A. M. Castle & Co.

Notes to Condensed Financial Statements

1. Condensed Financial Statements

On September 26, 2002, the Company and certain of its subsidiaries extended their trade receivables securitization facility with a financial institution for 182 days (until March 25, 2003) with a commitment of $50.0 million (the previous commitment, which expired on September 27, 2002, was for a $65.0 million 364 day facility). The new facility lowered the base amount of accounts receivables which can be sold and increased the discount rate by 65 basis points. As of September 30, 2002 the Company sold $41.0 million (had sold $41.0 million at December 31, 2001 and $53.7 million at September 30, 2001 under its then existing facility) under the facility. This sale is reflected as a reduction in "Accounts receivable, net" in the Condensed Balance Sheets and the incremental amount of the increase in the sale is reflected as "Sale of accounts receivable" in the Condensed Statements of Cash Flows. Funding under the facility is limited to the lesser of a base amount comprised of eligibl e receivables or $50.0 million. The maximum which could be funded at September 30, 2002 was $46.9 million, leaving an additional $5.9 million available for future working capital needs. The discount expense on the sale of the receivables is reported as "Discount on sale of accounts receivable" in the Comparative Condensed Statements of Operations.

The current provider of this facility has informed the Company that they will not offer a renewal upon its expiration on March 25, 2003. The Company is currently negotiating for a replacement facility and has received bids and term sheets from three financial institutions. The Company currently expects to have a new multi-year program in place before the expiration of the current facility. (See Liquidity and Capital Resources.)

In July, 2001, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 141, "Business Combinations" and No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141 requires that the purchase method of accounting be used for all business combinations completed after June 30, 2001, clarifies the recognition of intangible assets separately from goodwill and requires that unallocated negative goodwill be written off immediately as an extraordinary gain. SFAS No. 142, which was effective for fiscal years beginning after December 15, 2001, requires that ratable amortization of goodwill be replaced with periodic tests of goodwill impairment and that intangible assets, other than goodwill, which have determinable useful lives, be amortized over their useful lives. The Company has adopted these accounting standards effective January 1, 2002 and has determined that there is no impairment to the goodwill balance of $32.0 million at September 30, 2002. Annual impairment tests are performed during the first quarter of each calendar year. The following is a reconciliation of net income and earnings per share between the amounts reported in the third quarter and nine months of 2001, and the adjusted amounts reflectingthese new accounting rules:

In 2000 and 2001 the Emerging Issues Task Force (EITF) issued certain bulletins that were applicable to the Company for adoption in 2002. These bulletins included EITF 00-14 "Accounting for Sales Incentives", EITF 00-22 "Accounting for Points and Certain Other Time Based and Volume Based Sales Incentive Offers and Offers of Free Products or Services to be Delivered in the Future" and EITF 00-25 "Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendors Products". The Company has complied with these accounting standards effective January 1, 2002 and has reclassified the prior periods. The effect on reporting for 2002 and 2001 is immaterial.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144 "Accounting for the Impairment and Disposal of Long-Lived Assets." SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and also supersedes the provisions of APB Opinion No. 30 "Reporting the Results of Operations-Reporting the EffectsOperations

Results of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144 retains the requirements of SFAS No. 121 to (a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flow and (b) measure an impairment loss as the difference between the carrying amount and the fair value of the asset. SFAS No. 144 establishes a single model for accounting for long-lived assets to be disposed of by sale. As required, the Company has adopted the provision of SFAS No. 144 effective January 1, 2002 , the effect of which was immaterial.Operations

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145 "Rescission of Statements No. 4, 14 and 64, Amendment of FASB Statement No. 13 and Technical Corrections." This Statement rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and an amendment of that Statement,

SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." This Statement also rescinds SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers." This Statement Amends SFAS No. 13, "Accounting for Leases," to eliminate any inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that

are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This Statement is effective for fiscal years beginning after May 15, 2002. The Company is currently assessing the Statement and has not yet determined the impact of its adoption on its financial statements.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operations, plant closing, or other exit or disposal activity. Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability Recognition for Certain Costs, Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 replaces EITF 94-3 and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company is currently assessing the Statement and has not yet determined the impact of its adoption on its financial statements.

