<Page>                                                                    Page 1
                                    FORM 10-K


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                        
                                    FORM 10-K
                                        
              |X|     Annual Report Pursuant to Section 13 OR 15(d) of the
                      Securities Exchange Act of 1934
                                (No Fee Required)
                   For the fiscal year ended December 31, 2001
                                       or
             |_|     Transition Report Pursuant to Section 13 OR 15(d) of the
                     Securities Exchange Act of 1934
                                (No Fee Required)
            For the transition period from   ________  to   ________
                         Commission file number 1-12658
                                        
                              ALBEMARLE CORPORATION
             (Exact name of registrant as specified in its charter)
                                        
          VIRGINIA                                      54-1692118
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)
                                        
                             330 South Fourth Street
                                 P. O. Box 1335
                            Richmond, Virginia 23210
               (Address of principal executive offices) (Zip Code)
        Registrant's telephone number, including area code: 804-788-6000

           Securities registered pursuant to Section 12(b) of the Act:

    Title of each class             Name of each exchange on which registered
COMMON STOCK, $.01 Par Value               NEW YORK STOCK EXCHANGE


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes _X_ No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _X_

Number  of  shares  of  Common  Stock   outstanding  as  of December 31,  2001:
45,498,201.

Aggregate market value of voting stock held by  non-affiliates of the registrant
as of December 31, 2001: $678,935,184*

* In determining this figure, an aggregate of 17,209,235 shares of Common Stock
treated as beneficially owned by Floyd D. Gottwald, Jr., Bruce C. Gottwald and
members of their families have been excluded and treated as shares held by
affiliates. See Item 12 herein. The aggregate market value has been computed on
the basis of the closing price on the New York Stock Exchange Composite
Transactions on December 31, 2001, as reported by The Wall Street Journal.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of Albemarle Corporation's definitive Proxy Statement for its 2002
Annual Meeting of Shareholders filed with the Securities and Exchange Commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the "Proxy
Statement") are incorporated by reference into Part III of this Form 10-K.



<PAGE>                                                                    Page 2
ALBEMARLE CORPORATION AND SUBSIDIARIES


PART I


ITEM  1. BUSINESS

Albemarle Corporation ("the Company" or "Albemarle") is a major producer of
polymer and fine chemicals most of which are additives to or intermediates for
plastics, polymers and elastomers, cleaning products, agricultural compounds,
pharmaceuticals, photographic chemicals, drilling compounds, ceramics,
refractories, paper processing, paints and coatings, and biocides. Most sales of
the Company's products are made directly to manufacturers of the aforementioned
products, including chemical and polymer companies, pharmaceutical companies,
cleaning product manufacturers, paper and photographic companies, drilling
companies and water treatment companies. The Company also performs custom
research and development manufacturing campaigns for third parties at its cGMP
pilot plant in Dayton, Ohio. Albemarle employs approximately 3,000 people.
      The following discussion of the Company's businesses as of December 31,
2001, should be read in conjunction with the information contained in Item 7,

Management's Discussion and Analysis of Financial Condition and Results of
Operations on page 8.
      The Company's worldwide chemicals operations are reported as two separate
and distinct operating segments, Polymer Chemicals and Fine Chemicals.
      The Company produces the majority of its products in the United States,
but also has production facilities in France, Germany and the United Kingdom and
has aluminum alkyls produced for it by BP Amoco Chemical Company [formerly Amoco
Chemical Company ("BP")] at the Company's former Feluy, Belgium plant. The
processes and technology for many of these products were developed in the
Company's or its predecessor's research and development laboratories. The
Company also has an interest in certain joint venture production facilities in
Japan, Peoples Republic of China and Austria.
      The Polymer Chemicals' operating segment consists of a broad range of
chemicals including flame retardants, catalysts and polymer additives.
      Albemarle's brominated, mineral-based, phosphorus and zinc borate flame
retardants are manufactured to help polymers and other materials meet
fire-safety requirements in finished products which serve a variety of end use
markets including electronic enclosures, wire and cable, printed circuit boards,
electrical connectors and construction.
      The Company's catalyst business is the world's largest supplier of
aluminum alkyls which are used as co-catalysts in the production of polyolefins,
such as polyethylene and polypropylene, elastomers, alpha olefins such as
hexene, octene and decene, and organotin heat stabilizers and in the preparation
of organic intermediates. The Company has production units at Pasadena, Texas,
Orangeburg, South Carolina, Baton Rouge, Louisiana, Feluy, Belgium, which is
leased, and a 50%-owned joint venture in Japan. The Company has continued to
build on its organometallics base and expand the portfolio of products and
capabilities it offers its customers pursuing the development and
commercialization of polymers based on metallocene/single-site catalysts.
      The Company also produces polymer additives, such as curatives, which are
products used to control polyurethane and epoxy system polymerization. Also
produced are antioxidants and alkylated hindered phenolics that are used to
maintain the performance integrity of thermoplastic resins.
      The Fine Chemicals' operating segment includes pharmachemicals,
agrichemical intermediates and ultraviolet ("UV") light-curing and performance
chemicals. Included in performance chemicals are elemental bromine, alkyl
bromides, inorganic bromides, and a number of bromine fine chemicals.
Applications for these products primarily exist in chemical synthesis, oil and
gas well drilling and completion fluids, water purification, glass making,
cleaning products, soil fumigation and chemical intermediates for
pharmaceutical, photographic and agricultural chemicals. Other performance
chemicals' products include tertiary amines for surfactants and biocides,
disinfectants and sanitizers; zeolite A (sodium alumina silicate) used as a
phosphate replacement in laundry detergent builders; and alkenyl succinic
anhydride (ASA) used in paper-sizing formulations; and aluminum oxides used in a
wide variety of refractory, ceramic and polishing applications. These products
have many varied customers. They are sold to suppliers for use in household,
institutional and industrial cleaners, personal care products, automotive
insulators, foundry bricks and other industrial products.
      The Company's pharmachemicals' primary bulk actives, ibuprofen and
naproxen, are widely-used pharmaceuticals that provide fever reduction and
temporary relief of aches and pains and menstrual cramps. Bulk ibuprofen and
naproxen are formulated by pharmaceutical companies who sell to customers in
both the prescription and over-the-counter markets. Ibuprofen products accounted
for approximately 30% and naproxen products accounted for 6% of the U.S.
over-the-counter analgesic market in 2001 on a volume basis. They compete
against other painkillers including aspirin and acetaminophen. The Company is
one of the world's largest producers of ibuprofen. The Company produces
pharmaceutical intermediates at several plant sites. The Company's production
facility in Thann, France produces more than thirty different intermediates used
in the production of pharmaceutical actives and intermediates. The intermediates
produced at this facility are primarily, but not exclusively,brominated
products. The Company's cGMP pilot plant in Dayton, Ohio produces pharmaceutical
intermediates for a wide array of potential drugs under chemical trial. This
facility and the Tyrone, Pennsylvania ,pilot plant, along with the Process
Development Center in Baton Rouge, supply the Company's contract research and
development business. This business provides research and scale-up services to
innovative life science companies. These products are targeted for commercial
manufacturing in one of the Company's commercial sites.


<PAGE>                                                                    Page 3
ALBEMARLE CORPORATION AND SUBSIDIARIES

      Agrichemical intermediates are sold to chemical companies that supply
finished products to farmers, governments and others. These products include
orthoalkylated anilines for the acetanilide family of pre-emergent herbicides
used on corn, soybeans and other crops and organophosphorus products for
insecticide use. In 2000, the EPA initiated a program that will phase down the
home use end market products over a five-year period that use Albemarle's
organophosphorus agrichemical intermediates. In 2001, the Company absorbed the
impact of some of these products that were voluntarily withdrawn.
      The Company continues to expand its bromine production capabilities with
the anticipated completion in late 2002 of a bromine unit and facilities for
production of calcium bromide, sodium bromide and hydrogen bromide in Safi,
Jordan with Albemarle's joint-venture partner, The Arab Potash Company Limited.
The Company continued its expansion of brine field and bromine capacities at the
Company's Magnolia, Arkansas, facility that it started in 1995. The result of
the current phase of the program will be an approximate 36% bromine production
capacity increase over 1995 year end.
      UV curing business, acquired by acquisition in 2001, includes a complete
line of additives (initiators, synergists, and inhibitors) supporting primarily
the printing and laminates markets. This industry is rapidly growing (8%-10%) as
UV cured coatings provide a more environmentally friendly coating solution than
solvent based coatings.
      The Company's subsidiary, Albemarle PPC ("APPC"), operates a plant in
Thann, France. APPC is one of the world's largest producers of organic and
inorganic brominated compounds used mainly in pharmaceutical, photographic and
agricultural chemical intermediates. APPC also operates an electrolysis unit to
produce high-purity caustic potash and potassium carbonate used in the glass,
water treatment, cleaning product and food industries. APPC strengthens the
Company's position in Fine Chemicals and provides additional manufacturing
capabilities in Europe.
      In Polymer Chemicals' product lines, most of the Company's plants operated
at considerably lower capacity utilization in 2001 than during 2000; however,
the aluminum alkyls plants operated at rates similar to 2000. In the Fine
Chemicals' product lines, most plants operated at somewhat lower rates in 2001
than during 2000, with the exception of the ibuprofen and inorganic bromides
plants, which operated near capacity.
      The Company operates on a worldwide basis with (i) manufacturing plants
located in France, Germany and the United Kingdom, in addition to facilities in
the United States, and has interest in certain joint venture production
facilities in Japan, Peoples Republic of China and Austria, (ii) offices and
distribution terminals in Belgium, France, Japan and Singapore, as well as the
United States and (iii) offices in Shanghai and Beijing, China. The Company does
not believe it has significant assets in countries in which those assets would
be deemed to be exposed to substantial risk. See Note 17, "Operating Segments
and Geographic Area Information" of notes to the consolidated financial
statements in Item 8 on page 34.


COMPETITION

The Company operates in a highly competitive marketplace, competing against a
number of other companies in most of its product lines. Some markets involve a
significant number of competitors, while others involve only a few. The
competitors of the Company are varied in terms of size, resources and market
share. Competition generally is based on product performance and availability,
reputation for quality, price and customer service and support. The degree and
nature of competition depends on the type of product involved.
      In general, the Company competes on the basis of the quality and price of
its products as well as customer services by maintaining a broad range of
products and by focusing resources on products in which the Company has a
competitive advantage. The Company endeavors to improve its reputation for
quality products, competitive prices and excellent customer service and support.
Competition in connection with the Company's products requires continuing
investments in research and development, product and process improvements and
specialized customer services. Through research and development, the Company and
its subsidiaries continue to seek to increase margins by introducing value-added
products and products based on proprietary technologies.


RAW MATERIALS

Raw materials used by the Company include ethylene, potassium chloride,
aluminum, ortho-toluidine, bisphenol-A, chlorine, phenol, isobutylene, caustic
soda, toluene, diphenyl oxide, alumina trihydrate, dimethlyamine, phthalic
anhydride, polystyrene, alpha olefins, maleic anhydride, ethanol, phosphorus,
sulfuric acid and nitrogen, as well as electricity and natural gas as fuels,
most of which are readily available from numerous suppliers and are purchased or
provided under contracts at prices the Company believes are competitive. The
Company also produces bromine in Arkansas from its extensive brine reserves
supported by an active leasing program. The Company has supply agreements with
the Dead Sea Bromine group of companies. The contracts essentially cover the
bromine requirements for the production of bromine fine chemicals in the Thann
and Port-de-Bouc, France, facilities and provide additional bromine if requested
for the Company's other bromine needs. In addition, the Company's affiliate,
Martinswerk GmbH ("Martinswerk"), has certain contracts which require
Martinswerk to purchase certain minimum annual quantities of aluminum trihydrate

<PAGE>                                                                    Page 4
ALBEMARLE CORPORATION AND SUBSIDIARIES

from its suppliers. This is expected to continue as the Company or its
affiliates expect to continue or expand purchases of aluminum trihydrate.

MAJOR CUSTOMERS

Due to the diversity of product lines in which the Company competes, no major
portion of the Company's overall sales or earnings was generated by one customer
nor is the Company overly reliant on contracts with any one public, private or
governmental entity, although loss of one or more major customers could have a
substantial financial impact.
      A number of the Company's customers manufacture products for cyclical
industries such as the agricultural, pharmaceutical, automotive, electronics and
building and construction industries. As a result, demand for the products of
the Company from customers in such industries also is cyclical. Due to the
diversity and size of the Company's operations, there is little seasonal
variation in revenues or earnings, except for certain agricultural and
pharmaceutical products and certain electronics-related flame retardants.
      In addition, the profitability of sales of certain of the Company's
products depends on the level of industry growth and our plant capacity
utilization. In zeolites, our volumes and margins were lower in 2001 versus 2000
due to a new competitor entering the U.S. market. We addressed some of the
impact through cost reductions while seeking opportunities to expand into other
applications utilizing these assets.


OTHER MATTERS

On May 31, 2001, the Company, through its wholly owned subsidiary Albemarle
Deutschland GmbH, acquired Martinswerk GmbH, including its manufacturing
facilities and headquarters in Bergheim, Germany, and Martinswerk's 50-percent
stake in Magnifin Magnesiaprodukte GmbH, which has manufacturing facilities at
St. Jakobs/Breitenau, Austria, for approximately $34 million in cash plus
expenses and the assumption of approximately $55 million in current and
long-term liabilities. The assets acquired and liabilities assumed have been
based upon information currently available and on current assumptions as to
future operations. The Company is completing the review and determination of the
fair values of the other assets acquired and liabilities assumed. The purchase
price allocation is expected to be finalized in the second quarter of 2002.
      On July 1, 2001, the Company acquired the custom and fine chemicals
businesses of ChemFirst Inc. for approximately $79 million in cash, plus the
assumption of certain current liabilities and expenses associated with the
acquisition. The Asset Purchase Agreement provided for additional contingent
consideration payments to ChemFirst not expected to exceed $10 million. The
assets acquired included working capital, property, plant and equipment and
certain intangibles, including goodwill and technical know-how. The purchase
price allocation is expected to be finalized in the second quarter of 2002.
      During the fourth quarter of 2001, the Company continued its efforts to
reduce operating costs through an involuntary separation program that resulted
in a special charge of $2.1 million ($1.3 million after income taxes or 3 cents
per share on a diluted basis). The program impacted a total of 26 salaried
employees throughout the Company. The Company expects to recover the costs of
the reductions in force in approximately one year.
      In November, 2001, the Company signed a contract with Cendian Corporation
to outsource the Company's global transportation and logistics requirements.


RESEARCH AND PATENTS

The Company's research and development ("R&D") efforts support each operating
segment. With respect to Polymer Chemicals, the research focus is divided
between new and improved flame retardants, polymerization catalysts and new
polymer additives and blends. Flame retardant research is targeted to satisfy
increasing market needs for performance and quality in products manufactured
from polystyrene, acrylonitrilebutadiene-styrene (ABS) and engineered
thermoplastics. Catalysts research is targeted to meet the market needs for
cost-effective metallocene catalyst systems for the production of improved
polyolefin polymers and elastomers. Development efforts are focused on
efficiently debottlenecking pilot plant capacity to meet the expected demand for
these businesses and to inventory new molecules to meet the expanding needs of
our customers. These efforts are expected to continue into 2002 and beyond.
      The primary focus of the Company's Fine Chemicals' research program is the
development of efficient processes for the manufacture of chemical intermediates
and actives for the pharmaceutical and agrichemical industries. Another area of
research is the development of biocides for industrial and recreational water
treatment and other applications, especially products based on bromine
chemistry. These efforts are expected to continue into 2002 and beyond. In
addition to the U.S. research facilities in Baton Rouge, Louisiana, Dayton,
Ohio, and Tyrone, Pennsylvania, the Company's European businesses are supported
by the research and development facilities in Louvain-la-Neuve, Belgium and
Bergheim, Germany.
      The Company spent approximately $21.9 million, $26.2 million and $34.3
million in 2001, 2000 and 1999, respectively, on research and development, which
amounts qualified under the technical accounting definition of research and
development. Total R&D department spending for 2001 was about $27.2 million,
including $5.3 million related to technical services support to customers and
the Company's plants, testing of existing products, quality improvement and
environmental studies.

<PAGE>                                                                    Page 5
ALBEMARLE CORPORATION AND SUBSIDIARIES

      The Company considers patents, licenses and trademarks to be of
significance to its businesses. As of December 31, 2001, the Company owned 1,279
active United States and foreign patents, including 61 U.S. patents and 152
foreign patents issued in 2001. The above figures include 7 U.S. patents and 8
foreign patents that were acquired from Martinswerk and 15 U.S. patents and 2
foreign patents that were acquired from ChemFirst Inc. Some of the Company's
patents are licensed to others. In addition, rights under the patents and
inventions of others have been acquired by the Company through licenses. The
Company's patent position is actively managed and is deemed by it to be adequate
for the conduct of its business.


ENVIRONMENTAL REGULATION

The Company maintains and operates manufacturing and distribution facilities and
equipment which are used in the Polymer and Fine Chemicals' segments. These are
subject to environmental risks and regulations, which are discussed more fully
in Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations under the heading "Environmental Matters" on page 13.


FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS

The Company's operations are substantially all in the chemicals industry.
Industry segments and geographic area information for the Company's operations
for the three years ended December 31, 2001, is presented in Note 17, "Operating
Segments and Geographical Area Information" of the notes to the consolidated
financial statements in Item 8 on page 34.


FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

Financial information about the Company's foreign and domestic operations and
export sales for the three years ended December 31, 2001, is set forth in Note
17, "Operating Segments and Geographical Area Information" of the notes to the
consolidated financial statements in Item 8 on page 34. Domestic export sales to
non-affiliates may be made worldwide but are made primarily in the Asia Pacific
region and Europe. Foreign unaffiliated net sales are primarily in Europe, the
Middle East, Japan and the Asia Pacific region.



I
TEM 2.PROPERTIES

The Company's principal executive offices are located at 330 South Fourth
Street, Richmond, Virginia, 23219, and its principal operations offices are
located at 451 Florida Street, Baton Rouge, Louisiana, 70801. The Company leases
its executive offices and operations offices in Richmond, Virginia and Baton
Rouge, Louisiana, respectively; and its regional offices in Singapore; Tokyo,
Japan; and Shanghai and Beijing, China; as well as various other offices.

      The following is a brief description of the principal plants and related
facilities of the Company, all of which are owned except as stated below.


<TABLE>
<CAPTION>

LOCATION                                                        PRINCIPAL OPERATIONS
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <S>
Baton Rouge, Louisiana (2 facilities, one on leased land)       Research and product development activities, and production of
                                                                flame retardants, catalysts and additives

Bergheim, Germany                                               Production of flame retardants and specialty products based on 
                                                                aluminum hydroxide and aluminum oxide, and research and product
                                                                development

Dayton, Ohio (Leased land)                                      Research, product development and small scale production of
                                                                fine chemicals

Feluy, Belgium (Leased by BP in 1996 under a 99-year            Production of aluminum alkyls
   lease but operated for the Company)

Louvain-la-Neuve, Belgium                                       Regional offices and research and customer technical service
                                                                activities

Magnolia, Arkansas (South Plant)                                Production of flame retardants, bromine, inorganic bromides,
                                                                agrichemical intermediates and tertiary amines

Magnolia, Arkansas (West Plant)                                 Production of flame retardants and bromine

Magnolia, Arkansas (East Plant)                                 Production of bromine

Ninghai County, Zhejiang Province, China (25% joint             Production of antioxidants and polymer intermediates
   venture with Ninghai County Jinhai Chemical and
   Industry Company Limited)

</TABLE>


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ALBEMARLE CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>

LOCATION                                                        PRINCIPAL OPERATIONS
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <S>
Orangeburg, South Carolina                                      Production of flame retardants, aluminum alkyls and fine chemicals,
                                                                including pharmaceutical intermediates, fuel additives, 
                                                                orthoalkylated phenols and polymer modifiers

Pasadena, Texas                                                 Production of aluminum alkyls, alkenyl succinic anhydride, 
                                                                orthoalkylated anilines, zeolite A and other specialty chemicals

Port-de-Bouc, France                                            Production of flame retardants

Safi, Jordan (50% joint venture with Arab Potash                Production of bromine and derivatives (scheduled to start up in
   Company)                                                     late 2002)

St. Jakobs/Breitenau, Austria (50% joint venture with           Production of specialty magnesium hydroxide products
   TILOS Vermogensverwaltrung GmbH, Cologne,
   Germany and Veitsch-Radex GmbH, Vienna, Austria)

Takaishi City, Osaka, Japan (50% joint venture with Mitsui      Production of aluminum alkyls 
   Chemicals, Inc.)

Teesport, United Kingdom                                        Production of fine chemicals, including emulsifiers, corrosion
                                                                inhibitors, scale inhibitors and esters

Thann, France                                                   Production of organic and inorganic brominated pharmaceutical
                                                                intermediates, photographic and agrichemical intermediates,
                                                                high-purity caustic potash, potassium carbonate and chlorine

Tyrone, Pennsylvania                                            Production of custom fine chemicals, agricultural
                                                                intermediates, performance polymer products and research and
                                                                development
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>


    The Company believes that its plants, including planned expansions, will be
adequate at projected sales levels for 2002. Operating rates of certain plants
vary with product mix and normal seasonal sales swings. The Company believes
that its plants generally are well maintained and in good operating condition.


CERTAIN AGREEMENTS BETWEEN ALBEMARLE AND ETHYL CORPORATION ("ETHYL")

Albemarle and Ethyl entered into agreements, dated as of February 28, 1994,
pursuant to which the Company and Ethyl agreed to coordinate certain facilities
and services of adjacent operating facilities at plants in Pasadena, Texas and
Feluy, Belgium. Effective March 1, 1996, certain of these agreements or portions
thereof were transferred to BP as part of the Olefins Business sale. In
addition, Albemarle and Ethyl entered into agreements (Ethyl has extended the
agreements through February 28, 2014) dated as of February 28, 1994 providing
for the blending by Albemarle for Ethyl of certain products and the production
of others at the Company's Orangeburg, South Carolina, plant. Also since
February 28, 1994, Albemarle has leased certain property from Ethyl in Baton
Rouge, Louisiana, which is used by Albemarle as its Process Development Center.
Albemarle has extended this lease through February 28, 2014.


CERTAIN AGREEMENTS BETWEEN ALBEMARLE AND MEMC PASADENA, INC. ("MEMC")

Albemarle and MEMC entered into agreements, dated as of July 31, 1995, and
subsequently revised effective May 31, 1997, pursuant to which Albemarle
currently provides support services to MEMC at its Pasadena, Texas, plant which
consists of facilities for the production of electronic materials products.
Effective May 31, 1997, Albemarle supplies certain utilities and services to the
MEMC Pasadena plant site pursuant to a utilities and services agreement (the
"Utilities and Services Agreement"). All of the utilities and services are
supplied at Albemarle's cost plus a percentage fee. Albemarle furnishes certain
utilities and services for a minimum of five years from the effective date (May
31, 1997) of the Utilities and Services Agreement, subject to the right of MEMC
to terminate any one or more utilities or services on twelve months' notice.
Albemarle will make available to MEMC certain other utilities and services for
the duration of MEMC's lease of the property upon which the MEMC Pasadena plant
site is located.



<PAGE>                                                                    Page 7
ALBEMARLE CORPORATION AND SUBSIDIARIES

CERTAIN AGREEMENTS BETWEEN ALBEMARLE AND BP

Albemarle and BP entered into agreements, dated as of March 1, 1996, pursuant to
which the Company provides operating and support services, certain utilities and
products to BP, and BP provides operating and support services, certain
utilities and products to Albemarle.

 
PASADENA, TEXAS AGREEMENTS

After the Company's sale of the Olefins Business to BP Amoco Chemical Company
("BP") on March 1, 1996, BP owns and operates the linear alpha olefins and
synthetic alcohols facilities ("BP Pasadena plant"). Albemarle owns and operates
all remaining Albemarle plants ("Albemarle Pasadena plant"). As a result of the
sale, Albemarle supplies to the BP Pasadena plant certain utilities and the BP
Pasadena plant supplies certain utilities to the Albemarle Pasadena plant.
Virtually all of the utilities, services and products supplied by the Albemarle
Pasadena plant to the BP Pasadena plant and by the BP Pasadena plant to the
Albemarle Pasadena plant, are supplied at the provider's cost plus a percentage
fee. Most of the utilities, services and products supplied by Albemarle and BP
have an initial term of 10 years, with an automatic extension for an additional 
10-year term, unless terminated by either party at the end of the initial term 
upon two years notice.
     With respect to products supplied by Albemarle to BP, and conversely BP to
Albemarle, each may terminate the supply of such product to the other on 180
days notice. BP has given Albemarle notice that BP will cease operations of its
synthetic alcohols facility in September 2002.


FELUY, BELGIUM AGREEMENTS

After the sale, BP's Belgian affiliate ("BP Belgium") possesses (under a 99-year
lease, with certain purchase options) and operates the linear alpha olefins and
poly alpha olefin facilities. In addition, BP Belgium possesses (under the same
lease) and operates the aluminum alkyls facilities exclusively for Albemarle
(term: 10 years--Albemarle has the right to extend for one additional 10-year
term). Albemarle supplies aluminum alkyl products to BP Belgium for use in the
linear alpha olefins facility (term: 10 years--BP Belgium has the right to
extend for one additional 10-year term). The services and products supplied by
Albemarle to BP Belgium and by BP Belgium to Albemarle are at the provider's
cost plus a percentage fee.



ITEM 3.    LEGAL PROCEEDINGS

The Company and its subsidiaries are involved from time to time in legal
proceedings of types regarded as common in the Company's businesses,
particularly administrative or judicial proceedings seeking remediation under
environmental laws, such as Superfund, and products liability litigation.
     While it is not possible to predict or determine the outcome of the
proceedings presently pending, in the Company's opinion they will not result
ultimately in any liability that is likely to have a material adverse effect
upon the results of operations or financial condition of the Company and its
subsidiaries on a consolidated basis.



ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     NONE.



<PAGE>                                                                    Page 8
ALBEMARLE CORPORATION AND SUBSIDIARIES


PART II


ITEM 5. MARKET  FOR THE REGISTRANT'S  COMMON EQUITY AND RELATED  STOCKHOLDER
MATTERS

The Company's common stock is traded on the New York Stock Exchange under the
symbol ALB. The market price highs and lows (per the New York Stock Exchange) by
quarters for the years 2001 and 2000 are listed below:


<TABLE>
<CAPTION>
                       2001                  2000
-----------------------------------------------------------
   Quarter         High        Low       High       Low
-----------------------------------------------------------
<S>               <C>         <C>       <C>        <C>
First             25.6875     21.2000   21.1250    14.5625
Second            23.9000     21.2000   23.6875    18.7500
Third             23.3500     16.5000   26.1250    18.5000
Fourth            24.7300     17.3600   25.6875    18.6250
-----------------------------------------------------------

</TABLE>


     There were 45,498,201 shares of common stock held by 5,775 shareholders of
record as of December 31, 2001.
     During 2001, the quarterly dividend rate was $.13 per share or $.52 per
share on an annual basis.
     On February 23, 2000, the Company's Board of Directors increased the
quarterly dividend rate by 10%, from $.10 per share to $.11 per share, payable
April 1, 2000. On October 25, 2000, the Board of Directors increased the
quarterly dividend rate an additional 18%, from $.11 per share to $.13 per
share, payable January 1, 2001.
     Shareholders' equity per share at December 31, 2001, was $13.04, up 7% from
$12.20 at December 31, 2000, which was up 15% from $10.62 at December 31, 1999.



ITEM 6. SELECTED FINANCIAL DATA

The information for the five years ended December 31, 2001, is contained in the
"Five-Year Summary" included in Part IV, Item 14, Exhibit 99 on page 41.



ITEM 7.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS

The following financial data and discussion provides an analysis of certain
significant factors affecting the results of operations of the Company for years
ended December 31, 2001, 2000 and 1999. In addition, a discussion of
consolidated financial condition and sources of additional capital is included
under a separate heading, "Financial Condition and Liquidity" on page 12.

Some of the information presented in the following discussion may constitute
forward-looking comments within the meaning of the Private Securities Litigation
Reform Act of 1995. Although the Company believes its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include, without limitation, the timing of orders
received from customers, the gain or loss of significant customers, competition
from other manufacturers, changes in the demand for the Company's products,
increases in the cost of the product, changes in the markets in general,
fluctuations in foreign currencies and significant changes in new product
introductions resulting in increases in capital project requests and approvals
leading to additional capital spending.


<PAGE>                                                                    Page 9
ALBEMARLE CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS

Net sales by operating segments for the three years ended December 31, are as
follows:


<TABLE>
<CAPTION>
(In Thousands)
-------------------------------------------------------------
Net Sales                       2001       2000       1999
-------------------------------------------------------------
<S>                           <C>        <C>        <C>
Polymer Chemicals             $461,930   $500,899   $449,156
Fine Chemicals                 454,969    416,650    396,769
-------------------------------------------------------------
Segment totals                $916,899   $917,549   $845,925
=============================================================
</TABLE>


NET SALES

Net sales for 2001 amounted to $916.9 million, down $0.6 million (0.1%), from
$917.5 million in 2000. Polymer Chemicals' net sales were down $39.0 million
(7.8%), primarily due to lower shipments ($47.0 million) and pricing ($4.2
million), which includes the unfavorable net effects of foreign exchange in
flame retardants and lower shipments in catalysts and additives ($25.3 million)
offset, in part, by higher net sales of $39.5 million, resulting from the May
31, 2001, acquisition of Martinswerk GmbH. Fine Chemicals' net sales were up
$38.3 million (9.2%), due to the Company's May 31, 2001 and July 1, 2001,
acquisitions of Martinswerk GmbH and the ChemFirst custom and fine chemicals
businesses ($59.4 million) offset, in part, by lower shipments and unfavorable
pricing in surface actives (zeolites) and the unfavorable net effects of foreign
exchange.
     Net sales for 2000 amounted to $917.5 million, up $71.6 million (8.5%),
from $845.9 million in 1999. Polymer Chemicals' net sales were up $51.7 million
(11.5%), primarily due to higher shipments ($68.1 million) partially offset by
lower pricing ($15.8 million) in flame retardants. Fine Chemicals' net sales
were up $19.9 million (5.0%), primarily due to higher shipments ($33.5 million)
partially offset by lower pricing ($13.1 million) in performance chemicals and
pharmachemicals.


