UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

WASHINGTON, D.C. 20549FORM 10-Q

FORM 10-QxQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934


For Quarter EndedSeptember 30, 2004March 31, 2005or,
o    Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period fromto


Commission File Number1-5415


A. M. Castle & Co.
(Exact name of registrant as specified in its chartercharter)

Maryland 36-0879160
(State or Other Jurisdiction of
incorporation of organization)
 (I.R.S. Employer Identification No.)
incorporation of organization)

3400 North Wolf Road, Franklin Park, Illinois 60131
(Address of Principal Executive Offices) (Zip Code)

Registrant’sRegistrant's telephone, including area code847/455-7111

None
(Former name, former address and former fiscal year, if changed since last year)

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.

YesXNO
YesXNo___

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

YesXNO
YesXNo___

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class

Outstanding at September 30, 2004March 31, 2005
Common Stock, $0.01 Par Value 15,796,43715,823,079 shares



Preferred Stock, No Par Value 
12,000 shares

A. M. CASTLE & CO.

Part I. FINANCIAL INFORMATION




 


A. M. CASTLE & CO.
Part I. Finanical Information
Page
Number
FINANCIAL INFORMATION
 Part I. Financial Information
Page Number
Item 1.
Consolidated Financial Statements (unaudited):
Comparative
Consolidated Balance Sheets
3
Comparative
Consolidated Statements of OperationsIncome
4
Condensed Statements of Cash Flows
5
Notes to ComparativeConsolidated Financial Statements
 
6-12
6-11
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
12-20
12-15
Item 3
Quantitative and Qualitative Disclosure About Market Risk
20
15-16
Item 4
Control and Procedures
21
16-17
Part II. Other Information 
Item 1.Legal Proceedings22
 
Item 4.1Submission of Matters to a Vote of Security Holders
Legal Proceedings
22
18
Item 6.6
Exhibits and Reports on Form 8-K
2218




 
A.M. CASTLE & CO.
 
       
 
COMPARATIVE BALANCE SHEETS
 
          
(Amounts in thousands)
          
Unaudited
  Sep. 30  Dec. 31,  Sep. 30 
   2004  2003  2003 
ASSETS          
Current assets          
    Cash and equivalents
 $5,435 $2,455 $831 
    Accounts receivable, net
  99,073  54,232  51,666 
    Inventories (principally on last-in first-out basis)
  121,297  117,270  119,730 
    Income tax receivable
  310  660  - 
    Assets held for sale
  995  1,067  - 
    Other current assets
  7,926  7,184  5,546 
        Total current assets
  235,036  182,868  177,773 
Investment in joint ventures  7,024  5,492  5,317 
Goodwill  31,959  31,643  31,619 
Pension assets  42,216  42,075  41,823 
Advances to joint ventures and other assets  7,517  8,688  8,875 
Property, plant and equipment, at cost          
    Land
  4,767  4,767  5,020 
    Building
  47,255  45,346  48,885 
    Machinery and equipment
  121,093  118,447  118,741 
   173,115  168,560  172,646 
    Less - accumulated depreciation
  (107,528) (100,386) (101,763)
   65,587  68,174  70,883 
Total assets $389,339 $338,940 $336,290 
           
LIABILITIES AND STOCKHOLDER'S EQUITY          
Current liabilities          
    Accounts payable
 $102,893 $67,601 $60,422 
    Accrued liabilities and deferred gains
  23,990  19,145  19,259 
    Current and deferred income taxes
  2,954  4,852  4,183 
    Current portion of long-term debt
  11,676  8,248  7,980 
        Total current liabilities
  141,513  99,846  91,844 
Long-term debt, less current portion  89,450  100,034  98,786 
Deferred income taxes  19,942  13,963  16,018 
Deferred gain on sale of assets  6,673  7,304  6,997 
Minority interest  1,268  1,456  1,441 
Post retirement benefits obligations  2,834  2,683  2,352 
Stockholders' equity          
    Preferred stock
  11,239  11,239  11,239 
    Common stock
  159  159  159 
    Additional paid in capital
  35,025  35,009  35,017 
    Earnings reinvested in the business
  80,147  66,480  72,002 
    Accumulated other comprehensive income
  1,350  1,042  727 
    Other - deferred compensation
  (16) (30) 62)
    Treasury stock, at cost
  (245) (245) (230)
        Total stockholders' equity
  127,659  113,654  118,852 
Total liabilities and stockholders' equity $389,339 $338,940 $336,290 
           
The accompanying notes are an integral part of these financial statements.
          




 
A.M. CASTLE & CO.
   
 
COMPARATIVE STATEMENTS OF OPERATIONS
 
 
  For the Three
 
 
For the Nine
 
(Amounts in thousands, except per share data)
 Months Ended Months Ended 
(Unaudited)
 Sept 30, Sept 30, 
  2004 2003 2004 2003 
              
Net sales $199,341 $134,917 $563,195 $410,510 
Cost of material sold  (142,033) (95,948) (398,378) (287,931)
Special charges  -  -  -  (1,524)
    Gross material margin
  57,308  38,969  164,817  21,055 
              
Plant and delivery expense  (23,665) (21,300) (70,667) (65,913)
Sales, general, and administrative expense  (20,345) (16,723) (59,117) (52,402)
Depreciation and amortization expense  (2,245) (2,083) (6,736) (6,700)
Impairment and other operating expenses  -  -  -  (5,924)
Total other operating expense  (46,255) (40,106) (136,520) (130,939)
              
Operating income (loss)  11,053  (1,137) 28,297  (9,884)
              
Equity in earnings (loss) of joint ventures  1,458  2  3,197  (79)
Impairment to joint venture investment and advances  -  -  -  (2,830)
Interest expense, net  (2,175) (2,452) (6,706) (7,347)
Discount on sale of accounts receivable  (167) (295) (684) (874)
              
Income (loss) before income tax  10,169  (3,882) 24,104  (21,014)
              
Income tax (provision) benefit             
    Federal
  (3,250) 1,284  (7,720) 6,808 
    State
  (832) 261  (1,994) 1,431 
   (4,082) 1,545  (9,714) 8,239 
Net income (loss)  6,087  (2,337) 14,390  (12,775)
              
Preferred Dividends  (240) (242) (720) (719)
Net income (loss) applicable to common stock $5,847 $(2,579)$13,670 $(13,494)
              
Basic earnings (loss) per share $0.37 $(0.16)$0.87 $(0.86)
Diluted earnings (loss) per share $0.35  (0.16)$0.82  (0.86)
              
The accompanying notes are an integral part of these financial statements.
             

CONSOLIDATED BALANCE SHEETS Period Ended 
(Dollars in thousands)
 Mar. 31 Dec. 31 Mar. 31 
Unaudited*
 2005* 2004 2004* 
           
ASSETS          
Current assets          
Cash and equivalents $4,945 $3,106 $4,434 
Accounts receivable, less allowances of $1,877 in March 2005,          
$1,760 in December 2004 and $526 in March 2004 (Note 4)  95,194  80,323  77,348 
Inventories (principally on last-in first-out basis)          
(latest cost higher by approximately $95,700 in March 2005,          
$92,500 in December 2004 and $55,600 in March 2004)  139,219  135,588  104,040 
Income tax receivable  162  169  652 
Assets held for sale  995  995  1,117 
Advances to joint ventures and other current assets  7,624  7,325  6,599 
Total current assets  248,139  227,506  194,190 
Investment in joint ventures  9,204  8,463  5,060 
Goodwill  32,196  32,201  31,935 
Pension assets  41,933  42,262  42,122 
Advances to joint ventures and other assets  6,967  7,586  8,265 
Property, plant and equipment, at cost          
Land  4,770  4,771  4,767 
Building  45,495  45,514  46,975 
Machinery and equipment  125,339  124,641  119,253 
   175,604  174,926  170,995 
Less - accumulated depreciation  (111,931) (109,928) (103,079)
   63,673  64,998  67,916 
Total assets $402,112 $383,016 $349,488 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities          
Accounts payable $96,595 $93,342 $77,056 
Accrued liabilities and deferred gains  22,695  23,016  18,665 
Current and deferred income taxes  10,235  4,349  4,656 
Current portion of long-term debt  16,390  11,607  8,308 
Total current liabilities  145,915  132,314  108,685 
Long-term debt, less current portion  82,706  89,771  98,409 
Deferred income taxes  20,462  19,668  15,670 
Deferred gain on sale of assets  6,251  6,465  7,095 
Minority interest  1,653  1,644  1,261 
Post retirement benefits obligations  2,901  2,905  2,765 
Stockholders' equity          
Preferred stock, no par value - 10,000,000 shares          
authorized; 12,000 shares issued and outstanding  11,239  11,239  11,239 
Common stock, $0.01 par value - authorized 30,000,000          
shares; issued and outstanding 15,823,079 at March 2005,          
15,806,366 at December 2004 and 15,788,442 at March 2004  159  159  159 
Additional paid in capital  35,150  35,082  35,009 
Earnings reinvested in the business  94,278  82,400  68,542 
Accumulated other comprehensive income  1,643  1,616  928 
Other - deferred compensation  -  (2) (29)
Treasury stock, at cost - 63,331 shares at March 2005, 62,065          
shares at December 2004 and 57,019 shares at March 2004  (245) (245) (245)
Total stockholders' equity  142,224  130,249  115,603 
Total liabilities and stockholders' equity $402,112 $383,016 $349,488 
The accompanying notes are an integral part of these statements
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
For the Three
 