During the second quarter of 2002, the Company sold its United Kingdom subsidiary. The after-tax loss on the sale totalled $0.7 million and was based on $2.5 million received in cash and $0.9 million estimated to be received in the future (subject to a final accounting). The purchaser (as part of the agreement) also paid the Company $3.2 million to settle amounts owed by the United Kingdom subsidiary. Thefirst quarter 2002 financial statements for all periods have been restated to present the subsidiary as a discontinued operation in accordance with generally accepted accounting principles.

On May 1, 2002 the Company purchased its joint venture partner's 40 percent interest in Metal Express which serves the small order needs of tool and die shops, universities and other research facilities as well as the maintenance, engineering and non-manufacturing needs of its traditional customer base. Prior to May 1, 2002 the Company did not have a controlling voting interest in Metal Express and recorded it as a joint venture. As of the date of purchase, Metal Express became a wholly owned subsidiary at which time it was consolidated into Castle's financial statements. The purchase price for this 40 percent remaining interest was $1.0 million.

The Company has a buy/sell provision with one of its joint venture partners. This provision would allow either joint venture partner to effect the sale or purchase of the interests of the other partner by providing notice of their intention to buy or sell its interest. Once notice is given to the opposite joint venture partner, that partner has the option of accepting the original offer or to take the opposite position (buy/sell) for the purchase price specified in the original offer. This provision within the joint venture agreement effectively expires on April 30, 2003.

On either April 30, 2003 or 2004, the joint venture partner has an option to sell its interest to the Company for an amount determined as a multiple of the joint venture's average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for a two-year period less the debt outstanding at the end of the current fiscal period. On May 1, 2005, the Company must purchase its joint venture partner's interest at a price determined using the same formula as described above. Due to the uncertainty of the joint venture's future operating results, and the timing of the exercise of the option, the Company cannot determine the potential purchase price for the remaining ownership interest. Based upon current performance, if the option could have been exercised on April 2002, the purchase price to the Company would be approximately $8.0 million. However due to market conditions in the future, the purchase price could be higher or lower.

Inventory determination under the LIFO method can only be made at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO determinations, including those at September 30, 2002 and September 30, 2001, must necessarily be based on management's estimates of inventory levels and costs. Since future estimates of inventory levels and costs are subject to certain forces beyond the control of management, interim financial results are subject to fiscal year-end LIFO inventory valuations.

Current replacement cost of inventories exceeds book value by $39.5 million and $42.9 million at September 30,2002 and September 30, 2001, respectively. Taxes on income would become payable on any realization of this excess from reductions in the level of inventories.

On October 25, 2002 the Company signed a term sheet agreement (subject to execution of definitive agreements) with its largest shareholder for a $12.0 million equity investment. The shareholder agreed to purchase a private placement of eight percent cumulative convertible preferred stock. The preferred stock will have an initial conversion price of $6.69 per share which is 102% of the average closing price of the Company's common stock during the ten trading days prior to the signing of the term sheet. The shareholder, on an as-converted basis, would increase its holdings and voting power in the Company by approximately 5%. The terms of the preferred stock will include: the participation in dividends on the common stock, subject to a minimum eight percent dividend; voting rights on an as-converted basis; and customary anti-dilution and preemptive rights.

In conjunction with the above, the Company has renegotiated its loan covenants with its major long-term lenders. Signed term sheets (subject to execution of definitive agreements) have been obtained from these lenders. The debt amendments expand certain financial covenants in order to provide greater financial and operating flexibility in exchange for a 200 basis point increase in rates. As part of the debt amendments, the Company will grant to all of its lenders secured interests in the Company's and its subsidiaries' assets and provide subsidiary guarantees. The interest rate increase can be reduced by 150 basis points and the collateral positions released when the Company's balance sheet reaches an investment grade credit rating.

The Company has also entered into negotiations with its three lender banks to amend their financial covenants to be consistent with those of its long-term lenders. The Company believes these negotiations will be completed successfully.

