SECURITIES AND EXCHANGE COMMISSION

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

A. M. CASTLE & CO.

Registrant’s telephone number, including area code(847) 455-7111

Securities registered pursuant to Section 12(g) of the Act:None

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 the past 90 days.

Yes [X]þ       No [  ]o

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] þ.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yesþ       Noo

The approximate aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on February 24, 2004March 4, 2005 was $75,173,938.$127,869,186.

The number of shares outstanding of the registrant’s common stock on February 24, 2004March 4, 2005 was 15,796,439
15,881,046 shares.

DOCUMENTS INCORPORATED BY REFERENCE

1

ITEM 1 —Business

A. M. Castle & Co. is a specialty metals and plastics distribution company serving the North American market. The registrant (Company) provides a broad range of product inventories as well as preprocessingprocessing services to a wide varietyarray of customers.

     The Company distributes and performs first stage processing on both metals and plastics. Although the distribution processes are similar, different markets are served with different products and, therefore these businesses are considered segments according to Statement on Financial Accounting Standards (SFAS) No. 131 “Disclosures about Segments of an Enterprise and Related Information”. In 20032004 the plasticsPlastics segment accounted for overapproximately 12 percent of the Company’s revenue and therefore is disclosed as a separate segment.revenue. In the last three years, the percentagepercentages of total sales of the two segments were approximately as follows:

Machine Company. Paramont became a wholly owned subsidiary of TPI during 2004 through the purchase of the remaining joint venture partner’s interest. TPI has locations throughout the Midwest and EastU.S. (see Item 2) where it services a wide variety of users of industrial plastics.

     In general, the Company purchases metals and plastics from many producers. Satisfactory alternative sources are available for all metals and plastics that the Company buys and its business would not be materially adversely affected by the loss of any one supplier. Purchases are made in large lots and held in the distribution centers until sold, usually in smaller quantities.quantities and many times with some processing value added services performed. The Company’s ability to provide quick delivery, frequently overnight, of a wide variety of metal and plastic products and processing capabilities allows customers to reduce their inventory investment because they do notby reducing their need to order the large quantities required by producing mills.mills or perform additional material processing services.

     Approximately 82%86% of 20032004 net sales wereincluded materials shipped from materials owned by the Company.Company stock. The materials required to fill the balance of such sales were obtained from other sources, such as direct mill shipments to customers or purchases from other distributors. SalesThousands of customers from a wide array of industries are serviced primarily through the Company’s own sales organization and are made to many thousands of customers in a wide variety of industries.organization. Deliveries are made principally by leased trucks. Common carrier delivery is used in areas not serviced directly by the Company’s fleet.

     The Company encounters strong competition both from other metals and plastics distributors and from large distribution organizations, some of which have substantially greater resources.

     At December 31, 20032004 the Company had 1,4091,533 full-time employees in its operations throughout the United States, Canada and Canada.Mexico. Of these 278287 are represented by collective bargaining units, principally the United Steelworkers of America.

     The Company makes available free of charge on or through its Web site at www.amcastle.com the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

ITEM 2 —Properties

The Company’s principal executive offices are at its Franklin Park plant near Chicago, Illinois. All properties and equipment are well maintained and in good operating condition and sufficient for the current level of activities. Distribution centers and sales offices are maintained at each of the following locations, all of which are owned, except as indicated:

ITEM 3 —Legal Proceedings

There are no material legal proceedings other than the ordinary routine litigation incidental to the business of the Company.

ITEM 4 —Submission of Matters to a Vote of Security Holders

No items were submitted to vote of security holders during the fourth quarter of fiscal 2003.2004.

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PART II

ITEM 5 —Market for the Registrant’s Common Equity, and Related Stockholder Matters and Issuer’s Purchase of Equity Securities

A. M. Castle & Co.’s Common Stock trades on the American and Chicago Stock Exchanges under the ticker symbol “CAS”. As of February 24, 2004March 4, 2005 there were approximately 1,3881,412 shareholders of record and an estimated 1,7581,812 beneficial shareholders. The Company has paid no dividends in the past two years.

     The following table sets forth for the periods indicated the range of the high and low stock price:

ITEM 6 —Selected Financial Data

ITEM 7 —Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Review

This discussion should be read in conjunction with the information contained in the Consolidated Financial Statements and Notes.

