgment, might result in the holders of exchange notes having
       obligations with respect to resales and transfers of exchange notes which
       are greater than those described in the interpretations of the SEC staff
       referred to in this prospectus, or would otherwise make it inadvisable to
       proceed with the exchange offer; or

     - there shall have occurred:

        - any general suspension of or general limitation on prices for, or
          trading in, securities on any national securities exchange or in the
          over-the-counter market; or

        - any limitation by a governmental authority which may adversely affect
          our ability to complete the transactions contemplated by the exchange
          offer; or

        - a declaration of a banking moratorium or any suspension of payments in
          respect of banks in the United States or any limitation by any
          governmental agency or authority which adversely affects the extension
          of credit; or

        - a commencement of a war, armed hostilities or other similar
          international calamity directly or indirectly involving the United
          States, or, in the case of any of the preceding events existing at the
          time of the commencement of the exchange offer, a material
          acceleration or worsening of these calamities; or

     - any change, or any development involving a prospective change, shall have
       occurred or be threatened in our business, financial condition,
       operations or prospects and those of our subsidiaries taken as a whole
       that is or may be adverse to us, or we shall have become aware of facts
       that have or may have an adverse impact on the value of the original
       notes or the exchange notes; which in our sole

                                        31

     judgment in any case makes it inadvisable to proceed with the exchange
     offer and/or with such acceptance for exchange or with such exchange.

     These conditions to the exchange offer are to our sole benefit and we may
assert them regardless of the circumstances giving rise to any of these
conditions, or we may waive them in whole or in part in our sole discretion. If
we do so, the exchange offer will remain open for at least five business days
following any waiver of the preceding conditions. Our failure at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right.

     In addition, we will not accept for exchange any original notes tendered,
and no exchange notes will be issued in exchange for any original notes, if at
that time any stop order is threatened or in effect relating to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act of 1939.

EXCHANGE AGENT

     We have appointed The Bank of New York as the exchange agent for the
exchange offer. You should direct all executed letters of transmittal to the
exchange agent at the address indicated below. You should direct questions and
requests for assistance, requests for additional copies of this prospectus or of
the letter of transmittal and requests for notices of guaranteed delivery to the
exchange agent addressed as follows:

                  Delivery To: The Bank of New York, Exchange Agent


                                            
          By Hand Before 4:30 p.m.:                  By Registered or Certified Mail:
            The Bank of New York                           The Bank of New York
               15 Broad Street                                15 Broad Street
       Securities Window Street Level                 Securities Window Street Level
             New York, NY 10007                             New York, NY 10007
                                                        Attention: William Buckley,
                                                         Reorganization Department

     By Hand or Overnight Delivery after                 By Facsimile Transmission
      4:30 p.m. on the Expiration Date:           (for Eligible Institutions only): (212)
            The Bank of New York                                 235-2261
               15 Broad Street                                      --
       Securities Window Street Level                   Attention: Customer Service
             New York, NY 10007                    Confirm by Telephone: (800) 548-5075
    For Information Call: (212) 235-2352


     If you deliver the letter of transmittal to an address other than the
address indicated above or transmit instructions via facsimile other than to the
facsimile number indicated, then your delivery or transmission will not
constitute a valid delivery of the letter of transmittal.

FEES AND EXPENSES

     We will not make any payment to brokers, dealers, or others for soliciting
acceptances of the exchange offer. The expenses to be incurred in connection
with the exchange offer will be paid by us. These expenses will include
reasonable and customary fees and out-of-pocket expenses of the exchange agent
and reasonable out-of-pocket expenses incurred by brokerage houses and other
fiduciaries in forwarding materials to beneficial holders in connection with the
exchange offer.

ACCOUNTING TREATMENT

     We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize the expense of the exchange
offer over the term of the exchange notes under generally accepted accounting
principles.
                                        32


TRANSFER TAXES

     Holders who tender their original notes for exchange will not be obligated
to pay any related transfer taxes, except that holders who instruct us to
register exchange notes in the name of, or request that original notes not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer taxes.

CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE ORIGINAL NOTES

     Holders of original notes who do not exchange their original notes for
exchange notes in the exchange offer will continue to be subject to the
provisions in the indenture regarding transfer and exchange of the original
notes and the restrictions on transfer of the original notes as described in the
legend on the original notes. In general, the original notes may not be offered
or sold, unless registered under the Securities Act, except under an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We do not currently anticipate that we will register
original notes under the Securities Act.

     Based on interpretations by the staff of the SEC, as described in no-action
letters issued to third parties, we believe that exchange notes issued in the
exchange offer in exchange for original notes may be offered for resale, resold
or otherwise transferred by holders of the original notes, other than any holder
which is an "affiliate" of ours within the meaning of Rule 405 under the
Securities Act, without compliance with the registration and prospectus delivery
provisions of the Securities Act, as long as the exchange notes are acquired in
the ordinary course of the holders' business and the holders have no arrangement
or understanding with any person to participate in the distribution of the
exchange notes. However, the SEC has not considered this exchange offer in the
context of a no-action letter. We cannot assure you that the staff of the SEC
would make a similar determination with respect to this exchange offer as in the
other circumstances.

     Each holder, other than a broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a distribution of exchange notes
and has no arrangement or understanding to participate in a distribution of
exchange notes. If any holder is an affiliate of ours, is engaged in or intends
to engage in or has any arrangement or understanding with any person to
participate in the distribution of the exchange notes to be acquired in the
exchange offer, that holder could not rely on the applicable interpretations of
the staff of the SEC and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.

     Each broker-dealer that receives exchange notes for its own account in
exchange for original notes must acknowledge that the original notes were
acquired by the broker-dealer as a result of market-making activities or other
trading activities and that it will comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale of the
exchange notes. Furthermore, any broker-dealer that acquired any of its original
notes directly from us:

     - may not rely on the applicable interpretations of the staff of the SEC
       contained in Exxon Capital Holdings Corp., SEC no-action letter (May 13,
       1988), Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991)
       and Shearman & Sterling, SEC no-action letter (July 2, 1993) and

     - must also be named as a selling noteholder in connection with the
       registration and prospectus delivery requirements of the Securities Act
       relating to any resale transaction.

     See "Plan of Distribution."

     In addition, to comply with state securities laws, the exchange notes may
not be offered or sold in any state unless they have been registered or
qualified for sale in such state or an exemption from registration or
qualification, with which there has been compliance, is available. The offer and
sale of the exchange notes to "qualified institutional buyers," as defined under
Rule 144A of the Securities Act, is generally exempt from registration or
qualification under the state securities laws. We currently do not intend to
register or qualify the sale of exchange notes in any state where an exemption
from registration or qualification is required and not available.

                                        33


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

     The following management's discussion and analysis of financial condition
and results of operations should be read in conjunction with our pro forma
financial information and our historical financial statements and the related
notes appearing elsewhere in this prospectus.

OVERVIEW

     We are a leading, vertically integrated international producer and marketer
of value-added, metal-based specialty chemicals and related materials. We apply
proprietary technology to a wide variety of raw material feedstocks to
manufacture, market and supply more than 625 different product offerings to more
than 1,700 customers in over 30 industries. Our products typically represent a
small portion of the customer's total manufacturing or processing costs and are
often essential ingredients for superior product performance. For the year ended
December 31, 2001, on a pro forma basis, our net sales were $5,687.6 million and
our EBITDA was $285.2 million.

     We believe we are the world's leading producer of cobalt-based specialty
chemicals and a leading producer of nickel-based specialty chemicals and
platinum group metal catalysts and products. During 2001, on a pro forma basis,
and excluding net sales of our Metal Management segment, we derived
approximately 66% of our net sales from customers in Europe, 24% from customers
in the Americas and 10% from customers in Asia-Pacific. We operate 35
manufacturing facilities worldwide, including 14 in the Americas, 11 in Europe,
8 in Asia-Pacific and 2 in Africa, and employ approximately 5,200 employees in
24 countries. Our business is conducted through three segments: Base Metal
Chemistry, Precious Metal Chemistry and Metal Management.

PRIMARY FACTORS AFFECTING OUR BUSINESS

     The primary factors that affect our results are:

     Economic conditions in the geographic regions in which we operate.  We have
operations in a variety of foreign countries. Economic conditions and growth
rates historically have varied in the geographic regions in which we operate and
may do so in the future.

     Raw materials availability.  The primary raw materials we use in
manufacturing products are cobalt, nickel, copper, gold, silver, platinum,
palladium and rhodium. Copper, gold and silver are worldwide commodities and are
generally available. We source our other raw materials from various countries in
which localized events or conditions could affect the supply or price of metals,
although historically we have not experienced shortages in these raw materials.
Our refining and metal separation capabilities that allow us to transform
lower-grade feedstocks into high-quality finished products are an important
aspect of our business.

     Metal price volatility.  The cost of our raw materials fluctuates due to
actual or perceived changes in supply and demand. Generally, we are able to pass
through to our customers increases or decreases in raw material prices by
increasing or decreasing, respectively, the prices of our products or by
invoicing the customer directly for the cost of the raw material.

     Effects of currency fluctuations.  Our worldwide results of operations are
subject to both currency transaction and translation risk. We incur currency
transaction risk whenever we enter into either a purchase or sale transaction
using a currency other than the local currency of the entity. We incur currency
translation risk because we measure and record the financial condition and
results of operations for many of our subsidiaries in local currencies before
translating these results into U.S. dollars and including them in our historical
consolidated financial statements. Exchange rates between these currencies and
the U.S. dollar in recent years have fluctuated significantly and may do so in
the future. Although raw material purchases and product sales are predominantly
based on U.S. dollars or U.S. dollar quoted prices, we are exposed to
fluctuations in foreign currency exchange rates. Accordingly, fluctuations in
currency rates will affect our operating results and net income. Forward
contracts are utilized to partially hedge our exposures to fluctuating

                                        34


foreign exchange rates. Such transactions cannot, however, eliminate all of the
risks associated with currency fluctuations.

     New product development.  The continuing development of new products is an
integral focus of our business. New products developed in the last five years
accounted for more than one-fifth of our pro forma 2001 net sales (excluding net
sales of our Metal Management segment). We develop new products through
continued responsiveness to customer needs and through joint product development
programs.

     Acquisitions.  We have completed thirteen acquisitions since our initial
public offering in 1993, including our recent acquisition of the dmc(2)
operations. Most of these acquisitions have occurred during the last five years.
See "Business -- History."

ACQUISITION OF DMC(2) OPERATIONS AND SALE OF BUSINESSES TO FERRO

     On August 10, 2001, we acquired all of the operations of dmc(2) Degussa
Metals Catalysts Cerdec AG from Degussa AG for E1,200.0 million, or
approximately $1,072.0 million based on the exchange rate at closing. dmc(2) was
a worldwide provider of metal-based functional materials for a wide variety of
high-growth end markets and was a leading producer of PGM catalysts and
products. On September 7, 2001, we sold the Electronic Materials and Cerdec
divisions of dmc(2) to Ferro Corporation for approximately $525.5 million. The
acquisition of the dmc(2) operations and the subsequent divestiture of dmc(2)
businesses to Ferro were recorded using the purchase method of accounting.

                    RESULTS OF OPERATIONS -- OMG HISTORICAL

     Set forth below is summary consolidated information for the years ended
December 31, 1999, 2000 and 2001.



                                                                YEAR ENDED DECEMBER 31,
                                                              ----------------------------
                                                               1999      2000       2001
                                                              ------    ------    --------
                                                                         
INCOME STATEMENT DATA: (DOLLARS IN MILLIONS)
Net sales...................................................  $507.0    $887.7    $2,367.4
Gross profit................................................   159.5     213.8       334.6
Selling, general and administrative expenses................    60.8      75.4       165.4
                                                              ------    ------    --------
Income from operations......................................    98.7     138.4       169.2
Other expense - net.........................................   (18.4)    (38.5)      (57.3)
Income taxes................................................    24.5      28.4        27.7
Minority interests and equity income - net..................      --        --        (4.0)
                                                              ------    ------    --------
Income before extraordinary item............................    55.8      71.5        80.2
Extraordinary item..........................................      --        --        (4.6)
                                                              ------    ------    --------
Net income..................................................  $ 55.8    $ 71.5    $   75.6
                                                              ======    ======    ========


2001 COMPARED TO 2000

     The year 2001 was a transition year for us given that in August we acquired
dmc(2), a substantially larger company than us in terms of sales, facilities,
and personnel. The strong performance of dmc(2)'s auto catalyst and metal
management businesses, particularly in Europe, offset weakness in our base metal
business compared to 2000 in the second half of the year.

     Net sales for 2001 were $2,367.4 million compared to $887.7 million in 2000
primarily due to the acquisition of dmc(2), partially offset by a decline in our
base metal chemistry segment due to weak global economic conditions and lower
metal prices.

     Gross profit increased to $334.6 million in 2001, a 56.5% increase from
2000. The increase in gross profit was primarily the result of the acquisition
of dmc(2), partially offset by a decline in our base metal chemistry segment due
to weak global economic conditions and lower metal prices. Cost of products sold

                                        35


increased to 85.9% of net sales for 2001 from 75.9% of net sales in 2000 as a
result of the acquisition of dmc(2) with its high cost of precious metals
relative to revenues.

     Selling, general and administrative expenses increased by $90.0 million in
2001 from 2000, to $165.4 million, resulting primarily from the dmc(2)
acquisition and general increases in administrative costs due to our growth.
Selling, general and administrative expenses also included $1.8 million of
expense for closure costs of the Ezanville, France carboxylate plant.

     As a result of the above factors, EBITDA increased $51.9 million, or 29%,
from $176.6 million in 2000 to $228.5 million in 2001.

     Other expense - net was $57.3 million in 2001 compared to $38.5 million in
2000 due primarily to increased interest expense on higher outstanding
borrowings, primarily as a result of the dmc(2) acquisition.

     Income taxes as a percentage of income before income taxes decreased to
24.8% in 2001 from 28.5% in 2000. The lower effective tax rate was due primarily
to a tax holiday in Brazil and South Africa, related to businesses purchased as
part of the dmc(2) acquisition.

     The extraordinary item of $4.6 million in 2001 was the after-tax write-off
of fees due to the retirement in December 2001 of the bridge loan used to
finance the acquisition of dmc(2).

     Net income for 2001 was $75.6 million, an increase of $4.1 million from
2000, primarily due to the aforementioned factors.

     BASE METAL CHEMISTRY SEGMENT -- The base metal chemistry segment includes
the cobalt, nickel, copper and other base metal chemistry manufacturing
businesses, which comprised our historical businesses prior to the acquisition
of dmc(2).

     The following table shows market price fluctuations for the primary raw
materials we used in manufacturing our base metal chemistry segment products:



                                                      MARKET PRICE RANGES PER POUND
                                                         YEAR ENDED DECEMBER 31,
                                                   -----------------------------------
                                                         2000               2001
                                                   ----------------    ---------------
                                                           (DOLLARS PER POUND)
                                                                 
Cobalt -- 99.3% Grade............................  $10.68 to $15.25    $6.54 to $12.35
Nickel...........................................  $ 3.25 to $ 4.75    $2.04 to $ 3.35
Copper...........................................  $ 0.75 to $ 0.92    $0.61 to $ 0.85


     The following table shows the physical product volumes sold by the base
metal chemistry segment during each period:



                                                                            PERCENTAGE
                                                         2000      2001       CHANGE
                                                         -----     -----    ----------
                                                           (POUNDS IN
                                                            MILLIONS)

                                                                   
Organics...............................................   76.5      73.7       (3.7%)
Inorganics.............................................  105.6      98.1       (7.1%)
Powders................................................   46.9      42.0      (10.4%)
Metals.................................................   78.2     120.0       53.5%
                                                         -----     -----      ------
Total..................................................  307.2     333.8        8.7%
                                                         =====     =====      ======


     Operating profit for the year ended December 31, 2001 was $154.7 million
compared to $158.4 million in 2000. The negative effects of global economic
weakness across many industries and lower metal prices resulting in lower cobalt
refinery profits were partially offset by the full impact in 2001 of the results
of the Harjavalta nickel refinery, which was acquired in April 2000. Net sales
were $793.1 million, a decline of 10.7%, resulting principally from lower
prices, as cobalt, nickel and copper raw material market prices

                                        36


decreased compared to the same period in 2000. Physical sales volumes were up
overall by 8.7% due to the full-year impact of the Harjavalta nickel refinery
operations.

     PRECIOUS METAL CHEMISTRY SEGMENT -- The precious metal chemistry segment
includes the platinum group and other precious metals manufacturing businesses
that were acquired in the dmc(2) acquisition (the results of operations exclude
the businesses divested in September 2001). This segment develops, produces and
markets a variety of products, predominantly from platinum group metals such as
platinum, palladium, rhodium, gold and silver. Net sales, subsequent to the date
of the acquisition, were $584.9 million and were positively impacted by strong
sales of auto catalysts in Europe. Operating profit for that period was $28.1
million.

     METAL MANAGEMENT SEGMENT -- The metal management segment was acquired in
the dmc(2) acquisition. This segment acts as a metal sourcing operation for both
our precious metal chemistry segment and nonaffiliated customers, primarily
procuring platinum group metals such as platinum, palladium, rhodium, gold and
silver. The metal management segment centrally manages metal purchases and sales
by providing the necessary precious metal liquidity, financing and hedging for
our other businesses. Net sales, subsequent to the date of the acquisition, were
$989.4 million. Operating profit was $10.1 million for that period and was
positively effected by the higher volatility of precious metal pricing at
certain times during that period.

2000 COMPARED TO 1999

     Net sales for 2000 were $887.7 million, an increase of 75.1% compared to
1999. The increase in sales resulted principally through an increase in physical
volume of products sold, primarily due to the acquisition of Outokumpu Nickel
Oy.

     The following table shows market price fluctuations for the primary raw
materials we used in manufacturing our products:



                                                             MARKET PRICE RANGES
                                                           YEAR ENDED DECEMBER 31,
                                                      ----------------------------------
                                                           1999               2000
                                                      ---------------   ----------------
                                                             (DOLLARS PER POUND)
                                                                  
Cobalt - 99.3% Grade................................  $6.70 to $20.00   $10.68 to $15.25
Nickel..............................................  $1.81 to $ 3.81   $ 3.25 to $ 4.75
Copper..............................................  $0.61 to $ 0.85   $ 0.75 to $ 0.92


     The following table shows the physical product volumes sold during each
period:



                                                                              PERCENTAGE
                                                             1999     2000      CHANGE
                                                            ------   ------   ----------
                                                              (POUNDS IN
                                                               MILLIONS)
                                                                     
Organics..................................................    70.2     76.5       9.0%
Inorganics................................................    96.1    105.6       9.9%
Powders...................................................    43.1     46.9       8.8%
Metals....................................................      --     78.2        NA
                                                            ------   ------      ----
  Total...................................................   209.4    307.2      46.7%
                                                            ======   ======      ====


     We sold 307.2 million pounds of product during 2000, an increase of 46.7%
compared to 209.4 million pounds in 1999. The increase in physical volume of
organic products sold was primarily due to generally stronger cobalt catalyst
sales in all geographic regions and increased sales of plastic additives in
Asia-Pacific. In the inorganics category, the increase in physical volume of
products sold reflects increased volume of electronics chemicals, strong demand
for nickel catalyst products in the United States and higher sales of battery
grade chemicals in Asia-Pacific. The increase in physical volume of powder
products reflects increases in sales of cobalt powder to the Asia-Pacific
battery industry, and increased sales of cobalt extra fine, cobalt briquettes
and tungsten powders to the hard metal and alloy markets, offsetting a decrease
in copper powders used in automotive applications. The increase in physical
volume of metal products sold is a result of the acquisition of Outokumpu Nickel
Oy and the resulting sales of nickel briquettes and cathodes to the European
steel industry.

                                        37


     Gross profit increased to $213.8 million in 2000, a 34.0% increase from
1999. The increase in gross profit was primarily the result of the acquisition
of Outokumpu Nickel Oy and the increased volumes of product sold. Cost of
products sold increased to 75.9% of net sales for the year ended 2000 from 68.5%
of net sales in 1999 as a result of the acquisition of Outokumpu Nickel Oy with
lower value-added nickel products and higher sales of lower value-added cobalt
containing products.

     Selling, general and administrative expenses increased by $14.6 million in
2000 from 1999, resulting primarily from general increases in administrative
costs due to our growth and the Outokumpu Nickel Oy acquisition. Due to the
relatively low incremental selling, general and administrative expenses required
to support Outokumpu Nickel Oy and relatively high nickel prices, selling,
general and administrative expenses decreased to 8.5% of net sales in 2000
compared to 12.0% of net sales in 1999.

     As a result of the above factors, EBITDA increased $50.5 million, or 40.0%,
from $126.1 million in 1999 to $176.6 million in 2000.

     Other expense - net was $38.5 million in 2000 compared to $18.4 million in
1999 due primarily to increased interest expense on higher outstanding
borrowings, primarily as a result of the Outokumpu Nickel Oy acquisition, and
higher interest rates.

     Income taxes as a percentage of income before income taxes decreased to
28.4% in 2000 from 30.5% in 1999. The lower effective tax rate was due primarily
to a higher percentage of income earned in the relatively low statutory tax
country of Finland and a tax holiday in Malaysia.

     Net income for 2000 was $71.5 million, an increase of $15.7 million from
1999, primarily due to the aforementioned factors.

LIQUIDITY AND CAPITAL RESOURCES

     Our primary source of working capital is cash flow from operations. During
2001, our net working capital increased by approximately $624.8 million. This
increase was primarily the result of the acquisition of dmc(2). Capital
expenditures in 2001 were primarily related to capacity expansions at our base
metal chemistry facilities in Finland and at various precious metal chemistry
locations. These capital expenditures were funded through cash generated by
operations as well as additional borrowings under our revolving credit facility.

     In August 2001, our credit facilities were revised and increased to
$1,310.0 million, in conjunction with the acquisition of dmc(2). These credit
facilities were comprised of a $325.0 million revolving credit facility, a
$135.0 million five-year term loan, a $500.0 million six-year term loan and a
$350.0 million asset sale term loan, all bearing interest at a rate of LIBOR
plus 3%. In addition, we obtained a $550.0 million increasing-rate bridge loan,
initially bearing interest at a rate of 10.5%. The asset sale term loan and a
portion of the bridge loan were repaid from the proceeds of the sale of certain
dmc(2) related businesses in September 2001. In December 2001, we completed our
$400.0 million offering of 9 1/4% Senior Subordinated Notes due 2011. The net
proceeds were used to repay the remaining outstanding indebtedness under our
bridge loan and a portion of the outstanding indebtedness under our credit
facilities. In January 2002, we completed an offering of 4.025 million shares of
common stock. The $225.7 million of net proceeds was used to repay outstanding
indebtedness under our credit facilities.

     Our credit facilities include covenants which may require us to reduce our
debt in relation to total capital and in relation to earnings before interest,
taxes, depreciation and amortization. See "Description of the Credit
Facilities." We were in compliance with our debt covenants at December 31, 2001
and we believe that we will have sufficient cash generated by operations and
through our aforementioned common stock offering to meet future covenant
requirements. Cash generated by operations and through our credit facilities
should also be sufficient to provide for future working capital and capital
expenditure requirements and to pay quarterly dividends on our common stock,
subject to the discretion of our board of directors. Subject to several
limitations in our credit facilities, we may incur additional borrowings to
finance working capital and certain capital expenditures, including, without
limitation, the purchase of additional raw materials.

                                        38


     We enter into precious metal leases (primarily for gold and silver), which
are consignment inventory arrangements under which banks provide us with
precious metals for a specified period for which we pay a lease fee. We also
lease out metals under similar arrangements to customers. The amount of metal
leases in and metal leases out at December 31, 2001 were $276.1 million and
$110.7 million, respectively. Degussa AG has agreed to lease to us precious
metals up to an aggregate amount of approximately $297.0 million, until August
10, 2002, if we are otherwise unable to lease precious metals from other
sources. Since the acquisition, we have not leased any precious metals from
Degussa AG.

     We have ongoing capital expenditure programs to improve our processing
technology and plant and equipment, and to expand capacity to accommodate future
growth. We anticipate that capital spending, exclusive of acquisitions or joint
ventures, will approximate $88.0 million in 2002.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As a result of our global operating and financial activities, we are
exposed to changes in commodity prices, interest rates and foreign currency
exchange rates which may adversely affect our results of operations and
financial position. In seeking to minimize the risks and/or costs associated
with such activities, we manage exposures to changes in commodity prices,
interest rates and foreign currency exchange rates through our regular operating
and financial activities, which include the use of derivative instruments.

     The primary raw materials used in manufacturing our products are cobalt,
nickel, copper, platinum, palladium, rhodium, gold and silver. Our supply of
cobalt historically has been sourced primarily from the DRC, Australia, Finland
and Zambia. Nickel historically has been sourced primarily from Australia and
Brazil. Platinum group metals, including platinum, palladium and rhodium,
historically have been sourced from South Africa, where they are found in
primary deposits, and from Russia and Canada, where they are by-products of
copper and nickel mining. Copper, gold and silver are worldwide commodities and
generally available. Although we have never experienced a significant shortage
of raw materials, production problems and political and civil instability in
certain supplier countries may affect their supply and market price. We
currently do not anticipate any substantial interruption in our raw materials
supply that would have a material adverse effect on our operations. If a
substantial interruption should occur in supply from a primary source, there is
no assurance that we would be able to obtain as much from other sources as would
be necessary to satisfy our requirements or at prices comparable to our current
arrangements.

     We are exposed to risks of precious metals price fluctuations with respect
to our precious metal inventory and with respect to our precious metal trading
activities. Our precious metal inventories are partially protected from precious
metal price fluctuations by pricing agreements with customers or, if necessary,
by hedging through derivative financial instruments, such as forward or futures
contracts. All of our precious metal trading activities are carried out pursuant
to defined exposure limits set by management.

     We attempt to mitigate changes in prices and availability by maintaining
adequate inventories and long-term supply relationships with a variety of
producers. The cost of raw materials fluctuates due to both actual and perceived
changes in supply and demand. Generally, we are able to pass through to our
customers increases and decreases in raw material prices by increasing or
decreasing, respectively, the prices of our products. The degree of our
profitability principally depends on our ability to maintain the differential
between our product prices and product costs. Substantial, sustained reductions
in the price of raw materials also could result in our inventory being written
down to a lower market value.

     We are exposed to interest rate risk primarily through our borrowing
activities. We predominantly utilize U.S. dollar denomination borrowings to fund
our working capital and investment needs. The majority of our borrowings are in
variable rate instruments. We enter into interest rate swap agreements to
convert a portion of the variable-rate instruments to fixed-rate contracts
typically over a three-year period. There is an inherent refinancing risk for
borrowings as they mature and are renewed at current market rates. The extent of
this risk is not quantifiable or predictable because of the variability of
future interest rates and business financing requirements.

                                        39


     The following tables present principal cash flows and related
weighted-average interest rates by expected maturity dates of our long
term-debt.



                                                       EXPECTED MATURITY DATE
                         -----------------------------------------------------------------------------------
                                                                             THERE-                  FAIR
                          2002      2003      2004      2005       2006      AFTER      TOTAL       VALUE
                         -------   -------   -------   -------   --------   --------   --------   ----------
                                                       (DOLLARS IN THOUSANDS)
                                                                          
AS OF DECEMBER 31, 2001
Long-term debt,
  including current
  portion
  Fixed rate...........                                                     $400,000   $400,000    $400,000
  Average interest
    rate...............                                                         9.25%
  Variable rate........  $20,188   $26,938   $33,687   $40,438   $325,363   $474,081   $920,695    $920,695
  Average interest
    rate...............      5.1%      5.1%      5.1%      5.1%       5.4%       5.1%




                                                        EXPECTED MATURITY DATE
                          ----------------------------------------------------------------------------------
                                                                             THERE-                  FAIR
                           2001      2002      2003      2004      2005      AFTER      TOTAL       VALUE
                          -------   -------   -------   -------   -------   --------   --------   ----------
                                                        (DOLLARS IN THOUSANDS)
                                                                          
AS OF DECEMBER 31, 2000
Long-term debt,
  including current
  portion
  Fixed rate............  $   115   $    30   $    84   $   210   $   208   $    397   $  1,044    $  1,044
  Average interest
    rate................      2.1%      4.3%      2.2%      1.5%      1.5%       1.3%        --          --
  Variable rate.........  $20,750   $29,500   $39,500   $45,750   $13,250   $422,150   $570,900    $570,900
  Average interest
    rate................      8.8%      8.8%      8.8%      8.8%      8.8%       8.8%        --          --


     We have manufacturing and other facilities in the Americas, Europe,
Asia-Pacific and Africa, and we market our products worldwide. Although raw
material purchases and product sales are predominantly based on U.S. dollars or
U.S. dollar quoted prices, liabilities for non-U.S. operating expenses and
income taxes are denominated in local currencies. In addition, fluctuations in
exchange rates may affect product demand and may adversely affect the
profitability in U.S. dollars of products and services provided by us in foreign
markets where payment for our products and services is made in the local
currency. Accordingly, fluctuations in currency rates may affect our operating
results and net income. The acquisition of the operations of dmc(2) increased
our exposure to fluctuations in foreign currency exchange rates. In order to
partially hedge our balance sheet exposure to fluctuating rates, we enter into
forward contracts to purchase and sell various currencies. Such transactions
cannot, however, eliminate all of the risks associated with currency
fluctuations.

CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires our management to
make estimates and assumptions in certain circumstances that affect amounts
reported in the accompanying consolidated financial statements. In preparing
these financial statements, management has made their best estimates and
judgments of certain amounts included in the financial statements related to the
critical accounting policies described below. The application of these critical
accounting policies involves the exercise of judgment and use of assumptions as
to future uncertainties and, as a result, actual results could differ from these
estimates.

     Inventories -- Our inventories are principally stated at the lower of cost
or market and valued using the last-in, first-out (LIFO) method except for
precious metals trading inventory which is carried at the current monetary
value. We use the LIFO method to better match the price we currently pay for our
raw material metal with the selling prices we currently charge for our products.
The balance sheet amounts of inventory will reflect the quantities of metal in
inventory valued at metal prices paid for in the year LIFO was adopted and any
subsequent year in which there was an incremental increase in quantities. In
periods of sustained and significant raw material metal price declines, the
calculated LIFO amount may exceed the amount we could realize on sale. In this
case, we would record a lower of cost or market adjustment.

     Long-lived assets -- Long-lived assets are assessed for impairment when
operating profits for the related business indicate that the carrying value may
not be recoverable. We generally invest in long-lived assets to secure raw
material feedstocks, produce new products, or increase production capacity or
capability. Because

                                        40


market conditions may change, future operating profits may be difficult to
forecast. Furthermore, the assets and related businesses may be in different
stages of development. If we determined that the future operating profits from
these investments were not expected to exceed the carrying value of the
investments, we would record an impairment reserve.

     Income taxes -- Deferred income taxes are provided to recognize the effect
of temporary differences between financial and tax reporting. Deferred income
taxes are not provided for undistributed earnings of foreign consolidated
subsidiaries, to the extent such earnings are reinvested for an indefinite
period of time. We have significant operations outside the United States, where
most of our pre-tax earnings are derived, and in jurisdictions where the
statutory tax rate is lower than in the United States. We also have significant
cash requirements in the United States to pay interest and principal on
borrowings. As a result, significant tax and treasury planning and analysis of
future operations are necessary to determine the proper amounts of tax assets,
liabilities, and tax expense. Our tax assets, liabilities, and tax expense are
supported by our best estimates and assumptions of our global cash requirements,
planned dividend repatriations, and expectations of future earnings.

                                        41


                                    BUSINESS

HISTORY

     OMG was formed in 1991 through the merger of Mooney Chemicals, Inc.,
Kokkola Chemicals Oy and Vasset, S.A. Mooney Chemicals, Inc. (now known as OMG
Americas, Inc.), founded in 1946, was a family-owned specialty chemical company
and has been led by James P. Mooney, our current Chairman and Chief Executive
Officer, since the 1970's. Kokkola had been a wholly-owned subsidiary of
Outokumpu Oyj, producing primarily cobalt products since 1967. The strategy in
merging these businesses was to take advantage of the combined technical and
manufacturing strengths, niche market positions, high value and diverse product
ranges and low cost raw material sources to create an integrated specialty
chemical company offering high value-added chemicals and powders with advantages
in process capabilities and raw materials procurement.

     We grew primarily organically until early 1997, when we purchased SCM
Metals from U.S. Industries. SCM's annual sales of $94.0 million were
predominantly focused on specialty powders. This transaction extended our
product line in copper, iron and stainless steel products.

     In early 1998, we purchased Auric Fidelity and Dussek Campbell. Fidelity,
with annual sales of approximately $48.0 million, increased our exposure to the
electronics industry through its electroless nickel product line used in the
manufacturing of hard drives. The Dussek transaction provided geographic
expansion via its Canadian metal organics business. Total sales for Dussek in
1997 were approximately $12.0 million. In addition, in April 1998, we purchased
a specialized metal powder production technology from Dow Chemical.

     In April 2000, we acquired Outokumpu Nickel Oy, a nickel refinery located
in Harjavalta, Finland with annual production capacity of 53,000 tons per annum,
from Outokumpu Oyj. The Outokumpu Nickel Oy acquisition was complementary to our
previous business, adding to our nickel inorganics product portfolio and
expanding our raw materials vertical integration.

     In August 2001, we acquired all of the operations of dmc(2). dmc(2), a
worldwide provider of metal-based functional materials for a wide variety of
high-growth end markets, was one of the three largest producers of precious
metal containing catalysts and functional materials worldwide. As described
elsewhere in this prospectus, in September 2001, we sold the Electronic
Materials and Cerdec divisions of dmc(2) to Ferro Corporation.

     In December 2001, we acquired the metal organics business of Rhodia
Holdings Limited, including two manufacturing facilities in Bethlehem,
Pennsylvania and Manchester, England. This acquisition complements our existing
Base Metal Chemistry segment product offerings. Also in December 2001, we
acquired the mineral rights and chemical processing capabilities of Centaur
Mining and Exploration Ltd.'s Cawse operation in Western Australia. This will
provide us with approximately 8,000 tonnes per annum of nickel feedstock and
approximately 800 tonnes per annum of cobalt feedstock.

OVERVIEW

     We are a leading, vertically integrated international producer and marketer
of value-added, metal-based specialty chemicals and related materials. We apply
proprietary technology to a wide variety of raw material feedstocks to
manufacture, market and supply more than 625 different product offerings to more
than 1,700 customers in over 30 industries. Our products typically represent a
small portion of the customer's total manufacturing or processing costs and are
often essential ingredients for superior product performance. For the year ended
December 31, 2001, on a pro forma basis, our net sales were $5,687.6 million and
our EBITDA was $285.2 million.

     We believe we are the world's leading producer of cobalt-based specialty
chemicals and a leading producer of nickel-based specialty chemicals and
platinum group metal catalysts and products. During 2001, on a pro forma basis,
and excluding net sales of our Metal Management segment, we derived
approximately 66% of our net sales from customers in Europe, 24% from customers
in the Americas and 10% from

                                        42


customers in Asia-Pacific. We operate 35 manufacturing facilities worldwide,
including 14 in the Americas, 11 in Europe, 8 in Asia-Pacific and 2 in Africa,
and employ approximately 5,200 employees in 24 countries.

STRATEGY

     TARGET HIGH GROWTH APPLICATIONS AND VALUE-ADDED PRODUCTS.  We target
applications that we believe have high growth and high margin potential for our
products. For example, we have targeted the growing rechargeable battery and
nickel catalyst markets through our acquisition of a nickel refinery in
Harjavalta, Finland in April 2000. This acquisition has provided us with a solid
base from which to vertically integrate production of nickel chemicals and
powders. Other examples of value-added products used in targeted applications
include stainless steel powders for automotive pressed metal parts, cobalt salts
and powders for rechargeable batteries used in laptop computers and mobile
phones, PGM-based catalysts for membrane electrode assemblies and fuel
processing catalysts for fuel cells used in stationary and mobile applications.

     APPLY METAL TECHNOLOGY TO MEET CUSTOMER NEEDS AND DEVELOP NEW PRODUCTS.  We
are focused on increasing sales of value-added products through our emphasis on
research, technology and customer service. For example, we have increased our
sales of cobalt extra-fine powders and created new market opportunities in
tungsten powders by applying our recycling technology to the needs of our
customers in the hard metal tool industry. We also have developed several
products, such as electroless nickel-gold for printed circuit boards, through
continued responsiveness to customer needs and through joint product development
efforts.

     Through our acquisition of the dmc(2) operations, we have obtained leading
technology positions in the development of fuel cell components and automotive
catalysts. For example, the flexibility derived from advances in catalyst
technology has enabled us to significantly grow the North American sales of the
dmc(2) operations by providing customers with automotive catalyst solutions
based on multiple precious metals. These new technologies allow our customers
the flexibility to choose the most advantageous or cost-effective catalyst
solution.

     CONTINUE TO IMPROVE OUR COST POSITION.  We have undertaken several
initiatives to improve the leading cost positions we have developed in nickel
and cobalt procurement and processing as a result of our vertical integration
strategy. Our majority-owned Big Hill smelter facility, which we expect to reach
full-scale production by mid-year 2002, will expand our base of long-term,
low-cost cobalt and copper raw material feedstocks. The conversion of our
Harjavalta, Finland nickel refinery from the processing of commodity products to
higher value-added products is designed to result in the cost-efficient,
vertically integrated production of nickel inorganics and powders. We intend to
continue to improve our cost positions in our other product lines as we begin to
integrate base metal and precious metal separation and processing technologies.

     INTEGRATE DMC(2) BUSINESS AND CAPITALIZE ON ACQUISITION-RELATED
OPPORTUNITIES.  As part of our plan to integrate the dmc(2) business with our
other operations, we are focused on combining the best practices of each
organization to drive top-line growth, increase manufacturing efficiency and
leverage our common technology platforms. The acquisition of the dmc(2)
operations will allow us to:

     - use our combined experience and technical expertise in base metal and
       precious metal chemistry to develop new products and improve processing
       technology;

     - use the combined strength of our respective sales forces to drive growth
       of precious metal chemistry products in North America, accelerate the
       growth of our base metal chemistry products in Europe and enhance our
       presence in Asia;

     - cross-sell products to existing customers that have both base metal and
       precious metal chemistry needs; and

     - enhance our metal management operation by integrating the expertise and
       scale of our base metal and precious metal procurement capabilities.

                                        43


COMPETITIVE STRENGTHS

     LEADERSHIP POSITION IN EACH OF OUR CORE PRODUCTS.  We believe that as a
result of our high quality products, technological capabilities and focus on
providing customer service and support, we have achieved leading market
positions in the production of metal-based specialty chemicals, materials and
powders. We believe we are the world's leading producer, refiner and marketer of
cobalt and a leading worldwide producer of cobalt organics, cobalt inorganics,
cobalt powders, nickel inorganics, copper powders, automotive catalysts and PGM
compounds.

     DIVERSE GEOGRAPHIC AND CUSTOMER BASE.  Following our recent acquisition of
the operations of dmc(2), we offer more than 625 products to over 1,700
customers in over 30 industries, including automotive, chemicals, electronics,
industrial products and stainless steel. The diversity of the metals used in our
products and our worldwide presence are reflected in the following charts:


                                                           
2001 PRO FORMA PRODUCT SALES                                  2001 PRO FORMA SALES
BY METAL CONTAINED (1)                                        BY GEOGRAPHY (1)(2)


[PIE CHARTS]




                                              Percent                                                       Percent
                                              -------                                                       -------
                                                                                                   
Precious Metals.............................    68%           Americas....................................    24%
Copper......................................     3%           Asia-Pacific................................    10%
Nickel......................................    15%           Europe......................................    66%
Cobalt......................................    10%
Other Base Metals...........................     4%


---------------

(1) Excludes net sales of the Metal Management segment

(2) Sales based on customer location

     TECHNOLOGICAL LEADERSHIP.  Our research and new product development program
is an integral part of our business. New products introduced in the last five
years, including new chemical formulations and new concentrations of components,
accounted for over 20% of our pro forma 2001 net sales (excluding net sales of
the Metal Management segment). Examples of new products that we have developed
and introduced to the marketplace over the last five years include the
following:

     - an electroless nickel-gold process used in printed circuit boards to
       increase performance and improve product yields;

     - stainless steel powders used in automotive metal parts to prevent
       corrosion;

     - cobalt catalysts used in air bags to provide safety and enhance
       performance; and

     - automotive catalysts used in diesel and gasoline direct-injection engines
       to improve emission control.

     LEADING RAW MATERIAL SOURCING AND PRODUCTION CAPABILITY.  We believe we are
the leading producer, refiner and marketer of cobalt and the fifth largest
producer of nickel in the world as a result, in part, of our vertical
integration strategy. We also believe we are among the world's largest
processors of PGMs. Our leading industry positions and long-term relationships
with our suppliers provide us with reliable sources of key raw materials. Our
major manufacturing plants, all of which have received ISO 9002 certification,
are capable of efficiently producing a broad range of metals, specialty
chemicals and powders. Our leading refining and metal separation capabilities
give us the flexibility to work with a variety of raw materials, including
low-grade feedstocks such as slag, concentrates and recycled materials, and
transform them into

                                        44


high-quality finished products. The ability to refine and recycle these
materials enables us to source many grades of feedstocks at competitive prices
and offer recycling services to our customers, giving us a significant advantage
in the marketplace. Through our Metal Management segment, we are one of the
world's leading precious metals sourcing businesses.

     EXPERIENCED AND INCENTIVIZED MANAGEMENT TEAM.  Our senior management team
has an average of over twenty years experience in the chemical industry. Led by
Chairman and Chief Executive Officer James P. Mooney and President and Chief
Operating Officer Edward "Bud" Kissel, we have consistently delivered strong
operating and financial performance. Our senior management team also has
significant experience in executing and integrating acquisitions. Since our
initial public offering in 1993, we have successfully integrated thirteen
acquisitions. Our management team collectively holds approximately 5.4% of our
common shares on a fully diluted basis, with a significant number of these
shares issuable under stock option programs.

PRODUCTS AND MARKETS

     Our business is conducted through three segments: Base Metal Chemistry,
Precious Metal Chemistry and Metal Management.

[FLOW CHART]


                                                  
                            OM GROUP

--------------------------------------------------------------------------------
BASE METAL                  PRECIOUS METAL              METAL
CHEMISTRY                   CHEMISTRY                   MANAGEMENT


  BASE METAL CHEMISTRY

     Our Base Metal Chemistry segment develops, processes, manufactures and
markets specialty chemicals, powders and related products from various base
metals. We emphasize products that leverage our production capabilities and
bring value to our customers through superior product performance. These
products frequently are essential components in chemical and industrial
processes where they facilitate a chemical or physical reaction and/or enhance
the physical properties of end-products. Our base metal chemistry products can
be found in a variety of applications for catalysts, coatings, colorants, hard
metal tools, jet engines, lubricants, fuel and petroleum additives, magnetic
media, metal finishing agents, petrochemicals, plastics, printed circuit boards,
rechargeable batteries, stainless steel, super alloys and tires. We use more
than 15 metals as raw materials in this segment, with the most widely used
metals being cobalt, nickel and copper.

     The following table sets forth our historical sales by primary metals used
in our Base Metal Chemistry segment:



                                             1997     1998     1999     2000     2001
                                            ------   ------   ------   ------   ------
                                                      (DOLLARS IN MILLIONS)
                                                                 
Cobalt....................................  $282.1   $286.2   $251.5   $283.2   $234.9
Nickel....................................    64.1     82.3     87.6    403.9    372.9
Copper....................................    91.0     91.7     91.2     95.0     88.9
Other.....................................    50.1     61.0     76.7    105.6     96.4
                                            ------   ------   ------   ------   ------
                                            $487.3   $521.2   $507.0   $887.7   $793.1
                                            ======   ======   ======   ======   ======


     Our base metal chemistry products are generally categorized as organics,
inorganics, powders and metals and are sold in various forms such as solutions,
crystals, powders, cathodes and briquettes.

                                        45


     Organics are produced from the reaction of metals with organic acids (e.g.,
acetic acid). Organics are primarily sold in the form of solutions and crystals.
We use a variety of metals that include barium, calcium, cobalt, iron,
manganese, potassium, rare earth, zinc and zirconium, with cobalt being the
predominant metal.

     Inorganics are the products of reactions between metals and inorganic acids
(e.g., sulfuric acid). Inorganics are sold in solutions, crystals and powders.
We use primarily cobalt and nickel metals in our inorganics products. Other
metals used are lithium, copper and manganese.

     Powders are produced by separating metal from ores and ore concentrates by
chemical reactions involving heat or water, using several different metal
feedstocks with particle sizes and structures tailored for customer
applications. We believe we are the world's leading producer of cobalt powder
and a leading producer of copper and stainless steel powders. Other metals used
include nickel, iron, lithium, tin, bronze and brass.

     Metals are produced from several different nickel concentrate feedstocks
through nickel reduction and an electrowinning process. We are a leading
producer of nickel briquettes and cathodes that are designed to meet exact
customer analysis requirements.

     The following table sets forth our historical product volumes as classified
by chemistry:



                                     1997      1998      1999      2000      2001
                                     -----     -----     -----     -----     -----
                                                 (POUNDS IN MILLIONS)
                                                              
Organics...........................   50.3      60.5      70.2      76.5      73.7
Inorganics.........................   61.0      89.3      96.1     105.6      98.1
Powders............................   38.6      40.4      43.1      46.9      42.0
Metals.............................     --        --        --      78.2     120.0
                                     -----     -----     -----     -----     -----
                                     149.9     190.2     209.4     307.2     333.8
                                     =====     =====     =====     =====     =====


     The following table sets forth key applications for our base metal
chemistry products:



         APPLICATIONS                     METALS USED                      PRODUCT ATTRIBUTES
         ------------                     -----------                      ------------------
                                                          
BUSHINGS AND BEARINGS             Copper, Tin                   Enhances performance through porous,
                                                                self-lubricating bronze bearings for
                                                                electric motors and other industrial
                                                                applications

CERAMICS AND GLASSWARE            Cobalt, Nickel                Provides color for pigments, earthenware
                                                                and glass and facilitates adhesion of
                                                                porcelain to metal

COATINGS                          Cobalt, Manganese, Calcium,   Promotes faster drying in such products
                                  Zirconium                     as house paints (exterior and interior)
                                                                and industrial and marine coatings

CONSTRUCTION EQUIPMENT            Cobalt, Tungsten              Strengthens and adds durability to
                                                                diamond cutting and drilling equipment
                                                                used in construction and quarrying

CUTTING TOOLS                     Cobalt, Tungsten              Strengthens and adds durability to mining
                                                                and machine cutting tools, as well as oil
                                                                and gas drilling equipment

HIGH-TECH ALLOYS                  Nickel, Cobalt                Prevents corrosion of and strengthens
                                                                high-performance alloyed materials

HOUSEHOLD APPLIANCES              Cobalt                        Enhances metal-glass bonding in a variety
                                                                of household appliances


                                        46




         APPLICATIONS                     METALS USED                      PRODUCT ATTRIBUTES
         ------------                     -----------                      ------------------
                                                          
LUBRICATING OILS                  Copper, Lead, Zinc, Bismuth   Enhances the performance of various
                                                                lubricating oils used in automobile
                                                                engines, generators and mining equipment
                                                                by reducing sludge build-up, preventing
                                                                oxidation under high pressure and
                                                                reducing friction

MAGNETIC MEDIA                    Cobalt                        Improves the recording quality of video
                                                                and audio tapes, and enhances the high
                                                                screen resolution properties in
                                                                television sets

MEMORY DISKS                      Nickel                        Enhances information storage on disks and
                                                                computers

MICROELECTRONICS                  Tin, Lead, Silver             Reduces the solder bridging and enhances
                                                                solder joint strength for circuit boards
                                                                and brazing

PAINTS                            Cobalt, Aluminium, Manganese  Enhances antifouling in marine paints

PETROCHEMICAL REFINING            Cobalt                        Reduces sulfur dioxide and nitrogen
                                                                emissions

POLYESTER RESINS                  Cobalt, Copper, Zinc          Accelerates the curing of polyester
                                                                resins found in reinforced fiberglass
                                                                boats, storage tanks, bathrooms, sports
                                                                equipment, automobile and truck
                                                                components

POLYVINYL CHLORIDE (PVC)          Barium, Calcium, Zinc         Mitigates the effect of heat on flexible
                                                                PVC in such products as medical tubing,
                                                                garden hoses, resilient flooring and
                                                                shower curtains

PRESSED METAL PARTS               Stainless Steel, Copper,      Prevents corrosion in automotive exhaust
                                  Iron                          systems

PRINTING INKS                     Cobalt, Manganese             Promotes faster drying in various
                                                                printing inks

RECHARGEABLE BATTERIES            Cobalt, Nickel                Improves the electrical conduction of
                                                                rechargeable batteries used in cellular
                                                                phones, video cameras, portable computers
                                                                and power tools

STAINLESS STEEL                   Nickel                        Improves rust resistance in demanding
                                                                plating applications

STEEL                             Nickel                        Improves rust resistance in auto and
                                                                truck bodies

SYNTHETIC FIBERS                  Cobalt                        Improves the efficiency of chemical
                                                                processes used to manufacture synthetic
                                                                fibers

TIRES                             Cobalt                        Promotes bonding of metal-to-rubber in
                                                                radial tires


     Our Base Metal Chemistry segment serves over 1,500 customers. Sales to
AvestaPolarit, a Finnish stainless steel manufacturer, represented approximately
12% of segment net sales in 2001. Sales to our eight largest customers
(including AvestaPolarit) accounted for approximately 34% of 2001 segment net
sales. This segment's major customers include AvestaPolarit, BASF, Bayer,
DuPont, Ferro, General Electric, Glencore, Goodyear Tire, Kennametal, Komag,
Nippon, Sandvik, Seido, Sherwin Williams and Tanaka.

                                        47


  PRECIOUS METAL CHEMISTRY

     Our Precious Metal Chemistry segment develops, produces and markets
specialty chemicals and materials, predominantly from precious metals such as
platinum, palladium, rhodium, gold and silver. We also offer a variety of
refining and processing services to users of precious metals. Our precious metal
chemistry products are used in a variety of applications for automotive
catalysts, fuel cells and fuel processing catalysts, chemical catalysts,
electronics packaging and electroplating products, jewelry and glass
manufacturing for high-definition televisions.

     Automotive catalysts are produced by coating a ceramic piece in a process
with a washcoat containing performance chemicals and precious metals. We provide
a full-service operation by recycling spent automotive catalysts. Automotive
catalysts represent the largest application for this segment, accounting for
over 50% of 2001 segment net sales.

     Membrane electrode assemblies, the core components of fuel cells and fuel
processing catalysts, are produced by coating a membrane with a catalyst that
contains precious metals.

     Organic and inorganic heterogenous and homogenous chemical catalysts are
produced from platinum group metals, or PGMs, by chemical or metallurgical
processes.

     Electronics packaging is produced from special alloys that contain high
purity materials such as silver. These alloys generally are melted under a
protective atmosphere and then mechanically processed into various delivery
forms and customized products. Electrolytes for electroplating products are
produced by mixing precious metal preparations with alloying metal salts,
conducting salts, complexing agents and other additives.

     Jewelry semi-finished materials are produced from gold, silver and platinum
by melting and by mechanical processing. Special chemical and metallurgical
processes are used in the refining stages.

     Glass manufacturing components are produced from special high
heat-resistant and corrosion-resistant materials. Using a unique process, we
produce fine grain-stabilized platinum engineered materials made of platinum
group metals. These materials are well suited for manufacturing glass used in
high-tech applications such as flat-screen panels.

     The following table sets forth key applications for our precious metal
chemistry products:



         APPLICATIONS                     METALS USED                      PRODUCT ATTRIBUTES
         ------------                     -----------                      ------------------
                                                          
AUTOMOTIVE CATALYSTS              Platinum, Palladium, Rhodium  Improves emission control for gasoline
                                                                and diesel passenger cars, heavy duty
                                                                trucks and motorcycles

FUEL CELLS                        Platinum, Palladium,          Increases efficiency of fuel processing
                                  Rhodium, Ruthenium            systems for stationary, automotive and
                                                                portable applications

ELECTRONICS PACKAGING             Silver                        Provides high-purity packaging materials
                                                                for micro and power electronics

GLASS                             Platinum                      Enhances the resistance and recyclability
                                                                of glass and the integration of
                                                                electronic circuits on glass

JEWELRY                           Gold, Silver, Platinum,       Provides semi-finished precious metals
                                  Palladium                     for jewelry and for various industrial
                                                                applications (e.g., sputtering targets
                                                                for CD-Roms and DVDs)

ELECTROPLATING                    Gold, Silver, Platinum,       Provides electrolytes and precious metal
                                  Palladium, Rhodium,           salts for technical and decorative
                                  Ruthenium                     applications in various industries (e.g.,
                                                                printed circuit boards and connectors)


                                        48


     Our Precious Metal Chemistry segment serves over 200 customers. This
segment's largest customers include BMW, DaimlerChrysler, Fiat, General Motors,
Kyocera, Mitsubishi, Montblanc, Motorola, Opel/Saab (affiliate of General
Motors), PSA Group (Peugeot) and Volkswagen. The five major customers of this
segment are BMW, DaimlerChrysler, General Motors, PSA Group and Volkswagen, and
the loss of this group of customers would have a material adverse effect on this
segment.