Results of Operations

On May 1, 2002 Castle acquired its joint venture partner'spartner’s remaining interest in Metal Express. The results of this entity, now a wholly owedowned subsidiary, have been consolidated into Castle'sCastle’s financial statements as of the date of acquisition. Metal Express results are consolidated for the first quarter of 2003 and are reported as a joint venture on the equity basis of accounting in the first quarter of 2002.

For the quarter ended September 30, 2002March 31, 2003, Castle reported totalnet sales of $136.6$141.6 million down 1.5 percentwhich is an increase of $5.6 million or 4.1% from $138.7the $136.0 million generated a year ago. Excluding the effects of the acquisition of Metal Express, the increase was $2.3 million, or 1.7%. The relatively flat sales performance in our core metals business is due to capacity utilization rates in the durable goods manufacturing sector which have leveled off at extremely depressed levels. Approximately 88.7 percent of all revenues were derived from the Company's core metal businesses with the remaining 11.3 percent from the distribution of plastics.

Gross profit declined 1.6 percentmaterial margin on sales increased by 4.6% to $40.0$43.2 million compared with $40.7from $41.3 million in the third quarter of 2001. Gross2002. The gross material margin was 29.3 percent of sales, equalpercentage increased slightly to the prior year's rate.30.5% from 30.4% in 2002. Excluding the effects of Metal Express, the decrease in sales and gross profit were 3.8 percent and 5.3 percent respectively,material margin increased 0.6% and gross margin was 28.9 percent of sales forpercentage decreased to 30.0% from 30.4%. The continuing price competition within the third quarter of 2002. While sales declined 3.8 percent, physical activity as measured by both tons sold and line count rose 6.4 percent and 3.6 percent, respectively. Real productivity increases were substantially better than what the reported results would indicate. Third quarter operating expenses, as compared to the prior year, included a $1.5 million increase due to the consolidation of Metal Express and $0.8 million of expenses associated with severance, bad debts, and write-offs of non-performing software. A djusting for these items comparable operating expenses were 2.4 percent below prior year's levels in spite of the 3.6% increase in activity levels. For the current quarter, on an after-tax basis, losses increased to $2.7 million, or 18 cents per share, compared to $2.2 million, or 16 cents per share in the prior year.

For the nine months ended September 30, 2002, sales volume totalled $413.9 million, down 12.3 percent from $471.8 million a year ago. Gross profit for the nine months fell 12.8 percent to $123.4 million from $141.5 million. On a year-to-date basis, physical activity as measured by tons and line count fell by 6.8 and 4.0 percent, respectively. Sales and gross profit declined faster than physical activity due to lower material cost levels and a shift away from the Company's higher priced aerospace materials paralleling the decline in aviation markets. Operating expenses declined 8.3 percent to $117.6 million compared with $128.2 million in 2001. Adjusting for the same items that impacted third quarter operating results, expenses dropped 10.5 percent as improvements in productivity and reductions in costs outpaced the decline in physical activity levels. Pre-taxes losses increased to $6.5 million from $2.0 million a year ago while after tax losses from continuing operations rose to $4.1 million from $1 .4 million in 2001. After tax losses including losses from the sale of the Company's United Kingdom operation totalled $4.9 million, or 33 cents per share compared to $1.2 million, or 9 cents per share, in 2001.

Declining mill price levels, product mix changes and material margin compression reduced gross profit by $5.1 million for the third quarter and $12.5 million for the nine months period compared with prior year results. During the last two years the Company has reduced total employment in its metals business by over 27 percent, substantially outpacing the decline in both sales revenues and physical activity. As a result, the Company has improved its sales per employee and tons sold per employee by over 5 percent and its lines shipped per employee by over 14 percent.

Results of operations included non-cash income from pension investments in accordance with FASB No. 87. For the third quarter of 2002, this income totalled $0.7 million as compared with $0.6 million for the same period last year. For the nine months ended September 30, 2002, the income totalled $2.0 million as compared to $1.8 million in the prior year.

