Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ýQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For Quarterly Period Ended SeptemberJune 30, 20162017
or
¨Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to            
Commission File Number: 1-5415
 
A. M. Castle & Co.
(Exact name of registrant as specified in its charter) 
 
 
Maryland36-0879160
(State or other jurisdiction of incorporation of organization)(I.R.S. Employer Identification No.)
  
1420 Kensington Road, Suite 220, Oak Brook, Illinois60523
(Address of principal executive offices)(Zip Code)
Registrant’s telephone, including area code (847) 455-7111

(Former name, former address and former fiscal year, if changed since last report) None
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes  ý No  ¨  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    
Yes  ý No  ¨  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨  Accelerated filerý
¨

Non-accelerated filer¨(Do not check if a smaller reporting company) Smaller reporting companyý
Emerging growth company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes  ¨ No  ý  
The number of shares outstanding of the registrant’s common stock as of NovemberAugust 4, 20162017 was 32,549,82332,486,039 shares.

A. M. Castle & Co.
Table of Contents
 
  Page
Part I. Financial Information
 
Item 1.
Financial Statements (unaudited):
 
 
Condensed Consolidated Balance Sheets
3
 
Condensed Consolidated Statements of Operations and Comprehensive Loss
4
 
Condensed Consolidated Statements of Cash Flows
5
 
Notes to Condensed Consolidated Financial Statements
7
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
2326
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
3335
Item 4.
Controls and Procedures
3335
  
Part II. Other Information
 
Item 1A.
Risk Factors1.
34Legal Proceedings
36
Item 1A.
Risk Factors
36
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3437
Item 3.
Defaults Upon Senior Securities
37
Item 6.
Exhibits
3437
  
SignaturesSignature
3538
  
Exhibit Index
3639


Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Amounts in thousands, except par value and per share data
A.M. Castle & Co.
Condensed Consolidated Balance Sheets
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Balance Sheets
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Balance Sheets
As ofAs of
September 30,
2016		 December 31,
2015		June 30,
2017		 December 31,
2016
ASSETS      
Current assets:      
Cash and cash equivalents$10,005
 $11,100
$11,220
 $35,624
Accounts receivable, less allowances of $2,141 and $2,380, respectively
76,899
 73,191
Accounts receivable, less allowances of $1,766 and $1,945, respectively
83,592
 64,385
Inventories179,396
 216,090
149,457
 146,603
Prepaid expenses and other current assets11,609
 10,424
16,735
 10,141
Income tax receivable1,583
 346
154
 433
Current assets of discontinued operations—
 37,140
Total current assets279,492
 348,291
261,158
 257,186
Investment in joint venture—
 35,690
Intangible assets, net5,637
 10,250
1,041
 4,101
Prepaid pension cost10,372
 8,422
10,293
 8,501
Deferred income taxes416
 378
491
 381
Other noncurrent assets6,624
 6,109
8,643
 9,449
Property, plant and equipment:      
Land2,071
 2,519
2,072
 2,070
Buildings37,402
 39,778
37,430
 37,341
Machinery and equipment127,690
 153,955
129,734
 125,836
Property, plant and equipment, at cost167,163
 196,252
169,236
 165,247
Accumulated depreciation(115,279) (131,691)(121,257) (115,537)
Property, plant and equipment, net51,884
 64,561
47,979
 49,710
Noncurrent assets of discontinued operations—
 19,805
Total assets$354,425
 $493,506
$329,605
 $329,328
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)   
LIABILITIES AND STOCKHOLDERS’ DEFICIT   
Current liabilities:      
Accounts payable$51,856
 $45,606
$43,992
 $33,083
Accrued and other current liabilities37,401
 28,078
15,593
 19,854
Income tax payable1,512
 33
365
 209
Current portion of long-term debt142
 7,012
105,861
 137
Current liabilities of discontinued operations—
 11,158
Total current liabilities90,911
 91,887
165,811
 53,283
Long-term debt, less current portion235,454
 310,614
—
 286,459
Deferred income taxes—
 4,169
Build-to-suit liability13,229
 13,237
12,749
 12,305
Other noncurrent liabilities9,044
 7,935
5,353
 5,978
Pension and postretirement benefit obligations18,513
 18,676
6,243
 6,430
Liabilities subject to compromise211,363
 —
Commitments and contingencies (Note 14)
 

 
Stockholders’ equity (deficit):   
Preferred stock, $0.01 par value—9,988 shares authorized (including 400 Series B Junior Preferred, $0.00 par value); no shares issued and outstanding at September 30, 2016 and December 31, 2015—
 —
Common stock, $0.01 par value—60,000 shares authorized; 32,768 shares issued and 32,639 outstanding at September 30, 2016 and 23,888 shares issued and 23,794 outstanding at December 31, 2015327
 238
Stockholders’ deficit:   
Preferred stock, $0.01 par value—9,988 shares authorized (including 400 Series B Junior Preferred, $0.00 par value); no shares issued and outstanding at June 30, 2017 and December 31, 2016—
 —
Common stock, $0.01 par value—60,000 shares authorized; 32,768 shares issued and 32,486 outstanding at June 30, 2017 and 32,768 shares issued and 32,566 outstanding at December 31, 2016327
 327
Additional paid-in capital244,344
 226,844
245,357
 244,825
Accumulated deficit(223,435) (145,309)(289,324) (253,291)
Accumulated other comprehensive loss(32,950) (33,821)(27,196) (25,939)
Treasury stock, at cost—129 shares at September 30, 2016 and 94 shares at December 31, 2015(1,012) (964)
Total stockholders’ equity (deficit)(12,726) 46,988
Total liabilities and stockholders’ equity (deficit)$354,425
 $493,506
Treasury stock, at cost—282 shares at June 30, 2017 and 202 shares at December 31, 2016(1,078) (1,049)
Total stockholders’ deficit(71,914) (35,127)
Total liabilities and stockholders’ deficit$329,605
 $329,328
The accompanying notes are an integral part of these financial statements.

A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive Loss
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Statements of Operations
and Comprehensive Loss
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Statements of Operations
and Comprehensive Loss
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Net sales$124,893
 $150,571
 $419,433
 $505,439
$136,482
 $130,692
 $272,408
 $294,540
Costs and expenses:              
Cost of materials (exclusive of depreciation and amortization)92,406
 115,300
 323,808
 411,834
102,052
 97,644
 203,089
 231,402
Warehouse, processing and delivery expense19,561
 25,893
 63,772
 76,826
19,318
 20,808
 38,037
 44,211
Sales, general and administrative expense16,820
 18,023
 51,486
 60,338
14,605
 17,229
 29,091
 34,666
Restructuring expense912
 1,204
 14,674
 17,653
40
 2,044
 168
 13,762
Depreciation and amortization expense3,845
 5,666
 12,498
 17,447
3,895
 4,260
 7,759
 8,653
Total costs and expenses133,544
 166,086
 466,238
 584,098
139,910
 141,985
 278,144
 332,694
Operating loss(8,651) (15,515) (46,805) (78,659)(3,428) (11,293) (5,736) (38,154)
Interest expense, net8,743
 10,156
 28,711
 30,345
10,064
 9,599
 20,800
 19,968
Unrealized gain on embedded debt conversion option(6,285) —
 (7,569) —
Debt restructuring loss, net—
 —
 6,562
 —
Other expense, net6,250
 2,270
 4,587
 4,532
Financial restructuring expense5,723
 —
 6,600
 —
Unrealized (gain) loss on embedded debt conversion option—
 (1,284) 146
 (1,284)
Debt restructuring (gain) loss, net—
 (513) —
 6,562
Other (income) expense, net(2,247) (2,808) (2,759) (1,663)
Reorganization items, net5,502
 —
 5,502
 —
Loss from continuing operations before income taxes and equity in losses of joint venture(17,359) (27,941) (79,096) (113,536)(22,470) (16,287) (36,025) (61,737)
Income tax expense (benefit)903
 (629) 1,099
 (22,141)
Income tax expense71
 531
 8
 196
Loss from continuing operations before equity in losses of joint venture(18,262) (27,312) (80,195) (91,395)(22,541) (16,818) (36,033) (61,933)
Equity in losses of joint venture(36) (1,460) (4,177) (134)—
 (4,452) —
 (4,141)
Loss from continuing operations(18,298) (28,772) (84,372) (91,529)(22,541) (21,270) (36,033) (66,074)
Income (loss) from discontinued operations, net of income taxes(1,688) 955
 6,246
 2,333
Income from discontinued operations, net of income taxes—
 —
 —
 7,934
Net loss$(19,986) $(27,817) $(78,126) $(89,196)$(22,541) $(21,270) $(36,033) $(58,140)
              
Basic earnings (loss) per common share:       
Basic and diluted earnings (loss) per common share:       
Continuing operations$(0.57) $(1.22) $(3.02) $(3.89)$(0.70) $(0.77) $(1.12) $(2.57)
Discontinued operations(0.05) 0.04
 0.22
 0.10
—
 —
 —
 0.31
Net basic loss per common share$(0.62) $(1.18) $(2.80) $(3.79)
       
Diluted earnings (loss) per common share:       
Continuing operations$(0.57) $(1.22) $(3.02) $(3.89)
Discontinued operations(0.05) 0.04
 0.22
 0.10
Net diluted loss per common share$(0.62) $(1.18) $(2.80) $(3.79)
Net basic and diluted loss per common share$(0.70) $(0.77) $(1.12) $(2.26)
              
Comprehensive loss:              
Net loss$(19,986) $(27,817) $(78,126) $(89,196)$(22,541) $(21,270) $(36,033) $(58,140)
Change in unrecognized pension and postretirement benefit costs, net of tax456
 670
 1,368
 3,529
214
 456
 428
 912
Foreign currency translation adjustments2,967
 (2,941) (497) (7,633)
Foreign currency translation adjustments, net of tax(685) (4,075) (1,685) (3,464)
Comprehensive loss$(16,563) $(30,088) $(77,255) $(93,300)$(23,012) $(24,889) $(37,290) $(60,692)
The accompanying notes are an integral part of these financial statements.

A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Statements of Cash Flows
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Statements of Cash Flows
Nine Months EndedSix Months Ended
September 30,June 30,
2016 20152017 2016
Operating activities:      
Net loss$(78,126) $(89,196)$(36,033) $(58,140)
Less: Income from discontinued operations, net of income taxes6,246
 2,333
—
 7,934
Loss from continuing operations(84,372) (91,529)(36,033) (66,074)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities of continuing operations:      
Depreciation and amortization12,498
 17,447
7,759
 8,653
Amortization of deferred gain(92)
—
(38) (79)
Amortization of deferred financing costs and debt discount4,258
 6,241
3,056
 3,633
Debt restructuring loss6,562
 —
Debt restructuring loss, net—
 6,562
Non-cash reorganization items, net4,850
 —
Loss from lease termination4,452
 —
—
 4,452
Unrealized gain on embedded debt conversion option(7,569) —
Loss (gain) on sale of property, plant and equipment1,720
 (5,741)
Unrealized loss (gain) on embedded debt conversion option146
 (1,284)
Loss on sale of property, plant and equipment7
 1,650
Unrealized gain on commodity hedges(813) (313)—
 (598)
Unrealized foreign currency transaction loss2,484
 4,142
Unrealized foreign currency transaction gain(3,153) (88)
Equity in losses of joint venture4,141
 134
—
 4,141
Dividends from joint venture—
 315
Share-based compensation expense916
 424
442
 566
Pension curtailment—
 3,080
Deferred income taxes113
 (23,310)(1,325) —
Other, net679
 (12)446
 —
Changes in assets and liabilities:      
Accounts receivable(5,128) 18,326
(16,729) (6,118)
Inventories34,780
 43,838
487
 26,729
Prepaid expenses and other current assets(301) (8,258)(6,262) (1,769)
Other noncurrent assets(302) (2,789)1,533
 (3,026)
Prepaid pension costs(406) 1,272
(1,792) (264)
Accounts payable6,026
 4,059
5,976
 1,937
Income tax payable and receivable198
 1,188
433
 51
Accrued and other current liabilities8,604
 18,802
7,200
 498
Pension and postretirement benefit obligations and other noncurrent liabilities865
 (400)(353) 1,201
Net cash used in operating activities of continuing operations(10,687) (13,084)(33,350) (19,227)
Net cash (used in) from operating activities of discontinued operations(6,907) 6,673
Net cash used in operating activities of discontinued operations—
 (5,219)
Net cash used in operating activities(17,594) (6,411)(33,350) (24,446)
Investing activities:      
Proceeds from sale of investment in joint venture31,550
 —
Capital expenditures(2,431) (4,526)(2,264) (1,912)
Proceeds from sale of property, plant and equipment2,829
 7,742
47
 2,836
Net cash from investing activities of continuing operations31,948
 3,216
Net cash from (used in) investing activities of discontinued operations53,570
 (867)
Net cash from investing activities85,518
 2,349
Change in cash collateralization of letters of credit246
 —
Net cash (used in) from investing activities of continuing operations(1,971) 924
Net cash from investing activities of discontinued operations—
 53,570
Net cash (used in) from investing activities(1,971) 54,494
Financing activities:      
Proceeds from long-term debt581,052
 707,200
12,500
 426,861
Repayments of long-term debt(640,415) (698,696)(126) (447,185)
Payment of debt restructuring costs(8,677) —
Payments of debt restructuring costs—
 (8,677)
Payments of debt issue costs(1,831) —
Payments of build-to-suit liability(687) (500)—
 (237)
Net cash (used in) from financing activities(68,727) 8,004
Net cash from (used in) financing activities10,543
 (29,238)
Effect of exchange rate changes on cash and cash equivalents(292) (424)374
 (55)

A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Statements of Cash Flows
A.M. Castle & Co. (Debtor-In-Possession)
Condensed Consolidated Statements of Cash Flows
Nine Months EndedSix Months Ended
September 30,June 30,
2016 20152017 2016
Net change in cash and cash equivalents(1,095) 3,518
(24,404) 755
Cash and cash equivalents - beginning of year11,100
 8,454
Cash and cash equivalents - beginning of period35,624
 11,100
Cash and cash equivalents - end of period$10,005
 $11,972
$11,220
 $11,855
The accompanying notes are an integral part of these financial statements.

A. M. Castle & Co. (Debtor-In-Possession)
Notes to Condensed Consolidated Financial Statements
Unaudited - Amounts in thousands except per share data and percentages
(1) Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by A. M. Castle & Co. and subsidiaries (the “Company”), without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), and accounting principles generally accepted in the United States of America (“GAAP”). The Condensed Consolidated Balance Sheet at December 31, 20152016 is derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, the unaudited statements included herein contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of financial results for the interim period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (as amended) and the Current Report on Form 8-K filed May 26, 2016, which revised the Company financial statement presentation and disclosures to reflect discontinued operations related to the sale of substantially all the assets of the Company's wholly-owned subsidiary, Total Plastics, Inc. ("TPI").2016. The 20162017 interim results reported herein may not necessarily be indicative of the results of the Company’s operations for the full year.
In March 2016,Consistent with its previously disclosed plans to restructure its financing obligations to reduce its long-term debt and cash interest obligations, on June 18, 2017, A. M. Castle & Co. and four of its subsidiaries (collectively, the Company completed"Debtors") filed voluntary petitions for relief under chapter 11 of the saleUnited States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of substantially all the assets of TPI. TPI is reflectedDelaware in Wilmington, Delaware (the "Bankruptcy Court"). The four subsidiaries in the accompanyingchapter 11 cases are Keystone Tube Company, LLC, HY-Alloy Steels Company, Keystone Service, Inc. and Total Plastics, Inc. Also on June 18, 2017, the Debtors filed the Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court and on July 25, 2017, the Debtors filed the Debtors' Amended Prepackaged Joint Chapter 11 Plan of Reorganization (the "Plan") with the Bankruptcy Court.
The condensed consolidated financial statements included herein have been prepared on a going-concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The Plan was confirmed by the Bankruptcy Court on August 2, 2017, and it is expected to become effective and the Company plans to emerge from bankruptcy on or around August 31, 2017. Under Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-15, "Disclosure of Uncertainties about an Entity’s Ability to Continue as a discontinued operation,Going Concern", because the Company has not yet emerged from its chapter 11 bankruptcy proceedings and allcurrently remains under the data in thissupervision of the Bankruptcy Court as of the date of the filing has been recastof the Quarterly Report on Form 10-Q, the Company is required to present TPIdisclose that there is substantial doubt as to the Company's ability to continue as a discontinued operation for all periods presented.going concern. However, the Company has continued operations in the normal course during the pendency of the chapter 11 proceedings, and expects to continue to do so. Upon the Plan becoming effective, which the Company believes is probable of occurring and will mitigate the liquidity risk raised by the chapter 11 proceedings, the Company will enter into a new asset-based revolving credit facility and issue new senior secured convertible notes, and the accelerated debt obligations of the Company will be satisfied pursuant to the terms of the Plan. As a result, management believes that the substantial doubt as to the Company’s ability to continue as a going concern will be alleviated upon emergence from bankruptcy. Refer to Note 2 - Bankruptcy Related Disclosures and Note 16 - Subsequent Events.
(2) Bankruptcy Related Disclosures
Commitment Agreement and Restructuring Support Agreement
On June 16, 2017, the Debtors entered into a Commitment Agreement with certain of their creditors (the "Commitment Parties"). The Commitment Parties are the holders (or the investment advisors or managers for the holders) of term loans (the "Credit Facilities") made to the Company under a Credit and Guaranty Agreement dated December 8, 2016, as amended, by and among the Company, its subsidiaries, the lenders party thereto and Cantor Fitzgerald Securities, as Administrative and Collateral Agent (the "Credit Facilities Agreement").
The Commitment Agreement was entered into pursuant to a Restructuring Support Agreement dated April 6, 2017, as amended, by and among the Debtors and certain of their creditors, including the Commitment Parties (the "RSA"). The RSA provides for a consensual restructuring of the debt and equity of the Company, which the Company seeks to effect by means of the Plan.
Under the Commitment Agreement, the Commitment Parties have agreed, subject to the terms and conditions set forth in the Commitment Agreement, to purchase new notes to be issued by the reorganized Company under the Plan