(Dollars in thousands, except per share data)
 Months Ended 
Unaudited   
Mar. 31
   
2005
 
 
2004
 
        
Net sales 
$
246,203
 
$
175,634
 
Cost of material sold  (173,300) (124,481)
Gross material margin  
72,903
  
51,153
 
        
Plant and delivery expense  
(26,368
)
 
(23,599
)
 
Sales, general, and administrative expense
  
(22,955
)
 
(19,454
)
Depreciation and amortization expense  
(2,273
)
 
(2,247
)
Total operating expense  
(51,596
)
 
(45,300
)
        
Operating income  
21,307
  
5,853
 
        
Interest expense, net  
(2,083
)
 
(2,314
)
Discount on sale of accounts receivable  
(536
)
 
(283
)
        
Income before income tax and equity in unconsolidated subsidiaries  
18,688
  
3,256
 
        
Income taxes       
Federal  
(6,009
)
 
(1,025
)
State  
(1,476
)
 
(312
)
   
(7,485
)
 
(1,337
)
        
Net income before equity in unconsolidated subsidiaries  
11,203
  
1,919
 
        
Equity earnings of joint ventures, net of tax  
915
  
383
 
 
Net income
  
12,118
  
2,302
 
        
Preferred Dividends  
(240
)
 
(240
)
Net income applicable to common stock 
$
11,878
 
$
2,062
 
        
Basic earnings per share 
$
0.75
 
$
0.13
 
 
Diluted earnings per share
 
$
0.70
 
$
0.13
 






 
A.M. CASTLE & CO.
   
 
CONDENSED STATEMENT OF CASH FLOWS
   
(Dollars in thousands)
 For the Nine Months 
(Unaudited)
 Sept. 30, 
   2004  2003 
        
Cash flows from operating activities:       
   Net income (loss)
 $14,390 $(12,775)
   Depreciation
  6,736  6,700 
    Amortization of deferred gain
  (631) (150)
    Equity in (earnings) loss from joint ventures
  (3,197) 79 
    Deferred taxes and income tax receivable
  6,315  4,732 
    Non-cash pension income (loss) and post-retirement benefits
  315  (1,053)
    Other
  1,267  (3,257)
        Cash from operating activities before working capital changes
  25,195  (5,724)
    Asset impairment and special charges
  -  10,278 
    Net change in accounts receivable sold
  (8,000) (5,866)
    Other Increase in working capital
  (1,076) (61)
Net cash from operating activities  16,119  (1,373)
        
Cash flows from investing activities:       
    Investments and acquisitions
  (1,744) - 
    Advances to joint ventures
  -  (199)
    Capital expenditures
  (3,419) (2,183)
    Proceeds from sale of assets
     10,538 
Net cash from investing activities  (5,163) 8,156 
        
Cash flows from financing activities       
    Payments on long-term debt
  (7,337) (6,453)
    Preferred dividends paid
  (720) (719)
    Other
  (85) - 
Net cash from financing activities  (8,142) (7,172)
        
    Effect of exchange rate changes on cash
  166  302 
        
Net (decrease) increase in cash  2,980  (87)
        
    Cash - beginning of year
 $2,455 $918 
    Cash - end of period
 $5,435 $831 
        
Supplemental cash disclosure - cash received (paid) during the period:       
Interest  ($6,815) ($7,464)
Income taxes  ($4,923)$12,771 
        
The accompanying notes are an integral part of these statements.
       





The accompanying notes are an integral part of these statements




 
CONDENSED STATEMENTS OF CASH FLOWS
 For the Three Months 
(Dollars in thousands)
 Ended Mar. 31 
 Unaudited  
2005
 
 
2004
 
        
Cash flows from operating activities:       
Net income $12,118 $2,302 
Adjustments to reconcile net income to net cash from operating activities:       
Depreciation  2,273  2,247 
Amortization of deferred gain  (214) (209)
Equity in (earnings) from joint ventures  (1,509) (632)
Deferred taxes and income tax receivable  807  1,666 
Non-cash pension loss and post-retirement benefits  562  105 
Other  383  93 
Cash from operating activities before working capital changes  14,420  5,572 
Increase (decrease) from changes in:       
Accounts receivable sold  13,500  5,000 
Accounts receivable  (28,429) (26,883)
Inventory  (3,718) 14,962 
Accounts payable and accrued liabilities  3,075  8,212 
Other current assets  (300) 240 
Income tax payable  5,885  (143)
Net cash from operating activities  4,433  6,959 
        
Cash flows from investing activities:       
Investments and acquisitions  -  (1,744)
Cash from joint ventures  767  - 
Capital expenditures  (989) (1,430)
Net cash from investing activities  (222) (3,174)
        
Cash flows from financing activities:       
Repayment of long-term debt  (2,217) (1,479)
Preferred stock dividend  (240) (240)
Other  68  17 
Net cash from financing activities  (2,389) (1,702)
        
Effect of exchange rate changes on cash  17  (104)
        
Net increase in cash  1,839  1,979 
        
Cash - beginning of year  3,106  2,455 
Cash - end of period $4,945 $4,434 
        
Supplemental cash disclosure - cash (paid) received during the period:       
Interest $(2,357)$(2,319)
Income taxes $(880)$20 


The accompanying notes are an integral part of these statements




A. M. Castle & Co.

Notes to ComparativeConsolidated Financial Statements
(Unaudited)



1.  
ComparativeConsolidated Financial Statements
The comparativeconsolidated financial statements included herein are unaudited. The balance sheet at December 31, 20032004 is derived from the audited financial statements at that date. The CompanyA.M. Castle & Co. (the "Company") believes that the disclosures are adequate to make the information not misleading. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited statements, included herein, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position, the cash flows, and the results of operations for the periods then ended. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K. The 20042005 interim results reported herein may not necessarily be indicative of the results of operations for the full year.

2.  
New Accounting Standards
New Accounting Standards—In compliance withDecember 2004 the Financial Accounting Standards Board (FASB) issued a revised Statement of Financial Accounting Standards (åSFASæ)(SFAS) No. 132 (revised 2003) åEmployees’ Disclosures About Pensions123, "Share Based Payment". The revised SFAS No. 123 requires that the fair value of stock options be recorded in the results of operations beginning no later than January 1, 2006. The effect of adopting the new rule on reported diluted earnings per share is dependent on the number of opti granted in the future; the terms of those awards and Other Post Retirement Benefitsætheir fair values. The Company expects to adopt the revised rules on January 1, 2006.
In May 2003, the FASB issued SFAS No. 150 - "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This Statement provides guidance as to the appropriate classification of certain financial statement instruments that have characteristics of both liabilities and equity. This Statement was effective at the beginning of the first interim period after June 15, 2003. Adoption of this Statement has not had an impact on the Company's financial position or results of operations.
   In March 2003, the FASB issued Interpretation No. 46. This Interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", theaddresses consolidation by business enterprises of variable interest entities. This Interpretation applies to variable interest entities created after January 1, 2002, and to variable interest entities in which an enterprise obtains an interest after that date. The Company has disclosedno investments in or known contractual arrangements with variable interest entities and therefore, this Interpretation has no impact on the interim information required as Footnote 11 herein.Company’s financial statements and related disclosures.

3.  
Earnings Per Share
Earnings per common share are computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents (diluted) outstanding during the year. Common stock equivalents consist of stock options, restricted stock awards and preferred stock shares and have been included in the calculation of weighted average shares outstanding using the treasury stock method. In accordance with SFAS No. 128 "Earnings per Share", the following table is a reconciliation of the basic and fully diluted earnings per share calculations for the periods reported.