The 2001 third quarter and nine-month depreciation and amortization expense included $0.2 million and $0.7 million of amortization of goodwill, respectively. Due to changes in generally accepted accounting principles effective January 1, 2002, goodwill is no longer being amortized. Depreciation for both the quarter and nine- months are up slightly mainly due to Metal Express depreciation.

During the third quarter of 2001, the outstanding domestic revolving debt was fully paid down with funds generated from the accounts receivable securitization facility, which has become the Company's primary source for working capital funds. Thisdistribution industry is the main reason for the reduction in margin percentages.

Total other operating expenses in the first quarter of 2003 were $42.7 million as compared to $39.6 million for the same period in 2002, an increase of $3.1 million, or 7.7%. Metal Express accounted for $1.7 million of the increase while the expenses of our core metal and plastics business increased by $1.4 million, or 3.6%. Part of the increase in expenses is due to a reduction in non-cash pension income, net interest expenseof non-cash expenses for post-retirement benefits, from quarter to quarter. The discount amount on the securitization facility is recorded as "Discount on accounts receivable". The overall reduction of interest and discount expense of $1.1$0.6 million in the thirdfirst quarter of 2002 and $2.0to $0.2 million forduring the first nine-months of 2002 is the resultquarter of the reduction in general interest rates, more favorable rates forcurrent year. The decrease was mainly due to the securitization facility thandecision to reduce the domestic revolving debt which was outstanding during mostexpected long-term rate of the third quarter of last year, a one-time $0.9 million charge in September of 2001 when the initial securitization was put in place, and an overall reduction in average month-end borrowings (long-term debt plus the receivables sold) of $7.8 m illion and $13.1 million in the third quarter and first nine-months of the year, respectively.

return on pension plan assets from 10% to 9% (see Liquidity and Capital Resources

In the third quarter of 2001, the Company entered into an Accounts Receivable Securitization Program ("Securitization Program") and paid down its domestic revolver credit debt. This program is currently the primary source of funds for working capital. The previous facility which expired on September 26, 2002, has been extended for 182 days at a reduced commitment of $50.0 million (see Note 3) section). The Company is currently negotiatingmajority of the remainder of the increase occurred in the Plastics segment due to increased volume, expenses related to the opening of a replacementnew facility and has received bids and term sheets from three financial institutions. The Company currently expects to havehigher legal fees associated with the favorable settlement of a new multi-year program in place before the March 25, 2003 expiration date of the current facility.lawsuit.

The Company is pursuing several courses of action to further strengthen its capital structure. Actions to improve operating efficiency and reduce structural expense levels continue in response to the weak demand in the market place. Inventory reduction programs have successfully been instituted which are reflected in the reduction of inventory by $9.7 million in the third quarter. No further major reductions are anticipated during the balance of the year. The Company continues to seek strategic purchasers for its non-synergistic or under-performing business units to generate cash for further debt reduction. (The United Kingdom facility was sold during the second quarter of 2002).

In addition to those initiatives, the Company is evaluating other options for strengthening its capital base through the reconfiguration of some parts of its metal distribution network and the sale of non-strategic business units. The Company is also studying the possible restructuring or re-capitalization of one or more of its joint ventures.

On October 25, 2002 the Company signed a term sheet agreement (subject to execution of definitive agreements) with its largest shareholder for a $12.0 million equity investment (see Note 8). Management believes that this investment reaffirms the shareholder's confidence that the steps outlined above will position the Company to realize significant earnings leverage when demand in its markets return to pre-recession levels.

Working capital totalled $95.5 million at September 30, 2002 as compared to $106.4 million at September 30, 2001. Accounts receivable increased $4.4 million primarily due to lower sales of accounts receivables under the securitization agreement of $12.7 million (from $53.7 million at September 30, 2001 to $41.0 million at September 30, 2002), offset by lower sales volume and more aggressive collections (DSO decreased to 46.1 days in 2002 from 49.9 days in 2001). Inventories decreased by $9.6 million as a result of continuing programs instituted by the Company to reduce inventory investment in order to improve cash flow. During the first quarter of 2003 the Company generated operating income of $0.5 million compared with operating income of $1.7 million in 2002.