OPERATING COSTS AND EXPENSES

Cost of goods sold in 2001 increased $49.5 million (7.7%), from 2000, primarily
due to higher costs related to lower utilization of existing plant facilities
and the higher costs associated with the Company's acquisitions of Martinswerk
GmbH and the ChemFirst custom and fine chemicals businesses, offset, in part, by
lower employee-related costs in 2001 resulting from workforce reductions which
occurred during 2000 and the favorable effects of foreign exchange transaction
gains of approximately $0.5 million in 2001 versus foreign exchange transaction
losses of approximately $0.8 million in 2000, with the result that the gross
profit margin decreased to 24.1% in 2001 from 29.6% in 2000. Overall,
Albemarle's average 2001 raw material costs were comparable to 2000. Energy
costs in 2001 were slightly higher than 2000.
     Cost of goods sold in 2000 increased $57.1 million (9.7%), from 1999,
primarily due to operating costs associated with increased shipments over 1999,
higher raw material and energy costs and the unfavorable effects of foreign
exchange transaction losses of approximately $0.8 million in 2000 versus foreign
exchange transaction gains of approximately $6.0 million in 1999, offset, in
part, by improved plant utilization in some flame retardant businesses, and
lower employee-related costs in 2000 resulting from workforce reductions which
occurred during 1999, with the result that the gross profit margin decreased to
29.6% in 2000 from 30.4% in 1999. Overall, Albemarle's average 2000 raw material
costs were significantly higher than 1999. Energy costs in 2000 were
significantly higher than 1999 due primarily to higher natural gas pricing.
     Selling, general and administrative expenses, combined with research and
development expenses ("SG&A") in 2001 decreased $8.6 million (6.6%) from 2000
primarily due to lower employee incentive award costs and the realignment of
corporate research and development efforts as well as the benefits of cost
reduction efforts, offset, in part, by a $7.9 million increase in recurring
selling, general and administrative expenses and research and development
expenses associated with acquisitions during 2001. The 2001 decrease in SG&A
compares to a decrease of $2.7 million (2.0%) in 2000 from 1999, due primarily
to lower employee-related costs in 2000 resulting from workforce reductions
which occurred during 1999 and lower outside research and development contracted
services in 2000, offset, in part, by higher incentive award costs accrued in
2000 attributable to the Company's improved performance in 2000 versus 1999 and
by higher consulting costs. As a percentage of net sales, SG&A were 13.2% in
2001 versus 14.1% in 2000 and 15.6% in 1999.


OPERATING PROFIT

Operating profit by operating segments for the three years ended December 31,
are as follows:


<TABLE>
<CAPTION>

(In Thousands)                         
-------------------------------------------------------------
Operating Profit          2001          2000        1999    
-------------------------------------------------------------
<S>                      <C>          <C>          <C>
Polymer Chemicals        $59,691      $103,817     $73,083 
Fine Chemicals            61,466        70,736      60,187 
Corporate and other
   expenses              (22,707)      (24,391)    (19,144)
-------------------------------------------------------------
Totals                   $98,450      $150,162    $114,126 
=============================================================
</TABLE>


     The Company's operating profit in 2001, including a 2001 workforce
reduction charge of $2.1 million, decreased $51.7 (34.4%) from 2000 primarily
due to lower shipments, the effects of lower utilization of existing plant
facilities and the negative net effects of foreign exchange in the Company's
European and Asia Pacific regions versus 2000, offset, in part, by an increase
in operating profit associated with the Company's acquisitions of Martinswerk
GmbH and the ChemFirst custom and fine chemicals businesses. The operating
profit decrease in 2001 versus 2000 was also impacted by the net effect of 2000
special items consisting of a one-time $15.0 million noncash pension settlement
gain ("pension settlement gain") and a workforce reduction charge of $6.9
million. Excluding special items in the 2001 and 2000 periods, 2001 operating
profit decreased $41.5 million from 2000. Albemarle's average 2001 raw material
costs were comparable to the 2000 period while energy costs were slightly higher
than the 2000 period. SG&A decreased $8.6 million (6.6%) from 2000 primarily due
to lower employee incentive award costs and the realignment of corporate
research and development efforts as well as the benefits of cost reduction
efforts, offset, in part, by a $7.9 million increase in recurring selling,
general and administrative expenses and research and development expenses
associated with the acquisitions during 2001.


<PAGE>                                                                   Page 10
ALBEMARLE CORPORATION AND SUBSIDIARIES

     Polymer Chemicals' operating results decreased $44.1 million (42.5%)
primarily due to lower shipments in flame retardants ($18.7 million) and
catalyst and additives ($12.2 million), the effects of lower utilization of
existing plant facilities, net of lower spending ($10.1 million) and the
unfavorable results of foreign exchange ($7.0 million) offset, in part, by the
impact of the acquisition of Martinswerk GmbH ($4.7 million) in 2001 versus
2000. Polymer Chemicals' operating results for 2000 included allocations for a
pension settlement gain of $5.5 million and a workforce reduction charge of $3.1
million. Excluding the special items in 2001 and 2000, Polymer Chemicals'
operating results for 2001 decreased $41.4 million (40.8%) from the
corresponding period in 2000.
     Fine Chemicals' operating results decreased $9.3 million (13.1%) primarily
due to lower shipments and lower pricing in surface actives (zeolites) and the
unfavorable results of foreign exchange ($1.6 million) offset, in part, by
improved performance in agrichemicals and pharmachemicals ($11.9 million) as
well as the impact of the acquisitions of Martinswerk GmbH and the ChemFirst
custom and fine chemicals businesses. Fine Chemicals' operating results for 2000
included allocations of a pension settlement gain of $5.7 million and a
workforce reduction charge of $3.1 million. Excluding the special items in 2001
and 2000, Fine Chemicals' operating results for 2001 decreased $6.6 million
(9.7%) from the corresponding period in 2000.
     Corporate and other expenses in 2001, which included a charge of $1.5
million related to the fourth quarter workforce reduction, decreased $1.7
million (6.9%) versus 2000, primarily due to lower employee incentive award
costs and the benefit of cost reduction efforts in 2001. Corporate and other
expenses for 2000 included higher incentive award costs, higher consulting
costs, and a $.7 million workforce-reduction charge in 2000, offset, in part, by
the allocation of $3.8 million related to the pension settlement gain. Excluding
the workforce reduction charges in both periods and the pension settlement gain
in 2000, corporate and other expenses decreased $6.5 million (23.6%) in 2001.
     The Company's operating profit in 2000, including special items consisting
of a one-time $15.0 million noncash pension settlement gain and a 2000 workforce
reduction charge of $6.9 million, increased $36.0 million (31.6%) from 1999
primarily due to higher net sales. The operating profit increase in 2000 versus
1999 was also impacted by the write off of certain excess flame retardant plant
assets ($7.7 million) in the 1999 period as well as the unfavorable effects of
foreign exchange of $6.8 million in 2000 versus 1999. Albemarle's average 2000
raw material costs were significantly higher than 1999. 2000 energy costs were
also significantly higher than 1999 due primarily to higher natural gas pricing.
SG&A decreased $2.7 million (2.0%) in 2000 versus the 1999 period due primarily
to lower employee related costs resulting from workforce reductions during 1999
and lower research and development core technology charges in 2000, offset, in
part, by higher incentive award costs accrued in 2000 attributable to the
Company's improved performance in 2000 versus 1999 and by higher consulting
costs.
     Polymer Chemicals' operating results, including allocations of $5.5 million
relating to the pension settlement gain and a $3.1 million 2000
workforce-reduction charge, increased $30.7 million (42.1%) primarily due to
higher shipments and improved plant utilization in flame retardants and lower
research and development core technology charges, offset, in part, by higher raw
material and energy costs, lower sales prices ($16.8 million) and the
unfavorable effects of foreign exchange ($4.5 million) in 2000 versus 1999. The
improvement in Polymer Chemicals' operating profit in 2000 versus 1999 was also
impacted by the write off of certain excess flame retardant plant assets ($7.7
million) in the 1999 period.
     Fine Chemicals' operating results, including allocations of $5.7 million
relating to the pension settlement gain and a $3.1 million 2000
workforce-reduction charge, increased $10.5 million (17.5%) primarily due to
higher shipments in performance chemicals and pharmachemicals and lower research
and development core technology charges, offset, in part, by higher raw material
and energy costs, lower sales prices ($8.4 million) and the unfavorable effects
of foreign exchange ($4.2 million) in 2000 versus 1999. 
     Corporate and other expenses increased $5.2 million in 2000 versus 1999,
primarily due to higher incentive award costs accrued in 2000 attributable to
the Company's improved performance in 2000 versus 1999, higher consulting costs,
and a $.7 million workforce-reduction charge in 2000, offset, in part, by the
allocation of $3.8 million related to the pension settlement gain. (See Note 17,
"Operating Segments and Geographic Area Information" of the notes to the
consolidated financial statements in Item 8 on page 34.)


INTEREST AND FINANCING EXPENSES AND OTHER INCOME

Interest and financing expenses in 2001 decreased $0.5 million from 2000 and
decreased $2.4 million in 2000 from 1999. 2001 interest and financing expenses
were significantly impacted by an overall lower average interest rate for the
year versus 2000 despite higher average debt outstanding during 2001. The higher
debt in 2001 was associated with the two acquisitions during the year; whereas
there was lower average debt outstanding partially offset by a higher interest
rate in 2000 compared to 1999. Other income, net increased to $4.3 million in
2001 from $3.3 million in 2000. Other income, net, increased to $3.3 million in
2000 from $0.9 million in 1999 primarily due to earnings from investments (See
Note 1, "Summary of Significant Accounting Policies--Investments" of the notes
to the consolidated financial statements in Item 8 on page 20).




<PAGE>                                                                   Page 11
ALBEMARLE CORPORATION AND SUBSIDIARIES

GAIN ON SALE OF INVESTMENT

In May 1999, the Company sold all of its 58,394,049 common shares of Albright &
Wilson plc ("Albright & Wilson"), a United Kingdom chemicals company, that were
acquired in March 1999, as part of its friendly tender offer for Albright &
Wilson, for an aggregate consideration of $157.6 million, resulting in a gain of
$22.1 million ($14.4 million after income taxes or 30 cents per share on a
diluted basis), net of transaction expenses. The net proceeds from the sale of
the common shares were primarily used to pay down debt under the Company's
existing Credit Agreement.


INCOME TAXES

Income taxes in 2001 decreased $16.7 million (36.5%) compared to 2000 due
primarily to lower pre-tax income. 2000 income taxes increased $5.8 million
(14.6%) compared to 1999 due primarily to higher pre-tax income in 2000. The
effective tax rate for 2001 was 29.9%, which was down from 31% in 2000 and 1999.
     See Note 12, "Income Taxes" of the notes to the consolidated financial
statements in Item 8 on pages 30 and 31 for details of changes in effective
income tax rates.


2002 OUTLOOK

We believe that 2002 will be another challenging year for us with business
starting rather slowly as world events stabilize and the global economy
continues to recover from the malaise that has carried over from 2001. Many of
our customers' end uses, most notably in the electronics and the polymers
markets, have suffered from a slowdown in consumer demand throughout 2001 and
into 2002. We expect to see market conditions remaining very difficult in the
first half of this year and we hope for a pick-up in demand in the latter half
of 2002. Energy and raw material costs in 2001 declined throughout the year and
appear, at this time [early 2002] to have reached a bottom which could allow us
favorable cost opportunities in most of our businesses this year. We have a
concern that the strong dollar, especially against the weaker Japanese yen,
could have a significant negative impact, especially in our flame retardants
business where the Japanese market is an important one. We expect that benefits
from our Martinswerk and ChemFirst custom and fine chemicals businesses
acquisitions will continue as we build on the successful integration of both
operations into our ongoing businesses. In addition, we expect that an agreement
with Atofina Chemicals, Inc. ("Atofina") in forming an organotin intermediates
joint venture, should be completed by the second quarter of 2002. Our
acquisitions and joint ventures provide business diversification and leverage in
our current business and technology. We remain hopeful that we will be
successful with additional acquisitions or joint ventures this year.
     In Polymer Chemicals, pricing in flame retardants continues to be a concern
as long as we have soft demand and excess supply in the marketplace.
Consequently, we expect downward price pressure to continue. In tetrabrom, one
of our large volume flame retardant products, we estimate the industry is
currently operating at about 70% of existing capacity, accordingly, we have
elected to delay the start up of our tetrabrom joint venture plant in Jordan
that was initially planned in fourth-quarter 2002. We believe this is the
prudent thing to do given the weakness in demand, however, we have all the
equipment for this plant either in Jordan or on order, so we have the ability to
bring this plant on line in six to nine months if market conditions dictate it's
needed. We are enjoying the diversification benefits from the halogen-free flame
retardant products added through our Martinswerk acquisition and our joint
ventures, e.g., PolymerAdditives.com. The markets for these mineral flame
retardants products are not as closely tied to electronics as is our brominated
line.
     In our organometallics area, specifically in new catalysts, we are
optimistic that we will see growth as the polyolefin producers commercialize new
generation products which will utilize our strong technical and manufacturing
position in single site activators. In our base business, we are assessing the
impact of a customer's decision to discontinue certain of its products that
utilize aluminum alkyls. 
     Overall for Polymer Chemicals, we believe we have done a good job of coping
with the various challenges in 2001 using effective business and cost management
and in 2002, we will continue our tight control, stay focused on our strategies
and keep our customers satisfied.
     In Fine Chemicals, 2001 was a very good year, exceeding expectations in
many areas. A portfolio approach to our fine chemicals business helped offset
generally negative economic trends. Strategic implementation of our Fine
Chemistry Services business (formed from the ChemFirst custom and fine chemicals
businesses acquisition) began yielding results in building our new products
pipeline; the number of opportunities that customers in the life sciences arena
are bringing to us for evaluation and development encourages us, however, we
recognize this will be a long-term process. 
     A number of important initiatives will continue to improve our Fine
Chemicals profitability in 2002. First, we will continue to globalize our
ibuprofen business and benefit from investments in quality improvement, cost
reduction and plant expansion projects. Second, we are beginning the
implementation of a five-fold program that we anticipate will improve the return
on our naproxen business. Third, we are working to gain real market synergy in
the agrichemicals market. Fourth, we are continuing to expand our bromine-based


<PAGE>                                                                   Page 12
ALBEMARLE CORPORATION AND SUBSIDIARIES

water treatment business into both the recreational and industrial markets (a
small business today, growing at double-digit rates). The start-up of our Jordan
joint venture bromine and derivatives plant at the end of this year will
facilitate entry into new global bromine fine chemical markets. Preservation of
low-cost bromine supply is strategically very important to our future.
     We were pleased with the performance of our Fine Chemicals' business in
2001. We plan to continue in 2002 to expand our pharmaceutical and agrichemicals
businesses on a global basis and are working to populate our pipeline of new
products primarily from the life sciences sector. We are also continuing to work
on a variety of cost reduction and profit improvement initiatives and will
continue to navigate through a large array of acquisition opportunities for
those deals that make sense for us financially as well as strategically.

FINANCIAL CONDITION AND LIQUIDITY

Cash and cash equivalents at December 31, 2001 were $30.6 million, which
represents an increase of $11.3 million from $19.3 million at year-end 2000.
     Cash provided from operating activities was $144.0 million which together
with $128.2 million of proceeds from borrowings were used to cover operating
activities in 2001, including an increase in working capital of $4.5 million
(excluding foreign currency translation), and acquire Martinswerk and the custom
and fine chemicals businesses of ChemFirst Inc., fund capital expenditures,
repay $54.1 million of long-term debt, pay quarterly dividends to common
shareholders, fund the Company's additional investment in joint ventures,
purchase 417,505 shares of the Company's common stock for $7.6 million and
increase year-end cash and cash equivalents by $11.3 million.
     Cash and cash equivalents at December 31, 2000 were $19.3 million, which
represented a decrease of $29.3 million from $48.6 million at year-end 1999.
     Cash provided from operating activities was $155.1 million which together
with $29.3 million of existing cash and cash equivalents and $19.8 million of
proceeds from borrowings were used to cover operating activities in 2000,
including an increase in working capital of $7.7 million (excluding foreign
currency translation), repay $79.5 million of long-term debt, fund capital
expenditures, acquire the Ferro Corporation's PYRO-CHEK(R) Flame Retardant
business, pay quarterly dividends to common shareholders and purchase 574,091
shares of the Company's common stock for $9.8 million.
     The Company anticipates that cash provided from operating activities in the
future will be sufficient to cover its operating expenses, debt service
obligations, dividend payments to common shareholders and to fund most, if not
all, of its capital expenditures.
     The noncurrent portion of the Company's long-term debt amounted to $12.4
million at December 31, 2001, compared to $97.7 million at the end of 2000. At
December 31, 2000, the Company had the ability to refinance its borrowings under
uncommitted credit lines with domestic financial institutions and foreign banks
with borrowings under its Competitive Advance and Revolving Credit Facility
Agreement ("Credit Agreement") which matures on September 29, 2002, therefore,
these amounts were classified as long-term debt. At December 31, 2001, these
amounts are reflected in the accompanying financial statements on page 15 as
current debt. All uncommitted credit lines will resume being reflected as
long-term debt as soon as the new credit agreement is in place.
     The Company's total long-term debt, including the current portion, as a
percentage of total capitalization at December 31, 2001, was approximately
22.3%. In addition, the Company has commitments, in the form of guarantees, for
50% of the loan amounts outstanding (which at December 31, 2001, amounted to
$7.4 million) from time to time of its 50%-owned joint venture company, Jordan
Bromine Company Limited ("JBC"). JBC entered into the loan agreements in 2000 to
finance construction of certain bromine and derivatives manufacturing facilities
on the Dead Sea. The Company's total loan guarantee commitment for JBC is 50% of
the total loan agreements, which could amount to $73 million if JBC makes all of
its allowable draws.
     The Company, at December 31, 2001, had the flexibility to borrow up to a
total of $500 million ($125 million outstanding at December 31, 2001) under its
Credit Agreement.
     The Credit Agreement contains certain covenants typical for a credit
agreement of its size and nature, including financial covenants requiring the
Company to maintain consolidated indebtedness (as defined) of not more than 60%
of the sum of the Company's consolidated shareholders' equity (as defined) and
consolidated indebtedness. The amount and timing of any borrowings will depend
on the Company's specific cash requirements. The Company is currently meeting
with financial institutions and is confident that it will enter into another
long-term credit agreement before September 29, 2002, with terms comparable to
its existing Credit Agreement.
     The Company's foreign currency translation adjustments, net of related
deferred taxes, included in accumulated other comprehensive (loss) income in the
consolidated statement of changes in shareholders' equity on page 17 at December
31, 2001, increased from December 31, 2000, primarily due to the weakening of
foreign currencies against the U.S. dollar.
     Capital expenditures in 2001 of $49.9 million were lower than the 2000
level of $52.2 million. The Company's capital spending program is expected to be
in the $45-$55 million range over the next few years, with expenditures expected
to expand capacities at existing facilities to support an expected increase in
sales. Capital spending for environmental and safety projects is expected to be
more than the current year. Future capital spending is expected to be financed
primarily with cash provided from operating activities, with the balance, if
necessary, provided by additional debt. The Company continues to evaluate
potential acquisitions of facilities and/or businesses, particularly in areas
where our know-how adds value. 

<PAGE>                                                                   Page 13
ALBEMARLE CORPORATION AND SUBSIDIARIES

     Contractual obligations for plant construction, purchases of equipment,
unused lines of credit and various take or pay and throughput agreements
amounted to approximately $85,323 and $65,592 at December 31, 2001 and 2000,
respectively.


ENVIRONMENTAL MATTERS

The Company is subject to federal, state, local and foreign requirements
regulating the handling, manufacture and use of materials (some of which may be
classified as hazardous or toxic by one or more regulatory agencies), the
discharge of materials into the environment and the protection of the
environment. To the Company's knowledge, it is currently complying with and
expects to continue to comply in all material respects with existing
environmental laws, regulations, statutes and ordinances. Such compliance with
federal, state, local and foreign environmental protection laws is not expected
to have in the future a material effect on earnings or the competitive position
of Albemarle.
     Among other environmental requirements, the Company is subject to the
federal Superfund law, and similar state laws, under which the Company may be
designated as a potentially responsible party ("PRP") and may be liable for a
share of the costs associated with cleaning up various hazardous waste sites.
Management believes that in most cases, the Company's participation is de
minimis. Further, almost all such sites represent environmental issues that are
quite mature and have been investigated, studied and in many cases settled by
the Company or its predecessor company. In de minimis PRP matters, the Company's
policy generally is to negotiate a consent decree and to pay any apportioned
settlement, enabling the Company to be effectively relieved of any further
liability as a PRP, except for remote contingencies. In other than de minimis
PRP matters, the Company's records indicate that unresolved exposures should be
immaterial. The Company accrues and expenses its proportionate share of PRP
costs. Because management has been actively involved in evaluating environmental
matters, the Company is able to conclude that the outstanding environmental
liabilities for unresolved PRP sites should not be material to operations.
     The Company's environmental and safety operating costs charged to expense
were approximately $14.4 million in 2001 versus approximately $12.2 million in
2000 and $13.6 million in 1999, excluding depreciation of previous capital
expenditures, and are expected to be in the same range in the next few years.
Costs for remediation have been accrued and payments related to sites are
charged against accrued liabilities, which at December 31, 2001, totaled
approximately $30.2 million, up $18.7 million, from December 31, 2000, primarily
due to the May 31, 2001, acquisition of Martinswerk GmbH, Bergheim, Germany, in
which the Company assumed approximately $16.7 million of additional government
regulated environmental liabilities as a part of the purchase price.
     There is a reasonable possibility that future remediation costs in excess
of amounts already recorded could be up to $9.7 million before income taxes.
However, the Company believes that most of the amount it may be required to pay
in connection with environmental remediation matters in excess of the amounts
recorded should occur over a period of time and should not have a material
adverse impact on its financial condition or results of operations, but could
have a material adverse impact in a particular quarterly reporting period.
     Capital expenditures for pollution-abatement and safety projects for the
Company, including such costs that are included in other projects, were
approximately $2.6 million, $4.2 million and $4.0 million in 2001, 2000 and
1999, respectively. For each of the next few years, capital expenditures for
these types of projects are likely to be more than current year expenditures.
Management's estimates of the effects of compliance with governmental
pollution-abatement and safety regulations are subject to (i) the possibility of
changes in the applicable statutes and regulations or in judicial or
administrative construction of such statutes and regulations, and (ii)
uncertainty as to whether anticipated solutions to pollution problems will be
successful, or whether additional expenditures may prove necessary.


NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2001, the Company adopted Financial Accounting Standards Board's
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Company's transition
adjustment and related cumulative effect of a change in accounting principle
relating to the adoption of SFAS No. 133 did not have a material effect on the
financial position or results of operations in 2001. In connection with the
adoption of SFAS No. 133, the Company elected not to utilize hedge accounting
for then existing derivatives. Consequently, changes in the fair value of
derivatives will be recognized in the Company's statement of operations.
     In July 2001, the Company  adopted SFAS No. 141,  "Business  Combinations."
SFAS No. 141 requires  that the purchase  method of  accounting  be used for all
business  combinations  initiated after June 30, 2001 and  establishes  specific
criteria for the recognition of intangible assets separately from goodwill.  The
adoption  of SFAS  No.  141 did not  have a  material  impact  on the  Company's
financial statements.
     Also during July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 142 eliminates the amortization of goodwill and
instead requires a periodic review of any goodwill balance for possible
impairment. SFAS No. 142 also requires that goodwill be allocated at the
reporting unit level. The statement is effective for years beginning after


<PAGE>                                                                   Page 14
ALBEMARLE CORPORATION AND SUBSIDIARIES

December 15, 2001. The Company will discontinue amortization of goodwill as of
January 1, 2002 for financial reporting purposes, and will comply with periodic
impairment test procedures. Assuming the statement had been implemented by the
Company on January 1, 1999, net income and diluted earnings per share would have
been $69.3 million, $102.7 million and $89.7 million and $1.49, $2.20 and $1.89,
respectively for the years ended December 31, 2001, 2000 and 1999, respectively.
     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
related asset retirement costs. SFAS No. 143 is effective for financial
statements with fiscal years beginning after June 15, 2002. This Statement is
not expected to have a material impact on the Company's financial statements.
     During October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 is effective for financial statements with fiscal years beginning
after December 15, 2001. This Statement is not expected to have a material
impact on the Company's financial statements.



ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of operations, the Company is exposed to changes in
financial market conditions due to the denomination of its business transactions
in diverse foreign currencies and the Company's ongoing manufacturing and
funding activities. As a result, future earnings, cash flows and fair values of
assets and liabilities are subject to uncertainty. The Company has established
policies, procedures and internal processes governing its management of
uncertain market conditions, and uses both operational and financial market
actions in its risk management activities, which include the use of derivative
instruments. The Company does not use derivative instruments for trading
purposes. The Company only enters into derivative contracts based on economic
analysis of underlying exposures anticipating that adverse impacts on future
earnings, cash flows and fair values due to fluctuations in foreign currency
exchange rates will be offset by the proceeds from and changes in fair value of
the derivative instruments. The Company does not hedge its exposure to market
risks in a manner that completely eliminates the effects of changing market
conditions on earnings, cash flows and fair values.
     Short-term exposures to changing foreign currency exchange rates are
primarily due to operating cash flows denominated in foreign currencies. The
Company covers certain known and anticipated operating exposures by using
forward contracts.
     The primary currencies for which the Company has foreign currency exchange
rate exposure are the euro, Japanese yen, British pound sterling and the U.S.
dollar (in certain of its foreign locations). In response to the greater
fluctuations in foreign currency exchange rates in recent periods, the Company
has increased the degree of risk management activities to minimize their impact
on earnings of future periods.
     The Company's financial instruments, subject to foreign currency exchange
risk, consist of foreign currency forward contracts and represented a net asset
position of $0.1 million at December 31, 2001. The Company conducted a
sensitivity analysis on the fair value of its foreign currency hedge portfolio
assuming instantaneous 10% changes in foreign currency exchange rates from their
levels as of December 31, 2001, with all other variables held constant. A 10%
appreciation of the U.S. dollar against foreign currencies would result in an
increase of $0.1 million in the fair value of foreign currency exchange hedging
contracts. A 10% depreciation of the U.S. Dollar against foreign currencies
would result in a decrease of $0.2 million in the fair value of foreign currency
exchange hedging contracts.
     The sensitivity in fair value of the foreign currency hedge portfolio
represents changes in fair values estimated based on market conditions as of
December 31, 2001, without reflecting the effects of underlying anticipated
transactions.
     When those anticipated transactions are realized, actual effects of
changing foreign currency exchange rates could have a material impact on
earnings and cash flows in future periods.