  METAL MANAGEMENT

     Our Metal Management segment acts as a metal sourcing and trading operation
for our other businesses and for our customers, primarily procuring precious
metals. This segment also provides a centralized operation to manage price risk
associated with metal raw material purchases and sales. Its activities include
the following:

     - provision of the necessary precious metal liquidity and financing for our
       other businesses;

     - hedging and risk-pooling for the purchase and sale of precious metals;

     - purchasing and selling of precious metals;

     - proprietary precious metals trading on a limited scale; and

     - precious metals management consulting services.

     Our exposure from our proprietary trading activities is reduced by
limitations on both metal quantities and the value of open positions. We also
require our traders to close positions if mark-to-market valuation reaches
specified loss realization limits. Adherence to limits is strictly supervised by
our controlling department.

     In addition to purchasing metals, this segment leases precious metals,
primarily gold and silver. The metals primarily are leased from a variety of
financial institutions that have access to large physical inventories of gold
and silver. The metal leases usually allow for return of the metal at the end of
the lease agreement. However, leases are customarily extended at the end of a
lease term or metal is re-leased under a new agreement. We also lease precious
metals to selected customers to support our product business. Our total metal
lease expense may range from approximately $5.0 million to $10.0 million
annually, depending upon the prices and lease rates of precious metals.

     In order to support the ownership transition to us, Degussa AG has agreed
to provide us with a lease backstop facility until August 10, 2002. Under the
terms of the facility, if we are not able to otherwise lease precious metals,
Degussa AG will lease precious metals to us up to an aggregate amount of DM
650.0 million.

SALES AND MARKETING

     We believe that one of our key strengths is our sales and marketing team.
Our sales force of more than 250 professionals consists of separate teams
dedicated to the Base Metal Chemistry and the Precious Metal Chemistry segments.
Our salespeople are highly knowledgeable about our customers' manufacturing
processes and end-uses, which enables them to add significant value for our
customers. Our salespeople focus primarily on end-users and there is a strong
cooperative interaction among salespeople, technical staff and customers.

     We sell and support our products in dozens of countries throughout the
world. Our sales network is primarily segment focused, with global direction
provided for each segment and regional coverage provided as appropriate. For the
year ended December 31, 2001, on a pro forma basis, and excluding net sales of
our Metal Management segment, we derived approximately 66% of our net sales from
customers in Europe, 24% from customers in the Americas and 10% from customers
in Asia-Pacific.

COMPETITION

     We encounter a variety of competitors in each of our product lines, but no
single company competes with us across all of our existing product lines. The
value-added, metal-based specialty chemicals industry is
                                        49


highly fragmented and its participants offer a broad array of product lines and
categories, representing many different products designed to meet specific
customer requirements. Competition is based primarily on product quality, supply
reliability, price, service and technical support capabilities. Individual
products compete on a global, regional and local level due to the nature of the
businesses and products, as well as the end-use applications and customers
served. The following chart sets forth our primary competitors within each
segment:



               SEGMENT                                PRIMARY COMPETITORS
               -------                                -------------------
                                     
Base Metal Chemistry                    American ChemMet, Bayer, Degussa, Eurotungstene-
                                        Poudres, Hoeganaas, MacDermid, Rohm & Haas,
                                        Rhodia, Sheperd, Sumitomo, Umicore

Precious Metal Chemistry                Delphi, Engelhard, Johnson Matthey, Tanaka
                                        Precious Metals, W.C. Heraeus

Metal Management                        Engelhard, Johnson Matthey, W.C. Heraeus,
                                        various bullion banks


RAW MATERIALS

     The primary raw materials used in manufacturing our products are cobalt,
nickel, copper, platinum, palladium, rhodium, gold and silver, which are either
purchased, leased or provided by our customers on consignment for processing.

     The cost of metals we use as raw materials fluctuates due to actual or
perceived changes in supply and demand and changes in availability from
suppliers. We generally are able to pass through fluctuations in raw material
costs to our customers. Our supply of cobalt historically has been sourced
primarily from the DRC, Australia, Finland and Zambia. Nickel historically has
been sourced primarily from Australia and Brazil. Platinum group metals
historically have been sourced from South Africa and, to a lesser extent, from
Russia and Canada. We source a significant portion of our PGM feedstock from one
of the world's largest global suppliers of platinum group metals, primarily
under contract, and obtain the remainder through a variety of channels. Although
we have never experienced a significant shortage of these raw materials,
production problems or political or civil instability in specific supplier
countries may in the future affect their supply and market price. We attempt to
mitigate changes in prices and availability by entering into long-term supply
contracts with a variety of producers. We do not anticipate any substantial
interruption in our cobalt, nickel or PGM supply that would have a material
adverse effect on our operations. Copper, gold and silver are worldwide
commodities and are generally available.

     The following graphs set forth the average quarterly published market
prices of cobalt, nickel and copper, and platinum, palladium, gold and silver,
respectively, from January 1, 1998 to December 31, 2001:

BASE METAL PRICES



DATE                                                          COBALT   COPPER   NICKEL
----                                                          ------   ------   ------
                                                                       
1Q98                                                          19.32     0.77     2.48
2Q98                                                          20.75     0.78     2.27
3Q98                                                          18.58     0.75     1.90
4Q98                                                          13.10     0.70     1.79
1Q99                                                          13.51     0.64     2.09
2Q99                                                          15.50     0.67     2.35
3Q99                                                          17.79     0.77     2.87
4Q99                                                          14.11     0.80     3.52
1Q00                                                          13.52     0.82     4.28
2Q00                                                          14.27     0.81     4.27
3Q00                                                          13.13     0.87     3.75
4Q00                                                          12.01     0.86     3.38
1Q01                                                          11.27     0.82     2.98
2Q01                                                          10.45     0.75     3.03
3Q01                                                           9.26     0.67     2.50
4Q01                                                           7.20     0.66     2.31


PRECIOUS METAL PRICES



DATE                                                           GOLD    PLATINUM   PALLADIUM   SILVER
----                                                          ------   --------   ---------   ------
                                                                                  
1Q98                                                          294.21    386.91     241.98      6.31
2Q98                                                          299.67    385.05     319.31      5.71
3Q98                                                          288.82    369.33     292.65      5.22
4Q98                                                          294.06    346.42     283.76      4.95
1Q99                                                          286.86    363.43     342.47      5.28
2Q99                                                          273.10    356.68     342.20      5.12
3Q99                                                          259.22    357.04     344.70      5.23
4Q99                                                          296.25    431.98     403.58      5.24
1Q00                                                          290.42    479.68     589.16      5.16
2Q00                                                          280.31    529.77     599.11      5.01
3Q00                                                          276.65    576.88     731.10      4.91
4Q00                                                          269.14    593.41     806.01      4.72
1Q01                                                          263.65    602.61     930.38      4.54
2Q01                                                          268.00    594.74     654.00      4.39
3Q01                                                          274.10    480.96     475.84      4.27
4Q01                                                          278.44    440.87     354.38      4.29


                                        50


RESEARCH AND DEVELOPMENT

     Our research and new product development program is an integral part of our
business. Research and development focuses on adapting proprietary technologies
to develop new products and working with customers to meet their specific
requirements, including joint development arrangements with customers that
involve innovative products. New products include new chemical formulations,
metal-containing compounds, concentrations of various components, product forms
and packaging methods. Research and development expenses were approximately
$20.5 for 2001, $13.3 million for 2000 and $11.3 million for 1999. Expenses for
research and development are expected to increase due to the acquisition of the
dmc(2) operations.

     Our research staff of approximately 500 full-time personnel conducts
research and development at our laboratories located in Cleveland, Ohio;
Westlake, Ohio; Research Triangle Park, North Carolina; Newark, New Jersey;
Auburn Hills, Michigan; Kokkola, Finland; Hanau, Germany; Schwabisch-Gmund,
Germany; and Himeji, Japan. Our Kokkola facility also maintains a research
agreement with Outokumpu Research Oy.

PATENTS AND TRADEMARKS

     We hold approximately 926 patents and have pending approximately 1,023
patent applications, including approximately 720 patents and 650 patent
applications from the former dmc(2) operations, related to the manufacturing,
processing and use of metallo-organic and metal-based compounds. In addition, we
have the right to use, and in certain instances to license and sell, technology
covered by approximately 40 patents, including 21 patents from the former dmc(2)
operations, in the areas of hydrometallurgical processes, solvent extraction,
agitators and metal powders. We do not consider any single patent or group of
patents to be material to our business as a whole.

EMPLOYEES

     We have approximately 5,200 full-time employees, with 1,600 located in the
Americas, 2,700 in Europe, 500 in Africa and 400 in Asia-Pacific. We believe
relations with our employees are good.

     Americas.  Employees at our production facilities in Burlington, Canada;
Newark, Delaware; Newark, New Jersey; South Plainfield, New Jersey; Research
Triangle Park, North Carolina; Franklin, Pennsylvania; and St. George, Utah are
non-unionized. Employees at our Johnstown, Pennsylvania facility are members of
the United Steelworkers of America Union. The Johnstown union agreement has a
term of five years, expiring in June 2003. Employees at the Belleville, Canada
facility are members of the Communications, Energy and Paperworkers Union of
Canada. The Belleville union agreement has a term of five years, expiring in May
2003. The Calvert City, Kentucky, facility is operated under a service contract
with Degussa AG, which employs two-thirds of the site's employees. The Calvert
City contract with the Paper, Allied Industrial, Chemical, Energy Workers'
International Union was renegotiated in January 2001. This union has been
notified that as a consequence of the change in ownership resulting from our
acquisition of the dmc(2) operations, we will separate our workforce and these
employees will become employees of one of our subsidiaries. Employees at our
facilities in Guarulhos, Americana and Manaus, Brazil are members of either the
Metalworkers' Union or of the Chemical Workers' Union. The terms of these
agreements are valid for one year and expire in October 2002 in Guarulhos and
Americana, and in August 2002 in Manaus. Employees at our facility in Buenos
Aires, Argentina are members of the Union Obrera Metalurgica. The terms of the
Buenos Aires agreement do not provide for an expiration date and the agreement
may be terminated by us at any time.

     Europe.  Employees at our production facilities in Vienna, Austria;
Vicenza, Italy; and Amsterdam, Netherlands are non-unionized. Employees at our
facilities in Harjavalta, Finland and Kokkola, Finland are members of several
national workers' unions under various union agreements. Generally, these union
agreements have two-year terms. Employees at our Karlskoga, Sweden, facility are
members of industrial employees' and workers' unions with three-year terms,
expiring in February 2003. Employees at our facilities in Hanau, Rheinfelden,
Pforzheim and Schwabisch-Gmund, Germany, are members of several national
workers' unions. At these facilities, general working conditions are set forth
in long-term agreements, whereas wage agreements usually are negotiated annually
between the unions and the employers' associations.
                                        51


Employees at our facilities in Manchester, England are members of various trade
unions under a recognition agreement. This recognition agreement has an
indefinite term.

     Africa.  Employees at our production facilities in Lubumbashi, the DRC are
non-unionized. Employees at our Port Elizabeth, South Africa facility are
members of the Chemical Energy Paper and Printing Allied Workers' Union and the
applicable union agreement has an indefinite term.

     Asia Pacific.  Employees at our production facilities in Himeji, Japan;
Onsan, Korea; Kuching, Malaysia; Bangkok, Thailand; and Kalgoorlie, Australia
are non-unionized.

PROPERTIES

     We believe that our plants and facilities, which are of varying ages and of
different construction types, have been satisfactorily maintained, are in good
condition, are suitable for our operations and generally provide sufficient
capacity to meet our production requirements. The land on which the Kokkola,
Finland; Harjavalta, Finland; Karlskoga, Sweden; Hanau, Germany; Singapore
(Precious Metal Chemistry segment facility); St. George, Utah; and Newark,
Delaware plants are located is leased under separate agreements with varying
expiration dates. Otherwise, we own the real properties comprising our
manufacturing facilities. The transfer of ownership and some hereditary building
rights have not yet been completed with respect to some facilities located in
Germany that were acquired as part of the dmc(2) operations.

     Our Kokkola, Finland production facility (KCO) is situated on property
owned by Outokumpu Zinc Oy. KCO and Outokumpu Zinc Oy share certain physical
facilities, services and utilities under agreements with varying expiration
dates. Utilities and raw material purchase assistance contracts provide that KCO
jointly purchase with, or pay a fee to, affiliates of Outokumpu Oyj for
assistance in negotiating contracts and securing bulk quantity discounts. Our
Harjavalta, Finland production facility is situated on land owned by Outokumpu
Harjavalta Metals Oy. The Harjavalta, Finland facility also shares certain
physical facilities and has contracts in place for waste disposal, tolling,
utilities, laboratory services and raw material supply with varying expiration
dates.

     Information regarding our primary offices, research and product development
and manufacturing facilities is set forth below:



                                                 FACILITY      APPROXIMATE            LEASED/
          LOCATION                SEGMENT        FUNCTION*    SQUARE FOOTAGE           OWNED
          --------                -------        ---------    --------------          -------
                                                                    
AFRICA:
Lubumbashi, the DRC.........  Base Metal         M                116,000       joint venture (55%)
Port Elizabeth, South
  Africa....................  Precious Metal     M                181,800       joint venture (55%)

AMERICAS:
Newark, NJ..................  Base Metal         M, A, R           32,000       owned
Edison, NJ..................  Base Metal         W                 47,000       leased
Research Triangle Park,
  NC........................  Base Metal         M, A, R          148,500       owned
Cleveland, OH...............  Base Metal         A, R, W           51,400       leased
Westlake, OH................  Base Metal         A, R              35,200       owned
Belleville, Ontario.........  Base Metal         M                 38,000       owned
Bethlehem, PA...............  Base Metal         M                 14,085       owned
Franklin, PA................  Base Metal         M                331,500       owned
Johnstown, PA...............  Base Metal         M                168,000       owned
St. George, UT..............  Base Metal         M                193,000       owned
Burlington, Canada..........  Precious Metal     M                155,000       owned
South Plainfield, NJ........  Precious Metal     M                 71,400       owned/leased
Newark, DE..................  Precious Metal     M                 49,500       leased
Auburn Hills, MI............  Precious Metal     R, A             138,400       owned
Calvert City, KY............  Precious Metal     M                 30,900       joint venture (50%)


                                        52




                                                 FACILITY      APPROXIMATE            LEASED/
          LOCATION                SEGMENT        FUNCTION*    SQUARE FOOTAGE           OWNED
          --------                -------        ---------    --------------          -------
                                                                    
Manaus, Brazil..............  Precious Metal     M                132,500       owned
Americana, Brazil...........  Precious Metal     M                290,600       owned
Sao Paulo, Brazil...........  Precious Metal     M                215,400       owned/leased

ASIA-PACIFIC:
Kalgoorlie, Australia.......  Base Metal         M                294,400       owned
Tokyo, Japan................  Base Metal         A                  2,300       leased
Kuching, Malaysia...........  Base Metal         M, A              25,000       owned
Taipei, Taiwan..............  Base Metal         A                  4,000       leased
Bangkok, Thailand...........  Base Metal         M, A             107,400       owned
Bangkok, Thailand...........  Precious Metal     M                 18,200       leased
Singapore...................  Base Metal         M                  2,100       joint venture (70%)
Singapore...................  Precious Metal     M, A               4,200       leased
Himeji, Japan...............  Precious Metal     M, R              48,200       joint venture (50%)
Onsan, Korea................  Precious Metal     M                 89,500       joint venture (50%)

EUROPE:
Manchester, England.........  Base Metal         M                 73,300       owned
Espoo, Finland..............  Base Metal         A                  3,000       leased
Harjavalta, Finland.........  Base Metal         M, A             280,900       owned
Kokkola, Finland............  Base Metal         M, A, R          470,000       owned
Ezanville, France...........  Base Metal         A                 50,000       owned
Dusseldorf, Germany.........  Base Metal         A                  4,800       leased
Hanau, Germany..............  Precious Metal     M, A, R        1,643,400       owned/leased
Pforzheim, Germany..........  Precious Metal     M, A             196,300       owned/leased
Rheinfelden, Germany........  Precious Metal     M                131,200       owned
Schwabisch-Gmund, Germany...  Precious Metal     M, R             276,200       owned
Karlskoga, Sweden...........  Precious Metal     M                123,700       leased
Amsterdam, Netherlands......  Precious Metal     M                 38,900       owned
Vienna, Austria.............  Precious Metal     M                107,900       owned
Vicenza, Italy..............  Precious Metal     M                 31,900       owned


---------------

* M - Manufacturing; A - Administrative; R - Research and Development;
  W - Warehouse

ENVIRONMENTAL MATTERS

     We are subject to a wide variety of environmental laws and regulations in
the United States and in foreign countries as a result of our operations and use
of certain substances that are, or have been, used, produced or discharged by
our plants. In addition, soil and/or groundwater contamination presently exists
and may in the future be discovered at levels that require remediation under
environmental laws at properties now or previously owned, operated or used by
us.

     Environmental compliance costs were approximately $7.8 million in 2001.
Ongoing expenses include costs relating to waste water analysis and disposal,
hazardous and nonhazardous solid waste analysis and disposal, sea water control,
air emissions control, soil and groundwater clean-up and monitoring and related
staffing. We anticipate that we will continue to incur costs and make
expenditures at increasing levels for the foreseeable future as environmental
laws and regulations are becoming increasingly stringent and as we include the
expenditures related to the acquired operations of dmc(2).

     We also incurred capital expenditures of approximately $6.5 million in 2001
in connection with environmental compliance. We anticipate that capital
expenditure levels for these purposes will increase to approximately $12.0
million in 2002 due to the acquisition of the dmc(2) operations and as we
continue to modify specific processes that may have an environmental impact.

                                        53


     In preparation for the sale of the dmc(2) businesses to us, Degussa AG
engaged independent environmental consultants to conduct a "desktop" survey of
potential environmental liabilities. According to the results of the survey, the
high end of the estimated range of costs for the dmc(2) businesses retained by
us subsequent to the sale to Ferro is approximately $7.5 million. dmc(2) has
agreed to indemnify us against environmental liabilities relating to conditions
existing at the date of purchase, subject to a cap of 25% of the purchase price,
if such damages exceed E10.0 million for all of the former dmc(2) sites
together, including those sites that were sold to Ferro as part of the sale of
the dmc(2) divisions to Ferro (and then for the entire amount of damages). The
environmental liabilities are subject to a cost-sharing formula under which we
share an increasing percentage of costs over time, depending on when notice is
given. Accordingly, we pay 10% of claims asserted in the first year, 20% in the
second year, 30% in the third year, 40% in the fourth year, 50% in the fifth
year, 60% in the sixth year, 75% in the seventh year, 90% in the eighth year,
and 100% of all claims afterward. All of dmc(2)'s indemnification obligations
are guaranteed by Degussa AG.

     Due to the ongoing development and understanding of facts and remedial
options and the possibility of unanticipated regulatory developments, the amount
and timing of future environmental expenditures could vary significantly from
those currently anticipated. Although it is difficult to quantify the potential
impact of compliance with or liability under environmental protection laws,
based on presently available information, we believe that our ultimate aggregate
cost of environmental remediation should not result in a material adverse effect
upon our financial condition or results of operations.

LEGAL PROCEEDINGS

     We are subject to various legal and administrative proceedings incidental
to our business. We believe that the disposition of all pending suits and
claims, as relates to our business other than the former dmc(2) operations,
should not in the aggregate have a material adverse effect on our business or
financial position. We did not assume any material liabilities relating to any
pending suits or claims adverse to dmc(2) as part of the acquisition of the
dmc(2) operations. dmc(2) has agreed to indemnify us for breaches of
representations and warranties made by dmc(2) for an amount up to 25% of the
purchase price, subject to a E10.0 million deductible. dmc(2) has also agreed to
indemnify us against World War II and National Socialist Era claims. All of the
indemnification obligations of dmc(2) are guaranteed by Degussa AG.

                                        54


                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     The following table sets forth the names, ages and positions of our
directors and executive officers.



                    NAME                       AGE                       POSITION
                    ----                       ---                       --------
                                               
James P. Mooney..............................  54    Chairman of the Board and Chief Executive
                                                     Officer
Edward W. Kissel.............................  60    President, Chief Operating Officer and Director
James M. Materna*............................  56    Chief Financial Officer
Michael J. Scott.............................  51    General Counsel and Chief Administrative Officer
Lee R. Brodeur...............................  74    Director
Frank E. Butler..............................  65    Director
Thomas A. Miklich*...........................  54    Director
John E. Mooney...............................  51    Director
Katharine L. Plourde.........................  50    Director
Markku Toivanen..............................  60    Director


---------------

*Mr. Materna has indicated he will retire as Chief Financial Officer in June
 2002. Mr. Miklich will succeed Mr. Materna as the new Chief Financial Officer
 of OMG.

     The authorized number of directors is presently fixed at eight, divided
into three classes with each designated to serve three-year terms. Two classes
have three members and one class has two members. The term of the Class I
directors expires at the annual stockholders' meeting for election of directors
in 2003, the term of the Class II directors expires at the annual stockholders'
meeting for election of directors in 2004, and the term of the Class III
directors expires at the annual stockholders' meeting for the election of
directors in 2002. Officers are chosen by and serve at the discretion of the
board of directors. A summary of the background and experience of each officer
and director is set forth below.

     JAMES P. MOONEY is Chairman of the Board and has been a director and Chief
Executive Officer of OMG since 1991. From 1991 to 1994, Mr. Mooney was President
of OMG. From 1979 to 1991, Mr. Mooney was President and Chief Executive Officer
of Mooney Chemicals, Inc. Mr. Mooney is a member of the Supervisory Board of
Directors of Norddeutsche Affinerie AG and a member of the Board of Trustees of
The Cleveland Clinic Foundation. Mr. Mooney received a B.A. degree in history
from Quincy University. Mr. Mooney is John E. Mooney's brother. Mr. Mooney's
term as a director expires in 2002.

     EDWARD W. KISSEL was appointed as a director of OMG in 1999 to fill a
vacancy. Mr. Kissel has been President and Chief Operating Officer of OMG since
June, 1999. Since 1993, he has been Chief Executive Officer of Kissel Group,
Ltd., a holding company with interests in Kissel Group, a consulting business
specializing in strategic business issues and RotoCast Technologies, Inc., a
specialty cast aluminum mold manufacturer. Previously, he was President of the
Passenger and Light Truck Division of Continental-General Tire, Inc. From 1987
to 1990, he was Vice President of manufacturing and engineering for Engelhard
Corporation and previously spent 24 years with the Goodyear Tire & Rubber Co.
Mr. Kissel is a member of the Board of Directors of Myers Industries, Inc. and
Weda Bay Minerals, Inc., Toronto, Ontario. Mr. Kissel's term as a director
expires in 2004.

     JAMES M. MATERNA has been the Chief Financial Officer of OMG since 1992.
Prior to such time, he was a principal in Ashley Management, a financial
management services and private investment firm, for six years. From 1981 to
1986, Mr. Materna was a partner with the accounting firm of KPMG Peat Marwick in
New York and Cleveland. Mr. Materna received a B.S. degree in chemical
engineering from the University of Pittsburgh and an MBA degree from the
Graduate School of Business of Stanford University. Mr. Materna is a certified
public accountant.

     MICHAEL J. SCOTT is General Counsel and Chief Administrative Officer of OMG
and has been with OMG since 1977. He became an executive officer of OMG in
February 2002. Prior to joining OMG, Mr. Scott held

                                        55


several operating positions within the Standard Product Company. Mr. Scott
received a B.A. degree from Hamilton College and a J.D. from Cleveland State
University.

     LEE R. BRODEUR has been a director of OMG since 1991 and a director of
Mooney Chemicals, Inc. since 1987. Mr. Brodeur was employed by the Firestone
Tire & Rubber Company, Akron, Ohio from 1951 until his retirement as Vice
Chairman of that company in 1986. Mr. Brodeur's term as a director expires in
2002.

     FRANK E. BUTLER has been a director of OMG since 1996. From 1992 until his
retirement in 1997, Mr. Butler was President and General Manager of the Coatings
Division of The Sherwin-Williams Company, a manufacturer, distributor and
retailer of coatings and related products. From 1957 to 1992, Mr. Butler held
various engineering positions in the Chemical Division of Sherwin-Williams. Mr.
Butler received a masters degree in chemistry from Iowa State University. Mr.
Butler's term as a director expires in 2004.

     THOMAS R. MIKLICH has been a director of OMG since 1993. Mr. Miklich has
been employed by Invacare Corporation as Chief Financial Officer and General
Counsel since 1993. Prior to joining Invacare, Mr. Miklich was Executive Vice
President, Chief Financial Officer and a Director of Van Dorn Company. For 22
years prior to that, Mr. Miklich was employed with The Sherwin-Williams Company
where he held several financial positions, culminating as Senior Vice President
and Chief Financial Officer. Mr. Miklich's term as a director expires in 2002.

     JOHN E. MOONEY has been a director of OMG since 1995.  For the past 13
years, Mr. Mooney has been Chief Executive Officer of Sachem, Inc., a specialty
chemicals manufacturer. Mr. Mooney received a B.A. in Economics from the
University of Toronto. Mr. Mooney is James P. Mooney's brother. Mr. Mooney's
term as a director expires in 2003.

     KATHARINE L. PLOURDE became a director of OMG in February 2002. Ms. Plourde
was a Principal and analyst at the investment banking firm of Donaldson, Lufkin
& Jenrette, Inc., New York, New York, until November 1997. Since that time she
has engaged in private investing. Ms. Plourde is a director of Pall Corporation
and serves as a director of several not-for-profit organizations. Ms. Plourde
received a B.A. degree in English Literature from Barnard College at Columbia
University and an M.B.A. in Finance from Fordham University. Ms. Plourde's term
as a director expires in 2004.

     MARKKU TOIVANEN has been a director of OMG since 1991 and currently is a
consultant in the base metals industry. During 2000 and until October 2001, Mr.
Toivanen served as Senior Vice President of New Business Ventures of Outokumpu
Oyj. From 1996 to 2000, Mr. Toivanen served as Senior Vice President Corporate
Strategic Development of Outokumpu Oyj. From 1993 to 1996, Mr. Toivanen served
as President and Chief Executive Officer of Outokumpu Metals & Resources Oy. Mr.
Toivanen and Antti Aaltonen, Vice President of Operations for OMG Kokkola
Chemicals Oy, are brothers-in-law. Mr. Toivanen's term as a director expires in
2003.

DIRECTOR COMPENSATION

     Directors who are also officers of OMG receive no additional compensation
for serving as directors. Outside directors receive an annual director's fee of
$36,000 and an annual fee of $5,000 per committee for service on our Audit and
Finance Committee or our Compensation Committee. Committee chairmen also receive
an additional $5,000 per annum. In addition, each outside director receives a
fee of $1,500 for each board meeting he or she attends. Directors may elect to
receive their compensation in the form of cash, stock options or restricted
stock under our Non-Employee Directors' Equity Compensation Plan. Under this
plan, directors may purchase stock options for a price equal to the difference
between the exercise price (75% of fair market value on date of grant) and the
fair market value per share. Restricted shares may be purchased at a price equal
to fair market value per share. Also, directors electing to receive restricted
stock receive additional restricted stock equal to 5% of cash compensation.
Directors are reimbursed for their travel and other expenses incurred in
attending board and committee meetings.

                                        56


EXECUTIVE COMPENSATION

     Summary Compensation Table.  The following table sets forth all
compensation awarded to, earned by or paid to OMG's Chief Executive Officer and
OMG's other two executive officers during 1999, 2000 and 2001 for services
rendered during those years.

                           SUMMARY COMPENSATION TABLE



                                                                           LONG-TERM COMPENSATION AWARDS
                                   ANNUAL COMPENSATION               ------------------------------------------
                        ------------------------------------------   SECURITIES AND
                                                        RESTRICTED     UNDERLYING
       NAME AND                                           STOCK      STOCK OPTIONS     LTIP        ALL OTHER
  PRINCIPAL POSITION    YEAR   SALARY(1)    BONUS(2)    AWARDS(3)       (SHARES)      PAYOUTS   COMPENSATION(4)
  ------------------    ----   ---------   ----------   ----------   --------------   -------   ---------------
                                                                           
James P. Mooney.......  2001   $785,500    $1,140,000   $1,776,000       10,000         $0         $274,200
  Chairman & CEO        2000   $640,500    $1,123,000   $        0      100,000         $0         $178,500
                        1999   $580,000    $  630,000   $        0       85,000         $0         $161,000

Edward W. Kissel......  2001   $540,500    $  563,000   $1,184,000       20,000         $0         $168,750
  President & COO       2000   $485,500    $  665,000   $        0       65,000         $0         $ 92,929
                        1999   $240,208    $  207,813   $  570,000       70,000         $0         $ 28,125

James M. Materna......  2001   $339,500    $  288,000   $  592,000       20,000         $0         $ 92,850
  CFO                   2000   $296,500    $  360,000   $        0       50,000         $0         $ 68,940
                        1999   $270,000    $  243,000   $        0       37,000         $0         $ 62,150


---------------

(1) Salary amounts include $10,500 401(k) deferral.

(2) Amounts awarded to each officer under OMG's Bonus Program for Key Executives
    and Middle Management.

(3) Restricted stock awards granted in 2001 were as follows: Mr.
    Mooney -- 30,000 shares; Mr. Kissel -- 20,000 shares; and Mr.
    Materna -- 10,000 shares. Dollar amounts shown for each officer in 2001
    equal the number of shares of restricted stock granted multiplied by the
    stock price on the grant date ($59.20). The dollar amount shown for Mr.
    Kissel in 1999 equals the number of shares of restricted stock granted
    (15,000) multiplied by the stock price on the grant date ($38.00). The
    valuations shown do not take into account the diminution in value
    attributable to the restriction applicable to the shares. Dividends will be
    paid on all restricted stock shown above. As of December 31, 2001, Mr.
    Mooney's 30,000 shares of restricted stock had a value of $1,985,700, Mr.
    Kissel's 35,000 shares of restricted stock had a value of $2,316,650 and Mr.
    Materna's 10,000 shares of restricted stock had a value of $661,900. The
    restricted stock awards granted in 2001 to Mr. Mooney, Mr. Kissel and Mr.
    Materna will vest in equal increments over a three-year period on each of
    December 31, 2002, 2003 and 2004. As it relates to the restricted stock
    award of 15,000 shares granted to Mr. Kissel in 1999, on the three-year
    anniversary, June 1, 2002, 5,000 shares will vest and an amount equal to
    accrued dividends will be paid and on the five-year anniversary, June 1,
    2004, 10,000 shares will vest together with an amount equal to accrued
    dividends.

(4) This amount represents amounts contributed for each officer under OMG's
    qualified Profit-sharing Plan and amounts accrued under the OM Group, Inc.
    Benefit Restoration Plan. The amount OMG contributed during 2001 for the
    named executive officers for the Profit Sharing Plan was $15,000 each. For
    the Benefit Restoration Plan during 2001 OMG contributed the following
    amounts: Mr. Mooney, $259,200; Mr. Kissel, $153,750; and Mr. Materna,
    $77,850.

                                        57


     Option Grant Table.  The following table sets forth additional information
concerning individual grants of stock options pursuant to OMG's Long-term
Incentive Compensation Plan made by OMG during 2001 to the named executive
officers, which options are included in the Summary Compensation Table above.
Stock options granted under the plan have a 10-year term and become fully
exercisable at December 31 of the year following the year in which granted. The
option price for stock options granted under the plan is the closing sale price
of OMG common stock on the date of grant.

                               OPTION GRANT TABLE



                                                INDIVIDUAL GRANTS                        POTENTIAL REALIZABLE VALUE
                           -----------------------------------------------------------     AT ASSUMED ANNUAL RATES
                              NUMBER OF        PERCENTAGE OF                              OF STOCK APPRECIATION FOR
                             SECURITIES        TOTAL OPTIONS     EXERCISE                        OPTION TERM
                             UNDERLYING         GRANTED TO       OR BASE    EXPIRATION   ---------------------------
          NAME             OPTIONS GRANTED   EMPLOYEES IN 2001    PRICE        DATE          5%             10%
          ----             ---------------   -----------------   --------   ----------   -----------   -------------
                                                                                     
James P. Mooney..........      10,000                 4%          $59.20    11/05/2011    $372,300      $  943,500
Edward W. Kissel.........      20,000                 8%          $59.20    11/05/2011    $744,600      $1,887,000
James M. Materna.........      20,000                 8%          $59.20    11/05/2011    $744,600      $1,887,000


                        AGGREGATED OPTION EXERCISES AND
                          FISCAL YEAR-END OPTION VALUE



                                                            NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                           UNDERLYING UNEXERCISED             IN-THE-MONEY
                                                             OPTIONS AT 12/31/01         OPTIONS AT 12/31/01(2)
                         SHARES ACQUIRED      VALUE      ---------------------------   ---------------------------
         NAME              ON EXERCISE     REALIZED(1)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
         ----            ---------------   -----------   -----------   -------------   -----------   -------------
                                                                                   
James P. Mooney........      177,161       $9,080,387      548,065(3)      10,000      $19,346,983     $ 69,000
Edward W. Kissel.......           --               --      135,000         20,000      $ 3,333,150     $139,800
James M. Materna.......       19,049       $  757,177      191,100         20,000      $ 5,855,810     $139,800


---------------

(1) Market value of stock at date and time of exercise less exercise price.

(2) Based on fair market value at December 31, 2001 of $66.19.

(3) Includes 448,065 stock options transferred in accordance with the terms of
    OMG's Long-Term Incentive Compensation Plan to a limited partnership in
    which Mr. Mooney is a general partner.

REPORT OF THE COMPENSATION COMMITTEE

     Executive Compensation Policy.  The Compensation Committee of the Board of
Directors, comprised solely of outside directors of OMG, is responsible for
setting the policies and approving the practices of OMG in its compensation to
executive officers of OMG and its subsidiaries, including those executive
officers named in the compensation tables in this prospectus. The Committee's
general policy on executive compensation is to provide a significant incentive
to management to achieve annual profit goals and to increase the value of OMG's
stock. The policy is intended to cause a significant portion of total executive
compensation to be contingent upon OMG performance and in the form of annual and
longer-term incentives.

     In carrying out its responsibilities in 2001, the Committee considered the
following:

     1. OMG's financial performance;

     2. OMG's general policies and practices for compensation of employees;

     3. The recommendations of OMG's management concerning compensation of
individual key employees; and

     4. Advice from independent compensation consultants concerning all aspects
of OMG's compensation policies, including how its policies and practices compare
to the policies and practices of other comparable companies.

                                        58


     The three major components of OMG's executive officer compensation program
are (1) base compensation and annual adjustments thereto paid pursuant to
employment contracts with executive officers, (2) annual bonuses paid pursuant
to the Bonus Program for Key Executives and Middle Management, and (3) stock
options issued at fair market value pursuant to OMG's 1998 Long-Term Incentive
Compensation Plan.

     Employment Contracts with Executive Officers.  OMG has entered into
employment contracts with each of its executive officers. The employment
contracts establish the position of each executive officer and provide that the
executive officer will devote his full professional attention to OMG and that
OMG will not materially decrease his level of responsibility. Each contract
provides for automatic yearly renewals unless the contract is terminated by
either party upon six months' prior notice.

     Each contract provides for base compensation which may be increased
annually, but not decreased. In considering annual adjustments to an executive
officer's base compensation, the Committee considers both OMG and individual
performance. In addition, executive officers' base salaries are targeted between
the median and 75th percentile of comparably sized companies in the chemical and
non-durable goods manufacturing industries. Each contract also provides for
annual bonuses paid pursuant to OMG's Bonus Program for Key Executives and
Middle Management described below.

     OMG may terminate each contract at any time with or without cause. If
terminated for cause, an officer is entitled to compensation accrued up to the
time of termination. If terminated without cause, the officer is entitled to
accrued compensation and to receive all base compensation, incentive bonuses and
fringe benefits due under his contract for the later of the expiration of the
current contract term or two years after delivery of notice of termination with
respect to James P. Mooney and James M. Materna. If the officer resigns for any
reason, he is entitled to accrued compensation and to receive all base
compensation for three months following the effective date of termination of his
employment.

     Mr. Kissel has a three-year employment contract, renewable for two year
periods on six months notice. The contract provides for severance pay in the
amount of base and incentive compensation for the remainder of any portion of
the term not served, unless he is dismissed for cause as defined in the
contract.

     Bonus Program for Key Executives and Middle Management.  OMG pays annual
bonuses to certain employees, including executive officers, based primarily on
OMG's operating profit. In deciding annual bonus amounts, the Committee reviews
OMG's performance against a predetermined consolidated operating profit goal,
approved annually by the board of directors as part of OMG's financial budgeting
process. Annual bonuses are then paid pursuant to a schedule approved by the
board of directors which sets forth specified percentages of base compensation
payable as annual bonuses based upon the level of attainment of the
predetermined operating profit goal. Based on this performance, executive
officers, other than the CEO, received annual bonuses ranging from 85% to 104%
of their annual base salaries in 2001.

     1998 Long-Term Incentive Compensation Plan.  Executive officers and other
key employees also received compensation pursuant to OMG's 1998 Long-Term
Incentive Compensation Plan. The Incentive Plan is designed to promote OMG's
growth and profitability by providing, through common stock ownership,
incentives to attract and retain highly talented persons to provide managerial
and administrative services to OMG and to motivate such persons to use their
best efforts on OMG's behalf. The Incentive Plan provides for the granting of
stock options, stock appreciation rights, restricted stock awards and phantom
stock. Under the 1998 Long-Term Incentive Compensation Plan, the total number of
shares of common stock subject to the plan each year is 1.5% of the total number
of issued and outstanding shares of OMG's common stock as of December 30 of the
preceding calendar year.

     The Incentive Plan is administered by the Committee. Subject to the
provisions of the Incentive Plan, the Committee is authorized to determine who
may participate in the Incentive Plan, the Awards made to each participant and
the terms and conditions applicable to each Award. The number of stock options
granted to executive officers and key employees during 2001 depended principally
upon the individual's level of responsibility within OMG and the Committee's
assessment of individual performance and contribution.

                                        59


     CEO Compensation and Company Performance.  In setting Mr. James P. Mooney's
compensation for 2001, the Committee considered OMG's financial performance
during the previous four quarters, Mr. Mooney's personal performance and
comparative data on the salaries for chief executive officers of
comparably-sized companies in the chemical and non-durable goods manufacturing
industries. The Committee also considered various factors of corporate
performance, including profitability, market position, productivity, product
leadership and the balancing of short-term and long-term goals.

     Mr. Mooney's contract also provides for bonuses in accordance with the
Bonus Program for Key Executives and Middle Management. The Committee reviewed
OMG's 2001 performance against the predetermined consolidated operating profit
goal for 2001 and also considered the successful acquisition by OMG of the
precious metals and metal management businesses of dmc(2). Based upon OMG's
level of attainment of the operating profit goal and the acquisition of the
dmc(2) businesses, Mr. Mooney received an annual bonus for 2001 of $1,140,000 in
recognition of OMG's and his individual performance in 2001.

     On November 5, 2001, the Committee approved a grant of an option for 10,000
shares and an award of 30,000 restricted shares to Mr. Mooney pursuant to the
Incentive Plan. The size of these awards was based on the Committee's
consideration of the size of similar awards to chief executive officers with pay
and responsibility comparable to that of Mr. Mooney and its qualitative
assessment of Mr. Mooney's performance during 2001.

                                          The Compensation Committee

                                          Lee R. Brodeur, Chairman
                                          Frank E. Butler

                                        60


PERFORMANCE COMPARED TO CERTAIN STANDARDS

     The chart set forth below compares OMG's cumulative total stockholder
return to (a) that of the Standard & Poor's 500 Index, and (b) that of S&P
Chemicals (Specialty) Index. The chart assumes $100 was invested on December 31,
1996, and in all cases, the information is presented on a dividend reinvested
basis.

                     COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
                             AMONG OM GROUP, INC.,
                  S&P CHEMICALS (SPECIALTY) AND S&P 500 INDEX
[GRAPH]



                                                     OM GROUP, INC.         S&P CHEMICALS (SPECIALTY)         S&P 500 INDEX
                                                     --------------         -------------------------         -------------
                                                                                               
12/31/1996                                                  100                         100                         100
12/31/1997                                               136.99                      123.83                      133.36
12/31/1998                                               137.79                      105.46                      171.47
12/31/1999                                               131.48                      116.74                      207.56
12/29/2000                                                210.7                      103.84                      188.66
12/31/2001                                               257.56                       97.31                      166.24


                                        61


                        SECURITY OWNERSHIP OF DIRECTORS,
                     OFFICERS AND CERTAIN BENEFICIAL OWNERS

     The following table sets forth, as of January 31, 2002, information
concerning the number of shares of our common stock beneficially owned by each
director and executive officer individually and by all of our executive officers
and directors as a group. No executive officer or director other than James P.
Mooney owns more than 1% of the outstanding shares of our common stock. As of
January 31, 2002, Mr. Mooney beneficially owned approximately 4.2% and all
executive officers and directors as a group beneficially owned approximately
5.5% of our shares. The totals shown below for each person and for the group
include shares held personally, shares held by family members, shares held under
our profit-sharing plan, and shares acquirable within sixty days of the above
date by the exercise of stock options granted under our stock option plan.

                   AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP



NAME OF                                           DIRECTLY   PROFIT-SHARING   EXERCISABLE
BENEFICIAL OWNER(1)                               OWNED(2)        PLAN        OPTIONS(3)      TOTAL
-------------------                               --------   --------------   -----------   ---------
                                                                                
Lee R. Brodeur..................................    5,750           --           23,055        28,805
Frank E. Butler.................................       --           --           18,866        18,866
Edward W. Kissel................................      700           --          135,000       135,700
James M. Materna................................    1,050        2,922          191,100       195,072
Thomas R. Miklich...............................    3,450           --            3,890         7,340
James P. Mooney.................................  655,518          830          548,065     1,204,413
John E. Mooney..................................   10,854           --            7,568        18,422
Markku Toivanen.................................       --           --            3,080         3,080
All directors and executive officers as a group
  (consisting of 8 persons).....................  677,322        3,752          930,624     1,611,698


---------------

(1) Each person has sole voting and investment power with respect to all shares
    shown except as indicated below.

(2) James P. Mooney's shares include 541,381 shares held by a limited
    partnership, Lion Investment Co. L.P., for which Mr. Mooney is a general
    partner.

(3) Represents shares subject to stock options that were exercisable at January
    31, 2002 or within 60 days of January 31, 2002. James P. Mooney's options
    include 448,065 options transferred to a limited partnership in accordance
    with the terms of OMG's Long-Term Incentive Plan. Mr. Mooney, as a general
    partner of the limited partnership to which the options have been
    transferred, continues to have voting and investment power with respect to
    these shares.

                                        62


     The following table sets forth information concerning each person known by
us to be the beneficial owner of more than 5% of our outstanding common stock or
stock convertible into common stock.



                                                                AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER                            BENEFICIAL OWNERSHIP    PERCENT OF CLASS
------------------------------------                            --------------------    ----------------
                                                                                  
Baron Capital Group, Inc., et al............................         3,369,890                14.0%
  767 Fifth Avenue
  New York, NY 10153 (1)

Citigroup, Inc..............................................         1,774,731                 7.4%
  399 Park Avenue
  New York, NY 10043
    and
Salomon Smith Barney Holdings, Inc.
  388 Greenwich Street
  New York, NY 10013 (2)


---------------

(1) Information regarding share ownership and ownership percentage was obtained
    from Amendment No. 5 to a Schedule 13G filed on February 8, 2002 by Baron
    Capital Group, Inc., BAMCO, Inc., Baron Capital Management, Inc., Baron
    Asset Fund and Ronald Baron. Baron Capital Group, Inc. is a parent holding
    company of a group of investment management companies. BAMCO, Inc. and Baron
    Capital Management, Inc. are subsidiaries of Baron Capital Group, Inc. Baron
    Asset Fund is an investment advisory client of BAMCO, Inc. Ronald Baron owns
    a controlling interest in Baron Capital Group, Inc. Baron Capital Group,
    Inc. and Ronald Baron each have shared voting and dispositive power with
    respect to all 3,369,890 shares. BAMCO, Inc. has shared voting and
    dispositive power with respect to 2,780,300 shares. Baron Capital
    Management, Inc. has shared voting and dispositive power with respect to
    589,590 shares. Baron Asset Fund has shared voting and dispositive power
    with respect to 2,360,300 shares.

(2) Information regarding share ownership and ownership percentage was obtained
    from the Schedule 13G/A filed on February 4, 2002 jointly by Citigroup, Inc.
    and Salomon Smith Barney Holdings, Inc. CitiGroup, Inc. is the sole
    stockholder and parent holding company of Salomon Smith Barney Holdings,
    Inc. CitiGroup, Inc. has shared voting and dispositive power with respect to
    all 1,774,731 shares. Salomon Smith Barney Holdings, Inc. has shared voting
    and dispositive power with respect to 1,773,581 shares.

                                        63


                           RELATED PARTY TRANSACTIONS

     Mr. Markku Toivanen, a director of OMG, was formerly Senior Vice President
of Strategic Development of Outokumpu Oyj, our former majority stockholder. Our
Kokkola, Finland production facility (KCO) is situated on property owned by
Outokumpu Zinc Oy, an affiliate of Outokumpu Oyj. KCO and Outokumpu Zinc Oy
share certain physical facilities, services and utilities under agreements with
various expiration dates. Services and utilities also are provided to our
Harjavalta, Finland production facility (HNO) under similar agreements.
Utilities and raw material purchase assistance contracts provide that KCO and
HNO jointly purchase with, or pay a fee to, affiliates of Outokumpu Oyj for
assistance in negotiating contracts and securing bulk quantity discounts.
Amounts paid related to these raw material contracts and utilities agreements
amounted to approximately $116.0 million and $10.0 million, respectively, in
2001. We have other arrangements with Outokumpu Oyj affiliates relating to a
service agreement, a lease, and research and development. The aggregate of the
amounts paid by us during 2001 pursuant to these other arrangements amounted to
approximately $20.0 million.

                                        64


                      DESCRIPTION OF THE CREDIT FACILITIES

     The following description is only a summary of the material terms of the
credit facilities. This summary may not describe all of the terms of the credit
facilities that may be important to you. We will make available copies of the
credit facilities to holders of the notes upon request.

     In conjunction with the acquisition of the dmc(2) operations, the sale to
Ferro of the dmc(2) divisions and the refinancing of certain indebtedness,
Credit Suisse First Boston Corporation and National City Bank jointly underwrote
and jointly lead arranged $652.0 million of additional term loans under our
existing $658.0 million credit facilities. The credit facilities are comprised
of an amendment and restatement of our existing facilities and the additional
term loans. Effective as of August 10, 2001, the credit facilities were amended
to, among other things, extend the increased credit described above, modify
specific financial covenants and permit the offering of original notes.

     The credit facilities provide for up to $1,310.0 million of aggregate
borrowing capacity, consisting of:

     - a secured $135.0 million Term Loan A;

     - a secured $500.0 million Term Loan B;

     - a secured $350.0 million Asset Sale Term Loan; and

     - a secured revolving line of credit in an aggregate amount of $325.0
       million in available borrowings.

In addition, the credit facilities provide for a euro loan sub-facility, a swing
line loan sub-facility and a letter of credit sub-facility.

     As of December 31, 2001, there was approximately $920.7 million of
aggregate loans outstanding under the credit facilities, consisting of $127.2
million of the Term Loan A, $499.1 million of the Term Loan B and $294.4 million
of the Revolver. The Asset Sale Term Loan was fully repaid with the proceeds of
the sale of the dmc(2) divisions to Ferro and the corresponding commitment
amount is no longer available under the credit facilities. Approximately $106.7
million of Term Loan A and approximately $7.3 million of Term Loan B were repaid
with proceeds from the sale of our common stock on January 24, 2002 and the
corresponding commitment amounts are no longer available under the credit
facilities.

     The Term Loan A is subject to specified amortization payments required to
be made in quarterly installments that commenced in January, 2002 and will
continue until final payment is made in April, 2006. The Term Loan B is subject
to specified amortization payments required to be made in quarterly installments
that commenced in January, 2002 and will continue until final payment is made in
April, 2007. The Revolver is available until April 1, 2006 unless terminated
earlier under specified circumstances. Additionally, the loans under the credit
facilities and the aggregate available commitments under the credit facilities
(i) will be reduced in connection with specified asset and capital stock sales
and dispositions, receipt of specified insurance proceeds, and incurrences of
some indebtedness, and (ii) will be reduced by one-half of our Excess Cash Flow
(as defined in the credit facilities) if, commencing December 31, 2002, the
ratio of our Consolidated Total Debt to Consolidated EBITDA (as each is defined
in the credit facilities) exceeds a specified level.

     Borrowings under the Term Loan A, the Term Loan B and the Revolver bear
interest at a rate equal to, at our option, either (1) the base rate (which is
based on the greater of the prime rate most recently announced by the agent for
the credit facilities or the Federal Funds rate plus one-half of 1%) or (2) the
applicable London interbank rate, in each case plus an applicable margin
determined by reference to the ratio of our Consolidated Total Debt to
Consolidated EBITDA; provided that borrowings of swing line loans under the
Revolver portion of the credit facilities bear interest at a rate equal to
either (1) the money market rate or (2) the base rate plus an applicable margin
determined by reference to the ratio of our Consolidated Total Debt to
Consolidated EBITDA.

     Our obligations under the credit facilities are unconditionally guaranteed,
jointly and severally, by all of our material domestic direct and indirect
subsidiaries. Our obligations and the obligations of our guaranteeing
subsidiaries under the credit facilities are secured primarily by a first
priority perfected lien on all of our
                                        65


domestic personal property assets and a first priority pledge of 100% of the
common stock of our domestic subsidiaries and of 65% of the common stock of our
first-tier foreign subsidiaries. OMG AG & Co. KG, one of our foreign
subsidiaries, may obtain revolving loans under the euro loan sub-facility and is
liable to repay all such loans and related interest. We and our guarantor
subsidiaries are also liable in respect of such euro loans.

     The credit facilities contain, among other things, covenants requiring us
to obtain interest rate hedge protection for at least $350.0 million, and
restricting our ability and the ability of our subsidiaries to dispose of
assets, merge, pay dividends, repurchase or redeem capital stock, pay, prepay or
redeem specified indebtedness (including the notes), incur indebtedness and
guarantees, create liens, enter into agreements with negative pledge clauses,
make some investments or acquisitions, enter into sale and leaseback
transactions, enter into transactions with affiliates, change our fiscal year or
make any substantial change to the nature of the business we engage in
currently. The credit facilities also contain a number of representations and
warranties and specified financial covenants such as minimum interest coverage
ratios, maximum leverage ratios and minimum fixed charge coverage ratios.

     In addition, the credit facilities are subject to (i) a commitment fee
determined by reference to the unused portion of the Revolver, (ii) letter of
credit fees with respect to each letter of credit outstanding under the credit
facilities based on the applicable margin in effect for London interbank rate
loans for the Revolver, and (iii) some other fees that are usual and customary
for credit facilities of this nature.

                                        66


                            DESCRIPTION OF THE NOTES

     You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the word "OMG"
refers only to OM Group, Inc. and not to any of its subsidiaries.

     OMG issued the original notes and will issue the exchange notes under the
indenture among itself, the Guarantors and The Bank of New York, as trustee. The
terms of the notes include those stated in the indenture and those made part of
the indenture by reference to the Trust Indenture Act of 1939. The form and
terms of the exchange notes and the original notes are identical in all material
respects, except that transfer restrictions and registration rights applicable
to the original notes do not apply to the exchange notes.

     The following description is a summary of the material provisions of the
indenture and the registration rights agreement. It does not restate those
agreements in their entirety. We urge you to read the indenture and the
registration rights agreement because they, and not this description, define
your rights as holders of the notes. Copies of the indenture and the
registration rights agreement are available as set forth below under
"--Additional Information." Certain defined terms used in this description but
not defined below under "--Certain Definitions" have the meanings assigned to
them in the indenture.

     The registered Holder of a note will be treated as the owner of it for all
purposes. Only registered Holders will have rights under the indenture.

BRIEF DESCRIPTION OF THE NOTES AND GUARANTEES

 THE NOTES

     The original notes are, and the exchange notes will be:

     - general unsecured obligations of OMG;

     - subordinated in right of payment to all existing and future Senior Debt
       of OMG;

     - pari passu in right of payment with any future senior subordinated
       Indebtedness of OMG; and

     - unconditionally guaranteed by the Guarantors.

THE GUARANTEES

     The original notes are, and the exchange notes will be, guaranteed by all
of OMG's wholly-owned Domestic Restricted Subsidiaries. Each guarantee of the
notes is or will be:

     - a general unsecured obligation of the Guarantor;

     - subordinated in right of payment to all existing and future Senior Debt
       of that Guarantor; and

     - pari passu in right of payment with any future senior subordinated
       Indebtedness of that Guarantor.

     As of December 31, 2001, OMG and the Guarantors had total Senior Debt of
approximately $920.7 million. As indicated above and as discussed in detail
below under the caption "-- Subordination," payments on the notes and under
these guarantees are subordinated to the payment of Senior Debt. The indenture
permits us and the Guarantors to incur additional Senior Debt.

     Not all of our subsidiaries guarantee the notes. In the event of a
bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, the
non-guarantor subsidiary will pay the holders of its debt and its trade
creditors before it will be able to distribute any of its assets to us. The
guarantor subsidiaries generated 36% of our pro forma combined net sales for the
year ended December 31, 2001 and held 27% of our pro forma combined assets as of
December 31, 2001.

     Our operations are conducted through our subsidiaries and, therefore, we
depend on the cash flow of our subsidiaries to meet our obligations, including
our obligations under the notes. The notes are effectively subordinated in right
of payment to all Indebtedness and other liabilities and commitments (including
trade

                                        67


payables and lease obligations) of our non-guarantor subsidiaries. Any of our
rights to receive assets of any of these subsidiaries upon the subsidiary's
liquidation or reorganization (and the consequent right of the holders of the
notes to participate in those assets) will be effectively subordinated to the
claims of that subsidiary's creditors, except to the extent that we are
recognized as a creditor of the subsidiary, in which case our claims would still
be subordinate in right of payment to any security in the assets of the
subsidiary and any indebtedness of the subsidiary senior to that held by us. As
of December 31, 2001, our non-guarantor subsidiaries had approximately $712.5
million of liabilities, including trade payables but excluding intercompany
obligations and minority interests.

     As of the date of the indenture, all of our Domestic Subsidiaries are
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "-- Certain Covenants -- Designation of Restricted and
Unrestricted Subsidiaries," we are permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries are
not subject to many of the restrictive covenants in the indenture. Our
Unrestricted Subsidiaries will not guarantee the notes.

PRINCIPAL, MATURITY AND INTEREST

     OMG has issued $400.0 million in aggregate principal amount of original
notes and will issue up to that same amount of exchange notes pursuant to the
exchange offer. OMG may issue additional notes from time to time after this
exchange offer. Any offering of additional notes is subject to the covenant
described below under the caption "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock." The notes and any additional
notes subsequently issued under the indenture will be treated as a single class
for all purposes under the indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase. Notes are issued in
denominations of $1,000 and integral multiples of $1,000. The notes will mature
on December 15, 2011.

     Interest on the notes will accrue at the rate of 9 1/4% per annum and will
be payable semi-annually in arrears on June 15 and December 15, commencing on
June 15, 2002. OMG will make each interest payment to the Holders of record on
the immediately preceding June 1 and December 1.

     Interest on the exchange notes will accrue from the date of issuance of the
original notes or, if interest has already been paid on the original notes, from
the date it was most recently paid. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.

METHODS OF RECEIVING PAYMENTS ON THE NOTES

     If a Holder has given wire transfer instructions to OMG, OMG will pay all
principal, interest and premium and Liquidated Damages, if any, on that Holder's
notes in accordance with those instructions. All other payments on notes will be
made at the office or agency of the paying agent and registrar within the City
and State of New York unless OMG elects to make interest payments by check
mailed to the Holders at their address set forth in the register of Holders.

PAYING AGENT AND REGISTRAR FOR THE NOTES

     The trustee acts as paying agent and registrar. OMG may change the paying
agent or registrar without prior notice to the Holders of the notes, and OMG or
any of its Subsidiaries may act as paying agent or registrar.

TRANSFER AND EXCHANGE

     A Holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a Holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of notes.
Holders will be required to pay all taxes due on transfer. OMG is not required
to transfer or exchange any note selected for redemption. Also, OMG is not
required to transfer or exchange any note for a period of 15 days before a
selection of notes to be redeemed.

                                        68


SUBSIDIARY GUARANTEES

     The original notes are, and the exchange notes will be, guaranteed by each
of OMG's current and future wholly-owned Domestic Restricted Subsidiaries. These
Subsidiary Guarantees are joint and several obligations of the Guarantors. Each
Subsidiary Guarantee is subordinated to the prior payment in full of all Senior
Debt of that Guarantor. The obligations of each Guarantor under its Subsidiary
Guarantee will be limited as necessary to prevent that Subsidiary Guarantee from
constituting a fraudulent conveyance under applicable law. See "-- Risk
Factors."

     A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than OMG or another
Guarantor, unless:

        (1) immediately after giving effect to that transaction, no Default or
            Event of Default exists; and

        (2) either:

           (a) the Person acquiring the property in any such sale or disposition
               or the Person formed by or surviving any such consolidation or
               merger assumes all the obligations of that Guarantor under the
               indenture, its Subsidiary Guarantee and the registration rights
               agreement pursuant to a supplemental indenture satisfactory to
               the trustee; or

           (b) the Net Proceeds of such sale or other disposition are applied in
               accordance with the applicable provisions of the indenture.

     The Subsidiary Guarantee of a Guarantor will be released:

        (1) in connection with any sale or other disposition of all or
            substantially all of the assets of that Guarantor (including by way
            of merger or consolidation) to a Person that is not (either before
            or after giving effect to such transaction) a Subsidiary of OMG, if
            the sale or other disposition complies with the "Asset Sale"
            provisions of the indenture;

        (2) in connection with any sale of all of the Capital Stock of a
            Guarantor to a Person that is not (either before or after giving
            effect to such transaction) a Subsidiary of OMG, if the sale
            complies with the "Asset Sale" provisions of the indenture; or

        (3) if OMG designates any Restricted Subsidiary that is a Guarantor as
            an Unrestricted Subsidiary in accordance with the applicable
            provisions of the indenture.

     See "-- Repurchase at the Option of Holders -- Asset Sales."

SUBORDINATION

     The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes is subordinated to the prior payment in full of all Senior
Debt of OMG, including Senior Debt incurred after the date of the indenture.

     The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of notes will be entitled to receive
any payment with respect to the notes (except that Holders of notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under "-- Legal Defeasance and Covenant Defeasance"), in the event of
any distribution to creditors of OMG:

        (1) in a liquidation or dissolution of OMG;

        (2) in a bankruptcy, reorganization, insolvency, receivership or similar
            proceeding relating to OMG or its property;

        (3) in an assignment for the benefit of creditors; or

                                        69


        (4) in any marshaling of OMG's assets and liabilities.

     OMG also may not make any payment in respect of the notes (except in
Permitted Junior Securities or from the trust described under "-- Legal
Defeasance and Covenant Defeasance") if:

        (1) a payment default on Designated Senior Debt occurs and is continuing
            beyond any applicable grace period; or

        (2) any other default occurs and is continuing on any series of
            Designated Senior Debt that permits holders of that series of
            Designated Senior Debt to accelerate its maturity and the trustee
            receives a notice of such default (a "Payment Blockage Notice") from
            OMG or the holders of any Designated Senior Debt.

     Payments on the notes may and will be resumed:

        (1) in the case of a payment default, upon the date on which such
            default is cured or waived; and

        (2) in the case of a nonpayment default, upon the earlier of the date on
            which such nonpayment default is cured or waived or 179 days after
            the date on which the applicable Payment Blockage Notice is
            received, unless the maturity of any Designated Senior Debt has been
            accelerated.

     No new Payment Blockage Notice may be delivered unless and until:

        (1) 360 days have elapsed since the delivery of the immediately prior
            Payment Blockage Notice; and

        (2) all scheduled payments of principal, interest and premium and
            Liquidated Damages, if any, on the notes that have come due have
            been paid in full in cash.

     No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee will be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default has been
cured or waived for a period of not less than 180 days.

     If the trustee or any Holder of the notes receives a payment in respect of
the notes (except in Permitted Junior Securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance") when:

        (1) the payment is prohibited by these subordination provisions; and

        (2) the trustee or the Holder has actual knowledge that the payment is
            prohibited;

the trustee or the Holder, as the case may be, will hold the payment in trust
for the benefit of the holders of Senior Debt. Upon the proper written request
of the holders of Senior Debt, the trustee or the Holder, as the case may be,
will deliver the amounts in trust to the holders of Senior Debt or their proper
representative.

     OMG must promptly notify holders of Senior Debt if payment of the notes is
accelerated because of an Event of Default.

     As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of OMG, Holders of notes may
recover less ratably than creditors of OMG who are holders of Senior Debt. See
"Risk Factors."

OPTIONAL REDEMPTION

     At any time prior to December 15, 2004, OMG may on any one or more
occasions redeem up to 35% of the aggregate principal amount of notes issued
under the indenture at a redemption price of (i) 104% of the principal amount,
if such redemption had occurred prior to April 12, 2002 or (ii) 109.250% of the
principal amount, if such redemption occurs on or after April 12, 2002, in each
case, plus accrued and unpaid

                                        70


interest and Liquidated Damages, if any, to the redemption date, with the net
cash proceeds of one or more Public Equity Offerings; provided that:

        (1) at least 65% of the aggregate principal amount of notes issued under
            the indenture remains outstanding immediately after the occurrence
            of such redemption (excluding notes held by OMG and its
            Subsidiaries); and

        (2) the redemption occurs within 60 days of the date of the closing of
            such Public Equity Offering.

     At any time prior to December 15, 2006, OMG may also redeem all or a part
of the notes upon the occurrence of a Change of Control, upon not less than 30
nor more than 60 days prior notice (but in no event may any such redemption
occur more than 90 days after the occurrence of such Change of Control) mailed
by first-class mail to each Holder's registered address, at a redemption price
equal to 100% of the principal amount of notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Liquidated Damages, if any,
to the date of redemption (the "Redemption Date").

     After December 15, 2006, OMG may redeem all or a part of the notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, on the notes redeemed, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on December 15 of the years indicated below:



YEAR                                                           PERCENTAGE
----                                                           ----------
                                                            
2006........................................................    104.625%
2007........................................................    103.083%
2008........................................................    101.542%
2009 and thereafter.........................................    100.000%


MANDATORY REDEMPTION

     OMG is not required to make mandatory redemption or sinking fund payments
with respect to the notes.

REPURCHASE AT THE OPTION OF HOLDERS

CHANGE OF CONTROL

     If a Change of Control occurs and OMG does not exercise its option to
redeem the notes, each Holder of notes will have the right to require OMG to
repurchase all or any part (equal to $1,000 or an integral multiple of $1,000)
of that Holder's notes pursuant to a Change of Control Offer on the terms set
forth in the indenture. In the Change of Control Offer, OMG will offer a Change
of Control Payment in cash equal to 101% of the aggregate principal amount of
notes repurchased plus accrued and unpaid interest and Liquidated Damages, if
any, on the notes repurchased, to the date of purchase. Within 10 days following
the expiration of the notice period with respect to OMG's ability to redeem the
notes after any Change of Control, OMG will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase notes on the Change of Control Payment Date specified
in the notice, which date will be no earlier than 30 days and no later than 60
days from the date such notice is mailed, pursuant to the procedures required by
the indenture and described in such notice. OMG will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the indenture, OMG
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Change of Control provisions
of the indenture by virtue of such conflict.

     On the Change of Control Payment Date, OMG will, to the extent lawful:

        (1) accept for payment all notes or portions of notes properly tendered
            pursuant to the Change of Control Offer;

                                        71


        (2) deposit with the paying agent an amount equal to the Change of
            Control Payment in respect of all notes or portions of notes
            properly tendered; and

        (3) deliver or cause to be delivered to the trustee the notes properly
            accepted together with an officers' certificate stating the
            aggregate principal amount of notes or portions of notes being
            purchased by OMG.

     The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each new note will be in a
principal amount of $1,000 or an integral multiple of $1,000.

     The agreements governing OMG's outstanding Senior Debt currently prohibit
OMG from repurchasing or redeeming any notes. Prior to complying with any of the
provisions of this "Change of Control" covenant, but in any event within 90 days
following a Change of Control, OMG will either repay all outstanding Senior Debt
or obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of notes required by this
covenant. OMG will publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.

     The provisions described above that require OMG to make a Change of Control
Offer following a Change of Control will be applicable whether or not any other
provisions of the indenture are applicable. Except as described above with
respect to a Change of Control, the indenture does not contain provisions that
permit the Holders of the notes to require that OMG repurchase or redeem the
notes in the event of a takeover, recapitalization or similar transaction.

     OMG will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control Offer made by OMG and purchases all
notes properly tendered and not withdrawn under the Change of Control Offer.

     The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of OMG and its Restricted
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of notes to require OMG to repurchase its notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of OMG and its Subsidiaries taken as a whole to another Person or group may be
uncertain.

  ASSET SALES

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:

        (1) OMG (or the Restricted Subsidiary, as the case may be) receives
            consideration at the time of the Asset Sale at least equal to the
            fair market value of the assets or Equity Interests issued or sold
            or otherwise disposed of;

        (2) the fair market value is determined by OMG's Board of Directors and
            evidenced by a resolution of the Board of Directors set forth in an
            officers' certificate delivered to the trustee; and

        (3) at least 75% of the consideration received in the Asset Sale by OMG
            or such Restricted Subsidiary is in the form of cash. For purposes
            of this provision, each of the following will be deemed to be cash:

           (a) any liabilities, as shown on OMG's or such Restricted
               Subsidiary's most recent balance sheet, of OMG or any Restricted
               Subsidiary (other than contingent liabilities and liabilities
               that are by their terms subordinated to the notes or any
               Subsidiary Guarantee) that are

                                        72


               assumed by the transferee of any such assets pursuant to a
               customary novation agreement that releases OMG or such Restricted
               Subsidiary from further liability; and

           (b) any securities, notes or other obligations received by OMG or any
               such Restricted Subsidiary from such transferee that are
               converted by OMG or such Restricted Subsidiary into cash within
               180 days of their receipt, to the extent of the cash received in
               that conversion.

     Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
OMG may apply those Net Proceeds at its option:

        (1) to repay Senior Debt and, if the Senior Debt repaid is revolving
            credit Indebtedness, to correspondingly reduce commitments with
            respect thereto;

        (2) to acquire all or substantially all of the assets of, or a majority
            of the Voting Stock of, another Permitted Business;

        (3) to make a capital expenditure; or

        (4) to acquire other long-term assets that are used or useful in a
            Permitted Business.

     Pending the final application of any Net Proceeds, OMG may temporarily
reduce revolving credit borrowings or otherwise invest the Net Proceeds in any
manner that is not prohibited by the indenture.

     Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, OMG will make an
Asset Sale Offer to all Holders of notes and all holders of other Indebtedness
that is pari passu with the notes containing provisions similar to those set
forth in the indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase the maximum principal amount of notes
and such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of
principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, OMG may use those
Excess Proceeds for any purpose not otherwise prohibited by the indenture. If
the aggregate principal amount of notes and other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
trustee will select the notes and such other pari passu Indebtedness to be
purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds will be reset at zero.

     OMG will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with each repurchase of notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sale provisions of the
indenture, OMG will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under the Asset Sale
provisions of the indenture by virtue of such conflict.

     The agreements governing OMG's outstanding Senior Debt currently prohibit
OMG from purchasing any notes, and also provides that certain change of control
or asset sale events with respect to OMG would constitute a default under these
agreements. Any future credit agreements or other agreements relating to Senior
Debt to which OMG becomes a party may contain similar restrictions and
provisions. In the event a Change of Control or Asset Sale occurs at a time when
OMG is prohibited from purchasing notes, OMG could seek the consent of its
senior lenders to the purchase of notes or could attempt to refinance the
borrowings that contain such prohibition. If OMG does not obtain such a consent
or repay such borrowings, OMG will remain prohibited from purchasing notes. In
such case, OMG's failure to purchase tendered notes would constitute an Event of
Default under the indenture which would, in turn, constitute a default under
such Senior Debt. In such circumstances, the subordination provisions in the
indenture would likely restrict payments to the Holders of notes.

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SELECTION AND NOTICE

     If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:

        (1) if the notes are listed on any national securities exchange, in
            compliance with the requirements of the principal national
            securities exchange on which the notes are listed; or

        (2) if the notes are not listed on any national securities exchange, on
            a pro rata basis, by lot or by such method as the trustee deems fair
            and appropriate.

     No notes of $1,000 or less can be redeemed in part. Notices of redemption
will be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of notes to be redeemed at its registered
address, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the
notes or a satisfaction and discharge of the indenture. Notices of redemption
may not be conditional.

     If any note is to be redeemed in part only, the notice of redemption that
relates to that note will state the portion of the principal amount of that note
that is to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note will be issued in the name of the Holder of notes
upon cancellation of the original note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.

CERTAIN COVENANTS

RESTRICTED PAYMENTS

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
directly or indirectly:

        (1) declare or pay any dividend or make any other payment or
            distribution on account of OMG's or any of its Restricted
            Subsidiaries' Equity Interests (including, without limitation, any
            payment in connection with any merger or consolidation involving OMG
            or any of its Restricted Subsidiaries) or to the direct or indirect
            holders of OMG's or any of its Restricted Subsidiaries' Equity
            Interests in their capacity as such (other than dividends or
            distributions payable in Equity Interests (other than Disqualified
            Stock) of OMG or to OMG or a Restricted Subsidiary of OMG);

        (2) purchase, redeem or otherwise acquire or retire for value
            (including, without limitation, in connection with any merger or
            consolidation involving OMG) any Equity Interests of OMG or any
            direct or indirect parent of OMG;

        (3) make any payment on or with respect to, or purchase, redeem, defease
            or otherwise acquire or retire for value any Indebtedness that is
            subordinated to the notes or the Subsidiary Guarantees, except a
            payment of interest or principal at the Stated Maturity thereof; or

        (4) make any Restricted Investment (all such payments and other actions
            set forth in these clauses (1) through (4) above being collectively
            referred to as "Restricted Payments"),

unless, at the time of and after giving effect to such Restricted Payment:

        (1) no Default or Event of Default has occurred and is continuing or
            would occur as a reasonably foreseeable consequence of such
            Restricted Payment; and

        (2) OMG would, at the time of such Restricted Payment and after giving
            pro forma effect thereto as if such Restricted Payment had been made
            at the beginning of the applicable four-quarter period, have been
            permitted to incur at least $1.00 of additional Indebtedness
            pursuant to the Fixed Charge Coverage Ratio test set forth in the
            first paragraph of the covenant described below under the caption
            "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" and

                                        74


        (3) such Restricted Payment, together with the aggregate amount of all
            other Restricted Payments made by OMG and its Restricted
            Subsidiaries after the date of the indenture (excluding Restricted
            Payments permitted by clauses (2), (3) and (4) of the next
            succeeding paragraph), is less than the sum, without duplication,
            of:

           (a) 50% of the Consolidated Net Income of OMG for the period (taken
               as one accounting period) from the beginning of the first fiscal
               quarter commencing after the date of the indenture to the end of
               OMG's most recently ended fiscal quarter for which internal
               financial statements are available at the time of such Restricted
               Payment (or, if such Consolidated Net Income for such period is a
               deficit, less 100% of such deficit), plus

           (b) 100% of the aggregate net cash proceeds received by OMG since the
               date of the indenture as a contribution to its common equity
               capital or from the issue or sale of Equity Interests of OMG
               (other than Disqualified Stock) or from the issue or sale of
               convertible or exchangeable Disqualified Stock or convertible or
               exchangeable debt securities of OMG that have been converted into
               or exchanged for such Equity Interests (other than Equity
               Interests (or Disqualified Stock or debt securities) sold to a
               Subsidiary of OMG), plus

           (c) to the extent that any Restricted Investment that was made after
               the date of the indenture is sold for cash or otherwise
               liquidated or repaid for cash, the lesser of (i) the cash return
               of capital with respect to such Restricted Investment (less the
               cost of disposition, if any) and (ii) the initial amount of such
               Restricted Investment.

     The preceding provisions do not prohibit:

        (1) so long as no Default has occurred and is continuing or would be
            caused thereby, the payment of any dividend within 60 days after the
            date of declaration of the dividend, if at the date of declaration
            the dividend payment would have complied with the provisions of the
            indenture;

        (2) the redemption, repurchase, retirement, defeasance or other
            acquisition of any subordinated Indebtedness of OMG or any Guarantor
            or of any Equity Interests of OMG in exchange for, or out of the net
            cash proceeds of the substantially concurrent sale (other than to a
            Restricted Subsidiary of OMG) of, Equity Interests of OMG (other
            than Disqualified Stock); provided that the amount of any such net
            cash proceeds that are utilized for any such redemption, repurchase,
            retirement, defeasance or other acquisition will be excluded from
            clause (3) (b) of the preceding paragraph;

        (3) the defeasance, redemption, repurchase or other acquisition of
            subordinated Indebtedness of OMG or any Guarantor with the net cash
            proceeds from an incurrence of Permitted Refinancing Indebtedness;

        (4) the payment of any dividend by a Restricted Subsidiary of OMG to the
            holders of its Equity Interests on a pro rata basis;

        (5) so long as no Default has occurred and is continuing or would be
            caused thereby, the repurchase, redemption or other acquisition or
            retirement for value of any Equity Interests of OMG or any
            Restricted Subsidiary of OMG held by any member of OMG's (or any of
            its Restricted Subsidiaries') management or board of directors
            pursuant to any management equity subscription agreement, stock
            option agreement or similar agreement; provided that the aggregate
            price paid for all such repurchased, redeemed, acquired or retired
            Equity Interests may not exceed $2.0 million in any calendar year,
            with unused amounts in any calendar year being carried over to
            succeeding years;

        (6) the repurchase of any Equity Interest of OMG or any Restricted
            Subsidiary of OMG deemed to occur upon exercise of stock options if
            those Equity Interests represent all or a portion of the exercise
            price of those options;

                                        75


        (7) payments in connection with the Transactions, including any purchase
            price adjustment or other payment made pursuant to any agreement
            relating to any of the Transactions; and

        (8) so long as no Default has occurred and is continuing or would be
            caused thereby, other Restricted Payments in an amount not to exceed
            $20.0 million.

     The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by OMG or such Restricted Subsidiary, as
the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant will be
determined by the Board of Directors whose resolution with respect thereto will
be delivered to the trustee. The Board of Directors' determination must be based
upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if the fair market value exceeds $5.0 million.
Not later than the date of making any Restricted Payment, OMG will deliver to
the trustee an officers' certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this "Restricted Payments" covenant were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.

  INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and OMG may
not issue any Disqualified Stock and may not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; provided, however, that OMG
may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock,
and OMG's Restricted Subsidiaries may incur Indebtedness or issue preferred
stock, if the Fixed Charge Coverage Ratio for OMG's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.25 to 1
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.

     The first paragraph of this covenant does not prohibit the incurrence of
any of the following items of Indebtedness (collectively, "Permitted Debt"):

         (1) the incurrence by OMG and any Guarantor of additional Indebtedness
             and letters of credit under Credit Facilities in an aggregate
             principal amount at any one time outstanding under this clause (1)
             (with letters of credit being deemed to have a principal amount
             equal to the maximum potential reimbursement liability of OMG and
             its Subsidiaries thereunder) not to exceed the greater of $1,060.0
             million or the Borrowing Base, in each case, less the aggregate
             amount of all Net Proceeds of Asset Sales applied by OMG or any of
             its Restricted Subsidiaries to repay any Indebtedness under a
             Credit Facility and effect a corresponding commitment reduction
             thereunder pursuant to the covenant described above under the
             caption "-- Repurchase at the Option of Holders -- Asset Sales;"

         (2) the incurrence by Foreign Subsidiaries of Indebtedness in addition
             to that otherwise permitted under the indenture in an aggregate
             principal amount at any one time outstanding, including all
             Permitted Refinancing Indebtedness incurred to refund, refinance or
             replace any Indebtedness incurred pursuant to this clause (2), not
             to exceed $50.0 million;

         (3) the incurrence by OMG and its Restricted Subsidiaries of the
             Existing Indebtedness;

         (4) the incurrence by OMG and the Guarantors of Indebtedness
             represented by the notes and the related Subsidiary Guarantees to
             be issued on the date of the indenture and the exchange notes and
             the related Subsidiary Guarantees to be issued pursuant to the
             registration rights agreement;
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         (5) the incurrence by OMG or any of its Restricted Subsidiaries of
             Indebtedness represented by Capital Lease Obligations, mortgage
             financings or purchase money obligations, or the issuance of
             Disqualified Stock, in each case, incurred or issued for the
             purpose of financing all or any part of the purchase price or cost
             of construction or improvement of property, plant or equipment used
             in the business of OMG or such Restricted Subsidiary, in an
             aggregate principal amount and/or aggregate liquidation preference
             amount, as applicable, including all Permitted Refinancing
             Indebtedness incurred to refund, refinance or replace any
             Indebtedness incurred pursuant to this clause (5), not to
             collectively exceed $25.0 million at any time outstanding;

         (6) the incurrence by OMG or any of its Restricted Subsidiaries of
             Permitted Refinancing Indebtedness in exchange for, or the net
             proceeds of which are used to refund, refinance or replace
             Indebtedness (other than intercompany Indebtedness) that was
             permitted by the indenture to be incurred under the first paragraph
             of this covenant or clauses (2), (3), (4), (5), (6) or (11) of this
             paragraph;

         (7) the incurrence by OMG or any of its Restricted Subsidiaries of
             intercompany Indebtedness between or among OMG and any of its
             Restricted Subsidiaries; provided, however, that:

           (a) if OMG or any Guarantor is the obligor on such Indebtedness, such
               Indebtedness must be expressly subordinated to the prior payment
               in full in cash of all Obligations with respect to the notes, in
               the case of OMG, or the Subsidiary Guarantee, in the case of a
               Guarantor; and

           (b) (i) any subsequent issuance or transfer of Equity Interests that
               results in any such Indebtedness being held by a Person other
               than OMG or a Restricted Subsidiary of OMG and (ii) any sale or
               other transfer of any such Indebtedness to a Person that is not
               either OMG or a Restricted Subsidiary of OMG; will be deemed, in
               each case, to constitute an incurrence of such Indebtedness by
               OMG or such Restricted Subsidiary, as the case may be, that was
               not permitted by this clause (7);

         (8) the incurrence by OMG or any of its Restricted Subsidiaries of
             Hedging Obligations in the ordinary course of business;

         (9) the guarantee by OMG or any of the Guarantors of Indebtedness of
             OMG or a Restricted Subsidiary of OMG that was permitted to be
             incurred by another provision of this covenant;

        (10) the accrual of interest, the accretion or amortization of original
             issue discount, the payment of interest on any Indebtedness in the
             form of additional Indebtedness with the same terms, and the
             payment of dividends on Disqualified Stock in the form of
             additional shares of the same class of Disqualified Stock will not
             be deemed to be an incurrence of Indebtedness or an issuance of
             Disqualified Stock for purposes of this covenant; provided, in each
             such case, that the amount thereof is included in Fixed Charges of
             OMG as accrued; and

        (11) the incurrence by OMG or any of its Restricted Subsidiaries of
             additional Indebtedness in an aggregate principal amount (or
             accreted value, as applicable) at any time outstanding, together
             with the issuance of Disqualified Stock in an aggregate liquidation
             preference amount at any time outstanding, including all Permitted
             Refinancing Indebtedness incurred to refund, refinance or replace
             any Indebtedness incurred pursuant to this clause (11), not to
             exceed $75.0 million.

     For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (11) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, OMG is
permitted to classify such item of Indebtedness on the date of its incurrence,
or later reclassify all or a portion of such item of Indebtedness, in any manner
that complies with this covenant. Indebtedness under Credit Facilities
outstanding on the date on which notes are

                                        77


first issued and authenticated under the indenture will be deemed to have been
incurred on such date in reliance on the exception provided by clause (1) of the
definition of Permitted Debt.

NO SENIOR SUBORDINATED DEBT

     OMG may not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
any Senior Debt of OMG and senior in any respect in right of payment to the
notes. No Guarantor may incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to the Senior Debt of such Guarantor and senior in any respect in right
of payment to such Guarantor's Subsidiary Guarantee.

LIENS

     OMG may not and may not permit any of its Subsidiaries to, create, incur,
assume or otherwise cause or suffer to exist or become effective any Lien of any
kind securing Indebtedness, Attributable Debt or trade payables (other than
Permitted Liens) upon any of their property or assets, now owned or hereafter
acquired, unless all payments due under the indenture and the notes are secured
on an equal and ratable basis with the obligations so secured until such time as
such obligations are no longer secured by a Lien.

DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:

         (1) pay dividends or make any other distributions on its Capital Stock
             to OMG or any of its Restricted Subsidiaries, or with respect to
             any other interest or participation in, or measured by, its
             profits, or pay any indebtedness owed to OMG or any of its
             Restricted Subsidiaries;

         (2) make loans or advances to OMG or any of its Restricted
             Subsidiaries; or

         (3) transfer any of its properties or assets to OMG or any of its
             Restricted Subsidiaries.

     However, the preceding restrictions do not apply to encumbrances or
restrictions existing under or by reason of:

         (1) agreements governing Existing Indebtedness and Credit Facilities as
             in effect on the date of the indenture and any amendments,
             modifications, restatements, renewals, increases, supplements,
             refundings, replacements or refinancings of those agreements,
             provided that the amendments, modifications, restatements,
             renewals, increases, supplements, refundings, replacement or
             refinancings are no more restrictive, taken as a whole, with
             respect to such dividend and other payment restrictions than those
             contained in those agreements on the date of the indenture;

         (2) the indenture, the notes and the Subsidiary Guarantees;

         (3) applicable law;

         (4) any instrument governing Indebtedness or Capital Stock of a Person
             acquired by OMG or any of its Restricted Subsidiaries as in effect
             at the time of such acquisition (except to the extent such
             Indebtedness or Capital Stock was incurred in connection with or in
             contemplation of such acquisition), which encumbrance or
             restriction is not applicable to any Person, or the properties or
             assets of any Person, other than the Person, or the property or
             assets of the Person, so acquired, provided that, in the case of
             Indebtedness, such Indebtedness was permitted by the terms of the
             indenture to be incurred;

         (5) customary non-assignment provisions in leases entered into in the
             ordinary course of business and consistent with past practices;

                                        78


         (6) purchase money obligations for property acquired in the ordinary
             course of business that impose restrictions on that property of the
             nature described in clause (3) of the preceding paragraph;

         (7) any agreement for the sale or other disposition of a Restricted
             Subsidiary that restricts distributions by that Restricted
             Subsidiary pending its sale or other disposition;

         (8) Permitted Refinancing Indebtedness, provided that the restrictions
             contained in the agreements governing such Permitted Refinancing
             Indebtedness are no more restrictive, taken as a whole, than those
             contained in the agreements governing the Indebtedness being
             refinanced;

         (9) Liens securing Indebtedness otherwise permitted to be incurred
             under the provisions of the covenant described above under the
             caption "-- Liens" that limit the right of the debtor to dispose of
             the assets subject to such Liens;

        (10) restrictions on cash or other deposits or net worth imposed by
             customers under contracts entered into in the ordinary course of
             business; and

        (11) customary provisions in joint venture agreements, asset sale
             agreements, stock sale agreements and other similar agreements
             entered into in the ordinary course of business.

  MERGER, CONSOLIDATION OR SALE OF ASSETS

     OMG may not, directly or indirectly: (1) consolidate or merge with or into
another Person (whether or not OMG is the surviving corporation); or (2) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of OMG and its Restricted Subsidiaries taken as a whole, in
one or more related transactions, to another Person, unless:

        (1) either: (a) OMG is the surviving corporation; or (b) the Person
            formed by or surviving any such consolidation or merger (if other
            than OMG) or to which such sale, assignment, transfer, conveyance or
            other disposition has been made is a corporation organized or
            existing under the laws of the United States, any state of the
            United States or the District of Columbia;

        (2) the Person formed by or surviving any such consolidation or merger
            (if other than OMG) or the Person to which such sale, assignment,
            transfer, conveyance or other disposition has been made assumes all
            the obligations of OMG under the notes, the indenture and the
            registration rights agreement pursuant to agreements reasonably
            satisfactory to the trustee;

        (3) immediately after such transaction no Default or Event of Default
            exists; and

        (4) OMG or the Person formed by or surviving any such consolidation or
            merger (if other than OMG), or to which such sale, assignment,
            transfer, conveyance or other disposition has been made:

           (a) will have Consolidated Net Worth immediately after the
               transaction equal to or greater than the Consolidated Net Worth
               of OMG immediately preceding the transaction; and

           (b) will, on the date of such transaction after giving pro forma
               effect thereto and any related financing transactions as if the
               same had occurred at the beginning of the applicable four-
               quarter period, be permitted to incur at least $1.00 of
               additional Indebtedness pursuant to the Fixed Charge Coverage
               Ratio test set forth in the first paragraph of the covenant
               described above under the caption "-- Incurrence of Indebtedness
               and Issuance of Preferred Stock."

     In addition, OMG may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation or Sale of
Assets" covenant does not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among OMG and any of its Guarantors.

                                        79


  TRANSACTIONS WITH AFFILIATES

     OMG may not, and may not permit any of its Restricted Subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:

        (1) the Affiliate Transaction is on terms that are no less favorable to
            OMG or the relevant Restricted Subsidiary than those that would have
            been obtained in a comparable transaction by OMG or such Restricted
            Subsidiary with an unrelated Person; and

        (2) OMG delivers to the trustee:

           (a) with respect to any Affiliate Transaction or series of related
               Affiliate Transactions involving aggregate consideration in
               excess of $5.0 million, a resolution of the Board of Directors
               set forth in an officers' certificate certifying that such
               Affiliate Transaction complies with this covenant and that such
               Affiliate Transaction has been approved by a majority of the
               disinterested members of the Board of Directors; and

           (b) with respect to any Affiliate Transaction or series of related
               Affiliate Transactions involving aggregate consideration in
               excess of $10.0 million, an opinion as to the fairness to the
               Holders of such Affiliate Transaction from a financial point of
               view issued by an accounting, appraisal or investment banking
               firm of national standing.

     The following items are not deemed to be Affiliate Transactions and,
therefore, are not subject to the provisions of the prior paragraph:

        (1) any employment agreement entered into by OMG or any of its
            Restricted Subsidiaries in the ordinary course of business and
            consistent with the past practice of OMG or such Restricted
            Subsidiary;

        (2) transactions between or among OMG and/or its Restricted
            Subsidiaries;

        (3) transactions with a Person that is an Affiliate of OMG solely
            because OMG owns an Equity Interest in, or controls, such Person;

        (4) payment of reasonable directors fees to Persons who are not
            otherwise Affiliates of OMG;

        (5) sales of Equity Interests (other than Disqualified Stock) to
            Affiliates of OMG;

        (6) Restricted Payments that are permitted by the provisions of the
            indenture described above under the caption "-- Restricted
            Payments"; and

        (7) any agreement as in effect on the date of the indenture or any
            amendment thereto (so long as that amendment is not disadvantageous
            to the holders of the notes in any material respect) or any
            transaction contemplated thereby.

  ADDITIONAL SUBSIDIARY GUARANTEES

     If OMG or any of its Subsidiaries acquires or creates another wholly-owned
Domestic Restricted Subsidiary after the date of the indenture, then that newly
acquired or created wholly-owned Domestic Restricted Subsidiary will become a
Guarantor and execute a supplemental indenture and deliver an opinion of counsel
satisfactory to the trustee within 10 Business Days of the date on which it was
acquired or created; provided that this covenant does not apply to all
Subsidiaries that have properly been designated as Unrestricted Subsidiaries in
accordance with the indenture for so long as they continue to constitute
Unrestricted Subsidiaries.

                                        80


  DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES

     The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by OMG and its Restricted
Subsidiaries in the Subsidiary properly designated will be deemed to be an
Investment made as of the time of the designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "-- Restricted Payments" or Permitted
Investments, as determined by OMG. That designation will only be permitted if
the Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if the redesignation would not cause a Default.

  SALE AND LEASEBACK TRANSACTIONS

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that OMG or any
Restricted Subsidiary may enter into a sale and leaseback transaction if:

        (1) OMG or that Restricted Subsidiary, as applicable, could have (a)
            incurred Indebtedness in an amount equal to the Attributable Debt
            relating to such sale and leaseback transaction under the Fixed
            Charge Coverage Ratio test in the first paragraph of the covenant
            described above under the caption "-- Incurrence of Indebtedness and
            Issuance of Preferred Stock" and (b) incurred a Lien to secure such
            Indebtedness pursuant to the covenant described above under the
            caption "-- Liens;"

        (2) the gross cash proceeds of that sale and leaseback transaction are
            at least equal to the fair market value, as determined in good faith
            by the Board of Directors and set forth in an officers' certificate
            delivered to the trustee, of the property that is the subject of
            that sale and leaseback transaction; and

        (3) the transfer of assets in that sale and leaseback transaction is
            permitted by, and OMG applies the proceeds of such transaction in
            compliance with, the covenant described above under the caption
            "-- Repurchase at the Option of Holders -- Asset Sales."

  LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY OWNED
RESTRICTED SUBSIDIARIES

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests in
any Wholly Owned Restricted Subsidiary of OMG to any Person (other than OMG or a
Wholly Owned Restricted Subsidiary of OMG), unless:

        (1) such transfer, conveyance, sale, lease or other disposition is of
            all the Equity Interests in such Wholly Owned Restricted Subsidiary;
            and

        (2) the cash Net Proceeds from such transfer, conveyance, sale, lease or
            other disposition are applied in accordance with the covenant
            described above under the caption "-- Repurchase at the Option of
            Holders -- Asset Sales."

     In addition, OMG may not permit any Wholly Owned Restricted Subsidiary of
OMG to issue any of its Equity Interests (other than, if necessary, shares of
its Capital Stock constituting directors' qualifying shares) to any Person other
than to OMG or a Wholly Owned Restricted Subsidiary of OMG, unless OMG is
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock."

                                        81


  BUSINESS ACTIVITIES

     OMG may not, and may not permit any Restricted Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to OMG and its Restricted Subsidiaries taken as a whole.

  PAYMENTS FOR CONSENT

     OMG may not, and may not permit any of its Restricted Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the indenture or the notes unless
such consideration is offered to be paid and is paid to all Holders of the notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

REPORTS

     Whether or not required by the SEC, so long as any notes are outstanding,
OMG will furnish to the Holders of notes, within the time periods specified in
the SEC's rules and regulations:

        (1) all quarterly and annual financial information that would be
            required to be contained in a filing with the SEC on Forms 10-Q and
            10-K if OMG were required to file such Forms, including a
            "Management's Discussion and Analysis of Financial Condition and
            Results of Operations" and, with respect to the annual information
            only, a report on the annual financial statements by OMG's certified
            independent accountants; and

        (2) all current reports that would be required to be filed with the SEC
            on Form 8-K if OMG were required to file such reports.

     In addition, following the consummation of this exchange offer, whether or
not required by the SEC, OMG will file a copy of all of the information and
reports referred to in clauses (1) and (2) above with the SEC for public
availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, OMG and the Subsidiary Guarantors have agreed that, for so
long as any notes remain outstanding, they will furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

EVENTS OF DEFAULT AND REMEDIES

     Each of the following is an Event of Default:

        (1) default for 30 days in the payment when due of interest on, or
            Liquidated Damages with respect to, the notes whether or not
            prohibited by the subordination provisions of the indenture;

        (2) default in payment when due of the principal of, or premium, if any,
            on the notes, whether or not prohibited by the subordination
            provisions of the indenture;

        (3) failure by OMG or any of its Restricted Subsidiaries to comply with
            the provisions described under the captions "-- Repurchase at the
            Option of Holders -- Change of Control," "-- Repurchase at the
            Option of Holders -- Asset Sales," "-- Certain
            Covenants -- Restricted Payments," "-- Certain
            Covenants -- Incurrence of Indebtedness and Issuance of Preferred
            Stock" or "-- Certain Covenants -- Merger, Consolidation or Sale of
            Assets;"

        (4) failure by OMG or any of its Restricted Subsidiaries for 60 days
            after notice to comply with any of the other agreements in the
            indenture;

        (5) default under any mortgage, indenture or instrument under which
            there may be issued or by which there may be secured or evidenced
            any Indebtedness for money borrowed by OMG or any of its Restricted
            Subsidiaries (or the payment of which is guaranteed by OMG or any of
            its
                                        82


            Restricted Subsidiaries) whether such Indebtedness or guarantee now
            exists, or is created after the date of the indenture, if that
            default:

           (a) is caused by a failure to pay principal of, or interest or
               premium, if any, on such Indebtedness prior to the expiration of
               the grace period provided in such Indebtedness on the date of
               such default (a "Payment Default"); or

           (b) results in the acceleration of such Indebtedness prior to its
               express maturity;

             and, in each case, the principal amount of any such Indebtedness,
             together with the principal amount of any other such Indebtedness
             under which there has been a Payment Default or the maturity of
             which has been so accelerated, aggregates $15.0 million or more;

        (6) failure by OMG or any of its Restricted Subsidiaries to pay final
            judgments aggregating at any time in excess of $15.0 million, which
            judgments are not paid, discharged or stayed for a period of 60
            days;

        (7) except as permitted by the indenture, any Subsidiary Guarantee shall
            be held in any judicial proceeding to be unenforceable or invalid or
            shall cease for any reason to be in full force and effect or any
            Guarantor, or any Person acting on behalf of any Guarantor, shall
            deny or disaffirm its obligations under its Subsidiary Guarantee;
            and

        (8) certain events of bankruptcy or insolvency described in the
            indenture with respect to OMG or any of its Restricted Subsidiaries.

     In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to OMG, any Restricted Subsidiary that is
a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding notes will
become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the trustee or the Holders of
at least 25% in principal amount of the then outstanding notes may declare all
the notes to be due and payable immediately.

     Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from Holders of the
notes notice of any continuing Default or Event of Default if it determines that
withholding notes is in their interest, except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages.

     The Holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the Holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the notes.

     In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of OMG with the intention
of avoiding payment of the premium that OMG would have had to pay if OMG then
had elected to redeem the notes pursuant to the optional redemption provisions
of the indenture, an equivalent premium will also become and be immediately due
and payable to the extent permitted by law upon the acceleration of the notes.
If an Event of Default occurs prior to December 15, 2006 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of OMG with
the intention of avoiding the prohibition on redemption of the notes prior to
December 15, 2006 then the premium specified in the indenture will also become
immediately due and payable to the extent permitted by law upon the acceleration
of the notes.

     OMG is required to deliver to the trustee annually a statement regarding
compliance with the indenture. Upon becoming aware of any Default or Event of
Default, OMG is required to deliver to the trustee a statement specifying such
Default or Event of Default.

                                        83


NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

     No director, officer, employee, incorporator or stockholder of OMG or any
Guarantor, as such, will have any liability for any obligations of OMG or the
Guarantors under the notes, the indenture, the Subsidiary Guarantees, or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of notes by accepting a note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the notes. The waiver may not be effective to waive liabilities under the
federal securities laws.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

     OMG may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes and all obligations
of the Guarantors discharged with respect to their Subsidiary Guarantees ("Legal
Defeasance") except for:

        (1) the rights of Holders of outstanding notes to receive payments in
            respect of the principal of, or interest or premium and Liquidated
            Damages, if any, on such notes when such payments are due from the
            trust referred to below;

        (2) OMG's obligations with respect to the notes concerning issuing
            temporary notes, registration of notes, mutilated, destroyed, lost
            or stolen notes and the maintenance of an office or agency for
            payment and money for security payments held in trust;

        (3) the rights, powers, trusts, duties and immunities of the trustee,
            and OMG's and the Guarantor's obligations in connection therewith;
            and

        (4) the Legal Defeasance provisions of the indenture.

     In addition, OMG may, at its option and at any time, elect to have the
obligations of OMG and the Guarantors released with respect to certain covenants
that are described in the indenture ("Covenant Defeasance") and thereafter any
omission to comply with those covenants will not constitute a Default or Event
of Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "--Events of Default and
Remedies" will no longer constitute an Event of Default with respect to the
notes.

     In order to exercise either Legal Defeasance or Covenant Defeasance:

        (1) OMG must irrevocably deposit with the trustee, in trust, for the
            benefit of the Holders of the notes, cash in U.S. dollars,
            non-callable Government Securities, or a combination of cash in U.S.
            dollars and non-callable Government Securities, in amounts as will
            be sufficient, in the opinion of a nationally recognized firm of
            independent public accountants, to pay the principal of, or interest
            and premium and Liquidated Damages, if any, on the outstanding notes
            on the stated maturity or on the applicable redemption date, as the
            case may be, and OMG must specify whether the notes are being
            defeased to maturity or to a particular redemption date;

        (2) in the case of Legal Defeasance, OMG must deliver to the trustee an
            opinion of counsel reasonably acceptable to the trustee confirming
            that (a) OMG has received from, or there has been published by, the
            Internal Revenue Service a ruling or (b) since the date of the
            indenture, there has been a change in the applicable federal income
            tax law, in either case to the effect that, and based thereon such
            opinion of counsel will confirm that, the Holders of the outstanding
            notes will not recognize income, gain or loss for federal income tax
            purposes as a result of such Legal Defeasance and will be subject to
            federal income tax on the same amounts, in the same manner and at
            the same times as would have been the case if such Legal Defeasance
            had not occurred;

        (3) in the case of Covenant Defeasance, OMG must deliver to the trustee
            an opinion of counsel reasonably acceptable to the trustee
            confirming that the Holders of the outstanding notes will not
            recognize income, gain or loss for federal income tax purposes as a
            result of such Covenant

                                        84


            Defeasance and will be subject to federal income tax on the same
            amounts, in the same manner and at the same times as would have been
            the case if such Covenant Defeasance had not occurred;

        (4) no Default or Event of Default must have occurred and be continuing
            on the date of such deposit (other than a Default or Event of
            Default resulting from the borrowing of funds to be applied to such
            deposit);

        (5) such Legal Defeasance or Covenant Defeasance must not result in a
            breach or violation of, or constitute a default under any material
            agreement or instrument (other than the indenture) to which OMG or
            any of its Restricted Subsidiaries is a party or by which OMG or any
            of its Restricted Subsidiaries is bound;

        (6) OMG must deliver to the trustee an officers' certificate stating
            that the deposit was not made by OMG with the intent of preferring
            the Holders of notes over the other creditors of OMG with the intent
            of defeating, hindering, delaying or defrauding creditors of OMG or
            others; and

        (7) OMG must deliver to the trustee an officers' certificate and an
            opinion of counsel, each stating that all conditions precedent
            relating to the Legal Defeasance or the Covenant Defeasance have
            been complied with.

AMENDMENT, SUPPLEMENT AND WAIVER

     Except as provided in the next three succeeding paragraphs, the indenture
or the notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).

     Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting Holder):

        (1) reduce the principal amount of notes whose Holders must consent to
            an amendment, supplement or waiver;

        (2) reduce the principal of or change the fixed maturity of any note or
            alter the provisions with respect to the redemption of the notes
            (other than provisions relating to the covenants described above
            under the caption "-- Repurchase at the Option of Holders");

        (3) reduce the rate of or change the time for payment of interest on any
            note;

        (4) waive a Default or Event of Default in the payment of principal of,
            or interest or premium, or Liquidated Damages, if any, on the notes
            (except a rescission of acceleration of the notes by the Holders of
            at least a majority in aggregate principal amount of the notes and a
            waiver of the payment default that resulted from such acceleration);

        (5) make any note payable in money other than that stated in the notes;

        (6) make any change in the provisions of the indenture relating to
            waivers of past Defaults or the rights of Holders of notes to
            receive payments of principal of, or interest or premium or
            Liquidated Damages, if any, on the notes;

        (7) waive a redemption payment with respect to any note (other than a
            payment required by one of the covenants described above under the
            caption "-- Repurchase at the Option of Holders");

        (8) release any Guarantor from any of its obligations under its
            Subsidiary Guarantee or the indenture, except in accordance with the
            terms of the indenture; or

                                        85


        (9) make any change in the preceding amendment and waiver provisions.

     In addition, any amendment to, or waiver of, the provisions of the
indenture relating to subordination that adversely affects the rights of the
Holders of the notes requires the consent of the Holders of at least 75% in
aggregate principal amount of notes then outstanding.

     Notwithstanding the preceding, without the consent of any Holder of notes,
OMG, the Guarantors and the trustee may amend or supplement the indenture or the
notes:

        (1) to cure any ambiguity, defect or inconsistency;

        (2) to provide for uncertificated notes in addition to or in place of
            certificated notes;

        (3) to provide for the assumption of OMG's obligations to Holders of
            notes in the case of a merger or consolidation or sale of all or
            substantially all of OMG's assets;

        (4) to make any change that would provide any additional rights or
            benefits to the Holders of notes or that does not adversely affect
            the legal rights under the indenture of any such Holder; or

        (5) to comply with requirements of the SEC in order to effect or
            maintain the qualification of the indenture under the Trust
            Indenture Act.

SATISFACTION AND DISCHARGE

     The indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:

        (1) either:

           (a) all notes that have been authenticated, except lost, stolen or
               destroyed notes that have been replaced or paid and notes for
               whose payment money has been deposited in trust and thereafter
               repaid to OMG, have been delivered to the trustee for
               cancellation; or

           (b) all notes that have not been delivered to the trustee for
               cancellation have become due and payable by reason of the mailing
               of a notice of redemption or otherwise or will become due and
               payable within one year and OMG or any Guarantor has irrevocably
               deposited or caused to be deposited with the trustee as trust
               funds in trust solely for the benefit of the Holders, cash in
               U.S. dollars, non-callable Government Securities, or a
               combination of cash in U.S. dollars and non-callable Government
               Securities, in amounts as will be sufficient without
               consideration of any reinvestment of interest, to pay and
               discharge the entire indebtedness on the notes not delivered to
               the trustee for cancellation for principal, premium and
               Liquidated Damages, if any, and accrued interest to the date of
               maturity or redemption;

        (2) no Default or Event of Default has occurred and is continuing on the
            date of the deposit or will occur as a result of the deposit and the
            deposit will not result in a breach or violation of, or constitute a
            default under, any other instrument to which OMG or any Guarantor is
            a party or by which OMG or any Guarantor is bound;

        (3) OMG or any Guarantor has paid or caused to be paid all sums payable
            by it under the indenture; and

        (4) OMG has delivered irrevocable instructions to the trustee under the
            indenture to apply the deposited money toward the payment of the
            notes at maturity or the redemption date, as the case may be.

     In addition, OMG must deliver an officers' certificate and an opinion of
counsel to the trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

                                        86


CONCERNING THE TRUSTEE

     If the trustee becomes a creditor of OMG or any Guarantor, the indenture
limits its right to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as security or otherwise.
The trustee is permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue or resign.

     The Holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs and is continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of notes, unless such Holder has offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.

ADDITIONAL INFORMATION

     Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement without charge by writing to OM Group, Inc., 50
Public Square, Suite 3500, Cleveland, Ohio 44113, USA, Attention: General
Counsel.

BOOK-ENTRY, DELIVERY AND FORM

     The original notes were offered and sold to qualified institutional buyers
in reliance on Rule 144A ("Rule 144A Notes") and also were offered and sold in
offshore transactions in reliance on Regulation S ("Regulation S Notes"). Except
as set forth below, exchange notes will be issued in registered, global form in
minimum denominations of $1,000 and integral multiples of $1,000 in excess of
$1,000.

     Rule 144A Notes initially were represented by one or more notes in
registered, global form without interest coupons (collectively, the "Rule 144A
Global Notes"). Regulation S Notes initially were represented by one or more
notes in registered, global form without interest coupons (collectively, the
"Regulation S Global Notes"). The exchange notes initially will be represented
by one or more notes in registered, global form without interest coupons
(collectively, the "Exchange Global Notes" and, together with the Rule 144A
Global Notes and the Regulation S Global Notes, the "Global Notes"). The Rule
144A Global Notes and the Regulation S Global Notes were, and the Exchange
Global Notes will be, deposited upon issuance with the trustee as custodian for
The Depository Trust Company ("DTC"), in New York, New York, and registered in
the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below. Beneficial interests
in the Rule 144A Global Notes may not be exchanged for beneficial interests in
the Regulation S Global Notes at any time except in the limited circumstances
described below. See "-- Exchanges between Regulation S Notes and Rule 144A
Notes."

     Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Global Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of notes in certificated
form.

     Rule 144A Notes (including beneficial interests in the Rule 144A Global
Notes) are subject to certain restrictions on transfer and bear a restrictive
legend. Regulation S Notes also bear the legend. In addition, transfers of
beneficial interests in the Global Notes are subject to the applicable rules and
procedures of DTC and its direct or indirect participants (including, if
applicable, those of the Euroclear System ("Euroclear") and Clearstream Banking,
S.A. ("Clearstream") as indirect participants in DTC), which may change from
time to time.

                                        87


DEPOSITORY PROCEDURES

     The following description of the operations and procedures of DTC,
Euroclear and Clearstream are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them. OMG takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.

     DTC has advised OMG that DTC is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.

     DTC has also advised OMG that, pursuant to procedures established by it:

        (1) upon deposit of the Global Notes, DTC will credit the accounts of
            Participants designated by the Initial Purchasers with portions of
            the principal amount of the Global Notes; and

        (2) ownership of these interests in the Global Notes will be shown on,
            and the transfer of ownership of these interests will be effected
            only through, records maintained by DTC (with respect to the
            Participants) or by the Participants and the Indirect Participants
            (with respect to other owners of beneficial interest in the Global
            Notes).

     Investors in the Rule 144A Global Notes who are Participants in DTC's
system may hold their interests therein directly through DTC. Investors in the
Rule 144A Global Notes who are not Participants may hold their interests therein
indirectly through organizations (including Euroclear and Clearstream) which are
Participants in such system. Investors in the Regulation S Global Notes must
initially hold their interests therein through Euroclear or Clearstream, if they
are participants in such systems, or indirectly through organizations that are
participants in such systems. After the expiration of 40 days after the closing
of the original notes offering (the "Restricted Period"), investors may also
hold interests in the Regulation S Global Notes through Participants in the DTC
system other than Euroclear and Clearstream. Euroclear and Clearstream will hold
interests in the Regulation S Global Notes on behalf of their participants
through customers' securities accounts in their respective names on the books of
their respective depositories, which are Euroclear Bank S.A./N.V., as operator
of Euroclear, and Citibank, N.A., as operator of Clearstream. All interests in a
Global Note, including those held through Euroclear or Clearstream, may be
subject to the procedures and requirements of DTC. Those interests held through
Euroclear or Clearstream may also be subject to the procedures and requirements
of such systems. The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer beneficial interests in a Global Note to such Persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants, the ability
of a Person having beneficial interests in a Global Note to pledge such
interests to Persons that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.

     EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.

     Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the
                                        88


registered Holder under the indenture. Under the terms of the indenture, OMG and
the trustee have treated and will continue to treat the Persons in whose names
the notes, including the Global Notes, are registered as the owners of the notes
for the purpose of receiving payments and for all other purposes. Consequently,
neither OMG, the trustee nor any agent of OMG or the trustee has or will have
any responsibility or liability for:

        (1) any aspect of DTC's records or any Participant's or Indirect
            Participant's records relating to or payments made on account of
            beneficial ownership interest in the Global Notes or for
            maintaining, supervising or reviewing any of DTC's records or any
            Participant's or Indirect Participant's records relating to the
            beneficial ownership interests in the Global Notes; or

        (2) any other matter relating to the actions and practices of DTC or any
            of its Participants or Indirect Participants.

     DTC has advised OMG that its current practice, upon receipt of any payment
in respect of securities such as the notes (including principal and interest),
is to credit the accounts of the relevant Participants with the payment on the
payment date unless DTC has reason to believe it will not receive payment on
such payment date. Each relevant Participant is credited with an amount
proportionate to its beneficial ownership of an interest in the principal amount
of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of DTC, the trustee or OMG. Neither OMG nor the trustee
will be liable for any delay by DTC or any of its Participants in identifying
the beneficial owners of the notes, and OMG and the trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee
for all purposes.

     Subject to the transfer restrictions applicable to the original notes,
transfers between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and Clearstream will be effected in accordance with
their respective rules and operating procedures.

     Subject to compliance with the transfer restrictions applicable to the
original notes, cross-market transfers between the Participants in DTC, on the
one hand, and Euroclear or Clearstream participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant Global Note in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.

     DTC has advised OMG that it will take any action permitted to be taken by a
Holder of notes only at the direction of one or more Participants to whose
account DTC has credited the interests in the Global Notes and only in respect
of such portion of the aggregate principal amount of the notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the notes, DTC reserves the right to exchange the
Global Notes for notes in certificated form, and to distribute such notes to its
Participants.

     Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Rule 144A Global Notes
and the Regulation S Global Notes among participants in DTC, Euroclear and
Clearstream, they are under no obligation to perform or to continue to perform
such procedures, and may discontinue such procedures at any time. Neither OMG
nor the trustee nor any of their respective agents will have any responsibility
for the performance by DTC, Euroclear or Clearstream or their

                                        89


respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.

EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES

     A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated
Notes") if:

        (1) DTC (a) notifies OMG that it is unwilling or unable to continue as
            depositary for the Global Notes and OMG fails to appoint a successor
            depositary or (b) has ceased to be a clearing agency registered
            under the Exchange Act;

        (2) OMG, at its option, notifies the trustee in writing that it elects
            to cause the issuance of the Certificated Notes; or

        (3) there has occurred and is continuing a Default or Event of Default
            with respect to the notes.

     In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures) and, as it relates to the original notes, will bear the applicable
restrictive legend unless that legend is not required by applicable law.

EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES

     Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the trustee a written
certificate (in the form provided in the indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such notes.

SAME DAY SETTLEMENT AND PAYMENT

     OMG will make payments in respect of the notes represented by the Global
Notes (including principal, premium, if any, interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Global Note Holder. OMG will make all payments of principal, interest and
premium and Liquidated Damages, if any, with respect to Certificated Notes by
wire transfer of immediately available funds to the accounts specified by the
Holders of the Certificated Notes or, if no such account is specified, by
mailing a check to each such Holder's registered address. The notes represented
by the Global Notes are expected to be eligible to trade in The Portal(SM)
Market and to trade in DTC's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such notes will, therefore, be required by
DTC to be settled in immediately available funds. OMG expects that secondary
trading in any Certificated Notes will also be settled in immediately available
funds.

     Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Clearstream participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC. DTC has advised
OMG that cash received in Euroclear or Clearstream as a result of sales of
interests in a Global Note by or through a Euroclear or Clearstream participant
to a Participant in DTC will be received with value on the settlement date of
DTC but will be available in the relevant Euroclear or Clearstream cash account
only as of the business day for Euroclear or Clearstream following DTC's
settlement date.

REGISTRATION RIGHTS; LIQUIDATED DAMAGES

     The following description is a summary of the material provisions of the
registration rights agreement. It does not restate that agreement in its
entirety. We urge you to read the proposed form of registration rights

                                        90


agreement in its entirety because it, and not this description, defines your
registration rights as Holders of the original notes. See "Where You Can Find
More Information."

     In connection with the original notes offering, OMG, the Guarantors and the
initial purchasers entered into the registration rights agreement. Pursuant to
the registration rights agreement, OMG and the Guarantors agreed to file with
the SEC the exchange offer registration statement, of which this prospectus is a
part, on the appropriate form under the Securities Act with respect to the
exchange notes. Upon the effectiveness of the exchange offer registration
statement, pursuant to the exchange offer, OMG and the Guarantors will offer to
the Holders of Transfer Restricted Securities who are able to make certain
representations the opportunity to exchange their Transfer Restricted Securities
for exchange notes.

     If:

        (1) OMG and the Guarantors are not

           (a) required to file the exchange offer registration statement; or

           (b) permitted to consummate the exchange offer because the exchange
               offer is not permitted by applicable law or SEC policy; or

        (2) any Holder of Transfer Restricted Securities notifies OMG prior to
            the 20th day following consummation of the exchange offer that:

           (a) it is prohibited by law or SEC policy from participating in the
               exchange offer; or

           (b) that it may not resell the exchange notes acquired by it in the
               exchange offer to the public without delivering a prospectus and
               the prospectus contained in the exchange offer registration
               statement is not appropriate or available for such resales; or

           (c) that it is a broker-dealer and owns original notes acquired
               directly from OMG or an affiliate of OMG,

OMG and the Guarantors will file with the SEC a shelf registration statement to
cover resales of the original notes by the Holders of the original notes who
satisfy certain conditions relating to the provision of information in
connection with the shelf registration statement.

     OMG and the Guarantors will use their reasonable best efforts to cause the
applicable registration statement to be declared effective as promptly as
possible by the SEC.

     For purposes of the preceding, "Transfer Restricted Securities" means each
original note until:

        (1) the date on which such original note has been exchanged by a Person
            other than a broker-dealer for an exchange note in the exchange
            offer;

        (2) following the exchange by a broker-dealer in the exchange offer of
            an original note for an exchange note, the date on which such
            exchange note is sold to a purchaser who receives from such
            broker-dealer on or prior to the date of such sale a copy of the
            prospectus contained in the exchange offer registration statement;

        (3) the date on which such original note has been effectively registered
            under the Securities Act and disposed of in accordance with the
            shelf registration statement; or

        (4) the date on which such original note is distributed to the public
            pursuant to Rule 144 under the Securities Act.

     The registration rights agreement provides that:

        (1) OMG and the Guarantors will file the exchange offer registration
            statement with the SEC on or prior to 90 days after the closing of
            the original notes offering;

                                        91


        (2) OMG and the Guarantors will use their reasonable best efforts to
            have the exchange offer registration statement declared effective by
            the SEC on or prior to 180 days after the closing of the original
            notes offering;

        (3) unless the exchange offer would not be permitted by applicable law
            or SEC policy, OMG and the Guarantors will

           (a) commence the exchange offer; and

           (b) use their reasonable best efforts to issue on or prior to 40
               days, or longer, if required by the federal securities laws,
               after the date on which the exchange offer registration statement
               was declared effective by the SEC, exchange notes in exchange for
               all original notes properly tendered in the exchange offer; and

        (4) if obligated to file the shelf registration statement, OMG and the
            Guarantors will use their reasonable best efforts to file the shelf
            registration statement with the SEC on or prior to 60 days after
            such filing obligation arises and to cause the shelf registration to
            be declared effective by the SEC on or prior to 150 days after such
            obligation arises.

     If:

        (1) OMG and the Guarantors fail to file any of the registration
            statements required by the registration rights agreement on or
            before the date specified for such filing; or

        (2) any of such registration statements is not declared effective by the
            SEC on or prior to the date specified for such effectiveness; or

        (3) OMG and the Guarantors fail to consummate the exchange offer within
            40 days of the date specified for effectiveness with respect to the
            exchange offer registration statement; or

        (4) the shelf registration statement or the exchange offer registration
            statement is declared effective but thereafter ceases to be
            effective or usable in connection with resales of Transfer
            Restricted Securities during the periods specified in the
            registration rights agreement, with certain exceptions set forth in
            the registration rights agreement (each such event referred to in
            clauses (1) through (4) above, a "Registration Default"),

then OMG and the Guarantors will pay liquidated damages to each Holder of notes,
with respect to the first 90-day period immediately following the occurrence of
the first Registration Default in an amount equal to $.05 per week per $1,000
principal amount of notes held by such Holder.

     The amount of the liquidated damages will increase by an additional $.05
per week per $1,000 principal amount of notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages for all Registration Defaults of $.50 per week per
$1,000 principal amount of notes.

     All accrued liquidated damages will be paid by OMG and the Guarantors on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Notes by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified.

     Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease.

     Holders of original notes will be required to make certain representations
to OMG (as described in the registration rights agreement) in order to
participate in the exchange offer and will be required to deliver certain
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreement in order to have their original
notes included in the shelf registration statement and benefit from the
provisions regarding liquidated damages set forth above. By acquiring Transfer
Restricted Securities, a Holder will be deemed to have agreed to indemnify OMG
and the Guarantors against certain losses arising out of information furnished
by such Holder in writing for inclusion in any shelf registration statement.
Holders of
                                        92


original notes will also be required to suspend their use of the prospectus
included in the shelf registration statement under certain circumstances upon
receipt of written notice to that effect from OMG.

CERTAIN DEFINITIONS

     Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.

     "Acquired Debt" means, with respect to any specified Person:

        (1) Indebtedness of any other Person existing at the time such other
            Person is merged with or into or became a Subsidiary of such
            specified Person, whether or not such Indebtedness is incurred in
            connection with, or in contemplation of, such other Person merging
            with or into, or becoming a Subsidiary of, such specified Person;
            and

        (2) Indebtedness secured by a Lien encumbering any asset acquired by
            such specified Person.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.

     "Applicable Premium" means, with respect to any note on any Redemption
Date, the greater of:

        (1) 1.0% of the principal amount of the note; or

        (2) the excess of:

           (a) the present value at such Redemption Date of (i) the redemption
               price of the note at December 15, 2006 (such redemption price
               being set forth in the table appearing above under the caption
               "-- Optional Redemption") plus (ii) all required interest
               payments due on the note through December 15, 2006 (excluding
               accrued but unpaid interest), computed using a discount rate
               equal to the Treasury Rate as of such Redemption Date plus 50
               basis points; over

           (b) the principal amount of the note, if greater.

     "Asset Sale" means:

        (1) the sale, lease, conveyance or other disposition of any assets or
            rights, other than sales of inventory in the ordinary course of
            business consistent with past practices; provided that the sale,
            conveyance or other disposition of all or substantially all of the
            assets of OMG and its Subsidiaries taken as a whole will be governed
            by the provisions of the indenture described above under the caption
            "-- Repurchase at the Option of Holders -- Change of Control" and/or
            the provisions described above under the caption "-- Certain
            Covenants -- Merger, Consolidation or Sale of Assets" and not by the
            provisions of the Asset Sale covenant; and

        (2) the issuance of Equity Interests by any of OMG's Restricted
            Subsidiaries or the sale of Equity Interests in any of its
            Restricted Subsidiaries.

     Notwithstanding the preceding, the following items will not be deemed to be
Asset Sales:

        (1) any single transaction or series of related transactions that
            involves assets having a fair market value of less than $1.0
            million;

        (2) a transfer of assets between or among OMG and its Restricted
            Subsidiaries;

                                        93


        (3) an issuance of Equity Interests by a Restricted Subsidiary to OMG or
            to another Restricted Subsidiary;

        (4) the sale or lease of equipment, inventory, accounts receivable or
            other assets in the ordinary course of business;

        (5) the sale or other disposition of cash or Cash Equivalents; and

        (6) a Restricted Payment or Permitted Investment that is permitted by
            the covenant described above under the caption "-- Certain
            Covenants -- Restricted Payments."

     "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

     "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.

     "Board of Directors" means:

        (1) with respect to a corporation, the board of directors of the
            corporation;

        (2) with respect to a partnership, the Board of Directors of the general
            partner of the partnership; and

        (3) with respect to any other Person, the board or committee of such
            Person serving a similar function.

     "Borrowing Base" means, as of any date, an amount equal to the sum of:

        (1) 85% of the book value of all accounts receivable owned by OMG and
            its Restricted Subsidiaries, plus

        (2) 50% of the book value of all inventory owned by OMG and its
            Restricted Subsidiaries,

     in each case, calculated on a consolidated basis and in accordance with
GAAP.

     "Capital Lease Obligation" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.

     "Capital Stock" means:

        (1) in the case of a corporation, corporate stock;

        (2) in the case of an association or business entity, any and all
            shares, interests, participations, rights or other equivalents
            (however designated) of corporate stock;

        (3) in the case of a partnership or limited liability company,
            partnership or membership interests (whether general or limited);
            and

        (4) any other interest or participation that confers on a Person the
            right to receive a share of the profits and losses of, or
            distributions of assets of, the issuing Person.

                                        94


     "Cash Equivalents" means:

        (1) United States dollars;

        (2) securities issued or directly and fully guaranteed or insured by the
            United States government or any agency or instrumentality of the
            United States government (provided that the full faith and credit of
            the United States is pledged in support of those securities) having
            maturities of not more than six months from the date of acquisition;

        (3) certificates of deposit and eurodollar time deposits with maturities
            of six months or less from the date of acquisition, bankers'
            acceptances with maturities not exceeding six months and overnight
            bank deposits, in each case, with any domestic commercial bank
            having capital and surplus in excess of $500.0 million and a Thomson
            Bank Watch Rating of "B" or better;

        (4) repurchase obligations with a term of not more than seven days for
            underlying securities of the types described in clauses (2) and (3)
            above entered into with any financial institution meeting the
            qualifications specified in clause (3) above;

        (5) commercial paper having the highest rating obtainable from Moody's
            Investors Service, Inc. or Standard & Poor's Rating Services and in
            each case maturing within six months after the date of acquisition;
            and

        (6) money market funds at least 95% of the assets of which constitute
            Cash Equivalents of the kinds described in clauses (1) through (5)
            of this definition.

     "Change of Control" means the occurrence of any of the following:

        (1) the direct or indirect sale, transfer, conveyance or other
            disposition (other than by way of merger or consolidation), in one
            or a series of related transactions, of all or substantially all of
            the properties or assets of OMG and its Restricted Subsidiaries,
            taken as a whole, to any "person" (as that term is used in Section
            13(d)(3) of the Exchange Act) other than a Principal or a Related
            Party of a Principal;

        (2) the adoption of a plan relating to the liquidation or dissolution of
            OMG;

        (3) the consummation of any transaction (including, without limitation,
            any merger or consolidation) the result of which is that any
            "person" (as defined above), other than the Principals and their
            Related Parties, becomes the Beneficial Owner, directly or
            indirectly, of more than 50% of the Voting Stock of OMG, measured by
            voting power rather than number of shares; or

        (4) the first day on which a majority of the members of the Board of
            Directors of OMG are not Continuing Directors.

     "Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:

        (1) an amount equal to any extraordinary loss plus any net loss realized
            by such Person or any of its Restricted Subsidiaries in connection
            with an Asset Sale, to the extent such losses were deducted in
            computing such Consolidated Net Income; plus

        (2) provision for taxes based on income or profits of such Person and
            its Restricted Subsidiaries for such period, to the extent that such
            provision for taxes was deducted in computing such Consolidated Net
            Income; plus

        (3) consolidated interest expense of such Person and its Restricted
            Subsidiaries for such period, whether paid or accrued and whether or
            not capitalized (including, without limitation, amortization of debt
            issuance costs and original issue discount, non-cash interest
            payments, the interest component of any deferred payment
            obligations, the interest component of all payments associated with
            Capital Lease Obligations, imputed interest with respect to
            Attributable Debt,

                                        95


            commissions, discounts and other fees and charges incurred in
            respect of letter of credit or bankers' acceptance financings, and
            net of the effect of all payments made or received pursuant to
            Hedging Obligations), to the extent that any such expense was
            deducted in computing such Consolidated Net Income; plus

        (4) depreciation, amortization (including amortization of goodwill and
            other intangibles but excluding amortization of prepaid cash
            expenses that were paid in a prior period) and other non-cash
            expenses (excluding any such non-cash expense to the extent that it
            represents an accrual of or reserve for cash expenses in any future
            period or amortization of a prepaid cash expense that was paid in a
            prior period) of such Person and its Restricted Subsidiaries for
            such period to the extent that such depreciation, amortization and
            other non-cash expenses were deducted in computing such Consolidated
            Net Income; minus

        (5) non-cash items increasing such Consolidated Net Income for such
            period, other than the accrual of revenue in the ordinary course of
            business,

in each case, on a consolidated basis and determined in accordance with GAAP.

     Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Subsidiary of OMG will be added to Consolidated Net Income to compute
Consolidated Cash Flow of OMG only to the extent that a corresponding amount
would be permitted at the date of determination to be dividended to OMG by such
Subsidiary without prior governmental approval (that has not been obtained), and
without direct or indirect restriction pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.

     "Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

        (1) the Net Income (but not loss) of any Person that is not a Restricted
            Subsidiary or that is accounted for by the equity method of
            accounting will be included only to the extent of the amount of
            dividends or distributions paid in cash to the specified Person or a
            Restricted Subsidiary of the Person;

        (2) the Net Income (but not loss) of any Unrestricted Subsidiary will be
            excluded, whether or not distributed to the specified Person or one
            of its Subsidiaries;

        (3) the Net Income of any Restricted Subsidiary will be excluded to the
            extent that the declaration or payment of dividends or similar
            distributions by that Restricted Subsidiary of that Net Income is
            not at the date of determination permitted without any prior
            governmental approval (that has not been obtained) or, directly or
            indirectly, by operation of the terms of its charter or any
            agreement, instrument, judgment, decree, order, statute, rule or
            governmental regulation applicable to that Restricted Subsidiary or
            its stockholders;

        (4) the Net Income of any Person acquired in a pooling of interests
            transaction for any period prior to the date of such acquisition
            will be excluded; and

        (5) the cumulative effect of a change in accounting principles will be
            excluded.

     "Consolidated Net Worth" means, with respect to any specified Person as of
any date, the sum of:

        (1) the consolidated equity of the common stockholders of such Person
            and its consolidated Subsidiaries as of such date; plus

        (2) the respective amounts reported on such Person's balance sheet as of
            such date with respect to any series of preferred stock (other than
            Disqualified Stock) that by its terms is not entitled to the payment
            of dividends unless such dividends may be declared and paid only out
            of net

                                        96

            earnings in respect of the year of such declaration and payment, but
            only to the extent of any cash received by such Person upon issuance
            of such preferred stock.

     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of OMG who:

        (1) was a member of such Board of Directors on the date of the
            indenture; or

        (2) was nominated for election or elected to such Board of Directors
            with the approval of a majority of the Continuing Directors who were
            members of such Board at the time of such nomination or election.

     "Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of August 10, 2001, as thereafter amended, by and among OMG
and OMG AG & Co. KG, as borrowers; the various lending institutions party
thereto; Credit Suisse First Boston, as a lender, the syndication agent, joint
book running manager and joint lead arranger; National City Bank, as a lender,
the swingline lender, the letter of credit issuer, and as the administrative
agent, the collateral agent, joint book running manager and joint lead arranger;
and ABN AMRO Bank N.V., Credit Lyonnais, New York Branch, and KeyBank National
Association, each as a lender and a documentation agent, providing for up to
$1,310.0 million of term loans and revolving credit borrowings, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.

     "Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.

     "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

     "Designated Senior Debt" means:

        (1) any Indebtedness outstanding under the Credit Agreement; and

        (2) after payment in full of all Obligations under the Credit Agreement,
            any other Senior Debt permitted under the indenture the principal
            amount of which is $25.0 million or more and that has been
            designated by OMG as "Designated Senior Debt."

     "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require OMG to
repurchase such Capital Stock upon the occurrence of a change of control or an
asset sale will not constitute Disqualified Stock if the terms of such Capital
Stock provide that OMG may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."

     "Domestic Subsidiary" means any Subsidiary of OMG that was formed under the
laws of the United States or any state of the United States or the District of
Columbia or that guarantees or otherwise provides direct credit support for any
Indebtedness of OMG.

     "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
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     "Existing Indebtedness" means all Indebtedness of OMG and its Subsidiaries
(other than Indebtedness under the Credit Agreement) in existence on the date of
the indenture, until such amounts are repaid.

     "Fixed Charges" means, with respect to any specified Person for any period,
the sum, without duplication, of:

        (1) the consolidated interest expense of such Person and its Restricted
            Subsidiaries for such period, whether paid or accrued, including,
            without limitation, amortization of debt issuance costs and original
            issue discount, non-cash interest payments, the interest component
            of any deferred payment obligations, the interest component of all
            payments associated with Capital Lease Obligations, imputed interest
            with respect to Attributable Debt, commissions, discounts and other
            fees and charges incurred in respect of letter of credit or bankers'
            acceptance financings, and net of the effect of all payments made or
            received pursuant to Hedging Obligations; plus

        (2) the consolidated interest of such Person and its Restricted
            Subsidiaries that was capitalized during such period; plus

        (3) any interest expense on Indebtedness of another Person that is
            Guaranteed by such Person or one of its Restricted Subsidiaries or
            secured by a Lien on assets of such Person or one of its Restricted
            Subsidiaries, whether or not such Guarantee or Lien is called upon;
            plus

        (4) the product of (a) all dividends, whether paid or accrued and
            whether or not in cash, on any series of preferred stock of such
            Person or any of its Restricted Subsidiaries, other than dividends
            on Equity Interests payable solely in Equity Interests of OMG (other
            than Disqualified Stock) or to OMG or a Restricted Subsidiary of
            OMG, times (b) a fraction, the numerator of which is one and the
            denominator of which is one minus the then current combined federal,
            state and local statutory tax rate of such Person, expressed as a
            decimal, in each case, on a consolidated basis and in accordance
            with GAAP.

     "Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of preferred stock,
and the use of the proceeds therefrom as if the same had occurred at the
beginning of the applicable four-quarter reference period.

     In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

        (1) acquisitions that have been made by the specified Person or any of
            its Restricted Subsidiaries, including through mergers or
            consolidations and including any related financing transactions,
            during the four-quarter reference period or subsequent to such
            reference period and on or prior to the Calculation Date will be
            given pro forma effect as if they had occurred on the first day of
            the four-quarter reference period and Consolidated Cash Flow for
            such reference period will be calculated on a pro forma basis in
            accordance with Regulation S-X under the Securities Act, but without
            giving effect to clause (3) of the proviso set forth in the
            definition of Consolidated Net Income;

        (2) the Consolidated Cash Flow attributable to discontinued operations,
            as determined in accordance with GAAP, and operations or businesses
            disposed of prior to the Calculation Date, will be excluded; and

        (3) the Fixed Charges attributable to discontinued operations, as
            determined in accordance with GAAP, and operations or businesses
            disposed of prior to the Calculation Date, will be excluded,
                                        98


            but only to the extent that the obligations giving rise to such
            Fixed Charges will not be obligations of the specified Person or any
            of its Restricted Subsidiaries following the Calculation Date.

     "Foreign Subsidiary" means any Subsidiary of OMG that is not a Domestic
Subsidiary.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

     "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

     "Guarantors" means:

        (1) each wholly-owned Domestic Restricted Subsidiary of OMG on the date
            of the indenture; and

        (2) any other subsidiary that executes a Subsidiary Guarantee in
            accordance with the provisions of the indenture;

and their respective successors and assigns, other than any Subsidiary of OMG
with nominal assets created solely for the purpose of implementing an
acquisition or disposition transaction.

     "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

        (1) any interest rate swap agreement, interest rate cap agreement,
            interest rate collar agreement or other similar agreement or
            arrangement designed to protect against fluctuations in interest
            rates;

        (2) any currency swap agreement, forward currency purchase agreement or
            similar agreement or arrangement designed to protect against
            fluctuations in currency exchange rates; and

        (3) any forward commodity purchase agreement or similar agreement or
            arrangement designed to protect against fluctuations in raw material
            or other commodity prices.

     "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

        (1) in respect of borrowed money;

        (2) evidenced by bonds, notes, debentures or similar instruments or
            letters of credit (or reimbursement agreements in respect thereof);

        (3) in respect of banker's acceptances;

        (4) representing Capital Lease Obligations;

        (5) representing the balance deferred and unpaid of the purchase price
            of any property, except any such balance that constitutes an accrued
            expense or trade payable; or

        (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person. The term
"Indebtedness" shall not be deemed to include obligations under precious metal
leases and/or consignment

                                        99


arrangements incurred by OMG or its Subsidiaries in the ordinary course of
business and in accordance with past practice, to the extent such obligations do
not constitute "indebtedness" under GAAP as in effect on the date of the
indenture.

     The amount of any Indebtedness outstanding as of any date will be:

        (1) the accreted value of the Indebtedness, in the case of any
            Indebtedness issued with original issue discount; and

        (2) the principal amount of the Indebtedness, together with any interest
            on the Indebtedness that is more than 30 days past due, in the case
            of any other Indebtedness.

     "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If OMG or any
Restricted Subsidiary of OMG sells or otherwise disposes of any Equity Interests
of any direct or indirect Subsidiary of OMG such that, after giving effect to
any such sale or disposition, such Person is no longer a Subsidiary of OMG, OMG
will be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments." The acquisition by OMG or any Restricted
Subsidiary of OMG of a Person that holds an Investment in a third Person will be
deemed to be an Investment by OMG or such Restricted Subsidiary in such third
Person in an amount equal to the fair market value of the Investment held by the
acquired Person in such third Person in an amount determined as provided in the
final paragraph of the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."

     "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

     "Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

        (1) any gain (but not loss), together with any related provision for
            taxes on such gain (but not loss), realized in connection with: (a)
            any Asset Sale; or (b) the disposition of any securities by such
            Person or any of its Restricted Subsidiaries or the extinguishment
            of any Indebtedness of such Person or any of its Restricted
            Subsidiaries; and

        (2) any extraordinary gain (but not loss), together with any related
            provision for taxes on such extraordinary gain (but not loss).

     "Net Proceeds" means the aggregate cash proceeds received by OMG or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result of the Asset Sale, taxes paid or payable as a result of the Asset Sale,
in each case, after taking into account any available tax credits or deductions
and any tax sharing arrangements, and amounts required to be applied to the
repayment of Indebtedness, other than Senior Debt, secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.

                                       100


     "Non-Recourse Debt" means Indebtedness:

        (1) as to which neither OMG nor any of its Restricted Subsidiaries (a)
            provides credit support of any kind (including any undertaking,
            agreement or instrument that would constitute Indebtedness), (b) is
            directly or indirectly liable as a guarantor or otherwise or (c)
            constitutes the lender;

        (2) no default with respect to which (including any rights that the
            holders of the Indebtedness may have to take enforcement action
            against an Unrestricted Subsidiary) would permit upon notice, lapse
            of time or both any holder of any other Indebtedness (other than the
            notes) of OMG or any of its Restricted Subsidiaries to declare a
            default on such other Indebtedness or cause the payment of the
            Indebtedness to be accelerated or payable prior to its stated
            maturity; and

        (3) as to which the lenders have been notified in writing that they will
            not have any recourse to the stock or assets of OMG or any of its
            Restricted Subsidiaries.

     "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

     "Permitted Business" means any business conducted by OMG and its Restricted
Subsidiaries on the date of the indenture or that is reasonably related,
ancillary, incidental or complementary to any such business, and any business
that is acquired by OMG or any of its Restricted Subsidiaries subsequent to the
date of the indenture that meets the requirements of the preceding clause.

     "Permitted Investments" means:

         (1) any Investment in OMG or in a Restricted Subsidiary of OMG;

         (2) any Investment in Cash Equivalents;

         (3) any Investment by OMG or any Restricted Subsidiary of OMG in a
             Person, if as a result of such Investment:

           (a) such Person becomes a Restricted Subsidiary of OMG; or

           (b) such Person is merged, consolidated or amalgamated with or into,
               or transfers or conveys substantially all of its assets to, or is
               liquidated into, OMG or a Restricted Subsidiary of OMG;

         (4) any Investment made as a result of the receipt of non-cash
             consideration from an Asset Sale that was made pursuant to and in
             compliance with the covenant described above under the caption
             "-- Repurchase at the Option of Holders -- Asset Sales";

         (5) any acquisition of assets solely in exchange for the issuance of
             Equity Interests (other than Disqualified Stock) of OMG;

         (6) any Investments received in compromise of obligations of such
             persons incurred in the ordinary course of trade creditors or
             customers that were incurred in the ordinary course of business,
             including pursuant to any plan of reorganization or similar
             arrangement upon the bankruptcy or insolvency of any trade creditor
             or customer;

         (7) Hedging Obligations;

         (8) advances to any supplier that is not an Affiliate, consisting of
             prepayments for raw materials purchased for consumption or
             processing in the ordinary course of business and pursuant to
             arrangements designed to assure an adequate supply of such raw
             materials;

         (9) any additional loans, advances or investments (whether in the form
             of cash or contribution of property, and if in the form of a
             contribution of property, such property shall be valued for
             purposes of this clause at the fair value as reasonably determined
             by OMG) made after December 31, 1999, in or to The Weda Bay Project
             identified as a "subsequent event" in the

                                       101


             notes to OMG's consolidated financial statements for its fiscal
             year ended December 31, 1999, up to an aggregate of $20.0 million;
             and

        (10) other Investments in any Person having an aggregate fair market
             value (measured on the date each such Investment was made and
             without giving effect to subsequent changes in value), when taken
             together with all other Investments made pursuant to this clause
             (10) that are at the time outstanding not to exceed $50.0 million.

     "Permitted Junior Securities" means:

        (1) Equity Interests in OMG or any Guarantor; or

        (2) debt securities that are subordinated to all Senior Debt and any
            debt securities issued in exchange for Senior Debt to substantially
            the same extent as, or to a greater extent than, the notes and the
            Subsidiary Guarantees are subordinated to Senior Debt under the
            indenture.

     "Permitted Liens" means:

         (1) Liens of OMG and any Guarantor securing Indebtedness and other
             Obligations under Credit Facilities that were securing Senior Debt
             that was permitted by the terms of the indenture to be incurred;

         (2) Liens in favor of OMG or the Guarantors;

         (3) Liens on property of a Person existing at the time such Person is
             merged with or into or consolidated with OMG or any Restricted
             Subsidiary of OMG; provided that such Liens were in existence prior
             to the contemplation of such merger or consolidation and do not
             extend to any assets other than those of the Person merged into or
             consolidated with OMG or the Restricted Subsidiary;

         (4) Liens on property existing at the time of acquisition of the
             property by OMG or any Restricted Subsidiary of OMG, provided that
             such Liens were in existence prior to the contemplation of such
             acquisition;

         (5) Liens to secure the performance of statutory obligations, surety or
             appeal bonds, performance bonds or other obligations of a like
             nature incurred in the ordinary course of business;

         (6) Liens to secure Indebtedness (including Capital Lease Obligations)
             permitted by clause (5) of the second paragraph of the covenant
             entitled "-- Certain Covenants -- Incurrence of Indebtedness and
             Issuance of Preferred Stock" covering only the assets acquired with
             such Indebtedness;

         (7) Liens existing on the date of the indenture;

         (8) (a) Liens on precious metals and leases and rights of consignors in
                 respect of precious metals arising in connection with precious
                 metal leases and/or consignment arrangements entered into by
                 OMG or any of its Subsidiaries in the ordinary course of
                 business and in accordance with past practice; and

             (b) Liens granted pursuant to the security transfer agreements,
                 global assignment agreements and other security documents from
                 time to time securing the obligations of OMG AG & Co. KG (or
                 any of its subsidiaries and its successors and assigns) under
                 the Precious Metals Facility among Degussa AG, OMG AG & Co. KG
                 and OMG, provided that the recourse under any Liens granted in
                 such security documents shall be limited to 120% of the
                 aggregate value of all outstanding precious metals advanced
                 pursuant to such Precious Metals Facility on the date any
                 remedies are exercised by the lessor of the precious metals;

         (9) Liens for taxes, assessments or governmental charges or claims that
             are not yet delinquent or that are being contested in good faith by
             appropriate proceedings promptly instituted and

                                       102


             diligently concluded, provided that any reserve or other
             appropriate provision as is required in conformity with GAAP has
             been made therefor;

        (10) Liens incurred in the ordinary course of business of OMG or any
             Restricted Subsidiary of OMG with respect to obligations that do
             not exceed $75.0 million at any one time outstanding; and

        (11) Liens on assets of Unrestricted Subsidiaries that secure
             Non-Recourse Debt of Unrestricted Subsidiaries.

     "Permitted Refinancing Indebtedness" means any Indebtedness of OMG or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of OMG or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:

        (1) the principal amount (or accreted value, if applicable) of such
            Permitted Refinancing Indebtedness does not exceed the principal
            amount (or accreted value, if applicable) of the Indebtedness
            extended, refinanced, renewed, replaced, defeased or refunded (plus
            all accrued interest on the Indebtedness and the amount of all
            expenses and premiums incurred in connection therewith);

        (2) such Permitted Refinancing Indebtedness has a final maturity date
            later than the final maturity date of, and has a Weighted Average
            Life to Maturity equal to or greater than the Weighted Average Life
            to Maturity of, the Indebtedness being extended, refinanced,
            renewed, replaced, defeased or refunded;

        (3) if the Indebtedness being extended, refinanced, renewed, replaced,
            defeased or refunded is subordinated in right of payment to the
            notes, such Permitted Refinancing Indebtedness has a final maturity
            date later than the final maturity date of, and is subordinated in
            right of payment to, the notes on terms at least as favorable to the
            Holders of notes as those contained in the documentation governing
            the Indebtedness being extended, refinanced, renewed, replaced,
            defeased or refunded; and

        (4) such Indebtedness is incurred either by OMG or by the Restricted
            Subsidiary who is the obligor on the Indebtedness being extended,
            refinanced, renewed, replaced, defeased or refunded.

     "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

     "Principals" means James P. Mooney, or in the event of his incompetency or
death, his estate, heirs, executor, administrator or other personal
representative.

     "Public Equity Offering" means any underwritten public offering of common
stock of OMG.

     "Related Party" means:

        (1) any controlling stockholder, 80% (or more) owned Subsidiary, or
            immediate family member (in the case of an individual) of any
            Principal; or

        (2) any trust, corporation, partnership or other entity, the
            beneficiaries, stockholders, partners, owners or Persons
            beneficially holding an 80% or more controlling interest of which
            consist of any one or more Principals and/or such other Persons
            referred to in the immediately preceding clause (1).

     "Restricted Investment" means an Investment other than a Permitted
Investment.

     "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

                                       103


     "Senior Debt" means:

        (1) all Indebtedness of OMG or any Guarantor outstanding under Credit
            Facilities and all Hedging Obligations with respect thereto;

        (2) any other Indebtedness of OMG or any Guarantor permitted to be
            incurred under the terms of the indenture, unless the instrument
            under which such Indebtedness is incurred expressly provides that it
            is on a parity with or subordinated in right of payment to the notes
            or any Subsidiary Guarantee; and

        (3) all Obligations with respect to the items listed in the preceding
            clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding, Senior Debt will not
include:

        (1) any liability for federal, state, local or other taxes owed or owing
            by OMG;

        (2) any intercompany Indebtedness of OMG or any of its Subsidiaries to
            OMG or any of its Affiliates;

        (3) any trade payables; or

        (4) the portion of any Indebtedness that is incurred in violation of the
            indenture.

     "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.

     "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

     "Subsidiary" means, with respect to any specified Person:

        (1) any corporation, association or other business entity of which more
            than 50% of the total voting power of shares of Capital Stock
            entitled (without regard to the occurrence of any contingency) to
            vote in the election of directors, managers or trustees of the
            corporation, association or other business entity is at the time
            owned or controlled, directly or indirectly, by that Person or one
            or more of the other Subsidiaries of that Person (or a combination
            thereof); and

        (2) any partnership (a) the sole general partner or the managing general
            partner of which is such Person or a Subsidiary of such Person or
            (b) the only general partners of which are that Person or one or
            more Subsidiaries of that Person (or any combination thereof).

     "Treasury Rate" means, as of any Redemption Date, the yield to maturity as
of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to December 15, 2006;
provided, however, that if the period from the Redemption Date to December 15,
2006 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year will be
used.

     "Unrestricted Subsidiary" means any Subsidiary of OMG or any successor to
any of them that is designated by the Board of Directors as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that such
Subsidiary:

        (1) has no Indebtedness other than Non-Recourse Debt;

        (2) is not party to any agreement, contract, arrangement or
            understanding with OMG or any Restricted Subsidiary of OMG unless
            the terms of any such agreement, contract, arrangement or

                                       104


            understanding are no less favorable to OMG or such Restricted
            Subsidiary than those that might be obtained at the time from
            Persons who are not Affiliates of OMG;

        (3) is a Person with respect to which neither OMG nor any of its
            Restricted Subsidiaries has any direct or indirect obligation (a) to
            subscribe for additional Equity Interests or (b) to maintain or
            preserve such Person's financial condition or to cause such Person
            to achieve any specified levels of operating results;

        (4) has not guaranteed or otherwise directly or indirectly provided
            credit support for any Indebtedness of OMG or any of its Restricted
            Subsidiaries; and

        (5) has at least one director on its Board of Directors that is not a
            director or executive officer of OMG or any of its Restricted
            Subsidiaries and has at least one executive officer that is not a
            director or executive officer of OMG or any of its Restricted
            Subsidiaries.

     Any designation of a Subsidiary of OMG as an Unrestricted Subsidiary will
be evidenced to the trustee by filing with the trustee a certified copy of the
Board Resolution giving effect to such designation and an officers' certificate
certifying that such designation complied with the preceding conditions and was
permitted by the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it
will thereafter cease to be an Unrestricted Subsidiary for purposes of the
indenture and any Indebtedness of such Subsidiary will be deemed to be incurred
by a Restricted Subsidiary of OMG as of such date and, if such Indebtedness is
not permitted to be incurred as of such date under the covenant described under
the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock," OMG will be in default of such covenant. The Board of
Directors of OMG may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of OMG of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (1) such Indebtedness is permitted under the covenant described
under the caption "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period;
and (2) no Default or Event of Default would be in existence following such
designation.

     "Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:

        (1) the sum of the products obtained by multiplying (a) the amount of
            each then remaining installment, sinking fund, serial maturity or
            other required payments of principal, including payment at final
            maturity, in respect of the Indebtedness, by (b) the number of years
            (calculated to the nearest one-twelfth) that will elapse between
            such date and the making of such payment; by

        (2) the then outstanding principal amount of such Indebtedness.

     "Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
will at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.

                                       105


                 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     The following is a discussion of the material U.S. federal income tax
consequences of the ownership and disposition of the original notes and the
exchange notes, and of the exchange of the original notes for the exchange notes
pursuant to the exchange offer. This discussion is based on the Internal Revenue
Code of 1986, as amended, and administrative pronouncements, judicial decisions
and existing and proposed Treasury Regulations, together with related
interpretations, changes to any of which subsequent to the date of this
prospectus may affect the tax consequences described below, possibly with
retroactive effect.

     The following discusses only notes held as capital assets within the
meaning of Section 1221 of the Code. It does not discuss all of the tax
consequences that may be relevant to a holder in light of that holder's
particular circumstances or to holders subject to special rules, such as certain
financial institutions, insurance companies, dealers in securities or foreign
currencies, persons holding notes in connection with a hedging transaction,
"straddle," conversion transaction or other integrated transaction, persons
engaged in a trade or business in the United States or persons who are former
U.S. citizens or resident aliens who have ceased to be U.S. citizens or to be
taxed as resident aliens. Prospective investors should consult their tax
advisors with regard to the application of U.S. federal tax laws to their
particular situations, as well as any tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.

     As used in the following discussion, the term "U.S. holder" means a
beneficial owner of a note that is, for U.S. federal income tax purposes:

     - a citizen or resident of the United States;

     - a corporation or other entity taxable as a corporation created or
       organized in or under the laws of the United States, any state or
       political subdivision of the United States, or the District of Columbia;

     - an estate, the income of which is subject to U.S. federal income taxation
       regardless of its source; or

     - a trust if (A) a court within the United States is able to exercise
       primary supervision over the administration of the trust and (B) one or
       more United States persons have the authority to control all substantial
       decisions of the trust.

     Prospective purchasers that are foreign partnerships or partners in foreign
partnerships should consult their tax advisors regarding the U.S. federal income
tax consequences of holding notes.

EXCHANGE OF NOTES

     The exchange of the original notes for exchange notes pursuant to the
exchange offer will not constitute a taxable event. Consequently, no gain or
loss will be recognized by a holder upon receipt of exchange notes. The holding
period and tax basis of exchange notes will be the same as the holding period
and tax basis of the original notes so exchanged immediately before the
exchange.

                            TAXATION OF U.S. HOLDERS

INTEREST INCOME

     Payments of interest on notes generally will be taxable to a U.S. holder as
ordinary interest income at the time such payments are accrued or are received
(in accordance with the holder's regular method of tax accounting).

SALE, EXCHANGE OR REDEMPTION OF NOTES

     A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange, redemption or
other disposition of the notes (less a portion allocable to any accrued and
unpaid interest, which will be taxable as ordinary income) and the holder's
adjusted tax basis in the notes. A holder's adjusted tax basis in the notes
generally will be the initial purchase price paid less any principal payments
received by such holder. Such gain or loss will be capital gain or loss and will
be long-
                                       106


term capital gain or loss provided the holder's holding period for the notes
exceeds one year. In the case of a holder other than a corporation, the current
maximum marginal U.S. federal income tax rate applicable to long-term capital
gain recognized on the sale of notes is 20%. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for U.S.
federal income tax purposes.

LIQUIDATED DAMAGES

     We believe the likelihood that additional amounts will become payable due
to a failure to register the exchange notes is remote. Accordingly, we intend to
take the position that if such additional amounts become payable, such amounts
will be taxable to a U.S. holder as ordinary income in accordance with such
holder's method of accounting for federal tax purposes. However, the Internal
Revenue Service may take a different position, which could affect the timing of
both a holder's recognition of income and the availability of our deduction with
respect to such additional amounts.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

     In general, information reporting requirements will apply to payments of
principal and interest on the notes and payments of the proceeds of the sale of
the notes, and up to 30% backup withholding tax may apply to those payments if:

     - the holder fails to furnish or certify its correct taxpayer
       identification number to us in the manner required;

     - the holder is notified by the Internal Revenue Service that it has failed
       to report payments of interest and dividends properly; or

     - under certain circumstances, the holder fails to certify that it has not
       been notified by the Internal Revenue Service that it is subject to
       backup withholding for failure to report interest and dividend payments.

     Any amounts withheld under the backup withholding rules from a payment to a
holder will be allowed as a credit against the holder's U.S. federal income tax
and may entitle the holder to a refund, provided that the required information
is furnished to the Internal Revenue Service.

                          TAXATION OF NON-U.S. HOLDERS

PAYMENT OF INTEREST

     Subject to the discussion below concerning backup withholding, payments of
interest on the notes by us or any paying agent to any non-U.S. holder will not
be subject to United States federal withholding tax, provided that:

     - the interest is not effectively connected with the conduct by such holder
       of a trade or business in the United States;

     - such holder does not own, actually or constructively, 10% or more of the
       total combined voting power of all classes of our stock entitled to vote,
       is not a controlled foreign corporation (within the meaning of the Code)
       related, directly or indirectly, to us through stock ownership, and is
       not a bank receiving interest described in Section 881(c)(3)(A) of the
       Code; and

     - the certification requirement, as described below, has been fulfilled
       with respect to the beneficial owner.

     The certification requirement referred to above will be fulfilled if the
beneficial owner of notes certifies on Internal Revenue Service Form W-8BEN,
under penalties of perjury, that it is not a United States person and provides
its name and address, and (i) such beneficial owner files such Form W-8BEN with
the withholding agent or (ii) in the case of notes held by a foreign
intermediary or partnership, certification requirements are complied with under
Treasury regulations. For example, unless a foreign partnership has
                                       107


entered into a withholding agreement with the Internal Revenue Service, under
the new Treasury regulations, the foreign partnership will be required, in
addition to providing an intermediary Form W-8, to attach an appropriate
certification by each partner. Prospective investors, including foreign
partnerships and their partners, should consult their tax advisors regarding
possible additional reporting requirements.

     The gross amount of payments of interest that do not qualify for the
exception from withholding described above and that are not effectively
connected with the conduct by such holder of a trade or business in the United
States will be subject to U.S. withholding tax at a rate of 30% unless a treaty
applies to reduce or eliminate withholding and the non-U.S. holder properly
certifies to its entitlement to such treaty benefits on Internal Revenue Service
Form W-8BEN. Payments of interest that are effectively connected with the
conduct of a U.S. trade or business will not be subject to withholding tax if
the non-U.S. holder provides a properly executed Internal Revenue Service Form
W-8ECI.

SALE, EXCHANGE OR DISPOSITION OF NOTES

     Subject to the discussion below concerning backup withholding, a non-U.S.
holder of notes will not be subject to U.S. federal income tax on gain realized
on the sale, exchange or other disposition of such notes, unless:

     - the holder is an individual who is present in the United States for 183
       days or more in the taxable year of disposition, and certain other
       conditions are met; or

     - the gain is effectively connected with the conduct by the holder of a
       trade or business in the United States; or

     - the holder is subject to the special rules applicable to certain former
       citizens and residents of the United States.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

     We must report annually to the Internal Revenue Service and to each
non-U.S. holder any interest paid to the non-U.S. Holder. Copies of these
information returns may also be made available under the provisions of a
specific treaty or other agreement to the tax authorities of the country in
which the non-U.S. Holder resides.

     Under current U.S. federal income tax law, backup withholding tax of up to
30% will not apply to payments of interest by us or any paying agent on notes if
the certifications described above under "-- Payment of Interest" are received,
provided that we (or the paying agent, as the case may be) do not have actual
knowledge that the payee is a U.S. person.

     Payments on the sale, exchange or other disposition of notes made to or
through a foreign office of a foreign broker generally will not be subject to
backup withholding or information reporting. However, if the broker is for U.S.
federal income tax purposes a U.S. person, a controlled foreign corporation, a
foreign person 50% or more of whose gross income is effectively connected with a
U.S. trade or business for a specified three-year period or a foreign
partnership with certain connections to the United States, then information
reporting (but not backup withholding) will be required unless the broker has in
its records documentary evidence that the beneficial owner is not a U.S. person
and certain other conditions are met or the beneficial owner otherwise
establishes an exemption. Backup withholding may apply to any payment that the
broker is required to report if the broker has actual knowledge that the payee
is a U.S. person. Payments to or through the U.S. office of a broker will be
subject to backup withholding and information reporting unless the holder
certifies, under penalties of perjury, that it is not a U.S. person or otherwise
establishes an exemption.

     Non-U.S. holders of notes should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of an applicable exemption, and the procedure for
obtaining an exemption, if available. Any amounts withheld from a payment to a
non-U.S. holder under the backup withholding rules will be allowed as a credit
against the holder's U.S. federal income tax liability and may entitle the
holder to a refund, provided that the required information is furnished to the
U.S. Internal Revenue Service.

                                       108


                              PLAN OF DISTRIBUTION

     Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for original notes where the
original notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 120 days after the
expiration date of the exchange offer, we will make this prospectus, as amended
or supplemented, available to any broker-dealer for use in connection with any
resale. In addition, until July 24, 2002, all dealers effecting transactions in
the exchange notes may be required to deliver a prospectus.

     We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange notes or a combination of these methods of resale.
These resales may be made at market prices prevailing at the time of resale, at
prices related to these prevailing market prices or negotiated prices. Any
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
broker-dealer or the purchasers of any of the exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
the exchange notes may be deemed to be an underwriter within the meaning of the
Securities Act, and any profit on the resale of exchange notes and any
commission or concessions received by those persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act.

     Furthermore, any broker-dealer that acquired any of its original notes
directly from us:

     - may not rely on the applicable interpretations of the staff of the SEC
       contained in Exxon Capital Holdings Corp., SEC no-action letter (May 13,
       1988), Morgan, Stanley & Co., SEC no-action letter (June 5, 1991) and
       Shearman & Sterling, SEC no-action letter (July 2, 1993); and

     - must also be named as a selling noteholder in connection with the
       registration and prospectus delivery requirements of the Securities Act
       relating to any resale transaction.

     We agree to pay all expenses incident to the exchange offer, including the
expenses of one counsel for the holder of the notes, other than commissions or
concessions of any brokers or dealers. We will indemnify the holders of the
notes, including any broker-dealers, against various liabilities, including
liabilities under the Securities Act.

                                       109


                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

     The distribution of the notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the notes are made. Any resale of the notes in Canada must be made
under applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available statutory
exemptions or under a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the notes.

REPRESENTATIONS OF PURCHASERS

     By purchasing the notes in Canada and accepting a purchase confirmation a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that:

           (i) the purchaser is entitled under applicable provincial securities
               laws to purchase the notes without the benefit of a prospectus
               qualified under those securities laws;

           (ii) where required by law, that the purchaser is purchasing as
                principal and not as agent; and

          (iii) the purchaser has reviewed the text above under Resale
                Restrictions.