Total financing costs (interest expense, net and discount on sale of accounts receivable) increased by $0.7 from $2.1 million in the first quarter of 2002 to $2.8 million in 2003. The unfavorable variance was mainly due to increased interest rates of 200 basis points, which were negotiated in November 2002 with the Company's institutional and banking lenders, in exchange for favorable amendments to existing loan covenants. The accounts receivable securitization agreement that existed in the first quarter of 2002 was replaced in December 2002 with a three-year commitment with another institution. The new facility includes a comparable rate increase.

In November 2002 the Company receivedCompany's largest stockholder purchased, through a $4.7private placement, $12.0 million ($11.2 million net of transaction expenses) of eight-percent cumulative convertible preferred stock. Dividends of $0.2 million have been accrued in the first quarter of 2003.

Segments

Metals

Revenue for this segment increased by $3.7 million, or 3.1%, to $125.6 million in the first quarter of 2003 from $121.9 million in 2002. Excluding Metal Express, which was reflectedconsolidated effective May 1, 2002, sales increased by $0.4 million, or 0.3%. The slight increase in sales was achieved despite a reduction in tons shipped of 3.4%. The positive results were due to a swing in product mix towards higher priced non-ferrous materials from lower priced carbon and bar products.

The Metals segment operating profit decreased $1.1 million to $0.7 million from $1.8 million in 2002. Gross material margins increased $1.2 million while gross material margin percentage remained level at 29.9% when compared to the first quarter of 2002. Other operating expenses for the same period increased $2.3 million. Excluding the effects of the acquisition of Metal Express, operating profit remained at $0.7 million with gross material margin decreasing by $0.5 million resulting in a gross material margin rate of 29.4%. Operating expenses excluding Metal Express increased $0.7 million or 1.9%. The continuing price competition within the metals distribution industry is the main reason for the reduction in gross material margins and margin percentages. The majority of the increase in other operating expenses is due to a reduction in non-cash pension income, net of non-cash expenses for post-retirement benefits from $0.6 million in the first quarter of 2002 to $0.2 million during the first quarter of the current year. The decrease was primarily due to the decision by management to reduce the expected long-term rate of return on pension plan assets from 10% to 9% (see Liquidity and Capital Resources section).

Total assets of the Metals segment increased $11.3 million from the first quarter of 2002 to the first quarter of 2003. Prepaid pension assets accounted for $10.9 million of the increase as the result of the contribution of $8.3 million in cash and Company stock and $2.6 million in non-cash pension income. Accounts receivable increased $10.5 million primarily due to a $11.8 decrease in the amount of accounts receivable sold. Exclusive of the change in accounts receivables sold and the effect of Metal Express’s receivables balance on March 31, 2003 of $1.7 million, amounts due from customers were $3.0 million lower than March 31,2002 due to a 3.7 day improvement in days sales outstanding. These increases were offset by a $6.9 million decrease in inventory in concert with the Company's inventory reduction programs and a $3.5 million decrease in net fixed assets due to depreciation being greater than capital expenditures.

Plastics

Revenue for this segment increased 13.2% to $16.0 million in the first quarter of 2003 from $14.2 million for the comparable period in 2002 on higher total shipments.

The Plastics segment operating profit rose slightly in the first quarter of 2003. Gross material margin increased $0.7 million, or 14.8%, which is due to increased sales volume and an increase in gross material margin percentage to 34.9% from 34.4% in 2002. These favorable effects were offset by an increase in other operating expenses of $0.7 million dollars. This increase is due to

sales volume related expenses of $0.3 million, expenses incurred in the opening of a new facility of $0.2 million, and higher legal fees associated with the favorable settlement of a lawsuit of $0.2 million.

Total assets of the Plastics segment increased $1.8 million quarter-over-quarter. The major reason for the increase was a $1.4 million rise in inventory in support of the increased sales volume.

Other

The Company's “Other” operating segment includes expenses related to executive and legal services that benefit both the metal and plastics segments. This expense remained relatively constant at $0.7 million in the first quarter of 2003 as compared to $0.6 million in the first quarter of 2002.