<PAGE>                                                                   Page 15
ALBEMARLE CORPORATION AND SUBSIDIARIES



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------------------------------------
(In Thousands of Dollars Except Share Data)                                                                                     

December 31                                                                        2001            2000      
----------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>
Assets                                                                                                                          
Current assets:                                                                                                                 
   Cash and cash equivalents                                                  $   30,585        $ 19,300 
   Accounts receivable, less allowance for doubtful
     accounts (2001--$4,193; 2000--$2,119)                                       175,160         174,297
   Inventories:                                                                                                            
     Finished goods                                                              114,337          79,143 
     Raw materials                                                                19,551          10,804 
     Stores, supplies and other                                                   25,773          17,471
                                                                               ----------       --------- 
                                                                                 159,661         107,418 
   Deferred income taxes and prepaid expenses                                     18,255          14,139 
----------------------------------------------------------------------------------------------------------
     Total current assets                                                        383,661         315,154 
----------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost                                         1,425,203       1,326,534 
   Less accumulated depreciation and amortization                                895,531         836,460 
----------------------------------------------------------------------------------------------------------
   Net property, plant and equipment                                             529,672         490,074 
----------------------------------------------------------------------------------------------------------
Prepaid pension assets                                                           128,195         111,537 
Other assets and deferred charges                                                 56,199          42,583 
Goodwill and other intangibles net of amortization                                31,748          22,455 
----------------------------------------------------------------------------------------------------------
     Total assets                                                             $1,129,475       $ 981,803 
==========================================================================================================

Liabilities And Shareholders' Equity                                                                                            
Current liabilities:                                                                                                            
   Accounts payable                                                           $   63,559        $ 72,296 
   Long-term debt, current portion                                               157,862             299 
   Accrued expenses                                                               59,978          56,932 
   Dividends payable                                                               5,915           5,956 
   Income taxes payable                                                           16,523           6,633 
----------------------------------------------------------------------------------------------------------
     Total current liabilities                                                   303,837         142,116 
----------------------------------------------------------------------------------------------------------
Long-term debt                                                                    12,353          97,681 
Other noncurrent liabilities                                                     120,269          83,496 
Deferred income taxes                                                             99,714          99,603 
Commitments and contingencies (Note 10)                                                                                         
Shareholders' equity:                                                                                                           
   Common stock, $.01 par value (authorized 150,000,000 shares) issued
       and outstanding--45,498,201 in 2001 and 45,823,743 in 2000)                   455             458
   Additional paid-in capital                                                     51,025          57,223 
   Accumulated other comprehensive loss                                          (18,453)        (14,688)
   Retained earnings                                                             560,275         515,914 
----------------------------------------------------------------------------------------------------------
     Total shareholders' equity                                                  593,302         558,907 
----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                    $1,129,475       $ 981,803 
==========================================================================================================

<FN>
                       See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>




<PAGE>                                                                   Page 16
ALBEMARLE CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME
-----------------------------------------------------------------------------------------------------
(In Thousands Except Per-Share Amounts)                                                                                   

Years Ended December 31                                             2001          2000         1999   
-----------------------------------------------------------------------------------------------------

<S>                                                          <C>             <C>           <C>       
Net sales                                                        $916,899      $917,549     $845,925 
Cost of goods sold                                                695,564       646,086      588,983 
-----------------------------------------------------------------------------------------------------
   Gross profit                                                   221,335       271,463      256,942 
Special items                                                       2,051        (8,134)      10,692 
Selling, general and administrative expenses                       98,915       103,234       97,836 
Research and development expenses                                  21,919        26,201       34,288 
-----------------------------------------------------------------------------------------------------

   Operating profit                                                98,450       150,162      114,126 
Interest and financing expenses                                    (5,536)       (5,998)      (8,379)
Gain on sale of investment in Albright & Wilson stock, net           --            --         22,054 
Other income, net                                                   4,282         3,337          937 
-----------------------------------------------------------------------------------------------------

Income before income taxes                                         97,196       147,501      128,738 
Income taxes                                                       29,029        45,725       39,909 
-----------------------------------------------------------------------------------------------------
Net income                                                       $ 68,167      $101,776     $ 88,829 
=====================================================================================================
Basic earnings per share                                         $   1.49      $   2.22     $   1.89 
Shares used to compute basic earnings per share                    45,766        45,882       46,889 
=====================================================================================================
Diluted earnings per share                                       $   1.47      $   2.18     $   1.87 
Shares used to compute diluted earnings per share                  46,524        46,606       47,513 
=====================================================================================================
Cash dividends declared per share of common stock                $    .52      $    .46     $    .40 
=====================================================================================================
<FN>
                     See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>




<PAGE>                                                                   Page 17
ALBEMARLE CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------------------------------
(In Thousands of Dollars Except Share Data)                                                                                     
                                                                                          Accumulated
                                                                                             Other                      Total      
                                                       Common Stock          Additional   Comprehensive                 Share-
                                                   --------------------       Paid-in        (Loss)       Retained     holders'
                                                     Shares     Amounts       Capital        Income       Earnings      Equity
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>          <C>            <C>          <C>          <C>       
Balance at January 1, 1999                         47,008,283   $ 470        $ 78,724       $ 7,360      $ 365,113    $ 451,667 
---------------------------------------------------------------------------------------------------------------------------------

Comprehensive Income:                                                                                                           
   Net income for 1999                                                                                      88,829       88,829 
   Foreign currency translation                                                                                    
     (net of deferred tax benefit of $9,735)                                                (16,555)                    (16,555)
   Other (net of deferred taxes of $104)                                                        182                         182
                                                                                                                      -----------
   Total comprehensive income                                                                                            72,456 
Cash dividends declared for 1999                                                                           (18,731)     (18,731)
Exercise of stock options and SARs                     48,756                     646                                       646 
Shares purchased and retired                         (857,400)     (8)        (15,466)                                  (15,474)
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                       46,199,639     462          63,904        (9,013)       435,211      490,564 
---------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:                                                                                                           
   Net income for 2000                                                                                     101,776      101,776 
   Foreign currency translation                                                                                    
     (net of deferred tax benefit of $3,803)                                                 (6,680)                     (6,680)
   Other (net of deferred taxes of $573)                                                      1,005                       1,005
                                                                                                                      ----------
   Total comprehensive income                                                                                            96,101 
Cash dividends declared for 2000                                                                           (21,073)     (21,073)
Exercise of stock options and SARs                    132,045       1           2,060                                     2,061 
Shares purchased and retired                         (574,091)     (5)         (9,793)                                   (9,798)
Issuance of restricted stock                           66,150                   1,052                                     1,052 
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000                       45,823,743     458          57,223       (14,688)       515,914      558,907 
---------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:                                                                                                           
   Net income for 2001                                                                                      68,167       68,167 
   Foreign currency translation                                                                                    
     (net of deferred tax benefit of $2,019)                                                 (3,538)                     (3,538)
   Other (net of deferred tax benefit of $129)                                                 (227)                       (227)
                                                                                                                      -----------
   Total comprehensive income                                                                                            64,402 
Cash dividends declared for 2001                                                                           (23,806)     (23,806)
Exercise of stock options and SARs                     68,809       1             935                                       936 
Shares purchased and retired                         (417,505)     (4)         (7,581)                                   (7,585)
Issuance of restricted stock                           23,154                     448                                       448 
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001                       45,498,201    $455       $  51,025   $   (18,453)     $ 560,275   $  593,302 
=================================================================================================================================

<FN>

                            See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>




<PAGE>                                                                   Page 18
ALBEMARLE CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------------------------------
(In Thousands of Dollars)                                                                                                       


Years Ended December 31                                                                    2001          2000           1999    
---------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at beginning of year                                          $   19,300     $  48,621     $   21,180 
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>          <C>             <C>    
Cash flows from operating activities:
   Net income                                                                               68,167       101,776         88,829 
   Adjustments to reconcile net income to cash flows from operating activities:                                                 
     Depreciation and amortization                                                          77,610        73,750         75,750 
     Increase in prepaid pension assets                                                    (16,658)      (13,436)        (9,714)
     Deferred income taxes                                                                   3,517        13,405         (2,887)
     Noncash pension settlement gain                                                          --         (14,990)          --   
     Gain on sale of investment in Albright & Wilson stock, net                               --            --          (22,054)
     Write off of plant facilities                                                            --            --            7,706 
     Change in assets and liabilities, net of effects of the purchase of businesses:                                            
        Decrease (increase) in accounts receivable                                          22,098       (22,759)       (10,775)
        Decrease in inventories                                                              2,094         3,423         12,548 
        (Decrease) increase in accounts payable                                            (20,884)       11,215         18,503 
        Increase in accrued expenses and income taxes                                        1,225           445          4,963 
     Other, net                                                                              6,796         2,238          1,428 
---------------------------------------------------------------------------------------------------------------------------------
        Net cash provided from operating activities                                        143,965       155,067        164,297 
---------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Capital expenditures                                                                    (49,903)      (52,248)       (77,569)
   Acquisition of businesses, net of cash acquired                                        (113,245)      (35,006)          --   
   Investments in joint ventures and nonmarketable securities                              (12,370)      (10,733)        (7,791)
   Cost of securities available for sale                                                      --            --         (135,462)
   Proceeds from sale of securities available for sale                                        --            --          157,516 
   Other, net                                                                                 (217)          800         (2,562)

---------------------------------------------------------------------------------------------------------------------------------
        Net cash used in investing activities                                             (175,735)      (97,187)       (65,868)
---------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Proceeds from borrowings                                                                128,230        19,786        135,060 
   Repayments of long-term debt                                                            (54,091)      (79,492)      (169,758)
   Dividends paid                                                                          (23,844)      (19,752)       (18,797)
   Purchases of common stock                                                                (7,585)       (9,798)       (15,474)
   Other, net                                                                                  862         1,313            646 
---------------------------------------------------------------------------------------------------------------------------------
        Net cash provided from (used in) financing activities                               43,572       (87,943)       (68,323)
---------------------------------------------------------------------------------------------------------------------------------
Net effect of foreign exchange on cash and cash equivalents                                   (517)          742         (2,665)
---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                                            11,285       (29,321)        27,441 
---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                                $   30,585     $  19,300     $   48,621 
=================================================================================================================================

<FN>
                            See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>




<PAGE>                                                                   Page 19
ALBEMARLE CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

The consolidated financial statements include the accounts and operations of
Albemarle Corporation and all of its wholly-owned subsidiaries ("the Company" or
"Albemarle"). The Company consolidates all majority-owned and controlled
subsidiaries and applies the equity method of accounting for investments between
20% and 50% owned. All significant intercompany accounts and transactions are
eliminated in consolidation.

ESTIMATES AND RECLASSIFICATIONS

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
     Certain amounts in the accompanying notes to the consolidated financial
statements have been reclassified to conform to the current presentation.

REVENUE RECOGNITION

Sales revenue is recognized when (1) ownership and all rewards and risks of loss
have been transferred to the buyer, (2) the price is fixed and determinable and
(3) collectibility is reasonably assured. Revenue from services is recognized
when costs of providing services are incurred.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the accompanying consolidated financial statements
consist of cash and time deposits of the Company. Time deposits of 90 days or
less are stated at cost, which approximates market value.

INVENTORIES

Inventories are stated at the lower of cost or market, with cost determined on
the last-in, first-out ("LIFO") basis for substantially all domestic inventories
except stores and supplies, and on either the weighted-average or first-in,
first-out cost basis for other inventories.

PROPERTY, PLANT AND EQUIPMENT

Accounts include costs of assets constructed or purchased, related delivery and
installation costs and interest incurred on significant capital projects during
their construction periods. Expenditures for renewals and betterments also are
capitalized, but expenditures for repairs and maintenance are expensed as
incurred. The cost and accumulated depreciation applicable to assets retired or
sold are removed from the respective accounts, and gains or losses thereon are
included in income. Depreciation is computed primarily by the straight-line
method based on the estimated useful lives of the assets.
     The Company evaluates historical and expected undiscounted operating cash
flows of the related business units or fair value of property, plant and
equipment to determine the future recoverability of any property, plant and
equipment recorded. For purposes of determining these evaluations, undiscounted
cash flows are grouped at levels which management uses to operate the business,
which in some cases include businesses on a worldwide basis. Recorded property,
plant and equipment is reevaluated on the same basis at the end of each
accounting period whenever any significant permanent changes in business or
circumstances have occurred which might impair recovery.
     During 1999, the Company recorded asset write-downs of approximately $7,706
in connection with its ongoing review of its Polymer Chemicals operating
segment. These charges were recorded as a component of cost of goods sold in the
Company's statement of operations and are described in detail as follows. During
the fourth quarter of 1999, $2,925 of deferred engineering costs, incurred in
connection with the planned construction of a flame-retardant plant, were
written off since it was decided not to proceed with the proposed plant. The
assets were written-off as the fair value of the assets were deemed to be zero.
During the third quarter of 1999, the remaining net book value of certain flame
retardant production assets, totaling $2,381, were taken out of service and
written off due to the earlier than anticipated start-up of new replacement
production assets. During the second quarter of 1999, the remaining net book
value of certain flame retardant production assets, totaling $2,400, were idled
and written off due to changes in customer demand for the flame-retardant
product and a determination that the assets had a fair value of zero.
     The costs of brine wells, leases and royalty interests are primarily
amortized over the estimated average life of the well. On a yearly basis for all
wells, this approximates a unit-of-production method based upon estimated
reserves and production volumes.

<PAGE>                                                                   Page 20
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

INVESTMENTS

The Company's investments in joint ventures and nonmarketable securities
amounted to $39,944 and $26,416 at December 31, 2001 and 2000, respectively. At
December 31, 2001, the Company's equity interest in 8 joint ventures and 5
nonmarketable securities amounted to $31,941 and $8,003, respectively. The
Company's investment in any single investee is less than $15,000 and is
accounted for under the equity method. The Company's share of the investee's
(losses) earnings included in the consolidated statement of operations as a
component of other income, net totaled ($645), $1,339 and ($1,017) for the years
ended December 31, 2001, 2000 and 1999, respectively.
     Investments in marketable equity securities at December 31, 2001 and 2000,
are accounted for as available-for-sale securities, with changes in fair value
included in "accumulated other comprehensive (loss) income" in the shareholders'
equity section of the consolidated balance sheets. The aggregate fair value of
these investments totaled $3,743 and $4,200 at December 31, 2001 and 2000,
respectively. Net unrealized (losses) gains totaled ($227) and $1,005 at
December 31, 2001 and 2000, respectively.
     These investments are included in the balance sheets under the caption
"Other assets and deferred charges".


ENVIRONMENTAL COMPLIANCE AND REMEDIATION

Environmental compliance costs include the cost of purchasing and/or
constructing assets to prevent, limit and/or control pollution or to monitor the
environmental status at various locations. These costs are capitalized and
depreciated based on estimated useful lives.
     Environmental compliance costs also include maintenance and operating costs
with respect to pollution prevention and control facilities and other
administrative costs. Such operating costs are expensed as incurred.
     Environmental remediation costs of facilities used in current operations
are generally immaterial and are expensed as incurred.
     The Company accrues for environmental remediation costs and
post-remediation costs on an undiscounted basis at facilities or off-plant
disposal sites that relate to existing conditions caused by past operations in
the accounting period in which responsibility is established and when the
related costs are estimable. In developing these cost estimates, evaluation is
given to currently available facts regarding each site, with consideration given
to existing technology, presently enacted laws and regulations, prior experience
in remediation of contaminated sites, the financial capability of other
potentially responsible parties and other factors, subject to uncertainties
inherent in the estimation process. Additionally, these estimates are reviewed
periodically, with adjustments to the accruals recorded as necessary.


GOODWILL AND OTHER INTANGIBLES

Goodwill and other intangibles consist principally of goodwill, product licenses
and patents. Goodwill amounted to $26,704 and $21,485 at December 31, 2001 and
2000, respectively, net of accumulated amortization and effects of foreign
currency translation adjustments. Goodwill acquired prior to July 1, 2001 is
being amortized on a straight-line basis over periods of 16 to 20 years.
Intangible assets ($5,044 and $970 at December 31, 2001 and 2000, respectively,
net of accumulated amortization and effects of foreign currency translation
adjustments) are amortized on a straight-line basis over periods from three to
17 years. Amortization of goodwill and other intangibles amounted to $2,400,
$2,694 and $2,091 for 2001, 2000 and 1999, respectively. As of January 1, 2002,
the Company will discontinue amortizing goodwill as required by SFAS No. 142,
"Goodwill and Other Intangible Assets." Assuming the statement had been
implemented by the Company on January 1, 1999, net income and diluted earnings
per share would have been $69,300, $102,700, $89,700 and $1.49, $2.20 and $1.89,
respectively for the years ended December 31, 2001, 2000 and 1999, respectively.
     Accumulated amortization of goodwill and other intangibles was $21,980 and
$19,580 at the end of 2001 and 2000, respectively. The Company evaluates
historical and expected undiscounted operating cash flows of the related
business units to determine the future recoverability of any goodwill recorded.
For purposes of determining these evaluations, undiscounted cash flows are
grouped at levels which management uses to operate the business, which in some
cases include businesses on a worldwide basis. Recorded goodwill is reevaluated
on the same basis at the end of each accounting period whenever any significant,
permanent changes in business or circumstances have occurred which might impair
recovery.


RESEARCH AND DEVELOPMENT EXPENSES

The Company-sponsored research and development expenses related to present and
future products are expensed currently as incurred.



<PAGE>                                                                   Page 21
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Annual costs of pension plans are determined actuarially based on Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 87, "Employers' Accounting for Pensions" ("SFAS No. 87"). The
Company's policy is to fund U.S. pension plans at amounts not less than the
minimum requirements of the Employee Retirement Income Security Act of 1974 and
generally for obligations under its foreign plans to deposit funds with trustees
and/or under insurance policies. Annual costs of other postretirement plans are
accounted for based on SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions." The policy of the Company is to fund
post-retirement health benefits for retirees on a pay-as-you-go basis.

EMPLOYEE SAVINGS PLAN

Certain Company employees participate in the Albemarle-defined contribution
401(k) employee savings plan which is generally available to all U.S. full-time
salaried and non-union hourly employees and to employees who are covered by a
collective bargaining agreement which included such participation.
     The plan is funded with contributions by participants and the Company. The
Company's contributions to the 401(k) approximated $5,205, $4,860 and $5,090 in
2001, 2000 and 1999, respectively.

INCOME TAXES

The Company and its subsidiaries file consolidated U.S. Federal income tax
returns and individual foreign income tax returns.
     Deferred income taxes result from temporary differences in the recognition
of income and expenses for financial and income tax reporting purposes, using
the liability or balance sheet method. Such temporary differences result
primarily from differences between the financial statement carrying amounts and
tax basis of assets and liabilities using enacted tax rates in effect in the
years in which the differences are expected to reverse. It is the Company's
policy to record deferred income taxes on any undistributed earnings of foreign
subsidiaries that are not deemed to be, or are not intended to be, permanently
reinvested in those subsidiaries.
     In connection with the spin-off of Ethyl Corporation's ("Ethyl") olefins
and derivatives, bromine chemicals, and specialty chemicals businesses ("the
predecessor businesses") into Albemarle Corporation in 1994, the Company and
Ethyl entered into a tax sharing agreement whereby Ethyl agreed to indemnify and
hold harmless the Company against all taxes attributable to the predecessor
businesses prior to the spin-off, with the exception of certain of the Company's
subsidiaries which remained responsible for their taxes.

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

SFAS No. 130 "Reporting Comprehensive Income," established rules for the
reporting of comprehensive income. Comprehensive income is defined as net income
and other comprehensive income and is displayed in the shareholders' equity
section of the consolidated balance sheets.

FOREIGN CURRENCY TRANSLATION

The assets and liabilities of all foreign subsidiaries were prepared in their
respective local currencies and translated into U.S. dollars based on the
current exchange rate in effect at the balance sheet dates, while income and
expenses were translated at average rates for the periods presented. Translation
adjustments have no effect on net income. Transaction adjustments are included
in cost of goods sold. Foreign currency transaction adjustments resulted in
gains (losses) of $492, ($798) and $6,034 in 2001, 2000 and 1999, respectively.
Foreign currency transaction gains and losses herein are net of the foreign
exchange gains and losses from financial instruments activity below.

FINANCIAL INSTRUMENTS

The Company manages its foreign currency exposures by maintaining certain assets
and liabilities in approximate balance and through the use from time to time of
foreign exchange contracts. The principal objective of such contracts is to
minimize the risks and/or costs associated with global operating activities. The
Company does not utilize financial instruments for trading or other speculative
purposes. The counterparties to these contractual agreements are major financial
institutions with which the Company generally also has other financial
relationships. The Company is exposed to credit loss in the event of
nonperformance by these counterparties. However, the Company does not anticipate
nonperformance by the other parties, and no material loss would be expected from
their nonperformance.
     The Company enters into forward currency exchange contracts, which
typically expire within one year, in the regular course of business to assist in
managing its exposure against foreign currency fluctuations on sales and
intercompany transactions.
     While these hedging contracts are subject to fluctuations in value, such
fluctuations are generally offset by the value of the underlying foreign
currency exposures being hedged. Gains and losses on forward contracts are
recognized currently in income. The Company had outstanding forward exchange
contracts at December 31, 2001, hedging US dollar payables in its Japanese
subsidiary, with a notional value totaling $1,553.

<PAGE>                                                                   Page 22
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

     The Company had outstanding forward exchange contracts at December 31,
2000, hedging Belgian francs receivables with a notional value totaling $2,691.
For the years ended December 31, 2001, 2000 and 1999, the Company recognized
(losses) gains of ($43), $447 and ($1,001), respectively, in income before
income taxes on its exchange contracts.

STOCK-BASED COMPENSATION

SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123")
encourages, but does not require, companies to record at fair value,
compensation cost for stock-based employee compensation plans. The Company has
chosen to continue to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB Opinion No. 25") and related
interpretations (See Note 9, "Capital Stock"). Under the intrinsic method,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.

NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Company's transition adjustment and
related cumulative effect of a change in accounting principle relating to the
adoption of SFAS No. 133 did not have a material effect on the financial
position or results of operations in 2001. In connection with the adoption of
SFAS No. 133, the Company elected not to utilize hedge accounting for then
existing derivatives. Consequently, changes in the fair value of derivatives
will be recognized in the Company's statement of operations.
     In July 2001, the Company  adopted SFAS No. 141,  "Business  Combinations."
SFAS No. 141 requires  that the purchase  method of  accounting  be used for all
business  combinations  initiated after June 30, 2001 and  establishes  specific
criteria for the recognition of intangible assets separately from goodwill.  The
adoption  of SFAS  No.  141 did not  have a  material  impact  on the  Company's
financial statements.
     Also during July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 142 eliminates the amortization of goodwill and
instead requires a periodic review of any goodwill balance for possible
impairment. SFAS No. 142 also requires that goodwill be allocated at the
reporting unit level. The statement is effective for years beginning after
December 15, 2001. The Company will discontinue amortization of goodwill as of
January 1, 2002 for financial reporting purposes, and will comply with periodic
impairment test procedures.
     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
related asset retirement costs. SFAS No. 143 is effective for financial
statements with fiscal years beginning after June 15, 2002. This Statement is
not expected to have a material impact on the Company's financial statements.
     During October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 is effective for financial statements with fiscal years beginning
after December 15, 2001. This Statement is not expected to have a material
impact on the Company's financial statements.


NOTE 2--SUPPLEMENTAL CASH FLOW INFORMATION:

Supplemental information for the consolidated statements of cash flows is as
follows:


<TABLE>
<CAPTION>
                                    2001     2000     1999
-------------------------------------------------------------
<S>                                <C>      <C>      <C>    
Cash paid during the year for:
     Income taxes                  $17,684  $35,670  $31,285
     Interest and financing
        expenses (net of
        capitalization)              5,383    5,944    8,236
=============================================================
</TABLE>



<PAGE>                                                                   Page 23
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

NOTE 3--Earnings Per Share:

Basic and diluted earnings per share are calculated as follows:


<TABLE>
<CAPTION>
                                    2001       2000       1999
------------------------------------------------------------------
<S>                                 <C>       <C>         <C>    
Basic earnings per share
Numerator:
Income available to
   stockholders, as reported        $68,167   $101,776    $88,829
------------------------------------------------------------------

Denominator:
Average number of shares of
   common stock outstanding          45,766     45,882     46,889
------------------------------------------------------------------
Basic earnings per share            $  1.49   $   2.22    $  1.89
==================================================================


Diluted earnings per share
Numerator:
Income available to
   stockholders, as reported        $68,167   $101,776    $88,829
------------------------------------------------------------------

Denominator:
Average number of shares of
   common stock outstanding          45,766     45,882     46,889
Shares issuable upon exercise
   of stock options and other
   common stock equivalents             758        724        624
------------------------------------------------------------------
Total shares                         46,524     46,606     47,513
------------------------------------------------------------------
Diluted earnings per share          $  1.47   $   2.18    $  1.87
==================================================================
</TABLE>


NOTE 4--INVENTORIES:

Domestic inventories stated on the LIFO basis amounted to $90,282 and $64,068 at
December 31, 2001 and 2000, respectively, which are below replacement cost by
approximately $24,655 and $26,395, respectively.


NOTE 5--DEFERRED INCOME TAXES AND PREPAID EXPENSES:

Deferred income taxes and prepaid expenses consist of the following:


<TABLE>
<CAPTION>
                                          2001         2000
----------------------------------------------------------------
<S>                                         <C>          <C>    
Deferred income taxes--current             $13,878      $10,410
Prepaid expenses                             4,377        3,729
----------------------------------------------------------------
     Total                                 $18,255      $14,139
================================================================
</TABLE>



NOTE 6--PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, at cost, consists of the following:


<TABLE>
<CAPTION>
                                            2001         2000
----------------------------------------------------------------
<S>                                       <C>          <C>     
Land                                       $21,156     $ 19,063
Land improvements                           29,868       30,376
Buildings                                   90,003       87,133
Machinery and equipment                  1,259,318    1,168,599
Construction in progress                    24,858       21,363
----------------------------------------------------------------
   Total                                $1,425,203   $1,326,534
================================================================
</TABLE>



     The cost of property, plant and equipment is depreciated, generally by the
straight-line method, over the following useful lives: land improvements--5 to
30 years; buildings--10 to 40 years; and machinery and equipment--3 to 40 years.
     Interest capitalized on significant capital projects in 2001, 2000 and 1999
was $773, $1,192 and $1,978, respectively, while amortization of capitalized
interest (which is included in depreciation expense) in 2001, 2000 and 1999 was
$1,484, $1,495 and $1,440, respectively.


NOTE 7--ACCRUED EXPENSES:

Accrued expenses consist of the following:


<TABLE>
<CAPTION>
                                          2001         2000
----------------------------------------------------------------
<S>                                       <C>          <C>     
Employee benefits, payroll and            
   related taxes                           $30,454      $31,010
Taxes other than income and payroll          7,211        7,426
Other                                       22,313       18,496
----------------------------------------------------------------
   Total                                   $59,978      $56,932
================================================================
</TABLE>



NOTE 8--LONG-TERM DEBT:

Long-term debt consists of the following:


<TABLE>
<CAPTION>
                                          2001           2000
----------------------------------------------------------------
<S>                                       <C>           <C>     
Variable-rate bank loans                  $144,600      $70,000
Foreign borrowings                          13,584       15,916
Industrial revenue bonds                    11,000       11.000
Miscellaneous                                1,031        1,064
----------------------------------------------------------------
   Total                                   170,215       97,980
Less amounts due within one year            57,862          299
----------------------------------------------------------------
   Long-term debt                         $ 12,353      $97,681
================================================================
</TABLE>




<PAGE>                                                                   Page 24
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

     Maturities of long-term  debt are as follows:  2002--$157,862;  2003--$295;
2004--$146; 2005--$47; 2006--$51 and 2007 through 2021--$11,814.
     The Company has a five-year, $500,000 unsecured Competitive Advance and
Revolving Credit Facility Agreement (the "Credit Agreement") that was entered
into on September 24, 1996. The maturity date of the Credit Agreement has been
extended to September 29, 2002. At December 31, 2001 and 2000, $125,000 and
$55,000 in borrowings were outstanding under the Credit Agreement, respectively.
The Credit Agreement contains certain covenants typical for a credit agreement
of its size and nature, including financial covenants requiring the Company to
limit consolidated indebtedness (as defined) to not more than 60% of the sum of
the Company's consolidated shareholders' equity (as defined) and consolidated
indebtedness. The average interest rate on 2001 and 2000 borrowings under the
Credit Agreement was 3.82% and 6.58%, respectively, with a year-end interest
rate of 2.23% and 6.86% on the balance outstanding at December 31, 2001 and
2000, respectively.
     The Company has three additional agreements with domestic financial
institutions which provide immediate, uncommitted credit lines, on a short-term
basis, up to a maximum of $120,000 at the individual financial institution's
money market rate. At December 31, 2001 and 2000, $19,600 and $15,000 in
borrowings under these agreements were outstanding, respectively. The average
interest rate on borrowings under these agreements was 4.48% and 6.68% in 2001
and 2000, respectively, with a year-end interest rate of 2.00% and 6.88% on
balances outstanding at December 31, 2001 and 2000, respectively.
     One of the Company's foreign subsidiaries has an existing agreement with a
foreign bank which provides immediate uncommitted credit lines, on a short-term
basis, up to a maximum of approximately 2.5 billion Japanese yen ($19,075) at
the individual bank's money market rate. At December 31, 2001 and 2000,
borrowings under this agreement consisted of 1.7 billion Japanese yen ($12,971)
and 1.7 billion Japanese yen ($14,824), respectively. The average interest rate
on borrowings under this agreement was 1.43% and 1.42% in 2001 and 2000,
respectively with a year-end interest rate of 1.38% and 1.50% at December 31,
2001 and 2000, respectively. Certain of the Company's remaining foreign
subsidiaries have three additional agreements with foreign institutions which
provide immediate uncommitted credit lines, on a short term basis, up to a
maximum of approximately $20,646 at the individual institution's money market
rate. These agreements have been guaranteed by the Company. At December 31, 2001
and 2000, borrowings under these agreements were $0 and $183, respectively. The
average interest rate on borrowings under these agreements was 4.40% and 6.40%
in 2001 and 2000, respectively. The year-end interest rate was 4.59% and 6.37%
at December 31, 2001 and 2000, respectively. Additional foreign borrowings at
December 31, 2001 and 2000, consisted of 4.6 million French francs ($613) and
6.4 million French francs ($909), respectively. The average interest rate on
these borrowings was 0.50% at December 31, 2001 and 2000. The year-end interest
rate was 0.50% at December 31, 2001 and 2000.
     At December 31, 2000, the Company had the ability to refinance its
borrowings under uncommitted credit lines with domestic financial institutions
and foreign banks with borrowings under the Credit Agreement, therefore, these
amounts were classified as long-term debt. At December 31, 2001, these amounts
are reflected in the accompanying financial statements as current debt.
     The Company has a Loan Agreement with Columbia County, Arkansas ("the
County"), which issued $11,000 in Tax-Exempt Solid Waste Disposal Revenue Bonds
("Tax-Exempt Bonds") for the purpose of financing various solid waste disposal
facilities at the Company's Magnolia, Arkansas South Plant. At December 31, 2001
and 2000, $11,000 in borrowings from this agreement was outstanding. The
Tax-Exempt Bonds bear interest at a variable rate which approximates 65% of the
federal funds rate. The average interest rate was 2.84% and 4.34% in 2001 and
2000, respectively, with a year-end interest rate of 1.75% and 5.20%. The
Tax-Exempt Bonds will mature on March 1, 2021 and are collateralized by a
transferable irrevocable direct-pay letter of credit. Concurrently, the Company
and the County entered into a series of agreements. Pursuant to these
agreements, the Company will benefit from a ten-year property tax abatement on
all new capital plant expansions, modifications and/or improvements (except for
the restrictions on the $11,000 Tax-Exempt Bonds) constructed at the Company's
Magnolia, Arkansas South Plant over the next two years, up to a total of
$81,000, including the solid waste disposal facilities mentioned above.


NOTE 9--CAPITAL STOCK:

PREFERRED STOCK

The Company has the authority to issue 15,000,000 shares of preferred stock, in
one or more classes or series. No shares of the Company's preferred stock have
been issued to date.


<PAGE>                                                                   Page 25
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

STOCK PURCHASES

During 2001, the Company purchased, in market transactions, 417,505 common
shares for $7,585, at an average price of $18.17 per share. The Company
purchased 574,091 common shares, in market transactions, for $9,798, at an
average price of $17.07 per share during 2000. During 1999, the Company
purchased, in market transactions, 857,400 shares for $15,474, at an average
price of $18.05 per share. The Company had authorization to purchase at December
31, 2001 an additional 4,588,200 shares of its common stock.


INCENTIVE PLANS

The Company has two incentive plans (1994 and 1998 plans). The plans provide for
incentive awards payable in either cash or common stock of the Company,
qualified and non-qualified stock options ("stock options"), stock appreciation
rights ("SARs"), and restricted stock awards and performance awards ("stock
awards"). Under the 1994 plan, a maximum of 3,200,000 shares of the Company's
common stock could be issued pursuant to the exercise of stock options, SARs or
the grant of stock awards. At December 31, 2001, 466,985 shares are available
under the 1994 plan. However, it is not anticipated that any additional grants
or awards will be made under the 1994 plan. Under the 1998 plan, a maximum of
3,000,000 shares of the Company's common stock may be issued as incentive
awards, stock options, SARs or stock awards. At December 31, 2001, 1,456,650
shares are available under the 1998 plan. Total compensation expense associated
with the Company's incentive plans in 2001, 2000 and 1999 amounted to $3,299,
$9,595 and $2,970, respectively.
     Stock options outstanding under the two plans have been granted at prices
which are equal to the market value of the stock on the date of grant and expire
5 to 10 years after issuance. The stock options become exercisable based upon
either (a) growth in operating earnings as defined from the base-year earnings,
(b) the increase in fair market value ("FMV") of the Company's common stock,
during a specified period, from the FMV on the date of grant, or (c) at the end
of a fixed period as defined in the agreements.

Presented below is a summary of the activity in the 1994 and 1998 plans:


<TABLE>
<CAPTION>
                                                   Shares                                      Weighted-
                                                  Available     Options                         Average
                                                  for Grant     Activity     Options Price   Exercise Price
-------------------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>          <C>                  <C>   
January 1, 1999                                   3,262,939    1,834,287    $ 10.36--$25.75      $17.84
Non-qualifying stock options granted               (388,500)     388,500*   $ 20.00--$25.75      $21.48
Exercised                                                        (53,448)   $ 12.29--$13.13      $12.89
Restricted stock awards                             (15,500)                                        
-------------------------------------------------------------------------------------------------------------
December 31, 1999                                 2,858,939    2,169,339    $ 10.36--$25.75      $18.62
Non-qualifying stock options granted               (445,500)     445,500*   $ 15.94--$22.31      $17.12
Exercised                                                       (237,368)   $ 10.36--$13.47      $13.06
Non-qualifying stock options canceled and lapsed     97,000      (97,000)   $ 13.13--$25.75      $23.14
Restricted stock awards                            (206,000)                                          
Restricted stock awards canceled                     69,350                                           
-------------------------------------------------------------------------------------------------------------
December 31, 2000                                 2,373,789    2,280,471    $ 12.12--$25.75      $18.70
Non-qualifying stock options granted               (472,500)     472,500*   $ 21.32--$24.38      $24.31
Exercised                                                        (80,139)   $ 12.12--$15.94      $13.12
Non-qualifying stock options canceled and lapsed     28,000      (28,000)   $ 15.94--$25.75      $22.23
Restricted stock awards                             (10,000)                                          
Restricted stock awards canceled                      4,346                                           
-------------------------------------------------------------------------------------------------------------

December 31, 2001                                 1,923,635    2,644,832    $ 13.13--$25.75      $19.84
=============================================================================================================

<FN>
*The weighted average fair values of options granted during 2001, 2000 and 1999 were $8.07, $10.99 and $6.01,
 respectively.
</FN>
</TABLE>




<PAGE>                                                                   Page 26
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

The following table summarizes information about fixed-price stock options at
December 31, 2001:


<TABLE>
<CAPTION>
                                             Options Outstanding                                     Options Exercisable
---------------------------------------------------------------------------------------------------------------------------------
                                       Number            Weighted-Average       Weighted-    Average Number         
   Month/Year         Exercise       Outstanding        Remaining Contractual   Exercise      Exercisable       Weighted Average
   of Grants           Prices        at 12/31/01              Life               Price        at 12/31/01        Exercise Price
---------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>                    <S>                 <C>           <C>                   <C>
     12 / 1992        $13.47            16,407                1.0 years           $13.47          16,407              $13.47
      3 / 1994         13.13           554,425                2.2 years            13.13         554,425               13.13
      8 / 1996         17.38           293,000                4.7 years            17.38         234,400               17.38
      3 / 1998         25.25            50,000                6.3 years            25.25          10,000               25.25
      4 / 1998         25.75           419,000(a)             6.3 years            25.75              --               25.75
     11 / 1998         25.75            40,000(a)             6.8 years            25.75              --               25.75
      3 / 1999         25.75           100,000(a)             7.2 years            25.75              --               25.75
      6 / 1999         20.00           267,000(a)             7.5 years            20.00         133,500               20.00
      1 / 2000         19.19            50,000(a)             8.0 years            19.19          25,000               19.19
      2 / 2000         15.94           327,500                5.2 years            15.94         163,750               15.94
      4 / 2000         20.31             5,000                3.3 years            20.31           5,000               20.31
      7 / 2000         22.31            50,000(a)             8.5 years            22.31              --               22.31
      1 / 2001         24.38           392,500                9.1 years            24.38              --               24.38
      5 / 2001         24.38            50,000                9.3 years            24.38              --               24.38
      7 / 2001         24.38            15,000                9.5 years            24.38              --               24.38
      8 / 2001         21.32            10,000                9.7 years            21.32              --               21.32
     12 / 2001         24.00             5,000               10.0 years            24.00              --               24.00
---------------------------------------------------------------------------------------------------------------------------------
                                     2,644,832                                                 1,142,482            
=================================================================================================================================

</TABLE>

(a) During 2001, the lives of these options were extended from seven years to
ten years.

     Contingent restricted stock awards were granted to certain employees of the
Company in 2001, 2000 and 1999. Issuance of restricted stock is determined based
on certain performance criteria over periods which could result in as many as
twice the number of shares being issued as restricted stock, or none could be
issued if the performance criteria are not met. Upon issuance, the restricted
stock vests over a period of three years.

     The following table summarizes the contingent restricted stock awards
outstanding in 1999, 2000 and 2001:

<TABLE>
<CAPTION>
                                                                                                            Contingent Restricted
                                                                                                                    Shares        
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                                     <C>     
Awards outstanding--January 1, 1999                                                                                      250,000 
Awards granted                                                                                                            13,500 
---------------------------------------------------------------------------------------------------------------------------------
Awards outstanding--December 31, 1999                                                                                    263,500 
Restricted stock issued to retirees                                                                                       (4,860)
Restricted stock issued to employees                                                                                     (61,290)
Awards canceled                                                                                                          (69,350)
Awards granted                                                                                                           146,000 
---------------------------------------------------------------------------------------------------------------------------------
Awards outstanding--December 31, 2000                                                                                    274,000 
Restricted stock issued to retirees                                                                                       (3,154)
Awards canceled                                                                                                           (4,346)
Awards granted                                                                                                            10,000 
---------------------------------------------------------------------------------------------------------------------------------
Awards outstanding--December 31, 2001                                                                                    276,500 
=================================================================================================================================

</TABLE>


     In addition, restricted stock for 62,000 shares were granted in 2000 and
1999 which vest over a fixed period as defined in the agreements. During 2001,
20,000 shares were vested and issued.



<PAGE>                                                                   Page 27
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

     In January 2002, the Company's Executive Compensation Committee approved
the conversion of certain performance based restricted stock awards to
performance unit awards, reducing the potential number of shares to be issued
upon meeting the original performance criteria. If the original performance
criteria is met, 50 percent of the value of the incentive award is payable in
restricted cash and 50 percent of the value of the incentive award is payable in
shares of Albemarle common stock, based on the closing market price of Albemarle
common stock on the date of vesting. Both the restricted cash award and the
restricted stock vest over a three year period.
     As discussed in Note 1, "Summary of Significant Accounting Policies," the
Company accounts for stock-based compensation plans under APB Opinion No. 25. If
compensation cost had been determined based on the fair value at the grant date
for awards made in 2001, 2000 and 1999 under the plans consistent with the
method of SFAS No. 123, the Company's net income and earnings per share would
have been reduced to the pro forma amounts indicated below:


<TABLE>
<CAPTION>
                                      2001        2000
-------------------------------------------------------------
<S>                               <C>          <C>      
Net income        as reported     $  68,167    $ 101,776
                  pro forma       $  66,524    $ 100,437
-------------------------------------------------------------
Basic earnings    as reported     $    1.49    $    2.22
per share         pro forma       $    1.45    $    2.19
-------------------------------------------------------------
Diluted earnings  as reported     $    1.47    $    2.18
per share         pro forma       $    1.43    $    2.16
=============================================================
</TABLE>


     The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for options granted in 2001, 2000 and 1999, respectively:
dividend yield 3.02%, 2.43% and 2.68%; expected volatility of 31.71%, 32.90% and
31.44%; risk-free interest rate of 5.51%, 5.14% and 6.56%; and expected lives of
seven years.


NOTE 10--COMMITMENTS AND CONTINGENCIES:

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Contractual obligations for plant construction, purchases of equipment, unused
lines of credit and various take or pay and throughput agreements amounted to
approximately $85,323 and $65,592 at December 31, 2001 and 2000, respectively.
     In addition, the Company has commitments, in the form of guarantees, for
50% of the loan amounts outstanding (which at December 31, 2001, amounted to
$7,400) from time to time of its 50%-owned joint venture company, Jordan Bromine
Company Limited ("JBC"). JBC entered into the loan agreements in 2000 to finance
construction of certain bromine and derivatives manufacturing facilities on the
Dead Sea. The Company's total loan guarantee commitment for JBC is 50% of the
total loan agreements, which could amount to $73,000 if JBC makes all of its
allowable draws.


SERVICE AGREEMENTS

The Company and Ethyl are parties to various agreements, dated as of February
28, 1994, pursuant to which the Company and Ethyl agreed to coordinate certain
facilities and services of adjacent operating facilities at plants in Pasadena,
Texas, Baton Rouge, Louisiana and Feluy, Belgium. In addition, the Company and
Ethyl are parties to agreements providing for the blending by the Company of
Ethyl's additive products and the production of antioxidants and manganese-based
antiknock compounds at the Orangeburg, South Carolina plant. The Company's
billings to Ethyl in 2001, 2000 and 1999 in connection with these agreements
amounted to $23,776, $28,409 and $29,556, respectively.
     The Company and MEMC Pasadena, Inc. ("MEMC Pasadena") are parties to
agreements dated as of July 31, 1995 and subsequently revised effective May 31,
1997, pursuant to which the Company provides certain utilities and services to
the MEMC Pasadena site which is located at Albemarle's Pasadena plant and on
which the electronic materials facility is located. MEMC Pasadena agreed to
reimburse Albemarle for all the costs and expenses plus a percentage fee
incurred as a result of these agreements. The Company's billings to MEMC
Pasadena, in connection with these agreements amounted to $7,882 in 2001, $6,824
in 2000 and $6,339 in 1999.
     The Company and BP Amoco Chemical Company [formerly Amoco Chemical Company
("BP")] are parties to numerous operating and service agreements, dated as of
March 1, 1996, pursuant to which the Company provides operating and support
services, certain utilities and products to BP, and BP provides operating and
support services, certain utilities and products to Albemarle, at their
respective facilities in Pasadena, Texas and Feluy, Belgium. The Company's
billings to BP in 2001, 2000 and 1999, in connection with these agreements,
amounted to $53,488, $47,343 and $39,270, respectively. BP's billings to the
Company in 2001, 2000 and 1999, in connection with these agreements, amounted to
$16,330, $15,382 and $14,735, respectively.


ENVIRONMENTAL

The Company has recorded liabilities of $30,245, at December 31, 2001, up


<PAGE>                                                                   Page 28
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

$18,713, from $11,532 at December 31, 2000, primarily due to the Company's May
31, 2001, acquisition of Martinswerk GmbH, Bergheim, Germany in which the
Company assumed approximately $16,650 of additional government regulated
environmental liabilities, which will be paid out over the next 13 years, as a
part of the purchase price. The amounts recorded represent management's best
estimate of the Company's undiscounted future remediation and other anticipated
environmental costs relating to past operations.
     Although it is difficult to quantify the potential financial impact of
compliance with environmental protection laws, management estimates, based on
the latest available information, that there is a reasonable possibility that
future environmental remediation costs to be incurred over a period of time
associated with the Company's past operations in excess of amounts already
recorded, could be up to $9,700 before income taxes. However, the Company
believes that the amount it may be required to pay in connection with
environmental remediation matters in excess of the amounts recorded should occur
over a period of time and should not have a material adverse impact on its
financial condition or results of operations, but could have a material adverse
impact in a particular quarterly reporting period.


RENTAL EXPENSE

The Company has a number of operating lease agreements, primarily for office
space, transportation equipment and storage facilities. Future minimum lease
payments for the next five years for all noncancelable leases as of December 31,
2001 are $6,303 for 2002, $4,198 for 2003, $1,163 for 2004, $384 for 2005, $242
for 2006 and amounts payable after 2006 are $330. Rental expense was
approximately $13,540 for 2001, $13,280 for 2000, and $13,840 for 1999.


LITIGATION

The Company is, from time to time, subject to routine litigation incidental to
its businesses. The Company is not party to any pending litigation proceedings
that are expected to have a material adverse effect on the Company's results of
operations or financial condition.


NOTE 11--PENSION PLANS AND OTHER POSTRETIREMENT

BENEFITS:

The Company has noncontributory defined-benefit pension plans covering most
employees. The benefits for these plans are based primarily on compensation
and/or years of service. The funding policy for each plan complies with the
requirements of relevant governmental laws and regulations. Plan assets consist
principally of common stock, U.S. government and corporate obligations and group
annuity contracts. The pension information for all periods presented includes
amounts related to salaried and hourly plans. The net prepaid (accrued) benefit
cost related to pensions is included in "Prepaid pension assets" and "Other
noncurrent liabilities" in the consolidated balance sheets.
     The Company provides postretirement medical benefits and life insurance for
certain groups of U.S. retired employees. Medical and life insurance benefit
costs are funded principally on a pay-as-you-go basis. Although the availability
of medical coverage after retirement varies for different groups of employees,
the majority of employees who retire before becoming eligible for Medicare can
continue group coverage by paying all or most of the cost of a composite monthly
premium designed to cover the claims incurred by active and retired employees.
The availability of group coverage for Medicare-eligible retirees also varies by
employee group with coverage designed either to supplement or coordinate with
Medicare. Retirees generally pay a portion of the cost of the coverage. Plan
assets for retiree life insurance are held under an insurance contract and
reserved for retiree life insurance benefits. The accrued postretirement benefit
cost is included in "Other noncurrent liabilities" in the consolidated balance
sheets.
     Pension coverage for employees of the Company's foreign subsidiaries is
provided through separate plans. Obligations under such plans are systematically
provided for by depositing funds with trustees or under insurance policies. The
pension cost, actuarial present value of benefit obligations and plan assets
have been combined with the Company's other pension disclosure information
presented.



<PAGE>                                                                   Page 29
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

The following provides a reconciliation of benefit obligations, plan assets and
funded status of the plans, as well as a summary of significant assumptions:


<TABLE>
<CAPTION>

                                                                                                 Other          
                                                            Pension Benefits            Postretirement Benefits
-----------------------------------------------------------------------------------------------------------------
                                                         2001              2000            2001          2000  
-----------------------------------------------------------------------------------------------------------------
Change in benefit obligations                                                                                      
-----------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>             <C>             <C>     
Benefit obligation at January 1                       $304,864          $338,114         $59,766        $55,909 
Service cost                                             8,579             8,737           2,067          1,887 
Interest cost                                           22,792            21,064           4,514          4,142 
Plan amendments                                            307               877            --             --   
Assumption changes                                      10,121            (9,891)          9,661         (2,335)
Actuarial loss                                           2,328             1,767           2,398          2,803 
Benefits paid                                          (15,332)          (13,464)         (3,344)        (2,640)
Acquisition of Martinswerk GmbH                         14,412              --              --             --   
Plan curtailments, termination benefits and
    termination of insurer contracts                      --             (41,784)           --             --  
Foreign exchange loss (gain)                               187              (556)           --             --                       
------------------------------------------------------------------------------------------------------------------
Benefit obligation at December 31                     $348,258          $304,864         $75,062        $59,766 
==================================================================================================================
Change in plan assets                                                                                              
------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at January 1                $467,945          $540,450         $ 6,363        $ 7,197 
Actual return on plan assets                           (61,116)           (9,773)          1,892           (834)
Employer contributions                                   1,495             1,290           2,364          2,640 
Benefits paid                                          (15,332)          (13,464)         (3,344)        (2,640)
Transfer to insurer due to termination of contracts       --             (50,399)           --             --   
Transfer to 401(h) account                                (970)             --              --             --   
Foreign exchange loss                                      (69)             (159)           --             --   
Employee contributions                                      66              --              --             --   
------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at December 31              $392,019          $467,945         $ 7,275        $ 6,363 
==================================================================================================================
Funded status of plans                                                                                             
------------------------------------------------------------------------------------------------------------------
Over (under) funded status                             $43,760          $163,080        $(67,787)      $(53,403)
Unrecognized net loss (gain)                            58,262           (62,306)          1,553         (9,331)
Unrecognized prior service cost                          6,198             7,696             597            696 
Unrecognized net transition asset                         (615)           (2,684)           --             --   
------------------------------------------------------------------------------------------------------------------
Net prepaid (accrued) benefit cost at December 31     $107,605          $105,786        $(65,637)      $(62,038)
==================================================================================================================
Assumption percentages as of December 31                                                                           
------------------------------------------------------------------------------------------------------------------
Discount rate                                             7.25%             7.50%           7.25%          7.50%
Expected return on plan assets                            9.50%             9.50%           7.00%          7.00%
Rate of compensation increase                             4.50%             4.50%           4.50%          4.50%
==================================================================================================================
</TABLE>



<TABLE>
<CAPTION>

     The components of pension and postretirement benefits (income) expense are as follows:
                                                              Pension Benefits            Other Postretirement Benefit 
------------------------------------------------------------------------------------------------------------------------
                                                        2001         2000        1999        2001      2000      1999   
------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>         <C>       <C>        <C>    
Service cost                                         $  8,579     $  8,737     $ 9,676     $2,067    $1,887    $2,152 
Interest cost                                          22,792       21,064      22,425      4,514     4,142     3,738 
Expected return on assets                             (44,708)     (40,998)    (40,100)      (414)     (476)     (439)
Plan curtailments, termination benefits and                  
    termination of insurer contracts                       --      (14,836)        713         --        --        --  
Amortization of prior service cost                      1,780        1,759       1,553         99        99        99 
Amortization of (gain) loss                            (2,322)      (1,188)        102       (303)     (415)     (271)
Amortization of transition asset                       (2,070)      (2,070)     (2,351)        --        --        --   
Employee contributions                                    (77)          --          --         --        --        --   
------------------------------------------------------------------------------------------------------------------------
Benefits (income) expense                            $(16,026)    $(27,532)    $(7,982)    $5,963    $5,237    $5,279 
========================================================================================================================
</TABLE>



<PAGE>                                                                   Page 30
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

The Company has a Supplemental Retirement Plan ("SERP"),which provides unfunded
supplemental retirement benefits to certain management or highly compensated
employees of the Company. The SERP provides for incremental pension payments
partially to offset the reduction in amounts that would have been payable from
the Company's principal pension plan if it were not for limitations imposed by
federal income tax regulations. Expense relating to the SERP of $1,528, $1,618
and $934 was recorded for the years ended December 31, 2001, 2000 and 1999,
respectively. The accumulated benefit obligation recognized in the Company's
consolidated balance sheet at December 31, 2001 and 2000 was $5,736 and $5,773,
respectively. The benefit expenses and obligations of this SERP are included in
the tables on the preceding page.
     In 2000, the Company recognized a one-time noncash pension settlement gain
related to a change in election in certain pension annuity contracts of $14,990.
In 2000 and 1999, the Company recognized curtailment losses and special
termination benefits charges related to pension plans of $154 and $713,
respectively. The 2000 and 1999 curtailment losses and special termination
benefits charges are both included in special charges (See Note 13, "Special
Items") reflecting the voluntary separation offers accepted by 76 and 122
employees throughout the Company in 2000 and 1999, respectively.
     The assumed health care cost trend rate for the indemnity plans was 7% per
year in 2001 and 2000 for both pre 65 and post 65 coverage. The trend rate for
the managed care plans for pre 65 coverage was 6% per year in 2001 and 2000. For
2002, the trend rate for pre 65 coverage is 11% per year, dropping by 1% per
year to an ultimate rate of 6%; the trend rate for post 65 coverage is 13% per
year, dropping by 1% per year to an ultimate rate of 6%.
     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plan. A one-percentage-point change in
assumed health care cost trend rates at December 31, 2001 would have the
following effects:

<TABLE>
<CAPTION>

                              One-Percentage-   One-Percentage-  
                              Point Increase    Point Decrease
--------------------------------------------------------------
<S>                              <C>           <C>   
Effect on total of service and
    interest cost components      $ 1,200        $  (900)
--------------------------------------------------------------
Effect on postretirement
   benefit obligation             $11,000        $(9,200)
==============================================================
</TABLE>


OTHER POST EMPLOYMENT BENEFITS

The Company also provides certain post employment benefits to former or inactive
employees who are not retirees. The Company funds post employment benefits on a
pay-as-you-go basis. These benefits include salary continuance, severance and
disability health care and life insurance which are accounted for under SFAS No.
112 "Employers' Accounting for Post employment Benefits." The accrued post
employment benefit liability was $1,216 and $1,403 at December 31, 2001 and
2000, respectively.


NOTE 12--INCOME TAXES:

Income before income taxes and current and deferred income taxes (benefits) are
composed of the following:

<TABLE>
<CAPTION>

                                      Years Ended December 31        
--------------------------------------------------------------------
                                 2001          2000         1999  
--------------------------------------------------------------------
<S>                            <C>          <C>          <C>         
Income before Income taxes:                                          
   Domestic                    $90,528      $137,616     $ 98,395    
   Foreign                       6,668         9,885       30,343(a)
--------------------------------------------------------------------
     Total                     $97,196      $147,501     $128,738 
====================================================================
Current income taxes:                                            
   Federal                     $19,481      $ 25,908     $ 27,336 
   State                         1,039         1,454        1,351 
   Foreign                       4,992         4,958       14,109 
--------------------------------------------------------------------
     Total                     $25,512      $ 32,320     $ 42,796 
====================================================================
Deferred income taxes (benefits):
   Federal                     $ 5,965      $ 14,798     $  2,542 
   State                           597         1,048       (4,406)
   Foreign                      (3,045)(b)    (2,441)      (1,023)
--------------------------------------------------------------------
     Total                     $ 3,517      $ 13,405     $ (2,887)
====================================================================
Total income taxes             $29,029      $ 45,725     $ 39,909 
====================================================================
<FN>
 
(a)  Includes the gain on sale of investment in Albright & Wilson stock, net
     totaling $22,054 ($14,381 net of income tax).
(b)  In 2001, the Company released a valuation allowance amounting to $2,551
     that was required on a deferred tax asset related to the Company's
     facilities in Louvain-la-Neuve, Belgium, which was established in 1996 when
     the Company's Olefins Business was sold.
</FN>
</TABLE>


The significant differences between the U.S. federal statutory rate and the
effective income tax rate are as follows:

<TABLE>
<CAPTION>
 
                                         % of Income Before
                                             Income Taxes
-------------------------------------------------------------------
                                    2001         2000       1999  
-------------------------------------------------------------------
<S>                                 <C>          <C>        <C>  
Federal statutory rate              35.0%        35.0%      35.0%
Foreign sales corporation
    benefit                         (1.9)        (2.2)      (2.4)
State taxes, net of federal tax
    benefit                          1.1          1.1        0.9
Depletion                           (1.8)        (1.0)      (1.0)
Valuation allowance                 (2.6)          --         -- 
Other items, net                     0.1         (1.9)      (1.5)
-------------------------------------------------------------------
Effective income tax rate           29.9%        31.0%      31.0%
===================================================================
</TABLE>




<PAGE>                                                                   Page 31
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

     The deferred income tax assets and deferred income tax liabilities recorded
on the consolidated balance sheets as of December 31, 2001 and 2000, consist of
the following:

<TABLE>
<CAPTION>

                                                                    2001              2000
-------------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>        
Deferred tax assets:                                                                                                    
     Postretirement benefits other than pensions                  $ 23,884          $ 22,612
     Foreign currency translation adjustments                       11,105             9,086
     Accrued employee benefits                                       6,553             6,464
     Inventories                                                     9,073             6,742
     Environmental accruals                                          4,309             3,642
     Accrued liabilities                                             1,732             1,479
     Subsidiaries' net operating loss carryforwards                    904               956
     Other                                                           3,543             2,333
-------------------------------------------------------------------------------------------------
Deferred tax assets                                                 61,103            53,314
-------------------------------------------------------------------------------------------------
Deferred tax liabilities:                                                                                               
     Depreciation                                                   93,806            93,653
     Pensions                                                       44,012            38,383
     Gain on Belgian intercompany loan                               6,321             7,321
     Capitalization of interest                                      2,403             2,350
     Other                                                             397               800
-------------------------------------------------------------------------------------------------
Deferred tax liabilities                                           146,939           142,507
-------------------------------------------------------------------------------------------------
Net deferred tax liabilities                                      $ 85,836          $ 89,193
=================================================================================================
Reconciliation to consolidated balance sheets:
     Current deferred tax assets                                  $ 13,878          $ 10,410
     Deferred tax liabilities                                       99,714            99,603
-------------------------------------------------------------------------------------------------
Net deferred tax liabilities                                      $ 85,836          $ 89,193
=================================================================================================
</TABLE>





<PAGE>                                                                   Page 32
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

NOTE 13--SPECIAL ITEMS:

During the fourth quarter of 2001, the Company continued its efforts to reduce
operating costs through an involuntary separation program that resulted in a
special charge of $2,051 ($1,306 after income taxes or 3 cents per share on a
diluted basis). The program impacted a total of 26 salaried employees throughout
the Company. No amounts were paid during 2001.
     In April 2000, the Company made a change in election in certain of its
pension annuity contracts. This election resulted in the recognition of a
one-time noncash pension settlement gain of $14,990 ($9,549 after income taxes
or 20 cents per share on a diluted basis). The pension settlement gain did not
affect any retiree benefits or benefit programs of the Company.
     In December 2000, the Company incurred a special charge of $6,856 ($4,367
after income taxes or 9 cents per share on a diluted basis) that resulted from
workforce reduction programs at certain of the Company's facilities. The program
impacted a total of 76 salaried and wageroll employees. Essentially all of the
workforce accrual established in the fourth quarter of 2000 was paid out in
2001.
     In May 1999, the Company sold all of its 58,394,049 common shares of
Albright & Wilson plc ("Albright & Wilson"), a United Kingdom chemicals company,
that were acquired in March 1999, as part of its friendly tender offer for
Albright & Wilson, for an aggregate consideration of $157,516, resulting in a
gain of $22,054 ($14,381 after income taxes or 30 cents per share on a diluted
basis), net of transaction expenses. The net proceeds from the sale of the
common shares were primarily used to pay down debt under the Company's existing
Credit Agreement.
     During 1999, the Company incurred special charges of $10,692 ($6,717 after
income taxes or 14 cents per share on a diluted basis) that resulted primarily
from voluntary separation offers made to various employees throughout the
Company. The program impacted a total of 122 salaried and wageroll employees.
The workforce accruals were primarily paid out in 1999.


NOTE 14--FAIR VALUE OF FINANCIAL INSTRUMENTS:

In assessing the fair value of financial instruments, the Company uses methods
and assumptions that are based on market conditions and other risk factors
existing at the time of assessment. Fair value information for the Company's
financial instruments is as follows:
     Cash and Cash Equivalents--The carrying value approximates fair value due
to their short-term nature.
     Long-Term Debt--The carrying value of the Company's long-term debt reported
in the accompanying consolidated balance sheets at December 31, 2001 and 2000,
approximates fair value since substantially all of the Company's long-term debt
bears interest based on prevailing variable market rates currently available in
the countries in which the Company has borrowings.
     Foreign Currency Exchange Contracts--The fair values of the Company's
forward currency exchange contracts are estimated based on current settlement
values. The fair value of the forward contracts represent a net asset position
of $99 at December 31, 2001. At December 31, 2000, the fair value of the forward
contracts represented a net liability position of $62.


NOTE 15--ACQUISITIONS:

On May 31, 2001, the Company, through its wholly-owned subsidiary Albemarle
Deutschland GmbH, acquired Martinswerk GmbH for approximately $34,000 in cash
plus expenses and the assumption of approximately $55,000 in current and
long-term liabilities. The assets acquired included Martinswerk's manufacturing
facilities and headquarters in Bergheim, Germany and its 50-percent stake in
Magnifin Magnesiaprodukte GmbH, which has manufacturing facilities at St.
Jakobs/Breitenau, Austria. The acquisition was financed through the Company's
existing Credit Agreement. The acquisition is being accounted for by the
purchase method of accounting, and accordingly, the operating results have been
included in the Company's consolidated results of operations from the date of
acquisition. See Footnote 16, "Pro Forma Financial Information--Unaudited." The
purchase price allocation valuation has been included in the December 31, 2001,
financial statements based upon the use of certain estimates. The Company has
made a decision to reduce staffing levels but is still evaluating the business
operations and personnel requirements; therefore, the purchase price allocation
remains open until further information related to this decision is obtained.
Martinswerk produces mineral-based flame retardants for the plastics and rubber
markets, brightening pigments for high-quality paper applications and specialty
aluminum oxides for polishing, catalyst and niche ceramic applications. Magnifin
produces high-purity magnesium hydroxide flame retardant products used in
applications requiring higher processing temperatures.


<PAGE>                                                                   Page 33
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

     On July 1, 2001, the Company acquired the custom and fine chemicals
businesses of ChemFirst Inc. for approximately $79,000 in cash plus expenses and
the assumption of certain current liabilities. The acquisition was financed
through the Company's existing Credit Agreement. The Asset Purchase Agreement
provides for additional contingent payments to ChemFirst Inc. which are
dependant upon the contribution margin of certain products and are not expected
to exceed $10,000. Additional payments, if any, will be recorded as goodwill.
The acquisition is being accounted for by the purchase method of accounting, and
accordingly, the operating results have been included in the Company's
consolidated results of operations from the date of acquisition. See Footnote
16, "Pro Forma Financial Information--Unaudited." The purchase price allocation
valuation, excluding the effects of additional contingent consideration, has
been included in the December 31, 2001, financial statements based upon the use
of certain estimates. The assets acquired included working capital, property,
plant and equipment and certain intangibles, including goodwill and technical
know how. The purchase price alloc0ation valuation is still open at December 31,
2001, pending the Company's finalization of certain inventory related matters.
Albemarle's new businesses focus on the manufacture of custom and proprietary
fine chemicals and chemical services for the pharmaceutical and life sciences
industries. They also include additives for ultraviolet light-cured polymer
coatings, which should broaden the portfolio of Albemarle's polymer chemicals
business. Included is a multi-functional manufacturing plant in Tyrone,
Pennsylvania, and a cGMP (current Good Manufacturing Practices) pilot plant in
Dayton, Ohio.
     A summary of the assets acquired and liabilities assumed is presented as
follows, prior to the finalization of the purchase price allocations, for
Martinswerk GmbH and Martinswerk's 50-percent stake in Magnifin Magnesiaprodukte
GmbH, and the custom and fine chemicals businesses of ChemFirst Inc., which were
acquired on May 31, 2001, and July 1, 2001, respectively.


<TABLE>

-------------------------------------------------------------
<S>                                                     <C>        
Current assets                                   $    82,623
Property, plant & equipment                           67,269
Goodwill and intangibles                               9,691
Other assets                                           9,560
Current liabilities                                   24,971
Noncurrent environmental accruals                     16,224
Other noncurrent liabilities                          14,703
-------------------------------------------------------------
Net cash paid                                    $   113,245
=============================================================
</TABLE>



     On June 29, 2000, the Company acquired from Ferro Corporation the
PYRO-CHEK(R) Flame Retardant business ("Ferro"), along with a plant at
Port-de-Bouc, France, for a purchase price of approximately $35,000. The
purchase price was allocated between property, plant, and equipment, inventory,
identifiable intangibles with the remaining balance to goodwill.
     No pro forma financial information was provided for the Ferro acquisition
for the periods presented since their impact was immaterial to the Company's
consolidated results of operations and financial position.


NOTE 16--PRO FORMA FINANCIAL INFORMATION--UNAUDITED

The pro forma information presented below for Martinswerk GmbH and Martinswerk's
50-percent stake in Magnifin Magnesiaprodukte GmbH, and the custom and fine
chemicals businesses of ChemFirst Inc., which were acquired on May 31, 2001, and
July 1, 2001, respectively, includes adjustments for interest expense,
depreciation, amortization of intangibles as well as various other income
statement accounts in order to properly present results of operations for the
Company as if the acquisitions were made on January 1, 2000.


<TABLE>
<CAPTION>

                                    For the Years Ended
                                        December 31
-------------------------------------------------------------
                                       2001          2000
-------------------------------------------------------------
<S>                              <C>           <C>          
Net sales                        $   987,398   $   1,093,567
Net income                            70,527         107,789
Diluted earnings per share              1.52            2.31
=============================================================
</TABLE>




<PAGE>                                                                   Page 34
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

NOTE 17--OPERATING SEGMENTS AND GEOGRAPHIC AREA INFORMATION:

The Company is a global manufacturer of specialty polymer and fine chemicals,
grouped into two operating segments: Polymer Chemicals and Fine Chemicals. The
operating segments were determined based on management responsibility. The
Polymer Chemicals' operating segment is comprised of flame retardants,
catalysts, and polymer additives and intermediates. The Fine Chemicals'
operating segment is comprised of agrichemicals, pharmachemicals and performance
chemicals.
     The accounting policies of the segments are the same as those described in
Note 1, "Summary of Significant Accounting Policies." The Company evaluates the
performance of its operating segments based on operating profit which represents
income before income taxes, before gain on sale of investment in Albright &
Wilson stock and before interest and financing expenses and other income, net.
Segment data includes intersegment transfers of raw materials at cost and
foreign exchange transaction gains and losses, as well as allocations for
certain corporate costs.
     Summarized financial information concerning the Company's reportable
segments is shown in the following table. The "Corporate & Other" column
includes corporate-related items not allocated to the reportable segments.


<TABLE>
<CAPTION>
                                                          Polymer        Fine     Corporate
Operating Segment Results                                Chemicals    Chemicals    & Other         Total
----------------------------------------------------------------------------------------------------------------

2001                                                                                                                   
<S>                                                     <C>          <C>          <C>           <C>         
Net Sales                                               $  461,930   $  454,969         --      $    916,899
Operating profit(a)                                         59,691       61,466   $  (22,707)         98,450
Identifiable assets                                        353,855      532,921      242,699       1,129,475
Depreciation and amortization                               28,246       48,542          822          77,610
Capital expenditures                                        14,537       35,134          232          49,903

2000                                                                                                                   
Net sales                                               $  500,899   $  416,650         --      $    917,549
Operating profit(a)                                        103,817       70,736   $  (24,391)        150,162
Identifiable assets                                        350,811      433,380      197,612         981,803
Depreciation and amortization                               28,804       43,819        1,127          73,750
Capital expenditures                                        11,216       40,614          418          52,248

1999                                                                                                                   
Net sales                                               $  449,156   $  396,769         --      $    845,925
Operating profit(a)                                         73,083       60,187   $  (19,144)        114,126
Identifiable assets                                        331,505      436,669      185,920         954,094
Depreciation and amortization                               29,027       45,452        1,271          75,750
Capital expenditures                                        43,289       31,119        3,161          77,569
================================================================================================================
</TABLE>



<TABLE>
<CAPTION>
 
Net Sales(b)                                                2001              2000            1999
----------------------------------------------------------------------------------------------------------------
<S>                                                      <C>             <C>             <C>          
United States                                            $  498,141      $  504,373      $  480,070
Foreign                                                     418,758         413,176         365,855
----------------------------------------------------------------------------------------------------------------
     Total                                               $  916,899      $  917,549      $  845,925
================================================================================================================
</TABLE>



<TABLE>
<CAPTION>

Long-Lived Assets as of December 31                          2001              2000            1999
----------------------------------------------------------------------------------------------------------------
<S>                                                      <C>              <C>             <C>          
United States                                            $  428,808       $  406,169      $  410,626
France                                                       82,539           93,508          85,696
Other foreign countries                                      50,073           12,852          16,960
----------------------------------------------------------------------------------------------------------------
     Total                                               $  561,420       $  512,529      $  513,282
================================================================================================================
<FN>
 
Notes:
(a  Includes the effects of foreign exchange transaction gains(losses) of $492,
    ($798) and $6,034 in 2001, 2000 and 1999, respectively.
(b  No sales in a foreign country exceed 10% of the Company's total net
    sales.
</FN>
</TABLE>


<PAGE>                                                                   Page 35
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars Except for Share Data and Per-Share Amounts)

NOTE 18--QUARTERLY FINANCIAL SUMMARY (UNAUDITED):

<TABLE>
<CAPTION>
                                                          First       Second       Third       Fourth
                                                         Quarter      Quarter     Quarter      Quarter
------------------------------------------------------------------------------------------------------------
2001                                                                                                                            
<S>                                                        <C>         <C>          <C>         <C>        
Net sales                                               $ 224,410   $  211,286   $ 242,017   $  239,186 
Gross profit                                            $  59,455   $   48,736   $  56,681   $   56,463 
Special items(a)                                        $    --     $     --     $    --     $   (2,051)
Net income                                              $  22,545   $   14,805   $  16,761   $   14,056 
Basic earnings per share                                $     .49   $      .32   $     .37   $      .31 
Shares used to compute basic earnings per share            45,838       45,873      45,870       45,485 
Diluted earnings per share                              $     .48   $      .32   $     .36   $      .30 
Shares used to compute diluted earnings per share          46,686       46,667      46,539       46,204 

2000                                                                                                                            
Net sales                                               $ 235,480   $  226,206   $ 237,053   $  218,810 
Gross profit                                            $  74,602   $   66,006   $  68,839   $   62,016 
Special items(b,c)                                      $    --     $   15,900   $    --     $   (7,766)
Net income                                              $  28,548   $   33,813   $  23,706   $   15,709 
Basic earnings per share                                $     .62   $      .74   $     .52   $      .34 
Shares used to compute basic earnings per share            46,084       45,795      45,816       45,834 
Diluted earnings per share                              $     .61   $      .73   $     .51   $      .34 
Shares used to compute diluted earnings per share          46,538       46,608      46,684       46,595 
============================================================================================================
<FN>
 
Notes:
(a) A special charge in 2001 totaled $2,051 ($1,306 after income taxes) for the
    fourth quarter. This charge resulted from workforce reduction programs which
    impacted a total of 26 salaried employees throughout the Company.
(b) In April 2000, a change in election was made in certain pension annuity
    contracts which resulted in the recognition of a one-time noncash pension
    settlement gain of $15,900 ($10,128 after income taxes). A fourth quarter
    actuarial adjustment amounting to $910 ($579 after income taxes) reduced the
    net effect on 2000 to $14,990 ($9,549 after income taxes).
(c) A special charge in 2000 totaled $6,856 ($4,367 after income taxes) for the
    fourth quarter. This charge resulted from workforce reduction programs which
    impacted a total of 76 salaried and wageroll employees at certain of the
    Companies' facilities.
</FN>
</TABLE>



NOTE 19--SUBSEQUENT EVENT:

On February 13, 2002, the Company completed the purchase of 4,000,000 shares of
its common stock from Bruce C. Gottwald and his related immediate family
interests for an aggregate price of $92,680. The Company's purchase price was 25
cents per share less than the weighted average trading price from New York Stock
Exchange transactions in Albemarle common stock during the 10-day period
beginning with the third business day following the January 23, 2002,
announcement of Albemarle's 2001 earnings.


<PAGE>                                                                   Page 36
ALBEMARLE CORPORATION AND SUBSIDIARIES

MANAGEMENT'S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Albemarle Corporation's management has prepared the consolidated financial
statements and related notes appearing on pages 15 through 35 in conformity with
accounting principles generally accepted in the United States. In so doing,
management makes informed judgments and estimates of the expected effects of
events and transactions. Actual results may differ from management's judgments
and estimates. Financial data appearing elsewhere in this annual report are
consistent with these consolidated financial statements.
     Albemarle maintains a system of internal controls to provide reasonable,
but not absolute, assurance of the reliability of the financial records and the
protection of assets. The internal control system is supported by written
policies and procedures, careful selection and training of qualified personnel
and an extensive internal audit program.
     These consolidated financial statements have been audited by
PricewaterhouseCoopers LLP, independent certified public accountants. Their
audit was made in accordance with auditing standards generally accepted in the
United States and included an evaluation of Albemarle's internal accounting
controls to the extent considered necessary to determine audit procedures.
     The audit committee of the Board of Directors, composed only of
non-employee directors, meets with management, the outsourced independent
internal auditors and the independent accountants to review accounting, auditing
and financial reporting matters. The independent accountants are appointed by
the board on recommendation of the audit committee, subject to shareholder
approval.



R
EPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Albemarle Corporation:

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, of shareholders' equity and of cash
flows present fairly, in all material respects, the financial position of
Albemarle Corporation and its subsidiaries at December 31, 2001 and 2000, and
the results of their operations and their 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 of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP

January 23, 2002, except Footnote 19 

for which the date is February 13, 2002
Richmond, Virginia



<PAGE>                                                                   Page 37
ALBEMARLE CORPORATION AND SUBSIDIARIES


ITEM  9.    CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

NONE.



PART III


ITEM 10.    DIRECTORS AND OFFICERS OF THE REGISTRANT

The information contained in the Proxy Statement under the caption "Election of
Directors" concerning directors and persons nominated to become directors of the
Company is incorporated herein by reference. The names and ages of all officers
of the Company as of February 27, 2002 are set forth below:


<TABLE>
<CAPTION>
Name                                        Age      Officers
---------------------------------------------------------------------------------------------------------------------------------
<S>                                        <S>       <S>
Floyd D. Gottwald, Jr.*                     79       Chairman of the Executive Committee and Chief Executive Officer
William M. Gottwald*                        54       Chairman of the Board and Secretary to the Executive Committee as
                                                        Management Committee
Charles B. Walker*                          63       Vice Chairman of the Board and Chief Financial Officer
Mark C. Rohr                                50       President and Chief Operating Officer
E. Whitehead Elmore                         63       Executive Vice President
John G. Dabkowski                           53       Vice President--Polymer Chemicals
Thomas F. Dominick                          54       Vice President, Regional Managing Director, Europe, Middle East and Africa
Jack P. Harsh                               49       Vice President--Human Resources
Robert G. Kirchhoefer                       61       Treasurer and Chief Accounting Officer
George P. Manson, Jr.                       48       Vice President, General Counsel and Secretary
George A. Newbill                           58       Vice President--Sourcing Organization
John M. Steitz                              43       Vice President--Fine Chemicals
Gary L. Ter Haar                            65       Vice President--Health and Environment
Michael D. Whitlow                          50       Vice President--Americas Sales and Global Accounts
Edward G. Woods                             60       Vice President--Corporate Development
Michael J. Zobrist                          59       Vice President--Investor Relations/External Affairs
Richard A. Sabalot                          46       Assistant Secretary
---------------------------------------------------------------------------------------------------------------------------------
<FN>
* Member of the Executive Committee
</FN>
</TABLE>





<PAGE>                                                                   Page 38
ALBEMARLE CORPORATION AND SUBSIDIARIES

ADDITIONAL INFORMATION--OFFICERS OF THE COMPANY

The term of office of each such  officer  is until the  meeting  of the Board of
Directors following the next annual shareholders'  meeting (March 27, 2002). All
such officers have been employed by the Company or its  predecessor for at least
the last five years, with the exception of Jack P. Harsh, George P. Manson, Jr.,
Mark C. Rohr, Richard A. Sabalot and John M. Steitz.
     Thomas F. Dominick joined Albemarle in 1994 after being associated with the
Company's predecessor since 1974, most recently was elected vice president,
regional managing director, Europe, Middle East and Africa, effective November
26, 2001, after serving as vice president--development resources for Albemarle
from December 2000 and vice president--new business development on a global
basis effective August 1, 2000 responsible for global new business development,
marketing research and technology resources. Jack P. Harsh joined Albemarle
effective November 16, 1998, from Union Carbide Corporation in Danbury,
Connecticut, where he directed human resources for the solvents, intermediates
and monomers business and supply-chain planning organization. He was elected
vice president--human resources, effective December 1, 1998. George P. Manson,
Jr. joined Albemarle effective May 1, 2001. Prior to that, he was vice
president, general counsel and secretary of Hamilton Beach/Proctor-Silex, Inc.
in Richmond, Virginia. Mark C. Rohr was elected executive vice
president--operations on March 22, 1999 and assumed the position of president
and chief operating officer on January 1, 2000. Prior to joining Albemarle, Mr.
Rohr was senior vice president for the Specialty Chemicals group of Occidental
Chemical Corporation in Dallas, Texas. Richard A. Sabalot has been associated
with Albemarle since 1987 when he joined the company as assistant counsel. He
was appointed associate counsel- general law in 1994.
     John M. Steitz joined Albemarle after being associated with Mallinckrodt,
Incorporated, in St. Louis, Missouri for twenty years where he was vice
president and general manager--pharmaceutical chemicals. Mr. Steitz was elected
vice president--fine chemicals on a global basis effective August 1, 2000.
Michael J. Zobrist joined Albemarle in 1994 after being associated with the
Company's predecessor since 1975, and was elected vice president--investor
relations/external affairs effective August 1, 2000. Mr. Zobrist served as
general manager--external affairs and investor relations from May 1999 to July
31, 2000 and as general manager--Americas sales and global accounts from 1997 to
1999.



ITEM 11.    EXECUTIVE COMPENSATION

This information is contained in the Proxy Statement under the caption
"Compensation of Executive Officers" and is incorporated herein by reference.



ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This information is contained in the Proxy Statement under the caption "Stock
Ownership" and is incorporated herein by reference.



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information is contained in the Proxy Statement under the captions "Certain
Relationships and Related Transactions" and "Stock Ownership" and is
incorporated herein by reference.



<PAGE>                                                                   Page 39
ALBEMARLE CORPORATION AND SUBSIDIARIES


PART IV


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) The following consolidated financial and informational statements of the
registrant are included in Part II Item 8 on pages 15 to 35:

Consolidated Balance Sheets as of December 31, 2001 and 2000

Consolidated Statements of Income, Changes in Shareholders' Equity and Cash
  Flows for the years ended December 31, 2001, 2000, and 1999


Notes  to the  Consolidated  Financial  Statements

Management's Report on the Consolidated Financial Statements

R
eport of Independent Accountants

(a)(2) No Financial Statement Schedules are provided in accordance with Item
14(a)(2) as the information is either not applicable, not required or has been
furnished in the Consolidated Financial Statements or Notes thereto.

(a)(3) Exhibits

     The following documents are filed as exhibits to this Form 10-K pursuant to
Item 601 of Regulation S-K:


3.1      Amendment to Restated Articles of Incorporation of the registrant 
         [filed as Exhibit 3.1 to the Company's Form 10-K for 1994 (No.
         1-12658), and incorporated herein by reference].

3.2      By-laws of the registrant amended in February 2002 are filed herewith.

10.1     Credit Agreement, dated as of September 24, 1996, between the Company,
         Bank of America, N.A., as administrative agent and The Bank of New York
         and the Chase Manhattan Bank, as co-agents and certain commercial banks
         [filed as Exhibit 10.1 to the Company's Third Quarter 1996 Form 10-Q
         (No. 1-12658) and incorporated herein by reference].

10.2     The Company's 1994 Omnibus Stock Incentive Plan, adopted on February 8,
         1994 [filed as Exhibit 10.1 to the Company's Form S-1 (No.
         33-77452),and incorporated herein by reference].

10.3     The Company's Bonus Plan, adopted on February 8, 1994 [filed as Exhibit
         10.8 to the Company's Form 10 (No. 1-12658), and incorporated herein by
         reference].

10.4     Savings Plan for the Employees of the Company, adopted on February 8,
         1994, amended January 1, 2001 [filed as Exhibit 10.4 to the Company's
         Form 10-K for 2000 (No. 1-12658), and incorporated herein by
         reference].

10.5     The Company's Supplemental Executive Retirement Plan dated April 26,
         2000 [filed as Exhibit 10.5 to the Company's Form 10-K for 2000 (No.
         1-12658), and incorporated herein by reference].

10.6     The Company's Non-Employee Outside Directors' Stock Compensation Plan
         dated November 1, 1999 [filed as Exhibit 10.6 to the Company's Form
         10-K for 2000 (No. 1-12658), and incorporated herein by reference].

10.7     The Company's Agreement between Certain Executives [filed as Exhibit
         10.12 to the Company's Form 10 (No. 1-12658), and incorporated herein
         by reference].

10.8     The Company's 1998 Incentive Plan, adopted April 22, 1998 [filed as
         Exhibit 10.8 to the Company's Form 10-K for 1998 (No. 1-12658), and
         incorporated herein by reference].

10.9     The Company's compensation arrangement with Mark C. Rohr dated February
         26, 1999 [filed as Exhibit 10.9 to the Company's Form 10-K for 1999
         (No. 1-12658), and incorporated herein by reference].

10.10    The Company's Executive Deferred Compensation Plan, adopted December
         18, 2001, is filed herewith.

10.11    The Company's ESOP Amendment to the Savings Plan, adopted December 14,
         2001, is filed herewith.

11.      Statements re: Computation of Pro Forma Earnings Per Share for years 
         ended December 31, 2001 and 2000.

21.      Subsidiaries of the Company.

23.1     Consent of PricewaterhouseCoopers LLP.

99.      Five-Year Summary (see page 41).

(b) No report on Form 8-K was filed in the last quarter of the period covered by
this report.

(c) Exhibits--The response to this portion of Item 14 is submitted as a separate
section of this report.

Note: Part IV Item 14(1) 6 documents 10.10, 10.11, 11, 21, 23.1 and Item 14(c)
are not included herein. They will be filed in the Securities and Exchange
Commission EDGAR filing of the Form 10-K document only.


<PAGE>                                                                   Page 40
ALBEMARLE CORPORATION AND SUBSIDIARIES


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

 
                                                 ALBEMARLE CORPORATION
                                                 (Registrant)

                                                 By:  /S/    WILLIAM M. GOTTWALD
                                                    ----------------------------
                                                           (William M. Gottwald)
                                                           Chairman of the Board

Dated: February 27, 2002


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated as of February 27, 2002.


        Signature                             Title

/s/ WILLIAM M. GOTTWALD               Chairman of the Board and Director
------------------------------------
   (William M. Gottwald)

/s/ FLOYD D. GOTTWALD, JR.            Chief Executive Officer,
------------------------------------  Chairman of the Executive Committee
   (Floyd D. Gottwald, Jr.)           and Director (Principal Executive Officer)

/s/ CHARLES B. WALKER                 Vice Chairman of the Board,
------------------------------------  Chief Financial Officer and
   (Charles B. Walker)                Director (Principal Financial Officer)

/s/ MARK C. ROHR                      President, Chief Operating Officer 
------------------------------------  and Director
   (Mark C. Rohr)

/s/ ROBERT G. KIRCHHOEFER             Treasurer and Chief Accounting Officer
------------------------------------- (Principal Accounting Officer)
   (Robert G. Kirchhoefer)

/s/ CRAIG R. ANDERSSON                Director
--------------------------------------
   (Craig R. Andersson)

/s/ JOHN D. GOTTWALD                  Director
--------------------------------------
   (John D. Gottwald)

/s/ RICHARD L. MORRILL                Director
--------------------------------------
   (Richard L. Morrill)

/s/ SEYMOUR S. PRESTON III            Director
--------------------------------------
   (Seymour S. Preston III)

/s/ PAUL F. ROCHELEAU                 Director
--------------------------------------
   (Paul F. Rocheleau)

/s/ CHARLES E. STEWART                Director
---------------------------------------
   (Charles E. Stewart)

/s/ ANNE M. WHITTEMORE                Director
---------------------------------------
   (Anne M. Whittemore)


<PAGE>                                                                   Page 41
ALBEMARLE CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>
 
FIVE-YEAR SUMMARY
-------------------------------------------------------------------------------------------------------------------------------

(In Thousands Except Per-Share Amounts)
-------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31                                   2001           2000          1999          1998          1997    
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>           <C>           <C>           <C>

Results of Operations                                                                                                       
Net sales                                           $    916,899    $  917,549    $  845,925    $  820,862    $  829,850 
Costs and expenses(a)                                    818,449       767,387       731,799       695,147       709,143 
-------------------------------------------------------------------------------------------------------------------------------
   Operating profit                                       98,450       150,162       114,126       125,715       120,707 

Interest and financing expenses                            5,536         5,998         8,379         4,487           719 
Gain on sale of investment(b)                               --            --         (22,054)         --            --   
Other income, net                                         (4,282)       (3,337)         (937)       (1,570)         (917)
-------------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                97,196       147,501       128,738       122,798       120,905 
Income taxes                                              29,029        45,725        39,909        38,066        40,923 
-------------------------------------------------------------------------------------------------------------------------------
Net income                                          $     68,167    $  101,776    $   88,829    $   84,732    $   79,982 
===============================================================================================================================

Financial Position and Other Data                                                                                           
Total assets                                        $  1,129,475    $  981,803    $  954,094    $  937,797    $  888,181 
Operations:                                                                                                                 
   Working capital(c)                               $     79,824    $  173,038    $  201,246    $  203,594    $  184,176 
   Current ratio(c)                                    1.26 to 1     2.22 to 1     2.53 to 1     2.89 to 1     2.64 to 1
   Depreciation and amortization                    $     77,610    $   73,750    $   75,750    $   75,012    $   69,044 
   Capital expenditures                             $     49,903    $   52,248    $   77,569    $   76,747    $   85,284 
   Acquisitions of businesses                       $    113,245    $   35,006          --      $   15,229          --   
   Research and development expenses                $     21,919    $   26,201    $   34,288    $   29,655    $   31,446 
Gross margin as a % of net sales                            24.1          29.6          30.4          30.9          31.5 
Total long-term debt                                $    170,215    $   97,980    $  159,760    $  192,938    $   91,793 
Equity(d)                                           $    593,302    $  558,907    $  490,564    $  451,667    $  517,336 
Total long-term debt as a % of total capitalization         22.3          14.9          24.6          29.9          15.1 
                                                                                                                            

Common Stock                                                                                                                
Basic earnings per share                            $       1.49    $     2.22    $     1.89    $     1.64    $     1.45 
Shares used to compute basic earnings per share(d)        45,766        45,882        46,889        51,558        55,164 
Diluted earnings per share                          $       1.47    $     2.18    $     1.87    $     1.63    $     1.44 
Shares used to compute diluted earnings per share(d)      46,524        46,606        47,513        52,136        55,668 
Cash dividends declared per share                   $        .52    $      .46    $      .40    $      .37    $      .32 
Shareholders' equity per share(d)                   $      13.04    $    12.20    $    10.62    $     9.61    $     9.60 
Return on average shareholders' equity                     11.8%         19.4%         18.9%         17.5%         15.6%
===============================================================================================================================
<FN>

(a)2001 includes a special charge of $2,051($1,306 after income taxes) for
   workforce reductions; 2000 includes a special charge of $6,856 ($4,367 after
   income taxes) for workforce reductions and a one-time noncash pension
   settlement gain of $14,990 ($9,549 after income taxes) resulting from a
   change in election made in certain pension annuity contracts; 1999 includes a
   special charge of $10,692 ($6,717 after income taxes) for workforce
   reductions at certain of the Company's facilities.

(b)1999 gain on the sale of investment in Albright & Wilson stock ($14,381 after
   income taxes).

(c)The Company's working capital at December 31, 2001, includes $157,571 of debt
   related to the Company's Revolving Credit (c)Agreement which matures 
   September 29, 2002. The Company is currently renegotiating a new debt 
   agreement.
   
(d)Shareholders'  equity  includes the purchase of common  shares  amounting to:
   2001--417,505; 2000--574,091; 1999--857,400; 1998--6,912,741; 
   1997--1,560,300.
</FN>
</TABLE>





Exhibit 3.2
                              ALBEMARLE CORPORATION


                                     BY-LAWS


                                    ARTICLE I
                                    ----------
                             Meeting of Shareholders
                             -----------------------

Section 1. Places of Meetings. All meetings of the shareholders shall be held
           at such place, either within or without the Commonwealth of Virginia,
           as may, from time to time, be fixed by the Board of Directors.

Section 2. Annual Meetings. The annual meeting of the shareholders, for the
           election of directors and transaction of such other business as may
           come before the meeting, shall be held each year at 11:00 a.m. EST on
           the fourth Wednesday in March or at such other date and time as the
           Board of Directors of the Corporation may designate from time to
           time.

Section 3. Special Meetings. Special meetings of shareholders for any purpose
           or purposes may be called at any time by the Chief Executive Officer,
           the Chairman of the Board or by a majority of the Board of Directors.
           At a special meeting, no business shall be transacted and no
           corporate action shall be taken other than that stated in the notice
           of the meeting.

Section 4. Notice of Meetings. Except as otherwise required by law or these
           By -laws, written or printed notice stating the place, day and hour
           of every meeting of the shareholders and, in case of a special
           meeting, the purpose or purposes for
 which the meeting is called,
           shall be mailed not less than ten (10) nor more than sixty (60) days
           before the date of the meeting to each shareholder of record entitled
           to vote at such meeting, at his or her address which appears in the
           share transfer books of the Corporation. Meetings may be held without
           notice if all the shareholders entitled to vote at the meeting are
           present in person or by proxy or if notice is waived in writing by
           those not present, either before or after the meeting.
Section 5. Quorum. Except as otherwise required by the Articles of
           Incorporation, any number of shareholders together holding at least a
           majority of the outstanding shares of capital stock entitled to vote
           with respect to the business to be transacted, who shall be present
           in person or represented by proxy at any meeting duly called, shall
           constitute a quorum for the transaction of business. If less than a
           quorum shall be in attendance at the time for which a meeting shall
           have been called, the meeting may be adjourned from time to time by a
           majority of the shareholders present or represented by proxy without
           notice other than by announcement at the meeting.

Section 6. Voting. At any meeting of the shareholders each shareholder of a
           class entitled to vote on the matters coming before the meeting shall
           have one vote, in person or by proxy, for each share of capital stock
           standing in his or her name on the books of the Corporation at the
           time of such meeting or on any date fixed by the Board of Directors
           not more than seventy (70) days prior to the meeting.

Section 7. Voting List. The officer or agent having charge of the stock
           transfer books for shares of the Corporation shall make, at least ten
           (10) days before each meeting of shareholders, a complete list of the
           shareholders entitled to vote at such meeting or any adjournment
           thereof, with the address of and the number of shares held by each.
           Such list, for a period of ten (10) days prior to such meeting, shall
           be kept on file at the registered office of the Corporation or at its
           principal place of business or at the office of its transfer agent or
           registrar and shall be subject to inspection by any shareholder at
           any time during usual business hours. Such list shall also be
           produced and kept open at the time and place of the meeting and shall
           be subject to the inspection of any shareholder during the whole time
           of the meeting. The original stock transfer books shall be prima
           facie evidence as to who are the shareholders entitled to examine
           such list or transfer books or to vote at any meeting of
           shareholders. If the requirements of this section have not been
           substantially complied with, the meeting shall, on the demand of any
           shareholder in person or by proxy, be adjourned until the
           requirements are complied with.

Section 8. Shareholder Proposals.

(a)      Annual Meetings of Shareholders.

   (i)     Nominations of persons for election to the Board of Directors of the
           Corporation and the proposal of business to be considered by the
           shareholders may be made at an annual meeting of shareholders only
           (A) pursuant to the Corporation's notice of meeting (or any
           supplement thereto), (B) by or at the direction of the Board of
           Directors or (C) by any shareholder of the Corporation who was a
           shareholder of record of the Corporation who is entitled to vote at
           the meeting at the time the notice provided for in this section is
           delivered to the Secretary of the Corporation and who complies with
           the notice procedures set forth in this section.

   (ii)    For nominations or other business to be properly brought before an
           annual meeting by a shareholder pursuant to clause (C) of
           paragraph (a)(i) of this section, the shareholder must have given
           timely notice thereof in writing to the Secretary of the Corporation
           and any such proposed business other than the nominations of persons
           for election to the Board of Directors must constitute a proper
           matter for shareholder action. To be timely, a shareholder's notice
           shall be delivered to the Secretary at the principal executive
           offices of the Corporation not later than the close of business on
           the ninetieth day nor earlier than the close of business on the one
           hundred twentieth day prior to the first anniversary of the preceding
           year's annual meeting (provided, however, that in the event that the
           date of the annual meeting is more than thirty days before or more
           than seventy days after such anniversary date, notice by the
           shareholder must be so delivered not earlier than the close of
           business on the one hundred twentieth day prior to such annual
           meeting and not later than the close of business on the later of the
           ninetieth day prior to such annual meeting or the tenth day following
           the day on which public announcement of the date of such meeting is
           first made by the Corporation). In no event shall the public
           announcement of an adjournment or postponement of an annual meeting
           commence a new time period (or extend any time period) for the giving
           of a shareholder's notice as described above. Such shareholder's
           notice shall set forth: (A) as to each person whom the shareholder
           proposes to nominate for election as a director all information
           relating to such person that is required to be disclosed in
           solicitations of proxies for election of directors in an election
           contest, or is otherwise required in each case pursuant to
           Regulation 14A under the Securities Exchange Act of 1934, as amended
           (the "Exchange Act") (and such person's written consent to being
           named in the proxy statement as a nominee and to serving as such a
           director if elected); (B) as to any other business that the
           shareholder proposes to bring before the meeting, a brief description
           of the business desired to be brought before the meeting, the text of
           the proposal or business (including the text of any resolutions
           proposed for consideration and in the event that such business
           includes a proposal to amend the By-laws of the Corporation, the
           language of the proposed amendment), the reasons for conducting such
           business at the meeting and any material interest in such business of
           such shareholder and for the beneficial owner, if any, on whose
           behalf the proposal is made; and (C) as to the shareholder giving the
           notice and the beneficial owner, if any, on whose behalf the
           nomination or proposal is made (1) the name and address of such
           shareholder, as they appear on the Corporation's books, and of such
           beneficial owner, (2) the class and number of shares of capital stock
           of the Corporation that are owned beneficially and of record by such
           shareholder and such beneficial owner, (3) a representation that the
           shareholder is a holder of record of stock of the Corporation
           entitled to vote at such meeting and intends to appear in person or
           by proxy at the meeting to propose such business or nomination, and
           (4) a representation whether the shareholder or the beneficial owner,
           if any, intends or is part of a group that intends (a) to deliver a
           proxy statement and/or form of proxy to holders of at least the
           percentage of the Corporation's outstanding capital stock required to
           approve or adopt the proposal or elect the nominee and/or (b)
           otherwise to solicit proxies from shareholders in support of such
           proposal or nomination. The foregoing notice requirements shall be
           deemed satisfied by a shareholder if the shareholder has notified the
           Corporation of his intention to present a proposal at an annual
           meeting in compliance with Rule 14a-8 (or any successor thereof)
           promulgated under the Exchange Act and such shareholder's proposal
           has been included in a proxy statement that has been prepared by the
           Corporation to solicit proxies for such annual meeting. The
           Corporation may require any proposed nominee to furnish such other
           information as it may reasonably require to determine the eligibility
           of such proposed nominee to serve as a director of the Corporation.

   (iii)   Notwithstanding anything in the second sentence of paragraph (a)(ii)
           of this section to the contrary, in the event that the number of
           directors to be elected to the Board of Directors of the Corporation
           at an annual meeting is increased and there is no public announcement
           by the Corporation naming the nominees for the additional
           directorships at least one hundred days prior to the first
           anniversary of the preceding year's annual meeting, a shareholder's
           notice required by this section shall also be considered timely, but
           only with respect to nominees for the additional directorships, if it
           shall be delivered to the Secretary at the principal executive
           offices of the Corporation not later than the close of business on
           the tenth day following the day on which such public announcement is
           first made by the Corporation.

(b)      Special Meetings of Shareholders.  Only such business shall be
         conducted at a special meeting of shareholders as shall have been
         brought before the meeting pursuant to the Corporation's notice of
         meeting. Nominations of persons for election to the Board of
         Directors may be made at a special meeting of shareholders at which
         directors are to be elected pursuant to the Corporation's notice of
         meeting (i) by or at the direction of the Board of Directors or
         (ii) provided that the Board of Directors has determined that
         directors shall be elected at such meeting, by any shareholder of
         the Corporation who is a shareholder of record at the time the
         notice provided for in this section is delivered to the Secretary of
         the Corporation, who is entitled to vote at the meeting and upon
         such election and who complies with the notice procedures set forth
         in this section. In the event the Corporation calls a special
         meeting of shareholders for the purpose of electing one or more
         directors to the Board of Directors, any such shareholder entitled
         to vote in such election of directors may nominate a person or
         persons, as the case may be, for election to such position(s) as
         specified in the Corporation's notice of meeting, if the
         shareholder's notice required by paragraph (a)(ii) of this section
         is delivered to the Secretary at the principal executive offices of
         the Corporation not earlier than the close of business on the one
         hundred twentieth day prior to such special meeting, and not later
         than the close of business on the later of the ninetieth day prior
         to such special meeting or the tenth day following the day on which
         public announcement is first made of the date of the special meeting
         and of the nominees proposed by the Board of Directors to be elected
         at such meeting. In no event shall the public announcement of an
         adjournment or postponement of a special meeting commence a new time
         period (or extend any time period) for giving of a shareholder's
         notice as described above.

(c)      General.  (i)  Only such persons who are nominated in accordance with
         the procedures set forth in this section shall be eligible at an
         annual or special meeting of shareholders of the Corporation to
         serve as directors and only such business shall be conducted at a
         meeting of shareholders as shall have been brought before the
         meeting in accordance with the procedures set forth in this section.
         Except as otherwise provided by law, the Chairman of the meeting
         shall have the power and duty (A) to determine whether a nomination
         or any business proposed to be brought before the meeting was made
         or proposed, as the case may be, in accordance with the procedures
         set forth in this section (including whether the shareholder or
         beneficial owner, if any, on whose behalf the nomination or proposal
         is made solicited (or is part of a group which solicited) or did not
         so solicit, as the case may be, proxies in support of such
         shareholder's nominee or proposal in compliance with such
         shareholder's representation as required by clause (a)(ii)(C) of
         this section) and (B) to declare that such nomination shall be
         disregarded or that such proposed business shall not be transacted.
         Notwithstanding the foregoing provisions of this section, if the
         shareholder (or a designated representative of the shareholder) does
         not appear at the annual or special meeting of shareholders of the
         Corporation to present a nomination or business, such nomination
         shall be disregarded and such proposed business shall not be
         transacted, notwithstanding that proxies in respect of such vote may
         have been received by the Corporation.

   (ii)    For purposes of this section, "public announcement" shall include
           disclosure in a press release reported by the Dow Jones News Service,
           Associated Press or comparable national news service or in a document
           publicly filed by the Corporation with the Securities and Exchange
           Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

   (iii)   Notwithstanding the foregoing provisions of this section, a
           shareholder shall also comply with all applicable requirements of the
           Exchange Act and the rules and regulations thereunder with respect to
           the matters set forth in this section. Nothing in this section shall
           be deemed to affect any rights (A) of shareholders to request
           inclusion of proposals in the Corporation's proxy statement pursuant
           to Rule 14a-8 under the Exchange Act or (B) of the holders of any
           series of preferred stock to elect directors pursuant to any
           applicable provisions of the articles of incorporation.

Section 9. Inspectors. An appropriate number of inspectors for any meeting of
           shareholders shall be appointed by the Chairman of such meeting.
           Inspectors so appointed will open and close the polls, will receive
           and take charge of proxies and ballots, and will decide all questions
           as to the qualifications of voters, validity of proxies and ballots,
           and the number of votes properly cast.



                                   ARTICLE II
                                   ----------
                                   Directors
                                   ---------

Section 1. General Powers. The property, affairs and business of the
           Corporation shall be managed under the direction of the Board of
           Directors, and except as otherwise expressly provided by law, the
           Articles of Incorporation or these By-laws, all of the powers of the
           Corporation shall be vested in such Board.

Section 2. Number of Directors. The Board of Directors shall be eleven (11)
           in number. By amendment of these Bylaws the Board of Directors or the
           shareholders may increase or decrease the number of directors;
           provided, however, that the Board of Directors may not increase or
           decrease the number of directors by more than thirty percent of the
           number of directors last elected by the shareholders.

Section 3. Election of Directors.

(a)      Directors shall be elected each year at the annual meeting of
         shareholders.

(b)      Directors shall hold their offices until the next annual meeting of the
         shareholders and until their successors are elected. Any director may
         be removed from office as set forth in the Articles of Incorporation.

(c)      Any vacancy occurring in the Board of Directors may be filled by the
         affirmative vote of the majority of the remaining directors though less
         than a quorum of the Board of Directors.

(d)      A majority of the number of directors fixed by these By-laws shall
         constitute a quorum for the transaction of business. The act of a
         majority of the directors present at a meeting at which a quorum is
         present shall be the act of the Board of Directors.

Section 4. Meetings of Directors. Meetings of the Board of Directors shall be
           held at places within or without the Commonwealth of Virginia and at
           times fixed by resolution of the Board or upon call of the Chief
           Executive Officer or the Chairman of the Board, and the Secretary or
           officer performing the Secretary's duties shall give not less than
           twenty-four (24) hours' notice by letter, telegraph or telephone (or
           in person) of all meetings of the directors, provided that notice
           need not be given of regular meetings held at times and places fixed
           by resolution of the Board. An annual meeting of the Board of
           Directors shall be held as soon as practicable after the adjournment
           of the annual meeting of shareholders. Meetings may be held at any
           time without notice if all of the Directors are present, or if those
           not present waive notice in writing either before or after the
           meeting. Directors may be allowed, by resolution of the Board, a
           reasonable fee and expenses for attendance at meetings.



                                   ARTICLE III
                                   -----------
                                   Committees
                                   ----------

Section 1. Executive Committee. The Board of Directors shall, by vote of a
           majority of the number of Directors fixed by these By-laws, designate
           an Executive Committee. The members of the Executive Committee shall
           serve until their successors are designated by the Board of
           Directors, until removed or until the Executive Committee is
           dissolved by the Board of Directors. All vacancies which may occur in
           the Executive Committee shall be filled by the Board of Directors.

           When the Board of Directors is not in session, the Executive
           Committee shall have all power vested in the Board of Directors by
           law, the Articles of Incorporation or these By-laws, except as
           otherwise provided in the Virginia Stock Corporation Act. The
           Executive Committee shall report at the next regular or special
           meeting of the Board of Directors all action which the Executive
           Committee may have taken on behalf of the Board since the last
           regular or special meeting of the Board of Directors.
           Meetings of the Executive Committee shall be held at such places and
           at such times fixed by resolution of the Committee, or upon call of
           the Chief Executive Officer, the Chairman of the Board or the
           Chairman of the Executive Committee. Not less than twelve (12) hours'
           notice shall be given by letter, telegraph or telephone (or in
           person) of all meetings of the Executive Committee, provided that
           notice need not be given of regular meetings held at times and places
           fixed by resolution of the Committee and that meetings may be held at
           any time without notice if all of the members of the Committee are
           present or if those not present waive notice in writing either before
           or after the meeting. A majority of the members of the Executive
           Committee then serving shall constitute a quorum for the transaction
           of business at any meeting.

Section 2. Executive Compensation Committee. The Board of Directors, at its
           regular annual meeting, shall designate an Executive Compensation
           Committee which shall consist of three or more Directors who shall
           not be eligible for bonus, stock option or stock appreciation rights.
           In addition, the Board at any time may designate one or more
           alternate members of such Committee who shall be Directors not
           eligible for bonus, stock option or stock appreciation rights who may
           act in place of any absent regular member upon invitation by the
           Chairman or Secretary of the Committee.

           With respect to bonuses, the Executive Compensation Committee shall
           have and may exercise the powers to determine the amounts annually
           available for bonuses pursuant to any bonus plan or formula approved
           by the Board, to determine, after receiving the recommendations of
           the Chief Executive Officer and other members of management, bonus
           awards to executive officers and to exercise such further powers with
           respect to bonuses as may from time to time be conferred by the Board
           of Directors.

           With respect to salaries, the Executive Compensation Committee, after
           receiving the recommendations of the Chief Executive Officer and
           other members of management, shall have and may exercise the power to
           fix and determine from time to time all salaries of the executive
           officers of the Corporation, and such further powers with respect to
           salaries as may from time to time be conferred by the Board of
           Directors.

           The Executive Compensation Committee shall administer the
           Corporation's Incentive Stock Option Plan (the "Plan") and from time
           to time may grant, consistent with the Plan, stock options and stock
           appreciation rights and authorize the granting of restricted stock
           awards.

           Vacancies in the Executive Compensation Committee shall be filled by
           the Board of Directors, and members shall be subject to removal by
           the Board at any time.

           The Executive Compensation Committee shall fix its own rules of
           procedure. A majority of the number of regular members then serving
           shall constitute a quorum; and regular and alternate members present
           shall be counted to determine whether there is a quorum. The
           Executive Compensation Committee shall keep minutes of its meetings,
           and all action taken by it shall be reported to the Board of
           Directors.

Section 3. Audit Committee. The Board of Directors at its regular annual
           meeting shall designate an Audit Committee which shall consist of
           three or more Directors whose membership on the Committee shall meet
           the requirements set forth in the rules of the New York Stock
           Exchange, as amended from time to time.

           The primary function of the Committee shall be to assist the Board of
           Directors in fulfilling its oversight responsibilities by reviewing
           and overseeing (i) the financial reports and other financial
           information provided by the Corporation to any governmental body or
           the public, (ii) the Corporation's system of internal controls
           regarding finance and accounting that the Corporation's management
           and the Board have established, (iii) the independence of the
           Corporation's outside auditors and the performance of the
           Corporation's internal and outside auditors and (iv) the
           Corporation's auditing, accounting and financial reporting processes
           generally. The Committee shall review the reports and minutes of any
           audit committees of the Corporation's subsidiaries. The Committee
           shall review the Corporation's financial reporting process, including
           accounting policies and procedures. The Committee shall examine the
           report of the Corporation's outside auditors, consult with them with
           respect to their report and the standards and procedures employed by
           them in their audit, report to the Board the results of its study and
           recommend the selection of auditors for each fiscal year.

           Vacancies in the Committee shall be filled by the Board of Directors
           with Directors meeting the requirements set forth above, giving
           consideration to continuity of the Committee, and members shall be
           subject to removal by the Board at any time.

           The Committee shall fix its own rules of procedure and a majority of
           the members serving shall constitute a quorum. The Committee shall
           meet at least twice a year with both the Corporation's internal and
           outside auditors present. The Committee shall keep minutes of all of
           its meetings and all action taken shall be reported to the Board of
           Directors.

Section 4. Nominating Committee. The Board of Directors shall designate a
           Nominating Committee which shall consist of three or more Directors.
           The Committee shall make recommendations to the Board regarding
           nominees for election as Directors by the shareholders at each Annual
           Shareholders' Meeting and make such other recommendations regarding
           the Board of Directors as the Committee may deem advisable from time
           to time. The Committee shall fix its own rules of procedure and a
           majority of the members serving shall constitute a quorum.

Section 5. Other Committees of the Board. The Board of Directors, by
           resolution duly adopted, may establish such other committees of the
           Board as it may deem advisable and the members, terms and authority
           of such committees shall be as set forth in the resolutions
           establishing the same.


                                   ARTICLE IV
                                   ----------
                                    Officers
                                    --------

Section 1. Election. The officers of the Corporation may consist of a Chief
           Executive Officer, a Chairman of the Board, a Vice Chairman of the
           Board, a President, one or more Vice Presidents (any one or more of
           whom may be designated as Executive Vice Presidents or Senior Vice
           Presidents), a Secretary and a Treasurer. In addition, such other
           officers as are provided in Section 3 of this Article may from time
           to time be elected by the Board of Directors. All officers shall hold
           office until the next annual meeting of the Board of Directors or
           until their successors are elected. The Chairman of the Board and the
           Vice Chairman of the Board shall be chosen from among the Directors.
           Any two officers may be combined in the same person as the Board of
           Directors may determine.

Section 2. Removal of Officers; Vacancies. Any officer of the Corporation may
           be removed summarily with or without cause, at any time by a
           resolution passed at any meeting by affirmative vote of a majority of
           the number of Directors fixed by these By-laws. Vacancies may be
           filled at any meeting of the Board of Directors.

Section 3. Other Officers.  Other officers may from time to time be elected by
           the Board, including, without limitation, one or more Assistant
           Secretaries and Assistant Treasurers.

Section 4. Duties. The officers of the Corporation shall have such duties as
           generally pertain to their offices, respectively, as well as such
           powers and duties as are hereinafter provided and as from time to
           time shall be conferred by the Board of Directors. The Board of
           Directors may require any officer to give such bond for the faithful
           performance of his duties as the Board may see fit.

Section 5. Duties of the Chief Executive Officer. The Chief Executive Officer
           shall be responsible for the execution of the policies of the Board
           of Directors and shall have supervision over the business of the
           Corporation and its several officers, subject to the authority of the
           Board of Directors. In the incapacity or absence of the President,
           the Chief Executive Officer shall perform the duties and have the
           authority of the President. The Chief Executive Officer may sign and
           execute in the name of the Corporation deeds, mortgages, bonds,
           contracts or other instruments, except in cases where the signing and
           the execution thereof shall be expressly delegated by the Board of
           Directors or by these By-laws to some other officer or agent of the
           Corporation or shall be required by law otherwise to be signed or
           executed. In addition, he shall perform all duties incident to the
           office of the Chief Executive Officer and such other duties as from
           time to time may be assigned to him by the Board of Directors.

Section 6. Chairman of the Board. The Chairman of the Board shall preside at
           all meetings of shareholders, the Board of Directors and, unless
           there is a Chairman of the Executive Committee, the Executive
           Committee.

           The Chairman of the Board may sign and execute in the name of the
           Corporation deeds, mortgages, bonds, contracts or other instruments,
           except in cases where the signing and the execution thereof shall be
           expressly delegated by the Board of Directors or by these By-laws to
           some other officer or agent of the Corporation or shall be required
           by law otherwise to be signed or executed. In addition, he shall
           perform all duties incident to the office of the Chairman of the
           Board and such other duties as from time to time may be assigned to
           him by the Board of Directors.

Section 7. Duties of the Vice Chairman of the Board. The Vice Chairman of the
           Board shall perform all duties incident to the office of the Vice
           Chairman of the Board and shall have such other powers and duties as
           may from time to time be assigned to him by the Board of Directors,
           the Chief Executive Officer or the Chairman of the Board. The Vice
           Chairman of the Board may sign and execute in the name of the
           Corporation deeds, mortgages, bonds, contracts and other instruments,
           except in cases where the signing and execution thereof shall be
           expressly delegated by the Board of Directors or by these By-laws to
           some other officer or agent of the Corporation or shall be required
           by law otherwise to be signed or executed.

Section 8. Duties of the President. The President shall be the Chief
           Operating Officer of the Corporation and shall have direct
           supervision over the business of the Corporation subject to the
           authority of the Board of Directors, the Chief Executive Officer and
           the Chairman of the Board. The President may sign and execute in the
           name of the Corporation deeds, mortgages, bonds, contracts or other
           instruments, except in cases where the signing and the execution
           thereof shall be expressly delegated by the Board of Directors or by
           these By-laws to some other officer or agent of the Corporation or
           shall be required by law otherwise to be signed or executed. In
           addition, he shall perform all duties incident to the office of the
           President and such other duties as from time to time may be assigned
           to him.

Section 9. Duties of the Vice Presidents. Each Vice President of the
           Corporation (including any Executive Vice President and Senior Vice
           President) shall have powers and duties that are customary for that
           office and such other powers and duties as may from time to time be
           assigned to him. Any Vice President of the Corporation may sign and
           execute in the name of the Corporation deeds, mortgages, bonds,
           contracts and other instruments, except in cases where the signing
           and execution thereof shall be expressly delegated by the Board of
           Directors or by these By-laws to some other officer or agent of the
           Corporation or shall be required by law otherwise to be signed or
           executed.

Section 10.Duties of the Treasurer. The Treasurer shall have charge and
           custody of and be responsible for all funds and securities of the
           Corporation, and shall cause all such funds and securities to be
           deposited in such banks and depositories as the Board of Directors
           from time to time may direct. He shall maintain adequate accounts and
           records of all assets, liabilities and transactions of the
           Corporation in accordance with generally accepted accounting
           practices; shall exhibit his accounts and records to any of the
           Directors of the Corporation at any time upon request at the office
           of the Corporation; shall render such statements of his accounts and
           records and such other statements to the Board of Directors and
           officers as often and in such manner as they shall require; and shall
           make and file (or supervise the making and filing of) all tax returns
           required by law. He shall in general perform all duties incident to
           the office of Treasurer and such other duties as from time to time
           may be assigned to him.

Section 11.Duties of the Secretary. The Secretary shall act as secretary of
           all meetings of the Board of Directors and the shareholders of the
           Corporation, and shall keep the minutes thereof in the proper book or
           books to be provided for that purpose. He shall see that all notices
           required to be given by the Corporation are duly given and served;
           shall have custody of the seal of the Corporation and shall affix the
           seal or cause it to be affixed to all certificates for stock of the
           Corporation and to all documents the execution of which on behalf of
           the Corporation under its corporate seal is duly authorized in
           accordance with the provisions of these By-laws; shall have custody
           of all deeds, leases, contracts and other important corporate
           documents; shall have charge of the books, records and papers of the
           Corporation relating to its organization and management as a
           Corporation; shall see that the reports, statements and other
           documents required by law (except tax returns) are properly filed;
           and shall, in general, perform all the duties incident to the office
           of Secretary and such other duties as from time to time may be
           assigned to him.

Section 12.Other Duties of Officers. Any officer of the Corporation shall
           have, in addition to the duties prescribed herein or by law, such
           other duties as from time to time shall be prescribed.


                                    ARTICLE V
                                    ---------
                                  Capital Stock
                                  -------------

Section 1. Certificates. The shares of capital stock of the Corporation shall
           be evidenced by certificates in forms prescribed by the Board of
           Directors and executed by the Chief Executive Officer or the Chairman
           of the Board and by the Secretary or an Assistant Secretary and
           stating thereon the information required by law. Transfer agents
           and/or registrars for one or more classes of the stock of the
           Corporation may be appointed by the Board of Directors and may be
           required to countersign certificates representing stock of such class
           or classes. In the event that any officer whose signature or
           facsimile thereof shall have been used on a stock certificate shall
           for any reason cease to be an officer of the Corporation and such
           certificate shall not then have been delivered by the Corporation,
           the Board of Directors may nevertheless adopt such certificate and it
           may then be issued and delivered as though such person had not ceased
           to be an officer of the Corporation.

Section 2. Lost, Destroyed and Mutilated Certificates. Holders of the stock
           of the Corporation shall immediately notify the Corporation of any
           loss, destruction or mutilation of the certificate therefor, and the
           Board of Directors may, in its discretion, cause one or more new
           certificates for the same number of shares in the aggregate to be
           issued to such shareholder upon the surrender of the mutilated
           certificate or upon satisfactory proof of such loss or destruction,
           and the deposit of a bond in such form and amount and with such
           surety as the Board of Directors may require.

Section 3. Transfer of Stock. The stock of the Corporation shall be
           transferable or assignable only on the books of the Corporation by
           the holders in person or by attorney on surrender of the certificate
           for such shares duly endorsed and, if sought to be transferred by
           attorney, accompanied by a written power of attorney to have the same
           transferred on the books of the Corporation. The Corporation will
           recognize the exclusive right of the person registered on its books
           as the owner of shares to receive dividends and to vote as such
           owner.

Section 4. Fixing Record Date. For the purpose of determining shareholders
           entitled to notice of or to vote at any meeting of the shareholders
           or any adjournment thereof, or entitled to receive payment for any
           dividend, or in order to make a determination of shareholders for any
           other proper purpose, the Board of Directors may fix in advance a
           date as the record date for any such determination of shareholders,
           such date in any case to be not more than seventy (70) days prior to
           the date on which the particular action, requiring such determination
           of shareholders, is to be taken. If no record date is fixed for the
           determination of shareholders entitled to notice of or to vote at a
           meeting of shareholders, or shareholders entitled to receive payment
           of a dividend, the date on which notice of the meeting is mailed or
           the date on which the resolution of the Board of Directors declaring
           such dividend is adopted, as the case may be, shall be the record
           date for such determination of shareholders. Except as otherwise
           required by law, when a determination of shareholders entitled to
           vote at any meeting of shareholders has been made as provided in this
           section such determination shall apply to any adjournment thereof.



                                   ARTICLE VI
                                   ----------
                            Miscellaneous Provisions
                            ------------------------

Section 1. Seal. The seal of the Corporation shall consist of a flat-face
           circular die, of which there may be any number of counterparts, on
           which there shall be engraved in the center the words "Albemarle
           Corporation."

Section 2. Fiscal Year. The fiscal year of the Corporation shall end on December
           31st of each year.

Section 3. Books and Records. The Corporation shall keep correct and complete
           books and records of account and shall keep minutes of the
           proceedings of its shareholders and Board of Directors; and shall
           keep at its registered office or principal place of business, or at
           the office of its transfer agent or registrar a record of its
           shareholders, giving the names and addresses of all shareholders, and
           the number, class and series of the shares being held.

Section 4. Checks, Notes and Drafts. Checks, notes, drafts and other orders
           for the payment of money shall be signed by such persons as the Board
           of Directors from time to time may authorize. When the Board of
           Directors so authorizes, however, the signature of any such person
           may be a facsimile.

Section 5. Amendment of By-laws. These By-laws may be amended or altered at
           any meeting of the Board of Directors. The shareholders entitled to
           vote in respect of the election of directors, however, shall have the
           power to rescind, alter, amend or repeal any By-laws and to enact
           By-laws which, if expressly so provided, may not be amended, altered
           or repealed by the Board of Directors.

Section 6. Voting of Stock Held. The Chief Executive Officer, the Chairman of
           the Board or such other officer or officers as may be designated by
           the Board of Directors or the Executive Committee shall from time to
           time appoint an attorney or attorneys or agent or agents of this
           Corporation, in the name and on behalf of this Corporation, to cast
           the vote which this Corporation may be entitled to cast as a
           shareholder or otherwise in any other corporation any of whose stock
           or securities may be held in this Corporation, at meetings of the
           holders of the stock or other securities of such other corporation,
           or to consent in writing to any action by any of such other
           corporation, and shall instruct the person or persons so appointed as
           to the manner of casting such votes or giving such consent and may
           execute or cause to be executed on behalf of this Corporation and
           under its corporate seal or otherwise, such written proxies,
           consents, waivers or other instruments as may be necessary or proper
           in the premises; or, in lieu of such appointment, the Chief Executive
           Officer, the Chairman of the Board or any such designated officer or
           officers may attend in person any meetings of the holders of stock or
           other securities of any such other corporation and there vote or
           exercise any or all power of this Corporation as the holder of such
           stock or other securities of such other corporation.

Section 7. Control Share Acquisition Statute. Article 14.1 of the Virginia Stock
           Corporation Act ("Control Share Acquisitions") shall not apply to
           acquisitions of shares of stock of the Corporation.



Exhibit 10.10



                              ALBEMARLE CORPORATION

                      EXECUTIVE DEFERRED COMPENSATION PLAN

































                            Effective January 1, 2002



<PAGE>                                                                    Page i

                                TABLE OF CONTENTS


                                                                   Page


Article I PURPOSE AND EFFECTIVE DATE................................1

Article II DEFINITIONS..............................................1

2.1 Account.........................................................1

2.2 Administrative Committee....................................... 1

2.3 Beneficiary.....................................................1

2.4 Board...........................................................1

2.5 Company.........................................................1

2.6 Deferral Election...............................................2

2.7 Disability......................................................2

2.8 Elected Deferred Compensation...................................2

2.9 Employer........................................................2

2.10 Financial Hardship.............................................2

2.11 Hardship Distribution..........................................2

2.12 Participant....................................................2

2.13 Participation Agreement........................................2

2.14 Plan...........................................................3

2.15 Plan Year......................................................3

2.16 Retirement.....................................................3

2.17 Retirement/Termination Account.................................3

2.18 Scheduled Withdrawal...........................................3

2.19 Scheduled Withdrawal Account...................................3

2.20 Settlement Date................................................3

2.21 Small Account..................................................3

2.22 Valuation Date.................................................3

Article III PARTICIPATION AND DEFERRAL ELECTIONS....................4

3.1 Eligibility and Participation...................................4

3.2 Basic Forms of Deferral.........................................4

3.3 Commencement and Duration of Deferral Election..................4

3.4 Modification of Deferral Elections..............................4

Article IV COMPENSATION ACCOUNTS....................................5

4.1 Accounts........................................................5



<PAGE>                                                                   Page ii

                               TABLE OF CONTENTS
                                  (continued)


4.2 Crediting of Deferrals..........................................5

4.3 Retirement/Termination Account..................................5

4.4 Scheduled Withdrawal Account....................................5

4.5 Vesting of Accounts.............................................5

4.6 Statement of Accounts...........................................6

4.7 Valuation of Accounts...........................................6

Article V INVESTMENT AND EARNINGS...................................6

5.1 Plan Investments................................................6


5.2 Crediting Investment Gains and Losses...........................6

Article VI PLAN BENEFITS............................................6

6.1 Retirement Benefit..............................................6

6.2 Termination Benefit.............................................7

6.3 Death Benefit...................................................7

6.4 Disability Benefit..............................................8

6.5 Small Account...................................................8

6.6 Scheduled Withdrawal............................................8

6.7 Hardship Distribution...........................................9

6.8 Valuation and Settlement........................................9

6.9 Accelerated Distribution.......................................10

6.10 Withholding and Payroll Taxes.................................10

6.11 Payment to Guardian...........................................10

Article VII DESIGNATION............................................11

7.1 Beneficiary Designation........................................11

7.2 Changing Beneficiary...........................................11

7.3 No Beneficiary Designation.....................................11

7.4 Effect of Payment..............................................11

Article VIII FORFEITURES TO COMPANY................................11

8.1 Distribution of Participant's Interest When Company
    is Unable to Locate Distributees...............................11

Article IX ADMINISTRATION..........................................12



<PAGE>                                                                  Page iii

                               TABLE OF CONTENTS
                                  (continued)


9.1 Committee; Duties..............................................12

9.2 Agents.........................................................12

9.3 Binding Effect of Decisions....................................12

9.4 Indemnity of Committee.........................................12

Article X CLAIMS PROCEDURE.........................................12

10.1 Claim.........................................................12

10.2 Denial of Claim...............................................13

10.3 Review of Claim...............................................13

10.4 Final Decision................................................13

Article XI AMENDMENT AND TERMINATION OF PLAN.......................13

11.1 Amendment.....................................................13

11.2 Company's Right to Terminate..................................14

Article XII SPECIAL COMPENSATION AND AWARDS........................15

12.1 Special Compensation and Awards...............................15

12.2 Participation and Deferral Elections..........................15

12.3 Compensation Accounts.........................................15

12.4 Investment and Earnings.......................................15

12.5 Distributions.................................................15

Article XIII MISCELLANEOUS.........................................16

13.1 Unfunded Plan.................................................16

13.2 Unsecured General Creditor....................................16

13.3 Trust Fund....................................................16

13.4 Nonassignability..............................................17

13.5 Not a Contract of Employment..................................17

13.6 Protective Provisions.........................................17

13.7 Governing Law.................................................17

13.8 Validity......................................................17

13.9 Gender........................................................17

13.10 Notice.......................................................17

13.11 Successors...................................................18


Appendix A: Change in Control......................................19


<PAGE>                                                                    Page 1

                              ALBEMARLE CORPORATION

                      EXECUTIVE DEFERRED COMPENSATION PLAN


                     Article I-- PURPOSE AND EFFECTIVE DATE

     The purpose of this Executive Deferred Compensation Plan is to provide
current tax planning opportunities as well as supplemental funds upon the
retirement or death of certain employees of Employer. It is intended that the
Plan will aid in attracting and retaining employees of exceptional ability by
providing them with these benefits. The Plan shall be effective as of January 1,
2002.


                           Article II -- DEFINITIONS

     For the purposes of this Plan, the following terms shall have the meanings
indicated, unless the content clearly indicates otherwise:

2.1      Account

         Account means the interest of a Participant in the Plan as represented
         by the hypothetical bookkeeping entries kept by the Employer for each
         Participant. Each Participant's interest may be divided into one or
         more separate Accounts which reflect, not only contributions into the
         Plan, but also gains and losses, allocated thereto, as well as any
         distributions or other withdrawals. The value of these Accounts shall
         be determined as of the Valuation Date. The existence of an Account or
         bookkeeping entries for a Participant (or his Beneficiary) does not
         create, suggest or imply that a Participant, Beneficiary or other
         person claiming through them under this Plan has a beneficial interest
         in any asset of the Employer.


2.2      Administrative Committee

         "Administrative Committee" means the Employee Relations Committee of
         the Company.


2.3      Beneficiary

         "Beneficiary" means the person, persons or entity (including, without
         limitation, any trustee) last designated by a Participant to receive
         the benefits specified hereunder, in the event of the Participant's
         death.


2.4      Board

         "Board" means the Board of Directors of the Company.


2.5      Company

         "Company" means Albemarle Corporation or any successor to the business
         thereof.




<PAGE>                                                                    Page 2

2.6      Deferral Election

         Deferral Election" means a base salary, bonus and/or other special
         compensation or award deferral commitment made by a Participant to
         establish a Retirement/Termination Account and/or a Scheduled
         Withdrawal Account pursuant to Article III and Sections 4.3 and 4.4 for
         which a Participation Agreement has been submitted by the Participant
         to the Administrative Committee.


2.7      Disability

         Disability" shall have the same meaning such term has under the
         Company's long term disability plan.


2.8      Elected Deferred Compensation

         Elected Deferred Compensation" means the amount of base salary, bonus
         and/or other special compensation or award that a Participant elects to
         defer pursuant to a Deferral Election for a Plan Year.


2.9      Employer

         "Employer" means the Company and any affiliated or subsidiary
         corporations designated by the Board.


2.10     Financial Hardship

         "Financial Hardship" means an immediate and substantial financial need
         of the Participant or Beneficiary, determined by the Administrative
         Committee on the basis of written information supplied by the
         Participant or Beneficiary in accordance with such standards as are,
         from time to time, established by the Administrative Committee or
         applicable law.


2.11     Hardship Distribution

         "Hardship Distribution" means a distribution to a Participant or a
         Beneficiary pursuant to Section 6.7.


2.12     Participant

         "Participant" means any individual who is participating in this Plan as
         provided in Article III or Article XII.


2.13     Participation Agreement

         "Participation Agreement" means the written agreement to defer salary,
         bonus and/or other special compensation or award submitted by a
         Participant to the Administrative Committee or its delegates.




<PAGE>                                                                    Page 3

2.14     Plan

         "Plan" means this Albemarle Corporation Executive Deferred Compensation
         Plan as set forth in this document and as the same may be amended,
         administered or interpreted from time to time.


2.15     Plan Year

         "Plan Year" means each calendar year beginning on January 1 and ending
         on December 31.


2.16     Retirement

         "Retirement" means a Participant's voluntary termination of employment
         with Employer, other than by reason of death, on or after the
         Participant's attainment of sixty (60) and ten (10) years of service.


2.17     Retirement/Termination Account

         "Retirement/Termination Account" means an Account established pursuant
         to Section 4.3 to provide for distribution of benefits following
         Retirement.


2.18     Scheduled Withdrawal

         "Scheduled Withdrawal" means a distribution prior to termination of
         employment pursuant to Section 6.6.


2.19     Scheduled Withdrawal Account

         "Scheduled Withdrawal Account" means an Account which may be
         established pursuant to Section 4.4 to provide for distribution of
         benefits on a date selected by the Participant.


2.20     Settlement Date

         "Settlement Date" means the date on which a lump-sum payment shall be
         made or the date on which installment payments shall commence.


2.21     Small Account

         "Small Account" means a lump-sum payment pursuant to Section 6.5.


2.22     Valuation Date

         "Valuation Date" means the last day of any calendar month, or such
         other dates as the Administrative Committee may determine, in its sole
         discretion, which may be either more or less frequent for the valuation
         of Participants' Accounts.




<PAGE>                                                                    Page 4

               Article III-- PARTICIPATION AND DEFERRAL ELECTIONS

3.1      Eligibility and Participation

(a)      Eligibility. All executives designated by the Vice Chairman and Chief
         Financial Officer or such other individual delegated by the Executive
         Compensation Committee of the Board shall be entitled to participate in
         the Plan.

(b)      Participation.  An eligible employee may elect to participate in the
         Plan by submitting a Participation Agreement to the Administrative
         Committee prior to the date he becomes eligible.

3.2      Basic Forms of Deferral

         A Participant may file a Participation Agreement to defer up to fifty
         percent (50%) of his base salary and/or one hundred percent (100%) of
         each bonus paid in a Plan Year into the Retirement/Termination Account
         and/or a Scheduled Withdrawal Account. The amount to be deferred shall
         be stated as a percentage of base salary and bonus.

3.3      Commencement and Duration of Deferral Election

(a)      Each Deferral Election shall be effective until the Participant changes
         it by filing a new Participation Agreement with the Administrative
         Committee. The Participant's current Deferral Election shall continue
         to apply for succeeding Plan Years, unless changed by the Participant
         prior to the start of the following Plan Year, in accordance with
         Section 3.4 below. A Deferral Election shall commence as of the first
         day of the next Plan Year following the date a Participation Agreement
         for such Deferral Election is filed with the Administrative Committee.
         The Participation Agreement shall specify the portion of the Elected
         Deferred Compensation to be credited to the Retirement/Termination
         Account and to each Scheduled Withdrawal Account.

(b)      A Deferral Election shall terminate when a Participant terminates
         employment for any reason or elects a Hardship Withdrawal.

(c)      A Deferral Election for a particular Scheduled Withdrawal Account shall
         terminate at the end of the Plan Year preceding the Plan Year in which
         the Participant has elected for distribution of such Account.

3.4      Modification of Deferral Elections

         Each Deferral Election shall remain in effect until it is changed by
         the Participant. A Participant shall not have the right to change,
         suspend or resume a Deferral Election which is in effect for the
         current Plan Year. Notwithstanding the foregoing, a Participant may
         change, suspend or resume his Deferral Election for any succeeding Plan
         Year in accordance with rules established by the Administrative
         Committee, provided that the modification applies only to a salary,
         bonus and/or other special compensation or award payment that is not
         yet earned.




<PAGE>                                                                    Page 5

                       Article IV-- COMPENSATION ACCOUNTS

4.1      Accounts

         For recordkeeping purposes only, Employer shall maintain up to four (4)
         separate Accounts for each Participant. The Accounts shall be known as
         the Retirement/Termination Account and up to three (3) separate
         Scheduled Withdrawal Accounts.

4.2      Crediting of Deferrals

         Beginning January 1 of each Plan Year, a Participant's Elected Deferred
         Compensation which consists of deferred base salary shall be credited
         to the Participant's Accounts within three (3) business days after the
         date on which the corresponding nondeferred portion of the
         Participant's base salary is paid or would have been paid but for the
         Deferral Election. Beginning January 1 of each Plan Year, a
         Participant's Elected Deferred Compensation which consists of deferred
         bonus and/or any other special compensation or award shall be credited
         to the Participant's Accounts within three (3) business days after the
         date on which the bonus and/or such special compensation or award is
         paid or would have been paid but for the Deferral Election.

4.3      Retirement/Termination Account

         A Participant may establish a Retirement/Termination Account by filing
         a Participation Agreement to defer base salary, bonus and/or any other
         special compensation or award into the Retirement/Termination Account
         and to receive retirement benefits from such Account following
         Retirement.

4.4      Scheduled Withdrawal Account

         A Participant may establish up to three (3) Scheduled Withdrawal
         Accounts by filing a Participation Agreement to defer base salary,
         bonus and/or any other special compensation or award into the
         applicable Scheduled Withdrawal Accounts and designating the applicable
         percentages allocated to each Account. No deferrals may be made into
         the Participant's Scheduled Withdrawal Accounts during the Plan Year in
         which the Participant is receiving, or will receive, a Scheduled
         Withdrawal from any such Account.

4.5      Vesting of Accounts

         Each Participant shall be one hundred percent (100%) vested at all
         times in the amounts credited to such Participant's
         Retirement/Termination Account and Scheduled Withdrawal Account.



<PAGE>                                                                    Page 6

4.6      Statement of Accounts

         From time to time, the Administrative Committee shall give to each
         Participant a benefit statement setting forth the balance of the
         Accounts maintained for the Participant.


4.7      Valuation of Accounts

         A Participant's Account as of each Valuation Date shall consist of the
         balance of the Participant's Account as of the immediately preceding
         Valuation Date, plus the Participant's Elected Deferred Compensation,
         if any, as such Account may be adjusted for investment gains and losses
         and minus any distributions made from such Account since the
         immediately preceding Valuation Date.


                      Article V-- INVESTMENT AND EARNINGS

5.1      Plan Investments

         A Participant shall complete a portfolio allocation form electing from
         among a series of hypothetical investment options designated by the
         Administrative Committee into which the Participant's Elected Deferred
         Compensation shall be credited. The performance of the Participant's
         Account(s) shall be measured based upon the investment options
         selected. The Participant's Elected Deferred Compensation shall be
         credited with such hypothetical crediting rates calculated after the
         investment managers' expenses have been deducted. Investment options
         may be changed monthly by executing a form available from the
         Administrative Committee, which form must be returned as indicated by
         the Administrative Committee at least five (5) days before the
         beginning of the month in which it is to be effective. The revised or
         changed investment allocations are effective the first business day of
         the following month, after receipt of a timely filed investment change
         form.

5.2      Crediting Investment Gains and Losses

         Participant Accounts shall be credited daily with investment gains and
         losses as if Accounts were invested in one or more of the Plan's
         investment options, as selected by the Participant, less administrative
         charges applied against the particular investment options. Accounts
         shall be credited with investment gains and losses through the
         applicable Valuation Date with respect to a particular Settlement Date
         (or Dates) in anticipation of, and in connection with, a Plan
         distribution.


                           Article VI-- PLAN BENEFITS

6.1      Retirement Benefit

(a)      Amount.  If a Participant terminates employment due to Retirement, the
         Employer shall pay to the Participant a benefit equal to the balance in
         the Participant's Retirement/Termination Account.



<PAGE>                                                                    Page 7

(b)      Form.  The Participant may elect to receive his Retirement/Termination
         Account in one of the following forms:

(i)      Lump Sum.  A single lump-sum payment; or

(ii)     Installment payments.  Installment payments in annual payments for a
         period of up to fifteen (15) years, as elected by the Participant,
         commencing on the first day of the Plan Year next following the
         Participant's Retirement date. The first payment shall equal the
         Participant's account balance as of the most recent Valuation Date
         divided by the number of installments elected by the Participant. The
         amount of each succeeding payment shall be redetermined each Plan Year
         as of January 1 based on the remaining Account balance as of the most
         recent Valuation Date divided by the remaining number of installment
         payments. The Account shall be credited with earnings, gains and losses
         pursuant to Article V.

         A Participant may make an election to change the form in which benefits
         are to be paid and such election will supercede his most prior election
         provided the election is made no later than thirty (30) days prior to
         the last day of the Plan Year immediately prior to the Plan Year in
         which he commences receipt of his Retirement benefit. An election to
         change the form of distribution that is filed with the Administrative
         Committee which is not made at least thirty (30) days prior to the last
         day of the Plan Year immediately prior to the Plan Year in which the
         Participant commences receipt of his Retirement benefit shall be null
         and void and the next preceding timely election filed by the
         Participant shall be controlling.

         If the Participant makes no election, payments from the
         Retirement/Termination Account shall be made in annual installments
         over a period of ten (10) years.

6.2      Termination Benefit

(a)      Amount.  If a Participant terminates employment for any reason other
         than Retirement, death or disability, the Employer shall pay to the
         Participant a benefit equal to the balance in the Participant's
         Retirement/Termination Account. If a Participant transfers his
         employment within the Company to a jurisdiction so that the Participant
         will no longer be subject to Federal income taxation in the United
         States, the Participant shall be deemed to have terminated employment
         and the Employer shall pay to the Participant a benefit equal to the
         balance in the Participant's Retirement/Termination Account.

(b)      Form.  The Employer shall pay to the Participant the benefit due under
         this Section 6.2 in a single lump sum.

6.3      Death Benefit

(a)      Preretirement Death Benefit. If a Participant dies while employed by
         Employer, the balances in the Retirement/Termination Account and
         Scheduled Withdrawal Account, if any, shall be paid to the
         Participant's Beneficiary in the form elected by the Participant with
         respect to his Retirement/Termination Account.



<PAGE>                                                                    Page 8

         The Beneficiary shall be permitted to make investment elections and
         earnings shall continue to be credited pursuant to Article V after the
         Participant's death.

(b)      Postretirement Death Benefit. If a Participant dies following the
         commencement of Retirement payments, the Employer shall pay to the
         Participant's Beneficiary any remaining installment payments that would
         have been paid to the Participant had the Participant survived.

6.4      Disability Benefit

(a)      Amount.  If a Participant terminates employment due to Disability, the
         Employer shall pay to the Participant a benefit equal to the balance in
         the Participant's Retirement/Termination Account.

(b)      Form. A Participant who terminates employment due to Disability shall
         be permitted to elect the form in which benefits will be paid pursuant
         to Section 6.1(b) of the Plan.

6.5      Small Account

         If, on the date payments are to commence under Sections 6.1, 6.3 or 6.4
         of the Plan, the Participant's Account balance is less than fifty
         thousand dollars ($50,000), the Administrative Committee may, in its
         discretion, pay such Account in a single lump-sum payment to the
         Participant or Beneficiary, as applicable.

6.6      Scheduled Withdrawal

(a)      Form and Commencement.  The entire balance of the applicable Scheduled
         Withdrawal Account shall be paid in either a single lump sum or in
         installment payments on the date or dates elected by the Participant at
         the time the applicable Account was established. In no event shall the
         payment date be prior to the completion of three (3) Plan Years from
         the date the applicable Account is established. A Deferral Election
         shall not be made with respect to the applicable Scheduled Withdrawal
         Account for the Plan Year in which a payment is made from such Account
         to the Participant. The Participant may elect to receive distributions
         from a Scheduled Withdrawal Account in the form of a single lump sum or
         in annual installments over a period not to exceed four (4) years. A
         distribution in the form of annual installments shall be paid in the
         method described in Section 6.1(b)(ii).

(b)      Termination of Employment Prior to Scheduled Withdrawal.  If a
         Participant with a balance in a Scheduled Withdrawal Account(s)
         terminates his employment with Employer due to Retirement or
         Disability, such Scheduled Withdrawal Account(s) shall be paid to the
         Participant pursuant to subparagraph (a) above. Notwithstanding the
         foregoing, in the event the Participant terminates his employment for a
         reason other than due to Retirement or Disability, the Employer shall
         pay to the Participant the benefit due under this Section 6.6 in a
         single lump sum. If a Participant transfers his employment within the
         Company to a jurisdiction so that the Participant will no longer be
         subject to Federal income taxation in the United States, the
         Participant shall be deemed to have terminated employment and the
         Employer shall pay to the Participant the benefit due under this
         Section 6.6 in a single lump sum.



<PAGE>                                                                    Page 9

6.7      Hardship Distribution

         Upon finding that a Participant or Beneficiary has suffered a Financial
         Hardship, the Administrative Committee may, in its sole discretion,
         make distributions from an Account prior to the time specified for
         payment of benefits under the Plan. The Hardship Distribution shall be
         made ratably from all Accounts. The amount of such distributions shall
         be limited to the amount reasonably necessary to meet the Participant's
         or Beneficiary's requirements during the Financial Hardship. Any
         amounts paid to a Participant pursuant to this Section 6.7 shall be
         treated as distributions from the Participant's Accounts.

         Following a complete distribution of the entire Account balance, a
         Participant and his Beneficiary shall be entitled to no further
         benefits under the Plan with respect to that Account.

         Applications for Hardship Distributions and determinations thereon by
         the Administrative Committee shall be in writing, and a Participant or
         Beneficiary may be required to furnish written proof of the Financial
         Hardship.

         Upon receiving a Hardship Distribution, a Participant's Deferral
         Elections shall cease and such Participant shall not participate in the
         Plan until the next enrollment period following one (1) full year from
         the date of the Hardship Distribution.

6.8      Valuation and Settlement

         With respect to a lump-sum payment, the Settlement Date for an Account
         shall be no more than thirty (30) days after the Valuation Date
         following such event for which the Participant or Beneficiary becomes
         entitled to payments on account of termination of employment. With
         respect to benefits that will be paid in installments pursuant to
         Section 6.1(b)(ii), the Settlement Date shall be the January 1 next
         following the Participant's Retirement date.

         The Settlement Date for a Hardship Distribution shall be no more than
         sixty (60) days after the last day of the month in which the
         Administrative Committee delivers a finding that the Participant or
         Beneficiary has suffered a Financial Hardship. The amount of the
         lump-sum payment for a Hardship Distribution shall be based on the
         value of the Participant's Account as of the Valuation Date at the end
         of the month in which the Administrative Committee delivers a finding
         that the Participant or his Beneficiary has suffered a Financial
         Hardship.



<PAGE>                                                                   Page 10

6.9      Accelerated Distribution

         Notwithstanding any other provision of the Plan and upon written
         request to the Administrative Committee, a Participant shall be
         entitled to receive a lump-sum distribution equal to ninety percent
         (90%) of all Account balances as of the Valuation Date on the last day
         of the month in which the Administrative Committee receives the written
         request, provided the Administrative Committee receives such written
         request at least three (3) business days prior to the last day of such
         month. If the Administrative Committee receives the written request
         during the last three (3) business days of the month, the Participant
         shall be entitled to receive a lump sum distribution equal to ninety
         percent (90%) of all Account balances as of the Valuation Date on the
         last day of the next month. The remaining balance shall be forfeited by
         the Participant. The amount payable under this section shall be paid in
         a single lump sum within thirty (30) days after the Valuation Date for
         such distribution, as provided above. Such Participant shall not be
         eligible to make Deferral Elections until the next enrollment period
         following twelve (12) months from the date of the distribution.

6.10     Withholding and Payroll Taxes

         The Employer shall withhold from Plan payments made hereunder any taxes
         required to be withheld from such payments under federal, state or
         local law. Any withholding of taxes or other amounts with respect to
         contributions through Elected Deferred Compensation or otherwise, that
         is required by federal, state or local law, including but not limited
         to FICA taxes (including both OASDI and Medicare taxes), shall be
         withheld from the Participant's nondeferred base salary, bonus and/or
         other special compensation or award to the maximum extent possible with
         any excess being withheld from the Participant's Elected Deferred
         Compensation. Each Participant shall bear the ultimate responsibility
         for payment of all taxes owed under this Plan.

6.11     Payment to Guardian

         If a benefit is payable to a minor or a person declared incompetent or
         to a person incapable of handling the disposition of his property, the
         Administrative Committee may direct payment of such benefit to the
         guardian, conservator, legal representative or person having the care
         and custody of such minor, incompetent or incapacitated person. The
         Administrative Committee may require proof of minority, incompetency,
         incapacity, conservatorship or guardianship as it may deem appropriate
         prior to distribution of the benefit. Such distribution shall
         completely discharge the Administrative Committee from all liability
         with respect to such benefit.



<PAGE>                                                                   Page 11

                           Article VII -- DESIGNATION

7.1      Beneficiary Designation

         Each Participant shall have the right, at any time, to designate a
         Beneficiary (both primary as well as contingent) to whom benefits under
         this Plan shall be paid if a Participant dies prior to complete
         distribution to the Participant of the benefits due such Participant
         under the Plan. Each Beneficiary designation shall be in a written form
         prescribed by the Administrative Committee, and will be effective only
         when filed with the Administrative Committee during the Participant's
         lifetime.

7.2      Changing Beneficiary

         Any Beneficiary designation may be changed by a Participant without the
         consent of the previously named Beneficiary by the filing of a new
         Beneficiary designation with the Administrative Committee. The filing
         of a new Beneficiary designation shall cancel all Beneficiary
         designations previously filed. If a Participant's Compensation is
         community property, any Beneficiary Designation shall be valid or
         effective only as permitted under applicable law.

7.3      No Beneficiary Designation

         In the absence of an effective Beneficiary designation, or if all
         designated Beneficiaries predecease the Participant or die prior to
         complete distribution of the Participant's benefits, the Participant's
         designated Beneficiary shall be deemed to be the Participant's estate.

7.4      Effect of Payment

         Payment to the Beneficiary shall completely discharge Employer's
         obligations under this Plan.


                     Article VIII-- FORFEITURES TO COMPANY

8.1      Distribution of Participant's Interest When Company is Unable to Locate
         Distributees

         If the Employer is unable, within three (3) years after a payment is
         due to a Participant or Beneficiary, to make such payment because it
         cannot ascertain, after making reasonable efforts, the whereabouts of
         the Participant or the identity or whereabouts of the Beneficiary, and
         neither Participant, his Beneficiary, nor his executor or administrator
         has made written claim therefore before the expiration of the aforesaid
         time limit, then in such case, the amount due shall be forfeited to the
         Employer.




<PAGE>                                                                   Page 12

                          Article IX -- ADMINISTRATION

9.1      Committee; Duties

         The Administrative Committee shall have the authority to interpret and
         enforce all appropriate rules and regulations for the administration of
         the Plan and decide or resolve any and all questions, including
         interpretations of the Plan, as may arise in such administration. A
         majority vote of the Administrative Committee members in office at the
         time of the vote shall control any decision. The required majority
         action may be taken either by a vote at a meeting or without a meeting
         by a signed memorandum. Meetings may be conducted by telephone
         conference call. The Administrative Committee may, by majority action,
         delegate to one or more of its members the authority to execute and
         deliver in the name of the Administrative Committee all communications
         and documents which the Administrative Committee is required or
         authorized to provide under this Plan. Any party shall accept and rely
         upon any document executed in the name of the Administrative Committee.

9.2      Agents

         The Administrative Committee may employ agents and delegate to them
         such administrative duties as it sees fit, and may consult with counsel
         who may be counsel to the Company.

9.3      Binding Effect of Decisions

         The decision or action of the Administrative Committee with respect to
         any question arising out of or in connection with the administration,
         interpretation and application of the Plan and the rules and
         regulations promulgated hereunder shall be final, conclusive and
         binding upon all persons having any interest in the Plan.

9.4      Indemnity of Committee

         The Company shall indemnify and hold harmless the members of the
         Administrative Committee against any and all claims, loss, damage,
         expense or liability arising from any action or failure to act with
         respect to this Plan on account of such person's service on the
         Administrative Committee, except in the case of gross negligence or
         willful misconduct.


                          Article X-- CLAIMS PROCEDURE

10.1     Claim

         Any person claiming a benefit, requesting an interpretation or ruling
         under the Plan, or requesting information under the Plan, shall present
         the request in writing to the Administrative Committee which shall
         respond in writing within thirty (30) days.



<PAGE>                                                                   Page 13

10.2     Denial of Claim

         If the claim or request is denied, the written notice of denial shall
         state:

(a)      The reason for denial, with specific reference to the Plan provisions
         on which the denial is based.

(b)      A description of any additional material or information required and an
         explanation of why it is necessary.

(c)      An explanation of the Plan's claim review procedure.

10.3     Review of Claim

         Any person whose claim or request is denied or who has not received a
         response within thirty (30) days may request review by notice given in
         writing to the Administrative Committee. Such notice must be received
         by the Administrative Committee within sixty (60) days following the
         end of the thirty (30) day review period. The claim or request shall be
         reviewed by the Administrative Committee who may, but shall not be
         required to, grant the claimant a hearing. On review, the claimant may
         have representation, examine pertinent documents, and submit issues and
         comments in writing.

10.4     Final Decision

         The decision on review shall normally be made within sixty (60) days.
         If an extension of time is required for a hearing or other special
         circumstances, the claimant shall be notified and the time limit shall
         be one hundred twenty (120) days. The decision shall be in writing and
         shall state the reason and the relevant Plan provisions. All decisions
         on review shall be final and bind all parties concerned.

                 Article XI-- AMENDMENT AND TERMINATION OF PLAN

11.1     Amendment

(a)      The Executive Compensation Committee of the Board may at any time amend
         the Plan, in whole or in part, provided however that no amendment shall
         be effective to decrease or restrict the amount credited to any Account
         maintained under the Plan as of the adoption date or effective date of
         the amendment, whichever is later.

(b)      The Administrative Committee may adopt any technical, clerical,
         conforming or clarifying amendment or other change, provided:

(i)      The Administrative Committee deems it necessary or advisable to:



<PAGE>                                                                   Page 14

(A)      Correct any defect, supply any omission or reconcile any inconsistency
         in order to carry out the intent and purposes of the Plan;

(B)      Maintain the Plan's status as a "top-hat" plan for purposes of ERISA;

         or

(C)      Facilitate the administration of the Plan;

(ii)     The amendment or change does not, without the consent of the Executive
         Compensation Committee of the Board, materially increase the cost to
         the Employer of maintaining the Plan; and

(iii)    Any formal amendment adopted by the Administrative Committee shall be
         in writing, signed by a member of the Committee and reported to the
         Executive Compensation Committee of the Board.

(c)      Changes in Earnings Rate. If the Plan is amended so that a series of
         investment options is not used to calculate the Participants'
         investment gains and losses under the Plan, the rate of earnings to be
         credited to a Participant's Account shall not be less than the monthly
         equivalent of the average nominal annual yield on three (3) month
         Treasury bills for the applicable period.

11.2     Company's Right to Terminate

         The Executive Compensation Committee of the Board may, at any time,
         partially or completely terminate the Plan.

(a)      Partial Termination. The Executive Compensation Committee of the Board
         may partially terminate the Plan by instructing the Administrative
         Committee not to accept any additional deferrals into the Plan. If such
         a partial termination occurs, the Plan shall continue to operate and be
         effective with regard to deferrals made prior to the effective date of
         such partial termination.

(b)      Complete Termination.  The Executive Compensation Committee of the
         Board may completely terminate the Plan by instructing the
         Administrative Committee not to accept any additional deferrals, and by
         terminating all ongoing Deferral Elections. If such a complete
         termination occurs, the Plan shall cease to operate and Employer shall
         distribute each Account. Payment shall be made in either the form of a
         lump sum payment as soon as practicable or such other form of payment
         as determined by the Executive Compensation Committee of the Board.



<PAGE>                                                                   Page 15

                 Article XII-- SPECIAL COMPENSATION AND AWARDS

12.1     Special Compensation and Awards

         Notwithstanding anything in the Plan to the contrary, the deferral of a
         special compensation award shall be governed by this Article XII.
         Unless directly addressed herein, the Participant's deferral of a
         special compensation award shall otherwise be governed by the
         requirements of the Plan.

12.2     Participation and Deferral Elections

         The Executive Compensation Committee of the Board shall designate the
         Participants eligible to elect a deferral under this Article XII. The
         Participant must file a Participant Agreement with the Administrative
         Committee for such deferral. The Participant's Deferral Election under
         this Article XII shall commence as of the first day of the next Plan
         Year following the date the Participant's Deferral Election is filed
         with the Administrative Committee.

12.3     Compensation Accounts

         The Participant may establish either a Retirement/Termination Account
         or a Scheduled Withdrawal Account under this Article XII. Such Account
         shall be separate and apart from any other Accounts of the Participant.
         The Participant shall be entitled to have up to two (2) separate
         Scheduled Withdrawal Accounts under this Article XII.

12.4     Investment and Earnings

         The Participant shall not be eligible to direct the investment of his
         deferral under this Article XII. The Participant's Account shall be
         credited with earnings based on the increase or decrease in the value
         of the common stock of the Company from the date of the Participant's
         deferral. In addition, the Participant's Account shall be credited with
         the value of any hypothetical dividends paid on the common stock of the
         Company during the period for which the Participant's maintains an
         Account established under this Article XII. The hypothetical dividends
         will be reinvested when payable in additional shares of the common
         stock of the Company. The value of the common stock of the Company for
         the purposes of this Article XII shall mean the closing price of the
         stock on the New York Stock Exchange - Composite Transaction on the
         relevant date of determination.

12.5     Distributions

         The Participant shall only be eligible to receive his benefits under
         this Article XII in the form of Company stock. If designated into a
         Retirement Account, the Participant shall be eligible to commence
         receipt of his benefits in such Account in the manner described in
         Section 6.1. The Retirement Benefit may be paid out in the form of a
         lump sum or in installment payments. A distribution in the form of
         annual installments shall be paid in the method described in Section
         6.1(b)(ii).



<PAGE>                                                                   Page 16

         If designated into a Scheduled Withdrawal Account, the Participant
         shall be eligible to commence receipt of his benefits in such account
         on the date elected by the Participant at the time the Account was
         established. In no event shall the payment date be prior to the
         completion of two (2) Plan Years from the date the applicable Account
         is established. The Scheduled Withdrawal Account may be paid out in a
         single lump sum payment or in up to four (4) annual installments. A
         distribution in the form of annual installments shall be paid in the
         method described in Section 6.1(b)(ii). Notwithstanding the foregoing,
         the Participant shall be entitled to make a one-time election to defer
         commencement of the distributions from his Scheduled Withdrawal Account
         in the event the Participant notifies the Administrative Committee in
         writing of such election at least thirty (30) days prior to the close
         of the Plan Year immediately preceding the Plan Year in which the
         Scheduled Withdrawals were to begin. In such written election to defer
         commencement, the Participant shall inform the Administrative Committee
         of the new date upon which the Scheduled Withdrawals shall commence.


                         Article XIII -- MISCELLANEOUS

13.1     Unfunded Plan

         This plan is an unfunded plan maintained primarily to provide deferred
         compensation benefits for a select group of "management or
         highly-compensated employees" within the meaning of Sections 201, 301
         and 401 of the Employee Retirement Income Security Act of 1974, as
         amended ("ERISA"), and therefore is exempt from the provisions of Parts
         2, 3 and 4 of Title I of ERISA.

13.2     Unsecured General Creditor

         Participants and Beneficiaries shall be unsecured general creditors,
         with no secured or preferential right to any assets of Employer or any
         other party for payment of benefits under this Plan. Any life insurance
         policies, annuity contracts or other property purchased by Employer in
         connection with this Plan shall remain its general, unpledged and
         unrestricted assets. Employer's obligation under the Plan shall be an
         unfunded and unsecured promise to pay money in the future.

13.3     Trust Fund

         At its discretion, the Company may establish one or more trusts, with
         such trustees as the Company may approve, for the purpose of providing
         for the payment of benefits owed under the Plan. Although such a trust
         shall be irrevocable, its assets shall be held for payment to
         Employer's general creditors in the event of insolvency or bankruptcy.
         To the extent any benefits provided under the Plan with respect to an
         Employer's Participants are paid from any such trust, that Employer
         shall have no further obligation to pay them. If not paid from the
         trust, such benefits shall remain the obligation solely of that
         Employer.



<PAGE>                                                                   Page 17

13.4     Nonassignability

         Except in connection with designating a Beneficiary as provided under
         Article VII hereof, neither a Participant nor any other person shall
         have any right to commute, sell, assign, transfer, pledge, anticipate,
         mortgage or otherwise encumber, transfer, hypothecate or convey in
         advance of actual receipt the amounts, if any, payable hereunder, or
         any part thereof, which are, and all rights to which are, expressly
         declared to be unassignable and nontransferable. No part of the amounts
         payable shall, prior to actual payment, be subject to seizure or
         sequestration for the payment of any debts, judgments, alimony or
         separate maintenance owed by a Participant or any other person, nor be
         transferable by operation of law in the event of a Participant's or any
         other person's bankruptcy or insolvency.

13.5     Not a Contract of Employment

         This Plan shall not constitute a contract of employment between
         Employer and the Participant. Nothing in this Plan shall give a
         Participant the right to be retained in the service of Employer or to
         interfere with the right of Employer to discipline or discharge a
         Participant at any time.

13.6     Protective Provisions

         A Participant shall cooperate with Employer by furnishing any and all
         information requested by Employer in order to facilitate the payment of
         benefits hereunder, and by taking such physical examinations as
         Employer may deem necessary and taking such other action as may be
         requested by Employer.

13.7     Governing Law

         The provisions of this Plan shall be construed and interpreted
         according to the laws of the Commonwealth of Virginia, except as
         preempted by federal law.

13.8     Validity

         In case any provision of this Plan shall be held illegal or invalid for
         any reason, said illegality or invalidity shall not affect the
         remaining parts hereof, but this Plan shall be construed and enforced
         as if such illegal and invalid provision had never been inserted
         herein.

13.9     Gender

         The masculine gender shall include the feminine and the singular shall
         include the plural, except where the context expressly dictates
         otherwise.

13.10    Notice

         Any notice required or permitted under the Plan shall be sufficient if
         in writing and hand delivered or sent by registered or certified mail.
         Such notice shall be deemed as given as of the date of delivery or, if
         delivery is made by mail, as of the date shown on the postmark on the
         receipt for registration or certification. Mailed notice to the
         Administrative Committee shall be directed to the Company's address.
         Mailed notice to a Participant or Beneficiary shall be directed to the
         individual's last known address in Employer's records.



<PAGE>                                                                   Page 18

13.11    Successors

         The provisions of this Plan shall bind and inure to the benefit of
         Company and its successors and assigns. The term successors as used
         herein shall include any corporate or other business entity which
         shall, whether by merger, consolidation, purchase or otherwise acquire
         all or substantially all of the business and assets of Employer, and
         successors of any such corporation or other business entity.

                                        ALBEMARLE CORPORATION


                                             /s/ C.B. Walker

                                        Vice Chairman of the Board and
                                        Chief Financial Officer    

                                        Dated: December 21, 2001



<PAGE>                                                                   Page 19

                                   Appendix A

                                Change in Control


1.  A "Change in Control" shall mean the occurrence of any of the following
    events:

(a)      any Person, or "group" as defined in section 13(d)(3) of the Securities
         Exchange Act of 1934 (excluding Floyd D. Gottwald, Bruce C. Gottwald,
         members of either of their families and any Affiliate), becomes,
         directly or indirectly, the Beneficial Owner of 20% or more of the
         combined voting power of the then outstanding Albemarle securities that
         are entitled to vote generally for the election of Albemarle's
         directors (the "Voting Securities") (other than as a result of an
         issuance of securities by Albemarle approved by Continuing Directors,
         or open market purchases approved by Continuing Directors at the time
         the purchases are made);

(b)      as the direct or indirect result of, or in connection with, a
         reorganization, merger, share exchange or consolidation (a "Business
         Combination"), a contested election of directors, or any combination of
         these transactions, Continuing Directors cease to constitute a majority
         of Albemarle's board of directors, or any successor's board of
         directors, within two years of the last of such transactions;

(c)      the shareholders of Albemarle approve a Business Combination, unless
         immediately following such Business Combination, (i) all or
         substantially all of the Persons who were the Beneficial Owners of the
         Voting Securities outstanding immediately prior to such Business
         Combination Beneficially Own more than 70% of the combined voting power
         of the then outstanding voting securities entitled to vote generally in
         the election of directors of the Company resulting from such Business
         Combination (including, without limitation, a company which as a result
         of such transaction owns Albemarle through one or more Subsidiaries) in
         substantially the same proportions as their ownership, immediately
         prior to such Business Combination, of the Voting Securities, (ii) no
         Person (excluding Floyd D. Gottwald, Bruce C. Gottwald, members of
         either of their families and any Affiliate and any employee benefit
         plan or related trust of Albemarle or the Company resulting from such
         Business Combination) Beneficially Owns 30% or more of the combined
         voting power of the then outstanding voting securities entitled to vote
         generally in the election of directors of the Company resulting from
         such Business Combination and (iii) at least a majority of the members
         of the board of directors of the Company resulting from such Business
         Combination are Continuing Directors.

2.   Definitions.  For purposes of this Appendix A, the following terms shall
     have the following meanings:

(a)      Affiliate and Associate shall have the respective meanings ascribed to
         such terms in Rule 12b-2 of the General Rules and Regulations under the
         Securities Exchange Act of 1934, as amended and as in effect on the
         date of this Agreement (the "Exchange Act").



<PAGE>                                                                   Page 20

(b)      Albemarle means Albemarle Corporation.

(c)      Beneficial Owner means that a Person shall be deemed the "Beneficial
         Owner" and shall be deemed to "beneficially own," any securities:

         (i) that such Person or any of such Person's Affiliates or Associates
         owns, directly or indirectly;

         (ii) that such Person or any of such Person's Affiliates or Associates,
         directly or indirectly, has the right to acquire (whether such right is
         exercisable immediately or only after the passage of time) pursuant to
         any agreement, arrangement or understanding (whether or not in writing)
         or upon the exercise of conversion rights, exchange rights, rights,
         warrants or options, or otherwise; provided, however, that a Person
         shall not be deemed to be the "Beneficial Owner" of, or to
         "beneficially own," securities tendered pursuant to a tender or
         exchange offer made by such Person or any such Person's Affiliates or
         Associates until such tendered securities are accepted for purchase or
         exchange;

         (iii) that such Person or any of such Person's Affiliates or
         Associates, directly or indirectly, has the right to vote, including
         pursuant to any agreement, arrangement or understanding, whether or not
         in writing; provided, however, that a Person shall not be deemed the
         "Beneficial Owner" of, or to "beneficially own," any security under
         this subsection as a result of an agreement, arrangement or
         understanding to vote such security if such agreement, arrangement or
         understanding: (1) arises solely from a revocable proxy given in
         response to a public proxy solicitation made pursuant to, and in
         accordance with the applicable provisions of the General Rules and
         Regulations under the Exchange Act and (2) is not also then reportable
         by such Person on Schedule 13D under the Exchange Act (or any
         comparable or successor report); or

         (iv) that are beneficially owned, directly or indirectly, by any other
         Person (or any Affiliate or Associates thereof) with which such Person
         (or any of such Person's Affiliates or Associates) has any agreement,
         arrangement or understanding (whether or not in writing), for the
         purpose of acquiring, holding, voting (except pursuant to a revocable
         proxy as described in the proviso to subsection (iii) of this
         definition) or disposing of any voting securities of Albemarle
         provided, however, that notwithstanding any provision of this
         definition, any Person engaged in business as an underwriter of
         securities who acquires any securities of Albemarle through such
         Person's participation in good faith in a firm commitment underwriting
         registered under the Securities Act of 1933, shall not be deemed the
         "Beneficial Owner" of, or to "beneficially own," such securities until
         the expiration of forty days after the date of acquisition; and
         provided, further, that in no case shall an officer or director of
         Albemarle be deemed (1) the beneficial owner of any securities
         beneficially owned by another officer or director of Albemarle solely
         by reason of actions undertaken by such persons in their capacity as
         officers or directors of Albemarle; or (2) the beneficial owner of
         securities held of record by the trustee of any employee benefit plan
         of Albemarle or any Subsidiary of Albemarle for the benefit of any
         employee of Albemarle or any Subsidiary of Albemarle, other than the
         officer or director, by reason of any influences that such officer or
         director may have over the voting of the securities held in the trust.



<PAGE>                                                                   Page 21

(d)      Company means Albemarle or any successor thereto.

(e)      Continuing Director means any member of Albemarle's Board, while a
         member of that Board, and

         (i) who was a member of Albemarle's Board prior to April 27, 2000, or
         (ii) whose subsequent nomination for election or election to
         Albemarle's Board was recommended or approved by a majority of the
         Continuing Directors.

(f)      Control Change Date means the date on which an event described in
         paragraph 1 occurs. If a Change in Control occurs on account of a
         series of transactions, the Control Change Date is the date of the last
         of such transactions.

(g)      Person means any individual, firm, company, partnership or other
         entity.

(h)      Subsidiary means, with references to any Person, any company or other
         entity of which an amount of voting securities sufficient to elect a
         majority of the directors or Persons having similar authority of such
         company or other entity is beneficially owned, directly or indirectly,
         by such Person, or otherwise controlled by such Person.




Exhibit 10.11
                                 First Amendment
                                     to the
                         SAVINGS PLAN FOR THE EMPLOYEES
                            OF ALBEMARLE CORPORATION


In accordance with Section 10.01 of the Savings Plan for the Employees of
Albemarle Corporation (the "Plan"), the Plan is hereby amended as follows:

1.  The Plan is amended by adding a new Article VA thereof to read as follows:

                                   ARTICLE VA

                          Employee Stock Ownership Plan

5A.01.   Employee Stock Ownership Plan.

Effective as of December __, 2001, all Company Stock invested in the Albemarle
Corporation Common Stock Fund which is allocated to Member's Accounts shall
constitute an Employee Stock Ownership Plan.

5A.02.   Definitions. For purposes of the Plan, the following terms shall have
         the following meanings:

(a) "Company Stock" means common stock of Albemarle Corporation, or other stock
that constitutes "qualifying employer securities," as defined in Section
4975(e)(8) of the Code.

(b) "Albemarle Corporation Common Stock Fund" or "Albemarle Stock Fund" means
the Investment Fund within the Trust Fund which holds Company Stock allocated to
a Member's Account. The Albemarle Corporation Common Stock Fund shall be
maintained as an Investment Fund at all times during which a portion of the Plan
is intended to constitute an ESOP.

(c) "Employee Stock
 Ownership Plan" or "ESOP" means the portion of the Plan that
is intended to be a stock bonus plan as defined in Treasury Regulation Section
1.401-1(b)(1)(iii) and a non-leveraged employee stock ownership plan satisfying
the requirements of Sections 401(a), 409, and 4975(e)(7) of the Code. The ESOP
shall consist of all amounts held in the Albemarle Corporation Common Stock Fund
which is allocated to Member's Accounts. The ESOP is intended to be invested
primarily in Company Stock.



<PAGE>



5A.03    Discrimination Testing.

The portion of the Plan which constitutes an ESOP, and which is mandatorily
disaggregated from the balance of the Plan pursuant to Treasury Regulation
Sections 1.401(k)-1(g)(11) and 1.410(b)-7(c)(2), shall be tested separately for
the purpose of applying the discrimination tests of Code Sections 401(a)(4),
401(k), 401(m) and 410(b).

5A.04    Diversification Rights.

Notwithstanding Section 5.02(c) of the Plan, if a Member attains age fifty-five
(55) and has completed at least ten (10) Years of Service (so that the Member is
a "Qualified Participant"), such Qualified Participant shall be permitted to
elect to transfer to any Investment Fund or combination of Investment Funds a
portion of the balance in the Member's Account invested in the Albemarle
Corporation Common Stock Fund (the "Diversification Election") in accordance
with the following provisions:

(a) Such Qualified Participant shall be permitted to make the Diversification
Election, in such manner as the Administrator may prescribe, during the ninety
(90) day period immediately following the close of each Plan Year during the
Qualified Election Period (the "Diversification Election Period"). For purposes
of this Section 5A.04, the "Qualified Election Period" means the period of six
consecutive Plan Years beginning with the Plan Year during which the Member
becomes a Qualified Participant.

(b) For each of the first five Plan Years in the Qualified Election Period, such
Qualified Participant shall be permitted to reallocate to other Plan Investment
Funds, up to twenty-five (25) percent of the value credited to the Member within
the Albemarle Corporation Common Stock Fund (less any amounts that such
Qualified Participant reallocated previously under this Section 5A.04). For the
sixth Plan Year in the Qualified Election Period, such Qualified Participant
shall be permitted to reallocate up to fifty (50) percent of the value credited
to the Member within the Albemarle Corporation Common Stock Fund (less any
amounts that such Qualified Participant reallocated previously under this
Section 5A.04).

(c) The amount that may be reallocated during the Qualified Election Period
shall be determined as of the last day of the preceding Plan Year by multiplying
the value credited to the Qualified Participant within the Albemarle Corporation
Common Stock Fund (including the value of which has been previously reallocated
pursuant to this Section 5A.04 determined at the time of such reallocation) by
twenty-five (25) percent or, with respect to a Qualified Participant's
Diversification Election for the sixth Plan Year in the Qualified Election
Period, by fifty (50) percent, reduced by the value that has previously been
reallocated by such Qualified Participant pursuant to this Section 5A.04.

(d) A Diversification Election pursuant to this Section 5A.04 shall be effective
no later than ninety (90) days after the end of the Diversification Election
Period.

5A.05    Dividends on Company Stock.

Effective with respect to cash dividends paid on shares of Company Stock
allocated to a Member's Account in calendar year 2002 or later, the Member (or
his Beneficiary if applicable) shall have the right to receive payment of such
dividends in lieu of reinvestment of the dividends in Company Stock. An election
by a Member or Beneficiary to receive payment of dividends under this Section
5A.05 shall be made in the manner designated by the Administrator provided that,
(1) any Member or Beneficiary who fails to make an affirmative election to
receive payment of dividends within the time prescribed for such election by the
Administrator shall be deemed to have elected to retain such dividends in the
Plan and (2) any election by a Member or Beneficiary to receive payment of
dividends in lieu of reinvestment shall remain in effect until such election is
revoked by the Member or Beneficiary. In no event shall dividends be paid to the
Member or Beneficiary later than ninety (90) days after the close of the Plan
Year in which such dividends were paid to the Plan."

2.  Section 7.05 of the Plan is amended by adding the following sentence after
    the last sentence thereof:

        "Notwithstanding the foregoing, a Member may elect to receive his entire
         Account balance in whole shares of Company Stock by directing a
         transfer of his Account balance to the Albemarle Stock Fund and
         receiving a distribution of his entire Account balance in whole shares
         of Company Stock from the Albemarle Stock Fund."




<PAGE>



3.  This First Amendment shall be effective as of December 14, 2001.

    IN WITNESS WHEREOF, the Corporation by its duly authorized officer and with
    its seal affixed, has caused these presents to be signed this 14th day of
    December, 2001.

                                              ALBEMARLE CORPORATION





                                                    /s/ C.B. WALKER
                                              
                                              Vice Chairman of the Board and
                                              Chief Financial Officer   
                                                      
                                                     


Exhibit 11


                             ALBEMARLE CORPORATION
                  COMPUTATION OF PRO FORMA EARNINGS PER SHARE
                 for the years ended December 31, 2001 and 2000
                    (In thousands except per share amounts)


                                                    Pro Forma       Pro Forma
                                                       2001            2000
                                                  --------------  --------------

BASIC EARNINGS PER SHARE

Numerator:

Net income after effect of
 applying SFAS No. 123
 "Accounting for Stock Based
 Compensation"                                          $66,524        $100,437
                                                  --------------  --------------
 
Denominator:
 
Average number of shares of
 common stock outstanding                                45,766          45,882
                                                  ==============  ==============
 
Basic earnings per share                                  $1.45           $2.19
                                                  ==============  ==============
 

DILUTED EARNINGS PER SHARE

Numerator:
 
Net income after effect of
 applying SFAS No. 123
 "Accounting for Stock Based 
 Compensation"                                          $66,524        $100,437
                                                  --------------  --------------
 
Denominator:
 
Average number of shares of
 common stock outstanding                                45,766          45,882

Shares issuable upon the assumed
 exercise of outstanding stock
 options and other common stock
 equivalents                                                758             724
                                                  --------------  --------------

Total pro forma shares                                   46,524          46,606
                                                  ==============  ==============
 
Diluted earnings per share                                $1.43           $2.16
                                                  ==============  ==============
 
 














Exhibit 21
                             ALBEMARLE SUBSIDIARIES

NAME                                                DOMICILE

Albemarle Asano Corporation                         Japan

Albemarle Asia Pacific Company                      Virginia

Albemarle Asia Pacific Company LLC                  Virginia

Albemarle Chemicals SAS                             France

Albemarle Chimie                                    France

Albemarle China Corporation                         Virginia

Albemarle Deutschland GmbH                          Germany

Albemarle Europe SPRL                               Belgium

Albemarle Foreign Sales Corporation                 U. S. Virgin Islands

Albemarle France S.A.R.L.                           France

Albemarle Holdings Company Limited                  Turks and Caicos Islands

Albemarle International Corporation                 Virginia

Albemarle International Company LLC                 Virginia

Albemarle Marketing Company Limited                 Turks and Caicos Islands

Albemarle Overseas Development Corporation          Virginia

Albemarle Overseas Development Corporation LLC      Virginia

Albemarle PPC                                       France

Albemarle Services Company Limited                  Turks and Caicos Islands

Albemarle TCI Limited                               Turks and Caicos Islands

Albemarle U.K. Holdings, Inc.                       Virginia

Albemarle UK Limited                                England

Albemarle Ventures Company Limited                  Turks and Caicos Islands

Albemarle Virginia Corporation                      Virginia

Albemarle Virginia, L.P.                            Virginia

ANY, Inc.                                           New York

Breitenau Holding GmbH                              Germany

Marble (One) SAS                                    France

Marble (Two) SAS                                    France

Martinswerk
 GmbH                                    Germany




Exhibit 23.1


                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File No. 33-75622 and 333-83237) of Albemarle
Corporation of our report dated January 23, 2002, except Footnote 19 for which
the date is February 13, 2002, relating to the financial statements, which
appears in this Form 10-K.


/s/PricewaterhouseCoopers LLP

Richmond, Virginia 
February 27, 2002




Exhibit 99

<TABLE>
<CAPTION>
 
FIVE-YEAR SUMMARY
-------------------------------------------------------------------------------------------------------------------------------

(In Thousands Except Per-Share Amounts)
-------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31                                   2001           2000          1999          1998          1997    
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>           <C>           <C>           <C>

Results of Operations                                                                                                       
Net sales                                           $    916,899    $  917,549    $  845,925    $  820,862    $  829,850 
Costs and expenses(a)                                    818,449       767,387       731,799       695,147       709,143 
-------------------------------------------------------------------------------------------------------------------------------
   Operating profit                                       98,450       150,162       114,126       125,715       120,707 

Interest and financing expenses                            5,536         5,998         8,379         4,487           719 
Gain on sale of investment(b)                               --            --         (22,054)         --            --   
Other income, net                                         (4,282)       (3,337)         (937)       (1,570)         (917)
-------------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                97,196       147,501       128,738       122,798       120,905 
Income taxes                                              29,029        45,725        39,909        38,066        40,923 
-------------------------------------------------------------------------------------------------------------------------------
Net income                                          $     68,167    $  101,776    $   88,829    $   84,732    $   79,982 
===============================================================================================================================

Financial Position and Other Data                                                                                           
Total assets                                        $  1,129,475    $  981,803    $  954,094    $  937,797    $  888,181 
Operations:                                                                                                                 
   Working capital(c)                               $     79,824    $  173,038    $  201,246    $  203,594    $  184,176 
   Current ratio(c)                                    1.26 to 1     2.22 to 1     2.53 to 1     2.89 to 1     2.64 to 1
   Depreciation and amortization                    $     77,610    $   73,750    $   75,750    $   75,012    $   69,044 
   Capital expenditures                             $     49,903    $   52,248    $   77,569    $   76,747    $   85,284 
   Acquisitions of businesses                       $    113,245    $   35,006          --      $   15,229          --   
   Research and development expenses                $     21,919    $   26,201    $   34,288    $   29,655    $   31,446 
Gross margin as a % of net sales                            24.1          29.6          30.4          30.9          31.5 
Total long-term debt                                $    170,215    $   97,980    $  159,760    $  192,938    $   91,793 
Equity(d)                                           $    593,302    $  558,907    $  490,564    $  451,667    $  517,336 
Total long-term debt as a % of total capitalization
         22.3          14.9          24.6          29.9          15.1 
                                                                                                                            

Common Stock                                                                                                                
Basic earnings per share                            $       1.49    $     2.22    $     1.89    $     1.64    $     1.45 
Shares used to compute basic earnings per share(d)        45,766        45,882        46,889        51,558        55,164 
Diluted earnings per share                          $       1.47    $     2.18    $     1.87    $     1.63    $     1.44 
Shares used to compute diluted earnings per share(d)      46,524        46,606        47,513        52,136        55,668 
Cash dividends declared per share                   $        .52    $      .46    $      .40    $      .37    $      .32 
Shareholders' equity per share(d)                   $      13.04    $    12.20    $    10.62    $     9.61    $     9.60 
Return on average shareholders' equity                     11.8%         19.4%         18.9%         17.5%         15.6%
===============================================================================================================================
<FN>

(a)2001 includes a special charge of $2,051($1,306 after income taxes) for
   workforce reductions; 2000 includes a special charge of $6,856 ($4,367 after
   income taxes) for workforce reductions and a one-time noncash pension
   settlement gain of $14,990 ($9,549 after income taxes) resulting from a
   change in election made in certain pension annuity contracts; 1999 includes a
   special charge of $10,692 ($6,717 after income taxes) for workforce
   reductions at certain of the Company's facilities.

(b)1999 gain on the sale of investment in Albright & Wilson stock ($14,381 after
   income taxes).

(c)The Company's working capital at December 31, 2001, includes $157,571 of debt
   related to the Company's Revolving Credit (c)Agreement which matures 
   September 29, 2002. The Company is currently renegotiating a new debt 
   agreement.
   
(d)Shareholders'  equity  includes the purchase of common  shares  amounting to:
   2001--417,505; 2000--574,091; 1999--857,400; 1998--6,912,741; 
   1997--1,560,300.
</FN>
</TABLE>