  
For The Three Months Ended
Sept 30,
 
For The Nine
Months Ended
Sept 30,
 
  2004 2003 2004 2003 
 (in thousands)             
Net income (loss) $6,087 $(2,337)$14,390 $(12,775)
Preferred dividends  (240) (242) (720) (719)
Net income (loss) applicable to common stock $5,847 $(2,579)$13,670 $(13,494)
 
Weighted average common shares outstanding
  
15,797
  
15,788
  
15,794
  
15,777
 
Dilutive effect of outstanding employee and             
    Directors’ common stock options and preferred stock
  953  —  802  — 
Diluted common shares outstanding  16,750  15,788  16,596  15,777 
              
Basic income (loss) per common share $0.37 $(0.16)$0.87 $(0.86)
Diluted income (loss) per common share $0.36 $(0.16)$0.87 $(0.86)
              
Outstanding employee and directors' common stock options and restricted and preferred stock shares having no dilutive effect  845  3,575  850  3,575 
 

  
For The Three Months Ended
March 31,
 
(dollars in thousands, except per share data)
 2005 2004 
      
Net income $12,118 $2,302 
Preferred dividends  (240) (240)
Net income applicable to common stock $11,878 $2,062 
 
Weighted average common shares outstanding
  
15,819
  
15,791
 
Dilutive effect of outstanding employee and       
directors’ common stock options and preferred stock  1,610  536 
Diluted common shares outstanding  17,429  16,327 
        
Basic income per common share $0.75 $0.13 
        
Diluted income per common share $0.70 $0.13 
        
Outstanding employee and directors' common stock options and restricted and preferred stock shares having no dilutive effect  2,086  3,275 
        

4.  
Accounts Receivable Securitization
The Company is utilizing a special purpose, fully consolidated, bankruptcy remote company (Castle SPFD, LLC) for the sole purpose of buying receivables from the parent Company and selected subsidiaries and selling an undivided interest in a base of receivables to a finance company. Castle SPFD, LLC retains an undivided interest in the pool of accounts receivable and bad debt losses are allocated first to this retained interest. The facility, which expires in December 2005, requires early amortization if the special purpose company does not maintain a required minimum equity balance or if certain ratios related to the collectibility of the receivables are not maintained. Funding under the facility is limited to the lesser of a calculated funding base or $60 million. As of September 30, 2004, $5.0March 31, 2005, $30.0 million of accounts rec eivablereceivable were sold to the finance company and an additional $ 43.1$28.0 million could have been sold under the agreement. The amount sold to the financing company at December 31, 20032004 and September 30, 2003March 31, 2004 was $13.0$16.5 million and $20.0$18.0 million, respectively.
The sale of accounts receivable is reflected as a reduction of "accounts receivable, net" in the ComparativeConsolidated Balance Sheets and the proceeds received are included in "net cash from operating activities" in the Condensed Statements of Cash Flows. Sales proceeds from the receivables are less than the face amount of the accounts receivable sold by an amount equal to a discount on sales as determined by the financing company. These costs are charged to "discount on sale of accounts receivable" in the ComparativeConsolidated Statements of Operations.Income. The discount rate as of September 30, 2004March 31, 2005 was 4.75%5.6%.



5.  
Goodwill
During the first quarter of 2004 the Company’s Metal SegmentCompany purchased the remaining 50% interest in its Mexican joint venture in its metal segment and the Plastic SegmentTotal Plastics, Inc. purchased the remaining 40% interest in its Paramont Machine Company subsidiary in the Company’s plastics segment (both of these entities are now wholly owned). Based on the purchase price of these entities and the valuations required by SFAS 141 åBusiness Combinationsæ, additional net goodwill of $0.3 million was reported.
 
The Company performs an annual impairment test on Goodwillgoodwill and other intangible assets during the first quarter of each fiscal year. Based on the test made during the first quarter of 2004,2005, the Company has determined that there is no impairment to the remaining goodwill balance of $31.9$32.2 million.
The changes in carrying amounts of goodwill were as follows(in thousands):

 Metal Segment Plastic Segment Total  Metals Segment Plastics Segment Total 
Balance As of December 31, 2003 $ 18,670   $12,973   $31,643  
Balance As of December 31, 2004 
$        19,228
 
$        12,973
 
$        32,201
 
Purchases  510  (210) 300   —  —  — 
Currency Valuation  16  —  16   (5) ¾  (5)
Balance As of September 30, 2004 $19,196 $12,763 $31,959 
Balance As Of March 31, 2005 $19,223 $12,973 $32,196 
                    

6.  
Acquisitions
Effective January 1, 2004 the Company purchased the remaining joint venture partner's interest in Castle de Mexico, S.A. de C.V. for $1.6 million. Castle de Mexico is a distribution company, which targets a wide range of businesses within the durable goods sector throughout Mexico. The results of this entity, now a wholly owned subsidiary, have been consolidated in the Company's financial statements as of the effective date of the acquisition.
On March 31, 2004, the Company’s wholly-owned subsidiary, Total Plastics Inc. (TPI), purchased the remaining 40% interest in its Paramont Machine Company subsidiary for $0.4 million. Paramont is a manufacturer of plastic parts and components which sells to a variety of businesses basically in the Midwest. Beginning on March 31,April 1, 2004 the results of the entityParamont were reported as a wholly owned subsidiary (the minority interest was previously eliminated from reported results). The acquisition has been reported based on an allocation of the purchase price.

7.  
LIFO
Inventory determination under the LIFOlast-in first-out (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,March 31, 2005 and 2004, and 2003, 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 exceedsexceeded book value by $79.6$95.7 million and $42.9$55.6 million at September 30,March 31, 2005 and March 31, 2004, and December 31, 2003 respectively. Taxes on income would become payable on any realization of this excess from reductions in the level of inventories.

8.  
Stock Options
Valuation Assumptions - As required, the Company has adopted the disclosure provisions of SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", for the periods ended September 30, 2004March 31, 2005 and 2003.2004. The following table summariessummarizes on a pro-forma basis the effects on the Company's net lossincome had compensation expense been recognized. The fair value of the options granted had been estimated using the Black Scholes option pricing model with the


following assumptions: risk free interest rate of 3.1% to 4.5%, expected dividend yield of zero, option life of 10 years, and expected volatility from 30.0% to 50.0%. There were no employee options granted in the first three quartersquarter of 2004.2005.

Pro-Forma Income (Loss) Information
  
For The Three
Months Ended
September 30
 
For The Nine Months
Ended
September 30,
 
  2004 2003 2004 2003 
Net income (loss) applicable to common stock, as reported $5,847 $(2,579)$13,670 $(13,494)
Pro-forma effect of stock option compensation             
under fair value based method for all awards  (474) (236) (940) (709)
Pro-forma net income (loss) applicable to common stock $5,373 $(2,815)$12,730 $(14,203)
              
Basic income (loss) per share, as reported $0.37 $(0.16)$0.87 $(0.86)
              
Diluted income (loss) per share, as reported $0.36 $(0.16)$0.87 $(0.86)
Pro-forma income (loss) per share:             
Basic $0.34 $(0.18)$0.81 $(0.90)
 
Diluted
 
$
0.33
 
$
(0.18
)
$
0.81
 
$
(0.90
)
    
 
(dollars in thousand, except per share data)
 For The Three Months Ended March 31, 
  2005 2004 
Net income applicable to common stock, as reported 
$            11,878
 
$            2,062
 
Pro-forma effect of stock option compensation       
under fair value based method for all awards  (469) (233)
Pro-forma net income applicable to common stock $11,409 $1,829 
        
Total basic income per share, as reported $0.75 $0.13 
        
Total diluted income per share, as reported $0.70 $0.13 
        
Pro-forma income per share:       
Basic $0.72 $0.12 
 
Diluted
 
$
0.67
 
$
0.11
 
        

9.  
Segment Reporting
The Company distributes and performs first stage processing on both metalmetals and plastic materials.plastics. Although the distribution processes areprocess is similar, different products are offered and different customers are served by each of these businesses and, therefore, they are considered segments according to SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information".
The accounting policies of all segments are as described in the summary of significantcritical accounting policies.policies in the Company’s Form 10-K for year ended December 31, 2004. Management evaluates performance of its business segments based on operating income. The Company does not maintain separate standalone financial statements prepared in accordance with generally accepted accounting principles for each of its operating segments.
The following is the segment information for the quarters ended September 30, 2004March 31, 2005 and 2003:2004:

 
 
(in millions)
 Net Sales Gross Mat’l Margin Other Oper Exp Operating Income (Loss) 
2004             
Metal Segment $174.5 $49.1 $(38.9)$10.2 
Plastic Segment  24.8  8.2  (6.0) 2.2 
Other  —  —  (1.3) (1.3)
Consolidated $199.3 $57.3 $(46.2)$11.1 
              
2003             
Metal Segment $117.3 $32.9 $(33.5)$(0.6)
Plastic Segment  17.6  6.1  (5.3) 0.8 
Other  —  —  (1.3) (1.3)
Consolidated $134.9 $39.0 $(40.1)$(1.1)
              
"Other" — Operating loss includes costs of executive and legal departments and other corporate activities which support both operating segments of the Company.
 
 
(dollars in thousands)
 Net Sales Gross Mat’l Margin Other Oper Exp Operating Income (Loss) 
2005             
Metals Segment $220,005 $64,326  (43,361)$20,965 
Plastics Segment  26,198  8,577  (7,080) 1,497 
Other  —  —  (1,155) (1,155)
Consolidated $246,203 $72,903 $(51,596)$21,307 
              
2004             
Metals Segment $154,721 $44,264 $(38,370)$5,894 
Plastics Segment  20,913  6,889  (5,859) 1,030 
Other  —  —  (1,071) (1,071)
Consolidated $175,634 $51,153 $(45,300)$5,853 
              


The following is the segment information for the nine-months ended September 30, 2004 and  2003:

 
 
(in millions)
 Net Sales Gross Mat’l Margin Other Oper Exp Operating Income (Loss) 
2004             
Metal Segment $495.4 $142.4 $(115.5)$26.9 
Plastic Segment  67.8  22.4  (17.4) 4.9 
Other  —  —  (3.5) (3.5)
Consolidated $563.2 $164.8 $(136.4)$28.3 
              
2003             
Metal Segment $360.5 $103.6 $(112.8)$(9.2)
Plastic Segment  50.0  17.5  (15.4) 2.1 
Other  —  —  (2.7) (2.7)
Consolidated $410.5 $121.1 $(130.9)$(9.8)
              

"Other" — Operating loss includes costs of executive and legal departments and other corporate activities which support both operating segments of the Company.