Executive Overview

Recent History and Trends

A. M. Castle & Co.’s (the “Company”) operating results in 2004 reflect a solid recovery in the manufacturing sector of the U.S. economy from both a volume and material price standpoint. The Company’s Metals segment showed the most dramatic year-over-year changes in market dynamics. Total metal tons sold increased nearly 12% versus last year and material prices rose 21% on average compared to the corresponding 2003 twelve-month period. Metal material price acceleration was in the high single digits during the first quarter of 2004. During the second quarter, prices continued to accelerate while demand across a wide cross-section of our end-use customer markets remained very strong. By year-end, metal material prices were approximately 40% higher than the end of 2003. Solid recoveries in both domestic and global markets have increased the demand for steel, leading to shortages in raw materials such as scrap, iron ore and coke. These supply constraints served to fuel the acceleration of metal prices throughout 2004.

     The Company’s Plastics segment also enjoyed double-digit real growth. In contrast to the steep price increases in steel, plastic material prices rose at a more moderate rate and largely did not take effect until the latter half of 2004. Management estimates the plastics price increase to be approximately 3% for the year. Most of the sales growth reported in the plastics segment was due to the planned geographic expansion of the segment into the Southeast portion of the U.S., which the Company embarked upon in 2003.

     The favorable market conditions of 2004 were in direct contrast to those the Company experienced in recent years. Results from 2001 through most of 2003 reflect the impact of a prolonged downturn in the durable goods manufacturing sector of the economy that began in the second half of 2000. Evidence of the market depression, along with the 2004 recovery, can be found in a review of the history of the Purchaser’s Managers Index (“PMI”) provided by the Institute of Supply Managers(see Table 1 directly below). Generally speaking, an index above 50.0 indicates growth in the manufacturing sector of the U.S. economy. The following table shows what the average PMI has been for each quarter during those years.

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Table 32

The full annual impact of the savings resulting from the cost reduction actions taken in the middle to latter half of 2003 are expected to materializewere fully realized in 2004. Table 3 compares 2004 and 2003 operating expense as a percent of sales by quarter.

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In summary, the Company’s results have sufferedperformance was fueled in 2004 by a turnaround in overall market conditions, including an enhanced metal pricing environment. Management’s cost and productivity initiatives during the recent difficult years due largelypositioned the Company to the economics within its primary customer markets. Management initiated several actions that served to generate cash, which in turn, reduced the Company’s debt load and restructured its base operating costs to better position itself to favorably leverage incremental sales in the future. Manytake full advantage of the actions initiated resultedimproved market dynamics in charges being taken against current year earnings in2004 and generate substantial shareholder returns while continuing to de-leverage the form of impairment or other special charges ($11.5 million in 2003).balance sheet.

Current Business Outlook

InYear-end 2004 favorable PMI index is an indicator that demand for the fourth quarterCompany’s products and services should continue at their current high levels in at least the short-term. Additionally, the steady decline in the dollar could lead to an increase in U.S. manufacturing goods exporting and likewise serve to hold down the rate of 2003,increase in imports of like products. At the marketplace and hence,end of 2004, raw material shortages used in the Company began to show signsproduction of metal were still prevalent, thereby keeping prices for metal products at high levels. As mentioned previously, some economic recovery. Specifically, fourth quarter salesprice inflation has started in 2003 were 6.6% ahead of the corresponding period in 2002. This increase was broad-based across most of our product lines, further confirming improvingplastic materials as well. Generally speaking, current business conditions in the manufacturing sector of the U.S. economy. Operating expenses excluding the impact of impairment charges, declined $3.5 million or 8.1% versus the first quarter of 2003, to a level of 29.6% of sales. Additionally, material costs from our suppliers have surged in recent months, resulting in immediate price increases on the Company’s transactional business.are favorable.

     The Company’s plastic subsidiary, Total Plastics Inc., grew its revenue base by 12.0% in 2003 and currently represents more than 12% of the Company’s consolidated sales. This growth was achieved in part through the start-up of two new facilities in the New York and Florida markets. More detail on this business segment can be found in the year-to-year comparisons included in this section of the 10-K.8

Risk Factors

As part of its current financing agreements with its various lenders, the Company has specific principal payments required over the next few years as summarized below in Table 56(dollars in millions):

Table 56

In addition, the Company’s principal source of cash besides cash from operating cashresults is derived from its Accounts Receivable Securitization Agreement (herein referred to as “Financing Agreement”), which expires in December 2005. It is management’s intent to replace this facility with a revolving credit line or some similar type of debt financing during 2005, but there can be no certainty of success.