(the “New Money Notes”) for an aggregate purchase price of up to $40,000 (the "New Money Amount"), subject to decrease based on the Company’s Opening Liquidity (as defined in the Commitment Agreement) as of the effective date of the Plan (the "Effective Date"). The New Money Notes will be on the same terms as the new notes issued by the Company under the Plan to holders of certain other classes of claims.
The New Money Notes will be issued at a price of $0.8 in cash for each $1 in principal amount of New Money Notes. The Commitment Agreement provides for the payment by the Company, in consideration for the Commitment Parties’ agreements in the Commitment Agreement, of a put option payment equal to $2,000, which shall be payable in cash upon the earlier of the Effective Date or the termination of the Commitment Agreement in accordance with its terms. In addition, the Company has agreed to reimburse the reasonable fees and expenses incurred by the legal and financial advisors to the Commitment Parties.
Under the Commitment Agreement, the Debtors are required to meet the same milestones as set forth in the RSA, including that they obtain orders of the Bankruptcy Court confirming the Plan on or before the sixtieth day after filing voluntary chapter 11 petitions with the Bankruptcy Court. Further, the Commitment Agreement may be terminated if the Effective Date has not occurred by August 31, 2017, if the RSA is terminated, and upon other specified events.
Chapter 11 Bankruptcy Filing
On June 18, 2017 (the "Petition Date"), pursuant to the terms of the RSA, the Debtors commenced voluntary chapter 11 proceedings under the Bankruptcy Code with the Bankruptcy Court. The chapter 11 cases have been consolidated for procedural purposes only and are being administered jointly under the caption In re Keystone Tube Company, LLC., et al. (Case No. 17-11330).
The filing of the bankruptcy petitions constituted a default or event of default that accelerated the Company’s obligations under (i) the Credit Facilities Agreement, (ii) the Indenture dated February 8, 2016 (the "Senior Notes Indenture") and the 12.75% Senior Secured Notes due 2018 issued pursuant thereto (the "New Secured Notes"), and (iii) the Indenture dated May 19, 2016 (the "Convertible Notes Indenture") and the 5.25% Convertible Senior Secured Notes due 2019 issued pursuant thereto (the "New Convertible Notes"). The Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture provide that, as a result of the filing of the bankruptcy petitions, all outstanding indebtedness due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are automatically stayed as a result of the bankruptcy petitions, and the creditors’ rights of enforcement in respect of the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are subject to the applicable provisions of the RSA and the Bankruptcy Code.
No trustee has been appointed in the chapter 11 cases, and the Debtors continue to operate their business as “debtors in possession” subject to the supervision and orders of the Bankruptcy Court in accordance with the Bankruptcy Code. It is expected that the Company will continue its operations without interruption during the pendency of the chapter 11 cases. To maintain and continue ordinary course operations without interruption, the Company received approval from the Bankruptcy Court of a variety of “first day” motions seeking certain relief and authorizing the Company to maintain its operations and pay trade claims in the ordinary course.
Proposed Plan of Reorganization and Confirmation of the Plan
Pursuant to the terms of the RSA, on the Petition Date, the Debtors filed the Plan with the Bankruptcy Court. The Plan implements a new senior secured exit financing facility and the issuance of the New Money Notes to refinance or exchange the existing first lien Credit Facilities and to provide working capital for the reorganized Company. The terms of the Plan provide that the new senior secured exit financing facility shall be in the form of an asset-based revolving credit facility (the "New ABL Facility") entered into on or before the Effective Date. On June 2, 2017, the Company entered into a commitment letter with PNC Bank, National Association (“PNC”), which contemplates a $125,000 New ABL Facility to be entered into upon the Effective Date. If the Debtors are unable to enter into the New ABL Facility on or before the Effective Date, then, on the Effective Date, the Debtors shall enter into a new first lien senior secured term loan credit facility (the "New Roll-Up Facility").
The Plan also deleverages the Company's balance sheet by exchanging $177,019 aggregate principal amount of New Secured Notes and $22,323 aggregate principal amount of New Convertible Notes for an 80% share of new common stock in the reorganized Company, subject to dilution, and certain convertible new second lien secured notes in an aggregate principal amount of $115,000 (the "Exchange Notes"), together with certain cash distributions. All of the existing equity interests in the Company will be extinguished, but holders of such equity interests will have the opportunity to receive a 20% share of new common stock in the reorganized Company, subject to dilution, as part of a settlement encompassed in the Plan.

Allowed general unsecured claims and claims that are unimpaired under the Plan will be paid in full in cash.
On August 2, 2017, the Bankruptcy Court entered an order (the "Confirmation Order") approving and confirming the Plan. The Plan is expected to become effective on or around August 31, 2017. Refer to Note 16 - Subsequent Events.
Financial Reporting Under Reorganization
The condensed consolidated financial statements included herein have been prepared to reflect the application of FASB Accounting Standards Codification ("ASC") No. 852, "Reorganizations". ASC No. 852 requires that the financial statements, for periods subsequent to the chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. In addition, liabilities subject to compromise in the chapter 11 cases are distinguished from liabilities of non-filing entities, liabilities not expected to be compromised, and postpetition liabilities in the Company’s Condensed Consolidated Balance Sheet at June 30, 2017. Liabilities subject to compromise are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less.
Liabilities Subject to Compromise
The Company’s Condensed Consolidated Balance Sheet includes amounts classified as liabilities subject to compromise ("LSTC"), which represent the Company's estimate of prepetition liabilities and other expected allowed claims to be addressed in the chapter 11 cases and may be subject to future adjustment as the chapter 11 cases proceed. The following table presents LSTC as reported in the Company’s Condensed Consolidated Balance Sheet at June 30, 2017:
 June 30,
2017
Debt: 
12.75% Senior Secured Notes due December 15, 2018$177,019
5.25% Convertible Notes due December 30, 201922,323
Total debt199,342
Accrued interest payable12,021
Liabilities subject to compromise$211,363
Effective on the Petition Date, the Company discontinued recording interest expense on outstanding prepetition debt classified as LSTC. For both the three months and six months ended June 30, 2017, interest expense reported in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss does not include $791 of contractual interest on prepetition debt classified as LSTC.
Reorganization Items, Net
Expenses and income directly associated with the chapter 11 proceedings are reported separately in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Reorganization items, net also include adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments are determined. The following table summarizes the components of reorganization items, net for the three months and six months ended June 30, 2017:
 Three Months and Six Months Ended June 30, 2017
Legal and other professional fees$652
Write-off of unamortized debt issuance costs, discounts and embedded conversion option4,850
Reorganization items, net$5,502

(3) New Accounting Standards
Standards Updates Issued Not Yet EffectiveAdopted
In August 2016,Effective January 1, 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," to reduce the existing diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under Topic 230. For public companies, the amendments in ASU 2016-15 are effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU No. 2016-15 to have a material impact on its consolidated financial statements.
In March 2016, theadopted FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting," which simplifies several aspects of the accounting for employee share-based payment transactions. Under ASU No. 2016-09, a Companycompany recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, eliminating the notion of the additional paid-in capital pool and significantly reducing the complexity and cost of accounting for excess tax benefits and tax deficiencies. For interim reporting purposes, excess tax benefits and tax deficiencies are considered discrete items in the reporting period in which they occur and are not included in the estimate of an entity’s annual effective tax rate. ASU No. 2016-09 further eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable. The adoption of ASU No. 2016-09 did not have a material impact on the Company's consolidated financial statements.
Standards Updates Issued Not Yet Effective
In March 2017, the FASB issued ASU No. 2017-07, "Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." Under the new guidance, employers must present the service cost component of the net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. The other components of net periodic benefit cost must be reported separately from the line item(s) that includes the service cost component and outside of any subtotal of operating income, if one is presented. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. The guidance on the income statement presentation of the components of net periodic benefit cost must be applied retrospectively, while the guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component must be applied prospectively. For public companies,business entities, the ASUguidance is effective for annual reporting periodsfiscal years beginning after December 15, 2016, including2017, and interim periods within those annual reporting periods.years. Early adoption will beis permitted in any interim oras of the beginning of an annual period for which interim financial statements have not yet been issued or have not been made available for issuance.issued. The Company is currently evaluating the impact the adoption of ASU No. 2016-092017-07 will have on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," to reduce the existing diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. The amendments in ASU No. 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under Topic 230. The provisions of ASU No. 2016-15 must be applied retrospectively to all periods presented with limited exceptions. For public companies, the amendments in ASU No. 2016-15 are effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU No. 2016-15 to have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. ASU No. 2016-02 also requires improvedadditional disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update isprovisions of ASU No. 2016-02 are to be applied using a modified retrospective approach, and are effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU No. 2016-02 will have on its consolidated financial statements.
In August 2014,statements, but the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity’s Ability to ContinueCompany expects that most existing operating lease commitments will be recognized as operating lease obligations and right-of-use assets as a Going Concern," providing additional guidance surrounding the disclosureresult of going concern uncertainties in the financial statements and implementing requirements for management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The

ASU is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. The Company will begin performing the periodic assessments required by the ASU on its effective date and is currently assessing whether the adoption of the ASU will result in additional disclosures.adoption.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," related to revenue recognition. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in prior accounting guidance. The ASU provides alternative methodspermits the use of initialeither the retrospective or modified retrospective (cumulative-effect) transition method of adoption. ASU No. 2015-14, "Deferral of the Effective Date," was issued in August 2015 to defer the effective date of ASU No. 2014-09 for public companies until annual reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. In 2016, the FASB issued ASU No. 2016-08, “Revenue from

Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients," and ASU No. 2016-20, "Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers," which provide supplemental adoption guidance and clarification to ASCASU No. 2014-09. ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-122016-20 must be adopted concurrently with the adoption of ASU No. 2014-09. The Company is currently reviewingcontinues to evaluate the guidance and assessing the potential impact of these ASU's on its consolidated financial statements.statements and disclosures, and plans to adopt these ASU's in the first quarter of 2018 using the modified retrospective transition method.
(3)(4) Discontinued Operation
On March 15, 2016, the Company completed the sale of TPIsubstantially all the assets of its wholly-owned subsidiary, Total Plastics, Inc. ("TPI") for $55,070 in cash, subject to customary working capital adjustments. Under the terms of the sale, $1,500 of the purchase price was placed into escrow pending adjustment based upon the final calculation of the working capital at closing. The sale resulted in preliminary pre-tax and after-tax gains of $4,217 and $2,994, respectively, for the six months ended June 30, 2016. The Company and the buyer agreed to the final working capital adjustment during the third quarter of 2016, which resulted in the full escrowed amount being returned to the buyer and the Company reducing its pre-tax gain on thebuyer. The sale of TPI by $2,214. The saleultimately resulted in pre-tax and after-tax gains of $2,003 and $1,306, respectively, for the nine monthsyear ended September 30,December 31, 2016.
Prior to the sale of TPI, the Company had two reportable segments consisting of its Plastics segment and its Metals segment. Subsequent to the sale of TPI, which represented the Company's Plastics segment in its entirety, the Company has only one reportable segment.
Summarized results of the discontinued operation for the six months ended June 30, 2016 were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015Six Months Ended June 30, 2016
Net sales$—
 $34,105
 $29,680
 $101,168
$29,680
Cost of materials—
 23,970
 21,027
 71,251
21,027
Operating costs and expenses—
 8,201
 7,288
 25,005
7,288
Interest expense(a)
—
 350
 333
 1,081
333
Income from discontinued operations before income taxes$—
 $1,584
 $1,032
 $3,831
$1,032
Income tax expense (benefit) (b)
—
 629
 (3,908) 1,498
Gain (loss) on sale of discontinued operations, net of income taxes(1,688) —
 1,306
 —
Income (loss) from discontinued operations, net of income taxes$(1,688) $955
 $6,246
 $2,333
Income tax expense benefit (b)
(3,908)
Gain on sale of discontinued operations, net of income taxes2,994
Income from discontinued operations, net of income taxes$7,934
(a)Interest expense was allocated to the discontinued operation based on the debt that was required to be paid as a result of the sale of TPI.
(b) Income tax benefit for the ninesix months ended SeptemberJune 30, 2016 includes $4,207 reversal of valuation allowance resulting from the sale of TPI.


Major classes of assets and liabilities of the discontinued operation at December 31, 2015 were as follows:
 December 31,
2015
Current assets of discontinued operations: 
Accounts receivable$16,688
Inventories19,353
Prepaid expenses and other current assets1,099
Current assets of discontinued operations$37,140
Noncurrent assets of discontinued operations: 
Goodwill$12,973
Property, plant and equipment, at cost26,979
Less: accumulated depreciation(20,147)
Noncurrent assets of discontinued operations$19,805
Current liabilities of discontinued operations: 
Accounts payable$10,666
Accrued and other current liabilities492
Current liabilities of discontinued operations$11,158

(4)(5) Earnings (Loss) Per Share
Diluted earnings (loss) per common share is computed by dividing income (loss) by the weighted average number of shares of common stock outstanding plus outstanding common stock equivalents. Common stock equivalents consist of employee and director stock options, restricted stock awards, other share-based payment awards, and contingently issuable shares related to the Company’s 7.0% Convertible Senior Notes due December 15, 2017 (the "Convertible Notes") and the Company's 5.25% Convertible Senior Secured Notes due December 30, 2019 (the "New Convertible Notes"), which are included in the calculation of weighted average shares outstanding using the treasury stock method, if dilutive. Refer to Note 78 - Debt for further description of the Convertible Notes and New Convertible Notes.

The following table is a reconciliation of the basic and diluted earnings (loss) per common share calculations:
 
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Numerator:              
Loss from continuing operations$(18,298) $(28,772) $(84,372) $(91,529)$(22,541) $(21,270) $(36,033) $(66,074)
Income (loss) from discontinued operations, net of income taxes(1,688) 955
 6,246
 2,333
Income from discontinued operations, net of income taxes—
 —
 —
 7,934
Net loss$(19,986) $(27,817) $(78,126) $(89,196)$(22,541) $(21,270) $(36,033) $(58,140)
Denominator:              
Weighted average common shares outstanding32,260
 23,580
 27,909
 23,535
32,310
 27,793
 32,306
 25,709
Effect of dilutive securities:              
Outstanding common stock equivalents—
 —
 —
 —
—
 —
 —
 —
Denominator for diluted earnings (loss) per common share32,260
 23,580
 27,909
 23,535
32,310
 27,793
 32,306
 25,709
              
Basic earnings (loss) per common share:              
Continuing operations$(0.57) $(1.22) $(3.02) $(3.89)$(0.70) $(0.77) $(1.12) $(2.57)
Discontinued operations(0.05) 0.04
 0.22
 0.10
—
 —
 —
 0.31
Net basic loss per common share$(0.62) $(1.18) $(2.80) $(3.79)$(0.70) $(0.77) $(1.12) $(2.26)
              
Diluted earnings (loss) per common share:              
Continuing operations$(0.57) $(1.22) $(3.02) $(3.89)$(0.70) $(0.77) $(1.12) $(2.57)
Discontinued operations(0.05) 0.04
 0.22
 0.10
—
 —
 —
 0.31
Net diluted loss per common share$(0.62) $(1.18) $(2.80) $(3.79)$(0.70) $(0.77) $(1.12) $(2.26)
Excluded outstanding share-based awards having an anti-dilutive effect2,326
 1,049
 2,326
 1,049
2,457
 929
 2,457
 929
Excluded "in the money" portion of New Convertible Notes having an anti-dilutive effect—
 —
 —
 —
—
 —
 —
 —
The New Convertible Notes are dilutive to the extent the Company generates net income and the average stock price during the period is greater than $2.25 per share, which is the conversion price of the New Convertible Notes.TheNotes. The New Convertible Notes are only dilutive for the “in the money” portion of the New Convertible Notes that could be settled with the Company’s common stock. In future periods, absent a fundamental change (as defined in the New Convertible Notes indenture), the outstanding New Convertible Notes could increase diluted average shares outstanding by a maximum of approximately 9,900 shares. The Convertible Notes would have an insignificant impact on the diluted average shares outstanding if settled with the Company's stock.

(5)(6) Joint Venture
Kreher Steel Company, LLC ("Kreher"), a national distributor and processor of carbon and alloy steel bar products headquartered in Melrose Park, Illinois, was a 50% owned joint venture of the Company. In August 2016, the Company completed the sale of its ownership share in Kreher to its joint venture partner for aggregate cash proceeds of $31,550, which resulted in a loss on disposal of $5, including selling expenses. Because the sale of the Company's investment in Kreher is not considered to be a strategic shift that will have a major effect on the Company's operations and financial results, the results of Kreher are reflected within continuing operations in the Condensed Consolidated Financial Statements.
In June 2016, the Company received an offer from its joint venture partner to purchase its ownership share in Kreher for an amount that was less than the current carrying value of the Company's investment in Kreher. The Company determined that the offer to purchase its ownership share in Kreher at a purchase price lower than the carrying value indicated that it may not be able to recover the full carrying amount of its investment, and therefore recognized a $4,636 other-than-temporary impairment charge in the second quarter of 2016 to reduce the carrying amount of the investment to the negotiated purchase price. Prior to receiving the purchase offer, the Company had no previous indicators that its investment in Kreher had incurred a loss in value that was other-than-temporary.
In August 2016, the Company completed the sale of its ownership share in Kreher to its joint venture partner for aggregate cash proceeds of $31,550, which resulted in a loss on disposal of $5, including selling expenses.

The following information summarizes financial data for this joint venture (forKreher for the periods in 2016, the information is through the date the Company sold its investment in Kreher):three months and six months ended June 30, 2016:
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015Three Months Ended June 30, 2016 Six Months Ended June 30, 2016
Net sales$17,737
 $36,885
 $79,007
 $130,505
$29,752
 $61,270
Cost of materials15,359
 31,339
 67,115
 110,734
25,155
 51,756
(Loss) income before taxes(234) (3,117) 267
 (367)(65) 501
Net income (loss)(62) (2,920) 928
 (268)
Net income368
 990
(6)(7) Intangible Assets
Intangible assets consisted of customer relationships as follows:
 September 30, 2016 December 31, 2015
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Customer relationships$67,348
 $61,711
 $67,438
 $57,188
 June 30, 2017 December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Customer relationships$67,348
 $66,307
 $67,317
 $63,216
The Company recorded the following aggregate amortization expense associated with intangibles:
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2016 2015 2016 2015
Amortization expense$1,533
 $2,655
 $4,593
 $8,001
 Three Months Ended Six Months Ended
 June 30, June 30,
 2017 2016 2017 2016
Amortization expense$1,533
 $1,533
 $3,066
 $3,060
The following is a summary of the estimated annual amortization expense for the remainder of 20162017 and each of the subsequent years:
2016$1,533
2017$4,104
$1,041
2018$—
$—
2019$—
$—
2020$—
$—
2021$—

(7)(8) Debt
Long-term debt consisted of the following:
 
September 30,
2016		 December 31,
2015		June 30,
2017		 December 31,
2016
LONG-TERM DEBT      
12.75% Senior Secured Notes due December 15, 2016$—
 $6,681
7.0% Convertible Notes due December 15, 201741
 57,500
$25
 $41
11.0% Senior Secured Term Loan Credit Facilities due September 14, 2018112,000
 99,500
12.75% Senior Secured Notes due December 15, 2018204,519
 203,319
177,019
 177,019
Revolving Credit Facility due December 10, 201912,500
 66,100
5.25% Convertible Notes due December 30, 201922,323
 —
22,323
 22,323
Other, primarily capital leases143
 428
2
 96
Plus: derivative liability for embedded conversion feature3,284
 —
—
 403
Less: unamortized discount(4,502) (12,255)(2,665) (7,587)
Less: unamortized debt issuance costs(2,712) (4,147)(3,501) (5,199)
Total long-term debt$235,596
 $317,626
305,203
 286,596
Less: current portion142
 7,012
105,861
 137
Less: liabilities subject to compromise(a)
199,342
 —
Total long-term portion$235,454
 $310,614
$—
 $286,459
(a) The Company's Senior Secured Notes due December 15, 2018 and Convertible Notes due December 30, 2019 were classified as liabilities subject to compromise at June 30, 2017. See Note 2 - Bankruptcy Related Disclosures.
Secured Notes
In February 2016, the Company completed a private exchange offer and consent solicitation (the “Exchange Offer”) to certain eligible holders to exchange new 12.75% Senior Secured Notes due 2018 (the “New Secured Notes”) for the Company’s outstanding 12.75% Senior Secured Notes due 2016 (the "Secured Notes"). In connection with2016. The Company determined that the Exchange Offer was considered to be a troubled debt restructuring within the scope of ASC No. 470-60, "Debt - Troubled Debt Restructurings by Debtors", as the Company issued $203,319 aggregate principal amount of New Secured Notes. Inwas determined to be experiencing financial difficulties and was granted a concession by the eligible holders. Accordingly, the Company expensed the eligible holder consent fees and related legal and other direct costs incurred in conjunction with the Exchange Offer the Company solicited consents to certain proposed amendments to the Secured Notes and the related indenture (the “Existing Indenture”) providing for, among other things, elimination of substantially all restrictive covenants and certain events of defaultin debt restructuring loss, net in the Existing IndentureCondensed Consolidated Statements of Operations and releasing all of the collateral securing the Secured Notes and related guarantees. In May 2016, the Company entered into an agreement providing for the exchange of $1,200 aggregate principal amount of Secured Notes for $1,200 aggregate principal amount of New Secured Notes. On August 1, 2016, the Company issued a notice of redemption with respect to the remaining outstanding Secured Notes and deposited $5,629 with the trustee (representing the aggregate principal amount plus accrued and unpaid interest to the August 31, 2016 redemption date) to effect a satisfaction and discharge of the indenture governing the Secured Notes. There is no principal amount of Secured Notes outstanding at September 30, 2016.
The New Secured Notes have substantially the same terms as the Secured Notes except for the following principal differences: (i) the New Secured Notes were offered pursuant to an exemption from the registration requirements of the Securities Act, and do not have the benefit of any exchange offer or other registration rights, (ii) the New Secured Notes effectively extend the maturity date of the Secured Notes to December 15, 2018, unless the Company is unable to both (a) complete the exchange of a portion of its Convertible Notes on or prior to June 30, 2016, and (b) redeem, on one or more occasions (each, a “Special Redemption”), an aggregate of not less than $27,500 of aggregate principal amount of the New Secured Notes on or prior to October 31, 2016, using cash available to the Company and/or net proceeds from sales of assets of the Company or a Restricted Subsidiary outside the ordinary course of business (other than net proceeds derived from the sale of accounts receivable and inventory (the “Designated Asset Sale Proceeds”)), subject to a penalty equal to 4.00% of the outstanding principal, payable in cash and/or stock, in the Company’s sole discretion (the “Special Redemption Condition”), in which case the maturity date of the New Secured Notes will be September 14, 2017, (iii) the New Secured Notes provide that, whether or not the Special Redemption Condition is satisfied, the Company will have an obligation to effect Special Redemptions using Designated Asset Sale Proceeds or other permissible funds until such time as the aggregate amount of Special Redemptions equals $40,000, (iv) the New Secured Notes contain modifications to the asset sale covenant providing that the Company shall not use any net proceeds from asset sales outside the ordinary course of business to redeem, repay or prepay the Convertible Notes, and (v) the granting of a third-priority lien on the collateral securing the New Secured Notes for the benefit of the new Convertible Notes is a permitted lien under the indenture. The Company completed the exchange of a portion

of its Convertible Notes prior to June 30, 2016, and satisfied the Special Redemption Condition by issuing an irrevocable notice of redemption for $27,500 of aggregate principal amount of New Secured Notes on October 31, 2016.Comprehensive Loss.
The New Secured Notes are fully and unconditionally guaranteed, jointly and severally, by certain 100% owned domestic subsidiaries of the Company (the “Guarantors”). The New Secured Notes and the related guarantees are secured by a lien on substantially all of the Company's and the Guarantors' assets, subject to certain exceptions and permitted liens pursuant to a pledge and security agreement. The terms of the New Secured Notes contain numerous covenants imposing financial and operating restrictions on the Company's business. These covenants place restrictions on the Company's ability and the ability of its subsidiaries to, among other things, pay dividends, redeem stock or make other distributions or restricted payments; incur indebtedness or issue common stock; make certain investments; create liens; agree to payment restrictions affecting certain subsidiaries; consolidate or merge; sell or otherwise transfer or dispose of assets, including equity interests of certain subsidiaries; enter into transactions with affiliates; enter into sale and leaseback transactions; and use the proceeds of permitted sales of the Company's assets.
The Company may redeem some or all of the New Secured Notes at a redemption price of 100% of the principal amount, plus accrued and unpaid interest. The New Secured Notes also contain a provision that allows holders of the New Secured Notes to require the Company to repurchase all or any part of the New Secured Notes if a change of control triggering event occurs. Under this provision, the repurchase of the New Secured Notes will occur at a purchase price of 101% of the outstanding principal amount, plus accrued and unpaid interest, if any, on such New Secured Notes to the date of repurchase. In addition, upon certain asset sales, the Company may be required to offer to use the net proceeds thereof to purchase some of the New Secured Notes at 100% of the principal amount thereof, plus accrued and unpaid interest.
The New Secured Notes require that the Company make, subject to certain conditions and within 95 days of the end of each fiscal year beginning with the fiscal year ending December 31, 2016, an offer to purchase the New Secured Notes with (i) 75% of excess cash flow (as defined in the New Secured Notes indenture) until the Company has offered to purchase up to $50,000 in aggregate principal amount of the notes, (ii) 50% of excess cash flow until the Company

has offered to purchase up to $75,000 in aggregate principal amount of the notes, (iii) 25% of the excess cash flow until the Company has offered to purchase up to $100,000 in aggregate principal amount of the notes and (iv) 0% thereafter, in each case, at 103% of the principal amount, thereof, plus accrued and unpaid interest.
The Company determined that the Exchange Offer was considered to be a troubled debt restructuring within the scope of ASC No. 470-60, "Debt-Troubled Debt Restructurings", as the Company was determined to be experiencing financial difficulties and was granted a concession by the eligible holders. Accordingly, for the nine months ended September 30, 2016, the Company has expensed the eligible holder consent fees and related legal and other direct costs of $7,075 incurred in conjunction with the Exchange Offer in debt restructuring costs in the Condensed Consolidated Statements of Operations and Comprehensive Loss. There were no consent fees or related legal and other direct costs incurred in conjunction with the Exchange Offer for the three months ended September 30, 2016.
The Company pays interest on the New Secured Notes at a rate of 12.75% per annum in cash semi-annually.
Senior Secured Term Loan Credit Facilities
On December 8, 2016, the Company entered into new secured credit facilities (the “Credit Facilities”) with certain financial institutions (the "Financial Institutions") in order to replace and repay outstanding borrowings and support the continuance of letters of credit under the Company's senior secured asset-based revolving credit facility (the “Revolving Credit Facility”). The Credit Facilities are in the form of senior secured first-lien term loan facilities in an aggregate principal amount of up to $112,000. In connection with the closing of the Credit Facilities, commitments pursuant to the Revolving Credit Facility were terminated, liens granted to the collateral agent pursuant thereto were released in full, and Revolving Credit Facility borrowings outstanding were repaid by the Company using proceeds from the Credit Facilities. Letters of credit previously issued under the Revolving Credit Facility were cash collateralized, resulting in $7,722 and $7,968 of restricted cash that is reflected in other noncurrent assets in the Condensed Consolidated Balance Sheet at June 30, 2017 and December 31, 2016, respectively.
The Credit Facilities consist of a $75,000 initial term loan facility funded at closing and a $37,000 delayed-draw term loan facility (the “Delayed Draw Facility”). Under the Delayed Draw Facility, $24,500 was drawn in December 2016 and $12,500 was expected to be available in June 2017 or thereafter. On May 4, 2017, the Company entered into an amendment to the agreement governing the Credit Facilities (the "Credit Facilities Agreement"). Under this amendment, the Financial Institutions agreed to accelerate the Company's access to the Delayed Draw Facility that was expected to be available in June 2017 or thereafter.
The funding of the Credit Facilities was subject to original issue discount in an amount equal to 3.0% of the full principal amount of the Credit Facilities. The Credit Facilities bear interest at a rate per annum equal to 11.0%, payable monthly in arrears. The outstanding principal amount of the Credit Facilities and all accrued and unpaid interest thereon will be due and be payable on September 14, 2018.
In connection with the closing of the Credit Facilities, the Financial Institutions were issued warrants (the “Warrants”) to purchase an aggregate of 5,000 shares of the Company's common stock, pro rata based on the principal amount of each Financial Institution’s commitment in the Credit Facilities. Warrants to purchase 2,500 shares have an exercise price of $0.50 per share, and Warrants to purchase 2,500 shares have an exercise price of $0.65 per share. The Warrants were exercisable upon issuance and expire on June 8, 2018.
All obligations of the Company under the Credit Facilities are guaranteed on a senior-secured basis by each direct and indirect, existing and future, domestic or Canadian subsidiary of the Company (the “Subsidiary Guarantors” and together with the Company, the “Credit Parties”). All obligations under the Credit Facilities are secured on a first-priority basis by a perfected security interest in substantially all assets of the Credit Parties (subject to certain exceptions for permitted liens). The Company agreed to add its foreign subsidiaries as guarantors and to direct such subsidiaries to grant a security interest in substantially all of their respective assets, subject to certain exceptions, as soon as possible after closing.
The Credit Facilities Agreement contains numerous covenants that, if breached, could result in a default under the agreement. These covenants include a financial covenant that requires the Company to maintain a minimum amount of consolidated adjusted EBITDA (as defined in the Credit Facilities Agreement) during various applicable fiscal periods beginning with the fiscal quarter ended March 31, 2017. The Company is also required to maintain specified minimum amounts of net working capital (as defined in the Credit Facilities Agreement) and consolidated liquidity (as defined in the Credit Facilities Agreement) of at least $20,000. The Credit Facilities Agreement also provides that a default could result from the occurrence of any condition, act, event or development that results or could be reasonably expected to result in a material adverse effect (as defined in the Credit Facilities Agreement). In the event of a default, the Financial Institutions could elect to declare all amounts borrowed due and payable, including accrued interest and any other obligations under the Credit Facilities. Any such acceleration would also result in a default under the indentures governing the New Secured Notes and the New Convertible Notes.
On April 6, 2017, the Company entered into an amendment to the Credit Facilities Agreement. Under this amendment, the Financial Institutions agreed that the financial covenants related to consolidated adjusted EBITDA and specified minimum amounts of net working capital and consolidated liquidity, all as described in the preceding paragraph, would cease to apply for the period from March 31, 2017 through and including May 31, 2018.

Convertible Notes
In the first half of 2016, the Company entered into Transaction Support Agreements (as amended, supplemented or modified, the “Support Agreements”) with certain holders (the “Supporting Holders”) of the Convertible Notes. The Support Agreements provided for the terms of exchanges in which the Company agreed to issue new 5.25% Senior SecuredNew Convertible Notes due 2019 (the “New Convertible Notes”) in exchange for outstanding Convertible Notes (the “Convertible Note Exchange”). For each $1 principal amount ofThe Convertible Notes validly exchangedNote Exchange was considered to be a troubled debt restructuring, as the Company was experiencing financial difficulties and was granted a concession by the Supporting Holders. As a result, the Company expensed legal and other direct costs incurred in conjunction with the Convertible Note Exchange, an exchanging holder of Convertible Notes was entitled to receive $0.7 principal amount of New Convertible Notes, plus accrued and unpaid interest. On March 22, 2016, the Company filed a registration statement on Form S-3, as later amended, to register the resale of the common stock underlying the New Convertible Notes. On May 6, 2016, the Company held a special meeting of stockholders to consider a proposal to approve, as required pursuant to Rule 312 of the NYSE Listed Company Manual, the issuance of the Company’s common stock upon conversion of the New Convertible Notes. The proposal was approved by the Company’s stockholders with the affirmative vote of approximately 73% of the outstanding shares of common stock entitled to vote thereon, which represented approximately 99% of the total votes cast.
In May 2016, the Company entered into amendments to the Support Agreements that, among other things, permitted the Supporting Holders to elect to exchange some or all of the Convertible Notes directly into shares of the Company’s common stock on the same economic terms as would be applicable had they exchanged their Convertible Notes for New Convertible Notes and then converted those New Convertible Notes into common stock.

Supporting Holders holding $23,443 in aggregate principal amount of Convertible Notes exchanged their Convertible Notes for an aggregate of 7,863 shares of the Company’s common stock, which had a fair value of $15,332 at the time of the Convertible Note Exchange. Supporting Holders holding $34,016 in aggregate principal amount of Convertible Notes exchanged their Convertible Notes for $23,806 in aggregate principal amount of New Convertible Notes, which included (i) $20,866 in aggregate principal amount of New Convertible Notes issued pursuant to exchange agreements between the Company and certain non-affiliate noteholders and (ii) $2,940 in aggregate principal amount of New Convertible Notes issued pursuant to an exchange agreement with an affiliate of the Company.
As further described below, the New Convertible Notes are convertible into common stock at the option of the holder. The Company determined that the conversion option is not clearly and closely related to the economic characteristics of the New Convertible Notes, nor does it meet the criteria to be considered indexed to the Company’s common stock. As a result, the Company concluded that the embedded conversion option must be bifurcated from the New Convertible Notes, separately valued, and accounted for as a derivative liability that partially settled the Convertible Notes. The initial value allocated to the derivative liability was $11,574, with a corresponding discount recorded to the New Convertible Notes. During each reporting period, the derivative liability, which is classified in long-term debt, will be marked to fair value through earnings.
The Convertible Note Exchange was considered to be a troubled debt restructuring, as the Company was experiencing financial difficulties and was granted a concession by the Supporting Holders. As a result, the Company recognized a loss of $76 from the Convertible Note Exchange. The loss has been included in debt restructuring loss, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2016.
Subsequent to the Convertible Note Exchange, $1,483 in aggregate principal amount of New Convertible Notes was converted to 713 shares of the Company’s common stock. This resulted in a $589 extinguishment gain from the conversion of the New Convertible Notes and the settlement of a related portion of the derivative liability. The gain has been included in debt restructuring gain (loss), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2016. As of September 30, 2016, the Company had $22,323 aggregate principal amount of New Convertible Notes outstanding, and the derivative liability had a fair value of $3,284.$0 as of June 30, 2017.
The New Convertible Notes mature on December 30, 2019, and bear interest at a rate of 5.25% per annum, payable semi-annually in cash. The New Convertible Notes are initially convertible into shares of the Company's common stock at any time at a conversion price per share equal to $2.25 and are subject to adjustment in accordance with the New Convertible Notes indenture. All current and future guarantors of the New Secured Notes, the Revolving Credit Facility,Facilities, and any other material indebtedness of the Company guarantee the New Convertible Notes, subject to certain exceptions. The New Convertible Notes are secured on a “silent” third-priority basis by the same collateral that secures the New Secured Notes. Upon conversion, the Company will pay and/or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, together with cash in lieu of fractional shares. The value of shares of the Company's common stock for purposes of the settlement of the conversion right will be calculated as provided in the indenture, using a 20 trading day observation period. Upon such conversion, the holder shall be entitled to receive an amount equal to the "make-whole" premium, payable in the form of cash, shares of the Company's common stock, or a combination of both, at the Company's sole discretion. The value of shares of Company common stock for purposes of calculating the "make-whole" premium will be based on the greater of (i) 130% of the conversion price then in effect and (ii) the volume weighted average price ("VWAP") of such shares for the 20 trading day observation period as provided in the indenture.
If the VWAP of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which such notice of redemption is provided, the Company shall have the right to redeem any or all of the New Convertible Notes at a price equal to (i) 100.0% of the aggregate principal amount thereof plus (ii) the "make-whole" premium. The redemption price can be paid in the form of cash, shares of the Company's common stock or a combination of both, at the Company's sole discretion. The value of shares of the Company's common stock will be based on the VWAP of such shares for the 20 trading days immediately preceding the date of redemption. Prior to the third trading day prior to the date of any such redemption, any New Convertible Notes called for redemption may be converted by the holder into shares of the Company's common stock at the conversion price then in effect.
Following the Convertible Note Exchange, the Company had $41 aggregate principal amount of Convertible Notes outstanding at September 30, 2016.

Revolving Credit Facility
In June 2016, the Company entered into an amendment (the “Amendment”) to the Loan and Security Agreement governing the senior secured asset-based revolving credit facility (the “Revolving Credit Facility”), by and among the Company and certain domestic subsidiaries, the financial institutions from time to time party to the Loan and Security Agreement as lenders, and Wells Fargo Bank, National Association, in its capacity as agent. The Amendment reduced the aggregate commitments under the Revolving Credit Facility from $125,000 to $100,000, and also decreased aggregate commitments under (i) the Canadian portion of the Revolving Credit Facility from $20,000 to $16,000 and (ii) the letter of credit facility portion of the Revolving Credit Facility from $20,000 to $16,000.
The Amendment imposed an availability block that decreased availability under the Revolving Credit Facility by $17,500 initially. The availability block is subject to adjustment, and is reduced to $8,750 if the Company’s ratio (as defined in the Revolving Credit Facility Loan and Security Agreement) of EBITDA to fixed charges (the “Fixed Charge Coverage Ratio”) is at least 1.0 to 1.0 for each of the preceding six months. It is reduced to zero if the Fixed Charge Coverage Ratio is at least 1.0 to 1.0 for any trailing twelve-month period. The availability block was $17,500 as of September 30, 2016.
Previously, the Revolving Credit Facility restricted the Company’s ability to repay the New Secured Notes and the Secured Notes unless the Company is able to satisfy certain financial testing conditions. Pursuant to the terms of the Amendment, the Company is permitted to repay up to $27,500 of the New Secured Notes and up to $6,000 of the Secured Notes, subject to satisfaction of revised financial testing conditions.
The Amendment also increased the interest rate charged in connection with loans advanced under the Revolving Credit Facility. At the Company’s election, borrowings under the Revolving Credit Facility will bear interest at variable rates based on (a) a customary base rate plus an applicable margin of 1.75% or (b) an adjusted LIBOR rate plus an applicable margin of 2.75%, with such applicable margins subject to adjustment if the Fixed Charge Coverage Ratio is at least 1.0 to 1.0. The weighted average interest rate for borrowings under the Revolving Credit Facility for the three and nine months ended September 30, 2016 was 4.00%and 3.40%, respectively. The Company pays certain customary recurring fees with respect to the Revolving Credit Facility.
The Revolving Credit Facility matures on December 10, 2019 (or 91 days prior to the maturity date of the Company's Secured Notes or Convertible Notes if they have not been refinanced at that time). If certain incurrence tests are met, subject to approval by the Revolving Credit Facility lending group, the Company may have the ability under its Revolving Credit Facility to increase the aggregate commitments by $25,000 in the future. Currently, the Company is not able to increase the aggregate commitments as it has not met the incurrence tests.
The Revolving Credit Facility contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.1 to 1.0 when excess availability is less than the greater of 10% of the calculated borrowing base (as defined in the Revolving Credit Facility Loan and Security Agreement) or $10,000. In addition, if excess availability is less than the greater of 12.5% of the calculated borrowing base (as defined in the Revolving Credit Facility Loan and Security Agreement) or $12,500, the lender has the right to take full dominion of the Company’s cash collections and apply these proceeds to outstanding loans under the Revolving Credit Facility. The Company's Fixed Charge Coverage Ratio was negative for the twelve months ended September 30, 2016. At this ratio, the Company's current maximum borrowing capacity would be $54,471 before triggering full dominion of the Company's cash collections. As of September 30, 2016, the Company had $41,971 of additional unrestricted borrowing capacity under the Revolving Credit Facility. As noted above, the Company issued an irrevocable notice of redemption for $27,500 of aggregate principal amount of New Secured Notes on October 31, 2016. The Company will use proceeds from the Revolving Credit Facility to make the redemption payment.

(8)(9) Fair Value Measurements
The three-tier value hierarchy the Company utilizes, which prioritizes the inputs used in the valuation methodologies, is:
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.
The fair value of cash, accounts receivable, cash collateralized letters of credit and accounts payable approximate their carrying values. The fair value of cash equivalents are determined using the fair value hierarchy described above. Cash equivalents consisting of money market funds are valued based on quoted prices in active markets and as a result are classified as Level 1.
The Company’s pension plan asset portfolio as of SeptemberJune 30, 20162017 and December 31, 20152016 is primarily invested in fixed income securities, which generally fall within Level 2 of the fair value hierarchy. Fixed income securities are valued based on evaluated prices provided to the trustee by independent pricing services. Such prices may be determined by various factors which include, but are not limited to, market quotations, yields, maturities, call features, ratings, institutional size trading in similar groups of securities and developments related to specific securities.
Fair Value Measurements of Debt
The fair value of the Company's New Secured Notes as of SeptemberJune 30, 20162017 was estimated to be $153,901$116,390 compared to a carrying value of $204,519.$177,019. The fair value of the Company'sNew Secured Notes as of December 31, 20152016 was estimated to be $160,662$116,833 compared to a carrying value of $210,000.$177,019. The fair valuesvalue for both the Secured Notes and New Secured Notes werewas determined based on recent trades of the bonds and fall within Level 2 of the fair value hierarchy.
TheBecause it entered into the new Credit Facilities in December 2016 and borrowings outstanding are expected to be repaid in full on or before the Effective Date, the Company determined that the fair value of borrowings outstanding under the Company's Convertible Notes as of September 30, 2016 was estimated to be $25 compared to aCredit Facilities approximated carrying value of $41. The fair value of the Convertible Notes as ofat June 30, 2017 and December 31, 2015 was approximately $21,966 compared to a carrying value of $57,500. 2016.
The fair value of the Company's New Convertible Notes as of September 30, 2016, including the bifurcated embedded conversion option, was estimated to be $8,233$4,625 compared to a carrying value of $22,323.$22,323 as of June 30, 2017. The fair values for both the Convertible Notes and New Convertible Notes,value, which fallfalls within Level 3 of the fair value hierarchy, werewas determined based on the estimated value the holders of the New Convertible Notes are expected to receive in settlement of their claims on the effective date of the Plan. The fair value of the New Convertible Notes, including the bifurcated embedded conversion feature, was approximately $5,369 compared to a carrying value of $22,323 as of December 31, 2016. The fair value as of that date was determined based on similar debt instruments that do not contain a conversion feature, as well as other factors related to the callable nature of the Convertible Notes and New Convertible Notes.
The main inputs and assumptions into the fair value model for the New Convertible Notes at September 30, 2016 were as follows:
Company's stock price at the end of the period$0.80
Expected volatility79.70%
Credit spreads65.75%
Risk-free interest rate0.91%
Given the revolving nature and the variable interest rates, the Company has determined that the fair value of the Revolving Credit Facility approximates its carrying value.

Fair Value Measurements of Embedded Conversion Feature
TheBecause of the chapter 11 bankruptcy proceedings, the carrying values of the New Convertible Notes and the embedded conversion feature were adjusted as of the Petition Date to reflect their estimated allowed claim amounts as LSTC. As a result, the fair value of the derivative liability for the embedded conversion feature of the New Convertible Notes was estimated to be $3,284$0 as of September 30, 2016.the Petition Date, and the carrying value of the embedded conversion feature was written off to reorganization items, net. The estimated fair value of the derivative liability for the embedded conversion feature of the New Convertible Notes, which falls within Level 3 of the fair value hierarchy, ishad been measured on a recurring basis using a binomial lattice model using the Company's historical volatility over the term corresponding to the remaining contractual term of the New Convertible Notes and observed spreads of similar debt instruments that do not include a conversion feature. The following reconciliation represents the change in fair value of the embedded conversion feature of the New Convertible Notes between December 31, 20152016 and SeptemberJune 30, 2016:2017:
 Derivative liability for embedded conversion feature
Fair value as of December 31, 2015$—
Fair value at issuance date11,574
Settlement upon conversion into common stock(721)
Mark-to-market adjustment on conversion feature(a)
(7,569)
Fair value as of September 30, 2016$3,284
 Derivative liability for embedded conversion feature
Fair value as of December 31, 2016$403
Mark-to-market adjustment on conversion feature(a)
146
Adjustment to write-off conversion feature to reorganization items, net(549)
Fair value as of June 30, 2017$—
(a) Mark-to-market adjustment is recognized in unrealized gainloss on embedded debt conversion option in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the ninesix months ended SeptemberJune 30, 2016.2017.
Fair Value Measurements of Commodity Hedges
The Company has a commodity hedging program to mitigate risks associated with certain commodity price fluctuations. At September 30, 2016, the Company had executed forward contracts that extend through 2016. The counterparty to these contracts is not considered a credit risk by the Company. At September 30, 2016 and December 31, 2015, the notional value associated with forward contracts was $770 and $3,080, respectively. The Company recorded, through cost of materials, realized and unrealized net losses of $3 for the three months ended September 30, 2016, realized and unrealized net gains of $31 for the nine months ended September 30, 2016, and realized and unrealized net losses of $252 and $706 for the three and nine months ended September 30, 2015, respectively. As of September 30, 2016 and December 31, 2015, all commodity hedge contracts were in a liability position. As of September 30, 2016, the Company had a letter of credit outstanding for $700 as collateral for the commodity hedge contracts.
The Company uses information which is representative of readily observable market data when valuing derivative liabilities associated with commodity hedges.
The liabilities measured at fair value on a recurring basis were as follows:
 Level 1 Level 2 Level 3 
Total(a)
As of September 30, 2016       
Derivative liability for commodity hedges$—
 $202
 $—
 $202
As of December 31, 2015       
Derivative liability for commodity hedges$—
 $1,015
 $—
 $1,015
(a) As of September 30, 2016 and December 31, 2015 the entire derivative liability for commodity hedges of $202 and $1,015, respectively, are short-term and are included in accrued and other current liabilities in the Condensed Consolidated Balance Sheets.

(9)(10) Stockholders’ Equity (Deficit)
Convertible Note Exchange and Conversions of New Convertible Notes
The Company issued 7,863 shares of common stock in May 2016 in connection with the Convertible Note Exchange, and issued an additional 713 shares in June 2016 when New Convertible Notes were converted to common stock. The issuance of these shares was recorded using the fair value of the Company's common stock on the dates the shares were issued, and resulted in an increase in the par value of common stock and additional paid-in capital of $86 and $16,543, respectively. The Company received no cash proceeds from issuing these shares.Deficit
Accumulated Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
September 30,
2016		 December 31,
2015		June 30,
2017		 December 31,
2016
Unrecognized pension and postretirement benefit costs, net of tax$(15,817) $(17,185)$(9,369) $(9,797)
Foreign currency translation losses(17,133) (16,636)
Foreign currency translation losses, net of tax(17,827) (16,142)
Total accumulated other comprehensive loss$(32,950) $(33,821)$(27,196) $(25,939)
ChangesChanges in accumulated other comprehensive loss by component for the three months ended SeptemberJune 30, 20162017 and 20152016 are as follows:
 Defined Benefit Pension and Postretirement Items Foreign Currency Items Total
 2016 2015 2016 2015 2016 2015
Balance as of July 1,$(16,273) $(24,263) $(20,100) $(14,686) $(36,373) $(38,949)
Other comprehensive income (loss) before reclassifications—
 —
 2,967
 (2,941) 2,967
 (2,941)
Amounts reclassified from accumulated other comprehensive loss, net of tax (a)
456
 670
 —
 —
 456
 670
Net current period other comprehensive income (loss)456
 670
 2,967
 (2,941) 3,423
 (2,271)
Balance as of September 30,$(15,817) $(23,593) $(17,133) $(17,627) $(32,950) $(41,220)
 Defined Benefit Pension and Postretirement Items Foreign Currency Items Total
 2017 2016 2017 2016 2017 2016
Balance as of April 1,$(9,583) $(16,729) $(17,142) $(16,025) $(26,725) $(32,754)
Other comprehensive loss before reclassifications, net of tax—
 —
 (685) (4,075) (685) (4,075)
Amounts reclassified from accumulated other comprehensive loss, net of tax (a)
214
 456
 —
 —
 214
 456
Net current period other comprehensive income (loss)214
 456
 (685) (4,075) (471) (3,619)
Balance as of June 30,$(9,369) $(16,273) $(17,827) $(20,100) $(27,196) $(36,373)
(a) See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss for the three month periods ended SeptemberJune 30, 20162017 and 2015.2016.

Changes in accumulated other comprehensive loss by component for the ninesix months ended SeptemberJune 30, 20162017 and 20152016 are as follows:
Defined Benefit Pension and Postretirement Items Foreign Currency Items TotalDefined Benefit Pension and Postretirement Items Foreign Currency Items Total
2016 2015 2016 2015 2016 20152017 2016 2017 2016 2017 2016
Balance as of January 1,$(17,185) $(27,122) $(16,636) $(9,994) $(33,821) $(37,116)$(9,797) $(17,185) $(16,142) $(16,636) $(25,939) $(33,821)
Other comprehensive loss before reclassifications—
 —
 (497) (7,633) (497) (7,633)
Other comprehensive income (loss) before reclassifications, net of tax—
 —
 (1,685) (3,464) (1,685) (3,464)
Amounts reclassified from accumulated other comprehensive loss, net of tax (a)
1,368
 3,529
 —
 —
 1,368
 3,529
428
 912
 —
 —
 428
 912
Net current period other comprehensive income (loss)1,368
 3,529
 (497) (7,633) 871
 (4,104)428
 912
 (1,685) (3,464) (1,257) (2,552)
Balance as of September 30,$(15,817) $(23,593) $(17,133) $(17,627) $(32,950) $(41,220)
Balance as of June 30,$(9,369) $(16,273) $(17,827) $(20,100) $(27,196) $(36,373)
(a) See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss for the ninesix month periods ended SeptemberJune 30, 20162017 and 2015.2016.

Reclassifications from accumulated other comprehensive loss are as follows:
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Unrecognized pension and postretirement benefit items:              
Prior service cost (b)
$(50) $4
 $(150) $(997)$(50) $(50) $(100) $(100)
Actuarial loss (b)
(406) (674) (1,218) (2,532)(164) (406) (328) (812)
Total before tax(456) (670) (1,368) (3,529)(214) (456) (428) (912)
Tax effect—
 —
 —
 —
—
 —
 —
 —
Total reclassifications for the period, net of tax$(456) $(670) $(1,368) $(3,529)$(214) $(456) $(428) $(912)
(b) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost included in sales, general and administrative expense. Prior service cost of $813 for pension curtailment is shown as restructuring expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2015. There was no pension curtailment expense in the three and nine months ended September 30, 2016 or the three months ended September 30, 2015.

(10) Share-based Compensation
The Company accounts for its share-based compensation arrangements by recognizing compensation expense for the fair value of the share awards granted ratably over their vesting period. All compensation expense related to share-based compensation arrangements is recorded in sales, general and administrative expense and warehouse, processing and delivery expense. The total share-based compensation expense recognized for the three and nine months ended September 30, 2016 was $350 and $916, respectively, and $428 and $424 for the three and nine months ended September 30, 2015, respectively. The unrecognized compensation cost as of September 30, 2016 associated with all share-based payment arrangements is $2,087 and the weighted average period over which it is to be expensed is 1.3 years.
During the third quarter of 2016, the Company granted 304 non-vested shares to its non-employee directors pursuant to the Company's Non-Employee Director Compensation Plan. The non-vested shares had a weighted average grant date fair value of $1.47 per share. The grant date fair value of the non-vested shares is established using the market price of the Company's stock on the date of grant. The non-vested shares vest in full on the first anniversary of the date of grant.
On February 25, 2016, the Board of Directors of the Company approved the grant of 1,203 non-qualified stock options ("stock options") for executive officers under the Company’s 2016 Long-Term Compensation Plan (“2016 LTC Plan”). All stock options awarded under the 2016 LTC Plan are subject to the terms of the 2008 A.M. Castle & Co. Omnibus Incentive Plan, amended and restated as of July 27, 2016.
The stock options vest in three equal installments over three years from the grant date and are exercisable immediately upon vesting. The strike price was equal to the closing price of the Company's stock on the date of grant. The term of the options is 10 years from the date of grant.
The weighted average grant date fair value of $1.12 per share for the options granted under the 2016 LTC Plan for executive officers was estimated using the Black-Scholes option-pricing model with the following assumptions:
2016
Expected volatility61.8%
Risk-free interest rate1.3%
Expected life (in years)6.0
Expected dividend yield—%


(11) Employee Benefit Plans
Components of the net periodic pension and postretirement benefit cost are as follows:
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Service cost$112
 $250
 $336
 $724
$105
 $112
 $211
 $224
Interest cost1,312
 1,722
 3,936
 5,312
1,211
 1,312
 2,421
 2,624
Expected return on assets(2,035) (2,494) (6,105) (7,128)(2,035) (2,035) (4,069) (4,070)
Amortization of prior service cost50
 (4) 150
 184
50
 50
 100
 100
Amortization of actuarial loss406
 674
 1,218
 2,532
164
 406
 328
 812
Curtailment charge—
 —
 —
 3,080
Net periodic pension and postretirement benefit (credit) cost$(155) $148
 $(465) $4,704
$(505) $(155) $(1,009) $(310)
Contributions paid$—
 $—
 $—
 $—
$—
 $—
 $356
 $—
The Company anticipates making no significantadditional cash contributions of $213 to its pension plans in 2016.2017.

(12) Restructuring Activity
In April 2015, the Company announced a restructuring plan consisting of workforce reductions and the consolidation of more facilities in locations deemed to have redundant operations. In the ninethree months and six months ended SeptemberJune 30, 2016, the Company incurred additional costs associated with the April 2015 restructuring plan which consisted of employee termination and related benefits, moving costs, professional fees and losses on the disposal of fixed assets. In addition, the Company recorded charges of $452 for inventory moved from consolidated plants that was subsequently identified to be scrapped. The inventory charge is reported in cost of materials in the Condensed Consolidated Statement of Operations and Comprehensive Loss for the ninesix months ended SeptemberJune 30, 2016. Substantially all of the previously announced restructuring activities are complete.
In the first quarter of 2016, the Company closed its Houston and Edmonton facilities and sold all the equipment at these facilities to an unrelated third party. Restructuring activities associated with the strategic decision to close these facilities included employee termination and related benefits, lease termination costs, moving costs associated with exit from the closed facilities, and professional fees at the closed facilities.
As a result of its restructuring activities, the Company incurred the following restructuring expenses:
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Employee termination and related benefits$267
 $(987) $945
 $13,265
$17
 $125
 $45
 $678
Lease termination costs—
 364
 6,706
 364
—
 561
 —
 6,706
Moving costs associated with plant consolidations52
 1,733
 4,447
 2,334
23
 1,260
 93
 4,395
Professional fees593
 94
 1,323
 1,690
—
 52
 30
 730
Loss on disposal of fixed assets—
 —
 1,253
 —
—
 46
 —
 1,253
Total$912
 $1,204
 $14,674
 $17,653
$40
 $2,044
 $168
 $13,762
Restructuring reserve activity for the ninesix months ended SeptemberJune 30, 20162017 is summarized below:

   Period Activity     Period Activity  
 Balance January 1, 2016 Charges (gains) Cash receipts (payments) Non-cash activity Balance September 30, 2016 Balance January 1, 2017 Charges (gains) Cash receipts (payments) Non-cash activity Balance June 30, 2017
Employee termination and related benefits (a)
 $8,301
 $945
 $(3,646) $—
 $5,600
 $3,627
 $45
 $(163) $—
 $3,509
Lease termination costs (c)(b)
 232
 6,706
 (566) (4,539) 1,833
 823
 —
 (464) —
 359
Moving costs associated with plant consolidations —
 4,447
 (4,447) —
 —
 —
 93
 (93) —
 —
Professional fees —
 1,323
 (1,323) —
 —
 —
 30
 (30) —
 —
Disposal of fixed assets —
 1,253
 2,703
 (3,956) —
 —
 —
 —
 —
 —
Total $8,533
 $14,674
 $(7,279) $(8,495) $7,433
 $4,450
 $168
 $(750) $—
 $3,868
(a) As of SeptemberJune 30, 2016,2017, the short-term portion of employee termination and related benefits of $100$340 is included in accrued and other current liabilities in the Condensed Consolidated Balance Sheet and the long-term portionliability associated with the Company's withdrawal from a multi-employer pension plan of $5,500$3,169 is included in other noncurrent liabilities in the Condensed Consolidated Balance Sheet.
(b) Payments on certain of the lease obligations are scheduled to continue until 2020. Market conditions and the Company’s ability to sublease these properties could affect the ultimate charge related to the lease obligations. Any potential recoveries or additional charges could affect amounts reported in the consolidated financial statements of future periods. As of SeptemberJune 30, 2016,2017, the short-term portion of the lease termination costs of $125$296 is included in accrued and other current liabilities and the long-term portion of the lease termination costs of $1,708$63 is included in other noncurrent liabilities in the Condensed Consolidated Balance Sheet.
(c) In connection with the closure of the Company's Houston and Edmonton facilities, the Company agreed to sell its fixed assets and to a reduction in future proceeds from the sale of inventory in exchange for the assignment of its remaining lease obligations at its Houston facility resulting in a non-cash charge of $4,539 during the nine months ended September 30, 2016.
(13) Income Taxes
The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s effective tax rate is expressed as income tax (benefit) expense, which includes tax expense on the Company’s share of joint venture losses,earnings in the three months and six months ended June 30, 2016, as a percentage of loss from continuing operations before income taxes and equity in lossesearnings of joint venture.

For the three months ended SeptemberJune 30, 2017, the Company recorded income tax expense of $71 on pre-tax loss from continuing operations of $22,470, for an effective tax rate of (0.3)%. For the three months ended June 30, 2016, the Company recorded income tax expense of $903$531 on pre-tax loss from continuing operations before equity in lossesearnings of joint venture of $17,359,$16,287, for an effective tax rate of (5.2)(3.3)%.
For the threesix months ended SeptemberJune 30, 2015,2017, the Company recorded income tax benefitexpense of $629$8 on pre-tax loss from continuing operations of $36,025, for an effective tax rate of 0.0%. For the six months ended June 30, 2016, the Company recorded income tax expense of $196 on pre-tax loss from continuing operations before equity in lossesearnings of joint venture of $27,941,$61,737, for an effective tax rate of 2.3%.
For the nine months ended September 30, 2016, the Company recorded income tax expense of $1,099 on pre-tax loss from continuing operations before equity in losses of joint venture of $79,096, for an effective tax rate of (1.4)(0.3)%. For the nine months ended September 30, 2015, the Company recorded income tax benefit of $22,141 on pre-tax loss from continuing operations before equity in losses of joint venture of $113,536, for an effective tax rate of 19.5%.
The Company's U.S. statutory rate is 35%. The most significant factors impacting the effective tax rate for the ninesix months ended SeptemberJune 30, 20162017 and 20152016 were losses in jurisdictions that the Company is not able to benefit due to uncertainty as to the realization of those losses, release of valuation allowances in jurisdictions that have become profitable, and the impact of intraperiod allocations.
(14) Commitments and Contingent Liabilities
As of September 30, 2016, the Company had $8,088 of irrevocable letters of credit outstanding which primarily consisted of $5,000 for its warehouse in Janesville, Wisconsin, $700 for collateral associated with commodity hedges and $1,288 for compliance with the insurance reserve requirements of its workers’ compensation insurance program.
The Company is party to a variety of legal proceedings, claims, and other claims,inquiries, including proceedings or inquiries by governmentgovernmental authorities, which arise from the operation of its business. These proceedings, claims, and inquiries are incidental to and occur in the normal course of the Company's business affairs. The majority of these proceedings, claims, and proceedingsinquiries relate to commercial disputes with customers, suppliers, and others; employment including benefit matters;and employee benefits-related disputes; product quality;quality disputes with vendors and/or customers; and environmental, health and safety claims. It is the opinion of management that the currently expected outcome of these proceedings, claims, and claims,inquiries, after taking into account recorded accruals and the availability and limits of our insurance coverage, will

not have a material adverse effect on the consolidated results of operations, financial condition or cash flows of the Company.

(15) Condensed Combined Debtor-in-Possession Financial Information
The following condensed combined financial information presents the Debtors' Balance Sheet as of June 30, 2017, the Debtors' Statement of Operations for the six months ended June 30, 2017, and the Debtors' Statement of Cash Flows for the six months ended June 30, 2017. Those subsidiaries of the Company that did not file bankruptcy petitions (the "Non-Filing Entities") are accounted for as unconsolidated subsidiaries in these financial statements and, as such, their net earnings (loss) are included as equity in earnings of non-filing entities, net of taxes in the Debtors' Statement of Operations and their net assets are included with investments in and advances to non-filing entities in the Debtors' Balance Sheet.
Intercompany transactions among the Debtors have been eliminated in the financial statements contained herein. Intercompany transactions among the Debtors and the non-filing entities have not been eliminated in the Debtors' financial statements.
Debtors' Balance Sheet
  As of
  June 30, 2017
ASSETS  
Current assets:  
Cash and cash equivalents $4,566
Accounts receivable, less allowance for doubtful accounts 41,519
Inventories 96,213
Other current assets 9,917
Total current assets 152,215
Investments in and advances to non-filing entities 105,288
Intangible assets, net 1,012
Other noncurrent assets 18,671
Property, plant and equipment, net 38,371
Total assets $315,557
LIABILITIES AND DEFICIT  
Current liabilities:  
Accounts payable $27,997
Other current liabilities 12,674
Current portion of long-term debt 105,859
Total current liabilities 146,530
Long-term debt, less current portion —
Other noncurrent liabilities 29,578
Liabilities subject to compromise 211,363
Total deficit (71,914)
Total liabilities and deficit $315,557

Debtors' Statement of Operations
  Six Months Ended June 30, 2017
Net sales $167,545
Costs and expenses:  
Cost of materials (exclusive of depreciation and amortization) 118,974
Warehouse, processing and delivery expense 28,680
Sales, general and administrative expense 24,897
Restructuring expense 90
Depreciation and amortization expense 6,850
Total costs and expenses 179,491
Operating loss (11,946)
Interest expense, net 19,899
Financial restructuring expense 6,600
Unrealized loss on embedded debt conversion option 146
Other (income) expense, net —
Reorganization items, net 5,502
Loss before income taxes (44,093)
Income tax benefit —
Net loss attributable to debtor entities (44,093)
Equity in earnings of non-filing entities, net of taxes 8,060
Net loss $(36,033)
Comprehensive loss $(37,290)

Debtors' Statement of Cash Flows
  Six Months Ended June 30, 2017
Net cash used in operating activities $(29,641)
Investing activities:  
Capital expenditures (1,933)
Change in cash collateralization of letters of credit 246
Net cash from (used in) investing activities (1,687)
Financing activities:  
Proceeds from long-term debt 12,500
Repayments of long-term debt (114)
Other financing activities (1,831)
Net cash from (used in) financing activities 10,555
Net change in cash and cash equivalents (20,773)
Cash and cash equivalents - beginning of period 25,339
Cash and cash equivalents - end of period

 $4,566

(16) Subsequent Events
Special Redemption of Senior Secured NotesDebtor-in-Possession Revolving Credit Facility
On October 31, 2016,After obtaining approval by the Company issued an irrevocable notice of redemption with respect to $27,500 aggregate principal amount of its New Secured Notes. These New Secured Notes were redeemed on November 9, 2016, meetingBankruptcy Court, the Special Redemption Condition set forth in the indenture governing the New Secured Notes.
Commitment for Senior Secured Term Loan Facilities
On November 1, 2016, and November 2, 2016, the CompanyDebtors entered into commitment letters with certain financial institutions in order to replace and repay any amounts outstanding under thea Debtor-in-Possession Revolving Credit and Security Agreement dated July 10, 2017 (the "DIP Credit Agreement"), with PNC, as Lender and Administrative and Collateral Agent. The DIP Credit Agreement provides for an $85,000 senior secured, revolving debtor-in-possession credit facility and sets forth the terms and conditions of such facility (the "DIP Facility"). The purpose of the DIP Facility including cash collateralization of any undrawnis to (i) pay fees and expenses payable to PNC for the DIP Facility, (ii) provide for the Debtors' working capital needs and reimburse drawings under letters of credit, and to provide access to additional working capital. Pursuant to the termsin accordance with an approved budget, (iii) fund administrative expenses of the commitment letters,Debtors that are included in such budget, (iv) refinance up to $75,000 of the new credit facilities will take the form of senior securedCompany's term loan facilitiesborrowings under the Credit Facilities, and (v) pay the Permitted Adequate Protection Payments (as defined in an aggregate principal amountthe DIP Credit Agreement) as and when due.
The DIP Facility matures on the earliest of $100,000. In connection therewith, commitments pursuant(a) December 15, 2017, (b) the Revolving Credit Facility will be terminated and liens granted to the collateral agent pursuant thereto will be released in full. The fundingeffective date of the term loan facilities is subjectPlan, as confirmed pursuant to original issue discount in an amount equal to 3.0%order entered by the Bankruptcy Court, (c) the closing of a sale of all or substantially all of the full principal amountassets of the facilities. The facilitiesDebtors, or (d) the occurrence of an Event of Default (as defined in the DIP Credit Agreement), which results in acceleration of any portion of the obligations of the Debtors under the DIP Facility and termination of PNC's commitments under the DIP Credit Agreement. Obligations of the Debtors under the DIP Facility may be prepaid in whole, but not in part, at any time.
At the election of the Debtors, borrowings under the DIP Facility will bear interest at variable rates based on (a) a LIBOR-based rate plus an initial applicable margin of 11.0% per annum,3.00% or (b) a customary base rate plus an initial applicable margin of 2.00%, with such applicable margins subject to reduction based on the amount of excess available borrowing capacity under the DIP Facility. The Debtors must also pay a monthly commitment fee and will maturecertain other customary fees, costs and expenses that may be incurred by PNC in September 2018. connection with the transactions contemplated by the DIP Credit Agreement.
The Company willobligations of the Debtors under the DIP Facility are to be (i) entitled to super-priority administrative expense claim status pursuant to the Bankruptcy Code with priority over any administrative expenses of a kind specified in the Bankruptcy Code, subject to a carve-out for certain specified bankruptcy-related fees and expenses; and (ii) secured, pursuant to the Bankruptcy Code, by a first-priority perfected security interest and lien on all or substantially all of the Debtors' assets and the Company’s equity interests in its subsidiaries, subject to certain financial covenants, consistingcarve-out and permitted prior liens.
On July 10, 2017, in connection with its entering into the DIP Credit Agreement, the Company borrowed an aggregate amount of (a) a minimum cash EBITDA level, (b) a minimum liquidity amount, and (c) a minimum working capital covenant.$66,326 from PNC, of which $64,000 was used to pay down outstanding term loan borrowings under the Credit Facilities.
Upon initial fundingConfirmation of the term loan facilities,Plan
On August 2, 2017, the financial institutions will be issued warrantsBankruptcy Court entered the Confirmation Order, approving and confirming the Plan. The Plan is expected to purchase an aggregate of 5,000 shares of common stockbecome effective, and the Debtors are expected to emerge from their chapter 11 cases, on or around August 31, 2017.
Under ASC No. 852, fresh-start accounting is required upon emergence from chapter 11 if (i) the value of the Company, pro rata based onassets of the principal amountemerging entity immediately before the date of each financial institution’s commitment. The warrants will have exercise prices as follows: (a)confirmation (the "reorganization value") is less than the total of all postpetition liabilities and allowed claims; and (ii) holders of existing voting shares immediately before confirmation receive less than 50% of the warrants will have an exercise price of $0.50 per share and will expire 18 months from the date of grant and (ii) the remaining 50%voting shares of the warrants will have an exercise priceemerging entity. As of $0.65 per share and will expire 18 months from the effective date of the grant.
A definitive agreementPlan, the Company expects to adopt fresh-start accounting, which will result in a new reporting entity with respectno beginning retained earnings or deficit. Fresh-start accounting also requires that the reporting entity allocate the reorganization value to its assets and liabilities in relation to their fair values upon emergence from chapter 11, which may vary materially from the term loan facilities,carrying values as required byof June 30, 2017. The Company is in the commitment letters, has not been executed and there can be no assurances that such agreement will be executed or as toprocess of evaluating the terms of such facilities, or that certain other conditions required by the commitment letters will be satisfied.
Shareholder Sale and Purchase of Company Common Stock
On November 3, 2016, one of the Company's shareholders, W. B. & Co., purchased all 4,631 shares of the Company's common stock owned by Raging Capital Master Fund, Ltd.
The future utilization of the Company's federal and state net operating losses is expected to be limited by Internal Revenue Service Section 382 due to this ownership change and others that occurred since the last ownership change that occurred in 2015. Thepotential impact of this limitation has not been quantified at this time; however, the Company has a full valuation allowance againstfresh-start accounting on its federal and state net operating losses.consolidated financial statements.  

 



Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
Amounts in millions, except per share data
Disclosure Regarding Forward-Looking Statements
Information provided and statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this report and the Company assumes no obligation to update the information included in this report. Such forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy, and the cost savings and other benefits that we expect to achieve from our facility closures and organizational changes.restructuring. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “predict,” “plan,” "should," or similar expressions. These statements are not guarantees of performance or results, and they involve risks, uncertainties, and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements,statements. These factors include or relate to: other competing uses for funds, including the payment of the administrative expenses of our chapter 11 cases; our ability to timely conclude definitive documentation for, and to satisfy all conditions to the consummation of, any required exit financing, new notes indenture or other agreements required by our chapter 11 plan of reorganization; the effects of the filing of our chapter 11 cases on our business and the interests of various constituents; the bankruptcy court’s rulings in our chapter 11 cases, as well the outcome of any such case in general; the length of time that we will operate under chapter 11 protection and the continued availability of operating capital during the pendency of our chapter 11 cases; risks associated with third party motions or objections in our chapter 11 cases, which may interfere with our ability to confirm and consummate a chapter 11 plan of reorganization; the potential adverse effects of our chapter 11 cases on our liquidity or results of operations; our ability to execute the Company’s business and financial reorganization plan; and increased advisory costs to execute our reorganization. Other factors include our ability to effectively manage our operational initiatives and restructuring activities, the impact of volatility of metals prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels, our ability to successfully complete the remaining steps in our strategic refinancing process, and the impact of our substantial level of indebtedness, as well as including those risk factors identified in Item 1A “Risk Factors” of our Annual Report on Form 10-K/A10-K for the fiscal year ended December 31, 20152016 and ourthis Quarterly Report on Form 10-Q for the second quarter ended June 30, 2016.2017. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future, to reflect the occurrence of unanticipated events or for any other reason.
The following discussion should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and related notes thereto in Item 1 “Financial Statements (unaudited)”.

Executive Overview
A.M.A. M. Castle & Co., together with its subsidiaries, (the “Company”) is a specialty metals distribution company serving customers on a global basis. The Company has operations in the United States, Canada, Mexico, France, the United Kingdom, Spain, China and Singapore. The Company provides a broad range of product inventories as well as value-added processing and supply chain services to a wide array of customers, principally within the producer durable equipment, aerospace, heavy industrial equipment, industrial goods, construction equipment, oil and gas, and retail sectors of the global economy. Particular focus is placed on the aerospace and defense, power generation, mining, heavy industrial equipment, and general manufacturing industries, as well as general engineering applications.
In February 2016,Recent Developments
Restructuring Support Agreement
To reduce the Company sold allCompany's long-term debt and cash interest obligations and thereby strengthen its financial position and flexibility, A. M. Castle & Co. and certain of its inventory at its Houston and Edmonton facilities, which primarily serviced the energy market, to an unrelated third party and recognized net sales and cost of materials of $27.1 million. Subsequently, the Company sold all of its equipment at its Houston and Edmonton facilities and agreed tosubsidiaries (the "Debtors") entered into a reduction in future proceeds from the inventory sale in exchange for the assignment of its remaining lease obligations at its Houston facility, resulting in a non-cash charge of $4.5 million.restructuring support agreement (the “RSA”) on April 6, 2017. The Company ceased operations at the Houston and Edmonton facilities in February 2016 and recorded restructuring expense of $7.5 million related to the closure of these facilities (including the previously discussed $4.5 million non-cash loss) in the nine months ended September 30, 2016. The sale of the assets and subsequent closure of the Houston and Edmonton facilities did not qualify as a discontinued operation under the authoritative accounting guidance.
On March 15, 2016, the Company completed the sale of substantially all the assets of its wholly-owned subsidiary, Total Plastics, Inc. ("TPI"), for $53.6 million in cash. The Company used the proceeds of the sale to repay indebtedness, pursuant to its previously announced plan to improve its capital structure. The sale of TPI, which resulted in pre-tax and after-tax gains of $2.0 million and $1.3 million, respectively, allows the Company to focus solely on its core metals business going forward. TPI is reflected in the accompanying Condensed Consolidated Financial Statements as a discontinued operation, and all the financial data in this filing has been recast to present TPI as a discontinued operation retrospectively for all periods presented.
In June 2016, the Company received an offer from its joint venture partner to purchase its ownership share in Kreher Steel Company, LLC ("Kreher") for an amount thatRSA was less than the current carrying valueentered into with certain of the Company's investment in Kreher. The Company determined that this offer indicated that the Company may not be able to recover the full carrying amount of its investment and therefore, the Company recognized a $4.6 million other-than-temporary impairment charge in the second quarter of 2016 to reduce the carrying amountcreditors (the "Consenting Creditors"), including certain holders of the investment toCompany’s (a) term loans under the negotiated purchase price. In Augustcredit facilities agreement dated as of December 8, 2016, the Company completed the sale of its ownership share in Kreher to its joint venture partner for aggregate cash proceeds of $31.6 million, which resulted in an insignificant loss on disposal. Because the sale of the Company's investment in Kreher is not considered to be a strategic shift that will have a major effect on the Company's operations and financial results, the results of Kreher through the date of sale are reflected within continuing operations in the Condensed Consolidated Financial Statements.
In the first half of 2016, the Company exchanged $204.5 million aggregate principal amount ofas amended (the "Credit Facilities Agreement"), (b) 12.75% Senior Secured Notes due December 15, 2018 (the "New Secured Notes"), and (c) 5.25% Convertible Senior Secured Notes due December 30, 2019 (the "New Convertible Notes"). The RSA provides for a consensual restructuring of the debt and equity of

the Company, which the Company seeks to effect by means of a Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization (as amended, the "Plan").
Commitment Agreement
On June 16, 2017, pursuant to the terms of the RSA, the Debtors entered into a Commitment Agreement with certain of their creditors (the "Commitment Parties"). The Commitment Parties are the holders (or the investment advisors or managers for the holders) of term loans (the "Credit Facilities") made to the Company under the Credit Facilities Agreement.
Under the Commitment Agreement, the Commitment Parties have agreed, subject to the terms and conditions set forth in the Commitment Agreement, to purchase new notes to be issued by the reorganized Company under the Plan (the “New Money Notes”) for an aggregate purchase price of up to $40.0 million (the "New Money Amount"), subject to decrease based on the Company’s Opening Liquidity (as defined in the Commitment Agreement) as of the effective date of the Plan (the "Effective Date"). The New Money Notes will be on the same terms as the new notes issued by the Company under the Plan to holders of certain other classes of claims.
The New Money Notes will be issued at a price of $800 in cash for each $1,000 in principal amount of New Money Notes. The Commitment Agreement provides for the payment by the Company, in consideration for the Commitment Parties’ agreements in the Commitment Agreement, of a put option payment equal to $2.0 million, which shall be payable in cash upon the earlier of the Effective Date or the termination of the Commitment Agreement in accordance with its terms. In addition, the Company has agreed to reimburse the reasonable fees and expenses incurred by the legal and financial advisors to the Commitment Parties.
Under the Commitment Agreement, the Debtors are required to meet the same milestones as set forth in the RSA, including that they obtain orders of the Bankruptcy Court confirming the Plan on or before the sixtieth day after filing voluntary chapter 11 petitions with the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware (the "Bankruptcy Court"). Further, the Commitment Agreement may be terminated if the Effective Date has not occurred by August 31, 2017, if the RSA is terminated, and upon other specified events.
Chapter 11 Bankruptcy Filing
On June 18, 2017, pursuant to the terms of the RSA, the Debtors commenced voluntary chapter 11 proceedings under the United States Bankruptcy Code (the "Bankruptcy Code") with the Bankruptcy Court. The chapter 11 cases have been consolidated for procedural purposes only and are being administered jointly under the caption In re Keystone Tube Company, LLC., et al. (Case No. 17-11330).
The filing of the bankruptcy petitions constituted a default or event of default that accelerated the Company’s obligations under (i) the Credit Facilities Agreement, (ii) the Indenture dated February 8, 2016 (the "Senior Notes Indenture") and the New Secured Notes issued pursuant thereto, and (iii) the Indenture dated May 19, 2016 (the "Convertible Notes Indenture") and the New Convertible Notes issued pursuant thereto. The Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture provide that, as a result of the filing of the bankruptcy petitions, all outstanding indebtedness due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are automatically stayed as a result of the bankruptcy petitions, and the creditors’ rights of enforcement in respect of the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are subject to the applicable provisions of the RSA and the Bankruptcy Code.
No trustee has been appointed in the chapter 11 cases, and the Debtors continue to operate their business as “debtors in possession” subject to the supervision and orders of the Bankruptcy Court in accordance with the Bankruptcy Code. It is expected that the Company will continue its operations without interruption during the pendency of the chapter 11 cases. To maintain and continue ordinary course operations without interruption, the Company received approval from the Bankruptcy Court of a variety of “first day” motions seeking certain relief and authorizing the Company to maintain its operations in the ordinary course. Bankruptcy Court filings and other information related to the chapter 11 cases are available at a website administered by the Debtors’ claims agent, Kurtzman Carson Consultants, LLC, at http://www.kccllc.net/amcastle.
The Condensed Consolidated Financial Statements have been prepared to reflect the application of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 852, "Reorganizations". ASC No. 852 requires that the financial statements, for $204.5periods subsequent to the chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly,

certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. In addition, liabilities subject to compromise in the chapter 11 cases are distinguished from liabilities of non-filing entities, liabilities not expected to be compromised, and postpetition liabilities in the Company’s Condensed Consolidated Balance Sheet at June 30, 2017. Liabilities subject to compromise are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less.
Proposed Plan of Reorganization
Pursuant to the terms of the RSA, the Debtors filed the original Plan with the Bankruptcy Court on June 18, 2017 and an amended version of the Plan on July 25, 2017. The Plan implements a new senior secured exit financing facility and the issuance of the New Money Notes to refinance or exchange the existing first lien Credit Facilities and to provide working capital for the reorganized Company. The terms of the Plan provide that the new senior secured exit financing facility shall be in the form of an asset-based revolving credit facility (the "New ABL Facility") entered into on or before the Effective Date. On June 2, 2017, the Company entered into a commitment letter with PNC Bank, National Association (“PNC”), which contemplates a $125,000 New ABL Facility to be entered into upon the Effective Date. If the Debtors are unable to enter into the New ABL Facility on or before the Effective Date, then, on the Effective Date, the Debtors shall enter into a new first lien senior secured term loan credit facility (the "New Roll-Up Facility"). The Plan also deleverages the Company's balance sheet by exchanging $177.0 million aggregate principal amount of new 12.75% SeniorNew Secured Notes due December 2018. The Company also exchanged $57.5and $22.3 million aggregate principal amount of 7.0%New Convertible Notes due December 2017 for a combinationan 80% share of $23.8 millionnew common stock in the reorganized Company, subject to dilution, and certain convertible new second lien secured notes in an aggregate principal amount of 5.25%$115.0 million (the "Exchange Notes"), together with certain cash distributions. All of the existing equity interests in the Company will be extinguished, but holders of such equity interests will have the opportunity to receive a 20% share of new common stock in the reorganized Company, subject to dilution, as part of a settlement encompassed in the Plan. Allowed general unsecured claims and all creditors who are unimpaired under the Plan will receive a complete recovery.
Prior to filing the Plan with the Bankruptcy Court, the Company completed its solicitation of votes to accept or reject the Plan from the holders of claims under the Credit Facilities Agreement (the "Prepetition First Lien Secured Claims"), the holders of the New Secured Notes (the "Prepetition Second Lien Secured Claims") and the holders of the New Convertible Notes due December 2019(the "Prepetition Third Lien Secured Claims"). In dollar value, 100% of the votes cast by holders of both the Prepetition First Lien Secured Claims and 7.9the Prepetition Second Lien Secured Claims, as well as 79.24% of the votes cast by holders of the Prepetition Third Lien Secured Claims, approved the Plan. In the aggregate, 98.32% of the voting secured creditors by dollar value voted in favor of the Plan. Additionally, a majority of voting holders in number in each class approved the Plan, with an aggregate of 88.68% of voting holders in number approving the Plan.
Debtor-in-Possession Revolving Credit Facility
After obtaining approval by the Bankruptcy Court, the Debtors entered into a Debtor-in-Possession Revolving Credit and Security Agreement dated July 10, 2017 (the "DIP Credit Agreement"), with PNC, as Lender and Administrative and Collateral Agent. The DIP Credit Agreement provides for an $85.0 million sharessenior secured, revolving debtor-in-possession credit facility and sets forth the terms and conditions of such facility (the "DIP Facility"). The purpose of the DIP Facility is to (i) pay fees and expenses payable to PNC for the DIP Facility, (ii) provide for the Debtors' working capital needs and reimburse drawings under letters of credit, in accordance with an approved budget, (iii) fund administrative expenses of the Debtors that are included in such budget, (iv) refinance up to $75.0 million of the Company's common stock. These actions extendedterm loan borrowings under the maturity of substantially allCredit Facilities, and (v) pay the Permitted Adequate Protection Payments (as defined in the DIP Credit Agreement) as and when due. Refer to Note 16 - Subsequent Events to the Condensed Consolidated Financial Statements.
Confirmation of the Company's Senior Secured NotesPlan
On August 2, 2017, the Bankruptcy Court entered an order approving and Convertible Notesconfirming the Plan. The Plan is expected to become effective on terms that greatly improvedor around August 31, 2017. Refer to Note 16 - Subsequent Events to the Company's capital structure.Condensed Consolidated Financial Statements.

Results of Operations: Three Months Ended SeptemberJune 30, 20162017 Compared to Three Months Ended SeptemberJune 30, 20152016
The following table sets forth certain statement of operations data for the three months ended SeptemberJune 30, 20162017 and 2015. Included in the operating results below is the closure of the Company's Houston and Edmonton facilities which occurred in the first quarter of 2016.

Three Months Ended September 30,    Three Months Ended June 30,    
2016 2015 Favorable/(Unfavorable)2017 2016 Favorable/(Unfavorable)
$ % of Net Sales $ % of Net Sales $ Change % Change
(Dollar amounts in millions)$ % of Net Sales $ % of Net Sales $ Change % Change
                      
Net sales$124.9
 100.0 % $150.6
 100.0 % $(25.7) (17.1)%$136.5
 100.0 % $130.7
 100.0 % $5.8
 4.4 %
Cost of materials (exclusive of depreciation and amortization)92.4
 74.0 % 115.3
 76.6 % 22.9
 19.9 %102.1
 74.8 % 97.7
 74.7 % (4.4) (4.5)%
Operating costs and expenses(a)
41.1
 32.9 % 50.8
 33.7 % 9.7
 19.1 %37.8
 27.7 % 44.3
 33.9 % 6.5
 14.7 %
Operating loss$(8.6) (6.9)% $(15.5) (10.3)% $6.9
 44.5 %$(3.4) (2.5)% $(11.3) (8.6)% $7.9
 69.9 %
(a) Operating costs and expenses include $0.9 million and $1.2 million of restructuring expenses of less than $0.1 million for the three months ended SeptemberJune 30, 20162017 and 2015, respectively.$2.0 million for the three months ended June 30, 2016.
Net Sales
Net sales in the three months ended SeptemberJune 30, 20162017 were $124.9$136.5 million, a decreasean increase of $25.7$5.8 million, or 17.1%4.4%, compared to the three months ended SeptemberJune 30, 2015.2016. The decrease in net salesimprovement was mainly due to a 9.6% decrease10.9% increase in tons sold per day to customers compared to the same period in the prior year, coupled with a 4.4% decrease in average selling prices. Impacting the decrease in net tons sold per day wereyear. The largest sales attributable to the Company's Houston and Edmonton operations which were closed in February 2016. Excluding the tons sold from the Houston and Edmonton operationsvolume increases in the three months ended SeptemberJune 30, 2015, tons sold per day decreased 3.6% in the three months ended September 30, 20162017 compared to the three months ended SeptemberJune 30, 2015.2016 were in carbon and alloy plate and alloy bar. The largestfavorable impact of the increase in sales volume decreasesvolumes was partly offset by an overall unfavorable change in product mix.
Average selling prices overall decreased 4.5% in the three months ended SeptemberJune 30, 20162017 compared to the three months ended SeptemberJune 30, 2015 were in alloy bar, SBQ bar, tubing products, and cold finished carbon, with sales volume increases in aluminum and carbon and alloy plate.
Downward pricing pressures resulting from historically high levels of foreign imports into the U.S. market, lower prices on products purchased from mills and inventory de-stocking practices2016, driven by many competitors continue to have a negative impact on metals pricing. The Company posted a decreasedecreases in the price per ton sold of virtuallyaluminum and stainless. The average price per ton sold of all of itsother product categories asincreased compared to the prior year quarter. An overall favorable product mix in the three months ended September 30, 2016 compared to the three months ended September 30, 2015 partly offset the impact of the decrease in selling prices.
Cost of Materials
Cost of materials (exclusive of depreciation and amortization) in the three months ended SeptemberJune 30, 20162017 was $92.4$102.1 million compared to $115.3$97.7 million in the three months ended SeptemberJune 30, 2015.2016. The $22.9$4.4 million, or 19.9%4.5%, decreaseincrease is largely due to the decreaseincrease in sales volumevolumes in the three months ended SeptemberJune 30, 2016.2017.
Cost of materials (exclusive of depreciation and amortization) was 74.0%74.8% of net sales in the three months ended SeptemberJune 30, 20162017 compared to 76.6%74.7% of net sales in the three months ended SeptemberJune 30, 2015.

2016.
Operating Costs and Expenses and Operating Loss
Operating costs and expenses for the three months ended SeptemberJune 30, 20162017 and 20152016 were as follows:
Three Months Ended September 30, Favorable/(Unfavorable)Three Months Ended June 30, Favorable/(Unfavorable)
2016 2015 $ Change % Change
(Dollar amounts in millions)
2017 2016 $ Change % Change
Warehouse, processing and delivery expense$19.6
 $25.9
 $6.3
 24.3%$19.3
 $20.8
 $1.5
 7.2%
Sales, general and administrative expense16.8
 18.0
 1.2
 6.7%14.6
 17.2
 2.6
 15.1%
Restructuring expense0.9
 1.2
 0.3
 25.0%—
 2.0
 2.0
 100.0%
Depreciation and amortization expense3.8
 5.7
 1.9
 33.3%3.9
 4.3
 0.4
 9.3%
Total operating costs and expenses$41.1
 $50.8
 $9.7
 19.1%$37.8
 $44.3
 $6.5
 14.7%
Operating costs and expenses decreased by $9.7$6.5 million from $50.8$44.3 million in the three months ended SeptemberJune 30, 20152016 to $41.1$37.8 million in the three months ended SeptemberJune 30, 2016.2017.
Warehouse, processing and delivery expense decreased by $6.3$1.5 million mainly as a result of lower payroll, benefit and benefits costs, lower variable costs resulting from the decrease in sales activity as well as lower facility costs resulting from plant consolidations and the February 2016 closure of the Houston and Edmonton facilities;freight costs;

Sales, general and administrative expense decreased by $1.2$2.6 million mainly as a result of lower payroll and benefits costs due to lower company-wide employee headcount, bad debt expense and outside consulting services, partly offset by higher incentive based compensation costs;
Restructuring expense of $0.9 million in the three months ended September 30, 2016 consisted mainly of professional fees and severance expense;services; and
Depreciation and amortization expense decreased by $1.9$0.4 million mainly as a result of the impairment of intangible assets recorded in the fourth quarter of 2015, as well asdue to lower depreciation expense resulting from plant consolidations and closures and equipment sales.
Operating loss in the three months ended SeptemberJune 30, 2016, including restructuring expense of $0.9 million,2017, was $8.6$3.4 million compared to operating loss of $15.5$11.3 million, including $1.2$2.0 million of restructuring expense, in the same period last year.
Other Income and Expense, Income Taxes and Net Loss
Interest expense was $8.7$10.1 million in the three months ended SeptemberJune 30, 20162017 compared to $10.2$9.6 million in the three months ended SeptemberJune 30, 2015.2016. The decreaseincrease was primarilymainly attributable to lower outstanding borrowings. a higher interest rate on term loan borrowings under the Company's Credit Facilities Agreement, which was entered into in December 2016, compared to the interest rate on borrowings under the Company's former revolving credit agreement.
Financial restructuring expense of $5.7 million in the three months ended June 30, 2017 was mostly comprised of legal and other professional fees incurred prior to filing the chapter 11 bankruptcy petitions in connection with the financial restructuring of the debt and equity of the Company.
Unrealized gain on the embedded conversion option associated with the 5.25% Convertible Notes due December 30, 2019 was $6.3$0.0 million for the three months ended SeptemberJune 30, 2016. There was no conversion option associated with2017 and $1.3 million for the convertiblethree months ended June 30, 2016.
The debt requiring mark-to-market accountingrestructuring gain of $0.5 million in the three months ended SeptemberJune 30, 2015.2016 resulted from the issuance of the Company's New Convertible Notes in exchange for outstanding 7.0% Convertible Senior Notes due 2017 (the "Convertible Note Exchange") and the subsequent conversion of a portion of the New Convertible Notes to equity.
Other expense,income, comprised mostly of foreign currency transaction losses,gains, was $6.3$2.2 million in the three months ended SeptemberJune 30, 20162017 compared to $2.3$2.8 million in the same period last year. The unfavorable change in these transaction losses from the prior year period was partlyThese gains are primarily related to unhedged intercompany financing arrangements.
Reorganization items, net for the three months ended June 30, 2017 was an expense of $5.5 million, and was comprised of legal and other professional fees of $0.7 million and the write-off of unamortized debt issuance costs and discounts related to the New Secured Notes and New Convertible Notes of $4.8 million. Reorganization items, net represent expenses and income directly associated with the chapter 11 proceedings, as well as adjustments to reflect the carrying value of liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined.
The Company recorded an income tax expense of $0.9$0.1 million for the three months ended SeptemberJune 30, 20162017 compared to an income tax benefitexpense of $0.6$0.5 million for the same period last year. The Company’s effective tax rate is expressed as income tax (benefit) expense, which includes income tax expense (benefit) on the Company’s share of joint venture losses in the three months ended June 30, 2016, as a percentage of loss from continuing operations before income taxes and equity in losses of joint venture. The effective tax rate for the three months ended SeptemberJune 30, 2017 and 2016 and 2015 was (5.2)(0.3)% and 2.3%(3.3)%, respectively. The higherchange in the effective tax rate in the three months ended SeptemberJune 30, 20162017 resulted from changes in the geographic mix and timing of income (losses), the inability to benefit from current year losses due to changes in valuation allowancesallowance positions in the U.S. and Canada,, and the impact of intraperiod allocations.
Equity in losses of the Company’s joint venture was $4.5 million in the three months ended June 30, 2016, which included a $4.6 million impairment charge related to the write-down of the Company's investment in joint venture to fair value. In August 2016, the Company completed the sale of its interest in its joint venture for aggregate cash proceeds of $31.6 million. Equity in losses of joint venture in the three months ended September 30, 2016 was less than $0.1 million (refer to Note 5 - Joint Ventureto the Condensed Consolidated Financial Statements). Equity in losses of the Company’s joint venture was $1.5 million in the three months ended September 30, 2015, which included a $1.8 million charge associated with the impairment of goodwill at the joint venture.

Loss from continuing operations and net loss for the three months ended SeptemberJune 30, 20162017 was $18.3$22.5 million compared to a loss from continuing operations of $28.8$21.3 million for the three months ended SeptemberJune 30, 2015. Loss from discontinued operations, net of income taxes, was $1.7 million for the three months ended September 30, 2016, which resulted from the settlement of the final working capital of TPI. Income from discontinued operations, net of income taxes, was $1.0 million for the three months ended September 30, 2015.
Net loss for the three months ended September 30, 2016 was $20.0 million. Net loss for the same period in the prior year, which includes income from discontinued operations (net of income taxes) of $1.0 million, was $27.8 million.2016.

Results of Operations: NineSix Months Ended SeptemberJune 30, 20162017 Compared to NineSix Months Ended SeptemberJune 30, 20152016
The following table sets forth certain statement of operations data for the ninesix months ended SeptemberJune 30, 20162017 and 2015.2016. Included in the operating results below is the sale of all inventory and subsequent closure of the Company's Houston and Edmonton facilities which occurred in the first quarter of 2016.
Nine Months Ended September 30,    Six Months Ended June 30,    
2016 2015 Favorable/(Unfavorable)2017 2016 Favorable/(Unfavorable)
$ % of Net Sales $ % of Net Sales $ Change % Change
           
(Dollar amounts in millions)
$ % of Net Sales $ % of Net Sales $ Change % Change
Net sales$419.4
 100.0 % $505.4
 100.0 % $(86.0) (17.0)%$272.4
 100.0 % $294.5
 100.0 % $(22.1) (7.5)%
Cost of materials (exclusive of depreciation and amortization)(a)
323.8
 77.2 % 411.8
 81.5 % 88.0
 21.4 %203.1
 74.6 % 231.4
 78.6 % 28.3
 12.2 %
Operating costs and expenses(b)
142.4
 34.0 % 172.3
 34.1 % 29.9
 17.4 %75.0
 27.6 % 101.3
 34.4 % 26.3
 26.0 %
Operating loss$(46.8) (11.2)% $(78.7) (15.6)% $31.9
 40.5 %$(5.7) (2.1)% $(38.2) (13.0)% $32.5
 85.1 %
(a) Cost of materials includes $0.5 million and $22.3 million of inventory scrapping expenses associated with restructuring activity for the ninesix months ended SeptemberJune 30, 2016 and 2015, respectively.2016.
(b) Operating costs and expenses include $14.7$0.1 million and $17.7$13.8 million of restructuring expenses for the ninesix months ended SeptemberJune 30, 2017 and 2016, and 2015, respectively. Also included in the nine months ended September 30, 2015 was a $5.6 million gain from the sale of an operating facility.
Net Sales
Net sales in the ninesix months ended SeptemberJune 30, 20162017 were $419.4$272.4 million, a decrease of $86.0$22.1 million, or 17.0%7.5%, compared to the nine months ended September 30, 2015. The decrease in net sales was mainly attributable to a 15.6% decrease in tons sold per day to customers compared to the same period inlast year. Net sales for the prior year and a 6.8% decrease in average selling prices, offset by a favorable product mix and the impact ofsix months ended June 30, 2016 included the Company's $27.1 million sale of all its inventory at its Houston and Edmonton facilities to an unrelated third party in the first quarter of 2016.party. The sale of this inventory, which was sold at a zero gross profit margin (calculated as net sales, less cost of materials), was the result of a strategic decision to lower the Company's exposure to oil and gas market fluctuations.
Compared to Including that sale of inventory, net sales from the nine months ended September 30, 2015, sales volumes in the nine months ended September 30, 2016 decreased on virtually all products, with tubing, SBQ bar and alloy bar products having the most significant declines in sales volumes in the period. The closure of the Company's Houston and Edmonton facilitieslocations, which were closed in February 2016, also ledwere $33.0 million. Despite the closure of these two locations, the Company posted an 8.3% increase in tons sold per day to decreased sales volume ascustomers compared to the six months ended June 30, 2016. Excluding the tons sold from thesethe Houston and Edmonton locations which primarilyin the six months ended June 30, 2016, tons sold per day increased 10.7%. Products with the most notable improvements in sales volumes were sold to oilcarbon and gas customers, were not replaced by subsequent sales out of anotheralloy plate, alloy bar and aluminum. Offsetting the positive impact of the Company's service centers.
Downward pricing pressuresincrease in the nine months ended September 30, 2016 resulted in lower average selling prices on all of the products the Company sells compared to the nine months ended September 30, 2015. Lower pricing on highsales volumes of foreign metal imports and de-stocking by many of the Company's competitors caused the Company to lower prices in order to remain competitive. The most significant average selling price decreases of 8% to 18% on many of the Company's highest selling products by volume drove the 6.8%was a 4.8% decrease in average selling prices and an unfavorable change in product mix.
Average selling prices for many of the Company's products were higher in the ninesix months ended SeptemberJune 30, 20162017 compared to the nine months ended September 30, 2015 with a partial offset from favorable product mix.

same period last year, but decreases in average selling prices of aluminum and alloy bar resulted in the overall 4.8% decrease in average selling prices.
Cost of Materials
Cost of materials (exclusive of depreciation and amortization) during the ninesix months ended SeptemberJune 30, 20162017 was $323.8$203.1 million compared to $411.8$231.4 million during the ninesix months ended SeptemberJune 30, 2015.2016. The $88.0$28.3 million, or 21.4%12.2%, decrease is largelymostly due to the decrease in sales volume during the nine months ended September 30, 2016, partly offset by the $27.1 million of cost of materials recognized on the sale of all inventory at the Company's Houston and Edmonton facilities in the ninesix months ended SeptemberJune 30, 2016, as discussed above. Included in cost of materials in the nine months ended September 30, 2015 is a $22.3 million restructuring charge related to the write-down of aged and excess inventory compared to a restructuring charge of $0.5 million for the nine months ended September 30, 2016.
Cost of materials (exclusive of depreciation and amortization) was 77.2%74.6% as a percent of net sales in the ninesix months ended SeptemberJune 30, 2016,2017, compared to 81.5%78.6% as a percent of net sales for the comparative prior year period. While the percentage for the six months ended June 30, 2016 was impacted by the $27.1 million sale of the inventory at the Houston and Edmonton locations, the decrease in the percentage also reflects improved inventory management and better matching of sales prices with inventory replacement cost.

Operating Costs and Expenses and Operating Loss
Operating costs and expenses for the ninesix months ended SeptemberJune 30, 20162017 and 20152016 were as follows:
Nine Months Ended September 30, Favorable/(Unfavorable)Six Months Ended June 30, Favorable/(Unfavorable)
2016 2015 $ Change % Change
(Dollar amounts in millions)
2017 2016 $ Change % Change
Warehouse, processing and delivery expense$63.7
 $76.8
 $13.1
 17.1%$38.0
 $44.2
 $6.2
 14.0%
Sales, general and administrative expense51.5
 60.3
 8.8
 14.6%29.1
 34.7
 5.6
 16.1%
Restructuring expense14.7
 17.7
 3.0
 16.9%0.1
 13.8
 13.7
 99.3%
Depreciation and amortization expense12.5
 17.5
 5.0
 28.6%7.8
 8.6
 0.8
 9.3%
Total operating costs and expenses$142.4
 $172.3
 $29.9
 17.4%$75.0
 $101.3
 $26.3
 26.0%
Operating costs and expenses decreased by $29.9$26.3 million from $172.3$101.3 million during the ninesix months ended SeptemberJune 30, 20152016 to $142.4$75.0 million during the ninesix months ended SeptemberJune 30, 2016.2017.
Warehouse, processing and delivery expense excluding a gain on sale of facility of $5.6 million recorded during the nine months ended September 30, 2015, decreased by $18.7$6.2 million primarily as a result of lower payroll, benefit, and benefits costs, lower variable costs resulting from the decrease in sales activity, and lower facility costs resulting from plant consolidations and the February 2016 closure of the Houston and Edmonton facilities;
Sales, general and administrative expense decreased by $8.8$5.6 million mainly as a result of lower payroll, benefit, and benefits costs and non-restructuring related executive severance costs incurred in the prior year period;outside services costs;
Restructuring expense of $14.7was $0.1 million in the ninesix months ended SeptemberJune 30, 2017, while restructuring expense was $13.8 million in the six months ended June 30, 2016, which consisted mainly of severance expense and lease termination charges associated with the closure of the Company's Houston and Edmonton facilities, as well as moving expenses associated with the plant consolidations related to the April 2015 restructuring plan;consolidations; and
Depreciation and amortization expense decreased by $5.0$0.8 million mainly as a result of the impairment of intangible assets recorded in the fourth quarter of 2015, as well asdue to lower depreciation expense resulting from plant consolidations and closures and equipment sales.
Operating loss in the ninesix months ended SeptemberJune 30, 20162017, including restructuring charges of $14.7 million and inventory scrapping expense associated with restructuring activities of $0.5$0.1 million, was $46.8$5.7 million compared to an operating loss of $78.7$38.2 million, including restructuring-related inventory scrapping expense of $22.3 million, restructuring charges of $17.7$13.8 million, and the $5.6 million gain on sale of facility, in the same period in the prior year.

Other Income and Expense, Income Taxes and Net Loss
Interest expense was $28.7$20.8 million in the ninesix months ended SeptemberJune 30, 2017 compared to $20.0 million in the six months ended June 30, 2016. The increase was mainly attributable to a higher interest rate on term loan borrowings under the Company's Credit Facilities Agreement, which was entered into in December 2016, compared to $30.3the interest rate on borrowings under the Company's former revolving credit agreement.
Financial restructuring expense of $6.6 million in the ninesix months ended SeptemberJune 30, 2015. 2017 was mostly comprised of legal and other professional fees incurred prior to filing the chapter 11 bankruptcy petitions in connection with the financial restructuring of the debt and equity of the Company.
Unrealized gainloss on the embedded conversion option associated with the 5.25%New Convertible Notes due December 30, 2019 was $7.6$0.1 million for the ninesix months ended SeptemberJune 30, 2016. There was no conversion option associated with the convertible debt requiring mark-to-market accounting2017 compared to an unrealized gain of $1.3 million in the ninesix months ended SeptemberJune 30, 2015.2016.
DebtThe debt restructuring costsloss of $6.6 million in the ninesix months ended SeptemberJune 30, 2016 reflectreflects $7.1 million of eligible holder consent fees and related legal and other direct costs incurred in conjunction with the Exchange Offer,private exchange offer and consent solicitation to certain eligible holders to exchange New Secured Notes for the Company’s 12.75% Senior Secured Notes due 2016. Those charges were partly offset by a $0.5$0.5 million gain resultingthat resulted from the Convertible Note Exchange and the subsequent conversion of a portion of the New Convertible Notes to equity.
Other expense,income, comprised mostly of foreign currency transaction losses,gains, was $4.6$2.8 million in the ninesix months ended SeptemberJune 30, 20162017 compared to $4.5$1.7 million for the same period in the prior year. These gains and losses are primarily related to unhedged intercompany financing arrangements.

Reorganization items, net for the six months ended June 30, 2017 was an expense of $5.5 million, and was comprised of legal and other professional fees of $0.7 million and the write-off of unamortized debt issuance costs and discounts related to the New Secured Notes and New Convertible Notes of $4.8 million. Reorganization items, net represent expenses and income directly associated with the chapter 11 proceedings, as well as adjustments to reflect the carrying value of liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined.
The Company recorded an income tax expense of $1.1less than $0.1 million for the ninesix months ended SeptemberJune 30, 20162017 compared to an income tax benefitexpense of $22.1$0.2 million for the same period last year. The Company’s effective tax rate is expressed as income tax (benefit) expense, which includes tax expense (benefit) on the Company’s share of joint venture losses in the six months ended June 30, 2016, as a percentage of loss from continuing operations before income taxes and equity in losses of joint venture. The effective tax rate for the ninesix months ended SeptemberJune 30, 2017 and 2016 was 0.0% and 2015 was (1.4)(0.3)% and 19.5%, respectively. The lowerchange in the effective tax rate for the ninesix months ended SeptemberJune 30, 20162017 resulted from changes in the geographic mix and timing of income (losses), the inability to benefit from current year losses due to changes in valuation allowance positions in the U.S. and Canada,, and the impact of intraperiod allocations.
Equity in losses of the Company’s joint venture was $4.2$4.1 million in the ninesix months ended SeptemberJune 30, 2016, compared to2016. Included in the equity in losses of joint venture was an impairment charge of $0.1$4.6 million related to the write-down of the Company's investment in the same period last year.joint venture to fair value. In August 2016, the Company completed the sale of its joint venture for aggregate cash proceeds of $31.6 million. Included in the equity in losses of the Company's joint venture in the nine months ended September 30, 2016 was an impairment charge of $4.6 million related to the write-down of the Company's investment in joint venture to fair value (refer to Note 5 - Joint Ventureto the Condensed Consolidated Financial Statements). Equity in losses of joint venture for the prior year period included a $1.8 million charge associated with the impairment of goodwill at the joint venture.
Loss from continuing operations for the ninesix months ended SeptemberJune 30, 20162017 was $84.4$36.0 million compared to a loss from continuing operations of $91.5$66.1 million for the ninesix months ended SeptemberJune 30, 2015.2016. Income from discontinued operations, net of income taxes, was $6.2$7.9 million for the ninesix months ended SeptemberJune 30, 2016, compared to income from discontinued operations, net of income taxes, of $2.3 million for the nine months ended September 30, 2015. Income from discontinued operations, net of income taxes, for the nine months ended September 30, 2016which includes an after-tax gain on the sale of TPIsubstantially all the assets of $1.3the Company's wholly owned subsidiary, Total Plastic, Inc. ("TPI") of $3.0 million and an income tax benefit of $4.2 million from the reversal of an income tax valuation allowance.
Net loss for the ninesix months ended SeptemberJune 30, 2016, which includes income from discontinued operations (net of income taxes) of $6.2 million,2017 was $78.1$36.0 million. Net loss for the same period in the prior year, which includes income from discontinued operations (net of income taxes) of $2.3$7.9 million, was $89.2$58.1 million.
Liquidity and Capital Resources
Cash and cash equivalents increased (decreased) as follows:
Nine Months Ended September 30,Six Months Ended June 30,
2016 2015
(Dollar amounts in millions)

2017 2016
Net cash used in operating activities$(17.6) $(6.4)$(33.3) $(24.4)
Net cash from investing activities85.5
 2.3
Net cash (used in) from financing activities(68.7) 8.0
Net cash (used in) from investing activities(2.0) 54.5
Net cash from (used in) financing activities10.5
 (29.2)
Effect of exchange rate changes on cash and cash equivalents(0.3) (0.4)0.4
 (0.1)
Net change in cash and cash equivalents$(1.1) $3.5
$(24.4) $0.8
The Company’s principal sources of liquidity currently are cash provided by operations and available revolver borrowing capacityborrowings under the DIP Facility that was entered into on July 10, 2017. During the pendency of the chapter 11 proceedings, the Company expects its primary liquidity requirements will be to fund working capital needs, refinance up to $75.0 million of term loan borrowings under the Credit Facilities, and growth initiatives. make required payments under the DIP Facility.
Specific components of the change in working capital (defined as current assets less current liabilities), are highlighted below:
During the ninesix months ended SeptemberJune 30, 2016,2017, higher accounts receivable compared to year-end 20152016 resulted in $5.1$16.7 million of cash flow use compared to $18.3$6.1 million of cash flow sourceuse for the same period last year. Average receivable days outstanding was 53.851.4 days for the ninesix months ended SeptemberJune 30, 20162017 compared to 53.453.9 days for the ninesix months ended SeptemberJune 30, 2015.2016.
During the ninesix months ended SeptemberJune 30, 2016, lower2017, higher inventory levels compared to year-end 2015 provided $34.82016 used $0.5 million of cash, flow source, while lower inventory levels at SeptemberJune 30, 20152016 compared to year-end 20142015 were a $43.8$26.7 million cash flow source for the ninesix months ended SeptemberJune 30, 2015.2016. The majority of the cash flow source from inventory in the ninesix months ended SeptemberJune 30, 2016 was the result of the Houston and Edmonton inventory sale discussed above. Average days sales in inventory was 172.7135.9 days for the ninesix months

ended SeptemberJune 30, 20162017 compared to 228.0171.7 days for the ninesix months ended SeptemberJune 30, 2015,2016, which resulted primarily from the Houston and Edmonton inventory sale and improved inventory management.
During the ninesix months ended SeptemberJune 30, 2016,2017, increases in accounts payable and accrued and other current liabilities were a $14.6$13.2 million cash flow source compared to a $22.9$2.4 million cash flow source for the same period last year. Accounts payable days outstanding was 44.538.8 days for the ninesix months ended SeptemberJune 30, 20162017 compared to 43.745.1 days for the same period last year.
Working capital and the balances of its significant components are as follows:
 June 30, December 31, Working Capital
(Dollar amounts in millions)

2017 2016 Increase (Decrease)
Working capital$95.3
 $203.9
 $(108.6)
Cash and cash equivalents11.2
 35.6
 (24.4)
Accounts receivable83.6
 64.4
 19.2
Inventories149.5
 146.6
 2.9
Accounts payable44.0
 33.1
 (10.9)
Accrued and other current liabilities15.6
 19.9
 4.3
Approximately $5.6 million of the Company’s consolidated cash and cash equivalents balance of $11.2 million at June 30, 2017 resided in the United States. 
Net cash used in investing activities of $2.0 million during the six months ended June 30, 2017 is mostly attributable to cash paid for capital expenditures of $2.3 million. Management expects capital expenditures to range from $6.0 million to $7.0 million for the full-year 2017. Net cash from investing activities of $85.5$54.5 million during the nine months ended September 30, 2016same period last year is mainlymostly attributable to cash proceeds from the sale of TPI and the sale of the Company's 50% ownership in Kreher.TPI. Cash paid for capital expenditures for the ninesix months ended SeptemberJune 30, 2016 was $2.4 million,$1.9 million.
Under the indenture governing the Company's 7.0% Convertible Notes due 2017 (the "Convertible Notes"), upon the occurrence of a decreaseFundamental Change, which includes, among other things, the delisting of $2.1 millionthe Company’s common stock from the same period last year. Management expects capital expendituresNew York Stock Exchange ("NYSE"), each holder has the right to rangerequire the Company to repurchase for cash all or a portion of such holder’s Convertible Notes. Effective January 17, 2017, the Company’s common stock was delisted from $3.0 millionthe NYSE. Accordingly, the Company made an offer to $4.0 million forpurchase its Convertible Notes and, on February 22, 2017, the full-year 2016.Company repurchased $16 thousand aggregate principal amount of its Convertible Notes.
AllDuring the six months ended June 30, 2016, all available proceeds from the sale of TPI and Kreher were used to pay down the Company's long-term debt, which along with the $8.7 million payment of debt restructuring costs, resulted in net cash used in financing activities of $68.7 million during the nine months ended September 30, 2016.$29.2 million.
In connection with the Exchange Offer completed in FebruaryDecember 2016, and subsequent secured note exchanges, the Company issued $204.5 millionentered into the Credit Facilities with certain financial institutions (the "Financial Institutions") in order to replace and repay outstanding borrowings and support the continuance of letters of credit under the Company's senior secured asset-based revolving credit facility. The Credit Facilities are in the form of senior secured first-lien term loan facilities in an aggregate principal amount of New Secured Notes.$112.0 million. The Credit Facilities consist of a $75.0 million initial term loan facility funded at closing and a $37.0 million Delayed Draw Facility. Under the Delayed Draw Facility, $24.5 million was drawn in December 2016 and $12.5 million was expected to be available in June 2017 or thereafter. On August 1, 2016, the Company issued a notice of redemption with respect to the remaining outstanding Secured Notes and deposited $5.6 million with the trustee (representing the aggregate principal amount plus accrued and unpaid interest to the August 31, 2016 redemption date) to effect a satisfaction and discharge of the indenture governing the Secured Notes.  
The Company also completed the Convertible Note Exchange during the first half of 2016. Supporting Holders holding $57.5 million aggregate principal amount of Convertible Notes exchanged their Convertible Notes for an aggregate of 7.9 million shares of the Company's common stock and $23.8 million aggregate principal amount of New Convertible Notes. 
In June 2016,May 4, 2017, the Company entered into an amendment to its Revolvingthe Credit Facilities Agreement, whereby the Financial Institutions agreed to accelerate the Company's access to the Delayed Draw Facility that reduced the aggregate commitments under the Revolving Credit Facility from $125,000was expected to $100,000.be available in June 2017 or thereafter. The amendment also imposed an availability block that decreased availability under the Revolving Credit Facility$12.5 million was drawn by $17,500 initially. The availability block is subject to reduction if the Company’s ratio (as defined in the Revolving Credit Facility Loan and Security Agreement) of EBITDA to fixed charges (the “Fixed Charge Coverage Ratio”) is at least 1.0 to 1.0 for certain specified periods. As a result of these items, along with the sale of certain assets, the Company's current maximum borrowing capacity has decreased from $96.2 million at December 31, 2015 to $54.5 million at September 30, 2016.
Under the Revolving Credit Facility Loan and Security Agreement, the maximum borrowing capacity of the Revolving Credit Facility is based on the Company's borrowing base calculation. The weighted average advance rates used in the borrowing base calculation are 85.0% on eligible accounts receivable and 55.2% on eligible inventory.
The Company's Revolving Credit Facility contains a springing financial maintenance covenant requiring the Company in May 2017 to maintain a Fixed Charge Coverage Ratio of 1.1 to 1.0 when excess availability is less than the greater of 10% of the calculated borrowing base (as defined in the Revolving Credit Facility Loan and Security Agreement) or $10 million. In addition, if excess availability is less than the greater of 12.5% of the calculated borrowing base (as defined in the Revolving Credit Facility Loan and Security Agreement) or $12.5 million, the lender has the right to take full

dominion of the Company’s cash collections and apply these proceeds to outstanding loans under the Revolving Credit Agreement (“Cash Dominion”). The Company's Fixed Charge Coverage Ratio was negative for the twelve months ended September 30, 2016. At this ratio, the Company's current maximum borrowing capacity would be $54.5 million before triggering Cash Dominion. The Revolving Credit Facility matures on December 10, 2019 (or 91 days prior to the maturity date of the Company's Secured Notes or Convertible Notes if they have not been refinanced at that time).
Additional unrestricted borrowing capacity under the Revolving Credit Facility at September 30, 2016 was as follows:
Maximum borrowing capacity$93.9
Minimum excess availability before triggering Cash Dominion(12.5)
Letters of credit and other reserves(9.4)
Availability reserve(17.5)
Current maximum borrowing capacity54.5
Current borrowings(12.5)
Additional unrestricted borrowing capacity$42.0
As part of the Company's refinancing of its Secured Notes, it agreed to make Special Redemptions using Designated Asset Sales Proceeds (refer to Note 7 - Debt to the Condensed Consolidated Financial Statements). Pursuant to the indenture governing the New Secured Notes, Special Redemptions of not less than $27.5 million of aggregate principal amount of the New Secured Notes must be made on or prior to October 31, 2016, subject to a penalty equal to 4.0% of the outstanding principal, payable in cash and/or stock, in which case the maturity date of the New Secured Notes will be September 14, 2017. On October 31, 2016, the Company issued an irrevocable notice of redemption for $27.5 million of aggregate principal amount of the New Secured Notes to satisfy the Special Redemption requirement. The Company will use proceeds from the Revolving Credit Facility to make the Special Redemption payment, which will have a corresponding decrease in the Company's unrestricted borrowing capacity.
The Revolving Credit Facility matures on December 10, 2019 (or 91 days prior to the maturity date of the Company's Secured Notes or Convertible Notes if they have not been refinanced at that time).
The Company currently expects that it will have sufficient access to cash flows to continue as a going concern, to fund its ongoing capital expenditure programs and meet its debt obligations, including interest payments, for at least the next twelve months. However, these plans rely on certain underlying assumptions and estimates that may differ from actual results. Such assumptions include improvements in operating results and cash flows driven by ongoing refinancing efforts and the restructuring activities taken that streamlined the Company’s organizational structure, lowered operating costs and increased liquidity. These plans also rely on the Company securingfinance additional financing, achieving its sales targets, continuing to reduce operating costs and managing its working capital to increase liquidity. If the Company’s efforts to manage working capital and improve operating results are not successful, the Company may not have sufficient cash flows to continue as a going concern.
With the completion of the Exchange Offer and Convertible Notes Exchange, the Company has extended the maturity of a substantial portion of its long-term debt for up to two years. The sale of TPI, the sale of the Company's ownership in Kreher, and the sale of the Company's Houston and Edmonton inventory provided liquidity which was used to pay down long-term debt and resulted in a $53.6 million reduction in the Company's revolver balance during the nine months ended September 30, 2016. The Company plans to further improve liquidity through continued reductionsinvestments in inventory ongoing refinancing efforts and possible future strategic sales of under-performing assets. Furthermore, the Company has available borrowing capacity under the asset-based Revolving Credit Facility, as described above.
Through its ongoing restructuring and refinancing efforts, the Company is committed to achieving a strong financial position while maintaining sufficient levels of available liquidity, managing working capital and monitoring the Company's overall capitalization. Cash and cash equivalents at September 30, 2016 were $10.0 million, and the Company had $42.0 million of additional unrestricted borrowing capacity under its Revolving Credit Facility prior to the reduction for the Special Redemption payment of $27.5 million. Approximately $1.7 million of the Company’s consolidated cash and cash equivalents balance resides in the United States. As foreign earnings are permanently reinvested, availability under the Company’s Revolving Credit Facility would be used to fund operations in the United States as the need arises in the future.

Working capital, defined as current assets less current liabilities, and the balances of its significant components are as follows:
 September 30, December 31, Working Capital
 2016 2015 Increase (Decrease)
Working capital$188.6
 $256.4
 $(67.8)
Cash and cash equivalents10.0
 11.1
 (1.1)
Accounts receivable76.9
 73.2
 3.7
Inventories179.4
 216.1
 (36.7)
Accounts payable51.9
 45.6
 (6.3)
Accrued and other current liabilities37.4
 28.1
 (9.3)
service customers' needs.
The Company monitors its overall capitalization by evaluating total debt to total capitalization. Total debt to total capitalization is defined asFor additional information regarding the sum of short-term and long-term debt, divided by the sum of total debt and stockholders’ equity. Total debt to total capitalization was 105.7% at September 30, 2016 and 87.1% at December 31, 2015. Over the long-term, the Company plans to improve its total debt to total capitalization by improving operating results, managing working capital and using cash generated from operations as well as the strategic sale of under-performing assets to repay outstanding debt. As and when permitted by the terms of the agreements governing the Company's outstanding indebtedness, depending on market conditions, the Company may decide in the future to refinance, redeem or repurchase its debt and take other steps to reduce its debt or lease obligations or otherwise improve its overall financial position and balance sheet.
The Company’s principal payments on long-term debt, including the current portion of long-term debt, required during the next five years and thereafter are summarized below:
2016 (remaining three months)(a)
$27.6
20170.1
2018177.0
2019(b)
34.8
2020—
2020 and beyond—
Total debt$239.5
(a) Amount includes Special Redemption payment of $27.5 million of aggregate principal amount of the New Secured Notes. The terms of the New Secured Notes, require, among other things, a notice of redemption with respect to this Special Redemption to be issued on or prior to October 31, 2016, in order to extend the maturity date of the New SecuredConvertible Notes to December 15, 2018. On October 31, 2016,and the Company issued an irrevocable notice of redemption for $27.5 million of aggregate principal amount of the New Secured Notes to satisfy the Special Redemption Condition. ReferCredit Facilities, refer to Note 78 -Debt to the Condensed Consolidated Financial Statements.
(b) Amount includes outstanding balanceOn June 18, 2017, pursuant to the terms of $12.5 millionthe RSA, the Debtors commenced voluntary chapter 11 proceedings under the Company's Revolving Credit FacilityBankruptcy Code with the Bankruptcy Court. No trustee has been appointed in the chapter 11 cases, and the Debtors continue to operate their business as of September 30, 2016 which can fluctuate. The maturity date presented above is based on“debtors in possession” subject to the December 15, 2019 maturity datesupervision and orders of the RevolvingBankruptcy Court in accordance with the Bankruptcy Code. It is expected that the Company will continue its operations without interruption during the pendency of the chapter 11 cases.

The filing of the bankruptcy petitions constituted a default or event of default that accelerated the Company’s obligations under (i) the Credit Facility. AmountsFacilities Agreement, (ii) the Senior Notes Indenture and the New Secured Notes issued pursuant thereto, and (iii) the Convertible Notes Indenture and the New Convertible Notes issued pursuant thereto. The Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture provide that, as a result of the filing of the bankruptcy petitions, all outstanding indebtedness due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Revolving Credit Facility may become due sooner thanFacilities Agreement, the December 15, 2019 maturity dateSenior Notes Indenture, and the Convertible Notes Indenture are automatically stayed as describeda result of the bankruptcy petitions, and the creditors’ rights of enforcement in respect of the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are subject to the applicable provisions of the RSA and the Bankruptcy Code.
For additional information regarding the chapter 11 proceedings, refer to Note 72 - DebtBankruptcy Related Disclosures toin the Condensed Consolidated Financial Statements.
As of September 30, 2016, the Company had $8.1 million of irrevocable letters of credit outstanding, which primarily consisted of $5.0 million for its new warehouse in Janesville, Wisconsin, $0.7 million for collateral associated with commodity hedges and $1.3 million for compliance with the insurance reserve requirements of its workers’ compensation insurance program.
On November 1, 2016, and November 2, 2016, the Company entered into commitment letters with certain financial institutions in order to replace and repay any amounts outstanding under the Revolving Credit Facility, including cash collateralization of any undrawn letters of credit, and to provide access to additional working capital. Pursuant to the terms of the commitment letters, the new credit facilities will take the form of senior secured term loan facilities in an aggregate principal amount of $100.0 million. Commitments pursuant to the existing Revolving Credit Facility will be terminated, and liens granted to the collateral agent will be released in full. The funding of the term loan facilities is subject to original issue discount in an amount equal to 3.0% of the full principal amount of the facilities. The facilities will bear interest at a rate of 11.0% per annum, and will mature in September 2018. The commitment letters also allow the Company to secure up to $12.0 million of financing through its foreign subsidiaries, subject to certain conditions. The Company expects to close on the term loan facilities in the fourth quarter of 2016.

As noted above, the availability block and other restrictions significantly reduce the Company’s unrestricted borrowing capacity under the Revolving Credit Facility. The term loan facilities are expected to provide the Company with greater liquidity than the Revolving Credit Facility that they will replace. The Company will be subject to certain financial covenants, consisting of (a) a minimum cash EBITDA level, (b) a minimum liquidity amount, and (c) a minimum working capital covenant.
A definitive agreement with respect to the term loan facilities, as required by the commitment letters, has not been executed and there can be no assurances that such agreement will be executed or as to the terms of such facilities, or that certain other conditions required by the commitment letters will be satisfied.
On October 19, 2016, the Company received written notice from the New York Stock Exchange (the “NYSE”) that it was not in compliance with the continued listing standards set forth in Section 802.01C of the NYSE Listed Company Manual. The Company was considered below criteria established by the NYSE for continued listing because the average closing price of its common stock was less than $1.00 per share over a consecutive 30 trading-day period.

In accordance with applicable NYSE procedures, the Company notified the NYSE of its intention to cure this noncompliance. In accordance with the NYSE rules, the Company has six months from the date of receipt of the notice to achieve compliance with the continued listing standards of Section 802.01C. The Company can regain compliance at any time during the six-month cure period if the Company’s common stock has a closing share price of at least $1.00 per share on the last trading day of any calendar month during the period and also has an average closing share price of at least $1.00 per share over the 30 trading-day period ending on the last trading day of that month.
As previously disclosed, the Company received written notice from the NYSE on January 21, 2016 that it was not in compliance with the continued listing standards related to the maintenance of a minimum level of stockholders' equity and average market capitalization as set forth in Section 802.01B of the NYSE Listed Company Manual. The Company is currently implementing its plan to return to conformity with the relevant standards required in Section 802.01B within the 18-month period allowed by the NYSE.
The Company is actively monitoring the price of its common stock and will consider available options to resolve the deficiency and achieve compliance with Rule 802.01C. The Company's common stock will continue to be listed and traded on the NYSE during the cure period, subject to compliance with the NYSE's other applicable continued listing standards.
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to interest rate, commodity price and foreign exchange rate risks that arise in the normal course of business. There have been no significant or material changes to such risks since December 31, 20152016. Refer to Item 7a7A in the Company’s Annual Report on Form 10-K filed for the year ended December 31, 20152016, as amended, for further discussion of such risks.
Item 4.Controls and Procedures
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
A review and evaluation was performed by the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based upon that review and evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act that occurred during the three months ended SeptemberJune 30, 20162017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On June 18, 2017, A.M. Castle & Co. and four of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) pursuant to the terms of a Restructuring Support Agreement dated April 6, 2017, as amended, by and among the Debtors and certain of their creditors (the “RSA”). The Debtors’ chapter 11 cases are jointly administered under In re Keystone Tube Company, LLC., et al. (Case No. 17-11330). The four subsidiaries in the chapter 11 cases are Keystone Tube Company, LLC, HY-Alloy Steels Company, Keystone Services, Inc. and Total Plastics, Inc. The Debtors continue to operate as debtors-in-possession under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the United States Bankruptcy Code.
The bankruptcy cases were commenced pursuant to the RSA to effect a restructuring of the debt and equity of the Company under a chapter 11 plan of reorganization. Accordingly, the Company filed the Debtors’ Prepackaged Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court on June 18, 2017 and the Debtors' Amended Prepackaged Joint Chapter 11 Plan of Reorganization (the "Plan") with the Bankruptcy Court on July 25, 2017. On August 2, 2017, the Bankruptcy Court entered an order confirming the Plan. The Company expects that the effective date of the Plan will occur as soon as all conditions precedent to the Plan have been satisfied or waived in accordance with the terms of the Plan. The Company anticipates that all conditions precedent to the Plan will be satisfied on or about August 31, 2017 and that the Debtors will exit their bankruptcy cases at that time.
Item 1A. Risk Factors
There have been no material changes fromThe following information updates, and should be read in conjunction with, the risk factorsinformation previously disclosed in Part 1,I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015, as amended,2016, which was filed with the Securities and Exchange Commission on March 16, 2016,April 7, 2017.
Trading in the Company's securities during the pendency of the chapter 11 cases is highly speculative and our Quarterly Reportposes substantial risks.
If the restructuring contemplated by the Plan is consummated, all existing equity interests of the Company, including common stock and any outstanding preferred stock, warrants or options, will be extinguished. Holders of the Company’s common stock will be entitled to distributions under the Plan only if they are holders as of the Distribution Record Date established under the Plan. Each holder of the Company’s common stock entitled to any distribution under the Plan will receive only such holder’s share of 20% of the Company’s new common stock issued on Form 10-Qthe effective date of the Plan on a pro rata basis as determined by, and subject to dilution as contemplated under, the Plan. Trading prices for the quarter ended June 30, 2016.Company’s securities may not bear any substantive relationship to the probable outcome for security holders in the chapter 11 cases.
Trading in the Company’s common stock after August 2, 2017, the Distribution Record Date established under the Plan, is expected to be subject to restrictions. 
Pursuant to the Plan, the transfer ledgers for the Company’s common stock will be closed on the Distribution Record Date, and after such date there will no further changes in the holders of record of such shares. The Company and its transfer agents will not have any obligation to recognize the transfer of any shares of the Company’s outstanding common stock occurring after the Distribution Record Date, and will be entitled instead to recognize and deal for all purposes under the Plan with only those record holders stated on the transfer ledger as of the close of business on the Distribution Record Date.
The Company’s ability to exit from its chapter 11 cases on a timely basis in accordance with the Plan depends on completion of definitive documentation and other factors.
Consummation of the Plan is subject to a number of conditions precedent, including the execution and delivery by third parties, in final and definitive form, of material agreements and instruments required to effectuate the Plan. Such agreements include an exit facility credit agreement and related documents between the Company and the provider of its exit financing, an intercreditor agreement between the provider of the Company’s exit financing and the holders of the Company’s debt securities to be issued under the Plan, and an indenture agreement between the Company and an institutional indenture trustee under which such debt securities will be issued. Other factors that could impede or delay the Company’s exit from bankruptcy include appointment of a trustee to replace the Company as debtor-in-possession, conversion of the cases to chapter 7 cases, appeals of the Bankruptcy Court’s order approving confirmation

of the Plan, or other legal challenges to the Plan. If the Company is unable to exit from its chapter 11 cases on a timely basis, the Company will be exposed to the continuing costs of chapter 11, and its planned restructuring will be subject to delays.
Item 2.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.     Defaults Upon Senior Securities
Information required by this Item 3 has been previously disclosed in the Company's Current Report on Form 8-K filed on June 19, 2017.
Item 6.Exhibits
Item 6.     Exhibits
Exhibits required to be filed as part of this Report on Form 10-Q are listed in the Exhibit Index, which is incorporated by reference herein.

SIGNATURE
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 & Co.
   (Registrant)
Date:NovemberAugust 9, 20162017By:/s/ Paul SchwindPatrick R. Anderson
   Paul SchwindPatrick R. Anderson, Executive Vice President, Chief Financial Officer & Treasurer
   Corporate Controller(Principal Financial Officer & ChiefPrincipal Accounting OfficerOfficer)
   (Mr. SchwindAnderson has been authorized to sign on behalf of the Registrant.)

Exhibit Index
The following exhibits are filed herewith or incorporated herein by reference:
Exhibit No. Description
Page2.1Debtors' Amended Prepackaged Joint Chapter 11 Plan of Reorganization dated July 25, 2017. Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the SEC on August 3, 2017. Commission File No. 1-05415
2.2Debtors' Amended Prepackaged Joint Chapter 11 Plan or Reorganization, dated July 25, 2017. Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the SEC on August 3, 2017. Commission File No. 1-05415
3.1 Amended and Restated Bylaws of A.M. Castle & Co., as adopted on November 3, 2016. Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K/A filed with the SEC on February 3, 2017. Commission File No. 1-05415
3.2Amended and Restated Bylaws of A.M. Castle & Co., as adopted on April 6, 2017. Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on November 4, 2016.April 7, 2017. Commission File No. 1-05415
10.110.1* Unit PurchaseAmended and Restated Employment Agreement dated August 7, 2016, by andMay 15, 2017, between A.M. Castle & Co. and Duferco Steel, Inc.Steven W. Scheinkman
10.2*Amended and Restated Employment Agreement dated May 15, 2017, between A.M. Castle & Co. and Marec E. Edgar
10.3*Amended and Restated Employment Agreement dated May 15, 2017, between A.M. Castle & Co. and Patrick R. Anderson
10.4*Amended and Restated Employment Agreement dated May 15, 2017, between A.M. Castle & Co. and Ronald E. Knopp
10.5Restructuring Support Agreement, dated April 6, 2017, by and among the Company, certain of its subsidiaries, and certain beneficial holders or other parties signatory thereto. Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 9, 2016.April 7, 2017. Commission File No. 1-05415
10.210.6 
SettlementSecond Amendment to Credit and Guaranty Agreement, dated November 3, 2016,as of April 6, 2017, by and among A.M. Castle & Co., Raging Capital Management, LLC andthe Company, certain of their affiliates,its subsidiaries, the Lenders party thereto, and Steven W. Scheinkman, Kenneth H. Traub, Allan J. Young,Cantor Fitzgerald Securities, as Administrative Agent and Richard N. Burger.Collateral Agent. Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on April 7, 2017. Commission File No. 1-05415
10.7Third Amendment to Credit and Guaranty Agreement, dated as of May 4, 2017, by and among the Company, certain of its subsidiaries, the Lenders party thereto, and Cantor Fitzgerald Securities, as Administrative Agent and Collateral Agent. Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on NovemberMay 4, 2016.2017. Commission File No. 1-05415

10.8 Second Amendment to the Restructuring Support Agreement, dated June 8, 2017, by and among the Company, certain of its subsidiaries, and certain beneficial holders or other parties signatory thereto. Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on June 9, 2017. Commission File No. 1-05415
10.9Commitment Agreement, dated as of June 16, 2017, by and among A.M. Castle & Co., Total Plastics, Inc., Hy-Alloy Steels Company, Keystone Tube Company, LLC, Keystone Service, Inc., and the Commitment Parties thereto. Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on June 9, 2017. Commission File No. 1-05415
10.10Debtor-in-Possession Revolving Credit and Security Agreement, dated as of July 10, 2017, by and among A.M. Castle & Co., Total Plastics, Inc., HY-Alloy Steels Company, Keystone Tube Company, LLC, and Keystone Service, Inc., as Borrowers, PNC Bank, National Association, as Lender and as Administrative and Collateral Agent, and such other Lenders which may be party thereto, and the Commitment Parties thereto. Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on July 19, 2017. Commission File No. 1-05415
31.1 CEO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002E-1
31.2 CFO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002E-2
32.1 CEO and CFO Certification Pursuant to Section 906 of the Sarbanes Oxley Act of 2002E-3
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
   
* This agreement is considered a compensatory plan or arrangement.

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