The segment information for total assets at September 30, 2004,March 31, 2005, December 31, 20032004 and March 31, 2004 was as follows:

(in thousands)
September 30,
2004
 
December 31,
2003
 
Metal Segment$342,736 $306,892 
Plastic Segment 46,293  31,388 
Other 310  660 
Consolidated$389,339 $338,940 
       
 
(dollars in thousands)
 
March 31,
2005
 
December 31,
2004
 
March 31,
2004
 
Metals Segment $                       353,893 $                       338,558 $                       317,154 
Plastics Segment  48,057  44,289  31,682 
Other  162  169  652 
Consolidated $402,112 $383,016 $349,488 
           

"Other" — The segment's total assets consist solely of the Company's income tax receivable (the segments file a consolidated tax return)return).

10.Asset Impairment and Special Charges
After a review of certain of its under-performing operations within its metals segment, the Company initiated a major restructuring program during the second quarter of 2003. The restructuring anticipated the sale or liquidation of several under-performing and cash consuming business units, which were not strategic to the Company’s long-term strategy and were reporting operating losses and/or consuming cash. The restructuring included the closing of KSI, LLC a chrome bar plating operation; the liquidation or sale of the Company’s 50% interest in Laser Precision, a joint venture which produces laser cut parts; the sale of the operating assets of Keystone Honing Company, a subsidiary which processes and sells honed tubes; the disposal of selected pieces of equipment which interfere with more efficient use of th e Company’s distribution facilities; and the sale of the Company’s 50 % interest in Energy Alloys, a joint venture which distributes tubular goods to the oil and gas field industries.



The impairment and special charges consisted of $1.5 million of inventories anticipated to be sold or liquidated in connection with the disposition of these businesses; the impairment of long-lived assets of $4.9 million based on their anticipated sale price or appraisal value; the accrual of $1.0 million of contract termination costs under operating leases associated with the sale of the businesses’ non inventory assets, which are included in åimpairment and other operating expensesæ; and a $2.8 million impairment on the investment in the two joint ventures; which are included in åimpairment to joint venture investment and advances.æ
The following table summarizes the restructuring reserve activity:

(in millions)
 
December 31, 2003
Balance
 
Nine Months 2004
Spending
 
Sept 30, 2004
Balance
 
 Lease and other contract transaction costs  $0.3   $(0.3 ) $--  
Environmental clean-up costs  0.8  (0.8) — 
Legal fees on asset sales/divestiture  0.1  (0.1) — 
Total $1.2 $(1.2)$— 
           
11.Pension and Post Retirement Benefits
The following are the components of the net pension and post-retirement benefit activities for the quarters ended September 30, 2004 and 2003 (in thousands):

  
 
Pension Benefits 		Other Benefits
 
Total Benefits
   
2004
  
2003
  
2004
  
2003
  
2004
  
2003
 
 
Service cost
 
$
(594.2
)
$
(785.8
)
$
(29.0
)
$
(22.6
)
$
(623.2
)
$
(808.4
)
 
Interest cost
  
(1,448.1
)
 
(2,239.2
)
 
(38.1
)
 
(34.9
)
 
(1,486.2
)
 
(2,274.1
)
 
Expected return on plan assets
  
2,396.7
  
3,763.1
  
—
  
—
  
2,396.7
  
3,763.1
 
 
Amortization of prior service cost
  
(16.9
)
 
(26.1
)
 
(11.9
)
 
(9.5
)
 
(28.8
)
 
(35.6
)
 
Amortization of net (loss) gain
  
(366.3
)
 
(78.6
)
 
2.4
  
7.0
  
(363.9
)
 
(71.6
)
 
Net periodic (cost) benefit
 
$
(28.8
)
$
633.5
 
$
(76.6
)
$
(60.0
)
$
(105.4
)
$
573.5
 
The following are the components of the net pension and post-retirement benefit activities for the nine months September 30, 2004 and 2003 (in thousands):


 Pension Benefits Other Benefits Total Benefits 
 Pension Benefits 
 
Other Benefits
 
Total Benefits
 March 31, March 31, March 31, 
  
2004
  
2003
  
2004
  
2003
  
2004
  
2003
  
 
2005
 
 
2004
 
 
2005
 
 
2004
 
 
2005
 
 
2004
 
Service cost
 
$
(1,782.6
)
$
(1,530.0
)
$
(87.0
)
$
(67.8
)
$
(1,869.6
)
$
(1,597.8
)
 
$
(685.9
)
$
(594.2
)
$
(34.6
)
$
(29.0
)
$
(720.5
)
$
(623.2
)
Interest cost
  
(4,344.3
)
 
(4,360.0
)
 
(114.3
)
 
(104.7
)
 
(4,458.6
)
 
(4,464.7
)
  
(1,548.3
)
 
(1,448.1
)
 
(44.7
)
 
(38.1
)
 
(1,593.0
)
 
(1,486.2
)
Expected return on plan assets
  
7,190.1
 
7,327.3
 
—
 
—
 
7,190.1
 
7,327.3
 
Expected return on plan
  
2,394.2
 
2,396.7
 
—
 
—
 
2,394.2
 
2,396.7
 
Amortization of prior service cost
  
(50.7
)
 
(50.9
)
 
(35.7
)
 
(28.5
)
 
(86.4
)
 
(79.4
)
  
(15.8
)
 
(16.9
)
 
(11.9
)
 
(11.9
)
 
(27.7
)
 
(28.8
)
Amortization of net (loss) gain
  
(1.098.9
)
 
(153.0
)
 
7.2
 
21.0
 
(1,091.7
)
 
(132.0
)
  
(614.7
)
 
(366.3
)
 
0.1
 
2.4
 
(614.6
)
 
(363.9
)
Net periodic (cost) benefit
 
$
(86.4
)
$
1,233.4
 
$
(229.8
)
$
(180.0
)
$
(316.2
)
$
1,053.4
 
Net periodic cost
 
$
(470.5
)
$
(28.8
)
$
(91.1
)
$
(76.6
)
$
(561.6
)
$
(105.4
)
                            
  As of March 31, 2005 the Company has not made any cash contributions to its pension plans for this fiscal year nor does it anticipate any cash contributions being made to these plans for the balance of 2005.


11.


12.Commitments and Contingent Liabilities
At September 30, 2004March 31, 2005 the Company had no outstanding guarantees for bank loans made to its unconsolidated affiliate. The Company had $1.8 million of irrevocable letters of credit outstanding and $0.7 million of cash deposits outstanding at quarter endon deposit to comply with the insurance reserve requirements of its workers’ compensation insurance carrier. TheThis letter of credit is secured with a Certificatecertificate of Deposit,deposit, which is included in åAdvances"Advances to joint ventures and other current assetsæassets" on the Comparative Balance Sheets.Company’s consolidated balance sheets.
   The Company is the defendant in several lawsuits arising out of the conduct of its business. These lawsuits are incidental and occur in the normal course of the Company’s business affairs. It is the opinion of the Company’s managementin-house counsel that no significant uninsured liability will result from the outcome of the litigation and thus there is nothat would have a material adverse effect on the consolidated financial exposure toposition of the Company.


Item 2. ManagementManagement’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 for A. M. Castle & Co. (the åCompanyæ).Notes.

Executive Overview
Recent Economic Trends and EventsCurrent Business Conditions
As has beenThe Company continues to enjoy favorable demand for its metal and plastic products through the case since late 2003, global shortagesfirst quarter of the basic raw materials for steel making, coupled with increased demand, have resulted in accelerated metal prices and longer mill lead times.2005. The Company’s metal segment represents 88% of its consolidated revenue base (remaining 12% is plastic). To assess demand growth trends in theNorth American durable goods manufacturing sector, the Company’s primary market, continues to exhibit demand requirements above the already high levels of 2004. The aerospace, oil and gas, mining and construction equipment and truck and railroad equipment sectors are showing particular strength. The Company’s pricing in aggregate is running at levels slightly in excess of the levels experienced at the end of 2004. Much has been published in recent months about global steel supply and demand, and global steel pricing. Most of what has been written describes the steel industry in general terms, and is largely driven by carbon flat-rolled products which ourdominate the tonnage figures. It is important to note that the Company does not purchase or sell carbon flat-rolled products in any meaningful quantity. The Company’s metal segment serves, management reviewsproduct offerings are predominantly in carbon bar or tubing, alloy bar, high-end specialty metals (such as nickel alloy, stainless steel and aluminum), and carbon plate up to twenty inches thick. The Company’s product offerings and customer demand do not necessarily correlate with the carbon flat-rolled markets or its economics.
Historically, the Company has used The Purchaser’s Managers Index (åPMIæ("PMI") as provided by the Institute of Supply Managers(see to track general demand trends in its customer markets. Table 1 below).below shows recent PMI trends from the first quarter of 2004 through the first quarter of 2005. Generally speaking, an index above 50.0 indicates growth in the manufacturing sector of th ethe U.S. economy. As the table shows, theindicates, there has been sustained growth that began in the thirdmanufacturing sector for several quarters. The Company’s revenue growth, in real terms or net of material price increases, has improved over these same quarters. First quarter 2005 volume growth for the Company on a consolidated basis is approximately 5% ahead of 2003 has continued through each subsequentthe same quarter in 2004.