     Despite the recent signs of what appears to be an upswing inimproved recovery within the manufacturing sector of the U.S. economy, there can be no guarantee as to its magnitude or duration. Additionally, the Company’s ability to timely pass-through recently accelerating supplier-driven material cost increases to its customer base on a timely basis is also critical to meeting required debt service requirements and remaining in compliance with its debt covenants. Should the economic and market recovery turn out to be short term in length, management could pursue further options to ensure it generates enough cash to facilitate the required

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Summary of 2003 Special Charges
(Dollars in millions)

2004 Results Compared to 2003

Consolidated results by business segment are summarized in the following table for years 2004 and 2003. Impairment and other special charges are shown separately for clarification purposes.

Operating Results by Segment(dollars in millions)

Net Sales:

Consolidated net sales for the Company of $761.0 million are up $218.0 million or 40.1% versus last year. Improved market conditions in the manufacturing sector of the U.S. economy and shortages in raw materials used in metal production have fueled sales growth in terms of both price and real volume. Metals segment sales of $671.2 million are up $195.9 million or 41.2% versus 2003. Management estimates that the impact of 2004 material price escalation accounted for approximately two-thirds of the sales increase. The Company’s wholly-owned Mexican subsidiary added $14.6 million of sales in 2004. The balance of the year-over-year sales growth in this segment is due to increased volume driven by healthier market conditions. Plastics segment sales of $89.8 million increased $22.1 million or 32.6% versus prior year. Roughly 3% of this increase is due to material price inflation with the balance of growth resulting from planned geographic expansion the Company initiated in 2003.

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Gross Material Margins and Operating Profit (Loss):

On a consolidated basis, gross material margins increased $60.5 million or 38.5% to a level of $217.5 million in 2004. Increased volume and material cost and margin pass-through account for this improvement versus 2003. Within its Metals segment, the Company recorded $1.6 million of impairment related charges in 2003. See Footnote 8 for more details on the nature of these charges. Included in the 2004 margin are charges totaling $5.2 million resulting from company-wide physical inventories conducted in the third and fourth quarter. The Mexican operation contributed $3.2 million of margin in 2004. Total gross material margin within the Metals segment increased by $54.8 million or 41.0% including these factors. The Plastics segment increased gross material margins in 2004 by $5.7 million or 24.3%. Margin as a percent of sales declined during the year in this segment largely due to product and customer mix. Included in the 2004 margin for the Plastics segment are $0.5 million of charges associated with an annual physical inventory conducted in the fourth quarter.

     In 2003, the Company incurred a $13.7 million operating loss on a consolidated basis, including $8.1 million of impairment and other special charges associated with management’s decision to exit certain business units and dispose of certain capital assets. No impairment or special chares were recorded in 2004. The Company recorded a $2.6 million unfavorable net LIFO (last-in, fast-out) charge (LIFO loss less inventory revaluation gain) in 2004, compared to a $2.4 million charge in 2003.

     Consolidated operating expenses increased $13.2 million or 7.7% in 2004 in support of volume growth. Operating expense as a percent of sales declined from 30.2% (excluding impairment charges) in 2003 to 24.2% in 2004. More importantly, the incremental year-over-year increase in operating expense as a percent of incremental sales growth was 6.1%, reflecting the Company’s ability to support significant sales growth with a nominal increase in variable expense. Metals segment operating expense increased $14.4 million (excluding $6.5 million of impairment charges recorded in 2003) or 7.4% of their 41.2% sales increase. Operating expenses in the Plastics segment increased $3.0 million or 14.6% of their 32.6% growth in sales.

     The Company’s “Other” operating segment includes expenses related to executive and legal services that benefited both segments. This expense increased to $4.9 million in 2004 from $2.6 million in 2003. Most of the increase was attributable to management incentives and initial year Sarbanes-Oxley compliance costs.

     Consolidated operating profit earned in 2004 was $33.6 million compared to an operating loss of $13.7 million one year ago.

Other Income and Expense, and Net Results:

The Company’s sole remaining joint venture, Kreher Steel, experienced similar favorable market dynamics as the Company’s own Metals segment throughout the year. In 2004, equity earnings associated with the Company’s 50% interest in this joint venture were $5.2 million. In 2003, the Company recorded a $3.5 million impairment charge associated with certain joint venture investments which management elected to sell or exit (see Footnote 8 for more details). Equity earnings in 2003, excluding the impairment charge were $0.1 million.

     Interest expense decreased $0.7 million to $9.0 million in 2004. This reflected lower long-term debt levels. Due to lower average amounts sold under its Financing Agreement in 2004, the Company recorded a $1.0 million discount on receivables sold versus $1.2 million in 2003.