The “Other” segment’s total assets consist solely of the Company's income tax receivable on the December 31, 2001 Balance Sheet. An additional $2.2of $12.9 million (which was received in April 2003). The $7.9 million increase over the second quarter representing an additional loss carry-back from 2001 as a resultbalance at March 31, 2002 of legislation signed on March 8, 2002 temporarily increasing the loss ca rry-back period from two years to five years. The $7.1$5.0 million income tax receivable at the endwas due to: timing of the current quarter was mainly generated from operating losses and the tax deductibilityreceipt of the common stock pension contribution. This receivable will be realized either as an offset against taxes that would otherwise be payable in 2002 due to earnings or as additional loss carry-back during 2003.

During the second quarter of 2002 the Company received $2.5 million in cash from the sale of the United Kingdom subsidiary (an additional $0.9 million is anticipated to be received subject to a final accounting), along with $3.2 million to settle amounts owed by the subsidiary. Also during the second quarter, $1.0 million was expended on the purchase of the remaining 40 percent joint venture interest in Metal Express.

The Company's financial agreements require it to maintain certain funded debt-to-capital ratios, working capital-to-debt ratios and minimum equity values. At September 30, 2002, the Company was in compliance with all restrictive covenants. In order to provide additional flexibility in the management of the business during the current economic downturn, the Company has renegotiated its loan covenants with its long-term lenders. Signed term sheets (subject to execution of definitive agreements) have been obtained from these lenders. The debt amendments expand certain financial covenants in order to provide greater financial and operating flexibility in exchange for a 200 basis point increase in rates. As part of the debt amendments, the Company will grant its lenders security interests2001 loss carryback, which was received in March 2002, legislation in 2002 allowing for an extended carryback period, and a favorable IRS ruling in the Company's and its subsidiaries' assets and will provide for subsidiary guarantees. The interest rate increase can be reduced by 150 basis points andfirst quarter of 2003 with regards to the collateral positions released when the Company's balance sh eet reaches an investment grade credit rating. The Company is also negotiating with its three lender banks to amend their financial covenants to be consistent with thosedeductibility of its long-term lenders.certain pension related items.

The initial increases in interest rates provided for by these amendments will raise the Company's annual interest expense by approximately $2.1 million. As discussed previously, the Company is taking action on several fronts to reduce its total debt which, if successful, will mitigate a portion of this increased expense.

The Company's primary source of short-term funds is the accounts receivable securitization facility of which $41.0 million was utilized at September 30, 2002. There remains $5.9 million of immediately available funds under this facility along with $0.4 million of other committed lines of credit. Management believes that funds generated from future operations, the existing $6.3 million of cash availability, and proceeds from the issuance of preferred stock should provide adequate funding for current business operations.

Major Accounting Policies

There have been no changes in the Company's major accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.2002.

The Company is exposed to various interest rate and metal price risks that arise in the normal course of business. The Company finances its operationsOperations are financed with fixed and variable rate borrowings and the Accounts Receivable Securitization facility. Market risk arises from changes in variable interest rates. An increase of 1% in interest rates payable on the Company's variable rate indebtedness and the Accounts Receivable Securitization facility would increase the Company's annual interest expense and discount on sale of accounts receivable by approximately $0.5 million. The performances of the pension plans are subject to certain market risks arising from investment performance. A 1% decrease in investment performance would generate a $1.1 million reduction in earnings. A 0.25% decrease in the discount rate assumption would have the affect of increasing the accrued benefit obligation by $2.2 million. The Company's raw material costs are comprised primarily of engineered steels and highly specialized metals. Market risk arises from changes in the price of steel and other metals. Although average selling prices generally increase or decrease as the price of steel and other metals increasesincrease or decreases,decrease, the impact of a change in the price of steel
and other metals is more immediately reflected in the Company's raw material cost than in the Company's selling prices.

Part II. OTHER INFORMATION

SIGNATURES

Item 1  Legal Proceedings

Pursuant to the requirements 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.

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report:

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

6.  The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.