Table 1
 
YEAR
 
Qtr 1
 
Qtr 2
 
Qtr 3
 
Qtr 4
 
2003
 
49.7
 
48.9
 
54.1
 
60.6
200462.562.159.8 

Total tons shipped in the Metal business are up 11.0% and 13.8% versus the third quarter and nine-month periods of 2003, respectively. Additionally, management estimates that mill prices are up 29.5% versus the third quarter of last year and 19.4% versus the corresponding nine-month period of 2003. Lines sold, a measurement of individual items handled, shipped and invoiced to customers decreased 3.7% in the quarter and are up 2.1% year-to-date compared to the corresponding periods of 2003. Lines drive the Company’s variable expenses, not tons sold or dollar sales which can be affected by product mix and pricing fluctuations. In summary, the Company is enjoying increased metal volume, increased metal prices, and larger order sizes in its metal segment.
YEAR
Qtr 1
Qtr 2
Qtr 3
Qtr 4
200462.462.060.157.5
200555.6   

Additionally, global steel supply and demand dynamics have driven metal pricing upwards. These dynamics include supplier consolidations, the impact of China on global demand, and global shortages of steel-making raw materials. By year-end 2004, metal prices increased by 40% as compared to year-end 2003.  In the first quarter of 2005, the Company’s metal pricing has stabilized somewhat, but remains slightly higher than year-end 2004 and about 37% ahead of first quarter 2004 levels. Pricing in the specialty metals of nickel alloys, stainless steel and aluminum has increased during the period.
The Company’s plastic segment has also shown significant sales growth of 40.6% versus the third quarter of 2003 and 35.6% as compared to the nine-month period last year. During the third quarter of 2004, plastic material price increases were beginning to appear. Given the diverse product offerings and related mix of suppliers, it is difficult to pinpoint the impact of pricerecently benefited from increases in this


segment.its material pricing. Management roughly estimates that third quarter plastic segment sales growth includes a price increase of less than 5.0%. This is the first quarter where2005 revenue growth in this segment of 25% versus the same period in 2004 includes a 16% favorable material price impact. The volume growth in this business is significantly impacted by a planned long-term geographic expansion that continues in 2005.
Company Financial Condition
In addition to several consecutive quarters of solid earnings performance, the Company continues its efforts to reduce overall borrowings and de-leverage its balance sheet, thus positioning itself towards a higher-grade credit rating status. The Company’s primary short-term borrowing needs are funded through its Accounts Receivable Securitization Facility ("RPF") which expires at the end of 2005. Management has playedstarted the process to replace the RPF with a rolemore traditional revolving credit facility to meet its future needs. The Company’s outstanding long-term notes provide for an interest rate reduction in sales growth. Mostthe event the Company does replace the RPF with a revolving facility meeting the requirements under the notes. Management believes the Company is well-positioned at this time for a successful refinancing of the year-over-year growth is volume driven, including increased sales due to planned geographic expansion.

In recent years prior to 2004, the Company completed a multi-faceted planned restructuring that lowered its structural cost base through the shedding of non-profitable business units and other permanent fixed cost reductions. Additionally, during this same timeframe, productivity enhancements were made across its operations. As a result of these difficult actions, third quarter and year-to-date incremental operating expense as a percent of incremental sales were only 9.5% and 7.5% respectively. Management believes, as a general rule of thumb, a ratio of 10% or lower represents very strong cost containment and favorable earnings leverage on incremental sales.

Current Business Outlook
There are no apparent signs of demand softeningRPF in either segment and, in the near-term metal availability is expected to remain tight. As a result, mill pricing will likely remain near its current levels, through the balance of 2004 and likely into 2005. Plastic prices are expected to rise gradually in the next few months, but are estimated to average about 5.0% for the year. The Company’s efforts in 2003 and earlier to lower its operating cost structure along with the sale or disposal of under-performing business units, has positioned it to continue to leverage earnings favorably on the sales increase. The integration of Castle’s Mexico operations generated $5.1 million of added sales in the third quarter and $11.9 million year-to-date, contributing operating profit margin of slightly over 10.0% for both periods. The Company’s plastic subsidiary, TPI (Total Plastics, Inc.) continues to report double-digit year-over-year sales and earnings growth, driven by improved demand and geographic market expansion into Florida in 2003. In summary, the Company has enjoyed a strong nine-months of 2004 in both sales and earnings performance.

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 2(dollars in millions):

Table 2
 
Oct - Dec
2004
 
2005
 
2006
 
2007
2008 and Beyond
Required Principal
Payments on Debt
$0.3$11.4$16.2$16.2$56.3
  
 
2005
 
 
2006
 
 
2007
 
 
2008
 
2009 and Beyond
 
Required Principal Payments on Debt $9.4 $16.4 $16.4 $19.3 $37.6 

In addition, the Company’s principal source of operating cash is derived from earnings and its Accounts Receivable Securitization Agreement,RPF, which as stated above, expires in December 2005.
Despite anthe upswing in the manufacturing sector of the economy, there can be no guarantee as to its magnitude or duration. Additionally, as a distributor, the Company’s ability to continue to pass-through supplier-driven material cost increases to its customer base is alsoremains 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,conditions dramatically worsen, management could pursue further options to ensure it generatesgenerate enough cash to facilitatefund the required principal payments of principal as outlined in its agreements with its primary lenders. These options could include, but not necessarily beare not limited to, further operating c ostcost reductions and organizational restructuring, further working capital improvements, deferral of non-criticalnon-essential capital projects, sale of assets or business units, refinancing of the Company through additional equity or debt infusions, or renegotiating


existing loans outstanding.outstanding indebtedness. Management cannot guarantee that any of these options will be available if needed. NoneOutside of the planned replacement of the RPF with a customary revolving credit facility and normal course management of the business that seeks continuous improvements in commercial and operating performance, none of these options are under consideration at this time, other than the ongoing analysis and review of operating expense and levels of working capital required in the business.
time. All current business conditions lead management to believe the Companythat it will continue to be able to generate sufficient cash from operations and planned working capital improvements, to fund its ongoing capital expenditure program and to meet its debt obligations.


Results of Operations: Year-to-Year Comparisons and Commentary

Third Quarter 2004 versus Third Quarter 2003:
Consolidated results by business segment are summarized in Table 3the following table for the quarter ended September 30, 2004March 31, 2005 and 2003.2004.

Table 3
Operating Results by Segment
(dollars in millions)
  
Quarter Ended Sept 30
 
  
2004
 
2003
 
Fav/
(Unfav)
 
Fav/(Unfav)% Change
 
 
Net Sales
             
    Metal
 $174.5 $117.3 $57.3  48.8%
    Plastic
  24.8  17.6  7.2  40.9 
    Total Net Sales
 $199.3 $134.9 $64.5  47.8%
              
Gross Material Margin             
    Metal
 $49.1 $32.9 $16.2  49.2%
    % of Metal Sales
  
28.1
%
 
28.1
%
 
0.0
%
   
    Plastic
  8.2  6.1  2.1  34.4 
    % of Plastic Sales
  
33.1
%
 
34.7
%
 
(1.3
)%
   
    Total Gross Material Margin
 $57.3 $39.0 $18.3  46.9%
    % of Total Sales
  
28.7
%
 
28.9
%
 
(0.2
)%
   
              
Operating Expense             
    Metal
 $(38.9)$(33.5)$(5.4) (16.1)%
    Plastic
  (6.0) (5.3) (0.7) (13.2)
    Other
  (1.3) (1.3) —  — 
    Total Operating Expense
 $(46.2)$(40.1)$(6.1) (15.2)%
    % of Total Sales
  
(23.2
)%
 
(29.7
)%
 
6.5
%
   
              
Operating Income             
    Metal
 $10.2 $(0.6)$10.8  1800.0%
    % of Metal Sales
  
5.8
%
 
(0.5
)%
 
6.3
%
   
    Plastic
  2.2  0.8  1.4  175.0 
    % of Plastic Sales
  
8.9
%
 
4.5
%
 
4.4
%
   
    Other
  (1.3) (1.3) —  — 
    Total Operating Income
 $11.1 $(1.1)$12.2  1109.1%
% of Total Sales
  
5.6
%
 
(0.8
)%
 
6.4
%
   
 
 
"Other" includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company.


  
Quarter Ended March 31,
 
Fav/(Unfav)
 
   
2005
  
2004
  
Fav/
(Unfav
)
 
% Change
 
 
Net Sales
             
Metals $220.0 $154.7 $65.3  42.2%
Plastics  26.2  20.9  5.3  25.4 
Total Net Sales $246.2 $175.6 $70.6  40.2%
              
Gross Material Margin             
Metals $64.3 $44.3 $20.0  45.1%
 % of Metals
  
29.2
%
 
28.6
%
 
0.6
%
   
Plastics  8.6  6.9  1.7  24.6%
% of Plastics
  
32.8
%
 
33.0
%
 
(0.2
)%
   
Total Gross Material Margin $72.9 $51.2 $21.7  42.4%
% of Total Net Sales
  
29.6
%
 
29.2
%
 
0.5
%
   
              
Operating Expense             
Metals $(43.4)$(38.3)$(5.1) 13.3%
Plastics  (7.1) (5.9) (1.2) 20.3%
Other  (1.1) (1.1) —  — 
Total Operating Expense $(51.6)$(45.3)$(6.3) 13.9%
% of Total Net Sales
  
(21.0
)%
 
(25.8
)%
 
4.8
%
   
              
Operating Income             
Metals $21.0 $6.0 $15.0  250.0%
% of Metals Sales
  
9.5
%
 
3.9
%
 
5.7
%
   
Plastics  1.5  1.0  0.5  50.0%
 % of Plastics Sales
  
5.7
%
 
4.8
%
 
0.9
%
   
Other  (1.2) (1.1) (0.1) (9.1)%
Total Operating Income $21.3 $5.9 $15.4  261.0%
% of Total Net Sales
  
8.7
%
 
3.4
%
 
5.3
%
   

*Otheræ includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company.
 

Net Sales and Gross Material Margin:Sales:
Table 4 below summarizesConsolidated net sales of $246.2 million increased 40.2%, or $70.6 million, versus the first quarter of 2004. Metal segment sales of $220.0 million were $65.3 million, or 42.2%, ahead of last year. Product mix attributed to the strengthening of demand in the aerospace, and oil and gas industries are key factors in 2005. Increased volume accounted for approximately $8 million, or 5%, of the change inwith the balance (37%) due to price.
Plastic segment sales and gross material margin between the third quarter of 2003 and$26.2 million (10.6% of total consolidated sales) were $5.3 million, or 25.4%, stronger than the same quarter of 2004.

Table 4 We estimate that 16% of the year-over-year sales increase is price related with the balance being real volume growth, principally attributed to planned geographic expansion.
Net Sales and Gross Material Margin Bridge 
Quarter Ending September 30, 2004 Vs. 2003 
(dollars in millions)
 
 
 
 
 
Net Sales 		Gross Material Margin
   Dollars  Percent  Dollars  Percent 
Quarter Ended 9/30/03           
    Metal
 $117.3  58.8%$32.9 57.4%
    Plastic
  17.6  8.8% 6.1 10.7%
    Total Company
 $134.9  67.6%$39.0 68.1%
            
Change 3Q04 Vs. 3Q03           
    Metal
           
             Volume $17.6  13.1%$6.0 15.4%
             Price  34.6  25.7% 7.0 17.9%
             Mix/Other  (0.1) 0.0% 2.3 5.9%
             Mexico  5.1  3.8% 0.9 2.3%
        Total Metals
 $57.2  42.4%$16.2 41.5%
    Plastic
  7.2  5.3% 2.1 5.4%
    Total Company
 $64.4  47.8%$18.3 47.1%
            
Quarter Ended 9/30/04           
    Metal
 $174.5  87.6%$49.1 85.7%
    Plastic
  24.8  12.4% 8.2 14.3%
    Total Company
 $199.3  100.0%$57.3 100.0%


As shown above,
Gross Material Margins and Operating Profit:
Consolidated gross material margin of $72.9 million was $21.7 million, or 42.4%, better than last year. Metal segment gross margin of $64.3 million was $20.0 million, or 45.1%, ahead of the primary factors increasing metals sales for the thirdfirst quarter of 20042004. Plastic segment gross margin increased by 48.8%$1.7 million, or 24.6%, to a level of $8.6 million. The Company has been able to maintain its material margin percentages during this period material cost increases.
Total consolidated operating expenses of $51.6 million increased 13.9% versus the first quarter of last year on a 40.2% increase in net sales. Operating expense increased $6.3 million and was 8.9% of incremental net sales period-over-period, reflecting continued strong operating leverage.
The Company's "Other" operating segment includes expenses related to executive, legal and other corporate services which support both the metal and plastic segments. This expense remained relatively flat versus the same period last year are volume (15.0%), mill price increase (29.5%) and the Mexico operation which became a wholly-owned consolidated entity in January 2004 (4.3%). As mentioned in the executive summary, improving conditions in the manufacturing sector of the U.S. economy and accelerated metal pricing are the primary factors contributing to the quarter-over-quarter sales increase. The Plastic segment sales are up 40.9% versus the corresponding quarter of 2003, due largely to increased demand and planned geographic market expansion. Management estimates that pricing increases of less than 5% occurred in this segment during the quarter.2004.
    Gross material margin in the Metal segment increased 49.4% versus the third quarterConsolidated operating profit of 2003. Increased volume and material cost and margin pass-through account for nearly 214%$21.3 million (8.7% of this increase. Included in the 2004 resultsales) is a charge of $1.7$15.4 million resulting from a company-wide physical count of its plate inventory conducted in July. The Mexico operation contributed nearly $0.9 million of margin in the 2004 quarter. Favorable margins associated with product mix changes versus 2003 account for the balance of the total Metal segment improvement. Plastic margin improvement versus the third quarter of 2003 is primarily volume related but this isbetter than the first quarter where margin reflects modest price increases.



Operating Expense:
Consolidated operating expense increased 15.3% or $6.2 million on substantial sales growth in the same quarter of 2003. This incremental increase represents 9.5% of the $64.5 million sales increase versus priorlast year. Actions taken in 2003 and earlier to reduce the Company’s operating costs continue to have a positive impact on earnings in 2004.

Other Income and Expense, and Net Results:
Joint venture equity earnings of $1.5 million compare favorably to a minimal gain inwere $0.9 million ahead of 2004, reflecting previously mentioned metal market dynamics within the third quarter of 2003. The Company’s sole remaining joint venture, Kreher Steel, is also experiencing increased volume and pricing dynamics similar to the Company’s own Metal segment.Steel.
Financing costs, (interestwhich consists of interest expense and discount on sale of accounts receivable) decreased $0.4 million to $2.3receivable, were $2.6 million in the thirdfirst quarter of 2004 on lower total borrowings and accounts receivable sold.2005 which was equal to the same period in 2004.
Consolidated net income was $5.8$11.9 million or $0.37$0.75 per basic share (basic EPS, after(after preferred dividends of $0.2 million) in the thirdfirst quarter of 20042005 versus a consolidated net lossincome of $2.6$2.1 million or $0.16$0.13 per share (after preferred dividends of $0.2 million) in the corresponding period of 2003.



Year-to-Date 2004 versus Year-to-Date 2003:
Consolidated results by business segment are summarized in Table 5 for the nine-months ended September 30, 2004 and 2003. The table includes impairment and other restructuring related charges the Company recorded through the third quarter of 2003. Please refer to footnote 10 for more details on these charges.

Table 5
Operating Results by Segment
(dollars in millions)
 
Nine-Months Ended September 30
 
  
2004
 
2003
 
Fav/
(Unfav)
 
Fav/(Unfav) % Change
 
 
Net Sales
             
    Metal
 $495.4 $360.5 $134.9  37.4%
    Plastic
  67.8  50.0  17.8  35.6 
    Total Net Sales
 $563.2 $410.5 $152.7  37.2%
              
Gross Material Margin             
    Metal
 $142.4 $103.6 $38.8  37.5%
    % of Metal Sales
  
28.7
%
 
28.7
%
 
0.0
%
   
    Plastic
  22.4  17.5  4.9  28.0%
    % of Plastic Sales
  
33.0
%
 
35.0
%
 
(2.0
)%
   
    Total Gross Material Margin
 $164.8 $121.1 $43.7  36.1%
    % of Total Sales
  
29.3
%
 
29.5
%
 
(0.2
)%
   
              
Operating Expense             
    Metal
 $(115.5)$(112.8)$(2.7) (2.4)%
    Plastic
  (17.5) (15.4) (2.1) (13.6)
    Other
  (3.5) (2.7) (0.8) (29.6)
    Total Operating Expense
 $(136.5)$(130.9)$(5.6) (4.3)%
    % of Total Sales
  
(24.2
)%
 
(31.9
)%
 
7.7
%
   
              
Operating Income             
    Metal
 $26.9 $(9.2)$36.2  389.3%
    % of Metal Sale
  
5.4
%
 
(2 .6
)%
 
8.0
%
   
    Plastic
  4.9  2.1  2.8  133.3 
    % of Plastic Sales
  
7.3
%
 
4.2
%
 
3.1
%
   
    Other
  (3.5) (2.7) (0.8) (29.6)
    Total Operating Income
 $28.3 $(9.8)$38.2  385.9%
    % of Total Sales
  
5.0
%
 
(2.4
)%
 
7.4
%
   
 
 
"Other" includes costs of the executive and legal departments, and other corporate activities which support both operating segments of the Company.






Net Sales and Gross Material Margin:
Table 6 below summarizes the change in sales and gross material margin between the nine-month period of 2003 and the same period of 2004.

Table 6
    
Net Sales and Gross Material Margin Bridge 
Nine Months Ending September 30, 2004 Vs. 2003 
(dollars in millions)
             
  Net Sales Gross Material Margin
   Dollars   Percent  Dollars  Percent 
Nine Months Ended 9/30/03             
    Metal
 $360.5  64.0%$103.6  62.9%
    Plastic
  50.0  8.9% 17.5  10.6%
    Total Company
 $410.5  72.9%$121.1  73.5%
              
Change YTD '04 Vs. '03             
    Metal
             
        Volume
 $58.7  14.3%$17.9  14.8%
        Price
  70.0  17.1% 14.2  11.6%
        Mix/Other
  (5.8) -1.4% 2.7  2.2%
        Mexico
  11.9  2.9% 2.5  2.1%
        Impairment(2003 charge)
  —  —  1.5  1.2%
            Total Metal
 $134.9  32.9%$38.8  32.0%
    Plastic
  17.8  4.3% 4.9  4.1%
    Total Company
 $152.7  37.2%$43.7  36.1%
              
Nine Months Ended 9/30/04             
    Metal
 $495.4  88.0%$142.4  86.4%
    Plastic
  67.8  12.0% 22.4  13.6%
    Total Company
 $563.2  100.0%$164.8  100.0%

Metal sales for the first nine months of 2004 increased by 37.4% versus last year, primarily driven by increased volume (14.7%), mill price increase (19.4%) and the Mexico operation, which became a wholly owned consolidated entity in January 2004 (3.3%). As with the third quarter comparisons, improving conditions in the manufacturing sector of the U.S. economy and accelerated metal pricing are contributing to the year-over-year sales increase. Plastic segment sales are up 35.6% due to increased demand and planned geographic market expansion into the Southeast in late 2003.
Gross material margin in the metals segment increased 37.5% versus the first nine months of 2003. Material cost increases contributed 13.5% of the year-over-year change. The Company recorded $1.5 million of restructuring related charges to remove non-productive assets (see footnote 10) in the second quarter of 2003. Included in the 2004 results is a charge of $1.7 million from the results of a company-wide physical count of its plate inventory in July. The Mexico operation contributed $2.5 million of margin in the first half of 2004. Plastic margin improvement versus the nine-month period of 2003 is largely volume related.



Operating Expense:
Consolidated operating expenses increased 4.3% or $5.6 million in 2004, versus the same nine-months of 2003. Excluding a $5.9 million impairment charge in 2003, consolidated operating expenses increased $11.5 million, or 9.2%. This incremental increase represents 7.5% of the $152.7 million sales increase versus prior year. Actions taken in 2003 and earlier, to reduce the Company’s operating costs and enhance productivity are the primary drivers of this favorable operating leverage.

Other Income and Expense, and Net Results:
Year-to-date joint venture equity earnings of $3.2 million compare favorably to a loss of $2.9 million in the first nine months of 2003 (including a $2.8 million impairment charge taken in the second quarter of 2003). Kreher Steel is the Company’s sole remaining joint venture in 2004. Its 2004 results reflect similar market dynamics as the Company’s Metal segment.
    Financing costs (interest expense and discount on sale of accounts receivable) decreased $0.8 million to $7.4 million in the third quarter of 2004. Strong cash flow from operations has contributed to lower borrowings and accounts receivable sold under the Company’s Accounts Receivable Securitization facility.

Consolidated year-to-date net income was $13.7 million or $0.87 per share (basic EPS, after preferred dividends of $0.7 million) versus a net loss of $13.5 million or $0.86 per share (after preferred dividends of $0.7 million) in the corresponding period of 2003. The 2003 net loss for the nine month period includes $10.3 million of pre-tax impairment and restructuring related charges. These charges account for $0.40 per share of the reported loss in the first nine months of 2003.

Critical Accounting Policies:
There have been no changes in critical accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.2004.

Liquidity and Capital Resources
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 Facility (see Footnoteits RPF, as described in more detail in footnote 4 within the Consolidated Financial Statements for more details)to our consolidated financial statements included in this report, as its primary external funding source for working capital needs.
Cash flow from operating activities in the first nine monthsquarter of 20042005 was a positive $16.1$4.4 million. This included a $8.0$13.5 million decreaseincrease in accounts receivable sold under the Company’s Accounts Receivable Securitization FacilityRPF due to reduced funding requirements toin support the business. Excluding the impact of receivables sold under the Company’s Accounts Receivable Securitization Facility, cash flow from operations was a positive $24.1 million, versus a positive $4.5 million in the same period last year.increased sales activity.
Working capital, excluding the current portion of long-term debt, of $105.2$118.6 million is up $13.9$11.8 million since the beginning of the year. Trade receivables of $104.1$95.2 million (including an $5.0(excluding $30.0 million reduction inof receivables sold under the Company’s receivable securitization financing facility as of September 30, 2004)RPF) are up $36.9$14.9 million since the start of 2004 (including $13.0 million or receivables sold under the financing facility at the beginning of the year) due to increased sales activity and increased pricing. Daysstrong first quarter sales. However, days sales outstanding (DSO) declined 2.83.6 days to a level of 45.242.2 days reflecting lower past due balances outstanding as a percent of sales. Inventory at net book value of $121.3$139.2 million, including LIFO (last-in, first-out) reserves of $79.6$95.7 million is up $4.0$3.6 million forfrom the year.start of 2005. Days sales in inventory at replacement value (DSI) of 115123 days is down substantiallyup slightly versus the December 31, 20032004 level of 145 days, although there was slight rise quarter to quarter. Trade payables of $102.9 million are up $35.3 million reflecting increased mill pricing on metal purchases.120 days.



Capital expenditures in the first nine monthsquarter of 20042005 were $3.4$1.0 million versus $2.2$1.4 million in the same period last year. Current yearMajor expenditures are consistent with the Company’s historical maintenance capital requirements. We expect total 2004 capital expenditures to be approximately $4.5 million.included equipment and machinery purchases and information system upgrades and improvements. The Company purchased its former partner’s equity interest in a Mexico joint venture for $1.6 million effective January 1, 2004.
At September 30, 2004, $5.0March 31, 2005, $30.0 million of receivables were sold or utilized under the Accounts Receivable Securitization Facility (versus $20.0RPF versus $18.0 million at September 30, 2003 and $13.0 millionMarch 31, 2004. The increased sales under the RPF were a result of an increase in inventory at December 31, 2003).the end of 2004. Available fundscapacity remaining under this facility are $43.1was $28.0 million at the end of the thirdfirst quarter of 2004.2005.
As of September 30, 2004,March 31, 2005, the Company remains in compliance with the covenants of its financial agreements, which require it to maintain certain funded debt-to-capital ratios, working capital-to-debt ratios and a minimum equity value as defined within the agreement. A summary of covenant compliance is shown below.

 
Required
Actual
9/30/04          3/31/05
 
Debt-to-Capital Ratio
 
<0.55
 
0.390.34
 
Working Capital-to-Debt Ratio
 
>1.00
 
1.551.92
 
Minimum Equity Value
 
$105.8111.6 Million
 
$127.7142.2 Million
 

Current business conditions lead management to believe it will be able to generate sufficient cash from operations and planned working capital improvements (principally from reduced inventories), to fund its ongoing capital expenditure programs and meet its debt obligations.

Commitments and Contingencies
At March 31, 2005 the Company had $1.8 million of irrevocable letters of credit outstanding and $0.7 million of cash on deposit to comply with the insurance reserve requirements of its workers’ compensation insurance carrier. This letter of credit is secured with a certificate of deposit, which is included in "Advances to joint ventures and other current assets" on the Company’s consolidated balance sheets.
The Company is the defendant in several lawsuits arising out of the conduct of its business. These lawsuits are incidental and occur in the normal course of the Company’s business affairs. It is the opinion of Company managementthe Company’s in-house counsel that no significant uninsured liability will result from the outcome of the litigation and thus there is nothat would have a material adverse effect on the consolidated financial exposure toposition of the Company.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company is exposed to various ratethe risks of increases in interest rates and metal price risksincreased in the cost of metals and plastics, which are the Company’s primary raw materials, that arise in the normal course of business. The Company finances its operations with fixed and variable rate borrowings and the Accounts Receivable Securitization Facility. Market risk arises from changesRPF. Changes in interest rates affect the Company’s variable interest rates.borrowing costs and the cost of utilizing the RPF. An increase of 1% in interest rates on the variable rate indebtedness and Accounts Receivable Securitization facilitythe RPF would increase the Company’s annual interest expense and discount on sale of accounts receivable by approximately $0.3 million. The Company’s raw material costs are comprised primarily of highly engineered metals and plastics. Market risk arises from changes in the price of steel, other metals and plastics. Although average selling prices generally increase or decrease as material costs increase or decrease, the impact of a change in the purchase price of materials is more immediately reflected in the Company’s cost of goods sold than in isits selling price.



 
Item 4. Controls and Procedures:Procedures
 
(a)  

(a)Evaluation of Disclosure Controls and Procedures
A review and Procedures.
Castle maintains disclosure controls and procedures which are designed to provide reasonable assurance that the information required to be disclosedevaluation was performed by the Company in reports that it files or submits underCompany’s management, including the Securities Exchange Act of 1934 is recorded, processed, summarizedCompany’s Chief Executive Officer (the "CEO") and reported within the time periods specified in SEC rules and forms.
    Based on the evaluation required by Rule 13a-15(b) under the Securities Exchange Act of 1934, the principal executive officer and principal financial officerChief Financial Officer (the "CFO"), of the Company have concluded thateffectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in RulesRule 13a-15(e)), under the Securities Exchange Act of 1934) as of the end of the period covered by this report.
In its annual report on Form 10-K for the report, are effective to ensure that the information required to be disclosed byyear ended December 31, 2004, the Company in reportsreported that it files or submitshad identified certain material weaknesses in its system of internal controls over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Actact of 1934, is recorded, processed, summarized and reported, within the time periods specifiedas amended. Specifically, in Securities and Exchange Commission’s rules and forms.