     Consolidated net income from continuing operations in 2004 was $16.9 million compared to a loss of $17.9 million in 2003. In the fourth quarter of 2003, the Company recorded an additional $0.2 million loss (net of taxes) on the disposal of its United Kingdom subsidiary (sold in May 2002) associated with an outstanding customer product liability claim. This loss is shown in Discontinued Operations in the Company’s comparative Statement of Operations. Preferred dividends in 2004 and 2003 of $1.0 million each year are related to the Company’s November 2002 private placement of cumulative convertible preferred stock with its largest shareholder.

     The Company reported net income of $15.9 million or $1.01 per share (basic) in 2004 versus a net loss of $19.0 million or $1.20 per share in 2003.

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2003 Results Compared to 2002

Consolidated results by business segment are summarized in the following table for years 2003 and 2002. Impairment and other special charges are shown separately for clarification purposes.

Operating Results by Segment
(dollars in millions)

Net Sales:

Consolidated net sales in 2003 of $543.0 million were $4.9 million, or 0.9%, ahead of the prior year. Most of this year-to-year increase was realized in the fourth quarter during which consolidated sales were up $8.2 million, or 6.6%, versus the corresponding quarter of 2002. This reflectsreflected improving market activity at the time, principally in the Metals segment, as the manufacturing sector of the U.S. economy appears to bewas showing signs of sustained recovery from its prior three-year lull. Metals segment net sales of $475.3 million (approximately 87.6%87.5% of consolidated sales) for the year arewere slightly down versus 2002. Most of this decline iswas due to the Company’s decision to exit certain non-performing business units in 2003. Plastics segment sales of $67.7 million (approximately 12.4%12.5% of consolidated sales) were up $7.3 million, or 12.1%, over 2002, due in part to the Company expanding operations into New York and Florida.

Gross Material Margins and Operating Profit (Loss):

Consolidated gross material margin of $157.0 million, including special charges of $1.6 million, iswas $3.1 million lower in 2003 than lastthe previous year. The year-to-year decline in the Metals segment was due primarily to product mix and competitive pricing. The Plastics segment margins remainremained strong and ahead of last year2002 on higher sales volume.

     The Company incurred a $13.7 million operating loss on a consolidated basis, including $8.1 million of impairment and other special charges associated with management’s decision to exit certain business units and dispose of certain capital assets. The company also recorded a $2.4 million unfavorable net LIFO (Last-In, Last-Out) charge (LIFO loss less inventory revaluation gain) in 2003, compared to a $1.3 million charge in 2002.

     The Company’s “Other” operating segment includes expenses related to executive and legal services that benefitbenefited both segments. This expense decreased to $2.6 million in 2003 from $2.9 million in 2002.

Other Income and Expense, and Net Results:

The Company recorded a $3.5 million impairment charge in 2003 associated with certain joint venture investments which management elected to sell or exit (see Footnote 8 for more details).

     Interest expense increased $2.2 million to $9.7 million in 2003. This reflectsreflected the higher interest rates agreed to as part of the Company renegotiating its lending agreements in late 2002. The revised lending agreements allowed for more flexibility within the financial covenants that the Company needed in order to restructure its operating base and exit non-strategic or non-performing business units. Due to lower amounts sold under its Accounts Receivable Securitization Facility in 2003, the Company recorded a $1.2 million discount on receivables sold versus $3.4 million in 2002.

     Consolidated net loss from continuing operations was $17.9 million in 2003 versus a loss of $9.3 million in the previous year. In the fourth quarter of 2003, the Company recorded an additional $0.2 million loss (net of taxes) on the disposal of its United Kingdom subsidiary (sold in May 2002) associated with an outstanding customer product liability claim. This loss is shown in Discontinued Operations in the Company’s Statement of Operations. Preferred dividends in 2003 of $1.0 million reflectsreflected a full year of dividends associated with the November 2002 private placement of cumulative convertible preferred stock by the Company’s largest shareholder.

     The Company reported a net loss of $19.0 million or $1.20 per share in 2003 versus a net loss of $10.2 million, or $0.68 per share one year ago.

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Accounts Receivable– Accounts receivable are evaluated on a quarterly basis and any significant customers with delinquent balances are reviewed to determine future collectibility. Assessments are based on legal issues (bankruptcy status), past history, current financial and credit agency reports, and the experience of the credit representatives. Accounts judged to be uncollectible are reserved or written off in the quarter in which the determination is made. Additional reserves are maintained based on the Company’s historical bad debt experience.