RIGHTS OF ACTION -- ONTARIO PURCHASERS ONLY

     Under Ontario securities legislation, a purchaser who acquires a security
offered by this prospectus during the period of distribution will have a
statutory right of action for damages, or while still the owner of the notes,
for rescission against us in the event that this prospectus contains a
misrepresentation. Such a purchaser will be deemed to have relied on the
misrepresentation. The right of action for damages is exercisable not later than
the earlier of 180 days from the date the purchaser first had knowledge of the
facts giving rise to the cause of action and three years from the date on which
payment is made for the notes. The right of action for rescission is exercisable
not later than 180 days from the date on which payment is made for the notes. If
such a purchaser elects to exercise the right of action for rescission, the
purchaser will have no right of action for damages against us. In no case will
the amount recoverable in any action exceed the price at which the notes were
offered to the purchaser and if the purchaser is shown to have purchased the
securities with knowledge of the misrepresentation, we will have no liability.
In the case of an action for damages, we will not be liable for all or any
portion of the damages that are proven to not represent the depreciation in
value of the notes as a result of the misrepresentation relied upon. These
rights are in addition to, and without derogation from, any other rights or
remedies available at law to an Ontario purchaser. The foregoing is a summary of
the rights available to an Ontario purchaser. Ontario purchasers should refer to
the complete text of the relevant statutory provisions.

ENFORCEMENT OF LEGAL RIGHTS

     All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

     A purchaser of the notes to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any notes
acquired by the purchaser pursuant to this offering. The report must be in the
form attached
                                       110


to British Columbia Securities Commission Blanket Order BOR #95/17, a copy of
which may be obtained from us. Only one report must be filed for notes acquired
on the same date and under the same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

     Canadian purchasers of notes should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the notes in
their particular circumstances and about the eligibility of the notes for
investment by the purchaser under relevant Canadian legislation.

                                 LEGAL MATTERS

     Certain legal matters in connection with the exchange offer will be passed
upon for us by Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio.

                                    EXPERTS

     The consolidated financial statements of OM Group, Inc. at December 31,
2000 and 2001, and for each of the three years in the period ended December 31,
2001, appearing in this prospectus and registration statement, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.

     The combined balance sheets of dmc(2) Degussa Metals Catalysts Cerdec AG as
of December 31, 2000 and 1999, and September 30, 1999 and the related combined
statements of operations, shareholder's equity and cash flows for the year ended
December 31, 2000, three months ended December 31, 1999, and years ended
September 30, 1999 and 1998, have been included herein and in the registration
statement in reliance upon the report of KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.

                                       111


      INDEX TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT

                                 OM GROUP, INC.


                                                            
Unaudited Pro Forma Condensed Combined Statement of Income
  for the year ended December 31, 2001......................    P-3
Notes to Unaudited Pro Forma Condensed Combined Statement of
  Income....................................................    P-4


                                       P-1


                                 OM GROUP, INC.

           UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT

     The following unaudited pro forma condensed combined financial statement
has been prepared by OMG's management in accordance with generally accepted
accounting principles in the United States. This pro forma financial statement
reflects OMG's acquisition of all of the operations of dmc(2) Degussa Metals
Catalysts Cerdec AG ("dmc(2) Group") on August 10, 2001 and combines for the
period indicated the historical consolidated financial statements of OMG and
dmc(2) Group using the purchase method of accounting.

     The unaudited pro forma condensed combined statement of income reflects
adjustments as if the acquisition had occurred at the beginning of the period
presented. This pro forma financial statement should be read in conjunction with
the historical financial statements and related notes of OMG and dmc(2) Group.
The pro forma financial statement includes preliminary estimates and assumptions
that OMG's management believes are reasonable. The pro forma results are not
necessarily indicative of the results which would have occurred if the business
combination had been in effect on the date indicated, or which may result in the
future, and do not include any adjustments or other effects of the planned
integration of OMG and dmc(2) Group not calculated or prepared in accordance
with Article 11-02 of Regulation S-X.

     The pro forma financial statement has been prepared using the following
facts and assumptions:

          1. OMG acquires all the businesses of dmc(2) Group in exchange for a
             total cash payment of $1,072.0 million.

          2. OMG sells the electronic materials, performance pigments, glass
             systems and Cerdec ceramics divisions of dmc(2) Group to Ferro
             Corporation for a cash purchase price of $525.5 million, the
             proceeds from which were used to repay a portion of the debt issued
             to finance the acquisition of dmc(2) Group.

          3. OMG borrows $594.9 million consisting of $546.5 million to finance
             the acquisition price and $48.4 million for estimated financing and
             related transaction costs.

          4. OMG issues 4.025 million additional shares of its common stock at
             $59.00 per share and uses the net proceeds of $225.7 million to pay
             a portion of the debt issued to finance the acquisition of dmc(2)
             Group.

          5. The acquired assets and liabilities of dmc(2) Group are recorded at
             estimated fair values, as determined by OMG's management, based on
             information currently available and on current tentative
             assumptions as to the future operations of dmc(2) Group. OMG is in
             the process of obtaining independent appraisals of the acquired
             property, plant and equipment, intangible assets, and estimates of
             their remaining useful lives. OMG is also reviewing and determining
             the fair value of the other assets acquired and liabilities
             assumed. Accordingly, the allocation of the purchase price to the
             acquired assets and liabilities of dmc(2) Group is subject to
             revision as a result of the final determination of the purchase
             price and of appraised and other fair values.

           The preliminary allocation of the aggregate purchase price of
           businesses acquired of dmc(2) Group, and the recognition of the
           excess of aggregate purchase price over the estimated fair value of
           net assets acquired, is as follows (in millions):


                                                                        
                Adjust acquired inventories to estimated fair value.........  $ 104.0
                Adjust acquired property, plant and equipment to estimated
                fair value..................................................     16.4
                Record preliminary adjustment for acquired intangible
                assets......................................................     18.1
                Record preliminary estimate of goodwill.....................      2.2
                Record estimated financing costs............................     32.0
                Establish environmental accrual.............................     (9.0)
                Establish deferred tax liability resulting from the
                application of purchase accounting..........................    (67.5)
                Eliminate net equity acquired...............................    498.7
                                                                              -------
                Aggregate purchase price and related transaction costs......  $ 594.9
                                                                              =======


                                       P-2


                                 OM GROUP, INC.

           UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

                      FOR THE YEAR ENDED DECEMBER 31, 2001



                                                                                                       PRO FORMA
                                                                                                       COMBINED
                                                                                                         AFTER
                                                       PRO FORMA ADJUSTMENTS                OFFERING   OFFERING
                                           DMC(2)     -----------------------                  OF         OF
                               OMG         GROUP      TRANSACTION   DIVISIONS   PRO FORMA    COMMON     COMMON
                            HISTORICAL   HISTORICAL   ADJUSTMENTS     SOLD      COMBINED     STOCK       STOCK
                            ----------   ----------   -----------   ---------   ---------   --------   ---------
                                                (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
                                                                                  
Net sales.................    2,367.4      3,614.7                    (294.5)    5,687.6                5,687.6
Cost of products sold.....    2,032.8      3,431.8         1.0(a)     (220.0)    5,245.6                5,245.6
                             --------     --------      ------       -------    --------               --------
                                334.6        182.9        (1.0)        (74.5)      442.0                  442.0
Selling, general and
  administrative
  expenses................      165.4        144.9         0.7(b)      (76.7)      234.3                  234.3
                             --------     --------      ------       -------    --------               --------
Income from operations....      169.2         38.0        (1.7)          2.2       207.7                  207.7
Other income (expense)
  Interest expense, net...      (57.1)       (19.9)      (12.7)(c,d)      3.9      (85.8)      15.8(g)    (70.0)
  Other...................       (4.2)         4.5                      (0.7)       (0.4)                  (0.4)
                             --------     --------      ------       -------    --------      -----    --------
Income before income taxes
  and extraordinary
  item....................      107.9         22.6       (14.4)          5.4       121.5       15.8       137.3
Income taxes..............       27.7         12.6       (10.2)(e,f)     (0.5)      29.6        5.5(e)     35.1
Extraordinary item........       (4.6)          --          --            --        (4.6)        --        (4.6)
                             --------     --------      ------       -------    --------      -----    --------
Net income................       75.6         10.0        (4.2)          5.9        87.3       10.3        97.6
                             ========     ========      ======       =======    ========      =====    ========

Weighted average number of
  common shares
  outstanding (in
  millions)...............                                                          24.0        4.0(g)     28.0
Net income per common
  share...................                                                      $   3.64               $   3.49
Weighted average number of
  common shares
  outstanding (in
  millions) -- assuming
  dilution................                                                          24.4        4.0(g)     28.4
Net income per common
  share -- assuming
  dilution................                                                      $   3.58               $   3.44


                                       P-3


                                 OM GROUP, INC.

      NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

     The adjustments to give pro forma effect to OMG's acquisition of dmc(2)
Group are as follows:


                                                                        
           a.   Recognize incremental depreciation on the estimated write-up
                of property, plant and equipment to fair value over an
                average useful life of ten years.
           b.   Adjust amortization expense for acquired intangible assets
                over a 15-year life.
           c.   Recognize additional interest expense due to $594.9 million
                increase in consolidated long-term debt to finance the
                acquisition and related transaction costs, assuming a
                weighted average interest rate of 8.9%, reduced by the
                elimination of interest expense associated with debt not
                assumed, and adjusted for the difference in interest rates
                between the bridge notes and the permanent financing. An
                increase in the LIBOR of 1/8 of 1% would increase pro forma
                interest expense by approximately $0.2 million; an increase
                in the LIBOR of 1/8 of 1% with respect to total pro forma
                variable rate debt would increase annual pro forma interest
                expense by approximately $1.1 million.
           d.   Amortize the estimated financing costs over the life of the
                related debt.
           e.   Record the income tax effect assuming a 35% income tax rate.
           f.   To adjust tax expense for the acquired business to reflect
                the tax structure of the combined organization.
           g.   Reflect the issuance of 4.025 million shares of OMG common
                stock less underwriting fees and discounts.


                                       P-4


                  INDEX TO OM GROUP, INC. FINANCIAL STATEMENTS



                                                               PAGE
                                                               ----
                                                            
Report of Independent Auditors..............................    F-2
Consolidated Balance Sheets as of December 31, 2000 and
  2001......................................................    F-3
Statements of Consolidated Income for each of the three
  years in the period ended December 31, 2001...............    F-4
Statements of Consolidated Stockholders' Equity for each of
  the three years in the period ended December 31, 2001.....    F-5
Statements of Consolidated Cash Flows for each of the three
  years in the period ended December 31, 2001...............    F-6
Notes to Consolidated Financial Statements..................    F-7


                                       F-1


                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
OM Group, Inc.

     We have audited the accompanying consolidated balance sheets of OM Group,
Inc. as of December 31, 2001 and 2000, and the related statements of
consolidated income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of OM Group, Inc.
at December 31, 2001 and 2000, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
2001, in conformity with accounting principles generally accepted in the United
States.

                                          ERNST & YOUNG LLP

Cleveland, Ohio
March 27, 2002

                                       F-2


                                 OM GROUP, INC.

                          CONSOLIDATED BALANCE SHEETS

                   (THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)



                                                                    DECEMBER 31
                                                              -----------------------
                                                                 2000         2001
                                                              ----------   ----------
                                                                     
ASSETS
Current assets:
  Cash and cash equivalents.................................  $   13,482   $   78,210
  Marketable securities.....................................                   38,667
  Accounts receivable, less allowance of $7,571 in 2001 and
     $2,404 in 2000.........................................     147,618      375,258
  Inventories...............................................     393,849      815,503
  Committed metal positions.................................                   19,318
  Other current assets......................................      56,792      125,096
                                                              ----------   ----------
TOTAL CURRENT ASSETS........................................     611,741    1,452,052
Property, plant and equipment:
  Land......................................................       6,794       15,378
  Buildings and improvements................................     128,152      219,666
  Machinery and equipment...................................     481,548      651,822
  Furniture and fixtures....................................      12,860       36,964
                                                              ----------   ----------
                                                                 629,354      923,830
  Less accumulated depreciation.............................     144,002      191,816
                                                              ----------   ----------
                                                                 485,352      732,014
Other assets:
  Goodwill, less accumulated amortization of $24,817 in 2001
     and $18,163 in 2000....................................     176,198      180,402
  Other intangible assets, less accumulated amortization of
     $10,441 in 2001 and $8,520 in 2000.....................      15,865       32,812
  Other assets..............................................      68,306      143,942
                                                              ----------   ----------
TOTAL ASSETS................................................  $1,357,462   $2,541,222
                                                              ==========   ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt.........................  $   20,865   $   20,188
  Accounts payable..........................................     103,570      176,986
  Hedged metal obligations..................................                      815
  Accrued income taxes......................................      20,973       23,539
  Deferred income taxes.....................................      37,776       73,716
  Accrued compensation......................................      16,842       31,127
  Other accrued expenses....................................       7,229       96,351
                                                              ----------   ----------
TOTAL CURRENT LIABILITIES...................................     207,255      422,722
  Long-term debt............................................     551,079    1,300,507
  Deferred income taxes.....................................      29,116       76,366
  Other long-term liabilities...............................      14,333       97,530
  Minority interests........................................      49,549       74,564
Stockholders' equity:
  Preferred stock, $.01 par value:
     Authorized 2,000,000 shares; no shares issued or
     outstanding
  Common stock, $.01 par value:
     Authorized 60,000,000 shares; issued 24,143,267 shares
     in 2001 and 23,959,346 shares in 2000..................         240          241
  Capital in excess of par value............................     258,913      262,914
  Retained earnings.........................................     256,183      316,796
  Treasury stock (2,359 shares in 2001 and 105,065 shares in
     2000, at cost )........................................      (4,853)        (118)
  Accumulated other comprehensive loss......................      (3,967)      (6,363)
  Unearned compensation.....................................        (386)      (3,937)
                                                              ----------   ----------
TOTAL STOCKHOLDERS' EQUITY..................................     506,130      569,533
                                                              ----------   ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................  $1,357,462   $2,541,222
                                                              ==========   ==========


See accompanying notes to consolidated financial statements.
                                       F-3


                                 OM GROUP, INC.

                       STATEMENTS OF CONSOLIDATED INCOME

                   (THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)



                                                                 YEAR ENDED DECEMBER 31
                                                           ----------------------------------
                                                             1999        2000         2001
                                                           --------    --------    ----------
                                                                          
Net sales................................................  $506,955    $887,743    $2,367,399
Cost of products sold....................................   347,450     673,877     2,032,800
                                                           --------    --------    ----------
                                                            159,505     213,866       334,599
Selling, general and administrative expenses.............    60,768      75,373       165,359
                                                           --------    --------    ----------
Income from operations...................................    98,737     138,493       169,240
Other income (expense)
Interest expense.........................................   (19,081)    (39,829)      (60,623)
Interest income..........................................       181       2,435         3,476
Foreign exchange (loss) gain.............................       456      (1,123)         (194)
                                                           --------    --------    ----------
                                                            (18,444)    (38,517)      (57,341)
                                                           --------    --------    ----------
Income before income taxes, minority interests, equity
  income and extraordinary item..........................    80,293      99,976       111,899
Income taxes.............................................    24,468      28,476        27,715
Minority interests.......................................                               5,820
Equity in income of affiliates...........................                              (1,876)
                                                           --------    --------    ----------
Income before extraordinary item.........................    55,825      71,500        80,240
Extraordinary item (net of $2,500 tax benefit)...........                              (4,600)
                                                           --------    --------    ----------
Net income...............................................  $ 55,825    $ 71,500    $   75,640
                                                           ========    ========    ==========
Basic earnings per common share:
  Income before extraordinary item.......................  $   2.35    $   2.99    $     3.34
  Extraordinary item.....................................                               (0.19)
                                                           --------    --------    ----------
  Net income.............................................  $   2.35    $   2.99    $     3.15
                                                           ========    ========    ==========
Diluted earnings per common share:
  Income before extraordinary item.......................  $   2.30    $   2.95    $     3.28
  Extraordinary item.....................................                               (0.19)
                                                           --------    --------    ----------
  Net income.............................................  $   2.30    $   2.95    $     3.09
                                                           ========    ========    ==========
Cash dividends paid per common share.....................  $    .40    $    .44    $      .52
                                                           ========    ========    ==========


See accompanying notes to consolidated financial statements.

                                       F-4


                                 OM GROUP, INC.

                STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY

                             (THOUSANDS OF DOLLARS)



                                         CAPITAL                           ACCUMULATED
                                        IN EXCESS                             OTHER
                               COMMON    OF PAR     RETAINED   TREASURY   COMPREHENSIVE     UNEARNED
                               STOCK      VALUE     EARNINGS    STOCK         LOSS        COMPENSATION    TOTAL
                               ------   ---------   --------   --------   -------------   ------------   --------
                                                                                    
BALANCE AT JANUARY 1, 1999...   $240    $258,085    $155,691   $(8,494)      $(1,379)                    $404,143
Net income...................                         55,825                                               55,825
Other comprehensive loss.....                                                   (458)                        (458)
                                                                                                         --------

Total comprehensive income...                                                                              55,367
Non-employee directors'
  compensation...............                160                                                              160
Restricted stock grants......                570                                            $  (570)
Restricted stock
  compensation...............                                                                    70            70
Dividends paid...............                         (9,517)                                              (9,517)
Treasury stock purchased.....                                   (4,744)                                    (4,744)
Issuance of shares under
  benefit plans, including
  tax benefit................                         (3,952)    7,701                                      3,749
                                ----    --------    --------   -------       -------        -------      --------
BALANCE AT DECEMBER 31,
  1999.......................    240     258,815     198,047    (5,537)       (1,837)          (500)      449,228
Net income...................                         71,500                                               71,500
Other comprehensive loss.....                                                 (2,130)                      (2,130)
                                                                                                         --------

Total comprehensive income...                                                                              69,370
Non-employee directors'
  compensation...............                 98                                                               98
Restricted stock
  compensation...............                                                                   114           114
Dividends paid...............                        (10,491)                                             (10,491)
Treasury stock purchased.....                                   (9,650)                                    (9,650)
Issuance of shares under
  benefit plans, including
  tax benefit................                         (2,873)   10,334                                      7,461
                                ----    --------    --------   -------       -------        -------      --------
BALANCE AT DECEMBER 31,
  2000.......................    240     258,913     256,183    (4,853)       (3,967)          (386)      506,130
Net income...................                         75,640                                               75,640
Other comprehensive loss.....                                                 (2,396)                      (2,396)
                                                                                                         --------

Total comprehensive income...                                                                              73,244
Non-employee directors'
  compensation...............                153                                                              153
Restricted stock grants......              3,848                                             (3,848)
Restricted stock
  compensation...............                                                                   297           297
Dividends paid...............                        (12,494)                                             (12,494)
Treasury stock purchased.....                                   (5,331)                                    (5,331)
Issuance of shares under
  benefit plans, including
  tax benefit................      1                  (2,533)   10,066                                      7,534
                                ----    --------    --------   -------       -------        -------      --------
BALANCE AT DECEMBER 31,
  2001.......................   $241    $262,914    $316,796   $  (118)      $(6,363)       $(3,937)     $569,533
                                ====    ========    ========   =======       =======        =======      ========


See accompanying notes to consolidated financial statements.

                                       F-5


                                 OM GROUP, INC.

                     STATEMENTS OF CONSOLIDATED CASH FLOWS

                             (THOUSANDS OF DOLLARS)



                                                                 YEAR ENDED DECEMBER 31
                                                          ------------------------------------
                                                            1999        2000          2001
                                                          --------    ---------    -----------
                                                                          
OPERATING ACTIVITIES
Net income..............................................  $ 55,825    $  71,500    $    75,640
Items not affecting cash:
  Depreciation and amortization.........................    26,864       39,298         63,476
  Foreign exchange loss (gain)..........................      (456)       1,123            194
  Deferred income taxes.................................    13,327          184          4,783
  Minority interest.....................................                                 5,820
  Equity in income of affiliates........................                                (1,876)
  Extraordinary item....................................                                 4,600
Changes in operating assets and liabilities:
  Accounts receivable...................................   (19,586)      40,044         86,423
  Inventories...........................................   (49,521)      (4,296)       (69,371)
  Prepayments and other assets..........................    (9,247)     (41,436)       (43,067)
  Accounts payable and other liabilities................    (4,850)     (25,461)       (68,325)
                                                          --------    ---------    -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES...............    12,356       80,956         58,297
INVESTING ACTIVITIES
Expenditures for property, plant and equipment -- net...   (70,150)     (55,033)      (108,531)
Acquisitions of businesses..............................    (1,765)    (192,689)    (1,146,657)
Divestiture of businesses...............................                               525,473
                                                          --------    ---------    -----------
NET CASH USED IN INVESTING ACTIVITIES...................   (71,915)    (247,722)      (729,715)
FINANCING ACTIVITIES
Dividend payments.......................................    (9,517)     (10,491)       (12,494)
Long-term borrowings....................................    74,808      223,750      1,648,751
Payments of short-term debt.............................    (2,000)
Payments of long-term debt..............................                (37,600)      (900,000)
Purchase of treasury stock..............................    (4,744)      (9,650)        (5,331)
Proceeds from exercise of stock options.................     2,755        6,811          6,435
                                                          --------    ---------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES...............    61,302      172,820        737,361
Effect of exchange rate changes on cash and cash
  equivalents...........................................       (60)      (2,005)        (1,215)
                                                          --------    ---------    -----------
INCREASE IN CASH AND CASH EQUIVALENTS...................     1,683        4,049         64,728
Cash and cash equivalents at beginning of year..........     7,750        9,433         13,482
                                                          --------    ---------    -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR................  $  9,433    $  13,482    $    78,210
                                                          ========    =========    ===========


See accompanying notes to consolidated financial statements.

                                       F-6


                                 OM GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)

A. SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation -- The consolidated financial statements
include the accounts of OM Group, Inc. (the Company) and its majority-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

     Cash Equivalents -- For purposes of the statements of consolidated cash
flows, all highly liquid investments with a maturity of three months or less
when purchased are considered to be cash equivalents.

     Inventories -- Inventories are principally stated at the lower of cost or
market and valued using the last-in, first-out (LIFO) method except for precious
metals trading inventory which is carried at the current monetary value.

     Long-Lived Assets -- Property, plant and equipment is recorded at
historical cost less accumulated depreciation. Depreciation of plant and
equipment is provided by the straight-line method over the useful lives ranging
from 5 to 40 years for buildings and improvements and 3 to 15 years for other
depreciable assets.

     For acquisitions completed prior to July 1, 2001, goodwill is amortized on
a straight-line basis over 20 to 40 years. Other intangibles represent
principally patents, trademarks, technology acquired and capitalized software
and are being amortized on a straight-line basis over five to seventeen years.

     Long-lived assets are assessed for impairment when operating profits for
the related business indicate that the carrying value may not be recoverable.
The asset would be considered impaired when the future net undiscounted cash
flows generated by the asset are less than its carrying value. An impairment
loss would be recognized based on the amount by which the carrying value of the
asset exceeds its fair value.

     Research and Development -- Selling, general and administrative expenses
include research and development costs of $11,332, $13,308 and $20,486 in 1999,
2000 and 2001, respectively.

     Income Taxes -- Deferred income taxes are provided to recognize the effect
of temporary differences between financial and tax reporting. Deferred income
taxes are not provided for undistributed earnings of foreign consolidated
subsidiaries, to the extent such earnings are reinvested for an indefinite
period of time.

     Foreign Currency Translation -- The functional currency for the Company's
Finnish subsidiaries and related African operations is the U.S. Dollar since a
majority of their purchases and sales are denominated in U.S. Dollars.
Accordingly, foreign exchange gains and losses related to assets, liabilities
and transactions which are denominated in other currencies (principally the
euro) are included in results of operations. The Company enters into forward
contracts to partially hedge its balance sheet exposure to other currencies, and
accordingly, gains or losses related to the forward contracts are also included
in results of operations.

     The functional currency for the Company's other subsidiaries outside of the
United States is the applicable local currency. For those operations, financial
statements are translated into U.S. Dollars at year-end exchange rates as to
assets and liabilities and weighted average exchange rates as to revenues and
expenses. The resulting translation adjustments are recorded as a component of
stockholders' equity.

     Derivative Instruments -- The Company enters into derivative instruments
and hedging activities which are closely monitored and controlled in order to
manage, where possible and economically efficient, commodity price risk for base
and precious metals, interest rate risk related to borrowings, and foreign
currency risk associated with manufacturing and sales locations where
fluctuations in currency prices may affect the Company's operating results. The
use of forward and future contracts to hedge commodity price risk is discussed
in Note D, "Metals Financial Instruments." The use of interest rate swaps to
hedge interest rate risk on the Company's variable rate debt is discussed in
Note E, "Debt and Other Financial

                                       F-7

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Instruments." The use of foreign exchange contracts to hedge foreign currency
risk associated with foreign operations is managed with foreign exchange
contracts and is also discussed in Note E.

     Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended. SFAS No. 133 requires all derivative financial
instruments to be recorded on the balance sheet at fair value. Accounting for
the change in the fair value (that is, gain or loss) from the financial
instrument depends on whether it has been designated and is effective as a hedge
and, if so, on the nature of the hedging activity. The adoption of SFAS No. 133
resulted in cumulative effect adjustment of approximately $1,600.

     The Company has designated certain derivative instruments as cash flow
hedges. For these hedges, the effective portion of the gain or loss from the
financial instrument is initially reported as a component of other comprehensive
income in shareholders' equity and subsequently reclassified to net income when
the hedged item affects net income. Any ineffective portions of the cash flow
hedges are recognized immediately in net income.

     The gain or loss related to financial instruments that are not designated
as hedges are recognized immediately in net income.

     Stock Options and Compensation Plans -- The Company grants stock options
for a fixed number of shares to certain employees with an exercise price equal
to the fair value of the shares at the date of grant and accounts for stock
options using the intrinsic value method. Accordingly, compensation expense is
not recognized for the stock option grants.

     Non-employee members of the Board of Directors are eligible to receive
their annual retainer in the form of cash, stock options, or restricted stock.
If stock options or restricted stock are elected, the acquisition price is 75%
of the fair market value and directors' cash compensation is utilized to acquire
the options or restricted stock. Also, directors electing to receive restricted
stock receive additional restricted stock equal to 5% of their applied cash
compensation. Accordingly, compensation expense is recognized for stock option
and restricted share grants elected by eligible directors.

     Revenue Recognition -- Revenues are recognized when unaffiliated customers
take title and assume ownership of products specified in their purchase
agreements with the Company. Within the base metal and precious metal chemistry
segments, revenue recognition generally occurs upon shipment of product or usage
of consignment inventories. Metal management segment revenues are recognized
upon shipment of product or usage of consignment inventory in the case of sales
contracts; upon transfer of title under brokerage account transactions; and as
earned over the lives of the respective contracts in the case of leasing
arrangements. Shipping and handling are included in cost of products sold and
are included in the sales price when billed to customers.

     Sales and Cost of Products Sold -- Sales and cost of products sold include
the metal content of the product sold to customers if the metal has been
supplied by the Company. Also included are purchases and sales of metal to third
parties by the metal management segment whether or not the metal has been
processed into a product. If a customer supplies the metal for processing, the
metal content is not included in sales or cost of products sold.

     Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions in certain circumstances that
affect the amounts reported in the accompanying consolidated financial
statements and notes. Actual results could differ from these estimates.

     Recently Issued Accounting Pronouncements -- In June 2001, the Financial
Accounting Standards Board issued SFAS 141, "Business Combination," and SFAS
142, "Goodwill and Other Intangible Assets." SFAS 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase

                                       F-8

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

method of accounting. It also specifies the types of acquired intangible assets
that are required to be recognized and reported separately from goodwill. SFAS
142 will require that goodwill and certain intangibles no longer be amortized,
but instead tested for impairment at least annually. SFAS 142 is required to be
applied starting in the fiscal year beginning after December 15, 2001. The
adoption of SFAS 142 will result in an annual decrease in pre-tax amortization
expense of approximately $6,700.

     In the third quarter of 2001, the FASB issued SFAS No. 144 "Accounting for
Impairment or Disposal of Long-Lived Assets." This Statement addresses the
conditions under which an impairment charge should be recorded related to
long-lived assets to be held and used, except for goodwill, and those to be
disposed of by sale or otherwise. The provisions of this Statement are effective
January 1, 2002. The Company does not expect this Statement to have a material
impact on its financial position, results of operations or cash flows.

     Financial Presentation Changes -- Certain amounts for prior years have been
reclassified to conform to the current year presentation.

B. ACQUISITIONS AND PRO FORMA RESULTS OF OPERATIONS

     On August 10, 2001, the Company acquired dmc(2) Degussa Metals Catalysts
Cerdec (dmc(2)) for a purchase price of approximately $1.120 billion, including
cash acquired and related financing and transaction costs. dmc(2) is a worldwide
provider of metal-based functional materials for a wide variety of end markets.
The acquisition of dmc(2) was financed through a combination of debt and equity
and the sale of certain assets. On September 7, 2001, the Company completed the
disposition of the electronic materials, performance pigments, glass systems and
Cerdec ceramics divisions of dmc(2) for a cash purchase price of $525.5 million.
In both transactions, the purchase price is subject to working capital
adjustments, which may ultimately impact the final purchase price.

     The acquired assets and liabilities of dmc(2) are recorded at estimated
fair values, as determined by the Company's management, based on information
currently available, including its responsibility for any environmental or legal
matters at the date of acquisition. Accordingly, the allocation of the purchase
price to the acquired assets and liabilities of dmc(2) may be revised at a later
date as fair value determinations are finalized, including appraisals of
property, plant and equipment and intangible assets.

     The preliminary allocation of the aggregate purchase price of the
businesses acquired of dmc(2) is as follows (in millions):


                                                           
Net assets acquired.........................................  $  498.7
Fair value of assets sold...................................     525.5
Adjust acquired net assets to estimated fair value..........     143.4
Record preliminary adjustment for acquired intangible
  assets....................................................      18.1
Establish deferred tax liability............................     (67.5)
Record preliminary estimate of goodwill.....................       2.2
                                                              --------
          Total aggregate purchase price....................  $1,120.4
                                                              ========


     Acquired intangible assets, consisting of patents and trademarks, are being
amortized over their estimated useful lives of 15 years. Goodwill, which is
anticipated to be principally non-deductible for tax purposes, is attributable
to the precious metal chemistry segment.

     In December 2001, the Company purchased the metal organics division of
Rhodia Holdings Limited and a nickel refining facility from Centaur Mining and
Exploration Limited for an aggregate purchase price of $45.7 million. The
combined sales of these entities were $75.3 million in 2001.

                                       F-9

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     On April 4, 2000, the Company acquired Outokumpu Nickel Oy (OKN) for a
purchase price of $188.1 million, including related financing and transaction
costs. OKN manufactures, distributes and sells a broad range of nickel products,
principally plating and alloy-grade cathodes and briquettes. The acquisition of
OKN, was financed through bank borrowings and was recorded using the purchase
method of accounting. The Company is resolving certain matters with the seller
related to the net assets acquired, which may ultimately impact the final
purchase price. Accordingly, the allocation of the purchase price is subject to
revision, which is not expected to be material, based on finalization of the
purchase price.

     Pro forma net sales, net income and net income per share, for the years
ended December 31, 2000 and 2001, as if the acquisitions had occurred as of
January 1, 2000 and 2001, respectively, would have been as follows:



                                                         TWELVE MONTHS ENDED
                                                             DECEMBER 31
                                                       ------------------------
                                                          2000          2001
                                                       ----------    ----------
                                                               
Net sales............................................  $6,593,600    $5,687,600
Net income...........................................  $   84,800    $  101,000
Net income per common share..........................  $     3.11    $     3.61
Net income per common share -- assuming dilution.....  $     3.05    $     3.56


     The pro forma results include preliminary estimates and assumptions which
the Company's management believes are reasonable. However, the pro forma results
are not necessarily indicative of the results which would have occurred if the
acquisitions had occurred on the dates indicated, or which may result in the
future.

     The aforementioned pro forma information reflects the following
assumptions: amortization of financing costs over 6 years; adjustment of
depreciation expense over 10 years; interest cost on the incremental funds
borrowed; and the issuance of equity securities.

C. INVENTORIES

     Inventories consist of the following:



                                                              DECEMBER 31
                                                          --------------------
                                                            2000        2001
                                                          --------    --------
                                                                
Raw materials and supplies..............................  $168,750    $335,706
Finished goods..........................................   156,159     340,883
                                                          --------    --------
                                                           324,909     676,589
LIFO reserve............................................    68,940     138,914
                                                          --------    --------
          Total inventories.............................  $393,849    $815,503
                                                          ========    ========


D. METALS FINANCIAL INSTRUMENTS

     The Company generally manages its price exposure to metals by passing
through to its customers increases or decreases in metal raw material prices by
increasing or decreasing, respectively, the price of its products. The Company
also undertakes to minimize the effect on profitability of changes in prices of
metals through various hedging activities.

     The Company uses forward and future sales and purchase contracts to manage
price risk associated with its metal positions. The fair value of these
contracts is recorded in the balance sheet in Committed Metal

                                       F-10

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Positions and Hedged Metal Obligations, with the resulting changes in the fair
value due to fluctuating metal prices recorded as a gain or loss in income from
operations.

     The table below summarizes the open metals forwards/futures contracts:



                                                              NOTIONAL CONTRACT VALUE     MARKET VALUE(1)
                                                              -----------------------   -------------------
                                                                   DECEMBER 31,            DECEMBER 31,
                                                                       2001                    2001
                                                              -----------------------   -------------------
                                                                 BUY          SELL        BUY        SELL
                                                              ----------   ----------   --------   --------
                                                                                       
Remaining term up to 1 year:
  Forwards..................................................   $144,442     $118,033    $145,866   $ 99,016
  Futures...................................................      3,242       43,709       3,306     45,647
Remaining term over 1 year:
  Forwards..................................................                     133                    138
  Futures...................................................                   1,227                  1,286
                                                               --------     --------    --------   --------
Total.......................................................   $147,684     $163,102    $149,172   $146,087
                                                               ========     ========    ========   ========


---------------

(1) Market value is determined by financial institution counterparties.

     The Company also enters into forward contracts to hedge the purchase of
nickel raw material and the sales of nickel products. These contracts are
designated cash flow hedges. Therefore, realized gains and losses on these
forward contracts are included as a component of purchases and net sales, as
appropriate, and are recognized when the related raw material is purchased or
product is sold. At December 31, 2001, the notional value of the open contracts
approximated $22,433. The fair value of the unrealized gain/loss on those
contracts, based on current settlement prices at December 31, 2001, approximated
$279 receivable.

E. DEBT AND OTHER FINANCIAL INSTRUMENTS
     Long-term debt consists of the following:



                                                              DECEMBER 31
                                                         ----------------------
                                                           2000         2001
                                                         --------    ----------
                                                               
Notes payable to financial institutions................  $570,900    $  920,695
Senior Subordinated Notes..............................                 400,000
Other..................................................     1,044
                                                         --------    ----------
                                                          571,944     1,320,695
Less: Current portion..................................    20,865        20,188
                                                         --------    ----------
          Total long-term debt.........................  $551,079    $1,300,507
                                                         ========    ==========


     In August 2001, the Company's credit facilities were revised and increased
to $1.31 billion, in conjunction with the acquisition of dmc(2) (which is
discussed more fully in Note B). These credit facilities were comprised of a
$325 million revolving credit facility, a $135 million five year term loan, a
$500 million six year term loan and a $350 million asset sale term loan, all
bearing interest at a rate of LIBOR plus 3%. In addition, the Company obtained a
$550 million increasing rate bridge loan, initially bearing interest at a rate
of 10.5%. The asset sale term loan and a portion of the bridge loan were re-paid
from the proceeds of the sale of certain dmc(2) related businesses. On December
13, 2001, the Company completed its $400 million offering of 9.25% Senior
Subordinated Notes due 2011. The net proceeds were used to repay the remaining
outstanding indebtedness under its bridge loan and a portion of the outstanding
indebtedness under its credit facilities. The Company retired the bridge loan
early and as a result incurred an extraordinary loss of $4,600 after-tax. Under
the credit agreement, the Company must meet various financial covenants, and
there are

                                       F-11

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

restrictions on investments and dividend payments. Investments in Weda Bay
Minerals, Inc. (see Note L) are limited to $20 million. Annual dividends are
limited to the greater of $15 million or 25% of consolidated net income. Notes
payable to the banks are fully collateralized by a portion of the Company's
assets. As described in Note O, the Company's domestic subsidiaries are the
guarantors of the Senior Subordinated Notes. At December 31, 2001, the Company
had approximately $31 million available under its revolving credit facilities.

     The Company has entered into several interest rate swap agreements to
convert the variable interest rates on an aggregate contract amount of $55
million to an average fixed rate of 5.20% plus 1.25% to 2.5% for the period
ending February 14, 2003. The Company has also entered into several interest
rate swap agreements to convert the variable interest rates on an aggregate
contract amount of $120 million to an average fixed rate of 6.88% plus 1.25% to
2.5% for the period ending April 25, 2003. These interest rate swap agreements
are recorded as cash flow hedges.

     At December 31, 2001, the combined effective rate of the Company's bank
borrowings and the related swap agreements was 6.6%. The net interest paid or
received on interest rate swaps is included in interest expense. The
counterparties to the interest rate swaps are international commercial banks. At
December 31, 2001, the fair values of the Company's interest rate swaps
approximated $5,525 payable.

     Aggregate annual maturities of long-term debt for the five years following
December 31, 2001 are as follows: 2002 -- $20,188; 2003 -- $26,938;
2004 -- $33,687; 2005 -- $40,438 and 2006 -- $325,363. Interest paid, net of
capitalized amounts, was $19,112, $39,752, and $65,210 for the years ended
December 31, 1999, 2000 and 2001, respectively. Interest capitalized as part of
the acquisition or construction of major fixed assets was $7,057 in 1999,
$10,972 in 2000 and $10,307 in 2001. At December 31, 2001, the carrying value of
the Company's debt approximated its fair value.

     The Company enters into forward contracts to purchase and sell various
currencies to partially hedge its balance sheet exposure and other commitments
to rate fluctuations between various currencies and the U.S. Dollar. The
following table summarizes the Company's open foreign currency forward
contracts:



                                               NOTIONAL CONTRACT VALUE                    MARKET VALUE(1)
                                         ------------------------------------   ------------------------------------
                                           DECEMBER 31,       DECEMBER 31,        DECEMBER 31,       DECEMBER 31,
                                               2000               2001                2000               2001
                                         ----------------   -----------------   ----------------   -----------------
                                           BUY      SELL      BUY      SELL       BUY      SELL      BUY      SELL
                                         -------   ------   -------   -------   -------   ------   -------   -------
                                                                                     
Principally Euro.......................  $         $4,712   $17,694   $27,785   $         $5,061   $19,089   $27,792
                                         -------   ------   -------   -------   -------   ------   -------   -------
Total..................................  $         $4,712   $17,694   $27,785   $         $5,061   $19,089   $27,792
                                         =======   ======   =======   =======   =======   ======   =======   =======


---------------

(1) Market value is determined by financial institution counterparties.

F. INCOME TAXES

     Income (loss) before income taxes, minority interests, equity income and
extraordinary item consists of the following:



                                                          YEAR ENDED DECEMBER 31
                                                      -------------------------------
                                                       1999        2000        2001
                                                      -------    --------    --------
                                                                    
United States.......................................  $(2,715)   $(32,986)   $(75,648)
Outside the United States...........................   83,008     132,962     187,547
                                                      -------    --------    --------
                                                      $80,293    $ 99,976    $111,899
                                                      =======    ========    ========


                                       F-12

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     Income taxes are summarized as follows:



                                                            YEAR ENDED DECEMBER 31
                                                        ------------------------------
                                                         1999        2000       2001
                                                        -------    --------    -------
                                                                      
Current:
  United States:
     Federal..........................................  $ 1,281
     State and local..................................       88
  Outside the United States...........................    9,772    $ 28,292    $22,932
                                                        -------    --------    -------
                                                         11,141      28,292     22,932
Deferred:
  United States.......................................    2,817     (11,414)    (6,620)
  Outside the United States...........................   10,510      11,598     11,403
                                                        -------    --------    -------
                                                         13,327         184      4,783
                                                        -------    --------    -------
                                                        $24,468    $ 28,476    $27,715
                                                        =======    ========    =======




                                                               YEAR ENDED DECEMBER 31
                                                              ------------------------
                                                               1999     2000     2001
                                                              ------    -----    -----
                                                                        
Income taxes at the United States statutory rate............   35.0%    35.0%    35.0%
State income taxes, net of federal tax benefit..............     .1     (0.8)    (2.5)
Effective tax rate differential of earnings outside of the
  United States.............................................  (10.6)    (7.0)    (9.2)
Adjustment of worldwide tax liabilities.....................    4.2
Non-deductible goodwill.....................................    1.9      1.6      1.3
Other -- net................................................    (.1)    (0.3)     0.2
                                                              -----     ----     ----
                                                               30.5%    28.5%    24.8%
                                                              =====     ====     ====


     Significant components of the Company's deferred income taxes are as
follows:



                                                                   DECEMBER 31
                                                              ----------------------
                                                                2000         2001
                                                              ---------    ---------
                                                                     
Current asset -- operating accruals.........................  $   2,505    $  24,492
Current liability -- inventories............................    (40,281)     (95,014)
Long-term asset -- benefit accruals.........................      3,920       23,870
Long-term asset -- operating loss carryforwards.............     20,149       51,886
Long-term liability -- accelerated depreciation.............    (53,185)    (147,529)
                                                              ---------    ---------
  Net deferred tax liability................................  $ (66,892)   $(142,295)
                                                              =========    =========


     At December 31, 2001, certain United States subsidiaries had operating loss
carryforwards of approximately $129,700. These carryforwards expire at various
dates from 2019 through 2021.

     The Company has not provided additional United States income taxes on
approximately $490,000 of undistributed earnings of consolidated foreign
subsidiaries included in stockholders' equity. Such earnings could become
taxable upon the sale or liquidation of these foreign subsidiaries or upon
dividend repatriation. The Company's intent is for such earnings to be
reinvested by the subsidiaries or to be repatriated only when it would be tax
effective through the utilization of foreign tax credits. It is not practicable
to estimate the amount of unrecognized withholding taxes and deferred tax
liability on such earnings.

                                       F-13

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     In connection with various investment incentive arrangements, the Company
has a "holiday" from income taxes in Malaysia, South Africa and Brazil. These
agreements, which expire in 2002, 2003, and 2005 respectively, reduced income
tax expense by $1,680 or $.07; $2,572 or $.11; and $9,005 or $.37 per common
share -- assuming dilution, in 1999, 2000 and 2001, respectively.

     Income tax payments were $7,355, $15,867 and $28,293 during the years ended
December 31, 1999, 2000 and 2001, respectively.

G. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

     The Company sponsors several defined contribution plans covering certain
employees. Company contributions are determined by the Board of Directors based
upon participant compensation. The Company also sponsors a non-contributory,
non-qualified supplemental executive retirement plan for certain employees,
providing benefits beyond those covered in the defined contribution plans; the
Company also maintains a 401(k) plan for certain non-union employees. Aggregate
defined contribution plan expenses were $5,351, $5,565 and $6,051 in 1999, 2000
and 2001, respectively.

     The Company has non-contributory defined benefit pension plans and other
postretirement benefit plans, primarily health care and life insurance for
certain employees in the United States and Germany. Components of plan
obligations and assets, and the recorded asset (liability) at December 31 are as
follows:



                                                           PENSION           OTHER POSTRETIREMENT
                                                           BENEFITS                BENEFITS
                                                     --------------------    --------------------
                                                       2000        2001        2000        2001
                                                     --------    --------    --------    --------
                                                                             
Benefit obligation at beginning of year............  $(13,524)   $(13,983)   $(5,243)    $(5,131)
Service cost.......................................      (162)       (634)      (217)       (245)
Interest cost......................................    (1,022)     (1,983)      (426)       (418)
Participant contributions..........................                             (103)       (117)
Actuarial (loss) gain..............................       (91)     (1,061)       433         (59)
Benefits paid......................................       816       1,340        425         283
Plan amendments....................................                                          257
Acquisitions.......................................               (32,158)                  (960)
                                                     --------    --------    -------     -------
Benefit obligation at end of year..................   (13,983)    (48,479)    (5,131)     (6,390)
                                                     --------    --------    -------     -------
Fair value of plan assets at beginning of year.....    14,983      14,665          0           0
Actual return on plan assets.......................        15      (1,128)
Employer contributions.............................       483         721        322         166
Participant contributions..........................                              103         117
Acquisitions.......................................                 2,495
Benefits paid......................................      (816)     (1,340)      (425)       (283)
                                                     --------    --------    -------     -------
Fair value of plan assets at end of year...........    14,665      15,413          0           0
                                                     --------    --------    -------     -------
Plan assets (less than) exceeding benefit
  obligations......................................       682     (33,066)    (5,131)     (6,390)


                                       F-14

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                           PENSION           OTHER POSTRETIREMENT
                                                           BENEFITS                BENEFITS
                                                     --------------------    --------------------
                                                       2000        2001        2000        2001
                                                     --------    --------    --------    --------
                                                                             
Unamortized:
  Net loss (gain)..................................       972       5,086     (2,023)     (1,540)
  Prior service cost...............................                    82      1,295         944
  Employer contributions...........................                               81          27
                                                     --------    --------    -------     -------
Recorded (liability) asset.........................  $  1,654    $(27,898)   $(5,778)    $(6,959)
                                                     ========    ========    =======     =======


     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for pension plans with accumulated benefit obligations in
excess of plan assets were $3,137, $3,137 and $2,616, respectively, as of
December 31, 2000 and $48,479, $44,215 and $15,413 respectively, as of December
31, 2001.

     The components of net periodic benefit cost (income) for the years ended
December 31 are as follows:



                                                              PENSION BENEFITS
                                                        -----------------------------
                                                         1999       2000       2001
                                                        -------    -------    -------
                                                                     
Service cost..........................................  $   189    $   162    $   634
Interest cost.........................................      977      1,022      1,983
Amortization of unrecognized net gain.................                            (18)
Expected return on plan assets........................   (1,249)    (1,321)    (1,466)
                                                        -------    -------    -------
                                                        $   (83)   $  (137)   $ 1,133
                                                        =======    =======    =======




                                                              OTHER POSTRETIREMENT
                                                                    BENEFITS
                                                              --------------------
                                                              1999    2000    2001
                                                              ----    ----    ----
                                                                     
Service cost................................................  $425    $217    $245
Interest cost...............................................   470     426     418
Net amortization............................................    94      13      17
                                                              ----    ----    ----
                                                              $989    $656    $680
                                                              ====    ====    ====


     Actuarial assumptions used in the calculation of the recorded amounts are
as follows:



                                                              2000     2001
                                                              -----    -----
                                                                 
Discount rate...............................................   7.75%    7.00%
Return on pension plan assets...............................   9.00%    9.00%
Projected health care cost trend rate.......................   8.00%    7.50%
Ultimate health care trend rate.............................   5.50%    5.50%
Year ultimate health care trend rate is achieved............   2006     2006


     Assumed health care cost trend rates have a significant effect on the
amounts reported for other postretirement benefits. A one percentage point
change in the assumed health care cost trend rate would have the following
effect:



                                                            1% INCREASE    1% DECREASE
                                                            -----------    -----------
                                                                     
2001 benefit cost.........................................    $  172         $  147
Recorded liability at December 31, 2001...................    $1,456         $1,104


                                       F-15

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

H. STOCKHOLDERS' EQUITY

     In 1996, the Company's Board of Directors adopted a Stockholder Rights
Agreement. Under this plan, rights were constructively distributed as a dividend
at the rate of one right for each outstanding share of common stock of the
Company. The rights become exercisable if a person or group (Acquiring Person)
acquires or attempts to acquire 15% or more of the outstanding shares of the
Company's common stock. In the event that the rights become exercisable, each
right (except for rights beneficially owned by the Acquiring Person, which
become null and void) would entitle the holder to purchase one one-hundredth
share of Series A Participating Preferred Stock at an initial purchase price of
$160 per share, subject to adjustment.

     If a person or group acquires the threshold percentage of common stock,
each right will entitle the holder, other than the acquiring party, to buy
shares of common stock or Preferred Stock having a market value of twice the
exercise price. If the Company is acquired in a merger or other business
combination, each right will entitle the holder, other than the acquiring
person, to purchase securities of the surviving company having a market value
equal to twice the exercise price of the rights.

     The Rights may be redeemed by the Board of Directors in whole, but not in
part, at a price of $0.01 per Right. The Rights have no voting or dividend
privileges and are attached to, and do not trade separately from, the common
stock. The Rights expire on November 14, 2006.

I. OTHER COMPREHENSIVE LOSS

     The following lists the beginning balance, yearly activity and ending
balance of each component of accumulated other comprehensive loss:



                                                                            ADDITIONAL    ACCUMULATED
                                                  FOREIGN        FAIR        MINIMUM         OTHER
                                                 CURRENCY        VALUE       PENSION     COMPREHENSIVE
                                                TRANSLATION   ADJUSTMENTS   LIABILITY        LOSS
                                                -----------   -----------   ----------   -------------
                                                                             
Balance January 1, 1999.......................    $(1,379)                                  $(1,379)
  Foreign currency............................       (458)                                     (458)
                                                  -------       -------      -------        -------
Balance December 31, 1999.....................     (1,837)                                   (1,837)
  Foreign currency............................     (2,130)                                   (2,130)
                                                  -------       -------      -------        -------
Balance December 31, 2000.....................     (3,967)                                   (3,967)
  Cumulative effect of accounting
     change -- SFAS No. 133...................                  $(1,558)                     (1,558)
  Unrealized gain on available-for-sale
     securities...............................                    1,243                       1,243
  Cash flow hedges............................                   (3,410)                     (3,410)
  Additional minimum pension liability........                               $(3,465)        (3,465)
  Foreign currency............................      4,794                                     4,794
                                                  -------       -------      -------        -------
Balance December 31, 2001.....................    $   827       $(3,725)     $(3,465)       $(6,363)
                                                  =======       =======      =======        =======


                                       F-16

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

J. EARNINGS PER SHARE

     The following table sets forth the computation of net income per common
share and net income per common share -- assuming dilution:



                                                          YEAR ENDED DECEMBER 31
                                                       -----------------------------
                                                        1999       2000       2001
                                                       -------    -------    -------
                                                                    
Net income...........................................  $55,825    $71,500    $75,640
                                                       =======    =======    =======
Weighted average shares outstanding..................   23,767     23,843     24,021
Dilutive effect of stock options.....................      557        408        446
                                                       -------    -------    -------
Weighted average shares outstanding -- assuming
  dilution...........................................   24,324     24,251     24,467
                                                       =======    =======    =======
Net income per common share..........................  $  2.35    $  2.99    $  3.15
                                                       =======    =======    =======
Net income per common share -- assuming dilution.....  $  2.30    $  2.95    $  3.09
                                                       =======    =======    =======


K. STOCK PLANS

     The Company's 1998 Long-Term Incentive Compensation Plan authorizes the
annual grant of options to management personnel of up to one and one-half
percent of the total number of issued and outstanding shares of common stock of
the Company. The Company's 1995 Non-Employee Directors' Equity Compensation Plan
has also authorized the grant of options to non-employee members of the Board of
Directors for up to 250,000 shares of the Company's common stock. All options
granted have 10-year terms and vest and become fully exercisable at the end of
the next fiscal year following the year of grant.

     A summary of the Company's stock option activity, and related information
follows:


                                         1999                   2000                   2001
                                 --------------------   --------------------   --------------------
                                             WEIGHTED               WEIGHTED               WEIGHTED
                                             AVERAGE                AVERAGE                AVERAGE
                                             EXERCISE               EXERCISE               EXERCISE
                                  OPTIONS     PRICE      OPTIONS     PRICE      OPTIONS     PRICE
                                 ---------   --------   ---------   --------   ---------   --------
                                                                         
Outstanding at January 1.......  1,606,534    $22.01    1,725,862    $25.83    1,850,263    $30.33
  Granted......................    333,999     35.85      398,251     46.22      265,276     57.33
  Exercised....................   (214,671)    12.83     (273,850)    24.87     (390,494)    16.48
                                 ---------    ------    ---------    ------    ---------    ------
Outstanding at December 31.....  1,725,862    $25.83    1,850,263    $30.33    1,725,045    $37.53
Exercisable at end of year.....  1,423,362              1,462,763              1,472,933
Weighted-average fair value of
  options granted during the
  year.........................               $11.39                 $13.69                 $15.69


     The weighted-average remaining contractual life of options outstanding is
approximately seven years.

                                       F-17

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     The following table summarizes information about stock options outstanding
and exercisable at December 31, 2001:



                                                    OUTSTANDING                     EXERCISABLE
                                         ----------------------------------     --------------------
                                                      WEIGHTED
                                                       AVERAGE     WEIGHTED                 WEIGHTED
                                                      REMAINING    AVERAGE                  AVERAGE
                                         NUMBER OF   CONTRACTUAL   EXERCISE     NUMBER OF   EXERCISE
                                          SHARES        LIFE        PRICE        SHARES      PRICE
                                         ---------   -----------   --------     ---------   --------
                                                                             
  Range of exercise prices:
       $5.04 -- $13.00.................    189,610       2.4        $11.71        189,610    $11.71
       $17.31 -- $29.96................    254,262       5.0        $23.57        254,262    $23.57
       $35.06 -- $59.20................  1,281,173       8.3        $44.12      1,029,061    $40.60


     Pro forma information regarding net income and earnings per share is
required by FASB Statement No. 123, "Accounting for Stock Based Compensation,"
and has been determined as if the Company had accounted for its employee and
non-employee stock options under the fair value method of that Statement. The
fair value of these options was estimated at the date of grant using a
Black-Scholes options pricing model with the following weighted-average
assumptions:



                                                              YEAR ENDED DECEMBER 31
                                                              ----------------------
                                                              1999     2000     2001
                                                              ----     ----     ----
                                                                       
Risk-free interest rate.....................................  7.0%     6.0%     5.0%
Dividend yield..............................................  1.2%     1.2%     1.2%
Volatility factor of Company common stock...................  .25      .25      .24
Weighted-average expected option life (years)...............    5        5        5


     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:



                                                          1999      2000       2001
                                                         -------   -------    -------
                                                                     
Net income.............................................  $53,610   $68,974    $76,751
Net income per common share............................  $  2.26   $  2.89    $  3.20
Net income per common share -- assuming dilution.......  $  2.20   $  2.84    $  3.14


     During 2001, the Company granted 65,000 shares of restricted stock to
certain executive officers. The restricted shares will vest in equal increments
over a three-year period beginning December 31, 2002. The market value of the
restricted stock award was $3,848 and has been recorded as a separate component
of stockholders' equity.

L. COMMITMENTS AND CONTINGENCIES

     The Company has a supply agreement with La Generale des Carriers et des
Mines (Gecamines) to purchase all of the concentrate produced by the Luiswishi
mine in Shaba, Democratic Republic of Congo (DRC). Annual production from this
facility is estimated to contain approximately 4,500 metric tons of cobalt and
4,500 metric tons of copper. The cost of the cobalt and copper obtained will be
based upon the prevailing market price as material is processed.

     The Company has an agreement with Weda Bay Minerals, Inc. (Weda) which
provides for the Company to contribute financing up to $18 million, to complete
a bankable feasibility study for the development of the Halmahera Island,
Indonesia (Halmera) nickel and cobalt laterite deposits. The Company has agreed
to purchase all future production at Halmera, which Weda has estimated will
yield approximately 30,000 tons of

                                       F-18

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

nickel and 3,000 tons of cobalt annually. As of December 31, 2001, the Company
has invested approximately $12.7 million in debt and equity. The Company uses
the equity accounting method for its investment.

     The Company is a party to various legal proceedings incidental to its
business and is subject to a variety of environmental and pollution control laws
and regulations in the jurisdictions in which it operates. As is the case with
other companies in similar industries, the Company faces exposure from actual or
potential claims and legal proceedings involving environmental matters. Although
it is difficult to quantify the potential impact of compliance with or liability
under environmental protection laws, management believes that the ultimate
aggregate cost to the Company of environmental remediation, as well as other
legal proceedings arising out of operations in the normal course of business,
will not result in a material adverse effect upon its financial condition or
results of operations.

M. LEASE COMMITMENTS

     The Company rents real property and equipment under long-term operating
leases. The Company's operating lease expense was $2,969 in 1999, $4,613 in 2000
and $5,260 in 2001.

     Future minimum payments under noncancellable operating leases at December
31, 2001 are as follows:



YEAR ENDING DECEMBER 31
-----------------------
                                                           
2002........................................................  $ 5,355
2003........................................................    4,887
2004........................................................    4,045
2005........................................................    3,938
2006........................................................    3,846
2007 and thereafter.........................................   18,806
                                                              -------
Total minimum lease payments................................  $40,877
                                                              =======


     The Company also enters into precious metal leases (primarily gold and
silver) which are consignment inventory arrangements under which banks provide
the Company with precious metals for a specified period for which the Company
pays a lease fee. The Company also leases out metals under similar arrangements
to customers. The amount of metal leases in at December 31, 2000 and 2001 was $0
million and $276.1, respectively. The amount of metal leases out at December 31,
2000 and 2001 was $0 million and $110.7, respectively. Precious metal lease fees
paid and received were $1,424 and $3,156 in 2001 and are included in cost of
products sold and net sales, respectively.

N. REPORTABLE SEGMENTS AND GEOGRAPHIC INFORMATION

     The Company operates in three segments: base metal chemistry, precious
metal chemistry and metal management. These industry segments correspond to
management's approach to aggregating products and business units, making
operating decisions and assessing performance. Major products included in each
segment and other information follows.

     Base Metal Chemistry: Develops, processes, manufactures and markets
specialty chemicals, powders and related products from various base metals, with
the most widely used being cobalt, nickel and copper. The products produced are
essential components in chemical and industrial processes where they facilitate
a chemical or physical reaction and/or enhance the physical properties of
end-products. These products can be found in a variety of applications for
catalysts, coatings, colorants, hard metal tools, jet engines, lubricants, fuel
and petroleum additives, magnetic media, metal finishing agents, petrochemicals,
plastics, printed circuit boards, rechargeable batteries, stainless steel, super
alloys and tires. The products are sold in various forms such as solutions,
crystals, powders, cathodes and briquettes.

                                       F-19

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     Precious Metal Chemistry: Develops, produces, and markets specialty
chemicals and related materials, predominantly from platinum group and precious
metals such as platinum, palladium, rhodium, gold and silver. This segment also
offers a variety of refining and processing services to users of precious
metals. The products of this segment are used in a variety of applications for
automotive catalysts, fuel cells and fuel processing catalysts, chemical
catalysts, electronics packaging, and electroplating products, jewelry and glass
manufacturing for high-definition televisions.

     Metal Management: Operates as a metal sourcing operation for both the
Company's precious metal chemistry segment and nonaffiliated customers,
primarily procuring precious metals. This segment centrally manages metal
purchases and sales by providing the necessary precious metal liquidity,
financing and hedging for the Company's other businesses.



      BUSINESS SEGMENT INFORMATION           1999          2000          2001
      ----------------------------        ----------    ----------    ----------
                                                             
Net Sales
  Base Metal Chemistry..................  $  506,955    $  887,743    $  793,129
  Precious Metal Chemistry..............                                 584,861
  Metal Management......................                               1,110,516
  Inter-segment.........................                                (121,107)
                                          ----------    ----------    ----------
                                          $  506,955    $  887,743    $2,367,399
                                          ==========    ==========    ==========
Operating profit
  Base Metal Chemistry..................  $  117,237    $  158,436    $  154,750
  Precious Metal Chemistry..............                                  28,103
  Metal Management......................                                  10,075
                                          ----------    ----------    ----------
                                             117,237       158,436       192,928
Interest expense -- net.................     (18,900)      (37,394)      (57,147)
Foreign exchange (loss) gain............         456        (1,123)         (194)
Corporate and other -- net..............     (18,500)      (19,943)      (23,688)
                                          ----------    ----------    ----------
Income before income taxes, minority
  interests, equity income and
  extraordinary item....................  $   80,293    $   99,976    $  111,899
                                          ==========    ==========    ==========
Total assets
  Base Metal Chemistry..................  $1,012,528    $1,357,462    $1,562,523
  Precious Metal Chemistry..............                                 842,841
  Metal Management......................                                 101,718
  Corporate.............................                                  34,140
                                          ----------    ----------    ----------
TOTAL ASSETS............................  $1,012,528    $1,357,462    $2,541,222
                                          ==========    ==========    ==========
Expenditures for property, plant &
  equipment
  Base Metal Chemistry..................  $   69,089    $   52,225    $   82,853
  Precious Metal Chemistry..............                                  22,842
  Metal Management......................
  Corporate.............................       1,061         2,808         2,836
                                          ----------    ----------    ----------
TOTAL EXPENDITURES FOR PROPERTY, PLANT &
  EQUIPMENT.............................  $   70,150    $   55,033    $  108,531
                                          ==========    ==========    ==========


                                       F-20

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



      BUSINESS SEGMENT INFORMATION           1999          2000          2001
      ----------------------------        ----------    ----------    ----------
                                                             
Depreciation and amortization
  Base Metal Chemistry..................  $   26,763    $   39,078    $   52,817
  Precious Metal Chemistry..............                                  10,346
  Metal Management......................                                       9
  Corporate.............................         101           220           304
                                          ----------    ----------    ----------
TOTAL DEPRECIATION AND AMORTIZATION.....  $   26,864    $   39,298    $   63,476
                                          ==========    ==========    ==========




                                                                          LONG-LIVED
             GEOGRAPHIC REGION INFORMATION               NET SALES (1)      ASSETS
             -----------------------------               -------------    ----------
                                                                    
1999
United States..........................................   $  286,503       $121,178
Finland................................................      192,317        118,341
Other..................................................       28,135         79,296
                                                          ----------       --------
                                                          $  506,955       $318,815
                                                          ==========       ========

2000
United States..........................................   $  318,621       $117,303
Finland................................................      532,456        246,840
Other..................................................       36,666        121,209
                                                          ----------       --------
                                                          $  887,743       $485,352
                                                          ==========       ========
2001
United States..........................................   $  773,907       $134,073
Finland................................................      470,307        282,826
Germany................................................      815,667        105,432
Democratic Republic of the Congo.......................                     124,807
Other..................................................      307,518         84,876
                                                          ----------       --------
                                                          $2,367,399       $732,014
                                                          ==========       ========


---------------

(1) Net sales are attributed to the geographic area based on the location of the
    manufacturing facility.

O. GUARANTOR AND NON-GUARANTOR SUBSIDIARY INFORMATION

     In December 2001, the Company issued $400 million in aggregate principal
amount of 9.25% Senior Subordinated Notes due 2011. These Notes are guaranteed
by the Company's wholly-owned domestic subsidiaries. The guarantees are full,
unconditional and joint and several.

     The Company's foreign subsidiaries are not guarantors of these Notes. The
Company as presented below represents OM Group, Inc. exclusive of its guarantor
subsidiaries and its non-guarantor subsidiaries.

                                       F-21

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Condensed consolidating financial information for the Company, the guarantor
subsidiaries, and the non-guarantor subsidiaries is as follows:



                                                         DECEMBER 31, 2001
                             -------------------------------------------------------------------------
                                             COMBINED        COMBINED
                                THE         GUARANTOR      NON-GUARANTOR
                              COMPANY      SUBSIDIARIES    SUBSIDIARIES     ELIMINATIONS      TOTAL
BALANCE SHEET DATA           ----------    ------------    -------------    ------------    ----------
                                                                             
ASSETS
Current assets:
  Cash and cash
     equivalents...........  $      638     $    4,709      $   72,863                      $   78,210
  Marketable securities....                                     38,667                          38,667
  Accounts receivable......     733,669        102,482         482,816      $  (943,709)       375,258
  Inventories..............                    211,889         603,614                         815,503
  Committed metal
     positions.............                     16,124           3,194                          19,318
  Other assets.............      15,375          7,344         102,377                         125,096
                             ----------     ----------      ----------      -----------     ----------
TOTAL CURRENT ASSETS.......     749,682        342,548       1,303,531         (943,709)     1,452,052
Property, plant and
  equipment -- net.........                    135,672         596,342                         732,014
Goodwill and other
  intangible assets........                    166,542          46,672                         213,214
Intercompany receivables...     262,748          3,970       1,170,574       (1,437,292)
Investment in
  subsidiaries.............     908,483        522,939       2,029,173       (3,460,595)
Other assets...............      18,127         27,373          98,442                         143,942
                             ----------     ----------      ----------      -----------     ----------
Total assets...............  $1,939,040     $1,199,044      $5,244,734      $(5,841,596)    $2,541,222
                             ==========     ==========      ==========      ===========     ==========
LIABILITIES AND
  STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of
     long-term debt........  $   20,188                                                     $   20,188
  Accounts payable.........      38,146     $  365,410      $  359,124      $  (585,694)       176,986
  Hedged metal
     obligations...........                        752              63                             815
  Accrued income taxes.....       2,000                         21,539                          23,539
  Deferred income taxes....          46          1,208          72,462                          73,716
  Other accrued expenses...       9,071         17,740         100,667                         127,478
                             ----------     ----------      ----------      -----------     ----------
Total current
  liabilities..............      69,451        385,110         553,855         (585,694)       422,722
Long-term debt.............   1,300,507                                                      1,300,507
Deferred income taxes......        (451)                        76,817                          76,366
Other long-term
  liabilities..............                     15,664          81,866                          97,530
Intercompany payables......                    514,121       2,020,371       (2,534,492)
Minority interest..........                        445          74,119                          74,564
Stockholders' equity.......     569,533        283,704       2,437,706       (2,721,410)       569,533
                             ----------     ----------      ----------      -----------     ----------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY.....  $1,939,040     $1,199,044      $5,244,734      $(5,841,596)    $2,541,222
                             ==========     ==========      ==========      ===========     ==========



                                       F-22

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                           DECEMBER 31, 2001
                                -----------------------------------------------------------------------
                                              COMBINED        COMBINED
                                  THE        GUARANTOR      NON-GUARANTOR
                                COMPANY     SUBSIDIARIES    SUBSIDIARIES     ELIMINATIONS      TOTAL
INCOME STATEMENT DATA           --------    ------------    -------------    ------------    ----------
                                                                              
Net sales.....................                $827,948       $1,940,514       $(401,063)     $2,367,399
Cost of products sold.........                 762,997        1,670,866        (401,063)      2,032,800
                                --------      --------       ----------       ---------      ----------
                                                64,951          269,648                         334,599
Selling, general and
  administrative expense......  $    305        70,810           94,244                         165,359
                                --------      --------       ----------       ---------      ----------
Income (loss) from
  operations..................      (305)       (5,859)         175,404                         169,240
Interest expense..............   (61,272)      (20,348)         (67,938)         88,935         (60,623)
Interest income...............    21,873         1,022           69,516         (88,935)          3,476
Foreign exchange (loss)
  gain........................      (289)          324             (229)                           (194)
                                --------      --------       ----------       ---------      ----------
Income (loss) before income
  taxes and extraordinary
  item........................   (39,993)      (24,861)         176,753                         111,899
Income tax (benefit)
  expense.....................   (14,599)        8,267           34,047                          27,715
Minority interests............                                    5,820                           5,820
Equity in income of
  affiliates..................                                   (1,876)                         (1,876)
                                --------      --------       ----------       ---------      ----------
Income (loss) before
  extraordinary item..........   (25,394)      (33,128)         138,762                          80,240
Extraordinary item............    (4,600)                                                        (4,600)
                                --------      --------       ----------       ---------      ----------
Net (loss) income.............  $(29,994)     $(33,128)      $  138,762       $              $   75,640
                                ========      ========       ==========       =========      ==========


                                       F-23

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                          DECEMBER 31, 2001
                             ---------------------------------------------------------------------------
                                              COMBINED        COMBINED
                                 THE         GUARANTOR      NON-GUARANTOR
      CASH FLOW DATA           COMPANY      SUBSIDIARIES    SUBSIDIARIES     ELIMINATIONS       TOTAL
      --------------         -----------    ------------    -------------    ------------    -----------
                                                                              
NET CASH (USED IN) PROVIDED
  BY OPERATING
  ACTIVITIES...............  $   (93,774)     $20,906         $131,165         $             $    58,297
INVESTING ACTIVITIES:
  Expenditures for property
     plant and
     equipment -- net......                   (17,842)         (90,689)                         (108,531)
  Acquisitions of
     businesses............   (1,168,423)                       21,766                        (1,146,657)
  Divestiture of
     businesses............      525,473                                                         525,473
                             -----------      -------         --------         --------      -----------
     NET CASH USED IN
       INVESTING
       ACTIVITIES..........     (642,950)     (17,842)         (68,923)                         (729,715)
FINANCING ACTIVITIES:
  Dividend payments........      (12,494)                                                        (12,494)
  Long-term borrowings.....    1,648,751                                                       1,648,751
  Payments of long-term
     debt..................     (900,000)                                                       (900,000)
  Purchase of treasury
     stock.................       (5,331)                                                         (5,331)
  Proceeds from exercise of
     stock options.........        6,435                                                           6,435
                             -----------      -------         --------         --------      -----------
     NET CASH PROVIDED BY
       FINANCING
       ACTIVITIES..........      737,361                                                         737,361
Effect of exchange rate
  changes on cash and cash
  equivalents..............                       (49)          (1,166)                           (1,215)
                             -----------      -------         --------         --------      -----------
Increase in cash and cash
  equivalents..............          637        3,015           61,076                            64,728
Cash and cash equivalents
  at beginning of the
  year.....................            1        1,694           11,787                            13,482
                             -----------      -------         --------         --------      -----------
Cash and cash equivalents
  at end of the year.......  $       638      $ 4,709         $ 72,863         $             $    78,210
                             ===========      =======         ========         ========      ===========


                                       F-24

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                         DECEMBER 31, 2000
                             -------------------------------------------------------------------------
                                             COMBINED        COMBINED
                                THE         GUARANTOR      NON-GUARANTOR
                              COMPANY      SUBSIDIARIES    SUBSIDIARIES     ELIMINATIONS      TOTAL
    BALANCE SHEET DATA       ----------    ------------    -------------    ------------    ----------
                                                                             
ASSETS
Current assets:
  Cash and cash
     equivalents...........  $        1      $  1,694       $   11,787                      $   13,482
  Accounts receivable......     254,116        80,054          198,844      $  (385,396)       147,618
  Inventories..............                   155,318          238,531                         393,849
  Other assets.............       9,999         8,759           38,034                          56,792
                             ----------      --------       ----------      -----------     ----------
Total current assets.......     264,116       245,825          487,196         (385,396)       611,741
Property, plant and
  equipment -- net.........                   119,201          366,151                         485,352
Goodwill and other
  intangible assets........                   171,538           20,525                         192,063
Intercompany receivables...     242,441                        983,173       (1,225,614)
Investment in
  subsidiaries.............     574,185        51,125        1,942,874       (2,568,184)
Other assets...............       3,244        16,535           48,527                          68,306
                             ----------      --------       ----------      -----------     ----------
TOTAL ASSETS...............  $1,083,986      $604,224       $3,848,446      $(4,179,194)    $1,357,462
                             ==========      ========       ==========      ===========     ==========
LIABILITIES AND
  STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of
     long-term debt........  $   20,750      $     29       $       86                      $   20,865
  Accounts payable.........       7,803       125,474          173,964      $  (203,671)       103,570
  Deferred income taxes....          57         3,676           34,043                          37,776
  Other accrued expenses...       7,336         5,672           32,036                          45,044
                             ----------      --------       ----------      -----------     ----------
Total current
  liabilities..............      35,946       134,851          240,129         (203,671)       207,255
Long-term debt.............     550,150           166              763                         551,079
Deferred income taxes......      (8,240)       10,076           27,280                          29,116
Other long-term
  liabilities..............                     7,298            7,035                          14,333
Intercompany payables......                   421,470        1,178,434       (1,599,904)
Minority interest..........                                     49,549                          49,549
Stockholders' equity.......     506,130        30,363        2,345,256       (2,375,619)       506,130
                             ----------      --------       ----------      -----------     ----------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY.....  $1,083,986      $604,224       $3,848,446      $(4,179,194)    $1,357,462
                             ==========      ========       ==========      ===========     ==========



                                       F-25

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                              DECEMBER 31, 2000
                                      -----------------------------------------------------------------
                                                   COMBINED       COMBINED
                                        THE       GUARANTOR     NON-GUARANTOR
                                      COMPANY    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS    TOTAL
       INCOME STATEMENT DATA          --------   ------------   -------------   ------------   --------
                                                                                
Net sales...........................               $346,878       $705,347       $(164,482)    $887,743
Cost of products sold...............                283,681        554,678        (164,482)     673,877
                                      --------     --------       --------       ---------     --------
                                                     63,197        150,669                      213,866
Selling, general and administrative
  expense...........................  $  1,526       53,130         20,717                       75,373
                                      --------     --------       --------       ---------     --------
Income (loss) from operations.......    (1,526)      10,067        129,952                      138,493
Interest expense....................   (37,352)     (19,966)       (28,095)         45,584      (39,829)
Interest income.....................    22,630          212         25,177         (45,584)       2,435
Foreign exchange loss...............      (651)        (103)          (369)                      (1,123)
                                      --------     --------       --------       ---------     --------
Income (loss) before income taxes...   (16,899)      (9,790)       126,665                       99,976
Income tax (benefit) expense........    (5,795)      (5,276)        39,547                       28,476
                                      --------     --------       --------       ---------     --------
Net (loss) income...................  $(11,104)    $ (4,514)      $ 87,118       $             $ 71,500
                                      ========     ========       ========       =========     ========



                                       F-26

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                             DECEMBER 31, 2000
                                    -------------------------------------------------------------------
                                                  COMBINED       COMBINED
                                       THE       GUARANTOR     NON-GUARANTOR
          CASH FLOW DATA             COMPANY    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS     TOTAL
          --------------            ---------   ------------   -------------   ------------   ---------
                                                                               
NET CASH PROVIDED BY OPERATING
  ACTIVITIES......................  $  19,869      $7,055        $ 54,032           $         $  80,956
INVESTING ACTIVITIES:
  Expenditures for property plant
     and equipment -- net.........                 (7,088)        (47,945)                      (55,033)
  Acquisitions of businesses......   (192,689)                                                 (192,689)
                                    ---------      ------        --------           --        ---------
     NET CASH USED IN INVESTING
       ACTIVITIES.................   (192,689)     (7,088)        (47,945)                     (247,722)
FINANCING ACTIVITIES:
  Dividend payments...............    (10,491)                                                  (10,491)
  Long-term borrowings............    223,750                                                   223,750
  Payments of long-term debt......    (37,600)                                                  (37,600)
  Purchase of treasury stock......     (9,650)                                                   (9,650)
  Proceeds from exercise of stock
     options......................      6,811                                                     6,811
                                    ---------      ------        --------           --        ---------
     NET CASH PROVIDED BY
       FINANCING ACTIVITIES.......    172,820                                                   172,820
Effect of exchange rate changes on
  cash and cash equivalents.......                    (89)         (1,916)                       (2,005)
                                    ---------      ------        --------           --        ---------
Increase (decrease) in cash and
  cash equivalents................                   (122)          4,171                         4,049
Cash and cash equivalents at
  beginning of the year...........          1       1,816           7,616                         9,433
                                    ---------      ------        --------           --        ---------
Cash and cash equivalents at end
  of the year.....................  $       1      $1,694        $ 11,787           $         $  13,482
                                    =========      ======        ========           ==        =========


                                       F-27

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                              DECEMBER 31, 1999
                                      -----------------------------------------------------------------
                                                   COMBINED       COMBINED
                                        THE       GUARANTOR     NON-GUARANTOR
       INCOME STATEMENT DATA          COMPANY    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS    TOTAL
       ---------------------          --------   ------------   -------------   ------------   --------
                                                                                
Net sales...........................               $302,936       $311,546       $(107,527)    $506,955
Cost of products sold...............                239,823        215,154        (107,527)     347,450
                                      --------     --------       --------       ---------     --------
                                                     63,113         96,392                      159,505
Selling, general and administrative
  expense...........................  $    487       46,724         13,557                       60,768
                                      --------     --------       --------       ---------     --------
Income (loss) from operations.......      (487)      16,389         82,835                       98,737
Interest expense....................   (18,261)     (16,055)        (3,234)         18,469      (19,081)
Interest income.....................    18,722         (164)            92         (18,469)         181
Foreign exchange (loss) gain........      (807)       1,614           (351)                         456
                                      --------     --------       --------       ---------     --------
Income (loss) before income taxes...      (833)       1,784         79,342                       80,293
Income tax (benefit) expense........      (592)       4,778         20,282                       24,468
                                      --------     --------       --------       ---------     --------
Net (loss) income...................  $   (241)    $ (2,994)      $ 59,060       $             $ 55,825
                                      ========     ========       ========       =========     ========


                                       F-28

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED



                                                              DECEMBER 31, 1999
                                      -----------------------------------------------------------------
                                                   COMBINED       COMBINED
                                        THE       GUARANTOR     NON-GUARANTOR
           CASH FLOW DATA             COMPANY    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS    TOTAL
           --------------             --------   ------------   -------------   ------------   --------
                                                                                
NET CASH PROVIDED BY (USED IN)
  OPERATING ACTIVITIES..............  $(59,719)    $ 17,675       $ 54,400           $         $ 12,356
INVESTING ACTIVITIES:
  Expenditures for property plant
     and equipment -- net...........                (17,806)       (52,344)                     (70,150)
  Acquisitions of businesses........    (1,765)                                                  (1,765)
                                      --------     --------       --------           --        --------
     NET CASH USED IN INVESTING
       ACTIVITIES...................    (1,765)     (17,806)       (52,344)                     (71,915)
FINANCING ACTIVITIES:
  Dividend payments.................    (9,517)                                                  (9,517)
  Long-term borrowings..............    74,990          (55)          (127)                      74,808
  Payments of short-term debt.......    (2,000)                                                  (2,000)
  Purchase of treasury stock........    (4,744)                                                  (4,744)
  Proceeds from exercise of stock
     options........................     2,755                                                    2,755
                                      --------     --------       --------           --        --------
     NET CASH PROVIDED BY (USED IN)
       FINANCING ACTIVITIES.........    61,484          (55)          (127)                      61,302
Effect of exchange rate changes on
  cash and cash equivalents.........                     14            (74)                         (60)
                                      --------     --------       --------           --        --------
Increase (decrease) in cash and cash
  equivalents.......................                   (172)         1,855                        1,683
Cash and cash equivalents at
  beginning of the year.............         1        1,988          5,761                        7,750
                                      --------     --------       --------           --        --------
Cash and cash equivalents at end of
  the year..........................  $      1     $  1,816       $  7,616           $         $  9,433
                                      ========     ========       ========           ==        ========


P. SUBSEQUENT EVENT

     On January 25, 2002, the Company completed its secondary offering of 4.025
million shares of common stock. The net offering proceeds of $225.7 million were
used to repay outstanding indebtedness under the Company's credit facilities.

                                       F-29

                                 OM GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Q. QUARTERLY DATA (UNAUDITED)



                                                             QUARTER ENDED
                                 ---------------------------------------------------------------------
                                    MARCH 31           JUNE 30        SEPTEMBER 30       DECEMBER 31
                                 ---------------   ---------------   ---------------   ---------------
                                                                           
2000
Net sales......................         $148,285          $273,522          $233,384          $232,552
Gross profit...................           42,002            55,400            56,830            59,634
Income from operations.........           27,041            36,912            37,529            37,011
Net income.....................           15,150            18,428            18,627            19,295
Basic net income per common
  share........................            $0.63             $0.77             $0.78             $0.81
Diluted net income per common
  share........................            $0.63             $0.76             $0.77             $0.79
Market price: high-low.........    46.250-33.750     50.875-41.500     48.500-40.250     57.000-40.130
Dividends paid per share.......            $0.11             $0.11             $0.11             $0.11

2001
Net sales......................         $235,642          $216,589          $833,276        $1,081,892
Gross profit...................           60,024            60,693            97,372           116,510
Income from operations.........           38,795            38,620            45,505            46,320
Income before extraordinary
  item.........................           19,632            20,165            20,474            19,969
Net income.....................           19,632            20,165            20,474            15,369
Basic net income per common
  share:
  Income before extraordinary
     item......................            $0.82             $0.84             $0.85             $0.83
  Net income per common
     share.....................            $0.82             $0.84             $0.85             $0.64
Diluted net income per common
  share:
  Income before extraordinary
     item......................            $0.81             $0.83             $0.84             $0.81
  Net income per common
     share.....................            $0.81             $0.83             $0.84             $0.63
Market price: high-low.........    55.200-46.250     63.980-49.400     66.700-49.000     67.000-54.000
Dividends paid per share.......            $0.13             $0.13             $0.13             $0.13



                                       F-30


  INDEX TO dmc(2) DEGUSSA METALS CATALYSTS CERDEC AKTIENGESELLSCHAFT FINANCIAL
                                   STATEMENTS

                                  dmc(2) GROUP



                                                               PAGE
                                                               ----
                                                            
Independent Auditors' Report................................    A-2
Combined Statements of Operations for the years ended
  September 30, 1998 and 1999, three months ended December
  31, 1999 and year ended December 31, 2000.................    A-3
Combined Balance Sheets as of September 30, 1999, December
  31, 1999 and December 31, 2000............................    A-4
Combined Statements of Shareholder's Equity for the years
  ended September 30, 1998 and 1999, three months ended
  December 31, 1999 and year ended December 31, 2000........    A-5
Combined Statements of Cash Flows for the years ended
  September 30, 1998 and 1999, three months ended December
  31, 1999 and year ended December 31, 2000.................    A-6
Notes to the Combined Financial Statements..................    A-7
Interim Condensed Combined Statements of Operations for the
  six months ended June 30, 2000 and 2001 (unaudited).......   A-44
Interim Condensed Combined Balance Sheet as of June 30, 2001
  (unaudited)...............................................   A-45
Interim Condensed Combined Statements of Shareholder's
  Equity for the six months ended June 30, 2000 and 2001
  (unaudited)...............................................   A-46
Interim Condensed Combined Statements of Cash Flows for the
  six months ended June 30, 2000 and 2001 (unaudited).......   A-47
Notes to the Condensed Combined Interim Financial Statements
  (unaudited)...............................................   A-48


                                       A-1


                          INDEPENDENT AUDITORS' REPORT

To the Supervisory Board of
dmc(2) Degussa Metals Catalysts Cerdec Aktiengesellschaft:

     We have audited the accompanying combined balance sheets of dmc(2) Degussa
Metals Catalysts Cerdec Aktiengesellschaft and subsidiaries as of December 31,
2000 and 1999, and September 30, 1999, and the related combined statements of
operations, shareholder's equity, and cash flows for the year ended December 31,
2000, three months ended December 31, 1999, and the years ended September 30,
1999 and 1998. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of dmc(2)
Degussa Metals Catalysts Cerdec Aktiengesellschaft and subsidiaries as of
December 31, 2000 and 1999, and September 30, 1999 and the results of their
operations and their cash flows for the year ended December 31, 2000, the three
months ended December 31, 1999, and the years ended September 30, 1999 and 1998
in conformity with accounting principles generally accepted in Germany.

     Accounting principles generally accepted in Germany vary in certain
respects from accounting principles generally accepted in the United States of
America. Application of accounting principles generally accepted in the United
States of America would have affected shareholder's equity as of December 31,
2000 and 1999 and September 30, 1999 and results of operations for the year
ended December 31, 2000, the three months ended December 31, 1999, and the year
ended September 30, 1999 to the extent summarized in Note 33 to the combined
financial statements.

                                          KPMG DEUTSCHE TREUHAND-GESELLSCHAFT
                                          AKTIENGESELLSCHAFT
                                          WIRTSCHAFTSPRUEFUNGSGESELLSCHAFT

Frankfurt, Germany
November 30, 2001

                                       A-2


                                  dmc(2) GROUP

                       COMBINED STATEMENTS OF OPERATIONS

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)



                                                                            THREE MONTHS
                                             YEAR ENDED      YEAR ENDED         ENDED        YEAR ENDED
                                            SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,    DECEMBER 31,
                                     NOTE       1998            1999            1999            2000
                                     ----   -------------   -------------   -------------   ------------
                                                                             
SALES..............................    7      7,509,897       8,144,355       2,230,468       12,127,588
Cost of sales......................    8     (6,966,900)     (7,574,302)     (2,078,472)     (11,385,746)
                                             ----------      ----------      ----------     ------------
GROSS PROFIT.......................             542,997         570,053         151,996          741,842

Selling expenses...................    8       (279,152)       (275,338)        (75,003)        (296,967)
General administrative expenses....    8       (149,774)       (160,949)        (49,697)        (158,056)
Research and development
  expenses.........................    8        (67,740)        (72,389)        (20,849)        (117,838)
Other operating income.............    9         75,644          86,452          29,610          115,276
Other operating expenses...........   10        (67,713)        (94,968)        (38,937)         (80,082)
                                             ----------      ----------      ----------     ------------
NET OPERATING INCOME (LOSS)........              54,262          52,861          (2,880)         204,175

Income (loss) from investments,
  net..............................   11         (1,115)         11,612           2,495           17,549
Write-down of investments..........                  --              --              40             (683)
Interest expense, net..............   12        (15,709)        (27,540)         (6,577)         (53,875)
                                             ----------      ----------      ----------     ------------
INCOME (LOSS) FROM ORDINARY
  ACTIVITIES BEFORE EXTRAORDINARY
  ITEMS AND INCOME TAXES...........              37,438          36,933          (6,922)         167,166

Extraordinary income (expenses)....   13        119,716         (15,728)        (67,107)         (36,820)
Income taxes.......................             (47,654)         (9,168)          9,168          (44,655)
                                             ----------      ----------      ----------     ------------
NET INCOME (LOSS)..................             109,500          12,037         (64,861)          85,691
                                             ==========      ==========      ==========

Dividend payment...................                                                                   --
Minority interests.................   14                                                         (28,309)
Loss brought forward upon
  formation........................                                                               (7,042)
Transfer to reserves, net..........                                                              (42,340)
                                                                                            ------------
PROFIT AVAILABLE FOR
  DISTRIBUTION.....................                                                                8,000
                                                                                            ============


     The accompanying notes are an integral part of the combined financial
                                  statements.
                                       A-3


                                  dmc(2) GROUP

                            COMBINED BALANCE SHEETS

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)



                                                          SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                   NOTE       1999            1999           2000
                                                   ----   -------------   ------------   ------------
                                                                             
                                               ASSETS
Intangible assets................................   16         16,682         11,403         11,623
Property, plant and equipment, net...............   17        524,336        547,662        597,179
Investments......................................   18         88,723        102,697        128,720
                                                            ---------      ---------      ---------
NON-CURRENT ASSETS...............................   19        629,741        661,762        737,522

Inventories, net.................................   20        575,442        680,597        866,851

Trade accounts receivable, net...................             426,079        444,053        734,363
Accounts receivable from affiliated companies....              58,084         23,483         56,678
Other accounts receivable and other assets.......              54,705         54,706         90,869
                                                            ---------      ---------      ---------
ACCOUNTS RECEIVABLE AND OTHER ASSETS.............   21        538,868        522,242        881,910
Cash and cash equivalents........................   22         49,361         70,605         47,146
                                                            ---------      ---------      ---------
CURRENT ASSETS...................................           1,163,671      1,273,444      1,795,907

Deferred charges.................................   23         66,411         61,798         32,995
                                                            ---------      ---------      ---------

TOTAL ASSETS.....................................           1,859,823      1,997,004      2,566,424
                                                            =========      =========      =========

                                SHAREHOLDER'S EQUITY AND LIABILITIES
Issued capital...................................                  --             --         50,000
Reserves.........................................   25             --             --        483,885
Profit available for distribution................                  --             --          8,000
Investments by and advances from Degussa.........           1,076,675      1,168,391             --
Minority interests...............................   26             --             --        110,214
                                                            ---------      ---------      ---------
SHAREHOLDER'S EQUITY.............................   24      1,076,675      1,168,391        652,099

Provisions for pensions and similar
  obligations....................................              78,125         68,758        126,119
Other accrued liabilities........................             220,251        252,349        247,967
                                                            ---------      ---------      ---------
ACCRUED LIABILITIES..............................   27        298,376        321,107        374,086

Liabilities to banks.............................             184,019        184,664        938,726
Advance payments received on orders..............                  --             49          2,102
Trade accounts payable...........................             103,600        106,473        252,442
Liabilities to affiliated companies..............             121,821        146,785        277,497
Other liabilities................................              73,335         67,374         67,501
                                                            ---------      ---------      ---------
LIABILITIES......................................   28        482,775        505,345      1,538,268

Deferred income..................................               1,997          2,161          1,971
                                                            ---------      ---------      ---------
TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES.......           1,859,823      1,997,004      2,566,424
                                                            =========      =========      =========


     The accompanying notes are an integral part of the combined financial
                                  statements.
                                       A-4


                                  dmc(2) GROUP

                  COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)



                                                                                          INVESTMENTS
                                                                                            BY AND
                                                                  PROFIT                   ADVANCES
                                ISSUED    CAPITAL   REVENUE    AVAILABLE FOR   MINORITY      FROM
                                CAPITAL   RESERVE   RESERVES   DISTRIBUTION    INTEREST     DEGUSSA       TOTAL
                                -------   -------   --------   -------------   --------   -----------   ---------
                                                                                   
AS OF SEPTEMBER 30, 1997......      --         --        --            --           --       796,459      796,459
Net income....................      --         --        --            --           --       109,500      109,500
Contribution by Degussa,
  net.........................      --         --        --            --           --       106,507      106,507
                                ------    -------   -------       -------      -------     ---------    ---------
AS OF SEPTEMBER 30, 1998......      --         --        --            --           --     1,012,466    1,012,466
Net income....................      --         --        --            --           --        12,037       12,037
Contribution by Degussa,
  net.........................      --         --        --            --           --        52,172       52,172
                                ------    -------   -------       -------      -------     ---------    ---------
AS OF SEPTEMBER 30, 1999......      --         --        --            --           --     1,076,675    1,076,675
Net loss......................      --         --        --            --           --       (64,861)     (64,861)
Contribution by Degussa,
  net.........................      --         --        --            --           --       156,577      156,577
                                ------    -------   -------       -------      -------     ---------    ---------
AS OF DECEMBER 31, 1999.......      --         --        --            --           --     1,168,391    1,168,391
Formation (former Cerdec
  AG).........................  32,000    109,346     2,685        (7,042)          --      (136,989)          --
Contribution of precious
  metals and automotive
  catalysts divisions by
  Degussa.....................  18,000    149,000        --            --           --      (167,000)          --
Conversion of advances to
  liabilities.................      --         --        --            --           --      (689,269)    (689,269)
Conversion of advances to
  reserves....................      --         --    93,228            --           --       (93,228)          --
Conversion of advances to
  minority interest...........      --         --        --            --       81,905       (81,905)          --
Contribution by Degussa,
  net.........................      --    100,458        --            --           --            --      100,458
Net income....................      --         --        --        57,382       28,309            --       85,691
Dividends paid................      --         --   (23,732)           --           --            --      (23,732)
Foreign currency translation
  adjustment..................      --         --    10,560            --           --            --       10,560
Reclassifications.............      --         --    42,340       (42,340)          --            --           --
                                ------    -------   -------       -------      -------     ---------    ---------
AS OF DECEMBER 31, 2000.......  50,000    358,804   125,081         8,000      110,214            --      652,099
                                ======    =======   =======       =======      =======     =========    =========


     The accompanying notes are an integral part of the combined financial
                                  statements.
                                       A-5


                                  dmc(2) GROUP

                       COMBINED STATEMENTS OF CASH FLOWS

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)



                                                                                     THREE MONTHS
                                                      YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                                     SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                         1998            1999            1999           2000
                                                     -------------   -------------   ------------   ------------
                                                                                        
NET INCOME (LOSS)..................................     109,500          12,037         (64,861)        85,691
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
Depreciation and amortization......................      94,600          91,369          24,561        100,141
(Gain)/loss on disposal of non-current assets......    (127,831)         (1,265)          1,150          7,639
Provision for deferred taxes.......................      (6,147)         (8,755)         (6,627)        19,726
(Income)/loss from investments, net................       1,115         (11,612)         (2,495)       (17,549)
Write-down of non-current assets...................          --              --          23,507          1,743

CHANGES IN OPERATING ASSETS AND LIABILITIES:
Inventories, net...................................     (17,358)          7,752        (108,176)      (181,411)
Trade accounts receivable, net.....................      (1,493)        (72,862)        (20,215)      (285,256)
Accounts receivable from affiliated companies......      13,673          46,728          34,498        (33,256)
Other accounts receivable and assets...............        (961)        (20,084)           (391)       (31,108)
Deferred charges...................................      24,216         (12,726)         11,807         10,020
Provisions for pensions and similar obligations....       3,683           8,759          (9,717)        59,151
Other accrued liabilities..........................       8,032          (5,796)         31,525         (2,147)
Advance payments received on orders................          --              --              49          2,053
Trade accounts payable.............................      (2,465)         17,801           1,999        148,182
Liabilities to affiliated companies................     (84,867)         19,220          21,916         48,818
Other liabilities..................................     (13,969)         (9,833)         (5,751)           338
Deferred income....................................      13,605         (10,598)          1,065            161
                                                       --------        --------        --------       --------

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES....      13,333          50,135         (66,156)       (67,064)

INVESTING ACTIVITIES:
Purchase of intangible assets......................        (194)         (8,150)             --         (2,847)
Capital expenditures...............................    (150,668)       (108,036)        (52,547)      (152,788)
Dividends from investments.........................       9,513           1,457              --          8,437
Acquisition of business, net of cash acquired......          --              --              --         (8,745)
Proceeds from disposal of non-current assets.......     154,617          16,593          14,272         11,980
                                                       --------        --------        --------       --------

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES....      13,268         (98,136)        (38,275)      (143,963)

FINANCING ACTIVITIES:
Borrowing from banks, net..........................     (11,653)         (2,652)         (3,810)       750,515
Net cash from (to) Degussa.........................     (43,092)         53,771         125,159       (562,669)
                                                       --------        --------        --------       --------

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES....     (54,745)         51,119         121,349        187,846
Effect of exchange rate movements on cash..........      (1,807)           (415)          4,326           (278)
                                                       --------        --------        --------       --------

CHANGE IN CASH AND CASH EQUIVALENTS................     (29,951)          2,703          21,244        (23,459)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...      76,609          46,658          49,361         70,605
                                                       --------        --------        --------       --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD.........      46,658          49,361          70,605         47,146
                                                       ========        ========        ========       ========


     The accompanying notes are an integral part of the combined financial
                                  statements.
                                       A-6


                   NOTES TO THE COMBINED FINANCIAL STATEMENTS

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(1)  FORMATION OF dmc(2) GROUP, DESCRIPTION OF BUSINESS AND BASIS OF
     PRESENTATION

  FORMATION OF dmc(2) GROUP

     Effective January 1, 2000, Degussa-Huels AG ("Degussa") transferred assets
and liabilities constituting its precious metals and automotive catalysts
businesses to its wholly-owned subsidiary, Cerdec AG, and its subsidiaries (the
"Formation"). Following the Formation, Cerdec AG was renamed dmc(2) Degussa
Metals Catalysts Cerdec AG ("dmc(2) AG", together with its subsidiaries
collectively referred to as "dmc(2) Group").

  DESCRIPTION OF BUSINESS

     dmc(2) Group produces functional materials using mainly precious metals,
base metals and ceramic materials. dmc(2) Group refines precious metals from
used materials and precious metals management services. dmc(2) Group also
engages in proprietary trading of precious metals.

  BASIS OF PRESENTATION

     The accompanying combined financial statements were prepared in accordance
with the provisions of the German Commercial Code ("Handelsgesetzbuch" -- "HGB")
and the German Stock Corporation Act ("Aktiengesetz" -- "AktG"). The combined
financial statements of the dmc(2) Group have been prepared in accordance with
German generally accepted accounting principles as if dmc(2) Group had been an
established legal group during all periods presented.

  PRESENTATION OF YEARS PRIOR TO dmc(2) GROUP FORMATION

     These combined financial statements have been prepared with respect to the
sale on August 10, 2001 of all the assets and liabilities of dmc(2) Group to OM
Group, Inc. Prior to Formation, dmc(2) Group operations were conducted and
accounted for as part of Degussa and of its various subsidiaries. The
accompanying combined financial statements as of and for the three month period
ended December 31, 1999 and as of and for the years ended September 30, 1999 and
1998 ("carve-out periods") are presented as if dmc(2) Group activities carved
out of Degussa had been conducted by separate legal entities for all periods
presented. The carve-out periods include the historical assets, liabilities and
results of operations allocated to dmc(2) Group prepared from the Degussa
historical accounting records and the historical assets, liabilities and results
of operations of Cerdec AG. The combined financial statements for the periods
presented prior to the Formation may not necessarily be indicative of the
results of operations, financial position, and cash flows of dmc(2) Group had it
operated as a separate independent company, nor are they an indicator of future
performance.

     During the carve-out periods all revenue and expenses attributable to
dmc(2) Group are included in the statements of operations. Prior to Formation,
the statements of operations also include allocations from Degussa of general
corporate overhead, central organizational costs, and other expenses. In all
cases, management believes the allocation methods used were reasonable.

  INDEBTEDNESS AND INTEREST

     dmc(2) Group has historically been, and continues to be, dependent upon
Degussa for their financing and capital requirements. Financing is provided by
Degussa in the form of equity contributions, interest and non-interest bearing
intercompany advances and loans. Degussa also guarantees financing obtained from
third parties. Additionally, certain legal subsidiaries comprising dmc(2) Group
had external indebtedness during the carve-out periods and dmc(2) Group
operations incurred interest expense on precious metal lease transactions. Such
indebtedness and interest expense is included in the carve-out periods. The
capital structure and related

                                       A-7

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

interest expense may not necessarily be indicative of the interest expense that
dmc(2) Group would have incurred as a separate independent company.

  TAXATION

     Income taxes have been calculated as if dmc(2) Group was a stand-alone
entity filing separate tax returns during all periods presented. Income taxes as
calculated may not be indicative of income tax expense that dmc(2) Group would
have incurred had dmc(2) Group been a separate legal entity.

     In October 2000, the German government enacted new tax legislation which,
among other changes, will reduce the dmc(2) Group's statutory corporate tax rate
for German companies from 40% on retained earnings and from 30% on distributed
earnings to a uniform 25%, effective for dmc(2) Group's year beginning January
1, 2001. The effects of the rate changes were recorded in 2000.

  SHAREHOLDER'S EQUITY

     Prior to Formation, the difference between assets and liabilities allocated
to dmc(2) Group is shown as investments by and advances from Degussa within the
combined statements of shareholder's equity. Investments by and advances from
Degussa prior to Formation include indebtedness, provisions for pensions and
similar obligations, trade accounts payable, and other liabilities which could
not be reasonably allocated to dmc(2) Group because these amounts were managed
on a group basis by Degussa.

     As of the Formation, issued capital, reserves and profit available for
distribution are that of dmc(2) AG.

  CHANGE IN FISCAL YEAR

     Effective January 1, 2000, dmc(2) Group's fiscal year end was changed from
September 30 to December 31 to conform with Degussa's fiscal year end. As a
result, the accompanying financial statements present a three month period ended
December 31, 1999.

  CLASSIFICATION

     To improve clarity, certain balance sheet and statement of operations items
have been combined with the detail provided in the footnotes. The statements of
operations were prepared using the cost-of-sales format. Under the cost-of-sales
format, operating expenses are assigned to one of four areas: manufacturing,
selling, research and development, and general administration.

  AFFILIATION WITH THE DEGUSSA AG AND E.ON AG GROUPS

     Prior to August 10, 2001, dmc(2) AG was a wholly-owned subsidiary of
Degussa, Frankfurt am Main. dmc(2) AG and the companies consolidated are
included in the exempting consolidated financial statements of Degussa AG,
Frankfurt am Main. The consolidated Degussa group financial statements are on
public record with the District Court (Amtsgericht) of Frankfurt am Main. E.ON
AG, Duesseldorf, prepared the group financial statements for the largest group
of companies of which dmc(2) AG was a part. These group financial statements are
on record with the Commercial Registers in Berlin and Duesseldorf and have been
published in the Federal Bulletin (Bundesanzeiger). Companies controlled
directly and indirectly by E.ON AG are deemed affiliated companies of dmc(2)
Group.

                                       A-8

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(2)  dmc(2) GROUP STRUCTURE

     In connection with the Formation of dmc(2) Group as of January 1, 2000, the
following precious metals and automotive catalysts businesses of Degussa were
transferred to dmc(2) Group:



           TRANSFERRING COMPANY           RECEIVING COMPANY              NAME CHANGED TO
           --------------------           -----------------              ---------------
                                                             
       Degussa-Huels AG, Frankfurt   Cerdec AG, Frankfurt          dmc(2) AG, Frankfurt
       Degussa-Huels France S.A.     Cerdec France S.A.            dmc(2) France S.A.
       Degussa-Huels Ltda., Brazil   Cerdec Produtos Ceramicos     dmc(2) Ltda., Brazil
                                       Ltda., Brazil
       Degussa-Huels CEE GmbH        Oegussa GmbH, Vienna
         Vienna
       Degussa-Huels Corporation,    Cerdec Corporation, USA       dmc(2) Corporation, USA
         USA
       Degussa-Huels Corporation,    dmc(2) L.P., USA*
         USA
       Degussa-Huels Mexico S.A. de  Cerdec Mexico S.A. de C.V.    dmc(2) S.A. de C.V., Mexico
         CV
       Degussa-Huels Japan Co.,      Cerdec Japan Co. Ltd.         dmc(2) Japan Ltd.
         Ltd.
       Degussa-Huels Ltd., UK        Cerdec (UK) Ltd.              dmc(2) (UK) Ltd.
       Degussa-Huels Canada Ltd.     dmc(2) Canada Corp.*
       Algorax (Pty.) Limited,       dmc(2) Catalyst Ltd., South
         South Africa                  Africa*
       Degussa-Huels China Ltd.,     dmc(2) China Ltd., Hong
         Hong Kong                   Kong*


     --------------------

     * Newly formed company

     Furthermore, shares in the following companies were transferred to the
dmc(2) Group during 2000 in accordance with the transfer and acceptance
agreement:

     Allgemeine Gold- und Silberscheideanstalt AG, Pforzheim
     Degussa-NA Edelmetall GmbH, Hanau
     Norddeutsche Affinerie AG, Hamburg
     Prometron GmbH Produkte fuer Elektronik und Elektrotechnik GmbH, Hanau
     International Catalyst Technology, Inc., Calvert City/USA
     Coimpa Sociedade Industrial de Metais Preciosos da Amazonia Ltda.,
     Guarulhos/Brazil
     Newtechnos Argentina S.A. (NASA), Buenos Aires/Argentina
     dmc(2) Metals (Thailand), Bangkok/Thailand
     Nadir Allgemeine Soymetaller, Istanbul/Turkey
     Allgemeine France S.A.R.L., Brunstatt/France
     ICT Co. Ltd., Osaka/Japan
     Schoene Edelmetaal B.V., Amsterdam/Netherlands
     Degussa Galvanotechnik GmbH, Schwaebisch-Gmuend
     Clarex S.A., Guarulhos/Brazil
     Icomeq Industria e Comercio Ltda., Guarulhos/Brazil
     dmc(2) Electronic Materials B.V., Uden/Netherlands
     dmc Catalyst Ltd., Port Elizabeth/South Africa

                                       A-9

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  dmc(2) L.P.

     Through a subsidiary, dmc(2) AG owns a 1% interest in dmc(2) L.P. The
remaining 99% interest is owned by dmc(2) AG's parent, Degussa. However,
pursuant to the transfer and acceptance agreement with Degussa, dmc(2) L.P. is
subject to the management authority of dmc(2) AG and thus, control is exercised
by dmc(2) AG. Degussa's interest in dmc(2) L.P.'s equity and profits are
accordingly shown as minority interests in the combined financial statements as
of December 31, 2000. During the carve-out periods, Degussa's interest in dmc(2)
L.P.'s equity is included as investments by and advances from Degussa.

(3)  COMBINED AND ASSOCIATED COMPANIES

     Besides dmc(2) AG, the dmc(2) Group combined financial statements include
three domestic and thirty-two foreign group companies, which include carved-out
businesses (September 30, 1998: three domestic, twenty-four foreign; September
30, 1999 and December 31, 1999: three domestic, twenty-five foreign). Inclusion
was based on a voting rights majority held either directly or indirectly. dmc(2)
L.P., Washington/U.S.A. was an exception in this respect and was included
pursuant to ss. 290 (2) no. 2 of HGB. Colorificio Pardo, S.p.A., Corlo/Italy,
Degussa Skandinavien Katalysator AB, Karlskoga/Sweden, Cerpart S.R.L.,
Mailand/Italy, Cerdec Holding Co., Las Vegas/USA and Cerdec Royalty Co., Las
Vegas/USA were first included in the scope of consolidation during the year
ended September 30, 1998. dmc(2) Electronic Materials B.V., Uden/Netherlands was
consolidated following acquisition during the year ended September 30, 1999.
Demeca, Mexico was founded in the year ended December 31, 2000. dmc(2)
Electronic Components USA was consolidated following acquisition during the year
ended December 31, 2000.

     The 30% minority interest of Cerdec AG, formerly held by Ciba Geigy, was
acquired in the year ended September 30, 1999 and the resulting goodwill was
offset against investments by and advances from Degussa.

     Certain carved-out businesses were not established as legal companies prior
to fiscal 2000. These businesses included dmc(2) Iberica S.A., dmc(2) Italia
S.p.A., Cerdec Ceramics Brasil, Cerdec Ceramics Mexico and Cerdec Ceramics Inc.,
USA.

     Twelve subsidiaries and carved-out businesses (September 30, 1998: 12;
September 30, 1999: 13; December 31, 1999: 13) have not been consolidated as
they are not material to the dmc(2) Group's net assets, financial position and
operating results.

     Nine foreign companies, of which three are subsidiaries, (September 30,
1998: two foreign companies; September 30, 1999: five foreign companies, of
which one is a subsidiary; December 31, 1999: five foreign companies, of which
one is a subsidiary) have been included as equity investments in the combined
financial statements in accordance with the regulations on associated companies
under ss. 311 ff. HGB in conjunction with ss. 312 (1) no. 1 HGB. No adjustments
to comply with uniform Group accounting and valuation guidelines or elimination
of intercompany profits were made in relation to these companies. Investments in
two companies (September 30, 1998: seven companies; September 30, 1999: seven
companies; December 31, 1999: seven companies), were not included as associated
companies because they are not material. As of December 31, 2000, Norddeutsche
Affinerie AG, Hamburg, is included as an other investment due to the
discontinuation of gold and silver refining operations and the decline in mutual
business transactions. Norddeutsche Affinerie AG was included as an equity
investment as of December 31, 1999 and September 30, 1999.

(4)  PRINCIPLES OF COMBINATION

     In the process of combination, the acquisition cost of subsidiaries is
offset against the book value of the pro rata share of shareholder's equity at
the date of acquisition or initial combination. The resulting difference

                                       A-10

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

between the cost of acquisition and shareholder's equity is allocated to the
relevant assets or liabilities insofar as their fair market value differs from
their book value. In general, the excess of the purchase price over the fair
value of the net assets acquired is offset against shareholder's equity without
impacting the dmc(2) Group operating results. In general, negative goodwill
arising from combinations is shown as a component of shareholder's equity except
when the particular circumstances indicate that a liability exists, in which
case such differences are allocated to liabilities. The initial full combination
of subsidiaries and carved-out businesses resulted in positive (debit)
differences of DM 0.7 million as of December 31, 2000 (September 30, 1998:
positive (debit) differences of DM 8.1 million and negative (credit) differences
of DM 1.7 million; September 30, 1997: DM 0.0 million; December 31, 1999: DM 0.0
million).

     The initial inclusion of equity investments in the year ended December 31,
2000 resulted in positive (asset side) differences of DM 10.1 million which are
being amortized as goodwill over 15 years, and negative (equity side)
differences of DM 31.0 million (year ended September 30, 1999: DM 4.1 million)
which were added to shareholder's equity without impacting earnings.

     Accounts receivable and accounts payable between combined companies have
been eliminated. The valuation of assets has been adjusted to eliminate
unrealized intercompany profits. Accordingly, such assets are valued at their
cost to the dmc(2) Group as a whole. Intercompany sales and other income from
transactions within the dmc(2) Group have been offset against the corresponding
expenditure.

     Deferred taxes are recorded if any difference in the tax charge resulting
from combination measures is expected to be reversed in subsequent financial
years. In this process, prepaid and deferred taxes have been netted, taking into
account the tax adjusting entries in the individual balance sheets.

(5)  ACCOUNTING AND VALUATION PRINCIPLES

     The combined financial statements of the dmc(2) Group are prepared on a
uniform basis of accounting with respect to combined subsidiaries.

  INTANGIBLE ASSETS

     Acquired intangible assets, other than goodwill, are shown at the
acquisition cost less scheduled depreciation over a maximum period of 5 years.
Goodwill is depreciated over 15 years. Unscheduled depreciation is taken where
declines in value are expected to be other than temporary.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at historical cost. The production
cost of self-manufactured assets includes an allocation of overhead and
depreciation on production plant and equipment in addition to the cost of
materials and labor.

     Depreciation is recorded on a scheduled basis over the useful life that is
usual in the relevant industry sector. Where permissible for tax purposes, the
declining balance method is used until the residual book value over the
remaining useful life of the asset results in a higher straight-line
depreciation charge. Unscheduled depreciation is taken where a loss in value is
expected to be permanent. Low-value items are expensed in full in the year of
acquisition.

  INVESTMENTS

     Shares in affiliated companies and investments in other companies are
valued at cost of acquisition or at their lower assignable value on the balance
sheet date if declines in value are other than temporary. The book values of
associated enterprises have been adjusted for the pro rata amount of changes in
shareholder's equity. Generally, the accounting policies locally applied by the
associated enterprises were kept unchanged. The cost of acquisition was
generally netted against pro rata shareholder's equity at the time of
acquisition.

                                       A-11

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  INVENTORY

     The valuation of raw materials and supplies is based on the lower of
average purchase cost or market price. Write-downs are recorded to reflect
declines in value resulting from obsolete and slow moving items. Precious metals
have generally been accounted for under the LIFO method. Write-downs are
reversed where necessary. Work in progress and finished goods, other than
precious metals are valued at cost of production. The cost of production of work
in progress and finished goods includes all amounts required to be capitalized
for German tax purposes. These include the cost of labor and materials,
appropriate overhead costs, and a pro rata share of depreciation.

  RECEIVABLES

     Receivables are stated at nominal value less discounts and allowances.
dmc(2) Group covers specific risks relating to accounts receivable with
valuation allowances. The general credit risk is reflected in a general
allowance. For the periods ending September 30, 1998, September 30 and December
31, 1999, the general allowance for receivables not otherwise provided for was
4% of accounts receivable. In the period ended December 31, 2000, the allowance
was revised to 1% for certain subsidiaries to conform with internationally
accepted accounting practices, which focus more directly on the specific
recovery risk. This led to a reduction in the general allowance by approximately
DM 4,700 with respect to accounts receivable as of January 1, 2000.

  DEFERRED TAXES

     Deferred tax assets and liabilities are calculated for temporary
differences between the valuation of assets and liabilities in the financial
statements of combined companies and the carrying amounts for tax purposes using
the tax rates either in effect or expected to apply in the period of reversal.
Deferred tax assets are calculated with respect to tax loss carry forwards if
there are offsetting deferred tax liabilities. Deferred tax assets are
recognized to the extent they are expected to be realized.

  PENSION PROVISIONS

     Pension provisions and similar obligations including health care
commitments are actuarially determined utilizing the projected unit credit
method customarily used in international accounting. Thus, pension provisions
are calculated as the present value of the vested pension rights.

     Pension provisions are calculated on the basis of local economic
conditions. The German pension calculation used the following rates:



                                  SEPTEMBER 30,     DECEMBER 31,      DECEMBER 31,
                                       1999             1999              2000
                                  --------------   --------------   ----------------
                                                           
Interest rate...................      6.00%            6.25%             6.25%
Annual pension increase.........      1.00%            1.25%             1.25%
Annual wage and salary
  increase......................      2.50%            2.75%             2.75%
Average staff fluctuation
  rate..........................      2.00%            2.00%             2.00%
Actuarial table.................  Bode & Grabner   Bode & Grabner       Heubeck
                                  PK Chemie 1996   PK Chemie 1996   Richttafeln 1998


  ACCRUED LIABILITIES

     Other accrued liabilities are shown in the balance sheet at the expected
payable amount. Liabilities are stated at the higher of nominal value or at the
amount repayable.

                                       A-12

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(6)  CURRENCY TRANSLATION

     Accounts receivable and payable in foreign currencies, that are not hedged
against changes in exchange rates, are initially recorded at the rates of
exchange in force when first entered in the accounts. Unrealized losses due to
changes in exchange rates are taken into account as of the balance sheet date.
Gains are recognized when realized.

     The financial statements of foreign subsidiaries and associated companies
are translated in the group financial statements using the concept of functional
currencies. As a rule, the functional currency is the local currency as these
companies conduct their business independently from a financial, economic and
organizational point of view. Assets and liabilities are therefore translated at
closing rates on the balance sheet date. Shareholder's equity is translated at
historical rates, while income and expenses are translated using average
reporting period rates. Differences arising from the currency translation of
assets and liabilities compared to the previous period and translation
differences between the balance sheet and statement of operations are recorded
in shareholder's equity.

     The exchange rates for the more significant currencies for the dmc(2) Group
are as follows:



                                                                        CLOSING RATE
           (DEM)                               --------------------------------------------------------------
                                                                                 THREE MONTHS
                                                YEAR ENDED       YEAR ENDED         ENDED         YEAR ENDED
                                               SEPTEMBER 30,    SEPTEMBER 30,    DECEMBER 31,    DECEMBER 31,
                                                   1998             1999             1999            2000
                                               -------------    -------------    ------------    ------------
                                                                                  
    1 USA               USD.................      1.67590          1.83380         1.94690         2.10191
    1 Brazil            BRL.................      1.40770          0.94510         1.08740         1.07790
    100 Japan           JPY.................      1.23450          1.74070         1.90390         1.82920
    100 Mexico          MXN.................      16.8649          19.5192         20.5106         21.9235
    1 Canada            CAD.................      1.10070          1.24960         1.33890         1.40052
    1 S. Africa         ZAR.................      0.28500          0.30470         0.31650         0.27770




                                                                        AVERAGE RATE
                                               --------------------------------------------------------------
                                                                                 THREE MONTHS
                                                YEAR ENDED       YEAR ENDED         ENDED         YEAR ENDED
                                               SEPTEMBER 30,    SEPTEMBER 30,    DECEMBER 31,    DECEMBER 31,
                                                   1998             1999             1999            2000
                                               -------------    -------------    ------------    ------------
                                                                                  
    1 USA               USD.................      1.78290          1.78030         1.88330         2.11759
    1 Brazil            BRL.................      1.56790          1.11840         0.98510         1.15872
    100 Japan           JPY.................      1.35150          1.51770         1.80270         1.96620
    100 Mexico          MXN.................      20.8920          18.5220         20.0317         22.3865
    1 Canada            CAD.................      1.23130          1.18580         1.27910         1.42701
    1 S. Africa         ZAR.................      0.34060          0.29620         0.30880         0.30582


                                       A-13

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(7)  SALES



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
              (IN DEM MILLION)             -------------   -------------   ------------   ------------
                                                                              
    SALES BY ACTIVITY
    Industrial Products..................      2,769           3,058            873           4,408
    Metals Management....................      4,741           5,086          1,357           7,720
                                               -----           -----          -----          ------
    TOTAL GROUP..........................      7,510           8,144          2,230          12,128
                                               =====           =====          =====          ======

    SALES BY REGION
    Germany..............................      4,025           4,455          1,185           5,071
      Other European countries...........        475             489            149             553
      NAFTA..............................      2,422           2,657            750           5,330
      Latin America......................        359             262             57             466
      Asia...............................        153             195             59             374
      Africa, Australia, Oceania.........         76              86             30             334
                                               -----           -----          -----          ------
    Foreign..............................      3.485           3,689          1,045           7,057
                                               -----           -----          -----          ------
    TOTAL GROUP..........................      7,510           8,144          2,230          12,128
                                               =====           =====          =====          ======


     Sales are reported according to their nature into business activity:
Industrial Products (Advanced Materials, Chemicals & Catalysts) and Metals
Management.

     Advanced Materials consists of the following divisions: Electronic
Materials, Technical Materials, Performance Colors and Pigments, Glass Systems,
Jewelry and Electroplating, and Cerdec Ceramics. These divisions concentrate
primarily on the production of functional materials, multi-layer systems, and
surfaces for different markets.

     Chemicals and Catalysts constitutes the chemical sector of the dmc(2)
Group. Its three closely related divisions -- Automotive Catalysts, Precious
Metals Chemistry, and Fuel Cells -- deal primarily with the catalytic effects of
precious metals and their recycling.

     Metals Management includes revenue from precious metals trading.

(8)  FUNCTIONAL COSTS

     Costs of sales consist of manufacturing costs and the cost of purchased
goods sold including costs associated with precious metal trading. Costs of
sales also includes cost of materials, external services and payroll costs,
depreciation relating to manufacturing operations, machinery repairs, taxes and
write-downs on inventories.

     Selling expenses include the costs of maintaining sales and distribution
departments and advertising expense. Research and development expenses include
the cost of maintaining the research departments and product and process
development costs. General administrative expenses relate to management and
administrative functions which are not included in manufacturing, selling and
distribution, or research and development departments.

                                       A-14

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(9)  OTHER OPERATING INCOME

     Other operating income includes insurance reimbursements, release of
accrued liabilities, exchange gains, and income related to other accounting
periods. Income relating to other accounting periods amounts to DM 10,731 for
the year ended December 31, 2000 (September 30, 1998: DM 20,781; September 30,
1999: DM 5,772; December 31, 1999: DM 4,248) and includes primarily income from
the disposal of non-current assets, the reversal of write-downs of accounts
receivable, and reimbursements for costs incurred in prior years.



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Other operating income...............     75,644          86,452          29,610        115,276
                                              ======          ======          ======        =======


(10)  OTHER OPERATING EXPENSES

     Other operating expenses include expenses arising from allowances and
write-downs of accounts receivable, additions to accrued liabilities, and
expenses relating to other accounting periods. Expenses relating to other
accounting periods amount to DM 5,913 for the year ended December 31, 2000
(September 30, 1998: DM 25,756; September 30, 1999: DM 752; December 31, 1999:
DM 10,496).



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Other operating expenses.............     (67,713)        (94,968)       (38,937)       (80,082)
                                              =======         =======        =======        =======


(11)  INCOME (LOSS) FROM INVESTMENTS, NET



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Income from investments..............      3,513           1,323             --             531
      (of which from affiliated
         companies)......................     (2,764)           (611)            --            (354)
    Equity income (loss)
      from associated companies..........     (4,628)         10,289          2,495          17,018
                                              ------          ------          -----          ------
    TOTAL................................     (1,115)         11,612          2,495          17,549
                                              ======          ======          =====          ======


(12)  INTEREST EXPENSE, NET



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Interest and similar income..........      40,216          15,604          7,251         43,771
      (of which from affiliated
         companies)......................      (7,266)         (1,204)          (311)        (5,012)
      (of which relate to precious metal
         leases).........................     (16,037)         (7,801)        (4,997)       (31,716)
    Interest and similar expenses........     (55,925)        (43,144)       (13,828)       (97,646)
      (of which from affiliated
         companies)......................      (8,282)        (18,839)        (5,279)       (29,160)
      (of which relate to precious metal
         leases).........................     (28,751)        (14,585)        (5,777)       (24,209)
                                              -------         -------        -------        -------
    INTEREST EXPENSE, NET................     (15,709)        (27,540)        (6,577)       (53,875)
                                              =======         =======        =======        =======


                                       A-15

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

     The metals management segment is responsible for managing the metal
position of dmc(2) Group utilizing forward contracts and metal lease contracts
with suppliers, banks, customers and other third parties. Metals management also
finances the production needs of dmc(2) Group entities through the use of metal
leases.

(13)  EXTRAORDINARY INCOME (EXPENSES)

     The extraordinary income in fiscal year 1998 primarily relates to the sale
of a 10% interest in Norddeutsche Affinerie AG, Hamburg. The extraordinary
expenses shown in the year ended December 31, 2000 reflect primarily the impact
of LIFO valuation of precious metals inventories, the costs of forming the
dmc(2) Group, unscheduled depreciation and expenses related to the transfer of
the Cerdec Ceramics operations. The extraordinary expenses shown in prior
periods resulted primarily from restructuring measures which took place at
different locations in the dmc(2) Group.



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Extraordinary income.................     123,199              --            944          9,237
    Extraordinary expense................      (3,483)        (15,728)       (68,051)       (46,057)
                                              -------         -------        -------        -------
    EXTRAORDINARY INCOME (EXPENSES)......     119,716         (15,728)       (67,107)       (36,820)
                                              =======         =======        =======        =======


(14)  MINORITY INTERESTS



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    MINORITY INTERESTS...................       --              --             --           (28,309)
                                                 ==              ==             ==          =======


     Minority interests primarily relate to dmc(2) L.P., Coimpa Sociedade
Industrial de Metais Preciosos da Amazonia Ltda., Allgemeine Gold- und
Silberscheideanstalt AG, Degussa Galvanotechnik GmbH, Degussa Catalyst (Pty.)
Ltd., and Schoene Edelmetaal B.V.

(15)  ADDITIONAL OPERATING INFORMATION

  COST OF MATERIALS



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Cost of raw materials, supplies and
      merchandise purchased..............    6,484,049       7,023,576      1,863,538      10,640,983
    Cost of external services............       44,768          43,675         12,460          59,646
                                             ---------       ---------      ---------      ----------
    TOTAL................................    6,528,817       7,067,251      1,875,998      10,700,629
                                             =========       =========      =========      ==========


     Costs of raw materials, supplies and merchandise purchased includes
precious metal trading activity.

                                       A-16

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  PAYROLL COSTS



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    PERSONNEL EXPENSES
    Wages and salaries...................     343,799         366,987         92,682        453,924
    Social security contributions and
      expenses for pensions and similar
      obligations........................     110,838         109,539         31,260        126,050
      (of which from pensions)...........     (35,899)        (35,874)       (10,425)       (41,013)
                                              -------         -------        -------        -------
    TOTAL................................     454,637         476,526        123,942        579,974
                                              =======         =======        =======        =======


  UNSCHEDULED DEPRECIATION OF INTANGIBLE ASSETS AND PROPERTY PLANT AND EQUIPMENT

     Unscheduled depreciation of intangible assets and property plant and
equipment totaled DM 23,547 for the three months ended December 31, 1999.

  AVERAGE NUMBER OF EMPLOYEES DURING THE FINANCIAL PERIODS



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Germany..............................      2,221           2,203          2,165          2,342
    Abroad...............................      2,735           2,869          2,867          3,102
                                               -----           -----          -----          -----
    TOTAL................................      4,956           5,072          5,032          5,444
                                               =====           =====          =====          =====


  AVERAGE NUMBER OF EMPLOYEES BY PRODUCT LINE DURING THE FINANCIAL PERIODS



                                                                           THREE MONTHS
                                            YEAR ENDED      YEAR ENDED        ENDED        YEAR ENDED
                                           SEPTEMBER 30,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                               1998            1999            1999           2000
                                           -------------   -------------   ------------   ------------
                                                                              
    Advanced Materials...................      3,608           3,690          3,663          4,087
    Chemicals and Catalysts..............      1,318           1,352          1,340          1,304
    Metals Management....................         30              30             29             53
                                               -----           -----          -----          -----
    TOTAL................................      4,956           5,072          5,032          5,444
                                               =====           =====          =====          =====


(16)  INTANGIBLE ASSETS

  BOOK VALUE, NET



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Franchises, licenses and industrial property rights
      and similar rights and assets....................      2,603           3,553          3,644
    Goodwill...........................................     14,061           7,472          7,979
    Advance payments...................................         18             378             --
                                                            ------          ------         ------
    TOTAL..............................................     16,682          11,403         11,623
                                                            ======          ======         ======


                                       A-17

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  DEVELOPMENT



                                                                        THREE MONTHS
                                                         YEAR ENDED        ENDED        YEAR ENDED
                                                        SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                            1999            1999           2000
                                                        -------------   ------------   ------------
                                                                              
    COSTS OF ACQUISITION OR PRODUCTION
    Opening balance...................................     29,845          32,774         37,284
    Exchange differences..............................       (828)            859           (277)
    Changes in scope of combination...................      1,769              --             --
    Additions.........................................      8,150           5,099          5,215
    Disposals.........................................     (6,469)         (1,448)       (16,414)
    Reclassifications.................................        307              --            477
                                                           ------          ------        -------
    Closing balance...................................     32,774          37,284         26,285

    ACCUMULATED DEPRECIATION
    Opening balance...................................     18,863          16,092         25,881
    Exchange differences..............................     (1,078)            333           (210)
    Additions.........................................      2,681           9,820          3,840
    Disposals.........................................     (4,374)           (364)       (14,723)
    Reclassifications.................................         --              --           (126)
                                                           ------          ------        -------
    Closing balance...................................     16,092          25,881         14,662
                                                           ------          ------        -------
    BOOK VALUE, NET...................................     16,682          11,403         11,623
                                                           ======          ======        =======


     Depreciation of DM 9,820 for the three months ended December 31, 1999
includes DM 9,176 of unscheduled depreciation of goodwill relating to
Colorificio Pardo S.p.A. reducing the related goodwill to zero.

(17)  PROPERTY, PLANT AND EQUIPMENT

  BOOK VALUE, NET



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Land, land rights, buildings, including buildings
      on leased land...................................     200,501        205,284        215,449
    Technical equipment and machinery..................     218,181        220,922        242,805
    Other plant, factory and office equipment..........      49,859         48,250         53,137
    Advance payments and construction work in
      progress.........................................      55,795         73,206         85,788
                                                            -------        -------        -------
    TOTAL..............................................     524,336        547,662        597,179
                                                            =======        =======        =======


                                       A-18

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  DEVELOPMENT



                                                                        THREE MONTHS
                                                         YEAR ENDED        ENDED        YEAR ENDED
                                                        SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                            1999            1999           2000
                                                        -------------   ------------   ------------
                                                                              
    COSTS OF ACQUISITION OR PRODUCTION
    Opening balance...................................    1,265,516      1,333,001      1,391,146
    Exchange differences..............................      (28,463)        38,508         (6,990)
    Changes in scope of combination...................       17,231             --          5,881
    Additions.........................................      108,036         52,547        158,720
    Disposals.........................................      (29,012)       (32,910)       (54,579)
    Reclassifications.................................         (307)            --           (477)
                                                          ---------      ---------      ---------
    Closing balance...................................    1,333,001      1,391,146      1,493,701

    ACCUMULATED DEPRECIATION
    Opening balance...................................      756,183        808,665        843,484
    Exchange differences..............................      (20,098)        20,357         (4,012)
    Additions.........................................       88,688         38,288         97,361
    Disposals.........................................      (16,108)       (23,826)       (40,437)
    Reclassifications.................................           --             --            126
                                                          ---------      ---------      ---------
    Closing balance...................................      808,665        843,484        896,522
                                                          ---------      ---------      ---------
    BOOK VALUE, NET...................................      524,336        547,662        597,179
                                                          =========      =========      =========


(18)  INVESTMENTS

  BOOK VALUE, NET



                                                        SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                            1999            1999           2000
                                                        -------------   ------------   ------------
                                                                              
    Shares in affiliated companies....................        5,211          9,555         10,173
    Loans to affiliated companies.....................           --          1,010          2,020
    Shares in associated companies....................       67,240         78,431         59,995
    Other investments.................................        9,476         10,773         53,985
    Long-term securities held as investments..........        2,514          1,091          1,198
    Other loans.......................................        4,282          1,837          1,349
                                                          ---------      ---------      ---------
    TOTAL.............................................       88,723        102,697        128,720
                                                          =========      =========      =========


                                       A-19

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  DEVELOPMENT



                                                                        THREE MONTHS
                                                         YEAR ENDED        ENDED        YEAR ENDED
                                                        SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                            1999            1999           2000
                                                        -------------   ------------   ------------
                                                                              
    COSTS OF ACQUISITION OR PRODUCTION
    Opening balance...................................      89,574        109,522        123,714
    Exchange differences..............................       1,099          1,332          2,044
    Additions.........................................      19,178         18,114         28,437
    Disposals.........................................        (329)        (5,254)        (3,786)
    Closing balance...................................     109,522        123,714        150,409
    ACCUMULATED DEPRECIATION
    Opening balance...................................      21,509         20,799         21,017
    Exchange differences..............................        (710)           258            (11)
    Additions.........................................          --            (40)           683
                                                           -------        -------        -------
    Closing balance...................................      20,799         21,017         21,689
                                                           -------        -------        -------
    BOOK VALUE........................................      88,723        102,697        128,720
                                                           =======        =======        =======


(19)  NON-CURRENT ASSETS

     The sum of shareholder's equity, long-term accrued liabilities, and
long-term liabilities exceeded non-current assets in all reporting periods.
Liabilities are defined as long-term if not maturing within one year.

(20)  INVENTORIES, NET



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Inventories are as follows:

    Raw material and supplies..........................     151,131        174,790        292,510
    Work in progress...................................     123,106        129,888        168,909
    Finished products and merchandise..................     293,788        372,756        395,224
    Advance payments...................................       7,417          3,163         10,208
                                                            -------        -------        -------
    TOTAL..............................................     575,442        680,597        866,851
                                                            =======        =======        =======


     Inventory provisions have been established for obsolete and slow moving
inventories.

     Borrowed precious metals and the obligation to return similar metal are
excluded from the balance sheet. In connection with dmc(2) Group's precious
metal activities, dmc(2) Group pays and receives interest with respect to
precious metal leases.

                                       A-20

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(21)  ACCOUNTS RECEIVABLE AND OTHER ASSETS



                                                                DUE WITHIN   DUE AFTER
    SEPTEMBER 30, 1999                                            1 YEAR      1 YEAR      TOTAL
    ------------------                                          ----------   ---------   -------
                                                                                
    Trade accounts receivable.................................   425,999          80     426,079
    Accounts receivable from affiliated companies.............    58,084          --      58,084
    Accounts receivable from companies in which investments
      are held and other assets...............................   (47,939)      6,766     (54,705)
                                                                 -------      ------     -------
    TOTAL.....................................................   532,022       6,846     538,868
                                                                 =======      ======     =======




                                                                DUE WITHIN   DUE AFTER
    DECEMBER 31, 1999                                             1 YEAR      1 YEAR      TOTAL
    -----------------                                           ----------   ---------   -------
                                                                                
    Trade accounts receivable.................................   443,974          79     444,053
    Accounts receivable from affiliated companies.............    23,163         320      23,483
    Accounts receivable from companies in which investments
      are held................................................     6,240          --       6,240
    Other assets..............................................    39,692       8,774      48,466
                                                                 -------      ------     -------
    TOTAL.....................................................   513,069       9,173     522,242
                                                                 =======      ======     =======




                                                                DUE WITHIN   DUE AFTER
    DECEMBER 31, 2000                                             1 YEAR      1 YEAR      TOTAL
    -----------------                                           ----------   ---------   -------
                                                                                
    Trade accounts receivable.................................   734,326          37     734,363
    Accounts receivable from affiliated companies.............    56,678          --      56,678
    Accounts receivable from companies in which investments
      are held................................................    11,233          --      11,233
    Other assets..............................................    69,386      10,250      79,636
                                                                 -------      ------     -------
    TOTAL.....................................................   871,623      10,287     881,910
                                                                 =======      ======     =======


     Accounts receivable from affiliated companies relate primarily to trade
receivables. Other assets include loans, advance payments, receivables from
suppliers, and tax refund claims.

(22)  CASH AND CASH EQUIVALENTS

     This item is comprised of checks, cash on hand, and bank balances.

(23)  DEFERRED CHARGES



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Deferred taxes.....................................     44,485          51,679         30,341
    Other deferred charges.............................     21,926          10,119          2,654
                                                            ------          ------         ------
    TOTAL..............................................     66,411          61,798         32,995
                                                            ======          ======         ======


     Deferred taxes include charges relating to temporary differences in net
income arising from combination entries and interperiod tax allocation in the
financial statements of individual companies. The other deferred charges also
include prepaid expenses.

                                       A-21

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

(24)  SHAREHOLDER'S EQUITY

  ORDINARY SHARE CAPITAL

     At December 31, 2000 dmc(2) AG had outstanding 1,000,000 shares of bearer
stock with a nominal value of DM 50.00 each. At December 31, 2000, Degussa AG
owns all of the outstanding shares of dmc(2) AG.

  CAPITAL TRANSACTIONS

     Prior to Formation, the difference between all allocable assets and
liabilities for the carved-out businesses is treated as investments by and
advances from Degussa in the combined statements of shareholder's equity.

     Cerdec AG, the predecessor to dmc(2) AG, had 640,000 ordinary shares
outstanding with a total nominal value of DM 32,000. At the Formation, dmc(2) AG
issued 360,000 additional ordinary shares with a nominal value of DM 18,000 to
Degussa AG in exchange for the transfer of the precious metals and automotive
catalysts divisions. Capital reserves were increased DM 149,000 representing the
excess of the historical book value of the transferred assets and liabilities
over the nominal value of the issued ordinary shares.

(25)  RESERVES



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    THE RESERVE ACCOUNTS ARE AS FOLLOWS:
    Capital reserve....................................          --             --        358,804
    Revenue reserves...................................          --             --        125,081
                                                            -------        -------        -------
    TOTAL..............................................          --             --        483,885
                                                            =======        =======        =======


     The dmc(2) Group reserve accounts comprise revenue reserves of the dmc(2)
Group companies and the capital reserve of dmc(2) AG. The reserves furthermore
include net assets that Degussa has contributed to the shareholder's equity of
subsidiaries, the profits available for distribution of the subsidiaries of the
dmc(2) Group, differences from currency translation, and combination
adjustments.

(26)  MINORITY INTERESTS

     Third parties and affiliates hold equity interests in the following, and
other, consolidated subsidiaries: dmc(2) L.P., Coimpa Sociedade Industrial de
Metais Preciosos da Amazonia Ltda., Allgemeine Gold- und Silberscheideanstalt
AG, Degussa Galvanotechnik GmbH, Degussa Catalyst (Pty.) Ltd., and Schoene
Edelmetaal B.V.

(27)  ACCRUED LIABILITIES



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Provisions for pensions and similar obligations....      78,125         68,758        126,119
    Accrued taxes......................................      27,413         15,556         30,131
      (thereof deferred taxes).........................      (9,265)        (1,612)            --
    Other accrued liabilities..........................     192,838        236,793        217,836
                                                            -------        -------        -------
    TOTAL..............................................     298,376        321,107        374,086
                                                            =======        =======        =======


     Provision for pensions prior to 2000 includes pensions directly
attributable to Cerdec AG and its subsidiaries. In addition, Degussa maintained
pension plans for which the provision could not be allocated to

                                       A-22

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

the carve-out businesses. The provisions for pensions also include the severance
payment commitments of certain foreign subsidiaries.

     Corresponding with the Formation of dmc(2) Group as a separate legal entity
during 2000, certain pension plans were amended to increase employee benefits as
well as expand the number of plan participants.

     Accrued taxes include the estimated liabilities for current year taxes
which have not yet been assessed. It also includes deferred taxes for timing
differences resulting as a consequence of combination and otherwise existing for
combined entities.

     Other accrued liabilities include provisions for bonuses, guarantee
obligations, obligations under early retirement arrangements, restructuring
accruals, and future repairs. For employees already covered by semi-retirement
employment arrangements or who have already signed contracts, accruals were
established in the full amount for supplementary and settlement payments and pro
rata for wages and salaries in the permanent leave of absence phase. The
obligations were calculated under actuarial principles and discounted at 5.5%.

     Furthermore, based on the collective bargaining agreement entered into in
2000, liabilities were also established in 2000 up to a 5% workforce maximum
limit for potential semi-retirement of employees qualifying as of December 31,
2000. No accruals have been set up for employees that may qualify after December
31, 2000 until December 31, 2009 (expiring date of collective bargaining
agreement). As of December 31, 2000 this accrual included future supplementary
and settlement obligations and was likewise calculated under actuarial
principles and discounted at 5.5%.

(28)  LIABILITIES



                                                                  DUE AFTER 1
                                                     DUE WITHIN   AND WITHIN    DUE AFTER
    AS OF SEPTEMBER 30, 1999                           1 YEAR       5 YEARS      5 YEARS     TOTAL
    ------------------------                         ----------   -----------   ---------   -------
                                                                                
    Liabilities to banks...........................   135,971       47,425          623     184,019
    Trade accounts payable.........................    88,333       15,267           --     103,600
    Liabilities to affiliated companies............   121,821           --           --     121,821
    Liabilities to companies in which investments
      are held.....................................     7,967           --           --       7,967
    Other liabilities..............................    59,960        1,780        3,628      65,368
      (of which relating to taxation)..............    (9,317)          --           --      (9,317)
      (of which relating to social security).......   (22,183)          --           --     (22,183)
                                                      -------       ------        -----     -------
    TOTAL..........................................   414,052       64,472        4,251     482,775
                                                      =======       ======        =====     =======




                                                                  DUE AFTER 1
                                                     DUE WITHIN   AND WITHIN    DUE AFTER
    AS OF DECEMBER 31, 1999                            1 YEAR       5 YEARS      5 YEARS     TOTAL
    -----------------------                          ----------   -----------   ---------   -------
                                                                                
    Liabilities to banks...........................   154,150       29,141        1,373     184,664
    Advance payments received on orders............        49           --           --          49
    Trade accounts payable.........................    92,291       14,182           --     106,473
    Liabilities to affiliated companies............   146,785           --           --     146,785
    Liabilities to companies in which investments
      are held.....................................     3,807           --           --       3,807
    Other liabilities..............................    58,586        2,588        2,393      63,567
      (of which relating to taxation)..............   (10,836)          --           --     (10,836)
      (of which relating to social security).......   (25,047)          --           --     (25,047)
                                                      -------       ------        -----     -------
    TOTAL..........................................   455,668       45,911        3,766     505,345
                                                      =======       ======        =====     =======


                                       A-23

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                DUE AFTER 1
                                                   DUE WITHIN   AND WITHIN    DUE AFTER
    AS OF DECEMBER 31, 2000                          1 YEAR       5 YEARS      5 YEARS      TOTAL
    -----------------------                        ----------   -----------   ---------   ---------
                                                                              
    Liabilities to banks.........................    872,908      62,784        3,034       938,726
    Advance payments received on orders..........      2,102          --           --         2,102
    Trade accounts payable.......................    252,442          --           --       252,442
    Liabilities to affiliated companies..........    277,497          --           --       277,497
    Liabilities to companies in which investments
      are held...................................      2,263          84           --         2,347
    Liabilities from the acceptance of notes and
      notes issued...............................      3,769       1,117           --         4,886
    Other liabilities............................     57,040       2,221        1,007        60,268
      (of which relating to taxation)............     (8,721)         --           --        (8,721)
      (of which relating to social security).....    (11,823)         --           --       (11,823)
                                                   ---------      ------        -----     ---------
    TOTAL........................................  1,468,021      66,206        4,041     1,538,268
                                                   =========      ======        =====     =========


     Prior to 2000 the liabilities to affiliated companies relate primarily to
trade payables. As of December 31, 2000, liabilities to affiliated companies
also include an interest bearing loan of DM 249,833 to Degussa AG. Other
liabilities include mainly social security contributions, commissions, and
accrued salaries and bonuses. No security in the form of mortgages or other
security interests was given for the liabilities.

(29)  CONTINGENT LIABILITIES



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Notes receivable discounted........................      6,417          3,511           2,894
    Guarantee commitments..............................      5,096          5,716          11,983
                                                            ------          -----          ------
    TOTAL..............................................     11,513          9,227          14,877
                                                            ======          =====          ======


     The liability on discounted notes receivable relates to Allgemeine Gold-
und Silberscheideanstalt AG.

(30)  OTHER FINANCIAL COMMITMENTS



                                                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                             1999            1999           2000
                                                         -------------   ------------   ------------
                                                                               
    Commitments under rent and leasing agreements due
      for payment in the next financial year...........      5,789           4,875          4,465
      due for payment in 2 to 5 financial years........     12,774          10,971         17,712
    Non-security repurchase agreement due in next
      financial year...................................     10,216              --             --
                                                            ------          ------        -------
    TOTAL..............................................     28,779          15,846         22,177
                                                            ======          ======        =======


     The commitments arising from leasing agreements mainly relate to Degussa
and its affiliated companies.

(31)  DERIVATIVE FINANCIAL INSTRUMENTS

     The dmc(2) Group utilizes derivative financial instruments in the form of
futures contracts in order to economically hedge the operating business against
risks arising from changes in precious metals prices. The precious metals
futures contracts primarily are for gold and silver, but also include platinum
and palladium.

                                       A-24

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

The dmc(2) Group also makes use of these instruments on a limited scale to
optimize the precious metals trading result. The following table summarizes the
precious metals futures contracts:



                                     NOMINAL CONTRACT VOLUME                            MARKET VALUE
                           -------------------------------------------   -------------------------------------------
                           SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,   SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                               1999            1999           2000           1999            1999           2000
                           -------------   ------------   ------------   -------------   ------------   ------------
                                                                                      
    Remaining term up to
      1 year.............     505,386        568,951       1,098,977        (16,038)       (17,407)       (11,000)
    Remaining term 1 - 5
      years..............       7,628          4,890          11,067           (978)          (391)           820
                              -------        -------       ---------        -------        -------        -------
    PRECIOUS METALS
      FUTURES............     513,014        573,841       1,110,044        (17,016)       (17,798)       (10,180)
                              =======        =======       =========        =======        =======        =======


     To economically hedge against fluctuations in currency exchange rates and
interest rates, the dmc(2) Group also employs, on a limited basis, currency
futures contracts, currency option contracts, and interest rate swaps. The
nominal value of currency futures contracts at December 31, 2000 was DM 162,683
with a market value of DM 1,481. The nominal value of currency option contracts
amounted to DM 4,204 as of December 31, 2000 with a market value of DM 239.
Interest rate swaps as of December 31, 2000 had a nominal value of DM 19,146 and
a market value of DM (799).

     Nominal value is the sum of all purchase and sale transactions relating to
derivative financial instruments. Market value is calculated on the basis of
market quotations or customary market prices or the value for derivative
financial instruments derived therefrom. Market value shows how closing out the
derivatives position (entry into offsetting transactions) would affect earnings
(ignoring the underlying transactions).

(32)  TOTAL COMPENSATION OF THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD;
LOANS GRANTED

     For the year ended December 31, 2000, the Board of Management's total
compensation amounted to DM 3,722 for active board members and DM 1,010 for
former board members. The pension accrual for former board members amounted to
DM 2,566. An accrual of DM 396 was established for the compensation of the
members of the Supervisory Board. No loans or advance payments were made.

(33)  RECONCILIATION TO U.S. GAAP

     dmc(2) Group's combined financial statements are presented in accordance
with German GAAP, which differ in certain significant respects from U.S. GAAP.

                                       A-25

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

     The significant differences that affect net income and shareholder's equity
of the dmc(2) Group are set forth below:



                                                                          THREE MONTHS
                                                           YEAR ENDED        ENDED        YEAR ENDED
                                                          SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                   NOTE       1999            1999           2000
                                                   ----   -------------   ------------   ------------
                                                                             
RECONCILIATION OF NET INCOME (LOSS) FROM GERMAN
  GAAP TO U.S. GAAP:
Net income (loss) as reported in the combined
  statements of operations under German GAAP: ...             12,037        (64,861)        85,691
  Provisions and loss contingencies..............   (a)      (14,256)        24,435        (21,945)
  Valuation of inventory.........................   (b)          664            (97)         1,695
  Deferred taxes.................................   (c)       28,368          3,093         93,483
  Foreign currency revaluation...................   (d)          626           (430)           873
  Pensions and post retirement benefits..........   (e)            0           (372)        (7,465)
  Allowance for doubtful accounts................   (f)        2,119            644         (2,482)
  Valuation of securities........................   (g)        3,291              0          3,072
  Valuation fixed assets.........................   (h)          686         (1,222)         2,229
  Financial instruments..........................   (i)       (4,218)           347          3,582
  Purchase accounting of dmc(2) Group............   (j)      (27,069)        (9,594)       (40,594)
  Purchase of minority interest in Cerdec AG.....   (k)       (1,952)          (835)        (3,347)
  Combination of majority-owned subsidiaries.....   (l)        6,900            290          8,364
  Minority interests.............................   (m)         (931)        (1,948)       (14,424)
  Equity method accounting.......................   (n)       (7,272)        (6,359)       (13,305)
  Goodwill.......................................   (o)       (5,610)         6,910         (5,538)
                                                   ---       -------        -------        -------
Net Income (Loss) in Accordance With U.S. GAAP...             (6,617)       (49,999)        89,889
                                                             =======        =======        =======




                                                          SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                   NOTE       1999            1999           2000
                                                   ----   -------------   ------------   ------------
                                                                             
RECONCILIATION OF SHAREHOLDER'S EQUITY FROM
  GERMAN GAAP TO U.S. GAAP:
Shareholder's equity as reported in the combined
  statements of shareholder's equity under German
  GAAP:..........................................           1,076,675      1,168,391        652,099
  Provisions and loss contingencies..............   (a)        39,929         68,025         35,157
  Valuation of inventory.........................   (b)           629          1,292          2,066
  Deferred taxes.................................   (c)      (195,176)      (221,000)       (89,446)
  Foreign currency revaluation...................   (d)            99            616          2,299
  Pensions and post retirement benefits..........   (e)            --            718          3,597
  Allowance for doubtful accounts................   (f)         6,962          7,916          3,118
  Valuation of securities........................   (g)        77,477         68,062         38,438
  Valuation of fixed assets......................   (h)         3,359          6,990          6,372
  Financial instruments..........................   (i)            --            347          5,046


                                       A-26

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                          SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,
                                                   NOTE       1999            1999           2000
                                                   ----   -------------   ------------   ------------
                                                                             
  Purchase accounting of dmc(2) Group............   (j)       658,639        649,045        580,273
  Purchase of minority interest in Cerdec AG.....   (k)        48,231         47,396         44,049
  Combination of majority-owned subsidiaries.....   (l)        20,254         22,292         21,303
  Minority interests.............................   (m)       (23,330)       (27,705)       (26,242)
  Equity method accounting.......................   (n)        (9,451)       (15,716)         5,095
  Goodwill.......................................   (o)          (614)       (22,791)        10,370
                                                            ---------      ---------      ---------
Shareholder's Equity in Accordance with U.S.
  GAAP...........................................           1,703,683      1,753,878      1,293,594
                                                            =========      =========      =========


  (a)  PROVISIONS AND LOSS CONTINGENCIES

     In accordance with German GAAP, dmc(2) Group recognized provisions for
expected costs to be incurred for certain restructurings and other anticipated
future costs. Under U.S. GAAP, the recognition criteria for such provisions are
more stringent and require a number of prescribed conditions be satisfied before
a liability can be recorded.

  (b)  VALUATION OF INVENTORY

     Under German GAAP, dmc(2) Group capitalizes overhead costs in accordance
with German tax law, which excludes certain indirect and other costs. Under U.S.
GAAP, manufacturing overhead costs include all indirect material, labor and
overhead costs.

     Under German GAAP, raw materials inventory is valued at the lower of
average purchase cost or market price. For German GAAP purposes, market price is
the lower of replacement cost and net realizable value. Differences may arise
where sales prices are contracted at period end.

     In accordance with German GAAP, LIFO layers are created in each period for
each metal. A lower of cost or market assessment is performed every period for
each metal layer. For U.S. GAAP purposes, the lower of cost or market assessment
is applied to an entire metal position. Under U.S. GAAP, the inventory was
revalued as a result of the purchase accounting described in Note 33j).

  (c)  DEFERRED TAXES

     Under German GAAP, deferred tax assets and liabilities are generally
recognized for temporary differences between book carrying values and tax bases
of assets and liabilities, with the exception of deferred tax assets relating to
net operating loss carry forwards which are recognized to the extent of
offsetting deferred tax liabilities. Deferred tax assets are recognized to the
extent they are expected to be realized.

     Under U.S. GAAP, deferred tax assets and liabilities for temporary
differences using enacted tax rates in effect at period-end are recognized in
accordance with Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, net operating loss
carryforwards that are available to reduce future taxes are recognized as
deferred tax assets. Such amounts are reduced by a valuation allowance to the
extent that it is more likely than not that the deferred tax assets will not be
realized.

     The deferred tax adjustment included in the above reconciliation to U.S.
GAAP also contains the income tax effects of the U.S. GAAP adjustments, where
appropriate.

                                       A-27

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

  (d)  FOREIGN CURRENCY REVALUATION

     Under German GAAP, foreign currency denominated receivables (payables) are
translated at the lower (higher) of the period-end spot rate or contracted rate,
respectively.

     Under U.S. GAAP, assets and liabilities denominated in a foreign currency
are recorded at current exchange rates at period-end with any resulting
adjustment recognized in operating results.

  (e)  PENSIONS AND POST RETIREMENT BENEFITS

     For German GAAP, certain increases in pension and other similar obligations
are recognized immediately in earnings. Under U.S. GAAP, changes in pension and
similar obligations (including those resulting from plan amendments) as are not
recognized as they occur but are recognized systematically and gradually over
subsequent periods. Following the Formation of dmc(2) Group as a legal entity in
2000, certain pension plans were amended to increase benefits as well as expand
the number of participants.

     As part of the Formation of the dmc(2) Group, Degussa assumed the liability
for certain dmc(2) Group employees retired as of January 1, 2000. Under German
GAAP the pension expense associated with these retired employees is not included
in income for the year ended December 2000. For U.S. GAAP, pension costs
associated with the retired employees has been reflected in the U.S. GAAP
reconciliation.

  (f)  ALLOWANCE FOR DOUBTFUL ACCOUNTS

     In addition to specific reserves, dmc(2) Group also maintains a general
allowance as well as a country risk allowance for German GAAP purposes. For U.S.
GAAP purposes, these allowances were reversed except for the amounts based upon
dmc(2) Group's historical loss experience.

  (g)  VALUATION OF SECURITIES

     Under German GAAP, marketable debt and equity securities are generally
carried at the lower of cost or market value. Under U.S. GAAP, marketable debt
and equity securities other than investments accounted for by the equity method,
are categorized as either trading, available-for-sale, or held to maturity.
Securities classified as trading or available-for-sale are reported at fair
value at the balance sheet date and held to maturity securities are reported at
historical cost. Unrealized gains and losses on trading securities are recorded
in net income while unrealized gains and losses on securities categorized as
available-for-sale are recorded in shareholder's equity, net of income tax.

  (h)  VALUATION OF FIXED ASSETS

     Under German GAAP, capitalization of certain construction project costs is
not required. Under U.S. GAAP, certain project costs are required to be
capitalized. Further, capitalization of interest during the construction phase
of the project is permitted but not required under German GAAP. Under U.S. GAAP,
interest is capitalized during the construction phase of major construction
projects. Capitalized interest and other costs are added to the cost of
underlying assets and are depreciated over the useful life of the asset.

  (i)  FINANCIAL INSTRUMENTS

     Under German GAAP, the fair values of precious metal futures contracts are
netted amongst their respective metal portfolios with any resultant unrealized
loss recognized in earnings. Under U.S. GAAP, each metal future contract is
marked to market with both positive or negative fair values recognized in
earnings.

                                       A-28

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

     Under German GAAP, negative fair values of foreign currency forwards and
interest rate swaps contracted with third parties are recognized in earnings.
For U.S. GAAP, positive and negative fair values are recognized in earnings.

  (j)  PURCHASE ACCOUNTING OF dmc(2) GROUP

     E.ON AG (formerly Veba AG) acquired Degussa, including the related assets
and liabilities of the dmc(2) Group, in two separate transactions. The initial
36,4% ownership interest was acquired in December 1997 with the remaining 63,6%
interest acquired in February 1999. For German GAAP purposes, the recorded
amounts of dmc(2) Group's assets acquired and liabilities assumed by E.ON AG
remained at historical cost basis. For U.S. GAAP purposes, a new basis of
accounting is established for dmc(2) Group's assets and liabilities based upon
the fair values of the respective assets acquired and liabilities assumed by
E.ON AG at each acquisition date as reflected below:



                                                            USEFUL
                                                             LIFE        STEP I          STEP II
                                                            (YEARS)   DECEMBER 1997   FEBRUARY 1999
                                                            -------   -------------   -------------
                                                                             
Inventory.................................................      --        53,700         149,605
Property, plant and equipment.............................    5-15        13,989          24,441
Land......................................................      --         4,897           8,557
Licenses..................................................      10         5,159           9,015
Patents and Trademarks....................................   13-20        24,672          43,108
Deferred Taxes............................................      --       (58,378)       (133,794)
Goodwill..................................................      15       130,652         228,282


     As a result of the new basis of accounting, shareholder's equity was
increased and additional charges reflected in the reconciliation of net income
for the effects of increases in cost of sales, depreciation expense of tangible
and intangible assets, and related deferred income tax effects. The deferred tax
effects are reflected in Note 33(c).

  (k)  PURCHASE OF MINORITY INTEREST IN CERDEC AG

     In March 1999, Degussa AG purchased the remaining minority interest of 30%
in Cerdec AG from Ciba Geigy. In accordance with German GAAP, the excess of the
acquisition cost of the minority interest acquired over the fair value of the
net assets acquired is offset against shareholder's equity. Under U.S. GAAP,
goodwill is capitalized and depreciated over its useful life. dmc(2) Group's
policy is to depreciate goodwill over 15 years.

  (l)  COMBINATION OF MAJORITY-OWNED SUBSIDIARIES

     As explained in Note 3, under German GAAP dmc(2) Group does not combine a
number of investments in domestic and foreign companies in its combined
financial statements under German GAAP. For U.S. GAAP, the number of companies
consolidated in the combined financial statements has been increased. The
remaining companies not included in the scope of the consolidation for U.S. GAAP
purposes are not material to the combined shareholder's equity, financial
position and net operating results.

     Combination of dmc(2) L.P.

     As discussed in Note 2, dmc(2) L.P. is consolidated under German GAAP with
Degussa's 99% interest in equity and earnings shown as minority interests. As
these combined financial statements are prepared with respect to the sale of
dmc(2) Group to OMG and OMG has purchased the remaining 99% interest of dmc(2)
L.P.

                                       A-29

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

from Degussa as part of this agreement, dmc(2) L.P. has been fully consolidated
with no minority interests for U.S. GAAP purposes.

  (m)  MINORITY INTERESTS

     Under German GAAP, minority interest is included as a separate component of
shareholder's equity and is not adjusted in determining net income. Under U.S.
GAAP, minority interest is not shown as equity and is adjusted in determining
net income.

  (n)  EQUITY METHOD ACCOUNTING

     In accordance with German GAAP, investments in associated companies subject
to significant influence (generally entities which are 20 - 50% owned) are not
required to be accounted for under the equity method, if certain materiality
tests are met, and can be recorded under the cost method (and, if applicable,
the lower of cost or market value).

     Under U.S. GAAP, investments in associated companies are recorded using the
equity method of accounting if the investor has significant influence over the
operating or financial decisions of the investee. For both German GAAP and U.S.
GAAP the balance of each investment is increased or decreased, as appropriate,
to account for the investor's proportionate share of the investee earnings, less
dividends received.

     Under German GAAP, based on materiality it is permissible to consolidate
foreign associated companies on the basis of their local accounting principles,
not restated for German GAAP. Foreign associated companies have been converted
to U.S. GAAP for consolidation purposes in the U.S. GAAP reconciliation.

     For German GAAP, in cases where the associated company's financial year end
differs from the investor's year end, the associated company's previous
financial information is utilized for consolidation. For U.S. GAAP, financial
information of associated companies for periods ended within 90 days of the year
end of the associated investor's financial year end is used.

  (o)  GOODWILL

     In accordance with German GAAP, goodwill was either charged directly to
shareholder's equity or capitalized and depreciated over 15 years. For U.S. GAAP
purposes all goodwill is capitalized and depreciated over 15 years. The effect
of goodwill adjustments arising from the E.ON AG acquisition of Degussa and the
acquisition of the minority interest in Cerdec AG is included in notes 33(j) and
33(k), respectively.

    EXTRAORDINARY INCOME (EXPENSE)

     The items classified as extraordinary income (expense) under German GAAP
would not be presented as extraordinary items for U.S. GAAP purposes.

(34)  SUBSEQUENT EVENTS

     As discussed in Note 1, dmc(2) Group has been sold to OM Group, Inc. on
August 10, 2001. In addition, certain assets and liabilities which constitute
the electronic materials, performance, pigments and colors, glass systems and
Cerdec ceramic businesses of dmc(2) Group have been subsequently sold by OM
Group, Inc. to Ferro Corporation on September 7, 2001. As a result of purchase
accounting which will be applied to these transactions by OM Group, significant
changes can be expected to the recorded assets and liabilities of dmc(2) Group.

                                       A-30

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

SHAREHOLDINGS OF THE dmc(2) GROUP



                                                                   AS OF SEPTEMBER 30, 1998
                                                          ------------------------------------------
                                                           EQUITY                     NET INCOME
                                                          HOLDINGS    EQUITY IN         (LOSS)
NAME AND LOCATION OF THE COMPANY                            IN %      MILL. DEM      IN MILL. DEM
--------------------------------                          --------   -----------   -----------------
                                                                          
Magmalor GmbH,
  Colditz/Germany.......................................   100.0         5.0             (0.8)
dmc(2) Holding Co.,
  Las Vegas/USA*........................................      --          --               --
  (formerly: Cerdec Holding Co., Las Vegas/USA)
dmc(2) France S.A.,
  Limoges/France........................................      --          --               --
  (formerly: Cerdec France S.A., Limoges/France)
Cerdec Iberica S.A., Castellon de la Plana/Spain........   100.0        12.8              0.3
Cerdec Italia S.p.A.,
  Fiorano/Italy.........................................   100.0        14.9             (3.9)
dmc(2) Ltda.,
  Americana/Brazil......................................      --          --               --
  (formerly: Cerdec Produtos Ceramicos Ltda.,
     Americana/Brazil)
dmc(2) S.A. de C.V.,
  Mexico City/Mexico....................................      --          --               --
  (formerly: Cerdec Mexico S.A. de C.V., Mexico
     City/Mexico)
Cerpart S.R.L.
  Milan/Italy...........................................   100.0        23.9               --
Colorificio Pardo S.p.A.,
  Corlo/Italy...........................................   100.0         8.9             (1.1)
dmc(2) (UK) Ltd.,
  Stoke-on-Trent/Great Britain..........................      --          --               --
  (formerly: Cerdec (UK) Ltd., Stoke-on-Trent/Great
     Britain)
dmc(2) Japan Ltd., Tokio/Japan..........................      --          --               --
  (formerly: Cerdec Japan Co. Ltd., Tokio/Japan)
Degussa Skandinavien Katalysator AB,
  Karlskoga/Sweden......................................   100.0         1.1             (2.5)
Italbras S.p.A
  Vicenza/Italy.........................................   100.0         2.2              0.5
Icomeq Industria e Comercio Ltda.,
  Guarulhos/Brazil......................................   100.0        11.2             (1.1)
dmc(2) Canada Corp.,
  Burlington/Canada.....................................      --          --               --
Prometron GmbH Produkte fuer Elektronik und
  Elektrotechnik
  Hanau/Germany.........................................    30.0         0.3              0.0
Newtechnos Argentina S.A. (NASA),
  Buenos Aires/Argentina................................   100.0         1.1              0.6
dmc(2) Degussa Metals Catalyst Cerdec
  Southern Africa Ltd., Midrand/South Africa............      --          --               --


                                       A-31

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                   AS OF SEPTEMBER 30, 1998
                                                          ------------------------------------------
                                                           EQUITY                     NET INCOME
                                                          HOLDINGS    EQUITY IN         (LOSS)
NAME AND LOCATION OF THE COMPANY                            IN %      MILL. DEM      IN MILL. DEM
--------------------------------                          --------   -----------   -----------------
                                                                          
Oesterreichische Gold- und Silberscheideanstalt
  GmbH, Vienna/Austria**................................      --          --               --
Schilling's Graphics Inc., Galion,
  Ohio/USA..............................................   100.0         1.3             (0.6)
dmc(2) Degussa Metals Catalysts Cerdec China Ltd.,
  Hong Kong/China.......................................      --          --               --
Degussa Catalyst (Thailand) Ltd.,
  Bangkok/Thailand......................................    99.4         0.4             (0.1)
Clarex S.A.,
  Guarulhos/Brazil......................................   100.0         0.6             (0.5)
Degussa-NA Edelmetall GmbH,
  Hanau/Germany.........................................   100.0         0.2             (1.0)
dmc(2) Istanbul Degussa Metal Katalizor
  Seramik Boyalari Ticaret Limited Sirketi
     Istanbul/Turkey....................................      --          --               --
  (formerly: Cerdec Istanbul Seramic Bogalari Ticaret,
     Istanbul/Turkey)
Schoene Edelmetaal B.V.,
  Amsterdam/Netherlands.................................    90.8        11.6              1.9
Degussa Galvanotechnik GmbH,
  Schwaebisch-Gmuend/Germany............................    90.8         5.0              2.6
Allgemeine Gold- und Silberscheideanstalt AG,
  Pforzheim/Germany.....................................    90.8        48.5              2.4
Allgemeine France S.A.R.L
  Brunstatt/France......................................    90.8         0.3               --
Coimpa Sociedade Industrial de Metais
  Preciosos da Amazonia Ltda., Guarulhos/Brazil.........    78.0        48.4              7.8
Zibo Cerdec Ceramic Colours Co. Ltd.,
  Zibo City, Shandong/China.............................    60.0        13.4              1.4
PT Cerdec Indonesia,
  Sidoarjo/Indonesia....................................    51.0        (3.8)            (6.3)
Degussa Catalyst Ltd.,
  Port Elisabeth/South Africa...........................    55.0        (0.7)            (0.6)
dmc Catalyst Port Elisabeth (Pty) Ltd.,
  Port Elizabeth/South Africa...........................      --          --               --
Thai Ceramic Colors Co. Ltd.,
  Bangkok/Thailand......................................    51.0         0.9              0.2
dmc(2) L.P., Washington/USA
  (consolidated pursuant to ss. 290 (2) HGB)............      --          --               --


---------------

*  After consolidation of Cerdec Sales Corporation, Virgin Islands/USA, Cerdec
   Royalty Co., Las Vegas/ USA, and dmc(2) Corporation, Washington/USA
   (formerly: Cerdec Corporation, Washington/USA).

** Constitutes businesses which have been carved out of Degussa.

                                       A-32

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                   AS OF SEPTEMBER 30, 1998
                                                          ------------------------------------------
                                                           EQUITY                     NET INCOME
                                                          HOLDINGS    EQUITY IN         (LOSS)
NAME AND LOCATION OF THE COMPANY                            IN %      MILL. DEM      IN MILL. DEM
--------------------------------                          --------   -----------   -----------------
                                                                          
Ordeg Co., Limited
  Seoul/South Korea.....................................    50.0         5.3              0.2
ICT-International Catalyst Technology Inc.,
  Calvert City/USA......................................    50.0        24.1              6.2
ICT Co. Ltd.,
  Osaka/Japan...........................................    50.0         7.0              3.1
Cerdec (Thailand) Co., Ltd.,
  Bangkok/Thailand......................................    49.0         5.3              1.4
dmc(2) Metals (Thailand)
  Bangkok/Thailand......................................    44.5         4.0             (0.1)
Smaltochimica S.R.L.,
  Spezzano di Fiorano M./Italy..........................    40.0         1.4              2.2
Gardenia-Quimica S.A.
  Castellon/Spain.......................................    36.0         7.0              0.0
Chilches Materials, S.A.
  Alcora/Spain..........................................    20.0          --               --
Nadir Allgemeine Soymetaller,
  Istanbul/Turkey.......................................    13.6          --               --
Norddeutsche Affinerie AG
  Hamburg/Germany.......................................    10.0       458.2             (9.0)


                                       A-33

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

SHAREHOLDINGS OF THE dmc(2) GROUP



                                                                   AS OF SEPTEMBER 30, 1999
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
NAME AND LOCATION OF THE COMPANY                                IN %     MILL. DEM   IN MILL. DEM
--------------------------------                              --------   ---------   ------------
                                                                            
Magmalor GmbH,
  Colditz/Germany...........................................   100.0        3.7          (1.3)
dmc(2) Holding Co., Las Vegas/USA*..........................      --         --            --
  (formerly: Cerdec Holding Co., Las Vegas/USA)
dmc(2) France S.A., Limoges/France..........................      --         --            --
  (formerly: Cerdec France S.A., Limoges/France)
Cerdec Iberica S.A., Castellon de la Plana/Spain............   100.0       14.4          (1.6)
Cerdec Italia S.p.A., Fiorano/Italy.........................   100.0       (7.1)         (8.1)
dmc(2) Ltda., Americana/Brazil..............................      --         --            --
  (formerly: Cerdec Produtos Ceramicos Ltda.,
     Americana/Brazil)
dmc(2) S.A. de C.V., Mexico City/Mexico.....................      --         --            --
  (formerly: Cerdec Mexico S.A. de C.V., Mexico City/Mexico)
Cerpart S.R.L
  Milan/Italy...............................................   100.0       24.0          (0.3)
Colorificio Pardo S.p.A., Corlo/Italy.......................   100.0        2.8          (6.0)
dmc(2) (UK) Ltd., Stoke-on-Trent/Great Britain..............      --         --            --
  (formerly: Cerdec (UK) Ltd., Stoke-on-Trent/Great Britain)
dmc(2) Japan Ltd., Tokio/Japan..............................      --         --            --
  (formerly: Cerdec Japan Co. Ltd., Tokio/Japan)
Degussa Skandinavien Katalysator AB, Karlskoga/Sweden.......   100.0        1.2           0.0
Italbras S.p.A
  Vicenza/Italy.............................................   100.0        2.7           0.9
Icomeq Industria e Comercio Ltda., Guarulhos/Brazil.........   100.0        8.0           0.2
dmc(2) Canada Corp., Burlington/Canada......................      --         --            --
Prometron GmbH Produkte fuer Elektronik und Elektrotechnik
  Hanau/ Germany............................................   100.0        0.3            --
Newtechnos Argentina S.A. (NASA), Buenos Aires/Argentina....   100.0        0.0          (0.1)
dmc(2) Degussa Metals Catalyst Cerdec Southern Africa Ltd.,
  Midrand/ South Africa.....................................      --         --            --


                                       A-34

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                   AS OF SEPTEMBER 30, 1999
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
NAME AND LOCATION OF THE COMPANY                                IN %     MILL. DEM   IN MILL. DEM
--------------------------------                              --------   ---------   ------------
                                                                            
dmc(2) Electronic Materials B.V., Uden/Netherlands..........   100.0        8.9           2.3
Oesterreichische Gold- und Silberscheideanstalt GmbH,
  Vienna/ Austria**.........................................      --         --            --
Schilling's Graphics Inc., Galion, Ohio/USA.................   100.0        1.5           0.1
dmc(2) Degussa Metals Catalysts Cerdec China Ltd., Hong
  Kong/China................................................      --         --            --
Degussa Catalyst (Thailand) Ltd., Bangkok/Thailand..........    99.4        1.2            --
Clarex S.A., Guarulhos/Brazil...............................   100.0        0.3          (0.1)
Degussa-NA Edelmetall GmbH, Hanau/Germany...................   100.0        0.7           0.5
dmc(2) Istanbul Degussa Metal Katalizor Seramik Boyalari
  Ticaret Limited Sirketi Istanbul/Turkey...................      --         --            --
  (formerly: Cerdec Istanbul Seramic Bogalari Ticaret,
     Istanbul/Turkey)
Schoene Edelmetaal B.V., Amsterdam/Netherlands..............    90.8       11.0           1.1
Degussa Galvanotechnik GmbH, Schwaebisch-Gmuend/Germany.....    90.8        7.7           2.7
Allgemeine Gold- und Silberscheideanstalt AG,
  Pforzheim/Germany.........................................    90.8       67.0           7.7
Allgemeine France S.A.R.L
  Brunstatt/France..........................................    90.8        0.3            --
Coimpa Sociedade Industrial de Metais Preciosos da Amazonia
  Ltda., Guarulhos/Brazil...................................    78.0       18.3         (10.7)
Zibo Cerdec Ceramic Colours Co. Ltd., Zibo City,
  Shandong/China............................................    60.0       15.7           1.9
PT Cerdec Indonesia, Sidoarjo/Indonesia.....................    59.0        1.3           0.7
Degussa Catalyst Ltd., Port Elisabeth/South Africa..........    55.0        3.4          (1.5)
dmc(2) Catalyst Port Elisabeth (Pty) Ltd., Port
  Elizabeth/South Africa....................................      --         --            --
Thai Ceramic Colors Co. Ltd., Bangkok/Thailand..............    51.0        0.9           0.2
dmc(2) L.P., Washington/USA.................................      --         --            --
  (consolidated pursuant to ss. 290 (2) HGB)


---------------

*  After consolidation of Cerdec Sales Corporation, Virgin Islands/USA, Cerdec
   Royalty Co., Las Vegas/ USA, and dmc(2) Corporation, Washington/USA
   (formerly: Cerdec Corporation, Washington/USA).

** Constitutes businesses which have been carved out of Degussa.

                                       A-35

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                   AS OF SEPTEMBER 30, 1999
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
NAME AND LOCATION OF THE COMPANY                                IN %     MILL. DEM   IN MILL. DEM
--------------------------------                              --------   ---------   ------------
                                                                            
Ordeg Co., Limited
  Seoul/South Korea.........................................    50.0        11.8          3.9
ICT-International Catalyst Technology Inc.,
  Calvert City/USA..........................................    50.0        25.8         (1.3)
ICT Co. Ltd.,
  Osaka/Japan...............................................    50.0        18.8          1.7
Cerdec (Thailand) Co., Ltd.,
  Bangkok/Thailand..........................................    49.0         6.4          1.3
dmc(2) Metals (Thailand)
  Bangkok/Thailand..........................................    44.5         3.3         (0.3)
Smaltochimica S.R.L.,
  Spezzano di Fiorano M./Italy..............................    40.0         2.4          2.5
Gardenia-Quimica S.A.
  Castellon/Spain...........................................    20.0         8.5          1.8
Chilches Materials, S.A.
  Alcora/Spain..............................................    20.0         9.4           --
Nadir Allgemeine Soymetaller,
  Istanbul/Turkey...........................................    13.6          --           --
Norddeutsche Affinerie AG
  Hamburg/Germany...........................................    10.0       470.2         60.0


                                       A-36

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

SHAREHOLDINGS OF THE dmc(2) GROUP



                                                                    AS OF DECEMBER 31, 1999
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
              NAME AND LOCATION OF THE COMPANY                  IN %     MILL. DEM   IN MILL. DEM
              --------------------------------                --------   ---------   ------------
                                                                            
Magmalor GmbH,
  Colditz/Germany...........................................   100.0         3.3         (3.8)
dmc(2) Holding Co.,
  Las Vegas/USA*............................................      --          --           --
  (formerly: Cerdec Holding Co., Las Vegas/USA)
dmc(2) France S.A.,
  Limoges/France............................................      --          --           --
  (formerly: Cerdec France S.A., Limoges/France)
Cerdec Iberica S.A.,
  Castellon de la Plana/Spain...............................   100.0        15.4         (2.5)
Cerdec Italia S.p.A.,
  Fiorano/Italy.............................................   100.0         3.9        (11.6)
dmc(2) Ltda.,
  Americana/Brazil..........................................      --          --           --
  (formerly: Cerdec Produtos Ceramicos Ltda.,
     Americana/Brazil)
dmc(2) S.A. de C.V.,
  Mexico City/Mexico........................................      --          --           --
  (formerly: Cerdec Mexico S.A. de C.V., Mexico City/Mexico)
Cerpart S.R.L.
  Milan/Italy...............................................   100.0        25.1        (18.9)
Colorificio Pardo S.p.A.,
  Corlo/Italy...............................................   100.0         3.4          0.9
dmc(2) (UK) Ltd.,
  Stoke-on-Trent/Great Britain..............................      --          --           --
  (formerly: Cerdec (UK) Ltd., Stoke-on-Trent/Great Britain)
dmc(2) Japan Ltd.,
  Tokio/Japan...............................................      --          --           --
  (formerly: Cerdec Japan Co. Ltd., Tokio/Japan)
Degussa Skandinavien Katalysator AB,
  Karlskoga/Sweden..........................................   100.0         1.3          0.2
Italbras S.p.A
  Vicenza/Italy.............................................   100.0         1.6          0.2
Icomeq Industria e Comercio Ltda.,
  Guarulhos/Brazil..........................................   100.0         9.2          0.4
dmc(2) Canada Corp.,
  Burlington/Canada.........................................      --          --           --
Prometron GmbH Produkte fuer Elektronik und Elektrotechnik
  Hanau/Germany.............................................   100.0         0.3           --
Newtechnos Argentina S.A. (NASA),
  Buenos Aires/Argentina....................................   100.0         0.0         (1.1)
dmc(2) Degussa Metals Catalyst Cerdec Southern Africa Ltd.,
  Midrand/South Africa......................................      --          --           --
dmc(2) Electronic Materials B.V.,
  Uden/Netherlands..........................................   100.0         9.2          0.2


                                       A-37

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                    AS OF DECEMBER 31, 1999
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
              NAME AND LOCATION OF THE COMPANY                  IN %     MILL. DEM   IN MILL. DEM
              --------------------------------                --------   ---------   ------------
                                                                            
Oesterreichische Gold- und Silberscheideanstalt
  GmbH, Vienna/Austria **...................................      --          --           --
dmc(2) Degussa Metals Catalysts Cerdec China Ltd.,
  Hong Kong/China...........................................      --          --           --
Degussa Catalyst (Thailand) Ltd.,
  Bangkok/Thailand..........................................    99.4         0.7          0.0
Clarex S.A.,
  Guarulhos/Brazil..........................................   100.0         0.3         (0.1)
Degussa-NA Edelmetall GmbH,
  Hanau/Germany.............................................   100.0         0.7          0.5
dmc(2) Istanbul Degussa Metal Katalizor
  Seramik Boyalari Ticaret Limited Sirketi
  Istanbul/Turkey...........................................      --          --           --
  (formerly: Cerdec Istanbul Seramic Bogalari Ticaret,
  Istanbul/Turkey)
Schoene Edelmetaal B.V.,
  Amsterdam/Netherlands.....................................    90.8        11.4          0.4
Degussa Galvanotechnik GmbH,
  Schwaebisch-Gmuend/Germany................................    90.8         5.0          0.6
Allgemeine Gold- und Silberscheideanstalt AG,
  Pforzheim/Germany.........................................    90.8        79.3         12.3
Allgemeine France S.A.R.L
  Brunstatt/France..........................................    90.8         0.3           --
Coimpa Sociedade Industrial de Metais
  Preciosos da Amazonia Ltda.,
  Guarulhos/Brazil..........................................    78.0        29.2          7.3
Zibo Cerdec Ceramic Colours Co. Ltd.,
  Zibo City, Shandong/China.................................    60.0        16.8          0.5
PT Cerdec Indonesia,
  Sidoarjo/Indonesia........................................    59.0         1.9          0.2
Degussa Catalyst Ltd.,
  Port Elisabeth/South Africa...............................    55.0         3.9          0.4
dmc(2) Catalyst Port Elisabeth (Pty) Ltd.,
  Port Elizabeth/South Africa...............................      --          --           --
Thai Ceramic Colors Co. Ltd.,
  Bangkok/Thailand..........................................    51.0         1.1          0.1
dmc(2) L.P., Washington/USA
  (consolidated pursuant to ss. 290 (2) HGB)................      --          --           --


---------------

*  After consolidation of Cerdec Sales Corporation, Virgin Islands/USA, Cerdec
   Royalty Co., Las Vegas/ USA, dmc(2) Corporation, Washington/USA (formerly:
   Cerdec Corporation, Washington/USA), and Schilling's Graphics, Inc., Galion,
   Ohio/USA.

** Constitutes businesses which have been carved out of Degussa.

                                       A-38

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

SHAREHOLDINGS OF THE dmc(2) GROUP



                                                                    AS OF DECEMBER 31, 1999
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
NAME AND LOCATION OF THE COMPANY                                IN %     MILL. DEM   IN MILL. DEM
--------------------------------                              --------   ---------   ------------
                                                                            
Ordeg Co., Limited
  Seoul/South Korea.........................................    50.0        30.2          1.2
ICT-International Catalyst Technology Inc.,
  Calvert City/USA..........................................    50.0        27.2         (0.2)
ICT Co. Ltd.,
  Osaka/Japan...............................................    50.0        20.7          0.1
Cerdec (Thailand) Co., Ltd.,
  Bangkok/Thailand..........................................    49.0         7.7          0.6
dmc(2) Metals (Thailand)
  Bangkok/Thailand..........................................    44.5         3.8         (0.3)
Smaltochimica S.R.L.,
  Spezzano di Fiorano M./Italy..............................    40.0         2.7          0.3
Gardenia-Quimica S.A.
  Castellon/Spain...........................................    20.0         0.4          0.2
Chilches Materials, S.A.
  Alcora/Spain..............................................    20.0         0.9           --
Nadir Allgemeine Soymetaller,
  Istanbul/Turkey...........................................    13.6          --           --
Norddeutsche Affinerie AG
  Hamburg/Germany...........................................    10.0       457.0        (13.0)


                                       A-39

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

SHAREHOLDINGS OF THE dmc(2) GROUP



                                                                    AS OF DECEMBER 31, 2000
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
              NAME AND LOCATION OF THE COMPANY                  IN %     MILL. DEM   IN MILL. DEM
              --------------------------------                --------   ---------   ------------
                                                                            
Magmalor GmbH,
  Colditz/Germany...........................................   100.0         3.7          0.3
dmc(2) Holding Co.,
  Las Vegas/USA*............................................   100.0       179.0         (4.7)
  (formerly: Cerdec Holding Co., Las Vegas/USA)
dmc(2) France S.A.,
  Limoges/France............................................   100.0        21.9          1.1
  (formerly: Cerdec France S.A., Limoges/France)
Cerdec Iberica S.A.,
  Castellon de la Plana/Spain**.............................   100.0        15.5          2.2
Cerdec Italia S.p.A.,
  Fiorano/Italy.............................................   100.0         9.3          0.7
dmc(2) Ltda.,
  Americana/Brazil***.......................................   100.0        90.1         15.9
  (formerly: Cerdec Produtos Ceramicos Ltda.,
     Americana/Brazil)
dmc(2) S.A. de C.V.,
  Mexico City/Mexico****....................................   100.0        18.0          1.1
  (formerly: Cerdec Mexico S.A. de C.V., Mexico City/Mexico)
Cerpart S.R.L
  Milan/Italy...............................................   100.0        13.1         (0.4)
Colorificio Pardo S.p.A.,
  Corlo/Italy...............................................   100.0         4.8          1.3
dmc(2) (UK) Ltd.,
  Stoke-on-Trent/Great Britain..............................   100.0         1.8          0.8
  (formerly: Cerdec (UK) Ltd., Stoke-on-Trent/Great Britain)
dmc(2) Japan Ltd.,
  Tokio/Japan...............................................   100.0        18.8          2.5
  (formerly: Cerdec Japan Co. Ltd., Tokio/Japan)
Degussa Skandinavien Katalysator AB,
  Karlskoga/Sweden..........................................   100.0         1.9          0.7
Italbras S.p.A
  Vicenza/Italy.............................................   100.0         2.7          1.1
Icomeq Industria e Comercio Ltda.,
  Guarulhos/Brazil..........................................   100.0         9.2           --
dmc(2) Canada Corp.,
  Burlington/Canada.........................................   100.0        22.3          3.0
Prometron GmbH Produkte fuer Elektronik und Elektrotechnik
  Hanau/Germany*****........................................   100.0         0.3           --
Newtechnos Argentina S.A. (NASA),
  Buenos Aires/Argentina....................................   100.0         0.5         (1.1)
dmc(2) Degussa Metals Catalyst Cerdec
  Southern Africa Ltd., Midrand/South Africa................   100.0         0.7          0.8
dmc(2) Electronic Materials B.V.,
  Uden/Netherlands..........................................   100.0        12.2          3.1
dmc(2) Degussa Metals Catalysts Cerdec China Ltd.,
  Hong Kong/China...........................................   100.0         2.5          0.2


                                       A-40

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                    AS OF DECEMBER 31, 2000
                                                              -----------------------------------
                                                               EQUITY                 NET INCOME
                                                              HOLDINGS   EQUITY IN      (LOSS)
              NAME AND LOCATION OF THE COMPANY                  IN %     MILL. DEM   IN MILL. DEM
              --------------------------------                --------   ---------   ------------
                                                                            
Degussa Catalyst (Thailand) Ltd.,
  Bangkok/Thailand..........................................    99.4         0.5          0.3
Clarex S.A.,
  Guarulhos/Brazil..........................................   100.0         0.9         (0.2)
Cerdec Ceramics GmbH,
  Oberursel, Germany........................................   100.0         0.1           --
Braze Tec GmbH,
  Hanau/Germany.............................................   100.0         0.2           --
dmc(2) Italia S.p.A.,
  Fiorano/Italy.............................................   100.0         2.8         (0.4)
dmc(2) Pte Ltd.,
  Singapore.................................................   100.0         0.4           --
Degussa-NA Edelmetall GmbH,
  Hanau/Germany.............................................   100.0         1.4          0.7
dmc(2) Istanbul Degussa Metal Katalizor
Seramik Boyalari Ticaret Limited Sirketi
  Istanbul/Turkey...........................................    99.0         0.9          0.1
  (formerly: Cerdec Istanbul Seramic Bogalari Ticaret,
     Istanbul/Turkey)
Schoene Edelmetaal B.V.,
  Amsterdam/Netherlands.....................................    90.8        10.8          1.2
Degussa Galvanotechnik GmbH,
  Schwaebisch-Gmuend/Germany................................    90.8        12.7          4.4
Oesterreichische Gold- und Silberscheideanstalt GmbH,
  Vienna/Austria............................................    90.8         8.2          3.0
Allgemeine Gold- und Silberscheideanstalt AG,
  Pforzheim/Germany.........................................    90.8        88.4         14.1
Allgemeine France S.A.R.L
  Brunstatt/France******....................................    90.8         0.3           --
Coimpa Sociedade Industrial de Metais Preciosos da Amazonia
  Ltda.,
  Guarulhos/Brazil..........................................    78.0        23.6         16.5
Zibo Cerdec Ceramic Colours Co. Ltd.,
  Zibo City, Shandong/China.................................    60.0        21.2          5.0
PT Cerdec Indonesia,
  Sidoarjo/Indonesia........................................    59.0         2.7          1.5
Degussa Catalyst Ltd.,
  Port Elisabeth/South Africa...............................    55.0        21.1         19.5
dmc(2) Catalyst Port Elisabeth (Pty) Ltd.,
  Port Elizabeth/South Africa...............................    55.0         2.5          2.8
Thai Ceramic Colors Co. Ltd.,
  Bangkok/Thailand..........................................    51.0         0.7          0.3
dmc(2) L.P., Washington/USA
  (consolidated pursuant to ss. 290 (2) HGB)................     1.0       110.1         34.3
dmc(2) Electronic Components Inc.,
  Newark (Delaware)/USA.....................................   100.0         3.2         (5.2)


                                       A-41

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)

---------------
      * After consolidation of Cerdec Sales Corporation, Virgin Islands/USA,
        Cerdec Royalty Co., Las Vegas/USA, dmc(2) Corporation, Washington/USA
        (formerly: Cerdec Corporation, Washington/USA), Schilling's Graphics,
        Inc., Galion, Ohio/USA and Cerdec Ceramics Inc., Dallas/USA.

     ** After consolidation of dmc(2) Degussa Metals Catalysts Cerdec Iberica,
        S.A., Castellon, Spain.

   *** After consolidation of Cerdec Ceramics do Brasil Ltda., Americana/Brazil.

  **** After consolidation of Cerdec Ceramics Mexico S.A. de C.V., Puebla,
       Mexico, and Demeca S.A. de C.V. San Juan Xalpa, Mexico.

 ***** Figure as of December 31, 1999.

****** Net result before taxes.

                                       A-42

            NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

                                  GERMAN GAAP

                   (IN DEM THOUSANDS, UNLESS OTHERWISE NOTED)



                                                                   AS AT DECEMBER 31, 2000
                                                              ----------------------------------
                                                               EQUITY                NET INCOME
                                                              HOLDINGS   EQUITY IN     (LOSS)
              NAME AND LOCATION OF THE COMPANY                  IN %     MILL. DM    IN MILL. DM
              --------------------------------                --------   ---------   -----------
                                                                            
Ordeg Co., Limited
  Seoul/South Korea*........................................    50.0        28.9          5.1
ICT-International Catalyst Technology Inc.,
  Calvert City/USA..........................................    50.0        23.9         (5.4)
ICT Co. Ltd.,
  Osaka/Japan**.............................................    50.0        18.6         (0.2)
Cerdec (Thailand) Co., Ltd.,
  Bangkok/Thailand..........................................    49.0         9.6          2.6
dmc(2) Metals (Thailand)
  Bangkok/Thailand***.......................................    44.5         4.3          0.4
Smaltochimica S.R.L.,
  Spezzano di Fiorano M./Italy..............................    40.0         9.0          2.9
Gardenia-Quimica S.A.
  Castellon/Spain...........................................    36.0         5.7          1.7
Chilches Materials, S.A.
  Alcora/Spain..............................................    20.0         9.4         (0.1)
Nadir Allgemeine Soymetaller,
  Istanbul/Turkey****.......................................    13.6          --           --
Norddeutsche Affinerie AG
  Hamburg/Germany*****......................................    10.0       489.5         79.7


---------------

      * Figure as of December 31, 1999.

     ** Financial year from April 1, 1999 to March 31, 2000.

   *** Net result before taxes.

  **** No other information available.

 ***** Financial year from October 1, 1999 to September 30, 2000.

BOARD MANAGEMENT

Richard Adante

                                       A-43


                                  dmc(2) GROUP

              INTERIM CONDENSED COMBINED STATEMENTS OF OPERATIONS

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)

                                  (UNAUDITED)



                                                                 SIX MONTHS ENDED
                                                                     JUNE 30,
                                                              -----------------------
                                                                 2000         2001
                                                              ----------   ----------
                                                                     
SALES.......................................................   5,993,876    6,784,068
Cost of sales...............................................  (5,607,059)  (6,449,300)
                                                              ----------   ----------
GROSS PROFIT................................................     386,817      334,768
Selling expenses............................................    (137,336)    (146,705)
General administrative expenses.............................     (85,659)    (118,405)
Research and development expenses...........................     (47,242)     (60,226)
Other operating income......................................      46,009      102,102
Other operating expenses....................................     (60,258)     (48,307)
                                                              ----------   ----------
NET OPERATING INCOME........................................     102,331       63,227
Income from investments, net................................      10,152        9,444
Write-down of investments...................................          --         (252)
Interest expense, net.......................................     (26,128)     (35,322)
                                                              ----------   ----------
INCOME FROM ORDINARY ACTIVITIES BEFORE EXTRAORDINARY ITEMS
  AND INCOME TAXES..........................................      86,355       37,097
Extraordinary expense.......................................      (2,700)      (4,859)
Income taxes................................................     (36,641)     (19,886)
                                                              ----------   ----------
NET INCOME..................................................      47,014       12,352
Dividend payment............................................          --       (7,953)
Minority interests..........................................     (22,182)       2,035
(Loss) profit brought forward...............................      (7,042)       8,000
Transfer to reserves, net...................................     (13,790)      (4,951)
                                                              ----------   ----------
PROFIT AVAILABLE FOR DISTRIBUTION...........................       4,000        9,483
                                                              ==========   ==========


 The accompanying notes are an integral part of the interim condensed combined
                             financial statements.
                                       A-44


                                  dmc(2) GROUP

                    INTERIM CONDENSED COMBINED BALANCE SHEET

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)

                                  (UNAUDITED)



                                                               JUNE 30,
                                                                 2001
                                                               ---------
                                                            
                                 ASSETS
Intangible assets...........................................      14,622
Property, plant and equipment, net..........................     660,125
Investments.................................................     121,409
                                                               ---------
NON-CURRENT ASSETS..........................................     796,156
Inventories, net............................................     830,191
Trade accounts receivable, net..............................     803,459
Accounts receivable from affiliated companies...............      78,638
Other accounts receivable and other assets..................      69,161
                                                               ---------
ACCOUNTS RECEIVABLE AND OTHER ASSETS........................     951,258
Cash and cash equivalent....................................      55,133
                                                               ---------
CURRENT ASSETS..............................................   1,836,582
Deferred charges............................................      72,264
                                                               ---------
TOTAL ASSETS................................................   2,705,002
                                                               =========

                  SHAREHOLDER'S EQUITY AND LIABILITIES
Issued capital..............................................      50,000
Reserves....................................................     534,198
Profit available for distribution...........................       9,483
Minority interests..........................................     129,619
                                                               ---------
SHAREHOLDER'S EQUITY........................................     723,300
Provisions for pensions and similar obligations.............     130,016
Other accrued liabilities...................................     254,573
                                                               ---------
ACCRUED LIABILITIES.........................................     384,589
Liabilities to banks........................................     102,874
Trade accounts payable......................................     290,613
Liabilities to affiliated companies.........................   1,107,633
Other liabilities...........................................      93,394
                                                               ---------
LIABILITIES.................................................   1,594,514
Deferred income.............................................       2,599
                                                               ---------
TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES..................   2,705,002
                                                               =========


 The accompanying notes are an integral part of the interim condensed combined
                             financial statements.
                                       A-45


                                  dmc(2) GROUP

         INTERIM CONDENSED COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)

                                  (UNAUDITED)



                                                                                          INVESTMENTS
                                                                  PROFIT                    BY AND
                                                                AVAILABLE                  ADVANCES
                                ISSUED    CAPITAL   REVENUE        FOR        MINORITY       FROM
                                CAPITAL   RESERVE   RESERVES   DISTRIBUTION   INTERESTS     DEGUSSA       TOTAL
                                -------   -------   --------   ------------   ---------   -----------   ---------
                                                                                   
AS OF DECEMBER 31, 1999.......      --         --        --           --            --     1,168,391    1,168,391
Formation (former Cerdec
  AG).........................  32,000    109,346     2,685       (7,042)           --      (136,989)          --
Contribution of precious
  metals and automotive
  catalysts divisions by
  Degussa.....................  18,000    149,000        --           --            --      (167,000)          --
Conversion of advances to
  liabilities.................      --         --        --           --            --      (689,269)    (689,269)
Conversion of advances to
  reserves....................      --         --    93,228           --            --       (93,228)          --
Conversion of advances to
  minority interest...........      --         --        --           --        81,905       (81,905)          --
Contribution from Degussa,
  net.........................      --    100,458        --           --            --            --      100,458
Net income....................      --         --        --       24,832        22,182            --       47,014
Dividends paid................      --         --   (18,110)          --            --            --      (18,110)
Foreign currency translation
  adjustment..................      --         --    20,952           --            --            --       20,952
Reclassifications.............      --         --    13,790      (13,790)           --            --           --
                                ------    -------   -------      -------       -------     ---------    ---------
AS OF JUNE 30, 2000...........  50,000    358,804   112,545        4,000       104,087            --      629,436
                                ======    =======   =======      =======       =======     =========    =========




                                                                       PROFIT
                                                                     AVAILABLE
                                     ISSUED    CAPITAL   REVENUE        FOR        MINORITY
                                     CAPITAL   RESERVE   RESERVES   DISTRIBUTION   INTERESTS    TOTAL
                                     -------   -------   --------   ------------   ---------   -------
                                                                             
AS OF DECEMBER 31, 2000............  50,000    358,804   125,081        8,000       110,214    652,099
Net income.........................      --         --        --       14,387        (2,035)    12,352
Dividends paid.....................      --         --        --       (7,953)           --     (7,953)
Contribution by minority partner...      --         --        --           --        21,440     21,440
Foreign currency translation
  adjustment.......................      --         --    45,362           --            --     45,362
Reclassifications..................      --         --     4,951       (4,951)           --         --
                                     ------    -------   -------      -------       -------    -------
AS OF JUNE 30, 2001................  50,000    358,804   175,394        9,483       129,619    723,300
                                     ======    =======   =======      =======       =======    =======


 The accompanying notes are an integral part of the interim condensed combined
                             financial statements.
                                       A-46


                                  dmc(2) GROUP

              INTERIM CONDENSED COMBINED STATEMENTS OF CASH FLOWS

                                  GERMAN GAAP

                               (IN DEM THOUSANDS)

                                  (UNAUDITED)



                                                                SIX MONTHS ENDED
                                                                    JUNE 30,
                                                              --------------------
                                                                2000        2001
                                                              --------    --------
                                                                    
NET INCOME..................................................    47,014      12,352
Adjustments to reconcile net income to
  net cash provided by (used in) operating activities:
Depreciation and amortization...............................    41,146      46,362
(Gain)/loss on disposal of non-current assets...............     1,326        (255)
Provision for deferred taxes................................    15,573       9,784
Loss from investments, net..................................   (10,152)     (9,444)
Write-down of non-current assets............................        --         252
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Inventories, net............................................   (52,611)     42,322
Trade accounts receivable, net..............................  (193,188)    (66,850)
Accounts receivable from affiliated companies...............  (118,859)    (17,042)
Other accounts receivable and assets........................       495      21,940
Deferred charges............................................     8,170     (26,782)
Provisions for pensions and similar obligations.............    77,366       6,067
Other accrued liabilities...................................   (23,397)    (13,518)
Advance payments received on orders.........................       (49)     (2,102)
Trade accounts payable......................................    87,861      38,979
Liabilities to affiliated companies.........................    49,707      37,194
Other liabilities...........................................    17,135      13,567
Deferred income.............................................    12,361         636
                                                              --------    --------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.............   (40,102)     93,462
INVESTING ACTIVITIES:
Elimination of goodwill.....................................        --      30,841
Purchase of intangible assets...............................        --      (3,804)
Capital expenditures........................................   (71,714)   (107,746)
Acquisition of business, net of cash acquired...............    (8,745)         --
Proceeds from disposal of non-current assets................     7,569      22,097
                                                              --------    --------
CASH USED IN INVESTING ACTIVITIES...........................   (72,890)    (58,612)
FINANCING ACTIVITIES:
Borrowings from banks, net..................................   750,119    (836,716)
Net cash from (to) Degussa..................................  (636,406)    786,620
Contribution by minority interest...........................        --      21,440
                                                              --------    --------
CASH PROVIDED BY (USED IN) FINANCING
  ACTIVITIES................................................   113,713     (28,656)
Effect of exchange rate movements on cash...................      (803)      1,793
                                                              --------    --------

CHANGE IN CASH AND CASH EQUIVALENTS.........................       (82)      7,987
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............    70,605      47,146
                                                              --------    --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD..................    70,523      55,133
                                                              ========    ========


 The accompanying notes are an integral part of the interim condensed combined
                             financial statements.
                                       A-47


               NOTES TO THE COMBINED INTERIM FINANCIAL STATEMENTS

                                  dmc(2) GROUP

                               (IN DEM THOUSANDS)

                                  (UNAUDITED)

(1)   BASIS OF PREPARATION

     The accompanying combined financial statements were prepared in accordance
with the provisions of the German Commercial Code ("Handelsgesetzbuch" -- "HGB")
and the German Stock Corporation Act ("Aktiengesetz" -- "AktG"). These combined
financial statements of the dmc(2) Group have been prepared in accordance with
accounting principles generally accepted in Germany (German GAAP) as if the
dmc(2) Group had always been an established legal group.

(2)   RECONCILIATION TO U.S. GAAP

     The interim combined financial statements are presented in accordance with
German GAAP, which differ in certain significant respects from accounting
principles generally accepted in the United States of America ("U.S. GAAP").

     The significant differences that affect net income and shareholder's equity
of dmc(2) Group are set forth below:



                                                               SIX MONTHS ENDED JUNE 30,
                                                              ---------------------------
                                                              NOTE      2000       2001
                                                              -----   --------   --------
                                                                        
RECONCILIATION OF NET INCOME (LOSS) TO U.S. GAAP:
Net income as reported in the combined statements of
  operations under German GAAP..............................           47,014     12,352
     Provisions and loss contingencies......................   a)      (2,550)    (6,190)
     Valuation of inventory.................................   b)         503       (203)
     Deferred taxes.........................................   c)       1,096     13,517
     Foreign currency revaluation...........................   d)       3,652     (2,069)
     Pensions and post retirement benefits..................   e)      (3,240)    (4,796)
     Allowance for doubtful accounts........................   f)       8,541     (4,359)
     Valuation of securities................................   g)       3,072         10
     Valuation of fixed assets..............................   h)          24      2,713
     Financial instruments..................................   i)       1,671     30,188
     Purchase accounting of dmc(2) Group....................   j)     (17,093)   (17,094)
     Purchase of minority interest in Cerdec AG.............   k)      (1,675)    (1,672)
     Combination of majority-owned subsidiaries.............   l)       5,171      4,779
     Minority interests.....................................   m)      (7,058)   (11,627)
     Equity method accounting...............................   n)      (9,697)    (3,322)
     Goodwill...............................................   o)      (2,913)     1,883
                                                                      -------    -------
NET INCOME IN ACCORDANCE WITH U.S. GAAP.....................           26,518     14,110
                                                                      =======    =======


                                       A-48

        NOTES TO THE COMBINED INTERIM FINANCIAL STATEMENTS -- CONTINUED

                                  dmc(2) GROUP



                                                          SIX MONTHS ENDED JUNE 30,
                                                         ----------------------------
                                                         NOTE     2000        2001
                                                         ----   ---------   ---------
                                                                   
RECONCILIATION OF SHAREHOLDER'S EQUITY TO U.S. GAAP:
Shareholder's equity as reported in the combined
  statements of shareholder's equity under German
  GAAP.................................................           629,436     723,300
     Provisions and loss contingencies.................   (a)      47,057      24,691
     Valuation of inventory............................   (b)       5,009       3,453
     Deferred taxes....................................   (c)    (149,579)   (137,792)
     Foreign currency revaluation......................   (d)       7,453         (13)
     Pensions and post retirement benefits.............   (e)      (3,721)     (1,384)
     Allowance for doubtful accounts...................   (f)      17,877       4,497
     Valuation of securities...........................   (g)      92,385      46,114
     Valuation of fixed assets.........................   (h)       3,051      12,065
     Financial instruments.............................   (i)        (415)     31,685
     Purchase accounting of dmc(2) Group...............   (j)     618,200     577,605
     Purchase of minority interest in Cerdec AG........   (k)      45,721      42,377
     Combination of majority -- owned subsidiaries.....   (l)      25,162      13,291
     Minority interests................................   (m)     (24,129)    (57,189)
     Equity method accounting..........................   (n)     (19,787)      4,591
     Goodwill..........................................   (o)     (24,883)     (2,268)
                                                                ---------   ---------
SHAREHOLDER'S EQUITY IN ACCORDANCE WITH U.S. GAAP......         1,268,837   1,285,023
                                                                =========   =========


  (a)  PROVISIONS AND LOSS CONTINGENCIES

     In accordance with German GAAP, dmc(2) Group recognized provisions for
expected costs to be incurred for certain restructurings and other anticipated
future costs. Under U.S. GAAP, the recognition criteria for such provisions are
more stringent and require a number of prescribed conditions be satisfied before
a liability can be recorded.

  (b)  VALUATION OF INVENTORY

     Under German GAAP, dmc(2) Group capitalizes overhead costs in accordance
with German tax law, which excludes certain indirect and other costs. Under U.S.
GAAP, manufacturing overhead costs include all indirect material, labor and
overhead costs.

     Under German GAAP, raw materials inventory is valued at the lower of
average purchase cost or market price, similar to U.S. GAAP. However, for German
GAAP purposes, market price is the lower of replacement cost and net realizable
value. Differences may arise where sales prices are contracted at period end.

     In accordance with German GAAP, LIFO layers are created in each period for
each metal. A lower of cost or market assessment is performed every period for
each metal layer. For U.S. GAAP purposes, the lower of cost or market assessment
is applied to an entire metal position. Under U.S. GAAP, the inventory was
revalued as a result of the purchase accounting described in Note 33(j).

  (c)  DEFERRED TAXES

     Under German GAAP, deferred tax assets and liabilities are generally
recognized for temporary differences between book carrying values and tax bases
of assets and liabilities, with the exception of

                                       A-49

        NOTES TO THE COMBINED INTERIM FINANCIAL STATEMENTS -- CONTINUED

                                  dmc(2) GROUP

deferred tax assets relating to net operating loss carry forwards which are
recognized to the extent of offsetting deferred tax liabilities. Deferred tax
assets are recognized to the extent they are expected to be realized.

     Under U.S. GAAP, deferred tax assets and liabilities for temporary
differences using enacted tax rates in effect at period-end are recognized in
accordance with Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, net operating loss
carryforwards that are available to reduce future taxes are recognized as
deferred tax assets. Such amounts are reduced by a valuation allowance to the
extent that it is more likely than not that the deferred tax assets will not be
realized.

     The deferred tax adjustment included in the above reconciliation to U.S.
GAAP also contains the income tax effects of the above U.S. GAAP adjustments,
where appropriate.

  (d)  FOREIGN CURRENCY REVALUATION

     Under German GAAP, foreign currency denominated receivables (payables) are
translated at the lower (higher) of the period-end spot rate or contracted rate,
respectively.

     Under U.S. GAAP, assets and liabilities denominated in a foreign currency
are recorded at current exchange rates at period-end with any resulting
adjustments in operating results.

  (e)  PENSIONS AND POST RETIREMENT BENEFITS

     For German GAAP, certain increases in pension and other similar obligations
are recognised immediately in earnings. Under U.S. GAAP, changes in pension and
similar obligations (including those resulting from plan amendments) are not
recognised as they occur but are recognised systematically and gradually over
subsequent periods. Following the Formation of dmc(2) Group as a legal entity in
2000, certain pension plans were amended to increase benefits as well as expand
the number of participants.

     As part of the Formation of the dmc(2) Group, Degussa assumed the liability
for certain dmc(2) Group employees retired as of January 1, 2000. Under German
GAAP the pension expense associated to these retired employees is not included
in income for the year ended December 2000. For U.S. GAAP, pension costs
associated with the retired employees has been reflected in the U.S. GAAP
reconciliation.

  (f)  ALLOWANCE FOR DOUBTFUL ACCOUNTS

     In addition to specific reserves, dmc(2) Group also maintains a general
allowance as well as a country risk allowance for German GAAP purposes. For U.S.
GAAP purposes, these allowances were reversed except for the amounts based upon
dmc(2) Group's historical loss experience.

  (g)  VALUATION OF SECURITIES

     Under German GAAP, marketable debt and equity securities are generally
carried at the lower of cost or market value. Under U.S. GAAP, marketable debt
and equity securities other than investments accounted for by the equity method,
are categorized as either trading, available-for-sale, or held to maturity.
Securities classified as trading or available-for-sale are reported at fair
value at the balance sheet date and held to maturity securities are reported at
historical cost. Unrealized gains and losses on trading securities are recorded
in net income while unrealized gains and losses on securities categorized as
available-for-sale are recorded in shareholder's equity, net of income tax.

                                       A-50

        NOTES TO THE COMBINED INTERIM FINANCIAL STATEMENTS -- CONTINUED

                                  dmc(2) GROUP

  (h)  VALUATION OF FIXED ASSETS

     Under German GAAP, capitalization of certain construction project costs is
not required. Under U.S. GAAP, certain project costs are required to be
capitalized. Further, capitalization of interest during the construction phase
of the project is permitted but not required under German GAAP. Under U.S. GAAP,
interest is capitalized during the construction phase of major construction
projects. Capitalized interest and other costs are added to the cost of
underlying assets and are depreciated over the useful life of the asset.

  (i)  FINANCIAL INSTRUMENTS

     Under German GAAP, the fair values of precious metal futures contracts are
netted amongst their respective metal portfolios with any resultant unrealized
loss recognized in earnings. Under U.S. GAAP, each metal future contract is
marked to market with both positive or negative fair values recognized in
earnings.

     Under German GAAP, negative fair values of foreign currency forwards and
interest rate swaps contracted with third parties are recognized in earnings.
For U.S. GAAP, positive and negative fair values are recognized in earnings.

     Precious metal leases are treated off balance sheet under German GAAP since
title and ownership of the leased metal do not pass to the lessee. Precious
metal leases were similarly treated for U.S. GAAP until the adoption of
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), as amended on January 1, 2000.
After adoption, precious metal leases are treated as derivative instruments.
Therefore, changes in fair values are reported in earnings.

  (j)  PURCHASE ACCOUNTING OF DMC(2) GROUP

     E.ON AG (formerly Veba AG) acquired Degussa, including the related assets
and liabilities of the dmc(2) Group, in two separate transactions. The initial
36,4% ownership interest was acquired in December 1997 with the remaining 63,6%
interest acquired in February 1999. For German GAAP purposes, the recorded
amounts of dmc(2) Group's assets acquired and liabilities assumed by E.ON AG
remained at historical cost basis. For U.S. GAAP purposes, a new basis of
accounting is established for dmc(2) Group's assets and liabilities based upon
the fair values of the respective assets acquired and liabilities assumed by
E.ON AG at each acquisition date.

     As a result of the new basis of accounting, shareholder's equity was
increased and additional charges reflected in the reconciliation of net income
for the effects of increases in cost of sales, depreciation expense of tangible
and intangible assets, and related deferred taxes. The deferred tax effect is
reflected in Note 2(c) above.

  (k)  PURCHASE OF MINORITY INTEREST IN CERDEC AG

     In March 1999, Degussa AG purchased the remaining minority interest of 30%
in Cerdec AG from Ciba Geigy. In accordance with German GAAP, the excess of the
acquisition cost of the minority interest acquired over the fair value of the
net assets acquired is offset against shareholder's equity. Under U.S. GAAP,
goodwill is capitalized and depreciated over its useful life. dmc(2) Group's
policy is to depreciate goodwill over 15 years.

  (l)  COMBINATION OF MAJORITY-OWNED SUBSIDIARIES

     dmc(2) Group does not combine a number of investments in domestic and
foreign companies in its combined financial statements under German GAAP. For
U.S. GAAP, the number of companies consolidated in the combined financial
statements has been increased. The remaining companies not included in the scope

                                       A-51

        NOTES TO THE COMBINED INTERIM FINANCIAL STATEMENTS -- CONTINUED

                                  dmc(2) GROUP

of the consolidation for U.S. GAAP purposes are not material to the combined
shareholder's equity, financial position, and net operating results.

     Combination of dmc(2) L.P.

     dmc(2) L.P. is consolidated under German GAAP with Degussa's 99% interest
in equity and earnings shown as minority interests. As these combined financial
statements are prepared with respect to the sale of dmc(2) Group to OMG and OMG
has purchased the remaining 99% interest of dmc(2) L.P. from Degussa as part of
this agreement, dmc(2) L.P. has been fully consolidated with no minority
interests for U.S. GAAP purposes.

  (m)  MINORITY INTERESTS

     Under German GAAP, minority interest is included as a separate component of
shareholder's equity and is not adjusted in determining net income. Under U.S.
GAAP, minority interest is not shown as equity and is adjusted in determining
net income.

  (n)  EQUITY METHOD ACCOUNTING

     In accordance with German GAAP, investments in associated companies subject
to significant influence (generally entities which are 20 - 50% owned) are not
required to be accounted for under the equity method, if certain materiality
tests are met, and can be recorded under the cost method (and, if applicable,
the lower of cost or market value).

     Under U.S. GAAP, investments in associated companies are recorded using the
equity method of accounting if the investor has significant influence over the
operating or financial decisions of the investee. For both German GAAP and U.S.
GAAP, the balance of each investment is increased or decreased, as appropriate,
to account for the investor's proportionate share of the investee earnings, less
dividends received.

     Under German GAAP, based on materiality it is permissible to consolidate
foreign associated companies on the basis of their local accounting principles,
not restated for German GAAP. Foreign associated companies have been converted
to U.S. GAAP for consolidation purposes in the U.S. GAAP reconciliation.

     For German GAAP, in cases where the associated company's financial year end
differs from the investor's year end, the associated company's previous
financial information is utilized for consolidation. For U.S. GAAP, financial
information of associated companies for periods ended within 90 days of the year
end of the associated investor's financial year end.

  (o) GOODWILL

     In accordance with German GAAP, goodwill was either charged directly to
shareholder's equity or capitalized and depreciated over 15 years. For U.S. GAAP
purposes all goodwill is capitalized and depreciated over 15 years. The effect
of goodwill adjustments arising from the E.ON AG acquisition of Degussa and the
acquisition of the minority interest in Cerdec AG is included in notes 33(j) and
33(k), respectively.

       Extraordinary Income (Expense)

     The items classified as extraordinary income (expense) under German GAAP
would not be presented as extraordinary items for U.S. GAAP purposes.

(3)   SUBSEQUENT EVENT

     On August 10, 2001, Degussa forgave approximately DM 1,109,427 of affiliate
advances due from dmc(2) Group to Degussa AG.

                                       A-52


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