(b)Changes in Internal Control over Financial Reporting.
Except as disclosed below, there was no change inconducting its evaluation of the Company’s internal control over financial reporting that occurredat December 31, 2004, management found a material weakness in the area of inventory controls.
In the third quarter of 2004 the Company replaced its historical procedures of inventory verification with improved procedures for physical inventory counts. This change in internal control over inventory was reported in the Company’s quarterly report on Form 10-Q for the period ended September 30, 2004. As a result of initiating improved procedures in the second half of 2004, material inventory adjustments were identified and recorded during the last fiscal quarterthird and fourth quarters of 2004.
In addition, at year-end 2004 a weakness involving controls over inventory stored at third-party processors was identified. The post year-end implementation of expanded procedures identified additional inventory adjustments that has materially affected, or is reasonably likely to materially affect,were also recorded.
Lastly, management determined that significant deficiencies in the financial close and reporting process existed as of December 31, 2004. As a result of applying more rigorous post year-end procedures, material errors in the Company’s financial statements were identified and appropriate correcting adjustments were recorded. In management’s opinion, those significant deficiencies, in the aggregate, also constituted a material weakness in the Company’s internal controls over financial reporting as of December 31, 2004.
As part of its evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report, management has (i) identified no material weaknesses other than those described above and (ii) evaluated whether the material weaknesses described above continue to exist. Although the Company believes that the changes in internal controls discussed below address the reported material weaknesses, management cannot conclude that these weaknesses are eliminated until the Company performs further testing of internal controls over financial reporting in subsequent periods. Therefore, the CEO and CFO conclude that the Company’s current disclosure controls and procedures, as designed and implemented, were not effective in ensuring that the information the Company is required to disclose in this quarterly report is recorded, processed, summarized and reported in the time period required by the rules of the Securities and Exchange Commission.

(b)  
Changes in Internal Controls
In response to deficiencies in internal control over financial reporting.reporting as identified above, management implemented the following changes in the Company’s internal controls over financial reporting during the period ended March 31, 2005.
    DuringThe Company has adopted procedures requiring certified reporting of Company inventory on-hand by each of the 3rd QuarterCompany’s outside processors not less frequently than on a quarterly basis. Upon receipt of the certified report the Company will perform a reconciliation of the inventory reported by the outside processors to its own internal records. Additionally, each outside processor will be required to provide a certified report of Company inventory on hand to each of the Company’s
facilities having inventory at the outside processor in concert with scheduled physical inventory counts to be performed at the Company’s own facilities.
Additionally, management has modified its control overanalysis of certain financial statement accounts during the valuation of plate inventory by conducting a company-wide physical inventory count and reconciliation of all plate products. As a result of the physical count and reconciliation the Company recorded a $1.7 million adjustment to reduce its inventory balance in the 3rd Quarter.
Furthermore,quarter. Specifically, the Company has implemented a formal changeadopted the analysis and review methodology used in the designaudit of its internal controls extending toyear-end 2004 accrual for insurance reserves and allowance for doubtful accounts as part of its entire inventory which includes:quarterly procedures beginning with the quarter ended March 31, 2005.
(1) The institutionLastly, in 2005 the Company has expanded the scope of new procedures in recordingservices to be performed by its third-party professional tax services firm to include a more thorough analysis and reconciliation of all product inventories.
(2) The requirement of a minimum of one (1) physical inventory count per calendar year in all of their major facilities.
    The institution of these new controls should ensure the accuracy and timely count and reportingreview of its inventory.



Part II. OTHER INFORMATIONtax provision and related tax filings.


Item 1.Legal Proceedings
        There are no material legal proceedings other than ordinary routine litigation incidental to the business of the Registrant.

Part II. OTHER INFORMATION


Item 1.Legal Proceedings
 There are no material legal proceedings other than ordinary routine litigation incidental to the business of the Registrant except for the litigation.


Item 6.Exhibits and Reports on Form 8-K

(a) Exhibit 31.1 Certification Pursuant to Section 302 by CEO
Exhibit 31.2 Certification Pursuant to Section 302 by CFO
Exhibit 32.1 Certification Pursuant to Section 906 by CEO
Exhibit 32.2 Certification Pursuant to Section 906 by CFO

(b) The Company filed a Form 8-K, dated August 3, 2004, on August 3, 2004 under Item 12 the Company dissemination of the Company’s press release of second quarter results.Exhibit 31.2 Certification Pursuant to Section 302 by CFO
Exhibit 32.1 Certification Pursuant to Section 906 by CEO & CFO

The Company filed a Form 8K, dated September 15, 2004 on September 15, 2004 reporting under Item 7.01 the Company’s dissemination of a press release relating to the outlook for the second half of year sales.

The Company filed a Form 8K, dated September 24, 2004 on September 24, 2004 reporting under Item 5.02 the retirement of the CFO and the election of the new CFO of the Company.

SIGNATURES


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.


A. M. Castle & CoCo.
(Registrant)



Date:
November 5, 2004
By:
/s/ Lawrence A. Boik
(Registrant)
   
 Lawrence A. Boik
   
Date:May 5, 2005Vice President and Chief Financial OfficerBy:/s/ Henry J. Veith
  
Henry J. Veith
Controller
  (Mr. BoikVeith is the Chief Accounting Officer and has been authorized to sign on behalf of the Registrant.)




Exhibit 31.1


CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, G. Thomas McKane, certify that:


1.  I have reviewed this quarterly report on Form 10-Q of A. M. Castle & Co.;
2.  Based on my knowledge, this 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 report:report;:
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrantRegistrant as of, and for, the periods presented in this report;
4.  The registrant'sRegistrant's other certifying officerofficer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as[as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] and internal control over financial reporting [as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)] for the registrantRegistrant and have:
a)  Designed such disclosure controls and procedures, or causecaused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)  Evaluated the effectiveness of the registrant'sRegistrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)d)  Disclosed in this report any changes in the registrant'sRegistrant's internal control over financial reporting that occurred during the registrant'sRegistrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant'sRegistrant's internal control over financial reporting; and
5.  The registrant'sRegistrant's other certifying officerofficer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant'sRegistrant's auditors and the audit committee of the registrant'sRegistrant's board of directors (or persons performing the equivalent functions):
a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant'sRegistrant's ability to record, process, summarize and report financial information; and
b)  Any fraud, whether or not material, that involves management or other employees who have a sisignificantsignificant role in the registrant'sRegistrant's internal control over financial reporting.


Date:
November 5, 2004
 
By:
Date:
May 5, 2005
By:/s/ G. Thomas McKane
  G. Thomas McKane
  PresidentChairman and Chief Executive Officer



Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Lawrence A. Boik, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of A. M. Castle & Co.;
2.  Based on my knowledge, this 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 report:report;
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrantRegistrant as of, and for, the periods presented in this report;
4.  The registrant'sRegistrant's other certifying officerofficer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as[as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] and internal control over financial reporting [as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)] for the registrantRegistrant and have:
a)  Designed such disclosure controls and procedures, or causecaused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)  Evaluated the effectiveness of the registrant'sRegistrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)d)  Disclosed in this report any changes in the registrant'sRegistrant's internal control over financial reporting that occurred during the registrant'sRegistrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant'sRegistrant's internal control over financial reporting; and
5.  The registrant'sRegistrant's other certifying officerofficer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant'sRegistrant's auditors and the audit committee of the registrant'sRegistrant's board of directors (or persons performing the equivalent functions):
a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant'sRegistrant's ability to record, process, summarize and report financial information; and
b)  Any fraud, whether or not material, that involves management or other employees who have a sisignificantsignificant role in the registrant'sRegistrant's internal control over financial reporting.

Date:
November 5, 2004
 
By:
Date:
May 5, 2005
By:/s/ Lawrence A. Boik
  Lawrence A. Boik
  Vice President and Chief Financial Officer




Exhibit 32.1



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of A. M. Castle & Co. (the "Company") on Form 10-Q for the period endedMarch 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, G. Thomas McKane, President and Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



By:
/s/ G. Thomas McKane
G. Thomas McKane
President and Chief Executive Officer
November 5, 2004



Exhibit 32.232.1



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of A. M. Castle & Co. (the "Company") on Form 10-Q for the period ended March 31, 20042005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I,G. Thomas McKane, President and Chief Executive Officer (Principal Executive Officer) and Lawrence A. Boik, Vice President and Chief Financial Officer (Principal Financial Officer) of the Company, respectively, do each hereby certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:that to the best of his knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.Company and its subsidiaries.


  
By:
/s/ Lawrence A. Boik
G. Thomas McKane
  G. Thomas McKane
Chairman and Chief Executive Officer
(Principal Executive Officer)
May 5, 2005
/s/ Lawrence A. Boik
  Lawrence A. Boik
  Vice President and Chief Financial Officer
  (Principal Financial Officer)
  NovemberMay 5, 20042005