Inventory– Substantially all inventories are valued using the last-in first-out (LIFO) method. Under this method, the current value of material sold is recorded as cost of material sold rather than the actual cost in the order in which it was purchased. This means that older costs are included in inventory, which may be higher or lower than current costs. This method of valuation is subject to year-to-year fluctuations in cost of material sold, which is influenced by the inflation or deflation existing within the metals or plastics industry. The use of LIFO for inventory valuation was chosen to better match replacement cost of inventory with the current pricing used to bill customers.

Retirement Plans– The Company values retirement plan assets and liabilities based on assumptions and valuations established by management following consultation with its independent actuary. Future valuations are subject to market changes, which are not in the control of the Company and could differ materially from the amounts currently reported.

Insurance Plans –The Company is self-insured for a portion of worker’s compensation and automobile insurance. Self-insurance amounts are capped for individual claims, and, in the aggregate, for each policy year by an insurance company. Self-insurance reserves are based on unpaid, known claims (including related administrative fees assessed by the insurance company for claims processing) and a reserve for incurred but not reported claims based on the Company’s historical claim experience and development.

Revenue Recognition –Revenue from product sales is largely recognized upon shipment, whereupon title passes and the Company has no further obligations to the customer. The Company has entered into consignment inventory agreements with a few select customers whereby revenue is not recorded until the customer has consumed product from the consigned inventory and title has passed. Provisions for sales discounts and rebates to customers, and returns and other adjustments are provided for in the same period the related sales are recorded. Shipping and handling charges are recorded as operating expenses in the period incurred.

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     Capital expenditures for 20022003 totalled $1.4$5.1 million as compared to $6.8$1.4 million in 2001.2002. Major expenditures included replacement of machinery and equipment, increased processing capabilities and enhancements to a warehouse management system.

During 2002, and 2001, the Company sold and leased back approximately $2.0 million and $2.5 million of fixed assets respectively, which added to cash flow and minimized other financing requirements. The leaseback transactions are recorded as operating leases and therefore are not reflected as debt on the accompanying Consolidated Financial Statements.

Liquidity and Capital ResourcesResources:

The Company’s 2004 operating results have suffered in recent years due largely to thereflect significantly improved economic conditions within its primary customer markets. ManagementIn 2003, management initiated several actions that served to generate cash, which in turn, reduced the Company’s debt load and restructured its base operating costs, to better positionpositioning itself to favorably leverage 2004 and future years incremental sales in the future.sales. Many of the actions initiated resulted in charges beingthat were taken against current year2003 earnings in the form of impairment or other special charges ($11.5 million recorded in 2003).

     Additionally, in the last threefour years, the Company aggressively lowered its investment in inventory and sold unused facility space in select operations. The cash generated from these actions along with the previously mentioned sale of certain non-performing business units, allowed the Company to reduce its total debt and other financing arrangements (including its accounts receivable securitization facility)Financing Agreement) by $43.3$46.7 million since the end of 2000 as well as fund its ongoing operations.

     The Company’s principal internal sources of liquidity are earnings from operations and management of working capital. Additionally, the Company utilizes an Accounts Receivable Securitization FacilityFinancing Agreement (see Footnote 9 for more details) as its primary external funding source for working capital needs.

     Cash flow from operating activities in 20032004 was a negative $1.1positive $13.6 million. This included a $12.9$3.5 million reductionincrease in accounts receivable sold under the Company’s Accounts Receivable Securitization FacilityFinancing Agreement due to reducedadditional funding requirements for operations. Excluding the impact of reduced receivables sold under the Company’s Accounts Receivable Securitization Facility,Financing Agreement, cash flow from operations was a positive $11.8$12.3 million.

     Working capital, excluding the current portion of long-term debt, of $91.3$106.8 million is down $8.8up $15.5 million, or 8.8%16.6%, since the start of 2003.2004. Average inventory levels have declined throughout the year until late inmid-year largely due to tightening metal supply and related extended mill delivery lead times. During the fourth quarter, when management electedthe Company’s supplier base was beginning to increasemake progress on shortening delivery lead times, resulting in rising stock levels at year-end. The higher inventory levels at the levelend of material stocked due to increasing demand and in expectation of2004 will support the Company’s historically seasonally stronger first quarter sales. Additionally, the Company received $9.9 million of income tax refunds in theand second quarter of 2003. The refund was duesales activity in 2005. Days sales in inventory (DSI) declined to the carry-back of net operating losses for federal income tax purposes.120 days on average in 2004 from 153 days one year ago. Gross trade receivables (prior to the impact of receivables sold under the Securitization Facility)Financing Agreement) increased $7.1$29.6 million

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Cash CommitmentsCommitments:

The following is a schedule of cash commitments for long-term debt and non-cancelable lease payments: