S&P: OM Group developing

Standard & Poor's ratings on OM Group Inc. remain on CreditWatch, but the implications were revised to developing from negative. OM Group's corporate credit is rated B+ and subordinated notes B-.

S&P said the revision reflects the potential that the ratings on this company could be raised upon a satisfactory outcome of its independent auditors' review of OM's restated financial statements and if earnings continue at improved levels.

With the recent completion of the investigation by the company's audit committee, OM expects to restate its financial statements for 1999 through 2003. The audit committee has determined that certain adjustments to inventory and other accounts were improperly recorded for a number of years, resulting in overstatements - totaling $115 million to $120 million - of earnings before income taxes for 1999, 2000, and 2001.

During 2002 and 2003, most of those improper adjustments were written off, resulting in understatements - $116 million to $121 million - of earnings before income taxes for those two years. The company now expects that the total reduction to retained earnings as of Sept. 30, 2003 from the restatements described above and the negative impact of restatement issues that relate to periods prior to 1999 will be less than $25 million.

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